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TMI Blog2021 (8) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... judication. ITA No.2938/M/2015 A.Y. 2005-06 (Assessee's appeal) 3. The grounds raised by the assessee are reproduced as under: "1. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)-47 ought to have considered the assessment as without jurisdiction and bad in law since the order of the same was passed u/s. 153A r.w.s. 143(3) of the Act. However, the Appellant's premises were never searched u/s. 132 of the Act but only a survey was conducted u/s. 133A of the Act. 2. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)-47 erred in confirming addition of Rs. 94,000/- on alleged ground of unreconciled job confirmation on the basis of some rough workings found from the backup of the computer of Ms. Sandhya Ramchandran for the period for which she was not employed with the Appellant company. 3. On the facts and in the circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals)-47 erred in confirming addition of Rs. 37,851/- as unexplained expenditure on the basis of some rough workings found from the backup of the computer of Ms. Sandhya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order framed under section 153A read with section 143(3) of the Act by the AO by ignoring the fact that there has never been any search conducted on the assessee but a survey under section 133A of the Act was conducted. 5. The facts in brief are that a search action under section 132 of the Act was carried out at the residential and business premises of Katrina Kaif and Group concerns on 24.01.2011 by Dy.DIT(Inv.), Mumbai and during search on KK Group, several incriminating materials and documents were found and seized. The assessee is one of the persons of KK Group and but was not covered under search. However a survey was conducted on the assessee under section 133A of the Act on 24.01.2011 and statement of Shri Vivek Kamat, director of the assessee company was recorded. A notice under section 153C of the Act was issued to the assessee on 09.01.2012(wrongly mentioned as notice u/s 153A of the Act in the assessment order) which was complied with by the assessee vide letter dated 27.01.2012 submitting that return already filed for A.Y. 2005-06 declaring total income of Rs. 88,23,465/- may kindly be treated as return filed in compliance to notice under section 153C of the Act. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found pertaining to the assessee as in fact none of the materials/documents seized as stated in the Panchnama belonged to the assessee. The ld counsel for the assessee further stated that statement of Katrina Kaif as recorded during search u/s 132(4) of the Act a copy of which is filed at Pg 173 to 189, no query was ever raised on any incriminating material belonging to the assessee which was found during the search action. Besides, not a single addition was made on the basis of any material found during search in case of Katrina Kaif in whose case the search was conducted. The ld AR, elaborating the provisions of section 153C of the Act, submitted that as per S.153C of the Act, the bullion, money, documents seized must belong to person other than searched person and the notice to that other person can only be issued notice u/s 153C of the Act. The ld AR submitted that before issuing notice u/s 153C of the Act to the person other than the search person, the AO of the search person has to record a satisfaction on the basis of incriminating materials that income contained in the incriminating paper belonged to the person other than the searched person and passed on the AO of the othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Kaif group and assessee also related to Katrina Kaif group though the assessee was covered under survey action under section 133A of the Act and was issued notice under section 153C of the Act. During the course of search on Katrina Kaif some incriminating material were found and seized during the search. The Ld. D.R. while drawing distinction between the section 153A and 153C submitted that both the sections are part of the same chapter and it is not made much difference if assessment is framed under section 153A instead of 153C of the Act. As regards, non recording of satisfaction the Ld D.R. submitted that it is suffice if the incriminating information is shared by the AO of the searched person under section 132(1) with the AO of the other person and no satisfaction is required to be recorded. Moreover, it has been stated by the AO in response to RTI application by the assessee that satisfaction note in case of search are not shared with the AO and therefore not available with him. The Ld. D.R. prayed that the legal issue raised by the assessee may kindly be dismissed. 10. We have heard the rival submissions of both the parties and perused the material on record including wri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso note that no incriminating documents were seized during search on Kaitrina Kaif belonging to the assessee as is apparent from the punchnama prepared during search. Also during the course of recording of statement of Kaitrina Kaif not even a single query was raised on the basis of materials seized from Ms Katrina Kaif about the assessee. Under the present facts and circumstances, the contentions of the Ld. Counsel of the assessee carry weight that even if the assessment framed is presumed to be under section u/s 143(3) r.w.s. 153C of the Act, even then the assessment is bad in law as the notice has been issued with the satisfaction of the AO of the searched person. In our opinion the assessment framed by the AO is without jurisdiction and can not be sustained. The case of the assessee find supports from the decisions as discussed hereinafter: a) In the case of CIT vs. IBC Knowledge Park Pvt. Ltd. (2016) 385 ITR 346 (Kar.)(HC) it has been held that incriminating material leading to an inference of undisclosed income is a sine qua non for invocation of S. 153C of the Act. b) In the case of CIT vs. Veerprabhu Marketing Ltd. (2016) 388 ITR 574 (Cal.)(HC) it has been held that In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f various judicial forums we set aside the order of the CIT(A) and quash the assessment framed by the AO. Consequently the ground 1 is allowed in favour of the assessee. The ground no. 1 of the assessee's appeal is allowed. 13. Since we have decided the ground raised by the assessee on legal issue there is no need to adjudicate other grounds raised by the assessee on merits. 14. The appeal of the assessee is partly allowed. ITA Nos.2939 & 2940/M/2015 A.Ys. 2006-07 & 2007-08 ; (Assessee's appeals); ITA Nos.3208 & 3209/M/2015 A.Ys: 2009-10 & 2010-11 (Revenue's appeals) ; & CO Nos.26, 27 & 28/M/2017 AY 2008-09, 2009-10 & 2010-11 (Assessee's Cos) 15. The assessee has raised the similar jurisdictional issue in ITA Nos.2939 & 2940/M/2015 for AY 2006-07, 2007-08 and Cross Objections Nos.26, 27 & 28/M/2017 for AY 2008-09 to 2010-11 raising the same jurisdictional issue as decided by us in ITA No.2938/M/2015 AY 2005-06.However the cross objections filed by the assessee are late by 33 days. So we will first deal with the issue of condonation of delay. 16. The cross objections filed by the assessee in all the three years are late by 33 days and Assessee has filed application for condon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two cross objections are allowed on jurisdictional issue. 21. Since we have allowed the cross objections filed for 2009- 10 & 2010-11 on the jurisdictional issue, the appeal of the revenue becomes infructuous and are accordingly dismissed. ITA No.2941/M/2015 AY 2011-12 (Assessee's appeal) 22. The issue raised in first ground of appeal is against the confirmation of addition of Rs. 24,000/- by Ld. CIT(A) as undisclosed receipt from the clients on the basis of some rough workings found from the back up of the computer of Ms. Sandhya Ramachandran for the period for which she was not employed with the assessee company. 23. The facts in brief are that during the course of survey on the assessee on 24.01.2011, a statement of director of the assessee company Mr. Vivek M. Kamat was recorded and specific query was put as regards the loose papers found and in reply to question No.24 Mr. Kamat specifically mentioned that those loose papers are nothing but rough sheets which are used to record the offers from various companies and these are just scribbling pad and it is not necessary that every data recorded in the loose sheets resulted into actual materialization of the offer. The AO, ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... " 28. After hearing both the parties and perusing the material on record, we find that this addition was also based on conjuncture and surmises. Upon perusal of the record before us we find that there is no evidence of any cash payment to Ms. Katrina Kaif or on her behalf. Even the third party who was on the chat with Ms. Sandhya Ramachandran is not known and Ms. Katrina Kaif in her statement has denied such transactions. We also note the addition in the hand of Katrina Kaif of Rs. 20,00,000/- has been deleted by ld CIT(A) and coordinate bench has upheld the order of ld CIT(A) in ITA No.3092/M/2015 A.Y. 2006-07 & ors vide order dated 11.10.2017. The operative part is reproduced as under: "57. We heard the rival submissions and perused the material on record. Undisputedly, the seized documents on the basis of which the addition was made by the AO is a conversation between Ms. Sandhya Ramachandran and one of the clients of M/s. Matrix. Except the document containing conversation between two third parties there is no other evidence brought on record by the AO to indicate cash payment to the assessee. In fact in the course of assessment proceedings when the assessee was confronted w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Rs. 35,00,000/- to the income of the assessee. 34. In the appellate proceedings, the Ld. CIT(A) deleted the addition by observing and holding as under: "9.3 I have carefully perused the above. It is seen that the Dhaka performance has definitely materialized but it is through another agent i.e. ATN Records Ltd. The income received of Rs. 60,00,000/- for Katrina Rosemary Turcotte vide cheque by the appellant company of Rs. 1.60 crores (appellant Rs. 1 crore & Katrina Rosemary Turcotte Rs. 60 lakhs) has also been offered as its income for A.Y.2011-12 by Katrina Rosemary Turcotte in her individual return. The noting made of the said performance by the appellant regarding its clients is a noting only which did not materialize. Cheque payment of Rs. 1.60 crores which had been received for Dhaka event is also duly reflected in books of accounts of the appellant company. Therefore, Ground of Appeal No.2 is allowed and Rs. 35,00,000/- is deleted." 35. After hearing both the parties and perusing the material on record, we find that the corresponding addition made in the hand of Ms. Katrina Kaif was already deleted by Ld. CIT(A) and affirmed by the coordinate bench. We note that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mchandran being Annexure "G" which was a evaluation sheet for AY 06-07. On the basis of Annexure G-5 which pertain to A.Y. 2006-2007, AO came to the conclusion that percentage of unaccounted cash income is 27% of cheque income during the AY 2006-07. Accordingly the AO extrapolated the income in the instant year by applying 27% to current AY 11-12 turnover of Rs. 1,02,23,31,906/- and held that the estimated cash income for AY 11-12 would be Rs. 27,60,29,615/- . The AO calculated the assessee share being 20%, an addition of Rs. 5,52,05,923/- was made in the assessment framed. 39. In the appellate proceedings, the ld CIT(A) deleted the addition by observing and upholding that addition as made by the AO is based upon the presumptions, assumptions and extrapolation and there was no materials before the AO. The ld CIT(A) called for a remand report from the AO and AO clearly stated that the income was extrapolated on the basis AY 2006- 07. The ld CIT(A) recorded a finding that AO estimated the cash receipts @ 27% of the cheques receipts without any basis and thus deleted the addition. 40. We have heard the rival contentions and perused the materials on records. We note that the AO made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... achman Das 25 Taxmann.com 227 (Delhi)(HC) / [2012] 211 Taxman 61 (Delhi)-In this case order of ITAT was set-aside and restored back to ITAT. In this case incriminating material was found during search which is not the fact in the present case. The High Court accepted that there was corroborative evidence whereas in present case, it is held in case of Katrina that there was corroborative evidence. 41. Thus, all the above decisions are not applicable in the facts of the present case as the seized material is unreliable without any corroborative evidences and as already held by the Coordinate bench in the case Katrina Kaif the said material does not prove the allegation of the revenue that cash was paid to Katrina. In following cases it is held that estimation cannot be made for a different assessment year in respect of which there is no incriminating material namely CIT-1 v Jayaben Ratilal Sorathia (2014) 222 Taxman 64(Guj.) (Trib.) (Mag), Uday C Tamhankar v DCIT (2015) 174 TTJ 151(Mum)(Trib.), Dr M.K.E Memon (2008) 248 ITR 310 (Bom)(HC). Besides in the case .In Mehta Parikh & Co v CIT (1956) 30 ITR 181(SC), it is held that an Affidavit is valid unless proven false. The Supreme Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X
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