9911796707
TMI Blog2024 (7) TMI 702X X X X Extracts X X X X X X X X Extracts X X X X ..... s own case is invalid and unsustainable in law. In so far as arguments of the DR that, the survey u/s. 133A of the Act in the case of the assessee is triggered in pursuant to search action u/s. 132 of the Act conducted in the case of M/s. Christy Fried Gram Industry does not alter the legal position that, proceedings u/s. 153C of the Act can be initiated only when the Assessing Officer of the searched person records a satisfaction that any money, bullion or other valuable article or thing seized or requisitioned, belongs to or any books of accounts or documents seized or requisitioned pertains to or any information contain therein relates to a person other than the person referred to in section 153A of the Act. Therefore, mandatory condition to invoke jurisdiction u/s. 153C of the Act is not satisfied and thus, notice issued by AO u/s. 153C and consequent assessment order passed u/s. 144 r.w.s. 153C of the Act is illegal and unsustainable in law. Merely because search and survey are carried out simultaneously at several places, material found during the course of survey does not authorize the Assessing Officer to make assessment u/s. 153C of the Act - See Sai Shraddha Enterprises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions. Therefore, we are of the considered view that there is no merit in arguments of the ld. DR present for the revenue and thus, rejected. AO erred in making additions towards purported on-money payment for purchase of properties as per agreement of sale dated 01.04.2015 and two registered sale deed dated 24.08.2015 u/s. 69B - Decided against revenue. - SHRI MAHAVIR SINGH, HON BLE VICE PRESIDENT AND SHRI MANJUNATHA. G, HON BLE ACCOUNTANT MEMBER For the Appellant : Shri. V. Nanda Kumar, CIT For the Respondent : Shri. M. V. Prasad, FCA ORDER PER MANJUNATHA. G, ACCOUNTANT MEMBER: 1. This appeal filed by the revenue and cross objection filed by the assessee are directed against common order passed by the learned Commissioner of Income Tax (Appeals)-19, Chennai, dated 20.04.2023 and pertains to assessment year 2016-17. Since, facts are identical and issues are common, for the sake of convenience, the appeal filed by the revenue and cross objection filed by the assessee are being heard together and disposed off, by this consolidated order. 2. The revenue has raised following grounds of appeal: 1 The order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Cot Spin, No. 34, Saikripa Apartments, Thadagam Road, R.S. Puram, Coimbatore and the assessee was found and impounded vide ANN/SK/HM/B D/Imp/Sl.No.11. The department had also found two registered sale deeds vide document no. 11276/2015/SRO, Palladam, dated 25.08.2018 for Rs. 1,77,96,600/- for sale of two acres land and building therein and document no. 10389/2015, SRO Palladam for Rs. 42,03,400/- for sale of three acres of land and said documents were impounded vide ANN/SK/HM/B D/Imp/Sl.No:1 2. Further, Deputy Commissioner of Income-tax, Central Circle 2(1), Chennai has recorded satisfaction note u/s. 153C of the Act, in the case of the assessee on 17.09.2020 and as per said satisfaction note, the Assessing Officer has considered documents found and impounded during the course of survey in the case of assessee on 05.07.2018 and satisfied that this is only a case for issue of notice u/s. 153C of the Act for assessment year 2013-14 to 2018-19. Accordingly, notice u/s. 153C of the Act dated 28.11.2020 was issued for assessment years 2013-14 to 2018-19. The assessee did not respond to notice u/s. 153C of the Act. Therefore, notice u/s. 142(1) of the Act, dated 23.12.2020 was issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Survey, copies of two registered sale deeds: Document No: 11276/2015/SRO, Palladam, dated 25.08.2015 for Rs. 1,77,96,600/- (for the sale of 2.00 acres in SF.No:100/lAl) and Document No:10389/2015, SRO Palladam for Rs. 42,03,400/- (for the sale of 3.00 acres in SF.No:100/lAl) were impounded vide ANN/SK/HM/B D/Imp/SI. No: 1 2. From these documents it is found that the total consideration for which the property was purchased (vide two documents) was Rs. 2,20,00,000/- (Rs.1,77,96,600/- + Rs. 42,03,400/-), whereas the total consideration as per the sale agreement dated 01.04.2015 was Rs. 7,45,00,000/-. Hence, the balance consideration of Rs. 5,34,00,000/- is the on-money paid by M/s. Hill Max Exports in FY:2015-16, that is AY:2016-17. 6.2 As no sources have been established for the additional consideration of Rs. 5,34,00,000/-, the same is brought to tax as the assessee's investment from unexplained sources u/s 69B of the Income Tax Act, 1961 for AY: 2016-17. 5. Being aggrieved by the assessment order, the assessee preferred an appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee has taken a legal ground challenging jurisdiction of the Assessing Officer and invalid proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/-, u/s. 69B of the Act by holding that the assessee has filed necessary evidences to prove that entire consideration of Rs. 7,45,00,000/- has been accounted in the books of accounts of the assessee for the relevant assessment years and also explained the source for purchase of property including plant and machinery. The relevant findings of the ld. CIT(A) are as under: LEGAL VALIDITY OF ASSUMPTION OF JURISDICTION VIS 153C AND CONSEQUENT ASSESSMENT PROCEEDINGS 14. In Ground Nos.2 to 7 and 10 of appeal, the appellant challenged the legal validity of assumption of jurisdiction by the AO u/s 153C and the legal sustainability of the consequent assessment order passed u/s 144 r.w.s 153C. 15. In the ground of appeal and the written submission, the appellant advanced the following contentions with regard to the issue under consideration: The provisions of section 153C are triggered only when the assets seized during the course of search belong to a person other than the searched person or when the books of account document seized during the course of the search pertain to or information contained therein relates to a person other than the searched person. None of the said conditions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. From these documents it is found that the total consideration for which the property was purchased (vide two documents) was Rs. 2,20,00,000- (Rs. 1,77,96,600/-+Rs. 42,03,400/-), whereas the total consideration sale agreement dated 01.04.2015 (ANN/SKIHMIB D/lmp/Sl.No:10 was Rs. 7,45,00,000/-. Hence, the balance consideration of Rs. 5,34,00,000/- is the on money paid by M/s.Hill Max Exports in FY:2015-16, that is AY:2015-16. This is to be assessed in the hands of M/s.Hill Max Exports. Hence, I am satisfied that this is a fit case for issue of notice u/s 153C of the Act for AYs: 2013-14 to 2018-19. 17. It is clearly evident from the perusal of the contents of the satisfaction note recorded by the AO to enable him to issue of notice u/s 153C that the material based on which he recorded the said satisfaction is the material impounded during the course of survey conducted in the premises of the appellant. It is evident that the said satisfaction is not based on any books of account/documents seized during the course of search in Christy group of cases. 18. As per the provisions of sec. 153C, it is a mandatory condition that either the assets seized during the course of search in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The AO made the said addition having regard to the fact that the sale consideration as per the agreement of sale dated 01.04.2015 amounted to Rs. 7,45,00,000/- whereas the aggregate sale consideration shown in the two registered sale deeds dated 25.08.2015 amounted to Rs. 2,20,00,000/- only. The relevant agreement of sale and the two registered sale deeds formed part of the material impounded during the course of the survey at the business premises of the appellant. 22. Before proceeding further, it is relevant to point out that though the difference between the sale consideration as per the agreement of sale and aggregate sale consideration as per the two registered sale deeds amounted to Rs. 5,25,00,000/- only, the AO erroneously computed the same at Rs. 5,34,00,000/while making addition u/s 69B. The said difference is required to be adopted correctly at Rs. 5,25,00,000/-. 23. As regards the merits of the addition made u/s 69B, the appellant contented that the addition made u/s 69B is not warranted as the entire investment made in purchase of land, building and machineries as per the agreement of sale has been duly recorded in the books of account. The appellant has drawn attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame were registered on 24.08.2015. The details of the immovable properties transferred to the appellant through the said registered sale deeds, as noticed from the perusal of the said documents, are as under: Registered sale deed Particulars of immovable property Sale consideration for the specific property (Rs) Sale consideration as per registered sale deed Page number reference in registered sale deed 10389/2015 Land of 3 acres 42,03,400 42,03,400 10 and 11 11276/2015 Land of 2 acres 28,02,300 1,77,96,600 12 and 13 Building 1,49,94,300 Total 2,20,00,000 26. Since the movable properties agreed to be purchased by the appellant as per the agreement of sale represented by 'Machineries' do not require conveyance through a registered sale deed, the seller did not execute any sale deed in respect of machineries. However, the AO has erroneously compared the sale consideration as per the agreement of sale with the aggregate sale consideration as per the two registered sale deeds for arriving at his inference that the balance amount has been paid as on-money outside the books of account. While coming to such erroneous conclusion, the AO has omitted to consider that the sale agreeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order u/s 144 r.w.s 153C. On perusal of the said return of income and the audited Balance sheet as on 31.03.2016, it is noticed that all the immovable and movable properties purchased by the appellant in pursuance of the agreement of sale dated 01.04.2015 have been duly recorded in the books of account and reflected in the depreciation schedule in the return of income and the Balance sheet of the appellant. The details of the purchase of Building and Machineries recorded in the books of account of the appellant during the assessment year under consideration as noticed from the depreciation schedule furnished in the return of income are as follows: Asset description in depreciation schedule in the return of income Opening WDV as on 01.04.20 15 Additions during the year Deletions during the year Depreciation claimed Closing WDV as on 31.03.2016 Plant and Machinery 45,231 5,80,59,450 6,21,000 58,27,280 5,16,56,401 Building 2,63,993 1,75,43,040 Nil 9,03,551 1,69,03,482 29. Further, it is noticed on perusal of the audited Balance sheet as on 31.03.2016 that the closing WDV of the Plant Machinery and Building as shown in the table above are duly reflected therein in the following man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... own as on 31.03.2016 represents the Land purchased during the year. Since the sale consideration of Land purchased through the two registered sale deeds in pursuance of agreement of sale dated 01.04.2015 is Rs. 70,05,700/(Rs.42,03,400 + Rs. 28,02,300) as against the book value of land Rs. 74,58,919/ shown as on 31.03.2016, it is evident that the investment made towards purchase of Land as per the agreement of sale dated 01.04.2015 has been fully disclosed in the books of account within the meaning of section 69B of the Act. 33. In view of the aforesaid discussion, it is held that the facts of the case do not warrant any addition u/s 69B towards the investment not fully disclosed. in the books of account. Hence, the AO is directed to delete the addition of Rs. 5,34,00,000/- made u/s 69B in the assessment order. Ground No.11 of appeal is accordingly allowed. 7. The ld. DR, Shri. V. Nandakumar, CIT submitted that, the ld. CIT(A) erred in deleting addition of Rs. 5,25,00,000/- made towards unexplained investment u/s. 69B of the Act, being difference between consideration as per sale agreement and registered deed in respect of purchase of properties by the assessee. The CIT-DR, further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s totally incorrect and against law. The ld. CIT(A), after considering relevant facts has rightly held that the Assessing Officer has wrongly assumed jurisdiction u/s. 153C of the Act, because the satisfaction note recorded by the Assessing Officer is based on the documents found during the course of survey in the appellant s own business premises and not on the basis of books of accounts/documents seized during the course of search in the case of M/s. Christy group of cases. 10. The Ld. Counsel for the assessee further submitted that, the ld. CIT(A) rightly deleted additions made by the Assessing Officer towards unexplained investment u/s. 69B of the Act, by appraising relevant facts including return of income filed by the assessee u/s. 139(1) of the Act for assessment year 2016- 17, where the assessee has accounted consideration paid for purchase of land, building and plant machinery as per agreement of sale dated 01.04.2015 amounting to Rs. 7,45,00,000/- and the same has been reflected in the return of income filed by the assesse, which is much before the date of survey u/s. 133 of the Act. The assessee had also explained source for purchase of property out of capital considerat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson. In other words, during the course of a searched person, any money or other assets including books of accounts and documents found relates to a person other than the searched person. Therefore, in order to invoke jurisdiction u/s. 153C of the Act, it is a mandatory condition that either the assets seized during the course of search in the case of the searched person should belong to the person in respect of whom the proceedings u/s. 153C of the Act are sought to be invoked or books of accounts/documents seized during the course of search in the case of searched person should pertain to or information contained therein should relate to the person in respect of whom the proceedings u/s. 153C of the Act are sought to be invoked. In the present case, as per satisfaction note dated 17.09.2020 recorded by the Assessing Officer [DCIT, Central Circle 2(1)], Chennai, it is clearly evident that the Assessing Officer has recorded satisfaction u/s. 153C of the Act, on the basis of sale agreement dated 01.04.2015 and two registered sale deeds dated 25.08.2015 which were found and impounded during the course of search in appellant s own case on 05.07.2018. Therefore, we are of the consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of section 153C of the Act. On careful reading of the assessment orders at page no.1 and 2 in Para no.1 and at page no.4 in Para no.7.1, the learned Assessing Officer specifically referred to the survey action at the above address and impounded incriminating document found during the course of survey which is the basis of addition under Section 69C of the Act. It is also admitted fact that no search under Section 132 of the Act was carried out at the premises i.e. ground floor and first floor of Narsinh Smruti Building, Gaothan, Virar (W),Mumbai, where the evidences were found, based on which the addition under Section 69C of the Act is made for all these four years u/s 153C of the Act. satisfaction note dated 30 th September, 2015, recorded under Section 153C of the Act is also produced before us which is placed at page no.152 and 153 of the Paper Book which clearly shows that the evidences and documents based on which the addition is made were impounded from the place where survey action took place. Further, order under Section 133A (3)(ia) of the Act dated 31stJuly, 2014 was also passed by the learned Assessing Officer on2nd August, 2014, which clearly shows that the do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer u/s. 69B of the Act, by holding that the assessee has fully accounted consideration paid as per agreement of sale dated 01.04.2015 and also explained source for said investment, which is evident from return of income filed by the assessee for assessment year 2016-17 u/s. 139(1) of the Act on 13.01.2017, which is much before the date of survey in the business premises of the assessee on 05.07.2018. We have gone through the reasons given by the ld. CIT(A) to delete additions made u/s. 69B of the Act, in light of various averments of the ld. DR present for the revenue and we ourselves in agreement with reasons given by the ld. CIT(A) for the simple reason that, as per the sale agreement dated 01.04.2015, the appellant agreed to purchase land to the extent of 5 acres along with 30,000 sq.ft. building and machineries for aggregate sale consideration of Rs. 7,45,00,000/-. Subsequently, the appellant purchased two acres of land and building thereon vide sale deed no. 11276/2015, dated 24.08.2015 for aggregate consideration of Rs. 1,77,96,600/-. Out of said aggregate consideration, the consideration for 2 acres of land was at Rs. 28,02,195/- and the balance consideration of Rs. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) has passed his decision on the basis of return of income filed by the assessee coupled with financial statements and tax audit report filed u/s. 44AB of the Act and said return has been filed on 13.01.2017 much before the date of survey and such evidences were available before the Assessing Officer. Thus, the allegation of the ld. DR that, there was violation of Rule 46A of IT Rules, 1962 is devoid of merits and rejected. 16. Having said so, let us come back whether the assessee is able to explain source for purchase of property and is there any unexplained investment in respect of agreement of sale dated 01.04.2015 as alleged by the Assessing Officer. As we have already stated in earlier part of this order, the assessee has agreed to purchase land along with building and plant machinery, which is evident from agreement of sale dated 01.04.2015. The assessee has purchased immovable property by way of registered sale deeds, because immovable property is required to be transferred through registered sale deed only. In so far movable property like plant and machinery, there is no requirement of registered sale deeds and accordingly, the assessee has paid consideration for purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income tax Rules, 1962. 17. We, further noted that the argument of the ld. DR that the assessee did not make a claim during the assessment proceedings that the entire consideration as per the sale agreement is duly accounted in the books of accounts and that such claim was made only before the ld. CIT(A) and the source for the same were explained to be capital contribution from partners etc, because as explained in earlier part of this order, while making assessment u/s. 144 of the Act due to lack of response from the appellant, the Assessing Officer required to apply his mind to the material already available on record. Do the Assessing Officer made such basic verification of the material available on record, he would have been found that the properties purchased in pursuant to sale agreement dated 01.04.2015 are duly reflected in the balance sheet to the extent of consideration mentioned in the agreement and no addition is warranted towards unexplained investment u/s. 69B of the Act. The Assessing Officer has failed to carry out basic verification of material available on record. In our considered view, he went on to make addition u/s. 69B of the Act only on the basis of agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
