TaxTMI 
TaxTMI 
2007 (4) TMI 298
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....he facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in observing 'if as a result of search or on the basis of material information made available after the search it is found that the fact or the inferences shown in the return were wrong, then it cannot be said that s. 158BB does not apply'. Change of opinion being not permissible under the law and no new facts or evidences having come in possession of the Department as a result of search, the addition on account of purchase of land at Village Chawla deserves to be fully deleted. 3. On the facts and in the circumstances of the case, the AO has erred in making addition of Rs. 50,000 on account of commission, mutation charges, NOC charges, etc. in computing the total cost of land purchased at Chawla by holding that the same have not been shown in the return but paid as per seized document without appreciating the fact the amount incurred by the appellant on the stamp duty etc. amounting to Rs. 2,59,185 at the time of purchase of land at Chawla includes the actual amount paid for commission, mutation charges, NOC charges etc. Therefore, addition of Rs. 50,000 made by the AO as unexp....
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.... 3. On the facts and in the circumstances of the case, the AO has erred in making addition of Rs. 50,000 on account of commission, mutation charges, NOC charges, etc. in computing the total cost of land purchased at Chawla by holding that the same have not been shown in the return but paid as per seized document without appreciating the fact the amount incurred by the appellant on the stamp duty etc. amounting to Rs. 1,80,080 at the time of purchase of land at Chawla includes the actual amount paid for commission, mutation charges, NOC charges, etc. Therefore, addition of Rs. 50,000 made by the AO as unexplained investment in land is liable to be fully deleted. 4. On the facts and in the circumstances of the case, the AO had no jurisdiction to pass an assessment order under s. 158BD of the IT Act, 1961, since no search had taken place in the case of the appellant and satisfaction as required by s. 158BD of IT Act, 1961 had not been recorded. The order of AO being without jurisdiction requires to be cancelled on this ground. 5. On the facts and in the circumstances of the case, the AO has erred in initiating penalty proceedings under s. 158BFA(2) of IT Act, 1961....
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....s. 50,000 made by the AO as unexplained investment in land is liable to be fully deleted. 4. On the facts and in the circumstances of the case, the AO had no jurisdiction to pass an assessment order under s. 158BD of the IT Act, 1961, since no search had taken place in the case of the appellant and satisfaction as required by s. 158BD of IT Act, 1961 had not been recorded. The order of AO being without jurisdiction requires to be cancelled on this ground. 5. On the facts and in the circumstances of the case, the AO has erred in initiating penalty proceedings under s. 158BFA(2) of IT Act, 1961. The same is liable to be dropped. 6. The CIT(A) has erred in law in confirming the addition made on account of purchase of land at Village Chawla. The transaction was done at arm's length at prevailing prices at the time of purchase and copy of lease deed executed in the same locality at these prices had also been furnished. 7. A document seized at the time of search could not form the basis for forming opinion on cost of purchase which had taken place a few years back. 8. The circle rates of these properties even now are at much lower rates. ....
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....s of above analysis, the AO inferred that the total consideration of land at Village Chawla, shown in the books was around 20 per cent of the actual consideration i.e. the actual consideration is around 5 times the consideration as per books. Therefore, vide questionnaire dated .23^rd April, 2004, assessee company was asked to show-cause as to why the difference between Rs. 20 lakhs per acre, the acquisition price as shown on seized document and the acquisition price per acre as shown by the assessee company in the IT returns should not be added as unexplained investment for the block period. 3. The assessee filed its reply vide letter dated 17^th May, 2004 and it was contended that the document was seized during the course of search of a third party. Also, the document is neither signed nor dated and no name is mentioned on this document. Therefore, the noting made on this document cannot in anyway be related to the assessee company. Also, it was submitted that it is not known as to what does "P.A" as mentioned on the seized document stands for. The legal presumption under s. 132(4A) of the IT Act, 1961 regarding the document/books of account, etc. found during the course of se....
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....ng made on the said document could not in anyway be related to the assessee company. Therefore, he totally denied of having any connection with the said document or that the noting made on the said document had any appearance on the assessee. For this proposition, he relied on various decisions of the Tribunal and the Hon'ble High Court as contained in the paper book placed on the record. 8. On the other hand, learned CIT (Departmental Representative), Shri L.M. Pandey, contended that during the course of search at Usha Group of companies, in the premises situated at A-41, MCIE, Badarpur, which Was used as a corporate office of Usha Group, where corporate office of all the concerns of Usha group were located, this important document marked as Annex. AD-46 was found. Furthermore, this document was seized from the office of Dr. M.C. Gupta, who was looking after the real estate division of the group, the importance of this document cannot be underestimated. As per learned Departmental Representative, this seized document clearly indicates the prevailing market rate of land situated at Village Chawla and a further bifurcation has been done with reference to the amount at which r....
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....ver strong, cannot take place of proof. In the case of CIT vs. Khushlal Chand Nirmal Kumar (2003) 183 CTR (MP) 503 (2003) 263 ITR 77 (MP), it is held that even after the amendment to 158BB w.e.f. 1st July, 1995, emphasis has been given to the fact that evidence must have been found during search and only thereafter the question of gathering any material information would arise based on search inquiry/material. The undisputed facts in the instant case are also that the document so found during the course of search marked as Annex. AD-46, on the basis of which addition was made by the AO, was neither signed nor dated, on this document no name was mentioned so as to relate the same to some person. It was also not known as to who had written or prepared the said document. As per provisions of s. 158BD, where the AO is satisfied that any undisclosed income belongs to any person other than a person with respect to whom search was made, their the document seized shall be handed over to the AO having jurisdiction over such other person for proceeding against such other person. Thus, prima facie, the AO is required to be satisfied with the document found during search as belonging to some o....
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....hom assessee had purchased the land. Undisputedly, the land so purchased by the assessee situated in Village Chawla, was registered by the stamp authorities at the prevailing price of land situated in that area, and the source was comparable with the rate at which assessee had actually purchased the land. No extra stamp duty was imposed while registering the land on the plea of higher value than the value at which land was actually purchased as per sale deed entered between the assessee and owner of land. Valuation cell of the IT Department is entrusted with the responsibility to find out fair market value of capital asset, as and when any reference is made by the AO. AO may refer the valuations of capital asset to a Valuation Officer when he finds that the value of the asset as claimed by the assessee is less than fair market value. In the instant case to find out the fair market value of land, so as to co-relate the same with the rate of land stated in the document so found, the AO had referred the matter to its valuation cell, however instead of supporting the AO's allegation, the Valuation Officer indicated the fair market value of land at the price recorded by the assessee....