TaxTMI 
TaxTMI 
2014 (2) TMI 421
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....wo grounds are similar in all the three years except the difference in figure of additions only. 4. Brief facts of the case are that a search and seizure operation was carried out at the residence of Shri Dilip Dherai on 5-3-2009 along with the search and seizure operation in the cases of Jai Corp Group, its employees and close associates who were close involved in the process of acquiring land in the name of 52 companies of this Group. The affairs of this group are managed by Jain family viz. Mr. Anand Jain, Mr. Jai Kumar Jain, Mr. Virendra Jain, Mr. Satyapal Jain, Mr. Gaurav Jain and Mr. Harsh Jain. In recent years, this group has extended its operation to realty sector. The group is partner in two major upcoming Special Economic Zones of India (SEZs), being developed in the vicinity of Mumbai, namely Navi Mumbai Special Economic Zone (NMSEZ) and Mumbai Special Economic Zone (MSEZ). Reliance Industries Ltd. (RIL) group is other key partner. Mr. Anand Jain is chairman of both NMSEZ and MSEZ. The group has also purchased huge chunks of land in the vicinity of these SEZs with an objective to develop township in these areas anticipating potential price rise and good returns. The gro....
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....ntries of cash payments made on the loose papers found and seized in any other manner. The detailed discussion has been made on all the seized papers in the case of 52 land companies. Since Shri Dilip Dherai has worked as a land aggregator on behalf of the land companies, therefore, the AO has made the addition in the hands of the land companies on substantive basis and in the hands of Shri Dilip Dherai on protective basis amounting to Rs.7,05,10,000/-, Rs.8,22,71,000/- and Rs.28,20,43,000/- for the AYs. 07-08, 08-09 & 09-10 respectively. 5. The above facts are recorded in the order of the learned CIT(A) at pages 4 to 6 of his order. Thereafter assessee preferred appeals before the CIT(A) for all the three years. Detailed submissions were filed before him. The CIT(A) after considering the submission and perusing the material on record, allowed the appeals of the assessee for all the three years in respect to addition made on protective basis mentioned above. The CIT(A) deleted the addition by observing that the substantive addition made in the hands of the land companies have already been confirmed, therefore, the protective addition made by the AO in the hands of the assessee are....
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....h Court in the case of CIT, Gujarat II V. Surendra Gulab Chand Modi 140 ITR 517 (Gui) 1983 - wherein the Hon'ble Gujarat High Court has very clearly held that Tribunal was not justified in proceeding with the matter and vacating Protective Assessment'- Tribunal directed to keep matter pending till decision by Supreme Court. Hence, both the above decisions fully justify the framing of a Protective Assessment and to keep the same pending till matters attain finality by the Hon'ble Supreme Court. Hence, even though CIT(A) has confirmed the impugned additions in the hands of the 52 land companies, the Protective Assessment made in the hands of Shri Dilip Dherai cannot be deleted till matters have attained finality by the Hon'ble Supreme Court and the demand being a mere ‗paper demand' not enforceable as long as the assessment is protective - does not prejudice the Assessee and therefore, there can be no grievance against a 'Protective Assessment'. II. The statement on oath by Shri Prakash Chandra Shukla, Dy.G.M. and Director in Aakash Reality and 128 other companies (Total 129 companies) - p....
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....22.3.2013 - in para 18 "At this stage, it would be fair to the Revenue that it cannot be in the handwriting of the assessee, Since the assessee is a legal person, so to extend our observation, the seized documents are not even in the handwriting of any person related with the Assessee because Shri Dilip Dherai is neither a Director nor a shareholder/member nor even an employee of the Assessee Company". The above observations of Hon'ble ITAT being factually incorrect since Shri Prakash Chandra Shukla - Dy.G.M. and Director of 129 companies [as per statement of oath and list enclosed] has clearly stated in Q. and Ans.No.8, Q. and Ans.No.10 - that Shri Dilip Dherai is the main person, hence A.O. is within his rights and powers to frame a 'Protective assessment on such a person - as the company being an artificial juristic entity has to act through its instrumentalities - in this case Shri Dilip Dherai - hence a 'Protective Assessment' is warranted in his case as per para 18 of Hon'ble ITAT's observations of a company not being able to execute the document in its own handwriting - hence documents executed by Shri Dilip Dherai and found and seized from hi....
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....nue. It was further submitted that the affidavit filed by Shri Dilip Dherai by which he has retracted his own statement given earlier i.e. on 5-3-2009. It was explained that after the statement recorded under Section 132(4), Shri Dilip Dherai appeared before the DDIT on various dates i.e. on 6-4-2009, 8-4-2009, 20-4-2009, 22-4-2009 and 8-5-2009, respectively and on all these occasions, he never stated that his statement on oath recorded on 5-3-2009 was done under threat, force or coercion, hence, the affidavit filed by him is now afterthought. Therefore, no credence should be given in respect to affidavit filed on behalf of Shri Dilip Dherai. It was also submitted that the AO has requested the officer before whom Shri Dilip Dherai was appeared and they have categorically stated that no threat or force was used for obtaining the statement of Shri Dilip Dherai on 5-3-2009. Reliance was also placed on various case laws mentioned in the note submitted by the learned CITDR. 9. Per Contra, learned counsel of the assessee has also filed reply and the contents of the written reply filed on behalf of the assessee are also reproduced here as under :- 1. On behalf of our above ....
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.... Officer that the income belongs to or pertains to the appellant. In fact, there is a positive finding by the Assessing Officer that the seized material reflects on money paid by the Land Companies for acquisition of land. Further, the addition is made u/s 69C of the Act, in spite of the fact that the appellant has not purchased any land. Thus, the addition is not sustainable. 6. The appellant is a man of no means. The computation of income as well as balance sheet for A.Y. 2008-09 and A.Y. 2009-10 are enclosed in the Paper Book, which prove that the appellant has no capacity to buy such a huge land or pay on money. 7. The stand of the learned DR that this being merely a paper demand, the protective assessment should be allowed to survive is devoid of any merits. It is a settled position in law that where protective assessment can be made, there cannot be any protective appellate order. 8. Reliance is placed upon the decisions of the Hon'ble Allahabad High Court in the case of Smt. Hemlata Agarwal v. CIT U.P. (64 ITR 428) and CIT v. Smt Durgawati Singh (234 ITR 249). 9. The argument that Dilip Dherai is an agent as stated by v....
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.... department and the assessee, we find that the Tribunal by discussing the appeal in the case of 52 land companies have held that no addition can be made on the basis of material found during the course of search. The appeal in case of 52 land companies were decided in ITA No.8237/M/2011 and other connected appeals vide order dated 22-3-2013, copy of the same is placed on record. After analyzing the facts of the case and detailed arguments along with various case laws, the Tribunal has given its final finding in para 10 to 26 at pages 33 to 47 of its order. The findings of the Tribunal has been given in respect to legal grounds raised whether the AO has rightly assumed jurisdiction under Section 153C and whether the addition made on merit were sustainable in law or not. The Tribunal has decided both the issues together and has given its finding in paras 10 to 26. For the sake of completeness, we would like to reproduce the findings of the Tribunal given in case of 52 land companies, are as under:- "10. We have considered the rival submissions, perused the orders of the lower authorities and the documents referred to and relied upon by the rival parties. We find that th....
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....a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.] 12. Before proceeding further let us also consider the provisions of Sec. 158BD as provided under Chapter XIVB which has become non operative qua search etc. made after 31.5.2003. 158BD-Undisclosed income of any other person. "Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was mad....
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....p; -In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e. the assessee (which is included in the above mentioned 52 companies) other than the person referred to in Sec. 153A within the meaning of provisions of Sec. 153C of the Act. Accordingly, proceedings u/s. 153C of the Act are initiated in the case of the assessee". 14. After carefully going through this satisfaction note, a logical question is flashing in our mind and which is - when the assessment proceedings are concluded and all other consequential proceedings are completed, it is mandatory to release the seized material to the assessee. The question is - when these seized documents would be released , who will be the recipient? The obvious answer is Shri Dilip Dherai because the impugned documents were seized from his premises. Therefore the seized documents cannot belong to 52 companies because one document can belong to one person. Even in the satisfaction note, a sample copy of one of these 52 companies is given to us and it is the say of the Ld DR that all satisfaction notes are exactly worded with change in the name of the assessee, it is....
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....found in the possession or control of that person in the course of a search under section 132.] 15. It is the say of the Ld. DR that in the light of the decision of Kerala High Court 333 ITR 281 when the AO of the person searched u/s. 153A is the same as for the other person covered u/s. 153C. There is no need to record this satisfaction u/s. 153C of the Act. That decision is only to override the procedural part because the 'sender AO' and the 'receiver AO' of the seized documents being the same. But it cannot be said that no satisfaction is required prior to proceeding u/s. 153C of the Act. Had this being the legislative intent, the legislature could have provided in the section itself that when the search cases are centralized, there is no need for recording any satisfaction. That being not the case, we do not accept the submission of the Ld. DR on this point. The Ld. DR has further relied upon the decision of the Hon'ble Delhi High Court 346 ITR 177 according to which at the time of recording satisfaction only prima facie grounds have to be mentioned and not that there are conclusive evidences with AO at this stage of unrecorded income etc. Infact, this decision is....
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....f members and other details." 17. We find that in this decision of the Hon'ble Gujarat High Court, even when impugned documents had reference to the assessee, the Hon'ble High Court quashed the proceedings u/s. 153C of the Act. In our case, there is not even a reference to the assessee except the name of the village in which the assessee has purchased the lands. Coming back to the provisions of Sec. 153C vis-à-vis 158BD as pointed out earlier both the sections are similarly worded section. With a marked distinction such as the marginal heading of 158 BD is undisclosed income of any other person and that of 153C is assessment of income of any other person. Further u/s. 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account seized or requisitioned belong to such other person, whereas all that is required u/s. 158BD is that the undisclosed income should belong to any other person. 18. Thus it is clear that before issuing notice u/s. 153C, the primary condition has to be fulfilled and which is that the money, bullion, documents etc., seized should belong to such other person. If this c....
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...., we have no hesitation to hold that action taken u/s. 153C of the Act is bad in law. 20. Now coming on to the merits of the case, which is without prejudice to our findings hereinabove, the submissions of the Ld. Sr. Counsel have been incorporated hereinabove to which the Ld. DR in addition to his oral arguments filed a written submission. The Ld. DR has mainly relied upon the findings of the AO. So far as payments outside the regular books of accounts are concerned, in his written submission, the Ld. DR has explained the modus operandi of the assessee relying upon various documents seized from the premises of Shri Dilip Dherai and M/s. Jai Corp group. The Ld. DR strongly contended that the retraction of Shri Dilip Dherai is only self serving and has to be rejected as an afterthought. For this preposition the Ld DR relied upon several judgements . It is the say of the Ld. DR that the statement of Shri Dilip Dherai was recorded u/s. 132(4) of the Act on 5.3.2009 whereas Shri Dilip Dherai has filed an affidavit on 14.5.2009 retracting from his admission on 5.3.2009. The Ld. DR pointed out that after 5.3.2009 Shri Dilip Dherai appeared before the DDIT on 6.4.2009, 8.4.2....
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....ge. Please clarify the same.? Ans. These documents reflect total amounts disbursed for purchase of land. The details of area, village, payments made through cheque alongwith payments made through "cash" is shown very clearly in the chart. The highlighted portion reflects the cash payments disbursed through Jaicorp Office at Maker and Jai Towers. The same has been mentioned separately. The cash payment from Maker adds upto Rs. 28.01 Cr and cash payment from Jai Towers adds upto Rs. 10.43 cr. All these cash were received for these projects from Jaicorp Ltd. and the total of all these amounts works out to Rs. 38.45 Cr in cash. I was provided with these cash as and when required by Shri Sanjay Punkhia" 22. However, subsequently Shri Dilip Dherai has retracted from his statement which has been strongly objected by the Ld. DR in his submission. The entire dispute revolves around the alleged cash payment amounting to Rs. 43 crores approx. and which has been added u/s. 69C of the Act. Sec. 69C of the Act reads as under: "Where in any financial year an assessee has incurred any expenditure and he offer....
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....d to substantiate the claim of the Revenue that extra cash has actually changed hands. 24. Our view is fortified by the decision of the Delhi High Court in the case of Malik Brothers Pvt. Ltd. Vs CIT 162 Taxmann 43 which is relied upon by the Ld. DR. In that case, the assessee purchased the property allegedly for Rs. 6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was Rs. 45 lakhs and paid tax thereon. In view of vendor's statement, the AO made an addition of Rs. 39 lakhs to the income of the assessee towards unexplained investment. The action of the AO was justified and the additions were confirmed. Thus in view of the aforesaid decision, in the present case, none of the sellers have been examined by the AO to strengthen his views that cash has been paid over and above the registered amount. There is not even a single document/evidence of parties involved in the sale of land at different villages brought on record to show that an amount other than the payment of consideration has exchanged hands. No confession from the sellers have been brought on record. The entire additions have been made merely on the strength of loose p....
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....an be made in the hands of these 52 companies. 12. We have also gone through the order of the AO and the statements of Shri Dilip Dherai and others, copy of which are placed on record and found that there is no allegation against the assessee that all these land were purchased by the assessee from his own funds in the name of those land companies. It is amply proved from the statement of various persons, who are Directors of these companies or were invested in fund those companies, that assessee has not purchased the land for its own companies as he was only managing the affair of purchase and sale. It means the assessee was recruited as an agent. In submission of the assessee, which is reproduced in the order of AO, it has been clearly stated that he was handling the affairs of purchase and sales only. The persons, who are related with Jai group were searched and statement of those persons were also recorded and they have also stated that the purchase of land was handled by Shri Dilip Dherai, the assessee. They have not stated in their respective statements that Mr. Dilip Dherai was involved in purchasing the land from his own source or for his own companies flouted by him. Neith....
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....n his written submission and time and again has been stated that appeals of the department should be kept in abeyance till the decision of the Hon'ble Supreme Court in the case of 52 land companies, is decided. We find no much weight in these arguments because it is not known whether the department has filed any appeal even before the Hon'ble High Court or not. Therefore, no appeal is pending before the Hon'ble Supreme Court. If the department files appeals before the Hon'ble High Court, then appeals can be filed against this order also. Even and otherwise, we are not holding that no protective assessment can be made. Of course, protective assessment can be made if the same amount is added in one hand and the same amount is added in another hand on protective basis. In this case also, the AO made substantive addition in the hands of 52 land companies and protective basis in the hands of assessee for these three years. The Tribunal has taken a decision that no addition can be made on the basis of material found during the course of search. The Tribunal has not stated anywhere in its order that addition can be made in the hands of Shri Dilip Dherai and not in the hands of 52 land com....