TaxTMI 
TaxTMI 
2014 (9) TMI 310
X X X X Extracts X X X X
X X X X Extracts X X X X
....kas Shah, the addition of Rs. 12,24,000.00 is liable to be deleted from the assessment order." 2. At the outset, learned AR has made a statement at bar that through Ground no.1, the validity of the assessment is challenged on the ground of service of notice; but in the light of an "additional ground" raised; this Ground No.1 is not to be pressed. Considering the statement of learned AR, Ground No.1 is dismissed being not pressed. 2.1 The appellant had raised the following "Additional Ground". "Whether on the facts and circumstances of the case, the seized material found from Shri Vikas A. Shah belongs to the assessee and assessment made on the basis of said material is in confirmation of Section 153C of Income Tax Act." 2.2 After hearing the submissions of both the sides, we hereby admit this additional ground being a legal ground emerging from the facts already on record by following the judgment of Hon'ble Apex Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383. 3. Learned AR has contested that the document in question, i.e., MOU; was not found from the possession of the assessee. The said document was recove....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pleaded that the MOU in question was duly signed by the assessee in the presence of witnesses. To argue that the said MOU did belong to the assessee Ld. DR has pleaded that once the document was signed by a person then naturally that document belonged to the person who had put the signatures on it. In support, he has placed reliance on Kamleshbhai Dharamshibhai Patel v. CIT [2013] 31 taxmann.com 50 5.1 In addition to the above sections quoted by both the sides a discussion has also been held in respect of the provisions of Section 292 C of IT Act. However, learned AR has pleaded that Section 153C and Section 158BD are identically worded sections and the case laws either dealing any of these two sections are applicable on the issue of "income belongs to any person, other than the person with respect to whom search was made u/s. 132". Learned AR has pleaded that the first contention is that the document or the income should "belong" to such other person then only the proceedings u/s.153C could be initiated. 6. We have heard both the sides. We have perused the case law cited in the light of the facts of the case. A search was conducted on Sri Vikash A. Shah u/s.132 of IT Act on ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Act. 6.3 In any case, apart from the above logic, if we accept the argument of learned AR then the basic purpose of the introduction of Section 153C/158BD shall be defeated. Heading of Section 153C is "Assessment of income of any other person"; therefore it is to be applied if prima facie the AO is of the opinion or satisfied that any money, jewellery, books of account or documents seized belong to "such other person" other than the person referred in Section 153A. After a close reading of the relevant section it is wrong as well as illogical to interpret section 153C that a document etc, would belong to "other person" only if it was found in his possession or control. The very purpose of the introduction of Section 153C would be defeated if we interpret in this manner. The purpose of introduction of Section 153C was to rope-in "other person" who has not been raided or searched however the incriminating material related to him was found in possession of a person searched. 6.4 At this juncture, it is worth to mention that Section 292C has also been introduced in the provisions of IT Act and sub section (1) of this Section prescribes that where any books of account, other docum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....other person" then it shall be deemed that the said seized material was found in possession or control of such other person. Then the consequences that if it is found in possession of such other person then the provisions of Section 132(4A) shall also be applied ipso facto. Because of this logic we thus turn down the argument of ld. AR. 6.5 As far as the decision of Vijaybhai N. Chandrani (supra) as cited by learned AR is concerned that the main finding of the Hon'ble Gujarat High Court was that, quote, "it is nobody's case that the said documents belong to the petitioner" unquote. On the contrary in the present case, the case of the Revenue Department is that the appellant being one of the signatory, therefore, the document in question belonged to the assessee. We have also perused the decision of Prarthana Construction (P.) Ltd. (supra), cited by learned AR, and noticed that the facts were not matching with the facts of the appeal in hand. The Respected Co-ordinate Bench had rested its decision on the question whether the loose papers were to be treated as document having any value. For this purpose, the Respected Bench has also cited Central Bureau of Investigation v.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... time of search. This memorandum was made between the assessee and one Sri Vikash A. shah. Sri Shah is the Chairman of Mansi Builder Ltd. This memorandum was duly signed by these two persons/parties in the presence of few witnesses. As per AO a plot was allotted admeasuring 3.65 sq. yard in Chitwan Scheme developed by Mansi Builder Ltd. for a consideration of Rs. 12,24,000/-. The AO had inquired through a show cause notice that whether the assessee had shown the said transaction in his regular books of account. The assessee has preferred not to attend the assessment proceedings before the AO. As per AO, the assessee had not disclosed the said investment in the Department and offered no explanation, therefore, it was held as unaccounted investment in the hands of the assessee. The relevant observation of the AO is as under: "Here it is worth to mention that certain seized papers found and seized from the vehicle No.GJ-1-HF-251 like (1) page No.3 of Annexure A-20 and page No.63 of A-73, which is MOU between the assessee, Vikas A. Shah and Amit K. Patel, (2) Page No.1 and its back side of A-178, which is the MOU between assessee and Vikas A. Shah duly signe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....once the said MOU was signed by the assessee, therefore, it belonged to the assessee. He has held that the notice u/s.153C was rightly issued in the case of the assessee. Learned CIT(A) has also noted that there was proper service of notice but there was deliberate non compliance on the part of the assessee. In respect of the transaction, learned CIT(A) has noted as follows: "I have considered the submission of the appellant. The main contention of the appellant is that the document seized from the premises of Vikas Shah in the form of MOU cannot be relied upon unless the appellant is given a cross examination of Shri Vikas Shah and that he never got Rs. 12,24,000/- from him nor was allotted any plot in Chitvan as mentioned in the MOU. I don't agree with this contention of the AR for the simple reason that the MOU is singed by Shri Vikas Shah as well as the appellant in the presence of 5 witnesses. As per this MOU, all the transactions/dealings done till 16/05/2001 such as AArohan, -Aarohan-II, Cash, Shrafi, borrowings, profit, interest, etc. are mutually agreed. As per which the appellant was to receive Rs. 12,24,000/- against which plots admeasurin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ount had not accrued in favour of the assessee because the transaction of the plot never took place. The addition was merely on presumption that the amount was an income of the assessee; hence, the same should be deleted. He has placed reliance on a decision of Prarthana Construction (P.) Ltd. (supra) for the legal proposition that merely on the basis of a document which was recovered from a third party no action should be taken against "other person". Learned AR has also placed reliance on Unique Organisers & Developers (P.) Ltd. v. Dy. CIT [2001] 70 TTJ 131 (Ahd) for the legal proposition that the presumption u/s. 132 (4A) would not be applicable to a third party from whose possession such document had not been recovered by the Revenue. In the absence of any evidence of passing of "on money" and the assessee having denied the payment of on money, as it was contested in that case; no addition was called for. Learned AR has also cited CIT v. Maulik Kumar K. Shah [2008] 307 ITR 137 Gujarat wherein the Hon'ble Court has held that in a situation when both CIT(A) and ITAT have found that on the basis of the loose papers no addition was justified; hence, no interference was called f....