TaxTMI 
TaxTMI 
2013 (3) TMI 685
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....T.A. No. 8176 & 8172/Mum/2011, I.T.A. No. 8248/Mum/2011, I.T.A. No. 8226 & 8177/Mum/2011, I.T.A. No. 8224 & 8169/Mum/2011, I.T.A. No. 8244/Mum/2011, I.T.A. No. 8179 & 8180/Mum/2011, I.T.A. No. 8229/Mum/2011, I.T.A. No. 8162/Mum/2011, I.T.A. No. 8230 & 8243/Mum/2011, I.T.A. No. 8234/Mum/2011, I.T.A. No. 8249/Mum/2011, I.T.A. No. 8235/Mum/2011, I.T.A. No. 8182/Mum/2011, I.T.A. No. 8174/Mum/2011, I.T.A. No. 8232/Mum/2011, I.T.A. No. 8167/Mum/2011, I.T.A. No. 8181/Mum/2011, I.T.A. No. 8256/Mum/2011, I.T.A. No. 8164/Mum/2011, I.T.A. No. 8253 & 8254/Mum/2011, I.T.A. No. 8252/Mum/2011, I.T.A. No. 8240/Mum/2011 For the Petitioner : Jehangir Mistri, Vijay Mehta, Ghanashyam Ramchandani For the Respondent : S. D. Shrivastava ORDER ITA No. 8237/Mum/2011 - 2008-09 This appeal by the assessee is directed against the order of the Ld. CIT(A)-41, Mumbai dt.27.10.2011 pertaining to A.Y. 2008-09. The Ld. Representatives of both sides , in unison , pointed out that there are 67 appeals pertaining to 52 different assessees, including the present one, which have been assessed on identical facts and the issues involved in all these 67 appeals are the same. On the strength of the statements....
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....cts in the circumstances of the case and in law, the Hon'ble CIT(A) erred in relying on the decision of Hon'ble Delhi High Court in the case of Malik Bros (P) Ltd vs. CIT (162 Taxman 43). In the appellant's case, none of the land owners from whom land has been purchased by the appellant confirmed the receipt of cash payment. These remarks of the Hon'ble CIT(A) is erroneous remarks. It is therefore prayed that these erroneous remarks of the Hon'ble CIT(A) may kindly be deleted. 6. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the charge of interest u/s.234B and 234C of the Act, having regard to the fact of the case. The appellant denies its liability for payment of interest u/s.234B & 234C of the Act." 3. With ground No. 1 & 2, the assessee has challenged the legality of the assessment order framed u/s. 143(3) r.w.s 153C of the Act. It is the say of the assessee that nothing has been found in the course of search and seizure proceedings which could be said to belong to the assessee. 4. Facts at the stage of assessment show that a search and seizure action u/s. 132 of the Act was carried out on 5.3.2009 in the case....
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....d as Annexure-A1 as per Panchanama dt. 5.3.2009 and 6.3.2009 from the residential premises of Shri Dilip Dherai. The AO was convinced that these exhibits contain the details of land acquired in different villages wherein substantial cash payments have been made for acquisition of land in the villages whose name are mentioned in these exhibits. The AO was of the opinion that as per these pages, the total cash payments to the tune of Rs. 38.45 crores have been made for acquisition of land in various villages whose name appeared in these loose papers. When confronted with these documents, Shri Dilip Dherai in his subsequent statement dt. 20.5.2009 stated that the figures are only projected figures which can at the most be taken as the budgeted amount for the purchase of land in the villages. This contention of Shri Dilip Dherai was out-rightly rejected by the AO who was of the opinion that if the figures are projected, then there has to be some projected area of land which is absent therefore, the figures mentioned are not projected but actual amounts spent for the acquisition of the lands. 4.2. Referring to the initials MK and JT, the AO sought explanation from Shri Dilip Dherai a....
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....Dilip Dherai, and approximately another Rs. 5 crores as found recorded in various losse papers found from the possession of Shri Dilip Dherai in form of cash receipts, etc. as discussed above which are for the period after 28.11.2008 (i.e. the date of page Nos. 22 & 23), therefore are not included in the amounts mentioned on page Nos. 22 & 23." 4.4 Now the question remain with the AO was that how to apportion the sum of Rs. 38.45 crores and 5 crores amongst OMSEZ companies i.e. 52 land companies. The AO has discussed the apportionment from para 15.1.1 onwards till para 15.1.5 of his order. The basis of the apportionment of expenses has been in the ratio of cost of land purchased in OMSEZ land companies and wherever more than one assessment year is found to be involved the amounts so apportioned to that OMSEZ companies has been further apportioned assessment year-wise in the ratio of cost of land purchased in each assessment year. Similar treatment was given to the amount of Rs. 5 crores. According to the AO, the share of the appellant company comes to Rs. 52,50,000/- which he added as income under the head "Income from other sources u/s. 69C of the Act as Unexplained expenditure....
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....e, the Ld. Counsel submitted that there is no evidence whatsoever to conclude that any of these documents belong to the assessee or other land companies. Moreover, these seized documents do not even mention the name of the assessee or any other land company. The Ld. Counsel further pointed out that the entire assessment revolves around the search and seizure operation conducted in the residential premises of Shri Dilip Dherai and his statement recorded during the course of search and thereafter. However, the said Shri Dilip Dherai has no connection whatsoever with the assessee. Infact, while framing the assessment, the AO himself has given a finding that the seized documents belong to Shri Dilip Dherai. It is the say of the Counsel that the onus lies on the AO to establish that the seized documents belong to the assessee. The AO has grossly failed in discharging this onus. 9.1. Continuing his argument on this point of law, the Ld. Sr. Counsel submitted that the requirement of recording satisfaction is mandatory even if the AO of the searched person and the person whose assessment is sought to be reopened u/s. 153C of the Act is the same. The Ld. Counsel pointed out that no such ....
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....on in column 6 & 7 of these documents. These estimations were arrived at after discussion with Central Leadership Team of Jai Corp Group. The figures mentioned in column 6 & 7 reflect the projected fund requirement for future acquisition of land. This statement was made for indicating fund requirement at later date. MK & JT mentioned on Pgs 22-23 are merely indicators of the discussion took place on different sites before the said date. For MK & JT Villages, a map showing the land taken upto date and land available for contiguity of land along with the details of Survey No., Area and land owners' name from which we need to acquire the balance land for which we have issued the cheques in favour of Brokers! Agents to show the landowners for acquisition of their lands were also submitted to the A.O. 5. The seized documents of Pgs 22 & 23 do not reveal anything which prove that the appellant has incurred any cash expenditure as alleged by the A.O. for purchase of land. Column 6 & 7 of seized material at Pg Nos.22-23 are merely projected and budgeted expenditure to be incurred in case further lands are acquired. This was purely an estimation. In case this expenditure was an act....
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.... (ii) In the case of CIT v. Anil Bhalla (2010) 38 DTR (Del.) 113, 322 ITR 191, Tribunal held that until there are independent evidences exist, the addition on the basis of notings, jottings cannot be upheld. (iii) The reliance is also placed on the following decisions, wherein it has been held that additions made on dumb entries/ documents without corroborative evidences are not sustainable. a) Atul Kumar Jam v. CIT (1999) 64 TTJ 786 (Delhi) b) Rakesh Goyal v. ACIT (2004) 87 TTJ 151 (Delhi) c) Rakesh Kumar lain v. DCIT (2004) 89 TTJ 203 (Delhi) d) N.R.Malhan v. DCIT (2004) 91 TTJ 908 (Delhi) e) Amarjit Singh Baxi v. ACIT (2004) 263 ITR (AT) 75 f) ACIT v. Ashokkumar Vig (2008) 15 SOT 85 (Ranchi) g) MM Financiers v. DCIT (2007) 17 SOT 5 (Chennal) h) Pankaj Dayabhai Patel HUF v. ACIT (1999) 63 TTJ 790 (Ahd.) I) Radhe Developers (2010) 329 ITR 1 (Guj). j) Shri Kapidev vs. JCIT (Spl. Range, Delhi) ITA No.2259/Del/2002/A.Y. 1997-98 dated 22.03.2012. It is evident that the addition of Rs. 38.45 crore and Rs. 5.01 crore is based only on conjectures and surmises. There is no corrobora....
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....interchangeably with the word 'belong' - and this should be taken note of by the Hon'ble Bench. Hence, the plea that the reasons for satisfaction are vague and extraneous is NOT legally acceptable. II. The next issue is that the marginal note to Section '153C' very clearly states - Assessment of Income of any other person - that is - this section is concerned with the "Assessment of Income of other person" - and as held by Hon'ble Supreme Court in the case of K.P. Varghese Vs. CIT 131 ITR 597(SC) wherein it has clearly been held that the 'marginal note' of the section can be referred to remove any ambiguity if any - as it explains the 'Drift' of the section and its purpose and intention - in this case the purpose and intention being to avoid multiplicity of proceedings u/s 153A and 153C of I.T. Act - and also by removing the expression 'undisclosed income' from section 158BA - making it simple for initiating action u/s 153C - on the basis of seized material only. Hence, as per Heydon's Rule - or 'Mischief Rule' also - only that Interpretation should be given which enhances the remedy and suppresses the mischief and does not allow subtle variations - as in....
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....difference in our fact will make a world of difference - to the conclusion - hence this difference in facts - should make the conclusion different. IV. Also, the decision of Hon'ble Bangalore ITAT in the case of P. Srinivas Naik Vs. ACIT, CC-1(2), Bangalore (2009) 117 ITD 201 (Bang) - clearly holds the following TEST for 'belong' - the 'term' belonging implies something more than the idea of a casual association. It involves the notion of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search had a close association with the group concern of 'R'. It recorded the transaction carried out by that group. It did not record the transaction carried out by the assessee. Under the Wealth Tax Act, 1957 assets belonging to the assessee were taxable. The expression 'belonging' to the assessee - connotes both the complete ownership and limited ownership of interest. Of course, belonging to is capable of connoting interest which is less than an absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets....
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....dences" - hence the word 'belongs to' must be read and understood accordingly - permitting the above. Hence, a harmonious interpretation is needed. VII. Lastly, reliance on the decision in the case of Prithvi Prakashan by Ld. Counsel is not relevant since it relates to Section 158BD and not Section 153BC - as Section 153C is materially different from Section 1S8BD as it does not deal with 'undisclosed income' as the old Section 158BD does hence is of no avail. Also, reliance placed by Ld. Counsel on Wealth Tax decisions for understanding the meaning of the word 'belongs' are of no relevance as they are out of context - the sense and purpose in Wealth Tax is entirely different from the sense and purpose of section 153C which is to Assess Income based upon seized documents 'belonging' to another person and NOT questions of ownership etc. - hence, the word 'belongs' as used in section 153C can only mean 'relates' or 'pertains' to the other person - as explained by Hon'ble Supreme Court in the case of N.C. Buddhiraja 204 ITR 412 (SC) and no other meaning can be given to it. Thus, since all the 'seized documents' - 'belong to' - 'relate to', 'pertain to' the A....
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....come for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year- (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. ....
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....ording the satisfaction. Even in the satisfaction note while concluding his discussion at para 1.6 the AO concluded as under" "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 ....
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....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 in favour of the assessee because atleast there shoul....
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.... 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 condition is not satisfied, no proceedings could be taken u/s. 153C of the Act. The seized documents marked as page 1 & 2 of our order do not belong to the a....
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....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, 8.4.2009, 20.4.2009, 22.4.2009 & 8.5.2009 and none of these appearances Shri Dilip Dherai never stated that his statement on oath recorded on 5.3.2009 was done under threat, for....
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....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 offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the asses....
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....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 papers found during the course of the search not supported by any independent authority. Considering the entire addition, in the light of the provisions of Sec. 69C, as per A.O's own interpretation, investments in purchase of land have been fully financed by some other persons, therefore, the addition ....