TaxTMI 
TaxTMI 
2018 (3) TMI 424
X X X X Extracts X X X X
X X X X Extracts X X X X
....under section 153C of the IT Act, 1961? The prays that the order of the Ld. CIT(A) be set aside and the order of the AO be restored." 3. Briefly stated facts are that a search action under section 132 of the Act was conducted at the business and residential premises of one Bharat Shah Group of cases on 15-03-2008. During the course of search on Bharat Shah Group of cases certain loose papers marked as annexure A-1 consisting of 9 pages were seized and when confronted to the same to Bharat Shah Group of cases under section 132(4) of the Act on 08-05-2008, he stated that these papers were very old lying since 1985 and it is not known in whose handwriting it is written. These papers contains that the assessee is one of the party who has purchase three flats in the proposed building namely Sea View constructed by Bharat Shah Group of cases i.e. layer export Pvt. Ltd. During the course of assessment proceedings the AO confronted these loose paper No. 11 out of the loose papers folder 1 to 19 marked as annexure A-1 to explain the same. According to AO, there is recording of transactions relating to sale of flat in the legend project promoted by Layer Export Pvt. Ltd. to the a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ither by the appellant nor by the LAO, to prove that the aforesaid mandatory conditions were fulfilled in the present case. In view of the above and in the light of previously mentioned judicial decisions and in accordance with the provisions of sec.153 C of the Act the assessment framed u/s 153C of the Act is annulled in this case. Therefore, ground of appeal no. 1 (2) is allowed." Aggrieved, now Revenue is in appeal before Tribunal. 4. On query from the Bench the learned Sr. Departmental Representative only referred to information sent by ACIT central Circle 24 & 26 Mumbai i.e. the AO of the searched person i.e. Bharat Shah Group of cases recording the satisfaction in regard to the assessee vide letter dated 21-12-2009 No. ACIT-24 & 26/information/2009-10, wherein it was stated as under:- "Search operation u/s 132 was conducted on the premises of Bharat Shah group, in which loose papers I to 19, contained in annexure A - I, were seized from 55, Gamdevi 2nd Floor, Panchshil Plaza, Mumbai on 15.03.2008, copy of which are annexed herewith. These loose papers are systematic records related to actual sales transactions in Legend Project promoted by Layer Exports Pvt. Lt....
X X X X Extracts X X X X
X X X X Extracts X X X X
....papers are systematic records related to actual sales transactions in Legend project promoted by Layer Exports Pvt. Ltd. situated in Walkeshwar, Malabar Hill, Mumbai 400 006. Most of the said papers contains details of flat numbers, flat size(total sold area), rate per sq. ft. Total consideration bifurcated in cash and cheques, cash to be paid cheques to be paid, details of renegotiation, details of actual cash payment, details of actual cheques payment etc. In these loose papers "sh" represent cash portion i.e. on money or out of books portion and "q" and "chq" represents cheque portion i.w. which is accounted in the books. In this regard, on page no.11, there is recording of transactions related to sales of flats by Layer Exports Pvt. Ltd. to Kranti Impex Pvt. Ltd. (PAN AACCK3044P), who is assessed in your charge. As per the said record, your assessee has paid cash money i.e. out of books money of Rs. 2,06,32,051/- to my assessee. You are hereby requested to take necessary action in this regard as per provisions of IT Act, 1961. Ostensibly, such information reflects that certain loose papers were found in the course of search in the premises of Bharat Shah Group, which i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he documents seized relates to the assessee and that the purchase consideration of the properties involves cash elements, and that these are out of the books of the assessee and therefore such portion of income is to be brought to tax. Therefore, the undersigned is satisfied that this is a fit case for invoking the provisions of section 153C of the Income-tax Act and accordingly notice is being issued. On the basis of the aforesaid, it is pointed out that the Assessing Officer has recorded the requisite satisfaction contemplated under section 153C of the Act prior to issuance of notice on 09/09/2010. 7.1 In this background, the aspect which is required to be examined is as to whether the CIT(A) is correct in holding that the conditions precedent for issuance of notice under section 153C of the Act have not been fulfilled. At the time of hearing, the Ld. Representative for the assessee had relied upon the judgment of the Hon'ble Delhi High Court in the case of CIT v. Pepsico India Holdings (P.) Ltd., 370 ITR 295(Del). In order to appreciate the legal position enunciated by the Hon'ble Delhi High Court in the case of Pepsico India Holdings (P.) Ltd.(supra), ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the properties involve cash element........." At this stage, it would be pertinent to go back to the legal position explained by the Hon'ble Delhi High Court in the case of Pepsico India Holdings (P.) Ltd (supra), wherein it is held that the expression "relates to" cannot be equated to the expression "belongs to" which finds a mention in section 153C of the Act. Therefore, considering that Revenue has failed to establish that the documents in question do not belong to the searched person, the question of invoking of section 153C of the Act in the hands of the assessee company merely on the strength that the documents being related to it, cannot be justified. 7.3 Therefore, in view of the aforesaid discussion, we uphold the ultimate conclusion of the CIT(A) annulling the assessment, albeit on the ground that above discussed ingredients of section 153C of the Act have not been satisfied in this case. 8. Since the action of the CIT(A) in annulling the assessment has been affirmed by us, the Cross Objection of the assessee dealing with merits of the addition become academic and is also liable to be dismissed." 6. The learned Counsel for the assessee further st....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 132 or section 132A of the Act. Thus, the entire assessment u/s 153A of the Act in case of the assessee rests on shaky and incorrect foundation and thus deserves to be quashed. Copies of the 19 loose sheets of papers marked as Annexure A-1 seized from the premises of PDTEPL are enclosed at pages 94-112 of the assessee‟s Paper Book-I. 34. The case law relied on by assessee of co-ordinate bench of Delhi Tribunal in the case of Atul Kumar Jain Vs. DCIT reported in (1999) 64 TTJ (Del) 786 (Copy enclosed at pages 334-357 of assessee‟s Paper Book) had an occasion to examine the meaning word "document" and its evidentiary value for the purposes of sections 132, 132A and 132(4A) of the Act. At Para 6.4 to 6.6 of the order, the Delhi Tribunal observed as under:- "6.4 We find that the AO has made out the case for making such addition based exclusively on the said piece of paper found and seized during the course of search. It is, therefore, to be examined whether the said paper found and seized is a document having evidentiary value to prove the fact of the transaction. The word "document" has been defined in s. 32 of the Indian Evidence Act to mean - any....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ccordingly the same cannot form the basis for assessing the undisclosed Income. In light of the aforesaid judgment, we are of the view that the impugned loose sheets of papers cannot come within the ambit of definition of the word "document" to be used as evidence and the same cannot form the basis for assessing the undisclosed income of the assessee. Admittedly, the said loose papers are not in the form of pronotes or duly executed documents or books of account or certificates or money receipts which can prove conclusively the factum of any undisclosed income earned by the assessee or any unaccounted investments or expenditure made by him. Additions cannot be made simply on the basis of rough scribbling made by some unidentified person on few loose sheets of papers. 35. Our attention was further drawn to the decision of the Kolkata Tribunal in the case of ACIT Vs. Sri Radheshyam Poddar reported in (1992) 41 lTD (Cal) 449 (Copy enclosed at pages 368-372 of assessee‟s Paper Book) wherein it was held that no addition can be made simply on the basis of an unsigned piece of paper. Held as under (at para 5 of the order):- "After hearing the rival submiss....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f section 132(4A) will become oppressive if applied in this manner and surely this is not the purpose or intention of the Legislature in enacting section 132(4A) in Income-tax Act. Like any other provision of a statute the provisions of section 132(4A) also have to be applied and interpreted in very reasonable manner and in consonance with justice. We say so on the basis of judgment of Hon'ble Supreme Court in the case of R.B. Jodha Mal Kuthiala v. CIT [1971] 82 ITR 570 at p. 575. 36. Further in the case of Pioneer Publicity Corporation & Others Vs. DCIT reported in 67 TTJ 471, (Copy enclosed at pages 373-437 of Paper Book) the Delhi Tribunal held that "no addition could be made simply on the basis of a noting on a visiting card found during search directing certain payment to bearer of card when there was nothing to establish that the assessee paid the amount to the said person. The Department had not made any enquiry from the person named. In the card about the amount given and as such, no addition could be made in the hands of the assessee. 37. Again in the case of Ashwani Kumar Vs. ITO (1992) 42 TTJ (Del) 644, the Delhi Tribunal observed as under (Copy enc....