TaxTMI 
TaxTMI 
2017 (2) TMI 1423
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....2011. 3. Brief facts of the case are that search under section 132 of the Income Tax Act, 1961 was conducted in the case of Balaji Group on 22.4.2008. In order to give a logical end to the search proceedings, notice under section 153A was issued on 28.5.2009. In response to the notice under section 153A, the assessee filed return of income on 10.9.2009 declaring total income at Rs. 3,34,41,660/-. The ld.AO had issued notice under section 143(2) of the Act. On scrutiny of material, it came to the notice of the AO that during the course of search, certain documents inventoried as page nos.3 to 8 of Annexure A/2 were seized from site office of Shree Balaji Mall, Motera, Ahmedabad. According to the AO, an amount of Rs. 6,75,89,941/- has been appeared on page no.6 of the seized paper. A sum of Rs. 3.00 crores was debited from this amount on account of land cost, and net amount of Rs. 3,75,89,941/- was calculated. The ld.AO assumed that this is a net profit earned by the assessee on account of sale of shops in the Balaji Mall, and accordingly confronted the assessee as to why this should not be taken as a profit and added in the tot....
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.... been drawn by the directors or their family members. More 2. Even if we assume, for the time being, that the said documents are pertaining to Balaji Mall, it is to be stated that the handwritten document in English clearly shows bifurcation of Rs. 3.75 crores profit among various persons Stated "S", "A " & "A " with 25%, and 25% and 50% share and thus even if the department considers the said papers pertain to Balaji Mall then it seems that this paper might have been prepared to enter a partnership proposition as an estimated profit by the person who might have approached the Group. The Group is receiving such type of proposals on regular basis but it does not mean that the Group has entered into partnership and earned the said profit, nor it can conclude that the profit pertaining to the company as neither of the "Letter" mentioned in the paper suggests that it belongs to the company. Thus, the entire property is in the name of the Company only and there was no other partner or owner of the property, which itself is a conclusive evidence of the fact that the papers did not belong to the assessee. Again, no dates is mentioned on the paper which also states that this was a....
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....ssessee's denial of the hand-written entries is also not acceptable. If page no 3 to 8 of Annexure A-2 are seen in entirety and in conjunction with each other it becomes obvious that they relate to unaccounted profit earned by the assessee company from Balaji Mall Project. Moreover, from the details submitted by the assessee during the course of assessment proceedings it is seen that some of the shops/offices had been sold during FY 2007-08. Therefore, the profit worked out on the said pages are nothing but the unaccounted profit earned by the assessee from Balaji Mall Project. Therefore, the whole amount of Rs. 3,75,89,941/- is treated as unaccounted profit earned by the assessee company on the sale of shops of Shri Balaji Mall Project. Further, since the assessee has already made a disclosure of Rs. 2 crore in its return of income, credit for the same is given and the balance amount of Rs. 1,75,89,941/- is added to the total income of the assessee. Penalty proceeding u/s.271AAA is initiated in respect of the entire undisclosed income of Rs. 3,75,89,941/-. [Addition Rs. 1,75,89,941/-]" 4. Dissatisfied with the action of the AO, the assessee carried the matter ....
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....ich obviously there would not be any profit. The appellant has also submitted party-wise break-up of the shops sold during FY 2007-08, FY 2008-09 and FY 2009-10. From the aforesaid break-up it is evident that out of total 24 shops only 12 shops were sold in FY 2007-08. Further two shops on the second floor and three shops on the 4th floor have been sold to promoter's wife Smt. Binitaben Ashish Shah. Thus, it is evident that alleged profit working as per the papers seized could not have accrued in FY 2007-08, even if, for the moment, it is assumed that the same is attributable to the Balaji Mall Project 6.2 The appellant has also submitted an English translation of the relevant portion of the statement made by the principal promoter of the company Shri Ashish Jayantilal Shah during the course of search, the same is reproduced below: Q.9: I am showing you certain papers which are inventorized at page no. 3-8 of Annexure- A/2 found during survey from your office situated at Shree Balaji Mall on 22/04/2008. Kindly let me know your findings on the same? Ans: I certainly agree with you that the 'above papers were found from my 'office, but ....
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....ssessee is not acceptable. He has not established the nexus between the narrations available on these pages vis-à-vis the business transaction of the assessee. On the strength of Hon'ble Gujarat High Court decision in the case of ACIT Vs. Dharmendrasinh R. Waghela, Tax Appeal No.1539 of 2011, the ld.counsel for the assessee contended that no doubt section 132(4) of the Act raised a presumption about genuineness of the documents found during the course of search. But such presumption is rebuttable and it is to be demonstrated by the AO as to how the papers found from the premises of the assessee are relatable to its business. Only, thereafter, the assessee should be asked to give reply qua these narrations. 7. We have duly considered rival contentions and gone through the record carefully. Section 132(4A) contemplates that where any books of accounts, other documents, money, bullion, jewellery or other valuable article or thing is found in the possession or control of any person in course of a search, it can be assumed that such books of accounts other documents etc. belongs to such person, contents in the books of accounts or docum....
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....plained during the course of assessment proceedings, but even during the course of search itself. Against this stand of the assessee, the department did not take any step to investigate the issue further. The AO has also not tried to supplement his reasoning by inductive method i.e. he has not made reference to any other connected material exhibiting nexus between these papers with that of the assessee's transaction. He simply observed that explanation of the assessee is not acceptable. The assessee has made a disclosure of Rs. 3 crores in reply to question no.10 recorded under section 132(4) of the Act. Out of this Rs. 3n crores, Rs. 2 crores has been offered for taxation in this year. We have been informed that rest of Rs. 1 crore were offered in individual hands. We have tried our best to persuade both the ld.representatives to show some nexus or reasonable conclusion from all the figures mentioned in these papers. By any scientific means they did not goad adjudicating authority to arrive at a conclusion that unaccounted profits have noticed in these papers. The ld.CIT(A) has appreciated these papers and arrived at a conclusi....
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....tion of penalty u/s. 271AAA on this amount is not warranted. Further it is seen that the addition of Rs. 1,75,89,941 has since been , deleted by my predecessor through his order dated 11.08.2011, therefore there is no reason to impose penalty on this amount either. 5 In the result the appeal is allowed." 10. With the assistance of the ld. representatives, we have gone through the record carefully. For visiting the assessee with penalty, the ld.AO has considered addition of Rs. 3,75,89,941/-. This addition contains two components i.e. Rs. 2 crores plus Rs. 1,75,89,941/-. The AO has given a set off Rs. 2 crores against total addition on the ground that this much amount was declared by the assessee in the statement under section 132(4) of the Act. Therefore, he made an addition of only Rs. 1,75,89,941/-. 11. On due consideration of the material on record, we are of the view that order of the ld.CIT(A) does not call for any interference for two reasons viz. we have upheld order of the ld.CIT(A) for deleting addition of Rs. 1,75,89,941/-. Had the ld.AO not set off of Rs. ....