AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2019 (11) TMI 1105
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....the Ld. CIT (A) erred in upholding the assumption of jurisdiction u/s.147 by the Assessing Officer and in making the assessment in pursuance thereof, without dealing with appellant`s objection on merit and giving findings that no seized material obtained from the search of BPTP Group of cases (no search having been made on the Appellant) belonged to the appellant, clearly erred in yet upholding the action u/s.147 taken in the hands of the Appellant based on such seized material. 4. Succinct facts are that the assessee has filed return of income on 02.11.2006 declaring total income of Rs. 2,70,090/-. The assessment was made under section 143(3) on 31.12.2008 by assessing total income at Rs. 15,15,832/-.Subsequently, certain documents seized in the case of search action of BPTP group on 15.11.2007 and Post search enquiries, revealed that the group while dealing in land purchase was paying part payment at the time of execution of sale deed and the balance payment was being invariably paid by Post Dated Cheques (PDCs) and for intervening period (i.e. period between the date of sale deed and the date of encashment of PDCs) interest was being paid in cash @ 1.25% per month, on the amo....
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....A) placing reliance in the case of judgment of Pooran Lal v. CIT [1974] 093 ITR 0505 (SC) where the Hon'ble Supreme Court held that material obtained from search even where search is made in contravention of the provisions can be used for making assessment. Accordingly, pronouncement relied by the assessee are of no consequence. Hence, reopening of assessment was upheld. 6. Being, aggrieved the assessee filed this appeal before the Tribunal. 7. The learned counsel for the assessee submitted that the original assessment was made under section 143(3), hence, reopening of assessment can be done as per first proviso to section 147 where there is failure on the part of the assessee to disclose truly and fully all material necessary for assessment. The learned counsel for the assessee referred reasons recorded for reopening of assessment, placed at Paper Book, Page No. 93 and contended that that there is no charge against the assessee that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment.The learned counsel for the assessee further submitted that search and seizure operation was carried out on 15.11.2007 i....
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....refore, the Ld. CIT DR supported the order of Ld. CIT(A). The Ld. CIT DR also placed reliance in the case of ACIT, Cent. Circle 23 vs. M/s IAG Promoters & Developers Pvt. Ltd. ITA No. 1674/Del/2013 for AY 2008-09 of ITAT 'C' Bench Delhi dated 31/10/2014, wherein the additions made on account of interest paid on PDCs one of the group concern of the assessee was held to be valid. 9. We have heard the rival submissions and perused the relevant material on record. We find that the assessee has filed Return of Income on 12.11.2006 which was assessed u/s.143(3) on 31.12.2008 by determining total income at Rs. 15,15,832/-, subsequently certain documents seized in the case of search action in the BPTP group on 15.11.2007. Further, post search enquiries revealed that the group was dealing in land purchase and paying part payment at the time of execution of sale and balance was invariably paid by the post dated cheques and for the intervening period i.e. period between the date of sale deed and the date of encashment of PDC's interest was being paid @1.25% per month. The AO has analysed these papers and grouped them into PDS-1 to PDS-54 which supports the modus-operandi adopted by the ass....
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....us-operandi of the group, can be used in reopening of assessment. The AO has therefore reason to believe that income chargeable to tax has escaped assessment. Similarly, in the case of Phool Chand Bajranglal Vs. ITO [1993] 203 ITR 456 (SC) the Hon'ble Supreme Court has held that one of the purposes of section 147 is to ensure that a party cannot getaway by willfully making a false or untrue statement at the time of original assessment. Similarly, in the case of Raymond Woolen Mills Ltd. Vs. ITO [1999] 236 ITR 34 (SC) the Hon'ble Supreme Court held that in determining whether commencement of the reassessment proceedings was valid, it has only to be seen whether there was prima-facie some material on the basis of which the Department could reopen the case. The sufficiency or correctness of the material is not a thing to be considered at such stage. Therefore, considering these facts on record,we are of the considered opinion that AO was justified in reopening assessment. So far as reliance placed on the decision of Westland Developers (supra)of ITAT is concerned, we find that the reopening of assessment has been made within four years from the end of the assessment year, hence, pr....
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.... basis of seized material. The AO gave a finding in the assessment order that total such interest payable comes to Rs. 24,47,405/- on PDCs which was paid in cash out of books of account. Therefore, such interest was added as unaccounted/unexplained expenses. 12. Being, aggrieved, the assessee filed an appeal before the Ld. CIT (A). However, the Ld. CIT(A) after examining the issue in detailed, has given his direction for the recalculation of the interest on PDCs which is reproduced as under: :- "5.4 Conclusion :- Learned AR has been maintain all along that interest is not paid as all the receipts are only memorandum only.Analysis of these above seized document reveals that these seized documents definitely proves that interest is paid on PDCs. Various voucher in seized documents conclusively proves that the recipient has signed on voucher for receipt of the interest. Ld AR's contention that these are only working of interest claimed by seller for putting up before senior management does not appear to be convincing. In case of claim, the receiver will not sign the voucher as recipient. Amounts are specific and calculation is 15% per annum. Therefore, ld A....
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....ew, as interest payment on extension of period of PDCs are established on numerous seized documents. A trend is established for the group as the overall 4 ITA-1674/D/2013 & 1765/D/2013 management is controlled by one person Sh. Kabul Chawla and activities of all companies are interrelated. If it is not possible to work out the extension of PDCs in each case then A.O. is directed to recompute interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as six months is taken as reasonable period for giving PDC as per sale deed. This view is formed on the basis the statement of Sh. ChhotuRam which says that normally PDCs are given for 8 to 10 months. Further Ld AR has also submitted few sale deed in respect of some of seized record in the case of RamvatiBeero etc. where the interest working is made after 9/15 months. Taking these facts into consideration, it would be proper to compute interest after 6 months from date of sale on conservative side. Accordingly this ground is partly allowed." 13. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the AO categorized seized documents a....
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....r six months from the date of issue of PDC's has been upheld by the Coordinate Bench of the ITAT Delhi Tribunal in the case of ACIT Vs. IAG Promoters and Developers Pvt. Ltd., in ITA No.1674/Del/2013 for A.Y.2008- 09 dated 31.10.2014. 15. We have heard the rival submissions and perused the relevant material on record. We find that the modus operandi adopted by the Group has been established from the findings as given in the number of group concern. We find that Ld. CIT (A) has found that wherever the date of post dated cheque was extended, interest was being paid at 15% p.a. in cash out of books of account as was evident from the seized material, therefore, the interest on PDC to the extent of extension period was logical. Ld. CIT (A), therefore, directed the AO to re-compute the interest on PDC either on the sale consideration or additional payment to the extent of extended period of PDCs by the AO and in case the working out of the same is not possible, to re-compute the interest on PDCs after six months from the date of issue of PDCs i.e. date of sale, as six months is taken as reasonable period for giving PDC as per sale deed. The Ld. CIT(A) has above relied on the statement....