TaxTMI 
TaxTMI 
TaxTMI 
2020 (6) TMI 462
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....o assessee, M/s. Realtech Constructions Pvt. Ltd. The documents were in the nature of MOUs between promoters of Realtech Group, namely, Shri Yogesh Gupta, Shri Pankaj Dayal and Shri Rajeev Behl along with some working pertaining to Realtech Group. The seized annexure also gives details of working of assets and liabilities of different projects of Realtech group. It has been further observed by the Assessing Officer that during the course of post search proceedings, the seized documents were confronted to Shri Paraminder Singh Kalra, who has stated that these documents does not pertain to him and he further explained that due to dispute between the promoters of Realtech group, MOU was drawn by the partners for partition of the group and each partner has appointed one arbitrator which should be acceptable to the remaining two promoters of the group and there was one such arbitrator Shri Paraminder Singh Kalra appointed by the Realtech Group Promoters. Besides him, two other, Shri B.N. Chanok and Shri Kuldeep Ahuja were also appointed as arbitrator. During the course of search proceedings summons were issued to three promoter directors of M/s. Realtech Group, out of which only Mr. Yo....
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....statement of Mr. Yogesh Gupta cannot be held to be reliable as there were dispute amongst the promoters of the assessee-company and him and he does not have stake in the company nor any interest at the time of survey, therefore, his statement alone has not binding on the assessee company as an evidence. * Secondly, the addition has been made on standalone generated computer printout which has neither been signed by the assessee and has been found from the premises of Shri Yogesh Gupta, whose identity is different from the identity of the assessee company. No corroborative evidence has been found to substantiate that assessee has generated such unexplained cash and it is based on the document returned to a third party, i.e., Meter and Instrument Pvt. Ltd. * Further, the document mentions payment to be received from M/s. Realtech Constructions Pvt. Ltd. which indicates that his documents belongs to M/s. Meter and Instrument Pvt. Ltd. which has been discovered from Mr. Yogesh Gupta who was not controlling the assesseecompany at that point of time. Nowhere the document indicates that these payments have been made on behalf of the assessee company and the contents of the documents d....
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....ng survey. It is pertinent to mention that during the course of survey, Rs. 24,50,00,000/- have been offered as additional income for taxation for the period relevant to AY 2008-09 and that has also got a bearing to the project-City Emporiyo at Chandigarh. From the assessment order in the case of appellant for AY 2008-09 it is also found mentioned and a further addition of Rs. 20,00,00,000/- is made being undisclosed income from cash receipts over and above the booking amount. 10.8 It has not been substantiated by the AO that the cash mentioned in impugned document is over and above such surrender and additions made and hence to consider this receipt again as income of the appellant is not justified." * He further held that here in this case the addition has been based upon a standalone document which is a computer printout, found from the premises of Mr. Yogesh Gupta and from the statement of Mr. Yogesh Gupta, it cannot be conclusively established that cash payments received by Mr. Yogesh Gupta and Mr. Ajit are actually emanating from the funds of the assessee company. The documents per se relates to the third party, Meter Instrument Pvt. Ltd. * Another important observation....
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....ned to accept the contentions of the appellant and it is held that the such addition amounting to Rs. 13,90,26,749/- is devoid of any merit and deserves to be deleted. Accordingly, ground of appeal nos.1.2 to 1.5 are allowed and appellant gets a relief." 5. Before us, ld. CIT-DR submitted that one of the finding of the Ld. CIT(A) is that no satisfaction was recorded by the Assessing Officer of Kalra Group which deserves to be rejected in the light of the following judgments of the Hon'ble Delhi High Court:- 1. PCIT vs. Sheetal International Pvt. Ltd. (2017-TIOL-1355-HCDEL-IT), 2. PCIT vs. Instronics Ltd. (2017) 82 taxmann.com 357 (Delhi) 3. Ganpati Fincap Services P. Ltd. vs. CIT, (2017) 82 taxmann.com 408 (Delhi). Wherein it has been held that, where satisfaction note was recorded by Assessing Officer of searched person who also happened to be Assessing Officer of assessee (other person) to affect that seized documents belonged to assessee, issuance of notice under section 153C against assessee on basis of said note was justified. 6. Regarding observation of the Ld. CIT(A) addition are not related to the document found during the course of search of Kalra Group and is based o....
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....tement of Yogesh Gupta is not reliable, because of differences with other shareholders, mathematical errors and not corroborated by any conclusive evidence of unexplained income. CIT (A) has totally erred in making such statement as Sh. Yogesh Gupta had appeared during the course of proceedings u/s 153C before Income Tax Authorities and even in the return of income filed u/s 153C, address of Sh. Yogesh Gupta was given and all the notices were given to him for this proceeding and there was no objection on behalf of any other shareholder or director. Rather the other two shareholders never appeared before Investigation Wing even in response to summons or during the assessment proceedings except Sh. Yogesh Gupta. Further, there is no mathematical error in the sheet and addition was made only in respect of the cash payment over and above the cheque payment made to Meter & Instruments Pvt. Ltd. on the basis of the impounded documents found during the course of survey from the possession of the director Sh. Yogesh Gupta. Reliance was placed by her on the case of Hon'ble Delhi High Court of Sonal Construction 359 ITR 532 where Hon'ble Court has held in para 17 held that the corroboratio....
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....lso pointed out that Hon'ble ITAT, Delhi Bench has already considered this fact in A.Y. 2008-09 in ITA No. 3624/Del/2012 order dated 16.10.2017 and held in para 9 that the assessee is carrying on two projects and during the course of survey and search proceedings it was found that in both the projects assessee is collecting "on money" towards the sale of space. 10. On the arguments advanced by the Ld. Counsel during the course of hearing on 14.10.2019 that 153C proceedings can only be initiated if the documents seized are incriminating in nature and reliance placed upon the decision of RRJ Securities of Hon'ble Delhi High Court; in the case of Green Range Farms Pvt. Ltd. of Hon'ble ITAT Delhi Bench and the case of Dream City Buildwell of Hon'ble Delhi High Court, she submitted that this issue first of all does not arise from the order of CIT(A) and no cross objection has been filed by the assessee, hence no fresh legal ground can be taken by the assessee at this stage. Without prejudice, she submitted that this issue is covered by the decision of Hon'ble Delhi High Court in the case of SSP Aviation 346 ITR 177 where Hon'ble Delhi High Court after detailed discussion made regarding....
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....g to a person other than the searched person. There is no requirement in section 153C(1) that the Assessing Officer should also be satisfied that such valuable articles or books of account or documents belonging to the other person must conclusively reflect or disclose any undisclosed income. [Para 15] It will be appreciated from the above that the procedure envisaged by section 153C, which is applicable to re assessee herein, does not in any way infringe any rights of the assessee or curtail or curb his right to be heard by the Assessing Officer or to file appeals and question the assessments made pursuant to the notice under section 153A. There is no ground for any apprehension that the assessee will not be heard before the assessments or reassessments for the six assessment years are completed. In fact, in the case of the assess-i itself the Assessing Officer has not made any addition in the assessments completed under section 153A read with section 153C for the assessment years 2003-04 to 2006-07 and 2008-09. He has made the addition of Rs. 86 crores only in the assessment year 2007-08 against which an appeal has already been filed. Thus, full opportunity of being heard is avai....
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....sfaction of the Assessing Officer that any 'undisclosed income' belongs to any person other than the searched person, section 153C(1) in contrast refers merely to the satisfaction of the Assessing Officer that the valuable article or books of account or document 'belongs' to a person other than the searched person, (para 18)." This decision of Hon'ble Delhi High Court is also followed in the case of RRJ Securities wherein para 34 Hon'ble Court has held that "34. In SSP Aviation Ltd. (supra), this Court had noted the difference between the provisions of Section 158BD of the Act and the provisions of Section 153C. Whereas Section 158BD referred to the satisfaction of an AO with regard to any "undisclosed income" belonging to a person other than the searched person, Section 153C(1) of the Act in contrast referred merely to the AO being satisfied that assets/documents seized during a search belonged to a person other than one searched. It is, thus, clear that it was not necessary for the AO, at the stage of recording the satisfaction under Section 153C to come to a conclusion that seized assets which belong to another person represent any undisclosed income. If the AO....
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....zed documents must be incriminating and relate to the assessee and to each of the Assessment Year seized for which assessment was sought to be reopened. Here the seized documents referred to Assessing Officer's satisfaction note, first of all, are merely certain MOUs between the promoters of Realtech Group which has no correlation with any income or undisclosed income. Therefore, in view of the settled judicial principle by the Hon'ble Jurisdictional High court in the case of RRJ Securitites, 394 ITR 569 (Del.). PCIT vs. Index Securities Pvt. Ltd., reported in (2017) 86 Taxmann.com 84, such seized documents which are not incriminating cannot lead to acquisition of jurisdiction u/s.153C and therefore, addition made on the basis of survey documents cannot be the foundation for making assessment u/s.153C. He further drew our attention to the relevant finding of the Ld. CIT (A) as we have discussed above. 13. We have heard the rival submissions and also perused the relevant finding given in the impugned orders as well as material placed on record. On the facts as discussed above, it is clear that the satisfaction note u/s.153C was based on certain seized documents found during the cou....
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....Private Limited (ii) Realtech Construction Private Limited (iii) Realtech Projects Private Limited (iv) Realtech Maintenance Services Private Ltd. (v) Realtech Sports Academy Private limited (vi) Realtech Facilitators Private limited (vii) Realtech Promoters Private Limited (viii) Realtech Developers Private limited (ix) Realtech Heights Private limited (x) Realtech Skiers Private Limited (xi) Vivid Builders Private Limited (xii) 5.S. Con Build Private Limited (xiii) Dove Infrastructure Private Limited (ix) Pacific Sports Academy Private Limited. During the course of post search proceeding, when the abovementioned documents were confronted to Sh. Pcraminder Singh Kalra, he submitted that these papers/documents don't pertain to him. He explained that due to dispute between the promoters of Realtech Croup, namely, Shri Pankaj Dayal Shri Yogesh Gupta and Shri Rajeev Behl a memorandum of understanding was drawn by the partners for partition of the group. As per the terms of the MoU, each partner has to appoint one arbitrator which should be acceptable to the remaining two promoters of the Group and he was one such arbitrator appointed by the Realtech Group promoters. Besides him, S....
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....rintout, which contained details of payment to be received by M/s. Meter & Instrument Pvt. Ltd. from M/s. Realtech Constructions Pvt. Ltd. Further, Assessing Officer has inferred that as per the details, Shri Yogesh Gupta has paid cash of amount of Rs. 3,25,00,000/- with respect to sale of Delhi Shop and Mr. Ajeet for Rs. 10,65,749/- with respect to sale of Chandigarh shop. As observed by the Ld. CIT (A), the addition has been made on the basis of document found during the course of survey which has no reference to the proceedings u/s.153C, because 153C has been initiated on the basis of document seized during the course of search carried out on 28.07.2011 in the case of Kalra Group. 15. Now it is well settled law by the Hon'ble Jurisdictional High Court as stated above that, to acquire jurisdiction u/s.153C, the seized documents must be incriminating and must relate to the assessment year whose assessment are sought to be reopened. In the case of PCIT vs. Index Securities Pvt. Ltd. (supra), Hon'ble Delhi High Court after referring and relying upon by the principle laid down by the Hon'ble Supreme Court in the case of CIT vs. Singhad Technical Educational Society reported in (2017....
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.... The sequitur of the judgment of Hon'ble Jurisdictional High Court in the case of RRJ Securities Pvt. Ltd. (supra) and Index Securities Pvt. Ltd. (supra) are that, if the documents belonging to the assessee are found from the possession of a person search u/s.132, that does not ipso facto mean that, concluded assessment of the assessee are necessarily to be reopened u/s.153C. If the documents seized have no relevance or bearing on any income of the assessee for the relevant Assessment Year which could not possibly reflect any undisclosed income, then provision of Section 153C cannot be resorted too. Here, in this case, the seized documents as noted above and also noted by the Ld. CIT(A) is not incriminating at all and has no co-relation with any undisclosed income of the assessee and accordingly based on such documents the jurisdiction u/s.153C could not have been initiated. In another decision Hon'ble Delhi High court in the case of PCIT vs. Dream City Buildwell Pvt. Ltd. (supra), the Hon'ble High Court after taking the note of the amendment w.e.f. 1June, 2016 in Section 153C has observed and held as under: 15. It can straightaway be noticed that the crucial change is the substi....
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....i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the AO to rebut that presumption and come to a conclusion or 'satisfaction' that the document in fact belongs to somebody else. There must be some cogent material available with the AO before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of 'satisfaction'. 17. Further, the Hon'ble High Court held that the onus was on the Revenue to show that incriminating material/ document recovered at the time of search belongs to the assessee and it is not enough for the Revenue to show that documents pertained to the assessee or contains information that relates to the assessee. 18. Coming to the arguments relied upon by the Ld. CIT-DR in so far as contention that the Ld. CIT (A) has erroneosly held that satisfaction should be recorded by the Assessing Officer and the Kalra Group and not that of the assessee is accepted in view of the judgment of Hon'ble Delhi High Court in the case of PCIT vs. Sheetal Int....