TaxTMI 
TaxTMI 
2021 (1) TMI 737
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....called 'the Act') was conducted on the BPTP group and some other companies on 15.11.2007. However, admittedly, no search was conducted on assessee. 2.1.0 For AY 2006-07, the return of income declaring income of Rs. 4,03,150/- was filed on 15.11.2006. The return was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter called 'the Act') and no assessment was completed u/s 143(3) of the Act. During the course of search on BPTP group, certain documents were found and seized. As per these seized documents and on the basis of post search enquiries, the Assessing Officer (AO) held that BPTP and its group companies were purchasing land by making some payment at the time of execution and registration of sale deeds and balance payment was made through post-dated cheques and for the period in between from the date of sale deed to the date of encashment of post-dated cheques, interest in cash at the rate of 1.25% p.m. was being paid in cash to vendors of land outside the books of accounts. 2.1.1 The AO recorded reasons for reopening of the assessment on 29.03.2010 and issued notice u/s 148 of Income Tax Act, 1961. The Assessee filed return of income in response to notice u/s 148....
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....'that seized documents definitely proves that interest is paid on PDC' despite i. that the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s). 3.1 That the finding of the CIT (A) is based on mere surmises and conjectures without proof and corroboration by independent evidence. 3.2 That without prejudice the CIT (A) erred in upholding the addition of interest for the period for which PDC's were extended. 3.3. That without prejudice the CIT (A) erred in not quantifying the addition and instead giving ambiguous directions to compute the interest after six months from the date of sale. 4. That on the facts and circumstances of the case and in law the CIT (A) erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant. 4.1 That without prejudice the CIT ....
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....payment made of Rs. 27,000/-. The appeal of Revenue was dismissed due to low tax effect in ITA no.1407/ Del/2013 vide order dated 25.07.2016. ITA No.1750/Del/2013: 1. That on the facts and circumstances of the case and in law the CIT (A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground that it ought to have been made u/s 153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act. 2. That without prejudice, on the facts and circumstances of the case and in law, the CIT (A) erred in upholding the action of the Assessing Officer in relying upon the material seized in the case of search on M/s BPTP group of cases despite:- i) that such material had no nexus/relevance with the case of the appellant and, ii) that, the CIT (A) himself holding that such material did not belong to the appellant. 3. That on the facts and circumstances of the case and in law the CIT (A) erred in holding to quote, 'that seized documents definitely prove that interest is paid on PDC' despite i. that the seized record on the basis of whic....
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.... order of Delhi Bench 'H', New Delhi was filed in the paper book. The Ld. AR argued that identical reasons were recorded by the same AO in case of Westland Developers Pvt. Ltd. on same date i.e. on 29.03.2010. The reasons recorded in Westland Developers Pvt. Ltd. are reproduced as under: "REASONS IN CASE OF WESTLAND DEVELOPERS - AY- 2006-07 Reasons for reopening the case u/s 147 read with section 148 Assessment in this case was completed vide order u/s 143(3) dated 31.12.2008 at an income of Rs. 8,01,951/- A search and seizure action was conducted on BPTP and its Group companies on 15.11.2007. Certain documents seized in the search action (Details enclosed as per Annexure-A) on the Group and the post-search enquiries made revealed that the group was following a business model as a part of which only part payments of the sale consideration in respect of the land purchased were paid at the time of execution of the sale-deed and the payment of balance sale consideration was invariably made through post dated-cheques (PDCs) and for the intervening period i.e. period between the date of sale-deed and the date of encashment of PDCs interest was paid....
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....- on account of interest paid in cash out of the books of account has, thus, escaped assessment. 2. During the course of search on BPTP and its Group companies a document was found and seized (Pages 1 to 11 of Annexure-A-1 of Party BO-I) from the premises 5th & 6th Floor, DCM Building, Barakharnba Road, New Delhi which revealed that the assessee company had made additional payments 'aggregating to Rs. 9,52,625/- against the purchase of land to various land owner's. The post-search Investigations / enquiries were also made to verify the genuineness of the additional payments actually having been made end summons u/s 131 were issued to several farmers from whom the land was acquired. The enquiries made revealed that the additional payments made were not genuine. Moreover, the additional payments were made in violation of the section 24 of the Stamp Duty Act and as such the same are not admissible as expenditure as per explanation to u/s 37 (I) of the I.T. Act. The income has, thus, been under assessed to the extent of Re.9,52,625/- on account of additional payments against the purchase of land I have, therefore reasons to believe that income chargeable to ta....
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....the seized documents belonged to assessee. 3.6 The Ld. AR submitted that seized documents of 'other assessee' cannot be used or relied upon to make additions in the hands of any other assessee other than the assessee to whom the seized document belong. It was submitted that this issue was decided by the co-ordinate bench in case of one of the group companies of BPTP viz. Westland Developers Pvt. Ltd. in ITA no. 1757/Del/2013 vide order dated 23.11.2015 wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s 147 will not be in consonance with law having been based on mere suppositions, surmises and extrapolation of the material seized. The Ld. AR submitted that in this case, the Tribunal completely discarded the argument of the AO and the Ld. CIT (A) of common management and assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to assessee. It was submitted that this order of the Tribunal equally applies to the present....
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....l payments made by various companies which is duly recorded in the books of these companies. In respect of the reason recorded by the AO that post search investigations/enquiries were made to verify the genuineness of additional payments made, the Ld. AR argued that as no search was carried out on the assessee, question of post search investigation and enquiries in the case of the assessee is not applicable. He further stated that there is no mention of any adverse finding in the case of the assesse of any investigation done by the AO or any other authority. 3.11 In respect of the observations of the AO that additional payments were in violation of Section 24 of the Stamp Duty Act and not admissible as expenditure as per explanation to Section 37(1) of the Income Tax Act, the Ld. AR argued that additional payment is a payment which is made subsequent to execution and registration of sale deed. It is duly recorded in the books of account. The assessee has received reimbursement of additional payments made from Countrywide Promoters Pvt. Ltd. This Additional payment is neither debited to the Profit & Loss a/c nor claimed as expenditure in the computation of Taxable income. ....
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....nd challenge the addition confirmed of Rs. 2,38,563/- on account of so called interest paid on post-dated cheques in cash outside the books of account. It was submitted that during the course of search on BPTP Ltd. and some of its group companies on 15.11.2007, certain documents were found and seized. However, there was no search conducted on assessee. No proceedings were initiated against the assessee under section 153C of Income Tax Act. As per these seized documents and on the basis of post search enquiries, the AO held that BPTP and its group companies were purchasing land by making part payment at the time of execution and registration of sale deed and the balance payment was made through post-dated cheques and for the period in between from the date of sale deed to the date of encashment of post-dated cheques, interest in cash at the rate of 1.25% per month was allegedly paid in cash to vendors of land outside the books of account. The Ld. AR submitted that the AO issued notice u/s 143(2) of the Act and completed the assessment by making addition on account of interest paid on post-dated cheques of Rs. 28,93,733/- in cash outside the books of accounts. It was submitted that w....
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....n the decision of the co-ordinate bench in the case of one of the group companies of BPTP viz. M/s Westland Developers Pvt. Ltd in ITA No.1757/Del/2013 for the AY 2006-07 dated 23.11.2015. It was submitted by the Ld. AR that in the aforesaid case, the AO took action u/s 147 on the basis of material seized u/s 132 in the case of search conducted on BPTP Ltd on 15.11.2007 (and there was no search on that assessee -West Land Developers) which had no nexus with West Land Developers and none of the documents belonged to West Land Developers. It was submitted that the Tribunal disapproved the action of AO in making use of the 'alien material' having no specific nexus with the assessee. 5.7 The Ld. AR argued that the finding of the Ld. CIT (A) of justifying the use of seized documents of other assessee on the contention that these seized documents have shown some trend of unaccounted expenditure in the form of PDC interest is not justifiable and correct in view of fact that each assessee is separate and distinct and addition cannot be made on the basis of seized documents of other assessee simply on a presumption. 5.8 The Ld. AR further submitted that none of the parties from whom l....
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....ubmitted that no opportunity of cross examination of Shri Chottu Ram was allowed to the assessee. Further, as there was no search was carried out in the case of the assessee, question of post search enquiries in the case of the assessee does not arise at all. The Ld. AR further argued that there was no purchase of land by the assessee from Shri Chottu Ram. Accordingly, there is no logic of applying statement of Shri Chottu Ram in the case of the assessee. The Ld. AR further submitted that even the Ld. CIT (A) has not accepted the statement of Shri Chottu Ram as Shri Chottu Ram in his statement had stated that normally PDCs were given for a period of 8 to 10 months while the Ld. CIT (A) has allowed relief only for the period up to six month. It was submitted that no reason or justification has been given by the Ld. CIT (A) for allowing relief for a period up to six months as against period of 8 to 10 months as stated by Shri Chottu Ram and sustaining addition for the period beyond six months. The Ld. AR further argued that in the case of the assessee even if a lower period of 8 months, as stated by Shri Chottu Ram, is considered then, the entire of addition needs to be deleted as th....
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....ssessment order and which belong to assessee. The Ld. Sr. DR has also failed to bring anything on record to establish that any seized documents found during the course of search belonged to assessee. There is a clear finding by the Ld. CIT (A) in his order at Para 4.3.and Para 4.4 that none of the seized documents belong to the assessee which the Ld. Sr. DR was unable to controvert. The Ld. CIT (A) has relied on the judgment of the Hon'ble Supreme court in the case of Pooran Mal vs. CIT (1974) 093 ITR 505 (SC). However, in our considered view this judgment would apply only where in the course of search, documents of any other assessee are found. However, undisputedly, in the present case, no documents belonging to the assessee were found during the course of search. This issue is dealt at length by a co-ordinate Bench of this Tribunal in the case of one of the group companies of the assessee M/s Westland Developers Pvt. Ltd. in ITA no. 1757/Del/2013 vide order dated 23.11.2015 wherein at Para 7 of order, the following was held: "7. Now adverting to the second limb of assessee's stand, i.e., whether the reasons recorded for forming the belief of escapement of income on the ....
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....en u/s. 147 by the AO is, therefore, void ab initio and not sustainable, having been resorted to on vague reasons. 8. Once, as observed above, we have held the proceedings u/s. 147 as void, we need not to enter into the merits of additions challenged by assessee by way of other grounds and also by the Revenue in its appeal. Accordingly, the appeal of the assessee is liable to be allowed and that of Revenue to be dismissed." 7.2 In the case of West Land Developers Pvt. Ltd, there was only one issue of PDC interest on which the assessment proceedings were reopened. However, in this case there is one more issue of payment of additional payment besides the issue of PDC interest which was made the basis for reopening of assessment proceedings. There is nothing in the reasons recorded that the payments of additional payments made by the assesses is claimed by the assesses as the stand of the assessee is that the payments of additional payments made by the assessee are neither debited to the Profit & Loss account nor claimed by the assessee as expenditure. Nothing has been brought on record by the department to demonstrate that additional payments made by the assesse are claim....
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.... Further, the AO has neither called any of the vendors of land nor recorded any statement to arrive at the correct facts. Under such circumstances, question arises as to whether additions can be made in absence of any document/s or any adverse statement/s simply on the basis of suspicion and assumption that the assessee might have also paid interest on post dated cheques given towards purchase of land. This issue is settled by the co-ordinate bench in case of Westland Developers Pvt. Ltd. in ITA no. 1757/Del/2013 vide order dated 23.11.2015 wherein it was held by the Tribunal that in absence of any cogent, definite material which belonged to the assessee or any evidence demonstrating the payment of interest by the assessee on PDCs, reasons recorded for initiation of proceedings u/s 147 were not in consonance with law having been based on mere suppositions, surmises and extrapolation of material seized. The bench completely discarded the argument of AO and Ld. CIT (A) of common management and the assessee belonging to the same group and held that it cannot be equated with existence of incriminating seized material belonging to the assessee. In this case also, there is no seized docu....
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.... in fact transfer of money. Accordingly, considering the facts of the case and judicial pronouncements as discussed above, the Ground nos. 2 & 3 relating to addition confirmed by the Ld. CIT (A) in respect of interest paid on post-dated cheques outside the books is deleted. 9.1 Ground of Appeal no. 5 is related to disallowance u/s 40A(3) of Income Tax Act, 1961 of Rs. 12,31,160/- in respect of cash payment made by the assessee for purchase of land. The Ld. AR has submitted that the assessee has not claimed the amount paid for purchase of land as amount paid is neither debited to the Profit & Loss a/c nor claimed as deduction in the Computation of Taxable income as the assessee has received reimbursement of amount from M/s Countrywide Promoters Pvt. Ltd. He has further stated that the issue is covered by the decision of the co-ordinate bench of the ITAT 'H' bench, New Delhi in case of M/s West Land Developers Pvt. Ltd. in ITA no. 1752/Del/2013 vide order dated 22.08.2014. He has further stated that no appeal was filed by the department against this order before the Hon'ble Delhi High Court. It has further been stated that this issue is decided in favour of various assesses ....