TaxTMI 
TaxTMI 
2021 (2) TMI 889
X X X X Extracts X X X X
X X X X Extracts X X X X
....7 which is arising out of the penalty order u/s. 271(1)(c) of the Act framed by the Ld. ACIT (Central)-II, Bhopal on 27.09.2016. Further, in appeal nos. ITA 227-228/ Ind/ 2018, in the case of Pradeep Hirani for the A.Y. 2011-12 and 2012-13 is directed against the order of Ld. CIT(A)-3, Bhopal dated 23.02.2018 which is arising out of the penalty order u/s. 271(1)(c) levied by the Ld. ACIT (Central)-II, Bhopal vide his order dated 27.09.2016. 2. Since common issues and almost identical facts are involved and as requested by both the parties it is decided to adjudicate the issues raised in these appeals by framing common order for the sake of convenience and brevity. 3. In respect of the quantum appeal, the assessees have raised following grounds of appeal:- IT(SS)A 111/Ind/ 2016 - Pradeep Sharma,A.Y. 2011-12 1. That on the fats and in the circumstances of the case, the impugned order passed by the ld. AO is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the finding and conclusion of the ld. AO are also contrary to the material, opposed to the fact, equity and law. 2. That on the facts and in the circumstances of the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....neither justify nor sustainable in law. Therefore the built-up area of constructed unit may please by accepted. 9. That the ld. AO has erred in not considering the submission and the decision quoted by the appellant judiciously. He further erred without pointing out any specific, legal and lawful and supporting provisions of the law in disbelieving the claim of the appellant. 10. That the ld AO has erred in making addition on addition on account of undisclosed on money payment at Rs. 20,00,000/- 11. That at any event, the ld. AO was not justified in not accepting the book results, deduction and prepaid taxes as claimed by the appellant. 12. The AO has erred and was not justified in levying penalty interest u/s. 234-B and further erred in initiating penalty proceeding u/s. 271(1)(c). That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing. ITA 679/Ind/ 2016 - Pradeep Sharma,A.Y. 2012-13 1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 4. That on the facts and in the circumstances of the case the addition made by the ld. Lower authorities of Rs. 20,00,00/- on account of undisclosed money is totally arbitrary and illegal. This addition may please by quashed. That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing. ITA 675/Ind/ 2016 - Pradeep Hirani A.Y. 2012-13 1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the findings and conclusion of the ld. AO are also contrary to the material, opposed to the facts, equity and law. 2. That on the facts and in the circumstances of the case the ld. Lower authorities have erred and were not justified in invoking the provision of section 148 and 153C of the IT Act and thereby making the assessment in the hands of the appellant. The aforesaid action on the part of the ld. lower authority are bad and visited in law. 3. That on the facts and in the circumstances of the case the Ld. Lower authority were not justified in not acce....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C AO pg. 2 (Satisfaction and order) CIT(A) Gr. 1-2 - pg. 2. Search : 20.10.2011 to 21.10.2011 at business premises of 'Sagar Group' at 250, Sagar Plaza, Zone-II, M.P. Nagar, Bhopal. Satisfaction u/s. 153C : 11.09.2013. PB 17. Document referred in satisfaction : PB 96-107 : LPS-3, pg. 62-75 of Panchanama dated 22.10.2011. Khasra, Form P-2, Sale deed between sellers Rekha Bai, Lala Ram, Devi Singh through POA- 1. Shri. Pankaj Makhija 2. Pradeep Sharma 3. ShriPradeek Kumar Hirani And ShriSanjeevAgrawal partner of Agrawal Buildcon (as Buyer) For Rs. 1,76,50,000/- for sale of 1.495 hectares of Land at Katara, PatwariHalka No. 43/ 24 Vikar Khand: Fanda Tehsil Huzur, Zila Bhopal Notice u/s. 153C : 11.09.2013. Return : 15.10.2013. (AO pg. 1-2) PB 18-19. Notice u/s. 143(2) : 29.10.2013. PB 20. Business ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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. Section 292C has relevance where a search is conducted on a person. It is submitted that in present case, search was conducted on Sanjeev Agrawal of Agrawal Buildcon. No search was conducted on the assessee. This sale deed (PB 96-107) was found during the search from the possession of Sanjeev Agrawal. Thus, u/s. 292C, the presumption is that the document "belongs" to Sanjeev Agrawal. Subsequent amendment: - It is a trite law, that to understand the position of law existing prior to amendment, the subsequent amendment may be relevant. By the Finance Act, 2015 w.e.f. 01.06.2015, section 153C(1) was amended. This amendment is clearly applicable from 01.06.2015 and not applicable to the present case; but would serve in interpreting the earlier law. The new section 153C(1) (as amended) reads as under: "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, - (a) any mone....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section 148, section 149, section 151 and section 153 of the Income-tax Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing belongs to, or any books of account or documents seized or requisitioned pertain to, or any information contained therein, relates to, any person, other than the person referred to in section 153A of the Income-tax Act, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A. 39.3 Applicability: This amendment has taken effect from the 1st day of June, 2015." Thus, the intention and the date of applicability of the amendment is made clear from the above circular. Meaning of the word "Belongs": - The word "belongs" is not defined in the Income-tax Act, 1961. While interpreting section 153C, the word "belong" has been interpreted by the Hon'ble Courts as under: (i) Pepsico....
X X X X Extracts X X X X
X X X X Extracts X X X X
....st document referred to in the satisfaction note of the AO of the searched person is an application made by the assessee for subscription to the shares of DEPL. Being an application for subscription of equity shares, it is a document filled up by the Assessee and submitted to DEPL. The said application having being found in the possession of the searched person should safely be presumed to belong to the searched person by virtue of Section 132(4A) read with section 292C of the Act. DEPL, there is also presumption that it in fact belongs to DEPL. This is a rebuttable presumption. But rebuttable at the instance of the searched person. 15. The presumption operates in favour of the Department by relieving it of the burden of having to demonstrate that the aforementioned document belongs to the DEPL. But here the Department seeks to be relieved of the burden of demonstrating that the said document in fact does not belong to DEPL but to the assessee. That is not possible on a collective reading of section 132(4A) and section 292C of the Act. These provisions do not dilute the obligation on the Department and in particular the AO of the searched person, under section 153C(1) of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....smissed in SLP (C) Diary No. 27566 of 2018 (v) Pr. CIT vs Index Securities 304 CTR 67 (Del.): 157 DTR 20 (Del.) Search and Seizure - Assessment under s. 153C - Incriminating material belonging to the assessee - Essential jurisdictional requirement for assumption of jurisdiction under s. 153C (as it stood prior to its amendment w.e.f. 1st June 2015) qua the 'other person' (in this case the assessee) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'. (vi) Anil kumar Gopikishan Agrawal (2020) 186 DTR 273 (Guj.) Discussing the provision prior to 2015 and subsequently, an interesting issue arose whether if the search is conducted before 01.06.2015 but the satisfaction is recorded subsequent to 01.06.2015, whether the old law will apply or new. It was held that the old law will apply as the document which is relevant, is that found during the search. Subsequent document found in assessment of person searched or found in post search inquiries would not be relevant. Since the old law will apply, department cannot claim that the document "related to" ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....seizure. 8. On the other hand, Ld. CIT(DR) supported the proceedings u/s. 153C and contended that during the course of search, a sale deed was found wherein the name of the assessee was mentioned as attorney holder for the seller Smt. Rekha Bai, Lala Ram and Devi Singh. The sale deed therefore clearly belonged to the assessee who acted as a seller in the transaction. He further referred to the Assessment order and contended that the during the course of assessment, assessee objected to the proceedings u/s. 153C vide letter dated 30.10.2013. Ld. AO after considering all the facts had already rejected the objections of the assessee vide his order dated 14.11.2013. Further, he relied on the order of Ld. CIT(A) who has also held the proceedings u/s. 153C to be valid. 9. We have considered the facts of the case, material on record, arguments of both the parties and the case laws relied on. The facts of the case are that during the course of search at the premises of "Sagar Group", a sale deed was found marked as LPS-3 page no. 62 to 75. As per the sale deed, 1.495 hectare (3.69 acres) land was transferred by Smt. Rekha Bai, Shri Lalaram and Shri Devi Singh, through Power of Attorn....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A." 11. On bare perusal of the aforesaid sections it is clear that prior to the amendment, jurisdiction u/s. 153C could be exercised if the AO was satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A. It was only w.e.f. 01.06.2015 that section 153C(1) was amended to provide that jurisdiction would be available where the AO is satisfied that (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A. Thus, the scope of section 153C(1) underwent a change w.e.f. 01.06.2015. Prior to that, the jurisdiction u/s. 153C was available only if the assets as well as documents "belongs or belong to" third person. 12. We would like to refer to the judgment o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....teresting issue arose whether if the search is conducted before 01.06.2015 but the satisfaction is recorded subsequent to 01.06.2015, whether the old law will apply or new. It was held that the old law will apply as the document which is relevant, is that found during the search. Subsequent document found in assessment of person searched or found in post search inquiries would not be relevant. Since the old law will apply, department cannot claim that the document "related to" or "pertained to" the assessee; and they have to establish that the document "belongs to" the assessee. In Anil Kumar's case, the hard disk was found which contained information relating to the assessee. It was held that the hard disk was not belonging to the assessee, hence the essential jurisdiction requirement u/s. 153C did not exist. It was only on 1st June 2015 when the amended provisions came into force that the AO of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the assessee. 14. In these given facts and circumstances of the present case the aforesaid judgment of Pep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....11.2010 was entered into between Shri Lala Ram, Shri Devi Singh and Smt. Rekha Bai with Shri Laxmichand Hirani and Pradeep Sharma for sale of this 3.69 acres of land. As per this agreement, the consideration was Rs. 5,03,68,500/- whereby the payment was to be made as under:- 1) Rs. 10,00,000 was paid on date of agreement. 2) Rs. 40,00,000 was to be paid upto 10.12.2010. 3) Rs. 50,00,000 was to be paid uptoRs. 10.04.2011. 4) Rs. 4,03,68,500 was to be paid upto 10.08.2011. Further, if the approval from Town and Country Planning could not be done, the seller shall be liable to refund the amount to the buyer. Seller shall be required to sign documents, as required, so that the approval of Town and Country Planning may be obtained by the buyers. 20. During her statement, Smt. Rekha Bai further stated that the following amount was received and used as under: Particular Devi Singh Rekha Bai Lalaram Total Amount Received (In Rs. Amount received by cheque against the sale of agriculture land situated at Gram Katara deposit in the bank accounts. 54,39,595/- 54,39,595/- 64,20,808/- 1,72,99,998/- Amount received in cash ag....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on oath were recorded of Pradeep Sharma and Pradeep Hirani. Both of them in their statement dated 18.12.2011 accepted that the land was purchased for Rs. 5,03,68,500/- and sold for Rs. 5,30,30,000/- in a short span of time. The assessees' acted as brokers in the transaction and offered income of Rs. 26,31,500/- being Rs. 10,52,600 (each) as having 40% share. Further, they stated that the amount of on-money paid for purchase of land was paid only out of the cash received from M/s. Agrawal Buildcon. 23. Ld. AO concluded that, it is clear that the above land was purchased by Pradeep Sharma, Pradeep Hirani, and Shri Pankaj Makhija from Shri Lala Ram, Shri Devi Singh, and Smt. Rekha Bai as per agreement dated 27.11.2010 for a total consideration of Rs. 5,03,68,500/-. For this purchase of land, they have paid total onmoney to the sellers of Rs. 3,30,68,502/-. Further, the same land was transferred to M/s. Agrawal Buildcon (through Partner Shri Sanjeev Agrawal) on 30.08.2011 for total consideration of Rs. 5,30,30,000/-. Ld. AO therefore assessed on-money, inter-alia of Rs. 2,80,68,502 in A.Y. 2012-13. Ld. AO added Rs. 1,12,27,401/- each in the hands of Pradeep Sharma and Pradeep Hiran....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed to the agreement dated 27.11.2010 and contended that as per the agreement, land was to be diverted and approval of Town and Country Planning was to be obtained. However, the same was not done, and therefore no further payment was made after 27.11.2010. The land was sold on 30.08.2011 as an agricultural land only. He therefore contended that the "on-money payment" was only out of cash received from the sale of land to M/s. Agrawal Buildcon. 27. On the other hand, Ld. Counsel for the revenue heavily relied on the orders of the Ld. Lower authorities. He contended that during the post search inquiries, it was clearly established that the assessee made a payment of on-money for the purchase of land. Further the agreement dated 27.11.2010 was also on record to prove that the land was purchased for Rs. 5,03,68,500/-. The bank statements of the sellers also proved the date wise payments made by assessee. Also, the assessee himself has accepted to have paid on-money. No evidence was brought on record to prove that payment was made out of the money received from M/s. Agrawal Buildcon. He therefore prayed that the addition made by the Ld. AO be confirmed. 28. We have considered....
X X X X Extracts X X X X
X X X X Extracts X X X X
....greement, and an amount of Rs. 8,00,000 was deposited in the bank account of the sellers. Similarly, upto 10.12.2010, Rs. 40,00,000 was to be paid and Rs. 37,00,000 was deposited nearing to that date. Further, upto 10.04.2011 Rs. 50,00,000 was to be paid as per the agreement; and Rs. 29,99,000 was deposited on 31.03.2011 and Rs. 24,70,000 was deposited between 15 to 18 April 2011. Similarly, upto 10.08.2011 Rs. 4,03,00,000 was to be paid; and between Aug. and Sept. 2011, all payments were done and sale deed was also registered in the favour of M/s. Agrawal Buildcon. Considering the entirety of the facts, so far as the payments made, the nexus between amount received from M/s. Agrawal Buildcon and payment to Smt. Rekha Bai and others can be established. Since it is proved that the consideration of Rs. 4,03,00,000/- which included both the accounted and unaccounted consideration has been paid by M/s Agrawal Buildcon for the purchase of land in question from the sellers namely Smt. Rekha Bai and others, revenue authorities are free to carry out necessary exercise/ verification in the case of M/s Agrawal Buildcon with regard to the balance purchase consideration at Rs..4,03,00....
X X X X Extracts X X X X
X X X X Extracts X X X X
....idity of proceedings u/s. 153C of the Income-tax Act, 1961. 35. The issue of validity of assessment proceedings carried out u/s 153C r.w.s 143(3) of the Act already stands adjudicated by us in the case of Pradeep Sharma in IT(SS)A 111/ Ind/ 2016 in the preceding paras wherein we after observing that the facts of the instant case and the issues raised before us are squarely covered by the judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd V/s ACIT (supra) and placing reliance on the same we have held the assessment proceedings u/s 153C r.w.s. 143(3) of the Act as void and bad in law and proceedings were quashed accordingly. Following the same view we hold that the assumption of jurisdiction in the present case of Shri Pradeep Hirani for Assessment Year 2011-12 is void. The assessment is hereby quashed and this ground of the assessee is allowed. Since the assessment itself is quashed, the addition in challenge before us for the assessee for Assessment Year 2011-12 stands deleted. All other grounds for this year become academic. 36. Now we take up ITA 675/ Ind/ 2016 relating to A.Y. 2012-13 in the case of Pradeep Hirani. Ground No. 1 and 2 relat....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2012-13 651/IND/2017 (1) 'On-money' payment (2) Additional Commission income 37,60,000 ----do---- - 40. In respect of penalty for disallowance u/s. 80IB(10) in A.Y. 2006-07 to 2010-11, Ld. Counsel for the appellant submitted that the disallowance u/s. 80IB(10) in the above cases, had been confirmed as the completion certificate was not been issued in time. The appellant had completed the project and applied for completion certificate. However, since the same could not be issued in time, the disallowance u/s. 80IB(10) was confirmed. Ld. Counsel for the assessee relied on the judgment of Hon'ble M.P. High Court in the Pr. CIT vs Surabhi Homes P Ltd. (ITA 69 of 2016) and placed a copy of the same at paper book page 9-10. He further relied on the judgment of CIT vs Reliance Petro products Ltd. 230 CTR 320 (SC) to contend that merely for the reason that the deduction claimed by the assessee is not allowable, penalty cannot be levied u/s. 271(1)(c) as there is a deliberate act of concealment or furnishing of inaccurate particulars. Ld. Counsel for the Department on the other hand, relied on the penalty orders and contended that the penalty may be confirmed. 41.....