TaxTMI 
TaxTMI 
2020 (9) TMI 1247
X X X X Extracts X X X X
X X X X Extracts X X X X
....tement of a third party without bringing any positive material on record to corroborate the addition made. 4. In the facts and in the circumstances of the case, Ld. (IT(A)-I, Indore erred in holding that there are evidences in respect of onmoney paid by the appellant. 5. In the facts and in the circumstances of the case, Ld. CIT(A)-I, Indore erred in not considering the specific request made before Ld. AD for providing an opportunity of cross-examination of Mr. Akshay Doshi on whose statement sole reliance was placed by Ld.AD to make addition of Rs. 16,00,000. 6. In the facts and in the circumstances of the case, Ld. CIT (A)-I, Indore erred in not considering the specific request made before Ld. AD for making available the copies of documents, statements and assessment orders in the case of M/s. Bhoomi Elegant and Mr. Akshay Doshi on the basis of which adverse view is taken. 7. In the facts and in the circumstances of the case, Ld. (IT(A)-I, Indore erred in sustaining the addition of Rs. 16,00,000 made by Ld. AD to the total income of the assessee against the purchase of flat for payment in cash by treating it as unexplained/undisclosed investmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e sustaining of addition. The Ld. counsel for the assessee submitted that the assessing officer was not justified in invoking the provisions of section 147 of the Act. He submitted that the alleged material/information was gathered during the course of search, therefore, provisions of section 153 would be applicable but not of such u/s 147 of the Act. Further, he contended that the material was collected at the data of the assessee. The statement of 3rd party was recorded on the basis of such statements, addition was made by the assessing officer. It is contrary to the settled principle of law. Ld. counsel further reiterated the submission as made in the written submissions. For the sake of clarity written submission are reproduced as under: A. Apropos ground no.1 - In the facts and circumstances of the case, Ld. CIT(A)-1, Indore erred in sustaining the order passed by Ld. AO u/s 143(3) rws 147 of the act which is contrary to the material on record and provisions of the Act, unjust and bad in law. 1. In the instant case, the basis of initiation of proceedings is the information received from the DCIT Central Circle -6(2), Mumbai during the search and survey procee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....C are specific, separate and independent provisions applicable only in the circumstances where the material is seized or requisitioned during the conduct of search u/s 132 of the Act. In the instant case, addition has been made on the basis of material seized in the search conducted in Ekta and Bhoomi Group. Thus, the special provisions of section 153C which are separate and independent provisions are applicable in the instant case and have an overriding effect on the other provisions of the Act. Detailed submission was made before the Ld. AO explaining the aspects of 'general provisions' vis-à-vis 'special provisions' which he failed to consider. [PB 62 - 64] 6. Assessee submits that Ld. AO had no jurisdiction to issue notice under the general provisions of section 148 to re-open the assessment which is solely based on material seized during the search conducted at the third party premises. The matter is governed by the provisions of section 153C as against the general provisions of section 147. 7. Accordingly, the impugned assessment is a void ab ignition, bad in law and illegal, liable to be quashed. 8. Reliance is placed on the decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....saged u/s 153C. 9. Before issuing notice u/s 153C certain conditions are to be satisfied which are as follows - a. Recording of satisfaction by AO of the searched person and by AO of other person b. AO of other person has to apply his mind as to whether the assets or documents have a bearing on the total income of the other person. c. Seized material should be incriminating. In the instant case, the material seized in the search of third party is noted to be in digital form. It is not in the handwriting of the assessee. Further, it is noted from the Q.3 of the statement of Shri Akshay Doshi recorded post search u/s 131 that this seized material is from the laptop seized from the premises of one Smt. Vasumati Shah residing at a place different from that of Shri Akshay Doshi. It is nowhere specified as to what is the relation between Shri Akshay Doshi and Smt. Vasumati Shah. 10. Search was conducted in Ekta and Bhoomi Group on 05.10.2015. Assessee apprehends that having missed the time limit for issuance of notice u/s 153C. Ld. AO resorted to proceedings u/s 148 to take the advantage of time permissible for the same. If so, such a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d. CIT(A) to provide an opportunity for cross-examination but never so provided. Ld. AO issued a summon u/s 131 to which reply was received from M/s. Bhoomi Elegant, Mumbai giving certain details and documents. This reply does not contain any detail relating to alleged cash transaction with the assessee though signatory to this letter of reply is Shri Akshay Doshi himself. This demonstrates contradiction in his averments in the post search statement with this letter as to alleged cash transaction with the assessee. [PB 07] 6. Assessee had purchased a flat from M/s. Bhoomi Elegant, Mumbai for a registered value of Rs. 24,59,000. A registered agreement is on record which was made available by the seller which mentions the correct and real consideration for the flat purchased for Rs. 24,59,000. Market value of the flat mentioned in the sale deed is Rs. 24,12,500. Importantly, Shri Akshay Doshi is a party to the registered sale deed whose assertions therein are contrary to his own statements made u/s 131. [PB 15 and 22] 7. Assessee is a software engineer and salary is the dominant source of his income. Details of his bank accounts with withdrawals for the past three y....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s placed, which is found during the course of search conducted in the case of M/s. Bhoomi Group, Mumbai and which suggests that assessee has agreed to pay Rs. 16,00,000 in cash to the seller of the flat. f. Without prejudice, it is also submitted that assessee being a salaried person, return filed by him does not require and also does not have any provision to make a disclosure of the investment made by him in the house property. Accordingly, there cannot be a case of undisclosed investment in the instant case. Interest on the housing loan availed for making investment in the impugned flat is claimed as a deduction in the return and has been allowed in the assessment. g. Also, addition made u/s 69 by the Ld. AO is a deeming provision. To apply such a deeming provision, there must be, in the first instance, a transaction which is real and actual and which is not of the character of income. In the instant case, alleged cash payment of Rs. 16,00,000 by the assessee to the seller of the flat is purely based on surmises, conjectures and suspicion. Such a transaction cannot be characterized as an income by applying deeming provisions of the Act which are to be construed....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ack of the assessee and relied up on for taking an adverse view against the assessee has no evidentiary value since no opportunity of cross examining the said party has been given to the assessee. 11. Assessee had purchased the flat for a consideration of Rs. 24,59,000. Registry was done at this value and guideline value as recorded in the registry is Rs. 24,12,500 which is less than the actual and real consideration. The sale consideration has been accepted by the Registering Authority and by the seller, amount for which have been paid through banking channel. Assessee had availed housing loan from State Bank of India and has claimed deduction for interest paid on housing loan which has been allowed in the assessment order. [PB 48] No document is found which establishes that cash has been paid by the assessee. Reply received from Shri Akshay Doshi against notice issued u/s 131 by the Ld. AO categorically states that agreement to sell the flat was made at the value stated in the registered document. There is no mention by him in the said reply about any 'on-money' paid by the assessee to him in cash for Rs. 16,00,000. There is no concrete proof / evidence / paper ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....een discharged by merely referring to the statement of a third party in connection with the transaction. Therefore, such statement cannot be made the sole foundation that the assessee had deliberately suppressed his income. Even otherwise, if the explanation of the assessee is not acceptable, the onus shifts to the revenue to prove the same with corroborating material. No specific infirmity had been pinpointed by the revenue in the impugned order, nor any adverse material had been brought on record by the Assessing Officer to substantiate his contention that the assessee had paid any underhand money, except the money which had been shown in the sale deed. c) Addl. CIT v. Lata Mngeshkar [1974] 97 ITR 696 (Bom) - In this case, the Income Tax Officer came across a sort of a ledger maintained by the firm known as Vasu Films of Madras containing certain entries, which had been seized by the Income Tax Authorities from the premises of that firm at Madras and relying on those entries additions were made. On appeal, Tribunal deleted the additions made which was confirmed by the High Court. The Hon'ble High Court observed - "The evidence on which the income tax au....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or the assessee made a statement in the civil court that the total investment in the properly was Rs. 13 crores and odd, it would not be sufficient material to come to the conclusion that the said figure represented the actual investment. There had to be something more than that. The Tribunal's finding that the Revenue had failed to prove that the total investment of the assessee was Rs. 13 crores was not perverse." h) Neena Syal v. ACIT [1999] 70 ITD 62 (Chand.) - Held - "In the instant case, even the seized document on the basis of which the impugned addition of Rs. 4.83 lakhs had been made, had not been found at the residence of the assessee and the same had not been specifically confronted to the assessee before making the impugned addition. Further, in assessment of V addition of Rs. 14.20 lacs found at his residence had been made without discussing the diary seized at his residence. Thus, the addition of Rs. 4.83 lacs was not sustainable in the case of the assessee when the assessing officer had failed to comply with the basis conditions stipulated in section 69." i) Amarjit Singh Bakshi (HUF) [2003] 86 ITD 13 (DELHI) (TM) - Held - [Para 54....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tion 21), such a statement cannot be proved by or on their behalf". 16. Further, relying on the decision of Hon'ble Supreme Court in the case of K P Varghese [1981] 131 ITR 597 (SC), assessee cannot be made to prove the negative or to do an impossible act. It was stated by the Hon'ble Apex Court in Para 13 - "..............................It is a well-settled rule of law that the onus of establishing that the conditions of taxability are fulfilled is always on the revenue and the second condition being as much a condition of taxability as the first, the burden lies on the revenue to show that there is understatement of the consideration and the second condition is fulfilled. Moreover, to throw the burden of showing that there is no under statement of the consideration on the assessee would be to cast an almost impossible burden upon him to establish a negative, namely, that he did not receive any consideration beyond that declared by him." [emphasis supplied] Ld. AO has not brought any positive and cogent material on record to establish that cash of Rs. 16,00,000 has in fact and in reality moved from the hands of the assessee to M/s. Bhoomi Elegant or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....gathered at the back of the assessee in a search proceeding. Secondly, the assessee was not granted cross examine and thirdly, the assessing officer ought to have proceeded u/s 153C of the Act. It is submitted on behalf of the assessee that the assessee had not given any on money to the assessee. It is only the statement made by third party in respect of its accounts for which the assessee could not be made liable. It is contended that the assessing officer has duly recorded the fact that search and survey proceedings was carried out on 05.10.2015 on M/s Ekta & Bhoomi Group. The directors of M/s Bhoomi Group, Mr. Akshay Doshi in his post search statement recorded u/s 131 of the Act dated 28.12.2015 has admitted that the digital data found during the course of search represent the cash transactions executed by M/s. Bhoomi Group which was not been recorded in regular books of accounts. It was further observed by the Assessing Officer that on the basis of seized data, it was noticed that the assessee paid an amount of Rs. 16,00,000/- in cash on 02.01.2010 for the purchase of Flat No.C/604 in project "Bhoomi Elegant" undertaken by M/s Bhoomi Group. He submitted that the issue is square....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of M/s.Today Homes & Infrastructure Pvt. Ltd. pertaining to M/s.P.R. Infrastructure Ltd. and not the assessee. In this regard, we may point out that the contention raised by the learned D.R. is factually incorrect and contrary to the available records of seized documents specifically mentioned in the assessment order dated 30-12- 2008. In view of the above factual discussion, we do not find any merit and substance in the contention of the learned D.R. Therefore, we uphold the order of the CIT(A) and dismiss the ground Nos.1 to 4 of the appeal." 8. The reliance is placed on the decision of Coordinate Bench of this Tribunal in ITANo. 6276/Del/2018 in the case of Saurashtra Color Tones Pvt. Ltd. vs. ITO wherein it is held as under: The above reasons for reopening of the assessment shows that during the course of search incriminating material pertaining to assessee-company were found and seized and that M/s. Blue Bell Finance Ltd., has made investment in assessee-company. The A.O. has specifically referred to the seized documents during the course of search as Annexures B & D and also attached various other documents found during the course of search to the assessment orde....