TaxTMI 
TaxTMI 
2020 (9) TMI 1247
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....l 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 investment u/s 69 of the Act. 8. In the facts and in the circumstances of the case, Ld. (IT(A)-I....
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....ed 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 proceedings carried out on 05.10.2015 on M/s. Ekta & Bhoomi Group. Several incriminating data of M/s Bhoomi Group was found which ....
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....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 decision of Hon'ble Amritsar Bench of ITAT in the case of Arun Kumar Kapoor - [2011] 16 taxmann.com 373 - order pronounced on 21.06.2011 - Para 8 - "On a perusal of the above provisions, it would be ....
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....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 an approach is illegal, unwarranted, void ab initio and ought to be discouraged. 11. In the instant case, above mentioned conditions for issue of notice u/s 153C are not satisfied. Such defects cannot be cured by virtue of provisions of section 292B. Relianc....
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....is 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 years were placed on record before the Ld. AO which very evidently establishes that there was neither any occasion nor any source available with the assessee to pay such a huge amount of Rs. 16,00,000 in cash. 8. In the reasons recorded for issue of notice u/s 148, Ld. AO states - "During the course of search proceedings, it was establish....
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....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 in the strictest sense. 9. There is no occasion to issue notice u/s 148 which in fact tantamount to making fishing and roving enquires for what has been found in the search proceedings of some other group. It is a settled law that provisions of section 148 rws 147 are not meant for making enquires. There has to be a rational and intelligible nexus between the reasons which exists and the belief whi....
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.... 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 which establishes payment of Rs. 16,00,000 by in cash the assessee. [PB 07] 12. It is submitted that the addition of Rs. 16,00,000 in the case of the assessee is based on some data found in digital form in excel sheets in laptop seized from the premises of Smt. Vasumati Shah (Vasumati V Mody) which contained data related to transactions executed by Bhoomi Group in cash and not recorded in regular books of accounts. [PB 51, Answer to Question No. 3] 13. It is submitted that....
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....o 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 authorities relied were statements by two persons that they had paid money in "black" to the assessee and entries in books belonging to them regarding alleged payments to the assessee. The Tribunal examined the statements made by the two persons and found that the evidence tendered by them suffered from serious infirmities. It held that mere entries in the accounts regarding payments to the assessee was not sufficient as there was no guarantee that the entries were genuine. The Tribunal, therefore, held that there was no proof that the amounts in ....
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....d 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] ".....................................The entire addition rested on the seized document and no other material had been adverted to which would conclusively show that a huge amount of the magnitude mentioned in the seized document proceeded from one side to the other. In his own tax assessment, 'N' at one stage took the stand that the seized document was only a 'projection' or 'estimate' and nothing else." 14. Accordingly, it is submitted that the inference drawn by Ld. AO is purely based on conjectures, surmises and suspicion and does not have sanction of law as held by Hon'ble Supreme Court in several cases as under - a.....
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....w 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 its associates. 17. Thus, in spite of specific request made to Ld. AO to give an opportunity to cross examine Shri Akshay Doshi by the assessee and also to make available the documents, returns and computation of income and assessment orders to verify the treatment of Rs. 16,00,000, adverse inference has been drawn ignoring the principals of natural justice and section 34 of evidence Act. Accordingly, addition made based on some data found in digital form and assertion made by the person in his search proceedings is wholly unjustified, improper, bad in law. 18. Ld. CIT(A) also erred in not considering the submission of assessee and proceeded to sustain the addition made by Ld. AO u/s 69 of Rs. 16,00,000 as income f....
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....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 squarely covered by the various decisions of the Coordinate Benches as well as division bench of this Tribunal and the judgment of the Hon'ble jurisdictional High Court. Reliance is placed on the decision of division Bench of the Tribunal rendered in the case of ITO vs. Arun Kumar Kapoor, ITANo.147/ASR/2010 reported (2011) 16 taxmann.com 373 (Amritsar ). The Hon'ble Divisions Bench of this Tribunal in para 8 of its order held as under: "On a perusal of the above provisions, it would be clear that the provisions of section 153C of the Act were applicable, which supersedes the applicability of provisions of sections 147 and 148 of the Act. As we have already noted hereinabove that the documents were seized during the search under section 132 of the....
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....opening 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 order. The Ld. D.R. also admitted that the aforesaid Annexures were found during the course of search in the case of Jain Group. Therefore, when incriminating documents were found during the course of search, the same have been used in the case of the assessee-company. The proper course the A.O. should have adopted is to proceed against the assessee-company under section 153C of the I.T. Act instead of recording reasons for reopening of the assessment under section 147/148 of the I.T. Act. The issues involved in the additional grounds are, therefore, covered by the Orders of the Division Bench of the ITAT, Delhi A-Bench in the cases of Shri Meer Hassan & Shri Ali Hassan, Dehradun (supra) and in the case of Shri Adarsh Agarwal, Delhi vs., ITO, Ward- 61(1), New Delhi (sup....