TaxTMI 
TaxTMI 
2024 (10) TMI 468
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....f facts. 3. First of all, relevant grounds raised by the assessee for assessment year 2017-18 are reproduced as under: 1. The Ld. CIT(A) erred in confirming the action of the Ld. AO in making addition of Rs. 5,25,04,953/-as business income. 2. The Ld. CIT(A) erred in upholding the action of Ld.AO in estimating the on-money received for the year under reference using extrapolation technique. 3. The Ld. CIT(A) erred in upholding the action of Ld.AO in assuming the profit element in the on-money received for new construction at 36% instead the reasonable profit that is earned in appellants line of business being in the range of 10% to 12%. Similarly, the learned A.O. erred in assuming profit element at 16% for redevelopment projects instead at 8% to 10% being the reasonable profit. Without prejudice to above, the learned A.O. erred in taxing the profit element of the gross receipts in 4. the year under reference for projects where no sales are booked during the year since no income was accrued following percentage completion method. 5. The Ld. CIT(A) erred in confirming the action of the Ld. AO in making disallowing of Rs. 1,08,....
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....nd seized in the course of search u/s. 132 of the Act. The use of documents collected during survey u/s. 133A for the assessment u/s. 153C is not permissible under law. 5. The Ld. CIT(A) erred in upholding the action of Ld. AO in estimating the on-money received for the year under reference using extrapolation technique. 6. The Ld. CIT(A) erred in upholding the action of Ld. AO in assuming the profit element in the on-money received for new construction at 36% instead the reasonable profit that is earned in appellants line of business being in the range of 10% to 12%. Similarly, the learned A.O. erred in assuming profit element at 16% for redevelopment projects instead at 8% to 10% being the reasonable profit. 7. Without prejudice to above, the learned A.O. erred in taxing the profit element of the gross receipts in the year under reference for projects where no sales are booked during the year since no income was accrued following percentage completion method. 8. The Ld. AO has erred in initiating penalty proceedings u/s 274 r.w.s 271(1)(c) of the Act vide letter dated 30.12.2018. The Appellant prays that the penalty proceedings u/s 274 r.w.s 27....
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....centralized with the Assistant Commissioner of Income-tax, Central Circle 4(4), Mumbai (i.e. the Assessing Officer) and thereafter the Assessing Officer recorded satisfaction for invoking section 153C of the Act on 16.07.2018. This fact has been noted by the Assessing Officer in the assessment order for assessment year 2013-14. After recording satisfaction, the Assessing Officer issued notice u/s 153C of the Act for assessment years 2010-11 to 2016-17 and issued notice u/s 143(2) of the Act for assessment year 2017-18. The Assessing Officer in the assessment proceedings u/s 153C of the Act for assessment year 2013-14 to 2016-17 and assessment proceeding u/s 143(3) of the Act for assessment year 2017-18, has referred to material impounded during the course of survey at the premises of the assessee, interalia, Annexure A-1 and A-12 containing entries related to cash received in financial year 2015-16 and 2016-17 respectively. The assessee submitted entity-wise break-up of receipts and expenses in respect of various entities of the group. The assessee also provided details of nature of receipt. The Assessing Officer has tabulated year-wise receipt in the nature of the income on accoun....
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.... received from 'redevelopment projects' be assessed in the case of the assessee. The assessee however without prejudice, submitted that his profit in both new as well as redevelopment projects was not more than 8% to 10% and therefore, profit if any should be restricted to 8% of the on-money. The Ld. Assessing Officer however rejected the contention of the assessee and made addition estimating profit at the rate of 36% on new projects and 16% on redevelopment projects in respect of AY 2013-14 to AY 2017-18. 4.5 The detail of the profit of Rs. 5,25,04,953/- computed on the 'on-money' of Rs. 23,57,56,179/-, which was claimed by the AO to be received for assessment year 2017-18, is reproduced as under: "9.20 In view of discussion made above and facts & circumstances of the case, net on-money receipts of the assessee for A.Y. 2017-18 are worked out at Rs. 23,57,56,179/-. Considering the nature of business of the assessee, 36% of the extrapolated amount of on-money for the projects done with land and 16% of the extrapolated amount for the redeveloped projects is determined to be income of the assessee. The net extrapolated amount for the normal real estate projects is Rs. 7,....
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....h it was generated. The relevant finding of the Ld. CIT(A) is reproduced as under: "Seen in the above context, it is clear that the unaccounted cash which was carried by the Director of the appellant and admitted to have been undisclosed income is "incriminating" in nature and definitely gives rise to jurisdiction of the AO for invoking S. 153C of the Act. Cash is fungible in nature and is generated over a period of time although it may be found in the possession of a person at a particular point of time. But that doesn't mean that the cash was generated only on that day or only in that year. It is apparent enough that the cash has been generated on a regular basis giving rise to a valid jurisdiction u/s 153C for the years in which it was generated. Hence, the appellant's contention that the AO does not have S. 153C jurisdiction stands REJECTED. The Additional Ground No. 1 & 2 are DISMISSED." 6. Before us, the Ld. counsel for the assessee has challenged the assessment proceedings completed u/s 143(2) of the Act in assessment year 2017-18 and assessment proceedings u/s 153C of the Act completed for assessment years 2013-14 to assessment year 2016-17. According to....
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....of the Act if any cash, , bullion, jewellery or valuable article or thing belonging to other person has been found in the course of the searched person or any books of account or documents pertaining to other person is seized in the course of the searched person or any information contained thereon related to other person, then, firstly, the Assessing Officer of the searched person shall record a satisfaction that said cash, bullion, jewellary or valuable article or things belongs to other person or books of account or documents pertains to other person or any information contained therein relates to other person and he will hand over the said cash, bullion, jewellary or valuable article or documents to the Assessing Officer of the other person. Thereafter, secondly, the Assessing Officer of the other person, will record satisfaction that cash, bullion, jewellary. valuable article or things or book of account or documents etc handed over to him , have a bearing on the determination of total income of other person for six assessment yeas immediately preceding the assessment year in which search is conducted , then he will commence assessment proceedings by way of issue of notice u/s....
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.... 16. In these appeals, qua the aforesaid four Assessment Years, the assessment is quashed by the ITAT (which order is upheld by the High Court) on the sole ground that notice under Section 153C of the Act was legally unsustainable. The events recorded above further disclose that the issue pertaining to validity of notice under Section 153C of the Act was raised for the first time before the Tribunal and the Tribunal permitted the assessee to raise this additional ground and while dealing with the same on merits, accepted the contention of the assessee. 17. First objection of the learned Solicitor General was that it was improper on the part of the ITAT to allow this ground to be raised, when the assessee had not objected to the jurisdiction under Section 153C of the Act before the AO. Therefore, in the first instance, it needs to be determined as to whether ITAT was right in permitting the assessee to raise this ground for the first time before it, as an additional ground. 18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In thi....
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....ourt in the said case went in favour of the Revenue when it was found on facts that the documents seized, in fact, pertain to third party, i.e. the assessee, and, therefore, the said condition precedent for taking action under Section 153C of the Act had been satisfied. 21. Likewise, the Delhi High Court also decided the case on altogether different facts which will have no bearing once the matter is examined in the aforesaid hue on the facts of this case. The Bombay High Court has rightly distinguished the said judgment as not applicable giving the following reasons: "8. Reliance on the judgment of the Division Bench of the High Court of Delhi reported in case of SSP Aviation Ltd. v. Deputy Commissioner of Income Tax [2012] 346 ITR 177 is misplaced. There, search was carried out in the case of "P" group of companies. It was found that the assessee before the Hon'ble Delhi High Court had acquired certain development rights from "P" group of companies. Based thereon, the satisfaction was recorded by the Assessing Officer and he issued notice in terms of Section 153C. Thereupon the proceedings were initiated under section 153A and the assessee was directed to fi....
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....eceipts, cash expenses, transactions of cash taken for safe custody by the key persons of the family and similar transactions. It can be simply described as "cash book" related to the various projects done by the different concerns of the group. 9.1 The nature of the transactions recorded in these materials was explained by the key person i.e. Ishwardev D. Shukla, Director of the assessee vide his statement on oath u/s. 131 of the Act on 17.12.2016, The relevant portion of the statement is reproduced hereunder: Q16. I am showing you Brown Colour Jagruti Diary having written pages 1 to 350 marked as Annexure A-I. Please confirm that the same is impounded from this premise te. I^st Floor, Sheetal Kripa Butlding, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. A. I have gone through Brown Colour Jagruti Diary having written pages 1 to 350 marked as Annexure A-I. I confirm that Annexure A-I is impounded from this premise i.e. 1st Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai 400063. Q17. Kindly explain the contents of the diary (Brown Colour) marked as A....
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....wat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. 23. Kindly explain the contents of the Green and White Colour Diary marked as Annexure A-3? A. Sir. I do not know the exact contents of this diary. I will provide the complete details in due course. Q24. I am showing you Pink Colour Diary having written pages 1 to 67 marked as Aye Pire A4. Please confirm that the same is impounded this premise i.e. Sheetal Kripa Building, Beside Stras precisep. Bank, Naikwadt,Aarey Road, Goregaon (E), Mumbai400063. A. have gone through Pink Colour Diary having written pages 1 to 6" marked as Annexure A-4. I confirm that Annexure A-4 is impounded from this premise i.e. 1^st Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. Q25. Kindly explain the contents of the Pink Colour Diary marked as AnnexureA-4? A. Sir, I do not know the exact contents of this diary. I will provide the complete details in due course. Q26. I am showing you Green Colour Jagruti Diary having written pages 1 to 36 marked as Annexure A-5. Please confirm that the same is impounded from this pr....
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....t Floor, Sheetal Kripa Building, gone through Yellow Colour Receipt Book having written Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. A. I have pages 1 to 56 marked as Annexure A-8. I confirm that Annexure A-8 is impounded from this premise i.e. 1st Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. Q33. Kindly explain the contents of the Yellow Colour Receipt Book marked as Annexure A-8? A. Sir, the entries are related to amount received in cheque and cash from the parties. I will provide the complete details in due course. Q34. I am showing you Pink Colour Receipt Book having written pages 1 to 54 marked as Annexure A-9. Please confirm that the same is impounded from this premise i.e. Ist Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Goregaon (E), Mumbai-400063. A. I have gone through Pink Colour Receipt Book having written pages 1 to 54 marked as Annexure A-9. I confirm that Annexure A-9 is impounded from this premise i.e. 1st Floor, Sheetal Kripa Building, Beside Saraswat Co.Op. Bank, Naikwadi, Aarey Road, Gorega....
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....udes brokerage file to be paid to brokers or broker firm for the flats or property sold by acting as agent on our behalf. Thus, it was specifically submitted by Shri Ishwardev D. Shukla that cash entries made in the impounded materials are not reflected in regular books of account of any of the group concerns and these entries / receipts are unaccounted in nature." 8.4 The assessee contended that in absence of any incriminating material seized from the premises of Shri Ishwardev Shukla qua, the assessment year under consideration no addition could have been made in the hands of the assessee under u/s 153C of the Act. The ld CIT(A) has held that cash seized was incriminating in nature , which was generated over a period, hence, condition of availability of incriminating material stands satisfied for AY 2013-14 to AY 2016-17. We don't agree with this proposition of ld CIT(A) for the reason that AO in his order has no where determined the cash found as unexplained. It is sh Inshvardev Shukla, who stated during search action dated 18/12/2016 that said cash was undisclosed income of assessee company for AY 2017-18 but there is no finding by the AO on this issue. The AO has nowhere me....
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....t would not only be confined to question of abatement, but also with regard to the date from which the six years period was to be reckoned in respect of which the returns were to be filed by the third party and thus, period for which other person i.e. the assesses were required to file returns, would reference only from the date when material was forwarded to the jurisdictional Assessing Officer. Thus, the initial year would be assessed u/s 143(3) of the Act and preceding six assessment years are assessable u/s 153C read with section 153A of the Act. According to the assessee, the case of the assessee was centralized with the Assessing Officer only on 12/07/2018 and satisfaction has been recorded by the AO in the capacity of AO of searched person i.e. sh Ishwardev Shukla as well as AO of other person i.e. the assessee, only on 16/07/2018 , it is presumed that only after this date seized cash could be transferred to the AO of the assessee, therefore, the initial assessment year would be assessment year 2019-20 and the preceding six assessment years would be from assessment year 2018-19 to assessment year 2013-14. The ld Counsel submitted that the Assessing Officer was required to co....
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.... assessment year or years : XXX 153C. Assessment of income of any other person. (1) Not with standing 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 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, 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 the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately pr....
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....of the searched person, the date with reference to which the proceedings for assessment or reassessment of any assessment year within the period of the six assessment years shall abate, is the date of initiation of the search under Section 132 or the requisition under Section 132A. For instance, in the present case, with reference to the Puri Group of Companies, such date will be 5.1.2009. However, in the case of the other person, which in the present case is the petitioner herein, such date will be the date of receiving the books of account or documents or assets seized or requisition by the Assessing Officer having jurisdiction over such other person. In the case of the other person, the question of pendency and abatement of the proceedings of assessment or reassessment to the six assessment years will be examined with reference to such date." 9. It is evident on a plain interpretation of Section 153C(1) that the Parliamentary intent to enact the proviso was to cater not merely to the question of abatement but also with regard to the date from which the six year period was to be reckoned, in respect of which the returns were to be filed by the third party (whose premises....
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....024. ============= Document 1 Scan-1 (Page No. 56, Annexure-All THURSDAY 11 JUNE 2015 સંત ૧૦૦૧-૦૦ à«« ના à«« ૨૦૧ 5.25.000 24.00, 900 डा $9,000 Jatay d9093 RST Canton formatarra [1.00.000 राजेश पॠबैजेनà¥à¤¸ 4.000 22,25,GGO Scan-2 (Page No. 102, Annexure-A1) (1-2) MONDAY 27 JULY 2015 સંવત ૨૦à«à«§ નિ. અષાઠસà«àª¦ ૧૧ સોમવાર તા. ૨૪.૦à«.૨૦૧૬ were forth yOUT मि. सम दि. à¤à¤¾à¤µ ઉંચી ય -- 47,000 5.00.000 તો 17.1 મારી તા. ૧૧ રાત ૧૪ૠજરી મન વૃતà«àª°àª¿àª® વિષે જાયની àªàª• જ ચગાય elotest 2009 $ COOD 5....