TaxTMI 
TaxTMI 
2025 (7) TMI 1231
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....Kapoor, who is not even an employee of the assessee and is third party, as per para (xxx), page 93 of the order of CIT(A). 2. That the Ld. CIT(A) has erred in placing reliance on electronic data, which is an inadmissible evidence and is contrary to the CBDT Digital Evidence Investigation Manual, which governs procedure for collecting digital evidence. 3. a). That the Ld. CIT(A) has erred in sustaining the addition of Rs. 2,05,00,000/- on account of certain alleged payment made to Sh. Gurmeet Singh & Others for purchase of property as per para (x) of Para 5.4.3, page 105 of his order. b). That the said addition is not sustainable as the so called alleged evidence have been found from the premises of third party namely Sh. Ajay Prabhakar. c). That the Ld. CIT(A) while sustaining the addition has relied upon on certain presumptions and, thus, the addition have been sustained on surmises and conjectures. 3. That the Ld. CIT(A) has erred in sustaining the addition of Rs. 1,41,50,000/- on account of unexplained expenditure in respect of certain documents seized from the premises of third party, namely Sh. Ravi Kapoor, who has been working as a....
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.... 4. Whether upon facts and circumstances of the case and in law, the Ld.CIT (A)was justified to delete the addition to Rs. 4,54,00,000/- made by the A.O on account of unaccounted sale of SCOs on the basis of logical & rational extrapolation based on evidences collected during the search and post search enquiries? 5. Whether upon facts and circumstances of the case and in law, the Ld.CIT (A)was justified in restricting the addition to Rs. 2,05,00,000/-instead ofRs.71,08,87,130/- made by the A.O on account of unexplained investment madefor the purchase of agriculture lands on the basis of seized documents? 6. Whether upon facts and circumstances of the case and in law, the Ld.CIT (A) has failed to appreciate the facts of the case as well as seized documents of Sh. Gurmeet Singh C/o Ajay Prabhakar which establish that the rate of the agriculture lands is much higher than their registered sale value? 7. The appellant craves leave to add, amend, modify, vary, omit or substitute any of the aforesaid grounds of appeal at any time before or at the time of hearing of appeal." 5. The assessee has raised additional ground of appeal by way of letter, dated ....
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....o be investigated and, as such, by relying upon the judgement in the case of National Tharmal Plant, reported in 229 ITR 383, we admit the same. 8. In view of the above since the legal ground has been raised by the Ld. Counsel, we deem it fit to adjudicate first, the additional ground of appeal. The facts, in brief, are that there was a search and seizure operations conducted on the assessee on 16.11.2021. The assessee is engaged in the business of 'real estate'. The modus operandi of business of the assessee is that the assessee buys land and develops the same by leaving sufficient margin for Roads, Parks and for other infrastructure. He carves out plots and sells the same to different parties. Even, some of the SCOs were built by the assessee and they were sold. The assessee is maintaining the regular books of accounts in respect of above said activity, which have been duly audited. The assessee has been filing the returns on the basis of such audited books of accounts. This business is being carried on by the assessee since financial year 2007-08 and the regular assessments have taken place. 9. The facts leading to the above said issue are that there was a search and seizu....
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....y, it has been highlighted that at pages 24 and 27 of the assessment order, reference has been made to yet another search conducted in the year 2023, and certain material from that search has also been used in the applicant's assessment. 12. The core argument of the AR is that the AO has heavily relied upon material seized from third parties and not from material found in the premises of the applicant. It is contended that such reliance, in the absence of a proper satisfaction note recorded by the AO under section 147, establishing that the material belongs to the appellant, and without obtaining prior approval from the Ld. Pr. CIT, renders the assessment legally untenable. The Ld. Counsel submitted a chart as reproduced below to substantiate his argument of using the material as seized from third parties for making the addition in the hands of the assessee as under:- Name of searched person along with the premises from whom such data was recovered Name of Digital Device Nature of data recovered from Relevant the digital device and alleged as of incriminating material Relevant Page of assessment order Ajay Kumar Prabhakar. VPO ayalikalan, Ludhiana Pen Drive....
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.... the AO has made use of material seized from other/third persons (i.e., not from the assessee) and yet did not comply with the mandatory procedural requirements under the Act. The Ld. AR, further argued that specifically, the AO neither recorded a satisfaction note establishing that such material belonged to the assessee, nor obtained the mandatory prior approval of the Principal Commissioner of Income Tax (PCIT), as required under section 147. Hence, the AR argued that the assessment framed under section 143(3) is without jurisdiction as in the given circumstances, the AO ought to have invoked section 147 following the due process of law. 14. The Ld.AR draws our kind attention towards the provisions of section 147 as amended by Finance Act, 2021 read with explanation 2 of section 148 thereto. The relevant extract of explanation 2 is reproduced below "Explanation 2.-For the purposes of this section, where, - (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 13....
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....ch further clarification is required. Therefore, the return of income has been selected for scrutiny assessment in accordance with the provisions of the Income-tax Act, 1961'. 'Your may submit or cause to submit any evidence on which you may rely in support of your return of income electronically in 'e-Proceedings' facility through your account in e-Filing website (www.incometax.go.in) at your convenience on or before 11.07.2022. It is advised that you should gather all the information, documents, evidences, etc. in respect of various financial transactions, you have entered during the Assessment Year under consideration, which may be relevant for the scrutiny proceedings. Detailed questionnaire(s) or communication may be issued during the course of assessment proceedings. As and when questionnaire(s) or communication is issued, you are required to provide specific point-wise response within the time specified." It was contended by the Ld. Counsel that notice was only limited to the issue with regard to the return of income as it is apparent from the above language of the notice and referred to the proviso of section 148B, which reads as under:- Prior ....
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....3) Instead of Section 148: In the instant case, the Ld. AO has erroneously made the assessment under Section 143(3) of the Act instead of Section 148 of the Act. Such initiation of assessment by issuing a notice under Section 143(2) instead of Section 148 is bad in law and liable to be quashed. Furthermore, the order passed under Section 143(3) without obtaining the mandatory approval under Section 148B of the Act is also bad in law and liable to be quashed, for the following reasons: (ii) Where a specific provision for assessment is available, the general provision of law cannot be applied. i. The provisions of Section 143(2) and 143(3) are general in nature, applicable when an Assessing Officer seeks to verify a return of income to ensure no understatement of income, excessive loss, or underpayment of tax such opinion is formed only on the basis of ITR filed by the assessee. ii. Prior to the amendment by FA 2021, assessments in search cases were mandatorily carried out under Section 153A. By way of amendment in FA 2021, this specific procedure was subsumed into the provisions of Section 148 of the Act, and not Section 143(2), as explicitly clarified ....
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....ase is AY 2022-23. It is further submitted that the case under consideration pertains to AY 2021-22, which is the assessment year immediately prior to the search year. It is important to note that there has always been a consistent parity in the procedure of search assessments, despite amendments over time. This parity is elaborated below for consideration. Particulars Provisions of Block Assessment u/s 158BC Provisions of Search Assessment u/s 153A Provisions of Search assessment u/s 148 Provisions of Search assessment u/s 158BC Applicability In respect of search initiated prior to 31/05/2003 In respect of search initiated after 31/05/2003 and before 01/04/2021 In respect of search initiated after 01/04/2021 till 31/08/2024 In respect of search initiated after 01/09/2024 Filing of Return of Income afresh. 158BC(a) 153A(1)(a) 148 158BC(1)(a) Approval from Superior Authority before passing assessment order. Approval before passing of an order required u/s 158BG of the Act Approval before passing of an order required u/s 153D of the Act Approval before passing of an order required u/s 148B of the Act Approval before passing ....
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....ried out by issuing a notice under section 143(2) of the Income-tax Act, 1961, without adhering to the statutory procedure prescribed under section 147. This amounts to a clear avoidance of the statutory safeguards laid down by the legislature. That when the Assessing Officer (AO) of a person other than the searched person intends to utilize material found during a search conducted on a third party, he is mandatorily required to record satisfaction that such material belongs to or pertains to the assessee. Further, prior approval from the Principal Commissioner of Income Tax (PCIT) is required, as specifically provided under Explanation 2(iv) to section 147. If assessment proceedings are initiated merely under section 143(2), bypassing the essential preconditions and approvals under section 147, it would result in a complete circumvention of the legislative safeguards. Such an approach would defeat the very purpose and intent of the provisions laid down in the Act. The assessment under section 143(3) without complying with the jurisdictional requirements, rendering the assessment bad in law and without authority. The requirement is to first complete the assessment under se....
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....xtended time available on 5th of March 2022 and, thus, it is a case where the notice u/s 143(2) was issued after centralization of case and a sufficient time had passed from the date of search i.e. 16.11.2021 to the date of issue of notice u/s 143(2), dated 17th of June 2022 and the Assessing Officer was well aware of the information and material including, the material found and seized from the third parties namely Sh. Ajay Prabhakar and Sh. Ravi Kapoor and further to that, we have carefully gone through explanation -2 to section 147 as amended by Finance Act 2021 as 'cited supra', which clearly lays down the mandatory procedure to be followed in search assessment and which apparently has not been followed in the present case. 22. The core question before the Bench is whether, in the facts and circumstances of the case, the assessment ought to have been framed under section 143(3) or under section 147 of the Income-tax Act, 1961. From the plain reading of the statutory provisions and in light of Explanation 2 to section 148, it becomes abundantly clear that the legislature has widened the scope of reassessment, particularly through the Finance Act, 2021, which introduced signif....
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....he present case, where the AO has admittedly relied upon material seized during searches conducted on other persons, i.e., Sh. Ravi Kapoor and Sh. Ajay Kumar Prabhakar, it was mandatory for the AO to invoke the provisions of section 147 and not to bypass the statutory framework by proceeding under section 143(3). Granting such unfettered powers to the AO to rely on third-party material without adhering to the safeguards under section 147 would defeat the very purpose of the amendment and open the floodgates to arbitrary assessments. 26. The relevant extract Memorandum explaining the finance bill is reproduced as under:- '(ii) Assessments or reassessments or in re-computation in cases where search is initiated under section 132 or requisition is made under 132A, after 31st March 2021, shall be under the new procedure. (VI) Further, in search, survey or requisition cases initiated or made or conducted, on or after 1st April, 2021, it shall be deemed that the Assessing officer has information which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the three assessment years immediately preceding the assessment year r....
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....ecompilation in certain cass. 148B. No order of assessment or reassessment or recompilation under this Act shall be passed by an Assessing Officer below the rank of Joint Commissioner, in respect of an assessment year to which clause (i) or clause (ii) or clause (iti) or clause (iv) of Explanation 2 to section 148 apply except with the prior approval of the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director. 30. A comparison of the requirement of approval under section 153D and section 148B is drawn, from which it is evident that approval under section 153D was earlier required only in cases where assessments were completed under section 153A/153C and also for search year. However, under the amended provisions, approval under section 148B is now required in all cases where proceedings are initiated pursuant to a search, requisition, or survey, or where asset/material/documents found during such search pertain to or relate to another person. In such cases, the Assessing Officer must take the approval under section 148B from the specified higher authority. Aspect Section 153D Section 148B (with Explanation 2 to Section 148) ....
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.... Even we find while framing the assessment under section 143(3), the Assessing Officer (AO) has, on the last page of the assessment order, referred to an approval obtained from the supervisory authority. However, a bare perusal of this approval shows that it was obtained in reference to F. No. 299/36/2020/1DAR/INV3(3)/577 dated 15.07.2022, i.e., in accordance with the CBDT Circular dated 15th July 2022, and not under the mandatory provisions of section 148B of the Income-tax Act, 1961. At the outset, it is important to note that the approval so obtained does not mention or consider any of the seized materials sourced from the third-party. searches conducted on Sh. Ajay Kumar Prabhakar and Sh. Ravi Kapoor, despite the AO having heavily. relied on those materials in framing the additions. The approval merely states that the appraisal report was considered, without any reference to the original documents seized or to the statutory procedure outlined under section 148B. It is pertinent to refer to the Manual of Office Procedure in February 2003, which lays down a mandatory protocol: that in all search cases, especially where material pertains to persons other than the one searche....
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.... pages 2 to 52 of the order and has relied upon the statement of the independent deed writer, Sh. Ajay Prabhakar and his Associates, Sh. Raj Kumar Sachdeva. On one valuation report found during the course of search from the office of the assessee company of Sh. 'Harbans Singh Sekhon', wherein, the valuation of particular portion of land, in the colony of assessee co. was made at Rs. 30,000/- per sq. yard, copy has been reproduced at pages 6 to 8 of the order of the AO. The statement of 'Sh. Harbans Singh Sekhon' Valuer was recorded, in which, he stated that the market value of the land in the year could have been Rs. 40,000/- to 45,000/- in the month of January 2021 and the valuation was made 10% to 15% lesser than that at prevailing market value to cover the fluctuation element. The reference was also made to one unsigned agreement, as found, from the premises of 'third person' from the office of Sh. Ajay Prabhakar (Deed Writer), which was unexecuted and unsigned. In it the rate of particular plot in the colony had been mentioned at Rs. 55,500/- per sq. yard. Similarly, there was statement of one associates of Sh.Ajay Prabhakar, namely Sh. Raj Kumar Sachdeva, who was also searched....
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.... to do with real estate business of the company and, thus, the socalled evidences from the third party cannot be relied upon. Further, as regards the statement of Sh. Ajay Prabhakar, Sh. Raj Kumar Sachdeva or Sh. Ravi Kapoor or any other person concerned, no reliance could be placed on such statement of the 'third party' without their being any corroborative evidence found from the business premises of assessee. As regards, the valuation report of Sh. Harbans Singh Sekhon is concerned, it was argued by the Ld. Counsel that mere statement cannot be taken as any factual evidence of any unaccounted transaction by the assessee. Neither Sh. Ajay Prabhakar nor Sh. Raj Kumar Sachdeva are the partners, directors or employee of the company. Both of them are independent 'stamp vendors', working since 1996 under the License No.118 issued by the ADC, Ludhiana. Further, Sh. Ajay Kumar Prabhakar retracted from his statement before the AO and has even stated in his statement recorded on 05.12.2022 by the AO that, he is merely a stamp vendor. Beside writing registration deeds in respect of sales executed by the Homeland Buildcon Pvt.Ltd., the same profession he is doing in respect of various other....
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....udgments in the case of CIT Vs. Mantri Share Brokers (P) Ltd., reported in 2018) 90 taxman.com 280 (SC), Sh. Jagbir Singh Nehra in ITA No. 687/Chd./2023 and judgment of M/s Gurdip Cycle Industries Vs DCIT in ITA No. 705/Chd/2023, Maple Destinations and Dream build Pvt. Ltd. Vs DCIT, in ITA No. 1509/Del/2018 and many other judgments. It was further stressed that the plot holders, who have purchased the plots from the assessee company for raising 'super structure' has no link or connection with the assessee at all and such valuations of their plots were not recovered from the assessee's premises. Further, the Assessing Officer has wrongly mentioned such valuations from DVO, which is incorrect. Even, the valuation report of Sh. Harbans Singh Sekhon, it was explained by Sh. Jagjit Singh Grewal director that said report was obtained to support the transaction by the assessee within 'Aayali Kalan Co-operative Agricultural Multiple Society. The valuation was purposely enhanced so as to make the deal lucrative for the 'exchange of land' with the said society and, thus, under such circumstances, no money had passed on. This fact is further supported by the actual transaction of land execute....
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....No.774/Chd/2023, vide order date. 6.3.2025. iii). PCIT (Central) Vs DSG Paperrs (P) Ltd., reported in [2024] 161 taxmann.com 585 (P&H). iv). ITO Vs Dr. R.LO. Narang, reported in [2008] 174taxmann 96 (Chandigarh) v). ACIT Vs Ms. Katrina Rosemary Turcotte, reported in [2017] 87 taxmann.com 116 (Mumbai). vi). ACIT vs Layer Exports (P) Ltd., reported in 88 taxmann.com 620 ( Mum,.Trib.) vii). Prarthana Construction (P) Ltd. Vs DCIT, reported in [2001] 118 taxmann.112 (Ahdl.) viii). Sh. Omar Salay Mohammed Sait Vs CIT, reported in 37 ITR 151 (SC) ix). CIT Vs Maheshwari Synthetics (P) Ltd., reported in [2016] 73 taxmann.com 253 (P&H). 41. Reliance was also placed on the following judgments:- i). Judgement of Chandigarh Bench of the ITAT in the case of DCIT Vs. Sh. Amarjit Singh in ITA No. 774/Chd/2023 & Others, dated 06.03.2025. ii). Judgement of Chandigarh Bench of the ITAT in the case of ITO Vs. Sh. Ashwani Kumar Jain in ITA No.1083/Chd/2024, dated 12.03.2025. 42. Regarding the digital evidence, reliance was placed on the judgment of Madras High Court in the case of Saravana Selvarathnam Retails (P) L....
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....No. 70 of 1998 ( P&H). v). Judgement of ITAT, Jainpur Bench in the case of Tarachand Shanitlal, reported in 28 TTJ 128. 45. Lastly, it was argued that in view of the judgment of Delhi High Court in the case of 'Saksham Commodity', reported in 161 taxman.com 485 and Abhisar Buildwel Pvt. Ld., requirement of incriminating material has to be there. No extrapolation could be made, even if some incriminating material is found and the addition had to be restricted to the incriminating material, if any, found during the course of search. Reliance was placed on the judgment of Punjab & Haryana High Court in the case of V.M. Spinning Mills, reported in [2011] 16 taxman.com 199 as well that any addition has to be restricted on the basis of incriminating evidence. In the present case, nothing was found from the premises of assessee and, as such, no addition was liable to be made. 46. Regarding ground No. 4 as taken by the department is concerned, it was argued that the whole basis of addition made by the AO have been discussed in his order and again the reliance has been placed on the statement of Sh. Raj Kumar Sachdeva. No corroborative evidence or any other incriminating mate....
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....tally with the payments made by 'Homelife Bujildcon Pvt. Ltd.', which have been dealt in the assessment order. Further, certain cash receipts have been found, where there are signatures of Gurmeet Singh as per digital data, but there are no signatures of any of the director of the company or any of the witnesses. Further, it was found that the assessee company had purchased certain land from 'Sh. Gurmit Singh' and not from 'Gurmeet Singh' and on the basis of said evidences, the AO stated that the exact consideration had not been stated in the registration deed in respect of land purchased from Sh. Gurmeet Singh by the assessee. The AO on the basis of rate of purchase of land from Sh. Gurmeet Singh issued a show cause notice, dated 21.7.2023 to which, a detailed reply was filed by the assessee which have been placed at page 737 to page 761 of the paper book on various issues and it was stated that the land has been purchased from Sh. Gurmit Singh Bhangu S/o Sh. Baldev Singh and not from Sh. Gurmeet C/o Sh. Ajay Prabhakar. 49. It was argued that it is third party evidence and assessee does not know, who is Gurmeet Singh. The AO may enquire from Sh. Ajay Prabhakar. It was further a....
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..... Gurmit Singh Bhangu in his statement before the AO, categorically denied having received any cash payment from 'Homelife Buildcon Pvt. Ltd.'. He did not accept any such document, being relied by the AO. He further stated that he does not know any person of 'Homelife Buildcon Pvt. Ltd.', and neither could identity Sh. Ajay Prabhakar. Similarly, it was stated by the Ld. Counsel that there has been denial by the Sh. Jagjit Singh Grewal and Sh. Manu Gupta, directors of the company, having paid any cash in respect of land purchased from one Sh. Gurmit Singh. It was argued that the finding of CIT (A) that since the cheque payment are tallying with the books of accounts of the assessee company, therefore, the cash payments as paid to Sh. Gurmit Singh also belonged to company, is incorrect finding. So called account in the 'digital data' having been found from 'third party' as the assessee has no control over it, neither the signatures of the assessee company are there. The assessee had purchased land from Sh. Gurmit Singh Bhangu. So, addition as sustained by the CIT(A) to the tune of Rs. 2,05,00,000/- as having been paid to Gurmit Singh is not proper. Further, it was argued that even th....
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....ring search, the AO made the addition of Rs. 1,41,50,000/-, for which, neither Ravi Kapoor agreed nor Sh. Manu Gupta agreed and further to that, no corroborative evidence of the same was found from the premises of assessee. On the basis of certain self-assumed abbreviation in his e-mail.id, addition was made by the AO and confirmed by the CIT (A). 54. It was further brought to our notice that this issue has been discussed by the CIT(A) in his order and it has been contended that substantive addition has already been made in the hands of Sh. Ravi Kapoor vide order, dated 31.12.2022 in Asstt. Year 2021-22. The said document has been owned by Sh. Ravi Kapoor and, thus, on one hand, the addition has been made as 'unexplained money' in the hands of Sh. Ravi Kapoor, who has owned the document and merely on the basis of certain presumptions, the same addition has been made in the case of assessee, as well and, thus, it amounts to double addition without any basis. It was further argued that Sh. Ravi Kapoor has been disclosing brokerage income in his returns filed prior to search from real estate and since the data was found from the digital record of Sh. Ravi Kapoor, the presumption u/....
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.... have certain transactions with JBK India. How he recorded the entry or how that company JBK India records such entry is none of the concern of the assessee and, thus, there is no basis of making the said addition. Thus, it was prayed that the appeal of the department be dismissed and the appeal of assessee be allowed on merits. 58. The Ld. CIT (DR) relied upon the order of AO in its entirety and also argued that the market price of the land sold by assessee company was much higher and the registration was being effected at the lower rates and relied upon the evidence found from the digital data of Sh. Ravi Kapoor and the statement of Sh. Ajay Prabhakar and Sh. Raj Kumar Sachdeva. He further stated that the valuation made by different valuers cannot be so high and such valuation was made by expert persons and, as such, that evidence could be used for the purposes of making the addition and extrapolating of the same in respect of the entire sales of plot made during the year under consideration. Ld. DR further argued that the CIT(A) has wrongly deleted the addition on account of extrapolation. He justified the addition of Rs. 5,50 crores in respect of plots sold to SurbhiBhanda a....
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....s by the AO during assessment has no link or connection with the assessee. If such parties have submitted inflated valuation reports to the Financial Institution for raising loan, it cannot form the basis for making the addition on account of sales of plot in the hands of the assessee. Further, none of such reports was recovered from the premises of the assessee, except one report of Sh. Harbans Singh Sekhon, as being discussed in later paragraph. 60. We have also gone through the statement of Sh. Jagjit Singh director of company, wherein, he has explained the specified purpose of exchange of land with 'Aayali Kalan Co-operative Agricultural Multiple Society. The transaction for the purposes of exchange of land cannot be taken as base for the rate of plots. Further, that valuation report which has been reproduced in the order of the AO is of a commercial property as mentioned in the said report and the AO has estimated the value on that basis for residential property. So, there is lot of difference between the rate of residential and commercial proper. Further, we find that the CIT (A) has dealt this issue at page 89 in his order as under:- "vii I have also gone through....
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....& Haryana High Court in the case of DSG Papers (P) Ltd. reported in [2024] 161 taxmann.com 568 and to the Apex Court in the case of CIT Vs Odeon Builders reported in 418 ITR 315, in which, it has been held that no reliance could be placed on the statement recorded at the back of the assessee, without affording any opportunity of cross-examination. Findings of CIT(A) in following paragraphs at page 82 & 83 of his order is reproduced as under: - ix). Similarly, the AO has referred to the statements of two persons namely Sh. Raj Kumar Sachdeva and Sh. Ajay Kumar Prabhakar. In this regard, it is observed that heavy reliance has been placed by the AO on the statement of these two persons without allowing any cross-examination to the assessee. The AR has submitted that such reliance is misplaced as per the binding judgment of the Hon'ble Apex Court in the case of Kishan Chand Chela Ram reported in 125 ITR 713 and Andaman Timber Industries reported in 281 TIR 214 and other judgments as perthe written submissions furnished by the assessee. It has been held in many cases that cross examination is not required in the case of each & every person if the facts are supported by the ....
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....and Smt. Minni Bhanda and for, we are in agreement with the finding of CIT(A) as per the following paragraph at page 83 & 84 of his order:- xi). As regard the one unsigned agreement found from the pen-drive of Sh.Ajay Kumar Prabhakar between Smt. Asha Garg and Smt. Mini Jain in respect of one plot at Sunview Enclave, it is observed that this agreement has no link or connection with the assessee company. Further, it is not signed by either of the parties. The statement of Smt. Asha Garg and Smt. Mini Jain were recorded by the AO during assessment proceedings wherein they had denied having entered into any agreement. Thus, under such circumstances, this cannot form as a basis for estimating the sale value of residential plots by the assessee at Rs. 38,500/- per sq. yards in the colony.2 xii. Further, the assessee as per the company record had sold Plot No. 51 to Smt. Mini Jain on 06.06.2018 and that copy of the sale deed has been furnished at page 508 to 511 of the paper book and thus, this shows that the assessee had no link with the said plot during the year under assessment. This agreement relied upon by the AO does not have evidentiary value in the case of the a....
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....plot by Smt. Parveen Bhanda and Smt. Surbha Bhanda as per para (xxx) of the order of CIT(A), We find that Sh. Ravi Kapoor has owned that data from his mobile as belonging to him during search and later on, no enquiries have been made from purchaser of the plot. Sh. Manu Gupta, director has also denied his signatures on the digital data of third party and nothing has been found from assessee company during search. The original slip has not been produced nor any hand writing expert report is there. The said addition as sustained by the CIT(A) is not justified at all. 65. We also find that it is an accepted fact that no incriminating material was found from the premises of the assessee and the said addition was sustained by the CIT(A) on the basis of 'digital data' found from Sh. Ravi Kapoor, who is not an employee of assessee company. He is a property dealer (broker) and he has been disclosing income from his property dealings in his returns of income in Asstt. Year 2020-21 and in the return filed for Asstt. Year 2021-22. He had disclosed an income of Rs. 44 lacs and which has been accepted by AO and even for Asstt. Year 2022-23, he has disclosed an income of Rs. 60 lacs and all s....
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.... having been drawn by AO, the whole basis of making addition is not justified. 67. As regards, the deletion of addition of Rs. 4,54,00,000/-, the same has been deleted by the CIT(A) as per ground of appeal 4 in department appeal, we have considered the finding of CIT(A) on this issue from page 94 to 97 of his order and the facts are the same in, as much as, on the basis of valuation report submitted by purchaser of SCO to the bankers. The rate of sale of SCO have been adopted for the year under consideration at enhanced value. These facts are identical to our findings with regard to deletion of addition, while dealing with the Ground No. 1 to 3 of the department appeal and ground No. 1 of the assessee's appeal. We have held that no such basis can be adopted on such valuation reports and neither any extrapolation can be made. Thus, this ground of appeal in the department appeal is dismissed as per our finding given above while deciding ground No. 1 to 3 of the department appeal. 68. As regards ground No.5 & 6, which corresponds to the ground No. 3 (a) (b) (c) of the assessee's appeal, we have considered the arguments of both parties and the order of authorities below and f....
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....e on the basis of third party document specially when, no satisfaction has been drawn by the Assessing Officer while framing the assessment of the assessee company, as per case laws as cited above, no addition could be made on the basis of third party evidence, without any corroborated evidence found from the assessee company. 70. Further, there being no satisfaction being framed by the AO on this issue, no cognizance could be taken of such document recovered from third party. Further any conclusion drawn on the basis of discovery of evidence and the statement recorded u/s 132(4) is confined to the person from whose possession such document is found and such document cannot bind the third person as in the present case. It is a fact that no cross examination was allowed of Sh. Ajay Prabhakar, from whose premises such documents were recovered. The assessee is not expected to know why that person has made such entries of third person. The reliance by the assessee on the judgment of Sh. V.C. Shukla case of the Hon'ble Apex Court is quite apt to the above issue. Besides that no cross examination has been allowed of Sh. Ajay Prabhakar and further Sh. Gurmit Singh have also not agreed ....