TaxTMI 
TaxTMI 
2025 (10) TMI 283
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....il Group and M/s. Raja Rani Developers on 24/11/2011. During the said search and seizure action, it was interalia revealed that the assessee Shri Bhim Rao Patil and Shri Vinod Kumar purchased a land measuring 3 acres and 9 guntas situated in Survey No.148, Kompally Village, Qutaballapur Mandal, R.R. District vide sale deed dated 10/10/2007 for a consideration of Rs.3.35 crores in the name of M/s. Raja Rani Developers, a partnership firm formed, vide partnership deed dated 26/10/2007. Thus, the land was purchased by these persons stated to be partners of the partnership firm in the name of the said partnership firm prior to the said firm came into existence. Subsequently, the said partnership was dissolved and the land was transferred in favour of the partners. This information relating to the assessee was received by the Assessing Officer from Dy. CIT, Central Circle-1, Aurangabad vide letter 16/2/2015 that, the assessee and the other persons have purchased the land and then the same was transferred in favour of the partners including the assessees as part of the dissolution of the partnership firm. The Assessing Officer accordingly reopened the assessment by issuing notice u/s 148....
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....nce stated to be available with the A.O was not furnished to the assessee thus, denying opportunity of rebuttal. 5. The learned Commissioner of Income Tax (Appeals) erred in rejecting the appellant's contention that assessment should have been made u/s. 153C r.w.s 153A holding that the appellant's name does not figure in the document seized from the premises of BB Patil. 6. The learned Commissioner of Income Tax (Appeals) ought to have accepted explanation offered by the assessee that he made investment of Rs. 20,00,000 in the firm of M/ s. Raja Rani Developers towards his share and the share of his wife Smt.D. Vanaja and ought to have directed deletion of the addition of Rs. 9,53,00,000 made by the Assessing Officer u/s. 69 of the Act. 7. The learned Commissioner of Income Tax (Appeals) having held that each one of the partners have contributed towards purchase of the property, erred in upholding addition in the hands of the assessee to the extent of Rs. 4,76,50,000 constituting 1/3rd share of investment though the assessee held only 10% share as against 90% share held by other partners. 8. The learned Commissioner of Income Tax (Appeals....
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....gh Court. iv) Pr.CIT (Central) vs. Ganesh Plantation Ltd, Hon'ble Gujarat High Court. v) Samanthapudi Lavanya vs. ACIT Central Circle, ITAT Visakhapatnam. 7. The learned AR has also referred to the judgment of the Hon'ble Supreme Court in the case of Income Tax Officer vs. Vikram Sujitkumar Bhatia reported in (2022) 453 ITR 417, dated 6/4/2023 and submitted that, the Hon'ble Supreme Court has held that, the amendment in the provisions of section 153C vide Finance Act, 20215 would be applicable to the searches conducted before 1/6/2015 i.e. the date of amendment. Therefore, once the seized material pertains to or any information contained therein relates to a person other than the searched person, the Assessing Officer shall proceed against such other person as per the provisions of section 153C of the I.T. Act, 1961. The learned AR has thus, contended that, the reopening of the assessment on the basis of seized material and information received by the Assessing Officer is invalid and consequently, the re-assessment order is liable to be quashed. He has further contended that, the assessee was also not supplied the reasons recorded by the Assessing O....
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....e 3 persons out of which 1/3rd was made by Shri BB Patil and remaining was made by the assessee. Even if 1/3rd share of the assessee is taken into account, then the learned CIT (A) has rightly confirmed the addition to the extent of Rs. 4,76,50,000/- as unexplained investment in the land. He has relied upon the impugned order of the learned CIT(A). 9. We have considered the rival submissions as well as relevant material available on record. The assessee has not filed any return of income for the year under consideration and the Assessing Officer has received information from the Dy. CIT, Central Circle-1, Aurangabad revealing the fact that the assessee along with 2 other persons namely Shri S. Vinod Kumar representing Shri BB Patil and Shri Bhimrao Patil, purchased the land, in question, vide sale deed dated 10/10/2007 for a consideration of Rs. 3,35,00,000/- as stated in the sale deed. However, during the search & seizure operation in the case of MB Patil Group and M/s. Raja Rani Developers the partnership firm, it was found that the total consideration for the land, in question, was Rs. 15,45,00,000/ -. Based on the said information, the Assessing Officer reopened the assessme....
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....n the name of M/s. Raja Rani Developers, vide sale deed dated 10/10/2007, prior to the alleged partnership firm came into existence vide partnership deed dated 26/10/2007. Thus, the said transaction of purchase of land was entered into between the seller and the individual buyers and at the most, an Association of the Persons comprising 3 persons which was subsequently converted into the partnership firm. At the time of formation of the partnership firm, several other partners were also admitted and the total number of partners goes to 8. Therefore, at the time of purchase of the land, the investment was made only by the persons who were parties to the transactions and cannot be considered as investment either by the partnership firm or by the partners who were inducted at the time of formation of the partnership firm at a later point of time. This fact was revealed from the information received by the Assessing Officer from the Dy.CIT, Central Circle-1, Aurangabad and constitute a tangible material to form the belief that the income assessable to tax on account of unexplained investment in the purchase of the land by the assessee has escaped assessment. Since it is a case of non-f....
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....e assessee and other persons in the name of non-existing partnership firm and therefore, the said information received by the Assessing Officer from the Dy.CIT, Central Circle-1, Aurangabad leads to the conclusion that the intention of the parties right from the beginning was to conceal the transaction and avoid the tax. Once the satisfaction as required for initiation of proceedings u/s 153C of the I.T. Act, 1961 are not satisfied in the case of the assessee, then the initiation of proceedings u/s 147 and 148 of the I.T. Act, 1961 is the only remedy left with the Assessing Officer. Even otherwise, there is no legal impediment for initiation of proceedings u/s 147 & 148 based on the information received by the Assessing Officer in pursuant to a search & seizure action on a 3rd person. The Hon'ble Supreme Court in the case of Pr. CIT vs. Abhisar Buildwell (P) Ltd reported in (2023) 454 ITR 212 has held in Para 14 as under: "14. In view of the above and for the reasons stated above, it is concluded as under: i) that in case of search under Section 132 or requisition under Section 132A, the AO assumes the jurisdiction for block assessment under section 153A; ....
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....n the assessment order and remand report carefully. The facts of the case are that Search & Seizure action u/s.132 of the I.T.Act was conducted at the business and residential premises of M.B.Patil Group, Aurangabad and Pune on 24-11-2011. During the search operations, certain documents relating to M/s.Raja Rani Developers, Hyderabad were found and seized in which assessee is one of the partners. The seized document contain the details of the transaction in respect of the land purchased by M/s.Raja Rani Developers at Kompally. According to the information received by the Assessing Officer in the case of assessee, M/s.Raja Rani Developers, a partnership firm, had purchased a land worth of Rs. 3.35 crores vide deed dated 10-10-2007 against actual on-money transaction worth of Rs. 15.45 crores. Thereafter, the Assessing Officer has reopened the assessment in the case of the assessee, as assessee is one of the partner in the firm. M/s.Raja Rani Developers, a partnership firm, did not carry out any activity subsequently. The Assessing Officer observed that Sri B.B.Patil, one of the partner, had invested an amount of Rs. 5.92 crores out of the total cost of Rs. 15.45 crores for purchase ....
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....ge No.20 of the order of assessment made u/s.143(3) rws 147 dated 23-3-2016 passed in the case of Sri Vinod Kumar V Sriramwar by the Assessing Officer concerned i.e. ACIT, CC-1, Aurangabad that huge on-money was involved in the purchase of the property at Kompally. During the course of search action u/s.132 of the I.T.Act a statement of Sri B.B.Patil was recorded u/s.131 on 18-1-2012. In reply to Q.No.257 on the land at Kompally, Sri B.B.Patil admitted that the impugned property was purchased in the name of Raja Rani Developers having 3 partners. The reply given by Sri B.B.Patil was extracted by the Assessing Officer concerned in the case of Sri Vinod Kumar V Sriramwar as under: "There are details of investments in property at Kompally, Hyderabad, through Virmd Shnittmwar this property was purchase in the name of Raja Rani Developers, (firm) having three partners 1.Vinod Shriramwor 2.Ram Mohan Rao 3.Myself. As per this page, I have 1/3rd share in Kompally property against whom Rs.4.7 crores has been paid by me which includes payment made in cheque and cash end t am not able to provide details that whether payment has accounted for books or not m respective year at present ....
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.... Description of the document filed as additional evidence. Page No. 1 Copy of the appellate order dated 20-01-2016 passed u/s.250 of I.T Act, '61. by the Commissioner of Income Tax (Appeals)-12, Pune in the appeal against order u/s.144 r.w.s 153C of the I.T Act for Asst.Year 2008-09 in the case of M/s.Raja Rani Developers, Aurangabad. 1-16 2 Copy of the assessment order dated 23-03-2016 passed u/s.143(3) r.w.s 147 of I.T Act, '61. by the Asst.Commissioner of Income Tax, Central Circle-1, Aurangabad for Asst. Year 2008-09 in the case of Shri Vinodkumar V Shriramwar, Nanded. 17-41 Description Date of execution vendor vendee Extent Consideration Doc.No 3 10-10-2007 Sri Balaji Venkateswara Temple G.Ashok Reddy Ac. 3-09 Gts 3,35,00,000 16866/2007 Sale deed 42-49 4 10-10-2007 G.Ashok Reddy M/s.Raja Ran Developers Ac.3-09 Gts 3,35,00,000 16870/2007 Sale deed 50-59 5 14-12-2010 M/s.Raja Rani Developers Bhim Rao Patil. 6266.15 Sq.yds 1,35,00,000 10390/2010 Sale deed 60-66 6 24-09-2009 M/s.Raja Rani De....
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.... reflected in the document No.16870/07, dated 10- 10-2007 in the name of partnership firm M/s.Raja Rani Developers and registration charges of Rs. 31,82,600/-. It is to be further noted that registering of the partnership firm consisting of 8 partners in the name of M/s.Raja Rani Developers subsequently on 26-10-2007 and the investment made if any, by 8 partners thereafter has got no relevance to the impugned transaction already happened on 10-10-2007 by way of registration of purchase document No.16870/07. Therefore, considering all the factual matrix of the case, I direct the Assessing Officer to restrict the addition to Rs. 4,76,50,000/-. Therefore, the Ground No.4 raised by the appellant is partly allowed. 14. The assessee is one of the 3 persons who were party to the sale deed for purchase of the land, in question, and accordingly, the learned CIT (A) restricted the addition in the hand of the assessee to 1/3rd of the total purchase consideration as found during the course of search and seizure action. 15. We have heard the learned AR and the learned DR and carefully perused the relevant records. It is a case of an addition made by the Assessing Officer based on undisclo....
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....ned AR and the learned DR and considered the relevant material available on record. The learned CIT (A) has made the enhancement of assessment in Para 6.1 of the impugned order as under: 6.1 I have considered the submissions of the appellant carefully. It is not disputed that the appellant and his wife contributed Rs. 10,00,000/- each towards their share of 10% in the partnership firm M/s.Raja Rani Developers consisting of 8 partners which has come into existence from 26-10-2007. The appellant's contention that source of the investment of Rs. 10,00,000/- out of Rs. 20,00,000/- in cash during the F.Y.2007-08 relevant to A.Y.2008-09 was met from the loan advanced by Sri Ravi Kumar in the F.Y.2006-07 towards sale of land was not supported by any documentary evidence. Sri K.Ravi Kumar and D.Ram Mohan Rao have jointly purchased the property on 24-9-2009 along with Sri Ramender Reddy for a consideration of' Rs. 1,39,70,000/ -. The confirmation of advance given by Sri Ravi Kumar to D.Ram Mohan Rao in the F.Y.2006-07 relevant to A.Y.2007-08 and similar confirmation of receipt of advance from Sri Ravi Kumar by Sri D.Ram Mohan Rao was not believable and same was not accepted....