TaxTMI 
TaxTMI 
2026 (1) TMI 1312
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts of the case are that assessee had filed original return of income for A.Y 2020-21 on 28.12.2020 declaring total income of Rs. 51,66,100/-. A search and seizure action u/s. 132 of the Act was carried out in the case of "Land Broker & Financier Group" on 15.10.2019. In the case of search conducted at the premises of one of Shri Suresh R Thakkar, certain incriminating materials/digital data were found and seized which pertained to the assessee. Accordingly, the Assessing Officer of the search person had recorded his satisfaction and forwarded the incriminating material to the Assessing Officer of the assessee, who had recorded his independent satisfaction and initiated proceedings u/s. 153C of the Act in the case of the assessee for A.Ys. 2014-15 to AY 2020-21. 3. In the course of assessment proceeding, enquiries were conducted in respect of seized materials pertaining to the assessee. Being satisfied with the explanation of the assessee, the assessment order for AY 2020- 21 was completed u/s. 143(3) r.w.s 153C of the Act on 19.09.2022 at total income of Rs. 51,66,100/-, as per return of income. Subsequently, the case record was called for and examined by the Ld. PCIT, who hel....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce, the proceeding was being void and bad in law deserves to be quashed. 6. In law and in the facts and circumstances of the appellant's case, the Id. PCIT has erred in setting aside concluded proceeding on factually wrong observation by resulting into miscarriage of justice and violation of the fundamental rights of the taxpayer (Appellant) and thus the entire appeal proceeding is void and bad in law. 7. In law and in the facts and circumstances of the appellant's case, the revision order passed by Id. PCIT is perverse and has reduced the procedure to an empty formality, which has to be deprecated. Therefore, the order passed by PCIT liable to be quashed. 8. In law and in the facts and circumstances of the appellant's case, the Id. PCIT has failed to appreciate that the alleged transaction relates Sellers including Appellant and Sun Shilp Construction for non-agriculture land and that the Appellant has not entered into any transaction with Sun Group for the referred land. Therefore, the observation of the ld. PCIT is void and deserves to be quashed. 9. In law and in the facts and circumstances of the appellant's case, the Id. PCI....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d pertaining to the assessee. He submitted that in the course of assessment proceeding, the Assessing Officer had made due enquiries in this regard and the assessee had furnished the detailed explanation in respect of the seized materials. Being satisfied with the explanation of the assessee, the Assessing Officer did not make any addition for the reason that no addition was called for at all. According to the Ld. AR, the Assessing Officer had made all the relevant enquiries and had taken a conscious decision that no disallowance was called for in respect of the seized documents. The Ld. Counsel contended that when the matter was examined in-depth by the AO, the Ld. PCIT was not correct in initiating proceeding under Section 263 of the Act on the ground that the matter was not examined by the AO. He further submitted that considering the facts of the case, it was not correct for the Ld. PCIT to superimpose his view that no enquiry was made in the case and that the order was passed without making any addition. The Ld. AR has taken us through the queries raised by the Assessing Officer vide notices u/s. 142(1) of the Act and the reply filed by the assessee thereto, a copy of which ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ansaction and referred in the order of the Ld. PCIT are as under: i. Page no. 105 of volume-1: mutual agreement for land transactions bearing survey No. 430/3/1, 430/2, 430/4 & 429 situated at Makarba, Vejalpur sold at the rate of 48168 per Sq. yard for a total consideration of Rs. 61,43,34,672/-. ii. Page 576 and 579 of volume -1 : Regarding sale of plot of land at the rate of 48168 per Sq. yard for total consideration of 61.43 crore iii. Page No.271 of volume No.1 : Sale of land for document price of Rs. 18.11 crores. Shri Suresh R Thakkar had confirmed that these seized documents were in respect of sale of land by Rajeshbhai Brahmbhatt and Arunaben K Zhaveri to one Shri N. K. Patel of Sun Builder Group. He had also stated that cash and cheque payments were involved in this transaction and that the deal was facilitated through him. 9. The contention of the Ld. PCIT is that in the course of assessment, no proper inquiry was conducted by the Assessing Officer in respect of transactions recorded in the seized documents. The assessee has brought on record a copy of notices u/s. 142(1) of the Act dated 15.07.2022 and 24.08.2022 issued by the AO. It is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....0,000) was agreed to be settled in cash which takes the character of 'on-money. 20.1.3 Further, it can be noted from the seized document bearing page no.579 that at the top right expression 12754 48168 has been written. Here it is mentioned that the expression '12754 represent the aggregate area of land survey no. 430/3/1, 430/2, 430/4 & 429 situated at Makarba which is also found written in the seized MOU reproduced above. Likewise, the figure '48168 written in the seized document represents the rate at which the aforesaid land was agreed to sale which is also getting matched with the seized MOU reproduced above. Thus, it is concluded that all these seized documents i.e. page no.105, 576 & 579 are interconnected and contains the financial transactions in respect of land survey no. 430/3/1, 430/2, 430/4 & 429 situated at Makarta. 20.1.4 On further perusal of the seized document bearing page no. 579, it can be noted from the top that '61.44' has been noted which actually represents the aggregate agreed sale consideration ie. Rs. 61,43,34,672/-. Thus, it becomes clear that the figures recorded/noted in the seized document bearing page no. 579 run....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tuated at Makarba stands at 50%, you are therefore requested to show cause as to why a sum of Rs. 25,67,50,000/- being 50% of forfeited sum should not be added to your total income on substantive basis and the remaining 50% being Rs. 25,67,50,000/- on protective basis. 10. It is thus seen that the AO had made a detailed enquiry in respect of the seized documents pertaining to the assessee in the course of assessment proceeding. In response, the assessee vide letter dated 05.09.2022 had made the following submissions to the queries raised by the Assessing Officer: I am in receipt of Your Honour's above stated notice. In the matter I reply as follows by filing my reply on e-filing portal. 1. Details of the nature of business/profession carried on by you in detail. Please furnish addresses of all your premises from where the business/profession activities carried out. (Para 1 of notice 142(1) dt. 24/08/2022) I earned profit being a partner in firm viz. Priyal Realty and Vrundavan Garden LLP which is exempt u/s 10(2A) of the Act. Apart from above income from business and profession I have earned income from house properties given on rent and i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Vrundavan Garden LLP and ledger account from my books are enclosed at Para 5 below. 4. Details of all the bank accounts operated during the relevant assessment years along with copies thereof(AYwise). Please also furnish a copy of Bank Reconciliation with reference to the balance as on the last date of the relevant financial year for all your bank accounts. (Para 4 of notice 142(1) dt. 24/08/2022) In respect of all the bank accounts operated during the year, following details are enclosed Page 86 to 114]:- a) Bank Books: b) Bank Statements c) Bank Reconciliation Statements 5. Details of other entities in which you have substantial financial interest along with nature and quantum of such interest. (Para 5 of notice 142(1) dt. 24/08/2022) There is no substantial financial interest in any entities. Please note that my share of profit in Priyal Realty and Vrundavan Garden LLP was 1.5% and 7% respectively during the year. Copy of ledger account from my books of account and from the books of Priyal Realty and Vrundavan Garden LLP are enclosed. [Page 115 to 120] 6 Details of copy of yearwise cashbook and cash flow s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e) Copy of Bank Statement of all the lenders It will be found from the attached Statement of Income that no expense has been claimed by me against any of the Income reflected in my return of Income for the year under consideration. Your Honour may note that for the year under reference, I have obtained Loans from lender mentioned in the below table. I must be noted that amount received from the lenders were utilised as per the table below: Received From Amount Utilization Date Kishorbhai P Mandalia 2,50,00,000/- Payment made to Dollyben N Patel, Devrat T Patel, Deep N Patel 09/12/2019 Kishorbhai P Mandalia 2,50,00,000/- Payment made to Dollyben N Patel, Devrat T Patel, Deep N Patel 09/12/2019 Kishorbhai P Mandalia 2,50,00,000/- Payment made to Dollyben N Patel, Devrat T Patel, Deep N Patel 09/12/2019 Kishorbhai P Mandalia 1,52,00,000/- Payment made to Alka Ketan Desai and Dollyben N Patel 27/12/2019 Kishorbhai P Mandalia 1,52,00,000/- Payment made to Alka Ketan Desai and Dollyben N Patel 27/12/2019 Kishorbhai P Mandalia 2,50,00,000/- Payment made to KIFS Enterprise 16/010/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....does not apply to me. 13. Details of addition/disallowance made for scrutiny assessment occasions for the relevant assessment years and explain as to why similar addition/disallowance should not be made for the year under review. Please also furnish copy of order passed u/s. 143(3)/147/154/263 of the Act, if any, for the relevant assessment years and details of brought forward loss, if any, for the AY2014-15. Please also furnish copy of appellate order w.r.t. to the such orders. (Para 13 of notice 142(1) dt. 24/08/2022) Apart from the current ongoing proceedings, no assessment is done in my case for ITAY 2020-21. This question is repeated in the subsequent assessment years, hence, answers to these questions are given in the respective years. 14. Details of interest received and interest paid on loans obtained and loans and advances given/deposits made, showing rate of interest by furnishing a detailed Interest Account. (Para 14 of notice 142(1) dt. 24/08/2022) Copies of ledger account of Interest income are enclosed. Your Honour will find from my Statement of Income that no interest expense is claimed while computing total income for the year under refere....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eign properties have been disclosed by you in the Income Tax Returns filed by you for all the years under consideration. (Para 18 of notice 142(1) dt. 24/08/2022) No movable or immovable properties are held by me in foreign countries. 19. Details of original return was filed u/s 139(1) of the Act? If yes, whether the income/loss reported thereon has been revised subsequently or any additional income has been offered in the ROI filed in response to the notice issued u/s 153C of the Act? Please furnish complete details with supporting evidence/documents w.r.t. such enhancement/reduction of reported income(Para 19 of notice 142(1) dt. 24/08/2022) No additional income was offered to tax while filing return of income u/s 153C of the Act. Copies of ITR V of original returns of income, and Return of income filed u/s 153C are enclosed. [Page 201 to 202]. This question is repeated in the subsequent assessment years, hence, answers to these questions are given in the respective years. 20. Show cause as to why a sum of Rs. 25,67,50,000/- being 50% of forfeited sum should not be added to the total income on substantive basis and the remaining 50% being Rs. 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) Vide Point No.20.1.2 and with reference to the noting of document value of 18.11 crores pertains the alleged sell consideration of 61.43 crores it is submitted that the notings in the image which has been referred by your good-selves are not in my handwriting. Further, the area which has been noted against the survey no reflects with the gross area of agricultural land as per old sharat which was around 18369 sq. yrd. The final plot (FP) works out to approximately 12,754. The noting of 598 which has been reduced from the above is that portion of land which they were not interested to purchase. So far as the document value of 18.11 crores is concerned it is submitted that it reflects the tentative purchase price of these survey numbers (actual amount is 19.85 crores) and it does not reflect the sale value of this survey numbers so as to come to the alleged conclusion that the difference of Rs. 43.32 crores was to be settled in cash and is in the nature of alleged on-money. It is again reiterated that for the reasons stated here-in-above this deal was never concluded and accordingly the question of executing document does not arises. (c) Vide Point No.20.1.3 it is submitte....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he department while passing his order. (g) Further, since the land could not been converted into agricultural land the proposed transfer had to be called off. Moreover, a legal notice was also given through our Advocate Mis. Lakhani Gandhi & Co. of Ahmedabad to return the amount since the assessee was not successful in converting the said land. Considering the above facts, it is submitted that the entire deal was cancelled and the alleged observation that the assessee has received the alleged consideration is uncalled for and accordingly it is requested not to take adverse action in this regard. Further in view of the above mentioned contention the question of forfeiture or for that matter protective of the substantive addition does not arise. Sir, if any further information or explanation is required vis-à-vis the details furnished so far. Please inform me so that I can file necessary details/information/reply. 11. It is thus found that the assessee had responded to each and every issue raised in the questionnaire of the AO. In respect of seized material/data also, the assessee had given clarification to each and every query of the AO. Accordin....
X X X X Extracts X X X X
X X X X Extracts X X X X
....money received by the assessee, if any, would also have been returned. Under the circumstances, no addition could have been made on account of on-money receipt as the amount received by the assessee was only in the nature of advance, which would have been returned on cancellation of the deal. Further, the onmoney, if any, received in cash was part of sale consideration and exigible to "Capital Gain Tax" and could not have been considered as unexplained money u/s 69A of the Act. The provision of section 69A of Act was not at all applicable in the facts of the present case. The provision of 69A is attracted only when an assessee is found to be owner of any money, bullion, jewellery or other valuable article which is not recorded in the books of account, if any, maintained by him and the assessee offers no explanation about the nature and source of their acquisition. In the present case no such money, bullion, jewellery or other valuable article was found from the assessee and the provision of section 69A was not at all applicable to the facts of the present case. Further, with cancellation of the deal there was no question of any capital gains arising in the hands of the assessee. In....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l be deemed to be erroneous and prejudicial to the interest of the revenue, if such order is passed without making enquiries for verifications which should have been made or if the order is passed allowing any relief without enquiring into the claim. This condition is not found fulfilled in the present case as the AO had made detailed inquiries on the issue of seized documents pertaining to the assessee in the course of assessment proceedings. It was held by the Hon'ble Delhi High Court in the case of CIT Vs. Sunbeam Auto Ltd. - (2011) 332 ITR 167 (Delhi) that one has to see from the records as to whether there was application of mind before allowing the claim and one has to keep in mind the distinction between 'lack of inquiry' and 'inadequate inquiry'. If there was any enquiry, even inadequate, that would not by itself give occasion to the Commissioner to pass order under Section 263 of the Act merely because he has a different opinion in the matter. It is only in cases of 'lack of inquiry' that such a course of action would be open. The present case cannot be treated as a case of 'lack of inquiry' as the AO had deeply examined the issue in the course of assessment proceeding. Ev....