TaxTMI 
TaxTMI 
2026 (5) TMI 1053
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....l return of income on 22.04.2013 declaring total income of Rs. 7,33,747/-. A search and seizure action u/s 132 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was conducted on 06.08.2013 which was finally concluded on 01.10.2013 in the case of Sinhagad Technical Education Society and Maruti Nivrutti Navale group of cases of Pune. Since the assessee was professionally associated with Sinhagad Technical Education Society, his residence was also covered on 06.08.2013. Simultaneously, his premises was covered u/s 133A of the Act. 3. During the course of search operation certain documents / information were found and seized therein which relate to Shri Ramesh P Ranka. Accordingly, after recording the satisfaction note, notice u/s 153C of the Act for assessment years 2008-09 to 2013-14 was issued. The assessee in response to the notice u/s 153C of the Act submitted a letter dated 07.03.2016 stating that the return filed for assessment year 2013-14 on 23.04.2013 be treated as return filed in response to the notice u/s 153C of the Act. The Assessing Officer thereafter issued statutory notice u/s 143(2) of the Act. Subsequently notices u/s 142(1) of the Act along with ....
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.... Assessing Officer further noted that during the course of search, page No.3 of Bundle No.1 seized from the assessee's residence contains typed notings containing names in first column, amounts in second column, commission amounts in third column and due dates in last column. He, therefore, asked the assessee to explain the nature and source of commission income of Rs. 9,32,800/-. In absence of any proper reply to his satisfaction, the Assessing Officer made addition of the same to the total income of the assessee. He accordingly determined the total income of the assessee at Rs. 1,54,94,800/-. 7. Before the Ld. CIT(A), the assessee apart from challenging the various additions on merit, challenged the validity of the assessment framed u/s 153C instead of u/s 153A of the Act. Based on various submissions made by the assessee the Ld. CIT(A) called for a remand report from the Assessing Officer. After considering the submissions of the assessee, remand report of the Assessing Officer and the rejoinder of the assessee to such remand report, the Ld. CIT(A) upheld the action of the Assessing Officer in issuing notice u/s 153C of the Act instead of u/s 153A of the Act as argued by the ....
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....on searched within the menaing of section 132 of the Act. However, the Assessing Officer framed the assessment u/s 153C r.w.s. 143(3) r.w.s. 153A of the Act. He submitted that the statutory scheme is clear since the provisions of section 153A of the Act applies to the person searched whereas the provisions of section 153C of the Act applies to other persons i.e. the persons other than the searched person. He submitted that in the present case search was initiated and conducted on the assessee himself and the panchanama as well as satisfaction note both confirm this fact. Therefore, the jurisdiction could only have been assumed u/s 153A and not u/s 153C of the Act. He submitted that the provisions of section 153C cannot override the provisions of section 153A of the Act where the assessee is himself searched. 13. Referring to the decision of the Hon'ble Delhi High Court in the case of PCIT vs. Meeta Gutgutia reported in 82 taxmann.com 287 (Del), he submitted that the Hon'ble High Court in the said decision has held that jurisdictional conditions in search assessments are to be strictly complied with and failure on the part of the Assessing Officer to follow such jurisdictional co....
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....e addition based on presumptive commission @ 1% on alleged turnover of Rs. 22.31 crores. He submitted that despite search at the premises of the assessee no incriminating documents were found and the addition is based purely on presumptions and surmises. 21. He submitted that the Ld. CIT(A) himself noted that the commission ranges from 0.25% to 1%, therefore, estimating such commission @ 1% is on the higher side and is unsustainable since earning of such commission is not corroborated by any documentary evidence and independent confirmation or evidences. He accordingly submitted that the addition sustained by the Ld. CIT(A) be deleted. 22. In his alternate argument, he submitted that such commission may be restricted to 0.25% of the turnover. 23. The Ld. DR on the other hand submitted that the Assessing Officer has rightly invoked the provisions of section 153C of the Act. He submitted that the warrant of authorization u/s 132 of the Act which has been reproduced by the Ld. CIT(A) at page 59 of his order clearly mentions the name of 2 persons to be searched i.e. (1) Sinhagad Technical Education Society and (2) Shri M N Navale. He submitted that the warrant of authorization....
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....speaking order that the Assessing Officer has validly assumed the jurisdiction u/s 153C of the Act. Therefore, the same should be upheld and the grounds raised by the assessee be dismissed. 27. So far as the addition on account of commission on hawala transaction is concerned, the Ld. DR submitted that the impounded documents from the office premises contain notings in assessee's own hand writing which upon analysis reflected systematic transactions of large amounts aggregating to Rs. 22.31 crores carried out between October 2012 and December, 2012. The assessee in his statement recorded u/s 131 of the Act on 7th and 8th November 2013 had admitted that the notings were similar to hawala accounting transactions. The Ld. CIT(A) has already restricted such disallowance to 1% as against 2% made by the Assessing Officer. Since the assessee has already received substantial relief, therefore, the same should be upheld and the grounds raised by the assessee be dismissed. 28. The Ld. Counsel for the assessee in his rejoinder submitted that the decision of the Hon'ble Delhi High Court in the case of MDLR vs. CIT (supra) is distinguishable and not applicable to the facts of the present ....
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.... case of Sinhagad Technical Education Society and Shri M N Navale as it was suspected that evidences related to unaccounted income or unaccounted valuable including money, bullion, jewellery or other valuable items of the searched persons was kept at the residence of the assessee. Since the name of the assessee does not appear on any warrant of authorization, therefore, we find merit in the argument of the Ld. DR that no search was initiated in the case of the assessee and his residence was covered in the search initiated in case of some other person. Therefore, there is no question of his assessment being carried out u/s 153A of the Act. The various decisions relied on by the Ld. Counsel for the assessee are distinguishable and not applicable to the facts of the present case. In view of the above discussion and in view of the detailed reasoning given by the Ld. CIT(A) while upholding the validity of notice issued u/s 153C of the Act, we do not find any infirmity in the same. Accordingly the same is upheld. The grounds of appeal No.1 and 2 raised by the assessee are accordingly dismissed. 31. The ground of appeal No.3 raised by the assessee relates to the order of the Ld. CIT(A)....
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.... initio as the Ld. AO has failed to issue notice u/s 153A/153C of the Act which is a jurisdictional prerequisite in the case of the assessment on the basis of a search action. 2. The Ld. AO has erred in making the assessment u/s 143(3) which is not in conformity of the law as the assessment has arisen on account of search action u/s 132 that requires the initiation send completion of assessment u/s 153A or 153C of the Act. 3. The Ld. CIT(A) has erred in confirming the addition of Rs. 2,50,300/- on account of cash seized without appreciating that the cash was received by the appellant's son as a gift. 4. The Ld. CIT(A) has erred in confirming the addition of Rs. 3,00,000/- on account of cash received from Sinhagad Technical Education Society without appreciating the following: a. The presumption u/s 132(4A) of the Act were applicable to the addition as the documents were seized from the premises of Sinhagad Technical Education Society b. The transaction never existed as the cash was never paid to the appellant in actual. 5. The appellant craves leave to add, alter, amend or delete any of time above grounds of appeal. 34. A....
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..... CIT(A) / NFAC and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us. It is an admitted fact that out of the cash found at Rs. 4,50,300/-, the assessee had explained that an amount of Rs. 2,50,300/- was received by his son Piyush Ranka from his maternal uncle Shri Ashok Surana. However, no documentary evidence was produced either before the Assessing Officer or before the Ld. CIT(A) or even before us by establishing such claim. Under these circumstances, we do not find any infirmity in the order of the Ld. CIT(A) and therefore, we confirm the said addition. The ground raised by the assessee is accordingly dismissed. 40. Ground of appeal No.4 raised by the assessee relates to the order of the Ld. CIT(A) in confirming the addition of Rs. 3 lakhs being cash received from Sinhagad Technical Education Society. 41. Facts of the case, in brief, are that during the course of search page 39, bundle No.2 seized from society office which was a cash payment voucher of STES dated 03.08.2013. This page was an acknowledgement from Shri Ramesh Ranka of receipt of cash Rs. 3,00,000/- from STES. During the course of assessment procee....
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....as fictitious or that the cash was never actually received. The subsequent statement of STES that the voucher was not approved or recorded in its books does not by itself dislodge the evidentiary value of a signed receipt in the appellant's name. On the contrary, the presence of the appellant's acknowledgment on the document supports the inference that the cash was indeed received. In light of the above, I hold that the explanation offered by the appellant is unsubstantiated and cannot be accepted. The addition of Rs. 3,00,000/- made by the AO is, therefore, justified and is sustained. Accordingly, Ground No. 4 is dismissed. 44. Aggrieved with such order of the Ld. CIT(A) the assessee is in appeal before the Tribunal. 45. The Ld. Counsel for the assessee strongly challenged the addition made by the Assessing Officer and sustained by the Ld. CIT(A). Referring to the letter of STES dated 11.01.2016 which has been reproduced by the Ld. CIT(A) in his order at pages 73 and 74, he submitted that STES has categorically denied to have made any such payments to the assessee. Further, the paper was found in the premises of STES and not that of the assessee. Reiterating the same....
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....uch payments in cash amt here no payment was actually made the same is not approved by the President and is not entered in the books of accounts also. " 49. Once the paper was found from the premises of STES who have denied to have made any such payment to the assessee vide their letter addressed to the DDIT (Inv), therefore, in absence of any corroborative material brought by the Revenue to negate the above contention, the addition of Rs. 3 lakhs made by the Assessing Officer and sustained by the Ld. CIT(A), in our opinion is not justified. Accordingly, we set aside the order of the Ld. CIT(A) on this issue and direct the Assessing Officer to delete the addition. The ground No.4 raised by the assessee is accordingly allowed. 50. Ground of appeal No.5 being general in nature, is dismissed. 51. The appeal in IT(SS)A No.32/PUN/2025 is accordingly partly allowed. ITA No.2944/PUN/2025 (By the Revenue) 52. Grounds raised by the Revenue are as under: (1) Whether on the facts and in the circumstances of the case and in law, the CIT(A) has erred in deleting the addition of Rs. 46,87,232/- for the value of unexplained jewellery found during the search, without apprec....
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....hat the part of jewellery was acquired from the explained source and by way of disclosure amounting to Rs. 18,46,660/-, the Assessing Officer made addition of Rs. 46,87,232/- being the difference between Rs. 61,35,892/- minus Rs. 18,48,660/-. 55. Before the Ld. CIT(A) the assessee filed the detailed list of family members. It was argued that there were arithmetical errors in the computation as the correct figure should be Rs. 42,87,232/-. The CBDT Instruction No.11.05.1994 was brought to the notice of the Ld. CIT(A). It was submitted that the jewellery belonging to the married daughter was temporarily kept at the assessee's residence for safekeeping at the time of her brother's marriage. Relying on various decisions it was submitted that the addition made by the Assessing Officer is uncalled for. 56. Based on the arguments advanced by the assessee, the Ld. CIT(A) deleted the addition by observing as under: 5.6 After careful consideration of the submissions of both parties, I find merit in the arguments advanced by the appellant. It is well-settled law, as reflected in CBDT Instruction No, 1916 dated 11.05.1994, that a reasonable quantity of jewellery found during sea....
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....ng Officers, find jewellery beyond the said weight, then certainly they can question the source of acquisition of the jewellery and also in appropriate cases, if no proper explanation has been offered, can treat the jewellery beyond the said limit as unexplained investment of the person with whom the said jewellery has been found." 5.7 The appellant has further relies on the decision of Hon'ble Gujrat HC in the case of CIT v/s Ratanlal Vyaparilal Jain (2010) 339 ITR 351, wherein, the Hon'ble HC has held as under on this issue: "9. Though it is true that the Central Board of Direct Taxes Circular No. 1916, dated May 11, 1994, lays down guidelines for seizure of jewellery and ornaments in the course of search, the same takes into account the quantity of jewellery which would generally be held by the family members of an assessee belonging to an ordinary Hindu household. The approach adopted by the Tribunal in following the said circular and giving benefit to the assessee, even for explaining the source in respect of the jewellery being held by the family is in consonance with the general practice in the Hindu families whereby jewellery is gifted by the relat....
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....ing the addition has taken note of the family members of the assessee which consists of multiple members including daughter-in-law and a married daughter who had come to the assessee's house on the occasion of marriage of her brother. Further, there is some arithmetical error in the order of the Assessing Officer because he has made addition of Rs. 46,87,232/- by deducting Rs. 18,48,660/- from Rs. 61,35,892/-. However, the correct figure comes to Rs. 42,87,232/-. Thus, there is an arithmetic error on the part of the Assessing Officer amounting to Rs. 4 lakhs. The various coordinate Benches of the Tribunal, following the CBDT Circular No.1916 dated 11.05.1994 are giving credit towards jewellery as prescribed in the CBDT circular. Further, the finding given by the Ld. CIT(A) that the assessee and his wife had already disclosed a sum of Rs. 18,48,660/- which, when set off against the excess jewellery found is more than the value of jewellery that could be regarded as unexplained in the light of the CBDT Circular could not be controverted by the Ld. DR. Under these circumstances and in absence of any contrary material brought to our notice by the Ld. CIT-DR, we do not find any infirmit....
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....ot found in his possession but were seized from a third party, namely, Shri Sharad Bhosale. He argued that as per Section 132(4A) of the Act, the statutory presumption regarding ownership and correctness of documents found during search applies against the person from whose possession they are found, and therefore the documents can be used, if at all, only against Shri Sharad Bhosale. The appellant further submitted that the impugned papers neither bear his handwriting nor his signature, and there is no independent evidence to prove that he actually received the said amount. It was further argued that even during the search conducted at his own residence and office, no cash, unexplained investments, or corroborative evidence were found to suggest receipt of such a large sum. The appellant relied on several judicial precedents, including Pradeep A. Runwal v. DCIT (149 ITD 548, Pune ITAT), Regency Mahavir Properties v. ACIT (169 ITD 35, Mumbai ITAT), and Arpit Land Pvt Ltd v. CIT (393 ITR 276, Bombay High Court), to contend that loose papers found from a third party without corroboration are "dumb documents" and cannot be the basis for additions. The appellant also pointed out that S....
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....essarily actual payments. It is to be noted that retracted statements have little evidentiary value unless they are supported by independent corroborative evidence. It is well settled by the Hon'ble Supreme Court in the case of P.M Aboobacker Vs. CIT (81 taxmann.com 299) that a statement made under pressure or coercion cannot be used a sole evidence unless independently corroborated. In the present case, the AO did not produce any additional material evidence apart from the initial statement of Shri Sharad Bhosale, which was later retracted. The reliance placed by the AO on a statement that was subsequently retracted was misplaced. Further, the appellant was not granted an opportunity to cross-examine Shri Sharad Bhosale. 6.10 In view of the above, I hold that the addition of Rs. 2,00,00,000/- made by the AO is based merely on assumptions and uncorroborated third-party documents and retracted statements, and therefore cannot be sustained in law. Accordingly, the addition is deleted and Ground No. 3 is allowed. 63. Aggrieved with such order of the Ld. CIT(A) the Revenue is in appeal before the Tribunal. 64. After hearing both the sides, we do not find any infirmit....
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....other valuable articles or things represent either wholly or partly income or property which has not been, or would not be, disclosed for the purposes of the Income-tax Act. 1961; And whereas I have reason to suspect that such books of account, other documents. money, bullion, jewellery or other valuable article or thing have been kept and are to be found In Residence, Shri Ramech P. Ranka, Plot NO-42, Flat NO.5 Premonagar Housing Society, Premnagar, Pune-Safara Road, Pine. (specify particulars of the building/place /vessel/vehicle/aircraft); This is to authorise and require you as overteak [Name of the Deputy Director of Income tax (Inv.) / Deputy Commissioner of Income tax / Assistant Director of Income tax (Inv.) / Assistant Commissioner of Income tax / Income-tax Officer]- (a) to enter and search the said building / place / vessel / vehicle / aircraft; (b) to search any person who has got out of or is about to get into, or is in the building / place / vessel / vehicle / aircraft; if you have reason to suspect that such person has secreted about his person any such books of account. other documents, money, bullion, jewellery or other valuable article or thin....