TaxTMI 
TaxTMI 
2023 (1) TMI 1533
X X X X Extracts X X X X
X X X X Extracts X X X X
..../s. 132 of the Act was conducted on 21.07.2017 in the case of Avinash Bhosale group, business premises of the group as well as residential premises of partners/directors of group entities were covered in search action. The assessee was also covered in the said search. The group is primarily engaged in infrastructure development, real estate development and hospitality industry. 4. During the assessment proceedings, Assessing Officer observed that a search action u/s. 132 of the Act was carried out in the case of India bulls group on 13.07.2016. During the course of search, various documents and material in form of loose papers and digital data were seized and statements of key persons of India bulls group were recorded. Shri Ashok Sharma, CFO of India bulls group in reply to one of the questions stated that the acronym 'AB' in the data of unaccounted cash transactions stands for Avinash Bhosale i.e. the assessee. On the basis of the evidence and statements recorded, it was observed that India bulls group has entered into cash transactions with the assessee. The assessee filed his reply wherein he stated that no incriminating document has been found from the premises of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT(A) that relevant copy of the seized material and the statement on the basis of which addition has been made was not provided to the assessee. It was reiterated that no evidence was found from the premises of assessee indicating that the assessee had entered into unaccounted transactions with India bulls group. It was further stated that no opportunity of cross examination was provided to the assessee. The Ld. CIT(A) did not agree with the contention of the assessee and upheld the addition made by the Assessing Officer. He has held that there are sufficient material on record to justify the addition made by the Assessing Officer. Against this order of the Ld. CIT(A), assessee is in appeal before us. 8. Assessee has filed concise grounds of appeal, which are reproduced below: - "1. The learned CIT(A) has erred in not holding that the issue of notice u/s. 153A of the Act and the consequential assessment order passed is without jurisdiction and null and void. 2. The learned CIT(A) has erred in confirming the addition of Rs. 25,05,00,000/- u/s. 69C of the Act on account of cash payments to Indiabulls Group. 3. The learned CIT(A) ought to have held that ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....minating material found during the course of search on the assessee. It is submitted that, in order to make addition in hands of assessee, incriminating material must be found from the search conducted in premises of assessee and not of any other person. In order to support the said contention reliance is placed by the counsel on the following judicial pronouncements (i). Dy. CIT v. Shivali Mahajan and Others (ITA No. 5585/Del/2015) dated 19.03.2019 (Pgnos 48, 59, 60 of P.B.). (ii). DCIT v. Arun Kumar Mehta (ITA No. 2477/Mum/2018) dated 06.09.2019 (Pgnos 101, 106 of P.B) (iii). CIT v. SKS Ispat and Power Ltd [398 ITR 584 (Bom)) (Pgnos 98, 99 of P.B) (iv). PCIT v. Anand Kumar Jain [432 ITR 384 (Del)) (Pgnos 39, 41, 42, 47 of PB) 13. It was submitted that in absence of any incriminating material found from the premises of assessee, the impugned year, being a non- abated year, no addition can be made. In order to support the said contention reliance was placed on the decisions of the Hon'ble Bombay High Court in the case of CIT vs Continental Warehousing Corporation (NhavaSheva) Ltd. (374 ITR 645) and CIT v. Gurinder Singh Bawa (386 ITR 483) ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on on the basis of documents found from the premises of third party. Reliance was placed on the decision of the Hon'ble Delhi High Court in the case of PCIT v. Anand Kumar Jain [432 ITR 384 (Del)] (Pgnos 39, 47 of P.B.). 19. Further, on merits Ld. AR submitted as under: - 20. Ld AR submitted that on perusal of the assessment order, it is evident that the Assessing Officer has relied upon certain documents and statements of key persons recorded during the course of search conducted on India bulls group. It was submitted that the assessee, in response to Q. Nos 40 and 42 of the statement recorded u/s 132(4) of the Act dated 24.07.2017 (Pg nos 29-38 of P.B) asked for a copies of the statements of the concerned persons of the India bulls group. Subsequently, the assessee made repeated requests before the lower authorities to provide copy of material/statement being relied upon for making addition in the case of assessee. 21. It was reiterated that no incriminating documents have been found from the premises of assessee. It was submitted that no addition can be made merely on the basis of seized material found or statement recorded during the course of search conducted in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on record) and in the case of Rajvee Tractors (P) Ltd v. ACIT [143 taxmann.com 330 (Ahd)] (copy already on record). It was submitted that in the case of Asst. CIT v. Anand Jaikumar Jain (supra), the copy of the order of the Income tax Settlement Commission was provided to the assessee still the Tribunal held that no reliance can be placed on the order passed by the Income Tax Settlement Commission. It was submitted, in the present case, the copy of the order of Income Tax Settlement Commission in the case of entities of India Bulls group has not been given to the assessee. 26. On the other hand, Ld. DR submitted that various documents were found during search in the case of India Bulls and Radius Group and Nirav Modi Group cases, based on the above information a search was conducted in the case of assessee and in the case of search parties like India bulls and others, various documents were found relating to the assessee. It is fact on record that the documents found in the search in which abbreviation was used "AB", it was stated to be the name of assessee by the Investigation Wing. However, before Income Tax Settlement Commission, India Bulls have confirmed that it denotes th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efore hand. It is fact on record that there is no material found in the hands of the assessee which corroborates with the information or incriminating material found in the case of India Bulls. Therefore, the addition cannot be made without there being any incriminating material found in the case of assessee, as held in the case of Continental Warehousing (supra). 29. Coming to the next issue, it is clearly recorded by the AO in the remand proceedings that the satisfaction was recorded by him in order to initiate the proceedings u/s 153A of the Act. For the sake of clarity it is reproduced below: "It is found from the search u/s 132 of IT Act on Indiabulls group and subsequently on ABIL Group that unaccounted cash of Rs. 114.13 Cr as per details provided in the table above has been received by Indiabulls Group from Avinash Bhosale and unaccounted cash of Rs. 125.89315 Cr has been paid to Avinash Bhosale by Indiabulls Group during various years as summarized below: Sr. No Financial Year Amount of unaccounted paid by Avinash to Indiabulls (In Crore) Amount of unaccounted cash received by Avinash Bhosale from Indiabulls (In Crore) 1 2009....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sessment years; (b) the income referred to in clause (a) or part thereof has escaped assessment for such year or years; and (c) the search under section 132 is initiated or requisition under section 132A is made on or after the 1st day of April, 2017. Explanation 1 .- For the purposes of this sub-section, the expression "relevant assessment year" shall mean an assessment year preceding the assessment year relevant to the previous year in which search is conducted or requisition is made which falls beyond six assessment years but not later than ten assessment years from the end of the assessment year relevant to the previous year in which search is conducted or requisition is made. Explanation 2 .- For the purposes of the fourth proviso, "asset" shall include immovable property being land or building or both, shares and securities, loans and advances, deposits in bank account.] we are of the view that the amended provision of the section 153A/153C are applicable to the case of the assessee for which the search was initiated on 22.07.2017 but when the material relied by the AO to initiate the proceedings in the case of the assessee wherein he re....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e final. The Revenue's case is hinged on the statement of Mr. Jindal, which according to them is the incriminating material discovered during the search action. This statement certainly has the evidentiary value and relevance as contemplated under the Explanation to section 132(4) of the Act. However, this statement cannot, on a standalone basis, without reference to any other material discovered during search and seizure operations, empowers the Assessing Officer to frame the block assessment. This court in Pr. CIT v. Best Infrastructure (India) P. Ltd. [2017] 397 ITR 82 (Delhi); [2017] SCC Online Del 95911 has inter alia held that (page 101 of 397 ITR): "38. Fifthly, statements recorded under section 132(4) of the Act do not by themselves constitute incriminating material as has been explained by this court in Harjeev Aggarwal." 9. In CIT v. Harjeev Aggarwal [2016] 6 ITR-OL 504 (Delhi); [2016] 290 CTR 263; [2016] SCC OnLine 15122 this court had held as follows (page 515 of 6 ITR-OL): "In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under section 132(4) of the Act would by itself be ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce/material found during search in order for an assessment to be based on the statement recorded. In CIT v. Shri Ramdas Motor Transport [1999] 238 ITR 177 (AP), a Division Bench of the Andhra Pradesh High Court, reading the pro- vision of section 132(4) of the Act in the context of discovering undisclosed income, explained that in cases where no unaccounted documents or incriminating material is found, the powers under section 132(4) of the Act cannot be invoked .... It is also necessary to mention that the aforesaid interpretation of section 132(4) of the Act must be read with the Explanation to section 132(4) of the Act which expressly provides that the scope of examination under section 132(4) of the Act is not limited only to the books of account or other assets or material found during the search. How- ever, in the context of section 158BB(1) of the Act which expressly restricts the computation of undisclosed income to the evidence found during search, the statement recorded under section 132(4) of the Act can form a basis for a block assessment only if such statement relates to any incriminating evidence of undisclosed income unearthed during search and cann....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ires our consideration. Respectfully following the above decision and also we observe from the record that the AO has not followed the due process/procedure laid down under section 153C to complete the proceedings initiated u/s 153A of the Act makes the whole assessment bad in law. The search was conducted in the present case after a gap of almost one year from the date of the search initiated in the case of India Bulls, no material was brought on record to show that the AO of the India Bulls has forwarded his satisfaction and or any procedure followed by the present AO to frame the assessment. Accordingly, the grounds raised by the assessee on the jurisdictional issue are decided in favour of the assessee. 31. Coming to the merits of the case, In the given case, the AO heavily relied on the submissions made by India Bulls before ITSC and settlement made before them. No doubt they have made settlement before ITSC which suits them and when AO relies on those settlement to make addition in the case of the assessee, it is the duty of the AO to give proper opportunity to the assessee to rebut or give an opportunity for cross examination. Without following proper procedure laid do....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en-drive was seized or cloned. It is their claim that hence, the ownership and authenticity of the contents of the pen drive per se is not clear. We observe that amount of addition admitted before the settlement commission by the Dalmias is way too small than the addition made in the case of the assessee. Although the Department has strongly objected this before the settlement commission (page No. 13 of ITSC order), the application has been accepted and nothing has been brought on record to show that the order of the settlement commission has been reversed or even challenged. In any case, even if the person from whom the documents have been found out have accepted the correctness of transaction before the settlement commission, in our considered view, the same is not binding on the assessee. The similar view was expressed in the decision of Jaipur Bench of the Tribunal in the case of Mott Developers vs. Asstt. CIT in ITA No.101/Jp/2017. dt. 7th July, 2017. Further, it is brought to our notice that the seized MOUS relied upon by the Department are undated. unsigned (by either party) and titled as draft. It is the duty of the AO to bring on record that the same was acted upon, at the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....av Modi store and made part payment in cash. During the course of assessment proceedings, the assessee submitted the relevant invoices of purchase of jewellery and stated that no cash has been paid for purchase of jewellery. The Assessing Officer did not accept the contention of assessee. The Assessing Officer relied on the statement of Mrs. Aparna Chudasama, one of the employees of Nirav Modi group, whose signature was found on the invoice submitted by assessee and held that the assessee has paid cash of Rs.. 58.50,000/- for purchase of jewellery and added the same u/s 69B of the Act. 34. Assessee preferred appeal before the Ld. CIT(A) and assessee contended before the Ld. CIT(A) that the addition u/s 69B of the Act is bad in law since no incriminating material has been found during the course of search and the relevant year is a non-abated year. It was further submitted that the relevant assessment year falls beyond the period of six years hence notice u/s. 153A of the Act could only be issued if Assessing Officer has in his possession evidence which reveal that income represented in the form of asset exceeding rupees fifty lakhs has escaped assessment which is not satisfied i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g the course of search on the assessee. It was submitted that, in order to make addition in hands of assessee, incriminating material must be found from the search conducted in premises of assessee and not of any other person. He brought to our notice page no 5 of P.B. which is submission before the CIT(A) and also brought to our notice satisfaction note (Pg no 3 of PB) recorded by the AO for issue of notice u/s 153A of the Act. He submitted that on perusal of the satisfaction note, it is evident that the same does not make reference to any contention, reliance was placed on the following judicial pronouncements. (i). Dy. CIT v. Shivali Mahajan and Othrs (ITA No 5585/Del/2015) dated 19.03.2019 (Pgnos 48, 59, 60 of P.B.). (ii). DCIT v. Arun Kumar Mehta (ITA No. 2477/Mum/2018) dated 06.09.2019 (Pgnos 101, 106 of P.B.) (iii). CIT v. SKS Ispat and Power Ltd [398 ITR 584 (Bom)] (Pgnos 98, 99 of P.B) (iv). PCIT v, Anand Kumar Jain [432 ITR 384 (Del)) (Pgnos 39, 41, 42, 47 of P.B.) 40. It was submitted that in absence of any incriminating material found from the premises of assessee, the impugned year, being a non- abated year, no addition can be mad....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng documents have been found from the premises of assessee. It was submitted that no addition can be made on the basis of seized material found and statement recorded during the course of search conducted in the premises of third party more particularly in absence of any other independent evidence. In order to support the said contention, reliance was placed on the following judicial pronouncements: (i). Jawaharbhai Atmaram Hathiwala v. ITO [128 TT) 36 (Ahd) (URO)) (Pgnos 121-124 of P.B.) (ii). Naren Premchand Nagda v ITO (ITA No. 3265/Mum/2015) dated 08.07.2016 (Pgnos 125-133 of P.B.) (iii). CIT v. Sant Lal (118 taxmann.com 432) (Del) (Pgnos 134-138 of P.B.) 45. It was submitted that the seized material and the statements cannot be relied upon as the seized material and the statements/cross- examination of the parties have not been given to the assessee despite repeated requests. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of M/s Andaman Timber Industries v CIT (Civil appeal No 4228 of 2006) dated 02.09.2015 (Pgnos 139 to 145 of paper book). 46. It was submitted that there is no presumption about the correctness....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rd person may write the name of any person at his sweet will, in such circumstances assessee cannot be put to any liability on the action of the third person, the same has to be corroborated by the Revenue which has not been done in the present case. In the circumstances and facts of the case, we do not find any infirmity in the order of the Ld. CIT(A) who has rightly deleted the additions so made by the AO. Accordingly, all the grounds of the Revenue are dismissed." 12. In case of the Mahabir Prasad Gupta (supra), this Court has examined the facts and concluded that the concurrent finding of the facts cannot be disturbed as there was no material which could justify the assessment order. The relevant portion of the said order which reads as under: "13. The above submissions fail to persuade this Court to interfere with the matter. Concurrent findings of fact have been rendered by the CIT (A) as well as by the ITAT. Nothing has been pleaded in the memorandum of appeal to persuade the Court to hold that those findings are perverse or contrary to the facts on record. Secondly, there is not a whisper in the order of the AO about any bag recovered from the premises of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onfirming the addition of Rs. 14,69,00,000/- on the ground that the assessee had advanced unaccounted cash loans to Radius Group and earned interest thereon. 3. The learned CIT (A) ought to have held that the addition of Rs. 14,69,00,000/- is without jurisdiction and bad in law. The learned CIT (A) ought to have held that the order passed by the Assessing Officer was without following the principles of natural justice and, hence, unsustainable. 4. The appellant craves leave to add to, amend, alter or delete the foregoing grounds of appeal." 51. In A.Y. 2015-16 the facts are exactly similar to the facts in A.Y.2011-12 except the fact that the search action u/s. 132 was carried in the case of Radius Group on 16.12.2015 based on that various documents and material found and digital data seized in the case of Radius Group and two entities of the group had filed an application before Income Tax Settlement Commission. Based on the above informations Assessing Officer issued notice to the assessee u/s. 153A of the Act in reply assessee submitted that assessee has not given any loan to Radius Group nor any interest has been earned during the relevant Financial Year. He....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shared by the Assessing Officer of Radius group. 56. It was submitted that, in order to make addition in hands of assessee, incriminating material must be found from the search conducted in premises of assessee and not of any other person. In order to support the said contention reliance was placed on the following judicial pronouncements (i). Dy. CIT v. Shivali Mahajan and Others (ITA No.5585/Del/2015) dated 19.03.2019 (Pgnos 48, 59, 60 of P.B.). (ii). DCIT v. Arun Kumar Mehta (ITA No. 2477/Mum/2018) dated 06.09.2019 (Pgnos 101, 106 of P.B.) (iii). CIT v. SKS Ispat and Power Ltd [398 ITR 584 (Bom)] (Pgnos 98, 99 of P.B) (iv). PCIT v. Anand Kumar Jain [432 ITR 384 (Del)] (Pgnos 39, 41, 42, 47 of P.B.) 57. It was submitted that in absence of any incriminating material found from the premises of assessee, the impugned year, being a non- abated year, no addition can be made. In order to support the said contention reliance is placed on the decisions of the Hon'ble Bombay High Court in the case of CIT vs. Continental Warehousing Corporation (NhavaSheva) Ltd. (374 ITR 645) and CIT v. Gurinder Singh Bawa (386 ITR 483). 58. It was submitte....