TMI Blog2021 (1) TMI 322X X X X Extracts X X X X X X X X Extracts X X X X ..... tained by the assessee is sine qua non to trigger the provisions of Sec.68. However, going by the factual matrix, it is quite clear that there was no credit entry in assessee s books of accounts rather it was the Ld. AO s allegation that the assessee received on-money on sale of flats. There was no sum found credited in assessee s books and therefore, the provisions of Sec.68 could not have been invoked against the assessee. None of the parties have admitted to have paid or received any on-money which is evident from cross-examination proceedings. The two buyers denied having paid any cash while purchasing the flat. The assessee denied having received the on-money. Shri Pankaj Goshar was not authorised to undertake financial transactions on behalf of the assessee. He also denied having undertaken any financial transactions with Manania family. Therefore, the whole basis of making addition is mere dumb document found at the premises of a third party, without there being any corroborative evidences to support the same. No much weightage could be attached to the said document in the absence of any cogent material supporting the entries therein. - Decided in favour of assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the basis of the dumb documents, for which no forensic report was provided to Appellant. These dumb documents have no evidentiary value and therefore, the Order of the CIT (A) is bad in law and the additions are required to be deleted. 5. Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in partly confirming the addition only on the basis of seized document, even though the concerned parties who were summoned by the Ld. AO during the cross-examination had denied of any unaccounted transactions. 6. Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition to the extent of profit on alleged on-money when the Appellant is regularly following project completion method of accounting and the profit on alleged on-money should not have been taxed in the year of receipt 7. Without prejudice to the above and without admitting, on the facts and circumstances of the case and in law, the Ld. CIT (A) erred in rejecting the books of accounts of the Appellant u/s 145(3) and estimating the income of the Appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Goshar in the folder named Umkant Manania . It transpired that Shri Umakant Manania s family had booked two flats in the name of Shri Jayesh Umakant Manania Shri Nimesh Umakant Manania in the project Vivaria at agreement value of ₹ 350 Lacs each. However, the two buyers had allegedly paid on-money in cash on various dates for purchase of two flats over and above the aggregate registration / agreement value of ₹ 7 Crores. The seized paper nos. 1 to 3 showed that an amount of ₹ 25.20 Lacs (written as 25.02) was received in cash by the assessee from two buyers on 02/12/2009. Since, the same was not offered to tax, it was to be considered as concealed income of the assessee in the background of the fact that the image of pages was found in the mobile phone of Shri Pankaj Goshar and hard copy thereof was also seized from his premises. The associated concern of Shri Pankaj Goshar rendered end-to-end project consultancy for assessee. Shri Pankaj Goshar and Karta of assessee HUF were stated to be relatives of each other and entered into few financial transactions in the past. 3.4 A page No. 68 of Annexure-H was also impounded by the department during survey u/s 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that his entity was merely acting as project management consultant for the project. The two buyers denied having paid any on-money against purchase of the two flats. The Karta of assessee HUF, Shri Ajay Vishrani, submitted that M/s Goshar Ventures Pvt. Ltd. had no authority for any financial dealing with any buyer. Their role included selecting vendors, suppliers and contractors. He also denied having received any cash / on-money from the two buyers over and above the agreement / registered value. Upon perusal of the said cross examination proceedings, it is quite evident that none of the party has admitted to having paid or received any cash / on money in the course of transactions of sale / purchase of two flats. Proceedings before Ld. CIT(A) 5.1 Before Ld. CIT(A), the assessee challenged the validity of reassessment proceedings on legal grounds. However, the same was rejected by Ld. CIT(A), inter-alia, by observing that Ld. AO was in possession of tangible material clearly depicting the receipt of on-money. Only prima facie belief was sufficient for reopening the assessment. The statutory requirements to reopen the case were duly fulfilled and there was no pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eflects the date wise on-money received by the assessee from the Manania family. 5.4 The Ld. CIT(A) also opined that regardless of cross-examination, the entire case stands on the tangible seized record found during the course of search operation. Further, Pankaj Goshar was not an independent third party. The method of accounting being followed in the books of accounts for computation of income could not be applied to unaccounted cash transactions which were not even part of the books of account. Thus, the books were to be rejected u/s 145(3). Finally, the addition was estimated @15% of aforesaid alleged on-money received by the assessee. The same restricted the impugned additions to the extent of ₹ 3.78 Lacs. Aggrieved, the assessee is in further appeal before us. Our Adjudication 6. The Ld. AR, at the outset, raised similar legal plea that the assessment has wrongly been framed under Sec. 147 instead of Sec.153C which was applicable to the facts of the case. The failure to do so would vitiate the assessment proceedings as held by Pune Tribunal in the case of V.L.Khandge V/s ITO (ITA Nos. 1971 ors./Pune/2014 common order dated 24/04/2018). A copy of the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made and for the relevant assessment year or years referred to in sub-section (1) of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person: Provided further that the Central Government may by rules made by it and published in the Official Gazette, specify the class or classes of cases in respect of such other person, in which the Assessing Officer shall not be required to issue notice for assessing or reassessing the total income for six assessment years immediately preceding the assessment yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income in accordance with the provisions of section 153A. 9. The word belongs or belong to in case of any books of account or documents, seized or requisitioned has been replaced by Finance Act, 2015 w.e.f. 01/06/2015 with the words pertains or pertain to. The rationale of the amendment as per explanatory notes to the provisions of The Finance Act, 2015 was as follows:- 39. Assessment of income of a person other than the person in whose case search has been initiated or books of account, other documents or assets have been requisitioned. 39.1 Section 153C of the Income-tax Act relates to assessment of income of any person other than the person in whose case search has been conducted or requisition has been made. The provisions contained in sub-section (1) of the section 153C, before amendment made by the Act, provided that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153 of the Income-tax Act, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to any person, other than the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of making investigation and assessment thereafter in the hands of assessee is on the basis of information unearthed during the course of search action on the premises of Shri Ganesh Khandge on 12.02.2013, then whether proceedings are to be initiated under section 148 or under section 153C of the Act. The perusal of provisions of section 153C of the Act reflects that in case any document relating to any other person is found during the course of search on a person, then the said document is to be forwarded to the Assessing Officer in13 charge of the person other than the person searched. The proceedings have to be initiated against such person on the basis of such document found and impounded. Section 153C of the Act very clearly provided that where the conditions as mentioned in the said section prevail, then provisions of said section have to be applied notwithstanding anything contained in sections 139, 147, 148, 149, 151 and 153 of the Act. The requirement of section 153C of the Act is the first satisfaction of Assessing Officer that any money, bullion, jewellery or other valuable article or thing or books of account or documents or assets belongs to a person other than the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A: Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to sub-section (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person. .. (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on searched and then the Assessing Officer has to proceed and determine the income of the other person in accordance with provisions of section 153C of the Act. The said section very clearly also lays down that the provisions of section 153C of the Act are to be applied notwithstanding anything contained in sections 139, 147, 148, 151 and 153 of the Act. Applying the said provisions to the facts of the present case, wherein certain documents were found during the course of search at the residence of partners of assessee firm on the basis of which, additional income was to be assessed in the hands of partnership firm i.e. one of the assessees before us, then for making aforesaid addition, recourse which was open to the Assessing Officer was to initiate proceedings under section 153C of the Act. Where the provisions of said section are to be applied, then no proceedings can be initiated under section 147, 148, 151 and 153 of the Act. Accordingly, we hold that when during the course of search under section 132 of the Act at the residence of Mrs. Vasundhara S. Joshi and Shri Shailesh Joshi, loose paper bundle Nos.6, 7, 8 and 9 were found, which depicted the receipts and expenditur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... impugned additions would not survive. 10. Another aspect of the matter is that the additions have been made u/s 68 which is also not applicable to the facts of the case since credit of sum in the books of accounts being maintained by the assessee is sine qua non to trigger the provisions of Sec.68. However, going by the factual matrix, it is quite clear that there was no credit entry in assessee s books of accounts rather it was the Ld. AO s allegation that the assessee received on-money on sale of flats. There was no sum found credited in assessee s books and therefore, the provisions of Sec.68 could not have been invoked against the assessee. 11. Lastly, none of the parties have admitted to have paid or received any on-money which is evident from cross-examination proceedings. The two buyers denied having paid any cash while purchasing the flat. The assessee denied having received the on-money. Shri Pankaj Goshar was not authorised to undertake financial transactions on behalf of the assessee. He also denied having undertaken any financial transactions with Manania family. Therefore, the whole basis of making addition is mere dumb document found at the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X
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