2016 (5) TMI 1356 - AT - Income Tax

Validity of assessment framed u/s 153A - no commencement or initiation of search - Held that - Though the warrant of authorisation was prepared in the name of the assessee yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all the question of invoking the provisions of sec. 153A shall not arise. We notice that the Ld CIT(A) has expressed the view that the search need not take place at the business premises of the assessee itself but it can be conducted in any other place also. There should not be any dispute with the observations so made by Ld CIT(A). But the important point is that the search in any other place should have taken place in pursuance of warrant of authorisation issued in the name of the assessee. In the instant case the search at the residential premises of Shri Harshad Doshi has taken place. in pursuance of warrant of authorisation issued in his name and not in the name of the assessee herein. Hence we find merit in the contentions of the assessee that the assessment order passed for AY 2008-09 u/s. 153A of the Act is not valid. For AY 2009-10 it is an admitted fact that the revenue has not seized any other valuables cash or investments corroborating the figure of Rs. 15.00 crores. Further the notings made in panchanama shows that the search commenced in the residence of Shri Harshad Doshi at 1.30 a.m. (almost midnight) on 17.10.2008 and continued upto 1.00 am (again mid night) on 18.10.2008. We have noticed earlier that Shri Dilesh Shah was called upon to the residence of Shri Harshad Doshi. Even though there is no proper explanation as to why the affidavit prepared within two days of the search was filed after expiry of two years yet the surrounding circumstances show that the assessee was under the belief that the admission has been wrongly made. Further we have also for the reasons discussed supra noticed that the statement taken from Shri Dilesh Shah may not be a statement taken as per the provisions of sec. 132(4) of the Act. In view of the foregoing discussions we are of the view that the tax authorities are not justified in placing reliance on the page no.90 of the Annexure I and the sworn statement taken from Shri Dilesh Shah. - Decided in favour of assessee.

Summary

Issues Involved:
1. Validity of assessment framed under Section 153A of the Income Tax Act for AY 2008-09.
2. Justification of additions based on seized documents and statements for AY 2008-09 and 2009-10.

Issue-Wise Detailed Analysis:

1. Validity of Assessment Framed under Section 153A for AY 2008-09:

The assessee challenged the validity of the assessment framed under Section 153A of the Income Tax Act for AY 2008-09 on the ground that the search did not take place in its hands or at its business premises. The tax authorities rejected this contention, stating that the Warrant of Authorisation included the assessee's name along with other group concerns, as per the insertion of Section 292CC of the Act. The CIT(A) held that the search can be conducted at any place in pursuance of a warrant issued in the name of a particular person, and the search at the residential premises of a member of the assessee AOP was valid.

However, the Tribunal found that although the warrant of authorisation was prepared in the name of the assessee, there was no commencement or initiation of search in pursuance of that warrant. The search was conducted at the residence of Shri Harshad Doshi under a warrant issued in his name, not in the name of the assessee AOP. The Tribunal emphasized that under the Income Tax Act, the assessee AOP and Shri Harshad Doshi are two different assessable entities. Therefore, the warrant issued and executed in the name of Harshad Doshi cannot be considered as compliance with the warrant issued in the name of the assessee AOP.

The Tribunal also noted that the assessment order for AY 2008-09 was based on a document (Page 98 of Annexure I) seized from Shri Harshad Doshi's residence. Since the document was considered to belong to the assessee, the AO should have initiated proceedings under Section 153C of the Act, which was not done. Hence, the assessment order for AY 2008-09 was deemed invalid and quashed.

2. Justification of Additions Based on Seized Documents and Statements for AY 2008-09 and 2009-10:

For AY 2009-10, the assessment was completed under Section 143(3) of the Act. The addition of Rs. 11.50 crores plus ?0.30 crores was made based on Page 98 of Annexure I and the admission made by Shri Dilesh Shah. The assessee contended that the document was a dumb document prepared by Shri Dilesh Shah under duress and that the addition was not justified as it lacked corroboration with other material. The assessee also pointed out discrepancies in the document and retracted the admission through an affidavit.

The Tribunal examined whether the revenue could rely on the document and the admission. It found that the assessing officer's attempts to corroborate the document were insufficient and based on inferences rather than concrete evidence. The Tribunal noted that the AO did not make any discreet enquiries with the buyers of the flats to verify the alleged cash payments. The Tribunal also highlighted discrepancies in the document, such as variations in the area of flats and shops and the rate of cash received per square foot.

The Tribunal concluded that the document (Page 98 of Annexure I) was unreliable and could not be used as the sole basis for the additions. It also found that the statement taken from Shri Dilesh Shah may not have been taken as per the provisions of Section 132(4) of the Act. Therefore, the additions of Rs. 3.20 crores for AY 2008-09 and Rs. 11.80 crores for AY 2009-10 were unjustified and directed the AO to delete these additions.

Conclusion:

The Tribunal set aside the order passed by the CIT(A) for AY 2008-09 and quashed the assessment order passed under Section 153A of the Act for that year. For AY 2009-10, the Tribunal directed the AO to delete the additions of Rs. 11.50 crores plus ?0.30 crores, concluding that the additions were not justified based on the unreliable document and the coerced statement. The appeals of the assessee were allowed.