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2015 (11) TMI 1307 - ITAT DELHI

2015 (11) TMI 1307 - ITAT DELHI - TMI - Validity of action and notice u/s 153C - Held that:- In the present case, the base of document does not belong or belongs to the present assessee as the Assessing Officer of the other person himself was not clear in his mind that whether this chart belongs to or belong to the present assessee, therefore, he made jugglery of words by mentioning that the company wise non appearing in these pages will be treated as documents pertaining to all respective compa .....

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to the present assessee and on this ground also, the validity of reasons recorded comes within the teeth of proposition laid down in the case of Pepsico Holding Pvt. Ltd. (2014 (8) TMI 898 - DELHI HIGH COURT) and Pepsi Food Pvt. Ltd. vs CIT [2014 (8) TMI 425 - DELHI HIGH COURT]. Respectfully following the proposition laid down by Hon'ble Jurisdictional High Court, we are inclined to hold that the reasons recorded for action u/s 153 of the Act and issuance of notice under the said provision was .....

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e to emanating from the allegation of suppression of sales or receipt of unaccounted cash in sale of flats. Further, the first appellate authority also noted that the advances made to these persons/entities by the assessee firm were to raise capital for the purpose of business and also that these transactions are not in the nature of business advances. The Ld. CIT(A) also noted that the interest payment made by the assessee to Bank of Maharashtra also does not appear to have any nexus with the m .....

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A.O was to inform VAT authorities about the tax said to be deducted by the sellers so that the deposit of VAT tax could have been verified by them. Simultaneously, the A.O of the vendors could have also been informed about the sales made and to verify whether these sales had been reflected in their respective tax returns. The Ld. CIT(A) also mentions that the A.O could also have investigated bank accounts of the parties (Vendors) available with him and none of these courses have been taken by t .....

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suppression of sales or receipt of unaccounted cash in the sale of flats. - Decided against revenue. - I.T.A. No. 6205/Del/2013, C. O. No. 150/Del/2014 - Dated:- 23-11-2015 - Shri Chandra Mohan Garg, Judicial Member And Shri L. P. Sahu, Accountant Member For the Appellant : Shri Ramesh Chander, CIT DR For the Respondent : Shri Amit Goel & Saurabh Goel ORDER Per Chandramohan Garg, J. M. This appeal of the revenue as well as C.O. of the assessee have been preferred against the order of the CI .....

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nse to the said notice. Further, notice u/s 142(1) along with questionnaire on 8.2.2012 and 7.9.2012 and another notice u/s 143(2) of the Act was issued on 7.9.12. The Assessing Officer vide assessment order dated 18.3.2013 assessed taxable income of the assessee by making two additions viz. first addition on account of bogus purchases and second addition on account of notional interest disallowed from expenditure claimed by the assessee under the head of interest on term loan. The assessee pref .....

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g the order of the CIT(A) which granted relief to the assessee on both the counts but the assessee has also filed cross objections challenging the conclusion of the CIT(A) which uphold the validity of action and notice u/s 153C of the Act. C.O. No.150/Del/14 3. At the very outset, both the parties are agreed that the C.O. of the assessee being legal may be considered and heard first. We have heard arguments of both the sides and carefully perused the relevant material placed on record. Ld. AR su .....

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ng the stand of the Assessing Officer, ld. AR submitted that satisfaction note does not even satisfy as to the capacity of the Assessing Officer on which personal satisfaction has been recorded. Ld. AR further submitted that there are no documents belonging to the assessee found during search and seizure operation and even as per contents of the satisfaction note itself, there are no documents found belonging to the assessee. Ld. AR vehemently contended that as per contents of the satisfaction n .....

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it is apparent that according to the Assessing Officer himself, there were no documents pertaining to the assessee but certain information in the form of chart was treated as documents belonging to the assessee. Ld. AR further submitted that the manner in which satisfaction note has been recorded on the basis and contents of the said satisfaction note does not express any fact that any document or other article belonging to the assessee was recovered during search and seizure operation. Ld. AR f .....

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Officer of the searched person is required to rebut appeal presumption u/s 132(4A)(i) and u/s 292C(1)(i) that seized documents do not belong or belongs to the searched person and then the Assessing Officer of the searched person has to draw an inference as to whom the seized documents belong to the person other than the person searched. Ld. AR further contended that in the case of Pepsi Food Pvt. Ltd. vs ACIT reported as (2014) 52 Taxmann.com 220(Delhi), the Hon'ble Jurisdictional High Cour .....

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by section 153C of the Act. 5. Ld. AR also pointed out that this being a position of very first step of the Assessing Officer of the person searched prior to the handing over such document etc. to the other person and the Assessing Officer of the other person has to record satisfaction as per provisions of section 153C of the Act and in the present case, from first step prior to the issuance of notice u/s 153C of the Act has not been fulfilled and inasmuch as this condition precedent has not be .....

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he Assessing Officer has not mentioned that any documents etc. belong to or belongs to was recovered or unearthed during search and seizure operation, hence, this satisfaction note is hit by the proposition laid by Hon'ble High Court of Delhi in the case of Pepsi India Holding Pvt. Ltd. (supra). Ld. Ld. DR has also drawn our attention to last line of para 2 of the impugned satisfaction note wherein the satisfaction has been recorded and submitted that the Assessing Officer has simply mention .....

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ot be held as belongs to or belong to the present assessee company. 7. Further, ld. AR also placed reliance on the recent judgment dated 10.7.2015 of Hon'ble High Court of Madhya Pradesh in the case of CIT vs Mechmen passed in I.T.A. No. 44/2011 and other related appeals and contended that when no satisfaction note has been recorded by the Assessing Officer of the other person before issuing notice u/s 153C of the Act and none of the papers belong to or belongs to the assessee have been foun .....

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rguments but not admitting, it is presumed that the seized documents referred to in satisfaction note were belonging to the assessee and that the Assessing Officer was entitled to issue notice u/s 153C of the Act, even in such a situation, the Assessing Officer was duty bound to close the proceedings after calling off returns u/s 153C of the Act because there is nothing incriminating in the seized documents. To support this contention, ld. AR placed reliance on the judgment of Hon'ble Jurisd .....

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way of cross objection. He pointed out para no. 3.8 at page 27 of this judgment to support this legal contention. 10. Ld. AR strongly opposed the aforesaid legal contention of the department and submitted that the provision of section 124 of the Act is only related to the territorial jurisdiction of the Assessing Officer which nowhere states about the jurisdiction of the Assessing Officer provided u/s 153A or 153C of the Act which is relevant to the present case. Ld. AR further pointed out that .....

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ge of assessee regarding territorial jurisdiction by this provision, hence, we decline to accept the contention of ld. CIT DR that the assessee cannot agitate validity of notice u/s 153C of the Act u/s 124 of the Act. Furthermore, when we proceed to consider the facts and circumstances of the case of Sandip M. Patel, we see that the Ahmedabab Tribunal has never decided that the assessee cannot raise legal objection to the validity of notice u/s 153C of the Act by way of cross objection. On caref .....

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3C of the Act and all subsequent proceedings held in pursuance thereto. 12. On cross objections, Ld. DR further supported the action of the Assessing Officer and submitted that the CIT(A) rightly dismissed ground no. 1,2, 3, 5 (b) and 6 (b) of the Act upholding the validity of notice u/s 153C of the Act and reassessment order passed u/s 153C r/w section 143(3) of the Act as the Assessing Officer rightly assumed jurisdiction to issue notice u/s 153C of the Act and making reassessment proceedings .....

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evity in our findings and observations. 14. Further, before we proceed to adjudicate the allegation of assessee challenging the valid assumption of jurisdiction for issuance of notice u/s 153C of the Act and all subsequent proceedings, we find it appropriate to carefully peruse the proposition and dicta laid down by Hon'ble Jurisdictional High Court and other Hon'ble High Courts on this issue. Firstly, we observe that in the case of Pepsi Food Pvt. Ltd. vs ACIT (supra) the Hon'ble Ju .....

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is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or reassess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is a .....

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n the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There ,must be some cogent material available wi .....

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ndicate as to how the presumptions which are to be normally raised as indicated above, have been rebutted by the Assessing Officer. Mere use or mention of the word "satisfaction" or the words "I am satisfied" in the order or the note would not meet the requirement of the concept of satisfaction as used in Section 153C of the said Act. The satisfaction note itself must display the reasons or basis for the conclusion that the Assessing Officer of the searched person is satisfie .....

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to be quashed. It is ordered accordingly. The writ petitions are allowed as above. There shall be no order as to costs. 15. We further observe that in the case of Pepsico India Holdings Pvt. Ltd. vs ACIT, the Hon'ble Jurisdictional High Court of Delhi in para 12 to 16 held as follows:- 12. However, by virtue of the order dated 02.12.2013, the Assessing Officer rejected each one of these objections and observed that the provisions of Section I53C of the said Act had been rightly invoked and t .....

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ed to the petitioners. 14. First of all we may point out, once again, that it is nobody"s case that the Jaipuria Group had disclaimed these documents as belonging to them. Unless and until it is established that the documents , do not belong to the searched person, the provisions of Section 153C of the said Act do not get attracted because the very expression used in Section 153C of the said Act is that "where the Assessing Officer satisfied that any money, bullion, jewellery or other .....

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Note, which is the subject matter of these writ petitions, there is nothing therein to indicate that the seized documents do not belong to the Jaipuria Group. This is even apart from the fact that, as we have noted above, there is no disclaimer on the part of the Jaipuria Group insofar as these documents are concerned. 15. Secondly, we may also observe that the finding of photocopies in the possession of a searched person does not necessarily mean and imply that they "belong" to the pe .....

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uld also like to make it clear that the assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the properly although it obviously "relates to" or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot he said that it "belongs to&quo .....

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ment -J can be said to "belong to" the petitioner. 16. We further observe that in the case of CIT vs Mechmen (supra), the Hon ble Madhya Pradesh High Court in para 22 and 23 held as follows:- 22. Reverting to the substantial questions of law articulated while admitting these appeals, we hold that the same will be of no avail to the Department considering the fact situation of the present case and for the reasons mentioned hitherto. In that, we have rejected the argument that even in ca .....

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ed assessee. 23. In the present case, the concurrent finding of fact recorded by the Appellate Forums is that, no satisfaction has been recorded by the Assessing Officer before issuing of notice under section 153C Further, none of the papers seized belongs or belong to the assessee (noticee). The Appellate Forums have further found that no addition or even observations have been made by the Assessing Officer in any of the orders for the relevant assessment years in connection with any material f .....

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e of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of Section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. The said decision does not assist the petitioner. The section merely enables the revenue authorities to investigate into the contents of the document seized, whic .....

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cument relates to a person other than the searched person can do nothing except to forward the document to the Assessing Officer having jurisdiction over the other person and thereafter it is for the Assessing Officer having jurisdiction over the other person to follow the procedure prescribed by Section 153A in an attempt to ensure that the income reflected by the document has been accounted for by such other person. If he is so satisfied after obtaining the returns from such qther person for t .....

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Court of Delhi and Hon ble M.P. High Court, when we analyse the facts and circumstances of the present case, we observe that from reasons recorded by the Assessing Officer for initiation of action and issuance of notice u/s 153C of the Act, from the contents of reasons recorded, it is apparent that these reasons have been recorded in the case of Amrapali Grand and the search and seizure operation u/s 132(1) of the Act on 9.9.2010 was conducted in the Amrapali Group which is a separate entity and .....

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ertaken by various companies of Amrapali Group, it may be mentioned that Amrapali Group is not a legal entity but comprises of group of companies which individually and separately are having their different corporate/partnership firm entities. Subsequently, the Assessing Officer of the other person i.e. present assessee states that Therefore, the company wise information appearing in these pages will be treated as documents pertaining to all the respective companies, appearing in the said chart. .....

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essee and title of this chart is mentioned as Amrapali group, detail of projects . 20. We further observe that in the first para appearing on page no. 2 of the reasons recorded, the Assessing Officer of the other person has noted the details of companies and their managers of Amrapali Group and subsequently it has been mentioned that during the course of search, incriminating documents as to unaccounted cash receipts totalling to ₹ 31.33 crore were seized which have been admitted to be una .....

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logical and vigilant reading of reasons recorded by the Assessing Officer of the other person set out in the earlier paras, it is clear that the reasons have been recorded by the person other than the person searched and in the very first part of allegations, the Assessing Officer of the other person noted that a detailed chart showing company wise information will be treated as document pertaining to respective companies appearing in the said chart. From these observations of the Assessing Off .....

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we are unable to see any observations or facts or any other material which was recovered or unearthed during the search and seizure operation on Amrapali group on 9.9.2010. We may point out that the Assessing Officer in para 2 of the reasons recorded himself noted that during the course of search, incriminating documents as to the unaccounted cash receipts totalling to ₹ 31.33 crore were seized which have been admitted to have been unaccounted by the management of search entity and the sam .....

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eized during search and seizure operation on Amrapali group. In this position, when the unaccounted cash receipts have been accounted and surrendered as unexplained income of M/s Ultra Home, we are unable to see any other incriminating material or document etc. which could lead the Assessing Officer of other person to record his satisfaction that documents etc. belong to or belongs to the present assessee (other person) were seized during search and seizure operation on Amrapali group. 21. In vi .....

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Act but seizure of document etc. belonging to other person is a prerequisite and in absence of search and seizure operation proceedings u/s 153C of the Act, notice under the said provision cannot be initiated and issued against such other person. At the cost of repetition, when we analyse the proposition laid down by Hon'ble Jurisdictional High Court in the case of Pepsi Food Pvt. Ltd. vs CIT (supra) , we clearly observe that their lordships have explicitly held that before a notice u/s 153 .....

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ption wherein section 132(4A)(i) clearly stipulates that when inter alia any document is found in the control and possession of any person in the course of search, it may be presumed that such books of account, other documents, or other valuable article or thing belong or belongs to such person and it is also similarly provided in section 292C(i). Their lordships laying down a dicta which is binding on us, further held that whenever a document is found from a person who is being searched, the pr .....

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ce of satisfaction. 22. In the present case, undisputedly and admittedly, there was no satisfaction note recorded by the Assessing Officer of the person searched. This being the position, the first step prior to the issuance of notice u/s 153C of the Act has not been fulfilled by the Assessing Officer of the person searched i.e. Amrapali group. When we proceed to evaluate the validity of reasons recorded by the Assessing Officer of the other person for issuance of notice and initiation of procee .....

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words belong to or belongs to in the reasons recorded and he has noted that the company wise information appearing in these pages will be treated as document pertaining to all the respective companies appearing in the said chart. Ld. DR has pointed out that as per amended section 153C of the Act, the word pertains to is sufficient for valid assumption of jurisdiction, issuance of notice u/s 153C of the Act. However, we do not agree with this contention of the ld. CIT DR as the present case is re .....

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oned belongs to or belong to in the reasons recorded clearly demonstrate that the Assessing Officer himself was not sure about the chart which was used as pertain to the present assessee as to whether the same can be treated as pertain to or pertains to the present assessee. This ambiguous state of mind of the Assessing Officer of the other person clearly demonstrates that the Assessing Officer proceeded to initiate proceedings and to issue notice u/s 153C of the Act without assumption of valid .....

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vs Mechmen wherein their lordships after referring to the decisions of Hon'ble Delhi High Court in the case of Pepsi Food Pvt. Ltd., Pepsico Holding Pvt. Ltd. and observations in the case of SSP Aviation Ltd. (supra), it has been held that even in cases u/s 153C of the Act, the Assessing Officer need not record satisfaction in particular at both the stages, be it Assessing Officer of the searched person or Assessing Officer having jurisdiction over such other person, the requirement of reco .....

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High Court, their lordships held that the Assessing Officer proceeded to frame assessment u/s 153A of the Act relying on some information not unearthed during the search, then the assessment orders passed with reference to section 153A(1) of the Act were unsustainable in law. Furthermore, the Hon'ble High Court of Delhi in the case of PCIT vs Kurele Paper Mill Pvt. Ltd. I.T.A. No.369/2015 dated 6.7.15, their lordships held as follows:- 2. The Court finds that the order of the CIT(Appeals) r .....

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ing project wise detail of the Amrapali group of 12 companies including the present assessee pertained to present assessee and thus, the action of the Assessing Officer in issuance of notice u/s 153C of the Act and framing assessment under said provision was quite correct in view of the amendment in section 153C of the Act wherein the words pertain to or pertains to or any information contained therein relates to have been inserted. While we analyse the intention of the legislature, we are in ag .....

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from the base document Annexure A-1 i.e. reasons recorded for initiation of proceedings and issuance of notice u/s 153C of the Act:- i) Undisputedly, Annexure A-1 spread over 4 pages, as annexed to this order, has been recorded in the case of other person i.e. present assessee. ii) From the record we are unable to see any reason or satisfaction recorded by the Assessing Officer of the searched person prior to handing over of alleged pages 53 & 54 to the Assessing Officer of the other person. .....

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t, as existed at the time of recording reason, require that where the Assessing Officer is satisfied with any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized or requisitioned belongs to or belonged to a person other than the person referred to in section 153A of the Act, then the books of accounts or documents etc. seized or requisitioned shall be handed over to the Assessing Officer for jurisdiction over such other person. In the present cas .....

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53 & 54 in Annexure A-1 party AB-1, the sole alleged document belong to or belongs to the present assessee. However, the Assessing Officer of the present assessee referring to the said chart has merely mentioned that the company wise non-appearing in these pages will be treated as document pertaining to all the respective companies which is not a proper and valid reason for initiation of action and issuance of notice u/s 153C of the Act. iv) We also observe that except chart pages 53 & 5 .....

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Indi Holdings Pvt. Ltd. vs ACIT (supra) which were referred to by Hon ble Madhya Pradesh High Court in the case of CIT vs Mechmen (supra), it is vivid that the first required step of the Assessing Officer of the person who was searched have not recorded satisfaction that the sole document viz. chart pages 53 & 54 seized during the search and seizure operation of Amrapali Group do not belong to the searched person but to the present assessee. We further observe that the reasons recorded by t .....

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clear that the Assessing Officer should not confuse the expression belong to with the expression relates to or refers to , meaning thereby that as per dicta laid down by Jurisdictional High Court, the main requirement is that the reason for initiation of action and issuance of notice u/s 153C of the Act, the Assessing Officer of the other person is mandatorily required to record that the documents etc. belong to belongs to the other person and over such other person, he has jurisdiction to asse .....

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d chart. In this situation, we are inclined to hold that the reasons recorded by the Assessing Officer of the present assessee for initiation of action u/s 153C of the Act and issuance of notice under the said provision do not quash the requirement of said provision as accepted in the Act at the time of recording satisfaction. It is also relevant to mention that the socalled seized document i.e. chart cannot be held as belongs to or belong to the present assessee and on this ground also, the val .....

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le and consequently, we quash the same. Accordingly, C.O. of the assessee is hereby allowed. I.T.A. No. 6205/Del/2013 for A.Y. 2009-10 on merits 29. This appeal has been preferred against the same order of Ld. CIT(A) (supra) which upheld the validity of notice and action u/s 153C of the Act. 30. Ground Nos. 1 & 4 are general in nature which need no adjudication. The main grounds raised by the Revenue read as under:- 2. On the facts and the circumstances of the case the Ld. CIT(A) has erred i .....

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es given to them nor any goods have been received during the year and at the same time, the assessee has borrowed huge interest bearing funds and has also made payment of interest on loan to Bank of Maharashtra thus the notional interest @ 8% per annum on interest free advances was rightly disallowed from interest expenditure claimed by the assessee. The Ld. AR further pointed out that the Ld. CIT(A) granted relief to the assessee without any basis, hence, the impugned order may be set aside by .....

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ll the payments are related to the term loan from the Bank for various payments to various authorities and all the receipts are from M/s Ultra Homes as partners contribution to the appellants on going projects. 33. The Ld. DR also placed rejoinder by submitting that no remand report was called by the Ld. CIT(A) before granting relief to the assessee and assessee cannot be allowed to make a new case during appellate proceedings. 34. At the very outset, we observe that the Ld. CIT(A) granted relie .....

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emselves have adequate assets and liquid funds. M/s Ultra Home Construction Pvt. Ltd. is the flagship company of Amrapali Group and bank finance is raised by this company. This company is also majority partner of the appellant firm. Funds are infused by the partners into the appellant firm for the project, which in turn advances money to the directors of Ultra Home Construction Pvt. Ltd. so that more funds / finances can be raised as the project progresses. The advances made to these persons by .....

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ngoing project. 35. In view of above, the Ld. AR has placed reliance on the order of Hon ble High Court of Delhi in the case of Tinbox Co. 260 ITR 637 (Delhi) and submitted that where the firm advanced interest free funds to sister concern, and there are findings that capital of firm and interest free unsecured loans exceeded amounts advanced to sister concern, the disallowance of part of interest on borrowed capital is not justified. In the present case, the A.O proceeded to make addition by ob .....

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assessee, the Ld. CIT(A) granted relief with a conclusion and observations as reproduced above. The Ld. CIT(A) placing reliance on the judgment of Hon ble Delhi High Court in the case of SSP Aviation Ltd. vs DCIT (supra) held that the impugned addition based on disallowance of interest does not relate to emanating from the allegation of suppression of sales or receipt of unaccounted cash in sale of flats. Further, the first appellate authority also noted that the advances made to these persons/ .....

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ave not been controverted by them. This view also finds support from the dicta laid down by Hon ble High Court in the case of Tin Box (supra). Accordingly, we are unable to see any valid reason to interfere with the order of the first appellate authority. Thus, Ground No. 3 of the Revenue being devoid of merits is dismissed. Ground No.2 37. Apropos Ground No. 2, we have heard arguments of both the sides and carefully perused the material placed on record before us on this issue. The Ld. DR suppo .....

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ounts and hence, when the assessee failed to produce the relevant party (seller) to prove the genuineness of alleged purchase, the A.O was quite correct in making addition in this regard. The Ld. DR vehemently argued that the Ld. CIT(A) granted relief without any basis hence impugned order may be set aside by restoring that of the A.O. 38. Replying to the above, the Ld. Counsel of the assessee strongly supported the order of the Ld. CIT(A) and submitted that the assessee submitted all relevant p .....

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assessee with following observations and conclusion: 3.5 However, so far as the second aspect of the matter is concerned, whether AO can travel beyond the satisfaction recorded, in my considered view the provision u/s 153C is more akin to the provisions of section 147. The assessment is to be framed only when the AO comes to the finding that the material found belonging to the person indicates or establishes income that has not been disclosed in the tax returns filed. This implies that the AO i .....

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177 cited by Ld. AR above. The AO had jurisdiction to initiate proceedings u/s 153C but having verified the material belonging to the appellant, and not finding any undisclosed income on that basis, should have closed the proceedings. I hold accordingly. 5.2 The facts are that the appellant apparently purchased certain construction materials from Shree Saraswati Steel Centre, Ghaziabad (Tor Steel) and Laxmi Enterprises, Ghaziabad (Cement). The bills and other documents for these purchases were p .....

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its business from 50, Mali Wara Ghaziabad (LIP), was not found at the said premises and the proprietor of Laxmi Enterprises did not personally appear (although reply was filed by the said concern). The revenue has also linked these transactions with an admission made by Sh. Anil Sharma, the Managing Director and main person of the Amrapalli group, during the course of search that the group had engaged in unsubstantiated purchases and his offer to tax of undisclosed income amounting to ₹ 4 .....

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ummons were returned by post with the remark that the firm had '"left . The appellant was, thereafter, again required to physically produce the party for verification and upon failure to do so the revenue treated the transactions as bogus. However, the moot question here is whether it was in order for the revenue to subsequently require the appellant to produce the party for physical verification? The revenue justifies the adverse view it has taken for the reason that the party had not .....

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been found in the documentary evidence so produced. Though technical rules of evidence are not strictly applicable to tax proceedings (Dhakeswari Cotton Mills Ltd. v. CIT [1954] 26 ITR 775 & Dhakeswari Cotton Mills Ltd. v. CIT [1955] 27 ITR 126 (SC)}, taxing authorities are not required to put on blinkers while looking at the documents produced before them and they are to look into the surrounding circumstances to find out the reality of the recitals made in those documents {CIT v. Durga Pr .....

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s Shree Saraswati Steel Centre was duly registered with the VAT authority having TIN: 09190900301 and CST No, GD 5243336 and VAT@ 4% was also deducted on the sales; and M/s Laxmi Enterprises was duly registered with TIN: 09388805587 since 01.12.2007 and VAT @ 12.5% had been charged on the sales. The appropriate course of action was to inform the VAT authorities about the tax deducted so that the deposit of tax could have been verified by them. The AO of the selling parties could have also been i .....

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tion was made for non- production of the said party. Business relation can be transaction-based, and it is not possible for any business concern to physically produce all the parties with which it may have had transactions in the past. Therefore, the adverse inference drawn by the revenue is pre-mature and without sound basis. 40. At the very outset, we note that the CIT(A) has followed proposition laid down by Hon ble Jurisdictional High Court (supra) in the case of SSP Aviation Ltd. vs DCIT. W .....

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