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R.P. Import and Export P. Ltd. Versus Principal Commissioner of Income-Tax

Revision u/s 263 - addition on the basis of seized documents - Held that:- It is admitted fact that during the course of search, the seized paper as was recovered, was a cancelled/crossed document. Therefore, there is no question of considering the same against the assessee, that too when the same is not signed by the assessee-company. Furthermore, when the original seized document pages 34-35 of annexure A-9 was considered and discussed in detail and it is held by the appellate authorities that .....

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icer is merged with the orders of the appellate authorities, therefore, proceedings under section 263 of the Act on the same matter in issue could not be resorted to in view of the Explanation (c) of sub section (1) of section 263 of the Act.

In this case, the Assessing Officer examined the seized document at the assessment stage and his order has been set aside by the appellate authorities, therefore, there is no question of considering his order to be erroneous in so far as prejudic .....

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dhir Sehgal For the Respondent : Sushil Kumar ORDER Bhavnesh Saini (Judicial Member) 1. This appeal by the assessee is directed against the order of the learned Principal Commissioner of Income-tax (Central), Ludhiana, dated February 26, 2015, for the assessment years 2007-08 under section 263 of the Income-tax Act, 1961. 2. Briefly the facts of the case are that the original return in this case was filed on October 31, 2007, declaring nil income. Thereafter, a search under section 132 of the In .....

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ssee, vide show-cause notice dated February 20, 2013, proposing to adopt the purchase of land at the rate of ₹ 6,50,000 per bigha. The assessee submitted, before the Assessing Officer the following arguments, vide his letter dated February 28, 2013 : "This is with reference to your letter dated February 20, 2013, regarding to adopt the rate of land at ₹ 6,50,000 per bigha for the land purchased by the company in the year under assessment. In this regard we submit as under : As r .....

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the course of search. The said land purchased by the company from various persons and the amount have been paid by the company from their regular sources. Copy of the title deed along with sources of the amount from where the payments have already been filed during the course of assessment. During the course of search also no adverse material or any kind of adverse paper have been found for giving any kind of own money. As regards the one of the agreements as per pages 34 and 35 of annexure A-9 .....

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ot know from where this document have come on my business premises. Therefore, from the abovesaid facts and circumstances no adverse inference can be drawn in this regard. Moreover, we would also like to mention that on the basis of third party documents in which our company name of their directors name is not mentioned anywhere and the documents is a crossed documents and each page is crossed and cancelled. The company recorded the actual amount in the land account as paid to the parties from w .....

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s documents were not confronted to us during the course of search and post-search enquiries. There is no sign of any director or group member on the pages 34 and 35." 3. The Assessing Officer, after considering the submissions of the assessee, observed that as per the seized document referred to above, the agreement was for purchase of land by Sh. Bhola Nath from Sh. Pawan Kumar, Sh. Rajinder Puri and Sh. Ram Murti and the land was ultimately transferred to Sh. Sumit Gupta, S/o Sh. Bhola Na .....

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er of Income-tax (Appeals) and the assessee made detailed submissions explaining therein that the seized document is cancelled/crossed alleged agreement relating to some other party with which the assessee has nothing to do. There is no name of the assessee on the seized paper and none of the directors are also connected with the same. The assessee purchased 46 bighas, 9 biswas of land from different persons after making withdrawals from the bank account. No evidence was found against the assess .....

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order dated September 3, 2013, deleted the entire addition and allowed the appeal of the assessee. (i) The learned Commissioner of Income-tax (Appeals) in his findings observed that no evidence has been found during the course of search operation with regard to any payment made over and above what is recorded in the sale deed. It was the cancelled document. The Revenue preferred the appeal before the Income-tax Appellate Tribunal, Chandigarh Bench, on the same matter in issue in I.T.A. No. 1135 .....

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e-tax Act dated January 8, 2015, stating the same facts and noted that document pages 34-35 of annexure A-9 was seized from M/s. Narain and Co. which is the sale agreement of the land between Shri Rajinder Puri and others and Shri Bhola Nath. The Assessing Officer made addition of ₹ 23,62,500 in respect of 4 bighas 10 biswas purchased by the assessee from one Shri Sumit Gupta. However, no addition in respect of the remaining land, i.e., about 44 bighas has been made by the Assessing Office .....

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377; 2,31,00,000 was required to be made for the entire property. Since the copy of the agreement in question was received from the independent sources and it is not examined by the Assessing Officer, therefore, the order of the Assessing Officer dated March 25, 2013, was considered erroneous in so far as prejudicial to the interests of the Revenue. 6. The assessee submitted before the learned Principal Commissioner of Income-tax (Central) that the same seized paper was considered by the Assessi .....

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rming part of the same village and addition is required to be made of ₹ 2,31,00,000. Copy of the seized document which is not cancelled, has been received from independent sources. Authenticity and correctness of the same has not been examined by the Assessing Officer. Therefore, the original assessment order was set aside and the Assessing Officer was directed to make the assessment afresh de novo. 7. The assessee is in appeal challenging the order under section 263 of the Income-tax Act. .....

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ed at village Salani was purchased by the assessee and the total amount paid by the assessee-company to the buyers amounting to ₹ 68,36,500 as per the registration deed, copies of the documents were also filed and details of the persons from whom properties have been purchased was also explained. The assessee also explained the seized paper in question did not belong to the assessee and even no name of the assessee has been mentioned in the same seized document. Since the seized document a .....

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(Appeals) deleted the entire addition, vide order dated September 3, 2013, and the order of the learned Commissioner of Income-tax (Appeals) has been confirmed by the Income-tax Appellate Tribunal, Chandigarh, by dismissing the Departmental appeal, vide order dated December 12, 2014 (supra). Learned counsel for the assessee, therefore, submitted that since the seized document did not belong to the assessee and the same is referred to by the learned Principal Commissioner of Income-tax in the or .....

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fore, on mere difference of opinion, the Principal Commissioner of Income-tax should not have resorted to action under section 263 of the Act. He has further submitted that the same issue, prior to the proceedings under section 263 of the Act have been examined by the learned Commissioner of Income-tax (Appeals) and the Income-tax Appellate Tribunal, Chandigarh Bench, therefore, the order of the Assessing Officer merged with the order of the appellate authorities and as such, the Principal Commi .....

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he record of the Assessing Officer, however, the same is mentioned in the scrutiny proceedings for making reference for initiating proceedings under section 263 of the Income-tax Act. The learned Departmental representative, therefore, submitted that the order of the Assessing Officer was rightly held to be erroneous in so far as prejudicial to the interests of the Revenue because the Assessing Officer should have made the entire addition including 44 bighas of the land purchased in the same vil .....

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ems necessary, pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment, or cancelling the assessment and directing a fresh assessment. Explanation.-For the removal of doubts, it is hereby declared that, for the purposes of this sub-section,- (a) an order passed on or before or after the 1st day of June, 1988, by the Assessing Officer shall include- (i) an order of assessment made by the Assistant Commissioner or Deputy Commission .....

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the Board in this behalf under section 120 ; (b) 'record' shall include and shall be deemed always to have included all records relating to any proceeding under this Act available at the time of examination by the Principal Commissioner or Commissioner ; (c) where any order referred to in this sub-section and passed by the Assessing Officer had been the subject-matter of any appeal filed on or before or after the 1st day of June, 1988, the powers of the Principal Commissioner or Commissi .....

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equence of, or to give effect to, any finding or direction contained in an order of the Appellate Tribunal, National Tax Tribunal, the High Court or the Supreme Court. Explanation.-In computing the period of limitation for the purposes of sub-section (2), the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129 and any period during which any proceeding under this section is stayed by an order or injunction of any court shall be excluded." 9. Se .....

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al and decided by the appellate authorities, the same could not be subject matter of revision under section 263 of the Income-tax Act. It is not explained when the original seized document has already been considered by the appellate authorities against the Revenue, how the copy of the same is admissible in evidence in subsequent revision proceedings under section 263 of the Income-tax Act. 10. The hon'ble Madhya Pradesh High Court in the case of CIT v. Shalimar Housing and Finance Ltd. [201 .....

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the project-wise analysis it was perceptible that work-in-progress as per the seized documents amounted to ₹ 26,83,97,827 as against ₹ 8,42,62,301 as arrived at by the assessee which resulted in undervaluation of the work-in-progress to the extent of ₹ 18.41 crores ; (ii) that one of the directors of the assessee had admitted to have received salary and perquisites which were not recorded in the books of account of the assessee ; (iii) that the Assessing Officer in the individu .....

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with the finding that the addition should be considered on substantive basis in the hands of various depositors and also protective addition should be made in the hands of the assessee but it was not considered by the Assessing Officer while framing the assessment of the assessee. The Tribunal held that the action of the Commissioner was not justified. On appeal : Held, dismissing the appeal, that the Tribunal had adverted to the factual position in a detailed manner, had appreciated those issue .....

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ed in [2010] 322 ITR (St.) 14 (SC) in the name of CIT v. Shalimar Housing and Finance Ltd. 11. Considering the facts of the case in the light of the provisions contained under section 263(1) Explanation (c) to the Income-tax Act and the judgment above, it is clear that the learned Principal Commissioner of Income- tax has exceeded his jurisdiction under section 263 of the Act. Since the same seized document has been considered by the Assessing Officer who made the addition against the assessee w .....

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014 (supra). The Tribunal in the finding has specifically observed that the assessee is not party to the agreement to sell in question and none of the persons relating to the assessee- company also connected with the said agreement in question. It was also noted that no evidence was found during the course of search to prove if any over and above consideration have been paid in respect of any property purchased by the assessee-company. Even during the course of search, no adverse material was fo .....

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lwant Rai [2007] 291 ITR 36 (Delhi) held as under (headnote) : "Held, dismissing the appeal, (i) that admittedly the assessee had not signed the agreement in question and since he had not signed the agreement, no liability could be attributed qua that agreement towards him since he was not a party to the agreement till he had signed the agreement. The mere fact that this agreement was found in the possession of the assessee did not lead anywhere. Thus, the addition of ₹ 17,00,892 made .....

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noted in the impugned order. The Assessing Officer, at the assessment stage, has examined the issue in detail and the assessee also filed a detailed reply before the Assessing Officer in respect of the entire property so purchased and also made a detailed reply on the seized paper, therefore, it cannot be said that the Assessing Officer has not examined the issue in detail. Therefore, when prior to the initiation of the proceedings under section 263 of the Act, matter in issue has been examined .....

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d by the copy of the seized document which, according to him, was received from independent sources. It would, therefore, clearly show that the copy of the said agreement which is referred to by the learned Principal Commissioner of Income-tax was not seized during the course of search. Therefore, how this could be relevant in proceedings under section 153A of the Act was not at all explained. It is admitted fact that during the course of search, the seized paper as was recovered, was a cancelle .....

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y of the same seized document. When the matter in issue has already been examined by the appellate authorities, prior to the proceedings under section 263 of the Act, the learned Principal Commissioner of Income-tax should not have resorted to the present proceedings under section 263. When the order of the Assessing Officer is merged with the orders of the appellate authorities, therefore, proceedings under section 263 of the Act on the same matter in issue could not be resorted to in view of t .....

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