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2016 (6) TMI 282 - ITAT AHMEDABAD

2016 (6) TMI 282 - ITAT AHMEDABAD - TMI - Assessment u/s 153C - addition of ₹ 1.5 crores cash component - Held that:- We come to learned counsel submission that the Assessing Officer has himself proceeded against the co-vendors u/s. 153C of the Act. There is no material placed before us as to whether those cases satisfied all the relevant conditions for exigibilty of section 153C or not i.e. they furnished their returns and no notice u/s. 143(2) had been served on them or its limitation ha .....

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/sh Amit K. Patel and Narendra R. Patel had already waived off their interests in revenue record on 25-04-2008 in Shri Darjiís favour. The same precedes the impugned seized material dated 03-05-2008 and 13-05-2008. The assessee accordingly acquired 60% interest in land in question. This fact is evident from the contents of the registered sale deed dated 17-11-2009. We are of the view that 60% of the impugned cash amount of ₹ 1.5 crores coming to ₹ 90 lacs has to be assessed in assess .....

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yments in question from him or from the vendees. He has failed to do so. This tribunalís proceedings are summary in nature based on reasonable preponderance of probabilities not requiring application of stricter provisions of evidence law. We observe in these facts that all these payment patterns are sufficient to conclude that it is assessee only who has received the impugned cash sum in tune with the cheque payments. We accordingly hold that the Ld. CIT(A) has rightly assessed the entire cash .....

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having old condition liable to premium for non-agricultural purposes and sold the same within a very short span of time after changing its usage in the impugned three assessment years. We draw inference from assessment year 2007-08 and 2008-09 as well subject matter of this very order to observe that this assessee has been acting in a well planned manner in real estate business thereby purchasing lands at cheaper rates and executing sales thereof at premium prices in addition to huge cash payme .....

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o the latter addition of ₹ 1 lacs for calculating short term capital gains, we find that the lower appellate order holds that there is no evidence stating the cost of land to ₹ 9,12,000/- and not ₹ 1 lacs. Both these grounds are accordingly rejected. - IT(SS)A Nos. 258 to 260 /Ahd/2013, IT(SS)A No. 254 & CO No. 211 /Ahd/2013, IT(SS)A No. 256 & CO No. 213/Ahd/2013 - Dated:- 31-5-2016 - Shri Anil Chaturvedi, Accountant Member And Shri S. S. Godara, Judicial Member For the Revenue .....

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y. 2. We come to second assessee Shri Amit K. Patel. The Revenue has filed IT(SS)A 254/Ahd/2013 followed by his cross objections no. 211/Ahd/2013 in assessment year 2008-09 against the order of CIT(A)-I, dated 05-04-2013 in case no. CIT(A)- I/CC.1(1)/268/2011-12. 3. The Revenue has preferred appeal IT(SS)A 256/Ahd/2013 in case of third asssessee Shri Narendra R. Patel in assessment year 2008-09 followed by his CO No. 213/Ahd/2013 against the CIT(A)-I order dated 05-04-2013 passed in case no. CIT .....

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plained investment addition u/s. 69 of ₹ 56,61,200/- made by the Assessing Officer and affirmed in the lower appellate order. This assessee in assessment year 2008-09 raises identical no. of grounds inter alia testing validity of section 153C proceedings as well as unaccounted short term capital gain enhancement of ₹ 1,61,21,622/-; respectively. Shri Anil R. Darji raises multiple grounds in assessment year 2010-11 inter alia in testing legality of section 143(3) proceedings followed .....

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grounds:- 1) On the facts & circumstances of the case and in law, the Ld. CTT(A) has erred in upholding the jurisdiction and validity of the initiation of the proceedings and the assessment order passed U/S.153A/153C, without considering the ground (amongst others) that without having recorded the satisfaction by the A.O. prior to the issuance of notice U/S.153C of the Act, the initiation of proceeding U/S.153C is illegal, unlawful and bad in law. 2) The Ld. CIT(A) has erred in law and on fa .....

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deduction u/s 28 of the Act for the alleged equivalent share of profit out of sale consideration as retained/siphoned off by Anil G Darji should have been given as set off being incidental business loss as per the alternative plea raised by the appellant before the A.O. and the Ld. CIT(A). 3) On the facts and circumstances of the case and in law and also in view of the finding of fact recorded by the Ld. CIT(A) that cash amounting to ₹ 56,61,200/- has been paid by Anil G Darji out of unexp .....

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departmental appeal deserves to be dismissed/rejected. 6. This leaves us with the third Shri Narendra R. Patel. The Revenue has preferred IT(SS)A 256/Ahd/2013 against the CIT(A) s order deleting unaccounted capital gains addition on sale of lands of ₹ 53,70,646/- and ₹ 32,53,733/- made on substantive and protective basis respectively by the Assessing Officer on the basis of various seized documents. The assessee s CO therein is stated to be identical to those extracted in preceding .....

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f survey no 217/01 and 217/02 at Chandlodia, Ahmedabad admeasuring 2956 sq. yd. The same indicated that these three assessees had agreed to sell the above stated land to vandees S/sh Brijesh and Mahendra D. Patel @ ₹ 10,171/- per sq. yd as against Shri Vikas R. Patel s statement recording during search revealing therein cash payments of ₹ 2.5 crores made. The registered sale deed 31-10-2007 had quoted consideration amount as ₹ 20 lacs. Shri Patel deposed in his statement that t .....

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sessees making the above stated additions as confirmed/modified by the CIT(A) indicated hereinabove leaving all the three parties aggrieved to the extent of their grievances narrated in preceding paragraphs. 9. S/Sh S. N. Divetia, Anil Kshtriya and Jagdish (CITDepartmental Representative) represent the assessees Anil R. Darjee, Shri Amit Patel and Narendra R. Patel and Revenue respectively. They state that first and foremost issue involved in assessment year 2007-08 and 2008-09 is a legal one ch .....

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up and its partners Shri Vikas R. Patel on 04-03-2010. The same led to seizure of above stated incriminating documents. He makes it clear that Assessing Officer in case of the searched parties and asssessee s case is the same. He recorded satisfaction on 14-07-2011 that the relevant documents in the nature of above stated MOU (supra) etc belonged to the assessee for the purpose of initiating section 153C proceedings. Shri Divetia takes us to the relevant satisfaction note reading as under:- A se .....

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nexure A-1 are 'Memorandum of Understanding' dated 07/04/2007 pertaining to the land at Final Plot No.32, TP No. 29 of Survey No.217/1 and 217/2 at Chandlodia admeasuring 2472 sq.mt. (2956 sq.yd). This memorandum of understanding is between Shri Brijesh S. Patel and Shri Mahendra D. Patel (First Party) and Shri Anilkumar G. Darji, Shri Amitkumar K Patel and Shri Narendra R Patel (Second Party). This memorandum of understanding has signature of all the above persons. Thus, I am satisfied .....

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has the signatures of Shri Brijesh S Patel, Deepakbhai G Prajapati and Shri Anilkumar G Patel (Darji). Thus, I am satisfied that the page no 128- 135 of Annexure A-3 belongs to Anilkumar G Darji. It is also noticed that the page no 1-17 of Annexure A-3 seized from the residential premises of Shri Vikas R Patel is the copy of registered sale deed of land at Survey No 206 admeasuring 7386 sq mtr at Chandlodia of ₹ 4,25,000 dated 07/04/07 between Amitkumar K Patel, Anilkumar G. Darji, Narendr .....

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d Party). The Banakhata has the signatures of all the parties. Thus, I am satisfied that the page no 31-34 of Annexure A-1 I belongs to Anilkumar G Darji. In view of the above, I am satisfied that page no 1-6 of Annexure A- 1; page no 128-135 of Annexure A-3; page no 1-17 of Annexure A-3 and page no 31-34 of Annexure A-1 seized from the residential premises of Vikas R Patel belongs to Shri Anilkumar G Darii (PAN:AAWPD3288R) and hence the case is fit for initiating proceedings us. 153C r.w.s. 153 .....

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a similar action being adopted in this assessee s case. His case is that the revenue authorities have not placed on record any satisfaction to have recorded in searched parties cases. Case law of hon ble jurisdiction high court (2014) 222 Taxman 96 (Guj) DCIT vs. Lalitkumar M. Patel upholding tribunal s order in IT(SS)A No. 61/Ahd/2007 is also quoted. Shri Divetia submits that the impugned assessment framed u/s. 153C of the Act is liable to be quashed on this ground alone. 11. Next comes Shri D .....

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ar No. 24/2015 date 31-12-2015 in pursuance to the above stated decision requiring an Assessing Officer to record section 153C satisfaction first in case of the searched assessee followed by a similar exercise in case of other persons even if they are assessed in the same jurisdiction. Learned counsel clarifies that the Board has treated section 158BD of old scheme of block assessment to be pari materia to section 153C proceedings. 12. Shri Divetia thereafter argues that there is no dispute abou .....

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essee sought to be proceeded u/s. 153C of the Act is owner of the seized documents. Shri Divetia accordingly concludes his arguments to pray for quashing of the impugned section 153C proceedings in the light of above narrated submission. 13. Shri Jagish (CIT-D.R.) represents the Revenue. He narrates factual position first. He states that the date of relevant search is 04- 03-2010. The Assessing Officer initiated section 153A proceedings in case of Shri Vikas R. Patel on 18-02-2011. The departmen .....

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ion dated 14-07-2011 has to be read as a common one applicable in all cases of searched parties as well as the ones in hand. Case law of KPC Medical College and Hospital vs. DCIT(Kol) ITA Nos. 1832 to 1834/Kol/2014 decided on 24-06-2015 upholding a similar common satisfaction is quoted in support. 14. Next comes Shri Jagdish s reply to assessee s argument that the seized material (supra) cannot be held to be belonging to Shri Darji. He clarifies that all these three assessees are signatories to .....

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s narrated in this judgemnt treating vendors payment receipt containing their signatures held as to be belonging to them. Another case law (2014) 162 TTJ 171(AHD) Pravinbhai Keshavbhai Patel vs. DCIT treating an MOU to be belonging to parties therein is quoted in support. Shri Jagdish accordingly seeks to defend the impugned assessments by stating that the same confirms to all the legal requirements necessary for initiating section 153C proceedings. 15. Shri Anil Kshtriya represents the remainin .....

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o assessees have exhausted all their remedies including RTI applications in order to get copy of section 153C satisfaction notes. We are taken to our directions dated 14-10-2015 issued to the department for providing searched assessee s records and also to allow inspection of the relevant satisfaction note. Learned counsel submits that section 153C satisfaction note in his two cases are dated 19-07-2011 and no such course of action has been adopted in case of the searched party (supra). He argue .....

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which renders the impugned section 153C assessment to be not sustainable in the eyes of law. 16. Shri Jagdish (CIT-D.R.) representing Revenue reiterates his submissions as made in case of the first assessee Shri Anil R. Darji. 17. We afforded rebuttal opportunity to both the learned counsel representing assessees. More particularly for throwing light on Kolkata bench decision of the tribunal (supra) propounding common satisfaction principle u/s. 153C of the Act being recorded in case of the sea .....

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hri Vikas R. Patel. It seized MOU/Banakhat/Sale deed demonstrating these three having acted as vendors of the land in question. The registered sale deed quoted price is ₹ 20 lacs. Shri Vikas R. Patel got recorded his search statement deposing that these three assessees had received unaccounted cash money of ₹ 2.5 crores. The Assessing Officer is admittedly common in all these cases. He initiated section 153A proceedings against Shri Vikas R. Patel on 18-02-2011. This followed three s .....

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nue behest as to whether or not the Assessing Officer recorded satisfaction in case of Shri Vikas R. Patel s. His reply is in negative. He reiterates his submission already made that the impugned satisfaction has to be taken as a common one in case of the searched party as well as all the three assessees herein as per Kolkata bench decision (supra). We tend to disagree with this Revenue s contentions. The law is very well settled now that an Assessing Officer has first to form an opinion in the .....

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satisfaction hereinabove has to be read as a common one by drawing strength from Kolkata bench decision. We find that latter decision of this bench itself in case of Shailesh R. Daxini (supra) takes into account the same to hold that even the said bench does not dispute the legal requirement of recording of section 153C satisfaction. It holds that the Revenue must place on record sufficient material to make out its case of a common satisfaction recorded by the Assessing Officer being same in ca .....

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5.03.2008. It allegedly came across incriminating material in the nature of documents, books of account and other valuable articles. This included file documents Annexures A-55, 64 & 65 belonging to the assessee. The same culminated in issuance of section 153C notice dated 23.07.2009. The assessee filed return on 23.08.2009 stating income of ₹ 1,32,400/-. The Assessing Officer took up scrutiny. He inter alia noticed assessee s action of allegedly misusing client code facility and obser .....

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only. The assessee argued in the course of lower appellate proceedings that none of the seized material belonged to him as contemplated under section 153C of the Act. The CIT(A) concurs with the Assessing officer to hold that above stated incriminating material annexure-55, 64 to 65 belongs to assessee only thereby rejecting assessee s legal plea. 7. This leaves the assessee aggrieved. 8. Learned authorised representative opens up assessee s arguments. We are taken to the satisfaction note rele .....

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mises of Kunwarji Commodities & Brokers Pvt. Ltd. Ahmedabad, it is noticed that seized file Annexure- A-55 contains the following documents belong to Mr. Shailesh R. Daxini. Page 65 to 73 is the client registration form of Mr. Sailesh R. Daxini in which relevant details have been provided by Sailesh R. Daxini including his signed photograph. This document has been signed by Sailesh R. Daxini at different pages. Page 76 to 83 are the copy of bank statement of Central Bank of India of Sailesh .....

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ncome amounting to ₹ 1,35,30,671 in F.Y.2006-07 by adopting the methodology of client code modification carried out with the connivance of the broker Kunwarji Commodities & Brokers Pvt. Ltd. This has been done by taking over loss of other persons as well as transferring their profit to other persons and thereby the assessee has evaded payment of taxes. This has resulted in escapement of income assessable to tax. From the above it is clear that the said documents belong to Mr. Shailesh .....

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assessee s case who happens to be other than the searched assessee and no such satisfaction has been recorded in the case file of M/s. Kunvarji (supra) that the incriminating material hereinabove belonged to the assessee. It is further stated that the assessee filed RTI application as well seeking to confirm as to whether the Assessing Officer had recorded any satisfaction in case of the above stated searched assessee under section 153C. We are informed that the department has furnished the abov .....

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the other assessee as under :- 7. Copy of the reasons recorded for issue of notice under Section 158BC is at page no.25 of the Revenue s paper book which reads as under: REASONS FOR ISSUE OF NOTICE U/S.158BD OF THE ACT. Assessee : Shri Upendra N. Patel, Shri Lalit M. Patel & Shri Champak M. Patel A search and seizure action in the Jayraj Group was carried out u/s.132 (1) on 19 12.2001. Certain incriminating documents pertaining to Shri Upendra N.Patel, Shri Lalit M.Patel & Shri Champak .....

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romise decree dated 03.10.2000. As per the MOU dated 01.11.1996, Shri Lalit M.Patel and Shri Champak M.Patel acquired the right in the land of M/s.HEMPL and they have made total cash payment of ₹ 37 lacs and unaccounted demand draft of ₹ 1 crore to the Court Receiver appointed by the Hon'ble High Court of Mumbai. Shri Jayesh Dave entered into a Court Settlement Decree on 30.09.2000 with Shri Upendra N.Patel, Shri Lalit M.Patel & Shri Champak M.Patel for ceding their rights in .....

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ating papers referred to are A-15, pages 99-95, A-41 pages 36-39, A-3/5 pages 138 to 146, A-57 pages 122 to 158, A-35 pages 66-87J A-2 pages- 1, A-15 pages 75&76 and others of the Appraisal Report. Sd/- (A.K. SINHA) Dy. Commissioner of Income Tax Central Cir.1, Baroda. Date : 23.02.2004 8. The learned counsel for the assessee has challenged the validity of the initiation of the proceedings under Section 158BD mainly on two counts - (i) that the proceedings were initiated after completion of .....

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n the other hand, relied upon the orders of the authorities below and stated that the satisfaction recorded by the AO under Section 158BC is a valid satisfaction because the persons who recorded the satisfaction was the AO for Jayaraj Group of cases as well as the assessee. He also submitted that notice under Section 158BD was duly issued before the completion of the assessment under Section 158BC read with section 263, in the Jayraj Group of cases. 9. We have heard both the parties and perused .....

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section 132A or documents or assets have been requisitioned under section 132A. Section 158BD, however, provides for taking recourse to a block assessment in terms of section 158BC in respect of any other person, the conditions precedent wherefor are : (i) satisfaction must be recorded by the Assessing Officer that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 of the Act ; (ii) the books of account or other documents or .....

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n requisitioned under section 132A of the Act. 10. That the Special Bench of the ITAT in the case of Manoj Aggarwal (supra) has considered the above decision of the Hon ble Apex Court and also other decisions of various Courts and examined in detail the conditions which are to be satisfied before the issue of notice under Section 158BD. The Special Bench held as under: Section 158BD provides for assumption of jurisdiction to make a block assessment in the case of a person not searched and agains .....

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e other person. As section 158BC relates to a person searched there has to be different provision for making a similar assessment in the case of the other person and hence section 158BD has been enacted. So, the said section states that if the Assessing Officer is satisfied that the undisclosed income belongs to the other person, then he shall hand over the seized material so as to enable the second Assessing Officer to make a block assessment in a similar manner and that is not possible if the .....

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l examined shows that the undisclosed income pertains to some other person he has to give a finding to this effect and thereupon transmit the related seized material to the Assessing Officer having jurisdiction over the other person. All these findings have to be recorded after an honest appreciation of the seized material with an objective mind and there has to be a record reflecting such findings on the basis of which alone the other Assessing Officer can assume jurisdiction to proceed against .....

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ssessment in the section 158BC proceeding and the date of the block assessment is the outer limit for recording such satisfaction. This is for the reason that the satisfaction has to be recorded by the Assessing Officer examining the material in the case of the person searched and he will have to find out whether there is any undisclosed income at all unearthed which again can only be in the course of such proceeding. After finding that there is undisclosed income, he will have to give a finding .....

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r section 158BD is not possible. In the circumstances, the absence of the words 'in the course of the proceeding in the section is no material to the issue in the context of the said section itself. 11. Let us examine the facts of the assessee s case in the light of the above decision of the Hon ble Apex Court and the Special Bench of the ITAT. As per the decision of the Hon ble Apex Court, before the issue of notice under section 158BD, satisfaction must be recorded by the AO of the person .....

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the course of proceedings under Section 158BC and not thereafter. Meaning thereby, the satisfaction must be recorded before the completion of the assessment of the person searched. Now in the case of the assessee we have reproduced the satisfaction note in para-7 above. 12. From the satisfaction note, it seems that it is recorded by the AO of the assessee and not the AO of Jayraj Group of cases. This inference of ours is on the following basis: i) Heading of the note is Reasons for issue of Not .....

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Shri Champak M. Patel. Thus, the reason is recorded in the case of these assessee and not in the case of Jayraj Group of cases. Had the satisfaction recorded by the AO of Jayraj Group of cases, then the name of the assessee would have been Jayraj Group of cases and not as Shri Upendra N. Patel, Shri Lalit M. Patel & Shri Champak M. Patel. iii) In the first line of the satisfaction note, the AO has menioned the Search and seizure action in the Jayraj group of cases was carried out under Sect .....

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and not of the AO of Jayraj group. If the satisfaction has been recorded by the AO of Jayraj Group cases, he would have mentioned that during the course of search in the case of the assessee, various MOUs belonged to Shri Upendra N. Patel, Shri Lalit M. Patel & Shri Champak M. Patel were found. The same are being forwarded to their AO for taking action under Section 158BD in their cases. In view of the above, we are of the opinion that the satisfaction was recorded by the AO of the assessee .....

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originally completed under Section 158BC on 30-1-2004. That thereafter under Section 263 such order was set aside and fresh assessment order was passed on 29- 12-2006. However, it is not the case of the Revenue that the order under Section 263 was passed with regard to some finding pertaining to undisclosed income of the assessee viz. Shri Lalit M. Patel. In the fresh assessment order passed in pursuance of Section 263 also there is no mention with regard to undisclosed income, if any belonged t .....

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under Section 158BD in the case of the assessee was not valid. We quash the same. Once the notice under Section 158BD itself is quashed, the assessment order passed under Section 158BC in pursuance to the notice issued under section 158BD is also quashed. Learned authorised representative accordingly submits that the Assessing Officer has erred in taking recourse to above stated satisfaction note as the triggering point for initiation of section 153C proceedings under challenge. 10. We afforded .....

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ng Officer has not entered any separate satisfaction note in case of the searched party M/s Kunvarji. She submits that the Assessing Officer is the same in case of assessee as well as the searched party. He is accordingly supposed to have all the relevant information as to in whose case the impugned incriminating material is to be used for the purpose of assessing undisclosed income based on the alleged incriminating material. Learned departmental representative files on record decision of anoth .....

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the searched person as well as the other person i.e. the assessee. Let us take a situation, the AO was examining the file of Shri Bhaskar Ghosh. On perusal of his statement recorded under section 132(4) coupled with the fact of cash found during the course of search and buttressed by the Managing Director (Finance) of the KPC Group of companies, visualized that cash belonged to the assessee, he immediately took a piece of paper and recorded his satisfaction that the money belongs to the assesse .....

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at the end of ld. counsel for the assessee is that there should be a straight jacket system, whereby the satisfaction recorded even by the same AO then, that should be placed in the file of searched person and if it is placed in some other cupboard in his room by the AO then, there cannot be any satisfaction, we fail to appreciate that technical approach at the end of assessee. The law does not require the manner and the procedure of keeping the files. The section only requires that a satisfacti .....

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recorded. In our understanding the reply will be that satisfaction was recorded. Learned departmental representative thereafter takes us to the co-ordinate bench conclusion of the Assessing Officer having recorded satisfaction after noticing that both assessee s case files were on the same table as under :- 20. As far as the judgments relied upon by the ld. counsel for the assessee are concerned, we have considered them and they are distinguishable on facts. The emphasis of the ld. counsel for t .....

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sion that satisfaction was recorded while taking up the cases of other person. This conclusion has been drawn on the basis of material supplied under query made as per RTI Act. It is a factual issue. We are conscious of this fact but we have dealt with the facts in the present case and observed that satisfaction was recorded by the AO while scrutinizing the papers of the searched person. It is very difficult to create a distinction to find out when such satisfaction was recorded when files of bo .....

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153C of the Act. 12. We have heard rival submissions. Case files stands perused. There is no dispute that this assessee is not the one searched since the impugned proceedings are under section 153C of the Act conducted on 25.03.2008 in case of M/s. Kunvarji Commodities Brokers Pvt. Ltd. There is further no issue that the DCIT Central Circle 1(1) is the common assessing authority in case of both the assessees. The legal position envisaged under section 153C of the Act is very clear that the Asse .....

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e Revenue by saying that the Assessing Officer is the same who has expressed satisfaction in assessee s case. The law about entering of such a satisfaction is very well settled now. Hon ble apex court in the case of Manish Maheshwari vs. ACIT (2007) 289 ITR 341 (SC) holds that such a satisfaction is indeed mandatory. We deem it appropriate to observe that this case dealt with block assessment scheme under section 158BD of the Act as it existed in the erstwhile avatar under Chapter XIV-B of the A .....

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ficer of the other assessee. Para no.4 of this Circular further envisages that this dual exercise is to be complied with even if the Assessing Officer happens to be the same in both cases. We deem it appropriate to observe in this factual and legal backdrop that an Assessing Officer has to mandatorily follow the above stated dual satisfaction exercise before initiating section 153C proceedings. We find that neither the jurisdictional tribunal s decision nor that of Kolkata bench (supra) deviate .....

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n case of searched and third party is the same. And it is very difficult to create a distinction to find out when such satisfaction was recorded since both files were lying together on the assessing authority s table. It is therefore clear to us that there is no distinction on legal principle of the satisfaction precondition before initiation of section 153C proceedings in both these decisions. The latter decision is of the view that the timing of this satisfaction being recorded in case of sear .....

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, places the same in it s file followed by an opinion of the above stated material having caused escapement of any income. It is accordingly argued that the impugned satisfaction does not adhere to above stated settled law. The Revenue on the other hand makes out a case that the Assessing Officer s satisfaction has come only after careful examination of the above stated incriminating material being examined together in the cases of M/s. Kunvarji as well as the assessee. We find no reason to agre .....

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based on Kolkata bench decision of the tribunal puts a heavy onus on the department to positively prove that the same Assessing Officer in case of searched assessee as well as the third party had collectively examined the case files before recording a satisfaction note contemplated under section 153C of the Act. Needless to say, this burden stands un-discharged. We hold in these peculiar facts and circumstances that the Revenue s arguments justifying the impugned satisfaction note are devoid of .....

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failed in proving the fact that the Assessing Officer recorded any satisfaction whether common or separate in case of the searched person Shri Vikas R. Patel before initiating section 153C proceedings under challenge. We are of the opinion that this inaction on part of the Assessing Officer violates law mandating recording of satisfaction as settled by hon ble supreme court in case of Manish Maheshwari as well as that of Lalitkumar M. Patel (supra). We accordingly quash the impugned assessments .....

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belonging to aspect and merits as having been rendered infructuous. 20. We are now left with assessment year 2010-11 involving Shri Darji s appeal IT(SS)A 260/Ahd/2013 raising the following substantive grounds:- 1.1 The order passed u/s.250 on 19.4.2013 for A.Y.2010-11 by CIT(A)-I, Abad not only confirming but enhancing the addition in respect of land deal bearing Survey No.206 is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in l .....

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mstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld the addition of ₹ 1,50,91,800 as unaccounted business income instead of short term capital gain on substantive basis in the hands of the appellant in respect of land deal bearing survey No.206 at Chandlodiya. The enhancement made by CIT(A) was illegal unlawful and without jurisdiction apart from against the principles of natural justice. 3.1 The Ld. CIT(A) has grievously erred in law and or on facts in holding .....

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t these conclusions without allowing sufficient opportunity to the appellant or furnishing the material produced by the said co-purchasers or before passing the appellate order in their cases. The Ld. CIT(A) has grossly erred in ignoring the overwhelming evidence including the findings given by AO in asstt order as well as in remand report establishing beyond doubt that the entire transaction was carried out jointly by appellant and other two parties and had shared the proceeds equally. Both the .....

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h. 6.1 Without prejudice to the above and in the alternative, the Ld. CIT(A) has failed to appreciate that the signature of the appellant appears in respect of payments received aggregating to ₹ 36 lakhs so that only I/5th share therein was assessable in his hands as against the total consideration of ₹ 1,50,91,800 assessed by the lower authorities. 21. We come to facts first. The department came across Bana/chithi dated 03-05-2008 as well as Banakhat/Karar dated 13- 05-2008 pertaini .....

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ti. This was followed by the registered sale deed in question being executed on 17-11-2009 in previous year relevant to the impugned assessment year stating consideration of ₹ 73,58,000/-. Shri Vikas R. Patel in his search statement deposed that this sale deed involved cash payment of ₹ 1.5 crores made to Shri Darji and others. 22. The assessee filed his return on 28-03-2011 declaring total income of ₹ 37,16,870/- followed by a revised one on 08-11-2011 increasing income to  .....

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; 3,14,84000/- in the nature of undisclosed income. 23. The assessee filed reply on 10-11-2011 inter alia stating that there were five partners in the above stated land transaction (supra). He pleaded for equal addition in all these cases. Shri Darji highlighted that he had received ₹ 36 lacs only in cash and ₹ 73.58 lacs by cheques. Latter sum was clarified to have been obtained on behalf of all other partners. The Assessing Officer thereafter issued notices to the remaining two ass .....

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Both these assessees accordingly stated that they had no interest left whatsoever in agreements dated 03-05-2008 and 13-05-2008. There further case was Shri Darji only received the payments in question whose share had increased to 60% from 20% after acquiring 40% from them. 24. The Assessing Officer thereafter recorded statements of the two remaining vendors of 20% each i.e. S/sh Bhagyesh Patel and Chandubai Patel who denied to have received any cash sum for having sold the land in question. Th .....

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p; Others at ₹ 4,25,000 (as per the registered sale deed dated 17/07/2007). The registered deed dated 17/07/07 was bearing the name of all these five persons (buyers). 2. Shri Amit Patel & Shri Narendra Patel transferred their rights in favour of Anil G Darji and corresponding entries made in revenue record on 25/04/08 3. Tha Banakhat/Karar was executed on 13/05/2008 between Brijesh Patel and Dipak G Prajapati (First Party) and Amitkumar K Patel, Anilkumar G. Darji, Narendra Patel, Cha .....

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Shri Chandu Patel & Shri Bhagyesh Patel (Sellers) and Shri Bhagwan Ajara & Shri Dipak Prajapati (Buyers). The details of payment of ₹ 150 lakhs have been found on page 128, 129 & 132 of the Annexure A-3 seized from the residential premises of Shri Vikas R Patel. Shri Anil G Darji has also placed his signatures against the entries evidencing payment on these pages. From the details of these payments, it is established that the said MoU was duly executed and unaccounted payment o .....

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persons (viz Shri Amitkumar K Patel, Anilkumar G. Darji, Narendra Patel, Chandu Patel & Shri Bhagyesh Patel as the land was originally held jointly by each of these persons), the taxable capital gain in the hands of Shri Anil G Darji comes at ₹ 73,15,000 (ie ₹ 30,00,000 (cash) + ₹ 44,15,000 (cheque)- ₹ 1,00,000) as follows Sale Consideration Payment made for purchase (Rs) Taxable Capital Gain (Rs) Cash (Rs ) Cheque (Rs ) Shri Anil G Darji 30,00,000 44,15,000 1,00,000 .....

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4.2 The registered deed for the said land executed on 17/11/09 was not having the names of Shri Amitkumar Patel and Shri Narendra Patel as 'Selling Party'. As per the registered sale deed dated 17/11/09, Shri Amitkumar Patel and Shri Narendra Patel had transferred their share to Shri Anil G Darji on 25/04/08 (ie prior to signing of Bana Chitti on 03/05/2008 and Banakhat/Karar on 13/05/2008). Also, Bana Chitti dated 03/05/2008 and Banakhat/Karar dated 13/05/2008 was having the signature o .....

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ita] Gain is being made in the hands of Shri Amit Patel. Shri Narendra Patel. Shri Bhagyesh Pate] and Shri Chandubhai Patel at ₹ 30,00,000 each (ie ₹ 1,50,00,000 / 5). Penalty proceedings u/s 271AAA of the IT Act are initiated on undisclosed income of ₹ 1,20,00,000. 5. During the course of search another notarized document was seized vide page 24-27 of Annexure A/3 from the residence of Shri Vikas R Patel. As per this document, payment of ₹ 1,00,000 was made by Shri Anil .....

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₹ 2,00,000. 25. The assessee preferred an appeal. Other parties/assessees S/sh. Amit K. Patel and Narendra Patel preferred their separate appeals. The CIT(A) inter alia holds that the latter two assessees do not have any stake in the seized material documents dated 03-05- 2008 and 13-05-2008 thereby waiving off all their rights and interests in the revenue record on 25-04-2008, Shri Darji had entered into an adventure in real estate business thereby deciding the issue against him as follow .....

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rom the sequence of events, it is clear that the contention of Shri Amit K. Patel and Shri Narendra R. Patel that they were only name holder does not appear to be sound because it is seen that Shri Anil G. Darji himself is a agriculturist capable of getting agricultural lands registered in his name. Hence, if Shri Amit K. Patel and Shri Narendra R. Patel had not made any contribution towards purchase of land then there would have been no question of including their names in the purchase deed bec .....

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o specified in the banakhat. The land is sold within a period of less than 1 year of being purchased. The sellers are similarly engaged in similar transactions of purchase and sale of lands earlier also. All of them have stated in their statements recorded before the A.O. that the transactions were only for earning profit. This fact is further evident when one looks at the kind of transactions entered into by the concerned persons. Originally five persons had joined to purchase this land however .....

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as the other inference is drawn by the Assessing Officer are concerned, the same are correct and flow naturally from the records seized during the search and seizure operation at the premises of Shri Vikas R. Patel. 5.3 As far as the protective addition in the hands of Shri Amit K. Patel and Shri Narendra R. Patel is concerned, it is seen that Shri Amit K. Patel and Shri Narendra R. Patel had transferred their rights in favour of Shri Anil G. Darji and the corresponding entries made in revenue r .....

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at Survey No.206 at Chandlodia) was executed by Shri Anil G. Darji, Shri Chandu Patel, Shri Bhagyesh Patel as sellers and Shri Brijesh Patel and Shri Deepak Prajapati as buyers for sum of ₹ 73,58,000/-. This deed was not signed by Shri Narendra R. Patel or Shri Amit K. Patel. This finding has been recorded by the Assessing Officer on page 15 of the assessment order. In view of the above, it is clear that Shri Amit K. Patel and Shri Narendra R. Patel received only a sum of ₹ 1,00,000/ .....

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00/-. As a result of this in the cases of Shri Amit K. Patel and Shri Narendra R. Patel in A.Y.2008-09, it has been held that they had made unaccounted investment of ₹ 82,500/- each towards purchase of this land having 175th share. However, Shri Narendra R. Patel and Shri Amit K. Patel transferred their rights in favour of Shri Anil GLJDarji vide banakhat dated 02.04.2p08 for sum of ₹ 1,00,000/- each which was paid to them by Shri Anil G. Darji. This is evident from the seized docume .....

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i Deepak Prajapati on behalf of the purchasers. However, on behalf of the sellers, only Shri Anil G. Darji has signed banakhat. The sale deed for land at survey No.206, Chandlodiya admeasuring 3344.48 sq. mtrs. was executed for a sum of ₹ 73,58,000/- between Shri Anil G. Darji, Shri Chandubhai Patel and Shri Bhagyesh Patel (sellers) and Shri Bhagwanbhai Ajara and Shri Deepak Prajapati (buyers). The details of payments of ₹ 1,50,00,000/- have been found on pages 128,129 and 132 of Ann .....

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ed 02.04.2008 as consequence of this banakhat the names were removed from revenue records on 25.04.2008. Thus, these two persons could not have been a party to the banakhat executed on 13.05.2008. (ii) Shri Bhagyesh Patel and Shri Chandubhai Patel have not signed the banakhat which was made between Shri Brijesh Patel and Shri Deepak Prajapati (purchasers) and Shri Anil G. Darji (seller) for a sum of ₹ 73,58,000/- by cheque of ₹ 1,50,00,000/- by cash. This deed has been signed by Shri .....

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ash transactions. However, the cash receipts as evidenced by page No.128, 129 and 132 of Annexure-A-3 seized from the residential premises of Shri Vikas R. Patel have been signed only by Shri Anil G. Darji. (iv) Part of the cheque payment was to be received by Shri Chandubhai Patel (20%) and Bhagyesh Patel (20%). 5.7 The above clearly indicates that the money has been received by Shri Anil G. Darji alone. In view of the above, the following inquiries are drawn as far as the sale of land at surve .....

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Rs. 1,50,00,000/- Add: 60% of cheque of ₹ 73,58,000/- ₹ 44,14,800/- Less: Cost paid by Shri Anil G. Darji Rs.1,00,000/- Rs.1,93,14,800/- Less: Income shown by Shri Anil G. Darji as capital gain from this transactions Rs.42,23,000 Less: The addition on amount of this transactions to be made to be returned income Rs.1,50,91,800/- Thus, the addition to be made in the hands of Shri Anil G. Darji from sale of this land is ₹ 1,50,91,800/- which has to be assessed as business income. .....

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t to a caveat that no fresh fact is to be entertained or examined. Learned counsel submits that the hon ble apex court in NTPC case 229 ITR 383 has already held that this tribunal can very well entertain a pure question of law have all relevant facts on record in order to ascertain the correct tax liability. 27. Shri Divetia thereafter states that the impugned search is dated 04-03-2010. The Assessing Officer in assessee s case; a person not searched, entered into section 153C satisfaction on 14 .....

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nto account preceding six assessment years before the assessment year relevant to the previous year of the search. His contention is that the impugned assessment year 2010-11 comes within block of six assessment years preceding the date of search to be constructed as 14-07-2011 on the basis of first proviso to section 153C(1). It strongly argues that the relevant six assessment years would accordingly be 2006-07 to 2011-12 including the impugned assessment year 2010-11. Learned counsel submits t .....

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he cash component alike the one by cheque, the CIT(A) has wrongly held these transactions as adventure in the nature of real estate business, there are cuttings and overwriting in the relevant cash receipts and that MOU price of the land in question comes to ₹ 2,63,24,402/- (Rs. 7871X3344.48) as against that determined of ₹ 2,23,58,000/- (Rs. 1.5 crores + ₹ 73.58 lacs). He further reiterates assessee s pleadings relevant to the other substantive grounds to be decided in succeed .....

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vision are quoted in support. Shri Jagdish thereafter seeks to defend the impugned addition made by the lower authorities on merits. 30. We afforded rebuttal opportunity to Shri Divetia. He reiterates his earlier submissions. He comes to sections 292B and 292BB. It is stated that the former one cures only mistakes, defects and omissions and latter one deals with non-service of notice within time or manner prescribed. Learned counsel emphasizes that his legal plea seeking to quash the impugned re .....

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hri Vikas R. Patel (searched party) deposed before the search authorities that this land transaction involved cash payment of ₹ 1.5 crore over and above registered sale price of ₹ 73.58 lacs. The assessee filed his return on 28-03-2011. His Assessing Officer (common in all cases) received the relevant record pertaining to the search in question on 14-07-2011. This followed section 143(2) notice being served on 19- 09-2011. He thereafter framed the impugned regular assessment u/s. 143 .....

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reject this legal plea. We are of the opinion that Special Bench decision of the tribunal (supra) has taken into account all the relevant law to conclude that such a legal plea can be allowed to be raised if necessary for determining appropriate tax liability without requiring any new endings. We quote the same to overrule the Revenue s objections. 32. We come to assseess s legal argument now. Section 153C of the Act as applicable in the impugned assessment year 2010-11 reads asunder:- 153C(1)[ .....

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t or documents or asset, 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 notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if , that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total inc .....

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diction over such other person:] x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x [(2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date of furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A a .....

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unt or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.] 33. A perusal of the above extracted section makes it clear that the same applies in case it is found that any money, bullion or jewellery or other material stated therein belongs to any other person, the Assessi .....

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is followed by sub-section 2 to section 153C. This provision envisages the course of action to be adopted by the latter Assessing Officer having jurisdiction over a third person on receiving the relevant record after the due date for furnishing return of income for the assessment year relevant to the previous year in which search is conducted under sec. 132 or requisition is made under sec. 132A. This due date of furnishing return is 31/07/2010 u/s. 139(1) Explanation 2(c) of the act. The assess .....

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essment year relevant to the previous year in which search is conducted. We are of the opinion all these expressions are to be construed as they appear without any further emphasis being supplied. Then come the specific wordings search is conducted . We deem it appropriate to observe that the legislature itself has chosen to use this expression instead of search only. We are of the opinion that the legislative intention in using the former expression is clear that only the date of actual search .....

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before proceedings u/s. section 153C. The first clause (a) is that the third party assessee has not furnished his return and no notice u/s. 142(1) of the Act has been issued. This is not the case here since the assessee already filed return dated 28-03-2011 well before record being received by his Assessing Officer on 14-07-2011. Then comes clause (b) applicable in case the third person concerned furnished return but no notice u/s. 143(2) of the Act has been served and its limitation has expired .....

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apply reverse implication rule that the legislature in its full wisdom does not include a case wherein limitation for serving section 143(2) notice has not expired after a third party has furnished return. Clause (c) to sub-section 2 of section 153C of the Act applies in case assessment or reassessment have been framed. There is no such factual position exiting herein. We conclude in these facts and circumstances that all the relevant conditions in sec. 153C(2) clause (a) to (c) must be satisfi .....

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the assessee invited our attention to hon ble Delhi high court decision (supra) as well as other co-ordinate bench decision of Ahmedabad bench of the tribunal holding that six preceding assessment years for framing section 153C assessments have to be computed from the date of receiving records under section 153C first proviso. He also places on record similar sec. 153C notices being issued to the other two co-vendors. There is no reason for us to disagree with the legal position settled by hon b .....

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We also support ratios propounded therein that an Assessing Officer having jurisdiction over a third person has to proceed u/s. 153C of the Act by following 1st proviso. These cases do not anywhere deal with relevant stipulation u/s. 153C(2) of the Act. We accordingly distinguish the same in view of our reasoning hereinabove. 37. We come to learned counsel submission that the Assessing Officer has himself proceeded against the co-vendors u/s. 153C of the Act. There is no material placed before u .....

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g corresponding notices. 38. We come to the merits of the impugned addition of ₹ 1.5 crores cash component. The assessee s plea is that the same has to be equally divided in case of all the five partners. He does not dispute the correctness of having received cash amount in principle since he has already declared ₹ 36 lacs in the return turning out to be more than his share of ₹ 30 lacs. This itself is sufficient to decline his apportionment plea. It further transpires that his .....

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essed in assessee s hands in any case even if his apportionment plea is accepted. 39. The assessee s further case that the two co-shares/covendors have to be assessed for the remaining sums. We find that it is the assessee only who has signed the relevant documents revealing cash payments in question. He is the only person receiving even the cheque payments on behalf of other co-vendors. We are of the opinion that it was for the assessee to discharge a very strong onus for proving that the other .....

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ightly assessed the entire cash payment of ₹ 1.5 crores in assessee s hands thereby partly modifying Assessing Officer s action as extracted hereinabove. The corresponding grounds raised in the instant appeal accordingly fail. 40. The assessee s next substantive ground pleads that the CIT(A) has erred in treating the impugned additions as his business income instead of short term capital gains. It has come on record that the assessee has purchased land in question having huge potential sig .....

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