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2016 (7) TMI 166

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..... nt : Shri R. I. Patel, CIT, DR ORDER PER Manish Borad, Accountant Member . These two cross appeals, one by assessee and the other by the Revenue are directed against the order of ld. CIT(A)XVI, dated 13.01.2011 in appeal No.CIT(A)-XVI/ACIT(OSD)10/296/09-10 passed against order u/s 153C r.w.s. 153A of the IT Act, 1961 (in short the Act) for Asst. Year 2005-06 framed on 29.01.2010 by ACIT(OSD), Circle-10, Ahmedabad. 2. Briefly stated facts as culled out from the records are that the assessee is a co-operative housing society engaged in the business of construction of residential houses. Pursuant to search u/s 132 of the Act conducted on 9.2.2005 at the residential premises of Shri Umang H. Thakkar and Dharmadev Finance Pvt. Ltd., certain documents pertaining to transactions carried out by the assessee were seized. After recording satisfaction note, proceedings were initiated u/s 153C r.w.s. 153A of the Act and information was received in the office of ld. Assessing Officer on 13.8.2008. In the seized documents it was observed that assessee society had acquired 6535 sq.m. of land at Wadaj, Ahmedabad for a consideration of ₹ 2,28,72,500/- vide sale deed dated 4.1 .....

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..... raised :- 1. The learned Commissioner of Income Tax (Appeals) has erred in dismissing the grounds of appeal challenging the action of the Assessing Officer in passing the order u/s.l53C r.w.s.153A of the I.T. Act, 1961 which is illegal and bad in law and the assessment so made in pursuance thereof deserves to be cancelled. 2. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that no incriminating material other record was found from the premises of the searched party on the basis of which proceedings U/S.153C of the Income Tax Act, 1961 can be initiated in the case of the appellant. 3. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that notice u/s.!53C could be issued only for six years immediately preceding the year in which the search or requisition took place and therefore the assessment should have been completed u/s,143(3) or 144 of the I.T. Act, 1961 and not u/s.!53C r.w.s. 143(3) of the I.T. Act, 1961. . . : . 4. The Learned Commissioner of Income Tax (Appeals) ought to have considered the fact that the notice for initiation of proceedings u/s.!53C r.w.s. 153 A in the case of the appellant ha .....

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..... 1.12.2004 ₹ 180/- Rs.23,86,030/- 9. Referring to the above details, ld. AR submitted that the major portion of cash receipt of ₹ 23,86,030/- is on account of amount received from Swaminarayan Enterprises at ₹ 21,94,650/- (Rs.18,51,300 + ₹ 3,43,170/- + ₹ 180/-) and this amount was specifically used for land registration fees and stamp charges incurred by the assessee for getting the registry of the land done in the name of assessee on 4th December, 2004 and the same is verifiable from the details of cash book shown at pages 51 to 58 of the paper book. Ld. AR further submitted that as regards the source of fund with M/s Swaminarayan Enterprise, referred to the audited financial statement and copy of income-tax return and also the copy of cash book of Swaminarayan Enterprise which was having sufficient cash balance in order to justify the source of cash received by the assessee. Ld. AR also submitted that the proprietor Shri Umang H. Thakkar was the main person against whom the search proceedings were initiated and the assessment year 2005-06 was completed in his .....

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..... #8377; 18,51,300/- and ₹ 3,43,170/- to the society and against which assessee society paid the stamp fees of ₹ 18,21,300/-, land purchase related expenses at ₹ 1,50,000/- and land registration fees at ₹ 3,43,350/-. 12. Now going through the aspect that whether Swaminarayan Enterprise had sufficient source of cash fund which was hitherto given to assessee society, we observe that Swaminarayan Enterprise is the sole proprietary concern owned by Mr. Uman H. Thakkar, regular income-tax return are filed, books of accounts are audited and more specifically going through the cash book shown at pages 59-61 of M/s Swaminarayan Enterprise we observe that there is a regular flow of cash transaction in the books and sufficient cash balance was available on the date when cash funds were given in the regular course of business to the assessee society. 13. We further observe that assessment u/s 143(3) for Asst. Year 2005-06 was completed on 29.12.2006 in the case of Uman H. Thakkar whereby addition of ₹ 14,84,96,066/- was made and income was assessed at ₹ 15,09,65,390/-. Addition of ₹ 14,84,96,066/- inter alia included addition on account of unexpla .....

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..... u/s 69 of the Act. 19. During the course of assessment proceedings ld. Assessing Officer perused the seized documents and observed that assessee has acquired 6535 sq.m. of land at Vadaj on 4.12.2004 for a consideration of ₹ 2,28,72,500/-. On further examining the aspect as to whether there is any undisclosed investment in the purchase of land, ld. Assessing Officer referred the matter to the D.V.O. with reference to the order u/s 16A of W.T. Act on 22.3.2005 who has valued 10324 sq.m. of the said land on 31.3.2002 at ₹ 6,03,02,484/- and accordingly calculated proportionate value for 6535 sq.m. land at ₹ 3,81,71,472/- and added ₹ 38.17.147/- as appreciation in the value of land @ 10% and calculated the fair market value of the purchased land at ₹ 4,19,88,619/- and after giving credit to the amount paid by the respondent at ₹ 2,28,72,500/- added the difference amount at ₹ 1,91,16,119/- as unexplained and unaccounted investment u/s 69 of the Act. This observation of ld. Assessing Officer was duly supported by ld. DR in the course of proceedings before the Tribunal. 20. On the other hand, ld. AR supported the order of ld. CIT(A) and plea .....

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..... . Similarly in the case of Balkrishna Poddar ITA No 3412, 3413, 3414/Ahd/2008 the ITAT Ahmedabad has also decided that valuation report cannot be the basis of addition. In view of the decision relied upon by the appellant no addition u/s.69 as unexplained investment can be sustained based on the valuation report of the valuer. The addition is therefore deleted and this ground of appeal is allowed. 23. We further observe that the seized material on the basis of which information was extracted about the investment in the purchase of land at ₹ 2,28,72,500/- were documents which were executed on stamp paper and duly registered with the appropriate authorities and the purchase consideration is debited in the regular books of account and no defect has been pointed out in the source of the investment made and the credit of the same has been given by ld. Assessing Officer while calculating the unexplained investment. Further Stamp authorities have accepted the value of purchase consideration and there is no redoing or enhancement in the same and there was no other document found in the course of search which could prove that there was unexplained investment in the purchase of 653 .....

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