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2016 (5) TMI 1356 - ITAT MUMBAI

2016 (5) TMI 1356 - ITAT MUMBAI - TMI - Validity of assessment framed u/s 153A - no commencement or initiation of search - Held that:- Though the warrant of authorisation was prepared in the name of the assessee, yet there was no commencement or initiation of search in pursuance of the said warrant. When there is no commencement of search at all, the question of invoking the provisions of sec. 153A shall not arise. We notice that the Ld CIT(A) has expressed the view that the search need not take .....

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me and not in the name of the assessee herein. Hence we find merit in the contentions of the assessee that the assessment order passed for AY 2008-09 u/s. 153A of the Act is not valid. - For AY 2009-10 it is an admitted fact that the revenue has not seized any other valuables, cash or investments corroborating the figure of ₹ 15.00 crores. Further the notings made in panchanama shows that the search commenced in the residence of Shri Harshad Doshi at 1.30 a.m. (almost midnight) on 17.1 .....

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t the statement taken from Shri Dilesh Shah may not be a statement taken as per the provisions of sec. 132(4) of the Act. In view of the foregoing discussions, we are of the view that the tax authorities are not justified in placing reliance on the page no.90 of the Annexure I and the sworn statement taken from Shri Dilesh Shah. - Decided in favour of assessee. - I.T.A. No. 1941/Mum/2014, I.T.A. No. 1942/Mum/2014 - Dated:- 11-5-2016 - Shri B. R. Baskaran (AM) And Ramlal Negi (JM) For the Petitio .....

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ee is aggrieved by the decision of Ld CIT(A) in confirming the addition of ₹ 3.20 crores and ₹ 11.80 crores respectively made in AY 2008-09 and 2009-10. 3. The facts relating to the issue are set out in brief. The assessee is an AOP and is engaged in the business of construction of residential and commercial buildings. The members of AOP are Shri Harshad Doshi and Shri Dilesh Shah holding 95% and 5% share respectively. The office of the assessee is located at Shailesh Building, Linki .....

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skar Road, Boriveli (W), Mumbai a paper (numbered as Page 98 in Annexure A-I) was found which contained following noting:- POONAM RESIDENCY No. of flats - 104 & Shops Area of Flats - 76,960 Sq. ft. Area of Shops - 5,700 Sq. ft. Received cash upto 31.3.2008 3/20 + Area of flats - 53,910 Sq.ft. Area of Shops - 700 Sq.ft. Received cash 11/50 TOTAL 14/70 At the time of search conducted at the residence of Shri Harshad Doshi, he was not available and hence other member of AOP Shri Dilesh Shah was .....

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s as income of the assessee in AY 2008-09 and ₹ 11.50 crores as income in AY 2009-10. Further he also agreed to offer additional amount of ₹ 30.00 lakhs in AY 2009-10 to cover up any commission or omission. However, the assessee AOP did not offer the above said amount in the returns of income filed by it. 5. It is pertinent to note that the return of income for AY 2008-09 was filed in response to the notice issued u/s 153A of the Act and the assessment was also completed u/s 153A r.w .....

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ent u/s 153A of the Act. The contention of the assessee was rejected by the tax authorities by giving a finding that the Warrant of Authorisation contained the name of the assessee along with the name of other group concerns and such kind of joint authorisations will not make the search proceedings invalid in view of insertion of Sec. 2992CC of the Act, as held by Hon ble Allahabad High Court in the case of CIT Vs. Devesh Singh (I.T Appeal No.99 to 110 of 2010 dated 23.07.12, 24 taxmann.com 26). .....

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e fact that the appellate name appears in the warrant of authorisation and search has taken place in the residential premises of the member of the appellant AOP as mentioned in the warrant of authorisation. However, it is very significant to note that the appellant in its submission vide para 21 admitted that the premises where search has taken place were partly used by the appellant s business, however it was contended that no panchanama was drawn in the case of appellant. Further, the Ld CIT(A .....

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u/s 153A. Accordingly he dismissed the legal claim of the assessee. 7. We have heard the parties on this legal issue. The contention of the assessee is that though the search warrant was prepared in the name of the assessee jointly with others, no search has been initiated or conducted in pursuance of that warrant either in its business premises or in any other place. The Ld A.R also submitted that the Page no.98 of Annexure I, on the basis of which the impugned addition was made, was found at .....

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oshi is stated, i.e., A-103/104, Ray Shree Apartment, Royal Complex, Eksar Road, Borivali(W), Mumbai. The Annexure-I of this panchanama contains the page no.98, viz., the incriminating document. 8. At the time of hearing, the Ld D.R placed reliance on the order passed by Ld CIT(A), wherein he had stated that the preparation of warrant of authorisation is sufficient to initiate assessment proceedings u/s 153A of the Act. Further, the omission to mention the name in the Panchanama will not make th .....

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he said Warrant of authorisation was actually executed by initiating and conducting the search. The revenue also could not place any material to show that the search conducted at the residence of Shri Harshad Doshi is in pursuance of the warrant issued in the name of the assessee AOP. Under the Income tax Act, the assessee AOP and Shri Harshad Doshi are two different assessable entities. Hence the warrant issued and executed in the name of Harshad Doshi cannot also be considered to be in complia .....

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e, in order to invoke jurisdiction u/s 153A of the Act, there should be initiation of search and thereafter there should be actual conducting of search. 9. The expression search is initiated was explained by Hon ble Karnataka High Court in the case of CIT Vs. Wipro Finance Ltd (323 ITR 467) and the head notes read as under:- Held, allowing the appeals, that while assigning meaning to any expression in any provision of a statute, the context in which the particular expression is used had to be bo .....

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iated respectively on January 3, 1997 and January 8, 1997, but not either on December 30, 1996 on which date the authorisations were signed by the concerned authorities or on any date prior to January 3, 1997…. In the above said case, the date of authorisation of search was December 30, 1996 and the same was not taken as the date of initiation of search. The Hon ble High Court has held that the date of commencement of search is the date of initiation of search, meaning thereby, the search .....

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arch need not take place at the business premises of the assessee itself, but it can be conducted in any other place also. There should not be any dispute with the observations so made by Ld CIT(A). But the important point is that the search in any other place should have taken place in pursuance of warrant of authorisation issued in the name of the assessee. In the instant case, the search at the residential premises of Shri Harshad Doshi has taken place in pursuance of warrant of authorisation .....

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search in his hands in pursuance of warrant of authorisation issued in his name. There is no dispute with regard to the fact that Shri Harshad Doshi and the assessee herein are two different assessees. Since the impugned document was considered to belong to the assessee, at the most, the AO should have initiated proceedings u/s 153C of the Act, provided all the conditions prescribed in sec. 153C were complied with. That is not the case here and hence on that count also, the assessment order pass .....

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ear on the basis of page no.98 of Annexure I seized in the hands of Shri Harshad Doshi and the admission made by Shri Dilesh Shah, which is being contested by the assessee in this appeal. Hence the decision taken on this issue would automatically cover the validity of addition of ₹ 3.20 crores made in AY 2008-09. 14. The contention of the assessee is that the Page no.98 of Annexure-I is a dumb document and the same has been prepared by Shri Dilesh Shah at the insistence of the search offic .....

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ed to take cognizance of the retraction statement, since the said affidavit was filed with them after expiry of two years from the date of search, even though the same has been claimed to have been prepared within two days from the date of search. Further, the tax authorities noticed the age of Shri Dilesh Shah has been mentioned differently in the statement taken u/s 132(4) of the Act and in the affidavit. Accordingly they have held that the retraction made through affidavit is a self serving d .....

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arty. Later the search team obtained an authorisation letter from Shri Harshad Doshi in favour of Shri Dilesh Shah through fax and the said authorisation reads as under:- Date : 17.10.2008 To Additional D.I. (Investigation) Thane. Respected Sir, I hereby authorize Mr. Dilesh C Shah to give statement on my behalf as well as my firm s behalf. His statement will be binding on me. Thanking you (Harshad P Doshi) Thereafter, the search officials have taken the statement u/s 132(4) of the Act from Shri .....

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f attorney from Shri Harshad Doshi shows that Shri Dilesh Shah was not in possession or control of the impugned document. It is pertinent to note that the statement u/s 132(4) can be recorded under oath only from a person who is found to be in possession or control of books of accounts, document, money, bullion, jewellery or other valuable article or thing. Hence, the reliance placed by the revenue on the said statement is also being questioned. Further, it was submitted that the impugned docume .....

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AO. The admission has been made on the basis of page no.98 of Annexure I. Since the same was a loose sheet containing some noting, in our view, the same requires corroboration with some other material. In the assessment order, the assessing officer has tried to corroborate the notings so made therein as under:- (a) The affidavit, wherein retraction of the admission was made, was filed with the AO only after issuing notice u/s 142(1) of the Act, i.e., it was not filed at the earlier available opp .....

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the advertisement given by Shri Malpani, the cash component was shown in the range of ₹ 1.75 lakhs per flat). Shri Malpani confirmed the fact that the cash is being accepted by group concern of the assessee. The AO, accordingly, inferred that the assessee should have also collected cash and the same supports the noting made in page 98 of Annexure I. (c) The selling rate per Sq. ft. for the project developed by the assessee (Survey No.226 in Village Meera, Thane in FY 2009-10) worked out to .....

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9.17 crores and when price escalation is taken at 15%, the difference shall work out to ₹ 14.05 crores (d) The selling rate in other projects developed by other group conern was between ₹ 4,331/- to ₹ 4,734/-. Taking the average of the two rates, viz., ₹ 4532/-, the sales for the assessee should have been ₹ 70.87 crores. The Ld CIT(A) has also upheld the analysis made by the AO. 18. On a careful perusal of the analysis made by the AO would show that the same suffers .....

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ponent mentioned in the project developed by the group concern was not accounted at all, i.e., he did not make any enquiries either with the purchasers of the flat or the Group concern in this regard nor did he examine the books of accounts of the group concern to vindicate his stand. Further it is not also established that the accounting methodology followed by the group concern is same as that of the assessee. Thus, we notice that the AO has only drawn adverse inferences from the advertisement .....

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ccording to the AO the group concern has developed the project in FY 2007-08 and the assessee has developed the project in FY 2009-10. Hence, by taking price escalation at 15% p.a., the AO has worked out the difference at ₹ 14.05 crores. Accordingly the AO has taken the view that this fact also vindicates the noting made in page no.98 of Annexure I. We notice that though both the projects are located in Village Meera, yet they have been developed in two different survey numbers. The AO has .....

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t executed by the assessee is also not correct. Thus the AO has not carried out any such qualitative analysis and instead, he has simply made certain mathematical calculations to bring the difference to the level noticed in the loose paper. Hence the same cannot be taken as facts supporting the view taken by the AO. 20. Similarly, the AO was also not justified in considering the selling rate quoted for other projects developed by the group concern without pointing out the similarities in locatio .....

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e to agree with the observation of Ld CIT(A) that the AO has corroborated the noting made in page no.90 with outside materials. 22. Now we shall examine as to whether the page no.90 is a reliable document or dumb document. The assessee has pointed out the area or extent of built up area mentioned in the loose sheet were not correct. The assessee has explained the same as under:- As per Seized paper As per Books Area of flats booked upto 31.3.2008 76,960 93,970 Area of flats booked after 31.3.200 .....

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dressed by the tax authorities. Further, the contention of the assessee is that the page no.90 itself was prepared by Shri Dilesh Shah at the instruction of the search officials. Since the assessee has not taken any steps to make any complaint with higher officials or other appropriate authorities in this regard, we are not inclined to admit this contention at this stage. However the discrepancies pointed out by the assessee would show that the page no.90 cannot be considered to be a document th .....

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he under valuation had been raised were vague and could not be relied upon as it appeared that the total area with respect to the sale deed and that reflected in the loose sheet was discrepant. It was also observed that as per the guidelines for registration the fair vaue for registration on the relevant date was ₹ 244 to ₹ 400 per Sq.ft. and the sale consideration for ₹ 850/- per sq.ft. claimed by the Revenue was unrealistic and ignored the ground situation. In the instant cas .....

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mb document on which reliance could not placed upon. Identical views have been expressed in the following cases:- (i) ACIT Vs. Sharad Chaudhary (2014)(165 TTJ 0145)(Delhi) (ii) Sunita Dhaddda Vs. DCIT (2012)(71 DTR 0033)(Jaipur) 24. In the instant case, it is an admitted fact that the revenue has not seized any other valuables, cash or investments corroborating the figure of Rs..15.00 crores. Further the notings made in panchanama shows that the search commenced in the residence of Shri Harshad .....

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of the assessee that the statement was recorded at the fag end of the search and Shri Dilesh Shah was exhausted and he was constrained to admit the additional income. Further, we have noticed that the noting found in the loose sheet did not tally with the entries made in the books of account. No other material was brought on record by the AO to corroborate the noting made in the loose sheet. None of the buyers of the flat was examined to ascertain the truth. Under these set of facts, we are of t .....

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