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TMI Blog2017 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... he CIT (A), are bad in law and void abinitio on account of violation of principles of natural justice and denial of proper and adequate opportunity of being heard. 3. That on the facts and circumstances of the case, the assessment made is bad in law for the reason that material seized u/s 132 of the IT Act from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) has been utilized in the assessment of the assessee without complying with the mandatory provisions of law as engrafted under the IT Act. 4. That on the facts and circumstances of the case and in law the CIT (A) erred in confirming the addition of Rs. 120,00,00,000/- as income u/s 68 of the IT Act, 1961. 5. That on the facts and circumstances of the case and in law, the CIT (A) erred in confirming the addition of Rs. 120,00,00,000/- relying on the material seized u/s 132 of the IT Act 1961 from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) and collected during post-search investigations made, including statements recorded behind the back of the assessee and other details, forming part of Annexures 1 to 6 attached to the assessment order, running into 351 pages, without even furnishing the copies thereof (excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal issue of assessment being wrongly framed u/s 143(3) (confusing phrases are used in assessment order at different places), whereas assessment should have been framed u/s 153C, entire proceedings are vitiated by non-application of mind. 3. That vide synopsis filed on 04.07.2017, it is narrated in length that not only grave prejudice is caused to appellant/assessee by invalid jurisdiction being assumed, ultra vires to section 153C, & which deserves to be quashed. 4. In continuation of above to make our ground more explicit we humbly submit under mentioned ground vide Rule 11 of ITAT rules (Reference can be made to Hon'ble Punjab & Haryana High Court decision in case of VMT Spinning Co. Ltd., order dated 16.09.2016 (ITA No.445/2015) (389 ITR 326), Hon'ble Delhi High Court decision in case of Fast Booking (I) Pvt. Ltd., order dated 02.09.2015 (ITA No. 334/2015) (378 ITR 693), Hon'ble Delhi high Court decision in case of Silver Line, order dated 04.11.2015 (ITA No. 578/2015) (383 ITR 455). "That assessment framed u/s 143(3) for the period under consideration (AY 2011-12) which falls in Six years block prescribed u/s 153C, is invalid, void abinitio and lacks jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A) erred in confirming the addition of Rs. 105,00,00,000/- relying on the material seized u/s 132 of the IT Act, 1961 from third parties (i.e. Sh. S.K. Jain and Sh. V.K. Jain) and collected during post search investigations made, including statements recorded behind the back of the assessee and other details, forming part of Annexures 1 to 6 attached to the assessment order, running into 351 pages, without even furnishing the copies thereof (except few pages) in the course of assessment proceedings, thereby violating the principles of natural justice and denying the right of cross examination, wherever necessary. 6. That on the facts and circumstances of the case and in law the CIT (A) erred in confirming the addition of Rs. 105,00,00,000/- u/s 68 of the IT Act, 1961 , despite the fact that the aforesaid sum, having undisputedly been received by way of advance for purchase of land, and through normal banking channel, could not be subjected to the provisions of section 68 of the IT Act. 7. That on the facts and circumstances of the case and in law, the CIT (A) erred in not accepting the genuineness and authenticity of the tripartite agreement/MOU dated 29.05.2010 effected am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n'ble Delhi High Court decision in case of Fast Booking (I) Pvt. Ltd., order dated 02.09.2015 (ITA No. 334/2015) (378 ITR 693), Hon'ble Delhi high Court decision in case of Silver Line, order dated 04.11.2015 (ITA No. 578/2015) (383 ITR 455). "That assessment framed u/s 143(3) for the period under consideration (AY 2011-12) which falls in Six years block prescribed u/s 153C, is invalid, void-ab-initio and lacks jurisdiction as it should have been framed u/s 153C, accordingly the orders passed by AO and First Appellate Authority deserves to be quashed. " "That assessment framed u/s 143(3) for the period under consideration is ultra vires to section 153C, in as much as the documents referred in satisfaction note (copies placed on records), do not give rise to any undisclosed income and they are admittedly non -incriminating in nature as also none of the document is used in assessments while making the impugned additions." 5. That we reiterate our contentions and arguments raised in synopsis filed on last date, in support of aforesaid grounds where revenue has been heard and revenue has not factually controverted on facts assessee's contentions. 6. That we further rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That on the facts and circumstances of the case and in law, the CIT(A) erred in not accepting the genuineness and authenticity of the tripartite agreement/MoU dated 29.05.2010 effected amongst M/s Aquiss Pvt. Ltd, M/s Attractive Finlease Pvt. Ltd and M/s Aasheesh Capital Services Pvt. Ltd as first party and M/s Design Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd and M/s Pavitra Realcon Pvt. Ltd as second party and Sh. Kabul Chawla as the confirming party, and the factum of the forfeiture of the amount as per the said agreement/MoU. 7. That on the facts and circumstances of the case and in law the CIT(A) erred in holding that the sum of Rs. 1,16,00,00,000/- was surrendered as income in the hands of the assessee, without dealing with specific objections raised/taken before him against the alleged surrender. 8. That on the facts and circumstances of the case and in law the CIT(A) erred in concluding, to quote, "all the grounds of appeal are dismissed", despite a finding given in the penultimate paragraph, to the effect, 'that if the arbitration award is decided in favour of M/s Aquiss Pvt Ltd, then the amount advanced by them would be taxable in the hands of M/s Aquiss Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through a series of transactions. Directors of the three companies M/s Designing Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd & M/s Pavitra Realcon Pvt Ltd., namely Shri Sanjiv Kumar, Sh. N. K. Jain and Sandeep Sehgal respectively in the statements recorded on oath u/s 132 (4) accepted that they were not in a position to explain the receipts of above amount and hence came out with a voluntary disclosure of Rs. 325.23 to be their unaccounted income for the Financial Year 2010-11 (Assessment Year 2011-12). As per the statement dated 08.04.2010 of Shri Sanjiv Kumar, who was a Director in all the above three companies, he accepted that the above income was received by cheques from the above three companies for collaboration of future projects. Since, they were not able to explain and support the receipts with evidences, they accepted the same to be their income earned during the year which was not entered in the books of account in the current Financial Year. Therefore, to avoid any penalty, litigation and prosecution and to buy peace of mind they accepted this income. Thus, total amount declared was as under:- (1) M/s. Delicate Realtors Pvt. Ltd= Rs. 98 crores (2) M/s. Pavit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2010 Attractive Finlease Pvt. Ltd. M/s Delicate Realtors Pvt. Ltd. Rs. 105 crores 18/06/2010 to 07/07/2010 Aquiss Pvt. Ltd. M/s Design Infracon Pvt. Ltd., Rs. 116 crores 29/05/2010 to 05/08/2010 3.2 Rejecting the various explanations given by the assessee, the Assessing Officer made an addition of Rs. 120,00,00,000/- u/s 68 of the Income-tax Act, 1961. Similar addition of Rs. 105 crore has been made u/s 68 of the I.T. Act, 1961 in the case of M/s Delicate Realtors Pvt. Ltd. and amount of Rs. 1,16,00,00,000/- in the case of M/s Design Infracon (P) Ltd.. 3.3 Before the CIT(A), the assessee made elaborate submission which the ld. CIT(A) summarized at pages 67 and 68 of his order and which reads as under :- "(B) Arguments of ld. AR Main arguments of ld. AR are Summarized as under :- (i) Proper opportunities were not given while framing the assessment:- (a) The appellant has filed two replies is response to show-cause letter issued by the Assessing Officer. Further opportunity was not allowed by the Assessing Officer before making addition. (b) The Assessing Officer did not call upon the assessee to produce any person. (c) The Assessing Officer has not given any op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... illegal/illegitimate. (iii) On the evidentiary value of statement recorded u/s 132(4), main arguments of ld. AR is that the person who makes the statement u/s 132(4) has right to retract the same if he proves his bona fide. In present case, the statement recorded u/s 132(4) disclosing such huge income is in four lines without specifying the manner in which such income is earned. None of the persons namely Sh. N.K. Jain, Sh. Sandeep Sehgal and Sh. Sanjeev Kumar has accepted the cash payment by Sh. Ramprasad as per seized material A-10 found from the premises of Jain Brothers. Further, ld. AR argument that Sh. N.K. Jain was not director's of M/s Delicate Realtors Pvt. Ltd. & M/s. Pavitra Realcon Pvt. Ltd. though his statement has been relied on by the Assessing Officer while framing the assessment." 4. However, the ld. CIT(A) was not satisfied with the arguments advanced by the assessee and upheld the action of the Assessing Officer by observing as under :- 'I have considered the entire evidences relied by the Assessing Officer & the arguments of ld.AR. First I would deal with the statement of the directors recorded during the search u/s 132(4) of l.T. Act, during the search ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sad in this regard? Ans: We deny to have any cash transactions as above stated by you. We accept the above incoming of money by cheque from the above three companies for collaboration of future projects. Since we are not able to explain and support the receipts, we accept the same to be our income, earned during the year, on our own not yet provided for in the books of A/c in the current financial year. We are accepting these income to avoid any penalty, litigation and prosecution and to buy peace of mind. Thus the total disclosed amount 'works out as under:- 1. Delicate Realtors (P) Ltd. Rs.99,98 crores 2. M/s. Pavitra Realcon (P) Ltd. Rs.118.65 crores 3. M/s. Design Infracon (P) Ltd. Rs.106.60 crores Total Rs.325.23 crores. The taxes on the above disclosed amount including interest will be paid in due course. (ii) Statement of Sh. N.K. Jain (u/s 132(4) "Q. 34 I am showing you zerox copies of Annexure A-10 seized from the premises of Sh. S. K. Jain, which reflects that a set of documents in the shape of cash book. written in the handwriting of shri S. K. Jain and his brothers Shri Virender Jain reflect that one Shri Ram Parsad, who incidentally happens t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt in form of Cash book Seized from Jain Brothers were shown to them, though cash transaction were denied. It means that the disclosures of income in the hands of these three companies are related to cash book shown. Details of the findings on the content of annexure A-10 & its relevance would be given subsequently. Therefore, I do not agree this argument of ld. AR that disclosed income is of four liners & not based on evidence. Second arguments of ld. AR that the people who are not directors of a particular company, their statement have also been relied by the Assessing Officer. It may be mentioned that all there persons namely Sh. N.K, Jain, Sh. Sandeep Sehghal & Sh. Sanjeev Kumar are employee of flagship company M/s BPTP Ltd. and are directors in different companies of BPTP group. Either of three person are directors in all the three companies. During the appellant proceedings, details of directors as on date of search of different companies were obtained from ld. AR. The same are as under:- S. No. Name of the company making disclosure Amount of disclosure made Details of taxes paid thereon 1. M/s. Design Infracon Pvt. Ltd. Sh. N.K. Jain & Sh. Digvijay Yadav Sh. N. K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tement was made by the person who has made such statement explaining the circumstances in which such statement was made. In fact, in the statement of Sh. Sanjeev Kumar has stated that we are not able to explain and support the receipt, we accept the same to be income earned during the year, which has not been provided yet in the books of current Financial Year. The alleged advance as contended by Ld. AR must have been entered in the books of account at the time of receipt of the same. It is not a new fact after recording of statement. A closed scrutiny of this statement reveals that such income which is the source of alleged cheque payment is not explainable. The said Statement was not retracted is further strengthened by the fact that these companies have made part payment of taxes on such undisclosed income. In view of the above facts, I do not agree that it is a case of retraction of statement. All case laws relied by the ld AR this issue are not applicable. Last argument of ld. AR against the disclosure made u/s 132(4) is that the authorized officer while recording the statement has not asked the manner of earning of income & cited various judicial pronouncements. I have peru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Surendra Kumar Jain which shows that there is frequent conversation between Sh. Surendra Kumar Jain and Sh. Ramprasad on the date of receipt of cash from Sh. Ramprasad. The very fact that Surendra Kumar Jain was calling Sh. Ramprasad, employee of BPTP Ltd. and on the same date cash is received by Sh. Surendra Kumar Jain as per the seized document proves that 'Ramprasad ' mentioned in the seized document of Jain Brothers is employee of BPTP Ltd. Further name of Sh. N.K. Jain, another employee/company secretary of BPTP Ltd. is also appearing in seized material in Annexure A-II where he is shown as mediator for the transaction which proves that the cash payment and obtaining cheque from Jain Brothers was arranged by Sh. Ramprasad and Sh. N.K. Jain of BPTP group. In view of these evidences brought on record, I do not think there is any confusion that Sh. Ramprasad, N.K. Jain working with BPTP Ltd. is the same person whose name is recorded in the seized document' Annexure A-I 01 A-II found from the premises of Jain Brothers as giver of cash. After the receipt of cash, Jain brothers, have rotated this cash through various proprietorship firm and through various companies in different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Sh. Virendra Jain was assessed u/s 153A/143(3) as entry operators where commission income was assessed for seven assessment year from 2005- 06 to 2011-12. I have decided the appeal in both the cases u/s 250(6) in appeal No. 222-228/13-14/1373-1379 and appeal No. 229-235/13-14/1380-1386 in the case of Sh. Virendra Jain and Sh. Surendra Kumar Jain where I have held that these two Jain Brothers are receiving cash from the beneficiaries and by utilizing its bogus/paper concern/company by rotating the fund through various layers gives cheques to beneficiaries after charging commission. I have confirmed the addition on account total cash received as per the seized document u/s 68 as these persons have not explained the source and not given the name of beneficiary to whom such cash belongs inspite of numerous opportunities. I have given clear finding that the cash received in the cash books of Jain Brothers belongs and earned by e beneficiaries. After dealing with these evidences, I would deal with various issues raised such as not providing proper opportunity by ld. AR against the assessment order as under:- (i) Copy of Annexure A-10 containing transaction of cash received by Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equivalent amount from Jain Brothers, examination of sh. Ram Prasad was not required as enough evidences are there to prove the facts. (vi) The evidences that Jain Brothers are operating bogus companies to provide accommodation entries were never confronted to the appellant during the assessment proceedings. In this regard, I have perused the show cause letter issued by the Assessing Officer dt.29.01.2013 which is part of the paper book page 79-83. In the said show cause entire flow of fund leading to issuance of payment made to Delicate, Design & Pavitra (three companies of BPTP name in short) are mentioned. In the said show cause, it is clearly mentioned that cash book seized from the premise of Jain Brothers shows that they are charging commission for converting cash into cheques. Therefore, basic contention/evidences were informed to the appellant. In any case, all such evidences have been made part of the assessment order. I have perused those evidences and during the appellant proceedings the decision is taken after considering the contents of these evidences and written submission of Ld. AR. Finally, I would like to reiterate the settled position to law that strict tech ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e six companies with confirming party as Kabul Chawla for the transfer of land at Hyderabad. All the money received by these three companies of BPTP group namely, Design, Delicate and Pavitra has been forfeited on the ground of non-compliance of terms by the alleged purchase of land through MoU namely, Aquiss, Aashish & Attractive. The said forfeited amount was not declared by M/s. Design, Delicate & Pavitra on the ground that other parties namely, Aashish, Aquiss and Attractive have filed arbitration suit against the forfeiture of the sum before a retired High Court judge namely, Sh. S.K. Mahajan. The arbitration process is continuing and yet to be finalized. Therefore, the said sum was not declared as income during the year. The ld. AR has relied on various judicial pronouncements on this issue. Ld. AR argued that the directors had made disclosure u/s 132(4) of this income in view of forfeiture of advance. Ld. AR argued that under these circumstances, section 68 is not applicable as the advance was in the nature of trade receipt. The Assessing Officer has examined these claim and held that on various grounds such as during the disclosure by Directors u/s 132(4), they have never ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It may be mentioned here that once, the amount received from M/s. Aquiss, Aashish & Attractive is held to be on account of cash payment to Jain Brothers, the source of amount through bank account remained unexplained. Therefore, section 68 applies on account of non-genuineness of the transaction/creditworthiness of these paper companies. Even otherwise the cash receipts by Jain Brothers from BPTP group are nothing but income of BPTP group which have to be taxed. The most suitable answer is the first recipient of BPTP group in whose hand such receipt is taxable which was disclosed u/s 132(4)/131 of the Act by the directors of the company. Accordingly, additions in the hands of M/s. Design Infracon Pvt. Ltd, M/s Delicate Realtors Pvt. Ltd and M/s. Pavitra Realcon Pvt. Ltd to the extent of following additions are confirmed. S. No Name of the company Amount of addition 1. M/s. Design lnfracon Pvt. Ltd. Rs. 116 crores 2. M/s. Delicate Realcon Pvt. Ltd. Rs. 105 crores 3. M/s. Pavitra Realcon Pvt. Ltd. Rs. 120 crores Total Rs. 341 crores In my view on the entirety of facts & circumstances, the decision of hon'ble apex court in the case of Me Dowell cited supra is appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Aquiss, Aashish & Attractive. Lastly. in the statement of facts filed along with appeal form No. 35. it is claimed that the order & approval of Addl. CIT as mentioned in the assessment order is updated. I have verified the assessment records, the order date is 28.03.2013 & approval of Addl. CIT is also dt.28.03.2013. This fact is further proved by the date mentioned in demand notice u/s 156 dt.28.03.2013 which has been enclosed along with form No.35. Therefore, there is no confusion over date of order & approval by Addl. CIT. Accordingly, all the grounds of appeal are dismissed. 5. 7th ground of appeal is against charging of interest u/s 234B of LT. Act. This ground is consequential in nature. Assessing Officer is directed to charge interest as per provision of I. T. Act on Total Income after giving effect to this order. 6. Eighth ground of appeal is against not giving proper credit. This issue can be rectified u/s 154. The appellant may apply for rectification u/s 154 who will verify the facts & settle the grievance of the appellant. 7. As a result, the appeal is dismissed." 4.1 Aggrieved with such order of ld. CIT (A), the assessee is in appeal before the Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment u/s 143(3) also fails because same is in consequence to reopening u/s 153C. Thus, the ld. AR submitted that it is well settled law that jurisdiction u/s 153C comes from satisfaction note which cannot be allowed to be improved, modified or altered, i.e. any infirmity in satisfaction note would be non-curable. 6. In respect of the Merits of the case, the ld. AR submits for all the three appeals that arbitration proceedings were going on. Since the factum of arbitration is not in doubt, therefore applying the theory of accrual of income as highlighted in recent Hon'ble Supreme Court decision in case of P.G. & W. Sawoo (P.) Ltd. v. Asstt. CIT [2016] 385 ITR 60, no income can be said to have accrued during the pendency of arbitration proceeding, in the period under consideration. Only in the period when arbitration proceedings are settled and assessee gets ownership of the money, then only in that period accrual of income can take place. Since payer of the sum has claimed refund of the money given in arbitration proceedings going before retired Hon'ble High Court Judge, genuineness of the transaction cannot be called in question. Till date no enquiry has been made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was assessed to tax was traceable, was complying with provisions of law and was regularly appearing before the same AO with whom assessee is assessed to tax. Aquiss is regularly filing Tax returns and RoC returns as the data is available on MCA portal. As regards the genuineness of transaction of the assessee with the Aquiss, the existing assessee (Aquiss) assessed to Tax with same AO with whom assessee is assessed to tax. The assessee filed confirmed copy of account of Aquiss before Assessing Officer. Further, the amount paid by Aquiss were duly shown in the Audited financial statement of Aquiss which were matching with books of appellant and are duly verifiable. All amounts were paid through normal banking channels. The Amounts were paid by Aquiss pursuant to MoU/agreement. The Amounts paid by Aquiss were held to be genuine as appeal of Aquiss was allowed by CIT-Appeals. As regards the creditworthiness of the transaction of the assessee with Aquiss is concerned, the ld. AR submitted that the amount paid by Aquiss were reflected in their Audited financial statement and duly matches with amounts shown to have been received by assessee from them. Financial statement of Aquiss shows ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that there was no accrual of income to assessee. As against forfeiture of amount received by assessee from Aquiss, claim is pending before Arbitration, the amount forfeited does not give rise to accrual of income in the hands of assessee. Reliance is placed on the decision of Supreme court in case of CIT v. Excel Inds. Ltd. [2013] 379/358 ITR 295 and Godhra Electricity Co. Ltd. v. CIT [1997] 225 ITR 746. Relying on various decisions, the ld. AR submitted that the order of the ld. CIT (A) be set aside and the grounds raised by the assessee be allowed. 8. The ld. DR submitted that the satisfaction notes entitled as 'M/s Delicate Realtors Pvt. Ltd. and as 'M/s Pavitra Realcon Pvt. Ltd. were dated 27.07.2012, therefore, the contentions of the AR that assessment orders for A.Y. 2011-12 ought to have been passed u/s 143(3)/153C are not proper. In fact, the assessment orders mention the same thing i.e. these assessment orders were passed u/s 143(3)/153C. Presumption is in favour of the revenue by virtue of Illustration (e) of Section 114 of Evidence Act, 1872. However, the ld. AR contends that it was made u/s 143(3) only. The ld. AR submitted that what is apparent is not real. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has been excluded, relate to returns, assessment and reassessment provisions. Prior to, the introduction of these three Sections, there was Chapter XIV-B of the Act which took care of the assessment to be made in cases of search and seizure. Such an assessment was popularly known as 'block assessment' because the Chapter provided for a single assessment to be made in respect of a period of a block of ten assessment years prior to the assessment year in which the search was made. In addition to these ten assessment years, the broken period up to the date on which the search was conducted was also included in what was known as 'block period'. Though a single assessment order was to be passed, the undisclosed income was to be assessed in the different assessment years to which it related. But all this had to be made in a single assessment order. The block assessment so made was independent of and in addition to the normal assessment proceedings as clarified by the Explanation below Section 158BA(2). After the introduction of the group of Sections namely, 153A to 153C, the single block assessment concept was given a go-by. Under the new Section 153A, in a case where a search is ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 998] 229 ITR 383 (SC) as explained while delivering the judgment in case of Goetze India Ltd. v. CIT [2006] 284 ITR 323/157 Taxman 1. During the appellate proceedings, the appellate authority is also required to do justice to the revenue which represent interest of society at large. It is therefore, necessary that conduct of assessee has to be honest. Therefore, assessee ought to have pointed out/taken objection to technical defects at the earliest opportunity. The Assessee did not raise objection at appropriate time as per law and interest of the revenue has been prejudiced. In fact, while delivering judgment in case of GKN Driveshaft (India) Ltd. v. ITO [2002] 125 Taxman 963/[2003] 259 ITR 19 (SC), the Hon'ble Supreme Court held that objection to assumption of jurisdiction are to be taken and disposed off at that point of time. 8.2 The ld. DR submitted that by not raising this point at the stage of issue of notice u/s 153A of the Act, a prejudice has been cast against the revenue (e.g. revenue could have initiated proceedings u/s 147, independently).It may be pointed out that addition which are subject matter of impugned Assessment Year was confirmed by the CIT (A). Therefore, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . dated 31.10,2014 {ITA No. 1674/Del/2011 AY 2008-09}. Employees of the BPTP group ( Shri Ram Prasad and N K Jain. Shri N K Jain is Director in M/s Design Infracon Pvt. Ltd.) were paying cash to obtain cheques from accommodation entry providers (Surendra Jain/Virendra Jain who are known for running racket of money laundering and have been arrested by Enforcement Directorate for such activities). There are cases decided by Settlement Commission ( a quasi-judicial authority like ITAT) where Shri Surendra Jain / Virendra Jain have been adjudicated to be accommodation entry provider. Ld. DR submitted that specific instances would be submitted later. (However, no such instances were submitted). There is specific materials (discussed in Assessment Order and CIT(A)'s Order) evidencing that the sum which is subject matter of addition under consideration was obtained by way of accommodation entries and given colour of genuine transactions. Directors of these companies could not explain these transactions and logically admitted this to be undisclosed income by way of statements under oath including statement u/s 132(4). These statements were taken at different places, by different officers a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were taken at different places ,by different officers and at different time (there was a gap of more than a month). These statements were never retracted or proved to be wrong. These were ignored in RsOI. The retraction made by the Assessee two years after the declaration was not bona fide. There was no satisfactory explanation for not including the said amount in the return of income. Reversed ITAT Order and the ratio of decision in CIT v. Khader Khan Son [2008] 300 ITR 157 (Mad.) cannot be applied. In Pr. CIT v. Avinash Kumar Setia [2017 395 ITR 235 (Delhi) it was held that retraction to be effective has to be made at the earliest opportunity when the pressure or coercion or undue influence on the person making confession ceases to be operative. Whenever there is delay in retracting from the concessional statement, the onus lies upon the person retracting to show the circumstances that existed for him not to retract earlier as held in case of Gurdev Agro Engineers v. CIT [2016] 387 ITR 218 (Punj. & Har.). The additions made by the Assessing Officer was on the basis of clear admission made by the assessee in the statement recorded under section 132(4). The Tribunal has wrongly pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sept, 2012. Imagine a situation, if notice u/s 143(2) was issued before date of handing over of the material (say in June, 2012). If we go by the proposition of AR, in that case there would have been abetment of normal proceedings and 153C proceedings would start which will have no limitation. It will not impose any limitation on the powers of the AO to make addition. Obvious answer is 'no'. If we put another question- whether assessee is entitled to privilege just because the notice u/s 143(2) is issued on any particular day (as long as it is before 30.09.2012-the limitation date)?. Again obvious answer is 'no'. The contention of the AR was that material collected during the search of Sh. Surendra Kumar Jain was made known to the assessee by way of show-cause notice dated 03.07.2012, for the first time. This is not correct. Attention is invited to the statements of Directors of the assessee-companies (during search in case of BPTP/post-search) (which is part of assessment order) whereby the material from the search of Surendra Kumar Jain/Virendra Kumar Jain was confronted to the Directors and nature of the sum which is subject matter of addition under consideration, was asked. Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the assessee, then the assessee must be given a chance to make his submissions thereon. The principles of natural justice are violated if an adverse order is made on an assessee on the basis of the material not brought to his notice..." The reading of the assessment order shows that there is no withholding the material. Therefore principles of natural justice have been followed. 13. The Ld. DR submitted that the Revenue's case is that the subject sum is certainly credited in books of accounts of the assessee and it is not shown as income. Therefore, provisions of section 68 are applicable. As per settled law the initial onus is upon assessee to prove identity and capacity of the creditor and genuineness of the transaction. This is also settled law that the burden to discharge the onus becomes much heavier in view of confessional statements of their directors coupled with corroborative material. The assesee has not discharged this onus. Even identity is not proved because, it is not the case of the AR that assesee provided material to show that the companies were doing business in reality. In fact, there is material to show that these are paper companies of Surendra Jain/Vir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p the cause of assesee. The court held that right to receive arose only in the year 1994 and not from any earlier date. There are so much circumstantial evidences indicating that there are preponderance of probabilities that it is an after-thought including the land being under legal dispute before Hon'ble Supreme Court and none of the assessee companies being owner of the land. According to the assesee, it has right to forfeit and that right has not been exercised and money is already with the assesee. Relying upon E.D. Sassoon & Co. Ltd. v. CIT [1954] 26 ITR 27 (SC) which has been quoted in P.O. & W. Sawoo Pvt. Ltd. (supra) the accrual or right to receive is before receipt. Here receipt has already been taken. Alternatively, the receipt is revenue in character because it was received in connection with the business because none of the assessee company was ever owner of the so called land. The accounting entries are not conclusive of actual nature of transactions and their tax treatment, especially, when there is so much material to indicate to the contrary. Reliance is placed on ratio of Hon'ble SC in case of Kedarnath Jute Mfg. Co. Ltd. v. CIT [1971] 82 ITR 363 (Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -06 to 2010-11, in the case of M/s Pavitra Realcon Pvt. Ltd. i.e. the assessee company. Sd/- (Dr. Anjula Jain) 27.07.2012 Dy. Commissioner of Income Tax Central Circle-23, New Delhi. 15.3 Since the satisfaction was recorded on 27th July, 2012, therefore, deemed date of search in the case of other person for computing the period of six years is 27th July, 2012 and the six assessment years immediately preceding the assessment year relevant to previous year in which such search is conducted is assessment years 2006-07 to 2012-13. However, it is an admitted fact that no such notice u/s 153C was issued by the Assessing Officer in the above two cases for the impugned assessment years and the ld. DR also fairly admitted the same. It is a fact that the Assessing Officer mentioned in the body of the assessment order that the same has been passed u/s 153C/143(3). However, the Assessing Officer has not assumed jurisdiction u/s 153C as per the copies of order sheet entries filed during the course of hearing and the ld. DR also confirmed that no notice u/s 153C has been issued by the Assessing Officer in the above two cases. As per the requirement of the proceedings under Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the same cannot be ignored by the Assessing Officer. All the Sections to Income tax Act has given its own formats and whenever necessary they have given specific Sections in that particular Section and why the other Section has to be taken in cognizance while interpreting that particular Section. Thus, the legal ground of the assessee that Assessing Officer as well as the CIT(A) has not carried out proper proceedings against the assessee by invoking Section 143(2) in case of Pavitra and Dedicate sustains to the test of legal scrutiny. The Ld. DR relied upon the various Hon'ble Supreme Court and Hon'ble High Court judgments. The legal principle in all these judgments does not give the right to the Revenue to over look the Sections or misinterpret the Section as per the convenience of the Department. In-fact, all the Hon'ble Supreme Court as well as the Hon'ble High Court judgments have rather reiterated each and every factual aspect of each case and after that have come to the conclusion whether that particular Section in the particular case has been properly followed or not. The decision is not only based on the legal principle but how the legal principle has to be applied t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O of the searched person represent or indicate any undisclosed income of the Assessee under his jurisdiction. As explained in SSP Aviation (supra), Section 153C only enables the AO of a person other than the one searched, to investigate into the documents seized and/or the assets seized and ascertain that the same do not reflect any undisclosed income of the Assessee (i.e a person other than the one searched) for the relevant assessment years. If the seized money, bullion, jewellery or other valuable article or thing seized as handed over to the AO of the Assessee, are duly disclosed and reflected in the returns filed by the Assessee, no further interference would be called for. Similarly, if the books of accounts/documents seized do not reflect any undisclosed income, the assessments already made cannot be interfered with. Merely because valuable articles and/or documents belonging to the Assessee have been seized and handed over to the AO of the Assessee would not necessarily require the AO to reopen the concluded assessments and reassess the income of the Assessee. 36. The decision in SSP Aviation (supra) cannot be understood to mean that the AO has the jurisdiction to make a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es covered by these provisions, whereas provisions of section 143(2) subject to limitation provided under proviso to the sub-section require the AO to give the assessee an opportunity to support its return, before making of assessment under section 143(3)/144 as the case may be. In other words jurisdiction to make assessment under section 143(3) is gathered by the AO just after furnishing the return of income by the assessee under section 139 or on issuance and service of notice under section 142(1) requiring the assessee to furnish the return of income or on notice issued under section 148 of the Act, meaning thereby that provisions of section 143(2) of the Act did not give jurisdiction to make an assessment under section 143(3) but make it obligatory to comply with these provisions before making assessment under section 143(3) or section 144 as the case may be. In view of this difference between the purpose and the result of taking recourse to provisions of section 153A read with section 153C on one hand and issuance of notice under section 143(2) of the Act on the other hand, we are unable to accept the plea advanced by the Ld. D.R. 17. Coming to the merits of the case, we, af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. and M/s Delicate Real Estate Pvt. Ltd. are accepted. Since the assessee succeeds on this legal ground, we refrain ourselves from adjudicating the issue on merit as far as these two cases are concerned. 23. Now, coming to Design Infracon (P) Ltd., we find from the material available on record that there is brazen violation of principles of natural justice inasmuch as neither the statement of Mr. Jain recorded at the time of search nor his cross-examination was provided to the assessee by both the lower authorities despite specific and repeated requests made by the assessee in this regard. The Hon'ble Supreme Court in the case of Andaman Timber Industries (supra) has held that not giving opportunity of cross-examination makes the entire proceedings invalid and nullity. The Co-ordinate Bench of the Tribunal in the case of Best City Infrastructure Ltd. (supra) has also held that not providing opportunity of cross-examination makes the addition invalid. It has come to our notice that the Hon'ble Delhi High Court recently has upheld the said decision as Pr. CIT v. Best Infrastructure (India) (P.) Ltd. [2017] 397 ITR 82. 24. We further find from the records that the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant observations of the Tribunal at para 11-12 read as under:- 11. In the case of Harjeeg Aggarwal (supra), Hon'ble Jurisdictional High Court considered the evidentiary value of the statement recorded during the course of search. The relevant portion is paragraph 19, 20 & 24, which are reproduced below for ready reference :- 19. In view of the settled legal position, the first and foremost issue to be addressed is whether a statement recorded under Section 132(4) of the Act would by itself be sufficient to assess the income, as disclosed by the assessee in its statement, under the Provisions of Chapter XIV-B of the Act. 20. In our view, a plain reading of Section 158BB(1) of the Act does not contemplate computing of undisclosed income solely on the basis of a statement recorded during the search. The words "evidence found as a result of search" would not take within its sweep statements recorded during search and seizure operations. However, the statements recorded would certainly constitute information and if such information is relatable to the evidence or material found during search, the same could certainly be used in evidence in any proceedings under the Act as expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to bring the amount to tax. We find the Hon'ble Supreme Court in the case of P. G. & W. Sawoo (P.) Ltd. (supra) has observed as under (short notes) :- "Premises belonging to the assessee were let to the Government of India. The rent for the premises was enhanced from Rs. 4 to 8.11 per sq.ft. per month effective from September 1, 1987 by a letter dated March 29, 1994 of the Estate Manager of the Government of India making it clear that the enhancement was subject to conditions including execution of a fresh lease agreement and communication of acceptance of the conditions incorporated therein. Such acceptance was communicated by the assessee by letter dated March 30, 1994. Notice was issued under section 148 of the Income-tax Act, 1961 seeking to reopen the concluded assessment of the assessee for the assessment year 1989- 90. On a writ petition, the High Court upheld the validity of the notice. On appeal to the Supreme Court : Held, allowing the appeal, that the income to be chargeable to tax must accrue or arise at any point of time during the previous year. Income can be said to have accrued or arisen only when a right to receive the amount in question is vested in the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra) has observed as under :- "The onus to prove that the apparent is not the real is on the party who claims it to be so. As it was the department which claimed that the amount of fixed deposit receipt belonged to the respondent firm even though the receipt had been issued in the name of Biswanath, the burden lay on the department to prove that the respondent was the owner of the amount despite the fact that the receipt was in the name of Biswanath. A simple way of discharging the onus and resolving the controversy was to trace the source and origin of the amount and find out its ultimate destination. So far as the source is concerned, there is no material on the record to show that the amount came from the coffers of the respondent firm or that it was tendered in Burrabazar Calcutta branch of the Central Bank, on November 15, 1944, on behalf of the respondent. As regards the destination of the amount, it has already been mentioned that there is nothing to show that it went to the coffers of the respondent. On the contrary, there is positive evidence that the amount was received by Biswanath on January 22, 1946. It would thus follow that both as regards the source as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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