TMI Blog2018 (1) TMI 245X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of the assessee cannot be sustained. See Continental Warehousing Corporation (Nhava Sheva) Ltd. [2015 (5) TMI 656 - BOMBAY HIGH COURT] - Decided in favour of assessee. - ITA Nos. 682 And 683/Mum/2016 - - - Dated:- 4-1-2018 - Shri P K Bansal, Vice President And Shri Ravish Sood, Judicial Member For The Appellant : Shri Sunil U Pathak Smt Geetaa Guwalanii For The Respondent : Shri Awungshi Gimson ORDER Per P K Bansal, Vice-President: Both these appeals have been filed by the assessee against the common order, dated 3012.2015, of the CIT(A), Pune, for assessment years 2007-08 and 2010-11. 2. The assessee has taken following effective grounds of appeal for A.Y. 2007-08: 1] The learned CIT(A) erred in holding that the search action u/s. 132 was conducted on the assessee firm and hence, the learned A.O. was justified in assuming jurisdiction u/s. 153A and completing the asst. accordingly. 1.1] The learned CIT(A) erred in not appreciating that the proceedings u/s 153A are wrongly initiated in the case of the assessee as there was no search conducted on the assessee firm and the provision u/s 153A were not applicable and hence, the asst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore, the addition made of ₹ 2,60,00,000/- in this year was not justified at all. 2.3] The learned CIT(A) failed to appreciate that a. No addition could be made in the hands of the appellant firm on the basis of the document found with third party. b. There is no corroborative evidence with the learned A.O. to indicate that the appellant firm had paid on money of ₹ 7,60,00,000/- for purchase of the said property from Ashray Premises Pvt. Ltd and hence, in the absence of any concrete evidence, no addition was justified in the hands of the appellant firm. c. The impugned document was neither found with Atul Chordiya nor he was the author of same. Hence his statement could not be made basis of addition. d. There were inconsistencies in the statement of Shri Atul Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not justified at all. e. The appellant firm was not granted proper opportunity to cross examine Shri AtuI Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not valid at all. Subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of ₹ 7,60,00,0007- has been taxed in the hands of the seller of the said property and therefore, the said amount should be taxed in the hands of the appellant firm who is the buyer of the said property. 1.2] The learned CIT(A) erred in not appreciating that the appellant firm had .not paid any on money for purchase of Deccan Paper Mill property from M/s. Ashray Premises Pvt. Ltd. and therefore, the addition made of ₹ 5,00,00,000/- in this year was not justified at all. 1.3] The learned CIT(A) failed to appreciate that - a. No addition could be made in the hands of the appellant firm on the basis of the document found with third party. b. There is no corroborative evidence with the learned A.O. to indicate that the appellant firm had paid on money of ₹ 7,60,00,000/- for purchase of the said property from Ashray Premises Pvt. Ltd and hence, in the absence of any concrete evidence, no addition was justified in the hands of the appellant firm. c. The impugned document was neither found with Atul Chordiya nor he was the author of same. Hence his statement could not be made basis of addition. d. There were inconsistencies in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been search u/s. 132 of the Income tax Act on the assessee firm along with those of its partners at 111/112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar-2 on 18.02.2010, although there had been survey u/s. 133A carried out at 2418, East Street, Thakkar House, 1st Wing, 2nd Floor, Camp Pune on the same date. The assessee contended that the said premises did not belong to the assessee and belonged to the Khairari Group and was occupied by various concerns controlled by them. The authorized warrant for search action conducted in the premises might be in respect of these concerns carrying on their activities. The assessee does not have any connection with these concerns and the address of the assessee s firm, vide partnership deed dated 2.11.2016, was 5th Avenue, Dhole Patil Road, Pune. During the course of the search carried out at M/s. Ashray Premises Pvt Ltd., loose papers i.e. computerized Profit loss account of Ashray Premises Pvt Ltd from 01.04.2006 to 3.8.2009 was found and seized and the copy of computerized ledger account of KLL in books of Ashray Premises Pvt Ltd. for the period from 01.04.2006 to 3.08.2009. The Assessing Officer on the basis of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id search u/s. 132, the proceedings u/s. 153A cannot be initiated. In this regard our attention was drawn towards the provisions of section 153A and on that basis it was submitted that section 153A mandates to assess or re-assess that total income of the six assessment years immediately preceding the assessment year relevant to the previous year in which the search is conducted or requisition is made. The phrase search is conducted would mean the incidence of actual conduct of search. Where there is no panchnama drawn in the name of the person searched, heavy burden would lie on the Revenue to prove by evidence or by leading any other evidence that in fact, search with respect to such person, was actually conducted by them. Merely showing search warrant cannot be treated as if search was conducted. The provisions of section 153B provide the time-limit for completion of assessment or reassessment under section 153A. Referring to section 153B(1)(a) it was contended that the assessing officer shall make an order of assessment or reassessment in respect of each assessment years falling within six assessment years referred to in clause (b) of section 153A, within a period of two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de in consequence thereof will not be valid as the Assessing Officer will not have a valid jurisdiction to frame assessment u/s. 153A. Thus, it was contended that the facts involved clearly proved that no panchnama was ever drawn proving the conduct and conclusion of the search at the premises of the assessee firm on the date of search on 18.02.2010, although name of the assessee firm might have been included in one of the warrant of authorization. Mere initiation of search by mentioning the name of an assessee on any premises, is not enough to subject an assessee to assessment or reassessment u/s. 153A/153A(1)(b) on the basis of inclusion of a person/concern in the warrant of authorization. It was further contended that if it is assumed for the sake of the arguments that the name of the assessee has been included in one of the warrant of authorization issued and this warrant of authorization was executed on 18.02.2010 at the business premises of partners, the fact remains that no search was conducted in assessee s premises at 5th Avenue, Dhole Patil Road, Pune. The conduct of the search and drawing of the panchnama are the preconditions for issue of notice u/s. 153A and 153A(1)(b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee s name was included in the warrant issued to search the premises at 111/112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar-2. Besides the assessee, other persons to be searched as per this warrant of authorization were M/s. Konark Project Ltd., M/s Konark Infrastructure Pvt. Ltd., M/s. Regency Investment, M/s. Regency Realities, M/s. Regency Properties, M/s. Regency Nirman Pvt. Ltd. and M/s. Regency Ispat Pvt. Ltd. Referring to section 292CC of I.T Act inserted in the statute by the Finance Act 2012 with retrospective effect from 01.04.1976, it was submitted that where the authorization is issued in the name of more than one person, the assessment or reassessment shall be made separately in the name of each of persons mentioned in such authorization. Referring to the case law relied on by the assessee, reliance was placed on the decision of the CIT(A) in which the CIT(A) has duly distinguished these case laws. 7. We have heard the rival contentions and have carefully considered the same along with the orders of the authorities below. The question before us in ground no.1 taken by the assessee is whether in the facts and circumstances of the case, in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5th Avenue, Dhole Patil Road, Pune while in the notice dated 14.11.2010 issued u/s. 142(1) for A.Y. 2010-11 the address of the assessee has been given Thakkar House, 1st Wing Camp, 2nd Floor, East Street, Pune. In the notice issued on 5.12.2011 again the Assessing Officer has addressed the assessee at Thakkar House, 1st Wing Camp, 2nd Floor, East Street, Pune. We noted that in the notices dated 9.12.2011, 11,12,2011 and 21.12.2011, issued by the Assessing Officer, the address has been mentioned Thakkar House, 1st Wing, Camp, 2nd Floor, East Street, Pune. The same address was mentioned in the notice dated 15.2.2012 issued u/s. 220(6). In the recovery notice dated 27.11.2012 and in the order for attachment the address has been mentioned 5th floor, 5th Avenue, Dhole Patil Road, Pune. Not only this, we noted that although in the assessment order the Assessing Officer has mentioned the address of the assessee to be at 111/112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar-2, but in the notice of demand issued u/s. 156 the address has been generated on line and mentioned as 5th floor, A3, 5th Avenue, Dhole Patil Road, Pune. All these documents prove that the addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed : ( 2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed, - ( a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; or ( b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. Section 132(1) 132. (1) Where the Principal Director General or Director General or Principal Director or Director or the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner or Additional Director or Additional Commissioner or Joint Director or Joint Commissioner in consequence of information in his possession, has reason to believe that- ( a) any person to whom a summons under sub-section (1) of section 37 of the Indian Income-tax Act, 1922 (11 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edings u/s 132(1) of the Act, conduction of search in terms of search warrant issued which includes search in the premises of the assessee and other places and also the last stage panchnama which is conclusive proof of conclusion of search from which the period of limitation will be calculated as provided u/s 153B of the Act. The provisions of Act very clearly and unambiguously provide for initiation of search, conduct of search and conclusion of search and only then the Assessing Officer can assume jurisdiction u/s 153A of the Act. In the present case before us, we noted that the search has been initiated in the name of the assessee along with other assessees appearing on the warrant of authorization issued u/s 132(1) but did not mention the address of the premises from where the assessee conducts business. No incriminating material relating to the assessee was found in the premises where the search was carried out. The search was concluded but no panchnama was drawn in the name of the assessee. Therefore, the conditions as stipulated for assuming the jurisdiction u/s. 153A, in our view, have not been satisfied. We, do not agree with the CIT(A) that merely mentioning the address o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years immediately preceding the assessment years relevant to the previous year in which such search is conducted or requisition is made. It would, therefore, clarify that not only the warrant of authorization is to be issued in the name of the assessee but search shall have to benecessarily conducted or In case of requisition under section 132A, the requisition is to be made actually. It is undisputed fact that though warrant of authorization was issued in the name of assessee being Managing Trustee of the Trust, however it was an admitted fact that no search operation was conducted in the premises of assessee. Even in the warrant of authorization, the address of the place to be searched was not the address of assessee individual. Admittedly, no Panchnama was also drawn in pursuance with the warrant of authorization in the case of assessee. No documents were seized or impounded as such during the course of search from assessee. The warrant of authorization in the name of the trust and assessee stands unexecuted in the case of assessee-individual. Since in this case only survey operation under section 133A was conducted in the premises of assessees Trust, it would not satisfy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... using Corporation (Nhava Sheva) Ltd. [2015] 58 taxmann.com 78. The addition in the case of the assessee has been made by the Assessing Officer wholly on the basis of the material found during the course of the search on 11.09.2009 on Panchsheel Group i.e. Ashray Premises Pvt Ltd. The learned DR, on the other hand, relied on the orders of the authorities below. 10. We have heard the rival submissions and have carefully considered the same along with the orders of the authorities below. We noted that on the issue whether any addition can be made in the assessment made u/s. 153A when no incriminating documents are found during the course of the search, the Special Bench of the Tribunal, Mumbai Benches, in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 (SB) has held as under: in para 58 of its order 58. Thus, question No.1 before us is answered as under: a) In assessments that are abated, the AO retains the original jurisdiction as well as jurisdiction conferred on him u/s 153A for which assessments shall be made for each of the six assessment years separately; b) In other cases, in addition to the income that has already been assessed, the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 23.09.2006 Cr M.C.M.G being amount received from mr dilip jain on deccan paper retained by mr. K.LL as per inst. from kll : a/c for Payment 11 10,000,000 . 22.10.2006 Cr. Mukesh Agarwal/Dilip Jain (6.25) Being account closed by mr lunkad and last payment received lunkad and last payment received by mr lunkad . Journal 11 6,000,000 The Assessing Officer has taken it incorrectly to ₹ 2,60,00,000/-. On the basis of these two documents, the Assessing Officer concluded that since the assessee has bought development rights of the land from Ashray Premises Pvt Ltd. therefore, it had pad a sum of ₹ 7,60,00,000 to the Director, Ashray Premises Pvt Ltd., K.L.L. which stands for Kantilal L Lunkad, by the partner of the assessee Shri Dilip Jain/Mukesh Agarwal and since the sum of ₹ 2,60,00,000/- (correct f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1,67,75,001/- as well as built-up area of 65,000 sq. ft. along with additional pro-rata open/covered car parking. These were to paid and provided by Ashray Premises Pvt. Ltd. to Deccan Paper Mills Co. Ltd. Subsequently, vide agreement dated 20.05.2006, Ashray Premises Pvt. Ltd. transferred its rights to the assessee for a consideration of ₹ 9,12,60,000/- and the consenting party to the said agreement was Deccan Paper Mills Co. Ltd. Further as per condition no.(ii) of the said agreement deed of confirmation was duly executed on 17.07.2006 between Ashray Premises Pvt. Ltd being transferor, the assessee being the developer and Deccan Paper Mills Co. Ltd., being the consenting parties to Article of Agreement dated 20.05.2006. The Assessing Officer noted from seized document P23 (profit loss account) that the assessee had debited in the purchase account under the name Deccan Paper Mill :Purchase ₹ 1,91,93,350 while it has credited Deccan Paper Mill : Sale ₹ 7,60,00,000/- while the purchase value as per the agreement dated 22.4.2004 was of ₹ 1,67,75,001/-. The search party on 12.09.2009 recorded the statement of Atul Chordia, who admitted the undisclosed incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an Paper Mill. When Shri Dilip Oswal was shown the seized documents from the premises of Ashraya Premises Pvt. Ltd. i.e. P23 and P26, he replied as under: Q3.Pl.explain the transaction of Deccan Paper Mill Land, Pune and your role in the same. Ans. M/s.Ashray Premises Pvt IM had purchased the land from Deccan Paper Mills Ltd on 22/072004 on a development agreement. I was'one of the shareholder in M/s. Ashray Premises Pvt Ltd. The land in question was subsequently sold to M/s. Regency Mahavir Properties on 20/05/2006. M/s.Ashray Premises Pvt Ltd received the amount of ₹ 3.11 Crores. Q.4. During the course of search and seizure action u/s. 132 in Panchsheel Group of Cases on 11/09/2009, loose papers bearing Nos.23 26 of Bundle No.6 of Party No.P-1 were seized. PI. go through it and confirm it. Ans. I confirm that the pages were found during the search and the entry on Page No.23, 25 26 shows an entry of 2.10 crores received by Shri Kantilal Lunkad from Shri Dilip Jain wherein in one entry it is mentioned on account ol Deccan Paper Mill. Q.5 During the course of Search your statement was recorded u/s. 132(4) on 12/09/2009, the relevant port ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the search, to buy peace with the Department we admitted 55 crores as undisclosed income. Out of this 22 crores was admitted by Ashray (AOP) between myself and Mr.Kantilal Lunkand as two partners. The said amount ofRs.2.10 crores given by Dilip Jain to Kantilal Lunkad was part of the disclosure in the hands of Ahsray (AOP) as undisclosed income and thereafter we have filed the return and paid the taxes thereon. The Assessing Officer on the this basis made the addition of ₹ 2,60,00,000 in the A.Y. 2007-08 and ₹ 5 crores in the A.Y. 2010-11, which was confirmed by the CIT(A). 12. We have heard the rival submissions and carefully considered the same along with the orders of the tax authorities below. We have also gone through the following decisions as relied on before us: CTT vs. Tirupati Oil Corporation 248 ITR 194 Unique Star Developers vs. DCIT 50 CCH 25 Mum ACIT vs. MAB Finlease Ltd. 37 CCH 597 Del J.M.Trading Coprn. vs. ACIT 20 SOT 489 Dr. Mansukh Shah vs. ACLT 18 ITR 80 All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287 Pradeep Runwal vs. TRO, Range-3, Pune in ITA No. 334/PN ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vt Ltd being the consenting party to the agreement dated 20.05.2006. During the course of the search at Ashray Properties Pvt .Ltd. two documents were seized (P23 and P26), on the basis of which the Assessing Officer made the addition in the case of the assessee amounting to ₹ 2,60,00,000 in A.Y. 2007- 8 and ₹ 5 crores in A.Y. 2010-11. We noted that the statement of one of the Directors of Ashray Premises Pvt Ltd. was recorded and subsequently questions were raised with regard to these papers and in reply thereto is reproduced as under: Statement of Shri Atul Chordia Q.No.6: I am showing you pages No. 12 to 19, 22 to 27 of bundle No.6 of Annexure A of Panchnama Dated 12-09-2009. Please go through these pages and explain the content on it and also confirm whether these are accounted in the regular books of Mr KIL and Mr KLL accounts along with the documentary evidences. Ans: The pages referred above pertain to the company named 'M/s Ashray Premises Pvt Ltd., of which I am one of the shareholder and a Director. These transactions are not recorded either, in the books of the said company or KLL or my books of accounts. Page A/o.23 is a Profit and Loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2006. If the assessee firm would have paid in cash naturally the seller would have received the payment in cash before signing and registering the said agreement. We also noted that during the course of the search at the premises of Shri Dilip Oswal Shri Mahesh Khairari, the search party had specifically asked for the question relating to the sum of ₹ 7,60,00,000 paid by the assessee to Ashray Premises Pvt Ltd. and, in reply thereto, each of them has categorically denied any cash payment by the assessee to Ashray Premises Pvt Ltd. Further we also noted that there was search in the case of Ashray Premises P Ltd, the ledger account reflects a debit of ₹ 2,10,00,000/- but a sum of ₹ 7,60,00,000. The payment of ₹ 5 crores have been presumed by the Assessing Officer as payment made by the assessee on the basis of the Profit Loss Account of Ashray Premises P Ltd. We also noted from the profit loss account that a sum of ₹ 1,91,93,350/- has also been shown as purchase of Deccan Paper Mills but no question regarding this amount has been ever asked by the Assessing Officer. Even from the statement of the Directors of Ashray Premises Pvt. Ltd recorded on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid a sum of ₹ 7,60,00,000/- in cash to M/s. Ashray Premises Pvt Ltd. We also noted from the said Profit loss account that nowhere in these documents it is mentioned that M./s Ashray Premises Pvt Ltd. received a sum of ₹ 7,60,00,000/- in cash. The addition has been made merely on the basis of the statement of one of the Director of Ashray Premises Pvt Ltd. When the assessee s partners were cross-examined in this regard, they categorically denied that they have paid any cash. In our opinion, in view of the decision of Hon ble High Court in the case of Continental Warehousing Corporation (Nhava Sheva) Ltd. (supra), no addition can be made in the case of the assessee on the basis of documents being found from the premises of the third party where neither the name of the assessee nor the fact that the assessee has paid any cash of ₹ 7,60,00,000/-. Even otherwise also it is an undisputed fact that the said documents P23 and P26 on the basis of which the Assessing Officer has made the addition in the case of the assessee were found during the course of the search conducted at the premises of Ashray Premises Pvt. Ltd. Since these documents have been found during the co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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