TMI Blog2017 (6) TMI 1292X X X X Extracts X X X X X X X X Extracts X X X X ..... We do not find infirmity in the order of CIT(A) for deleting the said addition, since the findings recorded by CIT(A) are as per material on record and the same has not been controverted by revenue by bringing any positive material on record. The CIT(A) has also correctly applied the judicial pronouncements laid down in the case of Royal Marwar [ 2007 (12) TMI 321 - ITAT AHMEDABAD] to the facts of the instant case. Accordingly addition made by AO on account of on-money has been correctly deleted by CIT(A) after recording detailed finding which is as per materials on record. Since no addition has been made based on these documents but the addition is solely based on page no 5 of the Annexure A - 1 impounded during the course of survey at the assessee s premises, thus, the documents i.e. page no 1 to 27 of Annexure A - 1 found in course of search cannot be termed as incriminating material as envisaged u/s. 153C. Moreover there was no year specific incriminating material available with the learned Assessing Officer. In this regard, we rely on the decision of Hon ble Bombay High Court in the case of CIT v. Sinhgad Technical Education Society [ 2015 (4) TMI 190 - BOMBAY HIGH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survey proceedings in relation to the assessee. It may be appreciated that if infact there was such a huge receipt of on- money as alleged by the revenue, then the revenue should have been able to corroborate it with evidences in the form of undisclosed cash, investment or expenditure. The fact that no such evidences were available as regard to undisclosed cash, expenses or investment infact also substantiates the claim of the assessee that no on-money was received by it. Notwithstanding the above observation, since the survey party has found that the assessee was not able to substantiate fully with corroborative evidences that the amount of ₹ 8,90,000/- was not received in cash addition of ₹ 8,90,000 is warranted. However, since the assessee had already offered a sum of ₹ 1 crore to cover any discrepancies whatsoever no separate addition is warranted. The onus of the assessee stands discharged and shifts to the learned Assessing Officer. Provisions of section 132(4A) or 292C of the Act speaks about the presumption of the content in the seized material only (not extrapolation) and that too it is a rebuttable presumption. The assessee has already rebutted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot applicable to the facts of the case, as no document is required to be executed and registered and was infact not executed nor registered for surrender of tenancy rights under the law governing the surrender of tenancy rights. (c) The learned CIT (Appeals) erred in law and fact in appreciating that document executed between the landlord and a third party, to which appellant was not a party, could not be made a basis for estimating sale consideration on surrender of tenancy rights and for which no consideration was actually received or found to be received by the appellant. 2. Your appellant prays that (a) The said addition of ₹ 7,71,000/- on account of alleged capital gains on surrender of tenancy rights be deleted. (b) such other relief as may be deemed fit be granted. 3. The appellant craves leave to add, amend, alter or delete any or all grounds of appeal. 3. The grounds taken by Revenue in A.Y. 2006-07 are as under:- I. In the facts and circumstances of the law the Ld.CIT(A) erred in deleting the additions amounting to ₹ 2,91,29,314/- on account of unexplained sales. II. In the facts an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and 2007-08. Shri. Haresh N Patel has in the statement u/s. 132(4) offered a sum of ₹ 1 crore in the hands of assessee company for A.Y. 2007-08 to cover the discrepancies in the impounded material so as to buy peace of mind and avoid penal consequences. 6. During the course of scrutiny assessmen, inspite of one crore having offfered in addition to the regular business income, the AO made addition in the A.Y.2006-07 on account of on money alleged to be received by the assessee. AO also made addition on account of alleged capital gain on surrender of tenancy rights. 7. By the impugned order, CIT(A) deleted the addition made on account of unexplained sales. However addition made on account of surrender of tenancy right was upheld by CIT(A). 8. Against the above order of CIT(A) both assessee and Revenue are in further appeal before us. 9. At the outset, it was contended by learned AR that issue is covered by the decision of the Co-ordinate Bench in case of Group Concern M/s. Giriraj Developers, wherein Tribunal deleted the addition by observing that there was no incriminating material with respect to the additions made by the AO. Further, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment which came to be created during the search as the statement was recorded at the time of search. Therefore, it cannot be said that the statement was seized during the search and thus, would not qualify the expression document having been seized during the search. In such a scenario, proper course of action was reassessment u/s 147 read with section 148 of the Act. 11. Learned AR further contended that the Act stipulates that the incriminating material has to be assessment year specific. In the present case, neither the seized documents nor the impounded documents in the case of survey proceeding nor the statement on oath u/s. 132(4) relate to assessment year 2006-07. For invoking section 153C (1), the Id. Assessing Officer should be in receipt of assessment year specific material. The said view has been made clear by the amendment to section 153C by Finance Act, 2014 which stipulates bearing on the determination of the total income of such other person for the relevant assessment year or years . The Hon ble Bench of Kolkatta ITAT in the case of Hi-Tech Industries v. DCIT (ITA 84-86/Kol/2011) and Third Member of the Hon ble Bench of Cochin ITAT in the case of Hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 has made its applicability to pending litigation as well. In view of the above factual and legal matrix of the case, we uphold the ground raised that the orders of assessments for Asst. years 2006-07 and 2007-08 passed u/s 143(3) r.w.s. 153C of the Act are without jurisdiction. 13. In the instant case before us, in view of the fact that' no incriminating material was found in case of search at the premise of third person (Mr. Haresh Patel) and that no satisfaction note has been drawn by the learned Assessing Officer, we respectfully follow the decision of co-ordinate bench in the case of sister concern of the assessee - M/s. Giriraj Developers (ITA 5067/5113-14/Mum/2009) rendered under the same set of facts; wherein the appeal has been decided in the favour of the assessee based on the decision in the case of Hon ble Madhya Pradesh High court in the case of CIT v. Mechmen, Hon ble Apex Court in the case of CIT v. Calcutta Knitwears and CBDT Circular No. 24/2015. We found that the facts of the said case are same in as much as assessment in the said case was framed based on the same search action relying on the same statement and a similar addition in relation to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Book for A.Y. 2007-08. From the record we also found that Summons u/s. 131 were also issued to few customers who had attended before the Assessing Officer and given their statement and ITR details stating that they have not paid any cash in respect of these shops purchased. However, the Assessing Officer presumed that the assessee had accepted on money and applied the rate of on money on transaction for A.Y. 2006-07. The CIT(A) has dealt with the issue threadbare relying on the decision in case of Royal Marwar Tobacco Products Pvt. Ltd., 29 Sot 53 and deleted the addition. Precise observation of CIT(A) was as under:- In so far as additions made in AY 2006-07 is concerned, there is absolutely no basis for making any addition. No presumption as applicable to AY 2007-08 could not be applied to earlier years for want of any evidence relating to those years. The seized paper and the entry recorded therein do not pertain to the AY 200S-07. In this connection, apart from the cited decision in the case of Royal Marwar(supra), reference could be made to the case of Dr. Surendranath Reddy vs ACIT(2000) 72 ITD 205(Hyd), in which it was observed that when no materials were found to f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 2006-07, the said right was never reflected in the Balance-sheet and no depreciation was claimed on the same. The assessee was only a monthly tenant and deriving only rent income in respect of the same which was duly offered to tax during the period in which it was received. Thus, the assessee never owned the premises at all. The director of the company was also informed by the earlier directors that as the company was only a tenant and was earning only rented income out of sub-tenancy, there was always a pressure from the landlord to vacate the premises. As the pressure from the landlord mounted, the assessee company had to surrender the tenancy to the landlords. Thus, no transaction ever took place between the Assessee Company and said Shri Ravindra G. Jain, who have obtained the said tenancy right directly from the landlords and the assessee was never a party to that agreement. The assessee is given to understand that said Shri Ravindra G. Jain has admitted to have acquired the tenancy rights in the said premises from the landlord directly and there was no transaction between the present tenant and the assessee. In fact, the tenancy rights cannot be directly sold by a monthly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... particular amounts noted therein. However, later, these amounts of cheque was not received exactly and after certain negotiations, these were revised as is clear from the ledger of all the parties referred therein and placed at page 71-72, 77-78 and 83-84 of Paper Book for AY 2007-08. 22. With regard to the statement of Bhagwan Patel, learned DR contended that he was unable to give satisfactory replies in relation to the question put-forth to him. In this regard, we found that the replies given by him clearly indicate that ready answers were not available with him on the day of survey as the recording of noting in the books of accounts were known to him. Further, his statement was recorded u/s. 133A of the Act and no reliance can be placed on the same in view of the decision of the Hon ble Apex Court in the case of S. Khader Khan Son [2012] 25 taxmann.com 413 (SC), However, during the course of survey one cannot be readily available with all the answers. Infact, the CBDT has clarified it time and again that during the course of search/ survey operations emphasis must be laid on gathering evidences and strictly prohibited obtaining of confessions or statements i.e. Circula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid if any to the assessee HUF by way of summons under section 131 or enquiry letters under section 133(6) but, to no result. The search conducted at the premises of the karta of HUF also did not reveal the fact of on money received, if any, from the said fifteen flat buyers. Further, the document seized from G no doubt raised the presumption that the assessee HUF might have similarly received on money from other flat buyers but the presumption howsoever strong may be, cannot take the place of evidence or is no substitute of evidence. 24. With regard to the allegation of department that the Assessee-Company has received on-money, it is important to note that the director of the assessee company had been searched and the assessee s premises surveyed. However, no undisclosed cash, investments, expenditure, etc. had been found either in the course of search and survey proceedings in relation to the assessee. It may be appreciated that if infact there was such a huge receipt of on- money as alleged by the revenue, then the revenue should have been able to corroborate it with evidences in the form of undisclosed cash, investment or expenditure. The fact that no such evidence ..... X X X X Extracts X X X X X X X X Extracts X X X X
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