TMI Blog2018 (1) TMI 1551X X X X Extracts X X X X X X X X Extracts X X X X ..... law/statute then it can be allowed but if the material which is relevant to the assessee s escapement of income has not been seized then merely on the surmises or conjectures that cannot be called as incriminating material which was properly demonstrated by the assessee during his regular assessment. Order of CIT(A) holding the order as void ab-initio is correct - Decided against the revenue. - I.T.A. No. 973/DEL/2014, I.T.A. No. 974/DEL/2014, I.T.A. No. 975/DEL/2014, I.T.A. No. 976/DEL/2014, I.T.A. No. 977/DEL/2014, I.T.A. No. 978/DEL/2014 - - - Dated:- 5-1-2018 - SHRI G. D. AGRAWAL, PRESIDENT AND MS SUCHITRA KAMBLE, JUDICIAL MEMBER For the Appellant : Sh. Raja Ram Sah, CIT DR For the Respondent : Sh. M. P Rastogi P N. Shastri, AR ORDER PER SUCHITRA KAMBLE, JM These appeals are filed by the Revenue against the order dated 27/11/2013 passed by CIT(A)-XXXI, New Delhi. 2. For the sake convenience we are taking up grounds of ITA No. 973/Del/2014 Assessment Year 2004-05, the grounds of appeal are as under:- 1. The order of Ld.CIT(A) is not correct in law and facts. 2. On the facts and in the circumstances of the case, Ld.CIT(A) has erred in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the assessee was seller. It is established practice of the Income Tax department that not everything found at the time of search is seized. Only such material is seized which is, prima- facie, incriminating in nature. The Ld. DR further submitted that incidentally, the incumbent AO of the searched person and the assessee was the same officer. However, the 'Satisfaction note' was recorded on 02.09.2011 in capacity of AO of Shri Dinesh Kaushal, in respect of documents mentioned in para 1.1, above, u/s 153C. The present AO has confirmed this fact vide his letter dated 17.06.2016. This fact can also be seen from the S atisfaction Note: The Satisfaction Note says, on going through the documents Seized.... . Undoubtedly, seized documents are in the possession of the AO of 'searched person'. The Satisfaction Note says, there was no search warrant in the case of M/s Glensdale Enterprise Development Pvt. Ltd... . The Satisfaction Note also says, ....the case of M/s Glensdale Enterprise Development Pvt. Ltd. is covered u/s 153C... . This language would only be used by the AO of 'Searched person' because the AO of M/s Glensdale Enterprise Development Pvt. Ltd. wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollen Mills Ltd. v. ITO [ 1999 (236) ITR 34 (SC)]. The Satisfaction note says that the document (agreement to sale) under question also belongs to M/s Glensdale Enterprise Development Ltd. It certainly shows application of mind because an agreement to sale is not a sale deed which may be said to be belonging to the purchaser because the seller does not have any interest in the property after a sale deed is executed but in case of an agreement to sale, both the parties i.e. seller as well as buyer are having interest in the property which subject matter of the agreement to sale. The Ld. DR submitted that the CIT(A) has held in para 3.6.3/ Page No. 18 of his order for A.Y. 2004-05 that Sh. Dinesh Kaushal who is shown as purchaser in the said agreement to sale was a benami in order to circumvent laws prevailing in Himachal Pradesh. This fact was in knowledge of the AO of Sh. Dinesh Kaushal. Therefore, exclusive ownership of this documents in the hands of Sh. Dinesh Kaushal was doubtful. 6. The Ld. AR submitted details of returns filed for Assessment Year 2004- 05 till 2009-10 which are as follows:- Asst.Year Filed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessments for the Assessment Years 2005-06 to 2008-09 were already completed and not pending. Hence the completed assessment cannot be abated in view of the second proviso to Section 153A of the IT Act unless some incriminating material is found during the course of search for that year. 7. The Ld. AR further submitted that in the absence of any incriminating material, no addition can be made. The very agreement dated 05.09.2006 with Dinesh Kaushal, was not an incriminating material because the same was duly reflected in the books of account and was admitted by the AO in Assessment Year 2007-08. The AO has not made any addition based on such agreement dated 05.09.2006 found at the residence of Dinesh Kaushal which shows that there was no incriminating material found during the course of search. The AO has not made any addition based on the seized material. All the credits, which have been mentioned in the books of account and have been treated by the AO as unexplained u/s 68 of the IT Act, basically represent the trade advances received against the construction contract which has been completed in Assessment Year 2010-11 and have been offered for assessment in Assessment Year2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 153C. If the practice is supported by law/statute then it can be allowed but if the material which is relevant to the assessee s escapement of income has not been seized then merely on the surmises or conjectures that cannot be called as incriminating material which was properly demonstrated by the assessee during his regular assessment. The CIT(A) has given proper finding and allowed the appeal of the assessee. The CIT(A) held as under:- 3.6.1. I have considered the arguments of the AR and the facts of the case. From the assessment order it is noted that the AO has not made any additions to the total income based on the seized document on the basis of which proceedings were initiated under section 153G of the Act. The additions pertain to the credits appearing in the books of accounts of the assessee held as unexplained. The AO has asked the appellant to provide the list of advances received from his customers and to file details like confirmations from such parties and also to produce them for verification by him. Thus, the AO has proceeded with normal assessment proceedings by asking the appellant to establish the credits appearing in the books of accounts in accorda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or that there is any unaccounted payments / receipts in the said agreement. Thus it is an agreement entered between the seller and buyer in the course of the normal business activity of the appellant company. As per the submissions made to the AO, the appellant company is in the business of developing the- land owned by individual owners by constructing retention walls, approach parts, leveling of land by filling and compaction etc. which is required on the lands situated on a hill slopes. It emerges that as per the revenue laws prevailing in the State of Himachal Pradesh, only a person who is originally from Himachal Pradesh could own a piece of land in that state and the promoter of Tulip group made investment in the land at Himachal Pradesh through their _CFO who happens to be a native of Himachal Pradesh. It is not the AO s case that any extra amount was paid by Mr Dinesh Kaushal. No addition has been made on such grbunds in any of the assessment years. Thus the agreement to sell as such does not by itself show that the transaction between the appellant and Mr Dinesh Kaushalwas resulted in any undisclosed income. 3.6.4. I find that the action of the AO in initiating proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under reference. Even though there is no mention under section 153C that the document should show evasion of tax or presence of undisclosed income (so to say it should be incriminating), the higher appellate for a have interpreted that the document referred to in section 153C should be an incriminating document. The whole purpose of proceedings under section 153 A is to assess or reassess the income after an action u/s 132 or 132A. If the search findings show that proceedings mentioned under section 153A needed to be taken up in the case, of some other person who has not been searched, then the AO should proceed to do so after satisfying himself that the seized document belonged to that other person. In the instant case the document under reference is an agreement containing the name of two parties namely the appellant - a land developer and the search a person - a customer. Neither in the satisfaction note nor in any of the statements nor also in the Assessment order, is there any allegation of unaccounted payments. In a situation of this kind, I do not consider that the AO could have validly initiated proceedings under section 153C. 3.6.6. The Hon ble jurisdictional ITAT (F-B ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
