TMI Blog2020 (6) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... ear whose assessment are sought to be reopened. If the documents seized have no relevance or bearing on any income of the assessee for the relevant Assessment Year which could not possibly reflect any undisclosed income, then provision of Section 153C cannot be resorted too. Here, in this case, the seized documents as noted above and also noted by the Ld. CIT(A) is not incriminating at all and has no co-relation with any undisclosed income of the assessee and accordingly based on such documents the jurisdiction u/s.153C could not have been initiated. Onus was on the Revenue to show that incriminating material/ document recovered at the time of search belongs to the assessee and it is not enough for the Revenue to show that documents pertained to the assessee or contains information that relates to the assessee. Also it is seen that the Ld. CIT (A) has noted that the assessee has disclosed a sum of ₹ 24.50 crores as additional income during survey owing to such real estate business of the assessee, and therefore, if at all there is any element of cash payment or cash income and the source of income of the business is the same and no further evidence has been found or inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sh Gupta appeared before the investigation Wing. It was observed by the Investigation wing that books of account were not produced to corroborate the various entries. Accordingly, proceedings u/s.153C was initiated in the case of the assessee company and notice was issued on 12.08.2013. In response to which assessee has filed its return of income on 24.09.2016 declaring income of ₹ 30,87,530/-. Thereafter, survey operation was carried out in the case of Shri Yogesh Gupta by the Investigation Wing on 15.03.2012 wherein various incriminating documents pertaining to M/s. Realtech Group for the Assessment Year 2011-12 was seized from the premise D-22, Defence Colony, New Delhi. The said impounded document contains details of payment received by M/s. Meter Instruments Pvt. Ltd. from M/s. Realtech Constructions Pvt. Ltd. as on 31.03.2010. As per the details, Shri Yogesh Gupta had paid cash amount of ₹ 3,25,00,000/- in respect of sale at Delhi shop and Mr. Ajeet has paid cash amount of ₹ 10,65,26,749/- on behalf of the assessee. The scanned copy of cash transaction as per the impounded material has been incorporated in the assessment order. Assessing Officer further no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts of the documents did not support the addition made; and in any case assessee is not the beneficiary of such cash receipt. One important and finding given by the Ld. CIT(A) is that, here in this case proceedings have been initiated u/s.153C by issuance of notice dated 12.08.2013 pursuant to the details found in Kalra Group of cases held on 28.07.2011, but satisfaction has been recorded by the Assessing Officer of the assessee on 08.08.2013; and from the bare perusal of the said satisfaction, it reveals that main reason for the satisfaction is some MOU found during the course of search in Kalra Group and its key person has stated that the promoters wanted to resolve the difference between amongst them and the Realtech group. He further observed that Assessing Officer of the Kalra Group has not recorded the satisfaction and the document seized does not indicate any suppression of income by the assessee and emanating from the search. Ld. CIT(A) held that here the addition of ₹ 13,90,26,749/- has been made on the basis of survey conducted at the premises of Mr. Yogesh Gupta, wherein a document was found from his premises wherein the name of the assessee company had also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Instrument Pvt. Ltd. Another important observation and finding of the Ld. CIT (A) is that the assessee has already disclosed a sum of ₹ 24.50 crore as additional income during the survey owning to such real estate business which has been further enhanced by the Assessing Officer for the relevant Assessment Year, and therefore, it is not proper to consider this cash as the income of the assessee . The relevant findings reads as under: 10.10 It is also observed that the appellant has disclosed a sum of ₹ 24.50 crores as additional income during survey owing to such real estate business which is further enhanced by the AO for the relevant assessment year and therefore it is not appropriate to consider this cash as income of the appellant, again, when the source of income and business of the appellant is same and no evidence has been found or investigated during assessment proceedings. 4. Finally, he deleted the addition by concluding as under: 10.11 Therefore, looking to the facts and circumstances of this case and also following the case laws relied upon by the appellant, and discussions made in the foregoing paragraphs, it is found that the procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t related to the document found during the course of search of Kalra Group and is based on the documents found during the course of survey of Mr. Yogesh Gupta, she submitted that in the satisfaction note filed by the Revenue in the Paper Book on 14.10.2019 ( page 132 133), it is mentioned by the AO that the documents seized as per Annexure A- 8 Annexure A-11 in which working of assets and liabilities of different projects have been given and where a MOU was also seized for partition of the group which could not be corroborated with the books of accounts before the Investigation Wing post search proceedings. Neither the two promoter directors except Sh. Yogesh Gupta eared in response to summon nor were the books of accounts produced before Investigation Wing. Yogesh Gupta in his statement dated 07.12.2011 has confirmed that these documents belong to the assessee company. Hon ble Delhi High Court in the case of Ganpati Fincap Services (P.) Ltd. v/s CIT [2017] 82 taxmann.com 408 in para 47 to para 50 has held that if after giving sufficient opportunity, the assessee fails to demonstrate how the documents are incriminating or not and no submissions on merits of the case are made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sonal Construction 359 ITR 532 where Hon ble Court has held in para 17 held that the corroboration sought by the Tribunal in support of the seized documents, it is not an inviolable rule applicable to all situations and to all cases that every seized document should be corroborated before any addition can be made based on it. If calculations and computations have been made in the seized documents in such a manner that its probative value and genuineness cannot be doubted, nothing prevents the Assessing Officer from making additions on the basis of such documents despite the absence of any corroboration. 8. No addition was made in the hands of Mr. Yogesh Gupta and Mr. Ajit or in the case of Meters Instruments Pvt. Ltd. When the business is conducted by the appellant company and Sh. Yogesh Gupta is the director who admitted that this transaction relates to the appellant company and the impounded document also suggests that pertains to the assessee company as on the top of it name of the assessee company was mentioned, then no addition can be made in the hands of other persons who dealt with the cash on behalf of the company. Further, Meters Instruments Pvt. Ltd. is a co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of SSP Aviation 346 ITR 177 where Hon ble Delhi High Court after detailed discussion made regarding the provision of Section 153C has held various ratios in para 14, 15, 17 18 which are as under: Now there can be a situation when during the search conducted on one person under section 132, some documents or valuable assets or books of account belonging to some other person, in whose case the search is not conducted, may be found. In such case, the Assessing Officer has to first be satisfied under section 153C, which provides for the assessment of income of any other person, i.e., any other person who is not covered by the search, that the books of account or other valuable article or document belongs to the other person (person other than the one searched). He shall hand over the valuable article or books of account or document to the Assessing Officer having jurisdiction over the other person. Thereafter, the Assessing Officer having jurisdiction over the other person has to proceed against him and issue notice to that person in order to assess or reassess the income of such other person in the manner contemplated by the provisions of section 153A. No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only in the assessment year 2007-08 against which an appeal has already been filed. Thus, full opportunity of being heard is available, and in fact was made available to the assessee herein to represent against the proposed assessments or reassessments. [Para 15] The assessee contended that the seizure of the document must be of such nature that even closed assessments for six years could be reopened and this requirement postulates that the provisions of section 153C can be set in motion only if there is a finding that the seized document or books of account or valuable article represents the undisclosed income of the other person. In this regard, it can be said that this section merely enables the revenue authorities to investigate into the contents of the document seized, which belongs to a person other than the person searched so that it can be ascertained whether the transaction or the income embedded in the document has been accounted for in the case of the appropriate person. It is aimed at ensuring that income does not escape assessment in the hands of any other person merely because he has not been searched under section 132. It is only a first step to the enquiry, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 153C to come to a conclusion that seized assets which belong to another person represent any undisclosed income. If the AO of a searched person is satisfied that an asset/documents seized belong to another person, he has a duty to forward the documents or the valuable assets seized to the AO of the person concerned; apart from doing so, the AO can do nothing more. However, relief was given on the ground that the hard disk did not belong to the assessee in this case. 11 . Further in the case of Ganpati Fincap (supra), Hon ble Delhi has considered the case of RRJ Securities in para 37 and mentioned that in that case the seized hard disk did not belong to the company and on this account, relief was given. Further in the case of Index Securities Pvt. Ltd. 86 taxmann.com 84 also, relief was given to the assessee as trial balance and balance sheet seized from other person did not belong to assessee or relate to relevant assessment years. Hence, in the case of Green Range Farms Hon ble Tribunal has not considered the judgment of Hon ble Delhi High Court of SSP Aviation at all and not considered judgment of RRJ Securities and Index Securities properly. Similarly, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on record. On the facts as discussed above, it is clear that the satisfaction note u/s.153C was based on certain seized documents found during the course of search and seizure action initiated in Kalra Group cases/Consortium Securities Pvt. Ltd. The satisfaction note of the Assessing Officer for acquiring jurisdiction u/s 153C reads as under: A search seizure action in Kalra group of cases was initiated on 28.07.2011. Main company of the group is Consortium Securities Private Ltd. and it is a stock brokering company having membership of National Stock Exchange (NSE), Bombay Stock Exchange (BSE), MCX Exchange Ltd. (MCX-SX), United Stock Exchange Ltd.(USE) and depository participant of National Securities depositories Limited (NSDL). The main persons controlling the group are Sh. Paraminder Singh A his sons Sh. Harveer Singh and Sh. Bikramjit Singh Kalra. Consortium group of companies are promoted by Sh. Paraminder Singh Kalra and the registered office of the group companies are in New Delhi. Sh. Paraminder Singh Kalra is the main person who is controlling the affairs of the group companies and his sons namely Sh. Harveer Singh Kalra and Sh. Bikramjit Singh Kalra are also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne arbitrator which should be acceptable to the remaining two promoters of the Group and he was one such arbitrator appointed by the Realtech Group promoters. Besides him, Shri B.N. Chandok and Shri Kuldeep Ahuja were also appointed as Arbitrators by the Realtech Group. During the course of post search proceedings summons were issued to three promoter directors of M/s. Real Tech Group, out of which only Mr. Yogesh Gupta appeared before the Investigation Wing and as per the report of the Investigation Wing, Mr. Yogesh Gupta remained evasive on various replies. The books of accounts were not produced to corroborate the various entries in the seized documents. The above facts on the seized documents of M/s. Realtech Construction P. Ltd. and reluctance on the part of the Realtech Group to explain the seized documents, casts a heavy degree of suspicion on the affairs of Realtech Group. It may be noted that books of account of Realtech Construction Pvt. Ltd. have not been produced. As such it could not be ascertained that the above entries/liabilities mentioned/noted in the seized documents as discussed above have actually been recorded in the respective books of acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (supra), Hon ble Delhi High Court after referring and relying upon by the principle laid down by the Hon ble Supreme Court in the case of CIT vs. Singhad Technical Educational Society reported in (2017) 84 Taxmann.com 290 and RRJ Securities (supra) has observed and held as under: 30. In the present case, the documents seized were the trial balance and balance sheets of the two Assessees for the period 1st April to 13th September 2010 (for ISRPL) and 1st April to 4th September 2010 (for VS I PL). Both sets of documents were seized not from the respective Assessees but from the searched person i.e. Jagat Agro Commodities (P) Ltd. In other words, although the said documents might 'pertain' to the Assessees they did not belong to them. Therefore, one essential jurisdictional requirement to justify tax assumption of jurisdiction under Section 153 C of the Act was not met in the case of the two Assessees. 31. As regards the second jurisdictional requirement viz., that the seized documents must be incriminating must relate to the AYs whose assessments are sought to be reopened , the decision of the Supreme Court in Sinhgad Technical Education Society' {supra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Buildwell Pvt. Ltd . (supra), the Hon ble High Court after taking the note of the amendment w.e.f. 1June, 2016 in Section 153C has observed and held as under: 15. It can straightaway be noticed that the crucial change is the substitution of the words books of account or documents, seized or requisitioned belongs to or belong to a person other than the person referred to in s. 153A by two clauses i.e., (a) and (b), where cl. (b) is in the alternative and provides that such books of account or documents, seized or requisitioned could pertain to or contain information that relates to a person other than a person referred to in s. 153A of the Act. 16. The trigger for the above change was a series of decisions under s. 153C, as it stood prior to the amendment, which categorically held that unless the documents or material seized belonged to the assessee, the assumption of jurisdiction under s. 153C of the Act qua such assessee would be impermissible. The legal position in this regard was explained in Pepsi Foods (P) Ltd. us. Asstt. CIT (2014) 270 CTR (Del) 459: (2014) 108 DTR (Del) 297 : (2014) 367 ITR 112 (Del) where in para 6 it was held as under : 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the Ld. CIT (A) has erroneosly held that satisfaction should be recorded by the Assessing Officer and the Kalra Group and not that of the assessee is accepted in view of the judgment of Hon ble Delhi High Court in the case of PCIT vs. Sheetal International Pvt. Ltd. (supra) and Ganpati Finserve Ltd. (supra) . However, the other arguments raised by the ld. CIT-DR in view of the categorical judgments of Hon ble Delhi High Court in the case of RRJ Securities Ltd. (supra), PCIT vs. Dream City Buildwell cannot be accepted. 19. Further, the objection raised by the Ld. CIT-DR that ld. counsel for the assessee cannot raise this issue without filing the Cross Objection cannot be accepted, because the assessee can very well challenged the scope of the addition on legal grounds, when here in this case Ld. CIT(A) has given a categorical finding that technically in this case proceedings u/s.153C could not have been initiated because the satisfaction and the proceedings are not based on any seized documents albeit on the documents found during the course of survey. 20. Apart from that, it is seen that the Ld. CIT (A) has noted that the assessee has disclosed a sum of ₹ 24.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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