TMI Blog2020 (7) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... owance u/s 40A(3) - Cash payment made by the assessee for purchase of land disallowed - HELD THAT:- With respect to cash payment made by the assessee for purchase of land disallowed by the ld AO. The above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Westland Developers Pvt. Ltd 2014 (12) TMI 254 - ITAT DELHI The deletion of the addition is for the reason that assessee has neither debited the above sum in the profit and loss account and nor claimed in deduction of the above amount. Therefore, the coordinate bench have held that provision of section 40A(3) cannot apply in the above circumstances. In view of overwhelming judicial precedents in favour of the assessee deleting the above addition, respectfully following the same we direct the ld AO to delete the addition/ disallowance u/s 40A(3). Unexplained interest expenditure paid to the various vendors of the land through post dated cheque were issued - HELD THAT:- The assessee did not justify the above additional payment, hence, same were added. Against these two additions the assessee preferred appeal before the ld CIT(A). The ld CIT(A) upheld the addition on account of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005-06, 2007-08 and 2008-09. 3. The assessee has raised the following grounds of appeal:- 1. That the order passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad on facts and in law and void ab-initio. 2. That on the facts and circumstances of the case and in law, the CIT(A) erred in rejecting the appellant's contention that the assumption of jurisdiction by Assessing Officer for making assessment u/s 153C of the IT Act was bad on facts and in law, thereby rendering the whole assessment also as bad in law and void ab-initio. 3. That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the disallowance u/s 40A(3) in respect of which no deduction was claimed by the appellant. 3.1 That even on merits, the disallowance was not justified. 4. That on the facts and circumstance of the case and in law, the CIT(A) erred in confirming the disallowance of ₹ 51,000/- paid in respect of a property. 5. That on the facts and circumstance of the case and in law, the CIT(A) erred in confirming the addition of ₹ 16,500/- on account of unrealized rent. 6. the appellant craves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been made on the basis of seized documents . He therefore submitted that even otherwise the addition has been made on the basis of seized documents. 8. We have carefully considered the rival contentions and also perused the orders of the lower authorities. The impugned assessment order before us is for Assessment Year 2005-06, the date of search is 15.11.2007. Therefore, on the date of search the assessment for Assessment Year 2005-06 was not pending but a concluded assessment. Therefore, it is settled principle of law that if any addition is required to be made in the concluded assessment pursuant to search, it has to be based on the incriminating material found during the course of search. Apparently from the orders of the ld CIT (A) and AO we did not find that these additions challenged before us are based on any incriminating material found during the course of search. Further, reference to the orders of the ld CIT(A) in para No. 3.4.1 made by ld DR , where he has held that there are incriminating material found during the course of search, we do not find for this AY 2005-06 that there are any incriminating materials found. This may be for the other years as it is consolid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged. 4 That on the facts and circumstances of the case and in law the CIT(A) erred in not accepting the appellant's contention that Additional Payments having not been claimed as deduction by appellant, no disallowance could have been made in the hands of the appellant. 4.1 That without prejudice the CIT(A) erred in upholding the disallowance of Additional Payments made to the recipients who were not the owners of land and to whom the additional payment was made in cash. 4.2 That without prejudice the CIT(A) erred in not himself quantifying the addition/disallowance to be made. 5. That on facts and circumstances of the case and in law, the CIT(A) erred in confirming the disallowance of ₹ 17,04,250/- made by the Assessing Officer u/s 40A(3) of Income Tax Act. 5.1 That on the facts and circumstances of the case and in law the CIT(A) erred in upholding the disallowance u/s 40A(3) in respect of which no deduction was claimed by the appellant. 5.2 That even on merits the disallowance was not justified. 6. The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oncern the ld AO also made the above additions in the hands of the assessee. The matter reached before the ld CIT (A) wherein addition of ₹ 2279376/- was deleted and addition of ₹ 4250000/- was confirmed. Identical issue arose and in assessee s own case for Assessment Year 2010-11, wherein, the coordinate bench deleted addition. The coordinate bench in that year dealt with the above issue as per para No. 8 of that order. The coordinate bench followed the decision of the Hon'ble Delhi High Court in case of Vasundhara Promoters Ltd in ITA No. 211/2018 dated 14.05.2018. That being a binding judicial precedent, respectfully following the decision of the coordinate bench in assessee s own case, we direct the ld AO to delete the addition of ₹ 4250000/- on account of additional payment to the farmers/ land vendors. Accordingly, ground No. 4 of the appeal of the assessee is allowed. 20. Ground No. 5 of the appeal of the assessee is with respect to cash payment made by the assessee for purchase of land disallowed by the ld AO at ₹ 1704250/-. The above issue is squarely covered in favour of the assessee by the decision of the coordinate bench in Westland Develo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee preferred appeal before the ld CIT(A). The ld CIT(A) upheld the addition on account of interest however, directed the ld AO to re-compute the interest on post dated cheque after 6 months from the date of issue of post dated cheques. Therefore, according to him no interest is chargeable for the first six months from the date of PDC. 24. He gave the detailed finding as per para No. 5.4 of his order. With respect to the additional payments of ₹ 5878500/- he partly confirmed the addition. Therefore, the assessee is in appeal before us. 25. The assessee raised the additional ground of appeal as under:- that on the facts and circumstances of the case and in law, the impugned assessment order dated 15.12.2011passed by the ld AO u/s 143(3) of the Act, 1961 is bad in law and void ab initio in satisfaction it ought to have been passed u/s 153C of the Act. 26. The assessee submitted that the additional ground is purely legal and goes to the root of the matter and therefore, it should be admitted. It was further submitted that it is jurisdictional issue which can be raised at any time. It was further stated that the coordinate bench in M/s. Satkar Roadlines Pvt. Ltd., N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition after analyzing the search material. Based on this it is clear cut that the ld AO wanted to make the addition in the case of the assessee based on seized material. Now the question that arose is whether the assessment passed by the ld AO u/s 143(3) of the Act is a valid order or it should have been passed the order u/s 153C of the Act as being the assessment pursuant to search. 32. Before answering these question certain facts further need to be noted. On 03.09.2008 notice u/s 153A was issued by the ld AO in case of BPTP Ltd for Assessment Year 2003-04 to 2007-08. This company was incorporated on 11.08.2003 so the effective years were assessment year 2004-05 to 2007-08. No satisfaction note was recorded by the ld AO in the file of BPTP Ltd with respect to the documents belonging to the assessee. For this proposition, the assessee has shown the order sheet of BPTP Ltd as well as letter dated 04.01.2016 of the ld AO, wherein, in response to RTI Query, it was stated that since the ld AO of BPTP Ltd and the assessee was same, therefore, no separate satisfaction was recorded in the file of BPTP Ltd before assuming jurisdiction in case of assessee u/s 153C of the Act. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isfaction note was recorded on 19.08.2009 being explicitly and admittedly position in the assessment order itself reference the impugned year was framed as void ab initio in view of various decisions from jurisdictional high court and coordinate bench on identical facts and circumstances. 37. Similar arguments as advanced in AY 2009-10 for admission of additional grounds were also raised in this year by both the parties. As we have admitted additional ground as admitted in AY 2009-10 , we also admit additional ground and proceed to adjudicate it. 38. Brief facts of the case shows that assessment orders in this case shows that the assessment order in this case was passed on 31.12.2009 u/s 153C/ 143(3) of the Act. Search took place on 15.11.2007. Section 153C notices were issued to the assessee on 19.08.2009 for Assessment Year 2002-03 to 2007-08. In the present year satisfaction was recorded on 19.08.2009 u/s 153C of the Act. Notice u/s 143(2) was issued on 10.08.2009. Firstly there is no notice issued u/s 153C of the Act for the impugned assessment year. Therefore, presumably, assessment order is passed u/s 153C of the Act. The ld AO did not issue any notice with respect to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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