TMI Blog2020 (12) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... Addition on the documents found in the premises of Jami Siva Sai during the course of search proceedings - HELD THAT:- We are of the view that the AO is not justified in making the addition in the hands of the assessee of ₹ 75 lakhs. The AO did not follow the prescribed procedures, which ought to have been followed in cased of documents which was found in the case of other persons as prescribed u/s. 153C of the Act. Therefore, the entire addition made by the AO along with the interest made thereon is not correct. Accordingly, we delete the addition and interest charged. With regard to ground No. 4: since we have deleted the entire addition made by the AO and decided the appeal of the assessee on merits of the case, therefore, this ground is consequential in nature. Thus, the ground taken by the assessee on merits is allowed. Unexplained money u/s. 69 - HELD THAT:- Merely found the documents and if there is no transaction it cannot be said that the assessee has done the transactions outside his books of accounts or merely found the documents in the name of anybody cannot be said that the transactions have been occurred unless and until it is not established by confirm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which 616.400 grams gold were purchased from the HUF's fund as claimed by the assessee. Thus, if the assessee would be able to justify the cash availability in the hands of the HUF before the AO and it would be able to nullify the observation of the CIT(A) i.e. production of purchase bill, then the assessee will get relief of 616.400 grams or to the extent possible and the rest quantity is hereby disallowed. Accordingly, we restore this issue to the file of AO to consider the claim of the assessee as per our above observations. This ground of appeal of the assessee is partly allowed for statistical purposes. - ITA No.132/CTK/2018 And ITA Nos. 19 And 20/CTK/2019 And ITA No.386/CTK/2018 - - - Dated:- 31-8-2020 - Shri C.M. Garg, JM And Shri L.P. Sahu, AM For the Assessee : Shri P.K.Mishra, Advocate For the Revenue : Shri M.K.Gautam, CIT DR ORDER L.P. SAHU, MEMBER (A) 1. These are the appeals filed by the assessee against the separate orders of CIT(A)-2, Bhubaneswar, dated 11.09.2018 and 29.08.2018 for assessment years 2013-2014, 2014-2015, 2015-2016 2016-2017. 2. Since, similar issues have been raised in all the appeals, therefore, for the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Tribunal, the Appellant due to lack of knowledge, could not take legal grounds. Since, he himself has filed the appeal, having no knowledge on Income Tax Law, could not take these legal ground. Legal grounds that, the Appellant proposed to take here are as such; 1. That, the impugned order of Assessment is not sustainable in the eye of law in view of the fact that due procedure of law and statutory requirement has not been followed by the learned Authorities below while granting approval U/S. 153D of the Act. It being mandatory in the eye of law in absence of it, the order of Assessment needs to be quashed in the interest of justice. 2. For that, in absence of any incriminating material, the completed Assessment cannot be disturbed, as such, the consequential additions so made, being without jurisdiction and without the authority of law is liable to be quashed in the interest of justice. That, it may be respectfully submitted here that, it being jurisdictional ground and goes to the root of the case, it needs to be admitted for hearing in the interest of justice. If this legal ground is not admitted and not adjudicated, the Appellant/Assessee will suffer from irrep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... documents were also confronted to Jami Siva Sai on 12.04.2016, wherein he was also failed to offer any convincing explanations. From the statements, the AO noticed that Shri Jami Siva Sai could not furnish the details of ₹ 50 lakhs received from DORB and ₹ 25 lakhs received from Shri Gandhi Thakur Das, Surat. For the sake of convenience, we are reproducing the questions answers, statements and findings of AO in this regard, which read as under:- 6. During the course of search and seizure operation at the residential premises of Sri Jami Siva Sai, Jeypore on 12.02.2016, the following documents were seized. SI. No. Documents seized Indentified as 01. One diary JRR-45 02. One note book JRR-37 03. One rough cash Book JRR-26 Page no. 84 of JRR-45 shows the details of hand loan amounting to ₹ 75,00,000/- given by you to Sri Jami Siva Sai during the financial year 2012-13. The abstract of the seized document JRR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... During the course of post search enquiry, the above facts were confronted ] to Shri Jami Siva Sai in his statement recorded on 12.04.2016 wherein he was failed to offer any convincing explanation the relevant portion of his statement recorded u/s. 131 in verbatim is reproduced below:- Q. 85 Please go through Page No. 152 of the books seized from your residence, identified as JRR-26. On this page, there is an entry viz.: by K. Rama Rao(P)-₹ 25,00,000/- . Please furnish the complete surname for the initials K , complete postal address and Telephone Number of Shri K. Rama Rao and also explain the transaction. Ans-In fact, he is Y. Rama Rao and not K. Rama Rao who is a sales agent of Sri Sai Cashews and he collected the amount from Sri Gandhi Thakur Das, Surat who is a debtor. Sri Y. Rama Rao is residing at Khal Sahi, Arvind Nagar, Jeypore and his phone number is 7682801171. Q. 86 As you said, it is not written as Y it is actually K . Another entry at Page NO. 332 of JRR-26 clearly shows that it is actually K please offer your comment. Ans-We call him as Rama Rao and we are not sure about his initials. Q. 87 To substantiate my argument I am showi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns you have paid interest of ₹ 4,68,750/-@ 1.25% interest on ₹ 75,00,000/- of loan availed. Please offer your comments. Ans. I cannot explain the same. 05. From the above, it is clear that Shri Jami Siva Sai except stating that an amount of ₹ 50,00,000/- was received from DORB and ₹ 25,00,000/- received from Shri Gandhi Thakur Das, Surat, he has failed to furnish the any supporting documents such as ledger extracts of the parties from whom DORB payments were received and ledger extracts in the case of Shri Gandhi Thakur Das, Surat also. During the course of assessment proceeding also he has not produced any evidence in support his claim. Again, a final show cause letter was issued to the assessee on 30/10/2017. In response to this also the assessee also denied to have advanced any amounts to Shri Jami Siva Sai. 06. It is pertinent to mentioned here that during the course of search proceedings in his residence, evidence regarding money-lending business carried on by the assessee were found. For example during the financial year 2015-16, Shri K Rama Rao advanced an amount of ₹ 31,00,000/- to Shri B Ram Prasad Rao, Chairman of M/s. Gandhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2013-14 to 2016-17. Against the Additions made, for Assessment years: 2013-14 to 2016-17, the Appellant preferred Appeals before CIT(A)-2, Bhubaneswar. While adjudicating appeals of the Appellant, the learned CIT(A) deleted additions for Assessment year: 2014-15 and 2015-16, however allowed only relief of ₹ 9,73,821.00 for Assessment year: 2016-17. Being aggrieved with additions confirmed by the learned CIT(A), The Appellant knocks door of this Hon'ble Tribunal for justice. The Appellant submits herewith details, for better appreciation of facts; Asst.year Returned Income Assessed income Addition in dispute Relief by CIT(A) 2010-11 ₹ 1,89,771.00 ₹ 1,89,771.00 N I L No Appeal 2011-12 ₹ 2,52,115.00 ₹ 2,52,115.00 N I L No Appeal 2012-13 ₹ 2,63,040.00 ₹ 2,63,040.00 N I L No Appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed in the interest of justice. 2. That, in absence of any incriminating materials, the learned A.O. is not justified under the Law to disturb the completed, Assessment, as such the impugned order of Assessment for Assessment years: 2013-14 to 2015-16 are without jurisdiction and without the Authority of law, hence additions made needs to be deleted in the interest of justice. 3. The impugned orders of Assessments re ante-dated and are barred by limitation as such are not sustainable in the eye of law, hence needs to be quashed in the interest of justice. Legal Ground No. 1. 1A. That, as has been observed by the learned C.I.T (A) in para-7.2 at page 6 of his order that while completing Assessment, the learned A.O. has sent the draft order for approval of the learned Joint Commissioner of Income Tax on 29.12.2017 vide his F. No. ACIT/CC-1/Bhubaneswar/153D/2017-18 and the learned Joint Commissioner of income Tax accorded his approval vide Letter No. F. No. JCIT (Central)/Bhubaneswar/153D/CC-l/Bhubaneswar/2017-18/3633 on 29.12.2017, thereafter the Assessing Officer has issued the same order on 29.12.2017 and these are undisputed facts. From these facts, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in (2019) 307 CTR 218. that while granting approval, if the approving Authority did not have enough time to analyse the issues arising out of the draft Assessment orders, then clearly this was a case in which the Higher Authority had granted the Approval without consideration of relevant issues. Their lordships held that the question of validity of approval goes to the root of the matter and could have been raised at any time and the Tribunal was justified in holding that there was no application of mind on the part of the Authority granting approval and therefore approval was invalid. The Appellant also relies on following judicial pronouncements such as; 1. Dillip Constructions Pvt. Ltd-vs.-ACIT, IT (ss)A Nos. 66 to 71/CTK/2018 2. M3M India Holdings vs. DCIT, in ITA No. 2691/Del/2018 3. Geetarani Panda ors.-versus-ACIT (2018) 32 TTJ 703(CTK) 1E. That, in view of above judicial pronouncement and settled principles of law, it is respectfully submitted here that since the learned JOT has accorded approval without verifying the Assessment records and seized materials and in a very mechanical and hasty manner, the same is not sustainable in the eye of law, as s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al is found during search of other person. Since, facts of the present case is similar to the facts in the case of Trilok Chand Chaudhury. In view of settled principles of law, the Assessment so made U/S. 153A and consequential additions so made therein for Assessment years: 2013-14, 2014-15 and 2015-16 being not sustainable in the eye of law are liable to be quashed in the interest of justice. 2D. That, when the learned A.O. has no incriminating material in his hand for Assessment years: 2013-14 to 2015-16 and no addition has been made on the basis of documents seized, he is not authorised under the law to disturb the completed Assessment. Law on this issue is well settled by the Hon'ble ITAT, Delhi-F bench in the case of Smt. Sunita Bhagchandka vs. ACIT in ITA No. 3447/Del/2016 that, when documents seized during search has no revenue implication and does not indicate any undisclosed income, it cannot be construed as incriminating material, so as to attract section 153A of the Act to disturb completed Assessment. Law in this Aspect is well settled by the Hon'ble ITAT, Delhi Bench in the case of DCIT-versus-Dharampal Satyapal Ltd., that, in case of proceeding U/S. 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s made of ₹ 75,00,000.00 and ₹ 6,25,000.00 for Assessment year: 2013-14 For that, while examining documents seized from Shri Siva Sai Jami, the learned A.O. treated as if, the Appellant/Assessee has given ₹ 75,00,000.00 as loan and has earned ₹ 6,25,000.00 as interest income, for which, while completing Assessment U/S. 153A, the learned A.O. made addition of ₹ 75,00,000.00, treating it as undisclosed income on substantive basis and further, calculated interest and made addition of ₹ 6,25,000.00, treating it as undisclosed income from other sources and taxed accordingly U/S. 115BBE of the Act. To make these additions, he took help of documents seized from the premises of Shri Shiva Sai Jami. The learned A.O. referred to page No. 84 of JRR-26. (Reference may be drawn to Page No. 26, Annexure-4 and page No. 42, Annexure-5 of the paper Book.) During course of search, post search inquiry as well as during course of Assessment proceeding, Shri Shiva Sai Jami has categorically and repeatedly explained the fact that, the figures mentioned at page 84 of JRR-26 does not relate to the present Appellant Kothakota Rama Rao and has provided details of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Unique Organisers Developers (P) Ltd. vs. DCIT [118 Taxman 147] Ahd. In view of the above judicial pronouncements, it is respectfully prayed that, the additions so made being not sustainable in the eye of law needs to be deleted in the interest of justice. In addition to the above written submissions, the ld. AR of the assessee submitted that the AO sent the draft assessment order before the JCIT for taking approval u/s. 153D of the Act of near about 75 cases on 29th December, 2017 and the ld. JCIT approved the draft assessment order on the same date, which is impossible and the same implies that the JCIT has not applied his mind properly before giving approval. He also submitted that there was no any incriminating material found during the course of search. However, the AO has completed the assessment relying on the documents found in the name of Jami Siva Sai, who is other than searched person, therefore, the entire assessment made u/s. 153A of the Act is not sustainable in the eyes of law. 9. On the other hand, ld. DR has relied on the orders of lower authorities and filed his written synopsis which reads as under:- Assessee's first legal ground: It perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d his supervisory officer. However in the present case, no such comments have been mentioned by the Joint CIT, Central Range, Bhuvaneshwar while according approval on 29.12.2017. In the present case, the Joint CIT, Central Range, Bhuvaneshwar has confirmed consented to the act of the A.O. and sanctioned the same. vi.) The Judgment of the Hon'ble Cuttack Tribunal relied upon by the assessee in the case of Smt. Geetarani Panda vs. ACIT (IT (SS)A No. 01/CTK/2017 dated 05.07.2018 is distinguishable on facts. In para-11 of the decision (on page-13), it has been mentioned that the Addl. CIT, Central Range-1 had given a reminder to the A.O. to submit the draft orders for approval u/s. 153D on or before 23.03.2015. However the draft order was submitted on 26.03.2015 thereby he was left with no time to ensure that all the points in the Appraisal Report, the appellate proceedings, audit inspection etc. had been duly taken into account and the enquiries/investigations required to be made, were actually made by the A.O. In the end, he also mentioned that these cases were never discussed with him. With these comments, the draft order was approved as required under the statute u/s. 15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn interest unless such a statement is true . ii.) Reliance is placed on the order of Hon'ble Cuttack ITAT in the group case i.e. Smt. N. Roja for AY 2010-11 to AY 2014-15 AY 2016-17 in IT(SS) A Nos. 101-106/CTK/2018 dated 04.06.2020. On pages 16 17 of said order dated 04.06.2020, the Hon'ble Members of ITAT have analyzed clause (vii) of para-37 relating to the decision of Hon'ble Delhi High Court in the case of Kabul Chawla 380 ITR 573). From the same, it is clear that the AO can interfere with the completed assessments if there is either an incriminating material found at the time of search or undisclosed income or property is discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment. On going through the records, it is palpable that cash loans of ₹ 75 lakhs are not recorded in the books of account of the assessee. The sources of such loans have remained unexplained. Further the interest income of ₹ 6.25 lakhs had not been recorded in the books of account and was also not offered to tax. Hence the case of assessee clearly falls within the ambit of the observations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intent specified in sections 143(2)/148 and other sections is clear wherein which it is stated that the A.O. should serve on the assessee as compared to the language used in section 153(1). The legislature in its wisdom has not used the term shall be served on the assessee U/s. 153(1) for any assessment order or demand notice. The decision of the Hon'ble Andhra Pradesh High Court in the case of Kodicasu Appalaswamy Suryanarayana Vs. Commissioner of income Tax 46 ITR 735) is pertinent in which their lordships held that where an order of assessment had been passed within the period of limitation then the date on which order of assessment and demand notice were served, was not relevant. The Hon'ble Gauhati High Court in the case of Ramanand Agarwalla Vs. Commissioner of income-tax 151 ITR 216) held that as per sub-section 1 of section 153 of the Income Tax Act, 1961, the A.O. is required to pass an order of assessment within the limitation period, it does not require that the demand notice and assessment order should also be issued within that limitation period. In the case of K.U. Srinivasa Rao Vs. Commissioner of Wealth-tax 152 ITR 128), the Hon'ble Andhra Pradesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was paid to the assessee. ii.) This issue was discussed by the CIT(A) in paras 5.5 to 5.7 on pages 4 5 of the appellate order. It is clear that these documents were bound books in thick cover and could not be regarded as loose sheets of paper. The assessee was regularly advancing cash loans as evidenced by documents seized from his residence. In AY 2016-17, the assessee had advanced cash loans to Shri B. Ram Prasad (Director of Gandhi Institute of Advanced Computer Research) amounting to ₹ 31 lakhs as per seized cash receipts. Thus denial by Shri Jami Siva Sai was collusive in nature. iii.) The documents seized from the third party can be used against the person to whom these belong as held by Hon'ble Pune ITAT in the case of Dhunjibhoy Stud Agricultural Farm vs. DCIT 82 ITD 0018) (TM Pune ITAT). In view of above facts and circumstances, this ground taken by the AR of the assessee is required to be rejected. In addition to the above written synopsis, the ld. DR submitted that during the course of search and seizure proceedings, documents found indicate clearly that the assessee was engaged in money laundering business and he has used code words t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 25,00,000/- on 06.12.2012 is also clearly mentioned. 5.7 Both of the seized documents are bound books in thick cover and cannot be regarded as loose sheets of paper. There is no doubt that K. Rama Rao of Rayagada is the appellant, on whose residence also a search was conducted. In that search, money receipts issued by B. Ram Prasad Rao, Director of M/s. Gandhi Institute of Advanced Computer and Research (GIACR) amounting to ₹ 31,00,000/- were found and seized. This clearly suggests that the appellant is regularly practising in the money lending business and advances cash loans. The material seized during the course of search speaks for itself. Jami Siva Sai has stated that of ₹ 50,00,000/- was received from DORB customers but no such evidence was given either of the time of assessment or at the appellate stage. Moreover, names of the DORB customers are not mentioned anywhere. Similarly, Jami Siva Sai has stated that of ₹ 25,00,000/- was received from Gandhi Thakur Das of Surat. But his name does not appear in the seized material. Name of K. Rama Rao of Rayagada appears on the seized material. The denial on advancing of loan and of interest by the appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uthority, otherwise, there is likelihood of changes being made is the assessment order. In this case, it is not the contention of the appellant that the order has been changed from the time when it was made to the time when it was served on the appellant. When the Assessing Officer sends the draft order to Jt. Commissioner of Income Tax, for statutory approval u/s. 153D of the Income Tax Act, 1961, the order is beyond his power, as after the approval, the Assessing Officer, has to issue the same order. 7.4 As per the provisions of the section 153B of the Income Tax Act, 1961, the Assessing Officer has to make the order and not serve the order on the appellant, before the time barring date. I am supported in this regard by the decision of Hon'ble High Court at Calcutta in the case of CIT vs. Binani Industries Ltd. reported in (2015) 59 taxmann.com 389 Cal.). The head notes are as below:- section 143, read with section 153, of the Income-tax Act, 1961-Assessment General (Assessment barred by limitation)-Assessment year 2002-03-Assessing Officer passed assessment order on 31-3-2005 which was received by assessee on 13-4-2005-Assessee contended that same was barred by li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity and issue of demand notice but certainly not the service of the same on the assessee. Accordingly, it should, therefore, be taken that the assessment was completed on 15-10-1980. d. Commissioner of Income-tax (Central), Cochin Vs. T.O. Abraham Co. [2011] 12 taxmann.com 433 (Kerala) The requirement of section 158BE is satisfied if the department establishes that the block assessment is completed before the last date provided for completion of assessment under section 158BE which in the instant case was 31-5-1997. It is the settled position particularly through the decision of the Supreme Court in B.J. Shelat v. State of Gujarat AIR 1978 SC1109 that for validity of the assessment there is no need for the department to serve the assessment order on the assessee before the prescribed period of limitation provided for completion of assessment. The test laid down by the Supreme Court in the above case is that in order to establish that the assessment has been completed within time, the department should have completed the proceeding and dispatched it so that the proceeding is out of the control of the officer issuing it. In the instant case, admittedly, the assessment wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an extra copy of assessment order which was not signed. However, the same did not mean that the original assessment was not signed by the Assessing Officer with reference to which only he prepared the notice of demand which was admittedly signed and dispatched to the assessee within the period of limitation. The additional feature that supported the case of the department was that the draft assessment prepared and finalized by the Assessing Officer was approved by the Commissioner after giving a hearing to the assessee on 23-5-1997 and, so much so the assessee could not even contend that a draft assessment was not finalized within the period of limitation. Even though records were produced before the Tribunal and verified by the Tribunal, there was no finding that the assessment order signed on 27-5-1997 was not available on file. It could not also be assumed that the Assessing Officer predated the assessment order because the draft assessment was already approved by the Commissioner on 23-5-1997 after hearing the assessee and there was no case of any deviation-made from the approved draft while issuing the final order. Further, the notice of demand which was issued based on the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. The fact that the word used is 'made' in section 153 shows that the assessment order should be made on or before the said date. It does not mean that it should be served. On this ground itself as we find that the decision of the Coordinate Bench has erroneously laid down the law on this issue if the word 'made' is given the meaning served then the section itself would become unworkable and it would make all assessment orders made on the last day illegal. In the circumstances, respectfully following the principles and the ratio laid down by the Hon'ble Madras High Court in the case of CIT Vs. Hi-Tech Aral Ltd. (2010) 321 ITR 477, we differ from the decision taken by the Coordinate Bench in the case of Durga Condev Pvt. Ltd. (supra) as also the decision of Shanti Lai Godawat Ors. Vs. ACIT (2009) 126 TTJ (Jodh) 135. Here, we may specifically mention that in the case of Durga Condev Pvt. Ltd. (supra), though one of us is co signatory in that order still we differ from the said order as there is no bravery in perpetuating an error in law. The fact that the assessment order is dated 31.12.2010 and there is no evidence available to show that this order was not pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of this Court in CIT v. Vegetable Products Ltd. 1197 3J 88 ITR 192. This Court in paragraph 6 of the judgment has laid down the following: There is no doubt that the acceptance of one or the other interpretation sought to be placed on Section 271(1)(a)(i) by the parties would lead to some inconvenient result, but the duty of the court is to read the section, understand its language and give effect to the same. If the language is plain, the fact that the consequence of giving effect to it may lead to some absurd result is not a factor to be taken into account in interpreting a provision. It is for the Legislature to step in and remove the absurdity. On the other hand, if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. This is a well accepted rule of construction recognised by this Court in several of its decisions. Hence all that we have to see is, what is the true effect of he language employed in Section 271(1)(a)(i). If we find that language to be ambiguous or capable of more meanings than one, then we have to adopt that interpretation which favours the assessee, more particularly so because th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground of appeal is dismissed. 8. In the result, the appeal is dismissed. 11. On careful perusal of the above observations of the CIT(A), we do not find any interference is called for on the legal grounds decided by the CIT(A). The provision of Section 153D of the Act states regarding making of the order within the stipulated period. Further from the reading of the provisions of Section 153D of the Act, it is clear that there is no mention about the service of the order, however, it is only mentioned that the order shall be made . With regard to service it has clearly been defined in the section 143(2) of the Income Tax Act but in section 153D of the Act nowhere about service of order has been mentioned. The case laws relied on by the ld. AR of the assessee in the case of Dilip Constructions Pvt. Ltd.(supra) is not applicable in the present facts of the case. Accordingly, we dismiss the legal grounds taken by the assessee. 12. Now, coming to the ground raised by the assessee with regard to the addition made by the AO and confirmed by the CIT(A) of ₹ 75,00,000/- on account of advance given to Jami Siva Sai and the interest of ₹ 6,25,000/- received thereo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third parties, relied on following decisions: o?= DCIT Vs. Smt. Shivani Mahajan [ITA No. 5585/Del/2015](pronounced on 19.03.2019) DCIT Vs. Vikas Jain [ITA No. 4075/Del/2014] (pronounced on 19.03.2019) Pavitra Realcon (P) Ltd. Vs. ACIT [2017] 87 taxmann.com 142 (Del.-Trib.) Krishna Kumar Singhania Vs. DCIT [2017] 88 taxmann.com 259 (KolTrib) CIT Vs. Pinaki Misra [2017] 88 taxmann.com 521 (Delhi-HC) 5.3 Before us, the Ld. DR relied on the decision of the Hon'ble Delhi High Court in the case of Sh. Vinod Kumar Gupta in ITA No. 1003/2017, wherein addition on the basis of statement of the third party during the course of such was held as validly made. 5.4 We have heard the rival submissions of the parties and also perused copy of Panchnama through which the document in dispute was seized. On perusal of the Panchnama, we find that the said search warrant was issued in the case of Shri Ashok Chaudhri and the Panchnama is not containing name of the assessee. Therefore, it is evident that the material relied upon for making addition was not found from the premises of the assessee. 5.5 We also find that during relevant period, i.e., FY: 2014-15, fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of section 153 of the Act and if reliance is placed on the incriminating material found during the course of search of third-party, then provision of section 153C of the Act would be applicable and have to be adhered to. Thus, in the instant case, the Assessing Officer was required to first complete the proceedings under section 153A in hand, which were initiated by way of notice dated 30/06/2014 and thereafter, he was at liberty to take action under section 153C of the Act for bringing the material found from the premise of Sh. Ashok Chaudhri to tax in the hands of the assessee. 5.7 In the case of Shivani Mahajan(supra), identical question was raised before the Tribunal as under: 9. We have carefully considered the arguments of both the sides and perused the material placed before us. After considering the facts of the case and the rival submissions, we find that in these appeals, following two questions arise for our consideration: (i) Whether any material found in the search of any other person than the assessee in appeal can be considered in the assessment under 153A of the assessee. 5.8 The Tribunal after considering arguments of the parties held as unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc. is found which relates to a person other than the person searched, then the Assessing Officer of the person searched shall hand over such books of account, documents, or valuables to the Assessing Officer of such other person and thereafter, the Assessing Officer of such other person can proceed against such other person. However, in the case under appeal before us, admittedly, Section 153C is not invoked in the case of the assessee and the assessment is framed under Section 153A. We, respectfully following the above decisions of Hon'ble Jurisdictional High Court, hold that during the course of assessment under Section 153A, the incriminating material, if any, found during the course of search of the assessee only can be utilized and not the material found in the search of any other person. 5.9 The facts of the case of Vinod Kumar Gupta (supra) are distinguishable with the facts of the instant case. In the case of Vinod Kumar Gupta (supra) material found from Sh. S.K. Gupta was used in assessment proceeding under section 153A of the Act in the case of Sh. Vinod Kumar Gupta. But in that case warrant in fact was issued in the name of Sh. SK Gupta, Gaurav Gupta, Sh. Vin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee from the very beginning has denied to have received any such payment from M/s. Dhariwal group through Mr. Sohan Raj Mehta and since no incriminating material was found from the residence of the assessee during the course of search and since the assessee is not dealing with M/s. Dhariwal group in his individual capacity, therefore, respectfully following the decisions cited above and in view of our reasonings given earlier, we are of the considered opinion no addition in the hands of the assessee can be made. Since it is held that the assessee has not received any amount, therefore, the question of taxing the same u/s. 56(2)(vi) as held by CIT(A) does not arise. In this view of the matter, we set aside the order of the CIT(A) and direct the Assessing Officer to delete the addition of ₹ 1 crore for A.Y. 2006-07 and ₹ 20 crores for A.Y. 2007-08. Grounds raised by the assessee on this issue are accordingly allowed. 14. On the basis of our findings recorded above and the judicial pronouncements discussed supra, we are of the view that the AO is not justified in making the addition in the hands of the assessee of ₹ 75 lakhs. The AO did not follow the prescr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ice. 2. For that, in absence of any incriminating material, the completed Assessment cannot be disturbed, as such, the consequential additions so made, being without jurisdiction and without the authority of law is liable to be quashed in the interest of justice. 3. That, it may be respectfully submitted here that, it being jurisdictional ground and goes to the root of the case, it needs to be admitted for hearing in the interest of justice. If this legal ground is not admitted and not adjudicated, the Appellant/Assessee will suffer from irreparable loss and injury, Hence the; PRAYER Under the facts and in the circumstances stated above, it is therefore respectfully prayed that, this Hon'ble Tribunal shall be graciously pleased to consider the genuine difficulties faced by the Assessee and be further pleased to accept these additional legal ground taken here in the Revised grounds of Appeal for adjudication in the interest of justice. And for this Act of kindness, the Appellant/Assessee as in duty bound shall ever pray. 17. Since we have already decided the similar and identical legal grounds raised by the assessee in the appeal for A.Y. 2013-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not at all seen which is unjust. 9. For that the calculation of interest U/S. 234 A, 234 B 234 C are not as per the provisions of the I.T. Act 1961. 10. For these and other reasons to be adduced at the time of hearing the appellant prays your honour to reduce the Income to the returned figures. For which act of kindness the appellant shall ever pray. 20. First, we shall consider the legal grounds raised by the assessee which read as under:- 1. That, for Assessment year 2016-17, Assessment was completed by the learned A.O. U/s. 143(3) of the I.T. Act, 1961 by making additions of undisclosed income. Being aggrieved with these additions, the Assessee preferred appeal before the learned C.I.T.(A) and the same was already adjudicated upon. Since, the learned C.I.T.(A) allowed the appeal of the Appellant in part, being highly aggrieved and seriously prejudiced, the Appellant/Assessee preferred this present appeal before your Honour. 2. That, the impugned order so passed and consequential additions made therein are without jurisdiction and without the authority of law, but while drafting the grounds of appeal before the learned C.I.T.(A) as well as before this Hon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Identification No. of seized documents Date of transactions Amount in Rs. Rate of interest Cash received by KKR-01, Page No.29 22.06.2015 15,00,000 4.5% per month Sri B Ram Prasad Rao, Chairman of GIACR KKR-01, Page No. 30 23.07.2015 5,00,000 KKR-01, Page No. 31 25.07.2015 5,00,000 KKR-01, Page No.32 31,08.2015 6,00,000 TOTAL 31,00,000 22. The above facts were asked to the assessee for explanation by issuing questionnaire u/s. 142(1). The assessee replied that there was no any investments made on the said institutions and he stated that he is a partner of Jagannath Mills and the remuneration and interest on capital is shown in the return of income. The assessee also stated that the said transaction has not been occurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of Account, when the learned A.O. did not find proof of any financial transaction with the Appellant, completed Assessment of the said institute (GIACR a unit of Rabindranath Educational Trust) by accepting the return of income for Assessment year 2016-17. However, made addition in the hand of the Appellant, treating it as undisclosed income. On being appeal, the learned C.I.T.(A) confirmed the said addition. (Reference may be drawn to Page 72 to 78 of paper Book.) 2.2 That, when both Appellant and the Director of GIACR have denied of having any actual Financial transaction and there is no proof of either payment or receipt of money is found either from the Appellant or from the said Institute, both the Authorities below have committed gross error of law by treating it as undisclosed income in the hand of the Appellant on the basis of loose sheets found during search. Further, impugned addition is made without making any further enquiry and without having any corroborative evidence to justify that the Assessee has actually paid. 2.3 That, it may be submitted here that, it is not the case of the Department that, the Assessee had received any money from GIACR, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash of ₹ 27,36,300.00 was found from the bedroom of the Appellant and cash of ₹ 37,598.00 was found from the room occupied by the daughter. On being asked about source, it was explained by the Assessee that, out of total cash found ₹ 24.75 lakhs belong to HUF and ₹ 2,61,300.00 belong to him. It was also explained during post search inquiry, detail capital Account and balance sheet were filed while explaining the cash availability. However the learned A.O. made addition treating it as unexplained money by holding that since said capital accounts and balance sheets were not filed along with the return of income filed, therefore not acceptable. On appeal, the learned CIT(A) confirmed the addition by holding that capital account and balance sheet were prepared to justify the availability of cash hence not acceptable. 2.7. That finding of learned CIT(A) in para-7.5 of his order that, if the Appellant had filed consolidated balance sheet for 8 years before the DDIT(Inv.), Bhubaneswar, why there were not filed before the Assessing Officer is not known is completely wrong and contrary to the facts on record. The Appellant/Assessee had filed it before the DDIT(I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n case of the Appellant and HUF. When, from during search, the Appellant has been categorically submitting that, out of total cash found of ₹ 24,75,000.00 belongs to the HUF. Without objecting it and without uttering a single word and without examining the return of HUF, the Authorities below cannot treat it as unexplained income of the Appellant. The Appellant wants to draw kind attention of this Hon'ble Tribunal to Annexure-7 and 8 from page No. III to 129 of the paper Book. These evidences clearly justifies availability of cash. In view of the above facts, it is most respectfully submitted here that, the impugned addition of ₹ 27,36,300.00 being not sustainable in the eye of law is liable to be deleted in the interest of justice. Unexplained Investment: 2.11. That the family of the Assessee consists of the following persons, such as; 1. Kothakota Rama Rao Assessee 2. K.Damayanti Wife 3. K. Sridhar Son 4. K. Chandrika Daug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was of 1,473.580 grams, further during the Assessment year: 2015-16, the Appellant purchased Gold bar of six number weighing 616.4 grams which were disclosed in the capital Account and Balance sheet for Assessment year: 2015-16 and has not been disputed by the Authorities below.(Reference to page No. 140 to 142 of paper Book) When purchase slips were recovered during search and formed part of seized materials marked as KRR-11, and relates to Assessment year: 2015-16, the observation of the learned CIT(A) that the Assessee failed to explain source of 616.400 grams is not correct at all. Further, investment made in previous Assessment year cannot be taxed in subsequent Assessment year. The Appellant submits here with detail calculation for better appreciation of fact. Such as; 1. Gold jewellery available with Assessee 1,473.580 grams 2. Gold bar purchased in A.Y:2015-16 616.400 grams 3. As per CBDT Circular entitlement of Family members including Appellant 2,400.000 grams ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en against the assessee. During the course of search proceedings various documents were found which clearly shows that the assessee was engaged in loan/advance and money lending business, therefore, it can be clearly established that there was a transaction between the parties in cash. It was also contended by the ld. DR that the impounded document clearly established that money was received by the Chairman. 25. After hearing both the sides and perusing the entire material available on record and the order of the authorities below, we noted in this regard that there was a document found in which clearly stated that the money has been received by the Director of GIACR. On perusal of paper book, we noticed that the receipts have been issued by the Chairman of the Institute of Advance Computer, Rayagada, which is managed by Rabindranath Education Trust, Rayagada and it is also found that the blank cheque issued by the authorised signatory of Institute of Advance Computer and Research (ICAR) and on further perusal of page No. 76, 77 78, it is clearly stated that the GIACR is managed by Rabindranath Education Trust, Rayagada. The case of Rabindranath Education Trust has been scruti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any statement of affairs submitted and no cash balance was mentioned in the income tax return form, therefore, accumulation of cash showing by the assessee should be rejected. 29. After hearing both the sides and perusing the entire material available on record and the orders of authorities below, we find that during the course of search proceedings, there was a cash found in the bedroom of Shri Kothakota Rama Rao and ₹ 37,590/- was found from the room occupied by Smt. G. Leela Rani, daughter of the assessee. From the above cash he submitted that the cash of ₹ 24.75 lakhs belongs to Kothakota Rama Rao(HUF). In support of this, he submitted a balance sheet/statement of affairs of Kothakota Rama Rao (HUF), which is placed at paper book page No. 129 in which he has shown his agricultural income along with other incomes, details of which are as under:- K. RAMA RAO (HUF) BALANCE SHEET Rs.In Lakhs 31.03.09 31.03.10 31.03.11 31.03.12 31.03.13 31.03.14 31.03.15 12.02.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5.00 8.10 11.30 14.50 18.25 24.05 30.15 40.25 40.35 House 3.50 3.50 3.50 3.50 Constructions House Repairs 1.50 1.50 1.50 1.50 ASSETS Gold Bars(2) - - - - - - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44,87,990 4 1581.340 Grams K. Lila Rani 43,79,507 Total 4489.980 Grams 1,24,95,193 During the course of assessment, it was asked to the assessee to justify the above gold and jewellery. During the course of search proceedings, he also stated that these gold ornaments worth of ₹ 16,22,000/- in the F.Y. 2014-2015 and 2015-2016 was purchased and rest gold were received from inherited or received from relatives on ceremonial occasions. During the course of assessment, the AO asked to justify the above gold found during the course of search and seizure proceedings. In this regard, the assessee could not substantiate with supporting documents but the AO considered the status of the assessee and hailing from trading community and being a senior citizen and married during the year 1963 and the special function ceremonies inheritance and custom of Indian traditions. The AO allowed the following gold jewellery which was total 2050 grams which reads as under:- Sl.No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lls and treated it as unexplained. The CIT(A) also after considering the submission of the assessee that in case of G. Sindhu and G. Rahul, allowed 350 grams gold, resultantly there was a total unexplained gold jewellery of 2089.98 grams (1473.580+616.400) valued at ₹ 58,16,414/-. 33. Aggrieved from the above order of CIT(A), the assessee is in appeal before the Income Tax Appellate Tribunal. 34. Ld. AR reiterated the submissions made before the authorities below and submitted that gold was purchased from the account of HUF which is clearly showing in the statement of affairs which is kept at paper book page No. 129 and in paper book page No. 130, the details of reconciliation of gold were produced before the CIT(A) but he did not accept the return of income of HUF were also filed before the CIT(A) for preceding two assessment years and he also referred to paper book No. 2 pages 13 to 70 regarding marriage, date of division of property, which is placed on record. 35. On the other hand, ld. DR relied on the orders of authorities below and contested by way of his written submissions which has been reproduced as above. He further submitted that the documents submitted b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to explain only 1003.580 grams. Since the assessee is a male person so he is entitled for as per CBDT Instruction No. 1916 of 1994 and he is entitled for 100 grams of jewellery. Further, considering the status of the assessee, being a senior citizen of 73 years old, who belongs to well-established family and looking to the religious functions and marriage ceremonies in the family of the assessee, we deem it proper to allow 200 grams gold out of 903.580 (1003.580-100) grams. Now, gold remained to be explained by the assessee of 703.580 grams, out of which 616.400 grams gold were purchased from the HUF's fund as claimed by the assessee. Thus, if the assessee would be able to justify the cash availability in the hands of the HUF before the AO and it would be able to nullify the observation of the CIT(A) i.e. production of purchase bill, then the assessee will get relief of 616.400 grams or to the extent possible and the rest quantity is hereby disallowed. Accordingly, we restore this issue to the file of AO to consider the claim of the assessee as per our above observations. This ground of appeal of the assessee is partly allowed for statistical purposes. 37. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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