TMI Blog2020 (12) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ive search no other material of on money was seized except for the admission of the assessee for the amount paid for the amenities, which were duly offered to tax in the hands of the assessee s company in which he was director - there is no other material on record to suggest that the value of the flat would be at that rate assigned by the assessing officer. It is also not the case that assessing officer had sent the matter for valuation by the DVO. In similar circumstances when there was allegation of on money paid, honourable Madras High Court in the case of P.V. Kalyansundaram [ 2006 (2) TMI 79 - MADRAS HIGH COURT] found that non-reference to DVO is fatal. In the said case on money/addition solely based upon scribblings/jottings was found to be non- sustainable. The honourable Supreme Court had duly affirmed the said decision reported in the case of Commissioner of Income Tax vs. P.V. Kalyanasundaram ([ 2007 (9) TMI 25 - SUPREME COURT] The other case laws referred by learned CIT(A) are also germane and support the case of the assessee. Hence in our considered opinion on the facts and circumstances of the case when the addition is solely based upon builder s employee state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o rebut the evidence in the form of Pen Drive containing details of cash receipts and payments, which is an evidence being relied upon by the Department against the assessee for Unrecorded transactions. 3. The assessee has also filed an application under rule 27 of the ITAT rules for admission of the following grounds :- At the outset, it is respectfully submitted that by way of the present Petition the Assessee has raised a purely legal jurisdictional issue i.e. challenging the action of the Ld. AO in disturbing the concluded assessment by making the additions sans any incriminating material in an assessment u/s 153 A of the Act. This goes to the very root of the matter. In the humble submission of the Assessee, it is a settled law that jurisdiction of the Ld. AO can be challenged at any stage of the proceedings and not only during the course of Appeal but also in any parallel proceeding. A useful reference in this regard can be made to the following judgments wherein it is held that the jurisdiction of a Court to pass a decree can always be challenged either in appeal or even during the execution of the said decree. Such challenge could be raised even if the same is not rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... according to him has been paid for some amenities. As per the pendrive found with Shri Praveen Mishra, the assessee was supposed to have made payment of ₹ 8.70 crores over a period of three years as under:- Assessment Years Amount (in Lakhs) 2011-12 690 2012-13 75 2013-14 105.50 TOTAL 870.50 7. In response to the show cause issued by the Ld.AO to tax the difference between ₹ 8,70,50,000/- and ₹ 2,08,08,000/-, the assessee replied that there was no evidence found during the search of on money payment made by the assessee. Certain on money receipt evidences were found on the search of the company, Aklavya Builders Developers Pvt. Ltd. and an amount of ₹ 2.45 crores was offered. The agreement value of each flat booked by the assessee was ₹ 3,15,00,000/-. Over and above this the assessee has admitted to have paid cash of ₹ 1,04,04,000/- per flat. This would make the per square foot price of ₹ 28,000/-. If at all the figure of ₹ 8,70,50, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... search and can be considered as incriminating material on the basis of which additions can be made. This plea of the assessee is rejected. 10. However on the merits of the case she deleted the addition by observing that the same has been done solely on the basis of the statement of Shri Praveen Mishra an employee of the builder M/s. Nish Developers Pvt. Limited, which has also been retracted. That assessee was not provided any opportunity to confront the said person. The learned CIT(A) s order in this regard may be gainfully referred as under :- However, I find sufficient force in the argument of learned counsel that an amount of ₹ 8.70 crores has not been paid as on money. If the on money is considered at ₹ 8.70 crores, it would make the rate ₹ 51,500/- per square feet which would be too high and unrealistic. The assessee has booked the flats in October 2010. Perusal of the flats booked post search where, apparently on money was not received shows that they have been booked around 28,000 to 30,000 per square feet. This was the rate in November 2014. Estimating the rate at ₹ 51,500/- in October, 2010 would be too far fetched. Another important point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of natural Justice because of which the assessee was adversely affected. It is to be borne I mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority............ In view of the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the Show Cause Notice. We, thus, set aside the impugned order as passed by the Tribunal and allow this appeal. Similarly, the jurisdictional in the case of H.R. Mehta vs. ACIT, (2016) 289 CTR 0561(Bom)(HC) held as under : I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... zed material and as such the same is not sustainable in law. He further referred to several decisions that statement on survey cannot be the sole basis of addition. The details submission of the learned counsel of the assessee in this regard the summarised as under :- The Assessee humbly submits that the entire addition of ₹ 5.54 Crores made by the AO, in the present case is entirely based on the retracted statement of some employee of Nish Developers named Shri Pravin Mishra taken at the time of search and seizure operation carried out on Nish Developers and not the Assessee. The Assessee submits firstly, that extensive search was carried out on the residential premises of the Applicant, Shri Manoj M. Desai on 04.04.2014. It is interesting to note that in the search operation on the Applicant no incriminating material whatsoever was found so as to lead the Officer to believe that there was any undisclosed income. Only in the statement made during the course of search on the Applicant, it was stated by him that an amount of ₹ 2.08 crores was paid by him to Nish Developers in cash over and above the Agreement value of the flats purchased in the name of himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a statement. Ref. S Khader Khan Sons - (2008) 300 ITR 157 (Mad) affirmed in 352 ITR 480 (SC), Satinder Kumar v/s. ACIT- (1977) 106ITR 64 (HP). Not only that an admission or an acquiescence on the part of an assessee cannot be the foundation of assessment as held in various judicial pronouncements [Ref. Absalom v/s Talbot (1944) 26 Tax Cases 166, Abdul Qayumme v/s CIT- (1990) 184 ITR 404 (All), Mayank Poddar v/s. ITO - (2003) 262 ITR 633 (Cal), SAIL DSP Employees Association v/s UOI - (2003) 262 ITR 638 (Calutta). As evident, the addition made by the the Assessing Officer is simply based on the statement of some third party who later retracted his statement. Even this action of the Ld. AO is a seriously questionable since, it is a far too settled proposition of law that no addition can be made on the basis of a statement made by third party against the assessee. First Global Stocking (P.) Ltd. vs. ACIT (2008) 115 TTJ (Mum) 173, Dalpat Singh Choudhary vs. ACIT (2012) 143 TTJ 500 (Jodhpur), ACIT vs. Mrs. Uttara S. Shorewala [ITA No. 5506 5507/Mum/2009 and CO. No. 107/Mum/2010], Jafferali K. Rattonsey vs. DCIT [ITA 5068/M/2009]. Further, this finding of the Ld. CIT(A) that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... favour of search assessments being based only on such disclosures; it wants them to be based on incriminating material. In view of the facts, circumstances, CBDT instructions and various case law relied on by the assessee we are unable to uphold the additions solely on the basis of disclosure which doesn't meet the eye and have been held by us to be involuntary. (iii) Whether the additions are based on any incriminating material discovered as a result of search in terms of s. 153A. Conclusion : There is no reference to impugned additions being based on any worthwhile incriminating material or evidence except raising some '- suspicions. The sole basis of additions in both cases is proposed to be the disclosure. Consequently, the additions made are not as a result of any material found during the course of search, in view thereof impugned additions cannot be sustained as they do not conform to mandate of s. 153A. Also refer: ACIT v/s ShriDharam Pal Gulati-ITA No.671/Del/2012 Admittedly no incriminating material whatsoever has been unearthed during the course of search of the Applicant so as to reflect a state of affairs contrary to that stated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee where he was director and the same has been accepted by the Department. No addition on this account has been done by the assessing officers also. 14. As regards the addition based upon the statement of the employee of the builder proposed by the assessing officer, the assessee has duly explained that if the same is accepted as correct then the rate of flat in October 2010 would be ₹ 51,500. The learned CIT(A) has found that on a perusal of flats booked post search where apparently on money was not received, it is clear that the flats were booked around at ₹ 28,000 to 30,000 ft in November 2014. Hence the rate applied by the Assessing Officer for four years prior transaction is quite fantastic and not sustainable. Moreover as noted by the learned CIT(A) despite extensive search no other material of on money was seized except for the admission of the assessee for the amount paid for the amenities, which were duly offered to tax in the hands of the assessee s company in which he was director. Furthermore there is no other material on record to suggest that the value of the flat would be at that rate assigned by the assessing officer. It is also not the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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