TMI Blog2021 (4) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... firm came in to existence vide partnership deed dated 01.06.2007. Before us, no contrary evidences or material is place to show that the assessee-firm was in existence during the impugned financial year, if the firm was not in existence during the impugned financial year no assessment can be made on the non-existent (still to be born) entity. Therefore, we affirm the order of ld. CIT(A) that addition of ₹ 3.16 crore in case of assessee-firm is unjustified, accordingly, grounds raised by the Revenue are dismissed for this sole reason. However, it is made clear that our observation in this case will not affect the additions made in individual capacity of partner of the assessee namely Jayantibhai Virjibhai Babariya, in subsequent assessment years, which has to be examined by lower authorities independently. Appeal of the Revenue is dismissed. - I.T.A No.1841/AHD/2016 - - - Dated:- 8-3-2021 - Shri Pawan Singh, Hon'ble Judicial Member And Dr. Arjun Lal Saini, Hon'ble Accountant Member For the Assessee : Shri Ashwin K.Parekh CA For the Revenue : Shri Ritesh Mishra CIT(DR) ORDER PER PAWAN SINGH, JUDICIAL MEMEBER: 1. This appeal by Revenu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acie shows the plot wise cash amount against development of Shrushti Row House of ₹ 3,70,00,000/- during the relevant for A.Y. 2006-07. On the basis of information extracted during the search action, the AO after recording reasons of reopening issued notice under section 148 of the Act on 19.03.2013. The notice was allegedly served by affixation on 13.03.2013. The AO recorded that in response to notice under section 148 of the Act, no response was made. The AO again issued notice under section 142(1) on 21.01.2014 directing the assessee to file Return of Income of assesse firm. No response was made from the assessee. The AO after recording that assessee is not cooperating and responding in response to the notices, so he proceeded to complete assessment under section 144 of the Act. The AO recorded the details of seized material seized by Annexure A/1 on page no.6 to 9 of the assessment order. In para 11 of the assessment order, the AO noted that in notice under section 148 of the Act, the figure of concealed income is mentioned as ₹ 3.70 crore instead of ₹ 3.17 crore. The AO after considering the contents of Annexure A/1 made addition of ₹ 3.16 crore by pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the search proceedings. The documents seized were analyzed following conclusion are drawn: a) Most of the entries made in the above referred items are in coded manner. It can be seen from the entries of these books that the figures are written by making symbol of (=) between the last three digits and the initial digits. For example the figure on page No.-I are written as under: a. 50=000 Rs. Pachas Pura 05/12/05 b. 170=000 Rs. Ek so sitter pura 01/01/06 b) On page No.4 of Annexure-A/5, found and seized during the course of revocation proceeding of Prohibitory Order at residence of Shri Ankur Babariya on 11.09.2012, the entry is written as 37=500 Rs. Sadtrees Hazar Panchso and signature of Ankur Babariya are placed with date. It is pertinent to mention that the actual amount of Rupees Thirty-seven thousand and five hundred (37,500/-) has been in fact written in coded form as 37=500 . The same analogy applies to all the coded figures written in the above mentioned seized documents/books. c) To ascertain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13 13 220000 0 0 230000 14 14 220000 0 348000 568000 15 15 200000 0 368000 568000 16 16 200000 75000 0 275000 17 17 200000 75000 0 275000 18 20 215000 15000 0 230000 19 25 220000 0 0 220000 20 26 220000 0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 220000 0 0 220000 37 46 220000 0 0 220000 38 47 220000 0 0 230000 39 48 220000 0 0 230000 40 49 220000 0 0 230000 41 50 220000 0 0 230000 42 51 220000 0 0 235000 43 52 220000 15000 0 250000 44 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 200000 60 75 200000 0 0 200000 61 79 250000 381000 0 631000 62 80 220000 0 0 220000 63 81 220000 0 0 220000 64 82 220000 0 0 230000 65 86 220000 0 0 220000 66 87 235000 0 0 235000 67 88 235000 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 83 108 220000 0 0 220000 84 109 220000 0 0 220000 85 110 220000 0 0 220000 86 113 250000 15000 0 265000 86-A 114 250000 60000 0 310000 87 115 220000 0 0 220000 88 116 220000 45000 0 265000 89 123 220000 0 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 146 220000 0 0 220000 106 147 220000 0 0 230660 107 148 220000 0 0 230000 108 150 220000 0 0 230000 109 151 220000 0 411000 631000 110 152 220000 0 0 230000 111 153 220000 0 0 220000 112 154 225000 0 0 225000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 178 220000 0 0 220000 129 179 220000 0 0 220000 130 182 440000 150000 0 590000 - 185 220000 0 0 220000 131 186 220000 0 0 220000 187 220000 0 0 220000 132 188 220000 0 0 220000 189 220000 0 0 220000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 3.16 crore on sale of various plots. It was also submitted that a search was carried out at the residence of Ankurbhai Goardhanbhai Babariya who was looking after the maintenance activities of the society on 16.07.02012. Certain papers were seized from his residence. On the basis of which case of assessee was reopened. The notice under section 148 of the Act was not served upon the assessee firm. Since the assessee firm was not existent during the relevant assessment year, the assessment made of firm is invalid. This fact has been accepted by the Revenue in subsequent year as assessment for A.Y. 2007-08 and 2008-09 were made in the case of Jayantibhai Babariya, the purchased land and sold the plot. The assessee also objected to the assessment completed under section 144 of the Act. No construction of any plot commenced in A.Y. 2006-07 or in A.Y. 2007-08. The firm did not exist in those years. Shri Ankurbhai Gordhanbhai Babariya had explained all the facts in his statement recorded under section 132 of the Act. During the regular assessment of A.Y.2009-10, total 91 Row House owners were examined under section 131 of the Act and all of them confirmed the contract price of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of individual only, thus the addition of ₹ 3.16 crore is unjustified. Aggrieved by the order of the ld. CIT(A), the Revenue has filed present appeal before this Tribunal. 5. We have heard the submission of ld. CIT(DR) for Revenue and the learned authorized representative (AR) for the assessee. The ld. CIT(DR) for the Revenue submits that he relied upon the order of the AO. The assessee during the assessment neither co-operated nor furnished any submission to explain the contents of seized material, therefore, the AO was justified in making addition of receipt of on money on the basis of seized material, which clearly suggests the receipt of on money. 6. On the other hand, the learned AR of the assessee submits that the firm was not in existence during the period under consideration. Since the firm came into existence only from 01.06.2007 and no assessment for A.Y. 2006-07 at the hand of assessee can be made, when it was not in existence. The ld. CIT(A) appreciated the fact and deleted the addition. The addition of subsequent assessment year is made in case of Jayantibhai Virjibhai Babariya (partner of assessee) in his individual capacity. The learned AR fo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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