TMI Blog2021 (12) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the hands of the appellant company on substantive basis was the subject land, against which Shri Nilesh Ajmera made the payments, was owned by the appellant company only and therefore, the same was proposed to be added in the hands of the appellant company on substantive basis. We further find that despite giving a finding by the assessing officer of Shri Mohanlal Chugh in the assessment order for A.Y. 2009-10, the proposed addition in the hands of the appellant company on account of payment received by it from Shri Nilesh Ajmera, through Shri Mohanlal Chugh, could not be made - upon noticing such escapement of income, the AOs in the present case rightly issued the notices u/s. 148 to the appellant after recording the necessary reasons to believe and also after obtaining the necessary approval. The notices for both the assessment years have been issued within the time limit prescribed u/s. 149 of the Act. We also find that after issuing the notices, upon request of the appellant, the copies of the reasons recorded were provided to the appellant and the objections raised by the appellant subsequently against such reasons were also disposed off by the AO by passing speaking ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent also wrong when claiming that the appellant had purchased the land from Chughs and Ajmeras. However, it is a matter on record that Chughs family were the owners of the appellant company at the relevant time and the appellant company did not purchase any land from Chughs. On the contrary, we find that the case of the Revenue since the day one when search operations took in the case of the Satellite Group was that Shri Mohanlal Chugh on behalf of the appellant company sold the land of the appellant company and received the payment from Shri Nilesh Ajmera or his company. Thus, the findings given by the AO in his assessment orders are patently wrong which has culminated into an absolutely absurd and unwarranted addition in the hands of the appellant company. We find that during the financial year relevant to assessment years under consideration, the appellant had not made any investment either towards the purchases or towards the making of advances for purchases of the land at Pipliyakumar and therefore, the findings given by the AO in the assessment orders to the effect that the appellant had parted with certain sum for making the investments for purchases of land are not factu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal for A.Y. 2008-09 and appeal for A.Y. 2009-10 of the appellant are directed against the common order of the Ld. Commissioner of Income-Tax (Appeals) - II, (in short Ld.CIT(A) ), Indore dated 27.11.2017 which are arising out of the order of ITO -5(1), Indore dated 28.03.2016. 2.Grounds of appeal raised by Assessee for AY 2008-09 in ITA- 94/IND/2018 1. That, on the facts and in the circumstances of the case, the learned CIT(A) grossly erred, both on facts and in law, in passing the Order without considering the written submissions made by the appellant on the legal ground and without giving any effective opportunity of being heard to the appellant on other grounds raised in the Appeal Memo before him. 2a). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuing notice under s.148 of the Income-Tax Act, 1961 and framing the reassessment in the case of the appellant company without considering the material fact that the issuance of the notice under s.148 of the Act by the AO, itself, was bad-in-law and void ab initio. 2b). That, without prejudice to the above, the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained investment, without considering and appreciating the material fact that all through, the allegation against the appellant company was unaccounted receipt of money and not unaccounted or unexplained investment. 4b). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of ₹ 10,63,37,500/- made by the AO in the appellant s income, on account of alleged unexplained investment, without considering the material fact that during the course of the assessment proceedings, the learned AO could not rebut the submission of the appellant that during the year under consideration, it had not made any investment at all and further, the AO also failed to give any finding that the alleged investment was made by the appellant company during the year under consideration. 4c). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of ₹ 10,63,37,500/- made by the AO in the appellant s income, without considering and appreciating the material fact that during the previous year under consideration, the appellant had neither made/ incu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuing notice under s.148 of the Income-Tax Act, 1961 and framing the reassessment in the case of the appellant company without considering the material fact that having withdrawn the notice issued earlier under s.153C of the Act to the appellant, for the same assessment year, there was absolutely no justification for the AO to restart the assessment proceedings, earlier dropped, under the garb of the provisions of s.147 of the Act. 2c). That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO in issuing notice under s.148 of the Income-Tax Act, 1961 and framing the reassessment in the case of the appellant company without considering the material fact that in the instant case, the Assessing Officer by himself had not formed any belief as regard to escapement of any income chargeable to tax in the hands of the appellant and instead, merely on the finding of some other Assessing Officer in some other case, had assumed the jurisdiction for issuance of notice under s.148 of the Act. 2d). That, without prejudice t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4. Since, the issues involved in appeals of both these years relates the same assessee and are interlinked and interlaced, as agreed by both the parties we will take both these appeals and pass a common order for sake of convenience and brevity. 5. The brief facts of the case, as culled out from the records, are that the assessee is a private limited company incorporated under the then Companies Act, 1956 and is assessed to Income- Tax. The appellant company is engaged in the business of Real Estate Builders and Developers. Search and Seizure operations u/s. 132 of the Income-Tax Act, 1961 (in short The Act ), were carried out on a group of asseessees namely Satellite Group on 19.11.2019 and during the course of search in premises of M/s. Phoenix Devcons Pvt. Ltd. (in short PDPL ), one of the group companies of the Satellite Group, some loose papers, inventorized as Annexure A/3, containing the payment details, aggregating to a sum of ₹ 18,42,50,000/- made to Shri Mohanlal Chugh, one of the then directors of the appellant company, were found mentioned which were correlated with notings in one Diary inventoized as BS-8, which was also seized from the premises ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 12,13,37,500/- Rounded off ₹ 12,13,37,500/- For A.Y. 2009-10: Income shown in the return Rs. Nil Add: (1) Unexplained investment in purchase of land on substantive basis ₹ 10,63,37,500/- Total Assessed Income ₹ 10,63,37,500/- Rounded off ₹ 10,63,37,500/- 6. Being aggrieved with the assessment orders for both the A.Y. 2008-09 and A.Y. 2009-10, the appellant company preferred appeals before the learned CIT(A)-2, Indore. During the course of the appellate proceedings, the appellant company furnished its written submissions, copies whereof have been furnished by the appellant, before us, in its paper books filed separately for A.Y. 2008-09 and A.Y. 2009-10. 7. Ld. CIT(A) dismissed the appeals of the appellant for both the A.Y. 2008-09 and A.Y. 2009-10 and thus, the appellant is in appeal before this Tribunal. 8. The appellant company has filed two sep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... BS-8, which was also seized from the premises of the PDPL. Thereafter, the then Ld. Assistant Commissioner of Income-Tax 3(1), Indore issued notices u/s. 153C of the Act for A.Y. 2008-09 and A.Y. 2009-10, both dated 14.11.2011. In response to notices issued u/s. 153C, the appellant company, vide its two letters both dated 19.12.2011 intimated the AO that it had already furnished its returns of income u/s. 139 of the Act and further, made a request that the returns so furnished u/s. 139 be treated as the returns furnished in compliance to notices issued u/s. 153C. Thereafter, by way of two separate letters, both dated 19.12.2011, the Ld. ACIT-3(1) withdrew the earlier notices issued u/s. 153C of the Act for both the A.Y. 2008-09 A.Y. 2009-10. Subsequently, the Ld. ACIT-5(1) issued a notice u/s. 148 of the Act to the appellant for for A.Y. 2008-09 on 19.03.2015 and the ld. ACIT-3(1) issued a notice u/s. 148 of the act to the appellant for A.Y. 2009-10 on 08.09.2014. In response to such notices, the appellant vide its letters dated 02.04.2015 and 03.10.2014 objected the re-opening of its assessments and also made a request for supply of the reasons recorded before issuance of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out making any adjustment in the returned income of the appellant. 2.00 FORMING OF BELIEF BY THE AO ON THE BASIS OF FINDING OF SOME OTHER AO IN THE CASE OF THE SOME OTHER ASSESSEE That, the learned AO, merely on the basis of some finding of some other assessing officer in the case of some other assessee, for some other assessment year, without carrying out any independent enquiry by himself, formed a belief that the income of the appellant, for the assessment years under consideration, escaped to assessment. 2.01 REASON TO BELIEVE SHOULD BE THAT OF THE AO HIMSELF AND NOT A BORROWED SATISFACTION OF SOME OTHER OFFICER It is a settled law that the reason to believe recorded by the Assessing Officer should be that of his own and not a borrowed satisfaction of some other Officer. In the instant case, the action of the learned AO in issuing the notice under s.148, after the expiry of four years from the end of the relevant assessment year, merely by acting mechanically upon the findings given by some other AO in the case of some other assessee without applying his own mind,is unjustified, unwarranted, illegal and bad-in-law. For such proposition, reliance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2016) - M/s. Devansh Exports Vs. ACIT (I.T.A. No. 2178/Kol/2017) - Moti Adhesive P. Ltd. Vs. ITO (ITA No. 3133/Del/20I8) - CIT Vs. Oasis Hospitalities Pvt. Ltd. (2011) 333 ITR 119 (Del HC) - CIT Vs. Fair Invest Ltd. (2013) 357 ITR 146 (Del HC) - Sarthak Securities Co. Ltd. Vs. ITO 329 ITR 110 (Delhi HC) - Deeparaj Hospital (P)Ltd. Vs. ITO, 41/Agra/2017 dt. 01.06.2018 (Agra Trib) - ITO Vs. Reliance Corporation (2017) 55 ITR 69 (SN) (Mum) (Trib) - PCIT Vs. RMG Polyvinyl (I) Ltd. (2017) 83 taxmann.com 348 (Delhi HC) - PCIT Vs.Meenakshi Overseas(P)Ltd.(2017) 82 taxmann.com 300 (Delhi HC) - Gee Cee Cycle Balls Pvt. Ltd. Vs. ITO, ITA No. 867/DeL2013 dt. 30.10.2015 - CIT Vs. Goel Songs Golden Estate Pvt. Ltd. ITA No. 212 2012 dt 11.04.2012 - CIT Vs.Vrindavan Farms(P)Ltd. ITA No. 71, 72, 85 DeL2015 dt. 12.08.2015 - Dwarka Gems Ltd. ITA No. 71/ Jp/2017 (ITAT Jaipur) - Nirmala Agarwal Vs. ACIT (ITA No. 995 996 Jp/2016) (ITAT Jaipur) 5.00 WHAT COULD NOT HAVE BEEN DONE DIRECTLY WAS NOT PERMISSIBLE TO BE DONE OBLIQUELY It is submitted that the assessment in the case of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and tangible material) that the appellant has failed to fully and truly disclose the primary facts required for the purposes of assessing his case and such reason to believe for the purposes of reopening the assessment under section 147 of the Act r.w.s 148 of the Act cannot be based on surmises, conjectures or occasioned by a change in opinion but must be based on cogent material which establishes a live casual nexus between the information and inference so drawn by the learned AO. For such proposition, reliance is placed on the judgment of the Hon ble Delhi High Court in the case of CIT-II Vs. Multiplex Trading and Industrial Co. Ltd. [2015] 63 taxmann.com 170(Delhi). It is submitted that the reasons recorded by the learned AO were not reasonable and the same were vague in nature to establish that the income of the appellant had escaped assessment for reopening the assessment under section 148 of the Act. Therefore, the reassessment proceedings in the assessee s case were bad in law, void abinitio and consequent addition were unwarranted, unsustainable and deserves to be quashed. In such circumstances, in view of the pronouncement of the various judicial authorities, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ISSUANCE OF NOTICES U/s. 148 AND FRAMING OF ASSESSMENTS That, the case of the appellant company for the relevant assessment years was re-opened by issuing notices under s. 148 on 08-09-2014 for the A.Y. 2009-10 [kindly refer PB Page No. 19 for A.Y. 2009-10] and on 19-03-2015 for the A.Y. 2008-09 [kindly refer PB Page No. 12 for A.Y. 2008-09] and the assessments have been framed upon the appellant company under the provisions of s.147 of the Act. 3.00 PROCEEDINGS ONCE INITIATED UNDER S.153C OF THE ACT AND SUBSEQUENTLY DROPPED, THEREAFTER, ON THE SIMILAR GROUNDS, THE PROVISIONS OF S.147/148 CANNOT BE INVOKED In the above background, it would be observed that in pursuance of the loose papers seized during the search operations carried out under s.132 of the Act in the case of a third person, the correct course of action would have been to proceed against the appellant company under the provisions of s.153C of the Act. It is a settled law that the applicability of the provisions of s.153C of the Act would exclude the application of the provisions of s.147/148 of the Act. It would be appreciated by Your Honours that if the proceedings are initiated under s.153C o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Order under section 143(3)/148 of the I.T. Act, the same would be illegal and arbitrary and without jurisdiction. We rely upon the Order of ITAT, Visakhapatnam Bench in the case of G. Koteswara Rao (supra). In the case of ITO vs., Arun Kumar Kapoor [2011] 140 TTJ 249 (ASR-ITAT) [Paper Book at Page71], the ITAT, Amritsar Bench held as under : On a perusal of section 153C, it would be clear that the provisions of this section are applicable which supersedes the applicability of provisions of sections 147 and 148. In the instant case, the documents were seized during the search under section 132 and the same were sent to the Assessing Officer of the assessee and, thus, the Commissioner (Appeals) has correctly observed that only the provision in which any assessment could be made against the assessee was section 153C, read with section 153A. It was also apparent from the record that the officer in the case of 'T' Ltd. had mentioned in his letter that the necessary action may be taken as per law under section 153C/148. Hence, notice issued under section 148 and proceedings under section 147 by the Assessing Officer were illegal and void ab initio. In view of the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gal and void ab initio. A copy of the judgment is being enclosed herewith for kind perusal and record of Your Honour, as Exhibit P-3. 3.05 Hon ble ITAT Hyderabad in the case of Sri Suryadevara Avinash vs. DCIT 2019 (9) TMI 898 (ITAT Hyd.) has held that since the assessment proceedings were initiated mainly on the information found during the search proceedings and it was found that assessee is a party to the transactions and the same material was brought on record to complete the assessment u/s.147 of the Act, however, jurisdiction lies to initiate proceedings u/s.153C of the Act and not u/s.148 of the Act. The Hon ble Bench quashed the assessment made by the AO u/s. 143(3) r.w.s. 147. A copy of the judgment is being enclosed herewith for kind perusal and record of Your Honour, as Exhibit P-4. 3.06 Hon ble ITAT Chandigarh in the case of Shri Sanjay Singhal (HUF) vs. DCIT 2020 (9) TMI 338 has held that if any material was found relating to the assessee during the course of search on third parties then the correct course of action would have been to proceed against the assessee under s.153C of the Act and there was no justification for the AO to initiate proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of some other person u/s. 132, then in such case the provisions of s. 153C only could have been invoked against the appellant and no notice u/s. 148 could have been issued. The AR further pointed out that in the case of the appellant, factually, such notices u/s. 153C were issued by the assessing officer but, subsequently, such notices were withdrawn and later on, based on the same seized material, seized from the premises of a searched person, notices u/s. 148 have been issued, which are not legally sustainable. It has been contended that section 148 is not a substitute for the mandatory requirement of issuance of notice u/s. 153C. In support of his contention, the AR relied upon various judicial pronouncements. 17. The CIT(DR) vehemently argued that in the instant appeals, notices u/s. 148 have rightly been issued and further, the reassessment proceedings in pursuance of such notices have validly been carried out. The CIT(DR) also relied upon the findings given by the CIT(A) in the appellate order. 18. We have heard rival contentions and perused the records placed before us and duly considered the AO s order, the CIT(A) s order, paper books filed by the appellant, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the hands of the appellant company, on substantive basis and the similar addition was made in the total income of Shri Mohanlal Chugh for A.Y. 2009- 10 on protective basis. We find that the basis for proposing the addition in the hands of the appellant company on substantive basis was the subject land, against which Shri Nilesh Ajmera made the payments, was owned by the appellant company only and therefore, the same was proposed to be added in the hands of the appellant company on substantive basis. We further find that despite giving a finding by the assessing officer of Shri Mohanlal Chugh in the assessment order for A.Y. 2009-10, the proposed addition in the hands of the appellant company on account of payment received by it from Shri Nilesh Ajmera, through Shri Mohanlal Chugh, could not be made. Thus, upon noticing such escapement of income, the AOs in the present case rightly issued the notices u/s. 148 of the Act to the appellant after recording the necessary reasons to believe and also after obtaining the necessary approval. We noted that the notices for both the assessment years have been issued within the time limit prescribed u/s. 149 of the Act. We also find that after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant for both the years is also Dismissed. 20. Ground No. 2(d), 4(a), 4(b) 4(c) for A.Y. 2008-09 Ground No. 2(d), 3(a), 3(b) 3(c) for A.Y. 2009-10 21. Since, all the ground nos. 2(d), 4(a), 4(b) and 4(c) for A.Y. 2008-09 and ground nos. 2(d), 3(a), 3(b) and 3(c) for A.Y. 2009-10 are interlinked and interlaced with each other and further, since, the crux of all these grounds is similar in the nature, the same are being adjudicated together. 22. The brief facts of the issue, as culled out from the records, are that in the instant cases, two different AOs recorded certain reasons for issuance of notice under section 148 of the Act to the appellant for two different assessment years. According to both the AOs, during the course of search in premises of one company namely M/s. Phoenix Devcons Pvt. Ltd., some loose papers inventorized as LPS A/3 were seized and on a perusal of the page Nos. 25, 20 21 of LPS A/3, the payment details made to Shri Mohanlal Chugh, one of the then directors of the appellant company, were found mentioned which were correlated with notings in the Diary BS-8 which was also seized from the premises of above named company. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - has also been made in the income of the appellant for A.Y. 2009-10. 23. Aggrieved with such order of the AO, the appellant company preferred an appeal before the CIT(A) and contended the same argument that nowhere in the seized papers , there is mentioning of the name of the appellant company. The ld. CIT(A), in para (4.3) of his order gave a finding that the appellant company is a private limited company which is run on a family business style where its directors were running the company and all the decisions on behalf of the appellant company were being taken by Shri Mohanlal Chugh. The CIT(A) further observed that the land for which Shri Mohanlal Chugh had received the payment in cash pertained to the appellant company. Accordingly, the ld. CIT(A) upheld the view of the AO and confirmed the addition made u/s. 69 on this count. 24. Before us, the appellant company has made a written submission in the form of a Synopsis. The relevant portion of the appellant s reply is being reproduced as under: SUBMISSION [For Ground No. 2(d)] In this context, it is submitted as under: 1.00 On a perusal of the statement of reasons as recorded by the learned AO bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under s.148 was issued on the allegation of receipts of unaccounted money, but, the impugned assessment order has been passed by the ld. AO by taking a complete U-turn and by holding that the appellant company had made unaccounted payments. It is submitted that first of all, such a U-turn was not permissible in the law and secondly, even on the factual matrix, the assessment order so passed by the ld. AO by holding that the appellant company had parted with certain cash is patently wrong and based upon misappreciation of the facts on record. It is submitted that even the ld. CIT(A), at para (4.1), has given the finding that the appellant company through its director, had received the subject amount. It is submitted that by giving such finding, the ld. CIT(A) has exceeded his jurisdiction inasmuch the ground relating to the receipt of any amount by the appellant company was neither emerging from the body of the assessment order nor such a ground was taken by the appellant company. It is submitted that the ld. CIT(A) himself, at para (4.1), has stated that the ground no. 3 relates to the addition made under s.69 of the Act. 5.00 In view of the above submissions, it would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Order placed at page no. 408 of the Additional Paper Book]. 3.00 FINDINGS IN THE CASE OF SHRI NILESH AJMERA NOT BINDING UPON THE APPELLANT COMPANY Your Honours, it is respectfully submitted that although the findings given by this Hon ble Bench in the case of Shri Nilesh Ajmera are not binding upon the appellant company but, even if for the sake of arguments, such findings are accepted by the appellant company, then, the quantum of estimated receipt of on-money in the hands of the appellant company could not have been to the extent of ₹ 21,26,75,000/- but it would get restricted to sum of ₹ 5,50,00,000/- only. 4.00 LOOSE PAPERS AND OTHER PAPERS FOUND AND SEIZED FROM THE PREMISES OF SOME OTHER PERSONS CANNOT BE TAKEN AS AN EVIDENCE UNDER SECTION 292C OF THE ACT Your Honours, first of all, the loose papers and other papers found and seized from the premises of some other persons cannot be taken as an evidence under s.292C of the Act against the appellant company. It is therefore, merely on the basis of findings given in the case of some other assessees, without conducting any independent enquiry in the appellant s own case, no addition was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-10 passed in the case of Shri Mohanlal Chugh, giving a clear finding that Shri Mohanlal Chugh had received the payment of ₹ 10,63,37,500/- on behalf of the appellant company which has not been so recorded in the books of account of the appellant company. The AO of Shri Mohanlal Chugh has further given a finding that the substantive addition of ₹ 10,63,37,500/- be made in the hands of the appellant company and the similar addition be made in the hands of Shri Mohanlal Chugh on protective basis for the relevant assessment year. Thus, according to the AR of the appellant company, the AO had recorded the reasons to believe on the basis that the appellant had made receipts of certain payments from Shri Nilesh Ajmera against sale of certain land at Pipliyakumar. But, in radical contrast to such recording of the reasons, while eventually passing the impugned assessment orders, the AO made the additions by giving a finding that the appellant had parted with a sum of ₹ 10,63,37,500/- in cash, the sources whereof have not been explained. Thus, the addition has been made by giving a finding of making of payments by the appellant. According to the ld. AR of the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not as an income. The AR of the appellant has pressed his reliance on the findings given by this Bench while adjudicating the appeals in the case of the payer of the impugned sum namely Shri Nilesh Ajmera whereby this Bench has held that the amount of ₹ 5,50,00,000/- only was given by Shri Nilesh Ajmera to the appellant company out of the advances received by him from various customers to whom certain residential units in various buildings constructed on the subject land, owned by the appellant company, were sold by him. It has been contended by the appellant that the appellant company had entered into a joint development agreement for construction of certain residential units on certain land owned by the appellant company situated in Pipliyakumar on ratio basis. It has further been contended that due to certain disputes, eventually, the ratio agreement in respect of the subject land entered into between Shri Nilesh Ajmera and the appellant company had pre-maturely come to an end and consequently, Shri Nilesh Ajmera handed over the incomplete project to the appellant on as is where is basis and as a result thereof, the advance amount received by Shri Nilesh Ajmera from var ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 10,63,37,500/- by Shri Mohanlal Chugh on behalf of the appellant company which remained to be recorded in the books of account of the appellant company. We find that solely on the basis of the assessment order passed in the case of Shri Mohanlal Chugh, notices u/s. 148 have been issued to the appellant company to bring back those receipts made by the appellant company which were not recorded in its books of account. However, we find that for both the assessment years, the assessments have been made on altogether a different ground by holding that the appellant had made unaccounted payments of ₹ 10,63,37,500/- in each of the two assessment years under appeal viz. A.Y. 2008-09 and A.Y. 2009-10 for purchase of land at Pipliyakumar and by categorically giving a finding that such land at Pipliyakumar had gone to the coffers of the assessee, during the financial years under consideration, which was purchased by Chughs and Ajmeras for and on behalf of the appellant company. Here it would be apt to reproduce the relevant findings given by the AO in his assessment order passed for A.Y. 2008-09 as under: The assessee reply is basically objecting the proceedings and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mponent of consideration was not paid prior to the above period. The assessee has put-forth another argument that the recommendation of the assessing officer of Shri Mohanlal Chugh is unlawful. This is again an argument without any basis. Since, the land has ultimately become the property of the assessee, it is appropriate to assess the unexplained investment substantively in the assessee s case and protectively in the case of the person from whose possession documents were recovered. In view of the above, it is clear that the assessee has parted ₹ 10,63,37,500/- in cash, source of which has not been explained. It is therefore added to the assessee s total income. Penalty proceedings u/s. 271(1)(c) are initiated separately. (emphasis supplied) Addition:- ₹ 10,63,37,500/- 29. Thus, we find that there is no correlation between the basis taken for issuance of notices u/s. 148 and the findings given in the assessment orders passed. In our opinion, rather the basis taken in the notices and findings given in the assessment orders are in complete contradiction to each other inasmuch the notices have been issued on the basis that certain receipts mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound of appeal i.e. ground no. 2(d) for both the assessment years is hereby Dismissed. 30. Now, in the light of the discussions made above, we would adjudicate the ground nos. 4(a), 4(b) 4(c) for A.Y. 2008-09 and ground nos. 3(a), 3(b) 3(c) for A.Y. 2009-10. 31. We find that in the instant appeals, the AO has made the addition of ₹ 10,63,37,500/- in each of the assessment years under appeal by giving a finding that the appellant had made certain cash payments against purchases/proposed purchases of land. We find that during the course of the assessment proceedings, the AO had outrightly rejected the claim of the appellant that during the financial years under consideration it had neither purchased any land nor had made any payment as advance for purchases of any land. We find that in the assessment orders, the AO has given a patently wrong finding that certain lands had gone to the coffers of the appellant during the years under consideration. We find that the AO could not properly appreciate the facts of the present case in the proper perspective and could not understand the whole deal. The AO went also wrong when claiming that the appellant had purchased the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccount. We find that in order to establish the purchases of the land in earlier years, the appellant had furnished the copies of the purchase deeds at page no. 53 to 58 of the paper book filed for A.Y. 2008-09 and as per such purchase deeds, the appellant had purchased such land during the financial year 2006-07 only. Thus, we find that during the financial year relevant to assessment years under consideration, the appellant had not made any investment either towards the purchases or towards the making of advances for purchases of the land at Pipliyakumar and therefore, the findings given by the AO in the assessment orders to the effect that the appellant had parted with certain sum for making the investments for purchases of land are not factually correct. 33. We have also gone through the relevant abstract of the common order of this Bench, passed in the case of Shri Nilesh Ajmera, dated 11.05.2016 in Appeal Nos. IT(SS)A 182 to 184/Ind/2013 and ITA No. 538/Ind/2013 for A.Y. 2007-08 to A.Y. 2010-11 as placed at page no. 391 to 420 of the paper book filled by the appellant for A.Y. 2008-09. We find that in such order, this Bench while adjudicating the assesee s (Shri Nilesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the land owned by the appellant company. We find force in the contention of the appellant that since, the project had got aborted, the on-money so collected by the appellant through Shri Nilesh Ajmera had to be refunded and therefore, the same could not partake the character of any income in its hands. However, in any case, we find that in the present appeals, the question of quantification of income in the hands of the appellant has remained academic in the nature only for the reason that the AO has made the addition on altogether a different ground contrary to the facts on records. In our view, such an addition cannot be sustained in the eyes of the law. 35. We have also taken into consideration the arguments of the Ld.CIT(DR) that the mistake committed by the assessing officer in making the addition on the ground of unexplained investment in place of unaccounted receipt, can be regarded as a curable defect as contemplated u/s. 292B of the Act. However, we find no substance in such an argument of the Ld.CIT(DR) for the reason that the mistake so committed by the AO is not a mistake or defect or omission as contemplated under the provisions of s. 292B of the Act. We find t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3(c) of the appellant for A.Y. 2009-10 are Allowed. 38. Ground No. 3 for A.Y. 2008-09 General Ground During the course of the hearing, the appellant company has not pressed this ground. Accordingly, the Ground No. 3 for A.Y. 2008-09 is Dismissed. 39. Ground No. 5(a) 5(b) for A.Y. 2008-09 UNEXPLAINED CASH CREDIT OF ₹ 1,50,00,000/- 40. The brief facts relating to the issue are that during the course of the assessment proceedings for A.Y. 2008-09, the AO from the ITR of the appellant noticed that it had received certain sum shown as unsecured loan aggregating to a sum of ₹ 1,50,00,000/- in its audited balance sheet. Accordingly, the AO issued a show cause notice on 18.03.2016 requiring the appellant as to show cause why the amount shown as unsecured loan be not added to income of the appellant u/s. 68 of the Act. According to the AO, the appellant did not furnish any explanation on this issue before him. Consequently, an addition of ₹ 1,50,00,000/- has been made by the AO in the income of the appellant for A.Y. 2008-09. Against such addition too, the appellant preferred appeal before the ld. CIT(A). 41. According to the CIT(A), even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f their income-tax returns for the A.Y. 2008-09. The copies of confirmation letters are placed at Page no. 422 423 of our Additional Paper Book and the copies of the income-tax returns of both the loan creditors are placed at page no. 424 to 428 of the Additional Paper Book. 2.02 IDENTITY CREDITWORTHINESS OF THE LOAN CREDITORS AND GENUINENESS OF LOAN TRANSACTIONS It would be worthwhile to note that in the case of the above mentioned loan creditors, search and seizure operations under s.132 of the Act were carried out by the Income-tax Department and therefore, the identity of the loan creditors cannot be doubted at all. Further, the entire loans aggregating to a sum of ₹ 1,50,00,000/- have been given by the loan creditors through banking channels out of their explained and disclosed sources only. Furthermore, in the case of both the loan creditors, assessments for the relevant assessment year have got made under the provisions of s.153A/143(3) of the Act wherein the concerning AO has duly verified the receipts and payments in the hands of the loan creditors. Thus, the creditworthiness of the loan creditors also gets proved. Further, the genuineness of the lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itors and as also, certain documentary evidences to establish the identity, creditworthiness genuineness of the loan creditors such as confirmation letters, income-tax returns etc. in its paper book. The appellant submitted that in the case of the loan creditors, search and seizure operations under s.132 of the Act were carried out by the Income-tax Department and therefore, the identity of the loan creditors cannot be doubted at all. As per the appellant, the entire loans have been given by the loan creditors through banking channels out of their explained and disclosed sources only and in the case of both the loan creditors, assessments for the relevant assessment year have got made under the provisions of s.153A/143(3) of the Act wherein the concerning AO has duly verified the receipts and payments in the hands of the loan creditors, which proves the creditworthiness of the loan creditors. The appellant also submitted that the genuineness of the loan transactions gets established from the fact that the loans aggregating to a sum of ₹ 1,50,00,000/- have been made by the loan creditors in pursuance of the ratio deal which was entered into by PDPL with the appellant company ..... X X X X Extracts X X X X X X X X Extracts X X X X
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