TMI Blog2021 (12) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed and the reopening of assessment is confirmed. Addition u/s 69A - unexplained money - In course of search of PDP certain Compact Discs(CD) were found which contained data pertaining to unaccounted receipts and payments by PDP - seized document AK/PDP/06 and DTTE which was owned up by PDP and CHDC and determined income arising out of the same and taxed the same - Assessee reiterated his stand that the Assessee was only acting as liaison and the ledger was an imprest account where sums were spent on behalf of PDP and CHDC and Assessee has no interest whatsoever except as agent of PDP - HELD THAT:- SC in the case of CHDC that the entries arising from DTTE were offered to tax by the peak credit method. This has been accepted by the CIT(A). The CIT(A) has however gone on the premise that expenditure of PDP or CHDC would be income in the hands of the Assessee. This is contrary to the claim of PDP that the Assessee was acting as liaison for and on behalf of the Assessee that the ledger account was imprest account meaning thereby that whatever is found in the ledger is entries of PDP and CHDC and the Assessee has no interest whatsoever in respect of the sums reflected in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... K. Sankar Ganesh, Jt. CIT(DR)(ITAT), Bengaluru ORDER Per Chandra Poojari, Accountant Member These appeals by the assessee are directed against the common order of the CIT(Appeals) dated 02.01.2018 for the assessment years 2006-07 to 2009-10. 2. The grounds in these appeals are inter-related and all the appeals were heard together and disposed of by this common order for the sake of convenience. 3. The first common ground in this appeal is with regard to initiation of assessment proceedings u/s. 147 r.w.s. 148 of the Income-tax Act, 1961 [the Act], which according to the assessee, ought to have been initiated u/s. 153C of the Act. This ground is raised for the first time before the Tribunal and being a legal ground, we are inclined to adjudicate the same. 4. The facts of the case are that the assessee in these years filed original returns of income for the AYs 2006-07 to 2009-10. There was a search in the Dayanand Pai group cases u/s. 132 of the Act. During the course of search in the residence of employee, Smt. Adlene Kagoo on 12.4.2011, certain data pertaining to the transaction with Dayanand Pai and Shri Anand Nadig was seized. Consequent survey operation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be confirmed. For this purpose, he relied on the decision of ITAT Ahmedabad in the case of Shailesh S Patel v. ITO, 97 taxmnn.com 570 (Ahd). 7. We have heard both the parties and perused the material on record. In the present case, there was a search in the case of Shri Dayanand Pai group cases on 12.4.2011. During the course of search proceedings, certain CDs were found and seized vide Annexure AK/PDP/06 dated 12.4.2011. These CDs contained data pertaining to unaccounted receipts and payment made by Shri Dayanand Pai s group for the period 1.4.2002 to 14.6.2008. The data is in Tally application under the caption Dummy (Tally Training Environment) [DTTE]. The ledger extract pertaining to the present assessee, Shri Anand Nadig for the period 1.4.2005 to 2.5.2008 was also found in the DTTE. According to this ledger extract, Shri P Dayanand Pai has made cash payment to Shri Anand Nadig in respect of Mallasandra property at Sy. No.26/1, 10/1, 9/2A, 9/2B, 8, 3/3 7, 9, Raghuvanapalya property Sy.No.8, 8/3, 9/2A, 7 8 and Kothnur property Sy.No.169/4 170. The total cash payment made by Dayanand Pai was ₹ 16,11,774 on various dates for AY 2006-07. 8. Further, there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Received towards Devanahalli Dhaba Property from AandNadig 7 23.11.2006 5,50,000 Cash, Received through AnandNadig Towards Devanahalli Dhaba Property 8 19.12.2006 15,00,000 Cash, Received towards Devanahalli Dhaba Property Total 4,50,00,000 9. On the basis of above facts, notice u/s. 148 was issued to the assessee and the above amounts were brought to tax in the AY as discussed earlier. 10. Now the question before us is whether the details of seized material found during the course of search were belonging to assessee so as to issue notice u/s. 153C of the Act. Section 153C gives jurisdiction to the AO once the documents pertaining to the assessee are found in whose case search has taken place u/s. 132 of the Act. Being so, u/s. 153C of the Act, where the AO of the searched person is satisfied that any books of account or documents seized or requisitioned belong to any person other than the person searched referred to in s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nse that proceedings are initiated for six assessment years immediately preceding the year in which search u/s. 132 is initiated or requisition is made u/s.132A. Thirdly, the provisions of section 153C are analogous to section 158BD of the Act. Therefore, decision of the Apex Court in the case of Manish Maheshwari v. Asstt. CIT [2007] 159 Taxman 258/289 ITR 341 would also apply where assessment is to be made u/s. 153C. As per the aforesaid decision, the precondition for invoking jurisdiction for issue of notice u/s. 153C is that the AO must record satisfaction as to the seized material 'belongs to' the third person i.e. assessee. 14.2.2 Under s. 153C as applicable to the relevant assessment year in appeal, where the Assessing Officer of the searched person is satisfied that any books of account, or documents seized or requisitioned 'belong to' or belongs to any person, other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person for such jurisdictional Assessing Officer to complete the assessment. This positi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... employed in s. 153C which, to some extent, curtailed the power of the deptt. to invoke s. 153C of the Act. Thus, suitable legislative changes were brought with effect from 1-6-2015 to relax the impediment for implementation of the Section 153C. As noted earlier, as per existing provisions, section 153C could be invoked against such other person only when books of account, etc., belonged to him and not otherwise. However, to address the point, section 153C has been amended to widen the powers of the Assessing Officer of the searched person to hand over the books of account or documents to the jurisdictional Assessing Officer even if these merely 'pertains or pertain to', or any information contained therein merely relates to the other person. Thus, after the legislative amendment, now the deppt. is well equipped to exercise jurisdiction under s. 153C even if the document seized merely pertains or pertain to or any information contained therein relates to the other person without the necessity of these documents etc. to be belonging to such other persons. Thus, in the light of the judicial precedent of the Hon'ble Delhi High Court and further in view of the subsequent le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 is applicable to all types of escapement including income unearthed in search proceedings. The power available under S. 153C does not render provision of S. 147 repugnant per se. The remedy available under S. 153C and S. 147 are also not inconsistent. Relevant here to note the observation of the Hon'ble Bombay High Court in the case of Shirish Madhukar Dalvi v. Asstt. CIT [2006] 156 Taxman 79/287 ITR 242; Section 148 is a substantive provision whereas section 158BC is a procedural section. Both sections definitely stand on different footings. Section 158BC and S. 153C are analogous. The key variances are firstly, non-obstante clause in S. 153C grants nearly sweeping powers to revenue with a liberty to summarily reopen the assessment of 6 years without observing stringent and valuable safeguard of 'reason to believe' set out in S. 147 of the Act. Provisions of S. 153C thus somewhat tones down the rigors of S. 147 in favour of the Revenue. Secondly, for usurping jurisdiction under S. 147, the documents/papers found in the course of search need not 'belong to' the person other than person searched. Mere-demonstrable connection or live link to such third person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions cited on behalf of the assessee are clearly distinguishable and do not raise any conflict with position of law narrated above. The decision rendered by the Gujarat High Court in the case of Cargo Clearing Agency v. Jt. CIT [2008] 307 ITR 1 has been rendered under a different scheme for assessment of search cases i.e. with reference to block period regime. The Hon'ble Gujarat High Court also echoes that in case of conflict between the operation of erstwhile Section 158BC of the Act (pertaining to erstwhile assessment procedure in the case of third person under old scheme) and Section 147/148 of the Act under normal provisions, provisions of erstwhile Section 158BC will prevail. The Hon'ble Gujarat High Court has also opined that proceedings under s.147/148 of the Act will not lie where it is repugnant to the procedure laid down under erstwhile Chapter XIV-B relating to search cases. In the instant case, where the onerous proceedings under s. 153C of the Act has not been invoked and could not possibly be invoked, there was no impediment for initiating proceedings under s.147 of the Act by the AO as discussed in elaboration above. Therefore, in Cargo Clearing Agency a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,86,914/-. 75% of ₹ 1,57,50,86,914 i.e., a sum of ₹ 118,13,15,186 was offered as additional income before the SC by CHDC. The remaining sum of ₹ 39,37,71,729 was owned up by PDP who was also an applicant before the SC and accepted in the order of SC dated 19.10.2015. 14. Thus the SC has considered the seized document AK/PDP/06 and DTTE which was owned up by PDP and CHDC and determined income arising out of the same and taxed the same. 15. As far as the Assessee in this appeal is concerned, he is basically a real estate broker and commission agent. He does the job of liaison for various organizations like identifying negotiating and concluding transactions relating to purchase of properties including obtaining NOC approvals etc., from Government Agencies/Authorities. He used to receive funds towards expenses of client/principal and also payments of advances to sellers of properties for and on behalf of the client. The Assessee receives commission for rendering services. With this background, let us analyze the additions made by the revenue authorities in each AY. ITA No.576/Bang/2018: (AY 2006-07) 16. As far as the addition made in AY 2006-07 is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sum of ₹ 16,11,774/-. 19. On appeal by the Assessee, the CIT(A) confirmed the action of the AO. In the proceedings before the CIT(A), the Assessee filed a letter dated 5.2.2016 of PDP wherein PDP confirmed that as far as the Assessee is concerned the payments made to him as reflected in the ledger account which is part of DTTE, were nor for any services rendered by him but was only an imprest amount, for advancing money to land lords or reimbursement of expenses incurred on behalf of the Assessee and CHDC. It was also confirmed that the amounts reflected in the ledger have been accepted by PDP and CHDC in the SC and the SC while determining the additional income based on peak credit at the final stage before SC U/S.145D(4) considered and included in the working of peak credit amounts found in the various ledger accounts of DTTE. The Assessee had originally offered peak debit before DDIT and in SC application at the initial stage. The CIT(A) firstly held that the Assessee was giving different version regarding entries found in the ledger account which was part of DTTE by saying that in one AY the money is included in the receipts declared in the return of income and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ece of evidence but are not conclusive. The person making the admission is entitled to show that admission is incorrect or was made under erroneous belief or owing to other circumstances. The circumstances of the present case clearly demonstrate the correctness of the plea raised by the Assessee. We therefore direct that the addition made in this regard deserves to be deleted and is hereby deleted. ITA No. 575/Bang/2018 (AY 2007-08) 22. As far as AY 2007-08 is concerned, the Assessee filed return of income on 13.12.2007 declaring income of ₹ 5,06,595/-. A notice u/s.148 of the Act dated 28.3.2014 was issued. The Assessee in response thereto filed the same return of income which he had filed earlier. As part of the DTTE there was another ledger account found of one M/s. D.N. Associates. The Assessee and one Sri Babu Dhammanagi were partners of M/S.D.N. Associates. A copy of this ledger account is at page 115 of the paper book. In this ledger there were entries totalling ₹ 4.5 Crores between 5.8.2006 till 19.12.2008. As a consequence to the search in the case of PDP, a survey u/s.133 of the Act was conducted by the revenue in the premises of D.N. Associates on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ands of the Assessee cannot be sustained. It is clear from perusal of the ledger account based on which the addition has been made is in the name of D.N. Associates. Though the description in the relevant entries for a sum of ₹ 86 lacs has reference to Anand Nadig i.e., the Assessee, it cannot be attributed to the Assessee in his individual capacity. The Assessee is partner of D.N. Associates and if at all any addition is to be made it can be only in the hands of the firm. D.N. Associates had declared additional income of ₹ 3.64 Crores in AY 2007-08 and ₹ 50 lacs in AY 2008-09 thus total sum of ₹ 4.14 crores were offered in the return of income of D.N. Associates. With regard to the remaining sum of ₹ 86 lacs, there is no mention in the order of Assessment for AY 2007-08 in the case of D.N. Associates, a copy of which is placed at page-162 to 164 of the Assessee s paper book. The Assessee has disowned the transaction in his individual capacity to the extent of ₹ 86 lacs even before the AO. In such circumstances, the addition made is unsustainable and hence the same is directed to be deleted. ITA No.577/Bang/2018 (AY 2008-09) 25. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of D.N. Associates, we have already held that the sums found in those ledgers cannot be added in the hands of the Assessee in his individual capacity. For the reasons given therein, we direct that the additions made be deleted. ITA No.578/Bang/2018: (AY 2009-10) 30. As far as AY 2009-10 is concerned, the Assessee filed return of income on 29.9.2008 for the relevant AY declaring income of ₹ 5,27,267/-. A Notice dated 28.10.2014 u/s.148 of the Act was issued calling for a return of income in response to which the Assessee filed the return originally filed as a return in response to the notice u/s.148 of the Act. 31. In the ledger account in the name of the Assessee which was part of the DTTE, a sum of ₹ 11 lacs was shown as having been received on 7.5.2008 by the Assessee from PDP towards Thallaghapura S.No.30 Katha Expenses. This addition is made on the basis of the same ledger extract which is subject matter of addition in AY 2006-07. The facts and circumstances are identical to the addition made in AY 2006-07. We have already deleted similar addition in AY 2006-07 for the reason that the sum in question cannot be taxed in the hands of the Assessee as it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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