TMI Blog2023 (2) TMI 340X X X X Extracts X X X X X X X X Extracts X X X X ..... Wing, Mumbai and allegedly seized from the office Chamber of Mr. Ashok Sharma, the C.F.O. of Indiabulls Group at the time of search on the Indiabulls Group on 12.07.2016 and 14.07.2016. In RRJ Securities Pvt. Ltd. [ 2015 (3) TMI 410 - DELHI HIGH COURT] Hon ble Delhi High Court has held that data in hard disk found at the premises of a chartered accountant on basis of which accounts are prepared and return are filed cannot be considered as incriminating material. There is force in the contention of assessee that revenue cannot take a plea of lack of exercise of plenary powers by the ld. CIT(A) rather what transpires from the order of Ld. AO and ld. CIT(A) is that where Ld. AO had nearly approached the issue on the basis of presumptions. CIT(A) has taken into consideration the facts before it to make aforesaid conclusions. The ld. CIT(A) had forwarded the detailed written submissions of the assessee to ld. AO for comments and after receiving the remand report had disposed of the matter. Ld. CIT(A) had specifically authorized, the Ld. AO u/s 250(4) of the Act, to conduct necessary inquiries. It appears, Ld. AO made no efforts. The matter of fact remains that Ld. AO himse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (A) enhanced the income assessed to Rs.52,02,50,970/ -. Against this first appellate order, the appellant filed an appeal before the Tribunal which is still pending. 2.1 There was another search action against the appellant u/s 132 on 17.10.2016. In response to notice issued u/s 153A the appellant filed a return of income declaring income at Rs.19,34,16,486/- on 27.03.2018. In the order of assessment passed u/s 153A read with section 143(3) of the Act on 30.12.2018, the Assessing Officer framed order of assessment at an income of Rs. 156,52,50,970/- and was pleased to make an addition of Rs. 104,50,00,000/- as unexplained cash transactions. Assessment shows that the Assessing officer considered to make the addition on the basis of search operation conducted against India Bulls Group by the Investigation Wing, Mumbai on 12.07.2016. It has been further observed by the Assessing Officer that during the search proceedings on India Bulls Group, a Laptop was found in the office chamber of Shri Ashok Sharma, C.F.O. of India Bulls Group where cash transactions of amounts received as well as paid in the name of Vatika were noted and that M/s India Bulls Group has filed a settlement pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... round that the complete name of the assessee, i.e. Vatika Ltd., was not appearing in the seized documents and ignoring the fact that the name 'Vatika' showed sufficient nexus and, if further fact-finding was called for, it was incumbent upon him to get that done. 3. The Ld. CIT(A), having plenary powers under the Income tax Act, erred in law and on facts in holding that the amount mentioned in the seized documents was only Rs.10,855.43 ignoring the incontrovertible evidence that it was actually Rs.104.50 crore 4. The Ld. CIT(A) has erred in law and on facts in holding that addition which was not based on incriminating material found during the search could not be made in assessment u/s 153A of the I.T. Act and, consequently, deleting addition of Rs.104 crore, without going into merits of the same. 5. Heard and perused the record. 6. Assessee s Submissions; On behalf of the assessee it is contended that the addition have been made by the Ld. AO without there being any material found as a result of search conducted on the assessee and some material of alleged survey made on M/s. Vatika Prop. Build Pvt. Ltd. has been relied. It was submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven the material which was retrieved from the employee of M/s. India Bulls Group were not supplied to the appellant. 6.4 It has been submitted on behalf of the assessee that the grounds as raised before the Tribunal on the lack of exercise of plenary powers of the ld. CIT(A), are not sustainable. Ld. Sr. Counsel submitted that in fact Ld. CIT(A) made all efforts and even called for remand report and having failed to have material for sustaining the finding deleted the addition. 6.5 It was submitted that the burden was in the revenue establish that the assessee has made investment of the alleged sum, for the purpose of section 69 of the Act. It was emphasized that if India Bulls Group has offered the disputed amount as their income in an application u/s 245C(1) of the Act, its implication is that the credits appearing in their books of accounts remain unexplained and no assessee. 6.6 Relying judgment of Hon ble Delhi High Court in Pr. CIT (Central)-3 vs. M/s. Jaypee Financial Services Ltd. [ ITA 42/2021 CM No.6138/2021 dated 20.07.2021 it was submitted that Hon ble High Court has held that where assessment has been made u/s 153A of the Act and no proceedings were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... compared to then prevailing market rates of interest. In 2014-15 the debentures were redeemed by M/s Vatika Propbuild Pvt. Ltd. and reissued by another company M/s Deneb Developers Pvt. Ltd. B) Also, publicly available information about M/s Vatika Propbuild Pvt. Ltd. shows that their was no significant business activity in the company till it received investment of Rs.400 Cr. from Indiabulls group company. C) Both M/s Vatika Propbuild Pvt. Ltd. and M/s Deneb Developers Pvt. Ltd. had same registered address. Also that address happened to be the same on which this assessee i.e. M/s Vatika Ltd. is registered. D) One Sh. Brij Kishore Singh who was regular employee of this assessee i.e. Vatika Ltd. happened to be director of M/s Vatika Propbuild Pvt. Ltd. E) One Sh. Manu Raj Singh who was director on the board of this assessee i.e. Vatika Ltd. happened to be director of M/s Deneb Developers Pvt. Ltd. F) Sh. Gautam Bhalla and Sh. Anil Bhalla who are key persons of Vatika group happened to be directors of M/s Vatika Propbuild Pvt. Ltd. and also M/s Lincoln Developers Pvt. Ltd. in which M/s Vatika Propbuild Pvt. Ltd amalgamated. The above informati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with following :- 2. Further, as per information available on record, it has been noticed that you had made various cash payments to Indiabulls Group during the F.Y. 2010-11 totalling to Rs 1 08,55,42,562/-. During the same period, you have received cash payments of amounting to Rs 54 55,83.500/-. The Indiabulls Group has filed an application before the Hon ble ITSC on 03.10 2017 u/s 245C(1) of the Income Tax Act, 1961. In the application, the Indiabulls Group has admitted that it was accepting unaccounted funds in cash from various parties. The Indiabulls Group has categorised the cash transactions in the name of Vatika as cash loans and has offered the peak credit of these transactions as its unaccounted income. You are hereby required to show cause as to why the total of these cash transactions i.e. Rs 1,63,11,26,O62/- (1085542562+545583500) may not be added to your total income for the relevant A.Y. 2011-12. 10.1 In aforesaid context at outset relevant will be to mention that in the case of RRJ Securities Pvt. Ltd. (380 ITR 612), Hon ble Delhi High Court has held that data in hard disk found at the premises of a chartered accountant on basis of which accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. CIT(A) has rightly concluded following in para 5.11.28 reproduced as below :- 5.11.28 Considering the facts that: (1) The copy of seized material was not provided to the appellant (2) The copy of statement on oath was not provided to the appellant and opportunity of cross examination was not allowed (3) The complete name of the appellant i.e. M/s. Vatika Ltd. is not appearing on the seized papers (4) The total amount mentioned on the seized papers is only Rs. 10,855.43 and no justification with supporting evidence has been furnished by the Assessing Officer to hold it to be Rs. 104,50,00,000/- (5) A copy of the application filed before the Hon ble ITSC on 03.10.2017 u/s 245C(1) of the Income Tax Act, 1961 in Indiabulls Group was neither available with the Assessing officer nor a copy was provided to the assessee. The material was seized from third party and not from premises of the appellant. (6) In view of order u/s 153A r.w.s. 143(3) dated 30.03.2015, the assessment of the appellant stood completed on the date of search and no incriminating material with regard to this addition was found. No addition could be made in view of de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1 )(c) of the Act. Accordingly, penalty proceedings u/s 271(1 )(c) of the FT. Act, 1961 are initiated separately by issue of statutory notice. 13. The Bench is of considered opinion that Ld. AO has fallen in error in casting a burden upon the assessee for explanation of the admissions made by Indiabulls Group. The burden on the assessee would have been justified had the transactions initiated at the end of the assessee. However, there was no material on record to show that the admissions of Indiabull groups had anything in the form of evidence that funds had come from the end of assessee. 14. There is force in the contention of the ld. Sr. Counsel for the assessee that revenue cannot take a plea of lack of exercise of plenary powers by the ld. CIT(A) rather what transpires from the order of Ld. AO and ld. CIT(A) is that where Ld. AO had nearly approached the issue on the basis of presumptions. Ld. CIT(A) has taken into consideration the facts before it to make aforesaid conclusions. The ld. CIT(A) had forwarded the detailed written submissions of the assessee to ld. AO for comments and after receiving the remand report had disposed of the matter. Ld. CIT(A) had specifi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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