TMI Blog2023 (9) TMI 441X X X X Extracts X X X X X X X X Extracts X X X X ..... y or illegality in the order passed by ld CIT(A), which we affirm with our aforesaid observation. In the result, ground No. 1 of the appeal of revenue is dismissed. Addition on substantive basis and on protective basis - CIT(A) was of the view that it is an undisputed fact that the documents relied upon for making additions were found from the third party. Such documents are not signed by any one, not in the writing of assessee, thus deleted both the additions - HELD THAT:- We find merit in the submissions of assessee that the Assessing Officer made addition on the basis of guess work. There is no direct evidence against the assessee to connect the assessee with the investment made for purchase of flat No. A-501 and G-901. We find that search party recorded statement of Aagam Vadecha on 30/09/2015 in post search proceedings and Aagam Vadecha has not identified the assessee. In the course of assessment, the assessee asked for cross examination of Aagam Vadecha but he neither attended the proceedings nor sent any reply on his behalf. No independent investigation was carried out by Investigation Wing or by the Assessing Officer about the investment in Enn Enn Corporation about ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson from whom the incriminating documents was found and seized, ignoring the incriminating evidences on record and without affording an opportunity of cross examination in the appellate proceedings. 5. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. 6. The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal. 2. Brief facts of the case are that a search action under Section 132 of the Income Tax Act, 1961 (in short, the Act) was carried out on 04/09/2015 in case of Param Properties of Surat. During the course of search action, certain incriminating documents and evidences were seized from the premises of Param Properties which contains certain entries pertaining to the assessee. Based on the incriminating material related with the assessee, the assessing officer recorded satisfaction under section 153C. Notice under Section 153C of the Act dated 01/08/2017, was issued to the assessee for filing return of income for various assessment years. In response to notice under Section 153C, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15000000 iv. Param Properties 4% 2500000 62500000 4. On the basis of aforesaid observation, the Assessing Officer issued show cause notice to the assessee as to why the transactions reflected in the seized document should not be treated as unexplained cash transaction and should not be added to the total income of assessee for A.Y. 2015- 16. In response to said show cause notice, the assessee filed his reply dated 21/12/2017. The assessee in its reply, stated that MOU cannot be relied upon for drawing an inference as all parties have denied the MOU and such MOU was never executed. Reply of assessee was not accepted by the Assessing Officer. The Assessing Officer recorded that the MOU in question correctly and actually described the details of property. The land in question is actually registered in the name of one of the partner i.e. the assessee. The cheque number and other details are mentioned in the MOU. Such fact was corroborated by the statement of Shri Aagam V. Va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 46 28.06.14 2000000 FRN A-501 BS-28 3 30.09.14 2000000 FRN A-501 BS-28 3 30.09.14 2000000 FRN A-501 BS-28 3 Total 7000000 8000000 Particular (Transaction related to Flat No.) Amount (In Rs.) Nature FRN A-501 7000000 Payment FRN G-901 7500000 Receipt FRN F-901 500000 Receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the flat No. F-901 and G-901 are clearly in the name of A.N. Doshi (Assessee), hence, the addition against transactions of these flats is made on substantive basis in the hand of assessee. 7. The assessing officer further held that seized diary inventorised as BS- 28 in respect of FRN A-501 reflects the name of Ashokbhai Doshi in all probabilities is A.N. Doshi. Partner of the firm Param Property has advertently nor identified Ashok Doshi neither during search nor during assessment proceedings. Notice under Section 133(6) of the Act was issued to partner of Param Properties who neither responded nor filed any reply, hence addition of Rs. 70,00,000/- was made on protective basis in the hand of assessee against flat No. A-501 and on substantive basis in the hand of Param properties, in the assessment order completed under Section 143(3) r.w.s. 153C of the Act on 25/12/2017. 8. Aggrieved by the additions in the assessment order, the assessee filed appeal before the ld. CIT(A). Before the ld. CIT(A), the assessee filed his detailed written submission on all three additions. On the addition of investment as per MOU of Rs. 55.00 lacs, the assessee stated that MOU was not signed b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng but a guess work and assumption only. The strong suspicion cannot take place of legal proof. The assessee specifically submitted that the seized document which is not in the name of assessee nor signed by party specially found from the premises of unconnected person are in the nature of dumb document having no evidentiary value and cannot be a basis of addition of undisclosed income. 10. On the addition of Rs. 70.00 lacs on protective basis, the assessee submitted that diary inventorised as BS-28 contained clearly the name of Ashok Doshi. It contains some figure in coded language. As per Aagam Vadecha for flat No. A-501, even during recording the statement of Aagam Vadecha, he has not mentioned anything which can create any suspicion in the mind of Assessing Officer to treat the Ashok Doshi as Ashesh Doshi. Notice under Section 133(6) of the Act was issued to Param Properties for seeking clarification on AD or Ashok Doshi but no response was made by Param Properties. No summon under Section 131 of the Act was issued by assessing officer. The assessee submitted that the Assessing Officer made addition without any basis. Such loose sheet or paper cannot be used for making addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that it is undisputed fact that the MOU was found at the premises of Param Properties is unsigned. No amount is written on the aforesaid MOU. The said MOU is not in the handwriting of assessee, thus, cannot be used against the assessee for making addition. Moreover, another partner Pravin H. Shah stated that he has already received back his investment of Rs. 50.00 lacs. Such fact supports the case of assessee that the land was purchased by him for Rs. 5.72 crores and still in his name. The land is agricultural land and no development activities took place till date. The MOU which has been relied by Assessing officer for making addition is nothing but a dumb document so far as the assessee is concerned. The ld. CIT(A) by referring the decision of Hon ble Apex Court in Common Cause and Others Vs UOI in Writ Petition Civil Appeal No. 505 of 2015 and V.C. Shukla Vs UOI 1998 (3) SCC 410 and Hon ble Gujarat High Court in CIT Vs. Mauli Kumar K. Shah (2008) 307 ITR 137 (Guj) and PCIT Vs Ajay Sundarbhai Patel (2016) 69 taxmann.com 309 (Guj) held that the addition on the basis of dumb document is not justified. The assessee sought cross examination of Shri Aagam Vadecha which was not prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing of assessee. In the statement recorded under Section 132(4), Aagam Vadecha has not mentioned the name of assessee. Notice under Section 133(6) of the Act was issued to Param Properties during assessment but he has not turned up. Telephonic conversation and storage record cannot be made basis for making addition unless details of talk in is not on record. There is no statement either during the search or post search enquiry or during the statement which can be proved that the transaction in these papers relates to or pertains to assessee. The ld. CIT(A) by referring the decision of Hon ble Apex Court in V.C. Shukla Vs UOI (supra)and the decision of Hon ble Gujarat High Court in CIT Vs. Shri Mauli Kumar K. Shah (supra) held that analysis of seized document was not properly made at the time of assessment. When the name of assessee is not clearly mentioned on the seized document, the addition in the hand of assessee is not justified. On the basis of aforesaid finding, the ld. CIT(A) deleted both the addition of Rs. 80.00 lacs on substantive basis and Rs. 70.00 lacs on protective basis. Aggrieved by the order of ld. CIT(A), the revenue has filed present appeal before this Tribunal. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication before Settlement Commission and accepted all the transactions related with various parties and have paid tax thereon, thus, the application made by Aagam Vadecha, Proprietor of Param Properties is corroborated with the various incriminating documents found during the course of search action which is sufficient to corroborate the evidences found during the course of search. The ld CIT-DR for the revenue submits that from the seized material it was clearly established that the assessee has made investment with Enn Enn Corporation, thus, the finding of ld CIT(A) are liable to be reversed and that the finding of assessing officer be restored. 15. On the other hand, the ld. Sr. Counsel for the assessee supported the order of ld. CIT(A). Learned Sr. Counsel for the assessee submits that during the course of search action on Param Properties, one MOU was found and seized. The said MOU was in respect of agricultural land situated at village-Jothan. The Assessing Officer has scanned part of said MOU in the assessment order. The Assessing Officer has not appreciated the fact that the said MOU does not contain the signature of assessee or any other alleged partner. The said MOU wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cannot be used against the assessee. On the submission of assessee that the Param Properties have filed application before the Settlement Commission and have accepted the transaction. The ld. Sr. Counsel for the assessee relied upon the decision of Hon'ble Jurisdictional High Court in PCIT Vs Mukesh Keshavlal Patel in Tax Appeal No. 838 and 840 of 2019 dated 25/02/2020 wherein the Hon'ble High Court has held that declaration made by third party before the Settlement Commission is not binding on the assessee. No addition can be made in absence of independent material. To support such contention, the ld. Sr. Counsel for the assessee relied upon the following decisions: (i) CIT Vs Dhiranlal Durlabhbhai Patel HUF, Tax Appeal No. 579 of 2009 dated 28/06/2010 (ii) Rajeev Tractors (P) Ltd. Vs ACIT (2022) 143 taxmann.com 330 (Ahmedabad Trib) (iii) Rajesh Babubhai Damania Vs ITO (2002) 122 Taxman 614 (Guj) and (iv) CIT Vs Mukesh Keshav Lal Patel ( Tax Appeal No. 838 840 of 2019 dated 25.02.2020. 17. We have considered the rival submissions of both the parties and with their active assistance has gone through the orders of lower authorities carefully. We have also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 477 L) was also mentioned, and his share was shown at 24%. The case of Praveen Chandra Hiralal Shah was also centralised. The assessing officer on the basis of said MOU made addition of Rs. 1.50 Crore, at the hand of Praveen Chandra Hiralal Shah, however, on appeal before ld CIT(A), the addition was deleted vide order dated 30.03.2021. And on further appeal by revenue before Tribunal the order of ld CIT(A) was upheld in IT(SS) No. 33/Srt/ 2021 dated 13/06/2022. 20. The ld CIT-DR for the revenue raised additional plea before us that Param Property, on whom search action was carried out has accepted all the transaction in the Petition filed before Income Tax Settlement Commission (ITSC) including on the transaction mentioned in the MOU found during search. We find that Hon ble Gujarat High Court in PCIT Vs Mukesh Keshav Lal Patel (supra), while relying on the decision of Delhi High Court in CIT Vs Vineeta Gupta (2014) 46 taxmann.com 439 (Delhi) held that declaration made by another party before ITSC is not binding upon the assessee, therefore, no addition can be made in absence of independent material. Thus, in view of the afforesaid factual and legal discussions, we do not find a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee against flat No. A-501 and on substantive basis in the hand of Param properties. 22. We find that before ld CIT(A) the assessee retreated similar contention as raised before assessing officer. The ld CIT(A) on considering such contentions held that the documents relied by the Assessing Officer for making these additions were not found at the premises of assessee but found from the premises of Param Properties which is a third party. Similarly, the documents are not in the handwriting of assessee, nor signed by any one. The assessee claimed that in these papers, flat No. G-901 and F-901 have been shown in the name of A.N. Doshi and linking of assessee (Ashesh Nanalal Doshi) is not justified. For flat No. A-501, the seized material clearly contents the name of Ashokbhai Doshi and not the name of assessee, therefore, the addition in his name is not justified. During assessment notice under Section 133(6) was issued to Param Properties but he has not responded. The Assessing Officer relied upon the dumb document. The ld. CIT(A) was of the view that it is an undisputed fact that the documents relied upon for making additions were found from the third party. Such documents are n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y ignoring the evidence on record. Considering detailed discussions on ground No. 1 to 3, this ground of appeal does not require any specific adjudication. Ground No. 5 6 are general and needs no adjudication. 25. In the result, the appeal of revenue for AY 2015-16 in ITA No. 07/Srt/2021 is dismissed. ITA No. 32/Srt/2021 for AY 2016-17 by Revenue. 26. The revenue has raised following grounds of appeal; (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the incriminating documents seized during the search action u/s. 132 of the Act as dumb document and deleting the addition made of Rs.1,24,72,295/- on account of unexplained cash receipts. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the incriminating documents seized during the search action u/s. 132 of the Act as dumb documents and deleting the addition made of Rs.1,20,00,000/- on account of unexplained cash payments. (3) On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the additions on the ground that the A.O. has not allowed the cross examin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .15 872295 FRN G- 901 clear BS- 1 54 Total 12000000 25.04.15 12472295 Particular (Transaction related to Flat No.) Amount (In Rs.) Nature FRN A-501 12000000 Payment FRN G-901 18472295 Receipt 28. On the basis of aforesaid summary, the Assessing Officer was of the view that the seized document reveals that the assessee had entered into cash transaction related to purchase and sale of flat No. A-501, G-901 and F-901 developed by Enn Enn Corporation Ltd. through Param Properties. The assessing officer made addition of Rs. 1.24 Crore on account of unexplained cash receipt on substantive basis and of Rs. 1.24 Crore on protective basis and Rs.1.20 Crore substantive basis in the hand of Param Property. On appeal before ld CIT(A) the both the additions in substantive as well ..... X X X X Extracts X X X X X X X X Extracts X X X X
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