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TMI Blog2025 (1) TMI 1230X X X X Extracts X X X X X X X X Extracts X X X X ..... The Ld.CIT(A) ought to have considered that the satisfaction note recorded by the Assessing Officer to enable him to assume jurisdiction u/s 153C is invalid in law as it is completely silent regarding the reasons to co-relate the contents of the seized material with instant assessment year so as to arrive at the satisfaction that the said seized material has a bearing on the determination of total income of the said assessment year. 4. The Ld.CIT(A) erred in law in holding that the Assessing Officer is bound to issue notice u/s 153C for each of the six assessment years immediately preceding the assessment year relevant to the previous year in which search was conducted after recording satisfaction after the amendment made to section 153C by the Finance Act, 2017 disregarding the law laid down by the Hon'ble Supreme Court. 5. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in upholding the addition of Rs. 4,65,40,000/- made u/s 69 of the Act towards alleged on-money payments in cash for purchase of land and buildings of MNR Dairy Farms' 6. The Ld.CIT(A) erred on facts in holding that the on-money payments in cash have been made during the F.Y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he end of the relevant previous year and the on-money payment could not have been made in full without such registration. 13. On the facts and circumstances of the case and in law, the Ld.CIT(A) erred in relying on the sworn statement of Sri.M.S.N Reddy dated 27.04.2021 and his affidavit dated 05.07.2021 to infer the payment of on-money by the appellant without appreciating that there is no unequivocal admission of such payment by him and he had merely admitted additional income in order to avoid litigation. 14. The Ld.CIT(A) erred in relying on the statement of Sri.D.Venugopal Reddy, a third party, though his averment regarding the payment of on-money is not supported by any corroborative evidence. 15. Any other legal and factual ground that may be urged at the time of hearing of the appeal. 2. The brief facts of the case are that the appellant company, involved in the business of Agriculture, hunting and related service activities, filed its return of income for the A.Y.2020-21 on 11.02.2021, declaring loss of Rs. 14,020/-. A search and seizure operation u/s 132 of the Income Tax Act, 1961 ("the Act") was conducted in the case of M/s MSN Laboratories Pvt. Ltd. and its asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e basis of statement recorded from Shri D.Venugopal Reddy and Shri MSN Reddy does not arise. The appellant had also submitted that in the alleged loose sheets found during the course of search, there is no reference to any date of payment and also to whom the money has been paid, and therefore, the allegation that the appellant has paid on-money of Rs. 4,65,40,000/- for the A.Y.2020-21 is not correct. The appellant further submitted that Shri MSN Reddy has filed further affidavit dated 05.07.2021 and admitted additional income of Rs. 4,65,50,000/- towards purchase of property from MNR Dairy Farm in the name of appellant company for the A.Y.2019-20 on the basis of seized material, which is further proved with registration of the property in the financial year 2019-20. 4. The Assessing Officer, after considering the submissions of the appellant and also taking note of relevant seized material found during the course of search in the premises of Shri D.Venugopal Reddy, more particularly page No.23 to 36, coupled with statements recorded from Shri D.Venugopal Reddy and the affirmation by Shri MNS Reddy, observed that although the appellant company has admitted additional income of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the remand report of the Assessing Officer on this issue, rejected the legal ground taken by the appellant, challenging the jurisdiction of the Assessing Officer for initiation of proceedings u/s 153C of the Act and held that the material found during the course of search, coupled with statement recorded from Shri D.Venugopal Reddy and Shri MSN Reddy, clearly suggest that the documents belong to the appellant company and have a bearing on the total income of the appellant for the A.Y.2020-21. Therefore, the arguments of the appellant that the Assessing Officer has not recorded satisfaction as required under law and further, the seized material does not indicate undisclosed income of the appellant for the A.Y.2020-21, is devoid of merit and therefore, rejected the arguments of the appellant on the legal issue. The relevant findings of the Ld.CIT(A) are as under : "6.2.4. 1n the remand report, the Ao has stated that the decision of Hon'ble supreme court in case of CIT Vs. Sinhgad Technical Education Society (2017) 397 ITR 344(SC) deals with the legal position of section 153C of the Act prior to the amendment made by the Finance Act, 2017 w.e.f' 01.04.2017 and the Finance A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... begun once an Evidence Affidavit is filed and it is not permissible to withdraw such Evidence Affidavit on the ground that the deponent is unable to present himself for cross-examination. Thus, it is noticed that the said judgment is not relevant to the case of the appellant and the Assessing Officer has cited the same without appreciating the context in which it was rendered. However, I agree with the observations made by the Assessing Officer in the remand report that after amendment of section 153C by Finance Act, 2017, i.e. after 01.04.2017, the AO is bound to issue notice for each of the six assessment years immediately preceding the assessment year relevant to the previous year in which search is conducted or requisition is made after recording the proper satisfaction. The AO after duly complying the provisions of section 153C only, issued notices u/s 153C of the Act for the AYs 2015-16 to 2021-22 (AY.2021-22 being the search year). It is also seen that the satisfaction for the AYs 2015-16 to 2021-22 in case of the appellant was recorded by the Assessing Officer based on the incriminating material seized vide Page No.23 to 36 of Annexure-1/DVR/RES/01. On perusal of the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant for the A.Y.2020-21, observed that although the Assessing Officer has made additions of Rs. 6,42,60,3000/- by considering the amount shown in the balance sheet at Rs. 7,57,39,700/-, but the fact remains that the remaining amount of Rs. 1,77,20,300/- has been directly paid by Shri MSN Reddy for purchase of the property, on behalf of the appellant company and this fact has not been considered by the Assessing Officer, while making additions towards on-money. Further, the appellant has filed complete details of the payment made by the appellant company and the payments directly made by Shri MSN Reddy on behalf of the appellant company and if we consider the total payments made through RTGS/Cheques, the appellant company could able to explain the source to the extent of Rs. 9,34,60,000/- and thus taking into account, relevant evidences, accepted argument of the appellant towards source for investment in purchase of property from MNR Dairy Farm to the extent of Rs. 9,34,60,000/- and thus directed the Assessing Officer to delete the addition of Rs. 1,77,20,300/- out of total additions made for Rs. 6,42,60,300/-. In so far as the balance amount of Rs,4,65,40,000/-, the Ld.CIT(A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for the A.Y.2020-21. The learned Counsel for the appellant, further referring to statement recorded from Shri MSN Reddy and affidavit filed during the course of search and post investigation, submitted that although Shri MSN Reddy admitted Rs. 4,65,40,000/- in the name of appellant company towards cash payment for purchase of property for the A.Y.2020-21 in the statement recorded u/s 132(4) and affidavit filed during the course of search, but subsequently, he has filed one more affidavit on 05.07.2021 and admitted additional income for the A.Y.2019-20, after analyzing the sale deeds registered for purchase of the property. The Assessing Officer, without appreciating relevant facts, simply made additions towards on money for A.Y.2020-21, even though the incriminating material does not show any cash payment for purchase of property and further, it falls under the A.Y.2020-21. The learned counsel for the assessee, further referring to sale deeds for purchase of property, submitted that Sheet A1 found during the course of search records particulars of property and the name of the vendor. Further, out of six properties referred to in Sheet A1, Sl.1 to 4 has been registered in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditions made towards on money for purchase of property, the documents found during the course of search, clearly establish payment of on-money and this fact has been confirmed from the sworn statement recorded from Shri D.Venugopal Reddy and affirmed by Shri MSN Reddy. Although there are contradictory statements in respect of cash payment and date of payment, but the fact remains that the person who handled the transaction, is well aware of the date of payment and if we consider the said analogy, the affidavit filed by Shri D.Venugopal Reddy clearly proves cash payment for the A.Y.2020-21. Thus, the Assessing Officer and the Ld.CIT(A), after consideration of relevant facts has rightly made additions towards payment of on-money and their order should be upheld. 12. We have heard both the parties, perused the material on record and gone through the orders of the authorities below. We have also carefully considered relevant case laws referred to by both the parties in support of their arguments. The facts borne out from the record clearly shows that during the course of search in the residential premises of Shri D.Venugopal Reddy on 24.02.2021, incriminating material in the form of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of property by the appellant company and its directors and the same has been confirmed by Shri MSN Reddy, but there are contradictory admission in the statement and affidavit filed during the course of search and post search investigation. If we go by the statement recorded from Shri D.Venugopal Reddy and Shri MSN Reddy, there is evidence for payment of cash for purchase of the property, although no indication as to when said cash payment has been made, whether for the A.Y.2019-20 or 2020-21. Further, the AO has linked the cash payment to other particulars of the property including date of registration and cheque / RTGS payments. Since there is clear evidence for purchase of property from the vendors specified in Sheet A1 and also consideration paid through RTGS/Cheque is matching as per the books of accounts of the appellant, in our considered view, the said documents should be read in toto and therefore, the arguments of the appellant that the loose sheets found during the course of search is a dumb document and on the basis of said documents, no additions can be made is illogical and cannot be accepted. 14. Having said so, let us come back, is there any cash payment made for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment as alleged by the Assessing Officer made for purchase of property should be considered in light of sale deed registered for purchase of property. If we go by the said dates, the alleged cash payment towards purchase of property assessed by the Assessing Officer as unexplained investment does not fall under the A.Y.2020-21. Further, this fact has been confirmed by subsequent affidavit filed by Shri MSN Reddy, who has thoroughly explained the transaction on the basis of evidence and admitted additional income in the name of appellant company for the A.Y.2019-20. Therefore, we are of the considered view that the cash payment if any made for purchase of property at Rs. 4,65,40,000/- cannot be assessed for the A.Y.2020-21. Thus, we direct the Assessing Officer to delete the addition of Rs. 4,65,40,000/- as unexplained investment for the A.Y.2020-21. 15. Coming back to legal issue challenged by the assessee, in light of the satisfaction note recorded by the Assessing Officer for assessment or jurisdiction u/s 153C of the Act. Although, both the parties have argued the issue extensively, in light of certain judicial precedents, but the issue become merely academic in nature, becau ..... X X X X Extracts X X X X X X X X Extracts X X X X
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