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TMI Blog2025 (4) TMI 646X X X X Extracts X X X X X X X X Extracts X X X X ..... in law in setting aside the approval given by the JCIT u/s 153D of the Act though such approval does not constitute an order passed under the Act which could be a subject matter of revision u/s 263 of the Act 4. The order u/s 263 which sought to revise the assessment order passed u/s 153A is without jurisdiction and unsustainable in law, as the said order has been passed based on the material seized during the search in the case of persons other than the assessee and since the scope of assessment u/s 153A does not extend to such material which is not seized in the case of the assessee. 5. On the facts and circumstances of the case, the Ld. Principal CIT erred in law in subjecting the assessment order u/s 153A of the Act to revision u/s 263 with regard to the issue of unexplained investment in the purchase of lands at Rangareddyguda, though such assessment order cannot be regarded as erroneous when the Assessing Officer has taken one of the plausible views after application of mind to the available material, while quantifying the amount of such unexplained investment in the assessments made u/s 153C of the Act for A.Y 2020-21/2021-22 in the cases of the companies which purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to image of an agreement for sale dated 04.06.2016 was found in the laptop of Shri M.Uday Kumar Reddy, an employee of the MSN group. The entire data found in the said laptop, including the said agreement for sale, was imaged into a hard disk and the same was seized vide Annexure-A/MSN/OFF/HD1. A copy of the said agreement for sale dated 04.06.2016 was also found during the course of the search conducted in the case of Shri J. Anirudh Reddy at his residence and the same was seized at Page Nos.49 and 50 of Annexure A/JAR/RES/01. The agreement for sale dated 04.06.2016 was executed by Shri J. Anirudh Reddy, Shri J. Dushyant Reddy and Smt. J. Sashikala Reddy, who are collectively referred to as "sellers" in the said agreement in favour of Shri M.S.N. Reddy, the CMD of MSN group companies and agreed to sell 400 acres of agricultural lands situated at Rangareddyguda @ Rs. 14.50 lakhs per acre. The agreement did not contain any details of the payment of the consideration, except an advance of Rs. 5 crores to be paid to the bank account of Smt. J. Sashikala Reddy through RTGS. The statement on oath was recorded from Shri J. Anirudh Reddy and in reply to Q.No.10, Shri J. Anirudh Reddy confi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verifying the records. Subsequently, in the course of statement u/sec.132(4) recorded on dated 27.02.2021, Shri M.S.N. Reddy was requested at Q.No.13 to reconcile the payment of on-money and in reply, he stated that, he has purchased 326 acres of land and registered in the name of various group companies and also agreed that he has paid onmoney over and above the consideration stated as per the registered sale deed and accordingly, admitted additional income of Rs. 32,66,77,750/- in the hands of various companies as on-money payments for purchase of lands. During the course of post-search investigation Shri MSN Reddy filed an affidavit dated 05.07.2021 before the DDIT (Inv), Unit-II(2), Hyderabad and reiterated his statement given during the course of search and also filed details of purchase of lands and payment of consideration through RTGS/cheque and also cash consideration and further agreed to offer additional income for the assessment years 2020-2021 and 2021-2022. 5. Consequent to search, the Assessing Officer issued notice u/sec.153C for assessment years 2015-2016 to 2021-2022 to eight group companies and in response, all eight companies had filed their return of income. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- for purchase of lands at Rangareddyguda (v) by the appellant and it's group companies. In response, the assessee submitted that, the assessment order passed by the Assessing Officer is neither erroneous nor prejudicial to the interest of Revenue, because the Assessing Officer has assessed on-money payments for purchase of lands by the 08 group companies of the appellant for the assessment year 2020-2021 and 2021-2022 after considering relevant evidences found during the course of search, coupled with, statement recorded from the appellant and other employees. The PCIT after considering relevant explanations of the assessee, has rejected the contention of the assessee and passed order u/sec.263 of the Act on 27.11.2024 on the ground that the assessment order passed by the Assessing Officer is erroneous in so far as it is prejudicial to the interest of Revenue since it was passed without bringing into tax the on-money payment for purchase of land. The PCIT revised assessment order on the basis of page no.99 of the seized material A/SS-5/UBK/02 which contained the details of cheque payments made for the purchase of lands in the names of various MSN Group of Companies and as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee submitted that, the powers of revision u/sec.263 of the Act of the PCIT do not extend to an assessment order passed u/sec.153C with the prior approval of the JCIT u/sec.153D and consequently, the orders passed by the PCIT in the cases of the appellant for assessment year 2018-19 by invoking the revision powers u/sec.263 are bad in law and legally unsustainable. He also drew the attention of the Bench the provisions of sec.263(1) and Explanaton-1 to sec.263(1) and submitted that the statute does not provide for revision of assessment orders passed u/sec.153A and 153C u/sec.263 of the Act. He, therefore, submitted that the orders of the PCIT passed u/sec.263 of the Act for the assessment year 2018-2019 is without the authority of law and the same are legally unsustainable. In support of this contention, the Learned Counsel for the Assessee relied on the decisions of Hon'ble Madhya Pradesh High Court in the case of Pr. CIT vs. Prakhar Developers (P.) Ltd., [2024] 162 taxmann.com 48 (MP); Hon'ble Allahabad High Court decision in the case of CIT vs. Ashok Kumar in IT Appeal No.192 of 2000; Hon'ble Jharkhand High Court in the case of Pr. CIT vs. Padma Kumar Jain in Tax Appeal N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w. 8.2. The learned Counsel for the Assessee further submitted that, the PCIT has relied upon seized material which is non-incriminating in nature for revising the assessment order passed u/sec.153A of the Act, without appreciating the fact that, the sole seized document relied on by the PCIT in the revision order cannot be considered to be in the nature of incriminating material since the same merely contains the details of cheque payments made for purchase of lands at Rangareddyguda which are routed through the bank account. Further, the said seized document admittedly does not contain any details of cash payments made towards on-money over and above the said cheque payments. In the absence of any incriminating information in the said seized document, the same cannot be relied upon for drawing any inference regarding the quantum of on-money payment and the period during which, such on-money payments were made. Therefore, he submitted that the reliance placed by the PCIT on the said seized document for the purpose of arriving at the finding that, on-money payments were made for the assessment year 2018-2019 and for holding that the assessment order u/sec.153A in the case of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed by the Assessing Office for the assessment year 2020-2021 and 2021-2022 in the case of 08 Group companies submitted that, the Assessing Officer has discussed the issue thread bear and came to the conclusion that, on-money to the extent of Rs. 32.66 crores is assessable in the hands of 08 Group companies and at the time of assessment proceedings, the Assessing Officer was having the benefit of the statement recorded from Shri J. Anirduh Reddy and, therefore, the PCIT cannot allege that the Assessing Officer has not considered the relevant information to assess the on-money payment made for purchase of land. Therefore, he submitted that the assumption of jurisdiction and consequent revision order passed by the PCIT is totally on assumption without there being any evidences to suggest that the assessee has paid on-money for the assessment year 2018-2019 and thus, the order passed by the PCIT should be set-aside. 9. The Learned CIT-DR Shri B Bala Krishna, on the other hand, relied on the orders of the PCIT and submitted that the statute did not explicitly made it clear that if an assessment order passed by the Assessing Officer with the approval of JCIT u/sec.153D of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essing Officer has passed the assessment order without considering the relevant materials which is evident from the fact that although, as per the statement of Shri J. Anirudh Reddy total on-money paid for purchase of lands was at Rs. 41.30 crores, but, the Assessing Officer assessed total on-money in the hands of 08 different companies for Rs. 32.66 crores only on the basis of admission of Shri MSN Reddy, even though, remaining Rs. 10.14 crores is unexplained. Since the Assessing Officer has not considered the issue in light of relevant evidences, the assessment of total on-money paid by the assessee, is under assessed which resulted an erroneous order passed by the Assessing Officer caused prejudice to the interest of Revenue. The PCIT after considering the relevant facts has rightly set-aside the assessment order passed by the Assessing Officer and thus, the order of PCIT should be upheld. 10. We have heard both the parties, perused the material on record and the orders of the authorities below. The PCIT has invoked his jurisdiction u/sec.263 of the Act and set-aside the assessment order dated 01.04.2023 passed by the Assessing Officer u/sec.153A of the Act on the ground that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer is erroneous and further (2) It is prejudicial to the interest of revenue. Unless the PCIT makes-out a case that twin conditions mentioned therein are satisfied, the PCIT cannot assume his revisionary jurisdiction and revise the assessment order passed by the Assessing Officer in terms of sec.263 of the Act. 12. The PCIT relied on the seized material which is non-incriminating in nature for rendering the finding that the assessment made u/s 153A for A.Y 2018-19 is erroneous and prejudicial to the interests of revenue in order to exercise the powers of revision u/s 263 of the act. In our considered view, the revision order passed by the PCIT is not sustainable in the facts and circumstances of the case, since the assessment order sought to be revised by him cannot be regarded as erroneous and prejudicial to the interests of revenue on the basis of the seized material and sworn statements relied by him. The sole seized document relied on by the PCIT in the revision order cannot be considered to be in the nature of "incriminating material" since the same merely contains the details of cheque payments made for purchase of lands at Rangareddyguda, which are routed through the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eddy contained an internal contradiction, which has rendered the statement as unreliable for drawing any conclusion regarding the period during which on-money payments were made. Moreover, the claim that on-money payments in cash were received by him during the period from June 2016 to July 2017, when the facts available on record unmistakably show that the registration of the lands at Rangareddyguda took place during the previous years relevant to A.Ys 2020-21 and 2021-22, runs completely contrary to the prevailing commercial practice of making on-money payments closer to the date of registration of lands. Such a claim which is against the prevailing commercial practice needs to backed by documentary evidence in order to be considered as reliable and acceptable, which is absent in the present case. Further, it may be seen on perusal of the answer given by Sri.J.Anirudh Reddy to Q.No.11 that the same is inconsistent with and contradictory to the answer given by him to Q.No.10 regarding the quantum of on-money payments received by him. In his reply to Q.No.10, Sri.J.Anirudh Reddy stated that he received Rs. 21 crores through RTGS/Cheques and Rs. 42.80 crores through cash. However, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order that Sri.M.S.N.Reddy has confirmed in his sworn statement dated 27.02.2021 regarding the correctness of the statements of Sri.M.Uday Kumar Reddy and Sri.J.Anirudh Reddy that on-money payments in cash for purchase of Rangareddyguda lands were made during the period from June 2016 to July 2017, we find that said averment is totally incorrect on facts. It may be seen that in Q.No.13 of the statement dated 27.02.2021, Sri.M.S.N.Reddy was shown the answers given by Sri.M. Uday Kumar Reddy to Q.Nos.24 to 27 only of his sworn statement dated 25.02.2021 and Sri.M.S.N.Reddy stated in his response that what has been stated by Sri.M.Uday Kumar Reddy in his answers to the said questions is correct. However, since Sri.M. Uday Kumar Reddy did not state anywhere in his replies to the said questions that the on-money payments were made during the period from June 2016 to July 2017, the answer given by Sri.M.S.N.Reddy to Q.No.13 cannot be considered to be confirming the correctness of the said period of payment of on-money payments. The conclusion drawn by the PCIT that Sri.M.S.N.Reddy had agreed with the period of payment of on-money to be June 2016 to July 2017 as deposed by Sri.M.Uday Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified and accepted by the AO during the course of the assessment proceedings u/s 153C in the cases of eight group companies which purchased the lands at Rangareddyguda. Hence, it is evident that the quantum of on-money payments of Rs. 42.80 crores stated to have been received by Sri.J.Anirudh Reddy as per his sworn statement is based on a wrong factual premise of purchase of 440 acres of land, instead of 326 acres of land actually purchased by the MSN group companies. If the quantum of on-money payments is correctly computed based on 326 acres of land actually purchased by the group companies, the same works out to Rs. 32,66,77,750/- only as per the details furnished by Sri.M.S.N.Reddy in his answer to Q.No.13 of his sworn statement dated 27.04.2021 and the working shown by the AO in the assessment orders u/s 153C passed in the cases of the eight group companies which purchased the said lands. Further, though Sri.M.S.N.Reddy stated in his reply to Q.No.13 of his statement dated 27.02.2021 that what has been stated by Sri.M.Uday Kumar Reddy in his answers to Q.Nos.24 to 27 is correct, the same cannot be regarded as confirming the quantum of on-money payments at Rs. 42.80 crores sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the seized material regarding the payment of on-money to the tune of Rs. 42.80 crores for the purchase of lands at Rangareddyguda, which is corroborated by the fact that no such material has been brought on record by the PCIT in the revision order. Therefore, we are of the considered view that the revision order which relies solely on sworn statements is unsustainable in law, since it is a settled law that the addition made in search assessments based solely on statements recorded during the search, which are not based on incriminating evidence unearthed during the search, is legally untenable. 18. The appellant places reliance on certain judicial precedents in support of the said contention. In the case of CIT v. Harjeev Aggarwal [2016] 70 taxmann.com 95 (Delhi), the Hon'ble Delhi High Court held that statements recorded u/s 132(4) which are on a standalone basis without reference to any other material discovered during the search would not empower the AO to make block assessment merely because any admission was made by the assessee during the search operation. The Hon'ble High Court held that the undisclosed income of an assessee has to be computed on the basis of ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO recorded consolidated satisfaction notes u/s 153C for A.Ys 2015-16 to 2021-22 in the cases of the eight group companies which purchased the lands at Rangareddyguda, based on the material seized during the course of the search in the case of MSN Laboratories Ltd and its associated concerns and completed the assessments u/s 153C for the said assessment years. In the satisfaction notes of the eight group companies, the AO recorded that the on-money payments for purchase of lands at Rangareddyguda were made during the A.Y 2020- 21/2021-22 as the case may be, as per the seized material and the sworn statements and the same need to be brought to tax in the hands of the said assessee's for the A.Y 2020- 21/2021-22, since the seized material has a bearing on the determination of total income of the said assessee's for the A.Y 2020-21/2021-22. Further, in the assessments made u/s 153C for the A.Y 2020-21/2021-22 in the cases of the eight group companies, the AO made the addition u/s 69 towards the on-money payments made in cash for purchase of lands at Rangareddyguda by the said companies and the aggregate addition made by the AO in all the eight cases put together amounted to Rs. 32, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o.34 by showing the statement of Sri.J.Anirudh Reddy. His reply to the said effect does not carry evidentiary value due to this reason. Further, Sri.M.S.N.Reddy did not make any comments with regard to the quantum of on-money payments and the period of such payments, when he was confronted with the replies to Q.Nos.24 to 27 of the statement of Sri. M. Uday Kumar Reddy, in Q.No.13 of his statement dated 27.02.2021. Though he stated in his response that what has been stated by Sri.M.Uday Kumar Reddy is correct, it did not amount to any admission with regard to the quantum and period of on-money payments since nothing was stated by Sri.M.Uday Kumar Reddy in his replies to Q.Nos.24 to 27 of his statement regarding the said matters. Further, as regards the reply given by Sri.M.S.N.Reddy to Q.No.15 of his statement dated 27.02.2021 on being shown the replies given by Sri.J.Anirudh Reddy to Q.Nos. 10 to 12 of his statement, it may be seen that he confirmed the total payment of 63.80 crores only by explicitly multiplying the agreed extent of land of 440 acres and the agreed sale consideration of Rs. 14.50 lakh per acre. The said confirmation is patently incorrect on facts since the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -21 and 2021-22 when the lands were registered. The AO has taken a conscious decision in this respect after considering all the relevant evidences as referred to by him in the assessment orders and applying his mind to the same. The fact that the JCIT has given prior approval u/s 153D to the said assessment orders u/s 153C for A.Y 2020-21/2021-22 shows that the JCIT has also applied his mind to the material cited in the assessment orders consisting of the seized material, sworn statements and the affidavit. Therefore, in our considered view, the AO has adopted one of the plausible views on the basis of the said material after necessary application of mind and appreciation of evidences that the aggregate on-money payments for purchase of lands at Rangareddyguda amounted to Rs. 32,66,77,750/- only and the same were made during the previous year relevant to A.Y 2020- 21/2021-22. However, the PCIT has taken another view that the aggregate on-money payments for purchase of lands at Rangareddyguda amounted to Rs. 42.80 crores and the same were made during the previous years relevant to A.Ys 2017-18 and 2018-19. The said view was taken based on his appreciation of the seized document refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such ground is not available for revising the orders in view of the judgments of the Hon'ble Supreme Court in the cases of Malabar Industrial Co. Ltd v. CIT (supra) and Max India Ltd (supra). The said legal proposition was also laid down by the Hon'ble jurisdictional Andhra Pradesh and Telangana High Court in the case of CIT v. Srinivasa Hatcheries (P.) Ltd [2015] 60 taxmann.com 207 (Andhra Pradesh and Telangana). The Hon'ble High Court held therein that the principle governing the exercise of power in a revision u/s 263 is to the effect that where two views of a particular aspect are possible for an Assessing Officer and he has chosen one view, the Commissioner cannot reopen the matter u/s 263 on the ground that another view is possible. Further, the issue was dealt by the Hon'ble Andhra Pradesh High Court in the case of Spectra Shares & Scrips (P.) Ltd v. CIT [2013] 36 taxmann.com 348 (Andhra Pradesh) wherein it was held that an order where the assessing officer has adopted one of the courses permissible in law and it has resulted in loss of Revenue or where two views are possible and the assessing officer has taken one view with which the Commissioner does not a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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