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TMI Blog2025 (5) TMI 1401X X X X Extracts X X X X X X X X Extracts X X X X ..... n individual engaged in real estate brokerage through his proprietary concern namely City Estate Management. A search and seizure operation under section 132 of the Act was conducted on 28.09.2021 in the case of B Safal Group and City Estate Management Group. During the course of the search, various incriminating documents were found from the premises of the assessee and associated individuals, notably Shri Divyang Vyas. The seized documents primarily included: * "Inquiry Registers" (Annexure A/8 to A/11) containing property details such as plot numbers, rates, and broker details. * Loose papers indicating brokerage receipts on high-value property transactions. * Rough jottings of brokerage-sharing arrangements with associates. 2.1. These documents related to various transactions of lands, commercial buildings and plotting schemes carried out during Asst. Years 2019-20 to 2022-23. Based on the seized materials reassessment proceedings were initiated by issuing notice under sections 148 of the Act. In response assessee filed Returns of Income and the Ld AO concluded the reassessments by observing that the assessee was the key person orchestrating brokerage deals on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... v Shah when no evidence relating to alleged brokerage or any other incriminating material was found during the course of search from the possession of the appellant. 4. The appellant craves leave to add alter amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 4.1. The Grounds of Appeal raised by the Revenue in ITA No. 1896/Ahd/2024 for A.Y. 2021-22 are as follows: "1. The Ld. CIT(A) has erred in observing that AO was not justified in taxing brokerage income on entire deal value recorded in the documents found during the course of search at assessee's premises ignoring the detailed reasoning given by the A.O. 2. The Ld.CIT(A) has erred in restricting the addition of Rs. 4,96,30,739/- made by the AO u/s. 69A on account of undisclosed brokerage income calculated at 1% of the total transaction value to mere Rs. 12,40,768/-, i.e. 0.075% of the total transaction value, and further confirming 80% of the same in the assessee's hands that too 28 of the Act without any basis. 3. The Ld.CIT(A) has erred in considering the addition on account of undisclosed brokerage income u/s. 28 of the Act instead of section 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in the return of income on year to year basis. And accordingly, all final transaction that has been transacted through the ssc has been offered and disclosed in the return of income Therefore, if the answer for evidence that has earned brokerage income, the presumption made by the land seven point percent, 5% of the total encourage resulting in sales were attributed to the ssc. And 100% of the executed deals for the associated 2122 are accordingly estimated at what percent brokerage income on such transactions was incorrect and without any legal cases. Whereas let us take a per estimated brokerage income from executed deals was estimated at 1% of the 2.5% of the entire day for all the years. Therefore, based on the above arguments submitted the lower authority, despite their odd possible efforts, could not corroborate any cinema transaction, haven't been executed through the SSC as a broker. An arbitrary estimation of brokerage income should not be perpetuated as it is not sustainable in law. 5.2. Further learn at CIT appeal. At para #5.3 helped that. There are instances where there is substantial gap of six to seven years between the inquiry and actual transaction, which make ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been received. Further, it is also seen in para 3.4.2. of the assessment order that the Ld AO had tabulated 41 lands/plots. But it is beyond comprehension as to why the AO failed to verify even a single transaction. It is also not clear that out of total transactions of brokerage, to how many parties, notices u/s.133(6) of the Act were issued for this assessment year. Further, the assessment order is silent about the fact when such notices were issued and why other recourse available with the Revenue were not resorted to, for the verification of the deals, whether executed through the assessee as the broker or not. Needless to say, that it was the onus of the Revenue to make proper verification as no evidence of execution of deals through the broker was found during the course of search. When no credible evidences of unaccounted investments/earning of brokerage income was unearthed during the search proceedings, the question of making addition of brokerage on presumptions and assumptions should not survive. 7.1. The addition made by the Ld AO is clearly based of nonresponse to the notice u/s.133(6) of the Act which itself shows that no proper enquiry/verification was made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed after appreciating the evidence on record, does not give rise to any question of law, much less, a substantial question of law so as to warrant interference. The appeals, therefore, fail and are accordingly dismissed. [Para 14] 7.3. In light of the above facts as well as discussion we are inclined to agree with the arguments advanced by the Ld. AR and direct the Ld AO to delete the entire addition made based on the inquiry registers unearthed during the course of search proceedings. In result the Ground No 1 to 3 of Revenue appeal is dismissed and Ground No 2 filed by the assessee stands allowed. 8. Coming to ground no.4, raised by the Revenue, namely deleting the addition of Rs. 43,50,000/- u/s.69A r.w.s. 115BBE of the Act on account of unexplained and unaccounted brokerage income ignoring the seized material & statement recorded during/post search proceedings. 8.1. It is noted that the Department has challenged the deletion of addition of Rs. 43.50 lacs u/s.69A r.w.s. 115BBE of the Act on account of unexplained and unaccounted brokerage income. It has already been discussed at length in the foregoing paragraphs that the assessee is a broker and any income determined on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted basis from the total deal value on the basis of inquiry register (data bank) particularly when no evidence relating to alleged caring of brokerage or any other incriminating material was found during the course of search and relied upon by the Assessing Officer in the Assessment Order. 3. In law and in facts and circumstances of the case of the appellant, the Ld. CIT(A) has erred that the appellant had received alleged brokerage on the basis of rough jottings found from Divyang Vyas when no evidence relating to alleged brokerage or any other incriminating material was found during the course of search from the possession of the appellant. 4. In law and in facts and circumstances of the case of the appellant, the Ld. CIT(A) has erred that appellant has received alleged unaccounted Brokerage income merely on the assumption that 50% of the total transactions of the project were carried out through appellant and further allocated such brokerage income into two assessment years and confirm the value of the scheme at the rate of Rs 7000 per sq. feet (including all the charges). 5. The appellant craves leave to add, alter or amend and/or withdraw any ground or grounds of appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ld. Counsel further submitted that the details which have been mentioned in seized material do not indicate the name of the property, the details of purchaser/seller and therefore, question of making any addition based on such loose paper is uncalled for. Further, such seized material is not signed and not specifically dated. At most the notings which have been made on pages 57 of Annexure A 3 are merely instances reproduced in the loose paper and do not indicate or lead to a conclusion that the assessee could have earned unaccounted brokerage income was from any of the deals. Further, Ld. Counsel submitted that both the lower authorities were failed to bring any corroborative evidence that notings referred in seized material are actually dealt through the assessee as a Broker. Further, Ld. Counsel also submitted that, Ld. CIT(A) has confirmed the addition of Rs. 14,00,000/- based on the merely word "RECEIVED" written besides the total amount, assuming such amount is received without any corroborative evidence. However, such observation is again based on assumption and surmises without any corroborative or link with actual deal executed. Therefore, Ld. Counsel pleaded that the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the order of CIT(A). 17. We have heard rival submissions at length. Ld. DR could not bring any evidence on record to justify that any of the unit sold by the SKZ developer LLP are through the assessee as a Broker. We also found that none of the lower authorities could bring evidence of any deal is executed through the assessee. Therefore, based on our extensive finding given supra, we hereby direct Ld. AO to delete the entire addition and therefore this Ground No.4 stands allowed. 18. In the result, the appeal filed by the assessee in ITA No. 1688/Ahd/2024 for AY 2019-20 is Partly allowed. 19. Now coming to Assessee's appeal for AY 2020-21 for ITA 1689/Ahd/2024. Grounds of Appeal raised by the assessee is reproduced as under: 1. In the facts and circumstances of the case, the Ld. CIT(A) ought to have quashed the assessment being void ab initio, illegal, without jurisdiction and not following the principle of natural justice. 2. In law and in facts and circumstances of the case of the appellant, the Ld. CIT(A) has erred in holding that the appellant had received brokerage on estimated basis from the total deal value on the basis of inquiry register (data bank) particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the hands of assessee based on page no 9 of A-3, where noting of Rs. 9,47,900/- is jotted below the 2% written in such loose sheet. Ld AR the assessee submitted that, area mentioned in the both loose sheets are different. Further, nowhere commission or brokerage word is mentioned in loose sheet relied by AO for making addition. Ld. AO himself has assumed that Rs. 9,47,900/- is amount of brokerage and the share of the assessee is 80% amounting to Rs. 7,58,320/-. Ld. Counsel also submitted that, none of the party has accepted in his statement that 2% amount of Rs. 9,47,900/- is brokerage amount. Hence, addition made by AO and confirmed by the CIT(A) is without any basis and therefore the same shall be deleted. 22. On the other hand, Ld. DR has relied upon the order of CIT(A). 23. We found that, Ld. AO could not bring any evidence that amount of Rs. 9,47,900/- represents brokerage income. Revenue has merely relied upon the loose sheet found during the course of search without any efforts that income has been earned. It has also been mentioned that document has been executed but there is no evidence that has been brought by authorities that the deal has been executed through the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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