Appeal details
Counselvise Citation
[2015] 140 COUNSELVISE.COM (IT) 86902 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 2 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
04-03-2015
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
H
Next Hearing Date
07-10-2015
Assessment Year
2007-2008
Appeal Filed On
01-06-2012
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH H NEW DELHI BEFORE : SHRI C.M. GARG , JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 1504 & 1505/DEL./2012 ASSTT. YEAR : 2007 - 08 & 2008 - 09 A.C.I.T., CENTRAL CIRCLE - 22, VS. (1). VIJETA PROPERTIES PVT. LTD., NEW DELHI. L - 4, GREEN PARK EXTENSION, NEW DELHI. [PAN: AABCV 3630 P] ITA NO. 2684 & 2683/DEL./2012 ASSTT. YEAR : 2007 - 08 & 2008 - 09 A.C.I.T., CENTRAL CIRCLE - 2 2, VS. (2). RAM KUMAR SHOKEEN, NEW DELHI. D - 9, PUSHPANJALI FARMS, BIJWASAN, NEW DELHI. [PAN: A TSPS 5897A ] (APPELLANT) (RESPONDENT S ) APPELLANT BY : SMT. SUNITA KEJRIWAL, CIT/DR RESPONDENT S BY : SHRI RAKESH GUPTA, ADVO CATE & SHRI VED JAIN, CA DATE OF HEARING : 08.01.2016 DATE OF PRONOUNCEMENT : 04.03 .2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS BUNCH OF FOUR APPEALS BY TWO SEPARATE ASSESSEES AGAINST SEPARATE ORDERS DATED 19.01.2012 AND 23.03.2012 OF LEARNED CIT(A) - III, DELHI FOR THE ASSESSMENT YEARS 2007 - 08 AND 2008 - 09. SINCE THE COMMON QUESTIONS OF LAW ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 2 AND FACTS ARE INVOLVED IN ALL THESE APPEALS, THEREFORE, FOR SAKE OF CONVENIENCE AND BREVITY, ALL THESE APPEALS ARE BEING DECIDED BY THIS CONSOLIDAT ED ORDER. 2. THE BRIEF FACTS LEADING TO THE PRESENT CASES ARE THAT A SEARCH OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF SH. SANDEEP SINGH KHINDA AND MS. SAMTA KHINDA ON 6 TH NOVEMBER, 2008. DURING THE COURSE OF THE SEARCH A COMPUTER PRINTOUT PAGE WAS TAKEN AND SEIZED FROM THE COMPUTER/ LAPTOP OF SH. SANDEEP SINGH KHINDA SHOWING CERTAIN DETAILS AS MENTIONED AT PAGE NO. 5 OF THE APPELLATE ORDER. ON THE BASIS OF THIS DOCUMENT IT WAS INFERRED THAT THE SAID DOCUMENT SHOWS SALE CONSIDERATION FOR PR OPERTY NO. D - 17, PUSHPANJALI, NEW DELHI FOR A SUM OF RS.25.25 CRORE. 3. THE AO WAS OF THE VIEW THAT THIS PROPERTY NO. D - 17, PUSHPANJALI, NEW DELHI WAS PURCHASED BY M/S NIMITAYA PROPERTIES LTD. FROM SH. CHANDER PRAKASH GUPTA ON 15.04.2005. THEREAFTER THI S PROPERTY WAS SOLD BY M/S NIMITAYA PROPERTIES LTD. TO MS. SUDIKSHA SINGH FOR RS.2 CRORE AND MS. SUDIKSHA SINGH THEREAFTER HAS SOLD THIS PROPERTY TO M/S VIJETA PROPERTIES PVT. LTD. FOR A CONSIDERATION OF RS.4 CRORE ONLY AS PER THE SALE DEED DATED 27.02.20 08. THE AO WAS OF THE VIEW THAT AS PER THE ABOVE STATED SEIZED DOCUMENT FROM THE PREMISES OF KHINDA GROUP ON WHICH SEARCH WAS CARRIED OUT, THE TOTAL SALE CONSIDERATION OF THIS PROPERTY HAS BEEN AGREED TO AT RS.25 ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 3 CRORE. ON THIS BASIS THE AO TOOK INTO C ONSIDERATION THE SALE CONSIDERATION OF RS.25 CRORE AS AGAINST RS.4 CRORE DECLARED IN THE SALE DEED. THE AO FURTHER CONSIDERED A SUM OF RS.25 LAKHS AS COMMISSION AND ACCORDINGLY THE DIFFERENCE AMOUNT OF RS.21.25 CRORE WAS CONSIDERED TO BE THE SALE CONSIDER ATION PAID OUTSIDE THE BOOKS OF ACCOUNT. SINCE THIS CONSIDERATION WAS SPREAD OVER TWO YEARS, A SUM OF RS.3.5 CRORE WAS ADDED IN THE ASSESSMENT YEAR 2007 - 08 AND A SUM OF RS.17.75 CRORE WAS ADDED IN ASSESSMENT YEAR 2008 - 09 ON SUBSTANTIVE BASIS IN THE CASE O F M/S VIJETA PROPERTIES PVT. LTD. (RESPONDENT NO. 1) AND S INCE THE MR. RAM KUMAR SHOKEEN (RESPONDENT NO. 2) WAS A DIRECTOR IN M/S VIJETA PROPERTIES PVT. LTD. DURING THOSE YEARS PROTECTIVE ADDITION OF THESE AMOUNTS WAS MADE IN THE HANDS OF RESPONDENT NO. 2, SHRI RAM KUMAR SHOKEEN . 4. IN THE CASE OF RESPONDENT NO. 2, A FURTHER ADDITION OF RS.82,38,750/ - WAS MADE ON PROTECTIVE BASIS IN ASSESSMENT YEAR 2007 - 08 BY THE AO IN RESPECT OF ANOTHER PROPERTY PURCHASED BY M/S SUMESH REALTORS PVT. LTD. FROM SMT. ANIT A RANI BY ASSUMING THAT M/S SUMESH REALTORS PVT. LTD. WOULD HAVE PAID THIS AMOUNT OVER AND ABOVE THE CONSIDERATION OF RS.3 CRORE. WHILE MAKING THIS ADDITION THE AO TOOK INTO CONSIDERATION THE FACT THAT SMT. ANITA RANI HAS TAKEN A BANK LOAN AGAINST THIS PR OPERTY ON 14.05.2004 AND AT THAT ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 4 TIME THE BANK HAS VALUED THIS PROPERTY FOR THE PURPOSE OF GIVING LOAN AT RS.3,05,91,000/ - . SINCE THIS PROPERTY HAS BEEN SOLD BY SMT. ANITA RANI AFTER A PERIOD OF MORE THAN TWO YEARS, THE AO ASSUMED THAT THERE WOULD HAVE BE EN AN APPRECIATION OF AT LEAST 25% (I.E. 10% PER YEAR) AND ON THIS BASIS HE CALCULATED THE VALUE OF THE PROPERTY ON THE DATE ON WHICH M/S SUMESH REALTORS PVT. LTD. PURCHASED IT FROM SMT. ANITA RANI AT RS.3,82,38,750/ - . SINCE THE SALE CONSIDERATION STATED IN THE SALE DEED WAS RS.3 CRORE, THE BALANCE AMOUNT OF RS.82,38,750/ - WAS ASSUMED TO HAVE BEEN RECEIVED BY SMT. ANITA RANI FROM M/S SUMESH REALTORS PVT. LTD. 5. AGGRIEVED BY THE ORDER S OF THE AO BOTH THE ASSESSEE S CAME IN APPEAL BEFORE THE LEARNED CIT(A). THE CIT(A) VIDE IMPUGNED ORDER S ALLOWED THE APPEAL S OF BOTH THE ASSESSEE S HOLDING THAT ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE S AS THE DOCUMENT ON THE BASIS OF WHICH THE ADDITIONS HAVE BEEN MADE DOES NOT BELONG TO THE RESPONDENTS . FURTHER A DDITION OF RS.82,38,750/ - MADE IN THE HANDS OF RESPONDENT NO. 2 WAS ALSO DELETED BY OBSERVING THAT THE ADDITION IS ON ESTIMATE BASIS WITHOUT THERE BEING ANY MATERIAL OF ANY EXCESS PAYMENT OVER AND ABOVE WHAT HAS BEEN STATED IN THE SALE DEED. IN THAT MATTE R, THE LEARNED CIT(A) ALSO HELD THAT PROPERTY HAS BEEN PURCHASED BY M/S SUMESH REALTORS PVT. LTD. FROM SMT. ANITA RANI AND THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 5 DIRECTOR AND COMPANY ARE TWO DISTINCT LEGAL ENTITIES AND THEREFORE ADDITION IN THE HANDS OF THE DIRECTOR ON THE BASIS OF A PROPE RTY PURCHASED BY THE COMPANY CANNOT BE SUSTAINED. 6. AGGRIEVED BY THE ORDER S OF THE LEARNED CIT(A) REVENUE IS IN APPEAL S ON THE FOLLOWING GROUNDS : GROUNDS IN VIJETA PROPERTIES PVT. LTD. (RESPONDENT NO. 1) A.Y. 2007 - 08 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,50,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT BY HOLDING THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE REQUIREMENT FOR INITIATING PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 HAS NOT FULFILLED IN THIS CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE, THE CIT(A) HAS NOT CORRECTLY INTERPRETED THE PROVISIONS OF SECTION 153C R.W.S. 153A OF THE INCOME TAX ACT, 1961. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO INT IMATE CONNECTION BETWEEN THE SEIZED DOCUMENT AND THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE PROPERTY MENTIONED IN THE SEIZED DOCUMENT HAS BEEN PURCHASED BY THE ASSESSEE AND THE PAYMENTS MADE THROUGH CHEQUES THERETO HAVE BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO EVIDENCE TO THE EFFECT THAT ASSESSEE HAS PAID THE CASH PORTION RECORDED IN THE SEIZED DOCUMENT, WITHOUT APPRECIATI NG THE SETTLED POSITION OF LAW THAT THE SEIZED DOCUMENT SHOULD BE READ IN TOTALITY AND WHEN CHEQUE PAYMENTS MENTIONED IN THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 6 DOCUMENT HAVE BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE, IT CANNOT DENY THE CASH PORTION MENTIONED THEREIN. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HIMSELF HAS CONFIRMED THE ADDITION OF RS.3.50 CRORES MADE IN THE HANDS OF SH. SANDEEP SINGH KHINDA (ON PROTECTIVE BASIS) ON ACCOUNT OF UNACCOUNTED RECEIPTS ON THE BASIS OF SAME DOCUMENTS THUS VALIDATING THE TRA NSACTION RECORDED IN THE SEIZED DOCUMENT AND THE STAND TAKEN BY THE ASSESSING OFFICER. 7. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 7. COMMON GROUNDS HAVE BEEN RAISED BY REVENUE IN THE CASE OF RESPONDENT NO. 1 FOR THE A.Y. 2008 - 09 BARRING THE DIFFERENCE IN THE QUANTUM OF ADDITION, WHICH AMOUNTS TO RS.17,75,000/ - GROUNDS IN RAM KUMAR SHOKEEN: A.Y. 2007 - 08 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.3,50,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT BY HOLDING THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON F ACTS IN HOLDING THAT THE REQUIREMENT FOR INITIATING PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 HAS NOT FULFILLED IN THIS CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS NOT CORRECTLY INTERPRETED THE PROVISIONS OF SECTION 1 53C R.W.S. 153A OF THE INCOME TAX ACT, 1961. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO INTIMATE CONNECTION BETWEEN THE SEIZED DOCUMENT AND THE ASSESSEE WITHOUT APPRECIATING T HE FACT THAT THE PROPERTY MENTIONED IN THE SEIZED DOCUMENT HAS BEEN PURCHASED BY THE COMPANY IN WHICH ASSESSEE IS A DIRECTOR AND THE PAYMENTS ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 7 MADE THROUGH CHEQUES IN RESPECT OF THIS PROPERTY HAVE BEEN REFLECTED IN THE BOOKS OF THE COMPANY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO EVIDENCE TO THE EFFECT THAT ASSESSEE HAS PAID THE CASH PORTION RECORDED IN THE SEIZED DOCUMENT, WITHOUT APPRECIATING THE SETTLED POSITION OF LAW THA T THE SEIZED DOCUMENT SHOULD BE READ IN TOTALITY AND WHEN CHEQUE PAYMENTS MENTIONED IN THE DOCUMENT HAVE BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE, THE CASH PORTION MENTIONED IN THE SAME DOCUMENT CANNOT BE DENIED. 6. ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE, THE CIT(A) HIMSELF HAS CONFIRMED THE ADDITION OF RS.3.50 CRORES MADE IN THE HANDS OF SH. SANDEEP SINGH KHINDA (ON PROTECTIVE BASIS) ON ACCOUNT OF UNACCOUNTED RECEIPTS ON THE BASIS OF SAME DOCUMENTS THUS VALIDATING THE TRANSACTION RECORDED IN THE SEIZED DOCUMENT AND THE STAND TAKEN BY THE ASSESSING OFFICER. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.82,38,750/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT IN FARM HOUSE. 8. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. A.Y. 2008 - 09 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.17,75,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED INVESTMENT BY HOLDING THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE ASSESSEE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE REQUIREMENT FOR INITIATING PROCEEDINGS U/S 153C OF THE INCOME TAX ACT, 1961 HAS NOT FULFILLED IN THIS CASE. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS NOT CORRECTLY INTERPRETED THE PROVISIONS OF SECTION 153C R.W .S. 153A OF THE INCOME TAX ACT, 1961. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 8 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO INTIMATE CONNECTION BETWEEN THE SEIZED DOCUMENT AND THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE PROPERTY MENTIONED IN THE SEIZED DOCUMENT HAS BEEN PURCHASED BY THE COMPANY IN WHICH ASSESSEE IS A DIRECTOR AND THE PAYMENTS MADE THROUGH CHEQUES IN RESPECT OF THIS PROPERTY HAVE BEEN REFLECTED IN THE BOOKS OF THE COMPANY. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THERE IS NO EVIDENCE TO THE EFFECT THAT ASSESSEE HAS PAID THE CASH PORTION RECORDED IN THE SEIZED DOCUMENT, WITHOUT APPRECIATING THE SETTLED POSITION OF LAW THAT THE S EIZED DOCUMENT SHOULD BE READ IN TOTALITY AND WHEN CHEQUE PAYMENTS MENTIONED IN THE DOCUMENT HAVE BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE, THE CASH PORTION MENTIONED IN THE SAME DOCUMENT CANNOT BE DENIED. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE CIT(A) HIMSELF HAS CONFIRMED THE ADDITION OF RS.17.50 CRORES MADE IN THE HANDS OF SH. SANDEEP SINGH KHINDA (ON PROTECTIVE BASIS) ON ACCOUNT OF UNACCOUNTED RECEIPTS ON THE BASIS OF SAME DOCUMENTS THUS VALIDATING THE TRANSACTION RECORDED IN THE S EIZED DOCUMENT AND THE STAND TAKEN BY THE ASSESSING OFFICER. 8. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTING THE ORDERS OF THE ASSESSING OFFICER, CONTENDED THAT THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT THIS DOCUMENT DOES NOT BELONG TO THE ASSESS E E S . IT WAS CONTENDED THAT THOUGH THIS DOCUMENT WAS FOUND ON THE SEARCH AT THE RESIDENTIAL PREMISES OF SH. SANDEEP SINGH KHINDA AND MS. SAMTA KHINDA THE SAME HAS EVIDENTI A RY VALUE AND CIT(A) WAS NOT CORRECT IN HOLDING THAT THIS DOCUMENT CANNOT BE MADE BASIS FOR MAKING ADDITION IN THE PROCEEDINGS UNDER SECTION 153C OF THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 9 INCOME TAX ACT. IT WAS FURTHER CONTENDED THAT RESPONDENT NO. 2 WAS A DIRECTOR IN M/S VIJETA PROPERTIES PVT. LTD. (RESPONDENT NO. 1) AT THAT POINT OF TIME AND SINCE THE PROPERTY WAS PURCHASED BY THE COMPANY, THE CONSIDERATION EITHER WOULD HAVE BEEN PAID BY THE COMPANY, M/S VIJETA PROPERTIES PVT. LTD. OR BY THE DIRECTOR, THAT IS WHY THE AO WAS CORRECT IN MAKIN G SUBSTANTIVE ADDITION IN THE HANDS OF M/S VIJETA PROPERTIES PVT. LTD. AND PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE. 9. AS REGARDS THE ADDITION OF RS.82,38,750/ - MADE IN THE CASE OF RESPONDENT NO. 2 IN A.Y. 2007 - 08, IT WAS SUBMITTED BY THE LD. DR THAT THE AO WAS JUSTIFIED IN MAKING THIS ADDITION ON THE BASIS OF A VALUATION DONE BY THE BANK AND THEN INCREASING THE SAME BY 25% BEING THE NORMAL APPRECIATION WHICH WOULD HAVE HAPPENED OVER A PERIOD OF 2 - 1/2 YEARS. 10 . THE LD. COUNSEL FOR THE RESPONDENT S, ON THE OTHER HAND, CONTENDED THAT THE IMPUGNED DOCUMENT DOES NOT BELONG TO ASSESSEES . THIS DOCUMENT HAS BEEN FOUND AT THE OFFICE PREMISES OF KHINDA GROUP AS IS EVIDENT FROM THE ASSESSMENT ORDER S WHICH WAS FOUND IN THE COMPUTER OF SH. SANDEEP SINGH KHI NDA AND FROM WHERE PRINT OUT HAS BEEN TAKEN. THIS DOCUMENT BELONGS TO SH. SANDEEP SINGH KHINDA AND BY NO STRETCH OF IMAGINATION IT CAN BE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 10 CONSIDERED TO BE BELONGING TO ANY OF THE RESPONDENTS HERE . IT WAS ALSO CONTENDED THAT IN A PROCEEDING UNDER SECTION 153C ADDITION CAN BE MADE ON THE BASIS OF A DOCUMENT FOUND DURING THE SEARCH WHICH DOES NOT BELONG TO THE SEARCHED PERSON BUT BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON. IN SUPPORT THEREOF RELIANCE WAS PLACED ON THE JUDGMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS PRIVATE LIMITED VERSUS ASSISTANT COMMISSIONER OF INCOME TAX & ANOTHER IN WP (C) NO. 414 OF 2014 DATED AUGUST 14, 2014. 10.1. IT WAS ALSO CONTENDED THAT NO SATISFACTION HAS BEEN RECORDED BY THE AO OF THE SEARCHED PERSON AND THE AO OF THE ASSESSEE WHICH IS A PRECONDITION FOR INITIATING PROCEEDING UNDER SECTION 153C. AS PER THE PROVISIONS OF SECTION 153C, THE AO OF THE SEARCHED PERSON FIRST HAS TO RECORD A SATISFACTION THAT THIS DOCUMENT BELONGS TO THE SEARCHED PER SON. THEREAFTER THE AO HAS TO RECORD SATISFACTION THAT THIS DOCUMENT BELONGS TO THE ASSESSEES AND ONLY THEREAFTER THE SEARCHED DOCUMENT HAS TO BE HANDED OVER TO THE AO OF SUCH ASSESSEE AND THE AO OF SUCH ASSESSEE HAS TO RECORD A SATISFACTION THAT THIS DOC UMENT IS AN INCRIMINATING MATERIAL AND HENCE PROCEEDINGS UNDER SECTION 153C ARE TO BE INITIATED. IN THESE CASES NO SUCH SATISFACTION HAS BEEN RECORDED. FOR THE ARGUMENTS SAKE EVEN IF RECORDING OF SUCH SATISFACTION IS TAKEN FOR GRANTED, ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 11 THERE CANNOT BE T WO SATISFACTIONS WITH RESPECT TO THE SAME DOCUMENT AND SAME INCOME FOR TWO DIFFERENT ASSESSEES, NAMELY VIJETA PROPERTIES PVT. LTD. AND ITS DIRECTOR. ON THIS GROUND ALSO THE ACTION OF THE AO IS LEGALLY UNSUSTAINABLE. 10.2 IT WAS FURTHER POINTED OUT THAT THE SEIZED DOCUMENT NOWHERE DEMONSTRATES THAT ANY CONSIDERATION HAS BEEN PAID BY ANY OF THE ASSESSEES AS MENTIONED IN THE SEIZED PAPER. THE AO ONLY ON SCORE OF SURMISES AND CONJECTURE, HAS INFERRED THE FIGURES AGAINST THE ASSESSEES AND WRONGLY MADE ALLEGA TIONS AGAINST BOTH THE ASSESSEES. THEREFORE, NO ADDITION CAN BE MADE ON THE BASIS OF AN ALLEGATION THAT THE CONSIDERATION PAID FOR THE PURCHASE OF SUCH PROPERTY IS LESS THAN WHAT HAS BEEN STATED IN THE SALE DEED IN THE HANDS OF EITHER RESPONDENT NO. 1 OR 2. IN SUPPORT, RELIANCE IS PLACED ON THE JUDGMENT IN THE CASE OF HALDIRAM FOODS PVT. LTD. VS. CIT 79 ITD 425. 10.3 IT WAS ALSO CONTENDED THAT NEITHER SELLER NOR THE BUYER HAS MADE ANY STATEMENT NOR ANY ENQUIRY HAS BEEN CONDUCTED ABOUT SUCH DOCUMENT. IT IS NOT A CASE WHERE SH. SANDEEP SINGH KHINDA FROM WHOSE LAPTOP THIS DOCUMENT WAS FOUND HAS STATED ANYTHING ADVERSE ABOUT THIS DOCUMENT. IT IS A CASE WHERE THE AO HAS FAILED TO BRING ANY MATERIAL OR EVIDENCE TO SUPPORT ITS ALLEGATION THAT ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 12 ANY CONSIDERATION AS SHOWN IN THE SEIZED DOCUMENTS HAS BEEN PAID EITHER BY VIJETA PROPERTIES OR BY ITS DIRECTOR RAM KUMAR SHOKEEN. 10.4 AS REGARDS THE ADDITION OF RS.82,38,750/ - MADE IN THE CASE OF RESPONDENT NO. 2 FOR A,Y, 2007 - 08, IT WAS STATED THAT THIS ADDITION HAS BEEN MADE BY INDULGING INTO SURMISES AND CONJECTURE ; (I) FIRSTLY THIS ADDITION CANNOT BE MADE IN THE HANDS OF THE ASSESSEE AS THIS PROPERTY HAS NOT BEEN PURCHASED BY THE ASSESSEE BUT BY M/S SUMESH REALTORS PVT. LTD. (II) NO MATERIAL OR EVIDENCE WAS FO UND DURING THE COURSE OF THE SEARCH OF ANY EXCESS PAYMENT BEING MADE OUTSIDE THE BOOKS OF ACCOUNTS. (III) NEITHER SELLER NOR BUYER HAS MADE ANY STATEMENT. (IV) THE AO HAS SIMPLY ASSUMED THE FIGURES ON THE BASIS OF THE BANK VALUATION CARRIED OUT TWO YEA RS BACK AND HAS ADDED 25% TO THAT VALUE WHILE MAKING THIS ADDITION. (V) AS PER THE PROVISIONS OF SECTION 45 READ WITH SECTION 48 THE CONSIDERATION HAS TO BE THE ACTUAL CONSIDERATION AND NOT THE CONSIDERATION WHICH IS NOT ACTUALLY RECEIVED BUT OUGHT TO BE RECEIVED. IN THIS REGARD RELIANCE HAS BEEN PLACED ON THE FOLLOWING JUDGMENTS: - (A) COMMISSIONER OF INCOME - TAX VERSUS PUNEET SABHARWAL [2011] 338 ITR 485 (DEL) (B) COMMISSIONER OF INCOME TAX VERSUS ABHINAV KUMAR MITTAL [2013] 351 ITR 20 (DEL) ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 13 (C) DEV KUMAR JAIN VERSUS INCOME TAX OFFICER AND ANOTHER [2009] 309 ITR 240 (DELHI) (D) COMMISSIONER OF INCOME - TAX DELHI VERSUS SHAKUNTALA DEVI [2009] 316 ITR 46 (DELHI) (E) COMMISSIONER OF INCOME - TAX VERSUS. SMT SURAJ DEVI [2010] 328 ITR 604 (DEL) 11. WE HAVE HEARD RIVAL SUBMISSIONS OF BOTH THE PARTIES, PERUSED THE ASSESSMENT ORDERS, IMPUGNED ORDERS AND THE CASE LAWS CITED. ON GOING THROUGH THE SAME WE NOTE THAT THE MAIN ISSUE INVOLVED IN THESE APPEALS IS THE ADDITION MADE ON THE BASIS OF DOCUMENT FOUND DURING THE COURSE OF THE SEARCH ON SH. SANDEEP SINGH KHINDA AND MS. SAMTA KHINDA. THE AO HAS MADE THE ADDITION BASED ON THIS DOCUMENT IN THE HANDS OF RESPONDENT NO. 1 ON SUBSTANTIVE BASIS AND RESPONDENT NO. 2 ON PROTECTIVE BASIS. THE CASE OF THE AO IS T HAT AS PER THIS DOCUMENT A SUM OF RS.25.25 CRORE HAS BEEN PAID FOR PURCHASE OF PROPERTY NO. D - 17, PUSHPANJALI, NEW DELHI BY VIJETA PROPERTIES PVT. LTD. SINCE THE ACTUAL SALE CONSIDERATION STATED IN THE SALE DEED IS ONLY RS.4 CRORE THE BALANCE AMOUNT HAS B EEN PAID OUTSIDE THE BOOKS OF ACCOUNT, THE DETAILS OF WHICH HAVE BEEN STATED IN THE SEIZED DOCUMENTS, IN CASH. SINCE THIS INVESTMENT HAS BEEN MADE OUTSIDE THE BOOKS OF ACCOUNTS THE SAME HAS BEEN TREATED AS UNDISCLOSED INCOME OF THE VIJETA PROPERTIES PVT. LTD. THE RESPONDENT NO. 2 BEING A DIRECTOR OF VIJETA PROPERTIES PVT. LTD. IN THOSE YEARS, ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 14 PROTECTIVE ADDITION HAS BEEN MADE IN HIS HANDS ALSO ON THE ASSUMPTION THAT IN CASE THE AMOUNT HAS NOT PAID BY VIJETA PROPERTIES PVT. LTD. THEN THE DIRECTOR WOULD HAV E PAID THIS AMOUNT. 12. NOW THE ISSUE TO BE ADJUDICATED IS WHETHER THE ACTION OF THE AO IN MAKING THIS ADDITION IN THE HANDS OF BOTH THE ASSESSEES ON SUBSTANTIVE AND PROTECTIVE BASIS IS LEGALLY SUSTAINABLE. THE ADMITTED FACTS ARE THAT THE SEARCH HAS BEEN CARRIED OUT ON 6 TH NOVEMBER, 2011 AT THE RESIDENTIAL PREMISES OF SH. SANDEEP SINGH KHINDA AND MS. SAMTA KHINDA. THIS DOCUMENT WAS FOUND IN THE COMPUTER / LAPTOP OF SH. SANDEEP SINGH KHINDA. NO SEARCH HAS BEEN CARRIED OUT ON VIJETA PROPERTIES PVT. LT D. NOR ON ITS DIRECTOR I.E. SH. RAM KUMAR SHOKEEN. IT IS ALSO AN ADMITTED FACT THAT THIS ASSUMPTION HAS BEEN FRAMED BY THE AO BY INVOKING PROVISIONS OF SECTION 153C OF THE ACT. THIS SECTION 153C READS AS UNDER: - 153C. (1) NOTWITHSTANDING ANYTHING CONTAI NED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT, - (A) ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING, SEIZED OR REQUISITIONED, BELONGS TO; OR (B) ANY BOOKS OF ACCOUNT OR DOCUMENTS, SEIZED OR REQUISITIONED, PERTAINS OR PERTAIN TO, OR ANY INFORMATION CONTAINED THEREIN, RELATES TO, A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN, THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS, SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 15 ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCO RDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSES SMENT YEAR OR YEARS REFERRED TO IN SUB - SECTION (1) OF SECTION 153A. PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SUB - SECTION (1) OF SECTION 153ASHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON. PROVIDED FURTHER THAT THE CENTRAL GOVERNMENT MAY BY RULES MADE BY IT AND PUBLISHED IN THE OFFICIAL GAZETTE, SPECIFY THE CLASS OR CLASSES OF CASES IN RESPECT OF SUCH OTHER PERSON, IN WHICH THE ASSESSING OFFICER SHALL NOT BE REQUIRED TO ISSUE NOTICE FOR ASSESSING OR REASSESSING THE TOTAL INC OME FOR SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUISITION IS MADE EXCEPT IN CASES WHERE ANY ASSESSMENT OR REASSESSMENT HAS ABATED. (2) WHERE BOOKS OF ACCOUNT OR DOCUMENT S OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB - SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO T HE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR - ( A ) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM, OR ( B ) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS EXPIRED, OR ( C ) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 16 SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN SECTION 153A. 13. AS PER THIS PROVISION OF SECTION 153C WHERE THE AO IS SATISFIED THAT ANY BOOKS OF ACCOUNT OR DOCUMENT SEIZED DURING THE COU RSE OF SEARCH BELONG TO A PERSON OTHER THAN THE PERSON REFERRED IN SECTION 153A I.E. PERSON SEARCHED, THEN SUCH BOOKS OF ACCOUNT OR DOCUMENT SEIZED IS TO BE HANDED OVER TO THE AO HAVING JURISDICTION OVER SUCH OTHER PERSON AND THE AO OF SUCH OTHER PERSON HA S TO PROCEED AGAINST SUCH OTHER PERSON AND ISSUE NOTICE FOR REASSESSING INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A IF THAT AO IS SATISFIED THAT THE DOCUMENT SEIZED HAVE A BEARING ON THE DETERMINATION OF THE TOTAL INCOME O F SUCH OTHER PERSON. THUS THE CONDITIONS TO BE SATISFIED FOR INVOKING THE PROVISIONS OF SECTION 153C ARE (I) THAT THE DOCUMENT SEIZED DURING THE SEARCH SHOULD BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED MEANING THEREBY THAT DOCUMENT SEIZED DOES NOT BELONG TO THE PERSON SEARCHED. (II) THE AO OF THE SEARCHED PERSON SHOULD BE SATISFIED AND ACCORDINGLY RECORD A SATISFACTION THAT THIS DOCUMENT FOUND DOES NOT BELONG TO THE SEARCHED PERSON BUT BELONGS TO THE OTHER PERSON I.E. ASSESSEE S . (III) THAT THE AO OF THE SEARCHED PERSON SHOULD HANDOVER THIS DOCUMENT TO THE AO OF SUCH OTHER PERSON. (IV) THE AO OF THE OTHER PERSON ON EXAMINATION OF THE DOCUMENT SHOULD FORM A VIEW THAT SUCH DOCUMENT HAS A BEARING ON THE DETERMINATION OF TOTAL INCOME OF SUCH OTHER PER SON. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 17 (V) THE AO OF SUCH OTHER PERSON SHOULD RECORD A SATISFACTION TO THIS EFFECT. (VI) THE AO OF SUCH OTHER PERSON THEN SHOULD ISSUE NOTICE AND COMPLETE ASSESSMENT IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT. 13.1 IT IS ONLY IN THE ABOVE CIRCUMSTANCES AND AFTER FULFILLING THE ABOVE CONDITIONS THE PROCEEDING UNDER SECTION 153C CAN BE INITIATED AND ASSESSMENT HAS TO BE FRAMED IN ACCORDANCE WITH PROVISIONS OF SECTION 153A OF THE ACT ON THE PERSON SEARCHED . 14. IN THE INSTANT CASES , AS IS EVIDENT FROM THE FACTS, THIS DOCUMENT WAS FOUND FROM THE NEITHER FROM THE PREMISES OF THE COMPANY M/S VIJETA PROPERTIES PVT. LTD NOR FROM ITS DIRECTOR . THERE IS NO SEARCH EITHER ON VIJETA PROPERTIES PVT. LTD. OR ITS DI R ECTORS. THIS DOCUMENT IS A PR INTOUT PAGE TAKEN FROM THE COMPUTER/LAPTOP OF SH. SANDEEP SINGH KHINDA ON WHOM THE SEARCH WAS CARRIED OUT. ON PERUSAL OF THIS DOCUMENT IT IS FOUND THAT THERE IS SOME NOTING MADE BY SH. SANDEEP SINGH KHINDA. THERE IS NO MATERIAL ON RECORD TO SHOW THAT MR. SANDEEP SINGH KHINDA HAS GIVEN ANY STATEMENT DISOWNING THIS DOCUMENT. NOR THE AO OF THE SEARCHED PERSON HAS STATED THAT THIS DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON. THUS IT CANNOT BE SAID THAT THIS ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 18 DOCUMENT DOES NOT BELONG TO SH. SANDEEP SINGH K HINDA. FURTHER IT CAN ALSO NOT BE SAID THAT THIS DOCUMENT BELONGS TO ANY OF THE RESPONDENTS HERE . IN THE ABSENCE OF FULFILLING THESE CONDITIONS WHICH IS PRE - REQUISITE, THE PROVISIONS OF SECTION 153C , IN OUR CONSIDERED OPINION, CANNOT BE INVOKED. 15. AS STATED HEREINABOVE, SECTION 153C, AS STOOD AT THE RELEVANT POINT OF TIME, IT IS VERY CLEAR THAT THE DOCUMENT SHOULD BELONG TO A PERSON OTHER THAN THE PERSON SEARCHED. SO THERE ARE TWIN CONDITIONS TO BE SATISFIED I.E. THE DOCUMENT DOES NOT BELONG TO TH E PERSON SEARCHED AND THE DOCUMENT BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON. IN THE PRESENT CASE BOTH THE CONDITIONS ARE NOT SATISFIED AS IS EVIDENT FROM THE DOCUMENT SEIZED AND ACCORDINGLY, WE ARE OF THE VIEW THAT THE LEARNED CIT(A) WAS JUSTIFI ED IN HOLDING THAT THIS PAGE CANNOT BE USED FOR ASSESSING THE INCOME OF THE APPELLANT BY INVOKING PROVISIONS OF SECTION 153C OF THE ACT. THE FINDINGS OF THE LEARNED CIT(A) RECORDED IN THIS BEHALF IN THE CASE OF RESPONDENT NO. 2 ARE AS UNDER: - I HAVE CARE FULLY GONE THROUGH THE FINDINGS OF THE AO AS WELL AS THE SUBMISSIONS MADE BY THE APPELLANT. THE BASIC AND PRIMARY ISSUE TO BE DECIDED IN THE FACTS OF THIS CASE IS WHETHER BASED ON THE COMPUTER PRINTOUT WHICH HAS BEEN TAKEN FROM THE CO M PUTER AT THE PREMISE S OF SH. SANDEEP SINGH KHINDA, WHO IS A THIRD PARTY TO THE IMPUGNED TRANSACTION, A LEGAL PRESUMPTION CAN BE DRAWN U/S 132(4A) AND 292C OF THE IT ACT AGAINST THE APPELLANT, WHO WAS DIRECTOR OF M/S VIJETA PROPERTIES PVT. LTD., THE COMPANY WHICH HAD PURCHASED THE IMPUGNED PROPERTY. IN MY CONSIDERED VIEW SINCE IT IS A FACT ON RECORD THAT THE SAID DOCUMENT HAS NOT BEEN FOUND FROM THE POSSESSION / CONTROL OF THE APPELLANT, NEITHER THIS PAGE BEARS THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 19 HANDWRITING OR SIGNATURE OF ANY OF THE DIRECTOR OF M/S VIJETA PROPERTIES PVT. LTD. WITH RESPECT TO THE TRANSACTIONS RECORDED ON PAGE 1 OF ANNEXURE 1 THEREFORE THERE IS CONSIDERABLE MERIT IN THE SUBMISSION OF THE APPELLANT THAT NO PRESUMPTION UNDER THE LAW UNDER SECTIONS 132(4A) AND 292C OF THE IT ACT WOULD APPLY WITH RESPECT TO THE IMPUGNED DOCUMENT OR CONTENTS THEREOF AGAINST THE ASSESSEE. FURTHER AS THERE IS NO EVIDENCE TO THE EFFECT THAT SEIZED DOCUMENT IS IN THE HANDWRITING OF THE APPELLANT AND NEITHER IT BEARS SIGNATURE OF ANY OF THE DIRECTORS OF M/S VIJETA PROPERTIES PVT. LTD. THE PURCHASER COMPANY, THEREFORE THE SAME ALSO CANNOT BE HELD AS BELONGING TO THE APPELLANT AND THEREFORE THE CONDITION PRECEDENT TO ISSUE OF NOTICE U/S 153C IS NOT IN EXISTENCE IN THE FACTS OF THE CASE. ACCORDINGLY, THE CONTENTS AN D NARRATION ON THESE PAGES CANNOT BE USED FOR ASSESSING THE INCOME OF THE APPELLANT BY INVOKING THE PROVISIONS OF SECTION 153C IN THE CASE OF THE APPELLANT WHICH MANDATES THAT THE DOCUMENT MUST BELONG TO THE APPELLANT IF IT IS FOUND AND SEIZED FROM A THI RD PARTY PREMISE AND IS TO BE CONSIDERED IN CASE OF THE APPELLANT WHILE FRAMING THE ASSESSMENT ORDER. THE DECISIONS IN VIJAY BHAI N. CHANDRANI VS. ACIT 38 DTR 225; SAIF ALI KHAN IN ITA NO. 1091/MUM/2009 ITAT MUMBAI AND MEGHMANI ORGANICS LTD. 36 DTR 187 HO LD THAT IT IS A CONDITION PRECEDENT FOR ISSUING NOTICE U/S 153C THAT THE DOCUMENT IN QUESTION SHOULD BELONG TO THE ASSESSEE IS THEREFORE SQUARELY APPLICABLE TO APPELLANT S CASE. THE RELEVANT PORTION OF FINDING IN CASE OF VIJAY BHAI N. CHANDRANI VS. ACIT 38 DTR 225 (GUJ. HIGH COURT) ARE AS UNDER: - 11. THE CONTROVERSY IN ISSUE PERTAINS TO THE INTERPRETATION OF THE PROVISIONS OF SECTION 153C OF THE ACT WHICH READS THUS: '153C. ASSESSMENT OF INCOME OF ANY OTHER PERSON. - NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG S OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 20 AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A.' 12. ON A PLAIN READING OF THE AFORESAID PROVISIONS IT IS APPARENT THAT SECTIONS 153A, 153B AND 153C LAY DOWN A SCHEME FOR ASSESSMENT IN CASE OF SEARCH AND REQUISITION. SECTION 153A DEALS WITH PROCEDURE FOR ISSUANCE OF NOTICE AND ASSESSMENT OR REASSESSMENT IN CASE OF THE PERSON WHERE A SEARCH IS INITIATED UNDER SECTION 132 OR BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS ARE REQUISITIONED UNDER SECTION 132A AFTER THE 31ST DAY OF MAY, 2003. SECTION 153B LAYS DOWN THE TIME LIMIT FOR COMPLETION OF ASSESSMENT UNDE R SECTION 153A. SECTION 153C WHICH IS SIMILARLY WORDED TO SECTION 158BD OF THE ACT, PROVIDES THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQU ISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A HE SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON. HOWEVER, THERE IS A DISTINCTION BETWEEN THE TWO PROVISIONS INASMUCH AS UNDER SECTION 153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON, WHEREAS UNDER SECTION 158BD IF THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON, OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ASSETS WERE REQUISITIONED UN DER SECTION 132A, HE SHALL PROCEED AGAINST SUCH OTHER PERSON UNDER SECTION 158BC. 13. THUS A CONDITION PRECEDENT FOR ISSUING NOTICE UNDER SECTION 153C AND ASSESSING OR REASSESSING INCOME OF SUCH OTHER PERSON, IS THAT THE MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED SHOULD BELONG TO SUCH PERSON. IF THE SAID REQUIREMENT IS NOT SATISFIED, RECOURSE CANNOT BE HAD TO THE PROVISIONS OF SECTION 153C OF THE ACT. 14. EXAMINING THE FACTS OF THE PRESENT CASE IN THE LIGHT OF THE AFORESAID STATUTORY SCHEME, IT IS AN ADMITTED POSITION AS EMERGING FROM THE RECORD OF THE CASE, THAT THE DOCUMENTS IN QUESTION, NAMELY THE THREE LOOSE PAPERS RECOVERED DURING THE SEARCH PROCEEDINGS DO NOT BELONG TO THE PET ITIONER. IT MAY BE THAT THERE IS A REFERENCE TO THE PETITIONER INASMUCH AS HIS NAME IS REFLECTED IN THE LIST UNDER THE HEADING SAMUTKARSH MEMBERS DETAILS AND CERTAIN DETAILS ARE GIVEN UNDER DIFFERENT COLUMNS AGAINST THE NAME OF THE PETITIONER ALONG WITH OT HER MEMBERS, HOWEVER, IT IS NOBODY'S CASE THAT ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 21 THE SAID DOCUMENTS BELONG TO THE PETITIONER. IT IS NOT EVEN THE CASE OF THE REVENUE THAT THE SAID THREE DOCUMENTS ARE IN THE HANDWRITING OF THE PETITIONER. IN THE CIRCUMSTANCES, WHEN THE CONDITION PRECEDENT FO R ISSUANCE OF NOTICE IS NOT FULFILLED ANY ACTION TAKEN UNDER SECTION 153C OF THE ACT STANDS VITIATED. THE RELEVANT PORTION IN FINDING IN CASE OF ITAT DECISION IN MEGHMANI ORGANICS LTD. 36 DTR 187 ARE AS UNDER: - 18. THE TRIBUNAL BANGALORE BENCH IN THE CA SE OF P. SRINIVAS NAIK (140 TTJ 856) HELD THAT IF ANY DOCUMENTS FOUND THOUGH PERTAINING TO THE ASSESSEE, IF NOT BELONGING TO SUCH ASSESSEE, THE ACTION UNDER S. 153C R/W S. 153A CANNOT BE INVOKED. THE TRIBUNAL IN THIS CASE HELD AS UNDER: '7. WE HAVE HEARD BOTH THE PARTIES. IT IS AN UNDISPUTED FACT THAT BOOKS OF ACCOUNT OR DOCUMENTS DO NOT BELONG TO THE ASSESSEE, AS THESE WERE SEIZED FROM THE PREMISES OF SHRI REDDY. IT IS NOWHERE STATED THAT THESE BOOKS OF ACCOUNT OR DOCUMENTS SHOWED THAT ALL THE TRANSACTIO NS WERE BELONGING TO THE ASSESSEE. SUCH BOOKS OF ACCOUNT OR DOCUMENTS CONTAINED THE TRANSACTIONS RELATING TO THE GROUP CONCERNS OF SHRI REDDY. NO VALUABLE BELONGING TO THE ASSESSEE HAS BEEN SEIZED DURING THE COURSE OF SEARCH. THE TERM BELONGING IMPLIED SOM ETHING MORE THAN THE IDEA OF CASUAL ASSOCIATION. IT INVOLVES THE ACTION OF CONTINUITY AND INDICATES ONE MORE OR LESS INTIMATE CONNECTION WITH THE PERSON OVER A PERIOD OF TIME. THE BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE COURSE OF SEARCH HAVE A CLOS E ASSOCIATION WITH THE GROUP CONCERN OF SHRI REDDY. IT RECORDS THE TRANSACTION CARRIED OUT BY THAT GROUP. IT DOES NOT RECORD THE TRANSACTION CARRIED OUT BY THE ASSESSEE. UNDER THE WT ACT, ASSETS BELONGING TO ASSESSEE WERE TAXABLE. THE EXPRESSION BELONGING TO THE ASSESSEE CONNOTES BOTH THE COMPLETE OWNERSHIP AND LIMITED OWNERSHIP OF INTEREST. OF COURSE, BELONGING TO IS CAPABLE OF CONNOTING, INTEREST, WHICH IS LESS THAN ABSOLUTE PERFECT LEGAL TITLE. HOWEVER, THERE SHOULD BE SOME LIMITED OWNERSHIP OF INTEREST, IF IT IS TO BE PERMITTED THAT THE ASSETS BELONG TO THE ASSESSEE. IN THE INSTANT CASE, DOCUMENTS OR BOOKS OF ACCOUNT FOUND DURING THE COURSE OF SEARCH AND SEIZED CANNOT BE TERMED TO BE INDICATING ANY LIMITED INTEREST OF THE OWNERSHIP OF THE ASSESSEE IN SUC H BOOKS OF ACCOUNT OR DOCUMENTS. THE LANGUAGE USED IN S. 153C IS MATERIALLY DIFFERENT FROM THE LANGUAGE USED UNDER S. 158BD. AS PER S. 158BD, IF ANY UNDISCLOSED INCOME RELATES TO OTHER PERSON, THEN ACTION AGAINST SUCH OTHER PERSON CAN BE TAKEN PROVIDED SU CH UNDISCLOSED INCOME IS REFERABLE TO THE DOCUMENT SEIZED DURING THE COURSE OF SEARCH. HOWEVER, S. 153C SAYS THAT IF VALUABLE OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THEN ACTION UNDER S. 153C CAN BE TAKEN AGAINST ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 22 THAT PERSON. IN THE INSTANT CASE, WE ARE SATISFIED THAT BOOKS OF ACCOUNT OR DOCUMENTS DO NOT BELONG TO THE ASSESSEE AND, THEREFORE, THE AO WAS NOT JUSTIFIED IN INITIATING ACTION UNDER S. 153A R/W S. 153C OF THE IT ACT. THE AO IS FREE TO TAKE PROPER REMEDIAL MEASURE AS PER LAW.' 19. THE DECISIONS RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL NOT APPLY IN THIS CASE AS IN BOTH CASES THE FACTS ARE THAT THE ASSESSMENTS WERE FRAMED UNDER S. 153A OF THE ACT I.E., THE ASSESSEE WAS THE PERSON IN WHOSE CASE SEARCH WAS INITIATED UNDER S. 132(1) OF THE ACT. IT IS ALSO FOUND THAT THE ASSESSMENTS WERE PENDING IN THOSE CASES AND IT WAS ALSO OBSERVED THAT 'IT IS NOT THE COMPLAINT OF THE ASSESSEE THAT ANY INCOME WHICH IS ALREADY SUBJECTED TO THE ASSESSMENT UNDER S. 143(3) /148 OF THE ACT WHICH WAS COMPLETED PRIOR TO SEARCH HAS ALSO BEEN INCLUDED IN THE ASSESSMENTS FRAMED UNDER S. 153A OF THE ACT.' THEREFORE, BOTH THE CASES RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WILL NOT HELP THE CASE OF THE REVENUE. IN VIEW OF OUR ABOVE FINDING AND APPLYING THE DECISION OF THE TRIBUNAL CALCUTTA BENCH IN THE CASE OF LMJ INTERNATIONAL LTD. (SUPRA), SINCE WE HAVE FOUND THAT THE DOCUMENTS FOUND DURING THE SEARCH AT THE RESIDENTIAL PREMISES OF SHRI LALIT K. PATEL AND KANTILAL M PA TEL DO NOT 'BELONG TO THE ASSESSEE' THE AO WAS NOT COMPETENT TO INITIATE ACTION UNDER S. 153C OF THE ACT SO AS TO FRAME ASSESSMENT UNDER S. 153A OF THE ACT. WE, THEREFORE, SET ASIDE THE ASSESSMENTS. THE ABOVE DECISION OF ITAT HAS SINCE BEEN UPHELD BY THE GUJARAT HIGH COURT IN CASE OF MEGHMANI ORGANICS LTD. IN ITA NO. 2007 OF 2009 DECIDED ON 27.04.11. THE OPERATIONAL PART OF THIS DECISION IS AS UNDER: - THE DOCUMENTS ON THE BASIS OF WHICH THE AO INITIATED PROCEEDINGS UNDER SECTION 153C OF THE ACT WAS ADM ITTEDLY NOT WRITTEN BY THE ASSESSEE. IT, OF COURSE, HAD CERTAIN REFERENCES TO THE ESTIMATION AND EXPENDITURE, ETC. OF THE PROPERTIES BELONGING TO THE ASSESSEE. NEVERTHELESS, WE CANNOT HOLD THAT SUCH DOCUMENT BELONGED TO THE ASSESSEE. WHEN WE FIND THAT TH E VERY FOUNDATION FOR INSTITUTING THE PROCEEDINGS BY THE AO WAS MISSING, THE CONSEQUENTIAL ACTIONS AND ORDERS MUST FAIL. THE WORD BELONGING TO HAS ALSO BEEN SEEN IN CONCISE LAW DICTIONARY PUBLISHED BY LEXISNEXIS BUTTERWORTHS, WADHWA, NAGPUR. FROM TH E THIRD EDITION OF THIS BOOK IT IS SEEN THAT THE WORD BELONGING TO REFERS TO OWNERSHIP. THOUGH CAPABLE OF DENOTING SN ABSOLUTE TITLE IT CAN ALSO SIGNIFY ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 23 EVEN POSSESSION OF AN INTEREST LESS THAN FULL OWNERSHIP. IT SIGNIFIES SOMETHING MORE THAN THE IDEA OF CASUAL ASSOCIATION AND INDICATES A MORE OR LESS INTIMATE CONNECTION. THUS IN THE FACTS OF THE CASE THE FACT OF THE MATTER IS THAT THE THERE IS NO ABSOLUTE OR LIMITED OWNERSHIP OF THE ASSESSEE OVER PAGE 1 OF A - 1 FROM THE RESIDENCE OF SH. SANDEEP SINGH K HINDA. AS THERE IS NO INTIMATE CONNECTION BETWEEN THE CONTENTS OF THE SEIZED DOCUMENT AND THE APPELLANT AND NEITHER THERE IS ANY OTHER CORROBORATIVE EVIDENCE TO THE EFFECT THAT THE APPELLANT HAD PAID THE CASH PORTION RECORDED IN THE SEIZED DOCUMENT FOR PU RCHASE OF IMPUGNED PROPERTY THEREFORE THE REQUIREMENT UNDER THE LAW OF THE FACT THAT THE SEIZED DOCUMENT SHOULD BELONG TO THE ASSESSEE FOR INITIATION OF PROCEEDING U/S 153C OF THE IT ACT ARE NOT FULFILLED IN THE CASE OF THE APPELLANT IN VIEW THEREOF THE A DDITION MADE TO INCOME ON PROTECTIVE BASIS BASED ON THE AMOUNT OF RS. 350 LACS (PAID DURING FY 2006 - 07) AS RECORDED ON PAGE 1 OF ANNEXURE A - 1 IN CASE OF THE APPELLANT IS DIRECTED TO BE DELETED. IN VIEW OF THE ABOVE FINDING THE OTHER ISSUES RAISED BY THE A PPELLANT THAT THE ASSESSEE IS NOT THE LEGAL OWNER OF THE IMPUGNED PROPERTY AND THAT THE APPELLANT AND M/S VIJETA PROPERTIES P. LTD. (WHICH LEGALLY ACQUIRED THE PROPERTY), ARE DISTINCT LEGAL ENTITIES AND THEREFORE EVEN OTHERWISE NO ADDITION CAN BE MADE IN C ASE OF THE DIRECTOR AND THAT THE NOTINGS MADE ON THE SEIZED PAGE 1 OF ANNEXURE A - 1 ARE MERELY JOTTINGS IN THE NATURE OF DUMB DOCUMENT AND THEREFORE NO ADDITION CAN BE MADE ON BASIS OF SUCH DUMB NOTINGS AND THE SUBMISSION THAT THERE HAS BEEN NO CONFRONTATIO N OF THE STATEMENT OF SH. SANDEEP SINGH KHINDA TO THE ASSESSEE & THEREFORE VIOLATION OF NATURAL JUSTICE ARE NOT REQUIRED TO BE ADJUDICATED UPON. ACCORDINGLY, GROUNDS OF APPEAL NO. 1, 2 & 4 ARE ALLOWED. 1 6 . THE ABOVE VIEW IS ALSO SUPPORTED BY THE JUDGMEN T OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF PEPSI FOODS PVT. LTD. VS. ACIT 2014 (8) TMI 425 WHERE THE COURT HAS HELD AS UNDER: - 5. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY THE COUNSEL FOR THE PARTIES. BEFORE PROCEEDING ANY FURTHER IT WOULD BE NECESSARY TO SET OUT THE RELEVANT ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 24 PROVISIONS OF THE SAID ACT AS APPLICABLE TO THE ASSESSMENT YEARS UNDER CONSIDERATION: - 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOC UMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SUCH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A: PROVIDED THAT IN CASE OF SUCH OTHER PERSON, THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO SUB - SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE TO THE DATE OF RECEIVING THE BOOKS O F ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON: (2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN SUB - SECTION (1) HAS OR HAVE BEEN RECEI VED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR (A) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM, OR (B) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERS ON BUT NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS EXPIRED, OR (C) ASSESSMENT OR REASSESSMENT, IF ANY, HAS BEEN MADE, BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON, SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN T HE MANNER PROVIDED IN SECTION 153A. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 25 132. (1) XXXXXXXXXXXX XXXXXXXXXXXX (4A) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; XXXXXXXXXXXXXXXX 292C.(1) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY , BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 OR SURVEY UNDER SECTION 133A, IT MAY, IN ANY PROCEEDING UNDER THIS ACT, BE PRESUMED (I) THAT SUC H BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; XXXXXXXXXXXXXXXX 6. ON A PLAIN READING OF SECTION 153C, IT IS EVIDENT THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON MUS T BE SATISFIED THAT INTER ALIA ANY DOCUMENT SEIZED OR REQUISITIONED BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON. IT IS ONLY THEN THAT THE ASSESSING OFFICER OF THE SEARCHED PERSON CAN HANDOVER SUCH DOCUMENT TO THE ASSESSING OFFICER HAVING JURISDI CTION OVER SUCH OTHER PERSON (OTHER THAN THE SEARCHED PERSON). FURTHERMORE, IT IS ONLY AFTER SUCH HANDING OVER THAT THE ASSESSING OFFICER OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT PERSON AND ASSESS OR RE - ASSESS HIS INCOME IN ACCORDANCE WITH THE PROVI SIONS OF SECTION 153A. THEREFORE, BEFORE A NOTICE UNDER SECTION 153C CAN BE ISSUED TWO STEPS HAVE TO BE TAKEN. THE FIRST STEP IS THAT THE ASSESSING OFFICER OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT A DOCUMENT SEIZED FROM HIM DO ES NOT BELONG TO HIM BUT TO SOME OTHER PERSON. THE SECOND STEP IS AFTER SUCH SATISFACTION IS ARRIVED AT THAT THE DOCUMENT IS HANDED OVER TO THE ASSESSING OFFICER OF THE PERSON TO WHOM THE SAID DOCUMENT BELONGS . IN THE PRESENT CASES IT HAS BEEN URGED ON BEHALF OF THE PETITIONER THAT THE FIRST STEP ITSELF HAS NOT BEEN FULFILLED. FOR THIS PURPOSE IT WOULD BE NECESSARY TO EXAMINE THE PROVISIONS OF PRESUMPTIONS AS INDICATED ABOVE. SECTION 132(4A)(I) CLEARLY STIPULATES THAT WHEN INTER ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 26 ALIA ANY DOCUMENT IS F OUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO SUCH PERSON. IT IS SIMILARLY PROVIDED IN SECTION 292C(1)(I). IN OTHER WORDS, WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS BEING SEARCHED THE NORMAL PRESUMPTION IS THAT THE SAID DOCUMENT BELONGS TO THAT PERSON. IT IS FOR THE ASSESSING OFFICER TO REBUT THAT PRESUMPTION AND COME TO A CONCLUSION OR SATISFACTION THAT THE DOCUMENT IN FACT BELONGS TO SOMEBODY ELSE. THERE MUST BE SOME CO GENT MATERIAL AVAILABLE WITH THE ASSESSING OFFICER BEFORE HE/SHE ARRIVES AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PERSON BUT TO SOMEBODY ELSE. SURMISE AND CONJECTURE CANNOT TAKE THE PLACE OF SATISFACTION . 7. THIS WOULD BE THE APPROPRIATE STAGE TO CONSIDER THE DECISIONS REFERRED TO BY THE LEARNED COUNSEL FOR THE REVENUE. THE DECISION REFERRED TO IN KAMLESHBHAI DHARAMSHIBHAI PATEL (SUPRA) IS OF NO RELEVANCE INSOFAR AS THE PRESENT CASE IS CONCERNED. IN THAT CASE CERTAIN DO CUMENTS WERE SAID TO HAVE BELONGED TO THE PETITIONERS THEREIN BUT A PLEA HAD BEEN TAKEN THAT AS THE LAND, IN RELATION TO WHICH THE DOCUMENTS WERE, NO LONGER BELONGED TO THE PETITIONERS THEREFORE THE SAID DOCUMENTS COULD NOT BE REGARDED AS BELONGING TO THE PETITIONERS. THAT IS AN ENTIRELY DIFFERENT SITUATION AND THE FACTS OF THAT CASE ARE CLEARLY DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE. INSOFAR AS THE DECISION OF THE ALLAHABAD HIGH COURT IN CLASSIC ENTERPRISES (SUPRA) IS CONCERNED, WE ARE, WITH RE SPECT, UNABLE TO AGREE WITH THE OBSERVATIONS THAT AS THE PROCEEDINGS ARE AT THE VERY INITIAL STAGE THE SATISFACTION IS NEITHER REQUIRED TO BE FIRM OR CONCLUSIVE. WE SAY SO BECAUSE WE ARE OF THE VIEW THAT THIS CONCLUSION OF THE ALLAHABAD HIGH COURT IS PRE MISED ON A CONSIDERATION OF THE PROVISIONS OF SECTION 158BD OF THE SAID ACT WHICH ARE ENTIRELY DIFFERENT FROM SECTION 153C. UNDER SECTION 158BD THE ASSESSING OFFICER S SATISFACTION IS WITH REGARD TO UNDISCLOSED INCOME BELONGING TO A PERSON OTHER THAN THE SEARCHED PERSON. IT IS OBVIOUS THAT SUCH SATISFACTION UNDER SECTION 158BD BY ITS VERY NATURE HAS TO BE PRIMA FACIE AND TENTATIVE. THE SAME METHODOLOGY CANNOT BE IMPORTED INTO SECTION 153C WHERE, IN OUR VIEW, THE ASSESSING OFFICER IS REQUIRED TO ARRIVE AT A CONCLUSIVE SATISFACTION THAT THE DOCUMENT BELONGS TO A PERSON OTHER THAN THE SEARCHED PERSON BECAUSE SUCH ASSESSING OFFICER HAS TO REBUT THE NORMAL PRESUMPTIONS WHICH ARE SUGGESTED BY THE STATUTE UNDER SECTIONS 132(4A)(I) AND 292C(1)(I) OF THE SAID ACT. THEREFORE, THE DECISION OF THE ALLAHABAD HIGH COURT IN THE CASE OF CLASSIC ENTERPRISES (SUPRA) WOULD NOT COME TO THE AID OF THE REVENUE. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 27 8. INSOFAR AS THE DECISION IN THE SSP AVIATION LTD. (SUPRA) IS CONCERNED WE DO NOT FIND ANYTHING THEREIN WHICH MILITATE S AGAINST THE VIEW THAT WE ARE TAKING. IN FACT THE VERY DISTINCTION BETWEEN SECTION 153C AND 158BD (ALTHOUGH SECTION 158BD IS NOT MENTIONED) IS INDICATED BY THE FOLLOWING OBSERVATIONS OF THE DIVISION BENCH IN SSP AVIATION LTD. (SUPRA): - IT NEEDS TO BE APP RECIATED THAT THE SATISFACTION THAT IS REQUIRED TO BE REACHED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON IS THAT THE VALUABLE ARTICLE OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED DURING THE SEARCH BELONG TO A PERSON OTHER THAN THE SEA RCHED PERSON. THERE IS NO REQUIREMENT IN SECTION 153C(1) THAT THE ASSESSING OFFICER SHOULD ALSO BE SATISFIED THAT SUCH VALUABLE ARTICLES OR BOOKS OF ACCOUNT OR DOCUMENTS BELONGING TO THE OTHER PERSON MUST BE SHOWN TO SHOW TO CONCLUSIVELY REFLECT OR DISCLOS E ANY UNDISCLOSED INCOME. 9. IT IS ONLY IN THIS CONTEXT THAT THE DIVISION BENCH WAS OF THE VIEW THAT THE ISSUANCE OF THE 153C NOTICE WAS ONLY FIRST STEP IN THE PROCESS OF ENQUIRY. 1 7 . THE ABOVE JUDGMENT HAS FURTHER BEEN CONSIDERED BY THE DELHI HIGH COURT IN THE CASE OF PEPSICO INDIA HOLDINGS PRIVATE LIMITED VS. ACIT & ANOTHER 370 ITR 295 (DEL) AND THE HON BLE DELHI HIGH COURT HAS FURTHER EXPLAINED THE PROVISIONS OF SECTION 153C, THE RELEVANT PART OF WHICH READS AS UNDER: - 13. HAVING SET OUT THE POSITIO N IN LAW IN THE DECISION OF THIS COURT IN THE CASE OF PEPSI FOODS PVT. LTD. (SUPRA), IT MUST BE SEEN AS TO WHETHER THE ASSESSING OFFICER OF THE SEARCHED PERSON (THE JAIPURIA GROUP) COULD BE SAID TO HAVE ARRIVED AT A SATISFACTION THAT THE DOCUMENTS MENTIONE D ABOVE BELONGED TO THE PETITIONERS. 14. FIRST OF ALL WE MAY POINT OUT, ONCE AGAIN, THAT IT IS NOBODY S CASE THAT THE JAIPURIA GROUP HAD DISCLAIMED THESE DOCUMENTS AS BELONGING TO THEM. UNLESS AND UNTIL IT IS ESTABLISHED THAT THE DOCUMENTS DO NOT BELONG TO THE SEARCHED PERSON, THE PROVISIONS OF SECTION 153C OF THE SAID ACT DO NOT GET ATTRACTED BECAUSE THE VERY EXPRESSION USED IN SECTION 153C OF THE SAID ACT IS THAT WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 28 DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A .... IN VIEW OF THIS PHRASE, IT IS NECESSARY THAT BEFORE THE PROVISIONS OF SECTION 153C OF THE SAID ACT CAN BE INVOKED, THE ASSESSING OFFICER OF THE SEARCHED PERSON MUST BE SATISFIED THAT THE SEIZED MATERIAL (WHICH INCLUDES DOCUMENTS) DOES NOT BELONG TO THE PERSON REFERRED TO IN SECTION 153A (I.E., THE SEARCHED PERSON). IN THE SATISFACTION NOTE, WHICH I S THE SUBJECT MATTER OF THESE WRIT PETITIONS, THERE IS NOTHING THEREIN TO INDICATE THAT THE SEIZED DOCUMENTS DO NOT BELONG TO THE JAIPURIA GROUP. THIS IS EVEN APART FROM THE FACT THAT, AS WE HAVE NOTED ABOVE, THERE IS NO DISCLAIMER ON THE PART OF THE JAIPU RIA GROUP INSOFAR AS THESE DOCUMENTS ARE CONCERNED. 15. SECONDLY, WE MAY ALSO OBSERVE THAT THE FINDING OF PHOTOCOPIES IN THE POSSESSION OF A SEARCHED PERSON DOES NOT NECESSARILY MEAN AND IMPLY THAT THEY BELONG TO THE PERSON WHO HOLDS THE ORIGINALS. POSSE SSION OF DOCUMENTS AND POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO SEPARATE THINGS. WHILE THE JAIPURIA GROUP MAY BE THE OWNER OF THE PHOTOCOPIES OF THE DOCUMENTS IT IS QUITE POSSIBLE THAT THE ORIGINALS MAY BE OWNED BY SOME OTHER PERSON. UNLESS IT IS EST ABLISHED THAT THE DOCUMENTS IN QUESTION, WHETHER THEY BE PHOTOCOPIES OR ORIGINALS, DO NOT BELONG TO THE SEARCHED PERSON, THE QUESTION OF INVOKING SECTION 153C OF THE SAID ACT DOES NOT ARISE. 16. THIRDLY, WE WOULD ALSO LIKE TO MAKE IT CLEAR THAT THE ASSESSING OFFICERS SHOULD NOT CONFUSE THE EXPRESSION BELONGS TO WITH THE EXPRESSIONS RELATES TO OR REFERS TO . A REGISTERED SALE DEED, FOR EXAMPLE, BELONGS TO THE PURCHASER OF THE PROPERTY ALTHOUGH IT OBVIOUSLY RELATES TO OR REFERS TO THE VENDOR . IN THIS EXAMPLE IF THE PURCHASERS PREMISES ARE SEARCHED AND THE REGISTERED SALE DEED IS SEIZED, IT CANNOT BE SAID THAT IT BELONGS TO THE VENDOR JUST BECAUSE HIS NAME IS MENTIONED IN THE DOCUMENT. IN THE CONVERSE CASE IF THE VENDOR S PREMISES ARE SEARCH ED AND A COPY OF THE SALE DEED IS SEIZED, IT CANNOT BE SAID THAT THE SAID COPY BELONGS TO THE PURCHASER JUST BECAUSE IT REFERS TO HIM AND HE (THE PURCHASER) HOLDS THE ORIGINAL SALE DEED. IN THIS LIGHT, IT IS OBVIOUS THAT NONE OF THE THREE SETS OF DOCUMEN TS COPIES OF PREFERENCE SHARES, UNSIGNED LEAVES OF CHEQUE BOOKS AND THE COPY OF THE SUPPLY AND LOAN AGREEMENT CAN BE SAID TO BELONG TO THE PETITIONER. 17. IN VIEW OF THE FOREGOING DISCUSSION, WE DO NOT FIND THAT THE INGREDIENTS OF SECTION 153C OF THE SAID ACT HAVE BEEN SATISFIED IN THIS CASE. CONSEQUENTLY THE NOTICES DATED 02.08.2013 ISSUED UNDER SECTION 153C OF THE SAID ACT ARE QUASHED. ACCORDINGLY ALL PROCEEDINGS PURSUANT THERETO STAND QUASHED. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 29 1 8 . IN VIEW OF THE ABOVE WE HOLD THAT THE CIT(A) WAS C ORRECT IN HOLDING THAT THE ADDITIONS MADE BY THE AO IN THE PROCEEDING UNDER SECTION 153C OF THE ACT ARE UNSUSTAINABLE. 1 9 . WE ARE OF THE VIEW THAT THE ABOVE SAID ADDITION IS OTHERWISE UNTENABLE IN THE HANDS OF RESPONDENT NO. 2 AS THIS PROPERTY HAS NOT B EEN PURCHASED BY THE DIRECTOR OF THE COMPANY . IT IS ALSO AN ADMITTED FACT THAT THIS PROPERTY HAS BEEN PURCHASED BY VIJETA PROPERTIES PVT. LTD. THE SALE DEED IN THIS REGARD CLEARLY MENTIONS THE NAME OF THE SELLER AS WELL AS THE BUYER. THE NAME STATED IN THE SALE DEED IS THAT OF VIJETA PROPERTIES PVT. LTD. THE CONSIDERATION STATE D THEREIN OF RS.4 CRORE HAS ALSO BEEN PAID BY VIJETA PROPERTIES PVT. LTD. WHICH IS REFLECTED IN THEIR BOOKS OF ACCOUNT. THE RESPONDENT NO. 2 IS NEITHER BUYER OF THE PROPERTY NOR IS THERE ANY EVIDENCE THAT ANY CONSIDERATION THEREOF HAS BEEN PAID BY IT. THEREFORE, THE ADDITION IN THE HANDS OF SUCH IRRELEVANT PERSONS IS NOT TENABLE IN THE EYE OF LAW. 20 . SIMILAR ISSUE CAME UP BEFORE THE COORDINATE BENCH OF THE DELHI ITAT IN THE CAS E OF HALDIRAM FOODS LTD. VS. ACIT 79 ITD 425. IN THIS CASE A SEARCH WAS CARRIED ON AT THE BUSINESS PREMISES OF THE ASSESSEE COMPANY BELONGING TO THE HALDIRAM GROUP. DURING THE COURSE OF THE SEARCH A DOCUMENT WAS FOUND WHICH SHOWED THAT A SUM OF RS.22 LAK HS WAS PAID IN CASH OVER AND ABOVE THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 30 DECLARED VALUE OF THE LAND PURCHASED BY THE ASSESSEE COMPANY. THE DIRECTOR OF THE ASSESSEE COMPANY, SH. MANOHAR LAL AGARWAL ON BEING CALLED TO EXPLAIN THE DIFFERENCE OF RS.22 LAKHS ADMITTED THAT HE HAD PURCHASED THE LAND AND PAID THE EXTRA CONSIDERATION OF RS.22 LAKHS. SH. MANOHAR LAL AGARWAL SURRENDERED THIS AMOUNT OF RS.22 LAKHS AND OFFERED THE SAME IN ITS RETURN OF INCOME. DURING THE COURSE OF THE ASSESSMENT OF THE ASSESSEE COMPANY THE AO DID NOT ACCEPT THE EXPLANATION OF SH. MANOHAR LAL AGARWAL AS INVESTMENT IN THE PURCHASE FOR THE PURCHASE OF LAND ON THE GROUND THAT THE OWNERSHIP OF THE LAND IN QUESTION VESTED WITH THE ASSESSEE COMPANY AND NOT IN ITS DIRECTOR, SH. MANOHAR LAL AGARWAL IN HIS INDIVIDUAL CAPAC ITY. THE ABOVE SAID CONTENTION OF THE AO WAS UPHELD BY THE ITAT. THE FINDING OF THE ITAT READS AS UNDER: - 24. A COMPANY IS, UNDER THE GENERAL LAW, A JURISTIC PERSON ELIGIBLE TO OWN PROPERTY AND TO SUE OR BE SUED, IN ITS NAME. A COMPANY IS SEPARATE AND D ISTINCT FROM ITS SHAREHOLDERS. IN THE EYE OF LAW COMPANY IS ITS OWN MASTER AND IS ANSWERABLE LIKE ANY OTHER PERSON. IT IS TO BE NOTED THAT A SHARE IN A COMPANY IS THE EXPRESSION OF A PROPRIETARY RELATIONSHIP. THE SHAREHOLDER IS THE PROPORTIONATE OWNER OF T HE COMPANY. HIS LIABILITY IS LIMITED TO THE EXTENT OF HIS SHAREHOLDING. HE CAN BE CONSTRUED TO BE THE PROPORTIONATE OWNER OF THE COMPANY, BUT HE DOES NOT OWN THE COMPANY'S ASSETS WHICH BELONG TO THE COMPANY AS A SEPARATE AND INDEPENDENT ENTITY. AS SUCH, TH E DIRECTOR CANNOT BE CONSTRUED TO BE THE LEGAL OWNER OF THE COMPANY. IT FOLLOWS THAT HE CANNOT MAKE DISCLOSURE FOR THE BENEFIT OF THE COMPANY. THEREFORE, THE ASSESSING OFFICER WAS CORRECT IN HOLDING THAT THE INVESTMENT MADE FOR ACQUIRING THE ASSET OF THE C OMPANY WAS TO BE EXAMINED IN THE HANDS OF COMPANY AND NOT IN THE HANDS OF THE DIRECTOR OF THE COMPANY, WHO WAS SIMPLY AN AGENT AND NOT THE OWNER OF THE ASSET. WE HAVE ALSO NOTED THAT SHRI M.L. AGGARWAL, DID NOT MAKE INVESTMENT TOWARDS THE PURCHASE OF THE S AID PROPERTY. THE INVESTMENT AS DISCLOSED BY SHRI M.L. AGGARWAL TO THE ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 31 TUNE OF RS. 22,00,000 WAS NOT REFLECTED IN THE BALANCE SHEET OF THE COMPANY. WHAT PROMPTED SHRI M.L. AGGARWAL FOR MAKING THIS INVESTMENT WHEN THE COMPANY WAS NOT SOLELY OWNED BY HIS GRO UP IS A RIDDLE, WRAPPED IN A MYSTERY INSIDE AN ENIGMA. 2 1 . IN VIEW OF THE ABOVE WE UPHOLD THE ORDER OF THE LEARNED CIT(A) ON THIS GROUND IN BOTH THE ASSESSMENT YEARS. 2 2 . NOW COMING TO THE GROUND NO. 7 AND 8 IN ASSESSMENT YEAR 2007 - 08 IN THE CASE OF RESPO NDENT NO. 2 , THE AO HAS MADE AN ADDITION OF RS.82,38,750/ - ON THE BASIS OF VALUE WORKED OUT BY HIM BY INCREASING THE VALUATION GIVEN TO THE BANK 2 - 1/2 YEARS BY 25%. IT IS AN ADMITTED FACT THAT NO MATERIAL OR DOCUMENT WAS FOUND DURING THE COURSE OF THE SEA RCH. IN THE ABSENCE OF ANY INCRIMINATING MATERIAL BEING FOUND THIS ADDITION IN THE ASSESSMENT YEAR UNDER CONSIDERATION IS LEGALLY UNTENABLE. FURTHER ON GOING THROUGH THE ASSESSMENT ORDER WE NOTE THAT THE AO HAS ENHANCED THE VALUE ARBITRARILY BY 25%.THER E IS NO MATERIAL OR EVIDENCE THAT ANY EXTRA CONSIDERATION OVER AND ABOVE WHAT IS STATED IN THE SALE DEED WAS PAID BY THE BUYER TO THE SELLER. IN THE ABSENCE OF ANY SUCH EVIDENCE OR MATERIAL THE VALUE DECLARED IN THE SALE DEED CANNOT BE TINKERED WITH. THE ABOVE V I EW IS SUPPORTED BY THE FOLLOWING JUDGMENTS OF THE HON BLE DELHI HIGH COURT: - ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 32 (A) COMMISSIONER OF INCOME - TAX VERSUS PUNEET SABHARWAL [2011] 338 ITR 485 (DEL) (B) COMMISSIONER OF INCOME TAX VERSUS ABHINAV KUMAR MITTAL [2013] 351 ITR 20 (DEL) (C) DEV KUMAR JAIN VERSUS INCOME TAX OFFICER AND ANOTHER [2009] 309 ITR 240 (DELHI) (D) COMMISSIONER OF INCOME - TAX DELHI VERSUS SHAKUNTALA DEVI [2009] 316 ITR 46 (DELHI) (E) COMMISSIONER OF INCOME - TAX VERSUS. SMT SURAJ DEVI [2010] 328 ITR 604 (DEL) 23. THE CIT(A) HAS CONSIDERED THIS ISSUE AND THE RELEVANT FINDING OF THE CIT(A) ON THIS ISSUE READS AS UNDER: - ON A CONSIDERATION OF THE FINDINGS IN THE ASSESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT IT IS OBSERVED THAT THE ABOVE ADDITION TO INCOME OF RS. 8 2,38,750/ - IS NOT SUSTAINABLE ON VARIOUS ACCOUNTS. FIRSTLY, THE BASIS OF THIS ADDITION IS AN ESTIMATE MADE ON THE SALE CONSIDERATION BASED ON THE VALUATION DONE BY INDIAN OVERSEAS BANK OF THE PROPERTY IN QUESTION FOR OBTAINING OD FACILITIES BY THE SELLER OF THE PROPERTY MS. ANITA MAHAJAN. IN MY CONSIDERED VIEW SUCH VALUATION DONE BY THE BANKING AUTHORITIES ON WHICH AN APPRECIATION RATE OF 10% PER ANNUM HAS BEEN LOADED BY THE AO HAS NO LEGAL BACKING AND IS PRESUMPTUOUS IN NATURE. SECONDLY, THE SAID PROPER TY HAS BEEN PURCHASED FROM MRS. ANITA MAHAJAN BY M/S SUMESH REALTORS P. LTD., IN WHICH COMPANY THE APPELLANT IS A DIRECTOR. AS THE DIRECTOR AND THE COMPANY ARE TWO DISTINCT LEGAL ENTITIES THEREFORE THERE IS NO BASIS ON WHICH UNACCOUNTED INCOME ON ACCOUNT OF UNDISCLOSED INVESTMENT MADE BY THE APPELLANT CAN BE ADDED IN THE HANDS OF THE DIRECTOR, UNLESS THERE IS INEXISTENCE HARD POSITIVE EVIDENCE TO SUBSTANTIATE THAT THE UNDISCLOSED PART OF THE INVESTMENT WAS MADE BY THE DIRECTOR IN HIS INDIVIDUAL CAPACITY. IN VIEW OF THESE REASONS THE PROTECTIVE ADDITION OF RS.82,38,750/ - IN CASE OF THE APPELLANT IS DIRECTED TO BE DELETED. GROUND OF APPEAL NO. 3 IS ACCORDINGLY ALLOWED. ITA NO S . 1504, 1505, 2684 & 2683/DEL./2012 33 24. IN OUR VIEW THE LEARNED CIT(A) HAS DEALT WITH THIS ISSUE CORRECTLY AND WE SEE NO REA SON TO INTERFERE WITH THE FINDING OF THE CIT(A) AND ACCORDINGLY THESE GROUNDS OF THE REVENUE , BEING DEVOID OF MERITS, ARE LIABLE TO BE DISMISSED. 25 . IN THE RESULT ALL THE FOUR APPEALS OF THE REVENUE AGAINST BOTH THE ASSESSEES ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 04.03.2016 . SD/ - SD/ - ( C.M. GARG ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 04.03.2016 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE R ESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT. REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI
