DCIT, New Delhi V. Sh. Lalit Modi, New Delhi

ITA 329/DEL/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 91076 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 18-12-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 17-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S SINGHAVI
• Assessee Lawyers: J P CHANDRA
• Keywords: Unexplained investment; Unexplained expenditure; Capital asset; Search and seizure; Salary income; Loose papers; Document seized; Earning of tax free income; Question of law; Fair market value; Competent authority; Assessment record; Block assessment; Onus to prove; Documents seized; Reassessment proceedings; Capital expenditure
• Section: 69C; 143(3); 142(1); 133A; 153A; 14A; 32; 147; 131; 69; 148; 132; 139

Judgement Text

ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 3551/DEL/2013 ASSESSMENT Y EAR: 2010-11 DY.COMMISSIONER OF INCOME TAX, VS SMT. VINI TA CHAURASIA, CENTRAL CIRCLE 21, 575, 1 ST FLOOR, NEW DELHI. DOUBLE STOREY FLAT, NEW RAJENDRA NAGAR, NEW DELHI-110060 (PAN: AAFPC4589D) ITA NO. 3343/DEL/2013 ASSESSMENT Y EAR: 2010-11 SMT. VINITA CHAURASIA, VS ASSTT. COMM ISSIONER OF INCOME TAX, NEW DELHI. CC-21, NEW DELHI. ITA NO. 329/DEL/2014 ASSESSMENT YEAR : 2010-11 DCIT, VS SHRI LALIT MODI, CENTRAL CIRCLE-21, E-20, LAJPAT NAGAR-III, NEW DELHI. NEW DELHI. (PAN: AALPM7800R) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SINGHAVI , CA RESPONDENT BY: SHRI J.P. CHANDRA, SR. DR DATE OF HEARING: 19.3.2015 DATE OF PRONOUNCEMENT:29.05.2015 ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 2 O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE APPEALS PREFERRED BY THE REVENUE AND THE ASS ESSEE HAVE BEEN DIRECTED AGAINST THE ORDER OF CIT(A)-II, NEW DELHI DATED 25.3.2013 IN APPEAL NO.306/11-12 FOR AY 2010-11. FOR THE SAKE OF BREVI TY AND CLARITY IN OUR FINDINGS, BOTH THE APPEALS HAVE BEEN CLUBBED AND WE ARE ADJUDICATING THEM TOGETHER BY THIS CONSOLIDATED ORDER. REVENUES APPEAL IN ITA NO. 3551/DEL/2013 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITI ON OF RS. 1,24,90,084/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF DISALLOWANCE OF FREEHOLD CHARGES. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION O F RS. 39,65,106/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DISALLOWANCE OF PAYMENT OF SINKING FUND. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITI ON OF RS. 29,73,830/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DISALLOWANCE OF MAINTENANCE SECURITY. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITI ON OF RS. 65,70,747/- MADE BY THE ASSESSING OFFICER ON ACCOUN T OF DISALLOWANCE OF COMMISSION. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 3 GROUND NO. 1 OF THE REVENUE 3. APROPOS GROUND NO.1, WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON R ECORD. LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN L AW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 1,24,90,084/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF FREEHOLD CHARGES. THAT THE ASSESSEE MADE PAYMENT OF FREEHOLD CHARGES OVER AND ABOVE WHAT WAS ACCOUNT ED FOR IN THE BOOKS OF ACCOUNTS OF RS.16.42 CRORE OTHERWISE THAN BY WAY OF CHEQUE I.E. FROM UNACCOUNTED SOURCES AND THEREFORE THIS AMOUNT WAS R IGHTLY BROUGHT TO TAX BY THE AO. LD. DR POINTED OUT THAT THE CIT(A) HAD NO JUST IFIED REASON TO DELETE THIS ADDITION, THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. LD. AR SUPPORTING THE IMPUGNED ORDER SUBMITTED THAT THE PROPERTY CONTINUES TO BE LEASEHOLD AND THEREFORE THERE WAS N O OCCASION FOR THE ASSESSEE TO MAKE PAYMENT OF RS.1,24,90,084 AS THIS PAYMENT WAS CONTINGENT UPON THE HAPPENING OF THE SPECIFIC EVENT ON CONVERTING THE P ROPERTY FROM LEASEHOLD TO FREEHOLD. LD. AR SUBMITTED THAT THE AO HAS NOT BRO UGHT OUT ANY EVIDENCE OR INCRIMINATING MATERIAL TO SHOW THAT THE ASSESSEE MA DE PAYMENT TOWARDS FREEHOLD CHARGES, THEREFORE, THE CIT(A) WAS RIGHT IN DELETIN G THE SAME. 4. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, W E NOTE THAT THE AO PICKED UP AND PRESUMED PAYMENT OF FREEHOLD CHARGES ON THE BASIS OF ANNEXURE A1 PAGE 5 AVAILABLE AT PAGE 16 OF ASSESSEES PAPER BOOK. LD. AR TOOK US ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 4 THROUGH COPY OF THE SALE DEED AVAILABLE AT PAGE 96 TO 117 OF THE PAPER BOOK AND SUBMITTED THAT THE PROPERTY WAS PURCHASED AS LEASEH OLD AND ONLY IN THE EVENT OF CONVERSION FROM LEASEHOLD TO FREEHOLD, PAYMENT OF F REEHOLD CHARGES WAS TO BE MADE BY THE PURCHASER ASSESSEE AND SINCE THE PROPER TY CONTINUES TO BE LEASEHOLD, THERE WAS NO OCCASION FOR THE ASSESSEE TO MAKE SUCH PAYMENT. THE RELEVANT OPERATIVE PART OF THE IMPUGNED ORDER WHICH GRANTED RELIEF FOR THE ASSESSEE ON THIS ISSUE READS AS UNDER:- 12.12.1. IN SO FAR AS THE PAYMENT OF RS 1,24,90,08 4 IS CONCERNED, AS EVIDENT FROM THE REGISTERED SALE AGRE EMENT, IT WAS CONTINGENT UPON THE HAPPENING OF THE SPECIFIC AND V ERIFIABLE EVENT OF CONVERTING. THE PROPERTY FROM LEASE HOLD T O FREE HOLD. SINCE AS PER THE SUBMISSION OF THE AR DURING THE AP PELLATE PROCEEDINGS, THE PROPERTY CONTINUES TO BE LEASE HOL D, THE CONTENTION OF THE AR THAT NO PAYMENT WAS MADE IN TH E RELEVANT YEAR IS ACCEPTED. THIS AMOUNT IS DELETED. 5. IN VIEW OF ABOVE, FROM BARE READING OF THE ASSE SSMENT ORDER, WE NOTE THAT THE AO HAS NOT BROUGHT OUT ANY FACT TO SUPPORT THIS ALLEGATION THAT THE ASSESSEE MADE PAYMENT OF FREEHOLD CHARGES OVER AND ABOVE THE PAYMENT WHICH WAS ACTUALLY RECORDED IN THE BOOKS OF ACCOUNTS AND THE AO HAS ALSO NOT BROUGHT OUT ANY FACT OR MATERIAL TO SUPPORT THIS FACT THAT THE PROPERTY IN QUESTION WAS CONVERTED FROM LEASEHOLD TO FREEHOLD DURING THE YEA R UNDER CONSIDERATION ON THE PAYMENT OF FREEHOLD CHARGES MADE BY THE ASSESSEE OU T OF HER BOOKS OF ACCOUNTS. HENCE, WE ARE UNABLE O SEE ANY VALID REASON TO INTE RFERE WITH THE IMPUGNED ORDER AND HENCE, GROUND NO. 1 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 5 GROUND NO. 2 & 3 OF THE REVENUE 6. APROPOS GROUND NO. 2, LD. DR SUBMITTED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 39,65,106/- MADE BY THE ASSESSING OFFICER ON AC COUNT OF DISALLOWANCE OF PAYMENT OF SINKING FUND MADE BY THE ASSESSE OVER AN D ABOVE THE CAPITAL EXPENDITURE BOOKED BY THE ASSESSEE ON PURCHASE OF P ROPERTY IN HER BOOKS OF ACCOUNTS. SUPPORTING THE CONCLUSION OF THE AO, LD. DR SUBMITTED THAT THE ASSESSEE MADE THE PAYMENT OF SINKING FUNDS AND THE SAME WAS NOT REFLECTED AND RECORDED IN THE BOOKS OF ACCOUNTS, THEREFORE, THE P AYMENT MADE BY ASSESSEE OUT OF UNACCOUNTED MONEY WAS RIGHTLY ADDED BY THE AO. LD. DR ALSO SUBMITTED THAT THE CIT(A) ALSO ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 29,73,830/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF DISALLOWANCE OF MAINTENANCE SECURITY AS THIS PAYMEN T WAS ALSO MADE BY THE ASSESSEE OVER AND ABOVE THE BOOKED EXPENSES. LD. D R SUBMITTED THAT THE ASSESSEE PAID IMPUGNED AMOUNT TOWARDS SINKING FUND AND MAINTENANCE SECURITY, THEREFORE, THE AO RIGHTLY MADE ADDITION ON THIS ACC OUNT AS THE ASSESSEE HAS MADE SAID PAYMENTS FROM THE INCOME EARNED BY THE ASSESSE E FROM HER UNACCOUNTED SOURCES. 7. REPLYING TO THE ABOVE, LD. AR VEHEMENTLY CONTEND ED THAT THE PAYMENTS TOWARDS SINKING FUND AND MAINTENANCE SECURITY WERE TO BE FASTENED UPON THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 6 ASSESSEE ON EXECUTION OF MAINTENANCE AGREEMENT AND SINCE MAINTENANCE AGREEMENT WAS NOT EXECUTED DURING THE PERIOD UNDER CONSIDERATION, THEREFORE, THERE WAS NO OCCASION TO MAKE SUCH PAYMENTS DURING THE RELEVANT FINANCIAL YEAR UNDER CONSIDERATION. LD. AR VEHEMENTLY CONTENDED T HAT THE AO MADE ADDITION ON THE BASIS OF SURMISES AND CONJECTURES WITHOUT BR INGING ANY ADVERSE MATERIAL ON RECORD WHICH WAS RIGHTLY DELETED BY THE CIT(A) A FTER CONSIDERING THE FACT THAT THE MAINTENANCE AGREEMENT WAS NOT EXECUTED DURING T HE RELEVANT FINANCIAL YEAR AND THEREFORE, THERE WAS NO OCCASION TO MAKE ANY PA YMENT IN THIS REGARD FOR THE ASSESSEE. ON CAREFUL CONSIDERATION OF ABOVE, AT TH E OUTSET, FROM THE IMPUGNED ORDER, WE NOTE THAT THE CIT(A) GRANTED RELIEF FOR T HE ASSESSEE WITH FOLLOWING CONCLUSION AND OBSERVATIONS:- 12.2.2. SIMILARLY, THE PAYMENTS OF RS. 39,65,106 A ND RS 29,73,830 TOWARDS SINKING FUND AND MAINTENANCE SECU RITY WERE CONTINGENT UPON EXECUTION OF THE MAINTENANCE AGREEM ENT. SINCE AS PER THE SUBMISSION OF THE AR DURING THE APPELLAT E PROCEEDINGS THE MAINTENANCE AGREEMENT WAS NOT EXECUTED THE CONT ENTION THAT NO PAYMENTS WAS MADE DURING THE RELEVANT PERIOD CAN BE ACCEPTED. THESE AMOUNTS ARE DELETED. 8. UNDER THE FACTS AND CIRCUMSTANCES NOTED BY THE A O, WE OBSERVE THAT THE AO MADE THE SAID ADDITIONS HOLDING THAT THE ASSESSE E INCURRED EXPENDITURE TOWARDS PAYMENT OF SINKING FUND AND MAINTENANCE SEC URITY FROM THE INCOME OF HER UNACCOUNTED SOURCES. THE BASIS OF ADDITION IS THAT THE AO HAS DRAWN AN INFERENCE FROM ANNEXURE A-1 PAGE 5OF INCRIMINATING MATERIAL WHICH IS AVAILABLE AT PAGE 16 OF THE ASESSEES PAPER BOOK WHEREIN AMOU NT OF SINKING FUND AND ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 7 MAINTENANCE SECURITY HAVE BEEN MENTIONED AND ON THE RIGHT SIDE, THERE IS A MENTION THAT CH IN FAVOUR OF VSM SINKING FUND ACCO UNT SUNCITY PROJECTS PVT. LTD. AND CH IN FAVOUR OF VSM MMS ACCOUNT S UNCITY PVT. LTD., MEANING THEREBY AS PER OBSERVATIONS OF THE AO BASED ON ANNEXURE A-1, THE ALLEGED PAYMENTS WERE MADE THROUGH CHEQUE ON BOTH T HE COUNTS TO SUNCITY PROJECTS PVT. LTD. BUT THE AO HAS NOT MADE ANY INQU IRY OR VERIFICATION IN THIS REGARD FROM THE BANK ACCOUNT OF THE ASSESSEE PAYER OR THE SAID RECIPIENT AS TO WHETHER ANY PAYMENT BY WAY OF CHEQUE HAS BEEN MADE BY THE ASSESSEE TO THE ALLEGED PAYEE, EVEN OTHERWISE, WE ARE UNABLE TO SEE ANY DETAIL, EVIDENCE OR INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND SEIZURE OPERATION OR BROUGHT OUT BY THE AO DURING REASSESSMENT PROCEE DINGS U/S 153C OF THE ACT, TO SUPPORT THIS ALLEGATION THAT THE ASSESSEE ACTUAL LY PAID ALLEGED AMOUNT EITHER BY CHEQUE OR IN CASH TOWARDS SINKING FUND AND MAINTENA NCE SECURITY TO M/S SUNCITY PROJECTS PVT. LTD. OR ANY OTHER ENTITY OR CONCERN. THE AO HAD ALSO NOT BROUGHT OUT ANY FACT ON ASSESSMENT RECORDS THAT THE MAINTEN ANCE AGREEMENT WAS EXECUTED BETWEEN THE ASSESSEE AND THE DEVELOPER I.E . M/S SUNCITY PROJECTS DURING THE FY 2009-10 PERTAINING TO AY 2010-11 UNDE R CONSIDERATION AND THE ASSESSEE MADE SAID PAYMENTS TOWARDS SINKING FUND AN D MAINTENANCE CHARGES DURING RELEVANT FINANCIAL PERIOD EITHER BY CHEQUE O R IN CASH OVER AND ABOVE THE EXPENSES BOOKED AND REFLECTED IN HER BOOKS OF ACCOU NTS AND THIS PAYMENT WAS ACTUALLY MADE BY THE ASSESSEE FROM INCOME EARNED FR OM UNACCOUNTED SOURCES. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 8 9. IT IS ALSO PERTINENT TO NOTE THAT THE AO HAS NOT BROUGHT OUT ANY EVIDENCE OR INCRIMINATING MATERIAL TO SHOW THAT THE ASSESSEE HA S ACTUALLY MADE PAYMENT OF SINKING FUND AND MAINTENANCE SECURITY OVER AND ABOV E THE EXPENSES REFLECTED AND RECORDED IN HER BOOKS OF ACCOUNTS AND THE ASSES SEE HAS MADE SAID PAYMENTS FROM HER UNACCOUNTED SOURCES. THE AO HAS ALSO NOT BROUGHT OUT ANY FACT TO SUPPORT HIS CONTENTION THAT THE ASSESSEE ENTERED IN TO ANY MAINTENANCE AGREEMENT WITH SUN CITY PROJECTS (P) LTD. OR ANY OTHER ENTITY DURING THE RELEVANT FINANCIAL PERIOD PERTAINING TO ASSESSMENT YEAR UNDER CONSIDER ATION. ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A FORTIFIED CONCL USION THAT THE AO MADE DISALLOWANCE WITHOUT ANY REASONABLE AND JUSTIFIED B ASIS WHICH WAS RIGHTLY DELETED BY THE CIT(A) BY RIGHTLY APPRECIATING THE T OTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE. HENCE, WE ARE UNABLE TO SEE ANY PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE CONCLUSION OF THE CIT(A) AND WE UPHOLD THE SAME. ACCORDINGLY, GROUND NO. 2 AND 3 OF THE R EVENUE BEING DEVOID OF MERITS ARE DISMISSED. GROUND NO. 4 10. APROPOS GROUND NO. 4, LD. DR CONTENDED THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS OF T HE CASE IN DELETING THE ADDITION OF RS. 65,70,747/- MADE BY THE ASSESSING O FFICER ON ACCOUNT OF DISALLOWANCE OF COMMISSION. SUPPORTING THE ASSESSM ENT ORDER, LD. DR STRONGLY CONTENDED THAT THE AO RIGHTLY NOTED THAT THE IMPUGN ED DOCUMENT I.E. ANNEXURE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 9 A-1 (SUPRA) WAS FOUND FROM THE PREMISES OF SHRI LAL IT MODI WHO WAS A PROPERTY DEALER AND WAS INTIMATELY INVOLVED IN THE PROPERTY DEAL BETWEEN THE ASSESSEE AND SUNCITY PROJECT PVT. LTD. LD. DR ALSO POINTED OUT THAT THIS FACT ALSO GETS SUPPORTED FROM THE FACT THAT SHRI LALIT MODI WITNES SED THE REGISTERED DOCUMENT BETWEEN THE ASSESSEE AND SUNCITY PROJECT PVT. LTD. AND THE ASSESSEE MADE PAYMENT OF COMMISSION OVER AND ABOVE THE AMOUNT BOO KED IN THE BOOKS OF ACCOUNTS FROM THE INCOME EARNED FROM HER UNACCOUNTE D SOURCES, THEREFORE, THE AO RIGHTLY MADE ADDITION IN THIS REGARD. LD. DR AL LEGING THE IMPUGNED ORDER FURTHER SUBMITTED THAT THE CIT(A) DELETED THE ADDIT ION ON ACCOUNT OF COMMISSION WITHOUT ANY PLAUSIBLE AND ACCEPTABLE REASON, THEREF ORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 11. REPLYING TO THE ABOVE, LD. AR TOOK US THROUGH OPERATIVE PART OF THE ASSESSMENT ORDER I.E. FROM PARA 4.3 TO 4.4 AND SUBM ITTED THAT THE AO PROCEEDED TO MAKE ADDITION ON ACCOUNT OF COMMISSION AND OTHER ISSUES WITH A PRE- DETERMINED MIND AND BY PRESUMING THAT THE ASSESSEE RECORDED THE PAYMENT ON PURCHASE OF PROPERTY WHICH WAS MADE THROUGH CHEQUE AND OTHER PAYMENT WAS MADE OVER AND ABOVE THE BOOKS OF ACCOUNTS IN CASH O UT OF INCOME OF UNACCOUNTED SOURCES OF THE ASSESSEE. LD. AR VEHEM ENTLY CONTENDED THAT AS PER ANNEXURE A-1 PAGE 5 AVAILABLE AT PAGE 16 OF THE PAP ER BOOK OF THE ASSESSEE, THE PAYMENT OF SINKING FUND, MAINTENANCE SECURITY AND F REEHOLD CHARGES HAS BEEN MENTIONED AND AGAINST THESE PAYMENTS, THERE IS A ME NTION OF CHEQUE IN FAVOUR OF ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 10 SUN CITY PROJECT PVT. LTD. BUT THE AO PROCEEDED TO MAKE ADDITION BY PRESUMING THAT THERE WAS CASH TAKEN OVER AND ABOVE THE PAYMEN T RECORDED BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS AND THESE ADDITIONS WERE N OT FOUND TO BE SUSTAINABLE BY THE CIT(A) AND HAVE BEEN DELETED BY THE FIRST APPEL LATE AUTHORITY. LD. AR FURTHER POINTED OUT THAT IN THE RIGHT SIDE DOWN BEL OW CORNER OF ANNEXURE A-1, PAGE 5, THERE IS A MENTION OF COMMISSION ON SALE 2% 6,570,747 TO PAY THIS NARRATION ALSO DOES NOT ESTABLISH THIS FACT THAT TH E ASSESSEE ACTUALLY MADE PAYMENT OF COMMISSION TO SHRI LALIT MODI IN CASH OV ER AND ABOVE THE AMOUNT RECORDED IN HER BOOKS OF ACCOUNTS AS THE AO HAS NOT LET OUT ANY INCRIMINATING MATERIAL OR EVIDENCE TO SUPPORT THIS FACT THAT THE ASSESSEE MADE PAYMENT TO SHRI LALIT MODI BY CHEQUE OR IN CASH OR BY WAY OF ANY O THER MODE FROM THE INCOME EARNED FROM UNACCOUNTED SOURCES. 12. LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS PAGE NO. 124 AND 125 OF THE ASSESSEES PAPER BOOK THAT SHRI LALIT MODI HAS SUBMITTED THIS CLARIFICATION BEFORE THE REVENUE AUTHORITIES THAT THE DOCUMENT AN NEXURE A-1 SEIZED FROM HIS RESIDENCE DOES NOT REPRESENT ANY TRANSACTION OF PRO PERTY OR OTHERWISE BY THE ASSESSEE MRS. VINITA CHAURASIA AND WITH ANY OTHER P ARTY INCLUDING SUNCITY PROJECT PVT. LTD. LD. AR HAS ALSO CONTENDED THAT A S PER CERTIFICATE SUBMITTED BY THE ASSESSEE BEFORE THE REVENUE AUTHORITIES AVAILAB LE AT PAGE 125 OF ASSESSEES PAPER BOOK, IT IS FURTHER CLEAR THAT THE DEAL OF PU RCHASE OF PROPERTY FROM M/S SUNCITY PROJECT LTD. WAS MADE BY THE ASSESSEE DIREC TLY THROUGH HER HUSBAND AND ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 11 NO COMMISSION WAS PAID TO ANY BROKER SINCE IT WAS A DIRECT DEAL. THE AR ALSO HAS DRAWN OUR ATTENTION TO ORDER OF THE CIT(A) DATE D 28.10.2013 IN THE CASE OF SHRI LALIT MODI FOR AY 20.10.2011 AND SUBMITTED THA T IN THE CASE OF SAID RECIPIENT BROKER I.E. SHRI LALIT MODI, IT WAS HELD THAT NO COMMISSION WAS RECEIVED BY SHRI LALIT MODI, HENCE, NO INCOME IT CA N BE PRESUMED AND HELD THAT THE PURCHASE ASSESSEE OF THE PRESENT CASE I.E. SMT. VINITA CHAURASIA PAID COMMISSION EITHER IN THE CASH OR BY CHEQUE TO SHRI LALIT MODI OVER AND ABOVE BOOKS OF ACCOUNTS FROM THE INCOME EARNED FROM UNACC OUNTED SOURCES. 13. FROM THE ASSESSMENT ORDER PARA NO. 4.3, WE NOTE THAT THE AO HAS REJECTED THIS EXPLANATION OF THE ASSESSEE AND HELD THAT THIS CERTIFICATE OBTAINED FROM SHRI LALIT MODI IS OF NO HELP TO THE ASSESSEE. FROM THE RELEVANT OPERATIVE PART OF THE IMPUGNED ORDER, WE OBSERVE THAT THE CIT(A) DEMOLISH ED THE BASIS AND CONCLUSION OF THE AO FOR MAKING THIS ADDITION WITH FOLLOWING OBSERVATIONS:- 12.4 COMING TO THE PAYMENT OF RS 65,70,747, ON ACC OUNT OF COMMISSION, TO LALIT MODI BY THE APPELLANT, THE NEXUS BETWEEN THE TWO IS ESTABLISHED BY THE FACT THAT HE IS A PRO PERTY DEALER, HE WAS WITNESS TO THE REGISTERED SALE AGREEMENT, AND T HE SEIZED PAPER UNDER CONSIDERATION WAS FOUND AT HIS RESIDENC E. THE MATERIALS SEIZED, FOLLOWING SEARCH OPERATIONS U/S 1 32 CONDUCTED ON HIM, HAVE REVEALED HIS ROLE AS BROKER IN PROPERT Y DEALS. HENCE, THE PRESENCE AT HIS RESIDENCE OF THE SEIZED PAPER THAT GIVES DETAILED WORKING OF THE CHEQUE AND CASH COMPO NENTS OF THE PROPERTY DEAL INVOLVING THE APPELLANT IS NOT AN IMA GINARY AND FANCIFUL DRAFT, AS CONTENDED BY HIM AND THE AR OF T HE APPELLANT. IT IS A REASONABLE PRESUMPTION U/S 292C THAT THE SUM O F RS 65,70,747 WAS PAID TO HIM BY THE APPELLANT AS COMMI SSION. THE OUTCOME OF THIS INFERENCE IS THAT THOUGH RS 65,70,7 47 IS TO BE ADDED AS CASH RECEIPT THAT HAS REMAINED TO BE ACCOU NTED IN THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 12 HANDS OF THE APPELLANT, THE SAME WILL STAND DEDUCTE D SINCE THE PAYMENT WAS MADE TO LALIT MODI. THEREFORE, WHILE TH E AO WAS RIGHT IN ADDING THIS AMOUNT TO THE INCOME OF THE AP PELLANT, HE SHOULD HAVE ALSO ALLOWED THE DEDUCTION FOR THE SAME AS BROKERAGE PAID TO LALIT MODI. THE AO IS DIRECTED TO ALLOW THE DEDUCTION OF RS 65,70,747 WHILE GIVING EFFECT TO TH IS ORDER.' 14. ON CAREFUL CONSIDERATION OF THE CONCLUSION OF T HE AO AS WELL AS OBSERVATIONS OF THE CIT(A), WE NOTE THAT THE AO HAD NO OTHER DOCUMENT, EVIDENCE, MATERIAL OR BASIS, EXCEPT ANNEXURE A-1 TO SUPPORT THE IMPUGNED ADDITION ON ACCOUNT OF ALLEGED COMMISSION PAYMENT T O SHRI LALIT MODI BY THE ASSESSEE. THE AO HAS NOT BROUGHT OUT ANY OTHER INC RIMINATING MATERIAL OR EVIDENCE OR DETAILS FACT TO SUPPORT THIS CONTENTION THAT THE ASSESSEE HAD ACTUALLY MADE PAYMENT OF COMMISSION TO SHRI LALIT MODI OVER AND ABOVE THE AMOUNT RECORDED IN HER BOOKS OF ACCOUNTS PERTAINING TO IMP UGNED PROPERTY PURCHASE OUT OF INCOME FROM HER UNACCOUNTED SOURCES. IT IS ALSO PERTINENT TO NOTE THAT ANNEXURE A-1 WHICH IS AVAILABLE AT PAGE 16 OF ASSES SEES PAPER BOOK REVEALS THAT THE PAYMENT OF COMMISSION BY THE ASSESSEE TO S HRI LALIT MODI HAS NOT BEEN MENTIONED BUT CONTENTS OF RIGHT SIDE DOWN BELOW COR NER MANIFEST THAT IF CONTENTS THEREIN ARE PRESUMED TO BE GOSPEL TRUTH, THEN ALSO THERE WAS NO MENTION OF PAYMENT OF COMMISSION. PER CONTRA, THE WORDS TO P AY ON THE RIGHT SIDE OR COMMISSION AMOUNT EX FACIE SHOW THAT THE COMMISSION WAS DUE TO PAY. FOR MAKING ADDITION IN REGARD TO EXPENSES ON INVESTMENT OUT OF INCOME FROM UNACCOUNTED SOURCES, THE ONUS IS ON THE AO TO ESTAB LISH THIS FACT THAT THE ASSESSEE ACTUALLY MADE PAYMENT TOWARDS COMMISSION E XPENSES OVER AND ABOVE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 13 THE ENTRIES MADE IN THE BOOKS OF ACCOUNTS IN REGARD TO PURCHASE OF SAID PROPERTY AND THE PAYMENT WAS MADE BY THE ASSESSEE FROM THE I NCOME OF UNACCOUNTED SOURCES, THEN ONLY SUCH KIND OF ADDITION CAN BE HEL D AS SUSTAINABLE AND IN ACCORDANCE WITH LAW. 15. IN THE PRESENT CASE, TWO CONDITIONS GLARINGLY A RE NOT FULFILLED VIZ. (I) INCURRENCE OF THE EXPENDITURE BY THE ASSESSEE, AND (II) THE SAME BEING UNACCOUNTED IN NATURE AND HAS BEEN INCURRED OUT OF INCOME FROM UNDISCLOSED OR UNACCOUNTED SOURCES. SINCE THE ASSESSEE HAS ALSO C HALLENGED CONCLUSION OF THE CIT(A) ON THIS ISSUE IN PARA 12.4 OF THE IMPUGNED O RDER, FURTHER DELIBERATIONS AND OUR FINAL CONCLUSION ON GROUND NO. 4 OF THE REV ENUE IS DEFERRED FOR ADJUDICATION ALONG WITH RELEVANT GROUND 2(III) TO ( VI) OF THE ASSESSEE. ASSESSEES APPEAL IN ITA NO.3343/DEL/2014 16. GROUND NO. 5 AND 6 OF THE ASSESSEE ARE GENERAL IN NATURE WHICH NEED NO ADJUDICATION. REMAINING GROUNDS OF THE ASSESSEE R EAD AS UNDER:- 1(I) THAT THE INITIATION OF PROCEEDING U/S. 153C O F THE ACT & ORDER PASSED U/S 143(3) IS ILLEGAL, INVALID A ND WITHOUT JURISDICTION AS ALLEGED RECORDING OF SATISFACTION B Y ACIT, CENTRAL CIRCLE - 21, NEW DELHI, WAS WITHOUT ANY LEG AL & FACTUAL BASIS. (II) THAT ALLEGED SEIZED ANNEXURE A-I (PARTY NO. 2 ), PAGE 5 DOES NOT BELONG TO APPELLANT AND AS SUCH WHO LE BASIS OF RECORDING OF ALLEGED SATISFACTION AND CONSEQUENT IAL ASSESSMENT PROCEEDINGS IS ILLEGAL AND INVALID. (III) THAT IN THE ABSENCE OF ANY CORROBORATION OR VERIFICATION OF CONTENTS OF THE SAID ANNEXURE, SAME HAS NO EVIDE NTIARY VALUE. 2(I) THAT CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS. 16,42,68,522/- AS UNEXPLAINED INVESTMENT AND SAME I S WITHOUT ANY FACTUAL OR LEGAL BASIS AND MERELY BASED ON PRES UMPTION AND SURMISES. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 14 (II) THAT ADVERSE INFERENCE IN RESPECT OF ALLEGED SEIZED ANNEXURE IS WITHOUT ANY CORROBORATION OR PROPER INV ESTIGATION AND APPLICATION OF MIND. (III) THAT SEIZED ANNEXURE DOES NOT BELONG TO APPE LLANT NOR SAME WAS FOUND FROM THE POSSESSION OF APPELLANT OR EXECUTED BY APPELLANT AND AS SUCH ADDITION ON THE BASIS OF S UCH ANNEXURE IS HIGHLY ARBITRARY AND MISCONCEIVED. (IV) THAT EVEN PERSON FROM WHOSE POSSESSION THE SA ID ANNEXURE WAS FOUND HAS NOT ALLEGED OR STATED THAT S AME BELONGS TO APPELLANT AND AS SUCH THERE COULD BE NO PRESUMPTION THAT SAME BELONGS TO APPELLANT. (V) THAT IN THE ABSENCE OF ANY OPPORTUNITY FOR CRO SS EXAMINATION OF LALIT MODI AND SUNCITY PROJECTS (P.) LTD., THE SAID ANNEXURE IS NOT ADMISSIBLE AND COULD NOT BE AT TRIBUTED TO THE APPELLANT. (VI) THAT THE LEARNED CIT CA) HAS MISINTERPRETED TH E PROVISIONS OF SECTION 292C OF THE ACT. 3(I) THAT CITCA) HAS ERRED IN MAKING ENHANCEMENT TO THE EXTENT OF RS. 5,50,72,700/- IN TERMS OF PROVISIONS OF SECTION 251 (2) OF THE INCOME TAX ACT, 1961. (II) THAT ENHANCEMENT AND CONSEQUENTIAL ADDITION OF RS. 5,50,72,700/- IS WITHOUT PROPER APPRECIATION OF FAC TS, APPLICATION OF MIND AND OPPORTUNITY TO THE ASSESSEE . (III) THAT PRESUMPTION OF ANY UNDISCLOSED PAYMENT O R INVESTMENT AND CONSEQUENTIAL ENHANCEMENT IS HIGHLY ARBITRARY AND UNCALLED FOR. (IV) THAT IN THE ABSENCE OF ANY EVIDENCE IN RESPECT OF ANY SUCH PAYMENT, HAVING BEEN MADE BY THE APPELLANT THERE CO ULD BE NO GROUND OR BASIS FOR ANY SUCH ADDITION AND SAME IS R EQUIRED TO BE DELETED. (V) THAT CITCA) HAS MISCONSTRUED AND MISAPPLIED DEC ISION OF DELHI HIGH COURT IN THE CASE OF CIT VS. SONAL CONST RUCTION 28 TAXMAN.COM 127 AND SAME HAS NO RELEVANCE OR BEARING TO THE FACTS OF THE CASE. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 15 4 (I) THAT OBSERVATION OF CIT(A) REGARDING ADDITION OF RS. 4 CRORE IN AY 2009-10 ON THE BASIS OF ALLEGED PAYMENT OF SAME IN FY 2008-09 IS HIGHLY ARBITRARY AND UNCALLED FOR. (II) THAT PRESUMPTION OF ANY SUCH PAYMENT IS WITHOU T ANY FACTUAL BASIS OR PROPER APPLICATION OF MIND AND OPP ORTUNITY TO THE APPELLANT AND AS SUCH THESE OBSERVATIONS MAY BE VACATED AND NO ADVERSE INFERENCE WAS CALLED FOR. (III) THAT OBSERVATION OF CIT(A) ARE ILLEGAL, ARBIT RARY, UNWARRANTED AND WITHOUT JURISDICTION. 17. BRIEFLY STATED THE FACTS GIVING RISE TO THIS A PPEAL ARE THAT A SURVEY OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT) WAS CONDUCTED IN THE CASE OF SHRI LALIT MODI AND A LOOS E SHEET ANNEXURE A-1, PAGE NO. 5 (AVAILABLE AT ASSESSEES PAPER BOOK PAGE NO. 16) WAS SEIZED AND ALLEGED BY THE DEPARTMENT TO BE BELONGING TO SMT. VINITA CHAUR ASIA THE ASSESSEE. THE AO COMPLETED ASSESSMENT U/S 153C/143(3) OF THE ACT VID E ASSESSMENT ORDER DATED 29.12.2011 AND MADE ADDITION OF RS.19,02,68,289 ON ACCOUNT OF UNEXPLAINED INVESTMENT IN THE PROPERTY AND FINALISED THE ASSESS MENT AT TOTAL TAXABLE INCOME OF RS.21,22,88,069 AS AGAINST RETURNED INCOME OF TH E ASSESSEE. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, THE ASSESSEE PREFERR ED AN APPEAL BEFORE THE CIT(A). THE CIT(A) DELETED THE ADDITION OF RS.2,5 9,99,766 AND ENHANCED THE ASSESSMENT BY RS.5,50,72,700/-. THE CIT(A) ENHANCE D THE ASSESSMENT ON THE BASIS OF ONLY IMPUGNED DOCUMENT SEIZED DURING THE S EARCH OPERATION IN THE CASE OF SHRI LALIT MODI BY ADDING THE AMOUNT OF REFUND O F RS.59,56,943 AND AMOUNT OF PENDING RENT OF RS.4,91,15,757. NOW, THE AGGRIE VED ASSESSEE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 16 GROUND NO. 1(I) TO (III) 18. LD. AR SUBMITTED THAT ALL THE ADDITIONS MADE BY THE AO AND THE CIT(A) ARE BASED ON INFERENCE AND THERE IS NO CORROBORATIO N, INQUIRY OR INVESTIGATION BY THE REVENUE AUTHORITIES ON THIS ISSUE AND ALL DISAL LOWANCE AND ADDITIONS HAVE BEEN MADE IN TOTAL DISREGARD TO THE SETTLED LEGAL P ROVISIONS AND PRINCIPLES OF THE ACT. LD. AR FURTHER SUBMITTED THAT AS PER SATISFAC TION NOTE PLACED IN ASSESSEES PAPER BOOK PAGE NO. 17, THE AO OF THE SEARCHED PERS ON I.E. SHRI LALIT MODI HAS RECORDED HIS SATISFACTION U/S 153C OF THE ACT ON 30 .6.2011 BUT NO SATISFACTION NOTE WAS RECORDED IN RELATION TO THE PERSON OTHER T HAN THE PERSON SEARCHED I.E. THE APPELLANT OF THE PRESENT APPEAL. LD. AR FURTHER SU BMITTED THAT SATISFACTION NOTE IN THE CASE OF SHRI LALIT MODI (PERSON SEARCHED) WA S RECORDED BY ACIT, CENTRAL CIRCLE-21, NEW DELHI ON 30.6.2011 WHO IS ALSO THE A SSESSEE OF THE PRESENT APPELLANT ASSESSEE BUT IT IS A SETTLED LEGAL PRINCI PLE THAT EVEN WHEN THE AO OF THE SEARCHED PERSON AND THE OTHER PERSON IS THE SAME, T HEN ALSO THE RECORDING OF SATISFACTION IN THE CASE OF SEARCHED PERSON AS WELL AS IN THE CASE OF OTHER PERSON IS MANDATORY FOR VALIDITY ASSUMING JURISDICTION U/S 153C OF THE ACT. TO SUPPORT THIS PROPOSITION, LD. AR HAS PLACED RELIANCE ON THE FOLLOWING DECISIONS OF HONBLE ALLAHABAD HIGH COURT, ANDHRA PRADESH HIGH C OURT AND ORDERS OF THE TRIBUNAL:- I) DCIT VS M/S G.S. FINANCE AND INVESTMENT P. LTD. (DELHI ITAT) (25.02.2015) ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 17 I) TANVIR COLLECTIONS PVT. LTD. VS ACIT (ITAT DELHI) ( ITA NO. 2421/D/2014 (DATED 16.01.2015) II) CIT VS M/S GOPI APARTMENT (ALL HIGH COURT) DATED 1. 5.2014 III) CIT VS SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. ( AP HIGH COURT) I.I.T.A. NO.662 OF 2014 AND BATCH DATED 26 .11.2014 IV) DCIT VS AAKASH AROGYA MINDIR P. LTD. (ITAT DELHI) ( DECEMBER 1 ST , 2014) V) ACIT VS INLAY MARKETING PVT. LTD. (ITAT DELHI) (14. 11.2014) 19. LD. AR VEHEMENTLY CONTENDED THAT THE ALLEGED DO CUMENT IN QUESTION DOES NOT BELONG TO THE PRESENT ASSESSEE SMT. VINITA CHAU RASIA AND IN ABSENCE OF DOCUMENT BELONGING TO THE APPELLANT ASSESSEE, THERE IS NO LEGAL BASIS FOR ASSUMING JURISDICTION U/S 153C OF THE ACT IN THE CA SE OF SUCH OTHER PERSON I.E. ASSESSEE APPELLANT OF THE PRESENT CASE. LD. AR FUR THER ADDED THAT THE ASSESSMENT U/S 153C OF THE ACT CAN ONLY BE INITIATED IN THE CA SES WHERE THE DOCUMENT BELONGING TO THE APPELLANT ASSESSEE IS FOUND DURING THE COURSE OF SEARCH U/S 132(1) OF THE ACT AND THE IMPUGNED SEIZED LOOSE SHE ET OF THE PAPER WAS NEITHER FOUND FROM THE POSSESSION OF THE ASSESSEE NOR IS IN THE HANDWRITING OF THE ASSESSEE NOR IS EXECUTED BY THE ASSESSEE AND NOT EV EN ORIGINATED FROM THE COMPUTER OF THE PRESENT ASSESSEE AND, THEREFORE, SO CALLED SOLE DOCUMENT ANNEXURE-1, DOES NOT BELONG TO THE ASSESSEE APPEL LANT. LD. AR FURTHER POINTED OUT THAT IT IS A SETTLED LEGAL POSITION THA T THE WORD BELONG TO USED IN SECTION 153C OF THE ACT SHOULD BE GIVEN A STRICT IN TERPRETATION AS PER RECENT DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PEPSICO ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 18 INDIA HOLDINGS PRIVATE LIMITED VS DCIT 370 ITR 295 (DEL). TO SUPPORT THIS PROPOSITION, LD. AR ALSO PLACED RELIANCE ON THE DEC ISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS MEGHMANI ORGANICS LTD. IN ITA 2077/2009, ORDERS OF ITAT DELHI IN THE CASE OF DCIT VS QUALITRON COMMODITIES PVT. LTD. DATED 6.1.2015 IN ITA NO. 466 6/DEL/2012 AND IN THE CASE OF NATIONAL INDUSTRIAL CORPORATION LTD. VS DCI T DATED 23.11.2012 IN ITA NO. 1658 AND 1871/DEL/10 FOR AY 2003-04 AND 200 4-05 AND OTHER CROSS APPEALS OF THE ASSESSEE AND THE REVENUE. 20. LD. AR FURTHER CONTENDED THAT THE AUTHENTICITY AND LEGAL SANCTITY OF THE SEIZED DOCUMENT ANNEXURE 1 HAS NOT BEEN PROVED AND SUBSTANTIATED BY THE AO AND MERE LOOSE SHEET OF PAPER WITHOUT ANY CORROBORA TION DOES NOT CONSTITUTE AN ADMISSIBLE AND ACCEPTABLE EVIDENCE AS PER SECTION 3 4 AND 93 OF THE INDIAN EVIDENCE ACT 1872. LD. AR HAS FURTHER DRAWN OUR AT TENTION TO THE OBSERVATIONS OF THE CIT(A) AT PAGE 10 PARA 12.2 AND SUBMITTED TH AT THE FIRST APPELLATE AUTHORITY ITSELF HAS ADMITTED THAT PART OF SEIZED D OCUMENT IS NOT TRUE AND DOES NOT REPRESENT THE CORRECT FACTS AND CERTAIN ADDITIONS O N ACCOUNT OF SINKING FUNDS, MAINTENANCE SECURITY AND FREEHOLD CHARGES WERE ALSO DELETED BY THE CIT(A) AND IN THIS SITUATION, THE PART STIPULATION OF THE SAME SEIZED DOCUMENTS CANNOT BE CONSIDERED FOR THE CONFIRMING OF THE ADDITION IN RE SPECT OF ALLEGED OVER AND ABOVE PAYMENT OF CONSIDERATION IN RESPECT OF PURCHA SE OF PROPERTY TRANSACTION AND IN RESPECT OF ALLEGED RECEIPT OF CASH OF RS.59, 56,943 AND FOR MAKING ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 19 ENHANCEMENT OF INCOME OF AMOUNT OF PENDING RENT AMO UNTING TO RS. 4,91,15,757 EVEN THOUGH THERE WAS NO SUCH INQUIRY OR INVESTIGAT ION CARRIED OUT NEITHER BY THE AO NOR BY THE CIT(A) IN RESPECT OF SUCH CASH PAYMEN TS AND SINKING FUNDS, MAINTENANCE SECURITY, FREEHOLD CHARGES AND COMMISSI ON AND BY THE CIT(A) IN RESPECT OF ALLEGED REFUND OF CASH TO THE ASSESSEE A ND ALLEGED RECEIPT OF PENDING RENT BY THE ASSESSEE. 21. LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS ASSESSMENT ORDER AT PAGE 5 PARA 4.4.3 AND SUBMITTED THAT THE IMPUGNED DOCUME NT HAS TO BE CONSIDERED IN ENTIRETY AND NOT IN BITS OR PIECEMEAL. IT IS NOT OPEN FOR THE REVENUE AUTHORITIES TO TREAT ONE PART OF DOCUMENT AS CORRECT AND OTHER PART OF SAME DOCUMENT AS WRONG. LD. AR FURTHER POINTED OUT THAT SINCE MAJOR PART OF ADDITIONS ON ACCOUNT OF SINKING FUND, MAINTENANCE SECURITY, FREEHOLD CHA RGES AND COMMISSION PAYMENT HAS ALREADY BEEN DELETED BY THE CIT(A) WHIC H IN ITSELF CREATES AND CASTS A REASONABLE DOUBT OVER THE VALIDITY AND CORRECTNES S OF THE FIGURES APPEARING IN SEIZED DOCUMENT ANNEXURE A-1. LD. AR FURTHER POINT ED OUT THAT IN THE STATEMENT OF LALIT MODI AVAILABLE AT PAPER BOOK PAG E NO. 18 TO 33, IT IS CLEAR THAT SHRI LALIT MODI HAS HIMSELF ADMITTED THAT THE SEIZE D ANNEXURE A-1 IS A PROPOSAL FOR FUTURE TRANSACTION AS THE DATE OF SEIZED ANNEXU RE IS 18.5.2009 WHEREAS THE SALE DEED ITSELF WAS EXECUTED ON 13.5.2009 AND AS S UCH, THE SAME CANNOT BE A BASIS TO FASTEN ANY LIABILITY WITH THE ASSESSEE APP ELLANT OR TO DRAW ANY ADVERSE INFERENCE AGAINST THE ASSESSEE APPELLANT OF THE PRE SENT CASE. THE LD. AR ALSO ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 20 TOOK US THROUGH STATEMENT OF SHRI LALIT MODI DATED 15.3.2013 RECORDED U/S 131 OF THE ACT IN THE CASE OF M/S SUNCITY PROJECTS PVT. LTD. AND SUBMITTED THAT REPLYING TO THE QUESTION NO.3, SHRI LALIT MODI FURT HER MADE IT CLEAR THAT ANNEXURE A-1 IS A PROPOSAL WHICH WAS DELIVERED TO H IM BY A BROKER AFTER EXECUTION OF SALE DEED WHICH COULD NOT BE ACTED UPO N AND MATERIALISED THEREFORE, NO COMMISSION WAS EARNED BY HIM I.E. SHRI LALIT MOD I, WHICH ALSO SUPPORT THE FACT THAT NO BROKERAGE OR COMMISSION WAS PAID BY TH E PRESENT ASSESSEE TO SHRI LALIT MODI. LD. AR POINTED OUT IN THESE SET OF FAC TS AND CIRCUMSTANCES NO ADDITION EITHER U/S 69 OR 69C OF THE ACT CAN BE MAD E. 22. LD. COUNSEL ALSO POINTED OUT THAT IN THE STATEM ENT OF SHRI LALIT MODI RECORDED ON 10.6.2009 BEFORE THE CIT(A), SHRI MODI MADE IT CLEAR THAT ANNEXURE A-1 PAGE 5 TO 8 ARE ROUGH PLANNING AND PAG E NO. 5 IS A PROPOSAL FOR VASANT SQUARE MALL PROPERTY FOR SALE BUT THE DEAL D ID NOT MATERIALISE THROUGH HIM I.E. SHRI LALIT MODI. LD. AR FURTHER SUBMITTED THAT MERELY BECAUSE SHRI LALIT MODI SIGNED THE SALE DEED BETWEEN THE ASSESSE E AND M/S SUNCITY PROJECTS PVT. LTD., IT CANNOT BE PRESUMED THAT THE DEAL WAS MATERIALISED THROUGH LALIT MODI AND THE ASSESSEE MADE PAYMENT OF UNRECORDED CO NSIDERATION OF M/S SUNCITY PROJECT PVT. LTD. AND COMMISSION TO SHRI LA LIT MODI OVER AND ABOVE THE CONSIDERATION REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IN THIS REGARD AND FROM THE INCOME EARNED BY THE ASSESSEE FROM UNA CCOUNTED SOURCES. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 21 23. LD. AR REITERATING ITS ARGUMENTS SUBMITTED THAT THE PRESUMPTION U/S 132(4A) AND 292C OF THE ACT IS MISPLACED AS ONCE IT IS ADMITTED THAT THE DOCUMENT IS A PROPOSAL, THEN PRESUMPTION OF CORRECT NESS OF THE FIGURES MENTIONED THEREIN IS OF NO CONSEQUENCE CONSIDERING THE NATURE OF DOCUMENT. LD. AR STRENUOUSLY POINTED OUT THAT PRESUMPTION U/S 132 (4A) AND 292C OF THE ACT IS APPLICABLE ONLY IN THE CASE OF PERSON FROM WHOSE PO SSESSION THE DOCUMENT IS SEIZED AND NOT IN THE CASE OF THIRD PARTY OR OTHER PERSON AND THEREFORE, THE SAME HAS NO RELEVANCE AND IN THE CASE OF PRESENT ASSESSE E WHO IS UNDISPUTEDLY A PERSON OTHER THAN PERSON SEARCHED AND THE DOCUMENT ANNEXURE A-1 DOES NOT BELONG TO THE PRESENT APPELLANT ASSESSEE VIZ. VINIT A CHAURASIA. LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE 96-117 AND SUBMITTED THAT ROUGH NOTING OR PROPOSAL CANNOT REPLACE OR DILUTE T HE EVIDENTIARY VALUE OF THE REGISTERED SALE DEED AND THERE IS NO DOCUMENT ON RE CORD TO SHOW THAT ANYTHING OVER AND ABOVE THE AMOUNT MENTIONED IN SALE DEED WA S PAID BY THE ASSESSEE AND THE WHOLE BASIS OF THE ADDITION IS BASED ON SURMISE S AND CONJECTURES WHICH CANNOT BE HELD AS SUSTAINABLE. LD. AR VEHEMENTLY C ONTENDED THAT THE SALE CONSIDERATION PAID BY THE ASSESSEE FOR THE PROPERTY IN QUESTION IS WELL ABOVE TMORE THAN 25% OF THE PREVAILING CIRCLE RATE FOR TH E PERIOD UNDER CONSIDERATION, AS SUCH, THERE COULD BE NO PRESUMPTION ABOUT ANY UN DISCLOSED CONSIDERATION OVER AND ABOVE THE CONSIDERATION RECORDED BY THE ASSESSE E IN HER BOOKS OF ACCOUNTS. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 22 24. LD. AR ALSO POINTED OUT THAT IN THE SEIZED DOCU MENT, REFERENCE IS MADE TO PDC WHICH DENOTES POST DATED CHEQUES WHEREAS NO S UCH CHEQUES HAVE BEEN ISSUED BY THE ASSESSEE AS EVIDENT FROM THE CHEQUE C OUNTERFOILS PLACED AT PAPER BOOK PAGE NO. 129-140. LD. AR ALSO SUBMITTED THAT THIS FACT HAS NOT BEEN CONTROVERTED BY THE AUTHORITIES BELOW AND EVEN THE ALLEGATION OF CASH PAYMENT OVER AND ABOVE BOOKS OF ACCOUNTS HAS NOT BEEN ESTAB LISHED BY THE AO AND, THEREFORE, THE SAME SHOWS THAT THE FIGURES APPEARIN G IN THE SEIZED DOCUMENT ANNEXURE A-1 ARE NOT TRUE AND CORRECT AND AS SUCH, THE SAME ARE IMAGINARY AND HYPOTHETICAL WHICH CANNOT GO BEYOND UNMATERIALISED PROPOSAL AND NOT SUPPORTED BY ANY CORROBORATIVE EVIDENCE AND AS SUCH, THE SAME IS UNRELIABLE AND UNSUBSTANTIATED BEING A PROPOSAL OF PROPERTY DEAL W HICH COULD NOT BE MATERIALISED THROUGH THE PERSONS WHO INSERTED THESE IMAGINARY FIGURES. LD. AR ALSO CONTENDED THAT THE ASSESSEE APPELLANT OR ANY O THER PARTY IS IN NO WAY CONNECTED WITH THE SAID LOOSE SHEETS OF PAPER WITH ANNEXURE A-1 AND AS SUCH THE SAME IS NOT RELEVANT AND ACCEPTABLE FOR DRAWING PRE SUMPTION U/S 132 (4A) AND 292C OF THE ACT AND ALSO FOR THE PURPOSE OF MAKING ADDITION U/S 153C OF THE ACT. 25. REPLYING TO THE ABOVE, LD. DR SUPPORTED THE ORD ERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THERE IS NO REQUIREMENT OF PROVISIONS OF THE ACT TO RECORD SATISFACTION IN THE CASE OF THE PERSON OTHER THAN THE PERSON SEARCHED. LD. DR FURTHER POINTED OUT THAT THE DETAIL MENTIONED IN THE ALLEGED ANNEXURE A-1 ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 23 SEIZED DURING THE SEARCH OPERATION IN THE CASE OF S HRI LALIT MODI IS FROM SALE MATCHING WITH THE FACTS AND FIGURES RECORDED IN THE SALE DEED EXECUTED BY M/S SUNCITY PROJECT LTD. IN FAVOUR OF PRESENT ASSESSEE, THEREFORE, THE AO WAS QUITE JUSTIFIED AND RIGHT IN MAKING ADDITION WITH REGARD TO THE OVER AND ABOVE PAYMENT OF CONSIDERATION TO THE SELLER M/S SUNCITY PROJECT ON ACCOUNT OF PAYMENT OF SINKING FUND, MAINTENANCE SECURITY, FREEHOLD CHARGE S BY THE ASSESSEE TO THE SELLER M/S SUNCITY PROJECT PVT. LTD. THE LD. DR ALSO SUBM ITTED THAT AS PER STIPULATION AND NARRATION OF THE IMPUGNED DOCUMENT ANNEXURE A-1 , THE ASSESSEE MADE PAYMENT OF RS.16,42,68,832 BY WAY OF CHEQUE WHICH W AS RECORDED IN THE REGISTERED SALE DEED AND SIMILAR AMOUNT WAS ALSO PA ID BY THE ASSESSEE TO THE SELLER M/S SUNCITY PROJECT PVT. LTD. BY WAY OF PDC I.E. POST DATED CHEQUES AND IN ADDITION TO THAT AND THERE WAS AN EXCESS PAYMENT OF RS.59,56,943 BY THE ASSESSEE TO THE SELLER WHICH WAS REFUNDED TO THE AS SESSEE AND THEREFORE, ADDITION OF THIS AMOUNT WAS RIGHTLY MADE BY THE CIT(A) ENHAN CING THE ASSESSMENT. 25.1 LD. DR, SUPPORTING THE ENHANCEMENT OF RS. 4,91 ,15,757 ON ACCOUNT OF PENDING RENT, ALSO SUBMITTED THAT THE PROPERTY, WHI CH WAS PURCHASED BY THE ASSESSEE, WAS ALREADY GIVEN ON RENT, BY SUN CITY PR OJECTS P. LTD. AND THE ASSESSEE SMT. VINITA CHAURASIA RECEIVED AMOUNT OF P ENDING RENT, FROM THE TENANT WHICH WAS ALSO MENTIONED IN THE SEIZED DOCUMENT AN NEXURE A-1, THEREFORE AFTER ADJUSTING THE AMOUNT OF RS. 4 CRORES ALREADY PAID IN AY 2009-10, THE CIT(A) RIGHTLY ENHANCED THE INCOME OF THE ASSESSEE BY THE SAID AMOUNT UNPAID ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 24 PENDING RENT AFTER AFFORDING DUE OPPORTUNITY OF HEA RING FOR THE ASSESSEE. LD. AR SUBMITTED THAT THE AO RIGHTLY ASSUMED JURISDICTION OVER THE ASSESSEE FOR REASSESSMENT U/S 153C R/W SECTION 143(3) OF THE ACT AS THERE WAS SUFFICIENT AND VALID GROUND TO ASSUME JURISDICTION ON THE ASSESSEE ON THE BASIS OF INCRIMINATING MATERIAL ANNEXURE A-1 SEIZED DURING THE SEARCH OPER ATION IN THE CASE OF SHRI LALIT MODI WHO FACILITATED THE PROPERTY DEAL AND AL SO SIGNED THE SALE DEED AS ATTESTING WITNESS WHICH ALSO SUPPORT THIS FACT THAT THE ASSESSEE PAID COMMISSION OF RS.65,70,747/- TO SHRI LALIT MODI OVER AND ABOVE THE PAYMENT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE OUT OF INCOME EAR NED FROM UNDISCLOSED SOURCES. LD. DR FINALLY PRAYED THAT THE ADDITION M ADE BY THE AO AND ENHANCED BY THE CIT(A) ARE SUSTAINABLE AND APPEAL OF THE ASS ESSEE HAVING NO LEGS TO STAND MAY BE DISMISSED. 26. AT THE VERY OUTSET, LET US DEAL WITH THE LEGAL CONTENTION AND GROUND OF THE ASSESSEE WHICH FOUND PLACE IN GROUND NO. 1(I) TO (I II) OF THE ASSESSEES GROUNDS. THE PRECISE LEGAL CONTENTION OF THE ASSESSEE IS THA T THE INITIATION OF PROCEEDINGS U/S 153C OF THE ACT AND ORDER PASSED U/S 143(3)/153 C OF THE ACT ARE ILLEGAL, INVALID AND WITHOUT JURISDICTION AS ALLEGED RECORDI NG OF SATISFACTION BY THE CIT(A), CC-21, NEW DELHI (THE AO OF THE PERSON SEAR CHED) WAS WITHOUT ANY LEGAL AND FACTUAL BASIS. LD. AR HAS DRAWN OUR ATTE NTION TOWARDS PAPER BOOK PAGE NO. 17 AND SUBMITTED THAT THE WHOLE BASIS OF R ECORDING OF ALLEGED SATISFACTION BY THE AO OF THE PERSON SEARCHED AND C ONSEQUENTIAL ASSESSMENT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 25 PROCEEDINGS ARE ILLEGAL AND INVALID BECAUSE THE ALL EGED SEIZED DOCUMENT I.E. ANNEXURE A-1 (PAPER BOOK PAGE NO. 16) DOES NOT BELO NG TO APPELLANT ASSESSEE OF THE PRESENT ASSESSEE I.E. VINITA CHAURASIA. LD. AR FURTHER ADDED THAT IN ABSENCE OF ANY CORROBORATIVE EVIDENCE OF THE CONTENTS OF SA ID ANNEXURE A-1, THE SAME CANNOT BE CONSIDERED TO BELONG TO THE ASSESSEE AN D THE SAME HAS NO EVIDENTIARY VALUE. 26.1 PLACING RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PEPSICO HOLDING PVT. LTD. VS A CIT (2015) 370 ITR 295 (DELHI), THE L D. AR SUBMITTED THAT IN THE SATISFACTION NOTE RECOR DED BY THE AO OF THE PERSON SEARCHED, THERE WAS NOTHING TO INDICA TE THAT THE SEIZED DOCUMENT ANNEXURE A-1 DID NOT BELONG TO THE PERSON SEARCHED I.E. SHRI LALIT MODI, SECONDLY THE SAID SEIZED DOCUMENT, APPARENTLY A COM PUTER PRINTOUT, SEIZED DURING SEARCH OPERATION ON SHRI LALIT MODI DOES NOT NECESSARILY MEAN AND IMPLY THAT THE SAME BELONGS TO THE PERSON WHOSE NAME IS M ENTIONED THEREIN. LD. AR ALSO POINTED OUT THAT UNLESS IT WAS ESTABLISHED THA T THE DOCUMENT IN QUESTION, WHETHER ORIGINAL OR PHOTOCOPY, DID NOT BELONG TO PE RSON IN RESPECT OF WHOM SEARCH WAS CONDUCTED, THE QUESTION OF INVOKING SECT ION 153C OF THE ACT WOULD NOT ARISE. LD. AR HAS ALSO POINTED OUT THAT THE AO OF SHRI LALIT MODI I.E. PERSON SEARCHED RECORDING SATISFACTION U/S 153C OF THE ACT ON 30.6.2011 (PLACED AT PAPER BOOK PAGE NO. 17) BUT THERE IS NO MENTIONING IN THE SAID SATISFACTION NOTE THAT THE SEIZED DOCUMENT ANNEXURE A-1 WAS DISOWNED OR DISCLAIMED BY THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 26 PERSON SEARCHED VIZ. LALIT MODI. FURTHERMORE, IN T HIS SITUATION, THE QUESTION OF INVOKING SECTION 153C OF THE ACT WOULD NOT ARISE AN D THE AO OF THE PERSON SEARCHED MISERABLY FAILED TO COMPLY WITH THE DUTY C AST UPON HIM TO REBUT THE PRESUMPTION THAT THE DOCUMENT SEIZED DURING THE SEA RCH OPERATION UPON SHRI LALIT MODI DOES NOT BELONG TO THE PERSON SEARCHED A ND THE SAME ACTUALLY BELONGS TO THE OTHER PERSON I.E. ASSESSEE OF THE PRESENT AP PEAL SMT. VINITA CHAURASIA. LD. AR VEHEMENTLY CONTENDED THAT MERELY BECAUSE NAME OF THE PRESENT ASSESSEE HAS BEEN MENTIONED IN THE IMPUGNED DOCUMENT ANNEXURE A- 1 DOES NOT RELATE THE SAME TO THE PRESENT APPELLANT AND IT CANNOT BE LEGA LLY HELD THAT THE SEIZED DOCUMENT ANNEXURE A-1 BELONGS TO THE PRESENT ASSE SSEE. 27. LD. AR HAS ALSO POINTED OUT THAT THE AO OF PERS ON SEARCHED VIZ. SHRI LALIT MODI HAS RECORDED SATISFACTION U/S 153C OF THE ACT BUT NO SATISFACTION NOTE WAS RECORDED IN RELATION TO THE OTHER PERSON I.E. PRESE NT ASSESSEE SMT. VINITA CHAURASIA AND, THEREFORE, THE ASSUMPTION OF JURISDI CTION FOR ISSUING NOTICE U/S 153C OF THE ACT AND FRAMING REASSESSMENT U/S 143(3) R/W SECTION 153C OF THE ACT IS NOT VALID, BAD IN LAW AND VOID AB INITIO. T O SUPPORT THIS PROPOSITION, LD. AR HAS PLACED RELIANCE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. IN ITA NO. 662 & 668 OF 2014 DATED 26.11.2014. LD. AR HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF PEPSICO INDIA HOLDINGS PVT. LTD. VS ACIT 367 ITR 11 2 (DEL) AND DECISION ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 27 OF ITAT DELHI IN THE CASE OF TANVIR COLLECTIONS PV T. LTD. VS ACIT 168 TTJ (DEL) 145 AND SUBMITTED THAT IT WAS EVIDENT FROM THE SATISFAC TION NOTE THAT APART FROM SAYING THAT THE DOCUMENT BELONGED TO THE ASSES SEE, THE AO WAS SATISFIED THAT IT WAS A CASE FOR ISSUANCE OF NOTICE U/S 153C OF THE ACT BUT THERE WAS NOTHING WHICH WOULD INDICATE HOW THE PRESUMPTION WH ICH WERE TO BE NORMALLY RAISED HAD BEEN REBUTTED BY THE AO. LD. AR VEHEMEN TLY CONTENDED THAT IT IS A SETTLED POSITION OF LAW THAT WHEN A PROCEEDING IS T O BE DONE IN ONE PARTICULAR MANNER UNDER THE LAW OR RULES, THEN THE SAME HAS TO BE DONE IN THAT MANNER ALONE AND NOT THE OTHER WAY. 28. REPLYING TO THE ABOVE, LD. DR CONTENDED THAT WH EN THE AO OF THE PERSON SEARCHED AND THE AO OF THE OTHER PERSON IS THE SAME , THEN THERE IS NO NEED OF RECORDING TWO SATISFACTION NOTES VIZ. FIRST IN THE CASE OF PERSON SEARCHED AND SECOND IN THE CASE OF THE PERSON OTHER THAN THE PER SON SEARCHED. HOWEVER THE LD. DR FAIRLY ACCEPTED THAT THE SATISFACTION NOTE AVAIL ABLE AT PAGE NO. 17 OF THE ASSESSEES PAPER BOOK HAS BEEN RECORDED BY THE AO O F THE PERSON SEARCHED AND NO SATISFACTION NOTE HAS BEEN RECORDED IN THE CASE OF THE OTHER PERSON I.E. THE PRESENT ASSESSEE. 29. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE OBSERVE THAT THIS LEGAL CONTROVERSY REVOLVES AROUND THE REQUIREMENT OF SECT ION 153C(1) OF THE ACT WHICH READS AS UNDER:- ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 28 153C. 3 [(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 ART ICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISIT IONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRE D 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 3A [ AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSO N AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTH ER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A , IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR D OCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON TH E DETERMINATION OF THE TOTAL INCOME OF SUCH OTHER PER SON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SU B-SECTION (1) OF SECTION 153A ] 30. IN THE CASE OF CIT VS SHETTYS PHARMACEUTICALS & BIOLOGICALS LTD. (SUPRA), THE HONBLE ANDHRA PRADESH HIGH COURT HELD AS UNDER :- THIS APPEAL IS SOUGHT TO BE PREFERRED AND ADMITTED AGAINST THE JUDGMENT AND ORDER OF THE LEARNED TRIBU NAL DT.28.S.2014 IN RELATION TO THE ASSESSMENT YEAR 2009-2010 ON THE FOLLOWING SUGGESTED QUESTION OF LAW. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE HONBLE TRIBUNAL (ITAT) IS CORRECT IN LAW IN QUASHING THE A SSESSMENT FRAMED UNDER SECTION 153C OF THE INCOME TAX ACT 1961 ON TH E GROUND THAT THERE IS NO SATISFACTION RECORDED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER THE SEARCHED PERSON DESPITE THE F ACT THAT THE ASSESSING OFFICER OF THE RESPONDENT ASSESSEE AND TH E ASSESSING OFFICER OF THE SEARCHED ASSESSEE ARE ONE AND THE SA ME AND THE SATISFACTION RECORDED BY THE COMMON ASSESSING OFFIC ER BEFORE ISSUE OF NOTICE UNDER SECTION 153C OF THE INCOME TAX ACT, 19 61 IS SUFFICIENTLY VALID TO FINALIZE THE ASSESSMENT UNDER SECTION 153C OF THE INCOME TAX ACT? WE HAVE HEARD SRI B. NARASIMHA SARMA, LEARNED COUNS EL FOR THE APPELLANT REVENUE AND GONE THROUGH THE IMPUGNED JUDGMENT AND ORDER OF THE LEARNED TRIBUNAL. THE LEARNED TRIBUNAL IN THIS CASE DID NOT ACCEPT THE INITIATION OF THE ACTION UNDER SECTI ON 153C OF THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 29 INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT). THIS ACTION HAS TO BE TAKEN AGAINST A THIRD PARTY IN RESPECT OF THE INCRIMINATING MATERIALS BROUGHT OUT IN CONNECTION WITH SEARCH AND SEIZURE CONDUCTED ON ANOTHER PARTY. SECTION 153C OF THE AC T SPECIFICALLY SAYS THAT THE ASSESSING OFFICER MUST BE SATISFIED THAT S UCH ACTION IS REQUIRED TO BE INITIATED. SRI NARASIMHA SARMA, LEARNED COUNSEL FOR THE APPELL ANT, SUBMITS THAT THE WORD RECORDING SATISFACTION IS NOT A PRE-CONDITION FOR THE OBJECT OF THE AFORESAID SECTION. IN ANY EVENT, FROM A READING OF THE ORDER PASSED BY THE ASSESSING OFFICER TO INITIATE A CTION, IF IT EMERGES THAT SATISFACTION IS DEEMED TO HAVE BEEN ARRIVED AT , MERE NON-USE OF THE WORD OF SATISFACTION DOES NOT VITIATE THE ACTIO N. THE ARGUMENT APPARENTLY IS VERY ATTRACTIVE, BUT THE LAW IS OTHERWISE AND THE LEARNED TRIBUNAL HAS CORRECTLY AP PLIED. WE THEREFORE APPROPRIATELY SET OUT SECTION 153C OF THE ACT. ASSESSMENT OF INCOME OF ANY OTHER PERSON 153C. (1) NOTWITHSTANDING ANYTHING CONTAINED IN SEC TION 139, SECTION 147, SECTION 148, SECTION 149, SECTION 151 AND SECTION 153, WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOO KS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153A, THEN T HE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHAL L BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH S UCH OTHER PERSON AND ISSUE NOTICE AND ASSESS OR REASSESS THE INCOME OF THE OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A, IF, THAT ASSESSING OFFICER IS SATISFIED THAT THE BOOKS OF ACCOUNT OR D OCUMENTS OR ASSETS SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETER MINATION OF THE TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS REFERRED TO IN SUB- SECTION (1) OF SECTION 15 3A. (EMPHASIS SUPPLIED) IT IS THEREFORE CLEAR THAT FIRSTLY SATISFACTION HAS TO BE RECORDED BY THE ASSESSING OFFICER WHO CONDUCTED SEARCH, THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG 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 OF THE ACT. THEREAFTER, THE ASSESSING OFFICER HAVING JURISDICTI ON OVER THIRD PARTY ON RECEIPT OF THE SEIZED MATERIAL OR BOOKS OF ACCOU NTS OR DOCUMENT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 30 BEING HANDED OVER TO HIM SHALL RECORD HIS OWN SATIS FACTION AFTER EXAMINING THE SAME INDEPENDENTLY WITHOUT BEING INFL UENCED BY THE SATISFACTION OF THE SEIZING OFFICER. IN OTHER WORDS IT IS NOT AN AUTOMATIC ACTION. WE FIND SATISFACTION OF TWO OFFIC ERS IS MISSING. IN THIS CONNECTION WE SET OUT THE TEXT OF THE ORDER OF THE ASSESSING OFFICER WHICH IS AS FOLLOWS. A SEARCH AND SEIZURE OPERATION U/S. 132 WAS CARRIED OUT IN THE GROUP CASE OF DR. T. YADHAIAH GOUD AND OTHERS ON 25 .3.2010. DURING THE COURSE OF SEARCH OPERATION DOCUMENTS BELONGING TO SHETTYPHARMACEUTICALS & BIOLOGICAL LTD., HAS BEEN SEIZED. HENCE IT IS CONSIDERED TO INITIATE PROCEEDI NG U/S. 153C OF THE I.T.ACT. THE AFORESAID SECTION MANDATES RECORDING OF SATISFA CTION OF THE ASSESSING OFFICER(S) IS A PRE-CONDITION FOR INVOKIN G JURISDICTION AND IT IS NOT A MERE FORMALITY BECAUSE RECORDING OF SATISF ACTION POSTULATES APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENTS SE IZED MUST BE BELONGING TO THE ANY OTHER PERSON OTHER THAN THE PE RSON REFERRED TO IN SECTION 153-A OF THE ACT. IT IS CONTENDED THAT THE SAME ASSESSING OFFICER IS INVOLVED IN THE MATTER. THIS FACT DOES N OT DISPENSE WITH ABOVE REQUIREMENT. IT IS SETTLED POSITION OF LAW TH AT WHEN A THING IS TO BE DONE IN ONE PARTICULAR MANNER UNDER LAW THIS HAS TO BE DONE IN THAT MANNER ALONE AND NOT OTHER WAY (SEE NAZIR AHMED V. KING EMPEROR). WE THINK THE LEARNED TRIBUNAL HAS CORRECTLY FOLLOWE D THE PRINCIPLE. WE DO NOT FIND ANY ELEMENT OF LAW TO BE DECIDED.' WE ACCORDINGLY DISMISS THE APPEAL. 31. IN VIEW OF LANGUAGE USED BY THE LEGISLATURE IN SECTION 153C OF THE ACT AND THE RATIO LAID DOWN BY HONBLE ANDHRA PRADESH H IGH COURT IN THE CASE OF SHETTY PHARMACEUTICALS (SUPRA) IN SIMILAR SET OF FA CTS AND CIRCUMSTANCES, WE NOTE THAT FIRSTLY SATISFACTION HAS TO BE RECORDED BY THE AO OF THE PERSON SEARCHED THAT ANY MONEY, BULLION, JEWELLERY OR ANY OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OF DOCUMENT SEIZED OR REQUISITIONED BELONGE D TO OR BELONGED TO A PERSON OTHER THAN THE PERSON SEARCHED REFERRED TO IN SECTI ON 153A OF THE ACT. FURTHER, ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 31 THE AO OF THE PERSON OTHER THAN THE PERSON SEARCHED , HAVING JURISDICTION OVER THE OTHER PERSON, ON RECEIPT OF SEIZED MATERIAL OR BOO KS OF ACCOUNT OR DOCUMENTS ETC. HANDED OVER TO HIM BY THE AO OF THE PERSON SEA RCHED SHALL RECORD HIS SATISFACTION AFTER EXAMINING THE SAME INDEPENDENTLY WITHOUT BEING PREJUDICED OR INFLUENCED BY THE SATISFACTION OF THE AO OF THE PER SON SEARCHED SHALL RECORD HIS SATISFACTION THAT THE BOOKS OF ACCOUNTS OR DOCUMENT S OR ASSETS ETC. SEIZED OR REQUISITIONED HAVE A BEARING ON THE DETERMINATION O F TOTAL INCOME OF SUCH OTHER PERSON FOR THE RELEVANT ASSESSMENT YEAR OR YEARS RE FERRED TO IN SUB-SECTION (1) OF SECTION 153A OF THE ACT. MEANING THEREBY, SECTION 153C(1) OF THE ACT MANDATES RECORDING OF SATISFACTION BY THE OFFICER OF THE PER SON SEARCHED AS WELL AS OFFICER OF THE OTHER PERSON IS A PRECONDITION FOR INVOKING JURISDICTION UNDER THIS PROVISION. 31.1 THE RATIO LAID DOWN BY THE HONBLE ANDHRA PRAD ESH HIGH COURT IN THE CASE OF CIT VS SHETTYS PHARMACEUTICALS & BIOLOGICAL S LTD. (SUPRA) FURTHER MAKES IT CLEAR THAT THE RECORDING OF SATISFACTION POSTULA TES THE APPLICATION OF MIND CONSCIOUSLY AS THE DOCUMENT SEIZED MUST BE BELONGIN G TO ANY PERSON OTHER THAN THE PERSON SEARCHED REFERRED TO IN SECTION 153A OF THE ACT. THE HONBLE HIGH COURT HAS FURTHER MADE IT CLEAR THAT THIS REQUIREME NT DOES NOT DISPENSE WITH ONLY ON THE REASON THAT THE AO OF THE PERSON SEARCHED AN D THE OTHER PERSON IS THE SAME BECAUSE WHEN A THING IS TO BE DONE IN WAY PART ICULAR MANNER UNDER THE LAW, THIS HAS TO BE DONE IN THAT MANNER ALONE AND N OT IN ANY OTHER WAY. IN THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 32 PRESENT CASE, NON-RECORDING OF SATISFACTION IN RELA TION TO OTHER PERSON I.E. APPELLANT ASSESSEE OF THE PRESENT CASE IS OBVIOUSLY FATAL TO THE ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT FOR INITIATION OF PROCEEDINGS, ISSUANCE OF NOTICE ETC. 32. COMING TO THE ISSUE OF SATISFACTION NOTE RECORD ED BY THE AO OF THE PERSON SEARCHED AVAILABLE AT PAGE 17 OF THE PAPER BOOK OF THE ASSESSEE, WE NOTE THAT THERE IS NO MENTIONING BY THE AO OF SHRI LALIT MODI I.E. PERSON SEARCHED THAT THE IMPUGNED DOCUMENT ANNEXURE A-1 DOES NOT BELONG TO T HE PERSON SEARCHED. AT THIS JUNCTURE, WE RESPECTFULLY TAKE COGNIZANCE OF T HE RATIO LAID DOWN BY THE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF P EPSICO INDIA HOLDINGS PVT. LTD. VS ACIT (SUPRA) WHEREIN PARA 14, 15 AND 16 AT PAGE 304 OF THE JUDGEMENT LAY DOWN THE RATIO AS FOLLOWS:- 14. FIRST OF ALL WE MAY POINT OUT, ONCE AGAIN, THA T IT IS NOBODYS CASE THAT THE JAIPURIA GROUP HAD DISCLAIME D 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 S ECTION 153C OF THE SAID ACT IS THAT WHERE THE ASSESSING OFFICE R IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABL E ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR RE QUISITIONED 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 S AID ACT CAN BE INVOKED, THE ASSESSING OFFICER OF THE SEARCHED P ERSON MUST BE SATISFIED THAT THE SEIZED MATERIAL (WHICH INCLUD ES DOCUMENTS) DOES NOT BELONG TO THE PERSON REFERRED T O IN SECTION 153A (I.E., THE SEARCHED PERSON). IN THE SA TISFACTION NOTE, WHICH IS THE SUBJECT MATTER OF THESE WRIT PET ITIONS, THERE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 33 IS NOTHING THEREIN TO INDICATE THAT THE SEIZED DOCU MENTS DO NOT BELONG TO THE JAIPURIA GROUP. THIS IS EVEN APART FR OM THE FACT THAT, AS WE HAVE NOTED ABOVE, THERE IS NO DISCLAIME R ON THE PART OF THE JAIPURIA GROUP INSOFAR AS THESE DOCUMEN TS 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 TH E PERSON WHO HOLDS THE ORIGINALS. POSSESSION OF DOCUMENTS AN D POSSESSION OF PHOTOCOPIES OF DOCUMENTS ARE TWO SEPA RATE THINGS. WHILE THE JAIPURIA GROUP MAY BE THE OWNER O F THE PHOTOCOPIES OF THE DOCUMENTS IT IS QUITE POSSIBLE T HAT THE ORIGINALS MAY BE OWNED BY SOME OTHER PERSON. UNLESS IT IS ESTABLISHED THAT THE DOCUMENTS IN QUESTION, WHETHER THEY BE PHOTOCOPIES OR ORIGINALS, DO NOT BELONG TO THE SEAR CHED PERSON, THE QUESTION OF INVOKING SECTION 153C OF TH E SAID ACT DOES NOT ARISE. 16. THIRDLY, WE WOULD ALSO LIKE TO MAKE IT CLEAR TH AT THE ASSESSING OFFICERS SHOULD NOT CONFUSE THE EXPRESSIO N 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 P REMISES ARE SEARCHED AND THE REGISTERED SALE DEED IS SEIZED, IT CANNOT BE SAID THAT IT BELONGS TO THE VENDOR JUST BECAUSE H IS NAME IS MENTIONED IN THE DOCUMENT. IN THE CONVERSE CASE IF THE VENDORS PREMISES ARE SEARCHED AND A COPY OF THE SA LE DEED IS SEIZED, IT CANNOT BE SAID THAT THE SAID COPY BELON GS 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 DOCUMENTS COPIES OF PRE FERENCE SHARES, UNSIGNED LEAVES OF CHEQUE BOOKS AND THE COP Y OF THE SUPPLY AND LOAN AGREEMENT CAN BE SAID TO BELONG TO THE PETITIONER. 33. TURNING TO THE FACTS OF THE PRESENT CASE, WE NO TE THAT IT IS NOT THE CASE OF THE REVENUE THAT IT IS NOT THE CASE OF THE REVENUE THAT THE PERSON SEARCHED SHRI LALIT MODI HAD EXPRESSLY DISCLAIMED OR DISOWNED ANN EXURE A1 AS BELONGING TO HIM. IN VIEW OF RATIO LAID DOWN BY HONBLE JURISDI CTIONAL HIGH COURT IN THE CASE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 34 OF PEPSICO INDIA HOLDINGS PVT. LTD. VS ACIT (SUPRA ) UNLESS AND UNTIL IT IS ESTABLISHED THAT THE DOCUMENT DOES NOT BELONG TO TH E SEARCHED PERSON, THE PROVISIONS OF SECTION 153C OF THE ACT DO NOT GET AT TRACTED BECAUSE THE LANGUAGE USED BY THE LEGISLATURE IN SECTION 153C OF THE ACT MANDATES THAT WHERE THE AO IS SATISFIED THAT ANY MONEY, BULLION, JEWELLERY OR OTH ER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITION ED BELONG OR BELONGED TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTION 153 A OF THE ACT. THEIR LORDSHIPS SPEAKING FOR HONBLE HIGH COURT OF DELHI FURTHER HELD THAT IT IS NECESSARY BEFORE THE PROVISIONS OF SECTION 153C OF THE ACT CAN BE INVOKED THAT THE AO OF THE SEARCHED PERSON MUST BE SATISFIED THA T THE SEIZED MATERIAL, (WHICH INCLUDES DOCUMENTS) DOES NOT BELONG TO PERSON SEARC HED AND THE IMPUGNED SATISFACTION NOTE DATED 30.6.2011, THERE IS NOTHING TO INDICATE THAT THE SEIZED DOCUMENT ANNEXURE A-1 DOES NOT BELONG TO SHRI LALIT MODI AND WE ALSO NOTE THAT THERE IS NO DISCLAIMER ON THE PART OF SHRI LAL IT MODI WITH REGARD TO THIS DOCUMENT ANNEXURE A-1. 34. WE FURTHER HOLD THAT FINDING OF A DOCUMENT IN P OSSESSION OF A SEARCHED PERSON DOES NOT NECESSARILY MEAN THAT THE SAME BEL ONGS TO OR BELONGED TO THE OTHER PERSON WHOSE NAME IS MENTIONED THEREIN. WE HAVE NO HESITATION TO HOLD THAT UNLESS IT IS ESTABLISHED THAT THE DOCUMEN T IN QUESTION DOES NOT BELONG TO THE SEARCHED PERSON I.E. SHRI LALIT MODI THE QUESTI ON OF INVOKING SECTION 153C OF THE ACT DOES NOT ARISE. AS PER PROVISIONS OF SE CTION 153C OF THE ACT AND RATIO ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 35 LAID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN T HE CASE OF PEPSICO INDIA HOLDINGS PVT. LTD. VS ACIT (SUPRA), IT IS AMPLY CLE AR THAT THE AO SHOULD NOT CONFUSE THE EXPRESSION BELONGED TO WITH THE EXPRE SSION RELATES TO OR REFERS TO. A DOCUMENT CANNOT BE SAID THAT IT BELONGED T O THE OTHER PERSON JUST BECAUSE HER NAME IS MENTIONED IN THE DOCUMENT. 34.1 ON THE BASIS OF FOREGOING DISCUSSION, WE ARE INCLINED TO HOLD THAT AS PER SECTION 153C OF THE ACT, THE AO OF THE SEARCHED PER SON MUST BE SATISFIED THAT ANY DOCUMENT SEIZED OR REQUISITIONED BELONGED TO A PERSON OTHER THAN THE SEARCHED PERSON AND ONLY THEN THE AO OF SEARCHED PE RSON CAN HAND OVER SUCH DOCUMENT TO THE AO HAVING JURISDICTION OVER SUCH OT HER PERSON. WE FURTHER HOLD THAT IT IS ONLY AFTER SUCH HANDING OVER THAT THE AO OF SUCH OTHER PERSON CAN ISSUE A NOTICE TO THAT OTHER PERSON AND ASSESS OR REASSES S HIS TAXABLE INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153 OF TH E ACT. HENCE, BEFORE A NOTICE U/S 153C OF THE ACT IS ISSUED, TWO STEPS HAVE TO B E TAKEN, VIZ. FIRST STEP IS THAT THE AO OF THE PERSON WHO IS SEARCHED MUST ARRIVE AT A CLEAR SATISFACTION THAT THE IMPUGNED DOCUMENT SEIZED FROM THE PERSON SEARCHED D OES NOT BELONG TO HIM BUT TO SOME OTHER PERSON AND SECONDLY AFTER SUCH SATISF ACTION IS ARRIVED AT BY THE AO OF THE PERSON SEARCHED, THEN THE DOCUMENT IS REQUIR ED TO BE HANDED OVER THE AO OF THE OTHER PERSON TO WHOM SUCH DOCUMENT BELONGS OR BELONGED TO. IN THE PRESENT CASE, HOWEVER, THE AO OF THE PERSON SEARCHE D AND THE OTHER PERSON IS THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 36 SAME BUT SECOND STEP, AS REQUIRED BY THE STATUTE, I N THE CASE OF OTHER PERSON HAS NOT BEEN TAKEN AND FULFILLED. 35. IT IS RELEVANT TO EXAMINE THE PROVISIONS OF PRE SUMPTION U/S 132(4A)(I) AND PROVISIONS OF SECTION 292C(1) AT THIS STAGE, WHICH CONSECUTIVELY STIPULATES THAT WHEN INTER ALIA ANY DOCUMENT IS FOUND IN THE POSSES SION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH OPERATION, THEN IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGED TO SUCH PERSON. IN SIMPLE WORDS, THESE PR OVISIONS MANDATE THAT WHENEVER A DOCUMENT IS FOUND FROM A PERSON WHO IS B EING SEARCHED BY THE REVENUE AUTHORITIES, NORMAL PRESUMPTION WOULD BE TH AT THE SAID DOCUMENT BELONGS TO THAT PERSON. AT THE SAME TIME, WE FURTH ER NOTE THAT IT IS FOR THE AO OF THE PERSON SEARCHED TO REBUT THAT PRESUMPTION AND C OME TO A CONCLUSION BY WAY OF RECORDING A SATISFACTION NOTE THAT THE DOCUMENT, IN FACT, BELONGS OR BELONGED TO SOMEBODY ELSE. OBVIOUSLY, THERE MUST BE SOME CO GENT MATERIAL AVAILABLE WITH THE AO OF THE PERSON SEARCHED BEFORE HE ARRIVE S AT THE SATISFACTION THAT THE SEIZED DOCUMENT DOES NOT BELONG TO THE SEARCHED PER SON BUT TO SOMEBODY ELSE. 36. AT THIS STAGE, WE FIND IT APPROPRIATE TO RESPEC TFULLY FOLLOW THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF PEPSI FOODS P. LTD. VS ACIT (SUPRA) WHEREIN THEIR LORDSHIPS IN PARA 11 AN D 12 AT PAGE 121 OF THE JUDGMENT HELD AS FOLLOWS:- 11. IT IS EVIDENT FROM THE ABOVE SATISFACTION NOTE THAT APART FROM SAYING THAT THE DOCUMENTS BELONGED TO THE PETI TIONER AND THAT THE ASSESSING OFFICER IS SATISFIED THAT IT IS A FIT CASE FOR ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 37 ISSUANCE OF A NOTICE UNDER SECTION 153C, THERE IS N OTHING WHICH WOULD INDICATE AS TO HOW THE PRESUMPTIONS WHICH ARE WP(C) 415/2014 & ORS. PAGE 15 OF 15 TO BE NORMALLY RAISED AS INDICATED ABOVE, HAVE BEEN REBUTTED BY THE ASSESSIN G OFFICER. MERE USE OR MENTION OF THE WORD SATISFACTION OR T HE WORDS I AM SATISFIED IN THE ORDER OR THE NOTE WOULD NOT ME ET THE REQUIREMENT OF THE CONCEPT OF SATISFACTION AS USED IN SECTION 153C OF THE SAID ACT. THE SATISFACTION NOTE ITSELF MUST DISPLAY THE REASONS OR BASIS FOR THE CONCLUSION THAT THE ASSESS ING OFFICER OF THE SEARCHED PERSON IS SATISFIED THAT THE SEIZED DO CUMENTS BELONG TO A PERSON OTHER THAN THE SEARCHED PERSON. WE ARE AFRAID, THAT GOING THROUGH THE CONTENTS OF THE SATISFACTION NOTE , WE ARE UNABLE TO DISCERN ANY SATISFACTION OF THE KIND REQUIRED UNDER SECTION 153C OF THE SAID ACT. 12. THIS BEING THE POSITION T HE VERY FIRST STEP PRIOR TO THE ISSUANCE OF A NOTICE UNDER SECTIO N153C OF THE SAID ACT HAS NOT BEEN FULFILLED. INASMUCH AS THIS C ONDITION PRECEDENT HAS NOT BEEN MET, THE NOTICES UNDER SECTI ON 153C ARE LIABLE TO BE QUASHED. IT IS ORDERED ACCORDINGLY. 37. TURNING TO THE FACTS OF THE PRESENT CASE, WE NO TE THAT THE AO OF THE PERSON SEARCHED SHRI LALIT MODI RECORDED SATISFACTION ON 3 0.6.2011. FOR THE SAKE OF CLARITY IN OUR OBSERVATIONS AND FINDINGS, THE SAME IS REPRODUCED BELOW:- 30-06-2011 SATISFACTION NOTE FOR ISSUE OF NO TICE U/S 153 C OF THE LT. ACT NAME OF THE ASSESSEE : SMT. VINITA CHAURASI A PAN : AAFPC4589D SEARCH AND SEIZURE ACTION U/S 132 OF THE I.T. ACT WAS CARRIED OUT ON 19-06-2009 AT THE RESIDENTIAL AS WEL L AS BUSINESS PREMISES OF SHRI LALIT MODI AT L-48, LAJPAT NAGAR-I L, NEW DELHI, DURING THE COURSE OF PENDENCY OF ASSESSMENT PROCEED INGS IN THE CASE OF SHRI LALIT MODI FOR AY 2004-05 TO 2010-11 ( U/S 153 A/ 143 (3), THE MATERIAL SEIZED FROM THE PREMISES OF T HE ASSESSEE HAS BEEN EXAMINED. AFTER EXAMINING SUCH SEIZED MATERIAL , I AM SATISFIED THAT THE FOLLOWING SEIZED DOCUMENTS BELON G TO PERSONS OTHER THAN SHRI LALIT MODI. THE DETAIL OF SUCH PAPER IS AS UNDER: ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 38 ANNEXURE NO. PAGE NO. OF ANNEXURE BRIEF DESCRIPTION OF DOCUMENTS PERSON TO WHOM THE DOCUMENT BELONGS ANN A-1/PARTY 2 5 THESE PAPERS CONTAIN DETAIL OF TRANSACTION ENTERED IN BY SMT. VINITA CHAURASIA FOR ACQUISITION OF PROPERTY AT VASANT SQUARE MALL. SMT. VINITA CHAURASIA 2. 0N THE BASIS OF DOCUMENT FOUND AND SEIZED ENQUIR IES WERE CONDUCTED DURING THE COURSE OF POST SEARCH PROCEED INGS AND IT HAS COME TO NOTICE THAT THE PROPERTY WAS ACQUIRED B Y THE ASSESSEE FOR A CONSIDERATION OF RS. 32,85,37,3541 - OUT OF WHICH ONLY RS.16,42,68,832/- HAS BEEN PAID BY CHEQUE AND RECORDED IN BOOKS OF ACCOUNTS BY THE BUYER AS WELL AS SELLER. A PART FROM THE ABOVE CERTAIN OTHER PAYMENTS REPRESENTING SINKING F UND, MAINTENANCE SECURITY, FREEHOLD CHARGES, AND COMMISS ION ETC. HAVE BEEN PAID BY THE ASSESSEE. AS SUCH AMOUNT OF RS.19,02,68,2891- IS REQUIRED TO BE ASSESSED IN THE HANDS OF ASSESSEE AS UNDISCLOSED INVESTMENT ON THE BASIS OF ENTRIES MENTIONED ON SEIZED DOCUMENTS. 3. IN VIEW OF THE FACTS STATED ABOVE IT IS EVIDENT THAT DOCUMENTS BELONGING TO THE ASSESSEE HAVE BEEN SEIZED FROM A P ERSON COVERED UNDER SEARCH U/S 132 OF THE LT. ACT,1961, HENCE PRO CEEDINGS U/S 153 C ARE BEING INITIATED FOR AY 2004-05 TO 2009-10 . 37.1 IN VIEW OF CONTENTS OF THE SATISFACTION NO TE AS REPRODUCED HEREINABOVE, WE CLEARLY NOTE THAT THE SAME HAS BEEN RECORDED IN THE CAPACITY OF THE AO OF THE PERSON SEARCHED MEANING THEREBY SHRI LALIT MODI AND WE ARE UNABLE TO SEE ANY SATISFACTION NOTE ON RECORD BY THE AO OF THE OTHER PERSON VIZ. THE ASSESSEE OF THE INSTANT APPEAL I.E. SMT. VINITA CHAURASIA. ON A SP ECIFIC QUERY FROM THE BENCH, LD. DR COULD NOT ASSIST US TO SEE WHETHER ANY SATIS FACTION NOTE WAS RECORDED BY THE AO OF THE PRESENT ASSESSEE (OTHER PERSON). UND ER THESE FACTS AND CIRCUMSTANCES, IT CAN SAFELY BE HELD THAT NO VALID SATISFACTION WAS RECORDED BY ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 39 THE AO OF THE OTHER PERSON SO AS TO FULFIL THE REQU IREMENT OF SECOND STEP OF VALID ASSUMPTION OF JURISDICTION U/S 153C OF THE ACT WHIC H IS SINE QUA NON FOR VALIDLY ASSUMED JURISDICTION U/S 153A OF THE ACT. AT THE C OST OF REPETITION, WE ALSO HOLD THAT THE SATISFACTION RECORDED BY THE AO OF THE PER SON SEARCHED DOES NOT MEET THE LEGAL REQUIREMENT OF FIRST STEP OF SECTION 153C OF THE ACT. TO SUPPORT THESE CONCLUSIONS, WE RESPECTFULLY FOLLOW THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF PEPSICO INDIA HOLDING S PVT. LTD. VS ACIT (SUPRA), PEPSI FOODS P. LTD. VS ACIT (SUPRA), CIT VS SHETTY S PHARMACEUTICALS & BIOLOGICALS LTD. (SUPRA) AND ORDER OF ITAT DELHI IN THE CASE OF TANVIR COLLECTIONS PVT. LTD. VS ACIT (SUPRA). HENCE, INIT IATION OF PROCEEDINGS U/S 153C OF THE ACT AND ALL SUBSEQUENT PROCEEDINGS DESE RVE TO BE QUASHED, THUS, WE ORDER ACCORDINGLY. RESULTANTLY, LEGAL GROUND NO. 1( I) TO (III) OF THE ASSESSEE ARE ALLOWED. GROUND NO. 2 (I) TO (III), 3(I) TO 3(III) & 4(I) TO (III) OF ASSESSEE IN ITA NO. 3343/D/2013 & GROUND NO. 4 OF THE REVENUE IN ITA NO . 3551/DEL/2013 38 . APROPOS THESE GROUNDS, LD. AR SUBMITTED THAT WITHOU T PREJUDICE TO THE LEGAL OBJECTIONS OF THE ASSESSEE, EVEN ON MERITS, T HE ADDITIONS MADE BY THE ASSESSEE, EVEN ON MERITS, THE ADDITIONS MADE BY THE ASSESSEE ON ACCOUNT OF DISALLOWANCE OF FREEHOLD CHARGES, PAYMENT OF SINKIN G FUND, MAINTENANCE SECURITY AND PAYMENT OF COMMISSION HAVE BEEN DELETE D BY THE CIT(A) BY PASSING THE IMPUGNED ORDER. LD. AR ALSO POINTED OU T THAT THE ADDITION MADE BY THE AO IN THE CASE OF PERSON SEARCHED I.E. SHRI LAL IT MODI HAS ALSO BEEN DELETED ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 40 BY THE CIT(A)-XII, NEW DELHI VIDE ORDER DATED 28.10 .2013 IN APPEAL NO. 431/13-14 FOR THE SAME AY 2010-11. LD. AR VEHEMENT LY CONTENDED THAT THE SOLE IMPUGNED DOCUMENT ANNEXURE A-1 DOES NOT BELONG TO OR BELONGS TO THE ASSESSEE OF THE PRESENT CASE, IN ANY MANNER, AS IT WAS SEIZED FROM THE PERSON SEARCHED SHRI LALIT MODI. LD. AR STRONGLY POINTED OUT THAT THE ONLY DOCUMENT PICKED UP BY THE AO FOR MAKING ADDITIONS U/S 153C O F THE ACT DOES NOT BEAR ANY SIGNATURE OF THE PRESENT ASSESSEE OR THE PERSON SEARCHED OR ANYBODY ELSE AND MERELY BECAUSE THE NAME OF THE PRESENT ASSESSEE HAS BEEN MENTIONED THEREIN AND SOME DETAILS IN REGARD TO PROPERTY PURCHASED BY THE ASSESSEE IS MENTIONED THEREIN DOES NOT ALLOW THE REVENUE AUTHORITIES TO M AKE ADDITIONS U/S 69C OR ANY OTHER PROVISION OF THE ACT. 38.1 LD. AR HAS FURTHER DRAWN OUR ATTENTION TOWARDS APPELLATE ORDER OF THE CIT(A) PARA 10 AND 11 AND SUBMITTED THAT THE CIT(A) INTERPRETED THE CONTENTS OF THE DOCUMENT IN HER OWN WAY ON THE BASIS OF HYPE R TECHNICAL APPROACH FOLLOWED BY SURMISES AND CONJECTURES WHICH IS NOT S USTAINABLE. LD. AR FURTHER POINTED OUT THAT AS PER DOCUMENT ANNEXURE A-1 AVAIL ABLE AT PAGE 16 OF THE ASSESSEES PAPER BOOK, THERE IS NO ALLEGATION OF MA KING CASH PAYMENT BY THE ASSESSEE OVER AND ABOVE THE AMOUNT WHICH WAS RECORD ED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. LD. AR SUBMITTED THAT WH EN THE AMOUNT OF SINKING FUND, MAINTENANCE SECURITY AND FREEHOLD CHARGES WAS NOT FOUND TO BE PAID EITHER BY CHEQUE OR IN CASH BY THE ASSESSEE, BY THE CIT(A) WHILE PASSING THE IMPUGNED ORDER, THEN OTHER CONTENTS OF THE DOCUMENT CANNOT B E ACCEPTED AS GOSPEL TRUTH. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 41 LD. AR FURTHER POINTED OUT THAT AT THE BOTTOM OF AN NEXURE A-1 RIGHT SIDE COMMISSION ON SALE @2% IS MENTIONED AND AT THE EXTR EMELY RIGHT SIDE, THE WORDS TO PAY EX FACIE MAKE IT CLEAR THAT NO PAYME NT HAD BEEN MADE BY THE ASSESSEE AS COMMISSION OR BROKERAGE TO SHRI LALIT M ODI OR NOBODY ELSE. LD. AR STRENUOUSLY POINTED OUT THAT THE ADDITION MADE BY T HE AO IN THE CASE OF PERSON SEARCHED SHRI LALIT MODI IN REGARD TO COMMISSION OR BROKERAGE INCOME HAS NOT BEEN FOUND TO BE SUSTAINABLE AND THE SAME HAS BEEN DELETED BY THE CIT(A). THUS, WHEN THE RECEIPT OF COMMISSION ON BROKERAGE H AS NOT BEEN FOUND TO BE SUSTAINABLE IN THE HANDS OF PAYEE SHRI LALIT MODI B Y THE FIRST APPELLATE AUTHORITY, THEN THE PAYMENT OF COMMISSION ON BROKERAGE BY THE PRESENT ASSESSEE PAYER CANNOT BE HELD AS ESTABLISHED AND SUSTAINABLE IN FA CTS AND IN LAW. 39. LD. AR REITERATING HIS EARLIER ARGUMENTS FURTHE R POINTED OUT THAT AS PER THE AO, THE ASSESSEE HAD ACCOUNTED AN AMOUNT OF RS.16.4 2 CRORE IN THE BOOKS OF ACCOUNTS WHICH WAS PAID BY WAY OF CHEQUE AND SIMILA R AMOUNT OF PAYMENT WAS MADE OVER AND ABOVE, WHAT IS ACCOUNTED IN HER BOOKS OF ACCOUNTS, OUT OF INCOME FROM UNACCOUNTED SOURCES. LD. AR HAS FURTHE R DRAWN OUR ATTENTION TOWARDS MIDDLE OF ANNEXURE A-1 AND SUBMITTED THAT T HERE IS A MENTION OF CHEQUE VALUE RS.16,42,68,832 WHICH WAS UNDISPUTEDLY RECORDED IN THE SALE DEED AS WELL AS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE BUT DOWN BELOW, THERE IS MENTION OF PDC VALUE RS.16,42,68,522 AND THEREAFT ER ON THE RIGHT SIDE RECEIVED AMOUNT HAS BEEN MENTIONED AS RS.17,02,25,4 65 WHICH ALSO SHOWS SURPLUS PAYMENT OF RS.59,56,943 WHICH GAVE RISE OF ENHANCEMENT OF ASSESSMENT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 42 BY THIS AMOUNT BY THE CIT(A). LD. AR POINTED OUT T HAT IF THE PDC VALUE IS GIVEN A MEANING OF POST DATED CHEQUE, THEN THE AO AND THE CIT(A) WERE DUTY BOUND TO BRING OUT ANY ALLEGATION, MATERIAL, EVIDEN CE OR FACT TO SUBSTANTIATE THAT THE ASSESSEE MADE PAYMENT BY WAY OF PDC OR IN CASH OVER AND ABOVE THE ENTRIES WHICH WERE RECORDED IN HER BOOKS OF ACCOUNT S IN REGARD TO PURCHASE OF PROPERTY. LD. AR STRONGLY POINTED OUT THAT, IN ABS ENCE OF SUCH ALLEGATION OR MATERIAL, ONLY ON THE BASIS OF STAND ALONE DOCUMENT ANNEXURE A-1 WHICH IS EX FACIE ACTUALLY A DUMB DOCUMENT, EVEN A PRESUMPTION CANNOT BE MADE THAT THE ASSESSEE HAD MADE PAYMENT OF RS.16.42 CRORE TOWARDS SALE CONSIDERATION OVER AND ABOVE THE CONSIDERATION RECORDED IN HER BOOKS O F ACCOUNTS OUT OF INCOME EARNED FROM UNACCOUNTED SOURCES TOWARDS THE PURCHAS E OF THE SAID PROPERTY AND HAD ALSO PAID COMMISSION OR BROKERAGE OF RS.65,70,7 47 TO SHRI LALIT MODI OVER AND ABOVE THE BOOKS OF ACCOUNTS FROM THE INCOME EAR NED FROM UNACCOUNTED SOURCES. 40. LD. COUNSEL FURTHER POINTED OUT THAT ADMITTEDLY , THE ASSESSEE PURCHASED SAID PROPERTY IN THE MONTH OF MAY 2008 PERTAINING T O AY 2009-10, THEN WITHOUT ANY OTHER INCRIMINATING DOCUMENT, EVIDENCE OR MATER IAL, IT CANNOT BE HELD THAT THE ASSESSEE RECEIVED PENDING RENT FROM 1.10.2006 T O 30.4.2009 AMOUNTING TO RS.8,91,15,747, THEREFORE, ENHANCEMENT OF INCOME OF THE ASSESSEE FOR AY 2010- 11 BY RS.4,91,15,757 AND ENHANCEMENT OF INCOME BY R S.4 CRORE IN AY 2009-10 AS DIRECTED BY THE CIT(A) IN PARA 15 OF THE IMPUGNE D ORDER CANNOT BE HELD AS SUSTAINABLE AND THE SAME DESERVES TO BE DELETED. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 43 41. LD. AR HAS PLACED RELIANCE ON THE FOLLOWING JUD GMENTS OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI AND ITAT DELHI A ND HYDERABAD BENCHES:- I) CIT VS GIAN GUPTA IN ITA NO. 955/2011 DATED 8.5.201 4 (HONBLE HIGH COURT OF DELHI) II) DCIT VS DR. G.S.C. RAO IN ITA NO. 221/DEL/2011 FOR AY 2007-08 ITAT DELHI BENCH C DATED 9.9.2011 III) DCIT VS M. AJA BABU IN ITA NO. 1755, 1756 & 1757/HY D/2012 DATED 23.04.2014 AND I) ATUL KUMAR JAIN VS DCIT (1999) 64 TTJ (DEL) 786 II) CIT VS GIRISH CHAUDHARY (2008) 296 ITR 619 (DEL) III) CIT VS ANIL BHALLA (2010) 322 ITR 191 (DEL) IV) CIT VS ATAM VALVES (P) LTD. 184 TAXMAN 6 (P&H) V) ACIT VS SATYA PAL WASSAN (2007) 295 ITR (A T) 352 (JABALPUR) 42. REPLYING TO THE ABOVE, LD. DR SUPPORTING THE AC TION OF THE AO AND THE CIT(A) SUBMITTED THAT AS PER ANNEXURE A-1, THE ASSE SSEE ACTUALLY PAID RS.17,02,25,465 OVER AND ABOVE THE AMOUNT WHICH WAS RECORDED IN HER BOOKS OF ACCOUNT AND THE AO ADDED ONLY RS.16,42,68,522 AS TH E CASH COMPONENT OVER AND ABOVE THE BOOKS OF ACCOUNTS OF THE SALE TRANSAC TION WHICH RESULTED IN EXCESS PAYMENT OF RS.59,56,943 WHICH WAS REFLECTED IN ANN EXURE A-1 AS TO REFUND. LD. DR FURTHER POINTED OUT THAT THE INCOME OF RS.8, 91,15,757 ACCRUED TO THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 44 ASSESSEE AS A RESULT OF AN UNDISCLOSED ARRANGEMENT BETWEEN HER AND M/S SUNCITY PROJECT PVT. LTD. BECAUSE THE SEIZED DOCUMENT ANNEX URE A-1 CLEARLY DENOTES RS. 4 CRORE AS PAID TO THE ASSESSEE IN FINANCIAL YEAR 2 008-09 PERTAINING TO FY 2009- 10 AND THE CIT(A) WAS QUITE JUSTIFIED IN DIRECTING THE AO TO MAKE ADDITION IN THIS REGARD IN THE RELEVANT ASSESSMENT YEAR. LD. D R FURTHER POINTED OUT THAT THE BALANCE AMOUNT OF RS.4,91,15,757 HAS BEEN REVEALED AS AN OBLIGATION OF SUNCITY PROJECT PVT. LTD. AS TO PAY TO THE ASSESSEE, THER EFORE, THE SAME WAS ADDED TO THE INCOME OF PRESENT ASSESSMENT YEAR UNDER CONSIDE RATION IN THIS APPEAL. 42.1 SUPPORTING THE ORDER OF ENHANCEMENT, THE LD. D R STRENUOUSLY POINTED OUT THAT AS PER ANNEXURE A-1, THE ASSESSEE MADE PAYMENT OF RS.17,02,25,465 TO M/S SUNCITY PROJECT LTD. OVER AND ABOVE THE AMOUNT RECORDED IN HER BOOKS OF ACCOUNT AND, THEREFORE, ADDITIONS MADE BY THE AO AM OUNTING TO RS.16,42,68,522 BY THE AO AND ENHANCEMENT MADE BY T HE CIT(A) IN REGARD TO EXCESS PAYMENT OF RS.59,56,943 IS SUSTAINABLE. LD. DR FURTHER ADDED THAT THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE AND ADDITIO N IN THE HANDS OF ASSESSEE IN REGARD TO PAYMENT OF COMMISSION AMOUNTING TO RS. 65,70,747 TO SHRI LALIT MODI AND THE AO OF THE SEARCHED PERSON HAD ALSO MAD E SIMILAR ADDITION IN THE HANDS OF SHRI LALIT MODI AS INCOME EARNED FROM COMM ISSION OR BROKERAGE. HOWEVER, THE LD. DR FAIRLY ACCEPTED THAT THE ADDITI ONS MADE IN THE HANDS OF SHRI LALIT MODI (THE PERSON SEARCHED) HAS BEEN DELETED B Y THE RESPECTIVE CIT OF PERSON SEARCHED, BUT THE DR, AT THE SAME TIME, ALSO POINTED OUT THAT THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL CHALLENGING THE SAID DELETION. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 45 43. LD. DR SUPPORTING THE ACTION OF THE AO AND THE CIT(A) FINALLY SUBMITTED THAT THE PAYMENT OF COMMISSION TO SHRI LALIT MODI B Y THE ASSESSEE ESTABLISH THE NEXUS BETWEEN A PROPERTY DEALER AND PROPERTY PURCHA SER AND THIS FACT ALSO FOUND SUPPORT FROM THE FACT THAT SHRI LALIT MODI WITNESSE D TO THE REGISTERED SALE DEED BETWEEN THE PURCHASER ASSESSEE SMT. VINITA CHAURASI A AND THE SELLER M/S SUNCITY PROJECT PVT. LTD. AND SINCE THE SEIZED PAPE R ANNEXURE A-1 WAS FOUND AT THE RESIDENCE OF SHRI LALIT MODI WHICH CLEARLY REVE ALS THAT THE SEIZED PAPER IS THE RECORD OF FULL AND FINAL SETTLEMENT AS ON 18.5. 2009 OF ALL THE TRANSACTIONS BY CHEQUE AND IN CASH BETWEEN PURCHASER ASSESSEE AND S ELLER SUNCITY PROJECT PVT. LTD. AND ALSO BETWEEN THE PURCHASER ASSESSEE AND BR OKER SHRI LALIT MODI. LD. DR SUPPORTING THE ACTION OF THE CIT(A) SUBMITTED TH AT THE CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE ASSESSMENT BY THE AMOUNT OF EXCESS PAYMENT MADE BY THE ASSESSEE TO M/S SUNCITY PROJECT PVT. LTD. AM OUNTING TO RS. 59,56,943 AND FURTHER ENHANCING THE TAXABLE INCOME BY RS. 4 CRORE IN AY 2009-10 AND THE ADDITION OF BALANCE AMOUNT OF RS.4,91,15,757 FOR AY 2010-11. HOWEVER, LD. DR FAIRLY ACCEPTED THAT THE ADDITIONS MADE BY THE A O IN PRESENT ASSESSEES CASE PERTAINING TO SINKING FUND, MAINTENANCE CHARGES AND FREEHOLD CHARGES HAS BEEN DELETED BY THE CIT(A) AGAINST WHICH THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIBUNAL. 44. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS A ND CONTENTIONS OF BOTH THE SIDES, AT THE VERY OUTSET, WE NOTE THAT ADMITTE DLY, THE SOLE IMPUGNED DOCUMENT ANNEXURE A-1(WHICH WE ARE ENCLOSING HERE W ITH THIS ORDER AS ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 46 ANNEXURE A-1) FOR THE SAKE OF CLARITY IN OUR FINDIN GS WAS SEIZED DURING SEARCH AND SEIZURE OPERATION HELD ON 19.06.2009 AT THE PRE MISES OF SHRI LALIT MODI. WE FURTHER NOTE THAT THE AO PICKED UP DOCUMENT ANNE XURE A-1 AND HELD THAT THE ASSESSEE SMT. VINITA CHAURASIA HAS MADE PAYMENT IN REGARD TO PURCHASE OF PROPERTY AT VASANT SQUARE MALL FOR A TOTAL CONSIDER ATION OF RS.32,85,37,354 OUT OF WHICH PAYMENT WAS MADE BY CHEQUE OF RS.16,42,68 ,832 WHICH ADMITTEDLY STANDS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASS ESSEE. WE FURTHER NOTE THAT THE MAIN ALLEGATION OF THE AO IS THAT THE ASSESSEE HAD ALSO MADE PAYMENT OF RS.16,42,68,522 TOWARDS OVER AND ABOVE SALE CONSIDE RATION AND ALSO MADE PAYMENT OF SINKING FUND, MAINTENANCE SECURITY, FREE HOLD CHARGES AND COMMISSION OVER AND ABOVE HER BOOKS OF ACCOUNTS FRO M THE INCOME EARNED FROM UNACCOUNTED SOURCES. 44.1 AT THIS STAGE, IT IS PERTINENT TO MENTION THAT THE ADDITIONS MADE BY THE AO IN REGARD TO SINKING FUND, MAINTENANCE SECURITY AND FREEHOLD CHARGES HAS BEEN DELETED BY THE CIT(A) BY PASSING THE IMPUGNED ORDER . IT IS ALSO PERTINENT TO MENTION THAT THE CIT(A) WHILE DELETING THE AMOUNT O F FREEHOLD CHARGES HELD THAT THE PROPERTY CONTINUES TO BE LEASEHOLD AND THERE WA S NO PAYMENT OF FREEHOLD CHARGES, THEREFORE, ADDITION IS NOT FOUND TO BE SUS TAINABLE. IN PARA 12.2.2 OF THE IMPUGNED ORDER, THE CIT(A) ALSO HELD THAT THE MAINT ENANCE AGREEMENT WAS NOT EXECUTED DURING THE YEAR UNDER CONSIDERATION AND TH EREFORE, THE PAYMENTS TOWARDS SINKING FUND AND MAINTENANCE SECURITY WAS N OT MADE DURING THE RELEVANT PERIOD AND THE ADDITION WAS NOT FOUND TO B E SUSTAINABLE. SINCE BY ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 47 EARLIER PART OF THIS ORDER, WE HAVE UPHELD THE CONC LUSION OF THE CIT(A) IN THIS REGARD, APPEAL OF THE REVENUE, ON ALL THREE COUNTS VIZ. FREEHOLD CHARGES, SINKING FUND AND MAINTENANCE SECURITY, HAS BEEN DISMISSED B Y THE TRIBUNAL CONFIRMING THE DELETION OF ADDITIONS MADE BY THE AO. 45. FROM VIGILANT READING AND CAREFUL PERUSAL OF AN NEXURE A-1, WE OBSERVE THAT THIS DOCUMENT APPEARS TO BE A COMPUTER GENERAT ED DOCUMENT WHICH DOES NOT BEAR ANY SIGNATURE OR HANDWRITTEN CONTENTS. ON THE TOP PORTION, THERE IS DETAIL OF PROPERTY IN VASANT SQUARE MALL IN THE NAME OF PRESE NT ASSESSEE SMT. VINITA CHAURASIA IN REGARD TO AREA OF 39651.06 SQ FT. DOW N BELOW THERE IS A MENTION OF VALUE CH VALUE OF RS. 16,42,68,832 WHICH WAS ACCE PTED BY THE AO AS RECORDED BY THE BOOKS OF ACCOUNTS OF THE PRESENT AS SESSEE. IMMEDIATELY BELOW THIS CONTENT, THERE IS A MENTION OF PDC VALUE OF R S.16,42,68,522 AS PER CIT(A) AGAINST THIS AMOUNT THE ASSESSEE ACTUALLY MADE PAYM ENT OF RS.17,02,25,465 IN CASH OR BY WAY OF CHEQUE OVER AND ABOVE THE PAYMEN T WHICH WAS RECORDED BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS. HOWEVER, IN ABSENCE OF ANY OTHER SUPPORTING INCRIMINATING DOCUMENTS, EVIDENCE OR MAT ERIAL, WE ARE INCLINED TO HOLD THAT THE ADDITIONS MADE BY THE AO AND ENHANCED BY THE AO ARE BASED ONLY ON THE SOLE DOCUMENT I.E. ANNEXURE A-1 AND THE AO A ND THE CIT(A) HAS NOT BROUGHT OUT ANY ALLEGATION OR MATERIAL TO SHOW THAT THE ASSESSEE MADE OVER AND ABOVE PAYMENT EITHER IN CASH OR BY CHEQUE BY USING A SPECIFIC MODUS OPERANDI. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 48 45.1 LD. AR HAS DRAWN OUR ATTENTION TOWARDS PAPER B OOK PAGE NO. 129 TO 140 OF THE ASSESSEE AND SUBMITTED THAT THE ASSESSEE HAS FILED CHEQUE COUNTERFOILS FOR THE RELEVANT YEAR PERIOD BEFORE THE AO AND THE CIT( A) WHICH DOES NOT REFLECT ANY PAYMENT BY PDC AND THE REVENUE AUTHORITIES HAVE NOT BROUGHT OUT ANY FACT TO SUPPORT THIS CONTENTION THAT THE ASSESSEE MADE O VER AND ABOVE PAYMENT OF RS.17.02 CRORE OUT OF INCOME EARNED FROM UNACCOUNTE D SOURCES. LD. AR ALSO ADDED THAT DURING THE SEARCH AND SEIZURE OPERATION IN THE CASE OF SHRI LALIT MODI AND DURING REASSESSMENT PROCEEDINGS U/S 153C OF THE ACT AND ALSO DURING FIRST APPELLATE PROCEEDING BEFORE THE CIT(A), THE REVENUE AUTHORITIES HAVE NOT FOUND ANY OTHER INCRIMINATING DOCUMENT, MATERIAL OR EVIDE NCE WHICH COULD SUPPORT THE FACT THAT THE ASSESSEE MADE OVER AND ABOVE PAYMENT OF RS.17.02 CRORE TO THE SELLER AND MADE PAYMENT OF RS.65,70,747 AS BROKERAG E AND COMMISSION TO SHRI LALIT MODI OVER AND ABOVE THE BOOKS OF ACCOUNTS OUT OF THE INCOME EARNED FROM HER UNACCOUNTED SOURCES, EITHER BY CHEQUE OR IN CAS H. ADMITTEDLY, THE ADDITIONS MADE BY THE AO AND ENHANCEMENT MADE BY THE CIT(A) H AD BEEN MADE ONLY ON THE BASIS OF STAND ALONE SEIZED DOCUMENT ANNEXURE A -1, WHICH WAS SEIZED FROM SHRI LALIT MODI DURING SEARCH AND SEIZURE OPERATION HELD ON 19.6.2009. AT THIS STAGE, BEFORE DRAWING A FINAL CONCLUSION, IT IS RE LEVANT AND NECESSARY TO CONSIDER THE RATIO OF THE DECISIONS RELIED BY THE LD. AR. 45.2 LD. AR HAS ALSO PLACED RELIANCE ON THE DECISI ON OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS GIAN GUPTA WHEREIN IT H AS BEEN HELD THAT THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 49 COMMISSIONER OF INCOME TAX (APPEALS) EXAMINED THIS ISSUE AND CONCLUDED AS UNDER:- IT WOULD BE RELEVANT TO MENTION THAT THE LAND IN R EFERENCE HAS NEVER BEEN REGISTERED OR TRANSFERRED IN THE NAM E OF THE ASSESSEE. THE DOCUMENT RELIED UPON IS UNSIGNED. THE OTHER PARTY OF THE DOCUMENT MRS. JIND WAS EXAMINED AND SH E DENIED TO HAVE RECEIVED ANY CASH AMOUNT OF RS. 1 CR ORE FROM THE ASSESSEE. THE AO HAS ALSO NOT BROUGHT OUT ANY M ATERIAL ON RECORD TO PROVE THE TRANSFER OF RS. 1 CRORE BY T HE ASSESSEE TO JIND PARTICULARLY WHEN BOTH HAVE DENIED THE TRAN SFER AND ALSO THE PURCHASE AND SALE OF SUCH LAND AS MENTIONE D IN SUCH DOCUMENT WHICH IS ONLY A PERFORMA DOCUMENT. THE PER FORMA DOCUMENT DOES NOT CONTAIN THE SIGNATURES OF BOTH AN D BESIDES IT DOES NOT CONTAIN THE SIGNATURE OF ANY WI TNESSES. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO THAT THERE IS ANY INVESTMENT AND THERE IS ANY TRANSFER OF CASH. T HERE IS NO QUESTION OF INVESTMENT WHEN THE LAND HAS NOT BEEN TRANSFERRED AND REGISTERED IN THE NAME OF GIAN GUPT A. ON THE CONTRARY, THE AO HIMSELF ADMITS IN THE ASSESSMENT O RDER THAT THE ADDITION WAS MADE ON THE BASIS OF ASSUMPTION. T HEREFORE IN MY CONSIDERED OPINION THE ADDITION MADE BY THE A O ON THIS GROUND IS NOT TENABLE AND THEREFORE, THE APPEAL OF THE APPELLANT IS ALLOWED AND THE AO HAS BEEN DIRECTED T O DELETE THE ADDITION OF RS.1 CRORE MADE ON THIS ACCOUNT. 5. THE INCOME TAX APPELLATE TRIBUNAL ALSO EXAMINED THIS ISSUE ONCE AGAIN AND CAME TO THE CONCLUSION THAT AS THE TRANSACTION ITSELF NEVER TOOK PLACE, THERE WOULD BE NO QUESTION OF INVESTMENT AND, THEREFORE, NO QUESTION OF ANY UNEXPLAINED INVESTMENT. THE AMOUNT OF RS 1 CRORE, W HICH WAS PAID BY CHEQUE, WAS RETURNED AS THE TRANSACTION HAD FALLEN THROUGH. THE TRIBUNAL ALSO TOOK THE VIEW THAT THE O NUS WAS ON THE ASSESSING OFFICER TO ESTABLISH THAT AN INVESTME NT OF RS 1 CRORE IN CASH HAD BEEN MADE. THAT ONUS WAS NOT DISC HARGED ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 50 AND, THEREFORE, IT COULD BE CONCLUDED THAT AN UNEXP LAINED INVESTMENT OF RS 1 CRORE IN CASH HAD BEEN MADE BY T HE ASSESSEE. THE EXACT FINDINGS OF THE TRIBUNAL ARE AS UNDER:- 5. ON DUE CONSIDERATION OF THE ABOVE FACTS, WE AR E OF THE OPINION THAT THE ASSESSING OFFICER HAS GIVEN UNNECE SSARY WEIGHTAGE TO THE COPY OF MOU. THE FACTUM OF TRANSFE R OF A CAPITAL ASSET BY MRS JIND SINGH IN FAVOUR OF THE A SSESSEE WAS NOT ESTABLISHED. THE CASE OF THE ASSESSEE IS THAT H E HAS NOT PURCHASED ANY LAND. THE ALLEGED MOU IS A DOCUMENT EXHIBITING THE NEGOTIATION OF THE PURCHASE OF LAND, BUT IT NEVER MATERIALIZED. THE ASSESSING OFFICER HAS ERRONEOUSLY OBSERVED THAT IT IS FOR THE ASSESSEE TO ESTABLISH THAT LAND WAS NOT PURCHASED. IN OUR OPINION, FOR CHARGING THE ASSESSE E WITH TAX ON ACCOUNT OF UNEXPLAINED INVESTMENT, IT IS THE ASS ESSING OFFICER WHO OUGHT TO HAVE ESTABLISHED THAT LAND WAS PURCHASED BY THE ASSESSEE AND HE FAILED TO D ISCLOSE THE SOURCE OF SUCH PURCHASE. INSTEAD OF DISCHARGING TH IS ONUS, LEARNED ASSESSING OFFICER TREATED A DOCUMENT A S GOSPEL TRUTH AND TRIED TO PUT AN ONUS UPON THE ASS ESSEE TO PROVE A NEGATIVE FACT WHICH IS NOT PERMISS IBLE IN LAW. LEARNED FIRST APPELLATE AUTHORITY HAS RIGHTLY CON SIDERED THIS ASPECT AND DELETED THE ADDITION. 6. AFTER HAVING HEARD THE COUNSEL FOR THE PARTIES ON THIS ISSUE OF THE DELETION OF THE ADDITION OF RS 1 CRORE ON AC COUNT OF THE ALLEGED UNEXPLAINED INVESTMENT, WE ARE OF THE VIEW THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE INCOME TAX APPELLATE TRIBUNAL HAVE DELETED THE SAID ADDITION O N EXAMINATION OF FACTS. IN OUR VIEW, NO QUESTION OF L AW ARISES FOR OUR CONSIDERATION. THE FACTS, AS ESTABLISHED ON REC ORD, DO NOT POINT CONCLUSIVELY TO UNEXPLAINED INVESTMENT OF RS 1 CRORE IN CASH BY THE ASSESSEE PARTICULARLY BECAUSE THE MOU A S WELL AS THE RECEIPT IN QUESTION WERE UNSIGNED DOCUMENTS AND THE TRANSACTION HAD NOT MATERIALIZED. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 51 (EMPHASIS SUPPLIED BY UNDERLINING) 46. LD. AR HAS ALSO PLACED RELIANCE ON THE ORDER OF ITAT DELHI C BENCH IN THE CASE OF DCIT VS G.S.C. RAO (SUPRA) WHEREIN THE CONTENTS AND CREDENCE OF SEIZED DOCUMENT HAS BEEN INTERPRETED AS UNDER:- 3.3 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT IN T HE COURSE OF SEARCH OF THE RESIDENCE OF THE ASSESSEE A COMPUT ER PRINT OUT WAS FOUND, WHICH SHOWS RECEIPTS IN RESPECT OF S ALE OF SOME IMMOVABLE PROPERTY AND PAYMENTS MADE IN RESPEC T OF SOME IMMOVABLE PROPERTY. THE RECEIPTS EXCEED THE EXPENDITURE BY AN AMOUNT OF RS. 13,900/-. THE PAPER DOES NOT CONTAIN ANY NAME, THE DATES OF TRANSACTION, DETAILS OF BANK OR THE DESCRIPTIONS OF THE PROPERTY. THE AO HAS IGNORE D THE RECEIPT PORTION BUT HAS BROUGHT TO TAX THE AMOUNT O F INVESTMENT OF RS. 27,90,000/-. THE ASSESSEE RIGHT F ROM THE BEGINNING DENIED THAT THE PAPER BELONGS TO HIM OR A NY OF HIS FAMILY MEMBER. HE GAVE SOME INDICATION ABOUT THE PE RSON TO WHOM THE TRANSACTION MAY RELATE BUT HIS OR HIS SUCC ESSORS FULL DETAILS HAVE NOT BEEN FURNISHED, WITH A RESULT THAT IT WAS NOT FEASIBLE TO GET THE FACTS VERIFIED. SECTION 132(4) INTER-ALIA CONTAINS A PRESUMPTION THAT WHERE ANY DOCUMENT IS F OUND IN POSSESSION OF A PERSON IN THE COURSE OF SEARCH, IT MAY BE PRESUMED THAT SUCH DOCUMENT BELONGS TO HIM AND ITS CONTENTS ARE TRUE. IT IS A REBUTTABLE PRESUMPTION A ND, IN FACT, IT IS FOR THE COURTS TO MAKE SUCH A PRESUMPTION OR NOT. EVEN IF SUCH A PRESUMPTION IS RAISED IN THIS CASE, THE SAME HAS BEEN REBUTTED BY THE ASSESSEE ON THE DATE OF SEARCH ITSE LF WHEN IT WAS STATED THAT THE PAPER DOES NOT BELONG TO HIM OR HIS FAMILY MEMBER OR THAT THEY NEVER DEALT IN SUCH A PR OPERTY. NOTHING FURTHER HAS BEEN DONE BY THE REVENUE TO SHI FT THE ONUS ON THE ASSESSEE TO ESTABLISH OWNERSHIP AND TRU THFULNESS OF THE CONTENTS QUA THE ASSESSEE. COMING TO THE PRO VISION ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 52 CONTAINED IN SECTION 69B, IT IS PROVIDED THAT WHERE THE ASSESSEE HAS MADE AN INVESTMENT IN ANY FINANCIAL YE AR, WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MA INTAINED BY HIM, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT T HE NATURE AND SOURCE OF INVESTMENT OR THE EXPLANATION OFFERED BY HIM IS NOT SATISFACTORY IN THE OPINION OF THE ASSESSING OF FICER, THE VALUE OF INVESTMENT MADE MAY BE DEEMED TO BE THE IN COME OF THE FINANCIAL YEAR. AS ALREADY HELD IN THE CASE OF CHIRAAYU ESTATE & DEVELOPMENT PVT. LTD. (SUPRA), THE BURDEN IS ON THE REVENUE TO SHOW THAT THE ASSESSEE HAS MADE AN INVES TMENT. THEREAFTER, THE INVESTMENT HAS TO BE RELATED TO A F INANCIAL YEAR. THE COURSE OF EVENTS SHOW THAT REVENUE HAS NO T PROVED THAT INVESTMENT IN THE IMMOVABLE PROPERTY WAS MADE BY THE ASSESSEE. THE YEAR IN WHICH THE INVESTMENT WAS MADE IS ALSO NOT DISCERNIBLE FROM THE DOCUMENT. THEREFORE, WE AR E OF THE VIEW THAT THIS DOCUMENT ALONE CANNOT FORM BASIS FOR MAKING ANY ADDITION. ACCORDINGLY, IT IS HELD THAT THE LD. CIT(APPEALS) RIGHTLY DELETED THE ADDITION. GROUND NOS. 1 AND 2 A RE, THUS, DISMISSED. (EMPHASIS SUPPLIED BY UNDERLINING) 47. LD. AR HAS ALSO SOUGHT SUPPORT FROM THE DECISIO N OF ITAT HYDERABAD B BENCH IN THE CASE OF DCIT VS M. AJA BABU (SUPRA ) WHEREIN THE TRIBUNAL, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS ANIL BHALLA (SUPRA), CIT VS DINESH J AIN (HUF) 211 TAXMAN 23 (DEL) AND CIT VS JAIPAL AGGARWAL 212 TAXMAN 1 (D EL), ITAT MUMBAI IN THE CASE OF ACIT VS. JP MORGAN INDIA PVT. LTD. 4 6 SOT 250(MUMBAI), HELD THAT THE ADDITION MADE BY THE AO BASED ON THE LOOSE PAPER, WHICH IS NOT A CONCLUSIVE EVIDENCE AND THEREFORE, THE SAME IS NOT SUFFICIENT FOR MAKING THE ADDITION. THE TRIBUNAL ALSO HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 53 DUMB DOCUMENT/NOTEBOOK/LOOSE SLIPS IN ABSENCE OF AN Y OTHER MATERIAL TO SHOW THAT THE ASSESSEE HAS MADE INVESTMENT IN LAND. THE RELEVANT OBSERVATIONS AND FINDINGS OF THE TRIBUNAL IN THIS CASE READ AS UNDER :- 16. AGGRIEVED BY THE ORDE R OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 17. WE HAVE HEARD THE ARGUMENTS OF BOTH THE PARTIE S, PERUSED THE RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, THE ADDITION WAS M ADE BY THE AO BASED ON THE LOOSE PAPER AND THE SAME, IN OUR VI EW, CANNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE. AS HEL D BY THE CIT(A) IN THE IMPUGNED ORDER 'EXCEPT RELYING , THE NOTINGS IN THE LOOSE SLIPS, NO ATTEMPT HAS BEEN MADE TO CORROB ORATE THE NOTINGS WITH INDEPENDENT EVIDENCE. THE PARTIES TO T HE 'TRANSACTION PARTICULARLY THE VENDOR HAS NOT EXAMIN ED. IN EVERY TRANSACTION THERE IS A CIRCLE CONCERNING TWO PARTIES. IT IS NOT KNOWN WHETHER THE VENDOR HAS DISCLOSED THE CONSIDERATION AS NOTED IN THE DIARY. THEREFORE, MER ELY ON THE BASIS OF PRESUMPTION AND SOME CORROBORATED NOTINGS ADDITIONS CANNOT BE MADE.' IN OUR OPINION, THE DELE TION OF ADDITION BY THE CIT(A) IS JUSTIFIED AND NO INTERFER ENCE IS CALLED FOR IN THE ORDER OF THE CIT(A). THE FOLLOWING CASES SUPPORT THE ACTION OF THE CIT(A): 1. CIT VS. ANIL BHALLA [2010) 322 ITR 191 (DEL.) - WHEREIN HELD THAT THE NOTINGS RECORDED ON THE LOOSE SHEET OF PAP ER DO NOT REPRESENT ANY EXPENDITURE INCURRED BY THE ASSESSEE DIRECTOR AND THAT THE ENTRIES RELATED TO THE COMPANY IN AS M UCH AS THE ASSESSEE COULD EXPLAIN FROM THE BOOKS OF THE COMPAN Y THAT THESE PROJECTS WERE UNDERTAKEN BY IT, AND UPHELD TH E DELETION OF THE IMPUGNED ADDITION UNDER S. 69C, FINDINGS ARR IVED AT BY THE TRIBUNAL ARE PURE FINDINGS OF FACTS AND THE SAM E DO NOT WARRANT ANY INTERFERENCE. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 54 2. ACIT VS. J.P. MORGAN INDIA (P) LTD. [2011] 46 SO T 250 (MUM.) 3. CIT VS. DINESH JAIN HUF [2012] 211 TAXMAN 23 (DE LHI) 4. CIT VS. JAIPAL AGGARWAL [2013] 212 TAXMAN 1 (DEL HI)- WHEREIN IT WAS HELD THAT DUMB DOCUMENTS SEIZED, I.E . FROM WHICH NOTHING COULD BE CLEARLY UNDERSTOOD, CANNOT F ORM A JUSTIFIED BASE FOR MAKING ADDITIONS TO INCOME OF TH E ASSESSEE. 17.1 IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF TH E VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER BASED ON THE LOOSE PAPER, WHICH IS NOT A CONCLUSIVE EVIDENCE AND, THER EFORE, THE SAME IS NOT SUFFICIENT TO MAKE THE ADDITION. IN OUR OPINION, NO ADDITION CAN BE MADE ON THE BASIS OF DUMB DOCUMENTS /NOTE BOOK/LOOSE SLIPS IN THE ABSENCE OF ANY OTHER MATERI AL TO SHOW THAT THE ASSESSEE HAS MADE INVESTMENTS IN LAND. NOT ING ON THE NOTE BOOK/DIARY/LOOSE SHEETS ARE REQUIRED TO BE SUPPORTED/CORROBORATED BY OTHER EVIDENCE AND SHOULD ALSO INCLUDE THE STATEMENT OF A PERSON WHO ADMITTEDLY IS A PARTY TO THE NOTING AND STATEMENT FROM ALL THE PERSONS WH OSE NAMES THERE ON THE NOTE BOOK/LOOSE SLIPS AND THEIR STATEMENTS TO BE RECORDED AND THEN SUCH STATEMENT UNDOUBTEDLY SHOULD BE CONFRONTED TO THE ASSESSEE AN D HE HAS TO BE ALLOWED TO CROSS EXAMINE THE PARTIES. THE VEN DOR HAS NOT EXAMINED IN THIS CASE. THEREFORE, WE DO NOT FIN D ANY INFIRMITY IN THE ORDER OF THE CIT(A) IN DIRECTING T HE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON THE BASIS OF LOOSE PAPER AND THE ORDER OF THE CIT(A) IS HEREBY UPHELD DISMISSING THE GROUNDS RAISED BY THE REVENUE ON THIS ISSUE. 18. AS A RESULT APPEAL IN ITA NO. 1756/HYD/2012 I S DISMISSED. (EMPHASIS SUPPLIED BY UNDERLINING) ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 55 48. FURTHERMORE, THE LD. AR SEEKING SUPPORT FROM TH E RATION OF THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI IN THE C ASE OF CIT VS ANIL BHALLA (SUPRA) ALSO SUBMITTED THAT NO INDEPENDENT MATERIAL OR EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE AO TO ESTABLISH THAT THE N OTINGS/JOTTINGS RECORDED ON THE LOOSE SHEET OR PAPER REPRESENTED AN UNACCOUNTED TRANSACTION, THEN THE EXPLANATION OF THE ASSESSEE SHOULD BE ACCEPTED. LD . AR ALSO POINTED OUT THAT IN THIS SITUATION, THE TRIBUNAL WAS RIGHT IN HOLDING T HAT THE LOOSE SHEET OR DOCUMENT DOES NOT REPRESENT ANY INVESTMENT OR EXPENDITURE OV ER AND ABOVE THE BOOKS OF ACCOUNTS OF THE ASSESSEE OUT OF INCOME ALLEGED TO B E EARNED FROM UNACCOUNTED SOURCES. 49. LD. AR HAS ALSO PLACED RELIANCE ON THE RECENT D ECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS VIVEK AGARWAL DATED 9.2.2015 IN ITA NO. 66/2014 AND OTHER APPEALS WHEREIN IT WAS HELD THAT EVEN THOUGH THE INCOME TAX AUTHORITIES INCLUDING THE AO HAS UNFETTERED DISCRET ION AND NOT DIRECTLY BOUND BY THE RULES AND PLEADINGS AS WELL AS MATERIAL ON RECO RD AND IS ENTITLED TO ACT ON THE MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE, NEV ERTHELESS, SUCH DISCRETION DOES NOT ENTITLE THEM TO MAKE A PURES GUESS WORK AN D BASE AN ASSESSMENT ENTIRELY UPON IT WITHOUT ANY REFERENCE TO ANY MATER IAL OR EVIDENCE AT ALL. THE RELEVANT OBSERVATIONS OF THE HONBLE HIGH COURT REA D AS FOLLOWS:- 10. IN THE JUDGMENT REPORTED AS CIT VS. GIRISH CHAUDHARY (2008) 296 ITR 619 (DELHI), THE DIVISION BENCH, WHICH WAS CALLED UPON TO DECIDE THE CORRECTNESS OF AN ADDITION ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 56 MADE ON THE BASIS OF A NUMERIC ENTRY IN THE DOCUMEN T WHICH LED TO ADDITION OF RS.48 LAKHS, HELD AS FOLLOWS: '12. THE APEX COURT IN CENTRAL BUREAU INVESTIGATION V. V.C. SHUKLA AND ORS. HAS LAID DOWN THAT: FILE CONTAINING LOOSE SHEETS OF PAPERS ARE NOT 'BOO K' AND HENCE ENTRIES THEREIN ARE NOT ADMISSIBLE UNDER SECTION 34 OF THE EVIDENCE ACT, 1872. 13. SIMILARLY, THE DOCUMENT ANNEXURE A-37 RECOVERED DURING THE COURSE OF SEARCH IN THE PRESENT CASE IS A DUMB DOCU MENT AND LEAD US NOWHERE. THUS, THE TRIBUNAL RIGHTLY DELETED THE ADDITION OF RS. 48 LACS MADE BY THE ASSESSING OFFICER ON ACC OUNT OF UNDISCLOSED INCOME ON THE BASIS OF SEIZED MATERIAL. 14. THE ABOVE BEING THE POSITION, NO FAULT CAN BE F OUND WITH THE VIEW TAKEN BY THE TRIBUNAL. THUS, THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO A QUESTION OF LAW, MUCH LESS A SUB STANTIAL QUESTION OF LAW, TO FALL WITHIN THE LIMITED PURVIEW OF SECTION 260- A OF THE ACT, WHICH IS CONFINED TO ENTERTAINING ONL Y SUCH APPEALS AGAINST THE ORDER WHICH INVOLVES A SUBSTANTIAL QUES TION OF LAW. 15. ACCORDINGLY, THE PRESENT APPEAL FILED BY THE RE VENUE IS, HEREBY, DISMISSED.' 11. IN CIT VS. S.M. AGGARWAL (2007) 293 ITR 43 (DEL.) CITED BY THE ASSESSEE, THE COURT IN A SIMILAR SITUATION HELD AS FOLLOWS : '11. IN MAHAVIR WOOLEN MILLS (SUPRA) CASE, DURING T HE COURSE OF SEARCH AND SEIZURE PROCEEDINGS, CERTAIN SLIPS WERE FOUND, WHICH, THE ASSESSING OFFICER CONCLUDED, CONTAINED DETAILS OF PAYMENT BEYOND THOSE WHICH WERE MADE BY CHEQUES AND DRAFTS AND WERE DULY REFLECTED IN THE BOOKS OF ACCOUNTS. THE ASSESS EE'S STAND BEFORE THE TRIBUNAL WAS THAT THE DOCUMENTS WERE 'DU MB DOCUMENTS' WHICH DID NOT CONTAIN FULL DETAILS ABOUT THE DATES OF PAYMENT AND ITS CONTENTS WERE NOT CORROBORATED BY A NY MATERIAL AND COULD NOT BE RELIED UPON AND MADE THE BASIS OF ADDITION. THE TRIBUNAL CONSIDERED THIS ASPECT AND OBSERVED THAT O N COMPARISON ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 57 OF THE SEIZED DOCUMENTS AND LEDGER ACCOUNTS OF THE PARTIES, THE SEIZED DOCUMENTS COULD NOT BE REGARDED AS 'DUMB DOC UMENTS'. 12. WHILE DISMISSING THE APPEAL, THE APEX COURT HEL D: THAT THE TRIBUNAL HAD COME TO A CERTAIN FACTUAL CON CLUSION ABOUT THE NATURE OF THE PAPERS SEIZED. ON THE QUESTION WH ETHER THE DOCUMENTS DID OR DID NOT CONTAIN THE PARTICULARS, T HE TRIBUNAL OBSERVED THAT THEY DID CONTAIN CERTAIN MATERIALS WH ICH WERE SUFFICIENT TO COME TO A CONCLUSION ABOUT CASH PAYME NTS HAVING BEEN MADE IN ADDITION TO THOSE MADE BY CHEQUES AND DRAFTS. THE CONCLUSION WAS ESSENTIALLY FACTUAL. NO SUBSTANTIAL QUESTION OF LAW AROSE FROM ITS ORDER.' 12. IN CIT V/S KULWANT RAI (2007) 291 ITR 36 (DEL) INTERESTINGLY THE RULING OF THE SUPREME COURT IN DHAKESWARI COTTON MILLS LTD. V. CIT (1954) 26 ITR 775 (SC) WAS RELIED UPON. THE SUPREM E COURT HELD THAT EVEN THOUGH INCOME TAX AUTHORITIES INCLUDING THE ASSESSING OFFICER HAS UNFETTERED DISCRETION AND NOT STRICTLY BOUND BY THE RULES AND PLEADINGS AS WELL AS MATERIA LS ON RECORD AND IS LEGITIMATELY ENTITLED TO ACT ON THE MATERIAL WHICH MAY NOT BE ACCEPTED AS EVIDENCE, NEVERTHELESS SUCH DISCRETI ON DOES NOT ENTITLE THEM TO MAKE A PURE GUESS AND BASE AN ASSES SMENT ENTIRELY UPON IT WITHOUT REFERENCE TO ANY MATERIAL OR EVIDENCE AT ALL. 13. GIVEN THE ABOVE STATE OF LAW - AND THIS COURT H AS NO HESITATION IN SO CONCLUDING, SINCE THE DOCUMENT SEI ZED WAS BOTH UNDATED AND UNSIGNED AND EVEN TAKEN AT FACE VALUE D ID NOT LEAD TO FURTHER ENQUIRY ON BEHALF OF THE AO, THE ITAT'S VIEW WHICH ENDORSED THE FINDINGS OF THE CIT(APPEALS) WERE WELL -FOUNDED AND DO NOT CALL FOR INTERFERENCE. THE RELIANCE PLACED U PON URMILA GAMBHIR V. CIT 325 ITR 171 (DELHI) IN THIS COURT'S OPINION IS INAPT BECAUSE IN THAT CASE THERE WAS OTHER CORROBOR ATIVE MATERIAL FOR THE INCOME TAX AUTHORITIES TO LINK THE DESCRIPT ION OF THE TRANSACTIONS FOUND IN ITA NO.66-69/2014 & 75-77/201 4 PAGE 10 THE SAID INNOCUOUS DOCUMENT SEIZED WITH RESPECT TO OTHER MATERIAL. HOWEVER, SUCH INFERENCE CANNOT BE DRAWN I N THIS CASE BECAUSE THERE IS NO OTHER MATERIAL. ON THE CONTRARY THE AO'S ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 58 ACCEPTANCE AND FINALIZATION OF THE ASSESSMENT FOR 2 007-08 ON THE BASIS OF SALARY INCOME OF THE ASSESSEE, UNDERMINES THE ENTIRE FINDINGS WITH RESPECT TO THE INFERENCES DRAWN AND T HE ADDITIONS MADE, INDICATED ABOVE. THE QUESTION OF LAW URGED, T HEREFORE, IS NOT SUBSTANTIAL AND IS ANSWERED AGAINST THE REVENUE . 14. SO FAR AS THE SECOND AMOUNT 41,32,800/- IS CONCERNED THERE CANNOT BE ANY DOUBT THAT THE ABOVE WAS SOUGHT TO BE MADE IN RESPECT OF THE PERIOD 1999-2000. CLEARLY THAT WAS B EYOND THE BLOCK PERIOD AND THEREFORE TIME- BARRED. THAT APART THE CIT(APPEALS) NOTED THAT AFTER THE REMAND DURING THE PENDENCY OF APPELLATE PROCEEDINGS, THE AFFIDAVIT RELIED UPON BY THE ASSESSEE IN BRIJ BHUSHAN GUPTA WAS NOT ADVERSELY COMMENTED U PON. THIS BEING A FACTUAL FINDING THE COURT FINDS NO REASON T O INTERFERE WITH THE ITAT'S ORDER. 15. THAT LEAVES THE COURT WITH THE ADDITION INITIAL LY MADE BY THE AO FOR THE SUM OF RS.3.64 CRORES. HERE TOO THE ADDI TION WAS MADE ONLY ON THE BASIS OF SOME LOOSE PAPERS AND A C HIT. THIS TOO WOULD FALL IN THE SAME CATEGORY OF MATERIAL WHICH C OULD NOT HAVE BEEN THE SOLE BASIS FOR ADDITION WITHOUT SOME SURVE ILLANCE OF THE SUBSTANTIATION. CONSEQUENTLY, THE ITAT'S REASONING CANNOT BE FAULTED. (EMPHASIS SUPPLIED BY UNDERLINING) 50. LD. AR ALSO SOUGHT SUPPORT FROM THE ORDER OF IT AT, HYDERABAD IN ITA 329/HYD/2012 DATED 4.1.2014 IN THE CASE OF DCIT VS SHRI BABU RAO WHERE IN PARA 26 TO 29 IT WAS HELD THUS:- 26. IT IS CLEAR FROM THE ABOVE PROVISIONS OF SECTI ON 153A THAT THE INCOME OF THE ASSESSEE IN CASE OF A PERSON WHERE SEARCH IS INITIATED U/S. 132, THE BOOKS OF ACCOUNT OR OTHE R DOCUMENTS OR ANY ASSETS ARE REQUISITIONED U/S. 132A, THE ASSESSI NG OFFICER AFTER ISSUE OF A NOTICE TO FURNISH INCOME OF THE ASSESSEE IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN 6 ASSESSMENT YE ARS ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 59 IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUI SITION MADE, THE ASSESSING OFFICER SHALL ASSESS OR REASSESS THE TOTAL INCOME IN RESPECT OF EACH ASSESSMENT YEAR FALLING WITHIN SUCH 6 ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR REL EVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED OR REQUI SITIONED, AS THE CASE MAY BE, ON BRINGING ON RECORD THE MATERIAL TO SHOW THAT THERE IS UNDISCLOSED INCOME OF THE ASSESSEE. IN OTH ER WORDS, THERE SHOULD BE MATERIAL ON RECORD TO SHOW THAT THE INCOM E IS ASSESSED ON THE BASIS OF MATERIAL/ EVIDENCE IN HANDS OF THE ASSESSING OFFICER. 27. BEING SO, IN OUR OPINION, GUESS WORK IS NOT POS SIBLE IN CASE OF SEARCH ASSESSMENT FRAMED U/S. 143(3) OR U/S. 153A O F THE ACT WITHOUT ANY PROPER MATERIAL. THE AO SHALL HAVE THE BASIS FOR ASSUMING THAT THE EXPENDITURE INCURRED BY THE ASSES SEE IS OUT OF UNDISCLOSED INCOME. IT IS NOT PERMISSIBLE TO ASSESS THE UNDISCLOSED INCOME IN THE ABSENCE OF ANY OTHER EVID ENCE ON ARBITRARY BASIS. THE UNSUBSTANTIATED LOOSE SHEETS C ANNOT BE CONSIDERED AS A CONCLUSIVE EVIDENCE TO MAKE ANY ADDITION TOWARDS UNDISCLOSED INCOME. IT WAS HELD BY THE SUPR EME COURT IN THE CASE OF CBI VS. V.C. SHUKLA (1998) 3 SCC 410 TH AT 'FILE CONTAINING LOOSE SHEETS OF PAPERS ARE NOT BOOKS' AN D HENCE ENTRIES THEREIN ARE NOT ADMISSIBLE U/S. 34 OF THE E VIDENCE ACT, 1872. 28. IN THE PRESENT CASE, THE SEIZED MATERIAL (TWO N OTE BOOKS) MARKED AS KBR/A/02 AND KBR/A/04 WHEREIN CERTAIN ENT RIES ARE FOUND RECORDING VARIOUS TRANSACTIONS PERTAINING TO THE ASSESSEE. THESE ENTRIES IN THE NOTEBOOK ARE UNSUBSTANTIATED A ND ON THAT BASIS THE AO REACHED TO THE CONCLUSION THAT THE FIG URES MENTIONED THEREIN ARE TO BE READ BY ADDING 3 ZEROS AND THEREBY HE CAME TO CONCLUDE THAT THERE IS UNDISCLOSED INCOM E IN THESE 6 ASSESSMENT YEARS. IN OUR OPINION, THE DOCUMENT RECO VERED DURING THE COURSE OF SEARCH WAS A DUMB DOCUMENT AND LED NO WHERE. THE CIT(A) RIGHTLY CAME TO THE CONCLUSION THAT IT CANNO T BE ACTED UPON AND DELETED THE ADDITION. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 60 29. OTHER THAN THE LOOSE PAPER, THE AO HAS NOT BROU GHT ON RECORD ANY CORROBORATIVE MATERIAL OR EVIDENCE TO SH OW THAT THE INFERENCE MADE BY HIM IS CORRECT. THE CIT(A) AFTER TAKING THE TOTALITY OF THE CIRCUMSTANCES INTO CONSIDERATION CA ME TO THE CONCLUSION THAT THE ADDITION MADE BY THE AO IS NOT JUSTIFIED AND THE ARGUMENT PUT FORTH BY THE ASSESSEE IS SUPPORTED BY DOCUMENTARY EVIDENCE. THIS WAS NOT A CASE WHERE REL EVANT EVIDENCE HAD BEEN IGNORED BY THE CIT(A) AND THEIR R ELEVANT EVIDENCE HAS BEEN TAKEN INTO CONSIDERATION. THE ONL Y TEST THAT WAS REQUIRED TO BE APPLIED WAS WHETHER ON THE FACTS FOUND AND THE STATE OF EVIDENCE ON RECORD, THE CONCLUSION ARRIVED AT BY THE CIT(A) WAS ONE WHICH COULD BE ARRIVED BY A REAS ONABLE PERSON PROPERLY INFORMED IN LAW. APPLYING THIS TEST , IT COULD NOT BE SAID THAT THE DECISION RECORDED BY THE CIT(A) ON E WHICH COULD NOT HAVE BEEN ARRIVED AT BY A REASONABLE PERSON PRO PERLY INFORMED IN LAW CONSIDERING THE STATE OF EVIDENCE O N RECORD. HENCE, IN OUR CONSIDERED OPINION, THE CIT(A) HAS RE ACHED A CORRECT CONCLUSION IN DELETING THE ADDITION MADE BY THE AO ON THE BASIS OF LOOSE SHEETS. (EMPHASIS SUPPLIED BY UNDERLINING) 51. WE ALSO FIND IT APPROPRIATE TO CONSIDER T HE RATIO OF THE JUDGMENT, AS RELIED BY LD. DR, OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS SONAL CONSTRUCTION 2013 (359 ITR 532 (DEL) WHEREIN IT WAS HELD THAT WHEN THE DOCUMENT PERTAINING TO FIRM RECOVERED FROM POSSESSI ON OF PARTNER, THEN MERELY BECAUSE PARTNER NOT EXAMINED AT THE TIME OF ASSESSM ENT, THE REVENUE AUTHORITIES ARE NOT PRECLUDED IN RELYING ON THE DOCUMENT FOR MA KING THE ADDITION. LD. DR SUBMITTED THAT PRESUMPTION U/S 292C OF THE ACT IS A VAILABLE FOR THE AO TO SEIZED DOCUMENT FOR THE PURPOSE OF BLOCK ASSESSMENT. LD. DR ALSO POINTED OUT THAT WHILE DOCUMENT ANNEXURE A-1 CLEARLY BELONGS TO THE PRESENT ASSESSEE, THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 61 ADDITION MADE ON THE BASIS OF THE SAME SHOULD BE HE LD AS VALID AND SUSTAINABLE. ON THESE CONTENTIONS OF THE REVENUE, LD. AR STRENUO USLY CONTENDED THAT THE FACTS OF THAT CASE ARE CLEARLY DISTINGUISHABLE FROM THE F ACTS OF THE PRESENT CASE AS THERE WERE SEIZED DOCUMENTS WHICH HAD BEEN WRITTEN BY THE PARTNER IN HIS OWN HANDWRITING AND ALL THE ENTRIES REGARDING VARIOUS P ROPERTIES HAVE BEEN WRITTEN CLEARLY INDICATE THE VARIOUS PROPERTIES WHICH ALSO DEPICT TRUE PROFIT AND INVESTMENT WHICH WERE NOT DISCLOSED TO THE DEPARTME NT IN THE RETURN OF INCOME AND, THEREFORE, ADDITION WAS HELD TO BE SUSTAINABLE IN THAT CASE. LD. AR FURTHER POINTED OUT THAT IN THE PRESENT CASE, THE SOLE DOCU MENT ANNEXURE A-1 HAS NOT BEEN WRITTEN OR SIGNED BY THE PRESENT ASSESSEE AND EVEN THE SAME HAD NOT BEEN FOUND TO BE WRITTEN OR SIGNED BY THE PERSON SEARCHE D I.E. SHRI LALIT MODI. ON CAREFUL AND VIGILANT PERUSAL OF THE JUDGMENT OF HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS SONAL CONSTRUCTION, WE NOTE THAT THE BENEFIT OF THE RATIO OF THE DECISION IS NOT AVAILABLE FOR THE REVENUE AS THE FA CTS OF THE PRESENT CASE ARE CLEARLY DISTINGUISHABLE BECAUSE THE IMPUGNED DOCUME NT VIZ. ANNEXURE A-1 HAS NOT BEEN EITHER WRITTEN OR SIGNED BY THE PRESENT AS SESSEE OR BY THE PERSON SEARCHED FROM WHOM THE SAME WAS ALLEGED TO BE SEIZE D DURING SEARCH AND SEIZURE OPERATION U/S 132 OF THE ACT. 52. LD. AR HAS ALSO TAKEN US THROUGH THE RATIO OF T HE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CBI VS V.C. SHUKLA (19 98) 3 SCC 410 (SC) AND SUBMITTED THAT THE DOCUMENT ANNEXURE A-1 SAID TO BE RECOVERED DURING THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 62 COURSE OF SEARCH AND SEIZURE OPERATION IN THE CASE OF SHRI LALIT MODI IS A DUMB DOCUMENT WHICH LEAD THE REVENUE NOWHERE AND EVEN TH E FILE CONTAINING LOOSE SHEETS OF PAPERS ARE NOT BOOKS AND HENCE ENTRIES TH EREIN ARE NOT ADMISSIBLE U/S 34 OF THE EVIDENCE ACT 1872. UNDISPUTEDLY, THE SOL E DOCUMENT PICKED BY THE AO IS A PRINTED DOCUMENT WHICH HAS NOT BEEN WRITTEN OR SIGNED EITHER BY THE PRESENT ASSESSEE (OTHER PERSON) OR SHRI LALIT MODI (PERSON SEARCHED). 53. LD. AR HAS ALSO PLACED RELIANCE ON THE DECISION OF ITAT JABALPUR IN THE CASE OF ACIT VS SATYAPAL WASSAN (SUPRA) WHEREIN ELU CIDATING AND ELABORATING THE SAME ISSUE THE COORDINATE BENCH OF THE TRIBUNAL HELD AS UNDER:- THE CRUX OF THESE DECISIONS IS THAT A DOCUMENT FOU ND DURING THE COURSE OF SEARCH MUST BE A SPEAKING ONE AND WITHOUT ANY SECOND INTERPRETATION, MUST REFLECT ALL THE DETAILS ABOUT THE TRANSACTIONS OF THE ASSESSEE IN T HE RELEVANT ASSESSMENT YEAR. ANY GAP IN THE VARIOUS COMPONENTS AS MENTIONED IN SECTION 4 OF THE INCOME TAX ACT MUST B E FILLED UP BY THE ASSESSING OFFICER THROUGH INVESTIGATIONS AND CORRELATIONS WITH THE OTHER MATERIAL FOUND EITHER D URING THE COURSE OF THE SEARCH OR ON INVESTIGATION. AS A RESU LT, WE HOLD THAT DOCUMENT NO. 7 IS A NON-SPEAKING DOCUMENT. NEXT ISSUE RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE IS THAT ADDITION COULD BE CONSIDERED UNDER SECTION 68. IN OUR CONSIDERED VIEW, THIS SUBMISSION IS MISPLACED. IN FACT IT DOES NOT ARISE FROM THE ORDER OF THE ASSESSING OFFICER. HE HAS ONLY MADE ADDITION UNDER SECTION 69 FOR THE UNDISCLOSED ADVANCES GIVEN BY THE ASSESS EE. THE QUESTION OF TREATING THEM AS CASH CREDITS IS ONLY A N AFTERTHOUGHT. THE DEPARTMENT IS NOT SURE AS TO WHET HER THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 63 ALLEGED ENTRIES ARE PAYMENTS OR RECEIPTS. IF THE DE PARTMENT ITSELF IS VACILLATING AND TWO INTERPRETATIONS ARE P OSSIBLE, THEN THIS FACT ITSELF JUSTIFIES THE STAND OF THE ASSESSE E THAT NO ADDITION CAN BE MADE . (EMPHASIS SUPPLIED BY UNDERLINING) 54. ON CAREFUL READING OF ABOVE DECISION OF COORDIN ATE BENCH OF THE TRIBUNAL, WE NOTE THAT THE PRESUMPTION AND ADDITION THEREUNDER CAN BE MADE ON THE BASIS OF SEIZED DOCUMENT ONLY WHEN THE DOCUMENT IS A SPEAKING ONE. THE DOCUMENT EITHER SHOULD SPEAK OUT OF ITSELF OR IN TH E SUPPORT OR COMPANY OF OTHER MATERIAL, EVIDENCE AND DETAILS FOUND DURING SEARCH AND SEIZURE OPERATION OR DURING INVESTIGATION OR DURING ASSESSMENT OR REASSE SSMENT POCEEDINGS. IT WAS FURTHER HELD THAT THE DOCUMENT SHOULD BE CLEAR AND UNAMBIGUOUS IN RESPECT OF ALL FOUR COMPONENTS OF CHARGE OF TAX AND IF THE DOCUMEN T IS NOT SO, THEN THE DOCUMENT IS ONLY A DUMB DOCUMENT AND NO CHARGE OF T AX CAN BE LEVIED ON THE ASSESSEE ON THE BASIS OF A DUMB DOCUMENT. 55. ON BEHALF OF THE ASSESSEE, THE SUPPORT HAS ALSO BEEN SOUGHT FROM THE RATIO OF THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF CIT VS ATAM VALVES (P) LTD. (SUPRA) WHEREIN IT WAS HELD TH AT:- DURING THE PENDENCY OF ASSESSMENT PROCEEDINGS, A SU RVEY WAS CONDUCTED BY THE DEPARTMENT UNDER SECTION 133A OF THE ACT ON 27.9.2005 IN THE PREMISES OF THE ASSESSEE AN D CERTAIN INCRIMINATING DOCUMENTS WERE FOUND INCLUDING A SLI P PAD CONTAINING PAYMENT OF WAGES TO VARIOUS PERSONS. THE SLIPS ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 64 WERE WRITTEN BY MANOJ JAIN, AN EMPLOYEE OF THE ASSE SSEE WHO WAS CONFRONTED WITH THE SLIPS, APART FROM QUESTIONI NG OF THE DIRECTOR MANOJ JAIN AS WELL AS DIRECTOR OF THE ASSE SSEE EXPLAINED THE POSITION AS TO HOW THE SLIPS HAD BEEN WRITTEN AND THE STAND OF THE ASSESSEE WAS THAT THE SAME DID NOT REPRESENT PAYMENT OF WAGES DURING THE YEAR IN QUEST ION BUT WERE FOR THE EARLIER YEAR. HOWEVER, THE ASSESSING O FFICER DID NOT ACCEPT THE EXPLANATION AND MADE AN ADDITION. TH E CIT(A) AS WELL AS THE TRIBUNAL PARTLY SET ASIDE THE ADDITI ON. IT WAS HELD THAT EVEN THOUGH EXPLANATION OF THE ASSESSEE T HAT THE LOOSE PAPERS DID NOT RELATE TO PAYMENT OF WAGES DUR ING THE YEAR IN QUESTION MAY NOT BE ACCEPTED IN ABSENCE OF ANY OTHER MATERIAL, THE LOOSE SHEETS BY ITSELF WERE NOT ENOUG H TO MAKE ADDITION AS PER ESTIMATE OF THE ASSESSING OFFICER. 56. SPEAKING FOR THE HONBLE HIGH COURT THEIR LORD SHIPS LAID DOWN THE RATIO THAT WHEN THE LOOSE PAPERS DID NOT RELATE TO CERTAI N PAYMENTS DURING THE RELEVANT PERIOD IN QUESTION, THEN IN ABSENCE OF ANY SUPPORTI NG MATERIAL OR EVIDENCE, THESE LOOSE SHEETS BY ITSELF WERE NOT FOUND TO BE SUFFICI ENT ENOUGH FOR MAKING A SUSTAINABLE AND JUSTIFIED ADDITION. ON THIS ISSUE, LD. AR HAS ALSO TAKEN US THROUGH THE ORDER OF ITAT DELHI E BENCH IN THE CA SE OF ATUL KUMAR JAIN VS DCIT (SUPRA) WHEREIN IT WAS HELD THAT THE SEIZED PA PERS HAVE BEING NOT CORROBORATED BY ANY INDEPENDENT EVIDENCE CANNOT BE CONSIDERED AS A RELIABLE DOCUMENT OR ACCEPTABLE PIECE OF EVIDENCE AS A PROOF OF INVESTMENT IN THE HOUSE PROPERTY AND THEREFORE, THESE KIND OF DOCUMENTS/PAP ERS ARE LIABLE TO BE IGNORED AND ADDITION MADE ON THE BASIS OF SUCH DOCUMENT IS NOT SUSTAINABLE AND IN ACCORDANCE WITH LAW. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 65 57. LASTLY, LD. AR HAS ALSO PLACED RELIANCE ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS S.M.AGGARWAL 293 I TR 043 (DEL) WHEREIN SPEAKING FOR THE HONBLE JURISDICTIONAL HIGH COURT, THEIR LORDSHIPS HELD THAT UNLESS AND UNTIL THE CONTENTS OF THE DOCUMENT ARE P ROVED AGAINST THE PERSON, THE POSSESSION OF THE DOCUMENT OR HANDWRITING OF THAT P ERSON ON SUCH DOCUMENT BY ITSELF COULD NOT PROVE THE CONTENTS OF THE DOCUMENT . IT WAS FURTHER HELD THAT THE DOCUMENT RECOVERED DURING THE COURSE OF SEARCH FROM THE ASSESSEE WAS HELD TO BE DUMB DOCUMENT AND THE ADDITION ON THE BASIS OF T HE SAME IS NOT SUSTAINABLE. 58. TURNING TO THE FACTUAL MATRIX OF THE PRESENT CASE, IF WE LOGICALLY ANALYSE THE CONTENTS OF THE DOCUMENT AND ITS RELIABILITY IN THE LIGHT OF RATIO LAID DOWN BY THE HONBLE HIGH COURT AND COORDINATE BENCH OF THE TRIB UNAL, WE NOTE THAT IT IS NOT IN DISPUTE THAT THE SEIZED DOCUMENT WAS RECOVERED D URING SEARCH AND SEIZURE OPERATION CARRIED ON IN THE CASE OF SHRI LALIT MODI ON 19.6.2009 AND THE SAME IS A PRINTED DOCUMENT WHICH HAS NOT BEEN EITHER WRITTE N OR SIGNED BY THE ASSESSEE OF THE PRESENT CASE OR BY THE PERSON SEARCHED I.E. SHRI LALTI MODI. IT IS ALSO PERTINENT TO NOTE THAT IN THE CASE OF PERSON SEARCH ED I.E. SHRI LALIT MODI, THE ADDITION OF COMMISSION OR BROKERAGE ALLEGED TO BE R ECEIVED BY THE PERSON SEARCHED FROM THE ASSESSEE OF THE PRESENT APPEAL HA S NOT BEEN FOUND TO BE SUSTAINABLE AND THE SAME HAS BEEN DELETED BY THE CI T(A) VIDE ORDER DATED 28.10.2013 AND THE REVENUE HAS DISPUTED THE SAID DE LETION BY WAY OF FILE APPEAL NO. 329/DEL/2014 IS ALSO BEING DISPOSED OF BY THIS ORDER. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 66 58.1 IT IS ALSO PERTINENT TO NOTE THAT ON THE B ASIS OF THE SAME SEIZED DOCUMENT ANNEXURE A-1, THE AO MADE CERTAIN ADDITIONS AND DUR ING FIRST APPELLATE PROCEEDINGS, THE CIT(A) HAS DELETED THE ADDITIONS M ADE ON ACCOUNT OF FREEHOLD CHARGES, SINKING FUND AND MAINTENANCE SECURITY AGAI NST THE PRESENT ASSESSEE SMT. VINITA CHAURSIA FOR WHICH THE REVENUE HAS FILE D ITA NO.3551/DEL/2013 WHICH IS ALSO BEING ADJUDICATED BY US BY PASSING TH IS CONSOLIDATED ORDER. IN THIS SITUATION, IT CAN SAFELY BE PRESUMED THAT THE ADDITION MADE BY THE AO IN THE CASE OF PERSON SEARCHED SHRI LALIT MODI (THE ALLEGE D BROKER) ON ACCOUNT OF RECEIPT OF COMMISSION FROM THE PURCHASE OF PROPERTY I.E. PRESENT ASSESSEE SMT. VINITA CHAURASIA HAS BEEN FOUND TO BE UNSUSTAINABLE IN FACTS AND IN LAW BY THE FIRST APPELLATE AUTHORITY. IN THE SAME MANNER, THE ADDITIONS MADE BY THE AO OF THE PRESENT ASSESSEE I.E. OTHER PERSON, ON ACCOUNT OF PAYMENT OF FREEHOLD CHARGES, MAINTENANCE SECURITY, SIGNATURE FOUND AND COMMISSION HAS BEEN DIRECTED TO BE DELETED BY THE CIT(A) BY PASSING THE ORDER IN QUESTION IN THIS APPEAL. WE MAY FURTHER POINT OUT THAT THE ADDITION MADE BY THE AO IN THE CASE OF PRESENT ASSESSEE SMT. VINITA CHAURASIA ON ACCOU NT OF PAYMENT OF FREEHOLD CHARGES, PAYMENT OF SINKING FUND, MAINTENANCE, SECU RITY AND COMMISSION HAVE NOT BEEN FOUND TO BE SUSTAINABLE BY THIS TRIBUNAL B Y THE EARLIER PART OF THIS ORDER AND UPTO THIS EXTENT, IMPUGNED DOCUMENT ANNEXURE A- 1 HAS BEEN FOUND AS NOT RELIABLE FOR MAKING SAID ADDITIONS IN THE CASE OF P ERSON SEARCHED AND THE OTHER PERSON. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 67 58.2 AT THE COST OF REPETITION, IT IS ALSO RELE VANT TO OBSERVE THAT IN THE CASE OF ALLEGED BROKER SHRI LALIT MODI, THE ADDITION MADE B Y THE AO ON ACCOUNT OF INCOME FROM RECEIPT OF BROKERAGE OR COMMISSION HAS BEEN DELETED AND DEMOLISHED BY THE CIT(A), MEANING THEREBY THE ALLEG ATION OF OVER AND ABOVE PAYMENT OF COMMISSION OF BROKERAGE BY THE PRESENT A SSESSEE (PAYER) TO SHRI LALIT MODI (PAYEE) HAS NOT BEEN FOUND TO BE SUSTAIN ABLE ON FACT AND LAW BY THE RESPECTIVE FIRST APPELLATE AUTHORITIES I.E. CIT(A). 59. THE FACT REMAINS THAT THE CIT(A) HAS UPHELD T HE ADDITION OF RS.16,42,68,522 AS ALLEGED CASH COMPONENT OF THE SA LE CONSIDERATION AND THE CIT(A) HAS ALSO ENHANCED THE TAXABLE INCOME OF THE PRESENT ASSESSEE BY AN AMOUNT OF RS.59,56,943/- BY HOLDING THAT THE ASSESS EE ACTUALLY PAID RS.17,02,25,465 OVER AND ABOVE THE BOOKS OF ACCOUNT S FROM THE INCOME OF UNACCOUNTED SOURCES WHICH RESULTED INTO THE EXCESS PAYMENT OF SAID AMOUNT. LD. CIT(A) ALSO ENHANCED THE TAXABLE INCOME OF THE ASSESSEE ON ACCOUNT OF ALLEGED RECEIPT OF RENT ON THE BASIS OF ANNEXURE A- 1 AND ADDITION OF RS.4,91,15,757 HAS BEEN MADE FOR AY 2010-11 AND THE AO WAS ALSO DIRECTED TO TAKE APPROPRIATE ACTION ABOUT THE CASH PAYMENT OF R S.4 CRORE IN AY 2009-10. 60. ON VIGILANT PERUSAL OF ANNEXURE A-1 AVAILAB LE AT PAGE 16 OF ASSESSEES PAPER BOOK, WE OBSERVE THAT FIRST PART OF THE DOCUM ENT CONTAINS NAME OF PRESENT ASSESSEE SMT. VINITA CHAURASIA AND DETAIL OF PROPER TY PURCHASED BY THE ASSESSEE AND TOTAL COST HAS BEEN MENTIONED AS RS. 32,85,37,3 54 @8285.71 PER SQ FT. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 68 CHALLENGING THESE CONTENTS, LD. AR HAS DRAWN OUR AT TENTION TOWARDS PARA NO. 7 OF THE IMPUGNED ORDER AND SUBMITTED THAT THE CIT(A) NOTICED THIS FACT THAT AS PER CIRCLE RATE, THE VALUE OF THE PROPERTY PURCHASE D BY THE ASSESSEE WAS RS.12,95,85,414 WHEREAS THE AGREED SALE CONSIDERATI ON AS MENTIONED IN THE SALE DEED WAS RS.16,42,68,832, WHICH PROVES THAT THE REG ISTERED SALE CONSIDERATION WAS OTHERWISE ADEQUATE AND PRETTY MORE THAN THE CIR CLE RATE AND THEREFORE, ACTUAL AND FAIR MARKET VALUE OF THE PROPERTY AT THE TIME O F PURCHASE STOOD EXPLAINED. HENCE, IT SHOULD BE ACCEPTED AND PRESUMED THAT THE ASSESSEE DISCLOSED ACTUAL AMOUNT OF CONSIDERATION WHICH WAS INVESTED TOWARDS PURCHASE OF SAID PROPERTY. TO SUPPORT THIS CONTENTION, THE AR HAS PLACED RELIA NCE ON VARIOUS JUDGMENTS AND ORDERS OF HONBLE SUPREME COURT AND VARIOUS HIG H COURTS INCLUDING DECISION OF HONBLE SUPREME COURT IN THE CASE OF KI SHAN CHAND VS CIT 125 ITR 715 (SC) AND ORDER OF HONBLE ALLAHABAD HIGH CO URT IN THE CASE OF CIT VS RAJPAL 149 TAXMAN 32 (ALL). NOW, THE ONUS WAS ON THE AO TO BRING OUT ANY FACT, EVIDENCE, MATERIAL OR ANY OTHER CORROBORATIVE EVIDENCE TO SUPPORT THIS CONTENTION THAT THE ASSESSEE ACTUALLY PAID OVER AND ABOVE HER BOOKS OF ACCOUNTS PAYMENT OF RS.17,02,25,465 AS ADDITIONAL CONSIDERAT ION TO THE SELLER AND IN ABSENCE OF ANY SUCH CORROBORATIVE EVIDENCE OR MATER IAL, THE ADDITION MADE BY THE AO ON STAND ALONE BASIS OF ANNEXURE A-1 CANNOT BE HELD AS SUSTAINABLE, SPECIALLY WHEN THE AMOUNT SHOWN BY THE ASSESSEE IN HER BOOKS OF ACCOUNTS IN REGARD TO INVESTMENT MADE IN A PROPERTY IS UNDISPUT EDLY HIGHER THAN THE CIRCLE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 69 RATE WHICH WAS APPLICABLE FOR THE PURPOSE OF LEVIAB LE STAMP DUTY AT THE TIME OF PURCHASE TRANSACTION. 61. IN THE PRESENT CASE, ADDITION MADE BY THE AO PERTAINING TO UNEXPLAINED INVESTMENT FALLS WITHIN SECTION 69 OF THE ACT AND A DDITION PERTAINING TO PAYMENT OF COMMISSION/BROKERAGE FALLS WITHIN THE AMBIT OF S ECTION 69 OF THE ACT. IT IS APT TO ANALYSE SECTION 69 AND 69C OF THE ACT WHICH CAN BE APPLICABLE PROVISIONS IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. FOR THE SAKE CONVENIENCE, SECTION 69 AND 69C OF THE ACT ARE BEING REPRODUCED BELOW:- SECTION 69 UNEXPLAINED INVESTMENTS WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS W HICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AN D THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM I S NOT, IN THE OPINION OF THE ASSESSING OFFICER, SATISFACTORY, THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE A SSESSEE OF SUCH FINANCIAL YEAR. 69C. 2 UNEXPLAINED EXPENDITURE, ETC. WHERE IN ANY FINANCI AL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND H E OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF, OR THE EXPLANATION, IF ANY, OFFERED BY HIM IS NOT, IN THE OPINION OF THE 3 ASSESSING] OFFICER, SATISFACTORY, THE AMOUNT COVERED BY SUCH EXPENDITURE OR PART THEREOF, AS THE CASE MAY BE, MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR.] PROVIDED THAT, NOTWITHSTANDING ANYTHING CONTAINED I N ANY OTHER PROVISION OF THIS ACT, SUCH UNEXPLAINED EXPEN DITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SH ALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 70 62. ON PLAIN READING OF SECTION 69 OF THE ACT, WE NOTE THAT WHERE THE ASSESSEE HAS MADE INVESTMENT WHICH ARE NOT RECORDED IN THE B OOKS OF ACCOUNTS, IF ANY, MAINTAINED BY HIM FOR ANY UNACCOUNTED SOURCE OF INC OME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE O F THE INVESTMENT OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE AO, SATISFACTORY, THEN VALUE OF THE SAID INVESTMENT MAY BE DEEMED TO BE IN COME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. ON PLAIN READING OF SECTION 6 9C OF THE ACT FOLLOWING KEY FEATURES OR ELEMENTS ARE NOTICEABLE:- I) THAT THERE IS AN EXPENDITURE; II) WHICH IS ACTUALLY INCURRED BY THE ASSESSEE DURING T HE FINANCIAL PERIOD UNDER CONSIDERATION; III) THE SAME IS UNACCOUNTED; AND, IV) THERE IS NO SATISFACTORY EXPLANATION PROVIDED BY TH E ASSESSEE FOR THE SAME OR THE EXPLANATION OFFERED BY THE ASSE SSEE HAS NOT BEEN FOUND TO BE SATISFACTORY BY THE AO. 63. IT IS ALSO PERTINENT TO NOTE THAT ALL THE AFORESAID CONDITIONS ARE REQUIRED TO BE CUMULATIVELY SATISFIED BEFORE FASTENING TAX LIAB ILITY ON THE ASSESSEE. OBVIOUSLY, THE ONUS OR BURDEN TO PROVE ABOVE CONDIT ION LAY ON THE SHOULDERS OF THE AO AND COMPETENT REVENUE AUTHORITIES. FURTHER, IT IS NOTEWORTHY THAT THERE IS NO PLACE FOR ANY PRESUMPTION IN APPLYING SECTION 69 OR 69C OF THE ACT. IN SIMPLER WORDS ALL THE ABOVE CONDITIONS ARE REQUIRED TO BE SATISFIED ON FACTUAL AND ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 71 ACTUAL BASIS AND EVEN PRESUMPTION U/S 132(4A) AND S ECTION 292C OF THE ACT CANNOT BE IMPORTED TO SECTION 69 OR SECTION 69C OF THE ACT FOR MAKING VALID AND LEGALLY SUSTAINABLE ADDITIONS. 64. ON LOGICAL ANALYSIS OF FACTS AND CIRCUMSTANCE S OF THE PRESENT CASE, IT IS RELEVANT TO CONSIDER THE CONTENTS OF THE IMPUGNED D OCUMENT ANNEXURE A-1 AND RELIABILITY AND ACCEPTABILITY OF THE CONTENTS IN TH E LIGHT OF ALLEGATIONS OF THE AO, THE CONCLUSION OF THE CIT(A) IN THE IMPUGNED ORDER AND CONTENTIONS OF THE ASSESSEE COUPLED WITH RATIO OF THE DECISIONS AS REL IED BY THE LD. AR. 65. IT WOULD BE RELEVANT TO MENTION AGAIN THAT T HE ADDITIONS MADE BY THE AO PERTAINING TO SINKING FUND, MAINTENANCE SECURITY, F REEHOLD CHARGES IN THE CASE OF PURCHASER PRESENT ASSESSEE HAVE BEEN DELETED BY THE CIT(A) DURING FIRST APPELLATE PROCEEDINGS. ON THE ISSUE OF PAYMENT OF COMMISSION AND BROKERAGE, THE CIT(A) OF THE PERSON SEARCHED I.E. SHRI LALIT M ODI, HAS DELETED THE ADDITIONS BY HOLDING THAT THE ADDITION MADE BY THE AO ON THE BASIS OF PRESUMPTION U/S 132(4A) OF THE ACT BY STATING THAT IT IS BURDEN OF THE ASSESSEE TO PROVE THAT THE CONTENTS OF THE DOCUMENTS ARE NOT TRUE AND CORRECT. THE CIT(A) FURTHER HELD THAT THE AO HAD COMPLETELY IGNORED AND NOT CONSIDERED TH E CONFIRMATION OF THE PURCHASER SMT. VINITA CHAURASIA (OTHER PERSON) FIL ED IN THIS REGARD THAT THE SAID DEAL DID NOT MATURE THROUGH THE ASSESSEE OF THAT CA SE I.E. PERSON SEARCHED SHRI LALIT MODI. THE AO OF PERSON SEARCHED CATEGORICALL Y HELD THAT THE PRESUMPTION U/S 132(4A) OF THE ACT IS A REBUTTABLE PRESUMPTION AND THE ASSESSEE SHRI LALIT MODI HAD REBUTTED THE SAME BY WAY OF FILING CONFIRM ATION OF SMT. VINITA ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 72 CHAURASIA (OTHER PERSON) IN THIS REGARD. AT THIS S TAGE OF DETAILED DELIBERATIONS, WE FURTHER NOTE THAT THE PERSON SEARCHED SHRI LALIT MODI IN HIS STATEMENT DATED 19.6.2009 RECORDED U/S 132(4) OF THE ACT DURING SEA RCH AND SEIZURE OPERATION ANSWERING QUESTION NO. 25 REPLIED THAT ANNEXURE A-1 , PAGE 5 TO 8 ARE ROUGH PLANNING AND ON PAGE 5, PROPOSAL FROM VASANT KUNJ S QUARE MALL FOR SALE WAS RECEIVED AND THE DEAL DID NOT MATERIALISE THROUGH H IM. THE RELEVANT PART OF SAID QUESTION ANSWER VERBATIM READS AS UNDER:- Q: 25. I AM SHOWING YOU PAGE NO. 5 TO 8 OF ANNEX URE A-1, PLEASE EXPLAIN THE CONTENTS. ANS: PAGES NO. 5 TO 8 ARE ROUGH PLANNING ON PAGE 5 PROPOSAL FROM VASANT SQUARE MALL FOR SALE WAS RECEIVED AND T HE DEAL DID NOT MATERIALISE THROUGH ME. 66. WE FURTHER NOTE THAT SUBSEQUENTLY IN THE STAT EMENT RECORDED ON OATH ON 15.3.2013 U/S 131 OF THE ACT DURING THE COURSE OF A SSESSMENT PROCEEDINGS IN THE CASE OF M/S SUNCITY PROJECT LTD. (SELLER) & OTHERS THE ALLEGED BROKER SHRI LALIT MODI (PERSON SEARCHED) REPLYING TO QUESTION NO. 3 E XPLAINED THE CIRCUMSTANCES IN WHICH ANNEXURE A-1 (PAGE 5) REACHED HIS POSSESSI ON WHEREIN HE HAS CATEGORICALLY STATED THAT NO TRANSACTION TOOK PLACE ON THE BASIS OF ANNEXURE A-1 PAGE 5 AND HE WOULD HAVE EARNED BROKERAGE INCOME IF SAID PROPOSAL GOT MATERIALISED. THE RELEVANT QUESTION ANSWER VERBATI M READS AS UNDER:- Q3. DURING THE COURSE OF SEARCH PROCEEDINGS AT YOU R RESIDENCE AT L-48, LAJPAT NAGAR -11, NEW DELHI, LOO SE PAPERS WERE FOUND AND SEIZED VIDE ANNEXURE A-L. I AM SHOWI NG YOU PAGE NO. 5 OF THE SAID ANNEXURE A-1. KINDLY EXPLAIN THE TRANSACTIONS MENTIONED IN IT. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 73 ANS. THE CHAURASIA FAMILY IS KNOWN TO ME. AT THE TI ME OF EXECUTION OF SALE DEED IN FAVOUR OF MRS. VINITA CHA URASIA BY M/S SUNCITY PROJECTS LTD. IN RESPECT OF COMMERCIAL SPAC E PURCHASED IN VASANT SQUARE MALL, I WAS PRESENT AS A WITNESS A ND SIGNED ON THE DOCUMENTS CONVEYING TITLES AS A WITNESS BEFORE SUB REGISTRAR. IT HAPPENED SOMEWHERE IN MAY 2009. SINCE I AM IN RE AL ESTATE BUSINESS, INCIDENTALLY AFTER COMING BACK FROM EXECU TION OF THE SAID SALE DEED, I WAS APPROACHED BY A BROKER AT MY RESIDENCE MAKING ENQUIRY ABOUT AVAILABILITY OF COMMERCIAL SPA CE IN VASANT SQUARE MALL AT VASANT KUNJ, NEW DELHI. SINCE I ACCO MPANIED MRS. VINITA CHOURASIA WHO HAS PURCHASED COMMERCIAL SPACE AT VASANT SQUARE MALI, I TELEPHONED HER AND GOT THE DE TAILS OF COST ETC. OF HER COMMERCIAL SPACE IN VASANT SQUARE MALL AND TOLD THESE FACTS TO THE SAID BROKERS. AFTER FEW DAYS, TH E BROKER CAME TO MY RESIDENCE AND DELIVERED A PROPOSAL, WHICH IS NOT HING BUT THE SAME DOCUMENT SHOWN TO ME AS PAGE NO. 5 OF ANNEXURE A-1. THE SAID PROPOSAL REMAINED WITH ME AND BEFORE THE SAME COULD BE FORWARDED TO MRS. VINITA CHAURASIA, A SEARCH AND SE IZURE OPERATION BY THE INCOME TAX DEPARTMENT AT MY RESIDE NCE ON 19.06.20.09, DURING WHICH THE ABOVE MENTIONED PAPER CONTAINING THE PROPOSAL WAS FOUND AND SEIZED. SINCE IT COULD N OT BE DELIVERED TO SMT. VINITA CHAURASIA, THE PROPOSAL WA S NOT ACTED UPON, HENCE, NO TRANSACTION TOOK PLACE ON THE BASIS OF THE SAID PAGE SEIZED AT PAGE NO. 5 OF ANNEXURE A-1. HAD THE SAID PROPOSAL MATERIALIZED, I WOULD HAVE EARNED BROKERAG E INCOME. SINCE NO SUCH TRANSACTION TOOK PLACE, NO COMMISSION WAS EARNED BY ME. 67. IT IS ALSO PERTINENT TO TAKE COGNIZANCE OF CO NFIRMATION/CERTIFICATE (AVAILABLE AT PAGE 126 OF ASSESSEES PAPER BOOK) GIVEN BY SHRI LALIT MODI HAS AGAIN REPEATED THE VERY FACT THAT THE DOCUMENT IN QUESTIO N VIZ. ANNEXURE A-1, CONTAINS A DRAFT PROPOSAL PRESUMABLY BY A BROKER WHO MIGHT H AVE LEFT THIS PAPER IN HIS PREMISE AND THE SAID DOCUMENT WAS NOT PREPARED BY H IM. SHRI LALIT MODI EXPRESSLY DENIED THAT THE SAID DOCUMENT IN QUESTION DOES NOT REPRESENT ANY TRANSACTION OF PURCHASE OF PROPERTY BY SMT. VINITA CHAURASIA FROM M/S SUNCITY ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 74 PROJECT (P) LTD. SHRI LALIT MODI FURTHER STATED TH EREIN THAT IT IS IN HIS KNOWLEDGE THAT THERE WAS A TRANSACTION OF SALE OF PROPERTY OF BIG BAZAR, VASANT SQUARE MALL BY M/S SUNCITY PROJECT (P) LTD. TO SMT. VINITA CHAU RASIA FOR RS.16.42 CRORE APPROXIMATELY AS PER REGISTERED DOCUMENT AND NO CON SIDERATION WHATSOEVER , AS ALLEGED BY THE DEPARTMENT, WAS PAID BY PURCHASER SM T. VINITA CHAURASIA TO M/S SUNCITY PROJECT LTD. OVER AND ABOVE THE REGISTERED SALE PRICE IN THE PROPERTY DOCUMENT. 68. IN VIEW OF ABOVE NOTED FACTS, WE FURTHER OBSER VE THAT THE PAYMENT OF COMMISSION ON SALE @2% HAS BEEN CATEGORICALLY DENIE D BY THE OTHER PERSON I.E. PRESENT ASSESSEE PAYER. IN THE CASE OF BROKER SHRI LALIT MODI, THE PERSON SEARCHED, THE CIT(A) HAS DELETED THE ADDITION ON AC COUNT OF RECEIPT OF ALLEGED COMMISSION ON BROKERAGE AND THE SAME WAS NOT FOUND TO BE SUSTAINABLE AND IN ACCORDANCE WITH LAW. UNDER ABOVE NOTED FACTS AND C IRCUMSTANCES, WE ARE UNABLE TO SEE ANY CORROBORATIVE MATERIAL, EVIDENCE, DETAIL S OR ANY OTHER SUPPORTIVE ALLEGATION WHICH COULD LEAD US TO PRESUME THAT THE ASSESSEE MADE PAYMENT OF COMMISSION TO SHRI LALIT MODI AS MENTIONED IN DOCUM ENT IN QUESTION ANNEXURE A-1 DOWN BELOW RIGHT HAND SIDE. PER CONTRA, AS WE HAVE ALREADY NOTICED THAT EVEN IF FOR THE SAKE OF ARGUMENT, THE CONTENTS OF D OCUMENT ON THE ISSUE OF PAYMENT OF COMMISSION IS ACCEPTED AS GOSPEL TRUTH E VEN THEN MENTIONING OF WORDS ON THE EXTREMELY RIGHT SIDE DOWN BELOW IN ANN EXURE A-1 TO PAY DENOTES THAT THE COMMISSION WAS NOT ACTUALLY PAID B Y THE PURCHASER ASSESSEE OF THE PRESENT CASE TO THE ALLEGED BROKER SHRI LALIT M ODI THE PERSON SEARCHED TILL ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 75 DATE OF PREPARATION OF DOCUMENT IN QUESTION ANNEXUR E A-1. WE ARE ALSO INCLINED TO ACCEPTED CONTENTIONS OF THE LD. AR THAT THE PERSON SEARCHED I.E. SHRI LALIT MODI NEVER DISOWNED OR DECLINED THE SAID ANNE XURE A-1 AND NEVER STATED AT ANY POINT OF TIME THAT THE SAID DOCUMENT BELONGS TO THE PRESENT ASSESSEE. 68.1 AT THIS STAGE OF ADJUDICATION, WE FIND IT N ECESSARY TO CONTINUE FURTHER WITH OUR DELIBERATIONS FROM PARA 15 (SUPRA) OF THIS ORDE R TO LEND IT TO FINAL CONCLUSION ALONG WITH RELEVANT GROUNDS OF THE ASSESSEE. IN GR OUND NO.4 IN ITA NO. 3551/DEL/2013, THE REVENUE HAS CHALLENGED THE CONCL USION OF THE CIT(A) WITH THIS CONTENTION THAT THE CIT(A) ERRED IN LAW AND ON FACTS OF THE CASE IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF PAYMENT O F COMMISSION. WHEREAS THE ASSESSEE IN GROUND NO. (III) TO 2(VI), HAS ALLE GED THAT THE CIT(A) HAS MISINTERPRETED THE PROVISIONS OF SECTION 292C OF TH E ACT FOR MAKING PRESUMPTION AGAINST THE ASSESSEE ON THE BASIS OF DO CUMENT IN QUESTION ANNEXURE A-1 AS THE PRESUMPTION CAN BE MADE ONLY AGAINST THE PERSON FROM WHOM SUCH DOCUMENT WAS SEIZED DURING SEARCH OPERATION. 68.2 APROPOS GROUND NO. 4 OF THE REVENUE, THE LD . DR SUBMITTED THAT THE CIT(A) WAS NOT CORRECT IN DELETING THE ADDITION MAD E BY THE AO ON ACCOUNT OF DISALLOWANCE OF COMMISSION. THE LD. AR REPLIED THA T AS PER RELEVANT PARA 12.4 OF THE IMPUGNED ORDER, THE CIT(A) HAS NOT DELETED T HE ADDITION ON ACCOUNT OF ALLEGED PAYMENT OF COMMISSION AND HAS HELD THAT WHI LE MAKING ADDITION IN THIS REGARD THE AO SHOULD HAVE ALSO ALLOWED THE DEDUCTIO N FOR THE SAME AS BROKERAGE PAID TO SHRI LALIT MODI. LD. AR CONTENDED THAT THE PRESUMPTION U/S 132(4A) OF ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 76 THE ACT R/W SECTION 292C OF THE ACT CAN BE MADE IN THE CASE OF PERSON SEARCHED, THIS PRESUMPTION CANNOT BE MADE IN THE CASE OF THE OTHER PERSON. LD. AR ALSO POINTED OUT THAT THE CIT(A) MISINTERPRETED THE RELE VANT PROVISIONS OF THE ACT WHILE ADDRESSING THE ISSUE, WHICH IS CLEAR FROM PAR A 12.4 OF THE IMPUGNED ORDER. LD. AR POINTED OUT THAT THE BROKERAGE OR COMMISSION PAID TOWARDS PURCHASE OF IMMOVABLE ASSETS IS CAPITAL EXPENDITURE WHICH CANNO T BE DEDUCTED. LD. AR POINTED OUT THAT THE BROKERAGE OR COMMISSION PAID T OWARDS PURCHASE OF IMMOVABLE ASSETS IS CAPITAL EXPENDITURE WHICH CANNO T BE DEDUCTED. LD. AR FURTHER POINTED OUT THAT WHEN IN THE CASE OF PERSON SEARCHED, THEN THE CONCLUSION OF THE CIT(A) IN THE CASE OF PRESENT ASSESSEE IN PA RA 12.4 OF THE IMPUGNED ORDER IS NOT JUSTIFIED AND SUSTAINABLE. LD. AR VEHEMENTL Y CONTENDED THAT EVEN THE PERSON FROM WHOSE POSSESSION SAID ANNEXURE A-1 WAS FOUND HAS NOT ALLEGED OR STATED THAT THE SAME BELONGS TO PRESENT ASSESSEE, A S SUCH THERE COULD BE NO PRESUMPTION THAT THE SAME BELONGS TO THE PRESENT AS SESSEE. LD. AR FURTHER CONTENDED THAT IN ABSENCE OF ANY OPPORTUNITY FOR CR OSS EXAMINATION OF SHRI LALIT MODI AND THE DIRECTOR OR OTHER COMPETENT AUTHORITY OF M/S SUNCITY PROJECTS PVT. LTD, THE SAID DOCUMENT IN QUESTION IS NOT ADMISSIBL E AND ATTRIBUTED TO THE ASSESSEE FOR MAKING PRESUMPTION U/S 292C OF THE ACT . 68.3 ON CAREFUL CONSIDERATION OF ABOVE, WE NOTE THAT THE PERSON SEARCHED HAS NEVER STATED THAT THE DOCUMENT IN QUESTION BELONGS TO THE PRESENT ASSESSEE. ADMITTEDLY, THE DOCUMENT IN QUESTION ANNEXURE A-1 W AS SEIZED FROM THE POSSESSION OF PERSON SEARCHED I.E. SHRI LALIT MODI BUT FROM HIS STATEMENT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 77 RECORDED DURING SEARCH AND SEIZURE OPERATION ON 19. 6.2009 U/S 132(4) OF THE ACT OR HIS SUBSEQUENT STATEMENT RECORDED U/S 131 OF THE ACT ON 15.3.2013 DURING ASSESSMENT PROCEEDING OF M/S SUNCITY PROJECTS PVT. LTD., HE NEVER STATED THAT THE DOCUMENT IN QUESTION ANNEXURE A-1 BELONGS TO THE P RESENT ASSESSEE SMT. VINITA CHAURASIA. THE PRESUMPTION U/S 132(4A) OF THE ACT AND 292C OF THE ACT CAN BE MADE AGAINST THE PERSON SEARCHED AND IF THE SAME IS REBUTTED BY SATISFACTORY VALID REASON, THEN ONLY PRESUMPTION OTHERWISE MAY B E DRAWN. IN THE EXTANT CASE, THE PRESUMPTION AGAINST THE PRESENT ASSESSEE CANNOT BE TAKEN U/S 132(4A) OF THE ACT AND SECTION 292 C OF THE ACT. 68.4 ON VIGILANT READING OF OPERATIVE PART OF T HE IMPUGNED ORDER, AS REPRODUCED IN PARA 13 OF THIS ORDER (SUPRA), WE NOT E THAT THE CIT(A) HAS HELD THAT PRESENCE OF THE SEIZED PAPER GIVES DETAILED WORKING OF THE CHEQUE AND CASH COMPONENT OF THE PROPERTY DEAL INVOLVING THE PRESEN T ASSESSEE IS NOT AN IMAGINARY OR FANCIFUL DRAFT AND IT IS A REASONABLE PRESUMPTION U/S 292C OF THE ACT AGAINST THE PRESENT ASSESSEE THAT THE SUM OF RS .65,70,747 WAS PAID TO SHRI LALIT MODI BY THE PRESENT ASSESSEE AS COMMISSION. THE CIT(A) FURTHER WENT ON TO HOLD THAT OUTCOME OF SAID INFERENCE IS THAT THOU GH THE SAME AMOUNT WAS TO BE ADDED AS CASH RECEIPT THAT HAS REMAINED TO BE ACCOU NTED IN THE HANDS OF THE ASSESSEE, THE SAME WILL STAND DEDUCED SINCE THE PAY MENT WAS MADE TO SHRI LALIT MODI. THE CIT(A) CONCLUDED THAT THE AO WAS RIGHT I N ADDING THIS AMOUNT TO THE INCOME OF THE PRESENT ASSESSEE BUT THE AO SHOULD H AVE ALSO MADE THE DEDUCTION FOR THE SAME AS BROKERAGE PAID TO SHRI LALIT MODI. THE PRESUMPTION AND ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 78 INFERENCE TAKEN BY THE CIT(A) U/S 292C OF THE ACT A GAINST THE PRESENT ASSESSEE IS NOT VALID AS BEFORE TAKING SUCH PRESUMPTION, THE CI T(A) WAS UNDER OBLIGATION TO HOLD THAT THE DOCUMENT IN QUESTION ACTUALLY AND FAC TUALLY DOES NOT BELONG TO THE PERSON SEARCHED AND THE SAME BELONGS TO THE OTHER P ERSON VIZ. PRESENT ASSESSEE. AS WE HAVE ALREADY NOTED THAT THE PERSON SEARCHED N EVER STATED THAT THE DOCUMENT IN QUESTION ANNEXURE A-1 BELONGS TO THE PR ESENT ASSESSEE. FURTHER, NEITHER THE AO OF THE PERSON SEARCHED NOR THE AO OF THE OTHER PERSON HAS VALIDLY HELD THAT THE DOCUMENT IN QUESTION DOES NOT BELONG TO PERSON SEARCHED AND ACTUALLY OR FACTUALLY BELONGS TO THE PRESENT ASSESS EE. IN THIS SITUATION, PRESUMPTION TAKEN BY THE CIT(A) U/S 292C OF THE ACT AGAINST THE ASSESSEE IS NOT VALID AND SUSTAINABLE. WE FURTHER HOLD THAT THE DI RECTIONS GIVEN TO THE AO BY THE CIT(A) IN OPERATIVE PARA 12.4 OF THE IMPUGNED ORDER ARE ALSO NOT IN ACCORDANCE WITH PROVISIONS OF THE ACT AND LAW. WE MAY FURTHER POINT OUT THAT IN THE CASE OF PERSON SEARCHED, WHO WAS ALLEGED TO BE A BROKER IN THE DEAL BEING RECIPIENT OF ALLEGED COMMISSION, THE CIT(A) HERSELF HAS DELETED THE ADDITION ON ACCOUNT OF RECEIPT OF UNACCOUNTED COMMISSION, HENCE, ADDITION AND CONSEQUENT DEDUCTION IN THIS REGARD IN THE CASE OF ALLEGED PAYER, I.E. T HE PRESENT ASSESSEE ON THE BASIS OF INVALID PRESUMPTION CANNOT BE HELD AS SUSTAINABL E. THEREFORE, OBSERVATIONS, DIRECTIONS AND CONCLUSION OF THE CIT(A) IN PARA 12. 4 OF THE IMPUGNED ORDER ARE DEMOLISHED. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 79 69. FURTHERMORE, THE CIT(A) HAS ENHANCED THE ASSE SSMENT BY AN AMOUNT OF RS.4,91,15,757 FOR AY 2010-11 AND BY RS. 4 CRORE FO R AY 2009-10 ON THE BASIS OF CONTENTS OF THIRD PORTION OF THE DOCUMENT IN QU ESTION ANNEXURE A-1 WHEREIN DETAILS OF ALLEGED PENDING RENT FROM 1.10.2006 TO 3 0.4.2009 FOR 31MONTHS HAVE BEEN MENTIONED. IT IS PERTINENT TO KEEP IN MIND TH AT THE AO HAD NOT MADE ANY ADDITION ON THE ISSUE OF PENDING RENT BUT THE CIT(A ) HAS ENHANCED THE ASSESSMENT ON THIS ISSUE BY THE SAID AMOUNTS IN RES PECTIVE AY 2010-11 AND ALSO IN EARLIER AY 2009-10. THE FACTS OF THIS ISSUE HAV E BEEN DEALT IN DETAIL IN THE EARLIER PART OF THIS ORDER AND ON CHRONOLOGICAL ANA LYSIS OF THE SAME, WE NOTE THAT THE SALE DEED FOR THE PROPERTY PURCHASED BY THE PRE SENT ASSESSEE WAS EXECUTED AND REGISTERED ON 13.5.2009 DURING AY 2010-11 AND T HIS FACT HAS NOT BEEN CONTROVERTED OR DISLODGED EITHER BY THE AO OR BY TH E CIT(A). THE CIT(A) IN PARA 12.3 AT PAGE 11 OF THE IMPUGNED ORDER HELD THA T THE INCOME OF RS.8,91,15,757/- WAS ACCRUED TO THE ASSESSEE AS A R ESULT OF UNDISCLOSED AGREEMENT BETWEEN HER AND THE SELLER SUNCITY PROJEC T PVT. LTD. THE CIT(A) FURTHER WENT ON TO HOLD THAT SINCE THE SEIZED DOCUM ENT CLEARLY DENOTES RS.4 CRORE AS PAID TO HER IN FY 2008-09, THEREFORE, THE ADDITI ON IS REQUIRED TO BE MADE BY THE SAID AMOUNT IN THE RELEVANT AY 2009-10 AND THE BALANCE AMOUNT OF RS.4,91,15,757 WAS AN OBLIGATION OF SELLER SUNCITY PROJECT PVT. LTD. TO PAY TO THE ASSESSEE, THEREFORE, THE SAME AMOUNT WAS ADDED TO T HE INCOME OF THE ASSESSEE FOR AY 2010-11. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 80 70. FROM VIGILANT READING OF THE IMPUGNED ORDER O F THE CIT(A) WE NOTE THAT EXCEPT CONTENTS OF DOCUMENT ANNEXURE A-1, THE CIT(A ) HAD NO OTHER INCRIMINATING MATERIAL, EVIDENCE, DETAIL, OR ANY SU PPORTING LEG TO ESTABLISH THIS FACT THAT THE ASSESSEE HAD ACTUALLY RECEIVED AN AMO UNT OF RS.8,91,15,757/- ON ACCOUNT OF PENDING RENT FOR THE PERIOD STARTING FRO M 1.10.2006 TO 30.4.2009, BY CHEQUE OR IN CASH, GIVING RISE TO THE ALLEGED RENTA L INCOME OF THE ASSESSEE. IT IS PERTINENT TO MENTION THAT OBVIOUSLY, THE CIT(A) ENJ OYED CO-TERMINUS POWERS WITH THE AO AND DURING FIRST APPELLATE PROCEEDINGS, SHE HAD ISSUED A NOTICE OF ENHANCEMENT TO THE ASSESSEE, SHOWING HER INTENTION TO ENHANCE THE ASSESSMENT ON ACCOUNT OF PENDING RENT. REPLYING TO THE SAID N OTICE, THE ASSESSEE EXPLAINED THAT NO ADDITION/ENHANCEMENT WAS CALLED FOR AND THE PROPOSED ADDITION PERTAIN TO ALLEGED PENDING RENT FOR THE PERIOD 1.10.2006 TO 31 .4.2009, WHEREAS THE PROPERTY WAS PURCHASED BY THE ASSESSEE IN MAY 2009, THEREFOR E, THERE IS NO QUESTION OF MAKING ADDITION ON SAID AMOUNT. 71. LD. DR ON THIS ISSUE SUPPORTED THE ACTION OF THE CIT(A) AND CONTENDED THAT THERE WAS AN UNDISCLOSED ARRANGEMENT BETWEEN T HE PRESENT ASSESSEE (PURCHASER) WITH M/S SUNCITY PROJECT LTD. (SELLER) FOR PAYMENT OF PENDING RENT TO THE ASSESSEE, THEREFORE, THE ENHANCEMENT WAS QUITE JUSTIFIED. 72. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSION S, WE NOTE THAT THE CIT(A) HAS NOT MADE ANY INQUIRY FROM THE SELLER OF THE PRO PERTY AND PAYER OF THE RENT AS TO WHETHER THE PAYMENT OF 31 MONTHS STARTING FROM 1 .10.2006 TO 30.4.2009 WAS PAID DIRECTLY TO PRESENT ASSESSEE PURCHASER OR THRO UGH THE SELLER M/S SUNCITY ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 81 PROJECT (P) LTD. EXCEPT CONTENTS OF DOCUMENT IN QU ESTION ANNEXURE A-1. WE ARE UNABLE TO SEE ANY OTHER JUSTIFIED AND SOUND BAS IS FOR MAKING IMPUGNED ENHANCEMENT OF AMOUNT OF PENDING RENT AMOUNTING TO RS.4 CRORE IN AY 2009-10 AND FOR THE REMAINING AMOUNT OF RS.4,91,15,757 IN A Y 2010-11. HOWEVER, IT IS RELEVANT TO MENTION THAT AS PER GENERAL HUMAN PROB ABILITY AND MENTAL LEVEL OF A MAN OF ORDINARY PRUDENCE, IT CANNOT BE ACCEPTED THA T WHILE A PROPERTY IS BEING SOLD AT APPROXIMATELY 25% HIGHER RATE AS COMPARED T O CIRCLE RATE AND REGISTERED SALE DEED IS EXECUTED FOR THE CONSIDERATION OF RS.1 6,42,68,832 THEN HOW COME SAID SELLER MAY BE AGREED TO TRANSFER AN AMOUNT OF PENDING RENT OF RS.8,91,15,757 TO THE PURCHASER UNDER AN UNDISCLOSE D ARRANGEMENT. THAT TOO FOR THE PERIOD PRIOR TO ACTUAL AND LEGAL TRANSFER OF PR OPERTY. IN THIS SITUATION AND UNDER AFORESAID DISCUSSION, WE ARE OF THE CONSIDERE D OPINION THAT IN ABSENCE OF ANY OTHER INCRIMINATING MATERIAL, EVIDENCE OR DOCUM ENT, THE ENHANCEMENT OF INCOME BY THE CIT(A) ON STAND ALONE BASIS OF CONTEN TS OF DOCUMENT IN QUESTION ANNEXURE A-1 CANNOT BE HELD TO BE SUSTAINABLE. THE CIT(A) HAS NOT MADE ANY REQUIRED AND APPROPRIATE INQUIRY IN THIS REGARD AND IN ABSENCE OF THE SAME THE ENHANCEMENT OF INCOME FOR THE YEAR UNDER CONSIDERA TION AND ALSO IN THE PREVIOUS AY 2009-10 CANNOT BE HELD AS VALID, SUSTAI NABLE AND IN ACCORDANCE WITH LAW. 73. THE NEXT ISSUE FOR OUR CONSIDERATION REMAINS THE ADDITION MADE BY THE AO ON ACCOUNT OF SECOND PART OF DOCUMENT IN QUESTION W HEREIN THE AMOUNT OF RS.16,42,68,832 HAS BEEN MENTIONED TOWARDS CH. VAL UE UNDISPUTEDLY THE SAME ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 82 AMOUNT HAS BEEN SHOWN AND REFLECTED IN THE SALE DEE D AND IN THE BOOKS OF ACCOUNTS OF THE PRESENT ASSESSEE AND THIS FACT HAS BEEN UNCONTROVERTED RATHER ACCEPTED BY THE AO AND THE CIT(A) WHICH IS NOT ALSO IN DISPUTE. WE MAY FURTHER POINT OUT THAT THE DISPUTE REMAINS ABOUT TH E SECOND PART OF CONTENTS OF THE DOCUMENT IN QUESTION WHEREIN PDC CHEQUE OF RS.16, 42,68,522 HAS BEEN MENTIONED AND ON THE RIGHT SIDE RECD AMOUNT OF RS .17,02,25,465 HAS BEEN MENTIONED AND IN THE LAST COLUMN ON THE RIGHT, AMOU NT OF RS.59,56,943 HAS BEEN MENTIONED. THE AO MADE ADDITION OF RS.16,42,68,522 BY HOLDING THAT THE SAID AMOUNT WAS MADE OVER AND ABOVE THE SALE CONSIDERATI ON WHICH WAS RECORDED AND REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSES SEE. DURING FIRST APPELLATE PROCEEDINGS, THE CIT(A) NOT ONLY ACCEPTED AND UPHEL D THE CONCLUSION OF THE AO BUT ALSO ADDED THAT THE ASSESSEE HAD ACTUALLY PAID RS.17.02 CRORE WHICH RESULTED IN EXCESS PAYMENT OF RS.59,56,943 WHICH WAS REFLECT ED IN THE DOCUMENT IN QUESTION TO REFUND AND SHE ALSO MADE ENHANCEMENT OF SAID AMOUNT. 74. WHILE CONSIDERING THE CONTENTIONS OF BOTH TH E SIDES, WE NOTE THAT EXCEPT ADDITION ON ACCOUNT OF PDC VALUE AND ENHANCEMENT ON ACCOUNT OF EXCESS PAYMENT TOTALLING TO RS.17,02,25,465 OTHER ADDITION S HAVE NOT BEEN FOUND TO BE SUSTAINABLE IN THE EARLIER PART OF THIS ORDER. 75. AS WE HAVE ALREADY NOTED ADDITION THAT FOR M AKING ADDITION U/S 69 OF THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT AND MAKING ADDITION U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURE, THE ONUS IS ON THE AO AND OTHER COMPETENT REVENUE AUTHORITIES TO ESTABLISH THAT THE RE WAS AN AMOUNT OF ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 83 INVESTMENT OR EXPENDITURE; WHICH WAS ACTUALLY INVE STED OR INCURRED BY THE ASSESSEE DURING THE FINANCIAL YEAR UNDER CONSIDERAT ION; THE SAME WAS UNACCOUNTED AND NOT REFLECTED IN THE BOOKS OF ACCO UNTS OF THE ASSESSEE AND THERE WAS NO SATISFACTORY EXPLANATION PROVIDED BY THE ASS ESSEE FOR THE SAME OR THE EXPLANATION ADVANCED OR OFFERED BY THE ASSESSEE HAS NOT BEEN FOUND TO BE SATISFACTORY BY THE AO. AS PER REQUIREMENT OF RELE VANT STATUTORY PROVISIONS ALL THE AFORESAID CONDITIONS ARE REQUIRED TO BE FULFILL ED AND SATISFIED CUMULATIVELY BEFORE MAKING ANY ADDITION EITHER U/S 69 OR U/S 69C OF THE ACT AND BEFORE FASTENING TAX LIABILITY ON THE ASSESSEE. IN OUR HU MBLE UNDERSTANDING, IF THE AO OR THE COMPETENT REVENUE AUTHORITY DISCHARGED REQUI RED ONUS AS STATED ABOVE, THEN ONLY ONUS SHIFTS ON THE SHOULDER OF THE ASSESS EE TO DEMOLISH THE ALLEGATIONS OF THE AO AND TO SHOW THAT THE ASSESSEE HAS NOT MAD E ANY INVESTMENT OR EXPENDITURE DURING THE FINANCIAL PERIOD UNDER CONSI DERATION WHICH WAS UNACCOUNTED IN THE BOOKS OF ACCOUNTS OF THE ASSESS EE OUT OF INCOME OR RECEIPTS FROM UNACCOUNTED AND UNDISCLOSED SOURCES. 76. IN THE PRESENT CASE, THE AO AND THE CIT(A) H AS SOLELY RELIED ON THE DOCUMENT IN QUESTION I.E. ANNEXURE A-1 FOR MAKING A DDITION OF RS.16,42,68,522 PERHAPS U/S 69 OF THE ACT AND THE CIT(A) ALSO ENHAN CED THE ASSESSMENT BY RS. 59,56,943 PERHAPS U/S 69C OF THE ACT ONLY ON THE BA SIS OF CONTENTS OF ANNEXURE A-1 WHICH CANNOT BE SAID TO BE GOSPEL TRUTH. WE AR E UNABLE TO SEEK ANY FURTHER VERIFICATION, EXAMINATION OR ANY EFFORT TO BRING OU T ANY OTHER INCRIMINATING MATERIAL, EVIDENCE OR DETAILS OR ANY OTHER SUPPORTI NG EVIDENCE TO ESTABLISH THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 84 FACT THAT THE ASSESSEE ACTUALLY MADE OVER AND OVER PAYMENT OF R.S17,02,25,465 WHICH RESULTED INTO UNEXPLAINED INVESTMENT OF RS.16 ,42,68,522 AND UNEXPLAINED EXCESS PAYMENT OF RS. 59,56,943 WHICH RESULTED INTO REFUND OF THE SAME AMOUNT TO THE PRESENT ASSESSEE. 77. SINCE WE HAVE ALREADY OBSERVED THAT THE OTHE R CONTENTS OF THE DOCUMENT PERTAINING TO PAYMENT OF SINKING FUND, MAINTENANCE SECURITY, FREEHOLD CHARGES BY THE ASSESSEE AND INCOME ACCRUING FROM RECEIPT OF PENDING RENT FROM 1.10.2006 TO 31.10.2009 HAVE NOT BEEN FOUND TO BE S USTAINABLE AND IN ACCORDANCE WITH LAW. THE ADDITION MADE BY THE AO O F THE BROKER SHRI LALIT MODI (SEARCHED PERSON) HAS BEEN DELETED BY THE CIT( A) DURING FIRST APPELLATE PROCEEDINGS. THEREFORE, THE SOLE ISSUE REMAINS ABO UT THE ALLEGED PAYMENT OF RS.17,02,25,465 WHICH WAS PICKED UP BY THE AO FOR M AKING ADDITION AND REMAINING PART OF THE SAME WAS AGAIN PICKED UP BY T HE CIT(A) FOR MAKING ENHANCEMENT OF INCOME. 78. IN THE CASE OF CIT VS GIAN GUPTA THE HONBL E JURISDICTIONAL HIGH COURT OF DELHI, IN SIMILAR FACTS AND CIRCUMSTANCES, UPHELD T HE CONCLUSION OF THE TRIBUNAL THAT ONUS WAS ON THE AO TO ESTABLISH THAT ALLEGED I NVESTMENT IN CASH HAD BEEN MADE. WHEN THE SAID ONUS IS NOT DISCHARGED, IT COU LD NOT BE CONCLUDED THAT AN UNEXPLAINED INVESTMENT HAD BEEN MADE BY THE ASSESSE E TO ATTRACT ADDITION U/S 69 OF THE ACT. THE HONBLE HIGH COURT FURTHER UPHELD THE OBSERVATIONS OF THE TRIBUNAL THAT AO OUGHT TO HAVE ESTABLISHED THAT THE ALLEGED LAND WAS PURCHASED BY THE ASSESSEE AND HE FAILED TO DISCLOSE THE SOURC E OF SUCH PURCHASE. IN THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 85 PRESENT CASE UNDISPUTEDLY, THE INVESTMENT REFLECTED IN THE SALE DEED HAS BEEN RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE W HICH IS ADMITTEDLY MUCH HIGHER THAN THE CIRCLE RATE WHICH WAS EFFECTIVE AND PREVAILING AT THE TIME OF EXECUTION OF SALE DEED AND COMPLETION OF TRANSUDATI ON. ONUS WAS ON THE AO TO ESTABLISH THAT THE ASSESSEE MADE OVER AND ABOVE PAY MENT, EITHER BY CHEQUE OR IN CASH TO THE SELLER M/S SUNCITY PROJECTS PVT. LTD. A MOUNTING TO RS.17,02,25,465 OUT OF WHICH RS.16,42,68,522 WERE RETAINED BY THE S ELLER AS UNACCOUNTED CONSIDERATION AND EXCESS AMOUNT OF RS.59,56,943 WAS REFUNDED OR RETURNED BACK TO THE ASSESSEE. 79. WE FURTHER OBSERVE THAT ALTHOUGH THE REVENU E AUTHORITIES INCLUDING AO HAS UNFETTERED DISCRETION AND NOT STRICTLY BOUND BY THE RULES AND PROVISIONS OF THE EVIDENCE ACT 1872 AND CIVIL PROCEDURE CODE AS WELL AS MATERIAL AND EVIDENCE ON RECORD AND THEY ARE LEGALLY EMPOWERED TO TAKE AC TION ON THE MATERIAL WHICH MAY NOT BE ACCEPTED AS AN EVIDENCE UNDER EVIDENCE A CT 1872, NEVERTHELESS, SUCH DISCRETION DOES NOT PROVIDE THEM TO ACT AS A M ONARCHY AND DOES NOT ENTITLE THEM TO MAKE A PURE GUESSWORK AND SUPPORT AN ADDITI ON OR DISALLOWANCE ENTIRELY UPON DISCRETION ON THE BASIS OF A DUMB DOCUMENTS ON STAND ALONE BASIS WITHOUT ANY OTHER CORROBORATIVE OR SUPPORTIVE MATERIAL AND WITHOUT MAKING ANY FURTHER INVESTIGATION OR ENQUIRY FROM AVAILABLE REASONABLE SOURCES. 80. ON CAREFUL CONSIDERATION OF THE RATIO OF T HE ORDER OF ITAT HYDERABAD B BENCH IN THE CASE OF DCIT VS M.AJA BABU (SUPRA), WE OBSERVE THAT IN THE SIMILAR SET OF FACTS AND CIRCUMSTANCES, THE TRIBUNA L HELD THAT NO ADDITION CAN BE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 86 MADE ON THE BASIS OF DUMB DOCUMENT/NOTE/BOOK/LOOSE SLIPS IN ABSENCE OF ANY OTHER CORROBORATIVE OR SUPPORTIVE MATERIAL TO SHOW THAT THE ASSESSEE HAD MADE INVESTMENT. IT WAS ALSO HELD THAT NOTING ON THE NOT EBOOK ETC. ARE REQUIRED TO BE SUPPORTED/CORROBORATED BY THE OTHER EVIDENCE AND SH OULD ALSO INCLUDE THE STATEMENT OF A PERSON WHO ADMITTEDLY IS THE PARTY T O THE NOTING AND STATEMENT OF ALL THE RELATED PERSONS, THEN SUCH STATEMENT SHOULD BE CONFRONTED TO THE ASSESSEE AND HE SHOULD BE ALLOWED TO CROSS-EXAMINE THE RESPE CTIVE PERSONS/PARTIES. THE TRIBUNAL IN OPERATIVE PARA 17.1 FINALLY HELD THAT T HE VENDOR/SELLER HAS NOT BEEN EXAMINED IN THIS CASE AND, THEREFORE, THE ADDITION MADE BY THE AO ON THE BASIS OF LOOSE PAPER IS NOT SUSTAINABLE AND THE CIT(A) WA S RIGHT IN DELETING THE SAME. IN THE RECENT JUDGEMENT OF HONBLE JURISDICTIONAL H IGH COURT OF DELHI IN THE CASE OF CIT VS VIVEK AGRAWAL (SUPRA), IT WAS HELD T HAT THE ADDITION WAS MADE ONLY ON THE BASIS OF SOME LOOSE PAPER AND CHIT AND THE SAME WOULD FALL IN THE SAME CATEGORY OF MATERIAL WHICH COULD NOT HAVE BEEN THE SOLE BASIS FOR ADDITION WITHOUT SOME SURVEILLANCE OF THE SUBSTANTIATION. I N THIS JUDGMENT, THEIR LORDSHIPS REFERRING TO ITS OWN JUDGEMENT IN THE CAS E OF CIT VS KULWANT RAI (SUPRA) AND JUDGMENT OF HONBLE SUPREME COURT IN TH E CASE OF DHAKESWARI COTTON MILLS LTD. VS CIT (SUPRA) NOTED THAT THE INC OME TAX AUTHORITIES INCLUDING THE AO ENJOY UNFETTERED DISCRETION BUT THE SAME SHO ULD BE USED JUDICIOUSLY AND SUCH DISCRETION DOES NOT EMPOWER THEM TO MAKE A PUR E GUESSWORK FOR MAKING DISALLOWANCES AND ADDITIONS IN THE ASSESSMENT. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 87 81. ON THIS ISSUE, IT IS ALSO RELEVANT TO CONSID ER THE RATIO OF THE ORDER OF ITAT HYDERABAD IN THE CASE OF DDCIT VS SHRI BABU RAO (SU PRA), AS RELIED BY THE ASSESSEE, WHEREIN IT WAS HELD THAT OTHER THAN THE L OOSE PAPER, THE AO HAS NOT BROUGHT OUT ANY CORROBORATIVE MATERIAL TO SHOW THAT THE INFERENCE MADE BY HIM IS CORRECT AND SUSTAINABLE. THE TRIBUNAL FURTHER H ELD THAT THE ONLY TEST THAT WAS REQUIRED TO BE APPLIED WAS WHETHER ON THE FACTS FOU ND AND THE STATE OF EVIDENCE ON RECORD, THE CONCLUSION ARRIVED AT BY THE CIT(A) WAS ONE WHICH COULD BE ARRIVED BY A REASONABLE PERSON PROPERLY INFORMED IN LAW. THE TRIBUNAL ALSO MADE IT CLEAR THAT THE DOCUMENT RECOVERED DURING TH E COURSE OF SEARCH WHICH WAS A DUMB DOCUMENT, THEN THE SAME CANNOT BE THE SOLE B ASIS FOR MAKING ADDITIONS. 82. LD. AR HAS ALSO PLACED RELIANCE ON THE DECISI ON OF ITAT JABALPUR IN THE CASE OF ACIT VS SATYA PAL WASSAN (SUPRA) WHEREIN IT WAS HELD THAT THE DOCUMENT FOUND DURING THE COURSE OF SEARCH MUST BE A SPEAKING ONE AND WITHOUT ANY SECOND INTERPRETATION AND THE SAME MUST REFLECT ALL THE DETAILS ABOUT THE TRANSACTIONS OF THE ASSESSEE IN THE RELEVANT ASSESS MENT YEAR AND ANY GAP IN THE VARIOUS COMPONENTS AS MENTIONED IN SECTION 4 OF THE ACT MUST BE FILLED UP BY THE AO THROUGH INVESTIGATION AND CORRELATION WITH T HE OTHER MATERIAL FOUND EITHER DURING THE COURSE OF SEARCH OR DURING INQUIR Y OR ON INVESTIGATION. IN THE PRESENT CASE, AS WE HAVE ALREADY NOTED THAT EXCEPT ISSUE OF OVER AND ABOVE PAYMENT OF RS.17,02,25,465, THE ADDITIONS MADE IN T HE HANDS OF PRESENT ASSESSEE SMT. VINITA CHAURSIA ON ACCOUNT OF OVER AND ABOVE P AYMENT OF SINKING FUND, MAINTENANCE CHARGES, FREEHOLD CHARGES HAVE NOT BEEN FOUND TO BE SUSTAINABLE BY ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 88 THE CIT(A). IN THE CASE OF ALLEGED BROKER SHRI LA LIT MODI, THE CIT(A) OF SEARCHED PERSON HAS ALSO HELD THAT THE ADDITION MAD E BY THE AO OF THE PERSON SEARCHED ON ACCOUNT OF RECEIPT OF COMMISSION FROM T HE PRESENT ASSESSEE HAS NOT BEEN FOUND TO BE SUSTAINABLE. THE REMAINING CONTEN TS OF THE DOCUMENT IN QUESTION PERTAINING TO OVER AND ABOVE PAYMENT OF SA LE CONSIDERATION AND SURPLUS PAYMENT TO THE SELLER AND THE REFUND OF SURPLUS PAY MENT CANNOT BE HELD AS ACCEPTABLE AND SUSTAINABLE IN ABSENCE OF ANY OTHER MATERIAL FOUND EITHER DURING THE COURSE OF SEARCH OR ON INVESTIGATION OR INQUIRY . IN THE PRESENT CASE, THE AO OF THE PERSON SEARCHED AND THE AO OF THE OTHER PERS ON HAVE NOT POINTED OUT ANY OTHER SUPPORTIVE OR INCRIMINATING MATERIAL OR EVIDE NCE OR DETAIL EXCEPT STAND ALONE DOCUMENT IN QUESTION ANNEXURE A-1. 83. ON CAREFUL CONSIDERATION OF ENTIRE MATERIAL P LACED BEFORE US, INTER ALIA ASSESSMENT ORDER AND APPELLATE ORDER PASSED IN THE CASES OF PERSON SEARCHED AND THE OTHER PERSON, WE ARE UNABLE TO SEE ANY EFFORT O F MAKING ANY FURTHER INVESTIGATION OR INQUIRY BY THE RESPECTIVE ASSESSIN G OFFICERS ON THIS ISSUE AND THEY SIMPLY PROCEEDED TO MAKE ADDITIONS IN THE RESP ECTIVE HANDS OF PERSON SEARCHED AND OTHER PERSON ONLY ON THE BASIS OF DOCU MENT IN QUESTION WHICH IS NOT AN ACCEPTABLE, SUSTAINABLE AND JUSTIFIED APPROA CH. 84. IN VIEW OF OUR AFORESAID DISCUSSION, WE REAC H TO A FORTIFIED CONCLUSION THAT THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPLAIN ED INVESTMENT AND ENHANCEMENT BY THE CIT(A) ON ACCOUNT OF REFUNDED E XCESS PAYMENT ON THE BASIS OF STAND ALONE DOCUMENT IN QUESTION ANNEXURE A-1 IS NOT SUSTAINABLE IN ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 89 ABSENCE OF OTHER SUPPORTIVE EVIDENCE OR MATERIAL. HENCE, WITHOUT FURTHER INVESTIGATION OR ENQUIRY FROM OTHER RELATED ENTITIE S, ADDITION MADE BY THE AO AND ENHANCED BY THE CIT(A) CANNOT BE HELD AS VALID AND LEGALLY SUSTAINABLE AND WE ARE UNABLE TO ACCEPT AND UPHOLD THE SAME. ACCOR DINGLY, GROUND NO. 2(I) TO (VI), 3(I) TO (IV) AND 4(I) TO (III) OF THE ASSESSE E ARE HEREBY ALLOWED AND THE AO IS DIRECTED TO DELETE THE IMPUGNED ADDITIONS ON ACCOUN T OF UNEXPLAINED INVESTMENT, EXPENDITURE AND RECEIPT OF PENDING RENT FOR AY 2010 -11. WE FURTHER HOLD THAT UNDER ABOVE NOTED CONCLUSION, THE DIRECTIONS OF THE CIT(A) TO THE AO FOR ENHANCEMENT OF INCOME BY RS. 4 CRORES ARE ALSO NOT SUSTAINABLE AND WE ALSO DISMISS THE SAME. 85. SINCE BY THE EARLIER PART OF THIS ORDER, WE H AVE ALLOWED GROUND OF THE ASSESSEE AND HAVE DIRECTED THE AO TO DELETE THE ADD ITION ON ACCOUNT OF PAYMENT OF OVER AND ABOVE PAYMENT OF SALE CONSIDERATION, C OMMISSION/BROKERAGE TO SHRI LALIT MODI AND THE ADDITION MADE BY WAY OF ENHANCEM ENT BY THE CIT(A) ON ACCOUNT OF PENDING RENT, THEREFORE, GROUND NO. 4 OF THE REVENUE IN ITA NO. 3551/DEL/2013 ALSO GETS CONCLUSION AND WE HOLD THAT THE PRESENT ASSESSEE SMT. VINITA CHAURASIA HAS NOT MADE ANY PAYMENT ON ACCOUN T OF COMMISSION OR BROKERAGE TO SHRI LALIT MODI OR ANYBODY ELSE AS THE DEAL WAS MATERIALISED DIRECTLY WITH THE SELLER M/S SUNCITY PROJECT PVT. L TD. AND THERE WAS NO OCCASION OR QUESTION FOR PAYMENT OF COMMISSION OR BROKERAGE TO SHRI LALIT MODI OR ANYBODY ELSE BY THE ASSESSEE. HENCE, GROUND NO. 4 OF THE REVENUE IN ITA NO. 3551/DEL/2013 BEING DEVOID OF MERITS IS DISMISSED. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 90 ITA NO. 329/DEL/2014 86. THIS APPEAL BY THE REVENUE HAS BEEN DIRECTED AG AINST THE ORDER OF THE CIT(A)-XII, NEW DELHI DATED 28.10.2013 IN APPEAL NO .431/13-14 FOR AY 2010-11. GROUND NO. 4 OF THE REVENUE IS GENERAL IN NATURE WHICH REQUIRES NO ADJUDICATION. REMAINING EFFECTIVE GROUNDS OF THE R EVENUE READ AS UNDER:- 1. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ER RED IN LAW AND ON FACTS IN DELETING AN ADDITION OF RS.65,7 0,747/- ON ACCOUNT OF BROKERAGE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN LAW AND ON FACTS IN DELETING AN ADDITION ON ACCOUNT OF UNDISCLOSED INCOME ON SALE OF JEWELLERY OF RS. 40,0 0,000/-. 3. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERR ED IN LAW AND ON FACTS IN DELETING AN ADDITION OF RS.6,81 ,298/- ON ACCOUNT OF DISALLOWANCE U/S 14A OF THE I.T. ACT. 87. BRIEFLY STATED THE FACTS GIVING RISE TO THIS AP PEAL ARE THAT THE ASSESSEE FILED A RETURN ON 20.11.2010 U/S 139(1) OF THE INCOME TAX ACT, 19061 (FOR SHORT THE ACT) DECLARING AN INCOME OF RS.62,08,62,826/- UNDER THE HEAD INCOME FROM SALARY, INCOME FROM BUSINESS, INCOME FROM HOUSE PRO PERTY, INCOME FROM CAPITAL GAIN/LOSS AND INCOME FROM OTHER SOURCES. SUBSEQUEN TLY, STATUTORY NOTICES U/S 142(1) AND 143(2) DATED 23.6.2011 ALONG WITH DETAIL ED QUESTIONNAIRE BASED ON SEIZED DOCUMENTS AND OTHER ISSUES RELATED TO THE IN COME OF THE ASSESSEE WERE ISSUED AND SERVED ON THE ASSESSEE. THE AO MADE CER TAIN ADDITIONS ON ACCOUNT OF BROKERAGE EARNED IN CASH, UNDISCLOSED INCOME ON SALE OF JEWELLERY AND DISALLOWANCE U/S 14A OF THE ACT AND THE ASSESSMENT WAS FINALISED AT NET TAXABLE INCOME OF RS. 63,21,14,871/- AS AGAINST THE AFORESA ID RETURNED INCOME. THE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 91 AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT(A) WHICH WAS ALLOWED ON ALL THREE ISSUES BY DELETING THE ADDITIONS MADE BY THE AO. NOW, THE AGGRIEVED REVENUE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPE AL WITH THE GROUNDS AS REPRODUCED HEREINABOVE. GROUND NO.1 88. APROPOS GROUND NO. 1, LD. DR SUPPORTING THE ASS ESSMENT ORDER SUBMITTED THAT DURING THE COURSE OF SEARCH AT THE RESIDENCE O F ASSESSEE, ANNEXURE A-1 PAGE 5 WAS FOUND IN REGARD TO TRANSACTION OF IMMOVEABLE PROPERTY BETWEEN BUYER SMT. VINITA CHAURASIA AND SELLER SUNCITY PROJECT AN D AS PER THIS DOCUMENT, A COMMISSION OF RS.65,70,747/- WAS PAYABLE TO THE ASS ESSEE WHO IS A PROPERTY DEALER AND FACILITATES THE TRANSACTION OF IMMOVEABL E PROPERTY. LD. DR ALSO POINTED OUT THAT IT IS A NORMAL TRADE PRACTICE THAT IN THE DEALS OF IMMOVEABLE PROPERTY TRANSACTION, THE COMMISSION IS ALWAYS PAID OR RECEIVED AND THE DOCUMENTS SEIZED DURING SEARCH OPERATION CLEARLY SH OW THE QUANTUM OF COMMISSION AND IN THE CASE OF SMT. VINITA CHAURASIA , THE SAID PROPERTY WAS DULY FOUND ACCOUNTED FOR, THEREFORE, THE CONTENTION S OF THE ASSESSEE ARE NOT ACCEPTABLE. LD. DR ALSO POINTED OUT THAT U/S 132(4 A) OF THE ACT, THE BURDEN IS ON THE ASSESSEE TO PROVE THAT THE CONTENTS OF THE D OCUMENT ARE NOT TRUE AND WHEN THE PROPERTY TRANSACTION HAS ACTUALLY TAKEN PLACE, THEN THE AO RIGHTLY HELD THAT THE ASSESSEE WAS PART AND PARCEL OF THE ABOVE DEAL AND THE ASSESSEE HAS EARNED COMMISSION OF RS.65,70,747/- ON THE ABOVE DEAL. LD . DR ALSO SUBMITTED THAT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 92 THE CIT(A) DELETED THE ADDITION WITHOUT ANY BASIS A ND JUSTIFIED REASONING, THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY R ESTORING THAT OF THE AO ON THIS ISSUE. 89. LD. AR SUPPORTING THE IMPUGNED ORDER SUBMITTED THAT THE AO WAS NOT JUSTIFIED IN MAKING ADDITION AS THE AMOUNT OF ALLEG ED COMMISSION WAS NEVER RECEIVED BY THE ASSESSEE BECAUSE THE DEAL WAS NEVER MATERIALISED THROUGH THE ASSESSEE. LD. AR REITERATING ITS ARGUMENTS BEFORE THE CIT(A) FURTHER CONTENDED THAT THE ASSESSEE FILED A CONFIRMATION OF SMT. VINI TA CHAURASIA HAVING DENIED PAYING ANY COMMISSION TO THE ASSESSEE AS THE PROPER TY DEAL DID NOT MATERIALISE THROUGH THE ASSESSEE. 90. LD. AR VEHEMENTLY CONTENDED THAT THE AO WAS NOT JUSTIFIED TO MAKE ADDITION ON ACCOUNT OF ALLEGED COMMISSION, ON THE B ASIS OF DOCUMENT OF PROPOSAL WHICH NEVER SPECIFIED THAT THE DEAL IN QUE STION OF SMT. VINITA CHAURASIA, WAS MATERIALISED THROUGH THE ASSESSEE AN D NO OTHER DOCUMENT, EVIDENCE OR MATERIAL WAS FOUND AND SEIZED TO SUGGES T OR TO SUPPORT THE RECEIPT OF COMMISSION BY THE ASSESSEE FROM SMT. VINITA CHAURAS IA. LD. AR FURTHER POINTED OUT THAT SMT. VINITA CHAURASIA, THE PURCHAS ER, IN ITS CONFIRMATION CLEARLY SUPPORTED THIS FACT THAT THE DEAL OF PROPERTY WAS D IRECTLY MADE BY HER THROUGH HER HUSBAND AND THE DEAL OF PURCHASE OF PROPERTY WA S NOT DONE THROUGH THE ASSESSEE I.E. MR. LALIT MODI AND NO COMMISSION WAS PAID TO ANY BROKER AS IT WAS A DIRECT DEAL OF PROPERTY. LD. AR ALSO POINTED OUT THAT IN THE SEIZED SOLE ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 93 DOCUMENT, THERE WAS NO MENTION OF THE FACT THAT THE SAID DEAL HAD MATURED THROUGH THE ASSESSEE AND THE BASE DOCUMENT WAS SIMP LY A RECORDING OF THE PROPOSAL WHICH DID NOT BRING ANY COMMISSION OR INCO ME FOR THE ASSESSEE AS THE DEAL WAS NOT MATERIALISED THROUGH THE ASSESSEE. LD . AR ALSO POINTED OUT THAT WHEN THE ASSESSEE HAD DISCHARGED ITS ONUS BY SUBMIT TING REASONABLE EXPLANATION AND CONFIRMATION FROM SMT. VINITA CHAURASIA TO ESTA BLISH THIS FACT THAT THE DEAL OF PROPERTY WAS NOT MATERIALISED THROUGH THE ASSESS EE, THEN THE ONUS WAS SHIFTED ON THE AO TO CONTROVERT AND DEMOLISH THIS FACT AND TO ESTABLISH THIS ALLEGATION THAT THE DEAL WAS MATERIALISED THROUGH THE ASSESSEE AND ASSESSEE EARNED COMMISSION THEREFROM. LD. AR STRENUOUSLY CONTENDED THAT THE AO MADE ADDITION ON THE BASIS OF PURE GUESSWORK, SURMISES A ND CONJECTURES WHICH WAS RIGHTLY DELETED BY THE CIT(A). 91. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE AO MADE ADDITION ON THE BASIS OF ANNEXURE A-1 WHICH IS AVAILABLE AT PAGE 16 OF THE PAPER BOOK OF THE ASSESSEE. THE CIT(A) GRANTED REL IEF FOR THE ASSESSEE WITH THE FOLLOWING FINDINGS AND CONCLUSION:- I HAVE CONSIDERED THE FACTS STATED BY THE ASSESSEE IN HIS SUBMISSION AND THE GROUNDS RAISED IN APPEAL. THE AS SESSING OFFICER HAS MADE THE ADDITION ON THE BASIS OF PRESU MPTION U/S 132(4A) OF THE INCOME TAX ACT STATING THAT IT IS TH E BURDEN OF THE ASSESSEE TO PROVE THAT THE CONTENTS O F THE DOCUMENTS ARE NOT TRUE. THE ASSESSING OFFICER OBSER VED THAT WHEN THE PROPERTY TRANSACTION HAS ACTUALLY TAKEN PL ACE, HE HAS NO HESITATION IN HOLDING THAT THE ASSESSEE HAD EARN ED COMMISSION INCOME OF RS.65,70,747/- ON THE ABOVE ME NTIONED ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 94 DEAL. HOWEVER, THE ASSESSING OFFICER HAS COMPLETELY IGNORED AND NOT CONSIDERED THE CONFIRMATION OF SMT. VINEETA CHAURASIA FILED IN THIS REGARD THAT THE SAID DEAL D ID NOT MATURE THROUGH THE ASSESSEE. THE PRESUMPTION U/S 132(4A) I S REBUTTAL PRESUMPTION AS ALSO OBSERVED BY THE ASSESSING OFFIC ER AND SINCE THE ASSESSEE HAD REBUTTED THE SAME BY WAY OF FILING OF CONFIRMATION OF MRS.VINEETA CHAURASIA IN THIS REGAR D, THERE IS NO JUSTIFICATION ON THE PART OF THE ASSESSING OFFIC ER TO MAKE ADDITION OF RS.65,70,747/- IN THE HANDS OF THE ASSE SSEE AS ALLEGED COMMISSION RECEIVED IN THE DEAL IN FAVOUR O F SMT.VINEETA CHAURASIA REGARDING PROPERTY OF BIG BAZ AR, VASANT SQUARE MALL, NEW DELHI. IN VIEW OF THE ABOVE , THE ADDITION OF RS.65,70,747/- IS DIRECTED TO BE DELETE D. GROUND RAISED IN APPEAL IS ALLOWED. 92. IN VIEW OF OBSERVATIONS AND CONCLUSION OF THE R EVENUE AUTHORITIES BELOW, WE NOTE THAT THE AO PROCEEDED TO MAKE ADDITION ON T HE BASIS OF PRESUMPTION U/S 132(4A) OF THE ACT BY HOLDING THAT THE BURDEN TO PR OVE THAT THE CONTENTS OF THE SEIZED DOCUMENTS ARE NOT TRUE IS ON THE ASSESSEE. WE ALSO OBSERVE THAT THE AO ALSO HELD THAT THE PROPERTY TRANSACTION HAD ACTUALL Y TAKEN PLACE BETWEEN MRS. VINEETA CHAURASIA AND THE SUNCITY, THEREFORE, HE H AS NO HESITATION IN HOLDING THAT THE ASSESSEE HAD EARNED COMMISSION INCOME OF R S.65,70,747/- ON THE SAID PROPERTY DEAL. THE CIT(A) TOOK A WELL-FOUNDED LEGA L APPROACH THAT THE PRESUMPTION U/S 132(4A) OF THE ACT, ON THE OTHER HA ND, IS A REBUTTABLE PRESUMPTION AND SINCE THE ASSESSEE HAD REBUTTED THE SAME BY WAY OF FILING OF CONFIRMATION (AVAILABLE AT PAGE 125 OF ASSESSEES P APER BOOK) FROM MRS. VINEETA CHAURASIA IN THIS REGARD, THEN THERE IS NO JUSTIFICATION TO MAKE ADDITION IN THE HANDS OF ASSESSEE AS ALLEGED COMMISSION RECE IVED IN THE DEAL. IT IS ALSO RELEVANT TO NOTE THAT THE ALLEGED BROKER SHRI LALIT MODI (PERSON SEARCHED) HAD ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 95 ALSO GIVEN A CERTIFICATE/CONFIRMATION AVAILABLE AT PAGE 124 DURING COURSE OF ASSESSMENT PROCEEDINGS OF THE PURCHASER SMT. VINITA CHAURASIA THAT THE DEAL WAS NOT MATERIALISED THROUGH HIM AND HE DID NOT EAR N ANY COMMISSION FORM THIS DEAL FROM THE PURCHASER. NOW, WHEN THE PRESUMPTION IS REBUTTED BY THE ASSESSEE AND PURCHASER, THEN ONUS WAS ON THE AO TO FURTHER DEMOLISH THE SAME TO RESTORE THE PRESUMPTION U/S 132(4A) OF THE ACT B Y WAY OF RELEVANT MATERIAL OR EVIDENCE BY CONDUCTING FURTHER INQUIRY OR INVESTIGA TION FROM THE SELLER AND OTHER RELATED PARTIES AND THE AO HAD NOT CONDUCTED SUCH E XERCISE. THE ADDITION IN THE HANDS OF SAID RECIPIENT/PAYEE CANNOT BE SUSTAINED E SPECIALLY WHEN THE ADDITION IN THE HANDS OF THE PAYER-PURCHASER HAS NOT BEEN FO UND TO BE SUSTAINABLE BY THE EARLIER PART OF THIS ORDER WHILE DISMISSING AD ADJU DICATING GROUND NO. 4 OF THE REVENUE. 93. IN VIEW OF AFORESAID CONCLUSION OF THE CIT(A), WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE REVENUE HAS NOT BROUGHT ANY EVIDENCE ON RECORD OR ANY SUCH DOCUMENT IN SUPPORT OF PAYMENT O F BROKERAGE OR COMMISSION ON THE BASIS OF WHICH THE FACT OF BROKERAGE OR COM MISSION OR LEGALLY DUE OR PAID TO THE ASSESSEE CAN BE SUSTAINED OR ESTABLISHE D. THE AO HAS NOT BROUGHT OUT ANY ALLEGATION, EVIDENCE, DOCUMENT OR OPINION O N RECORD DURING THE ASSESSMENT PROCEEDINGS OR APPELLATE PROCEEDINGS TO SUPPORT THIS FACT THAT THE DEAL WAS ACTUALLY MATERIALISED THROUGH THE PRESENT ASSESSEE AND, THEREFORE, THE PRESUMPTION MADE BY THE AO ONLY ON THE BASIS OF DOC UMENT IN QUESTION ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 96 ANNEXURE A-1 DOES NOT SEEM TO BE WELL-FOUNDED THAT THE ASSESSEE HAD ACTUALLY RECEIVED COMMISSION OR BROKERAGE FROM THE DEAL OR T RANSACTION OR SALE OF PROPERTY BETWEEN MRS. VINEETA CHAURASIA AND SUNCITY PROJECT. THE FINDINGS AND CONCLUSION OF THE CIT(A) ARE BASED ON THE LEGAL PRINCIPLES AND VERIFICATION OF THE FACT AND WE ARE UNABLE TO SEE ANY INFIRMITY, PERVERSITY OR ANY OTHER VALID REASON TO INTERFERE WITH THE SAME AND HENCE, WE UPH OLD THE SAME. ACCORDINGLY, GROUND NO. 1 OF THE REVENUE BEING DEVOID OF MERITS IS DISMISSED. GROUND NO. 2 94. APROPOS GROUND NO.2, LD. DR SUBMITTED THAT DURI NG THE SEARCH AND SEIZURE OPERATION, THE ASSESSEES STATEMENT WAS RECORDED U/ S 132(4) OF THE ACT ON 19.6.2009 AT HIS RESIDENCE. LD. DR FURTHER POINTED OUT THAT DURING STATEMENTS VIDE QUESTION NO. 33, THE ASSESSEE WAS SPECIFICALLY ASKED ABOUT THE POSSESSION OF JEWELLERY OF RS.3.51 CRORES AND THE ASSESSEE ADMITT ED THAT HE SOLD JEWELLERY IN CASH AND AT THAT MOMENT, HE WAS NOT ABLE TO PRODUCE THE EVIDENCE. 95. LD. DR ALSO CONTENDED THAT THE JEWELLERY BELONG ED TO THE ASSESSEE SHRI LALIT MODI AND HIS WIFE SMT. RAJUL MODI AND THERE W AS NO SURRENDER BY SMT. RAJUL MODI AND IN THE CASE OF ASSESSEE NOTHING HAD BEEN BROUGHT ON RECORD AS TO HOW THE CAPITAL GAIN ARISING OUT OF SALE OF JEWELLE RY GETS ACCOUNTED FOR. THEREFORE, THE AO RIGHTLY MADE ADDITION IN THIS REG ARD. LD. DR SUPPORTING THE CONCLUSION OF THE AO SUBMITTED THAT IN VIEW OF SAID FACTS, THE AO RIGHTLY REJECTED THE CONTENTION OF THE ASSESSEE THAT THE I NCOME ARISING FROM SALE OF ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 97 SALARY GETS SUBSUMED IN THE SURRENDERED AMOUNT OF R S.62 CRORE MADE BY THE AO IN AY 2010-11 BECAUSE THERE WAS NO BIFURCATION OF S URRENDERED INCOME. LD. DR FINALLY CONTENDED THAT THE AO RIGHTLY ESTIMATED THE CAPITAL GAINS OF RS.40 LAKH IN THE HANDS OF ASSESSEE WHICH WAS DELETED BY THE CIT(A) WITHOUT ANY JUSTIFIED REASON AND BASIS. LD. DR LASTLY PRAYED T HAT IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO. 96. LD. AR VEHEMENTLY CONTENDED THAT THE ASSESSEE H AD SURRENDERED HUGE AMOUNT OF RS. 62 CRORE FOR AY 2010-11 WHICH INCLUDE D ENTIRE INCOME OF THE ASSESSEE FROM ALL KNOWN AND UNKNOWN SOURCES, THEREF ORE, IMPUGNED ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME ON SALE OF JE WELLERY WAS NOT SUSTAINABLE. LD. AR FURTHER POINTED OUT NO EVIDENC E WAS FOUND DURING THE COURSE OF SEARCH TO SUGGEST AND PROVE THAT THE ASSE SSEE HAD IN FACT SOLD ANY PART OF JEWELLERY AND THE ASSESSEE DULY EXPLAINED THE PO SITION OF SALE OF JEWELLERY IN ITS LETTER DATED 10.08.2009. LD. AR ALSO POINTED O UT THAT THERE WAS NO BASIS OR EVIDENCE REGARDING WORKING OF SAID CAPITAL GAIN ON SALE OF SAID JEWELLERY AND EVEN FOR THE SAKE OF ARGUMENT IF IT IS PRESUMED THA T THE ASSESSEE EARNED SOME CAPITAL GAIN ON SALE OF JEWELLERY, THEN ALSO THE SA ID AMOUNT WAS DULY COVERED IN THE AMOUNT OF INCOME DECLARED AND SEARCHED BY THE A SSESSEE DURING THE COURSE OF SEARCH OPERATION. LD. AR VEHEMENTLY CONTENDED T HAT THE AO HIMSELF ACCEPTED THAT THE ASSESSEE AND HIS WIFE DECLARED SA ID JEWELLERY IN THE WEALTH TAX RETURNS AND IN THE EVENT OF SALE OF SAID JEWELLERY, ANY CAPITAL GAIN OR SURPLUS ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 98 CANNOT BE CONSIDERED SEPARATELY, IGNORING THE HUGE AMOUNT OF SURRENDERED INCOME OF RS. 62 CRORE. 97. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE NOTE THAT THE WHOLE BASIS OF ADDITION MADE BY THE AO IS THE REPLY OF TH E ASSESSEE TO QUESTION NO. 33 IN THE STATEMENTS RECORDED DURING SEARCH OPERATION U/S 132(4) OF THE ACT ON 19.6.2009. REPLYING TO THIS QUESTION, THE ASSESSEE ACCEPTED THE DIFFERENCE BETWEEN THE JEWELLERY SHOWN AS PER THE BALANCE SHEE T AND THE ASSESSEE REPLIED THAT THE BALANCE JEWELLERY HAS BEEN SOLD. DURING T HE ASSESSMENT PROCEEDINGS, THE AO RAISED A QUESTION THAT HOW THE INCOME ARISIN G OUT OF SALE OF JEWELLERY HAS BEEN ACCOUNTED FOR AND THE ASSESSEE REPLIED THA T THE SAID INCOME GOT SUBSUMED IN THE SURRENDERED AMOUNT OF INCOME MADE I N AY 2010-11 OF RS. 62 CRORE. THE AO DID NOT CONSIDER THE REPLY OF THE AS SESSEE DATED 10.8.2009 SUBMITTED TO DDI(INV) WHEREIN THE ASSESSEE ACCEPTED THE POSITION OF JEWELLERY AND THIS EXPLANATION WAS CONSIDERED BY THE FIRST AP PELLATE AUTHORITY. UNDER THE ABOVE NOTED FACTS AND CIRCUMSTANCES, WE ARE IN AGRE EMENT WITH THE CONCLUSION OF THE CIT(A) THAT THE SAID AMOUNT FROM SALE OF JEW ELLERY WAS DULY COVERED IN THE AMOUNT OF INCOME DECLARED DURING THE COURSE OF SEARCH. THE CIT(A) WAS QUITE REASONABLE AND JUSTIFIED IN HOLDING THAT WHEN THE AO HIMSELF ACCEPTED THE DECLARATION OF SAID JEWELLERY IN THE WEALTH TAX RET URN FILED BY THE ASSESSEE AND HIS WIFE, THEN NO ADDITION TOWARDS ALLEGED CAPITAL GAIN ON SALE OF JEWELLERY CAN ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 99 BE MADE OR SUSTAINED. FOR THE SAKE OF CLARITY IN O UR OBSERVATIONS, THE CONCLUSION OF THE CIT(A) AT PAGE 16 IS BEING REPRODUCED AS UND ER:- IT IS SEEN THAT THERE IS NO BASIS FOR ESTIMATION OF CAPITAL GAINS AMOUNTING TO RS.50 LACS WORKED OUT BY THE ASS ESSING OFFICER OUT OF WHICH RS.40 LACS WAS ADDED IN THE HA NDS OF THE ASSESSEE, SHRI LALIT MODI AND RS.10 LACS ADDED IN T HE HANDS OF HIS WIFE SMT.RAJUL MODI. IT IS A FACT THAT EXCEPT F OR THE STATEMENT OF THE ASSESSEE, THERE IS NO EVIDENCE FOUND DURING THE COURSE OF SEARCH TO SUGGEST AND PROVE THAT THE ASSESSEE HAD I N FACT SOLD ANY PART OF JEWELLERY. ALSO THE STATEMENT MADE DURING T HE COURSE OF SEARCH, WAS DULY CLARIFIED BY THE ASSESSEE TO THE O FFICE OF DDI (INV.) VIDE LETTER DATED 10.08.2009 AND EVEN THE DE CLARATION OF THE INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT ON T HE BASIS OF THE SAID LETTER IN WHICH THE POSITION OF JEWELLERY WAS DULY EXPLAINED. THERE IS NO BASIS OR EVIDENCE REGARDING WORKING OF THE SAID CAPITAL GAIN ON SALE OF SAID JEWELLERY AND EVEN FOR THE SAKE OF ARGUMENT, THE SAID AMOUNT WAS DULY COVERED IN THE AMOUNT OF INCOME DECLARED DURING THE COURSE OF SEAR CH. FURTHER THE ASSESSING OFFICER HIMSELF ACCEPTED THE DECLARAT ION OF THE SAID JEWELLERY IN THE WEALTH TAX RETURNS FILED BY THE AS SESSEE AND HIS WIFE. IN VIEW OF THE DETAILED SUBMISSION, ADDITION OF RS.40 LACS TOWARDS ALLEGED CAPITAL GAIN ON ALLEGED SALE OF JEW ELLERY IS DIRECTED TO BE DELETED. GROUND RAISED IN APPEAL IS ALLOWED. 98. ON THE BASIS OF FOREGOING DISCUSSION, WE REACH TO A LOGICAL CONCLUSION THAT THE AO MADE ADDITION ON THE BASIS OF SURMISES AND CONJECTURES BY ADOPTING A HYPER TECHNICAL APPROACH AND IGNORING THE HUGE AM OUNT OF SURRENDER OF RS. 62 CRORE AND THE LETTER OF THE ASSESSEE DATED 10.8.200 9 EXPLAINING THE STATEMENT MADE DURING THE COURSE OF SEARCH WHEREIN THE FACTUM REGARDING JEWELLERY WAS DULY ELABORATED BY THE ASSESSEE. ON THIS ISSUE, WE ARE UNABLE TO SEE ANY MISTAKE OR ANY OTHER VALID REASON TO INTERFERE WITH THE IMP UGNED ORDER ON THE ISSUE OF CAPITAL GAIN ON SALE OF SALARY AND WE HOLD THAT THE AO MADE ADDITION WITHOUT ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 100 ANY BASIS ON THE IMAGINARY FACTS IGNORING THE SUSTA INABLE EXPLANATION OF THE ASSESSEE AND THE CIT(A) RIGHTLY DELETED THE SAME. ACCORDINGLY, GROUND NO. 2 OF THE REVENUE DESERVES TO BE DISMISSED AND WE DISMISS THE SAME. GROUND NO. 3 99. APROPOS GROUND NO. 3, LD. DR POINTED OUT THAT T HE CIT(A) GRANTED RELIEF FOR THE ASSESSEE BY PASSING BRIEF AND SLIPSHOD OBS ERVATION WITHOUT ANY BASIS. LD. DR HAS DRAWN OUR ATTENTION TOWARDS PARA NO. 8 O F THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSESSEE HAD CLAIMED DIVIDEND IN COME EXCEPT U/S 10(34) OF THE ACT AND THEREFORE, THE EXPENSES ATTRIBUTABLE TO EARNING SUCH EXEMPT INCOME NEED TO BE DISALLOWED U/S 14A OF THE ACT R/W RULE 8 D OF THE INCOME TAX RULES 1962. LD. DR FURTHER POINTED OUT THAT AS PER TAX A UDIT REPORT FILED BY THE ASSESSEE, THE ASSESSEE HAS SHOWN EXPENSES ATTRIBUTA BLE TO EXEMPT INCOME AT NIL AND, THEREFORE, THE AO RIGHTLY TOOK AVERAGE OF OPEN ING AND CLOSING BALANCE OF THE INVESTMENT BETWEEN 1.4.2009 TO 31.3.2010 FOR MA KING .5% OF DISALLOWANCE AMOUNTING TO RS. 6,81,298/-. LD. DR SUBMITTED THAT THE IMPUGNED CRYPTIC ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE AO ON THI S ISSUE. 100. LD. AR REPLIED THAT THERE IS NO DISPUTE THAT T HE ASSESSEE HAS NOT CLAIMED ANY EXEMPT INCOME FOR THE YEAR UNDER CONSIDERATION AND, THEREFORE, NO DISALLOWANCE U/S 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES 1962 CAN BE MADE. PLACING RELIANCE ON THE DECISION OF JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. IN ITA NO. 486/2014 ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 101 SUBMITTED THAT WHERE NO EXEMPT INCOME IS EARNED, TH ERE COULD NOT BE ANY DISALLOWANCE U/S 14A OF THE ACT R/W RULE 8D OF THE INCOME TAX RULES, 1962. 101. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, WE RESPECTFULLY REPRODUCE THE CONCLUSION OF HONBLE JURISDICTIONAL HIGH COURT OF DELHI ON THIS ISSUE IN THE CASE OF CIT VS HOLCIM INDIA PVT. LTD. (SUPRA) WHER EIN PARA 14 AND 15 READ AS FOLLOWS:- 14. ON THE ISSUE WHETHER THE RESPONDENT-ASSESSEE C OULD HAVE EARNED DIVIDEND INCOME AND EVEN IF NO DIVIDEND INCOME WAS EARNED, YET SECTION 14A CAN BE INVOKED AND DISA LLOWANCE OF EXPENDITURE CAN BE MADE, THERE ARE THREE DECISIO NS OF THE DIFFERENT HIGH COURTS DIRECTLY ON THE ISSUE AND AGA INST THE APPELLANT-REVENUE. NO CONTRARY DECISION OF A HIGH C OURT HAS BEEN SHOWN TO US. THE PUNJAB AND HARYANA HIGH COURT IN COMMISSIONER OF INCOME TAX, FARIDABAD VS. M/S. LAKH ANI MARKETING INCL., ITA NO. 970/2008, DECIDED ON 02.04 .2014, MADE REFERENCE TO TWO EARLIER DECISIONS OF THE SAME COURT IN CIT VS. HERO CYCLES LIMITED, [2010] 323 ITR 518 AND CIT VS. WINSOME TEXTILE INDUSTRIES LIMITED, [2009] 319 ITR 204 TO HOLD THAT SECTION 14A CANNOT BE INVOKED WHEN NO EXEMPT I NCOME WAS EARNED. THE SECOND DECISION IS OF THE GUJARAT HIGH COURT I N COMMISSIONER OF INCOME TAX-I VS. CORRTECH ENERGY (P .) LTD. [2014] 223 TAXMANN 130 (GUJ.). THE THIRD DECISION I S OF THE ALLAHABAD HIGH COURT IN INCOME TAX APPEAL NO. 88 OF 2014, COMMISSIONER OF INCOME TAX (II) KANPUR, VS. M/S. SH IVAM MOTORS (P) LTD. DECIDED ON 05.05.2014. 15. INCOME EXEMPT UNDER SECTION 10 IN A PARTICULAR ASSESSMENT YEAR, MAY NOT HAVE BEEN EXEMPT EARLIER A ND CAN BECOME TAXABLE IN FUTURE YEARS. FURTHER, WHETHER I NCOME EARNED IN A SUBSEQUENT YEAR WOULD OR WOULD NOT BE T AXABLE, MAY DEPEND UPON THE NATURE OF TRANSACTION ENTERED I NTO IN THE SUBSEQUENT ASSESSMENT YEAR. FOR EXAMPLE, LONG TERM CAPITAL GAIN ON SALE OF SHARES IS PRESENTLY NOT TAXABLE WHE RE SECURITY TRANSACTION TAX HAS BEEN PAID, BUT A PRIVATE SALE O F SHARES IN AN ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 102 OFF MARKET TRANSACTION ATTRACTS CAPITAL GAINS TAX. IT IS AN UNDISPUTED POSITION THAT RESPONDENT ASSESSEE IS AN INVESTMENT COMPANY AND HAD INVESTED BY PURCHASING A SUBSTANTIA L NUMBER OF SHARES AND THEREBY SECURING RIGHT TO MANAGEMENT. POSSIBILITY OF SALE OF SHARES BY PRIVATE PLACEMENT ETC. CANNOT BE RULED OUT AND IS NOT AN IMPROBABILITY. DIVIDEND MAY OR MAY NO T BE DECLARED. DIVIDEND IS DECLARED BY THE COMPANY AND S TRICTLY IN LEGAL SENSE, A SHAREHOLDER HAS NO CONTROL AND CANNO T INSIST ON PAYMENT OF DIVIDEND. WHEN DECLARED, IT IS SUBJECTED TO DIVIDEND DISTRIBUTION TAX. 102. TURNING TO THE FACTS OF THE PRESENT CASE, WE N OTE THAT THE LD. DR HAS NOT DISPUTED THIS FACT THAT THERE WAS NO EXEMPT INCOME FOR THE ASSESSEE DURING THE FINANCIAL YEAR UNDER CONSIDERATION I.E. AY 2009-10 RELEVANT TO AY 2010-11 AND IN THE LIGHT OF RATIO OF THE JUDGMENT OF JURISDICTI ONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS HOLCIM INDIA P. LTD. (SUPRA), NO DIS ALLOWANCE U/S 14A OF THE ACT CAN BE INVOKED FOR MAKING DISALLOWANCE. THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE SAID DECISION OF HON BLE HIGH COURT OF DELHI. ACCORDINGLY, GROUND NO. 3 OF THE REVENUE IS DISMISS ED. 103. IN THE RESULT, THE APPEAL OF THE REVENUE IN IT A NO. 3551/D/2013 AND 329/D/2014 ARE DISMISSED AND APPEAL OF THE ASSESSEE IN ITA NO. 3343/DEL/2013 IS ALLOWED IN THE MANNER AS INDICATED ABOVE. ITA NO.3551 & 3343/DEL/2013 329/DEL/2014 ASSTT.YEAR: 2010-11 103 ORDER PRONOUNCED IN THE OPEN COURT ON 29.05.2015. SD/- SD/- (B.C. MEENA ) (CHANDRAMO HAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 29 TH MAY 2015 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT.REGISTRAR