DCIT, New Delhi V. M/s. Glensdale Enterprise Development Pvt. Ltd., New Delhi

ITA 973/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 4211 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 19-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJA RAM SAH
• Assessee Lawyers: PN SHASTRI
• Keywords: Unexplained cash credit; Document seized; Opportunity of being heard; Additional evidence; Onus to prove; Documents seized
• Section: 142(1); 153A; 68; 132

Judgement Text

1 ITA NOS. 973/DEL/2014 & ORS IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI G. D. AGRAWAL, PRES IDENT AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A .NO. 973/DEL/20 14 (A.Y 2004-05) I.T.A .NO. 974/DEL/20 14 (A.Y 2005-06) I.T.A .NO. 975/DEL/20 14 (A.Y 2006-07) I.T.A .NO. 976/DEL/20 14 (A.Y 2007-08) I.T.A .NO. 977/DEL/20 14 (A.Y 2008-09) I.T.A .NO. 978/DEL/20 14 (A.Y 2009-10) DCIT CENTRAL CIRCLE-11 NEW DELHI (APPELLANT) VS GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. 149D, OKHLA INDUSTRIAL ESTATE NEW DELHI AABCG7188B (RESPONDENT) APPELLANT BY SH. RAJA RAM SAH, CIT DR RESPONDENT BY SH. M. P RASTOGI & P N. SHASTRI, AR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER DATED 27/11/2013 PASSED BY CIT(A)-XXXI, NEW DELHI. 2. FOR THE SAKE CONVENIENCE WE ARE TAKING UP GROUN DS OF ITA NO. 973/DEL/2014 ASSESSMENT YEAR 2004-05, THE GROUNDS O F APPEAL ARE AS UNDER:- DATE OF HEARING 07.12.2017 DATE OF PRONOUNCEMENT 05.01.2018 2 ITA NOS. 973/DEL/2014 & ORS 1. THE ORDER OF LD.CIT(A) IS NOT CORRECT IN LAW AN D FACTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD.CIT(A) HAS ERRED IN HOLDING THAT ORDER U/S 153C IS VOID AB-INI TIO AS PROCEEDINGS U/S 153C WERE WRONGLY INITIATED BY THE A.O. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD.CIT (A) HAS ERRED BY NOT APPRECIATING THAT THE REQUIREMENT OF S ECTION 153C WERE FULFILLED BEFORE NOTICE U/S 153C WAS ISSUED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, LD.CIT (A) HAS ERRED BY NOT GIVING A FINDING ON THE MERITS OF THE CASE. 3. FACTS FOR ASSESSMENT YEAR 2004-05 ARE TAKEN AS T HE SAME IS LEAD MATTER. AS PER THE ASSESSMENT ORDER, THERE WAS A SEARCH U/S 132 OF THE INCOME TAX ACT 1961, AT THE PREMISES OF MR. DINESH KAUSHAL WHO WAS CFO OF TULIP TELECOM LTD. AS PART OF SEARCH & SEIZURE OPERATION IN THE T ULIP TELECOM GROUP ON 25/09/2009. AT THE SAID RESIDENCE OF MR. KAUSHAL, A N AGREEMENT TO SELL DATED 05/09/2006 BETWEEN THE ASSESSEE (SELLER) AND MR. KA USHAL (PURCHASER) WAS FOUND AND SEIZED. THE AO INITIATED THE PROCEEDINGS U/S 153C AGAINST THE ASSESSEE. IN THE ASSESSMENT ORDER, THE AO NOTED THA T HE HAD ISSUED NOTICE U/S 153C ON 29/04/2010 AND THERE WAS NO COMPLIANCE TO T HE SAID NOTICE. THE A.O ISSUED QUESTIONNAIRE U/S 142(1) ON 8/12/2011 AND FO LLOWED WITH A LETTER DATED 13/12/2011 GIVING FINAL OPPORTUNITY. ON THE APPOINT ED DATE (21/12/2011) THE AR OF THE ASSESSEE SUBMITTED A WRITTEN REPLY WHICH WAS QUOTED BY THE AO AT PARA 3 OF ASSESSMENT ORDER. IN THE SAID REPLY THE A R SUBMITTED THE A.O NOTED IN THE ASSESSMENT ORDER THAT THE ARS CONTENTIONS A BOUT THE TIME PERIOD AVAILABLE FOR COMPLETING THE PROCEEDINGS U/S 153C I N THE ASSESSEES CASE WAS INCORRECT AND THAT THE ASSESSMENT HAD TO BE COMPLET ED BY END OF DECEMBER 2011. THE A.O COMPLETED THE ASSESSMENT U/S 153C/143 (3) BY MAKING ADDITION/DISALLOWANCES OF RS.1,40,75,000/- ON ACCOU NT OF UNEXPLAINED CASH CREDITS U/S 68 OF INCOME TAX ACT, 1961. 3 ITA NOS. 973/DEL/2014 & ORS 4. BEING AGGRIEVED BY THE SAME, THE ASSESSEE FILED APPEAL BEFORE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER . THE LD. DR SUBMITTED THAT A SEARCH & SEIZURE / SURVEY OPERATI ON TOOK PLACE ON 24/25.09.2009 IN CASE OF TULIP GROUP. DURING THE SE ARCH OPERATION AT RESIDENCE OF SHRI DINESH KAUSHAL, CFO OF THE TULIP GROUP, AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVEABLE PROPERTY WAS FOUND AND SEIZED AS PER PAGE NOS. 66-69 OF ANNEXURE A-L TO THE PANCHNAMA DRAWN A T THE SAID PREMISES. AS PER THE SAID AGREEMENT TO SELL, THE ASSESSEE WAS SE LLER. IT IS ESTABLISHED PRACTICE OF THE INCOME TAX DEPARTMENT THAT NOT EVER YTHING FOUND AT THE TIME OF SEARCH IS SEIZED. ONLY SUCH MATERIAL IS SEIZED WHIC H IS, PRIMA- FACIE, INCRIMINATING IN NATURE. THE LD. DR FURTHER SUBMITT ED THAT INCIDENTALLY, THE INCUMBENT AO OF THE SEARCHED PERSON AND THE ASSESSE E WAS THE SAME OFFICER. HOWEVER, THE 'SATISFACTION NOTE' WAS RECORDED ON 02 .09.2011 IN CAPACITY OF AO OF SHRI DINESH KAUSHAL, IN RESPECT OF DOCUMENTS MEN TIONED IN PARA 1.1, ABOVE, U/S 153C. THE PRESENT AO HAS CONFIRMED THIS FACT VI DE HIS LETTER DATED 17.06.2016. THIS FACT CAN ALSO BE SEEN FROM THE S A TISFACTION NOTE: THE SATISFACTION NOTE SAYS, ON GOING THROUGH THE DOCUM ENTS SEIZED....'. UNDOUBTEDLY, SEIZED DOCUMENTS ARE IN THE POSSESSION OF THE AO OF 'SEARCHED PERSON'. THE SATISFACTION NOTE SAYS, THERE WAS NO SEARCH WARRANT IN THE CASE OF M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD...'. THE SATISFACTION NOTE ALSO SAYS, '....THE CASE OF M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. IS COVERED U/S 153C...'. THIS LANGUAGE WOULD ONLY BE U SED BY THE AO OF 'SEARCHED PERSON' BECAUSE THE AO OF M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. WOULD HAVE REFERRED TO IT AS 'ASSESSEE' AS PER PRAC TICE PREVALENT IN THE INCOME- TAX DEPARTMENT. THE SATISFACTION NOTE SAYS, ' I AM SATISFIED THAT THE DOCUMENT ALSO BELONG TO M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD...' CLEARLY, THIS LANGUAGE IS USED BY THE AO OF THE PERSON IN WHOSE H ANDS THE DOCUMENT WAS 4 ITA NOS. 973/DEL/2014 & ORS ORIGINALLY SEIZED AND THERE IS PRESUMPTION THAT IT BELONGS TO THE SAID PERSON. AS PER PRACTICE PREVALENT IN THE INCOME TAX DEPARTM ENT, AO WOULD NOT WRITE NAME OF HIS ASSESSEE ON THE ORDER-SHEET BECAUSE THE SAID ORDER-SHEET WOULD IN ANY CASE REMAIN IN ASSESSMENT FOLDER OF THE ASSESSE E. HOWEVER, IN THE PRESENT CASE, ON THE SHEET RECORDING 'SATISFACTION NOTE', T HE NAME OF M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. IS RECORDED ON THE TOP(JUST BELOW THE HEADING 'SATIFCATION NOTE') WHICH CLEARLY INDICATE THAT IT IS NOT WRITTEN BY THE AO OF M/S. GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. SIN CE AO OF SEARCHED PERSON WOULD BE REQUIRED TO WRITE SUCH 'SATISFACTION NOTE' IN MORE THAN ONE CASE, THEREFORE, THE NAME OF EACH 'OTHER PERSON' WOULD BE INDICATED ON TOP OF THE PAPER TO EASY REFERENCE IN FUTURE. THE SATISFACTION NOTE SAYS, ' AS SUCH NOTICES ARE BEING ISSUED TO M/S GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A AS L AID DOWN UNDER SECTION 153C ... IT DOES NOT SAY , ' NOTICES ISSUED...'. IT CLEARLY SHOWS THAT THE CAPACITY OF THE OFFICER RECORDING THE 'SATISFACTION NOTE' IS NOT THAT OF AO OF M/S. GLENSDALE ENTERPRISE DEVELOPMENT PVT. LTD. A CURSO RY READING OF THE SATISFACTION NOTE INDICATES THAT THE SATISFACTIO N NOTE RECORDED BY THE AO OF SEARCHED PERSON SHOWS THE APPLICATION OF MIND. TH E RELEVANT SEIZED AGREEMENT TO SALE HAS BEEN GONE THROUGH AND LOGICAL CONCLUSIO N HAS BEEN DRAWN. THE HON'BLE SC IN CASE OF RAYMOND WOOLLEN MILLS LTD VS. INCOME-TAX OFFICER AND OTHERS [1999] 236 ITR 34 (SC) HAS HELD THAT THE SUF FICIENCY OR CORRECTNESS OF THE MATERIAL IS NOT A THING TO BE CONSIDERED BY THE COURTS. THIS VIEW IS REAFFIRMED IN CASE OF ASSISTANT COMMISSIONER OF INC OME VS RAJESH JHAVERI STOCK BROKERS PVT. 291 ITR 500(SC). THE HONBLE SC HAS STATED AS UNDER: 'THIS IS SO BECAUSE THE FORMATION OF BELIEF BY THE ASSESSING OFFICER IS WITHIN THE REALM OF SUBJECTIVE SATISFACTION (SEE ITO V. SE LECTED DALURBAND COAL CO. PVT. LTD. [1996 (217) ITR - - ' SC)] ; RAYMOND WOOL LEN MILLS LTD. V. ITO [ 1999 (236) ITR 34 (SC)]. 5 ITA NOS. 973/DEL/2014 & ORS THE SATISFACTION NOTE SAYS THAT THE DOCUMENT (AGR EEMENT TO SALE) UNDER QUESTION ALSO BELONGS TO M/S GLENSDALE ENTERPRISE DEVELOPMENT LTD. IT CERTAINLY SHOWS APPLICATION OF MIND BECAUSE AN AGRE EMENT TO SALE IS NOT A SALE DEED WHICH MAY BE SAID TO BE BELONGING TO THE PURCH ASER BECAUSE THE SELLER DOES NOT HAVE ANY INTEREST IN THE PROPERTY AFTER A SALE DEED IS EXECUTED BUT IN CASE OF AN AGREEMENT TO SALE, BOTH THE PARTIES I.E. SELLER AS WELL AS BUYER ARE HAVING INTEREST IN THE PROPERTY WHICH SUBJECT MATTE R OF THE AGREEMENT TO SALE. THE LD. DR SUBMITTED THAT THE CIT(A) HAS HELD IN PA RA 3.6.3/ PAGE NO. 18 OF HIS ORDER FOR A.Y. 2004-05 THAT SH. DINESH KAUSHAL WHO IS SHOWN AS PURCHASER IN THE SAID AGREEMENT TO SALE WAS A BENAM I IN ORDER TO CIRCUMVENT LAWS PREVAILING IN HIMACHAL PRADESH. THIS FACT WAS IN KNOWLEDGE OF THE AO OF SH. DINESH KAUSHAL. THEREFORE, EXCLUSIVE OWNERSHIP OF THIS DOCUMENTS IN THE HANDS OF SH. DINESH KAUSHAL WAS DOUBTFUL. 6. THE LD. AR SUBMITTED DETAILS OF RETURNS FILED FO R ASSESSMENT YEAR 2004- 05 TILL 2009-10 WHICH ARE AS FOLLOWS:- ASST.YEAR FILED ON ACKNOWLEDGEMENT REMARKS 1. 2004-05 20-10-2014 1222000366 NOTICE INVALI D 2. 2005-06 30-10-2005 1222000807 ASST. COMPLETE D 3. 2006-07 31-03-2008 2011900923 ASST. COMPLETE D 4. 2007-08 01-04-2008 1255000046 ASST. COMPLET ED 5. 2008-09 31-01-2009 675825930310309 ASST. COMP LETED 6. 2009-10 26-09-2009 9162091260909 PENDING THE LD. AR FURTHER SUBMITTED THAT THE SATISFACTION NOTE DATED 02.09.2011 IS NOT IN ACCORDANCE WITH THE SATISFACTION AS CONTEMPL ATED U/S 153C OF THE IT ACT. THE VERY AGREEMENT DATED 05.09.2006 BASICALLY BELON GS TO DINESH KAUSHAL ITSELF. DINESH KAUSHAL DID NOT DISCLAIM THE OWNERSH IP OF THAT VERY AGREEMENT. 6 ITA NOS. 973/DEL/2014 & ORS HENCE THE SAME CANNOT BE SAID AND IMAGINED TO BE BE LONGING TO THE ASSESSEE AND THE SATISFACTION NOTE AS PREPARED BY THE REVENU E IS NOT PROPER IN TERMS OF PROVISION OF SECTION 153C OF THE IT ACT AND ACCORDI NGLY THE ASSUMPTION OF JURISDICTION AS MADE BY THE AO IS ILLEGAL. THE LD. AR RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN CASE OF PEPSICO INDIA HOLDING PVT. LTD VS. ACIT 370 ITR 295. THE LD. AR SUBMITTED THE IMPORT ANT DATES AS UNDER:- DATE OF SEARCH ON DINESH KAUSHAL 24.09.2009 DATE OF RECORDING OF SATISFACTION U/S 153C OF THE IT ACT 02.09.2011 AS PER THE FIRST PROVISO TO SECTION 153C OF THE IT ACT, DATE OF SEARCH WOULD BE THE DATE OF RECEIVING THE DOCUMENTS BY THE AO OF TH E THIRD PERSON, I.E. THE ASSESSEE. HENCE IN THE INSTANT CASE, THE DATE OF SE ARCH IS 02.09.2011. THE LD.AR RELIED UPON THE HONBLE CIT VS. RRJ SECURITI ES LTD. 380 ITR 612 (DEL). THE LD. AR FURTHER SUBMITTED THAT ASSESSMENT YEAR 2 004-05 IS BEYOND THE PERIOD OF SIX YEARS, HENCE THE NOTICE ISSUED FOR AS SESSMENT YEAR 2004-05 IS ILLEGAL AND NO ASSESSMENT CAN BE MADE U/S 153C OF T HE IT ACT. ON THE DATE OF SEARCH, I.E. 02.09.2011, THE ASSESSMENTS FOR THE AS SESSMENT YEARS 2005-06 TO 2008-09 WERE ALREADY COMPLETED AND NOT PENDING. HEN CE THE COMPLETED ASSESSMENT CANNOT BE ABATED IN VIEW OF THE SECOND P ROVISO TO SECTION 153A OF THE IT ACT UNLESS SOME INCRIMINATING MATERIAL IS FO UND DURING THE COURSE OF SEARCH FOR THAT YEAR. 7. THE LD. AR FURTHER SUBMITTED THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL, NO ADDITION CAN BE MADE. THE VERY AGREEME NT DATED 05.09.2006 WITH DINESH KAUSHAL, WAS NOT AN INCRIMINATING MATERIAL B ECAUSE THE SAME WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT AND WAS ADMITTED BY THE AO IN ASSESSMENT YEAR 2007-08. THE AO HAS NOT MADE ANY ADDITION BASE D ON SUCH AGREEMENT DATED 05.09.2006 FOUND AT THE RESIDENCE OF DINESH K AUSHAL WHICH SHOWS THAT THERE WAS NO INCRIMINATING MATERIAL FOUND DURING TH E COURSE OF SEARCH. THE AO 7 ITA NOS. 973/DEL/2014 & ORS HAS NOT MADE ANY ADDITION BASED ON THE SEIZED MATER IAL. ALL THE CREDITS, WHICH HAVE BEEN MENTIONED IN THE BOOKS OF ACCOUNT AND HAV E BEEN TREATED BY THE AO AS UNEXPLAINED U/S 68 OF THE IT ACT, BASICALLY REPR ESENT THE TRADE ADVANCES RECEIVED AGAINST THE CONSTRUCTION CONTRACT WHICH HA S BEEN COMPLETED IN ASSESSMENT YEAR 2010-11 AND HAVE BEEN OFFERED FOR A SSESSMENT IN ASSESSMENT YEAR2010-11 BECAUSE THE ASSESSEE BEING A CONSTRUCTI ON CONTRACTOR FOLLOWING THE PROJECT COMPLETION METHOD, WHICH IS A RECOGNIZE D METHOD, AS ALREADY HELD IN THE FOLLOWING CASES. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. THE CONTENTION OF THE LD. AR THAT THE SAT ISFACTION NOTE IS NOT IN ACCORDANCE WITH THE SATISFACTION AS CONTEMPLATE U/S 153C OF THE I.T ACT APPEARS PRIMA FACIE CORRECT AS THE AGREEMENT DATED 5/9/2006 BELONG TO THE DINESH KAUSHAL HIMSELF AND AT NO POINT OF TIME DINE SH KAUSHAL DISCLAIMED THE OWNERSHIP OF THAT VERY AGREEMENT AND, THEREFORE, TH E SAME CANNOT BE IMAGINED TO BE BELONGING TO THE ASSESSEE ON THE MERE ASSUMPT ION. THE ASSESSING OFFICER CANNOT SAY THAT THE DOCUMENT BELONGS TO THE ASSESSE E. THE LD. DRS CONTENTION THAT THE CIT(A) HAS NOT GIVEN CATEGORICA L FINDING THAT THE ADDITIONS PERTAINING TO THE AMOUNTS APPEARING IN THE BOOKS OF THE ACCOUNTS OF THE ASSESSEE, THE LIST OF ADDITIONS RECEIVED FROM HIS C USTOMERS AND DETAILS LIKE CONFIRMATIONS FROM SUCH PARTIES AND VERIFICATIONS B Y THE ASSESSEE WAS ASKED BY THE ASSESSING OFFICER WHICH IS A NORMAL ASSESSMENT PROCEEDINGS. THERE IS A FINDING GIVEN BY THE CIT(A) THAT ALL THESE ADDITION S ADDED BY THE ASSESSING OFFICER ARE THAT OF THE SALE CONSIDERATION RECEIVE D AS ADVANCE BY THE ASSESSEE. THE ASSESSEE IS FOLLOWING PROJECT COMPLETION METHOD AND THE ADVANCES WAS PROPERLY TAKEN IN PROFIT AND LOSS AMOUNT DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2010-11. THE PROCEEDINGS U/S 1 53 C WERE INITIATED BECAUSE OF THE AGREEMENT TO SALE FOUND AT THE RESID ENCE OF CFO OF TULIP TELECOM LTD. THE A.O HAS NOT MENTIONED THAT THE AG REEMENT REFLECTS THAT THERE 8 ITA NOS. 973/DEL/2014 & ORS WAS ANY UNACCOUNTED TRANSACTION OR UNACCOUNTED PAYM ENTS/RECEIPTS THE BUSINESS ACTIVITIES OF THE ASSESSEE IN-FACT WAS CO NFIRMED BY THE SAID AGREEMENT AND ALL THE DOCUMENTS WERE BEFORE THE ASSESSING OFF ICER DURING THE REGULAR ASSESSMENT PROCEEDINGS. THUS, THERE WAS NO INCRIMI NATING MATERIAL OR DOCUMENT FOUND IN RESPECT OF SECTION 153C PROCEEDIN GS. THE LD. DRS CONTENTIONS THAT IT IS AN ESTABLISHED PRACTICE OF T HE INCOME TAX DEPARTMENT THAT NOT EVERYTHING FOUND AT THE TIME OF SEARCH AND CEASE. ONLY SUCH MATERIAL IS SEIZED WHICH IS PRIMA FACIE INCRIMINATING IN NAT URE. THE REVENUE CANNOT SIMPLY RELY ON THEIR DEPARTMENTAL ENDEAVOUR PRACTIC E, THEY HAVE TO STRICTLY FOLLOW THE STATUTE WHILE CONDUCTING THE SEARCH ADHE RING TO SECTION 153C. IF THE PRACTICE IS SUPPORTED BY LAW/STATUTE THEN IT CA N BE ALLOWED BUT IF THE MATERIAL WHICH IS RELEVANT TO THE ASSESSEES ESCAPE MENT OF INCOME HAS NOT BEEN SEIZED THEN MERELY ON THE SURMISES OR CONJECTURES T HAT CANNOT BE CALLED AS INCRIMINATING MATERIAL WHICH WAS PROPERLY DEMONSTRA TED BY THE ASSESSEE DURING HIS REGULAR ASSESSMENT. THE CIT(A) HAS GIVE N PROPER FINDING AND ALLOWED THE APPEAL OF THE ASSESSEE. THE CIT(A) HE LD AS UNDER:- 3.6.1. I HAVE CONSIDERED THE ARGUMENTS OF THE AR AND THE FACTS OF THE CASE. FROM THE ASSESSMENT ORDER IT IS NOTED THA T THE AO HAS NOT MADE ANY ADDITIONS TO THE TOTAL INCOME BASED ON THE SEIZ ED DOCUMENT ON THE BASIS OF WHICH PROCEEDINGS WERE INITIATED UNDER SEC TION 153G OF THE ACT. THE ADDITIONS PERTAIN TO THE CREDITS APPEARING IN T HE BOOKS OF ACCOUNTS OF THE ASSESSEE HELD AS UNEXPLAINED. THE AO HAS ASKED THE APPELLANT TO PROVIDE THE LIST OF ADVANCES RECEIVED FROM HIS CUST OMERS AND TO FILE DETAILS LIKE CONFIRMATIONS FROM SUCH PARTIES AND ALSO TO PR ODUCE THEM FOR VERIFICATION BY HIM. THUS, THE AO HAS PROCEEDED WIT H NORMAL ASSESSMENT PROCEEDINGS BY ASKING THE APPELLANT TO ESTABLISH TH E CREDITS APPEARING IN THE BOOKS OF ACCOUNTS IN ACCORDANCE WITH PROVISIONS OF SECTION 68 OF THE ACT. DUE TO THE CIRCUMSTANCES EXPLAINED IN THE EARL IER-PARAGRAPHS, THE AO HAS HELD THAT THE APPELLANT HAS FAILED TO SUBSTANTI ATE THE ADVANCES RECEIVED FROM THE CUSTOMERS AND ADDED THE SAME TO T HE TOTAL INCOME. ALL THESE ADVANCES ADDED BY THE AO ARE NOTHING BUT THE SALE CONSIDERATION 9 ITA NOS. 973/DEL/2014 & ORS RECEIVED AS ADVANCE BY THE APPELLANT. THE APPELLANT , WHO IS IN THE BUSINESS OF REAL ESTATE (DEVELOPING LAND AND BUILDI NG HOUSES/COTTAGES AT KASAULI, HIMACHAL PRADESH), HAS FOLLOWED PROJECT CO MPLETION METHOD AND THE ADVANCES HAVE BEEN TAKEN TO P&L DURING THE PREV IOUS YEAR RELEVANT TO ASSESSMENT YEAR 2010-11 AS PER THE ACCOUNTING METHO D FOLLOWED BY IT. 3.6.2. IN THE ASSESSMENT ORDER FOR ASSESSMENT Y EAR 2007-08, THE AO HAS GIVEN A FINDING THAT THE ADVANCES RECEIVED FROM MR DINESH KAUSHAL AS PER THE SEIZED DOCUMENT (AGREEMENT TO SELL) HAS BEEN DULY ACCOUNTED BY THE APPELLANT IN ITS BOOKS OF ACCOUNTS AND THAT THE ADVANCES FROM MR. KAUSHAL STOOD |EXPLAINED. THE RELEVANT PARAGRAPH 6 ON PAGE 2 OUT OF THE ASSESSMENT ORDER ON THIS ASPECT IS REPRODUCED BELOW : 6. ......... HOWEVER IT IS PERTINENT TO MENTION HERE THAT IN THE CASE OF THE ASSESSEE COMPANY AN ACTION UNDER SECTION 153C WAS T AKEN ON THE BASIS OF AN AGREEMENT FOUND AND SEIZED FROM THE PREMISES OF ONE SRI DINESH KAUSHAL IN THE COURSE OF SEARCH IN W HICH IT WAS NOTICED THAT IN NOVEMBER 2006 HE HAD PAID AN AMOUNT OF RS. 56,00,000/- TO THE ASSESSEE COMPANY ON ACCOUNT OF ADVANCE FOR PURCHASE OF PROPERTY. AS PER DETAILS AVAILABLE, THE AMOUNT ADVANCED IS REFLECTED IN THE BOOKS OF THE ASSESSEE COMPANY!) THEREFORE OUT OF THE TOTAL AMOUNT OF RS. 1,55,10,76 2/- .AMOUNT OF RS. 56,00,000/- IS CONSIDERED AS EXPLAINED AND FOR THE BALANCE AMOUNT, IT IS CONSIDERED THAT THE ASSESSEE COMPANY HAS NOT BEEN ABLE TO DISCHARGE ITS ONUS TO PROVE THE CREDITS APP EARING IN ITS BOOKS OF ACCOUNTS, 3.6.3. THE PROCEEDINGS UNDER SECTION 153C WERE IN ITIATED BECAUSE OF THE AGREEMENT TO SELL FOUND AT THE RESIDENCE OF CFO OF TULIP TELECOM LTD. AS PER THE AGREEMENT THE APPELLANT COMPANY UNDERTOO K SELL A PIECE OF LAND ALONG WITH RESIDENTIAL HOUSE AT ' KASAULI IN H IMACHAL PRADESH. IN THE SATISFACTION NOTE MADE BEFORE ISSUING NOTICE UN DER SECTION 153C, THE 10 ITA NOS. 973/DEL/2014 & ORS AO HAS NOT MENTIONED THAT, THE AGREEMENT THERE IS A NY TAX ANGLE TO THE TRANSACTION FOUND IN THE AGREEMENT OR THAT IT REFLE CTS ANY UNACCOUNTED TRANSACTION OR THAT THERE IS ANY UNACCOUNTED PAYMEN TS / RECEIPTS IN THE SAID AGREEMENT. THUS IT IS AN AGREEMENT ENTERED BET WEEN THE SELLER AND BUYER IN THE COURSE OF THE NORMAL BUSINESS ACTIVITY OF THE APPELLANT COMPANY. AS PER THE SUBMISSIONS MADE TO THE AO, THE APPELLANT COMPANY IS IN THE BUSINESS OF DEVELOPING THE- LAND OWNED BY INDIVIDUAL OWNERS BY CONSTRUCTING RETENTION WALLS, APPROACH PA RTS, LEVELING OF LAND BY FILLING AND COMPACTION ETC. WHICH IS REQUIRED ON THE LANDS SITUATED ON A HILL SLOPES. IT EMERGES THAT AS PER THE REVENUE L AWS PREVAILING IN THE STATE OF HIMACHAL PRADESH, ONLY A PERSON WHO IS ORI GINALLY FROM HIMACHAL PRADESH COULD OWN A PIECE OF LAND IN THAT STATE AND THE PROMOTER OF TULIP GROUP MADE INVESTMENT IN THE LAND AT HIMACHAL PRADESH THROUGH THEIR _CFO WHO HAPPENS TO BE A NATI VE OF HIMACHAL PRADESH. IT IS NOT THE AOS CASE THAT ANY EXTRA AMO UNT WAS PAID BY MR DINESH KAUSHAL. NO ADDITION HAS BEEN MADE ON SUCH G RBUNDS IN ANY OF THE ASSESSMENT YEARS. THUS THE AGREEMENT TO SELL AS SUCH DOES NOT BY ITSELF SHOW THAT THE TRANSACTION BETWEEN THE APPELL ANT AND MR DINESH KAUSHALWAS RESULTED IN ANY UNDISCLOSED INCOME. 3.6.4. I FIND THAT THE ACTION OF THE AO IN INITIAT ING PROCEEDINGS UNDER SECTION 153C CANNOT BE SUSTAINED. THE DOCUMENT IN Q UESTION IS A NORMAL DOCUMENT WHICH IS ENTERED BETWEEN ANY SIMILARLY PLA CED TWO PARTIES INVOLVING A LAND DEVELOPER AND HIS CUSTOMERS. THE DOCUMENT EVIDENCES RECEIPT AND PAYMENT OF AMOUNTS WHICH ARE NOT ALLEGE D TO BE OUTSIDE THE BOOKS OF ACCOUNTS OF THE APPELLANT. THE DOCUMENT PE R SE DOES NOT SHOW THAT THERE WAS ANY UNDISCLOSED INCOME. THE AO HAS N OT ALLEGED OF ANY CASH TRANSACTION OR ANY PAYMENTS / RECEIPTS OVER AN D ABOVE WHAT WAS REFLECTED IN THE DOCUMENT. THERE IS NO ADDITION MAD E ON ACCOUNT OF THIS AGREEMENT IN THE HANDS OF THE APPELLANT ON ACCOUNT OF THIS TRANSACTION REFLECTED IN THE AGREEMENT. THUS THE FACTS SHOW THA T THIS TRANSACTION WAS VERY MUCH EXPLAINED BY THE PERSON WHO HAS BEEN SEAR CHED BY THE DEPT. 11 ITA NOS. 973/DEL/2014 & ORS IN SUCH A SITUATION, IM OF THE VIEW THAT PROCEEDIN GS UNDER SECTION 153C COULD NOT HAVE BEEN INITIATED VALIDLY. 3.6.5. EVEN THE SATISFACTION NOTE IS COMPLETELY SILENT ABOUT THE REASON FOR INITIATING SUCH PROCEEDINGS. IN THE SATISFACTION NO TE' THE AO STATES THAT THE DOCUMENT ALSO BELONGS TO M/S GLENSDALE ENTERPRISES DEVELOPMENT PRIVATE LIMITED. IT IS NOTED THAT FOR INITIATING P ROCEEDINGS UNDER SECTION 153C THE AO IS REQUIRED TO BE SATISFIED WITH THE FA CT THAT A PARTICULAR DOCUMENT BELONGS TO SOME OTHER PERSON THAN THE PERS ON IN WHOSE CASE SEARCH HAS TAKEN PLACE. THERE IS ALREADY MUCH DEBAT E ON THE ISSUE AS TO WHAT IS THE MEANING OF THE WORD BELONG GIVEN IN S .153C OF THE ACT. HOWEVER, THE SECTION DOES NOT APPEAR TO BE MEANT FO R THE CASES WHERE THE DOCUMENT ALSO BELONGS TO SOME OTHER PERSON. FURTH ER, BY THIS LOGIC IT SHOULD APPEAR THAT THE DOCUMENT BELONGED TO THE PER SON WHO WAS SEARCHED AND THEN IT ALSO BELONGED TO ANOTHER PERSO N WHO WAS NOT SEARCHED. IN SUCH A CASE, THERE MUST BE SOME UNDISC LOSED INCOME IN THE HANDS OF THE SEARCHED PERSON. NO SUCH FINDING IS TH ERE IN THE ASSESSMENT ORDER OF THE PERSON SEARCHED. THE SECTION DOES NOT TALK ABOUT THE DUAL OWNERSHIP OF THE DOCUMENT: THE SATISFACTION OF THE AO THAT THE DOCUMENT ALSO BELONGS TO THE APPELLANT CANNOT BE A PROPER SATISFACTION FOR ISSUING NOTICE UNDER SECTION 153C. BY NOTING THAT THE DOCUMENT ALSO BELONGS TO THE APPELLANT, THE AO HAS GIVEN A FINDING THAT THE DOCUMENT BELON GS TO SOME OTHER PERSON AND ALSO THE APPELLANT. HOWEVER, HE DOES NOT SAY THAT THERE IS ANY TAX ANGLE TO THE WHOLE TRANSACTION REF LECTED IN THE DOCUMENT UNDER REFERENCE. EVEN THOUGH THERE IS NO MENTION UN DER SECTION 153C THAT THE DOCUMENT SHOULD SHOW EVASION OF TAX OR PRESENCE OF UNDISCLOSED INCOME (SO TO SAY IT SHOULD BE INCRIMINATING), THE HIGHER APPELLATE FOR A HAVE INTERPRETED THAT THE DOCUMENT REFERRED TO IN S ECTION 153C SHOULD BE AN INCRIMINATING DOCUMENT. THE WHOLE PURPOSE OF PRO CEEDINGS UNDER SECTION 153 A IS TO ASSESS OR REASSESS THE INCOME A FTER AN ACTION U/S 132 OR 132A. IF THE SEARCH FINDINGS SHOW THAT PROCEEDIN GS MENTIONED UNDER SECTION 153A NEEDED TO BE TAKEN UP IN THE CASE, OF SOME OTHER PERSON WHO 12 ITA NOS. 973/DEL/2014 & ORS HAS NOT BEEN SEARCHED, THEN THE AO SHOULD PROCEED T O DO SO AFTER SATISFYING HIMSELF THAT THE SEIZED DOCUMENT BELONGE D TO THAT OTHER PERSON. IN THE INSTANT CASE THE DOCUMENT UNDER REFERENCE IS AN AGREEMENT CONTAINING THE NAME OF TWO PARTIES NAMELY THE APPEL LANT - A LAND DEVELOPER AND THE SEARCH A PERSON - A CUSTOMER. NEI THER IN THE SATISFACTION NOTE NOR IN ANY OF THE STATEMENTS NOR ALSO IN THE A SSESSMENT ORDER, IS THERE ANY ALLEGATION OF UNACCOUNTED PAYMENTS. IN A SITUATION OF THIS KIND, I DO NOT CONSIDER THAT THE AO COULD HAVE VALIDLY IN ITIATED PROCEEDINGS UNDER SECTION 153C. 3.6.6. THE HONBLE JURISDICTIONAL ITAT (F-BENCH), IN THE CASE OF ACIT CENTRAL CIRCLE- IV VS PACL INDIA LTD. (ITA NO. 267/ DEL/ 2010) HAS HELD ON 20/06/2013 THAT WHEN NO INCRIMINATING DOCUMENTS WERE FOUND DURING THE SEARCH, THE AO CANNOT MAKE ANY ADDITION BY MAKI NG ROVING AND FISHING INQUIRIES WHILE MAKING ASSESSMENT U/S' 153A . SIMILARLY IN THE CASE OF ACIT VS ASHA KATARIA (ITA NO. 3105, 3106 AN D 3107/ DEL/2011), THE HONBLE A BENCH OF JURISDICTIONAL ITAT, ON 20 /05/2013, HAS HELD THAT AS EXPOUNDED IN THE CASE OF ALLCARGO GLOBAL LOGIST ICS LTD. VS DCIT 137 ITD 287 (SB) ASSESSMENT U/S 153 A CAN BE MADE ONLY ON THE BASIS OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH. AGAIN HONBLE E BENCH OF ITAT NEW DELHI, IN THE CASE OF MGF AUTOMOB ILES LTD. VS ACIT CENTRAL CIRLCE-05 (ITA NO. 4212 AND 4213/ DEL/ 2011 ) HAS HELD THAT IN THE CASE WHERE ASSESSMENT OR REASSESSMENT WAS NOT PENDI NG AS ON THE DAY OF SEARCH AND WHICH DID NOT ABATE, THE AO IS REQUIR ED TO PASS ASSESSMENT ORDER U/S 153A AS PER THE ORIGINAL ASSESSMENT WHETH ER U/S 143(1) OR 143(3). ALL THE THREE DECISION CITED ABOVE HAVE TAK EN INTO ACCOUNT THE DECISION OF THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS ANIL KUMAR BHATIA (2012) 211 TAXMAN 453 (DEL) AND THE DE CISION OF SPECIAL BENCH OF HONBLE ITAT IN THE CASE OF ALLCARGO GLOBA L LOGISTICS LTD. (SUPRA). 3.6.7. CONSIDERING THE ABOVE FACTORS IT HAS TO BE HELD THAT THE PROCEEDINGS UNDER SECTION 153C HAVE BEEN WRONGLY INVOKED AND TH E PROCEEDINGS 13 ITA NOS. 973/DEL/2014 & ORS ARE'VOID AB-INITIO. THEREFORE THE ORDER IS HEREBY H ELD TO BE VOID AB-INITIO FOR- INCORRECT ASSUMPTION OF JURISDICTION U/S 153C OF THE IT ACT 1961. 3.6.8. AS REGARDS THE APPELLANTS REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCES IS CONCERNED, IM OF THE VIEW THAT EVEN T HOUGH THE AO ISSUED NOTICE UNDER SECTION 153C OF THE ACT ON 02/09/2011 AS REPORTED BY THE AO IN THE REMAND REPORT, THERE APPEARS TO BE SOME T YPOGRAPHICAL ERROR IN MENTIONING THE NOTICE UNDER SECTION 153C AS DATED 2 9.04.2010 IN THE ASSESSMENT ORDER. IRRESPECTIVE OF THAT, IT IS NOTED THAT THE AO HAS ASKED THE APPELLANT TO LEAD EVIDENCES WITH REGARD TO ADVA NCES RECEIVED FROM CUSTOMERS ONLY IN THE MIDDLE OF DECEMBER. 2011 AND HE -COMPLETED THE ASSESSMENT ON 27 TH OF DECEMBER 2011. IN THE GIVEN CIRCUMSTANCES THE SAME DOES NOT AMOUNT TO PROVIDING PROPER AND ADEQUA TE OPPORTUNITY OF BEING HEARD BY THE AO. HOWEVER AS THE ASSUMPTION OF JURISDICTION ITSELF HAS BEEN FOUND TO BE FAULTY AND THE ORDER ITSELF HA S BEEN HELD TO BE VOID AB-INITIO BY FOLLOWING THE DECISIONS OF JURISDICTIO NAL TRIBUNAL, WHICH HAS TAKEN INTO CONSIDERATION THE DECISION OF THE JURISD ICTIONAL HIGH COURT OF DELHI, NO PURPOSE WILL BE SERVED IN DEALING WITH TH E OTHER ISSUES RELATING TO MERIT. 3.7. IN THE RESULT APPEAL IS ALLOWED. THERE IS DETAILED FINDING GIVEN BY THE CIT(A). THE REFORE, THERE IS NO NEED TO INTERFERE IN ORDER OF THE CIT(A). IN ALL THE OTHER APPEALS, GROUNDS AS WELL AS THE CONTENTIONS OF THE LD. DR AND LD. AR ARE SAME. TH EREFORE, THE APPEALS FILED BY THE REVENUE ARE DISMISSED FOR ALL THE ASSESSMENT YE ARS. 14 ITA NOS. 973/DEL/2014 & ORS 10. IN THE RESULT, ALL THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH JANUARY, 2018 . SD/- SD/- (G. D. AGRAWAL) (SUCHITRA KAMBLE) PRESIDENT JUDICIAL MEMBER DATED: 05/01/2018 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 07/12/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 11/12/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 5.01.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 5 .01.2018 PS 15 ITA NOS. 973/DEL/2014 & ORS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.