Kashish GAurav Chandani, Ahmedabad V. The Income tax Officer,Ward-3(3)(2), Ahmedabad

ITSSA 147/AHD/2023

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 1723 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 28 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 09-06-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 03-06-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 12-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice
• Section: 143(3); 153C

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद । ।। । IN THE INCOME TAX APPELLATE TRIBUNAL “ B ” BENCH, AHMEDABAD ] ] BEFORE SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER AND SHRI MAKARAND V. MAHADEOKAR, ACCOUNTNAT MEMBER IT(ss)A No.147/Ahd/2023 Assessment Year : 2011-12 Kashish Gaurav Chandani A-21, Samprat Residency Opp. Parivar Society Judges Bungalows Road Bodakdev Ahmedabad – 380 015 Vs The ITO Ward-3(3)92) Ahmedabad PAN: AHTPC 5207 B / (Appellant) / (Respondent) Assessee by : Shri S. N. Divatia, AR and Shri Samir Vora, AR Revenue by : Shri Sudhendu Das, CIT-DR /Date of Hearing : 04/06/2024 /Date of Pronouncement: 10/06/2024 आदेश/O R D E R PER MAKARAND V. MAHADEOKAR, ACCOUNTANT MEMBER The present appeal is filed by the Assessee against the order of the Ld.Commissioner of Income Tax (Appeals)–11, Ahmedabad (hereinafter referred to as “the Ld.CIT(A)”), dated 17-10-2023, arising out of the assessment order passed by the Assessing Officer (Assessing Officer) under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as "the Act") dated 21/12/2018 relevant to the Assessment Year (AY) 2011-12. ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 2 Facts of the Case: 2. A search was conducted at the premises of H N Safal Group on 04-09-2013, wherein computer data/documents, etc., were seized. It was found that the soft data on the hard-disk contained information relating to the NIRVANA Scheme of M/s.Manushi Land Developers LLP. As per the final sheet, it was shown that Plot No.188 was purchased in this Scheme, wherein the assessee had allegedly paid cash of Rs.7,86,450/-. 2.1. Consequently, the AO recorded a satisfaction note on 19-03-2018 and issued a notice under Section 153C of the Act, on the same date. The assessee filed objections vide letter dated 16-04-2018 and filed her Income Tax Return (ITR) on 27-08-2018. The AO disposed of the objections vide order dated 28-10-2018. 2.2. During the course of the assessment proceedings, the AO asked the assessee to explain the source of the investment. The assessee, vide reply dated 13-12-2018, denied having made any cash payment of Rs.7,86,450/- and pointed out that the data was not maintained by her and there were many errors in the coded details. However, the AO relying solely upon the said data and statements of the searched persons, without supplying copies or allowing cross-examination, made an addition of Rs.17,22,700/- u/s. 69 of the Act, consisting of a cheque component of Rs.9,36,250/- and cash of Rs.7,86,450/-. 3. Aggrieved by the AO's order, the assessee preferred an appeal to the Ld.CIT(A), contending that the proceedings under Section 153C were illegal ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 3 and invalid as the seized data did not belong to the assessee and the amendment made w.e.f. 01-06-2015 was not applicable. The Ld.CIT(A) held that the proceedings under Section 153C of the Act were valid. While doing so, the Ld.CIT(A) referred the judgement of Hon’ble Apex Court in the case of ITO vs. Vikram Sujit Kumar Bhatia & Others (Civil Appeal No.911-1026 of 2022), dated 06/04/2023, wherein the Hon’ble Apex Court reversed the decision of Hon’ble Gujarat High Court passed in the case of Anil Kumar Gopikishan Agrawal vs. ACIT (2019) reported at 106 taxman.com 137. On merits, the Ld.CIT(A) upheld the addition for the reasons stated in paragraph number 5.13 of the impugned order. 4. Aggrieved by the CIT(A)’s order, now the assessee is in appeal before us with following grounds of appeal: “1.1 The order passed by Us.250 passed on 17.10.2023 by CIT(A)-11 A'bad upholding the addition of Rs.17,22,700/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 2.1 The Id. CIT(A) has grievously erred in law and or on facts in upholding the validity of notice u/s 153C though the condition precedent were not satisfied. The Ld. CIT(A) has failed to appreciate that there is no mention in the orders passed by the lower authorities that satisfaction note was recorded by the AO of the person searched and relevant documents were handed over to the AO of the assessee. 2.2 The Id. CIT(A) has grievously erred in law and or on facts in not allowing sufficient opportunity of hearing after the decision in case of Vikram Suijt Bhatia was rendered by the Apex Court. Thus, there was a sufficient cause for failure to comply with the notices claimed to be issued by CIT(A). 3.1 The Id. CIT(A) has grievously erred in law and or on facts in upholding that the entire investment of Rs. 17,22,700/- in plot no. 177 of NIRVANA scheme of M/s Manushi Land Developers LLP which consisted of cheque ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 4 component of Rs.9,36,250 and cash of Rs.7,86,450/-was unexplained income u/s.69. 3.2 That the in the facts and circumstances of the Id. CIT(A) ought not to have upheld the addition of Rs. 17,22,700/- as unexplained investment u/s 69 when the source of cheque payments of Rs.9,36,250/- was fully explained. 3.3 The Ld. CIT(A) has failed to appreciate that the first payment by cheque was made on 09.10.2010 and the final purchase deed on 22.08.2013. But no evidence pointed out by AO to prove that the alleged cash payment was made during the previous year relevant to A.Y. 2011-12. 3.4 The observations made, and conclusions reached by CIT(A) as per para- 5.13 of the impugned order are denied and unjustified both on facts & in law. It is, therefore, prayed that the addition of Rs.17,22,700/- upheld by the CIT(A) may kindly be deleted or in the alternative reduced by Rs.9,36,250/-”. On Ground Nos.1 and 2: 5. The Authorised Ld. Representative (AR) for the assessee contented that the notice u/s.153C of the Act should be issued within a reasonable time period. The notice u/s. 153C of the Act was issued on 19-3-2018, i.e. after more than 4 years after the search on 04-09-2013. The Ld.Departmental Representative (DR), on the other hand, stated that there is no such provision specifying the time limit as stated by Ld.AR. 5.1. It was observed and noted that Ld.CIT(A) has dealt with the issue of validity of notice u/s.153C of the Act in details in his order. Therefore, Ld.AR decided not to press for the Grounds Nos.1 and 2 and decided to argue on Ground No.3. Therefore, these grounds are not adjudicated. Ground No. 3: ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 5 6. Regarding the addition of Rs. 17,22,700/- made u/s.69 of the Act, the Ld.AR submitted that the Ld.CIT(A) was not justified both on facts and in law in upholding the addition of Rs.17,22,700/- as the payments by cheque aggregating to Rs.9,34,250/- were duly recorded in the books of assessee and reflected in her Axis Bank Account No.469104 and the assessee has denied having paid the cash component of Rs.7,86,450/-. 6.1. The Ld.AR further stated that while confirming the addition the Ld.CIT(A) has relied on the excel-sheet found at the time of search and seizure at the premises of H N Safal Group. It was also based on the fact that one of the groups entity Manushi Land Developers LLP from whom assessee purchased plot admitted that ‘ON-MONEY’ in the form of cash was received by them and this ‘on-money’ was disclosed by said M/s.Manushi Land Developers LPP, after paying tax and applied before Settlement Commission for relief. He further stated that there is no any proof with the Department that cash was actually paid by the assessee. Even there is no any statement or signature of the person on such excel- sheet. 6.2. The Ld.AR also stated that there is no mention of order passed by Settlement Commission in the order passed by AO. The Ld.DR contented that the assessee was privy to the information of order of Settlement Commission, and this was never challenged by the assessee before the Ld.CIT(A). He further stated that the information in excel-sheet is not to be seen in isolation and it should be read with reference to the order of Settlement Commission. ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 6 6.3. The Ld.AR further contented that the Amount of Rs.17,22,700/- added by the AO also include Rs.9,34,250/-, which was paid by cheque and both the Ld.AO and the Ld.CIT(A) have erred. 6.4. The Ld.AR placed his reliance on the decision of Hon’ble Gujarat High Court in the case of Kaushik Nanubhai Majithia (in Tax Appeal No. 20 of 2024), dated 06/03/2024. We reproduce hereunder the relevant portion of the judgement: “2. The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer. 3. We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel- sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 7 nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.” 6.5. We have heard the submissions of both parties and perused the material on record. It is noted that the AO made the addition solely based on the seized data and statement of the searched person, who paid the taxes on admission of such undisclosed ‘on-money' in cash. Such addition was made without affording an opportunity to the assessee to cross-examine the person, whose statements were relied upon. This is against the principles of natural justice. 6.6 Furthermore, the payments made by cheque aggregating to Rs.9,34,250/- were duly recorded in the assessee's books of account and reflected in her Axis Bank account. These entries have not been disputed by the AO. Therefore, the addition to this extent is not justified. 6.7. As regards the cash component of Rs.7,86,450/-, the assessee has consistently denied making such payment and there is no corroborative evidence brought on record by the AO to substantiate this addition. Therefore, in the absence of any conclusive evidence, the addition of Rs.7,86,450/- is not sustainable. 6.8. In view of the above discussion and respectfully following the judicial precedence relied upon, the appeal of the assessee is partly allowed. The ITA No. 147/Ahd/2023 Kashish Gaurav Chandani vs. ITO Asst. Year : 2011-12 8 addition of Rs.9,34,250/- is hereby deleted, and the addition of Rs.7,86,450/- is also deleted. 9. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the Open Court on 10 June, 2024 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) JUDICIAL MEMBER (MAKARAND V. MAHADEOKAR) ACCOUNTANT MEMBER Ahmedabad, Dated 10/06/2024 . ी. य , . . ./T.C. NAIR, Sr. PS ! "# /Copy of the Order forwarded to : 1. "!ी $% / The Appellant 2. &य$% / The Respondent. 3. '(')* य य + / Concerned CIT 4. य य + )"!ी (/ The CIT(A)-11, Ahmedabad 5. . /ीय )* , य "!ी य ")* , ज /DR,ITAT, Ahmedabad, 6. / 12 3 /Guard file. / BY ORDER, &य ! //True Copy// ह य !'जी (Asstt. Registrar) य "!ी य ")* , ITAT, Ahmedabad 1. Date of dictation (word processed by Hon’ble AM in his laptop) : 06.05 .2024 2. Date on which the typed draft is placed before the Dictating Member. : 06.05 .2024 3. Date on which the approved draft comes to the Sr.P.S./P.S : 4. Date on which the fair order is placed before the Dictating Member for pronouncement. : 5. Date on which fair order placed before Other Member : 6. Date on which the fair order comes back to the Sr.P.S./P.S. : 10.6.’24 7. Date on which the file goes to the Bench Clerk. : 10.6.’24 8. Date on which the file goes to the Head Clerk. : 9. The date on which the file goes to the Assistant Registrar for signature on the order. : 10. Date of Despatch of the Order :