Appeal details
Counselvise Citation
[2023] 102 COUNSELVISE.COM (IT) 0463 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
8 month(s) 9 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
26-10-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
11-10-2023
Assessment Year
2016-2017
Appeal Filed On
16-02-2023
Judgement Text
आयकर अपीलȣय अͬधकरण,स ु रत Ûयायपीठ, स ु रत IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND Dr ARJUN LAL SAINI, ACCOUNTANT MEMBER आ. (खो और ज).सं./IT(SS)A No.16 /SRT/2023 (AYs 2016-17) (Hearing in Physical Court) Shailesh Shantilal Shah M-14, Hiral Arcade, Opp. New Civil Court, Athwalines, Surat-395007 PAN No. AEDPS 0606 K Vs Assistant Commissioner of Income Tax, Central Circle- 3, Room No 507, Aayakar Bhawan, Majura Gate, Sura-395001 अपीलाथȸ/Appellant Ĥ×यथȸ /Respondent आ. (खो और ज).सं./IT(SS)A No.17/SRT/2023 (AYs 2016-17) Jayshree Shailesh Shah M-14, Hiral Arcade, Opp. New Civil Court, Athwalines, Surat- 395007 PAN No. AGUOPS 7930 D Assistant Commissioner of Income Tax, Central Circle- 3, Room No 507, Aayakar Bhawan, Majura Gate, Sura-395001 अपीलाथȸ/Appellant Ĥ×यथȸ /Respondent आ. (खो और ज).सं./IT(SS)A No. 18/SRT/2023 (AYs 2016-17) Parth Shailesh Shah M-14, Hiral Arcade, Opp. New Civil Court, Athwalines, Surat- 395007 PAN No. BZHPS 5062 F Assistant Commissioner of Income Tax, Central Circle- 3, Room No 507, Aayakar Bhawan, Majura Gate, Sura-395001 अपीलाथȸ/Appellant Ĥ×यथȸ /Respondent Ǔनधा[ǐरती कȧ ओर से /Assessee by Shri Hiren M. Diwan, C.A & Shri Dhruvang Diwan, CA राजèव कȧ ओर से /Revenue by Shri Airiju Jaikaran, CIT-DR अपील पंजीकरण/Appeal instituted on 7.02.2023 सुनवाई की तारीख/Date of hearing 12.10.2023 उɮघोषणा कȧ तारȣख/Date of pronouncement 27.10.2023 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This set of three appeals by different assessee, being family members / same group are directed against separate orders of ld. IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 2 Commissioner of Income-tax (Appeals)-4 Surat [for short to as “Ld. CIT(A)”] all dated 22.12.2022 for same assessment year i.e., 2016-17, which in turn arose out of separate assessment orders passed by Assistant Commissioner of Income Tax, Central Circle-3, Surat / Assessing Officer under section 143(3) r.w.s. 153A of Income Tax Act, 1961 (hereinafter referred to as ‘the Act’ for the sake of brevity) all dated 20.12.2018. In all the three appeals facts are common, the assessees have raised common grounds of appeal except variation of additions, therefore, all the three appeals were clubbed, heard together and are decided by consolidated order to avoid conflicting decisions. For appreciation of facts, facts in IT(SS)A No.16/SRT/2023 in the case of Shri Shailesh S Shah is treated as “lead” case. The assessee in its appeal has raised the following grounds of appeal:- “1) The ld. CIT(A) has erred in law and on facts in upholding the validity of notice issued u/s 153C of the Act. 2) The ld. CIT(A) has erred in law and on facts in confirming the addition of Rs.31,50,750/- on the ground of alleged unaccounted investment u/s 69 of the Act. 3) The Appellant craves leave to add, amend, alter, modify, substitute, delete, change or vary all or any of the ground or grounds of appeal.” 2. Brief facts of the case are that assessee is an individual filed his return his return of income for assessment year 2016-17 on 26.07.2016 declaring total income of 9,67,570/-. The Assessing Officer noted that a survey under section 133A was carried out in the case of Kiran Rasiklal Shanghvi HUF at House No.6/1947, Raj Tilak Apartment, Dalghia Mohallo, of Mahidherpura, Surat on 29.11.2016. Survey was carried out by the investigation wing on the basis of IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 3 information that Kiran Rasiklal Shanghvi was exchanging old currency after demonetization on commission. During such survey unaccounted cash of more than Rs. 1.00 Crore was seized. The survey was converted into search action under section 132. During search other incriminating evidence from the Mobile Phone back up of his staff was recovered and sized, which contents entries pertaining to assessee. Consequently, jurisdiction in case of assessee was transferred to Central Circle by the order of Principal Commissioner (PCIT-2) vide order dated 27.09.2018. Notice under section 153C dated 24.09.2018 was issued to the assessee after recording satisfaction. Reasons/ satisfaction recorded under section 153C was attached with the notice under section 153C. In response to notice under section 153C, the assessee filed his return of income on 02.11.2018 declaring income of Rs.9,67,570/-. The Assessing Officer after serving notice under section 143(2) proceeded for assessment. During assessment proceedings, Assessing Office on the basis of various nottings in the seized material, which was in the form of some writings, printout of which was obtained from mobile phone backup of staff of searched person. On the basis of such printout the assessing officer noted that assessee has purchased shop No.BR-6 from Kiran Rasiklal Shanghvi HUF and paid on-money of Rs.42,01,000/-. The assessee was issued show cause notice dated 11.12.2018. 3. In the show cause notice Assessing Officer narrated that during the course of search, some digital data was seized / impounded from the mobile phone of Brijesh S Shah, staff of Kiran Rasiklal Shanghvi HUF. IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 4 The said data contains the details of payment of on-money in receipt of shop Nos. BR-5 & BR-6 in Blue Ribbon Project. On the said page the rate of shop was written as @ 7506/- per square feet and details of cash receipts of Rs.42.00 lakhs for BR-5 and Rs.42.01 lakh for BR- 6 and cheque receipts of Rs.6,00,100/- for BR-6. The statement of Kiran Rasiklal Shanghvi was recorded and such printout (page) was confronted to him, he stated that he did not know about such papers. On the basis of noting from the paper, the Assessing Officer was of the view that ownership of shop No.BR-5 was having share divided between Jayshree S Shah (wife of assessee) and Parth S Shah (son of assessee) in 3:1 and ownership of BR-6 was divided between Shailesh S Shah and Parth S Shah in 3:1. On the basis of such observation, assessee was asked to explain the complete details of such transaction and as to why an amount of Rs.31,50,750/- should not be treated as unaccounted investment of assessee. 4. In response to said show cause notice, the assessee filed his reply dated 13.12.2018. The contents of assessees reply is extracted by Assessing Officer on pages 5 to 9 of assessment order. In the reply, assessee submitted that on perusal of page-12, seized during search action in case of Kiran Rasiklal Sanghvi (HUF), the same is divided into two parts and each part are independent of each other and different. The assessee further submitted that impugned shops were booked / negotiated for purchasing by him and his family members who are doctors by profession. They have made an idea of developing a day-care medical clinic in the impugned shop and adjoining shop, IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 5 which was also booked by his family members. During such negotiation, assessee expected that builder to supply more facilities in both the shops including decorative materials instead of ordinary material. The assessee also expected to furnish exclusive interior, air- conditioners, sophisticated electrical fittings, CCTV camera, television, table-chair, computer UPS/power back-up generator etc to be installed and supplied in both shops. For such purpose, assessee requested that builder to estimate a total cost including of decoration and equipment. The upper part of seized material contents such estimate of both the shops. However, on receipt of such estimate from the builders, the health of assessee was deteriorated and assessee changed the idea for establishing an exclusive modern Day-Care Medical Clinic and decide to only purchase the bare two shops. For lower portion of impugned seized material, assessee explained that the standard facilities were made by builder and details thereof were tallying with builder’s books of account and purchase deed. The assessee further explained that for upper part of the seized material contents details of on-money payable for purchasing shop then the documents valued purchase of shop in upper half portion and lower half portion would not have been different. The lower portion of document shows that shop No.BR-6 is stated to be at Rs.17,66,270/- whereas in the lower half document value stated to be at Rs.21,85,000/- which as stated the purchase consideration as per sale deed. The assessee explained that the difference of Rs. 4.18 between the two documents values as per seized material has taken IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 6 place, since in the estimate portion that is in the upper half of seized paper the reduction in cost was allowed as the assessee and his family were going to use standard material like other shops in the complex. On the basis of such fact the assessee explained that reduction of cost of Rs. 4.18 Lakhs was allowed. The assessee on the basis of narrating other discrepancies explained that seized materials does not indicate any on-money and that estimation prepared for additional facilities were not materialised. The noting on the upper part and lower part are different and no addition can be made on the basis of such noting. The documents were not recovered either from assessee or from builder rather from his employee. The assessee cannot be held responsible for the noting found from another person or any confirmation. On the basis of such submission, assessee requested that no addition be made in assessees case. 5. The reply of assessee was not accepted by Assessing Officer. The Assessing Officer held that contention of assessee is not plausible, the assessee simply stated that assessee had expected that builder to supply more facilities in the concerned shops with sophisticated electrical fittings, CCTV camera, television, table-chair, computer UPS/ power back-up generator facilities. Such items without any agreement between customer and builders. In case these items are provided then such items are reflected in their broachers also. The assessee has not filed any agreement or such broachers. Seized documents found from the digital data from mobile of Brijesh S Shah, staff of Kiran R. Sanghvi. The data in the mobile phone shows that the IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 7 payment of on-money of Rs.42.00 lakh for BR-5 and Rs.42.01 lakh for BR-6 shops. The amount and the date of cheques are mentioned with the sale deed as well as matching with ratio of ownership which clearly indicates that calculation was made for sale of shops. The assessee failed to submit any supportive evidence nor submitted any explanation. Therefore, the ratio of 3/4 th of Rs.42.01 lakh for shop No.BR-6 of Rs.31,50,750/- was treated as undisclosed investment under section 69 of the Act while passing the assessment order under section 143(3) r.w.s. 153C of the Act. 6. Aggrieved by the addition in the assessment order, the assessee filed appeal before Ld. CIT(A). Before Ld. CIT(A), the assessee challenged the validity of jurisdiction under section 153C as well as the addition under section 69 of the Act. The assessee filed detailed written submission. The submission of assessee is recorded in para-7.2 at pages from 6 to 15 of order of Ld. CIT(A). In the submission, the assessee reiterated same contention as submitted before Assessing Officer that some estimations of additional facilities were prepared, however, same was not acted upon. The assessee also referred the statement of Kiran R Sanghvi (HUF) who expressed his ignorance about such noting, found from his staff. In addition to, the assessee stated that no addition on the basis of seized material can be made unless the same is corroborated by independent and reliable evidence /material. There is no independent and corroborative evidence or material on record. The assessing officer has not been able to make any independent investigation or to bring material to substantiate his IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 8 finding that any on-money or cash payment for purchase of shops were made. To support such submission, assessee relied on the decision of Hon’ble Apex Court in the case of PCIT vs. Nishant Construction (P.) Ltd. (2019) 101 taxmann.com 180 (SC); in the case of DCIT vs. Alpesh Gokulbhai Kotadia (2018) 95 taxmann.com 108 (SC); in the case of DCIT vs. Vinodbhai Shamjibhai Ravani (2018) 94 taxmann.com 246 (SC) and Chennai Tribunal in the case of DCIT vs. GSNR Rice Industries (P.) Ltd. (2021) 128 taxmann.com 433 (Chennai – Trib.) The assessee also submitted that Assessing Officer relied upon part of print-out of digital data retrieved from mobile phone and concluded that assessee made on-money payment. The assessee also submitted that evidence was found from the premises of third person which was subjected to proceedings under section 132 of the Act. 7. The assessee also objected for admissibility on electronic data record in absence of fulfilment of condition of Section 65A and 65B of Evidence Act, 1872. To support such view, assessee relied upon the decision of Hon’ble Apex Court in the case of Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal (Civil Appeals No.20825-20826 of 2017) and in the case of Ravinder Singh @ Kaku Vs State of Punjab [2022 Live Law (SC) 461], wherein the Hon’ble Apex Court reiterated that certificate under Section 65B(4) is a mandatory requirement for production of electronic evidence. 8. On the validity of order under section 153C, the assessee raised additional ground that seized paper was found in the mobile phone by a search party, is not a document and provisions of section 153C IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 9 cannot be invoked. The assessee submitted that as per requirement of language employed in section 153C; no valuable belonging to assessee was seized during search action neither the books of account or document was seized or requisition made during the search. Notice under section 153C was issued on the basis of print-out of seized mobile data during search. The print out of mobile can neither be said to be the books of account nor can be said to be document. The print out is a unilaterally prepared digital data, not signed by any of the parties and not purported to be used for permanent reference by any party whatsoever. The conditions prescribed under clause (a) & (b) of Section 153C of the Act is not satisfied for issuance of notice under section 153C. Therefore, impugned notice under section 153C is invalid and action thereon is void ab intio. 9. The Ld. CIT(A) on considering the submission of assessee on additional ground of appeal held that search action conducted in the premises the digital data found from the staff of Kiran Rasiklal Sangahvi HUF, contain information relating to shop No BR-6 which was purchased by the assessee. The price of said shop was mentioned at Rs.56,97,064/- and Rs.59,67,270/- and Rs.42.00 lakh and Rs.42.01 lakh was reduced from the price and Rs.14,97,064/- and Rs.17,66,270/- have been paid by assessee in cheque on different dates. In shop No.BR-5, wife of assessee and Parth S Shah (son) are co-owner and in shop No.BR-6 the assessee and his son are co-owner. At the lower portion of seized paper, the cheque payment are shows which are mentioned with the cheque payment by assessee and his IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 10 family members. The information relating to area of shop payment by cheque are totally matching. The digital data found in the mobile which is treated as incriminating material by Assessing Officer, is corroborated with the area of shop and cheque payment, which has evidentiary value, can be relied for issuance of notice under section 153C. The assessee purchased the shop along with his family members and such information is reliable information, corroborated with actual price of shop paid by assessee and his family members. Thus issuance of notice under section 153C rightly valued and issued by Assessing Officer. The Ld. CIT(A) also relied upon the decision of Hon’ble Apex Court in the case of Ambalal Sarabhai Enterprises vs. K.S. Infraspace LLP & Ors. In Civil Appeal No.9346 of 2019 and dismissed additional ground of appeal raised by assessee. 10. On the merit of the additions, the Ld. CIT(A) held that there is no dispute that assessee and his family members had purchased two shops BR-5 & BR-6 and area of shops are multiplied by rate mentioned Rs. 7,506/- per square feet resultantly figure is cost of Rs.56,97,064/- and Rs.59,67,270/-. From such amount, Rs.42.00 lakh and Rs.42.01 lakh have been reduced, which is cash component and balance amount was paid by cheque on various dates. Such dates and cheque of the amount in the incriminating are matching. In the bottom of the page (seized incriminating), the shares of each of the family members are specified i.e., shop BR-5 Dr. Jayshree Shah (spouse of assessee) has 75% and Parth S Shah (son of assessee) has 25% share. In BR-6 assessee has 75% and son (Parth S Shah) has IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 11 25% respective share and distribution of payment between co-owner respective one cheque amount. Thus, the incriminating paper found and relied by Assessing Officer provide the details about the shop purchased and each and every area and cheque payment are mentioned. The ld. CIT(A), while considering the plea of assessee that certain amenities which was proposed to be provided by the builder, were not actually provided for Day-Care Medical Clinic. The Ld. CIT(A) held that Day-Care Medical Clinic equipment are specialized equipment which no builder will provide such sophisticated equipment including white goods as claimed by assessee. The equipment is to be brought by the owner who purchased the premises after taking possession. The role of builder is only of civil construction work or electrical works related amenities and no builder provide any sophisticated equipment. The assessee has not produced any agreement or Memorandum of Understanding with the builder. The onus lies upon assessee and assessee failed to discharge such onus. It was held that submission of assessee about Day-Care Medical clinic is an afterthought and without any supported or cogent evidence. To support such view, the Ld. CIT(A) relied on the case law of Hon’ble Apex Court in the case of Ambalal Sarabhai Enterprises vs. K.S. Infraspace LLP & Ors. in Civil Appeal No.9346 of 2019. The Ld. CIT(A) also held that information on the incriminating material in the digital image has been corroborated with the cheque payment or actual area of the shops purchased by assessee and upheld the addition made by IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 12 Assessing Officer. Further aggrieved the assessee has filed present appeal before the Tribunal. 11. We have heard the submission of Ld. Authorized Representative (Ld.AR) for the assessee and Ld. Commissioner of Income Tax- Departmental Representative (Ld. CIT-DR) for the Revenue. The Ld. AR for the assessee submits that search action was carried out in case of Kiran Rasiklal Sangahvi HUF. During search action, a mobile phone was recovered from the possession of employee of Kiran Rasiklal Sangahvi (HUF). On taking print out of data of said sized mobile phone certain noting with regard to shop No(s). BR-5 and BR-6 were found. The Ld. AR for the assessee submits that copy of print out of such mobile phone is filed at page 19 of the paper book, at page-20 is a fair typing of such document. The Ld. AR for the assessee submits that there is no independent and corroborative evidence to support that the noting on the print out was contained any actual or real figure. During search action, the statement of Kiran Rasiklal Sangahvi (HUF) was recorded who shows his ignorance about such noting on the print out. Further the statement of employee was also recorded. In the statement, Brijesh S Shah, staff of Kiran R Sangahvi (HUF) stated that it was a proposal of estimate about civil work, exclusive interior, air-conditioner, sophisticated electrical fittings CCTV camera, television, table-chair, computer UPS/power generator etc., as enquired by assessee, who wanted to make everything available so that he may make their Day-Care Medical Clinic and all the estimate of payment. So our supervisor prepared this estimate. IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 13 The assessee stated that estimate was on higher side and unfortunately he suffered heart attack during said period and requested not to go for fully furnished properly and as per estimate and he proposed to purchase shop only. So by otherwise estimate buyer decided not to do all work and to additional simply by two shops only. This paper was estimation and cancelled and hence was deleted. He also stated that they have executed sale deed in favour of assessee and copy of sale deed also furnished. The ld AR for the assessee filed copy of the order of CIT(A) dated 11.02.2021 passed in case of Fortune Corporation (PAN: AADFF 2655 B) containing the reference of statement of Shailesh Shah. The Ld.AR for the assessee submits that no such corroborative evidence is in power and possession of Assessing Office. The Ld. AR for the assessee submits that said writing was rough estimate and not actual rate. Even otherwise the Assessing Officer relied upon the upper portion of the document and not on the lower portion of the document. The Ld. AR for the assessee further submits that the Assessing Officer merely presumed that the area of shop is matching and area of shop is of different, the area of shop No.BR-6 is 437 square feet i.e., 40.61 square meter and area of shop No.BR-5 is also different. The Ld. AR for the assessee submits that in absence of corroborative material no addition can be made. The assessee has purchased shop on more than jantri rate prevailing at the time. The Ld. AR for the assessee submits that no independent investigation was carried out by the Assessing Officer nor any comparative instance for adjoining shop was IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 14 investigated. The Assessing Officer relied on the third party information without any corroborative evidence. 12. The Ld. AR for the assessee further submits that for admitting evidence, which was found in the form of electronic mode, has to be proved by bringing certificate as required under section 65B of Evidence Act, 1872 and in absence of such certificate, such evidence found in the form of electronic means cannot be accepted. To support such view, Ld.AR for the assessee relied upon the Hon’ble Apex Court in the case of Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal Civil Appeals No.20825-20826 of 2017. 13. On merit of the case, the Ld. AR for the assessee submits that Ld. CIT(A) relied upon the decision of Hon’ble Apex Court in the case of Ambalal Sarabhai Enterprises Vs. K.S. Infraspace LLP & Ors. in Civil Appeal No.9346 of 2019. Facts of said fact is quite different and the ratio of such decision is not at all applicable on the facts of the present case. In the said case massages and image was exchange by both the parties. Our case is of unanimous entry that two found in the possession of staff member, so the ratio of said case is not at all applicable in the case, moreover, the person in whose possession such mobile was found categorically refuted and explained the entry that it was a mere estimation. To support various submissions, the Ld. AR for the assessee relied on the decision in DCIT vs Kanakia Hospitality (P.) Ltd. (2019) 110 taxmann.com 4 (Mumbai – Trib.), wherein it was held that contents of a ‘seized document’ are to be read in toto, and it is not permissible on part of an Assessing Officer to IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 15 dissect same and summarily accept same in part and reject other part. The Ld. AR for the assessee submits that as explained earlier, the Assessing Officer relied upper portion of the print-out only despite the fact that it was explained that on mere estimation. On the other hand, lower part of said print-out was not considered by the Assessing Officer. The Ld. AR for the assessee also relied on the decision in Prabhudayal Agarwal vs. ACIT (2007) 11 SOT 50 (HYD.) (URO), wherein it was held that no addition could be made on surmises and suspicion. The entire seized paper should be taken into consideration or rejected in toto. Part of the particulars could not be considered. It was not permissible for the revenue to accept a part of the paper and ignore the rest of the seized documents. Similar view was taken by Visakhapatnam Tribunal in the case of Smt. Bommana Swarna Rekha vs. ACIT (2005) 147 Taxman 59 (Visakhapatnam) (Mag.) and Mumbai Tribunal in the case of ACIOT vs. Omprakash & Co. (2004) 2 SOT 1 (MUM.). 14. The Ld. AR for the assessee further submits that Hon’ble Apex Court in Common Cause Vs. Union of India (2017) 77taxmann.com 245 (SC) also held that loose sheets of papers are not admissible under section 34 of the Evidence Act, 1872. Further, Hon’ble Apex Court in the case of S.P. Gramophone Co. Vs. CIT (1986) 24 Taxman 507 (SC), held that profit and loss account statement prepared on a loose sheet did not contain any distribution of profits and / or allocation thereof to each one of the new partners but such distribution or allocation was indicated on a loose paper on which the balance sheet was IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 16 prepared, but even then that loose sheet was an unsigned piece of paper and, therefore, being un-authentic, was rightly rejected by the taxing authority. The Hon’ble Apex Court in the case of PCIT vs. Nishant Construction (P.) Ltd. (2019) 101 taxmann.com 180 (SC) upheld the deleting addition on the ground that there was no reliable or independent evidence to come to conclusion that assessee had accepted on-money for sale of constructed properties. Similarly, in the case of DCIT vs. Alpesh Gokulbhai Kotadia (2018) 95 taxmann.com 108 (SC) it was held that where there was no tangible material available on record to form a reasonable belief that amount of sale consideration had been received by assessee in cash, merely on basis of sauda chitthi signed by assessee for sale of such land, it could not be said that sale consideration was received by assessee. Similar view was taken by Hon’ble Apex Court in the case of DCIT Vs Vinodbhai Shamjibhai Ravani (2018) 94 taxmann.com 246 (SC) that in absence of tangible material on record to form a reasonable belief that amount of sale consideration on sale of land owned by third party was received by assessee in cash, merely on basis of sauda chitthi signed by assessee for sale of such land, it could not be said that sale consideration was received by assessee. 15. The Ld. AR for the assessee submits that he has also challenged the validity of satisfaction recorded under section 153C. The Ld. AR for the assessee submits that in the present case, satisfaction was recorded on 24.09.2018, copy of reasons recorded for issuance notice under section 153C and satisfaction is field on pages 13 of paper IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 17 book, where the reasons recorded shows that some digital data was found / impounded from a mobile phone of Brijesh S Shah, staff of Kiran R. Sanghavi HUF and print out of page-12 relates to details of on-money payment. On the basis of such document and information was considered and related to assessee. The Ld. AR for the assessee submits that as per language employed in section 153C, neither any money, bullion or jewellery or other valuable articles or thing were seized or requisitioned, belongs to or any books of account or document seized or requisitioned pertains or pertain to or any information contained therein, relates to, found in the search action. The print out of mobile date can neither be said to be books of account nor can be considered to be document, it is a unilaterally prepared digital data and same is not signed by any of the party and not purported to use for permanent reference by any party. Thus, the contents prescribed in clause (a) and (b) of Section 153C gets satisfied for issuing valid notice under section 153C. The Ld. AR for the assessee submits that the documents have to be executed by two persons and basic reason, is to use as permanent source of information and print out of mobile data cannot be termed as a document. The Ld. AR for the assessee submits that neither there was a sufficient material for recording reasons for issuance notice under section 153C or basis for making addition of on-money. Therefore, assessees appeal is to be succeeded on both the grounds. 16. On the other hand, Ld. Commissioner of Income Tax-Departmental Representative (Ld. CIT-DR) for the Revenue supported the order of IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 18 lower authorities. The ld. CIT-DR for the revenue submits that on perusal of seized material, clearly indicates that size of shop, rate of shop and total cost and after subtracting the cheque payment remaining amount was paid by way of on-money by assessee. The assessee took a plea that it was a mere estimation and no such evidence was furnished by assessee to substantiate this fact. The explanation so offered by assessee is nothing but an afterthought story. On the issue of satisfaction, under section 153C, the Ld. CIT- DR for the revenue submits that there was sufficient information relating to and pertains to assessee about sale of shop, which was ultimately purchased by assessee and the incriminating evidence found in the back up of mobile of staff member of searched person was sufficient for recording the reasons of satisfaction for issuance of notice under section 153C.The Ld. CIT-DR for the Revenue submits that he fully supported the order of lower authorities on this issue. 17. We have considered the submissions of both the parties on merit and carefully perused. We have also deliberated on various case law relied by Ld. AR fort the assessee as well as before us. We find that Assessing Office made addition of Rs. 31,50,750/- on account of unexplained investment on the basis of entry shown on the printout extracted from the back up of mobile phone of staff of searched person. The assessing officer while making addition the explanation given by the assessee about the entry on the seized paper is not plausible. The assessee simply stated that assessee had expected that builder to supply more facilities in the concerned shops with IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 19 sophisticated electrical fittings, CCTV camera, television, table-chair, computer UPS/ power back-up generator facilities. Such items without any agreement between customer and builders. The amount and the date of cheques are mentioned in sale deed is matching. The assessee failed to submit any supportive evidence nor submitted any explanation. The assessing officer made the addition in the ratio of 3/4 th of Rs.42.01 lakh for shop No.BR-6 of Rs.31,50,750/- by treating it as undisclosed investment under section 69 of the Act. As noted above before ld CIT(A) the assessee challenged the validity of notice under section 153C and the additions of undisclosed investment. The assessee filed very detailed written submissions on both the issues, which we have recorded above and the same are not repeated here for the sake of brevity. The ld CIT(A) rejected the contention of assessee on both the issues and upheld the additions made by assessing officer. 18. We find that ld CIT(A) while upholding the addition of undisclosed investment held that the assessee and his family members had purchased two shops BR-5 & BR-6 having area of 759 and 795 square feet respectively. The area of shops is multiplied by rate mentioned Rs. 7,506/- per square feet resultantly figure is cost of Rs.56,97,064/- and Rs.59,67,270/- was arrived. From such amount, Rs.42.00 lakh and Rs.42.01 lakh have been reduced, which is cash component and balance amount was paid by cheque on various dates. Such dates and cheque of the amount in the incriminating are matching. In the bottom of the page (seized incriminating), the shares IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 20 of each of the family members are specified i.e., shop BR-5 Dr. Jayshree Shah (spouse of assessee) has 75% and Parth S Shah (son of assessee) has 25% share. In BR-6 assessee has 75% and son (Parth S Shah) has 25% respective share and distribution of payment between co-owner respective one cheque amount. The ld CIT(A) held that the incriminating paper found and relied by Assessing Officer provide the details about the shop purchased and each and every area and cheque payment are mentioned. The ld. CIT(A), rejected the plea of assessee that certain amenities which was mere proposal for providing additional amenities, were not actually materialised. The Ld. CIT(A) held that Day-Care Medical Clinic equipment are specialized equipment which no builder will provide such sophisticated equipment including white goods as claimed by assessee and role of builder is only of civil construction work or electrical works related amenities and no builder provide any sophisticated equipment. The onus lies upon assessee and assessee failed to discharge such onus. It was held that submission of assessee about Day-Care Medical clinic is an afterthought and without any supported or cogent evidence. 19. There is no dispute that the seized material was recovered from the possession of staff of searched person. It does not bear the signature of assessee or his family members. Admittedly it is not in the writing of the assessee. The statement of searched person was recorded by the investigation team. Admittedly, the search person expressed his ignorance about the writing on the seized paper. Further, the person from whom, the seized document was found also made statement that IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 21 the assessee obtained some estimate of furnished shops with certain additional fittings and fixtures, on such proposal some estimate was prepared, however, the same was not accepted and acted upon the parties. The noting on the printout recovered from his mobile phone was nothing but a mere estimation. The assessee suffered heart attack and he dropped the idea of taking fully furnished shops. 20. We find that except those two statement, there is no other corroborative material with the assessing officer. We find that neither the searched person nor his staff, from whom the phone was recovered support the presumption drawn by the assessing officer about the noting on the seized paper. We find that the assessee has filed copy of the sale deeds of both the shops, the area of the shop No. BR-5 is 417 square feet and the area of BR-6 is 437 square feet, which does not match with figures mentioned in the seized papers. We find that the assessing officer has not made any independent investigation of fact either from the owners of adjoining shops or from the officer of stamp valuation authority about the actual value of shops in dispute. Admittedly there is no other evidence except the seized paper in the possession of the assessing officer. We find that the assessing officer has considered only the part of the information of the seized paper, which is not permissible under law. The document has to be considered as a whole. The assessee in reply to the show cause notice before assessing officer has clearly explained the writing on such loose paper (printout from back up of mobile). If we consider the impugned document as whole, it clearly suggests that is was IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 22 working of some estimation and not the real figure. We find that the assessee as well as the person from whose possession such document was recovered, right from the beginning took their stand that it was mere estimation, which was never acted upon, still the assessing officer presumed that the assessee made unaccounted investment, without bringing any corroborative evidence or material on record. There is no evidence on record, which may suggest that the seller has received anything in addition to the sale consideration mentioned on the sale deeds of both the shops. It is settled position under the law that no addition can be made on surmises and suspicious. Entire seized material should be considered in toto. It is not permissible for party to accept in part and to reject or ignore the rest. On the basis of categorical stand of the assessee as well as of Shailesh Shah, the impugned document is nothing more than dumb document. 21. The Hon’ble Apex Court in Common Cause and Others Vs UOI in Writ Petition Civil Appeal No. 505 of 2015 and V.C. Shukla Vs UOI 1998 (3) SCC 410 and Hon’ble Gujarat High Court in PCIT Vs Ajay Sundarbhai Patel (2016) 69 taxmann.com 309 (Guj) held that the addition on the basis of dumb document is not justified. We find that Hon’ble jurisdictional High Court in the case of Mauli Kumar K Shah (supra) held that mere entry in the seized materials are not sufficient to prove that assessee was indulging such transaction in which on-money has been received. The Co-ordinate Benches of Chandigarh Tribunal in the case of DCIT vs. R.P. Import and Export Pvt. Ltd. in ITA No.1135/Chd/2013 dated 12.12.2014 also held that when no IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 23 evidence was found during search action, if any considerations have been paid in respect of any property and no adverse material was found against the assessee to justify unaccounted investment and the agreement in question was cancelled document did not relate to assessee directly or indirectly. It was held that the Assessing Officer has merely inferred that assessee might have paid more consideration over and above what was stated in the document. It was merely on suspicious of Assessing Officer to make addition against the assessee. 22. The facts of the case law relied by ld CIT(A) in Ambalal Sarabhai Enterprises Vs K S Infraspace LLP and others (supra) is at variance to the facts of the present case and the same is not helpful to the revenue. In the said case, the parties have made massages and e- mails to each other and the plaintiff in the suit claimed that there was a concluded contracts of the parties for negotiation for suit land. However, in the present case, the assessee as well as the person from whose possession such writing was recovered explained that it was never acted upon, being not accepted by the assessee. 23. Thus, in view of the aforesaid factual and legal discussion, we do not find any justification of making addition of unaccounted investment under section 69 of Rs. 31,50,750/- at the hand of assessee. hence, we direct the assessing officer to delete the entire additions. In the result, ground No. 2 of the appeal is allowed. Considering the facts that we have allowed relief to the assessee, therefore, consideration and adjudication on other submissions of ld AR for the assessee and adjudication of other grounds of appeal have become academic. IT(SS)A No.16-18/SRT/2023 (A.Y 16-17) Shailesh S Shah, Jayshree S Shah & Parth S Shah 24 24. In the result, the appeal of the assessee is allowed. IT(SS)A No.17 & 18/SRT/2023) 25. As recorded earlier, the assessees in these two appeal have raised similar grounds of appeal as raised in IT (SS) 16/Srt/2023, which we have allowed. Therefore, following the principle of consistency, both assessees appeals are allowed with similar observation. Copy of this order be kept in the respective case file(s). Order pronounced in the open court on 27/10/2023. Sd/- Sd/- (Dr ARJUN LAL SAINI) (PAWAN SINGH) [लेखा सद᭭य/ACCOUNTANT MEMBER] [᭠याियक सद᭭य JUDICIAL MEMBER] Surat, Dated: 27/10/2023 Dkp. Out Sourcing Sr.P.S Copy to: 1. Appellant- 2. Respondent- 3. CIT 4. DR By order 5. Guard File True copy/ // True Copy // Sr.P.S./Assistant Registrar, ITAT, Surat
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