The Deputy Commissioner of Income Tax, Central Circle-2(4), Ahmedabad V. Shayona Land Corporation, Ahmedabad

ITSSA 240/AHD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7988 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-02-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 31-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SHARMA
• Assessee Lawyers: R B TANK
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Document seized; Reasonable cause; Documents seized; Set aside
• Section: 40A(3); 143(3); 153A; 201; 73; 13; 153; 69; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT ME MBER THE DEPUTY CIT, CENTRAL CIRCLE-2(4), AHMEDABAD (APPELLANT) VS SHAYONA LAND CORPORATION, 120, ASHISH NAGAR SOCIETY, MEGHNINAGAR, AHMEDABAD-380016 PAN:AAFFS7377H (RESPONDENT) REVENUE BY: SHRI O.P. SHARMA, CIT-D.R. ASSESSEE BY: SHRI R.B. TANK, A.R. DATE OF HEARING : 13-02-2020 DATE OF PRONOUNCEMENT : 19-08-2020 /ORDER PER BENCH:- THESE FOUR APPEALS FILED BY ASSESSEE FOR A.Y. 2011- 12 TO 2014-15, ARISE FROM ORDER OF THE CIT(A)-12, AHMEDABAD DATED 20-02-2017, IN PROCEEDINGS UNDER SECTION 143(3) R.W.S. 153 A OF TH E INCOME TAX ACT, 1961; IN SHORT 'THE ACT'. 2. ALL THESE FOUR APPEALS ARE FILED BY THE RE VENUE AGAINST THE ORDER OF ID. CIT(A)-12 AHMEDABAD. COMMON ISSUES ON SIMILAR FACTS ARE INVOLVED IN ALL THESE APPEALS FILED THEREFORE FOR THE SAKE OF CONVE NIENCE THESE APPEALS ARE IT(SS)A NOS. 240 TO 243/AHD/2017 ASSESSMENT YEAR 2011-12 TO 2014-15 I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 2 ADJUDICATED TOGETHER BY THIS COMMON ORDER BY TAKING THE FACTS OF ITA NO. 240/AHD/2017 AS LEAD CASE AND ITS FINDING WILL BE A PPLICABLE TO THE REMAINING THREE CASES IN APPEALS OF THE REVENUE. IT(SS)A NO. 240/AHD/20L7 3. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- '. ON THE FUELS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/ OR ON FADS IN NOT APPRECIATING THE PROVISIONS OF SECTION 153A OF THE I.T. ACT WHICH REQUIRES THE TOTAL INCOME TO BE BROUGHT UNDER TAX WITHOUT AN Y RESTRICTION. 2. ON THE FADS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND OR ON FACTS IN HOLDING THAT SUCH ASSESSMENT OR REASSESSMENT U/S 153A IS TO BE RESTRICTED ONLY TO THE INCRIMINATING MATERIALS FOUND DURING THE SEA RCH. 3. ON THE FUELS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING ADDITION ON ACCOUNT OF ON MONEY RECEIPT / UNRECORDED SALE CONSIDERATION OF RS.3,18,79,334/-. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND/OR ON FACTS IN DELETING ADDITION ON ACCOUNT OF UNACCOUNTED INVESTMENT U/S 69 OF THE C.I.T. ACT OF RS.3,45,01,388/-. 5. ON THE FADS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN LAW AND OR ON FADS IN DELETING THE DISALLOWANCE U/S 40A (3) OF THE I. T. ACT OF RS. 6,00,000/-. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 7. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE L D. CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. ' GROUNDS OF APPEAL NO. 1 TO 3:- 4. THESE GROUNDS OF APPEAL ARE BASED ON SIMILAR FA CTS AND ISSUE THEREFORE THESE THREE GROUNDS OF APPEAL ARE ADJUDICATED TOGET HER. THE FACT IN BRIEF IS THAT A SEARCH ACTION U/S. 132 OF THE INCOME TAX ACT WAS CARRIED OUT IN THE GROUP CASES OF SHAYONA GROUP ON 15 TH OCTOBER, 2013. THE ASSESSING OFFICER HAS ISSUED NOTICE U/S. 153A OF THE ACT ON 26 TH OCTOBER, 2014. IN RESPONSE, THE ASSESSEE HAS SUBMITTED VIDE LETTER DATED 17 TH NOV, 2014 THAT ITS ORIGINAL RETURN OF INCOME FILED ON 29 TH SEP, 2008 BE CONSIDERED AS FILED U/S. 153A OF THE ACT. DURING THE COURSE OF ASSESSMENT, THE ASSES SING OFFICER NOTICED THAT ASSESSEE AS DEVELOPER HAS DEVELOPED SHAYONA CITY AN D SHAYONA ESTATE. THE I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 3 ASSESSEE FIRM HAS COMPLETED 'SHAYONA TILK-2' AND IT S POSSESSION WAS HANDED OVER TO THE MEMBER DURING THE YEAR UNDER CON SIDERATION AS FOLLOWS:- SR. NO. NAME OF THE SCHEME TYPE NO. OF UNITS SALE CONSIDERATION 1 SHAYONATILAK - 2 BLOCK - A 16 2,56,39,000/- BLOCK - B 18 2,21,80,001/- TOTAL 34 4,78,19,001/- THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD ADOPTED THE SIMILAR MODUS OPERANDI OF NOT DISCLOSING ON MONEY RECEIPT O N SALE OF UNITS OF PROJECT SHAYONA TILAK-2 AS ADOPTED IN THE OTHER SCH EME OF THE GROUP. THE ASSESSEE WAS ASKED TO FURNISH THE COMPLETE BILL AND ALSO SHOW CAUSE AS TO WHY RS. 3,18,79,334/- SHOULD NOT BE TREATED AS ON-M ONEY BEING 40% OF RS. 100/- RECEIVED AS UNRECORDED SALE SIMILAR TO THE AA RYAMAAN SCHEME OF GAJANAND CORPORATION. THE ASSESSEE OBJECTED OBSERVA TION MADE BY THE ASSESSING OFFICER AND CONTENDED THAT NO INCRIMINATI NG MATERIAL/DOCUMENT RELATING TO THE AFORESAID OBSERVATION WAS FOUND DUR ING THE SEARCH AND SURVEY PROCEEDING AND NO DETAIL OF SUCH MATERIAL WAS PROVI DED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASS ESSEE AND STATED THAT A SMALL POCKET DIARY WAS FOUND FROM THE POSSESSION OF SRI SURESHBHAI R. PATEL DURING THE COURSE OF SEARCH PROCEEDINGS PERTAINING TO THE 'ARYAMAAN SCHEME OF GAJANAND CORPORATION' AND GAJANAND CORPOR ATION HAVE OWNED UP THIS DIARY AND DISCLOSED 'ON MONEY' WHICH THEY H AD VOLUNTARILY DISCLOSED I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 4 AND ADDITIONS WERE MADE FOR THE ASSESSMENT YEAR 201 2-13 AND 2013-14. THE ASSESSING OFFICER HAS FURTHER STATED IN THE SHAYONA GREEN SCHEME OF NARAYAN DEVELOPER VARIOUS LOOSE PAPERS AND DOCUMENTS WERE F OUND AND IMPOUNDED WHEREIN TRANSACTION OF ON MONEY RECEIVED IN CASH WA S REPORTED. DURING THE COURSE OF ASSESSMENT THE ASSESSEE WAS ASKED TO FURN ISH DETAIL OF THE PROJECTS- BLOCK WISE AND FLAT WISE IN RESPECT OF SHYONATILAK. THE ASSESSING OFFICER STATED THAT THERE WAS VARIATION IN THE RATES PER SQ . YD. IN FLATS OF THE SAME BLOCK SITUATED ON THE SAME FLOOR. THE ASSESSING OFF ICER WAS OF THE VIEW THAT SHRI SURESHBHAI PATEL ONE OF THE PARTNER OF THE FIR M IN RESPECT OF ARYAMAAN PROJECT HAS ADOPTED MODUS OPERANDI OF SALE FOR ALL PROJECTS LIKE AARYAMAAN OF GAJANAND CORPORATION, THEREFORE, AFTER TAKING IN TO CONSIDERATION THE MODUS OPERANDI ADOPTED IN THE CASE OF ARYAMANN PROJ ECT, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD RECEIVED ON MONE Y IN RESPECT OF FIXATION OF SALE PRICE OF 34 UNITS OF SHAYONA TILAK-2 DURING THE YEAR UNDER CONSIDERATION. THEREFORE, THE ASSESSING OFFICER STA TED THAT THE ASSESSEE FIRM WAS ALSO IN RECEIPT OF ON MONEY IN 60/40 RATIO ON T HE SALE OF ABOVE UNITS OF THE PROJECT SHAYONATILAK. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT ACTUAL SALE CONSIDERATION FROM THE SALE OF ABO VE UNITS OF SHAYONATILK WAS AT RS. 7,96,98,3557- AND THE ASSESSEE HAS OFFER ED SALE CONSIDERATION FOR RS. 4,78,19,0017- ONLY THEREFORE BALANCE AMOUNT OF RS. 3,18,79,3347- BEING 40% OF SALE WAS TREATED AS REMAINED TO BE TAXED. AC CORDING, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE ID. CIT(A). THE ID. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVANT PART OF THE DECISION OF ID. CIT(A) IS AS UNDER:- I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 5 '9. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT OR DERS, SUBMISSIONS FILED BY THE APPELLANT AS ALSO THROUGH THE REPORT SUBMITTED BY THE AO. HAVING DONE SO, AT THE OUTSET, I HAVE NO HESITATION IN UNCONDITIONALLY AND UNAMBIGUOUSLY OBSERVING THAT TH E ACTION OF THE LD. AO IN MAKING THE ON- MONEY ADDITION IN THE HANDS OF THE APPELLANT IS BAS ED ON ABSOLUTELY NO CREDIBLE EVIDENCE. AS SUCH, IN THE FACE OF THE APPELLANT'S SUBMISSION BEFORE TH E AO AS RECORDED BY HER ON PAGE NO. 7 OF THE ASSESSMENT ORDER, IT IS WHOLLY INCONCEIVABLE AS TO HOW AND WHY THE ASSESSING OFFICER COULD PROCEED TO MAKE THE ADDITION OF ON-MONEY RECEIPT IN THE HANDS OF THE APPELLANT. THE METHOD ADOPTED BY THE AO FOR ARRIVING AT THE ESTIMATE OF ' ON-MONEY RECEIPTS' IS EQUALLY UNUSUAL AND CURIOUS. THE AO BASELESSLY AND WITHOUT GIVING EVEN A SEMBLANCE OF WINDOW TO HER MIND, HAS ARBITRARILY COME TO A WHOLLY ILL-CONCEIVED CONCLUSI ON THAT THE RECORDED RECEIPTS REPRESENT 60% OF THE 'ACTUAL RECEIPTS' SO THAT THE ON-MONEY RECEIPT SHOULD AMOUNT TO 66.66% OF THE RECORDED RECEIPTS. EVEN IN THE REMAND REPORT, THE LD. AO HAS REITERATED HER REFERENCES IN THE IRRELEVANT SEIZED/IMPOUNDED DOCUMENTS, WHOLLY UNCONNECTED WITH THE APPELLANT, REFERRED LO BY HER IN THE ASSESSMENT ORDER, ON WHOLLY UNFOUNDED REASONING. I HAVE NOTED THAT THE AO HAS RELIED ONLY AND EXCLUSIVELY ON MATERIAL SEIZED IMPOUNDED FROM THIRD PARTY PREMISES WHILE REMAINING COMPLETELY UNMINDFUL OF THE FACT THAT THE FUNDAMENTAL DISCIPLI NE OF ASSESSMENT PROCEEDINGS U/S 153A, AND INDEED THE BASIC LAW OF EVIDENCE, REQUIRES THAT MAT ERIAL SEIZED ONLY FROM THE APPELLANT'S PREMISES CAN BE MADE THE FOUNDATION OF THE ADDITION. THE AO HAS, AS RIGHTLY SUBMITTED BY THE AR, ALSO REMAINED OBLIVIOUS TO THE FACT THAT THE FUNDAMENTAL PRINCIPLES OF AUIDI ALTERAM PARTEM MANDATES A QUASI-JUDICIAL AUTHORITY LIKE HER TO USE, IF AT ALL . THIRD PARTY EVIDENCES ONLY AFTER FIRST GRANTING T HE OPPORTUNITY OF REBUTTING THE CONTENTS/INFERENCES FR OM SUCH THIRD PARTY EVIDENCES. THE AO HAS A/SO ATTEMPTED TO PROVIDE AN APPARENT JUSTIFICATION LO H ER ACTION BY USING WORDS AND PHRASES LIKE 'THE GROUP IS INDULGED IN' OR 'THE DEPARTMENT HAS COLLEC TED ENOUGH EVIDENCES' OR 'THE FACTS AND MATERIALS GATHERED DURING THE SEARCH SPEAK LOUDLY A BOUT THE MODUS OPERANDS' OF THE GROUP IN COLLECTING ON-MONEY IN ALL THEIR PROJECTS ON 60:40 BASIS' WITHOUT REALIZING THAT THE CONCEPT OF 'GROUP' IS ALIEN LO INCOME-TAX ACT, OR TO GENERAL L AW OF EVIDENCE. THE 'MODUS OPERAND/' OF THE 'GROUP' AS CONCEIVED BY AO LO HAVE HEEN 'UNEARTHED' DURING THE SEARCH, IF AT ALL SO, WOULD ONLY BE A STARTING POINT OF FURTHER ENQUIRY AND INVESTIG ATION AGAINST THE APPELLANT BY THE AO AND CERTAINLY CANNOT BE AN 'EVIDENCE', MUCH LESS A CONC LUSIVE EVIDENCE, AGAINST THE APPELLANT. THERE IS NO MATERIAL GATHERED BY THE AO OR UNEARTHED DURI NG THE SEARCH WHICH CAN BE CONSIDERED ADVERSE LO OR AGAINST THE APPELLANT. 1 HAVE THEREFORE COME TO A CONSIDERED CONCLUSION TH AT THE ADDITIONS OF 'ON-MONEY RECEIPTS' MADE BY THE AO FOR ALL THE YEARS UNDER APPEAL ARE WHOLLY BASELESS AND UNSUPPORTED BY ANY CREDIBLE EVIDENCE A GAINST THE APPELLANT AND THEREFORE NOT SUSTAINABLE. MOREOVER, EVIDENCES THEMSELVES REFERRED TO BV THE A O IN THE ASSESSMENT ORDERS, ARE NOT ONLY IRRELEVANT AND THEREFORE UNUSABLE AGAINST THE APPELLANT, THEY, EVEN IF HELD TO BE CREDIBLE AGAINST I HE APPELLANT, ALSO CANNOT JUSTIFY OR VALI DATE THE ADDITION MADE BY THE AO ON PRESUMPTIONS AND SURMISES AT 66.66% OF RECORDED REC EIPTS FOR EACH VEAR THERE IS NO VALID OR MEANINGFUL EXPLANATION AS TO ON WHAT BASIS THE AO H AS HELD FIRSTLY THAI RECEIPT SHOWN IN THE BOOKS BY THE APPELLANT IS ONLY 60 % OF THE ACTUAL RECEIPT S. SIMILARLY, THERE IS NO LEGALLY SANCTIFIED OR FACTUALLY SUPPORTED BASIS WITH THE AO TO FURTHER HO LD THAT APPELLANT HAS EARNED SUCH UNACCOUNTED RECEIPTS FOR EACH OF THE YEARS UNDER APPEAL INCLUDI NG THOSE WHICH REMAINED UNABATED AS ON THE DATE OF THE SEARCH. THERE IS NO PRESUMPTION IN LAW THAT ALL 'GROUP MEMB ERS' ARE FOLLOWING 'MODUS OPERAND! OF ONE OF THE GROUP MEMBERS'. SIMIL ARLY, THERE IS NO PRESUMPTION IN LAW THAT AN ASSESSEE WOULD CONTINUE, FROM YEAR TO YEAR, TO E NGAGE IN AND EARN UNACCOUNTED INCOME EVEN IF CATEGORICAL EVIDENCES OF SUCH UNACCOUNTED EARNIN G BY THE VERY APPELLANT FOR ONE YEAR ARE ALSO IN AO'S POSSESSION. THE AO'S EXTRAPOLATION OF 'ADVERSE INFERENCE' FROM YEAR TO YEAR AGAINST THE APPELLANT ON THE BASIS OF DOCUMENTS SEIZED/IMPOUNDE D FROM WHOLLY UNRELATED THIRD PARTIES AND POSSIBLY (AND IF AT ALL) RELATABLE TO ONLY ONE OF T HE YEARS EVEN AGAINST SUCH THIRD PARTIES, BY OBSERVING THAT 'ALL THESE GO LO PROVE THAI THE DEPA RTMENT HAS GATHERED PLENTY OF EVIDENCES ON THE BASIS OF WHICH THIS CONCLUSION IS DRAWN' HAS NO LEG AL SANCTION. THUS, ADDITION HAS NO FOUNDATION EXCEPT IN SUSPICION AND SURMISE OF THE AO. SUSPICIO N, HOW-SO-EVER STRONG, CANNOT PARTAKE THE CHARACTER OF EVIDENCE, AND, THE AO IS INDEED OBLIGE D TO POSITIVELY BRIDGE THE GAP BETWEEN SUSPICION AND EVIDENCE. I DO NOT THINK FIRSTLY THAT THE SEIZED EVIDENCES RE FERRED TO BY THE AO SHOW ANYTHING BEYOND THE FACT THAT SOME ON MONEY IS POSS IBLY CHARGER BY GAJANAND CORPORATION IN I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 6 ARYAMAN SCHEME, AND BY NARAYAN DEVELOPERS IN SHAYON A GREEN SCHEME. THE THIRD DOCUMENT PRINTED BY THE AO IN THE ASSESSMENT ORDER IS MERELY PROJECTION THAT IN, SHAYONAPUSHP SCHEME OF POOJABUITDCON, THERE IS A RECEIPT/LIKELIHOOD OF 'EX TRA-RECEIPT' OF RS.4.08 CRORES AS AGAINST 'BOOK- RECEIPT' OF RS. 47.76 CRORES. THE AO HAS CONSPICUOU SLY NOT SHOWN AT ALL OR EVEN ARGUED AS TO WHY AND HOW SUCH 'EVIDENCES', EVEN IF POSSIBLY ACCEPTAB LE AGAINST THE APPELLANT FOR THE REARS UNDER REFERENCE, WOULD LEAD TO A CONCLUSION THAT 66.66% O F THE RECORDED AMOUNTS HAVE BEEN RECEIVED AS 'ON-MONEY' BY THE APPELLANT FOR THE RESPECTIVE ASSE SSMENT YEARS. THE AO HAS REFERRED TO 'WIDE VARIATION' IN THE SALE-PRICE OF FLATS AS IS EVIDENT FROM THE ANNEXURE TO THE ASSESSMENT ORDER. HOWEVER, THIS 'WIDE VARIATION' CANNOT PER SE AND IN LAW, IN THE ABSENCE OF CATEGORICAL EVIDENCE OF RECEIPT OF ON-MONEY BY THE APPELLANT, BE OF ANY MEANINGFUL IMPORT. MOREOVER, THE AO HAS NOT VALIDLY ALSO REJECTED (AND THERE DOES NOT ALSO APPE AR ANY BASIS OR REASON FOR THAT) THE BOOKS OF ACCOUNTS U/S 145 SO AS TO EVEN ENABLE HER IN ESTIMA TING THE INCOME OF THE APPELLANT U/S 144. THUS THE ADDITION OF 'ON-MONEY' RECEIPT FOR EACH YEAR IS PRESUMPTION AND CONJECTURAL AND IS BASED ON NO EVIDENCE. THE AO'S INSISTENCE IN THE REMAND REPORT THAT THE A DDITIONS IS MADE ON THE BASIS OF 'SEIZED/IMPOUNDED' MATERIAL IS ALSO WITHOUT ANY SUPPORTING DOCUMENT IN AS MUCH AS THERE IS INDEED NO DOCUMENT SEIZED FORM THE APPELLANT OR ELS EWHERE WHICH EVEN POINT TO UNACCOUNTED RECEIPT BY THE APPELLANT FOR ANY OF THE YEARS. I MAY CONCLUDE BY OBSERVING THAT THE ADDITION OF ON - MONEY RECEIPTS MADE BY THE AO FOR EACH YEAR IS CONS PICUOUSLY, PATENTLY AND EVIDENTLY FOUNDED ON 'NO EVIDENCE' AND IS THUS WHOLLY WITHOUT MERIT. THEREFORE I HAVE NO HESITATION IN DELETING THE SAME FOR EACH YEAR UNDER REFERENCE. BEFORE PARTING WITH THE ISSUE, I WOULD QUOTE FROM T HE FOLLOWING JURISDICTIONAL TRIBUNAL AND FROM DELHI HI GH COURT JUDGMENTS RELIED UPON BY THE AR, WHICH INSTRUCTIVELY ALSO REFER TO A SCRIESOJ OTHER AUTHORITIES AND LAY DOWN A PROPOSITION OJ LAW THAT WHILE THE AO IS NOT FETTERED BY THE STRICT RULES OF EVIDENCE, HE HAS, AT THE SAME TIME, NO AUTHORITY TO ACT WITHOUT ANY RELEVANT MATERIAL, AND FURTHER, THAT EVEN THE 'BEST JUDGMENT ASSESSMENT' CANNOT ALSO BE BASED ON MERE SUSPICION OR ON PURE GUESS WORK OF THE AO. AS NOTED IN THE DELHI HIGH COURT JUDGEMENT, THE RELIANCE ON 'NOTORIOUS PRACTICES IN THE INDUSTRY' OF CHARGING 'ON-MONEY' HAS ALSO BEEN DISAPPROVED BY TH E APEX COURT. (EMPHASIS MINE): DISCOVERY ESTATES (P.) LTD. {2013) 31 TAXMANN.COM I SO (DEL) '17. IT ONLY REMAINS FOR US TO REFER TO THE OBSERVA TIONS OF THE ASSESSING OFFICER TO THE EFFECT THAT NO ONE MAKES A LOSS IN REAL ESTATE BUSINESS AND THA T THE MARKET PERCEPTIONS INDICATE THAT THE PRICES OF THE IMMOVEABLE PROPERTIES ARE ALWAYS ON T HE UPWARD TREND. THESE OBSERVATIONS HAVE, INTER ALIA, FORMED THE BASIS OF THE ADDITIONS MADE, BY THE ASSESSING OFFICER. IT WAS EVEN SUGGESTED BEFORE US ON BEHALF OF THE REVENUE THAT I T IS A 'NOTORIOUS PRACTICE' PREVAILING IN REAL ESTATE CIRCLES THAT IN ALL PROPERTY TRANSACTIO NS THERE IS NONDISCLOSURE OF THE FULL CONSIDERATION. AS POINTED OUT EARLIER, THIS CANNOT PER SE CONSTITUTE THE BASIS OF THE ADDITION, THOUGH WE MUST HASTEN TO ADD THAT IT CAN VERY WELL BE A STARTING POINT FOR FURTHER INVESTIGATION. IN LALCHANDBHAGATAMBICA RAM V. CIT / I959/ 37ITR 288, THE SUPREME COURT DISAPPROVED THE PRACTICE OF MAKING ADDITIONS IN THE ASSESSMENT ON MERE SUSPICION AND .SURMISES OR BY TAKING NOTE OF THE 'NOTORIOUS PRACTICE' PREVAILING IN TRADE CIRCLES. 11 WAS OBSERVED AS UNDER: 'ADVERTING TO THE VARIOUS PROBABILITIES WHICH WEIGH ED WITH THE INCOME-TAX OFFICER WE MAY OBSERVE THAT THE NOTORIETY FOR SMUGG LING FOND GRAINS AND OTHER COMMODITIES TO BENGAL BY COUNTRY BOATS ACQUIRED BY SAHIBGNNJ AND THE NOTORIETY ACHIEVED BY DHULIAN AS A GREAT RECEIVING CENTRE FOR SUCH COMMODITIES WERE MERELY A BACKGROUND OF SUSPICION AND THE APPEL LANT COULD NOT BE TARRED WITH THE SAME BRUSH AS EVERY ARHATDAR AND GRAIN MER CHANT WHO MIGHT HAVE BEEN INDULGING IN SMUGGLING OPERATIONS, WITHOUT AN IOTA OF EVIDENCE IN THAT BEHALF.'' BUDHALAL& CO. /2O1I/1O TAXMANN.COM 52 (AHD.) 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. INDISPUTABLY, GP RATE IN THE YEAR UNDER CONSIDERATION DECLINED TO 24.92 PER CENT VIS-D-UFS28.13 PER CENT OF THE PRECEDING YEAR WHILE THE ID. CIT(A) CON CLUDED THAT THE ASSESSEE HAD LOGICALLY EXPLAINED WITH ELABORATE REASONS, THE FALL IN GP DU RING THE YEAR UNDER CONSIDERATION AND THE ASSESSING OFFICER DID RIOT POINT OUT ANY SPECIF IC DEFECTS IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE. WE FIND FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER DID NOT POINT OUT ANY DEFECTS IN THE HOOKS OF ACCOUNT WHILE IGNORING THE BOOK I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 7 RESULTS NOR BROUGHT ANY MATERIAL ON RECORD REGARDIN G THE GENUINENESS OF PURCHASES, SALES OR EXPENDITURE INCURRED BY THE ASSESSEE BEFORE DISC ARDING THE BOOK RESULTS HON'BLEGAUHAII HIGH COURT IN ALUMINIUM INDUSTRIES ( P.) LTD. V. CIT (1995] 80 TAXMAN 184 OBSERVED THAT A LOWER RATE OF GROSS PROFIT DECL ARED BY THE ASSESSEE AS COMPARED TO THE PREVIOUS YEAR, WOULD NOT IN- ITSELF BE SUFFICIE NT TO JUSTIFY ANY ADDITION. THE MERE FACT THAT THE PERCENTAGE OF LOSS OR GROSS PROFIT IS HIGH OR LOW I N A PARTICULAR YEAR DOES NOT NECESSARILY LEAD TO INFERENCE THAT THERE HAS BEEN SUPPRESSION. LOW PROFIT IS NEITHER A CIRCUMSTANCE NOR MATERIAL TO JUSTIFY ADDITION OF PROFITS. THE RATIO OF THE JUDGMENTS IN DHAKESWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 7 75 (SO; RAGHUBARMANDALHARIHARMANDALV. STATE OFBIHAR [195'] 8 STC 770 (SO: STATE OF KERALAV. C. VETUKUTTY [19661 60 ITR 239 (SO; STATE OF ORISSAV. MAHARAJA SHR/B.P. SINGH DEO [197Q] 76 ITR 690 (SC); BRIJBHUSANLALPARDIMIAN KUMAR \: CIT [197$; 7/5 // 524 (SC): CHOUTHMALAGANVALLAV. CIT [1962] 46 ITR 262 (A SSAM): R.V.S. & SONS DAIRY FARMV. CIT[20O2} 257 ITR 764/[2003] 130 TAXMAN 615 I MAD.): INTERNATIONAL FOREST CO. V. CIT [1975! 101 ITR 721 (J. & K.): M. DURAI R AJ R. CIT [1V2] 83 ITR 484 (KER); RAMCHANDRARAMNIVAS V. STATE OF ORISSA [1970] 25 STC 501 (ORISSA): ACTION ELECTRICALS V. DY. CIT [2002] 258 ITR 188/[2003] 132 TAXMAN 640 73 TAXMAN 229 (CAN.) INDICATE THAT THE ASSESSING OFFICER IS NOT FETTERED BY ANY TECHNICAL RULES OF EVIDENCE AND PLEADINGS, AND HE IS ENTITLED TO ACT ON MATERIAL WHICH ARE NOT ACCEPT ABLE IN EVIDENCE IN A COURT OF LAW, BUT WHILE MAKING THE ASSESSMENT UNDER THE PRINCIPLES OF BEST JUDGMENT, THE INCOME-T AX OFFICER IS NOT ENTITLED TO MAKE A PURE GUESS WITHOUT REFERENCE TO ANY EVIDE NCE OR MATERIAL. THERE MUST BE SOMETHING MORE THAN A MERE SUSPICION TO SUPPORT THE ASSESSMENT. LOW PROFIT IN A PARTICULAR YEAR IN ITSE LF CANNOT HE A GROUND FOR INVOKING THE POWERS OF BEST JUDGMENT ASSESSMENT WITHOUT SUPPORT OF ANY MATERIAL ON RECORD. THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT V. AM IIBHAIGUNAVANTBHAI [1981] 129 ITR 373 HELD THAT IF THERE WAS NO CHALLENGE LO THE TRAN SACTIONS REPRESENTED IN THE BRINKS THEN IT IS NOT OPEN TO REVENUE TO CONTEND THAT WHAT IS S HOWN BY THE ENTRIES IS NOT THE REAL STATE OF AFFAIRS. SECONDLY, EVEN IF FOR SOME REASON, THE BOOKS ARE REJECTED IT IS NOT OPEN TO THE ASSESSING OFFICER TO MAKE ANY ADDITION ON ESTIMATE BASIS OR ON PURE GUESS WORK. THE ASSESSING OFFICER, WITHOUT RECORDING ANY FINDING TH AT THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE WERE INCORRECT, RENDERING IT IMPOSSIBL E LO DEDUCE THE PROFITS, PROCEEDED TO REJECT THE BOOK RESULTS, INVOKING, THE PROVISIONS O F SECTION 145 OF THE ACT. NO SPECIFIC DISCREPANCIES OR DEFECTS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE HAVE BEEN POINTED OUT BEFORE US NOR WAS ANY MATERIAL BROUGHT LO OUR NOTIC E TO ESTABLISH TLINLPNRRBH.SR.S WERE INFLATED OR RECEIPTS SUPPRESSED. IN THESE CIRCUMSTA NCES, THERE WAS NO JUSTIFICATION IN INVOKING THE PROVISIONS OF SECTION 145 OF THE ACT [ CIT V. VIKRAM PLASTICS [1999] 239 ITR 161 (GUJ.). SINCE THE ASSESSING OFFICER HAD NOT REC ORDED ANY FINDINGS FOR REJECTING THE BOOK RESULTS AND APPLYING THE GROSS PROFIT RATE OF 26 PERCENT IN THE YEAR UNDER CONSIDERATION, WE ARC OF THE OPINION THAT THE ID. C IT(A) WAS JUSTIFIED IN DELETING THE ADDITION. EVEN THE REVENUE HAVE NOT PLACED BEFORE U S ANY MATERIAL CON/ROVER/ING THE AFORESAID FINDINGS OF FACTS RECORDED />R THE ID CIT LA). IF THERE WAS NO CHALLENGE TO THE TRANSACTIONS REPRESENTED IN THE BOOKS, THEN IT IS N OT OPEN TO REVENUE TO CONTEND THAT WHAT IS SHOWN BY THE ENTRIES IS NOT THE REAL STALE OF AF FAIRS. IN THE LIGHT OF THESE OBSERVATIONS OF THE HON'BLEJURISDICLIONAL HIGH COURT, WE UPHOLD THE FINDINGS OF THE ID. CIT(A). CONSEQUENTLY, GROUNDS NO. I AND 2 ARE DISMISSED. 10. THUS, THE FOLLOWING ADDITIONS .OF ON-MONEY RECEIPTS ARE D ELETED. GROUND 5 (OR EQUIVALENT) IS ALLOWED FOR ALL THE FOUR APPEALS: A.Y. AMOUNT OF RELIEF (RS.) 2011-12 3,38,79.344 2012-13 6,15,13,181 I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 8 2013-14 4,67,05,284 2014-15 3,44,70,103 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US, THE ID. D.R. HAS CONTENDED THAT SEARCH ACTION U/S. 132 OF THE ACT WA S CARRIED OUT IN THE GROUP CASES OF SHAYONA GROUP ON 15 TH OCTOBER, 2013. THE MAIN PROJECT DEVELOPED BY THE ASSESSEE DURING THE YEAR WERE SHAYONA ESTATE AND SHAYONA CITY. THE ID. D.R. HAS SUBMITTED MODUS OPERANDI IN RESPECT OF FIXATION OF SALE PRICE AS WELL AS FOR ON SALE CONSIDERATION WAS SIMILAR FOR E NTIRE SHAYONA GROUP AS WELL AS CONNECTED GROUP TO THE ASSESSEE, THEREFORE, THE ASSESSEE FIRM WAS ALSO IN RECEIPT OF ON MONEY IN 60/40 RATIO AND ID. CIT(A ) HAS INCORRECTLY DELETED THE ADDITION. ON THE OTHER HAND, ID. AUTHORIZED REP RESENTATIVE HAS SUPPORTED THE ORDER OF ID. C1T(A) AND REFERRED THE VARIOUS PA RAS OF FINDING GIVEN BY THE ID. CIT(A) AND SUBMITTED THAT THE ISSUE IN THE APPEAL OF THE ASSESSEE IS FULLY COVERED BY THE DECISION OF HON'BLE JURISDICTI ONAL HIGH COURT IN THE CASE OF SAUMYA CONSTRUCTION 387 ITR 529(GUJ). THE I D. COUNSEL HAS ALSO REFERRED PAGE NO. 6 OF THE CIT(A) ORDER AND STATED THAT ID. CIT(A) DURING THE COURSE OF APPELLATE PROCEEDINGS HAS CLEARLY COMMUNI CATED TO THE RANGE HEAD VIDE LETTER DATED 1 ST DECEMBER, 2016 THAT NO INCRIMINATING MATERIAL WAS SEIZED IN THE UNABATED ASSESSMENT FRAMED U/S. 153A OF THE ACT AND STATED THAT ASSESSING OFFICER MAY BE DIRECTED TO REPORT TH E PARTICULAR SPECIFIC SEIZED DOCUMENT AND HOW THESE DOCUMENTS WERE INCRIMINATING IN NATURE. ON RECEIPT OF THE REPLY OF THE ASSESSING OFFICER, THE ID. CIT(A) HAS CLEARLY STATED AT PAGE NO. 7 OF THE APPELLATE ORDER THAT THE ASSES SING OFFICER HAS RELIED EXCLUSIVELY ONLY ON MATERIAL SEIZED/IMPOUNDED FROM THIRD PARTY PREMISES I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 9 WITHOUT CONSIDERING THAT FOR ASSESSMENT PROCEEDINGS U/S. 153A ONLY THE SEIZED MATERIAL FOUND FROM THE PREMISES OF THE ASSE SSEE CAN BE MADE THE FOUNDATION OF THE ADDITION. THE ID. COUNSEL HAS REF ERRED THE FINDING OF ID. CIT(A) THAT THERE IS NO PRESUMPTION IN LAW THAT ALL GROUP MEMBERS ARE FOLLOWING MODUS OPERANDI OF ONE OF THE GROUP MEMBER S. SIMILARLY THERE IS NO PRESUMPTION IN LAW THAT ASSESSEE WOULD CONTINUE FROM YEAR TO YEAR TO ENGAGE IN AND EARN UNACCOUNTED INCOME EVEN IF CATEG ORICAL EVIDENCE OF SUCH UNACCOUNTED EARNING BY THE VERY ASSESSEE FOR ONE YE AR ARE ALSO IN ASSESSING OFFICER'S POSSESSION. THE ID. COUNSEL HAS STATED TH AT THE ADDITION OF ON MONEY RECEIPT MADE BY THE ASSESSING OFFICER WAS NOT BASED ON EVIDENCES, THEREFORE, THE WHOLE ADDITION WAS MADE WITHOUT ANY MERIT. 7. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MA TERIAL ON RECORD. THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEVELOPMENT AND CONSTRUCTION. THERE WAS A SEARCH ACTION U/S. 132 OF THE ACT CARRI ED OUT ON 15 L OCTOBER, 2013 IN THE CASE OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS WORKED AS DEVELOPER FOR SHAYONA CITY AND SHAYONA ESTATE. THE ASSESSING OFFICER STAT ED THAT IN THE GROUP CASES OF OTHER PROJECT PERTAINING TO ARYAMAAN SCHEME OF G AJANAND CORPORATION THERE WAS ON MONEY RECEIPT WHICH WAS VOLUNTARILY DI SCLOSED AND ADDITIONS WERE MADE FOR ASSESSMENT YEAR 2012-13 AND 2013-14. IN SHORT THERE WAS A 60/40 RATIO OF ACTUAL SALE RECEIPT MEANING THAT RS. 60 OUT OF 100 WAS BOOKED IN THE BOOKS OF ACCOUNT AND OFFERED FOR TAX BALANCE 40 WAS BEING TAKEN EITHER IN CASH OR IN ANY KIND IN THE FORM OF ON MONEY. ON THE BASIS OF INCRIMINATING DOCUMENT SEIZED IN THE CASE OF THE GROUP CASES THE ASSESSING OFFICER WAS OF THE VIEW THAT ENTIRE SHAYONA GROUP AS WELL AS CONNE CTED GROUP TO THE I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 10 ASSESSEE FIRM WAS INDULGED IN RECEIPT OF ON MONEY I N 60/40. THEREFORE, THE ASSESSING OFFICER HAS COMPUTED RS. 3,18,79,334/- BE ING ON MONEY RECEIVED IN CASH AND ADDED TO THE TOTAL INCOME OF THE ASSESS EE. THE ASSESSEE CHALLENGED THE IMPUGNED ADDITION BEFORE THE ID. CIT (A) THAT ASSESSING OFFICER HAS MADE SAID ADDITION IN THE ABSENCE OF IN CRIMINATING DOCUMENT SEIZED FROM THE ASSESSEE. THE ID. CIT(A) HAS CATEGO RICALLY STATED REGARDING DIARY SEIZED FROM SURESHBHAI R. PATEL AND THE ASSES SING OFFICER HAS HERSELF STATED THAT RECORDING IN THE DIARY WAS PERTAINED TO RECEIPT FROM SALE OF FLATS PERTAINING TO ARYAMAAN SCHEME OF GAJANAND CORPORATI ON. OBVIOUSLY THESE DOCUMENTS DID NOT BELONG TO THE ASSESSEE FIRM. THE OTHER DOCUMENT WHICH WAS REFERRED BY THE ASSESSING OFFICER WAS PERTAINED TO M/S. NARAYAN DEVELOPER NOT SEIZED FROM THE ASSESSEE. ON THE BASI S OF OTHER GROUP CASES, THE ASSESSING OFFICER HAS STATED THAT MODUS OPERAND ! OF THE ASSESSEE WAS ALSO THE SAME THAT THE SALE CONSIDERATION WAS RECORDED A T RS. 60 AS AGAINST THE ACTUAL SALE RECEIPT OF RS. 100/-. IN ORDER TO GET C LARIFICATION ABOUT INCRIMINATING DOCUMENT SEIZED FROM THE ASSESSEE THE ID. CIT(A) HAS ALSO PROVIDED OPPORTUNITY TO THE RANGE HEAD TO DIRECT TH E ASSESSING OFFICER TO FURNISH SPECIFIC REPORT ON THE ISSUE. HOWEVER, THE ASSESSING OFFICER HAS REFERRED SEIZED DOCUMENT FOUND FROM THE POSSESSION OF SURESH R. PATEL PARTNER PERTAINING TO ARYAMAAN SCHEME OF GAJANAND C ORPORATION AND STATED THAT THE SAME MODUS OPERANDI WAS APPLIED TO THE ENT IRE GROUP. THEREFORE, THE ID. CIT(A) HELD THAT THE ASSESSING OFFICER HAS RELI ED ONLY AND EXCLUSIVELY ON MATERIAL SEIZED IMPOUNDED FROM THIRD PARTY PREMISES PERTAINING TO THE OTHER CASES FOR COMPLETING THE ASSESSMENT PROCEEDINGS U/S . 153 A OF THE ACT IN THE CASE OF THE ASSESSEE AND THE ASSESSING OFFICER COUL D NOT DEMONSTRATE THAT ANY INCRIMINATING MATERIAL WAS SEIZED FROM THE ASSESSEE DURING THE COURSE OF I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 11 SEARCH TO SUBSTANTIATE THAT ASSESSEE HAD COLLECTED ON MONEY ON THE SALE OF UNIT OF PROJECT NAMELY SHAYONA TILAK-2 ON 60/40 BA SIS. IN THE LIGHT OF THE ABOVE FACTS AND FINDING OF ID. CIT(A), WE DO NOT FI ND ANY INFIRMITY IN THE DECISION OF ID. CIT(A) AFTER PLACING RELIANCE ON TH E DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SAUMYA CON STRUCTION 387 1TR 529 (GUJ) WHEREIN IT IS HELD THAT IF IN RELATION TO ANY ASSESSMENT YEAR NO INCRIMINATING MATERIAL IS FOUND NO ADDITION OR DISA LLOWANCE CAN BE MADE IN RELATION TO THAT ASSESSMENT YEAR IN EXERCISE OF POW ER U/S. 153A OF THE ACT. THEREFORE, THESE THREE GROUNDS OF APPEAL OF THE REV ENUE ARE DISMISSED. GROUND NO. 4 (UNACCOUNTED INVESTMENT U/S. 69 OF RS. 3,45,0 1, 388/-) 8. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER HAS NOTICED THAT A SURVEY ACTION U/S. 1 33 A WAS CONDUCTED ON S HOP NO. 22/23 SHAYONA COMPLEX, AHMEDABAD AND VARIOUS DOCUMENTS PERTAINING TO LAND TRANSACTION WERE FOUND AND IMPOUNDED. AS PER THE BANAKHAT THERE WAS NOTING OF SALE CONSIDERATION OF RS. 4,57,41,388/- BETWEEN SHRI RAM ESH NAGJIBHAI DESAI (SELLER) AND SHRI SURESH KR. RANCHHODBHAI PATEL. HO WEVER, THE FINAL SALE DEED WAS EXECUTED FOR RS. 1,12,40,000/- IN FAVOUR O F THE ASSESSEE FIRM. THIS ISSUE WAS CONFRONTED WHILE RECORDING A STATEMENT OF SHRI SURESH RANCHHODBHAI PATEL ON I0 LH DECEMBER, 2013 AND HE HAS EXPLAINED THAT SAID BANAKHAT WAS CANCELLED. THE ASSESSING OFFICER HAS N OT AGREED WITH THE AFORESAID EXPLANATION. THE A.O. WAS OF THE VIEW THA T ACTUAL SALE CONSIDERATION OF LAND CANNOT BE LESS THAN RS. 4.57 CRORES AS MENTIONED IN THE BANAKHAT AS AGAINST THE SALE CONSIDERATION REPORTED IN THE SALE DEED RS. 1.12 CRORES. THEREFORE, THE ASSESSING OFFICER WAS OF THE VIEW THAT DIFFERENCE IN THE TWO DOCUMENTS TO THE AMOUNT OF RS. 3,45,01,388/- W AS PAID BY THE ASSESSEEE I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 12 FIRM IN CASH TO THE SELLER OF THE LAND. THEREFORE, AN AMOUNT OF RS. 3,45,01,388/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9. AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE ID. CIT(A). THE ID. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVAN T PART OF THE DECISION OF ID. CIT(A) IS AS UNDER:- '12. I HAVE PERUSED THE RELEVANT MATERIAL ON RECORD . I HAVE ALSO GONE THROUGH THE IMPOUNDED DOCUMENT A-L PAGE 72-79 AVAILABLE ON PAGE NO.39-45 OF THE PAPER BOOK. MY PERUSAL OF THE DOCUMENT HAS INDICATED THAT THE LD. AR IS ABSOLUTEL Y RIGHT THAT THERE IS NO MENTION OR REFERENCE OF THE APPELLANT IN THE SAID DOCUMENT AND THEREFORE, T HE LD. AR IS ALSO RIGHT THAT THE DOCUMENT HAS NO EXPRESS OR IMPLIED RELEVANCE OR INCRIMINALITY VIS-A -VIS THE APPELLANT. MOREOVER, AND IN ANY CASE, THE LD. AR HAS UNDERTAKEN ON BEHALF OF SHRI SURESHB HAI PATEL THAT THE DOCUMENT IS EXECUTED BY, RELEVANT TO, AND SHALL BE DULY EXPLAINED IN THE CAS E OF SHRI SURESHBHAI PATEL IN WHOSE CASE ALSO THE APPELLATE PROCEEDINGS ARE ALSO UNDER WAY. IN ANY CA SE, I AM OTHERWISE ALSO COMPLETELY AL A LOSS IN DIGESTING THE INSISTENCE OF THE AO IN DRAWING AN AD VERSE INFERENCE AGAINST THE APPELLANT ON THE BASIS OF A DOCUMENT IMPOUNDED FROM A THIRD PARRY TO WHICH THE APPELLANT IS A 'COMPLETE STRANGER' FROM ALL ANGLES, AND IN BRINGING THE AMOUNT OF 'UNA CCOUNTED INVESTMENT' TO TAX IN APPELLANT'S HANDS. I ALSO DO NOT APPRECIATE, AS RIGHTLY SUBMITT ED BY THE AR, THAT WHEN THE PRIMA FACIE CASH UNACCOUNTED PAYMENT RECORDED IN THE DOCUMENT IS ONL Y RS. 1.8 CRORE, HOW THE AO HAS CONSIDERED THE HIGHER ADDITION OF RS. 3,45,01, ,388/- WITHOUT BRINGING IN ANY FURTHER EVIDENCE AND WITHOUT ANY APPLICATION OF MIND TO THE FACTS ON RECORD. BE THAT AS IT MAY, I HAVE COME TO A CONSIDERED CONCLUSION THAT IF AT ALL ANY AMOUNT IS REQUIRED TO BE BROUGHT TO TAX, AND CAN BE BROUGHT TO TAX IN LAW, THE RIGHT ACCOUNTABLE HANDS ARE THOSE OF TH E EXECUTOR OF THE DOCUMENT OR THE PARTY FROM WHOM THE DOCUMENT IS IMPOUNDED/SEIZED, AND CERTAINL Y NOT A PARTY WHOLLY AND COMPLETELY A STRANGER TO THE DOCUMENT. THUS, I HAVE NO HESITATION IN HOLDING THAT THERE IS NO MERIT IN THE ADDITION AS MADE BY THE A O AND IN ANY CASE THE IMP ORT OF SEIZED/IMPOUNDED MATERIAL HAS TO BE CONSIDERED IN THE CASE OF SHRI SURESHBHAI PATEL WHO IS NOT ONLY THE SIGNATORY TO THE SAID DOCUMENT BUT WHO HAS ALSO UNDERTAKEN TO BE FULLY LIABLE FOR TAX LIABILITY, IF ANY IN LAW, ARISING ON ACCOUNT OF THE SAID DOCUMENT WITHOUT TAKING A PLEA THAT THE TR ANSACTION PERTAINS TO THE APPELLANT FIRM. THUS, THE ADDITION OF RS,3,45,01,388/- IS DELETED. GROUND 6 SUCCEEDS. ' 10. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFO RE US. THE ID. DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT ASSE SSING OFFICER HAS CORRECTLY MADE THE PROTECTIVE ADDITION IN THE CASE OF THE FIRM SINCE THE PAYMENTS HAVE BEEN MADE BY THE PARTNERS. ON THE OTH ER HAND, ID. AUTHORIZED REPRESENTATIVE HAS REFERRED THE FINDING OF ID. CIT( A) AS PER PAGE NO. 10 TO 12 OF THE CIT(A) ORDER AND STATED THAT ID. CIT(A) HAS CORRECTLY HELD THAT NO ADDITION CAN BE MADE IN THE CASE OF THE FIRM AS THE SAID DOCUMENT 'BANAKHAT' I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 13 WAS PERTAINED TO THE PARTNER, SHRI. SURESH R. PATEL AND NOT EXECUTED BY THE PARTNERSHIP FIRM AND THE SAME WAS NOT CONNECTED TO THE ASSESSEE FIRM. 11. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE M ATERIAL ON RECORD. DURING THE COURSE OF SURVEY U/S. 133 A CARRIED OUT ALONG WITH ACTION U/S. 132 OF THE ACT A DOCUMENT AS BANAKHAT BETWEEN A SELLER SHRI R. N. DESAI AND PURCHASER SHRI SURESH R. PATEL WAS IMPOUNDED FROM T HE SHOP NO. 22/23 OF SHAYONA COMPLEX. IT IS STATED THAT IN THE BANAKHAT THAT AN AMOUNT OF RS. 1.8 CRORES IN CASH HAS BEEN PAID BY SHRI SURESH PATEL T O SHRI R.N. DESAI AT THE TIME OF EXECUTION OF THE SAID BANAKHAT. AS PER THE BANAKHAT THE TOTAL CONSIDERATION OF THE LAND WAS AT RS. 4,57,41,388/-. THEREFORE, THE ASSESSING OFFICER HAS ADDED THE DIFFERENTIAL AMOUNT OF RS. 3, 45,01,388/- IN THE CASE OF ASSESSEE FIRM ON PROTECTIVE BASIS U/S. 69 OF THE AC T. IN THE LIGHT OF THE ABOVE FACTS AND FINDING OF ID. CIT(A) IT IS UNDISPUTED FA CT THAT THE SAID DOCUMENT WAS BELONGED TO SHRISURESHBHAI PATEL WHICH HE HAD E XECUTED IN INDIVIDUAL CAPACITY. THERE WAS NO MENTION OF MAKING OF ANY PAY MENT BY THE ASSESSEE FIRM. THEREFORE, WE CONSIDER THAT ID. CIT(A) HAS CO RRECTLY DELETED THIS PROTECTIVE ADDITION HOLDING THAT ASSESSEE FIRM WAS NOT A PARTY AND COMPLETELY STRANGER TO THE DOCUMENT. THEREFORE, THIS GROUND OF APPEAL OF THE REVENUE IS ALSO DISMISSED. GROUND NO. 5 (DISALLOWANCE U/S. 40A(3) OF THE ACT O F RS. 6 LACS 12. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS MADE CASH PAYMENT OF RS. 6 LACS TOWARD S PURCHASE OF LAND AT R.S. NO.210/2 VIDE ORDER SHEET ENTRY DATED 19 TH FEB, 2016. THE ASSESSING OFFICER STATED THAT THE PURCHASED LAND WAS PART OF THE STOCK IN TRADE AND I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 14 ASSESSEE HAS FAILED TO FURNISH REASONABLE CAUSE FOR PAYMENT MADE IN CASH. THEREFORE AN AMOUNT OF RS. 6 LACS WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE AFTER INVOKING THE PROVISION OF SECTION 40A(3) OF T HE ACT R.W.R. 8DD OF THE IT RULE. 13. THE ASSESSEE HAS PREFERRED APPEAL BEFORE THE ID . CIT(A). THE ID. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE. THE RELEVAN T PART OF THE DECISION OF ID. CIT(A) IS AS UNDER:- '13. THE NEXT ADDITION FOR A. Y. 2OI1-12 IS OF RS. 6,OO,OOO/-MADE BY THE AO U/S 40A(3) FUR PAYMENT IN CASH TO LANDOWNERS FOR PURCHASE OF LAND AT SURVEY NUMBER 210/2. IN RESPONSE TO SHOW- CAUSE NOTICE, THE APPELLANT SUBMITTED TO THE AO THA T THE PAYMENT TO AGRICULTURISTS IS SAVED BY RULE 6DD. THE AO OBSERVES THAT THE APPELLANT DID NOT DIS CHARGE THE ONUS OF SHOWING HOW RULE 6DD APPLIES, AND FURTHER, 2 LAND PURCHASED IS STOCK-IN- TRADE OF THE APPELLANT' AND IS THEREFORE HIT BY S. 40A(3) AND THUS SHE MAKES ADDITION. THE LD. AR BROU GHT MY ATTENTION TO THE FACT THAT THE AMOUNT OF WHOLE OF THE PURCHASE PRICE FOR THE LAND AT SURV EY NUMBER 210/2 HAS BEEN SHOWN IN THE BALANCE-SHEET UNDER THE HEAD 'DEPOSITS AND ADVANCES ', THE AMOUNT HAS NOT BEEN DEBITED TO THE P & L ACCOUNT AND THEREFORE, THE AO IS WRONG IN OBSER VING THAT THE LAND IN QUESTION IS 'STOCK-IN- TRADE'. THE LD AR ALSO DREW MY ATTENTION TO PAGE 13 (BALANCE SHEET) AND PAGE 60-61 (LAND ACCOUNT) OF PB TO HIGHLIGHT THAT THE AMOUNT OF PAYM ENT HAS NOT BEEN DEBITED TO P&L ACCOUNT TO BE VALIDLY HIT BY PROVISIONS OF S~. 40A(3). ALTERNATIV ELY, THE AR SUBMITTED THAT THE PAYMENTS ARE TO AGRICULTURISTS INSISTING FOR CASH-PAYMENT AND HENCE THE TRANSACTION IS SAVED BY RULE 6DD. AFTER CONSIDERING THE MATERIAL ON RECORD, I FIRST OBSERVE THAT THE ADDITION IS BASED ON NO SEIZED MATERIAL BUT IS BASED ENTIRELY AND EVIDENTLY ON THE ACCOUNTS WHICH STOOD FILED BEFORE THE DATE OF THE SEARCH. SECOND, THE AO IS WRONG IN HER CONCLUSION THAT THE 'LAND IS STOCK IN TRADE', AND THE AR IS RIGHT THAT THE AMOUNT OF PAYMENT HAS NOT BEEN DE BITED TO THE P&L ACCOUNT BUT IS STANDING AS ADVANCE AGAINST LAND AS PER SCHEDULE 6 TO BALANCE-S HEET AS ON 31/3/2013 AT RS. 1,82,56,45(L/-. SECTION 40A(3) ENABLES DISALLOWANCE FROM THE EXPENS ES CLAIMED, AND THUS HAS NO APPLICABILITY TO 'ADVANCES TOWARDS LAND NOT DEBITED TO P&L ACCOUNT'. ADDITION OF RS. 6,00,000/- BEING WITHOUT MERIT IS DELETED. GROUND 7 SUCCEEDS. ' 14. WE HAVE CONSIDERED RIVAL CONTENTION ON THIS IS SUE AND PERUSED THE MATERIAL ON RECORD. IN THE LIGHT OF THE FACTS ELABO RATED BY THE ID. CIT(A) IN HIS FINDING THE WHOLE OF THE PURCHASE PRICE FOR THE LAN D AT SERIAL NO. 210/2 HAS BEEN SHOWN IN THE BALANCE SHEET UNDER THE HEAD DEPOSITS AND ADVANCES AND THE AMOUNT HAS NOT BEEN DEBITED TO THE P & L ACCOUNT. T HEREFORE, THE PROVISION OF SECTION 40A(3) HAS BEEN WRONGLY APPLIED BY THE ASSE SSING OFFICER. CONSIDERING THE ABOVE FACTS THAT LAND WAS NOT STOCK IN TRADE AS THE SAME WAS SHOWN IN THE I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 15 BALANCE SHEET THEREFORE WE DO NOT FIND ANY INFIRMIT Y IN THE DECISION OF ID. CIT(A). THEREFORE THIS GROUND OF APPEAL OF THE REVE NUE IS DISMISSED. IT(SS)A NO. 241 /AHD/2017 GROUND NO. 1 TO 3 IT(SS)A NO. 242/AHD/2017 GROUND NO. 1 TO 3 IT(SS)A NO. 243/AHD/2017 GROUND NO. 1 TO 3 15. THESE THREE DIFFERENT GROUNDS OF APPEAL FOR AS SESSMENT YEAR 2012-13 TO 2014-15 FILED AGAINST THE DECISION OF ID. CIT(A) IN ALLOWING THE CLAIM OF ASSESSEE THAT NO INCRIMINATING MATERIEL WAS FOUND D URING THE COURSE OF SEARCH. IN VIEW OF THE DETAILED REASONS AND FINDINGS GIVEN ON THE SIMILAR ISSUE IN GROUNDS NO. 1 TO 3 VIDE IT(SS)A NO. 240/AHD/2017 AS DISCUSSED SUPRA IN THIS ORDER WE DO NOT FIND ANY INFIRMITY IN THE DECI SION OF THE ID. CIT(A), THEREFORE, THESE DIFFERENT GROUNDS OF APPEAL FOR AS SESSMENT YEAR 2012-13 TO 2014-15 OF THE REVENUE ARE DISMISSED. ITA NO. 242/AHD/2017 GROUND NO. 4 DISALLOWANCE U/S. 40A(3) OF RS. 56 LAC S FOR A.Y. 2013-14 16. 16. DURING THE COURSE OF ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS MADE CASH PAYMENT OF RS. 56 LACS TOWAR DS PURCHASE OF LAND AT R. S NO. 413/1 GOTA. ON QUERY, THE ASSESSEE EXPLAIN ED THAT SELLER WAS THE FARMER WHO HAD DEMANDED THE PAYMENT IN CASH INSTEAD OF CHEQUE THEREFORE QUESTION OF DISALLOWANCE U/S. 40A(3) DID NOT ARISE. THE ASSESSING OFFICER HAS NOT ACCEPTED THE ASSESSEE'S EXPLANATION AND DISALLO WED THE AMOUNT STATING I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 16 THAT ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE TO JUSTIFY THAT RULE 6DD IS APPLICABLE TO HIS CASE. 17. AGGRIEVED ASSESSEE HAS FILED APPEAL BEFORE THE ID. CIT(A). THE ID. CIT(A) HAS ALLOWED THE APPEAL OF THE ASSESSEE STATI NG THAT ON VERIFICATION OF THE ANNUAL ACCOUNTS OF THE ASSESSEE, IT IS REVEALED THAT THE AMOUNT HAS NOT BEEN DEBITED TO P & L ACCOUNT, THEREFORE, THE SAME CANNOT BE DISALLOWED U/S. 40A(3)OF THE ACT. 18. WE HAVE HEARD THE RIVAL CONTENTION ON THIS ISS UE AND PERUSED THE MATERIAL ON RECORD. THE REVENUE COULD NOT DISPROVE THE UNDISPUTED FACT REPORTED BY THE ID. CIT(A) THAT THE AFORESAID AMOUN T HAS NOT BEEN DEBITED TO P & L ACCOUNT, THEREFORE, WE DO NOT FIND ANY ERROR IN THE DECISION OF THE ID. CIT(A). ACCORDINGLY, THIS GROUND OF APPEAL OF THE R EVENUE IS DISMISSED. 19. IN THE RESULT, ALL THE FOUR APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19-08-2020 SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 19/08/2020 / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. I.T(SS).A NOS. 240 TO 243/AHD/2017 A.Y. 2011-12 TO 2014-15 PAGE NO DEPUTY CIT VS. SHAYONA LAND CORPORATION 17 BY ORDER/ , / ,