AI Insights
The case involves Maitree Associates, a builder and developer firm, which was subjected to a search and seizure operation under section 132 of the Income Tax Act, 1961, at the premises of Param Properties. During this operation, several documents were seized that allegedly contained entries related to unaccounted cash transactions involving Maitree Associates. The Assessing Officer, based on these documents, made additions to the income of Maitree Associates for the assessment years 2012-13, 2013-14, and 2015-16, treating the amounts as unexplained cash receipts. The assessee contested these additions, leading to appeals before the Commissioner of Income Tax (Appeals) and subsequently the Income Tax Appellate Tribunal. The Tribunal, after considering the submissions and evidence, ruled in favor of the assessee, primarily due to the absence of direct evidence linking the assessee to the transactions and the procedural lapses in the assessment process.
Appeal Details
Counselvise Citation
[2023] 140 COUNSELVISE.COM (IT) 301731 (ITAT-SURAT)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
1 year(s) 11 month(s) 7 day(s)
Appellant
Respondent
Appeal Type
Income Tax (Search & Seizure) Appeal
Pronouncement Date
23-08-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
DB
Next Hearing Date
06-08-2023
Assessment Year
2013-2014
Appeal Filed On
15-09-2021
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर (खोज-और-जÞती) सं./IT(SS)A Nos.55 to 57/SRT/2021 AYs: (2012-13, 2013-14 & 2015-16) (Virtual Hearing) Maitree Associates, UG-26, Nariman Point Shopping Centre, City Light Road, Parle Point, Surat – 395001. Vs. The DCIT, Central Circle-3, Surat. èथायीलेखासं./जीआइआरसं./PAN/GIR No.: AATFM5545P (Assessee) (Respondent) Assessee by Shri Manish J. Shah, Advocate Respondent by Shri Ashok B. Koli, CIT(DR) Date of Hearing 07/08/2023 Date of Pronouncement 24/08/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeals filed by the assessee, pertaining to different Assessment Years (AYs) 2012-13, 2013-14 and 2015-16 respectively, all are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-4, [in short “the ld. CIT(A)”], Surat, in Appeal No. CIT(A),Surat-4/10496/2017-18, dated 28.07.2021, which in turn arise out of separate assessment orders passed by the Assessing Officer under section 143(3) r.w.s. 153C of the Income Tax Act, 1961 (hereinafter referred to as “the Act”), dated 27.12.2017. 2. Since, the issues involved in these three appeals, are common and identical; therefore, these appeals have been clubbed and heard together and a consolidated order is being passed for the sake of convenience and brevity. The facts as well as grounds of appeal raised by the assessee in Page | 2 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates ITA No.55/SRT/2021 for AY.2012-13 have been taken into consideration for deciding these appeals en masse. 3. Grounds of appeal raised by the assessee ‘in lead case’ ITA No. 55/SRT/2021, for AY.2012-13, are as follows: “1. The Ld. AO as well as the Ld. CIT(A) have erred in law and on facts of the case in holding that the transactions recorded in the seized documents during search in case of Param Properties pertain to and information therein relates to the assessee and consequently, have erred in initiating and sustaining the proceedings u/s 153C of the Act respectively. 2. The Ld. CIT(A) has erred in law and on facts of the case in sustaining addition made on the basis of entries in the seized documents to the extent of 20% by estimating the net profit of the assessee at the rate of 20%. 3. The assessee craves leave to add, amend or alter the grounds of appeal at the time of hearing, if need arise.” 4. The relevant material facts, as culled out from the material on record, are as follows. The assessee firm had filed its return of income u/s 139 of the Income-tax Act, 1961 for A.Y.2012-13 on 09.08.2012, declaring total income of Rs. NIL. A search action u/s 132 of the Income Tax Act was carried out on 04.09.2015, in the case of Param Properties of Surat. During the search and seizure proceedings carried out at business premises of the Param Properties, several incriminating documents and evidences were found and seized which contain entries pertaining to and information contained therein related to flats/units/ bungalows/ shops of projects undertaken by M/s Maitri Associates. Accordingly, after drawing satisfaction in this respect, notice u/s l53C of the I.T. Act, 1961 was issued to the assessee for various assessment years including the assessment year under consideration on 02.11.2016. Subsequently, the assesse, vide letter dated 15.11.2016 filed objection against notice u/s 153C of the Act. The objections filed by the assessee, were disposed of by passing speaking order on 18.05.2017, which was Page | 3 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates duly served upon the assessee. In response to the notice u/s 153C of the Act, the assessee has filed return of income for the A.Y. 2011-12 on 08.08 2017 declaring total income at Rs. NIL/-. Subsequently, notice u/s 143(2) of the Act, was issued on 10.08.2017, which was duly served upon the assessee. The notice u/s. 142(1) of the Act, along with questionnaires were issued on 10.08.2017 and 10.11.2017, which were also duly served to the assessee. In response to notices, U/S 143(2) and 142(1) of the Act, the assessee attended hearings on several dates, and filed the details before the assessing officer. 5. The Assessing Officer noted that during the previous year under consideration, the assessee firm is engaged in the business of Builders and Developers in the name & style of “M/s Maitri Associates”. During the course of search, action u/s 132 of the Act, carried out in the case of M/s Param Properties of Surat on 04.09.2015, seizure of various incriminating evidences possessed by it, corresponding to facilitation of unaccounted cash transactions of its clients, financiers, other brokers and builders as also earning of income of varying nature and unaccounted investments made by it was found. The documents and evidences seized during the course of search in the case of M/s Param Properties also include page 13 of Annexure: BS-51 & page 55 of Annexure: BS-51 wherein certain details of cash payment received by assessee from Param Properties towards booking/purchase of flats no. 323 & 813 of Star Galaxy project undertaken by M/s Maitri Associates are mentioned. 6. Thus the image and evidence has been taken from the diary kept for unaccounted transactions seized during the search action which is one of the core evidences seized during the search. The diary is basically the record of unaccounted cash transactions undertaken by the said firm i.e. Page | 4 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates M/s Param Properties as also facilitated by it. The cash is written in a coded form, ignoring the last three digits, e.g. 500 means Rs.5,00,000/-, 2831.530 means Rs.28,31,530/-, so on and so forth. These facts were revealed by Shri Agam Vadecha, one of the partners of Param Properties, while replying to Q. no. 17, in his initial statement recorded on oath u/s 131 of the Act on 03.09.2015. The gist of the transactions in respect of flat no.232 and 813 of Star Galaxy, is reproduced by Assessing Officer on page no.5 to 6 of assessment order. Further, the assessing officer observed that the sanctity and correctness of the seized documents from the assessee firm stands established, on the grounds of (i) no claim regarding any of the entries in their seized documents to be incorrect has been made by the said firm, (ii) entries of cheques in the cash book clearly corresponds to the entries in the bank statements of the corresponding parties, (iii) perfect match of several entries in pocket diaries acknowledged by various parties with the corresponding entry in the said cash book, (iv) owning up of many entries in the seized cash book by third parties attended in response to summons and admittance that the entries in the cash book of M/s Param Properties do correspond to the transactions made by them and (v) nothing has been put forth by the partners of Param Properties, at any time, even in the form of an argument, implying that there are incorrect entries in the said cash book. Thus, Assessing Officer noted that sanctity and correctness of the documents seized from the premises of the assessee firm during the search action crystal clearly stands established. 7. In view of the above, the assesse vide notice u/s 142(1) dated 10.08.2017 and 10.11.2017 and vide show cause notice dated 04.12.2017, was asked to furnish the explanation in respect of seized material and was show caused as to why, in absence of proper and Page | 5 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates satisfactory explanation, transactions reflecting in seized material should not be treated as unexplained cash transactions (receipts and payments) and should not be added to the total income for the relevant assessment year. In response thereto; the assessee stated that the documents are not related to them and they have nothing to do with them. 8. However, Assessing Officer rejected the reply of the assessee and observed that scanned pages and the diary pertains to the flat No. 813 & 323 of Star Galaxy. The transaction recorded therein are actually the “on -money” paid by the customer to the builder i.e. assessee. It is also apparent from the submission of the assessee that Star Galaxy project is being developed by them. It is common practice of Builders in Surat to issue such type of diaries to customers or brokers to fix up the conditions for cash payment and keep the record payment made so far. Further, contention of the assessee that the seized documents, was not seized from him was also rejected by the Assessing Officer. In view of the above facts, the Assessing Officer held that the assessee has received the amount of Rs.29,95,000/- for the flats No. 323 & 823 of its project Star Galaxy, which is unaccounted money, hence addition of Rs.29,95,000/- was made on account of unexplained money under section 69A of the Act. 9. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has partly deleted the addition made by the Assessing Officer. The ld CIT(A) observed that it has been admitted by one of the partner Shri Gordhanbhai R. Asodaira that these details is related to resale of flats of "Star Galaxy" which was undertaken by the assessee. But at the same time the addition of the total amount of Rs.29,95,000/-, which is total "on Page | 6 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates money" received mentioned in these papers is also not correct. Therefore, ld CIT(A) was of the view that only profit element should be taxed in hand of the assessee. Keeping in view the nature of business of the assessee, 20% of the total receipt was considered as net profit of the assessee, hence addition to be extent of 20% i.e. Rs.5,99,000/- ( 20% of Rs.29,95,000) was confirmed and remaining addition of Rs.23,96,000/- was deleted . 10. Aggrieved by the order of ld. CIT(A), the assessee is in further appeal before us. 11. Shri Manish J. Shah, learned Counsel for the assessee argued that the seized documents, were not seized from assessee`s house/premises and these seized documents do not contain the signature of the assessee. Thus, ld Counsel contended that these documents are not related to assessee, therefore no addition should be made in the hand of the assessee. 12. The Ld. Counsel, further submitted that the judgment of the settlement commission, in the case of Param properties, which relates to other person, having different circumstances, is not applicable to the assessee under consideration. Therefore, findings of the settlement commission are not applicable to the assessee, and for that ld Counsel relied on the judgment of the Jurisdictional High Court of Gujarat in the case of Mukesh Keshavalal Patel, vide Tax appeal No. 838/2019, dated 25.02.2020, wherein the Hon`ble Court held as follows: “9. The entire edifice of the revenue’s case is the statement made by Bhikhubhai Padsala before the Settlement Commission. Shri Bhukhubhai Padsala stated before the Settlement Commission that he had received the amount in cash from the assessee for the purpose of purchase of the land at Page | 7 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates Village – Jagatpur. Accordingly, to the Assessing Officer, the same was sufficient for the purpose of addition under Section – 68 of the Act. 10. In the aforesaid context, many decision of the Supreme Court as well as this High Court and other High Courts have been relief upon by the CIT(A). Once common principle in all the said decisions is that the assessee need not to be asked to explain the entries or notings in the books of third party. In the absence of any other independent material to corroborate the statement of Shri Bhikhubhai Padsala made before the Settlement Commission, it would not be prudent to take the view that there was a transaction between the assessee and Shri Bhikhubhai Padsala in cash with regard to the purchase of certain parcels of land. 11. It appears that the CIT(A) relied upon the decision of the Delhi High Court in case of CIT vs. Vineeta Gupta (2014) 46 taxmann.com 439 (Delhi), wherein, the view taken is that the declaration made by another party before the Settlement Commission is not binding upon the assessee, therefore, no additions can be made in absence of any independent material. 12. In view of the concurrent findings of fact recorded by the two authorities, we are of the view that the question of law as proposed by the Revenue cannot be termed as a substantial question of law.” 13. Therefore, ld Counsel contended that the declaration made by another party before the Settlement Commission is not binding upon the assessee. Hence, ld Counsel prays the Bench that addition sustained by ld CIT(A) may be deleted. 14. On the other hand, the Ld. DR for the Revenue, argued that the scanned pages and the diary pertains to the flat No. 813 & 323 of Star Galaxy. The transaction recorded therein are actually the “on -money” paid by the customer to the assessee. The Star Galaxy project was developed by the assessee. The ld DR further stated that it is common practice of Builders in Surat to issue such type of diaries to customers to fix up the conditions for cash payment. Therefore, ld DR stated that the circumstantial evidence clearly suggest that assessee has received ‘on- money’ which should be taxed in the hands of the assessee. Thus, ld DR argued that addition made by the assessing officer may be sustained. Page | 8 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates 15. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessing officer made addition of Rs.29,95,000/-, considering unaccounted on money received by the assessee, from M/s Param Properties, on booking of flat no. 323 and 823 of its project Star Galaxy. We note that during the course of search at the premises of M/s Param Properties of Surat on 04.09.2015, page no. 13 of Annex. BS-51 and page 55 of Annex. BS-51 were seized which contain details of cash received by the assessee, from of M/s Param Properties for booking/purchase of flat no. 323 and 823. The transaction were not found entered into books of accounts of the assessee, the Assessing Officer made the additions of total “on money” received. On appeal, ld CIT(A) restricted the addition at the rate of 20% of the total receipt. However, we note that assessing officer does not establish with cogent evidence that on-money received by him. That is, assessee has not received any cash on booking/sale of these fats therefore addition may be deleted. 16. We note on identical facts, (Param Properties related case) the combination of this Bench, in the case of Shri Ashesh Nanalal Doshi, in IT(SS)A No. 07/Srt /2021 (Assessment Year: 2015-16) and in ITA No. 32/Srt/2021 (Assessment Year: 2016-17), order dated, 21/08/2023, held as follows: “13. We have heard the submissions of the learned Commissioner of Income Tax-Departmental Representative (ld. CIT-DR) for the revenue and Shri Saurabh Soparkar, learned Senior Advocate assisted by Miss Urvashi Shodhan, Advocate (hereinafter called the ld. Sr. Counsel for the assessee). We have also gone through the orders of the lower authorities carefully. The ld. CIT-DR for the revenue submits that during the search operation at the premises of Param Properties, various incriminating documents were seized Page | 9 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates and inventorised. The seized document contains the entries in relation to assessee. The documents and the evidence seized during the course of search on Param Properties includes MOU. The said MOU in respect of development of a big piece of land at village Jothan. The share of Param Properties in said property was 4%. The MOU also specified the share of other stake holder including the share of assessee at 36%. Param Properties made payment of Rs. 25.00 lacs in cash as per their share. On the basis of share of Param Properties, the actual value of entire property was worked out at Rs. 6.25 crores, since the assessee has shown value of land in his books at Rs. 5.70 crores, accordingly, a difference of amount of Rs. 55.00 lacs (Rs. 6.25 crores – Rs. 5.70 crores) was added. The ld. CIT(A) deleted the addition by accepting the submission of assessee that the addition is made on the basis of dumb document. The documents found in the form of MOU was not a dumb document, the said document clearly indicates the name of parties and their shares. In such transaction, no direct evidence is available rather the circumstances and the incriminating material found during the course of search clearly established that the assessee’s expenses is of Rs. 55.00 lacs. The ld. CIT-DR for the revenue prayed for restoring the order of Assessing Officer by reversing the order of ld. CIT(A). 14. On the additions of Rs. 80.00 lacs on substantive basis and Rs. 70.00 lacs on protective basis, the ld. CIT-DR for the revenue supported the order of Assessing Officer and submits that on the basis of seized material and the name written on the seized material, it was clearly proved that the assessee made investment in Flat No. A-501, G-901 & F-901 developed by Enn Enn Corporation. The Ld. CIT-DR for the revenue submits that Param Properties, on which search was carried out, filed application before Settlement Commission and accepted all the transactions related with various parties and have paid tax thereon, thus, the application made by Aagam Vadecha, Proprietor of Param Properties is corroborated with the various incriminating documents found during the course of search action which is sufficient to corroborate the evidences found during the course of search. The ld CIT-DR for the revenue submits that from the seized material it was clearly established that the assessee has made investment with Enn Enn Corporation, thus, the finding of ld CIT(A) are liable to be reversed and that the finding of assessing officer be restored. 15. On the other hand, the ld. Sr. Counsel for the assessee supported the order of ld. CIT(A). Learned Sr. Counsel for the assessee submits that during the course of search action on Param Properties, one MOU was found and seized. The said MOU was in respect of agricultural land situated at village- Jothan. The Assessing Officer has scanned part of said MOU in the assessment order. The Assessing Officer has not appreciated the fact that the said MOU does not contain the signature of assessee or any other alleged partner. The said MOU was recovered from the third party. Statement of Aagam Vadecha of Param Properties was recorded who has shown his ignorance about the execution of said MOU. Further the statement of Pravin H Shah, who is allegedly having 24% share in the MOU was also recorded under Section 131 on 12/10/2015. In the statement, Pravin H Shah clearly and categorically stated that the amount of Rs. 50.00 lacs paid by him on account Page | 10 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates of development charges, which have been received back by him in May, 2015. Thus, from the enquiry of Investigation Wing, it was clearly proved that the said MOU was never acted upon. The Assessing Officer worked out the total development charges on the basis of share of Param Properties shown at 4%, in the alleged MOU and worked out the figure of total investment at Rs. 6.25 crores and made addition of Rs. 55.00 lacs by subtracting the cost of agricultural land shown by assessee in his books of account. The said MOU is not an admissible evidence as it is neither signed nor written by assessee nor recovered from the possession of assessee, moreover, the investigation carried out by the Investigation Wing/Assessing Officer clearly suggest that the said MOU was never acted upon. Thus, the ld. CIT(A) appreciated the fact in a proper manner and deleted the addition. 16. On the addition of Rs. 80.00 lacs on account of substantive basis and addition of Rs. 70.00 lacs on protective basis, the ld. Sr. Counsel for the assessee submits that the Assessing Officer made addition on the basis of guess work. There is no direct evidence against the assessee to connect the assessee with the investment made for purchase of flat No. A-501 and G-901. The search party recorded statement of Aagam Vadecha on 30/09/2015 in post search proceedings and Aagam Vadecha has not identified the assessee. During the assessment, the assessee asked for cross examination of Aagam Vadecha but he neither attended the proceedings nor sent any reply on his behalf. No independent investigation was carried out by Investigation Wing or by the Assessing Officer about the investment in Enn Enn Corporation about the purchase of flat No. A-501 or G-901. The assessee has not purchased any such flat hence there is no occasion for making such investment. Moreover, the evidence was found from the premises of third party and in absence of any corroborative evidence or independent evidence, such evidence cannot be used against the assessee. On the submission of assessee that the Param Properties have filed application before the Settlement Commission and have accepted the transaction. The ld. Sr. Counsel for the assessee relied upon the decision of Hon'ble Jurisdictional High Court in PCIT Vs Mukesh Keshavlal Patel in Tax Appeal No. 838 and 840 of 2019 dated 25/02/2020 wherein the Hon'ble High Court has held that declaration made by third party before the Settlement Commission is not binding on the assessee. No addition can be made in absence of independent material. To support such contention, the ld. Sr. Counsel for the assessee relied upon the following decisions: (i) CIT Vs Dhiranlal Durlabhbhai Patel HUF, Tax Appeal No. 579 of 2009 dated 28/06/2010 (ii) Rajeev Tractors (P) Ltd. Vs ACIT (2022) 143 taxmann.com 330 (Ahmedabad Trib) (iii) Rajesh Babubhai Damania Vs ITO (2002) 122 Taxman 614 (Guj) and (iv) CIT Vs Mukesh Keshav Lal Patel ( Tax Appeal No. 838 & 840 of 2019 dated 25.02.2020. 17. We have considered the rival submissions of both the parties and with their active assistance has gone through the orders of lower authorities carefully. We have also deliberated on various case laws relied by learned Page | 11 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates Senior Counsel for the assessee. Ground No. 1 relates to the deleting the addition of Rs. 55.00 lacks. We find that the assessing officer made this addition by taking view that during the search action of Param Property MOU was seized and as per said MOU the assessee was having share of 36% in the land and Param Property was having 4% share. The partner of Param Property in his statement, recorded during the search action stated that they made payment of Rs. 50.00 lacs in cash for their share. The assessing officer on the basis of share of Param Property worked out total cost of the Land at Survey No. 135, Jothan at R. 6.25 Crore. The Assessing Officer was of the view that in whole process, the partners of MOU fixed liabilities of each partner for future course of activities in respect of land. The actual value of the property was Rs. 6.25 crores. Sale deed of this land was executed in the name of assessee, who made the payment of Rs. 5.70 crores through cheques, thus the difference between the value shown in the MOU and as per the registered deed of Rs. 55.00 lacs (Rs. 6,25 Crore – 5,70 Crore = Rs. 55.00 lacs) and addition of Rs. 55.00 lacs under Section 69A. 18. The ld. CIT(A) deleted the addition by holding that the MOU is not acted upon. No amount is mentioned on the MOU. The ld. CIT(A) further held that the Assessing Officer considered the total value including development of land to the extent of Rs. 6.25 crores, and after reducing the price of Rs. 5.70 crores shown by the assessee as per price in the sale deed. The Assessing Officer made addition of Rs. 55.00 lacs. The extrapolation on the contents written on the seized material is not permissible as has been held on a number of occasions by the Higher Judicial Authorities. The seized document should be read in totally and not in partial manner. Selective and partial reading of seized material is not permissible either by revenue or by assessee. The portion of unsigned MOU was not reproduced by the Assessing Officer in the assessment order. Figure of addition of Rs. 55.00 lacs are nowhere mentioned in the seized material. On the basis of aforesaid finding, the ld. CIT(A) deleted the entire addition of Rs. 55.00 lacs. 19. We further find that in the impugned MOU, besides the name of assessee, the name of Praveen Chandra Hiralal Shah (PAN: ABIPS 4477 L) was also mentioned, and his share was shown at 24%. The case of Praveen Chandra Hiralal Shah was also centralised. The assessing officer on the basis of said MOU made addition of Rs. 1.50 Crore, at the hand of Praveen Chandra Hiralal Shah, however, on appeal before ld CIT(A), the addition was deleted vide order dated 30.03.2021. And on further appeal by revenue before Tribunal the order of ld CIT(A) was upheld in IT(SS) No. 33/Srt/ 2021 dated 13/06/2022. 20. The ld CIT-DR for the revenue raised additional plea before us that Param Property, on whom search action was carried out has accepted all the transaction in the Petition filed before Income Tax Settlement Commission (ITSC) including on the transaction mentioned in the MOU found during search. We find that Hon’ble Gujarat High Court in PCIT Vs Mukesh Keshav Lal Patel (supra), while relying on the decision of Delhi High Court in CIT Vs Vineeta Gupta (2014) 46 taxmann.com 439 (Delhi) held that declaration made by another party before ITSC is not binding upon the assessee, Page | 12 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates therefore, no addition can be made in absence of independent material. Thus, in view of the afforesaid factual and legal discussions, we do not find any infirmity or illegality in the order passed by ld CIT(A), which we affirm with our aforesaid observation. In the result, ground No. 1 of the appeal of revenue is dismissed. 21. Ground No. 2 relates to deleting the addition of Rs. 80.00 lacs on substantive basis and ground No. 3 relates to deleting the addition of Rs. 70.00 lacs on protective basis. We find that the assessing officer made these additions by taking view that that during the course of search action on Param Properties, the documents and the evidences seized reveals cash transaction in the name of assessee. The Assessing Officer made summary of such transaction which we have recorded in para -5 supra. On the basis of aforesaid summary, the Assessing Officer held the assesse had entered into cash transaction related to purchase and sale of flat No. A-501, G-901 and F- 901 developed by Enn Enn Corporation Ltd. through Param Properties. On the basis of the above view the assessing officer issued show cause notice, the assessee in his reply denied any such transaction and stated that he never received any such payment nor ever booked any such flat. The also denied his role and disputed that the entry in the diary belongs to him. The Assessing Officer held that as per evidence gathered by the Investigation Wing, it is established beyond doubt that the documents seized from Param Properties relates to the assessee. It held that as per data gathered from i-Phone and contact back up of Aagam Vadecha, partner of Param Properties, the entries reflecting in the seized material in the name of assessee. The Assessing Officer referred the call details of assessee and took his view that the transaction reflecting in the flat No. F-901 and G-901 are clearly in the name of A.N. Doshi (Assessee), hence, the addition against transactions of these flats is made on substantive basis in the hand of assessee. The assessing officer further held that seized diary inventorised as BS-28 in respect of FRN A-501 reflects the name of Ashokbhai Doshi in all probabilities is A.N. Doshi. Partner of the firm Param Property has advertently nor identified Ashok Doshi neither during search nor during assessment proceedings. Notice under Section 133(6) of the Act was issued to partner of Param Properties who neither responded nor filed any reply, hence addition of Rs. 70,00,000/- was made on protective basis in the hand of assessee against flat No. A-501 and on substantive basis in the hand of Param properties. 22. We find that before ld CIT(A) the assessee retreated similar contention as raised before assessing officer. The ld CIT(A) on considering such contentions held that the documents relied by the Assessing Officer for making these additions were not found at the premises of assessee but found from the premises of Param Properties which is a third party. Similarly, the documents are not in the handwriting of assessee, nor signed by any one. The assessee claimed that in these papers, flat No. G-901 and F-901 have been shown in the name of A.N. Doshi and linking of assessee (Ashesh Nanalal Doshi) is not justified. For flat No. A-501, the seized material clearly contents the name of Ashokbhai Doshi and not the name of assessee, therefore, the addition in his name is not justified. During assessment notice under Section 133(6) was issued to Param Properties but he has not responded. The Assessing Officer Page | 13 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates relied upon the dumb document. The ld. CIT(A) was of the view that it is an undisputed fact that the documents relied upon for making additions were found from the third party. Such documents are not signed by any one, not in the writing of assessee. In the statement recorded under Section 132(4), Aagam Vadecha has not mentioned the name of assessee. Notice under Section 133(6) of the Act was issued to Param Properties during assessment but he has not turned up. Telephonic conversation and storage record cannot be made basis for making addition unless details of talk in is not on record. There is no statement either during the search or post search enquiry or during the statement which can be proved that the transaction in these papers relates to or pertains to assessee. The ld. CIT(A) by referring the decision of Hon’ble Apex Court in V.C. Shukla Vs UOI (supra)and the decision of Hon’ble Gujarat High Court in CIT Vs. Shri Mauli Kumar K. Shah (supra) held that analysis of seized document was not properly made at the time of assessment. When the name of assessee is not clearly mentioned on the seized document, the addition in the hand of assessee is not justified. On the basis of aforesaid finding, the ld. CIT(A) deleted both the addition of Rs. 80.00 lacs on substantive basis and Rs. 70.00 lacs on protective basis. 23. We also find merit in the submissions of learned senior Counsel for assessee that the Assessing Officer made addition on the basis of guess work. There is no direct evidence against the assessee to connect the assessee with the investment made for purchase of flat No. A-501 and G-901. We find that search party recorded statement of Aagam Vadecha on 30/09/2015 in post search proceedings and Aagam Vadecha has not identified the assessee. In the course of assessment, the assessee asked for cross examination of Aagam Vadecha but he neither attended the proceedings nor sent any reply on his behalf. No independent investigation was carried out by Investigation Wing or by the Assessing Officer about the investment in Enn Enn Corporation about the purchase of flat No. A-501 or G-901. There is no evidence on record that the assessee has not purchased any such flat hence there is no occasion for making such investment with Enn Enn Corporation. Thus, in view of the afforesaid discussions, we do not find any justification to interfere with the findings of the ld CIT(A), which we affirm. In the result, ground No. 2&3 of the appeal is dismissed. 24. Ground No. 4 relates to deleting the addition on the grounds of not allowing cross examination by ignoring the evidence on record. Considering detailed discussions on ground No. 1 to 3, this ground of appeal does not require any specific adjudication. Ground No. 5 & 6 are general and needs no adjudication. 25. In the result, the appeal of revenue for AY 2015-16 in ITA No. 07/Srt/2021 is dismissed. ITA No. 32/Srt/2021 for AY 2016-17 by Revenue. 26. The revenue has raised following grounds of appeal; Page | 14 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates (1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the incriminating documents seized during the search action u/s. 132 of the Act as dumb document and deleting the addition made of Rs.1,24,72,295/- on account of unexplained cash receipts. (2) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in treating the incriminating documents seized during the search action u/s. 132 of the Act as dumb documents and deleting the addition made of Rs.1,20,00,000/- on account of unexplained cash payments. (3) On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in deleting the additions on the ground that the A.O. has not allowed the cross examination of the person from whom the incriminating documents was found and seized, ignoring the incriminating evidences on record and without affording an opportunity of cross examination in the appellate proceedings. (4) It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the AO may be restored to the above extent. (5) The appellant craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 27. As recorded in the brief facts in appeal for AY 2015-16, in para- 5 (supra), the assessing officer while passing the assessment order for AY 2016-17 noted that during the course of search action on Param Properties, the documents and the evidences seized reveals cash transaction in the name of assessee. The Assessing Officer made summary of such transaction in the following manner: SHRI ASHESH NANDLAL DOSHI PAYMENTS BY ASHESH N DOSHI RECEIPTS BY ASHESH N DOSHI F.Y. 2015-16 (A.Y. 2016-17) 22.08.15 2500000 FRN A- 501 BS-28 5 15.04.2015 5000000 FRN G-901 cash mayor bhai BS-1 47 24.08.15 2400000 FRN A- 501 BS-28 5 05.04.15 2500000 FRN F-901 cash at home BS-1 50 28.08.15 5500000 FRN A- 501 BS-28 5 07.04.15 1500000 FRN G-901 cash BS-1 49 31.08.15 1600000 FRN A- 501 BS-28 5 10.04.15 1000000 FRN G-901 cash BS-1 48 24.04.15 6100000 FRN G-901 Hawala BS-1 53 25.04.15 872295 FRN G-901 clear BS-1 54 Total 12000000 25.04.15 12472295 Particular (Transaction related Amount (In Rs.) Nature Page | 15 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates to Flat No.) FRN A-501 12000000 Payment FRN G-901 18472295 Receipt 28. On the basis of aforesaid summary, the Assessing Officer was of the view that the seized document reveals that the assesse had entered into cash transaction related to purchase and sale of flat No. A-501, G-901 and F-901 developed by Enn Enn Corporation Ltd. through Param Properties. The assessing officer made addition of Rs. 1.24 Crore on account of unexplained cash receipt on substantive basis and of Rs. 1.24 Crore on protective basis and Rs.1.20 Crore substantive basis in the hand of Param Property. On appeal before ld CIT(A) the both the additions in substantive as well as on protective basis was deleted with the same grounds and reasoning as of AY 2015-16. Considering the facts that we have upheld the order of ld CIT(A) on similar grounds of appeal on same set of facts, therefore, following the principal of consistency, the grounds of appeal for this assessment years raised by the revenue are also dismissed with similar observation. 29. In the result, the appeal of the revenue for AY 2016-17 is also dismissed.” 17. As the issue is squarely covered in favour of the assessee, by the decision of the coordinate bench (supra)and there is no change in facts and law and the Revenue is unable to produce any material to controvert the aforesaid findings of the Division Bench (supra). We find no reason to interfere in the said order of the Division Bench (supra), therefore, respectfully following the binding judgment of the Coordinate Bench, we delete the addition sustained by ld CIT(A). 18. In the result, appeal filed by the assessee in IT(SS)A No. 55/SRT/2021, is allowed. 19. Since, we have allowed the appeal of the assessee by taking lead case in IT(ss) A No.55/SRT/2021, for assessment year 2012-13. Since the facts are similar in other two appeals of the assessee, namely in IT(SS)A No.56 and57/SRT/ 2021,accordingly, our observations made in IT(ss) A No.55/SRT/2021, for assessment year 2012-13, shall apply mutatis mutandis to the aforesaid other appeals of assessee. For the parity Page | 16 IT(SS)A Nos.55 to 57//SRT/2021 Maitree Associates of reasons, we allow abovementioned appeals of assessee in IT(SS)A No.56 and57/SRT/ 2021. 20. Since, we have adjudicated the issue on merit of the case, therefore other arguments of ld Counsel on technical issue raised under section 153C of the Act, has rendered academic and infructuous, hence do not require adjudication. 21. In the result, these three appeals filed by the assessee [in IT(SS)A Nos. 55 to 57/SRT/21), are allowed. Registry is directed to place one copy of this order in all appeals folder / case files. Order is pronounced on 24/08/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 24/08/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat
Other Referred Cases
Mukesh Keshavlal Patel vs. PCIT, CIT vs. Vineeta Gupta, CIT vs. Dhiranlal Durlabhbhai Patel HUF, Rajeev Tractors (P) Ltd. vs. ACIT, Rajesh Babubhai Damania vs. ITO, CIT vs. Mukesh Keshav Lal Patel
Laws Referred To
Income Tax Act, 1961
1:1 Consultation on Business Development
₹1
1:1 Consultation on Tax Litigation
₹0
1:1 Consultation on Business Valuations
₹1
Form AOC-2 - Disclosure of Related Party Transaction
Mehul₹50
Sales Forecasting Sheet
₹100
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