Regency Mahavir Properties Vs ACIT (ITAT Mumbai)
It is an undisputed fact that the said documents P23 and P26 on the basis of which the Assessing Officer has made the addition in the case of the assessee were found during the course of the search conducted at the premises of Ashray Premises Pvt. Ltd. Since these documents have been found during the course of search conducted in the case of Ashray Premises Pvt. Ltd., if the Assessing Officer wanted to make addition, the assessment should have been completed in the case of the assessee only u/s. 153C r.w.s. 143(3). No assessment has been completed u/s. 153 r.w.s. 143(3) neither any satisfaction that these documents belong to the assessee was brought on record by the Assessing Officer of Ashray Premises Pvt. Ltd. Therefore, on this basis also the addition made in the case of the assessee cannot be sustained.
FULL TEXT OF THE ITAT JUDGMENT
Both these appeals have been filed by the assessee against the common order, dated 3012.2015, of the CIT(A), Pune, for assessment years 2007-08 and 2010-11.
2. The assessee has taken following effective grounds of appeal for A.Y. 2007-08:
1] The learned CIT(A) erred in holding that the search action u/s. 132 was conducted on the assessee firm and hence, the learned A.O. was justified in assuming jurisdiction u/s. 153A and completing the asst. accordingly.
1.1] The learned CIT(A) erred in not appreciating that the proceedings u/s 153A are wrongly initiated in the case of the assessee as there was no search conducted on the assessee firm and the provision u/s 153A were not applicable and hence, the asst. completed u/s. 153A was null and void.
1.2] The learned CIT(A) erred in holding that the name of the assessee was included in the warrant issued to search the premises at 111/112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar- 2 and therefore, the learned A.O. was justified in completing the asst. u/s. 153A on the basis of the said authorization.
1.3] The learned CIT(A) failed to appreciate that –
a. The warrant issued to search the premises at 111/112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar – 2 did not belong to the assessee firm nor the assessee conducted it’s business from the said address and therefore, there was no search on the assessee firm and the assessment initiated and completed u/s. 153A was bad in law.
b. Conducting a search on the premises of the partner does not amount to conducting a search on the firm and thus, in this case, it cannot be held that the appellant firm was searched.
c. The additional grounds raised by the appellant ought to have been admitted and allowed as it was shown by the appellant that the business premises of the firm were not searched and the asst. u/s 153A is wand void. .
2] The learned CIT(A) erred in confirming an addition of Rs. 2,60,00,000/- in the hands of the appellant firm on the basis of the loose paper seized from third party.
2.1] The learned CIT(A) erred in holding that –
a. The appellant firm had paid total on money of Rs. 7,60,00,000/- to Ashray Premises Pvt. Ltd. for purchase of the property named Deccan Paper Mill property and part of the on money of Rs. 2,60,00,000/- was paid by the appellant firm in this year and therefore, the learned A.O. was justified in making the said addition in this year.
b. The learned A.O. was justified in making the addition in the hands of the appellant firm on the basis of the loose papers found during the course of search on Panchsheel group.
c. The amount of Rs. 7,60,00,000/- has been taxed in the hands of the seller of the said property and therefore, the said amount should be taxed in the hands of the appellant firm who is the buyer of the said property.
2.2] The learned CIT(A) erred in not appreciating that the appellant firm had not paid any on money for purchase of Deccan Paper Mill property from M/s. Ashray Premises Pvt. Ltd. and therefore, the addition made of Rs. 2,60,00,000/- in this year was not justified at all.
2.3] The learned CIT(A) failed to appreciate that –
a. No addition could be made in the hands of the appellant firm on the basis of the document found with third party.
b. There is no corroborative evidence with the learned A.O. to indicate that the appellant firm had paid on money of Rs. 7,60,00,000/- for purchase of the said property from Ashray Premises Pvt. Ltd and hence, in the absence of any concrete evidence, no addition was justified in the hands of the appellant
c. The impugned document was neither found with Atul Chordiya nor he was the author of same. Hence his statement could not be made basis of addition.
d. There were inconsistencies in the statement of Shri Atul Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not justified at all.
e. The appellant firm was not granted proper opportunity to cross examine ShriAtuI Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not valid at all.”
Subsequently, the assessee filed abridged grounds of appeal which read as under:
“On the facts and in law,
1]The learned CIT(A) erred in holding that the search action u/s. 132 was conducted on the assessee firm and thus, the asst. order passed u/s 153A is valid in law.
1.1] The learned CIT(A) erred in holding that the name of the assessee was included in the warrant to search the premises at 111 / 112, Anil Complex, New Link Road, Near Regency Marriage Hall, Ulhasnagar 2 and therefore, the assessee was searched and the asst. u/s 153A was valid.
2] The Learned CIT (A) failed to appreciate that the assessment for A.Y.2007-08 was a non abated assessment and since no incriminating evidence was found relating to the impugned addition of Rs. 2,60,00,000/- during the course of alleged search on the appellant firm, no addition could be made in 153A The entire addition of Rs. 2,60,00,000/- may kindly be deleted.
3] Based on the loose papers found in the search on Atul Chordia Group and the statement of Shri Atul Chordia, the learned CIT(A) erred in holding that in total, the appellant had paid on money of Rs.7,60,00,000/- to M/s. Ashray Premises Pvt. Ltd. for purchase of the property named Deccan Paper Mill Property.
4] The learned CIT(A) erred in confirming an addition of 2,60,00,000/- in the hands of the appellant firm for this year on the basis of the evidence seized during the search on Atul Chordia Group (third party)”
The assessee has taken following effective grounds of appeal for A.Y. 2010-11:
1] The learned CIT(A) erred in confirming an addition of Rs. 5,00,00,000/- in the hands of the appellant firm on the basis of the loose paper seized from third party.
1.1] The learned CIT(A) erred in holding that –
a.The appellant firm had paid total on money of Rs. 7,60,00,000/- to M/s. Ashray Premises Pvt. Ltd. for purchase of the property named Deccan Paper Mill property and part of the on money of Rs. 5,00,00,000/- was paid by the appellant firm in this year and therefore, the learned A.O. was justified in making the said addition in this year.
b. The learned A.O. was justified in making the addition in the hands of the appellant firm on the basis of the loose papers found during the course of search on Panchsheel group.
c. The amount of Rs. 7,60,00,0007- has been taxed in the hands of the seller of the said property and therefore, the said amount should be taxed in the hands of the appellant firm who is the buyer of the said property.
1.2] The learned CIT(A) erred in not appreciating that the appellant firm had . not paid any on money for purchase of Deccan Paper Mill property from M/s. Ashray Premises Pvt. Ltd. and therefore, the addition made of Rs. 5,00,00,000/- in this year was not justified at all.
1.3] The learned CIT(A) failed to appreciate that –
a. No addition could be made in the hands of the appellant firm on the basis of the document found with third party.
b. There is no corroborative evidence with the learned A.O. to indicate that the appellant firm had paid on money of Rs. 7,60,00,000/- for purchase of the said property from Ashray Premises Pvt. Ltd and hence, in the absence of any concrete evidence, no addition was justified in the hands of the appellant
c. The impugned document was neither found with Atul Chordiya nor he was the author of same. Hence his statement could not be made basis of addition.
d. There were inconsistencies in the statement of Shri Atul Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not justified at all.
e. The appellant firm was not granted proper opportunity to cross examine ShriAtul Chordia and therefore, the reliance placed on his statement for making addition in the hands of the appellant firm was not valid at all.
f. There was no concrete evidence that the appellant firm had paid Rs. 5,00,00,000/- as on money for purchase of the said property in this year and hence, the addition made of Rs. 5,00,00,000/- in this year was not justified at all.”
Subsequently, assessee filed abridged grounds of appeal for A.Y. 2010-11, as under:-
The following grounds are without prejudice to each other On the facts and in law,
1] Based on the loose papers found in the search on Atul Chordia Group and the statement of Shri Atul Chordia, the learned CIT(A) erred in holding that in total, the appellant had paid on money of Rs. 7,60,00,0007- to M/s. Ashray Premises Pvt. Ltd. for purchase of the property named Deccan Paper Mill Property.
2] The learned CIT(A) erred in confirming an addition of 5,00,00,000/- in the hands of the appellant firm for this year on the basis of the evidence seized during the search on Atul Chordia Group (third party).
3] The appellant craves leave to add, alter, amend or delete any of the above grounds of appeal.
3. Both the parties agreed that first appeal for the A.Y. 2007-08 be decided. We therefore, decided to dispose of the appeal for A.Y. 2007-08.
4. The brief facts of the case are that the assessee is a partnership firm constituted on 26.08.2005. The details of principal place of business as per the partnership deeds are as under:
