DCIT Vs Shayona Land Corporation (ITAT Ahmedabad)
The assessee was engaged in the business of development and construction. There was a search action u/s. 132 of the Act carried out on 15l 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 stated that in the group cases of other project pertaining to Aryamaan Scheme of Gajanand Corporation there was on money receipt which was voluntarily disclosed 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 connected group to the assessee firm was indulged in receipt of on money in 60/40. Therefore, the assessing officer has computed Rs. 3,18,79,334/- being on money received in cash and added to the total income of the assessee. The assessee challenged the impugned addition before the Id. CIT(A) that assessing officer has made said addition in the absence of incriminating document seized from the assessee. The Id. CIT(A) has categorically stated regarding diary seized from Sureshbhai R. Patel and the assessing officer has herself stated that recording in the diary was pertained to receipt from sale of flats pertaining to Aryamaan scheme of Gajanand Corporation. 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 basis 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 at Rs. 60 as against the actual sale receipt of Rs. 100/-. In order to get clarification about incriminating document seized from the assessee the Id. CIT(A) has also provided opportunity to the range head to direct the 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 Corporation and stated that the same modus operandi was applied to the entire group. Therefore, the Id. CIT(A) held that the assessing officer has relied 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 could not demonstrate that any incriminating material was seized from the assessee during the course of search to substantiate that assessee had collected on money on the sale of Unit of project namely Shayona Tilak-2 on 60/40 basis. In the light of the above facts and finding of Id. CIT(A), we do not find any infirmity in the decision of Id. CIT(A) after placing reliance on the decision of Hon’ble Jurisdictional High Court in the case of Saumya Construction 387 1TR 529 (Guj) wherein it is held that if in relation to any assessment year no incriminating material is found no addition or disallowance can be made in relation to that assessment year in exercise of power u/s. 153A of the Act. Therefore, these three grounds of appeal of the revenue are dismissed.
FULL TEXT OF THE ITAT JUDGEMENT
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 the Income Tax Act, 1961; in short “the Act”.
2. All these four appeals are filed by the revenue 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 convenience these appeals are adjudicated together by this common order by taking the facts of ITA No. 240/Ahd/2017 as lead case and its finding will be applicable 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 case 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 any 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 search.
3. On the fuels and in the circumstances of the case 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 case 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 case 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 Ld. 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 facts and issue therefore these three grounds of appeal are adjudicated together. 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 15th October, 2013. The assessing officer has issued notice u/s. 153A of the act on 26th October, 2014. In response, the assessee has submitted vide letter dated 17th Nov, 2014 that its original return of income filed on 29th Sep, 2008 be considered as filed u/s. 153A of the act. During the course of assessment, the assessing officer noticed that assessee as developer has developed Shayona City and Shayona Estate. The assessee firm has completed “Shayona Tilk-2” and its possession was handed over to the member during the year under consideration as follows:-
