Absence of incriminating material during search- No Addition in Section 153A Assessment

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 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 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.

Please become a Premium member. If you are already a Premium member, login here to access the full content.