ACIT Vs Conc Shade Construction Pvt. Ltd. (ITAT Bangalore)
Facts- The facts of the case are that there was a search u/s 132 was carried out in the case of one Sri. H.B.Sudarshan, who is the Managing Director of the Assessee Company, on 08.06.2012. Subsequently the Assessee Company’s case was centralized with the office of the DCIT, Central Circle 2(3), Bangalore vide Centralization notification in F.NO. 52/Tech/CIT/Mys/2012-13 dated 07.12.2012. Consequent to the search in the case of Sri. H B Sudarshan notices u/s 153C r.w.s. 153A were issued on 15.09.2014 requiring the Assessee Company to file its return of income for the A Y 2010-11 to AY 2012-13.
A residential house at Basavanahalli belongs to Sh. C.T. Ravi. As per the statement of affairs of Sh. C.T. Ravi, the construction of the house started in A.Y 2010-11 and construction got completed in A.Y. 2012-13. There was a search u/s 132 conducted in the case of Sh. H.B. Sudarshan who is the relative of Sh. C.T. Ravi, Sh. H.B. Sudarshan and Smt. Pallavi Ravi (spouse of Sh. C.T. Ravi) are directors in the assessee company M/s Conc Shade Constructions P. Ltd. During search in the case of Sh. H.B. Sudarshan, digital data from his computer was seized (Digital Data of Mac_h.b.sudarshan\Data of Mac_HBSudarshan\present Data\Excel File 1 (Version 1).xls\sheet main A/c) where investment of Rs. 3,26,05,531/- in a house in Basavanahalli was found. Further seized evidence suggested additional expenditure post construction related to house warming, certain other purchases etc. related to the house amounting to Rs.70,13,236/-.
The total undisclosed investment as per the seized evidence is Rs. 3,96,18,767/-.
The assessing officer made various additions in these assessment years, which are deleted by Ld. CIT(A) and also he quashed the assessments framed u/s 153C of the Act. Against this the revenue is in appeal before us.
Conclusion- With regard to the evidentiary value of data recovered from computer in the form of digital data and other documents listed in earlier part of this order is concerned, section 132(4) of the Income-tax Act, permits the authorised officer to seize books of accounts and other documents.
A Division Bench of the Madras High Court, in the case of Rangroopchand Chardia and in the case of M.Vivek Vs. DCIT, while dealing with section 132 of the Income-tax has held that loose sheets picked up during search under section 132 of the Income-tax Act, falls within the definition of “document”, mentioned in section 132(4) of the Income Tax and therefore, it had got evidentiary value. Therefore, the contention raised by the learned Counsel for the assessee that digital evidence seized during the search under section 132 of the Income-tax Act does not have any evidentiary value, is rejected. This issue is remitted to the AO in all assessment years for consideration along with the incriminating material found during the course of search and for fresh decision.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
These three appeals are by the revenue against the separate orders dated 24.11.2017 of the CIT(Appeals)-11, Bangalore for the assessment years 2010-11 to 2012-13. All these appeals involve common issues, they were heard together and disposed of by this common order.
2. The common grounds of appeal by the revenue raised in ITA No.299/Bang/2018 for the AY 2010-11 are as follows, except change in figures:-
“1. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in relying on the order of Karnataka High Court in the case of IBC Knowledge Park Pvt. Ltd. when the assessee has participated in the proceedings and had not challenged issue of notices as decided by Delhi High Court in the case of CIT Vs Safetag International Pvt. Ltd. in 332 ITR 622 and Hon’ble Apex Court in the case of Shri Vijyabhai N Chandrani in 357 ITR 713.
2. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in relying on the case of Singhad Technical Society case as the decision does not restrain the AO from making addition only on the incriminating material and it only refers that seized material should pertain to third person and terms it a condition precedent to initiate proceeding and not for finalization of assessment.
3. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in deleting the protective additions on account of undisclosed investment of Rs.1,10,93,254!- whereas Gujarat High Court in 140 ITR 517 settled that protective assessment should not be decided till substantive assessment reaches finality.
4. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in deleting the unexplained case deposit of Rs.40,12,909! – whereas it remains unsubstantiated and without satisfactory explanation. Also, the case law Singhad Technical Education Society is distinguishable.
5. Only in AYs 2010-11 & 2011-12
Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in deleting the addition of undisclosed investment of Rs.54,66,483!- in office construction without appreciating the fact that this being protective addition ought to have sustain as substantive addition in case of H B Sudarshan has been deleted.
6. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in deleting the estimated profit of Rs.9,68,072!-!- without appreciating the fact that books were not produced and case law relied is distinguished.
7. Whether on the facts and the circumstances of the case, the Ld. CIT(A) is correct in accepting the ground of validity of digital evidence based on VC Shukla case rendered in 1998 however, the same has been overridden by provision of Information Technology Act 2000 and Section 2(22AA) of the I.T. Act and Section 292C of the IT Act.”
3. The first common ground in these appeals is regarding cancellation of assessment framed u/s. 153C of the Income-tax Act, 1961 [the Act] on the basis that there was no incriminating material to frame the assessment by placing reliance on the judgment of Supreme Court in the case of CIT vs Sinhgad Technical Education Society in Civil Appeal No.11080 of 2017, arising out of SLP (C) No.2527 of 2015.
4. The facts of the case are that there was a search u/s 132 of the Income Tax Act, 1961 was carried out in the case of one Sri. H.B.Sudarshan, who is the Managing Director of the Assessee Company, on 08.06.2012. Subsequently the Assessee Company’s case was centralized with the office of the DCIT, Central Circle 2(3), Bangalore vide Centralization notification in F.NO. 52/Tech/CIT/Mys/2012-13 dated 07.12.2012. Consequent to the search in the case of Sri. H B Sudarshan notices u/s 153C r.w.s. 153A were issued on 15.09.2014 requiring the Assessee Company to file its return of income for the A Y 2010-11 to AY 2012-13.
5. A residential house at Basavanahalli belongs to Sh. C.T. Ravi. As per the statement of affairs of Sh. C.T. Ravi, the construction of the house started in A.Y 2010-11 and construction got completed in A.Y. 2012-13. There was a search u/s 132 conducted in the case of Sh. H.B. Sudarshan who is the relative of Sh. C.T. Ravi, Sh. H.B. Sudarshan and Smt. Pallavi Ravi (spouse of Sh. C.T. Ravi) are directors in the assessee company M/s Conc Shade Constructions P. Ltd. During search in the case of Sh. H.B. Sudarshan, digital data from his computer was seized (Digital Data of Mac_h.b.sudarshan\Data of Mac_HBSudarshan\present Data\Excel File 1 (Version 1).xls\sheet main A/c) where investment of Rs. 3,26,05,531/- in a house in Basavanahalli was found. Further seized evidence suggested additional expenditure post construction related to house warming, certain other purchases etc. related to the house amounting to Rs.70,13,236/-. The seized evidences are reproduced below :
