Case Law Details
Colourful Estates Pvt. Ltd. Vs DCIT (ITAT Delhi)
ITAT Delhi held that addition based on documents seized from third party is liable to be set aside since assessing officer failed to tie contact between seized material and the assessee company. Accordingly, appeal allowed and addition deleted.
Facts- A search and seizure action u/s. 132 together with survey proceedings u/s. 133A were conducted at the residential as well as business/office premises of Antriksh Group including residential premises of Shri Rakesh Kumar Yadav on 05.02.2014. In search operations, various incriminating documents allegedly pertaining to the assessee company i.e Colourful Estates were found and seized from the residential premises of Shri Rakesh Kumar Yadav. Consequent upon search, notices u/s.153A of the Act were issued on the assessee.
Pursuant thereto, the assessment of the assessee was completed u/s. 153A(1)(b) rws 143(3) of the Act vide assessment order dated 29.03.2016 wherein additions of INR 6,14,69,315/- were made by the AO.
CIT(A) granted partial relief. Aggrieved by the additions sustained by the Ld.CIT(A) to the extent of INR 1,05,50,000/- towards undisclosed income which stemmed from loose documents/diary etc. found from the residential premise of Shri Rakesh Kumar Yadav, the assessee preferred appeal before the Tribunal.
Conclusion- Held that that the entries found recorded in the diary seized from the residential premises of RKY is not capable of incriminating the assessee company per se. The additions made qua such entries thus are not justified within sweep of s. 153A of the Act. On merits also, the impugned addition is not justified in the absence of any culpability established against the assessee company by some irrefutable evidence as noted above. The revenue has failed to tie the contents of impugned entries discovered from third person with that of assessee co. The statutory presumption is thus not available in the instant case. The onus thus continues to lie at the doorstep of Revenue that the transactions/ entries were consummated by the assessee indeed. Such onus has not been discharged at all. The allegation leveled against the assessee co. is in the realm of bald. Coupled with this, simultaneous addition based on such entries in the hands of other entity militates against action of the revenue and erodes the very foundation of the impugned additions. Thus, we thus find substantial merit in the plea of the assessee on both counts namely lack of jurisdiction under s. 153A for making impugned additions dehors any incriminating material as well as additions being devoid of any merit in the absence of any credible corroboration that such entries unflinchingly relates to the assessee company in exclusion to other entities.
FULL TEXT OF THE ORDER OF ITAT DELHI
The captioned appeals have been filed at the instance of the assessee against the first appellate order dated 05.06.2023 passed by Ld. Commissioner of Income Tax (A), Gurgaon-3 [“Ld.CIT(A)”] u/s 250(6) of the Income Tax Act, 1961 [“the Act”] arising from the assessment orders both dated 29.03.2016 passed under s. 153A(1)(b) of the Act pertaining to Assessment Years 2011-12 & 2012-13 respectively.
2. The issues being common, interlinked and similar and arising from a common order of CIT(A), both the captioned appeals of the assessee have been heard together and are being disposed of by this common order.
ITA No.2204/Del/2023 [Assessment Year : 2011-12]
3. We shall first take up the appeal of the assessee i.e. ITA No.2204/Del/2023 for the Assessment Year 2011-12 for adjudication purpose.
4. The assessee has raised following grounds of appeal:-
1. “That on the facts and circumstances of the case, Assessment Order passed u/s 153A(1)(b) of the Act by the Deputy Commissioner of Income Tax, Central Circle -1, Gurgaon on 31.05.2023 for the assessment year 2011-12, is bad in law and liable to be quashed as no search action u/s 132 of the Act was carried out at the premises of the appellant company and no Panchnama was served to the appellant company.
2. Without prejudice to the Ground of Appeal No. 1, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 1,05,50,000/-by disregarding the contention of the appellant that the assessment in case of relevant assessment year has already been concluded which could not abate on the date of search as per second proviso of Section 153A of the Act and no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.
3. Without prejudice to the Ground of Appeal No. 1, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 1,05,50,000/- made by Ld. AO by disregarding the contention of the appellant that such addition was made on the basis of seized documents found during the course of search action u/s 132 of the Act carried out at the premises of third person and hence, outside the scope of proceedings u/s 153A of the Act.
4. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 1,05,50,000/- made on the basis of documents seized from the premises of third person without appreciating the fact that amount of Rs. 1,50,000/- out of alleged amount of Rs. 1,05,50,000/-pertains to the appellant which was duly explained and substantiated by the appellant with its books of account.
5. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 1,05,50,000/- without appreciating the fact that similar addition was also made in the hands of Antriksh Developers & Promoters Pvt. Ltd. on the basis of same seized documents, which is bad in law and liable to be deleted.
6. That the grounds of appeal are independent and without prejudice to each other.”
4. As emerges from record, the assessee company namely Colourful Estates Pvt. Ltd. [Colourful Estates] is engaged in the business of development of real estate projects in the name ‘Golf View Project-II’ sector 78 Noida. Another project namely ‘Golf View project –I is also being developed in the adjoining plot by another company namely Antariksh Developer and Promoters (P) Ltd [Antriksh Developers]. One of the directors namely Mr. Rakesh Kumar Yadav is stated to be a common director in both the companies. A search and seizure action under s. 132 together with survey proceedings under s. 133A were conducted at the residential as well as business/office premises of Antriksh Group including residential premises of Shri Rakesh Kumar Yadav on 05.02.2014. In search operations, various incriminating documents allegedly pertaining to the assessee company i.e Colourful Estates were found and seized from the residential premises of Shri Rakesh Kumar Yadav. Consequent upon search, notices under s.153A of the Act were issued on the assessee. Pursuant thereto, the assessee filed return of income at INR 23,870/-under s.153A of the Act. The assessment was completed under s. 153A(1)(b) rws 143(3) of the Act vide assessment order dated 29.03.2016 wherein additions of INR 6,14,69,315/- were made by the Assessing Officer [AO] to the returned income. The adjustments comprised of additions of INR 4,39,62,275/- towards recognition of accrued income under Percentage of Completion Method (“PoCM”) from real estate project. The deemed income accrued was calculated at estimation of 20% of advances received from proposed customers together with amount already declared in P&L account having regard to AS-9 of the Accounting Standard notified by Institute of Chartered Accountants of India (“ICAI”). Another additions of INR 1,75,07,040/- were made on account of Unexplained Income from undisclosed sources relatable to entries allegedly found recorded in loose paper/dairy etc. searched from the residential premise of Shri Rakesh Kumar Yadav. The income returned was accordingly enhanced by such additions.
5. Aggrieved, the assessee preferred appeal before the Ld.CIT(A).
5.1. On analysis of factual matrix, the Ld.CIT(A) found merit in the plea of the assessee towards lack of justification in relation to additions to the extent of INR 4,39,62,275/- under PoCM method and agreed with the plea that no income can be recognised from ongoing development of project as per percentage of completion method in terms of AS-9 read with Guidance Note on Real Estate and no income has accrued which can be recognized for taxation purposes.
5.2 The Ld.CIT(A) further granted part-relief towards additions made by the AO with respect to undisclosed income and modified and reduced the additions of INR 1,75,07,040/- made by the AO to IRN 1,05,50,000/-. While doing so, the Ld.CIT(A) held that both receipts and payments appearing in seized documents cannot be added and thus restricted the additions to higher of the receipts and payments which in the present case stands at INR 1,05,50,000/-.
5.3 The Ld.CIT(A) however declined to apply alternate plea of disallowance as per peak theory and to consequently reduce alleged unaccounted payments from alleged unaccounted receipts.
6. Aggrieved by the additions sustained by the Ld.CIT(A) to the extent of INR 1,05,50,000/- towards undisclosed income which stemmed from loose documents/diary etc. found from the residential premise of Shri Rakesh Kumar Yadav [“RKY”], the assessee preferred appeal before the Tribunal.
7. When the matter was called for hearing, the Ld. Counsel for the assessee made wide ranging submissions to counter the impugned additions of INR 1,05,50,000/- sustained by the Ld.CIT(A). The assessee raised a legal objection and contended that (i) no valid search has occurred in the case of the assessee co. (ii) the assessment in the instant case stood concluded prior to search on 5/02/2014 and consequently in the absence of any incriminating material found in the course of search qua the assessee, the addition made by the AO under s. 153A is devoid of any legitimacy. For making assessment towards undisclosed income in the hands of the assessee co. in such concluded and unabated assessment, it was incumbent upon the AO to establish some connection / link of so called entries found recorded in some diary or loose paper etc. [ marked as Annexure A-12 & Annexure A-4] from the residential premises of RKY with that of the assessee co.. Besides, such entries should also be capable of incriminating the assessee co. for alleged suppression of any income. The entries as tabulated in para 4.1 of the assessment order neither provides name of the project Golf view –II being developed by Colourful Estate nor discloses name of Colourful Estate. The entries were actually found to be in relation to Golf View –I by the AO himself leading to additions of the same amount in the hands of Antariksh Developers by a separate assessment order. (iii) Notwithstanding, the additions towards undisclosed income suffers from vice of multiple defects and not sustainable in law in the hands of assessee co. even on merits.
7.1 Expounding further, the Ld Counsel submits that the business premises or project site [Golf View –II] of the assessee company was actually not covered in the search at all. Although, the name of the assessee co. is shown to be appearing in the search warrant, neither the search team actually visited the office premises or Golf View II project in the course of search nor any panchnama was served to the assessee co or any of its employees. The action under s. 153A was initiated merely because the director RKY and his other project i.e. Golf View –I handled by Antariksh Developers was covered in search under s. 132 of the Act. The Panchnama was served on one ‘Shri Rakesh Kumar’ who appears to be a different person than RKY and perhaps was working in the capacity of supervisor / junior employee of adjoining project site Golf View I at the time of search. The said employee Shri Rakesh Kumar did not serve the assessee company. Golf View (I) Project was developed by Antariksh Developer whereas Golf View-II Project was under the domain of the assessee company. Shri Rakesh Kumar Yadav from whose premises, the alleged incriminating documents were found showing various entries of receipts and payments as summarized by tabular statement at para 4.1 of the assessment order, happens to be Director in both projects i.e. Golf View (I) Project as well as Golf View (II) project. As pointed out, the AO itself has noticed the fact that Golf View (I), Noida project falls within domain of company Antariksh Developer whereas Golf View II, Noida project is being developed by the Colourful Estates i.e. assessee co. herein. To repeat, business premises of the assessee company have not been searched and no seizure thus took place from the premises of the assessee co.. No statement under s. 132(4) was recorded of any person in the capacity of representative of the assessee company. The statement of Shri Rakesh Kumar Yadav recorded under s. 132(4) do not provide any nexus of such loose papers/diary to the company. There is nothing on record to corroborate the so called entries to be belonging to the assessee co. A reading of statement under s. 132(4) as obtained by the authorised person do not implicate Golf View I or Colourful Estate in any manner on such entries. Shri Rakesh Kuamr Yadav has however not stated anything to implicate the assessee in relation to so called entries detected in search. Shri Rakesh Kumar Yadav being connected to Golf View I, Noida project also, the seized documents found from his residential premises cannot be presumed to be relatable to the assessee company in exclusion to other entities where the business interests of RKY are paralely involved. There being total absence of any tangible evidence or statement to this effect, the action of revenue is unsubstantiated. The Ld. Counsel for the assessee thus submits that seized documents found from the residential premises of Shri Rakesh Kumar Yadav being third person cannot be used against the assessee under s. 153A of the Act in an unabated assessment. Notwithstanding, list/inventory of books etc. found/seized as annexed to panchnama (Annexure-A) does not mention the name of the assessee company alone but contains multiple other companies such as Antariksh Developer and Promoters (P) Ltd. ; Antriksh Engineers Pvt.Ltd. & Perfect Properties Pvt.Ltd.
7.2 The Ld. Counsel for the assessee thus submits that firstly, the premises of the assessee has not been covered under search although the name of the assessee appears in the search warrant and secondly, in an unabated assessment, no addition can be made unless some incriminating documents are found from the premises of the assessee co. and not from third person. No entry in Annexure 12 as tabulated in para 4.1 of the assessment order can be attributed to the assessee co. in the absence of name of the assessee co. except one entry of INR 1,50,000/- for which receipt drawn in the name of Golf View II was issued and the entry was duly recorded in the books. Thus provision of s.153A of the Act are not attracted in the absence of any documents incriminating the assessee.
7.3 The Ld. Counsel for the assessee next pointed out that identical additions based on same very entries have been simultaneously made by the same AO on substantive basis in the hands of ‘Antariksh Developer and Promoters (P) Ltd.’ for the AY 2011-12 in question. The Ld. Counsel for the assessee adverted to the Paper Book containing the assessment order dated 29.03.2016 passed under s. 153A(1)(b) for AY 2011-12 in the case of M/s. Antariksh Developer and Promoters (P) Ltd. by the same AO, to lend support to such plea. The Ld. Counsel for the assessee thus submitted that where same entries have been subject matter of the assessment in the hands of Antariksh Developer and Promoters (P) Ltd. by the same AO on substantive basis, the additions made yet again in the case of captioned assessee amounts to double additions on substantive basis in the hands of two different assessees. The approach of AO clearly smacks of being indifferent and farfetched. It is for the AO discharge his onus as a statutory functionary in this regard. No such initial onus has been discharged.
7.4 As per averments made in the assessment order pertaining to ‘Antariksh Developer and Promoters (P) Ltd.’ The AO himself states that such entries include entries relating to Golf View I (M/s. Antariksh Developer and Promoters (P) Ltd. ). The imputations on entries which are not identifiable to the assessee is wholly unjustified in a scenario where Shri Rakesh Kuamr Yadav is having business stakes in multiple companies.
7.5 Besides, as pointed out, no adverse statement is referred in the assessment order or first appellate order as may have been recorded under s. 132(4) of the Act at the time of search on such entries found from the residential premises of Shri Rakesh Kuamr Yadav. Hence, the statutory presumptions available under s. 132(4A) r.w.s. 292C of the Act are not available against the assessee co. . In the instant case, neither the documents were found from the premises of the assessee nor any adverse statement is available to invoke such statutory presumptions. Besides, statutory presumption under s. 132(4) is not absolute but a rebuttable presumptions in the absence of any adverse statement or any corroboration of entries found from the premises of third person. No adverse presumption can be fastened on the assessee in law. Therefore, the initial onus continue to lie on the Revenue to connect such so called entries with the assessee company. The AO has clearly failed to discharge such onus and hence such onus never shifted to the assessee for the purposes of its rebuttal.
7.6 The Ld. Counsel for the assessee thus submitted that all entries found relatable to the assessee co. has already been accounted for in the books prior to search and hence part-additions sustained by the Ld.CIT(A) is not justified both on the point of jurisdiction to assess such entries in the hands of assessee as well as on merits.
8. Per contra, the Ld.CIT DR for the Revenue relied upon the observations made in the first appellate order as well as the assessment order. In furtherance, the Ld.CIT DR submitted that multiple entries of receipts and payments were found recorded in the diary/loose paper etc. seized and marked as Annexure, in the course of search from the residential premises of Shri Rakesh Kumar Yadav [RKY] who happens to be the key person and Director of the assessee company. It is a matter of record that the search warrant has been issued in the name of the assessee company. The premises of the Director/main person has been covered in the search. Hence, the validity of search cannot be questioned before the Tribunal. As per the scheme of the Act, once search is conducted under s. 132 of the Act and panchnama has been found drawn in the name of the Assessee, the provisions of section 153A sufficiently empowers the AO assess total income of the searched person for various AYs falling in the block of six years. The AO in the instant case has invoked provisions of s. 153A and made additions based on e incriminating material found from the residential premises of Director of assessee co. The onus is thus always on the assessee to dislodge the statutory presumption coming to the fore owing to possession of diary containing entries from the residence of the Director of the assessee company. The assessee has not discharged the onus to rebut the statutory presumptions available to the AO. In the absence of any explanation on various entries found recorded, the Revenue is entitled in law to draw adverse inference against the assessee company. As regards delivery of panchnama to one ‘Shri Rakesh Kumar’, the Ld.CIT DR submitted that ‘Shri Rakesh Kumar’ is quite likely to be an abbreviated name of ‘Shri Rakesh Kumar Yadav’ or some person found in the business premises of the assessee company. The sanctity of the panchnama thus cannot be dislodged.
8.1 On a query put by the Bench in the course of hearing towards statement under s. 132(4) of the Act, the Ld.CIT DR submitted that statement under s. 132(4) of Shri Rakesh Kumar Yadav is being placed on record although not referred in the assessment order or in the first appellate order. The Ld.CIT DR submitted that once a diary/other paper etc. has been found from the possession of the Director of the assessee company, the presumption under s. 132(4A) in the course of search as well as presumption under s. 292C in the course of assessment continues to be available to the Revneue and hence additions made in the absence of any concrete evidence to the contrary, cannot be faulted.
8.2 The Ld.CIT DR thus submitted that no interference with the first appellate order is called for.
9. We have carefully considered the rival submissions and perused the first appellate order and the assessment order. The material referred to and relied upon has been considered in terms of Rule 18(6) of the Income Tax Appellate (Tribunal) Rules, 1963. Case laws cited have been perused.
10. Having regard to the legal framework available for search assessment, the legitimacy of additions under s. 153A on account of undisclosed Income attributable to certain entries discovered in the course of search under s. 132 is under controversy. The assessee has questioned the propriety of additions on merits as well.
11. As transpired in preceding paragraphs, a search and seizure operations were carried out on Antriksh Group including residential premises of Shri Rakesh Kuamr Yadav [RKY] on 05.02.2014. Based on search warrant & Panchnama which also included name of the assessee company herein, the proceedings under s. 153A were initiated against assessee.
11.1. Once search warrant and Panchnama has been drawn in the name of the assessee company, the legality of search under s. 132 of the Act cannot be examined by the Tribunal.
11.2 The plea of the assessee on this score is thus rejected.
12. The assessee claims that the impugned additions towards undisclosed income in question without successfully attributing the so called incriminating material in the form of entries in diary etc. to the assessee co. is outside the legal framework provided under s. 153A of the Act as enunciated and settled in the case of CIT vs. Abhisar Buildwell (P.) Ltd. [2023] 149 com 399 (SC) and other subsequent judgments of the Hon’ble Supreme Court wherein the ratio of CIT vs. Abhisar Buildwell (P.) Ltd. (supra) was applied. The instant assessment years AY 2011-12 & 2012-13 being unabated and concluded assessments at the time of search, no addition under s. 153A is permissible in the absence of incriminating material found in the course of search in the case of assessee co.
12.1 Admittedly, the basis of additions towards undisclosed Income is the entries found in the premises of RKY. The residential premises of RKY cannot be equated with the premises of the Assessee. RKY in the statement under s. 132(4) or in other statement is not shown to attribute such entries to the Assessee co. engaged in development of Golf View -II project. No other tangible material have been produced either. Unless it is found as a matter of fact that incriminating material found in the course of search unflinchingly relates to the assessee, unabated assessment cannot be disturbed on such aspect more so, when the so called entries were discovered from the premises of a person who holds business interests in other independent companies simultaneously and is also assessable in his personal capacity also. It is also the case of the assessee that for applicability of section 153A, it is not only the initiation of search on assessee which is mandatory but also actual conduct of search at the premises of the assessee which is equally material. The assessee claims that no search was actually carried out at the premises of the assessee.
12.2 Indisputably, in the instant case, the diary containing entries which is the foundation for making additions have been found from the residential premises of RKY who not only happens to be Director of the assessee company (Golf View II project) but is also a Director of Antariksh Developer and Promoters (P) Ltd. (Golf View I project) and other cos. Besides, RKY is also a taxpayer in his personal capacity. Hence anything and everything found from the premises of such person cannot be automatically linked to all companies where he happens to be a Director or a key person per se. The primary onus thus lies on the revenue to show that the impugned entries found in the diary bears a live link and proximate nexus to a particular company. The Revenue authorities namely, AO and CIT(A) have not demonstrated that the entries found in the diary which is subject matter of controversy relates to the assessee company in exclusion to other entities. The assessee, on the other hand, has all along taken a stance that such entries are neither speaking and nor do they indicate any connection with the assessee company herein except one entry of INR 1,50,000/- in the form of receipt for which receipt issued by the assessee was duly found in the course of search. Such receipt found in the course of search cannot be regarded as incriminating document since such entries was duly recorded in the books at the relevant time of transactions. The statement of RKY under s. 132(4) of the Act has not been referred either in the assessment order or in the first appellate order to appreciate the version of Director, Shri Rakesh Kumar Yadav on such entries. In order to appreciate the contents of Statement under s. 132(4) of the deponents RKY or other person bearing evidentiary value, the revenue in the course of hearing before the ITAT was called to produce copy of such statements. In response to the directions of the bench, statement of RKY under s. 132(4) & s. 131 of the Act was filed by the Revenue. On perusal thereof and on enquiry from the department, it emerged that no adverse statement on the impugned entries has been extracted in so far as the assessee herein is concerned. No other corroboration is available either, to link such entries to the assessee co. In the absence of any tangible material carrying any evidentiary value, the additions on account of impugned entries is not permissible in the hands of the assessee company in a concluded assessment. In the absence of any mention of assessee company namely ‘Colourful Estates’ against the entries recorded in diary except one entry of receipt of INR 1,50,000/-, it is difficult to gather the nature of these entries. The right person to answer the nature of entries is none other than RKY from whose possession, the diary was found. RKY nowhere shown to have acknowledged or acquisitioned in the statement under s. 132(4) or later statements that such entries are relatable to assessee co. The entire additions are clearly in the realm of speculation & conjectures. Hence the version of the assessee that rest of the entries except INR 1,50,000/- do not relate to the assessee company deserves to be accepted.
12.3 The presumption under s. 132(4A) as well as s.292C is plausible against the assessee only in the event where such documents/diaries etc. are found from the business premises of the assessee company. The documents found from the resident of a Director of the assessee company who also simultaneously holds similar status and business interests in multiple companies will not ipso facto gives rise to statutory presumption against all companies where he is a Director or a key person. Manifestly, the Revenue has proceeded on conjectures and surmises without bringing any concrete evidence against the stance of the assessee such as statement under s. 132(4) or identification of entries by RKY even post-search or any other direct or circumstantial evidence. The statutory presumption under s. 132(4A) thus did not trigger against the assessee co. at any point of time in the course of search. Likewise, the presumption under s. 292C in the course of assessment is also not available for identical reasons. In the peculiar circumstances, the presumption if any, is plausible against the custodian of the diary containing entries subject to the provisions of the Act.
13. Paradoxically, based on impugned entries, the same very AO has made identical additions on substantive basis in the hands of Antariksh Developer and Promoters (P) Ltd. simultaneously. The AO in the case of Antariksh Developers has made identical additions on the ground that entries recorded in the diary include entries relatable to Antariksh Developer and Promoters (P) Ltd. Significantly, it is not a case that the additions in Antariksh Developer and Promoters (P) Ltd. have been made on protective basis. Additions in that case is found to be made on substantive basis on the ground that entries found include entries related to Golf View I project developed by Antriksh Developer and Promoters (P) Ltd. Such stand of the AO in Antariksh Developers assessment is in direct contradiction to the action taken in the hands of the assessee herein and hence blemishes the impugned additions irreversibly.
14. Thus, on conspectus of peculiar facts and law applicable, we are disposed to hold that the entries found recorded in the diary seized from the residential premises of RKY is not capable of incriminating the assessee company per se. The additions made qua such entries thus are not justified within sweep of s. 153A of the Act.
15. On merits also, the impugned addition is not justified in the absence of any culpability established against the assessee company by some irrefutable evidence as noted above. The revenue has failed to tie the contents of impugned entries discovered from third person with that of assessee co. The statutory presumption is thus not available in the instant case. The onus thus continues to lie at the doorstep of Revenue that the transactions/ entries were consummated by the assessee indeed. Such onus has not been discharged at all. The allegation leveled against the assessee co. is in the realm of bald. Coupled with this, simultaneous addition based on such entries in the hands of other entity militates against action of the revenue and erodes the very foundation of the impugned additions.
16. We thus find substantial merit in the plea of the assessee on both counts namely lack of jurisdiction under s. 153A for making impugned additions dehors any incriminating material as well as additions being devoid of any merit in the absence of any credible corroboration that such entries unflinchingly relates to the assessee company in exclusion to other entities.
17. In the result, the appeal of the assessee is allowed.
ITA No.2205/Del/2023 [Assessment Year : 2012-13]
18. We shall now advert to appeal of the assessee i.e. ITA No.2205/Del/2023 for the Assessment Year 2012-13.
19. The grounds of appeal raised by the assessee read as under:-
1. “That on the facts and circumstances of the case, Assessment Order passed u/s 153A(1)(b) of the Act by the Deputy Commissioner of Income Tax, Central Circle -1, Gurgaon on 31.05.2023 for the assessment year 2012-13, is bad in law and liable to be quashed as no search action u/s 132 of the Act was carried out at the premises of the appellant company and no Panchnama was served to the appellant company.
2. Without prejudice to the Ground of Appeal No. 1, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 2,40,37,564/- by disregarding the contention of the appellant that the assessment in case of relevant assessment year has already been concluded which could not abate on the date of search as per second proviso of Section 153A of the Act and no such additions were made on the basis of any incriminating material found / seized during search action at the premises of the appellant.
3. Without prejudice to the Ground of Appeal No. 1, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 2,40,37,564/- made by Ld. AO by disregarding the contention of the appellant that such addition was made on the basis of seized documents found during the course of search action u/s 132 of the Act carried out at the premises of third person and hence, outside the scope of proceedings u/s 153A of the Act.
4. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 2,40,37,564/- made on the basis of documents seized from the premises of third person without appreciating the fact that entries amounting to Rs. 1,39,47,025/- only pertains to the appellant which was duly explained and substantiated by the appellant with its books of account.
5. That on the facts and circumstances of the case, the learned CIT(A) has erred both on facts & in law in sustaining addition to the extent of Rs. 2,40,37,564/- without appreciating the fact that similar addition was also made in the hands of Antriksh Developers & Promoters Pvt. Ltd. on the basis of same seized documents, which is bad in law and liable to be deleted.
6. That the grounds of appeal are independent and without prejudice to each other.”
20. Identical facts as discussed in ITA no. 2204/Del/2023 AY 2011-12 (supra) emerge in the present appeal concerning AY 2012-13 as well. In the instant case, the AO inter-alia made an addition of INR 3,43,96,743/- on account of unexplained entries recorded in the diary/paper seized from the residential premises of RKY. The AO has made additions towards receipts as well as payments for the entries as recorded in para 4.1 of the assessment order.
21. In the first appeal, the Ld.CIT(A), similar to AY 2011-12, has sustained the additions of the higher figure of receipts and payments. The aggregate amount of receipts of INR 2,40,37,564/- was accordingly sustained in the hands of the assessee by the Ld.CIT(A) providing part-relief.
22. The assessee has raised identical objections on assumption of jurisdiction and also on merits of additions claiming similarity of factual matrix in the context of unabated and concluded assessment for AY 2012-13 in question. The assessee has thus raised identical arguments as that of AY 201112. Broadly speaking, it is the case of the assessee that the nature of entries are obscure and unrelatable to the Assessee co. herein. The assessee had already accounted for such entries relating to Golf View II Project in its books of accounts. The rest of entries possibly relate to Golf View I Project belonging to Antariksh Developer. The Assessee further refers to and rely on the observations of the AO in the assessment order dated 29/03/2016 passed by the same AO in relation to AY 2012-13 in the hands of Antariksh Developer as placed in the paper book and contends that it is an admitted position by the AO himself that the multiple entries include entries relating to Golf View I Project also. Thus, making additions of all entries in the hands of the assessee is wholly unjustified and opposed to the basic facts and premises available on record. The assessee also contends that no adverse material has been brought against the assessee in relation to impugned entries by way of statement under s. 132(4) or other statements of any other stakeholder or any independent corroborative material. The assessee yet again vehemently points out that similar additions based on impugned entries have been parallelly made in hands of Antariksh Developer and Promoters (P) Ltd. under s. 153A(1b) of the Act for AY 2012-13 similar to AY 2011-12. Thus, the AO seeks to make additions in the hands of assessee as well as other entity based on same foundation and without discharging initial onus which lay upon the Revenue. The Assessee thus seeks to condemn the action of the revenue based on incorrigible infirmities as pointed out for AY 2011-12 and thus seeks reversal of the additions under challenge.
23. Facts being identical to AY 2011-12, the view expressed in ITA No.2204/Del/2023 concerning AY 2011-12 shall apply Mutatis Mutandis. The additions made on account of undisclosed income attributable to alleged unexplained entries are thus not sustainable in the hands of assessee co. herein both on the question of jurisdiction to assess impugned income having regard to the legal framework as well as on merits in the absence corroboration of alleged entries. Without repeating the delineations already made in AY 2011- 12 (supra), we hold that the additions made by the revenue are devoid of legal and factual foundation. Consequently, the additions sustained by the Ld.CIT(A) deserves to be cancelled and set aside. The AO is directed to reverse the additions on this score.
24. In the result, the appeal of the assessee is allowed.
25. In the combined result, both captioned appeals of the assessee are allowed.
Order pronounced in the open Court on 15th January, 2025.
Author Bio
