ser Assessment U/s. 153C without mentioning assesse’s name in legal paper and non-establishment of nexus with searched party was invalid Assessment U/s. 153C without mentioning assesse’s name in legal paper and non-establishment of nexus with searched party was invalid

Case Law Details

Case Name : DCIT Vs Abhishek Atlani (ITAT Raipur)
Appeal Number : ITA No.185/RPR/2014
Date of Judgement/Order : 12/10/2018
Related Assessment Year : 2006-07
Courts : All ITAT (6236) ITAT Raipur (15)

DCIT Vs Abhishek Atlani (ITAT Raipur)

Conclusion: Since AO made addition under section 153 on the basis of documents seized in case of third party but without mentioning of assesse’s name in any legal paper and non-establishment of relationship with searched party, therefore, the same was invalid.

Held: AO on the basis of documents seized from the premises of M/s. A Ltd. and its directors which were belonging to assessee initiated proceedings u/s 153C in case of assessee and, thereafter, made addition of Rs.2,61,50496/-. While doing so, he observed that assessee was entitled to receive compensation equivalent to 2,61,50,496/- which was the amount receivable as on 31.03.2006. According to him, the compensation received represented the investments which were not recorded in the books of account of assessee and, therefore, were hit by the provisions of section 69B. It was held the addition was to be deleted on the ground that similar addition had been deleted in the hands of M/s. A Ltd.. Further, AO had not demonstrated the nature of relationship with assessee and M/s. A Ltd.. Since the name of the assessee did not figure out in any official paper and AO did not establish the nexus of assessee with M/s. A Ltd, therefore, addition made in assessee’s case could not be sustained.

FULL TEXT OF THE ITAT JUDGEMENT

ITA Nos.185 & 186/RPR/2014 filed by the Revenue are directed against the separate orders dated 23.05.2014 of the ld. CIT(A), Raipur (CG) relating to assessment year 2006-07 respectively. ITA No.314/RPR/2014 filed by the Revenue is directed against the order dated 27.08.2014 of the ld. CIT(A), Raipur (CG) relating to assessment year 2006-07. Since common grounds of appeal have been taken by the Revenue in all these three appeals, therefore, they were heard together and are being disposed of by this common order for the sake of convenience.

2. First, we take up ITA No.314/RPR/2014 in the case of Taral Modi as the lead case.

2.1 Facts of the case, in brief, are that the assessee is an individual and derives income from house property, business income in the capacity of partner and income from other sources. A search and seizure action u/s 132 of the I.T. Act, 1961 was conducted on the business premises of M/s. Aarti Infrastructure & Buildcon Ltd., residential premises of its directors and the residential/business premises of the other members and related persons/ concerns in the above business group. The materials seized from the persons covered under search were examined and the relevant persons were asked to furnish their explanations upon findings of assets and entries made in the loose papers and various discrepancies found in accounts/documents. Certain papers were found from the above premises wherein the name of the assessee was mentioned in certain transactions of land and in redistribution of some assets on dissociation of the assessee and few others from the affairs of M/s. Aarti Infrastructure & Buildcon Ltd. In the course of verification of the documents seized from the residential premises of Shri Kishore Atlani (namely a pen drive) and also the documents seized from Shri Rajesh Atlani, certain documents belonging to the assessee were found, based on which the Assessing Officer issued notice u/s 153C to the assessee on 12.09.2012 after recording reasons. Since there was no compliance to this notice, a notice u/s 142(1) was issued on 09.01.2013 and a questionnaire was also issued separately. The assessee subsequently filed the return of income in response to notice u/s 153C on 12.03.2013 declaring total income of Rs.3,74,960/-.

3. During the course of assessment proceedings, the Assessing Officer observed that the assessee is related to one business concern namely M/s. Aarti Infrastructure & Buildcon Ltd. which is a company engaged in construction and sale of flats/shops, sale of lands and execution of government contracts. The assessee was a Director of said M/s. Aarti Infrastructure & Buildcon Limited then known as M/s. Aarti Buildcon Private Limited. But subsequently there was a change in the holding/controlling pattern of this company and the assessee severed himself from the functioning of this company. At the time of change of the controlling pattern, an agreement was executed between various persons in which the assessee was also a party. A copy of the agreement was seized from Shri Rajesh Atlani, who is the brother of the assessee and this agreement narrates transaction of sale of land and sharing of profit out of it by the outgoing stake holders mentioned in the agreement. As already mentioned earlier, the assessee is specified to be the beneficiaries from this devolution of the profits worked out and included in the agreement. The said company M/s. Aarti Infrastructure & Buildcon Limited was having receipts from sale of land also. In the accounts for financial year 2007-08, the sale of lands include sale of land at Mowa which was sold for Rs.3,53,52,000/- and included in the accounts of head-office. From its ledger account, it was also found that a land was sold for Rs.2,95,20,000/- on 13/03/2008 to one M/s. Purandar Promoters and Developers Private Limited vide sale deed on the same date. A copy of the sale deed was found in the office premises of the said company and seized under identification mark A/3/30 containing pages from 1 to 197. As per this document, the market value adopted for stamp duty calculation was Rs.3,68,90,000/- whereas the sale was registered at much lower amount of Rs.2,95,20,000/-. The payment was made through one demand draft of Rs.1,80,00,000/- bearing number 018122 dated 18/01/2006 and one cheque of Rs.1,15,20,000/- bearing number 864642 dated 01/06/2006. These details were found entered in the sale deed itself. The payments through above instruments were made more than 2 years ago, but the sale was registered much later. Further, the sale consideration which was adopted was on a lower side as compared to the stamp duty valuation. These findings made during the course of search was itself being probed when at premises of Shri Rajesh Atlani, a copy of agreements relating to sale of land at Mowa was found. Apart from this from the residence of Shri Kishore Atlani, one pendrive was seized in which one excel file was present showing details of one land transaction. On superficial examination above these transactions are found to be one and the same.

4. The Assessing Officer, therefore, asked the assessee to explain as to why the addition should not be made in the hands of the assessee to the extent of Rs.2,65,52,456/-. It was explained by the assessee that the funds to the extent of Rs.12,00,00,000/- were to be received by him along with others from M/s Suncity Projects Private Limited and initial payment of Rs.1,80,00,000/- was also made. But subsequently a severance of some directors from the activities of the company M/s. Aarti Infrastructure and Buildcon Limited was imminent due to which the outgoing directors were to be provided with some liquidity. He concluded by stating that the compensation allocated to him was never received.

5. The Assessing Officer held that the explanation offered in the above letter fails to satisfactorily explain that the assessee was not a beneficiary of the settlement worked out in the agreement. At the first place the assessee is not in a position to outright object the veracity of the agreement since it carries his signature. The assessee never claimed and also did not produce any documentary evidence substantiating that the agreement was unilaterally cancelled by him if it was to have no significance as has been contented by the assessee. The assessee mainly relied on two events subsequent to the date of the agreement. On this basis, one of the contentions of the assessee that the impugned land was sold to M/s. Suncity Projects Limited for a lower amount and it provided funds in form of inter-corporate loans to M/s. Aarti Infrastructure & Buildcon Limited. This argument was advanced by the company M/s. Aarti Infrastructure & Buildcon Limited in their case but by itself is not convincing. The fact that the impugned land was ultimately sold and that valuation of its price for stamp duty purposes is on lower side, does not preclude the possibility of the transaction taking place in the manner & amount as appearing from the seized documents. Thus there are umpteen cases where the actual sale price is much higher than the valuation for stamp duty purposes and this is a common feature in transactions relating to sale of lands. The company also contended that funds represent inter-corporate transfers but considering the circumstances in totality the argument does not substantiate that the sale of the land was done in other manner than as appearing in the seized document. Hence the assessee failed to clarify his position from the accounts vis-à-vis the situation appearing out of the execution of the above referred agreement.

6. The Assessing Officer further observed that the agreement clearly vests with the assessee the right and entitlement for compensation from M/s. Aarti Infrastructure & Buildcon Limited equivalent to Rs.2,61,50,496/- from the redistribution of various assets. The assessee is entitled for the above amount being his share on account of compensation equivalent to Rs.2,61,50,496/-, which is the amount receivable as on 31/0312006. In absence of any explanation from the side of the assessee, the Assessing Officer made addition to the income of the assessee by invoking the deeming provision of section 69B of Income Tax Act, 1961. According to him, the compensation received represents the investments which are not recorded in the accounts of hence by virtue of the deeming provisions, the addition of Rs.2,61,50,496/- was made by the Assessing Officer to the income of the assessee.

7. Before the ld. CIT(A), the assessee made elaborate submissions which has been summarized by the ld. CIT(A) and which read as under :-

“(i) No part of the agreement dated 01.04.2006 was ever implemented by any party to the agreement and it is no more than a MOU which has remained unimplemented.

(ii) That the agreement was signed by the directors of Aarti Infrastructure and Buildcon Ltd. (other than Shri Suresh Atlani) unwillingly. The immovable properties described in para no. 6 of the agreement were never given/transferred to the person named in the agreement.

(iii) Shri Suresh Atlani had filed a Civil Suit in the Court of Law for recovery of certain amount, which was later on withdrawn/terminated by entering into a compromise deal in Lok Adalat.

(iv) The appellant has relied upon the civil suit filed by Shri Suresh Atlani to establish that the agreement was never implemented. The contents of the agreement do not have any implication in the case of appellant and there is no material/evidence on record that any part of the agreement was actually carried out.

(v) The amounts stated to have been received from Suncity Project Pvt. Ltd. actually represent inter corporate loans given by Suncity Project Pvt. Ltd.

(vi) The contents of the pen drive are unauthentic, unreliable and do not represent correct state of affairs. In absence of any corroborative material, no addition could have been made.

(vii) Neither the copy of agreement dated 01.04.2006 nor the pen drive was found from appellant. No evidence has been brought on record correlating the allegation of AO.”

8. Based on the argument advances by the assessee, the ld. CIT(A) following his decision in the case of M/s Aarti Infrastructure & Buildcon Ltd. deleted the addition made by the Assessing Officer by observing as under :-

6. I have carefully gone through the assessment order and submissions of the appellant. The addition has been made by the AO holding that as per the agreement dated 01.04.2006, the appellant was entitled to the amount of Rs.2,61,50,496/-. A perusal of the copy of agreement shows that major amount is comprised of share of appellant in the alleged undisclosed sale consideration of land sold by Aarti Infrastructure and Buildcon Ltd. (hereinafter referred to as AIBL) to Suncity Project Pvt. Ltd. On the basis of this very agreement, an addition of Rs.9,17,91,005/- was made by the AO as undisclosed capital gain in the case of AIBL. The issue covered by this ground of appeal is thus identical to Ground No. 1 in Appeal no. 30/13-14 in the case of M/s Aarti Infrastructure and Buildcon Ltd. for AY 2008-09. The said assessee had also filed an appeal which has been decided in assessee’s favour vide order dated 13.08.2013. Since the issue covered in this appeal is already decided in the above appeal, for the reasons detailed in the operative part of the appellate order dt. 13.08.2013, which have been reproduced below, the addition made in the instant case is deleted.

“6. 1 have carefully gone through the assessment order and written submissions of the appellant. It is not in dispute that the appellant had disclosed the sale of land at Mowa under question in its books of accounts as the A.O. has also recorded his finding of fact in Para 2 of the assessment order. It is gathered that the land was sold for Rs.2,95,20,000/- on 13.03.2008 to M/s. Purandar Promoters and Developers Private Limited through the registered sale deed on the even date. It is seen that as per registered sale deed, the market value adopted for stamp duty purposes was Rs.3,68,90,000/-, however, the sale consideration was Rs.2,95,20,000/-; that the payment was received two years before the registry of the sale deed through one demand draft of Rs.1,80,00,000/- bearing number 018122 dated 18.01.2006 and one cheque of Rs. 1,15,20,000/- bearing number 864642 dated 01.06.2006. The action of the A.O is based on the information gathered and inference drawn from the following:

a) At another premises, which is a residential premises of brother of one of the past director in the appellant company, a copy of agreements relating to sale of land at Mowa was found;

b) The sale consideration was much lower than the value adopted for stamp duty purposes.

c) From the residence of the same person, named Shri Kishore Atlani, one pen drive was seized in which one excel file was present showing details of one land transaction.

7. According to the A.O. the transaction are found to be one and the same. The A.O has also referred to the pen drive seized from Shri Kishore Atlani that contained one excel file named SUNCITY contents whereof have been reproduced by the A.O in Para 3 of the assessment order.

8. From the perusal of contents of the excel file, 1 find that the payment details, inter alia, contains details of cheque numbers vide which payments were made to following parties as extracted hereunder :

Particulars
SQ. FT.
RATE FOR SQ.FT.
Amount
Date
Cheque NO.
Amount Recd.
Name
Cost of Plot
397741
305
121311005.00
20.01.2006
18122
18000000.00
Aarti Buildcon Pvt. Ltd.
(407741 – 10000 For CSEB)
05.06.2006
864496
10000000.00
Rajeev Agrawal
13.06.2006
864642
11520000.00
Aarti Buildcon Pvt. Ltd.
26.06.2006
864800
20000000.00
Aarti Sponge Pvt. Ltd.
04.07.2006
865067
20000000.00
Aarti Buildcon Pvt. Ltd.
29.07.2006
196882
20000000.00
Aarti Buildcon Pvt. Ltd.
Total
99520000.00

9. It is an undisputed fact that the receipts vide cheque no. 18122 for Rs.1,80,00,000/- and cheque no. 864642 for Rs. 1,15,20,000/- stood encashed and credited in the bank account and books of accounts of the appellant. It is also not in dispute that the other payment details made through cheque were also received by the persons named in the Table. I have carefully perused Page No. 26 to 33, Page No. 34 to 50 and Page No.51 of the Paper book. I find that the payments through cheque are duly appearing in the books of accounts of the persons named in the Table. I find that the appellant had repaid Rs.1.10 crores to M/s Suncity Project Pvt. Ltd. and the sum of Rs.2,95,20,000/- was adjusted against the sale consideration of the land sold by the appellant at Mowa. It is also seen that the appellant had repaid the sum of Rs.2 crores to the said party namely Suncity Project Pvt. Ltd. that was received as unsecured loan by the appellant. I also find that M/s Aarti Sponge & Power (P) Ltd. had repaid the sum of Rs. 2 crores to Suncity Project Pvt. Ltd. Similarly, Mr. Rajeev Agrawal and Mr. Chhagan Lal Mundra had also repaid sum of Rs. 1 crore and Rs.1.50 crores respectively to Sun city Project Pvt. Ltd. It is not the case of the A. O. that Purandar Promoters & Developers Pvt. Ltd., the buyer of the land had confirmed having paid any amount over and above that appearing in the registered sale deed. It transpires that the persons named in the Table have shown the receipts as unsecured loan. M/s Aarti Sponge & Power (P) Ltd. is also an assessee covered under the same search assessment proceedings being a group company, however, it is not the case of the A. O. that the payment particulars appearing in copy of account of Suncity Project Pvt. Ltd. in the books of M/s Aarti Sponge & Power (P) Ltd. have not been received by Suncity Project Pvt. Ltd. I find that the specific queries were raised by the A.O. from the appellant and Mr. Rajeev Agrawal. I find that, in spite of specific request having been made by the appellant during the course of assessment proceedings to seek information from the buyer, the request was not acceded and no enquiry was made by the A.O. to support his conclusion. It is also not the case of the A.O. that the buyer had recognized the cost of the land i.e. asset at Rs.12,13,11,005/-. It is not the case of the A. O. that the actual sales consideration was agreed between the appellant and the buyer at Rs.12,13,11,005/- and not at Rs.2,95,00,000/- which transpired from the “Agreement to Sale” which is a common procedure adopted by the parties to protect their interest. Conversely, the action of the A.O does not derive any strength from any such “Agreement to Sale “. The A.O. has referred to the agreement dated 01.04.2006 wherein sum of Rs.10,33,11,005/- is appearing as receivable from Suncity Project Pvt. Ltd and share of Party No.2 and 3 in the said agreement. It is gathered that the A.O. has drawn nexus between the said agreement between the directors of the appellant company in their capacity as directors and also in their individual capacity for distribution of assets of the companies. I have perused the said agreement dated 01.04.2006, from the perusal of the Table in para 3 of the assessment order, it is clear that the funds were received from Suncity Project Pvt. Ltd. and stood recorded in the books of accounts as loan received. It is seen that the said agreement dated 01.04.2006 nowhere describes the nature of sum of Rs.10,33,11,005/-receivable from Suncity Project Pvt. Ltd. A reading of the agreement shows that it is an illegal agreement, as it speaks of distribution of assets of the company in an illegal manner. Such an agreement could not have been relied upon for the purpose of making addition. There is no evidence on record that the agreement was ever implemented by any of the party. In my considered opinion, the agreement has no evidentiary value, in the facts and circumstances of the case. No adversity could have been drawn on the basis of this agreement. There was no transfer of any asset with reference to this agreement, giving rise to any capital gain. The A. O. has not brought on record any evidence to rebut the submission of the appellant that the said agreement dated 01.04.2006 was never executed, on the contrary, I do find force in the submission of the appellant that the Compromise entered into between the appellant and other parties vide order of the Lok Adalat dated 20.06.2010 itself signifies that the agreement was never acted upon between the parties. I do find force in the submission of the appellant that the land was sold to Purandar Promoters and Developers Pvt. Ltd., whereas, the payments have been received from Suncity Project Pvt. Ltd. As there is no lifting of corporate veil between Purandar Promoters and Developers Pvt. Ltd. and Suncity Project Pvt. Ltd., the receipts cannot be said to be receipt of sales consideration against transfer of land.

The agreement dated 01.04.2006 is not the agreement to sell the property in question, but it is an agreement having reference to some amount receivable from Suncity Project Pvt. Ltd. Neither the agreement nor the pen drive was found from the control and possession of the appellant and on the contrary, these were found from the brother of an ex-director of the company. For this reason, the agreement and the so called contents of the pen drive requires to be viewed and relied upon more cautiously. As rightly contended by the appellant, the contents of the pen drive are absurd and unauthentic, because it relates to the alleged sale price of the land with the loans by several persons. Apart from this, no corroborative evidence, entry in any records, documents etc. was found during search. I find that the conclusion drawn by the A. O. is not deriving any strength from the enquiries conducted by the A.O. from Mr. Kishore Atlani i.e. the person from whose possession the Pen Drive was seized. I am convinced that the sums referred by the A.O represents loan received by various persons of the group and out of the sums received, loans have been repaid also by the parties including the appellant which cannot be construed as an afterthought as the repayments were made much earlier than the search. 1 am convinced that the sums do not represent receipt of sales consideration to the tune of Rs.12,13,11,005/-. As the sums were repaid, there is no question of holding the same as sales consideration giving rise to capital gain. It is only the real income which gets charged as income under the Income-tax Act as pointed out by the Hon’ble Supreme Court in State Bank of Travancore v. CIT (1986) 158 ITR 102 (SC) later superseded by the decision in UCO Bank v. CIT (1999) 237 ITR 889 (SC) the concept of real income has certainly to be applied in judging what the assessee has received is income or not. Even if a credit entry is made in the account books, it may well be a hypothetical income. 1f it is not real income, the mere entry would not create liability. A liability to tax can arise only when, there is a legal right to receive as was pointed out in CIT v. Thiagaraja Chetty & Co. (1953) 24 ITR 525 (SC) and Morvi Industries Ltd. v. CIT (1971) 82ITR 835 (SC).

10. In the case of CIT vs. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) : TC39R. 737, Hidayatullah, J. (as he then was), speaking for the Court, observed “Income-tax is a levy on income. No doubt, the IT Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. 1f income does not result at all, there cannot be a tax, even though in book- keeping, an entry is made about a ‘hypothetical income’, which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account.

11.. In the case of Godhra Electricity Co. Ltd. v. CIT (1997) 225 ITR 746 (SC) enhanced rates shown as receipt in accounts but not realized due to litigation and takeover of the company by Government was held by the Supreme Court as not accruing to the assessee on real income basis in the following words: “The question whether there was real accrual of income to the assessee-company in respect of the enhanced charges for supply of electricity has to be considered by taking the probability or improbability of realisation in a realistic manner. If the matter is considered in this light, it is not possible to hold that there was real accrual of income to the assessee-company in respect of the enhanced charges for supply of electricity which were added by the ITO while passing the assessment orders in respect of the assessment years under consideration. The AAC was right in deleting the said addition made by the ITO and the Tribunal had rightly held that the claim at the increased rates as made by the assessee-company on the basis of which necessary entries were made represented only hypothetical income and the impugned amounts as brought to tax by the ITO did not represent the income which had really accrued to the assessee-company during the relevant previous years. The High Court, in our opinion was in error in upsetting the said view of the Tribunal.”

12. Looking to the facts and circumstances of the case, as also decisions cited above, the addition made by the A.O. cannot be sustained. Hence, the addition is deleted.”

6.1 The findings given in the above referred appellate order are applicable in the present appeal also for the reason that the issue involved in both the appeals is identical. The addition has been made in the hands of appellant by the A.O based on the contents of agreement dt. 01.04.2006, which was also the subject matter of dispute in the appeal of Aarti Infrastructure & Buildcon Ltd. A clear finding has been given in the above appellate order that the agreement dt. 01.04.2006 is of no avail for the AO as it is illegal, invalid, un-implemented and none of the party to the agreement ever fulfilled its part of the agreement. When no undisclosed capital gain is earned by Aarti Infrastructure & Buildcon Ltd. there is no question of appellant getting any share in alleged capital gain and consequently, the addition made is not justified.

6.2 In the case of Shri Suresh Atlani, an addition of Rs.1,43,31,504/- was made by the AO on account of the above referred agreement dt. 01.04.2006, as this amount was stated to be payable to Shri Suresh Atlani in the above referred agreement. In Appeal No.318/13-14 order dt. 23.05.2014, the addition of Rs.1,43,31,504/- made in the case of Shri Suresh Atlani has been deleted, for the reasons given in the appellate order passed in the case of Aarti Infrastructure & Buildcon Ltd.

6.3 I find that the A.O had, in Para 3 of the assessment order, stated that the appellant is related to one business concern named Aarti Infrastructure & Buildcon Ltd., however, the A.O has not demonstrated the nature of relationship of the appellant with Aarti Infrastructure & Buildcon Ltd.. It is seen that the A.O. has referred the appellant as brother of Shri Rajesh Atlani, however, said finding of the A.O. has been found to be factually incorrect. It is also seen that the A.O. himself accepted that the name of the appellant does not figure out on any official papers, under such circumstances, in my considered view, the onus on the A.O. to establish the nexus of the appellant with Aarti Infrastructure & Buildcon Ltd. and transaction giving rise to impugned capital gain was much more. Looking to the facts and circumstances of the case and keeping in view findings in the above referred appellate orders dt. 13.08.2013 and 23.05.2014, I am convinced that the AO was not justified in making addition of Rs.2,61,50,496/- and the same cannot be sustained. Accordingly, the addition of Rs.2,61,50,496/- made by the AO is deleted.”

9. Aggrieved with such order of the ld. CIT(A), the Revenue is in appeal before the Tribunal by raising the following grounds :-

“1. Whether in law and on facts & circumstances of the case, the learned CIT(A) has erred in deleting the addition of Rs.2,61,50,496/- made by the A.O. by invoking section 69B of the IT Act, 1961?

2. The Order of the Ld. CIT(A) is erroneous both in law and on facts.

3. Any other ground that may be adduced at the time of hearing.”

10. The ld. counsel for the assessee at the outset referred to the decision of the Tribunal in the case of DCIT vs. M/s. Aarti Infrastructure & Buildcon Ltd. vide ITA no.30/RPR/2013 order dated 15.02.2018 for assessment year 2008-09 and submitted that the Tribunal after considering all the aspects has dismissed the appeal filed by the Revenue. Since in the instant case also the addition has been made by the Assessing Officer on the basis of the documents seized from the premises of M/s. Aarti Infrastructure & Buildcon Ltd. and related persons, therefore, this being a covered matter in favour of the assessee the grounds raised by the Revenue should be dismissed.

11. The ld. DR on the other hand heavily relied on the order of the Assessing Officer.

12. We have considered the rival arguments made by both the sides and perused the material available on record. We find the Assessing Officer on the basis of documents seized from the premises of M/s. Aarti Infrastructure & Buildcon Ltd. and its directors which were belonging to the assessee initiated proceedings u/s 153C in case of the assessee and, thereafter, made addition of Rs.2,61,50496/-. While doing so, he observed that the assessee is entitled to receive compensation equivalent to 2,61,50,496/- which is the amount receivable as on 31.03.2006. According to him, the compensation received represents the investments which are not recorded in the books of account of the assessee and, therefore, are hit by the provisions of section 69B of the I.T. Act. We find the ld. CIT(A) deleted the addition on the ground that similar addition has been deleted in the hands of M/s. Aarti Infrastructure & Buildcon Ltd.. Further, the Assessing Officer has not demonstrated the nature of relationship with the assessee and M/s. Aarti Infrastructure & Buildcon Ltd.. Since the name of the assessee does not figure out in any official paper and the Assessing Officer did not establish the nexus of the assessee with M/s. Aarti Infrastructure & Buildcon Ltd., the ld. CIT(A) deleted the addition made by the Assessing Officer, the reasons of which are already reproduced in the preceding paragraph.

13. We find identical issue had come up before the Tribunal in the case of M/s. Aarti Infrastructure & Buildcon Ltd. (supra). We find the Tribunal upheld the findings of the ld. CIT(A) and dismissed the appeal filed by the Revenue by observing as under :-

“19. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. In the instant case, a search & seizure operation was conducted on 23.6.2010. According to the Assessing Officer, during the course of search in the premises of the assessee, a sale deed was found which evidences sale of land situated at Mowa for Rs.2,95,20,000/- by the assessee to M/s. Purandar Promoters and Developers Private Limited on 13.3.2008. The said sale was disclosed by the assessee in its return of income for the year under consideration at Rs.2,95,20,000/-. The Assessing officer further observed that on 23.6.2010, a search was conducted simultaneously at the premises of Shri Suresh Atlani, Ex. Director of the assessee company. During that search, one Pen drive was found and in that Pen driver one Excel sheet was found. In that Excess-sheet, on the left hand side, description of the very same land which was sold by the Registered Deed dated 13.3.3008 for Rs.2,95,20,000/- was mentioned and its cost was stated at Rs.12,13,11,005/- being 397741 sq.ft @ Rs.305/- per sq.ft. On the right hand side, amount received from SUNCITY Project (P) Ltd., was stated at Rs.12,05,20,000/- and balance to receive was Rs.7,91,005/-. The aforesaid Rs.12,05,20,000/- was received by cheque as detailed hereunder:

Name of recipient Date Amount
Aarati Buildcon Ltd. 20.1.2006 1,80,00,000.00
Rajeev Agrawal 5.6.2006 10,00,00,000.00
Vimal Agrawal 5.6.2006 20,00,00,000.00
Aarati Buildcon Ltd. 13.6.2006 11,52,00,000.00
Aarati Sponge (P) Ltd. 26.6.2006 20,00,00,000.00
Chhagan Lal Mundra 27.6.2006 10,00,00,000.00
Aarati Buildcon Ltd. 4.7.2006 11,00,00,000.00
12,05,20,000.00

20. Further, during the course of search at the residential premises of Shri Suresh Atlani, one agreement marked as LPS A-7/13 was also found. As per the said agreement, Shri Suresh Atlani alongwith his son Shri Abhisek Atlani and Taral Modi agreed to relinquish their right in the assessee company w.e.f. 1.3.2006 for certain consideration. The consideration, inter alia, included Rs.10,33,11,005/- receivable from M/s. SUNCITY Project (P) Ltd.,. As per the said agreement, out of Rs.10,33,11,005/- receivable from SUNCITY Project (P) Ltd., Rs.2,84,10,526/- was to be received by Shri Suresh Atlani and Shri Abhisek Atalani and Rs.2,58,27,751/- was to be received by Shri Taral Modi. Thus, the figure of Rs.10,33,11,005/- is corroborated with the Excel sheet, wherein, total amount was stated at Rs.12,13,11,005/-, out of which, Rs.1,80,00,000/- was already received prior to thertate of agreement. On the basis of above documents, the Assessing Officer inferred that the land in question was not sold for Rs.2,95,20,000/- as stated in the registered sale deed but was actually sold for Rs.12,13,11,005/- as revealed from the seized Excel sheet alongwith seized agreement dated 1.4.2006. The Assessing Officer therefore added Rs.9,17,91,005/- being suppressed sale proceeds of the land in question to the income of the assessee for the assessment year 2008-09.

21. On appeal, the CIT(A) deleted the said addition of Rs.9,17,91,005/-. As per the CIT(A), the amount received from SUNCITY Project (P) Ltd., included loans etc., which were repaid to SUNCITY Project (P) Ltd., by the recipients by cheque much before the date of search. The Assessing Officer was not justified in treating the said amount as actual sale proceeds of the land. The agreement dated 1.4.2006 also nowhere provides that Rs.10,33,11,005/-, amount to be received from SUNCITY Project (P) Ltd., was in the nature of sale proceeds of land at Mowa. According to him, only real income can be brought to tax as because the amount received from SUNCITY Project (P) Ltd. in excess of Rs.2,95,20,000/-were repaid back and no real income actually accrued or received by the assessee.

22. Ld D.R. reiterated the findings of the Assessing Officer.

23. We find that the undisputed facts of the case are that the assessee company sold its land situated at Mowa to Purandar Promoters and Developers Private Limited vide a registered sale deed dated 13.3.2008. As per the said sale deed, the consideration for the said land was Rs.2,95,20,000/- only. The stamp duty value of the said land was Rs.3,68,90,000/- at the time of execution of sale deed. Section 43CA was inserted in the Statute by the Finance Act 2013 w.e.f. 1.4.2014 and, therefore, not applicable in the assessment year under appeal. Nowhere in the course of search, any agreement for the said sale of land in question for an amount other than Rs.2,95,20,000/- was found. On the basis of excel sheet contained in the pen drive, the Assessing Officer inferred that the entire amount of Rs.12,13,11,005/-received/receivable from SUNCITY Project Pvt. Ltd., was on account of sale of the land at Mowa whereas the explanation of the assessee was that on the basis of inflated and projected value of the land of which development was to be carried out by the assessee and its other associates, the SUNCITY Project (P) Ltd., agreed to investment Rs.12,13,11,005/- with the assessee and its associates as unsecured loan and share application, etc. for becoming a future partner in the development of the said land. However, this deal could not be materialized and the loan etc received from SUNCITY Project (P) Ltd., was returned back to them or adjusted against the land in as it is position. The assessee strongly urged that in no point of time SUNCITY Project (P) Ltd., or Purandar Promoters and Developers Private Limited agreed to purchase the said land at Rs.12,13,11,005/- and never ever such consideration was received by the assessee. In view of the above explanation, we find no error in the order of the CIT(A). In the Excel sheet contained in the seized pen drive against the amount of Rs.12,13,11,005/-, the word stated was ‘cost’ and not the ‘sale value’ of the land. Even in the agreement dated 1.4.2006, nowhere it was stated that Rs.10,33,11,005/- receivable from SUNCITY Project Pvt. Ltd., was against the sale value of the land in question. The explanation of the assessee that it was the estimated cost after the development of the land against which M/s. SUNCITY Project Pvt. Ltd., agreed to make the investment but such development never took place cannot be ruled out. Rather that seems to be more plausible as the amounts received from SUNCITY Project (P) Ltd., were all through banking channel and same were also returned back through banking channel by the recipients of that amount before the date of the search. In the above circumstances, we do not find any good reason to interfere with the order of the CIT(A). It is confirmed and the ground of appeal of the revenue is dismissed.

24. In the result, appeal filed by the revenue is dismissed.”

14. Since the addition made by the Assessing Officer is also based on the same agreement which was found from the premises of M/s Aarti Infrastructure & Buildcon Ltd. and since the Tribunal after considering the various submissions made by both the sides has dismissed the appeal filed by the Revenue on this issue by holding that the excel sheet containing in the seized Pendrive against the amount of Rs.12,13,11,005/-, the word stated was “cost” and not the “sale value’ of the land and that in the agreement dated 01.04.2006 nowhere it was stated that the amount of Rs.10,33,11,005/- receivable from Suncity Project (P) Ltd. was against the sale value of land in question, therefore, in absence of any contrary material brought to our notice, we find no infirmity in the order of the ld. CIT(A) in deleting the addition for the year under consideration in the hands of the assessee. Accordingly, the order of the ld. CIT(A) is upheld and the grounds raised by the Revenue are dismissed.

ITA No.185/RPR/2014 (Abhishek Atlani):
ITA No.186/RPR/2014 (Suresh Atlani) :

15. After hearing both the sides, we find the grounds raised by the Revenue in the above two appeals are identical to the grounds in ITA No.314/RPR/2014 where the addition was made by the Assessing Officer on the basis of the same seized documents and the ld. CIT(A) has deleted the addition. We have already decided the issue and the grounds raised by the Revenue have been dismissed. Following similar reasoning, the grounds raised by the Revenue in the above two appeals are also dismissed.

16. In the result, all the three appeals filed by the Revenue are dismissed. Order pronounced in the open Court on this 12th October, 2018.

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