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Income Tax Appellate Tribunal, DELHI BENCH “SMC” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD
आदेश /O R D E R These two appeals are filed by the Assessees against the different orders of the Ld. Commissioner of Income Tax (Appeals), Kanpur dated 16.08.2022 for the AY 2015-16. In these two appeals the assessees have raised the following common grounds of appeal and since the issue is
I.T.A.Nos.2515 & 2516/Del/2022 common in both these appeals. These appeals are heard together and disposed off by way of common order for the sake of convenience:
1. “Because, the order of Ld, Lower Authority is bad in law as well as is against the facts and circumstances of the case.
2. Because learned Commissioner of Income Tax (A) erred in upholding the validity of notice and proceedings u/s 153 C of the Act, as:
a) notice u/s 153C is issued beyond the parameters of that provisions whereby neither document pertains to assessee nor Id, AO had requisite satisfaction, b) notice u/s 153C and consequent proceedings are beyond jurisdiction of AO being jurisdiction assumed based on the order u/s 127 which itself void, thus notice u/s 153C itself is void ab initio.
3. Because, without prejudice to above, learned Commissioner of Income Tax (A), manifestly erred in holding the validity of impugned order without issuing notice u/s 143(2) on the ITR in compliance to notice u/s 153C by erroneously observing in para 6.7/6.8 that issuance of notice u/s 143(2) is not mandatory as proper opportunity by various notice is provided.
4. Because, even on merits learned Commissioner of Income Tax (A), manifestly erred in sustaining addition of 21,50,000/- u/s 69 r.w.s. 115BBE, being the alleged cash payment against the purchase of house, in whole disregard to clinching/admitted evidences in support of disclosed payment merely on the basis of surmises and conjectures.
5. Because, learned lower authority further misdirected himself in law, on relying on section 292C as sacrosanct for addition, as presumption is against the searched person and is rebuttable, thereby erroneously sustained addition despite revenue failing to discharge heavy onus lay upon them to prove allegation more so when assessee discharged onus if any lay upon him.
6. Because, learned lower authority failed to appreciate that material relied upon, that too of a third party 2
I.T.A.Nos.2515 & 2516/Del/2022 collected/recorded behind the back still without providing same, without opportunity to cross etc. is no material more so when such material itself is vague/unreliable, thereby addition was without any material.
7. Therefore, it is very humbly prayed that notice u/s 153C and consequent order may be declared void, however alternatively prayed that addition of Rs. Rs. 21,50,000/- may kindly be deleted.” (Geeta Bansal):
2. Briefly stated the facts are that a search and seizure operation u/s 132 of the Act was conducted on 06.03.2018 at the residential as well as business premises of M/s SSS (Satyam, Sangani, Shaligram) Group.
Simultaneously the search was also conducted in the premises of V.K.
Patel who is the employee of Satyam Developers Ltd. which is also a group concern of M/s SSS Group for short (Satyam Group). In the course of search proceedings in the premises of V.K. Patel certain loose sheets and CD was found in respect of investments made by various persons in the project called “Santossa Neemland”. Based on the evidences found in the form of loose sheets, CD, etc., a satisfaction note for initiation of assessment proceedings u/s 153C of the Act in the case of the assessee namely Geeta Bansal was recorded on 19.02.2021 by the Joint Commissioner of Income Tax (OSD), Central Circle 2(2), Ahmedabad. The material in tally data (impounded) in the premises of V.K. Patel reveals that Geeta Bansal and Rakesh Kumar Bansal have purchased Unit 23 in Project SDL – Santossa Neemland Property registered on 09.03.2014 for a total cost of Rs.1,43,00,000/- out of which Rs.43,00,000/- has been paid in cash and the seized incriminating documents/digital data 3
I.T.A.Nos.2515 & 2516/Del/2022 pertains/relates to the assessees Geeta Bansal and Rakesh Kumar Bansal and accordingly provisions of Section 153C of the Act are attracted.
3. The satisfaction note has been forwarded by JCIT, Central Circle 2(2), Ahmedabad to the Income Tax Officer, Ward 2(3)(4), Hapur. Later by order u/s 127(1) dated 26.03.2021 the Commissioner of Income Tax, Ghaziabad transferred the jurisdiction of the Assessing Officer of the assessees to DCIT/ACIT, Central Circle, Ghaziabad. Subsequently notice u/s 153C of the Act dated 22.07.2021 was issued to the assessee by the DCIT/ACIT, Central Circle, Ghaziabad requiring the assessees to file return of income within 15 days from the service of the notice. The assessee Geeta Bansal sent e-mail on 05.08.2021 to the Assessing Officer DCIT/ACIT, Central Circle, Ghaziabad informing that due to technical glitches in Income tax portal she is not able to file return u/s 153C of the Act and, therefore, requested to consider the original return filed u/s 139(1) as return filed u/s 153C of the Act. Later on the assessee filed return on 16.08.2021 electronically for the assessment year under consideration i.e. 2015-16 declaring income of Rs.3,73,000/-.
In the course of assessment proceedings the assessee was required to file copy of purchase deed in respect of property purchased by the assessee along with her husband Shri Rakesh Kumar Bansal in Santossa Neemland and also to explain the source of investment made to acquire/purchase the said property along with supporting documents. In response to the notices the assessee filed submissions along with copy of 4
I.T.A.Nos.2515 & 2516/Del/2022 sale deed executed in respect of property bearing Unit No. 23 in Project SDL-Santossa Neemland stating that she along with her husband has purchased the property for consideration of Rs.1 crore. The assessee along with co-owner paid total consideration of Rs.91 lakhs out of housing loan taken from ICICI Bank Ltd. and out of remaining balance of Rs.9 lakhs assessee and co-owner paid Rs.4 lakhs each from their own bank accounts and remaining amount of Rs.1 lakh has been paid towards TDS on property from Axis Bank Ltd. Assessee furnished copy of loan sanctioned letters before the Assessing Officer. Assessee denied any payment of cash against purchase of property However, the Assessing Officer relying on the digital/tally data found and seized in the premises of V.K. Patel and his statement recorded u/s 132(4) of the Act came to the conclusion that assessee along with her husband has paid an amount of Rs.43 lakhs through cash against purchase of property and the assessee could not explain the nature and source of the said cash payment and, therefore, an amount of Rs.21,50,000/- (50% of 43 lakhs) was treated as unexplained cash investment and added to the income of the assessee u/s 69 read with section 115BBE of the Act. While completing the assessment u/s 144/153C of the Act.
5. On appeal, the Ld. CIT(A) sustained the addition made by the Assessing Officer holding that the contents of the seized material are presumed to be true and correct. Ld. CIT(A) also observed that V.K.
Patel has accepted that the amount has been taken in cash as well as in I.T.A.Nos.2515 & 2516/Del/2022 cheque from the allottees of this project. Ld. CIT(A) also observed that the ledger account found and maintained in digital and tally data clearly shows that cash payments are taken through Mr. Bhavnesh, J. Kaka and self on various dates appearing in the ledger and, therefore, the presumption is that the same are legally presumed to be belonging to the appellant to the assessee.
6. Ld. Counsel submitted that assessee is running her business of textile cloth in the name and style of “Rajiv Textile” and filed her return of income declaring income of Rs.3,73,000/- and this was accepted u/s 143(1) of the Act. Ld. Counsel submits that pursuant to search in the case of Satyam Group and V.K. Patel on 06.03.2018, notice u/s 153C of the Act dated 22.07.2021 was issued to the assessee and the assessee has filed her return of income on 16.08.2021. The assessment was completed u/s 144/153C on 30.12.2021 determining the income of the assessee at Rs.25,23,000/- after making addition of Rs.21,50,000/- as unexplained investment u/s 69 read with section 115BBE of the Act.
The Ld. Counsel for the assessee submits that notice u/s 153C of the Act was issued beyond the parameters of that provision whereby neither documents pertained to the assessee nor Ld. Assessing Officer has requisite satisfaction. The Ld. Counsel for the assessee referring to page 21 which is the satisfaction note recorded by the Assessing Officer and page no. 24 which is the satisfaction recorded by the JCIT, Central Circle, Ahmedabad in the searched person namely V.K. Patel, submits 6
I.T.A.Nos.2515 & 2516/Del/2022 that the satisfaction recorded by both the Assessing Officers are identical and there is no independent application of mind by the Assessing Officer in assessees case while recording the satisfaction and, therefore, the initiation of proceedings under 153C of the Act itself is bad in law. The Ld. Counsel for the assessee placed reliance on the decision of the Delhi High Court in the case of Canyon Financial Services Ltd. Vs. ITO [399 ITR 202].
The Ld. Counsel for the assessee submits that merely based on the material seized in the premises of a third party cannot be the basis for making addition in the hands of the assessee without showing as to how documents found during search related to the assessee and reflects any undisclosed income of the assessee. Reliance was placed on the decision of the Delhi High Court in the case of PCIT(Central) Vs. Sunway Realtech Pvt. Ltd. [142 Taxmann.com 477].
Ld. Counsel for the assessee further referring to the statement recorded under 132(4) from V.K. Patel which is placed at pages 52 to 74 especially page 66 in respect of Neemland Project submits that what has been seized is only some cheques and loose papers containing details with PAN and some calculations and referring to page 51 which is the ledger copy said to have been recovered from the CD found in the course of search submits that it is nowhere mentioned that the assessee has given cash to Mr. V.K. Patel or the builder. The Ld. Counsel submits that it is said to have been recorded in the ledger that cash of Rs.18 lakhs and 7
I.T.A.Nos.2515 & 2516/Del/2022 Rs.5 lakhs was received by the builder from one Mr. J. Kaka on 19.09.2014 and 13.10.2014 which dates are subsequent to the registration of the property in the name of the assessee as the property was registered on 03.09.2014. The Ld. Counsel further submits that the cash said to have been received from the assessee was recorded in the name of Mr. Bhavnesh on 28.05.2014 and 30.05.2014 of Rs.3 lakhs and Rs.7 lakhs respectively and it is nowhere mentioned that the assessee herself given cash to the builder or V.K. Patel.
The Ld. Counsel for the assessee further submits that the Ld. CIT(Appeals) misdirected himself in law on relying on Section 292C as sacrosanct for addition, as presumption is against the searched person and is rebuttable thereby erroneously sustained addition despite Revenue failing to discharge heavy onus placed upon them to prove allegation more so when assessee discharged onus if any, lay upon her. Reliance was placed on the following decisions:
1. CIT Vs. Anil Khandelwal [ITA No. 247 & 248/2015 dated 21.04.2015];
2. PCIT(Central)-II Vs. Umesh Ishrani [108 Taxmann.com 437] (Bom.);
3. Brijbhushan Singhal Vs. ACIT [ITA No. 1415 to 1417/Del/2018 dated 07.02.2018 ITAT (Del.)];
4. Pradeep Amrit Lal Vs. TRO [149 ITD 548] (Pune). 11. The Ld. Counsel further submits that the electronic evidence cannot be accepted in the absence of any corroborative evidence on record and certificate in terms of section 65B(4) of the Indian Evidence 8
I.T.A.Nos.2515 & 2516/Del/2022 Act, 1872. The assessment made by the AO on the foundation of such non-est material is devoid of any merit on legal and factual perspective and deserves to be quashed. Ld. Counsel submits that the Ld ACIT/DCIT, Central Circle has used the print out of the ledger recorded in Tally seized during search operation; such print outs, though are ‘documents’ u/s 2(l)(t) of Information Technology Act, 2000 read with section 2(22AA) of Income Tax Act,1961, yet it is secondary evidence as the secured access to computer resource from which the print out has been obtained was itself not made available to the Assessee. Therefore, print out of the ledger, being secondary evidence, cannot be admitted without compliance to the provisions of section 65B(4) rws 65B(2) of the Indian Evidence Act,1872.
Ld. Counsel placed reliance on the decision of Hon’ble Madras High Court in the case of Vetrivel Minerals v ACIT, Central Circle (2021) 437 ITR 178 wherein it has been held as -
“24. As contended by the writ petitioners, when the entire assessment has been framed only on the basis of the so-called electronic record which are said to be copies of Excel Sheet, Excel work note book etc., non-compliance of section 65(B) of the Indian Evidence Act renders the document inadmissible in the eye of law as held by the Supreme Court in the judgment Anvar P.V. case4 (supra).” “14.Any documentary evidence by way of an electronic record under the Evidence Act, in view of sections 59 and 65A, can be proved only in accordance with the procedure prescribed under section 65B. Section 65B deals with the admissibility of the electronic record. The purpose of these provisions is to sanctify secondary evidence in electronic form, generated by a computer. It may be noted that the section starts with a non obstante clause. 9
I.T.A.Nos.2515 & 2516/Del/2022 Thus, notwithstanding anything contained in the Evidence Act, any information contained in an electronic record which is printed on a paper, stored, recorded or copied in optical or magnetic media produced by a computer shall be deemed to be a document only if the conditions mentioned under sub-section (2) are satisfied, without further proof or production of the original. The very admissibility of such a document, i.e., electronic record which is called as computer output, depends on the satisfaction of the four conditions under section 65B(2). Following are the specified conditions under section 65B(2) of the Evidence Act: (i) The electronic record containing the information should have been produced by the computer during the period over which the same was regularly used to store or process information for the purpose of any activity regularly carried on over that period by the person having lawful control over the use of that computer; (ii) The information of the kind contained in electronic record or of the kind from which the information is derived was regularly fed into the computer in the ordinary course of the said activity; (iii) During the material part of the said period, the computer was operating properly and that even if it was not operating properly for some time, the break or breaks had not affected either the record or the accuracy of its contents; and (iv) The information contained in the record should be a reproduction or derivation from the information fed into the computer in the ordinary course of the said activity.
Under section 65B(4) of the Evidence Act, if it is desired to give a statement in any proceedings pertaining to an electronic record, it is permissible provided the following conditions are satisfied: (a) There must be a certificate which identifies the electronic record containing the statement; (b) The certificate must describe the manner in which the electronic record was produced;
I.T.A.Nos.2515 & 2516/Del/2022 (c) The certificate must furnish the particulars of the device involved in the production of that record; (d) The certificate must deal with the applicable conditions mentioned under section 65B(2) of the Evidence Act; and (e) The certificate must be signed by a person occupying a responsible official position in relation to the operation of the relevant device.
It is further clarified that the person need only to state in the certificate that the same is to the best of his knowledge and belief. Most importantly, such a certificate must accompany the electronic record like computer printout, Compact Disc (CD), Video Compact Disc (VCD), pen drive, etc., pertaining to which a statement is sought to be given in evidence, when the same is produced in evidence. All these safeguards are taken to ensure the source and authenticity, which are the two hallmarks pertaining to electronic record sought to be used as evidence. Electronic records being more susceptible to tampering, alteration, transposition, excision, etc. without such safeguards, the whole trial based on proof of electronic records can lead to travesty of justice.
Only if the electronic record is duly produced in terms of section 65Bof the Evidence Act, the question would arise as to the genuineness thereof and in that situation, resort can be made to section 45A opinion of examiner of electronic evidence.
18. The Evidence Act does not contemplate or permit the proof of an electronic record by oral evidence if requirements under section 65B of the Evidence Act are not complied with, as the law now stands in India."
The Ld. Counsel further submits that since no certificate in terms of section 65B(4) rws 65B(2) of the Indian Evidence Act 1872 has been produced during the assessment proceedings, the print out cannot be used against the appellant. [Smt Abha Bansal v Pr CIT (Central) (ITA No 383-386/Del/2021) dated 31.05.2021 - Hon’ble ITAT Delhi]. Ld. Counsel submits that on facts and circumstances of the case, the 11
I.T.A.Nos.2515 & 2516/Del/2022 document representing electronic record cannot be used against the assessee without providing her with the access to original computer resource from which such document has purportedly derived from (as no certificate u/s 65B(4) of IEA 1872 has not been brought on record during the assessment proceedings). Therefore, it is prayed that the copy of opinion be obtained from any of the notified Examiner of the Electronic Evidence so as to establish the existence/admissibility, condition and genuineness of the contents alleged in documents derived from electronic record in terms of section 45A of Indian Evidence Act 1872 read with section 79A of the Information Technology Act, 2000.
The ld. Counsel for the assessee further submits that the materials relied upon that too of a third party collected/recorded behind the back and without providing the same to the assessee, without giving opportunity to cross-examination is no material more so when such material is itself vague/unreliable. Reliance was placed on the following decisions:
1. Common Cost Vs. Union of India (UOI) [394 ITR 220] (SC); 2. Andaman Timber Industries Vs. CCE [281 CTR 241] (SC); 3. Kishan Chand Challa Ram Vs. CIT [125 ITR 713] (SC); 4. CIT Vs. Sunita Dudda [100 Taxmann.com 526] (SC).
15. The Ld. Counsel for the assessee further submits that the assessment framed u/s 153C of the Act is bad in law as no notice u/s 143(2) of the Act was issued and served on the assessee before
I.T.A.Nos.2515 & 2516/Del/2022 completion of assessment. Reliance was placed on the following decisions:
1. CIT(Central) Kanpur Vs. Moins Iqbal [ITA No. 168/Del/2009 dated 28.07.2017] (Allah.) (HC); 2. Pr. CIT (Central) Vs. Cherian Abraham [444 ITR 420] (Karn.); 3. Pr. CIT Vs. N.S. Software [403 ITR 259].
16. The Ld. Counsel for the assessee further submits that notice u/s 153C of the Act and consequent proceedings are beyond jurisdiction of Assessing Officer being jurisdiction assumed based on the order u/s 127 of the Act which itself is void ab initio. Reliance was placed on the following decisions:
“Noorul Islam Educational Trust Vs. CIT (2016) 76 taxmann.com 144 (SC);
2. Herambh Anandrao Shelke Vs. Pr. CIT (2018) 257 Taxman 487 (Hon’ble Bombay HC);
3. Smt. Chandra Prabha Kushwaha Vs. CIT (2014) 361 ITR 66 (Hon’ble Allahabad HC);
4. CIT Vs. Deepak Gupta (2014) 266 CTR 265 (Hon’ble Allahabad HC);
Deepak Gupta Vs. ACIT (ITA No. 1708-1713/Del/2011) dated 31.05.2012 (Hon’ble ITAT Delhi);
Guidelines for compulsory selection (FN 225/126/2020/ITA- II) dated 17.09.2020.” 17. On the other hand, the Ld. DR strongly placed reliance on the orders of the authorities below. In so far as the non issue of notice u/s 143(2) is concerned the Ld. DR referring to page 13 para 6.7 of the Ld. CIT(Appeals) order submits that the Delhi High Court in the case of Ashok 13
I.T.A.Nos.2515 & 2516/Del/2022 Chadha Vs. ITO [337 ITR 399] held that notice u/s 143(2) of the Act is not mandatory for finalization of assessment u/s 153A of the Act.
Heard rival submissions, perused the orders of the authorities below and the materials placed before me. In so far as service of notice u/s 143(2) is concerned the Delhi High Court in the case of Ashok Chadha Vs. ITO (supra) considering the decision of the Hon’ble Supreme Court in the case of Hotel Blue Moon held that notice u/s 143(2) of the Act is not mandatory for finalization of assessment u/s 153A of the Act. Ratio of this decision applies to the facts of the assessees case respectfully following the said decision ground no. 3 of grounds of appeal of the assessee is dismissed. The case laws relied upon by the Ld. Counsel for the assessees have no application to the facts of the assessees case.
19. Coming to ground no. 2(a) in respect of satisfaction recorded by the Assesisng Officer before issue of notice u/s 153C of the Act it is observed from page 24 of the Paper Book which is the satisfaction note recorded by the Assessing Officer in the case of V.K. Patel who is the searched person, it reads as under:
“1. A search & seizure action u/s 132 of the Income Tax Act, 1961 was carried out on 06.03.2018 in the case of “SSS(Satyam Sangani Shaligram) Group” of companies. During the search and seizure action, the residential premise of Shri Viral K Patel at 8/104, Shaligram Flora, Near Sangini Bungalows, Opp. Shaligram-III, thaltej, Ahmedabad was also covered u/s 132 of the Act as he is the key person handling cash transactions related to the M/s Satyam Developers Limited and its directors. During the course of search action, various incriminating documents and digital data is found and seized as per Annexure A/1 to A/21 were found and seized. 14
I.T.A.Nos.2515 & 2516/Del/2022
Verification of tally data at location Viral Kiran Kumar Patel – Party AB/Viral Kumar Patel-HD5/EXTRACTION/viral Lenovo laptop/TALLY DATA/viral Lenovo laptop/it/F/Desktop file/CD RERA/02112017/data/101014 reveals that GEETA BANSAL, PAN: AISPB9075G has purchased unit 23 in project “SDL-Sentossa Neemland”, property registered on 09/03/2014 for a total cost of Rs.1,43,00,000/- out of which Rs.43,00,000/- has been paid in cash.
It is clear from the above that the information in the seized incriminating documentary/digital data pertains/relates to the assessee viz. GEETA BANSAL, PAN: AISPB9075G. Accordingly, provisions of section 153C of the Act are attracted in the case of GEETA BANSAL, PAN: AISPB9075G. The relevant provisions of section 153C of the Act are reproduced hereunder for reference which is relevant in this case. ……………………. 5. In view of above facts, I am satisfied that the above referred incriminating digital data/documents/books of accounts found & seized from the residential premise of Shri Viral K Patel contains information pertaining/relating and information contained therein, relates to GEETA BANSAL, PAN: AISPB9075G and the same is having bearing on determination of total income relevant to the period AY 2013-14 to AY 2017-18. As such, the provisions of section 153C are clearly applicable in the case of GEETA BANSAL, PAN: AISPB9075G and hence, in accordance with provisions of section 153C r.w.s. 153A of the Act, income of GEETA BANSAL, PAN: AISPB9075G needs to be assessed or reassessed in respect of each assessment years falling within the period of AY 2013-14 to AY 2017-18.” 20. On perusal of page 21 of the Paper Book which is the satisfaction note recorded by the Assessing Officer of the assessee it reads as under:
OFFICE OF THE DY. COMMISSIONER'OF INCOME TAX. CENTRAL CIRCLE. ROOM NO. 229. 2HD FLOOR. C.G.O. COMPLEX - I, KAMALA NEHRU NAGAR. HAPUR CHUNGI. SHAZIABAD SATISFACTION NOTE TO INITIATE PROCEEDINGS U/S 155C READ WITH SECTION 153A OF THE INCOME ACT. 19S1 IN THE CASE OF SMT. GEETA BANSAL HAVING PAN NO. AISPB9075G
I.T.A.Nos.2515 & 2516/Del/2022
A search & seizure operation u/s 132 of the Income Tax Act,1961 was conducted on 06/03/2018 at the residential as well as official premises of persons/parties comprising M/s SSS (Satyam', Sangani, Shaligram) Group of cases by issuing warrants of authorization u/s 13211) of the Income Tax Act. 1961. During the course of search & seizure operation at the premises B/104, Shaligram Flora, Near Sangini Bungalows. Opp. Shaligram-III, Thaltej, Ahmedabad of Sh. Viral K Patel comprising M/s SSS (Satyam Sangani Shaligram) Group of cases, various incriminating documents as well as digital/tally data was found and seized. 0n verification of this digital/tall data at location Viral Kiran Kumar Patel Party A8/Viral KumarPatel_HD5/EXTRACTION/viral lenovo laptop/TALLY DATA/viral Lenovo laptop/it/F/Desktop file/CD RERA/02112017/data/101014, it was found that the assessee i.e. Smt. Geeta Bansal having PAN No. AISPB9075G has purchased a Unit 23 in project “SDL-Sentossa Neemland and registered the said unit for a total cost of R*s. 1.43,00.000/- out of which he has also paid an amount of Rs. 43,00,000/- in cash. Therefore, in view of the provision of section 1.53C(1) read with section 153A of the Income Tax Act, 1961. I am satisfied that proceedings u/s 153C read with section 153A is required to be initiated in the case of Smt. Geeta Bansal' having PAN No, AISPB9075G as the above said incriminating documents/material will have bearing on the determination of total income of Smt. Geeta Bansal having PAN No. AISPB9075G and the transactions recorded therein pertain to Smt. Geeta Bansal having PAN No. AISPB9075G. Hence, the case of Smt. Geeta Bansal having PAN No. AISPB9075G is required to be assessed as per provisions of section 1530 of the Income Tax Act. 1961 from the A.Y. 2012-13 to A.Y. 2018-19.” Sd/- (Vindhya Nupur) Dy. Commissioner of Income Tax Central Circle, Ghaziabad.
On perusal of both these satisfaction notes recorded by the Assessing Officers in the case of the V.K. Patel the searched person and the assessee, the satisfaction note recorded is almost identical as can be seen from the satisfaction note recorded in the case of the assessee the Assessing Officer who stated that on verification of the digital/tally data
I.T.A.Nos.2515 & 2516/Del/2022 at Viral Kiran Kumar Patel_Party A8/Viral Kumar, Patel_HD5/EXTRACTION/viral lenovo laptop/TALLY DATA/viral Lenovo laptop/it/F/Desktop file/CD RERA/02112017/data/101014. It was found that the assessee Smt. Geeta Bansal has purchased a Unit 23 in Project SDL Santossa Neemland for total cost of Rs.1,43,00,000/- out of which an amount of Rs.43 lakhs was paid in cash, therefore, the Assessing Officer records his satisfaction that proceedings u/s 153C read with Section 153A is required to be initiated in the case of the assessee observing that the incriminating documents/materials will have bearing on the determination of total income of the assessee. In other words, the Assessing Officer records his satisfaction for initiation of proceedings u/s 153C only for the reason that digital/tally data since was found at the location in V.K. Patel’s premises Assessing Officer found that the assessee has made investment in cash. This shows that there is complete non application of mind at all by the Assessing Officer while recording the satisfaction for initiation of proceedings u/s 153C of the Act. The Assessing Officer is merely relying on the satisfaction note recorded by the Assessing Officer in the case of a searched person. He has not made any enquiry nor he has linked the documents or made any efforts to show that the incriminating material (ledger account and entries therein) said to have been seized are belong to the assessee. The tally data said to have been recovered in the premises of the V.K. Patel which is placed at page 51 in the form of ledger reflects that cash of Rs.3 lakhs and Rs.7
I.T.A.Nos.2515 & 2516/Del/2022 lakhs was received from one Mr. Bhavnesh and cash of Rs.18 lakhs and Rs.5 lakhs was received from one Mr. J. Kaka and Rs.10 lakhs was said to have been received from self. No inquiries were made to know as to who are these persons who has given cash to Mr. V.K. Patel as the assessee has completely denied any payment of cash to the builder. It is also noticed that the cash payments to the extent of Rs.18 lakhs and Rs.5 lakhs were made on 19.10.2014 and 13.10.2014 which is subsequent to registration of the property in the name of the assessee by the Builder (Satyam Developers Ltd.) on 03.09.2014. Therefore, on reading of the satisfaction note recorded by the Assessing Officer it is very much clear that the satisfaction note recorded is without any application of mind and it is a repetition of the satisfaction note recorded in the searched person.
In the case of Canyon Financial Services Ltd. Vs. ITO (supra) the Hon’ble Delhi High Court held that where satisfaction notes recorded by Assessing Officer of assessee and Assessing Officer of searched person were identically verdict carbon copy proceeding could not be initiated against assessee u/s 153C of the Act. While holding so the Hon’ble High Court held as under:
“19. As a result, the Court holds that the satisfaction note prepared by the AO of the searched person does not fulfil the legal requirement spelled out in Section 153C(1) of the Act. The satisfaction note of the AO of the Assessee, being a carbon copy of the satisfaction note of the AO of the searched person also fails to fulfil the jurisdictional requirement. No reasons are recorded for the identical conclusion in either satisfaction 18
I.T.A.Nos.2515 & 2516/Del/2022 note that the seized documents mentioned therein belong not to the searched person but to the Assessee.” 23. The situation in the present case also identical. Both the satisfactions recorded by the Assessing Officer of the searched person as well as the assessee or almost identically worded and in fact the Assessing Officer merely relied on the satisfaction note recorded by the Assessing Officer in the searched person. Therefore, the ratio of the decision of the Jurisdictional High Court in the case of Canyon Financial Services Pvt. Ltd. Vs. ITO (supra) applies in the circumstances of the facts of the case. Therefore, on this ground alone the assessment made u/s 144/153C of the Act is liable to be quashed as there is no proper recording of satisfaction note by the Assessing Officer while initiating the assessment proceedings u/s 153C of the Act.
It is also observed that except stating that various incriminating documents as well as digital/tally data was found and seized nothing was mentioned in the satisfaction note or in the assessment order that what exactly was seized in the premises of V.K. Patel. Even in the statement recorded u/s 132(4) of the Act from V.K. Patel it is found that there was no adverse statement given by V.K. Patel against the assessee, it is the contention of the assessee that till now the Revenue did not provide any seized materials to the assessee nor given any opportunity to cross- examine the person on whose statement the Revenue is relied on.
I.T.A.Nos.2515 & 2516/Del/2022
In the case of Pr. CIT Vs. Sunway Realtech Pvt. Ltd. the Hon’ble Delhi High Court held as under: -
“6. Further, in the present case, the Assessing Officer in the satisfaction note has recorded that the documents found during the search pertained to assessee and, therefore, it is a fit case for initiation of proceedings under section 153C of the Act. However, the Assessing Officer failed to record as to how the documents found during search reflected any undisclosed income of the assessee. The Assessing Officer, without even demonstrating/or drawing any nexus of the seized documents with the undisclosed income of the assessee, merely on the ground that the seized documents belong to the assessee initiated proceedings under section 153C of the Act, which is against the settled position of law in several decisions of this Court.” It is not clear from the assessment order that any sort of the enquiries made at all by the Assessing Officer in placing reliance on the incriminating material said to have been seized from the premises of V.K.
Patel. Nothing was recorded by the Assessing Officer in the assessment order the statement of V.K. Patel also did not reveal that he has taken any specific names of the assessee in the matter of receiving sale consideration in cash the ledger account said to have been retrieved from the CD only suggest the names of one Sh. Bhavnesh and one Sh. J.
Kaka and nothing is on records as to whether any enquiries were made to find out who are these persons. Nothing is coming out from Sh. V.K.
Patel on whose statement and the material containing in CD which was relied on by the Assessing Officer in searched person and also the Assessing Officer. It is also the contention of the assessee that seized documents not provided to the assessee and nothing is recorded in the assessment order as to what kind of seized documents were related to 20
I.T.A.Nos.2515 & 2516/Del/2022 the assessee. All these goes to show that these are not conclusive proof to say that the assessee has paid cash to the builder/V.K. Patel.
In view of what is discussed above, I am of the view that the initiation of the proceedings u/s 153C of the Act in the case of the assessee is bad in law. Even on merits the evidence/incriminating material on which the Revenue is placing reliance are not conclusive proof to say that the assessee has paid the cash to Sh. V.K. Patel. Thus, the order of the Ld. CIT(Appeals) is set aside and the Assessing Officer is directed to delete the addition made u/s 69 read with section 115BBE of the Act. Grounds 2(a) and 4 are allowed. Since the addition is deleted allowing ground no. 2(a) and 4, the other technical grounds raised by the assessee are not gone into as the adjudication of these grounds would render only academic at this stage.
In this appeal also grounds are identical to grounds raised by the assessee in the case of Geeta Bansal in ITA No. 2515/Del/2022. Facts being identical and similar the decision taken therein shall apply mutatis – mutandis to the appeal of the assessee Shri Rakesh Kumar Bansal.
Ground no. 2(a) and 4 are allowed and ground no. 3 is dismissed. Since the addition is deleted allowing ground no. 2(a) and 4, the other technical grounds raised by the assessee are not gone into as the decision on these grounds would render only academic at this stage.
I.T.A.Nos.2515 & 2516/Del/2022
In the result, both the appeals of the assessees are partly allowed as indicated above.