MADHURENDRA NATH,ALLAHABAD vs. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, ALLAHABAD

in the appeal in are reproduced as under: “1. BECAUSE the Id. CIT(Appeals) has failed to appreciate that the assessment order dated 19th March, 2016 is wholly illegal and bad in law as the statutory notice under section 143(2) was issued beyond the limitation as prescribed in the Income Tax Act, 1961.

BECAUSE the Id. CIT(Appeals) has erred in law and on facts in holding that land purchase deal were between the appellant and M/s H.K. Infraventures Pvt. Ltd. totally defying the document and evidences placed before her thereby confirming the illegal addition made under section 69 of the Income Tax Act, 1961.

BECAUSE the assessment order dated 19th March 2016 and the order passed by Id. CIT(Appeals) dated 13.11.2017 is wholly illegal and unjustified on legal grounds as also on facts of the case.

BECAUSE the appellant denies the liability of interest under various section Independent of quantum of assessment.”

The assessee is an individual and was Dental Surgeon by profession. Before filing the present appeal the assessee expired and therefore, the appeal in was filed through legal heir Smt. Neeta Nath. Originally, the assessee filed his return of income on 30.07.2013 declaring total income of Rs. 1,87,730/-. Thereafter, there was a search and seizure action under section 132 of the Income Tax Act in case of Hemant Kumar Sindhi, Dinesh Kumar Pahuja group. During the course of search and seizure, the document annexure L-5/page 124 back side was found and seized. The said seized document was a ledger account of land purchase in the books of M/s H.K. Infraventures Pvt. Ltd. from 01.04.2011 to 31.03.2014, which shows that Rs. 2.10 Crore (Rs. 1.05 Crore each) has been paid to the assessee and his brother Shri Madhurendra Nath. Consequently, the AO initiated the proceedings under section 153C by issuing notice under section 153C dated 5.9.2014. In response to the said notice, the assessee filed reply dated 22.9.2014 and stated that the return filed under section 139 on 30.07.2013 may be treated as return filed in compliance to notice issued under section 153C. Since, the assessee and his brother declared a sum of Rs. 60 Lac each as receipt towards compensation for vacating the premises i.e. House No. 11/13/17 Stanely Road, Allahabad which was occupied by the assessee and his brother as a tenant of M/s Sindhu Sahkari Awas Samiti sold to M/s H.K. 4 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath Infraventures Pvt. Ltd, therefore, the AO issued show cause notice as to why the balance amount of Rs. 45 Lac each should not be added to their total income as unexplained income under section 69 of the Income Tax Act. In reply dated 22.02.2016, the assessee denied the allegations of receiving any amount over and above of Rs. 60 Lac, in lieu of vacating the premises. The assessee also explained that the compensation was received from Shri Hemant Kumar Sindhi for vacating the premises in question and the assessee had no dealing with M/s Sindhu Sahkari Awas Samiti whatsoever. The assessee also denied his acquaintance with Shri. Dinesh Kumar Pahuja. The AO did not accept the reply of the assessee and found the same unsatisfactory and by considering the fact that during the assessment proceedings of M/s H.K. Infraventures Pvt. Ltd., Shri. Hemant Kumar Sindhi has accepted the transaction of Rs. 51,49,500/- mentioned on the seized document therefore, the other transactions, recorded in the seized document cannot be denied. The AO accordingly made an addition of Rs. 45 Lac and treated the same as an unexplained income under section 69 of the Income Tax Act and separately taxed the same as per the provisions of section 115BBE of the Income Tax Act. The assessee challenged the action of the AO before the CIT(A) but could not succeed.

Ground Nos. 1 and 2 are regarding the validity of assessment framed by the AO under section 153C without issuing notice under section 143(2). The learned AR of the assessee has submitted that the AO completed the assessment without issuing a notice under section 143(2). The assessee challenged the validity of the assessment on the ground that there is no mention about the issuance of notice under section 143(2) in the order-sheet entries recorded by the AO. Thus, the learned AR has submitted that the assessment completed by the AO without issuing notice under section 143(2) which is a mandatory condition is not sustainable in law and liable to be quashed. He has referred to the order-sheet entries recorded by the AO placed at page no. 44 to 46 of the paper book and submitted that the first entry is regarding notice issued under section 153C dated 5.9.2014. Thereafter, the second entry is regarding reply filed by the assessee and third entry is regarding notice issued under section 142(1) with queries. There is no mention of notice under section 143(2) as & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath per the order-sheet entries. The learned AR has thus contended that the AO has not issued any notice under section 143(2) to the assessee therefore, the assessment framed by the AO is void ab initio and liable to be quashed. In support of his contention, he has relied upon the judgment of Hon’ble jurisdictional High Court at Lucknow Bench dated 28.7.2017 in the case of CIT vs. Shri. Moin Iqbal in Income Tax Appeal Nos. 168 and 169 of 2009. The learned AR has submitted that the Hon’ble High Court has held that section 143(2) of the Act is mandatory in nature and it shall be obligatory for the AO to apply mind to the contents of the return filed in response to notice and thereafter issue notice under section 143(2) of the Act before proceeding to decide controversy. The non- compliance of mandatory provision vitiates the assessment. He has also relied upon the judgment of Hon’ble Supreme Court in the case of Assistant Commissioner of Income Tax vs. Hotel Blue Moon 321 ITR 362 (SC).

On the other hand, learned DR has submitted that the AO has duly recorded at page no. 2 of the assessment order that notice under section 143(2) was duly issued to the assessee on 16.11.2015 alongwith the notice issued under section 142(1) and in response to which the counsel of the assessee attended the proceedings before Assessing Officer and filed reply. The assessee never objected during the assessment proceedings to the notice issued under section 143(2) by the AO. He has further submitted that even otherwise the notice under section 143(2) is not required while framing the assessment under section 153A/153C of the Income Tax Act. He has relied upon the judgment of Hon’ble jurisdictional High Court in the case of CIT vs. Anurag Aggarwal 299 taxman 532 as well as in the case of CIT vs. Surendra Chand Bansal 42 taxman.com 201. The learned DR has further submitted that this issue is also covered by the Third Member decision in the case of Sunshine Infraestate Private Limited vs. ACIT, wherein the majority view has held that notice under section 143(2) is not required for assuming the jurisdiction by the AO for framing the assessment under section 153A / 153C of the Income Tax Act.

We have considered the rival submissions as well as relevant material on record. The assessee has challenged the validity of assessment for want of notice 6 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath under section 143(2) of the Income Tax Act. The challenge of the assessee is entirely based on the order-sheet entries wherein the AO has not mentioned about the issuance of the notice under section 143(2) whereas the Assessing Officer has recorded in the assessment order itself that a notice under section 143(2) was issued on 16.11.2015. The relevant part of the assessment order in para 3 is as under:- “The assessee has filed reply on 22.09 2014 stated that return filed u/s 139 on 30.07.2013 at total income of Rs. 1,87,730/- may be treated an return filed incompliance to notice u/s 153C whereas the assessee was required to file return electronically in compliance to notice u/s 153C. Notice u/s 143(2) was issued on 16.11.2015. Notice under section 142(1) with detailed questionnaire was issued on 05.11.2015. In response Advocate, Shri Madhurendra Nath, attended and has filed reply 23.11.2015 and the case has been discussed with him.”

Thus, it is clear from the assessment order that the AO recorded the fact of issuing the notice under section 143(2) on 16.11.2015 and thereafter the assessee appeared and filed reply on 23.11.2015. It is also undisputed fact that the assessee did not challenge the notice issued under section 143(2) either during the assessment proceedings or even before the CIT(A). Only before the Tribunal, the assessee has first time raised this issue in ground no. 1 and 2. The grounds raised

Accordingly, in view of the facts and circumstances as discussed above as well as the decisions of Hon’ble High Court and this Tribunal in the case of Sunshine Infraestate Private Limited (supra) on this point, we do not find any merit or substance in ground no. 1 and 2 of the assessee’s appeal, the same are dismissed.

Ground no. 3 and 4 are regarding the validity of assessment order for want of satisfaction recorded by the AO. The learned AR of the assessee has submitted that the AO has framed the assessment without recording the satisfaction before invoking the provisions of section 153C of the Income Tax Act. He has submitted that in the order-sheet entries, the AO has not mentioned about the satisfaction recorded before issuing the notice under section 153C of the Act. Therefore, the assessment framed by the AO is not valid and liable to be quashed. 13. On the other hand, the learned DR has submitted that the AO has duly stated in para 3 of the assessment order that after recording satisfaction in writing a notice under section 153C of the Income Tax Act dated 5.9.2014 was issued requiring the assessee to furnish the return of income. Thus, the learned DR has submitted that once this fact is recorded in the assessment order and the assessee has not raised any objection about the satisfaction recorded by the AO either during the assessment proceedings or before the CIT(A), the same cannot be questioned at this stage. & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath 14. We have considered the rival submissions as well as relevant material on record. The Assessing Officer in para 3 of the assessment order, which has been reproduced in the foregoing part of this order has clearly stated that after recording satisfaction in writing, a notice under section 153C of the Act dated 5.9.2014 was issued and duly served to the assessee. The assessee has challenged the recording of satisfaction only on the ground that the same is not mentioned in the order-sheet entries. It is pertinent to note that once the AO has specifically mentioned in the assessment order about the recording of satisfaction before the notice issued under section 153C of the Act and the assessee did not raise any objection either during the assessment proceedings or before the CIT(A) then merely because this was not mentioned in the order- sheet would not change the fact duly recorded by the AO in the absence of any contrary fact or material brought before us. Hence, the mere verbal contention of the assessee disputing the recording of the satisfaction, which find place in the assessment order itself, would not negate the fact of recording the satisfaction. Accordingly, we do not find any merit or substance in ground no. 3 and 4 of the assessment order and the same are dismissed. 15. Ground no. 5 to 20 are regarding the addition of Rs. 45 lac made by the AO on account of unexplained income allegedly received by the assessee for vacating the premises. The AO noted that during the search in the case of Dinesh Kumar Pahuja at Lotus Apartment on 5.12.2013, a document marked as Annexure L-5/ page 124 back side was seized which is a ledger account of land purchase in the books of M/s H.K. Infraventure Private Limited showing that Rs. 2.10 Crore has been paid to assessee and his brother Sh. Madhurendra Nath. The AO accordingly, asked the assessee vide questionnaire dated 5.11.2015 to explain the whole transaction and also explained whether you have disclosed the aforesaid amount and shown capital gain for the relevant period. The assessee filed its reply dated 23.11.2015 and submitted that he had received 13 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath Rs. 60 lac through three cheques from M/s H.K. Infraventure Private Limited as per agreement dated 30.05.2012 for vacating the premises no. 13/15/17 Stanely Road, Allahabad which were under the tenancy of the assessee and his brother who also got Rs. 60 lac as per the said agreement. The AO did not accept this reply / contention of the assessee and observed that out of Rs. 2.10 lac, Rs. 1.20 lac has been paid through cheques and the balance of Rs. 45 lac each total Rs. 90 lac was paid to the assessee and his brother in cash. Relying on the entries in the ledger account for payment of Rs. 1.05 crore each to the assessee and his brother and further in the assessment proceedings of M/s H.K. Infraventure Private Limited, a transaction of Rs. 51,49,500/- recorded in the same seized material was accepted the AO opined that the transaction of the seized document cannot be partly true and partly incorrect. The AO consequently made the addition of Rs. 45 lac treating the same as unexplained income under section 69 of the Act. The assessee challenged the action of the AO before the CIT(A) and contended that the assessee and his brother have received Rs. 60 lac each only as per the MOU dated 30.5.2012 for vacating the portion of the property in which they were residing as a tenantS. The assessee further contended that the document seized from the premises of Dinesh Kumar Pahuja (a Third party) is rough and dump document which is liable to be ignored. The CIT(A) was not impressed with the contentions and explanations of the assessee and confirmed the addition made by the AO. 16. Before the Tribunal, the learned AR of the assessee has submitted that the AO has made the addition on the basis of the alleged seized document which is a ledger account in the books of M/s H.K. Infraventure Private Limited showing the payment of Rs. 1.05 Crores each to the assessee and his brother. He has submitted that the AO has ignored the fact as well as undisputed document being the memorandum of understanding dated 30.5.2012 giving the details of the payment made by the purchaser of the property in question to the 14 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath assessee and his brother. The details of the payment are given in the schedule of payment of the said memorandum of understanding which is signed by the assessee and his brother on the one hand and Shri. Dinesh kumar Pahuja on behalf of Sindhu Sehkari Avas Samiti as well as Sh. Hemant Kumar Sindhi, the Director of M/s H.K. Infraventure Private Limited. The said document is also attested by the witnesses. Therefore, a compensation was received by the assessee under the memorandum of understanding which is signed by all the parties has been duly declared by the assessee in the return of income and there is no evidence of receiving any compensation over and above which is mentioned in the memorandum of understanding and paid through cheques. The allegation of the AO regarding Rs. 45 lac received by the assessee and his brother in cash is neither accepted by M/s H.K. Infraventure Private Limited nor mentioned in the memorandum of understanding. The seized document was found from the possession of Shri. Dinesh Kumar Pahuja (Third Party) therefore, he was bound to explain the same. The learned AR has submitted that the assessee has made specific request to AO during the assessment proceedings to summon Shri. Dinesh Kumar Pahuja to verify the correctness of the fact but the AO failed in it for the reasons best known to him. The addition made by the AO on the basis of a dump document which is neither signed nor accepted by any of the parties is unjustified. In support of his contention, he has relied upon the judgment of Hon’ble Supreme Court in the case of Central Bureau of Investigation vs. V.C. Shukla & Ors dated 02.03.1998. The learned AR has thus contended that the agreement / memorandum of understanding was executed on 30.05.2012 and the seized paper was found in the course of search on 5.12.2013 therefore, the memorandum of understanding would prevail and not the rough and dump document to which too much weightage was given by the Assessing Officer. The said document was neither signed nor certified by any of the party. He has also referred to the provisions of section & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath 292C of the Income Tax Act and submitted that a document found from the possession of Shri. Dinesh Kumar Pahuja, a third party is required to be explained by the said person and not by the assessee. The learned AR has further submitted that the lose sheet of paper is wholly irrelevant as evident being not admissible under section 34 of the Evidence Act, 1872 so as to constitute the evidence with respect to the transactions mentioned therein being of not evidentiary value as held by Hon’ble Supreme Court in the case of Common Cause & Ors vs. Union of India 394 ITR 220. Since a seized document was not part of the books of accounts maintained in regular course of business therefore, the same cannot be used against the assessee when the person from the possession of whom it is found has not accepted the transactions. The learned AR has further contended that during the course of assessment proceedings, the AO recorded the statement of the assessee on 26.11.2015 wherein the assessee has explained and stated that he has received the compensation of Rs. 60 lac only from M/s H.K. Infraventure Private Limited through cheques. The details of which are given in memorandum of understanding dated 30.5.2012. The assessee also requested the AO, vide letter dated 23.12.2012 to provide the copy of the statement of the assessee recorded by him however, the same has not been provided. Thus, the learned AR has submitted that when the assessee has produced the evidence in the shape of memorandum of understanding duly signed by the parties and attested by the witnesses as well as notary public and also explained in his statement recorded by the AO that the assessee has received only Rs. 60 lac as compensation for vacating the premises in question then in the absence of any tangible material to show the payment of the alleged sum of Rs. 45 lac as compensation to the assessee the addition made by the AO is not justified. 16. On the other hand, the learned DR has submitted that M/s H.K. Infraventure Private Limited has accepted the part transactions recorded in the 16 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath seized document and therefore, the seized document cannot be accepted in part but the whole of the document has to be accepted and the transactions recorded in the document are to be deemed as correct. The memorandum of understanding dated 30.5.2012 is showing only the payment through cheques and the cash payment, component of compensation is not mentioned in the said memorandum as it is a normal practice when the money is taken in cash. He has relied upon the impugned order of the CIT(A) and submitted that the CIT(A) has examined the facts and the relevant material including the seized document marked as Annexure L-5/ page 124 and held that the document found during the course of search should be treated as genuine with respect to all entries recorded therein. 17. We have considered the rival submissions as well as relevant material on record. The AO, vide notice dated 16.02.2016 asked the assessee to explain as to why a sum of Rs. 1.05 crore received by the assessee for vacating the premises from M/s H.K. Infraventure Private Limited during the year should not be treated as undisclosed receipt or undisclosed income. The AO has reproduced the said notice at page no. 3 and 4 of the assessment order as under:- “Therefore, the assessee was again asked vide notice dt 16.02.2016 the relevant part of notice is as under:- As per seized document Annexure L-5/page 124 back side, the copy of which was provided earlier, is ledger account of land purchased (where you reside at 17 Stanley Road) account of Sindhu Sahkari Avas Samiti (Sri Dinesh Kumar Pahuja is related to that samiti) in the books of HK Infraventures Pvt Ltd which shows that Rs 2.10 Crore paid to you and your brother Sri Madhurendra Nath which is stated as under:- “31.12.2012 To (as per details) Journal Vch No. 208 2,10,00,000 Tenant-Jitendra Nath 10500000 Cr Tenant- Mahurendra Nath 10500000 Cr & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath There are other transaction also shown in the above seized documents. You were directed to explain the transaction and to state whether the aforesaid amount has been disclosed by you. You have stated in your reply filed on 23.11.2015 that you did not receive any amount other than mentioned above from M/s H K Infraventures Put Ltd. You have further reiterated the same in your statement recorded on oath. Since the transaction is also related to M/s H K Infraventure Pvt Ltd and he was also asked to explain the aforesaid transaction as per Seized document Annexure L-5/page 124 back. M/s HK Infraventures Pvt Ltd in its reply filed on 05.02.2016( reply no 27) during the assessment proceeding in his case for A.Y. 2013-14 has accepted of a cash transaction of Rs 51,49,500/- dt.04.11.2011 being Registry made and stamp duty paid Rs 5139500 and other fees paid no 185622 voucher no. 13. The transaction is also found on the same page 124 back side of Annexure L-5. It is stated that during the search, if a part of document is found true, then the whole document will be treated as correct. Thus it can be said that the transaction of Rs 2.10 payment made to you and your brother Madhurendra Nath can also be treated as true. Therefore Please state why it will not be treated that you have received Rs 1,05,00,000/- for vacating the premises from M/s H K Infraventures during the year and why the remaining amount not disclosed by you may not be treated your undisclosed receipt/undisclosed income. You are hereby given an opportunity of being heard. Therefore, you are directed to file your reply on 22.02.2016 at 11 AM. In the absence of any reply, it would be presumed that you have nothing to say in the matter and proceeding will be decided on merits."

The assessee filed the reply dated 22.02.2016 which is also reproduced by the AO at page no. 4 as under:- “The assessee has filed reply on 22.02.2016 and relevant part of reply is - reproduced as under:- “Re: Compensation received from Mr. Hemant Sindhi for vacating premises No stanley Road, Allahabad under our tenancy, I have had no dealing with M/s Sindhu Sahkari Avas Samiti whatsoever. I have made it clear that I do not know Dinesh Kumar Pahuja. I do not think that I have ever met him. What he has en in his books I have got nothing to do with it. 18 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath That my dealing was with Mr. Hemant Sindhi of M/s HK Infraventures only and with no other person. I have no idea how the name of Mr. Kumar Pahuja has come in between.”

The AO did not accept the reply of the assessee and made the addition of Rs. 45 lac as unexplained income which reads as under:- “The assessee's reply as stated above, with regard to seized document Annexure age 124 and its back, is not acceptable and is not found satisfactorily. esh Kumar Pahuja is the son of Late Narayan Das Pahuja, who was the Secretary of Sindhu Sehkari Awas Samiti and this Samiti has the ownership of property at 17, Stainley Road, Allahabad. Presently, as well as on the date of Sri Dilip Pahuja brother of Dinesh Kumar Pahuja is the Secretary of Sehkari Awas Samiti. In the aforesaid seized documents, certain other tions related to Sindhu Sehkari Awas Samiti and M/s H.K. Infraventure Ltd are recorded. As per seized documents, the amount paid to you of Rs. 1.05 crore (and Rs. 1.05 crore paid to your brother Madhurendra Nath) is also found recorded. Out of which Rs. 60 lakhs was disclosed by H.K. Infraventure and by you and the remaining amount of Rs. 45 lakhs was not disclosed either by you or by M/s H.K. Infraventure. Moreover, M/s H.K. Infraventure (P) Ltd has accepted a transaction (Rs. 51,49,500) mentioned on this page during the assessment proceedings in its case. Therefore, the transaction of a seized document cannot be partly true and partly incorrect. Thus, the amount received by you of Rs. 1.05 crore recorded in the said seized document is also correct. Therefore, contention made by you is not accepted. Out of Rs. 1,05,00,000/-, you have disclosed Rs. 60,00,000/- and the remaining amount of Rs. 45,00,000/- is treated as your unexplained under section 69 of the Income Tax Act, 1961 and added to your income which is separately tax as per provisions of section 115 BBE of Income Tax Act.” 20. Thus, it is clear that as per the seized document, there are entries of payment of Rs. 1.05 crore each to the assessee and his brother. There is no narration or details of the mode of payment in the said seized document. The assessee challenged the action of the AO before the CIT(A) and filed the written submissions which were reproduced by the CIT(A) in para no. 2 at page 5 to 11 of the impugned order as under:- & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath “….That for the year under consideration a return u/s 139(1) of the IT Act was filed on 30/07/2013 declaring an income of Rs. 1,87,730/- alongwith all necessary paper and documents copy of which are enclosed at page no........of the paper book alongwith computation chart. From the computation sheet itself it will appear that apart from professional and interest income the appellant voluntarily disclosed Rs. 60 Lakhs in his return which was received from M/s H.K. Infraventure Pvt. Ltd. to vacate the property No. 13, Stanley Road, Allahabad which is a rented property and for vacating the property the appellant received consideration of Rs. 60 Lakhs only. Thus it is a voluntary disclosure in the return which proves the conduct and intention of the appellant. That after filing of the return notice u/s 153C of the IT Act dated 05/09/2014 was served on the appellant on 09/09/2014 requiring thereby to furnish the returns for six years starting from A. Ys. 2007-08 to 2012-13. In compliance to the said notice returns for these six years were filed on 22/09/2014. In compliance to the notices u/s 143(2) of the IT Act necessary explanations, informations and details were also furnished as per requirement of the Assessing Officer. That the cause/reason for issue of the notice u/s 153C of the IT Act was that a search and seizure operation u/s 132 of the IT Act was conducted on 05/12/2013 in the business and residential premises of Shri Dinesh Kumar Pahuja and Sri Hemant Kumar Sindhi. The Assessing Officer has admitted in para 4 of the assessment order that during the search operation in the case of Dinesh Kumar Pahuja R/o Lotus Apartment, Allahabad on 05/12/2013 many incriminating documents were found and seized in the course of search. Out of the said documents an annexure L-5 page 124 was also found and seized which is a ledger account of land purchase in the books of M/s H.K. Infraventure Pvt. Ltd. for the period from 01/04/2011 to 31.03.2014 copies of which are enclosed in the paper book at page no......From such document a wrong inference was drawn by the assessing officer which is reproduced here under -: "As per seized document Annexure L-5/page 124 back side (copy enclosed), which is ledger account of land purchase in the books of H K Infraventures Pvt. Ltd for 01/04/2011 - 31/03/2014 which shows that Rs. 2.10 Crore has been paid to you and your brother Madhurendra Nath out of which Rs. 1.20 Crore has paid through cheques. Please explain the whole transaction and also explain whether you have disclosed the aforesaid amount and whether you have shown capital gain for the relevant period. Please also correlate/verify the aforesaid transaction with your books of accounts" That from the above inference it will appear that a sum of Rs. 1.20 Cr. was paid by the company through cheques. Meaning thereby that Rs. 60 Lacs each was paid to the appellant and his brother Sri Madhurendra Nath each through cheques. 20 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath That the cause of such payment made through cheque after signing of the memorandum of understanding was to finally close the deal of vacating the said rented property once and for all. The alleged incriminating document i.e. Annexure L-5 Page-124 was found from the possession of Sri Dinesh Kumar Pahuja (Third Party) in whose premises aforesaid mentioned search was conducted. Based on the said paper the assessing officer presumed that a sum of Rs. 10500000/- + Rs. 10500000/- was paid to the appellant & his brother when in reality the appellant and his brother each received Rs. 60/- Lacs only and that is also in terms of the agreement/Memorandum of understanding dated 30.05.2012 Copy of which is enclosed in the paper book at page no...... That the reason for such payment was only because the appellant and his brother both were residing in the property situated at13 Stanley Road, Allahabad as tenant from the year 1947 and paying rent of Rs 2500/- per month. The property in question belonged to M/s Sindhu Sahkari Awas Samiti in which the said Sri Dinesh Kumar Pahuja was the main person/Landlord. The said property was sold to M/s H.K. Infraventure P Ltd in which Sri Hemant Kumar Sindhi is a director. In this regard there is no dispute of any kind between said M/s Sindhu Sahkari Awas Samity & M/s H.K. Infraventure P Ltd. That after purchase of the said property by M/s H.K. Infraventure Pvt Ltd. one of the directors of the Company named Sri Hemant Kumar Sindhi entered into an agreement with the appellant and his brother on 30.05.2012 much before the date of search and the said disputed single unsigned loose paper was founded seized in the course of search from said third party Dinesh Kumar Pahuja from his residence According to the agreement the appellant and his brother both were paid Rs. 60 Lakh + Rs. 60 Lakh only by M/s H.K. Infraventure Pvt. Ltd. for vacating the portion of the property in which they were residing as a tenant. The details of deal & transaction mode etc. are clearly mentioned in the agreement copy of the agreement is enclosed in the paper book at page no...... The said agreement was signed by four person namely the appellant and his brother and by Sri Dinesh Kumar Pahuja (Previous Land owner of M/s Sindhu Sahkari Samiti Ltd & Sri Hemant Kumar Sindhi, Director of M/s H.K. Infraventure Pvt. Ltd. in presence of two witnesses named Sri Ashok Dubey and Mrs Neeta Nath whose address are also appearing in the agreement. Thus the document clearly establishes that the transaction took place between the appellant & his brother and M/s H. K. Infraventure Pvt. Ltd. only (Purchaser) by before the date of search. That the agreement was executed on 30/05/2012 and the seized paper was found in the course of search on 05/12/2013. Therefore, the memorandum of understanding will prevail and not the rough and dump document to which too much weightage was given by the assessing & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath officer. In this background the rough unsigned paper is liable to be ignored in all faimess of justice. That in this regard your kind attention is invited to the provision of section 292 C of the IT Act which is reproduced as under- Where any books of account, other documents money, bullion, jewellery or other valuable article or thing are or is found in the possession of control of any person in the course of a search under section 132 (for survey under section 133A) it may, in any proceeding under this Act, be presumed- i) That such books of account other documents money, bullion, jewellery of other valuable article or thing belong or belongs to such person. That from the aforesaid provision since the said annexure was found from said Sri Dinesh Kumar Pahuja (third party) therefore he was bound to explain the same and even the had made a specific request also to the Assessing fficer during the assessment proceeding to summon Sri Dinesh Kumar Pahuja to verify the correctness of the facts but the Assessing Officer failed in it for the reasons best known to him only and spared/freed to him and penalized the appellant uncalled for by making the unjustified addition without appreciating the correct facts which can not be called a judicious approach. In this regard the appellant rely upon decisions of various High Courts and ITAT Benches as mentioned in the list of citation enclosed in the paper book at page no…….. The said notarized agreement and mode/amount of payment as mentioned therein have been accepted by the Assessing Officer and on this count there is no adverse remark anywhere in the assessment order. It means the assessing officer gave full cognizance to the said notarized agreement. The fact of payment of Rs 60 lakhs each has been duly confirmed by Dinesh Kumar Pahuja and Hemant Kumar Sindhi as per the agreement. That the addition of Rs. 45 Lacs was made by the assessing officer by giving too much weightage to the referred connected L- 5/page 124 only which is a rough, dump & duff documents only found from the premises of third party named Sri Dinesh Kumar Pahuja and the same does not bear anybody's signature also. Hence the Assessing Officer proceeded on presumptions only and according to his own likings added made a wrong addition in the hands of the appellant knowingly by sparing the said third party namely Dinesh Kumar Pahuja from whose possession the said document was found. In the assessment of Dinesh Kumar Pahuja no adverse view was taken by the Assessing Officer on the basis of said referred annexure 22 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath when the same was found from his residence and also because he signed the agreement. That during the hearing proceedings before your goodself on 09.08.2017 had filed my Written Submissions Paper Book. The following additional submissions are in continuance of and without prejudice to my earlier submissions. That the addition of Rs 45,00,000.00 to the income of the appellant has been made by the Assessing Officer as unexplained under Section 69 of the Income Tax Act, 1961-refer line 10 of Page 5 of the Assessment Order. That during the assessment proceedings all material facts were submitted before the Assessing Officer. Details of all the investments during the relevant period along with their source were duly submitted before the Assessing Officer and have been accepted. The appellant had categorically denied receiving any amount over and above Rs 60,00,000.00 from M/s HK Infraventure P Ltd. This fact has been mentioned in the assessment order- refer line 25 of Page 3 of the assessment order. At no point of time during the assessment proceedings did the Assessing Officer confront the appellant of any investment which had not been disclosed in the appellant's return of income. What investment he had made the source of which could not be explained is no where mentioned in the assessment order. Also, the Assessing Officer did not make any query during the assessment proceedings - there is no reference in the order sheet entries certified copies of which have been submitted as Annexure 12 (Pages 42-45) of the Written Submissions Paper Book submitted before your goodself on 09.08.2017. It is most humbly requested that the same may kindly be perused. Your attention is drawn towards Section 69 of the Income Tax Act 1961, which reads as under: "69. Unexplained Investment Where in the financial year immediately preceeding the assessment year the assessee has made investments which are not recorded in the books of account, if maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the option of the Assessing Officer, satisfactory, the value of the investments may be deemed to be income of the assessee of such financial year.” 21. The assessee has given the details of the memorandum of understanding dated 30.5.2012 between the parties which was executed and signed by the 23 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath tenants, the landlord as well as the purchaser. The property was owned by Sindhu Sehkari Avas Samiti which was purchased by M/s H.K. Infraventures Pvt. Ltd,. The assessee and his brother were occupants of one portion of the properties as tenants. The said memorandum of understanding contains all the details regarding the status of the parties, the monthly rent of the portion of the property occupied by the assessee and his brother and the schedule of the payments of compensation for vacating the property by assessee and his brother as the same was purchased by M/s H.K. Infraventures Pvt. Ltd., from M/s Sindhu Sehkari Avas Samiti. The details of the payment have been given as under:- i Rs. 34,00,000.00 Vide Cheque No. 566707 dated 18.05.2012 drawn on Vijaya Bank, Allahabad ii Rs. 34,00,000.00 Vide Cheque No. 566705 dated 18.05.2012 drawn on Vijaya Bank, Allahabad iii Rs. 16,00,000.00 Vide Cheque No. 525457 dated 17.05.2012 drawn on ING Vysya Bank Ltd., Allahabad iv Rs. 16,00,000.00 Vide Cheque No. 525458 dated 17.05.2012 drawn on ING Vysya Bank Ltd., Allahabad v Rs. 10,00,000.00 Vide Cheque No. 823068 dated 23.04.2012 drawn on ING Vysya Bank Ltd., Allahabad vi Rs. 10,00,000.00 Vide Cheque No. 823069 dated 23.04.2012 drawn on ING Vysya Bank Ltd., Allahabad Total Rs. 1,20,00,000.00 (Rupees One Crore Twenty Lacs only)

The said seized document contained some other entries regarding payment of Rs. 51,52,000/- towards Stamp Duty and entry fee to Nagar Nigam, Allahabad. M/s H.K. Infraventures Pvt. Ltd., accepted those transactions being matter of record as payment was made to the authorities and also mentioned in the sale deed. The said seized document was found from the possession of Sh. Dinesh Kumar Pahuja. The AO as well as CIT(A) has relied upon the said document which contains the entries of payment of Rs. 1.05 crore each to the assessee and his brother. However, there is no mention in the said document about the mode of the said payment. Further the date mentioned in the seized document as 31.12.2012 does not match with undisputed payment of Rs. 60 lac each to assessee and his brother through cheques. The Assessing Officer has neither made any reference to the statement, if any, recorded of Shri. Dinesh Kumar Pahuja or M/s H.K Infraventures Pvt. Ltd., whereas the assessee has made the statement during the assessment proceedings as examined by the AO as well as produced the memorandum of understanding dated 30.5.2012 to show that he has received only Rs. 60 lac towards the compensation for vacating the premises. When two documentary evidence are giving different version of a transaction then the document which is signed by the parties and not disputed by its signatories cannot be ignored while considering the issue of 27 ITA Nos. 15 & 16/Alld/2018 Smt. Neeta Nath L/H of Lt. Dr. Jitendra Nath addition based on the entries recorded in the seized document which is neither signed by any party nor accepted by the parties and particularly by the assessee. The AO has made no efforts to examine the person from whose possession the said document was found or to whom the document belongs being the ledger account of M/s H.K. Infraventures Pvt. Ltd,. The assessee has made the request to the AO that Sh. Dinesh Kumar Pahuja is the person who can explain the seized document but the AO has not taken any step to examine those persons. Therefore, in the facts and circumstances of the case, when the assessee has denied the receipt of any payment other than Rs. 60 lac through cheques towards the compensation for vacating the tenanted premises and the said claim of the assessee is also supported by the memorandum of understanding between the parties which is executed and signed by all the three parties and also attested by the witnesses as well as notary then before making any addition of the alleged receipt of compensation in cash on the basis of the seized document, the AO ought to have examined the person from whose possession the said document was found and also the party whom the document belongs to. Therefore, Shri. Dinesh Kumar Pahuja as Secretary, Sindhu Sehkari Avas Samiti and Shri. Hemant Kumar Singh, Director, M/s H.K. Infraventures Pvt. Ltd., were required to be examined by the AO and the assessee would have been given an opportunity to cross examine before making the addition. Accordingly, we set aside the impugned order and remand the matter to the record of the Assessing Officer for fresh adjudication after examination of Shri. D.K. Pahuja and Shri. Hemant Kumar Sindhi qua the seized document and opportunity to cross examination be afforded to the assessee.

In the result, both the appeals in ITA No. 15/Alld/2018 & are partly allowed for statistical purpose. Order pronounced on 16.02.2023 at Allahabad, U.P. Sd/- [RAMIT KOCHAR] [VIJAY PAL RAO] ACCOUNTANT MEMBER JUDICIAL MEMBER As per separate Concurring Order Dated: 16/02/2023 Varanasi/Allahabad Sd/- Ramit Kochar Sh 15/2/23