THE PRINCIPAL COMMISSIONER OF INCOME TAX (CENTRAL), SURAT vs. M/S. SHREE RAM DEVELOPERS

ORAL ORDER (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1 This is an appeal at the instance of the Revenue under Section 260A of the Income Tax Act, 1961 (for short, “the Act, 1961”) and is directed against the order passed by the Income Tax Appellate Tribunal, Surat Bench, Surat dated 8th March 2021 in the ITA No.1841/Ahd/2016 for the assessment year 2006-07. 2 The Revenue has proposed the following questions of law for the consideration of this Court: “(A) Whether on the facts and the circumstance of the case and in law, the Appellate Tribunal is justified in upholding the decision of CIT(A) that the amendment order passed in the case of non-existing entity is invalid without appreciating the fact that inspite of being aware of all facts and circumstances of the case, the partners of the firm including Shri Jayantilal Babaria have not complied with the statutory notices issued by the Assessing Officer during the course of assessment proceedings which led to an ex-parte order in this case? C/TAXAP/87/2022 ORDER DATED: 11/01/2022 (B) Whether on the facts and the circumstances of the case and in law, the Appellate Tribunal is justified in upholding the decision of the CIT(A) without appreciating the fact that the incriminating documents seized during the course of search and circumstantial evidences clearly show receipt of on money from the project Shrusti Row House, which was jointly developed by the firm, Shree Ram Developers and also Shri Jayantibhai Babariya in his individual capacity? (C) Whether on the facts and the circumstances of the case and in law, the decision of Appellate Tribunal leads to perversity being contrary to facts emerging from incriminating documents and surrounding circumstances including intentional non-compliance by the partners of the firm before the Assessing Officer? (D) Whether on the facts and in the circumstances of the case in law, the Appellate Tribunal is justified in upholding the decision of the CIT(A) in accepting the contention of the assessee that the unaccounted income unearthed during the course of search proceedings were pertaining to Shri Jayatibhai Babariya in his individual’s capacity and not to the firm for the sole reason that as the firm was not in existence during the relevant period of time, without appreciating the overall facts of the case and also by not issuing necessary directions to the Assessing Officer by exercising the powers conferred upon the appellate authorities under Section 150(1) of the Act for taking necessary action in the case of Shri Jayantibhai Babariya?” 3

We have heard Mr. M. R. Bhatt, the learned Senior Counsel appearing for the Revenue. 4 We take notice of the findings recorded by the Appellate Tribunal in para 7 of the impugned order. The same reads thus: “We have considered rival submission of the parties and have gone through the order of the authorities below. We have also gone through the various documentary evidences furnished by the learned AR of the assessee. We have noted that the AO made addition on the basis of seized documents by taking view that seized documents prima facie reflects the receipts of plot wise on money in coded form. And that no explanation and evidences furnished by the assessee. The ld. CIT(A) while deleting the addition held that there is no evidence on record to establish that assessee firm was involved in plotting of the scheme. Further, the addition on the basis of Annexure A/1 has been made in case of Jayantibhai Virjibhai Babariya for A.Y. 2007-08 (in individual capacity vide PAN: AFHPB 0820 M). The firm was not in existence and C/TAXAP/87/2022 ORDER DATED: 11/01/2022 it was formed by way of partnership deed dated 01.06.2007.” 5 Thus, it appears that even the CIT(A), while deleting the addition, took notice of the fact that there was nothing on record to indicate that the assessee – firm was involved in plotting of the scheme. In fact, the finding of fact recorded by the CIT(A) as affirmed by the Appellate Tribunal is that the firm was not in existence and it was formed only by way of a partnership deed dated 1st June 2017. 6 In view of the aforesaid, there is no good ground for us to disturb the order passed by the Appellate Tribunal. 7 In the result, this appeal fails and is hereby dismissed. (J. B. PARDIWALA, J) (NISHA M. THAKORE,J) CHANDRESH