JCIT (OSD) CEN CIR 39, MUMBAI vs. KRUPA LAND LTD, MUMBAI

ITA No.633/Mum/2012 & (Assessment Year :2009-10) M/s. Krupa Land Limited Vs. The Jt. Commissioner of 11, B-Wing, Mittal Towers Income Tax (OSD), CC-39 Free Press Journal Marg Mumbai Nariman Point R.No.32(1), Ground Floor Mumbai – 400 021 Aayakar Bhavan, M.K.Road Mumbai – 400 020 PAN/GIR No.AADCK1521E Appellant) .. Respondent) Revenue by Shri K.S. Rajendra Kumar Assessee by Shri Vijay Mehta Date of Hearing 10/08/2018 Date of Pronouncement 18/10/2018 आदेश / O R D E R PER R.C.SHARMA (A.M):

M/s. Krupa Land Limited and 604/Mum/2012 These are cross appeals filed by assessee and Revenue against the order of CIT(A)-41, Mumbai dated 29/11/2011 for the A.Y.2009-10 in the matter of order passed u/s.143(3) r.w.s. 153C / 143(3) of the IT Act, 1961.

2. Following grounds have been taken by the assessee:- Ground No1: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in rejecting the appellant's contention that initiation of proceedings U/S.153C of the I.T.Act, 1961 ('the Act') are bad-in-law even though no assessment or re-assessment proceedings in relation to this year were pending as on the date of the search u/s.132 of the Act. Ground No.2: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in rejecting the appellant's contention that invoking of provisions of section 153C of the Act was bad-in-law in view of the fact that there was no money, bullion, jewellery or other valuable articles or things or books of account or documents seized which are belonging or belonged to the appellant and which disclosed that the appellant had incurred unaccounted expenditure. Ground No.3: ' On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in relying on the seized materials purported to be pertaining to land companies. Thus, has mixed up the issues involved in the land companies with the facts of the appellant's case. The issues involved and discussed by the learned A.O. in the assessment order are entirely different. The learned A.O. has also made no reference of these evidences while reaching his conclusion in the assessment order. The issues and evidences relating to the land companies are therefore irrelevant and out of context so far as the appellant is concerned. It is prayed that the evidences not related to the appellant's case, may kindly be ignored. Ground No.4: On the facts and rn the circumstances of the case and in law, the learned CIT(A) erred in confirming an addition of Rs.7,98,02,500 by wrongly interpreting the seized material at page no.231 found from the office at Embassy Centre, which is an IOM by Shri Dilip Dherai.

M/s. Krupa Land Limited The appellant prays that the said addition may kindly be deleted and appellant's explanation submitted before the Authorities may kindly be accepted. Ground No.5: On the facts and in the circumstances of the case and in law, the learned CIT(A} erred in holding that a cash payment of Rs.50.58 crore has been made for all the land transactions entered into by 52 land companies and the appellant. Out of this, Rs.38.40 crore has been added back in the case of 52 land companies and was upheld by the learned CIT(A), while deciding appeal of 52 land companies. The remaining alleged cash expenditure of Rs.5,93,66,667 was confirmed for A.Y. 2008-09 and Rs.7,98,02,500 for A.Y. 2009-10. The appellant denies the incurring of cash expenditure in its totality in the land companies as well as in the appellant's case. Accordingly, it is prayed that the addition of Rs.7,98,02,500 for A.Y. 2009-10 may please be deleted. Ground No.6: Without prejudice to the above ground, on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in computing the alleged cash expenditure while deciding the appellant's appeal for A.Y. 2009-10 inasmuch as that for A.Y. 2009- 10, the alleged cash expenditure was worked out by the CIT(A) in the appellate order at Rs.2,65,35,000, whereas the addition of Rs.3,98,02,500 has been made. This-figure thus should have been Rs.2,65,35,000 instead of erroneously adopted by the CIT(A) at Rs.3,98,02,500. It is prayed that in case, addition is sustained, then the A.O. may be directed to substitute the figure of Rs.2,65,35,000 instead of Rs.3,98,02,500.

Ground No. 7: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in bringing new evidences of Pathik Construction and Shri Sunil Gulati on record and discussing the same in the appellate order even though the same has no connection with the facts of the appellant. The learned A.O. has also made no reference of these evidences while reaching its conclusion in the assessment order. These evidences are, therefore, irrelevant and out of context so far as the appellant is concerned. It is prayed that these evidences may kindly be ignored. Ground No. 8: . . On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in relying on the decision of Hon'ble Delhi High Court in the case of Malik Bros (P) Ltd vs. CIT (162 Taxman

M/s. Krupa Land Limited 43) and Shri Naresh Kumar Aggarwala (198 Taxman 194). In the appellant's case, none of the land owners from whom land has been purchased by the appellant confirmed the receipt of cash payment. These remarks of the Hon'ble CIT(A) is erroneous remarks. It is therefore prayed that these erroneous remarks of the Hon'ble CIT(A) may kindly be deleted. Ground No. 9: On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in confirming the charge of interest u/s.234B of the Act, having regard to the fact of the case. The appellant denies its liability for payment of interest u/s.234B of the Act. The appellant craves leave to add, omit or alter grounds of appeal before or during the hearing of the appeal.

3. Following grounds have been taken by the Revenue:- (1) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in not confirming the addition of unexplained cash expenditure of Rs.9,28,72,5007- made on account of the assessee's land purchases in Nevali village which was added on the basis of specific entries in seized/impounded records unearthed during the course of search and seizure operation?" (2) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that cash component used in purchase of land cannot exceed 40% when no such claim or argument was made by the assessee? All the conclusions in this regard are drawn by the Ld. CIT(A) himself in his impugned order even when the assessee has neither raised any such ground of appeal before him nor any submission, claim or argument has been advanced by the assessee in this regard either before the Ld. CIT(A) or before the Assessing Officer." (3) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the figures of cash payments appearing in the last column of the MIS/status reports (i.e. page nos. 190, 196 and 197 of Annexure A-5 impounded on 06.03.2009 from office at Jai Tower, CBD Belapur, Navi Mumbai) are progressive figures for whole land purchased by 52 land companies of this Group and the land purchased by the assessee company when no such claim or argument was made by the assessee? All the conclusions in this regard are drawn by the Ld. CIT(A) himself in his impugned order when the assessee has neither raised any such ground of appeal before him nor any submission,

M/s. Krupa Land Limited claim or argument has been advanced by the assessee in this regard either before the Ld. CIT(A) or before the Assessing Officer."

Without prejudice to the above – (4) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in applying the ratio of 60 : 40 to determine the amount ot unaccounted cash payments towards the assessee's land purchases in Nevali village on the basis of second part of Inter Office Memo (IOM) dated 30.08.2008 which was not at all relevant for the impugned already concluded land transactions of the assessee because the same was in respect of a proposal which had not even materialized." (5) "Whether on the facts and circumstances of the case and in faw, the Ld. CIT(A) was justified in applying the ratio of 60 : 40 to determine the amount of unaccounted cash payments towards the assessee's land purchases in Nevali village ignoring figures/entries of actual amount of cash payments available on specific documents gathered as a result of the search and seizure action? Some of such specific documents include page nos. 190, 196 and 1"97 of Annexure A-5 impounded on 06.03.2009 from the office at Jai Tower, CBD Belapur, Navi Mumbai, page no. 16 of Annexure A-1 seized as per panchanama dated 05.03.2009 from the residence of Mr. Dilip Dherai, page nos. 60 and 66 of Annexure A-1 seized as per panchanama dated 05.03.2009 from the residence of Mr. Dilip Dherai, etc." (6) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the ratio of cheque and cash payment columns of page nos. 190 and 196 gives a very unreasonable picture when in para 4.19 of his impugned order he himself has discussed the case of another company of the same Jai Corp Group viz. M/s. Iconic Realtors Ltd. where in one of its land transactions only Rs.3.25 crore of the purchase cost was reflected in books of account and the related unexplained cash expenditure was a huge amount of Rs.10.65 crore? It is important and relevant to highlight that recipient of this unaccounted cash has made categorical admission in this regard and has paid the tax also in this respect." (7) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in holding that the figures of cash payments appearing in last column of the MIS/status report (i.e. the aforesaid page nos. 190, 196 and 197) -are progressive figures for whole land purchased for 52 land companies of this Group and the M/s. Krupa Land Limited land purchased by the assessee company? Such findings of the Lei. CIT(A) are perverse and factually incorrect also due to the following reasons -(i) On top of the above page nos. 190, 196 and 197 (MIS reports/status reports of the assessee company), there is clear mention of "Nevali 29-Nov-Q8" which establishes that the this MIS/status report as on 29.11.2008 is in respect of land acquisition in Nevali village only, and only the assessee has made the impugned land purchases in Nevali village; (ii) Further, there are specific columns containing details such as "Case ID", "Village", "Land Purchaser", etc. wherein the columns of "Village" and "Land Purchaser" clearly mention 'Nevali' and 'Krupa Land Pvt. Ltd.' respectively; (iii) The unique "Case ID" mentioned against different land transactions on all the above three page nos. 190, 195 and 197 are the same for those particular respective land transactions which also clearly establish that figures/details mentioned in various columns thereof pertain only to the assessee's land purchases in Nevali village; (iv) When all the other columns of the MIS/status reports appearing on page nos. 190, 196 and 197 contain details of only the asssessee's land purchases in Nevali village (this fact has been confirmed by the Ld. CIT(A) also in various paras of his impugned order e.g. paras 5.1, 5.2, 4.18, etc.), it is a perverse observation on his part to say that the last column of the same report does not pertain only to such land purchases of the assessee but it also includes progressive figures of unaccounted cash payments made in respect of land acquisitions by 52 land companies in numerous different villages; (v) The Ld. CIT(A) in paras 5.2 and 5.3 of his order has worked out total of "progressive figures" of cash payments by 52 land companies and the assessee wherein he has arrived at a figure of Rs.50.99 crore (Rs. 38.40 crore by 52 land companies + Rs.12.59 crore by the assessee) and he has made an attempt to match this figure of Rs.50.99 crore with the figure of Rs.50.58 crore appearing in the last column of the above page no.196. But, it is important and relevant to highlight that the "progressive figure" of Rs.50.99 crore as calculated by the Ld. CIT(A), itself is factually incorrect because in the cases of 52 land companies the amount of unexplained cash expenditure was Rs.43.45 crore (Rs.38.45 crore appearing on page nos. 22 and 23 of Annexure A-1 + Rs.5 crore appearing on other pages seized from Mr. Dilip Dherai) which has been confirmed also by the Ld. CIT(A) himself in those cases, and not Rs. 38.40 crore as assumed by him in his this impugned order. Therefore, the aggregate of Rs.43.45 crore and Rs.12.59 crore as calculated by the Ld. CIT(A), is Rs.56.04 crore which has no correlation whatsoever with the figure of Rs.50.58 'crore appearing in the last column of the above page no. 196."

M/s. Krupa Land Limited The appellant prays that the order of Commissioner of Income-tax (Appeal) on the above ground be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any grounds or add a new ground which may be necessary.

4. Rival contentions have been heard and record perused.

5. Facts in brief are that a search and seizure operation u/s. 132 of the I.T. Act was carried out on 05.03.2009 in the case of Jai Corp Group of companies and employees and close associates who were closely involved in the process of acquiring land in the name of 52 group companies newly formed for this purpose. During the course of search and seizure operation, number of documents were found and seized as reflected in the Panchnama which shows the Sl. No., Name of the village, Area registered, Cutoff, Payments and cash payments. The important documents as per Annexure A-l -page (22) & (23), Annexure A-3 - page (16) & (17) and Annexure A-4 - page Nos. 4 to 6 which are also annexed with the assessment order are the most relevant documents on which the AO has relied upon. After a perusal of these documents, the AO has noticed that all the papers found and seized from the residence of Shri Dilip Dherai (land aggregator) and from the corporate office of Jaicorp Group companies situated at Jai Tower (shortly known as JT) and Maker Chambers (shortly known as MK) were related to all 52 companies floated for acquiring land outside the MSEZ. All the entries recorded in the loose papers are duly reflected in the books of account of these companies except one column relating to cash payment to the land M/s. Krupa Land Limited owners. On this basis, AO informed that these papers were not belonging to the assessee company. Therefore, the AO has issued notice u/s. 153C and in response to this notice, the assessee submitted its return of income after which notice u/s. 143(2) and 142(1) alongwith questionnaire were issued.

5. In view of the order passed by AO u/s.143(3) r.w.s. 153C an addition of Rs.9,28,72,500/- was made by the AO. By the impugned order, CIT(A) has given relief of Rs.2,63,37,500/-.

6. Against this order of CIT(A), both assessee and revenue are in appeal before us.

7. At the outset, learned AR placed on record the order of the Tribunal dated 22/03/2014 in the group concerns wherein under same search various additions were made by the AO and confirmed by the CIT(A). The ITAT vide its order dated 22/03/2013 deleted the addition both on merit as well as on legal ground. Our attention was invited to various parts of the order of the Tribunal. He further placed on record the order of the Bombay High Court wherein the appeal filed by the Revenue against the order of Tribunal was dismissed by the Hon’ble High Court both on legal as well as on merit.

8. We have gone through the orders of the authorities below as well as the order of the Tribunal and High Court and found that the Tribunal vide its order dated 22/03/2013 has deleted the addition after having the following observation.

M/s. Krupa Land Limited ―9. The Ld. Senior Counsel vehemently questioned the validity of the order u/s. 153C of the Act. The Ld. Counsel challenged the very basis of the satisfaction note. It is the say of the Ld. Sr. Counsel that the AO has relied upon four documents which are exhibited at pages 17, 19, 20, 16, 42 & 43 of the Paper book , when none of these documents have been found from the possession of the assessee, these documents have been found from the possession of either Shri Dilip Dherai or M/s. Jai Corp Ltd. These documents are either in the handwriting or addressed by, or addressed to Shri Dilip Dherai or other person and not by assessee or any office Director. Questioning the satisfaction note, the Ld. Counsel submitted that there is no evidence whatsoever to conclude that any of these documents belong to the assessee or other land companies. Moreover, these seized documents do not even mention the name of the assessee or any other land company. The Ld. Counsel further pointed out that the entire assessment revolves around the search and seizure operation conducted in the residential premises of Shri Dilip Dherai and his statement recorded during the course of search and thereafter. However, the said Shri Dilip Dherai has no connection whatsoever with the assessee. Infact, while framing the assessment, the AO himself has given a finding that the seized documents belong to Shri Dilip Dherai. It is the say of the Counsel that the onus lies on the AO to establish that the seized documents belong to the assessee. The AO has grossly failed in discharging this onus.

9.1. Continuing his argument on this point of law, the Ld. Sr. Counsel submitted that the requirement of recording satisfaction is mandatory even if the AO of the searched person and the person whose assessment is sought to be reopened u/s. 153C of the Act is the same. The Ld. Counsel pointed out that no such satisfaction has been recorded in the case of searched person Shri Dilip Dherai. On the contrary, the AO has recorded the so called satisfaction in the case of 52 land companies. Concluding on this submission, the question of the validity of the order on the point of law, the Ld. Sr. Counsel concluded that considering the entire search and seizure proceedings in the light of the documents impounded during the course of search, there is not even an iota of evidence brought on record to show that the seized documents belong to the assessee , not even remotely.

10. Arguing on the merits of the case, the Ld. Sr. Counsel submitted as under: 1. An addition of Rs.38.45 crore was computed by the A.O. on the basis of seized documents of Pg Nos. 22 & 23 of Annexure A1i.Further, the A.O.

M/s. Krupa Land Limited computed the addition of Rs.5.01 crore on the basis of seized documents of Pg.Nos.1-15, 54, 55, 56, 57, 58, 60-68, 69, 70 of Annexure A-1. Thus, the total alleged unexplained expenditure has been estimated by the A.O. at Rs.43.46 crore and the same has been apportioned in 52 land companies where 67 appeals have been filed.

2. The addition of Rs.38.45 crore is based on Pg Nos.22 & 23 of Annexure A-1 and Rs.5.02 crore is based on other seized documents.

3. While analyzing the contents of Pg. No. 22 & 23, the A.O. has relied on Q No. 24 of statement of Dilip Dherai recorded on date of search i.e. 05.03.2009. However, the same has been retracted through an Affidavit dated and notarized on 07.03.2009 i.e. immediately after the search. It was submitted before the Income Tax Dept. on 14.05.2009 as Mr. Dilip Dherai was in great tension due to the massive search and seizure action. The contention of the lower authorities that it is after thought is thus without any merit as it has been notarized immediately after search.

4. As regards Pg Nos.22-23 of Annexure A seized from the residence of Shri Dilip Dherai, an explanation was offered to the A.O. as well as to the Ld.CIT(A) that these documents reflect total registered area, payment amounts and future requirements for amount for purchase of land. These sheets have been prepared on 28.11.2008. These sheets were in connection with land acquired till 20.11.2008, as indicated in Column 3 of Pgs 22-23. This sheet also incorporates budgeted requirement for land which has been reflected in highlighted portion in column 6 & 7 of these documents. These estimations were arrived at after discussion with Central Leadership Team of Jai Corp Group. The figures mentioned in column 6 & 7 reflect the projected fund requirement for future acquisition of land. This statement was made for indicating fund requirement at later date. MK & JT mentioned on Pgs 22-23 are merely indicators of the discussion took place on different sites before the said date. For MK & JT Villages, a map showing the land taken upto date and land available for contiguity of land along with the details of Survey No., Area and land owners‘ name from which we need to acquire the balance land for which we have issued the cheques in favour of Brokers! Agents to show the landowners for acquisition of their lands were also submitted to the A.O.

5. The seized documents of Pgs 22 & 23 do not reveal anything which prove that the appellant has incurred any cash expenditure as alleged by the A.O. for purchase of land. Column 6 & 7 of seized material at Pg

M/s. Krupa Land Limited Nos.22-23 are merely projected and budgeted expenditure to be incurred in case further lands are acquired. This was purely an estimation. In case this expenditure was an actual expenditure as alleged by the A.O. then various details like names & addresses of the Brokers, names and address of sellers! persons to whom the amount is paid, date of payment would have been maintained by the appellant. No such evidences have been found during the course of search at the residential premises of Shri Dilip Dherai as well as other premises. Thus, there is no documentary evidence to indicate that the figures mentioned in column 6 & 7 are an actual expenditure as alleged by the A.O. The seized documents, therefore, nowhere reveal the name and address of the recipients. The amount of Rs.38.46 crore is thus nothing, but a projected budgeted expenditure which is further fortified by the fact that cheques aggregating to Rs.38.46 crore were issued by various land companies in advance to brokers etc. with a view to finalize a land deal then payment could have been made by the brokers. These cheques were lying unencashed with Agents! Brokers prospective sellers on the date of search.

6. With regard to the addition of Rs.5.O1 crore, it is submitted that this alleged unexplained expenditure has been computed on the basis of seized material, referred to above, as per Annexure A-1. Again these documents do not indicate the names & address of the recipients of amounts. The contents of the seized material were duly explained during assessment proceedings as well as before the Ld. CIT(A). Thus, even this addition is also not based on the fact that there is no mention of name & address of the recipients. The appellant as well as other associate companies have engaged in the purchase of land and during such activities, a number of rough notings were made by staff members, brokers! agents etc. However, as already stated, the documents do not reveal anything which prove that the appellant has incurred any cash expenditure to the tune of Rs.5.O1 crore as alleged by the A.O.

7. The appellant placed reliance on the following decisions wherein the courts have held that in the absence of corroborative evidences, additions on the basis of slips, loose sheets cannot be upheld.

(i) The ITAT Delhi Bench ‗C‘ in Third Member‘s decision in the case of Amarjit Singh Bakshi (HUF) v. ACIT 263 ITR 75, 81 TTJ 169 while deliberating on the loose sheets of paper held that there is no documentary evidence to support the passing of cash.

M/s. Krupa Land Limited (ii) In the case of CIT v. Anil Bhalla (2010) 38 DTR (Del.) 113, 322 ITR 191, Tribunal held that until there are independent evidences exist, the addition on the basis of notings, jottings cannot be upheld.

(iii) The reliance is also placed on the following decisions, wherein it has been held that additions made on dumb entries/ documents without corroborative evidences are not sustainable. a) Atul Kumar Jam v. CIT (1999) 64 TTJ 786 (Delhi) b) Rakesh Goyal v. ACIT (2004) 87 TTJ 151 (Delhi) c) Rakesh Kumar lain v. DCIT (2004) 89 TTJ 203 (Delhi) d) N.R.Malhan v. DCIT (2004) 91 TTJ 908 (Delhi) e) Amarjit Singh Baxi v. ACIT (2004) 263 ITR (AT) 75 f) ACIT v. Ashokkumar Vig (2008) 15 SOT 85 (Ranchi) g) MM Financiers v. DCIT (2007) 17 SOT 5 (Chennal) h) Pankaj Dayabhai Patel HUF v. ACIT (1999) 63 TTJ 790 (Ahd.) I) Radhe Developers (2010) 329 ITR 1 (Guj). j) Shri Kapidev vs. JCIT (Spl. Range, Delhi) dated 22.03.2012.

It is evident that the addition of Rs.38.45 crore and Rs.5.01 crore is based only on conjectures and surmises. There is no corroborative evidence on record to prove that the appellant has actually incurred the alleged expenditure in cash. There is nothing on record to establish as to whom the said amount has been paid. There is also nothing on record to prove the source of the alleged cash expenditure.

9.2. Replying to the question of legality of proceedings u/s. 153C of the Act, the Ld. Departmental Representative, in addition to his oral submissions, also filed written submissions as under:

2. The judgement of Hon‘ble Delhi High Court in S.S.P. Aviation 346 ITR 177 (Del) also makes it very clear that at the time of recording satisfaction only prima fade grounds have to be mentioned and NOT that there is conclusive evidence with AC at this stage of unrecorded income etc. - which is not required at all.

3. Further, the judgement of Hon‘ble Kerala High Court in the case of Dr. K.M. Mehaboob Vs. Dy.CIT, Circle 2(1), Kozhikode (2012) 26 Taxmann.com 54(Ker.) is very clear on this and it states that u/s 153C - unlike Section 158BD - there is no need whether seized evidence etc. represents or proves undisclosed income of another assessee - and all that is required to be considered is whether such materials or evidence RELATES to another assessee or not – which may or may not lead to an assessment against that other person. Here too, the Hon‘ble Kerala High Court has used the word ‗relates‘ interchangeably with the word ‗belong‘ - and this should be taken note of by the Hon‘ble Bench. Hence, the plea that the reasons for satisfaction are vague and extraneous is NOT legally acceptable.

II. The next issue is that the marginal note to Section ‗153C‘ very clearly states - Assessment of Income of any other person - that is -this section is concerned with the ―Assessment of Income of other person‖ - and as held by Hon‘ble Supreme Court in the case of K.P. Varghese Vs. CIT 131 ITR 597(SC) wherein it has clearly been held that the ‗marginal note‘ of the section can be referred to remove any ambiguity if any - as it explains the ‗Drift‘ of the section and its purpose and intention - in this case the purpose and intention being to avoid multiplicity of proceedings u/s 153A and 153C of I.T. Act - and also by removing the expression ‗undisclosed income‘ from section 158BA - making it simple for initiating action u/s 153C - on the basis of seized material only. Hence, as per Heydon‘s Rule - or ‗Mischief Rule‘ also - only that Interpretation should be given which enhances the remedy and suppresses the mischief and does not allow subtle variations - as in the present case of trying to import a hypertechnical meaning to the word ‗belong‘ - out of context - and the same should be construed harmoniously with the context - the purpose and intention – which the law seeks to achieve.

M/s. Krupa Land Limited Also, by referring to the history of the legislation - it becomes clear that by putting a very narrow and restricted meaning the purpose of enacting section 153C will be defeated - hence, Courts should avoid a headlong confrontation between two statutes - so as to reduce it to a nullity - or make it still born - rather the section should be interpreted to breathe life and meaning into it. Hence, even by Heydon‘s Rule/Mischief Rule/Purposive Rule – the section should be so construed so as to make it effective and not still born.

The word ‗belong‘ as used in the section means - and can only mean - ‗relates to‘ or ‗pertains to‘ and as held by Hon‘ble Supreme Court in the case of N.C. Buddhiraia, 204 ITR 412 SC - you do not interpret a statute with a dictionary in one hand and the section in another - you have to see the ‗context‘ in which it is used and the ‗purpose and intention‘ it seeks to achieve etc. - hence the word ‗belong‘ cannot be interpreted strictly by a Dictionary meaning - but the context in which it is used and the purpose for which it is used and the intention of achieving the above. Any interpretation which fails in the above should be eschewed and the interpretation that achieves it should be preferred.

Ill. The decision of Hon‘ble Gujarat High Court in the case of Vijaybhai N. Chandrani V. ACIT 333 ITR 436 — relied upon by the Ld. Counsel for the appellant - clearly states that ‗Held, allowing the petition, that admittedly, the three loose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the three documents were in the handwriting of the petitioner — in the circumstances, when the condition precedent for issuance of notice was not fulfilled action taken u/s 153C of the Act stood vitiated. The above case stands distinguished on facts - because in the present case Revenue has always stated - contended and affirmed that the loose papers are signed by Mr. Dilip Dhenia and are in his handwriting hence as per observations of Hon‘ble Supreme Court in the case of Padma Sundar Rao 255 ITR 143 (SC) - even a small difference in our fact will make a world of difference - to the conclusion - hence this difference in facts - should make the conclusion different.

IV. Also, the decision of Hon‘ble Bangalore ITAT in the case of P. Srinivas Naik Vs. ACIT, CC-1(2), Bangalore (2009) 117 ITD 201 (Bang) - clearly holds the following TEST for ‗belong‘ - the ‗term‘ belonging implies something more than the idea of a casual association. It involves the notion of continuity and indicates one more or less intimate connection

M/s. Krupa Land Limited with the person over a period of time. The books of account or documents seized during the course of search had a close association with the group concern of ‗R‘. It recorded the transaction carried out by that group. It did not record the transaction carried out by the assessee. Under the Wealth Tax Act, 1957 assets belonging to the assessee were taxable. The expression ‗belonging‘ to the assessee - connotes both the complete ownership and limited ownership of interest. Of course, belonging to is capable of connoting interest which is less than an absolute perfect legal title. However, there should be some limited ownership of interest, if it is to be permitted that the assets belong to the assessee.

Hence, in the present case - the connection is not casual but CAUSAL (the chart given during the course of hearing clearly shows the land mentioned on seized documents and appellant companies dealing in it) and since all the documents are written and signed by Mr. Dilip Dheria who as per statement on oath of Mr. Shukia and Mr. Kapadia the Directors of Avkash Land Realty Pvt. Ltd. - handled all these transactions - the Test as laid down of ‗belong‘ in Naik‘s case by Hon‘ble Bangalore ITAT(Supra) is satisfied.

Further, without prejudice to Revenue‘s stand of the documents belonging to the Appellant - in case the submissions of Revenue are not accepted by Hon‘ble ITAT - then following the order of Hon‘ble ITAT, Bangalore the Hon‘ble ITAT, Mumbai may be pleased to give necessary directions/findings that Revenue is free to take remedial measures as per law - as observed in para- 7 by Hon‘ble Bangalore ITAT, in Naik‘s case.

V. Further, the decision of Hon‘ble ITAT in the case of ITO Vs. Arun Kumar Kapoor (2012) 50 SOT 87 (ASR) - is in favour of Revenue wherein on similar facts Hon‘ble ITAT Did NOT permit action u/s 148 of I.T. Act - but directed Revenue to take recourse to proceedings u/s 153C of I.T. Act, 1961.

Hence, Hon‘ble ITAT, Mumbai may kindly follow this decision.

VI. The decision of Hon‘ble Andhra Pradesh High Court in the case of Gopal Lal Bhadruka Vs. DCIT (2012) 346 ITR 106 (AP) also helps the Revenue - as it clearly states that u/s 153A and 153C - AO can take into consideration material other than what was available during the search and seizure operation for making an assessment of the undisclosed income of the assessee. It shows that the satisfaction note is not the end all and AO

M/s. Krupa Land Limited can take action u/s. 153C based upon ‗other materials‘ also as connected with the search proceedings. Also, Hon‘ble Delhi High Court in the case of CIT-VII Vs. Chetan Das Lachman Das (2012) 211 Taxmann 61 (Del) 254 CTR 392 (Del) has also clearly held that ‗seized material‘ can also be relied upon to draw inference that there can be similar transactions throughout the period of six years covered by Section 153A. Hence, the above judgement also supports Revenue‘s position that the assessment need not be based only and purely on seized material but also on ―other relevant and attendant evidences‖ -hence the word ‗belongs to‘ must be read and understood accordingly - permitting the above. Hence, a harmonious interpretation is needed.

VII. Lastly, reliance on the decision in the case of Prithvi Prakashan by Ld. Counsel is not relevant since it relates to Section 158BD and not Section 153BC - as Section 153C is materially different from Section 1S8BD as it does not deal with ‗undisclosed income‘ as the old Section 158BD does hence is of no avail. Also, reliance placed by Ld. Counsel on Wealth Tax decisions for understanding the meaning of the word ‗belongs‘ are of no relevance as they are out of context - the sense and purpose in Wealth Tax is entirely different from the sense and purpose of section 153C which is to Assess Income based upon seized documents ‗belonging‘ to another person and NOT questions of ownership etc. - hence, the word ‗belongs‘ as used in section 153C can only mean ‗relates‘ or ‗pertains‘ to the other person – as explained by Hon‘ble Supreme Court in the case of N.C. Buddhiraja 204 ITR 412 (SC) and no other meaning can be given to it. Thus, since all the ‗seized documents‘ - ‗belong to‘ - ‗relate to‘, ‗pertain to‘ the Appellant - Revenue has rightly initiated proceedings u/s 153C of I.T. Act, which may kindly be sustained and upheld.

M/s. Krupa Land Limited marked as page 1 & 2. Section 153C provides as under: ―Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belong to a person other than the person referred to in section 153A, then the books of account or documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of section 153A :][Provided that in case of such other person, the reference to the date of initiation of the search under section 132 or making of requisition under section 132A in the second proviso to 97[subsection (1) of section 153A shall be construed as reference to the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person.] (2) Where books of account or documents or assets seized or requisitioned as referred to in sub-section (1) has or have been received by the Assessing Officer having jurisdiction over such other person after the due date for furnishing the return of income for the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A and in respect of such assessment year— (a) no return of income has been furnished by such other person and no notice under sub-section (1) of section 142 has been issued to him, or (b) a return of income has been furnished by such other person but no notice under sub-section (2) of section 143 has been served and limitation of serving the notice under sub-section (2) of section 143 has expired, or (c) assessment or reassessment, if any, has been made, before the date of receiving the books of account or documents or assets seized or requisitioned by the Assessing Officer having jurisdiction over such other person, such Assessing Officer shall issue the notice and assess or reassess total income of such other person of such assessment year in the manner provided in section 153A.]

12. Before proceeding further let us also consider the provisions of Sec. 158BD as provided under Chapter XIVB which has become nonoperative

M/s. Krupa Land Limited qua search etc. made after 31.5.2003.158BD-Undisclosed income of any other person. ―Where the Assessing Officer is satisfied that any undisclosed income belongs to any person, other than the person with respect to whom search was made under section 132 or whose books of account or other documents or any assets were requisitioned under section 132A, then, the books of account, other documents or assets seized or requisitioned shall be handed over to the Assessing Officer having jurisdiction over such other person and that Assessing Officer shall proceed [under section 158BC] against such other person and the provisions of this Chapter shall apply accordingly‖.

13. A close perusal of these two sections show that prior to 31.5.2003 in case of search and seizure proceedings, under erstwhile section 158BD, the AO has to satisfy himself that any undisclosed income belongs to any person other than the person with respect to whom search was made u/s. 132 etc. However, under the present provisions of Sec. 153C, the AO has to satisfy that any money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belongs or belonged to a person other than the person referred to in Sec. 153A. The distinction is clear and obvious. In the erstwhile provisions of Sec. 158BD the emphasis was on ―undisclosed income‖ whereas under the present provision the emphasis is on money, bullion, documents etc. belonged to a person other than the person searched. In the light of the aforesaid distinction and the provisions of Sec. 153C all that has to be seen is whether the document seized from the possession of Shri Dilip Dherai belong to the assessee and whether on the strength of these documents has the AO recorded the satisfaction in consonance with the letter and spirit of the provisions of the Act. A careful perusal of the documents marked as page 1 & 2 of our order show that there is not a single mention of any company. It appears that the AO was in possession with the mythological power of the ―Divyadrishti‖ possessed by Sarathi Sanjay in Mahabharat by which he could foresee and narrate the exact happenings at the Kurushetra sitting in the room of King Dridharashtra. Our reference to this mythological character is not without any basis because just by looking at the documents at page 1 & 2, the AO could foresee that these lands belong to 52 land companies without even knowing their names at the time of recording the satisfaction. Even in the satisfaction note while concluding his discussion at para 1.6 the AO concluded as under‖.

―In view of the above, I am satisfied that the above mentioned seized documents belong to a person i.e. the assessee (which is included in the M/s. Krupa Land Limited above mentioned 52 companies) other than the person referred to in Sec. 153A within the meaning of provisions of Sec. 153C of the Act. Accordingly, proceedings u/s. 153C of the Act are initiated in the case of the assessee‖.

292C. [(1)] Where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of a search under section 132 [or 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 or other valuable article or thing belong or belongs to such person; (ii) that the contents of such books of account and other documents are true; and (iii) that the signature and every other part of such books of account and other documents which purport to be in the handwriting of any particular

M/s. Krupa Land Limited person or which may reasonably be assumed to have been signed by, or to be in the handwriting of, any particular person, are in that person‘s handwriting, and in the case of a document stamped, executed or attested, that it was duly stamped and executed or attested by the person by whom it purports to have been so executed or attested.] 26[(2) Where any books of account, other documents or assets have been delivered to the requisitioning officer in accordance with the provisions of section 132A, then, the provisions of sub-section (1) shall apply as if such books of account, other documents or assets which had been taken into custody from the person referred to in clause (a) or clause (b) or clause (c), as the case may be, of subsection(1) of section 132A, had been found in the possession or control of that person in the course of a search under section 132.]

15. It is the say of the Ld. DR that in the light of the decision of Kerala High Court 333 ITR 281 when the AO of the person searched u/s. 153A is the same as for the other person covered u/s. 153C. There is no need to record this satisfaction u/s. 153C of the Act. That decision is only to override the procedural part because the ‗sender AO‘ and the ‗receiver AO‘ of the seized documents being the same. But it cannot be said that no satisfaction is required prior to proceeding u/s. 153C of the Act. Had this being the legislative intent, the legislature could have provided in the section itself that when the search cases are centralized, there is no need for recording any satisfaction. That being not the case, we do not accept the submission of the Ld. DR on this point. The Ld. DR has further relied upon the decision of the Hon‘ble Delhi High Court 346 ITR 177 according to which at the time of recording satisfaction only prima facie grounds have to be mentioned and not that there are conclusive evidences with AO at this stage of unrecorded income etc. Infact, this decision is in favour of the assessee because atleast there should be some prima facie ground, which is absent in the present case. As pointed out earlier, the seized documents contain only the names of the villages where the lands have been purchased. By looking at the names of the villages, it is beyond our understanding how could one come to know that 52 companies have purchased lands in these villages. The third decision relied upon by the Ld. DR on this point is that of Hon‘ble Kerala High Court 26 Taxmann.com 54 by which the Ld. DR has emphasized that there is no need whether seized evidence etc. represents or prove undisclosed income of another assessee all that is required to be considered is whether such material or evidence relates to another assessee or not. Once again even at the sake of repetition we have to say that the exhibit 1 & 2 relied upon

M/s. Krupa Land Limited by the AO do not contain the names of any company therefore at the stage of recording of the satisfaction how could the AO say that the entries pertain to 52 companies. The Ld. DR has further emphasized on the word belong used in the section. It is the say of the Ld. DR that even if there is a causal relationship, it can be said that the document belong to other person.

16. On the contrary, the reliance of the assessee on the decision of the Hon‘ble Gujarat High Court in the case of Vijaybhai Chandrani Vs ACIT 333 ITR 436 is well founded wherein the Hon‘ble Gujarat High Court has held that ― allowing the petition, that admittedly, the 3 loose papers recovered during the search proceedings did not belong to the petitioner. It was not the case of the Revenue that the 3 documents were in the handwriting of the petitioners. In the circumstances, when the condition precedent for issuance of notice was not fulfilled, action taken u/s. 153C of the Act stood vitiated. The Hon‘ble High Court in its order considering the usage of a document has made the following observations:

―A perusal of the said documents indicates that the same contain details of members of Samutkarsh Co-Operative Hsg. Soc. The said document undoubtedly is not a document which belongs to the petitioner though there is a reference to the petitioner in one of the loose papers under the heading Samutkarsh Members. Detail indicating plot numbers, names of members and other details.‖

17. We find that in this decision of the Hon‘ble Gujarat High Court, even when impugned documents had reference to the assessee, the Hon‘ble High Court quashed the proceedings u/s. 153C of the Act. In our case, there is not even a reference to the assessee except the name of the village in which the assessee has purchased the lands. Coming back to the provisions of Sec. 153C vis-à-vis 158BD as pointed out earlier both the sections are similarly worded section. With a marked distinction such as the marginal heading of 158 BD is undisclosed income of any other person and that of 153C is assessment of income of any other person.

Further u/s. 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account seized or requisitioned belong to such other person, whereas all that is required u/s. 158BD is that the undisclosed income should belong to any other person.

M/s. Krupa Land Limited 18. Thus it is clear that before issuing notice u/s. 153C, the primary condition has to be fulfilled and which is that the money, bullion, documents etc., seized should belong to such other person. If this condition is not satisfied, no proceedings could be taken u/s. 153C of the Act. The seized documents marked as page 1 & 2 of our order do not belong to the assessee but were seized from the residential premises of Shri Dilip Dherai. It is not the case of the Revenue that the impugned documents are in the handwriting of the assessee. At this stage, it would be fair to the Revenue that it cannot be in the handwriting of the assessee since the assessee is a legal person, so to extend our observation, the seized documents are not even in the handwriting of any person related with the assessee because Shri Dilip Dherai is neither a Director nor a shareholder/member nor even an employee of the assessee company. We may mention at this stage that the provisions of the Indian Evidence Act are not strictly applicable to the proceedings under the Income Tax Act, but the broad principles of law of evidence do apply to such proceedings. Further an entry in the books of account maintained in the regular course of business is relevant for the purpose of considering the nature and impact of a transaction, but noting on slip of papers or loose sheet of papers are required to be supported/corroborated by other evidence. There is also a distinction between loose papers found from the possession of assessee and similar documents found from a third person. In the present case, impugned documents were not found from the possession of the assessee but was found from the possession of a third person i.e. Shri Dilip Dherai. Mere mention of the names of the villages where the companies may have purchased lands would not give any basis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec.153C has been shaken by not fulfilling the condition precedent for the issue of notice. It is the say of the Ld DR that in the present case there is no need for recording of the satisfaction .If this plea of the DR is accepted then the legislative intent of inserting sec.153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 years in the case of the ‗ Other Person ‘without recording any basis [ satisfaction ] for his action .Therefore this plea of the Ld DR cannot be accepted .

19. Considering the entire facts and circumstances in the light of the impugned seized documents, we have no hesitation to hold that action taken u/s. 153C of the Act is bad in law.

M/s. Krupa Land Limited 20. Now coming on to the merits of the case, which is without prejudice to our findings hereinabove, the submissions of the Ld. Sr. Counsel have been incorporated hereinabove to which the Ld. DR in addition to his oral arguments filed a written submission. The Ld. DR has mainly relied upon the findings of the AO. So far as payments outside the regular books of accounts are concerned, in his written submission, the Ld. DR has explained the modus operandi of the assessee relying upon various documents seized from the premises of Shri Dilip Dherai and M/s. Jai Corp group. The Ld. DR strongly contended that the retraction of Shri Dilip Dherai is only self serving and has to be rejected as an afterthought. For this preposition the Ld DR relied upon several judgements . It is the say of the Ld. DR that the statement of Shri Dilip Dherai was recorded u/s. 132(4) of the Act on 5.3.2009 whereas Shri Dilip Dherai has filed an affidavit on 14.5.2009 retracting from his admission on 5.3.2009. The Ld. DR pointed out that after 5.3.2009 Shri Dilip Dherai appeared before the DDIT on 6.4.2009, 8.4.2009, 20.4.2009, 22.4.2009 & 8.5.2009 and none of these appearances Shri Dilip Dherai never stated that his statement on oath recorded on 5.3.2009 was done under threat, force, coercion. Therefore, the affidavit filed by Shri Dilip Dherai is only an afterthought. In his written submission, the Ld. DR has pointed out that Shri Dilip Dherai in order to escape the consequences of law , has filed the affidavit as an afterthought which deserves to be ignored especially when the affidavit has been controverted and repelled by the Authorised Officer Shri Manoj Kumar. Thereafter in his written submission, the Ld. DR went on to explain how the cash transactions have taken place as mentioned in the seized documents. It is the say of the Ld. DR that on perusal of these seized documents, there is clear mention of cash required at the bottom of these pages. Further in all these documents, total cost of land has been arrived by multiplying area of land with rate per acre. Referring to page-22 and 23 of Annexure-A1, which are at page 1 & 2 of our order, the Ld. DR submitted that since 5 columns of the chart are entered into the books of account, then it cannot be accepted that the 6th & 7th column do not belong to the assessee company. This view has been accepted by the Ld. CIT(A). The Ld. DR finally concluded that in view of all the surrounding facts and circumstances, it is very clear that cash payments have been made and an addition has to be made on this account. To substantiate his claim, the Ld. DR has also referred to seized materials 101 to 108. According to the Ld. DR, these seized materials described the modus operandi of the group. The Ld. DR in his written submission has tried to explain the nature of transaction recorded in the seized documents 101 to 108.

M/s. Krupa Land Limited

―Q. 24.Please note page No. 22 and page No. 23 which is kept before you. As I understand these are the statement as on 28th November, 2008 for the land purchased herein list of accounted payments are provided against each village. Please clarify the same.?

Ans. These documents reflect total amounts disbursed for purchase of land. The details of area, village, payments made through cheque alongwith payments made through ―cash‖ is shown very clearly in the chart. The highlighted portion reflects the cash payments disbursed through Jaicorp Office at Maker and Jai Towers. The same has been mentioned separately. The cash payment from Maker adds upto Rs. 28.01 Cr and cash payment from Jai Towers adds upto Rs. 10.43 cr. All these cash were received for these projects from Jaicorp Ltd. and the total of all these amounts works out to Rs. 38.45 Cr in cash. I was provided with these cash as and when required by Shri Sanjay Punkhia‖ 22. However, subsequently Shri Dilip Dherai has retracted from his statement which has been strongly objected by the Ld. DR in his submission. The entire dispute revolves around the alleged cash payment amounting to Rs. 43 crores approx. and which has been added u/s. 69C of the Act. Sec. 69C of the Act reads as under:

―Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the AO, satisfactory, the amount covered by such expenditure or part thereof, as the case may be, may be deemed to be the income of the assessee for such financial year.‖

M/s. Krupa Land Limited that the assessee must have been found to have incurred any expenditure to invoke the provisions of Sec. 69C of the Act. Even if for the sake of arguments, the retraction of Shri Dilip Dherai is ignored , in his reply to question No. 24 on the date of search, Shri Dilip Dherai has categorically mentioned that cash payment from Makers is at Rs. 28.01 crores and cash payment from Jai Towers is at Rs. 10.43 crores, total of these amounts works out at Rs. 38.45 crores which was provided to Shri Dilip Dherai by one Shri Sanjay Punkhia CEO of SEZ Project. Shri Dilip Dherai is not even remotely related to the assessee company .It is also not the case of the Revenue that Dilip Dherai was acting as agent of the assessee company. Merely on the strength of this admission, it cannot be said that the assessee has incurred certain expenditure over and above what has been recorded in its books of account. We find that the ultimate conclusions drawn by the AO and the Ld. CIT(A) have been reached merely on the entries found on loose sheet of papers for which Shri Dilip Dherai has stated that they are only estimates / budgetary figures. However, the allegations made by the lower authorities are not supported by actual cash passing hands. The entire additions are based on the seized documents and no other material has been adverted to and which could conclusively show that the huge amount of the magnitude mentioned in the seized documents travelled from, one side to the other. The Revenue authorities have not brought a single statement on record of the vendors of land in different villages. None of the seller has been examined to substantiate the claim of the Revenue that extra cash has actually changed hands.

24. Our view is fortified by the decision of the Delhi High Court in the case of Malik Brothers Pvt. Ltd. Vs CIT 162 Taxmann 43 which is relied upon by the Ld. DR. In that case, the assessee purchased the property allegedly for Rs. 6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was Rs. 45 lakhs and paid tax thereon. In view of vendor‘s statement, the AO made an addition of Rs. 39 lakhs to the income of the assessee towards unexplained investment. The action of the AO was justified and the additions were confirmed. Thus in view of the aforesaid decision, in the present case, none of the sellers have been examined by the AO to strengthen his views that cash has been paid over and above the registered amount. There is not even a single document/evidence of parties involved in the sale of land at different villages brought on record to show that an amount other than the payment of consideration has exchanged hands. No confession from the sellers have been brought on record. The entire additions have been made merely on M/s. Krupa Land Limited the strength of loose papers found during the course of the search not supported by any independent authority. Considering the entire addition, in the light of the provisions of Sec. 69C, as per A.O‘s own interpretation, investments in purchase of land have been fully financed by some other persons, therefore, the addition in the hands of the assessee cannot be justified as the assessee has not incurred any expenditure. There may be one more possibility that the persons who were doing land purchase might have inflated the sale price in these loose sheets just to extract monies from their higher authorities in the guise of On-Money to be paid to the vendors. May be because of his possibility no documents were found to show that the money actually changed hands.

4. He would submit that the Tribunal has noted that Jai Corp group is a partner in 'Mumbai Special Economic Zone' and 'Navi Mumbai Special Economic Zone' projects of India. This group has floated various companies to purchase large chunks of land in the vicinity of Special Economic Zones. The group's real estate operations were being handled by Viredra Jain, Gaurav Jain and Dilip Dherai. Dilip Dherai was also managing land deals outside Mumbai Special Economic Zone. The assessee in Income Tax Appeal No. 72 of 2014 is one of the companies floated by this group to purchase land outside Mumbai Special Economic Zone.

5. On 5th March, 2009, a search action under Section 132 of the Income Tax Act, 1961 (for short, ―the IT Act‖) was carried out in the case of this group, it's employees and close associates. They were involved in the process of acquiring land. During search of Dilip Dherai's residence, certain incriminating documents were seized and his statement was recorded.

6. Our attention is invited by Mr. Singh to an answer given to question 24 by the said Dilip Dherai. Mr. Singh would submit that this answer is an admission of the fact that there were amounts disbursed for purchase of lands. The said Dilip Dherai also stated that an amount of Rs.38.45 crores was received by him in cash to purchase lands. It may be that Dilip Dherai retracted his statement after 2½ months on 14th May, 2009. Then Mr. Singh invited our attention to the notice under Section 153C of the IT Act issued for those years preceding the relevant Assessment Year, requiring the assessee to file return of income within 10 days of receipt of the notice. This notice under Section 153C was issued on 9th September, 2010 and prior thereto, a notice was issued under Section 143(2) for the Assessment Year 2009-10. Mr. Singh also submits that on 28th September, 2010, the notices under Sections 143(2) and 142(1) were issued and served alongwith questionnaire for all the Assessment Years. On 7th December, 2010, a show cause notice was issued to the assessee informing that Rs.38.45 crores, which is a sum reflected from the documents seized from Dilip Dherai's residence, and Rs.4 crores in addition, which is evidenced by loose documents in the form of cash receipts, were found during search M/s. Krupa Land Limited and seizure proceedings. The assessee was called upon to explain and show cause as to how these amounts should not be treated as 'unexplained expenditure' under Section 69C of the IT Act, since the assessee did not provide any explanation with regard to the documents seized under Section 132 of the said Act for the Assessment Years from 2003 to 2009 and for 2009-10. The Assessment Order was passed and additions were made. The amount of unexplained expenditure was apportioned to all the land companies floated by Jai Corp Group who had purchased land in these villages in ratio of the cost of land purchased up to 28th November, 2008. This Assessment Order was passed on 29th December, 2010 and was upheld by the Commissioner of Income Tax (Appeals) on 28th October, 2011. He held that the Assessing Officer had rightly issued notice under Section 153C of the IT Act for these years preceding the current Assessment Year and made additions under Section 69C of the said Act as unexplained expenditure. The Income Tax Appellate Tribunal set aside the order of the Commissioner of Income Tax (Appeals) pertaining to the Assessment Year 2008-09 holding that the action under Section 153C of the IT Act was bad in law.

7. It is this conclusion of the Income Tax Appellate Tribunal which is assailed in this Appeal by the Revenue. Mr. Singh would submit that right from the beginning, the facts were clear. If the Income Tax Appellate Tribunal proceeded on an erroneous assumption that the Revenue is not disputing the position as pointed out by the assessee, then, that foundation for the ultimate conclusion is bad in law and on the face of it. There is no question of any consent or 'no objection' by the Revenue when the facts were clear. If the conclusion is de hors the facts, it denotes complete error of jurisdiction. It is in these circumstances that relying upon the findings in the order of the Assessing Officer and the Commissioner of Income Tax (Appeals), Mr. Singh would submit that the grounds raised

by the Revenue in the present Appeal should be entertained and appropriate orders to subserve the larger interest of justice be passed.

8. On the other hand, Mr. Joshi appearing on behalf of the assessees in all these Appeals would rely upon the order passed by the Division Bench of this Court on 7th February, 2017 in Income Tax Appeal No. 83 of 2014 and Income Tax Appeal No. 150 of 2014. Mr. Joshi would submit that a common impugned order was passed disposing of 67 appeals pertaining to 52 different assessees. The Revenue picked up only two assessees, namely, M/s. Arpit Land Private Limited and M/s. Ambit Reality Private Limited and challenged the orders in their appeals relating to Assessment Years 2007-08 and 2008-09 respectively. Mr. Joshi heavily relied upon the findings of fact which are relied by the Division Bench of this Court in these Appeals to submit that the present Appeals are no different. The very grievance based on the statement of Dilip Dherai was raised in those Appeals. It is in these circumstances that he would submit that the Division Bench's order rejecting the Appeals of the Revenue would bind it in the M/s. Krupa Land Limited present matters. Hence, there is no substantial question of law which arises for consideration in these Appeals. The Appeals deserve to be dismissed.

2. We find that the common impugned order disposed of the appeals in favour of the respondent assessee (who were Apellants before it) on the following two grounds: (a) The Assessing Officer does not have jurisdiction to pass the assessment order in view of Section 153C of the Act not being satisfied; and (b) There is no warrant to add the alleged cash payment to the Respondent – assessee's income in terms of Section 69C of the Act as unexplained expenditure.

3. These appeals have been filed on the following identical questions of law for our consideration : ―(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in quashing the order made under Section 143(3) of the Act by holding that Shri Dilip Dherai is an unrelated person to the assessee when the evidences discovered in the course of search operation and statements recorded under Section 132 (4) of the Act and other facts marshaled, as brought out in the assessment order and appellate order or the Ld. CIT (A) clearly show that Shri Dilip Dherai was actually working for and on behalf of the assessee as part of a larger common group with a common agenda? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in deleting the additions made under Section 69C of the Act both on merits and point of law? (iii) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in making incorrect observation that the Revenue has not brought on record a single statement of the vendors of land and sellers, and have not examined to substantiate the claim of extra cash actually changing hands, where as the independent evidences gathered and statements recorded in respect of M/s. Pathik Constructions, Shri Ajit Thumar, Shri Chaturbhai Thumar and Shri Sunil Gulati confirmed unaccounted receipts in cash towards land acquisition?

M/s. Krupa Land Limited (iv) Whether on the facts and in circumstances of the case and in law, the Tribunal was justified in not adjudicating the ground of appeal no.4 of the assessee, before the Tribunal relating to evidences of Pathik Construction and Sunil Gulati, which independently confirmed unaccounted cash transactions, evidenced by seized material, admitted in statements under Section 132(4) of the Act and correlation of materials seized/impounded from different places/persons on one hand and correlation of material seized/impounded with the books of account on the other hand? (v) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in not following the decision of the Apex Court in the case of Sumati Dayal (214 ITR 801), rendered in the context of degree of evidences relating to unaccounted cash transactions, and failing to lift the corporate veil in the present case and see the facts in their proper perspective?‖ There is no specific question raised with regard to the impugned order being wrong/incorrect in holding that the Assessing Officer did not have jurisdiction to proceed under Section 153C of the Act. Moreover we also notice that no ground is urged in the memo of appeal with regard to the issue of jurisdiction.

4. In view of the fact that no specific grievance had been made by the revenue with regard to the finding of the Tribunal on applicability of Section 153C of the Act, the other questions raised and urged before us becomes academic. However, we are not certain that the revenue has taken an informed decision to not challenge the finding in the impugned order of the Tribunal with regard to Section 153C of the Act. The counsel for the Revenue was also not certain, when specifically asked. If the decision not to challenge the issues of jurisdiction was informed we are unable to understand why all these appeals were filed to raise academic issues.

5. It may be pointed out that after the appeal was argued for sometime and we were about to dictate this order, Mr. Kotangale, learned counsel for the Revenue did point out that challenge to the impugned order of Tribunal in respect of Section 153C of the Act has to be inferred from the fact that question as framed challenges the quashing of the order of the Assessing Officer under Section 143(3) of the Act by the Tribunal. Similarly he relies upon the challenge to the deletion of the addition made under Section 69C of the Act on merits and on point of law. The aforesaid questions do not bring out the challenge to the issue of jurisdiction. Nor is there any ground in support of the same.

6. We expect the Commissioner of Income Tax to examine this issue and put a record how this has happened and the corrective measures being taken by them to ensure that a considered view is taken in respect of the M/s. Krupa Land Limited orders of the Tribunal which are being challenged before this Court. This casual attitude in filing of appeals leads to uncalled for harassment of the assessee and undue encroachment on scarce judicial time in the context of the large number of pending appeals.

7. The Registry is directed to forward a copy of this order to the Principal Chief Commissioner of Income Tax.

8. These appeals are at the request of the Revenue adjourned to 11th July, 2016.‖ 10. Then these Appeals were placed on 1st August, 2016. On 1st August, 2016, after hearing both sides, this Court made the following order : ―1. On the last date, Mr. Kotangle, learned Counsel appearing for the revenue informed us that all appeals raise identical questions. On hearing the revenue it appeared to us prima facie that the common impugned order dated 22nd March, 2013 has not been challenged to the extent it held that the Assessing Officer did not have jurisdiction as section 53C of the Income Tax Act (the Act) was not satisfied. We adjourned the hearing to enable the Commissioner of Income Tax to put on record, whether the nonchallenge to the issue of jurisdiction was an informed decision or not. This was so as it appeared to us that in the absence of challenge to the issue of jurisdiction, the other issues become academic.

2. Mr. Kotangle, learned Counsel for the revenue tenders an affidavit of Mr. D.B. Semwal, Principal Commissioner of Income Tax, (Central)III dated 25th July, 2016. The affidavit as filed does not address the issue raised by us in our order dated 23rd June, 2016.

2. These appeals were first heard on 27 June 2016. At that time, the Court had noticed that the appeals as preferred had not specifically raised any question with regard to finding of the Tribunal that the proceedings under Section 153C of the Income Tax Act, 1961 (―the Act‖) are without jurisdiction. Therefore, the further questions raised on merits of the assessment appeared to be academic. In the above view, the appeals were adjourned so as to enable the Revenue to bring on record whether the decision to not challenge the finding of the Tribunal with regard to applicability of Section 153C of the Act, was an informed decision or not. Further, if it was an informed decision, then why challenge the other issues when the lack of jurisdiction has been accepted. We had also directed the Registry to forward a copy of the order to the Principal Chief Commissioner of the Income Tax. 3 Thereafter appeals reached hearing on 25th July 2016 for admission. At that time, the Revenue again sought time and appeals were adjourned to 1 August 2016. On 1 August 2016, an affidavit dated 25th July 2016 by Principal Commissioner of IncomeTax, (Central)III was tendered. However, the Court found that the affidavit dated 25 July 2016 of the Principal Commissioner of Income Tax did not address the issues raised in its order dated 27 June 2016.Thus all the appeals adjourned to 9 August 2016 with direction to the Revenue to file a detailed affidavit addressing the issues raised in order dated 27 June 2016. 4 The appeals thereafter reached hearing on 11 August 2016. At that time, Mr. Kontagle, the learned Counsel for the Revenue, again sought time. At his request the appeals were adjourned to 25 August 2016. On 25 August 2016, the appeals were again adjourned at the request of Additional Solicitor General to 13 September 2016. Today, when the appeals reached hearing, Mr. Kotangle, learned Counsel for the Appellant sought time. This time on the ground that, the Revenue desire to file a detailed affidavit. 5 We find attitude of the Revenue in the present appeals is most casual. These appeals had first reached admission on 27th June 2016 when certain directions were given only in view of the manner in which the appeal had been filed. The affidavit dated 25 July 2016 of the Principal Commissioner of Income Tax did not address the issues raised. Thereafter, the Revenue has been seeking time on one pretext or other. We grant adjournment of the appeals subject to costs of Rs.25,000/being paid by the Appellant – Commissioner of Income Tax to the Tata Memorial Cancer Hospital on or before 30 September 2016.

M/s. Krupa Land Limited

3. Further an affidavit dated 04th October, 2016 of Mr. D.P. Semwal, Principal Commissioner of Income Tax (Central)3, Mumbai21, has been filed. In the affidavit, it is stated that the Appeals relating to the a Assessment Years 2003-04,2004-05,2005-06,2006-07,2007-08 and 2008- 09 do raise a jurisdictional issue as regards applicability of Section 153C of the Act. However, as regards the Appeals relating to Assessment Year 2009-10,no such jurisdictional issue is urged in the Appeals as it does not fall within the period of six years, as envisaged in Section 153C of the Act. It is, however, stated that the Revenue has now realized that the impugned order of the Tribunal has disposed of all the Appeals relating to the Assessment Year 2009-2010 alongwith the other Assessment Years on the basis that the Section 153C of the Act, would apply. Therefore, the Revenue ought to have raised the issue with regard to Tribunal being incorrect in holding that Section 153C of the Act applies to the Assessment Year 2009-2010.

4. In view of the above, the learned Additional Solicitor General seeks to add following additional question of law in all Appeals relating to Assessment Year 2009-10 i.e. Income Tax Appeal Nos. 72/2014; 114/2014; 122/2014; 124/2014, 225/2014 and 226/2014 for our consideration:

M/s. Krupa Land Limited Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT, Mumbai was right in holding that the action taken u/s. 153 C was bad in law, also for the 7th year/current year of the search i.e. A.Y. 2009-10 even when it does not fall under the ambit of provisions of section 153C of the IT Act, 1961.

6. In fact we may also record the fact that on 27th June, 2016, when these appeals reached hearing, the Revenue referred to the question raised in the Income Tax Appeal No. 72 of 2014 as being common question in all appeals.

9. In view of the above, at the request of the Revenue all these Appeals are adjourned to 22.11.2016.‖ M/s. Krupa Land Limited 14. Thereafter, for some reason or the other, the present Appeals could not be taken up. Adjournments were sought on 24th November, 2016, 5th December, 2016, 19th December, 2016, 21st December, 2016 and thereafter on 23rd January, 2017, 6th February, 2017 and 7th February, 2017.

19. We are not impressed by the arguments of the learned Additional Solicitor General. The Tribunal has decided, as is apparent from the record, the Appeals of the assessees pertaining to the Assessment Years 2007-08, 2008-09 and 2009-10. These Appeals were directed against the order of the learned Commissioner of Income Tax (Appeals) dated 27th October, 2011. The representatives of both sides, by consent, stated that there are 67 appeals pertaining to 52 different assessees, including the one before the Tribunal, which have been decided on identical facts. The issues are also common. That is how the Tribunal clubbed all the appeals together for the convenience sake.

19. Considering the entire facts and circumstances in the light of the impugned seized documents, we have no hesitation to hold that action taken u/s. 153C of the Act is bad in law.‖ 21. Thereafter, in paragraph 20, the Tribunal considered the merits and once again, at great length. The particular argument revolving around the statement of Dilip Dherai and his answer to question No. 24 was also considered in paragraph 21 of the impugned order. Then, in paragraph 22, the Tribunal refers to the additions made under Section 69C. After reproducing Section 69C and adverting to the fact that Dilip Dherai has retracted his statement, the Tribunal arrived at the conclusion that merely on the strength of the alleged admission in the statement of Dilip Dherai, the additions could not have been made. The concurrent findings of fact would demonstrate that the essential ingredients of Section 69C of the IT Act enabling the additions were not satisfied. This is not a case of 'no explanation'. Rather, the Tribunal concluded that the allegations made by the authorities are not supported by actual cash passing hands. The entire decision is based on the seized documents and M/s. Krupa Land Limited no material has been referred which would conclusively show that huge amounts revealed from the seized documents are transferred from one side to another. In that regard, the Tribunal found that the Revenue did not bring on record a single statement of the vendors of the land in different villages. None of the sellers has been examined to substantiate the claim of the Revenue that extra cash has actually changed hands. It is in these circumstances that the Tribunal found that on both counts, namely, the legal issue, as also merits, the additions cannot be sustained. Eventually, the Tribunal held in paragraph 25 (page 188) as under: ―25. A perusal of the balance sheet of the assessee show that the authorized, issued and subscribed paid up capital is at Rs. One lakh and the assessee had not done any business during the year under consideration. With such a small corpus and no business activity, nor any has been brought on record by the Revenue, it is not acceptable that the company may have incurred such huge expenditure outside its books of account. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changed hands between the parties, no addition could therefore be made u/s. 69C of the Act to the income of the assessee. Considering the entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained.‖ 22. We do not think that this case is any different from the one considered by the Division Bench in the case of M/s. Arpit Land Pvt. Ltd. and M/s. Ambit Reality Pvt. Ltd. The Assessment Year in the case of M/s. Arpit Land Pvt. Ltd. was 2008-09 and in the case of M/s. Ambit Reality Pvt. Ltd., it was 2007-08. The controversy was identical. The Division Bench, having concluded that no substantial question of law arises for consideration in the Appeals by the Revenue in the case of identical land transactions of two assessees involved in Income Tax Appeal Nos. 83 of 2014 and 150 of 2014, then, a different conclusion is not possible. We do not think that the shift in the stand of the Revenue carries its case any further. We are of the opinion that the Revenue has rightly been faulted for its approach by the Tribunal. The above are pure findings of fact and consistent with the material placed on record. Thus, the jurisdiction and vesting in the Assessing Officer could have been exercised and the satisfaction in that regard was enough, are not matters which can be decided in the further appellate jurisdiction of this Court. It is not possible for us to reappraise and reappreciate the factual findings. The finding that Section 153C was not attracted and its invocation was bad in law is not based just on an interpretation of Section 153C but after holding that the ingredients of the same were not satisfied in the present case. That is an exercise carried out by the Tribunal as a last fact finding authority. Therefore, the finding is a M/s. Krupa Land Limited mixed one. There is no substantial question of law arising from such an order and which alternatively considers the merits of the case as well.

23. As a result of the above conclusion, we cannot agree with the learned Additional Solicitor General that we can pass a different order and entertain these Appeals for the current year of the search, namely, the Assessment Year 2009-10. That was based on the argument that the action under Section 153C for this year is an incorrect conclusion. All the earlier orders in these Appeals having being noted by us, we have no hesitation in concluding that despite sufficient opportunity being given to the Revenue, it has not been able to satisfy this Court that a different view can be taken.

10. We had carefully gone through the orders of the authorities below as well as order passed by Tribunal in the group case of the assessee which was duly confirmed by Hon’ble Bombay High Court. We had also deliberated on the judicial pronouncements referred by lower authorities in their respective orders as well as cited by learned AR and DR during the course of hearing before us.

11. For Ground Numbers 3 to 9 (Except 6) the AR placed reliance on the ITAT order dated 22.03.2013 of the 52 land companies of the Jai Corp Group. The following page numbers and para were brought to the notice of the members:- “Page 18, Para 4.1: The AR bought to the notice of the member Para 4.1, Page 18 wherein the discussion of Assessing officer (AO) in relation to pg. no. 22 and 23 of the loose paper folder marked as Annexure-1 seized from the premises of Dilip Dherai was discussed. Page 20, Para 4.3:

M/s. Krupa Land Limited This para gives reference to the conclusion given by the AO at the time of Assessment procedure of 52 Land Companies. The AO gave the conclusion stating that the submissions made by the appellate and Shri. Dilip Dherai are not tenable and hence, made addition on the basis of incriminating material. Page 24, Para 10: This para gave a reference to arguments made by the Ld. Senior Counsel (AR) at the ITAT proceedings of 52 Land Companies: Sub Para 1: This para is in relation to additions which were based on the seized material found. Sub Para 3: This para reads out the analysis of Page no. 22 and 23 of the loose paper folder marked as Annexure-1 seized from the premises of Dilip Dherai and further retraction by Dilip Dherai through affidavit dated 07.03.2009. The AR (of the ITAT proceedings of 52 Land Companies] bought to attention that it is mentioned in the submission that the affidavit was notarized immediately after search and therefore the contention of lower authority that it is an afterthought is not valid. Page 41, Para 20: This para gave a reference to argument by the Ld. DR at the ITAT proceeding of 52 Land Companies. The Ld. DR has mainly relied upon the findings of the AO. So far as payments outside the regular books of accounts are concerned, in his written submission, the Ld, DR has explained the modus operand! of the assessee relying upon various documents seized from the premises of Shri Dilip Dherai and M/s. Jai Corp group. The Ld. DR strongly contended that the retraction of Shri Dilip Dherai is only self-serving and has to be rejected as an afterthought For this preposition the Ld DR relied upon several judgments. The Ld. DR concluded that the affidavit filed by Shri. Dilip Dherai is just an afterthought because the statement of Shri Dilip Dherai recorded u/s. 132(4] of the Act never stated that his statement on oath recorded on 5.3.2009 was done under threat, force, coercion. . Page 44, Para 22: This para states the objection by Ld. DR against the retraction of Dilip Dherai from his statement. 4 Page45, Para 23, 24, 25 and 26: This para is the concluding paragraph by the Hon'ble ITAT in the case of 52 Land Companies, wherein it was stated that:- • Shri. Dilip Dherai is not even remotely related to the assessee company. It is also not the case of the revenue that Dilip Dherai was acting as agent of the assessee company. • The conclusion given by the AO is entirely on the basis of the loose paper for which Shri. ^Dilip Dherai has stated that they are only

M/s. Krupa Land Limited estimates/ budgetary figures. Also, all trhe allegations made by the lower authority are not supported by actual cash passing hands. • The Hon'ble ITAT made reference to the decision given by the Delhi High Court in case of Malik Brothers Pvt Ltd. Vs. CIT which was relied by the Ld. DR. In the aforesaid case the assessee purchased the property allegedly for Rs. 6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was Rs. 45 lakhs and paid tax thereon. In view of vendor's statement, the AO made an addition of Rs. 39 lakhs to the income of the assessee towards unexplained investment. The action of the AO was justified and the additions were confirmed. Thus in view of the aforesaid decision, in the present case, none of the sellers have been examined by the AO to strengthen his views that cash has been paid over and above the registered amount. • The entire addition was made on the basis of loose paper found at the time of search. Considering the entire addition, in the light of the provisions of Sec. 69C, as per A.O's own interpretation, investments in purchase of land have been fully financed by some father persons, therefore, the addition in the hands of the assessee cannot be justified as the assessee has not incurred any expenditure. • The balance sheet of the appellant itself shows that the assessee had insufficient fund. The AR further stated that the ITAT order was challenged by the revenue before the Hon'ble High Court and the reliance was placed on the decision of Bombay High Court in the assessee's case i.e. Commissioner of Income Tax, Central-Ill vs. Lavanya Land(P.) Ltd dated 23.06.2017, wherein the order was passed in favour of the assessee. The following para of the HC order were bought to the notice of the Members: Page 5, Para 4, 5 and 6: These paragraphs were introductory and gave a brief of issue involved. Page 23, Para 20: This paragraph deals with the decision given by the Tribunal. In this para a reference was made of tribunal order of 52 land companies, para no. 18 and 19, which reads as under:- ".................There is also a distinction between loose papers found from the possession of assessee and similar documents found from a third person. In the present case, impugned documents were not found from the possession of the assessee but was found from the possession of a third person i.e. Shri Dilip Dherai. Mere mention of the names of the villages where the companies may have purchased lands would not give any basis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec.

M/s. Krupa Land Limited 153C has been shaken by not fulfilling the condition precedent/or the issue of notice. It is the say of the Ld PR that in the present case there is no need for recording of the satisfaction. If this plea of the DR is accepted then the legislative intent of inserting sec. 153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 year in the case of the ' Other Person ' without recording any basis satisfaction for his action. Therefore this plea of the Id DR cannot be accepted.

1. The AR concluded that 4.42 Acre of land was part of 23.43 Acres by giving reference of the seized material (Annexure 0-3 Pg 3 and Annexure 0-1] on Pg. 2 of the paperbook.

M/s. Krupa Land Limited both the seized materials are ambiguous about the date of registration of the property. Pg 25 and 27 are actual sale deed evidencing the registration date as 16.07.2008 mentioned supra‖

12. We had duly deliberated on the relevant para to which our attention was invited wherein we found that all the issues raised in this appeal are duly covered by the order of the Tribunal. No contrary decision was placed by learned DR. Respectfully following the order of the Tribunal in the group case of the assessee which was duly confirmed by the Hon’ble High Court, we do not find any merit in the addition so made by the AO, part of which was confirmed by the CIT(A).

M/s. Krupa Land Limited