DEPUTY COMMISSIONER OF INCOME TAX, FARIDABAD vs. AFRESH BUILDERS PRIVATE LIMITED, GURUGRAM

Date of hearing: 08/10/2024 Date of Pronouncement: 06/11/2024 ORDER PER SUDHIR KUMAR, JM:

This appeal by the revenue is directed against the order of Commissioner of Income Tax (Appeals)-3, Gurgaon [hereinafter referred to as “CIT(A)”], vide order dated 29.08.2023 pertaining to A.Y. 2011-12 and arises out of the assessment order dated 09.07.2019 passed by the Assessing Officer under Section 153A(1)(b) of the Income Tax Act, 1961 [hereinafter referred as ‘the Act’].

1. Whether the Development Rights Agreement seized as per Annexure A-4 does not amount to be incriminating material in view of facts had there been no search conducted, aforesaid information could not be passed on to the Department?

2 Whether the Ld. CIT (A) is right in deleting the addition of Rs.13,56,544/-made on account of differential value of TDR as per books and as per report of DVO by holding that no incriminating material was found and seized during the course of search operation whereas in the instant case the said addition is based upon incriminating material found and seized during the search operation on the M3M group of cases? 3 Whether the Ld. CIT (A) is right in deleting the addition of Rs. 2,05,92,000/- made u/s 40a(ia) of the Act by holding that the said disallowance was not emanating out of any incriminating material whereas as per para 14(iii) of order of Hon'ble Supreme Court in the case of PCIT, Central-3 vs Abhisar Buildwell P. Ltd, AO would assume the jurisdiction to assess or reassess the 'total income' taking into consideration the incriminating material unearthed during the search as well as other material available with the AO? 4 The appellant craves to add, amend, alter or modify any grounds of appeal at the time of hearing.

3. The brief facts of the case are that a search and seizure operation u/s 132 of the Act was conducted on 21-07-2016 at the residential as well as office premise of M3M group of cases. A notice u/s 153A was issued and served upon the assessee on 22-11-2018 requiring him to file his return of income in respect of assessment year 2011-12. In response of the notice the assessee has filed his return of income u/s 153C of the Act declaring its income at loss of Rs 633543/- on 29-11-2018. Notice u/s 143(2) and 142(1) along with questionnaire were issued to the assessee. During the course of the scrutiny assessment proceedings referring to the trial balance as the incriminating material found at the time of search the assessing officer raised specific query in relation to the under valuation of the transfer of development rights. After appreciating the submission of the assessee, the AO concluded that the difference between the DVO and as per the book of accounts of the assessee is the income of the assessee and made the addition of Rs 1356544/-. According to AO the assessee did not route the transaction through Profit and Loss account and the assessee has not deducted the TDS while making the payment to HUDA and made the addition that the assessee has not deducted the TDS on EDC while making such payment of Rs 2,05,92000/- and made total addition of Rs 21335001/ for A.Y. 2011-12.