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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
Before: SHRI RAVISH SOOD, JM & SHRI N.K.PRADHAN, AM
सुनवाई की तायीख / : 19.02.2018 Date of Hearing घोषणा की तायीख / : 21.03.2018 Date of Pronouncement आदेश / O R D E R
PER RAVISH SOOD, JUDICIAL MEMBER:
The present set of appeals filed by the assessee for A.Ys 2007-08 to 2009-10 are directed against the respective orders passed by the CIT(A)-41, Mumbai, dated 22.12.2010, which in itself arises from the respective assessment orders passed by the A.O under Sec. 143(3) r.w. Sec. 153C for A.Ys 2007-08 and 2008-09, dated 22.12.2010 and order passed under Sec. 143(3) for A.Y 2009-10. That as common issues are involved in the aforementioned appeals, therefore, the same are being taken up together and are being
P a g e | 2 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 disposed off by way of a consolidate order. We shall first take up the appeal filed by the assessee for A.Y 2007-08. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal:-
1. On the facts and circumstances of the case, Notice issued under Section 153(c) without recording of satisfaction as required by Section 153(c) is void ab initio and consequently the assessment made U/s.143 (3) read with Section 153(c) deserves to be quashed.
2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.6,92,198/- U/s.69 of the Income Tax Act without appreciating that there was no evidence found during the course of survey action U/s 133A.
3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (appeals) ought to have appreciated that the addition confirmed U/s.69 of the Income Tax based on the statement recorded u/s.133A does not have any evidentiary value in absence of any further corroborative evidence. The Appeal as the leave to add, amend, alter and/or delete any of the above grounds of appeal at Or before the time of appearing.
2. Briefly stated, the facts of the case are that the assessee firm which is rendering its services as an architect, surveyor and valuer had filed its original return of income for A.Y 2007-08 on 31.10.2007, disclosing an income of Rs.25,08,528/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Income tax Act 1961 (for short ‘Act’). That in the course of the Search and seizure proceedings conducted under Sec. 132 of the Act in the case of Hicons & Pranay group of cases on 24.02.2009, the residential premises at B-607/608, Rukhaiya Palace, N1 Road, Malad (W), Mumbai-64 of Shri Farooq Sarang, partner of the assessee firm was also covered. During the course of the Search and seizure proceedings certain documents marked as Annexure A-1 to A-3 were seized. That survey proceedings on the same date were also carried out at the business premises of the assessee firm, viz. M/s Sarang & Associates. That the revenue being of the view that the seized document, viz. Annexure A-1 belonged to the assessee, therefore, served a notice P a g e | 3 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 under Sec. 153C to the assessee on 04.01.2010. The assessee in compliance to the aforesaid notice filed its return of income on 23.02.2010, declaring a total income of Rs.48,41,330/-. The case of the assessee was taken up for scrutiny assessment and a notice u/s. 143(2) r.w. Sec. 153C was served on the assessee.
3. The A.O during the course of the assessment proceedings observed that in the course of the survey proceedings conducted on the assessee under Sec. 133A on 24.02.2009, documents marked as Annexure A-1 to A-10 were found and impounded. The A.O observed that Page Nos. 2, 156, 159, to 161 of Annexure A-1 pertained to purchase of flats by the assessee at Shabnam Building, S.V Road, Andheri (TV), Mumbai. The partner of the assessee firm, viz. Shri Fazal Sarang in his statement recorded during the course of the survey proceedings conducted on 24/25.02.2009, on being confronted with Annexure A-1, Page Nos. 162-164 confirmed that the same pertained to purchase of Flat No. 502, Shabnam building, Andheri (W) Mumbai, and were written and signed by the other partner, i.e his brother Shri Farooq Sarang. It was further stated by Shri Fazal Sarang that the aforesaid Flat No. 502 was purchased by way of an agreement in the year 2006-07 for a total consideration of Rs.34,00,000/-, out of which an amount of Rs. 20,50,000/- was paid by cheque and the balance payment of Rs.13,50,000/- was made in cash. That Shri Fazal Sarang on being queried and called upon by the A.O to furnish the details of all the flats and shops which were purchased by him along with the details of cash transactions involved in the said purchase transactions, stated in his aforesaid statement recorded during the course of the survey proceedings, as under:- “Ans. During the last 6 years we have purchased 5 flats and 1 shop at Ground Floor of Shabnam Bldg, Andheri (W), Mumbai and the same modus operandi was involved for purchase of all these flats and shop in respect of P a g e | 4 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 cash transactions as it is involved in the transactions of Flat No. 502, Shabnam Bldg, Andheri (W), the details of which are as under:
Sr. Flat No. Period of Agreement Cash Paid Total No. Purchase Value Consideration 1. 401/402 at 2007-08 60,00,000/- 40,00,000/- 1,00,00,000/- Shabnam Bldg. 2. 502...do..... 2006-07 20,50,000/- 13,50,000/- 34,00,000/- 3. 601..do...... 2006-07 25,11,000/- 16,75,000/- 41,86,000/- 4. 501..do...... 2008-09 10,50,000/- 7,00,000/- 17,50,000/- 5. Shop at. .....do... 2008-09 36,00,000/- 24,00,000/- 60,00,000/- Ground Floor Total 1,52,11,000/- 1,01,25,000/- 2,53,36,000/- The above chart shows the cash payment of Rs.1,01,25,000/- is made for the purchase of flats during the year 2006-07 to 2008-09. This cash is generated out of the business receipts. The flats are purchased in the name of partners i.e. ourselves as partners of M/s Sarang & Associates. The cash of Rs.1,01,25,000/- has not been recorded in my regular books of accounts. Therefore, in order to buy peace of mind I voluntarily disclose an amount of Rs.1,01,25,000/- for the relevant assessment years.” That from the aforesaid revelations made by Shri Fazal Sarang the A.O observed that a cash payment of Rs.1,01,25,000/- was made from undisclosed sources for the purchase of the aforesaid flats/shop in Shabnam Building during the Financial years 2006-07 to 2008-09, which was voluntarily disclosed by the partner of the assessee firm in order to buy peace of mind and to avoid litigation. The statement of Sh. Fazal Sarang and the documents which were impounded during the course of the survey operation from the business premises of the assessee firm were also confronted to the other partner, viz. Shri Farooq Sarang, who after perusing the same admitted in his statement recorded on oath under Sec. 132(4) of the Act on 06.03.2009 that the disclosure of Rs.1,01,25,000/- made under Sec. 133A by his brother Shri Fazal Sarang was in respect of purchase of four flats and one shop in Shabnam building, S.V. Road, Andheri (W), Mumbai, and confirmed the statement of his brother. That Shri Farooq Sarang P a g e | 5 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 further in his statement recorded on oath under Sec. 132(4) on 26.03.2009 reaffirmed the disclosure made in respect of payment of unaccounted cash for purchase of business premises at Shabnam building, S.V. Road, Andheri (W) Mumbai and stated as under: “Q-11. Please refer to the statement of Shri Fazal Sarang recorded u/s. 133A of the Income Tax Act 196T on 24.02.2009 at your business premises being Shabnam, S.V. Road, Andheri (W) Mumbai in wh ich a decla ra tio n of in co me of Rs.1,01.25,000/ - & Rs. 1,25,802/ - h as been made in respe ct of th e cash element involved while purchasing office premises at shabnam Appts. and unexplained cash respectively. Do you consent to confirm the said declaration and if so kindly furnish particulars of assessment years to which these relate as additional income. Ans. As per the response of Shri Fazal Sarang to Q. Nos. 15 & 22 of his statement dated 24/25.02.2009, the details of cash involvement in the purchase of the above stated properly have been given. In terms of such particulars, it is stated that the breakup o/ Rs. 1.01.25,000/- would gel broken up for three assessment yea/-s as under Sr. F. Yr. A. Yr. Amount (Rs.) No. 1. 2006-07 2007-08 Rs. 30,25,000/- 2. 2007-08 2008-09 Rs. 40,00,000/- 3. 2008-09 2009-10 Rs. 31,00,000/- Total Rs.1,01,25,000/- He had also offered an undisclosed income of Rs. 1,25,802/- in the hands of M/s. Sarang & Associates for the current financial year relevant to 4. Yr. 2009-10 as he was unable to explain the same. The above disclosures aggregating to Rs. 1,02,50,802/- is confirmed by me in the hands of M/s Sarang & Associates a partnership firm comprising of Shri Fazal Sarang & myself as partners. This confirmation may be treated as a joint confirmation by the said partners. If permitted in law the firm may be allowed the privilege of seeking this disclosure to be taken tinder the provisions of section 132(4) of the Income Tax Act, 1961.”
The assessee firm during the course of the assessment proceedings, vide its letter dated 13.12.2010 submitted that the cash payments made for purchase of office premises as gathered from the documents which were found during the course of the search and survey operations were disclosed in its ‘return of income’ by crediting the same in its profit and loss account, as under:
P a g e | 6 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 Assessment year Amount 2007-08 Rs.26,00,000/- 2006-07 Rs.13,72,040/- It was further submitted by the assessee that except for the aforesaid cash payments which were made for purchase of office premises, no other payment was made for acquisition of any other office premises or otherwise. The assessee in order to drive home his aforesaid contention submitted that neither any material evidencing any other cash payment by the assessee had emerged during the course of the Search and seizure proceedings, nor any such adverse inferences could be drawn in its hands in the absence of any document/material proving to the contrary. However, the A.O acting upon the statements of the partners recorded during the course of the survey/search proceedings in context of the unaccounted cash payments which was admitted by them to have been made towards purchase of five flats and one shop at ground floor of Shabnam building, S.V. Road, Andheri (W), Mumbai, thus, reminded the partners of the disclosure made by them in their respective statements recorded during the course of the search and survey operations and called upon them to furnish the details of the ‘on money’ cash payments of Rs. 1.01 crores that was admitted by them to have been made for purchase of the flats and shop. The assessee in its reply re-affirmed its contention that no other cash payment except for those which had been disclosed in the returns of income for A.Ys 2006-07 and 2007-08 were made towards purchase of the aforementioned property. However, the A.O holding a conviction that the assessee had came forth with the disclosure of income on account of unaccounted cash payments made in respect of purchase of property at Shabnam building, S.V. Road, Andheri (W), Mumbai, on the basis of the material impounded during the course of survey action at its business premises, therefore, rejected the P a g e | 7 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 aforesaid claim of the assessee by characterising the same as an afterthought which was not backed by any plausible evidence. The A.O being guided by the admissions of the partners of the assessee firm made during the course of the search and survey proceedings held a conviction that the assessee had during the year under consideration made unaccounted cash payments of Rs.30,25,000/- as ‘on money’ for purchase of Flats No. 601/502 of Shabnam building. The A.O observing that the assessee had disclosed unaccounted cash payment of Rs. 23,32,802/- in its return of income filed under Sec. 153C, therefore, added the balance amount of Rs.6,92,198/- [Rs.30,25,000/- (-) Rs.23,32,802/-] to the income of the assessee.
Aggrieved, the assessee carried the matter in appeal before the CIT(A). The assessee submitted before the CIT(A) that since it had made the disclosure of Rs.23,32,802/- in respect of the investments made in flat No. 601/502 of Shabnam building in its return of income filed under Sec. 153C for the year under consideration, viz. A.Y 2007- 08, as per the stamp duty value of that area, therefore, no further addition was called for in its hands. However, the CIT(A) after deliberating on the facts of the case observed that the disclosure made by the assessee on the basis of stamp duty value of the area could not be accepted. The CIT(A) being of the view that as the impounded documents and the statements of the partners recorded during the course of the survey and search proceedings revealed that 40% cash payments were made for acquisition of the Flats no. 502 and 601 of Shabnam Building, therefore, sustained the addition of Rs.6,92,198/- made by the A.O.
The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short A.R) for the assessee at the very outset of the P a g e | 8 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 hearing of the appeal drew our attention to the notice issued by the A.O under Sec. 153C of the Act, dated 04.01.2010, (Page No. 1) of his ‘Paper book’ (for short ‘APB’). The ld. A.R taking us through the aforesaid notice submitted that the A.O had assumed jurisdiction under Sec. 153C for the reason that during the course of Search and seizure proceedings certain documents ‘belonging’ to the assessee were seized. The ld. A.R took us through the undated ‘Satisfaction note’ recorded by the A.O of the assessee for assuming jurisdiction in its case under Sec. 153C. The ld. A.R referring to the contents of the aforesaid ‘Satisfaction note’ submitted that the A.O had assumed jurisdiction under Sec. 153C in its case on the ground that the documents marked as Annexure A-1 – Page No. 1(e) ‘belonging’ to the assessee was found and seized during the course of the Search and seizure operation conducted at the residential premises of the partner of the assessee firm, viz. Shri Farooq Sarang at B-607/608, Rukhaiya Palace, Malad (W), Mumbai. It was submitted by the ld. A.R that from a perusal of the note it could neither be gathered as to when the same was recorded, nor as to whether the same had been recorded in the file of the assessee or that of the searched person, viz. Shri Farooq Sarang. The ld. A.R in order to drive home his contention that recording of satisfaction by the Assessing officers of both the searched person and the third party was an indispensable precondition for valid assumption of jurisdiction under Sec. 153C, placed reliance on the judgment of the Hon‟ble High Court of Andhra Pradesh in the case of CIT,III Hyderabad Vs. Shettys Pharmaceuticals & Biological Ltd. (2015) 57 Taxmann.ocm 282 (AP). The ld. A.R further taking us through the statement of Shri Farooq Sarang recorded under Sec. 132(4) on 24.02.2009, submitted that a perusal of the reply given by Shri Farooq Sarang in context of Annexure A-1 seized from his residential premises revealed that Page 1(e) of the said annexure, viz.
P a g e | 9 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 Annexure A-1 was in context of sale of a BMW car to one Mr. Rafiq Sheikh, in respect of which an amount of Rs.5 lac was yet to be received from the buyer. The ld. A.R submitted that despite persistent requests the copy of the seized document, viz. Annexure A1 – Page 1(e) which was stated to have been seized during the course of Search and seizure operations conducted at the residential premises of Shri Farooq Sarang and formed the very basis for assumption of jurisdiction by the A.O under Sec. 153C in the case of the assessee on the ground that the said document ‘belonged’ to the assessee, was however not made available by the A.O to the assessee. It was thus the contention of the assessee that now when it remained as a matter of fact that the seized document, viz. Annexure A1 – Page 1(e) did not belong to the assessee or even pertained to it, therefore, in the absence of any incriminating document ‘belonging’ to the assessee having been found and seized during the course of the Search and seizure operations conducted under Sec. 132(4) on Shri Farooq Sarang, the very assumption of jurisdiction by the A.O under Sec. 153C in the case of the assessee was bad in the eyes of law and could not be sustained.
The ld. A.R further adverting to the merits of the case drew our attention to Page 2 – Para 4.1 of the order passed by the A.O. It was submitted by the ld. A.R that as the statement of Shri. Fazal Sarang was recorded on 24/25.02.2009 during the course of the survey proceedings conducted on the assessee firm under Sec. 133A on 24.02.2009, therefore, the A.O had wrongly mentioned that the same was recorded under Sec. 132(4). It was the contention of the ld. A.R that the material recovered during the course of the survey proceedings conducted on the assessee firm under Sec. 133A on 24.02.2009 could not be used for vesting of jurisdiction with the A.O P a g e | 10 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 to frame an assessment under Sec. 153C in the hands of the assessee. The ld. A.R further submitted that the statements of the partners of the assessee firm, viz. S/sh. Farooq Sarang and Fazal Sarang recorded under Sec. 132(4)/133A during the course of the Search and survey proceedings, respectively, having been recorded under pressure were retracted by both of them vide their respective letters dated 15.05.2009 (Page 59-60 of ‘APB’). The ld. A.R further submitted that as the A.O had nowhere while framing the assessment in the case of the assessee stated to have received any seized material during the course of the search proceedings in the case of Shri Farooq Sarang, therefore, it stood clearly revealed that the jurisdiction under Sec. 153C had wrongly been assumed in the case of the assessee. It was submitted by the ld. A.R that the addition in the hands of the assessee had merely been made on the presumption that 40% of the purchase consideration for the flats/shop at Shabnam building, S.V. Road, Andheri (W), Mumbai was paid by the assessee in cash. The ld. A.R submitted that as per the mandate of law firstly satisfaction has to be recorded by the A.O of the person searched 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 Sec. 153A of the Act. Thereafter, the A.O exercising jurisdiction over the case of the third party on receipt of the seized material or books of account or documents being handed over to him shall record his own satisfaction after examining the same independently and without being influenced by the satisfaction of the seizing officer. The ld. A.R in support of his aforesaid contention placed reliance of the judgment on the Hon‟ble High Court of Bombay in the case of CIT-III, Pune Vs. Sinhgad Technical Education Society (2015) 63 taxmann.com 14 (Bom). The ld. A.R taking us through the aforesaid judgment submitted that as in the P a g e | 11 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 said case though certain ‘loose papers’ seized during the course of the search proceedings conducted at the residence of the president of an educational institution revealed capitation fees received by the various institutions run by the assessee society, but however, as the same did not establish document-wise co-relation with the assessment years under consideration, therefore, the Hon’ble High Court upheld the quashing of the notice issued under Sec. 153C. It was further averred by the ld. A.R that for valid assumption of jurisdiction under Sec. 153C the documents seized must be found to be ‘belonging’ to the assessee. The ld. A.R in the backdrop of his aforesaid contentions submitted that as the seized document, viz. Annexure A1 - Page 1(e) did not ‘belonged’ to the assessee, therefore, the very assumption of jurisdiction under Sec. 153C in the case of the assessee was invalid and as such was liable to be vacated. The ld. A.R in support of his contention that for valid assumption of jurisdiction under Sec. 153C document ‘belonging’ to the assessee should have been seized during the course of the search proceedings, relied on the order of a coordinate bench of the Tribunal, viz. ITAT, Mumbai Bench „H‟ in the case of DCIT, CC-7(3), Mumbai Vs. National Standard India Ltd. (2017) 166 ITD 426 (Mum).
Per contra, the ld. Departmental Representative (for short D.R) relied on the assessment framed by the A.O and took us through the relevant extracts of his order. It was submitted by the ld. D.R that as the assessee had disclosed unaccounted income of Rs.23,32,802/- in its return of income filed in compliance to notice issued under Sec. 153C, therefore, it could safely be concluded that incriminating material pertaining to the investment made by the assessee in purchase of property at Shabnam building, S.V. Road, Andheri (W), Mumbai, had emerged during the course of the Search and seizure P a g e | 12 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 proceedings conducted under Sec. 132(4) in the case of the partner of the assessee firm, viz. Shri Farooq Sarang. The ld. D.R took us through the reply to question No. 11 given by Shri Farooq Sarang in his statement recorded under Sec. 132(4) on 26.03.2009. It was submitted by the ld. D.R that as the assessee had clearly made a disclosure of Rs.1,01,25,000/- for A.Ys 2007-08 to 2009-10, therefore, it could not be allowed to retract from the same without any basis. The ld. D.R on being called upon by the bench to produce the seized document, viz. Annexure A 1 – Page 1(e), fairly submitted that the A.O vide his letter dated 29.09.2017 had conveyed that neither the seized material or the statement recorded during the course of the search and seizure proceedings was available in his office. Copy of the aforesaid letter was placed on record.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material available on record. We find that the assessee had at the very outset assailed before us the validity of the assessment framed by the A.O under Sec. 153C, primarily on two grounds, viz. (i) that in the absence of recording of satisfaction as required under Sec. 153C the assessment framed under Sec. 143(3) r.w. Sec. 153C cannot be sustained; and (ii) that as no document ‘belonging’ to the assessee was found and seized during the course of Search and seizure proceedings conducted on Shri Farooq Sarang, therefore, the assessment framed under Sec. 143(3) r.w.s. 153C was backed by invalid assumption of jurisdiction by the A.O.
We have deliberated on the facts available on record and given a thoughtful consideration to the same. We find that the A.O in the case before us had assumed jurisdiction to frame assessment under Sec. 153C in the case of the assessee for the reason that the document, viz.
P a g e | 13 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 Annexure A-1 – Page 1(e) which was seized during the course of the Search and seizure proceedings conducted under Sec. 132(4) of the Act on 24.04.2009 on Shri Farooq Sarang was found to be ‘belonging’ to the assessee. We find that the revenue on being called upon to produce the seized Annexure A1 – Page 1(e) so that the claim of the assessee that the said document did not ‘belong’ to it could be verified, had however expressed its inability to produce the same for the reason that neither the seized material or the statements recorded during the course of the Search and seizure operations were available with the A.O. Be that as it may, we find from a perusal of the statement of Shri Farooq Sarang which was recorded under Sec. 132(4) on 24.02.2009 (Page 54 of APB) that he on being called upon to furnish page wise explanation of the seized annexures, had in context of Annexure A1 – Page 1(e) claimed that the same contained details in context of sale of a BMW car to one Mr. Rafiq Shekh, by stating as under: “E. The details on the page are with respect to the sale of BMW car to Mr. Rafiq Sheikh. The amount of Rs.5 lacs is to be received from him. The transfer has not yet been done for the same.” We are of the considered view that for the failure on the part of the revenue to produce before us the seized Annexure A1- Page 1(e), we are constrained to record our observations as regards nexus of the said document with the assessee, or not, on the basis of the reply given by the partner of the assessee firm, viz. Sh. Farooq Sarang to Q.No. 17 in his statement recorded under Sec. 132(4) on 24.02.2009. Before proceeding, we may herein observe that the ld. D.R had not pointed out any infirmity in the aforesaid reply of the partner of the assessee firm in context of the contents of the said seized document, viz. Annexure A1- Page 1(e). We have perused the aforesaid details and find that the aforesaid contents of Annexure A1 - Page 1(e) does not even pertain, much the less belong to the assessee firm. That on a P a g e | 14 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 specific query by the bench as regards the antecedents of Mr. Rafiq Shekh and the fact as to whether the said person was in any manner connected with the assessee firm, the ld. A.R answered in the negative. The ld. D.R neither rebutted the aforesaid reply of the assessee, nor placed on record any material before us which could persuade us to conclude that the contents of Annexure A1 – Page 1(e) pertained to the assessee firm. We may herein observe that as per the law as was applicable during the year under consideration, viz. A.Y 2007-08, for the purpose of valid assumption of jurisdiction under Sec. 153C, it was mandatory on the part of the A.O to be satisfied that the books of account or documents seized or requisitioned ‘belongs’ or ‘belonged’ to a person other than the person referred to in Sec. 153A. We find that as the aforesaid requisite condition that the seized document, viz. Annexure A1 – Page 1(e) ‘belonged’ to the assessee firm has not been proved, therefore, the very assumption of jurisdiction under Sec.153C by the A.O fails on the said count itself. We thus are of the considered view that now when the document seized, viz. Annexure A1- Page 1(e) on the basis of which the A.O had assumed jurisdiction to frame assessment under Sec. 153C in the case of the assessee, is not found to be belonging to the assessee, therefore, the A.O clearly stood divested of his jurisdiction to frame assessment under Sec.153C of the Act. We find that our aforesaid view is fortified by the judgment of Hon‟ble High Court of Bombay in the case of CIT Central III, Mumbai Vs. Arpit Land Pvt. Ltd. (2017) 393 ITR 0276 (Bom), wherein the Hon’ble High Court had observed as under: “6. We note that in terms of Section 153C of the Act at the relevant time i.e. prior to 1st June, 2015 the proceedings under Section 153C of the Act could only be initiated/proceeded against a party - assessee if the document seized during the search and seizure proceedings of another person belonged to the party - assessee concerned. The impugned order records a finding of fact that the seized documents which formed the basis of initiation of proceedings P a g e | 15 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 against the respondent assessees do not belong to it. This finding of fact has not been shown to us to be incorrect. Further, the impugned order placed reliance upon a decision of Gujarat High Court in Vijaybhai Chandrani vs. ACIT 333 ITR Page 436 which records that the condition precedent f or issuing notice under Section 153C of the Act is that the document found during search proceedings should belong to assessee to whom notice is issued under Section 153C of the Act. It was fairly pointed out to us by Mr. Mistry, the learned Senior counsel for the respondent assessee that the above decision was reversed by the Supreme Court in CIT vs. Vijaybhai N. Chandrani (2013) 357 ITR 713. However, we find that the Apex Court reversed the view of Gujarat High Court on the ground that efficacious alternative remedy was available petitioner to raise its objections before the authorities under the Act. Therefore, the Gujarat High Court should not have exercised its extra ordinary writ jurisdiction to entertain the petition. However, the Apex Court also clarified that it was not expressing any opinion of the correctness or otherwise of construction placed by the High Court on Section 153C of the Act. The Revenue has not pointed out any reason why the construction put on Section 153C of the Act by Gujarat High Court is not correct/appropriate. We find that in any case our Court has also taken a similar view in CIT Vs. Sinhgad Technical Education Society (2015) 378 ITR 84 and refused to entertain Revenue's appeal.” We further find that following the aforesaid judgment of the Hon‟ble High Court of Bombay, the coordinate bench of the Tribunal in the case of DCIT, CC-7(3), Mumbai Vs. National Standard India Ltd. (2017) 166 ITD 426 (Mum) had also concluded that in the absence of any document belonging to the assessee having been seized during the course of search proceedings, the very assumption of jurisdiction by the A.O under Sec.153C being devoid of any force of law cannot be sustained and as such is liable to be vacated, had observed as under: “9. We have heard the Authorized Representatives for both the parties, perused the orders of the lower authorities and the material available on record. We are of the considered view that before adverting to and adjudicating the validity of the assumption of jurisdiction by the A.O under Sec. 153C in the case of the assessee company, it would be relevant to refer to the relevant extract of the pre-amended Sec. 153C, as was applicable in the case of the assessee, and read as under:- “Sec. 153C. (1) Notwithstanding anything contained in s. 139, s. 147, s. 148,s. 149,s. 151 and s. 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 P a g e | 16 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 belongs or belong to a person other than the person referred to in s. 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.”. Thus a bare perusal of the aforesaid statutory provision reveals beyond any scope of doubt that up to 30th May 2015, the requirement as per the mandate of law for the purpose of assumption of jurisdiction u/s. 153C was that the A.O of the person searched should be satisfied that money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized „belonged‟ to a person other than the person referred to Section 153A. We find that the scope of the aforesaid statutory provision in light of the conscious, purposive and intentional usage of the term „belongs‟ or „belong to‟ in respect of a „documents‟, therein excluded from its scope and gamut such seized documents, which though were found to pertain or relatable to such „Other person‟, but however not found to be „belonging‟ to the latter. The legislature therein realizing the fact that the usage of the aforesaid terms seriously jeopardised the assumption of jurisdiction by the A.O in a case where any „books of accounts‟ or „documents‟ which though pertained to or any information contained therein related to such other person, but were not found to be „belonging‟ to him, thus, vide an amendment made available on the statute by the Finance Act, 2015, had with effect from 01.06.2015 dispensed with the terms „belongs‟ or „belong to‟, in respect of the „books of accounts‟ or „documents‟ seized during the course of search proceedings, and therein substituted the same by clause (b) of Section 153C (1), which therein takes within its sweep any „books of accounts‟ or „documents‟ which pertain or pertains to or any information contained therein, relates to such other person. The relevant extract of the memorandum explaining the aforesaid amendment to Sec. 153C, as had been made available on the statute vide the Finance Act, 2015, is reproduced as under:- “Disputes have arisen as to the interpretation of the words "belongs to" in respect of a document as for instance when a given document seized from a person is a copy of the original document. Accordingly it is proposed to amend the aforesaid section to provide that 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 belongs to, or any books of account or documents seized or requisitioned pertain to, or any information contained therein, relates to any 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 P a g e | 17 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 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”. That as the aforesaid amendment to Section 153C is not retrospective in nature and is applicable only w.e.f 01.06.2015, therefore, the case of the present assessee company would be regulated by the pre-amended provisions as were available on the statute till 30.05.2015.” We thus in the backdrop of our aforesaid observations are of the considered view that as document, viz. Annexure A1 – Page 1(e) seized during the course of search proceedings conducted on Shri Farooq Sarang does not ‘belong’ to the assessee, therefore, it could safely be concluded that the A.O had wrongly assumed jurisdiction and framed assessment under Sec. 143(3) r.w.s 153C in the hands of the assessee.
We have further perused the ‘Satisfaction note’ of the A.O as had been placed on our record, and before adverting further and adjudicating on the validity of the same deem it fit to reproduce the same, which we find reads as under: “SARANG & ASSOCIATE During the search & seizure operation at the residential premises of shri Farooq Sarang at B-607/608 Rukhaiya Palace, NI Road, Malad (w) Mum 64, documents marked as annexure A1 to A3 were seized. Farooq Sarang is a partner in Sarang & Associate. Following documents belong to Sarang & Associate Annexure Page no. A1 1(e) I am satisfied that above mentioned document required detail examination in order to determine the taxable income of the assessee. Issue notice under Section 153C Sd/- P a g e | 18 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 Dinesh Kumar DCIT CC36” We are of the considered view that as neither the contents of the seized document, viz. Annexure A1 – Page 1(e) (as gathered on the basis of the material to the extent available before us), nor the aforesaid undated satisfaction note in any way establishes co-relation between the seized document with the assessment year under consideration, therefore, we are not persuaded to be in agreement with the view taken by the lower authorities, who appear to have proceeded with on the basis of a general presumption that the same pertained to the year under consideration. We have closely examined the satisfaction note and the vague reason recorded by the A.O, which we are afraid except for referring to the impugned seized document, viz. Annexure A1 – Page 1(e), however, fails to establish any co-relation with the assessment year under consideration. We thus are of the considered view that now when the A.O had assumed jurisdiction to frame assessment under Sec. 153C on the basis of the document, viz. Annexure A1- Page 1(e) seized during the course of the Search and seizure proceedings conducted on Shri. Farooq Sarang, therefore, in the absence of establishing of any co-relation with the year under consideration, nor the contents thereof, the very assumption of jurisdiction and issue of notice under Sec. 153C of the Act, cannot be sustained. We thus are of the view that the validity of assumption of jurisdiction and the framing of consequential assessment under Sec. 143(3) r.w.s 153C, also fails on the said count too. We are of the considered view that in the very absence of valid assumption of jurisdiction the assessment framed under Sec. 143(3) r.w. Sec. 153C cannot be sustained and is therefore, quashed.
P a g e | 19 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 12. We may herein observe that as we have quashed the assessment framed by the A.O under Sec.143(3) r.w. Sec. 153C for the reason of lack of valid assumption of jurisdiction, therefore, we refrain from adverting to and therein adjudicating the merits of the additions made by the A.O, as had been assailed by the assessee before us.
We thus in terms of our aforesaid observations quash the assessment framed by the A.O under Sec. 143(3) r.w. Sec. 153C and consequently set aside the order passed by the CIT(A).
The appeal filed by the assessee is allowed in terms of our aforesaid observations. A.Y 2008-09 15. We shall now advert to the appeal of the assessee for A.Y 2008- 09. The assessee assailing the order of the CIT(A) had raised before us the following grounds of the appeal:-
“The grounds mentioned hereunder are without prejudice to one another:-
1. 1. On the facts and circumstances of the case, Notice issued under Section 153(c) without recording of satisfaction as required by Section 153(c) is void ab initio and consequently the assessment made U/s.143(3) read with Section 153(c) deserves to be quashed.
2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.40,00,000/- U/s.69 of the Income Tax Act without appreciating that there was no evidence found during the course of survey action U/s 133A.
3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) ought to have appreciated that the addition confirmed U/s. 69 of the Income Tax based on the statement recorded u/s 133A does not have any evidentiary value in absence of any further corroborative evidence.
4. On the facts and circumstance of the case the Learned Commissioner of Income Tax (Appeals) erred in confirming disallowance of Rs.97,436/- U/s 40(a)(ia) without appreciating that the TDS was deducted and paid before due date of filing the return.
P a g e | 20 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 The Appellant craves the leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of appearing.
16. Briefly stated, the facts of the case are that the assessee had filed its return of income on 10.09.2008, disclosing an income of Rs.31,56,451/-. That Search and seizure proceedings were carried out under Sec. 132 in the case of Hicons & Pranay group of cases on 07.01.2009, in connection with which the residential premises of Shri Farooq Sarang, partner of the assessee firm was also covered. Survey action was also conducted at the business premises of the assessee firm on 24.02.2009. The A.O on the basis of certain documents seized from the premises of Shri Farooq Sarang, viz. Annexure A1- Page 1(e) assumed jurisdiction under Sec. 153C in the case of the assessee and assessed its income under Sec. 143(3) r.w. Sec. 153C at Rs.79,33,550/-.
17. The assessee being aggrieved with the assessment order carried the matter in appeal before the CIT(A), but however, the contentions raised by the assessee were not fully accepted and the appeal was partly allowed.
18. The assessee being aggrieved with the order passed by the CIT(A) had carried the matter in appeal before us. The assessee had at the very outset assailed the validity of the jurisdiction assumed by the A.O under Sec. 153C. We find that as the facts and the issue involved in the present appeal remain the same, as were involved in the appeal of the assessee for A.Y 2007-08, viz. A.O under Sec. 153C, wherein the assessment framed by him under Sec. 143(3) r.w. Sec. 153C had been quashed by us shall apply mutatis mutandis for disposing the present appeal of the assessee for A.Y 2008-09 in ITA No. 1228/Mum/2012. We thus in P a g e | 21 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 terms of our aforesaid observations recorded while disposing off the appeal of the assessee for A.Y 2007-08, quash the assessment framed by the A.O in A.Y 2008-09 under Sec.143(3) r.w. Sec. 153C and set aside the order passed by the CIT(A).
The appeal filed by the assessee is allowed in terms of our aforesaid observations. ITA No. 1229/Mum/2012 A.Y 2009-10 20. We shall now advert to the appeal of the assessee for A.Y 2009- 10. The assessee assailing the order of the CIT(A) had raised before us the following grounds of appeal: “The grounds mentioned hereunder are without prejudice to one another:-
1. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.31,00,000/- U/s.69 of the Income Tax Act without appreciating that there was no evidence found during the course of survey action U/s 133A.
2. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) ought to have appreciated that the addition confirmed U/s.69 of the Income Tax based on the statement recorded u/s.133A does not have any evidentiary value in absence of any further corroborative evidence.
3. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs. 1,25,802/- towards cash found short as compared to cash balance in computer books of accounts U/s 69C, without appreciating that there was no unexplained expenditure and there cannot be unexplained expenditure when the cash was found short.
4. On the facts and circumstances of the case, the Learned Commissioner of Income Tax (Appeals) erred in confirming the addition of Rs.10,00,000/- U/s.69C, without appreciating that there was cash on hand in the books of firm and the entries were not recorded on the date of survey. The Appellant craves the leave to add, amend, alter and/or delete any of the above grounds of appeal at or before the time of appearing.
21. Briefly stated, the facts of the case are that Search and seizure operations were carried out under Sec. 132 of the Income tax Act, 1961 (for short ‘Act’) in Hicons & Pranay group of cases on P a g e | 22 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 24.02.2009, alongwith a consequential search and seizure operation at the residential premises of Shri Farooq Sarang, partner of the assessee firm. Survey operation under Sec. 133A was carried out at the same time at the premises of the assessee firm on 24.02.2009. The assessee had filed its return of income for A.Y 2009-10 on 24.09.2009, declaring an income of Rs.36,25,395/-. The return of income filed by the assessee was processed as such under Sec. 143(1) of the Act. The case of the assessee was thereafter taken up for scrutiny assessment and a notice under Sec. 143(2) was served on it on 18.05.2010. The assessee after receiving the notice under Sec. 143(2) came forth with a revised return of income, declaring a total income of Rs.33,56,030/-.
22. The A.O while framing the assessment observed that in the course of the survey proceedings conducted on the assessee under Sec. 133A on 24.02.2009, documents marked as Annexure A-1 to A- 10 were found and impounded. The A.O observed that Page Nos. 2, 156, 159, to 161 of Annexure A-1 pertained to purchase of flats by the assessee at Shabnam Building, S.V Road, Andheri (TV), Mumbai. The partner of the assessee firm, viz. Shri Fazal Sarang in his statement recorded during the course of the survey proceedings conducted on 24/25.02.2009, on being confronted with Annexure A-1, Page Nos. 162-164 confirmed that the same pertained to purchase of Flat No. 502, Shabnam building, Andheri (W) Mumbai, and were written and signed by the other partner, i.e his brother Shri Farooq Sarang. It was further stated by Shri Fazal Sarang that the aforesaid Flat No. 502 was purchased by way of an agreement in the year 2006-07 for a total consideration of Rs.34,00,000/-, out of which an amount of Rs. 20,50,000/- was paid by cheque and the balance payment of Rs.13,50,000/- was made in cash. That Shri Fazal Sarang on being queried and called upon by the A.O to furnish the details of all the P a g e | 23 ITA Nos. 1227 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 flats and shops which were purchased by him along with the details of cash transactions involved in the said purchase transactions, stated in his aforesaid statement recorded during the course of the survey proceedings, as under:- “Ans. During the last 6 years we have purchased 5 flats and 1 shop at Ground Floor of Shabnam Bldg, Andheri (W), Mumbai and the same modus operandi was involved for purchase of all these flats and shop in respect of cash transactions as it is involved in the transactions of Flat No. 502, Shabnam Bldg, Andheri (W), the details of which are as under:
Sr. Flat No. Period of Agreement Cash Paid Total No. Purchase Value Consideration 1. 401/402 at 2007-08 60,00,000/- 40,00,000/- 1,00,00,000/- Shabnam Bldg. 2. 502...do..... 2006-07 20,50,000/- 13,50,000/- 34,00,000/- 3. 601..do...... 2006-07 25,11,000/- 16,75,000/- 41,86,000/- 4. 501..do...... 2008-09 10,50,000/- 7,00,000/- 17,50,000/- 5. Shop at. .....do... 2008-09 36,00,000/- 24,00,000/- 60,00,000/- Ground Floor Total 1,52,11,000/- 1,01,25,000/- 2,53,36,000/- The above chart shows the cash payment of Rs.1,01,25,000/- is made for the purchase of flats during the year 2006-07 to 2008-09. This cash is generated out of the business receipts. The flats are purchased in the name of partners i.e. ourselves as partners of M/s Sarang & Associates. The cash of Rs.1,01,25,000/- has not been recorded in my regular books of accounts. Therefore, in order to buy peace of mind I voluntarily disclose an amount of Rs.1,01,25,000/- for the relevant assessment years.” That from the aforesaid revelations made by Shri Fazal Sarang, the A.O observed that a cash payment of Rs.1,01,25,000/- was made from undisclosed sources for the purchase of the aforesaid flats/shop in Shabnam Building during the Financial years 2006-07 to 2008-09, which was voluntarily disclosed by the partner of the assessee firm in order to buy peace of mind and to avoid litigation. The statement of Sh. Fazal Sarang and the documents which were impounded during the course of the survey operation from the business premises of the assessee firm were also confronted to the other partner, viz. Shri Farooq Sarang, who after perusing the same admitted in his statement P a g e | 24 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 recorded on oath under Sec. 132(4) of the Act on 06.03.2009, that the disclosure of Rs.1,01,25,000/- made under Sec. 133A by his brother Shri Fazal Sarang was in respect of purchase of five flats and one shop in Shabnam building, S.V. Road, Andheri (W), Mumbai, and confirmed the statement of his brother. That Shri Farooq Sarang further in his statement recorded on oath under Sec. 132(4) on 26.03.2009 reaffirmed the disclosure made in respect of payment of unaccounted cash for purchase of business premises at Shabnam building, S.V. Road, Andheri (W) Mumbai and stated as under: “Q-11. Please refer to the statement of Shri Fazal Sarang recorded u/s. 133A of the Income Tax Act 196T on 24.02.2009 at your business premises being Shabnam, S.V. Road, Andheri (W) Mumbai in wh ich a decla ra tio n of in co me of Rs.1,01 ,25,000/ - & Rs. 1,25,802/ - h as been made in respe ct of th e cash element involved while purchasing office premises at shabnam Appts. and unexplained cash respectively. Do you consent to confirm the said declaration and if so kindly furnish particulars of assessment years to which these relate as additional income. Ans. As per the response of Shri Fazal Sarang to Q. Nos. 15 & 22 of his statement dated 24/25.02.2009, the details of cash involvement in the purchase of the above stated properly have been given. In terms of such particulars, it is stated that the breakup o/ Rs. 1.01.25,000/- would gel broken up for three assessment yea/-s as under Sr. F. Yr. A. Yr. Amount (Rs.) No. 1. 2006-07 2007-08 Rs. 30,25,000/- 2. 2007-08 2008-09 Rs. 40,00,000/- 3. 2008-09 2009-10 Rs. 31,00,000/- Total Rs.1,01,25,000/- He had also offered an undisclosed income of Rs. 1,25,802/- in the hands of M/s. Sarang & Associates for the current financial year relevant to 4. Yr. 2009-10 as he was unable to explain the same. The above disclosures aggregating to Rs. 1,02,50,802/- is confirmed by me in the hands of M/s Sarang & Associates a partnership firm comprising of Shri Fazal Sarang & myself as partners. This confirmation may be treated as a joint confirmation by the said partners. If permitted in law the firm may be allowed the privilege of seeking this disclosure to be taken tinder the provisions of section 132(4) of the Income Tax Act, 1961.”
The assessee firm during the course of the assessment proceedings, vide its letter dated 13.12.2010 submitted that the cash P a g e | 25 ITA Nos. 1227 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 payments made for purchase of office premises as gathered from the documents which were found during the course of the search and survey operations was disclosed in its ‘return of income’ by crediting the same in its profit and loss account, as under:
Assessment year Amount 2007-08 Rs.26,00,000/- 2006-07 Rs.13,72,040/- It was further submitted by the assessee that except for the aforesaid cash payments which were made for purchase of office premises, no other payment was made for acquisition of any other office premises or otherwise. The assessee in order to drive home his aforesaid contention, submitted that neither any material evidencing any other cash payment by the assessee had emerged during the course of the Search and seizure proceedings, nor any such adverse inferences could be drawn in its hands in the absence of any document/material proving to the contrary. However, the A.O acting upon the statements of the partners recorded during the course of the survey/search proceedings in context of the unaccounted cash payments which were admitted by them to have been made towards purchase of five flats and one shop at ground floor of Shabnam building, S.V. Road, Andheri (W), Mumbai, thus, reminded the partners of the disclosure made by them in their respective statements recorded during the course of the search and survey operations and called upon them to furnish the details of the ‘on money’ cash payments of Rs. 1.01 crores that was admitted by them to have been made for purchase of the flats and shop. The assessee in its reply re-affirmed its contention that no other cash payment, except for those which had been disclosed in the returns of income for A.Ys 2006-07 and 2007-08 were made towards purchase of the aforementioned property. However, the A.O holding a P a g e | 26 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 conviction that the assessee had came forth with the disclosure of income on account of unaccounted cash payments made in respect of purchase of property at Shabnam building, S.V. Road, Andheri (W), Mumbai, on the basis of the material impounded during the course of survey action at its business premises, therefore, rejected the aforesaid claim of the assessee by characterising the same as an afterthought which was not backed by any plausible evidence. The A.O being guided by the admissions of the partners of the assessee firm made during the course of the search and survey proceedings, held a conviction that the assessee had during the year under consideration made unaccounted cash payments of Rs.31,00,000/- as ‘on money’ for purchase of Flat No. 501 and Shop on ground floor in Shabnam building. The A.O observing that the assessee had not offered the aforesaid admitted unaccounted cash payments as its income in the return of income filed under Sec. 153C for the year under consideration, viz. A.Y 2009-10, therefore, made an addition of the said amount in the hands of the assessee.
The A.O further during the course of the assessment proceedings observed that during the course of survey operation while for the cash balance as per the books of account of the assessee was Rs. 17,58,884/-, but however, the cash found at the business premises was Rs.13,481/- only. The assessee on being called upon to put forth an explanation as regards the aforesaid discrepancy submitted that the said variance had emerged for the reason that the entries had not been properly entered in the records by the accountant. The partner of the assessee firm after reconciling the cash receipts and the expenses incurred during the year along with the cash withdrawals and deposits made from/in the bank, brought down the variance to Rs.3,58,182/-. The assessee further putting forth an explanation as regards the P a g e | 27 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 balance variance of Rs. 3,58,182/-, submitted that out of the aforesaid amount an amount of Rs.1,05,000/- was spent for the medical bills of his father and sister, while for an amount of Rs.45,000/- was paid by way ex-gratia to employees who had excelled in their work. However, as the deficit of Rs.1,25,802/-could not be explained by the assessee, therefore, the same was offered as undisclosed income for the year under consideration. The aforesaid disclosure of Rs.1,25,802/- in respect of deficit/short cash made by the partner of the assessee firm, viz. Shri Fazal Sarang was also confronted to the other partner, viz. Shri Farooq Sarang, who confirmed the same in the course of his statement recorded under Sec. 132(4) on 26.03.2009. The A.O in the backdrop of the aforesaid facts, observing that the assessee had not offered the aforesaid amount of Rs. 1,25,802/- as income in its return of income filed in compliance to notice issued u/s 153C, therefore, going by the disclosure made by the partner in the course of the survey proceedings conducted on the assessee firm under Sec. 133A on 24.02.2009, which was also confirmed by the other partner, viz. Sh. Farooq Sarang in his statement recorded under Sec. 132(4), therefore, made an addition of Rs.1,25,802/- as an unexplained expenditure and disallowable under Sec. 37(1) of the Act in the hands of the assessee.
The A.O further during the course of the assessment proceedings observed that a perusal of Annexure A1 to Annexure A10 which were impounded during the course of the survey proceedings conducted at the business premises of the assessee on 24.02.2009, revealed certain expenditures that were incurred by the assessee. That as the assessee failed to furnish any explanation in respect of the source of the aforesaid expenditure aggregating to Rs.10,00,000/-, therefore, the P a g e | 28 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 A.O added the same as an unexplained expenditure under Sec.69C of the Act.
Aggrieved, the assessee carried the matter in appeal before the CIT(A). The CIT(A) after deliberating on the contentions advanced by the assessee in context of the aforesaid additions/disallowances was however not persuaded to be in agreement with the assessee. Though the CIT(A) partly allowed the appeal of the assessee, but however, the aforesaid additions/disallowances were upheld by him.
The assessee being aggrieved with the order of the CIT(A) had carried the matter in appeal before us. The ld. Authorized Representative (for short ‘A.R’) for the assessee at the very outset submitted that the A.O had made an addition of Rs.31,00,000/- in respect of alleged ‘on money’ paid by the assessee towards purchase of the property in Shabnam building, Andheri (W), Mumbai, not on the basis of any material evidencing the same as was found during the course of the survey proceedings conducted on the assessee on 24.02.2009, but rather, on the basis of the unsubstantiated statement of the partner of the assessee firm recorded during the course of the survey proceedings, which however stood retracted. The ld. A.R in order to fortify his contention that both of the partners had retracted their respective statements recorded under Sec. 133A/132(4), took us through the letters filed by them on 15.05.2009 (Page 59-60 of ‘APB’), wherein both of them alleging that their statements were recorded under pressure, had thus retracted from the same. The ld. A.R submitted that as per the settled position of law no adverse inferences could be drawn in the hands of the assessee on the basis of the retracted statements of the partners recorded during the course of the survey proceedings. The ld. A.R in order to drive home his aforesaid contention that the statement recorded under Sec. 133A has no P a g e | 29 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 evidentiary value and any admission made in such statement cannot be made as a basis for making of addition in the hands of an assessee, placed heavy reliance on the judgement of the Hon‟ble Supreme Court in the case of CIT Vs. S. Khadar Khan Son (2012) 210 taxmann 248 (SC). The ld. A.R further took support of the judgments of the Hon‟ble High Court of Madras in the case of CIT Vs. P. Balasubramanian (2013) 334 ITR 116 (Madras) and CIT Vs. Smt. S. Jayalakshmi Ammal (2016) 74 taxman.com 35 (Madras). The ld. A.R taking support of the aforesaid judicial pronouncements, submitted that as per the settled position of law an addition on the basis of the statement of the assessee recorded during the course of the survey proceedings can be made only if it is supported by relevant material. It was thus the contention of the ld. A.R that as no evidence had emerged during the course of the survey proceedings which could justify the addition made by the A.O in respect of alleged cash payments made towards ‘on money’ for purchase of the property in Shabnam Building, therefore, the same could not be sustained and was liable to be vacated. Alternatively, it was submitted by the ld. A.R that the investment made by the assessee in purchase of the flat/shop at Shabnam Bldg, S.V. Road, Andheri (W), Mumbai, was recorded in the books of account of the assessee, therefore, though not admitting, however for academic purpose even in case any addition in respect of the ‘on money’ cash payments as alleged by the A.O were to be made, the same could not have been made under Section 69 of the Act. The ld. A.R driving home his aforesaid contention submitted that an addition in respect of the unexplained investments could be made under Sec. 69, only where the investments in itself was not found to be recorded in the books of accounts, if any, maintained by the assessee for any source of income. It was averred by the ld. A.R that as the aforesaid investments in the Flat N. 501/Shop (ground floor) of P a g e | 30 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 Shabnam building was recorded in the books of account of the assessee, therefore, addition on account of alleged suppression of the investment could not have been made under Sec. 69 of the Act. The ld. A.R averred that as additions in respect of suppressed investment, i.e investments which were not fully disclosed in the books of account of the assessee could only be made under Sec. 69B, therefore, the addition made by the A.O under Sec. 69 could not be sustained and also was liable to be vacated on the said count. The ld. A.R in order to support his aforesaid contention relied on the judgement of the Hon‟ble High Court of Rajasthan in the case of CIT Jodhpur Vs. Mehta Gwar Gum & Co. (2008) 174 taxman.com 464 (Raj). The ld. A.R further adverting to the addition of Rs. 1,25,802/- made by the A.O in respect of the short/deficit cash found during the course of the survey action conducted on the assessee as against that as stood reflected in its books of account, submitted that no such addition was called for in the hands of the assessee. The ld. A.R taking us through the order of the A.O submitted that he had made an addition in respect of the short/deficit cash of Rs.1,25,802/- by characterising the same as an unexplained expenditure and disallowable under Sec. 37(1) of the Act. It was submitted by the ld. A.R that as the cash in hand as per the books of account of the assessee was higher than that as was found available with the assessee, therefore, no addition in respect of the said variance was called for in its hands. The ld. A.R submitted that as the very basis on which the addition of Rs.1,25,802/- was made in the hands of the assessee was absolutely misconceived and beyond comprehension, therefore, the same could not be sustained and was liable to be vacated.
Per contra, the ld. Departmental Representative (for short ‘D.R’) submitted that the partner of the assessee firm, viz. Shri Fazal Sarang P a g e | 31 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 had in his statement recorded on 24/25.02.2009 during the course of survey proceedings under Sec. 133A on the assessee firm, voluntarily admitted of making of ‘on money’ cash payment of Rs. 31,00,000/- for purchase of the flat No. 501/shop (ground floor) in Shabnam Building, S.V. Road Andheri (W), Mumbai, and had made a disclosure of the aforesaid amount for the year under consideration. It was further submitted by the ld. D.R that the aforesaid statement of Shri Fazal Sarang on being confronted to the other partner, viz. Shri Farooq Sarang was also confirmed by him in his statement recorded on oath under Sec.132 (4) on 06.03.2009. The ld. D.R. submitted that in the backdrop of the aforesaid facts the retraction of the disclosure made by the partners of the assessee firm by simply filing respective letters dated 15.05.2009, without assigning any reason was not permissible. The ld. D.R adverting to the addition of Rs.1,25,802/- made in respect of the short/deficit cash found during the course of the survey proceedings as against that reflected in its books of account, submitted that as the assessee had voluntarily accepted in his statement recorded during the course of survey proceedings on 24/25.02.2009 that the aforesaid amount was the undisclosed income of the assessee firm for the year under consideration, therefore, the A.O had rightly made an addition in respect of the same in the hands of the assessee. It was reiterated by the ld. D.R that the assessee after offering the aforesaid amount as its income could not be permitted to withdraw from the same without any plausible reason. The ld. D.R. in the backdrop of his aforesaid contentions submitted that the appeal of the assessee was devoid of any force of law and was liable to be dismissed.
We have heard the authorized representatives for both the parties, perused the orders of the lower authorities and the material P a g e | 32 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 available on record. We shall first advert to the addition of Rs.31,00,000/- made by the A.O in respect of the alleged unaccounted cash payments made towards ‘on money’ by the assessee for purchase of flat No. 501/shop (ground floor) in Shabnam building, S.V. Road, Andheri (W), Mumbai. We find that it remains as a matter of fact that Shri Fazal Sarang, partner of the assessee firm, had during the course of the survey proceedings stated that for the purchase of flat No. 502 Shabnam building, S.V. Road, Andheri (W), Mumbai, the purchase consideration was paid as 40% in cash and 60% in cheques, and the agreement for the purchase of the said flat only made a mention of the payment made in cheque only. We further find that Shri Fazal Sarang had in his statement recorded on 24/25.02.2009 during the course of the survey proceedings conducted under Sec. 133A on the assessee firm, had in his reply to question No. 22 accepted that for all the five flats and one shop purchased at ground floor in Shabnam building, S.V. Road, Andheri (W), Mumbai, the same modus operandi was adopted and purchase consideration was paid 60% by cheque and 40% in cash. We find that the aforesaid partner had during the course of the survey proceedings specifically placed on record a ‘Chart’, which revealed that in respect of the aforesaid five flats and one shop at ground floor of Shabnam building, S.V. Road, Andheri (W), Mumbai, which were purchased by the assessee firm during the F.Ys 2006-07 to 2008-09, unaccounted cash payments aggregating to Rs.1,01,25,000/- were made. We further find that the aforesaid partner, viz. Shri Fazal Sarang in reply to question No. 22 had admitted that as the cash payments aggregating to Rs.1,01,25,000/- made for purchase of the properties were not recorded in the regular books of account of the assessee firm, therefore, the same were voluntarily disclosed as its income for the aforementioned assessment year, viz. A.Y 2007-08, to AY 2009-10. We P a g e | 33 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 find that the aforesaid disclosure of Rs.1,01,25,000/- (supra) includes a disclosure in respect of cash payments made in respect of two properties which were purchased by the assessee during the year under consideration, viz. (i). a cash payment of Rs. 7,00,000/- was claimed by the assessee to have been made for the purchase of flat No. 501 in Shabnam building (over and above the agreement value of Rs.10,50,000/- that was paid by cheque); and (ii). an amount of cash payment of Rs.24,00,000/- (over above the agreement value of Rs.36,00,000/- that was paid by cheque) was stated to have been paid for purchase of a shop (ground floor) in Shabnam building, S.V. Road, Andheri (W), Mumbai. We find that the aforesaid disclosure so made by the partner of the assessee firm, viz. Shri Fazal Sarang was also confirmed by his brother, i.e the other partner, viz. Shri Farooq Sarang in his statement recorded on oath under Sec. 132(4) on 06.03.2009. We have perused the facts and find that though the partner of the assessee firm had came forth with a disclosure during the course of survey proceedings conducted under Sec. 133A on the assessee firm on 24.02.2009, but however, did not offer the aforesaid amount of Rs.31,00,000/-(supra) as its additional income in respect of the unaccounted cash payments for purchase of flat No. 501 and shop (ground floor) in Shabnam building, as was admitted. During the course of the survey proceeding. We find that the A.O taking cognizance of the failure on the part of the assessee to offer the aforesaid amount as its income for the year under consideration, therefore, reminded them of their respective statements which were recorded during the course of the survey/search proceedings in context of the unaccounted cash payments which were admitted by them to have been made for the purchase of the flat No. 501 and shop (ground floor) in Shabnam building during the year under consideration. However, the assessee in its reply submitted that as P a g e | 34 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 and where the cash payments were made for the purchase of the office premises as per the documents found during the course of the search and the survey proceedings, the same had been disclosed in its respective returns of income by crediting the same to its profit and loss account. It was submitted by the assessee that as no cash payments were made for acquisition of any other office premises or otherwise, except for that which had already been offered for tax in its returns of income for A.Ys 2006-07 and 2007-08, therefore, no addition in the absence of any document proving to the contrary was called for in its hands. We find that the A.O not persuaded to be in agreement with the aforesaid claim of the assessee and being of the view that the assessee on being confronted with the impounded material during the course of survey action had came forth with the aforesaid disclosure, therefore, being of view that the assessee had made unaccounted cash payment of Rs.31,00,000/- towards ‘on money’ for purchase of flat No. 501 and shop (ground floor) in Shabnam building, added the said amount to the total income of the assessee.
We have deliberated on the facts and though are not oblivious of the fact that the partners of the assessee firm had during the course of the survey proceedings categorically admitted of having made unaccounted cash payments aggregating to Rs.31,00,000/- towards ‘on money’ for purchase of flat No. 501 and shop (ground floor) in Shabnam building, S.V. Road, Andheri (W), Mumbai, and after categorically admitting that the cash payments were not recorded in the regular books of accounts of the assessee firm had made a disclosure of the said amount. However, the aforesaid statements recorded during the course of the survey/search proceedings under Sec. 133A/132(4) were retracted by both the partners vide their P a g e | 35 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 respective letters dated 15.05.2009, for the reason that same were recorded under pressure. We further find that the assessee while filing its return of income for the year under consideration, viz. A.Y 2009- 10, had not offered the aforesaid disclosure of Rs.31,00,000/- in respect of the aforesaid unaccounted cash payments as its income for tax. We are of the considered view that though it is claimed by the A.O that the assessee had came forth with a disclosure of Rs.31,00,000/- (forming part of the total disclosure of Rs.1,01,25,000/-) on being confronted with the documents marked as Annexure A1 – Annexure A10 which were impounded during the course of the survey action, but however, despite the specific retraction by the assessee vide the letters filed with the A.O on 15.05.2009, who thereafter had restricted the disclosure in respect of the unaccounted cash payments made towards purchase of property aggregating amount of Rs.39,72,040/-, as under:- Assessment year Amount 2006-07 13,72,040/- 2007-08 26,00,000/- Total 39,72,040/- ,neither any document forming part of Annexure A1- Annexure A10 which would evidence unaccounted cash payment aggregating to Rs.31,00,000/- made by the assessee for purchase of flat No. 501 and shop (ground floor) in Shabnam building during the year under consideration, viz. AY 2009-10, had either been referred to and confronted to the assessee during the course of the assessment proceedings, nor reference of any such material had been made by the ld. D.R during the course of hearing of the appeal before us. Be that as it may, the fact as it so emerges is that though the assessee had made a disclosure of Rs.31,00,000/- in respect of unexplained cash payments towards ‘on money’ for purchase of flat/shop in Shabnam P a g e | 36 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 building, during the year under consideration, but however, the said disclosure made by the partners was retracted by them vide their respective letters dated 15.05.2009. We have deliberated on the facts and are of the considered view that the revenue except for raising hollow allegations as regards the suppression of the investment made by assessee towards purchase of property during the year under consideration, has any material with it which could persuade as to concluded that the retraction by the partners was not to be accepted, nor is in possession of any material which could prove to the hilt the fact that unaccounted cash payments towards ‘on money’ was made for purchase of the property during the year under consideration. We are of the considered view that the claim of the assessee that no addition can be made in the hands of the assessee on the basis of the retracted statement recorded during the course of the survey proceedings, carries substantial force. We are of the considered view that a statement recorded during the course of the survey proceedings, which though might have been retracted, would not come in the way of making of an addition in the hands of the assessee, as long as there is material available with the A.O evidencing the undisclosed income or making of unexplained investment by the assessee. However, we are afraid that this is not the state of affairs in the case before us. We are persuaded to be in agreement with the contention of the ld. A.R that in the absence of conclusive evidence suggesting payment of ‘on money’ by the assessee, the purchase consideration for which the property had been purchased by the assessee as per duly registered agreements could not be doubted and dislodged. We are of the considered view that in the absence of any documentary evidence which could irrefutably prove to the hilt the making of unaccounted cash payment of Rs.31,00,000/- by the assessee, no addition of the said amount could have been made in its P a g e | 37 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 hands. We find that our aforesaid view stand fortified by the judgments of the Hon‟ble High Court of Madras in the case of CIT Vs. P. Balasubramanian (2013) 354 ITR 116 (Madras) and CIT Vs. Smt. S. Jayalaxmi Ammal (2016) 74 taxmann.com 35 (Madras). We thus in the backdrop of our aforesaid observations are of the considered view that the addition of Rs.31,00,000/- made in the hands of the assessee firm, merely on the basis of an unaccounted statement of its partner recorded during the course of the survey proceedings conducted on 24.02.2009, which in itself had been retracted, thus, cannot be sustained. We thus in terms of our aforesaid observations delete the addition of Rs.31,00,000/- made in the hands of the assessee firm. The Ground of appeal
No. 1 & 2 are allowed in terms of our aforesaid observations.
31. We shall now advert to the addition of Rs.1,25,802/- made in the hands of the assessee firm on account of short/deficit cash found during the course of the survey proceeding, as in comparison to that as was reflected in its books of account. We find that the A.O had made the aforesaid addition of Rs.1,25,802/- by treating the same as an unexplained expenditure and disallowable under Sec.37(1). The CIT(A) had upheld the aforesaid addition for the reason that as the assessee had admitted the unexplained expenditure of Rs.1,25,802/- in his statement recorded during the course of survey and also in the reply submitted before the A.O, therefore, the addition in respect of the said unexplained expenditure which was not allowable as a deduction as per the proviso to Sec. 69C was liable to be upheld.
32. We have deliberated on the issue under consideration and are unable to persuade ourselves to accept the observations of the lower authorities. We are persuaded to be in agreement with the contention of the ld. A.R that as it was a case where short/deficit cash was found P a g e | 38 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 during the course of survey proceedings, therefore, no adverse inference on the said count was liable to be drawn in the hands of the assessee. We are of the considered view that though Shri Fazal Sarang, partner of the assessee firm had in his statement recorded during the course of the survey proceedings under Sec. 133A had submitted that as he was unable to explain the short/deficit cash of Rs.1,25,802/-, therefore, the same was offered as undisclosed income of the assessee firm for the year under consideration, but however, it remains as a matter of fact that the said offer so made by the assessee was thereafter retracted by the partners, vide their respective letters dated 15.05.2009 filed with the A.O. We thus in the backdrop of the aforesaid retraction on the part of the assessee have to adjudicate on the validity of the addition of Rs.1,25,802/- in the backdrop of the facts attending to the same. We find substantial force in the contention of the ld. A.R that as the aforesaid short/deficit cash of Rs.1,25,802/- could not be reconciled by the assessee as against the cash as stood reflected in the books of account of the assessee, therefore, no adverse inferences in respect of the said amount was liable to be drawn in the hands of the assessee. We are not impressed by the observations of the CIT(A) who had upheld the addition of Rs.1,25,802/- for the reason that the partner of the assessee firm had in his statement recorded during the course of the survey proceedings admitted that the said amount was incurred by way of unexplained expenditure. We are unable to comprehend either the basis or the reasoning drawn by the CIT(A) for arriving at the aforesaid observations. We find that Shri Fazal Sarang, partner of the assessee firm had in his reply to question no. 15 of his statement recorded during the course of the survey proceedings on 24/25.02.2009, stated that as the shortfall/deficit cash balance of Rs.1,25,802/- could not be reconciled and explained by him, therefore, the same was being P a g e | 39 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 offered as undisclosed income of the assessee firm. We further find that it also remains as a matter of fact that the aforesaid disclosure made by Shri Fazal Sarang was affirmed by the other partner, viz. Shri Fazal Sarang in his statement recorded under Sec. 132(4) on 26.03.2009. However, we find that neither of the partners of the assessee firm had in their respective statements recorded during the course of survey and search proceedings admitted that the assessee firm had incurred unexplained expenditure of Rs.1,25,802/-. We are further of the view that even if it is to be assumed that the amount of Rs.1,25,802/- had been expended by the assessee firm, which thus had led to a shortfall/deficit cash, therefore, now when the source of the said amount was clearly from the cash in hand available with the assessee firm as per its books of account, there would be no reason for characterising the same as an unexplained expenditure in the hands of the assessee. We are of the considered view that the CIT(A) had absolutely misconceived and misconstrued the scope and gamut of the conditions in respect of unexplained expenditure contemplated under Sec. 69C of the Act. We thus in the backdrop of our aforesaid observations delete the addition of Rs.1,25,802/- made in the hands of the assessee. The Grounds of appeal
No. 3 is allowed, in terms of our aforesaid observations.
33. We further find that as Annexure A1 – Page 12 and 13 impounded during the course of the survey proceeding conducted on the assessee firm on 24.02.2009 revealed certain expenses aggregating to Rs.10,00,000/-, therefore, the A.O observing that the assessee had failed to give any explanation or any supporting evidence in respect of the said expenses, added the said amount as an unexplained expenditure under Sec. 69C in the hands of the assessee. We find that the aforesaid addition was thereafter upheld by the CIT(A). The P a g e | 40 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 assessee had assailed the aforesaid addition of Rs.10,00,000/- made in its hands under Sec. 69C. We are of the considered view that as observed by us hereinabove, the survey proceedings conducted on the assessee firm on 24.02.2009 revealed that as against the cash in hand of Rs. 13,480/- that was found lying with the assessee, the cash as per the books of account stood reflected at Rs. 17,58,884/-. We find that the assessee explaining the said discrepancy had submitted that the same had emerged for the reason that his accountant had failed to make proper entries in the books of account. We further find that it remains as a matter of an undisputed fact that the assessee interalia after taking cognizance of certain cash receipts and expenses which though were incurred during the year (i.e from 01.04.2008 to 24.02.2009), but however, had remained omitted to be recorded in the books of account, had brought down the variance to Rs. 3,58,182/-. We are of the considered view that in case any of the expenses recorded in Annexure A1 – Page 12 and 13 , on the basis of which an addition of Rs. 10 lac was made by the A.O as unexplained expenditure under Sec. 69C in the hands of the assessee, forms part of the aforesaid reconciliation as per which the initial variance of Rs. 17,58,884/- was brought down by the assessee to an amount of Rs. 3,58,182/-, then no addition in respect of such unrecorded expenditure, the source of which is found routed to the aforesaid reconciliation filed by the assessee during the course of the survey proceedings would be called for in its hands. We thus for the said limited purpose of making necessary verifications in terms of our aforesaid observations restore the issue as regards the addition of Rs. 10,00,000/- made by the A.O under Sec. 69C to the file of the A.O. Needless to say, the A.O shall during the course of adjudication of the aforesaid issue afford sufficient opportunity of being heard to the P a g e | 41 ITA Nos. 1227 to 1229/Mum/2012 AYs. 2007-08 to 2009-10 M/s Sarang & Associates Vs. Dy. Commissioner of Income Tax-CC-36 assessee. The Ground of appeal
No. 4 is allowed for statistical purposes.
34. The appeal of the assessee is partly allowed in terms of our aforesaid observations.
The appeals of the assessee for A.Ys 2007-08, 2008-09 and 2009-10, viz. and ITA No. 1229/Mum/2012 are allowed in terms of our aforesaid observations.