ACIT, NEW DELHI vs. SH. SURESH JAIN, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’, NEW DELHI Before Sh. N. K. Saini, AM and Smt. Beena Pillai, JM ITA No. 369/Del/2012 : Asstt. Year : 2000-01 ITA No. 370/Del/2012 : Asstt. Year : 2001-02 ITA No. 374/Del/2012 : Asstt. Year : 2006-07 ACIT Vs Suresh Jain Circle-38(1), C-29, Panchsheel Enclave New Delhi New Delhi (APPELLANT) (RESPONDENT) PAN No. ACXPJ6507G Assessee by : Sh. Sh. Raj Kumar Gupta, Adv. & Sh. Sumit Goyal, CA Revenue by : Sh. S. S. Rana, CIT DR Date of Hearing : 14.02.2017 Date of Pronouncement : 28.04.2017 ORDER Per N. K. Saini, AM: These appeals by the department are directed against the separate orders each dated 29.11.2001 of the ld. CIT(A)- XXVIII, New Delhi for the assessment year 2000-01, 2001-02 and 2006-2007. Since the appeals pertain to the same assessee, so these are being disposed off by this consolidated order for the sake of convenience and brevity.

ITA Nos. 369, 370 & 374/Del/2012 2 Suresh Jain 2. At the first instance, we will deal with the appeal of the department in ITA No. 369/Del/2012 for the assessment year 2000-01. Following grounds have been raised in this appeal: “1. The Ld. CIT(A) has erred in deleting the addition of Rs. 21,73,229/- made by the AO on account of estimation of net profit @8% of gross receipt. 2. The Ld CIT(A) erred in deleting the disallowance of loss of Rs. 19,34,285/-. 3. The Ld. CIT(A) erred in deleting the addition of Rs. 49,85,441/- made by the AO on account of Long Term Capital Gain. 4. That the grounds of appeal are without prejudice to each other. 5. The appellant craves to add, amend or modify the grounds of appeal at any time.”

ITA Nos. 369, 370 & 374/Del/2012 3 Suresh Jain declaring an income of Rs. 32,80,110/-. The AO, however, framed the assessment on a total taxable income of Rs. 1,07,76,611/- by making the various additions. The relevant observations made by the AO while making the additions in the assessment order dated 24.12.2007 read as under: “I. Addition on account of profit earned from Contractorship business:- The assessee has shown net profit at Rs.50,42,589/- from the business of contractorship. Vide order sheet entry dated 04.12.2007, the assessee was asked to produce the books of account and complete vouchers on the basis of which he has claimed expenses in the P & L account. On 17.12.2007, the assessee has produced books of account and some vouchers but has not produced the muster rolls of wages claimed at Rs.2,73,77,450/-. On 18.12.2007 the assessee was again asked to produce the muster rolls of wages claimed. No information was filed. On 19.12.2007, it was specifically asked to the assessee as to why his books of account may not be rejected, since he failed to produce the muster rolls of wages and also failed to file the evidence regarding additions in the fixed assets. Upto 19.12.2007 the assessee has not produced the muster rolls wages and evidence regarding additions in the fixed assets. On 20.12.2007, the assessee came with another story that his muster rolls were destroyed in the fire broke out in January, 2004 in C-29, Panchsheel Enclave, New Delhi and the same cannot be produced. An affidavit by Sh. Suresh Jain confirming his statement has also filed which is not attested by any authority.

ITA Nos. 369, 370 & 374/Del/2012 4 Suresh Jain I.I The above reply of the assessee was examined and the same is not accepted due to the reason that upto 19.12.2007 the assessee has stated that the muster rolls of wages are not available and on 20.12.2007 the assessee stated that the same were destroyed in the fire. The assessee's counsel was also asked to furnish the copy of FIR. It was stated that at present there is no record of FIR. Since the assessee failed to prove the major expenditure debited to P & L account under the head wages, the books of account of the assessee are not reliable and the same are rejected. A net profit rate of 8% is applied on the gross receipts from contractorship. Vide order sheet entry dated 19.12.2007 the assessee was specifically asked to explain as to why his books of account may not be rejected and net profit rate of 8% is applied on the gross receipts. No reply has been filed in this regard. During the year the assessee has received the following amount from contractorship:- i) M/s Parivahan Cooperative Group Housing Society Ltd. Rs. 1,71,28,253/- ii) M/s NPCC Cooperative Group Housing Society Ltd. Rs. 7,26,99,923/- Total Rs. 8,98,28,176/- Net profit rate of 8% on the gross receipts of Rs.8,98,28,176/- is applied and the income of the assessee from the contractorship business is worked out at Rs.71,86,254/-. The assessee has also earned miscellaneous income at Rs.29,564/- as shown in the P & L account of NPCC, CGSS Ltd. account. Accordingly addition of Rs.29,564/- is also made to the returned income. Thus, total addition under the

ITA Nos. 369, 370 & 374/Del/2012 5 Suresh Jain business head in this case is made at Rs.72,15,818/- to the income of the assessee. II. Disallowance of loss of M/s Ridge Court Bowling Centre- Rs.19,34.285/- The assessee has claimed loss from M/s Ridge Court Bowling Centre at Rs.19,34,285/. During the course of assessment proceedings, the assessee has filed a copy of balance sheet audited by Suresh C Gupta and Associates, Chartered Accountants dated 20.10.2002 according to which a liability of Rs.63,72,500/- was shown in the name of Suresh Jain and Associates. A perusal of Suresh Jain & Associates audit report shows that a loan of Rs.45,00,000/- has been given to M/s Ridge Court Bowling Centre. During the course of assessment proceedings, the assessee was asked to reconcile this difference. On 19.12.2007 the assessee has filed a copy of balance sheet of M/s Suresh Jain & Associates in respect of Urja Villa Cooperative Group Housing Society in which the amount of Rs.63,72,500/- has been shown as receivable from M/s Ridge Court Bowling Centre as at 31.03.99. In the assessment year under consideration no balance sheet in respect of Urja Villa Cooperative Group Housing Society Ltd. project was filed by the assessee. The assessee has also not filed the consolidated balance sheet in respect of his projects executed. Since the assessee has failed to explain the balances, the books of account of the assessee are rejected and the loss claimed at Rs. 19,34,285/- is allowed. III. Addition on account of compensation of land received:- A perusal of return of income shows that

ITA Nos. 369, 370 & 374/Del/2012 6 Suresh Jain assessee has received compensation from Govt, of U.P in respect of his land situated at Village Sultanpur, Tehsil Dadri, District Gautambudh Nagar (U.P) at Rs.58,17,070/-. In the return filed on 09.08.2007 in response to notice u/s 153A the assessee has claimed exemption u/s 54F amounting to Rs.35,99,554/- and also adjusted brought forward of loss amounting to Rs.13,85,887/-. After deducting both the figures the net capital gain shown at nil. During the course of assessment proceedings, the assessee was asked to explain whether he owns any residential house on the date of purchase of another residential house for which he has claimed deduction u/s 54F. Instead of filing the information the assessee has filed a certificate on 19.12.2007 issued by the Tehsildar, Dadri showing therein that the land in question was agriculture and is not within the limits of 8 kms from the limits of Municipal Committee of Dadri. Thus in view of this certificate the assessee has claimed that the land from which he has received compensation is agricultural land and a not a capital asset as defined in Section 2(14) of the Act. III.I The certificate filed by the assessee is examined in detail. As per provisions of section 10 (37) inserted by Finance (No.2) Act 2004 w.e.f. 2005:- In the case of an assessee, being an individual or Hindu Undivided Family, any income chargeable under the head "capital gains" arising from the transfer of agricultural land, where –

ITA Nos. 369, 370 & 374/Del/2012 7 Suresh Jain (i) Such land is situated in any area referred to in item (a) or item (b) of sub-clause (iii) of clause (14) of section 2; (ii) Such land, during the period of two years immediately preceding the date of transfer was being used for agricultural purposes by such Hindu Undivided Family Or Individual or a parent of his ; (iii) Such transfer is by way of compulsory acquisition under any law, or a transfer the consideration for which is determined or approved by the Central Govt, or the Reserve Bank of India; (iv) Such income has arisen from the compensation or consideration for such transfer received by such assessee on or after first day of April, 2004. Explanation- For the purpose of this clause, the expression "compensation or consideration" includes the compensation or consideration enhanced or further enhanced by any court, Tribunal or other authority. According to section 10(37) of the Act the assessee can claim the deduction of capital gain arised from the acquisition of the land if he fulfills the above four conditions. In the case of assessee it appears that assessee fulfills only condition (i) and (iii) and does not fulfill conditions No. (ii) and (iv) as discussed below:- a. The assessee has not carried out any agricultural operations and shown agricultural income in order to prove that the land was used for agricultural purposes. A perusal of return of

ITA Nos. 369, 370 & 374/Del/2012 8 Suresh Jain income for Asstt. Year shows that assessee had not shown any agricultural income. b. The compensation of land was received in the year 1999-2000 i.e. much before 01.04.2004. Since the assessee does not fulfills the conditions as laid down in section 10(37), the capital gain arisen from the acquisition of the land amounting to Rs.58,17,070/- is brought to tax. Accordingly an addition of Rs.58,17,070/- is made to the returned income. 3. Since the assessee has not produced the vouchers in respect of expenses claimed, wrongly claimed loss from the firm M/s Ridge Court Bowling Centre and furnished inaccurate particulars of income in respect of capital gain earned from the compensation of land at Village Sultanpur, I am satisfied that assessee has furnished inaccurate particulars of income, penalty proceedings u/s 271(1)(C) are initiated separately. 4. Subject to above discussions, the income of the assessee is computed as under:- 1. Income profit from (Amount in Rs.) contractorship as discussed in para I above 72,15,818 2. Loss claimed at Rs. 19,34,285/- in respect of Ridge Court Bowling Centre as discussed in para II above is not allowed. Income from capital gain 3. Compensation of land at Sultanpur, Tehsil Dadri 58,17,070

ITA Nos. 369, 370 & 374/Del/2012 9 Suresh Jain Less indexed cost of land 8,31,629 4. Balance 49,85,441 Less BF losses 16,03,776/- 5. Taxable long term capital gain 33,81,665 6. Short Term Capital Gain 25,000 Income from other sources 6. Bank interest 1,49,678 7. Other interest 1,51,500 3,01,178 Total Income 1,09,23,661 8. Less u/s 80G 50% of Rs. 2,70,100/- 1,35,050 Less u/s 80L 12,000/- TOTAL (-)1,47,050 Total Taxable Income 1,07,76,611 4. Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that there was no CBI search on the assessee and it was done on his son Sri. Sumit Jain and daughter-in-law Smt. Monica Jain. It was further stated that the assessee was having a joint locker in Kailash Hill Vaults with Mrs. Monica Jain and the CBI searched that locker also while conducting search of Mrs. Monica Jain, the cash of Rs. 40,00,000/- was found and seized from the said locker. This cash was owned by the assessee and was requisitioned u/s 132A of the I.T. Act after the information of search and seizure by the CBI was received by the Income Tax department. Therefore, the case of the assessee was covered

ITA Nos. 369, 370 & 374/Del/2012 10 Suresh Jain u/s 153 of the Act. It was also stated that there was no CBI search or CBI case against the assessee and he was never a party in any proceedings initiated by the CBI and consequently no case/proceedings were pending against the assessee as on date. It was further submitted that the assessment was without jurisdiction because there was no order u/s 127 of the Act being passed within the knowledge of the assessee conferring the jurisdiction to ACIT, Circle-38(1), New Delhi, who has passed the assessment order, since, prior to the said assessment order, the last assessment order of Assessment Year 1999-2000 was framed by the JCIT, Special Range-19, New Delhi. Therefore, in the absence of any order being passed u/s 127 of the Act, the jurisdiction of the AO did not stands automatically changed. The assessee also filed the written submissions which has been incorporated by the learned CIT(A) in para 3.1 of the impugned order which read as under: “Search took place on 27.03.06. Present Asstt. u/s 153 A is dtd. 24.12.07. Prior to this the last Asstt. of A.Y. 1999-2000 has been framed by the JCIT, Special Range-19, New Delhi (P - 1) The present Asstt. has been framed by ACIT, Circle 38 (1), New Delhi. Thus, there is an apparent change in the jurisdiction. However, no order u/s 127 has been passed within the knowledge of the assessee and no such order has ever been served on the assessee.

ITA Nos. 369, 370 & 374/Del/2012 11 Suresh Jain It is submitted that as per law and various authorities for change in jurisdiction order u/s 127 needs to be passed and needs to be communicated to the assessee failing which, the jurisdiction does not stand validly transferred. Further, the reasons for the transfer also needs to be recorded and to be communicated to the assessee. Few authorities on the above preposition of law are as under:- � NITIN DEVELOPERS AND CONST Vs CIT 284 ITR 605 (DEL.) � KUMAR KUMAR & BROTHERS AND ANOTHER Vs UOI 290 ITR 310 (CAL.) � VIJAY KUMAR GAURI SHANKAR Vs CIT 153 TAXMAN 272 (ALL.) � DGP HINODAY INDS. LTD. (2007) 13 SOT 733 (MUM.) In view of above, the Asstt. be please quashed as without jurisdiction.” 5. The learned CIT(A) also asked the remand report from the AO who vide report dated 30.12.2008 submitted as under: “Thus, according to the assessee, there is apparent change in the jurisdiction. According to the assessee no order u/s 127 has been passed. In this regard, it is submitted that CBDT vide Notification No. SO732 (E) dtd. 31.07.2001 has assigned the cases of persons having income from contractor ship, including supply of labour for carrying out any work to the commissioner of income tax, Delhi –

ITA Nos. 369, 370 & 374/Del/2012 12 Suresh Jain XIII (copy enclosed). Further, vide order No. 1/ 2001 dtd. 14.01.2001 passed by JCIT, Range – 38, New Delhi, the jurisdiction of contractors has been assigned to ACIT/ DCIT Circle 38 (1), New Delhi (copy enclosed). In view of above order, the jurisdiction over the case of the assessee lies with this office, since, the jurisdiction over the cases of contractors was assigned to this office, there was no need to pass an order u/s 127 in the case of the assessee.” 6. The learned CIT(A) forwarded the copy of remand report to the assessee and asked to furnish his reply. In response, the assessee vide letter dated 9.2.2009, furnished the reply which reads as under:

- “The AO has stated that jurisdiction for the cases of contractorship stood transferred to CIT - XIII, by CBDT vide notification dtd. 31.07.2001. Copy of the same has been attached. On going through the same, it appears that cases of contractors stood assigned to CIT-XIII. - Now, as per Para -C of said notification, the CIT will issue in writing to perform the functions by JCIT. - Now, as per Para - (d), said JCIT’s, can further issue orders in writing to perform the functions by the AO, who are subordinate to him. - Thus, from the above, it is clear that there must be some order subsequent to 31.07.2001, being

ITA Nos. 369, 370 & 374/Del/2012 13 Suresh Jain passed by CIT for performing the functions by JCIT and thereafter, there must be some order passed by JCIT directing the performance of functions by the current AO. - In reply, the AO has not referred to any such order being passed after 31.07.2001 through which CIT has conferred power to JCIT and further no order have been referred by which JCIT has further conferred that power to present AO. - The AO in his reply referred to some order no. 1/ 2001 dtd. 14.01.2001 being passed by JCIT, Range - 38, for assigning the jurisdiction of contractors to ACIT / DCIT Circle 38 (1). It is interesting to note that the said order refer to is dtd. 14.01.2001 while as per CBDT Notification it has to be subsequent to 31.07.2001 because the date of CBDT notification is 31.07.2001.Thus, the said JCIT order dtd. 14.01.2001 cannot confer the jurisdiction to ACIT, Circle 38 (1), New Delhi. - Further, the copy of said order dtd. 14.01.2001 has also not been given to the assessee along with remand report. The same be please given. Further reply may be furnished thereafter. In view of above, on the basis of reply of the AO itself, it is evident that no evidence has been placed on record by the AO to prove the correctness of jurisdiction being with the ACIT Circle 38 (1), New Delhi.”

ITA Nos. 369, 370 & 374/Del/2012 14 Suresh Jain 7. The assessee also submitted to the learned CIT(A) that the jurisdiction had not been properly and legally conferred on ACIT Circle-38(1), New Delhi and that in the remand report, the AO although mentioned for enclosing the copy of some order no. 1/2001 dated 14.01.2001 passed by JCIT Range-38 for assigning jurisdiction of contractors to ACIT / DCIT, Circle-38(1), New Delhi. However, copy of the said order was neither attached with the remand report nor was given to the assessee for his further comments. Accordingly, it was submitted that the jurisdiction had been illegally assumed by the ACIT, Circle-38(1), New Delhi and the assessment was without jurisdiction.

ITA Nos. 369, 370 & 374/Del/2012 15 Suresh Jain “ADDITIONAL GROUND NO. 1 That no Asstt./ Re-Asstt. was required to be framed U/s 153A in the absence of any material and information being found during search relating to any undisclosed income. ADDITIONAL GROUND NO. 2 That without prejudice to additional Ground No. 1, in the absence of any material and information being found during search relating to any undisclosed income, Asstt//Re-Asstt. U/s 153A was required to be framed exactly the same and at the same income as already stood assessed / reassessed before search and no further inquiry and investigation should have been made before and for framing the impugned Asstt. U/s 153A.” 10. The said legal grounds were admitted by the learned CIT(A) but the first additional ground was dismissed by observing that the assessment in this case had been framed u/s 153A of the Act on account of application of provisions of Section 132A of the Act. He further observed that Section 153A(1) of the Act mandates for assessment of each assessment year following within six years relevant to the previous year in which the requisition u/s 132A of the Act was made. He also observed that the assessment year 2000-01 was the first year amongst those six years and that by the use of the word “shall” in Section 153A of the Act. There was no option but to make assessment of said six years. The learned CIT(A)

ITA Nos. 369, 370 & 374/Del/2012 16 Suresh Jain categorically stated that the law nowhere provides that in the absence of any information being found relevant to undisclosed income, no assessment shall be done. He, accordingly, dismissed the additional ground no. 1 of the Act.

ITA Nos. 369, 370 & 374/Del/2012 17 Suresh Jain defend the said issue as per the provision contained in Rule 27 of the ITAT Rules.

ITA Nos. 369, 370 & 374/Del/2012 18 Suresh Jain the AO emanated from the return and regular books of accounts and not from any seized material, therefore, no addition could have been made in the assessment framed by the AO u/s 153 A of the Act particularly when none of the additions made by the AO was based on any incriminating seized material.

ITA Nos. 369, 370 & 374/Del/2012 19 Suresh Jain or limited to incriminating material found during the search. The reliance was placed on following case laws: � E.N. Gopakumar Vs CIT [(2016) 75 taxman.com 215 (Kerala) � CIT Vs St. Francis Clay Decor Tiles 385 ITR 624 (Kerala) � CIT Vs Anil Kumar Bhatia 352 ITR 493 (Del.) � Filatex India Ltd Vs CIT 49 taxman.com 465 (Del.) � CIT Vs Continental Warehousing Corporation (Nhava Sheva) Ltd. 64 Taxmann.com 34 (SC) 16. We have considered the submissions of both the parties and carefully gone through the material available on the record. In the present case, it is an admitted fact that the assessee is a respondent in the appeal filed by the department, in the said appeal the issues raised by the department relate to the deletion of various additions made by the AO and the ld. CIT(A) has decided the issue in favour of the assessee. Now the assessee filed an application under Rule 27 of the ITAT Rules, 1963. It is not in dispute that the provisions contained in Rules 27 of the ITAT Rules, 1963 are remedial provision to the respondent to support the favourable conclusion of the ld. CIT(A) in his favour and under this rule the respondent has been empowered to support the order appealed against on any of the grounds decided against him.

ITA Nos. 369, 370 & 374/Del/2012 20 Suresh Jain 17. On a similar issue the ITAT Delhi Bench ‘D’ in the case of DCIT, Circle-4(1), New Delhi Vs Jubliant Enpro (P.) Ltd. (supra) has held as under: “The effect of rule 27 of 1963 Rules is that a respondent has been entitled to support the order on the ground which has been decided against him. The underlying idea and the spirit of rule 27 is to arm a respondent, in an appeal filed by the plaintiff, with an option to contest unfavourable decision of the Commissioner (Appeals) on the aspect(s) of an issue, the final decision on which issue has been delivered in his favour. The mandate of rule 27 is to be seen in contradistinction to the provisions of section 253(4), which empower the respondent, on an appeal filed by the plaintiff, to file cross objection against any part of the order. When one considers rule 27 of the ITAT rules in juxtaposition to section 253(4), the position which emerges is that whereas rule 27 is a remedy to the respondent to 'support' the ultimate favourable conclusion of the Commissioner (Appeals) by challenging such aspects of the issue which were decided against him, a cross objection under section 253(4) is a remedy to the respondent to 'challenge' the ultimate unfavourable conclusion of the Commissioner (Appeals). A cursory look at the language of rule 27 transpires that a respondent has been empowered to support the order appealed against on any of the grounds 'decided against him.' In other words, the challenge

ITA Nos. 369, 370 & 374/Del/2012 21 Suresh Jain can be made by a respondent only in respect of a 'ground decided against him'. In such circumstances, a question arises that if there is no decision at all of the Commissioner (Appeals) on a particular aspect, which is otherwise germane to the overall issue decided in favour of the respondent, can the respondent espouse such aspect under rule 27 in an appeal filed by the plaintiff ? If one goes by the literal interpretation of the Rule, then the answer is in negative that unless the ground is not 'decided against' the respondent, he cannot take recourse to this provision. However, it is of paramount importance to keep in mind the fundamental object of enshrining rule 27, being giving an opportunity to the respondent to support the impugned order in an appeal filed by the plaintiff. A pragmatic approach on consideration of the object of such Rule, necessitates the adoption of liberal interpretation that when a particular issue is decided in favour of the respondent and the plaintiff has come up in appeal against such decision on the issue, then all the relevant aspects having bearing on the overall issue, even though not specifically decided against the plaintiff, should be open for challenge by the respondent under the rule. If the respondent is debarred from raising that aspect of the issue, which was not taken up before the first appellate authority or taken up but remained undecided, and the appeal of the plaintiff is allowed, the respondent would be rendered without remedy. It has been noticed above that a respondent is not entitled to file cross objection on such aspects of the issue under section 253(4) of the Act, the scope of which provision is circumscribed to challenging the ultimate unfavourable conclusion

ITA Nos. 369, 370 & 374/Del/2012 22 Suresh Jain drawn by the Commissioner (Appeals). In common parlance, when an issue is decided in favour of one party whether on one aspect or the other, it is not expected of such a party to challenge the order by asserting that the decision should have been given in his favour on that issue on all the aspects and not on that particular aspect on which it was given. When an appeal is filed against such favourable decision on the issue by the other party, and suppose the impugned order is not sustainable on that aspect of the issue on which it was decided, but on some other aspect which was not decided by the first appellate authority and the respondent is restrained from taking up such aspect on the reasoning that rule 27 is not applicable on such aspect, the respondent would stand nowhere. In view of the foregoing discussion, it is clear that hyper technicalities of rule 27 cannot come in the way of the deciding such aspects of the issue taken up by assessee before the tribunal which were germane to the main issue but were not contested or decided before first appellate authority provided no fresh investigation of facts is required for rendering decision on such aspects.” 18. We, therefore, by considering the aforesaid order of the coordinate bench and the provisions contained in Rule 27 of the ITAT Rules, 1963 allow the ld. Counsel for the assessee to argue the legal issue raised in the application dated 21.04.2016 filed by the assessee. The ld. Counsel for the assessee submitted that the search in this case took place on 27.03.2006 and no proceedings were pending as on the date of search for

ITA Nos. 369, 370 & 374/Del/2012 23 Suresh Jain the assessment years 2000-01 and 2001-02. Hence, it was an unabated assessment year in view of second proviso to Section 153A(1) of the Act. It was further submitted that the additions were made by the AO by applying the estimated net profit rate, disallowing declared loss and addition on account of long term capital gain on sale of the agricultural land although additions emanates from the return of income already filed by the assessee and regular books of account and not from any seized/incriminating material found during the search proceedings. Therefore, no addition could have been made u/s 153A of the Act in the absence of incriminating material found during the course of search.

ITA Nos. 369, 370 & 374/Del/2012 24 Suresh Jain (ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such assessment years will have to be computed by the Assessing Officers as afresh exercise. (iii) The Assessing Officer will exercise normal assessment powers in respect of the six years previous to the relevant assessment year in which the search takes place. The Assessing Officer has the power to assess and reassess the "total income" of the six years in separate assessment orders for each of the six years. In other words, there will be only one assessment order in respect of each of the six assessment years in which both the disclosed and the undisclosed income would be brought to tax. (iv) Although section 153A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the Assessing Officer which can be related to the evidence found, it does not mean that the assessment can be arbitrary or made without any relevance or nexus with the seized material. Obviously, an assessment has to be made under this section only on the basis of the seized material. (v) In the absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word "assess" in section 153A is relatable to abated proceedings (i.e., those pending on the date of search) and the word "reassess " to completed assessment proceedings, (vi) In so far as pending assessments are concerned, the jurisdiction to make the original

ITA Nos. 369, 370 & 374/Del/2012 25 Suresh Jain assessment and the assessment under section 153A merges into one. Only one assessment shall be made separately for each assessment year on the basis of the findings of the search and any other material existing or brought on the record of the Assessing Officer, (vii) Completed assessments can be interfered with by the Assessing Officer while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.” It has further been held that “On the date of the search the assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed." 20. We, therefore, considering the totality of the facts are of the confirmed view that the additions made by the AO while framing the assessment u/s 153A of the Act in the absence of incriminating material were not justified and the ld. CIT(A) rightly deleted the same. We, therefore, do not see merit in the appeal of the department and accept the contention of the ld. Counsel for the assessee that in the absence of incriminating material found during the course of search no addition can be made u/s 153A of the Act.

ITA Nos. 369, 370 & 374/Del/2012 26 Suresh Jain 21. The facts for the assessment year 2001-02 in ITA No. 370/Del/2012 are identical as were involved in the assessment year 2000-01 in ITA No. 369/Del/2012, the only difference is in the figures involved. Therefore, our findings given in the former part of this order shall apply mutatis mutandis.

ITA Nos. 369, 370 & 374/Del/2012 27 Suresh Jain Central Bureau of Investigation, New Delhi, a search and seizure operation u/s 132 of the Act was carried out by the Investigation Wing of the department on 27.03.2006 in respect of locker No. 560 at Kailash Hill Vaults Ltd., 218, Kailash Hills, New Delhi. During the course of search operation, cash amounting to Rs.40,00,000/- was found which was seized and the statement of Sh. Suresh Jain i.e. the assessee was recorded on 27.03.2006, in the said statement, the assessee stated that he had received this money from one Sh. Satish Gupta, Director of the company. The AO issued summon u/s 131(1)(A) of the Act to Sh. Satish Kumar Gupta, Director of M/s Silver Oak Infrastructure Pvt. Ltd. on 25.08.2006 and while examining the books of account of the said company, it was found that a share application money of Rs.40,00,000/- was received in cash on 08.10.2005 out of which an amount of Rs.7,00,000/- was given by Sh. Satish Kumar Gupta from cash in hand available with him. Proof of this cash in hand was also made available. The remaining amount of Rs.33,00,000/- was given in cash on 08.10.2005 as share application money to the said company by Sh. Satish Kumar Gupta who surrendered and offered the same as an additional income.

ITA Nos. 369, 370 & 374/Del/2012 28 Suresh Jain bearing Khasra No. 239, having area of 900 sq. yrds. With built up area of 30,000 sq. ft., near Manglapuri, Mehrauli Gurgaon Road, New Delhi in the name of Sh. Sumeet Jain and Sh. Vineet Jain of which the total consideration had been shown at Rs.6,21,00,000/-. This document was signed only by Vendee and not signed by the vendor and the witnesses. The AO pointed out that the assessee filed a copy of agreement to sell of which both the vendee and the vendor has put their signature and the witnesses had also witnessed this agreement to sell but there was no mention of Rs.40,00,000/- received from Sh. Satish Kumar Gupta by the assessee. The AO was of the view that the amount was not the same which was given by Sh. Satish Kumar Gupta to the assessee. The AO narrated the peculiarity of the issue of Rs.40,00,000/- found from the locker of the assessee as under: “i. That this cash of Rs.40,00,000/- was found from the locker of the assessee. ii. It is not accounted for in his regular books of account. iii. The assessee has given the statement that it was received by him as an advance for the sale of an immovable property. But in the agreement to sell of the said property there is no mention of cash of Rs.40,00,000/-. So the statement is not corroborative rather the documentary evidence

ITA Nos. 369, 370 & 374/Del/2012 29 Suresh Jain itself negates the claim of the assessee that the amount was received in cash also in addition to the cheques received. iv. Even the copy of agreement attached with the writ petition does not contain any clue about the transaction of Rs.40,00,000/-, as advance money for the sale of property. v. The purchaser has surrendered the income of Rs.33,00,000/- after the recording of the statement of the seller as he could not explain the nature and source of Rs.40,00,000/-. It also makes it clear that as on the date of search there exists no evidence to the nature and source of the amount found from the locker of the assessee. And any evidence attempted to be created later on has no evidentiary value as it is merely self-serving for both the parties.” 26. The AO made the addition of the aforesaid amount of Rs.40,00,000/- in the hands of the assessee. The reliance was placed on the judgment of the Hon’ble Supreme Court in the case of State of U.P Vs Dr. R.P. Mittal reported at AIR (1992) (SC) 2045.

ITA Nos. 369, 370 & 374/Del/2012 30 Suresh Jain during the course of search by CBI and a copy of the said agreement duly signed by the vendor and the vendee and the witnesses was also filed before the AO during the course of assessment proceedings which proved that Rs.40,00,000/- were received from Sh. Satish Kumar Gupta by the assessee. It was further submitted that the complete cash found in the locker amounting to Rs.40,00,000/- was received as an advance against the agreement of property from M/s Silver Oak Infrastructure (P) Ltd. It was further submitted that apart from the agreement with M/s Silver Oak Infrastructure (P) Ltd., the assessee executed MOU dated 09.10.2005 duly signed by the assessee and Sh. Satish Kumar Gupta, the said MOU as well as the agreement mentioned the sale price at Rs.6.21 crores at para 1 of the MOU. It was clearly mentioned that Rs.40,00,000/- was given in cash. It was further submitted that some dispute had arisen relating to this property and M/s Silver Oak Infrastructure (P) Ltd. issued legal notice to the assessee claiming that Rs.40,00,000/- had been paid in cash. It was further stated that M/s Silver Oak Infrastructure (P) Ltd. had also filed a petition before the Hon’ble Delhi High Court and averred that Rs.40,00,000/- had been paid in cash to the assessee and that in the statement recorded on 27.03.2006 in reply to the question No. 9, the assessee duly contended that

ITA Nos. 369, 370 & 374/Del/2012 31 Suresh Jain the source was from M/s Silver Oak Infrastructure (P) Ltd. and also furnished the written submission which has been reproduced by the ld. CIT(A) in para 5.2 of the impugned order, for the cost of repetition, the same is not reproduced herein. The ld. CIT(A) asked the remand report on the submissions of the assessee from the AO who vide report dated 13.12.2008 stated that all the evidences were not filed during the course of assessment proceedings and that the AO had already examined those evidences. Therefore, addition of Rs.40,00,000/- deserves to upheld.

ITA Nos. 369, 370 & 374/Del/2012 32 Suresh Jain

-It is submitted that Rs. 40 lacs is mentioned at large no. of places namely MOU filed at Page 41 - 45, copy of legal notice filed at Page 46 - 61, copy of petition filed by payer in the High Court submitted to you as Page 4 -40 and an explanation filed by assesses available at Page 1-3 vide letter dtd.20.12.2007 and explanation given vide letter dtd. 12.12.2007 filed to the AO and abstracted in full in Para 5A of the submissions. All these documents proved that this Rs. 40 lacs have been received from M/s. Silver Oak Infrastructure (P) Ltd. Satish Kumar Gupta (Director). It is to be noted that the fact of payment of Rs. 40 lacs by said company to the assessee stands claimed and accepted by both the parties in the petition pending before Hon'ble Delhi High Court filed by Silver Oak for specific performance. These documents proves beyond doubt the contention of the assessee, The latest evidence of case in progress before Delhi High Court being High Court Order dtd. 19.01.2009 is attached. -Further, vide letter did. 12.12.2007, the AO was requested to produce Satish Kumar Gupta for cross examination. However, it has not been done. In view of this, his statement cannot be read adversely. Thus in view of above, Rs. 40 lacs stands proved." 29. The ld. CIT(A) after considering the submissions of the assessee observed that Memorandum of Understanding (MOU) dated 09.10.2005 had been executed between the assessee, Sh.

ITA Nos. 369, 370 & 374/Del/2012 33 Suresh Jain Sumit Jain and Sh. Vinit Jain as one part and M/s Silver Oak Infrastructure (P) Ltd., New Delhi through its director Sh. Satish Kumar Gupta for purchase of Khasra No. 239, on Main Mehrauli Gurgaon Road, New Delhi for Rs.6.21 crores. The said MOU was signed by all the parties as well as witnessed and page no. 3 of this MOU gave the details of payments made till date by the purchaser to the seller as under: “Rs. 20 lacs vide cheque dtd.04.10.2005 Rs. 15 lacs vide pay order dtd. 08.10.2005 Rs, 15 lacs vide pay order dtd. 08.10.2005 Rs. 10 lacs vide cheque dtd. 10.10.2005 Rs. 40 lacs in cash Rs. 1 Crore TOTAL” 30. On the basis of the aforesaid details, the ld. CIT(A) was of the view that the assessee had been given Rs.40,00,000/- in cash on 09.10.2005 in pursuance to the MOU. He further observed that an application under Order 39 Rule 1 & 2 CPC, filed before the Hon’ble Delhi High Court by Sh. Satish Kumar Gupta against the assessee in which it was mentioned on page 3, para 5 that Rs.40,00,000/- cash payment had been made on 09.10.2005. She also observed that during the course of search, statement of the assessee was recorded on 27.03.2006 wherein vide reply to question No. 9, the assessee stated as under: "The cash represents advance received from the party with whom 1 entered into an agreement to sell

ITA Nos. 369, 370 & 374/Del/2012 34 Suresh Jain joint family property at 11 M.G. Road. Apart from Rs. 40 lacs cash, I had also received cheque for Rs. 60 lacs at the time of signing of sale agreement in October 2005. Since, then I have received a further sum of Rs. 1.5 Crores vide cheque. Balance was to be paid to me by December 2005. However, the party has failed to pay the total consideration of Rs. 6.21 Crores by December 2005.” 31. The ld. CIT(A) further observed that Sh. Satish Kumar Gupta had been claiming throughout that he had paid Rs.40,00,000/- in cash on 09.10.2005 to the assessee as part of the sale consideration for the property and also through legal as well as by way of averment in the suit filed against the assessee and other co-owner before the Hon’ble Delhi High Court, Sh. Satish Kumar Gupta had claimed that he had paid Rs.40,00,000/- in cash to the assessee. Therefore, the fact of payment of Rs.40,00,000/- by Sh. Satish Kumar Gupta to the assessee in cash against part sale consideration stood corroborated by various documents and by both the parties. Therefore, the fact that the said amount was not mentioned in the agreement to sale was not very much relevant as total amount of Rs.6.21 crores stood duly mentioned in the agreement & MOU dated 09.10.2005 and other documents wherein it was clearly mentioned that acknowledgment for receipt of Rs.40,00,000/- had been issued separately. She

ITA Nos. 369, 370 & 374/Del/2012 35 Suresh Jain further observed that share capital was introduced in the company on 08.10.2005, the date of payment of Rs.40,00,000/- by Sh. Satish Kumar Gupta on 09.10.2005 to the assessee were two continuing dates and that the amount of Rs.40,00,000/- also matched. The ld. CIT(A) further observed that Sh. Satish Kumar Gupta claimed the payment of Rs.40,00,000/- to the assessee on 09.10.2005 for the property and the said claim of Sh. Satish Kumar Gupta was evident from legal notice as well as Court petition. Therefore, the assessee fully explained source of Rs.40,00,000/- found from his locker being advance received from Sh. Satish Kumar Gupta, Director of M/s Silver Oak Infrastructure (P) Ltd. against total sale consideration at Rs.6.21 crores vide MOU dated 09.10.2005. Accordingly, the addition made by the AO was deleted.

ITA Nos. 369, 370 & 374/Del/2012 36 Suresh Jain 33. In his rival submissions the ld. Counsel for the assessee reiterated the submissions made before the authorities below and further submitted that the assessee received an advance of Rs.40,00,000/- against the sale of the property situated at Khasra No. 239, Manglapuri, Mehrauli Gurgaon Road, New Delhi. He also referred to page nos. 18 to 22 of the assessee’s paper book which is the copy of Memorandum of Understanding (MOU) dated 09.10.2005 between the assessee and M/s Silver Oak Infrastructure (P) Ltd. through its Director Sh. Satish Kumar Gupta wherein at page no. 3 of the said agreement (copy of which is placed at page no. 20), it was clearly mentioned that Rs.40,00,000/- were paid in cash to the assessee. It was further stated that Sh. Satish Kumar Gupta issued a notice dated 03.11.2006 to the assessee mentioning in the said notice that cash payment of Rs.40,00,000/- was made on 09.10.2005, a reference was made to page no. 25 of the assessee’s paper book. The ld. Counsel for the assessee also submitted that M/s Silver Oak Infrastructure (P) Ltd. filed a suit for specific performance before the Hon’ble High Court and claimed that the cash payment of Rs.40,00,000/- was made on 09.10.2005 which was acknowledged and mentioned in the Memorandum of Understanding dated 09.10.2005. A reference was made to page no. 41 of the assessee’s paper book.

ITA Nos. 369, 370 & 374/Del/2012 37 Suresh Jain Therefore, the arbitrary addition made by the AO was rightly deleted by the ld. CIT(A).

ITA Nos. 369, 370 & 374/Del/2012 38 Suresh Jain abadi area, laldora of village, Sultanpur on main Mehrauli Gurgaon Road, New Delhi, which is evident from page nos. 40 & 41 of the assessee’s paper book.

From the aforesaid facts, it is clear that the assessee furnished all the documents and evidences to prove his claim and the department could not bring any material on record to rebut the claim of the assessee. We, therefore, considering the totality of the facts as discussed hereinabove are of the view that the ld. CIT(A) rightly deleted the addition of Rs.40,00,000/- made by the AO.

ITA Nos. 369, 370 & 374/Del/2012 39 Suresh Jain “i. Sh. Suresh Jain Rs.3,07,672/- ii. Smt. Usha Jain Rs.2,08,170/- iii. Sh. Vineet Jain Rs.2,68,270/- 37. The aforesaid persons also deposed that similar cash was available with them as on 05.01.2006. The AO, however did not find merit in the submissions of the assessee by observing that the assessee had not furnished his personal balance sheet as on 05.01.2006 to prove that the above cash was available with him as on the said date. He, accordingly, made the addition of Rs.5,30,000/-.

ITA Nos. 369, 370 & 374/Del/2012 40 Suresh Jain much cash and the assessee furnished the affidavits of all the three persons wherein PAN No. was given, the contents of affidavits remained un-rebutted and un-refuted by the AO. Therefore, the sources stood explained and the cash found was owned by M/s Usha Jain and Sh. Vineet Jain who were assessed to Income Tax, then to treat the said cash as unexplained in the hands of the assessee was absolutely unjustified. The ld. CIT(A) also asked the remand report from the AO who had simply stated that the availability of Rs.7,84,612/- as on 31.03.2006 could not explain the availability of cash of Rs.5,30,000/- as on 05.01.2006. The assessee in his reply to the remand report submitted to the ld. CIT(A) as under: -The AO is factually incorrect in inferring that explanation of source of cash of Rs. 5,30,000/- is an after thought. -The AO has not stated even a single word against and in contradiction of sources as explained vide Para - 6 of submissions. He has also not rebutted the affidavits of 3 persons filed who claims to be owner of said cash. -The AO has got confused by the dates as 27.03.2006 and 31.03.2006. The claim of the assessee is that the cash in hand was available as on 27.03.2006 as well as on 31.03.2006. The statement of affairs as on 31.03.2006 of three

ITA Nos. 369, 370 & 374/Del/2012 41 Suresh Jain persons has been filed. There is no cash transaction between 27.03.2006 and 31.03.2006. Thus, the cash available on 27.03.2006 remains available on 31.03.2006, therefore, the statement has been so correctly given." 39. The ld. CIT(A) after considering the submissions of the assessee deleted the impugned addition by observing in para 6.4 of the impugned order as under: “6.4 I have carefully examined this issue. Total cash of Rs. 5,30,000/- was found from the rooms of various family members on 05.01.2006 during the course of CBI search. It was not seized. The assessee explained the said cash as belonging to 3 family members as per details given above which included his wife and son. All the 3 persons are assessed to income tax. All the 3 persons have given their affidavits explaining and admitting the said cash as belonging to them and have also given their PAN NOS. The sources of income of these persons have also been explained which shows that these persons has sufficient sources of incomes to have that much cash. The assessee also filed the balance sheets and the details of assets of these persons as on 31.03.2006 wherein total cash in hand available with these 3 persons as on 31.03.2006 is of Rs. 7,84,612/- as per details given above. It has also been submitted that there is no material cash outflow between 05.01.2006 till 31.03.2006 and Rs. 5,30,000/- found on 05.01.2006 is out of Rs. 7,84,612/- as are available as on 31.03.2006. The AO has not doubted the availability of cash with these 3 persons as on 31.03.2006 at Rs. 7,84,612/-.

ITA Nos. 369, 370 & 374/Del/2012 42 Suresh Jain AO has also not brought on record any material to show that cash outflow between 05.01.2006 to 31.03.2006 was so much which will not make possible to show the availability of Rs.5,30,000/- as on 05.01.2006, all the 3 persons have given the affidavits admitting the said amount as available with them as on 05.01.2006 and the said affidavits remains un- rebutted. In view of these facts, I am of the considered opinion that the cash of Rs. 5,30,000/- stands fully explained in the hands of assessee and Mrs. Usha Jain and Sh. Vineet Jain and so far as the assessee is concerned, no addition can be made on this ground. As a result of above discussion, the addition stands deleted and this ground stands allowed.” 40. Now the department is in appeal. The ld. CIT DR strongly supported the order of the AO and reiterated the observation made in the assessment order dated 24.12.2007.

ITA Nos. 369, 370 & 374/Del/2012 43 Suresh Jain members of the assessee on 05.01.2006 during the course of search by the CBI. The assessee explained that the said cash belonged to different family members, he furnished the affidavits of the said members alongwith the copies of the balance sheets as on 31.03.2006 of the three persons from whom the cash was found, three persons i.e. the assessee, his wife and his son were assessed to tax and having the sufficient source to explain the availability of cash found during the course of search. Wife of the assessee Smt. Usha Jain was having the rental income of Rs.4,80,000/- and claimed that cash of Rs.2,08,170/- as on 31.03.2006 belonged to her, Sh. Vineet Jain, the son of the assessee was also having a salary income of Rs.18,00,000/- per annum, he claimed that Rs.2,68,770/- belonged to him and the assessee also claimed through his affidavit that a sum of Rs.3,07,672/- was available with him as on 31.03.2006. They also claimed that there was no material cash outflow between 05.01.2006 to 31.03.2006. the AO had not doubted the availability of cash with these three persons as on 31.03.2006 at Rs.7,84,612/-. We, therefore, considering the totality of the facts, do not see any valid ground to interfere with the findings by the ld. CIT(A). In that view of the matter, we do not see any merit on this issue in this appeal of the department.

ITA Nos. 369, 370 & 374/Del/2012 44 Suresh Jain 43. In the result, appeals of the department are dismissed. (Order Pronounced in the Court on 28/04/2017)

Sd/- Sd/- (Beena Pillai) (N. K. Saini) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 28/04/2017 *Subodh* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5.DR: ITAT ASSISTANT REGISTRAR