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Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE
Before: SHRI RAMA KANTA PANDA & SHRI SATBEER SINGH GODARA
Pune’s DIN & Order no.ITBA/APL./S/250/2023-24/ 1057484205(1) and 1057483879(1), both dated 30.10.2023, in proceedings u/sec.143(3) r.w.s.147 of the Income Tax Act, 1961 [in short “the Act”]; assessment year-wise; respectively.
Heard both the parties at length. Case files perused.
2. We advert to the former assessment year 2010-11 herein involving assessee’s and Revenue’s cross-appeals ITA.Nos.1338 and 1432/PUN./2023; respectively. The assessee raises his first and foremost substantive ground challenging validity of the impugned reopening itself as not sustainable in law for the precise reason that the learned Assessing Officer had set into motion the said mechanism in absence of a valid approval;
3 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 or of for that, in absence of any approval whatsoever; coming from the prescribed authority at that point of time.
It is in this limited context that we proceed to examine the relevant facts in this former AY 2010-11. The assessee is admittedly assessed as an individual. He is stated to be proprietor of M/s. Megh Mayur Park Housing and also runs retail fuel outlet(s). The assessee had filed his return for AY 2010-11 on 28.03.2011 stating income of Rs.2,25,36,950/- which stood summarily processed u/sec.143(1) of the Act. The Assessing Officer thereafter took-up scrutiny and completed his sec.143(3) assessment on 06.03.2013 (pages 42 to 47 in the PB) adding short term capital gains of Rs.71,30,913/- thereby assessing taxable income in assessee’s case to the tune of Rs.2,96,67,863/-
We proceed further and note that the learned Assessing Officer thereafter formed reasons to believe that the assessee’s taxable income liable to be assessed had escaped assessment which represented cash deposits of Rs.54.50 lakhs as well as loans to the tune of Rs.3,46,92,700/- from M/s. Megh Mayur Realty Pvt. Ltd., There is hardly any dispute between the parties that all this culminated in the impugned twin additions made in 4 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 assessee’s hands in AO’s re-assessment dated 29.12.2017; which in turn; stand upheld in the CIT(A)’s order under challenge only qua the former item. This leaves both the parties aggrieved who have instituted their respective cross-appeals ITA.Nos.1338 & 1432/PUN./2023 (supra) for assessment year 2010-2011.
We now come to above legal issue of validity of the impugned reopening itself. A perusal of the case file indicates at page-18 that the learned Assessing Officer had issued sec.148 notice on 31.03.2017 at 7.53 PM whereas the prescribed authority i.e., the PCIT, Nashik, intimated/approved the same on the very date at 10.:06PM on the very date. This clinching fact has gone un-rebutted from the Revenue’s side. We wish to make it clear that the assessee has also enclosed the corresponding postal receipts as well as approval/intimation coming from the prescribed authority to this effect in the case file. It is thus an instance wherein the learned AO has initiated the impugned 148 / 147 proceedings against the assessee without getting sec.151 approval and therefore, the same is held to be not sustainable in law going by Mrs. Amina Rasool vs. ITO [2014] 161 TTJ 405 (Amritsar) deciding the very issue in assessee’s favour and against the department as under :
5 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 6 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 7 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 8 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023
We adopt the above detailed discussion mutatis mutandis to accept the assessee’s instant legal ground challenging validity of the impugned reopening in very terms. He accordingly succeeds in his appeal ITA.No.1338/PUN./2023 and Revenue’s cross-appeal ITA.1432/PUN./2023 is dismissed as a necessary corollary therefore.
Ordered accordingly.
We now deal with the assessee’s and Revenue’s cross- appeals ITA.No.1339 and 1433/PUN./2023 for the latter assessment year 2015-16. The former’s sole substantive grievance herein challenges correctness of both the learned lower authorities action making addition of Rs.9,55,65,676/- as representing the alleged “retracted disclosure” during the course of survey carried-out in his case on 26.12.2014. Learned CIT(A)’s detailed discussion affirming the same reads as under :
9 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 10 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 11 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 12 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 13 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 14 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 15 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 16 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 17 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 18 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 19 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023
Both the parties vehemently reiterate their respective stands during the course of hearing before us. Learned counsel more particularly argued that the impugned addition is not sustainable in law since not based on any supportive material found/seized during the course of survey.
Coming to the Revenue’s cross-appeal ITA.No.1433/ PUN./2023, the assessee has further drawn strong support from the CIT(A)’s lower appellate findings accepting his sec.54F deduction claim amounting to Rs.11,44,21,118/- disallowed in the course of assessment framed on 29.12.2017. Learned counsel’s case in otherwords is that the assessee is indeed entitled for claiming the foregoing deduction even qua on-money component as well which stands accepted by the CIT(A)as under :
20 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 21 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 22 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 23 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 24 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 25 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 26 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 27 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 28 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 29 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 30 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 31 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 32 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 33 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 34 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 35 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 36 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 37 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 38 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 39 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 40 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023
We make it clear before proceeding further that the Revenue’s cross-appeal ITA.No.1433/PUN./2023 herein raises it’s sole substantive ground that the Assessing Officer had rightly disallowed the assessee’s sec.54F deduction claim in the foregoing terms.
It is in this factual backdrop that we first of all deal with assessee’s appeal ITA.No.1339/PUN./2023. Both the parties are very much ad idem during the course of hearing that the learned lower authorities have made addition of Rs.9,55,65,676/- in assessee’s hands based on the relevant entries made in the seized material coupled with his post-survey sec.131 statement(s). Mr. Shah claims at the same time that the assessee’s multiple post-survey statement(s); be it u/s.131 or 133 of the Act, as the case may be, had declared varying sum(s) which stood duly honoured upto Rs.41,25,12,846/- since the dispute is only qua the impugned “retraction” sum of Rs.9,55,65,676/- herein. He has further filed the assessee’s written submissions as follows :-
41 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 42 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 43 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 44 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 45 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 46 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 47 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023
48 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 13. We find from a perusal of the assessment discussion that the Assessing Officer is more than fair in extracting all the said seized document(s) in support of the impugned addition(s).
First such seized document is page-85 containing cheque entry of Rs.487.92 lakhs followed by alleged cash figure of Rs.295.05 lakhs. Learned CIT-DR could hardly dispute that apart from the foregoing figures, there is no clarification at all regarding the alleged investment or payment or receipt by the assessee; whatsoever; which could lead us to a conclusion that the corresponding cash amount had been rightly added in his hands.
It is further noticed that although there is stated to be a cheque payment of Rs.487.92 lakhs; there is no endeavour undertaken by the learned departmental authorities to cross-verify the said cheque through the relevant books of account or bank statement(s) or from the investment(s) or from stock-in-trade of the immovable properties.
Faced with the situation, learned CIT-DR vehemently supports the CIT(A)’s above extracted lower appellate discussion that the assessee had got recorded his statement(s) before the departmental authorities thereby admitting additional income which stood retracted later on. We do not see any reason to 49 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 express our concurrence with the Revenue’s instant technical arguments once it has come on record that none of the seized material extracted in the assessment order itself; fails to throw light on any alleged additional income component and therefore, all these documents have to be treated as “dumb” ones only. We further observe that once such seized material does not itself lead to any conclusion about the undisclosed income component, we are of the considered view that sec.292C drawing a presumption based thereupon itself fails and therefore, no addition based on the same is sustainable in law. We quote hon’ble jurisdictional high court’s landmark decision in [2019] 108 taxmann.com 437 (Bom.) PCIT vs. Umesh Ishrani deciding the very issue in assessee’s favour as follows :
“1. This Appeal is filed by the revenue to challenge the judgment of Income Tax Appellate Tribunal. Following question is presented for our consideration;
"Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the addition on account of cash payment for purchase of shops by holding that the seized papers
50 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 were not found from the premises of the assessee and hence presumption u/s. 132(4A), u/s. 292C of the IT
Act, 1961 are not applicable, without appreciating that the seized papers were found during search in the premises of one of the partners Sri Laxmichand Rohira of the same firm for purchase of shops by the firm and in the said seized documents, amounts of cash paid by all the partners are noted and assessments made in the case of the said partner Shri Laxmichand Robira relating to his share of cash payment has become final, and therefore, that evidence is also relevant for assessment of other partners, including the assessee?"
The Respondent-Assessee is an individual. He was the partner of the firm. The Income Tax Department had carried
out search and seizure operation during which certain loose papers were collected. On the basis of loose papers additions were made in the hands of the individual partners and on protective basis on the hand of the firm. While deleting such addition in case of the present assessee the Tribunal noted that the documents nowhere show that any payments were 51 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 made by same persons, no enquiry or verification was made with the seller of the shops or the developer. Tribunal therefore concluded that entries of the loose papers were not corroborated with any other evidence on record.
3. It can thus be seen that the entire issue is based on appreciation of evidence on record. The Tribunal noted that the loose papers entries were not clear and not corroborated
by any independent evidence. No question of law therefore arises. Income Tax Appeal is dismissed.”
This is indeed coupled with the fact that the CBDT’s landmark circulars dated 10.03.2023 and 18-12-2014 have settled the issue that no such addition during a search or a survey; is to be made based on mere admissions and confessions wherein there is no supportive evidence(s) un-earthed by the departmental authorities. We conclude in these peculiar facts and circumstances that the impugned addition of Rs.9,55,65,676/- made by both the learned lower authorities on mere “dumb” documents and assessee’s alleged admission(s), in absence of any substantiation at all; deserves to be deleted.
52 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 Ordered accordingly. His appeal ITA.No.1339/PUN./2023 is accepted.
Next comes the Revenue’s cross-appeal ITA.No.1433/ PUN./2023 raising it’s sole substantive ground that the Assessing Officer had rightly disallowed the assessee’s sec.54F deduction claim of Rs.114421118/- representing on-money component; detected during survey. Suffice to say, the learned CIT(A)’s above extracted discussion from paragraphs-29 to 49 hereinabove has already placed reliance upon a catena of case law that such an on-money is indeed entitled for all the corresponding deduction claim(s); wherever applicable; under the provisions of the Act. Learned CIT-DR could also not dispute the clinching link between the assessee’s on-money vis-à-vis the capital asset sold/transferred herein followed by his sec.54F deduction claim qua re-investment of the consequential capital gains in a residential house property, which already stands accepted qua the declared amount. We thus see no reason to disturb the learned CIT(A)’s findings accepting the assessee’s impugned sec.54F deduction claim in question in light of various landmark judicial precedents herein (supra). Rejected accordingly.
53 ITA.Nos.1338, 1339 , 1432 & 1433/PUN./2023 17. This Revenue’s appeal ITA.No.1433/PUN./2023 fails in very terms.
To sum-up, both these assessee’s appeals ITA.Nos.1338 and 1339/PUN./2023 are allowed and Revenue’s cross-appeals ITA.Nos.1432 and 1433/PUN./2023 stand dismissed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 15.10.2024.