ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, VAPI vs. RAJESHBHAI MAGANBHAI AHIR, SURAT

The captioned appeal has been filed by the Revenue against the order passed the Ld. Additional Commissioner of Income Tax, Central Circle-1, Vapi (hereinafter referred to as “ACIT”) vide order dated 30.10.2024 relevant to Assessment Year 2017-18.

Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld.CIT(A), who allowed the ground of appeal of the assessee.

During the course of appellate proceedings, the Ld. Counsel for the assessee submitted that the reassessment proceedings initiated under section 148 of the Act are invalid. It was contended that the reassessment was initiated merely on the basis that the name of the assessee appeared on certain loose papers found during the survey conducted in the case of M. Poonam Group, without any independent verification by the Assessing Officer. The assessee argued that mere suspicion cannot constitute “reason to believe” for reopening an (Assessment Year: 2017-18) - 4– assessment. It was further submitted that the Assessing Officer recorded incorrect facts while forming the reasons for reopening the assessment. According to the Assessing Officer, the assessee had purchased Flat No. E2/203 from M/s. Lotus Infra and had allegedly paid on-money of Rs.10,39,500/-. However, the assessee submitted that no sale deed was executed during the relevant year and that the assessee had only made advance payments through proper banking channels, with the first installment being paid on 04.04.2017. Therefore, it was argued that the reasons recorded for reopening were based on incorrect facts and assumptions, and consequently the reassessment proceedings initiated on such grounds are liable to be quashed.

The Ld. Departmental Representative (DR) submitted that the Ld. CIT(A) erred in deleting the additions made by the Assessing Officer. It was contended that the Ld. CIT(A) wrongly deleted the addition of Rs.10,39,500/- made by the Assessing Officer under section 69A of the Income Tax Act, 1961, in contravention of the provisions of section 292C of the Act, without appreciating the fact that the addition was based on incriminating details/documents recovered during the course of survey proceedings. The Ld. DR further submitted that the Ld. CIT(A) also erred in deleting the addition of Rs.1,68,09,490/- made under section 69A of the Act, ignoring the evidentiary value of the incriminating documents found during the survey proceedings. Similarly, it was argued that the Ld. CIT(A) was not justified in deleting the addition of Rs.49,59,944/- made by the Assessing Officer under section 69B of the Act, which was also based (Assessment Year: 2017-18) - 5– on incriminating material recovered during the survey. The Ld. DR further contended that the Ld. CIT(A) deleted the additions without properly considering the principle of “human probability test” or “preponderance of probabilities”, which is applicable in income tax proceedings.

The Ld.AR relied on the order of the Ld.CIT(A)

We have heard both the parties and perused the relevant material available on record. In the present case, a survey under section 133A of the Income Tax Act, 1961 was conducted on 21.02.2018 in the case of M/s. M. Poonam Developers, M/s. Lotus Infrastructure and M/s.M Poonam Construction at three premises, during which various documents alleged to be incriminating were found and impounded, and marked as Annexure BS-1 (pages 61, 62, 63 and 67). On the basis of these documents, the Assessing Officer observed that the assessee had purchased Flat No. E2/203 from M/s. Lotus Infrastructure, wherein the documented value was Rs.35,34,300/- at the rate of Rs.1,650 per sq. ft. for an area of 2079 sq. ft., whereas the actual consideration was alleged to be Rs.45,73,800/- at the rate of Rs.2,200 per sq. ft., thereby inferring that the assessee had paid on-money of Rs.10,39,500/- in cash, which remained unaccounted and was not disclosed in the return of income. However, on perusal of the impounded material contained in Annexure BS-1, it is observed that neither the amount of Rs.35,34,300/- nor Rs.45,73,800/- is reflected in the seized documents; only the rate of Rs.2,200 per sq. ft. appears therein. Further, the flat number mentioned in the seized material does not (Assessment Year: 2017-18) - 6– match the flat allegedly purchased by the assessee. During the course of hearing, the Ld. DR relied upon the provisions of section 292C of the Act, which provide for presumption as to the correctness of documents found during the course of survey proceedings. However, such presumption can be drawn only when there exists a clear nexus between the seized documents and the assessee. In the present case, no such nexus or logical connection has been established by the Assessing Officer, and even the basic details relied upon by the AO are not borne out from the seized material. Therefore, the presumption sought to be invoked by the AO is without any basis and cannot be sustained. In view of the above facts and circumstances, we find that the Ld. CIT(A) has rightly deleted the additions, and accordingly, the appeal filed by the Revenue is dismissed.

In the result, the appeal filed by the Revenue is dismissed.