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Income Tax Appellate Tribunal, “SMC” BENCH, AHMEDABAD
Before: MRS. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
O R D E R आदेश आदेश आदेश PER SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER: This appeal has been filed by the assessee against the order of the learned Commissioner of Income-tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as "CIT(A)" for short] dated 20.10.2023, passed under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as "the Act" for short], for the Assessment Year (AY) 2012-13.
The assessee has raised the following grounds of appeal:- “1.1 The order passed by U/s.250 passed on 20.10.2023 by CIT(A)-NFAC Delhi upholding the addition of Rs.28,72,000/- made by A.O. is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has failed to appreciate that the first payment by cheque was made on 03.02.2014 and the final purchase deed was executed in FY 2018-19. But no evidence pointed out by AO to prove that the alleged cash payment was made during the previous year relevant to A.Y. 2012-13.
Mahesh D. Tekchandani Vs. ITO AY : 2012-13
1.3 The observations made and conclusions reached by CIT(A) as per the impugned order are denied and unjustified both on facts & in law”
The brief facts of the case are that the assessee had filed his return of for AY 2012-13 on 04.01.2023 declaring total income of Rs. 3,63,300/-. Information was received by the AO that the assessee had made payment of Rs.88,95,000/- for purchase/booking of Tower B/401 in Iscon Platinum developed by J.P. Iscon Group. A search and seizure in the case of J.P. Iscon Group was carried out wherein incriminating documents/materials were seized in respect of 'On money' received from various customers of the projects developed by J.P. Iscon Pvt. Ltd. and its group concern. On verification of seized documents/materials, it was found that various persons have advanced/paid cash for booking/purchase of Unit during the F.Y. 2011-12 relevant to the A.Y. 2012-13 and the assessee is one of the persons who has advance paid cash for booking/purchase of Unit. The relevant extracts from the file titled "Platinum-final-booking Chart- 28.03.2015 (Version 1)" seized from the computer which is used by Ms. Kalindi S. Shah, Senior Marketing Manager of JP Group showing the transaction in respect of the assessee that the assessee has paid an amount of Rs.60,23,000/- by cheque and Rs.28,72,000/- in cash towards booking / purchase of unit. The AO was of the view that as per the details available from the seized material i.e. agreement of sale dated 03–12–2011, the name of the seller is JP Iscon Limited and the name of the purchaser is Mahesh Tekchandani and the names mentioned in the seized material tally with the sale agreement. The Assessing Officer was of the view that the assessee cannot accept only part details as coming from the agreement seized from the search carried out at the ISCON group. The Assessing Officer was of the view that from the material seized during the course of search carried out at ISCON group, there was definite evidence of payment of on-money, which Mahesh D. Tekchandani Vs. ITO AY : 2012-13 was found during the course of search, which is an important piece of evidence. Accordingly, the Assessing Officer added a sum of Rs.28,72,000/– as unexplained investments in the hands of the assessee/appellant.
In appeal, Ld. CIT(Appeals) confirmed the additions in the hands of the assessee with the following observations:-
“7. The appellant filed her submission on 17.10.2023 in respect of addition of Rs.28,72,000/- as unexplained investment made in the order u/s.143(3) r.w.s 147 the Act by the AO. Through his submission the appellant stated as under: "A search operation u/s 132 of the act conducted at the premises of J. P. Iscon Group on 25.02.2016. During the course of search, an excel sheet by the name of "platinum final booking chart 28.03.2015 (version-1)" on 18.03.2019 from Central Circle- 2(4), Ahmedabad. Learned AO has erred on the legal basis as the Appellant being other than the person referred to in the section 153A of the Act, notice u/s 153C of the Income Tax Act, 1961required to be issue but notice u/s 148 was issued hence the notice issued is without having proper jurisdiction and should be quashed. Appellant has filed his return of income u/s 148 of the income tax Act, 1961 declaring total income of Rs 3,63,300/- Later on the assessing officer also sent notices us 142(1) and called the necessary information which was duly complied with and necessary details were served timely." The appellant in his submission could not put forth any details or explanation to substantiate the denial of payment of cash component of Rs.28,72,000/- in the transaction for purchase of the flat in question. The appellant has just beaten round the bush about the payment made by cheque of Rs. 60,23,000/- but did not touch the issue on cash payment which has been substantiated by the cease materials found during the course of search and seizure operation u/s 132 conducted against the builder J. P. Iscon Group. The AO in his assessment order has lucidly marshaled the facts establishing the payment made by the appellant out of his undisclosed cash amounting to Rs. 28,72,000/- to the builder. The relevant portion of the assessment order is reproduced here as under: "Para 4 of the assessment order: In this case this office has received information from the ACIT, Central Circle2(4), Ahmedabad, Vide letter No. ACIT/CC-2(4)/Ahd./Passing
Mahesh D. Tekchandani Vs. ITO AY : 2012-13
Inf./2018-19/18 dated 15.02.2019, in respect of the captioned assessee. As informed by the ACIT, Central Circle-2(4), Ahmedabad, a search u/s. 132 was conducted on 25.02.2016 in the various premises of case of J. P. ISCON group and related assessee wherein, incriminating documents/materials, evidence were seized in respect of 'On Money' received from various customers of the projects developed by J. P. IsconPvt. Ltd. and its group concerns. It is further informed that, the digital data, which was seized during the course of search proceedings as "Platinum final Booking chart-28-03-15 (version-1) clearly established the Planned (1) cheque and planned (2) received as an unaccounted cash. Further, the AC1T, Central Circle-2(4), Ahmedabad has informed that, the following person(s) (the assessee) has advanced/paid cash for booking/purchase of Units.
Para 5 of the assessment order:
...On perusal of the submissions filed by the assessee as well as the details available with this office, it is observed that the Tower/unit No. & area mentioned in the seized material i.e. Tower B/401 exactly tallied with the Agreement of sale dated 03.12.2011. The seller Name 'JP ISCON LIMITED' and purchaser name Mahesh D. Tekchandani (Name & PAN are placed at Sr. No. 1 in purchaser's names) are mentioned in seized materials tallied with Agreement of sale. The payment of Rs. 88,95,000/-(60,23,000 by cheque & 28, 72000 by cash) paid up to 18.05.2011 (as mentioned in show cause notice) through cheque and cash is also mentioned in seized materials exactly tallied with the Agreement of sale as well as submission filed by the Assessee during the assessment proceedings. The name & mobile no. of Kaushal, who is one of the purchasers as mentioned in seized materials tallied with the name of purchasers as mentioned in Agreement of sale submitted by the assessee during the assessment proceedings. The name of buyer, seller, area & amount of consideration which was paid through cheque are found in the seized materials have been reflected in Agreement of sale dated 03.12.2011. The assessee cannot accept the part details and does not accept the details of cash payment towards the purchase of flat. The assessee has submitted in the reply during the assessment proceedings that no prudence would pay this much huge and large amount of cash for purchase of flat. The above contention of the assessee is also not tenable. Further, the evidence of 'on-money' was found during the course of search is important evidence."
On the basis of matrix of facts and evidentiary documents found during the course of search and seizure operations against the builder J.P. Iscon Group
Mahesh D. Tekchandani Vs. ITO AY : 2012-13 and duly considered in the assessment order, the addition of Rs. 28,72,000/- made by the AO is confirmed.
8. In the result, appeal of the appellant is 'Dismissed'.”
The assessee is in appeal before us against the order passed by Ld. CIT(A), confirming the additions made by the Assessing Officer. Before us, the Counsel for the assessee took a legal argument that additions have been made on the basis of certain documents found during the course of search carried out at the premises of a third-party (Iscon Group) and therefore, in these set of facts, the correct course of action should have been to initiate 153C proceedings, by confronting the material to the jurisdictional Assessing Officer of the assessee. However, in the instant facts, the Assessing Officer proceeded to initiate proceedings under Section 147 of the Act directly against the assessee which is not permissible in law. The Counsel for the assessee submitted that, as per the documents available on record with the assessee, the assessee is in a position to conclusively prove that property under dispute was not purchased by the assessee during the year under consideration, as evident from copy of documents regarding loan taken by the assessee from ICICI Bank for the purpose of purchase of the above stated property. Without prejudice, the Counsel for the assessee submitted that in this case, additions have been made on the basis of dumb documents found at the premises of a third party group (Iscon Group) and Assessing Officer has erred in facts and in law in initiating proceedings under Section 147 of the Act, whereas the correct course should have been to proceed in terms of section 153C of the Act, by first sending the materials on the basis of which additions were proposed to be made to the jurisdictional Assessing Officer of the assessee, and thereafter proceed in accordance with law.
Mahesh D. Tekchandani Vs. ITO AY : 2012-13
In response, DR, placed reliance on the observations made by the Assessing Officer and Ld. CIT(A) in their respective orders.
We have heard the rival contentions and perused the material on record. We shall first deal with the ground relating to jurisdiction of initiation of proceedings u/s 147 of the Act taken by the Ld. Counsel for the assessee. In the case of Sri Dinakara Suvarna, 143 taxmann.com 362 (Karnataka), the High Court held that where Assessing Officer, on basis of search conducted at premises of A, reopened assessment of assessee, since no proceedings were initiated against assessee under Section 153C and Assessing Officer did not record his satisfaction with regard to escapement of income, impugned reassessment proceeding was not sustainable. The SLP filed by the Department was dismissed by Hon'ble Supreme Court in DCIT v. Dinakara Suvarna 151 taxmann.com 489 (SC). In the case of G. Koteswara Rao 64 taxmann.com 159 (Visakhapatnam - Trib.), the ITAT held that in case of assessment made on assessee consequent to search in another case, Assessing Officer is bound to issue notice under Section 153C and thereafter proceed to assess income under Section 153A, and if Assessing Officer had proceeded with reassessment under section 147/148 and passed assessment order under section 143(3), same would be illegal, arbitrary and without any jurisdiction. In the case of Smt. Samanthapudi Lavanya 127 taxmann.com 188 (Visakhapatnam - Trib.), the ITAT held that where no fresh information was collected by Assessing Officer or no information had come to notice of Assessing Officer in normal course other than information collected during course of search from another person, all search assessments were required to be made in case of assessee under sections 153A or 153C, but not under Section 147. In the case of Rajat Saurabh Chatterji vs. ACIT (ITAT Delhi) in ITA 2430/Del/2015 dated 20.05.2016, the Tribunal observed that where the Assessing Officer detects
Mahesh D. Tekchandani Vs. ITO AY : 2012-13 incriminating material in search, he has to proceed only u/s 153C and not u/s 147. A notice u/s.148 to assess such undisclosed income is void ab initio. In the case of Shri Kalyan Buildmart Pvt. Ltd., Jaipur. & 153/JP/2018, ITAT held that the reopening under section 147/148 of the Act is not valid when the proper course of action was only to initiate the proceedings under section 153C/153A of the Act in case addition is sought to be made on the basis of material found during course of search at premises of a third party. In the case of Arun Kumar Kapoor 16 taxmann.com 373 (Amritsar), a search was conducted under section 132 in case of 'T' Ltd., and during course of which certain incriminating documents were allegedly seized. The Deputy Commissioner intimated Assessing Officer of assessee about seizure of certain documents pertaining to assessee during search and enclosed copy of those documents requesting him to take appropriate action under Section 153C of the Act issued notice u/s 148 of the Act. Thereupon, Assessing Officer having initiated reassessment proceedings under section 148, passed an assessment order. The assessee took an additional ground of appeal to the effect that reassessment proceedings initiated by Assessing Officer under section 148 were illegal and void ab initio. The Commissioner (Appeals) held that Assessing Officer should have issued notice under Section 153C and should have framed assessment under section 153C, read with section 153A. Ld. CIT(A) further held that since Assessing Officer had not followed procedure laid down under section 153C, notice issued under section 148 and reassessment proceedings became illegal and void ab initio. In appeal ITAT held that on facts, Commissioner (Appeals) was justified in setting aside reassessment proceedings. In the case of Radheshyam B. Agrawal 61 taxmann.com
50. (Pune - Trib.), the ITAT held that once an assessment has been framed under section 158BA in relation to undisclosed income for block period as a result
Mahesh D. Tekchandani Vs. ITO AY : 2012-13 of search, Assessing Officer cannot issue notice under Section 148 for reopening of such assessment; reopening of assessee's assessment was bad in law.
Accordingly, looking into the instant facts, the Ld. Assessing Officer proceeded to make additions in the hands of the assessee, on account of undisclosed investments on the basis of documents found during the course of search at third party premises. However, in our view, the correct course should have been to initiate proceedings under section 153C after handing over the relevant materials to the Ld. Assessing Officer of the assessee rather than directly initiating proceedings u/s 147 of the Act.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 29.05.2024 at Ahmedabad.