Income Tax Appellate Tribunal - Indore
Pradeep Hirani, Bhopal vs Assistant Commissioner Of Income Tax ( ... on 11 February, 2021
अपील य अ धकरण, इ दौर यायपीठ, इ दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER IT(SS) A No.111/Ind/2016 (Assessment Year 2011-12) & ITA Nos.645 to 651/Ind/2017 & 679/Ind/2016 Assessment Years: 2006-07 to 2012-13 Pradeep Sharma, ACIT(Central)-2 S-4, Ramesh Tower, Bhopal 10 No. Stop,Arera Colony, Vs. Bhopal (Appellant) (Revenue ) PAN:ACWPS6402S IT(SS)A Nos.108 /Ind/2016 Assessment Year 2011-12 ITA No. 675 Ind/2016 Assessment Year 2012-13 & ITA Nos.227 & 228/Ind/2018 Assessment Years: 2011-12& 2012-13 Pradeep Hirani, ACIT(Central)-II E-3, 3/2 NupurKunj, Bhopal Arera Colony Vs. Bhopal (Appellant) (Revenue ) PAN:ABOPH8456N Appellant by Shri AshishGoyal & N.D. Patwa, ARs Respondent by Shri Lal Chand, CIT-DR Pradeep Sharma & Pradeep Hirani Date of Hearing: 12.01.2021 Date of Pronouncement: 11.02.2021 आदे श / O R D E R PER BENCH:
By way of the above captioned appeals by the assessee(s) Pradeep Sharma and Pradeep Hirani, quantum appeals relating to A.Y. 2011-12 and A.Y. 2012-13 are directed against the order of Ld. CIT(A) -3, Bhopal dated 18.03.2016 arising out of the order u/s.
153C rwst. section 143(3) of the Income Tax Act (hereinafter referred to as "the Act") for A.Y. 2011-12 and u/s. 143(3) of the Act for A.Y. 2012-13 of DCIT (Central), Bhopal dated 03.03.2014.
Further, in appeal nos. ITA 645 to 651/ Ind/ 2017, in the case of Pradeep Sharma for the A.Y. 2006-07 to 2012-13 is directed against the order of Ld. CIT(A)-3, Bhopal dated 11.09.2017 which is arising out of the penalty order u/s. 271(1)(c) of the Act framed by the Ld. ACIT (Central)-II, Bhopal on 27.09.2016. Further, in appeal nos.
ITA 227-228/ Ind/ 2018, in the case of Pradeep Hirani for the A.Y. 2011-12 and 2012-13 is directed against the order of Ld. CIT(A)-3, Bhopal dated 23.02.2018 which is arising out of the penalty order 2 Pradeep Sharma & Pradeep Hirani u/s. 271(1)(c) levied by the Ld. ACIT (Central)-II, Bhopal vide his order dated 27.09.2016.
2. Since common issues and almost identical facts are involved and as requested by both the parties it is decided to adjudicate the issues raised in these appeals by framing common order for the sake of convenience and brevity.
3. In respect of the quantum appeal, the assessees have raised following grounds of appeal:-
IT(SS)A 111/Ind/ 2016 - Pradeep Sharma,A.Y. 2011-12
1. That on the fats and in the circumstances of the case, the impugned order passed by the ld. AO is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the finding and conclusion of the ld. AO are also contrary to the material, opposed to the fact, equity and law.
2. That on the facts and in the circumstances of the case and on law as well the ld. AO has erred and was not justified in invoking the provisions of section 153C of the Income tax Act and thereby in making the assessment on the basis of presumption and assumption and without any corroborative material.
3. That the ld. AO has erred and was not justified in rejecting the claim of deduction u/s. 80IB(10) of the I.T. Act at Rs. 29,76,373/-. He has further erred to interpret the provision of section 80IB (10) and thereby disallowing the lawful, valid and legal claim which is fully supported by evidences. Hence the deduction u/s 80IB(10) be kindly allowed.3
Pradeep Sharma & Pradeep Hirani
4. That on the facts and in the circumstances of the case and in the law as well, the reason advance by the ld. AO for disallowing the claim made u/s 80IB(10) of the I.T. Act is neither justified nor sustainable in law. The so-called reasons are opposed to facts and law and based upon presumption and assumption. Therefore, the said so-called reasons be held as wrong and unsustainable of law.
5. That the ld. AO grievously erred and was not justified in holding that the appellant is not an undertaking for developing and building housing project, the ld. AO has further erred in holding that the appellant is a contractor and is not entitled for claiming diction u/s. 80IB(10). The so- called findings and conclusion is grossly arbitrary and erroneous. The same may kindly be held as bad and wrong.
6. That the ld. AO has erred and not justified in holding that the appellant has not furnished completion certificate issued by the Municipal Corporation. The appellant filed completion certificate duly signed by registered Architect with Municipal Corporation, Bhopal. Therefore the same should have been treated as valid and legal evidence.
7. That on the facts and in circumstances of the case and on law as well the ld. AO was not justified in not allowing proper and reasonable opportunity to the appellant for seeking the detailed objection in respect of measurement of the residential units. Therefore the order is illegal invalid and may be quashed.
8. That on the facts and in the circumstances of the case the ld. AO has erred and was not justified in not accepting the measurement of the residential unit as approved by the Municipal Corporation. The DVO taking the measurement and applying the same as taken by him is neither justify nor sustainable in law. Therefore the built-up area of constructed unit may please by accepted.
4 Pradeep Sharma & Pradeep Hirani
9. That the ld. AO has erred in not considering the submission and the decision quoted by the appellant judiciously. He further erred without pointing out any specific, legal and lawful and supporting provisions of the law in disbelieving the claim of the appellant.
10. That the ld AO has erred in making addition on addition on account of undisclosed on money payment at Rs. 20,00,000/-
11. That at any event, the ld. AO was not justified in not accepting the book results, deduction and prepaid taxes as claimed by the appellant.
12. The AO has erred and was not justified in levying penalty interest u/s. 234-B and further erred in initiating penalty proceeding u/s. 271(1)(c). That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing.
ITA 679/Ind/ 2016 - Pradeep Sharma,A.Y. 2012-13
1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the findings and conclusion of the ld. AO are also contrary to the material, opposed to the facts, equity and law.
2. That on the facts and in the circumstances of the case the ld. Lower authorities have erred and were not justified in invoking the provision of section 153C of the IT Act and thereby making the assessment in the hands of the appellant. The aforesaid action on the part of the ld. Lower authority are bad and visited in law.
3. That the ld. Lower authorities has erred in not considering the submission and the decisions quoted by the appellant judiciously.
4. That the ld. Lower authorities has erred in making addition on account of undisclosed on money payment at Rs. 1,12,27,401/-.
5. That the ld. Lower authorities has erred in making addition of Rs. 9,12,600/- on account of commission on sale of land. 5 Pradeep Sharma & Pradeep Hirani
6. That at any event, the ld. Lower authorities were not justified in not accepting the results and deduction as claimed in the return.
7. The lower authorities has erred and was not justified in levying penal interest u/s. 234-B and further erred in initiating penalty proceeding u/s 271(1)(c).
That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing. IT(SS)A 108/Ind/ 2016 - Pradeep Hirani.A.Y. 2011-12
1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the finding and conclusion of the ld. AO are also contrary to the material, opposed to the facts, equity and law.
2. That on the facts and in the circumstances of the case the ld. lower authorities have erred and were not justified in invoking the provision of section 148 and 153C of IT Act and thereby making the assessment and reassessment in the hands of the appellant. The aforesaid action on the part of the ld. lower authority are bad and visited in law.
3. That on the facts and in circumstances of the case the ld. Lower authority were not justified in not accepting the payment made by the appellant after receiving the cash from M/s AgrawalBuildcon. In the facts the appellant worked as an agent and therefore has not given any undisclosed amount to the seller of land.
4. That on the facts and in the circumstances of the case the addition made by the ld. Lower authorities of Rs. 20,00,00/- on account of undisclosed money is totally arbitrary and illegal. This addition may please by quashed.
6 Pradeep Sharma & Pradeep Hirani That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing. ITA 675/Ind/ 2016 - Pradeep Hirani A.Y. 2012-13
1. That on the facts and in the circumstances of the case, the impugned order passed by the ld. Lower authorities is contrary to law, materially incorrect and unsustainable in law as well as on facts. All the findings and conclusion of the ld. AO are also contrary to the material, opposed to the facts, equity and law.
2. That on the facts and in the circumstances of the case the ld. Lower authorities have erred and were not justified in invoking the provision of section 148 and 153C of the IT Act and thereby making the assessment in the hands of the appellant. The aforesaid action on the part of the ld. lower authority are bad and visited in law.
3. That on the facts and in the circumstances of the case the Ld. Lower authority were not justified in not accepting the payment made by the appellant after receiving the cash from M/s AgrawalBuildcon. In facts the appellant worked as an agent and therefore has not given any undisclosed amount to the seller of land.
4. That the ld. Lower authorities has erred in making addition of Rs. 1,12,27,401/- in the total income the appellant. The appellant has paid cash part to seller Smt. RekhaBai, Lala Ram and Devi Singh after receiving cash from M/s. AgrawalBuildcon. In facts the appellant worked as an agent and therefore has not given any undisclosed amount to the seller of land.
5. That in view of the matter, the addition made by the ld. Lower authorities of Rs. 1,12,27,401/- on account of undisclosed on money payment to the seller is totally arbitrary, illegal and visited in law. The same may please by quashed.
7Pradeep Sharma & Pradeep Hirani That the appellant craves leave to add, alter, and amend or to modify any ground(s) on or before the date of hearing.
4. First we take up IT(SS)A 111/ Ind/ 2016 for A.Y. 2011-12 in the case of Pradeep Sharma. Ground No. 1 and 2 relate to the common ground challenging the validity of the proceedings u/s. 153C r/w section 143(3).
5. The facts relating to this ground of appeal are a search and seizure action u/s. 132 of the Income-tax Act, 1961 was undertaken on 21.10.2011 and 22.10.2011 at the business premises of 250, Sagar Plaza, M.P. Nagar, Zone-II, Bhopal in the "Sagar Group". During the course of search and seizure, various documents were found and seized. After the search and seizure action, satisfaction u/s. 153C was recorded by ACIT (Central) on 11.09.2013. In the satisfaction, it was mentioned that the following books of accounts/ documents belonging to the assessee Pradeep Sharma were found and seized:
Page No Details 62 to 75 Map, Kahsra Form P-2, Photos, sales deed held between of LPS-3 Pankaj Makhija, Pradeep Sharma, Pradeep Kumar Hirani (seller) and SanjivAgrawal of Rs. 1,76,50,000/- regarding land situated at Gram: Katara, PatwariHalka No. 43/25 VikasKhand: Fanda Tehsil: HuzurZila: Bhopal 8 Pradeep Sharma & Pradeep Hirani Ld. ACIT (Central), Bhopal thereafter being satisfied that books of accounts/documents seized above "belong" to Pradeep Sharma, initiated action u/s. 153C.
6. Ld. Counsel for the assessee, challenging the assumption of jurisdiction u/s. 153C made the following submissions:
"GROUND NO. 1-2 - Validity U/s. 153C AO pg. 2 (Satisfaction and order) CIT(A) Gr. 1-2 - pg. 2.
Search : 20.10.2011 to 21.10.2011 at business premises of 'Sagar Group' at 250, Sagar Plaza, Zone-II, M.P. Nagar, Bhopal.
Satisfaction u/s. 153C : 11.09.2013. PB 17.
Document referred in satisfaction:
PB 96-107 : LPS-3, pg. 62-75 of Panchanama dated 22.10.2011. Khasra, Form P-2, Sale deed between sellers Rekha Bai, Lala Ram, Devi Singh through POA-
1. Shri. Pankaj Makhija
2. Pradeep Sharma
3. ShriPradeek Kumar Hirani And ShriSanjeevAgrawal partner of Agrawal Buildcon (as Buyer) For Rs. 1,76,50,000/- for sale of 1.495 hectares of Land at Katara, PatwariHalka No. 43/ 24 Vikar Khand: Fanda Tehsil Huzur, Zila Bhopal Notice u/s. 153C : 11.09.2013.
Return : 15.10.2013. (AO pg. 1-2) PB 18-19.
Notice u/s. 143(2) : 29.10.2013. PB 20.
Business of Assessee : Real Estate Trader and Builder.9
Pradeep Sharma & Pradeep Hirani FACTS The document, which is the basis of initiating proceedings u/s. 153C, as mentioned above, is a sale deed executed between Rekha Bai, Lala Ram and others through Power of Attorney Holders being Pankaj Makhija, Pradeep Sharma and Pradeep Hirani; and Sanjeev Agrawal for Agrawal Buildcon as the buyer. The sale consideration mentioned therein is Rs.
1,76,50,000 was paid by cheque.
In the satisfaction, there was no mention of any incriminating document. The very basis of the satisfaction is the Sale deed of Rs. 1,76,50,000. This would be clear from the satisfaction note at PB 17. This sale deed, of course mentioned the name of the assessee, but did not "belong" to the "assessee".
Relevant Provision Before, its amendment by Finance Act, 2015 w.e.f. 01.06.2015, the relevant section 153C(1) read as under:
"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 or books of account or document seized belongs or belong to a 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." [emphasis applied] Submissions:
The jurisdiction u/s. 153C is obtained only when any money, bullion, jewellery or other valuable article or thing or books of account or document is seized, that belongs or belong to a any third person (i.e. person not covered in the warrant of authorisation). Thus the satisfaction has to be:10
Pradeep Sharma & Pradeep Hirani a. Money, bullion, jewellery ........books of account or document is seized.
b. It "belongs" to a person other than person searched.
Presumption u/s. 292C: - Section 292C would also be relevant here. As per this section, where any document is found in the possession or control of any person in the course of a search it may be presumed that such document "belongs" to that person. It is similarly provided in section 292C(1)(i). In other words, whenever a document is found from a person who is being searched, the normal presumption is that the said document belongs to that person. It is for the AO to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. Section 292C has relevance where a search is conducted on a person.
It is submitted that in present case, search was conducted on Sanjeev Agrawal of Agrawal Buildcon. No search was conducted on the assessee. This sale deed (PB 96-107) was found during the search from the possession of Sanjeev Agrawal. Thus, u/s. 292C, the presumption is that the document "belongs" to Sanjeev Agrawal.
Subsequent amendment: - It is a trite law, that to understand the position of law existing prior to amendment, the subsequent amendment may be relevant. By the Finance Act, 2015 w.e.f. 01.06.2015, section 153C(1) was amended. This amendment is clearly applicable from 01.06.2015 and not applicable to the present case; but would serve in interpreting the earlier law.
The new section 153C(1) (as amended) reads as under: 11
Pradeep Sharma & Pradeep Hirani "Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, -
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A............".
Thus, after 2015, in respect of assets, the words "Belong" was used and in respect of documents, the words "pertains"/ "relates" were used. The position before this amendment, is thus made more clear, that prior to the amendment, the legislature only used the words "belong". Section 153C(1) grants jurisdiction and therefore a strict interpretation is required for same.
Even the CBDT Circular No. 19/ 2015 dated 27th Nov. 2015, which explained the amendment read as under:
"39. Assessment of income of a person other than the person in whose case search has been initiated or books of account, other documents or assets have been requisitioned.
39.1 Section 153C of the Income-tax Act relates to assessment of income of any person other than the person in whose case search has been conducted or requisition has been made. The provisions contained in sub-section (1) of the section 153C, before amendment made by the Act, provided that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153 of the Income-tax Act, 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 12 Pradeep Sharma & Pradeep Hirani requisitioned belong to any person, other than the person referred to in section 153A of the Income-tax Act, 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 and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A.
39.2 Disputes have arisen as to the interpretation of the words "belong 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, section 153C has been amended so as to provide that notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153 of the Income- tax Act, 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 of the Income-tax Act, 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 and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess income of such other person in accordance with the provisions of section 153A.
39.3 Applicability: This amendment has taken effect from the 1st day of June, 2015."13
Pradeep Sharma & Pradeep Hirani Thus, the intention and the date of applicability of the amendment is made clear from the above circular.
Meaning of the word "Belongs": - The word "belongs" is not defined in the Income-tax Act, 1961. While interpreting section 153C, the word "belong" has been interpreted by the Hon'ble Courts as under:
(i) Pepsico India Holdings P Ltd. VsAsst CIT (2015) 370 ITR 295 (Del.) Para 16, which is squarely applicable to the present case, reads as under:
"16. Thirdly, we would also like to make it clear that the assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the property although it obviously "relates to" or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to" the vendor just because his name is mentioned in the document....".
Further, para 14 and 15 would be relevant. In the present case, nothing is mentioned in the satisfaction that Sanjeev Agrawal disowned the sale deed.
SLP against the judgment was dismissed; reported at 252 Taxman372 (SC) - copy at PB 222/ II (Case Laws Book).
(ii) Canyon Financial Services Ltd. 399 ITR 202 (Del.) 14 Pradeep Sharma & Pradeep Hirani In this case, referring to section 153C with section 292C, it was held as under:
"13. In the first place, the satisfaction note of the AO of the searched person has to record that the document seized "belongs or belong to the person other than the person referred to in section 153A" of the Act. It was explained in Pepsico India Holdings (P.) Ltd. (supra) and reiterated in Pepsi Foods (P) Ltd. (supra) that, given the nature of a particular seized document, in the process of recording his satisfaction, the AO of the searched person may have to note the reasons for his conclusion that the said document does not belong to the searched person but to the other person. It is ont necessary that this should be done in each and every case. If, as in the present case, the AO of the 'other person' is not the AO also of the searched person, then the AO of the other person has an obligation to also examine if indeed any of the documents handed over to him by the AO of the searched person in fact belong to the Assessee and further if they constitute incriminating material justifying the reopening of the assessments of the assessee. This is then the second filter. However, as already mentioned, in each case the extent of satisfaction of the above requirement will depend upon the nature of the documents.
14. Turning to the case at hand, the first document referred to in the satisfaction note of the AO of the searched person is an application made by the assessee for subscription to the shares of DEPL. Being an application for subscription of equity shares, it is a document filled up by the Assessee and submitted to DEPL. The said application having being found in the possession of the searched 15 Pradeep Sharma & Pradeep Hirani person should safely be presumed to belong to the searched person by virtue of Section 132(4A) read with section 292C of the Act. DEPL, there is also presumption that it in fact belongs to DEPL. This is a rebuttable presumption. But rebuttable at the instance of the searched person.
15. The presumption operates in favour of the Department by relieving it of the burden of having to demonstrate that the aforementioned document belongs to the DEPL. But here the Department seeks to be relieved of the burden of demonstrating that the said document in fact does not belong to DEPL but to the assessee. That is not possible on a collective reading of section 132(4A) and section 292C of the Act. These provisions do not dilute the obligation on the Department and in particular the AO of the searched person, under section 153C(1) of the Act as it stood prior to 1st April 2015 of showing that the seized document belongs to the other person (here, the assessee) and not the searched person from whom it was seized.
16. The application submitted by the assessee for subscription of shares of DEPL can certainly be said to be "pertaining to" to the assessee. However, once it was submitted by the assessee to DEPL, and was found in possession of DEPL, it cannot be said to 'belong' to the assessee. If it has been recovered from the premises of assessee then the position may have been different. Based on the presumption u/s. 132(4A) read with section 292C of the Act, it may have been possible to proceed against the assessee under Section 153A of the Act, subject of course to the document constituting incriminating material. However, in the present case that is not the 16 Pradeep Sharma & Pradeep Hirani position. The jurisdictional requirement under section 153C (1) of the Act of the Department having to show that the application made by the assessee for equity shares of DEPL belongs to the assessee is not satisfied."
SLP against this judgment was dismissed. PB 232-233/ II (Case Laws Book).
(iii) Vijaybhai N. Chandrani 231 CTR 474 (Guj.): 333 ITR 436 (Guj.) Search and Seizure - Assessment under s. 153C - Scope - Condition precedent for issuing notice under s. 153C and assessing or reassessing income of such other person, is that the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned should belong to such person - Three loose papers found at the time of the search of one housing society did not belong to the petitioner - It may be that there is a reference to the petitioner and certain details are given under different columns against the name of petitioner along with other members - Notice issued under s. 153C is therefore quashed and set-aside.
(iv) Pr. CIT vs Vinita Chaurasia 394 ITR 758 (Del.): 154 DTR 145 (Del.) Search and Seizure - Assessment under s. 153C - Recording of satisfaction vis-a-vis document belonging to assessee - Search in the present case took place on 19th June 2009 i.e. prior to the amendment in s. 153C(1) w.e.f. 1st June 2015 - Therefore, it is not 17 Pradeep Sharma & Pradeep Hirani open to the Revenue to seek to point out that the document in question, 'pertains to' or 'relates to' the assessee. SLP against same was dismissed in SLP (C) Diary No. 27566 of 2018
(v) Pr. CIT vs Index Securities 304 CTR 67 (Del.): 157 DTR 20 (Del.) Search and Seizure - Assessment under s. 153C - Incriminating material belonging to the assessee - Essential jurisdictional requirement for assumption of jurisdiction under s. 153C (as it stood prior to its amendment w.e.f. 1st June 2015) qua the 'other person' (in this case the assessee) is that the seized documents forming the basis of the satisfaction note must not merely 'pertain' to the other person but must belong to the 'other person'.
(vi) Anil kumar Gopikishan Agrawal (2020) 186 DTR 273 (Guj.) Discussing the provision prior to 2015 and subsequently, an interesting issue arose whether if the search is conducted before 01.06.2015 but the satisfaction is recorded subsequent to 01.06.2015, whether the old law will apply or new. It was held that the old law will apply as the document which is relevant, is that found during the search. Subsequent document found in assessment of person searched or found in post search inquiries would not be relevant. Since the old law will apply, department cannot claim that the document "related to" or "pertained to" the assessee; and they have to establish that the document "belongs to" the assessee. In Anil Kumar's case, the harddisk was found which contained information relating to the assessee. It was held that the harddisk was not belonging to the assessee, hence the essential jurisdiction 18 Pradeep Sharma & Pradeep Hirani requirement u/s. 153C did not exist. It was only on 1st June 2015 when the amended provisions came into force that the AO of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the assessee. The present case, is much better on facts favouring the assessee as the search was conducted on 20.10.2011 and the satisfaction was recorded on 11.09.2013. Thus both were prior to 1st June 2015. The law prior to 1st June 2015 is applicable and the presumption u/s. 292C is not rebutted.
The registered sale deed was seized from Sanjeev Agrawal; infact, it belonged to him and was found from his possession, although the transaction mentioned therein may also 'pertain to' or 'relate to' the appellant. It is further pertinent that this sale deed was not incriminating as the transaction mentioned therein was accounted for. No jurisdiction u/s. 153C could have been assumed therefore. It is therefore prayed that the assessment u/s. 153C is bad-in-law.
Two satisfactions:
Earlier, the appellant was claiming that two satisfactions shall be recorded; i.e. in the case of the person searched, and in the case of the appellant. This contention was based on the judgment of Hon'ble M.P. High Court CIT vs Mechman 60 taxmann.com 484 (MP). But in the light of the latest judgment in Sper Malls P Ltd. (SC) [Placed at PB 210-221/ II (case laws book)]; the appellant is not pressing this issue.
The appellant prays that the jurisdiction u/s. 153C is bad in law."19
Pradeep Sharma & Pradeep Hirani
7. The ld. Counsel for the assessee, further submitted that the proceedings u/s. 153C are bad in law, as no material "belonging" to the assessee was found. The registry found might be "related to" or contained transaction "pertaining to" the assessee. Further, the registry contained the transaction at Rs. 1,76,50,000/- which was by banking channels and was accounted for; therefore it cannot be said that any incriminating material was found during the course of search and seizure.
8. On the other hand, Ld. CIT(DR) supported the proceedings u/s. 153C and contended that during the course of search, a sale deed was found wherein the name of the assessee was mentioned as attorney holder for the seller Smt. Rekha Bai, Lala Ram and Devi Singh. The sale deed therefore clearly belonged to the assessee who acted as a seller in the transaction. He further referred to the Assessment order and contended that the during the course of assessment, assessee objected to the proceedings u/s. 153C vide letter dated 30.10.2013. Ld. AO after considering all the facts had already rejected the objections of the assessee vide his order dated 20 Pradeep Sharma & Pradeep Hirani 14.11.2013. Further, he relied on the order of Ld. CIT(A) who has also held the proceedings u/s. 153C to be valid.
9. We have considered the facts of the case, material on record, arguments of both the parties and the case laws relied on. The facts of the case are that during the course of search at the premises of "Sagar Group", a sale deed was found marked as LPS-3 page no. 62 to 75. As per the sale deed, 1.495 hectare (3.69 acres) land was transferred by Smt. Rekha Bai, Shri Lalaram and Shri Devi Singh, through Power of Attorney holders Shri Pankaj Makhija, Pradeep Sharma and Pradeep Hirani to M/s. Agrawal Buildcon through Shri Sanjeev Agrawal, partner. The sale deed mentioned that the sale of the land is for Rs. 1,76,50,000. Now, the issue before us is whether this document i.e. the sale deed, which mentions the assessee as attorney holders of sellers; can be said to "belong to" the assessee.
10. Before going further, we may refer that Section 153C(1) of the Act prior to its amendment by Finance Act, 2015 read as under
(relevant portion):
"(1) 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 or books of account or document seized belongs or 21 Pradeep Sharma & Pradeep Hirani belong to a 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 personand that Assessing Officer shall proceed against each such other person and issue such other person notice and assess or reassess income of the other person in accordance with the provisions of section 153A"
Later on, after amendment by Finance Act, 2015 w.e.f. 01.06.2015, section 153C(1) read as under (relevant portion):
"(1) Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, where the Assessing Officer is satisfied that, -
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a 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 and that Assessing Officer shall proceed against each such other person and issue notice and assess or reassess the income of the other person in accordance with the provisions of section 153A, if, that Assessing Officer is satisfied that the books of account or documents or assets seized or requisitioned have a bearing on the determination of the total income of such other person for the relevant assessment year or years referred to in sub-section (1) of section 153A."
11. On bare perusal of the aforesaid sections it is clear that prior to the amendment, jurisdiction u/s. 153C could be exercised if the AO was satisfied 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 section 153A. It was only w.e.f. 01.06.2015 that 22 Pradeep Sharma & Pradeep Hirani section 153C(1) was amended to provide that jurisdiction would be available where the AO is satisfied that (a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned, belongs to; or (b) any books of account or documents, seized or requisitioned, pertains or pertain to, or any information contained therein, relates to, a person other than the person referred to in section 153A. Thus, the scope of section 153C(1) underwent a change w.e.f. 01.06.2015. Prior to that, the jurisdiction u/s. 153C was available only if the assets as well as documents "belongs or belong to" third person.
12. We would like to refer to the judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd. Vs Asst CIT (2015) 370 ITR 295 (Del.), where, para 16, read as under:
"16. Thirdly, we would also like to make it clear that the assessing officers should not confuse the expression "belongs to" with the expressions "relates to" or "refers to". A registered sale deed, for example, "belongs to" the purchaser of the property although it obviously "relates to"
or "refers to" the vendor. In this example if the purchasers premises are searched and the registered sale deed is seized, it cannot be said that it "belongs to" the vendor just because his name is mentioned in the document....".
23 Pradeep Sharma & Pradeep Hirani
13. It has also been brought to our notice by the learned counsel for the assessee that SLP against the aforesaid judgment has been dismissed which is reported at 252 Taxman372 (SC).
(1) Canyon Financial Services Ltd. 399 ITR 202 (Del.) In this case, referring to section 153C with section 292C, it was held as under:
"13. In the first place, the satisfaction note of the AO of the searched person has to record that the document seized "belongs or belong to the person other than the person referred to in section 153A" of the Act. It was explained in Pepsico India Holdings (P.) Ltd. (supra) and reiterated in Pepsi Foods (P) Ltd. (supra) that, given the nature of a particular seized document, in the process of recording his satisfaction, the AO of the searched person may have to note the reasons for his conclusion that the said document does not belong to the searched person but to the other person. It is ont necessary that this should be done in each and every case. If, as in the present case, the AO of the 'other person' is not the AO also of the searched person, then the AO of the other person has an obligation to also examine if indeed any of the documents handed over to him by the AO of the searched person in fact belong to the Assessee and further if they constitute incriminating material justifying the reopening of the assessments of the assessee. This is then the second filter. However, as already mentioned, in each case the extent of satisfaction of the above requirement will depend upon the nature of the documents.
(2) Anil kumar Gopikishan Agrawal (2020) 186 DTR 273 (Guj.) Discussing the provision prior to 2015 and subsequently, an interesting issue arose whether if the search is conducted before 01.06.2015 but the satisfaction is recorded subsequent to 01.06.2015, whether the old law will apply or new. It was held that the old law will apply as the document which is relevant, is that found during the search. Subsequent document found in assessment of person searched or found in post search inquiries would not be relevant. Since the old law will apply, department cannot claim that the document "related to" or "pertained to" the assessee; and they have to establish that the document "belongs to" the assessee. In 24 Pradeep Sharma & Pradeep Hirani Anil Kumar's case, the hard disk was found which contained information relating to the assessee. It was held that the hard disk was not belonging to the assessee, hence the essential jurisdiction requirement u/s. 153C did not exist. It was only on 1st June 2015 when the amended provisions came into force that the AO of the searched person could have formed the requisite belief that the books of account or documents seized or requisitioned pertain to or the information contained therein relates to the assessee.
14. In these given facts and circumstances of the present case the aforesaid judgment of Pepsico India Holdings P Ltd. Vs Asst CIT (2015) 370 ITR 295 (Del.) is squarely applicable. In the instant case, assessee was the attorney holder of the seller. The sale deed was found during the course of search at the premises of the buyer. The sale deed, at best can be said to "relate to" or "refer to" the assessee, but it cannot be said to "belong to" the seller or to the attorney holder. Before us Ld. CIT(DR) could not place any judgment in its favour against this judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd. Vs Asst CIT (2015) 370 ITR 295 (Del.). Respectfully following this judgment, we therefore hold that the proceedings u/s. 153C are bad in law and therefore the assessments so made deserves to be quashed. This ground of the assessee's appeal is allowed.
25 Pradeep Sharma & Pradeep Hirani
15. Since we have held that the assumption of jurisdiction by the Assessing Officer u/s 153C of the Act for framing assessment is not in accordance with law and have quashed the assessment orders on this legal ground itself, the other grounds on merit have become infructuous and merely academic in nature and thus we are not adjudicating the same.
16. Now we take up ITA 679/ Ind/ 2016 for A.Y. 2012-13 in the case of Pradeep Sharma.
17. Ground No. 1 to 3 deal with the validity of the assessment. Same were not pressed during the course of hearing. Same are being dismissed as not pressed.
18. Ground No. 4 relates to the addition on account of undisclosed on money payment at Rs. 1,12,27,401/-.
19. The facts relating to this ground of appeal are that a search and seizure action u/s. 132 of the Income-tax Act, 1961 was undertaken on 21.10.2011 and 22.10.2011 at the business premises of 250, Sagar Plaza, M.P. Nagar, Zone-II, Bhopal in the "Sagar Group". During the course of search and seizure, one document LPS-3 page no. 62 -75 was seized. This document was a 26 Pradeep Sharma & Pradeep Hirani sale deed for sale of 3.69 acres of agricultural land between Smt. Rekha Bai, Shri Lala Ram and Shri Devi Singh, as sellers through Attorney holders (1) Shri Pankaj Makhija; (2) Pradeep Sharma; and (3) Shri Pradeep Kumar Hirani; and the land was purchased by Shri Sanjeev Agrawal partner of M/s. Agrawal Buildcon. The land was sold for Rs. 1,76,50,000/-. In the post search inquiries, statement of Smt. Rekha Bai was recorded on 30.10.2011. In her statement, Smt. Rekha Bai stated that an agreement dated 27.11.2010 was entered into between Shri Lala Ram, Shri Devi Singh and Smt. Rekha Bai with Shri Laxmichand Hirani and Pradeep Sharma for sale of this 3.69 acres of land. As per this agreement, the consideration was Rs. 5,03,68,500/- whereby the payment was to be made as under:-
1) Rs. 10,00,000 was paid on date of agreement.
2) Rs. 40,00,000 was to be paid upto 10.12.2010.
3) Rs. 50,00,000 was to be paid uptoRs. 10.04.2011.
4) Rs. 4,03,68,500 was to be paid upto 10.08.2011. Further, if the approval from Town and Country Planning could not be done, the seller shall be liable to refund the amount to the buyer. Seller shall 27 Pradeep Sharma & Pradeep Hirani be required to sign documents, as required, so that the approval of Town and Country Planning may be obtained by the buyers.
20. During her statement, Smt. Rekha Bai further stated that the following amount was received and used as under:
Particular Devi Singh Rekha Bai Lalaram Total Amount Received (In Rs.
Amount received 54,39,595/- 54,39,595/- 64,20,808/- 1,72,99,998/-
by cheque against the sale of agriculture land situated at Gram Katara deposit in the bank accounts.
Amount received 1,03,20,000/- 33,99,500/- 19,00,500/- 1,56,20,000/-
in cash against
the sale of
agriculture land
situated at Gram
Katara deposit in
the bank
accounts.
Amount received 1,74,48,502/- 1,74,48,502/-
by cash against
the sale of
agriculture land
and used for the
purchase of
another
agricultural land,
not deposited in
the bank
account.
Total 5,03,68,500/-
28
Pradeep Sharma & Pradeep Hirani
21. Ld. AO stated in the Assessment order that the fact mentioned in her statement were further reconfirmed in the affidavit dated 18.12.2013. Ld. AO noticed that the date wise cash deposits in the bank account of the sellers are as under:
Name of the Bank account Amount deposit Date of deposit person by cash (In Rs.)
1.Shri Devi singh 3372101000100 8,00,000/- 29/11/2010 Canara Bank 27,00,000/- 10/12/2010 10,00,000/- 16/12/2010 15,00,000/- 31/03/2011 23,00,000/- 15/04/2011 1,70,000/- 18/04/2011 9,00,000/- 13/08/2011 9,50,000/- 01/09/2011
2.Shri Lalaram 3372101000731 9,50,000/- 13/08/2011 Canara Bank 9,50,000/- 01/09/2011
3.Smt. Rekha Bai 3372101000424 14,99,000/- 31/03/2011 Canara Bank 9,50,000/- 13/08/2011 9,50,000/- 01/09/2011 Total 1,56,19,000/-
22. Another pertinent fact is that, during assessment, the assessee in a letter filed on 16/12/2013 accepted that the actual consideration for purchase of the land was Rs. 5,03,68,500/-.
Assessee further contended that the land was in fact sold for Rs. 5,30,30,000/- to M/s. Agrawal Buildcon, against the consideration mentioned in the sale deed for Rs. 1,76,50,000. Assessee contended that assessee had only given Rs. 10,00,000/- to Smt. Rekhabai and 29 Pradeep Sharma & Pradeep Hirani others from own sources at the time of agreement on 27/11/2010 and balance was paid out of the amount received from M/s. Agrawal Buildcon. Further, assessee offered an amount of Rs. 26,61,500/- (Rs. 5,30,30,000 - Rs. 5,03,68,500) as income brokerage income from the transaction. Since the share of Pradeep Sharma in the land deal was 40%, he offered Rs. 10,52,600 as his income. Infact, later on statement on oath were recorded of Pradeep Sharma and Pradeep Hirani. Both of them in their statement dated 18.12.2011 accepted that the land was purchased for Rs. 5,03,68,500/- and sold for Rs. 5,30,30,000/- in a short span of time. The assessees' acted as brokers in the transaction and offered income of Rs. 26,31,500/- being Rs. 10,52,600 (each) as having 40% share. Further, they stated that the amount of on-money paid for purchase of land was paid only out of the cash received from M/s. Agrawal Buildcon.
23. Ld. AO concluded that, it is clear that the above land was purchased by Pradeep Sharma, Pradeep Hirani, and Shri Pankaj Makhija from Shri Lala Ram, Shri Devi Singh, and Smt. Rekha Bai as per agreement dated 27.11.2010 for a total consideration of Rs. 30 Pradeep Sharma & Pradeep Hirani 5,03,68,500/-. For this purchase of land, they have paid total on- money to the sellers of Rs. 3,30,68,502/-. Further, the same land was transferred to M/s. Agrawal Buildcon (through Partner Shri Sanjeev Agrawal) on 30.08.2011 for total consideration of Rs. 5,30,30,000/-. Ld. AO therefore assessed on-money, inter-alia of Rs. 2,80,68,502 in A.Y. 2012-13. Ld. AO added Rs. 1,12,27,401/- each in the hands of Pradeep Sharma and Pradeep Hirani being both 40% holders in the land deal.
24. Against this addition, the assessee filed appeal before the Ld. CIT(A) who considering the facts of the case, confirmed the addition.
25. Now the assessee is in appeal before the Tribunal.
26. Ld. Counsel for the assessee submitted that it is uncontroverted fact as seen from the Assessment Order that the land was purchased for Rs. 5,03,68,500/- and the same was sold for Rs. 5,30,30,000/-. The appellant acted only as broker in the transaction. He had not got sufficient funds for the purchase of land. He, alongwith other parties entered into an agreement for purchase of the land on 27.11.2010 and thereafter paid Rs. 10,00,000/- only out of own sources on that date. Later on, no 31 Pradeep Sharma & Pradeep Hirani payment was made to the sellers Smt. Rekhabai and others. It was only when the land was agreed to be transferred to M/s. Agrawal Buildcon, the payment was made after receiving the amount from M/s. Agrawal Buildcon. He thus argued that although on-money was paid, but he source of same was established. He contended that even the cheque payments were made in the month of August and Sept 2011 when the registry was done in the favour of M/s. Agrawal Buildcon. This, further establishes the nexus that only agreement was done on 27.11.2010 but the entire payment was made only in Aug. and Sept. 2011 after receiving the amount from M/s. Agrawal Buildcon. Ld. Counsel for the assessee submitted that the assessee had no intention to hold that land. No registry was done in the favour of the assessee. Land was not diverted by the assessee. The assessee is a builder, and had he intended to purchase the land by his own funds, he would have purchased the land, registered in his name, and developed it and earned substantially. But the same was not done, as the assessee intended to pocket immediately by getting involved in the land transaction. Ld. Counsel for the assessee submitted that the department could 32 Pradeep Sharma & Pradeep Hirani not establish by any evidence whatsoever that payment was made from any other income of the assessee. If the payment was not made out of the amount received from M/s. Agrawal Builders, then from where this money came. He also submitted that the Ld. A.O relied on the bank statements of Smt. Rekha Bai, Shri Devi Singh and Shri Lala Ram. Said bank statements were never confronted to the assessee. Copy of same were never supplied. He further referred to the agreement dated 27.11.2010 and contended that as per the agreement, land was to be diverted and approval of Town and Country Planning was to be obtained. However, the same was not done, and therefore no further payment was made after 27.11.2010. The land was sold on 30.08.2011 as an agricultural land only. He therefore contended that the "on-money payment" was only out of cash received from the sale of land to M/s. Agrawal Buildcon.
27. On the other hand, Ld. Counsel for the revenue heavily relied on the orders of the Ld. Lower authorities. He contended that during the post search inquiries, it was clearly established that the assessee made a payment of on-money for the purchase of land. Further the agreement dated 27.11.2010 was also on record to 33 Pradeep Sharma & Pradeep Hirani prove that the land was purchased for Rs. 5,03,68,500/-. The bank statements of the sellers also proved the date wise payments made by assessee. Also, the assessee himself has accepted to have paid on-money. No evidence was brought on record to prove that payment was made out of the money received from M/s. Agrawal Buildcon. He therefore prayed that the addition made by the Ld. AO be confirmed.
28. We have considered the rival submissions, order of the Ld. Lower authorities and evidence on recorded. At first we may mention that the sale consideration mentioned in the registry dated 30.08.2011 is Rs. 1,76,50,000/- but the assessee himself has accepted that the land was sold for Rs. 5,30,30,000/-. Thus, this fact is uncontroverted before us. Infact, Ld. AO himself accepted the difference income offered by the assessee at Rs. 26,61,500/- (Rs. 5,30,30,000 - Rs. 5,03,68,500). Ld. Counsel for the assessee submitted that the payment was made out of amount received from M/s. Agrawal Buildcon. However, this fact cannot be verified based on evidences on record, and cannot be accepted in toto. On the other hand, Ld. Counsel for the revenue has submitted that 34 Pradeep Sharma & Pradeep Hirani payment was made from other sources. However, this fact is also unsubstantiated as majority of the payment by the assessee to Smt. Rekha bai and others was made in Aug- Sept 2011, when the registry was done in the favour of M/s. Agrawal Buildcon. Further, the department could not support their case with any positive evidence to prove that the contention of the assessee is wrong. Thus, in these circumstances, we are left with only option to rely on the evidences on record. The agreement dated 27.11.2010 provides the details of date-wise consideration to be paid. Further, the bank account of the sellers are also important to find when the cash was deposited therein. Ld. Counsel for the assessee has submitted a chart at page 13 of his submissions:
Amount payable as per Amount deposited as per alleged A.Y agreement Bank statement By Rs.10,00,000 On Rs.8,00,000 2011-12 27.11.2010 27.11.2010 By Rs.40,00,000 On Rs.27,00,000 2011-12 10.12.2010 10.12.2010 On 16.12.2010 Rs.10,00,000 2011-12 By Rs.50,00,000 On Rs.29,99,000 2011-12 10.04.2011 31.03.2011 On 15- Rs.24,70,000 2012-13 18.04.2011 By Rs.4,03,00,000 In Aug Sept Rs.56,50,000 10.08.2011 2011 35 Pradeep Sharma & Pradeep Hirani In Aug Sept Rs.1,72,99,998 2012-13 2011 (Cheque portion) In Sept 2011 Statement that (used for balance amount purchase of used (Rs.173.50 land by lakhs Rekha Bai and others
29. This chart clearly establishes the nexus between the dates as per the agreement and the deposits made in the bank account of Smt. Rekha Bai and others. It can be seen that on 27.11.2010 an amount of Rs. 10,00,000 was paid as per the agreement, and an amount of Rs. 8,00,000 was deposited in the bank account of the sellers. Similarly, upto 10.12.2010, Rs. 40,00,000 was to be paid and Rs. 37,00,000 was deposited nearing to that date. Further, upto 10.04.2011 Rs. 50,00,000 was to be paid as per the agreement; and Rs. 29,99,000 was deposited on 31.03.2011 and Rs. 24,70,000 was deposited between 15 to 18 April 2011.
Similarly, upto 10.08.2011 Rs. 4,03,00,000 was to be paid; and between Aug. and Sept. 2011, all payments were done and sale deed was also registered in the favour of M/s. Agrawal Buildcon. 36 Pradeep Sharma & Pradeep Hirani Considering the entirety of the facts, so far as the payments made, the nexus between amount received from M/s. Agrawal Buildcon and payment to Smt. Rekha Bai and others can be established. Since it is proved that the consideration of Rs.4,03,00,000/- which included both the accounted and unaccounted consideration has been paid by M/s Agrawal Buildcon for the purchase of land in question from the sellers namely Smt. Rekha Bai and others, revenue authorities are free to carry out necessary exercise/ verification in the case of M/s Agrawal Buildcon with regard to the balance purchase consideration at Rs..4,03,00,000/-. However, so far as the cash deposits in the account of Smt. Rekha Bai and others in April 2011, to the tune of Rs. 24,70,000 no nexus can be established in respect to amount received from M/s. Agrawal Buildcon. Since there in no direct evidence as to when the amount was actually paid, considering the surrounding circumstances based on agreement and bank accounts of the sellers, we hold that during the current A.Y. 2012-13 the source of payment of Rs. 24,70,000 to Smt. Rekha Bai and others could not be established and therefore ought to be confirmed. Since the share of the 37 Pradeep Sharma & Pradeep Hirani assessee Pradeep Sharma was 40% in the land deal, an amount of Rs. 9,88,000 is to be confirmed in the hands of Pradeep Sharma for A.Y. 2012-13. Balance addition of Rs. 1,02,39,401 (Rs. 1,12,27,401
- Rs. 9,88,000) is hereby deleted.
30. In the result Ground no. 4 of the assessee is partly allowed against the total addition of Rs. 1,02,39,401/- and addition of Rs. 9,88,000/- stands confirmed.
31. Now we take up Ground No. 5 of assessee's appeal relating to addition of Rs. 9,12,600/- on account of commission on sale of land. Ld. Counsel for the assessee fairly conceded that the assessee had already offered the additional commission income, this ground was not pressed. We therefore dismiss this ground as not pressed.
32. Ground No. 6 is general in nature and therefore no separate adjudication for same is called for. Ground No. 7 relates to initiation of interest and penalty. Same is dismissed as consequential.
33. Now we take up IT(SS)A 679/ Ind/ 2016 for A.Y. 2011-12 in the case of Pradeep Hirani. There is a delay of 3 days in filing the appeal. In the application for Condonation it has been submitted that the delay occurred as the connected appeals of Pradeep 38 Pradeep Sharma & Pradeep Hirani Sharma were heard together by the Ld. CIT(A). The said order of Ld. CIT(A) was received in the case of assessee on 18.04.2016, whereas the order in the case of another assessee namely Pradeep Sharma was received on 24.04.2016. The Ld. Counsel who prepared both the appeals together, under this confusion, could not file the appeal within time. Further 18th and 19th June 2016 were Saturday and Sunday, thus effectively there was a delay of only 1 day. We have considered the reasons for delay, and looking to the reasonable cause the delay is hereby condoned.
34. The assessee in Ground No. 1 and 2 have challenged the validity of proceedings u/s. 153C of the Income-tax Act, 1961.
35. The issue of validity of assessment proceedings carried out u/s 153C r.w.s 143(3) of the Act already stands adjudicated by us in the case of Pradeep Sharma in IT(SS)A 111/ Ind/ 2016 in the preceding paras wherein we after observing that the facts of the instant case and the issues raised before us are squarely covered by the judgment of Hon'ble Delhi High Court in the case of Pepsico India Holdings P Ltd V/s ACIT (supra) and placing reliance on the same we have held the assessment proceedings u/s 153C r.w.s. 39 Pradeep Sharma & Pradeep Hirani 143(3) of the Act as void and bad in law and proceedings were quashed accordingly. Following the same view we hold that the assumption of jurisdiction in the present case of Shri Pradeep Hirani for Assessment Year 2011-12 is void. The assessment is hereby quashed and this ground of the assessee is allowed. Since the assessment itself is quashed, the addition in challenge before us for the assessee for Assessment Year 2011-12 stands deleted. All other grounds for this year become academic.
36. Now we take up ITA 675/ Ind/ 2016 relating to A.Y. 2012-13 in the case of Pradeep Hirani. Ground No. 1 and 2 relate to validity of assessment. The same were not pressed hence dismissed as not pressed.
37. Ground No. 3 to 5 relate to addition on account of on-money payment to Smt. RekhaBai, Lala Ram and Devi Singh for purchase of land. This issue is covered by our findings in the aforesaid paras in the case of Pradeep Sharma in ITA 679/ Ind/ 2016. Following the same we confirm the addition to Rs. 9,88,000 and delete the addition of Rs. 1,02,39,401/-. Thus grounds of the assessee are partly allowed.
40Pradeep Sharma & Pradeep Hirani
38. Now we take up the penalty appeals. Appeal Nos. ITA 645 to 651/ Ind/ 2017 are the penalty appeal u/s. 271(1)(c) in the case of Pradeep Sharma for the A.Y. 2006-07 to 2012-13.
Common Grounds of appeal;
1. The Ld. CIT(A) was not justified in sustaining the penalty order, which is bad in law, void ab initio, barred by limitation, illegal, contrary to the facts and circumstances of the case liable to be annulled.
2. The Ld. CIT(A) did not provide proper opportunity of being heard, and therefore the order passed by the Ld. CIT(A) deserves to be set-aside.
3. The Ld. CIT(A) erred in confirming the penalty of Rs.5,10,000/-, Rs.13,50,000/-, Rs.10,50,000/-, Rs.19,10,000/-, Rs.9,75,000/-, Rs.14,75,000/-, & Rs.37,60,000/- u/s 271(1)(c) for Assessment Years 2006-07 to 2012-13 respectively.
The appellant craves leave to add, amend or to modify any ground(s) of appeal.
39. During the course of hearing, Ld. Counsel for the assessee submitted that the penalty u/s. 271(1)(c) is not leviable. He submitted that the penalty is levied for following additions:-
A.Y. Appeal Basis of Penalty Penalty Quantum Appeal PB No. ITA Amount Status 2006- 645/ Disallowance of 5,10,000 CIT(A) confirmed - 07 IND/ deduction u/s. the disallowance.
2017 80IB(10)
2007- 646/ ----same ---- 13,50,000 Pending before PB 1-2
08 IND/ Hon'ble High
2017 Court.
2008- 647/ ----same ---- 10,50,000 -----same - ----- PB 3-4
09 IND/
41
Pradeep Sharma & Pradeep Hirani
2017
2009- 648/ ----same ---- 19,10,000 -----same - ----- PB 5-6
10 IND/
2017
2010- 649/ ----same ---- 9,75,000 CIT(A) confirmed -
11 IND/ the disallowance.
2017
2011- 650/ (1) ----same ---- 14,75,000 Pending before -
12 IND/ Rs. 28,76,373 your honours.
2017 (2) 'On-money' Bunched together
payment Rs. with present
20,00,000 appeals.
2012- 651/ (1) 'On-money' 37,60,000 ----do---- -
13 IND/ payment
2017 (2) Additional
Commission
income
40. In respect of penalty for disallowance u/s. 80IB(10) in A.Y. 2006-07 to 2010-11, Ld. Counsel for the appellant submitted that the disallowance u/s. 80IB(10) in the above cases, had been confirmed as the completion certificate was not been issued in time.
The appellant had completed the project and applied for completion certificate. However, since the same could not be issued in time, the disallowance u/s. 80IB(10) was confirmed. Ld. Counsel for the assessee relied on the judgment of Hon'ble M.P. High Court in the Pr. CIT vs Surabhi Homes P Ltd. (ITA 69 of 2016) and placed a copy of the same at paper book page 9-10. He further relied on the 42 Pradeep Sharma & Pradeep Hirani judgment of CIT vs Reliance Petro products Ltd. 230 CTR 320 (SC) to contend that merely for the reason that the deduction claimed by the assessee is not allowable, penalty cannot be levied u/s. 271(1)(c) as there is a deliberate act of concealment or furnishing of inaccurate particulars. Ld. Counsel for the Department on the other hand, relied on the penalty orders and contended that the penalty may be confirmed.
41. We have considered the rival submissions. We are fully in agreement with the Ld. Counsel for the assessee that penalty cannot be levied in the present case merely for disallowance of deduction u/s. 80IB(10). Revenue authorities have failed to bring to our notice that the assessee had furnished inadequate particulars or concealed the particulars of income since the deduction u/s 80IB(10) of the Act was denied merely not receiving the completion certificate within the due time. In the similar set of facts we observe that Hon'ble jurisdictional High Court in the case of Pr. CIT V/s Surabhi Homes P Ltd (supra) held that :-
"The fact is that the assessee claimed deduction under section 80IB(10) for the reason that the a project approval certificate was filed and the possession delivered. May be the technical formality of obtaining 43 Pradeep Sharma & Pradeep Hirani completion certificate was not satisfied, but it will not mean that the assessee has claimed incorrect or false deduction. Mere non-satisfaction of a condition of deductions will not mean that the assessee has furnished incorrect return, which will make it liable for penalty."
42. We respectfully following the above judgment which is squarely applicable on the facts and issues of the case before us hold that the penalty u/s. 271(1)(c) is liable to be deleted in the present case for the A.Y. 2006-07 to A.Y. 2010-11. The appeal of the assessee for A.Y. 2006-07 to A.Y. 2010-11 is hereby allowed.
43. In respect of penalty for A.Y. 2011-12, covered in appeal No. ITA 650/ Ind/ 2017, since we have already quashed the assessment u/s. 153C r/w section 143(3), the penalty order is also not sustainable and the same is hereby quashed.
44. In respect of penalty for A.Y. 2012-13 in ITA No. 651/ Ind/ 2017, Ld. Counsel for the assessee relied on his submissions as made in the quantum proceedings. Ld. Counsel for the revenue contended that the penalty may kindly be confirmed.
45. We have considered the rival contentions and the impugned penalty levied on the addition of Rs. 1,12,27,401/-. while dealing with the quantum addition we have sustained the addition of Rs. 44 Pradeep Sharma & Pradeep Hirani 9,88,000/-. Assessee was unable to show the source of investment made by him. In these circumstances we direct the revenue authorities to levy the penalty u/s 271(1)(c) of the Act only on the additions sustained by us at Rs.9,88,000/-. Accordingly ground raised for the penalty levied u/s 271(1)(c) of the Act for Assessment Year 2012-13 is partly allowed.
46. Now we take up the levy of penalty u/s. 271(1)(c) in ITA 227/ Ind/ 2018 and ITA 228/ Ind/ 2018 for A.Y. 2011-12 and A.Y. 2012- 13 respectively, in the case of Pradeep Hirani.
Common Grounds of appeal;
1. The Ld. CIT(A) was not justified in sustaining the penalty order, which is, void ab initio, invalid, unjustified, barred by limitation and therefore liable to be quashed.
2. The Ld. CIT(A) did not provide proper and meaningful opportunity of being heard to the appellant.
3. The Ld. CIT(A) erred in confirming the penalty of Rs.5,60,000/- and Rs.37,60,000/- u/s 271(1)(c) for Assessment Years 2011-12 & 2012-13 respectively.
The appellant craves leave to add, amend or to modify any ground(s) of appeal.
47. In respect of penalty for A.Y. 2011-12, covered in appeal No. ITA 227/ Ind/ 2018, since we have already quashed the assessment u/s. 45 Pradeep Sharma & Pradeep Hirani 153C r/w section 143(3), the penalty order is also not sustainable and the same is hereby quashed.
48. In respect of penalty for A.Y. 2012-13 (ITA 228/ Ind/ 2018) Ld. CIT(A) confirmed the levy of penalty on the addition of Rs.1,12,27,401/-. We have sustained this addition only to Rs.9,88,000/-. Since the penalty is linked to the addition made in the hands of the assessee the same needs to be sustained only to the extent of addition of Rs.9,88,000/- sustained by us. The appeal of the assessee is thus partly allowed.
49. In the result quantum appeals in respect of both the assessee(s) for Assessment Year 2011-12 are allowed and that of Assessment Year 2012-13 are partly allowed. Penalty appeals in case of Shri Pradeep Sharma for Assessment Year 2006-07 to 2011-12 are allowed and for Assessment Year 2012-13 is partly allowed. Penalty in the case of Shri Pradeep Hirani are allowed for Assessment Year 2011-12 and partly allowed for Assessment Year 2012-13.
Order was pronounced in the open court on 11.02.2021.
Sd/- Sd/-
(KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Indore; दनांक Dated : 11 February, 2021
/Dev
46
Pradeep Sharma & Pradeep Hirani
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file.
By order Assistant Registrar, Indore 47