Income Tax Appellate Tribunal - Ahmedabad
Shri Narshibhai Somabhai Patel,, ... vs The Income Tax Officer, Ward-6(5),, ... on 20 December, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD "SMC/D" BENCH AHMEDABAD
BEFORE, SHRI S. S. GODARA, JUDICIAL MEMBER
AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
ITA Nos. 93 to 98/Ahd/2014
(Assessment Years: 2005-06 to 2010-11)
Sahyog Developers
18, Nildeep Society
Opp. Vishvakarma Temple,
Sabarmati, Ahmedabad Appellant
Vs.
Income-tax Officer,
Ward - 3(1), Ahmedabad Respondent
PAN: ABBFS7079P
&
ITA Nos. 1122 & 3343/Ahd/2014
(Assessment Years: 2007-08 & 2009-10)
Income tax Officer, Ward-3(1),
B-101, 1st Floor, Pratyakshkar Bhavan,
Panjrapole, Ambawadi, Ahmedabad -380015 Appellant
Vs.
Shri Shailesh Keshavlal Patel
228-B, M. K. House, Nr. Visat Petrol
Pump, Sabarmati, Ahmedabad Respondent
&
ITA No.394/Ahd/2015
(Assessment Year : 2008-09)
&
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -2-
CO Nos. 80, 81 & 10/Ahd/2015
(in ITA Nos. 627/Ahd/2014, 1122/Ahd/2015 & 10/Ahd/2015)
(Assessment Years: 2006-07, 2007-08 & 2009-10)
Shailesh Keshavlal Patel
18, Neeldeep Society, Opp.
Vishwakarma Mandir, Sabarmati,
Ahmedabad - 382424 Appellant
Vs.
The ITO, Ward-3(1),
101, B-Wing, First Floor, Pratyaksh
Kar Bhavan, Ambawadi, Ahmedabad Respondent
PAN: AHGPP0442G
&
ITA No.2455/Ahd/2014
WITH
CO No.281/Ahd/2014
(Assessment Year : 2007-08)
Dy. Commissioner of Income- tax,
Circle-12, Ahmedabad Appellant
Vs.
Shri Gordhanbhai B. Patel
Prop. of M/s. Unnati Indl. Corp.,
D-10, Suvas Avenue, Opp. Khetan Towers,
Shahibaug, Ahmedabad-380004 Respondent/Cross Objector
PAN: AGUPP9959P
&
ITA Nos. 1357 & 1358/Ahd/2015
(Assessment Years: 2007-08 & 2008-09)
Narshibhai Somabhai Patel,
4, Pragatlaxmi Society, Part-2, Ramji
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -3-
Mandir, Ranip, Ahmedabad -382480 Appellant
Vs.
The ITO, Ward-6(5),
A-501, 5th Floor, Pratyaksh Kar
Bhavan, Ambawadi, Ahmedabad Respondent
PAN: AASPP9933H
राज व क ओर से/By Revenue : Shri V. K. Singh, Sr. D.R.
आवेदक क ओर से/By Assessee : Shri Sunil Talati & Shri S. N.
Divatia, A.R.
सन
ु वाई क तार ख/Date of Hearing : 9 & 10.11.2017
घोषणा क तार ख/Date of
Pronouncement : 20.12.2017
ORDER
PER S. S. GODARA, JUDICIAL MEMBER
This batch of sixteen cases pertains to four different assessees namely M/s. Sahyog Developers (a partnership firm), S/Shri Shailesh Keshavlal Patel (partner), Gordhanbhai Patel and Narshibhai Somabhai Patel. Relevant proceedings in all these cases are u/s.147 r.w.s. 143(3) of the Income Tax Act, 1961; in short 'the Act'. The firm assessees' six appeals ITA Nos. 93 to 98/Ahd/2014 for assessment years 2005-06 to 2010-11 emanate from the CIT(A)-III, Ahmedabad's common order dated 30.10.2013 passed in case nos. CIT(A)-III/8 to 13/DCIT-CC-2(2)/13- 14; respectively. The assessee raises the following identical substantive grounds in all these six appeals as follows:
"1. The learned Commissioner of Income Tax (Appeals) has erred in confirming the Order u/s.147 r.w.s. 143(3) of the Income Tax Act and taxing the income of Rs.6,00,300/- in the hands of the appellant firm. It is submitted that complete details were filed by the appellant at the time of original assessment and there was no failure on the part of the assessee to furnish any details or Return of Income. Similarly no new information has been received by the Assessing Officer under which the reopening can be done. It is submitted that the reopening done u/s.147 and consequential ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -4- order passed is bad in law as the provisions of section 148 are not applicable. It is submitted that the reopening being bad in law, the assessment be set aside.
2. Without prejudice to the above, the learned CIT(A) has erred in confirming addition of Rs.6,00,300/- on the ground that 50% of the on money received by two groups in M/s. Sahyog Developers, namely; Shailesh K. Patel and Dhaval D. Prajapati, however, to protect the revenue 50% of the income belongs to the appellant firm. It is submitted that the very basis and presumption on which addition is made, even on protective basis is incorrect on facts and invalid on law and the same be held. Accordingly, the addition of Rs.6,00,300/- be deleted.
3. Without prejudice to the above, it is submitted that the learned CIT(A) ( has not appreciated the facts stated in his assessment order that substantive addition has been made in the hands of Shri Shailesh D. Prajapati for 50% also has been added and taxed in substantive manner in the hands of Shri Shailesh K. Patel with I.T.O. Ward-3(l), Ahmedabad. In view of these clear facts and income being clearly owned up by respective two individuals, there is no question of making any protective assessment and that too 50% of the On money received on protective basis in the hands of the appellant. It is submitted that the substantial addition made is true and correct both on facts and on law and the protective addition made in the hands of the appellant deserves to be outrightly deleted.
4. The learned CIT(A) has erred in confirming the addition on protective basis merely to protect the revenue in spite of the fact that there is not an iota of evidence that the appellant firm was directly or indirectly in receipt of any On money. In absence of any material or evidence on record, the addition made on protective basis is incorrect, invalid and illegal and the same be deleted."
The only difference noticed is that latter five assessment years involve on money addition amounts of Rs.23,52,385/-, Rs.20,73,520/-, Rs.2,43,300/-, Rs.25,14,025/- and Rs.20,350/-; respectively.
2. There are total six cases relating to the second assessee Shri Shailesh Keshavlal Patel in the instant batch in assessment year 2006-07 to 2009-10. His cross objection no.80/Ahd/2015 filed in Revenue's cross appeal no. 627/Ahd/2014 (dismissed for involving lower than prescribed tax effect of Rs.10lacs on 15.12.2015) arises against the CIT(A)-VI, Ahmedabad's order dated 28.01.2014 in case no. CIT(A)-VI/Wd.3(1)/150/12-13. Next assessment year 2007-08 involves Revenue's appeal ITA No.1122/Ahd/2014 arising against the very CIT(A)'s order ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -5- dated 18.02.2014 in case no. CIT(A)-VI/Wd.3(1)/151/12-13 reversing Assessing Officer's action making on money additions of Rs.23.63lacs qua sale of shops in Sahyog Plaja and Rs.46.57lacs paid alongwith Rs.9.60lacs received in purchase and sale of Lapkaman Project and Lapkaman land respectively. This follows assessee's cross objection thereto CO No. 81/Ahd/2015. Assessment year 2008-09 comprises of the assessee's appeal ITA No.394/Ahd/2015 directed against the CIT(A)-10, Ahmedabad's order dated 08.01.2015 passed in case no. CIT(A)-10/WD- 3(1)/43/14-15 involving the following substantive grounds:
"1.1 The order passed u/s.250 on 8-1-2015 for A.Y.2008-09 by CIT(A)-10 Abad, not only upholding the additions of Rs.l,15,20,000/-but making enhancement by RS. 9,60,000/- is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the explanations furnished and the evidence produced by the appellant.
1.3 The Ld. CIT(A) has grievously erred in upholding the impugned addition aggregating to Rs. 1,24,80,000/- without giving any opportunity to the appellant and thereby violating the principles of natural justice. The appellant was not allowed any opportunity of hearing by CIT(A) before confirming the addition of RS. 1,15,20,000/- or making enhancement by Rs.9,60,000/-.
2.1 The notice issued u/s. 148 on 6-3-2013 and the proceedings initiated u/s. 147 both were illegal, unlawful and without jurisdiction.
2.2 The Ld.CIT(A) has grievously erred in confirming that the notice u/s 148 and entire asstt. was not bad in law and illegal. The Ld CIT(A) has failed to appreciate that when the addition in respect of Sahyog Plaza was deleted, the addition in respect of Lapkaman land was illegal in view of absence of reasons recorded.
3.1 The Ld. CIT(A) has grievously erred in law and or on facts in upholding the addition of Rs.1,15,20,000 as "On Money" received in respect of Lapkaman Project towards the 20% share of the appellant.
3.2 That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have relied upon P. 3 of Ann-BS/8 as well as the statement of Shri Vijay Prajapati and thereby confirmed the addition of Rs.1,15,20,000 as "On Money" received in respect of Lapkaman Project towards the 20% share of the appellant.
3.3 The Ld. CIT(A) has grievously erred in relying upon seized papers- P.3 of Ann-BS/8 as well as statement of Shri Vijay Prajapati and thereby upholding that ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -6- "On Money" was received on sale of land at Lapkaman. The Ld CIT(A) ought not to have relied upon the alternative contention raised by the appellant during the appeal for A.Y. 2007-08 and thereby enhanced the addition by Rs. 9,60,000/-."
3. Last assessment year 2009-10 in the second assessee's case involves Revenue's appeal ITA No. 3343/Ahd/2014 and former's CO No.10/Ahd.2015 preferred against the CIT(A)-XX, Ahmedabad's order dated 22.09.2014 in case no. CIT(A)-VI/Wd.3(1)/250/13-14 reversing Assessing Officer's action making on money addition of Rs. 24.90lacs in respect of Sahyog Plaza commercial project. This assessee's all three cross objections CO Nos. 10, 80 & 81/Ahd/2015 for assessment years 2009-10, 2006-07 and 2007-08 respectively seek to challenge validity of reopening as confirmed in the corresponding lower appellate proceedings. Mr. Divatia is fair enough at the outset in pointing out that the assessee no more wishes to press for his above second cross objection CO No. 80/Ahd/2015 for assessment year 2006-07 as the Revenue's appeal ITA No.627/Ahd/2014 stands dismissed since involving low tax effect (supra).
4. The Revenue and third assessee Shri Gordhanbhai B Patel have instituted ITA No.2455 & CO No. 281/Ahd/2014 against the CIT(A)-XX, Ahmedabad's order dated 30.06.2014 in case no. CIT(A)-XX/255/13-14 inter alia reversing Assessing Officer's action making on money additions of Rs.23,28,500/- paid in cash for Lapkaman project and Rs.62,40,000/- received in cash for Lapkaman Lands; respectively after upholding validity of re-assessment forming subject matter of challenge in latter's cross objection hereinabove in assessment year 2007-
08.
5. Lastly come fourth assessee Shri Narshibhai Somabhai Patel's two appeals ITA Nos. 1357 & 1358/Ahd/2015 for assessment years. 2007-08 & 2008-09, arising against the CIT(A)-10, Ahmedabad's separate orders dated 23.03.2015 & 20.03.2015 in case nos. CIT (A) -10/WD-6(5)/561/2014-15 & CIT (A) -10/WD- 6(5)/558/2014-15 inter alia affirming Assessing Officer's identical action making ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -7- on money additions of Rs.11,65,250/- and Rs.19,55,750/- in respect of Lapkaman land after upholding validity of re-assessment proceedings.
This completes narration of the relevant pleadings in all these appeals.
6. We start with common basic facts in all these cases. The first assessee M/s. Sahyog Developers is a partnership firm. It came to be constituted on 20.02.2004 w.e.f. 01.04.2004 as per the relevant partnership deed before us. This firm comprised of two partners S/Shri Shailesh Keshavlal Patel (second assessee) and Dhaval Prajapati having 50% share each. The above firm's business was of sale purchase of land, development, sale on brokerage and construction. The department carried out the search in question in one Shri Govindbhai Mulchand Prajapati's premises on 08.12.2009. The said searched assessee happened to be latter partner Dhaval Prajapati's deceased father's brother. The said Prajapati i.e. Shri Govindbhai, Shailesh Dungarbhai Prajapati got recorded their statements admitting unaccounted expenses and on money receipts including the ones pertaining to the above firm assessee's shops sold in Sahyog Plaza complex. They declared undisclosed unaccounted income of Rs.2crores regarding Sahyog Plaza and Lapkaman. It is an undisputed fact that this Prajapati family was a co-investor in latter village project/lands as well. The department therefore made substantive addition to the extent of 50% of the above undisclosed income in "Prajapatis'"
hands which attained finality for want of any challenge whatsoever.
7. We proceed further to notice that the Assessing Officer thereafter formed reasons to believe that first two assessees' taxable income liable to be assessed had escaped assessment. He recorded corresponding reasons in firm's case on 06.03.2012 reading as under:
"During the course of search conducted at the premises of Shri Govindbhai Mulchand Prajapati on 08.12.2009, various documents were seized. As per BS-10 (a notebook), seized from the premises of Govindbhai Mulchand Prajapati at 228- B, M.K. House, Near Vishat Petrol Pump, Gandhinagar 'Highway, Sabarmati, Ahmedabad, details of receipts on account of sale of shops at 'Sahog Plaza', a commercial complex developed by 'Sahyog Developers' are recorded. Sahyog Developers is a partnership firm of Shri Shailesh K. Patel and Shri Dhaval D. Prajapati. Shri Shaval D. Praiapati belongs to the family of Shri Govindbhai Mulchand Prajapati being son of deceased brother.ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -8-
During the search assessment proceedings in the case of 'Shri Govindbhai Mulchand Prajapati and Family' the assessee was requested to explain the contents of the 'note book' (Annexure BS-10). Assessee in its reply vide letter dated 24.10.2011 has submitted explanation of the same. As per the explanation, submitted by Shri Govindbhai Mulchand Prajapati following receipts have not been accounted for in the books of 'Sahyog Plaza'. The assessment year wise details of unaccounted receipts o Sahyog Developers received an account of sale of shops at 'Sahyog Plaza' are as under.
A.Y. Unaccounted cash admitted by Unaccounted cash by
Govind M. Prajapati Group being 'Sahyog Developers'
50% partner in 'Sahyog developers' Total receipts
Receipts
2005-06 638,000 12,76,000
2006-07 25,88,472 51,76,944
2007-08 23,63,400 47,26,800
2008-09 322,500 645,000
2009-10 24,90,000 49,80,000
Total 84,02,372 168,04,744
Thus, it is clear that the assesses has not recorded cash sales of Rs. 12,76,000/- in it books of accounts for the A.Y 2005-06.
Further, as per BS-9 (a note book) seized from the premises of Shri Govindbha Mulchand Prajapati at 228-6, M.K. House, Near Vishat Petrol Pump, Gandhinaga Highway, Sabarmati, Ahmedabad, various details of expenses incurred towards 'Sanyo Plaza' have been recorded. As per submissions dated 24.10.2011 submitted by Govindbhai Mulchand Prajapati during the assessment proceedings following expense have not been accounted for in the books of 'Sahyog Developers':
A.Y. Expenditure
2005-06 75,394
2006-07 488,953
2007-08 665,935
2008-09 237,695
2009-10 133,830
2010-11 40,700
Total 16,42,507
In view of the above, I am satisfied that the income of the assessee on account of unaccounted receipts of Rs.12,76,000/- and unaccounted expenditure of Rs. 75,394/- for A.Y 2005-06 has escaped assessment.
As these facts have come to light only after the search which were otherwise not fully disclosed by assessee in its return of income. Thus, there is material failure on part of the assessee (Sahyog Developers) to disclose fully and truly the material facts in its return of income."ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] -9-
This followed Section 148 notice to the above firm assessee issued on 20.03.2012 for assessment year 2005-06. The Assessing Officer thereafter adopted the very reasoning for remaining assessment years 2006-07 to 2010-11 to initiate Section 148 proceedings in firm assessee's case.
8. It is evident from a combined perusal of the case records that the Assessing Officer recorded similar satisfaction of taxable income having escaped assessment in second assessee / partner's case as well in assessment years 2006-07 to 2009-10. The said first assessment year no more requires any mention as we have already dismissed assessee's CO No.80/Ahd/2015 as not pressed (supra). Next assessment year 2007-08 contains the Assessing Officer's following reopening reasons:
"....As per the information received from A.C.I.T. Central Circle - 2(2), Ahmedabad vide no. ACIT/DC-2(2)/Passing Info./2011-12 dtd. 13.03.2012, it is noticed that search action was carried out at the premises of Shri Govindbhai Mulchand Prajapati on 08.12.2009 and various docuements were seized. As per BS10(Note book) seized from premsies of Govindbhai M. Prajapati at 228-B, M. K. House, Nr. Visat Petrol Pump, Sabarmati, Ahmedabad, details of receipts on account of sale of shops at Sahyog Plaza a commerical complex developed by Sahyog Developers "were recorded". Sahyog Developers is a partnership firm in which Shri Shailesh K. Patel and Shri Dhaval D. Prajapati are partners. Shri Dhaval D. Prajapati belongs to family of ShrM3ovindbhai Mulchand Prajapati.
During the course of search assessment proceedings in the case of "Shri Govindbhai Mulchand Prajapati and family", a reply dtd. 24.10.2011 has been submitted in respect of aforesaid note book Annexure - BS10. As per the explanation submitted by Shri Govindbhai Mulchand Prajapati following receipts have not been accounted for in the books of "Sahyog Plaza", assessment wise details of unaccounted receipts of Sahyog Developers received on account of sale of shops at "Sahyog Plaza" are as under:-
A.Y. Unaccounted cash admitted by Unaccounted cash by "Sahyog Govind M. Prajapati Group Developers" Total receipts being 50% partner in "Sahyog developers" Receipts 2005-06 6,38,000/- 12,76,000/-
2006-07 25,88,472/- 51,76,944/-
2007-08 23,63,400/- 47,26,800/-
2008-09 3,22,500/- 6,45,000/-
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 10 -
2009-10 24,90,000/- 49,80,000/-
TOTAL 84,02,372/- 1,68,04,744/-
As per the copy of letter dtd. 24.10.2011 and 02.12.2011 (Annexure A & B) filed by Shri Shailesh D. Prajapati "Brother of Dhaval D. Prajapati" who has owned up the entire on-money receipts as his income. From the submission dtd. 24.10.2011, 50% on-money receipts constitute income of Shri Shaileh K. Patel being 50% partner in Sahyog Developers, since 50% of the on-money receipits have been owned by Shri Shailesh D. Prajapati on behalf of Shri Dhaval D. Prajapati and has been brought to tax in his hand. Thus, 50% on-money receipts amounting to Rs. 23,63,400/- requires to be assesed in the case of assessee.
In view of the above facts, I have reason to believe that the income of Rs. 23,63,400/- has escaped the assessment and hence notice u/s. 148 is issued..."
There is no dispute that latter assessment years 2008-09 and 2009-10 contain similar reopening reasons except the fact that the said former assessment year involved on money addition issue of Lapkaman lands as under:
"Further, as per the information received from the ACIT Cen. Cir 2(2), Ahmedabad vide letter No. ACIT/DC-2(2)/Passing lnfo./2011-12 dtd. 18.05.2012, in the case of Shri Govind Mulchand Prajapati. It is found that land was purchased by Shri Vijay Govindbhai Parajapati-Sabarmati, Ahmedabad, having 10% share, and other co-owners, including Shri Shailesh Keshavlal Patel- Sabarmati, Ahmedabad, having 20% Share in the land. The said land was sold. It was found that cash has also been received on sale of this land at village Lapkaman. On examination of the submission filed during the assessment proceedings it has been found that Shri Vijay G. Prajapati has received following amounts aggregating to Rs. 62.40 Lacks as cash consideration over and above documented price for the sale of the Lapkaman Land.
Annexure Page No. Date Noting in Seized Decoded Amount
Annexure
Annexure BS-8 20.3.2007 4800=00 4,80,000/-
page-2 03.05.2007 18500=00 18,50,000/-
15.10.2007 5000=00 5,00,000/-
08.12.2007 15000=00 15,00,000/-
28.12.2007 8000=00 8,00,000/-
20.01 .2007 210000=00 2,10,000/-
31.01.2007 6000=00 6,00,000/-
08.02.2008 3000=00 3,00,000/-
62,40,000/-
Shri Vijay G. Praqjapati has accepted to have received above amount in cash, during the course of assessment proceedings. As Shri Vijay G. Prajapati has only 10% share in the said land. Thus, total cash component received on sale of this ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 11 - land works out to Rs. 6,24,00,000/-. The remaining amount received in cash is required to be brought to tax in the hands of other owners of this land including Shri Shailesh Keshavlal Patel.
Shri Shailesh Keshavlal Patel, is 20% partner, therefore, out of total cash received of Rs.62400000/- the 20% share works out to Rs. 1,24,80,000/-. Out of total share of Rs 1,24,80,000/-, Rs.960000/- is received in F.Y, 2006-07 relevant to A.Y. 2007- 08 and balance of Rs.1,15,20,000/- is received in F.Y. 2007-08 relevant to A.Y. 2008-09.
In view of the above and on the basis of material available on record I am of the view and I have reason to believe that income chargeable to tax, of more than Rs. 1,18,42,500/- (Rs.3,22,500/-+Rs. 1,15,20,000/-) has escaped the assessment, for the year under consideration, due to failure of the assessee to disclose fully, and truly all material facts necessary for assessment. Therefore, I propose to reopen the assessment of the assessee for A.Y. 2008-09...."
9. The Assessing Officer thereafter took up consequential re-assessment proceedings in these two assessees' cases. The firm assessee inter alia pleaded that only the above Prajapati had handled all of its affairs so as to be assessed qua the relevant half share of the unaccounted income and expenditure, there was no question of assessing it qua the remaining half share as the same deserved to be taxed in its second partner's hands as per BS-2 and other incriminating evidence, it highlighted the fact that the said another partner was already facing Section 148 proceedings leaving no requirement to tax it once again. The Assessing Officer rejected the same in his assessment order dated 26.03.2013 to make protective addition in the firm's hands qua the remaining 50% shares in unaccounted income of Rs.6,38,000/- i.e. Rs.12.76lacs and Rs.75,394/- / 2 = Rs.37,694/-; respectively. All this followed similar protective additions being made in latter five assessment years 2006-07 to 2010-11 as narrated hereinabove.
10. This firm assessee preferred its separate appeals in all six assessment years. It raised an identical legal plea first of all that the above re-opening was not sustainable as it had filed all the relevant details in corresponding regular returns submitted during original assessments. The CIT(A)'s common order under challenge declines the same in page 3 para 5 after holding that the Assessing Officer had rightly initiated the impugned re-opening as per the relevant ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 12 - information collected during search in question indication suppression of sale amount as well as expenditure regarding shops sold in "Sahyog Plaza". He thereafter approves assessment findings on merits as follows:
"8. Appellant in its written submissions argued that ASST. YEAR 2005-06 "The first ground of appeal is with regard to reopening of the Assessment u/s. 147. As can be seen from the copy of reasons recorded the only ground for opening the completed assessment was that during the course of search assessment proceedings in the case of Shri Govindbhai Mulchand Prajapati, a Note book being 85-10 was found out. In its reply vide letter dated 24-10-2011 when the assessee was asked to explain the contents of the Note book it was stated by Shri Govindbhai M. Parajapati that the Note book contains the amount received on the sale of Building "Sahyog Plaza", which were not recorded in the books. The Assessing Officer has reopened the assessment on the ground that income not accounted in the books represents the unaccounted receipts and unexplained expenditure of the assessee firm of different years being different amount as noted in the diary. The Assessing Officer has blindly made the addition in all the assessment years considering the unaccounted receipts as undisclosed income by the appellant firm. The Assessing Officer has reproduced the detailed reply filed by the assessee after reproducing the reasons recorded on Page-2. Reproducing the detailed rep/)i up to Page-6, the Assessing Officer summarily in last Para-5 held that one of the partner Shri Shailesh D. Prajapati has accepted 50% of the unaccounted income in his Return of Income and he is so assessed. Balance 50% has been added by the Income Tax Officer, Ward-3(l) in the case of Shri Shailesh K. Patel, the other partner at 50%.
As such both the partners have accepted that On money was received by them and this is not the income of the firm M/s. Sahyog Developers. However, the Assessing Officer has made the addition on protective basis. It is submitted that there is no material or evidence to make such protective addition as there are no indications in the diary or papers seized that On money is received by the firm. None of the partners have stated that unaccounted income belongs to the firm. On the contrary the partners have accepted 50% income in their individual assessment. Therefore, in absence of any material or evidence whatsoever there is no basis or justification to make even protective addition in the hands of the Firm.
As one of the partner has accepted the income at 50% by disclosing in his Return of Income, being the tax and interest, accepting the order and not filing appeal, the protective addition made in the firm be deleted."
9. Since it was argued by the appellant that 50% of the unaccounted income has been claimed by Shri Shailesh K Patel, who is a partner of appellant firm, ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 13 - enquiries were made in this regard from ITO, Ward-3(Tj. 'He sent his report vide letter dtd. 30.09.2013 in which he stated that
2. "In this case, the assessments for A.Y. 205-06 to 2007-08, orders u/s. 143(3) r.w.s. 147 have been passed and additions in A.Y. 2005-06 2006-07 and 2007-08 of ks.6,38,000/-, Rs.25,88,472 and Rs.23,63,400/- respectively were made, considering it to be 50% of share received by the assessee Shri Shailesh K. Patel as "on money" from Sahyog Developers.
3. The assessee has filed appeal before the ld. CIT(A)-VI, Ahmedabad against the all the three assessment years.
4. The assessment for A.Y. 2008-09 and 2009-10 are re-opened by issue of notices u/s. 148, which are pending. In respect of A.Y. 2010-11, no information was received from the DCIT, CC-2(2), Ahmedabad and therefore, the assessment was not reopened."
10. A copy of report of ITO, Wd-3(1), Ahmedabad was also provided to the appellant and he was asked to make further submissions, if any. Appellant filed further submissions vide his letter dtd. 29/10/2013 in which it was stated that "This is in connection with the hearing fixed in the case of above mentioned assesses with regards to the comments submitted by the Ld. A.O. vide his Remand Report No. ITO/Wd.3(1)/Remand Report/2013-14 Dated 30/09/2013 for the A.Y. A.Y. 2005-06 to 2010-2011 submitted through Jt.CIT-Ahmedabad Range-3, Ahmedabad dated 04-10-2013.
On going through the contents of the same , we have found that the A.O. has stated and repeated the facts , which were already stated by the learned Assessing Officer in the order passed for making/reasoning the addition on protective basis for the Asst.year 2005-06 to 2010-2011 under appeal .
The learned Income-tax Officer, Ward 3(1), Ahmedabad of Shri Shailesh K.Patel (Partner of M/s Sahyog Developers ) clearly stated the following facts in his Remand Report, which is reproduced for sake of your honour's convenience as under:
a) In the Para 2, the learned A. O has stated that, the assessment for A. Y. 2005-06 to 2007-2008 , orders U/s 143(3) r.w.s. 147 have been passed and additions in A.Y. 2005-05, 2\006-07 and 2007-08 of Rs. 6,38,000/- , Rs. 25,88,472/- and Rs. 23,63,4001-respectively were made , considering it to be 50% of Share received by assessee Shri Shailesh K.Patel as "On Money" from Sahyog Developers.
b) In the Para 4 also he has confirmed the fact that, the Asst. for A. Y 2008-09 and A. Y. 2009-10 are re-opened. In respect of A.Y. 2010-
11 , he has stated that no informations was received from the DCIT,CC-2(2), Ahmedabad & therefore the assessment was not re- opened.
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 14 -In short, it is submitted that, the learned Assessing Officer of other Partner namely Shri Shailesh K.Patel have confirmed the fact regarding the taxing of balance share of 50 % in "On Money" from Sahyog Developers " for A. Y. 2005-06 to 2009-10 & for A. Y. 2010-2011 he has not received the information from the DCIT-CC- 2(2) , Ahmedabad , because of smallness of quantum of addition only to the extent of Rs. 20,350/- being remaining 50 % of Rs.
40,700/- even though the facts for re-opening for ot her Asst. years i.e for A.Y. 2005-06 to 2009-2010 are absolutely similar in nature.
As such both the partners have accepted that On money was received by them and this is not the income of the firm M/s. Sahyog Developers. However, the Assessing Officer has made the addition on protective basis. It is submitted that there is no material or evidence to make such protective addition as there are no indications in the diary or papers seized that On money is received by the firm. None of the partners have stated that unaccounted income belongs to the firm. On the contrary the partners have accepted 50% income in their individual assessment.
Therefore, in absence of any material or evidence whatsoever there is no basis or justification to make even protective addition in the hands of the Firm.
As one of the partner has accepted the income at 50% by disclosing in his Return of Income, being the tax and interest, accepting the order and not filing appeal & in other partner's case , the re-opening/addition have been already made, therefore there is no question of now making the protective addition in the firm & same may be deleted."
11. In view of report of ITO, Ward-3(l), Ahmedabad as mentioned above it is clear that receipt of on money has not been accepted by Shri Shailesh K Patel. AO has completed assessments in his case for A.Y. 2005-06, 2006-07 and 2007-08 making additions of various amounts in his hand but the same are disputed in appeal and Shri Shailesh K Patel has not paid any taxes in respect of his share of income. In such a situation, argument of the appellant that addition in the case of appellant firm is not justified because the income is owned by two individuals (partners of the firm) is factually incorrect.
12. The other argument of the appellant that there is no evidence with the department that the appellant firm was in receipt of on money is also factually incorrect. In view of reasons given in detail by AO in the assessment order, it is clear that appellant firm received unaccounted cash in respect of sale of shops at Sahyog Plaza, a commercial complex which was developed by the appellant firm. During the course of search note book was also seized, which records various expenses incurred in respect of Sahyog Plaza, which are not recorded in the books of appellant firm. Keeping in view all these facts, I hold that AO has rightly made additions in the case of appellant firm for all the years. Additions of Rs. 6,00,303/- for A.Y. 2005-06, Rs.23,43,995/- for A.Y. 2006-07, Rs.20,30,432/- for A.Y. 2007- 08, Rs.2,03,652/- for A.Y. 2008-09, Rs.24,23,085/- for A.Y. 2009-10 and Rs.20,350/- for A.Y. 2010-11 are confirmed. Grounds No.2,3&4 of the appeal are dismissed."
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 15 -This leaves the firm assessee aggrieved filing its six appeals ITA Nos. 93 to 98/Ahd/2014 relevant to assessment years 2005-06 to 2010-11 respectively proposing to challenge correctness of both the lower authorities' action taking recourse to Section 148 proceedings culminating it the above stated unaccounted income and expenditure additions (supra).
11. It is evident that the Assessing Officer framed substantive assessments in partner assessee Shri Shailesh Keshavlal Patel's cases in remaining assessment years 2007-08 to 2009-10 adding on money receipts of Rs.23.63lacs pertaining to Sahyog Plaza shops, Rs.46.57lacs and Rs.9.6lacs (latter two amounts paid and received) qua Lapkaman project and land respectively in said first assessment year. Assessment year 2008-09 involved Sahyog Plaza and Lapkaman land on money additions of Rs.3,22,500/- and Rs.1,15,20,000/- respectively. Last assessment year 2009-10 saw on money addition of Rs.24.90lacs in respect of Sahyog Plaza commercial projects only. The Assessing Officer placed a very strong reliance on "Prajapatis'" statements to make the above impugned additions in partner assessee's hands on substantive basis in all these assessment years.
12. This partner assessee preferred his appeals. He raised legal plea first of all challenging validity of reopenings in question in all these three assessment years. The CIT(A) followed his reasoning in assessment year 2006-07 rejecting similar arguments as under:
"3.4. In this case appellant had filed return of income on 07-04-2006 admitting share income from partnership firm M/s Sahayog Developers of Rs. 95,820/-. The return of income was processed u/s 143(1). Notice u/s 148 was issued on 29-03- 2012 and was served on 30-03-2012. The reasons recorded were provided to the appellant vide the letter dtd. 22-11-2012. Objections raised against the re-opening were disposed of by the A.O. vide his order dtd. 03-01-2013. Thus no assessment order u/s 143(3) had been parsed prior to the issue of notice u/s 148 and re- opening was done within 5 years from the end of the year under consideration. In the light of these facts this ground of appeal is being adjudicated in the succeeding paras.
3.5 The contentions of the ld. A.R. against the re-opening of the assessment are twofold, The first contention is that the re-opening was done on the basis of material found and the statements recorded during the course of search operation ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 16 - u/s 132 in the case of Govindbhai Prajapati Group on 08-12-2009 and therefore it was mandatory on the part of the A.O. to make the assessment u/s 153C [and not u/s 147]. As seen from the assessment order the re-opening was done on the basis of Annexure -BS-10 and page-10 of BS-2 seized during the search in the case of Govindbhai Mulchandbhai Prajapati Group on 08-12-2009 and the statements recorded from Shri Govindbhai Prajapati and Shri Shailesh Prajapati. The material seized during the course of search pertained to the 'On Money' receipts on the sale of shops by the firm M/s Sahayog Developers, of which the appellant was a partner. In other words no material belonging to the appellant was found during the course of search. The material seized was not in the handwriting of the appellant. Therefore, there was no basis on which A.O. could have proceeded under the provisions of Sec. 153A r.w.s. 153C. In this connection, it is seen that the Jurisdictional Gujarat High Court in the case of Vijaybhai N. Chandrani Vs. ACIT.(333 1TR 436) [2010] held as under:
" 14. Examining the facts of the present case in the-light of the aforesaid statutory schema, it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner. It may be that there is a reference to the petitioner in as much as his name is reflected in the list under the heading 'Samutkarsh members details' and certain details are given under different columns against the name of the petitioner along with other members, however, it is nobody's case that the said documents belong to the petitioner. It is not even the case of Revenue that the said three documents are in the handwriting of the petitioner, In the circumstances, when the condition precedent for issuance of notice is not fulfilled any action taken under s. 153C of the Act stands vitiated.
15. For the foregoing reasons, the petition succeeds and is accordingly allowed. The impugned notices did. 7th Oct., 2009 issued by the respondent under s. 153C of the Act are hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs. "
In the instant case also the documents seized in the other case did not belong to the appellant nor were they in his handwriting. Therefore in the light of the above decision the contention of the ld. A.R. that A.O. must have proceeded u/s 153C has to fail.
3.6 The second contention of the A.R. is that invoking the provisions of Sec. 147 was not in accordance with law. lie contended that the 'On Money' noticed during the search was received by M/s Sahyog Developers, which plotted the scheme of Sahyog Plaza; the material relied upon the A.O. was a note book marked as 'BS-10' and the statements of Sim Shailesh Prajapati and Shri Govindbhai Prajapati; even the said material did not show that the appellant had received any 'On Money' and therefore the material could not have constituted the basis to form belief. I have considered the contentions. As seen from the assessment order the firm M/s Sahyog Developers had 2 partners namely Shri Dhaval Prajapati and the appellant. The seized material in the other case denoted the receipt of 'On Money' by M/s Sahyog Developers. The other partner's brother accepted the receipt of 'On Money'. In the light of these facts A.O. certainly had reason to believe- that the appellant had received the balance 50% 'On Money'. It ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 17 - cannot be said that there was no live link between the material found during the course of search and statements recorded on the one hand and reasons recorded for re-opening on the other hand. Therefore I am of the view that the re-opening the assessment order was in conformity with law.
Accordingly, these grounds of appeal are dismissed."
13. The CIT(A) thereafter proceeded to deal with merits of the on money additions relating to Sahyog Plaza as well as Lapkaman. He accepted assessee's primary contention that the property in question had been transferred not in assessment year 2007-08 but on 24.01.2008 relevant in assessment year 2008-09. We reiterate that we are dealing with this partner assessee's cases for assessment years 2007-08 to 2009-10 only. The CIT(A) considered the fact that the Assessing Officer had neither supplied copy if the relevant incriminating evidence nor afforded "Prajapatis'" cross examination opportunity. He was thus of the opinion that the said Prajapati had never mentioned assessee's name at all qua the on money in question. The CIT(A) held that the relevant additions pertaining to Sahyog Plaza and Lapkaman lands could have been made only in assessment year 2008-09 as follows:
"5.10 I have considered the facts of the matter. Impugned additions of payment and receipt of 'On Money' were made relying primarily on the alleged acceptance of Shri Vijay Prajapati during his assessment proceedings. As accepted by the A.O in the remand report copy of the statement of Vijay Prajapati was not provided to the appellant during the assessment proceedings. Perusal of the Free English translation of the said statement [recorded in Gujarati on 08-12-2009] furnished by the A.R. shows that there was nothing incriminating the appellant. No opportunity of cross-examination was provided. In the letter dtd. 03-01-2013 enclosed to the remand report A.O. had disposed of the objections raised by the appellant against the re-opening. In the letter dtd. 11-01-2013 enclosed to the remand report appellant simply requested to accept the income returned in the original return of income . On perusal of the question no. 16 of the statement of Govind Prajapati it is seen that he stated to have received Rs. 23.28 lakhs towards his 10% share in Lapkaman land. However, there was no mention of the appellant having paid or received 'On Money' in connection with the land. As seen from the sale-deed of lapkaman land, the land was purchased on 17-07-2006 and was sold on 24-01-2008. Even presuming that on-money was received by the appellant, its assessability is to be considered in the succeeding A.Y. 2008-09 [and not in the year under consideration]. Copy of the seized material relied on by the A.O., i.e. Annexure BS-8 was not furnished to the appellant either during assessment or during appellate proceedings. Further, there is no basis as to how the sum of Rs. 9.6 lakhs was arrived at as pertaining to the year under consideration. Hence, ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 18 - impugned additions of Rs.46.57 lakhs & Rs. 9.6 lakhs are not sustainable. They are deleted. These grounds of appeal are allowed."
The Revenue's substantive ground in ITA No.1122/Ahd./2014 therefore seek to revive the said additions of Rs.23.63, Rs.46.57 & Rs.9.60 (all in lacs) whereas assessee's cross objection proposes to challenge validity of reopening in assessment year 2007-08 as well as 2009-10.
14. It further emerges that the CIT(A)'s order in assessment year 2008-09 in partner assessee's case placed strong reliance on his co-partner's search statement to affirm on money additions to the tune of 20% of Rs.6.2crores (total amount); coming to Rs.1,24,80,000/- pertaining to Lapkaman land. He then took note of his corresponding findings in assessment year 2007-08 denying taxation of on money of Rs.9.6lacs to make consequential enhancement in assessment year 2008-09 after concluding that the assessee in question is the same. The CIT(A)'s order of assessment year 2009-10 deletes on money addition pertaining to "Sahyog Plaza"
in partner assessee's hands after taking cue from his order in assessment year 2006- 07 onwards that this second assessee had not received any on money since it was the firm assessee who had developed the abovestated commercial project.
All the above re-assessments and CIT(A)'s orders in these two formers assessees' cases give rise to the corresponding twelve cases whose pleadings stand narrated in the beginning of our instant order.
15. Mr. Talati represents the above firm assessee. His first plea is a legal one quoting Section 153C(1) opening words as follows:
"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 documents seized or requisitioned 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 a having jurisdiction over such other person."ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 19 -
16. Learned counsel's plea therefore is that this firm assessee happens to be the third person and distinct assessee in relation to its partner Prajapatis for the purpose of on money issue. He submits that the Assessing Officer therefore has erred in law in initiating Section 148 instead of Section 153C proceedings. He emphasizes the point that the above search assessment procedure forms a complete code in itself excluding operation of the normal reopening provision enshrined u/s.147 r.w.s. 148 of the Act. Case law ACIT vs. Shamsundar Laxman Jagtap & Ors. ITA No. 1278, 1333 & 1334/Pune/2013 dated 21.08.2015 quoting hon'ble apex court's decision in Manish Maheshwari vs. ACIT [2007] 289 ITR 349 (SC) that lack of a proper satisfaction u/s.158 BD (pari materia to Section 153C now) renders the entire assessment invalid.
17. Mr. Talati's next argument is that both the lower authorities have gravely erred in making protective assessments in firm assessee's cases not sustainable in the eyes of law as held in G K Consultants Ltd. vs. ITO ITA No. 1502/Del/2013 decided on 27.06.2014, Ketan V Shah vs. ACIT ITA No.2321 & 2322/Mum/2013 decided on 26.06.2015 and CIT vs. Durgawati Singh 234 ITR 249 (Allahabad). He contends that an Assessing Officer can indeed frame a protective assessment but appellate authorities have to confirm additions on substantive basis only.
18. Mr. Talati's third vehement contention is that both the lower authorities have erred in taxing the firm assessee qua 50% of the Sahyog Plaza on money addition amount as the same ought to have been assessed in partner assessee Shri Shailesh Keshavlal Patel's hands only. He highlights the fact that the above Prajapatis already stands assessed qua 50% of the on money amount in all these assessment years. His case therefore is that assessment of the remaining 50% share in firm's hands would result in under assessment of on money amounts in case of Mr. Patel to the tune of 25% whereas the Prajapatis would end up paying taxes qua 75% of the amounts in question. He therefore seeks to delete all the impugned additions on merits as well.
ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 20 -19. Mr. Divatia represents all the remaining three assessees. He takes us to Assessing Officer's reopening reason in second assessee's case reproduced in preceding paragraphs. He states the same to be not sustainable as the right course herein was to initiate Section 153C proceedings and not u/s.148 process. He then submits that the above Prajapatis have nowhere alleged in their search statement that the partner assessee has received or paid any on money in both Sahyog Plaza or Lapkaman deals. Learned counsel clarifies that this second assessee's name nowhere figures either in search statement or in the alleged incriminating material seized during search. He thus contends that there is no tangible material as well which could form reasons to believe that any taxable income arising from the above on money payments has escaped assessment. Learned counsel alleges that both the lower authorities have made the impugned addition without allowing him to cross examine the above Prajapatis or furnishing relevant incriminating evidence. Learned counsel then quotes hon'ble jurisdictional high court's judgment in CIT vs. Mohamed Juned Dadani [2014] 355 ITR 172 (Guj) that once addition based on sole reopening reason pertaining to Sahyog Plaza is deleted, Lapkaman on money addition must also follow the suit as the entire re-assessment in such a case deserves to be quashed. Case law [2013] 356 ITR 493(Guj) Ratna Trayi Reality Services vs. ITO (on legality issue), IT(SS)A No.260/Ahd/2013 Anil Kumar G Darji vs. ACIT dated 31.05.2016 as affirmed in hon'ble jurisdictional high court's judgment dated 21.02.2017 in Tax Appeal No. 18 of 2017 confirming on money addition in a single co-owner's hands than in case of all such joint owners in corresponding proportion, ITO vs. Girish & Associates ITA No.1282/Mum/2010 dated 18.11.2009 on the issue of binding nature of a partner's general service statement, CIT vs. Umang H. Thakkar Tax Appeal No.1971/2009 dated 18.10.2011 dealing with on money addition issue; is strongly relied upon both for quashing re- assessment as well as for deleting the remaining Lapkaman on money addition on merits.
20. Learned Departmental Representative draws strong support from both the lower authorities' action initiating Section 148 proceedings qua both Sahyog Plaza ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 21 - as well as Lapkaman on money additions. He pleads that Prajapatis' statements during search admitting unaccounted payments/receipts in both Sahyog Plaza as well as Lapkaman formed sufficient material for the Assessing Officer to reopen these cases u/s.148 of the Act. Mr. Singh submits that both the above Prajapatis had carried business in firm's name. It is very much unlikely that the partner assessee did have no knowledge or concurrence qua the same. Mr. Singh vehemently contends that it is humanly not possible that only a single partner / a co-owner collects or pays on money qua the very parcel of commercial complex or land without knowledge of the remaining partners / co-sharers. He quotes case law Mrs. Malini Ramnath Rele vs. ITO [1994] 49 ITD (AHD)(TM) to submit that preponderance of probability in such a case goes against the assessee. Mr. Singh therefore urges us to confirm Assessing Officer's action reopening assessments u/s.148 of the Act culminating in on money additions in question pertaining to both Sahyog Plaza as well as Lapkman deals. He thereafter seeks to support Assessing Officer's action making the impugned additions wherever the same stands deleted in the course of lower appellate proceedings.
21. We have given our thoughtful consideration to all the above rival submissions. We first recapitulate with brief facts once again. It is an admitted fact that the firm assessee consists of two partners Dhaval Prajapati/Prajapatis and second assessee herein Shri Shailesh Keshavlal Patel. The said former partner undisputedly admitted on money payments/unaccounted receipt income in shops sold in Lapkaman deals and sale of Sahyog Plaza shops. There is hardly any quarrel that the firm assessee's partnership deed reveals both the said partners to be having half share each in its business receipts. The said other partner / Prajapatis stands assessed qua 50% of the on money amounts. He has not even filed any appeal against the same. The Assessing Officer therefore initiated Section 148 proceedings against the firm as well as Shri Patel. These two assessees therefore seek to shift the impugned assessments on each other as indicated in their respective arguments. Hon'ble apex court landmark judgment in ITO vs. Ch Atchaiah [1996] 218 ITR 239 (SC) holds that only the right person is to be taxed ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 22 - qua an income in question. We rely on the said judicial precedent as well as quote Section 184 of the Indian Partnership Act, 1932 to opine that an income in question is to be assessed only in a firm assessee's hands in case there exists the partnership deed instrument specifying its partners' respective shares. This firm assessee first of all fails to dispel application of the relevant provision in the Indian Partnership Act, 1932. Section 2(a) defines act of a firm to mean act or omission by any or all of its partners. Section 18 thereof envisages that a partner acts as agent of the firm for the purpose of its business. Section 23 of the said law makes it clear that a partner's admission or representation concerning a firm's affair is in the nature of evidence against the latter. We find the same to be squarely applicable herein as firm assessee's partner carried business in its name in developing Sahyog Plaza commercial complex. We further find that the twin conditions in Section 184 of the Act duly fulfilled in facts of the instant case. We have with us a copy of the above partnership deed specifying 50% share each of the above two partners. We thus hold that both the lower authorities have rightly assessed the firm assessee qua the impugned on money amounts pertaining to Sahyog Plaza shops in assessment years 2005-06 to 2010-11 in principle as made in the course of assessment and affirmed in lower appellate proceedings.
22. We now come to firm assessee's first argument that the impugned reassessment are not sustainable since hit by the non obstante clause in Section 153C (1) (supra) expressly excluding operation of Section 147/148 in case of a third person other than the searched assessee. Mr. Talati seeks to treat the firm assessee as a third person. We see no merit in the instant argument. Section 153C(1) of the Act before its amendment by the Finance Act 2015 w.e.f. 01.06.2015 provided for its application only if any money, bullion, jewellery or other valuable article or thing or books of accounts or documents seized or requisition belonged or belonged to a third person other than the searched assessee. Learned counsel fails to indicate any such material which can be stated to be belonging to the firm assessee so as to invoke Section 153C of the Act. We reiterate that the said provision is a special one in the nature of a complete code in ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 23 - itself which is applicable only in the specified circumstances. We therefore hold that once the said special provision's application is not attracted, the Assessing Officer herein had no other option but to set into motion the general provision u/s.148 of the Act after taking cognizance of Prajapatis' statements binding the firm assessee as per the relevant provisions in partnership law. We thus reject the firm assessee's first argument hereinabove.
23. We find no reason to concur with the firm assessees' second argument as well challenging correctness of the impugned protective assessments in light of the abovestated case law starting with G K Consultants (supra) dealing with an instance wherein no substantive assessment had been finalized. We repeat that this is not the case before us as the Assessing Officer had indeed framed corresponding substantive assessments in partner assessees' cases (supra) making the very on money additions. The said case law are accordingly distinguished. We accordingly hold that the impugned protective assessment would become substantive in case the Revenue looses its appeals in the above partners' cases hereinbelow.
24. Mr. Talati's third argument that both the lower authorities' action making the impugned addition in firm's hands reduces partner assessees' tax liability from 50% to 25% is also devoid of merits as the crucial test in such a case is to file the right assessee in whose hands such an income has to be assessed as per hon'ble apex court's above referred judgment in Ch Atchaiah's case (supra). We have already concluded that the said right person herein has to be the firm assessee only. We therefore decline Mr. Talati's instant last argument as well. The firm assessee looses in all of its six appeals ITA Nos. 93 to 98/Ahd/2014. Both the lower authorities' action making the impugned on money additions after initiating Section 148 proceedings stands upheld.
25. We now advert to Mr. Divatia's arguments. His first plea challenging correctness of Section 148 proceedings already stands adjudicated in firm assessee's cases in Revenue's favour. We further quote Section 4 of the above ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 24 - partnership law (supra) making it clear that a partnership is a relation between persons who have agreed to share profits of a business carried on by all or any of them acting for all. Learned counsel fails to dispute application of the said law in the instant facts. We thus observe that Prajapatis' search statement formed sufficient tangible material for the Assessing Officer to issue Section 148 notices in all these assessment years from 2007-08 to 2009-10. Case law of Ratna Trayi Reality (supra) holding pre-existence of tangible material before forming reasons to believe of escapement of taxable income from being assessed is distinguished accordingly.
26. Mr. Divatia's next argument inter alia alleging that both the lower authorities have not afforded him cross examination of the above Prajapatis is also without any merit. It is evident that the said Prajapatis' search statements had never claimed Shri Patel to have collected or paid any on money. It further transpires that the relevant incriminating material forms part of the paper book. It is therefore not a case wherein the assessee has not been supplied the relevant incriminating documents. It rather emerges that the said Prajapatis' statements in case of Gordhanbhai Patel hereinbelow clearly named this partner assessee to have received on money in question. The said statements dated 24.03.2014 forms part of the paper book in pages 124 to 132 in appeal ITA No.2455/Ahd/2014. We therefore observe that learned counsel's instant technical plea based on hon'ble apex court's judgment in Andaman Timber Industries vs. CCE, Kolkata Civil Appeal No. 4228/2006 decided on 02.09.2015 involving statements of third parties than partners/co-owners deserves to be distinguished. We therefore quote above provisions of partnership law once again to hold that these two partners carried firm's business, of sale of shops in Sahyog Plaza to utilize the same in Lapkaman deals. We thus reject assessee's instant arguments.
27. We now deal with learned counsel's next argument that there is no evidence whatsoever against this second partner assessee about having collected or paid any on money. We once again reiterate the above provisions of partnership law (supra) ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 25 - making it clear that action of one partner binds the firm as well as all other partners. It has come on record that Prajapatis and Shri Patel are partners from the very beginning. A logical inference that flows from the above narration of facts is that they are co-sharers in all deals relating to Sahyog Plaza and Lapkaman. It is therefore very much unlikely that only Prajapatis participated in all on monies without involving any or all of other co-sharers. There is hardly any dispute that the relevant parcels of commercial as well as Lapkaman deals involve more than one co-owners. The said properties admittedly are co-owned without any demarcation of share in metes and bounds. None of the co-owners particularly in Lapkaman deals is sure as to where his corresponding share would be allotted. We therefore are of the view that it is humanly impossible in such cases that a single co-owner only collects all or a portion of the on money in question running into huge sums. We refer to Prajapatis' search statements declaring Rs.2crores on money as unaccounted income. The on money amount has been proportionately spread over in all these assessees' cases. We accordingly quote reasonable preponderance of probability that the impugned on money has been proportionately received by all the co-owners to the extent of their respective shares. The assessee's instant argument is therefore rejected.
28. We now advert to the relevant case law. We have already narrated the relevant citations. We find that hon'ble jurisdictional high court's decision in Mohmed Juned Dadani case does not apply in facts of the instant case since the Assessing Officer therein had initiated Section 148 proceedings for "X" reason. He thereafter framed consequential re-assessment making "Y" addition. Hon'ble jurisdictional high court quashed reopening in such circumstances. We make it clear that the Assessing Officer had in fact made addition on X issue as well hearing forming the reopening reason. The said case law is therefore distinguished. We proceed further to notice that the co-ordinate bench order in Darji's case (supra) upholding on money addition in one of the co-owner's hands instead of all of them is also not applicable herein as the quantum of on money herein is the relevant issue instead of assessment thereof. We reiterate that we have invoked ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 26 - preponderance of probability in concluding that all the co-owners herein have received their respective shares in the on money in question. Next case law Girish & Associates (supra) involves a survey statement instead of the one made u/s.132(4) of the Act. The said decision is distinguished therefore. The assessee's reliance on Umang H Thakkar's case involving a third party's survey statement is also not found to be similar to the facts herein as we have quoted the relevant provisions in partnership law wherein an act or omission of a partner binds all or remaining partners in the course of business. We therefore hold that the above case law does not apply in peculiar facts before us.
29. We now come back to assessment year 2007-08 involving Revenue's appeal ITA No.1122/Ahd/2014. Its first substantive ground seeks to revive on money addition amount of Rs.23.63lacs qua 50% share of the instant partner assessessee in Sahyog Plaza. Suffice to say, we have already upheld the said addition in firm assessee's case after concluding that the same has to be made in the said partnership firm's hands u/s.184 of the Act. We therefore reject Revenue's instant substantive ground.
30. The Revenue's second substantive ground seeks to reverse the CIT(A)'s action deleting on money addition of Rs.46.57lacs pertaining to Lapkaman project. We rely upon our detailed discussion hereinabove to conclude that the said partner / co-owner's search statement (supra) as reiterated in Gordhanbhai Patel's case forms sufficient reason to infer that the impugned on money has been paid in the instant project deal. We therefore revive the impugned addition in this partner's hands in the impugned assessment year as the relevant deal was struck on 17.07.2006 in previous year relevant to the impugned assessment year. The Revenue's instant substantive ground is therefore accepted.
31. The Revenue's third substantive ground challenges correctness of the CIT(A)'s findings holding that addition of Rs.9.6lacs being receipt of on money in cash on sale of Lapkaman lands ought not to have been made since the relevant ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 27 - deal took place on 24.01.2008 i.e. in assessment year 2008-09 instead of 2007-08. Learned Departmental Representative fails to dispute this crucial fact. We therefore reject Revenue's instant substantive ground. Its appeal ITA No.2455/Ahd/2014 is therefore partly accepted. We decline this partner assessee's cross objections CO No.81 & 10/Ahd/2015 challenging validity of reopening in assessment years 2007-08 & 2009-10 respectively in view of our detailed discussion in preceding paragraphs.
32. Next assessment year 2008-09 involves assessee's appeal ITA No.394/Ahd/2015. Its only substantive ground on merits seeks to reverse both the lower authorities' action making on money addition of Rs.1,15,20,000/- pertaining to Lapkaman land based on the incriminating evidence in question. The same lead to decoding of the relevant on money amount of Rs.6,24,0000/- wherein the instant assessee's share was 20% coming to Rs.1,15,20,000/- as the remaining Rs.9.6lacs had been added in assessment year 2007-08. The CIT(A) therefore takes note of his order in said earlier assessment year to enhance the above addition to the tune of Rs.9.6lacs as he had held therein that this sum ought to have been added in the impugned assessment year since the relevant transaction took place on 24.01.2008. Learned counsel strongly argues that the lower appellate authority has erred in making the above enhancement. He however fails to dispute the CIT(A)'s jurisdiction to be co-terminus with that of the assessing authority. We observe in these facts that the CIT(A) has rightly taken note of his preceding assessment year's finding so as to add the sum in question in the impugned assessment year. We quote Section 153(6) of the Act to conclude that the CIT(A) has correctly enhanced the impugned assessment to the extent of the on money in question of Rs.9.6lacs. We have already discussed at length correctness of the impugned on money addition on merits as based on Prajapatis' search statements (supra). We reiterate the same herein to uphold both the lower authorities' action in adding on money amount of Rs.1,15,20,000/- in question pertaining to Lapkaman deals. The assessee's second substantive ground challenging validity of reopening already stands rejected in preceding paragraph. His third substantive ground is found to be ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 28 - a repetitive one challenging correctness of the impugned on money addition for Lapkaman lands which already stands adjudicated in Revenue's favour. This appeal ITA No.394/Ahd/2015 is rejected accordingly.
33. We come to assessment year 2009-10 now containing Revenue's appeal ITA No. 3343/Ahd/2014 seeking to revive Sahyog Plaza commercial project on money addition of Rs.24.90lacs made in partner assessees' hands during substantive assessment as deleted in lower appellate proceedings. We have already upheld the said addition in firm assessee's hands. We therefore see no reason to accept the Revenue's instant substantive ground. This appeal ITA No.3343/Ahd/2014 fails.
34. We now come to Revenue's appeal ITA No.2455 and assessee's cross objection CO No.281/Ahd/2014 in case of third assessee Shri Gordhanbhai B. Patel's case in assessment year 2007-08. The Revenue's first substantive ground pleads for reviving on money payment addition of Rs.23,28,500/- pertaining to Lapkaman project whose deal was struck on 17.07.2006. Its latter substantive ground pleads that the CIT(A) has erred in deleting on money addition of Rs.62.40lacs on account of the instant assessees' 10% share in the said Lapkaman land for the reason that the relevant transaction took place on 24.01.2008 i.e. in assessment year 2008-09. We have already declined similar substantive grounds in earlier assessee's case. We therefore adopt consistency herein to reject the Revenue's instant latter substantive ground.
35. We now stay back on Revenue's former substantive ground. There is no dispute that the Assessing Officer initiated Section 148 proceedings based on incriminating evidence as well as Prajapatis' search statements. We notice that this assessee pleaded in the course of assessment that the said Prajapatis were not allowed to be cross examined. The Assessing Officer produced the said deponents in the instant assessee's case on 24.03.2014 who once again admitted on money qua his share. Learned counsel therefore vehemently contends that such an extrapolation is not permissible so as to make the impugned on money addition in all co-owners' cases. We find no merit in the instant argument in view of our ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 29 - detailed discussion in preceding paragraph quoting preponderance of probability in such joint ownership cases wherein it is humanly impossible that only one co- purchaser or co-seller pays or collects on money qua 10% share only without participation of the remaining joint owners. We accordingly reiterate our said reasoning herein as well to accept Revenue's arguments seeking to revive the impugned on money addition of Rs.23,28,500/-. Its former substantive ground is accepted. Appeal ITA No.2455/Ahd/2014 partly succeeds.
36. The assessee's cross objection CO No. 281/Ahd/2014 seeking to quash the reopening in question raising similar arguments as in case of above partner assessee are found to be devoid of merits as Prajapatis/co-owners' search statements as well as the relevant documents having decoded figures (supra) pertaining to the on money in question formed sufficient tangible material for the Assessing Officer to set into motion Section 148 proceedings in question. We therefore adopt the very reasoning herein as well to decline this third assessee's cross objection CO No. 281/Ahd/2014.
37. We are now left with fourth assessee Shri Narshibhai S. Patel's two appeals ITA Nos. 1357 & 1358/Ahd/2015 for assessment years 2007-08 & 2008-09 arising against the CIT(A)-10, Ahmedabad's separate orders dated 23.03.2015 & 20.03.2015, upholding on money additions of Rs.11,65,250/- regarding purchase of Lapkaman land and Rs.19,55,750/- on sale thereof; respectively as based on Prajapatis' search statements. There is no dispute that the relevant purchase and sales transactions have taken place in the corresponding impugned assessment years only (supra). We therefore adopt our detailed discussion in preceding paragraphs in cases pertaining to second and third assessees in holding that both the lower authorities have rightly made the impugned additions based on Prajapatis' statements by invoking the relevant preponderance of probability as per all the surrounding circumstances. Learned counsel then pleads that the Assessing Officer nowhere furnished reopening reasons in both the impugned assessment years. The CIT(A) holds in his lower appellate order that there is no evidence on record indicating the assessee to have sought for the said reopening reasons. The very ITA No. 93/Ahd/14 & 15 ors. [Sahyog Developers & Ors.] - 30 - factual position continues herein as well. We therefore see no reason to accept assessee's instant latter substantive ground as well. His instant two appeals ITA Nos. 1357 & 1358/Ahd/2015 fail. Ordered accordingly.
38. We rely on our above detailed discussion to dismiss firm assessee's six appeals ITA Nos. 93 to 98/Ahd/2014. Revenue's appeal ITA No. 1122/Ahd/2014 in second assessee's case is partly accepted. Its latter appeal ITA No.3343/Ahd/2014 is dismissed. The very assessee's cross objection CO No.80/Ahd/2015 is dismissed as not pressed. His remaining two cross objection CO Nos. 81 & 10/Ahd/2015 as well as appeal ITA No.394/Ahd/2015 are dismissed. Revenue's appeal ITA No.2455/Ahd/2014 in third assessee's case is partly accepted whereas latter's cross objection CO No.281/Ahd/2014 is dismissed. Fourth assessee's two appeals ITA Nos. 1357 & 1358/Ahd/2015 are also dismissed.
[Pronounced in the open Court on this the 20th day of December, 2017.] Sd/- Sd/-
(PRADIP KUMAR KEDIA) (S. S. GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad: Dated 20/12/2017
True Copy
S.K.SINHA
आदे श क त ल
प अ े
षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं धत आयकर आयु!त / Concerned CIT
4. आयकर आय!
ु त- अपील / CIT (A)
5. )वभागीय ,-त-न ध, आयकर अपील य अ धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड3 फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील य अ धकरण, अहमदाबाद ।