Q.Section 153C. What will happen when the revenue seized a documents, which is computer generated loose sheet and found during the search of third party who is neither assessee nor any authorized person of the assessee. The HIGH COURT OF DELHI in the case of PCIT vs. STC DEVELOPER PVT. LTD. Decided on Dec 15, 2021 on similar issue.
Answer
The facts in brief are that the assessee-company was carrying on the business of real estate developers and have constructed commercial projects for sale. It is a fact that assessee and Shri Kamal Kishore Chaurasia has entered into an agreement for sale of a commercial property for which the assessee has received amount of Rs.7,62,92,413/- through cheque. The addition has been made on the basis that other entry mentioned as PDC value in the seized document is payment received by the assessee other than cheque amounting to Rs.7,62,92,143/-. The amount payable by cheque recorded in the seized material bears complete resemblance to the cheque amount actually received by the Respondent and the particulars of the cheque numbers also match. She also states that the square footage of the shop between the seized document and the actual shop sold by the respondent also match.
The decision was in favour of the assessee on the following ground
1.The assessee has denied having received such amount. The assessee categorically mentioned that seized document contains some rough calculation and hence any transaction with the assessee has not been established.
2.On the above seized documents/ information the the name of purchaser was mentioned but the name of the assessee is not appearing.
3.The Assessing Officer has not made it clear as to what is the mode of receipt. There is no corroborative evidence was found to prove that this amount has been received by the assessee because seized document does not mention anything to show that this is a cash receipt from Mr. Kamal Kishore Chaurasia by the assessee.
4.So simply a mention of amount does not substantiate the addition made by the Assessing Officer.
5.Not only that Mr. Kamal Kishore Chaurasia during the assessment proceedings has denied of making any payments to the assessee other than what agreed upon as per the registered agreement and other dues for this transaction. An addition was made for the said amount in the hands of the Mr. Kamal Kishore Chaurasia as unexplained investment, which has been deleted by the Tribunal in his case.
6.No business linkages has been established.
7.It was stated to be the loose sheet with some jottings and cannot be established that this document belongs to the appellant.
8.Therefore the appellant cannot be presumed to have been received such amount, in the absence of any corroborative material/evidence or the cash transaction.
The complete decision is as under:-
PRINCIPAL COMMISSIONER OF INCOME TAX vs. STC DEVELOPER PVT. LTD.
HIGH COURT OF DELHI
MANMOHAN & NAVIN CHAWLA, JJ.
ITA 174/2021 & CM 45209/2021
Dec 15, 2021
Section 153C
Counsel appeared:
Vibhooti Malhotra, Adv. for the Petitioner.: Ved Jain, Richa, Advs. for the Respondent
MANMOHAN, J. (ORAL)
CM 45209/2021 (exemption)
Allowed, subject to all just exceptions.
ITA 174/2021
1. Present appeal has been filed challenging the order of the ITAT dated 28th February, 2020 passed in ITA 2738/DEL/2016.
2. Learned Counsel for the Appellant states that the ITAT has not recorded any independent reasoning to deviate from the findings recorded in the assessment order that the Respondent had failed to discharge its onus to prove the genuineness of the sale transaction with regard to the shop in the Cross River Mall.
3. Learned Counsel for the Appellant states that the impugned order is erroneous as it fails to appreciate that the seized material indicated that certain portion of the transaction was conducted ‘out of book’ as the total consideration recorded is at Rs.14,62,91,143/-. She further states that the amount payable by cheque recorded in the seized material bears complete resemblance to the cheque amount actually received by the Respondent and the particulars of the cheque numbers also match. She also states that the square footage of the shop between the seized document and the actual shop sold by the respondent also match.
4. Learned counsel for the Appellant further states that the ITAT has grossly erred in relying on the decision of this Court in the case of Pr. CIT (Central -2) v. Vinita Chaurasia ITA 1104/2015 without appreciating the distinction on facts. She emphasis that this Court in Vinita Chaurasia (supra) had deleted the additions on account of Revenue’s failure to satisfy the jurisdictional benchmark of ‘belong to’ under Section 153C of the Act. However, she states that the Tribunal failed to appreciate that in the present case, the assessing officer having jurisdiction over the respondent had duly recorded his satisfaction that the seized material belonged to the respondent.
5. Having heard learned counsel for the appellant, this Court finds that the name of the assessee nowhere appears in the computer generated loose sheets found from the residence of Mr.Lalit Modi, the alleged broker.
6. ITAT in its impugned order has concluded that there was no corroborative evidence or statement to prove that the payment had been received by the assessee other than cheque amount as entered in the sale agreement. The Tribunal had observed that on the bare perusal of the seized document it cannot be inferred or concluded that seized document belongs to or has any nexus with the assessee.
7. In our opinion, the Tribunal/ITAT has given cogent reasons for arriving at its decision.
8. This Court also finds that in the case of Vinita Chaurasia (supra), who had purchased a number of properties from the assessee, this Court had dismissed a similar appeal filed by the Revenue being ITA No.1104/2020. Further, the Division Bench in the said case had not only dismissed the appeal on the ground of jurisdiction but also on merits.
9. A Special Leave Petition filed against the said judgment has also been dismissed by the Supreme Court.
10. Consequently, this Court is of the view that no substantial question of law arises for consideration in the present appeal. Accordingly, the same is dismissed.
Income Tax Appellate Tribunal – Delhi
Dcit, New Delhi vs M/S Stc Developers Pvt. Ltd.,, New … on 28 February, 2020
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH “A” NEW DELHI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER
&
SHRI Dr. B.R.R. KUMAR, ACCOUNTANT MEMBER
I.T.A. No.2738/DEL/2016
Assessment Year 2007-08
DCIT, v. M/s. STC Developers Pvt.
Central Circle-25, Ltd.,
New Delhi. N-49, First Floor,
Connaught Place,
Delhi.
TAN/PAN: AAHCS8323C
(Appellant) (Respondent)
Appellant by: Shri Sanjay Goel, CIT-DR
Respondent by: Shri Ved Jain, Adv. & Shri AK
Agarwal, Adv.
Date of hearing: 10 02 2020
Date of pronouncement: 28 02 2020
ORDER
PER AMIT SHUKLA, J.M.:
The aforesaid appeal has been filed by the Assessee against the impugned order dated 22.02.2016 passed by Commissioner of Income Tax (Appeals)-XXIX, New Delhi for the quantum of assessment passed u/s.143(3)/153C for the Assessment Year 2007-08. In the grounds of appeal, the Revenue has raised following grounds:-
“1. That on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.7,62,92,143/- on account of unexplained sale consideration received from Mr. Kamal Kishore Chaurasia without appreciating the detailed reasoning given by the AO in the assessment order.
2. That on the facts and in the circumstances of the case, the Ld. CIT (A) erred in law and on facts in holding that the onus of explaining the seized document was not on the assessee as the property can easily be identified from details mentioned in the loose sheet and thus onus was on the assessee.
3. That the order of the CIT (A) is perverse, erroneous and is not tenable on facts and in law.
4. That the grounds of appeal are without prejudice to each other.”
2. The facts in brief are that the assessee-company was carrying on the business of real estate developers and have constructed commercial projects for sale. The Ld. Assessing Officer observed that a letter was received along with related seized document from the office of Ld. ACIT, Central Circle-21, New Delhi along with satisfaction note dated 01.12.2011 for issuance of notice u/s.153C. Further, on examination of the seized documents found from the premises of Shri Lalit Modi, the Assessing Officer of the assessee was satisfied that the seized Annexure A-1 is related to the assessee-company and after recording the reasons, the Assessing Officer has completed the assessment u/s. 143(3) on 28.03.2013. The Ld. Assessing Officer observed that as per the seized document, the commercial space sold by the assessee to Shri Kamal Kishore Chaurasia and on the basis of such noting the Ld. Assessing Officer inferred that the amount of Rs.7,62,92,143/- was received by the assessee as payment otherwise than cheques from Shri Kamal Kishore Chaurasia for sale of commercial space in the Cross River Mall, over and above the payments received by cheque. Accordingly, the Assessing Officer held that assessee has suppressed the receipt for sale of space at Rs.7,62,92,143/-.
3. The Ld. CIT (A) after considering the entire gamut of facts and material on record, specifically the Tribunal order in the case of Shri Kamal Kishore Chaurasia observed that, first of all, the seized document was computer generated loose sheet which was neither found from the computer of Mr. Lalit Modi nor any authorized person of the company. Mr. Modi has categorically mentioned that seized document contains some rough calculation and hence any transaction with the assessee has not been established. Though it is true that on the seized document the name of Shri Kamal Kishore Chaurasia has been mentioned but assessee has not been mentioned anywhere. It is a fact that assessee and Shri Kamal Kishore Chaurasia has entered into an agreement for sale of a commercial property for which the assessee has received amount of Rs.7,62,92,413/- through cheque. The addition has been made on the basis that other entry mentioned as PDC value in the seized document is payment received by the assessee other than cheque amounting to Rs.7,62,92,143/-. The assessee has denied having received such amount and the Assessing Officer has not made it clear as to what is the mode of receipt. Further, there is no corroborative evidence was found to prove that this amount has been received by the assessee because seized document does not mention anything to show that this is a cash receipt from Mr. Kamal Kishore Chaurasia by the assessee. So simply a mention of amount does not substantiate the addition made by the Assessing Officer. Not only that Mr. Kamal Kishore Chaurasia during the assessment proceedings has denied of making any payments to the assessee other than what agreed upon as per the registered agreement and other dues for this transaction. An addition was made for the said amount in the hands of the Mr. Kamal Kishore Chaurasia as unexplained investment, which has been deleted by the Tribunal in his case. The relevant observation of the Ld. CIT(A) in this regard reads as under:
“11.4 During the assessment proceedings, statement of Mr. KK Chaurasia was recorded, who categorically denied of making any payments to the appellant other than what agreed upon as per the registered agreement and other dues for this transaction. An addition was made for the said amount in the hands of Mr. KK Chaurasia also as unexplained investment for having given such amount to the appellant otherwise than by cheque, which was deleted by the CIT(A)-12, New Delhi vide her order in A.No.417/2013-14 dated 21.11.2013 on the reason that it is a jotting on the loose sheet, without any basis and made in the absence of any corroborative material.
11.5 Further, since the document was found and seized from the premises of Mr. Lalit Modi therefore it is to be explained by him only as per the provisions of section 292C. He explained this to be a rough paper having some jottings and of no relevance. As mentioned earlier, during assessment proceeding also he denied having any relation with the appellant and confirmed of having no such transaction. No business linkages has been established. It was stated to be the loose sheet with some jottings and cannot be established that this document belongs to the appellant. Therefore the appellant cannot be presumed to have been received such amount, in the absence of any corroborative material/evidence or the cash transaction.
11.6 It is observed from the assessment order that the addition was not substantiated by any cogent reasoning and only based on said document, without any corroborative evidence. On the other hand Mr. Lalit Modi in whose possession the document was found has categorically denied of having any dealing with the appellant and it is stated to be just a rough working, whose author is also not known. The purchaser has also denied of having given any such amount in cash.
11.7 Therefore, looking to the above facts and circumstances of the case, also following the various decisions relied upon by the appellant, it is held that the addition of Rs.7,62,92,143/- made in the hands of the appellant, on the basis of jottings on a loose sheet found from the premises of Mr. Lalit Modi is without any basis for which no corroborative material or evidence has either been found during the course of search or subsequently brought on record and hence deserves to be deleted. I have also considered the appellate order in the case of KK Chaurasia, the purchaser, where the CIT(A) has deleted the addition considering that such payment made by him is not substantiated. Accordingly, the appellant gets a relief of Rs.7,62,92,143/-”
4. At the outset, Ld. counsel for the assessee, Mr. Ved Jain submitted that not only in the case of Mr. Kamal Kishore Chaurasia the Tribunal has deleted this addition based on some seized documents but also in the appeal filed by the Revenue before the Hon’ble High Court, Their Lordships vide judgments and orders dated 18.05.2017 in detailed manner has dismissed the Revenue’s appeal. Further, the SLP filed by the Revenue before the Hon’ble Supreme Court also stands dismissed.
5. Ld. DR though admitted that precisely the same issue has been considered by the Hon’ble High Court on the same seized document. However, he strongly relied upon the order of the Assessing Officer.
6. We have considered the relevant finding given in the impugned orders as well as material referred to before us. Here, in this case, the entire addition of Rs.7,62,92,143/- is based on some computer generated loose sheets which was seized and found from the computer of Mr. Lalit Modi who has categorically denied of any such transaction. It is also an admitted fact that name of the assessee nowhere appeared in the said document albeit the name of Shri Kamal Kishore Chaurasia that he has entered into an agreement for sale of commercial property in Cross River Mall has been mentioned. Apart from that, the aforesaid finding of the Ld. CIT(A) that this addition cannot be made in the hands of the assessee for the reason that, firstly, the name of the assessee is not mentioned in the seized document; secondly, there is no corroborative evidence or any statement that the payment has been received by the assessee other than cheque amount as entered in the sale agreement; and lastly, on the bare perusal of the document it cannot be inferred or concluded that seized document belongs to or has any nexus with the assessee. Here, in this case, as pointed out by the Ld. counsel similar matter had come for consideration before Tribunal in the case of Mr. Kamal Kishore Chaurasia where exactly same addition has been made based on same seized documents that the amount of Rs.7,62,92,143/- is an unexplained investment. The Tribunal in a very detailed order has deleted the said addition on merits. Now Hon’ble Delhi High Court in the appeal filed by the Revenue has dealt with exactly the same seized document in the case of PCIT vs. Mrs. Vineeta Chaurasia in ITA No.1104 and 1105/Del/2015. The relevant observation of the Hon’ble High Court is reproduced hereunder:-
“3. The background facts are that the Assessee filed her return of income for the AY in question on 2ndAugust, 2010 declaring an income of Rs.2,20,19,780 under the heads income from house property, short terms capitals gains and income from other sources. The assessment for the AYin question was completed under Section 143(3) of the Act with the AO passing an assessment order dated 29thDecember, 2011 at a total income of Rs.21,22,88,069 against the return income of Rs.2,20,19,780.
1. On 19th June, 2009, a search and seizure operation was undertaken in ITA Nos. 1004 of 2015 & 1005 of 2015Page 3of 14terms of Section 132 of the Act on the premises of Mr. Lalit Modi, a real estate broker. During the course of the search at his premises at L-48, Lajpat Nagar-II, New Delhia document described as Annexure A-1 was found. The said document which is computer-generated, reads as under:
Big Bazar In the name of Brand (name) Rent 18.05.
Vasant Sq Mrs. Vinita R-sold% Pantaloon 7250
Mall Chaurasia
S Area 39651.06 10.05 28,74,702 Monthly Rent
@ 9285.71
Total Cost 3285,37,354
recd
pdc value 1642,68,522 170225465 -59,56,943
32,85,37,354 334494297 -59,56,943 -59,56,943 to refund
Pending From To No of Month
rent
31 891,15,757 Rent
01.10.2006 30.04.2009 Calculated
Amount Paid 400,00,000 Paid
(18,27 To pay
29.8.08=2+1+1 491,15,757 491,15,757
Sinking 3965106 ch in favr of VSM Sinking fund account-Suncity projects Pvt. Ltd.
Fund
Maintenanc ch in favr of VSM MMS account-Suncity projects Pvt Ltd.
e Security 2973830
Free Hold ch in favr of Suncity Projects Pv.
Charges 12490084 Ltd.
Ch required Commission on To pay
194,29,019 sale 2% 65,70,747 65,70,747
616,43,447 Total
5. The aforementioned document dated 18th May, 2009 contained the name of the Assessee showing the area in the Vasant Square Mall as 39561.06sq.ft. with the ‘ch value Rs.16,42,68,832’which incidentally was the disclosed sale consideration for which the Assessee had purchased the aforementioned area in Vasant Square Mall i.e. 39,651.06 sq.ft. However, the document also reflected as ‘Total Cost’ a sum of Rs.32,85,37,354 and the additional sum as „PDC Value‟ being Rs.16,42,68,522.
6. A questionnaire was sent to the Assessee in response to which she gave a reply on 7th December, 2011. She enclosed a confirmation from Mr. Lalit Modi clarifying that Annexure A-1 page 5 did not pertain to any transaction in respect of purchase of any space in either Big Bazar, Vasant Square Mall and that it was just a draft proposal presumably by a broker. She also pointed out that the property which she had purchased had been for a consideration which was higher than the prevalent circle rate.
7. However, the AO was not satisfied with the said reply. The AO who incidentally was the common AO for both Mr. Lalit Modi and the Assessee recorded the following satisfaction note for issuance of a notice to the Assessee under Section 153C of the Act:
“30.6.2011Satisfaction note for issue of notice u/s. 153C of the IT Act.
Name of the Assessee Smt. Vinita Chaurasia PAN: AAFPC4589D Search and seizure action under Section 132 of the I.T. Act was carried out on 19th June 2009 at the residential as well as business premises of Shri Lalit Modi at Lajpat Nagar- II, New Delhi. During the course of pendency of assessment proceedings in the case of Shri Lalit Modi for AY 2004-05 to 2010-11 (u/s.153A/143(3) the material seized from the ITA Nos. 1004 of 2015 & 1005 of 2015Page 5of 14premises of the Assessee has been examined. After examining such seized material I am satisfied that the following seized documents belong to persons other than Shri Lalit Modi.
The detail of such paper is as under:
Annexure Page No. of Brief description Person to whom No. Annexure of documents the document belongs Ann A-1 5 These papers Smt. Vinita contain detail of Chaurasia transaction entered in by Smt. Vinita Chaurasia for acquisition of property at Vasant Square Mall
2. On the basis of document found and seized enquiries were conducted during the course of post search proceedings and it has come to notice that the property was acquired by the Assessee for a consideration of Rs. 32,85,37,3541 out of which only Rs. 16,42,68,832 has been paid by cheque and recorded in books of accounts by the buyer as well as seller. Apart from the above certain other payments representing Sinking Fund, Maintenance Security, Freehold charges and commission etc. have been paid by the Assessee. As such amount of Rs.
19,02,68,289 is required to be assessed in the hands of Assessee as undisclosed investment on the basis of entries mentioned on seized documents.
3. In view of the facts stated above, it is evident that documents belonging to the Assessee have been seized from a person covered under search u/S 132 of the I.T. Act, 1961. Hence, proceedings u/s. 153C are being initiated for AY 2004- 05 to 2009-10.
8. In the resultant assessment proceedings, the AO passed an order on 29th December, 2011 under Section 153C/143(3) of the Act making the following additions:
4.5 In view of the above, I hold that not only the document being page no. 5 of A-1 seized from the premised of Shri Lalit Modi belong to her but its contents too pertain to her in entirety. Accordingly, I hold that payment over and above what is accounted in the books of 16.42 crores totalling to Rs.16,42,68,522/-is made otherwise than by way of cheque i.e. from her unaccounted sources and is accordingly brought to tax. As per the said document below mentioned payments were also required to be made:
(i) Sinking fund Rs. 39,65,106/-
(ii)Maintenance Security Rs. 29,73,830/-
(iii) Freehold charges Rs. 1,24,90,084/-
(iv) Commission Rs. 65,70,747/-
The assessee has not brought anything on record to explain the sources of the above payment also. In view of this, I hold that the assessee has made above payments also from her unaccounted sources. This would in turn mean total addition in the hands of the assessee of Rs. 19,02,68,289/-. Since, the assessee has not accounted for the above amounts being added, penalty proceedings u/s. 271(1)(c) for concealment are also hereby initiated.
(Addition Rs. 19,02,68,289/-) With the above remarks, total income of the assessee is computed as under:-
Income as declared Rs. 2,20,19,780/-
Add: Addition as discussed above Rs. 19,02,68,289/-in the order at para 5.
Total taxable income rounded off Rs. 21,22,88,069”
9. The Assessee’s appeal was disposed of by the CIT (A) by an order dated 25th March, 2013. The appeal was allowed in part. The operative portion of the order of the CIT (A) read as under:
“15. Thus considering the receipt and the payment side of the unaccounted transactions on the seized paper, identified as page 5 of Annexure A-1 the total addition to be made in the case of the appellant are as follows:
In AY 10-11, addition of Rs. 21,93,41,222 (Rs.22,59,11,969 – Rs 65,70,747). This comprises of Rs.16,42,68,522, which is the cash component of the total sale consideration of Rs 32,85,37,354; and Rs.59,56,943 appearing as ‘to Refund’ and Rs 4,91,15,757 appearing as ‘To Pay’, which had remained to be added by the AO and in respect of which the notice for enhancement was issued.”
10. The net result was that there was an enhancement of the assessable income by of the Assessee by Rs.5,50,72,700.
11. Both the Revenue and the Assessee filed appeals before the ITAT which came to be disposed of by the impugned order. Interestingly it may be also mentioned that Revenue’s appeal in the case of Mr. Lalit Modi was also heard along with these two appeals. The Revenue’s appeals were dismissed and the Assessee‟s appeal was allowed.
12. The ITAT held that the initiation of proceedings against the assessment under Section 153C was bad in law. It also proceeded to discuss the merits of the additions made by the AO and the CIT (A) and found them to be unsustainable in law.
13. It may be mentioned at the outset that as far as the dismissal of the Revenue’s appeal by the ITAT in the case of Mr. Lalit Modi is concerned, the Revenue filed ITA No. 992/2015 in thisCourt which was dismissed by an order dated 16thAugust, 2016. The very same document which has been relied upon by the Revenue in the case of the present Assessee was discussed by the Division Bench („DB‟) in the aforementioned order. The order of the ITAT was upheld by this Court.
14. This Court has heard the submissions of Mr. Dileep Shivpuri, learned Senior Standing Counsel for the Department and Mr. Ajay Vohra, learned Senior counsel appearing for the Assessee.
15. It requires to be first noted that the document relied upon by the Revenue (Annexure A-1 page 5) to sustain the additions made to the assessable income of the Respondent has not been shown to ‘belong’ to the Assessee. In arriving at this conclusion, the ITAT followed the decision of this Court in Pepsico India Holding Ltd. v. ACIT (2015) 370 ITR 295(Del). Mr. Shivpuri on the other hand submitted that there have been subsequent decisions of the DBs of this Court which have explained the aforementioned decision and in particular the phrase ‘belongs’ to occurring in Section 153C of the Act. He placed particular reliance on the decisions in Principal Commissioner of Income-tax-8 v. Super Malls (P.) Ltd. [2017] 291 CTR 142 (Del), Principal Commissioner of Income Tax, Circle-II v. Satkar Fincap (decision dated 16th November, 2016in ITA No. 82 of 2016)and Principal Commissioner of Income Tax (Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (decision dated 3rdFebruary, 2017in ITA No. 58/2017).
16. At the outset, it requires to be noticed that the search in the present case took place on 19thJune 2009 i.e., prior to the amendment in Section (1) of the Actwith effect from 1st June 2015. Therefore, it is not open to the Revenue to seek to point out that the document in question, ‘pertains to’ or ‘relates to’ the Assessee. The example given by this Court in Pepsico India Holding Ltd. (supra) is that of a photocopy of a sale deed which contains the names of the vendor and the vendee being found with the broker. The mere fact that such photocopy of the sale deed was found with the broker would not lead to the conclusion that such a document ‘belongs to’ either the vendor or the vendee. While in the present case the AO in his satisfaction note does record that the document in question does not belong to Mr. Lalit Modi i.e. the searched person, he does not indicate on what basis he proceeds as if the document belonged to the Assessee.
17. In this context, it requires to be noticed that a very detailed interrogation of Mr. Lalit Modi in relation to this document took place, the relevant portions of which have been extracted by the ITAT in the impugned order. Question No. 25 posed to Mr. Modi and his answer there to reads as under:
“Q.25. I am showing you page no. 5 to 8 of Annexure A-1, please explain the contents.
Ans: Pages no. 5 to 8 are rough planning on page 5 proposal from Vasant Square Mall for sale was received and the deal did not materialise through me.”
18. The above statement was made in the course of the search. In the assessment proceedings in the case of Suncity Project Ltd. allegedly involving Mr. Lalit Modi, a specific question was put to him and his answer thereto was recorded on oath on 15th March, 2013 under Section 131 of Act reads as under:
“Q.3. During the course of search proceedings at your residence atL-48, Lajpat Nagar-II, New Delhi, loose papers were found and seized vide annexure A-1. I am showing you page No.5 of the said Annexure A-1. Kindly explain the transactions mentioned in it.
Ans. The Chaurasia family is known to me. At the time of execution of sale deed in favour of Mrs. Vinita Chaurasia by M/s. Suncity Projects Ltd. in respect of commercial space purchased in Vasant Square Mall, I was present as a witness and signed on the documents Conveying titles as a witness before sub registrar. It happened somewhere in May 2009. Since I am in real estate business, incidentally after coming back from execution of the said sale deed, I was approached by a broker at my residence making enquiry about availability of commercial space in Vasant Square Mall at Vasant Kunj, New Delhi. Since I accompanied Mrs. Vinita Chaurasia who has purchased commercial space at Vasant Square Mali, I telephoned her and got the details of cost etc. of her commercial space in Vasant Square Mall and told these facts to the said brokers. After few days, the broker came to my residence and delivered a proposal, which is nothing but the same document shown to me as page No. 5 of Annexure A-1. The said proposal remained with me and before the same could be forwarded to Mrs. Vinita Chaurasia, a search and seizure operation by the Income Tax Department at my residence on 19.06.2009, during which the above mentioned paper containing the proposal was found and seized. Since it could not be delivered to Smt. Vinita Chaurasia, the proposal was not acted upon, hence, no transaction took place on the basis of the said page seized at page No. 5 of Annexure A-1. Had the said proposal materialized, I would have earned brokerage income. Since no such transaction took place, no commission was earned by me.”
19. What is evident from the above reply of Mr. Lalit Modi is that even according to him the document in question did not belong to the Assessee. He appears to suggest that the document was a proposal delivered at his residence by some other broker and which proposal remained with him before it could be forwarded to the Assessee. In the meanwhile, the search and seizure operation took place.
20. There is no material whatsoever placed on record by the Revenue before the CIT (A) or the ITAT to justify the invocation of Section 153C of the Act against the Assessee on the basis that the above document belonged to her.
21. Turning to the decisions cited by Mr. Shivpuri it is seen that in Principal Commissioner of Income tax-8 v. Super Malls (P.) Ltd. (supra), a pen drive was recovered from the residence of Mr. Ved Prakash Bharti who was a Director of the Assessee. The AO recorded “during the statement of Sh.Ved Prakash Bharti at the time of search, he has also stated that these documents (contained in the pen drive) pertain to him and Super Malls Pvt. Ltd., Karnal in which he is Director.” It is on the basis of the above facts that this Court rejected the Assessee’s contention that the said documents could not be said to belong to the Assessee.
22. As regards the decision in Principal Commissioner of Income Tax (Central)-2 v. Nau Nidh Overseas Pvt. Ltd. (supra), the searched person Mr. Jatinder Pal Singh, was one of the Directors of the Assessee. As noted by the Court in the course of the search, he clearly stated that some cash seized in those transactions belonged to the Assessee.
23. In Principal Commissioner of Income Tax, Circle-II v. Satkar Fincap (supra), again, this Court noted in para 4 of its order that “during the course of hearing it was suggested to the Respondent/Assessee through its counsel that having regard to the categorical statement in a note that “During the course of search &seizure documents/papers page1to 31 of Annexure A-28 seized by Party R-2, Annexures A-56, A-57and A-58 seized by party 04 are found to belong to of M/s Satkar Fincap Ld., (), Ramdutt Enclave, Uttam Nagar, New Delhi. I have examined the above mentioned documents/papers and provision of section 153C is invokable in this case”, the ITAT’s findings and conclusion cannot be sustained.”
24. In the present case, however, it is nobody’ case other than the Revenue that the document found in the premises of Mr. Lalit Modi belongs to the Assessee. Mr. Shivpuri referred to Section 292C of the Act for the purposes of drawing two presumptions (i) the one contained in Section 292C(1)(i) to the effect that the document found in possession of a person should be presumed to belong to such person. As far as this is concerned, clearly, since the document was found in possession of Mr. Modi, the presumption, if at all, is attracted only qua Mr. Lalit Modi and not the Assessee herein.
25. There is, therefore, nothing to contradict the categorical finding of the ITAT that the document which formed the main basis for initiation of the proceedings under Section 153C of the Act does not belong to the Assessee. One of the principal conditions for attracting Section 153C of the Act is, therefore, not fulfilled in the present case.
26. Turning to the document itself, Mr. Shivpuri urged that the further presumption in Section 292C(1)(ii) would stand attracted viz.,that the contents of the document should be presumed to be true. His submission that the said presumptions have not been rebutted by the Assessee and, therefore, whatever was said in the document should be taken to be sufficient proof of concealment of the income by the Assessee.
27. The Court is unable to accept the above submission of Mr. Shivpuri. The Court in this regard notices that the detailed interrogation of Mr. Modi revealed the source of the document and the fact that Mr. Modi was not the author of the document. Mr. Modi had suggested that it was some other broker who had given him the said document as a „proposal‟. There appears to have been no attempt made by the AO to enquire into the matter further to find out if at all there was any such other broker who had prepared the document. Further, there is no attempt also made to ascertain whether the prevalent market value of the space purchased by the Assessee could at all fetch the value indicated in the document which is Rs.32,85,37,354. This was too fundamental an issue to be left un-investigated. The AO appears to have proceeded purely on conjectures as regards what the document has stated without noticing the internal contradictions and inconsistencies. For instance, the document talks of rent payable for a period from 2006 onwards where in fact even according to the Revenue the Assessee purchased the property on 13thMay, 2009. The shifting of the burden on the Assessee without making these basic enquiries to unearth the truth of the document could not have been accepted and was rightly commented upon by the ITAT. The entire basis for making the additions to the assessable income of the Assessee was a single document i.e., Annexure A-1. The attempt at making additions on the basis of Annexure A-1, without any further investigation on the above lines, is bound to be rendered unsustainable in law.
28. Therefore, even as regards the merits of the additions made by the AO, the Court funds no error having been committed by the ITAT in deleting them.
29. No substantial question of law arises from the impugned order of the ITAT. The appeals are dismissed.
7. Apart from that, it has also been brought on record that SLP filed by the Revenue against the said order has been dismissed. Once on exactly same seized document the Hon’ble High Court has decided this issue that this document does not belong to Mrs. Vineet Chaurasia nor any adverse inference can be drawn, therefore, in the case of the assessee whose name is not even was mentioned in the seized documents, no addition can be made. Accordingly, the said addition is deleted and the order of the Ld. CIT(A) is confirmed.
8. In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open Court on 28th February, 2020.
Sd/- Sd/-
[Dr. B.R.R. KUMAR] [AMIT SHUKLA]
ACCOUNTANT MEMBER JUDICIAL MEMBER
DATED: 28th February, 2020
PKK: