D.C.I.T. CEN.CIR.39, MUMBAI v. DILIP V. DHERAI, MUMBAI

ITA 1459/MUM/2012 | 2009-2010
Pronouncement Date: 31-07-2013 | Result: Dismissed

Appeal Details

RSA Number 145919914 RSA 2012
Assessee PAN AACPD8483A
Bench Mumbai
Appeal Number ITA 1459/MUM/2012
Duration Of Justice 1 year(s) 4 month(s) 28 day(s)
Appellant D.C.I.T. CEN.CIR.39, MUMBAI
Respondent DILIP V. DHERAI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 31-07-2013
Date Of Final Hearing 29-10-2013
Next Hearing Date 29-10-2013
Assessment Year 2009-2010
Appeal Filed On 02-03-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH MUMBAI BEFORE SHRI R.K.GUPTA JM & SHRI N.K.BILLAIYA AM ITA NO S . 1459 TO 1461 / MUM/ 20 12 ( ASSESSMENT YEAR S : 2009 - 10 200 7 - 08 & 200 8 - 0 9 ) DCIT CEN. CIR - 39 MUMBAI - 20 VS. SHRI DILIP V. DHERAI 10 VIVEK PLOT NO.67 TILAK ROAD GHATKOPAR (E) MUMBAI - 400 077 PAN/GIR NO. : A A CPD 8483 A ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : MR. VIJAY MEHTA /ASSESSEE BY : MR. S.D.SHRIVASTAVA DATE OF HEARING : 11 TH JUNE 201 3 DATE O F PRONOUNCEMENT : 31 ST JULY 2013 O R D E R PER BENCH : THIS COMMON ORDER SHALL GOVERN THE DISPOSAL OF THREE APPEALS WHICH HAVE BEEN FILED BY THE DEPARTMENT AGAINST THE ORDER OF LEARNED CIT(A) FOR ASSESSMENT YEARS 200 9 - 10 200 7 - 08 & 2008 - 09 RESPECTIVELY. 2 . SINCE COMMON ISSUES ARE INVOLVED IN ALL THE THREE CASES THEREFORE FOR THE SAKE OF CONVENIENCE ALL THE CASES HAVE BEEN HEARD AND DISPOSED OF BY THIS CONSOLIDATED ORDER. ITA NOS.1459 TO 1461/12 2 3 . THE DEPARTMENT HAS TAKEN GROUND IN ALL THE THREE APPEALS THAT LEARNED CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO ON PROTECTIVE BASIS. THE DEPARTMENT IN THE GROUND IN ALL THE APPEALS HAS ALSO OBJECTED AS TO WHETHER LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE PROTECTIVE ADDITION WHEN THE SAI D LAND COMPANIES ARE IN APPEALS AGAINST THE CONFIRMATION OF SUBSTANTIVE ADDITION AND THUS THE ISSUE OF SUBSTANTIVE ADDITION HAS NOT YET REACHED FINALITY. THE ABOVE TWO GROUNDS ARE SIMILAR IN ALL THE THREE YEARS EXCEPT THE DIFFERENCE IN FIGURE OF ADDITIONS ONLY. 4 . BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENCE OF SHRI DILIP DHERAI ON 5 - 3 - 2009 ALONG WITH THE SEARCH AND SEIZURE OPERATION IN THE CASES OF JAI CORP GROUP ITS EMPLOYEES AND CLOSE ASSOCIATES WHO WERE CLOSE INVOLVED IN THE PROCESS OF ACQUIRING LAND IN THE NAME OF 52 COMPANIES OF THIS GROUP. THE AFFAIRS OF THIS GROUP ARE MANAGED BY JAIN FAMILY VIZ. MR. ANAND JAIN MR. JAI KUMAR JAIN MR. VIRENDRA JAIN MR. SATYAPAL JAIN MR. GAURAV JAI N AND MR. HARS H JAIN. IN RECENT YEARS THIS GROUP HAS EXTENDED ITS OPERATION TO REALTY SECTOR. THE GROUP IS PARTNER IN TWO MAJOR UPCOMING SPECIAL ECONOMIC ZONES OF INDIA (SEZS) BEING DEVELOPED IN THE VICINITY OF MUMBAI NAMELY NAVI MUMBAI SPECIAL ECONOMIC ZONE (NMSEZ) AND MUMBAI SPECIAL ECONOMIC ZONE (MSEZ). RELIANCE INDUSTRIES LTD. (RIL) GROUP IS OTHER KEY PARTNER. MR. ANAND JAIN IS CHAIRMAN OF BOTH NMSEZ AND MSEZ. THE GROUP HAS ALSO PURCHASED HUGE CHUNKS OF LAND IN THE VICINITY OF THESE SEZS WITH ITA NOS.1459 TO 1461/12 3 AN OBJECTIVE TO DEVEL OP TOWNSHIP IN THESE AREAS ANTICIPATING POTENT IAL PRICE RISE AND GOOD RETURNS. THE GROUP HAS ALSO PURCHASED SUBSTANTIAL AGRICULTURAL/NON - AGRICULTURAL LANDS IN THE SUBURBS OF MUMBAI THANE PANVEL ALIBAUG AND PUNE. THESE LANDS HAVE BEEN PURCHASED IN THE NA ME OF VARIOUS COMPANIES AND INDIVIDUALS OF THIS GROUP. THIS GROUP HAS ALSO FLOATED A LARGE NUMBER OF COMPANIES WITH MOST OF THEIR REGISTERED /CORPORATE OFFICES AT 806/807 EMBASSY CENTER NARIMAN POINT MUMBAI - 400 021 82 MAKER CHAMBERS III NARIMAN POIN T MUMBAI - 400 021 AND 11B MITTAL TOWERS NARIMAN POINT MUMBAI. THIS GROUP'S REAL ESTATE OPERATIONS ARE BEING HANDLED MAINLY BY MR. VIRENDRA JAIN MR. GAURAN JAIN AND MR. DILIP DHERAI. AS PR EVIDENCES GATHERED DURING THE SEARCH SHRI DILIP DHERAI WAS FO UND TO BE MANAGING AND HANDLING THE ENTIRE LAND ACQUISITION OPERATIONS FOR MSEZ AND OUTSIDE MSEZ WHICH IS POPULARLY KNOWN AS OMSEZ. MR. DILIP DHERAI HAS HIS OFFICE AT JAI TOWER CBD BELAPUR NAVI MUMBAI. THE LAND OUTSIDE MSEZ (OMSEZ) HAS BEEN PURCHASED IN VARIOUS PRIVATE LTD. COMPANIES WHICH ARE CALLED AS LAND COMPANIES BY THE GROUP. THERE ARE MORE THAN 100 SUCH LAND COMPANIES. EMPLOYEES OF MSEZ AND NMSEZ ARE DIRECTORS IN THESE COMPANIES. MR. DILIP DHERAI IS PART OF CENTRAL LEADERSHIP TEAM (CLT) AND MR. A NAND JAIN MR. SANJAY PUNKHIA AND MR. AJIT WARTHY ARE OTHER KEY MEMBERS OF CLT IN RESPECT OF THE WHOLE PROCESS OF LAND ACQUISITION IN THESE COMPANIES. MR. SANJAY PUNKHIA AND MR. AJIT WARTHY ALSO HAVE THEIR OFFICES AT JAI TOWER CBD BELAPUR AND JAIN CENTER P. D'MEILO ROAD MUMBAI. A ITA NOS.1459 TO 1461/12 4 LA RGE NUMBER OF INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED FROM THE RESIDENCE OF SHRI DILIP DHERAI. THESE DOCUMENTS WERE CONFRONTED AND HIS STATEMENT WAS RECORDE D U/.S. 132(4) OF THE LT. ACT. IN THE STATEMENT RECORDED HE HAS ADMITTED THAT HE HAS PURCHASED LAND FOR THE LAND COMPANIES CONTROLLED BY SHRI ANAND JAIN SHRI VIRENDRA JAIN SHRI SATYAPAL JAIN SHRI GAURAV JAIN AND SHRI HARSH JAIN. HE HAS ADMITTED THE CONTENTS OF THE LOOSE PAPERS FOUND AND SEIZED WHICH PROVES THAT THE PAYMENT MADE BY CHEQUES FOR THE ACQUISITION OF LAND HAS BEEN DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THE LAND COMPANIES BUT THE CASH PAYMENTS REFLECTED IN THE SEIZED PAPERS WAS THE PAYMENTS WHICH WERE NOT REFLECTED IN THE BOOKS OF ACCOUNT OF THE COMPANI ES. AFTER A PERIOD OF 4 MONTHS' HE HAS RETRACTED HIS STATEMENT UNDER THE PRESSURE OF THE GROUP COMPANIES BUT THE RETRACTION WAS NOT GENUINE BECAUSE HE COULD NOT EXPLAIN THE ENTRIES OF CASH PAYMENTS MADE ON THE LOOSE PAPERS FOUND AND SEIZED IN ANY OTHER MANNER. THE DETAILED DISCUSSION HAS BEEN MADE ON ALL THE SEIZED PAPERS IN THE CASE OF 52 LAND COMPANIES. SINCE SHRI DILIP DHERAI HAS WORKED AS A LAND AGGREGATOR ON BEHALF OF THE LAND COMPANIES THEREFORE THE AO HAS MADE THE ADDITION IN THE HANDS OF THE LA ND COMPANIES ON SUBSTANTIVE BASIS AND IN THE HANDS OF SHRI DILIP DHERAI ON PROTECTIVE BASIS AMOUNTING TO RS.7 05 10 000 / - RS.8 22 71 000 / - AND RS.28 20 43 000 / - FOR THE AYS. 07 - 08 08 - 09 & 09 - 10 RESPECTIVELY. ITA NOS.1459 TO 1461/12 5 5 . THE ABOVE FACTS ARE RECORDED IN THE ORDER OF THE LEARNED CIT(A) AT PAGES 4 TO 6 OF HIS ORDER. THEREAFTER ASSESSEE PREFERRED APPEAL S BEFORE THE CIT(A) FOR ALL THE THREE YEARS. DETAILED SUBMISSIONS WERE FILED BEFORE HIM. THE CIT(A) AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECOR D ALLOWED THE APPEALS OF THE ASSESSEE FOR ALL THE THREE YEARS IN RESPECT TO ADDITION MADE ON PROTECTIVE BASIS MENTIONED ABOVE. THE CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE SUBSTANTIVE ADDITION MADE IN THE HANDS OF THE LAND COMPANIES HAVE ALREADY BEEN CONFIRMED THEREFORE THE PROTECTIVE ADDITION MADE BY THE AO IN THE HANDS OF THE ASSESSEE ARE DELETED. AGAINST THIS ORDER OF LEARNED CIT(A) THE DEPARTMENT IS NOW IN APPEAL HERE BEFORE THE TRIBUNAL FOR ALL THE THREE YEARS. 6 . ARGUMENTS WERE ADVANCED AT GREAT LENGTH BY BOTH THE PARTIES VERBALLY. WRITTEN SUBMISSION S WERE FILED BY LEARNED CIT DR. COPY OF WHICH WERE GIVEN TO LEARNED AR WHO IN TURN HAS ALSO FILED WRITTEN SUBMISSIONS AND POINTWISE REPLY WAS ALSO GIVEN BY LEARNED AR. 7 . WE HAVE GIVEN OU R THOUGHTFUL CONSIDERATION TO THE SUBMISSIONS ADVANCED AT THE HANDS OF THE LEARNED DR AS WELL AS LEARNED AR OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSION OF BOTH THE PARTIES AND THE ORDERS OF THE AUTHORITIES BELOW WE FOUND THAT THE APPEALS OF THE DEPA RTMENT AGAINST DELETING THE PROTECTIVE ADDITION ARE LIABLE TO BE REJECTED. FOR THE SAKE OF COMPLETENESS AND TO UNDERSTAND THE MATTER PROPERLY WE WOULD LIKE TO REPRODUCE THE WRITTEN SUBMISSION FILED ON ITA NOS.1459 TO 1461/12 6 BEHALF OF THE DEPARTMENT AS WELL AS ON BEHALF OF THE A SSESSEE. THE CONTENTS OF THE WRITTEN SUBMISSION FILED ON BEHALF OF THE DEPARTMENT ARE AS UNDER : - I. THE FIRST CONTENTION OF REVENUE IS THAT THE LD.CIT(A) WAS WRONG IN LAW BY ANNULLING/DELETING THE PROTECTIVE ADDITION MADE BY THE A.O. IN THE HANDS OF SHRI DILIP DHERAI - BECAUSE - THE MAKING OF A PROTECTIVE ASSESSMENT IS PERFECTLY VALID IN SUCH CIRCUMSTANCES WHEN DOCUMENTS HAVE BEEN FOUND AND SEIZED FROM THE RESIDENCE OF SHRI DILIP DHERAI THE 'LAND AGGREGATOR' - ALL RELATING TO 52 LAND COMPANIES - FLOATED FOR ACQUIRING LAND. HENCE AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF LALJI HARIDAS V. ITO 43 ITR 387 (SC) 1961 - WHERE THE INCOME TAX AUTHORITIES ARE NOT CLEAR WHO HAS RECEIVED THE INCOME AND PRIMA FACIE IT APPEARS THAT THE INCOME MAY HAVE BEE N RECEIVED EITHER BY 'A' OR BY 'B' OR BY BOTH TOGETHER - IT WOULD BE OPEN TO THE INCOME TAX AUTHORITIES TO DETERMINE THE QUESTION WHO IS RESPONSIBLE TO PAY TAX BY TAKING ASSESSMENT PROCEEDINGS BOTH AGAINST 'A' AND 'B'. FURTHER THE 'PROTECTIVE ASSESSMENT' RESULTS IN ONLY A 'PAPER DEMAND' WHICH IS NOT ENFORCEABLE - SO LONG AS THE ASSESSMENT REMAINS PROTECTIVE - HENCE NO PREJUDICE IS CAUSED TO THE ASSESSEE AGAINST SUCH A 'PROTECTIVE ASSESSMENT' - WHICH 'IN LAW' SHOULD BE ALLOWED TO REMAIN AS SUCH - TILL THE M ATTERS ATTAIN FINALITY BY SUPERIOR COURTS - HIGH COURT OR HON'BLE SUPREME COURT - AS HELD BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT GUJARAT II V. SURENDRA GULAB CHAND MODI 140 ITR 517 (GUI) 1983 - WHEREIN THE HON'BLE GUJARAT HIGH COURT HAS VERY CLEA RLY HELD THAT TRIBUNAL WAS NOT JUSTIFIED IN PROCEEDING WITH THE MATTER AND VACATING PROTECTIVE ASSESSMENT - TRIBUNAL DIRECTED TO KEEP MATTER PENDING TILL DECISION BY SUPREME COURT. HENCE BOTH THE ABOVE DECISIONS FULLY JUSTIFY THE FRAMING OF A PROTECTIV E ASSESSMENT AND TO KEEP THE SAME PENDING TILL MATTERS ATTAIN FINALITY - BY THE HON'BLE SUPREME COURT. HENCE EVEN THOUGH CIT(A) HAS CONFIRMED THE IMPUGNED ADDITIONS IN THE HANDS OF THE 52 LAND COMPANIES THE PROTECTIVE ASSESSMENT MADE IN THE HANDS OF SH RI DILIP DHERAI CANNOT BE DELETED TILL MATTERS HAVE ATTAINED FINALITY BY TH E HON'BLE SUPREME COURT AND THE DEMAND BEING A MERE PAPER DEMAND NOT ENFORCEABLE AS LONG AS THE ASSESSMENT IS PROTECTIVE - DOES NOT PREJUDICE THE ASSESSEE AND THEREFORE THERE CAN BE NO GRIEVANCE AGAINST A 'PROTECTIVE ASSESSMENT'. II. THE STATEMENT ON OATH BY SHRI PRAKASH CHANDRA SHUKLA DY.G.M. AND DIRECTOR IN AAKASH REALITY AND 128 OTHER COMPANIES (TOTAL 129 COMPANIES) - PARTICULARLY Q. AND ANS. NO.8 9 AND ANS.NO.10 Q. AND AN S.NO.11 AND Q. AND ANS.NO.17 - CLEARLY SHOWS THAT ALL TRANSACTIONS RELATING TO LAND ARE CONTROLLED AND DONE BY/THROUGH SHRI DILIP DHERAI. HENCE THE A.O. HAS CORRECTLY FRAMED THE 'PROTECTIVE ASSESSMENT' ORDER IN THE HANDS OF SHRI DILIP DHERAI - IN ORDER TO SAFEGUARD AND ITA NOS.1459 TO 1461/12 7 PROTECT THE INTERESTS OF REVENUE - SINCE INCRIMINATING PAPERS - WRITTEN IN HIS HANDWRITING - SIGNED BY SHRI DILIP DHERAI - WERE FOUND AND SEIZED FROM HIS RESIDENCE - ON THE BASIS OF WHICH ASSESSMENTS HAVE BEEN FRAMED IN THE 52 LAND COMPANI ES - SO THE COROLLARY AND LOGICAL CONCLUSION IS THAT IF THE ABOVE ASSESSMENTS IN THE HANDS OF THE 52 LAND COMPANIES ARE NOT CONFIRMED BY HIGHER APPELLATE AUTHORITIES - AS DONE BY HON'BLE ITAT IN ALL THE CASES OF 52 LAND COMPANIES BY ITS ORDER DTD.22.3.20 1 3. THEN IN SUCH A SITUATION - THE PROTECTIVE ASSESSMENT - OF THE SAME INCOME - DONE IN THE HANDS OF SHRI DILIP DHERAI WILL REVIVE AND REVENUE CAN THEN ENFORCE IT. FURTHER THE FACTUAL FINDINGS GIVEN BY THE A.A. IN THE ASSESSMENT ORDER IN PARAS 13 13.1 1 3.1.1 13.1.2 [EVIDENCING CASH PAYMENTS] 13.1.3 13.1.4 13.1.5 [NO CREDIBILITY ON RETRACTION OF STATEMENT ON OATH OF SHRI DILIP DHERAI BY SUBSEQUENT FILING OF AFFIDAVIT] 13.1.5.1 [CASH PAYMENTS] 13.1.5.2 13.1.5.3 [CASH PAYMENTS] 13.1.5.4 13.1.5.5 13 .1.5.6 13.2.1 13.2.2 13.2.2.2 13.2.2.3 13.2.2.4 13.3.1 13.3.2 13.3.3 13.3.4 13.3.4.1 13.3.4.2 13.3.4.3 13.3.4.4 13.3.4.5 13.3.4.6 13.3.4.7 13.4 13.4.1 13.4.2 13.4.3 13.5.1 13.5.2 13.5.3 13.5.3.1 13.5.3.2 13.5.3.3 13.5.3.4 13.6 [ PRESENCE OF UN - ACCOUNTED CASH IN LOCKER AND RESIDENCE OF SHRI DILIP DHERAI] 13.7 13.8 13.8.1 13.8.2 13.8.3 13.8.3.1 13.8.3.2 13.8.3.3 13.8.3.4 13.9 13.10 14 15.1 15.1.1 15.1.2 15.1.3 15.1.4 15.1.5 15.1.6 15.1.7 15.1.8 15.1.9 15.1.10 15.1.11 15.1.12 15.1.13 15.1.14 15.1.15. 15.2 - CLEARLY LEAD TO THE CONCLUSION AS DONE BY A. O . IN PARA 17 - THAT THE SAME HAS TO BE ASSESSED PROTECTIVELY IN THE HANDS OF SHRI DILIP DHERAI BECAUSE ALL THE DOCUMENTS IN QUESTION RELATE TO HIM ALSO/AS MUC H AS THEY DO TO THE 52 LAND COMPANIES AND SINCE THE COMPANIES BEING A LEGAL JURISTIC ENTITY ONLY - IT HAS TO ACT THROUGH ITS INSTRUMENTALITIES/AGENTS VIZ. SHRI DILIP DHERAI - HENCE AS HELD BY HON'BLE ITAT IN ITS ORDER DATED 22.3.2013 - IN PARA 18 'AT THIS STAGE IT WOULD BE FAIR TO THE REVENUE THAT IT CANNOT BE IN THE HANDWRITING OF THE ASSESSEE SINCE THE ASSESSEE IS A LEGAL PERSON SO TO EXTEND OUR OBSERVATION THE SEIZED DOCUMENTS ARE NOT EVEN IN THE HANDWRITING OF ANY PERSON RELATED WITH THE ASSESSEE BE CAUSE SHRI DILIP DHERAI IS NEITHER A DIRECTOR NOR A SHAREHOLDER/MEMBER NOR EVEN AN EMPLOYEE OF THE ASSESSEE COMPANY'. THE ABOVE OBSERVATIONS OF HON'BLE I TAT BEING FACTUALLY INCORRECT SI NCE SHRI PRAKASH CHANDRA SHUKLA - DY.G.M. AND DIRECTOR OF 129 COMPANI ES [AS PER STATEMENT OF OATH AND LIST ENCLOSED] HAS CLEARLY STATED IN Q. AND ANS.NO.8 Q. AND ANS.NO.10 - THAT SHRI DILIP DHERAI IS THE MAIN PERSON HENCE A.O. IS WITHIN HIS RIG HTS AND POWERS TO FRAME A 'PROTECTIVE ASSESSMENT ON SUCH A PERSON - AS THE COMP ANY BEING AN ARTIFICIAL JURISTIC ENTITY HAS TO ACT T HROUGH ITS INSTRUMENTALITIES IN THIS CASE SHRI DILI P DHERAI - HENCE A 'PROTECTIVE ASSESSMENT' IS WARRANTED IN HIS CASE AS PER PARA 18 OF HON'BLE ITAT'S OBSERVATIONS OF A COMPANY NOT BEING ABLE TO EXECUT E THE DOCUMENT IN ITS OWN HANDWRITING - HENCE DOCUMENTS EXECUTED BY SHRI DILIP DHERAI AND FOUND AND SEIZED FROM HIS POSSESSION ON DATE BY SEARCH - CAN EASILY LEAD TO A PROTECTIVE ASSESSMENT - WHICH HAS BEEN DONE IN THIS CASE. III. FURTHER OBSERVATIONS OF HON'BLE ITAT ON PAGE 46 PARA 24 OF ITS ORDER DTD.22.3.2013 CLEARLY SHOW THAT IN VIEW OF THE OBSERVATIONS 'THERE MAY BE ONE MORE POSSIBILITY THAT THE PERSONS WHO WERE DOING LAND PURCHASE MIGHT HAVE INFLATED THE SALE PRICE IN THESE LOOSE SHEET JUST TO EXT RACT MONIES FROM THEIR HIGHER AUTHORITIES IN THE ITA NOS.1459 TO 1461/12 8 GUISE OF ON - MONEY TO BE PAID TO THE VENDORS. MAY BE BECAUSE OF THIS POSSIBILITY NO DOCUMENTS WERE FOUND TO SHOW THAT THE MONEY ACTUALLY CHARGED HANDS.' CLEARLY AFFIRMS THE REQUIREMENT OF A PROTECTIVE ASSE SSMENT IN THE HANDS OF SHRI DILIP DHERAI - AS HE IS THE 'MAIN PERSON' DOING THE LAND PURCHASES [REFER TO STATEMENT ON OATH OF SHRI PRAKASH CHANDRA SHUKLA (SUPRA)] AND SINCE THE HON'BLE ITAT IS ITSELF STATING 'THE POSSIBILITY' - THEN IN SUCH A SITUATION TH E PROPER COURSE IS TO KEEP THE 'PROTECTIVE ASSESSMENT' ALIVE/OPERATIVE TILL MATTERS REACH FINAL ITY AT THE HON'BLE SUPREME COURT AS HELD BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT GUJARAT II V. S URENDRA GULABCHAND MODI 140 ITR 517 (GUJ) 1983. LASTL Y THE INCOME TAX DEPARTMENT HAS SIX MONTHS FROM THE DATE OF RECEIPT OF ORDER OF HON'BLE ITAT TO FILE APPEAL IN THE HO N. BLE HIGH COURT- THE ISSUE IS PENDING AND NO CONTRARY/ADVERSE VIEW CAN BE TAKEN OF THIS AS THE TIME FOR FILING APPEAL TO HON'BLE HIGH CO URT SUBSISTS AND IS WIDE- OPEN AS OF DATE - WHEN THESE WRITTEN SUBMISSIONS ARE BEING FILED ON 11 TH JUNE 2013 - THE TIME LIMIT EXPIRING ON 25.8.2013 [AS INFORMED BY CONCERNED A.O .] - HENCE THE DECISION OF HON'BLE GUJARAT HIGH COURT - A PPLIES SQUARELY AND THE ORDER OF CIT(A) DELETING THE PROTECTIVE A SSESSMENT MAY KINDLY BE SE - ASIDE AND THE ORDER OF A. O . RESTORED. F URTHER ONCE THE HON'BLE ITAT HAS HELD IN PARAS 18 AND 24 OF ITS ORDER (SUPRA) - THEN THE ONLY RECOURSE LEFT IS TO ALSO UPHOLD THE PROTECTIVE A SSESSMENT DONE IN THE HANDS OF SHRI DILIP DHERAI BY THE A. O . TILL THE A SSESSMENT OF THE 52 LAND COMPANIES ATTAINS FINALITY BY THE HON'BLE SUPREME COU RT. 8 . THEREAFTER A SHORT NOTE IN REGARD TO THE PROTECTIVE ASSESSMENT IS VALID IS ALSO FILED BY LEARNED CIT DR. IT HAS BEEN CONTENDED THAT THE PROTECTIVE ADDITION WAS MADE TO PROTECT THE INTEREST OF REVENUE. IT WAS FURTHER SUBMITTED THAT THE AFFIDAVIT FILED BY SHRI DILIP DHERAI BY WHICH HE HAS RETRACTED HIS OWN STATEMENT GIVEN EARLIER I.E. ON 5 - 3 - 2009. IT W AS EXPLAINED THAT AFTER THE STATEMENT RECORDED UNDER SECTION 132(4) SHRI DILIP DHERAI APPEARED BEFORE THE DDIT ON VARIOUS DATES I.E. ON 6 - 4 - 2009 8 - 4 - 2009 20 - 4 - 2009 22 - 4 - 2009 AND 8 - 5 - 2009 RESPECTIVELY AND ON ALL THESE OCCASIONS HE NEVER STATED THAT HI S STATEMENT ON OATH RECORDED ON 5 - 3 - 2009 WAS DONE UNDER THREAT FORCE OR COERCION HENCE THE AFFIDAVIT FILED BY HIM IS NOW AFTERTHOUGHT. THEREFORE NO CREDENCE ITA NOS.1459 TO 1461/12 9 SHOULD BE GIVEN IN RESPECT TO AFFIDAVIT FILED ON BEHALF OF SHRI DILIP DHERAI. IT WAS ALSO SUBM ITTED THAT THE AO HAS REQUESTED THE OFFICER BEFORE WHOM SHRI DILIP DHERAI WAS APPEARED AND THEY HAVE CATEGORICALLY STATED THAT NO THREAT OR FORCE WAS USED FOR OBTAINING THE STATEMENT OF SHRI DILIP DHERAI ON 5 - 3 - 2009. RELIANCE WAS ALSO PLACED ON VARIOUS CAS E LAWS MENTIONED IN THE NOTE SUBMITTED BY THE LEARNED CITDR. 9 . PER CONTRA LEARNED COUNSEL OF THE ASSESSEE HAS ALSO FILED REPLY AND THE CONTENTS OF THE WRITTEN REPLY FILED ON BEHALF OF THE ASSESSEE ARE ALSO REPRODUCED HERE AS UNDER : - 1. ON BEHALF OF OUR ABOVE MENTIONED CLIENT AND AS PER HIS INSTRUCTIONS WE STATE AND SUBMIT AS UNDER. 2. KINDLY REFER TO THE ABOVE MATTERS IN WHICH THE HEARING TOOK PLACE ON 30.05.2013 AND SINCE HAVE BEEN ADJOURNED TO 03.06.2013. IN DEFERENCE TO THE DIRECTIONS OF THE HON'B LE BENCH GIVEN DURING THE COURSE OF THE HEARING WE ARE SUBMITTING SYNOPSIS OF OUR ARGUMENTS AS UNDER. 3. THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDERS FOR A.YS. 2007 - 08 TO 2009 - 10 WERE MADE IN THE HANDS OF MIS. AVKASH LAN D REALITY PVT. LTD. AND OTHER RELATED ENTITIES (HEREINAFTER REFERRED TO AS LAND COMPANIES) ON SUBSTANTIVE BASIS. SIMILAR ADDITION HAS BEEN MADE IN THE HANDS OF THE APPELLANT ON PROTECTIVE BASIS. IT IS SUBMITTED THAT IN THE HANDS OF THE LAND COMPANIES THE ISSUE HAS NOW BEEN ADJUDICATED BY 'J' BENCH OF THE TRIBUNAL VIDE THEIR ORDER IN ITA NO. 8237/MUM /2011 AND OTHER DATED 22.03.2013. IN THE SAID ORDER THE HON'BLE TRIBUNAL HAS NOT ONLY QUASHED THE ASSESSMENT ORDER ON TECHNICAL GROUND BUT ALSO HELD ON MERITS THAT NO ADDITION IS REQUIRED TO BE MADE. FROM THE DISCUSSION OF THE ISSUE ON MERIT MADE BY THE HON'BLE TRIBUNAL IT IS EVIDENT THAT THE HON'BLE TRIBUNAL IS OF THE OPINION THAT NO CASH HAS CHANGED HANDS AND HENCE NO ADDITION IS REQUIRED TO BE MADE ON THE BASIS OF SEIZED PAPERS (PAGE NO. 41; PARA 20 ONWARDS OF THE ORDER). SINCE THE ADDITION IN THE HANDS OF THE ASSESSEE HAS BEEN MADE ON THE BASIS OF THE SAME SEIZED PAPER THE ORDER OF THE TRIBUNAL HOLDS GOOD IN THE PRESENT CASE ALSO; AND ACCORDINGLY WITHOUT GOING FURTHER - THE ISSUE NEEDS TO BE DECIDED IN FAVOUR OF THE ASSESSEE. 4. IT MAY KINDLY BE NOTED THAT THE MAIN PURPOSE OF PROTECTIVE ADDITIONS IS TO PROTECT THE INTERESTS OF THE REVENUE - .IN A CASE WHERE IN FUTURE IT IS FOUND OR HELD THAT INCOME IS BE LONGING TO DIFFERENT ASSESSEE. IN THE INSTANT CASE HOWEVER THE LAND COMPANIES IN WHOSE CASES SUBSTANTIVE ADDITIONS WERE MADE HAVE NEVER TAKEN A STAND THAT ADDITION SHOULD BE MADE IN THE HANDS ITA NOS.1459 TO 1461/12 10 OF APPELLANT. HENCE PROTECTIVE ADDITIONS LOSE THEIR PURPOSE AND' THEREFORE SHOULD BE DELETED. 5. MOREOVER THE ASSESSING OFFICER IN THE PRESENT CASE HAS VERBATIM REPRODUCED ENTIRE ORDER OF THE LAND COMPANIES. HE HAD SIMPLY ADDED THAT THE ADDITION IS BEING MADE IN THE HANDS OF DILIP DHERAI ON PROTECTIVE BASIS. IN THE ENTIRE ORDER THERE IS NO FINDING BY THE ASSESSING OFFICER THAT THE INCOME BELONGS TO OR PERTAINS TO THE APPELLANT. IN FACT THERE IS A POSITIVE FINDING BY THE ASSESSING OFFICER THAT THE SEIZED MATERIAL REFLECTS ON MONEY PAID BY THE LAND COMPANIES F OR ACQUISITION OF LAND. F URTHER THE ADDITION IS MADE U/ S 69C OF THE ACT IN SPITE OF THE FACT THAT THE APPELLANT HAS NOT PURCHASED ANY LAND. THUS THE ADDITION IS NOT SUSTAINABLE. 6. THE APPELLANT IS A MAN OF NO MEANS. THE COMPUTATION OF INCOME AS WELL A S BALANCE SHEET FOR A.Y. 2008 - 09 AND A.Y. 2009 - 10 ARE ENCLOSED IN THE PAPER BOOK WHICH PROVE THAT THE APPELLANT HAS NO CAPACITY TO BUY SUCH A HUGE LAND OR PAY ON MONEY. 7. THE STAND OF THE LEARNED DR THAT THIS BEING MERELY A PAPER DEMAND THE PROTECTIVE ASSESSMENT SHOULD BE ALLOWED TO SURVIVE IS DEVOID OF ANY MERITS. IT IS A SETTLED POSITION IN LAW THAT WHERE PROTECTIVE ASSESSMENT CAN BE MADE THERE CANNOT BE ANY PROTECTIVE APPELLATE ORDER. 8. RELIANCE IS PLACED UPON THE DECISIONS OF THE HON'BLE ALLAHA BAD HIGH COURT IN THE CASE OF SMT. HEMLATA AGARWAL V. CIT U.P. (64 ITR 428) AND CIT V. SMT DURGAWATI SINGH (234 ITR 249). 9. THE ARGUMENT THAT DILIP DHERAI IS AN AGENT AS STATED BY VARIOUS PERSONS DURING THE COURSE OF SEARCH HAS GOT NO BEARING ON THE FAC TS OF THE CASE. ASSUMING FOR A MOMENT THAT DILIP DHERAI IS AN AGENT THE ADDITION CANNOT BE MADE IN THE HANDS OF THE AGENT. IT IS NOBODY'S CASE THAT DILIP DHERAI HAS INVESTED THE MONEY IN PURCHASE OF LAND. THE SEARCH STATEMENTS OF VARIOUS PERSONS MERELY SU GGEST AT THE HIGHEST THAT DILIP DHERAI WAS MANAGING THE AFFAIRS. 10. THE ASSESSING OFFICER WHILE MAKING PROTECTIVE ADDITIONS IN THE HANDS OF THE ASSESSEE HAS NOT MENTIONED ANY CLEAR REASONS FOR ARRIVING AT THE CONCLUSION THAT PROTECTIVE ADDITIONS OUG HT TO HAVE BEEN MADE IN THE HANDS OF ASSESSEE. THIS BASIC INGREDIENT FOR MAKING PROTECTIVE ASSESSMENT IS MISSING IN THE PRESENT CASE. 11. THE RELIANCE OF THE DR ON S. 292C OF THE ACT IS OF NO RELEVANCE AS THIS SECTION LAYS DOWN AN ASSUMPTION FOR THE OWN ERSHIP AND CORRECTNESS OF THE SEIZED MATERIAL AND NOT AS TO WHETHER IT RELATES TO THE ASSESSEE. NONE OF SEIZED MATERIAL RELATES THE ADDITION TO THE ASSESSEE. 12. THE RELIANCE OF THE DR ON PG 46 OF THE IT AT ORDER IN CASE OF LAND COMPANIES THAT THERE MAY BE ONE MORE POSSIBILITY THAT THE PERSONS WHO WERE DOING LAND PURCHASES MIGHT HAVE INFLATED THE SALE PRICE IN THESE LOOSE SHEETS TO EXTRACT MONIES CANNOT BE READ IN ISOLATION. THE FINDING OF THE TRIBUNAL REGARDING THE FIGURES NOTED IN THE SEIZED MATERIAL BE ING BUDGETARY FIGURES AND NO CASH HAS CHANGED HANDS ARE CONCLUSIVE FINDING AND THE DEPARTMENT CANNOT RAISE ANY ARGUMENT IN THE PRESENT PROCEEDINGS AGAINST THE SAME. 13. THE DECISION RELIED UPON BY THE LD. DR IN THE CASE OF CIT GUJRAT - II V. SURENDRA CULAB CHAND MODI (140 ITR 517) HOLDING THAT PROTECTIVE ADDITION SHOULD NOT BE DELETED IS CLEARLY DISTINGUISHABLE. ITA NOS.1459 TO 1461/12 11 14. IT NEEDS TO BE READ WITH THE POSITIVE FINDING GIVEN BY THE TRIBUNAL TO THE FACT THAT NO CASH HAS CHANGED THE HANDS. FURTHER THE TRIBUNAL H AS MERELY LISTED OUT THE POSSIBILITIES AND THERE IS NO CONCLUSIVE FINDING REGARDING INFLATION OF FIGURES. ASSUMING FOR A MOMENT THAT THERE WAS INFLATION IN FIGURES IT MERELY REPRESENTS THE ATTEMPT BEING MADE BY THE CONCERNED PERSON. THIS IS BECAUSE IF THE SAID ATTEMPT WOULD HAVE BEEN SUCCESSFUL THE MONIES WOULD HAVE CHANGED THE HANDS AND THERE WOULD HAVE BEEN ADDITION IN THE HANDS OF LAND COMPANIES. 10 . AFTER CONSIDERING THE WRITTEN SUBMISSIONS FILED ON BEHALF OF BOTH THE DEPARTMENT AND THE ASSESSEE WE FIND THAT THE TRIBUNAL BY DISCUSSING THE APPEAL IN THE CASE OF 52 LAND COMPANIES HAVE HELD THAT NO ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. THE APPEAL IN CASE OF 52 LAND COMPANIES WERE DECIDED IN ITA NO. 8237/M/201 1 AND OTHER CONNECTED APPEALS VIDE ORDER DATED 22 - 3 - 2013 COPY OF THE SAME IS PLACED ON RECORD. AFTER ANALYZING THE FACTS OF THE CASE AND DETAILED ARGUMENTS ALONG WITH VARIOUS CASE LAWS THE TRIBUNAL HAS GIVEN ITS FINAL FINDING IN PARA 10 TO 26 AT PAGES 33 TO 4 7 OF ITS ORDER. THE FINDINGS OF THE TRIBUNAL HAS BEEN GIVEN IN RESPECT TO LEGAL GROUNDS RAISED WHETHER THE AO HAS RIGHTLY ASSUMED JURISDICTION UNDER SECTION 153C AND WHETHER THE ADDITION MADE ON MERIT WERE SUSTAINABLE IN LAW OR NOT. THE TRIBUNAL HAS D ECIDED BOTH THE ISSUES TOGETHER AND HAS GIVEN ITS FINDING IN PARAS 10 TO 26. FOR THE SAKE OF COMPLETENESS WE WOULD LIKE TO REPRODUCE THE FINDINGS OF THE TRIBUNAL GIVEN IN CASE OF 52 LAND COMPANIES ARE AS UNDER: - 10. WE HAVE CONSIDERED THE RIVAL SUBMISSI ONS PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE DOCUMENTS REFERRED TO AND RELIED UPON BY THE RIVAL PARTIES. WE FIND THAT THE ENTIRE ASSESSMENT REVOLVES AROUND THE DOCUMENTS SEIZED DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS AT THE RESIDEN TIAL PREMISES OF ONE SHRI DHILIP DHERAI. THE MOST RELEVANT DOCUMENTS HAVE BEEN MADE PART OF THE ASSESSMENT ORDER. THE ENTIRE ASSESSMENT IS BASED UPON THE NOTINGS ON DOCUMENT NO. 22 & 23 OF ITA NOS.1459 TO 1461/12 12 ANNEXURE - A1 IMPOUNDED FROM THE RESIDENCE OF SHRI DHILIP DHERAI. WE ARE MAKING THESE TWO DOCUMENTS PART OF OUR APPELLATE ORDER AT PAGE - 1 &2. 11. THE QUESTION WHICH IS TO BE DECIDED FIRST IS WHETHER PROVISIONS OF SEC. 153C ARE APPLICABLE ON THE FACTS OF THE CASE IN THE LIGHT OF THE DOCUMENTS MARKED AS PAGE 1 & 2. SEC TION 153C PROVIDES AS UNDER: NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 139 SECTION 147 SECTION 148 SECTION 149 SECTION 151 AND SECTION 153 WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR BELONG TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SECTI ON 153A THEN THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED AGAINST EACH SUCH OTHER PERSON AND ISSUE SU CH OTHER PERSON NOTICE AND ASSESS OR REASSESS INCOME OF SUCH OTHER PERSON IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A :] [ PROVIDED THAT IN CASE OF SUCH OTHER PERSON THE REFERENCE TO THE DATE OF INITIATION OF THE SEARCH UNDER SECTION 132 OR MAKING OF REQUISITION UNDER SECTION 132A IN THE SECOND PROVISO TO 97 [SUB - SECTION (1) OF SECTION 153A SHALL BE CONSTRUED AS REFERENCE T O THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON.] [(2) WHERE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED AS REFERRED TO IN S UB - SECTION (1) HAS OR HAVE BEEN RECEIVED BY THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AFTER THE DUE DATE FOR FURNISHING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH IS CONDUCTED UNDER SECTION 132 OR REQUISITION IS MADE UNDER SECTION 132A AND IN RESPECT OF SUCH ASSESSMENT YEAR ( A ) NO RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON AND NO NOTICE UNDER SUB - SECTION (1) OF SECTION 142 HAS BEEN ISSUED TO HIM OR ( B ) A RETURN OF INCOME HAS BEEN FURNISHED BY SUCH OTHER PERSON BUT NO NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS BEEN SERVED AND LIMITATION OF SERVING THE NOTICE UNDER SUB - SECTION (2) OF SECTION 143 HAS EXPIRED OR ( C ) ASSESSMENT OR REASSESSMENT IF ANY HAS BEEN MADE BEFORE THE DATE OF RECEIVING THE BOOKS OF ACCOUNT OR DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED BY THE ASSESSING OFFICER HAVING J URISDICTION OVER SUCH OTHER PERSON SUCH ASSESSING OFFICER SHALL ISSUE THE NOTICE AND ASSESS OR REASSESS TOTAL INCOME OF SUCH OTHER PERSON OF SUCH ASSESSMENT YEAR IN THE MANNER PROVIDED IN SECTION 153A .] 12. BEFORE PROCEEDING FURTHER LET US ALSO CONSIDER THE PROVISIONS OF SEC. 158BD AS PROVIDED UNDER CHAPTER XIVB WHICH HAS BECOME NON OPERATIVE QUA SEARCH ETC. MADE AFTER 31.5.2003. 158BD - UNDISCLOSED INCOME OF ANY OTHER PERSON. WHERE THE ASSESSING OFFICER IS SATISFIED THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPECT TO WHOM SEARCH WAS MADE UNDER SECTION 132 OR WHOSE BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSETS WERE REQUISITIONED UNDER ITA NOS.1459 TO 1461/12 13 SECTION 132A THEN THE BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS SEIZED OR REQUISITIONED SHALL BE HANDED OVER TO THE ASSESSING OFFICER HAVING JURISDICTION OVER SUCH OTHER PERSON AND THAT ASSESSING OFFICER SHALL PROCEED [UNDER SECTION 158BC ] AGAINST SUCH OTHER PERSON AND THE PROVISIONS OF THIS CHAPTER SHALL APPLY ACCORDINGLY. 13 . A CLOSE PERUSAL OF THESE TWO SECTIONS SHOW THAT PRIOR TO 31.5.2003 IN CASE OF SEARCH AND SEIZURE PROCEEDINGS UNDER ERSTWHILE SECTION 158BD THE AO HAS TO SATISFY HIMSELF THAT ANY UNDISCLOSED INCOME BELONGS TO ANY PERSON OTHER THAN THE PERSON WITH RESPE CT TO WHOM SEARCH WAS MADE U/S. 132 ETC. HOWEVER UNDER THE PRESENT PROVISIONS OF SEC. 153C THE AO HAS TO SATISFY THAT ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT OR DOCUMENTS SEIZED OR REQUISITIONED BELONGS OR B ELONGED TO A PERSON OTHER THAN THE PERSON REFERRED TO IN SEC. 153A. THE DISTINCTION IS CLEAR AND OBVIOUS. IN THE ERSTWHILE PROVISIONS OF SEC. 158BD THE EMPHASIS WAS ON UNDISCLOSED INCOME WHEREAS UNDER THE PRESENT PROVISION THE EMPHASIS IS ON MONEY BUL LION DOCUMENTS ETC. BELONGED TO A PERSON OTHER THAN THE PERSON SEARCHED. IN THE LIGHT OF THE AFORESAID DISTINCTION AND THE PROVISIONS OF SEC. 153C ALL THAT HAS TO BE SEEN IS WHETHER THE DOCUMENT SEIZED FROM THE POSSESSION OF SHRI DILIP DHERAI BELONG TO THE ASSESSEE AND WHETHER ON THE STRENGTH OF THESE DOCUMENTS HAS THE AO RECORDED THE SATISFACTION IN CONSONANCE WITH THE LETTER AND SPIRIT OF THE PROVISIONS OF THE ACT. A CAREFUL PERUSAL OF THE DOCUMENTS MARKED AS PAGE 1 & 2 OF OUR ORDER SHOW THAT THERE I S NOT A SINGLE MENTION OF ANY COMPANY. IT APPEARS THAT THE AO WAS IN POSSESSION WITH THE MYTHOLOGICAL POWER OF THE DIVYADRISHTI POSSESSED BY SARATHI SANJAY IN MAHABHARAT BY WHICH HE COULD FORESEE AND NARRATE THE EXACT HAPPENINGS AT THE KURUSHETRA SITTING IN THE ROOM OF KING DRIDHARASHTRA. OUR REFERENCE TO THIS MYTHOLOGICAL CHARACTER IS NOT WITHOUT ANY BASIS BECAUSE JUST BY LOOKING AT THE DOCUMENTS AT PAGE 1 & 2 THE AO COULD FORESEE THAT THESE LANDS BELONG TO 52 LAND COMPANIES WITHOUT EVEN KNOW ING THEIR NAMES AT THE TIME OF RECORDING THE SATISFACTION. EVEN IN THE SATISFACTION NOTE WHILE CONCLUDING HIS DISCUSSION AT PARA 1.6 THE AO CONCLUDED AS UNDER IN VIEW OF THE ABOVE I AM SATISFIED THAT THE ABOVE MENTIONED SEIZED DOCUMENTS BELONG TO A PERSON I.E. THE ASSESSEE (WHICH IS INCLUDED IN THE ABOVE MENTIONED 52 COMPANIES) OTHER THAN THE PERSON REFERRED TO IN SEC. 153A WITHIN THE MEANING OF PROVISIONS OF SEC. 153C OF T HE ACT. ACCORDINGLY PROCEEDINGS U/S. 153C OF THE ACT ARE INITIATED IN THE CASE OF THE ASSESSEE. 14. AFTER CAREFULLY GOING THROUGH THIS SATISFACTION NOTE A LOGICAL QUESTION IS FLASHING IN OUR MIND AND WHICH IS WHEN THE ASSESSMENT PROCEEDINGS ARE CONCL UDED AND ALL OTHER CONSEQUENTIAL PROCEEDINGS ARE COMPLETED IT IS MANDATORY TO RELEASE THE SEIZED MATERIAL TO THE ASSESSEE. THE QUESTION IS - WHEN THESE SEIZED DOCUMENTS WOULD BE RELEASED WHO WILL BE THE RECIPIENT? THE OBVIOUS ANSWER IS SHRI DILIP DHERA I BECAUSE THE IMPUGNED DOCUMENTS WERE SEIZED FROM HIS PREMISES. THEREFORE THE SEIZED DOCUMENTS CANNOT BELONG TO 52 COMPANIES BECAUSE ONE DOCUMENT CAN BELONG TO ONE PERSON. EVEN IN THE SATISFACTION NOTE A SAMPLE COPY OF ONE OF THESE 52 COMPANIES IS GIVEN TO US AND IT IS THE SAY OF THE LD DR THAT ALL SATISFACTION NOTES ARE EXACTLY WORDED WITH CHANGE IN THE NAME OF THE ASSESSEE IT IS BEYOND ONES UNDERSTANDING HOW COULD THE AO COME TO KNOW THE NAMES AND PURCHASE COST OF LANDS IN THESE 52COMPANIES WITHOUT E VEN LOOKING INTO THEIR RESPECTIVE BALANCE SHEETS. THEREFORE IS THE SATISFACTION NOTE PREPARED ON THE DATE MENTIONED IN IT OR IS IT BACK DATED AFTER LOOKING INTO THE BALANCE SHEETS OF THESE 52 COMPANIES .IF THAT IS THE CASE THAN ON THE DATE OF PREPARING T HE SATISFACTION NOTE THE AO HAD NO ITA NOS.1459 TO 1461/12 14 OCCASION TO KNOW THAT THE ENTRIES IN SEIZED DOCUMENTS PERTAIN TO THESE 52 LAND COMPANIES. EVEN IF THE ENTRIES MAY PERTAIN TO THESE 52 LAND COMPANIES BY ANY STRETCH OF IMAGINATION IT CANNOT BE SAID THAT THE IMPUGNED DOCU MENT BELONG TO THESE 52 COMPANIES . OUR VIEW IS ALSO SUPPORTED BY THE PROVISIONS OF SEC. 292C WHICH IS AS UNDER: 292C. [(1)] WHERE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 [OR SURVEY UNDER SECTION 133A ] IT MAY IN ANY PROCEEDING UNDER THIS ACT BE PRESUMED ( I ) THAT SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS MONEY BULLION JEWELLERY OR OTHER VALUA BLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON; ( II ) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE; AND ( III ) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY OR TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON ARE IN THAT PERSONS HANDWRITING AND IN THE CASE OF A DOCUMENT STAMPED EXECUTED OR ATTESTED THAT IT W AS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED.] 26 [(2) WHE RE ANY BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS HAVE BEEN DELIVERED TO THE REQUISITIONING OFFICER IN ACCORDANCE WITH THE PROVISIONS OF SECTION 132A THEN THE PROVISIONS OF SUB - SECTION (1) SHALL APPLY AS IF SUCH BOOKS OF ACCOUNT OTHER DOCUMENTS OR ASSETS WHICH HAD BEEN TAKEN INTO CUSTODY FROM THE PERSON REFERRED TO IN CLAUSE ( A ) OR CLAUSE ( B ) OR CLAUSE ( C ) AS THE CASE MAY BE OF SUB - SECTION (1) OF SECTION 132A HAD BEEN FOUND IN THE POSSESSION OR CONTROL OF THAT PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 .] 15. IT IS THE SAY OF THE LD. DR THAT IN THE LIGHT OF THE DECISION OF KERALA HIGH COURT 333 ITR 281 WHEN THE AO OF THE PERSON SEARCHED U/S. 153A IS THE SAME AS FOR THE OTHER PERSON COVERED U/S. 153C. THERE IS NO NEED TO RECORD THIS SATISFACTION U/S. 153C OF THE ACT. THAT DECISION IS ONLY TO OVERRIDE THE PROCEDURAL PART BECAUSE THE SENDER AO AND THE RECEIVER AO O F THE SEIZED DOCUMENTS BEING THE SAME. BUT IT CANNOT BE SAID THAT NO SATISFACTION IS REQUIRED PRIOR TO PROCEEDING U/S. 153C OF THE ACT. HAD THIS BEING THE LEGISLATIVE INTENT THE LEGISLATURE COULD HAVE PROVIDED IN THE SECTION ITSELF THAT WHEN THE SEARCH CASES ARE CENTRALIZED THERE IS NO NEED FOR RECORDING ANY SATISFACTION. THAT BEING NOT THE CASE WE DO NOT ACCEPT THE SUBMISSION OF THE LD. DR ON THIS POINT. THE LD. DR HAS FURTHER RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT 346 ITR 177 ACCO RDING TO WHICH AT THE TIME OF RECORDING SATISFACTION ONLY PRIMA FACIE GROUNDS HAVE TO BE MENTIONED AND NOT THAT THERE ARE CONCLUSIVE EVIDENCES WITH AO AT THIS STAGE OF UNRECORDED INCOME ETC. INFACT THIS DECISION IS IN FAVOUR OF THE ASSESSEE BECAUSE ATLE AST THERE SHOULD BE SOME PRIMA FACIE GROUND WHICH IS ABSENT IN THE PRESENT CASE. AS POINTED OUT EARLIER THE SEIZED DOCUMENTS CONTAIN ONLY THE NAMES OF THE VILLAGES WHERE THE LANDS HAVE BEEN PURCHASED. BY LOOKING AT THE NAMES OF THE VILLAGES IT IS BEYO ND OUR UNDERSTANDING HOW COULD ONE COME TO KNOW THAT 52 COMPANIES HAVE PURCHASED LANDS IN THESE VILLAGES. THE THIRD DECISION RELIED UPON BY THE LD. DR ON THIS POINT IS THAT OF HONBLE KERALA HIGH COURT 26 TAXMANN.COM 54 BY WHICH THE LD. DR HAS EMPHASIZED THAT THERE IS NO NEED WHETHER SEIZED EVIDENCE ETC. REPRESENTS OR PROVE UNDISCLOSED INCOME OF ANOTHER ASSESSEE ALL THAT IS REQUIRED TO BE CONSIDERED IS WHETHER SUCH MATERIAL OR EVIDENCE ITA NOS.1459 TO 1461/12 15 RELATES TO ANOTHER ASSESSEE OR NOT. ONCE AGAIN EVEN AT THE SAKE OF RE PETITION WE HAVE TO SAY THAT THE EXHIBIT 1 & 2 RELIED UPON BY THE AO DO NOT CONTAIN THE NAMES OF ANY COMPANY THEREFORE AT THE STAGE OF RECORDING OF THE SATISFACTION HOW COULD THE AO SAY THAT THE ENTRIES PERTAIN TO 52 COMPANIES. THE LD. DR HAS FURTHER EMPH ASIZED ON THE WORD BELONG USED IN THE SECTION. IT IS THE SAY OF THE LD. DR THAT EVEN IF THERE IS A CAUSAL RELATIONSHIP IT CAN BE SAID THAT THE DOCUMENT BELONG TO OTHER PERSON. 16. ON THE CONTRARY THE RELIANCE OF THE ASSESSEE ON THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF VIJAYBHAI CHANDRANI VS ACIT 333 ITR 436 IS WELL FOUNDED WHEREIN THE HONBLE GUJARAT HIGH COURT HAS HELD THAT ALLOWING THE PETITION THAT ADMITTEDLY THE 3 LOOSE PAPERS RECOVERED DURING THE SEARCH PROCEEDINGS DID N OT BELONG TO THE PETITIONER. IT WAS NOT THE CASE OF THE REVENUE THAT THE 3 DOCUMENTS WERE IN THE HANDWRITING OF THE PETITIONERS. IN THE CIRCUMSTANCES WHEN THE CONDITION PRECEDENT FOR ISSUANCE OF NOTICE WAS NOT FULFILLED ACTION TAKEN U/S. 153C OF THE AC T STOOD VITIATED. THE HONBLE HIGH COURT IN ITS ORDER CONSIDERING THE USAGE OF A DOCUMENT HAS MADE THE FOLLOWING OBSERVATIONS: A PERUSAL OF THE SAID DOCUMENTS INDICATES THAT THE SAME CONTAIN DETAILS OF MEMBERS OF SAMUTKARSH CO - OPERATIVE HSG. SOC. THE SAID DOCUMENT UNDOUBTEDLY IS NOT A DOCUMENT WHICH BELONGS TO THE PETITIONER THOUGH THERE IS A REFERENCE TO THE PETITIONER IN ONE OF THE LOOSE PAPERS UNDER THE HEADING SAMUTKARSH MEMBERS. DETAIL INDICATING PLOT NUMBERS NAMES OF MEMBERS AND OTHER DETAILS. 17. WE FIND THAT IN THIS DECISION OF THE HONBLE GUJARAT HIGH COURT EVEN WHEN IMPUGNED DOCUMENTS HAD REFERENCE TO THE ASSESSEE THE HONBLE HIGH COURT QUASHED THE PROCEEDINGS U/S. 153C OF THE ACT. IN OUR CASE THERE IS NOT EVEN A REFERENCE TO THE AS SESSEE EXCEPT THE NAME OF THE VILLAGE IN WHICH THE ASSESSEE HAS PURCHASED THE LANDS. COMING BACK TO THE PROVISIONS OF SEC. 153C VIS - - VIS 158BD AS POINTED OUT EARLIER BOTH THE SECTIONS ARE SIMILARLY WORDED SECTION. WITH A MARKED DISTINCTION SUCH AS THE MA RGINAL HEADING OF 158 BD IS UNDISCLOSED INCOME OF ANY OTHER PERSON AND THAT OF 153C IS ASSESSMENT OF INCOME OF ANY OTHER PERSON. FURTHER U/S. 153C NOTICE CAN BE ISSUED ONLY WHERE THE MONEY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR BOOKS OF ACCOUNT SEIZED OR REQUISITIONED BELONG TO SUCH OTHER PERSON WHEREAS ALL THAT IS REQUIRED U/S. 158BD IS THAT THE UNDISCLOSED INCOME SHOULD BELONG TO ANY OTHER PERSON. 18. THUS IT IS CLEAR THAT BEFORE ISSUING NOTICE U/S. 153C THE PRIMARY CONDITION H AS TO BE FULFILLED AND WHICH IS THAT THE MONEY BULLION DOCUMENTS ETC. SEIZED SHOULD BELONG TO SUCH OTHER PERSON. IF THIS CONDITION IS NOT SATISFIED NO PROCEEDINGS COULD BE TAKEN U/S. 153C OF THE ACT. THE SEIZED DOCUMENTS MARKED AS PAGE 1 & 2 OF OUR O RDER DO NOT BELONG TO THE ASSESSEE BUT WERE SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI DILIP DHERAI. IT IS NOT THE CASE OF THE REVENUE THAT THE IMPUGNED DOCUMENTS ARE IN THE HANDWRITING OF THE ASSESSEE. AT THIS STAGE IT WOULD BE FAIR TO THE REVENUE TH AT IT CANNOT BE IN THE HANDWRITING OF THE ASSESSEE SINCE THE ASSESSEE IS A LEGAL PERSON SO TO EXTEND OUR OBSERVATION THE SEIZED DOCUMENTS ARE NOT EVEN IN THE HANDWRITING OF ANY PERSON RELATED WITH THE ASSESSEE BECAUSE SHRI DILIP DHERAI IS NEITHER A DIREC TOR NOR A SHAREHOLDER/MEMBER NOR EVEN AN EMPLOYEE OF THE ASSESSEE COMPANY. WE MAY MENTION AT THIS STAGE THAT THE PROVISIONS OF THE INDIAN EVIDENCE ACT ARE NOT STRICTLY APPLICABLE TO THE PROCEEDINGS UNDER THE INCOME TAX ACT BUT THE BROAD PRINCIPLES OF LAW OF ITA NOS.1459 TO 1461/12 16 EVIDENCE DO APPLY TO SUCH PROCEEDINGS. FURTHER AN ENTRY IN THE BOOKS OF ACCOUNT MAINTAINED IN THE REGULAR COURSE OF BUSINESS IS RELEVANT FOR THE PURPOSE OF CONSIDERING THE NATURE AND IMPACT OF A TRANSACTION BUT NOTING ON SLIP OF PAPERS OR LOOSE SHEET OF PAPERS ARE REQUIRED TO BE SUPPORTED/CORROBORATED BY OTHER EVIDENCE. THERE IS ALSO A DISTINCTION BETWEEN LOOSE PAPERS FOUND FROM THE POSSESSION OF ASSESSEE AND SIMILAR DOCUMENTS FOUND FROM A THIRD PERSON. IN THE PRESENT CASE IMPUGNED DOCUMENTS WERE N OT FOUND FROM THE POSSESSION OF THE ASSESSEE BUT WAS FOUND FROM THE POSSESSION OF A THIRD PERSON I.E. SHRI DILIP DHERAI. MERE MENTION OF THE NAMES OF THE VILLAGES WHERE THE COMPANIES MAY HAVE PURCHASED LANDS WOULD NOT GIVE ANY BASIS TO ASSUME/PRESUME/SU RMISE THAT THE NAME OF THE COMPANIES ARE MENTIONED IN THE IMPUGNED DOCUMENTS. THE VERY FOUNDATION OF SEC. 153C HAS BEEN SHAKEN BY NOT FULFILLING THE CONDITION PRECEDENT FOR THE ISSUE OF NOTICE. IT IS THE SAY OF THE LD DR THAT IN THE PRESENT CASE THERE IS NO NEED FOR RECORDING OF THE SATISFACTION .IF THIS PLEA OF THE DR IS ACCEPTED THEN THE LEGISLATIVE INTENT OF INSERTING SEC.153C IN THE ACT WOULD GET DEFEATED BECAUSE THE AO WILL GET UNSTOPPABLE POWERS TO REOPEN ASSESSMENTS FOR 6 YEARS IN THE CASE OF THE OTHER PERSON WITHOUT RECORDING ANY BASIS [ SATISFACTION ] FOR HIS ACTION .THEREFORE THIS PLEA OF THE LD DR CANNOT BE ACCEPTED . 19. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE IMPUGNED SEIZED DOCUMENTS WE HAVE NO HESITATION TO HOLD THAT ACTION TAKEN U/S. 153C OF THE ACT IS BAD IN LAW. 20. NOW COMING ON TO THE MERITS OF THE CASE WHICH IS WITHOUT PREJUDICE TO OUR FINDINGS HEREINABOVE THE SUBMISSIONS OF THE LD. SR. COUNSEL HAVE BEEN INCORPORATED HEREINABOVE TO WHICH THE LD. DR IN ADDITION TO HIS ORAL ARGUMENTS FILED A WRITTEN SUBMISSION. THE LD. DR HAS MAINLY RELIED UPON THE FINDINGS OF THE AO. SO FAR AS PAYMENTS OUTSIDE THE REGULAR BOOKS OF ACCOUNTS ARE CONCERNED IN HIS WRITTEN SUBMISSION THE LD. DR HAS EXPLAINED THE MODUS OPERANDI OF THE ASSESSEE RELYING UPON VARIOUS DOCUMENTS SEIZED FROM THE PREMISES OF SHRI DILIP DHERAI AND M/S. JAI CORP GROUP. THE LD. DR STRONGLY CONTENDED THAT THE RETRACTION OF SHRI DILIP DHERAI IS ONLY SELF SERVING AND HAS TO BE REJECTED AS AN AFTE RTHOUGHT. FOR THIS PREPOSITION THE LD DR RELIED UPON SEVERAL JUDGEMENTS . IT IS THE SAY OF THE LD. DR THAT THE STATEMENT OF SHRI DILIP DHERAI WAS RECORDED U/S. 132(4) OF THE ACT ON 5.3.2009 WHEREAS SHRI DILIP DHERAI HAS FILED AN AFFIDAVIT ON 14.5.2009 RETRACTING FROM HIS ADMISSION ON 5.3.2009. THE LD. DR POINTED OUT THAT AFTER 5.3.2009 SHRI DILIP DHERAI APPEARED BEFORE THE DDIT ON 6.4.2009 8.4.2009 20.4.2009 22.4.2009 & 8.5.2009 AND NONE OF THESE APPEARANCES SHRI DILIP DHERAI NEVER STATED THAT HIS STATEMENT ON OATH RECORDED ON 5.3.2009 WAS DONE UNDER THREAT FORCE COERCION. THEREFORE THE AFFIDAVIT FILED BY SHRI DILIP DHERAI IS ONLY AN AFTERTHOUGHT. IN HIS WRITTEN SUBMISSION THE LD. DR HAS POINTED OUT THAT SHRI DILIP DHERAI IN ORDER TO E SCAPE THE CONSEQUENCES OF LAW HAS FILED THE AFFIDAVIT AS AN AFTERTHOUGHT WHICH DESERVES TO BE IGNORED ESPECIALLY WHEN THE AFFIDAVIT HAS BEEN CONTROVERTED AND REPELLED BY THE AUTHORISED OFFICER SHRI MANOJ KUMAR. THEREAFTER IN HIS WRITTEN SUBMISSION THE LD. DR WENT ON TO EXPLAIN HOW THE CASH TRANSACTIONS HAVE TAKEN PLACE AS MENTIONED IN THE SEIZED DOCUMENTS. IT IS THE SAY OF THE LD. DR THAT ON PERUSAL OF THESE SEIZED DOCUMENTS THERE IS CLEAR MENTION OF CASH REQUIRED AT THE BOTTOM OF THESE PAGES. FURTHE R IN ALL THESE DOCUMENTS TOTAL COST OF LAND HAS BEEN ARRIVED BY MULTIPLYING AREA OF LAND WITH RATE PER ACRE. REFERRING TO PAGE - 22 AND 23 OF ANNEXURE - A1 WHICH ARE AT PAGE 1 & 2 OF OUR ORDER THE LD. DR SUBMITTED THAT SINCE 5 COLUMNS OF THE CHART ARE ENTE RED INTO THE BOOKS OF ACCOUNT THEN IT CANNOT BE ACCEPTED THAT THE 6 TH & 7 TH COLUMN DO NOT BELONG TO THE ASSESSEE COMPANY. THIS VIEW HAS BEEN ACCEPTED BY THE LD. CIT(A). THE LD. DR FINALLY CONCLUDED THAT IN VIEW OF ALL THE SURROUNDING FACTS AND ITA NOS.1459 TO 1461/12 17 CIRCUMSTA NCES IT IS VERY CLEAR THAT CASH PAYMENTS HAVE BEEN MADE AND AN ADDITION HAS TO BE MADE ON THIS ACCOUNT. TO SUBSTANTIATE HIS CLAIM THE LD. DR HAS ALSO REFERRED TO SEIZED MATERIALS 101 TO 108. ACCORDING TO THE LD. DR THESE SEIZED MATERIALS DESCRIBED THE MODUS OPERANDI OF THE GROUP. THE LD. DR IN HIS WRITTEN SUBMISSION HAS TRIED TO EXPLAIN THE NATURE OF TRANSACTION RECORDED IN THE SEIZED DOCUMENTS 101 TO 108. 21. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON MERITS AND PERUSED THE ORDERS OF THE LOWER AUTH ORITIES. THE ENTIRE ASSESSMENT REVOLVES AROUND THE STATEMENT OF SHRI DILIP DHERAI RECORDED U/S. 132(4) OF THE ACT ON THE DATE OF SEARCH I.E. 5.3.2009. THE RELEVANT QUESTION WHICH HAS BEEN RELIED UPON BY THE AO AND THE LD. CIT(A) IS AS UNDER: Q. 24.PLE ASE NOTE PAGE NO. 22 AND PAGE NO. 23 WHICH IS KEPT BEFORE YOU. AS I UNDERSTAND THESE ARE THE STATEMENT AS ON 28 TH NOVEMBER 2008 FOR THE LAND PURCHASED HEREIN LIST OF ACCOUNTED PAYMENTS ARE PROVIDED AGAINST EACH VILLAGE. PLEASE CLARIFY THE SAME.? ANS. T HESE DOCUMENTS REFLECT TOTAL AMOUNTS DISBURSED FOR PURCHASE OF LAND. THE DETAILS OF AREA VILLAGE PAYMENTS MADE THROUGH CHEQUE ALONGWITH PAYMENTS MADE THROUGH CASH IS SHOWN VERY CLEARLY IN THE CHART. THE HIGHLIGHTED PORTION REFLECTS THE CASH PAYMENTS D ISBURSED THROUGH JAICORP OFFICE AT MAKER AND JAI TOWERS. THE SAME HAS BEEN MENTIONED SEPARATELY. THE CASH PAYMENT FROM MAKER ADDS UPTO RS. 28.01 CR AND CASH PAYMENT FROM JAI TOWERS ADDS UPTO RS. 10.43 CR. ALL THESE CASH WERE RECEIVED FOR THESE PROJECTS FROM JAICORP LTD. AND THE TOTAL OF ALL THESE AMOUNTS WORKS OUT TO RS. 38.45 CR IN CASH. I WAS PROVIDED WITH THESE CASH AS AND WHEN REQUIRED BY SHRI SANJAY PUNKHIA 22. HOWEVER SUBSEQUENTLY SHRI DILIP DHERAI HAS RETRACTED FROM HIS STATEMENT WHICH HAS BEE N STRONGLY OBJECTED BY THE LD. DR IN HIS SUBMISSION. THE ENTIRE DISPUTE REVOLVES AROUND THE ALLEGED CASH PAYMENT AMOUNTING TO RS. 43 CRORES APPROX. AND WHICH HAS BEEN ADDED U/S. 69C OF THE ACT. SEC. 69C OF THE ACT READS AS UNDER: WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRED ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR THE EXPLANATION IF ANY OFFERED BY HIM IS NOT IN THE OPINION OF THE AO SATISFACTORY THE AMOUNT COVERED BY SUCH EXPENDIT URE OR PART THEREOF AS THE CASE MAY BE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR. 23. A PERUSAL OF THE AFOREMENTIONED SECTION SHOWS THAT THE REQUIREMENT OF THE SECTION IS THAT AN EXPENDITURE HAS BEEN FOUND TO HAVE BEEN INCU RRED BY AN ASSESSEE IN ANY FINANCIAL YEAR. CONSEQUENTLY THE ASSESSEE FAILS TO INDICATE SATISFACTORILY THE SOURCE OF SUCH EXPENDITURE OR ANY PART THEREOF. THEN SECTION 69C IS ATTRACTED IN SUCH CIRCUMSTANCES. THE EMPHASIS IS ON THE FACT THAT AN ASSESSEE HAS INCURRED ANY EXPENDITURE. THIS ITSELF SHOW THAT THE ASSESSEE MUST HAVE BEEN FOUND TO HAVE INCURRED ANY EXPENDITURE TO INVOKE THE PROVISIONS OF SEC. 69C OF THE ACT. EVEN IF FOR THE SAKE OF ARGUMENTS THE RETRACTION OF SHRI DILIP DHERAI IS IGNORED IN HIS REPLY TO QUESTION NO. 24 ON THE DATE OF SEARCH SHRI DILIP DHERAI HAS CATEGORICALLY MENTIONED THAT CASH PAYMENT FROM MAKERS IS AT RS. 28.01 CRORES AND CASH PAYMENT FROM JAI TOWERS IS AT RS. 10.43 CRORES TOTAL OF THESE AMOUNTS WORKS OUT AT RS. 3 8.45 CRORES WHICH WAS PROVIDED TO SHRI DILIP DHERAI BY ONE SHRI SANJAY PUNKHIA CEO OF SEZ PROJECT. SHRI DILIP DHERAI IS NOT EVEN REMOTELY RELATED TO THE ASSESSEE COMPANY .IT IS ALSO NOT THE CASE OF THE REVENUE THAT DILIP DHERAI WAS ACTING AS AGENT OF ITA NOS.1459 TO 1461/12 18 TH E ASSESSEE COMPANY. MERELY ON THE STRENGTH OF THIS ADMISSION IT CANNOT BE SAID THAT THE ASSESSEE HAS INCURRED CERTAIN EXPENDITURE OVER AND ABOVE WHAT HAS BEEN RECORDED IN ITS BOOKS OF ACCOUNT. WE FIND THAT THE ULTIMATE CONCLUSIONS DRAWN BY THE AO AND THE LD. CIT(A) HAVE BEEN REACHED MERELY ON THE ENTRIES FOUND ON LOOSE SHEET OF PAPERS FOR WHICH SHRI DILIP DHERAI HAS STATED THAT THEY ARE ONLY ESTIMATS / BUDGETARY FIGURES. HOWEVER THE ALLEGATIONS MADE BY THE LOWER AUTHORITIES ARE NOT SUPPORTED BY ACTUAL CASH PASSING HANDS. THE ENTIRE ADDITIONS ARE BASED ON THE SEIZED DOCUMENTS AND NO OTHER MATERIAL HAS BEEN ADVERTED TO AND WHICH COULD CONCLUSIVELY SHOW THAT THE HUGE AMOUNT OF THE MAGNITUDE MENTIONED IN THE SEIZED DOCUMENTS TRAVELLED FROM ONE SIDE TO TH E OTHER. THE REVENUE AUTHORITIES HAVE NOT BROUGHT A SINGLE STATEMENT ON RECORD OF THE VENDORS OF LAND IN DIFFERENT VILLAGES. NONE OF THE SELLER HAS BEEN EXAMINED TO SUBSTANTIATE THE CLAIM OF THE REVENUE THAT EXTRA CASH HAS ACTUALLY CHANGED HANDS. 24. OUR VIEW IS FORTIFIED BY THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF MALIK BROTHERS PVT. LTD. VS CIT 162 TAXMANN 43 WHICH IS RELIED UPON BY THE LD. DR. I N THAT CASE THE ASSESSEE PURCHASED THE PROPERTY ALLEGEDLY FOR RS. 6 LAKHS. THE VENDOR IN HE R STATEMENT CONFIRMED THAT THE SALE CONSIDERATION OF SAID PROPERTY WAS RS. 45 LAKHS AND PAID TAX THEREON. IN VIEW OF VENDORS STATEMENT THE AO MADE AN ADDITION OF RS. 39 LAKHS TO THE INCOME OF THE ASSESSEE TOWARDS UNEXPLAINED INVESTMENT. THE ACTION OF T HE AO WAS JUSTIFIED AND THE ADDITIONS WERE CONFIRMED. THUS IN VIEW OF THE AFORESAID DECISION IN THE PRESENT CASE NONE OF THE SELLERS HAVE BEEN EXAMINED BY THE AO TO STRENGTHEN HIS VIEWS THAT CASH HAS BEEN PAID OVER AND ABOVE THE REGISTERED AMOUNT. T HERE IS NOT EVEN A SINGLE DOCUMENT/EVIDENCE OF PARTIES INVOLVED IN THE SALE OF LAND AT DIFFERENT VILLAGES BROUGHT ON RECORD TO SHOW THAT AN AMOUNT OTHER THAN THE PAYMENT OF CONSIDERATION HAS EXCHANGED HANDS. NO CONFESSION FROM THE SELLERS HAVE BEEN BROUGHT ON RECORD. THE ENTIRE ADDITIONS HAVE BEEN MADE MERELY ON THE STRENGTH OF LOOSE PAPERS FOUND DURING THE COURSE OF THE SEARCH NOT SUPPORTED BY ANY INDEPENDENT AUTHORITY. CONSIDERING THE ENTIRE ADDITION IN THE LIGHT OF THE PROVISIONS OF SEC. 69C AS PER A .OS OWN INTERPRETATION INVESTMENTS IN PURCHASE OF LAND HAVE BEEN FULLY FINANCED BY SOME OTHER PERSONS THEREFORE THE ADDITION IN THE HANDS OF THE ASSESSEE CANNOT BE JUSTIFIED AS THE ASSESSEE HAS NOT INCURRED ANY EXPENDITURE. THERE MAY BE ONE MORE POSSI BILITY THAT THE PERSONS WHO WERE DOING LAND PURCHASE MIGHT HAVE INFLATED THE SALE PRICE IN THESE LOOSE SHEETS JUST TO EXTRACT MONIES FROM THEIR HIGHER AUTHORITIES IN THE GUISE OF ON - MONEY TO BE PAID TO THE VENDORS. MAY BE BECAUSE OF HIS POSSIBILITY NO DOCU MENTS WERE FOUND TO SHOW THAT THE MONEY ACTUALLY CHANGED HANDS. 25. A PERUSAL OF THE BALANCE SHEET OF THE ASSESSEE SHOW THAT THE AUTHORIZED ISSUED AND SUBSCRIBED PAID UP CAPITAL IS AT RS. ONE LAKH AND THE ASSESSEE HAD NOT DONE ANY BUSINESS DURING THE YEA R UNDER CONSIDERATION. WITH SUCH A SMALL CORPUS AND NO BUSINESS ACTIVITY NOR ANY HAS BEEN BROUGHT ON RECORD BY THE REVENUE IT IS NOT ACCEPTABLE THAT THE COMPANY MAY HAVE INCURRED SUCH HUGE EXPENDITURE OUTSIDE ITS BOOKS OF ACCOUNT. FURTHER IN HIS ENTIRE ASSESSMENT ORDER THE AO HIMSELF HAS POINTED OUT TIME AND AGAIN DIFFERENT PERSONS WHO ARE ALLEGED TO HAVE MADE CASH PAYMENTS. EVEN ON THAT COUNT THE ADDITIONS CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE. IN OUR CONSIDERATE VIEW THERE BEING NO E VIDENCE TO SUPPORT THE REVENUES CASE THAT A HUGE FIGURE WHATEVER BE ITS QUANTUM OVER AND ABOVE THE FIGURE BOOKED IN THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN THE PARTIES NO ADDITION COULD THEREFORE BE MADE U/S. 69C OF THE ACT TO THE INCOME OF THE ASSESSEE. CONSIDERING THE ENTIRE FACTS BROUGHT ON RECORD WE HAVE NO HESITATION TO HOLD THAT EVEN ON MERITS NO ADDITION COULD BE SUSTAINED. ITA NOS.1459 TO 1461/12 19 11 . AFTER GOING THROUGH THE FINDINGS OF THE TRIBUNAL IT IS CLEARL Y SEEN THAT THE TRIBUNAL HAS ALREADY GIVEN A FINDING THAT NO ADDITION CAN BE MADE IN THE HANDS OF THOSE COMPANIES ON SUBSTANTIVE BASIS ON THE BASIS OF MATERIAL FOUND DURING THE COURSE OF SEARCH. NEITHER THERE WAS ANY EVIDENCE TO SHOW THAT ANY CASH HAS CHAN GED HAND NOR THERE WAS ANY CONFIRMATION FROM THE SELLERS FROM WHOM THE LAND IN QUESTION WAS PURCHASED BY THOSE 52 LAND COMPANIES AND AFTER ANALYZING ALL THESE FACTS THE TRIBUNAL CAME TO THE CONCLUSION THAT NO ADDITION CAN BE MADE IN THE HANDS OF THESE 52 C OMPANIES. 1 2 WE HAVE ALSO GONE THROUGH THE ORDER OF THE AO AND THE STATEMENTS OF SHRI DILIP DHERAI AND OTHERS COPY OF WHICH ARE PLACED ON RECORD AND FOUND THAT THERE IS NO ALLEGATION AGAINST THE ASSESSEE THAT ALL THESE LAND WERE PURCHASED BY THE ASSESSE E FROM HIS OWN FUNDS IN THE NAME OF THOSE LAND COMPANIES. IT IS AMPLY PROVED FROM THE STATEMENT OF VARIOUS PERSONS WHO ARE DIRECTORS OF THESE COMPANIES OR WERE INVESTED IN FUND THOSE COMPANIES THAT ASSESSEE H AS NOT PURCHASED THE LAND FOR ITS OWN COMPANIE S AS HE WAS ONLY MANAGING THE AFFAIR OF PURCHASE AND SALE. IT MEANS THE ASSESSEE WAS RECRUITED AS AN AGENT. IN SUBMISSION OF THE ASSESSEE WHICH IS REPRODUCED IN THE ORDER OF AO IT HAS BEEN CLEARLY STATED THAT HE WAS HANDLING THE AFFAIRS OF PURCHASE AND S ALES ONLY. THE PERSONS WHO ARE RELATED WITH JAI G ROUP WERE SEARCHED AND STATEMENT OF THOSE PERSONS WERE ALSO RECORDED AND THEY HAVE ALSO STATED THAT THE PURCHASE OF LAND WAS HANDLED BY SHRI DILIP DHERAI THE ASSESSEE. THEY HAVE NOT STATED IN ITA NOS.1459 TO 1461/12 20 THEIR RESPECTIVE S TATEMENTS THAT MR. DILIP DHERAI WAS INVOLVED IN PURCHASING THE LAND FROM HIS OWN SOURCE OR FOR HIS OWN COMPANIES FLOUTED BY HIM. NEITHER THESE COMPANIES WERE FLOUTED BY THE ASSESSEE NOR HE HAS PURCHASED THE LAND FOR HIS OWN BENEFIT. THEREFORE FOR THESE RE ASONS ALSO IN OUR CONSIDERED VIEW NO ADDITIONS COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE EITHER ON SUBSTANTIVE BASIS OR ON PROTECTIVE BASIS. IT IS ALSO A MATTER OF FACT THAT THE ASSESSEE IS NOT A DIRECTOR OF ANY OF THE 52 LAND COMPAN IES NOR HE I S A SHAREHOLDER OF THOSE COMPANIES THEREFORE WE DONT KNOW HOW THE AO HAS DRAWN INFERENCE AGAINST THE ASSESSEE THAT HE IS THE ONLY PERSON WHO IS USING HIS UNEXPLAINED CASH FOR BUYING THE LAND IN THE NAME OF 52 COMPANIES. IF AT ALL ANY CASH HAS CHANGED H ANDS AT LEAST IT CANNOT BE SAID THAT THE CASH RELATES TO THE ASSESSEE AS THE ASSESSEE IS NOT A MAN OF MEANS WHO CAN INVEST SUCH A HUGE AMOUNT OF ABOVE 4 3 CRORES IN PURCHASE OF LAND IN THE NAME OF 52 COMPANIES. COPY OF THE RETURN FOR THESE ASSESSMENT YEA RS ALONG WITH BALANCE SHEET OF THE ASSESSEE ARE PLACED ON RECORD AND IS CAPITAL IS VERY MINIMAL. THEREFORE FOR THIS REASON ALSO IN OUR CONSIDERED VIEW NO ADDITION COULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. 13 . THE ARGUMENTS OF THE LEARNED DR T HAT THE AFFIDAVIT OF RETRACTION FILED BY THE ASSESSEE IS AN ACT OF AFTERTHOUGHT. MAYBE THAT OF AFTERTHOUGHT AND RETRACTION MADE BY THE ASSESSEE IN OUR CONSIDERED VIEW DOES NOT HAVE ANY BEARING O N THE PRESENT FACTS OF THE CASE AS IN THE ORIGINAL STATEMENT ALSO THE ASSESSEE HAS NEVER STATED THAT HE HAS ITA NOS.1459 TO 1461/12 21 USED HIS UNEXPLAINED CASH FOR PURCHASE OF AGRICULTURAL LAND IN THE NAME OF 52 LAND COMPANIES. THEREFORE NO MUCH CREDENCE CAN BE GIVEN IN RESPECT OF AFFIDAVIT FILED BY THE ASSESSEE RETRACTING HIS OWN EARLIER STATEMENT NEITHER COMPLEX OF THE CASE IS TO BE CHANGED IN FILING OF THE AFFIDAVIT OF THE ASSESSEE. 14 . THE NEXT MAIN ARGUMENT OF THE LEARNED DR IS THAT SINCE THE DEMAND IS ONLY ON PAPERS AND THE ORDER OF THE TRIBUNAL HAS NOT REACHED ITS FINALITY THEREF ORE SHOULD BE KEPT IN ABEYANCE. FOR THIS PURPOSE HEAVY RELIANCE WAS PLACED BY THE LEARNED DR IN THE CASE OF COMMISSIONER OF INCOME - TAX V. SURENDRA GULABCHAND MODI (1983) 140 ITR 517 (GUJ) BY WHICH IT HAS BEEN HELD THAT THE TRIBUNAL WAS NOT JUSTIFIED IN PROCEEDING WITH THE MATTER AND VACATING THE PROTECTIVE ASSESSMENT. ACCORDINGLY THE TRIBUNAL WAS DIRECTED TO KEEP THE MATTER PENDING TILL THE DECISION OF THE HON BLE SUPREME COURT. THESE ARGUMENTS HAVE BEEN TAKEN BY THE LEARNED DR IN HIS WRITTEN SUBMISSIO N AND TIME AND AGAIN HAS BEEN STATED THAT APPEALS OF THE DEPARTMENT SHOULD BE KEPT IN ABEYANCE TILL THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF 52 LAND COMPANIES IS DECIDED. WE FIND NO MUCH WEIGHT IN THESE ARGUMENTS BECAUSE IT IS NOT KNOWN W HETHER THE DEPARTMENT HAS FILED ANY APPEAL EVEN BEFORE THE HON BLE HIGH COURT OR NOT. THEREFORE NO APPEAL IS PENDING BEFORE THE HON BLE SUPREME COURT . IF THE DEPARTMENT FILES APPEALS BEFORE THE HON BLE HIGH COURT THEN APPEALS CAN BE FILED AGAINST THIS OR DER ALSO. EVEN AND OTHERWISE WE ARE NOT HOLDING THAT NO PROTECTIVE ASSESSMENT CAN BE ITA NOS.1459 TO 1461/12 22 MADE. OF COURSE PROTECTIVE ASSESSMENT CAN BE MADE IF THE SAME AMOUNT IS ADDED IN ONE HAND AND THE SAME AMOUNT IS ADDED IN ANOTHER HAND ON PROTECTIVE BASIS. IN THIS CASE ALSO THE AO MADE SUBSTANTIVE ADDITION IN THE HANDS OF 52 LAND COMPANIES AND PROTECTIVE BASIS IN THE HANDS OF ASSESSEE FOR THESE THREE YEARS. THE TRIBUNAL HAS TAKEN A DECISION THAT NO ADDITION CAN BE MADE ON THE BASIS OF MATERIAL FOUND DURING THE COURSE O F SEARCH. THE TRIBUNAL HAS NOT STATED ANYWHERE IN ITS ORDER THAT ADDITION CAN BE MADE IN THE HANDS OF SHRI DILIP DHERAI AND NOT IN THE HANDS OF 52 LAND COMPANIES. IN THE CASE OF THE ASSESSEE WE ARE NOT DELETING THE ADDITION MERELY ON THE BASIS OF THE FIND INGS OF THE T RIBUNAL AS WE ARE OF THE VIEW THAT EVEN ON MERIT NO ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE WE HOLD THAT THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESSEE FOR THESE THREE ASSESSMENT YEARS WAS NOT JUSTIFIED AND FOR THIS REASON WE CONFIRM THE ORDER OF THE LEARNED CIT(A) WHO DELETED THE ADDITION IN THE HANDS OF THE ASSESSEE MADE ON PROTECTIVE BASIS. THIS GROUND OF THE DEPARTMENT FAILS. 1 5 . THERE IS NO OTHER GROUND I N APPEAL FOR ASSESSMENT YEARS 2007 - 08 & 2008 - 09. HOWEVER THERE IS ONE MORE GROUND IN APPEAL OF THE DEPARTMENT FOR ASSESSMENT YEAR 2009 - 10 I.E. AGAINST DELETING THE ADDITION OF RS. 18 LAKHS MADE ON PROTECTIVE BASIS. 1 6 . BRIEF FACTS OF THE CASE IN THIS REGA RD ARE THAT DURING THE SEARCH AND SEIZURE OPERATION AT RESIDENTIAL PREMISES OF THE ASSESSEE A CAS H ITA NOS.1459 TO 1461/12 23 OF RS. 33 08 520/ - WAS FOUND. IN THE STATEMENT RECORDED THE ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF THIS CASH FOUND DURING THE COURSE OF SEARCH WITH A NY SUPPORTING EVIDENCE. AN AMOUNT OF RS. 18 00 000/ - OF CASH OUT OF RS. 33 08 520/ - WAS EARNED BY M/S URBAN TRANSPORTATION INFRASTRUCTURE PVT. LTD. (UTIPL) AND THIS COMPANY HAS ALSO FAILED TO EXPLAIN THE SOURCE OF THIS CASH OF RS. 18 LAKHS WITH ANY SUPPORTI NG EVIDENCE. DURING THE ASSESSMENT PROCEEDINGS THE AO HAS GIVEN A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH FOUND DURING THE COURSE OF SEARCH. THE ASSESSEE SUBMITTED THAT CASH OF RS. 18 LAKHS WAS FOUND WHICH RELATES TO UTIPL AND THE B ALANCE AMOUNT OF RS. 15 08 520/ - WAS BELONGING TO HIM. SINCE NO SUPPORTING EVIDENCE WAS FILED BEFORE THE AO ACCORDINGLY THE AO MADE ADDITION OF RS. 18 LAKHS ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AND SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF THE COMPANY M/S UTIPL. THE REMAINING AMOUNT OF RS. 15 08 520/ - WAS TREATED AS UNEXPLAINED MONEY UNDER SECTION 69A OF THE ACT AND WAS ADDED TO THE TAXABLE INCOME OF THE ASSESSEE ON SUBSTANTIVE BASIS. 17 . IN APPEAL LEARNED CIT(A) DELETED THE ADDITION OF RS . 18 LAKHS BY FINDING THE FACT THAT M/S UTIPL HAS ADMITTED THAT THE AMOUNT OF RS. 18 LAKHS BELONGS TO THEM AND THEREFORE HE DELETED THIS PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE. HOWEVER THE ADDITION OF RS. 15 08 520/ - WAS CONFIRMED AS THE ASSESSEE HAS DECLARED THIS AMOUNT IN HIS RETURN. HOWEVER LEARNED CIT(A) REDUCED THIS AMOUNT FROM THE COMPUTATION BECAUSE THE AO HAS MADE THIS ADDITION OF ITA NOS.1459 TO 1461/12 24 RS. 15 08 5250/ - OVER AND ABOVE THE AMOUNT DECLARED IN THE RETURN WHICH INCLUDED THIS AMOUNT OF RS. 15 08 520/ - ALSO. NOW THE DEPARTMENT HAS CHALLENGED IN DELETING THE ADDITION OF RS. 18 LAKHS HERE BEFORE THE TRIBUNAL. 18 . LEARNED DR PLACED RELIANCE ON THE ORDER OF AO . ON THE OTHER HAND LEARNED COUNSEL OF THE ASSESSEE PLACED RELIANCE ON THE ORDER OF CIT(A) . FURT HER ATTENTION OF THE BENCH WAS DRAWN ON THE COPY OF THE ASSESSMENT ORDER IN THE CASE OF M/S UTIPL WHEREIN THE COMPANY HAS ADMITTED THAT THIS AMOUNT BELONGS TO THEM. THEREFORE IT WAS SUBMITTED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITIO N. 19 . AFTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD WE FOUND THAT LEARNED CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AS SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF THE M/ S UTIPL. COPY OF THE ASSESSMENT ORDER IS PLACED ON RECORD IN CASE OF M/S UTIPL AND IT IS SEEN THAT THE COMPANY HAS ADMITTED THAT THIS AMOUNT BELONGS TO THEM. IN PARA 3.1 OF THE ASSESSMENT ORDER OF THE COMPANY M/S UTIPL IT HAS BEEN OBSERVED THAT THE ASSES SEE COMPANY HAS ALSO OWNED UNEXPLAINED CASH OF RS. 18 LAKHS FOUND FROM MR. DLILIP DHERAI AS IT OWN UNEXPLAINED CASH. NO DOUBT REMAINS THAT AMOUNT OF RS. 18 00 000/ - BELONGS TO THE COMPANY AND SUBSTANTIVE ADDITIONS HAVE ALREADY BEEN MADE. THEREFORE IN OUR C ONSIDERED VIEW THERE WAS NO REASON TO MAKE ITA NOS.1459 TO 1461/12 25 ANY ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. ACCORDINGLY WE CONFIRM THE ORDER OF THE CIT(A) IN THIS RESPECT ALSO. 2 0 . IN THE RESULT ALL THE APPEAL S OF THE DEPARTMENT ARE DISMISSED ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF JUL. 2013 . SD/ - ( ) ( N.K.BILLAIYA ) SD/ - ( ) ( R.K.GUPTA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 31/07/ 2013 . /PKM PS COPY OF THE ORDER FORWARDED T O : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) MUMBAI. 4. / CIT 5. / DR ITAT MUMBAI 6. GUARD FILE. //TRUE COPY// / BY ORDER ( ASSTT. REGISTRAR) / ITAT MUMBAI