×Latest Case Laws on Income Tax by various Income Tax Appellate Tribunals in India
These are the latest case laws decided by various Income Tax Appellate Tribunals (ITAT) of India on Income Tax which have been published recently. The case laws are open for discussion and we invite expert comments from our members on its applicability and effect on relevant issues.
1. These are the six appeals pertaining to the Assessee for AY 2005-06, 2006- 07 and 2009-10 filed by both the parties involving certain common issues; both the parties argued the matter together for all the appeals and same is disposed of by this common order.
2. First , we address the appeals of assessment year 2005 – 06 wherein both the parties have filed the cross appeals against the order of The Commissioner Of Income Tax (Appeals) –III, New Delhi [ The ld CIT (A)] dated 25/3/2010.
3. The assessee has raised the following grounds of appeal in ITA No. 2494/Del/2010 for the Assessment Year 2005-06:-
“1. On the facts and in the circumstances of the case, the Ld CIT (A) was not correct in holding date assessment proceedings are validly initiated and further holding that assessment order was not illegal and invalid
2. Without prejudice to above, that ld CIT(A) has erred on facts and in law in not holding that present: assessment is without jurisdiction and void ab initio in so far as no documents or material seized during various searches could be said to be belonging to assessee and as such assessment deserves to be annulled.
3. Without prejudice to above, that ld CIT (A) has erred on facts and in law in holding that jurisdiction u/s 153A r/w 153C is validly initiated in so far as there is no satisfaction recorded by AO in file and record of persons searched U/s 153A as mandated by Income Tax Act 1961. As such assessment be annulled.
4. Without/prejudice to above, that ld CIT(A) has erred on facts and in law in not holding that the present assessment is without jurisdiction in so far as there is no record of handing over and taking over of record from file of persons searched to assessee as mandated by Income Tax Act‟1961.
5. Without prejudice to above, the ld CIT (A) has erred on facts and in law in holding that jurisdiction U/s 153A r/w 153C of Income Tax Act 1961 is validly initiated in so far there is absence of two separate AO‟s i.e. one having jurisdiction over assessee searched and other having jurisdiction over assessee in whose case jurisdiction U/s 153C initiated. As such assessment be annulled.
6. That the order of ld CIT (A) is against the law, facts, circumstances, natural justice and all the other principles and rules of law.
7. That the ld CIT(A) has erred in law in confirming an addition based on material collected by AO which were mere conjectures only and using them as evidence against assessee ignoring the facts, submission and material placed on record by the assessee which is in the violation of principles of natural justice and applicable law, as such all the findings are vitiated and additions so made are not maintainable in law and liable to be deleted.
8. That the ld CIT (A) erred in confirming additions of Rs. 15 lakhs which is perverse, based on surmises and conjectures and is contrary to the facts and provisions of law, as such is bound to be deleted.”
4. The revenue has raised the following grounds of appeal in ITA No. 2674/Del/2010 for the Assessment Year 2005-06:-
“1. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in deleting the addition of Rs. 43.61 Crores out of Rs. 43.76 Crores made by the AO on account of receipt of cash payments?
2. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts by not appreciating the fact that the addition made in the case of M/s Vipul Ltd. stands confirmed by the CIT (A) himself on the same issue as well as on the basis of same evidences'.‟
3. Whether on the facts and in the circumstances of the case, the CIT (A) has erred in law and on facts in ignoring the fact that the assessee company is a co partner of M/s Vipul Ltd in various projects and was in receipt of equal amount of cash component as received by M/s Vipul Ltd.?
4. The order of the CIT(A) is perverse and not tenable in law and on facts.”
5. The brief fact shows that assessee is a company engaged in the business of construction of residential flats in Gurgaon. Search and seizure action u/s 132 of The Income Tax Act [the Act] was carried out in Vipul group of cases on 1/6/2006 and survey at the business premises of the assessee u/s 133A of The Act. During the course of search, certain documents allegedly belonging to the assessee were seized and therefore after recording the satisfaction the learned assessing officer proceeded under section 153C of the act. The learned assessing officer also provided the copy of satisfaction note to the assessee. Pursuant to that assessee filed its return of income declaring income of INR 9801350/– on 2/6/2008. At the time of commencement of the assessment proceedings, assessee objected to the proceedings initiated u/s 153C, however the learned assessing officer noted that the documents are „belonging to‟ the assessee were seized and after recording the satisfaction proceedings u/s 153C were initiated. He further noted that the assessee company has also undertaken to develop various building projects in joint collaboration with M/s Vipul Ltd and the documents seized during the course of search also related to these projects and therefore the action u/s 153C of the act was properly taken.
6. The assessee company was incorporated on 2/4/1993 and engaged in the business of real estate developers and contractors. It has entered into a joint venture with M/s Vipul infrastructure developers Ltd for development of several projects having 50% share in all the projects except in one case where the assessee company was having only 37.5 percent shares. During the course of search on 01/06/2006 at the residence of Shri Moti S Masand, director of M/s Vipul Ltd, several documents were seized which are MIS receipts of collection of customers money for different projects of Vipul Ltd and assessee. During the course of search, the statement of Mr. Moti S Masand was recorded wherein he has admitted that he has prepared the same on the basis of data gathered from the management Information Systems statements from the account section of Vipul Ltd. He further offered the sum of as his additional income. Based on the analysis of the seized documents the learned assessing officer held that those papers contain details of total receipts against all the projects of M/s Vipul group. He further noted that documents revealed that the payment in cash amounting to INR 40.56 crore has been received by M/s Vipul Limited up to 31/3/2005 as its share of cash receipts. As the assessee was jointly developing the projects having equal share in those projects, assessee company share in cash receipt too was stated to be as per LD AO at INR 40.56 crores. Therefore, the learned AO gave a copy of the statement along with the seized documents to the assessee to rebut the above findings. The opportunity of cross-examination was also given. During the course of hearing, assessee stated that those documents have neither been prepared by the assessee not seized from the possession of the assessee and they are not in the handwriting of any employees of the assessee company. He further stated that the statement of Mr. Masand has no reference about the assessee company and in the seized documents; the name of the assessee is not appearing. It was further stated that Mr. Masand has accepted that he has never collected any and has not indicated any definite source of the documents on the figure mentioned therein. Assessee also stated that that Mr. Masand has never handled financial part of M/s Vipul Ltd and was only associated with the execution of the projects as an engineer. Assessee stated that the documents seized from that person are dumb documents and there is no authentic source of the said documents and figures written therein. It was further stated that projects were being developed and marketed by M/s Vipul Ltd and during the course of search, afterward in any confessional statement it has not been admitted that the cash was being received and assessee also stated that the statement of the purchasers have not been recorded to examine the veracity of the statement of that man. The learned assessing officer rejected the argument of the assessee. The learned AO held that the document seized from the residence of that man was in his own hand writing who is a director of M/s Vipul Ltd and was holding a very important post , signing the balance sheet and cheques and was a key management personnel of that company. The