Pavitra Realcon (P) Ltd. v. Asstt. CIT

INCOME TAX ACT, 1961

--Search and seizure--Assessment under section 153CValidity of proceedins vis-a-vis additions----Where notice under section 153C was not issued to assessee by revenue and furtherse in on exensive search no incriminating material was found and statement recorded under section 132(4) was not corroborated by independent corroboratins material , assessment was therefore palpably and patently illegal and as such, on basis of presumption and surmises,no addition could be made.--M/s. BPTP Ltd. was incorporated in 2003 and was a leading real estate developer in NCR region. The group was one of the major players in development of integrated township, residential projects, IT Parks, SEZ, Hospitality Sectors etc. in NCR region. A search and seziure action was carried out on BPTP group companies. Notice under section 143(2) was issued to assessee and it filed return declaring 'Nil' income. During course of search,it was seen that three group companies, viz., M/s DIL, M/s DRL and M/s PRL had shown certain crores of rupees as 'advance against property' from three companies AFL, ACL and AL. said three group companies DIL, DRL and PRL were accommodation entry provider. The AO observed that during the various searches conducted and evidence collected, it was found that these are entry providing companies were used as conduit for channelling unaccounted money.AO made addition accordingly. Held: No notice under section 153C was issued in case of PRPC and DRP and search was conducted in the case of DIPL and satisfaction was recoded on 27-7-2012. So far as the argument of the Departmental Representative that although no notice under section 153C has been issued but the assessment had been completed under section 153C/143(3) and therefore, the error was curable under section 292B is concerned, the same cannot be read to confer the jurisdiction on the AO where none exists. No notice under section 153C has been issued for the period under consideration. However, so far as the seized materials were concerned, the same were not found during the assessee's own search action and were found from Mr. S.K. Jain's independent search. The procedure prescribed under section 153C had not been followed in the present case. This was more so when assessee's extensive search operation had not yielded any incriminating material. The provision of section 292C creates presumption only to the person from whose possession the said documents are found and therefore, the same will not be applicable qua the assessee.There was no corroboration of the statement recorded under section 132(4) by any independent corroborative material. As regards statement recorded under section 132(4) was concerned, it has since been held in various decisions that presumptions and surmises, however strong may be, couldnot be the basis for any addition. CIT(A) was not justified in confirming the addition made by the AO. Therefore, the order of the CIT(A) was setaside and the AO was directed to delete the addition.