The two member bench of Ahmedabad Income Tax Appellate Tribunal ( ITAT ) ruled that no addition should be made on the basis of documents found from third party’s premises during the survey proceedings .
The Assessee, Lilaben Rameshbhai Savaliya ‘s after filing the return of income his case was selected for scrutiny . During the course of survey proceedings, the case of Shri Paresh Hiralal Modi conducted at his office who was covered during the course of search of survey conducted in the cases of Amrapali Group a loose-paper file inventorized as ‘Annexure A-2’ was found and impounded.
The said file was related to pieces of land in various survey numbers admeasuring total area of 23272 sq.metres situated at Hathijan Village of Daskroi Taluka of Sub-District Ahmedabad. According to the Banakhat dated 26/03/2010, the sale consideration of the said land is Rs.1,01,45,000/.
It is observed that the assessee was having 60% share in the land.Therefore, considering that the undisclosed amount of Rs.3,17,46,320/- has escaped assessment as per the observation of the Assessing Officer and, therefore, the case was reopened. Accordingly, notice under Section 148 of the Income Tax Act was issued and served upon the assessee.Accordingly the assessee informed that he was field return of income .
After taking cognizance of the assessee, the Assessing Officer disposed of the objection filed by the assessee Thus the Assessing Officer made addition of Rs.79,36,580/- on account of unexplained investment in purchase of land under Section 69 of the Income Tax Act. The Assessing Officer also made disallowance on account of unexplained expenditure on agricultural income to the extent of Rs.1,06,204/.
Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.Hence the assessee filed another appeal before the tribunal.
During the adjudication Sanjay R. Shah, the counsel for assessee submitted that the draft of Memorandum of Understanding ( MOU ) found during the course of survey proceedings cannot be considered as final document for sale of land as the draft itself contains many corrections and instructions to be carried out before preparing final document.
Further the counsel argued that “even the statement of Shri Paresh Hiralal Modi taken at the time of survey as well as the papers found and impounded cannot have any evidentiary value as relating to survey proceedings in case of third party”.
Saumya Pandey Jain, Counsel for Revenue supported the order of lower authorities and argued that the document found on third party and the final registered documents are on the similar terms and, therefore, the same cannot be treated as done document, but are very much incriminating
It was observed that the document found on the third party’s premises and which were not finalized in the eyes of law cannot be assumed that the same have been acted upon by the parties mentioned therein.
After reviewing the facts the ITAT bench of Suchitra Kamble (Judicial Member) and Annapurna Gupta (Accountant Member) held that no addition should be made on the basis of documents found from third party’s premises during the survey proceedings .
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