| Question And Answer | |
|---|---|
| Subject: | Notice u/sec 153C of the Act and incriminating material |
| Category: | Income-Tax |
| Querist: | Disha shah |
| Answered by: | Research Team |
| Tags: | Builder, search assessment, statement, undisclosed income |
| Date: | October 20, 2021 |
Assessee has individual who has purchase flat from Builder. There was search at the premises of Builder from whom assessee has purchased flat. During the course of search one statement in excel format in which name of flat holders, flat no, agreement value and on money , area etc mention. Builder has accepted that his additional income earned by him and paid the taxes. On the basis of this incriminating material and statement of Builder Assessing Officer has recorded a satisfaction note that on money amount is income to be taxable in the hands of assessee and sent the satisfaction note and incriminating material to the Jurisdictional AO, who has issued notice u/sec. 153C for 6 years. Assessee has filed the Return in response to said Notice. And asked the AO to provide satisfaction note and incriminating material, which has been provided by the AO. On verification of the incriminating material and satisfaction note it is found that:
a. In satisfaction note flat number and amount mention is different than the flat purchase by the assessee.
b. Statement relied up on as incriminating does not give the date on which amount of on money is paid?
Issues :
a. Whether notice issued u/sec.153C for 6 years is correct
b. Whether assesse can challenge the notice issued U/153C is not valid as the number of flat , agreement value , area of flat etc are not the same which assessee has purchased.
c. Statement in excel format found does not have any date or signature of the assessee.
d. Whether the assessee can take the objection when no incriminating material is found no addition can be made.
Kindly guide
The assessee may write to the Assessing Officer to furnish the copy of satisfaction note , copies of documents seized from the premises of builder statement of the builder and an opportunity for cross examination . If the said documents are not furnished the assessee may make an application under Right to Information Act, 2005 . As the documents seized from the third party premises , the provision of section 292C regarding presumption as to assets , books of account ,etc , is not applicable to the assessee. The burden is on the revenue to prove that the amount was paid more than the agreement value . One has to refer what was the stamp valuation is it equal or more than the amount stated in the agreement. The issue of notice may be valid if due process of law was followed by the Assessing Officer . If an opportunity for cross examination is not given the entire addition may be held to be bad in law . Refer Andaman Timber Industries v.CCE ( 2015 ) 281 CTR 241 (SC) and Kishanchand Chellaram v. CIT ( 1980) 125 ITR 713 (SC). In following cases the addition made on the basis of statement of the builder was deleted, Runal Homes Pvt. Ltd. v. DCIT (Mum.)(Trib.) (ITA No. 5621/Mum/2017 dt. 20-12-2017), Sonali Bjhavsar v. PCIT (ITA No. 742/M/2019 dt. 17-5-2019).
If the original assessment was completed the assessee can take the ground that no incriminating material was found hence addition cannot be made merely on the basis of third party statement . In the PCIT v. Anand Kumar Jain (2021) 432 ITR 384/ 201 CTR 200 / 320 CTR 656 (Delhi) (HC) the Court held that the statement of third party is not an incriminating document . One has to study the facts and law the assessee may contact the tax consultant for further guidance .