INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - AO inferred modus operandi adopted by group companies prior to date of first search - Assessee company was not in existence at the time of first search and during second search nothing was found belonging to assessee

Search and seizure operation was carried out at various premises of M/s. BPTP Ltd. and its group concerns and associated persons on 7-12-2010 and was finally concluded on 5-2-2011. The assessee was associated with M/s. BPTP Group of cases. During the course of assessment proceedings, AO noticed that first search and seizure operation was carried out in M/s. BPTP Group of cases and some of its group companies on 15-11-2007. During earlier assessment proceedings under section 153 A, it was very well proved that the group used to waive part payments of sale consideration in respect of land purchased at the time of execution of sale-deed and payments of balance sale consideration were invariably made through post dated cheques (PDCs) for intervening period, i.e., period between the date of sale deed and the date of encashment of PDCs interest was paid in cash to vendors of land by the vendee company on monthly basis @ 1.25% p.m. on amount of PDC's and this cash payment of interest by vendee company was not accounted for by it, in its books of account. The addition on this ground was made in several group companies of BPTP group during course of earlier assessment proceedings under section 143(3)/148/153A consequent to search carried out on 15-11-2007. Accordingly, AO took the view that assessee was following the same business model and accordingly, AO made similar addition in assessee's case assessee submitted that assessee-company was incorporated on 6-7-2009 and was not in existence at the time of first search and in the matter of PDC interest had not brought any fresh material on record to show that interest was paid in cash outside books of accounts and had been accepted by the recipients.Held: When assessee company was not in existence at the time of first search and when none of the documents found during the course of second search belonged to the assessee and also AO in the body of assessment order had not referred to any seized material found during the course of second search pertaining to assessee which gave any clue even in remotest manner with respect to payment of interest on PDCs out of books beyond 6 months from the sale deed, no addition could have been sustained.

Followed:Impower Infrastructure Pvt. Ltd. v. Asstt. CIT vide [ITA No. 6637/Del/2014] and vice versa vide ITA No.6818/Del/2014 Order, dt. 18-5-2018 for assessment year 2011-12.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2011-12

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