INCOME TAX ACT, 1961

Section 153A

Search and seizure - Assessment under section 153A - Addition made on the basis of seized documents - No income accrued to assessee based on documents seized

Search and seizure on 'Triveni Group' of companies was carried out and assessee was covered in that search also. During the course of search Annexure A-23 was seized. Based thereon AO alleged that assessee had received as commission of Rs. 8.75 crore in respect of sale of property purchased by three individuals from court auction which was bid by Triveni Group for purchase of the property. AO took the view that as documents recovered from the laptop of promoter of Triveni group was good evidence. In view of this, he made an addition of Rs. 8.75 crores in the hands of assessee while framing assessment under section 153A read with section 143(3). Assessee argued that documents were dumb documents.Held: If letters of three buyers and reply correspondence of assessee was looked as a compendium of correspondence as 'one', assessee had clearly shown that yes as per those documents assessee received an offer and by another document, which was totally ignored by AO assessee refused to accept that offer. Both receipt of offer and refusal to accept that offer-rejection-both were prior to search and both the electronic evidences were available with AO. However, AO made addition based on offer received by assessee completely ignoring the refusal to accept such offer by assessee. Therefore, part of the records found during search could not be used against assessee where in other documents clearly suggested that there was no such income accruing to assessee. Further, AO did not examine buyers of property with respect to commission paid by them to the assessee. Even assessee was also not querstioned during the course of search with respect to the three letters. As there was no income accrued to assessee based on documents seized, without bringing any corroborative material, it could not have been taxed in the hands of assessee.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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