The court established that additions to the assessee's income cannot be based solely on uncorroborated documents without proper investigation, reaffirming the necessity for substantial evidence in reassessment procedures.

JUDGMENT

Manmeet Pritam Singh Arora, J. (Oral)

ITA 638/2019

1. Present appeal has been filed by Revenue challenging the order dated 05th October, 2018 passed by Income Tax Appellate Tribunal (`ITAT') in ITA No. 5957/DEL/2015 and C.O. NO. 38/DEL/2016 for the Assessment Year (`AY') 2007-08.

2. Learned counsel for the Revenue states that ITAT erred in deleting the addition of Rs.34,06,11,102/- without analysing and considering the contents and the words of the seized document, identified in the appeal as page no. 5 of Annexure A-1 (`Seized Document'). He states that as per the said Seized Document the Vasant Square Mall was acquired by the Assessee for Rs.32,85,37,354/- before 1st October 2006, which was undisclosed in the Income Tax Return (`ITR') of the Assessee. He states that the ITAT erred in deleting the addition of Rs.1.20 Crores on account of receipt of rent, without considering that the amount of rent pertaining to period from 1st October 2006 to 31st March 2007, was undisclosed in the ITR. He states that as per the Seized Document, the Vasant Square Mall was in the possession of the Assessee before 01st October 2006 and the rent started with effect from 01st October 2006.

3. He states that ITAT erred in relying upon the decision of this court in the case of Assessee for AY 2010-11. He states that the Assessment order in the year under consideration was framed under Section 147 read with 143(3) of the Act and ITAT erred in holding that the proceedings were not maintainable. He further, states that ITAT failed to consider that a perusal of the Seized Document, reveals that the Assessee had invested a sum of Rs.32,85,37,354/- with M/s Suncity Project Pvt. Ltd. before 01st October 2006.

4. We have perused the paper book and considered the submissions of the learned counsel for the Revenue. The Assessment order was passed by the Assessing Officer (`AO') under Section 147 read with 143(3) of the Act. The original return was filed on 31st July 2007 under Section 139(1) of the Income Tax Act, 1961 (`the Act') declaring the total income of Rs.4,70,97,930/-. There was search and seizure operation on 29th April, 2008 and in consequence thereof, the reassessment had been completed under Section 153A read with Section 143(3) of the Act at the returned income of Rs.4,70,97,930/- vide order dated 29th December, 2010.

5. The case of the Assessee was subjected to further scrutiny in view of the distinct search conducted in the case of one Mr. Lalit Modi on 19th June, 2009 and consequently, proceedings under Section 153C of the Act were initiated against the Assessee and assessment was framed vide order dated 29th December, 2011 at the total income of Rs.4,70,97,930/-.

6. Subsequently, on the basis of the Seized Document found during the search of Mr. Lalit Modi, the AO issued a Section 148 notice dated 28th March, 2014 on the basis of the satisfaction recorded. The ITAT has returned a finding that AO based on the seized Annexure A-1 (page no. 5) alone, without any further investigations, made additions and passed the impugned assessment order.

7. The ITAT has held that the additions made by the AO are factually incorrect, illegal and arbitrary. The finding of the ITAT reads as under:

7.....Further, assessment order made by the Assessing Officer is factually incorrect and additions were made on illegal and arbitrary basis. The Assessing Officer has not brought on record any details or evidences which could corroborate investment of a sum of Rs.32,85,37,354/- before 01-10-2006 with M/s. Suncity Project Pvt. Ltd. The entire dispute is with reference to Annexure-A-l page 5 which is in the context of purchase of property vide sale deed dtd. 13/05/2009 and A