The PCIT's revision under sec.263 was quashed as it exceeded the scope of the show cause notice and relied on inadmissible evidence.

ORDER

PER V. DURGA RAO, J.M. :

The above five appeals are filed by twin Assessees against the respective orders of the learned Principal Commissioner of Income Tax, Nagpur-1, Nagpur, relating to assessment years 2017-18, 2018-19 and 2019-20. Since common issues are involved in these appeals, these appeals were heard together and are being disposed of by this consolidated order for the sake of convenience and brevity.

2. First we take-up appeal ITA .No.251/NAG./2024 for the assessment year 2017-2018 as “lead” appeal. Both the parties are agreed to that the decision taken in this appeal, be applicable in the remaining appeals.

ITA .No.251/NAG./2024 – A.Y. 2017-2018 [Neel Infratech] :

3. Facts of the case, in brief, are that the assessee is a partnership firm engaged in marketing associate in the field of Real Estate Business. The assessee filed it’s original return of income u/sec.139(1) of the Act on 08.09.2017 declaring total income of Rs.23,660/. Subsequently, a survey action u/sec.133A of the Act was conducted at the business premises of M/s. Tirupati Developers and during the survey proceedings, certain incriminating documents were found and impounded related to the assessee. Accordingly, the case of the assessee was reopened u/sec.147 of the Act after recording reasons as required u/sec.148(2) of the Act by taking necessary sanction from the Competent Authority u/sec.151 of the Act. The Assessing Officer issued notice u/sc.148 of the Act on 17.02.2021. In response to the said notice, the assessee filed revised return of income on 15.03.2022 declaring total income of Rs.23,660/-. Subsequently, the Assessing Officer issued statutory notices u/sec.143(2) and 142(1) to the assessee calling for information. The Authorised Representative of the assessee appeared before the Assessing Officer from time to time and filed requisite details/explanation. The Assessing Officer noted that as per assessee’s letter it is acting as Marketing Associate in the field of Real Estate and acts as broker and finds customers for the layout projects of Tirupati Developers and in return receives revenue share/commission. During the year under consideration, the assessee booked share of income from sale of plot Oasis, Shlok, Suvarnabhoomi, Maple and DB-1 Projects of Tirupati Developers. After examining the books of accounts of the assessee, the Assessing Officer noted the assessee has shown profit on sale of plots at Rs.39,24,600/- which is it’s marketing income and the said income was arrived at 40 : 60 ratio with Tirupati Developers. In this regard, the Assessing Officer noted that the cash receipts received against the plots from the customers were neither recorded in the books of account nor it offered for the taxation and as per the seized documents the total cash receipts are at Rs.56,97,000/- in respect of sale of plots and estimated the assessee’s share of marketing income will be at Rs.22,78,800/- @ 40%. Since the assessee did not show this impugned sum of Rs.22,78,800/-, the Assessing Officer estimated the impugned sum as derived from marketing income by making the addition and determined the total income of the assessee at Rs.23,02,460/- as against the returned income of Rs.23,660/- vide order dated 31.03.2022 passed u/sec.147 of the Act.

4. On being aggrieved with the assessment order, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) after examining the written submissions, documents placed on record such as lay outs, registered sale deeds etc., noted that the Assessing Officer had relied on some diary or loose papers which are incomplete in nature for making the impugned addition. Since such documents are “dumb documents” does not form part of “Books of account” and are not admissible u/sec.34 of the Evidence Act, the learned CIT(A) has given full relief to the assessee by deleting the impugned addition of Rs.22,78,000/- in the hands of the assessee. Similar was the position in respect of remaining asses