A search and seizure operation was carried out in the Mahesh Mehta group of cases. During the course of search, certain documents belonging to the assessee were found and seized. After recording satisfaction, assessment proceedings were initiated u/s 153C of Act. Among incriminating documents seized, were hand written ‘BAHI’s’. These BAHIs contained actual record of the business activities of Mahesh Mehta group. As per the documents seized, it was noticed that a property was sold and an aggregate amount of Rs. 7.61 crores was received in the books against the sale of such property and cash of Rs. 5,55,91,000/- was received from the assessee and others. The AO called for the explanation of assessee in this regard. The AO was not satisfied with explanation of assessee. The AO held that assessee made cash payment of Rs. 3,55,91,000/- to Mahesh Mehta group of companies. The addition was accordingly made to the returned income. The AO also made addition of Rs. 3,55,910/- on account of 1% amount paid as brokerage charges. The assessment u/s 143(3) r.w.s. 153C was completed. The CIT(A), dismissed the appeal of assessee.

Tribunal held that,

++ an identical issue was considered by ITAT, Delhi ‘D’ Bench in the case of ACIT vs. M/s. Victory Accommodations Pvt. Ltd. It is proved on record that AO of the person searched has not recorded any satisfaction note. Such satisfaction note u/s 153C has been recorded by the AO of the assessee, therefore, condition of Section 153C are not satisfied in the present case. Further, the AO. has failed to prove that any documents seized belong or belongs to the person other than the person searched u/s 153A of the I.T. Act. No incriminating material was seized during the assessment year under appeal. Even during the course of survey, no incriminating material was found against the assessee. The statement of Manish Mehta was recorded on 11.09.2009 after the search and was subjected to cross-examination on behalf of the assessee in which the assessee pointed-out several infirmities and inconsistencies because Manish Mehta was not connected with the seller M/s. Honest Estate Pvt. Ltd., and he denied meeting any of the Directors of the assessee-company. He has also stated that at no point of time he takes any cash from the Directors of the assessee-company. He has stated that cash was received from a local Agent whose name and address he does not remember. Further Manish Mehta retracted from his statement, therefore, such statement has no evidentiary value because the Revenue has failed to record statement of any of the Agent who have allegedly received any cash against the sale of the property. No evidence have been found on record to justify payment of cash against the property on behalf of the assessee-company over and above what is recorded in the sale deed. The person who has recorded BAHIs found during the course of search was not subjected to cross-examination on behalf of the assessee. Therefore, these facts clearly show that initiation of proceedings u/s 153C of the I.T. Act is invalid and bad in law and there were no justification to make any addition against the assessee-company. Thus it was decided to quash the proceedings u/s 153C of the I.T. Act and delete the entire addition. In the result, appeal of Assessee is allowed.

(See 2019-TIOL-183-ITAT-DEL)