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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI KULDIP SINGH & SHRI S RIFAUR RAHMAN
O R D E R
Per : Kuldip Singh, Judicial Member:
The appellant, Shri Prashant Rameshchandra Samdani (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 23.06.2023 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] qua the assessment year 2011-12 on the grounds inter-alia that :- “A. Reopening of the assessment is bad in law and liable to be quashed
1. The Ld. CIT(A) erred in sustaining the reopening of the assessment for AY 2011-12 on the basis of some unknown information without appreciating that -
a) the Appellant has NOT made any transaction of purchase of property during the impugned assessment year b) the Appellant has NOT purchased any property from the builder Mis Sunshine Housing & Infrastructure P. Lad c) the Appellant has NOT paid any On-Money to any person d) there is no reason to believe and the reasons recorded are merely based on borrowed satisfaction and that too on wrong and incorrect information; e) there is NO tangible material in possession of the AO and no such material or evidence or any other documents including statements furnished to the Appellant; and thus, there is NO escapement of income whatsoever in the present case of the Appellant and hence, the reopening of the assessment is bad in law and liable to be quashed.
Without prejudice to the above: B. Addition made u/s.69A of the Act of Rs.1.25.39,000/- is unjustified and liable to be deleted 2. The Ld. CIT (Appeals) has erred in confirming the addition made by AO of Rs.1,25,39,000/- u/s.69A of the Act (though in the body of order refers to addition u/s.69C of the Act) without appreciating that:- a) the Appellant has NO transaction of any purchase of property during the year under consideration; b) the Appellant has purchased the property during FY 2012-13 relating to AY 2013-14 and thus same was second sale i.e. from third party and NOT from the builder; c) the purchase transaction of the Appellant is at market value (stamp duty value less than Agreement value) and thus, there is NO question of payment of any On-Money and that too, to the builder in FY 2010-11 when the property is purchased from third party in FY 2012-13; and thus, there is neither any unexplained investment made in the property nor any unexplained expenditure incurred and hence, the addition made u/s.69A of the Act of Rs.1,25,39,000/- is without any justification and needs to be deleted.
The Ld. CIT(A) supported the order of the Ld. AO even though the same was in complete violation of principles of natural justice and thus, the Ld. CIT(A) failed to appreciate that - a) no material or evidence whatsoever was given to the Appellant proving any payment of on-money for purchase of property, and even though requested to submit the same time and again; b) copy of statement recorded of one person so called Shri Nikhil Vora is not furnished even though relied upon by AO for reopening of assessment as also for making addition and even though requested to submit the same time and again; c) cross-examination of Shri Nikhil Vora or any other person related to builder was not given by the Ld. AO and categorically denied by the Ld. CIT(A) for no valid reason whatsoever; and hence, the addition sustained of Rs.1,25,39,000/- u/s.69A of the Act is without any justification and needs to be deleted.
4. The Appellant craves leave to add, amend, alter or delete all or any of the aforesaid grounds of appeal..”
2. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee is an individual and proprietor of M/s. Gunina Ventures engaged in trading business. The assessee’s return of income filed for the year under consideration declaring total income of Rs.3,01,21,710/- showing income from business, income from salary and other sources was processed under section 143(3) of the Income Tax Act, 1961 (for short ‘the Act’) assessing the total income at Rs.4,27,60,713/- by making addition of Rs.1,25,39,000/- being the difference between agreement value and the market value of the sale alleged to be paid by the assessee in cash. However, subsequently, the assessment was reopened by initiating the proceedings under section 147/148 of the Act. The assessee opted to treat the return already filed as reply to the notice issued under section 148 of the Act. Objections filed by the assessee to the reopening was disposed of. The Assessing Officer (AO) issued notice under section 143(2) and 142(1) dated 29.11.2019 calling upon the details viz. copy of purchase agreement of office premises No.34, Sunshine Tower, bank statement for financial year 2010-11 reflecting the said transaction and source of fund. The assessee was also called upon to explain as to why an amount of Rs.1,25,39,000/- was paid in cash for purchase of property bearing office premises No.34 in Sunshine Tower project of M/s. Sunshine Housing & Infrastructure Pvt. Ltd. being the difference in market value of agreement value. Declining the contentions raised by the assessee the AO proceeded to hold that the assessee has paid on money to the builders to the tune of Rs.1,25,39,000/-, which was added to the income of the assessee being unexplained expenditure under section 69 of the Act and thereby framed the assessment under section 143(3) read with section 147 of the Act.
3. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
Undisputedly the assessee has purchased the office premises No.34 from M/s. Sunshine Housing & Infrastructure Pvt. Ltd. during the year under consideration. It is also not in dispute that figure of amount of Rs.1,25,39,000/- being the alleged on money paid by the assessee for the purchase of immovable property has come from the statement of Shri N.K. Vora, sales head of Sunshine group recorded under section 132(4) of the Act and that the assessee along with M/s. Trincas Agencies & Commerce Pvt. Ltd. had paid on money of Rs.1,25,39,000/- in cash qua purchase of office premises No.34 in M/s. Sunshine Housing & Infrastructure Pvt. Ltd. It is also not in dispute that the agreement for sale was executed qua the property in question between M/s. Sunshine Housing & Infrastructure Pvt. Ltd. and M/s. Trincas Agencies & Commerce Pvt. Ltd. on 23.03.2010. It is also not in dispute that agreement for sale dated 13.08.2012 was executed between M/s. Trincas Agencies & Commerce Pvt. Ltd. and the assessee for the purchase of office premises in question at the total sale consideration of Rs.9,92,00,000/- which was more than the market value of the said property.
In the backdrop of the aforesaid undisputed facts and circumstances of the case the sole question arises for determination in this case is as to whether: “Addition of Rs.1,25,39,000/- being the difference between agreement value and market value of the sale agreement dated 23.03.2010 entered into between M/s. Trincas Agencies & Commerce Pvt. Ltd. and M/s. Sunshine Housing & Infrastructure Pvt. Ltd., in the name of the assessee who was not privy to the sale agreement dated 23.03.2010 is sustainable in the eyes of law?”
The Ld. A.R. for the assessee challenging the impugned order passed by the Ld. CIT(A) contended that the assessee has nothing to do with sale agreement dated 23.03.2010 entered into between M/s. Trincas Agencies & Commerce Pvt. Ltd. and M/s. Sunshine Housing & Infrastructure Pvt. Ltd. because the assessee has purchased the premises in question from M/s. Trincas Agencies & Commerce Pvt. Ltd. by virtue of the sale agreement dated 13.08.2012 (in A.Y. 2013-14) and there is no difference between the agreement value and the fair market value; that the assessee has no transaction with M/s. Sunshine Housing & Infrastructure Pvt. Ltd. nor N.K. Vora, sales head of Sunshine group had nothing to do with the assessee as the assessee has purchased the premises from M/s. Trincas Agencies & Commerce Pvt. Ltd. by virtue of the sale agreement dated 13.08.2012; and that the assessee has not purchased any property during the year under consideration i.e. A.Y. 2011-12.
However, on the other hand, the Ld. D.R. for the Revenue relied upon the impugned order passed by the Ld. CIT(A) and prayed for the dismissal of the assessee’s appeal.
When we examine the contentions raised by the assessee as recorded in the preceding para in the light of the fact that the assessee’s transactions qua the property in question does not fall during the year under consideration nor the assessee has entered into any agreement with Sunshine group, rather purchased the property in question vide sale agreement dated 13.08.2012 (A.Y. 2013-14) by virtue of the agreement entered into with M/s. Trincas Agencies & Commerce Pvt. Ltd., reopening on the basis of statement of Shri N.K. Vora, sales head of Sunshine group, Mumbai that on money of Rs.1,25,39,000/- being the difference between agreement value and market value is not sustainable in the eyes of law being based upon incorrect facts.
The Ld. A.R. for the assessee also contended that by raising specific objections the AO was requested to provide copy of the statement of Shri N.K. Vora recorded under section 132(4) of the Act which has never been supplied rather in para 6.1 of the order dated 31.10.2018 passed for dismissing of the objections filed by the assessee it is mentioned that the statement of Shri N.K. Vora, recorded under section 132(4) of the Act will be provided during the course of proceedings “after giving proper opportunity of being heard”. So without providing copy of statement of Shri N.K. Vora recorded under section 132(4) on the basis of which reopening under section 147/148 was initiated, reopening itself is invalid.
Furthermore, the AO made the addition of Rs.1,25,39,000/- being the difference between agreement value and market value of the sale agreement dated 23.03.2010 entered into between M/s. Trincas Agencies & Commerce Pvt. Ltd. M/s. Sunshine Housing & Infrastructure Pvt. Ltd. with which the assessee has no connection. In case any such addition is to be made it is to be made in the name of M/s. Trincas Agencies & Commerce Pvt. Ltd.
When it is undisputed fact on record that the assessee has purchased the premises in question by virtue of the sale agreement dated 13.08.2012 (in A.Y. 2013-14), from M/s. Trincas Agencies & Commerce Pvt. Ltd. reopening in case of the assessee for A.Y. 2011-12 is not sustainable in the eyes of law. Even on merits the assessee has proved on record the ledger account of M/s. Trincas Agencies & Commerce Pvt. Ltd. available at page 16 of the paper book showing payment of Rs.9,92,00,000/- through banking channel. The assessee has also brought on record his bank statement available at page 18 to 20 of the paper book wherein payment of the sale consideration is shown to have been made through Union Bank of India from his bank account.
When we examine sale agreement dated 13.08.2012 available at page 29 to 32 of the paper book it is between M/s. Trincas Agencies & Commerce Pvt. Ltd. and the assessee for a consideration of Rs.9,92,00,000/-. From the document available on page 64 of the paper book it is proved that the assessee has purchased the property in question more than the fair market value.
Moreover, the assessee has nothing to do with M/s. Sunshine Housing & Infrastructure Pvt. Ltd. rather purchased the property in question in A.Y. 2013-14 in second sale from M/s. Trincas Agencies & Commerce Pvt. Ltd. at the rate more than the fair market value.
In these circumstances, we are of the considered view that reopening made on the basis of search conducted at the M/s. Sunshine Housing & Infrastructure Pvt. Ltd. and the statement of Shri N.K. Vora recorded under section 132(4) of the Act reopening of the assessment in A.Y. 2011-12 is invalid and not sustainable in the eyes of law. Even on merits the addition made in the hands of the assessee in A.Y. 2011-12 in which no such property was purchased by the assessee is sustainable in the eyes of law, hence ordered to be deleted.
Resultantly, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 24.11.2023.