ACIT 14(1)(1), MUMBAI vs. M/S.BHAVESHWAR PROPERTIES PRIVATE LIMITED, MUMBAI

The present appeal filed by the Revenue and Cross-Objection filed by the Assessee arise from the order of Commissioner of Income CO No. 12/Mum/2023 Assessment Year: 2011-12 Tax (Appeals)-National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as „the CIT(A)‟] passed on 06.10.2022 for the Assessment Year 2011-12, which in turn arose from the Assessment Order, dated 26.12.2018, passed under Section 143(3) read with Section 147 of the Income Tax Act, 1961 [hereinafter referred to as „the Act‟].

The Revenue has raised the following grounds of appeal: 1. "On the facts and in the circumstances of the case, the Ld. CIT(A) erred in deleting the addition made by the A.O. of Rs. 3,01,39,200/- on account of disallowance u/s 69B of the Income Tax Act merely relying on the submissions made by the A.R. of the assessee and on the basis of various judicial decisions made by the courts without considering the genuine fact of the case.

The relevant facts in brief, are that Assessee filed return of income for the Assessment Year 2011–12 on 29/09/2011 declaring loss of INR 99,433/-. The return filed by the Assessee was processed under Section 143(1) of the Act. Subsequently, intimation was received from DCIT, Central Circle – 6(2), Mumbai that the Assessee had purchased Transferable Development Rights (TDR) of INR 3,01,39,200/- in cash from Booming Group. On the basis of the aforesaid information, reassessment proceedings are initiated for the Assessment Year 2010–11. However, after re-verification, the DCIT, Central Circle–6(2), Mumbai, provided 04/12/2017. On perusal of the aforesaid documents, the Assessing Officer was of the view that the documents/information pertained to Assessment Year 2011-12. Therefore, the reassessment proceedings for Assessment Year 2010-11 were dropped and reassessment proceedings for Assessment Year 2011–12 were initiated by the Assessing Officer. Notice under Section 148 of the Act was issued to the Assessee on 28/03/2018 for reopening the assessment for the Assessment Year 2011–12 after recorded reasons for reopening assessment in writing.

In the reasons recorded it was stated that the case of the Assessee has been reopened as the Assessee had purchased TDR of INR 3,01,39,200/- in cash from Bhoomi Group. Information this regard CO No. 12/Mum/2023 Assessment Year: 2011-12 was received by the Assessing Officer from the DCIT-CC-6(2), Mumbai vide letter dated 23/03/2017 and 04/12/2017. In support of the aforesaid information, the DCIT-CC-6(2), Mumbai had provided copy of statement recorded on 23/12/2015 and 4/01/2016 under Section 131 of the Act of Mr. Akshay Doshi, Director of Bhoomi Shashwat Estate Private Limited along with Annexure-1 being statement of parties to whom TDR has been sold and details of cash component paid by them forming Part C of Appraisal Report of Ekta Group and Bhoomi Group, containing the name of the Assessee at Serial No. 19. Therefore, the Assessing Officer had reasons to believe that income has escaped assessment.

In response to the notice issued under Section 148 of the Act, the Assessee filed return of income on 17/04/2018 declaring loss of INR.99,433/-. A copy of reasons recorded in writing for reopening the assessment for Assessment Year 2011–12 were furnished to the Assessee vide letter dated 11/07/2018. Thereafter, the Assessee filed a number of letters/submissions objecting to the reassessment proceedings on the ground that the same were void ab initio as the statement of third parties on the basis of which the assessment proceedings have been initiated has not been provided to the Assessee. The Assessee also sought for cross-examination of Mr. Akshay Joshi on a number of occasions. It was also contended by the Assessee that Assessee did not purchased TDR is from Bhoomi Group during the year under consideration. The Deed of Purchase of TDR was between the Assessee and Housing Development & Infrastructure Ltd (HDIL) directly and that Bhoomi Group never acted as commission agent or broker in relation to purchase of the aforesaid TDR from HDIL. Mere allegation of a cash transaction without any supporting documents cannot be the basis for making CO No. 12/Mum/2023 Assessment Year: 2011-12 any additions in the hands of the Assessee. However, the Assessing Officer proceeded with the reassessment proceedings.

During the reassessment proceedings, the Assessing Officer noticed that as per the seized material shared by the DCIT-CC6(2), Mumbai, TDR were purchased through Bhoomi Group from HDIL at the rate of INR 2,600 per Sq. Ft. out of which 1800 per Sq. Ft were payable in cheque as evidence from the sale agreement and balance 800 per Sq. Ft. was payable by cash as evident from the noting in the ceased material. The Assessee was asked to show cause why the cash component of INR 3,01,39,200/- should not be assessed as unexplained investment under Section 69B of the Act in the hands of the Assessee. In reply the Assessee filed submission/letters dated 06.12.2018, 07.12.2018, 13.12.2018, 17.12.2018 and 18.12.2018.

In the reasons recorded the Assessing Officer had referred to the statement of Mr. Akshay Doshi and therefore, the Assessee has asked for cross-examination of Mr. Akshay Doshi. The Assessing Officer informed the Assessee that the Assessee would be granted opportunity to cross examine Mr. Akshay Doshi on 14/12/2018 at 3:30 pm. Accordingly, summons under Section 131 of the Act, dated 11/12/2018, seeking attendance of Mr. Akshay Doshi on 14/12/2018 at 3.30 p.m., were issued and duly served on him. However, vide letter, dated 13/12/2018, Mr. Akshay Doshi expresses his inability to attend the office of the Assessing Officer on account of his preoccupation. In the aforesaid letter, he stated that on going through the statement recorded during the course of search proceedings, he had neither given any statement related to the Assessee nor dealt with the TDR involved. Through Letter, dated 17/12/2018, the Assessee asked for copy of the aforesaid CO No. 12/Mum/2023 Assessment Year: 2011-12 Letter, dated 13/12/2018, sent by Mr. Akshay Doshi to the Assessing Officer. In the aforesaid Letter, it was stated by the Assessee that the Assessee had information that the Mr. Akshay Doshi has stated that he has neither given any statement in relation to the Assessee nor does he remember to have dealt with the Assessee. Taking note of the aforesaid Letter, the Assessing Officer observed that the summons issued under Section 131 of the Act to Mr. Akshay Doshi did not provide any reference or details of search action on Bhoomi Group. Therefore, the Assessing Officer concluded that the Assessee did not want to cross-examine Mr. Akshay Doshi. The Assessing Officer not being convinced with submission made by the Assessee, completed the assessment under Section 143(3) read with Section 147 of the Act vide assessment order, dated 26/12/2018, assessing total income of the Assessee had INR 3,01,39,200/- after making addition in respect of a amount of TDR holding that the purchase of TDR was not fully disclosed in the books of accounts .

Being aggrieved, the Assessee preferred appeal before CIT(A) challenging the validity of the reassessment proceedings, as well as the addition made by the Assessing Officer on merits. The CIT(A), vide order dated 06.10.2022, granted relief to the Assessee on merits and did adjudicate the grounds raised by the Assessee regarding the validity of the reassessment proceedings.

The Revenue being aggrieved by the order of CIT(A) granting relief to the Assessee on merits preferred appeal before the Tribunal. The Assessee also filed cross objections challenging non-adjudication of grounds challenging validity of reassessment proceedings by the CIT(A).

The Learned Departmental Representative appearing before us submitted that the CIT(A) has deleted the addition without assigning any reasons and by merely referring to the fact that the Assessee could not cross-examine Mr. Akshay Doshi. Per Contra the Learned Authorised Representative for Assessee supported the order passed by the CIT(A) and submitted that the Assessee did not purchase the TDR from Bhoomi Group. During the assessment proceedings, the Assessee had requested for the opportunity for cross-examination on a number of occasions. However, the Assessee was not granted the same. Countering the aforesaid submission, the Learned Departmental Representative submitted that the opportunity was granted to the Assessee, however, on the date fixed Mr. Akshay Doshi did not turn up citing preoccupation. In rejoinder, the Learned Authorised Representative for the Assessee, referring to paragraph 3.6.1 of the assessment order, submitted that Mr. Akshay Doshi had vide letter, dated 13/12/2018 had clearly stated that he neither had any dealings with the Assessee nor did he make any statement in relation to the Assessee, therefore, in any case, no adverse inference could have been drawn against the Assessee from the statement given Mr. Akshay Doshi. Responding to the aforesaid, the Learned Departmental Representative submitted that the CIT(A) could have also granted the opportunity of cross-examination to the Assessee and contended that the matter could be remanded back to the file of the CIT(A) by placing reliance on the decision of the Tribunal in the case of Neo Pharma Private Limited Vs. DCIT, CC-5(3) [ITA No. 21/Mum/2022, Assessment Year 2010-11].

We have considered the rival submission and perused the material on record including the order passed by the CIT(A). After recording CO No. 12/Mum/2023 Assessment Year: 2011-12 the facts of the case, the order passed by the Assessing Officer and the submission of the Assessee, the CIT(A) has in paragraph 5.1.7. of the order has analyzed and concluded as under:

On perusal of the above, we find merit in the contention advanced by the Learned Departmental Representative that the CIT(A) has deleted the addition without taking into consideration the transaction, the incriminating material relied upon by the Assessing Officer and without dealing with the factual findings returned by the Assessing Officer. On perusal of paragraph 5.1.3 to 5.1.5 of the order impugned, it can be inferred that the fact that the Assessee was not granted opportunity for cross-examination weighed heavily with the CIT(A) in arriving at the conclusion. However, In our view, no reasoning has been given by the CIT(A) for deleting the addition. Even the facts and circumstances in which the Assessee could not be granted the opportunity of cross examination of Mr. Akshay Doshi has not been taken into consideration. Therefore, the order passed by the CIT(A) deleting the addition of INR 3,01,39,200/- cannot be sustained.

As regards the cross objection raised by the Assessee, we find that the CIT(A) has, in paragraph 5.2.4 of the order, „dismissed for statistical purposes‟ the grounds raised by the Assessee challenging validity of reassessment proceedings as the same had become academic in nature. Thus, we find merit in the contention of the Assessee that the grounds have not been adjudicated.

In our view, the entire approach adopted by the CIT(A) while dealing with issues raised in the appeal by the Assessee cannot be countenanced and the order passed by the CIT(A) cannot be sustained. Therefore, we set aside the order, dated 06/10/2022 passed by the CIT(A) with the direction to the CIT(A) to decide the appeal preferred by the Assessee afresh after taking steps for providing to the Assessee an opportunity for cross-examination of Mr. Akshay Doshi if so requested by the Assessee in writing. All rights and contentions of the parties as available under law are left open. The Assessee would be granted reasonable opportunity of being heard. In terms of the aforesaid Ground No. 1&2 raised by the Revenue in appeal are allowed, while Ground No.1 raised by the Assessee as cross-objection is allowed for statistical purposes.