PRADEEP KRIPLANI,MUMBAI vs. ITO (IT)- 3 (1)(1), MUMBAI

All the grounds raised in the present appeal pertain to the addition of INR 77,18,100/- made by the Assessing Officer under Section 69 of the Act which has been confirmed by the CIT(A).

The relevant facts in brief are that search and seizure action under section 132 of the Act was carried out in the case of Runwal Group. In his statement recorded on 21/11/2014, Mr. Subodh Runwal admitted to accepting ‘on money’ in relation to project Runwal Greens launched by M/s Runwal Homes Private Limited. A chart showing bookings made from January, 2014 to October, 2014 along with details of customer was also furnished.

Information vide Letter Number DCIT/CC-4(1)/Information/2016– 17, dated 09/11/2016, was received by the Assessing Officer according to which the Appellant had paid an amount of INR 77,18,100/- on 09/01/2014 during the previous year 2013-14 relevant to the Assessment Year 2014-15 as ‘on money’ in cash for Tower No. T-7, Flat No. 403 in project Runwal Greens, Mumbai. The Assessing Officer noted that the Appellant had not filed return of income for the Assessment Year 2014-15. Therefore, reassessment proceedings were initiated in the case of the Appellant and notice under Section 148 of the Act was issued on 06/03/2017. In response to the aforesaid notice, the Appellant declared ‘Nil’ income. During the reassessment proceedings, in response to notice, dated 26/10/2017, issued under section 142(1) of the Act, the Appellant furnish complete details/submissions along with documentary evidence vide letter dated 22/11/2017. Further, vide letter dated 23/10/2017, the Appellant filed an affidavit stating that the Appellant had no Assessment Year: 2014-15 cash income arising in India and no large cash withdrawals were made from the bank during the relevant financial year under consideration to support this contention that no ‘on money’ transactions undertaken by the Appellant with Runwal Group. However, the Assessing Officer was not convinced with the details, documents and an explanation furnished by the Appellant and therefore, the Assessing Officer made an addition of INR 77,18,100/- under Section 69 of the Act holding the aforesaid amount to be an unexplained investment by the Appellant vide Assessment Order, dated 27/12/2017, passed under Section 143(3) read with Section 147 of the Act.

Being aggrieved, the Appellant preferred appeal before CIT(A) against the Assessment Order, dated 27/12/2017 which was dismissed vide order dated 31/05/2018. The CIT(A) confirmed the addition of INR 77,18,100/- made under Section 69 of the Act of observing that the seized material contained details of bookings made by the Appellant and an amount of INR 77,18,100/-, being amount paid in cash against the booking, was mentioned in the list against the name of the Appellant.

The Appellant is now in appeal before us against the above order of the CIT(A), dated 31/05/2018.

The Learned Authorised Representative for the Appellant appearing before a submitted that the Appellant had furnished all the relevant details and documents which included Agreement for Sale entered by the Appellant with M/s Runwal Homes Private Limited, dated 17/03/2015, towards purchase of Flat No. 403 in Tower No. 7 of the building known as ‘Redwood’ in the project Runwal Greens reflecting sale consideration of INR

Assessment Year: 2014-15 2,29,94,400/-. Further, the Appellant had also furnished relevant extract of the bank account statement of the Appellant and copy of Ledger maintained by the Runwal Homes Private Limited. Vide letter dated 23/10/2017, the Appellant had also filed affidavit clearly stating that Appellant did not have cash income in India, no large amounts were withdrawn in cash from the bank account by the Appellant during the relevant financial year, and therefore, the Appellant could not have paid amount of INR 77,18,100/- in cash. The Learned Authorised Representative for Appellant further submitted that the Mumbai Bench of the Tribunal has, in the case of Runwal Homes Private Limited, vide order dated, 20/12/2017, passed in (Assessment Year 2015–16), deleted the addition made by the Assessing Officer by estimating the amount of sale consideration in respect of flats at the rate of INR 15,750/- per square feet since the Revenue had failed to place on record any material or evidence to show that the Runwal Homes Private Limited had received consideration at the aforesaid rate of INR 15,750/- per square feet. While holding as aforesaid, the Tribunal observed that ‘on money’ was received only for a limited period of a few months and that too in respect of few of the buyers. The Tribunal confirmed the addition made on account of ‘on money’ only to the extent based on seized material and deleted the additions made by estimating the amount of ‘on money’ although no material or evidence was found in the course of the search. The Tribunal, after taking into account reply given by Mr. Subodh Runwal, Director of Runwal Homes Private Limited, to question Nos. 16, 17 and 18 forming part of his statement, concluded that ‘on money’ was received only in respect of few units of the project. Further, Mr. Subodh Runwal had, in reply to Assessment Year: 2014-15 question No. 17, categorically stated that he did not agree that in all cases cash has been accepted over and above the agreement value, but he agreed to surrender the difference as additional income to avoid protracted litigation. In view of the aforesaid decision of the Tribunal, the Learned Authorised Representative for the Appellant submitted that in the present case also there is no evidence/material to show that ‘on money’ was paid by the Appellant to M/s Runwal Homes Private Limited and therefore, the addition of INR 77,18,100/- made on estimate basis should be deleted.

Per Contra, the learned departmental representative referred to the Assessment Order and submitted that the addition was not made on estimate basis but on the basis of material/document. Taking us through paragraph 7.2 to 7.4 of the Assessment Order, the Learned Departmental Representative submitted that in reply to question No. 18, Mr. Subodh Runwal had accepted that ‘on money’ was received in respect of project Runwal Greens. Annexure 1 furnished by him containing the details of the flat number book by the Appellant. Therefore, the Assessing Officer was justified in making addition of INR 77,18,100/- under Section 69 of the Act holding the same to be unexplained investment since the Appellant had failed to provide any satisfactory explanation regarding the source of cash paid as ‘on money’ for the purchase of the flat. He also relied upon the order passed by CIT(A) in support of his contentions.

We have considered the rival submissions and perused the material on record. The Assessing Officer has relied upon the statement given by Mr. Subodh Runwal, Director of Runwal Homes Private Limited. According to the Assessing Officer in Assessment Year: 2014-15 reply to question No. 18, Mr. Subodh Runwal has stated that ‘on money’ was received in respect of sale of flats in project Runwal Green and had provided the details of bookings in respect of which such ‘on money’ was received. On perusal of the order passed by the Tribunal in the case of Runwal Homes Private Limited, we find that amount of INR 63,39,52,372/- mentioned in reply to question No. 18 included amount of estimated ‘on money’ payments with stand deleted by the aforesaid order of the Tribunal. In paragraph 4 of the Assessment Order, the Assessing Officer has given a summary of proceedings in the case of M/s Runwal Homes Private Limited. On perusal of the same we find that addition in the case of M/s Runwal Homes Private Limited was made on the basis of loose papers, emails pertaining to third parties, details of flats/payments found in the course of the search and the statement of Mr. Subodh Runwal. However, the name of the Appellant and/or the details of the flat booked by the Appellant in project Runwal Green does not find any mention in the same. A careful analysis of paragraph 1 of the Assessment Order would show that the reassessment proceedings were initiated against the Appellant on the basis of information received by letter, dated 09/01/2014 (letter No. DCIT/CC-4(1)/information/2016-17), wherein it was stated that amount of INR 77,18,100/- was paid as ‘on money’ in cash by the Appellant. It does not provide details of any material or document. On the other hand, the Appellant had filed affidavit during the assessment proceedings along with letter, dated 23/10/2017, deposing that the Appellant was a non-resident; that the Appellant did not have cash income in India; that no large amounts were withdrawn by the Appellant in cash from the bank account during the relevant period; and that the Appellant

In result, appeal preferred the Assessee is allowed.