THE ITO, WARD-1(1)(3), AHMEDABAD vs. M/S. ARISTA LIFESPACE PVT. LTD., AHMEDABAD

The only issue raised by the revenue is that the Ld. CIT(A) erred in deleting the addition made by the AO for Rs. 1,71,00,000/- u/s 69A of the Act representing the money receipt against the sale of flat.

The necessary facts are that the assessee, a private limited company, is engaged in the business of development of land and building, professional and consultancy services. The AO in the present case based on the seized materials found during the search u/s 132 of the Act, dated 04/08/2015 in the Claris Group of cases including the residential premises of Shri Kiritn A. Shah where a document was recovered from the Laptop of Shri Kirit A. Shah, found that the company namely Akhilesh Venture LLP has purchased property from the assessee. The payment for the purchase of the property was through cheque as well as cash. As per the AO, the cash payment was not recorded in the books of accounts. Thus, the AO after recording the satisfaction note initiated the proceeding u/s 153C of the Act. On question by the AO, the assessee claimed that the documents seized from the premises of the third party neither belong nor pertain to it and therefore the same cannot be used against the assessee. However, the AO disagreed with the contention of the assessee and concluded that the assessee has received cash payment against the sale of property bearing flat No. 402 in Belvedere Park Scheme, Ahmedabad. Accordingly, the AO held as under: From the above submission of Akhilesh Venture Holdings LLP, it is crystal clear that the assessee company had received Rs.1,71,00,000/- in cash during F.Y 2013-14 relevant to A.Y. 2014-15 and utilized this unaccounted money for whole of the year. It is also very much apparent from the above findings that the assessee company has generated unaccounted money during the year and returned the same in the next financial year. The fact that part of the sum was returned back in subsequent year does not after the fact that cash was received during the year and used. 6.3 In view of the above discussion, it is clear that assessee has received total amount of Rs.1,71,00,000/- in cash for sale of Flat no.402 in Belvedere Park Scheme which was not disclosed by the assesee company during the year under consideration. Thus, it appears that aforesaid receipt of Rs.1,71,00,000/- as on money during A.Y. 2014-15 was not disclosed by the assessee during the year under consideration. Considering the facts and circumstances of the case, the receipt of Rs.1,71,00,000/- is considered as unexplained money as per the provisions of section 69A of the Act.

Aggrieved assessee preferred an appeal before the ld. CIT-A who deleted the addition made by the AO by observing as under: 6.14 In assessment proceedings, copy of partnership deed of Arista Gamdiwala Project was also filed to AO as called for by the AO vide notice dated 19-11-2019. It was submitted that the above firm is a separate legal entity. In assessment proceedings, copy of index for sale deed of flat no. 402 of Belvedere Park filed executed by Arista Gamdiwala Project, a partnership firm for construction part and Shri Vinodkumar Chunilal Patel for land part. In assessment proceedings, copy of ledger a/c of flat no. 402 of Belvedere Park filed which was from the books of Arista Gamdiwala Project, a partnership firm and separate entity from appellant company m/s. Arista Lifespaces Pvt.Ltd. W 6.15 In view of the above facts, submissions and evidences, it was submitted that flat no. 402 of belvedere park was developed by Arista Gamdiwala Project, a partnership firm and not by the appellant company M/s. Arista Lifespaces Pvt. Ltd. hence, satisfaction recorded by AO in the name of appellant company M/s. Arista Lifespaces Pvt. Ltd. and notice issued u/s. 153C are bad-in-law. It is therefore submitted that assessment order framed u/s. 153C of the act is bad in law and deserves to be quashed. 6.16 Having considered the facts and submissions of the appellant it is found that the initiation of proceedings u/s 153C of IT Act in the case of appellant is not correct and unsustainable in the eyes of law. The appellant company at every stage in assessment proceedings stated that excel sheets and notings are not belonging to or pertains to assessee company (M/s. Arista Lifespaces Pvt. Ltd), to whom notice u/s. 153C issued by AO. 6.17 In assessment proceedings, copy of partnership deed of Arista Gamdiwala project filed to AO as called for vide notice dated 19-11-2019. Thus it was apparent that the said firm was a separate entity. In assessment proceedings, copy of index for sale deed of flat no. 402 of belvedere park filed executed by Arista Gamdiwala project, a partnership firm and landowner Shri Vinodkumar Chunilal Patel. 6.18 In assessment proceedings, copy of ledger a/c of flat no. 402 of Belvedere Park filed which is from the books of Arista Gamdiwala project, a partnership firm and separate entity from appellant company M/s. Arista Lifespaces Pvt. Ltd. which has been reproduced by the AO on page No. 10 of the assessment order. The AO has not rebutted the same or did not observe any adversial facts in the submission of the appellant that the aforesaid flat was sold by Arista Gamdiwala Project, a partnership firm and not by the appellant. In support of this contention the appellant has further submitted the following documentary evidences of the Arista Gamdiwala Project. ITR acknowledgement and audited accounts of Arista Gamdiwala Project for F.Y.2013-14 Sale deed copy of flat no. 402 of Belvedere Park, Executed by Arista Gamdiwala project. Ledger a/c for sale of flat no. 402 of Belvedere Park from the books of Arista Gamdiwala Project. 6.19 In view of the above discussion and material on record it is found that the contention of the appellant was correct in view of various facts and evidences on record. In the satisfaction recorded the AO was noted the sale of Flat No.402 Belvarede Park by Arista Gamdiwala Project but the proceedings u/s.153C has been issued not in the case of Arista Gamdiwala Project but in the case of appellant namely Arista Lifesciences Pvt. Ltd. which was wrong. Why the proceedings u/s.153C has not been issued in the case of Arista Gamdiwala Project a partnership firm inspite of the fact that in the assessment

The Ld. DR before us reiterated the findings of the AO whereas the Ld. AR filed a paper book running from pages 1 to 129 and contended that the property was sold by the partnership firm namely Arista Gamdiwala Project and not by the assessee. Therefore, the satisfaction note recorded by the AO that the assessee has received money in cash against sale of flat was based on wrong assumption of facts. The Ld. AR vehemently supported the order of the Ld. CIT(A). 7. We have heard the rival contentions of both the parties and perused the materials available on record. In the satisfaction note, it was alleged by the AO that the assessee has received unaccounted cash payment against sale of flat bearing No. 402 of Belvedere Park. However, the Ld. CIT(A), held that the impugned flat was owned by the partnership firm Arista Gamdiwala Project. Therefore, the question of any unaccounted receipt of money attracting the provision of section 69A of the Act, does not arise. At the time of hearing, the Ld. DR could not controvert the findings of the Ld. CIT(A). Hence, we do not find any