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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
PER PRASHANT MAHARISHI, AM:
This appeal is filed by Simtools Pvt Ltd [ assessee/ Appellant] against the appellate order passed by the Commissioner of Income Tax (Appeals) Mumbai-48, (The ld. CIT (A) ) for A.Y. 2010-11 on 27.02.2020 wherein appeal filed by the assessee against the assessment order passed under section 153A r.w.s. 153C/143(3) of the Income Tax Act, 1961 (The Act) by the Deputy Commissioner of Income Tax. Central Circle 42, Mumbai (The ld. AO) dated 28.03.2013 is partly allowed.
“1. The learned CIT(A) has erred in law and on facts in upholding the validity of the assessment order dated 28.03.2013 passed by the Assessing Officer u/s. 153A r.w.s. 153C/143(3) of the Income-tax Act, 1961. The order passed by the Assessing Officer by taking recourse to provisions of S. 153C of the Act ought to have been declared as not in accordance with law and, as such, null and void.
The learned CIT(A) ought to have held that the order passed by the Assessing Officer was bad in law as no notice u/s. 143(2) of the Act was issued as required under the law.
The learned CIT(A) has erred in law and on facts in upholding the order passed by the Assessing Officer without appreciating that the Assessing Officer had not obtained valid approval u/s. 153D of the Act.
The learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in taxing Long Term Capital Gain of ₹ 10,89,14,692/- as business income and enhancing the same to Rs.11,11,62,469/-.
The learned CIT(A) has erred in law and on facts in upholding the action of the Assessing Officer in taxing Short Term Capital Gain of ₹ 2,05,75,672/- as business income.
The learned CIT(A) has erred in law and facts in upholding the action of the Assessing Officer in
Subsequently, search u/s. 132 was conducted in „Lodha Group‟ cases on 10.01.2011. Assessee is also one of the entity connected to that group. Therefore, notice u/s. 153C was issued on 27.09.2012. Assessee filed return of income on 30.11.2012 at ₹ 09,98,27,292.
The Assessing Officer noted that Lodha Group is suppressing income by receiving car parking revenue and on money over and above disclosed receipts from sale of flats. The key person of the group in his statement recorded on 12.01.2011 accepted declaration of ₹199.80 Crores in the hands various entities. The statement also have disclosed ₹ 04,87,00,000/- for A.Y. 2010-11 and ₹ 47,00,000/- for A.Y. 2011-12 as undisclosed receipts on account of sale of car parking.
ii. In the computation of income, assessee declared a Long Term Capital Gain of ₹ 10,89,14,692/- on sale of land . The AO found that the above land was held by assessee as stock in trade. Therefore, he considered the sale consideration of ₹ 11,11,74,632/-, deducted cost of asset determined the business income at ₹ 11,11,62,469/-. iii. Assessee has also sold development rights and computed Short Term Capital Gain of ₹02,05,75,672/-. The Assessing Officer considered the same as business income. iv. As the Director of the group disclosed unaccounted car parkingsale receipts, ld. AO noted that assessee has sold 246 flats during the Assessment Year, he presumed that such sale of flat is also along with the car parking. He took the prevailing rate of car parking of ₹4,41,00,000/- which was matching with the ratein case of another sister concern in the same city. Accordingly, he determined sum of ₹ 10,84,00,000/- as unaccounted sale of car parking.
Accordingly, assessment order was passed on 28.03.2013 u/s. 153A r.w.s. 153C r.w.s. 143(3) of the Act determining the total income of the assessee at ₹37,94,31,080/-.
The assessee aggrieved with assessment order preferred appeal before the learned CIT(A) challenging the order on jurisdiction, approval and on the merits of the addition.
i. On the issue of absence of incriminating material, the ld. CIT(A) held that there are enough indications of the evidence of incriminating material particularly unaccounted cash discovered during the course of search belonging to the appellant.
ii. He further held that, the satisfaction recorded by the ld. AO is also correct as statement based on the discovery of unaccounted cash and incriminating material is enough to arrive at the satisfaction of the transaction found in the case
iii. On the issue of notice issued u/s. 143 (2) was not served on the assessee, the ld. CIT(A) following the decision of Hon‟ble Delhi High Court in case of Ashok Chadda 27.07.2011 (327 ITR 399)(2011) held that there is no requirement of such notice in assessment u/s 153 C of the Act.
iv. On the issue of approval being mechanical, He held that approval given is administrative and hence, dismissed this ground.
v. On the issue of carry forward of depreciation beyond 8 years, he held that same cannot be treated as time barred beyond a period of 8 years and can be carried forward indefinitely and allowed the ground of the appeal.
vi. On the issue of taxation of Long Term Capital Gain on sale of land, he held that same was stock in trade and accordingly the AO was right in treating it under head of income from business. Similarly, he also held that the sale of development rights of ₹ 02,05,75,672/- is also correctly taxed as business income.
vii. On the issue of unaccounted income of car parking, he confirmed the addition similarly on
i. Assessee filed its original return of income u/s. 139(1) on 11.10.2010 for the impugned assessment year. The same was not taken up for scrutiny. The time limit for issuance of notice of the 143(2) of the Act expired on 30.09.2011. Search on „Lodha Group‟ took place on 10.01.2011. But the satisfaction was recorded on 27.09.2012. Therefore, the date of recording the satisfaction should be considered as the date of search in case of „other person‟. So, this is a concluded assessment. ii. It was further stated that, in absence of any incriminating material pertaining to the assessee, found during search on lodha group, there is no reason to disturb the return of income already filed for impugned assessment year. He relied on several judgments on this issue. iii. It was also submitted that all the additions in this case are made by the ld. AO are without any incriminating material found during search.
iv. On the order of the ld. CIT(A) on the „satisfaction Note‟ he referred to the Page No. 19 of the paper book and submits that the „satisfaction Note‟ also does not suggest any incriminating material with respect to the assessee specifically. It merely says that the documents are related to the group therefore, same cannot be used against the assessee.
v. Appeal of the assessee for A.Y. 2010-11 in ITA No. 1574/MUM/2020 is decided on 09.02.2022 wherein the issue of receipt of on money on sale of car parking, sale of flats and on the issue of Notice u./s 153C qua incriminating material is decided in Para No. 16-30. He therefore submitted that, in absence of any incriminating material as well as in view of the decision of the co-ordinate bench in assessee own case for A.Y. 2011-12, addition deserves to be deleted.
vi. He also extensively referred to 49 pages paper book submitted before us. He specifically referred to Page No. 19 which is a satisfaction note recorded for the issue of notice u/s. 153C of the Act. He submitted that in the whole of satisfaction note there is no single incriminating material mentioned by the ld. AO to give him jurisdiction u/s 153C of the Act. He submitted that the only
vii. He also referred to the decision of the co-ordinate bench in case of National Standard India Limited for A.Y. 2005-06 – 2010-11 at Page No. 31-49 in ITA No. 4055-4060 dated 28.07.2017 and submitted that on identical facts and circumstances of the case the co-ordinate bench has rejected the invocation of jurisdiction u/s. 153C of the Act. He extensively referred Para No. 9-13 of that order.
viii. So, it was submitted that all the issues in this appeal are covered in favor of the assessee.
ix. Even, otherwise on the issue of taxation of Long Term Capital Gain and Short Term Capital Gain arising on sale of land and sale of development rights treated by the ld.AO as business income is also without any incriminating material.
x. Accordingly, he submitted that orders of the lower authorities are not sustainable.
xi. He did not press Ground No. 2 of the appeal stating that same is covered against the assessee holding that there is no requirement of issue
The ld. DR vehemently supported the orders of the lower authorities.
i. On the issue of incriminating material he referred to Para No. 6 of the appellate order statingthat the assessee is part of Lodha Group where the Director of the company disclosed the sum of unaccounted sale consideration as per annexure A1 and „Casa Ultima project‟ in that assessee had disclosed unaccounted income of ₹5,35,00,000/- by the Director and further the confession statement clearly showing the unaccounted money on sale of flats and sale of car parking received by the assessee is the incriminating material available along with the statement of other persons gives the clear cut jurisdiction to the ld. AO for invoking the jurisdiction u/s. 153 of the Act. Thus, it was stated that ld. CIT(A) is correct in holding the proper assumption of jurisdiction by the ld. AO u/s. 153C of the Act.
ii. With respect to the addition on account ofsale of car parking of ₹ 10.84 Crores. He relied on Para No. 11.7 of the ld. CIT(A) he extensively referred to the various statements. He specifically said that all various employees. It was submitted that the assessee company is collecting parking charges by cheques in the name of other concerns operated by other parties.
In rejoinder the ld. Authorized Representative extensively referred the submission made before ld. CIT (A) as well as order of the co-ordinate bench in assessee‟s own case for A.Y. 2011-12 and submitted that the issue is squarely covered on all accounts. He therefore submitted that order of the co-ordinate bench may be followed.
We have carefully considered the rival contentions and perused the orders of the lower authorities. We have carefully considered the order of the co-ordinate bench in assessee‟s own case for A.Y.2011-12 in ITA No. 1574/2020 dated 09.02.2022. In that appeal on identical facts and circumstances, the assessee challenged that provisions of Section 153C of the Act have been invoked without any incriminating material found during the course of search. We find that reasons for making the addition as well as the reasons for invoking the jurisdiction u/s. 153C of the Act by the ld. AO and confirmation of it by the ld. CIT(A) in that year is identical to the impugned Assessment year in this appeal. The co-ordinate bench
The Coordinate bench on the issue of Incriminating material has held as under :-
“20. Now, it is undisputed that in the findings referred by the authorities below, there is no mention to any specific material corresponding to the assessment year under reference, which was found in search, which belong to the assessee in this case. The entire finding of the authorities below is based
On the issue of addition of unaccounted car parking sale income and on money on sale of flats, the coordinate bench held that :-
“22. Now, we come to the merit of addition in this case relating to on money received and the cash
As noted above, these are also not based upon reference to any specific materials relating to the assessee company. The additions are said to be based upon materials belonging to the Lodha group and statement of employees of Lodha group and statement of Shri Abhinandan Lodha, which has been retracted afterwards.
As found out by us above, the assessee is a separate legal entity. There is no mention whatsoever regarding the nature of material belonging to the assessee company, which gives rise to the inference of on money receipt. This is based upon statement of other employees of Lodha group and that of Shri Abhianndan Lodha. As pointed out by us above, assessee has already disputed that assessee is a distinct legal entity and the term Lodha group cannot be used to incriminate the assessee and that Shri Abhinandan Lodha is not at all related to the assessee company. Hence, the material referred are not germane and hence, the addition on merits is also not sustainable. In this regard, we also note that the ld.CIT(A) has given the elaborate reference to case laws regarding the evidence Act and evidentiary value of statements obtained.
In this regard, we note that none of the statement referred here are identified to be belonging to the
“27. The Hon‟ble Supreme Court answered the reference in Para 72 as under: -
(a) Anvar P.V. (supra), as clarified by us hereinabove, is the law declared by this Court on Section 65B of the Evidence Act. The judgment in Tomaso Bruno (supra), being per incuriam, does not lay down the law correctly. Also, the judgment in SLP (Crl.) No. 9431 of 2011 reported as Shafhi Mohammad (supra) and the judgment dated 03.04.2018 reported as (2018) 5 SCC 311, do not lay down the law correctly and are therefore overruled. (b) The clarification referred to above is that the required certificate under Section 65B (4) is unnecessary if the original document itself is produced. This can be done by the owner of a laptop computer, computer tablet or even a mobile phone, by stepping into the witness box and proving that the concerned device, on which the original information is first stored, is owned and/or operated by him. In cases where the “computer” happens to be a part of a “computer system” or “computer network” and it becomes impossible to physically bring such system or network to the Court, then the only means of providing information contained in such electronic record can be in accordance with Section 65B (1), together with the requisite certificate under Section 65B(4). The last sentence in Anvar P.V. (supra) which reads as “…if an electronic record as such is used as primary evidence under Section 62 of the Evidence Act…” is thus clarified; it is to be read without the words “under Section 62 of the Evidence Act,” With this clarification, the law stated in paragraph 24 of Anvar P.V. (supra) does not need to be revisited.
“30. We also note that the ld.CIT(A) has dismissed the assessees plea that the issue is covered in assesees favour by the decision, the lTAT and ld.CIT(A) in the case of NSIL Ltd on the ground that in that case there was no disclosure of section 132(4) of the Act, whereas in the present case, there is a disclosure of income u/s. 132(4) of ₹ 4.80 crores. As noted by us above the said so called disclosure was by Shri Abhinandan Lodha, who is not at all related to the assessees company and his statement was based upon the electronically retrieved data. As observed by us the above cannot distinguish the case from that of the assessees group company in NSIL ltd. Hence, the order of ld.CIT(A) is not sustainable on this ground also.”
In view of the above findings, ld. DR could not show us any reason to deviate from the orders of Coordinate bench in above cases. On reading of The orders of lower authorities, we do not find any difference in the facts and circumstances of the case. Even before us, revenue could not contend that there is any other material collected during the course of search which has not been referred to in those decisions of coordinate bench. In view of this, following the decision of coordinate bench in case of
Honorable Supreme court in case of CIT V Sinhgad Technical education society (2017) 156 DTR 0161 (SC), (2017) 297 CTR 0441 (SC), (2017) 397 ITR 0344 (SC), (2017) 250 TAXMAN 0225 (SC) has held that “18. The ITAT permitted this additional ground by giving a reason that it was a jurisdictional issue taken up on the basis of facts already on the record and, therefore, could be raised. In this behalf, it was noted by the ITAT that as per the provisions of Section 153C of the Act, incriminating material which was seized had to pertain to the Assessment Years in question and it is an undisputed fact that the documents which were seized did not establish any co-relation, document-wise, with these four Assessment Years. Since this requirement under Section 153C of the Act is essential for assessment under that provision, it becomes a jurisdictional fact. We find this reasoning to be logical and valid, having regard to the provisions of Section 153C of the Act. Para 9 of the order of the ITAT reveals that the ITAT had scanned through the Satisfaction Note and the material which was disclosed therein was culled out and it showed that the same belongs to Assessment Year 2004-05 or thereafter. After taking note of the material in para 9 of the order, the position that emerges therefrom is discussed in para 10. It was specifically recorded that the counsel for the Department could not point out to the contrary.
In view of this we hold that there is no incriminating material available on records which were found during the course of search which could have been used by the assessee for disturbing the returned income of the Assessee for AY 2010-11. Accordingly, we allow Ground no 1 of the Appeal. Resultantly, all additions made in the order do not survive.
On Ground no 2 of the appeal regarding non issue of notice u/s 143 (2) of The Act in case of assessment u/s 153C of the Ac, ld. AR has not pressed this issue, however same is also covered against the assessee by the decision of coordinate bench in case of Assessee for AY 2011-12 as under :-
“31. We note that assessee has raised a ground before the ld.CIT(A) that assessment is bad inasmuch
Accordingly Ground no 2 of the Appeal is dismissed.
Ground no 3 was not at all argued before us, therefore same is dismissed.
Ground no 4 & 5 are with respect to capital gain shown by assessee on sale of land and development rights, treated by it its computation of income as income chargeable to tax under the Head “ capital gains‟ but learned AO considered it as “income from Business and Profession.” Neither the ld. AO, nor the ld. CIT (A) and ld. DR before us could not show above any incriminating material found during the course of search. In absence of incriminating material, we hold that orders of the ld. Lower Authorities are non-sustainable in view of the decision of honorable supreme court in case of Sinhgad Technical
Ground no 6 is with respect to addition of on money income on account of sale of car parking and Ground no 7 is on account of taxation of on money on sale of flats. We find that both this issues were discussed by the coordinate bench in the case of the assessee for AY 2011 -12 In 1574/Mum/2020 AY 2011-12 dated 09-02-2022] and held that there is no incriminating material available for making such addition in the hands of the assessee in case of a concluded assessment. Before us also same document andstatements are relied up on by the lower authorities as well as the ld. DR. JudicialDiscipline demands that unless, there is manifest error, same needs to be followed. No infirmities werepointed before us by the ld. DR in the order of coordinate bench, therefore, there is no reason to deviate from the same. On careful analysis, we find that Para no 12.36 of the order of The Ld. CIT (A) in appeal before us is identical to Para no 13 of the decision of the coordinate bench where the addition of unaccounted on money on sale of flats was confirmed by him [ the Ld. CIT (A) for AY 2011-12] . When the findings of ld. CIT (A) are ad verbatim for this appeal compared to AY 2011-12, where the coordinate bench has deleted the addition, we have no reason to differ from the same. Accordingly,ground no6 & 7 of the appeal are allowed.
In the Result appeal of assessee is partly allowed.
Order pronounced in the open court on 12.12.2022.
Sd/- Sd/- (PAVAN KUMAR GADALE) (PRASHANT MAHARISHI) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Mumbai, Dated: 12.12.2022 Dragon Copy of the Order forwarded to: 1. The Appellant 2. The Respondent. 3. The CIT(A) 4. CIT DR, ITAT, Mumbai 5. 6. Guard file. BY ORDER, True Copy//
Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Mumbai