DR PUSHPA SINGH (ALIAS PUSHPA SINGH),MUMBAI vs. DCIT CC 2 (3), MUMBAI

These appeals are filed by different assessees of same family, against different orders of Learned Commissioner of Income-tax (Appeals)-48, Mumbai [hereinafter for short "Ld. CIT(A)] dated 19.09.2019 for the A.Y.2007-08.

Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal of Dr.Shailendra I Singh in ITA.No. 7520/MUM/2019 for A.Y. 2007-08 as a lead appeal.

Brief facts of the case are, assessee’s return of income was assessed u/s.143(3) r.w.s. 153A of Income-tax Act, 1961 (in short “Act”) on 17.12.2009. Thereafter the case was reopened u/s. 147 by issue of notice u/s. 148 of the Act dated 30.03.2014. Further, notices u/s. 143(2) dated 15.07.2014 along with questionnaire was issued and served on the assessee. The case was reopened with the following reasons recorded: - “Consequent to the search, this case was centralized with the undersigned. The notice u/s. 153A of the IT Act, 1961 was issued on 22.12.2008. In response to notice u/s. 153A of the IT Act, 1961 the 3 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh assessee filed the return of income on 27.02.2009 declaring total income of Rs. 60,69,788/-. The assessee is a Doctor by his profession. The assessment was completed u/s. 143(3) r.w.s 153A of the IT Act, 1961 and determining total income of Rs. 61,34,873/- The search was conducted by DIT (Inv.)-11, Mumbai on Hiranandani Group Builders and Developers on 11.03.2014, it was found that payments in form of "on money were made by various purchasers/buyers. It was also duly certified by the Directors and Promoters of the said company that they have received on money from the purchasers/buyers. However, on identification of the purchasers/buyers based on PAN on the basis of address it is found that Dr. Shailendra I. Singh has given Rs. 22 lacs in form of on money for the purchase of flats. In view of the above facts, I have reason to believe that income chargeable to tx to the extent of Rs. 22,00,000/- has escaped assessment for A. Y. 2007-08 by reason of the failure on the part of the assessee to furnish the correct particulars of facts necessary for assessment. Since more than 4 years have elapsed from the end of the relevant assessment year, the case is covered u/s. 149 r.w.s. 151 of I.T Act. Therefore, approval to issue notice u/s. 148 may be granted, as required under proviso to Sec. 151 (1) of the IT Act, 1961. In view of the foregoing discussion, I am satisfied that it is a fit case for re-opening of assessment u/s. 147 of the Act as the income chargeable to tax has escaped assessment for A.Y. 2007-08.”

In response to the notices u/s. 143(2) and 142(1) of the Act, AR of the assessee attended and submitted relevant information as called for. Assessee asked for the copy of reasons for reopening and the same was submitted to him. In response assessee submitted the details of flat purchased from M/s. Crescendo Associates a concern of Hiranandani Group. As per the agreement for sale, the assessee has purchased the following flats jointly owned by the assessee and his spouse Dr. Pushpa S. Singh and the details of the flats are as under: -

Assessee submitted that total consideration of the above said flats is ₹.2.20 crores and categorically stated that he has not paid any on- money to purchase these flats from M/s. Crescendo Associates. Therefore, he objected to make any addition to its total income assessed u/s. 143(3) r.w.s. 153A of the Act. Subsequently assessee was asked to produce the copies of bank statements and why on-money should not be treated as the income of the assessee. In response assessee submitted reply dated 26.03.2015 and submitted as under: - “(1) Copy of bank statements for period 01-04-2006 to 31.03.2007 in respect of SB A/c. of Dr. Pushpa S. Singh with Bank of India, Ghatkopar (West) Branch, Mumbai - 400086 in which the entries of payments made to M/s/ Crescendo Associates for purchase of residential house property being Flat No. 2202A, 220B and 2202C in Glenridge, Hiranandani Gardens, Powai, Mumbai - 400076 have been highlighted. As discussed during the course of the hearing on 24-03- 2015, this residential house property has been purchased for Rs. 2,20,00,000/- out of which housing loan from ICICI Bank Ltd. has been taken of Rs. 1,91,00,000/- and the balance Rs. 29,00,000/- has been paid from my saving Bank Account and the Savings Bank Account of my husband - Dr. shailendra I singh with Bank of India, Ghatkopar (West) Branch, Mumbai-400086. (2) There are no cash withdraws from my Savings Bank Account with Bank of India, Ghatkopar (West) Branch, Mumbai - 400086. (3) Allotment Letter dated 30-11-2006 in respect of purchase of residential house property being Flat No. 2202A, 2202B and 2202C in Glenridge, Hiranandani Gardens, Powai, Mumbai-400076.

After considering the submissions made by the assessee, Assessing Officer rejected the same and observed that during the course of search u/s. 132 of the Act in the case of Hiranandani Group a pendrive was seized containing running cash ledger reflecting the receipt of on-money during the respective years. Further, Assessing Officer observed that when the informations contained in pendrive was confronted to the Managing Director of the group Shri Niranjan Hiranandani and Shri Surendra Hiranandani who in their sworn statements u/s. 132(4) of the Act dated 14.03.2014 confirmed that such transactions had taken place and on-money receipts from various purchasers was not offered to tax, which they have offered during the course of search in the respective years. Further, Assessing Officer observed that the details of transactions of on-money carried out by Hiranandani Group contained in the pendrive contains the details of the assessee which is as under: -

The Assessing Officer observed from the above statement that the properties were actually Flat Nos. 2202A, 2202B and 2202C on 22nd Floor of Glenridge. The total amount of on-money paid to purchase the above said properties was ₹.75 Lakhs and the above properties are jointly owned by the assessee and his wife. Accordingly, the payment of on-money is divided equally among them. Accordingly, he made the addition of ₹.37.5 lakhs in the hands of the assessee as undisclosed investment u/s.69 of the Act.

Aggrieved assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) considered the submissions of the assessee and proceeded to sustain the addition made by the Assessing Officer and also distinguished the case law relied by the assessee.

Aggrieved assessee is in appeal before us raising following revised grounds in its appeal: -

On the other hand, Ld. DR submitted that there is sufficient evidence is enough reason to believe to reopen the assessment and at the time of reopening what is relevant is reason to believe. In this case Assessing Officer has proper reason to believe and accordingly, he reopened the assessment. Further, he submitted that statement recorded u/s. 132 of the Act has evidential value. Therefore, Assessing Officer has completed the assessment with proper approval from the higher authorities.

We shall now take up the case of the assessee on merits and deliberate on the validity of the addition of Rs. 2.23 crore made by the A.O on the ground that the assessee had made a payment of “on money” for purchase of flats from M/s Lakeview developers. We have perused the facts of the case and the material available on record on the basis of which the addition of Rs. 2.23 crore had been made in the hands of the assessee. We have further deliberated on the material placed on record and the contentions of the ld. A.R to drive home his contention that no payment of any “on money” was made by the assessee for purchase of flats from M/s Lakeview Developers. We find that the genesis of the conclusion of the A.O that the assessee had paid “on money” of Rs. 2.23 crore for purchase of property under consideration is based on the contents of the pen drive which was seized from the residence of an ex-employee of Hiranandani group. We have perused the print out of the pen drive (Page 42 of APB) and find ourselves to be in agreement with the view of the ld A.R that though against the heading “Amount of on money paid” the name, address and PAN No. of the assessee is mentioned alongwith the details of the property purchased by him, viz. Flat no.2501 in “Somerset” building from Lakeview Developers (a Hiranandani group concern), however, the same would not conclusively prove suppression of investment and payment of “on money” by the assessee for purchase of the property under consideration. We find that the information as emerges from the print out of the pen drive falls short of certain material facts, viz. date and mode of receipt of „on money‟, who had paid the money, to whom the money was paid, date of agreement and who had prepared the details, as a result whereof the adverse inferences as regards payment of “on money” by the assessee for purchase of the property under consideration remain uncorroborated. We further find that what was the source from where the information was 13 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh received in the pen drive also remains a mystery till date. We find that Sh. Niranjan Hiranandani in the course of his cross-examination had clearly stated that neither he was aware of the person who had made the entry in the pen drive, nor had with him any evidence that the assessee had paid any cash towards purchase of flat. We have deliberated on the fact that Sh. Niranjan Hiranandani in his statement recorded on oath in the course of the Search & seizure proceedings had confirmed that the amounts aggregating to Rs. 475.60 crore recorded in the pen drive were the on-money received on sale of flats, which was offered as additional income under Sec. 132(4) and thereafter offered as such for tax in the petition filed before the Settlement commission. We are of the considered view that there is substantial force in the contention of the ld. A.R that mere admission of the amounts recorded in the pen drive as the additional income by Sh. Niranjan Hiranandani, falling short of any such material which would inextricably evidence payment of “on money” by the assessee would not lead to drawing of adverse inferences as regards the investment made by the assessee for purchase of the property under consideration. We rather hold a strong conviction that the very fact that the consideration paid by the assessee for purchase of the property under consideration when pitted against the „market value‟ fixed by the stamp valuation authority is found to be substantially high, further fortifies the veracity of the claim of the assessee that his investment made towards purchase of the property under consideration was well in order. We are of the considered view that though the material acted upon by the department for drawing of adverse inferences as regards payment of “on money” by the assessee formed a strong basis for doubting the investment made by the assessee for purchase of the property under consideration, but the same falling short of clinching material which would have irrefutably evidenced the said fact, thus, does not inspire much of confidence as regards the way they have been construed by the lower authorities for drawing of adverse inferences in the hands of the assessee. We thus are of a strong conviction that as the material relied upon by the lower authorities does not corroborate the adverse inferences drawn as regards the investment made by the assessee, therefore, the same cannot conclusively form a basis for concluding that the assessee had made payment of “on money” for purchase of the property under consideration. We thus in the backdrop of our aforesaid observations are of the considered view that the adverse inferences drawn by the A.O as regards payment of “on money” of Rs. 2.23 crore by the assessee for purchase of Flat No. 2501 from M/s Lakeview Developers are based on of premature observations of the A.O, which in the absence of any clinching evidence cannot be sustained. We thus are unable to subscribe to the view of the lower authorities

Considered the facts on record and facts in the above said case are exactly similar and the conclusion reached therein by the Coordinate Bench are respectfully followed and accordingly, the assessment made u/s. 147 r.w.s. 143(3) of the Act is bad in law. Following the above facts on record we allow the appeal filed by the assessee.

Coming to the appeal in the case of Dr. Pushpa Singh in ITA.No. 7519/MUM/2019 for the A.Y. 2007-08, since facts in this appeal are mutatis mutandis to the case of Dr. Shailendra I. Singh for the A.Y.2007-08, therefore the decision taken in Dr. Shailendra I. Singh for the A.Y. 2007-08 is applicable mutatis mutandis to this appeal also. Accordingly, the appeal filed by the assessee is allowed.