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Income Tax Appellate Tribunal, “C” BENCH, MUMBAI
Before: SHRI AMIT SHUKLA, HONBLE & SHRI S. RIFAUR RAHMAN, HONBLE
2 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh O R D E R PER S. RIFAUR RAHMAN (AM)
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: -
4 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh (1) Flat No. 2202/A, 22nd Floor, Glen Ridge, Hiranandani Gardens Mumbai. (2) Flat No. 2202/B, 22nd Floor, Glen Ridge, Hiranandani Gardens Mumbai. (3) Flat No. 2202/C, 22nd Floor, Glen Ridge, Hiranandani Gardens Mumbai.
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.
5 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh (4) Affidavit declaring that I have not paid any "On Money" to M/s. Crescendo Associates for purchase of the aforesaid residential house property being Flat No. 22024, 2202B and 2202C in Glenridge, Hiranandani Gardens, Powai, Mumbai-400076. Hence in the light of details and information given hereinabove and earlier submitted along with various documents, I once again state that I have not paid any "on money" amount to M/s.Crescendo Associates"
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: -
6 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh Date of Name of the Amount of Flat No. Payment buyer On-money paid 19.10.2006 Shailendra Singh 2202 Rs. 22,00,000/- 28.10.2006 Shailendra Singh 2202 Rs. 10,00,000/- 01.11.2006 Shailendra Singh 2202 Rs. 13,00,000/- 27.11.2006 Shailendra Singh 2202 Rs. 10,00,000/- 28.11.2006 Shailendra Singh 2202 Rs. 20,00,000/- Total Rs. 75,00,000/-
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: -
7 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh “While the appellant objects to the order dated 30/03/2015 passed under section 147 r.w.s 143(3) of the Act, the Appellant humbly seeks withdrawal of the original Grounds of Appeal and accordingly seeks modification and renumbering of Grounds of Appeal as under:
1. The Appellant strongly objects to Notice dated 30/03/2014 issued under section 148 of the Act as it is illegal, bad in law, and ultra vires the provisions of the Act as is evident from the perusal of the copy of the Reasons recorded since: a. Neither any certificate from the Directors and Promoters of Hiranandani Group as claimed has been provided nor any evidence whatsoever alleging the appellant of having paid any "on money" is provided. b. An amount of Rs. 22,00,000/- has been mentioned as against an amount of Rs.75,00,000/- in some excel sheet as alleged as a document as incriminating in nature. c. It is evident that the excel sheet mentioning an amount of Rs. 75,00,000/- is nothing but an afterthought, especially since, the said excel sheet neither bears the seal of the authority nor the name of the Tax Official authorizing the same. d. There is no incriminating document whatsoever that could even remotely conclude that income of the appellant has escaped assessment. e. Neither any satisfaction note nor approval has been sought as per proviso to section 151(1) of the Act as is evident from the plain reading of the notice issued u/s 148 of the Act.
2. The grounds of appeal are without prejudice to the other.
3. The appellant reserves the right to amend, alter or add to the grounds of appeal.”
10. At the time of hearing Ld. AR of the assessee submitted that a search was conducted on “Hiranandani Group builders and developers” on 11.03.2014 and certain documents relating to purchase of three flats were recovered and it was alleged that assessee has paid on-money. In 8 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh this regard, he brought to our notice Page No. 22 of the Paper Book which is Assessment Order for the A.Y. 2007-08 in the case of original Assessment Order passed u/s. 143 r.w.s. 153A of the Act and submitted that search was conducted in the case of the assessee, assessee has filed all the relevant information. Further, he brought to our notice Page No. 40 of the Paper Book which is the notice issued u/s. 148 of the Act dated 30.03.2014. He submitted that the above notice was issued without proper approval of any authority. Further, he brought to our notice Page No. 41 of the Paper Book in which assessee has asked through the authorized representative the reasons for reopening in writing and the Assessing Officer has intimated the assessee through letter dated 03.04.2014 that the copy of the reasons recorded for re-assessment may be collected from his office. After several requests finally assessee received the reasons recorded in writing for reopening the assessment only on 12.03.2015 and the reasons supplied by the Assessing Officer is placed in Paper Book 47 of the Paper Book and he also brought to our notice Page No. 21 of the Paper Book which is form for recording reasons for initiating the proceedings u/s. 147 of the Act in which Assessing Officer has taken approval for escapement of income for ₹.22 lakhs. And the reasons recorded and supplied by the Assessing Officer exactly similar and 9 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh the reasons recorded are that in the case of Hiranandani Group search case, the Directors and promotors of the group have agreed to receive on-money from the purchasers of the flat. Therefore, the additions were made merely relying on the finding in the case and Assessing Officer completed the assessment without giving opportunity to the assessee for cross examination and not shared with the informations relied upon to make additions. Further, he submitted that Ld.CIT(A) applied general principle view and applied the case of the Sumati Dayal v. CIT [214 ITR 801] and no material was confronted with the assessee before making the addition, in this regard, he relied on the case of Anil Jaggi v. ACIT [2018] 89 taxmann.com 266 (Mumbai – Trib.).
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.
10 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh 12. Considered the rival submissions and material placed on record, we observe from the submissions of the parties that the case of the assessee was reopened mainly on the basis of information acquired in the case of Hiranandani group case wherein the director and promotor of the company had agreed that they have received on-money from the purchasers of the flat. In the case of assessee it is fact on record that the assessment was reopened after the expiry of four years and completed assessment u/s. 143(3) r.w.s. 153A of the Act. On exactly similar facts on record the Coordinate Bench of this Tribunal in the case of Anil Jaggi v. ACIT (supra) held as under: - “13. We shall now advert to the validity of the reopening of the concluded assessment of the assessee after a period of four years from the end of the assessment year. We find that the A.O taking recourse to the first proviso of Sec. 147 had initiated reassessment proceedings, for the reason that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to truly and fully disclose all the material facts necessary for his assessment. The ld. A.R had assailed before us the validity of the reassessment proceedings for the reason that the reasons recorded by the A.O for reopening the case of the assessee does not make any mention of escapement of the income of the assessee for failure on his part to fully and truly disclose all material facts necessary for his assessment. We have perused the copy of the „reasons to believe‟ on the basis of which the case of the assessee was reopened by the A.O (Page 31 of „APB‟). We find that nowhere in the reasons to believe there is any mention by the A.O that the case of the assessee had been reopened for the reason of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We find that the assessee by challenging the validity of the reopening of the concluded assessment in his case on the present ground, had sought our indulgence for adjudicating as to whether in the absence on the part of the A.O to make a mention in the „reasons to believe‟ that the case of the assessee had been reopened for the reason of the failure
11 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh on the part of the assessee to fully and truly disclose all material facts necessary for his assessment, the assumption of jurisdiction by him to frame the reassessment can be held to be valid, or not. We have given a thoughtful consideration to the issue before us and find that as per the mandate of first proviso of Sec. 147, a concluded assessment can be reopened after a period of four years from the end of the assessment year, subject to the condition that the income of the assessee chargeable to tax had escaped assessment for the reason of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We are of the considered view that failing satisfaction of the aforesaid condition, the reopening of a concluded assessment after a period of four years from the end of the assessment year cannot be justified. We find that the „reasons to believe‟ on the basis of which the case of the assessee before us was reopened, does not refer to any such ground for reopening the case of the assessee. We are unable to gather from the „reasons to believe‟ which form the very foundation for assumption of jurisdiction for reopening the case of the assessee, that the jurisdiction for reassessing the income of the assessee after lapse of a period of four years from the end of the assessment year was assumed by the A.O because of the failure on the part of the assessee to fully and truly disclose all material facts necessary for his assessment. We find that the validity of the reopening of a concluded assessment which had been reopened after a lapse of a period of four years from the end of the assessment year, in the absence of mention of such a fact in the „reasons to believe‟ is no more res integra in light of the judgment of the Hon’ble High Court of Bombay in the case of Nirmal Bang Securities (P) Ltd. Vs. ACIT (2016) 382 ITR 93 (Bom), wherein the Hon‟ble High Court taking cognizance of the fact that there was no allegation in the reasons recorded that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment in the hands of the assessee, had quashed the reassessment proceedings by observing as under:- “24. In view of the aforesaid well settled legal position and there admittedly being not even an allegation in the reasons recorded that there was any failure on the part of the Petitioner to disclose truly and fully any material fact necessary for assessment, let alone the details thereof, the impugned notice dated 30th March, 2007 and the impugned order dated 5th December 2007 are liable to be quashed and set aside on this ground alone”. We thus in the backdrop of the facts involved in the present case read with the settled position of law as had been deliberated at length hereinabove, being of the considered view that now when 12 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh there is no allegation in the reasons recorded as regards the failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment in the hands of the assessee, therefore, following the judgment of the Hon’ble High Court of Bombay in the case of Nirmal Bang Securities (supra) are of the view that the reassessment proceedings in light of the aforesaid jurisdictional defect in the assumption of jurisdiction cannot be sustained. We thus in the backdrop of our aforesaid observations, therefore, hold that the reassessment proceedings initiated by the A.O beyond a period of four years from the end of the assessment year, without making a mention in the „reasons to believe‟ that the income of the assessee chargeable to tax had escaped assessment because of failure on the part of the assessee to disclose fully and truly all material facts necessary for framing of assessment, cannot be sustained and on the said count too is liable to be vacated.
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
14 ITA.Nos. 7519 & 7520/MUM/2019 (A.Y: 2007-08) Dr. Pushpa Singh & Dr. Shailendra I. Singh and set aside the order of the CIT(A) sustaining the addition of Rs. 2.23 crores in the hands of the assessee.”
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.
14. In the result, appeals filed by the assessee are allowed.
Order pronounced in the open court on 25th August, 2022