NISHA NAVIN PUNJANI ,MUMBAI vs. INCOME TAX OFFICER 29 (2) (4) MUMBAI, MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M): These appeals in 5798/Mum/2019 for A.Y.2013-14 arise out of the order by the ld. Commissioner of Income

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani

As the information received from the DDIT(Inv.), Unit-VII(3) that Shri Navin C. Punjani, Nisha Navin Punjani and Chirag Navin Pujani have made the payments of Rs.23,00,000/- in cash and Navin C. Punjani, is assessed with this charge and to verify the transactions of immovable property made by the assessee, the assessment for the assessment year 2013-14 needs to be re- opened. I, therefore, have reason to believe that the assessment has escaped income to the extent of Rs.23,00,000/- in the case of navin C. Punjani, within the meaning of section 147 of the I.T. Act, for the assessment year 2013-14.”

3.1. The assessee is a proprietor of M/s. Pushpam Store wherein he sells ladies dress materials and clothes. The assessee was having 1/3rd share of shop at Haribhuvan which was purchased for Rs.6,98,040/- (being assessee’s 1/3rd share). This shop was situated at No.11, Haribhuvan Co-operative Housing Society, Zaveri Road, Mulund (W), Mumbai – 400 080 and was purchased by the assessee alongwith his relatives Ms. Nisha Navin Punjani and Shri Chirag Navin Punjani for sale consideration of Rs.19,75,000/- from Shri Jignesh Jayantilal Doshi vide registered sale deed executed on 12/11/2012. The lower authorities observed that Shri Jignesh Jayantilal Doshi (seller of the shop) was raided in a police check point by the police authorities where the cash of Rs.23,00,000/- was found. Since cash of Rs.23,00,000/- was seized from Shri Jignesh Jayantilal Doshi by the police authorities, this information was apparently passed on to Income Tax department by the police authorities. We find that the ld. AO had given his report vide letter dated 22/04/2021 wherein it has been stated that the said seizure of cash by the police authorities had happened on 12/12/2012. Pursuant to the receipt of information from the police authorities, the investigation wing of Income Tax department i.e. DDIT (Inv.) Unit-VII(3), Mumbai confronted Shri Jignesh Jayantilal Doshi seeking explanation for the seized cash of Rs.23,00,000/-. Shri Jignesh Jayantilal Doshi replied that the said cash of Rs.23,00,000/- in toto represent on money received from Shri Navin C Punjani (assessee herein), Ms. Nisha Navin Punjani and Shri Chirag

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani

Navin Punjani for purchase of shop No.11 over and above the cheque portion of Rs.19,75,000/- on sale of property. Based on the said statement of Shri Jignesh Jayantilal Doshi, the Investigation wing passed on the information to the ld. AO of the assessee and the ld. AO recorded the same in the reasons and reopened the assessment of assessee for the A.Y.2013-14. The assessee sought for cross examination of Shri Jignesh Jayantilal Doshi during the course of assessment proceedings. Accordingly, the ld. AO of the assessee issued summons to Shri Jignesh Jayantilal Doshi u/s.131 of the Act which remained unresponded by Shri Jignesh Jayantilal Doshi. However, pursuant to the summons, the assessee duly appeared before the ld. AO and the statement on oath u/s.131 of the Act was recorded from him on 29/12/2016 wherein assessee had clearly stated in response to Question No.6,7 & 8 that he was owner of 1/3rd share in the property purchased from Shri Jignesh Jayantilal Doshi; that he had not paid any cash to Shri Jignesh Jayantilal Doshi over and above the cheque payment for purchase of property ; that he knows Shri Jignesh Jayantilal Doshi as Shri Jignesh Jayantilal Doshi was doing business opposite to his shop; and Shri Jignesh Jayantilal Doshi was introduced to assessee through his friend who is an estate agent by name Shri Bipin Thakkar. The ld. AO completely disregarded the entire contentions of the assessee and merely by placing reliance on the statement recorded from Shri Jignesh Jayantilal Doshi and in view of the fact that Shri Jignesh Jayantilal Doshi did not respond to the summons issued by the ld. AO, proceeded to treat 50% (1/2 share) of Rs.23,00,000/- as unexplained income of the assessee and added the same in the hands of the assessee, a sum of Rs.11,50,000/-.

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani

3.2. We find that ld. CIT(A) had in principle upheld the addition made by the ld. AO but by making the minor modification by stating that the addition should have made by the ld. AO u/s.69 of the Act instead of Section 68 of the Act. The ld. CIT(A) also observed that the mere fact that the cash has been seized from the seller is more than sufficient to prove that assessee has paid on-money towards purchase of property to the seller and hence, the cross examination of Shri Jignesh Jayantilal Doshi requested by the assessee is not really relevant and accordingly, dismissed the appeal of the assessee. Aggrieved, the assessee is in appeal before us.

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani

Jayantilal Doshi was not provided to the assessee. It was argued that the cash of Rs.23,00,000/- has been seized from the premises of Shri Jignesh Jayantilal Doshi (seller of the shop) hence, the presumption in terms of Section 132(4A) and r.w.s. 292C of the Act would lie in favour of Shri Jignesh Jayantilal Doshi wherein onus is on Shri Jignesh Jayantilal Doshi to prove that the said cash does not represent income in his hands.

4.1. The ld. DR before us pointed out that Shri Jignesh Jayantilal Doshi had revised his return of income in the relevant year by including this Rs.23,00,000/- cash portion also as part of sale consideration of shop and had paid capital gains tax thereon.

4.2. The ld AR argued that there is absolutely no evidence brought on record by the ld. CIT(A) to come to a conclusion that cash was received by seller from the assessee 2-3 days prior to the date of registered sale deed. As far as the assessee is concerned, he alongwith his relatives had purchased the entire property for Rs.19,75,000/- as against the market value as per ready reckoner rates at Rs.18,44,189/- which figure is mentioned in the written submission of the ld. AR and the same is considered as a statement made from the Bar. No contrary evidence has been brought on record by the ld. DR in this regard. However, as per the statement given by the assessee before the ld. AO during the course of assessment proceedings, Shri Jignesh Jayantilal Doshi is running his business in the premises which is opposite to the shop of the assessee. Hence, there may be a reasonable belief that assessee or his relatives could have influenced Shri Jignesh Jayantilal Doshi (seller) for not responding to the summons issued by the ld. AO. We hold that the Preponderance of 5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani

Probability Theory would come into play in the instant case. Though this observation is made only as a passing remark, we would like to address the entire issue in dispute on merits of the addition in the peculiar facts and circumstances of the instant case instead of addressing on the legal arguments advanced by the ld. AR before us. We would like to make it clear that the decision rendered in this case shall not be considered as a binding precedent for other cases as the same is peculiar to the facts of the instant case alone. We find that the ld. DR pointed before us that the seller has conceded the cash portion of Rs.23,00,000/- as part of sale consideration of property and had paid capital gains tax in his returns. Hence, it could be reasonably inferred that the said cash of Rs.23,00,000/- represents on money payments made by the assessee to the seller for purchase of property. Hence, addition towards unexplained cash payments should be made in the hands of the assessee. Admittedly, the assessee Shri Navin C Punjani is only owner of 1/3rd share in the property purchased. This fact is not disputed at all. Hence, any addition that could be made in the hands of the assessee on account of unexplained investment made on purchase of property could only be to the extent of 1/3rd share and not 1/2 share as made by the Revenue in the instant case. We direct the ld. AO accordingly. Accordingly, the grounds raised by the assessee in the case of Shri Navin C Punjani are partly allowed.

(A.Y2013-14 (Ms. Nisha Navin Punjani)

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani investment u/s.69 of the Act in the facts and circumstances of the instant case.

5.1. We have heard rival submissions and perused the materials available on record. We find that assessee had filed her original return of income for the A.Y.2013-14 on 03/07/2013 declaring total income of Rs.2,14,520/-. Later her assessment was sought to be reopened by issuance of notice u/s.148 of the Act on 09/03/2016 after recording the following reasons for reopening:- “In this case, an information has been received from DDTT(Inv.) Unit-VII-(3), Mumbai, wherein it has been stated that during the recording of statement of Shri Jignesh Jayantilal Doshi u/s. 131 of the I.T. Act, 1961, he has confirmed that he has received an amount of Rs. 23,00,000/- in cash from Shri Navin C. Punjani, Nisha Navin Punjani and Chirag Navin Punjani over and above the cheques of Rs. 19,75,000/- as mentioned in the registered sale deed executed on 12-11-2012 in respect of sale of shop no.11, Hari Bhuvan Co-op. Hsg. Soc., Zaveri Road, Mulund (W), Mumbai ~ 400 080. As the information received from the DDIT(Inv.), Unit-VII(3) that Shri Navin C. Punjani, Nisha Navin Punjani, Chiiag Navin Pujani have made the payments of Rs.23,00,000/- in cash and Navin C. Punjani, is assessed with this change and to verify the transactions of immovable property made by the assessee, the assessment for the assessment year 2013-14 needs to be re-opened. I, therefore, have reason to believe that the assessment has escaped income to the extent of Rs.23,00,000/- in the case of Navin C. Punjani within the meaning of section 147 of the I.T. Act, for the assessment year 2013-14.”

5.2. The ld. AO sought to add 50% (1/2) share in the hands of Ms. Nisha N Punjani towards on-money payment for purchase of property in the sum of Rs.11,50,000/- for the same reasons adduced in the case of Shri Navin C Punjani. This was also upheld by the ld. CIT(A) on the same reasons as was decided in the case of Shri Navin C Punjani.

5.3. From the perusal of the reasons recorded in the hands of Ms. Nisha N Punjani, it could be seen that the ld. AO had only sought to have reasonable belief that income of Rs.23,00,000/- has escaped assessment

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani in the hands of Shri Navin C Punjani alone and not in the hands of assessee herein. Hence, the belief of the ld. AO itself gets vitiated. As per the aforesaid reasons, it is the case of the Revenue that only Shri Navin C Punjani had made payment of Rs.23,00,000/- in cash to Shri Jignesh Jayantilal Doshi for purchase of property. This fact is factually incorrect in as much as Shri Jignesh Jayantilal Doshi had also confirmed the fact that the cash of Rs.23,00,000/- in toto had been received by him from Shri Navin C Punjani, Ms. Nisha N Punjani and Shri Chirag C Punjani. However, the reasons recorded by the ld. AO in the case of Ms. Nisha N Punjani nowhere mentions that the ld. AO while recording reasons had a reasonable belief that her income had escaped assessment. Hence no addition per se could be made in the hands of Ms. Nisha N Punjani. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of Hindustan Lever Ltd., vs. ITO reported in 268 ITR 332 (Bom). The relevant operative portion of the said judgement is as under:- “20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against

5798/Mum/2019 Ms.Nisha Navin Punjani & Shri Navin C Punjani arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced.”

5.4. Respectfully following the aforesaid decision, we hold that the reasons recorded by the ld. AO for reopening the assessment itself does not contemplate any formation of belief to conclude that income of Ms. Nisha N Punjani had escaped assessment. Accordingly, re-assessment made herein in the hands of Ms. Nisha N Punjani is hereby quashed. In the result, appeal of the assessee is allowed.

Order pronounced on 20/07/2021 by way of proper mentioning in the notice board.