AARAV A. MUCHHALA,MUMBAI vs. ITO WARD- 11 (1)(3), MUMBAI

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ITA 2521/MUM/2019Status: DisposedITAT Mumbai20 March 2020AY 2012-1314 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the first issue regarding the reopening of assessment was not pressed by the assessee and was therefore decided in favour of the revenue. For the second issue concerning the addition under Section 69C, the Tribunal found that while the material relied upon by the department (pen-drive data) formed a basis for doubting the investment, it fell short of clinching evidence to irrefutably prove the payment of 'on-money' by the assessee. The judgment cited the case of Anil Jaggi Vs. ACIT, noting that the name and details of the assessee were mentioned in the pen-drive printout, but this alone did not conclusively prove suppression of investment and payment of 'on-money'. Crucial details like the date and mode of receipt of 'on-money', who paid it, to whom it was paid, and who prepared the details were missing. The Tribunal also noted that the admission by Sh. Niranjan Hiranandani regarding 'on-money' received by his group did not, in the absence of material inextricably evidencing payment by the assessee, lead to adverse inferences against the assessee. The Tribunal concluded that the adverse inferences drawn by the AO were based on premature observations and lacked corroborating evidence, thus could not be sustained. The addition was set aside. The appeals for AYs 2013-14 and 2014-15 were also allowed as they involved similar controversies. The operative direction was to set aside the CIT(A)'s order and allow the assessee's claim.

What were the facts?

The assessee, Aarav A. Muchhala, filed appeals against orders of the CIT(A)-18, Mumbai, for Assessment Years (AYs) 2012-13, 2013-14, and 2014-15. The appeals stemmed from the reopening of assessments based on information from a search on Cosmos Group, which allegedly accepted 'on-money' for property sales. The Investigation Wing prepared a cash book of 'on-money' received by Cosmos Group, indicating the assessee paid Rs. 1,34,50,000/- as 'on-money' for a bungalow during FY 2011-12 (relevant to AY 2012-13). The Assessing Officer (AO) made an addition of Rs. 84,50,000/- under Section 69C of the Income Tax Act. The CIT(A) confirmed the AO's order. The assessee's return for AY 2012-13 declared a total income of Rs. 18,95,621/-. The AO assessed the total income at Rs. 1,03,45,620/-.

What were the issues?

1. Whether the learned CIT(A) erred in confirming the reopening of assessment by issuing a notice under Section 148 of the Income Tax Act. 2. Whether the learned CIT(A) erred in confirming the addition of Rs. 84,50,000/- as unexplained expenditure under Section 69C, based on third-party information without providing an opportunity for cross-examination or conducting independent inquiry. Assessee's Contentions: - The information from the pen-drive, inferring 'on-money' payment, was not provided, preventing the assessee from identifying the payer, recipient, preparer, date, and place of payment. - The total consideration, including 'on-money', would be Rs. 2,99,50,000/-, significantly higher than the stamp duty valuation of Rs. 2,01,15,000/-, making the addition based on surmises and conjecture. - Reliance was placed on ITAT Mumbai Bench decisions in ITA No. 6752/M/2008 and Anil Jaggi Vs. ACIT. - Statements of certain individuals were not confronted, and cross-examination was not provided. Revenue's Contentions: - An opportunity of being heard was given to the assessee, and there was no specific demand for cross-examination or material at the time of assessment completion. - The factual position is not in dispute; material found during the search on Cosmos Group belonged to the assessee and indicated 'on-money' payment.

Which sections of the Income-tax Act were involved?

Section 69C,Section 148,Section 143(2),Section 142(1),Section 132(4)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: SHRI RAJESH KUMAR, AM & SHRI AMARJIT SINGH, JM

For Appellant: Shri Y. P. Trivedi/ D. C. Jain / Ms
Hearing: 16/03/2020Pronounced: 20/03/2020

O R D E R

PER AMARJIT SINGH, JM:

1.

The assessee has filed the above mentioned appeals against the different order passed by the Commissioner of Income Tax (Appeals) -18, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Ys. 2012-13 to 2014-15.

2.

The assessee has filed the present appeal against the order dated 28.02.2019 passed by the Commissioner of Income Tax (Appeals) -18, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2012- 13. to 2523/M/2019 A.Ys. 2012-13 to 2014-15 3. The assessee has raised the following grounds: - “

1. Under the facts and circumstances the learned CIT (Appeals) erred in confirming the order of reopening, the assessment by issue Notice u/s. 148 of I.T. Act passed by the learned Assessing officer.

2. Under the facts and circumstances the learned CIT (Appeals) erred in confirming the addition of Rs. 8450000/- as an unexplained expenditure u/s. 69C of I.T. Act made by the learned Assessing officer basis on the information from third party without providing an opportunity for cross examination and/or without conducting independent inquiry. 2(a) The information gathered by the department from the pen-drive on the basis of which payment of on-money' by the assessee for purchase of flat was being inferred, has not been made available to the appellant, to find out the details as regards to whom the money was paid, who has paid the money and who has prepared the details and date and place where the money was paid etc. etc. B the appellant agreed to purchase a week end cottage for a price of Rs. 1,65,00,000/- vide Agreement for sale dated 20/01/2014 from Cosmos Infrastructure, registered with sub-

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