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Income Tax Appellate Tribunal, “C”
Before: HON’BLE SH. SANDEEP GOSAIN, JM & HON’BLE SH. N. K. PRADHAN, AM
M/s Prime Developers, DCIT Cen Cir -8(4) R. No. 658, 6th floor, 9A, Chunawala, बिधम/ Compound, Ambewadi, G. Aayakar Bhavan, D. Ambedkar Marg, Parel Vs. Mumbai-400 020 Tank Road, Kala Chowki, Mumbai-400 033 स्थायीलेखासं./जीआइआरसं./ PAN No. AAHEF7599Q (अपीलाथी/Appellant) (प्रत्यथी / Respondent) : अपीलाथीकीओरसे/ Appellant Shri Awangshi Gimson, DR : by प्रत्यथीकीओरसे/Respondentby : Shri Vimal Punamiya, AR सुनवाईकीतारीख/ : 18.02.2019 Date of Hearing घोषणाकीतारीख / : 16.05.2019 Date of Pronouncement आदेश / O R D E R
Per Sandeep Gosain, Judicial Member:
The present Appeal has been filed by the revenue against the order of Commissioner of Income Tax (Appeals)-50, Mumbai, dated 24.02.17 for AY 2012-13 on the grounds mentioned herein below:-
M/s Prime Developers a) "Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in deleting the addition of Rs.28,60,00,000/- made by the Assessing Officer ignoring the fact that the AO has rightly considered statement of Shri Paras Porwal recorded u/s 131, in his capacity as the Chairman & Managing Director of the Om Shanti Group, as a credible and admissible evidence in the eyes of law in the light of the fact that the assessee is a group entity of the Om Shanti Group?". b). "Whether on the facts and circumstances of the case and in law, the Ld.CIT(A) was justified in deleting the addition of Rs:28,60,00,000/- made by the Assessing Officer ignoring the fact that statement of Shri Paras Porwal recorded u/s 131 recorded on 26.07.2013 was retracted only on 29.09.2014, after an inordinate delay of 14 months, thus rendering the same as an afterthought so as to evade tax liability?".
The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.
The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.
M/s Prime Developers 2. As per the facts of the present case, assessee is a partnership firm. The return of income was filed on 27.09.2012 declaring income of Rs. 4,360/-. Consequently, a survey u/s 133A was conducted by the DDIT Unit -II (1) Mumbai on 15.10.2013 in case of a group, known as the M/s Om Shanti Group. During the course of survey, the statement of Shri Paras Porwal was recorded, wherein the said Paras Porwal admitted that assessee had undisclosed income and thus on the basis of statement recorded of Paras Porwal, CMD of Om Shanti Group, additions were made to the total income of the assessee.
Aggrieved by the order of AO, assessee preferred appeal before Ld. CIT(A) and Ld. CIT(A) after considering the case of both the parties partly allowed the appeal of the assessee and deleted the additions made by AO.
Aggrieved by the order of Ld. CIT(A), revenue has filed the present appeal before us on the grounds mentioned herein above.
M/s Prime Developers Ground No. (a) & (b) 5. These grounds raised by the revenue are inter connected and inter related and relates to challenging the order of Ld. CIT(A) in deleting the addition of Rs.28,60,00,000/- made by the AO, therefore we thought it fit to dispose of the same by this common order.
Ld. DR appearing on behalf of the department relied upon the orders passed by AO and submitted that Ld. CIT(A) erred in deleting the addition made by AO by ignoring the fact that the AO had rightly considered statement of Shri Paras Porwal recorded u/s 131, in his capacity as the Chairman & Managing Director of the Om Shanti Group, as a credible and admissible evidence in the eyes of law in the light of the fact that the assessee was a group entity of the Om Shanti Group. It was further submitted that Ld. CIT(A) was not justified in deleting the additions made by the AO, thereby ignoring the fact that statement of Paras Porwal u/s 131 recorded on 26.07.2013 was retracted only on 29.09.2014 and in this way, there was an M/s Prime Developers inordinate delay of 14 months, thus rendering the same as an afterthought so as to evade tax liability.
It was further submitted that it is an undisputed fact that assessee is also a group entity /sister concern of Om Shanti Group. The survey action was carried out in the case of Om Shanti Group on 15.10.13, wherein the statement of Shri Paras Porwal was recorded and the same was well within the notice and knowledge of the assessee. Therefore, in such circumstances, the assessee could not have taken stand that he was not aware regarding the admission of undisclosed income by Paras Porwal, CMD of Om Shanti Group. It was also submitted that Paras Porwal, being the key person of the group had admitted at the time of survey that assessee had undisclosed income of Rs. 28,60,00,000/- for the year under consideration. Thus in such a scenario, the contention of the assessee was rightly found to be afterthought by the AO and was thus rightly rejected, whereas, Ld. CIT(A) had applied a short cut method by simply deleting the additions by rejecting the statement of Paras Porwal.
M/s Prime Developers 8. On the other hand, Ld AR appearing on behalf of the assessee reiterated the same arguments as were raised by him before Ld. CIT(A) and relied upon the orders passed by Ld. CIT(A).
We have heard the counsels for both the parties at length and we have also perused the material placed on record, judgment cited by the parties as well as the orders passed by revenue authorities. Before we decide the merits of the case, it is necessary to evaluate the orders passed by Ld. CIT(A). The Ld. CIT(A) has dealt with the above grounds raised by the revenue in para no. 5 & 6 of its order. The operative portion of the order of Ld. CIT(A) is contained in para no. 6.2 & 6.3 of its order and the same is reproduced below:-
6.2 I have gone through the assessment order and the submissions of the appellant. I find that the addition of Rs. 28,60,00,000/- was made solely on the basis of the statement of Shri Paras Porwal. The appellant has contested the addition on the ground that Shri Paras Porwal is not connected with the firm (appellant). As per the appellant, Shri Paras Porwal M/s Prime Developers has no locus standi as far as the affairs of the appellant is concerned. The Assessing Officer on the other hand claimed that appellant is part of, what the AO called, the Om Shanti Group. The AO further contended that Shri Paras Porwal is CMD of "Om Shanti Group" and therefore, this statement made by Shri Paras Porwal was binding on the appellant.
6.3 The contention of the Assessing Officer is grossly wrong. The Income Tax Act does not recognise the concept of Group. Therefore, the contention of the AO that the appellant belongs to the Om Shanti Group is not a valid ground for making the addition. Consequently, the contention of the AO that this statement of Shri Paras Porwal is binding on the appellant is without any basis whatsoever. I agree with the contention of the appellant that Shri Paras Porwal has no locus standi as far as it (the appellant) is concerned and, therefore, the addition made on the basis of the statement of Shri Paras Porwal is not sustainable. I, therefore, delete the addition of Rs. 28,60,00,000/- made by the AO. In the result, the first ground of appeal is allowed.
10. After having gone through the facts of the present case and hearing the parties at length, we find that the AO had made M/s Prime Developers additions only on the basis of statement of Paras Porwal recorded during the survey. Whereas, it was no where pointed out by AO that the said Paras Porwal had affirmed in his statement that it was undisclosed income of the assessee. The AO had not provided opportunity of cross examination to the assessee with regard to the statement of Paras Porwal. We notice that AO had not investigated the matter independently, but had relied upon the statement of Paras Porwal.
11. It is a settled law that suspicion of highest degree cannot take place of evidence and thus additions cannot be made merely on assumptions and presumptions. Even otherwise, the AO had not placed on record any material to co-relate undisclosed income with the statement of Paras Porwal. We also rely upon CBDT instruction F.No.286/2/2003/IT-INB-3 dated 10.03.03, which provided that no surrender or addition should be made during the course of survey, which was not based on the concrete evidences. Therefore, in such a circumstances, Ld. CIT(A) rightly concluded that the solitary statement of Paras Porwal without any corroborative evidence is not sufficient for making additions.
M/s Prime Developers 12. In the net result, the appeal filed by the revenue stands dismissed with no order as to cost.
Order pronounced in the open court on 16th May 2019. (N. K. Pradhan) (Sandeep Gosain) लेखासदस्य / Accountant Member न्याययकसदस्य / Judicial Member मुंबई Mumbai;यदनांकDated : 16.05.2019 Sr.PS. Dhananjay