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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI
AadoSa / O R D E R महावीर स िंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM:
This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-3, Mumbai [in short CIT(A)], Appeal No. 105-THN/15-16 vide order dated 17.08.2017. The Assessment was framed by the Asst. Commissioner of Income Tax, Circle-2, Kalyan (in short ‘ACIT/ITO/ AO’) for the A.Y. 2007-08 vide order dated 27.03.2014 ITAs No. 6299/Mum/2017 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the reopening of assessment. For this assessee has raised the following ground No. 1 and 2: -
1. The Ld. CIT(A)-3 Thane has seriously erred in upholding action of assessing officer in reopening validity completed assessment without appreciating that the said action was illegal and unjustified both on facts and in law.
Without prejudice to above the appellant submits that the order passed in pursuance to notice under section 148 issued is ab-initio void and bad in law since a) The same has been passed without complying with mandatory conditions of sec 147-151 of I.T Act 1961 b) In violation of principles of natural justice without providing copy of stamen recorded behind the back of assessee as also without providing copy of statement recorded behind the back of assessee as also without making the person on whose statement not only notice under section 148 has been issued but even addition has been made available for cross ITAs No. 6299/Mum/2017 examination inspite of a specific request having been made.”
At the outset, the learned Counsel for the assessee filed a letter stating that the assessee is not interested in prosecuting the issues of reopening and hence, ground No 2 is not pressed. The relevant text of the letter reads as under: - “Under the instructions from my client Shri Gurmukhdas Khubhchandani, the appellant I submit as under:
That in the above appeal which is fixed for hearing before Hon’ble ITAT, Bench-G, Mumbai appellant has raised various grounds challenging the validity of initiation of reassessment proceedings as well addition made on merits.
It is necessary submitted that since the issue involved in the case of appellant relating to addition made on merits is already covered in his favour by various decisions of different benches of Hon’ble ITAT, Mumbai as referred to in the paper book filed, the Ground No. 1 and 2 raised in the memo of appeal filed relating to initiation of reassessment proceedings is not being pressed.”
As the issue has not been pressed the same is dismissed.
ITAs No. 6299/Mum/2017
The issue on merits is as regards to the order of CIT(A) confirming the addition made by AO on alleged on money payment made by assessee for purchase of flat and addition made on the basis of statement of one of the directors of Hiranandani Group of cases. For this assessee has raised the following ground No. 3: -
3. The appellant submits that even on merits the addition of ₹ 67,79,300/- made by the assessing officer as alleged on money paid by the assessee is legal and unjustified without there being any evidence except the self-serving statement of the director of Hiranandani Group.”
Briefly stated facts are that assessee filed his return of income declaring total income of ₹ 80,80,527/- on 31.10.2007 and the assessment was completed under section 143(3) of the Act by assessing the income at ₹ 92,02,800/-. Subsequently, the AO reopened the assessment by issuing notice under section 148 of the Act on 30.03.2014 and in response to notice under section 148 of the Act assessee filed copy of return on 27.05.2014. The AO reopened the assessment on the basis of information received from the DGIT that during the search and seizure in the group of Hiranandani Group Builders and Developers, it was seen that the assessee has given on-money payment of ₹ 67,79,300/- to Crescendo Associates of Hiranandani Group for purchase of Flat No. 2701, Glendale Hiranandani. On the basis of the statement of Directors, notice under section 148 of the Act was issued on 30.03.2014. The AO made the addition and the CIT(A) confirmed the action of the AO on the basis that the assessee has paid on money to Crescendo Associates for purchase of Flat No. 2701, Glendale Hiranandani from ITAs No. 6299/Mum/2017 Hiranandani Group of cases concern. The CIT(A) discussed the facts while concluding the issue and held as under: - “a) The “on-money” paid by the appellant has been finally admitted on oath recorded under section 132(4) of the Act by Mr. Niranjan Hiranandani on 14.03.2014, the main Director and Promoter of the Group. The name of the appellant appears in the list of persons who have paid “On-money” in cash and the details of cash payments of ₹ 67,79,300/- on various dates have been discussed from page 3 of the assessment order and the details of payments are as below:-
Date Flat No. Amount of On Concern of money paid Hiranandani Group 29.09.2006 2701 5,00,000 Crescendo Associates 03.10.2006 -do- 100 -do- -do- 5,00,000 -do- 17.10.2006 18.10.2006 -do- 8,08,700 -do- -do- 12,50,000 -do- 28.12.2006 05.01.2007 -do- 15,00,000 -do- -do- 5,00,000 -do- 15.01.2007 18.01.2007 -do- 10,00,000 -do- 22.01.2007 -do- 7,00,000 -do- 30.01.2007 -do- 20,400 -do- b) In the remand proceedings, the AO has called for a report from the Dy. CIT Central Circle-1(2), Mumbai who is assessing the Hiranandani Group cases, and the officer has confirmed that, the appellant has paid ‘On- ITAs No. 6299/Mum/2017 Money’ to the Hiranandani Group and the Hiranandani Group companies had filed application before the Settlement Commission and the relevant portion of reply is reproduced as below:-
“The assessee group companies filed application before Income-tax Settlement Commission wherein, they have offered the “On-money” received by the group companies from all such flat purchasers in their application in the Statement of Facts (though they had offered net profit on percentage of gross sales for tax purposes). The settlement Commission has passed the final order under section 245D(4) of the Income-tax Act, 1961 in the month of August 2016 and it has settled the issue of “on Money” received by the Group companies.”
In the remand proceedings, the AO has responded to the query raised by the appellant and at this juncture, the Directors and promoters, who had given the statement of receiving ‘On-Money from the appellant, would not have attended before AO as they have already offered the undisclosed income before the Settlement Commission. In fact, the complete details of receiving ‘On-Money’ has been discussed in the assessment order, ITAs No. 6299/Mum/2017 therefore, the evidence found against the appellant is sufficient enough to prove that the appellant has paid “On-Money”.
Aggrieved, assessee is in appeal before Tribunal.
There is no dispute about the facts of the case, admittedly, the assessee has purchased house property from Crescendo Associates as Flat No. 2701, Glendale Hiranandani, but assessee denied the on money payment. The learned Counsel for the assessee before us filed Tribunal order and Tribunal in series of judgement exactly on the same facts, wherein on money paid to Hiranandani group of cases was deleted. The lead case decided by Tribunal in the case of Shri Anil Jaggi vs. ACIT in for AY 2007-08 vide order dated 20.12.2017, wherein Tribunal reads as under:
“15. 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 ITAs No. 6299/Mum/2017 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 ITAs No. 6299/Mum/2017 further find that what was the source from where the information was 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 ITAs No. 6299/Mum/2017 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.
ITAs No. 6299/Mum/2017 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 and set aside the order of the CIT(A) sustaining the addition of Rs. 2.23 crores in the hands of the assessee.”
From the above facts, we find that the assessee has booked the flat no 2701/A, 2701/B and 2701/C in the building Glendale situated at Hiranandani Gardens Powai, Mumbai-400 706 vide three letters of allotment each dated 22nd November, 2006 issued by the builders Crescendo Associates and had even paid a part of purchase price amounting to ₹ 39,32,500/-, ₹ 39,32,500 and ₹ 38,05,000/- respective. However thereafter assessee vide three letters each dated 23 February, 2008 addressed to the builders Crescendo Associates cancelled his bookings and the amount of ₹ 93,16,280/- paid by cheque till then towards consideration was refunded by the builders by cheque no 18/1476 dated 05.03.2008 drawn on ICICI Bank. However, after cancelling the booking assessee again changed his mind and agreed to purchase the very flats from the builders who had allotted him the very three flats by three different allotment letters all dated 24.03.2008 for a consideration of ₹ 54,69,750/- ₹ 54,31,500/- and ₹ 53,55,000/- respectively.
12 ITAs No. 6299/Mum/2017