JAYANTILAL M. SOLANKI,MUMBAI vs. DCIT - 20(2), MUMBAI

आदेश / O R D E R PER R.C.SHARMA (A.M):

This is an appeal filed by the assessee against the order of CIT(A)- 32, Mumbai dated 17/06/2016 for A.Y 2007-08 in the matter of order passed u/s.143(3) r.w.s 147 of the IT Act. 2. Following grounds have been taken by the assessee:-

1. On the facts and in the circumstances of the case and in law, the Ld. Assessing Officer erred in re-opening the assessment u/s 147 of the Income Tax Act, 1961. The appellant prays that the re-opening of assessment u/s 147 of the Income Tax Act, 1961 may be declared bad in law and reassessment order may please be cancelled.

2. On the facts and circumstances of the case as well as in law, the Learned CIT(A) has erred in confirming the action of Learned Assessing Officer by treating the payment of Rs.39,25,000/- made to 2 Shri Jayantilal M. Solanki developer as unexplained investment u/s 69 of the IT Act, without considering the fact and circumstances of the case. 3. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal

3. Rival contentions have been heard and record perused. Facts in brief are that the assessee, an individual had made payments totaling Rs.40,25,000/- towards booking a Flat No. 404/B, Shanti Darshan, Kalachowki, Mumbai, a residential building project, developed by M/s Esque Finmark Pvt. Ltd. Out of the sum of Rs.40,25,000/-, Rs. 39,25,000/- was paid in cash in part payments during the AY 2005-06 and AY 2006-07 and the balance Rs. 1,00,000/- was paid by Cheque in AY 2007-08. The proof of the dates of cash payments was provided in a diary maintained by the assessee, which was counter signed on every payment date by the director of the developer company, Mr. Paras Porwal. AO did not accept assessee’s contention and added Rs.39,25,000/- in assessee’s income which was confirmed by CIT(A). Assessee is in further appeal before us.

4. At the outset, learned AR placed on record the order of Tribunal in case of Shri Kantilal S Solanki brother of the assessee for the very same A.Y 2007-08 wherein exactly similar issue was dealt by the Tribunal in its order dated 21/08/2017 and appeal was allowed in favour of the assessee.

5. We have carefully gone through the orders of the authorities below and as well as the order of the Tribunal. The precise observation of the Tribunal was as under:-

7. I have heard the rival contentions and perused the record. The Assessing Officer has made addition u/s. 69 of the Act, since the payment of Rs.34 lakhs was not recorded in the books of account maintained by the assessee and further the assessee also did not specify sources thereof. Though the assessee agrees that the above said payment has been made from undisclosed resources, his only contention is that these payments were made during the financial year relevant to A.Y. 2006-07. Submissions of the assessee is that these payments have been made during the financial year relevant to A.Y. 2006-07 and hence the Assessing Officer was not right in law in making the addition in A.Y. 2007-08. In support of the submissions so made, the assessee has furnished copy of the kaccha chitti, wherein details of payment made towards flat have been noted down. In the Kaccha chitti the payments made by way of cash and also by way of cheque have been noted down. It is pertinent to note that the recipient named Mr. Paras has duly acknowledged the receipt of payments. I have noticed that the learned CIT(A) has rejected this document only on the reasoning that the identity of Mr. Paras is not established and also details of his connection with the builder is also not established. The assessee has now filed a copy of directorship details of Mr. Paras Shantilal Porwal from the website of Ministry of Corporate Affairs. Perusal of the same would show that Mr. Paras is a director of many companies and he has been a director of M/s. Esque Finmark Pvt. Ltd., to whom the impugned payments have been made, from 10.9.2001 to 2.12.2006. In my view this document downloaded from the website of Ministry of Corporate Affairs establishes the identity of Mr. Paras but also his connection with the builder M/s. Esque Finmark Pvt. Ltd. Since this document is a public document, I am of the view that the learned CIT(A) was not justified in rejecting the submissions of the assessee. In this view of the matter, I am of the opinion that the kaccha chitti furnished by the assessee cannot be rejected altogether. Perusal of the entries made in the kaccha chitti would show that the assessee has made payments by way of cash during the period from 9.1.2006 to 28.3.2006 aggregating to ` 34 lakhs. Hence, in my view the submissions of the assessee should be accepted and hence cause of action, if any, would not arise in the A.Y. 2007- 08 since the payment have not been made during the year relevant to A.Y. 2007-08. Accordingly, I set aside the order passed by the learned CIT(A) on this issue and direct the Assessing Officer to delete the impugned addition of Rs. 34 lakhs. Since I have granted relief to the assessee on merits, I do