ACIT-CC-1(3), MUMBAI vs. BHAGWATI DEVELOPERS, NAVI MUMBAI

ITA 1490/MUM/2024Status: DisposedITAT Mumbai08 October 2024AY 2015-1628 pages

AI SummaryN/A

Facts

A search and seizure operation was conducted on real estate developers, Bhagwati Developers and Shanti Enterprises, revealing 'on money' receipts and unexplained cash expenditures for AY 2012-13. For AY 2015-16, Bhagwati Developers faced additions for allegedly bogus unsecured loans and interest payments. The assessees challenged the validity of Section 153A notices and the merits of the additions, while the AO challenged the CIT(A)'s partial relief.

Held

For AY 2012-13, the Tribunal quashed the assessment orders, ruling that 'on money' receipts and cash expenditures, when spent on a project and not representing a discernible asset, do not qualify as an 'asset' under Section 153A's 4th proviso, rendering notices beyond six years invalid. For AY 2015-16, the Tribunal upheld the CIT(A)'s deletion of additions related to unsecured loans and interest, finding that the assessee had largely satisfied Section 68 requirements and that the AO's investigation was flawed.

Key Issues

1. Whether Section 153A notices issued for an assessment year beyond six years were valid, specifically if 'on money' transactions constitute an 'asset' under the 4th proviso of Section 153A. 2. Whether additions for unexplained cash receipts and expenditures, or for allegedly bogus unsecured loans and interest payments, were justified under the Income Tax Act.

Sections Cited

153A, 143(3), 69C, 132(4), 133(6), 68

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI PRASHANT MAHARISHI, AM & SHRIRAJ KUMAR CHAUHAN, JM

For Appellant: Shri Mani Jain &, Shri Prateek Jain

For Respondent: Shri S. Srinivasu, CIT (DR)

This is the bunch of three appeals filed by The Assistant Commissioner of Income tax , central Circle -1 (3) , Mumbai [The learned AO] and 2 cross objections filed by the assessee in case of 2 entities namely M/s Bhagwati developers and Shanti enterprises [ Assessee] for two assessment years i.e. assessment year 2012 – 13 and 2015 – 16, involving similar issues arising out of same search, similar arguments of the party contesting similar assessment and appellate orders , therefore, disposed of by this common order. Bhagwati Developers A Y 2012-13 & CO No 80/MUM/2024

First we take up the appeal in case of BHAGWATI DEVELOPERS (the assessee) for assessment year 2012 – 13 wherein ITA number 1346/M/2024 is filed by The Assistant Commissioner Of Income Tax – Central Circle – i. whether on the facts and in the circumstances of the case and in law, the learned CIT (A) is justified in restricting the addition to 12.25% of money of ₹ 64,322,169/– received by the assessee without appreciating the fact that the assessee has failed to submit any detail in respect of the cash receipts and profit element arising cannot be asserted as such. ii. Whether on the facts and in the circumstances of the case and in law, the learned CIT (A) is justified in deleting the addition of unexplained cash expenditure under section 69C of the income tax act, 1961 amounting to ₹ 64,832,240/– without going into the merits of the case discussed in the assessment order.

Assessee is aggrieved and has filed cross objection in CO number 80/M/2024 raising the following grounds of cross objections: – i. on the facts and circumstances of the cross objector's case and in law, the learned CIT A Shanti Developers ITA number 1349/M/2024 and CO number 110/M/2024 (Assessment Year 2012 – 13)