HARSHA LAND P.LTD,URAN vs ITO 10(3)(2), MUMBAI

Income Tax Appellate Tribunal, “B” BENCH, MUMBAI

Before: SHRI MAHAVIR SINGH, JM & SHRI MANOJ KUMAR AGGARWAL, AM

आदेश / O R D E R Per Manoj Kumar Aggarwal (Accountant Member)

The captioned appeal by assessee for Assessment Year [AY] 2009-10 assails the order of the Ld. Commissioner of Income-Tax Harsha Land Private Limited Assessment Year 2009-10 (Appeals)- 24 [CIT(A)], Mumbai, Appeal No. CIT(A)-22/ITO-10(3)(2)/IT 157/2013-14 dated 28/10/2015. The assessment for the impugned AY was framed by Ld. Income Tax Officer-10(3)(2), Mumbai [AO] u/s 143(3) read with Section 147 on 30/03/2013. The assessee has raised 8 Grounds in all out of which Ground Numbers 1 & 2 are not pressed and Ground Numbers 7 & 8 is consequential and general in nature. Ground Numbers 4 to 6 are supportive of main Ground No.3. The only effective Ground No. 3 reads as follows:- 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), erred in confirming the addition on account of alleged unexplained expenditure in lands u/s.69C of the Act, ignoring the explanation of seized material and appellant’s reliance of various decisions. It is prayed that the addition on account of alleged unexplained expenditure of Rs.1,01,25,000/- may be deleted.” 2.1 Facts in brief are that the assesse being resident corporate assessee engaged as builder and developer was subjected to an assessment for impugned AY u/s 143(3) read with Section 147 of the Income Tax Act on 30/03/2013 at Rs.101.20 lakhs as against returned loss of Rs.4,188/- filed by the assesse on 22/09/2009. The assessee has suffered addition u/s 69C for unexplained investment amounting to Rs.101.25 lakhs in the reassessment proceedings and the same is the sole subject matter of this appeal. 2.2 Pursuant to search and seizure operations u/s 132 on 05/03/2009 in the case of Jai Corp Group of Companies, its associated persons, employees and close associates, certain incriminating evidences and documents were found and seized and the same also contained certain information about assessee’s dealings. Subsequently, the case of the Harsha Land Private Limited Assessment Year 2009-10 assessee was subjected to reassessment proceedings upon receipt of information from DCIT CC 39 vide letter No. DCIT/CC-39/Land Comp./Jai Corp Group/2011-12 dated 02/02/2012. 2.3 It was noted that the said group was partner in two major upcoming Special Economic Zones of India being developed in the vicinity of Mumbai, namely Navi Mumbai Special Economic Zone [NMSEZ] and Mumbai Special Economic Zone [MSEZ]. The group had purchased huge chunks of land in the vicinity of these SEZs with an objective to develop township in these areas anticipating potential price rise and good return. This group’s real estate operations were being handled mainly by Virendra Jain, Gaurav Jain and Dilip Dherai. As per evidences gathered during search, Dilip Dherai was found to be managing and handling the entire land acquisition operations for MSEZ and outside MSEZ which was popularly known as OMSEZ. The land outside MSEZ was purchased in the name of numerous Private Limited companies numbering more than one hundred which were called as land companies by the group. The assessee was one of such land companies for which land outside MSEZ was acquired. 2.4 Upon perusal of Page No. 22 & 23 of loose paper folders referred to as Annexure-1 seized from Dilip Dherai, it was found that the assessee made unaccounted cash payment towards acquisition of land in Vangni TT Village. The assessee’s proportionate amount of cash paid was Rs. 101.25 Lacs which was added to the income of the assessee as unexplained investment u/s 69C. Harsha Land Private Limited Assessment Year 2009-10 3. Aggrieved, the assessee contested the same without any success before Ld. CIT(A) vide impugned order dated 28/10/2015 where the appeal was dismissed by making following observations: 2.4.25. I also find that exactly same issue came up for adjudication before the then Ld. CIT(A)-41, Mumbai in the case of one of the beneficiaries viz.Hita Land Pvt.Ltd. In appeal No. CIT(A)-41/DCCC-39/IT-638/10-11 where vide order dated 28.10.2011, the assessee’s grounds of appeal

of similar nature were dismissed. Further, in yet another case of this group namely M/s Ekdanta Land Pvt.Ltd., the matter came up for adjudication before Ld. CIT(A)-2, Thane and on same set of facts, appellant’s grounds of appeal were dismissed. I find lot of pervasive value in the above two orders where the same loose papers were taken into consideration for framing the assessments and which came to be confirmed by the respective Ld. CIT(A) referred to above. 2.4.26. Facts and circumstances of the present case are covered by the decisions of Hon’ble Delhi High Court (supra) because in the present case, it is confirmed by the land owner also that they have received cash payment which was duly declared in the return of income and paid taxes accordingly. Although, the search and survey was conducted only in two cases of M/s. Pathik Constructions and Shri Sunil Gulati, they have confirmed that cash payments have been received from the appellant company over and above the cheque payments declared in their books of account. Since the Ld. AR of the appellant has failed to submit any documentary evidence to rebut the entries of seized papers and statement recorded during the course of search of Shri Dilip Dherai, therefore, the addition made by the Ld. AO of Rs.1,01,25,000/- u/s 69C of the I.T.Act is upheld and the grounds of appeal no.(c) & (d) are dismissed. Aggrieved, the assessee is in further appeal before us.

4. The Ld. Counsel for assessee [AR], at the outset, submitted that identical additions were made in the case of several other entities. However, all these additions have been deleted by this Tribunal on merits which has since been confirmed by Hon’ble Bombay High Court and hence, the addition could not be sustained. The copies of the relevant orders of the Tribunal and Bombay High Court have been placed before us. Per Contra, Ld. DR although placed reliance on the stand of lower authorities but could not controvert the factual situation.

5. We have carefully considered the rival contentions and perused the relevant material on record. After going through the documents, we find that the impugned additions have been deleted and the issue stand Harsha Land Private Limited Assessment Year 2009-10 squarely covered in assessee’s favor by following judicial pronouncements:-

1. Avkash Land Realty Private Limited Vs. DCIT & Others [ITA Nos. 8237/Mum/2011 & Others, order dated 22/03/2013] against which revenue’s appeals titled as CIT Vs. Lavanya Land Private Limited [ITA No. 72 of 2014 and others] has been dismissed by Hon’ble Bombay High Court vide judgment dated 23/06/2017]

2. Timble Realty Private Limited Vs. ITO & Others [ITA Nos. 5664/Mum/2015 & Others, order dated 27/10/2016] The operative part of the order of the Tribunal in is reproduced below:- 24. Our view is fortified by the decision of the Delhi High Court in the case of Malik Brothers Pvt.Ltd. Vs CIT 162 Taxmann 43 which is relied upon by the Ld. DR. In that case, the assesse purchased the property allegedly for Rs.6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was Rs.45 lakhs and paid tax thereon. In view of vendor’s statement, the AO made an addition of Rs.39 lakhs to the income of the assessee towards unexplained investment. The action of the AO was justified and the additions were confirmed. Thus in view of the aforesaid decision, in the present case, one of the sellers have been examined by the AO to strengthen his views that cash has been paid over and above the registered amount. There is not even a single document/evidence of parties involved in the sale of land at different villages brought on record to show that an amount other than the payment of consideration has exchanged hands. No confession from the sellers have been brought on record. The entire additions have been made merely on the strength of loose papers found during the course of the search not supported by any independent authority. Considering the entire addition, in the light of the provisions of Sec. 69C, as per A.O’s own interpretation, investments in purchase of land have been fully financed by some other persons, therefore, the addition in the hands of the assesse cannot be justified as the assesse has not incurred any expenditure. There may be one more possibility that the persons who were doing land purchase might have inflated the sale price in these loose sheets just to extract monies from their higher authorities in the guise of On-Money to be paid to the vendors. May be because of his possibility no documents were found to show that the money actually changed hands.

25.

A perusal of the balance sheet of the assesse show that the authorized, issued and subscribed paid up capital is at Rs.One lakh and the assesse had not done any business during the year under consideration. With such a small corpus and no business activity, nor any has been brought on record by the Revenue, it is not acceptable that the company may have incurred such huge expenditure outside its books of account. Further in his entire assessment order, the AO himself has pointed out time and again different persons, who are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assesse. In our considerate view, there being no evidence to support the Revenue’s case that a huge figure whatever be its quantum , over and above the figure booked in the records and accounts changed hands between the parties no addition could therefore be made u/s.69C of the Act to the income of the assesse. Considering the Harsha Land Private Limited Assessment Year 2009-10 entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained. Further, the appeal of the revenue against the above order of the Tribunal has been dismissed by Hon’ble Bombay High Court. We are also of the considered opinion that additions could not be made merely on the basis of entries in loose papers without bringing on record any cogent material to substantiate the same and further additions could not be made merely on the basis of doubts, conjectures or surmises. Hence, respectfully following the above decisions, we delete the impugned additions and allow assessee’s ground of appeal

6. Resultantly the assessee’s appeal stands partly allowed in terms of over above order. Order pronounced in the open court on 08th November, 2017.

HARSHA LAND P.LTD,URAN vs. ITO 10(3)(2), MUMBAI