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Before: SHRI S.V. MEHROTRA & SMT SUCHITRA KAMBLE
These appeals are filed against the order dated 18.12.2012 passed by the CIT (A)-XXXIII, by the assessee as well as by the Revenue.
The grounds of appeal are as under:- “I.T.A .No. 1744/DEL/2013 REMARKABLES ESTATES PVT. LTD AY: 2007-08 GROUNDS OF APPEAL
1. That on the facts and circumstances of the case and in law the CIT(A) erred in rejecting appellant's contention that assessment order made by Assessing Officer was bad in law and void ab-initio on the ground-that it ought to have been made u/s 153C of the Income Tax Act, and not, as was done u/s 143(3) of the Income Tax Act.
2. That without prejudice, on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the action of the Assessing Officer in relying upon the material seized in the case of search on M/s BPTP group of cases despite:- i) that such material had no nexus/relevance with the case of the appellant and, ii) that, the CIT(A) himself holding that such material did not belong to the appellant.
3. That on the facts and circumstances of the case and in law the CIT(A) erred in holding to quote, 'that seized documents definitely prove that interest is paid on PDC' despite- i. that the seized record on the basis of which above finding was given, even according to his own finding by the CIT(A), did not belong to the appellant and, ii. that no enquiries were made from any of the alleged recipients of the interest and none was confronted with relevant document(s).
3.1 That the finding of the CIT(A) is based on mere surmises and conjectures without proof and corroboration by independent evidence.
3.2 That without prejudice the CIT(A) erred in upholding the addition of interest for the period for which PDC's were extended.
3.3 That without prejudice the CIT(A) erred in not quantifying the addition and instead giving ambiguous directions to compute the interest after six months from the date of sale.
4. That the orders passed by the Assessing Officer and Commissioner of Income Tax (Appeals)-XXXIII, New Delhi are bad in law and void ab- initio.
The appellant craves permission to add, amend, alter or vary all or any grounds of appeal on or before the date of hearing of the appeal.
I.T.A .No. 1366/DEL/2013 1 On the facts and in the circumstances of the case, the CIT(A) has erred in deleting the addition of Rs,39,81,936/-, out of total addition of Rs.48,01,436/-,made by the Assessing Officer on account of interest on PDCs paid out of books of account.
2. The order of the CIT(A) is erroneous and is not tenable on facts and in law.
The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.”
3. At the time of hearing the Ld. AR has not pressed ground no. 1, 4 & 5 of the assessee’s appeal; therefore, the same are dismissed.
The assessing officer analysed few seized material and concluded that assessee is paving unaccounted interest on PDCs given to the seller of land. He also relied upon bank accounts of five sellers of the land to BPTP Group where there is huge cash deposit. The assessee company belongs to the BPTP Group.
The BPTP Ltd and its Group companies are engaged in the business of real estate. This group is a leading real estate developer operating all over India but mainly it is working in the NCR area-Faridabad, Gurgaon, and Noida. This group is owned and controlled by Sh. Kabul Chawla. A search & seizure operation was carried out on BPTP Ltd and some of its group companies on 15- 11-2007. During the course of search operation on BPTP group, certain incriminating documents were found and seized. From perusal of these documents and as a result of several posts search inquiries, it was revealed that BPTP group companies had purchased huge tacts of land in different villages of Faridabad such as Kherikhurd, Kherikalan, Budena, Bhatola, etc.
The A.O noticed from the seized documents that the group was following a business model as a part of which only part payments of the sale considerations in respect of lands purchased were paid at the time of execution of sale deed and the payment of balance sale consideration was invariably made through post dated cheques (PDCs) and for the intervening period i.e. period between the date of sale deed and the date of encashment of PDC, interest was paid in cash to the vendors of the land by the vendee company on monthly basis @ 1.25% p.m. on the amount of PDC. During the course of post search enquiries, it was noticed that the said payment of interest by the vendee company in cash was not accounted for by it in it’s books of accounts. The Assessing Officer relied upon various documents seized from the premise of BPTP Group in support of interest paid. All these documents are part of Assessment Order. The Assessing officer held that it is well within its right to calculate the undisclosed expenditure of the assessee on rational basis. In the present case, this undisclosed expenditure is interest paid on PDCs based on the substantial number of seized document which clearly indicated the modus operandi of the group. Reliance was also placed on the judgement of Hon'ble Supreme Court in the case of H.M. Esufali H.M.Abdulali V/s Commissioner of Sales Tax, Madhya Pradesh 90 1TR 271 ( 1973 ). The A.O further held that the assessee paid interest in cash to the vendor(s) on the amount of PDCs @ 1.25% per month (15% per annum) outside its books of account. Thus, by applying the rate of 1.25% per month on the amount of PDCs for the intervening period i.e. from date of sale deed to date of encashment of PDCs, the total amount of unaccounted interest paid by the assessee company to the vendors, A.O. was computed such interest as under:- Date Sale Deed No. Name of the Amt. ofPDC Amt. of Interest encashed of date vendor (Rs.)(A) ( 1.25 % of A x Mo B) nth Kuldeep 13-06-2006 1,21,87.500 11-11-2006 5 Rs. 7,61,719/- Surendri 13-06-2006 1,21.87,500 11-11-2006 5 Rs. 7,61,719/- Azadbati 31-05-2006 54,63,333 08-02-2007 Rs. 5,46,333/- 8 Netrapal 31-05-2006 54,63,333 05-02-2007 Rs. 5,46,333/- 8 Bed Pal 31-05-2006 54,63,333 05-02-2007 Rs. 5,46,333/- 8 Sunder 31-05-2006 54,63,333 05-02-2007 Rs. 5,46,333/- 8 Devender 31-05-2006 54,63,333 05-02-2007 Rs. 5,46,333/- 8 Lado 31-05-2006 54,63,333 05-02-2007 Rs. 5,46,333/- 8 Rs. 48,01,436/- T o t a l
5. Being aggrieved by the assessment order the assessee filed appeal before the CIT (A). The CIT (A) held that the Assessing Officer utilized documents seized from the premies of BPTP and group companies’ however the assessment order nowhere mentions that any part of the seized material belong to assessee company. The CIT (A) further observed that the assessee company is one of the group companies of BPTC group and material seized from BPTP Ltd. and other associates company has shown some trend of unaccounted expenditure in form of PDC interest, some finding on additional payment for the acquisition of land. The Ld. DR has also submitted that there is no finding which was given by the Assessing Officer that certain seized material belongs to Assessee Company. The CIT (A) further held that there is no evidence which proves that interest is paid from the date of sale to date of encashment of post dated cheques. However there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs while analyzing the seized document. Therefore in CIT(A)’s opinion wherever the dates of PDCs are extended interest is paid at 15% per annum in cash out of books of accounts. The same is evident from the seized material. The CIT(A) further held that:-
“If it is not possible to work out the extension of PDCs in each case then A.O. is directed to recomputed interest on PDCs after six months from date of issue of PDCs i.e. date of sale, as s i x months i s taken as reasonable period for giving PDC as per sale deed. This view i s formed on the basis the statement of Sh. Chhotu Ram which says that normally PDCs are given for 8 to 10 months. Further Ld AR has also submitted few Sale Deed in respect of some of Seized record in the case of Ramvati Beero etc where the interest working is made after 9/ 3 5 months. Taking these facts into consideration. It would be proper to compute interest after 6 months from date of Sale on conservative side. Accordingly this ground is partly allowed.”
The Ld. AR submitted that there is no search with the present assessee but the search was at the premises of BPTP. The Ld. AR further submitted that the facts of the case of the assessee are identical with the Tribunal’s order in case of M/s. Westline Developers Pvt. Ltd. (ITA No. 1757/Del/2013 for A.Y. 2006-07 dated 23.11.2015). The material which has been utilized by the Assessing Officer for making the assessment in the present case is same as was utilized for taking action u/s 147 and also for making assessment in the case of M/s. Westline Developers Pvt. Ltd. This is evident from the reasons recorded u/s 148(2) and the assessment order, where similar material is referred to. The Ld. AR further submitted that none of the concerns seized material had specific nexus with the assessee in the present case as was so held in the case of M/s. Westline Developers Pvt. Ltd.
The Ld. DR. submitted that the order in case of M/s. Westline Developers Pvt. Ltd. is not applicable in the present case as the said order was related to Section 147 of the Act only and not to that of Section 143(3) of the Act as in the present case. The Ld. DR. however submitted that the interest is paid in cash to the group companies.
The Ld. AR in his rejoinder submitted that no interest was received by the assessee and there is no material found.
We have heard both the parties and perused all the documents. The CIT (A) clearly mentioned that the assessment order nowhere mentions any part of seized material belonged to Assessee Company, but the seized material is that of associates/group companies of BPTP Group. The assessee is also group company of the BPTP Group. This fact was never denied by the assessee at any point of time. The reliance by the Ld. AR on the order of M/s. Westline Developers Pvt. Ltd. is of no help to the assessee as the distinguishing factor has been pointed out by the Revenue. The present case is regarding Section 143(3) of the Act, thus the facts are different from the ratio laid down in case of Westline Developer Pvt. Ltd.. The CIT (A) has rightly made observations that there is concrete evidence in form of seized material to show that interest is paid and received by seller on the extension of PDCs while analysing the seized documents. The CIT(A)’s order is upheld.
In the result, the appeals of the assessee and revenue are dismissed.
The order is pronounced in the open court on 15th of February, 2017.