PNK SPACE DEVELOPMENT PRIVATE LIMITED ,MUMBAI vs. INCOME TAX OFFICER, WARD 13(1)(4), MUMBAI

As there was no representation on behalf of the assessee, we hereby proceed to dispose of this appeal by hearing the learned Departmental Representative ('ld.DR' for short) and on perusal of the materials available on record.

The brief facts are that the assessee is a Private Limited Company engaged in the business of real estate development and had filed its return of income dated 28.09.2012,

The assessee was in appeal before the ld. CIT(A) who vide order dated 19.07.2023 upheld the addition made by the ld. A.O. on the ground that the assessee has failed to substantiate its claim inspite of sufficient opportunity given.

The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A).

The learned Departmental Representative ('ld.DR' for short) for the Revenue contended that the assessee has been non compliant before the lower authorities and failed to substantiate its claim by any documentary evidences. The ld. DR further stated that the assessee’s case was reopened based on incriminating materials seized from (A.Y. 2012-13) PNK Space Development Private Limited vs. ITO Bharat Shah Group by the Investigation Wing where it has been found that the assessee was one of the beneficiaries of accommodation entries provided by the said group. The ld. DR further contended that the assessee has failed to discharge the primary onus casted upon it in case of the additions made on unexplained expenditure, disallowance on the depreciation claimed and the interest on loan amounting to Rs.1,16,04,799/-. The ld. DR relied on the orders of the lower authorities.

We heard the learned Departmental Representative ('ld. DR' for short) and perused the materials available on record. It is observed that ground no. 1 raised by the assessee pertains to challenging of the reopening of the assessment which according to the assessee was without applying the mind of the ld. A.O. and merely on the basis of the enquiries and findings in the case of Bharat Shah Group. The assessee has also contended that the lower authorities have failed to consider the orders of the settlement commission which has held that the evidence in the case of Bharat Shah group of cases is unreliable and have no evidentiary value. The assessee also stated that the said order of the Hon’ble Settlement Commissioner was not challenged before the Hon'ble High Court meaning that it has attained finality. It is observed that the assessee’s case was reopened based on the incriminating material seized/impounded by the Investigation unit in the case of Bharat Shah group where documents relating to unaccounted purchase was found. It was further corroborated by the statement of Shri Daxesh Parmar. The ld. CIT(A) by placing reliance on the decision of the Hon'ble Apex Court in the case of ITO vs. Purshottam Das Bangur 90 taxmann.com 541 (1997) held that the ld. A.O. had tangible material to believe that income chargeable to tax has escaped assessment and further relied on the (A.Y. 2012-13) PNK Space Development Private Limited vs. ITO decision of the Hon'ble Apex Court in the case of Raymond Wollen Mills Ltd. vs. ITO [1999] 236 ITR 34.

From the above observation, we deem it fit that the ld. A.O. had rightly invoked the provision of section 147 in assessee’s case and has reassessed the income of the assessee. We find no infirmity in the order of the ld. CIT(A) and we, therefore, dismiss ground no. 1 raised by the assessee.

Ground no. 2 pertains to the addition of Rs.44,70,180/- made u/s. 69C of the Act as unexplained expenditure. The assessee has contended that the said addition was merely made on the basis of the statement given by Shri Daxesh Parmar and the pen drive seized during the search and seizure operation without proving the nexus between the assessee and Shri Daxesh Parmar. The assessee has further stated that the assessee has filed the police compliant against the said person and the lower authorities have failed to give an opportunity to the assessee to cross examine Shri Daxesh Parmar whose statement was solely relied upon by the ld. A.O. The assessee further contended that the seized pen drive does not belong to the assessee and relied on the order of the Hon’ble Settlement Commissioner u/s. 245D(4) of the Act dated 20.08.2014 in the case of M/s. Strawberry Constructions Pvt. Ltd. which has held that reliance would not be placed on the material seized from the premises of Shri Daxesh Parmar. The assessee also stated that the said order has not been challenged by the department.

The ld. CIT(A) has held that the assessee has not furnished the copy of the order of Hon’ble Settlement Commissioner which has stated that the department should not reopen any case on the basis of the material covered from the search operation of Bharat

From the above observation, we find not infirmity in the order of the ld. CIT(A).

Ground no. 3 pertains to the disallowance of depreciation made u/s. 32(1)(ii) of the Act amounting to Rs.6,18,160/-. It is observed that the lower authorities have observed that the assessee has made an addition to the fixed assets during the year under consideration for which the assessee has claimed depreciation of Rs.6,18,160/- u/s. 32(1)(ii) of the Act. The assessee has failed to furnish the copy of bill, invoice, payment details and installation certificate in support of its claim neither before the lower authorities nor before us. In the absence of such documentary evidence, we find no reason to interfere with the order of the lower authorities. Hence, ground no. 3 raised by the assessee is dismissed.

In the result, the appeal filed by the assessee is dismissed.