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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI MAHAVIR SINGH, JM & SHRI RAJESH KUMAR, AM
स्थधयी ऱेखध सं./जीआइआर सं./PAN. :AAKCS5478Q अपीऱधथी ओर से / Assessees by: Shri Vijay Mehta प्रत्यथी की ओर से/Respondent by Shri K.B.Shukla सुिवधई की तधरीख / Date of Hearing : 25.10.2016 घोर्णध की तधरीख /Date of Pronouncement :27.10.2016 आदेश / O R D E R Per RAJESH KUMAR, Accountant Member: These three appeals are filed by the three separate assessees against the order of ld.CIT(A)-24, Mumbai, dated 28.10.2015 for the assessment years 2008- 09 and 2009-10. Since issue involved in all these appeals pertain to provisions of section 132 and 153C, therefore, these were clubbed together, heard together and are being disposed of by this common order for the sake of convenience.
“1. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in rejecting the appellant's contention that initiation of proceedings u/s. 153C of the IT. Act, 1961 ('the Act') are bad-in-law even though no assessment or re-assessment proceedings in relation to this year were pending as on the date of the search u/s.132 of the Act.
2. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in rejecting the appellant's contention that invoking of provisions of section 153C of the Act was bad-in-Law in view of the fact that there was no money, bullion, jewellery or other valuable articles or things or books of account or documents seized which are belonging or 3 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5 belonged to the appellant and which disclosed that the appellant had incurred unaccounted expenditure.
On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the addition on account of alleged unexplained expenditure of lands u/s 69C of the Act, ignoring the explanation seized material and appellant’s reliance of various decisions. It is prayed that the addition on account of alleged unexplained expendie of Rs.282000/- may be deleted.
4. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in bringing new evidences of Pathik Construction and Sh. Sunil Gulati on record and discussing the same in the appellate order even though the same has no connection with the facts of the appellant. The learned A.O. has also made no reference of these evidences while reaching its conclusion in the assessment order. These evidences are, therefore, irrelevant and out of context so far as the appellant is concerned. It is prayed that these evidences may kindly be ignored.
5. On the facts in the circumstances of the case and in law, the Hon'ble CIT (A) erred in relying on the decision of Hon'ble Delhi High Court in the case of Malik Bros (P) Ltd vs CIT( 162 Taxman 43). In the appellant's case, none of the land owners from whom land has been purchased by the appellant confirmed the receipt of cash payment. These remarks of the Hon'ble CIT (A) are erroneous remarks. It is therefore prayed that these erroneous remarks of the Hon'ble CIT (A) may kindly be deleted.
6. On the facts in the circumstances of the case and in law, the Hon'ble CIT (A) erred in relying order of the Hita Land Private limited passed by the CIT (A) 41 vide order CIT (A)/DCCC-39/IT -638/10-11 dated 28/10/2011. Though the issues are similar and identical the said order has been quashed by the hon'ble ITAT, Mumbai Bench. The Hon'ble CIT (A) erred not considering the same while passing the order. It is therefore prayed that addition confirmed by the learned CIT (A) may kindly be deleted following the decision of the Hon'ble ITAT Mumbai.
7. On the facts and in the circumstances of the case and in law, the learned CIT (A) erred in confirming the charge of interest u/s.234B and 234C of the Act. having regard to the fact of the case. The appellant denies it liability for payment of interest u/s 234B and 234C of the Act.
4 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5
Each one of the above grounds of appeal is without prejudice to the other.”
At the out set, the ld. AR of the assessee submitted before the Bench that grounds of appeal No.1 and 2, are not pressed and therefore, dismissed.
3. Ground No.3 is the only effective ground which is against the confirmation of addition on account of alleged unexplained expenditure under section 69C of the Act and ground no 4, 6 and 6 are supportive to ground no. 3.
Brief facts of the case are that the assessee company is a Private Limited Company incorporated and registered under the Companies Act, 1956 and is engaged in the business of purchase, sell, develop, take in exchange, or on lease, hire or otherwise acquire etc land and properties. The assessee filed its return of income on 23.9.2009 declaring a total income of (-) 9,392/-. The assessing officer by following the process u/s 147 r.w.s. 148 of the Act re- opened the assessment and assessed the total income at Rs.2,72,610/- vide an order dated 25.3.2013. A search and seizure action was carried out on 5.3.2009 in the case of Jai Crop Ltd ,its Group ,its employees and close associates who were involved in the acquisition of land. Consequent to the search and seizure operation the assessments were made u/s 143(3) r.w.s. 153C of the Act on the most of group companies against whom the incriminating material was found.
5 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5 According to the information received from the Joint CIT(OSD)-CC-39, Mumbai assessee was found to have entered into cash transactions of Rs. 2,82,000/- Mathe Vengaon village. Besides pages No.1 to 15, 54 to 56,58, 60 to 64, 67 to 69 and 70 were seized during search as per punchanama dated 5.3.2009/6.3.2009 of Shri Dilip Dherai which contained dealings in land in assessee was appearing as investor to the tune of Rs. 2,82,000/-. During the course of assessment proceedings, and after considering the above incriminating materials seized by the search team , the AO came to the concussion that Rs.2,82,000/- is attributable to the assessee out of Rs.38.45 crores mentioned at pages 22 and 23 and therefore treated the same as unexplained expenditure u/s 69C of the Act and accordingly the assessment was framed vide order dated 25.2.2013 passed under sections 143(3) r.w.s. 147 of the Act by assessing the income at Rs.2,72,610/-. Aggrieved by the order of the AO, the assessee preferred an appeal before the ld. CIT(A), who in turn upheld the addition made by the AO by observing and holding as under : “………..From the contentions of the affidavits of Shri. Dilip Dherai as well of Shri Pradeep Kotian, Steno, it is abundantly clear that the statement of Shri. Dilip Dherai on the day of search was taken under force and coercion. The questions and answers relating to the critical issue of land transactions were dictated by Shri. Manoj Kumar, Asst, and Commissioner of Income Tax. Thus it is submitted that the statement recorded on the day of search cannot be attributed to Shri. Dilip Dherai. The relevance of these affidavits cannot be totally ignored merely on the ground that they have been filed late.
6 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5
The Department recorded another statement of Shri. Dilip Dherai deted 20.05.2009 wherein in Q. No.(6)(K) it is stated that amount mentioned in column No. 6 & 7 reflect the projected fund requirements for acquisition land. Shri. Dilip Dherai and the assessee thus reiterated their stand that the amount mentioned in column No. 6 & 7 are the projected fund requirement for the land other than already purchased and recorded in the books of account. The A.O. has also rejected the contents of this statement without giving any plausible reasons. Looking to the above facts in totality and also looking to the submission made by the appellant during the course of assessment proceedings and evidence adduced during the course of assessment proceedings,, it is submitted that no additions u/s 69C as unexplained cash expenditure are required to be made. There are no concrete and clinching corroborative evidences found during the course of search nor the A. a. has brought any evidence on record to establish beyond doubt that the amounts mentioned in column NO.6 & 7 or seized papers of 22 & 23 and the figures mentioned on other seized materials contained the details of alleged unexplained expenditure. The only statement of Shri Dilip Dherai recorded on 05.03.2009 could not be exclusive and conclusive evidence to justify an addition of the magnitude of Rs. 38. 45 crs in the land companies, particularly when the contents of the statement have been retracted by Shri Dilip Dherai and supported by Shri Pradeep Kotian, Steno who was typing the statement of Shri Dilip Dherai at the material time. Your Honour may appreciate that the additions of such magnitude cast a liability on the appellant not only to pay taxes but also to pay interest and subsequent even penalty also. The nature and quantum of the additions should thus be based on clinching evidences wherefrom a layman can draw an inference that such evidences contained an expenditure which is not recorded in the books of account. The land companies have purchased lands and they are duly recorded in the relevant books of account of land companies. When the appellant has not incurred any expenditure in cash for the purchase of land and there is no evidence directly or indirectly found during the course of search, no addition can be made only on guesswork and presumption. Accordingly, it is prayed before your honour that proportionate addition out of Rs.38.45 crs and Rs.5.0152 Crs amounting to added in the appellant's case u/s. 69 C may kindly be deleted. The action of the A.O is not based on legal sound footings rather it is in contravention of judicial pronouncement by various courts of law.
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In this connection, the appellant places it reliance on the judgement of the Hon'ble Gujarat High Court in the case of Koilashben Manharlal Chokshi reported in (2010) 3281TR 411 (Guj). In an another decision Hon'ble Allahabad High Court in the case of CIT Vs Radha Kishan Goel reported in (2005) 270 ITR 454 observed that during the course of search and seizure action;' harassment had coercion do take place resulting putting an assessee under mental, torture; thereby the assessee loses his normal mental state of mind. The Hon'ble Supreme Court in case of Pullangode Rubber Produce Co. Ltd Vs State of Kerala reported in (1973) 91 ITR 18 (SC) held that an admission is an extremely important piece of evidence but it cannot be said that it is conclusive. It is open to the person who made the admission to show that it is correct In view of this, it is submitted that the appellant's retraction is bonafide and should have been taken into consideration. Further, it merit attention that statement of Shri Dilip Dherai post search require equal consideration which the AO has ignored. It may also be pertinent to draw your honour's attention to a recent decision by Gujarat High Court in the case of DIT Vs Radhe Developers India Ltd [329 ITR 1]. In this decision, the Hon'ble Gujarat High Court has held that addition in the assessment order based on the seized material cannot be sustained unless some other corroborative evidence to justify the addition is brought on record . In view of the above, and facts of the case your honour is required to direct the assessing officer to delete the addition of Rs. 2, 82, 000/-.”
At the time of hearing, the ld.AR submitted before us that the issue raised in this appeal is identical to that of the issue decided by the Mumbai Bench of the Tribunal in the case of M/s Avkash Land Reality Pvt Ltd V/s DCIT in (AY-2008-09) and other similarly placed assessees vide
8 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5 order dated 22.3.2013, wherein it has been held that addition on the basis of incriminating documents/material vide pages pages No.1 to 15, 54 to 56,58, 60 to 64, 67 to 69 and 70 was deleted and therefore the ld.AR prayed that the appeal of the assessee be allowed in view of the decision of the Co-ordinate Bench of the Tribunal in the case of M/s Avkash Land Reality Pvt Ltd and others (supra) as the issue raised in both the appeals is identical.
The ld. DR fairly admitted that the issue raised in the case at hand and that of relied upon by the assessee are identical and stands covered by the Tribunal decision in the case of M/s Avkash Land Reality Pvt Ltd (supra).
We have carefully considered the rival contentions and perused the material placed before us including the orders of authorities below and the case laws relied upon by the ld.AR. We find from the order of Co-ordinate Bench of the Tribunal in the case of M/s Avkash Land Reality Pvt Ltd (supra ) an identical issue has been decided by the Tribunal in favour of the assessee and in the other similarly placed assessees’ whose names have been appeared in the title sheet of who made investments in the land who were engaged in purchase, sale of land and development of land and in whose cases the addition was made on the basis of incriminating documents found during the 9 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5 course of search which also formed basis of addition in the hands of the assessee. The relevant para of the Tribunal order 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 assessee 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, none 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 assessee cannot be justified as the assessee 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.
A perusal of the balance sheet of the assessee show that the authorized, issued and subscribed paid up capital is at Rs. One lakh and the assessee 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 assessee. In our considerate view, there
10 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5 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 assessee. Considering the entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained.”
A perusal of the above reveals that the issue stands covered by the decision of the co-ordinate Bench of the Tribunal and therefore, respectfully following the ratio laid down by the Co-ordinate Bench of the Tribunal we set aside the order of ld CIT(A) and direct the AO to delete the addition made u/s 69C of Rs. 2,82,000/-. The appeal of the assessee is partly allowed.
I.T.A. No.5668/Mum/2015 8. We find from the grounds raised in these appeals are also same to that of except figures and hence, we are deciding these appeals by this common order. We have already decided identical issue in ITA No. 5664/Mum/2015 (AY-2009-10) vide para 7 of this order above and therefore, our decision in ITA No.5664/Mum/2015 would mutatis mutandis apply to these appeals as well. The appeals of the assessee are partly allowed.
11 I.T .A. N o .5 6 6 4, 5 6 65 a nd 56 6 8 / M/ 1 5
In the result, the appeals filed by the assessee are allowed.