RAHEJA DEVELOPERS LIMITED,NEW DELHI vs. ACIT, CENTRAL CIRCLE 19, DELHI

The Assessee raised identical grounds in both the Appeals, for the sake of convenience, Grounds of Appeal for Assessment Year 2011-12 are considered, which reads as follows:- “1. That the order of learned Commissioner of Income Tax (Appeals) is bad in law as well as on the facts and in the circumstances of the case.

That the learned Commissioner of income Tax (Appeals) has erred in not sustaining the contention of the appellant that the assessing officer has issued notice under section 148 without application of mind.

That the learned Commissioner of Income Tax (Appeals) has erred in not sustaining the contention of the appellant that the re-opening u/s 147 of the Act is of a completed assessment after expiry of four years.

That the learned Commissioner of Income Tax (Appeals) has erred in not sustaining the contention of the appellant that the objections for re-opening filed on 05.04.2018 and 13.11.2018 have not been considered and the assessing officer has mentioned in the assessment order that no objections to the re-opening were filed until 28.08.2018. 5. That the learned Commissioner of Income Tax (Appeals) has erred in upholding the addition made by the assessing officer on account of treating the sale proceeds received from M/s. Sagar Trade Links Pvt. Ltd. as unexplained cash credit u/s 68 amounting to Rs. 19.06.83,165/- ignoring the evidences filed by the appellant.

That the learned Commissioner of income Tax (Appeals) has erred in not sustaining the contention of the appellant that the learned Assessing Officer has not confronted the appellant with the statement of Mr. Sushil Kumar Purohit relied upon by him in the assessment order.

That the learned Commissioner of Income Tax (Appeals) has erred in not sustaining the contention of the appellant that the explanation offered and the documents evidences adduced by the appellant and gathered directly by the Assessing Officer have been ignored in the assessment proceedings.

That the learned Commissioner of Income Tax (Appeals) has erred in sustaining the invocation of provisions of section 68 of the Income Tax Act, 1961. ignoring the explanation offered and the documents evidences adduced by the appellant and gathered directly by the Assessing 9. That the learned Commissioner of Income Tax (Appeals) has erred in sustaining that the appellant company has used M/s. Sagar Trade Links Pvt. Ltd.. an alleged paper/shell company for routing its own funds without bringing on record any concrete evidence to support its contention.

That the learned Commissioner of Income Tax (Appeals) has erred sustaining the contention of the assessing officer that the assessee before him had not contested the veracity of the statements of Sh. Jagdish Prasad Purohit&Dhruv Narayan Shah provided and has misinterpreted the contention of the appellant that no direct link exists between these statements and the appellant.

That the learned Commissioner of Income Tax (Appeals) has erred in not sustaining the contention of the appellant that no opportunity was provided to examine the witnesses whose statements have been relied upon by the assessing officer before drawing any conclusions.”

Both the appeals are having identical issues to be decided, therefore, captioned appeals have been heard together and the parties have made common submission on both the Appeals. For the sake of convenience brief facts of the case for Assessment Year 2011-12 are considered. The Assessee filed return of income for Assessment Year 2011-12 declaring an income of Rs. 45,61,43,920/-. The return filed by the Assessee was assessed u/s 143(3) of the Income Tax Act, 1961 ('Act' for short) on 31/03/2014 at a total income of Rs. 45,72,09,890/- by making an addition of Rs. 10,65,970/- u/s 14A of the Act. The case of the Assessee was selected for re-assessment u/s 147 of the Act after recording reasons for reopening. An assessment order came to be passedon 31/12/2018 u/s 143(3) r.w. Section 147 of the Act by Raheja Developers Ltd. vs. ACIT making addition of Rs. 19,06,83,165/- considering the alleged sale of properties as bogus u/s 68 of the Act and also made addition of Rs. 38,13,663/- as commission at 2% for providing accommodation entries to various parties. Similar additions have also been made for Assessment Year 2012-13 of Rs. 17,53,76,931/- u/s 68 of the Act and Rs. 37,07,539/- as commission paid to the parties u/s 69C of the Act as unexplained expenditure.

Aggrieved by the assessment orders dated 31/12/2018 and 26/12/2019 respectively for Assessment Year 2011-12 and 2012-13, Assessee preferred two Appeals before the Ld. CIT(A). The Ld. CIT(A) vide orders dated 12/06/2023 dismissed both the Appeals filed by the Assessee. As against the orders of the Ld. CIT(A), Assessee preferred the present Appeals.

Ground No. 1 of the Assessee is general in nature which requires no adjudication.

In Ground No. 2 and 3, the Assessee challenged the initiation of proceedings u/s 147 & 148 of the Act. Ld. Counsel for the Assessee submitted that the notice issued u/s 148 of the Act is without application of mind and the Ld. CIT(A) erred in not appreciating the contention of the Assessee that reopening u/s 147 of the Act is of completed assessment after expiry of four years and further submitted 7. Per contra, the Ld. Departmental Representative submitted that the A.O. was having prima facie intangible material on record on the basis of which A.O. formed reason to believe that income of the Assessee has escaped assessment. Further submitted that the material and the ‘reasons to believe’ has direct nexus and in order to forming reason to believe theA.O. has applied his mind on such material. Further submitted that as the A.O. has applied his mind in issuing notice u/s 148 of the Act, relying on the findings of the Lower Authorities, sought for dismissal of Ground No. 2 & 3. 8. We have heard both the parties and perused the material available on record. While reopening the case of the Assessee, A.O. relied on the information collected by the Director of Investigating Wing, Kolkata. The A.O. recorded detailed reasons for reopening of the case which reads as under:- “Purohit family had opened multiples accounts at various branches of Kotak Mahindra Bank, located at Kolkata and Mumbai.

Thus, in our considered opinion, A.O. was indeed having prima facie tangible material on record on the basis of which formed reason to believe that income of appellant has escaped assessment. As the material and the reason to believe has direct nexus, we are of the opinion that A.O. has applied his mind on such material while forming reasons to believe.

Further specific information received from office of the DDIT, Companies, that the total amount of Rs. 3,48,00,000/- was credited into the bank account of Assessee Company, the A.O. examined the information, recorded facts which led to formation of his disbelieve that escarpment of income and after taking approval from the competent authority, issued notice u/s 148 of the Act. The requirement for reopening of assessment proceedings u/s 147 of the Act is the availability of prima facie material of evasion tax and not the conclusive establishment of escarpment of income. The said ratio has been laid down by the various judicial precedents which reads as under:- (a) In the case of Yogendra kumar Gupta Vs ITO 51 taxmann.com 383 (SC)/[2014] 227 Taxman 374, the Hon'ble Apex Court had held that where subsequent to completion of original assessment, Assessing Officer, on basis of search carried out in case of another person, came to know that loan transactions of assessee with a finance company were bogus as said company was engaged in providing accommodation entries, it being a fresh information, therefore A.O. was justified in initiating reassessment proceeding in case of assessee.

As per Section 147 of the Act, the reassessment proceedings beyond four years where assessment u/s 143(3)of the Act has already been made, the action may be taken if the Assessee fails to disclose fully and truly all material facts. In the present case, no doubt the Raheja Developers Ltd. vs. ACIT assessment u/s 143(3) of the Act had already been completed. However, at the time of assessment proceedings, no such information relating to M/s Sagar Trtadelink Private Limited was available with the A.O. The information was received by the A.O. only after completion of assessment proceedings u/s 143(3) of the Act the said Sagar Tradelink Private Limited was a paper company which was managed and controlled by entry operator namely Sh. Jagdish Prasad Purohit,who was engaged in providing accommodation entries to beneficiary entities through paper shell companies. On the receipt of the said information and based on the prima facie material available on record regarding suspicious transactions made between the Assessee and M/s Sagar Trtadelink Private Limited, after applying his mind, A.O. recorded the reasons for reopening of case. Since, there was a failure in the part of the Assessee to fully and truly disclose the facts during the original Assessment Proceedings and as the information has been received by the A.O. after the conclusion of the original assessment, we find no error or infirmity in reopening the case of the Assessee and find no merits in the contention of the Assessee that there was no failure on the part of the Assessee to fully and truly disclose the facts. In view of the above, we find no merits in Ground No. 2 & 3 of the Assessee, accordingly, Ground No. 2 & 3 are dismissed. Assessee's Representative submitted that the appellant has filed objection for reopening on 05/04/2018 and 31/11/2018, which were not considered by the A.O., however, A.O. erroneously mentioned in the assessment order,that no objections to reopening were filed until 28/08/2018. Thus, sought for allowing the Ground No. 4. 14. The Ld. Departmental Representative submitted that the reasons were supplied to the Assessee vide letter dated 12/07/2018. The Assessee has not filed any objection. Thereafter A.O. issued notice u/s 143(2) of the Act on 28/08/2018 which is after 46 days of providing reasons for reopening. Thereafter the Assessee filed objectionafter 124 days from the date of supplying the reasons recorded for reopening. The Assessee deliberately filed the objection at the fag end of the assessment proceedings. The said objection has been decided by the A.O. in the final assessment order, therefore, the Ground No. 4 of the Assessee requires to be dismissed.

We have heard both the parties and perused the material available on record. The A.O. vide letter dated 12/07/2018, supplied the reasons for reopening to the Assessee, in the reply of the Assessee dated 05/04/2018, the Assessee has not filed any specific objection on reopening of the case. Thereafter A.O. issued notice u/s 143(2) of the Act on 28/08/2018 after 46 days of providing the reasons for Raheja Developers Ltd. vs. ACIT reopening to the Assessee with a bonfide belief that the Assessee has no objection on reopening of the case. However, Assessee filed objections after 124 days from the receipt of reasons recorded for reopening of the case. The Assessee deliberately filed the objection after expiry of 124 days at the end of the assessment proceedings which is nothing but afterthought only with an intention to delay the assessment proceedings. Though the A.O. has not passed any speaking order disposing the objections as the objection was filed at the belated stage, however, the same has been considered by the A.O. in the assessment order. The relevant portion of the same is reproduced as under:- "Further, the assessee vide letter dated 13.11.2018 filed objection to initiation of assessment proceedings on the ground that re- assessment proceedings were solely initiated upon the information provided by the Investigation Wing. However, same is not acceptable as the assessing officer while recording reasons arrived at satisfaction by considering all the facts of the case and has concluded that the taxable income has escaped assessment.

Considering the above facts and circumstances, we find no merit in Ground No 4 of the Assessee, accordingly Ground No 4 of the Assessee is dismissed. 17. In Ground No. 5 to 9, the Assessee challenged the addition made u/s 68 of the Act on its merits. The Ld. Assessee's Representative contended that the Commissioner of Income Tax (Appeal) has erred in upholding the addition made by the A.O. on account of treating the sale proceedings received from M/s Sagar Trade Link Pvt. ltd. as unexplained cash credit u/s 68 of the Act. The Ld. Assessee's Representative submitted that both the authorities have ignored the evidences filed by the Assessee, thus sought for deleting the addition.

Per contra, the Ld. Departmental Representative relying on the orders of the Lower Authorities sought for dismissal of Ground No. 5 to 9 of the Assessee.

We have heard both the parties and perused the material available on record. In the year under consideration, Assessee claimed to have sold 22 shops in Raheja Mall situated at Sector 47, Sohna Road, Gurugram, Haryana to M/s Sagar Trtadelink Private Limited vide agreement to sell dated 17/08/2012 for a total sale consideration of rs. 36,56,48,734/-. Out of the total sale consideration, part payment of Rs. 19,06,83,163/- was received in Assessment Year 2011-12 and remaining amount of Rs.17,53,76,931/- in the Assessment Year 2012-13. The details of 20 shops sold and amount so received are as under:- Amount received (In Rs.) during FY 2010-11 1 LG-001, Raheja Mall 26800000 2 LG-011, Raheja Mall 8000000 3 LG-012, Raheja Mall 7762962 4 LG-048, Raheja Mall 22745086 5 UG-048, Raheja Mall 21386368 6 F-101, Raheja Mall 21500000 7 F-107, Raheja Mall 5180726 8 F-lll, Raheja Mall 8045919 9 F-112, Raheja Mall 8049919 10 T-309, Raheja Mall 4250458 11 T-310, Raheja Mall 5221213 12 T-311, Raheja Mall 5221213 13 T-312, Raheja Mall 5221213 14 S-201, Raheja Mall 14189914 15 S-208, Raheja Mall 1024140 16 S-209, Raheja Mall 6248762 17 S-213, Raheja Mall 5590125 18 UG-011, Raheja Mall 5720753 19 F-137, Raheja Mall 3305180 20 T-313, Raheja Mall 5221214 Total

The A.O. received information from Investigating Wing, Kolkata that M/s M/s Sagar Trtadelink Private Limited is a paper company and was managed/controlled by entryoperator Mr. Jagdish Kumar Purohit for providing accommodation entries to beneficiary entities. The A.O. issued summons u/s 131 of the Act to M/s Sagar Trtadelink Private Limited. The M/s Sagar Trtadelink Private Limited filed response from which it is found that, no conveyance deed/sale deed was registered in favour of M/s Sagar Trtadelink Private Limited. Only physical position was handed over, name of M/s Sagar Trtadelink Private Limited got mutated in Municipal Corporation, Gurgaon. Further out of 20 shops, only one shop bearing F-107 was sold till 12/11/2018. The summons have been issued to M/s Amphibious Finvest Pvt. Ltd. (formerly M/s Sagar Trtadelink Private Limited)u/s Raheja Developers Ltd. vs. ACIT

However, no response were furnished by M/s Amphibious Finvest Pvt. Ltd.(formerly M/s Sagar Trtadelink Private Limited) It is pertinent to note that said M/s Amphibious Finvest Pvt. Ltd. in its assessment proceedings for Assessment Year 2015-16, admitted that shops measuring 23,510 square feet out of allotted area of 38,870 square feet at Raheja Mall have not been handed over till 31/03/2015. There was no explanation submitted by M/s Amphibious Finvest Pvt. Ltd. Now the question arose that, when the entire payment of Rs. 36,56,48,734/- was made during Financial Year 2011-12 itself, what made the purchaser not to get sale deed Raheja Developers Ltd. vs. ACIT executed in their favour?Further, the sub