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Income Tax Appellate Tribunal, “C” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & SHRI SIDDHARTHA NAUTIYAL
PER SIDDHARTHA NAUTIYAL - JUDICIAL MEMBER:
This appeal has been filed by the Assessee against the order passed by the Ld. Principal Commissioner of Income Tax, (in short “Ld. PCIT”), Ahmedabad-1, Ahmedabad vide order dated 07.03.2024 for Assessment Year 2016-17.
2. The Assessee has taken the following grounds of appeal:-
“1. In law and in the facts and circumstances of the case, the order passed by Ld. Pr. CIT, Ahmedabad-1 u./s 263 of the Income tax Act is ab initio void being bad in law.
2. On the facts and circumstances of the case, the learned Pr. CIT erred in setting aside the assessment order dated 29/03/2022 passed by the faceless assessing officer u/s 147 r.w.s. 144B, and directing the faceless assessing officer to pass a fresh Assessment Order.
3. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal
either before or during the course of hearing of the appeal.”
3. The brief facts of the case are that the assessee filed return of income for A.Y. 2016-17 on 05.08.2016, declaring total income of Rs. 69,53,000/-. No scrutiny assessment under Section 143(3) of the Act was made in this case. The re-assessment proceedings, under Section 147 of the Act r.w.s. 144B of the Act was completed on 29.03.2022, by accepting the returned income. Subsequently, on perusal of records, the PCIT observed that a search under Section 132 of the Act was carried out on 11.04.2017 in the case of Navratna Group. The Navratna Group is a premier real estate group of Gujarat and is engaged in development of various real estate projects. During the course of search, various incriminating documents were found and seized from the premises of Shri Murlidhar M. Trivedi, who is a shareholder of Navratna Infrastructure Ltd.. Mr. Murlidhar Trivedi is also the key person involved in carrying sale of plots in “Kalhaar” scheme launched by the Navratna Group. During the course of search, certain data was recovered from the laptop of Shri Murlidhar Trivedi from which it is found that Navratna Group has accepted on-money for sale of units / villas at Kalhaar Blues and Greens for which conveyance deed were executed. On perusal and analysis of the excel sheet, it was observed that the assessee had purchased a unit / villa at Kalhaar Blues and Greens and made payment to Navratna Developmers. Accordingly, the PCIT issued notice under Section 263 of the Act dated 23.01.2024 to the assessee and another notice dated 06.02.2024. In response to the 263 notices, the assessee submitted that the faceless Assessing Officer had verified the issue and therefore, the order of the Assessing Officer is not erroneous and prejudicial to the interest of the Revenue. The assessee submitted that he had purchased unit No. 608 in the scheme of Kalhaar Blues and Greens, jointly with his co-purchaser. The assessee further submitted that this unit was initially booked by Mr. Rajan Shah who had paid a sum of Rs. 77,00,000/- to the builder and the assessee and his co-purchaser have paid this sum to Mr. Rajan Shah. The assessee submitted / explained that he has paid a sum of Rs.
25,00,000/- to Mr. Rajan Shah and the balance sum of Rs. 52,00,000/- was paid by the brother of the assessee.
4. However, the PCIT was of the view that as per information gathered during the course of search operation / post search operation, the assessee has paid a sum of Rs. 55,00,000/- as on-money to M/s. Navratna Organisers and Developers Pvt. Ltd. (in short “NODPL”) for purchase of immovable property being unit No. 608 in the scheme called “Kalhaar Blues and Greens”. Accordingly, the PCIT was of the view that the Assessing Officer has erred in not verifying the information, with the submissions of the assessee. The PCIT observed that the searched party Navratna Developers has itself deposed before the Income Tax Settlement Commission that it has received on-money from purchasers of units and therefore, the Assessing Officer ought to have made addition of Rs. 55,00,000/- on account of on-money paid by the assessee. Accordingly, the PCIT held that the order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue.
5. The assessee is in appeal before us against the aforesaid order passed by the PCIT, holding that the assessment order to be erroneous and prejudicial to the interest of the Revenue. Firstly, the Counsel for the assessee submitted before us that proceedings under Section 147 of the Act had been initiated to examine the issue of on-money payment of Rs. 55,00,000/- to Navratna Organisers and Developers Pvt. Ltd. Therefore, the allegation of the PCIT is per se erroneous that the Assessing Officer failed to make enquiries on this aspect, since the very purpose of initiating re-assessment proceedings under Section 147 of the Act was to analyse the on-money payment of Rs. 55,00,000/- towards payment made to Navratna Developers. Secondly, the Counsel for the assessee drew our attention to notice dated 03.11.2021, in which the Assessing Officer made a specific enquiry regarding the payment of on-money of an amount of Rs. 55,00,000/- paid by the assessee towards purchase of immovable property from Navratna Organisers and Developers Pvt. Ltd. Thereafter, the Counsel for the assessee drew our attention to reply dated 30.12.2021 in which the assessee objected to initiation of proceedings under Section 147 of the Act. In the said reply, the assessee had challenged the initiation of re-assessment proceedings on the ground that the 147 notice, the Assessing Officer has not brought anything on record to show as to how he has computed alleged payment of on-money receipts of Rs. 55,00,000/- to Navratna Organisers and Developers Pvt. Ltd. Further, the Counsel for the assessee further drew our attention to letter dated 24.01.2022 and another letter dated 25.02.2022 to the Assessing Officer in which the assessee requested the Assessing Officer to provide copy of the seized material which proves that the assessee had allegedly made payment of Rs. 55,00,000/- in cash to Navratna Developers on the basis of which notice under Section 148 of the Act has been issued in the case of the assessee. In the said letters, the assessee submitted that there is no material whatsoever which supports the allegation that the assessee had paid cash of Rs. 55,00,000/- for purchase of immovable property to Navratna Developers. Thereafter, the Counsel for the assessee drew our attention to notice dated 07.03.2022 issued by the Assessing Officer to the assessee in which again the Assessing Officer proposed to make an addition of Rs. 55,00,000/- as cash on-money paid by the assessee to Navratna Organisers and Developers Pvt. Ltd. towards purchase of immovable property. The Counsel for the assessee submitted that on perusal of the aforesaid notice dated 07.03.2022, it is evident that there is no incriminating material on which the Assessing Officer is placing reliance upon to come to a finding that the assessee has paid on-money to Navratna Developers towards purchase of immovable property. The Counsel for the assessee thereafter drew our attention to draft order of the Assessing Officer (at Page 94 of the Paper Book), in response to which the assessee filed another reply dated 17.03.2022 (at Pages 97-108 of the Paper Book) in which the assessee specifically submitted that there is no incriminating material whatsoever to come to a finding that a sum of Rs. 55,00,000/- was paid as on-money by the assessee to Navratna Developers towards purchase of immovable property. In the said letter, the assessee had requested the Assessing Officer to give details of any incriminating material whatsoever, which would suggest that the assessee had paid on-money towards purchase of immovable property. Further, the Counsel for the assessee drew our attention to Page 177 of the Paper Book to letter dated 28.03.2022, in which the assessee further made a submission that the excel sheet found during the course of search pertained to the period 13.11.2008 to 15.03.2013, which is not relevant to the impugned year under consideration. Therefore, no reliance can be placed on such excel sheet, discovered during the course of search to come to the conclusion / to hold that the assessee had paid on-money towards purchase of immovable property. Accordingly, in light of the above notices issued by the Assessing Officer from time to time and the assessee’s reply to the same, wherein the assessee had submitted that there is no incriminating material or basis to hold that the assessee had made cash on-money towards purchase of immovable property, it is evident that the issue was analyzed in detailed during the course of assessment proceedings and that there is no lack of enquiry on the part of the Assessing Officer. Accordingly, looking into the instant facts, the order passed by Ld. PCIT is liable to be set-aside.
In response, Ld. D.R. drew our attention to para 5.4 of the 263 order, wherein the Ld. PCIT has observed that Navratna Developers have admitted to have taken on-money towards purchase of immovable property. Accordingly, looking into the instant facts, the Ld. D.R. placed reliance on the observation of the PCIT in the 263 order to contend that the assessment order lacked adequate enquiries into the matter and therefore, was liable to the set-aside.
We have heard the rival contentions and perused the material on record. Firstly, we are of the considered view that the Assessing Officer had made sufficient enquiries on this aspect during the course of 147 proceedings, which is evident from various notices issued by the Assessing Officer, specifically to enquire into the aspect of payment of on-money cash amounting to Rs. 55,00,000/- towards purchase of property. Secondly, we are observe that on going through the contents of the 263 order, the PCIT has not given any specific findings as to where the Assessing Officer has erred in facts and in law in the assessment order is coming to an incorrect conclusion. Thirdly, we observe that even the table produced at Para 5.7 of the 263 order does not state that the assessee had paid a sum of Rs. 55,00,000/- in cash towards purchase of immovable property. Fourthly, the assessee had made a specific averment that the excel sheet found during the course of search pertains to period 2008-2013 and hence the contents of the excel sheet have no bearing for the impugned period under consideration. Therefore, in view of the present facts, placed before us, we are of the considered view that there is no adverse incriminating material in possession of the Department specifically mentioning payment of Rs. 55,00,000/- as cash on-money payment towards purchase of immovable property. Accordingly, looking into the instant facts, we are of the considered view that there is apparently no lack of enquiry by the Assessing Officer on the issue of on-money payment of a sum of Rs. 55,00,000/- towards purchase of immovable property, and secondly the order passed under Section 263 of the Act by Ld. PCIT has not given any specific findings as to where the Assessing Officer is wrong in passing the assessment order. Therefore, looking into the instant facts, we are of the considered view that the assessment order is not erroneous and prejudicial to the interest of the Revenue. In the recent case of PCIT v. Kaushik Nanubhai Majithia in Tax Appeal No. 20 of 2024, on similar facts, the Gujarat High Court, while ruling in favour of the assessee observed as under:
“1. Having noted the findings of the facts returned by the Commissioner of Income Tax (Appeals) (‘CITA’, in brief) and the Income Tax Appellate Tribunal (‘ITAT’, herein after), we may record that, essentially, the proceedings under Section 153C of the Income Tax Act, 1961 (in short, ‘IT Act of 1961’) were initiated against the Respondent- assessee on the basis of an excel sheet found from the computer of a person, associated with the Company, namely Navratna Organizers and Developers Private Limited (in short as ‘the Developer’), in the premises of whom the search was conducted.
The excel sheet, according to the learned Counsel for the Revenue, contained the details of payment made by the assessee to the developer, with respect to which tax had been paid by the developer before the Settlement Commissioner. The findings returned by the CITA and ITAT on the issue is sought to be assailed on the ground that the payment of tax by the developer, in whose premises search was conducted, before the Settlement Commissioner, with respect to the amount entered in the excel sheet found from the possession of the assistant working with the developer, is sufficient proof of the transaction between the assessee and the developer.
We find inherent fallacy in this submission, inasmuch as, there is no basis for conducting proceedings against the assessee merely for the fact that the developer had paid tax on the amount shown in the excel-sheet. There is no adjudication with regard to the payment, which was shown in the excel-sheet to the effect that the same was actually paid by the assessee to the developer. Even otherwise, the concurrent findings returned by the CITA and ITAT are that the document found from the premises of the third party namely excel-sheet, which is the basis of the proceedings was without any signature and there is no corroborative material to substantiate the said document. The nature of the document has not been explained by the Assessing Officer while proceeding against the assessee. The statements of the persons recorded during search with reference to the alleged, seized material, was not provided to the assessee and hence, the entire proceedings under Section 153C of the IT Act of 1961 stood vitiated.
Learned Counsel for the petitioner could not successfully demolish the facts, which are recorded concurrently by the CITA and ITAT.
No question of law much less any substantial question of law arises to entertain this appeal. The same is accordingly, dismissed.”
Accordingly, in view of the facts placed before us and the judicial precedents on the subject, the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 29/08/2024
Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 29/08/2024 TANMAY, Sr. PS TRUE COPY आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)- 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER,