ACIT, NEW DELHI V. M/S. MANAS INFRATECH PVT. LTD., NEW DELHI

ITA 4929/DEL/2015

AI Insights

The case revolves around an appeal by the Revenue against the order of the CIT(A) which had deleted an addition of Rs. 8,39,30,000 made by the AO to the inventory of M/s Manas Infratech Pvt. Ltd. The addition was based on a suspicion raised by the Investigation Wing of Goa, suggesting that the payment made to Mr. N. Suryanarayana might have been a part of a scheme to siphon off funds. The CIT(A) found that there was no direct evidence linking the payment to any wrongdoing and that the AO had not conducted sufficient inquiries. The Tribunal upheld the CIT(A)'s decision, emphasizing the lack of concrete evidence and the principles of natural justice.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471779 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HARPREET KAUR
• Assessee Lawyers: RUCHESH SINHA
• Keywords: Principle of natural justice; Bogus
• Section: 143(3); 132

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘G’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 4929/Del/2015 (Assessment Year- 2009-10) ACIT, Central Circle-26, New Delhi. Vs. M/s Manas Infratech Pvt. Ltd., C-4, 1st Floor, Malviya Nagar, New Delhi. PAN No: AAFCM1419B APPELLANT RESPONDENT Revenue by : Ms. Harpreet Kaur, Sr. DR Assessee by : Shri Ruchesh Sinha, Adv. and Ms. Monalisa Maity, Adv. Date of Hearing : 29.11.2024 Date of Pronouncement : 29.01.2025 ORDER PER SUDHIR PAREEK, JM The aforetitled appeal arising out of the order dated 07.05.15 passed by the Commissioner of Income Tax(Appeals)-29, New Delhi (for the sake of convenience, here in after referred in short as “CIT(A)”] ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 2 of 10 by which the appeal filed by the Revenue/ appellant against the order dated 26.03.2013 passed by the DCIT, [(for the sake of convenience, here in after referred in short as Ld. AO)] for A.Y. 2009-10. 2. The Revenue has raised the following grounds of appeal: “1 On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the reduction of Rs.8,39.30,000/- from the total inventory as against the compensation paid to Sh. N Suryanarayana by the assessee company. 2 On the facts and in the circumstance of the case and in law, the CIT(A) has erred in deleting the above addition without appreciating the fact that the assessee failed to rebut the findings of the Investigation Wing of Goa either before the AO or before the CIT(A) 3 On the facts and in the circumstances of the case and in law, the CIT(A) has erred in stating that the AO had not made sufficient enquiry in the case. Even if the CIT(A) is of the opinion that the AO had not made sufficient enquiry the Ld CIT(A) could have made further enquiries as its powers are coterminous with that of the AO. 4. The order of the CIT(A) is erroneous and is not tenable on facts and in law. 5. 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. Facts of the case may be summarized as that during the year under consideration, the assessee company is engaged in the business of real estate business activities. However, the assessee company did not earn any income through its business operation in ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 3 of 10 this year. Copy of Profit & Loss Account, Balance Sheet and Auditor's report of the Act, for the year under consideration, have been submitted by the assessee during the course of assessment proceedings. 4. A search & seizure operation u/s 132 of the I. T. Act, 1961 was carried out on 19.10.2010 in the case of IREO Group of cases. The case of the assessee was also covered in the search. During the course of search carried out at the different premise located in India in IREO Group, documents and data storage devices, etc, belonging to the assessee company were found and seized. Thereafter, the case of the assessee was centralized with this circle from the CIT-II, New Delhi, u/s 127 of the I. T. Act, 1961 vide order F.No. CIT-II/Delhi/127 Order/2011-12/1534 dated 06.09.2011. 5. Consequent upon search and centralization, a notice u/s section 153A of the Income-tax Act, 1961 was issued to the assessee on 30.12.2011 which was duly served upon the assessee company through speed post, receipt of which is placed on record. In this notice, the assessee was required to furnish the true and correct ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 4 of 10 return of income for the A.Y 2009-10 within 16 days from the date of receipt of the notice. 6. Heard rival submission and carefully scanned the material available on record. 7. Revenue has assailed the order of the Ld. CIT(A) by which first appellate authority deleted the reduction of Rs. 8,39,30,000/- from the total inventory as against the compensation paid to Sh. N. Suryanarayana by the assessee company. Reiterating the grounds of appeal, the Ld. DR expressed concerned that the Ld. CIT(A) deleted the said addition even without appreciating the fact that the assessee failed to rebut the findings of the Investigation Wing of Goa before the lower authorities. 8. Per contra, the Ld. AR submitted that the alleged report of Investigation Wing-Goa, was neither confronted to appellant company nor any opportunity of being beard was afforded to rebut the same before addition has been made in violation to the principles of natural justice and even the said report of Investigation Wing-Goa, does not raises any doubt relating ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 5 of 10 genuineness of compensation of Rs. 8,39,30,000/- received by Surya From assessee company and it only raises doubt regarding the genuineness of expenses claimed by Mr. Surya in his books of accounts against the compensation received by him from assessee company but such expenses do not have any nexus with the assessee company nor does it affect the genuineness of compensation paid by assessee company. He further submitted that the Ld. AO has made disallowance in the instance case solely by relying on the Report of Investigation Wing- Goa, wherein the Investigation Officer has expressed suspicion regarding the expenses booked by Mr. Surya and report does not contained anything against the gross receipts of Mr. Surya . So, it is quite arbitrary to doubt the payment of compensation by assessee company, only just because expenses claimed by Surya were considered doubtful by his Assessing Officer at Goa. It was vehemently argued that even from the aforesaid Investigation Wing report as reproduced in the assessment order, does not contain even an iota of evidence against the compensation paid by the assessee company to Mr. Surya and disallowance made in the instant case is unlawful ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 6 of 10 because the investigation report relied upon by the Ld. AO for making disallowance is not a clinching evidence secondly, such report raises suspicion regarding the genuineness of expenses booked by Mr. Surya and not about his gross revenue receipt and no opportunity of being herd was given to furnish the explanation as assessee was not confronted with such report during assessment proceedings. The relevant part of the order of AO is reproduced as under: “In this context, the basis for the payment of the excess amounts of Rs. 19.50 cr by the Ireo group of companies to Mr N Suryanarayana is questionable. The excess payments do not have any nexus with the purchase of lands in Maharashtra and were made for non business purposes. There is a strong possibility that the amounts of Rs.19,50,00,000/- might have gone back to the buyer companies (i.e. Ireo group of companies) or its key employees or directors. Mr N Suryanarayana appears to have acted as accommodation entry provider to the Ireo group of companies to siphon off the amount of Rs. 19.50 cr.” 9. The Ld. CIT(A), in the impugned order stated that the Ld. AO disallowed the alleged payment of Rs. 8,39,30,000/- made to Mr. Surya primarily on the information received from Investigation Wing, Goa, that Rs. 19.50 crore paid to 4 entities were bogus payments and that the IREO entities might have received back Rs. 19.50 crore, paid to Mr. Surya. The Ld. CIT(A) ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 7 of 10 subsequently stated that by the perusal of order passed by the Ld. AO, it is crystal clear that no enquiry has been done and no even evidence has been collected and brought on record. So, as to given to the conclusion that any four entity as mentioned hereinbefore, to whom Mr. Surya has paid to Rs. 19.50 crores belongings to IREO Group or they have any interest on the assessee company directly or indirectly, Ld. CIT(A) drawn inferences that alleged addition of Rs. 8,39,30,000/-has been made purely on conjuncture and surmises. The relevant part of the impugned order is reduced as under: “`5.8 Taking in totality of all the facts and evidences on record viz: (a) no evidence has been brought on record so as to hold that payment of Rs. 19.50 crore which is paid to the 4 entities have any direct or indirect link or connection with the appellant or IREO group, (b) no evidence is there to show that \"Mr. Surya\" has paid back the money to appellant's group entities, (c) nothing has been brought on record by the AO so as to hold that \"Mr. Surya\" was not having the tenancy right over the subject land with him and (d) in the assessment order passed under section 153A/ 143(3) dated 29.12.2011 in the case of \"Mr. Surya\", the Revenue has accepted that \"Mr. Surya\" has received a sum of Rs.28,11,38,000 from the IREO/group and same has been reflected by \"Mr. Surya\" as its income It is pertinent to mention the AO's finding in para 4.3 of assessment order which reads as under:- Quote ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 8 of 10 \"In this context, the basis for the payment of the excess amounts of Rs.19.50 cr. by the IREO group of companies to Mr. N. Suryanarayana is questionable. The excess payments do not have any nexus with the purchase of lands in Maharashtra and were made for non business purposes. There is a strong possibility that the amounts of Rs.19,50,000/-might have gone back to the buyer companies (i.e. Ireo group of companies) or its key employees or directors. Mr. N. Suryanarayana appears to have acted as accommodation entry provider to the IREO group of companies to siphon off the amount of Rs.19.50 cr.\" The above finding of the AO in the assessment order (while disallowing the payment of Rs.8,39,30,000 in appellant's case) also shows that even the AO himself is not sure whether the payment of Rs. 19.50 crore has gone back to the appellant/IREO group or not. And probably because of that, no disallowance are made in other IREO group case. 5.9 In view of the above, the AO's finding that the payment of Rs.8,39,30,000 has no nexus with the purchase of land and thus disallowance is warranted is fraught and not on any sound logic. Hence an addition of Rs. 8,39,30,000 which has been made purely on conjectures and surmises cannot be sustained and thus deserves to be deleted.” 10. From perusal of that record, hearing and submissions advanced by the both parties, we are of the opinion that there is a substance in the submissions of the assessee and the Ld. CIT(A) passed detailed order with full discussions and there is no any ground exist, for which needs to interfere. Hence, grounds raised by the Revenue are not allowable and accordingly dismissed. ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 9 of 10 11. In the result, appeal of the Revenue is dismissed. Order pronounced in the Open Court on 29th January, 2025. Sd/- Sd/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 29/01/2025 Neha, Sr. PS and Pooja, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.- 4929/Del/2015 Manas Infratech Pvt. Ltd. Page 10 of 10 1. Date of dictation of Tribunal order 15.01.2025, 21.01.25, 28.1.25 2. Date on which the typed draft Tribunal Order is placed before the Dictation Member 15.01.2025, 21.01.25, 28.1.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9. Date on which the file goes to the Supervisor (Judicial) 10. The date on which the file goes to the Assistant Registrar for endorsement of the order 11. Date of Despatch of the order "