R.R. CONSTRUCTION, NAVI MUMBAI V. DCIT CEN CIR 39, MUMBAI

CO 187/MUM/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 9730 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 25-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 16-06-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 26-08-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HITAL SEJPAL
• Keywords: Unexplained expenditure; Income from undisclosed sources; Document seized; Opportunity of being heard; Condonation of delay; Documents seized
• Section: 69C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND SANJAY GARG, (JM) . . , , ./I.T.A. NO.606/MUM/2012 ( / ASSESSMENT YEAR : 2009-10) JT. COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-39, ROOM NO.32(1), GROUND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 / VS. M/ S R R CONSTRUCTION 4-ALOK CO-OP. HSG., PLOT NO.128 TO M-131, S ECTOR-21, NERUL,NAVI MUMBAI ( / APPELLANT) .. ( !' / RESPONDENT) CROSS OBJECTION/ !'# . 187/MUM/2013 IN I.T.A. NO.606/MUM/2012 M/S R R CONSTRUCTION, NAVI MUMBAI / VS. JT. COMMISSIONER OF INCOME TAX (OSD), CENTRAL CIRCLE-39, MUMBAI-400020 ( /CROSS-OBJECTOR) .. ( !' / RESPONDENT) ./ $ ./PAN/GIR NO. : AAJFR4030Q % / APPELLANT BY : SHRI SANTOSH KUMAR !' & % /RESPONDENT BY : MS.HITAL SEJPAL ' ( & )* / DATE OF HEARING : 16.6.2014 +, & )* /DATE OF PRONOUNCEMENT : 25.6.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE ASSESSEE AND THE CRO SS OBJECTION FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER DATED 29-12-2010 PASSED BY LD CIT(A)-41, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEAR 2009-10. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD C IT(A) IN GRANTING RELIEF OF RS.1.00 CRORES TO THE ASSESSEE OUT OF THE ADDITION OF RS.1,44,36,000/- MADE BY THE AO. IN THE CROSS OBJECTION, THE ASSESSEE IS ASSAILING T HE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION TO THE EXTENT OF RS.44,36,000/-. 3. THE CROSS OBJECTION FILED BY THE ASSESSEE IS BARRED BY LIMITATION BY 217 DAYS. WE HEARD BOTH THE PARTIES ON THIS PRELIMINAR Y ISSUE. THE ASSESSEE HAS FILED AN AFFIDAVIT DATED 18-03-2014, WHEREIN I T HAS EXPLAINED THE REASONS FOR THE I.T.A. NO.606/MUM/2012 2 DELAY IN FILING THE CROSS OBJECTIONS. THE RELEVANT PORTION OF THE DEPOSITION IS EXTRACTED BELOW:- . (9) I SAY THAT A COPY OF DEPARTMENTS MEMORANDUM O F APPEAL IN FORM-36 WAS DESPATCHED TO THE RESPONDENT FIRM WHICH WAS RECEIVED BY THE SAID FIRM ON 22.12.2012. (10) I SAY THAT THE HEARING OF THE APPEAL BEFORE T HE HON. ITAT D BENCH, MUMBAI HAS BEEN FIXED FOR 28.01.2013 AND 14. 05.2013 BUT ON BOTH DATES THE HEARING WAS ADJOURNED AT THE REQUEST OF THE DEPARTMENT. (11) I SAY THAT THE NEXT HEARING THE APPEAL HAD BE EN FIXED FOR 27.08.2013 BUT SINCE THE HON. MEMBERS WERE BUSY IN SOME SPECIAL BENCH APPEAL ON 27.08.2013, THE HEARING IN THE DEPARTMENT AL APPEAL HAS THEN ADJOURNED TO 16 TH DECEMBER, 2013 AND AGAIN NOW ADJOURNED TO 19 TH MARCH, 2014. (12) I SAY THAT IN THE MEANTIME, THE RESPONDENT FI RM ALSO FILED A MEMORANDUM OF CROSS-OBJECTION IN FORM-36A ON 26.08. 2013 TOGETHER WITH A PETITION DT. 23.08.2013 FOR CONDONATION OF DELAY OF 217 DAYS (IN FILING THE SAID MEMORANDUM OF CROSS OBJECTION) AGAINST THE DECISION OF THE LD CIT(A) IN RETAINING THE OTHER PART OF RS.44,36,000 OUT OF THE THE ABOVE STATED TOTAL ADDITION OF RS.1,44,36,000/- U/S 69C O F THE INCOME TAX ACT, 1961. (14) I SAY THAT SINCE THE APPEAL DID NOT COME UP S O FAR FOR AN EFFECTIVE HEARING, THE EARLIER AR ENGAGED BY THE AP PELLATE FIRM THROUGH OVERSIGHT SKIPPED THE FILING OF THE SAID MEMORANDUM OF CROSS OBJECTION WITHIN THE PRESCRIBED TIME LIMIT AND THAT WAS THE R EASON FOR SUCH A DELAY FOR A PERIOD OF 217 DAYS. (15) I SAY THAT THE DELAY IN FILING THE MEMORANDUM OF CROSS OBJECTION WAS NOT INTENTIONAL AND NOT WITH ANY ULTE RIOR MOTIVE AND THAT THE RESPONDENT FIRM CANNOT THINK OF WILFULLY NEGLECTING TO FILE THE SAID MEMORANDUM OF CROSS OBJECTION WITHIN THE PRESCRIBED TIME LIMIT. 4. A CAREFUL PERUSAL OF THE CONTENTS OF THE AFFI DAVIT WOULD SHOW THAT THE ASSESSEE IS FURNISHING REASONS IN ONLY PARAGRAPH 14 , WHEREIN THE ASSESSEE FINDS FAULT WITH HIS THEN AUTHORISED REPRESENTATIVE. HOWE VER, A PERUSAL OF THE ASSESSMENT ORDER, THE ORDER OF LD CIT(A) WOULD SHOW THAT THE ASSESSEE WAS REPRESENTED BY SHRI D.C. SEJPAL, CHARTERED ACCOUNTA NT. WE FURTHER NOTICE THAT THE MEMORANDUM OF CROSS OBJECTION WAS ALSO FILED WI TH THE TRIBUNAL WAS ALSO FORWARDED BY SHRI D.C. SEJPAL. WE NOTICE THAT THE ASSESSEE, THOUGH STATES ABOUT EARLIER AR, YET IT HAS NOT FURNISHED THE NAME AN D OTHER DETAILS OF ANY OTHER AR. WE ALSO NOTICE THAT THE FINANCIAL STATEMENTS O F THE ASSESSEE HAVE ALSO BEEN CERTIFIED BY SHRI D.C. SEJPAL. UNDER THESE SET OF FACTS, IT IS HARD TO BELIEVE THAT I.T.A. NO.606/MUM/2012 3 THE ASSESSEE DID ENGAGE ANY OTHER AR FOR HANDLING APPEAL MATTERS BEFORE THE TRIBUNAL. 4.1 ANOTHER PERTINENT POINT TO BE NOTED IS T HAT THE ASSESSEE HAS ADMITTED IN THE AFFIDAVIT THAT IT IS AWARE ABOUT THE APPEAL FIL ED BY THE REVENUE AND ALSO ABOUT THE DATES OF HEARINGS VIZ., 28.01.2013, 14.05.2013 AND 27.08.2013. HOWEVER, THE ASSESSEE HAS CHOSEN TO FILE THE CROSS OBJECTION S ONLY ON 26.08.2013 RESULTING IN A DELAY OF 217 DAYS. IN VIEW OF THE FOREGOING D ISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS TAKEN DECISION TO FILE THE CR OSS OBJECTIONS BELATEDLY AND THERE COULD NOT BE ANY VALID REASON FOR THE DELAY. 4.2 BEFORE US, THE LD A.R PLACED RELIANCE ON TH E FOLLOWING CASE LAW:- (A) SHRI Y.P. TRIVEDI VS. JCIT (ITA NO.5994/MUM/20 10 DATED 11.07.2012)(MUMBAI ITAT) (B) AVTAR KRISHNAN DASS VS. CIT (1982)(1 33 ITR 338)(DELHI). BY PLACING RELIANCE ON THE ABOVE CITED CASE LAWS, T HE LD A.R SUBMITTED THAT THE TRIBUNAL SHOULD GIVE MORE IMPORTANCE TO THE PRACTIC ALITIES THAN TO THE LEGAL PROCEDURES. ACCORDINGLY THE LD A.R PRAYED FOR COND ONATION OF DELAY. WE HAVE GONE THROUGH THE DECISIONS RELIED UPON BY LD A.R AN D FIND THAT THE DECISION IN THOSE CASES HAS BEEN RENDERED ON THE BASIS OF FACTS PREVAILING IN THOSE CASES. HOWEVER, IN THE INSTANT CASE, THE FIRST INSTANCE A T WHICH THE ASSESSEE COULD HAVE TAKEN DECISION TO FILE APPEAL WAS 22.12.2012, I.E., THE DATE ON WHICH IT RECEIVED A COPY OF MEMORANDUM OF APPEAL FILED BY TH E DEPARTMENT. THEN SUBSEQUENTLY, THE APPEAL OF THE DEPARTMENT WAS POST ED FOR HEARING IN JANUARY, 2013 AND MAY, 2013. AT THAT POINT OF TIME ALSO, TH E ASSESSEE COULD HAVE TAKEN DECISION TO FILE THE CO. HOWEVER, THE ASSESSEE HAS CHOSEN TO FILE THE CO ONLY ON 26.08.2013, I.E., ONE DAY PRIOR TO THE DATE OF NEXT DAY OF HEARING. THE REASON CITED FOR THE DELAY HAS BEEN DISCUSSED BY US IN THE EARLIER PARAGRAPH AND WE HAVE NOTICED THAT THE SAID REASONS ARE HARD TO BELI EVE. IT IS WELL SETTLED PROPOSITION THAT THE ASSESSEE IS REQUIRED TO EXPLAI N THE DELAY ON DAY TO DAY BASIS TILL THE DATE OF FILING OF APPEAL. I.T.A. NO.606/MUM/2012 4 4.3 HENCE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE DELAY AND HENCE WE ARE UNABLE TO CONDONE THE DELAY. ACCO RDINGLY, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED IN LIM INE. 5. WE SHALL TAKE UP THE APPEAL FILED BY THE REV ENUE. THE FACTS RELATING TO THE ISSUE CONTESTED BY THE REVENUE ARE DISCUSSED IN BRI EF. THE ASSESSEE IS A PARTNERSHIP FIRM FALLING WITHIN M/S PATHNIK CONSTR UCTIONS GROUP AND IS ENGAGED IN THE BUSINESS OF BUILDING CONSTRUCTION AND DEVELO PMENT. THIS GROUP WAS SUBJECTED TO THE SEARCH ON 18.02.2009. THE FLAG SH IP COMPANY OF THE GROUP IS M/S KALPANA STRUCT CON PVT LTD AND THE ADDRESS OF T HE SAID COMPANY AND THAT OF THE ASSESSEE FIRM WAS FOUND TO BE ONE AND SAME. TH E KEY PARTNER OF THE ASSESSEE FIRM IS SHRI RAMESH K NAKRANI. 5.1 DURING THE COURSE OF SEARCH OPERATIONS CON DUCTED IN THE RESIDENTIAL PREMISES OF SHRI RAMESH K NAKRANI, CERTAIN LOOSE PA PERS WERE UNEARTHED. PAGE NO. 6 OF LOOSE PAPER FILE, WHICH IS MARKED AS ANNE XURE A/1 CONTAINED DETAILS OF PAYMENTS MADE IN RESPECT OF A PLOT PURCHASED AT A P LACE CALLED ULWE. THE SAID PAGE WAS WRITTEN IN PENCIL ON BOTH SIDES AND A MOUNTS WERE FOUND NOTED IN CODED FIGURES. IN THE SWORN STATEMENT TAKEN FROM S HRI RAMESH K NAKRANI, HE EXPLAINED THE DETAILS NOTED IN THE ABOVE SAID SEIZE D PAPER. THE AO NOTICED THAT THE ASSESSEE FIRM HAS PURCHASED A PLOT NUMBERED AS NO.98 LOCATED AT SECTOR 20, ULWE ADMEASURING 1100 SQ. MTS. FROM THE SEIZED DOC UMENT, IT WAS SEEN THAT THE ASSESSEE HAS MADE PAYMENTS IN THREE INSTALMENTS AS DETAILED BELOW:- FIRST INSTALMENT - 1,64,00,000 SECOND INSTALMENT - 82,00,000 THIRD INSTALMENT - 96,63,002 --------------------- 3,42,63,000 =========== HOWEVER, IT WAS NOTED IN THE SEIZED DOCUMENT THAT A GGREGATE AMOUNT WAS SHOWN AT RS.3,40,30,000/-. ANOTHER FIGURE OF RS.3, 09,36,000/- (NOTED AS 309.36) WAS ALSO FOUND NOTED IN THE SEIZED DOCUMENT . HOWEVER, IN THE AGREEMENT ENTERED FOR THE PURCHASE OF THE ABOVE CIT ED PLOT, THE CONSIDERATION WAS SHOWN AS RS.1,65,00,000/- ONLY. I.T.A. NO.606/MUM/2012 5 5.2 IN THE SWORN STATEMENT TAKEN ON 18.2.2009, SHRI RAMESH K NAKRANI ADMITTED IN THE ANSWER GIVEN TO Q. NO.11 THAT THE P LOT CITED ABOVE WAS PURCHASED FOR A CONSIDERATION OF RS.3,09,36,000/-. IN THE ANSWER GIVEN TO Q. NO.13, SHRI RAMESH K NAKRANI ADMITTED THAT THE CASH WAS PAID FROM HIS UNDISCLOSED SOURCES. IN THE STATEMENT RECORDED ON 19-02-2009, HE STATED THAT THE QUANTUM OF CASH INVOLVED IN THE ABOVE DEAL WAS ABOUT RS.1.00 CRORE AND HE SUBMITTED THAT HE HAS OFFERED THE SAME IN HIS HAND AS HIS UNDISCLOSED INCOME. 5.3 THE ASSESSING OFFICER ACCEPTED THAT THE TOT AL CONSIDERATION PAID FOR THE PURCHASE OF PLOT WAS RS.3,09,36,000/-. SINCE THE A MOUNT SHOWN IN THE SALE AGREEMENT WAS RS.1,65,00,000/-, THE AO TOOK THE DI FFERENCE AMOUNT OF RS.1,44,36,000/- AS THE UNACCOUNTED PAYMENT MADE IN CASH. THE ASSESSEE SUBMITTED THAT THE UNACCOUNTED CASH PAYMENT TO THE EXTENT OF RS.1.00 CRORES WAS THE AMOUNT OFFERED BY SHRI RAMESH NAKRANI IN HI S HANDS. HOWEVER, THE AO REJECTED THE SAID EXPLANATIONS WITH THE FOLLOWING O BSERVATIONS:- BY ADMITTING ONLY RS.1,00,00,000/-, MR. RAMESH NAK RANI HAS NOT EXPLAINED THE ACTUAL AMOUNT OF UNACCOUNTED CASH PAY MENTS INVOLVED IN THE ABOVE LAND PURCHASED BY THE ASSESSEE. IN FACT, THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE TO SHOW THAT THE UNA CCOUNTED CASH ADMITTED BY MR. RAMESH NAKRANI HAS BEEN USED TO MAK E UNACCOUNTED CASH PAYMENTS OF RS.1,44,36,000/- INVOLVED IN THE A BOVE LAND PURCHASED BY THE ASSESSEE. THESE FACTS CLEARLY SHOW THAT ADM ISSION OF UNACCOUNTED INCOME OF RS.1,00,00,000/- BY MR. RAMESH NAKRANI DO ES NOT EXPLAIN THE SOURCE OF UNACCOUNTED CASH PAYMENTS OF RS.1,44,36,0 00/- MADE BY THE ASSESSEE ON ITS ABOVE LAND DEAL. ACCORDINGLY, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE UNACCOUNTED PAYMENT OF RS.1,44,36,000/- TO HIS SATI SFACTION. SINCE THE ABOVE SAID PAYMENTS ARE RELATED TO BUSINESS ACTIVITIES OF THE ASSESSEE, THE AO TOOK THE VIEW THE SAME IS HIT BY THE PROVISO TO SEC. 69C OF THE ACT, WHICH STATES THAT THE UNEXPLAINED EXPENDITURE WHICH IS DEEMED TO BE THE I NCOME OF THE ASSESSEE SHALL NOT BE ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INC OME. ACCORDINGLY, THE AO ASSESSED THE ABOVE SAID SUM OF RS.1,44,36,000/- AS THE INCOME OF THE ASSESSEE UNDER THE HEAD OTHER SOURCES. 6. BEFORE LD CIT(A), THE ASSESSEE CONTENDED TH AT THE LOOSE PAPER, ON THE BASIS OF WHICH THE IMPUGNED ADDITION WAS MADE, WAS NOT RECOVERED FROM THE I.T.A. NO.606/MUM/2012 6 PREMISES OF THE ASSESSEE AND HENCE THE SAME CANNOT BE CONSIDERED FOR COMPUTATION OF ASSESSEES INCOME. IT WAS FURTHER S UBMITTED THAT THE ASSESSMENT TO THE EXTENT OF RS.1.00 CRORE, WHICH HAS ALREADY B EEN OFFERED BY SHRI RAMESH NAKRANI, RESULTS IN DOUBLE ASSESSMENT OF SAME INCOM E. 6.1 THE LD CIT(A) NOTICED THAT NEITHER THE ASSE SSEE FIRM NOR MR. RAMESH NAKRANI HAS OFFERED ANY EXPLANATION WITH REGARD TO THE BALANCE AMOUNT OF RS.44,36,000/-. HENCE HE REJECTED THE CLAIM OF THE ASSESSEE FIRM THAT THE ABOVE SAID AMOUNT SHOULD HAVE BEEN ASSESSED IN THE HANDS OF SHRI RAMESH NAKRANI. THE LD CIT(A) EXAMINED THE DOCUMENTS RELATING TO RA MESH NAKRANI. HE FURTHER NOTICED THAT IT IS SHRI RAMESH NAKRANI, WHO HAS EXP LAINED THE CODED ENTRIES FOUND IN THE SEIZED DOCUMENT AND FURTHER HE ONLY HA S OFFERED RS.1.00 CRORE AS HIS UNDISCLOSED INCOME. ACCORDINGLY, THE LD CIT(A) TOOK THE VIEW THE AMOUNT OF RS.1.00 CRORES SHOULD BE GIVEN CREDIT AGAINST THE A MOUNT OF RS.1,65,00,000/- AND ORDERED ACCORDINGLY. IN RESPECT OF THE REMAINI NG AMOUNT OF RS.44,36,000/-, THE LD CIT(A) HELD THAT THE ASSESSEE FIRM HAS FAILE D TO EXPLAIN THE SAME AND HENCE CONFIRMED THE ADDITION MADE BY THE AO. ACCOR DINGLY, THE APPEAL FILED BY THE ASSESSEE WAS ALLOWED PARTLY. AGGRIEVED, THE RE VENUE HAS FILED THIS APPEAL BEFORE US. 7. BEFORE US, THE LD D.R PLACED STRONG RELIANCE ON THE ORDER PASSED BY THE AO. THE LD D.R SUBMITTED THAT THE ASSESSING OFFICE R HAS GIVEN A SPECIFIC FINDING THAT THE ASSESSEE HAS FAILED TO SHOW THAT THE UNACC OUNTED CASH ADMITTED BY MR.RAMESH NAKRANI WAS USED TO MAKE UNACCOUNTED CASH PAYMENTS OF RS.1,44,36,000/- INVOLVED IN THE LAND DEAL. ACCORD INGLY HE CONTENDED THAT THE LD CIT(A) WAS NOT JUSTIFIED IN GIVING CREDIT RS.1.00 C RORES. 8. ON THE CONTRARY, THE LD A.R SUBMITTED THAT T HE IMPUGNED SEIZED DOCUMENT WAS SEIZED FROM THE RESIDENCE OF SHRI RAMESH NAKRAN I. SHE FURTHER SUBMITTED THAT THE CODED ENTRIES FOUND IN THE SEIZED DOCUMENT WERE ALSO EXPLAINED BY HIM ONLY. SHE FURTHER SUBMITTED THAT SHRI RAMESH NAKRA NI HAS SPECIFICALLY STATED, IN REPLY TO THE QUESTION NO.3 AS WELL AS IN QUESTION N O.13, THAT THE CASH INVOLVED IN THE IMPUGNED TRANSACTION WAS APPROXIMATELY ONE CROR E AND THE SAME WAS PAID BY HIM ONLY. HENCE HE HAS OFFERED A SUM OF RS.1.00 CRORES AS HIS UNDISCLOSED I.T.A. NO.606/MUM/2012 7 INCOME IN HIS HANDS. SHE FURTHER SUBMITTED THAT TH E AMOUNT SO OFFERED IN THE HANDS OF SHRI RAMESH NAKRANI HAS BEEN DULY BROUGHT INTO THE BOOKS OF THE ASSESSEE FIRM IN THE SUCCEEDING YEAR. SHE SUBMITTE D THAT THE ASSESSING OFFICER HAS ALSO ACCEPTED THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE AND ACCORDINGLY COMPLETED THE ASSESSMENT IN HIS HANDS. ACCORDINGLY THE LD A.R SUBMITTED THAT THE LD CIT(A) WAS JUSTIFIED IN ALLOWING CREDIT OF R S.1.00 CRORES AGAINST THE ADDITION MADE BY THE AO. THE LD A.R FURTHER SUBMIT TED THAT THE ADDITION OF RS.1.00 CRORE MADE BY THE ASSESSING OFFICER IN THE HANDS OF THE ASSESSEE FIRM RESULTS IN DOUBLE ASSESSMENT OF SAME INCOME, WHICH IS NOT PERMITTED UNDER THE INCOME TAX ACT. THE LD A.R FURTHER PLACED RELIANCE ON THE DECISION RENDERED BY THE JODHPUR BENCH OF TRIBUNAL IN THE CASE OF NAND K ISHORE MALANI VS. DCIT (2013)(40 TAXMANN.COM 160). THE LD A.R SUBMITTED T HAT THE DEPARTMENT, IN THE ABOVE SAID CASE, HAS RECOVERED CERTAIN DOCUMENTS FR OM THE PARTNER AND THE SAID PARTNER DECLARED UNDISCLOSED INCOME SHOWN IN THE SA ID DOCUMENT IN RETURN FILED BY HIM U/S 153A. LATER THE DEPARTMENT FOUND THAT T HE RELEVANT BILLS RELATED TO A FIRM AND THE AO ASSESSED THE SAME IN THE HANDS OF T HE FIRM. UNDER THESE SET OF FACTS, THE TRIBUNAL HELD THAT THE AMOUNT DECLARED B Y THE PARTNER CANNOT BE AGAIN ADDED IN THE HANDS OF THE FIRM. 8.1 THE LD A.R FURTHER SUBMITTED THAT SHRI RAMES H NAKRANI HAS SPECIFICALLY ADMITTED IN THE SWORN STATEMENT THAT THE CASH AMOUN T INVOLVED IN THE LAND DEAL WAS PAID BY HIM. HE ESTIMATED THE CASH PORTION AT ABOUT RS.1.00 CRORE AT THAT POINT OF TIME AND HENCE OFFERED THE SAME AS HIS INC OME. ACCORDINGLY THE LD A.R SUBMITTED THAT THE ENTIRE DIFFERENCE SHOULD HAVE BE EN ASSESSED IN HIS HANDS ONLY. THE LD A.R FURTHER SUBMITTED THAT THE AO HAS TAKEN THE SUM OF RS.1.65 CRORES SHOWN IN THE AGREEMENT AS THE AMOUNT ACCOUNT ED BY THE ASSESSEE FIRM AND ACCORDINGLY COMPUTED THE DIFFERENCE AMOUNT. HO WEVER, THE ASSESSEE FIRM HAS ACCOUNTED A SUM OF RS.1,75,15,280/- IN ITS BOOK S AND HENCE THE DIFFERENCE AMOUNT COMPUTED BY THE AO IS NOT CORRECT. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. IT IS AN ADMITTED FACT THAT THE ADDITION OF RS.1,44,36,00 0/- WAS MADE BY THE ASSESSING OFFICER ON THE BASIS OF THE INCRIMINATING DOCUMENT FOUND AT THE RESIDENCE OF SHRI RAMESH NAKRANI. THE QUESTION ABO UT THE ENTRIES FOUND NOTED I.T.A. NO.606/MUM/2012 8 IN THE SAID DOCUMENT WAS ASKED TO HIM ONLY AND HE H AS ONLY DECODED THE CODED ENTRIES FOUND THEREIN. THOUGH THE AGGREGATE AMOUNT OF CONSIDERATION NOTED IN THAT DOCUMENT WAS FOUND TO BE RS.3,42,63,000/-, YET THE AO ACCEPTED THE DEPOSITION MADE BY SHRI RAMESH NAKRANI THAT THE ACT UAL CONSIDERATION WAS RS.309.36 CRORES. IN THE SWORN STATEMENT, SHRI RAM ESH NAKRANI HAS ALSO DEPOSED THAT THE CASH PORTION OF THE AMOUNT INVOLVE D IN THE LAND DEAL WAS ABOUT RS.1.00 CRORE AND ALSO STATED THAT HE HAS PAID THE SAME AND ACCORDINGLY OFFERED THE SAME IN HIS RETURN OF INCOME. HOWEVER, THE AO H AS REFUSED TO GIVE CREDIT OF THE AMOUNT OF RS.1.00 CRORE OFFERED BY SHRI RAMESH NAKRANI ONLY ON THE REASONING THAT THE ASSESSEE HAS FAILED TO PRODUCE A NY EVIDENCE TO SHOW THAT THE UNACCOUNTED CASH ADMITTED BY MR. RAMESH NAKRANI HAS BEEN USED TO MAKE UNACCOUNTED CASH PAYMENT OF RS.1,44,36,000/- INVOLV ED IN THE LAND DEAL. 9.1 BUT THE FACT REMAINS THAT THE EXPLANATION AB OUT THE LAND DEAL AND INVOLVEMENT OF ON MONEY PAYMENT THEREIN HAVE BEEN A DMITTED BY SHRI RAMESH NAKRANI ONLY. THE INCRIMINATING DOCUMENT WAS ALSO FOUND AT HIS RESIDENCE ONLY. IN THE SWORN STATEMENT, SHRI RAMESH NAKRANI HAS ADM ITTED THAT THE CASH PORTION AMOUNT (ON MONEY) WAS PAID BY HIM ONLY. FOR THE SA KE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT QUESTIONS AND ANSWERS:- Q.NO. 13:- PLEASE CONFIRM THAT WITH REFERENCE TO YOUR ANSWER TO THE VARIOUS QUESTION IN RESPECT OF LOOSE PAPER PAGE NO. 6, WHAT IS THE SOURCE OF CASH SO PAID INRESPECT OF SAID LAND DEAL ? (SWOR N STATEMENT DATED 18- 02-2009). (A.O PAGE NO.5) ANS.:- I CONFIRM THAT THIS IS CASH PAID FROM ACCOUN T OF MY UNDISCLOSED SOURCES AND HENCE OUT OF BOOKS. . ANSWER TO Q.NO.3 ASKED IN THE STATEMENT TAKEN ON 19 .02.2009 (CIT(A) PAGE NO.5):- I CONFIRM THAT CASH IS INVOLVED IN THE SAID TRANSA CTION WHICH IS APPROX. RS. ONE CRORE. I ALSO REITERATE THAT THE S AME IS PAID BY ME FROM MY UNDISCLOSED SOURCES AND I OFFER THE SAME FOR TAX . I.T.A. NO.606/MUM/2012 9 THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E REVENUE, IN THE INSTANT CASE, DID NOT UNEARTH ANY TANGIBLE EVIDENCE TO PROVE THE PAYMENT OF ON MONEY IN THE IMPUGNED LAND DEAL. THE ACTUAL CONSIDERATION I NVOLVED IN THE LAND DEAL CAME TO LIGHT ON THE BASIS OF THE DOCUMENT SEIZED FROM T HE RESIDENCE OF SHRI RAMESH NAKRANI. THE SAID DOCUMENT CONTAINED ONLY CODED EN TRIES AND SAID CODED ENTRIES WAS ALSO DECODED BY HIM ONLY. THE AGGREGATE CONSID ERATION NOTED IN THE INCRIMINATING DOCUMENT WAS FOUND TO BE RS.3.42 CROR ES. HOWEVER, ANOTHER FIGURE OF 309.36 WAS ALSO FOUND NOTED IN THE SA ME DOCUMENT. SHRI RAMESH NAKRANI SUBMITTED THAT THE ACTUAL CONSIDERATION PAI D IN THE LAND DEAL WAS RS.309.36 CRORES. THUS, THERE WERE TWO FIGURES DE PICTING ACTUAL CONSIDERATION AND THE AO WAS REQUIRED TO DECIDE ABOUT THE ACTUAL AMOUNT OF CONSIDERATION. WHEN SHRI RAMESH NAKRANI STATED THAT THE ACTUAL CON SIDERATION WAS 309.36 CRORES, THE AO HAS ALSO ACCEPTED THE SAME. THUS, T HE AO HAS ACCEPTED THE DECODED VERSION OF SHRI RAMESH NAKRANI AND ALSO THE ACTUAL CONSIDERATION AS CONFESSED BY HIM. IN THE SWORN STATEMENTS TAKEN ON 18.02.2009 AND ALSO ON 19.02.2009, SHRI RAMESH NAKRANI HAS CLEARLY STATED THAT THE DIFFERENCE AMOUNT WAS ABOUT RS.1.00 CRORES AND IT WAS PAID OUT OF HIS UNDISCLOSED SOURCES. HOWEVER, THE ASSESSING OFFICER HAS REFUSED TO ACCEP T THIS VERSION OF SHRI RAMESH NAKRANI FOR THE SIMPLE REASON THAT NO EVIDENCE WAS SHOWN TO PROVE THE SAME. WHEN THE ASSESSING OFFICER IS ACCEPTING THE SWORN S TATEMENT OF SHRI RAMESH NAKRANI IN RESPECT OF THE ENTRIES NOTED IN CODE TER MS AND ALSO IN RESPECT OF ACTUAL AMOUNT OF CONSIDERATION, IN OUR VIEW, HE IS NOT JUSTIFIED IN REJECTING THE SWORN STATEMENT WITH REGARD TO THE SOURCES FOR RS.1 .00 CRORE. 9.2 ONE MORE POINT WE NOTICE FROM THE ANSWER G IVEN BY SHRI RAMESH NAKRANI TO Q. NO.11, WHICH IS EXTRACTED AT PAGE NO.4 OF THE ASSESSMENT ORDER. HE HAS STATED THAT THE PROFIT SHARING RATIO OF EACH PARTNE R, WHICH IS RKN-50%, RDN-30% AND PVP-20% AND THE INVESTMENTS WERE MADE IN THAT R ATIO. HOWEVER, A PERUSAL OF THE INCRIMINATING DOCUMENT WOULD SHOW THAT SHRI RMESH NAKRANI (RKN) HAS ACTUALLY CONTRIBUTED MORE, WHICH IS EVIDENCED BY TH E AMOUNT OF CONTRIBUTION MADE TOWARDS FIRST INSTALMENT,I.E., THE AMOUNT PAID IN FIRST INSTALMENT WAS RS.1,64,00,000/- AND THE SHARE OF RAMESH NAKRANI WA S RS.82,00,000/-. HOWEVER, THE ACTUAL AMOUNT NOTED AS PAID BY HIM IS SHOWN RS.98,50,000/- IN I.T.A. NO.606/MUM/2012 10 THE INCRIMINATING DOCUMENT. WHEN SHRI RAMESH NAKRA NI IS CONTRIBUTING MORE AMOUNT THAN THAT IS REQUIRED AS HIS SHARE, THAT TOO , IN RESPECT OF ACCOUNTED PORTION, IN OUR VIEW, THERE IS NO REASON TO DOUBT H IS STATEMENT THAT THE UNACCOUNTED AMOUNT WAS CONTRIBUTED BY HIM OUT OF HI S UNDISCLOSED SOURCES. 9.3 IT IS ALSO AN ADMITTED FACT THAT SHRI RAMES H NAKRANI HAS OFFERED A SUM OF RS.1.00 CRORES AS HIS UNDISCLOSED INCOME AND THE SA ME HAS ALSO BEEN ACCEPTED BY THE AO AND THE RELEVANT ASSESSMENT HAS ALSO BEEN COMPLETED. IT IS ALSO A FACT THAT THE ASSESSEE FIRM HAS ALSO INCORPORTED TH E AMOUNT OF RS.1.00 CRORE IN ITS BOOKS OF ACCOUNT IN THE SUCCEEDING YEAR BY CRED ITING THE CAPITAL ACCOUNT OF SHRI RAMESH NAKRANI BY MAKING CORRESPONDING DEBIT T O THE LAND ACCOUNT. FURTHER WE NOTICE THAT THE ASSESSEE FIRM HAS SHOWN THE IMPUGNED LAND AS ITS FIXED ASSET IN ITS BALANCE SHEET. ALL THESE DOCUME NTS, IN OUR VIEW, PROVES THE CONTENTION OF THE ASSESSEE THAT THE UNACCOUNTED PAY MENT INVOLVED IN THE LAND DEAL WAS FINANCED TO THE EXTENT OF RS.1.00 CRORE BY THE UNDISCLOSED INCOME DECLARED BY SHRI RAMESH NAKRANI IN HIS HANDS. 9.4 WE NOTICE THAT THE DECISION RENDERED BY JOD HPUR BENCH OF TRIBUNAL IN THE CASE OF NAND KISHORE MALANI (SUPRA), WHICH WAS RELI ED UPON BY THE LD A.R, SUPPORTS THE CASE OF THE ASSESSEE. THE FACTS PREVA ILED IN THAT CASE WAS THAT THE ASSESSEE WAS A PARTNER OF A FIRM AND HE DECLARED UN DISCLOSED INCOME IN HIS HANDS ON THE BASIS OF DOCUMENTS SEIZED FROM HIS PRE MISES. THE DRI FOUND THAT THE RELEVANT BILLS RELATED TO THE FIRM AND ACCORDIN GLY COLLECTED THE DUTY THEREON FROM THE FIRM. ON THAT BASIS, THE AO MADE SUBSTANT IAL ADDDITION IN THE HANDS OF THE FIRM AND MADE PROTECTIVE ASSESSMENT IN THE HAND S OF THE ASSESSEE. THE TRIBUNAL HELD IN THE CASE OF FIRM THAT ENTIRE AMOUN T WAS SURRENDERED BY THE ASSESSEE AND HE HAS PAID TAX THEREON AND HENCE ADDI TION COULD NOT BE MADE IN THE HANDS OF THE FIRM. FOLLOWING THE ORDER PASSED IN THE HANDS OF THE FIRM, THE TRIBUNAL HELD THAT THE INCOME SURRENDERED BY THE AS SESSEE WAS TO BE ASSESSED IN HIS HANDS ON SUBSTANTIVE BASIS. 9.5 WHAT WE SEE FROM THE DECISION RENDERED BY T HE JODHPUR BENCH OF TRIBUNAL IS THAT THE UNDISCLOSED INCOME HAS TO BE ASSESSED I N THE HANDS OF THAT PERSON, WHO HAS ACTUALLY PROVIDED THE FUNDS. IN THE INSTAN T CASE, SHRI RAMESH NAKRANI I.T.A. NO.606/MUM/2012 11 HAS CONFESSED THAT HE HAS PROVIDED THE FUNDS FOR MA KING UNACCOUNTED PAYMENT IN THE LAND DEAL TO THE EXTENT OF RS.1.00 CRORE AND HAS ALSO OFFERED THE SAME IN HIS RETURN OF INCOME AND IT WAS ALSO ACCEPTED BY TH E ASSESSING OFFICER. THE STATEMENT SO GIVEN BY SHRI RAMESH NAKRANI HAS NOT B EEN PROVED TO BE FALSE BY THE AO BY BRINGING ANY MATERIAL ON RECORD. THE ASS ESSEE FIRM HAS ALSO ACCOUNTED THE SAID PAYMENT BY CREDITING THE CAPITAL ACCOUNT OF SHRI RAMESH NAKRANI AND DEBITING THE VALUE OF LAND. THUS, IT I S SEEN THAT THE ASSESSEE FIRM AND SHRI RAMESH NAKRANI HAS DULY CARRIED OUT THEIR STATED POSITION BY MAKING APPROPRIATE ENTRIES. UNDER THESE CIRCUMSTANCES, IN OUR VIEW, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REJECTING THE SAID SUB MISSION ALONE, WHEN HE IS ACCEPTING THE OTHER SUBMISSIONS MADE IN RESPECT OF THE LAND DEAL. 9.6 IN VIEW OF THE FOREGOING DISCUSSIONS, WE DO NOT FIND ANY REASON TO REJECT THE SUBMISSIONS OF THE ASSESSEE FIRM THAT THE UNACC OUNTED PORTION INVOLVED IN THE LAND DEAL WAS MET OUT OF UNDISCLOSED INCOME DEL ARED BY SHRI RAMESH NAKRANI. ACCORDINGLY, WE ARE OF THE VIEW THAT THE ASSESSEE HAS EXPLAINED THE SOURCES FOR MAKING PAYMENT TO THE EXTENT OF RS.1.00 CRORE IN RESPECT OF THE LAND DEAL. HENCE, IN OUR VIEW, THE LD CIT(A) WAS JUSTIF IED IN GIVING CREDIT OF RS.1.00 CRORE AGAINST THE ADDITION OF RS.1,44,36,000/- MADE BY THE ASSESSING OFFICER. 9.7 THE LD A.R ALSO CONTENDED THAT THE BALANCE AMOUNT OF RS.44,36,000/- SHOULD HAVE ALSO BEEN ASSESSED IN THE HANDS OF SHRI RAMESH NAKRANI. WE NOTICE THAT THE LD CIT(A) HAS MADE A SPECIFIC OBSERVATION THAT NEITHER THE ASSESSEE FIRM NOR SHRI RAMESH NAKRANI HAS OFFERED ANY EXPLANATION WITH REGARD TO THE AMOUNT OF RS.44,36,000/-. HENCE WE ARE UNABLE TO ACCEPT T HE SAID CONTENTIONS. 9.8 THE LD A.R ALSO POINTED OUT THAT THE AO HAS ADOPTED THE AMOUNT OF ACCOUNTED CONSIDERATION AS RS.1.65 CRORES, I.E., TH E AMOUNT THAT WAS SHOWN IN THE SALE AGREEMENT. ACCORDING TO THE LD A.R, THE A SSESSEE FIRM HAS ACCOUNTED A SUM OF RS.1,75,15,280/- IN ITS BOOKS OF ACCOUNT. A CCORDINGLY, IT WAS CONTENDED THAT THE UNACCOUNTED AMOUNT COMPUTED BY THE AO IS H IGHER BY RS.10,15,280/-. WE FIND FORCE IN THE SAID CONTENTIONS OF THE ASSESS EE. THERE SHOULD NOT BE ANY DOUBT THAT THE SUPPRESSED AMOUNT OF CONSIDERATION S HOULD BE ARRIVED AT BY COMPARING THE ACTUAL CONSIDERATION WITH THE ACCOUNT ED CONSIDERATION. IN THIS CASE, THE AO HAS ADOPTED THE FIGURE OF RS.1,65,00,0 00/- AS ACCOUNTED I.T.A. NO.606/MUM/2012 12 CONSIDERATION AND ACCORDINGLY COMPUTED THE SUPPRESS ED AMOUNT. NOW THE ASSESSEE CLAIMS BEFORE US THAT THE ASSESSEE FIRM HA S ACCOUNTED FOR A SUM OF RS.1,75,15,280/-. IN SUPPORT OF THE SAME, THE ASSE SSEE HAS PRODUCED A COPY OF BALANCE SHEET PERTAINING TO THE FY 2009-10. IN OUR VIEW, THE CLAIM OF THE ASSESSEE IS ADMISSIBLE UNDER RULE 27 OF APPELLATE T RIBUNAL RULES, 1963. FURTHER THIS CONTENTION RELATED TO COMPUTATION OF UNACCOUNT ED INCOME ONLY. HOWEVER, THE SAID CONTENTIONS REQUIRE FACTUAL VERIFICATION A T THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THIS ISSUE TO T HE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE CLAIM PUT FORTH BY THE ASS ESSEE WITH THE BOOKS OF ACCOUNT AND DECIDE THE SAME IN ACCORDANCE WITH THE LAW, AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEARD TO THE ASSESSE E. 10. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED IN TERMS OF OUR OBSERVATIONS MADE ABOVE AND THE CROSS OBJECTION FIL ED BY THE ASSESSEE STANDS DISMISSED IN LIMINE. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25TH JUNE, 2014. +, ' -. / 0 25TH JUNE, 2014 , & ( 2 SD SD ( /SANJAY GARG) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER - ' ( MUMBAI: 25TH JUNE,2014. . . ./ SRL , SR. PS ! '#$%& '&($ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT. 3. ' 4) ( ) / THE CIT(A)- CONCERNED 4. ' 4) / CIT CONCERNED 5. 5 !) 6 , * 6 , - ' ( / DR, ITAT, MUMBAI CONCERNED 6. 7( / GUARD FILE. 8 ' / BY ORDER, TRUE COPY 9 (ASSTT. REGISTRAR) * 6 , - ' ( /ITAT, MUMBAI