DAULAT LUTHARIA, MUMBAI V. ACIT 22(1), MUMBAI

CO 20/MUM/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3101 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 22-02-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Unexplained cash credit; Search and seizure; Loose papers
• Section: 143(3); 68; 54; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI SAKTIJIT DEY (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) I.T.A. NO. 2/MUM/2015 ASSESSMENT YEAR: 2007 - 08 ACIT 22(1) R. NO. 322 PIRAMAL CHAMBERS, 3 RD FLOOR, PAREL MUMBAI - 400012 VS. DAULAT LUTHARIA ADELMAR BUNGLOW PLOT NO 496 , 16 TH RD, OFF KHAR DANDA RD. KHAR, MUMBAI - 400052 PAN : ABBPL1370L (APPELLANT) (RESPONDENT) CROSS OBJECTION NO. 20/MUM/2016 ASSESSMENT YEAR: 2007 - 08 DAULAT LUTHARIA ADELMAR BUNGLOW PLOT NO 496 , 16 TH RD, OFF KHAR DANDA RD. KHAR, MUMBAI 400052 VS. ACIT 22(1) R. NO. 322 PIRAMAL CHAMBERS, 3 RD FLOOR, PAREL MUMBAI - 400012 PAN : ABBPL1370L (APPELLANT) (RESPONDENT) REVENUE BY: SHRI M.C. OMI NINGSHEN, DR ASSESSEE BY: SHRI VIMAL PUNMIYA, AR DATE OF HEARING : 24/03/2017 DATE OF PRONOUNCEMENT: 14/06/2017 ORDER PER N.K. PRADHAN, AM THIS IS APPEAL FILED BY THE REVENUE. THE RELEVANT A.Y. IS 2007 - 08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER (APPEALS) 30 , ITA NO. 2/MUM/2015 2 MUMBAI AND ARISES OUT OF ORDER U/S 153C OF THE INCOME TAX ACT, 1961 (THE A CT ). 2. THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.74,00,000/ - MADE BY THE ASSESSING OFFI CER ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE COULD NOT FURNISH DOCUMENTARY EVIDENCE TO PROVE THAT THE SAME IS NOT AFFIRMATIVE. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. THE CROSS OBJECTION RAISED BY THE ASSESSEE READ AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT (A) ERRED IN CONFIRMING THE VALIDITY OF PROCEEDING U/S. 153C WITHOUT CONSID ERING THE FACTS THAT PROCEEDING WAS INITIATED AND PROCEEDED WITHOUT JURISDICTION AND PROCEDURE. HENCE, PROCEEDING U/S. 153C IS BAD - IN - LAW. 4. BRIEFLY STATED , THE FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE A.Y. 2007 - 08 ON 30/07/2007 DECLARING TOTAL INCOME AT RS. 4,97,635/ - . THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S. 143(3) ON 11/12/2009 ACCEPTING THE ABOVE INCOME OF RS. 4,97,635/ - . SUBSEQUENTLY, AN INFORMATION WAS RECEIVED BY THE A.O. FROM THE DC IT, CENTRAL CIRCLE 1(1), PUNE THAT A SEARCH AND SEIZURE ACTION U/S. 132 WAS CARRIED OUT IN THE MARVEL GROUP ON 22/05/2008. THE INFORMATION WAS THAT THE ASSESSEE HAD PURCHASED THE FLAT FROM THE MARVEL GROUP AND HAD PAID RS. 1,25,00,000/ - AS PART CONSIDERAT ION IN CASH. CONSEQUENTLY, THE A.O. ISSUED A NOTICE U/S. 153C TO THE ASSESSEE ON 12/09/2011 REQUIRING HIM TO PREPARE A TRUE AND CORRECT RETURN OF HIS TOTAL INCOME FOR THE IMPUGNED ASSESSMENT YEAR IN ACCORDANCE WITH THE PROVISIONS OF SECTION 140 OF THE ACT . ITA NO. 2/MUM/2015 3 IN RESPONSE TO IT, THE ASSESSEE FILED A LETTER DATED 05/02/2011 STATING TO TREAT THE RETURN FILED ORIGINALLY AS RETURN OF INCOME, WITHOUT PREJUDICE TO HIS RIGHT TO CHALLENGE THE AFORESAID PROCEEDINGS BEFORE THE APPROPRIATE AUTHORITY. 4.1 IN RESPONSE TO A QUERY RAISED BY THE A.O. TO EXPLAIN WHY THE AMOUNT OF RS. 1,25,00,000/ - SHALL NOT BE TAXED, THE ASSESSEE FILED A REPLY ON 26/02/2013 STATING THAT (I) THE NOTING WERE MENTIONED IN COMPUTER PRINTOUTS, (II) THE AUTHOR OF THE LOOSE SLIPS AND CIRCUMSTANCES IN WHICH THESE WERE FOUND WERE NOT KNOWN, (III) THE COMPUTER PRINTOUTS ARE UNSIGNED, (IV) NO SALE AGREEMENT, MONEY RECEIPTS CORROBORATING THESE PAYMENTS WERE FOUND IN THE COURSE OF SEARCH CONDUCTED IN MARVEL GROUP OR FROM THE RECORDS OF THE ASSESSEE AND ( V) THERE IS NOTHING TO CONTRADICT THE REGISTERED PRICE EXECUTED IN FAVOUR OF THE BUYERS IS NOT CORRECT. 4.2 THE A.O. OBSERVED THAT IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD MADE INVESTMENT IN MARVEL REALTORS , ONE OF THE CONCERN OF THE MARVEL GROU P TO THE TUNE OF RS. 67,67,600/ - AND CLAIM ED DEDUCTION U/S. 54 AS INVESTMENT IN MARVEL ENI G MA, PUNE, ANOTHER CONCERN OF THE MARVEL GROUP TO THE TUNE OF RS. 71,41,047/ - . CONSIDERING THE ABOVE THE A.O. MADE AN ADDITION OF RS. 1,25,00,000/ - U/S. 68 OF THE AC T . 5. AGGRIEVED BY THE ORDER OF THE A.O., THE ASSESSEE FILE D AN APPEAL BEFORE THE LD. CIT(A). THE ASSESSEE RAISED BEFORE THE LD. CIT (A) AN ADDITIONAL GROUND THAT THE ASSESSMENT ORDER PASSED BY THE A.O. U/S. 153C IS WITHOUT JURISDICTION. THE LD. CIT(A ) HAVING GONE THROUGH PARA 2 OF THE ASSESSMENT ORDER FOUND THAT THE DCIT, CENTRAL CIRCLE 1(1), PUNE DULY FOLLOWED THE PROCEDURE FOR INFORMING THE A.O. TO INITIATE PROCEEDING U/S. 153C OF THE ACT. ITA NO. 2/MUM/2015 4 THEREFORE, THE LD. CIT(A) DISMISSED THE ADDITIONAL GROUND O F APPEAL FILED BY ASSESSEE. 5.1 REGARDING THE ADDITION OF RS. 1,25,00,000/ - MADE BY THE A.O. U/S. 68 OF THE ACT, THE LD. CIT(A) HAS FOUND THAT OUT OF THE ADDITION OF RS. 1,25,00,000/ - , AN AMOUNT OF RS. 51,00,000/ - PERTAINS TO THE FINANCIAL YEAR 2007 - 08 RE LEVANT TO THE ASSESSMENT YEAR 2008 - 09 AND THE SAME CANNOT BE ADDED IN THE ASSESSMENT YEAR 2007 - 08. THEREFORE, THE LD. CIT(A) DELETED THE AMOUNT OF RS. 51,00,000/ - IN THE ASSESSMENT YEAR 2007 - 08. 5.2 AS REGARDS THE BALANCE AMOUNT OF RS. 74,00,000/ - , TH E LD. CIT(A) HELD AS UNDER: 3.5.4. AS REGARDS, THE BALANCE AMOUNT OF RS. 74,00,000/ - , I FIND THAT IN THE LEDGER ACCOUNT DESCRIPTION OF CASH RECEIPT HAS BEEN GIVEN. THE FIRST CASH OF RS. 11,00,000/ - WAS RECEIVED FOR FLAT NO. 5 IN MYSTIQUE AT HONAVAR. HOWEVER, FROM WHOM THIS AMOUNT HAS BEEN RECEIVED HAS NOT BEEN MENTIONED. THIS ASSUMES SIGNIFICANCE BECAUSE IN THE SUBSEQUENT ENTRIES THE NAME OF THE PERSON FROM WHOM CASH HAS BEEN RECEIVED HAS BEEN MENTIONED. THE SECOND AMOUNT OF CASH OF RS. 14,00,000/ - HAS AGAIN BEEN RECEIVED FOR THE ABOVE FLAT IN MYSTIQUE AT HONAVAR AND IT WAS RECEIVED FROM THE APPELLANT HIMSELF. THE THIRD AMOUNT OF CASH OF RS. 9,00,000/ - WAS RECEIVED FOR PROPERTIES ONE FOR MYSTIQUE AT HONAVAR I.E. RS. 7,42,315/ - AND ANOTHER FOR ABN AVE HADAPSAR, I.E. RS. 1,57,885/ - FROM ONE AGAI. THE LAST AMOUNT OF CASH OF RS. 40,00,000/ - HAS AGAIN BEEN RECEIVED FOR ABHAVE HADAPSAR PROPERTY FROM ONE DIVA. 3.5.5. THE A.O. HAS HOWEVER, NOT CALLED FOR DETAILS OF THE ABOVE PERSONS FROM THE MARVEL GROU P. THERE IS NO STATEMENT ON RECORD FROM ANY PERSON TO SHOW THAT THE AMOUNT MENTIONED IN DAULAT LUTHARIAS ACCOUNT IS THE ADDITIONAL AND UNDISCLOSED INCOME OF THE MARVEL GROUP. IF THE CASH PAYMENT FOR PURCHASE OF THE PROPERTY IS TO BE ATTRIBUTED TO THE AP PELLANT, THE RECEIVER HAS TO FIRST ACKNOWLEDGE THAT HE HAS RECEIVED THE AMOUNT FROM THE APPELLANT AND THEREAFTER THE RIGHT OF THE APPELLANT TO CROSS EXAMINE THAT PERSON ARISES. IT IS SEEN FROM THE ASSESSMENT ORDER THAT ITA NO. 2/MUM/2015 5 THERE IS NO MENTION EITHER IN THE FO RM OF ADMISSION BY THE MAIN PERSON IN THE MARVEL GROUP OR REFERENCE TO THE ASSESSMENT ORDERS IN THE CASE OF MARVEL GROUP THAT THE ABOVE CASH AMOUNT HAS BEEN TREATED AS INCOME OF MARVEL GROUP. THEREFORE, WHEN THE A.O. HAS NOT ESTABLISHED THAT THE AMOUNT OF RS. 74,00,000/ - HAS BEEN CONSIDERED AS INCOME IN THE HANDS OF THE PERSON FROM WHERE THE ABOVE DOCUMENT WAS FOUND, THE SAME CANNOT BE PER SE, I.E. WITHOUT ANY EVIDENCE ATTRIBUTED TO THE APPELLANT. I ALSO FIND THAT IN THE ASSESSMENT ORDER, THE A.O. HAS REF ERRED TO DEDUCTION U/S. 54 CLAIMED BY THE APPELLANT AS INVESTMENT IN MARVEL ENIGMA AT PUNE, BELONGING TO MARVEL GROUP. HOWEVER, THE LEDGER REFERS TO THE PROJECT MYSTIQUE AT HONAVAR AND ABNAVE AT HADAPSAR. THE A.O. HAS NOT BROUGHT ANY EVIDENCE ON RECORD T O SHOW THAT THE APPELLANT HAS ENTERED INTO AN AGREEMENT FOR PURCHASE OF ABOVE PROPERTIES FROM THE MARVEL GROUP. I, THEREFORE, IN THE ABSENCE OF ANY EVIDENCE TO SUPPORT THE ABOVE DOCUMENT FOUND FROM THE PREMISES OF MARVEL GROUP DO NOT FIND ANY MERIT OF THE ADDITION OF RS. 74,00,000/ - IN THE HANDS OF THE APPELLANT AND, ACCORDINGLY, DELETE IT. 6. BEFORE US , THE LD. DR SUBMITS THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD MAD E INVESTMENT IN MARVEL REALTORS, ONE OF THE CONCERN OF THE MARVEL GROUP TO THE TUNE OF RS. 67,67,600/ - AND CLAIMED DEDUCTION U/S. 54 AS INVESTMENT IN MARVEL ENGIMA, PUNE, ANOTHER CONCERN OF THE MARVEL GROUP TO THE TUNE OF RS. 71,41,047/ - . THEREFORE, THE LD. DR ARGUES THAT THE LD. CIT(A) SHOULD NOT HAVE DELETED THE ADDITION OF RS. 74,00,000/ - MADE BY THE A.O. U/S. 68 OF THE ACT. 7. PER CONTRA THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT IN THE PRESENT CASE NOTICE U/S. 153 C HAS B EEN ISSUED WITHOUT JURISDICTION. HE ELABORATES THAT NO SATISFACTION NOTE HAS BEEN RECORDED BY THE A.O. OF THE SEARCHED PARTY U/S. 153C AND HE HAS JUST FORWARDED THE INFORMATION TO THE A.O. OF THE ASSESSEE. ITA NO. 2/MUM/2015 6 7.1 IN RESPECT OF THE DELETION OF RS. 74,00,000/ - MADE BY THE LD. CIT(A), THE LD. COUNSEL OF THE AS SESSEE SUBMITS THAT IN THE PRESENT CASE THE A.O. HAS NOTHING IN HIS POSSESSION TO PROVE THAT THE ASSESSEE HAS PAID ANY AMOUNT IN CASH TO THE MARVEL GROUP AS THERE HAS TO BE SOME CORROBO RATIVE EVIDENCE TO SUPPORT. THE A.O. WITHOUT FINDING ANY DISCREPANCY IN EVIDENCE PROVIDED BY THE ASSESSEE, HAS OUTRIGHTLY REJECTED THE SAME AND RELIED ONLY THE INFORMATION PROVIDED BY THE DCIT. IT IS STATED THAT THE LEDGER ACCOUNT RELIED ON BY THE A.O. IS DISPUTED. RELIANCE IS PLACED BY HIM ON THE DECISION IN CIT V S. CALCUTTA KNITWEARS (2014) 362 ITR 673 (SC), CIT VS. P.V. KALYANSUNDARAM (2006) 155 TAXMAN N 454 (MAD), (2007) 164 TAXMAN 78 (SC), COMMON CAUSE (A REGISTERED SOCIETY) V S. UNION OF INDIA (2017) 77 TAXMANN.COM 243 (SC) . 8. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE TAKE UP FIRST THE ISSUE OF NOTICE U/S. 153C OF THE ACT. THE SAME ISSUE WAS RAISED BEFORE THE LD. CIT(A) . WE FIND THE LD. CIT(A) HAS DEALT THE ISSUE AT PARA 2.1 OF THE APPELLATE ORDER DATED 28/10/2014 PASSED BY HIM AND NOTED THAT THE DCIT CC(1)(1) HAS RIGHTLY FOLLOWED THE PROCEDURE FOR INFORMING THE A.O. FOR INITIATING THE PROCEEDINGS U/S. 153C OF THE ACT. WE AGREE WITH THE FINDING OF THE LD. CIT(A) AND DISMIS S THE CROSS OBJECTION FILED BY THE ASSESSEE. 8.1 NOW WE TURN TO THE DELETION MADE BY THE LD. CIT(A) OF THE ADDITION OF RS. 74,00,000/ - MADE BY THE A.O. U/S. 68 OF THE ACT. THE SOLE MATERIAL BEFORE THE A.O. TO MAKE ADDITION OF RS. 1,25,00,000/ - IS PAG E NO. 116 OF THE LEDGER ACCOUNT. LET US NOW EXAMINE IT. IN THE SAID LEDGER ACCOUNT, THE DESCRIPTION OF CASH RECEIPT HAS BEEN GIVEN AS UNDER : ITA NO. 2/MUM/2015 7 (A) IT BEGINS WITH CASH OF RS. 11,00,000/ - SHOWN AS RECEIPT FOR FLAT NO. 5 IN MYSTIQUE AT HONAVAR. BUT NO NAME IS MENTIONED. (B) AGAINST THE SECOND ENTRY OF RS. 14,00,000/ - , THE NAME OF THE ASSESSEE IS MENTIONED FOR FLAT MYSTIQUE AT HONAVAR. (C) WITH THIRD ENTRY RS. 9,00,000/ - IS MENTIONED AS RECEIVED FOR PROPERTY ONE FOR MYSTIQUE AT HONAVAR I.E. RS. 7,42,315/ - AND ANOTHER FOR ABNAVE HADAPSAR I.E. RS. 1,57,685/ - FROM ONE AGAI. (D) LAST ITEM - AN AMOUNT OF RS. 40,00,000/ - IS MENTIONED AS RECEIPT FOR ABNAVE HADAPSAR FROM ONE DIVA. THUS WE FIND THAT THE A.O. FAILED TO MAKE ANY ENQUIRY TO KNOW THE IDENTITY OF TH E PEOPLE MENTIONED IN THE LEDGER ACCOUNT. NO DETAILS WERE CALLED BY HIM FROM THE MARVEL GROUP. THERE IS NO STATEMENT INDICATING THAT THE ASSESSEE HAD GIVEN ANY CASH AMOUNT. THERE IS NO FINDING IN THE CASE OF MARVEL GROUP ABOUT THE DESTINATION OF THESE A MOUNTS. THE A.O. FAILED TO CONSIDER THAT THE ASSESSEE PURCHASE D THE PROPERTY IN MARVEL ENIGMA WHEREAS THE LEDGER ACCOUNT MENTIONS THE PROJECT AT MYSTIQUE AT HONAVAR AND ABNAVE AT HADAPSAR. TO SUM UP THE A.O. HAS NOT MADE ANY ENQUIRY OR VERIFICATION TO FIND OUT THE AUTHENTICITY OF PAGE NO. 116 OF THE LEDGER ACCOUNT . 8.2 A SIMILAR ISSUE AROSE IN COMMON CAUSE (A REGISTERED SOCIETY) ( S UPRA). IT RELATES TO SECTION 69A OF THE INCOME TAX ACT 1961 R.W.S. 34 OF THE INDIAN EVIDENCE ACT, 1872. THE HON'BLE SUPREME COURT REFERRING TO ITS DECISION IN C.B.I. VS. V.C.SHUKLA (1998) 3 SCC 410 HELD AS UNDER: 16. WITH RESPECT TO THE KIND OF MATERIALS WHICH HAVE BEEN PLACED ON RECORD, THIS COURT IN V.C. SHUKLAS CASE (SUPRA) HAS DEALT WITH THE MATTER THOUGH AT THE STAGE OF DISCHARGE WHEN INVESTIGATION HAD BEEN COMPLETED BUT ITA NO. 2/MUM/2015 8 SAME IS RELEVANT FOR THE PURPOSE OF DECISION OF THIS CASE ALSO. THIS COURT HAS CONSIDERED THE ENTRIES IN JAIN HAWALA DIARIES, NOTE B OOKS AND FILE CONTAINING LOOSE SHEETS OF PAPERS NOT IN THE FORM OF BOOKS OF ACCOUNTS AND HAS HELD THAT SUCH ENTRIES IN LOOSE PAPERS / SHEETS ARE IRRELEVANT AND NOT ADMISSIBLE UNDER SECTION 34 OF THE EVIDENCE ACT, AND THAT ONLY WHERE THE ENTRIES ARE IN TH E BOOKS OF ACCOUNTS REGULARLY KEPT, DEPENDING ON THE NATURE OF OCCUPATION, THAT THOSE ARE ADMISSIBLE. 17. IT HAS FURTHER BEEN LAID DOWN IN V.C. SHUKLA ( S UPRA) AS TO THE VALUE OF ENTRIES IN THE BOOKS OF ACCOUNT, THAT SUCH STATEMENT SHALL NOT ALONE BE SUF FICIENT EVIDENCE TO CHARGE ANY PERSON WITH LIABILITY, EVEN IF THEY ARE RELEVANT AND ADMISSIBLE, AND THAT THEY ARE ONLY CORROBORATIVE EVIDENCE. IT HAS BEEN HELD EVEN THEN INDEPENDENT EVIDENCE IS NECESSARY AS TO TRUSTWORTHINESS OF THOSE ENTRIES WHICH IS A R EQUIREMENT TO FASTEN THE LIABILITY. 8.3 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HON'BLE SUPREME COURT MENTIONED HERE - IN - ABOVE AT PARA 8.2, WE UPHOLD THE ORDER OF THE LD. CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 /06/2017. SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 14/06/2017 RAHUL DHOKE P.S. ITA NO. 2/MUM/2015 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI