ENRICH HAIR AND SKIN SOLUTIONS PRIVATE LIMITED,MUMBAI V. ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE 14 (1) - 2, MUMBAI, MUMBAI

ITA 6331/MUM/2024

AI Insights

The case involves Enrich Hair and Skin Solutions Pvt Ltd, which appealed against the order of the Commissioner of Income-tax (Appeals) upholding the AO's addition of Rs. 47,00,000 as unexplained investment. The addition was based on alleged cash payments for a property transaction with M/s Lake View Developers, which the assessee denied. The Tribunal examined the evidence and found that the AO had not provided any corroborative evidence or allowed the assessee to cross-examine the parties involved. The Tribunal concluded that the assessee had only engaged in a rental transaction with M/s Lake View Developers, for which a security deposit was paid and subsequently refunded.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 26685 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2007-2008
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: HEMANSHU JOSHI
• Assessee Lawyers: MEHUL SHAH
• Keywords: Reassessment proceedings; Unexplained investment; Document seized; Documents seized
• Section: 148; 143(3); 250; 143(1); 69; 80G

Judgement Text

" IN THE INCOME-TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No. 6331/MUM/2024 (निर्धारण वर्ा / Assessment Year :2007-08) Enrich Hair and Skin Solutions Pvt Ltd. 301, Kamla Executive Park, Vazir Glass Work Lane, Andheri East, Maharashtra-400059 v/s. बिधम ACIT, Range 14(1)-2, Mumbai Aayakar Bhawan, M.K. Marg, Churchgate, Maharashtra-400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AABCE3307L Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri Mehul Shah रधजस्व की ओर से /Revenue by: Shri Hemanshu Joshi सुिवधई की िधरीख / Date of Hearing 29.01.2025 घोर्णध की िधरीख/Date of Pronouncement 26.03.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 07.11.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2007-08. P a g e | 2 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. 2. The assessee has raised the following grounds of appeal: “1. On the facts, and in circumstances of the case, and in law, learned Commissioner of income-tax (Appeal) erred in upholding order of the Assessing Officer in making addition of RS. 4,700,000 as unexplained investment under section 69 without bringing or providing any corroborative evidence to support the allegation and without affording any opportunity to the Appellant to cross examine the party said to have made any statement against the Appellant as well as not even allowing the Appellant to rebut the contention by not providing any information despite specific prayers from the Appellant. 2. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in not communicating the Remand Report to the Appellant that is said to be sent after a period of seven years, and unilaterally on presumption concluding that even if the Appellant had no ownership or rental premises from Lakeview Developers (belonging to Hiranandani group), \"Under the above set of facts and on the material knowledge that payment of on money in property transaction in cash is a common practice all over India, especially in Mumbai, denial of the assessee that it had no transaction with Hiranandani Group other than making a payment of Rs.4,14,000/- as security deposit in Assessment Year 2009-10, which was also got refunded in the same Assessment Year, does not remove all doubts that there was no transaction in cash with the said group.\" 3. On the facts, and in circumstances of the case, and in law, learned Commissioner of Income-tax (Appeal) erred in not adjudicating the ground on not allowing donation of donation claim by the Assessing Officer of RS. 2,000 under section 80G as was claimed while filing Return of Income without assigning any reason.” 3. Brief facts of the case are that the assessee company is engaged in beauty parlour services & retail of beauty products and filed its return declaring income of Rs. 1,20,73,770/- on 29.09.2007. The return was processed u/s 143(1) of the Act. Subsequently, a notice u/s 148 was issued on 29.03.2024 on the basis of information received from the Investigation Wing, Mumbai regarding a cash payment of Rs. 46,00,000/- by the assessee in FY 2006-07 to M/s Lake View Developers, belonging to Hiranandani Group, for the purchase of a shop at Ventura Building. The assessee denied having made any transaction for the P a g e | 3 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. purchase of shop with M/s. Lake View of Developers. Ld. AO held that in the backdrop of specific information received from the investigation wing, the onus lay upon the assessee to prove that it had not made any such transaction. Accordingly, an addition of Rs. 47,00,000/- was made vide order u/s 143(3) r.w.s. 147 of the Act dated 13.03.2015. 4. Aggrieved with the order of Ld. AO, the assessee preferred an appeal before the Ld. CIT(A). Before Ld. CIT(A), the assessee claimed that no evidence on which Ld. AO relied upon was shared with the assessee during the reassessment proceedings nor any opportunity was given to cross-examine the concerned persons based on whose statements the impugned addition was made. It was further submitted that there had only been a transaction with the M/s. Lake View Developers in AY 2009-10 for taking a shop on a rental basis in the said Ventura Building for which a sum of Rs. 4,14,000/- was paid vide a cheque dated 20.04.2008 towards security deposits. However, the said amount was subsequently refunded on 23.01.2009 as the transaction did not materialise. A remand report was sought by Ld. CIT(A) from the AO on the submissions made by the assessee along with copies of bank statements evidencing the above two transactions. However, no remand report was received and the appeal was migrated to the NFAC in the meantime. Subsequently, vide letter dated 18.07.2024, a remand report was received wherein the Ld. AO merely stated that the assessee has not submitted any fresh P a g e | 4 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. documents on which the remand report can be sent. Accordingly, Ld. CIT(A), on the basis of information gathered from open sources, noted that the assessee had a beauty saloon running in Haiko Mall at Powai, developed by the Hiranandani Group, adjacent to the Ventura Building. Since no reply from the assessee was received to the specific queries, Ld. CIT(A) dismissed the appeal. 5. Aggrieved with the order of Ld. CIT(A), the assessee has filed an appeal before the Tribunal. Before us, Ld. AR has submitted that the Ld. AO had no evidence on record with regard to the purchase of any flat except a third-party statement. Even that statement was not made available to the assessee nor a cross-examination was allowed. The Ld. AR further pointed out that the assessee company is in the business of running beauty parlours for which the premises are taken on rental basis and therefore there is no question of the assessee entering into any transaction for the purchase of a property with M/s. Lake View Developers. There was only an agreement to take a premises on rent during AY 2009-10 for which a security deposit of Rs. 4,14,000/- was given by cheque on 20.04.2008. Since the transaction did not materialise, the security deposit was also returned back by M/s. Lake View Developers on 23.01.2009. Ld. AR has also filed a copy of the confirmation of M/s. Lake View Developers in this regard. 6. Ld. DR, on the other hand, has strongly relied on the orders of the lower authorities and held that the case was reopened on the basis of specific P a g e | 5 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. information received from Investigation Wing, Mumbai regarding payment of on-money to the tune of Rs. 47,00,000/- by the assessee to M/s. Lake View Developers during the year under consideration, and therefore the order of Ld. AO deserves to be upheld. 7. We have heard the rival submissions and considered the material placed before us. A perusal of the assessment order shows that the assessee was asked to explain the sources of cash payment amounting to Rs. 47,00,000/- during the year under consideration, on the basis of information received from the Investigation Wing, Mumbai. No documentary evidence or copy of the statement relied upon has been supplied to the assessee nor any such details are noted in the assessment order. The addition has been made with the following observations: “4.4 It is a settled position that the onus lay upon the assessee to prove that it has not made any transaction with M/s. Lakeview Developers. However, this onus has not been discharged by the assessee. Here it is pertinent to note that the Courts have held that if the investigation done by the department leads to some information with regard to transaction, it is incumbent on the assessee to produce the parties alongwith necessary documents in order to prove its contention, in the instant case, there is uncontroverted evidence regarding the purchase of flat by the assessee from M/s. Lakeview Developers (Hiranandani Group).” 8. Subsequently, during the course of appellate proceedings, Ld. CIT(A) sought a remand report from the Ld. AO. However, in the remand report received on 18.07.2021, the main issue was not addressed. Therefore, Ld. CIT(A) upheld the addition made by the Ld. AO with the following observations: P a g e | 6 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. “3.7 Under the circumstances, the following facts of the case have come into knowledge:- (i) That there is evidential proof of payment of cash of Rs.47,00,000/- by the assessee to the Hiranandani Group. (ii) The assessee has denied of making of such payment (iii) Although the assessee does not have any property either on ownership or on lease basis in the Ventura Building, but there is sufficient proof that the assessee has a property either on ownership or on lease basis at Haiko Mall, Powal, which was developed by the Hiranandani Group and inaugurated in 1999. The Ventura Building was opened in the year 2005. There is no doubt therefore that the assessee has transaction in property with the Hiranandani Group. 3.8 Under the above set of facts and on the material knowledge that payment of on money in property transaction in cash is a common practice all over India, especially in Mumbai, denial of the assessee that it had no transaction with Hiranandani Group other than making a payment of Rs.4,14,000/- as security deposit in Assessment Year 2009-10, which was also got refunded in the same Assessment Year; does not remove all doubts that there was no transaction in cash with the said group. 3.9 The complete silence on part on its transaction with Hiranandani Group in spite of its occupation at Haiko Mall in Mumbai raises reasonable doubts that the seized documents as found during the search at the place of Hiranandani Group in respect of the cash payment by the assessee for Rs.47,000/- is a fact.” 9. It is thus clear that no documentary evidence regarding the payment made by the assessee for the purchase of any property from M/s. Lake View Developers has been brought on record by the Ld. AO. On the other hand, the assessee has been able to demonstrate that the only transaction with M/s. Lake View Developers was for taking a shop on rent for which a security deposit was paid and received back vide cheque of Rs. 4,14,000/-, that too in FY 2008-09. Accordingly, we are of the opinion that there was no material based on which Ld. AO could have made the addition of Rs. 47,00,000/- for cash payment made by the assessee to M/s. Lake View Developers in FY 2006-07. As no such document and/or statement of a third party has been mentioned in the assessment order or in the remand report submitted by the Ld. AO, we, P a g e | 7 ITA No. 6331/Mum/2024 A.Y. 2007-08. Enrich Hair and Skin Solutions Pvt. Ltd. therefore, hold that there was no justification for making the addition of Rs. 47,00,000/- as unexplained investment u/s 69 of the Act in the hands of the assessee. The addition is, therefore, directed to be deleted. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 26.03.2025. Sd/- Sd/- KAVITHA RAJAGOPAL RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 26.03.2025 अननक ेत स ुंह र जपूत/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. "