Shri Jyotindra Nikam, Pune V. DCIT, Circle - 3, Pune

ITA 1011/PUN/2012

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7198 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 21-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO , AM AND SHRI VIKAS AWASTHY, JM . / I TA NO. 1011 /PUN/20 12 / ASSESSMENT YEAR : 2008 - 09 SHRI JYOTINDRA NIKAM, 8/997, SATSANG HOUSING SOCIETY, NAVI PETH, PUNE - 411 030. PAN : ABZPN4576C ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3, PUNE. / RESPONDENT / RESPONDENT A SSESSEE BY : SHRI ABHAY AVCHAT REVENUE BY : SHRI MUKESH JHA, JCIT / DATE OF HEARING : 11.09.2017 / DATE OF PRONOUNCEMENT : 22 .11.2017 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - II, PUNE DATED 06.01.2012 FOR THE ASSESSMENT YEAR 2008 - 09. 2 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A PRACTICING A RCHITECT. THE ASSESSEE IS ALSO A DIRECTOR IN TOMATO ARCHITECTURAL SOLUTIONS PVT. LTD. AND PARTNER IN ADITI GROUP & ADITI PROPERTIES. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR ON 31.03.2009 DECLARING HIS TOTAL INCOME AS RS.11,57,030/ - . THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY, NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED ON 24.08.2009. AS PER AIR INFORMATION RECEIVED BY THE ASSESSING OFFICER, THE ASSESSEE HAD DEPOSITED CASH TO THE TUNE OF RS.28,10,000/ - IN HIS IDBI BANK LTD, PUNE. DURING THE COURSE OF SCRUTINY ASSESSMENT P ROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF CASH DEPOSIT S . THE ASSESSEE EXPLAINED THAT AFORESAID AMOUNT IS RECEI VED AS ADVANCE FOR PURCHASING PROPERTY FROM THREE PERSONS VIZ. 1) MR. SHIVAJI MALOJI PATIL, RS. 20 LACS 2) DR. BAJIRAO N PATIL , RS. 4.5 LACS 3) MRS. MANGAL PATIL, RS. 3.5 LACS THE ASSESSEE FURNISHED CONFIRMATION LETTER FROM THE SAID PARTIES. HOWEVER, THE ASSESSING OFFICER WAS NOT CONVINCED WITH THE EXPLANATION FURNISHED BY ASSESSEE. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS FAILED TO SHOW GENUINENESS OF TRANSACTI ONS AND MADE ADDITION OF RS.28,1 0,000/ - U/S. 68 OF THE ACT IN INCOME RETURNED BY THE ASSESSEE. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31.12.2010, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE REITERATED HIS EXPLANATION GIVEN BEFORE ASSESSING OFFICER . THE COMMISSIONER OF INCOME TAX 3 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 (APPEALS) REJECTED THE CONTENTIONS OF ASSESSEE AND CONFIRMED THE ADDITION . NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING ADDITION S CONFIRMED BY COMMISSIONER OF INCOME TAX (APPEALS). 3 . SHRI ABHAY AVCHAT APPEARING ON BEHALF OF ASSESSEE CONTENDED AT THE OUTSET THAT HE IS NOT PRESSING GROUND NO. 5 RAISED IN APPEAL. THE GROUND NO. 1 AND 6 AR E GENERAL IN NATURE; T HEREFORE, GROUNDS OF APPEAL FOR EF FECTIVE ADJUDICATION BEFORE THE TRIBUNAL ARE GROUNDS NO. 2 TO 4. THE SE THREE GROUNDS PERTAIN TO SINGLE ISSUE OF ADDITION U/S. 68 OF THE ACT , RS . 28,10,000/ - . 3 .1 THE LD. AR SUBMITTED THAT ASSESSEE HA S RECEIVED ADVANCE FOR PURCHASE OF PROPERTY FROM MR. SHIVAJI MALOJI PATIL, DR. BAJIRAO N. PATIL AND MRS. MANGAL PATIL. THE ASSESSEE HAD FILED CONFIRMATION LETTERS FROM THE SAID PARTIES. THE ASSESSEE HAS ALSO FILED DETAILS OF CREDITORS BEFORE THE SAID PARTIES. THE ASSESSEE HAS ALSO FILED DETAILS OF CREDITORS BEFORE THE ASSESSING OFFICER. ONCE THE ASSESSEE HA S GIVEN DETAILS OF CREDITORS AS WELL AS CREDITWORTHINESS OF THE PARTIES, NO ADDITION U/S. 68 WAS REQUIRED TO BE MADE. 3 .2 THE LD. AR EXPLAINED THAT ASSESSEE IS WORKING AS FACILITATOR/AGENT IN VARIOUS LAND/PROPERTY DEALS ON COMMISSION BASIS. THE ASSESSEE HAD RECEIVED ADVANCE FROM AF ORESAID PERSONS FOR PURCHASING PROPERTY IN AND AROUND PUNE/ PCMC. THE ASSESSEE WAS ABLE TO LOCATE PROPERTIES AS PER THE REQUIREMENTS OF AFORESAID PERSONS . THE ASSESSEE LOCATED PROPERTY BE AR ING FLAT NO. 101 ADMEASURING 1714 SQ.FT. AT BANER FOR SHRI SHIVAJI M. PATIL. A MEMORANDUM OF UNDERSTANDING DATED 13.05.2011 TOWARDS THE PURCHASE OF PROPERTY WAS ENTERED INTO BY SHIVAJI MALOJI PATIL. SIMILARLY , FOR OTHER TWO PERSONS VIZ. DR . BAJIRAO N. PATIL AND M R S. MANGAL 4 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 PATIL , THE ASSESSEE BOOKED FLATS AT D EV EMRALD , A HOUSING PROJECT FLOATED BY M/S. N.G REALITIES. THEREFORE, NO ADDITION IS CALLED FOR. 4 . ON THE OTHER HAND, SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIO NER OF INCOME TAX (APPEALS). THE LD. DR SUBMITTED THAT ASSESSEE HAS FAILED TO PROVE GENUINENESS OF TRANSACTIONS. OUT OF THREE PERSONS FROM WHOM, THE ASSESSEE HAS RECEIVED CASH; MR. SHIVAJI MALOJI PATIL IS UNRELATED PERSON. THE OTHER TWO PERSONS VIZ. DR. BA JIRAO N. PATIL AND MRS. MANGAL PATIL ARE RELATED TO THE ASSESSEE (PARENTS). THE ASSESSEE RECEIVED RS.20 LACS FROM MR. SHIVAJI MALOJI PATIL ON 05.05.2007, RS. 4.5 LACS AND RS. 3.5 LACS FROM DR. BAJIRAO N. PATIL AND MRS. MANGAL PATIL , RESPECTIVELY ON 20.05. 2007. THE AMOUNT DEPOSITED IN SAVING ACCOUNT OF ASSESSEE IN CASH WAS UTILIZED BY ASSESSEE BY TRANSFERRING RS. 8,00,000/ - TO ONE OF HIS PARTNER SHIP FIRM M/S. ADITI GROUP ON 22.05.2007. THE SAID AMOUNT HIS PARTNER SHIP FIRM M/S. ADITI GROUP ON 22.05.2007. THE SAID AMOUNT WAS INTRODUCED AS CAPITAL IN THE FIRM. THE LD. DR FURTHER POINTED THAT THE ASSESSEE IN HIS BOOKS NEITHER IN EARLIER ASSESSMENT YEAR S N OR IN AS SESSMENT YEAR UNDER APPEAL HAS EVER SHOWN COMMISSION/ BROKERAGE INCOME EARN ED FROM SALE OF PROPERTIES. THE LD. DR POINTED THAT EVEN IF TRANSACTIONS REFERRED TO BY THE ASSESSEE IN RESPECT OF PROPERTIES ALLEGEDLY PURCHASED, ON BEHALF OF THREE ABOVE MENTIONED PERS ONS IS CONSIDERED TO BE CORRECT, I T IS DIFFICULT TO BELIEVE THAT FOR L OCATING IDEAL PROPERTIES FOR PURCHASE IN 2011 , THE ASSESSEE RECEIVED ADVANCE FOUR YEARS BACK IN 2007 AND THE SAME AMOUNT WAS LYING IN HIS SAVING ACCOUNT. THE LD. DR PRAYED FOR REJECTING SUBMISSIONS OF ASSESSEE AND UPHOLDING THE ORDER OF COMMISSIONER OF INC OME TAX (APPEALS). 5 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 5 . WE HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. THE SOLE DISPUTE IN THE PRESENT APPEAL IS WITH RESPECT TO ADDITION OF RS. 28,10,000/ - PURPORTEDLY RECEIVED AS ADV ANCE BY ASSESSEE FROM THREE DIFFERENT PARTIES FOR PURCHASING PROPERTIES IN AND AROUND PUNE/ PCMC . THE CONTENTION OF ASSESSEE IS THAT ASSESSEE ALSO ENGAGED IN SALE PURCHASE OF PROPERTY ON COMMISSION BASIS. HOWEVER , THE ASSESSEE HAS FAILED TO FURNISH ANY COG ENT EVIDENCE TO SUPPORT HIS CONTENTION. THE AUTHORITIES BELOW HAVE POINTED THAT PART OF AMOUNT RS. 8,00,000/ - RECEIVED AS ADVANCE HAS BEEN TRANSFERRED BY ASSESSEE TO ONE OF HIS PARTNER SHIP FIRM S M/S. ADITI GROUP AND THE AMOUNT HAS BEEN PURPORTEDLY INTROD UCED AS CAPITAL IN THE FIRM BY ASSESSEE. THE LD. DR FURTHER POINTED THAT DR. BAJIRAO N. PATIL AND MRS. MANGAL PATIL WHO HAVE JOINTLY CONTRIBUTED RS. 8,00,000/ - ARE PARENTS OF ASSESSEE. THE ADVANCE RECEIVED FROM PARENTS FOR PURCHASING OF PROPERTY CAN STILL BE ACCEPTED AS THERE WOULD BE NO ELEMENT OF OF PROPERTY CAN STILL BE ACCEPTED AS THERE WOULD BE NO ELEMENT OF COMMISSION IN SUCH TRANSACTION. IN SO FAR AS RS. 20,00,000/ - RECEIVED FROM MR. SHIVAJI MALOJI PATIL IS CONCERNED, THE ASSESSEE HAS FAILED TO PROVE GENUINENESS OF TRANSACTIONS. THOUGH THE LD. A R HAS POINTED THAT PROPERTY WAS PURCHASED ON BEHALF OF MR. SHIVAJI MALOJI PATIL AND REFERRED TO MEMORANDUM OF UNDERSTANDING DATED 13.05.2011. THE ASSESSEE COULD NO T SHOW GENUINENESS OF TRANSACTIONS AND ALSO COULD NOT EXPLAIN THE REASON FOR LONG TIME GAP BETWEEN DATE OF ADVANCE RECEIVED AND EXECUTION OF MEMORANDUM OF UNDERSTANDING , WHICH IS ALMOST FOUR YEARS. 6 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 6. TO PROVE GENUINENESS OF CREDITORS, TH REE THINGS ARE REQUIRED TO BE PROVED I.E I) I DENTITY OF CREDITORS ; II ) FINANCIAL C APACITY OF C REDITORS , AND III) GENUINENESS OF TRANSACTIONS. IN THE PRESENT CASE, AUTHORITIES BELOW HAVE NOT RAISED ANY DOUBT OVER IDENTITY AND CAPACITY OF CREDITORS. IT IS THE THIRD ELEMENT I.E. GENUINENESS OF TRANSACTIONS WHICH IS UNDER SHADOW OF DOUBT. THE ASSESSEE HAS FAILED TO SHOW THE GENUINENESS OF TRANSACTIONS IN RESPECT OF ADVANCE RECEIVED FROM MR. SHIVAJI MALOJI PATIL. AFTER TAKING INTO CONSIDERATION ENTIRETY OF FACTS AND DOCUMENTS ON RECORD, WE ARE OF CONSIDERED VIEW THAT THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IS WELL REASONED. HOWEVER, IN VIEW OF THE FACT THAT TWO OF THE CREDITORS ARE PARENTS OF ASSESSEE, WHO HAVE JOINTLY CONTRIBUTED RS. 8,00,000/ - , WE MODIFY THE IMPUGNE D ORDER AND CONFIRM THE ADDITION TO THE EXTENT OF RS. 20,10,000/ - . H ENCE, THE ASSESSEE GET S RELIEF OF RS. 8,00,000/ - . THUS, IN VIEW OF OUR ABOVE FINDINGS, GROUND NO. 2, 3 AND 4 RAISED IN APPEAL BY ASSESSEE ARE PARTLY ALLOWED. 2, 3 AND 4 RAISED IN APPEAL BY ASSESSEE ARE PARTLY ALLOWED. 7. GROUND NO. 5 RAISED IN APPEAL IS DISMISSED AS NOT PRESSED. THE GROUND NO. 1 AND 6 BEING GENERAL IN NATURE REQUIRES NO ADJUDICATION. 8 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRO NOUNCED ON WEDNESDAY , THE 22ND DAY OF NOVEMBER , 201 7 . SD/ - SD/ - ( . / D. KARUNAKARA RAO ) ( /VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 22 ND NOVEMBER , 2017 . SB 7 ITA NO. 1011/PUN/2012 A.Y. 2008 - 09 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS) - II, PUNE. 4. THE CIT - II, PUNE. 5 . , , , / DR, ITAT, A BENCH, PUNE. 6 . / GUARD FILE. // TRUE COPY // / BY ORDER, / PRIVATE SECRETARY , / ITAT, PUNE .