Appeal Details
Counselvise Citation
[2015] 120 COUNSELVISE.COM (IT) 9165 (ITAT-MUMBAI)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
4 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-03-2015
Appeal Filed By
Assessee
Order Result
Dismissed
Bench Allotted
I
Next Hearing Date
17-03-2015
Assessment Year
2007-2008
Appeal Filed On
07-02-2011
Judgement Text
, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ITA NO.1125/MUM/2011 ASSESSMENT YEAR: 2007-08 M/S A.R. DEVELOPERS, C/O. V.A. AMBEKAR & ASSOCIATES, CHARTERED ACCOUNTANTS, G-4, ANDHERI LAXMI SOCIETY J.B. NAGAR, ANDHERI (EAST), MUMBAI-400059 / VS. THE INCOME TAX OFFICER 20(1)-4, MUMBAI ( #$%& ' /ASSESSEE) ( / REVENUE) P.A. NO. AAOFA5716H #$%& ' / ASSESSEE BY): SHRI K.R. LAXMINARAYANAN / REVENUE BY SHRI ASGHAR JAIN V.P. -DR ( # ) ' * / DATE OF HEARING : 23/03/2015 +, ) ' * / DATE OF PRONOUNCEMENT : 25/03/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 03/11/2010 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. BROADLY IN CONFIRMING THE ADDITION OF RS.3.60 CRORE S BEING M/S A.R. DEVELOPERS , 2 UNEXPLAINED EXPENDITURE U/S 69C OF THE INCOME TAX A CT, 1961 (HEREINAFTER THE ACT) ON THE GROUND THAT THE ALLEGE D PAYMENTS WERE MADE IN CASH OUT OF UNDISCLOSED SOURCES AS ON THE DATE OF EXECUTION OF THE MEMORANDUM OF UNDERSTANDING (HEREINAFTER MOU) ON 02/09/2006 ENTERED INTO BETWEE N THE ASSESSEE AND THE OWNER OF THE PROPERTY. 2. DURING HEARING OF THE APPEAL, THE LD. COUNSEL FO R THE ASSESSEE, SHRI AJAY R. SINGH, ADVANCED HIS ARGUMENT S WHICH ARE IDENTICAL TO THE GROUND RAISED BY FURTHER SUBMI TTING THAT ORIGINALLY ADDITION OF RS.6.10 CRORE WAS MADE BY TH E ASSESSING OFFICER OUT OF WHICH THE RELIEF OF RS.2.50 CRORES W AS GRANTED BY THE LD. FIRST APPELLATE AUTHORITY. THE LD. COUNSEL EXPLAINED THE FACTS BY INVITING OUR ATTENTION TO THE STATEMEN T OF FACTS AND COPY OF THE MOU ENTERED ON 02/09/2006. IT WAS ASSERTED THAT RS.3.60 CRORES WAS TO BE PAID TO THE SISTER TO WITHDRAW THE CASES AND FURTHER OZONE ALSO FILED SUIT IN THE COURT AS ANOTHER DEVELOPMENT AGREEMENT WAS ENTERED WITH IT I N 2010. THE AMOUNT WAS CLAIMED TO BE DEPOSITED IN ESCREW AC COUNT. ON THE OTHER HAND, THE LD. SR. DR, SHRI PREMANAND J . STRONGLY DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER BY CONTENDING THAT FIRSTLY THE ASSESSEE DID NOT FILE T HE NECESSARY DETAILS, THEREFORE THE ASSESSING OFFICER WAS FORCED TO PASS THE ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. FURTHER, WHEREVER, APPLICABLE, THE LD. COMMISSIONER OF INCOM E TAX (APPEALS) GRANTED RELIEF TO THE ASSESSEE. IT WAS A LSO EXPLAINED THAT REMAND REPORT WAS SOUGHT BY THE LD. COMMISSION ER FROM THE ASSESSING OFFICER WITH COUNTER REPLY FROM THE A SSESSEE. OUR ATTENTION WAS INVITED TO PARA 2.3.3 OF THE IMPU GNED ORDER. M/S A.R. DEVELOPERS , 3 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. BEFORE COMING TO ANY CONCLUSION, WE ARE REPRODUCING HEREUNDER THE FACTUA L FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APP EALS) FOR READY REFERENCE AND ITS ANALYSIS. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORDER, SUBMISSIONS AND ARGUMENTS OF THE AR. I HAVE ALSO G ONE THROUGH THE DETAILS INCLUDING THE ADDITIONAL EVIDENCES FILE D BY THE AR AND THE REMAND REPORT OF THE AO. AS PER THE FACTS BROUGHT ON RECORD, THE APPELLANT HAS ENTERED INTO AN MOU WITH SHRI DHARMENDRA SINGH CHAUDHARY FOR THE DEVELOPMENT OF P ROPERTY BEARING SURVEY NO.9, HISSA NO.1 AND CTS NOS. 864, 8 64/1 & 864/2 ADMEASURING 2,570 SQ. MTS. OR THEREABOUTS AT JUHU VILLAGE, SITUATED AT JUHU TARAROAD, JUHU, MUMBAI. T HE SAID PROPERTY WAS OWNED BY SHRI DHARMENDRA SINGH CHAUDHA RY ON EXECUTION OF THE WILL DATED 18.11.1996 OF LATE SHRI C.R. MISTRY WHO DIED INTESTATE ON 14.12.1996. HOWEVER, THE PROP ERTY WAS UNDER DISPUTE AND SHRI DHARMENDRA SINGH CHAUDHARY H AD NO FINANCIAL RESOURCES TO DEVELOP THE SAID PROPERTY. A CCORDINGLY, SHRI DHARMENDRA SINGH CHAUDHARY HAD ENTERED INTO AN MOD WITH THE APPELLANT FIRM TO DEVELOP THE PROPERTY VID E MOD DATED 02.09.2006; WHEREBY, AS DISCUSSED ABOVE ON PAYMENT OF RS.3.60 CRORES TO MRS. LILABEN D. KHATHRECHA, SISTE R OF LATE C.R. MISTRY AND SETTLEMENT OF PENDING COURT DISPUTES AND FURTHER OBTAINING CLEAR AND MARKETABLE TITLE TO THE SAID PR OPERTY BY HIM UPON PAYMENT OF RS.2.50 CRORES BY THE APPELLANT; TH E APPELLANT WOULD DEVELOPED A PROPERTY TOGETHER WITH SHRI DHARM ENDRA SINGH CHAUDHARY ON EQUAL PROFIT-SHARING BASIS. IT W AS ALSO AGREED THAT THE APPELLANT WOULD PAY A SUM OF RS.3 . 60 CRORES WHICH WOULD BE DEPOSITED IN A ESCROW ACCOUNT TO BE JOINTLY MAINTAINED BY THE ADVOCATES OF THE PARTIES INVOLVED (I.E. M/S MEHTA & CO., ADVOCATES FOR THE OWNER AND M/S HARISH RAJPUT, M/S A.R. DEVELOPERS , 4 ADVOCATE FOR MRS. LILABEN D. KHATHRECHA) BEFORE THE PAYMENTS ARE FINALLY MADE TO MRS. LILABEN D. KHATHRECHA UPON FILING OF THE CONSENT TERMS TO WITHDRAW HER CLAIM ON THE PROPERTY BEFORE THE HON'BLE CITY CIVIL COURT AT AHMEDABAD AND BEFORE TH E HON'BLE BOMBAY HIGH COURT. MUMBAI. HOWEVER, IMMEDIATELY AFT ER THE EXECUTION OF THE MOD IT HAS COME TO THE LIGHT THAT MRS. LILABEN D. KHATHRECHA HAS ALREADY ENTERED INTO AN AGREEMENT FO R THE SALE OF HER SHARE OF THE PROPERTY TO MIS OZONE FINANCE & INVESTMENT PVT. LTD. VIDE AGREEMENT DATED 10.07.2002 AND VIDE ANOTHER AGREEMENT DATED 07.06.2006 SHE HAS ALREADY RECEIVED A SUM OF RS.50 LAKHS FROM 'OZONE'. ACCORDINGLY, ON ACCOUNT O F THESE CHANGED CIRCUMSTANCES A NEW OR SUPPLEMENTARY AGREEM ENT OR MOD DATED 14.09.2006 WAS EXECUTED; WHEREBY, AS DISC USSED ABOVE THE APPELLANT WAS TO MAKE PAYMENT OF RS.2.25 CRORES INSTEAD OF RS.3.60 CRORES AGREED VIDE ORIGINAL MOD DIRECTLY TO MRS. LILABEN D. KHATHRECHA AS FULL AND FINAL SETTLE MENT AMOUNT ON FILING OF THE CONSENT TERMS BEFORE THE HON'BLE C OURTS AT AHMEDABAD AND MUMBAI. IT WAS ALSO AGREED THAT A SUM OF RS.2.50 CRORES MENTIONED OF THE ORIGINAL AGREEMENT PAYABLE TO THE OWNER I.E. TO SHRI DHARMENDRA SINGH CHAUDHARY W OULD BE PAID BY THE APPELLANT IN SUITABLE INSTALLMENTS AS A ND WHEN THE NEED ARISES AFTER THE SETTLEMENT WITH 'OZONE', THES E NEW FACTS BROUGHT ON RECORD BY THE AR IN APPEAL I.E. THE FILI NG AND EXISTENCE OF THE SUPPLEMENTARY AGREEMENT IS NOT DIS PUTED BY THE AO IN REMAND. HOWEVER, ACCORDING TO THE AO AS PER T HE ORIGINAL MOD THE APPELLANT HAS PAID A SUM OF RS.3.60 CRORES TO BE KEPT IN THE ESCROW ACCOUNT TO BE MAINTAINED BY THEIR RES PECTIVE ADVOCATES BUT THE ENTIRE SUCH PAYMENT MADE IS NOT D ISCLOSED IN THE BOOKS OF ACCOUNT AND BALANCE SHEET OF THE APPEL LANT. IN THIS REGARD, IT WAS SUBMITTED THAT THE PAYMENTS MADE TO THE ADVOCATES ARE APPEARING IN THE BALANCE SHEET BUT TH E PAYMENT MADE TO SHRI DHARMENDRA SINGH CHAUDHARY IS NOT APPE ARING IN THE BALANCE SHEET. BESIDES, AS NOTED ABOVE THE AO I N REMAND HAS SUBMITTED THAT THE BANK STATEMENT FILED DURING THE COURSE OF M/S A.R. DEVELOPERS , 5 ASSESSMENT PROCEEDINGS SHOWS THAT THE ENTIRE PAYMEN TS ARE MADE DIRECTLY TO MRS. LILABEN D. KHATHRECHA AND NOT THROUGH THE ESCROW ACCOUNT AS CLAIMED IN THE MOU. HOWEVER, NO S UCH PAYMENTS MADE TO MRS. LILABEN D. KHATHRECHA ARE SHO WN IN THE BALANCE SHEET OF THE APPELLANT. ACCORDINGLY, IN VIE W OF THE ABOVE, THE AO HAS JUSTIFIED HIS ACTION OF MAKING THE ADDIT ION OF RS.6.60 CRORES IN HIS REMAND REPORT DISCUSSED ABOVE. 2.3.1. WITH THIS BACKGROUND AND FURTHER DULY TAKEN INTO CONSIDERATION THE SUBMISSIONS OF THE AR JUSTIFYING THE FILING OF THE ADDITIONAL EVIDENCES AS DISCUSSED ABOVE PARTICULARL Y ON ACCOUNT OF THE NATURE OF THE ADDITIONAL EVIDENCES FILED AS WEL L AS DULY TAKING INTO CONSIDERATION THE SUBMISSION MADE BY THE AR RE SPONDING TO THE PARA-2 OF THE REMAND REPORT AS DISCUSSED ABOVE (PARA 2.3.5 OF THIS ORDER), I FIND THAT THE APPELLANT HAS SUFFICIE NT AND REASONABLE CAUSE FOR NOT BEING ABLE TO FILE THESE ADDITIONAL E VIDENCES BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE AR HAS ELABORATELY DISCUSSED THE FAILURE ON THE PART OF TH E APPELLANT TO COMPLY WITH THE FINAL SHOW CAUSE NOTICE ISSUED ON 2 3.12.2009. THEREFORE, IN VIEW OF THE SAME, THE ADDITIONAL EVID ENCES FILED FOR THE FIRST TIME ARE ADMITTED DULY TAKING INTO CONSID ERATION THE PROVISIONS OF RULE 46A OF IT RULES, 1962. ACCORDING LY, THESE ADDITIONAL EVIDENCES FILED BY THE APPELLANT IN APPE AL ARE TAKEN INTO CONSIDERATION WHILE DECIDING THE VARIOUS GROUNDS RA ISED BY THE APPELLANT IN THE SUBSEQUENT PARAGRAPHS OF THIS ORDE R. 2.3.2. FROM THE ABOVE DISCUSSION, IT IS APPARENT TH AT THE ADDITION MADE BY THE AO IS ON ACCOUNT OF TWO COUNTS I.E. PAY MENT OF RS.3.60 CRORES MADE FOR ITS PAYMENT TO MRS. LILABEN D. KHATHRECHA AGAINST THE FILING OF CONSENT TERMS BEFORE THE COUR TS WITHDRAWING HER CLAIM ON THE PROPERTY, AND FURTHER RS.2.50 CROR ES TO BE PAID TO SHRI DHARMENDRA SINGH CHAUDHARY TO CLEAR/PAY OFF AL L THESE CLAIMS SO AT THE TITLE TO THE SAID PROPERTY BECOMES CLEAR AND MARKETABLE ON THE EXECUTION OF SAID DEVELOPMENT AGR EEMENT, BY THE M/S A.R. DEVELOPERS , 6 APPELLANT. IN THIS REGARD, THE AO HAS INFERRED THAT THE APPELLANT HAS ALREADY PAID THESE AMOUNTS OUT OF ITS UNDISCLOS ED SOURCES AS A RESULT OF THE ORIGINAL MOU EXECUTED ON 02.09.2006 A S THE RELEVANT PROVISION MADE ARE NOT DISCLOSED OR SHOWN IN ITS BA LANCE SHEET DATED 31.03.2007. THEREFORE, TO UNDERSTAND THE ISSU E IN ITS PROPER PERSPECTIVE, I FIND IT IMPERATIVE TO GO THROUGH THE RELEVANT PROVISIONS OF THE ORIGINAL MOU DATED 02.09.2006; WH ICH, READ AS UNDER: ' THE DEVELOPER HAS AGREED TO ADVANCE MONEYS TO THE OWNER TO ARRIVE AT THE SETTLEMENT REFERRED TO HEREINABOVE AN D OBTAIN CLEAR AND MARKETABLE TITLE TO THE SAID PROPERTY. FOR THIS PURPOSE THE DEVELOPERS HAVE ON SIGNING OF THIS MOU DEPOSITED A SUM OF RS.3,60,OO,OOO/- (RUPEES THREE CRORES SIXTY LACS ON LY) WITH THE OWNER WHICH IS TO BE HELD IN ESCROW JOINTLY WITH MI S. MEHTA & CO. ADVOCATES FOR THE OWNER AND MR. HARISH RAJPUT ADVOC ATE FOR MS. LILABEN D. KATHRECHA. THE OWNER SHALL PAY TO THE SA ID MS. LILABEN D. KATHRECHA THE SAID AMOUNT SIMULTANEOUS WITH CONS ENT TERMS BEING FILED BOTH IN THE CITY CIVIL COURT AT AHMEDAB AD AND THE MUMBAI HIGH COURT IN THE AFORESAID PENDING LITIGATI ONS. AS SOON AS OWNER GETS CLEARANCE FORM COURTS AND OBT AIN PROBATE IN THE AFORESAID OPROBATE PETITION FROM MUMBAI HIGH CO URT, THE PARTIES SHALL SIGN AND EXECUTE THE DEVELOPMENT AGRE EMENT, INTERALIA, RECORDING THE TERMS AND CONDITIONS FOR J OINT DEVELOPMENT OF THE SAID PROPERTY WHEREIN THE OWNER SHALL HAVE 5 0% SHARE AND THE DEVELOPERS SHALL HAVE 50% SHARE. THE OWNER HAS INFORMED THE DEVELOPERS THAT THERE AR E CERTAIN OUTSTANDING CLAIMS AGAINST THE SAID PROPERTY AS DIS CLOSED TO THE DEVELOPERS AGGREGATING TO RS.2.5 CRORES TO CLEAR/PA Y OFF ALL THESE CLAIMS SO THAT THE TITLE TO THE SAID PROPERTY BECOM ES CLEAR AND MARKETABLE, ON EXECUTION OF THE SAID DEVELOPMENT AG REEMENT BY AND BETWEEN THE OWNER AND DEVELOPERS. IT IS AGREED THAT OUT OF THE SAID SUM OF RS.2.5 CRORES, ONLY A SUM OF RS.L.5 CRO RE SHALL BE CONSIDERED AS PROJECT COST AND THE OWNER SHALL BE L IABLE TO REPAY TO THE DEVELOPERS THE BALANCE SUM OF RS.L CRORE WITHOU T INTEREST.' M/S A.R. DEVELOPERS , 7 2.3.3. FROM THE ABOVE, IT IS EVIDENT THAT THE APPEL LANT HAS PAID A SUM OF RS.3.60 CRORES UPON THE EXECUTION OF THE MOU DATED 02.09.2006 AS IT IS CLEARLY MENTIONED THAT THE DEVE LOPERS I.E. THE APPELLANT ON SIGNING OF THE MOU HAS DEPOSITED A SUM OF RS.3,60,00,0001-WITH THE OWNER I.E. SHRI DHARMENDRA SINGH CHAUDHARY, WHICH IS TO DENIED BY THE AR, EXCEPT SUB MITTING THAT THE MOU IS ERRONEOUSLY DRAFTED WHEREBY, THE WORDS ' DEPOSITED' SHOULD HAVE BEEN DRAFTED AS ' SHALL BE DEPOSITED'. THIS ARGUMENT OR SUBMISSION OF THE AR TO MY CONSIDERATION PAID IS FALLACIOUS. ON PERUSAL THE RELEVANT DOCUMENT I.E. THE MOU IT TRANS PIRES THAT CLAUSE-2 REPRODUCED CONTAINING THE .SAID COVENANT I S THE MOST VITAL PART OF THE MOU WHICH IS DRAFTED THROUGH THE ASSIST ANCE OF SENIOR ADVOCATES REPRESENTING THE CASE AND INTERESTS OF TH E APPELLANT, THE OWNER I.E. SHRI DHARMENDRA SINGH CHAUDHARY AS WELL AS MRS. LILABEN D. KHATHRECHA. THE APPELLANT ADMITTEDLY HAS PAID A HUGE AMOUNT OF CONSULTANCY CHARGES ON THIS ACCOUNT TO TH E CONCERNED ADVOCATES AS RS.5,00,0001- TO M/S MEHTA & CO. THE A DVANCE CONSULTANCY FEES PAID TO THIS EXTENT IS DULY DISCLO SED IN THE BALANCE SHEET OF THE APPELLANT DATED 31.03.2007. THE FINAL BILL AMOUNT SETTLED IN THE FOLLOWING YEAR IS NOT BROUGHT ON REC ORD EITHER BY THE AO OR BY THE AR. THEREFORE, IT IS EVIDENT THAT THE SAME MAY BE MORE THAN THE ADVANCES GIVEN TO THE CONCERNED ADVOCATES. THE SUBMISSIONS OF THE AR THAT THE FACTS REGARDING THE EXECUTION OF THE AGREEMENT PERTAINING TO 1/2 SHARE BY MRS. LILABEN D . KHATHRECHA AND THE RECEIPT OF ADVANCE PAYMENT OF RS.50 LAKHS B Y HER AS ON THE DATE OF ORIGINAL MOD ARE TO MY CONSIDERED OPINI ON IS NOT ACCEPTABLE BECAUSE OF THE SIMPLE REASON THAT WITHOU T KNOWING THOSE FACTS OR WITHOUT INVOLVING MRS. LILABEN D. KH ATHRECHA EITHER IN PERSON OR THROUGH HER REPRESENTATIVE, ON WHAT BA SIS THE PARTIES INVOLVED IN THE ORIGINAL MOD HAVE ARRIVED AT A FIGU RE OF RS.3 .60 CRORES TO BE PAID TO MRS. LILABEN D. KHATHRECHA UPO N HER FILING OF CONSENT TERMS BEFORE THE HON'BLE COURTS. THEREFORE, DULY TAKING INTO CONSIDERATION ALL' THESE FACTS AVAILABLE ON RECORD, THE SUBMISSIONS OF THE AR THAT THE CATEGORICAL WORD USED IN THE MOD DATED M/S A.R. DEVELOPERS , 8 02.09.2006 CANNOT BE SIMPLY BRUSHED ASIDE ON THE GR OUND THAT IT HAS OCCURRED DUE TO AN ERRONEOUS DRAFTING OF THE AG REEMENT. BESIDES, I ALSO FIND NO SUCH MENTION IN THE SUPPLEM ENTARY AGREEMENT OR MOD DATED 14.09.2006 HAVING ANY CLAUSE THEREIN TO CONFIRM THAT THE ORIGINAL MOD DATED 02.09.2006 WAS WRONGLY OR ERRONEOUSLY DRAFTED. MOREOVER, THE SUPPLEMENTARY AG REEMENT CONFIRMS VIDE CLAUSE 9 THAT 'SAVE AS PROVIDED HEREI NABOVE, THE ABOVE CITED MEMORANDUM OF UNDERSTANDING DATED 2ND S EPTEMBER 2006, SHALL REMAIN IN FORCE, VALID, SUBSISTING AND BINDING BETWEEN THE PARTIES HERETO.' THEREFORE, IN VIEW OF THE ABOV E TO MY CONSIDERED OPINION THE ENTIRE SET OF ARGUMENTS AND SUBMISSIONS MADE BY THE AR IS AN AFTERTHOUGHT. FURTHER, THE CON FIRMATIONS OF THE PARTIES INCLUDING THE ADVOCATES BEING THE INTER ESTED PARTIES (DUE TO .!HE HUGE AMOUNT OF CONSULTANCY FEES CHARGE D AND PAID) I FIND THAT THE SELF-SERVING CONFIRMATIONS CANNOT BE TAKEN ON ITS FACE VALUE. IT IS ALSO A FACT THAT THE APPELLANT DID NOT PRODUCE THESE VITAL PIECES OF EVIDENCES BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE SAME BEING SELF GENER ATED EVIDENCES FROM THE INTERESTED PARTIES ARE NOT TAKEN INTO CON SIDERATION, AND THEREFORE, THE SAME IS REJECTED. THE AR OF THE APPE LLANT HAS NO DETAILS AND EXPLANATION OF THE SOURCE OF AMOUNT PAI D TO SHRI DHARMENDRA SINGH CHAUDHARY AS ON T E ATE OF SIGNING OR EXECUTION OF THE ORIGINAL MOU DATED 02.09.2006 NOR SUCH ENTRI ES EXPLAINING THE SAME ARE FOUND RECORDED IN THE BOOKS OF ACCOUNT OF THE APPELLANT. THEREFORE, IN VIEW OF THE SAME AND PARTI CULARLY IN VIEW OF THE FACT THAT NO SUCH TRANSACTIONS ARE RECORDED IN THE BOOKS OF ACCOUNT OF THE APPELLANT, I FIND THAT THE AO IS FUL LY JUSTIFIED IN CONSIDERING THAT THE ENTIRE SUCH PAYMENTS ARE MADE IN CASH OUT OF ITS UNDISCLOSED SOURCES AS ON THE DATE OF EXECUTION OF THE MOU DATED 02.09.2006. THEREFORE, IN VIEW OF THE AFORE SAID DISCUSSION, THE ENTIRE ADDITION MADE ON ACCOUNT OF UNDISCLOSED INCOME TO THE EXTENT OF RS. 3.60 CRORES IS CONFIRMED. M/S A.R. DEVELOPERS , 9 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORDE R, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSELS, IF KEPT IN JUXTAPOSITION AND ANALYZED, WE NOTE THAT THE ASSESS EE, A PARTNERSHIP FIRM, IS ENGAGED IN THE BUSINESS OF BUI LDER AND DEVELOPER AT THE RELEVANT TIME. THE ASSESSEE ENTER ED INTO A MOU ON 02/09/2006 WITH ONE SHRI DHARMENDRA CHAUDHARY, WHEREBY, ONE SHRI, C.R.MISTRY WAS OWNING A PIECE OF LAND (SURVEY NO.9 HISSA NO.-CTS NOS.864,86 4/1 AND 864/2) MEASURING 2570 SQ. MT., SITUATED AT JUHU TARA ROAD, JUHU ALONGWITH STRUCTURE THEREUPON. SHRI C.R.MISTRY DIED ON 14/12/1996 LEAVING BEHIND HIS LA ST WILL AND TESTAMENT DATED 18/11/1996, APPOINTING SHRI DHARMENDRA S. CHAUDHARY AS THE SOUL EXECUTOR AND AL SO OWNERSHIP OF THE PROPERTY MEASURING 1350 SQ. MT., B EING PORTION OF THE LARGER PIECE OF LAND. SHRI DHARMENDR A S. CHAUDHARY, ON THE BASIS OF AFORESAID WILL FILED A P ETITION FOR PROBATE OF THE WILL, VIDE PETITION NO.509 OF 1998 BEFORE THE HONBLE HIGH COURT OF BOMBAY. THE SISTER OF LATE C .R. MISTRY NAMELY MS. LILABEN D.KATHRECHA, CONTESTED TH E PETITION, CONSEQUENTLY, THE SAID PETITION WAS CONVE RTED INTO SUIT NO.83 OF 1998, WHICH IS STILL PENDING. SHE AL SO FILED A PETITION IN THE CITY CIVIL COURT AT AHMEDABAD (CMA NO.823 OF 1997) FOR OBTAINING SUCCESSION CERTIFICATE WHICH WAS GRANTED TO HER ON 30/06/1988, WHICH WAS SUBSEQUENTL Y CONVERTED INTO LETTER OF ADMINISTRATION BY THE SAID COURT FOR OBTAINING SUCCESSION CERTIFICATE. THE OWNER FILED H IS OBJECTION THERETO VIDE CIVIL MISCELLANEOUS APPLICAT ION M/S A.R. DEVELOPERS , 10 NO.125 OF 1999 AND THAT PROCEEDING WAS ALSO PENDING IN THE COURT. SHRI DHARMENDRA S. CHAUDHARY (OWNER) INFORM ED THE DEVELOPER THAT HE IS IN A POSITION TO SETTLE TH E PENDING COURT DISPUTES AND TO OBTAIN THE CLEAR MARKETABLE T ITLE OF THE PROPERTY, CONSEQUENTLY, HE ENTERED INTO AN MOU WITH THE ASSESSEE ON SPECIFIC TERMS AND CONDITIONS TO CA RRY OUT THE DEVELOPMENT OF THE PROPERTY ON 02/09/2006. THE MOU HAS BEEN REPRODUCED IN THE ASSESSMENT ORDER AND ALS O AVAILABLE IN THE PAPER BOOK. THE TOTALITY OF FACTS CLEARLY INDICATES THAT ON EXECUTION OF MOU DATED 02/09/2006 , THE ASSESSEE PAID RS.3.60 CRORES TO SHRI DHARMENDRA SIN GH CHAUDHARY, TO BE HELD IN ESCROW ACCOUNT JOINTLY WIT H M/S MEHTA COMPANY, ADVOCATES FOR THE OWNER AND THE M/S HARISH RAJPUT, ADVOCATES FOR MS. LEELABEN KHATRECHA . THE MOU WAS DULY SIGNED IN THE PRESENCE OF WITNESS ON 02/09/2006 BY BOTH THE PARTIES I.E. THE ASSESSEE AN D SHRI D.S. CHAUDHARY. BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) AS WELL AS BEFORE THIS TRIBUNAL, THE STAN D OF THE ASSESSEE IS THAT THE MOU WAS ERRONEOUSLY DRAFTED AN D THE AMOUNT SHOULD HAVE BEEN MENTIONED AS SHALL BE DEPO SITED IN PLACE OF THE WORD DEPOSITED. THERE IS UNCONTRO VERTED FINDING IN THE IMPUGNED ORDER THAT THE ASSESSEE HAS ADMITTED TO HAVE PAID HUGE CONSULTANCY CHARGES TO T HE CONCERNED ADVOCATES AND SUCH CHARGES WERE DULY DISC LOSED IN THE BALANCE SHEET OF THE ASSESSEE. THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS FURTHER FOR TIFIED BY THE FACT THAT IN THE SUPPLEMENTARY AGREEMENT OR MOU DATED 14/09/2006, THERE IS NO MENTION THAT THE EARLIER MO U WAS ERRONEOUSLY DRAFTED, RATHER THE NEW MOU VIDE CLAUSE -9 M/S A.R. DEVELOPERS , 11 CONFIRMS THAT SAVE AS PROVIDED HEREINABOVE, THE ABOVE CITED MOU DATED 02/09/2006, SHALL REMAIN IN FORCE, VALID, SUBSISTING AND BINDING BETWEEN THE PARTIES HERETO. IN VIEW OF THESE UNDISPUTED FACTS, THE CLAIM OF T HE ASSESSEE SEEMS TO BE AN AFTERTHOUGHT. THE SOURCE O F AMOUNT PAID TO SHRI D.S.CHAUDHARY, ON THE DATE OF S IGNING ARE EXECUTION OF ORIGINAL MOU WAS NEVER EXPLAINED, THUS, IT WAS ALSO NOT FOUND RECORDED IN THE BOOKS OF THE ASS ESSEE, CONSEQUENTLY, THE AMOUNT WAS RIGHTLY TREATED ON ACC OUNT OF UNDISCLOSED SOURCES/INCOME TO THE EXTENT OF RS.3.60 CRORES. IT IS ALSO NOTED WHEREVER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FOUND THAT CLAIM TO BE JUSTIFIED AS M ENTIONED IN PARA 2.3.4 (PAGE-15 OF THE IMPUGNED ORDER), HE D ELETED THE ADDITION. SO FAR AS RELIANCE CASES RELIED UPON BY THE ASSESSEE IS CONCERNED THE FACTS ARE DIFFERENT. THE HONBLE DELHI HIGH COURT IN LUBTEC INDIA LTD. (311 ITR 175) REACHED TO A CONCLUSION WHEN IT WAS FOUND THAT THER E WAS NO EVIDENCE OF EXPENDITURE, CONSEQUENTLY, THE AMOUN T WAS NOT TO BE ADDED TO THE INCOME U/S 69C OF THE ACT. IT IS NOT THE CASE THAT A MECHANICAL ORDER OR IN HASTE HAS BE EN PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS), RATHER IT IS BASED ON PROPER APPRECIATION OF FACTS AND THE CIRCUMSTANCES AT THE RELEVANT POINT OF TIME, THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE LD. COMMIS SIONER OF INCOME TAX (APPEALS). IT IS AFFIRMED. FINALLY THE APPEAL OF THE ASSESSEE IS DISMISSED. M/S A.R. DEVELOPERS , 12 THIS ORDER WAS PRONOUNCED IN THE OPEN COURT ON 25/03/2015. - ) +, . #/ 25 /0 3 /2015 ) 4 SD/ - (D. KARUNAKARA RAO) SD/ - (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( MUMBAI; . # DATED :25/03/2015 F{X~{T? P.S/. #.. %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. 6789 / THE APPELLANT 2. :;89 / THE RESPONDENT. 3. ( <' ( 67 ) / THE CIT, MUMBAI. 4. ( <' / CIT(A)- , MUMBAI 5. >? :'#$ , 67* 6$ , ( / DR, ITAT, MUMBAI 6. % @ / GUARD FILE. / BY ORDER, ;>7' :' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( / ITAT, MUMBAI
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