DCIT, Bangalore V. M/s Jewel Associates, Bangalore

ITA 1140/BANG/2011

• Counselvise Citation: 114021114 RSA 2011
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-09-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 22-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Keywords: Document seized; Opportunity of being heard; Documents seized
• Section: 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRI BNAL BANGALORE BENCH B, BANGALORE BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NOS.1140 & 1141(BNG.)/2011 (ASSESSMENT YEARS : 2005-06 & 2006-07) THE ASST. COMMISSIONER INCOME-TAX, M/S JE WEL ASSOCIATES, CENTRAL CIRLE-2(3), NO.6 & &, 5 TH CROSS, BANGALORE CHUNCHUNGHATTA MAIN ROAD, NEW BANK COLONY, KONANAKUNTE, PAN NO. AAFFJ5900M VS BANGALORE APPELLANT RESPONDENT REVENUE BY : SMT. SUSAN THOMAS JOSE, JCIT ASSESSEE BY : NONE DATE OF HEARING : 27-08-2012 DATE OF PRONOUNCEMENT : 07- 09-2012 O R D E R PER SHRI N.V.VASUDEVAN, JM: THESE ARE APPEALS BY THE ASSESSEE AGAINST THE COMMO N ORDER DATED 16-09-2011 OF CIT(A)-VI, BANGALORE RELATING TO ASSESSMENT YEARS 2005-06 & 2006-07 RESPECTIVELY. 2. M/S JEWEL ASSOCIATES, THE ASSESSEE IN THIS APPE AL, IS A PARTNERSHIP FIRM FORMED UNDER A PARTNERSHIP DEED DT.12-08-2004. THE ASSESSEE FIRM HAS FOUR PARTNERS AND IS ENGAGED IN CONSTRUCTION OF BUILDINGS, LAND ITA NOS.1140 & 1141(B)/2011 2 DEVELOPMENT AND OTHER RELATED ACTIVITIES. SHRI H N AGARAJA, SMT. BHAGYA NAGARAJ, SHRI K KISHORE KUMAR AND SHRI M.HANUMANTHA IAH ARE HOLDING EQUAL SHARE OF THE PROFIT AND LOSSES OF THE FIRM. 3. THERE WAS A SEARCH ACTION U/S 132 OF THE INCOME TAX ACT, 1961 (THE ACT) CONDUCTED ON 06-01-2009 IN THE CASE OF SHRI H NAGARAJA AND HIS GROUP CONCERNS AND ALL OTHER ASSOCIATES. IN THE CO URSE OF SUCH SEARCH DOCUMENTS NAMELY, EXHIBIT NO.A/HN/2 WHICH BELONG TO THE ASSESSEE WAS FOUND. CONSEQUENTLY, ACTION U/S153C WAS INITIA TED AGAINST THE ASSESSEE. 4. AS ALREADY STATED DURING THE COURSE OF SEARCH PR OCEEDINGS AT THE RESIDENTIAL PREMISES OF SHRI H.NAGARAJA AT NO.6 & 7 , 5 TH CROSS, CHUNCHUNGHATTA MAIN ROAD, NEW BANK COLONY, KONANKUN TE, BANGALORE, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZ ED. ONE SUCH DOCUMENTS IS A SALE AGREEMENT DATED 07-08-2004 BETW EEN SMT SARALA REDDY AND SHRI H. NAGARAJA, SMT BHAGYA NAGARAJA, SH RI HANUMAPPA AND SHRI KISHORE KUMAR IN RESPECT OF LANDS BEARING SURVEY NOS.3/3, 7,8,9/2A AND 9/2B AT MALLASANDRA. PAGES 77 TO 93 OF THE SEIZED MATERIAL MARKED A/HN/13 CONTAINED THE ABOVE SALE AG REEMENT. AS PER THIS SALE AGREEMENT, THE FOLLOWING CASH PAYMENTS WE RE MADE TO SMT SARALA REDDY. DATE AMOUNT 7/8/2004 RS.30,00,000/- 26/9/2004 RS.25,00,000/- 14/4/2005 RS.20,00,000/- 16/4/2005 RS. 5,00,000/- ITA NOS.1140 & 1141(B)/2011 3 SHRI H. NAGARAJA, ONE OF THE PARTNERS OF THE ASSESS EE FIRM HAS VIDE HIS REPLY TO QUESTION NO.6 OF HIS STATEMENT U/S 131 REC ORDED ON 20-04-2009 STATED THAT THEY HAVE ENTERED INTO THE AFORESAID AG REEMENT ON BEHALF OF THE ASSESSEE FIRM. FURTHER, IN REPLY TO QUESTION NO.7 OF THE SAID STATEMENT, IT WAS STATED BY SHRI NAGARAJA THAT OUT OF THE TOTAL CASH PAYMENT OF RS.80 LAKHS, ONLY AN AMOUNT OF RS.20 LAK HS HAS BEEN ACCOUNTED IN THE BOOKS OF THE ASSESSEE FIRM AND THE BALANCE OF RS.60 LAKHS HAS NOT BEEN ACCOUNTED. 5. ACCORDING TO THE AO, THE ASSESSEE WAS CALLED UP ON TO EXPLAIN THE AFORESAID CASH PAYMENTS. ACCORDING TO THE AO, THE ASSESSEE HAD FAILED TO GIVE SATISFACTORY EXPLANATION. THE AO THEREFORE , BROUGHT TO TAX A SUM OF RS.55.00 LAKHS IN THE ASSESSMENT YEAR 2005-06 AN D RS.25.00 LAKHS IN THE ASSESSMENT YEAR 06-07, AS UNEXPLAINED INVESTMEN TS BY THE ASSESSEE. 6. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED IN T HEIR GROUNDS OF APPEAL, THE ASSESSEE HAS STATED THAT IT WAS NOT CORRECT THA T THE PAYMENTS WERE MADE BY CASH AND ARE NOT REFLECTED IN THE BOOKS OF ACCOUNTS OF THE FIRM. IT WAS ALSO STATED THAT THE ENTIRE PAYMENTS RELATIN G TO THE AGREEMENTS WERE MADE BY CHEQUES. ELABORATING FURTHER, IT WAS STATED THAT THE FIRM DURING FY: 2004-05 ENTERED INTO AGREEMENT WITH SEVE RAL LANDLORDS IN MALLASANDRA VILLAGE SITUATED ON KANAKAPURA ROAD FOR ACQUIRING THE LANDS. IT WAS STATED THAT THE ASSESSEEE FIRM MADE V ARIOUS PAYMENTS TO THE LANDLORDS AT THE TIME OF MAKING THE AGREEMENTS. IT WAS FURTHER STATED THAT SRI DAYANAND PAI APPROACHED THE ASSESSE E FIRM WITH A VIEW OF ACQUIRE THE LAND PROPOSED TO BE PURCHASED BY THE ASSESSEE AND GOT THE LAND REGISTERED IN THEIR NAME AFTER PAYING A CO MPENSATION TO THE EXTENT OF OVER RS.9 CRORES (EXACT AMOUNT RS.9.15 CR ORES) TO THE ASSESSEE FIRM. IT WAS STATED THAT THE ASSESSEE FIRM WAS ON LY AN AGREEMENT HOLDER ITA NOS.1140 & 1141(B)/2011 4 AND BECAME A CONFIRMING PARTY AT THE TIME OF CONCLU SION OF THE SALE. IT WAS ALSO STATED THAT THE AO HAS FAILED TO NOTICE TH AT AT THE TIME OF RECORDING STATEMENT U/S 131, THE ASSESSEE HAD NOT C OMMITTED ABOUT THE ALLEGED CASH PAYMENTS NOR HAD HE OFFERED IT FOR TAX . IT WAS ALSO STATED THAT ALL THE DOCUMENTS INCLUDING SALE DEEDS AND OTH ER RELEVANT DOCUMENTS WERE SEIZED BY THE DEPARTMENT AND WERE IN THE CUSTODY OF THE AO, WHO DID NOT MAKE ANY FURTHER ENQUIRY TO ASC ERTAIN THE FACTS. IT WAS ALSO STATED THAT THE AO DID NOT EVEN EXAMINE TH E BOOKS OF ACCOUNTS OF THE ASSESSEE TO FIND OUT WHETHER SUCH ALLEGED CA SH PAYMENTS HAVE BEEN RECORDED IN THE BOOKS OF ACCOUNT OR NOT BUT WE NT AHEAD WITH THE ADDITION WITHOUT CALLING FOR ANY FURTHER INFORMATIO N. 7. THE CIT(A) THEREAFTER, CONSIDERED THE PROFIT & LOSS ACCOUNT OF THE ASSESSEE FOR THE YEAR ENDING 31-03-2006 AND ALSO VA RIOUS TRANSACTIONS OF THE PURCHASE AND SALE OF LAND INCLUDING THE PART ICULARS OF PAYMENTS MADE THROUGH VARIOUS BANK ACCOUNTS IN FAVOUR OF SMT . SARALA REDDY AND SMT. NEELA REDDY. BASED ON THE ABOVE D ETAILS, THE CIT(A) CAME TO THE CONCLUSION THAT THE PAYMENTS MADE, AS REFLEC TED IN THE SEIZED DOCUMENTS ARE DULY RECORDED IN THE BOOKS OF ACCOUNT S. THE ADDITION MADE BY THE AO WAS ACCORDINGLY DELETED BY THE CIT(A ). 8. AGGRIEVED BY THE ORDERS OF THE CIT(A), THE REVE NUE HAS PREFERRED THE APPEALS BEFORE THE TRIBUNAL. 9. THE GROUNDS OF APPEALS RAISED BY THE REVENUE RE ADS AS FOLLOWS; 1. THE ORDER OF LD. CIT(A) IS OPPOSED TO LAW, EQUITY, FACTS, WEIGHT OF EVIDENCE ON RECORD FACTS A ND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) IGNORED AND OVERLOOKED THE FACTS AND EVIDENCE ON RECORD THAT THE AO HAS ADDED THE AMOUNT OF RS.55 LAKHS BASED ON SALE AGREEMENT ITA NOS.1140 & 1141(B)/2011 5 WHICH WAS DULY REGISTERED AT SUB-REGISTRARS OFFICE , KENGERI, BANGALORE. 3. THE CIT(A) ALSO IGNORED TO CONSIDER THE FACT THAT THE RECEIPT OF THE AMOUNT WAS DULY ACKNOWLEDGED BY THE VENDOR AND DULY SIGNED BY THE WITNESS IN SALE AGREEMENT. 4. THE CIT(A) FAILED TO CONSIDER THAT MERE PAYMENT OF THE AMOUNT THROUGH CHEQUES WILL NOT AUTOMATICALLY EXPLAIN THE SOURCE OF MONEY FOR INVESTMENT IN PROPERTY BY THE ASSESSEE. 5. THE CIT(A) IS NOT JUSTIFIED IN ADMITTING FRESH EVIDENCE BROUGHT BY THE ASSESEE ON THE PURPORTED CHEQUE PAYMENTS MADE BY THE ASSESSEE. 6. THE CIT(A) OUGHT TO HAVE GIVEN OPPORTUNITY OF BEING HEARD TO THE AO AS ENVISAGED IN RULE 46 OF TH E IT RULES. 7. THE CIT(A) FAILED TO CONSIDER THAT A NUMBER OF OPPORTUNITIES WERE GIVEN TO THE ASSESSEEE AND A SHO W CAUSE NOTICE WAS ISSUED F THE PROPOSED ADDITION FOR WHICH THERE WAS OUTRIGHT FAILURE ON THE PART OF ASSESSEE TO RESPOND TO THE NOTICE. 10. THE GROUNDS ARE IDENTICAL IN ASSESSMENT YEARS 2006- 07 ALSO, EXCEPT FOR THE QUANTUM OF ADDITION WHICH IN THAT ASSESSMEN T YEAR WAS ONLY RS.25.00 LAKHS. 11. THIS APPEAL WAS FIXED FOR HEARING ON 02-07-201 2. ON THAT DATE AT THE REQUEST OF THE CA OF THE ASSESSEE, THE APPEAL W AS ADJOURNED TO 27- 08-2012. THE DATE OF HEARING WAS ANNOUNCED IN THE OPEN COURT. ON 27- 08-2012, WHEN THE APPEAL WAS CALLED FOR HEARING, NO NE APPEARED ON BEHALF OF THE ASSESSEE. WE THEREFORE, PROCEEDED TO DECIDE THE APPEALS AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED DR . 12. THE LEARNED DR SUBMITTED THAT THE ASSESSEE DID NOT MAKE PROPER COMPLIANCE BEFORE THE AO AND IN THIS REGARD DREW OU R ATTENTION TO PAGE- 3 OF THE ASSESSMENT ORDER, WHEREIN THE AO HAS CLEAR LY BROUGHT OUT ITA NOS.1140 & 1141(B)/2011 6 FAILURE ON THE PART OF THE ASSESSEE TO GIVE EXPLANA TION IN RESPECT OF THE SEIZED DOCUMENTS. OUR ATTENTION WAS ALSO DRAWN TO THE FACT THAT THE STATEMENT RECORDED U/S 131 OF THE ACT THAT ON 20-04 -2009 SHRI H.NAGARAJA, ADMITTED THAT RS.60.00 LAKHS OUT OF RS. 80.00 LAKHS FOUND RECORDED IN THE SEIZED DOCUMENTS WAS PAID TO SMT.SA RALA REDDY, PAID IN CASH WAS NOT ACCOUNTED. THE LEARNED DR ALSO SUB MITTED THAT THE CIT(A) HAS TAKEN INTO ACCOUNT SEVERAL CHEQUE PAYMEN TS AND THESE DETAILS WERE NOT GIVEN BY THE ASSESSEE BEFORE THE A O. IT WAS SUBMITTED THAT THE CIT(A) OUGHT TO HAVE CONFRONTED THE DETAIL S AS FILED BY THE ASSESSEE BEFORE THE CIT(A) TO THE AO AND OBTAINED R EMAND REPORT FROM THE AO. IN THIS REGARD, IT IS ALSO SUBMITTED THAT THE CONTENTION PUT FORTH BEFORE THE CIT(A) BY THE ASSESSEE WERE CONTRARY TO THE SEIZED DOCUMENTS. IT WAS FINALLY SUBMITTED THAT THE AO SHOULD BE AFFO RDED AN OPPORTUNITY TO EXAMINE THE CLAIM OF THE ASSESSEE, AS PUT FORTH BEFORE THE CIT(A) AND FOR THIS THE ORDER OF THE CIT(A) SHOULD BE SET ASID E AND THE ISSUE REMANDED TO THE AO FOR FRESH CONSIDERATION. 13. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE SUBMISSIONS OF THE LEARNED DR. AS RIGHTLY CONTENDED BY THE LEARNED DR THE DETAILS AND EXPLANATION PUT FORTH BY THE ASSESSEE BEFORE THE CI T(A) WERE PUT FORTH BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDIN GS. IT WAS THEREFORE, NECESSARY TO CO-RELATE VARIOUS CHEQUE PA YMENTS AND ALSO EXPLANATION WITH REGARD TO CASH PAYMENTS AS FOUND R ECORDED IN THE SEIZED DOCUMENTS. IN THIS REGARD, WE ARE ALSO OF T HE VIEW, THAT THE DETAILS GIVEN IN THE CIT(A)S ORDER ARE GENERAL IN NATURE AND DO NOT DEAL WITH THE CONTENTS OF THE SEIZED DOCUMENTS. WE THER EFORE, SET ASIDE THE ORDER OF CIT(A) AND REMAND THE ISSUE WITH REGARD TO ADDITION OF RS.55.00 LAKHS IN THE ASSESSMENT YEAR 2005-06 AND RS.25.00 L AKHS IN ASSESSMENT YEAR 2006-07 TO THE AO FOR FRESH CONSIDE RATION. THE AO ITA NOS.1140 & 1141(B)/2011 7 SHOULD AFFORD AN OPPORTUNITY TO THE ASSESSEE BEFORE DECIDING THE ISSUE AFRESH. 14. FOR STATISTICAL PURPOSES, THE APPEALS OF THE R EVENUE ARE TREATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 7.9.2012 SD/- SD/- (JASON P BOAZ) (N.V.VASUD EVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R BANGALORE: D A T E D : 07-09-2012 AM* COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A)-IV, BANGALORE. 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE (1+1) BY ORDER SR. PRIVATE SECRETARY ITAT, BANGALORE