Sun Developers, Kadi V. The DCIT, Mehsana Circle, Mehsana

ITA 1141/AHD/2018

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1145 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-07-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 03-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Corroborative evidences; Retraction
• Section: 68; 133A; 22

Judgement Text

आयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरणआयकर अपीलीय अिधकरण आयकर अपीलीय अिधकरण, अहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठअहमदाबाद 瀈यायपीठ अहमदाबाद 瀈यायपीठ ‘B’ अहमदाबाद। अहमदाबाद।अहमदाबाद। अहमदाबाद। IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE MRS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER AND MISS SUCHITRA KAMBLE, JUDICIAL MEMBER ITA No.1141/Ahd/2018 Assessment Year :2014-15 Sun Developers Survey No.1457/1 City Park, Opp: Fire Station Thol Road Kadi 382 715 PAN : ABTFS 7182 D Vs. DCIT, Mehsana Circle Mehsana. ITA No.1142/Ahd/2018 Assessment Year :2014-15 Jay Buildcon City Park, Opp: Fire Station Thol Road Kadi 382 715 PAN : AAHFJ 0612 N Vs. DCIT, Mehsana Circle Mehsana. अपीलाथ / (Appellant) यथ /(Respondent) Assessee by : Shri Tushar Hemani, Sr.Adv, and Shri P.B. Parmar, AR Revenue by : Shri Rakesh Jha, Sr.DR स ु नवाई क तार ख/Date of Hearing : 14/07/2022 घोषणा क तार ख /Date of Pronouncement: 12/10/2022 आदेश/O R D E R PER ANNAPURNA GUPTA, ACCOUNTANT MEMBER Present two appeals relate to different assesses and have been filed against orders passed by the ld. Commissioner of Income- Tax(Appeals), Gandhinagar, Ahmedabad [hereinafter referred to as “Ld.CIT(A) under section 250(6) of the Income Tax Act, 1961 ("the Act" for short) of even dated 9.2.2018 both pertaining to the Asst.Year 2014-15. ITA No.1141 & 1142/Ahd/2018 2 2. The ld.counsel for the assessee ,at the outset , stated that both the assessees belonged to the same group and the issue arising in both the appeals was identical, pertaining to addition made on account of alleged on-money received by the assessees, both being in the business real-estate development. It was stated that in both the cases the additions arose as a consequence of a common survey action conducted on them under section 133A of the Act. He stated that similar arguments were to be made against the additions made and therefore, both the appeals needed to be heard together. The ld.DR fairly agreed with the contentions of the assessee. In view of the same, both the appeals were taken up together for hearing. 3. The ld.counsel for the assessee began by summarizing the issue in both the appeals before us, stating that both the assessees were in the business of real-estate development and had been subjected to survey action under section 133A of the Act on 11.1.2013 i.e. preceding financial year . That during the course of the survey action the partners of the assessee-firm had made surrender on account of on-money received by the assessees on plots sold/booked, but in the return of income filed for the impugned year, the assessee did not make disclosure of the entire amount surrendered, the disclosure being less than the surrender made in the case of the assessee i.e. M/s Jay Buildcon and no disclosure being made in the case of the other assessee i.e M/s Sun Developers, noting which the AO held that the assessee had retracted from his surrender and accordingly he made addition of the purported retraction to the income of the assessee, being Rs.26 lakhs in the case of the assessee M/s Jay Buildcon and Rs.20,23,809/- in the case of the other assessee, M/s.Sun Developers, which addition was upheld by the ld.CIT(A). ITA No.1141 & 1142/Ahd/2018 3 4. The ld.counsel for the assessee contended that his arguments and primary contention against the addition made was that the surrender made by the assessees during survey was on estimate basis while disclosure made subsequently in the return filed was on actual basis of the number plots sold by the assessee on which the assessee admitted to have received on-money and therefore there was no retraction as such of the surrender and true and correct disclosure has been made by the assessee; that there was no incriminating material otherwise found by the Revenue during the course of survey; that therefore the addition made in both the cases was unwarranted. Having said so, he thereafter drew our attention to the ground raised in both the cases challenging the confirmation of the addition on account of on-money as under: ITA No.1141/Ahd/2018- M/s Sun Developers 1. The learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 20,23,809/- on account of alleged on money receipt u/s. 68 of the Act without proper consideration and appreciation of the facts of the case and submission filed as well as legal position relied upon. In view of the facts and submission filed, the impugned addition of Rs.20,23,809/-u/s.68_of the Act requires to be deleted. 2. The learned CIT(A) has erred in not dealing with the legal decisions relied upon in connection with the contention that the statement recorded U/S.133A was not recorded on oath, such statement recorded U/S.133A was not at par with the statement recorded u/s. 132(4) and accordingly did not have any evidentiary value. Thus, the addition of Rs. 20,23,809/- made on the basis of statement recorded u/s. 133A of the Act only and without any supporting evidences found during the course of survey and therefore the impugned addition requires to be deleted. ITA No.1142/Ahd/2018- M/s Jay Buildcon 1. The learned CIT(A) has erred in law and on facts in confirming the addition of Rs. 26,00,000/- on account of alleged on money receipt u/s. 68 of the Act without proper consideration and appreciation of the facts of the case and submission filed as well as legal position relied upon. In view of the facts and submission filed, the impugned addition of Rs. 26,00,000/- u/s. 68 of the Act requires to be deleted. 2. The learned CIT(A) has erred in not dealing with the legal decisions relied upon in connection with the contention that the statement recorded U/S.133A was not recorded on oath, such statement recorded U/S.133A was not at par with the statement recorded u/s.132(4) and accordingly did not have any evidentiary value. Thus, the addition of Rs. 26,00,000/- made on the basis of statement recorded u/s. 133A of the Act only and without any supporting evidences found during the course of survey and therefore the impugned addition requires to be deleted.” ITA No.1141 & 1142/Ahd/2018 4 5. The ld.counsel for the assessee thereafter proceeded to draw our attention to the facts of the case and taking us through the assessment order at para-3, he pointed out that survey action under section 133A was conducted at office premises of the scheme viz. “Raj Ratna Godown” on 11.1.2013. During the course of survey certain documents were found and impounded and inventorised as annexure-A/1. Further on the basis of material available, the statement of the partner assessee-firm/main person Shri Jayantibhai A. Patel was recorded. In the statement recorded, the partner gave details scheme-wise (both Sun Developers and Jay Buildcon), year-wise of booking/sale of plots, rate of sale of plots and on-money received against the sale or booking of the plots. Survey was temporarily concluded on that date. Shri Jayantibhai Patel wanted time to make disclosure so that he could compute the exact on-money received unit-wise by taking help of persons involved. Accordingly, the time was allowed and on 12.3.2013 summons under section 133(1) was issued to Shri Jayantibhai Patel who attended office on 26.3.2013 along with his Chartered Accountant and gave his working of total disclosure. The total disclosure in the two firms made was of Rs.2,99,75,000/- being Rs.50.00 lakhs in M/s Sun Developers and Rs.249.75 lakhs in M/s Jay Buildcon, the working of which as reproduced in page no.3 of the assessment order was pointed out as under: ITA No.1141 & 1142/Ahd/2018 5 6. The ld.counsel for the assessee thereafter stated that in the case of M/s.Sun developers, Rs.50.00 lakhs surrendered was disclosed in the return of income filed by the assessee for the preceding assessment year i.e. Asst.Year 2013-14 and similarly, Rs.2.00 crores surrendered for financial year 2012-13 pertaining to Asst.Year 2013-14 in the case of M/s Jay Buildcon was accordingly disclosed in the return of income filed for said assessment year i.e. Asst.Year 2013-14. ITA No.1141 & 1142/Ahd/2018 6 7. For the impugned assessment year i.e. Asst.Year 2014-15, Ld.Counsel for the assessee stated, in the case of M/s Sun Developers the assessee made no further disclosure of income on account of on-money received while in the case of M/s.Jay Buildcon the assessee made a disclosure of Rs.23.75 lakhs. The ld.counsel for the assessee pointed out that it was explained to the authorities below i.e. both the AO and the Ld.CIT(A) that the disclosure made in the case of Jay Buildcon of Rs.23.75 lakhs in the impugned year varied from the surrender made of Rs.49.75 lakhs for the impugned year on account of the fact that surrender had been made on an estimation basis in the month of March, 2013, even before the financial year 2013-14 pertaining to the impugned Asst.Year 2014- 15 began, and therefore, the disclosure was accordingly made on the basis of actual houses/shops/multiplexes booked or sold during the year, since on-money was received only on the booking of the sale of the plots. 8. In the case of M/s Sun Developers, the ld.counsel for the assessee pointed out that no disclosure was made in the impugned year since ,it was explained to the AO , Rs.50 lakhs surrendered by the assessee in the preceding year covered plots sold/booked during the year also. 9. The ld.counsel for the assessee thereafter pointed out that the AO was not satisfied with the explanation of the assessee, and in the case of M/s Jay Buildcon he held that since the assessee had suo moto – voluntarily surrendered Rs.49.75 lakhs on account of on- money received, he could not have retracted his surrender and accordingly added difference of Rs.26 lakhs to the income of the assessee. In the case of M/s Sun Developers, the AO held that Rs.50 lakhs surrendered by the assessee pertained to the plots ITA No.1141 & 1142/Ahd/2018 7 booked/sold in the preceding financial year, and applying ratio of surrender made to the plots booked or sold in the preceding year, to the actual plots booked/sold by the assessee in the impugned year, the AO worked out on-money to be disclosed by the assessee as received in the impugned year of Rs.20,23,809/- and made addition of the same. The ld.counsel for the assessee contended that the ld.CIT(A) upheld the finding of the AO. 10. The ld.counsel for the assessee thereafter first took up the case of M/s Jay Buildcon and pointed out that surrender of Rs.49.75 lakhs had been made for the impugned year i.e. F.Y. 2013- 14 pertaining to the Asst.Year 2014-15 on 26.3.2013 pursuant to the survey action conducted at the assessee, on an estimate basis even before the financial year began. Therefore the surrender made of Rs.49.75 lakhs was only an estimated surrender based on houses/shops/hall which the assessee presumed would be sold during the impugned year; that however, when return of income was filed for the year, the assessee found that property sold/booked during the year were much less, being as under: Particulars Units Amount disclosed Res. House booked 06 6 lacs Comm.Shop booked 22 11 lacs Multiplex Hall 03 6.75 lacs And that accordingly on the basis of properties booked or sold during the year, the assessee surrendered on-money of Rs.23.75 lakhs. The ld.counsel for the assessee pointed out that there was no question of any on-money received on unsold/un-booked, and therefore, there was no question of making any disclosure vis-à-vis remaining property of the assessee, which remained unsold or unbooked during the year. He further contended that except for the ITA No.1141 & 1142/Ahd/2018 8 surrender made during the survey, there was no incriminating material which was found by the Revenue during the survey to support the surrender on account of on-money received by the assessee pertained to the impugned year. He also stated that surrender was voluntary in the absence of any incriminating material pertained to the alleged on-money or extra money received by the assessee firm and the deviation or retraction in the amount of disclosure, was on factual basis. 11. Taking up the case of M/s Sun Developers, the ld.counsel for the assessee pointed out that the only surrender made by the assessee was of Rs.50 lakhs which was disclosed in the return of income filed for the preceding Asst.Year 2013-14, which fact was not disputed. He thereafter pointed out that in the case of M/s Sun Developers, the AO from the details submitted by the assessee that it had sold 17 units during the impugned year inferred that the assessee must have received on-money on the sale of these units. He pointed out that Rs.50 lakhs surrendered by the assessee was taken by the AO to be on account of units sold in the preceding assessment year i.e. 42 units, and working out the average of 42 units to the surrender made, On-money receipts for 17 units sold during the year was worked out by the assessee at Rs.20,23,810/-. The ld.counsel for the assessee contended that it was repeatedly stated to the authorities below that whatever surrender had been made by the assessee, had been disclosed in the return of income for the preceding assessment year and the surrender included plots booked or sold during the impugned year also i.e. 17 units sold/booked by the assessee during the year; that there was no incriminating material found relating to the on-money received by the assessee, and the assessee having honoured his surrender, and no incriminating material being found by the AO, there was no ITA No.1141 & 1142/Ahd/2018 9 reason at all for making any addition on account of on-money received during the impugned year. The ld.counsel for the assessee thereafter pointed out that in both the cases, Revenue authorities failed to appreciate the factual contentions made by the assessee and made addition merely on the basis that disclosure made by the assessee in the return of income tantamounted to retraction of surrender made voluntarily and suo moto by the assessee, and was just an after-thought to deny the department to its legitimate tax. The ld.counsel for the assessee contended that this finding of the Revenue authorities was far from truth and without appreciating the facts as submitted by the assessee before the Revenue authorities repeatedly. He therefore stated that addition made in both the cases on account of on-money received need to be deleted. 12. The ld.DR, on the other hand, relied on the order of the authorities below, emphasizing that the assessee had not honoured its surrender made during survey, and had in fact retracted without any proof or evidence, which was not permissible in law. Reliance was placed on various case laws referred to in this regard by the AO in his assessment order. 13. We have heard contentions of both the parties and gone through the orders of the authorities below and also perused various documents referred to before us. The issue before us in both the cases is vis-à-vis addition made on account alleged on-money received by the assessee and the addition has been made primarily on ground that the assessee had failed to honour surrender made by it during survey in this regard for the impugned year in the case of M/s.Jay Buildcon ,and in the ITA No.1141 & 1142/Ahd/2018 10 case of M/s Sun Developers the addition has been made over above the surrender made by the assessee ,by extrapolating the ratio of on- money admitted to have been received by the assessee on plots sold/booked in the surrender made, to the number of plots actually sold/booked by the assessee during the year. 14. First we take up the case of M/s Jay Buildcon. It is an undisputed fact that for the impugned year the assessee had surrendered Rs.49.75 lakhs on account of alleged on-money receipt for 18 residential houses, 50 commercial shops and three multiplex halls, as reproduced in our order above the working of the surrender made pursuant to survey action undertaken in the case of assessee. This surrender was made by the assessee on 26.3.2013, even before the financial year pertaining to the impugned assessment year ,i.e. F.Y.2013-14 relevant to the impugned assessment year 2014-15 began, is also a fact on record; that the surrender was made on account of on-money receipt is also not denied or disputed by the Revenue. Neither the assessment order nor the CIT(A)’s order mentions any basis or specific material found during the survey, forming the basis of surrender made, nor has the ld.DR drawn our attention to any such material. These facts clearly lend credence to the contention of the assessee that the surrender was an estimated surrender made by the assessee in the belief that it would sell or book flats/plots to the said extent in the impugned year and earn on-money on the same. There can be no two ways about it, since as per the facts before us, surrender was made prior to beginning of the impugned year and related to on-money receipt on booking or sale of the property during the year. Undeniably, it was an estimated surrender made by the assessee. ITA No.1141 & 1142/Ahd/2018 11 15. In the return of income filed, we have noted, and it is not disputed also, the assessee disclosed the on money receipt of Rs.23.75 lacs, being in relation to property actually sold/booked during the year of residential, commercial and multiplexes. The Revenue does not dispute this fact. On the issue relating to on- money receipt, it is an admitted fact, even by the Revenue, that on- money is received only on the booking of the properties, and there is no question of receiving any on-money prior to that. In the light of the undisputed facts that the assessee had actually booked properties much less than what it had stated in its surrender, there was no question of receiving on-money more than that relating to the property actually booked during the year. The Revenue has not pointed out any incriminating material found during survey evidencing the surrender made by the assessee. The disclosure of the assessee therefore, of the on-money receipt of Rs.23.75 lakhs, we find was in accordance with the surrender made by the assessee, and there is no retraction as such of the surrender. The assessee, we find in fact evidenced the reduction in the surrender made by demonstrating that properties sold by it were actually less than that disclosed in the surrender. Therefore, this retraction, if any of the surrender, is evidenced by the actual facts on record, and all the case laws relied on by the ld.AO to hold that the assessee could not have retracted his surrender in the absence of any evidence actually support the case of the assessee. The AO has relied on various decisions at para 3.14 of his order, gist and crux of which is that retraction of surrender can be accepted and/are acceptable only when supported with strong evidence. In the present case, we have noted above, the assessee has supported his retraction of surrender on account of on-money by showing that the actual properties sold by it was less than what was disclosed in the surrender, which fact ITA No.1141 & 1142/Ahd/2018 12 has not been disputed by the AO, and the surrender was solely on account of on-money receipt which was received only on the booking/sale of properties and not prior to that. The retraction of the assessee, we find, is strongly supported with evidence, and we hold is therefore justified. The order of the ld.CIT(A) making addition to the extent of Rs.26 lakhs solely on the basis of surrender made by the assessee, without any incriminating material, and which surrender the assessee has shown with evidence to be not correct, we hold is not sustainable. Accordingly addition of Rs.26 lakhs made in the case of M/s Jay Buildcon is direct to be deleted. 16. Now taking up the case of M/s Sun Developers, we find that in this case, total surrender made by the assessee during the survey was Rs.50 lakhs, which admittedly, the assessee had surrendered and disclosed in the return of income filed for preceding years i.e. Asst.Year 2013-14. For the impugned assessment year, accordingly, no disclosure has been made by the assessee in the return of income. It is therefore clearly not a case of retraction of surrender at all. Whatever the assessee had surrendered, it was duly declared in its return of income of the preceding year. What the Revenue is now attempting to do is to apply a hypothesis that since the assessee had admitted to having received on-money in the preceding year, the same logic would apply to all properties sold in the impugned year also. But we find that other than surrender made by the assessee, there is no incriminating material with the Revenue lending credence to this hypothesis. The assessee has repeatedly stated that it made surrender to buy peace and whatever was surrendered it had honoured in the preceding year. In the absence of any other evidence, the surrender made by the assessee alone cannot be sufficient to establish that the assessee has actually received on- money on all transactions, and therefore no addition could have ITA No.1141 & 1142/Ahd/2018 13 been made in the impugned year for any on-money receipt. Accordingly, the order of the ld.CIT(A) upholding the addition of Rs.20,23,809/-, we hold, is not sustainable and is unjustified, and we direct deletion of the same. Ground of appeals raised by both the assesses are allowed. 17. In effect the appeals of both the assessee are allowed. Order pronounced in the Court on 12 th October, 2022 at Ahmedabad. Sd/- Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER (ANNAPURNA GUPTA) ACCOUNTANT MEMBER Ahmedabad, dated 12/10/2022 vk*