METRO CONSTRUCTION CO, NAVI MUMBAI V. DCIT CEN CIR 3(4), MUMBAI

ITA 1353/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5807 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 27-02-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITNYA ANJARIA
• Keywords: Unexplained expenditure; Search and seizure; Opportunity of being heard; Revised return; Set aside
• Section: 234B; 201; 139(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 1353 /MUM/2017 ASSESSMENT Y EAR: 2008 - 09 M/S METRO CONSTRUCTION CO., C - 3/1:2, SECTOR - 1, VASHI, NAVI MUMBAI - 4000703 PAN NO . : AAJFM6208R VS. THE DCIT, CENTRAL CIRCLE - 3(4), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI CHAITNYA ANJARIA (DR) DATE OF HEARING: 12/09 /201 8 DATE OF PRONOUNCEMENT: 06 / 12 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 13.12.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) (FOR SHORT THE CIT (A)) - 51 , MUMBAI , FOR THE A S S ESSMENT YEAR 2008 - 09 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143 (3 ) R.W.S . 254 OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF R EAL E STATE D EVELOPMENT, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. SUBSEQUENTLY, A SEARCH AND SEIZURE ACTION U/S 132 (1) OF THE ACT WAS CONDUCTED ON THE OFFICE PREMISES AND RESIDENTIAL PREMISES OF THE DIRECTOR S OF THE COMPANY. CONSEQUENT TO THE SEARCH, THE ASSESSEE F I LED THE REVISED RETURN OF INCOME DECLARING THE SAME INCOME WHICH HAD BEEN DECLARED IN THE RETURN FILED U/S 139(1) OF THE ACT. THEREAFTER, AO PASSED THE ASSESSMENT ORDER U/S 143 (3) OF THE ACT MAKIN G ADDITION OF RS, 2,24,32,000/ - ON ACCOUNT OF ESTIMATED MONEY RECEIVED ON SALE 2 ITA NO. 13 53 / MUM/2017 ASSESSMENT YEAR: 2008 - 09 OF FLATS AND FURTHER DISALLOWANCE OF RS. 34,16,640/ - ON ACCOUNT OF INFLATION OF EXPENSES. IN THE FIRST APPEAL, THE LD. CIT (A) DELETED THE ADDITION OF RS. 2,24,32,000/ - AND CONF IRMED THE ADDITION OF RS. 34,16,640/ - . THE ASSESSEE FURTHER CHALLENGED THE ORDER OF THE LD. CIT (A) BY FILING SECOND APPEAL BEFORE THE ITAT. THE ITAT AFTER HEARING THE RIVAL CONTENTIONS, SET AS IDE THE MATTER TO THE FILE OF AO FOR PASSING THE ASSESSMENT ORD ER AFRESH. HOWEVER, THE AO IN ITS ORDER PASSED U/S 143 (3) R.W.S 254 OF THE ACT MADE ADDITION OF RS. 34,16,640/ - . IN THE FURTHER APPEAL, THE LD. CIT (A) CONFIRMED THE ADDITION MADE BY THE AO . 3 . AGGRIEVED BY THE ORDER OF LD. CIT (APPEAL S ), THE ASSESSEE H AS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FOLLOWING EFFECTIVE GROUND S : - 1. BECAUSE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ORDER OF THE AO WHICH WAS COMPLETELY IN VIOLATION OF THE INSTRUCTIONS GIVEN BY THE HONBLE ITAT IN T HEIR ORDER DATED 10/07/2014. 2. (I) BECAUSE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN UPHOLDING THE ADDITION OF RS. 34,64,640/ - IN CLEAR VIOLATION OF THE PROVISIONS OF SECTION 132(4A). 2(II) BECAUSE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN UP HOLDING THE ADDITION OF RS. 34,16,640/ - ALTHOUGH IT WAS PROVEN FROM RECORD THAT THE IMPUGNED DOCUMENT WAS NOT SEIZED FROM THE PREMISES OF THE APPELLANT. 3. BECAUSE, THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 34,16,640/ - BASED ON STATEMENT WHEN A COPY OF THE SAME WAS NOT PROVIDED TO THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND AN OPPORTUNITY TO CROSS EXAMINE THE DEPONENT WAS ALSO NOT PROVIDED. 4. BECAUSE, THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN FAILING TO CONSIDER THE RELE VANT CASE LAWS PLACED ON RECORD. 4. THIS CASE WAS FIXED FOR HEARING ON 12.09.2018. ON THE SAID DATE, THE CASE WAS CALLED OUT FOR HEARING, HOWEVER, NONE APPEARED ON BEHALF OF THE ASSESSEE. EVEN WE DID NOT RECEIVE ANY APPLICATION FOR ADJOURNMENT ON BEHALF OF THE 3 ITA NO. 13 53 / MUM/2017 ASSESSMENT YEAR: 2008 - 09 ASSESSEE. WE NOTICE THAT ON THE LAST DATE OF HEARING, THE ASSESSEE WAS INFORMED ABOUT THE DATE OF HEARING AND DESPITE THE NOTICE OF THE DATE OF HEARING, THE ASSESSEE DID NOT APPEAR ON 12.09.2018. HENCE , WE DECIDED TO D ISPOSE OF THE APPEAL ON THE BAS IS OF MATERIAL AVAILABLE ON RECORD AFTER HEARING THE LD. DR. ACCORDINGLY, WE ASKED THE LD. DR TO ARGUE THE CASE ON BEHALF OF THE DEPARTMENT. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) RELYING ON THE ORDER PASSED BY THE LD. CIT (A) SUBMITTED TH AT FROM THE STATEMENT OF MANISH THA KK AR , A FAMILY MEMBER OF ONE OF THE PARTNERS, I T IS CLEAR THE PAPERS FOUND DURING THE SEARCH AND SEIZURE ACTION U/S 132 (1) OF THE ACT BELONGS TO THE ASSESSEE , WHICH CONFIRMS THE DETAILS OF EXPENDITURE . SINCE, THE ASSESSE E HAS FAILED TO REBUT EVIDENCE AGAINST IT , T HE LD. CIT (A) HAS RIGHTLY CONFIRMED THE ADDITION OF RS. 3 4,16,640/ - MADE BY AO IN ASSESSMENT ORDER PASSED U/S 143 (3) R.W.S. 254 OF THE ACT. 6 WE HAVE PERUSED THE MATERIAL ON RECORD . T HE ADDITION IN QUESTION WA S MADE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER PASSED U/S 143 (3) OF THE ACT. THE LD. CIT (A) CONFIRMED THE ADDITION IN THE FIRST APPEAL. HOWEVER , IN THE SECOND APPEAL, THE ITAT, MUMBAI SET ASIDE THIS ISSUE TO THE FILE OF AO TO VERIFY WHETHER INCRIMINAT ING DOCUMENT WAS PART OF THE PANCHNAMA PREPARED IN THE CASE OF THE ASSESSEE OR NOT. THE RELEVANT PARA OF THE ORDER OF THE CO - ORDINATE BENCH PASSED IN ITA NO. 4811/MUM/2010 READS AS UNDER: - WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE RE LEVANT FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) AND THE MATERIAL PLACED ON RECORD. ON A PERUSAL OF THE DOCUMENT ANNEXURE A 1 / PAGE 71, WHICH IS APPEARING AT PAGE 77 OF THE PAPER BOOK SHOWS CERTAIN ENTRIES ON THE DEBIT AND CREDIT SIDE AND FURTHER E NTRIES IN THE NAME OF MR. BHARATBHAI, FULJI, YOGESH SIR. PRIMA FACIE THE SAID ENTRIES ARE NOT BASED ON DOUBLE ENTRY SYSTEM AND THERE IS NO CO RELATION BETWEEN ANY OF THE FIGURES GIVEN ON THE DEBIT / CREDIT SIDE. THE MAIN CONTENTION OF THE LEARNED COU NSEL IS THAT THE SAID DOCUMENT DOES NOT RELATE TO THE ASSESSEE FIRM AS IT WAS NOT FOUND FROM THE POSSESSION OF THE ASSESSEE FIRM 4 ITA NO. 13 53 / MUM/2017 ASSESSMENT YEAR: 2008 - 09 AT THE TIME OF SEARCH AND ALSO THERE IS NO MENTION IN THE PANCHANAMA PREPARED IN THE ASSESSEES CASE. EVEN THE ASSESSING OFFICE R HAS NOT MENTIONED AS TO FROM WHERE THE DOCUMENT WAS FOUND. IF THAT IS THE FACT, THEN, THERE CANNOT BE ANY PRESUMPTION UNDER SECTION 292C WHICH POSTULATES THAT ONUS IS UPON THE ASSESSEE TO EXPLAIN THE NATURE OF ALL THE DOCUMENTS AND THE ENTRIES GIVEN THER EIN, IF FOUND FROM THE POSSESSION OF THE ASSESSEE AT THE TIME OF SEARCH. UNDER THESE FACTS AND CIRCUMSTANCES AND WITHOUT GOING INTO THE MERITS OF THE ADDITION, WE ARE OF THE VIEW THAT THIS MATTER REQUIRED TO BE RESTORED BACK TO THE FILE OF THE ASSESSING OF FICER TO VERIFY THIS FACT. CONSEQUENTLY, WE SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED COMMISSIONER (APPEALS) AND RESTORE BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THIS CONTENTION OF THE ASSESSEE AND TO VERIFY WHETHER THE SAID DOCUMENT I.E., PAGE 71 OF ANNEXURE A 1, WAS PART OF PANCHANAMA PREPARED IN CASE OF THE ASSESSEE OR NOT. IF THE SAID DOCUMENT DOES NOT PERTAIN TO THE ASSESSEE, THEN NEEDLESS TO SAY THAT NO ADVERSE INFERENCE CAN BE DRAWN AGAINST THE ASSESSEE. THE ASSESSING OFFICER SHALL PROVIDE DUE AND EFFECTIVE OPPORTUNITY OF HEARING TO THE ASSESSEE TO EXPLAIN THESE FACTS. CONSEQUENTLY, THE GROUND RAISED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN COMPLIANCE OF THE ORDER OF THE COORDINATE BENCH , THE AO PASSED ORDER GIVING EFFECT TO THE TRIBUNAL ORDER U/S 143 (3) R.W.S. 254 OF THE ACT AND AFTER HEARING THE ASSESSEE AND REJECTING THE CONTENTION OF THE ASSESSEE, CONFIRMED THE ADDITION. THE ASSESSEE CHALLENGED THE FINDINGS OF THE AO BEFORE THE LD. C IT (A). THE LD. CIT (A) HAS CONFIRMED THE ADDITION MADE BY THE AO HOLDING AS UNDER: - 11. FROM THE ABOVE STATEMENT OF SHRI MANISH THAKKAR, IT IS CLEAR THAT SEIZED PAPERS FOUND FROM HIS POSSESSION BELONGED TO THE ASSESSEE FIRM. IT APPEARS THAT WHILE COMPLE TING THE ORIGINAL ASSESSMENT ORDER, THE AO MISTAKENLY REFERRED TO THE RELEVANT SEIZED ANNEXURE A AND THE RELEVANT PAGES AS 71. IN FACT , THE RELEVANT PAPER WAS 71 OF SEIZED ANNEXURE A, WHICH HAS BEEN CORRECTLY MENTIONED BY THE AO IN THE PRESENT ORDER. FURTH ER FROM ANALYSIS OF THE SEIZED PAPER, 5 ITA NO. 13 53 / MUM/2017 ASSESSMENT YEAR: 2008 - 09 IT IS GATHERED THAT THE FOLLOWING EXPENSES HAVE BEEN INCURRED BY THE ASSESSEE WHICH ARE IN THE NATURE OF UNACCOUNTED EXPENDITURE. BHARATBHAI EXTRA BILL RS. 8,08,480/ - FULJI (ADJUSTMENT BILL) RS. 23,85,708/ - YOGESH SIR EXTRA BILL AMOUNT RS. 34,16,640/ - 12. THEREFORE, THE CONTENTION OF THE ASSESSEE THAT THE RELEVANT PAPER WAS NOT SEIZED DURING THE COURSE OF SEARCH OR THERE WAS NO MATERIAL AGAINST IT TO MAKE ADDITION OF RS.34,16,640/ - IS FACTUALLY INCORRECT. THE ASSE SSEE IS UNNECESSARILY MAGNIFYING A TYPOGRAPHICAL MISTAKE COMMITTED BY THE AO WHILE PASSING THE ORIGINAL ASSESSMENT ORDER WHEN SUCH MISTAKE IS ALREADY RECTIFIED IN THE PRESENT ORDER. FROM THE PANCHNAMA DRAWN AT THE TIME OF SEARCH, IS QUITE CLEAR THAT A BUNC H OF LO OSE PAPERS CONTAINING 73 PAGES WAS FOUND AND SEIZ ED FROM POSSESSION OF MANISH THA KKAR AS ON 05.06.2007. THE CONTENTS OF THESE PAPERS HAVE ALREADY BEEN MENTIONED IN THE FOREGOING PARAGRAPHS WHICH IS IN NATURE OF EXTRA BILL OR ADJUSTMENT BILL, ETC. TH E ASSESSEE HAS FAILED TO EXPLAIN THAT THESE EXPENSES WERE RECORDED IN BOOKS OF ACCOUNTS AND WERE INCURRED OUT OF THE EXPLAINED SOURCES. SINCE THESE PAPERS HAVE BEEN SEIZED DURING THE COURSE OF SEARCH, THEREFORE, IN VIEW OF PROVISIONS OF SEC 132(4A) OF THE ACT, THE ONUS LIES UPON THE ASSESSEE TO PROVE THE ENTRIES THEREIN ARE EXPLAINED OR IT DOES NOT CONTAIN ANY UNDISCLOSED INCOME. SINCE THE ASSESSE HAS FAILED TO EXPLAIN THE CONTENT OF THESE PAPERS AND SOURCES OF THE EXPENDITURE MENTIONED THEREIN, NO RELIEF C OULD BE GRANTED TO IT. 13. THEREFORE CONSIDERING ALL THE FACTS OF THE CASE, DISALLOWANCE OF RS. 34,16,640/ - MADE BY THE AO IS UPHELD AND VARIOUS CONTENTIONS RAISED BY THE ASSESSEE IN THIS REGARD ARE R EJECTED. THEREFORE, THESE GROUNDS OF APPEAL ARE DISMISSE D. 14. GROUND NO. 5 IS RELATING TO CHARGING OF INTEREST U/S 234B & 234C OF THE ACT. SINCE THE INTEREST UNDER THESE SECTIONS IS MANDATORY IN NATURE AND THE AO HAS NO DISCRETION WHATSOEVER IN LEVY OF THESE INTERESTS, NO RELIEF COULD BE GRANTED TO THE ASSESSE E. AS LONG AS THERE IS TAX PAYABLE ON THE BASIS OF ASSESSMENT ORDER, INTEREST UNDER THESE SECTIONS AUTOMATICALLY FOLLOW AND IT IS CONSEQUENTIAL 6 ITA NO. 13 53 / MUM/2017 ASSESSMENT YEAR: 2008 - 09 IN NATURE. THEREFORE, THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS REJECTED 8. WE NOTICE THAT THE LD. CIT(A ) HAS CONFIRMED THE ADDITION AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IN OUR CONSIDERED VIEW, THE FINDINGS OF THE LD. CIT(A) ARE BASED ON THE SOUND REASO NS. SINCE, THE LD. CIT ( A) HAS CONFIRMED THE ADDITION ON THE BASIS OF EVID ENCE ON RECORD , W E DO NOT FIND ANY INFIRMITY IN THE SAID ORDER TO INTERFERE WITH. WE THEREFORE DISMISSED THE APP EAL OF THE ASSESSEE AND CONFIRM THE ORDER PASSED BY THE LD. CIT (A) . IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2008 - 2009 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH DECEMBER , 2018 . SD/ - SD/ - ( R.C.SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIA L MEMBER MUMBAI ; DATED: 06 / 12 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI