ACIT CC 39, MUMBAI V. ANGCHEKAR LAND P.LTD, NAVI MUMBAI

ITA 1361/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3610 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MALATHI SRIDHARAN MANGCHEKAR
• Assessee Lawyers: RAMESH JAIN
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Initiation of penalty proceedings; Documents seized
• Section: 69C; 132

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER ./I.T.A. NO.1361/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39, ROOM NO.32(1) GROUND FLOOR, AAYAKAR BHAVAN. MUMBAI-400 020. VS. M/S. ANGCHEKAR LAND PVT. LTD. RAJ SPARSH, PLOT NO.21 & 22, SECTOR-20, CBD BELAPUR,NAVI MUMBAI-400614. PAN:AAGCA 7704 C ./I.T.A. NO.1363/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39, ROOM NO.32(1) GROUND FLOOR, AAYAKAR BHAVAN. MUMBAI-400 020 VS. M/S. KRUTIKA LAND PVT. LTD. DN-215, SECOND FLOOR, PLOT NO.6 SECTOR-II, DRONAGIRI,MUMBAI-400702. PAN: AADCK 1508 K ./I.T.A. NO.1364/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39 GROUND FLOOR,AAYKAR BHAVAN, MUMBAI-400 020 VS. M/S.AMOL LAND PVT. LTD. RAJ SPARSH, PLOT NO.21 & 22, SECTOR-20, CBD BELAPUR,NAVI MUMBAI-400614. PAN: AAGCA 7705 D ./I.T.A. NO.1366/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39 GROUND FLOOR,AAYKAR BHAVAN, MUMBAI-400 020 VS. M/S. KRISHNA LAND REALTY PVT. LTD. NMSEZ HOUSE SECTOR 10B, ULWE (WATER FRONT) NAVI MUMBAI-RAIGARH-410 216. PAN: AADCK 0178 R ./I.T.A. NO.1367/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39 GROUND FLOOR,AAYKAR BHAVAN, MUMBAI-400 020 VS. M/S. ATHARVA LAND PVT. LTD. OFFICE NO. D-416, 7TH FLOOR, PLOT NO.6 SECTOR-11, DRONAGIRI-400 702. PAN: AAGCA 5067 L ./I.T.A. NO.1368/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-39 GROUND FLOOR,AAYKAR BHAVAN, MUMBAI-400 020 VS. M/S. KHETOBA LAND PVT. LTD. 101, SAGAR DARSHAN, CTS NO.1023/4, RAMNATH ROAD, ALIBAUG-402 201. PAN: AADCK 1565 G ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: MS. MALATHI SRIDHARAN 1361/M/14-ANGCHEKAR+6 2 ASSESSEE BY: SHRI RAMESH JAIN, / DATE OF HEARING: 08.03.2016 / DATE OF PRONOUNCEMENT: 08.03.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER BENCH - CHALLENGING THE ORDERS DATED 29.11.2013 OF THE CIT -(A)37,MUMBAI THE ASSESSING OFFICERS (AO.S) HAVE FILED THE ABOVE MENTIONED APPEALS. AS T HE ISSUE INVOLVED IN THESE APPEALS IS COMMON, THEREFORE, WE ARE ADJUDICATING THEM BY PASS ING A SINGLE COMMON ORDER. ITA/1361/MUM/2014 , ,, , AY.2009-10 BRIEF FACTS: 2. THE ASSESSEE BELONGS TO JAI CORP GROUP OF CASES WHI CH WAS A PARTNER IN TWO MAJOR SPECIAL ECONOMIC ZONES (SEZ), BEING DEVELOPED IN THE VICIN ITY OF MUMBAI, VIZ. NAVI MUMBAI SPECIAL ECONOMIC ZONE(NMSEZ) AND MUMBAI SPECIAL ECONOMIC Z ONE(MSEZ).THE GROUP HAS PURCHAS -ED VAST TRACTS OF LAND IN THE VICINITY OF THESE S EZS WITH AN OBJECTIVE TO DEVELOP THE LANDS INTO SATELLITE TOWNSHIPS IN THESE AREAS WITH NECESSARY A MENITIES AND INFRASTRUCTURE ANTICIPATING POTENTIAL PRICE RISE AND GOOD RETURN FOR THEIR INVE STMENT IN FUTURE.THESE LANDS HAVE BEEN PURCHASED IN THE NAMES OF ABOUT 100 COMPANIES INCLU DING THE APPELLANT.THE REAL ESTATE OPERATIONS OF THE GROUP WERE HANDLED BY VIRENDRA JA IN,GAURAV JAIN AND DILIP DHERAI. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT WAS CARRIED OUT AT THE OFFICE PREMISES OF THE GROUP AND ITS CLOSE ASSOCIATES AND RESIDENTIAL PREMISES OF ITS KEY PERSONS ON 5.3.2009.IN THE COURSE OF SEARCH, INCRIMINATING EVI DENCE WAS FOUND AND SEIZED PROVING THE FACT THAT THE ASSESSEE HAD MADE CASH PAYMENTS OVER AND A BOVE THE CHEQUE PAYMENTS ENTERED IN THE BOOKS OF ACCOUNT FOR PURCHASE OF LAND. THE FACTUM O F CASH PAYMENTS WAS CONFIRMED BY DILIP DHERAI IN THE COURSE OF SEARCH.LATER ON AFTER TWO-A ND-HALF MOTHS FROM THE DATE OF SEARCH,HE FILED AN AFFIDAVIT BEFORE THE DDIT(INV.),ON 14. 05.2009,A FFIRMING THAT THE STATEMENT RECORDED DURING THE COURSE OF SEARCH ON 05.03.2009 WAS TAKEN FORCI BLY AND UNDER PRESSURE.HOWEVER,THE AO REJECTED THE AFFIDAVIT BY HOLDING IT AS A SELF-SERV ING DOCUMENT.BASED ON SCRUTINY OF THE SEIZED DOCUMENTS,TOTAL UNEXPLAINED EXPENDITURE INCURRED IN CASH ON ACQUISITION OF LANDS WAS ESTIMATED BY THE AO AT RS.43.46 CRORES.THE AMOUNT OF UNEXPLAI NED EXPENDITURE INCURRED IN CASH AS APPORTIONED AMONG ALL LAND COMPANIES (INCLUDING TH E APPELLANT) IN THE RATIO OF COST OF LAND PURCHASED BY SAID COMPANIES UP TO 28.11.2008. ON T HE BASIS OF SAID APPORTIONMENT, AN ADDITION OF RS.46,49,000/- WAS MADE IN CASE OF THE APPELLAN T U/S 69C THE ACT BY THE AO. IN THE APPELLATE PROCEEDINGS,THE FIRST APPELLATE AUTHORITY(FAA)CONFI RMED THE ORDER OF THE AO. 3. IN THE MEANWHILE,THE AO INITIATED PENALTY PROCEEDIN GS U/S 271AAA OF THE ACT.AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE,THE A O HELD THAT CASH PAYMENTS HAD BEEN MADE IN LAND TRANSACTIONS WHICH WERE NOT REFLECTED IN THE B OOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE, THAT IT HAD PAID UNEXPLAINED CASH TO THE LAND OWNER S AS PART OF THE PURCHASE CONSIDERATION OF THE LAND AND THAT SUCH CASH PAYMENTS WERE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS OF THE APPELLANT AND THEREBY THE ACTION OF THE APPELLANT A TTRACTED THE PROVISION OF SECTION 69C OF THE ACT,THAT THE SOURCE OF UNEXPLAINED EXPENDITURE OF R S.46,49,000/- IN CASH COULD ONLY BE UNACCOUN -TED AND UNDISCLOSED INCOME OF THE APPELLANT OUTSID E THE REGULAR BOOK OF ACCOUNTS. THE AO LEVIED ON THE APPELLANT A PENALTY OF RS.4,64,900/- BEING 10% OF UNDISCLOSED INCOME ASSESSED IN CASE OF THE ASSESSEE. 1361/M/14-ANGCHEKAR+6 3 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA AND ARGUED THAT THE AO HAD MADE ADDITIONS OF RS.46,49,000/-U/S .69C OF THE ACT BASED ON THE STATEMENT RECORDED AND DOCUMENTS SEIZED FROM THE THIRD PARTE S,THAT IT HAD MADE A TRUE AND FULL DISCLOSURE OF THE PARTICULARS OF ITS INCOME,THAT THE DIFFEREN CE IN THE ASSESSED INCOME AND THE RETURNED INCOME WAS ON ACCOUNT OF THE ADDITION WHICH THE AO HAD CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE,THAT THE ADDITION U/S 69C HAS BEEN MAD E BY THE AO MERELY BASED ON CERTAIN DOCUMENTS FOUND AT THE PREMISES OF DILIP DHERAI WH O WAS NEITHER A DIRECTOR NOR THE EMPLOYEE OF THE ASSESSEE-COMPANY, THAT NO RELIANCE COULD BE PLA CED ON THE DOCUMENTS SEIZED FROM HIM,THAT THAT THE ADDITIONS HAD BEEN MADE ON AD HOC/ESTIMATE D BASIS AND NO CONSTRUCTIVE EVIDENCE HAS BEEN BROUGHT ON RECORD , THAT THIS DIFFERENCE OF OP INION DOES NOT AT ALL WARRANT THE INITIATION OF PENALTY PROCEEDINGS U/S 271AAA OF THE ACT. THE APPE LLANT FURTHER SUBMITTED THAT THE ADDITION U/S.69C MADE BY THE AO HAD BEEN DELETED BY THE IT AT VIDE ITS ORDER DATED 22.03.2013. IT IS SUBMITTED THAT THE ITAT HAD HELD THAT THE SEIZED DO CUMENTS RELIED UPON BY THE A.O. DO NOT ESTABLISH ANY PAYMENT OF CASH BY THE ASSESSEE FOR A CQUIRING LAND AND THUS THE PENALTY U/S. 271AAA LEVIED BY THE AO BASED ON THESE ADDITION WOU LD NOT SURVIVE.CONSIDERING THE FACT THAT THE TRIBUNAL HAD DELETED THE ADDITIONS MADE IN QUAN TUM PROCEEDINGS,THE FAA DELETED THE PENALTY IMPOSED BY THE AO. 5. BEFORE US,REPRESENTATIVES OF BOTH THE SIDES AGREED THAT THE TRIBUNAL HAD DELETED THE ADDITIONS, THAT TRIBUNAL HAD CONSIDERED THE ISSUE ON MERITS AL SO. WE WOULD LIKE TO REPRODUCE THE RELEVANT PORTION OF THE ORDER OF THE TRIBUNAL AND SAME READS AS UNDER : . IN THE PRESENT CASE, THE IMPUGNED DOCUMENTS W ERE NOT FOUND FROM THE POSSESSION OF THE ASSESSEE BUT WAS FORMED FROM THE POSSESSION OF A TH IRD-PARTY I.E. DILIP DHERAI. MERE MENTION OF THE NAMES OF THE VILLAGES WHERE THE COMPANIES MAY H AVE PURCHASED LENGTHS WOULD NOT GIVE ANY BASIS TO ASSUME/RESUME/SURMISE THAT THE NAME OF THE COMPANIES ARE MENTIONED IN THE IMPUGNED DOCUMENTS. THE VERY FOUNDATION OF SECTION 153C HAS BEEN SHAKEN BY NOT FULFILLING THE CONDITION PRECEDENT FOR THE ISSUE OF NOTICE 19. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES IN THE LIGHT OF THE IMPUGNED SEASON DOCUMENTS, WE HAVE NO HESITATION TO HOLD THAT ACTIO N TAKEN UNDER SECTION 153C OF THE ACT IS BAD IN LAW 22. THE ENTIRE DISPUTE REVOLVES AROUND THE ALLEGE D CASH PAYMENT AMOUNTING TO RS. 43 CRORES APPROXIMATELY AND WHICH HAS BEEN ADDED UNDER SECTIO N 69C OF THE ACT 23 THE ASSESSEE MUST HAVE BEEN FOUND TO HAVE INCURRED ANY EXPENDITURE TO INVOKE THE PROVISIONS OF SECTION 69C OF THE ACT.HOWEVER TH E ALLEGATION MADE BY THE LOWER AUTHORITIES ARE NOT SUPPORTED BY ACTUAL CASH PASSING HANDS. THE ENT IRE ADDITION ARE BASED ON THE SEA DOCUMENTS AND NO OTHER MATERIAL HAS BEEN ADVERTED TO AND WHIC H COULD CONCLUSIVELY SHOW THAT THE HUGE AMOUNT OF THE MAGNITUDE MENTIONED IN THE SEIZED DOC UMENTS TRAVELLED FROM ONE SIDE TO OTHER. THE REVENUE AUTHORITIES HAVE NOT BROUGHT A SINGLE STATE MENT ON RECORD OF THE VENDOR OF LAND IN DIFFERENT VILLAGES. NONE OF THE SELLER HAS BEEN EXA MINED TO SUBSTANTIATE THE CLAIM OF THE REVENUE THAT EXTRA CASH ACTUALLY CHANGED HANDS. 24.. IN THE PRESENT CASE NONE OF THE SELLERS HAVE BEEN EXAMINED BY THE AO TO STRENGTHEN HIS VIEWS THAT CASH HAS BEEN PAID OVER AND ABOVE THE RE GISTERED AMOUNT. THERE IS NOT A SINGLE DOCUMENT/EVIDENCE OF PARTIES INVOLVED IN THE SALE O F LAND AT DIFFERENT VILLAGES BROUGHT ON RECORD TO SHOW THAT AN AMOUNT OTHER THAN THE PAYMENT OF CO NSIDERATION HAS CHANGED HANDS. NO CONFESSION FROM THE SELLERS HAVE BEEN BROUGHT ON RE CORD.. 25. IN OUR CONSIDERATE VIEW (SIC) THERE BEING NO EVIDENCE TO SUPPORT THE REVENUES CASE THAT I USE FIGURE, WHATEVER BE ITS QUANTUM, OVER AND ABOVE THE FIGURE IN THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN THE PARTIES, NO ADDITION COUL D THEREFORE BE MADE UNDER SECTION 69C OF THE 1361/M/14-ANGCHEKAR+6 4 ACT TO THE INCOME OF THE ASSESSEE CONSIDERING THE E NTIRE FACTS BROUGHT ON RECORD, WE HAVE NO HESITATION TO HOLD THAT EVEN ON MERITS NO ADDITION COULD BE SUSTAINED. 26. SINCE WE HAVE ALLOWED THE ISSUE IN CASE OF THE PRESENT ASSESSEE ON BOTH COUNTS I.E.P.ON LEGAL ISSUE AND ON MERIT AND THE ISSUE INVOLVED IN ALL OT HER APPEALS OF OTHER ASSESSEES ARE SIMILAR AND IDENTICAL,THOUGH QUANTUM MAY DIFFER, FOR SIMILAR RE ASONS, WE QUASH THE ASSESSMENT AND DELETE THE ADDITIONS ON MERIT AS WELL AS ON POINT OF LAW IN AL L OTHER CASES ALSO. AS THE TRIBUNAL HAS DELETED THE ADDITIONS ON MERITS AND ON POINT OF LAW TOO,THEREFORE, IN OUR OPINION PENALTY LEVIED BY THE AO UNDER SECTION 271A AA WAS RIGHTLY DELETED BY THE FAA. CONFIRMING HIS ORDER,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. ITA.S./1363-1364,1366,1367 &,1368AY.S.2009-10 7. WE FIND THAT THE TRIBUNAL HAD,IN PARAGRAPH 26 OF IT S ABOVE REFERRED ORDER,DELETED THE ADDITIONS IN ALL OTHER CASES AND THAT THE FAA HAD DELETED THE PENALTY FOLLOWING THE SAIS ORDER.THEREFORE, FOLLOWING OUR ORDER IN THE CASE OF ANGCHEKAR LAND P VT. LTD.,WE UPHOLD HIS ORDER.EFFECTIVE GROUNDS OF APPEAL IN ALL OTHER CASES ARE DECIDED AG AINST THE AO.S. AS A RESULT,AL L THE APPEALS,FILED BY THE AO.S.,STAND DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2016. 8 , 2016 SD/- SD/- ( / AMIT SHUKLA ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.03.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.