ACIT, New Delhi V. M/s. Eventual Builders (P) Ltd., New Delhi

ITA 1368/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8871 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 07-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers; Document seized; Documents seized

Judgement Text

INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B : NEW DELHI BEFORE SHRI S.V.MEHROTRA, ACCOUNTANT MEMBER AND SHRI A. T. VARKEY, JUDICIAL MEMBER ITA NO. 1368 /DEL/ 2013 (ASSESSMENT YEAR: 2007 - 08 ) ACIT CENTRAL CIRCLE - 23, ROOM NO.359, E - 2, ARA CENTRE, JHANDEWALAN EXTENSION, NEW DELHI VS. EVENTUAL BUILDERS (P) LTD., M - 11, MIDDLE CIRCLE, CANNAUGHT CIRCUS, NEW DELHI PAN:AABCE3530H (APPELLANT) (RESPONDENT) DATE OF HEARING 05.01.2015 DATE OF PRONOUNCEMENT 27 .02.2015 O R D E R PER A. T. VARKEY, JUDICIAL MEMBER THIS IS AN APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A),XXXIII, NEW DELHI DATED 24.12.2012 FOR ASSESSMENT YEAR 2007 - 08. 2. THE SOLE GROUND RAISED BY THE REVENUE IS THAT OF DELETION OF ADDITION OF RS.19,41,541/ - ON ACCOUNT OF INTEREST ON POST DATED CHEQUE (PDC) PAID OUT OF BOOKS OF ACCOUNT. 3. BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE COMPANY BELONGS TO THE BPTP GROUP. THE BPTP LTD AND ITS GROUP COMPANIES ARE ENGAGED IN THE BUSINESS OF REAL ESTATE. A SEARCH & SEIZURE OPERATION WAS CARRIED OUT ON BPTP LTD AND SOME OF ITS GROUP COMPANIES ON 15 - 11 - 2007, CERTAIN INCRIMINATING D OCUMENTS WERE FOUND AND SEIZED. FROM PERUSAL OF THESE DOCUMENTS IT WAS REVEALED THAT BPTP GROUP COMPANIES HAD PURCHASED HUGE TACTS OF LAND IN APPELLANT BY : SMT. PARWINDER KAUR, SR. DR RESPONDENT BY : SH. V.K. RASTOGI, AR PAGE 2 OF 5 DIFFERENT VILLAGES OF FARIDABAD. IT WAS ALSO NOTICED FROM THE SEIZED DOCUMENTS THAT THE GROUP WAS FOLLOWING A BUSI NESS MODEL AS A PART OF WHICH ONLY PART PAYMENTS OF THE SALE CONSIDERATIONS IN RESPECT OF LANDS PURCHASED WERE PAID AT THE TIME OF EXECUTION OF SALE DEED AND THE PAYMENT OF BALANCE SALE CONSIDERATION WAS INVARIABLY MADE THROUGH POST DATED CHEQUES (PDCS) AN D FOR THE INTERVENING PERIOD BETWEEN THE DATE OF SALE DEED AN D TH E DATE OF ENCASHMENT OF PDC, INTEREST WAS PAID IN CASH TO THE VENDORS OF THE LAND BY THE VENDEE COMPANY ON MONTHLY BASIS @1.25% P.M. ON THE AMOUNT OF PDC. IN VIEW OF ABOVE, A.O. HAS HELD THAT THE APPELLANT HAS PAID INTEREST IN CASH TO THE VENDOR(S) ON THE AMOUNT OF PDCS @1.25% PER MONTH (15% PER ANNUM) OUTSIDE ITS BOOKS OF ACCOUNT. THUS, BY APPLYING THE RATE OF 1.25% PER MONTH ON THE AMOUNT OF PDCS FOR THE INTERVENING PERIOD I.E. FROM DATE OF SALE DEED TO DATE OF ENCASHMENT OF PDCS, THE TOTAL AMOUNT OF UNACCOUNTED INTEREST PAID BY THE APPELLANT COMPANY TO THE VENDORS, AO HAS COMPUTED TOLD INTEREST OF RS.19,47,541/ - AND MADE AN ADDITION OF THE SAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED BY THE SAID ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD CIT(A) WHO WAS PLEASED TO GIVE THE FOLLOWING DIRECTION FOR THE RECALCULATION OF THE INTEREST ON PDCS : - LEARNED AR HAS BEEN MAINTAIN ALL ALONG THAT INTEREST IS NOT PAID AS ALL THE RECEIPTS ARE ONLY MEMORANDUM ONLY. ANALYSIS OF THESE ABOVE SEIZED DOCUMENT REVEALS THAT THESE SEIZED DOCUMENTS DEFINITELY PROVES THAT INTEREST IS PAID ON PDCS. VARIOUS VOUCHER IN SEIZED DOCUMENTS CONCLUSIVELY PROVES THAT THE RECIPIENT HAS SIGNE D ON VOUCHER FOR RECEIPT OF THE INTEREST. LD AR'S CONTENTION THAT THESE ARE ONLY WORKING OF INTEREST CLAIMED BY SELLER FOR PUTTING UP BEFORE SENIOR MANAGEMENT DOES NOT APPEAR TO BE CONVINCING. IN CASE OF CLAIM, THE RECEIVER WILL NOT SIGN THE VOUCHER AS REC IPIENT. AMOUNTS ARE SPECIFIC AND CALCULATION IS 15% PER ANNUM. THEREFORE, LD AR WITHOUT CONCEDING THAT THE INTEREST IS PAID ON PDCS HAS TAKEN THE STAND THAT IN NONE OF THE SEIZED MATERIAL, PAGE 3 OF 5 I.E. EVEN IN RECEIPT SEIZED, THE INTEREST IS FROM DATE OF ISSUE OF PDCS. NOW ISSUE ARISES WHETHER INTEREST ON PDCS ARE PAID FROM DATE OF ISSUE OR FOR EXTENSION OF PDCS. DOCUMENTS DISCUSSED ABOVE WHERE THERE IS CLEAR EVIDENCE OF RECEIPT OF INTEREST IS FOR EXTENSION OF PERIOD OF PDCS. LD AR'S ARGUMENTS THAT CALCULATION OF I NTEREST ON PDCS HAS BEEN CONSIDERED WHILE ENTERING INTO AGREEMENTS HOLDS SOME LOGIC. BUT WHEN DATE OF PDCS ARE EXTENDED, THE RECIPIENT WILL DEFINITELY ASK AND SETTLE FOR SOME ADDITIONAL COMPENSATION IN FORM OF INTEREST. THERE IS NO EVIDENCE WHICH PROVES TH AT INTEREST IS PAID FROM THE DATE OF SALE TO DATE OF ENCASHMENT OF POST DATED CHEQUES. HOWEVER, THERE IS CONCRETE EVIDENCE IN FORM OF SEIZED MATERIAL TO SHOW THAT INTEREST IS PAID AND RECEIVED BY SELLER ON THE EXTENSION OF PDCS AS DISCUSSED ABOVE WHILE ANA LYZING THE SEIZED DOCUMENT. THEREFORE, IN MY VIEW WHERE EVER THE DATE OF PDCS ARE EXTENDED INTEREST IS PAID @ 15% PER ANNUM IN CASH OUT OF BOOKS OF ACCOUNTS. WHICH ARE EVIDENT FROM SEIZED MATERIAL. THEREFORE, INTEREST ON PDCS TO THE EXTENT OF EXTENSION PER IOD APPEARS TO QUITE REASONABLE AND LOGICAL. ACCORDINGLY, INTEREST ON PDCS EITHER AS SALE CONSIDERATION OR ADDITIONAL PAYMENT MAY BE RECOMPUTED TO THE EXTENT OF EXTENDED PERIOD OF PDCS BY THE A.O. AND TO THAT EXTENT ADDITION IS CONFIRMED. THE ABOVE FORMULA E WILL APPLY TO ALL GROUP COMPANIES UNDER THE MANAGEMENT OF BPTP I.E.( M/S BPTP AND ASSOCIATE COMPANIES) INCLUDING THE APPELLANT COMPANY' AS EVIDENCE IS FOUND IN RESPECT OF VARIOUS COMPANIES OF BPTP AND SOME SEIZED PAPER COULD NOT BE RELATED TO SPECIFIC CO MPANY. THEREFORE, IT IS PROPER TO APPLY THIS FORMULA FOR ALL COMPANIES UNDER THE COMMON MANAGEMENT OF BPTP GROUP, HEAD BY SHRI KABUL CHAWLA. ALL THESE COMPANIES ARE CLOSELY LINKED. SOME COMPANIES PURCHASE LAND AND TRANSFER THE SAME TO M/S BPTP LTD, OR COUN TRYWIDE PROMOTERS (P) LTD. FOR HOUSING OR COMMERCIAL PROJECTS ARE ULTIMATELY DEVELOPED AND SOLD BY M/S BPTP LTD AND COUNTRYWIDE PROMOTERS LTD. OR IN STRAY CASE BY SOME OTHER COMPANIES. ASSESSING OFFICER HAS APPLIED THE CASE OF EUSUF ALI FOR APPLYING INTERE ST ON PDCS FOR ALL COMPANIES OF BPTP GROUP FOR ALL ASSESSMENT YEAR UNDER CONSIDERATION. LD AR HAS TRIED TO DIFFERENTIATE THE ABOVE CITED CASE ON FACTS. IN MY VIEW, AS INTEREST PAYMENT ON EXTENSION OF PERIOD OF PDCS ARE ESTABLISHED ON NUMEROUS SEIZED DOCUME NTS. A TREND IS ESTABLISHED FOR THE GROUP AS THE OVERALL MANAGEMENT IS CONTROLLED BY ONE PERSON SH.KABUL CHAWLA AND ACTIVITIES OF ALL COMPANIES ARE INTERRELATED. IF IT IS NOT POSSIBLE TO WORK OUT THE EXTENSION OF PDCS IN EACH CASE THEN A.O. IS DIRECTED TO RECOMPUTED INTEREST ON PDCS AFTER SIX MONTHS FROM DATE OF ISSUE OF PDCS I.E. DATE OF SALE, AS SIX MONTHS IS TAKEN AS REASONABLE PERIOD FOR GIVING PDC AS PER SALE DEED. THIS VIEW IS FORMED ON THE BASIS THE STATEMENT OF SH. CHHOTU RAM WHICH SAYS THAT NORMALL Y PDCS ARE GIVEN FOR 8 TO 10 MONTHS. FURTHER LD AR HAS ALSO SUBMITTED FEW SALE DEED IN RESPECT OF SOME OF SEIZED RECORD IN THE CASE OF RAMVATI BEERO ETC WHERE THE INTEREST WORKING IS MADE AFTER 9/15 MONTHS. TAKING THESE FACTS INTO CONSIDERATION. IT WOULD B E PROPER TO COMPUTE INTEREST AFTER 6 MONTHS FROM DATE OF SALE ON CONSERVATIVE SIDE. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED. PAGE 4 OF 5 4. THE LD AR BROUGHT TO OUR NOTICE THE ORDER PASSED BY A CO - ORDINATE BENCH IN ONE OF THE SISTER CONCERN I.E. CASE OF M/S I AG PRO MOTERS AND DEVELOPMENT PVT . LTD , TA NO.16 74/DEL/2013 AND 1765/DEL/2013 OF ASSESSMENT YEAR 2008 - 09, IN WHICH ON IDENTICAL FACTS AND CIRCUMSTANCES AND ON THE SAME ISSUE HAS DECIDED AS FOLLOWS: - 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND PERUSED RELEVANT MATERIAL PLACED BEFORE US. AT THE OUTSET, THE GROUND RAISED BY THE REVENUE IS MISCONCEIVED BECAUSE LEARNED CIT(A) HAS NOT DELETED THE ADDITION OF RS.5,06,625/ - BUT HAS ONLY DIRECTED TO RECALCULATE THE, INTEREST. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE LEARNED CIT(A) AND ALSO THE SUBMISSIONS OF BOTH THE PARTIES AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). AFTER EXAMINING THE LOOSE PAPERS SEIZED AT THE TIME OF SEARCH AT THE ASSESSEE'S PREMISES, IT WAS NOTICED THAT INTE REST IS PAID ON THE PDCS ONLY DURING THE PERIOD OF EXTENSION OF PDCS AND, THEREFORE, HE DIRECTED THE ASSESSING OFFICER TO RECOMPUTED THE INTEREST ON PDCS AT THE TIME OF EXTENSION OF THE PDCS. HE HAS FURTHER OBSERVED THAT IF IT IS NOT POSSIBLE TO WORK OUT T HE EXTENSION OF PDCS IN EACH CASE, THEN THE ASSESSING OFFICER IS DIRECTED TO RECOMPUTED INTEREST ON PDCS AFTER SIX MONTHS FROM THE DATE OF ISSUE OF THE PDCS. THEREFORE, THE GROUND OF APPEAL OF THE REVENUE THAT THE CIT(A) DELETED THE ADDITION OF RS.5,06,625 / - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST ON PDCS IS FACTUALLY INCORRECT AND CONTRARY TO THE ORDER OF THE CIT(A). THE CIT(A) DIRECTED TO RECALCULATE THE INTEREST ON PDCS AND THERE WAS A SOUND LOGIC FOR SUCH DIRECTION. HIS DIRECTION IS BASED O N MATERIAL FOUND AND SEIZED AT THE TIME OF SEARCH. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) IN THIS REGARD AND ACCORDINGLY, WE REJECT GROUND NO.1 OF THE REVENUE'S APPEAL. 5. RESPECTFULLY FOLLOWI NG THE AFORESAID ORDER WE CONFIRM THE IMPUGNED ORDER , SINCE LD DR COULD NOT POINT OUT ANY CHANGE IN FACTS AND CIRCUMSTANCES TO DISTINGUISH THIS CASE FORM THE AFORESAID CASE OF THE SISTER CONCERN. SO WE DISMISS THIS GROUND OF THE REVENUE. 6. IN THE RESULT THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 . 02.2015 . - S D / - - S D / - ( S. V. MEHROTRA ) (A. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER PAGE 5 OF 5 DATED : 2 7 / 02 / 2015 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI