DCIT CEN CIR 9, MUMBAI V. AVISHKAR INFRASTRUCTURE P.LTD, MUMBAI

ITA 1378/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3606 (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
• Next Hearing Date: 08-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP GEOL
• Keywords: Income from undisclosed sources; Search and seizure

Judgement Text

1 , , , , INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMIT SHUKLA,JUDICIAL MEMBER ./I.T.A./1378/MUM/2014 , / ASSESSMENT YEAR: 2009-10 ACIT,CC-9 OLD CGO,M K ROAD, MUMBAI-400 020 VS. AVISHKAR INFRASTRUCTURE PVT.LTD. ACME GHAR,19 K D ROAD,VILE PARLE(W), MUMBAI-400058 PAN:AAFCA9502R REVENUE BY: SH.SANDEEP GEOL ASSESSEE BY: SH.RAVIKANT PATHAK / 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 RAJENDRA A.M. - CHALLENGING THE ORDERS DATED 1.1.2014 OF THE CIT(A) - 37,MUMBAI,THE ASSESSING OFFICER(AO) HAS FILED PRESENT APPEAL.THE EFFECTIVE GROUND OF AP PEAL IS ABOUT DELETION OF PENALTY. BRIEF FACTS: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER AND IS FOLLOWING PROJECT COMPLETION METHODOF ACCOUNTING.. IT COMPLETED PROJE CT NAMELY ACME CENTER AT AHMADABAD, GUJARAT.A SEARCH WAS CARRIED AT THE PREMISES OF THE ASSESSEE AND ACME GROUP ON 24/07/2008. DURING THE COURSE OF SEARCH STATEMENT OF SHRI KETAN MEHTA WAS RECORDED ON 18/ 09/2008, IN WHICH UNACCOUNTED INCOME OF RS.22.88 CRORES WAS DIS CLOSED IN RESPECT OF ACME GROUP OF COMPANIES WHICH INTER-ALIA INCLUDE UNDISCLOSED INCO ME OF RS.70.00 LACS IN RESPECT OF ASSESSEE'S PROJECT NAMELY 'ACME CENTER' AT AHMADABA D FOR ASSESSMENT YEAR 2009-10. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS THE AO N OTICED THAT ASSESSEE HAD DISCLOSED ONLY A SUM OF RS.19,74,387/- AS AGAINST RS.70.00 LACS DE CLARED DURING THE COURSE OF SEARCH. THE ASSESSEE WAS REQUIRED TO EXPLAIN AS TO WHY ENTIRE A MOUNT OF RS.70.00 LACS WAS NOT DECLARED AND WHY THE SAME SHOULD NOT BE ASSESSED. IN RESPONS E, IT WAS SUBMITTED THAT DUE TO RECESSION IN REAL ESTATE MARKET IN FINANCIAL YEAR 2008-09, TH E ASSESSEE COULD NOT REALIZE THE PROFIT OF RS. 70.LACS,WHICH WAS REALIZED AT A SUM OF RS.19,74,387 /-IN RESPECT OF ASSESSMENT YEAR 2009-10 AND RS.69,770/- IN AY.2010-11. THE AO REJECTED THE SAID EXPLANATION OF THE ASSESSEE.IN VIEW OF THE STATEMENT OF KETAN MEHTA RECORDED U/S. 132(4 ) OF THE ACT AND THE FACTS MENTIONED ABOVE THE BALANCE UNDISCLOSED INCOME OF RS.49,55,84 3/- (RS.70,00,000 - RS.20,44,157/-) WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE.IN THE AP PELLATE PROCEEDINGS,THE FIRST APPELLATE PROCEEDINGS (FAA) CONFIRMED THE ORDER OF THE AO. PENALTY PROCEEDINGS U/S.271(1)(C)OF THE ACT FOR CON CEALMENT OF PARTICULARS OF INCOME WERE INITIATED SEPARATELY. THE AO,VIDE HIS ORDER DATED 2 8.12.2012,IMPOSED A PENALTY OF RS.15,31, 356/-,U/S.271(1)(C) OF THE ACT FOR CONCEALING THE P ARTICULARS OF INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME.BUT,THE FAA DELETE D THE PENALTY LEVIED BY THE AO. 3. BEFORE US,THE DEPARTMENTAL.REPRESNETATIVE(DR)STATED THAT THE MATTER COULD BE DECIDED ON MERITS.THE AUTHORISED REPRESENTATIVE(AR)STATED THAT THE TRIBUNAL,VIDE ITS ORDER DATED 17. 06. 2015(ITA/7165/MUM/2011-AY.2009-10),HAD DECIDED THE QUANTUM APPEAL IN FAVOUR OF THE ASSESSEE,THAT THE ADDITION UPHELD BY THE FAA WERE D ELETED BY THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE TRIBUNAL HAS DELETED THE ADDITION MADE/CONFIRMED BY THE AO/FAA IN THE ASSESSMENT/ APPELLATE PROCEEDINGS.WE ARE REPRODUCING THE RELEVA NT PORTION OF THE ORDER OF THE TRIBUNAL (SUPRA)AND SAME READS AS UNDER: 2 6. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. THE QUESTION IN THE PRESENT APPEAL RELATES TO THE DETER MINATION OF PROFIT IN RESPECT OF 'ACME CENTER', A PROJECT DEVELOPED BY THE ASSESSEE AT AHM ADABAD. THE SOLE BASIS OF THE DEPARTMENT TO ASSESS PROFIT OF RS.70.00 LACS IS BASED UPON THE STATEMENT RECORDED UNDER SECTION 132(4) OF THE ACT. IT IS A MATTER OF FACT THAT BY THE TIME ST ATEMENT WAS RECORDED, THE ENTIRE PROJECT WAS NOT SOLD BY THE ASSESSEE. ONLY TWO SHOPS WERE SOLD. THE DETAILS OF SALE OF THE ENTIRE PROJECT BY THE ASSESSEE HAS ALREADY BEEN PRODUCED IN THE TABLE REPRODUCED IN PARA-3. ACCORDING TO THE FACTS, ASSESSEE HAS DEVELOPED TOTAL AREA OF 14950 S Q.FTS. WHICH COMPRISES OF GROUND FLOOR TO 4TH FLOOR. BY THE TIME STATEMENT WAS RECORDED THE A SSESSEE HAD SOLD 6000 SQ.FTS. FOR AN AGGREGATE AMOUNT OF RS.1,86,26,000/-, WHICH GIVE RI SE TO AVERAGE RATE OF RS.3103/- PER SQ.FT. THE SUBSEQUENT SALES BY THE ASSESSEE WERE 8950 SQ.F TS. WHICH WAS SOLD FOR AN AGGREGATE AMOUNT OF RS.3,28,68,750/-, WHICH IS AVERAGE SALE R ATE OF RS.3672/- PER SQ.FT. ALL THESE SALES ARE MADE TO THIRD PARTY, THE NAMES OF WHICH WERE GI VEN NOT ONLY TO AO BUT ALSO TO LD. CIT(A). THEREFORE, TOTAL RECEIPTS OF THE ASSESSEE FROM THE SAID PROJECT ARE A SUM OF RS.5,14,88,750/-. THE DETAILS OF EXPENDITURE WAS ALSO SUBMITTED TO TH E AO. THE RELEVANT PORTION OF THE ASSESSMENT ORDER HAS ALREADY BEEN REPRODUCED. THE A O DID NOT DOUBT THE RECEIPTS OF THE ASSESSEE AS WELL AS EXPENDITURE INCURRED ON PROJECT BUT HE HAS MADE THE ADDITION SIMPLY ON THE BASIS OF STATEMENT WHICH WAS RECORDED UNDER SEC TION 132(4) OF THE ACT. THE ASSESSEE RETRACTED THE STATEMENT BY FILING THE RETURN OF INC OME AND THIS FACT HAS ALSO BEEN ADMITTED BY LD. CIT(A) WITH THE FOLLOWING WORDS' 'SECONDLY, IN THIS CASE ALTHOUGH THE SEARCH & SEIZU RE WAS CARRIED OUT IN THE PREMISES OF THE APPELLANT ON 24-07-2008, THE APPELLANT NEVER RETRAC TED THE STATEMENT RECORDED U/S. 132(4) OF THE ACT TILL THE DATE OF FURNISHING OF RETURN OF IN COME ON 23-09-2009.' 6.1 UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE WE HAVE TO EXAMINE THAT WHETHER SUSTENANCE OF IMPUGNED ADDITION IS IN ACCORDANCE WI TH LAW OR NOT. THE LAW IN THIS REGARD HAS ALREADY BEEN DESCRIBED IN THE ABOVE PART OF THIS OR DER AND REFERENCE CAN BE MADE TO THE DECISION OF HON'BLE TELUNGANA & ANDHRA PRADESH HIGH COURT IN THE CASE OF GAJJAM CHINNA YELLAPA VS. ITO(SUPRA), WHERE THEIR LORDSHIPS HAVE OBSERVED THAT IN CASE STATEMENT IS RETRACTED THEN TOTALLY DIFFERENT CONSIDERATION ALTO GETHER WILL ENSUE AND THE SITUATION WOULD RESEMBLE TO SECTION 164 OF THE CODE OF CRIMINAL PRO CEDURE. THE EVIDENTIARY VALUE OF RETRACTED STATEMENT BECOME DILUTED AND IT LOSES ITS STRENGTH TO STAND ON ITS OWN. IN THAT CASE ASSESSING AUTHORITY HAS TO GARNER SOME SUPPORT TO T HE STATEMENT FOR PASSING AN ORDER OF ASSESSMENT. IT IS ALSO HELD THAT RETRACTED STATEMEN T WOULD NOT PUT AN END TO THE PROCEDURE, THEN THE AO IS UNDER AN OBLIGATION TO SUPPORT HIS F INDINGS ON THE BASIS OF OTHER MATERIALS AND IF HE DOES NOT HAVE SUCH MATERIAL THEN IT WOULD REF LECT UPON THE VERY PERFUNCTORY NATURE OF THE SURVEY. FOR HOLDING SO THEIR LORDSHIPS HAVE REFERRE D TO THE AFOREMENTIONED CIRCULAR DATED 10/3/2003, WHEREIN CBDT HAS CLEARLY GIVEN THE MAND ATE TO THE OFFICERS THAT DURING THE COURSE OF SEARCH, SEIZURES AND SURVEY NO ATTEMPT SH OULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME AND SUCH INSTRUCTIONS TO CBD T WERE APPLICABLE WHEN THE SEARCH AND SEIZURE WAS MADE AND ASSESSMENT WAS FRAMED. CBDT HA S FURTHER MANDATED THAT IN RESPECT OF PENDING ASSESSMENT ALSO AO SHOULD RELY UPON THE EVI DENCES/MATERIALS GATHERED DURING THE COURSE OF SEARCH/SURVEY OPERATIONS OR THEREAFTER WH ILE FRAMING RELEVANT ASSESSMENT ORDER. THE ADDITION MADE IN THE PRESENT CASE IS CONTRARY T O THE AFOREMENTIONED DECISION OF HON'BLE TELANGANA & ANDHRA PRADESH HIGH COURT AS WELL AS AF OREMENTIONED CIRCULAR OF CBDT AS THE ASSESSMENT IS ENTIRELY BASED UPON THE STATEMENT REC ORDED DURING THE COURSE OF SEARCH AND NO INDEPENDENT MATERIAL HAS BEEN BROUGHT ON RECORD BY THE AO TO SHOW THAT THE INCOME RETURNED WAS INCORRECT. 6.2 THE OTHER DECISIONS WHICH HAVE BEEN RELIED UPON BY LD. AR ALSO SUPPORTS SIMILAR PROPOSITION AND THESE HAVE BEEN DISCUSSED IN THE AB OVE PART OF THIS ORDER AND FOR THE SAKE OF BREVITY THEY ARE NOT REPEATED. 6.3 SO FAR AS IT RELATES TO FINDINGS RECORDED BY LD . CIT(A), ONE OF THE FINDING IS THAT BY MAKING ADMISSION UNDER SECTION 132(4) THE ASSESSEE HAS ALT ERED THE POSITION OF THE DEPARTMENT BECAUSE OF WHICH THE DEPARTMENT DID NOT PURSUE THE MATTER FURTHER AND DID NOT VISIT THE SAID ACME CENTRE AT AHMEDABAD. IT MAY BE MENTIONED THAT SUCH OPINION OF LD. CIT(A) WOULD BE CONTRARY TO THE AFOREMENTIONED CIRCULAR ISSUED BY C BDT, WHERE THE CLEAR MANDATE HAS BEEN 3 GIVEN TO THE INCOME TAX AUTHORITIES WORKING UNDER T HE CBDT THAT WHILE RECORDING THE STATEMENT DURING THE COURSE OF SEARCH/SURVEY NO ATT EMPT SHOULD BE MADE TO OBTAIN CONFESSION OF THE UNDISCLOSED INCOME AND ANY SUCH ACTION WOULD BE VIEWED ADVERSELY. RECOGNIZING SUCH POSITION THEIR LORDSHIPS OF TELANGANA & ANDHRA PRAD ESH HIGH COURT HAVE ALREADY OBSERVED THAT IF ADDITION IS MADE SIMPLY ON THE BASIS OF STA TEMENT RECORDED UNDER SECTION 132(4) AND NO MATERIAL IS BROUGHT ON RECORD BY THE REVENUE AUTHOR ITIES THEN IT WOULD REFLECT UPON VERY PERFUNCTORY NATURE OF THE SURVEY/SEARCH ACTION OF T HE DEPARTMENT. THEREFORE, IN ABSENCE OF SUPPORTING MATERIAL, THE ADDITION SIMPLY ON THE BAS IS OF STATEMENT CANNOT BE UPHELD. THE OTHER FINDINGS OF LD. CIT(A) DO NOT SUPPORT THE ADD ITION AS THEY ARE ONLY BASED UPON THE ADMISSION OF THE ASSESSEE. ACCORDING, TO THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED ALL REQUIRED PARTICULARS REGARDING SALE AND EXPENDITURE INCURRED ON THE IMPUGNED PROJECT AND AO COULD NOT POINT OUT ANY DEFECT IN THOSE PARTICUL ARS SUBMITTED BY THE ASSESSEE. THUS, THE ADDITION IS MADE SIMPLY ON THE BASIS OF STATEMENT R ECORDED DURING THE COURSE OF SEARCH AND IS NOT SUPPORTED BY ANY MATERIAL. IN VIEW OF CASE LAW RELIED UPON BY LD. AR, THE ADDITION IS NOT SUSTAINABLE AND IS DELETED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. AS THE TRIBUNAL HAS DELETED THE ADDITIONS MADE BY T HE AO IN QUANTUM APPEALS,SO, THE PENALTY ORDERS WOULD NOT SURVIVE.EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST THE AO. AS A RESULT, APPEALS FI LED BY THE AO STAND DISMISSED. % &'()')*) + )),) . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH MARCH, 2016. 0 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.