SHRI RAJMAL HEMRAJ VANIGOTA , MUMBAI V. DY CIT, CC-7(3), MUMBAI

ITA 140/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9762 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 14-02-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Unexplained expenditure; Set aside
• Section: 69; 69C; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “D”, MUMBAI BEFORE SHRI RAJESH KUMAR, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA No.140/M/2021 Assessment Year: 2010-11 Shri Rajmal Hemraj Vanigota, 1602, Summer Tower, Building No.5, 108, Motisha Lane, Mazgaon, Mumbai – 400 010 PAN: AAAPV5786E Vs. Dy. CIT, CC-7(3), Room No.655, 6 th Floor, Aayakar Bhavan, M.K. Road, Mumbai - 400020 (Appellant) (Respondent) Present for: Assessee by : Shri Neel Khandelwal, A.R. Revenue by : Shri Mahendra Ahuja, Sr. A.R. CIT Date of Hearing : 23.11.2021 Date of Pronouncement : 25.01.2022 O R D E R Per Rajesh Kumar, Accountant Member: The present appeal has been preferred by the assessee against the order dated 12.10.2020 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2010-11. 2. At the time of hearing the ground No.1 was not pressed and therefore ground No.1 is dismissed as not pressed. 3. The ground No.2(a) raised by the assessee is against the order of Ld. CIT(A) confirming the addition of Rs.4,40,39,152/- as made by the AO to the income of the assessee on account of unexplained investments u/s 69 of the Act in flat No.1002 & ITA No.140/M/2021 Shri Rajmal Hemraj Vanigota 2 1006 in the building known as Lodha Costeria on the basis of stamp duty valuation and comparable cases. 4. The facts in brief are that a search action under section 132(1) of the Act was conducted on Lodha group of entities by Investigation Wing on 10.01.2011. The assessee, being related to Lodha group, was also covered under search and accordingly was issued notice under section 153A of the Act. The assessee filed the return of income on 15.11.2012 declaring an income of Rs.25,39,420/- in response to notice issued under section 153A of the Act. Thus the assessee declared the same income in the return of income as was declared in the original return filed on 26.10.2011. During the course of assessment proceedings the AO, upon perusal of the records, found that assessee has purchased two flats namely Flat No.1002 & 1006 on 10 th Floor in Lodha Costeria admeasuring 544 and 870 sq. ft. respectively for a consideration of Rs.38,65,000/- and Rs.62,10,000/- respectively from M/s. Vivek Enterprises as against the stamp value of these flats of Rs.2,10,21,134/- and Rs.3,30,93,018/- respectively. The AO also noted that assessee has paid stamp duty of Rs.11,08,600/- and Rs.17,40,900/- on both these flats respectively. On the basis of this, the AO came to a conclusion that since the assessee has not disputed the valuation as stamp valuation authority at the time of purchase of these flats, therefore he accordingly presumed that the full market value was paid by the assessee to the builder without mentioning the same in the agreements entered into between the assessee and M/s. Vivek Enterprises. The AO finally took the price of these flats at Rs.2,10,21,134/- in respect of flat No.1002 and Rs.3,30,93,018/- qua flat No.1006 and after allowing reduction ITA No.140/M/2021 Shri Rajmal Hemraj Vanigota 3 of Rs. 38,65,000/- and Rs. 62,10,000/- in respect the value shown by the assessee and treated the difference of Rs. 4,40,39,152/- as income of the assessee on account of unexplained investments under section 69 of the Act thereby making total addition of Rs.4,40,39,152/- to the income of the assessee. Pertinent to mention that the AO also noted that M/s. Vivek Enterprises has filed a petition before Income Tax Settlement Commission offering huge income on account of on- money not reflected in the books of accounts. Aggrieved assessee filed an appeal before the Ld. CIT(A) which was dismissed by the Ld. CIT(A) by upholding the order of AO. 5. After hearing the rival contentions of both the parties and perusing the material on record, we note that assessee has purchased two flats i.e. flat No.1002 & 1006 for Rs.38,65,000/- and Rs.62,10,000/- respectively. These flats admeasured 544 and 870 sq. ft. and the stamp valuation of these flats on which the assessee paid the stamp duty were Rs.2,10,21,134/- and Rs.3,30,93,018/- respectively. The Ld. A.R. has raised legal issue before us that the provisions of section 69 of the Act under which the AO has made addition on account of unexplained investment is not applicable to the instant case. The Ld. A.R. also took us through the provisions of section 69 of the Act and submitted that the provisions of section 69 of the Act are not applicable as the said section deals with unexplained investments made by the assessee which have not been recorded into the books of accounts whereas in the present case the investment made by the assessee has been recorded in the books of accounts and therefore the addition made by the AO has been made under wrong provisions of the Act and is ITA No.140/M/2021 Shri Rajmal Hemraj Vanigota 4 invalidly made and may kindly be deleted. After perusing the provisions of section 69 of the Act carefully, we note that certainly the provisions of this section deal with those investments which have not been recorded by the assessee in the books of accounts but in the present case the assessee has recorded both the flats in the books of accounts. Therefore we agree with the contentions of the Ld. Counsel that this addition has wrongly been made as unexplained investments u/s 69 of the Act by the AO which has also been confirmed by the Ld. CIT(A). In our opinion, the addition should have been made by the AO under section 69C of the Act which deals with unexplained expenditure. 6. In view of these facts and circumstances and the provisions of section 69 of the Act, we are inclined to set aside the order of Ld. CIT(A) and direct the AO to delete the addition of Rs.4,40,39,152/- as the provisions of section 69 of the Act are not applicable to the assessee’s case. Accordingly, appeal of the assessee is allowed. 7. Since we have allowed the appeal of the assessee on legal issue, therefore, we are not deciding the merits of the case. 8. In the result, the appeal of the assessee is allowed. Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board Sd/- Sd/- (Ravish Sood) (Rajesh Kumar) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 25.01.2022. * Kishore, Sr. P.S. ITA No.140/M/2021 Shri Rajmal Hemraj Vanigota 5 Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The CIT (A) Concerned, Mumbai The DR Concerned Bench //True Copy// [ By Order Dy/Asstt. Registrar, ITAT, Mumbai.