MR VAIDYANATHAN VEMBU, MUMBAI V. ACIT , CC 6(2), MUMBAI, MUMBAI

ITA 1579/MUM/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 2591 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2016-2017
• Appeal Filed On: 09-06-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: .. DETAILED
• Keywords: Unexplained investment; Revision of order; Search and seizure; Salary income; Loose papers; Document seized; Corroborative evidences; Assessment record; Documents seized; Set aside; Capital Gains
• Section: 69; 263; 143(3); 195; 201; 48; 13; 153; 22; 153C; 101; 20

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE SHRI C. N. PRASAD , JM & SHRI S. RIFAUR RAHMAN, AM ./ I.T.A. NO . 1577 TO 1579 / MUM/ 2020 ( / ASSESSMENT YEAR: 2014 - 15 TO 2016 - 17 ) MR. VAIDYANATHAN VEMBU, B - 1602, BEAUMONDE , APPASAHEB MARATHE MARG, PRABHADEVI, MUMBAI - 400 025 / VS. ACIT - CC - 6(2 ) R. NO. 1903, AIR INDIA BLDG, NARIMAN POINT, MUMBAI - 400 021 ./ ./ PAN NO. A AIPV 5796 J ( / APPELLANT ) : ( / RESPONDENT ) / APP ELLANT BY : SHRI RAJEEV KHANDELWAL , AR / RESPONDENTBY : SHRI A. MOHAN , DR / DATE OF HEARING : 22 .10 .2020 / DATE OF PRONOUNCEMENT : 17.11.2020 / O R D E R PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER : THE PRESE NT THREE A PPEAL S HAVE BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. PR. COMMIS S IONER OF INCOME TAX (C ) 3 IN SHORT REFERRED AS LD. P CIT , MUMBAI, DATED 16.03.2020 FOR 2 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU A SSESSMENT YEAR (IN SHORT A Y ) 2014 - 15 TO 2016 - 17 PASSED UNDER SECTION 263 OF THE ACT RESPECTIVELY . 2. SINCE THE ISSUES RAISED IN ALL THE APPEALS ARE IDENTICAL, THEREFORE, FOR THE SAKE OF CONVENIENCE, THESE APPEALS ARE CLUBBED, HEARD AND DISPOSED OF F BY THIS CONSOLIDATED ORDER. 3. AT THE OUTSET , LD. AR SUBMITTED THAT LD. PCITS ORDER D ATED 16.03.2020 WAS RECEIVED BY THE ASSESSEE ON 17.03.2020 AND THE DUE DATE FOR FILING THE APPEAL WAS 16.05.2020, WHEREAS ASSESSEE HAS FILED THE APPEAL ON 09.06.2020 DUE TO PANDEMIC SITUATION AND TH US, THE ASSESSEE COULD NOT FILE THE APPEAL BEFORE THE SPEC IFIED DATE. HE FURTHER SUBMITTED THAT AS PER THE ORDINANCE/NOTIFI CATION, THE TIME PERIOD TO FILE THE APPEAL EXTENDED UP TO JUNE 30, SINCE THE ASSESSEE FILED THE APPEAL ON 09.06.2020 WITHIN THE PERIOD EXTENDED BY THE NOTIFICATION AND SUCH DELAY MAY BE CONDO NED. 4. ON THE OTHER HAND, LD. DR HAS NOT OBJECTED TO THE ABOVE SUBMISSION, ACCORDINGLY WE CONDONE THE DELAY FOR FILING THE APPEAL BELATEDLY. 3 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 5. LD. AR BROUGHT TO OUR NOTICE THAT ASSESSEE HAS FILED THE PRESENT APPEALS I. E. ITA NO. 1577 TO 1579/MUM/20 20 A ND ASSESSEE HAS REMITTED THE APPEAL FEES OF RS. 30,000/ - . THE ISSUE IN VOLVED IN THE PRESENT APPEALS ARE RELATING TO SECTION 263 OF THE ACT AND ASSESSEE IS REQUIRED TO PAY ONLY A FEE OF RS. 500 PER APPEAL. THEREFORE, THE ASSESSEE HAS REMITTED EXCESS APPEAL FEES TO THE EXTENT OF RS. 28,500/ - AND HE BROUGHT TO OUR NOTICE DECISION OF COORDINATE BENCH OF ITAT, AMRITSAR IN THE CASE OF KIRANJEET SINGH (2006) 101 TTJ(AMRITSAR). 6. WE NOTICE THAT ASSESSE E IS REQUIRED TO PAY FEES OF RS. 500 PER APPEAL U/S 253(6)(B) OF THE ACT , THEREFORE, THE ASSESSEE IS REQUIRED TO PAY ONLY RS. 1500 FOR FILING THE APPEAL AGAINST THE ORDER U/S 263 WHEREAS , HE HAS REMITTED RS. 30,000/ - INSTEAD OF RS. 1,500/ - . IT IS DIRECTED ACCORDINGLY TO REGISTRY THAT THE EXCESS APPEAL FEES PAID WAS L IABLE TO BE REFUNDED EITHER BY THE WAY OF ADJUSTING THE SAME AGAINST OUTSTANDING DEMAND IF ANY OR BY WAY OF GRANTING OF REFUND WITHIN A PERIOD OF ONE MONTH FROM THE DATE OF RECEIPT OF THE ORDER IN APPEAL. 4 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 7 . NOW COMING TO THE FACTS OF THE LEAD CASE I.E. ITA NO. 1579/MUM/2020 , ACCORDINGLY WE ARE EXTRACTING THE FACTS FROM THIS APPEAL. THE BRIEF FACTS OF THE CASE ARE, ASSESSMENT ORDER U/S 143(3) OF THE ACT WAS PASSED BY AO ON 11.12.17 ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS. 9,70,55,250/ - AGAINST TH E RETURN ED INCOME OF RS. 5,94,05,250/ - . FROM THE RECORDS, LD. PCIT OBSERVED THAT A SEARCH & SEIZURE OPERATION U/S.132(1) OF THE ACT WAS CONDUCTED AT THE PREMISES OF M/S AHUJA GROUP . CONSEQUENT TO THE SEARCH OPERATION, THE CASE OF THE ASSESSEE WAS CENTRALIZ ED U/S 127 WITH DCIT CC - 6(2), MUMBAI FOR COORDINATED INVESTIGATION. ON EXAMINATION OF RECORDS RELATING TO SEARCH AND SEIZURE ACTION IN THE CASE OF M/S AHUJA GROUP, THEY FOUND PEN DRIVES CONTAINING PARALLEL BOOKS OF ACCOUNT AND THEY WERE MARKED AS ANNEXURES 'A - 9' TO 'A - 17' WHICH SHOWED VARIOUS UNACCOUNTED TRANSACTIONS OF M/S. AHUJA GROUP, INCLUDING UNDISCL OSED CASH LOAN FROM THE ASSESSEE ON VARIOUS DATES. HE OBSERVED THAT THE SEIZED RECORDS ALSO SHOWED THAT THE CASH LOANS HAVE BEEN ACCEPTE D AT MONTHLY INTERE ST RATE OF 15% PER ANNUM . THE DOCUMENTS ALSO SHOW ED CALCULATION OF INTEREST AND REPAYMENT DE TAILS OF LOANS MADE BY ASSESSEE TO M/S AHUJA 5 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU GROUP. HE FURTHER OBSERVED THAT IT WAS SEEN THAT M/S. AHUJA GROUP HAS ACCEPTED THE UNACCOUNTED NATURE OF THESE TRANSACT ION S BEFORE SETTLEMENT COMMISSION AND VIDE ORDER U/S. 245D(4) DATED 26.08 .2018, THE SETTLEMENT COMMISSION HAS ACCEPTED THAT THESE TRANSACTIONS RECORDED THEREIN ARE CORRECT. FOR THE SAKE OF CLARITY, THE RELEVANT PORTION OF SEIZED RECORDS FOR FY 01.04.13 TO 30.05.15 RELEVANT TO ASSESSMENT YEAR 2014 - 15 TO 2016 - 17 STATED BY LD. PCIT IN HIS ORDER AND FOR THE PURPOSE OF BREVITY, WE REPRODUCED THE SAME AS UNDER: - JBA V VAIDYANATHAN CASH LOAN LEDGER ACCOUNT 1 - APRL 2013 TO 31 - MR - 2014 DATE PARTICULARS 17 - 7 - 2013 DR CASH 25 - 7 2013 DR CASH 184 T OTAL 29 - 10 - 2013 DR CASH MONTHLY REST 15% P.A 31 - 10 - 2013 D R CASH 29 - 3 - 2014 DR CASH DR CASH 171.50+40+211.50, WE HAD ROUND TO 230 LAST TILL 31.03.`14, PLUS 40+270 CR. CLOSING BALANCE VCH TYPE RECEIPT RECEIPT RECEIPT PAYMENT PAYMENT RECEIPT VCHNO 400 410 664 2023 3611 1272 CLOSING BALANCE DEBIT 25,00,000.00 82,500.00 25,82,500.00 2.10.67,500.00 2,36,60,000.00 CREDIT 1,00,00,000.00 84,00,000.00 12,50,000.00 40,00,000.00 2.36,50,000.00 2.36,50,000.00 JBA V VAIDYANATHAN CASH LOAN LEDGER ACCOUNT 1 - APRL 2014 TO 31 - MR - 2015 DATE PARTICULARS 1 - 4 - 2014 DR OPENING BALANCE 5 - 4 - 2014 DR CA H 17 - 5 - 2014 DR CASH 12 - 6 - 2014 DR CASH 27 - 10.2014 CR CASH 1.11 - 2014 CR CASH PAID AS INTEREST 15% 1.4. 14 ONWARD 2 - 12 - 2014 CR CASH 16 - 12 - 2014 CR CASH 30 - 12 - 2014 CR CASH 8 - 1 - 2015 CR CASH PAID ON ACCOUNT (23 + 5 ) 20 - 1 - 2015 CR CASH 26.2 - 2015 CR CASH VCH TYPE RECEIPT RECEIPT RECEIPT PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT PAYMENT VCHNO BANK DATE 25 15 5 237 2155 2249 2527 2830 2792 2945 3053 3449 DEBIT 3,00,000.00 5,00,000.00 5,00,000.00 5.00,000.00 5,00,000.00 5,00,000.00 6,00,000.00 10,00,000.00 43,00,00060 3,27,00,000.00 370,00,0000 0 CREDIT 2,30,00,000.00 35.00.00000 50,00,00000 55.00,000.00 --------------------- 370,00,00000 370,00,00000 6 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU JBA V VAIDYANATHAN CASH LOAN LEDGER ACCOUNT 1 - APRL 201 5 TO 30 MAY - 2015 DATE PARTICULARS 1 3 - 4 - 2015 C R CASH PD O N AC FOR INT. 26 - 06 - 2015 C R CA S H CRD ENTRD BAL 353 AS ON DATE DR CLOSING BALANCE VCH TYPE PAYMENT PAYMENT VCHNO BANK DATE 195 641 DEBIT 10 ,00,000.00 10,00,000.00 20,00,000.00 20,00,000.00 CREDIT -- ------------------- 2 0,00,000 . 00 2 0,00,000 . 00 8 . CONSIDERING THE ABOVE SET OF DOCUMENTS, LD. PCIT OBSERVED THAT THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2016 - 17 WAS PASSED ON 11.12.17 AND ADDITION OF RS. 3,76,50,000/ - WAS MADE ON THE GROUNDS THAT THE CASH LOAN GIVEN BY THE ASSESSEE WAS CONVERTED INTO 'ON MONEY' ON 13.04.2015 . HE FURTHER OBSERVED THAT ASSESSEE HAD PURCHASED A FLAT FROM M/S AHUJA GROUP, WHEREIN THE CASH LOAN GIVEN BY HIM WAS SUPPOSED TO HAVE BEEN ADJUSTED ON MONEY. HOWEVER, HE ACKNO WLEDGED THAT THE ADDITION WAS DELETED BY LD. CIT(A) FOR THE REASON THAT IT WAS NOT PLAUSIBLE THAT CASH LOAN GIVEN BY THE ASSESSEE COULD HAVE BEEN RETURNED BY CHEQUE. HE FURTHER OBSERVED THAT REVENUE DID NOT FILE APPEAL AGAINST THE ORDER OF LD. CIT(A) AS IT WAS PROPOSED THAT THE CASH LOAN GIVEN BY THE ASSESSEE WOULD BE ADDED IN THE YEAR IN WHICH THE LOAN WAS GIVEN. HE FURTHER OBSERVED THAT FROM THE LEDGER ACCOUNT PRODUCED ABOVE, NO FURTHER CASH HAS BEEN GIVEN BY THE 7 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU ASSESSEE DURING THE FY 2015 - 16. HOWEVER, T HE BALANCE WAS OUTSTANDING EVEN AS ON 28.06.18 AS MENTIONED IN THE ITSC ORDER IN THE CASE OF M/S AHUJA GROUP. FURTHER, THE INTEREST OF RS. 46,32,534/ - WAS ACCRUED ON THE ADVANCE OUTSTANDING IN THE BEGINNING OF FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 201 6 - 17. THI S ISSUE WAS NOT EXAMINED BY THE AO FOR ASSESSMENT YEAR 2016 - 17. CONSIDERING THE ABOVE FACTS, LD. PCIT ISSUED NOTICE U/S 263 OF THE ACT WITH REFERENCE TO ABOVE FACTS RECORDED IN THE NOTICE. 9 . IN RESPONSE TO THE ABOVE NOTICE, ASSESSEE SUBMITTED TH AT REPLY FILED ON 20.05.2019 AND 09.10.2019 MAY BE TAKEN ON RECORD . LD. PCIT OBSERVED THAT ASSESSEE TRIED TO EXPLAIN THE ENTIRE TRANSACTION OF FLAT BOOKING. IN THE SUBMISSION, IT WAS CLAIMED THAT A FLAT WAS BOOKED IN AHUJA TOWERS, PRABHADEVI, BEARING FLA T NO.A - 41 FOR RS. 2.01 CRORES. IN JANUARY 2009, T HE BALANCE AMOUNT OF RS.16 CRORES WAS TO BE PAID WHEN FLAT WAS READY FOR POSSESSION. AT THE TIME OF TAKING POSSESSION OF THIS FLAT, ASSESSEE AND THE BUILDER AGREED TO SHIFT THE BOOKING TO ANOTHER APARTMENT (B - 48) OF THE SAME SIZE IN THE SAME COMPLEX. IT WAS CLAIMED BY 8 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU THE ASSESSEE THAT IN THE OPINION OF DEVELOPER, THE TRANSACTION MAY BE TREATED AS NEW BOOKING FOR B - 48 AND THE TOTAL DEAL PRICE OF THIS FLAT WAS RS.29.08 CR ORES. AS BOTH FLATS WERE IN THE SAME PROJ ECT, THE PRICE OF NEW FLAT WAS TAKEN AS BENCHMARK FOR CLAIMING COMPE NSATION FOR THE CANCELLED FLAT A - 41 AND ACCORDINGLY, THE B UILDER PAID A SUM OF RS.10 CRORES FOR SURR ENDERING RIGHTS IN A - 41 . LD. PCIT OBSERVED WITH REGARD TO ARRANGEMENT OF FUNDS THAT ASSE SSE E HAS PAID A SUM OF RS.29.08 CRORES TO THE DEVELOPER FOR BOOKING FLAT NO. B - 48. RS.7 CRORES WAS PAID AS MARGIN MONEY FROM HIS BANK ACCOUNT, RS.20.5 CR ORES BY TAKING LOAN FROM ICICI BANK AND RS.1.58 CRORES FOR CORPUS AND OTHER CHARGES FROM ASSESSEE'S BAN K ACCOUNT. IN THE SUBMISSION, ASSESSEE FURTHER SUBMITTED THAT THE DOCUMENTS FOUND AND SEIZED FROM THE PREMISES OF M/S AHUJA BUILDERS WAS NOT ACCEPTABLE DUE TO SOME DISCREPANCIES IN THE STATEMENT OF MR. JAGDISH AHUJA WITH REGARD TO PAYMENT AND NAME OF THE B OOKING OF THE FLAT. 1 0 . LD. PCIT OBSERVED THAT THE ASSESSEES ANOTHER CONTENTION IS WITH RESPECT TO RECEIPT OF PAYMENT FROM THE DEVELOPER ON CANCELLATION OF FLAT NO.A - 41 AND SUBSEQUENT PAYMENT OF RS.29 9 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU CRORE FOR FLAT NO.B - 48 IN THE SAME APAR TMENT COMPLEX. WITH REGARD TO PAYMENT OF CASH AS CASH LOAN BY THE ASSESSEE TO M/S AHUJA GROUP, IT WAS SIMPLY DENIED BY THE ASSESSEE AS THE SAME WAS NOT FOUND FROM HIS RESIDENCE, B UT FROM THE PREMISES OF M/S. AHUJA GROUP. LD. PCIT RELIED IN THE CASE OF DHUNJIBHOY STUD & AGRICULTURAL FARM V/S. DCIT, REPORTED IN 82 ITD 18 (ITAT PUNE). 1 1 . BASED ON THE ABOVE DISCUSSION, LD. PCIT CAME TO THE CONCLUSION THAT THE ORDER PASSED BY THE AO IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE CONSIDERING THE FACT THAT M/S AHUJA G ROUP HAS ADMITTED BEFORE THE SETTLEMENT COMMISSION AND OFFERED UNDISCLOSED INCOME ON THE BASIS OF THESE DOCUMENTS FOUND DURING SEARCH AND AO HAS NOT ENQUIRED INTO THE ISSUE OF PAYMENT OF UNSECURED CASH LOAN AND EARNING OF INTEREST THEREON FROM M/S. AHUJA G ROUP IN A.Y. 2014 - 15. 12 . BASED ON THE ABOVE FACTS ON RECORDS AND LEDGER ACCOUNT FOUND FOR ASSESSMENT YEAR 2016 - 17, LD. PCIT SET ASIDE THE ASSESSMENT ORDER PASSED BY THE AO AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. 10 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 1 3 . AGGRIEV ED WITH THE AB OVE ORDER, ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: - THE PRINCIPAL COMMISSIONER OF INCOME - TAX, CENTRAL - 3, MUMBAI (HEREINAFTER REFERRED TO AS THE PR. CIT) ERRED IN FRAMING AN ORDER DATED 16.03.2020 UNDER SECTION 263 OF THE A CT TO SET ASIDE THE ORDER OF THE DEPUTY COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE6(2), MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OFFICER), BY HOLDING THAT THE ASSESSMENT ORDER DATED 11.12.2017 PASSED BY THE ASSESSING OFFICER UNDER SECTION 153C R.W. S. 143(3) OF THE ACT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. CONSEQUENTLY, THE PR. CIT HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO PASS A FRESH ASSESSMENT ORDER. THE APPELLANT CONTENDS THAT THE PR. CIT HAS NOT APPRECIATED THE FACTS OF THE CASE, INASMUCH AS THE BASIS OF HIS CONCLUSION ARE THE SAME DOCUMENTS WHICH HAS BEEN ALREADY BEEN CONSIDERED BY THE ASSESSING OFFICER TO MAKE THE ADDITION IN HIS ASSESSMENT ORDER FOR INCOME - TAX ASSESSMENT YEAR 2016 - 17, (AND SUCH ADDITION WAS SUBSEQU ENTLY DELETED BY THE CIT(A) ), AND THUS, THE IMPUGNED ORDER PASSED BY THE PR. CIT UNDER SECTION 263 IS BAD IN LAW. THE APPELLANT FURTHER, CONTENDS THAT THE SAID DOCUMENT RELIED UPON BY THE PR. CIT PERMEATES THROUGH THE RELEVANT PREVIOUS YEARS NAMELY, YEARS ENDED 31 ST MARCH 2014 TO 2016. THE ASSESSING OFFICER IN RESPECT OF THE DOCUMENTS AVAILABLE TO THEM, HAS ADOPTED THE COURSE AS DEEMED APPROPRIATE FOR THE ADDITION. THE APPELLANT HAS IN THE COURSE OF THE PROCEEDINGS 11 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU HAS SUBMITTED ALL RECORDS AND RECONCILIAT IONS WITH PROOF OF ALL RECORDS, EXPLAINED THE TRANSACTION IN DETAIL, AND PROVIDED PROOF FOR ALL TRANSACTIONS AND STATEMENTS, TO THE CIT (A), WHICH CLEARLY SHOW THAT (A) THE FACTS AND RECORDS OF THE AGREEMENT, AND RECORDS OF PAYMENTS PROVE THAT THE ASSESSEE 'S STAND IS CORRECT. (B) FURTHER, THE FACTS, RECORDS, LETTERS, THE SALE AGREEMENT, AS WELL AS THE BANK ENTRIES OF PAYMENT TO THE DEVELOPER, STATEMENTS FROM THEIR OWN STAFF REFUTING THE DEVELOPER'S STATEMENT PROVE THAT THE DEVELOPER'S STATEMENT IS INCORRECT . THE DEVELOPERS STATEMENTS DO NOT EVEN RECONCILE WITH THEIR OWN RECORDS OF PAYMENTS RECEIVED BY THEM THROUGH BANK ACCOUNT, (C) FURTHER, VARIOUS CORROBORATIVE EVIDENCES SUCH AS STAMP DUTY RATES AND OTHER EVIDENCES ARE ALSO IN FAVOUR OF THE ASSESSEE. BASED ON THE ABOVE SUBMISSIONS AS WELL AS AFTER REVIEWING ALL DOCUMENTS AND ALL RECORDS, PROOFS, AND SUBMISSIONS OF THE AO, THE CIT (A) HAS COME TO THE CONCLUSION THAT THE SAID ORDER OF THE AO IS INCORRECT AND HAS DELETED THE ADDITION. THE PR. CIT HAS, ON THE B ASIS OF THE VERY SAME RECORDS, REFERRED THE MATTER UNDER S. 263, WITHOUT ANY FRESH INFORMATION WHATSOEVER, AND RELYING ON THE VERY SAME RECORDS THAT HAVE ALREADY BEEN CONSIDERED BY AO. THE APPELLANT FURTHER CONTENDS THAT, BASED ON THE FACTS AND CIRCUMSTANC ES OF THE CASE, AND IN LAW, THE PR. CIT OUGHT NOT TO HAVE REACHED THE AFORESAID CONCLUSION INASMUCH AS THE ASSESSING OFFICER 12 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU AFTER HAVING CONSIDERED, AND AFTER HAVING SATISFIED HIMSELF ON THE DOCUMENTS FURNISHED TO HIM, COMPLETED THE ASSESSMENT. THE APPELL ANT FURTHER CONTENDS THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE PR. CIT LACKS JURISDICTION TO PASS THE IMPUGNED ORDER, INASMUCH, AS THE ASSESSING OFFICER ON THE BASIS OF THE SAME DOCUMENTS HAD MADE AN ADDITION IN INCOME - TAX ASSESSMENT YEAR 2016 - 17 FOR THE BLOCK YEAR 2014 - 15,2015 - 16 AND 2016 - 17. THIS WAS THE SUBJECT MATTER OF THE APPEAL TO THE CIT(A) WHO DELETED THE ADDITION, AND THUS, THE ORDER OF THE ASSESSING OFFICER STANDS MERGED BY THE ORDER OF THE CIT(A) ON THE SAME SUBJECT MATTER. THE APPELLANT SUBMITS THAT APART FROM TECHNICAL REASONS AS SUBMITTED ABOVE, ALL DOCUMENTS, AGREEMENTS, LETTERS, RECORDS, CORRESPONDING BANK ENTRIES THAT TALLY WITH THE APPELLANT'S STATEMENT, RECONCILIATIONS AND CORROBORATIVE EVIDENCES, AND STATEMENT ON OA TH BY THE DEVELOPER'S STAFF, ALL CONSISTENTLY AND CONCLUSIVELY PROVE THAT THE APPELLANT'S STAND IS CORRECT. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER AND/ OR AMEND THE AFORESTATED GROUND OF APPEAL. 14 . BEFORE US LD. AR APPEARING ON BEHALF O F THE ASSESSE E SUBMITTED WRITTEN SUBMISSION AND FOR THE SAKE OF CONVENIENCE, IT IS REPRODUCED BELOW: - 2.1 THE ASSESSEE IS A SALARIED PERSON AND HAS DECLARED INCOME FROM SALARY, LONG - TERM CAPITAL GAINS, AND INTEREST INCOME. THE 13 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU RETURN OF INCOME WAS E - FILED ON 28 TH JULY 2016 DECLARING A TOTAL INCOME OF RS. 5,94,05,250. 2.2 THE ASSESSEE HAD BOOKED A FLAT NAMELY, FLAT 41, A - WING, AHUJA TOWER, RAJABHAU DESAI MARG, PRABHADEVI, MUMBAI 400 025 IN JANUARY 2009, BY MAKING A PAYMENT OF BOOKING AMOUNT OF RS 2.01 CRORE. 2.3 IN 2014, IT WAS REQUIRED BY THE ASSESSEE TO PAY THE BALANCE AMOUNT OF RS 16 CRORE AND TAKE POSSESSION OF THE FLAT. 2.4 HOWEVER, AT THIS STAGE, AHUJA PROPERTY AND THE ASSESSEE NEGOTIATED TO SHIFT THE BOOKING TO ANOTHER FLAT NAMELY, FLAT NO 48 IN B - WING IN THE SAME PROJECT AT AN ALL - INCLUSIVE AGREED AMOUNT OF RS 27.50 CRORE PLUS RS 1.58 CRORE TOWARDS CORPUS AND OTHER CHARGES, THUS, AGGREGATING RS 29.08 CRORES. 2.5 TO FORMALISE THE SWITCH, IT WAS AGREED THAT THE DEVELOPER WILL CANCEL THE BOOKING OF FLAT NO A - 41, AND P AY RS 10 CRORES, BEING THE DIFFERENCE BETWEEN THE PREVAILING MARKET VALUE OF THE SAID FLAT AND ITS BOOKING VALUE. ACCORDINGLY, THE ASSESSEE RECEIVED A SUM OF RS. 10 CRORES (INCLUSIVE OF THE RS. 2.01 CRORE PAID AS BOOKING AMOUNT AT THE TIME OF BOOKING). THI S AMOUNT IS OFFERED FOR TAXATION IN THE RELEVANT YEAR. 2.6 SUBSEQUENTLY, THE ASSESSEE PAID A SUM OF RS. 27.50 CRORES TO THE DEVELOPER, BEING THE BOOKING AMOUNT OF FLAT NO B - 48, THE DETAILS OF WHICH ARE GIVEN HEREUNDER - DATE OF PAYMENT AMOUNT (INRS) R EMARKS 21.05.2015 3,50,00,000 FROM UNION BANK OF INDIA ACCOUNT 14 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 23.05.2015 3,50,00,000 FROM UNION BANK OF INDIA ACCOUNT 04.06.2015 20,50,00,000 FROM ICICI (HOUSING LOAN) SUB - TOTAL 27,50,00,000 ALL THESE PAYMENTS HAVE BEEN MADE BY CHEQUE OR BANK TRANSF ER. 2.7 LATER, A SUM OF RS. 1.58 CRORES HAS BEEN PAID WHICH IS TOWARDS THE CORPUS AND OTHER CHARGES; THUS, THE AGGREGATE PAYMENT OF RS 29.08 CRORES HAS BEEN MADE BY THE ASSESSEE TOWARDS THE FLAT NO B - 48. 2.8 TO SUM UP, IT IS CRYSTAL CLEAR THAT THE ASSESSEE EFFECTIVELY, HAS SOLD/ SURRENDERED BACK TO THE DEVELOPER THE ALLOTMENT IN A - 41 AT PREVAILING MARKET RATES AND OFFERED THE GAINS FOR TAX UNDER THE HEAD 'CAPITAL GAINS': AND BOOKED A NEW FLAT THAT IS, FLAT NO B - 48 AT PREVAILING MARKET RATE. 2.9 AS MENTIONED ABOVE, THERE WERE SEARCH AND SEIZURE OPERATIONS ON THE AHUJA GROUP ON 25.06.2015 BY THE INVESTIGATION WHIG AND IT WAS FOUND THAT THEY HAVE MAINTAINED PARALLEL BOOKS OF ACCOUNT WHICH CONTAINED SOME CASH LOAN TRANSACTIONS WITH THE APPELLANT. DURING THE COUR SE OF SUCH OPERATIONS, STATEMENT ON OATH OF VARIOUS PERSONS WERE RECORDED BY THE SEARCH PARTY; AND THE RELEVANT ONES AMONGST THEM ARE OF MR JAGDISH AHUJA AND MS MERLIN FERNANDES, WORKING AS A PERSONAL SECRETARY AND ASSISTANT TO KEY PERSONS OF THE AHUJA GRO UP HANDLING POST - SALES ACTIVITIES. 2.10 THE STATEMENT ON OATH OF MS MERLIN FERNANDES WAS RECORDED BY THE SEARCH PARTY ON 26.06.2015 AND 28.06.2015 - REFER PAGE NOS 144 - 145 AND 146 TO 150 OF THE PAPER BOOK - RELEVANT QUESTION IS 15 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU Q. 11 ON PAGE NO 145 OF THE PAPER BOOK AND QS. 5 TO 8 ON PAGE NO 147 TO 150 OF THE PAPER BOOK 2.11 THE STATEMENT ON OATH OF MR JAGDISH AHUJA RECORDED BY THE SEARCH PARTY ON 28.06.2015 - REFER PAGE NOS 151 - 152 AND 153 TO 156 OF THE PAPER BOOK 2.12 DURING ASSESSMENT PROCEEDINGS - 2.12.1 THE ASSESSING OFFICER ISSUED A NOTICE DATED 12.10.2017 REQUIRING THE ASSESSEE TO SUBMIT HIS RESPONSE IN RESPECT OF THE LEDGER ACCOUNT FOUND IN THE PARALLEL BOOKS OF ACCOUNT MAINTAINED BY THE AHUJA GROUP WHICH CONTAINED SOME CASH LOAN TRANSACTIONS W ITH THE ASSESSEE - REFER PAGE NOS 138 TO 141 OF THE PAPER BOOK - RELEVANT POINTS ARE POINT NOS 10 TO 15 (A) POINT NO 10 OF THE SAID NOTICE - REFER PAGE NO 139 OF THE PAPER BOOK - 'DURING THE SEARCH AND SEIZURE ACTION CONDUCTED IN M/S AHUJA GROUP CERTAI N LOOSE PAPERS WERE FOUND AND SEIZED AND MARKED AS PAGE NOS 1 TO 5 OF ANNEXURE 1 FROM THE TABLE OF MERLIN FERNANDEZ AT THE OFFICE PREMISES OF AHUJA GROUP AT RAJPIPLA CHS LTD. SHE IS WORKING AS A PERSONAL SECRETARY AND ASSISTANT TO THE KEY PERSONS OF THE AH UJA GROUP HANDLING POST SALES ACTIVITIES. IN HER STATEMENT RECORDED ON OATH U/S 132(4) OF THE IT AT ON 26/06/2015, MERLIN FERNANDEZ HAS CONFIRMED THE FACT THAT ON MONEY WAS BEING ACCEPTED BY THE GROUP. WITH REGARD TO PAGE NO 4 OF THE LOOSE PAPER FOLDER MAR KED AS ANNEXURE 1 SEIZED PERTAINING TO THE ASSESSEE SHE HAS CONFIRMED IN HER STATEMENT AS UNDER: 'Q - LL. I AM SHOWING YOU PAGE NO. 4 OF LOOSE PAPER FOLDER (MARKED AS ANNEXURE A - L) SEIZED FROM THIS PREMISE PLEASE CONFIRM THE SAME HAS BEEN FOUND FROM YOUR TAB LE AT THE OFFICE PREMISES AND ALSO EXPLAIN THE CONTENTS OF THE SAME. 16 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU ANS: SIR, I CONFIRM THAT THE SAME WAS FOUND IN MY TABLE. THE SAME IS PERTAINING TO SHRI V. VAIDYANATHAN A PURCHASER OF FLAT IN AHUJA TOWERS BEARING NO. B - 48. AS FAR AS I CAN REMEMBER, WE WERE PLANNING TO TAKE 3.73 CRORES IN CASH PLUS RS.24 CRORES IN CHEQUE. HOWEVER, AFTER MULTIPLE DISCUSSIONS WITH THE CLIENT, WE FINALISED THE VALUE AT RS.27.50 CRORES FOR WHICH THE PAYMENT WAS RECEIVED IN CHEQUE.' (EMPHASISE OURS) ASSESSEE RESPONSE THE ASSE SSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY LETTER DATED 27.10.2017 (REFER PAGE NOS 160 - 161 OF THE PAPER BOOK) HAS STATED THAT 'EXPLANATION WITH REGARD TO THE STATEMENT OF MS. MERLIN. PLEASE NOTE THAT IN THE STATEMENT BY MERLIN, SHE HAS MENTIONED THAT 'WE (AHUJA GROUP) WERE PLANNING TO TAKE RS. 3.73 CRORE BY CASH '; MAYBE THEY WERE 'PLANNING' TO TAKE RS. 3.73 CR IN CASH. EVEN IF THIS WERE TRUE, THEY (AHUJA GROUP) MAY HAVE PLANNED TO TAKE SUCH PAYMENT IN CASH. SPECIFICALLY, HER QUOTE IS 'WE (THE AH UJA GROUP) WERE PLANNING TO ASK THE CLIENT.... ' SUC'I MAY HAVE BEEN THEIR PRACTICE, BUT OUR CLIENT HAS NOTHING TO DO WITH IT. KINDLY NOTE THAT NO STAGE SHE HAS EVEN SAID THAT SHE EVEN EVER ASKED OUR CLIENT, OR OUR CLIENT AGREED TO, OR OUR CLIENT PAID ANYT HING BY CASH. IN FACT, SHE HAS CLEARLY SAID AND CONFIRMED IN HER STATEMENT GIVEN ON 26 TH JUNE 2015 THAT THE CONSIDERATION AMOUNT OF RS. 27.50 CRORE HAS BEEN RECEIVED BY WAY OF CHEQUE BY THEM FROM OUR CLIENT. TO QUOTE HER SPECIFICALLY ' ....WE FINALIZED THE VALUE AT RS. 27.50 CORES FOR WHICH THE PAYMENT WAS RECEIVED IN CHEQUE.....' AS YOU CAN SEE, THE STATEMENT THAT THE AHUJA GROUP WERE 'PLANNING' TO TAKE ANY PAYMENT BY CASH IS NEITHER OF ANY MEANING, 17 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU NOR OF ANY RELEVANCE TO OUR CLIENTS. THAT MAY HAVE OR MAY NOT HAVE BEEN THEIR PLAN WE DO NOT KNOW. AS FAR AS OUR CLIENT IS CONCERNED, THE ENTIRE BILL AS PER THE AGREEMENT OF RS. 27.50 CR BEEN SETTLED BY OUR CLIENT BY CHEQUE, OUR CLIENT'S BANK STATEMENT REFLECT THE SAME ENTRIES, AND THIS TALLIES WITH THE STATEMEN T OF MS. MERLIN. OUR CLIENT BEING A SALARIED EMPLOYEE, HAS NO SOURCE OF SUCH INCOME............ HENCE THE STATEMENT FROM MERLIN THAT MR. VAIDYANATHAN HAS PAID THE FULL CONSIDERATION OFRS. 27.50 CR. BY CHEQUE FOR THE FLAT AT B - 48, EXACTLY TALLIES WITH THE P AYMENTS MADE FROM OUR CLIENT'S SIDE AS PER OUR BANK STATEMENT. AGAIN, OF THE RS. 27.50 CRORES, RS. 7.00 CRORE AS MARGIN MONEY HAS BEEN PAID FROM HIS BANK ACCOUNT, AND RS. 20.50 CRORE HAS BEEN PAID BY TAKING LOAN FROM ICICI BANK, AND HENCE IT IS CLEAR THAT THE ENTIRE PAYMENT OF RS. 27.50 CRORE PAID TO THE AHUJA GROUP HAS BEEN MADE FROM FULLY ACCOUNTED SOURCES.' FROM THE ABOVE - AS PER THE RESPONSE OF MS MERLIN OF AHUJA GROUP QUOTED ABOVE IN VERBATIM AS RECORDED BY THE SEARCH PARTY, IT IS AN ESTABLISHED FACT ON RECORD THAT FROM HER STATEMENT (A) SHE HAS NEVER STATED THAT THE AHUJA GROUP DEMANDED FOR ANY CASH/ ON - RAONEY FROM THE APPELLANT; SHE ONLY STATES THAT THEY PLANNED TO ASK - THE ASSESSEE CANNOT COMMENT ON THEIR INTENT AND BUSINESS PRACTICES (B) MS. MERLI N HAS NEVER STATED THAT THE ASSESSEE PAID ANYTHING IN CASH. (C) IN FACT, MS MERLIN HAS CLEARLY STATED AND CONFIRMED IN HER STATEMENT GIVEN ON 26* JUNE, 2015 THAT THE ENTIRE CONSIDERATION OF 18 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU RS. 27.50 CRORE HAS BEEN RECEIVED BY WAY OF CHEQUE BY THEM FROM TH E APPELLANT. (D) HER VERSION TALLIES WITH THE BOOKS OF ACCOUNT, RECORDS AND BANK STATEMENTS OF BOTH THE PARTIES NAMELY, THE AHUJA GROUP AND THE APPELLANT (E) THE ASSESSING OFFICER HAS FALLEN IN ERROR TO HAVE DISMISSED THE TESTAMENT OF MS MERLIN FERNANDES, EMPLOYEE OF THE AHUJA GROUP. (B) POINT NO 11 OF THE SAID NOTICE - REFER PAGE NO 139 OF THE PAPER BOOK 'DURING THE SEARCH AND SEIZURE ACTION CONDUCTED IN M/S AHUJA GROUP IN THE STATEMENT RECORDED ON OATH U/S 132(4) OF THE IT ACT, 1961 ON 28.06.2015 OF MS MERLIN FERNANDEZ WHICH IS REPRODUCED HERE UNDER 'Q.8 AS STATED BY YOU AND AS SEEN FROM THE DOCUMENTS PROVIDED BY YOU IN THE CASE OF SH. VAIDYANATHAN, IT IS SEEN THAT HE HAS PAID A BOOKING AMOUNT OFRS.2.01 CRORES AND THE COMPANY HAS RETURNED BACK A SU M OF SUM RS.10 CRORES. PLEASE EXPLAIN?' ANS. SIR, SHRI V VAIDYANATHAN HAD BOOKED THE FLAT A - 41 IN THE PROJECT AHUJA TOWER, WORLI. HE CANCELLED THE BOOKING AND BOOKED A FLAT BEARING NO. B - 48. THE COMPANY M/S SHREE AHUJA PROPERTIES & REALTORS PVT. LTD TRANSF ERRED RS.10 CRORES BY RTGS TO THE ACCOUNT OF SHRI V. VAIDYANATHAN. A SUM OFRS.7 CRORES WAS TRANSFERRED BACK TO THE COMPANY ACCOUNT BY SHRI V VAIDYANATHAN ON 21.05.2015 RS.3.5 CRORES & 23.05.2015 RS.3.5 CRORES. Q.9 PLEASE EXPLAIN WHY A SUM OF SUM RS.10 CROR ES WAS TRANSFERRED TO THE ACCOUNT OF SHRI V. VAIDYANATHAN WHEN RS. 2.01 CRORES WAS THE BOOKING AMOUNT PAID BY SHRI V VAIDYANATHAN. AND ALSO EXPLAIN 19 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU WHY ONLY RS. 7 CRORES RECEIVED BACK FROM SHRI V. VAIDYANATHAN. ANS. SIR, I AM UNABLE TO PROVE ANY EXPLANATIO N FOR THE SAME. SHRI GAUTAM AHUJA WILL BE ABLE TO PROVIDE THE DETAILS OF THIS TRANSACTION.' ASSESSEE RESPONSE THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY LETTER DATED 27.10.2017 (REFER PAGE NOS 160 - 161 OF THE PAPER BOOK) HAS STATED THAT ' IN THE ABOVE STATEMENT, MS. FERNANDEZ HAS SAID THAT MR. VAIDYANATHAN HAD BOOKED A FLAT IN A - 41 AND PAID RS. 2.01 CRORES AT THE TIME OF BOOKING AND THE COMPANY PAID RS. 10.0 CRORES TO MR. VAIDYANATHAN. THIS STATEMENT IS CORRECT AND THE EXPLANATION FOR THE SAME IS AS FOLLOWS:............... ' (ENTIRE FACTS OF THE CASE AS MENTIONED IN POINT NO 2 ABOVE IS STATED (HENCE, FOR THE SAKE OF BREVITY, THE ASSESSEE IS NOT REPRODUCING THE SAME HERE; THOUGH THE LETTER IS ENCLOSED IN THE PAPER BOOK AT PAGE NOS 157 TO 170 - RELEVANT PORTION BEING AT PAGE NOS 162 AND 163). FROM THE ABOVE - IT WILL BE APPRECIATED THAT - I. THE ENTIRE AMOUNT ON BOOKING OF FIRST FLAT A 41 HAS BEEN PAID BY CHEQUE. II. THE AMOUNT OF RS. 10 CRORE ON CANCELLATION OF A 41 HAS BEEN RECEIVED BY CHEQUE. III. THE DOWN PAYMENT FOR THE NEW BOOKING OF RS.7 CRORE HAS BEEN PAID BY CHEQUE. 20 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU IV. AND THE BALANCE OF RS. 20.5 CR HAS BEEN PAID BY OBTAINING LOAN FROM A BANK AND HENCE, HAS BEEN PAID BY CHEQUE/ BANK TRANSFER, AND V. THE CORPUS CHARGES OF RS. 1.58 CR HAS BEEN PAID BY CHEQUE. THUS, THE STATEMENT MADE BY MERLIN WITH REGARD TO PAYMENTS MADE BY OUR CLIENT TO THEM BY CHEQUE IS ACCURATE. IN HER STATEMENT. MERLIN HAS CONFIRMED THAT ALL MONEY HAS BEEN RECEIVED IN CHEQUE ONLY. (C) POINT NO 12 OF THE SAID N OTICE - REFER PAGE NO 140 OF THE PAPER BOOK - DURING THE SEARCH & SEIZURE OF M/S AHUJA GROUP THE HEAD OF THE GROUP SHRI JAGDISH AHUJA'S STATEMENT WAS RECORDED ON 28/06/2015, WHICH IS REPRODUCED AS UNDER, HE HAS ACCEPTED THAT SHRI VAIDYANATHAN HAS PAID CASH TO THE TUNE OF RS 3.5 CRORES AS CASH LOAN - 'Q - 46. IN THE STATEMENT ON OATH OF MISS MERLIN FERNANCES (SIC FERNANDES) UNDER SECTION 132(4) OF THE INCOME - TAX ACT 1961, RECORDED ON 26/06/2015, IT WAS STATED THAT THERE WERE TALKS OF RECEIVING RS 3.5 CRORES IN CASH FROM SHRI V. VAIDYANATHAN, THE NOTING OF WHICH IS ALSO MADE BY HER ON PAGE NO 4 OF LOOSE PAPERS FOLDER (ANNEXURE A - 1) FOUND AND SEIZED FROM THE PRESENT PREMISES. THE VERIFICATION OF THE PARALLEL BOOKS OF ACCOUNT FOUND AND SEIZED FROM THE PREMISES OF YOUR CAR DRIVER SHRI SUNIL CHAUDHARY ALSO REVEALS THAT CASH OF RS. 4 CRORE HAS BEEN RECEIVED FROM SHRI V. VAIDYANATHAN. PLEASE CONFIRM THE SAME AND EXPLAIN THE TRANSACTIONS. ANS: SIR, I AGREE THAT THE CASH SUM OF APPROXIMATELY RS. 3.5 CRORE WAS RECEIVED FR OM SHRI VAIDYANATHAN AS CASH LOAN INITIALLY. HE HAD ALSO PAID A SUM OF RS. 2 CRORE IN CHEQUE TOWARDS FLAT COST IN AHUJA TOWERS. SINCE THE FLAT WAS CANCELLE D WE PAID HIM BACK THE SUM OF A PPROXIMATELY RS. 6 CRORE IN CHEQUE INCLUDING INTEREST INCOME 21 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU AMOUNT. L ATER ON, SHRI V. VAIDYANATHAN PURCHASED A FLAT FROM US IN HIS WIFE'S NAME FOR A TOTAL CONSIDERATION OF RS 27.50 CRORE WHICH WAS FULLY PAID IN CHEQUE.' ASSESSEE RESPONSE THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY LETTER DATED 27.10.2017 (RE FER PAGE NOS 164 - 165 OF THE PAPER BOOK) HAS STATED THAT '1. KINDLY NOTE THAT THE STATEMENT MADE BY MERLIN ENTIRELY CONTRADICTS THE STATEMENT OF MR.AHUJA SO ONLY ONE OF THEM CAN BE RIGHT. WE CANNOT UNDERSTAND OR EXPLAIN THE STATEMENT OF MR. AHUJA BECAUSE IT IS NOT BACKED BY ANY BASIS WHATSOEVER, AND DOES NOT TALLY WITH OUR BANK STATEMENT. NO SUCH TRANSACTION HAS BEEN ENTERED INTO WITH THE AHUJA GROUP. ON THE CONTRARY, THE STATEMENT OF THE OTHER PARTY IN AHUJA GROUP, MS MERLIN, EXACTLY TALLIES WITH THE ACTU AL TRANSACTION, AS WELL AS TALLIES WITH OUR BANK STATEMENT AS EXPLAINED IN THE PREVIOUS ANNEXURE N2. WE THEREFORE ESTABLISH THAT HER STATEMENT IS CORRECT AND TALLIES WITH US. 2. OUR ASSESSEE HAS BEEN REGULARLY FILING HIS RETURN AND PAYING TAXES FOR OVER TH E 27 YEARS AND HIS CREDENTIALS AS A TAXPAYER ARE ESTABLISHED BEYOND DOUBT. ANALYSIS OF HIS BANK ACCOUNT FOR LAST 6 YEARS CLEARLY SHOW THAT THERE WAS NORMAL WITHDRAWAL OF DAY TO DAY EXPENSES OVER THAT PERIOD. MOST OF HIS EXPENSES ARE PAID BY CHEQUES AND CRE DIT CARD WHICH ARE CHARGED TO HIS BANK ACCOUNT. DETAILS OF ALL EXPENSES AND WITHDRAWALS HAVE BEEN PROVIDED IN FL TO F8. APART FROM GENERAL HOUSEHOLD EXPENSES, EMI PAYMENTS, PAYMENTS TO DRIVERS, MAIDS AND CHARITY, THERE ARE NO OTHER SIGNIFICANT WITHDRAWALS FROM HIS BANK ACCOUNT. IN FACT, DURING THE ENTIRE PERIOD OF FY 10 TO FY 16, ONLY RS. 17,29,4471 - HAS BEEN WITHDRAWN FROM HIS BANK ACCOUNT. IT IS NOT LOGICALLY POSSIBLE FOR OUR CLIENT TO GENERATE AND PAY CASH TO AHUJA DEVELOPERS. THEIR STATEMENT IS BASELESS AND NOT TRUE.' 22 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU ERRORS IN THE STATEMENT OF MR JAGDISH AHUIA - THE ASSESSEE POINTS OUT THAT THERE ARE MATERIAL ERRORS OF FACT IN THE STATEMENT OF MR AHUJA VIS A VIS THE ACTUAL DOCUMENTED TRANSACTIONS - 1. IN HIS STATEMENT, HE HAS STATED THAT THE NEW PROPERT Y IS PURCHASED IN THE NAME OF MRS. VAIDYANATHAN WHEREAS THE NEW BOOKING HAS BEEN MADE IN THE NAME OF THE ASSESSEE AND NOT IN THE NAME OF HIS WIFE. THUS, HE HAS GOT THE NAME WRONG IN HIS TESTAMENT. 2. HE HAS IN HIS STATEMENT STATED THAT RS 6 CRORE HAS GIVEN BY HIM TOWARDS CANCELLATION AND RELINQUISHING OF RIGHTS IN FLAT NO A - 41, WHEREAS THE FACT IS THAT HE (THE COMPANY) HAS PAID A SUM OF RS 10 CRORES TO THE ASSESSEE WHICH STANDS CREDITED TO HIS BANK ACCOUNT, DETAILS OF WHICH ARE GIVEN BELOW - DATE AMOUNT 21 .05.2015 3,50,00,000 22.05.2015 4,50,00,000 23.05.2015 50,00,000 26.05.2015 20,00,000 05.06.2015 1,30,00,000 TOTAL 10,00,00,000 IT WOULD NOT BE OUT OF PLACE TO MENTION THAT MS MERLIN IN HER STATEMENT ON OATH HAS CONFIRMED THAT A SUM 10 CRORE HAS BEEN PAID TO THE ASSESSEE FOR CANCELLATION OF THE BOOKING OF FLAT NO A - 41; THIS TALLIES WITH THE RECORDS AND BOOKS OF ACCOUNT AS WELL. 2.12.2 THE ASSESSEE HAS THUS, CLEARLY POINTED OUT TO THE ASSESSING OFFICER THAT MS MERLIN FERNANDES, WHO IS WORKING AS A PERS ONAL SECRETARY AND ASSISTANT TO THE KEY PERSONS OF THE AHUJA GROUP 23 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU HANDLING POST - SALES ACTIVITIES, HAS CLEARLY STATED THAT THE ASSESSEE HAS MADE ENTIRE PAYMENT BY CHEQUE ONLY. 2.12.3 THE ASSESSEE RESPONDED TO BY LETTER DATED 27.10.2017 GIVING ALL THE DETAI LS MENTIONED THEREIN - REFER PAGE NOS 157 TO 170 OF THE PAPER BOOK. 2.12.4 THE ASSESSING OFFICER THEN ISSUED ANOTHER NOTICE DATED 31.10.2017 REQUIRING THE ASSESSEE TO SHOW CAUSE WHY ADDITION OF 3.76 CRORES SHOULD NOT BE MADE - REFER PAGE NOS 171 AND 172 OF THE PAPER BOOK 2.12.5 THE ASSESSEE RESPONDED TO BY LETTER DATED 09.11.2017 - REFER PAGE NOS 157 TO 170 OF THE PAPER BOOK. 2.13 ASSESSMENT ORDER - THE ASSESSING OFFICER FOR THE REASONS GIVEN BY HIM IN THE ASSESSMENT ORDER, CHOSE TO COMPLETELY IGNORE THE EX PLANATIONS, COMPUTATIONS, AND DOCUMENTARY EVIDENCES PROVIDED BY THE APPELLANT, AND MADE AN ADDITION OF RS. 3,76,50,000 FOR THE REASONS GIVEN IN PARA 5.7 ON PAGE NOS 11 AND 12 OF THE ASSESSMENT ORDER 3. CONTENTIONS 3.1 THE SAME MATTER AS RAISED BY PR . CIT WAS RAISED BY THE ASSESSING OFFICER IN HIS SHOW CAUSE NOTICE DATED 31.10.2017 DURING THE ASSESSMENT PROCEEDINGS FOR INCOME - TAX ASSESSMENT YEAR 2016 - 17, POST - SEARCH ON THE AHUJA GROUP IN SECTION 153C PROCEEDINGS AND A SUM OF RS.3,76,50,000 WAS ADDED B Y HIM. THERE IS NO NEW INFORMATION THAT HAS COME TO THE NOTICE OF THE REVENUE FOR WHICH A SHOW - CAUSE NOTICE ISSUED BY THE PR. CIT UNDER SECTION 263; THE BASIS OF HIS CONCLUSION IS THE SAME SEIZED DOCUMENT WHICH HAS BEEN CONSIDERED BY THE ASSESSING OFFICER TO MAKE THE ADDITION IN HIS 24 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU ASSESSMENT ORDER FOR INCOME - TAX ASSESSMENT YEAR 2016 - 17. THUS, THE SUBJECT MATTER OF REVISION IS ALREADY CONSIDERED BY THE ASSESSING OFFICER. AS SUCH, TO MAKE THE SAME MATTER A SUBJECT MATTER OF REVISION ON THE BASIS OF SAME SET OF INFORMATION IS BAD IN LAW AND HENCE, THE IMPUGNED ORDER OF THE PR. CIT NEEDS TO BE VACATED FOR THIS REASON ALONE. 3.2 'ERRONEOUS' - THE DATE OF THE ORDER OF THE ASSESSING OFFICER IS 11.12.2017; AND THE DATE OF THE ORDER OF ITSC IS 28.06.2018 WHICH IS S UBSEQUENT TO THE DATE OF THE ASSESSMENT ORDER, AND THE BASIS OF THE PR. CIT TO CONCLUDE THAT THE ORDER OF THE ASSESSING OFFICER IS ERRONEOUS IS THE SAID ORDER OF THE ITSC - INASMUCH AS ONLY ON THAT BASIS THE PR CIT IN PARA 9 ON PAGE NO 9 OF HIS IMPUGNED OR DER STATES 'FURTHER, THE AHUJA GROUP HAS ADMITTED BEFORE THE SETTLEMENT COMMISSION ABOUT THE CORRECTNESS OF THESE DOCUMENTS AND HAS OFFERED UNDISCLOSED INCOME ON THE BASIS OF THESE DOCUMENTS BEFORE THE COMMISSION ALSO. IT IS SEEN THAT THE A.O. HAS NOT INQU IRED INTO THE ISSUE OF PAYMENT OF UNSECURED CASH LOAN AND EARNING OF INTEREST THEREON FROM M/S. AHUJA GROUP IN ASSESSMENT PROCEEDINGS FOR A.Y. 2016 - 17, MAKING AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE.' THE TERM 'ERRONEOUS' HAS TO BE LOOKED INTO FROM FACTS AND CIRCUMSTANCES AND MATERIALS WHICH ARE PLACED BEFORE THE ASSESSING OFFICER AT TIME OF ASSESSMENT AND THERE IS NO SCOPE UNDER SECTION 263 TO REVISE AN ASSESSMENT ON SUBSEQUENT EVENT O R ANY NEW MATERIAL - JAI KUMAR KANKARIA - 251ITR 707 (CAL) 3.3 MATTER ALREADY COVERED AND DECIDED BY THE CIT (A) 25 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU IT WOULD NOT BE OUT OF PLACE TO MENTION THAT THE SAID ADDITION STANDS DELETED BY A WELL REASONED ORDER OF THE CIT(A) DATED 21.09.2018 - PA GE NOS 176 TO 198 OF THE PAPER BOOK. THE CIT(A) IN PARA 5.4 ON PAGE 22 OF HER ORDER (REFER PAGE NO 197 OF THE PAPER BOOK) HAS INTER ALIA HELD THAT 'THE AMOUNT OF RS.3,76,50,000/ - CANNOT BE TREATED AS ON - MONEY PAYMENT NOR IT COULD BE TREATED AS CASH LOAN CO NVERTED TO ON - MONEY AS SHRI JAGDISH AHUJA HIMSELF STATES THAT THE SAME HAS BEEN PAID WITH INTEREST IN CHEQUE. THERE IS NO MERIT IN THESE ALLEGATIONS.' - THE CONCLUSION OF THE CIT(A) IS IN PARA 5.3 AND 5.4 OF HER ORDER - REFER PAGE NOS 196 AND 197 OF THE PA PER BOOK. 3.4 (A) IN VIEW OF PARA 3.2 ABOVE, THE ADDITION OF RS 3.76 CRORE MADE BY THE ASSESSING OFFICER REGARDING THE ALLEGED PAYMENT OF CASH LOAN DELETED BY THE CIT(A) HAS ATTAINED FINALITY AND THEREFORE, THE PR CIT CANNOT INVOKE THE REVISIONARY JURISDIC TION OF SECTION 263 - PER CLAUSE (C) OF EXPLANATION 1 BELOW SECTION 263(1) OF THE ACT. FOR THE SAKE OF REFERENCE, THE SAID PROVISION IS REPRODUCED AS UNDER - ' (C) WHERE ANY ORDER REFERRED TO IN THIS SUB - SECTION AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJECT MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER THE 1ST DAY OF JUNE, 1988, THE POWERS OF THE PRINCIPAL COMMISSIONER OR] COMMISSIONER UNDER THIS SUB - SECTION SHALL EXTEND AND SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MATTERS AS HAD NOT BE EN CONSIDERED AND DECIDED IN SUCH APPEAL' RELIANCE IS PLACED ON THE DECISION OF THE HONOURABLE JURISDICTIONAL HIGH COURT IN THE CASE OF RANKA JEWELLERS V. ADDL. CIT REPORTED IN 328 ITR 148 (BOM) (B) THE ORDER OF THE CIT(A) DELETING THE ADDITION MADE BY THE ASSESSING OFFICER IS ACCEPTED BY THE REVENUE AS NO APPEAL HAS BEEN PREFERRED TO THE TRIBUNAL ON THIS ISSUE. THE ORDER OF THE CIT(A) IS 26 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU DATED 21.09.2018 WHICH WOULD HAVE BEEN RECEIVED IN THE OFFICE OF THE PR. CIT IN THE MONTH OF OCTOBER, 2018, AND THE PERI OD OF 60 DAYS TO FILE APPEAL TO THE TRIBUNAL ELAPSED BY DECEMBER, 2018; THE NOTICE OF THE PR. CIT IS DATED 11.04.2019. THUS, THE DECISION OF THE CIT(A) THAT WAS ACCEPTED BY THE REVENUE AND HAD ATTAINED FINALITY ON THE SUBJECT MATTER, IS NOW SOUGHT TO BE DI STURBED BY THE PR CIT BY INVOKING THE PROVISIONS OF SECTION 263 - THIS CANNOT BE DONE INASMUCH AS THE MERGER THEORY WOULD APPLY AND THE ORDER OF THE ASSESSING OFFICER IS MERGED WITH THE ORDER OF THE CIT(A). 3.5 REFER NOTICE OF THE PR CIT U/S 263 THERE ARE CONTRADICTIONS IN THE SAID NOTICE 3.5.1 READ 2 ND PARA OF THE NOTICE WHICH STATES THAT 'WHEREIN IT IS SEEN THAT AHUJA GROUP HAD TAKEN CASH LOANS FROM YOU DURING FY 2015 - 16, RELEVANT TO AY 2016 - 17' WITH 4 TH PARA WHICH STATES THAT 'WO FURTHER CASH HAS BE EN GIVEN BY YOU DURING FY 2015 - 16' - NON - APPLICATION OF MIND BY THE PR. CIT 3.5.2 READ 3 RD PARA WHICH STATES THAT 'DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ADDITION OFRS 3,76,50,000 WAS MADE ON THE GROUNDS THAT THE CASH LOAN GIVEN BY YOU WAS CONVERTED INTO ON MONEY ON 13.4.2015...' WITH 4 TH PARA WHICH STATES THAT '.....HOWEVER, THE BALANCE WAS OUTSTANDING EVEN AS ON 28.06.2018. INTEREST OF RS 46,32,534/ - HAS BEEN ACCRUED WHICH SHOULD HAVE BEEN ADDED TO THE TOTAL INCOME AS INCOME FROM OTHER SOURCES FOR A Y 2016 - 17' 3.6 REFER NOTICE UNDER SECTION 263 - THE BASIS FOR ISSUE OF NOTICE - 6 TH PARA WHICH STATES THAT '...ON PERUSAL OF THE ORDER IT IS SEEN THAT THE ABOVE INFORMATION WAS NOT TAKEN INTO CONSIDERATION WHILE DETERMINING THE INCOME TO THAT EXTENT THE O RDER IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE U/S 263' 27 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 3.6.1 REFER NOTICE DATED 12.10.2017 AND SHOW CAUSE NOTICE DATED 31.10.2017 OF THE ASSESSING OFFICER AND THE RESPONSES OF THE ASSESSEE BY LETTER DATED 27.10.2017 AND 09.11.2017 - DETAIL ED INQUIRY MADE AND DETAILED SUBMISSIONS MADE BY THE APPELLANT, RECONCILED ALL BANK ENTRIES WITH THE TRANSACTIONS WITH THE BUILDER 3.6.2 IT IS SUBMITTED THAT ALL INFORMATION AVAILABLE WITH THE ASSESSING OFFICER HAS BEEN CONSIDERED BY HIM IN FRAMING THE ASS ESSMENT ORDER AND HENCE, THE PR. CIT IS IN ERROR IN OBSERVING SO IN THE NOTICE. 3.6.3 THE ASSESSING OFFICER HAS THOROUGHLY INQUIRED, APPLIED HIS MIND AND DECIDED TO MAKE ADDITION ON THE BASIS OF UNEXPLAINED INVESTMENT AS ON - MONEY - THIS COULD BE ONE PLAUSI BLE VIEW AS, AHUJA GROUP WOULD SHOW THIS AS ON - MONEY IN THIS RELEVANT YEAR; IF TWO VIEWS POSSIBLE, AND THE ASSESSING OFFICER HAS TAKEN ONE SUCH POSSIBLE VIEW, THE PR CIT DOES NOT GET POWERS UNDER SECTION 263 TO HOLD THE ORDER OF THE ASSESSING OFFICER ERRON EOUS - MALABAR INDUSTRIAL CO LTD - 243 ITR 83(SC) 3.7 TWO VIEWS POSSIBLE - ON THE BASIS OF FACTS AVAILABLE ON RECORD, THE ASSESSING OFFICER MADE ADDITION OF RS 3.76 CRORES, THE CIT(A) ON THE BASIS OF SAME FACTS, DELETED THE ADDITION, AND THEN THE PR. CIT, AGAIN ON THE BASIS OF ABSOLUTELY SAME FACTS (NO NEW INFORMATION) IS OF AN OPINION TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER - THIS IS THUS, A CASE WHERE TWO OPINIONS ON SAME FACTS ARE POSSIBLE AND THE ASSESSING OFFICER HAS TAKEN ONE PLAUSIBLE VIEW - T HUS, THE PR. CIT IS PRECLUDED TO INVOKE THE PROVISIONS OF SECTION 263 OF THE ACT. 3.8 REFER NOTICE UNDER SECTION 263 - 4 TH PARA RE TAXABILITY OF INTEREST RS 46,32,534 ON OUTSTANDING BALANCE AS AT 28.06.2018 28 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 3.8.1 THE SAID ENTRIES HAVE NO BASIS AS THE SAME ARE AT AHUJA GROUP, THAT TOO IN PARALLEL BOOKS OF ACCOUNT, NOT ACKNOWLEDGED BY THE APPELLANT, UNRECONCILED WITH THE TRANSACTIONS ENTERED WITH THE ASSESSEE AND ALSO AT VARIANCE WITH THE STATEMENT OF MS MERLIN. SUCH ENTRIES THUS, HAVE NO EVIDENTIARY VALUE. 3 .8.2 FURTHER, MR AHUJA IN HIS STATEMENT ON OATH - RESPONSE TO Q. 46 HAS STATED THAT '........SINCE THE FLAT WAS CANCELLED, WE PAID HIM BACK THE SUM OF APPROXIMATELY RS 6 CRORE IN CHEQUE INCLINING INTEREST AMOUNT........' 3.9 EXPLANATION 2 TO SECTION 263 - NOT APPLICABLE - CLAUSE (A) - THE ASSESSMENT ORDER COULD BE DEEMED TO BE ERRONEOUS IF AN ORDER WAS PASSED BY THE ASSESSING OFFICER IN FAVOUR OF THE ASSESSEE WITHOUT MAKING ENQUIRIES. HOWEVER, IN THE CASE ON HAND, THE ASSESSING OFFICER HAS DONE DETAILED ENQUIRIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS; AND NO RELIEF WAS PROVIDED TO THE APPELLANT. THE OTHER CLAUSES NAMELY, CLAUSE (B) TO (D), ON FACTS, ARE NOT APPLICABLE. AS SUCH, NONE OF THE CLAUSES ARE APPLICABLE TO DEEM THE ORDER OF THE ASSESSING OF FICE AS ERRONEOUS. IN FACT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ISSUED A NOTICE FOR AYS 2010 - 11 TO 2016 - 17 DATED 31 ST OCT 2017 REQUIRING THE ASSESSEE TO SHOW CAUSE WHY CASH LOAN OF RS. 3,76,50,000 GIVEN BY THE ASSESSEE TO THE DEVELOPER BE NOT ADDED TO THE TOTAL INCOME OF THE ASSESSEE - REFER PAGE NOS 171 - 172 OF THE PAPER BOOK. THIS WAS RESPONDED TO BY LETTER DATED 9 TH NOVEMBER 2017 - REFER PAGE NOS 174 - 175 OF THE PAPER BOOK. PROVIDED ALL DETAILS AND RECONCILIATIONS FOR THE TRANSACTIONS, PROVED THAT THE THE STATEMENT OF MR AHUJA WAS WRONG BY SHOWING BANK ENTRIES, AND HENCE, COULD NOT BE RELIED UPON 29 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU SHOWED THE STATEMENT OF MS MERLIN FERNANDES WHICH TALLIES WITH THE SUPPORTING DOCUMENTS AND RECORDS, EFFECTIVEL Y THE ASSESSING OFFICER HAS CARRIED OUT ASSESSMENT FOR THE PERIOD OF 6 YEARS AND NOT FOR ONE ASSESSMENT YEAR; AFTER CONSIDERING ALL FACTS AVAILABLE WITH HIM, THE ASSESSING OFFICER HAS, BY APPLYING HIS MIND, AND AFTER DUE DILIGENCE, DECIDED TO MAKE THE ADDI TION OF THE ENTIRE AMOUNT OF RS 3.76 CRORES IN ASSESSMENT YEAR 2016 - 17 ONLY. THERE WAS NO EVIDENCE OF THE ASSESSEE ACTUALLY GIVING CASH TO AHUJA DEVELOPERS. THUS, THIS IS NOT A CASE WHERE THE ORDER IS PASSED WITHOUT MAKING INQUIRIES OR VERIFICATION WHICH S HOULD HAVE BEEN MADE BEFORE THE ORDER WAS PASSED. FURTHER, THERE WAS NO RELIEF GIVEN TO THE APPELLANT. THEREFORE, THE CLAUSES EMBODIED IN THE EXPLANATION 2 TO SECTION 263 ARE NOT APPLICABLE FOR THE ORDER TO BE DEEMED TO BE PREJUDICIAL TO THE INTEREST OF RE VENUE. 3.10 THE IMPUGNED SEIZED DOCUMENTS ALLEGED TO BE OF THE ASSESSEE DO NOT BEAR THE ACKNOWLEDGEMENT/ SIGNATURES OF THE APPELLANT; MOREOVER, THE SAME IS NOT FOUND FROM THE PREMISES OF THE APPELLANT. 3.11 THE ONLY BASIS FOR THE IMPUGNED ORDER UNDER SECTI ON 263 IS THE STATEMENT OF MR AHUJA - HOWEVER, THE SAME IS RIDDLED WITH FACTUAL INACCURACIES AND HENCE, CANNOT BE RELIED UPON; HOWEVER, THE STATEMENT OF MS. MERLIN IS ACCURATE AND TALLIES WITH THE RECORDS AND DOCUMENTS - BOTH OF THE ASSESSEE AND OF THE AHU JA GROUP 3.12 THE ASSESSEE HAS BOOKED THE FLAT NO B - 48 FOR RS 27.50 CRORES, WHICH IS 30% HIGHER THAT THE READY RECKONER VALUE OF RS ____ WHICH IS THE BASIS FOR PAYMENT OF STAMP DUTY; THE VALUE IS GOVERNMENT RECOGNISED. THUS, THERE CAN BE NO ON - MONEY IN SUC H A SITUATION. 3.13 REFER STATEMENT ON OATH OF MR JAGDISH AHUJA - Q. 46 30 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 'Q - 46. IN THE STATEMENT ON OATH OF MISS MERLIN FERNANCES (SIC FERNANDES) UNDER SECTION 132(4) OF THE INCOME - TAX ACT 1961, RECORDED ON 26/06/2015, IT WAS STATED THAT THERE WERE TALKS OF RECEIVING RS 3.5 CRORES IN CASH FROM SHRI V. VAIDYANATHAN. THE NOTING OF WHICH IS ALSO MADE BY HER ON PAGE NO 4 OF LOOSE PAPERS FOLDER (ANNEXURE A - L) FOUND AND SEIZED FROM THE PRESENT PREMISES.......' 3.13.1 THE OFFICER IS NOT STATING THE TRUE FACTS OF THE QUESTION AND THE RESPONSE OF MS MERLIN TO MR AHUJA - PLEASE REFER THE STATEMENT ON OATH OF MS MERLIN - Q. 11 (ON PAGE 145 OF THE PAPER BOOK) - THE FIGURE MENTIONED IS RS 3.73 CRORES. THUS, REALLY, THE LOOSE PAPER MENTIONS THE FIGURE OF RS 3.73 CRORE, THE OFFICER SAYS RS 3.50 CRORE AND MR AHUJA TOWS THE LINE OF THE OFFICER AND SAYS THAT HE HAS RECEIVED APPROXIMATELY RS 3.50 CRORE. THUS, THERE IS NO TRUTH IN THE AVERMENT OF RECEIPT OF CASH BY AHUJA GROUP FROM THE APPELLANT. 3.14 IT IS WELL SETTLED LAW TH AT AN ORDER CANNOT BE TERMED AS ERRONEOUS UNLESS IT IS NOT IN ACCORDANCE WITH LAW. THE ASSESSING OFFICER HAD EXERCISED HIS QUASI - JUDICIAL POWER VESTED IN HIM AND IN ACCORDANCE WITH LAW PASSED THE ASSESSMENT ORDER BY MAKING AN ADDITION UNDER SECTION 69 OF T HE ACT AS UNEXPLAINED INVESTMENT. THIS OPINION WAS FORMED ON THE BASIS OF ENQUIRES AND VERIFICATION OF MATERIALS AVAILABLE WITH HIM. AS SUCH, THE ASSESSMENT ORDER CANNOT BE BRANDED AS ERRONEOUS SIMPLY BECAUSE THE PR. CIT IS OF A DIFFERENT VIEW. FURTHER, TH E CIT(A) HAS DECIDED THE ISSUE IN FAVOUR OF THE APPELLANT. 3.15 THE CIT(A) IN HER ORDER DATED 21 ST SEPTEMBER 2018 HAS AFTER PERUSING ALL RECORDS AND DOCUMENTS CLEARLY HELD THAT 'THE AMOUNT OFRS.3,76,50,000/ - CANNOT BE TREATED AS ON - MONEY PAYMENT NOR IT COU LD BE TREATED AS CASH LOAN CONVERTED TO ON - MONEY.... ' THE BASIS 31 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU OF THE ISSUE OF NOTICE UNDER SECTION 263 DATED 11* APRIL 2019 IS FOR THE SAME REASON THAT THE AMOUNT OF RS. 3,76,50,0000 IS A CASH LOAN. IN VIEW OF THE ABOVE, THE IMPUGNED ORDER OF THE PR. CI T IS REQUIRED TO BE QUASHED AS THE SAME IS BAD IN LAW . 1 5 . ON THE OTHER HAND , LD. DR SUPP ORTED THE FINDING OF LD. PCIT IN PARA - 4 OF THE ORDER AND HE SUBMITTED THAT THERE IS NO DOUBT THAT ITSC ORDER CONFIRMS THAT M/S AHUJA GROUP HAS ACCEPTED THE BALANCE OF OUTSTANDING DECLARED BY THEM AND FURTHER ASSESSEE HAS RECEIVED THE INTEREST FROM M/S AHUJA GROUP. HOWEVER, HE ACCEPTED THE FACT THAT DEPARTMENT HAS NOT FILE D ANY APPEAL AGAINST THE FINDINGS OF LD. CIT(A) FOR THIS ASSESSMENT YEAR. HE FURTHER SUBMIT TED THAT THE DECISION NOT TO APPEAL IS THE INTERNAL MATTER OF THE DEPARTMENT. HE FURTHER SUBMITTED THAT LD. AR RELIED ON THE DECISION IN THE CASE OF B. L. SHUKLA, WHICH IS ON A CRIMINAL ISSUE NOT RELEVANT FOR THE PRESENT APPEAL. HE FURTHER SUBMITTED THAT ALL THE CA SE LAWS RELIED BY LD. AR ARE DISTINGUISHABLE ON FACTS AND HE SUPPORTED THE FINDINGS OF LD. PCIT. 16 . CONSIDERED THE RIVAL SUBMISSIONS AND MATERIAL PLACED ON RECORD. WE NOTICE FROM THE ORDER OF LD. PCIT THAT AO HAS 32 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU COMPLETED THE ASSESSMENT ORDER U/S 143(3) OF THE ACT BY MAKING AN ADDITION OF RS. 3,76,50,000 / - AS UNEXPLAINED CASH INVESTMENT U/S 69 OF THE ACT BY TREATING THE CASH LOAN GIVEN BY THE ASSESSEE WHICH WAS CONVERTED INTO ON MONEY ON 30.04.15. THE AO TREATED THE CASH LOAN GIVEN BY THE ASSESSEE AS ON MONEY GIVEN TO THE BUILDER (M/S AHUJA GROUP) FOR THE PURCHASE OF FLAT AND ACCORDINGLY, AO MADE THE ADDITIONS. WE NOTICE THAT THE ASSESSMENT ORDER PASSED BY THE AO ON 11.12.17 AND THE LD. PCIT HEAVILY RELIED ON THE ORDERS OF ITSC PASSED U/S 245D(4) OF T HE ACT DATED 26.06.18. IT IS A FACT S ON RECORD THAT LD. PCIT INITIATED THE PROCEEDINGS U/S 263 OF THE AC T ONLY ON 11.04.19 BY ISSUING NOTICE AND ITSC HAS PASSED THE ORDER ON 26.06.18, THEREFORE LD. PCIT OBSERVED HIS FINDINGS FROM THE ORDER OF ITSC ONLY AFT ER 26.06.18 AND INITIATED THE PROCEEDINGS SUBSEQUENTLY. IT IS RELEVANT TO NOTE THAT THIS ASSESSMENT ORDER WAS PASSED ON 11.12.17, THEREFORE THE AO WAS NEVER AWARE OF THE FACT T HAT WHAT M/S AHUJA GROUP WILL DISCLOSE BEFORE THE SETTLEMENT COMMI SSION. FURTHER , AO COMPLETED THIS ASSES SMENT WHEN ALL THE CASES RELEVANT FOR THIS SEARCH AND SEIZURE ACTION WAS CENTRALIZED AND ALL THE TRANSACTIONS UNDER CONSIDERATION WERE INVESTIGATED UNDER 33 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU COORDINATION BASIS FOR ALL THE ISSUES RELATING TO M/S AHUJA GROUP AND ASSESSE E . BASED ON THE INFORMATION AVAILABLE AT THE TIME OF ASSESSMENT PROCEEDINGS ALONE WAS CONSIDERED BY THE AO TO COMPLETE THE ASSESSMENT. IT IS NOT HUMANLY POS SIBLE FOR THE AO TO PROJ ECT /EXPECT WHAT M/S AHUJA GROUP WILL DISCLOSE BEFORE THE SETTLEMENT COMMISSI ON AND THE PROCEEDINGS BEFORE SETTLEMENT COMMISSION WAS SUBSEQUENT EVENT AND SUBSEQUENT DEVELOPMENTS . FROM THE ASSESSMENT ORDER, WE OBSERVE THAT AO CAME TO THE CONCLUSION BASED ON THE INFO RMATION AVAILABLE BEFORE HIM OR SUBMISSIONS MADE BEFORE HIM AND HE C ONCLUDED THAT ASSESSEE HAS PURCHASED FLAT BY CONVERTING THE ALLEGED CASH TRANSACTION WITH ON MONEY AND HE MADE THE ADDITIONS. NOW THE SAME ISSUE WAS REVIEWED BY LD. PCI T U/S 263 OF THE ACT AND EXPECT THE AO TO CONSIDER THE EVENT I.E. M/S AHUJA GROUP HAS ACCEPTED THE UNACCOUNTED NATURE OF THE TRANSACTION BEFORE SETTLEMENT COMMISSION. THIS FUTURE EVEN T CA NNOT BIND THE AO WHO PASSED THE ORDER ON 11.12.17 ITSELF AND IT IS NOT POSSIBLE FOR THE AO TO APPRECIATE THE FUTURE EVENT AND PASS THE ASSESSMENT ORDER. 34 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 17 . FROM THE ORDER PASSED U/S 263 OF THE ACT, WE NOTICE THAT LD. PCIT IS TRYING TO RE VIEW THE ASSESSMENT BASED ON ORDER OF SETTLEMENT COMMISSION WHICH WAS PASSED ON 26.06. 18 AND COMING TO A NEW CONCLUSION BASED ON NEW INFORMATION WHICH IS DIFFERENT FROM THE VIEW TAKEN BY THE AO AT THE TIME OF PASSING ASSESSMENT ORDER. 18. WE FURTHER NOTICE THAT ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT WAS APPEALED BEFORE LD. CIT(A) AND LD. CIT(A) PASSED THE ORDER BASED ON TH E MERIT ON THE RECORD AND DELETED THE ADDITION S MADE BY THE AO. THE ORDER OF LD. CIT(A) DATED 21.09.18 WAS NEVER CHALLENGED BY THE DEPARTMENT, THEREFORE IT REACHED ITS FINALITY. AS PER THE PROVISION OF SECTION 263(1) EXPLANATION - 1(C), THE ORDER OF THE AO WHICH WAS A SPECIAL MATTER OF ANY APPEAL BEFORE COMMISSIONER, POWERS OF THE PCIT UNDER THIS SUB - SECTION ONLY TO THE MATTER WHICH HAS NOT BEEN CONSIDERED AND NOT DECIDED IN THE APPEAL . THEREFORE, THE PCIT HAS NO RIGHT TO REVIEW THE ORDER WHICH WAS SUBJECT MATTER OF APPEAL BEFORE LD. CIT(A) AND WE NOTICE THAT THE ISSUE WHICH IS CHALLENGED BEFORE LD. CIT(A) IS THE SAME ISSUE IN WHICH LD. 35 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU PCIT HAS REVIEWED U/S 263 OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, LD. PCIT HAS NO POWER TO REVIEW THE ORDER PASSED U/S 143(3) AND THE SAME ORDER WAS APPEALED AND AD JUDICAT ED U/S 254 OF THE ACT. THEREFORE, WE ARE IN AGREEMENT WITH THE SUBMISSION OF ASSESSEE AND WE QUASH THE ORDER PASSED U/S 263 OF THE ACT WITHOUT GOING INTO ANY MERITS OF THE CASE SINCE LD. CIT(A) HAS ALREADY CONSIDERED THE MERITS OF THIS CASE AND PASS ED AN ORDER IN THIS REGARD. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS REGARD ARE ALLOWED. 19. WE FURTHER NOTICE THAT LD. PCIT HAS INITIATED THE PROCEEDINGS U/S 263 OF THE ACT AND TREATED THE ORDER PASSED BY AO U/S 153C R.W.S. 143(3) OF THE ACT FOR THE AY 2014 - 15 AND 2015 - 16 . WE NOTICE THAT THE ISSUE UNDER CONSIDERATION IS EXACTLY SIMILAR TO THE ISSUE RAISED IN ASSESSMENT YEAR 2016 - 17. IN OUR CONSIDERED VIEW, LD. PCIT HAS REVIEWED THE ASSESSMENT ORDER WHICH WAS PASSED ON 11.12.17. IT IS FACT ON RECORD THAT SEARCH AND SEIZURE OPERATION WAS INITIATED ON 25.06.15 AND ASSESSMENT ORDERS UNDER CONSIDERATION FOR ASSESSMENT YEAR 2014 - 15 AND 2015 - 16 WERE ASSESSED U/S 153C AND COMBINED ORDER FOR ALL THE 36 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU ASSESSMENTS INCLUDING ASSESSMENT YEAR 2016 - 17 WERE PASSED ON THE SAME DATE 11.12.17. THEREFORE, IN OUR CONSIDERED VIEW, AO HAS CONSIDERED THE FACTS ON RECORDS AND TAKEN A VIEW O N THE TRANSACTIONS WITH M/S AHUJA GROUP IN ASSESSMENT YEAR 2016 - 17 AND ALSO MADE THE ADDITIONS IN ASSESSMENT YEAR 2016 - 17 AFTER A NALYZING THE SAME SETS OF DOCUMENTS WHICH WAS REVIEWED BY LD. PCIT NOW. THEREFORE, LD. PCIT CANNOT REVIEW THE ORDER WHICH WAS ALREADY VERIFIED AND INVESTIGATED BY AO AT THE TIME OF ASSESSMENT AND THE SAME ORDER WHICH WAS INVESTIGATED ON COORDINATED BASIS , LD. PCIT CANNOT REVIEW AND CANNOT TAKE A DIFFERENT VIEW. MOREOVER, HE REVIEWED THIS ASSESSMENT ORDERS PASSED BY THE AO AFTER FORMING AN OPINION ON 11.12.17 AND LD. PCIT HAS REVIEWED THE ASSESSMENT ORDER WITH THE SUBSEQUENT DEVELOPMENT WHICH WAS N EVER PART OF ASSESSMENT RECORDS. EVEN OTHERWISE, LD . PCIT INTENDED TO INITIATE PROCEEDINGS U/S 263 OF THE ACT ON THE FACTS ON RECORD THAT M/S AHUJA GROUP HAS ACCEPTED SOME CASH TRANSACTIONS UNDERTAKEN WITH THE ASSESSEE. IF THAT IS THE CASE, HE SHOULD HAVE INVESTIGAT ED THE ISSUE B Y HIMSELF AND NOT DIRECTED THE SAME ISSUE TO BE INVESTIGATED BY AO AGAIN . WHEN HE INITIATE THE INVESTIGATION ON THIS ISSUE, HE MUST HAVE GIVEN AN 37 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE PERSONS, WHO ACCEPTED BEFORE THE SETTLEMENT COM MISSION FOR SETTLEMENT. WE DO NOT AWARE ON WHAT BASIS OR ON WHAT CONDITION, THE SETTLEMENT WAS REACHED. SINCE THIS TRANSACTION WAS ACCEPTED BEFORE SETTLEMENT COMMISSION BY M/S AHUJA GROUP. IT IS ONLY M/S AHUJA GROUP HAS DECLARED BUT NOTHING WAS FOUND FROM ASSESSEES PREMISES OR THERE IS ANY EVIDENCE WITH THE DEPARTMENT TOWARDS CASH TRANSACTION CARRIED ON BY THE ASSESSEE EXCEPT DOCUMENTS ORIGINATED FROM M/S AHUJA GROUP . WE ALSO NOTICE THAT MS. MERLIN FERNANDES HAS DENIED ANY INVOLVEMENT OF CASH TRANSACTION W ITH THE ASSESSEE AND THE STATEMENT GIVEN BY MR. JAGDISH AHUJA ARE NOT RELIABLE AS THE NUMBER DECLARED AND FACTS DISCLOSED BY HIM ARE NOT MATCHING WITH THE ACTUAL FACTS AND TRANSACTIONS. MOREOVER, IN OUR CONSIDERED VIEW, LD PCIT HAS NOT INVESTIGATED THIS IS SUE HIMSELF AND NOT OFFERED ANY CROSS EXAMINATION TO THE ASSESSEE. FURTHER, AS DISCUSSED THE ISSUE IN EARLIER PARA NO 18, WE CANNOT TREAT THE ASSESSMENT ORDER AS ERRONEOUS CONSIDERING THE DISCUSSION IN THE ABOVE SAID PARA NO. 18, THEREFORE, WE DO NOT AGREE WITH LD PCIT TO ONCE AGAIN REVIEW THE ASSESSMENT ORDER MERELY BASED ON ITSC ORDER, WHICH IS SUBSEQUENT EVENT. 38 I.T.A. NO 1577 TO 1579 /MUM/2020 MR. VAIDYANATHAN VEMBU 20. THE QUESTION BEFORE US IS , WHETHER THE ASSESSMENT ORDER PASSED BY AO AT THE TIME OF PASSING THE ORDER IS ERRONEOUS OR NOT. WE DO NOT FIND ANY ERROR IN PASSING THE ASSESSMENT ORDER CONSIDERING THE ABOVE SAID DISCUSSIONS THAT THE SUBSEQUENT EVENTS OR DEVELOPMENTS DOES NOT MAKE THE ASSESSMENT ORDER PASSED EARLIER AS ERRONEOUS . ACCORDINGLY, WE QUASH THE ORDER PASSED BY LD. PCIT U/S 263 OF THE ACT F OR THE AYS 2014 - 15 AND 2015 - 16. 21 . IN THE NET RESULT, ALL THE APPEALS FILED BY THE ASSESSEE STANDS ALLOWED . ORDERS PRONOUNCED IN THE OPEN COURT ON 17.11.2020 . SD/ - SD/ - (C. N. PRASAD) (S. RIFAUR RAHMAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 17.11.2020 SR.PS. DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE ASSESSEE 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI