Sareen Estates Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1738/DEL/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8029 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 09-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 12-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT MOHAN GOVIL
• Assessee Lawyers: U N MARWA
• Keywords: Search and seizure
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH H : NEW DELHI) BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.1738/DEL./2012 (ASSESSMENT YEAR : 2008-09) M/S. SAREEN ESTATES PRIVATE LIMITED, VS. ACIT, 75 E, HIMALAYA HOUSE, CENTRAL CIRCLE 7, 23, KASTURBA GANDHI MARG, NEW DELHI 110 001. (PAN : AAACS0365D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI U.N. MARWA, CA REVENUE BY : SHRI AMIT MOHAN GOVIL, CIT DR DATE OF HEARING : 10.03.2016 DATE OF ORDER : 09.05.2016 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : APPELLANT, M/S. SAREEN ESTATES PRIVATE LIMITED (HE REINAFTER REFERRED TO AS THE ASSESSEE), BY FILING THE PRESE NT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 03.02.2012 PASSE D BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, NEW DELHI Q UA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA T HAT :- 1 THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT(A) I, NEW DELHI, FOR THE REASONS STATED IN THE IMPUGNED ORDER, ERRED IN LAW IN UPHOLDING THE ORDER OF THE ASSISTANT COMMISSIONER OF INCOME TAX CENTRAL CIRCLE -7, NEW ITA NO.1738/DEL./2012 2 DELHI, IN CONFIRMING THE ADDITION MADE IN THE ASSES SMENT U/S 69A OF THE ACT, BY A SUM OF RS.70,00,000/-. 1.2 THAT THE LEARNED COMMISSIONER OF INCOME TAX(APP EALS) WHILE UPHOLDING THE ORDER OF THE LEARNED AO FAILED TO CONSIDER AND APPRECIATE THE EVIDENCE FILED BEING COPY OF THE CAS H BOOK FOR THE PERIOD 1ST APRIL 2006 TO 31ST MARCH 2007 WHICH WAS FILED BEFORE HIM AT HIS BEHEST, TO ESTABLISH THAT THE CASH IN HA ND EXISTED EVEN AS AT 31 ST MARCH 2007. 2. THE LD. CIT(A)-I, NEW DELHI, ERRED IN NOT ACCEPT ING THE EXPLANATION OFFERED BY THE APPELLANT THAT THE SEIZE D CASH BELONGED TO VARIOUS ENTITIES OF THE GROUP . 3. THAT THE APPELLANT, CRAVES, LEAVE TO ADD, ALTER, AMEND, SUBSTITUTE, FORGO, ANY OR ALL THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE : ON T HE BASIS OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 12.09.200 7 U/S 132 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER THE ACT), N OTICE U/S 142 (1) OF THE ACT WAS ISSUED CALLING UPON THE ASSESSEE TO FILE THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09. ASSESSEE F ILED THE RETURN OF INCOME ON 17.09.2009 DECLARING INCOME OF RS.4,08 ,46,267/- QUA AY 2008-09. CONSEQUENT UPON THE NOTICES ISSUED U/S 143(2) AND 142(1) ALONG WITH QUESTIONNAIRE, SHRI ANIL KUMAR, C A AND THEREAFTER SHRI ADITYA PURWAR, CA PUT IN APPEARANCE AND FILED NECESSARY DETAILS. ASSESSEE IS INTO THE BUSINESS O F REAL ESTATE DEVELOPMENT AND CONSTRUCTION ACTIVITIES. DURING TH E SEARCH, CASH OF RS.73,43,000/- WAS FOUND OUT OF WHICH RS.70,00,0 00/- WAS SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE. ON FAILURE OF THE ASSESSEE TO PROVE ON RECORD THE EVIDENCE FOR HA VING AFORESAID ITA NO.1738/DEL./2012 3 CASH, ASSESSMENT PROCEEDINGS WERE INITIATED. DURIN G THE ASSESSMENT PROCEEDINGS, LD. AR FOR THE ASSESSEE SUB MITTED THAT THE AFORESAID CASH BELONGS TO FOUR DIFFERENT COMPANIES. FINDING THE EXPLANATION FURNISHED BY THE ASSESSEE NOT TENABLE, THE AO MADE AN ADDITION OF RS.70,00,000/- TO THE INCOME OF THE ASS ESSEE BEING UNDISCLOSED INCOME. 3. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS DISMISSED THE APPEAL VIDE IMPUGNED ORDER. FEELING AGGRIEVED, THE ASSESSEE CAME IN APPEAL BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. UNDISPUTED FACTS OF THIS CASE INTER ALIA ARE THA T THE PREMISES SEARCHED BY THE REVENUE AUTHORITIES ON 12.09.2007 W AS BEING USED BY 8/10, GROUP COMPANIES, HAVING SAME ADDRESS; THAT THE STATEMENT RECORDED DURING THE SEARCH OPERATION HAVE BEEN BURN T IN THE FIRE WHICH TOOK PLACE IMMEDIATELY AFTER THE SEARCH; THAT THE AO MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE HAS FA ILED TO PRODUCE THE DOCUMENTS DURING SEARCH; THAT THE STATE MENTS RECORDED ITA NO.1738/DEL./2012 4 AND SEIZED AT THE TIME OF SEARCH HAVE NOT BEEN SUPP LIED TO THE ASSESSEE. 6. IN THE BACKDROP OF THE AFORESAID FACTS AND CIRCU MSTANCES OF THE CASE, THE SOLE QUESTION ARISES FOR DETERMINATIO N IN THIS CASE IS AS TO WHETHER THE ASSESSEE HAS EXPLAINED SOURCE AN D GENUINENESS OF THE SEIZED AMOUNT OF RS.70,00,000/- HAVING BEEN BELONGING TO ITS SISTER CONCERN DURING THE ASSESSME NT PROCEEDINGS?. 7. AO IN ORDER TO MADE THE ADDITION BY RS.70,00,000 /- TO THE INCOME OF THE ASSESSEE RETURNED THE FINDINGS WHICH ARE REPRODUCED AS UNDER FOR READY REFERENCE :- 4. DURING THE SEARCH CASH OF RS.73,43,000/- WAS FO UND OUT OF WHICH AN AMOUNT RS.70,00,000/- WAS SEIZED FROM THE BUSINESS PREMISE OF THE ASSESSEE. THE ASSESSEE WAS ASKED DUR ING THE SEARCH TO FURNISH PROOF OF THE SOURCE OF THE ABOVE CASH ON THE DATE OF SEARCH, BUT THE ASSESSEE FAILED TO SHOW ANY EVIDENC E RELATING TO THE SAME. THE ASSESSEE WAS ASKED DURING ASSESSMENT PROC EEDINGS VIDE ORDER SHEET ENTRY DATED 18.12.2009 TO SHOW-CAUSE WH Y THE ABOVE AMOUNT SHALL NOT BE ADDED AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION OVER AND ABOVE THE INCOME ALREA DY SHOWN. THE AR HAS SUBMITTED THROUGH LETTER DATED THAT THE ABOVE CASH IS CASH IN HAND OF THE FOLLOWING COMPANIES AS ON THE D AY OF SEARCH :- MOONLIGHT CONTINENTAL PVT. LTD. RS.25,00,000/- NEW ERA IMPEX (INDIA) PVT. LTD RS.15,00,000/- AUGITE ESTATE PVT. LTD. RS.15,00,000/- OSTRICH ESTATE PVT. LTD RS.15,00,000/- TOTAL : RS.70,00,000/- THE CONTENTION OF THE ASSESSEE WAS CONSIDERED AND B UT FOUND NOT SUSTAINABLE IN AS MUCH AS NONE OF THE COMPANIES COU LD PRODUCE THE CASH BOOK AT THE TIME OF SEARCH FROM WHERE THE ABOV E AMOUNT SEIZED COULD HAVE BEEN VERIFIED. IN THE EVENT OF TH E ASSESSEE FAILING TO JUSTIFY THE SOURCE OF THE ABOVE CASH, AN AMOUNT OF RS.70,00,000/- WAS SEIZED. IN IS A SETTLE PRINCIPLE OF LAW THAT IN ITA NO.1738/DEL./2012 5 CASE THE ASSESSEE FAILS TO GIVE ANY EVIDENCE REGARD ING THE SOURCE OF ANY ASSET FOUND AT ITS PREMISE DURING THE SEARCH DE SPITE GIVING IT SUFFICIENT OPPORTUNITY, AN ADVERSE INFERENCE IS IMM INENT RELATING TO THE SOURCE OF THE ABOVE ASSET. IN THE CASE AT HAND THE ASSESSEE FAILED TO FURNISH THE CASH BOOK SHOWING THE ABOVE CASH IN 'HAND ON THE DAY OF SEARCH. HENCE, THE ABOVE CONTENTION OF THE A SSESSEE THAT THE CASH FOUND IS ACTUALLY CASH IN HAND IN ALL THE ABOV E COMPANIES CAN SAFELY BE SAID TO BE AN AFTERTHOUGHT. MOREOVER, THE STATEMENTS RECORDED DURING THE SEARCH WERE BURNT IN THE FIRE T HAT OCCURRED IMMEDIATELY AFTER THE SEARCH. HENCE THE CASH OF RS. 70,00,000/- SEIZED DURING THE SEARCH, IS TREATED AS THE UNDISCL OSED INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. (A DDITION OF RS. 70,00,000/-) 8. LD. CIT (A), AFTER CALLING UPON THE REMAND REPOR T, HAS NOT ACCEPTED THE EXPLANATION FURNISHED BY THE ASSESSEE THAT THE SEIZED CASH BELONGS TO OTHER COMPANIES PRIMARILY ON THE GR OUND THAT THE ASSESSEE HAS FURNISHED THE CASH BOOK OF THE AFORESA ID COMPANY FOR THE PERIOD 01.04.2006 TO 31.03.2007 WHEREAS SEARCH WAS TAKEN PLACE ON 12.09.2007 AND THAT SUMMARIZED STATEMENT O F CASH DEPOSIT MADE DURING THE PERIOD 01.04.2007 TO 12.09.2007 DOE S NOT BEAR SIGNATURE OF THE DIRECTOR OR THE AUDITOR AND KEPT T HE AUTHENTICITY OF THE SAID DOCUMENT UNDER DOUBT. 9. WHEN THE FACTS AND CIRCUMSTANCES OF THE CASE, DO CUMENTS BROUGHT ON RECORD BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS, ARE EXAMINED IN THE LIGHT OF THE ORDER PASSED BY THE LOWER REVENUE AUTHORITIES BELOW , WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO SCOPE TO INTERFERE INTO THE FINDINGS RETURNED BY THE AO/LD.CIT (A) FOR THE FOLLOWING REA SONS :- ITA NO.1738/DEL./2012 6 (I) THAT NO PLAUSIBLE EXPLANATION HAS COME ON RECOR D DURING THE ASSESSMENT PROCEEDINGS OR THEREAFTER AS TO WHY THE CASH BOOK, SUBSEQUENTLY RELIED UPON BY THE ASSESSEE, HAS NOT BEEN PRODUCED BEFORE THE AO PARTICULARLY WHEN THE ASSESSEE COMPANY ALONG WITH I TS SISTER CONCERN WAS OPERATING FROM THE AFORESAID OFF ICE; (II) THAT EVEN OTHERWISE IT IS NOT THE CASE OF THE ASSESSEE THAT SOME OF ITS RECORD WAS LYING IN SOME OTHER OFF ICE RESTRAINING HIM NOT TO PRODUCE THE SAME BEFORE THE AO; (III) THAT THERE IS NO EXPLANATION AS TO WHY THE SU MMARIZED STATEMENT OF CASH DEPOSIT MADE BY THE ASSESSEE COMPANY DURING THE PERIOD 01.04.2007 TO 12.09.2007 PLACED BEFORE THE CIT (A) WAS NOT SIGNED BY THE DIRECTORS/AUDITORS. IT IS DIFFICULT TO ADMIT ANY S UCH STATEMENT INTO THE EVIDENCE WITHOUT THE SIGNATURE O F ANY AUTHORIZED SIGNATORY; (IV) THAT THE CONTENTION OF THE LD. AR THAT THE CAS H BOOK WAS SEIZED AT THE TIME OF SEARCH AND SEIZURE OPERAT ION IS NOT TENABLE BECAUSE CASH BOOK ONLY QUA THE PERIO D 01.04.2006 TO 31.03.2007 WAS PRODUCED WHEREAS THE PERIOD UNDER CONSIDERATION WAS ROUGHLY STARTS AFTER SIX ITA NO.1738/DEL./2012 7 MONTHS I.E. 12.09.2007, SO NON-FILING OF THE CASH B OOK OF THE LAST SIX MONTHS AUTHENTICATES THE FINDINGS RETURNED BY THE LD. CIT (A) THAT THE SAME CANNOT BE BELIEVED. MOREOVER CASH BOOK IS A DAILY DIARY WHIC H IS TO BE COMPLETED ON DAY-TO-DAY BASIS AND TO BE KE PT AND MAINTAINED AT THE OFFICE ITSELF AND NOT TO BE COMPLETED AT THE END OF THE FINANCIAL YEAR; (V) THAT THE ASSESSEE HAS NOT BROUGHT ON RECORD ANY MATERIAL TO PROVE AS TO HOW THE CASH HAS BEEN BUILT UP IN THE BANK AS SHOWN IN THE BANK STATEMENT OUT OF WHICH THE CASH WAS ALLEGEDLY WITHDRAWN; (VI) THAT THE CASH AMOUNT OF RS.30,00,000/-, SHOWN AT PAGE 74 OF THE PAPER BOOK, ATTRIBUTED TO M/S. MOONLIGHT CONTINENTAL (P) LTD. WAS SHOWN DEPOSITED IN SEPTEMBER 2006 I.E. ONE YEAR PRIOR TO THE SEARCH SHOWING LEAST NEXUS WITH THE SEIZED AMOUNT; (VII) THAT SIMILARLY, THE AMOUNT OF RS.10,00,000/- EACH IS SHOWN DEPOSITED ON 01.06.2006 IN CASE OF M/S. NEW ERA IMPEX (INDIA) (P) LTD., LYING AT PAGE 78 OF THE PAPER BOOK; (VIII) THAT IN CASE OF M/S. OSTRICH ESTATE PVT. LTD ., AMOUNTS OF RS.8,00,000/- AND RS.4,50,000/- SHOWN AT PAGE 94 ITA NO.1738/DEL./2012 8 OF THE PAPER BOOK AS ON 10.07.2006 AND 01.08.2006 RESPECTIVELY AND IT IS DIFFICULT TO BELIEVE THAT TH E CASH HAS BEEN KEPT FOR A PERIOD OF MORE THAN ONE YEAR WITHOUT ANY FURTHER EXPLANATION; (IX) THAT AUDITING BALANCE SHEET OF M/S. MOONLIGHT CONTINENTAL (P) LTD. FOR THE YEAR ENDING 2006-07 ON 15.09.2007 AFTER ONE MONTH OF THE SEARCH AND SEIZUR E IN THIS CASE ITSELF GOES TO PROVE THAT THE RECORD H AS BEEN PREPARED ANTI-DATED TO CREATE EVIDENCE. SIMIL AR IS THE CASE OF M/S. NEW ERA IMPEX (INDIA) (P) LTD. M/S. AUGITE ESTATE (P) LTD. AND M/S. OSTRICH ESTATE (P) LTD; (X) THAT EVEN PERUSAL OF THE BALANCE OF ALL THE COM PANIES IN QUESTION AS ON 31.03.2007 APPARENTLY SHOW THAT THERE IS NO SUBSTANTIVE CASH-IN-HAND WITH THE SAID COMPANIES; (XI) THAT MOREOVER WHEN THE CASH BOOK OF THE YEAR U NDER CONSIDERATION WAS SUPPRESSED BY THE ASSESSEE INTENTIONALLY AT THE TIME OF SEARCH AND SEIZURE, AS IS EVIDENT FROM THE COPY OF PANCHNAMA, NOR PRODUCED THE SAME DURING THE ASSESSMENT PROCEEDINGS, EARLIER CASH BOOKS PRODUCED BY THE ASSESSEE COMPANY ARE OF NO SUPPORT TO ITS CASE; ITA NO.1738/DEL./2012 9 (XII) THAT THE ASSESSEE HAS FAILED TO PROVE THE SOU RCE OF THE CASH OF RS.70,00,000/- FOUND AND SEIZED FROM ITS PREMISES ON THE BASIS OF SEARCH AND SEIZURE CONDUCT ED ON 12.08.2007. SO, THE CIT (A) HAS RIGHTLY DISMISS ED THE ASSESSEES APPEAL. 10. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL FILED BY THE ASSESSEE IS HEREBY DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 9 TH DAY OF MAY, 2016. SD/- SD/- (S.V. MEHROTRA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DAY OF MAY, 2016 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT-I, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.