Remarkable Estate Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 1744/DEL/2013

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6634 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 25-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 26-03-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V S RASTOGI
• Keywords: Unexplained expenditure; Document seized; Documents seized
• Section: 143(3); 147; 6

Judgement Text

1 ITA NOS. 1366 & 1744/DEL/2013 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A .NO. 1366/DEL/2013 (ASSESSMENT YEAR-2007-08) I.T.A .NO. 1744 /DEL/2013 (ASSESSMENT YEAR-2007-08) REMARKABLE ESTATE (P) LTD. 20-A, NAJAFGARH ROAD, NEW DELHI AAACR5555N (APPELLANT) VS ACIT, CENTRAL CIRCLE - 23, ROOM NO. 359, E-2, ARA CENTRE, JHANDEWALAN EXTENSION NEW DELHI (RESPONDENT) APPELLANT BY SH. V.S. RASTOGI, AR RESPONDENT BY SH. DEEPAK GARG, SR. DR ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED AGAINST THE ORDER DATED 18. 12.2012 PASSED BY THE CIT (A)-XXXIII, BY THE ASSESSEE AS WELL AS BY THE R EVENUE. ACIT, CENTRAL CIRCLE - 23, ROOM NO. 359, E-2, ARA CENTRE, JHANDEWALAN EXTENSION NEW DELHI (APPELLANT) VS REMARKABLE ESTATE (P) LTD. 20-A, NAJAFGARH ROAD, NEW DELHI AAACR5555N (RESPONDENT) DATE OF HEARING 25.01.2017 DATE OF PRONOUNCEMENT 15 . 02.2017 2 ITA NOS. 1366 & 1744/DEL/2013 2. THE GROUNDS OF APPEAL ARE AS UNDER:- I.T.A .NO. 1744/DEL/2013 REMARKABLES ESTATES PVT. LTD AY: 2007-08 GROUNDS OF APPEAL 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN REJECTING APPELLANT'S CONTENTION TH AT ASSESSMENT ORDER MADE BY ASSESSING OFFICER WAS BAD IN LAW AND VOID AB-INITIO ON THE GROUND-THAT IT OUGHT TO HAVE BEEN MADE U/S 153C OF THE INCOME TAX ACT, AND NOT, AS WAS DONE U/S 143(3) OF THE INCOME TAX ACT. 2. THAT WITHOUT PREJUDICE, ON THE FACTS AND CIRCUM STANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN UPHOLDING THE ACTIO N OF THE ASSESSING OFFICER IN RELYING UPON THE MATERIAL SEIZED IN THE CASE OF SEARCH ON M/S BPTP GROUP OF CASES DESPITE:- I) THAT SUCH MATERIAL HAD NO NEXUS/RELEVANCE WITH T HE CASE OF THE APPELLANT AND, II) THAT, THE CIT(A) HIMSELF HOLDING THAT SUCH MATE RIAL DID NOT BELONG TO THE APPELLANT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN HOLDING TO QUOTE, 'THAT SEIZED DOCU MENTS DEFINITELY PROVE THAT INTEREST IS PAID ON PDC' DESPITE- I. THAT THE SEIZED RECORD ON THE BASIS OF WHICH ABO VE FINDING WAS GIVEN, EVEN ACCORDING TO HIS OWN FINDING BY THE CIT (A), DID NOT BELONG TO THE APPELLANT AND, II. THAT NO ENQUIRIES WERE MADE FROM ANY OF THE ALL EGED RECIPIENTS OF THE INTEREST AND NONE WAS CONFRONTED WITH RELEVANT DOCU MENT(S). 3 ITA NOS. 1366 & 1744/DEL/2013 3.1 THAT THE FINDING OF THE CIT(A) IS BASED ON MERE SURMISES AND CONJECTURES WITHOUT PROOF AND CORROBORATION BY INDE PENDENT EVIDENCE. 3.2 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN UPHO LDING THE ADDITION OF INTEREST FOR THE PERIOD FOR WHICH PDC'S WERE EXTEND ED. 3.3 THAT WITHOUT PREJUDICE THE CIT(A) ERRED IN NOT QUANTIFYING THE ADDITION AND INSTEAD GIVING AMBIGUOUS DIRECTIONS TO COMPUTE THE INTEREST AFTER SIX MONTHS FROM THE DATE OF SALE. 4. THAT THE ORDERS PASSED BY THE ASSESSING OFFICER AND COMMISSIONER OF INCOME TAX (APPEALS)-XXXIII, NEW DELHI ARE BAD I N LAW AND VOID AB- INITIO. 5. THE APPELLANT CRAVES PERMISSION TO ADD, AMEND, ALTER OR VARY ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAR ING OF THE APPEAL. I.T.A .NO. 1366/DEL/2013 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS,39,81,936/-, O UT OF TOTAL ADDITION OF RS.48,01,436/-,MADE BY THE ASSESSING OFFICER ON ACC OUNT OF INTEREST ON PDCS PAID OUT OF BOOKS OF ACCOUNT. 2. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 3. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. 4 ITA NOS. 1366 & 1744/DEL/2013 3. AT THE TIME OF HEARING THE LD. AR HAS NOT PRESSE D GROUND NO. 1, 4 & 5 OF THE ASSESSEES APPEAL; THEREFORE, THE SAME ARE DISM ISSED. 4. THE ASSESSING OFFICER ANALYSED FEW SEIZED MATERI AL AND CONCLUDED THAT ASSESSEE IS PAVING UNACCOUNTED INTEREST ON PDCS GIV EN TO THE SELLER OF LAND. HE ALSO RELIED UPON BANK ACCOUNTS OF FIVE SELLERS OF T HE LAND TO BPTP GROUP WHERE THERE IS HUGE CASH DEPOSIT. THE ASSESSEE COMPANY BE LONGS TO THE BPTP GROUP. THE BPTP LTD AND ITS GROUP COMPANIES ARE ENGAGED IN THE BUSINESS OF REAL ESTATE. THIS GROUP IS A LEADING REAL ESTATE DEVELOP ER OPERATING ALL OVER INDIA BUT MAINLY IT IS WORKING IN THE NCR AREA-FARIDABAD, GUR GAON, AND NOIDA. THIS GROUP IS OWNED AND CONTROLLED BY SH. KABUL CHAWLA. A SEARCH & SEIZURE OPERATION WAS CARRIED OUT ON BPTP LTD AND SOME OF I TS GROUP COMPANIES ON 15- 11-2007. DURING THE COURSE OF SEARCH OPERATION ON B PTP GROUP, CERTAIN INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. FROM PERUSAL OF THESE DOCUMENTS AND AS A RESULT OF SEVERAL POSTS SEARCH I NQUIRIES, IT WAS REVEALED THAT BPTP GROUP COMPANIES HAD PURCHASED HUGE TACTS OF LAND IN DIFFERENT VILLAGES OF FARIDABAD SUCH AS KHERIKHURD, KHERIKALA N, BUDENA, BHATOLA, ETC. THE A.O NOTICED FROM THE SEIZED DOCUMENTS THAT THE GROUP WAS FOLLOWING A BUSINESS MODEL AS A PART OF WHICH ONLY PART PAYMENT S OF THE SALE CONSIDERATIONS IN RESPECT OF LANDS PURCHASED WERE P AID AT THE TIME OF EXECUTION OF SALE DEED AND THE PAYMENT OF BALANCE SALE CONSID ERATION WAS INVARIABLY MADE THROUGH POST DATED CHEQUES (PDCS) AND FOR THE INTERVENING PERIOD I.E. PERIOD BETWEEN THE DATE OF SALE DEED AND THE DATE O F ENCASHMENT OF PDC, 5 ITA NOS. 1366 & 1744/DEL/2013 INTEREST WAS PAID IN CASH TO THE VENDORS OF THE LAN D BY THE VENDEE COMPANY ON MONTHLY BASIS @ 1.25% P.M. ON THE AMOUNT OF PDC. DU RING THE COURSE OF POST SEARCH ENQUIRIES, IT WAS NOTICED THAT THE SAID PAYM ENT OF INTEREST BY THE VENDEE COMPANY IN CASH WAS NOT ACCOUNTED FOR BY IT IN ITS BOOKS OF ACCOUNTS. THE ASSESSING OFFICER RELIED UPON VARIOUS DOCUMENTS SEI ZED FROM THE PREMISE OF BPTP GROUP IN SUPPORT OF INTEREST PAID. ALL THESE D OCUMENTS ARE PART OF ASSESSMENT ORDER. THE ASSESSING OFFICER HELD THAT I T IS WELL WITHIN ITS RIGHT TO CALCULATE THE UNDISCLOSED EXPENDITURE OF THE ASSESS EE ON RATIONAL BASIS. IN THE PRESENT CASE, THIS UNDISCLOSED EXPENDITURE IS INTER EST PAID ON PDCS BASED ON THE SUBSTANTIAL NUMBER OF SEIZED DOCUMENT WHICH CLE ARLY INDICATED THE MODUS OPERANDI OF THE GROUP. RELIANCE WAS ALSO PLACED ON THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF H.M. ESUFALI H.M.ABDUL ALI V/S COMMISSIONER OF SALES TAX, MADHYA PRADESH 90 1TR 271 ( 1973 ). THE A.O FURTHER HELD THAT THE ASSESSEE PAID INTEREST IN CASH TO THE VENDOR(S) O N THE AMOUNT OF PDCS @ 1.25% PER MONTH (15% PER ANNUM) OUTSIDE ITS BOOKS O F 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 D ATE OF ENCASHMENT OF PDCS, THE TOTAL AMOUNT OF UNACCOUNTED INTEREST PAID BY TH E ASSESSEE COMPANY TO THE VENDORS, A.O. WAS COMPUTED SUCH INTEREST AS UNDER:- NAME OF THE VENDOR SALE DEED DATE AMT. OFPDC (RS.)(A) DATE ENCASHED NO. OF MO NTH AMT. OF INTEREST ( 1.25 % OF A X B) KULDEEP 13-06-2006 1,21,87.500 11-11-2006 5 RS. 7,61,719/- SURENDRI 13-06-2006 1,21.87,500 11-11-2006 5 RS. 7,61,719/- 6 ITA NOS. 1366 & 1744/DEL/2013 AZADBATI 31-05-2006 54,63,333 08-02-2007 8 RS. 5,46,333/- NETRAPAL 31-05-2006 54,63,333 05-02-2007 8 RS. 5,46,333/- BED PAL 31-05-2006 54,63,333 05-02-2007 8 RS. 5,46,333/- SUNDER 31-05-2006 54,63,333 05-02-2007 8 RS. 5,46,333/- DEVENDER 31-05-2006 54,63,333 05-02-2007 8 RS. 5,46,333/- LADO 31 - 05 - 2006 54,63,333 05 - 02 - 2007 8 RS. 5,46,333/ - T O T A L RS. 48,01,436/- 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER THE ASSE SSEE FILED APPEAL BEFORE THE CIT (A). THE CIT (A) HELD THAT THE ASSESSING OF FICER UTILIZED DOCUMENTS SEIZED FROM THE PREMIES OF BPTP AND GROUP COMPANIES HOWEVER THE ASSESSMENT ORDER NOWHERE MENTIONS THAT ANY PART OF THE SEIZED MATERIAL BELONG TO ASSESSEE COMPANY. THE CIT (A) FURTHER OBSERVED T HAT THE ASSESSEE COMPANY IS ONE OF THE GROUP COMPANIES OF BPTC GROUP AND MAT ERIAL SEIZED FROM BPTP LTD. AND OTHER ASSOCIATES COMPANY HAS SHOWN SOME TR END OF UNACCOUNTED EXPENDITURE IN FORM OF PDC INTEREST, SOME FINDING O N ADDITIONAL PAYMENT FOR THE ACQUISITION OF LAND. THE LD. DR HAS ALSO SUBMIT TED THAT THERE IS NO FINDING WHICH WAS GIVEN BY THE ASSESSING OFFICER THAT CERTA IN SEIZED MATERIAL BELONGS TO ASSESSEE COMPANY. THE CIT (A) FURTHER HELD THAT THE RE IS NO EVIDENCE WHICH PROVES THAT INTEREST IS PAID FROM THE DATE OF SALE TO DATE OF ENCASHMENT OF POST DATED CHEQUES. HOWEVER THERE IS CONCRETE EVIDENCE I N FORM OF SEIZED MATERIAL TO SHOW THAT INTEREST IS PAID AND RECEIVED BY SELLER O N THE EXTENSION OF PDCS WHILE ANALYZING THE SEIZED DOCUMENT. THEREFORE IN CIT(A) S OPINION WHEREVER THE 7 ITA NOS. 1366 & 1744/DEL/2013 DATES OF PDCS ARE EXTENDED INTEREST IS PAID AT 15% PER ANNUM IN CASH OUT OF BOOKS OF ACCOUNTS. THE SAME IS EVIDENT FROM THE SEI ZED MATERIAL. THE CIT(A) FURTHER HELD THAT:- 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 AFT ER SIX MONTHS FROM DATE OF ISSUE OF PDCS I.E. DATE OF SALE, AS S I X MONTHS I S TAKEN AS REASONABLE PERIOD FOR GIVING PDC AS PER SALE DEED. THIS VIEW I S FORMED ON THE BASIS THE STATEMENT OF SH. CHHOTU RAM WHICH SAYS THAT NOR MALLY PDCS ARE GIVEN FOR 8 TO 10 MONTHS. FURTHER LD AR HAS ALSO SUBMITTE D FEW SALE DEED IN RESPECT OF SOME OF SEIZED RECORD IN THE CASE OF RAM VATI BEERO ETC WHERE THE INTEREST WORKING IS MADE AFTER 9/ 3 5 MONTHS. TAKIN G THESE FACTS INTO CONSIDERATION. IT WOULD BE PROPER TO COMPUTE INTERE ST AFTER 6 MONTHS FROM DATE OF SALE ON CONSERVATIVE SIDE. ACCORDINGLY THIS GROUND IS PARTLY ALLOWED. 6. THE LD. AR SUBMITTED THAT THERE IS NO SEARCH WIT H THE PRESENT ASSESSEE BUT THE SEARCH WAS AT THE PREMISES OF BPTP. THE LD. AR FURTHER SUBMITTED THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE IDENTICAL WITH THE TRIBUNALS ORDER IN CASE OF M/S. WESTLINE DEVELOPERS PVT. LTD. (ITA NO. 1757/DEL/2013 FOR A.Y. 2006-07 DATED 23.11.2015). THE MATERIAL WHICH HAS B EEN UTILIZED BY THE ASSESSING OFFICER FOR MAKING THE ASSESSMENT IN THE PRESENT CASE IS SAME AS WAS UTILIZED FOR TAKING ACTION U/S 147 AND ALSO FOR MAKING ASSESSMENT IN THE CASE OF M/S. WESTLINE DEVELOPERS PVT. LTD. THIS IS EVIDENT FROM THE REASONS RECORDED U/S 148(2) AND THE ASSESSMENT ORDER, WHERE SIMILAR MATERIAL IS REFERRED TO. THE LD. AR FURTHER SUBMITTED THAT NON E OF THE CONCERNS SEIZED 8 ITA NOS. 1366 & 1744/DEL/2013 MATERIAL HAD SPECIFIC NEXUS WITH THE ASSESSEE IN TH E PRESENT CASE AS WAS SO HELD IN THE CASE OF M/S. WESTLINE DEVELOPERS PVT. L TD. 7. THE LD. DR. SUBMITTED THAT THE ORDER IN CASE OF M/S. WESTLINE DEVELOPERS PVT. LTD. IS NOT APPLICABLE IN THE PRESE NT CASE AS THE SAID ORDER WAS RELATED TO SECTION 147 OF THE ACT ONLY AND NOT TO T HAT OF SECTION 143(3) OF THE ACT AS IN THE PRESENT CASE. THE LD. DR. HOWEVER SUB MITTED THAT THE INTEREST IS PAID IN CASH TO THE GROUP COMPANIES. 8. THE LD. AR IN HIS REJOINDER SUBMITTED THAT NO IN TEREST WAS RECEIVED BY THE ASSESSEE AND THERE IS NO MATERIAL FOUND. 9. WE HAVE HEARD BOTH THE PARTIES AND PERUSED ALL T HE DOCUMENTS. THE CIT (A) CLEARLY MENTIONED THAT THE ASSESSMENT ORDER NOW HERE MENTIONS ANY PART OF SEIZED MATERIAL BELONGED TO ASSESSEE COMPANY, BUT T HE SEIZED MATERIAL IS THAT OF ASSOCIATES/GROUP COMPANIES OF BPTP GROUP. THE AS SESSEE IS ALSO GROUP COMPANY OF THE BPTP GROUP. THIS FACT WAS NEVER DENI ED BY THE ASSESSEE AT ANY POINT OF TIME. THE RELIANCE BY THE LD. AR ON THE OR DER OF M/S. WESTLINE DEVELOPERS PVT. LTD. IS OF NO HELP TO THE ASSESSEE AS THE DISTINGUISHING FACTOR HAS BEEN POINTED OUT BY THE REVENUE. THE PRESENT CA SE IS REGARDING SECTION 143(3) OF THE ACT, THUS THE FACTS ARE DIFFERENT FRO M THE RATIO LAID DOWN IN CASE OF WESTLINE DEVELOPER PVT. LTD.. THE CIT (A) HAS RIGHT LY MADE OBSERVATIONS THAT THERE IS CONCRETE EVIDENCE IN FORM OF SEIZED MATERI AL TO SHOW THAT INTEREST IS 9 ITA NOS. 1366 & 1744/DEL/2013 PAID AND RECEIVED BY SELLER ON THE EXTENSION OF PDC S WHILE ANALYSING THE SEIZED DOCUMENTS. THE CIT(A)S ORDER IS UPHELD. 10. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND REVENUE ARE DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 15TH OF FEBRUARY, 2017. SD/- SD/- (S.V. MEHROTRA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15/02/2017 NARENDER /R.NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 08/02/2017 SR. PS 2. DRAFT PLACED BEFORE AUTHOR 08/02/2017 SR. PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 10 ITA NOS. 1366 & 1744/DEL/2013 5. APPROVED DRAFT COMES TO THE SR.PS/PS 15.02.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 15.02.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.