ACIT, Aurangabad V. M/s. Vishwa Developers, Aurangabad

ITA 1794/PUN/2005

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7659 (ITAT-PUNE)
• Duration Of Justice: 5 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: misc
• Appeal Filed On: 02-12-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S SINGH
• Assessee Lawyers: SUNIL PATHAK
• Keywords: Document seized; Principle of natural justice; Block assessment; Documents seized
• Section: 40A(3); 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1794/PN/05 [BLOCK PERIOD 01/04/1996 TO 29/03/2003] ACIT, CENTRAL CIRCLE, AURANGABAD .... APPELLANT VS. M/S. VISHWA DEVELOPERS, LAXMI NARAYAN APARTMENTS, NEW OSMANPURA, AURANGABAD PAN NO. AAEFV0414F . RESPONDENT ITA NO. 1841/PN/05 [BLOCK PERIOD 01/04/1996 TO 29/03/2003] M/S. VISHWA DEVELOPERS, LAXMI NARAYAN APARTMENTS, NEW OSMANPURA, AURANGABAD PAN NO. AAEFV0414F .... APPELLANT VS. ACIT, CENTRAL CIRCLE, AURANGABAD . RESPONDENT ASSESSEE BY : SHRI SUNIL PATHAK DEPARTMENT BY : SHRI A.S. SINGH ORDER PER D. KARUNAKARA RAO AM THESE ARE THE CROSS APPEALS FILED BY THE ASSESSEE AN D THE REVENUE AGAINST THE ORDER OF CIT(A)-I, NAGPUR DATED 05-09-2 005 FOR BLOCK ASSESSMENT PERIOD 01-04-1996 TO 29-03-2003. APPEAL WISE ADJUDIC ATION IS TAKEN UP IN THE PRECEDING PARAGRAPHS. TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 2 OF 9 ITA NO. 1841/PN/05 (ASSESSEES APPEAL) 2. GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- 01. HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) -I, NAGPUR HAS ERRED IN HOLDING THAT THE ON MONEY AMOUNTING TO R S. 30,41,717/- SHOWN AS BALANCE IN ANNEXURE A-15 HAS BEEN COLLECTED BY T HE APPELLANT AND SAME RS. 30,41,717/- REPRESENTS UNDISCLOSED INCOME OF THE APPELLANT FOR THE BLOCK PERIOD. THUS HONORABLE COMMISSIONER OF IN COME TAX (APPEALS)- I, HAS ERRED IN UPHOLDING THE ADDITION MADE BY THE ASSESSING OFFICER ON ASSUMPTION THAT WHAT IS APPEARING IN SEIZED DOCUMEN T AS BALANCE HAS BEEN ACTUALLY RECEIVED WITHOUT ANY CORROBORATIVE EV IDENCE PROVING THAT THE SAID BALANCE ON MONEY HAS BEEN ACTUALLY RECEI VED AND SAME FORMS PART OF UNDISCLOSED INCOME OF THE APPELLANT. HENCE ADDITION OF RS. 30,41,717/- IS NOT JUSTIFIED AND SAME MAY BE DELETE D. 02. SUCH OTHER ORDERS BE PASSED AS MAY BE DEEMED FI T AND PROPER. 03. THE APPELLANT PRAYS FOR LEAVE TO ADD FRESH GROUN DS OF APPEAL AND LEAD EVIDENCE. 3. BRIEFLY STATED, RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE WAS SEARCHED U/S 132 OF THE ACT WHICH RESULTED IN DISCOVE RY OF CERTAIN INCRIMINATING DOCUMENTS. ANNEXURE A-15 IS ONE SUCH DISCOVERY. BASE D ON THESE PAPERS ASSESSEE OFFERED UNDISCLOSED INCOME OF RS. 34,01,150 /- THESE ARE THE SUM OF EARNED MONEY COLLECTION IN RESPECT OF 21 PLOTS AS APP EARING ON THESE INCRIMINATING DOCUMENTS. DURING THE ASSESSMENT PROCEED INGS, A.O NOTICED THE PAGE 13 OF THE A-15 CONTAINS LIST OF MONEY RECEIVABLE IN RESPECT OF THE PLOTS NUMBERED 1 TO 65. A.O DETERMINED THE ADDITIONAL UNDIS CLOSED INCOME AT RS.30,41,717/- IN ADDITION TO THE UNDISCLOSED INCO ME OFFERED BY THE ASSESSEE. DETAILS OF THESE UNDISCLOSED INCOME ARE GIVEN IN PARA 2.31. 4. DURING THE APPELLATE PROCEEDINGS, ASSESSEE CONTEST ED THAT THE ABOVE ADDITION AND PUT FORWARDED VARIOUS ARGUMENTS DESCRIBED A T LENGTH BY THE CIT(A). FINALLY, THE CIT(A) CONFIRMED THE ADDITION AS MENTIO NED IN PARA 2.38 TO 2.40. DURING THESE PROCEEDINGS, ASSESSEE RAISED ANOTHER GROUND WITHOUT PREJUDICE TO THE ABOVE STATING THAT THE SAID ADDITION HAS TO BE REDUCED TO THE EXTENT AMOUNT PAYABLE BY THE ASSESSEE WHICH IS NARRATED IN ANNEXURE A-4, PA GE 84, WHICH IS PLACED AT PAGE 62 OF THE PAPER BOOK. AS PER THE SAID PAGE, WHICH IS SEIZED PAPER THE AMOUNT TO BE GIVEN TO SHRI MEHTA FAMILY AGAINST THE LOSS OF RS. 25 LAKHS ASSESSEE IS OF THE VIEW THAT RS. 25 LAKHS IS STILL PAYABLE AS PER THE DOCUMENTS I.E., BEFORE THE CONDUCTING OF THE SEARCH THE AMOUNT WAS NOT PAID BEFORE THE SEARCH ACTION. CIT(A) HEARD THE VARIOUS ARGUMENTS MADE BY THE ASSESSEE AND TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 3 OF 9 DIRECTED A.O TO GIVE SET OFF OF THE SAID AMOUNT OF R S 25 LAKHS AGAINST THE SUM OF RS. 30, 41,717/-. RELEVANT DETAILS ARE MENTIONED IN PARA 3.9 TO 3.11. 5. AGGRIEVED WITH THE CONFIRMING OF ADDITION OF RS. 3 0,41,717, THE ASSESSEE IS IN APPEAL. FURTHER, AGGRIEVED WITH THE CIT(A) DIRECT ION OF GRANTING OF SET OFF TO THE EXTENT OF RS. 25 LAKHS, REVENUE IS IN THE APPEA L. DURING THE PROCEEDINGS BEFORE US BASICALLY LD. AR FOR THE ASSESSEE RELIED ON THE SUBMISSIONS AND VARIOUS ARGUMENTS MADE BEFORE THE CIT(A). ON THE OTHER HAND L D. DR FOR REVENUE RELIED ON THE ORDER OF THE A.O. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND THE DISCUSSION GIVEN BY THE CIT(A) WHILE ARRIVIN G AT THE DECISION OF CONFIRMING THE ADDITION OF RS. 30,41,717/-. WE HAVE ALSO PERUSED THE RELEVANT DISCUSSION FOR ARRIVING AT THE DECISION OF GRANTING SE T OFF TO THE EXTENT OF RS. 25 LAKHS AGAINST THE ABOVE CONFIRMED UNDISCLOSED INCOME . RELEVANT PARAS READS AS FOLLOWS:- 2.31 HOWEVER, ON EXAMINATION OF THE SEIZED DOCUMEN T ANNEXURE A-15, THE AO OBSERVED THAT THE ASSESSEE HAS OFFERED ON M ONEY COLLECTION OF RS. 44,53,150/- IN RESPECT OF 21 PLOTS AS APPEARING IN THE SAID DOCUMENT AND HAS NOT TAKEN INTO CONSIDERATION THE ON MONEY RECEIVABLE ON THE SAID PLOTS CLEARLY MENTIONED IN THE SEIZED DOCUMENT . THE PAGE NUMBER 13 OF ANNEXURE A-15 GIVES THESE DETAILS ROW WISE IN RE SPECT OF PLOTS NUMBERED 1 TO 65. THE LAST ROW GIVES THE TOTALS OF ALL THE COLUMNS. THE AO OBSERVED THAT ON COMPARISON OF THE ON MONEY CO LLECTION OFFERED BY THE ASSESSEE IN RESPECT OF SAID 21 PLOTS VIS--VIS THE CONSIDERATION NUMBER 2 MENTIONED IN COLUMN NO. 7 OF ANNEXURE A- 15 DOES NOT TALLY AND THERE WERE CERTAIN DIFFERENCES WHEREIN THE ASSE SSEE HAD NOT OFFERED THE ON MONEY RECEIVABLE ON SALE OF SUCH PLOTS. TH E AO, THEREFORE, WAS OF THE VIEW THAT THE ON MONEY BALANCE APPEARING I N THE SAID SEIZED DOCUMENT A-15 DURING THE PERIOD 16-06-2002 TO 23-06 -2002, WOULD ESSENTIALLY REPRESENT ON MONEY OF HAVING BEEN ACT UALLY BEEN COLLECTED SINCE EXECUTION OF THE SALE DEED IN RESPECT OF SUCH 21 PLOTS HAD TAKEN PLACE BEFORE THE DATE OF SEARCH. ACCORDINGLY, THE A O DETERMINED THE RECEIPT OF ON MONEY AT RS. 30,41,717/- WHICH HAD NOT BEEN INCLUDED IN THE TOTAL ON MONEY CONSIDERATION OF RS. 44,53,150 /- OFFERED BY THE APPELLANT AND THE SAME WAS ADDED AS UNDISCLOSED INC OME OF THE ASSESSEE. THE DETAILS OF SUCH ON MONEY DETERMINED BY THE AO WHICH HAD BEEN OMITTED BY THE ASSESSEE IS DESCRIBED AS UNDER: NAME OF THE PURCHASER PLOT NO. ON MONEY --------------------------- ---------- ---------- --- SHRI ARVIKAR PANDIT 5 1,67,965/- SHRI R.T. MAHAJAN 8 3,18,864/- SHRI PRADEEP TAPAR 11 4,13,618/- SHRI BALPREETSINGH 14 2,00,000/- SHRI V.R. AVHAD 16 3,19,141/- SHRI AMIT PATIL 38 97,298/- SHRI GAJANAN PAWAR 45 1,40,000/- TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 4 OF 9 M/S. SAI BUILDERS (GOBS) 58 TO 65 8,98,866/- SHRI G.K. GORTE 2 4,85,965/- ------------- TOTAL ON MONEY RECEIVED 30,41,717/- 2.38 I SHALL NOW TAKE UP THE ARGUMENT OF THE APPE LLANT IN CITING ADVERSE FACTORS CONCERNING EACH PLOT THAT HAD COMPELLED TO FOREGO THE BALANCE ON MONEY AT THE TIME OF EXECUTION OF SALE DEED. MY FI NDING ON THE APPELLANTS ARGUMENT ON EACH OF THE FACTORS ARE GIV EN AS UNDER: (I) THE APPELLANT HAS VEHEMENTLY ARGUED THAT THE A URANGABAD MUNICIPAL CORPN. HAD ISSUED A NOTICE DATED 19-09-20 00 TO M/S. DISHA CONSTRUCTION PVT LTD. ALLEGING ILLEGAL OWNERSHIP OF THE GOVT. LAND AT SURVEY NO. 3, C.T.S NO. 16340 WHICH HAD ADVERSE EFFECT ON THE SALE PROSPECT OF THE VIVEKANAND PURAM PROJECT. THE SO CALLED ARGUMEN T HAS NO MERIT IN IT, CONSIDERING THE FACT THAT THE SO CALLED NOTICE WAS ISSUED TO DISHA CONSTRUCTION PVT LTD AND NOT THE APPELLANT SELLING PLOTS ON A DIFFERENT SURVEY NO. AND CTS NO. THE SO CALLED NOTICE WOULD, THEREFORE, HAVE NOT ADVERSE IMPACT ON THE SALE PRICE ALREADY NEGOTIATED PRIOR TO THE DATE OF ISSUE OF SUCH NOTICE. IT IS PERTINENT TO NOTE THAT THE LAYOUT PLAN OF VIVEKANAND PURAM PROJECT WAS APPROVED BY TOWN PLANN ING AUTHORITY AS PER THE LETTER DATED 05-10-2002, WHICH IS AFTER THE DATE OF SO CALLED NOTICE OF AURANGABAD MUNICIPAL CORPORATION DATED 19-09-200 2. THEREFORE, IF THERE WAS ANY ISSUE OF ILLEGAL OWNERSHIP OF THE PRO PERTY HELD BY THE APPELLANT, THEN THE APPROVAL WOULD NOT HAVE BEEN IS SUED TO THE PROJECT BY THE SAME AUTHORITY. (II) THE APPELLANT HAS CONTENDED THAT THERE WAS SO ME TOPOGRAPHICAL ADVERSE FACTORS PERTAINING TO CERTAIN PLOTS AND, THEREFORE, THE BALANCE ON MONEY WAS NOT COLLECTED FROM THE B UYERS. THE APPELLANT HAS ARGUED THAT PLOT NO. 14 WAS ADJACENT TO A TOMB, PLOT NO. 38 AND 45 WERE LOCATED AT UNLEVELED LOW LYING AREA, PLOT NO. 58 TO 65 WERE NEAR THE SLUM AREA AND, THEREFORE, THE BALANCE ON MONEY WA S NOT COLLECTED FROM THE BUYERS OF THE SAID PLOTS WOULD NOT HAVE PAID SU BSTANTIAL AMOUNT OF RECORDED COST AND PART OF THE ON MONEY WITHOUT CA RRYING OUT SITE INSPECTION AND CONSIDERING THE ADVERSE FACTOR AFFEC TING THE DEAL. OBVIOUSLY, THE BUYERS HAD MADE SUBSTANTIAL PAYMENT TOWARDS SUCH PURCHASES AT THE TIME OF ENTERING INTO AGREEMENT, W HEN THE SO CALLED ADVERSE FACTORS, THEREFORE, DID NOT ERUPT AFTER THE PREPARATION OF THE SEIZED DOCUMENT ANNEXURE A-15 ON 10-07-2002 SO AS T O THREATEN CANCELLATION OF THE DEAL AS ALLEGEDLY CLAIMED BY TH E APPELLANT. IT IS ALSO PERTINENT TO NOTE HERE THAT THERE WAS PROXIMITY OF TOMB TO OTHER PLOTS SUCH AS PLOT NO. 10 WHERE FULL CONSIDERATION OF ON MONEY HAD BEEN RECEIVED AND OFFERED AS UDO BY THE APPELLANT AND HE NCE THE ARGUMENT IS VAGUE AND DESERVES TO BE REJECTED. SIMILARLY, THE P ROXIMITY OF THE PLOTS TO THE SLUM AREA WAS RELEVANT TO OTHER PLOTS SUCH AS P LOT NO. 36 AND 49 IN WHICH FULL CONSIDERATION OF THE ON MONEY HAD BEEN RECEIVED AND OFFERED AS UDI BY THE APPELLANT. THEREFORE, THE ARGUMENT OF THE APPELLANT ON THE PROXIMITY OF THE PLOT NO. 50 TO 65 TO SLUM AREA, RE SULTING IN NON COLLECTION OF BALANCE ON MONEY IS NOT TENABLE AND HENCE DISM ISSED. THERE IS NO EVIDENCE SUBMITTED BY THE APPELLANT EITHER BEFORE T HE AO OR BEFORE ME TO SUBSTANTIATE THE THREAT OF CANCELLATION OF THE AGRE EMENT OF WHERE THE AGREEMENT HAD ACTUALLY BEEN CANCELLED BY ANY OF THE PARTIES. TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 5 OF 9 (III) THE APPELLANT HAS ARGUED THAT SHRI R.T. MAHA JAN, BUYER OF PLOT NO. 8 WAS A OLD CUSTOMER AND, THEREFORE, THE BA LANCE ON MONEY WAS NOT COLLECTED FROM HIM. THIS ARGUMENT IS BASELE SS, CONSIDERING THE FACT THAT A TOTAL ON MONEY OF RS. 3,18,965/- WAS MUTUALLY AGREED UPON AT THE TIME OF ENTERING INTO THE AGREEMENT AS EVIDE NT AT REVERSE SIDE OF PAGE 13, ANNEXURE A-15. IF THERE WAS ANY CONSIDERAT ION FOR CONCESSION TO BE GIVEN TO THE OLD CUSTOMER, IT WOULD HAVE BEEN GI VEN AT THE TIME OF AGREEMENT AND NOT SUBSEQUENT TO EVENT WHEN PART OF THE ON MONEY HAD ALREADY BEEN COLLECTED FROM THE BUYER. FURTHER, THE APPELLANT HAS NOT PRODUCED ANY EVIDENCE ON RECORD TO PROVE THAT SHRI R.T. MAHAJAN WAS A OLD CUSTOMER AND HAS GIVEN BUSINESS TO THE APPELLAN T. THE ARGUMENT, THEREFORE, HAS NO MERIT AND HENCE REJECTED. 2.39 IN VIEW OF THE DISCUSSIONS IN THE PRECEDING PA RAS, I AM TO HOLD THAT THE SO CALLED ADVERSE FACTORS PERTAINING TO THE SAI D PLOTS ARE AFTER THOUGHT OF THE APPELLANT WHICH FAILS TO EXPLAIN THE SO CALL ED NON COLLECTION OF THE ON MONEY. I AM OF THE CONSIDERED VIEW THAT ALL TH E FACTORS AS CITED BY THE APPELLANT AS INDIVIDUALLY DISCUSSED ABOVE DID N OT RESULT IN NON COLLECTION OF THE ON MONEY AND, THEREFORE, DESERV ES TO BE REJECTED. 2.40 IN THE LIGHT OF ABOVE FINDING, I AM TO HOLD TH AT THE ON MONEY BALANCE SHOWN IN ANNEXURE A-15 HAD BEEN COLLECTED B Y THE APPELLANT, IN THE PERIOD BETWEEN THE PREPARATION OF THE SEIZED DO CUMENT AS ON 10-07- 2002 AND THE EXECUTION OF THE SALE DEED, PRIOR TO T HE DATE OF SEARCH AND HENCE THE TOTAL OF SUCH ON MONEY RECEIPTS AMOUNTI NG TO RS. 30,41,717/- REPRESENTS UNDISCLOSED INCOME OF THE APPELLANT FOR THE BLOCK PERIOD IN QUESTION. ACCORDINGLY, THE ACTION OF THE AO IN MAK ING SUCH ADDITION OF RS. 30,41,717/- ON ACCOUNT OF ON MONEY RECEIPTS AS EV IDENT FROM THE SEIZED DOCUMENTS AND OTHER CIRCUMSTANTIAL EVIDENCES IN HOL DING IT AS UNDISCLOSED INCOME, IS HEREBY UPHELD. 3.9 I HAVE EXAMINED THE SEIZED DOCUMENT ANNEXURE A -4, PAGE 84 WHICH SHOWS AN ENTRY OF RS. 25 LACS TO BE PAID TO S HRI MEHTA AGAINST THE ACQUISITION OF LAND. THE SAID EXPENSE HAS BEEN IGN ORED BY THE AO IN COMPUTING THE UNDISCLOSED INCOME DERIVED FROM THE VI VEKANAND PURAM PROJECT. CONSIDERING THE FACT THAT IN GROUND NO. 1, I HAVE THAT ON MONEY BALANCE APPEARING IN ANNEXURE A-15 HAD ACTUALLY BEE N RECEIVED AT THE TIME OF EXECUTION OF THE SALE DEED PRIOR TO THE DAT E OF SEARCH, THEN IN THE INTEREST OF NATURAL JUSTICE AND RESPECTING THE JUDI CIAL PROPRIETY, WHEN THERE IS EVIDENCE AS PER THE SEIZED RECORDS AS PER ANNEXU RE A-4, PAGE 84, THE AMOUNT OF RS. 2 LACS CLEARLY MARKED TO BE PAID OU GHT TO HAVE BEEN ALLOWED TO ARRIVE AT A CORRECT UNDISCLOSED INCOME D URING THE BLOCK PERIOD. THE ASSESSING OFFICER HAD MAINTAINED THAT AS THE SA LE DEEDS OF THE SAID PLOTS WERE EXECUTED AND REGISTERED BEFORE THE DATE OF SEARCH THEREFORE, THE APPELLANT FIRM HAD RECEIVED THE ON MONEY SHOW N AS BALANCE-2 IN THE SEIZED DOCUMENT PAGE 13 ANNEX. A-15 ALTHOUGH TH ERE IS NO CORROBORATIVE EVIDENCE OF THE RECEIPT OF THE SAME. IN THE SAME SPIRIT IT IS EVIDENT THAT THE AGREEMENT TO SALE FOR THE LAND WAS EXECUTED BY MEHTA FAMILY IN FAVOUR OF SHRI D.N. KOTGIRE (PARTNER OF TH E FIRM) AND REGISTERED ON THE SAME DATE I.E. 28-01-2002 PRIOR TO THE DATE OF SEARCH. THEREFORE, BY THE VERY SAME ANALOGY, THE ASSESSING OFFICER SHO ULD HAVE ALLOWED THE SET OFF OF ON MONEY PAYABLE OF RS. 25 LACS TO SHR I MEHTA TO ARRIVE AT A TRUE AND CORRECT UNDISCLOSED INCOME OF THE APPELLAN T. THE AO WAS, THEREFORE, INCORRECT IN NOT TAKING COGNIZANCE THE E NTRY OF RS. 25 LACS PAYABLE TO SHRI MEHTA ON ACQUISITION OF THE SAID PR OPERTY, AS EVIDENT FROM TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 6 OF 9 THE SEIZED DOCUMENT. IN THIS CONNECTION RELIANCE IS PLACED ON THE JUDGMENT OF THE ITAT, ALLAHABAD BENCH IN THE CASE OF SMT USHA TRIPATHI (66 TTJ 508) , WHEREIN IT HAS BEEN HELD THAT WHEN THE RECEIPTS IN A DOCUMENT ARE PER SE CONSIDERED INCOME WITHOUT ANY FURTHER EVIDENCE, EXPENSES RECORDED AGAINST THOSE RECEIPTS SHOULD ALS O BE CONSIDERED AT THE FACE VALUE AND ALLOWED DEDUCTION IN COMPUTING UNDIS CLOSED INCOME. THEREFORE, IT FOLLOWS THAT THE ASSESSMENT ORDER MUS T BE A REASONED ONE SO AS TO INTRODUCE CLARITY AND MINIMIZING CHANCES O F ARBITRARINESS. IN THE CASE OF APPELLANT, I FIND THAT THE SELECTIVE COGNIZ ANCE OF THE SEIZED DOCUMENT ANNEXURE A-15 AND IGNORING THE CONTENTS OF SEIZED DOCUMENT A- 4, IS NOT FAIR AND JUSTIFIED IN THE EYES OF LAW AND , THEREFORE, ALL THE TRANSACTION APPEARING IN THE SEIZED DOCUMENT IN TOT ALITY NEEDED TO BE CONSIDERED IN DETERMINING A TRUE AND CORRECT UNDISC LOSED INCOME. 3.10 IT IS RELEVANT TO MENTION HERE THAT THE APPELL ANT HAD ACQUIRED THE PROPERTY ADMEASURING 21136.43 SQR MTRS. FROM SHRI J M MEHTA & OTHERS AT A TOTAL CONSIDERATION OF RS. 2,08,82,500/- WHICH IS EVIDENT FROM SEIZED DOCUMENT A-87 AND BALANCE SHEET OF THE APPELLANT. T HE AO HAS ACCEPTED AND ALLOWED ON MONEY OF RS. 10 LACS PAID TO SHRI MEHTA ON THE BASIS OF SEIZED DOCUMENT ANNEXURE A-26, BUT HAS IGNORED THE ON MONEY PAYABLE OF RS. 25 LACS AS EVIDENT IN THE SEIZED DOCUMENT IN ANNEXURE A-4 AND THEREFORE, SUCH STAND OF THE AO IS NOT IN CONFORMIT Y WITH HIS FINDING GIVEN IN ON MONEY RECEIVABLE ON SALE OF PLOTS BY THE AP PELLANT. CONSIDERING, THE TOTAL PAYMENT OF ON MONEY OF RS. 35 LACS (RS. 10 LACS + RS. 25 LACS) EVIDENT FROM THE SEIZED DOCUMENT, APPEARS TO BE TRU E AND HENCE ACCEPTABLE. 3.11 IN VIEW OF MY FINDING GIVEN ON GROUND NO. 1 WH EREIN I HAVE UPHELD THE ADDITION MADE BY THE AO IN RESPECT OF THE ON MONEY OF RS. 25 LACS PAYABLE TO SHRI J M MEHTA AS EVIDENT FROM THE SEIZE D DOCUMENT OUGHT TO HAVE BEEN ALLOWED TO ARRIVE AT A TRUE AND CORRECT U NDISCLOSED INCOME, KEEPING IN VIEW THE JUDICIAL PROPRIETY IN THIS CASE . THE AO IS, THEREFORE, DIRECTED TO ALLOW DEDUCTION OF RS. 25 LACS AS EXPEN SES OUT OF THE TOTAL UNDISCLOSED INCOME ASSESSED BY HIM. 7. WE HAVE HEARD THE PARTIES AND PERUSED THE DETAILED AND ANALYTICAL LINE OF LOGIC AND DISCUSSION GIVEN IN THE ABOVE EXTRACTED PA RAGRAPHS. ON CONSIDERING THE ABOVE DETAILED DISCUSSION OF THE CIT(A), WE ARE OF T HE VIEW THAT ORDER OF THE CIT(A) IS IN ORDER AND IT DOES NOT CALL FOR ANY INTERF ERENCE. ACCORDINGLY, GROUND NO.1 OF THE ASSESSEES APPEAL IS DISMISSED. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED. BY SAME LOGIC THE GROUND 1 OF THE REVENUE STANDS ADJU DICATED AGAINST THE REVENUE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO. 1794/PN/05 (REVENUES APPEAL) 9. GROUNDS RAISED IN THIS APPEAL ARE AS UNDER:- 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE, THE LEARNED CIT(APPEALS) WAS JUSTIFIED IN ALLOWING A SE T-OFF OF RS. 25 LAKHS ON ACCOUNT OF ON MONEY CLAIMED TO BE PAYAB LE BY THE TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 7 OF 9 ASSESSEE, WITHOUT THERE BEING ANY CERTAIN EVIDENCE THEREFORE IN THE SEIZED RECORD, AGAINST THE ADDITION MADE BY THE ASS ESSING OFFICER AND UPHELD BY THE CIT(APPEALS) IN RESPECT OF ON MO NEY RECEIVABLE BY THE ASSESSEE IN THE TRANSACTION OF SA LE OF PLOTS, AS EVIDENCED FROM THE SEIZED DOCUMENTS. 2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) WAS RIGHT IN DELETING THE DISA LLOWANCE OF RS. 2,10,000/- MADE U/S. 40A(3) OF THE I.T. ACT, 1961, BY THE ASSESSING OFFICER IN HIS ORDER U/S. 158 BC R.W.S. 143(3) OF T HE I.T. ACT. 3) WHETHER THE LEARNED CIT(APPEALS) WAS RIGHT IN LA W IN HOLDING THAT DISALLOWANCES U/S. 40A(3) CANNOT BE CONSTITUTED AS UNDISCLOSED INCOME WITHIN THE DEFINITION OF SEC. 158B OF THE I. T. ACT. 4) WHETHER THE LEARNED CIT(APPEALS) WAS RIGHT IN LA W IN HOLDING THAT DISALLOWANCES U/S. 40A(3) IN BLOCK ASSESSMENT WAS O UTSIDE THE AMBIT OF CHAPTER XIV B OF THE I.T. ACT , BY IGNORIN G THE PROVISIONS OF SECTION 158BH OF CHAPTER XIV-B. 5) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(APPEALS) WAS RIGHT IN COMING TO THE CO NCLUSION THAT THE ASSESSEES CASE WAS COVERED BY THE SECOND PROVI SO TO SEC. 40A(3) OF THE I.T. ACT, AND THUS DELETING THE DISAL LOWANCE MADE BY THE ASSESSING OFFICER. 10. AS DISCUSSED ABOVE, THE ISSUE RAISED IN THE 1 ST GROUND OF THE REVENUE IS DISMISSED AND THE ASSESSEE IS ENTITLED TO SET OFF T O THE TUNE OF RS 25 LAKHS AS ALLOWED BY THE CIT(A) FOR THE REASONS DISCUSSED ABOVE . THE OTHER ISSUE RAISED IN THE REVENUES APPEAL IS WITH REGARD TO DISALLOWANCE U/S. 40 A(3) OF THE INCOME TAX ACT TO THE TUNE OF 2.1 LAKHS. IN THIS REG ARD, LD. COUNSEL FILED AN ORDER OF THIS TRIBUNAL VIDE ITA 1791/PN/05 FOR THE PROPO SITION THAT DISALLOWANCE U/S. 40 A(3) OF THE ACT ARE UNCALLED FOR IN THE ASSES SMENT ORDER MADE U/S. 158BC OF THE ACT THE TRIBUNAL DECIDED SO IN ASSESSEES FAV OUR AND IN THE PROCESS A REPORTED DECISION OF THIS TRIBUNAL IN THE CASE OF DHAN VARSHA BUILDERS AND DEVELOPERS, 102 ITD 375 (PUNE) WAS RELIED. THE LOGIC FOR THIS PROPOSITION THAT THE PAYMENTS DISALLOWED U/S. 40A(3) ARE BASICALLY DE CLARED TRANSACTIONS IN THE BOOKS OF ACCOUNT AND IT IS NOT THE CASE THAT THE SE IZED MATERIAL IS THE GENESIS OF THE INFORMATION. PARA 4 OF THE ORDER IS RELEVANT AS PER THE LD. COUNSEL . LD. DR FOR THE REVENUE RELIED ON THE ORDER OF THE A.O WE HAVE HEARD THE PARTIES AND FIND PARA 4 OF THE SAID ORDER IS RELEVANT AND THE SAME READS AS FOLLOWS:- 4. AFTER HEARING THE LEARNED D.R., AND IN THE BACK GROUND OF THE ABOVE DISCUSSION, WE HAVE FOUND THAT THIS ISSUE STOOD COV ERED BY THE RESPECTED PUNE BENCH AS DECIDED IN THE CASE OF DHANVARSHA BU ILDERS AND DEVELOPERS, 102 ITD 375 (PUNE) WHEREIN IT WAS OBSER VED THAT THE PROVISIONS OF SECTION 40A(3) ARE NOT APPLICABLE PER TAINING TO AN ASSESSMENT BASED UPON SEIZED MATERIAL. LATER ON, A N ANOTHER BENCH OF TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 8 OF 9 THIS TRIBUNAL HAS ALSO FOLLOWED THE SAID DECISION, IN THE CASE OF SHRI MANOJ G. BHATIA, PUNE,BEARING ITA NO. 763/PN/05, ORDER DT . 19 TH SEPTEMBER 2007 WHEREIN THE ABOVE CITED DECISION WAS FOLLOWED WITH THE FOLLOWING OBSERVATIONS :- 4. WE HAVE CONSIDERED THE MATTER. IT WAS POINTED OUT BY SHRI K.A. SATHE, THE LD. AR THAT THE ABOVE ISSUE IS COVERED I N FAVOUR OF THE ASSESSEE BY THE DECISION OF THE ITAT PUNE BENCH IN THE CASE OF DHANVARSHA BUILDERS & DEVELOPERS (P) LTD. V. DCIT [ 2006] 102 ITD 375 (PUNE). IN PARAGRAPH 6.2 OF ITS ORDER, THE TRIBUNA L OBSERVED AS UNDER: ..IT MAY BE POINTED OUT THAT WE ARE ON THE ISSUE OF COMPUTATION OF INCOME OF THE ASSESSEE DE HORS THE BOOKS OF ACCOUNT AND ON THE BASIS OF SEIZED MATERIAL. IN SUCH COMPUTATION, PROVISIONS O F SECTION 40A(3) ARE NOT APPLICABLE BECAUSE THIS IS NOT THE CASE OF THE ASSESSEE OR THE REVENUE THAT THE COMPUTATION OF UNDISCLOSED INCOME IS ON AN EXACT BASIS AS PER SEIZED DOCUMENTS AND THE BOOKS OF ACCOUNT. THE RESULT OF THE AFORESAID DISCUSSION IS THAT THE UNDISCLOSED INCOME IS TO BE QUANTIFIED AT RS. 14.74 LAKHS. 5. THE FACTS OF THE CASE IN THIS APPEAL ARE IDENTIC AL AND THEREFORE, WE FOLLOW THE PRECEDENT AND ALLOW THIS A PPEAL. SINCE A VIEW HAS ALREADY BEEN TAKEN BY THE RESPECTE D CO-ORDINATE BENCHES, HENCE WE FIND NO FORCE IN THE GROUNDS OF R EVENUE, WITH THE RESULT, THE VIEW TAKEN BY LD CIT(A) IS HEREBY CONF IRMED. 11. FURTHER WE HAVE ALSO PERUSED THE ORDER OF THE CIT(A) WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE RELYING ON VARIOUS DEC ISIONS ENLISTED IN PARA 4.1 TO 4.16 OF THE IMPUGNED ORDER. AFTER PERUSAL OF THE SAID D ECISIONS WE FIND NO REASON TO DEVIATE FROM THE ESTABLISHED DECISIONS ON THE ISS UE. ACCORDINGLY, RELATED GROUNDS RAISED BY THE REVENUE ARE DISMISSED. IN THE RE SULT APPEAL OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED AND THE APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF JANUARY, 2011. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 19 TH JANUARY, 2011 R TA NO. 1794 & 1841/PN/05 BLOCK PERIOD 01/04/1996 TO 29/03/2003 PAGE 9 OF 9 COPY OF THE ORDER IS FORWARDED TO : 1. ACIT, CENTRAL CIRCLE, AURANGABAD 2. ASSESSEE 3. CIT(A)-I, NAGPUR 4. CIT(CENTRAL), NAGPUR 5. D.R. ITAT B BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE