Shaillee Developers, Ahmedabad V. The Income tax Officer,Ward-5(1), Baroda

ITA 1909/AHD/2010

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9510 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 10-01-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Income from undisclosed sources; Question of law; Block assessment; Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 1909 & 1910/AHD/2010 (ASSESSMENT YEAR: 2007-08) M/S. SHAILEE DEVELOPERS, 19A PONGHAT, GOVINDRAO PARK, AJWA ROAD, BARODA INCOME TAX OFFICER, WARD- 5 (1), BARODA V/S V/S INCOME TAX OFFICER, WARD- 5 (1), BARODA M/S. SHAILEE DEVELOPERS, 19A PONGHAT, GOVINDRAO PARK, AJWA ROAD, BARODA (RESPONDENT) ITA. NOS: 515 & 516/AHD/2013 & 517/AHD/2013 (ASSESSMENT YEARS: 2005-06 & 2008-09) M/S. SWARAJ CONSTRUCTION, 19A PONGHAT, GOVINDRAO PARK, AJWA ROAD, BARODA M/S. SHAILEE DEVELOPERS, 19A PONGHAT, GOVINDRAO PARK, AJWA ROAD, BARODA V/S V/S INCOME TAX OFFICER, WARD- 5 (1), BARO INCOME TAX OFFICER, WARD- 5 (1), BARODA (RESPONDENT) PAN: AAPPT0319Q ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 2 APPELLANT BY : SHRI S. N. SOPARKAR, ANIL R. SHAH & PARIN SHAH, A.R RESPONDENT BY : SHRI DHARMVIR D. YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 10 -01-201 7 DATE OF PRONOUNCEMENT : 12 -01-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. THE ABOVE CAPTIONED APPEALS ARE BY TWO DIFFERENT AS SESSEES NAMELY MS. SHAILEE DEVELOPERS & M/S. SWARAJ CONSTRUCTION. THE FACTS AND ISSUES IN THE UNDERLYING APPEALS ARE IDENTICAL FOR BOTH THE APPEL LANTS; THEREFORE, ALL THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. THE COMMON FACT IN THE UNDERLYING APPEALS RELATE TO A SURVEY OPERATION WHICH WAS CARRIED OUT ON 25.03.2009 IN WHICH TOTAL AMOUNT DECLARED WAS RS. 1.26 CRORES. LATER ON THE DISCLOSURE MADE AT T HE TIME OF SURVEY WAS RETRACTED AND MODIFIED. BY AN AFFIDAVIT FILED BEFOR E THE A.O. INCOME TAX OFFICER, WARD 5(1), BARODA DATED 20.04.2009. 3. BY THIS RETRACTION-CUM-MODIFICATION AFFIDAVIT, THE DISCLOSURE IN THE CASE OF M/S. SHAILEE DEVELOPERS WAS MADE AT RS. 76 LACS FOR A.Y. 2009-10 AND IN CASE OF M/S. SWARAJ CONSTRUCTION THE DISCLOSURE WAS MADE AT RS. 50 LACS FOR A.Y. 2009-10. ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 3 4. THE ASSESSING OFFICER HEAVILY RELIED UPON THE STATE MENT MADE DURING THE COURSE OF THE SURVEY OPERATIONS AND BIFURCATED THE DISCLOSURE INTO THREE ASSESSMENT YEARS. THE DISCLOSURE OF THE ASSESSEE AN D THE ACTION OF THE A.O. CAN BE UNDERSTOOD BY THE FOLLOWING CHART:- TOTAL AMOUNT DECLARED IN SURVEY IS RS.1,26,00,000 I . AS PER ASSESSEE M/S. SWARAJ CONSTRUCTION A.Y. 09-10 RS. 50 LACS AS PER ASSESSEE M/S. SHAILEE DEVELOPERS A.Y. 09-10 RS. 76 LACS II. AS PER DEPARTMENT INCOME A.Y. 07-08 RS. 30 LACS A.Y. 08-09 RS. 6 LACS A.Y. 09-10 RS. 15 LACS AS PER DEPARTMENT INCOME A.Y. 07-08 RS. 54 LACS A.Y. 08-09 RS. 6 LACS A.Y. 09-10 RS. 15 LACS 5. THE ABOVE CHART SHOWS THAT THE ASSESSEE STUCK TO IT S DISCLOSURE BY FILING THE RETURN OF INCOME FOR A.Y. 2009-10 AND ADMITTING RS. 76 LACS IN THE CASE OF M/S. SHAILEE DEVELOPERS AND RS. 50 LACS IN THE CASE OF M/S. SWARAJ CONSTRUCTION. 6. THIS CLAIM OF THE ASSESSEE WAS DENIED BY THE ASSESS ING OFFICER BY BIFURCATING THE DISCLOSED AMOUNT OF RS. 76 LACS IN THREE ASSESSMENT YEARS NAMELY 2007-08, 2008-09 & 2009-10. SUBSEQUENT TO TH E FINDINGS OF THE FIRST APPELLATE AUTHORITY, THE ASSESSMENT FOR A.Y. 2006-07 AND A.Y. 2005-06 WERE REOPENED IN THE CASE OF M/S. SHAILEE DEVELOPER S AND M/S. SWARAJ CONSTRUCTION RESPECTIVELY AND ADDITION OF 15 LACS E ACH WAS MADE. ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 4 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) B UT WITHOUT ANY SUCCESS. 8. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT THE SOLE BASIS OF MAKING THE IMPUGNED ADDITIONS WAS THE STAT EMENT RECORDED DURING THE COURSE OF THE SURVEY PROCEEDINGS. IT IS THE SAY OF THE LD. COUNSEL THAT ANY DISCLOSURE MADE VIDE A STATEMENT RECORDED DURIN G THE COURSE OF SURVEY PROCEEDINGS HAS NO EVIDENTIARY VALUE. STRONG RELIAN CE WAS PLACED ON THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CA SE OF S. KHADER KHAN SON 300 ITR 157 WHICH WAS CONFIRMED BY THE HONBLE SUPREME COURT IN 352 ITR 480. THE LD. COUNSEL FURTHER STATED THAT A SIM ILAR VIEW HAS BEEN TAKEN BY THE HONBLE HIGH COURT OF GUJARAT IN THE CASE OF RADHE ASSOCIATES 218 TAXMANN.COM 97. THE LD. COUNSEL CONCLUDED BY STATIN G THAT ALL THE ASSESSMENTS HAVE BEEN MADE ONLY ON THE BASIS OF THE STATEMENT MADE DURING THE COURSE OF SURVEY OPERATIONS AND IMPUGNED DISCLOSURE THEREIN. IT IS THE SAY OF THE LD. COUNSEL THAT THE IMPUGNED ADD ITIONS CANNOT BE SUSTAINED IN THE LIGHT OF THE RATIO LAID DOWN BY TH E HONBLE MADRAS HIGH COURT (SUPRA) CONFIRMED BY THE HONBLE SUPREME COUR T (SUPRA). 9. PER CONTRA THE LD. D.R. HEAVILY RELIED UPON THE ORD ER OF THE AUTHORITIES BELOW. IT IS THE SAY OF THE LD. D.R. THAT DURING TH E COURSE OF SURVEY OPERATIONS AND IN THE STATEMENT RECORDED THEREIN TH E ASSESSEE HAS VOLUNTARILY MADE THE DISCLOSURE FOR THE IMPUGNED AS SESSMENT YEARS. THEREFORE, AT THIS STAGE, THE ASSESSEE CANNOT TAKE THE PLEA THAT THE DISCLOSURE WAS IMPROPER. ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 5 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. WE HAVE CAREFULLY CONSIDERED THE JUDICIAL DE CISIONS RELIED UPON BY THE LD. COUNSEL. 11. THE FACTUAL MATRIX OF THE DISCLOSURE MADE IN THE CA SE OF THE TWO APPELLANTS HAS BEEN EXHIBITED ELSEWHERE. THERE IS NO DISPUTE T HAT THE ENTIRE ADDITIONS HAVE BEEN MADE SOLELY ON THE BASIS OF THE DISCLOSUR E MADE IN THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY OPERATIONS. IT IS ALSO AN UNDISPUTED FACT THAT NO OTHER CORROBORATIVE EVIDENC E HAS BEEN BROUGHT ON RECORD. THE HONBLE HIGH COURT OF MADRAS IN THE CAS E OF S. KHADER KHAN SON HAS TAKEN A VIEW WHICH READS AS UNDER:- THE PRINCIPLES RELATING TO SECTION 133A OF THE INCOME-T AX ACT, 1961, ARE AS FOLLOWS : (I) AN ADMISSION IS AN EXTREMELY IMPORTAN T PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE AND IT IS OPEN TO THE PERSON WHO MADE THE ADMISSION TO SHOW THAT IT IS INCORRECT AND THAT THE ASSESSEE SHOULD BE GIVEN A PROPER OPPORTUNITY TO SHOW THAT THE BOOKS OF ACCOUN T DO NOT CORRECTLY DISCLOSE THE CORRECT STATE OF FACTS ; (II) IN CONTRADISTINCTION TO THE POWER UNDER SECTION 133A, SECTION 132(4) ENABLES THE AUTHORISED OFFICER TO EX AMINE A PERSON ON OATH AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATI ON CAN ALSO BE USED IN EVIDENCE UNDER THE ACT. ON THE OTHER HAND, WHATEVER STATEMENT IS RECORDED UNDER SECTION 133A IS NOT GIVEN ANY EVIDENTIARY VALUE OBV IOUSLY FOR THE REASON THAT THE OFFICER IS NOT AUTHORISED TO ADMINISTER OATH AND TO TAKE ANY SWORN STATEMENT WHICH ALONE HAS EVIDENTIARY VALUE AS CONTEMPLATED UNDER L AW ; (IN) THE EXPRESSION 'SUCH OTHER MATERIALS OR INFORMATION AS ARE AVAILAB LE WITH THE ASSESSING OFFICER' CONTAINED IN SECTION 158BB WOULD INCLUDE THE MATERI ALS GATHERED DURING THE SURVEY OPERATION UNDER SECTION 133 A ; (IV) THE MATERIAL OR INFORMATION FOUND IN THE COURSE OF SURVEY PROCEEDING COULD NOT BE A BASI S FOR MAKING ANY ADDITION IN THE BLOCK ASSESSMENT ; AND (V) THE WORD 'MAY' USED IN SECTION 133A(3)(III) OF THE ACT, VIZ., 'RECORD THE STATEMENT OF ANY PERSON WHIC H MAY BE USEFUL FOR, OR RELEVANT ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 6 TO, ANY PROCEEDING UNDER THIS ACT' MAKES IT CLEAR T HAT THE MATERIALS COLLECTED AND THE STATEMENT RECORDED DURING THE SURVEY UNDER SECT ION 133A ARE NOT CONCLUSIVE PIECE OF EVIDENCE BY ITSELF. A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSES SEE-FIRM. ONE OF THE PARTNERS IN HIS SWORN STATEMENT OFFERED AN ADDITIONAL INCOME OF RS. 20 LAKHS FOR THE ASSESSMENT YEAR 2001-02 AND RS. 30 LAKHS FOR THE AS SESSMENT YEAR 2002-03. HOWEVER, THE SAID STATEMENT WAS RETRACTED BY THE AS SESSEE THROUGH ITS LETTER DATED AUGUST 3, 2001, STATING THAT THE PARTNER FROM WHOM A STATEMENT WAS RECORDED DURING THE SURVEY OPERATION UNDER SECTION 133A, WAS NEW TO THE MANAGEMENT AND HE COULD NOT ANSWER THE ENQUIRIES MADE AND AS SUCH, HE AGREED TO AN AD HOC ADDITION. THE ASSESSING OFFICER BASED ON THE ADMISS IONS MADE BY THE ASSESSEE, WHICH WERE DIRECTLY RELATABLE TO THE DEFECTS NOTICE D DURING THE ACTION UNDER SECTION 133A OF THE ACT, RECOMPUTED THE ASSESSMENT. THE ORDER WAS SET ASIDE BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THIS O RDER WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT IN VIEW OF THE SCOPE AN D AMBIT OF THE MATERIALS COLLECTED DURING THE COURSE OF SURVEY ACTION UNDER SECTION 133A SHALL NOT HAVE ANY EVIDENTIARY VALUE. IT COULD NOT BE SAID SOLELY ON THE BASIS OF THE STATEMENT GIVEN BY ONE OF THE PARTNERS OF THE ASSESSEE-FIRM T HAT THE DISCLOSED INCOME WAS ASSESSABLE AS LAWFUL INCOME OF THE ASSESSEE. 12. THE REVENUE HAD PREFERRED AN APPEAL BEFORE THE HON BLE SUPREME COURT AGAINST THIS DECISION OF THE HONBLE MADRAS HIGH CO URT WHICH WAS DISMISSED BY THE HONBLE SUPREME COURT IN 352 ITR 480. 13. ON IDENTICAL SET OF FACTS, THE HONBLE HIGH COURT O F GUJARAT IN THE CASE OF RADHE ASSOCIATES 218 TAXMANN.COM 97 HAS HELD AS UND ER:- 3. WE HAVE HEARD MS. PAURAMI SHETH, LEARNED COUNSEL FOR THE REVENUE AND CONSIDERED THE IMPUGNED JUDGMENT AND ORDER PASSED B Y THE LEARNED ITAT AS WELL AS THE ORDER OF ASSESSMENT PASSED BY THE AO. ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 7 AT THE OUTSET IT IS REQUIRED TO BE NOTED THAT THOUG H IN THE ORDER, THE AO HAD MENTIONED THAT THERE IS CLINCHING DOCUMENTARY EVIDE NCE WITH RESPECT TO RECEIPT OF 'ON-MONEY', THE AO HAS NOT MENTIONED AS TO WHAT WER E THOSE CLINCHING DOCUMENTARY EVIDENCES. BY MAKING THE AFORESAID ADDI TION, NOWHERE IT IS MENTIONED BY THE AO THAT WHAT WAS THE NATURE OF CLI NCHING DOCUMENTARY EVIDENCE ON THE BASIS OF WHICH THE AO HAS COME TO THE CONCLU SION THAT THE ASSESSEE HAS RECEIVED RS.1,45,37,500/- AS 'ON-MONEY' WITH RESPEC T TO THE OFFICE-CUM-SHOP AS WELL AS THE SHOPS IN 'GANESH PLAZA'. IT APPEARS THA T WHILE PASSING THE ORDER OF ASSESSMENT, THE AO HAS SOLELY RELIED UPON THE STATE MENT OF THE ASSESSEE WHICH HAS BEEN SUBSEQUENTLY RETRACTED AND THE QUESTION ANSWER S RECORDED WHILE RECORDING THE STATEMENT OF THE WORKING PARTNER ON 01.05.1996. 3.1 THE ISSUE INVOLVED IN THE PRESENT APPEAL IS SQUAREL Y COVERED BY THE DECISION OF THE MADRAS HIGH COURT IN THE CASE OF K. BHUVANENDRA N (SUPRA); THE DECISION OF THE DELHI HIGH COURT IN THE CASE OF BALAJI WIRE (P. ) LTD. (SUPRA) AS WELL AS THIS COURT IN THE CASE OF CIT V. MAULIKKUMAR K. SHAH [20 08] 307 ITR 137 4. CONSIDERING THE AFORESAID FACTS AND CIRCUMSTANCE S AND THE REASONING GIVEN BY THE ITAT AND THE AFORESAID THREE DECISIONS, WE SEE NO REASON TO INTERFERE WITH THE IMPUGNED JUDGMENT AND ORDER PASSED BY THE LEARNED I TAT IN DELETING THE ADDITION OF RS. 1,45,37,500/- AS UNACCOUNTED INCOME AS 'ON-M ONEY' ALLEGED TO HAVE BEEN RECEIVED BY THE ASSESSEE. THE DECISION OF THE ITAT IS ON APPRECIATION OF MATERIAL ON RECORD AND ON FACTS. NO SUBSTANTIAL QUESTION OF LAW ARISE IN THE PRESENT APPEAL. HENCE, PRESENT TAX APPEAL DESERVES TO BE DISMISSED AND IS, ACCORDINGLY, DISMISSED. 14. A PERUSAL OF THE AFORE-STATED DECISIONS SHOW THAT A NY DISCLOSURE MADE DURING THE COURSE OF SURVEY PROCEEDINGS DOES NOT HA VE ANY EVIDENTIARY VALUE. THEREFORE, THE IMPUGNED ADDITIONS MADE IN T HE CASES OF THE AFOREMENTIONED TWO APPELLANTS DO NOT STAND AND DESE RVE TO BE DELETED. ITA NOS. 1909 & 1910/AHD/2010 & ORS. . A.YS. 2005 -06, 2007-08 & 2008-09 8 HOWEVER, WE FIND THAT THE ASSESSEE HAS ADMITTED THE DISCLOSED AMOUNT IN THEIR RESPECTIVE RETURN OF INCOME FOR A.Y. 2009-10 AND HAVE PAID TAXES ACCORDINGLY. THEREFORE, IN OUR CONSIDERED OPINION, THESE RETURNS SHOULD NOT BE DISTURBED. THE LD. SENIOR COUNSEL FAIRLY CONCEDE D TO THIS. SETTING ASIDE THE FINDINGS OF THE LD. CIT(A), WE DIRECT THE A.O. TO DELETE THE ADDITIONS FROM A.Y. 2006-07,2007-08 & 2008-09 IN THE CASE OF M/S. SHAILEE DEVELOPERS AND DELETE THE ADDITIONS FROM A.Y. 2005-06, 2007-08 & 2 008-09 IN THE CASE OF M/S. SWARAJ CONSTRUCTION. THE DISCLOSURE MADE IN A. Y. 2009-10 OF RS. 76 LACS IN THE CASE OF M/S. SHAILEE DEVELOPERS AND RS. 50 LACS IN THE CASE OF M/S. SWARAJ CONSTRUCTION WILL STAND. WE ORDER ACCOR DINGLY. 15. BEFORE CLOSING THE LD. COUNSEL STATED THAT HE IS NO T PRESSING OTHER GROUNDS IN THE IMPUGNED APPEALS, THEREFORE, ALL OTHER GROUN DS ARE DISMISSED AS NOT PRESSED. 16. IN THE RESULT, THE APPEALS FILED BY THE ASESSEES AR E PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 12 - 01- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 12 /01/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD.