DCIT 24(3), MUMBAI V. SIROYA DEVELOPERS, MUMBAI

ITA 2088/MUM/2010

• Counselvise Citation: 208819914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 25-05-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 15-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V JHAVERI
• Keywords: Retraction
• Section: 133A; 132

Judgement Text

1 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G BEFORE SHRI D.K. AGARWAL, J.M. AND SHRI R.K. PANDA, A.M. ITA NO. 2088/MUM/2010 ASSESSMENT YEAR 2006-07 DCIT 24(3), R. NO. 701, C-11, 7 TH FLOOR, B.K.C. BANDRA (E), MUMBAI - 51. VS. M/S SIROYA DEVELOPERS, 43, SUNVILLA YASHODHAM, GENERAL A.K. VAIDYA MARG, GOREGAON (E), MUMBAI.400062. PAN AANFS1544G APPELLANT RESPONDENT APPELLANT BY SHRI PAVAN VED RESPONDENT BY SHRI B.V. JHAVERI ORDER PER R.K. PANDA A.M. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF CIT(A)- 34, MUMBAI DATED 30.12.2009 RELATING TO A.Y. 2006-07. 2. THE ONLY GROUND RAISED BY THE REVENUE READS AS UNDER:- 1. ON THE FACTS & IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE ADDITION OF ` 2.05 CRORES MADE BY THE A.O. ON ACCOUNT OF UNDISCLOSED INCOME WITHOUT A PPRECIATING THE FACT THAT THE SAID INCOME WAS DECLARED BY THE ASSES SEE FOR A.Y. 2006- 07 DURING THE SURVEY ACTION ON 8.3.2006 AND WHILE F ILING THE RETURN OF INCOME THE SAME WAS NEITHER OFFERED TO TAX NOR T HE ASSESSEE RETRACTED THE DECLARATION MADE DURING THE SURVEY AC TION. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS A FIRM AND IS ENGAGED IN THE BUSINESS OF DEVELOPING SLUMS UNDER THE SLUMS RE HABILITATION SCHEME OF THE GOVERNMENT OF MAHARASHTRA. A SURVEY ACTION U/S 133A OF THE INCOME TAX 2 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS ACT WAS CARRIED OUT IN THIS CASE ON 8.3.2006 DURING WHICH THE ASSESSEE DISCLOSED AN AMOUNT OF ` 2.05 CRORES. THE SAID DISCLOSURE WAS MADE BY THE ASSESSEE AS SUM BEING RECEIVABLE FROM M/S SIROYA SA RUP CONSTRUCTIONS AS PER MOU DATED 11.4.2005 FOUND FROM THE PREMISES OF THE ASSESSEE. THE PARTNER OF THE ASSESSEE FIRM SHRI SHRENIK SIROYA IN HIS STATEM ENT RECORDED DURING THE COURSE OF SURVEY CONFESSED AND DECLARED THE SUM OF ` 2.05 CRORES AS HIS INCOME FOR THE F.Y. 2005-06 AND ALSO AGREED TO PAY THE TAX ES DUE THEREON AMOUNTING TO ` 70 LAKHS. THEREAFTER, THE ASSESSEE PAID ADVANCE T AX OF ` 50 LACS/- IN TWO INSTALLMENTS OF ` 25 LACS EACH ON 9.3.2006 AND 14.3.2006. 2.2 THE A.O. NOTED THAT THE SURVEY ACTION WAS CARRI ED OUT ON 8.3.2006 AND ASSESSEE HAS DISCLOSED AN AMOUNT OF ` 2.05 CRORES AS INCOME FOR THE YEAR UNDER CONSIDERATION AND HAS ALSO PAID ADVANCE TAXES OF ` 50 LACS AND NO RETRACTION WAS EVER FILED IN RESPECT OF THE DISCLOS URE MADE DURING SURVEY. HOWEVER, IN THE RETURN OF INCOME FILED ON 31.10.200 6, THE ASSESSEE DID NOT OFFER THE AMOUNT OF ` 2.05 CRORES AS HIS INCOME WHICH WAS DISCLOSED DURI NG THE COURSE OF SURVEY. THE A.O., THEREFORE, ASKED THE AS SESSEE TO EXPLAIN AS TO WHY THE INCOME OF ` 2.05 CRORES SHOULD NOT BE ADDED TO THE RETURNED IN COME, ESPECIALLY WHEN THE STATEMENT TO DISCLOSE THE INCOM E HAS NOT BEEN RETRACTED AT ALL. IN RESPONSE TO THE SAID QUERY, THE ASSESSEE V IDE LETTER DATED 5.12.2008 AND AS INCORPORATED IN THE BODY OF THE ASSESSMENT ORDER SUBMITTED AS UNDER:- M/S SIROYA SARUP CONSTRUCTION AND M/S SIROYA DEVELO PERS, THE ASSESSEE FIRM HAD UNDERTAKEN TO WORK OF GETTING TEN ANTS VACATED FROM ITS PROPERTY KNOWN AS HARPYARI BHUVAN FOR WHICH THE LUMP SUM AMOUNT OF ` 2,05,00,000/- WAS DETERMINED BETWEEN THE TWO CONCE RNS. THEREAFTER M/S SIROYA DEVELOPERS HAD PUT IN EFFORTS FOR VACATING THE SAID TENANTS BUT M/S SIROYA DEVELOPERS HAD FAILED T O GET THE PROPERTY VACATED FROM THE TENANTS. THEREFORE, IN THOSE CIRC UMSTANCES THE QUESTION OF PAYING ANY AMOUNT BY M/S SIROYA SARUP C ONSTRUCTIONS HAD NOT ARISEN. IT WAS UNDERSTOOD BETWEEN M/S SIRO YA SARUP CONSTRUCTION AND M/S SIROYA DEVELOPERS THAT THE SAI D SUM OF ` 2,05,00,000/- WOULD BE PAID AS AND WHEN REQUIRED FO R GETTING THE TENANTS VACATED. AS THE ASSESSEE FIRM COULD NOT AR RIVE AT ANY SETTLEMENT WITH THE TENANTS, THE QUESTION OF M/S SI ROYA SARUP CONSTRUCTION PAYING ANY AMOUNT TO M/S SIROYA DEVELO PERS HAD NOT 3 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS ARISEN AND THEREFORE M/S SIROYA DEVELOPERS HAD NOT RECEIVED ANY AMOUNT FROM M/S SIROYA SARUP CONSTRUCTION FOR GETTI NG TENANTS VACATED. .. IN THESE CIRCUMSTANCES, THE ASSESSEE FIRM HAD NOT E ARNED INCOME OF ` 2,05,00,000/- OR ANY PART THEREOF AND THE ASSESSEE FIRM WHILE FILING ITS RETURN OF INCOME FOR A.Y. 2006-07 DID NOT DISCLOSE THE SAID ALLEGED INCOME IN ITS RETURN OF INCOME. 2.3 HOWEVER, THE A.O. DID NOT AGREE WITH THE SUBMIS SIONS OF THE ASSESSEE BY HOLDING THE SAME TO BE A CLEAR CUT AFTER THOUGHT. A CCORDING TO THE A.O., IF THE ASSESSEE HAS NOT EARNED THE INCOME WHICH WAS OFFERE D DURING THE COURSE OF SURVEY THEN THE ASSESSEE OUGHT TO HAVE RETRACTED TH E SAME IN THE VERY FIRST WEEK OF APRIL, 2006 BY STATING THAT THE INCOME DISC LOSED DURING THE COURSE OF SURVEY HAS NOT MATERIALIZED AND HAS NOT BEEN EARNED BY THE ASSESSEE DURING THE YEAR AND THEREFORE THE RETURN OF INCOME WHICH W OULD BE FILED BEFORE 31.10.2006 WILL NOT REFLECT THE INCOME DISCLOSED DU RING THE COURSE OF SURVEY. SINCE THE ASSESSEE REFRAINED FROM INTIMATING THE FA CTS ABOUT HIS INCOME EARNING ACTIVITIES AND ALSO DID NOT FILE RETRACTION RELATING TO THE INCOME DISCLOSED DURING THE COURSE OF SURVEY, THE A.O. HEL D THAT THE ASSESSEE HAS TRIED TO CONCEAL THE FACTS OF THE BUSINESS AND ALSO TRIED TO HOODWINK THE EXCHEQUER. HE, THEREFORE, REJECTED THE EXPLANATION GIVEN BY TH E ASSESSEE AND MADE AN ADDITION OF ` 2.05 CRORES TO THE INCOME OF THE ASSESSEE. 2.4 IN APPEAL, THE LD. CIT(A) DELETED THE ADDITION MADE BY THE A.O. BY HOLDING AS UNDER:- I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, FINDINGS OF THE ASSESSING OFFICER AND SUBMISSIONS OF THE APPELLANT. I HAVE ALSO CONSIDERED VARIOUS CASE LAWS RELIED BY THE APPELLAN T. THE BASIS OF ADDITION IN QUESTION IS COPY OF AGREEMENT DATED 11. 04.2005 FOUND DURING THE COURSE OF SURVEY U/S 133A AND STATEMENT OF PARTNERS SHRI SHRANIK D. SIROVA, RECORDED AT THE TIME OF SURVEY. AS PER AFORESAID 4 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS MEMORANDUM OF UNDERSTANDING BETWEEN APPELLANT AND S IROYA SWAROOP CONSTRUCTION THE APPELLANT WAS REQUIRED TO VACATE 8 TENANTS FROM BUILDING HAR PYARI WITHIN ONE YEAR AND IN VI EW OF THAT APPELLANT WAS TO RECEIVE ` 2,05,00,000/- WHICH WAS DISCLOSED AS INCOME OF WHICH ASSESSMENT YEAR AND AGREED TO PAY T HE TAX THEREON. THREE CHEQUES OF ADVANCE TAX WERE ALSO GIVEN BY THE APPELLANT OUT OF THIS TWO CHEQUES WERE ENCASHED BY THE DEPARTMENT AN D PAYMENT OF THIRD CHEQUE OF ` 20,00,000/- WAS STOPPED BY THE APPELLANT AND ACCORDING TO APPELLANT DEPARTMENT WAS INFORMED ORA LLY THAT THE AGREEMENT HAS FAILED. THE GIST OF THE SUBMISSION O F THE APPELLANT IS THAT AS PER THE AGREEMENT, THE INCOME WAS RECEIVABL E BUT THAT WAS NOT RECEIVED IN FACT BECAUSE THEY COULD NOT VACATE THE PREMISES OF THE TENANTS AND SAME WAS GOT VACATED BY M/S SIROYA SWAR OOP CONSTRUCTION THEMSELVES BY MAKING CASH PAYMENTS AND PROVIDING ALTERNATIVE ACCOMMODATION IN THE NEW BUILDING. IT IS PLEADED THAT THE INCOME WHICH HAS NOT ACCRUED AND RECEIVED BY TH E APPELLANT SHOULD NOT HAVE BEEN TAXED IN THE HANDS OF THE APPE LLANT. IT IS ALSO ARGUED THAT ORAL INFORMATION WAS GIVEN TO THE DEPAR TMENT TO THIS EFFECT AND THAT IS WHY THIRD CHEQUE OF ADVANCE TAX WAS NOT ENCASHED BY THE DEPARTMENT. THE APPELLANT HAS RELIED ON LAR GE NUMBER OF CASE LAWS WHEREIN IT HAS BEEN HELD THAT NO ADDITION SHOU LD BE MADE OR COULD BE MADE MERELY ON THE BASIS OF STATEMENT RECO RDED ON OATH. THE APPELLANT HAS ALSO ARGUED THAT THIS EXPENDITURE OF ` 2,05,00,000/- HAS NOT BEEN CLAIMED BY M/S SIROYA SW AROOP CONSTRUCTIONS IN THEIR BOOKS OF ACCOUNTS BECAUSE TH E TRANSACTION DID NOT MATERIALIZE. APPELLANT HAS FILED DOCUMENTS TO THIS EFFECT. SO AFTER CONSIDERING THE AFORESAID FACTS AND PRINCIPLE THAT ONLY REAL INCOME SHOULD BE ASSESSED. I AM CONVINCED THAT ASSE SSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDITION OF ` 2,05,00,000/- ONLY ON THE BASIS OF THE STATEMENT WITHOUT CORRELATING AND INVE STIGATING FURTHER FACTS. THE ASSESSING OFFICER HAS NOT BROUGHT ON RE CORD ANY EVIDENCE THAT THE EXPLANATION IS AFTER THOUGHT AND THE AMOUN T OF ` 2,05,00,000/- WAS ACTUALLY RECEIVED. THE APPELLANT HAS FILED LARGE NUMBER OF EVIDENCE TO PROVE THAT THE PREMISES WERE GOT VACATED BY M/S SIROYA SWAROOP CONSTRUCTION ON THEIR OWN AND NO PAYMENT WAS MADE BY THAT PARTY TO THE APPELLANT. THE APPELLANT HAS ALSO PROVED WITH THE DOCUMENTS THAT NO EXPENDITURE OF ` 2,05,00,000/- WAS CLAIMED BY M/S SIROYA SWAROOP CONSTRUCTION. SO IN VIEW OF THE AFORESAID FACTS AND VARIOUS CASE LAWS REFERRED ABOV E, ASSESSING OFFICER IS DIRECTED TO DELETE THE ENTIRE ADDITION. ALL GROUNDS OF APPEALS ARE ALLOWED. 2.5 AGGRIEVED BY SUCH ORDER OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LD. D.R. STRONGLY RELIED ON THE ORDER OF THE A.O. HE SUBMITTED THAT THE STATEMENT OF THE PARTNER WAS RECORDED DURING TH E COURSE OF SURVEY ON THE 5 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS BASIS OF MOU FOUND FROM THE PREMISES OF THE ASSESSE E. THE PARTNER HAD AGREED TO PAY THE TAX ON THE AMOUNT OF ` 2.05 CRORES AND HAS PAID AN AMOUNT OF ` 50 LACS OUT OF THE AGREED AMOUNT OF ` 70 LACS. THE STATEMENT WAS ADMINISTERED ON OATH ON THE BASIS OF MATERIAL FOUND. ACCORDING TO T HE LD. D.R., SOME ACTION MIGHT HAVE BEEN TAKEN BY THE ASSESSEE ON THE BASIS OF THE MOU. THE ASSESSEE HAS NEVER STATED THAT THE INCOME HAS NOT ACCRUED TO HIM. SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THEREFOR E, ALTHOUGH THE AMOUNT HAS NOT BEEN RECEIVED BY HIM BUT IT CANNOT BE SAID THAT THE AMOUNT HAS NEVER ACCRUED TO HIM. FURTHER, THE ASSESSEE HAS NEVER RET RACTED THE STATEMENT. SINCE THE ASSESSEE HAD AGREED TO PAY TAX OF ` 70 LACS ON THE ACCRUED AMOUNT OF ` 2.05 CRORES AND SINCE THE ASSESSEE HAS ALSO PAID ` 50 LACS OUT OF THE ABOVE ` 70 LACS, THEREFORE, NO FURTHER QUESTION WAS REQUIRED T O BE ASKED TO THE OTHER PARTY AND NO FURTHER INVESTIGATION WAS REQUIRED BY THE A. O. RELYING ON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF V. KUN HAMBU & SONS REPORTED IN 219 ITR 235, HE SUBMITTED THAT THE LD. CIT(A) IS NO T JUSTIFIED IN DELETING THE ADDITION. 4. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, SUBMITTED THAT THERE IS NO DISPUTE TO THE FACT THAT THE PARTNER OF THE A SSESSEE FIRM HAD AGREED TO PAY TAX OF ` 70 LACS ON INCOME OF ` 2.05 CRORES ON THE BASIS OF THE MOU FOUND DURING THE COURSE OF SURVEY. ACCORDINGLY, THE OFFI CERS OF THE DEPARTMENT HAD TAKEN THREE CHEQUES AGGREGATING TO ` 70 LACS FROM THE ASSESSEE FIRM. OUT OF THE AFORESAID THREE CHEQUES, TWO CHEQUES OF ` 25 LACS EACH DATED 9 TH MARCH, 2006 AND 14.3.2006 WERE ENCASHED BEING THE INCOME-TAX PA YABLE BY THE ASSESSEE ON THE SAID INCOME OF ` 2.05 CRORES. THE THIRD CHEQUE OF ` 20 LACS WAS NOT ENCASHED BY THE OFFICERS OF THE INCOME-TAX DEPARTME NT AS THE PARTNER OF THE ASSESSEE FIRM HAD INFORMED THEM THAT THE TRANSACTIO N RECORDED IN THE MOU HAD NOT MATERIALIZED AND THEREFORE THE ASSESSEE FIR M IS NOT GOING TO EARN ANY INCOME FROM M/S SIROYA SARUP CONSTRUCTION. REFERRI NG TO THE STATEMENT RECORDED DURING THE COURSE OF ASSESSMENT PROCEEDING S AND A COPY OF WHICH IS 6 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS PLACED AT PAPER BOOK PAGE 30 TO 32, HE SUBMITTED TH AT IN HIS REPLY TO Q. NO. 4, THE ASSESSEE HAS SUBMITTED THAT IN THE FIRST WEEK O F APRIL 2006, HE MET THE CONCERNED OFFICER AND INFORMED HIM REGARDING NON-RE CEIPT OF INCOME WHICH HE HAD DECLARED DURING THE SURVEY AND ASKED HIM TO HOL D BACK THE CHEQUE WHICH WAS NOT CLEARED. IT WAS ALSO STATED IN THE SAID RE PLY THAT HE HAS NOT RETRACTED THE STATEMENT WHICH WAS GIVEN DURING THE COURSE OF SURVEY BECAUSE THEY HAVE HELD BACK THE CHEQUE. HE ACCORDINGLY SUBMITTED THAT THE ASSESSEE HAS RETRACTED THE STATEMENT INFORMING THE DEPARTMENT NO T TO DEPOSIT THE THIRD CHEQUE WHICH THE A.O. DID. REFERRING TO PAPER BOOK PAGE 38, WHICH IS COPY OF LETTER DATED 5.4.2006 WRITTEN BY SIROYA & SARUP CON STRUCTION TO THE ASSESSEE, HE SUBMITTED THAT M/S SIROYA & SARUP HAS CATEGORICA LLY MENTIONED THAT THE QUESTION OF PAYING ANY AMOUNT OUT OF THE SAID AMOU NT OF ` 2.05 CRORES AGREED UPON DOES NOT ARISE AT ALL SINCE M/S SIROYA DEVELOP ERS AFTER PUTTING ALL ITS EFFORTS HAD FAILED TO ARRIVE AT ANY SETTLEMENT WITH THE TENANTS OF HARPYARI BHUVAN AND THEREFORE M/S SIROYA DEVELOPERS COULD NO T GET THE PROPERTY VACATED FOR CONSTRUCTING A NEW BUILDING THEREON. R EFERRING TO Q NO. 6, HE SUBMITTED THAT SINCE THE INCOME HAS NOT ACCRUED TO THE ASSESSEE AND SINCE THE OTHER PARTY HAS NOT CLAIMED THE SAME AS AN EXPENDIT URE AND SINCE THE ASSESSEE HAS NOT RECEIVED THE AMOUNT AS THE ASSESSEE FAILED TO CARRY OUT THE WORK AS PER THE MOU, THEREFORE, THERE IS NO QUESTION OF OFFERIN G THE SAME TO TAX. REFERRING TO CBDT CIRCULAR DATED 10.3.2003 HE SUBMITTED THAT THE CONFESSION MADE DURING THE COURSE OF SURVEY CANNOT BE THE BASIS OF ADDITION IF NOT BASED UPON ANY CREDIBLE EVIDENCE. HE SUBMITTED THAT THE ASSES SEE, IN SUBSTANCE, HAS RETRACTED HIS STATEMENT BY ASKING THE OFFICERS OF T HE DEPARTMENT NOT TO DEPOSIT THE 3 RD CHEQUE FOR ` 20 LACS WHICH THEY DID. HE ACCORDINGLY SUBMITTED THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDI TION. HE ALSO RELIED ON THE FOLLOWING DECISIONS:- 1. DCIT V. PREMSONS [2010] 130 TTJ 159(MUM) 2. CIT V. S. KEDAR KHAN SON 300 ITR 157(MAD.) 3. B. RAMKRISHNAAH V. ITO [2010] 39 SOT 379(HYD) 7 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS 4. TDI MARKETING (P) LTD.V. ACIT[2009] 28 SOT 215( DEL) 5. ASHOK MANILAL THAKKAR V. ACIT [2005] 97 ITD 361 (AHD.) 6. CIT V. HARPAL SINGH (169) TAXMAN 90 P&H) 4. THE LD. D.R. IN HIS REJOINDER SUBMITTED THAT THE RE IS NO EVENT BETWEEN THE DATE OF SURVEY AND 31.3.06 TO SAY THAT THE AMOUNT H AS NOT ACCRUED TO THE ASSESSEE. THE VARIOUS DECISIONS RELIED ON BY THE L D. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE AND ARE DISTINGUISHABLE ON FACTS . SINCE THE ASSESSEE IN THE INSTANT CASE HAS GIVEN A CATEGORICAL STATEMENT ON O ATH ADMITTING TO PAY THE TAX ON THE AMOUNT OF ` 2.05 CRORES, THEREFORE, IN ABSENCE OF ANY RETRACTI ON FROM THE ASSESSEE THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETI NG THE SAME. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF A.O. AND THE CIT(A) AND THE P APER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS D ECISIONS CITED BEFORE US. WE FIND FROM THE TERMS OF THE MOU DT. 11.4.2006 BETWEE N M/S SIROYA SARUP CONSTRUCTION AND M/S SIROYA DEVELOPERS I.E. THE ASS ESSEE THAT THE ASSESSEE WAS SUPPOSED TO GET AN AMOUNT OF ` 2.05 CRORES FOR GETTING THE TENANTS IN THE PROPERTY NAMELY HARPYARI BHUVAN VACATED IN LEGAL MANNER AND TO OBTAIN ALL THE PERMISSION AS REQUIRED FOR THE SAME AT THEIR OW N COST AND RISK WITHIN A PERIOD OF ONE YEAR. THE COPY OF THE MOU IS PLACED A T PAPER BOOK PAGE 25 AND 26. WE FIND IN VIEW OF THE MOU FOUND DURING THE COU RSE OF SURVEY FROM THE PREMISES OF THE ASSESSEE THE STATEMENT OF THE PARTN ER WAS RECORDED DURING THE COURSE OF SURVEY ACCORDING TO WHICH THE PARTNER CON FESSED TO PAY AN AMOUNT OF ` 70 LACS ON THE AMOUNT OF ` 2.05 CRORES. WE FIND ALTHOUGH THE ASSESSEE HAS PAID AN AMOUNT OF ` 50 LACS, IN 2 INSTALMENTS OF ` 25 LACS EACH, THE ASSESSEE REQUESTED THE DEPARTMENT NOT TO DEPOSIT THE BALANCE CHEQUE AMOUNTING TO ` 20 LACS ON THE GROUND THAT THE INCOME HAS NOT ACCRUED TO THE ASSESSEE. IT IS ALSO A FACT THAT THE DEPARTMENT HAS NOT DEPOSITED THE CH EQUE OF ` 20 LACS. THEREFORE, WE FIND MERIT IN THE ARGUMENTS ADVANCED BY THE ASSESSEE THAT IN SUBSTANCE THE ASSESSEE HAS RETRACTED BY INFORMING T HE DEPARTMENT NOT TO 8 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS DEPOSIT THE 3 RD CHEQUE WHICH THE DEPARTMENT OBLIGED. IN OUR OPINI ON, AN ADMISSION IS AN IMPORTANT PIECE OF EVIDENCE BUT IT CANNOT BE SAID THAT IT IS CONCLUSIVE. IT IS OPEN TO THE PERSON TO SHOW THAT IT IS INCORRECT, WHICH THE ASSESSEE DID IN THE INSTANT CASE BY WRITING TO THE A.O. THE REASONS FOR NON- INCLUSION OF THE AMOUNT OF ` 2.05 CRORES IN THE RETURN OF INCOME. WE FIND FROM THE LETTER DATED 5.4.06 ADDRESSED TO THE ASSESSEE B Y M/S SIROYA & SARUP CONSTRUCTION THAT M/S SIROYA & SARUP CONSTRUCTION D ENIED TO PAY THE AMOUNT OF ` 2.05 CRORES AS AGREED SINCE M/S SIROYA DEVELOPERS AFTER PUTTING ALL EFFORTS HAD FAILED TO ARRIVE AT ANY SETTLEMENT WITH THE TEN ANT. THE ABOVE LETTER FROM M/S SIROYA & SARUP CONSTRUCTION WAS AVAILABLE BEFOR E THE A.O. AND STILL THE A.O. HAS NOT MADE ANY EFFORT TO FIND OUT FROM ANY O F THE TENANTS OR FROM M/S SIROYA CONSTRUCTIONS ABOUT THE VERACITY OF THE SUBM ISSION. WE ALSO FIND FROM THE BODY OF THE ASSESSMENT ORDER WHERE THE A.O. HAS REPRODUCED THE EXPLANATION GIVEN BY THE ASSESSEE ACCORDING TO WHIC H THE FIRM HAS JUSTIFIED IN NOT DISCLOSING THE INCOME OF ` 2.05 CRORES ON THE GROUND THAT THE SAME WAS NEITHER RECEIVED NOR ACCRUED TO THEM. 5.1 IT IS AN ADMITTED FACT THAT THE ASSESSEE IS FOL LOWING MERCANTILE SYSTEM OF ACCOUNTING WHICH IS EVIDENT FROM S. NO.8 OF PAGE 1 OF THE ASSESSMENT ORDER. IT IS ALSO THE SETTLED PROPOSITION OF LAW THAT THE ASS ESSEE IS LIABLE TO PAY TAX ON INCOME WHICH HAS ACCRUED TO HIM OR RECEIVED BY HIM. IN THE INSTANT CASE, THE ASSESSE HAS ADDUCED SUFFICIENT EVIDENCE BEFORE THE A.O. ESPECIALLY IN THE FORM OF LETTER FROM THE OTHER PARTY NAMELY SIROYA & SARU P CONSTRUCTION THAT THEY HAVE NEITHER MADE ANY PAYMENT TO THE ASSESSEE NOR A RE LIABLE TO PAY ANY AMOUNT TO THE ASSESSEE. THE LD. D.R. ALSO COULD NOT CONTROVERT THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT M/S SIROYA & SARUP CONSTRUCTIONS HAS NOT CLAIMED ANY SUCH EXPENDITURE IN THEIR BOOKS OF ACCOUNT. THEREFORE, IT IS CONCLUSIVELY PROVED THAT THE ASSESSEE HAS NOT RECEI VED ANY AMOUNT. FROM THE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDING, IT IS CRYSTAL CLEAR THAT IT COULD NOT VACATE THE 8 TENANTS 9 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS FROM THE PROPERTY IN QUESTION FOR WHICH SIROYA & SA RUP CONSTRUCTION HAD CATEGORICALLY DENIED TO PAY THE AMOUNT OF ` 2.05 CRORES. THE ASSESSEE HAS ALSO SUBMITTED BEFORE THE A.O. THAT SINCE THE ASSESSEE F IRM COULD NOT ARRIVE AT ANY SETTLEMENT WITH THE TENANT, THE QUESTION OF OTHER P ARTY PAYING ANY AMOUNT TO THE ASSESSEE DOES NOT ARISE. THEREFORE, WHEN THE AS SESSEE HAS NEITHER RECEIVED ANY AMOUNT NOR ANY AMOUNT HAS ACCRUED TO IT, THEREF ORE, MERELY BECAUSE IT HAD AGREED TO PAY TAX ON THE AMOUNT OF ` 2.05 CRORES WILL NOT BIND THE ASSESSEE ESPECIALLY WHEN THERE IS NOTHING ON RECORD TO SUGGE ST THAT THE ASSESSEE FIRM HAS DIRECTLY OR INDIRECTLY RECEIVED THE AMOUNT OF ` 2.05 CRORES OR THE OTHER PARTY HAS PAID THE AMOUNT OF ` 2.05 CRORES. THE CASE LAW RELIED UPON BY THE LD. D .R. IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AT ALL SINCE IN THAT CASE THE STATEMENT WAS RECORDED DURING SEARCH U/S 132 WHEREA S HERE IT IS A SURVEY. IN THIS VIEW OF THE MATTER AND IN VIEW OF THE DETAI L DISCUSSION BY THE LD. CIT(A) JUSTIFYING THE DELETION OF ADDITION, WE FIND NO INF IRMITY IN THE ORDER OF THE LD. CIT(A) AND ACCORDINGLY UPHOLD THE SAME. THE GROUND RAISED BY THE REVENUE, THEREFORE, IS DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED ON 31.5.2011. SD/- SD/- (D.K. AGARWAL) (R.K. PANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST MAY, 2011. RK 10 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 34, MUMBAI 4. THE CIT - 24- MUMBAI 5. THE DR BENCH, G 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT, MUMBAI 11 ITA 2088 /M/2010 M/S SIROYA DEVELOPERS DATE INITIALS 1 DRAFT DICTATED ON 26.5.2011, SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 27.5.2011 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER