KULDEEP OSTWAL, THANE V. ACIT CEN CIR 2, THANE

ITA 2438/MUM/2010

• Counselvise Citation: 243819914 RSA 2010
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 29-03-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI R.V. EASWAR, HONBLE PRESIDENT AND SHRI R.K. PANDA, A.M. ITA NO.2438/MUM/2010 ASSESSMENT YEAR : 2007-08 SHRI KULDEEP OSTWAL A-1, SHANTI GANGA APTS., OPP. RAILWAY STATION, BHAYANDER (E), DIST. THANE PAN NO. : AADPO 2170 J VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-2, THANE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : MS. ASHIMA GUPTA O R D E R PER R.K. PANDA, A.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 15.01.2010 OF THE CIT(A)-I, THANE RELATING TO ASSE SSMENT YEAR 2007-08. 2. THE ASSESSEE IN HIS GROUNDS OF APPEAL HAS CHALLE NGED THE ORDER OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF `. 5,00,000/-, MADE BY THE A.O. AS UNEXPLAINED INVESTMENT IN THE PARTNERSHIP FIRM. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT A SEARCH AND SEIZURE ACTION U/S.132 OF THE I.T. ACT WAS CARRIED OUT AT THE PREM ISES OF THE ASSESSEE ON 21.02.2007. THE ASSESSEE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF `. 4,57,640/-, ON 31.12.2007. THE AO NOTED THAT THE A SSESSEE IS A PARTNER IN POLSTAR EXPORT & ASHADEEP EXPORT AND IS HAVING INCO ME FROM SALARY, INTEREST & HOUSE PROPERTY. HE IS ALSO THE PROPRIETO R OF ASHADEEP, WHERE THE PROJECT IS UNDER CONSTRUCTION. DURING THE COURSE OF SEARCH ACTION, A NUMBER 2 OF DOCUMENTS WERE FOUND AND SEIZED. THE ASSESSEE WA S ALLOWED INSPECTION OF THE SEIZED DOCUMENTS. COPIES OF THE SEIZED DOCUMENT S AND SWORN STATEMENTS OF THE ASSESSEE AS WELL AS COPIES OF THE SWORN STAT EMENTS OF THE GROUP MEMBERS/EMPLOYEES WERE ALSO MADE AVAILABLE TO THE A SSESSEE ON HIS REQUEST. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. ASKED THE ASSESSEE TO EXPLAIN PG. 121 OF BUNDLE NO.1 IMPOUNDE D FROM THE OFFICE OF M/S. SHREE OSTWAL BUILDERS LTD. THE ASSESSEE VIDE H IS LETTER DATED 12.11.2008 SUBMITTED AS FOLLOWS :- .. THIS WAS A ROUGH WORKING OF EXPENSES INCURRED /TO BE INCURRED BY PEARL BUILDERS WHERE SHRI KULDEEP U. OS TWAL WAS PARTNER OF 25% IN PROFIT & LOSS TO LAND DEVELOPMENT . `. 5,00,000/- IN CASH WAS THE ESTIMATED REQUIREMENT TO PAY TO GOVERNMENT/MUNICIPAL CORPORATION FOR N.A. & OTHER C HARGES. ALL THE PAYMENT OF `. 25,77,697/- ARE RECORDED IN REGULAR BOOKS OF ACCOUNTS LEDGER COPY OF ACCOUNTS, BANK PASS BOOK EN CLOSED HEREWITH FOR YOURKIND PERUSAL ANNEXURE K-1 12 THE ASSESSEE WAS PARTNER UPTO 27.11.2007 IN THE FIRM AN D HE RETIRED AFTER RECEIVING `. 1,88,87,000/- BY CHEQUE NO. 227066 OF VASAI JANTA SAHAKARI BANK LTD. 5. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THE EXP LANATION GIVEN BY THE ASSESSEE AND AGAIN ASKED THE ASSESSEE TO GIVE REASO NS AS TO WHY THE AMOUNT OF `. 5,00,000/- PAID IN CASH SPECIFIED AGAINST N.A. SH OULD NOT BE TREATED AS UNDISCLOSED INCOME. THE ASSESSEE AGAIN REITERATED THAT `. 5,00,000/- IN CASH WAS THE ESTIMATED REQUIREMENT TO BE PAID TO GO VERNMENT/MUNICIPAL CORPORATION FOR N.A. AND OTHER CHARGES. ALL THE PAY MENTS TOTALING TO `. 25,77,697/-, ARE RECORDED IN REGULAR BOOKS OF ACCOU NTS AND THAT NOTING OF `. 5,00,000/- IS ROUGH NOTING IN ONE PIECE OF PAPER, R EGARDING FURTHER EXPENDITURE TO BE INCURRED IN CASH TO BE DEPOSITED WITH BHAYANDER MUNICIPAL CORPORATION FOR N.A. SINCE THE ASSESSEE W ANTED TO WITHDRAW HIMSELF FROM THIS PARTNERSHIP FIRM, THEREFORE, HE H AS NOT INCURRED OR INVESTED IN PEARL BUILDERS THIS AMOUNT OF `. 5,00,000/-IN CASH AND HENCE, NO ADDITION CAN BE MADE. ON THE SUBSEQUENT DATE, IT WAS SUBMITT ED THAT THERE IS NO CONNECTION BETWEEN THE ASSESSEE AND THIS NOTING OF `. 5,00,000/- AND HAS NOT BEEN PREPARED BY HIM AND THAT IT DOES NOT BELONG TO HIM. IT WAS SUBMITTED 3 THAT THIS PAPER WAS FOUND IN THE PREMISES OF THE AS SESSEE BECAUSE BOOKS OF ACCOUNTS OF THE FIRM USED TO BE MAINTAINED IN THE O FFICE OF THE ASSESSEE AS FIRM OFFICE WAS ALSO KEPT THERE ONLY. 6. HOWEVER, THE A.O. WAS NOT SATISFIED WITH THE EXP LANATION GIVEN BY THE ASSESSEE. HE NOTED THAT WHEN THE REST OF OTHER EXPE NSES NOTED IN THE PIECE OF PAPER ARE APPEARING IN THE BOOKS OF ACCOUNTS, IT IS VERY DIFFICULT TO ACCEPT THAT ONLY CASH OF `. 5,00,000/-, WHICH WAS NOT REFLECTED IN THE BOOKS OF ACCOUNTS WAS ESTIMATED REQUIREMENT TO BE PAID TO GO VERNMENT/MUNICIPAL CORPORATION FOR N.A. AND OTHER CHARGES. SINCE, THE ASESSEE WAS PARTNER IN THE FIRM OF M/S. PEARL BUILDERS AND SINCE ALL THE ENTRI ES OTHER THAN THE CASH PAYMENT ENTRY WAS ACCOUNTED INTO BOOKS OF ACCOUNTS AND SINCE, THE PIECE OF PAPER WAS FOUND FROM THE PREMISES OF THE ASSESSEE, WHERE THE BOOKS OF ACCOUNTS WERE MAINTAINED, THEREFORE, THIS CASH AMOU NT OF `. 5,00,000/- IS NOTHING BUT INVESTMENT OF THE ASSESSEE MADE FROM HI S UNDISCLOSED SOURCE OF INCOME. HE FURTHER NOTED THAT WHEN A PART OF THE PA PER IS GENUINE, THE BALANCE PART CANNOT BE HELD AS NON-GENUINE, ON THE GROUND THAT THE SAME IS AN ESTIMATED AMOUNT. HE, ACCORDINGLY, MADE AN ADDIT ION OF `. 5,00,000/- TO THE TOTAL INCOME OF THE ASSESSEE, AS HIS UNDISCLOSE D INCOME. 7. IN APPEAL, THE LD. CIT(A), CONFIRMED THE ADDITIO N. 8. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SAME SUBMISSIONS AS MADE BEFORE THE A.O. AND THE LD. CIT(A). REFERRING TO THE COPY OF THE SEIZED PAPER PLACED AT PG. NO. 6 OF THE PAPER BOOK, HE DRE W THE ATTENTION OF THE BENCH TO THE FIGURE OF `. 5,00,000/-, AGAINST WHICH IT IS MENTIONED CASH N.A. HE SUBMITTED THAT THE ABOVE AMOUNT OF `. 5,00,000/- WAS THE ESTIMATED EXPENDITURE TO BE INCURRED FOR CONVERSION OF AGRICU LTURAL LAND TO NON- AGRICULTURAL LAND. HE SUBMITTED THAT THE ASSESSEE H AS NOT INCURRED THE EXPENDITURE, THEREFORE, NO ADDITION IS CALLED FOR. HE SUBMITTED THAT ASSESSEE EVEN TILL NOW HAS NOT APPLIED FOR N.A. AND THE LAND CONTINUES TO BE AGRICULTURAL LAND. THEREFORE, THE ADDITION MADE BY THE A.O. AND SUSTAINED BY 4 THE LD. CIT(A) SHOULD BE DELETED. HE ALSO RELIED ON SERIES OF DECISIONS AS PER THE PAPER BOOK FILED. 10. THE LD. DR ON THE OTHER HAND, WHILE SUPPORTING THE ORDER OF THE LD. CIT(A) SUBMITTED THAT N.A. WRITTEN IN THE PIECE O F THE PAPER CAN ALSO BE READ AS NOT ACCOUNTED. HE SUBMITTED THAT WHEN ALL THE ENTRIES IN THE SEIZED PAPER ARE APPEARING IN THE BOOKS OF ACCOUNTS EXCEPT THE CASH AMOUNT OF `. 5,00,000/-, THEREFORE, THE ONLY INFERENCE THAT CAN BE DRAWN IS THAT THE SAID AMOUNT HAS BEEN PAID UNDER THE TABLE, WHICH IS NOT ACCOUNTED. THEREFORE, THE ARGUMENT OF THE ASSESSEE THAT IT IS THE ESTIMAT ED EXPENSES TO BE INCURRED, IS INCORRECT. HE SUBMITTED THAT THE VARIO US DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABL E AND NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. HE ACCORDINGLY, SUBM ITTED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE UPHELD. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS MADE B Y BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE LD. CIT(A) AND THE PAPER BOOK FILED BEFORE US. WE HAVE ALSO CONSIDERED THE VARIOUS DECI SIONS RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE WHICH ARE FILED IN THE PAPER BOOK. THERE IS NO DISPUTE TO THE FACT THAT PG. 120 OF THE BUNDLE NO.1 WAS IMPOUNDED FROM THE PREMISES OF THE ASSESSEE WHERE THE BOOKS OF ACCOUNT S OF THE FIRM ARE MAINTAINED AND WHICH CONTAINS A NUMBER OF ENTRIES I NCLUDING THE AMOUNT OF `. 5,00,000/-, AGAINST WHICH IT IS MENTIONED CASH N.A . THE A.O. TREATED THE AMOUNT OF `. 5,00,000/-, AS UNDISCLOSED INCOME OF THE ASSESSEE BY REJECTING THE SUBMISSION THAT THE SAID IS AN ESTIMATED EXPEND ITURE TO BE INCURRED FOR CONVERTING THE AGRICULTURAL LAND TO NON-AGRICULTURA L LAND. IT IS THE SUBMISSION OF THE LD. DR THAT THE WORD CASH N.A. CAN ALSO BE READ AS CASH NOT-ACCOUNTED. FURTHER IT IS THE SUBMISSION OF THE LD. DR THAT WHEN ALL THE ENTRIES ARE APPEARING IN THE BOOKS OF ACCOU NTS AND ONLY THE AMOUNT OF `. 5,00,000/- DOES NOT APPEAR IN THE BOOKS OF ACCOUNTS , THEREFORE, THE SAME HAS TO BE CONSIDERED AS UNACCOUNTED CASH EXPENDITU RE OF THE ASSESSEE. 12. WE FIND FORCE IN THE ABOVE SUBMISSIONS OF THE L D. DR. THE ENTRIES ON A PIECE OF PAPER CAN EITHER BE ACCEPTED IN FULL OR RE JECTED IN FULL AND CANNOT BE ACCEPTED IN PART. WHEN ALL THE ENTRIES APPEARING ON THE SEIZED 5 DOCUMENT/PIECE OF PAPER ARE APPEARING IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THEREFORE, THE ONLY AMOUNT OF `. 5,00,000/-, AGAINST WHICH CASH N.A. IS WRITTEN CANNOT BE SAID THAT THE SAME IS ON ACCOUNT OF ESTIMATED EXPENDITURE TO BE INCURRED FOR CONVERTING THE AGRIC ULTURAL LAND TO NON- AGRICULTURAL LAND PURPOSE. THE VARIOUS DECISIONS RE LIED ON BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE, AND ARE DISTINGUISHABLE. SINCE, THE ASSESSEE IS NOT ABLE TO SATISFACTORILY REBUT THE ENTRY OF `. 5,00,000/- APPEARING ON THE SEIZED DOCUMENT, WHICH IS IN HIS EXCLUSIVE KNOWLEDGE, THEREFORE, THE ONLY CONCLUSION THAT CAN BE DRAWN IS THAT THE SAME IS THE UNACCOUNTED EXPENDITURE INCURRED IN CASH BY THE ASSESSEE. IN THIS VIEW OF THE MATTER, WE UPHOLD THE ORDER OF THE LD. CIT(A) AND THE GROUND RAISED BY THE ASSESSEE IS DISMISSED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 29 TH DAY OF APRIL, 2011. SD/- (R.V. EASVAR) HON'BLE PRESIDENT SD/- (R.K. PANDA) ACCOUNTANT MEMBER MUMBAI, DATED : 29/04/2011 COPY FORWARDED TO : 1. THE APPELLANT, 2. THE RESPONDENT, 3. THE C.I.T. 4. CIT (A) 5. THE DR, A - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI