ACIT CC 39, MUMBAI V. SANJEEVANI REAL ESTATE P.LTD, MUMBAI

ITA 262/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100827 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Department
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Assessee Lawyers: PALLAVI GUDKA
• Keywords: Unexplained expenditure; Loose papers; Corroborative evidences
• Section: 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL E , BENCH MUMBAI . . , , BEFORE SHRI R.C.SHARMA , A M & SHRI SANJAY GARG , J M ./ ITA NO . 261&262 / MUM/20 1 4 ( / ASSESSMENT YEAR S : 2008 - 09 & 20 0 9 - 10 ) ACIT - CC - 6(4)(ERSTWHILE CC - 39), MUMBAI - 400020 VS. M/S SANJEEVANI REAL ESTATE PVT. LTD., 82 MAKER CHAMBER - III, NARIMAN POINT, MUMBAI - 21 ./ ./ PAN/GIR NO. : A A CC G 7142 E ( / APPELLANT ) .. ( / RESPONDENT ) /REVENUE BY : MS. MANJUNATHA SWAMY /ASSESSEE BY : MS. PALLAVI GUDKA / DATE OF HEARING : 16 /0 6 / 2015 / DATE OF PRONO UNCEMENT 14/08 /2015 / O R D E R PER R.C.SHARMA (A.M) : TH ESE ARE THE APPEALS FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) , MUMBAI FOR THE ASSESSMENT YEAR S 2008 - 09 & 2009 - 10 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S.153A OF THE I.T.ACT . 2. COMMON GROUNDS HAVE BEEN TAKEN FOR BOTH THE YEARS UNDER CONSIDERATION, THEREFORE, BOTH THE APPEALS ARE HEARD TOGETHER AND ARE NOW DECIDED BY THIS CONSOLIDATED ORDER. 3. IN THE ASSESSMENT YEAR 2008 - 09, THE REVENUE IS AGGRIEVED FOR DELETION OF A DDITION OF RS. 5,76,000/ - ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S.69C OF THE IT ACT. ITA NO. 261&262 /1 4 2 4. FACTS IN BRIEF ARE THAT THERE WAS A SEARCH U/S.132 ON 5 - 3 - 2009 IN THE CASE OF JAI GROUPS, ITS EMPLOYEES AND CLOSE ASSOCIATES. DURING THE COURSE OF SEARCH IT WAS FOUND THAT THIS GROUP HAD PURCHASED HUGE AGRICULTURAL LAND IN THE SUBURB OF BOMBAY, THANE, PANVEL, ALIBAUG AND PUNE. THE LAND HAS BEEN PURCHASED IN THE NAME OF VARIOUS COMPANIES OF THIS GROUP. THE AO MADE ADDITION IN THE HANDS OF THE ASSESSEE BY OBSERVING THAT ASSESSEE HAS PURCHASED THE LAND AS PER MOU DATED 18 - 8 - 2007 DURING THE YEAR UNDER CONSIDERATION WHERE PART - B PAYMENT IS UNACCOUNTED PAYMENTS AMOUNTS TO RS. 5,76,000/ - . THE AO ADDED THE SAME U/S.69C OF THE IT ACT 5. BY THE IMPUGNED ORDER, THE CIT(A) AFTER REL YING ON THE DECISION OF ITAT IN THE CASE OF OTHER GROUP COMPANIES, AFFECTED BY THE SAME SEARCH, DELETED THE ADDITION AFTER HAVING FOLLOWING OBSERVATIONS : - THUS, IT CAN BE OBSERVED FROM THE DECISION OF HON'BLE ITA T THAT AN ADDITION U/ S69C OF THE ACT, CAN NOT SUSTAIN UNLESS IT IS SATISFACTORILY PROVED THAT THE ASSESSEE HAS ACTUALLY INCURRED THE EXPENDITURE WHICH REMAINS UNRECORDED IN THE BOOKS. THE A.O. FURTHER STATED THAT THE RATIO OF THE ABOVE MUMBAI ITAT'S DECISION IS SQUARELY APPLICABLE TO THE APPELL ANT'S CASE AS THE FACTS ARE MOSTLY IDENTICAL IN BOTH THE CASES. 6.2. THE APPELLANT'S A.R. IN WRITTEN SUBMISSIONS, HAS MADE A CHART SHOWING AS TO HOW THE FACTS OF THE BOTH THE CASES ARE SIMILAR IN NATURE. SL.N O. LAND COMPANIES SANJEEVANI REAL ESTATE PVT . LTD. FACTS OF THE CASE 1. ORDER PASSED U/S153C OF THE ACT ORDER PASSED U/S153A OF THE ACT 2. THE ADDITIONS WERE MADE U/S69C OF THE ACT THE ADDITION WAS MADE U/S69C OF THE ACT. 3. THE ADDITIONS WERE MADE MAINLY ON THE BASIS OF TWO PAGES SEIZED FROM THE PREMISES OF SHRI DILIP DHERAI I.E. PG.22 & 23 OF ANNEXURE A - 1. THE ADDITION IS MADE ON THE BASIS OF JUST TWO SEIZED PAPERS I.E. PAGE NO.225 AND PAGE NO.227 OF ANNEXURE - I IMPOUNDED FROM EMBASSY CENTRE OFFICE OF JAI CORP GROUP ITA NO. 261&262 /1 4 3 ON 23.1.2009 D URING THE SURVEY PROCEEDINGS. BOTH THE PAGES ARE IDENTICAL, ONE BEING IN HAND WRITTEN FORM AND THE OTHER IN PRINTED FORM. 4. NO ADDITIONS WERE MADE ON THE BASIS OF OTHER PAPERS, EVEN THOUGH THE SAME WERE REFERRED IN THE ORDER THE OTHER DOCUMENTS RELI ED UPON BY THE I D.AO ARE NOT RELATED TO THE APPELLANT AS EXPLAINED IN OUR EARLIER SUBMISSIONS, ALSO NO ADDITION IS MADE BY THE LD.AO ON THE BASIS OF THOSE P A P ERS. 5. THE CONTENTION OF THE DEPARTMENT WAS THAT THE FIGURES APPEARING IN THE LAST TWO COLUMNS OF THE PAPERS ARE CASH PAYMENTS WHEREAS THE CONTENTION OF THE ASSESSEE WAS THAT THE FIGURES ARE NOTHING BUT PROJECTED [UND REQUIREMENT FOR FUTURE ACQUISITION OF LAND. IT IS THE CONTENTION OF THE LD.AO THAT THE AMOUNTS APPEARING IN THE COLUMN PART B OF TH E PAPER ARE CASH PAYMENTS WHEREAS THE CONTENTION OF THE APPELLANT IS THAT THE FIGURES ARE NOTHING BUT BUDGETED FIGURES FOR CONVERSION OF AGRICULTURAL LAND INTO DEVELOPMENT ZONES. 6.3 HE FURTHER MADE A CHART SHOWING AS TO HOW THE OBSERVATION OF THE HON'B IE ITAT IN THE CASE OF LAND COMPANIES IS FULLY RELEVANT IN THE CASE OF APPELLANT HERE. OBSERVATIONS IN CASE OF LAND COMPANIES MADE BY HON'BLE ITAT AND RELEVANCE OF THE SAME IN THE CASE OF THE APPELLANT. 1. THE HON'BLE ITAT HAS OBSERVED THAT IN NO EVI DENCE OF ANY NATURE IS BROUGHT ON ORDER TO MAKE ADDITION U/S69C OF THE RECORDS WHICH PROVE THAT THE APPELLANT HAS ACT, IT IS ESSENTIAL TO ESTABLISH THAT AN INCURRED THE EXPENDITURE, THE SOURCE OF EXPENDITURE IS INCURRED BY THE ASSESSEE 'WHICH OR ANY PART T HEREOF STANDS IN ANY FINANCIAL YEAR, THE SOURCE OF UNEXPLAINED (PAGE 44 PARA 23) NO EVIDENCE OF ANY NATURE IS BROUGHT ON RECORDS WHICH PROVE THAT THAT THE APPELLANT HAS INCURRED THE EXPENDITURE, THE SOURCE OF WHICH OR ANY PART THEREOF STANDS UNEXPLAINED. 2. IT WAS OBSER V ED THAT AN ALLEGATION THAT THE ALLEGATION OF THE LD.AO IS NOT AN EXPENDITURE HAS BEEN INCURRED SUPPORTE D BY ACTUAL CASH PASSING HANDS(PAGE 44 PARA 23) NO DOCUMENT OR EVIDENCE IS PLACED ON RECORD, WHICH PROVES THAT CASH EXPENDITURE IS INCU RRED. EVEN PAGE NO.225 AND 227 OF ANNEXURE A - 1, DOES NOT PROVE THAT A CASH EXPENDITURE IS INCURRED. IN FACT, THE APPELLANT HAS SATISFACTORILY PROVE THE CONTENTS OF THE PERSON AND AN AFFIDAVIT IN THIS REGARD, IS ALSO FILED BY THE PERSON WHO HAS PREPARED THE DOCUMENTS I.E MR. ITA NO. 261&262 /1 4 4 ATUL PAWAR, EXPLAINING THE CONTENTS OF THE DOCUMENT. NOTHING CONTRARY TO THE AFFIDAVIT OF ATUL PAWAR HAS BEEN BROUGHT ON RECORD. 4. IT WAS OBSERVED THAT THE REVENUE AUTHORITIES HAVE NOT BROUGHT A SINGLE STATEMENT OF RECORD OF THE VENDOR S OF LAND IN DIFFERENT VILLAGES. NONE OF THE SELLERS HAS BEEN EXAMINED TO SUBSTANTIATE THE CLAIM OF THE REVENUE THAT EXTRA CASH HAS ACTUALLY CHANGED HANDS (PAGE 45 PARA 24) THE LD. AO HAS NOT BROUGHT ON RECORD ANY CORROBORATIVE EVIDENCES FROM VENDORS FROM WHOM THE LANDS WERE PURCHASED. NONE OF THE SELLERS HAS BEEN EXAMINED TO SUBSTANTIATE THE CLAIM OF THE LD. AO THAT EXTRA CASH ACTUALLY CHANGED HANDS. 5. IT WAS OBSERVED THAT THE ENTIRE ADDITIONS HAVE BEEN MADE MERELY ON THE STRENGTH OF LOOSE PAPERS FOUND D URING THE COURSE OF THE SEARCH NOT SUPPORTED BY ANY INDEPENDENT AUTHORITY (PAGE 46 PARA 24) EVEN IN THIS CASE THE ENTIRE ADDITIONS HAVE BEEN MADE MERELY ON THE STRENGTH OF LOOSE PAPERS FOUND DURING THE COURSE OF THE SURVEY NOT SUPPORTED BY ANY INDEPENDENT EVIDENCES. 6. IT WAS OBSERVED THAT WITH A SMALL CORPUS AS COULD BE SEEN FROM THE BALANCE SHEET AND NO BUSINESS ACTIVITY, NOR ANY HAS BEEN BROUGHT ON RECORD BY THE REVENUE, IT IS NOT ACCEPTABLE THAT THE COMPANY MAY HAVE INCURRED SUCH HUGE EXPENDITURE OUTSI DE ITS BOOKS OF ACCOUNT (PAGE 46 PARA 25) ON PERUSAL OF THE FINANCIALS OF THE APPELLANT, IT COULD BE OBSERVED THAT THE APPELLANT HAS A NOMINAL SHARE CAPITAL OF RS.1,39,500/ - AND SECURITIES PREMIUM RESERVES OF RS.39,10,500/ - . THERE IS NOMINAL INCOME OF RS.2 4,553/ - ON ACCOUNT OF PROFIT ON FUTURES AND OPTIONS. HOWEVER, THERE IS NO INCOME FROM THE MAIN BUSINESS ACTIVITY OF THE APPELLANT. THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE DEPARTMENT, WHICH SUGGEST THAT THE CASH IS BEING RECEIVED FROM SOME SOURCES, FA CILITATING THE ALLEGED CASH EXPENDITURE. 6. 4 THE ABOVE MENTIONED CHARTS ARE CAREFULLY EXAMINED. IT IS SEEN THAT THE FACTS OF THIS CASE ARE ALMOST IDENTICAL TO THE CASE OF LAND COMPANIES. NO DOCUMENT OR EVIDENCE OF ANY NATURE HAS BEEN BROUGHT ON RECORD B Y THE AO. TO PROVE THAT THE APPELLANT HAS INCURRED THE EXPENDITURE THE COURSE OF WHICH IS UNEXPLAINED PAGE 225 AND 227 OF ANNEXURE A - 1 DOES NOT PROVE THAT A CASH EXPENDITURE HA S I NCURRED. THE APPELLANT SATISFACTORILY PROVED THE SAME BY SUBMITTING AN AFFIDA VIT BY MR ATUL PAWAR. THE AO. HAS NOT BROUG HT ON RECORD ANY THING TO PROVE TO THE CONTRARY. HE HAS ALSO NOT BROUGHT ON RECORD ANY CORROB ORATIVE EVIDENCES FROM VENDORS FROM WHOM THE LANDS WERE PURCHASED. N ONE OF THE SELLERS EXAMINED TO SHOW THAT EXTRA CASH HAS ACTUALLY CHANGED 1IANDS. THE ENTIRE ADDITIONS HAVE BEEN MADE ONLY ON THE BASIS OF LOOSE PAPERS WHICH IS NOT SUPPORTED BY ANY DOCUMENTARY AND INDEPENDENT EVIDENCES. THE INCOME OF THE ITA NO. 261&262 /1 4 5 APPELLANT FROM ITS MAIN BUSINESS ACTIVITY IS ALSO VERY NOMINAL. NO EVI DENCE HAS BEEN BROUGHT ON RECORD BY THE AO TO SHOW THAT THE CASH IS BEING RECEIVED FROM SOME OTHER SOURCES TO FACILITATE THE ALLEGED CASH EXPENDITURE. THUS IN VIEW OF THE ABOVE, IT IS SEEN THAT THE CASE OF THE APPELLANT IS COVERED BY THE DECISION OF THE HO N'BLE MUMBAI IT AT IN THE CASE OF LAND COMPANIES ON MERITS AS THE FACTS ARE ALMOST IDENTICAL. HOWEVER, ADDITION HAS BEEN MADE IN THE CASE OF LAND COMPANIES U/S.153C BUT HERE IN THE CASE OF THE APPELLANT, IT IS UNDER SECTION 153A WHICH IS A LEGAL ISSUE. T H E APPELLANT'S AR FURTHER STATED THAT THE HON'BLE MUMBAI, IT AT HAS PASSED ORDER IN FAVOUR OF LAND COMPANIES BOTH ON LEGAL AS WELL AS ON MERIT. THE CASE OF LAND COMPANIES AND THAT OF THE APPELLAN T HERE ARE BOTH RELATED TO THE J AI CARP GROUP. IN THE CASE OF THE APPELLANT, 2 PAGES ( 225 AND 227) WERE IMPOUNDED DURING SURVEY PROCEEDINGS AND THAT OF LAND COMPANIES 2 PAGES ( PAGE 22 AND 23) DURING SEARCH PROCEEDINGS. THE PRESENT APPEAL IS AGAINST ORDER U/ S153A SO THE RATIO OF DECISION ON LEGAL ISSUE ON SECTION 153 IN THE CASE OF LAND COMPANIES IS NOT APPLICABLE IN THE APPEAL UNDER CONSIDERATION HERE. HOWEVER, ON MERI TS BOTH THE CASES ARE IDENTICAL. IT IS SEEN THAT THE CONTENTION OF THE AR IS CORRECT. IN THE ASSESSMENT ORDER, THE A.O. HAS NOT CLEARLY BROUGHT OUT THE NEXUS BETW EEN THE MAIN SEARCH GROUP I.E. J AI CARP GROUP AND THE APPELLANT. ADDITION HAS BEEN MADE U/ S69C MERELY ON THE BASIS OF JUST TWO SEIZED PAPER. THEREFORE, AS DISCUSSED ABOVE AND AS PER PARA 6.4, THE GROUND OF APPEAL IS ALLOWED. 6. WE HAVE CAR EFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL AND FOUND THAT EXACTLY SIMILAR ADDITION WAS MADE IN CASE OF OTHER LAND COMPANIES WHICH HAS BEEN DELETED BY THE TRIBUNAL. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) FOR DELETING THE ADDITION MADE U/S.69C OF THE IT ACT. ACCORDINGLY, WE DISMISS THE APPEAL OF THE REVENUE FOR A.Y.2008 - 09. 7. AS THE FACTS AND CIRCUMSTANCES IN THE ASSESSMENT YEAR 2009 - 2010 (I.E.ITA NO. 262/MUM/2014) ARE EXACTLY SAME, FOLLOWING THE REASONING GIVEN IN THE ASSESSMENT YEAR 2008 - 09 (I.E. ITA NO. 261/MUM/2014), APPEAL OF THE REVENUE FOR THE A.Y.2009 - 2010 IS ALSO DISMISSED. ITA NO. 261&262 /1 4 6 8 . IN THE RESULT, BOTH APPEAL S OF THE REVENUE ARE DISMISSED. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 14/08 / 201 5 . SD/ - SD/ - ( ) ( SANJAY GARG ) ( . . ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOU NTANT MEMBER MUMBAI ; DATED 14/08 /201 5 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBA I. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//