ANAYDEV PROJECTS P.LTD, MUMBAI V. DCIT CEN CIR 5(3), MUMBAI

ITA 2620/MUM/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9781 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 02-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 07-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JAYANT R BHAT
• Keywords: Search and seizure; Loose papers
• Section: 143(3); 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SHRI R.C SHARMA , ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ITA NO.2620/MUM./2015 ( ASSESSMENT YEAR :2011 - 12 ) ANAYDEV PROJECTS P. LTD, 205 COMMERCE HOUSE, 140, N.M ROAD, FORT, MUMBAI 400 0 23 PAN A AHCA9496N . APPELLANT V/S DCIT CEN CIR5(3) R.NO. 43 AAYKAR BHAVAN, M.K ROAD, MUMBAI 400020 MUMBAI . RESPONDENT ASSESSEE BY : SHRI. JAYANT. R. BHAT REVENUE BY : SHRI. RAHUL RAMAN DATE OF HEARING - 0 1.05 .2017 DATE OF ORDER 25 .0 7 .2017 O R D E R PER: SANDEEP GOSAIN, JUDICIAL MEMBER. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINS T THE ORDER OF THE LD. CIT(A) - 53, MUMBAI, DATED 24.02.2015 AND PERTAINS TO THE ASSESSMENT YEAR 2011 - 12 . THE GROUNDS OF APPEAL READ AS UNDER: ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 2 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE AO A MOUNTING TO RS.1, 16 ,35,241/ - . 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CI T(A) HAS ERRED IN NOT APPRECIATING THE MATERIALS AND DOCUMENTS ON RECORDS AND HAS CONFIRMED THE ADDITION MADE BY THE AO ON THE BASIS OF DOCUMENTS FOUND DURING SURVEY AND PURELY ON GUESSWORK. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF REAL ESTATE D EVELOPMENT. THE RETURNED OF INCOME WAS ELECTRONICALLY FILED FOR THE YEAR UNDER CONSIDER ATION ON 29.09.2011 DECLARING TOTAL INCOME AT RS.2,61,15,970/ - . THE ORDER OF AS SESSMENT U/S. 143(3) OF THE INCOME TAX ACT WAS PASSED BY THE A . O ON 28.03.2013 DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.3,77,51,211/ - AFTER MAKING CERTAIN ADDITION ON ACCOUNT OF ALLEGED CASH EXPENSES INCURRED BY THE ASSESSEE. A GGRIEVED BY THE O RDER OF A . O , ASSESSEE PREFERRED APPEAL BEFORE LD. CIT (A) AND THE LD. CIT(A) HAD DISMISSED THE APPEAL FILED BY THE ASSESSEE VIDE ORDER DATED 24 .02.2015. 3. AGGRIEVED BY THE ORDER LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE U S ON THE GROUNDS MENTIONED HEREIN ABOVE. 4. THE ONLY GROUND RAISED BY THE ASSESSEE BEFORE US IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE A . O AMOUNTING TO RS.1,16,35,241/ - . ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 3 5. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS ORDER S PASSED BY THE REVENUE AUTHORITIES . 6. THE FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION HAD BEEN CARRIED OUT U/S. 132 OF THE ACT, IN SUMER GROUP OF C ASES ON 23.11.2010 AND ASSESSEE IS ALSO ONE OF THE ASSOCIATE CONCERNS. THE SEPARATE SURVEY ACTION U/S. 133A , WAS ALSO CONDUCTED ON THE SAME DATE AT THE BUSINESS PREMISES OF M/S. PALASH CORPORATION AND M/S. SIDDHARTH HOUSING PVT. LTD. LOCATED AT 210, COMMERCE HOUSE, 140, N.M ROAD FORT, MUMBAI. DU RING THE COURSE OF SURVEY, SOME LOOSE PAPERS WERE FOUND AND IMPOUNDED BY THE REVENUE WHICH REFLECTED CASH AND CHEQUE EXPENSES ALREADY INCURRED TILL DATE OF SURVEY AND PART OF EXPENSES PROPOSED TO BE INCURRED IN CHEQUE AND CASH AFTER DATE OF SURVEY BY M/S. SIDDHARTH HOUSING PVT. LTD., SIDHHARTH DEVELOPERS AND THE ASSESSEE IN DIFFERENT FINANCIAL YEAR. THESE LOOSE PAPERS WERE CONFRONTED TO SHRI. RAMESH. S. SHAH (ONE OF THE MAIN PERSON OF THE GROUP) AND HIS STATEMENT WAS RECORDED U/S. 132(4) OF THE ACT . 7. DURI NG THE POST - SEARCH / SURVEY PROCEEDINGS , THE ASSESSEE SUBMITTED YEAR WISE ENTITY - WISE BIFURCATION OF UNEXPLAINED CASH EXPENDITURE OF RS.5 CRORE, WHICH INCLUDED DISCLOSURE OF RS.2,61,15,965/ - IN THE HAND S OF THE ASSESSEE. DURING THE ASSESSMENT ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 4 PROCEEDINGS A .O FOUND THAT ON PAGE NO. 23 OF THE LOOSE PAPERS IMPOUNDED DURING SURVEY REFLECTS FOR THE TOTAL LAND DEAL COST, ASSESSEE HAD AG REED TO PAY SUM OF RS.3,65,33,000/ - TOWARDS(LAND COST AND PREMIUM) AND A SUM OF RS.12 , 18,206/ INCURRED ON OTHER EXPENSES THEREBY MAKING TOTAL CASH EXPENSES OF RS.3,77,51,206/ - AND IN THIS WAY A . O MADE ADDITION OF RS.1,16,35,241/ - BEING THE DIFFERENCE OF THE AMOUNT INCURRED AND DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. 8 . BEFORE US T HE LD A . R APPEARING ON BEHALF OF THE ASSESSEE ARGUED T HAT THE A.O. WAS NOT JUSTIFIED IN DECIPHERING THE FIGURES ON A SEIZED PAPER AT HIS WHIMS AND CAPRICES BASED ON UNFOUNDED PRESUMPTIONS AND CONJECTURES WITHOUT BRINGING ANY CORROBORATIVE MATERIAL OR EVIDENCE IN SUPPORT THEREOF AND THE SAME COULD NOT FORM THE BASIS FOR AS SESSING UNDISCLOSED INCOME. IT WAS ALSO ARGUED THAT AO HAS DISREGARDED THE PROJECT DOCUMENTATION IN THE FORM OF REGISTERED AGREEMENT WHICH CONTAINED THE ACTUAL PAYMENT AND HANDING OVER 9.5% OF BUILT UP AREA IN PLACE OF CASH AND CHEQUE PAYMENT PROPOSED TO BE MADE BY ASSESSEE. S INCE THERE WAS NO CORROBORATIVE EVIDENCE THAT THE APPELLANT HAD ACTUALLY PAID CASH OF RS.1,16,35,241/ - TO COMPLETE THE TRANSACTION, NO SUCH AD DITION S COULD ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 5 HAVE BEEN MADE. IN THIS REGARD, THE A SSESSEE HAS ALSO RELIED ON THE FOLLOWING JUDICIAL DECISIONS: ATUI KUMAR ISIN V . DCFT 64 ITJ 786 (DEL) CFTV. D . K GUPTA 308 ITR 230 (DEL) SIMILARLY, THE APPELLANT ALSO CITED THE CASE OF S.K GUPTA V. DCIT 63 TTJ (DEL.) - 532 WHEREIN IT IS HELD THAT WHERE ENTRIES MADE IN THE LOOSE PAPERS WERE FOUND TO BE MERE ESTIMATE AND NO CORROBORATING EVIDENCE HAD BEEN BROUGHT ON RECORD TO SHOW THAT THE PURCHASE AND SALE OF PROPERTIES HAD TAKEN PLACE, ADDITION ON ACCOUNT OF UNDISCLOSE D INC OME WAS NOT JUSTIFIED. IT WA S THUS SUBMITTED THAT THE ADDITION S BY THE A.O. WAS BASED ON SURMI SES AND CONJECTURES BY DISREGARDING THE REGISTERED AGREEMENT STIPULATING TERMS AND CONDITIONS DIFFERENT FROM WHAT AO HAD ESTIMATED AND THERE WAS NO COGENT EVIDEN CE AVAILABLE ON RECORD TO PRESUME THAT ASSESSEE HAD MADE FURTHER CASH PAYMENT AFTER SEARCH AND HENCE THE SAME WA S NOT SUSTAINABLE IN LAW. THE LD. A.R FURTHER SUBMITTED THAT THE DEVELOPMENT DEED DATED 30.12.2010 FOR DEVELOPMENT OF LAND SITUATED AT VILLAGE VADAVLI, CHEMBUR, MUMBAI OWNED BY MEMBERS OF ACHARYA FAMILY WAS REGISTERED WITH REGISTRAR OF ASSURANCES, MUMBAI ON 23.06.2011.( I.E. AFTER THE SEARCH ACTION ON 23.12.2010) AND THE SAME WAS COMPLETELY DISREGARDED BY AO . IN VIEW OF THIS, IT WAS CONTENDED THA T THE FIGURES MENTIONED ON ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 6 PAGE NO.23 WERE TENTATIVE AMOUNTS FOR SETTLING THE DEAL AND WERE SUBJECT TO THE ACTUAL PAYMENTS TO BE MADE IN FUTURE . LASTLY IT WAS ARGUED THAT THE ADDITION OF RS.1,16,35,241/ - MADE BY THE A.O. TOW ARDS UNACCOUNTED CASH EXPENSES WA S BASED ON SURMISES AND CONJECTURES AND THE SAME DESERVES TO BE DELETED . 9. O N THE OTHER HAND LD. DR RELIED UPON THE ORDER PASSED BY REVENUE AUTHORITY. 10 . HAVING HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH WE FIND , THAT THE A.O WHILE MAKING ADDIT IONS HAS DRAWN INFERENCE BY TAKING INTO CONSIDERATION THE AMOUNT MENTIONED IN LOOSE IMPOUNDED PAPER SHEET A NNEXURE P - 23 AND HAS CONSIDERED THAT THE AMOUNT SHOWN IN P - 23 HAS ALREADY BEEN PAID/INCURRED BY THE ASSESSEE T O COMPLETE THE TRANSACTION FOR ACQUISIT ION OF THE LAND. WHEREAS ON THE CONTRARY THE EXPENSES FOUND MENTION TO P - 23 AND ANNEXURE P - 25 IS WITH RESPECT TO TOWARDS COST OF ONGOING PROJECT OF COMPANY AS ADMITTED BY THE ASSESSEE DURING THE COURSE OF SUCH PROCEEDINGS. AS PER THE ASSESSEE A NNEXURE P - 23, PREMIUM PAYABLE IN CASH WAS MENTIONED AT RS.3,65,33,000/ - OUT OF WHICH ONLY RS.2,30,33,000 HAD BEEN PAID IN CASH UP TO 31.07.2010. IT WAS ALSO SUBMITTED THAT BALANCE AMOUNT OF RS.1,35,00,000/ - WAS PAYABLE IN FUTURE . OUT OF CHEQUE PAYMENT OF RS.2 CROR ES, THE ASS ESSEE HAS PAID CHEQUE OF RS.1 1 ,00,000/ - AND BALANCE OF RS.1,89,00,000/ - WAS TO BE PAID IN FUTURE DATES. THE STATEMENT SHOWING DETAIL OF SHARE ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 7 HOLDERS CONTRIBUTION FOR EXPENSES WAS AS UNDER: - CASH CHEQUE TOTAL TOTAL LAND COST & PREMIUM 36533000 20000000 56533000 LESS: AMOUNT PAID TILL 31.07.10 23033000 1100000 24133000 13500000 18900000 32400000 BREAK - UP OF BALANCE PAYABLE IN FUTURE FOR LAND AND PREMIUM:; A/C CASH A/C CHEQUE SIDDHARATH SIDDHARATH GROUP 75% 10125000 GROUP 75% 14175000 VALUE VALUE GROUP 25% 3375000 GROUP 25% 4725000 18900000 BREAK - UP OF AMOUNT PAID UPTO 31.07.10 IN CASH FOR LAND AND PREMIUM '. SIDDHARTH GROUP 75% VALUE GROUP 25% 17274750 5758250 LESS :RECD. 7500000 15533000 BALANCE RECEIVABLE 9774750 (A) 9774750 (A) - 9774750 (B) BREAK - UP OF AMOUNT PAID UPTO 31.07.10 IN CHEQUE FOR LAND AND PREMIUM SIDDHARTH GROUP 75% VALUE GROUP 25% 825000 275000 LESS :RECD. NIL 1100000 EXCESS RECD NIL - 825000 BALANCE RECEIVABLE 825000 (C) - 825000 (D) BREAK - UP OF AMOUNT PAID UPTO 31.07.10 IN CASH FOR OTHER EXPENSES (RS.1218206) SIDDHARTH GROUP 75% VALUE GROUP 25% ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 8 913655 304551 LESS :RECD. NIL 1218206 EXCESS RECD NIL - 913655 BALANCE RECEIVABLE 913655 (E) - 913655 (F) BREAK - UP OF AMOUNT PAID UPTO 31.07.10 IN CHEQUE FOR OTHER EXPENSES (RS.625513) SIDDHARTH GROUP 75% VALUE GROUP 25% 469135 156378 LESS :RECD. 1000000 NIL EXCESS RECD NIL 362430 BALANCE RECEIVABLE - 530865 (G) 518808 (H) 11. FROM THE RECORD WE FOUND THAT AS PER THE IMPOUNDED PAPER SHEETS ANNEXURE P - 23, ASSESSEE WAS TO PAY THE AMOUNT OF LAND IN CASH AS WELL AS IN CHEQUE. SO FAR AS AMOUNTS SHOWN TO HAVE BEEN PAID IN CASH BY THE DATE OF SEARCH , THERE IS NO DISPUTE AND THE ASS ESSEE HAS ALREADY DISCLOSED THE SAME IN ITS RETURN OF INCOME . WE ALSO FIND THAT PERUSAL OF P - 23 AND P - 25 OF THE ANNEXURE - A REVEALS THAT THE AFORESAID CASH EXPENSES/PAYMENTS DID NOT REPRESENT FULL AND FINAL PAYMENTS TOWARDS THE PROPERTY TRANSACTION IN QUEST ION AND THAT THERE WERE CERTAIN AMOUNTS PAYABLE IN FUTURE BY THE ASSESSEE TOWARDS LAND COST AND PREMIUM TO THE OWNERS OF THE SAID PROPERTY AS WELL AS OTHER RELATED EXPENSE. WE FURTHER NOTED FROM THE RECORDS THAT THE TRANSACTION IN QUESTION WAS NOT ONE OF MERE PURCHASE OF LAND BUT OF GRANT OF DEVELOPMENT RIGHTS OF THE PROPERTY UNDER THE SCHEME SANCTIONED BY SRA AND CONSEQUENT OF ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 9 REDEVELOPMENT OF THE PROPERTY WITHIN 36 MONTHS OF THE GRANT OF COMMENCEMENT CERTIFICATE BY THE SRA. THEREFORE, FROM THE ABOVE FAC TS WE FIND THAT CONSIDERATION PAYABLE TO THE OWNER COMPRISED OF CASH AND CHEQUE COMPENSATION AS WELL AS PROVISION OF 9.5% OF THE TOTAL BUILD UP AREA OUT OF THE FREE SALE COMPONENT AREA TO THE OWNERS/LANDLORDS OF THE SAID PROPERTY UPON COMPLETION OF DEVELOP MENT. THIS SHOWS THAT THE TRANSACTION IN QUESTION WAS NOT COMPLETED AS ON THE DATE OF SEARCH AND THE BALANCE AMOUNTS WERE PAYABLE IN FUTURE TOWARDS NOT ONLY LAND COST AND PREMIUM BUT ALSO OTHER INCIDENTAL EXPENSES. I N RESPECT OF CASH AND CHEQUE PAYMENT WHI CH WAS TO BE PAID IN FUTURE DATE ON COMPLETION OF THE PROJECT , T HERE WAS SOME VARIATION IN THE TERMS AND CONDITIONS AFTER SEARCH AND ASSESSEE HAS ENTERED INTO REGISTERED AGREEMENT WITH THE OCCUPANTS OF THE PROPERTY ACCORDING TO WHICH THE CHEQUE PAYMENT OF RS.1.10 CRORES ONLY WAS TO BE MADE INSTEAD OF ORIGINAL CHEQUE AMOUNT ENVISAGED AT RS.2 CRORES AS PER NOTINGS ON THE ANNEXURE PAGE P - 23. THUS, THE ORIGINAL UNDERSTANDING RECORDED ON ANNEXURE PAGE P - 23 A S IMPOUNDED AT THE TIME OF SURVEY HAS CHANGED AND AS PE R AGREEMENT SO ENTERED BY ASSESSEE AFTER SEARCH, THE ASSESSEE WAS TO PAY ONLY RS.1.10 CRORES INSTEAD OF 2 CRORES AS ORIGINALLY AGREED AND ASSESSEE AGREED TO HANDOVER 9.5% OF BUILT UP AREA TO THE OCCUPANT PARTIES. HOWEVER NO FURTHER CASH PAYMENT WAS TO BE M ADE AS PER AGREEMENT DULY REGISTERED. THUS, NO FURTHER CASH PAYMENT WAS MADE IN SO FAR AS ASSESSEE HAS ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 10 AGREED TO HAND OVER 9.5% OF BUILT - UP AREA TO THE OCCUPANTS. HOWEVER, THE AO HAS DISREGARDED THE REGISTERED AGREEMENT SO ENTERED INTO WHICH WAS HAVING DIF FERENT TERMS AND CONDITIONS AS COMPARED TO TERMS OF ORIGINAL UNDERSTANDING WHICH WAS FOUND TO BE NOTED AT PAGE - 23. AS PER THE REGISTERED AGREEMENT, ASSESSEE WAS NOT REQUIRED TO MAKE ANY FURTHER PAYMENT OF CASH AND CHEQUE PAYMENT WAS ALSO REDUCED FROM RS.2 CRORES TO RS.1.10 CRORES. AS PER THE REVISED TERMS, ASSESSEE WAS TO HANDOVER 9.5% OF THE BUILT - UP AREA TO THE OCCUPANT PARTIES. NOWHERE AO HAS DOUBTED THE GENUINENESS OF THE AGREEMENT. THIS COUPLED WITH THE FACT THAT NO DOCUMENTARY OR OTHER EVIDENCE HAS BE EN BROUGHT ON RECORD BY THE AO TO ESTABLISH ANY FURTHER PAYMENT OF CASH BY THE APPELLANT, IS TESTIMONY TO THE FACT THAT IN DEED NO CASH WAS PAID BY THE APPELLANT AS PRESUMED BY THE AO, ESPECIALLY IN THE LIGHT OF THE FACT THAT THE ORIGINAL UNDERSTANDING IN RESPECT OF AMOUNTS PAYABLE ITSELF STOOD AMENDED AS EXPLAINED ABOVE. THE LD. A.O HAS NOT MENTIONED ANY COGENT OR CONVINCING REASON TO DISCARD THE TERMS AND CONDITIONS OF REGISTERED AGREEMENT. THEREFORE, UNDER THESE FACTS AND CIRCUMSTANCES W E ARE OF THE CONSIDERED VIEW THAT THE ADDITIONS MADE BY THE AO ARE NOT SUSTAINABLE IN THE EYES LAW. AND HENCE THE SAME ARE LIABLE TO BE DELETED. ANAYDEV PROJECTS P. LTD, ITA NO.2620/MUM./2015 11 1 2 . IN THE NET RESULT APPEAL FILED BY THE ASSESSEE STANDS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 25 .07 .2017 SD/ - SD/ - ( R.C. SHARMA ) ( SANDEEP GOSAIN ) ACC OUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25 .07 .2017 C OPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE. BY ORDER NISHANT VERMA SR. PRIVATE SECRETARY (DY./ASSTT.REGISTRAR) ITAT MUMBAI