Mahesh Mehta, Delhi V. CIT, New Delhi

ITA 2804/DEL/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1526 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Search and seizure; Document seized; Assessment record; Documents seized; Set aside
• Section: 143(3); 153A; 153C; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2804/DEL/2014 : ASSTT. YEAR : 2009-10 MAHESH MEHTA, 2042, KATRA TOBACCO, KHARI BAOLI, DELHI-110006 VS CIT, CENTRAL-II, NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AGBPM7320C ASSESSEE BY : SH. SURESH KUMAR GUPTA, CA REVENUE BY : SH. J. K. MISHRA, CIT DR DATE OF HEARING: 16.01.2020 DATE OF PRONOUNCEMENT: 12.03.2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT, CENTRAL-II, NEW DELHI DAT ED 27.03.2014. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THE LD. CIT HAS ERRED BOTH IN LAW AND ON FACTS IN SETTING ASIDE THE ASSESSMENT TO THE AO WITH A DIRECTION TO REFRAME THE SAME AFTER PROPER EXAMINATION, ENQUIRY AND VERIFICATION OF THE ISSUE OF CASH PAYMENT OF RS.2,00,00,000/- ALLEGEDLY MADE TO THE VENDORS OF THE PROPERTY PURCHASED BY THE APPELLANT. 2. THE LD. CIT HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE IN GIVING A FINDING THAT THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDE R UNDER REVISION HAS FAILED TO CONDUCT A PROPER ENQUI RY AND VERIFICATION ON THE ISSUE OF PAYMENT OF ITA NO. 2804/DEL/2014 MAHESH MEHTA 2 RS.2,00,00,000/- BY THE APPELLANT TO THE VENDOR OF THE PROPERTY. 3. THE ACTION OF THE LD. CIT SETTING ASIDE THE ORDE R OF ASSESSMENT IS BASED ON THE ALLEGATION BY THE THIRD PARTY (VENDOR) THAT THERE WAS CASH PAYMENT OF RS.2,00,00,000/- BY THE APPELLANT FOR PURCHASE OF PROPERTY IGNORING THE FACT THERE WAS NO CORROBORATI ON OF SUCH PAYMENT IN THE SEIZED DOCUMENTS WHEREAS ON THE CONTRARY THERE WAS NOTING OF THE RECEIPT OF SIM ILAR AMOUNT FROM THE SAME VENDOR IN THE SEIZED DOCUMENTS WHICH IS DULY ACCEPTED BY THE APPELLANT AND AO. THIS NOTING CREATES SERIOUS DOUBTS ABOUT TH E AUTHENTICITY OF THE ABOVE ALLEGATION OF THE SAID VENDOR. 3. WE HAVE GONE THROUGH THE ASSESSMENT ORDER, ORDER OF THE LD. PCIT, WRITTEN SUBMISSIONS OF THE AR, WRITTEN SU BMISSIONS OF THE DR, PAPER BOOK FILED AND THE JUDGMENTS RELIED B Y BOTH THE PARTIES. AFTER CULLING THE ENTIRE MATERIAL, THE REL EVANT PORTION FOR THE PURPOSE OF ADJUDICATION IS BEING CONSIDERED IN THIS ORDER. 4. THE RELEVANT PORTION OF THE ORDER U/S 263 IS AS UNDER: I HAVE PERUSED THE ASSESSMENT RECORDS AND SUBMISSI ONS MADE ON THE ASSESSEE IN THIS CASE. FROM THE FACT OF THIS CASE, IT IS CLEAR THAT SHRI UDAY KUMAR WAS IN HIS STATEMENT DATED 18.08.2009 HAS HAD STATED IN UNEQUIVOCAL TERMS THAT HE HAS RECEIVED THE AMOUNT O F RS. 2 CRORE IN CASH OVER AND ABOVE THE PRICE IS STATED IN THE DEAL HAS PURCHASE CONSIDERATION FROM SHRI MAHESH MEHTA ON SALE OF PROPERTY AT 783/1 61, DB GUPTA ROAD, DELHI. THE SALE WAS MADE ON 17.072008 AS PER THE SA LE DEED. THIS TRANSACTION FELL IN ASSESSMENT YEAR 2008-09 RELEVAN T TO ASSESSMENT YEAR 2009-10. THE RELEVANT PART OF THE STATEMENT OF SHRI UDAY KUMAR IS REPRODUCED BELOW: Q.NO. 6: DURING THE COURSE OF SEARCH AND SEIZURE OP ERATION AT THE PREMISES OF SHRI MAHESH MEHTA AT BA-17A, ASHOK VIHA R, DDA FLAT, NEW ITA NO. 2804/DEL/2014 MAHESH MEHTA 3 DELHI ON 30.06.2009 01.07.2009, A BAHI KHATA (HAN DWRITTEN LEDGER A/C.) WAS SEIZED. IN HIS STATEMENT RECORDED U/S 132(4) OF THE I.T. ACT, 1961. SHRI MAHESH MEHTA ACCEPTED THAT THE SAID BAHI KHATA REFLECTED THE DETAILED ACTUAL TRANSACTION UNDERTAKEN BY HIS FAMIL Y MEMBERS/GROUP CONCERN (INVENTORISED AS PARTY S-2/ANNEXURE A-4). T HE AMOUNTS MENTIONED THEREIN WERE CODED BY SUPPRESSING TWO ZER OS. THE AMOUNTS INCLUDED THE COMPLETE TRANSACTIONS I.E. CASH TRANSA CTIONS AS WELL AS CHEQUE TRANSACTIONS RECEIVED FROM THE PARTIES. ON PAGE NO. 97 OF THE SAID BAHI KHATA, THERE IS AN ACCOUNT OF THE SALE OF BUILDING NO. 56/7, DB GUPTA ROAD, KAROL BAGH. THIS IS THE SAME PREMISE WERE THE CURRENT SURVEY OPERATION IS BEING CARRIED OUT. THE ENTRIES RELATED TO IT ARE BEING REPRODUCED AS PER ANNEXURE-A-I OF THIS STATEMENT. Y OU ARE REQUIRED TO EXPLAIN THE SAME IN RESPECT OF YOUR PART OF BUILDIN G PURCHASE BY YOU? ANS.: I HAVE GONE THROUGH THE LEDGER ACCOUNT SHOWN TO ME. I VERIFY THAT THE CHEQUES OF RS.50 LACS SHOWN TO BE PAID IN THE N AME OF M/S HONEST ESTATES PRIVATE LIMITED PAID ON 8/5/2008 WERE THE B ANKER'S CHEQUE TWO NOS. OF RS.25 LAKH EACH, PAID BY ME AS PART OF THE PURCHASE AMOUNT OF TOTAL SALE CONSIDERATION OF 3 FLATS (1 ST FLOOR, 2 ND FLOOR AND 3RD FLOOR) OF THIS PREMISES I.E. 56/7, DB GUPTA ROAD, KAROL BAGH, NEW DELHI. FURTHER, I HAVE SOLD MY PROPERTY NO. 783/161, DB GUPTA ROAD, NEW DE LHI THROUGH MR. MAHESH MEHTA AND A SUM OF RS.2 CRORES IN CASH WAS A N ON ACCOUNT OF PART OF SALE CONSIDERATION OF THE ABOVE SAID PROPERTY WH ICH WAS KEPT BY HIM AS PURCHASE CONSIDERATION AGAINST THE NEWLY PURCHASED BUILDING AT 56/7, DB GUPTA ROAD, KAROL BAGH, NEW DELHI PURCHASED FROM HI M. SINCE THE AMOUNT WAS NOT RECEIVED BY ME AND WAS KEPT BY MR. M EHTA HIMSELF, I WAS UNDER THE IMPRESSION NO CAPITAL GAIN IS TO BE INVOK ED ON THIS AMOUNT WHICH WAS, THUS, NOT DISCLOSED TO THE INCOME TAX DE PARTMENT FOR ADVANCE TAX PURPOSE.. ITA NO. 2804/DEL/2014 MAHESH MEHTA 4 THIS STATEMENT OF SHRI UDAY KUMAR VAISH WAS NOT CON FRONTED TO SHRI MAHESH MEHTA DURING THE ENTIRE ASSESSMENT PROCEEDIN GS OF ASSESSMENT YEAR 2009-10. NO QUESTIONS ABOUT SOURCE OF RS. 2 CR ORES PAID IN CASH WERE ASKED DURING THE SAID PROCEEDINGS. THE AR HAD MENTI ONED THAT SUM QUERY REGARDING THIS ISSUE WAS MADE IN ASSESSMENT YEAR 20 10-11. THIS CLEARLY SHOWS NON-APPLICATION OF MIND AND NO ENQUIRY IN THE RELEVANT ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2009-10. RAISING THE QUERY IN A YEAR IN WHICH THE SAID AMOUNT COULD NOT BE TAXED DOES NOT A BSOLVE THE AO FROM THE ERROR IN NOT MAKING ENQUIRY IN THE YEAR IN WHIC H RECEIVED AMOUNT COULD HAVE BEEN RIGHTFULLY BROUGHT TO TAX. THE A.R. HAS NOT DENIED THE FACT THAT NO ENQUIRY ON THIS ISSUE WAS MADE IN THE RELEV ANT ASSESSMENT PROCEEDINGS OF ASSESSMENT YEAR 2009-10. THE ORDER O F THE ASSESSING OFFICER IS, THEREFORE, ERRONEOUS AND PRESIDENTIAL T O THE REVENUE TO THIS EXTENT. THE MAJOR ISSUE IN THIS REVISIONAL PROCEEDINGS U/S 263 OF INCOME TAX ACT, 1961 IS THAT ASSESSMENT ON THIS ISSUES RAISED IN TH E SHOW-CAUSE NOTICE WAS MADE WITHOUT PROPER EXAMINATION, ENQUIRY AND VE RIFICATION. IT HAS BEEN HELD IN THE FOLLOWING CASES THAT REVISIONAL JU RISDICTION U/S 263 BY THE COMMISSIONER IS WARRANTED IN A CASE WHERE ASSESSMEN TS HAVE BEEN MADE WITHOUT ENQUIRY OR VERIFICATION: ASSESSMENT ORIGINALLY MADE WITHOUT ENQUIRY - CAN IT BE REVISED - FAILURE OF THE ASSESSING OFFICER TO MAKE AN IN ENQUIRY BEFORE GRANTING DEDUCTION WOULD RENDER THE ASSESSMENT ERRONEOUS AND PREJUDICI AL TO THE INTEREST OF REVENUE. CIT VS SESHASAYEE PAPER & BOARDS LIMITED ( 2000) 108 TAXMAN 464 WHERE THE ASSESSING OFFICER HAD ACCEPTED ENTRY IN T HE STATEMENT OF ACCOUNT FILED BY THE ASSESSEE SHOWING CERTAIN INCOM E AS AGRICULTURAL INCOME, WITHOUT MAKING ANY ENQUIRY, THE EXERCISE OF JURISDICTION BY THE ITA NO. 2804/DEL/2014 MAHESH MEHTA 5 COMMISSIONER U/S 263(1) WOULD BE JUSTIFIED. - MALAB AR INDUSTRIAL COMPANY LIMITED VS CIT (2000) 109 TAXMAN 66 (SC) WHERE THE ASSESSING OFFICER COMPLETED ASSESSMENT PR OCEEDINGS U/S 143(3) AND ADMITTED THAT HE COULD NOT MAKE PROPER E NQUIRIES AS ASSESSMENT WAS BECOMING TIME-BARRED, THERE IS VALID ASSUMPTION OF JURISDICTION U/S 263 BY THE COMMISSIONER, IN SETTIN G ASIDE THE ASSESSMENT AND DIRECTING THE ASSESSING OFFICER TO MAKE A FRESH ASSESSMEN - JAGDISH KUMAR GULATI VS CIT (2004) 139 TAXMAN 369. .. FURTHER, IT HAS BEEN HELD IN THE CASE OF INDIAN TEX TILES VS CIT 157 ITR 112 (MADRAS) THAT IF AT LEAST IN RESPECT OF ONE ITEM IT OS ORDER WAS FOUND TO BE PREJUDICIAL TO REVENUE, INITIATION OF PROCEEDINGS B Y COMMISSIONER U/S 263 COULD NOT BE QUESTIONED BY OBSERVING AS UNDER: IT IS SIGNIFICANT TO NOTE THAT THE ASSESSEES CLAI M FOR WEIGHTED DEDUCTION IN RESPECT OF FREIGHT CHARGES FALLING UNDER SUB-CLAUSE (III) HAS BEEN SET ASIDE BY THE COMMISSIONER AND THAT VIEW HAS BEEN ACCEPTED BY THE TRIBUNAL AND IT IS ONLY IN RESPECT OF OTHER MATTERS, THE TRIBUNA L HAS REMITTED THE MATTER TO THE ITO. IF AT LEAST IN RESPECT OF ONE ITEM, THE ITOS ORDER IS FOUND TO BE PREJUICIAL TO THE REVENUE, THE INITIATION OF THE PR OCEEDING BY THE COMMISSIONER U/S 263 CANNOT BE QUESTIONED. WE ARE N OT, THEREFORE, INCLINED TO DIRECT A REFERENCE IN THIS CASE. THIS P ETITION IS, THEREFORE, DISMISSED. FROM THE ABOVE DISCUSSION, IT IS CLEAR THAT THE ASS ESSING OFFICER HAS FAILED TO CONDUCT PROPER ENQUIRY AND VERIFICATION ON THE I SSUE OF PAYMENT OF RS.2 CRORES BY THE ASSESSEE TO SHRI UDAY KUMAR VAISH AND SMT. MAYA VAISH. AS HAS BEEN BROUGHT OUT ABOVE, IN VARIOUS JUDICIAL PRO NOUNCEMENTS, IT HAS ITA NO. 2804/DEL/2014 MAHESH MEHTA 6 BEEN HELD AT WHERE ENQUIRY OR VERIFICATION IS WARRA NTED, BUT NOT DONE, IT WOULD CERTAINLY CAUSE PREJUDICE TO REVENUE AND THE COMMISSIONER SHALL BE JUSTIFIED IN REMANDING THE MATTER BACK TO THE ASSES SING OFFICER FOR MAKING SUCH ENQUIRY. HENCE, THE ASSESSMENT MADE BY ASSESSI NG OFFICER, CENTRAL CIRCLE-3, NEW DELHI U/S 143(3)/153A DATED 30.12.201 1 IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. INVOKING TH E PROVISIONS OF SECTION 263 OF THE INCOME TAX ACT, 1961, I HEREBY SET ASIDE THE ASSESSMENT PROCEEDINGS WITH THE DIRECTION TO THE ASSESSING OFF ICER TO FRAME THE ASSESSMENT OF AFRESH AFTER PROPER EXAMINATION, ENQU IRY AND VERIFICATION ON THE ISSUES CITED ABOVE. 5. THE RELEVANT DERIVATION FROM THE ABOVE ORDER IS AS UNDER: THE ISSUE INVOLVED TWO PROPERTIES NAMELY, 56/7, DB G UPTA ROAD, KAROL BAGH AND 783/161, DB GUPTA ROAD, KAROL BAGH THE PROPERTY 56/7, KAROL BAGH HAS BEEN SOLD BY THE ASSESSEE GROUP COMPANY NAMELY, HONEST ESTATES PVT. LTD. TO ONE MR. UDAY VAISH THE PROPERTY NO. 783/161, DB GUPTA ROAD, KAROL BAGH WAS SOLD BY SH. UDAY VAISH TO THE ASSESSEE SH. UDAY VAISH IS SUPPOSED TO RECEIVE AN AMOUNT OF RS. 2 CRORES IN CASH AS A SALE CONSIDERATION OF THE PROPERTY 783/16 1 FROM THE ASSESSEE AND THE AMOUNT WAS KEPT BY HIM AGAINST THE PURCHASE CONSIDERATION OF THE PROPERTY 56/7, DB GUPTA ROAD, K AROL BAGH IT IS UNDISPUTED THAT THERE HAS BEEN A TRANSACTION OF RS.2 CRORES BETWEEN THE ASSESSEE AND SH. UDAY VAISH THE SEIZED DOCUMENT NAMELY, ANNEXURE A-4, PARTY S-2 CONTAINS CLEARLY A TRANSACTION OF RECEIPT OF RS.2 CRORES FRO M SH. UDAY VAISH TO THE ASSESSEE. THERE WAS NO SEIZED DOCUMENT SHOWING ANY PAYMENT BY THE ASSESSEE TO SH. UDAY VAISH. EVEN THE STATEMENT OF SH. UDAY VAISH DID NOT MENTIO N THE RECEIPT OF MONEY FROM THE ASSESSEE ITA NO. 2804/DEL/2014 MAHESH MEHTA 7 6. THE LD. PCIT HELD THAT THE AO FAILED TO CONDUCT PROPER ENQUIRY AND VERIFICATION ON THE ISSUE OF PAYMENT OF RS.2 CRORES BY THE ASSESSEE TO SH. UDAY VAISH. 7. WE FIND THAT THE CASE OF THE ASSESSEE AND THE GR OUP CONCERNS HAVE BEEN CENTRALIZED AND ASSESSED IN THE SAME CENTRAL C IRCLE-03. ALL THE CASES OF SUBJECT MATTER OF ASSESSMENT U/S 153A AND 153C W HICH COMPRISED THE ASSESSMENT FOR THE SIX PREVIOUS YEARS FROM THE DATE OF THE SEARCH. WE FIND FROM THE ASSESSMENT ORDER IN THE CASE OF M/S HONEST ESTATES PVT. LTD., THE AMOUNT OF RS.2 CRORES WHICH HAS BEEN RECEIVED BY TH E ASSESSEE FROM SH. UDAY VAISH BASED ON THE SEIZED MATERIAL ANNEXURE A- 4, PARTY S-2 HAS BEEN DULY OFFERED TO TAX AND ASSESSMENT HAS BEEN CO MPLETED BY ADDING THE AMOUNT OF RS.2 CRORES TO THE SALE CONSIDERATION RECEIVED IN CASH OVER AND ABOVE THE VALUE REFLECTED IN THE BOOKS. 8. THE LD. PCIT OBSERVED THAT THE ENQUIRY OUGHT TO HAVE BEEN MADE IN CONNECTION WITH THE ASSESSMENT YEAR 2010-11 BUT NOT IN CONNECTION WITH ASSESSMENT YEAR 2009-10. WE HOLD THAT SUCH OBS ERVATION THAT THE QUERY HAS TO BE RAISED IN THE RELEVANT ASSESSMENT Y EAR DOESNT MATERIALLY CHANGE THE NATURE OF ENQUIRY IN THE POST SEARCH ASS ESSMENTS, WHERE IN THE ENTIRE MATERIAL FOUND AND SEIZED AT DIFFERENT PLACE S IS CONSIDERED COMPREHENSIVELY AND APPORTIONED TO EACH ASSESSMENT YEAR AND TO EACH ASSESSEE AS RELEVANT. THUS, WE ARE UNABLE TO SUPPOR T THE LD. PCITS OBSERVATION THAT THE AO FAILED TO MAKE ENQUIRY IN C ONNECTION WITH PROCEEDINGS FOR THE RELEVANT ASSESSMENT YEAR. IT IS ALSO ON RECORD THAT THE PROCEEDINGS IN THE CASE OF SH. UDAY VAISH INITIATED U/S 263 TO ASSESS THE INCOME PAID TO THE ASSESSEE HAVING SUBJECTED TO FUR THER APPELLATE PROCEEDINGS. THUS, FROM THE FACTS OF THE RECORD CON SIDERING THE ASSESSMENT OF M/S HONEST ESTATES PVT. LTD. WHEREIN THE AMOUNT OF RS.2 CRORES STANDS ASSESSED TO TAX AND KEEPING IN VIEW T HAT THERE WAS NO ITA NO. 2804/DEL/2014 MAHESH MEHTA 8 SEIZED MATERIAL TO DEMONSTRATE PAYMENT OF RS.2 CROR ES BY THE ASSESSEE TO SH. UDAY VAISH (RATHER IT IS REVERSE) AND KEEPING I N VIEW THE ISSUE HAS ALREADY BEEN A SUBJECT MATTER BEFORE THE LD. CIT (A ) WHEREIN THE LD. CIT (A) HAS ISSUED A NOTICE ON 18.02.2004 FOR ENHANCEME NT AND DROPPED THE PROCEEDINGS AFTER DUE ENQUIRY IN THE CASE OF SH. UD AY VAISH, AND KEEPING IN VIEW THE FACT THAT THE ORDER OF THE LD. PCIT COU LD NOT PROVE HOW THE ENQUIRIES CONDUCTED FOR THE ASSESSMENT YEAR 2010-11 ARE NOT CONSIDERED RELEVANT FOR THE ASSESSMENT YEAR 2009-10 AND ALSO K EEPING IN VIEW THE MOOT FACT THAT NO LOSS OF REVENUE COULD BE ARRIVED AT BY THE LD. PCIT OWING TO THE SAID LACK OF ENQUIRY DURING THE CURRENT YEAR , WE HEREBY HOLD THAT THE ORDER U/S 263 CANNOT BE HELD TO BE LEGALLY VALI D. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/03/2020. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUNT ANT MEMBER DATED: 12/03/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. 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