LATE SHRI NAZMIN JAMAL(THROUGH ITS LEGAL HEIR), MUMBAI V. ITO 20(3)(5), MUMBAI

ITA 2838/MUM/2016

AI Insights

The case revolves around an appeal by the legal heir of Late Shri Nazmin Jamal against the order of the CIT(A)-32, Mumbai, which confirmed the addition of Rs. 60 lakhs as undisclosed investment by the assessee in purchasing an office. The addition was initially based on a handwritten note seized during a search operation, which indicated a transaction involving Rs. 60 lakhs for the purchase of an office. The ITAT, after reviewing the submissions and evidence, including the absence of direct payments or receipts and the inability to cross-examine key witnesses, set aside the CIT(A)'s order and directed the deletion of the addition.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 131950 (ITAT-MUMBAI)
• Duration Of Justice: 2021 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-12-2022
• Assessment Year: 2005-2006
• Appeal Filed On: 17-08-0001
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Principle of natural justice; Documents seized; Set aside
• Section: 147; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL “B” Bench, Mumbai Shri B.R. Baskaran (AM) & Shri Rahul Chaudhary (JM) I.T.A. No. 2838/Mum/2016 (A.Y. 2005-06) Late Shri Nazmin Jamal (through legal heir Ms. Noorjahan Jamal) 44, Amynabad Aga Hall Nesbit Road, Mazgaon Mumbai-400 010. PAN : AHLPJ8280H Vs. ITO-20(3)(5) Erstwhile 17(1)(3) Mumbai. (Appellant) (Respondent) Assessee by Dr. Hemant O. Sharma Department by Shri Chetan M. Kacha Date of He aring 08.12.2022 Date of P ronounceme nt 27.12.2022 O R D E R Per B.R.Baskaran (AM) :- The assessee has filed this appeal challenging the order dated 18.2.2016 passed by the learned CIT(A)-32, Mumbai and it relates to A.Y. 2005-06. The assessee is aggrieved by the decision of the learned CIT(A) in confirming the addition of Rs. 60 lakhs made by the Assessing Officer towards undisclosed investment. 2. The facts relating to the case are stated in brief. This is a second round of proceedings. The Revenue carried out search and seizure operation in the hands of Ajani Group on 6.7.2004. One of the documents seized at the time of search is a handwritten note titled “regarding office at Byculla”. The said note appears to have been written by Mr. Nuruddin B. Ajani. It is mentioned therein that he has taken Rs. 60 lakhs from the assessee herein against sale of his office premises to the assessee. It is stated that the office was sold for a sum of Rs. 56 lakhs and hence balance of Rs. 4 lakhs was promised to be 2 paid by 31st April and the possession will be given on 21st March. Based on this note, the assessment of the assessee was reopened under section 147 of the Act on the reasoning that the assessee has made undisclosed investment of Rs. 60 lakhs in purchasing the office at Byculla. The Assessing Officer completed the assessment of making addition of Rs. 60 lakhs. The learned CIT(A) in the first round deleted the addition and hence the revenue filed the appeal before the Tribunal. 3. The ITAT, vide its order dated 22.2.2013 passed in ITA No. 2828/Mum/2011 reversed the order passed by the learned CIT(A) and restored the matter to the file of the Assessing Officer for examining the issue afresh. 4. In the set aside proceedings, the Assessing Officer made addition of Rs.60 lakhs again. In the appellate proceedings the learned CIT(A) confirmed the addition and hence the assessee has filed this appeal. 5. We heard the parties and perused the record. We noticed from the order-sheet of the appeal folder that the revenue was directed to furnish a copy of the statement recorded under section 132(4) from Mr. Nuruddin B. Ajani or Shri D.N. Israni. However, it is reported by the revenue that the copies of the said statements are not available. However, the Revenue has furnished certain documents which included copy of the note titled as “regarding office at Byculla”. 6. One of the contentions raised before the tax authorities by the assessee was that the hand written note was dated 4.4.2004 and it has been stated therein that Mr. Nuruddin Ajani has taken amount of Rs. 60 lakhs. The assessee submitted as under before the assessing officer:- “In response to this, AR of the assessee vide letter dated 12.3.2014 submitted the relevant portion is reproduced as under : 3 "The addition is made based on a note dated 04/04/2004 written in the hands of Shri Nuruddin B. Ajani found at the time of search operation carried out u/s 132 on 06/07/2004 at the premises of the Ajani Group. The opportunity of cross examine Nuruddin B Ajani was not given to understand the content of note vis-a-vis alleged payment made by Nazmin Jamal for the tenancy right for the office at Byculla to Nuruddin B. Ajani. Byculla office was located at 4th floor, Warden Building 340, Byculla. The office is owned by Sir Jacob Sassoon High School 340 Sir JJ Road, Byculla. Empire Continental Exports Private Limited was having the tenancy night of the said office. All the equity shares of Empire Continental Exports Private Limited was owned and held by Ajanis. By virtue of having 100% shareholding of Empire Continental Exports Private Limited, Ajanis were in possession of the office and defecto tenant. The tenancy right of the office can be transferred by transferring the shares of the company who is tenant of the premises. There are no receipts for the payment made by Nazmin Jamal for the tenancy of the said office is found in the course of search operation carried out at Ajanis place. The addition of Rs. 60,00,000 made in the assessment based on a note dated 04/04/2004 written by Naruddin Ajani found at the time of search. Without prejudice and assuming without admitting it is said that the tenancy right in the said premises were transferred to Jamals, it can be done only by transferring the shares in Empire Continental Exports Private Limited to Jamals by Ajanis. The main issue in the said assessment is regarding alleged payment of Rs. 60,00,000 made by Nazmin Jamal to Nuruddin Ajani for transfer of tenancy in the office located at 4 floor Warden Building 340 Byculla. By our letter dated 03/03/2014 we submitted the copies of share certificate of Empire Continental Exports Private Limited for the evidence to show that 100% shares of Empire Continental Exports Private Limited were transferred on 18/09/2003 by Ajanis to son and wife of Nazmin Jamal. As stated earlier, the tenancy right in the office located at 4 floor Warden Building 340 Byculla were in the name of Empire Continental Exports Private Limited and by virtue of transferring all the shares of Empire Continental Exports Private Limited by Ajanis to family members of Nazmin Jamal the said tenancy right indirectly transferred to family members of Nazmin Jamal. Assuming without admitting, if at all it is said that the amount is paid for transfer of tenancy right in the office, it would have been paid on or before 18/09/2003. This also can be substantiated by the note dated 04/04/2004 wherein it is stated by Naruddin Ajanis "I have taken 60,00,000 against the office from Nazmun Jamal. We sold office to him for 56,00,000 balance 4,00,000 1 had promised that I would pay him by 31" April. Please refer page no.2 of Hon. ITAT Order on page no.2. 4 This is written in the note dated 04/04/2004. He said he has already received 60,00,000 for sale of premises i.e, tenancy right in office located 4th floor, Warden Building, 340 Byculla. The inference of the note is that the tenancy right is already transferred and money is already received by him in transferred of tenancy by transferring the shares of Empire Continental Exports Private Limited by Ajani to Family member Nazmin Jamal. The note cannot considered the receipt of the amount it only a statement. Assuming without admitting, if he has promised before the arbitrators to give the possession of the office 21 March and there after requested the extension upto 15th April for the possession to be given to the arbitrator. The arbitrators are normally appointed when there is dispute between two parties, Assuming without admitting, here in this case, family members of Nazmin Jamal has paid the amount for transferred of the tenancy right in the office by virtue of transferring 100% share in Empire Continental Exports Private Limited and Ajanis who were earlier shareholders of Empire Continental Exports Private Limited, tenant has not given the possession as agreed. This is a case wherein arbitrators were appointed to give possession of the office to the family members of Nazmin Jamal after the shares were transferred and tenancy right is indirectly transferred to Jamals. We have already stated in the submission made to Commissioners of Income tax Appeals that the assessee has not paid any money because he was bedridden and not having any source of income and there are no direct evidences found to show that amount is paid by the assessee. However, we assuming without admitting here by state that the amount if any alleged to be paid for transferred of tenancy rights in the said office, it is paid in FY.2003-2004. We are enclosing herewith a copy of letter dated 21" July, 1998 given by Sir. Jacob Sasson High School certifying that Empire Continental Exports Private Limited is respectable tenants occupying the office at 4" Floor. Warden Building, 340 Byculla." 7. We notice that the assessing officer has not allowed the opportunity of cross examining Shri Nuruddin Ajani. Further, the Ld A.R stated that the revenue has not made any addition in the hands of Shri Nuruddin Ajani. The above submissions made by the assessee would show that the impugned rented premise, i.e., the tenancy right was held by M/s Empire Continental Exports P Ltd, a company owned by Shri Ajani. The said company has been acquired by the son and wife of the assessee on 18-09-2003. Accordingly, it was submitted that the tenancy right would form part of the company and hence there was no requirement to make separate payment for it. On a safer course, it was argued 5 that the transaction, if at all is taxable, would be liable to be taxed in AY 2004-05 and not in AY 2005-06. The assessee, in whose hands, it is taxable is also a question at large. 8. In the absence of providing opportunity to cross examine Mr Nuruddin Ajani, there is violation Principles of natural justice. Before us, the revenue has expressed its inability to produce the sworn statement recorded from Mr Nuruddin Ajani or Mr D N Israni. Hence, it is not clear as to whether the above said two parties have implicated the assessee in this deal, if any. Even if it is assumed for a moment that these parties have admitted to have received amount of Rs.60 lakhs from the assessee, it is not shown that the action taken by the revenue in the hands of the above said two persons in respect of the above said amount. Hence, on a conspectus of the matter, we are of the view that the AO was not justified in making addition of Rs.60.00 lakhs in the hands of the assessee, as other corroborative evidences militate against the impugned addition. Accordingly, we set aside the order passed by Ld CIT(A) on this issue and direct the AO to delete this addition of Rs.60.00 lakhs 9. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 27.12.2022. Sd/- Sd/- (RAHUL CHAUDHARY) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated : 27/12/2022 6 Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. The CIT(A) 4. CIT 5. DR, ITAT, Mumbai 6. Guard File. BY ORDER, //True Copy// (Assistant Registrar) Karuna Sr.PS ITAT, Mumbai