STRAWBERRY CONSTRUCTIONS P.LTD, MUMBAI V. DCIT CC 4(2), MUMBAI

ITA 2838/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7199 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 20-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Unexplained expenditure; Search and seizure; Document seized; Reason to believe; Documents seized
• Section: 69C; 143(3); 131; 148; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMCBENCH, MU MBAI BEFORE SHRI B.R. BASKARAN, AM AND SHRI AMARJIT SINGH JM / I.T.A. NO.2838/MUM/2017 ( / ASSESSMENT YEAR: 2007-08) M/S STRAWBERRY CONSTRUCTIONS PRIVATE LTD. THE PLAZA, 11 TH FLOOR, 55,GAMDEVI, MUMBAI-400007 / VS. DCIT CENTRAL CIRCLE-4(2) /. /. PAN/GIR NO. :AABCS1396K ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 10.04.2019 /DATE OF PRONOUNCEMENT: 12.04.2019 / O R D E R PER B. R. BASKARAN, AM: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 19/01/2017 PASSED BY LD CIT(A)-52, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2007-08. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN CONFIRMING THE ADDITION OF RS.21 LA KHS MADE BY THE AO U/S 69C OF THE INCOME TAX ACT, 1961 (HEREINAFTER T HE ACT) AS ASSESSEE BY: SHRI SASHI TULSIAN REVENUE BY: SHRI CHAITANYA ANJARIA SR. DR ITA. NO.2838/M12017 A.Y.2007-08 2 UNEXPLAINED EXPENDITURE RELATING TO ALLEGED UNACCOU NTED BROKERAGE PAYMENT MADE BY THE ASSESSEE. 2. THE FACTS RELATING TO ABOVE SAID ISSUE ARE STAT ED IN BRIEF. THE ASSESSEE COMPANY IS A BUILDER AND DEVELOPER. TH E ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE A SSESSING OFFICER ORIGINALLY Y/S 143(3) OF THE ACT ON 17/11/2009. IT IS PERTINENT TO NOTE THAT THE ASSESSEE DID NOT START ANY CONSTRUCTION AC TIVITY DURING THE YEAR UNDER CONSIDERATION AND HENCE, THE PROFIT & LO SS ACCOUNT OF THE ASSESSEE DID NOT REFLECT ANY PURCHASES/SALES DURING THE YEAR UNDER CONSIDERATION. 3. THE REVENUE CARRIED OUT SEARCH AND SEIZURE OPERA TION U/S 132 OF THE ACT ON 03/03/2014 IN THE HANDS OF THE ASSESSEE AND THE CERTAIN DOCUMENTS INCLUDING A PEN DRIVE WAS SEIZED. BASED O N THESE DOCUMENTS, A STATEMENT WAS RECORDED U/S 132(4) OF T HE ACT FROM ONE OF THE EMPLOYEES OF THE ASSESSEE NAMED SHRI DAXESH PARMAR. THE STATEMENT OF DAXESH PARMAR WAS CONFIRMED BY SHRI NI LESH TANK, DIRECTOR OF THE ASSESSEE COMPANY IN THE STATEMENT T AKEN FROM HIM U/S 131 OF THE ACT. DURING THE COURSE OF SEARCH, ONE P APER WAS SEIZED, WHICH CONTAINED A NOTING TO THE EFFECT THAT A SUM O F RS.21 LAKHS WAS PAID AS BROKERAGE TO A PERSON NAMED PRAVIN BHAI FOR LAND DEALING. ITA. NO.2838/M12017 A.Y.2007-08 3 THOUGH THE DATE WAS MENTIONED AS 25.3.1997 AND THE AMOUNT WAS MENTIONED AS 21000.00, SHRI DAXESH PARMAR STATED TH AT THE DATE HAS BEEN RECORDED BY DEDUCTING TEN YEARS FROM THE ORIGI NAL DATE AND THE AMOUNT SHOULD BE UNDERSTOOD BY REMOVING .. ACCORD INGLY, THE DATE MENTIONED AS 25/03/1997 WAS TAKEN AS 25/03/2007, WH ICH FELL IN THE ASSESSMENT YEAR 2007-08 AND THE AMOUNT WAS TAKEN AS RS.21.00 LAKHS. BASED ON THE ABOVE SAID INFORMATION, THE ASS ESSING OFFICE REOPENED THE ASSESSEE OF THE YEAR UNDER CONSIDERATI ON BY ISSUING NOTICE U/S 148 OF THE ACT ON 28/03/2014. 4. THE ASSESSEE OBJECTED TO THE REOPENING OF THE AS SESSMENT BEFORE THE ASSESSING OFFICER AND ALSO OBJECTED TO THE PROP OSAL TO ASSESS THE AMOUNT OF RS.21.00 LAKHS AS INCOME OF THE ASSESSEE. IT WAS SUBMITTED THAT THE ASSESSEE DID NOT CARRY ON ANY CONSTRUCTION ACTIVITY NOR DID IT PURCHASE ANY LAND DURING THE YEAR UNDER CONSIDERATI ON AND HENCE THE QUESTION OF PAYING ANY BROKERAGE DOES NOT ARISE. WITH REGARD TO THE STATEMENT GIVEN BY SHRI DAXESH PARMAR, THE ASSESSEE SUBMITTED THAT SHRI DAXESH PARMAR IS NEITHER ITS EMPLOYEE NOR ITS AGENT. IT WAS SUBMITTED THAT HE USED TO THREAT THE ASSESSEE SEEKI NG MONEY AND HENCE THE ASSESSEE HAS MADE SEVERAL POLICE COMPLAIN TS AGAINST HIM FOR THREAT AND EXTORTION. IT WAS SUBMITTED THAT A POLIC E COMPLAINT DATED ITA. NO.2838/M12017 A.Y.2007-08 4 12/02/2014 WAS FILED WITH POLICE DEPARTMENT PRIOR T O THE DATE OF SEARCH DATED 31/03/2014 AND FIR WAS FILED ON 01/04/ 2014. ACCORDINGLY, IT WAS CONTENDED THAT THE STATEMENT GI VEN BY SHRI DAXESH PARMAR SHOULD NOT BE RELIED UPON. WITH REGARD TO T HE STATEMENT GIVEN BY SHIR NILESH TANK, THE DIRECTOR OF THE ASSESSEE C OMPANY, WHEREIN HE HAD ENDORSED THE STATEMENT GIVEN BY SHRI DAXESH PAR MAR, IT WAS SUBMITTED THAT SHRI NILESH TANK HAS RETRACTED FROM HIS STATEMENT. 5. THE AO DID NOT ACCEPT THE EXPLANATIONS OF THE AS SESSEE AND ACCORDINGLY TOOK THE VIEW THAT THE ASSESSEE COULD N OT FURNISH PROPER EXPLANATIONS WITH REGARD PAYMENT OF RS.21 LAKHS AS BROKERAGE TO SHRI PRVAIN BHAI. ACCORDINGLY, THE AO ASSESSED THE SAME AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. THE LD. CIT(A) CONF IRMED THE ADDITIONS WITH FOLLOWING OBSERVATIONS. 15. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMIS SIONS AND CONTENTIONS OF THE ASSESSEE AS WELL AS THE ORDER OF THE AO. 1 HAVE ALSO DISCUSSED THIS ISSUE WITH THE AO WHO MADE THE ASSESSMENT IN THIS CASE AS ALSO WITH THE AO WHO REPRESENTED THE D EPARTMENT BEFORE THE J-HON'BLE SETTLEMENT COMMISSION IN THIS CASE. THOUGH, THE ASSESSEE CLAIMS THAT SHRI DAXESH PRMAR IS NOT A N EMPLOYEE AND WAS INFACT A BLACKMAILER. HOWEVER, THE FACTS AN D DOCUMENTS RECOVERED FROM HIS POSSESSION SPEAK A DIFFERENT STO RY. IT IS GATHERED THAT SHRI DAXESH PARMAR NOT ONLY HAD DETAI LS ABOUT VARIOUS PROJECTS UNDERTAKEN BY THE ASSESSEE AT DIFF ERENT PLACES UNDER THE NAME AKSHAR SHANTI AND PAM NAGAR DEVELOPE RS IN THE MIRA ROAD LOCALITY BUT HE ALSO HAD DETAILS ABOUT TH E PERSONAL INVESTMENTS IN NSCS MADE BY SHRI NILESH TANK AND SH RI RIRAN TANK, THE DIRECTORS OF THE ASSESSEE COMPANY. THE DE TAILS OF THESE INVESTMENTS HAVE BEEN DISCUSSED BY THE AO ON PAGE 9 & 10 OF THE ITA. NO.2838/M12017 A.Y.2007-08 5 ASSESSMENT ORDER. IF SHRI DAXESH PARRNAR WERE JUST NOT CONNECTED WITH THE ASSESSEE COMPANY IN ANY WAY, THEN HE WERE NOT EXPECTED TO HAVE THE PERSONAL INVESTMENT INFORMATION OF THE ASSESSEE. THE ASSESSEE, FURTHER CLAIMS THAT SHRI DAXESH PARMAR WA S A BLACKMAILER AND THAT A. POLICE COMPLAINT WAS FILED AGAINST HIM PRIOR TO THE DATE OF SEARCH. HOWEVER, THE ENQUIRIES CONDU CTED BY THE AO SPEAK OTHERWISE. IT IS GATHERED THAT THE ASSESSEE H AS FILED A FIR AGAINST SHRI DAXESH P.RRNAR ONLY ON 01/04/2014, MUC H AFTER THE DATE OF SEARCH ON THE PREMISES OF THE ASSESSEE ON 0 3/03/2014. THEREFORE, THE CLAIM OF THE ASSESSEE THAT SUCH FIR WAS FILED AGAINST DAXESH PARMAR ON 12/02/2014 AND THAT STATEMENT WAS GIVEN BY HIM BEFORE THE POLICE AUTHORITIES ON 17/02/2014 APP EARS TO BE UNSUBSTANTIATED. IN FACT, SUCH FACTS HAVE NOT BEEN CONFIRMED BY THE POLICE AUTHORITIES ON SPECIFIC ENQUIRY BY THE AO. O N THE BASIS OF THE ENQUIRIES CONDUCTED BY THE AO, THE POLICE AUTHORITI ES HAVE ONLY CONFIRMED ABOUT A FIR FILED AS ON 01/04/2014. THE A SSESSEE, IN THIS REGARD, AS RELIED UPON PARA 9.1 AND 9.2 OF THE HONBLE SETTLEMENT COMMISSION ORDER IN CASE OF THE APPELLAN T COMPANY FOR OTHER YEARS WHEREIN THE ISSUE OF FILING FIR PRIOR T O THE DATE OF SEARCH AND STATEMENT OF SHRI DAXESH PARMAR BEFORE T HE POLICE AUTHORITIES HAS BEEN MENTIONED. WITH UTMOST RESPECT TO THE FLON'BLE COMMISSION, IT APPEARS THAT THIS FACT WAS APPARENTL Y NOT BEEN VERIFIED BY THE HON'BLE SETTLEMENT COMMISSION. BUT THE AO HAD CAUSED INDEPENDENT ENQUIRIES WITH THE POLICE AUTHOR ITIES DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHEREIN THE ONLY F ACT CONFIRMED HAS BEEN THE FILING OF AN FIR AS ON 01/04/2014 WHIC H IS AFTER ONE MONTH OF THE DATE OF SEARCH AND THEREFORE, IT CAN B E A PLOY AT THE END OF THE ASSESSEE TO CONFUSE THE WHOLE PROCEEDING S, 16. THE ASSESSEE HAS FURTHER CLAIMED THAT NO SALES OR PURCHASES HAD BEEN CARRIED OUT BY IT DURING THE YEAR UNDER CO NSIDERATION AND THEREFORE THERE WAS NO REASON TO PAY ANY BROKERAGE TO ANYBODY. HOWEVER, THE FACT REMAINS THAT BROKERAGE HAS NOT BE EN PAID FOR SALE OF FLATS OR APARTMENTS, BUT HAS APPARENTLY BEE N PAID FOR THE PURCHASE OF LAND. IT IS AN ADMITTED FACT THAT THE A SSESSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION AND W ITHOUT PURCHASE OF LAND IT CANNOT CARRY OUT ANY CONSTRUCTION ACTIVI TIES. MORE IMPORTANTLY, IT HAS BEEN NOTICED DURING THE COURSE OF SEARCH THAT THEY ARE IN HABIT OF MAKING HUGE TRANSACTIONS OUTSI DE THE BOOKS OF ACCOUNTS AND DID NOT RECORD THE SAME IN THE BOOKS F OR REASONS BEST KNOWN TO THEM. THEREFORE, EVEN IF ANY ACTIVITIES WE RE TAKING PLACE IN NATURE OF CONSTRUCTION OR SALES AND PURCHASES, T HE SAME MAY NOT HAVE BEEN RECORDED BY THE ASSESSEE IN ITS BOOKS OF ACCOUNTS. FURTHER, THE COMMISSION COULD HAVE BEEN PAID IN RES PECT OF LAND DEAL ONCE IT HAS BEEN FINALIZED, EVEN IF THE LAND M AY NOT HAVE BEEN REGISTERED IN THE NAME OF THE ASSESSEE. IT IS HOWEV ER, GATHERED THAT ITA. NO.2838/M12017 A.Y.2007-08 6 WIP OF THE PROJECT OF THE ASSESSEE UNDER CONSTRUCTI ON AS ON 31/03/2008 WAS RS. 93,64,92,018/- THOUGH THE VALUE AS ON 31/03/2007 WAS SHOWN AT NIL. THEREFORE, IT CAN BE S AID THAT THE ASSESSEE'S PROJECT WAS IN PIPELINE AND CONSTRUCTION ACTIVITIES ARE IN FULL SWING DURING THE IMMEDIATELY SUCCEEDING YEAR A ND THE PAYMENT OF BROKERAGE MAY BE CONNECTED TO SUCH ACTIV ITIES. IN ANY CASE, SUCH ACTIVITIES COULD NOT HAVE BEEN CARRIED O UT WITHOUT PROCUREMENT OF LAND OF WHICH THE ABOVE BROKERAGE MA Y HAVE BEEN PAID. IN ANY CASE, THE AMOUNT OF RS. 21,00,000/- PA ID DURING THE YEAR IS NOT A HUGE AMOUNT AND MAY HAVE BEEN ONLY A PART OF OVERALL DEAL MADE BY THE ASSESSEE WITH THE HELP OF SHRI PRAVIN BHAI. FURTHER, THESE ARE THE FACTS IN SPECIAL KNOWL EDGE OF THE ASSESSEE AND THE ASSESSEE NEED TO EXPLAIN AS TO WHO SHRI PRAVIN BHAI IS AND WHAT WERE ITS ACTUAL DEALINGS WITH HIM. AS THE ASSESSEE HAS NOT FURNISHED ANY EXPLANATION REGARDIN G THE SOURCE OF RS. 21,00,000/- PAID TO PRAVINBHAI AS PER ENTRIE S IN THE SEIZED PENDRIVE, THE SAME IS TREATED AS UNEXPLAINED AND IS LIABLE TO BE ADDED IN THE HANDS OF THE ASSESSEE U/S. 69C OF THE ACT, CONSEQUENTLY, THE ADDITION OF RS. 21,00,000/- MADE BY THE AO IS UPHELD. AGGRIEVED BY THE ORDER PASSED BY LD CIT(A), THE ASS ESSEE HAS FILED THIS APPEAL BEFORE THE TRIBUNAL . 6. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER HAS REOPENED THE ASSESSMENT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE PRESENT ASSESSMENT YEAR AND THE BASIS FOR REOPENING OF ASSE SSMENT IS THE LETTER RECEIVED FROM DDIT(INV.) ALLEGING PAYMENT OF BROKERAGE. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSIN G OFFICER DID NOT APPLY HIS MIND ON THE LETTER SO RECEIVED BY HIM FRO M DDIT TO EXAMINE ITS VERACITY AND SIMPLY REOPENED THE ASSESSMENT. I N THE ABOVE SAID ITA. NO.2838/M12017 A.Y.2007-08 7 LETTER, DDIT HAS REFERRED TO THE FOLLOWING NOTING FOUND IN A SEIZED DOCUMENT:- 25.03,97 PRAVIN BHAI (LAND BROKERAGE)-21,000.00 7. THE LD. AR SUBMITTED THAT ABOVE SAID INFORMATION DOES NOT GIVE RISE ANY REASON TO BELIEVE THAT THERE WAS ESCAPEMEN T OF INCOME IN THE HANDS OF THE ASSESSEE. HE SUBMITTED THAT THE AO, W ITHOUT APPLYING HIS MIND ON THE ABOVE SAID INFORMATION, HAS SIMPLY REOP ENED THE ASSESSMENT AND HENCE THE ASSESSMENT IS BAD IN LAW. 8. THE LD. AR FURTHER SUBMITTED THAT ASSESSEE HAS F ILED SETTLEMENT APPLICATION BEFORE THE SETTLEMENT COMMISSION FOR AS SESSMENT YEAR 2010-11 TO 2012-13. THE HONBLE SETTLEMENT COMMISSI ON HAS EXAMINED VERACITY OF SEIZED DOCUMENTS AND GIVEN A F INDING THAT THESE DOCUMENTS DID NOT YIELD ANY FOOLPROOF, COGENT, DIRE CT AND CLINCHING EVIDENCE TO ESTABLISH THE DEPARTMENTS CONTENTION O F NON-DISCLOSURE OF TRUE AND FULL INCOME IN THE SETTLEMENT APPLICATION BY THE ASSESSEE COMPANY. THE LD. AR FURTHER SUBMITTED THAT HONBLE SETTLEMENT COMMISSION HAS GIVEN ITS FINDING ON THE RELIABILITY OF THE SEIZED DOCUMENTS AND THE SAID ORDER IS BINDING ON THE REVE NUE, SINCE THE ORDER PASSED BY THE SETTLEMENT COMMISSION HAS BEEN ACCEPTED BY THE REVENUE. ACCORDINGLY, THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER ITA. NO.2838/M12017 A.Y.2007-08 8 COULD NOT HAVE PLACED HIS RELIANCE ON THE VERY SAME DOCUMENT TO REOPEN THE ASSESSMENT UNDER CONSIDERATION. 9. THE LD. AR ALSO PLACED RELIANCE ON THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF VINOD M. C HITALIA VS UNION OF INDIA (FERA APPEAL NO.8 OF 2012) DATED 28/03/2012. THE LD. AR FURTHER SUBMITTED THAT THE HONBLE BOMBAY HIGH COUR T, IN THE ABOVE SAID CASE, HAS HELD THAT THE ORDER OF SETTLEMENT CO MMISSION IS CONSIDERED TO BE CONCLUSIVE OF THE MATTERS STATED T HEREIN AND CANNOT BE CHALLENGED IN ANY OTHER PROCEEDINGS UNDER ANY OT HER LAW INCLUDING FEMA. THE LD. AR FURTHER SUBMITTED THAT THE FINDING S GIVEN BY THE HONBLE SETTLEMENT COMMISSION ON THE RELIABILITY OF EVIDENCES IS CONCLUSIVE AND HENCE, THE AO WAS NOT RIGHT IN REOPE NING THE ASSESSMENT BY RELYING ON THE VERY SAME MATERIAL. A CCORDINGLY THE LD A.R PLEADED THAT THE REOPENING OF ASSESSMENT SHOULD BE QUASHED. 10. ON MERITS, THE LD. AR SUBMITTED THAT THE ASSESS EE HAD FILED POLICE COMPLAINTS PRIOR TO THE DATE OF SEARCH IN TH E NAME OF SHRI DAXESH PARMAR, AS HE WAS THREATENING FOR EXTORTING MONEY FROM THE ASSESSEE. THE POLICE HAS REGISTERED FIR ON 01/04/20 14 IE. SUBSEQUENT TO THE DATE OF SEARCH. HENCE, THE LD. CIT(A) WAS NO T JUSTIFIED IN HOLDING THAT FILING OF FIR WAS A PLOY AT END OF THE ASSESSEE TO CONFUSE ITA. NO.2838/M12017 A.Y.2007-08 9 THE PROCEEDINGS. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE DID NOT CARRY ON ANY CONSTRUCTION ACTIVITY DURING THE Y EAR UNDER CONSIDERATION AND DID NOT PURCHASE ANY LAND ALSO DU RING THE YEAR. THE QUESTION OF PAYING BROKERAGE SHALL ARISE ONLY IF AN Y LAND TRANSACTION HAS BEEN FINALIZED DURING THE YEAR. HENCE THERE WA S NO REASON FOR THE ASSESSEE TO MAKE THE ALLEGED PAYMENT OF BROKERAGE O F RS.21.00 LAKHS. THE LD. AR FURTHER SUBMITTED THAT THE AO DID NOT MA KE ANY INDEPENDENT ENQUIRY TO FIND OUT WHETHER THE SEIZED DOCUMENT IS RELIABLE OR NOT. THE AO ALSO DID NOT FIND MR. PRAVI N BHAI AND DID NOT MAKE ANY ENQUIRIES FROM HIM WHICH WOULD HAVE BROUGH T OUT THE VERACITY OF THE SEIZED DOCUMENTS. THE LD. AR FURTHE R SUBMITTED THAT THE ASSESSEE HAS, IN FACT, PURCHASED A LAND IN THE SUCCEEDING YEAR. THE LD. CIT(A) HAS TAKEN A VIEW THAT THE AMOUNT OF RS.2 1 LAKHS MIGHT HAVE BEEN PAID BY THE ASSESSEE TO PRAVINBHAI AS ADVANCE IN CONNECTION WITH THE LAND PURCHASED IN THE SUCCEEDING YEAR. 11. THE LD. AR FURTHER SUBMITTED THAT THE VIEW SO ENTERTAINED BY THE LD. CIT(A) IS NOT BASED ON ANY MATERIAL AND IS PURELY BASED ON SURMISES UNDER CONJECTURES. THE LD. AR SUBMITTED TH AT THE LD CIT(A) DID NOT CAUSE ANY ENQUIRY NOR DID HE BRING ANY MATE RIAL ON RECORD ANY CREDIBLE MATERIAL TO SHOW THAT THE ASSESSEE HAS INC URRED UNEXPLAINED ITA. NO.2838/M12017 A.Y.2007-08 10 EXPENDITURE OF RS.21 LAKHS TOWARDS PAYMENT OF BROKE RAGE TO A PERSON NAMED SHRI PRAVINBHAI. ACCORDINGLY, THE LD. AR SUB MITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING ADDITIONS OF RS.21 LAKHS IN THE HANDS OF THE ASSESSEE MERELY ON THE BASIS OF SURMIS ES AND CONJECTURES. 12. ON THE CONTRARY, THE LD. DR HAS STRONGLY SUPPOR TED THE ORDER PASSED BY THE LD. CIT(A). 13. WE HEARD THE PARTIES AND PERUSED THE RECORD. W E NOTICED THAT THE ASSESSING OFFICER HAS MADE THE ADDITIONS ON THE BASIS OF NOTING MADE IN A SEIZED MATERIAL, WHICH WAS DECIPHERED AS THE PAYMENT OF RS.21 LAKHS WAS MADE TO A PERSON NAMED SHRI PRAVINB HAI AS BROKERAGE FOR LAND DEAL. THOUGH THE CONTENTS OF PAY MENT AND THE AMOUNT WAS MENTIONED IN DIFFERENT WAY, AS STATED EA RLIER, THE SAME WAS DECIPHERED AS HAVING BEEN PAID ON 25/03/2007 AN D THE AMOUNT WAS RS.21 LAKHS. IN THE STATEMENT TAKEN FROM SHRI DAXESH PARMAR U/S 132(4) OF THE ACT, HE HAS ADMITTED THAT THE SAM E REPRESENTS BROKERAGE PAID BY WAY OF CASH. THE DIRECTOR OF ASSE SSEE COMPANY, SHRI NILESH TANK HAS ENDORSED THE STATEMENT SO GIVE N BY THE SHRI DAXESH PARMAR SUBSEQUENTLY. ITA. NO.2838/M12017 A.Y.2007-08 11 14. IT IS THE CONTENTION OF THE ASSESSEE THAT SHRI NILESH TANK HAS GIVEN STATEMENT UNDER PRESSURE AND ACCORDINGLY, HE HAS RETRACTED THE STATEMENT SUBSEQUENTLY. IT WAS ALSO POINTED OUT THA T SHRI DAXESH PARMAR WAS NOT EMPLOYEE OF THE ASSESSEE AND HE HAS BEEN CREATING TROUBLE TO THE ASSESSEE BY ISSUING THREATS FOR THE PURPOSE OF EXTORTING MONEY FROM THE ASSESSEE. WE NOTICE THAT THE AO HAS REJECTED THE ABOVE SAID CONTENTIONS OF THE ASSESSEE WITHOUT EXAM INING SHRI DAXESH PARMAR. ON THE CONTRARY, THE ASSESSEE HAS FURNISHE D EVIDENCES IN THE FORM OF COMPLAINTS LODGED WITH POLICE PERSONNEL AND FIR FILED BY THE POLICE AGAINST DAXESH PARMAR TO SUBSTANTIATE ITS CO NTENTIONS THAT THE STATEMENT GIVEN BY HIM IS NOT RELIABLE. WE ALSO NOT ICE THAT THE AO HAS NOT IDENTIFIED THE SHRI PRAVIN BHAI TO WHOM THE ABO VE SAID AMOUNT OF RS.21 LAKSH WAS ALLEGED TO HAVE BEEN PAID. WHEN TH E ASSESSEE HAS DISOWNED THE ENTRIES MADE IN THE SEIZED PAPER AND A LSO PLEADED IGNORANCE ABOVE PRAVIN BHAI, IN OUR VIEW, THE RESPO NSIBILITY TO PROVE THE VIEW TAKEN BY THE AO LIES UPON THE ASSESSING OF FICER, MORE PARTICULARLY, WHEN THE ASSESSEE HAS CONTENDED THAT THE STATEMENT GIVEN BY SHRI DAXESH PARMAR IS NOT RELIABLE. AS NO TICED EARLIER, THE AO HAS ALSO NOT CONDUCTED FURTHER ENQUIRIES WITH SHRI DAXES PARMAR. UNDER THE SET OF FACTS, IN OUR VIEW, THE ASSESSING OFFICER COULD NOT ITA. NO.2838/M12017 A.Y.2007-08 12 HAVE PLACED HIS RELIANCE ON THE SEIZED MATERIAL WIT HOUT BRINGING ANY OTHER CORROBORATIVE MATERIAL TO SUPPORT HIS VIEW. 15. THOUGH, THE LD. CIT(A) HAS TAKEN THE VIEW THA T FIR FILED BY THE ASSESSEE AGAINST SHRI DAXESH PARMAR SUBSEQUENT TO T HE DATE OF SEARCH WAS A PLOY TO CONFUSE THE ASSESSMENT PROCEEDINGS, Y ET WE NOTICE FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICER HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS FILED A POLICE COMPLAINT WITH POLICE AUTHORITIES PRIOR TO THE DATE OF SEARCH AND FINALLY A FIR WAS L ODGED SUBSEQUENT TO THE DATE OF SEARCH. HENCE, IN OUR VIEW, THE LD CIT( A) WAS NOT JUSTIFIED IN TAKING A DIFFERENT VIEW ON THIS MATTER. IN ANY CASE, NO MATERIAL WAS BROUGHT ON RECORD BY LD CIT(A) TO SHOW THAT THE ASS ESSEE DID NOT FILE SUCH A LETTER BEFORE THE POLICE AUTHORITIES PRIOR T O THE DATE OF SEARCH. UNDER THE SET OF FACTS, THERE IS MERIT IN THE CONTE NTION OF THE ASSESSEE THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN PRESUMING THAT LODGING OF FIR WAS A PLY TO CONFUSE THE ASSESSMENT PROCEEDINGS. 16. IT IS IN THE COMMON KNOWLEDGE OF EVERYONE THAT BROKERAGE IS USUALLY PAID ON CONCLUSION OF THE RELEVANT TRANSACT ION. IT IS ALSO AN ADMITTED AND ACCEPTED FACT THAT THE ASSESSEE DID NO T CARRY OUT ANY CONSTRUCTION ACTIVITY AND DID NOT PURCHASE ANY LAND OR PROPERTY DURING THE YEAR UNDER CONSIDERATION. HENCE, THERE IS MERIT IN THE IN CONTENTION ITA. NO.2838/M12017 A.Y.2007-08 13 OF THE ASSESSEE THAT THE QUESTION OF PAYING ANY BRO KERAGE DURING THE YEAR UNDER CONSIDERATION DOES NOT ARISE. THE LD. CI T(A) HAS TAKEN THE VIEW THAT THE ASSESSEE HAS PURCHASED A LAND IN SUCC EEDING YEAR AND HENCE THE AMOUNT OF RS.21 LAKHS MIGHT HAVE BEEN PAI D DURING THE YEAR UNDER CONSIDERATION AS ADVANCE TOWARDS BROKERA GE IN CONNECTION WITH SAID LAND DEALING ENTERED IN THE SUCCEEDING YE AR. AS RIGHTLY POINTED OUT BY THE LD. AR THAT THAT THIS OBSERVATIO N OF THE LD. CIT(A) IS BASED ON SURMISES AND CONJECTURES ONLY, SINCE TH E LD. CIT(A) HAS NOT BROUGHT OUT ANY MATERIAL TO SUPPORT HIS VIEWS. ACCORDINGLY WE ARE OF THE VIEW THAT THERE IS NO JUSTIFICATION FOR MAKI NG ADDITION OF RS.21 LAKHS IN THE HANDS OF THE ASSESSEE AS UNEXPLAINED E XPENDITURE INCURRED TOWARDS PAYMENT OF BROKERAGE. ACCORDINGLY , WE SET-ASIDE THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND DI RECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITIONS. 17. THE LD. AR ALSO VEHEMENTLY ARGUED ON THE VALIDI TY OF REOPENING OF THE ASSESSMENT AS WELL AS BINDING NATURE OF THE ORDER PASSED BY THE HONBLE SETTLEMENT COMMISSION. SINCE, WE HAVE GRANT ED RELIEF TO THE ASSESSEE ON MERITS, WE DONT FIND IT NECESSARY TO A DJUDICATE THESE LEGAL GROUNDS, AS THE SAME WOULD BE ACADEMIC IN NATURE. ITA. NO.2838/M12017 A.Y.2007-08 14 18. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12/04/2019 SD/- SD/- AMARJIT SINGH B.R BASKARAN JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 12.04.2019 F{X~{T? P.S COPY 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 (DY./ASSTT.REGISTRAR) MUMBAI, ITAT, MUMBAI