DCIT CEN CIR 8(4), MUMBAI V. SILVER ARCH BUILDERS & PROMOTERS, MUMBAI

ITA 3162/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0827 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 22-03-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 05-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Keywords: Search and seizure; Corroborative evidences
• Section: 153A; 132; 139

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -FBENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND RAMLAL N EGI,JUDICIAL MEMBER ./I.T.A./3162/MUM/2016, /AY.: 2007-08 ./I.T.A./3163/MUM/2016, /AY.: 2008-09 DCIT CC,8(4) 6 TH FLOOR, ROOM NO.658 AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. VS. SILVER ARCH BUILDERS & PROMOTORS 12/14,GORDHAN BUILDING, PAREKH ROAD,PRARTHANA SAMAJ MUMBAI-400 004. PAN:AAYFS 2047 M ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: S.PADMAJA -DR /ASSESSEE BY: NONE . / DATE OF HEARING: 02/05/2017 / DATE OF PRONOUNCEMENT: 02/05/2017 / PER RAJENDRA, AM - CHALLENGING THE ORDERS DATED 29.02.2016 OF THE CIT (A)- 47,MUMBAI,THE ASSESSING OFFICER(AO) HAS FILED THE APPEALS FOR THE ABOVE-MENTIONED ASSES SMENT YEARS(AY.S). AS THE ISSUES INVOLVED IN BOTH THE APPEALS ARE IDENTICAL,SO,WE ARE ADJUDICATI NG THE APPEALS BY A COMMON ORDER,FOR THE SAKE OF CONVENIENCE.ASSESSEE-FIRM IS A REAL ESTATE DEVEL OPER.THE DETAILS OF FILING OF RETURNS OF INCOME,RETURNED INCOMES AND DATES OF ASSESSMENT ETC . CAN BE SUMMARISED AS UNDER: AY. ROI FILED ON RETURNED INCOME ASSESSMENT DATE AS SESSED INCOME 2007-08 27.10.2007 04.03.2013 36,65,970/- 36,65,970/- 29/03/2014 73,37,860/- 2008-09 30.09.2008 04.03.2013 84,85,680/- 80,40,730/- 29.03.2014 1,31,67,390/- ITA/3162/MUMBAI/2016,AY. 2007-08: 2. THE BRIEF FACTS OF THE CASE ARE THAT ROHAN GROUP OF ENTITIES ALONG WITH DIRECTORS, FAMILY MEMBERS AND RELATED PARTIES WERE SUBJECT TO SEARCH AND SEIZURE OPERATIONS U/S. 132 OF THE ACT ON 26/05/2011,THAT THE ASSESSEES WAS ALSO ASSOCIATED W ITH THE SAID GROUP.SUBSEQUENT TO THE SEARCH A NOTICE U/S. 153A WAS ISSUED TO THE ASSESSEE ON 11/0 1/2013.IT FILED A RETURN ON 04/03/2013, DECLARING INCOME AT RS. 36.65 LAKHS. DURING THE ASS ESSMENT PROCEEDINGS, THE AO FOUND THAT THE ASSESSEE HAD UNDERTAKEN THE CONSTRUCTION OF A COMME RCIAL PROJECT RAMESWARAM.DURING THE 3162-63/M/16 (07-08 & 08-09) SILVER ARCH BUILDERS & PROMOTERS 2 SEARCH PROCEEDINGS STATEMENTS OF HARESH MOHANLAL M EHTA(HMM), ONE OF THE DIRECTORS OF THE ROHAN GROUP,WERE RECORDED,WHO ADMITTED THAT THAT 3 0% ON MONEY WAS ACCEPTED OVER AND ABOVE THE RECEIPT VALUE OF THE AGREEMENT AND THE SAME WAS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS.THE AO ALSO TOOK NOTE OF THE STATEMENTS OF SALES AND MARKETING EXECUTIVE, ACCOUNTANT OF THE GROUP AND OF THE LIASON OFFICER FOR THE PROP OSITION THAT ON MONEY WAS COLLECTED ON SALE TRANSACTIONS AND ACCORDINGLY ASKED THE ASSESSEE TO EXPLAIN AS TO WHY SUCH ADDITION SHOULD NOT BE MADE IN ITS HAND. THE ASSESSEE FILED ITS REPLY STATING THAT NONE OF T HE INDIVIDUALS, WHOSE THE STATEMENTS WERE RELIED UPON BY THE AO, WAS IN ANY WAY AUTHORISED TO CLOSE SALES TRANSACTIONS,THAT THE COPIES OF THE SAID STATEMENT HAD NOT BEEN PROVIDED TO THE ASSESSEE,THA T HMM WAS DIRECTOR IN THE ONE OF THE CONCERNS OF ROHAN GROUP, THAT HE WAS NOT CONCERNED WITH THE SALES, THAT HE WAS NOT LOOKING AFTER DAY-TO-DAY ACTIVITIES OF THE ASSESSEE, THAT NO SALE SPERSON OR OTHER STAFF OF THE COMPANY WAS REPORTING TO HMM, THAT HE INDEPENDENTLY OWNED A CON STRUCTION COMPANY, THAT THERE WAS NO NEXUS BETWEEN THE PROJECT OF THE ASSESSEE AND THE I NDEPENDENT PROJECT CARRIED OUT BY HMM, THAT THE DECLARATION MADE BY HMM U/S. 132 (4) COULD NOT BE TAKEN TO RELATES THE PROJECTS OF THE ASSESSEE. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D TAKING NOTE OF THE CASH AND JEWELLERY FOUND AT THE OFFICE PREMISES, THE AO MADE AN ADDITION OF RS. 36.71 LAKHS UNDER THE HEAD ON MONEY RECEIVED DURING THE YEAR UNDER CONSIDERATION. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HER,THE ASSESSEE CHALLENGED T HE VALIDITY OF THE ORDER PASSED U/S. 153A OF THE ACT AND RELIED UPON CERTAIN CASE LAWS.AFTER CON SIDERING THE ELABORATE SUBMISSIONS OF THE ASSESSEE,THE FAA HELD THAT ORIGINAL RETURN U/S. 139 OF THE ACT ON 2/7/2007, THAT SEARCH WAS CARRIED OUT IN THE CASE OF ROHAN GROUP ON 26/05/201 1, THAT THE TIME LIMIT FOR ISSUE OF NOTICE U/S. 143(2) FOR THE YEAR UNDER CONSIDERATION EXPIRED ON 31/03/2008,THAT THERE WAS NO PROCEEDINGS PENDING IN THE CASE OF THE ASSESSEE,THAT IT WAS NOT A CASE WHERE ASSESSMENT PROCEEDINGS WERE PENDING AND HAD ABATED.SHE REFERRED TO THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. OF THE SPECIAL BENCH OF THE TRIBUNAL AND HELD THAT IN CASES WHERE THERE HAD NOT BEEN ANY ABATEMENT OF ASSESSMENT THE ASSESSMENT U/S. 153A OF THE ACT WOUL D BE MADE ON THE BASIS OF INCRIMINATING MATERIAL FOUND IN THE COURSE OF SEARCH,THAT THE ORD ER OF THE SPECIAL BENCH OF THE TRIBUNAL WERE CHALLENGED BY THE DEPARTMENT BEFORE THE JURISDICTIO NAL HIGH COURT,THAT THE HONBLE BOMBAY 3162-63/M/16 (07-08 & 08-09) SILVER ARCH BUILDERS & PROMOTERS 3 HIGH COURT HAD DISMISSED THE APPEAL FILED BY THE RE VENUE AND HAD UPHELD THE ORDER OF THE TRIBUNAL. SHE FURTHER OBSERVED THAT THE CASE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION WAS NOT A PENDING OR ABATED ASSESSMENT,THAT IN CASE OF NON-ABATED ASSESSMENTS ADDITION HAD TO BASED ON INCRIMINATING MATERIAL SEIZED DURING THE SEARCH, THAT THE ONLY DOCUMENT REFERRED TO IN THE IMPUGNED ORDER WAS PAGE 114 OF ANNEXURE A-1 AND THE STATEMENTS OF HMM ALONG WITH THE STATEMENTS OF EMPLOYEES,THAT THE PERUSAL OF THE SEI ZED PAPER REVEALED THAT THERE WAS NO MENTION OF THE ASSESSEE OR THE PROJECT UNDERTAKEN BY IT ON THE SAID PAPER,THAT THE ABOVE REFERRED PAPER DID NOT MAKE ANY MENTION OF THE ASSESSEE,THAT THE PERUS AL OF THE STATEMENTS OF THE EMPLOYEES REFLECTED THAT NO SPECIFIC MENTION OF RECEIPT OF ON MONEY, THAT THE IMPUGNED ASSESSMENT WAS NOT BASED ON ANY INCRIMINATING MATERIAL PERTAINING TO T HE ASSESSEE SEIZED DURING THE SEARCH, THAT THE ADDITION MADE ON ACCOUNT OF ON MONEY WAS NOT EMANAT ING FROM THE MATERIAL FOUND AND SEIZED DURING THE SEARCH ACTION.FINALLY,SHE DELETED THE AD DITION MADE BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US,THE DEPARTME NTAL REPRESENTATIVE STATED THAT THE EMPLOYEES OF THE ASSESSEE HAD ACCEPTED THE FACT THA T ON MONEY AT THE RATE OF 30% OF THE REGISTERED VALUE WAS ACCEPTED BY THE COMPANY.AS STA TED EARLIER, NONE APPEARED ON BEHALF OF THE ASSESSEE. 5. WE HAVE PERUSED THE AVAILABLE MATERIAL. WE FIND THA T THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DU RING THE SEARCH AND SEIZURE OPERATION THAT COULD JUSTIFY THE ADDITION MADE BY THE AO. SHE HAS ANALYSED THE PAGE NUMBER 114 THAT WAS SEIZED BY THE AUTHORISED PARTY CARRYING OUT THE SEA RCH PROCEEDINGS. IT IS VERY CLEAR THAT NEITHER THE NAME OF THE ASSESSEE NOR THE NAME OF THE PROJECT IS APPEARING IN THE PAPER. THE ASSESSEE HAD OBJECTED BEFORE THE AO THAT THE STATEMENTS OF THE E MPLOYEES WERE NOT GIVEN TO IT. WE DO NOT KNOW AS TO WHETHER SAME WERE MADE AVAILABLE TO THE ASSESSEE OR NOT. THE STATEMENTS OF THE EMPLOYEES, IN SEARCH AND SEIZURE CASES, CAN BE USED IF THEY ARE SUPPORTED BY SOME KIND OF COLLABORATIVE EVIDENCE. ON A SPECIFIC QUERY BY THE BENCH TO THE DR ABOUT SUPPORTING EVIDENCE PROVING THE RECEIPT OF ALLEGED ON MONEY,SHE COULD N OT REFER TO ANY MATERIAL. AS THE ASSESSMENT FOR THE AY. 2007-08 WAS NOT PENDING, SO, WITHOUT SO ME INCRIMINATING MATERIAL THE AO SHOULD NOT HAVE MADE THE ADDITION TO THE TOTAL INCOME OF T HE ASSESSEE.THE FAA HAD TAKEN NOTICE OF THE ORDER OF THE SPECIAL BENCH AND DISMISSAL OF THE DEP ARTMENTAL APPEAL BY THE HONBLE BOMBAY HIGH COURT AND HAD DECIDED THE ISSUE.IN OUR OPINION , HER ORDER DOES NOT SUFFER FROM ANY LEGAL OR 3162-63/M/16 (07-08 & 08-09) SILVER ARCH BUILDERS & PROMOTERS 4 FACTUAL INFIRMITY.SO, CONFIRMING THE SAME, WE DECID E EFFECTIVE GROUND OF APPEAL (GOA-1&2) AGAINST THE AO. ITA/3163/MUM/2016, AY. 2008-09: ALL THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF EARLIER AY.,EXCEPT FOR THE AMOUNT OF ADDITION.FOLLOWING OUR ORDER FOR THE AY.2007-08, WE DECIDE,EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEALS FILED BY THE AO FOR THE BOTH AY .S STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND ,MAY,2017. 2 2017 SD/- SD/- ( / RAMLAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 02 .05.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR F BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.