Hi-lite builders P.Ltd, Calicut V. ACIT, Calicut

ITA 341/COCH/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77471 (ITAT-COCHIN)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-06-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 27-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Assessee Lawyers: T N SEETHARAMAN
• Keywords: Recovery proceedings; Documents seized

Judgement Text

1 ITA NO.341 & 342/COCH/2013 IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE SHRI N.R.S. GANESAN (JM) AND SHRI CHANDRA PO OJARI (AM) I.T.A NO.341 & 342/COCH/2013 (ASSESSMENT YEAR 2004-05 & 2005-06) HI-LITE BUILDERS (P) LTD VS THE ACIT, CENT.CIR.1 HI-LITE HOUSE, METROMAX JUNCTION RANGE-1, KOZHIK ODE NELLIKODE POST, CALICUT PAN : AABCH3734L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI T.N. SEETHARAMAN RESPONDENT BY : SMT. LATHA V KUMAR, JR DR DATE OF HEARING : 24-06-2014 DATE OF PRONOUNCEMENT : 04-07-2014 O R D E R PER N.R.S. GANESAN (JM) BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGAI NST THE COMMON ORDER PASSED BY THE CIT(A) CONFIRMING THE PENALTY L EVIED U/S 271(1)(C) FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. SINCE CO MMON ISSUE ARISES FOR CONSIDERATION WE HEARD BOTH THE APPEALS TOGETHE R AND ARE DISPOSING OF THE SAME BY THIS COMMON ORDER. 2. SHRI T.N. SEETHARAMAN, THE LD.REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT IN THE QUANTUM APPEALS, THE ADDITION MADE BY THE LOWER 2 ITA NO.341 & 342/COCH/2013 AUTHORITIES WAS ACCEPTED BY THE ASSESSEE. HOWEVER, PENALTY PROCEEDINGS ARE SEPARATE AND DISTINCT FROM ASSESSMENT PROCEEDIN GS, THEREFORE, THE LOWER AUTHORITIES ARE EXPECTED TO RE-APPRECIATE THE MATERIALS AVAILABLE ON RECORD IN THE PENALTY PROCEEDINGS. 3. SHRI T.N. SEETHARAMAN, THE LD.REPRESENTATIVE FOR SUBMITTED THAT THE FIRST AGREEMENT FOR PURCHASE OF LAND WAS ON 27-03-2 004. THE REGISTERED SALE DEED WAS EXECUTED ON 15-09-2004. ACCORDING TO THE LD.REPRESENTATIVE, THE PURCHASE CONSIDERATION AS PE R THE AGREEMENT WAS RS.44 LAKHS. HOWEVER, AS PER THE SALE DEED IT WAS RS.12,10,000. THE ASSESSING OFFICER TREATED THE DIFFERENCE BETWEEN TH E AGREED PRICE AND THE SALE DEED AS ON-MONEY PAYMENT. ACCORDING TO THE LD .REPRESENTATIVE, IN THE AGREEMENT DATED 27-03-2004, THE ENTIRE AMOUNT O F RS.44 LAKHS WAS SHOWN AS DUE FOR PAYMENT. THEREFORE, AS ON 27-03-2 004, THE ON-MONEY PAYMENT WAS NOT PAID. IF IT IS PAID THEY WOULD NOT HAVE MENTIONED THE ENTIRE SUM OF RS.44 LAKHS AS DUE FOR PAYMENT. THER EFORE, ONLY SUBSEQUENT TO THE AGREEMENT, I.E. IN THE MONTH OF APRIL, 2004 IT WOULD HAVE BEEN PAID, IF AT ALL THERE WAS ANY TRANSACTION. THEREFORE, AC CORDING TO THE LD.REPRESENTATIVE, THIS TRANSACTION WOULD NOT FALL WITHIN THE FINANCIAL YEAR RELEVANT FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N. SIMILARLY, IN RESPECT OF AGREEMENT DATED 03-06-2005, THE RELEVANT SALE DE ED WAS EXECUTED ON 05-12-2005. AS PER THE AGREEMENT, THE SALE CONSIDE RATION WAS RS.10 3 ITA NO.341 & 342/COCH/2013 LAKHS. HOWEVER, AS PER THE SALE DEED, THE SALE CON SIDERATION WAS SHOWN AT RS.3,30,000. IN THE AGREEMENT, THE AMOUNT WAS S HOWN AS DUE FOR PAYMENT. THEREFORE, ACCORDING TO THE LD.REPRESENTA TIVE, ON THE DATE OF THE AGREEMENT THERE WAS NO ON-MONEY TRANSACTION. ON A QUERY FROM THE BENCH WHETHER THE COPY OF THE AGREEMENT WAS FILED B EFORE THIS TRIBUNAL, THE LD.COUNSEL SUBMITTED THAT BOTH THE AGREEMENTS W ERE PART OF THE SEIZED RECORDS AND THE COPIES OF THE AGREEMENT WERE NOT PR OVIDED TO THE ASSESSEE, THEREFORE, ONLY THE DEPARTMENT COULD PROD UCE EITHER THE ORIGINAL AGREEMENTS OR COPIES OF THE SAME. WE HEARD THE LD. DR ALSO. 4. THE MAIN CONTENTION OF THE ASSESSEE IS THAT THE ENTIRE SALE CONSIDERATION OF RS.44 LAKHS IN THE AGREEMENT DATED 27-03-2004 AND RS.10 LAKHS IN THE AGREEMENT DATED 03-06-2005 WAS D UE FOR PAYMENT. IF THAT IS SO, THE ON-MONEY WAS NOT PAID EITHER ON THE DATE OF THE AGREEMENT OR BEFORE THAT. AS RIGHTLY CONTENTED BY THE ASSESS EE, IN THE AGREEMENT DATED 27-03-2004 IN RESPECT OF LAND PURCHASED FROM RAHIM / FREDERICK, ON- MONEY COULD NOT HAVE BEEN PAID ON 27-03-2004 IF THE ENTIRE SALE CONSIDERATION OF RS.44 LAKHS WAS SHOWN AS AMOUNT DU E IN THE AGREEMENT. HOWEVER, THE COPIES OF THE AGREEMENTS HAVE TO BEEN SEEN BEFORE TAKING ANY DECISION. THEREFORE, WE DIRECTED THE DEPARTMEN T TO PRODUCE THE SEIZED MATERIAL INCLUDING THE COPIES OF THE AGREEME NTS. IN SPITE OF SEVERAL ADJOURNMENTS, THE DEPARTMENT COULD NOT PRODUCE EITH ER THE SEIZED 4 ITA NO.341 & 342/COCH/2013 AGREEMENT OR THE COPY OF THE SAME. IN FACT, THE CO MMISSIONER OF INCOME- TAX WHO IS HOLDING THE CHARGE OVER THE RANGE HAS FI LED AN AFFIDAVIT SAYING THAT NO RECOVERY PROCEEDINGS WILL BE INITIATED AGAI NST THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06 TILL THE AGREE MENT DATED 26-03- 2004 AND 03-06-2005 ARE FILED BEFORE THE TRIBUNAL. FOR THE PURPOSE OF CONVENIENCE, WE ARE REPRODUCING THE AFFIDAVIT DATED 16-01-2014 FILED BY THE CONCERNED ADMINISTRATIVE COMMISSIONER : A F F I D A V I T I, P.N. DEVADASAN, AGED 50, S/0 SRI M. RARUKUTTY N AIR RESIDING AT KARANTHUR, KOZHIKODE DO HEREBY SOLEMNLY AFFIRM AND STATE AS FOLLOWS: 1. THAT I AM THE COMMISSIONER OF INCOME TAX, KOZHIK ODE AND IS HOLDING THE JURISDICTION OVER THE PETITIONER. 2. THAT NO RECOVERY PROCEEDINGS WILL BE INITIATED A GAINST THE ASSESSEE FOR THE ASSESSMENT YEARS 2004-05 AND 2005- 06 TILL THE AGREEMENTS DATED 3.6.2005 AND 27.3.2004 AR E FILED BEFORE THE BENCH. SD/- (P.N.DEVADASAN) COMMISS IONER OF INCOME-TAX KOZHIKODE 5. IN SPITE OF THIS AFFIDAVIT, THE REVENUE COULD NO T TRACE OUT THE AGREEMENT AND FILE THE SAME BEFORE THIS TRIBUNAL IN THE COURSE OF THE 5 ITA NO.341 & 342/COCH/2013 APPELLATE PROCEEDINGS. THE DEPUTY COMMISSIONER OF INCOME-TAX, BY A LETTER DATED 24-03-2014 ADDRESSED TO THE LD.REPRESE NTATIVE OF THE ASSESSEE INFORMED THAT THE DEPUTY COMMISSIONER, WHO PASSED THE PENALTY ORDERS IS UNABLE TO EXACTLY RECOLLECT THE N ATURE OF THESE DOCUMENTS AND ALL EFFORTS ARE BEING MADE TO TRACE O UT THE DOCUMENTS AND SHALL PRODUCE THE SAME BEFORE THIS TRIBUNAL IN THE NEXT DATE OF HEARING. IN SPITE OF THAT THE DOCUMENTS, VIZ. THE AGREEMENTS DA TED 27-03-2004 AND 03-06-2005 COULD NOT BE PRODUCED BY THE DEPARTMENT BEFORE THIS TRIBUNAL. WHEN THE APPEALS WERE TAKEN UP FOR HEARING ON 24-06 -2014, THE LD.REPRESENTATIVE FILED A COPY OF THE LETTER SAID T O BE RECEIVED FROM THE CONCERNED ADMINISTRATIVE COMMISSIONER SAYING THAT T HE OFFICERS ARE STILL TRYING THEIR LEVEL BEST TO TRACE OUT THE ABOVE TWO AGREEMENTS AND HE INFORMED THE DR THAT AS SOON AS THE SAME IS TRACED OUT, THE DOCUMENT COULD BE PRODUCED BEFORE THE TRIBUNAL. IN FACT, TH E LETTER OF THE COMMISSIONER OF INCOME-TAX DATED 15-05-2014 READS A S FOLLOWS: F.NO.TECH/JUDL./CIT/CLT/2014-15 DATED:1 5-05-2014 TO, THE COMMISSIONER OF INCOME TAX (DR), INCOME TAX APPELLATE TRIBUNAL, COCHIN BENCH, 7 TH FLOOR, KENDRIYA BHAWAN SEAPORT-AIRPORT ROAD KAKKANAD, KOCHI-37. SIR, 6 ITA NO.341 & 342/COCH/2013 SUB : APPEALS FILED BY THE ASSESSEE IN THE CASE OF M/S HI-LITE BUILDERS PVT LTD, ERNAHIPALAM, CALICUT ITA/341 & 342/COCH/2013 A.YS 2004-05 & 2005-06 REG. --------------------- ----- KINDLY REFER TO THE ABOVE. IN THIS CASE, THE ASSESSEES APPEAL IS PENDING BEF ORE THE HONBLE ITAT. DURING THE APPEAL PROCEEDINGS, T HE BENCH HAS DIRECTED TO PRODUCE THE FOLLOWING TWO DOCUMENTS : I) AGREEMENT FOR SALE WITH RAHIM/FREDERICK DATED 27.3.2004 FOR A.Y. 2004-05 II) AGREEMENT FOR SALE WITH SMT. INDIRA DATED 3.6.2005 FOR A.Y. 2005-06. THE FACTS OF THE CASE ARE THAT A SEARCH OPERATION WAS CONDUCTED IN THE BUSINESS PREMISES AS ALSO IN THE R ESIDENTIAL PREMISE OF SHRI P. SULAIMAN, MD. DURING THE SEARCH , THE ABOVE DOCUMENTS WERE PURPORTEDLY SEIZED FROM THE RE SIDENTIAL PREMISES OF SHRI SULAIMAN. THE ASSESSING OFFICER H AS COMPLETED THE ASSESSMENT IN WHICH THESE DOCUMENTS W ERE ALSO BASED FOR ADDITION EVEN THOUGH THE EXACT SEIZE D MATERIAL NUMBERS WERE NOT RECORDED IN THE ASSESSMENT ORDER. THE ASSESSEE HAS ACCEPTED THE QUANTUM ASSESSMENT ORDER AS IT DID NOT FILE ANY APPEAL. IN FACT, DURING THE ASSES SMENT PROCEEDINGS, THE ASSESSEE HAD SURRENDERED VOLUNTARI LY THE AMOUNT OF CONCEALMENT AS PER THESE DOCUMENTS. LATE R ON, THE ASSESSING OFFICER HAD IMPOSED PENALTY U/S 271(1 )(C) ON THE BASIS OF THE CONCEALED INCOME, WHICH IN FIRST A PPEAL WAS CONFIRMED BY THE CIT(A). IT APPEARS THAT THE CIT(A ) HAS ALSO VERIFIED THESE DOCUMENTS WHILE CONFIRMING THE PENAL TY AS IS APPARENT FROM HIS ORDER. THE PRESENT APPEAL PENDIN G BEFORE 7 ITA NO.341 & 342/COCH/2013 THE HONBLE ITAT IS AGAINST THIS PENALTY ORDER CONF IRMED BY THE CIT(A). 3. THE ASSESSING OFFICER I.E. DCIT, CIRCLE 1(1), KO ZHIKODE AND ACIT, CIRCLE 2(2), TIRUR, WHO HOLDS THE JURISDI CTION OVER SHRI P. SULAIMAN, HAVE MADE THEIR EFFORTS TO TRACE OUT THE ABOVE DOCUMENTS FROM THE SEIZED MATERIALS, BUT IT W AS FOUND THAT THESE DOCUMENTS ARE NEITHER AVAILABLE IN THE DOCUMENTS SEIZED DURING THE SEARCH NOR IT AVAILABLE IN OTHER RECORDS OF THESE ASSESSEES. THE OFFICERS ARE STILL TRYING THEIR LEVEL BEST TO TRACE OUT THESE DOCUMENT S. AS SOON AS THE SAME IS TRACED OUT, THE DOCUMENTS WILL BE SUBMITTED BEFORE THE HONBLE MEMBERS OF THE ITAT. IT IS, THEREFORE, REQUESTED THAT THESE FACTS MAY BE BROUGH T BEFORE THE NOTICE OF THE BENCH OF THE ITAT. YOURS FAITHFULLY SD/- (P. N. DESVADASAN) COMMISSIONER OF INCO ME TAX KOZHIKODE 6. FROM THE ABOVE FACTUAL SITUATION, THE DEPARTMENT COULD NOT PRODUCE THE AGREEMENT DATED 27-03-2004 AND 03-06-2005 WHICH IS ADMITTEDLY PART OF THE SEIZED RECORDS. THIS TRIBUNAL IS OF THE CON SIDERED OPINION THAT UNLESS THE AGREEMENT IS EXAMINED, THE APPEAL COULD NOT BE DISPOSED OF EFFECTIVELY. IN OTHER WORDS, FOR THE EFFECTIVE DIS POSAL OF THE APPEALS, THE COPIES OF THE ABOVE TWO AGREEMENTS NEED TO BE EXAMI NED BY THIS TRIBUNAL. SINCE THE DEPARTMENT IN SPITE OF THEIR BEST EFFORTS COULD NOT TRACE OUT THE 8 ITA NO.341 & 342/COCH/2013 ABOVE SAID TWO AGREEMENTS, THERE IS NO MEANING IN K EEPING THE APPEALS PENDING BEFORE THIS TRIBUNAL. THEREFORE, THIS TRIB UNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE CONSIDERED AFTE R TRACING OUT THE ABOVE TWO AGREEMENTS DATED 27-03-2004 AND 03-05-2005 BY T HE ASSESSING OFFICER IN THE LIGHT OF THE CONTENTIONS RAISED BY T HE ASSESSEE. ACCORDINGLY, THE ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND T HE ISSUE OF LEVY OF PENALTY IN BOTH THE ASSESSMENT YEARS IS RESTORED TO THE FIL E OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL TRACE OUT THE AGREEMENT DATED 27-03-2004 AND 03-06-2005 WHICH ARE PART OF THE SEIZED RECORDS, FU RNISH THE COPIES OF THE SAME TO THE ASSESSEE AND HEREAFTER DECIDE THE ISSUE OF LEVY OF PENALTY IN ACCORDANCE WITH LAW AFTER GIVING REASONABLE OPPORTU NITY OF HEARING TO THE ASSESSEE. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 TH JULY, 2014. SD/- SD/- (CHANDRA POOJARI) (N.R.S. GANESAN) ACCOUNTANT MEMBER JUDICIAL MEMBER COCHIN, DT : 04 TH JULY, 2014 PK/- 9 ITA NO.341 & 342/COCH/2013 COPY TO: 1. HI-LITE BUILDERS (P) LTD, HI-LITE HOUSE, METROMA X JUNCTION, NELLIKODE POST, CALICUT 2. THE ACIT, CENT.CIR.1, KOZHIKODE 3. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE, KERAL A 4. THE COMMISSIONER OF INCOME-TAX(A)-I, 2 ND FLOOR, SAN JUAN TOWERS, OLD RAILWAY STATION ROAD, ERNAKULAM NORTH, KOCHI 682 01 8 5. THE DR (TRUE COPY) BY ORDER ASSTT. REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL, COCHIN BENCH