DCIT CEN CIR 23, MUMBAI V. SARANG PROPERTY DEVELOPERS P.LTD, MUMBAI

ITA 3563/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9096 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 20-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Keywords: Bogus purchase; Unexplained expenditure; Search and seizure
• Section: 143(3); 132

Judgement Text

, B BB B INCOME TAX APPELLATE TRIBUNAL,MUMBAI - E BENCH , IOU IOUIOU IOU , BEFORE S/SH. RAJENDRA, ACCOUNTANT MEMBER & PAWAN SINGH, JUDICIAL MEMBER /.ITA NO.3563/MUM/2014, /ASSESSMENT YEAR-2011-12 DCIT, CC-23, ROOM NO. 409, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. VS. M/S. SARANG PROPERTY DEVELOPERS PVT. LTD. 10 TH FLOOR, 215 ATRIUM, ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI-400059 PAN: AADCS6382B ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI B.B. RAJENDRA PRASAD (DR) ! ! / ASSESSEE BY : SHRI ANUJ KISNADWALA ' ! / DATE OF HEARING : 03 -01-2017 ! '( / DATE OF PRONOUNCEMENT : 03 -01-2017 , 1961 ' 254(1) #!$! ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER PAWAN SINGH, J.M. IOU IOUIOU IOU : 1. THE PRESENT APPEAL U/S 53 OF THE INCOME-TAX ACT IS FILED BY ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-40, MUMBAI (FO R SHORT THE CIT(A) DATED 06.03.2014 FOR ASSESSMENT YEAR(AY) 2011-12. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: 1. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS CORRECT IN DELETING THE ADDITION MADE BY AO, ON ACCOUNT OF RECEIPT OF POSSIBLE ON- MONEY?' 2. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS CORRECT IN APPLYING THE LAW PRONOUNCED IN THE C ASES OF BIREN V SALVA VS. ACIT (2006) 100 TTJ 1006?' 3. 'WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE CIT(A) WAS CORRECT IN HOLDING THAT THE DIARY SEIZED AND MA RKED AS ANNEXURE A-2, WAS A CONCLUSIVE PIECE OF EVIDENCE AND COULD BE RELIED UP ON?' 4. 'THE APPELLANT CRAVES LEAVE, TO AMEND ADD/ OR TO ALTER ANY OF GROUND OF APPEAL, IF NEED BE'. 5. 'THE APPELLANT, THEREFORE, PRAYS THAT ON THE GRO UND STATED ABOVE, THE ORDER OF THE CIT(A)-40, MUMBAI MAY BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORED'. 2. IN BRIEF THE FACTS ARE THAT THE ASSESSEE-COMPANY IS ENGAGED IN REAL ESTATE, HOSPITALITY, ENTERTAINMENT AND EDUCATION SECTORS. THE NAME OF FLAGSHIP COMPANY OF ASSESSEE IS KANAKIA SPACES PRIVATE LIMITED (IN SHORT KSPL). THE ASSES SEE GROUP COMPANY HAS NUMEROUS COMMERCIAL AND RESIDENTIAL PROJECTS IN MUMBAI CONSI STING OF KSPL, KANAKIA HOSPITALITY PVT. LTD., CENTAUR MERCANTILE P. LTD, SUPREME REAL ESTATE DEVELOPERS P. LTD. AND M/S SARANG PROPERTY DEVELOPERS P. LTD. (THE ASSESSEE). A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CONDUCTED AT THE BUSINESS AND RESIDENT IAL PREMISES OF ITS DIRECTORS ON 2 ITA NO. 3563/M/2014 M/S. SARANG PROPERTY DEVELOPER S PVT. LTD.. 29.03.2011 AND CONCLUDED ON 24.05.2011. PURSUANT T O SEARCH AND SEIZURE ACTION ASSESSMENT ORDER WAS FRAMED U/S 143(3) R.W.S. 153(C) OF THE AC T. IN ASSESSMENT ORDER THE ASSESSING OFFICER (AO) MADE THE ADDITION OF RS. 19,49,789/- O N ACCOUNT OF UNEXPLAINED EXPENDITURE AND RS. 5,80,43,425/- ON ACCOUNT OF UNEXPLAINED CAS H CREDIT. ON APPEAL BEFORE THE LD. CIT(A), THE ADDITION ON ACCOUNT OF CASH CREDIT OF R S. 5,80,43,425/- WAS DELETED AND THE ADDITION OF RS. 19,49,789/- WAS UPHELD. THUS, BEING AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 3. AT THE OUTSET OF THE HEARING THE LD. AUTHORIZED REP RESENTATIVE (AR) OF ASSESSEE ARGUED THAT THE GROUNDS OF APPEAL RAISED IN THE PRESENT APPEAL ARE SQUARELY COVERED BY THE DECISION OF TRIBUNAL IN ASSESSEES GROUP CASE IN ITA NO. 3562/M UM/2014. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE NOT DISPUTED THE FA CTUAL AND LEGAL POSITION. 4. WE HAVE CONSIDERED THE CONTENTION OF THE PARTIES AN D GONE THROUGH THE ORDER OF CO-ORDINATE BENCH OF THIS TRIBUNAL IN ASSESSEE GROUP CASE IN IT A NO. 3562/MUM/2014, WHEREIN THE CO- ORDINATE BENCH OF THIS TRIBUNAL MADE THE FOLLOWING ORDER: 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND IS PART OF KANAKIA GROUP. A SEARCH ACTION WAS CARRIED OUT UPON THE KANAKIA GROUP ON 29/03/2011. PURSUANT TO SEARC H, ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT. THE WHOLE ADDITION WAS MADE BY THE ASS ESSING OFFICER ON THE PLEA THAT ASSESSEE BOOKED CERTAIN BOGUS PURCHASES IN ITS BOOK S OF ACCOUNTS, WHICH WERE PAID THROUGH CHEQUE. THE ASSESSEE PASSED NECESSARY JOURN AL ENTRIES WHEREIN, PURCHASES WERE REVERSED AND THE RESULTANT CASH HAS BEEN BROUGHT IN TO BOOKS OF ACCOUNTS. THE LD. ASSESSING OFFICER WAS OF THE VIEW THAT SUCH BACK MU ST BE OUT OF ON-MONEY, CHARGED BY THE ASSESSEE AND CASH WAS GENERATED BY WAY OF BOOKI NG OF BOGUS PURCHASES. TOTALITY OF FACTS/SEIZED PAPERS (CONTAINED IN ANNEXURE A/1), CL EARLY INDICATES THAT CASH FLOW DEPICTS THE RECEIPT OF CASH AGAINST THE PAYMENT IN CHEQUE T OWARDS PURCHASES. THE SAID CASH FLOW REVEALS THE BALANCE AVAILABLE FROM 2007 ONWARDS AND FURTHER SUCH CASH WAS SHOWED IN THE CLOSING BALANCE EVIDENCING THAT THE CASH WAS AVAILA BLE. THE CASH FLOW HAS BEEN REPRODUCED AT PAGE 11 & 12 OF THE ASSESSMENT ORDER. THE STATEMENTS OF DIRECTORS AS WELL AS SOME OF THE EMPLOYEES WERE RECORDED, WHEREIN, TH E FACTUM OF RECEIPT OF CASH AGAINST BOGUS PURCHASES HAS BEEN TENDERED. HOWEVER, ACCEPT THE STATEMENT, THERE IS NO EVIDENCE ON RECORD THAT ON-MONEY WAS CHARGED BY THE ASSESSEE AND THE SEIZED PAPERS, FOUND DURING THE SEARCH, PERTAINING THE SISTER CONCERN OF THE AS SESSEE, M/S KANAKIA SPACES PVT. LTD. AND THE STATEMENT RELIED UPON BY THE ASSESSING OFFICER WAS SUBSEQUENTLY RETRACTED. THERE IS NO EVIDENCE ON RECORD THAT CASH GENERATED BY THE AS SESSEE WAS OUT OF BOGUS PURCHASES AND USE OF UTILIZATION OF CASH WAS EVEN NOT DISCOVERED DURING SEIZURE ACTION. THE STATEMENTS WERE RETRACTED BY THE EMPLOYEE ON THE VERY NEXT DAY AND M/S KANAKIA SPACES PVT. LTD. APPROACH THE HONBLE SETTLEMENT COMMISSION, WHEREIN , IT WAS CONCLUDED THAT THERE IS NO ON-MONEY CHARGED BY THE SISTER CONCERN. IT IS ALSO NOTED THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION CONSIDERI NG THE FACTUAL MATRIX AND FOUND THAT THE ASSESSING OFFICER PARTIALLY ACCEPTED THE SEIZE PAPER ACCEPTING THE FACT THAT THE ASSESSEE MADE BOGUS PURCHASES AT THE SAME TIME DENI ED THE ASSESSEE THE BENEFIT OF CASH GENERATED OUT OF SUCH BOGUS PURCHASES STATING THAT THE SAID CASH WAS SPEND ELSEWHERE FOR WHICH NO EVIDENCE WAS BROUGHT ON RECORD. IN SUCH A SITUATION, THE ASSESSEE GET SUPPORTS FROM THE DECISION IN THE CASE OF VIREN V. SAVLA VS ACIT (100 TTJ 1006 (MUM.), WHEREIN, IT WAS HELD THAT THE SEIZED MATERIAL SHOULD BE READ AND ACCEPTED AS A WHOLE AND SHOULD BE 3 ITA NO. 3563/M/2014 M/S. SARANG PROPERTY DEVELOPER S PVT. LTD.. TREATED AS GENUINE WITH RESPECT TO ALL ENTRIES THER EIN. THERE IS NO EVIDENCE OF CHARGING OF ON-MONEY BY THE ASSESSEE AND THE STATEMENT SO RECOR DED AND THE SEIZE PAPER, SEIZED DURING THE COURSE OF SEARCH, PERTAINS TO SISTER CON CERN OF THE ASSESSEE. THE WHOLE ADDITION WAS MADE BY THE ASSESSING OFFICER BASED UPON THE ST ATEMENT OF VIREN LOHAR AND MS. SONA MEHTA, WHO ARE THE EMPLOYEES OF SISTER CONCERN AND THAT STATEMENT WAS RETRACTED LATER ON. IN VIEW OF THE FINDING OF THE SETTLEMENT COMMISSION AND THE UNCONTROVERTED FACTUAL FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), WE FIND NO MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSE D. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. 5. CONSIDERING THE DECISION OF CO-ORDINATE BENCH IN AS SESSEES GROUP CASE, WE FIND THAT THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE SQUAREL Y COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVENUE. HENCE, WE DO NOT FIND ANY ILLE GALITY AND INFIRMITY IN THE ORDER OF LD CIT(A). 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS D ISMISSED. AS A RESULT APPEAL FILED BY TH E REVENUE STANDS DISMISSED. ' JKTLO , - ! ./ UK 0 ! ' . ORDER PRONOUNCED IN THE OPEN COURT ON 03 ,JANU ARY,2017. 3 ! 4 5 03, ( , 201 7 ! ./ 9 SD/- SD/- ( / RAJENDRA ( IOU IOUIOU IOU / PAWAN SINGH)) ( / ACCOUNTANT MEMBER # ( / JUDICIAL MEMBER / /MUMBAI, 5 /DATE: 03 .01.2017 SK ' )!*+ ,+! / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ ,: ( ;' , 4. THE CONCERNED CIT / ,: ;' 5. DR E BENCH, ITAT, MUMBAI / <=. '>: B BB B , . . . / 6. GUARD FILE/ . / <' ' //TRUE COPY// 3 / BY ORDER, / DY./ASST. REGISTRAR ( >: , / /ITAT, MUMBAI