M N Navale, Pune V. Assistant Commissioner of Income tax, Pune

ITA 359/PUN/2017

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 4228 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-10-2021
• Assessment Year: 2007-2008
• Appeal Filed On: 13-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CITA PUNE ON; IN RELATION TO TH
• Keywords: Unexplained investment; Document seized; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH, B PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.359/PUN/2017 / ASSESSMENT YEAR : 2007-08 M.N. NAVALE, SINHAGAD TECHNICAL EDUCATION SOCIETY CAMPUS, VADGAON BUDRUK, PUNE 411 041 PAN : AAIPN0909R VS. ACIT, CENTRAL CIRCLE -2(2), PUNE APPELLANT RESPONDENT . / ITA NO.541/PUN/2017 / ASSESSMENT YEAR : 2008-09 M.N. NAVALE, SINHAGAD TECHNICAL EDUCATION SOCIETY CAMPUS, VADGAON BUDRUK, PUNE 411 041 PAN : AAIPN0909R VS. ACIT, CENTRAL CIRCLE -2(2), PUNE APPELLANT RESPONDENT / ORDER PER R.S.SYAL, VP : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY THE CIT(A)-12, PUNE ON 27-1 2-2016 & 06-01-2017 IN RELATION TO THE ASSESSMENT YEARS 2007-08 AN D 2008-09 RESPECTIVELY. SINCE COMMON ISSUES ARE RAISED IN THESE TWO AP PEALS, WE ARE, THEREFORE, PROCEEDING TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ASSESSEE BY SHRI SUHAS P.BORA REVENUE BY SHRI A.M. MAHADEVAN KRISHNAN DATE OF HEARING 04-10-2021 DATE OF PRONOUNCEMENT 06-10-2021 ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 2 A.Y. 2007-08 : 2. ALL THE GROUNDS EXCEPT GROUND NO.8 DEAL WITH A COMMON ISSUE. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN DECLARING TOTAL INCOME OF RS.11,44 ,837/-. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME-TA X ACT, 1961 (HEREINAFTER ALSO CALLED `THE ACT) BY MAKING AN ADDITION OF RS.34,70,696/- ON ACCOUNT OF RENTAL INCOME RECEIVED FRO M CERTAIN PROPERTIES BY HOLDING THAT SAID PROPERTIES BELONGED TO M.N. NA VALE (INDIVIDUAL) AND NOT M.N. NAVALE (BIGGER HUF) AS WAS CLAIM ED BY THE ASSESSEE. THE AO, FOR REACHING THIS DECISION, RELIED O N HIS ORDER PASSED U/S.171 OF THE ACT FOR AN EARLIER YEAR HOLDING THAT M.N. NAVALE (BIGGER HUF) DID NOT EXIST AND THESE PROPERTIES BELONGE D TO M.N. NAVALE (INDIVIDUAL). THE ASSESSEE CHALLENGED THE M ATTER BEFORE THE LD. CIT(A), WHO CONFIRMED SUCH AN ORDER. IN THE SE COND APPEAL, THE TRIBUNAL IN ITA NO.149/PUN/2010 ACCEPTED THE EXISTENCE OF HUF VIDE PARA 21 OF ITS ORDER. THE TRIBUNAL HELD THAT ANY P ROPERTY WOULD BECOME PROPERTY OF HUF PROVIDED IT IS INHERITED OR DEV OLVED FROM THE GRANDPARENTS. THEREAFTER, IT ISSUED CERTAIN DIRECTIO NS FOR QUANTIFICATION OF INCOME AND EVENTUALLY RESTORED THE MATTER FOR FRESH ADJUDICATION. GIVING EFFECT TO SUCH DIRECTIONS, THE AO, IN THE EARLIER ROUND OF PROCEEDINGS, MADE CERTAIN ADDITIONS. THE MATTER WAS AGAIN ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 3 BROUGHT BEFORE THE TRIBUNAL. VIDE ITS ORDER DATED 24-07-2 013 IN ITA NO.1001/PUN/2012 AND OTHERS, THE TRIBUNAL AGAIN RESTORED THE MATTER TO THE FILE OF THE AO FOR PASSING AN ORDER IN CONFORM ITY WITH THE ORDER PASSED IN ITA NO.149/PUN/2010. IN THE INSTANT PROCEEDINGS, THE AO MADE THE FOLLOWING ADDITIONS : II. LTCG : RS.1,05,38,028/- II) SHORT TERM CAPITAL GAIN : RS.10,57,040/- GAT NO.321 (21R) : RS.7,85,920/- GAT NO.321 (20R) : RS.9,35,853/- GAT NO.321 (82R) : RS.27,39,640/- GAT NO.321 (41R) : RS.14,72,960/- III) UNEXPLAINED INVESTMENT U/S.69B : RS.19,73,626 /- 3. THE LD. CIT(A) DID NOT GRANT ANY RELIEF TO THE ASSES SEE, AGAINST WHICH THE APPEAL HAS BEEN PREFERRED BEFORE THE TRIBUNAL. 4. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. AT THE OUTSET, THE LD. AR PLACED ON RECO RD A COPY OF THE ORDER DATED 15-11-2019 PASSED BY THE TRIBUNAL IN THE CASE OF MARUTI NAVALE (BIGGER HUF) AND MARUTI NAVALE (SMALLER HUF) [ IN ITA NOS. 360-367/PUN/2017 AND ITA NO.542/PUN/2017] LAYING DOWN A MECHANISM FOR COMPUTATION OF INCOME IN THE HANDS OF MARUTI NAVALE (BIGGER HUF). THE RELEVANT DISCUSSION HAS BEEN MAD E FROM PARA 51 ONWARDS OF THE TRIBUNAL ORDER. THE LD. AR SUBM ITTED THAT AT THE TIME OF PASSING OF THE INSTANT ORDERS BY THE AO AS WELL A S THE CIT(A), THEY DID NOT HAVE THE BENEFIT OF THE ORDER PASSED BY THE ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 4 TRIBUNAL IN THE CASE OF MARUTI NAVALE (BIGGER HUF) AND MARUTI NAVALE (SMALLER HUF) WHICH HAS DIRECT BEARING ON THE DETERMINA TION OF THE ISSUES RAISED IN THE INSTANT APPEAL INASMUCH AS A MECH ANISM HAS BEEN PROVIDED FOR DETERMINING THE INCOME IN THE HANDS O F HUFS, WHICH WILL AUTOMATICALLY AFFECT THE INCLUSION OF QUANTUM OF INCOME IN THE HANDS OF THE ASSESSEE-INDIVIDUAL. THE LD. DR FAIRLY C ONCEDED THE POSITION. IN VIEW OF THE FOREGOING RIVAL BUT COMMON SUBMISSIONS, WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF THE AO FOR DECIDING THESE ISSUES AFRESH IN THE HU E OF THE DIRECTIONS GIVEN BY THE TRIBUNAL IN THE AFORENOTED CASE OF MA RUTI NAVALE (BIGGER HUF) AND MARUTI NAVALE (SMALLER HUF). 5. GROUND NO.8 IS AGAINST THE CONFIRMATION OF ADDITION OF RS .1.55 CRORE. THE FACTS APROPOS THIS GROUND ARE THAT DURING THE COURSE OF SEARCH CONDUCTED IN THE CASE OF THE ASSESSEE CERTAIN INCRI MINATING DOCUMENTS WERE FOUND, WHICH REVEALED THAT ASSESSEE HAD P AID CASH AMOUNTING TO RS.1.55 CRORE TO SRIKANTIA SOMASHEKHAR ON DIFF ERENT DATES IN THE MONTH OF MARCH 2007. THE PAYMENTS WERE ACKNOWLEDGED ON REVENUE STAMP AND THE MINUTE DETAILS LIKE DENOMINATIONS OF CURRENCY NOTES AND QUANTITY WERE ALSO MEN TIONED THEREON ALONG WITH THE SIGNATURE OF WITNESS, MR. M.M. LOPEZ. THE ASSESSEE HAD PURCHASED CERTAIN PROPERTIES AT GEETA BUILDING, SION, ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 5 MUMBAI FROM THE SAID MR. SRIKANTIA SOMASHEKHAR VIDE REGISTER ED DEED DATED 28-03-2007. THERE WAS NO REFERENCE TO SU CH CASH PAYMENTS IN THE REGISTERED DEED WHICH WERE RECORDED IN THE SEIZED DOCUMENTS. WHEN THESE FACTS WERE CONFRONTED TO THE ASSES SEE DURING THE COURSE OF RECORDING THE STATEMENT U/S.132(4), THE ASSES SEE, IN RESPONSE TO QUESTION NO.15, STATED THAT HE DID NOT RECOLLE CT ANY SUCH TRANSACTIONS. LATER ON, A WRITTEN EXPLANATION WAS FILED BY THE A SSESSEE IN WHICH HE ACCEPTED CASH PAYMENT OF RS.1.55 CRORE WAS MADE BY HIM TO MR. SRIKANTIA SOMASHEKHAR AND STATED THAT THE AMOUNT WA S PAID FOR EVICTION OF TENANTS. IT WAS FURTHER STATED THAT ON FA ILURE TO EVICT THE TENANTS, THE AMOUNTS WERE REFUNDED TO HIM ON 28- 03-2007 ITSELF. AS REGARDS THE SOURCE OF PAYMENT, THE ASSESSEE SUBMITTED THAT HE WITHDREW RS.95.00 LAKH FROM HIS BANK ACCOUNT MAINTAINED WITH CENTRAL BANK OF INDIA AND THE REMAINING AMOUNT OF RS.60.00 LAKH WAS CLAIMED TO BE OUT OF CASH IN HAND WITH MARUTI NAVALE (BIG GER HUF). THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AS N O SUCH REFERENCE WAS MADE TO THIS TRANSACTION IN THE STATEMENT U/S.132 (4) OF THE ACT. HE FURTHER DID NOT BELIEVE THE THEORY SET UP BY THE ASSESSEE ON THE GROUND THAT THE AMOUNT CLAIMED TO HAVE BEEN PAID FOR EVICTION WAS STATED TO BE RECEIVED BACK WITHIN 3 DAYS OF THE PAYMENT ON THE EVICTION NOT TAKING PLACE. THE AO FURTHER OBSERVED THAT THE ASSESSEE ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 6 HAD NOT RECORDED THE ALLEGED CASH WITHDRAWN IN THE BOOKS OF ACCOUNT. HE FURTHER DID NOT ACCEPT THE SOURCE OF RS.60.00 LAKH BE ING CASH IN HAND WITH HUF. THAT IS HOW, THE AO HELD THAT THE ENTIRE AMOUNT OF RS.1.55 CRORE WAS LIABLE TO BE INCLUDED IN THE HANDS OF THE ASSESSEE. HE, THEREFORE, MADE THE ADDITION OF RS.1.55 CRORE, WHICH CAME TO BE SUSTAINED IN THE FIRST APPEAL. 6. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE PAID RS.1.55 C RORE TO MR. SRIKANTIA SOMASHEKHAR IN CASH AT THE TIME OF PURCHASE OF CERTAIN PROPERTIES DURING THE YEAR FROM HIM. SUCH CASH PAYMENT W AS NOT RECORDED IN THE BOOKS OF ACCOUNT. IT WAS ONLY DURING TH E COURSE OF SEARCH THAT THE FACT OF CASH PAYMENTS CAME TO LIGHT AND THE ASSESSEE ALSO ADMITTED THAT HE PAID CASH OF RS.1.55 CRORE TO MR. SR IKANTIA SOMASHEKHAR FOR EVICTION OF TENANTS. AT THE SAME TIME, THE ASSESSEE ALSO CLAIMED THAT THE EVICTION COULD NOT TAKE PLACE AND HE GOT REFUND OF THE AMOUNT WITHIN 3 DAYS. IN OUR CONSIDERED OPINION, TH E AO AS WELL AS THE LD. CIT(A) HAVE RIGHTLY APPRECIATED THE FACT THAT TH E THEORY OF PAYMENT OF RS.1.55 CRORE FOR EVICTION OF TENANTS AND ITS RECEIPT BACK WITHIN 3 DAYS ON THE FAILURE OF THE EVICTION, IS N OT BASED ON ANY EVIDENCE AND HENCE, CANNOT BE ACCEPTED. 7. AS REGARDS THE SOURCE OF PAYMENT OF RS.1.55 CRO RE, THE ASSESSEE STATED THAT A SUM OF RS.95.00 LAKH WAS WITHDRAWN FROM HIS B ANK ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 7 ACCOUNT AND RS.60.00 LAKH WAS OUT OF CASH IN HAND IN THE HANDS OF HUF. QUA THE CASH WITHDRAWAL OF RS.95.00 LAKH FROM THE BANK ACCOUNT, IT IS SEEN THAT EVEN THOUGH THE AMOUNT WAS WITHDRAW N FROM THE BANK ACCOUNT BUT THE ASSESSEE HAS NOT PLACED ANY EVID ENCE ON RECORD TO SHOW THAT SUCH WITHDRAWN CASH WAS RECORDED IN TH E BOOKS OF ACCOUNT TO HAVE BEEN PAID TO MR. SRIKANTIA SOMASHEKHAR ON DIFFERENT DATES AS WAS REVEALED FROM THE INCRIMINATING DOCU MENTS FOUND DURING THE COURSE OF SEARCH. IF THE BOOKS OF A CCOUNT ARE REGULARLY MAINTAINED AND CASH IS WITHDRAWN FROM THE BANK, IT H AS NECESSARILY TO BE SHOWN TO HAVE BEEN PAID TO MR. SRIKANTIA SOMASHEKHAR, SO AS TO CLAIM THE BENEFIT. MERELY SHOWING WITHDRAWALS FROM THE BANK DOES NOT PROVE THAT SUCH WITHDRAW N AMOUNT WAS UTILIZED FOR PAYING CASH TO MR. SRIKANTIA SOMASHEKHA R. THE LD. AR COULD NOT PLACE ON RECORD ANY EVIDENCE TO DEMO NSTRATE THAT CASH OF RS.95.00 LAKH WITHDRAWN FROM BANK WAS, IN FA CT, PAID TO MR. SRIKANTIA SOMASHEKHAR IN THE BOOKS OF ACCOUNT. THAT BEIN G THE POSITION, WE SET-ASIDE THE IMPUGNED ORDER ON THIS SCORE AN D REMIT THE MATTER TO THE FILE OF THE AO FOR EXAMINING THE ASSESSEES CON TENTION ABOUT THE UTILIZATION OF CASH OF RS.95.00 LAKH WITHDRAWN FROM THE BANK FOR THE PURPOSES OF PAYMENT TO MR. SRIKANTIA SOMASHEK HAR IN ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 8 THE BOOKS OF ACCOUNT. IF THE ASSESSEES CONTENTION IS FOU ND TO BE INCORRECT, THEN THE ADDITION TO THAT EXTENT SHOULD BE MADE. 8. NOW COMING TO THE REMAINING ADDITION OF RS.60.00 LAKH, BOTH THE SIDES ADMITTED THAT THIS ISSUE WILL HAVE TO BE DECIDED BY THE AO AFRESH IN THE SAME MANNER AS IN GIVING EFFECT TO THE DIRE CTION OF THE TRIBUNAL IN RESPECT OF THE OTHER 8 GROUNDS OF THE PRESENT A PPEAL, THROUGH WHICH THE INCLUSION OF INCOME IN THE HANDS OF THE ASS ESSEE- INDIVIDUAL VIS--VIS MARUTI NAVALE (BIGGER HUF) AND MARUTI NAVALE (SMALLER HUF) HAS BEEN DISCUSSED SUPRA . WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S. A.Y. 2008-09 : 10. THE ONLY ISSUE RAISED THROUGH 7 GROUNDS IS AGAINST THE INCLUSION OF FOLLOWING ITEMS IN THE TOTAL INCOME OF THE ASSESSEE : I. INCOME FROM HOUSE PROPERTY : RS.34,300/- II. INCOME OF BIGGER HUF (AS PER ORIGINAL : RS.5, 64,540/- ORDER (PROTECTIVE BASIS IN THE CASE OF BIGGER HUF) III. INCOME OF SMALLER HUF : RS.42,61,000/- (AS PER ORIGINAL ORDER) (PROTECTIVE BASIS IN THE CASE OF SMALLER HUF) 11. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCU MSTANCES OF THESE GROUNDS ARE MUTATIS MUTANDIS SIMILAR TO THOSE FOR THE ASSESSMENT YEAR 2007-08. FOLLOWING THE VIEW TAKEN HEREINAB OVE, WE SET-ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE F ILE OF THE ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 9 AO FOR DECIDING IT IN THE LIGHT OF THE DECISION RENDERED BY US FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. 12. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSE S. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH OCTOBER, 2021. SD/- SD/- ( PARTHA SARATHI CHAUDHURY ) (R.S.SYAL) JUDICIAL MEMBER VIC E PRESIDENT PUNE; DATED : 06 TH OCTOBER, 2021 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. 3. / THE CIT(A)-12, PUNE PR.CIT, CENTRAL, PUNE 4. DR, ITAT, B BENCH, PUNE 5. / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE ITA NOS.359 & 541/PUN/2017 M.N. NAVALE 10 DATE 1. DRAFT DICTATED ON 04-10-2021 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 05-10-2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *