DCIT CEN CIR 8(4), MUMBAI V. HARSH DEEP CONSTRUCTION, MUMBAI

ITA 3721/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5180 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 27-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Search and seizure; Set aside
• Section: 143(3)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE HONBLE SH . R. C. SHARMA , AM & HONBLE SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 3721 /MUM/2016 ( / ASSESSMENT YEAR: 2010 - 11 ) DCIT CEN. CIR - 8 (4 ) , ROOM NO. 658 , 6 TH FLOOR, AAAYAKAR BHAVAN, M. K. ROAD , MUMBAI - 40002 0 / VS. HARSH DEEP CONSTRUCTION, GROUND FLOOR, SHAILESHBLDG, OUT HOUSE LINKING ROAD, SANTACRUZ(WEST), MUMBAI - 400054 . ./ ./ PAN NO. AAEFH7011A ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. C. OMI NINGSHEN , DR / RESPONDENTBY : SHRI SASHITULSIYAN , AR / DATE OF HEARING : 28.09 .1 8 / DATE OF PRONOUNCEMENT : 04.10.2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 50, MUMBAI DATED 04.02.16 F OR AY 20 10 - 11. 2 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, 2. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CONS TRUCTION OF RESIDENTIAL AND COMMERCIAL BUILDINGS IN MIRA ROAD AND ITS SURROUNDING AREAS. THE RETURN OF INCOME WAS FILED ON 27.09.10 DECLARING TOTAL INCOME OF RS. 3,35,23,570 / - . THEREAFTER, THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STA TUTORY NOTICES AND SEEKING REPLY OF THE ASSESSEE , ORDER OF ASSESSMENT U/S 143(3) W AS COMPLET ED BY THE AO ON A TOTAL INCOME OF RS. 4,08,98,480/ - AFTER MAKING ADDITION OF RS. 73,74,906/ - . AGGRIE VED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES , PARTLY ALLOWED THE APPEAL OF THE ASSESSEE . NOW BEFORE US, THE REVENUE HAS PREFERRED THE PRESENT APPEAL . 3. THE SOLITARY GROUND RAISED BY THE REVENUE RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN DELETING THE ADDITION OF ON - MONEY OF RS. 73,74,906/ - RECEIVED ON SALES OF FLATS OF 6886 SQ. FEE T, WITHOUT APPRECIATING THE STATEMENT OF SHRI DILESH C. SHAH , RECORDED U/S 132(4) OF THE I.T. ACT. 3 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, 4. LD. DR APPEARING ON BEHALF OF REVENUE SUBMITTED BEFORE US THAT LD. CIT(A) WITHOUT APPRECIATING THE FACT IN THE STATEMENT OF SHRI DILESH C. SHAH, PARTNER, RECORDED U/S 132(4) OF THE ACT WHEREIN IT HAS BEEN CATEGORICALLY ADMITTED TH AT THE ASSESSEE HAD RECEIV ED ON - M ONEY AGAINST THE SALES OF FLATS OF 1,32,270 SQ. FEET OF RS. 14.70 CRORES AND AS SUCH IT IS CLEAR THAT ASSESSEE FIRM WAS INDULGED IN CHARGING ON - MONEY IN CASH ON SALE OF FLATS. IT WAS FURTHER SUBMITTED THAT AS PER THE FACTS OF THE CASE, A SEARCH WA S CONDUCTED ON THE ASSESSEE ON 16.10.08 AND DURING THE SEARCH, INCRIMINATING DOCUMENT WAS FOUND, IN WHICH IT WAS MENTIONED THAT THE ASSESSEE RECEIVED ON - MONEY AGAINST SALE OF FLAT AMOUNTING TO RS. 14,17,00,000/ - ON THE SALE OF 1,37,270 SQ. FT. OF BUILT UP AREA. THE TOTAL BUILT UP AREA OF THE PROJECT WAS 1,44,156 SQ. FT. AND THE BALANCE UNSOLD AREA WAS SOLD DURING THE YEAR UNDER CONSIDERATION. IT WAS ALSO SUBMITTED THAT DURING THE SEARCH, THE STATEMENT U/S 132(4) OF I.T. ACT WAS RECORDED OF THE ASSESSEE. T HE AO DURING THE COURSE OF ASSESSMENT WAS OF THE VIEW THAT ON - MONEY RECEIPT DURING THE YEAR UNDER CONSIDERATION CANNOT 4 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, BE RULED OUT CONSIDERING THE ADMISSIONS MADE BY ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) OF THE I.T. ACT. IT WAS FURTHER SUBMITTED THAT ASSESSEE HAD SOLD ALMOST 95% OF THE PROJECT BEFORE THE SEA RCH IN WHICH HE HAD RECEIVED ON - MONEY PAYMENT AGAINST THE SALE OF FLAT. IT WAS FURTHER SUBMITTED BY LD. DR THAT THE PER SQ. FT. RATE OF SALE PRICE WAS NOT FLUCTUATED IN THE CURRENT YEAR AS COM PARED TO LAST YEARS IN WHICH ON - MONEY PAYMENT WAS RECEIVED. IT WAS FURTHER SUBMITTED THAT THERE WAS NO INCREASE IN SALE PRICE AND ASSESSEE HAD SOLD REMAINING 5% FLATS OF THE PROJECT DURING THE YEAR AT THE ALMOST SAME PRICE THAT WAS IN EARLIER YEARS. IT WAS SUBMITTED THAT AO AFTER CONSIDERING THIS FACT, HAD RIGHTLY CONCLUDED THAT THE PARTIAL PRICE WHICH WAS RECEIVED BY THE ASSESSEE AS ON - MONEY PAYMENT AGAINST THE SALE OF FLAT WAS NO T INCORPORATED IN AGREEMENT VALUE FOR FURTHER SALE OF 5% OF THE PROJECT AND T HUS RELIED UPON THE ORDERS PASSED BY AO. 5. ON THE OTHER HAND, LD. AR REITERATED THE SAME ARGUMENTS AS WERE RAISED BEFORE LD. CIT(A). IT WAS ALSO SUBMITTED THAT IDENTICAL GROUND HAS ALREADY BEEN DECIDED BY THE COORDINATE BENCH OF ITAT IN ASSESSEES OWN C ASE IN ITA NO. 5 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, 1941/1942/MUM/2014 FOR AY 2008 - 09 & 2009 - 10 DECIDED ON 11.05.2016. 6. WE HAVE HEARD THE COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSE D THE MATERIAL PLACED ON RECORD, ORDERS PASSED BY REVENUE AUTHORITIES AS WELL AS ORDERS PASSED BY THE COORDINATE BENCH OF ITAT. AS PER THE FACTS OF THE PRESENT CASE, THE ASSESSEE IS A JOINT VENTURE FIRM WHICH HAD UNDERTAKEN CONSTRUCTION OF RESIDENTIAL CUM COMMERCIAL PROJECT VIZ. POONAM RESIDENCY AT SERIAL NO. 226, VILLAGE MIRA, DISTT - THANE. A SEARCH WAS CONDUCTED ON 16.10.08 AND DURING THE SEARCH, STATEMENT OF SHRI DINESH C. SHAHA WAS RECORDED IN WHICH HE MADE DISCLOSURE OF RS. 14.70 CRORES ON ACCOUNT OF ON - MONEY PAYMENT RECEIPT AGAINST THE SALE OF FLAT, THOUGH HE RETRACTED LATER. IN THE SAID SEARCH, NO EVIDENCE OF ON - MONEY RECEIPT WAS FOUND BY THE ASSESSEE FOR PREVIOUS YEAR 2009 - 10, BUT THE AO WAS OF THE VIEW THAT ON - MONEY RECEIPT DURING THE PREVIOUS YEAR 2009 - 10 CANNOT BE RULED OUT. ALTHOUGH, ASSESSEE HAD FILED A DETAILED REPLY BUT STILL ADDITIONS WERE MADE BY THE AO. 6 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, LD. CIT(A) DEALT WITH THE ENTIRE FACTS OF THE CASE AND CONCLUDED THAT AO HAD NOT BROUGHT SUFFICIENT MATERIAL TO JUSTIFY THE ADDITIONS AND THE ADDITIONS WERE MADE ON THE BASIS OF SUSPICION. WE ARE ALSO OF THE VIEW THAT HOWSOEVER STRONG THE SUSPICION MAY BE, BUT THE SAME CANNOT TAKE PLACE OF PROOF. EVEN THE COORDINATE BENCH OF ITAT IN ASSESSEES OWN CASE FOR AY 2008 - 09 & 2009 - 10 HAD DELETED THE IDENTICAL ADDITIONS BY HOLDING AS UNDER: - 24. IN THE INSTANT CASE, IT IS AN ADMITTED FACT THAT THE REVENUE HAS NOT SEIZED ANY OTHER VALUABLES, CASH OR INVESTMENTS CORROBORATING THE FIGURE OF RS..15.00 CRORES. FURTHER THE NOTINGS MADE IN PANCHANAMA SHOWS THAT THE SEARCH COMMENCED IN THE RESIDENCE OF SHRI HARSHAD DOSHI AT 1 .30 A.M. (ALMOST MIDNIGHT) ON 17.10.2008 AND CONTINUED UPTO 1.00 AM (AGAIN MID NIGHT) ON 18.10.2008. WE HAVE NOTICED EARLIER THAT SHRI DILESH SHAH WAS CALLED UPON TO THE RESIDENCE OF SHRI HARSHAD DOSHI. THE COPY OF SWORN STATEMENT FURNISHED IN PAGE NO.2 OF THE PAPER BOOK SHOWS THAT THE SEARCH OFFICIALS DID NOT RECORD THE TIME AT WHICH THE RECORDING OF STATEMENT WAS COMMENCED, EVEN THOUGH THE SHEET CONTAINED A COLUMN FOR RECORDING THE TIME. HENCE THERE COULD BE MERIT IN THE CONTENTIONS OF THE ASSESSEE THAT T HE STATEMENT WAS RECORDED AT THE FAG END OF THE 7 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, SEARCH AND SHRI DILESH SHAH WAS EXHAUSTED AND HE WAS CONSTRAINED TO ADMIT THE ADDITIONAL INCOME. FURTHER, WE HAVE NOTICED THAT THE NOTING FOUND IN THE LOOSE SHEET DID NOT TALLY WITH THE ENTRIES MADE IN THE BO OKS OF ACCOUNT. NO OTHER MATERIAL WAS BROUGHT ON RECORD BY THE AO TO CORROBORATE THE NOTING MADE IN THE LOOSE SHEET. NONE OF THE BUYERS OF THE FLAT WAS EXAMINED TO ASCERTAIN THE TRUTH. UNDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THE LOOSE SHEET REFER RED ABOVE CANNOT BE CONSIDERED TO BE A DOCUMENT THAT COULD BE RELIED UPON. FURTHER, THE FACTS AND CIRCUMSTANCES SHOW THAT SHRI DILESH SHAH WAS UNDER SOME COMPULSION TO ADMIT ADDITIONAL INCOME. THE VERY FACT THAT THE ASSESSEE DID NOT OFFER THE SAME IN THE R ETURN OF INCOME SHOWS THAT THE ASSESSEE WAS NOT IN AGREEMENT WITH THE ADMISSION SO MADE, AS ACCORDING TO IT, THE SAME DID NOT REFLECT THE TRUTH. EVEN THOUGH THERE IS NO PROPER EXPLANATION AS TO WHY THE AFFIDAVIT PREPARED WITHIN TWO DAYS OF THE SEARCH, WAS FILED AFTER EXPIRY OF TWO YEARS, YET THE SURROUNDING CIRCUMSTANCES SHOW THAT THE ASSESSEE WAS UNDER THE BELIEF THAT THE ADMISSION HAS BEEN WRONGLY MADE. FURTHER, WE HAVE ALSO, FOR THE REASONS DISCUSSED SUPRA, NOTICED THAT THE STATEMENT TAKEN FROM SHRI DILE SH SHAH MAY NOT BE A STATEMENT TAKEN AS PER THE PROVISIONS OF SEC. 132(4) OF THE ACT. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE TAX AUTHORITIES ARE NOT JUSTIFIED IN PLACING RELIANCE ON THE 8 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, PAGE NO.90 OF THE ANNEXURE I AND THE SWORN STATEMENT TAKEN FROM SHRI DILESH SHAH. 25. IN VIEW OF THE ABOVE, WE ARE UNABLE TO AGREE WITH THE VIEW TAKEN BY THE LD CIT(A) IN RESPECT OF ADDITION OF RS.3.20 CRORES AND RS.11.80 CRORES MADE RESPECTIVELY IN AY 2008 - 09 AND 2009 - 10. ACCORDINGLY, WE SET ASIDE HIS ORDER PASSED FOR BOTH THE YEARS AND DIRECT THE AO TO DELETE THE ABOVE SAID ADDITIONS. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS ORDERS PASSED BY THE COOR DINATE BENCH OF ITAT IN ASSESSEES OWN CASE AND JUDGMENTS RELIED UPON BY BOTH THE PARTIES, WE FIND THAT THE COORDINATE BENCH HAD ALREADY DEALT WITH THE SEARCH AND SEIZURE OPERATIONS CARRIED OUT ON THE PREMISES OF THE ASSESSEES GROUP ON 16.10.08 AND THE ST ATEMENT RECORDED BY SHRI DINESH C. SHAH AND DELETED THE ADDITIONS BY DETAILED ORDER. EVEN IN THE PRESENT CASE, APART FROM THE SAID STATEMENT, THERE IS NO OTHER CORROBORATIVE EVIDENCE/MATERIAL FOR MAKING ADDITIONS AND THE REVENUE HAS NOT BEEN ABLE TO DEMONS TRATE BEFORE US AS TO WHETHER THE ALLEGED ON - MONEY RECEIPT BY THE ASSESSEE WAS NOT ACCOUNTED AT ALL, I.E. THE REVENUE DID NOT MADE ANY ENQUIRES EITHER 9 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, WITH THE PURCHASERS OF THE FLAT OR THE GROUP CONCERN IN THIS REGARD NOT DID THE REVENUE EXAMINED THE BOOK S OF ACCOUNT OF THE GROUP TO VINDICATE THEIR STAND, THEREFORE THE LD. CIT(A) HAS RIGHTLY DELETED THE ADDITIONS BY HOLDING THAT NO ADDITIONS CAN BE MADE ON THE BASIS OF SUCH STATEMENT. EVEN OTHERWISE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE B ENCH OF HONBLE ITAT AND IN ORDER TO MAINTAIN JUDICIAL CONSISTENCY , WE APPLY THE SAME FINDINGS IN THE PRESENT CASE WHICH ARE APPLICABLE MUTATIS MUTANDIS IN THE PRESENT CASE. THEREFORE, WE DISMISS THE APPEAL FILED BY THE REVENUE . 7 . IN THE NET RESULT, TH E APPEAL FILED BY THE REVENUE STANDS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER , 2018 SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 04 . 10 .201 8 SR.PS . DHANANJAY 10 I.T.A. NO. 37 21 /MUM/201 6 HARSH DEEP CONSTRUCTION, / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI