ASST CIT CEN CIR 15 & 16, MUMBAI V. VIJAY LAND DEVELOPMENT CORPORATION, MUMBAI

ITA 3997/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83642 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-09-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 07-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH RANJAN PRASAD
• Assessee Lawyers: BHUMIKA VORA
• Keywords: Unexplained cash credit
• Section: 68; 148

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL F BENCH, MUMBAI BEFORE HONBLE S/SHRI D. MANMOHAN , VICE-PRESIDENT AND B.R.BASKARAN (AM) , . , . . , ! ./I.T.A. NO.3997/MUM/2012 ( '#$ % / ASSESSMENT YEAR : 2003-04) ASSTT. COMMISSIONER OF INCOME TAX , CENTRAL CIRCLE 15 AND 16, ROOM NO.401, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S VIJAY LAND DEVELOPMENT CORPORATION, 1, TARLIKA 216, SIR MALCHANDRA ROAD, MATUNGA, MUMBAI-400019 ( !&' / APPELLANT) .. ( ()&' / RESPONDENT) & ./ *+ ./PAN/GIR NO. : AADFV9065B !&' , / APPELLANT BY : SHRI RAJESH RANJAN PRASAD ()&' - , /RESPONDENT BY : BHUMIKA VORA . / - 01 / DATE OF HEARING : 21.8.2014 2 %$ - 01 /DATE OF PRONOUNCEMENT : 28.8.2014 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 28.03.2012 PASSED BY LD CIT(A)-39, MUMBAI AND IT RE LATES TO THE ASSESSMENT YEAR 2003-04. 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION OF RS.1.07 CRORES MADE BY THE ASSESSING OF FICER AS UNEXPLAINED CREDIT. I.T.A. NO.3997/MUM/2012 2 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE A RE STATED IN BRIEF. THE ASSESSEE, A PARTNERSHIP FIRM, IS IN THE BUSINESS OF REAL ESTA TE DEVELOPMENT. THE ASSESSEE FILED RETURN OF INCOME ORIGINALLY ON 31.10.2003 DEC LARING NIL INCOME. CONSEQUENT TO THE SEARCH OPERATIONS CONDUCTED IN TH E GROUP CONCERNS ON 22-09- 2005, THE ASSESSEES CASE CAME TO BE COVERED U/S 15 3C OF THE ACT. THE ASSESSEE FILED RETURN OF INCOME U/S 153C ALSO DECLA RING NIL INCOME. WHILE THE ASSESSMENT U/S 153C WAS PENDING, THE ASSESSING OFFI CER COMPLETED THE ASSESSMENT ON 24.3.2006 AGAINST THE ORIGINAL RETURN OF INCOME MAKING SUBSTANTIAL ADDITIONS. SINCE UNDER THE PROVISIONS OF SEC. 153A, THE PENDING ASSESSMENTS STOOD ABATED, THE LD CIT(A) QUASHED THE ASSESSMENT ORDER PASSED ON 24.3.2006. LATER THE ASSESSMENT U/S 153C WAS CO MPLETED ON 27-03-2007 DETERMINING THE TOTAL INCOME AT RS. NIL. 4. SUBSEQUENTLY, THE ASSESSING OFFICER REOPENED THE ASSESSMENT BY ISSUING NOTICE U/S 148 OF THE ACT. THE AO NOTICED THAT THE ASSESSEE HAD FAILED TO FURNISH LOAN CONFIRMATIONS AND BANK ACCOUNT DETAILS DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS. SINCE THE GENUINENESS AND CREDITWORTHINESS OF THE CREDITORS COULD NOT BE VERIFIED, THE AO FELT THAT THE INCOME CHARGEABLE TO TAX HAD ESCAPED THE ASSESSMENT AND ACCORDINGLY REOPENED THE ASSESSMENT. IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT, THE ASSE SSEE AGAIN FILED NIL RETURN. IN THE REOPENED THE ASSESSMENT, THE ASSESSING OFFICER EXAMINED VARIOUS CREDITORS, WHICH INCLUDED A SUM OF RS.1.07 CRORES SHOWN AS OUT STANDING AGAINST M/S SHREE SAI ENTERPRISES. IN RESPECT OF THE ABOVE CREDITOR, THE ASSESSEE SUBMITTED THAT IT HAD PURCHASED THE DEVELOPMENT RIGHTS FROM SHREE SAI ENTERPRISES, VIDE FOUR REGISTERED AGREEMENTS, FOR A SUM OF RS.1.17 CRORES. DURING THE YEAR UNDER I.T.A. NO.3997/MUM/2012 3 CONSIDERATION, THE ASSESSEE HAD PAID A SUM OF RS.10 .00 LAKHS AS ADVANCE. SINCE THE ASSESSEE ACCOUNTED FOR THE ENTIRE AMOUNT OF RS. 1.17 CRORES AS LAND PURCHASE IN THE BOOKS OF ACCOUNT, THE REMAINING AM OUNT OF RS.1.07 CRORES WAS SHOWN AS PAYABLE TO M/S SHREE SAI ENTERPRISES. THE ASSESSEE FURNISHED THE ADDRESS OF SHREE SAI ENTERPRIES AND ALSO THE RELEVA NT DOCUMENTS BEFORE THE AO. HOWEVER, THE ASSESSEE DID NOT FILE CONFIRMATION LET TER OBTAINED FROM M/S SHREE SAI ENTERPRISES AND ALSO DID NOT PRODUCE THEM FOR V ERIFICATION. HENCE, THE AO TREATED THE CREDIT AMOUNT OF RS.1.07 CRORES AS UNEX PLAINED CREDITOR AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 5. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THA T IT PAID A FURTHER SUM OF RS.25.00 LAKHS IN THE SUBSEQUENT YEAR BY WAY OF CHE QUES TO M/S SHREE SAI ENTERPRISES. IT WAS FURTHER SUBMITTED THAT THE REM AINING AMOUNT WAS ALSO DISCHARGED BY WAY OF TRADE ADJUSTMENTS. THE LD CIT (A) WAS CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE AND ACCORDINGLY DELETE D THE ADDITION OF RS.1.07 CRORES MADE BY THE ASSESSING OFFICER. AGGRIEVED, T HE REVENUE HAS FILED THIS APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RECORD. THE LD D.R STRONGLY SUPPORTED THE ORDER PASSED BY THE A O, WHILE THE LD A.R SUPPORTED THE ORDER PASSED BY LD CIT(A). WE NOTICE THAT THE AMOUNT OF RS.1.07 LAKHS BECAME PAYABLE BY THE ASSESSEE AS PER FOUR RE GISTERED DOCUMENTS ENTERED FOR PURCHASING DEVELOPMENT RIGHTS FROM M/S SHREE SA I ENTERPRIESES. THUS, IT IS SEEN THAT IT WAS NOT A CASE WHERE THE ASSESSEE HAS RECEIVED FUNDS FROM M/S SHREE SAI ENTERPRISES, WHICH MIGHT HAVE WARRANTED A N ADDITION U/S 68 OF THE ACT. IT IS FURTHER SEEN THAT THE ASSESSEE HAS PAID A SUM OF RS.10.00 LAKHS TO M/S I.T.A. NO.3997/MUM/2012 4 SHREE SAI ENTERPRISES, BY VIRTUE OF THE REGISTERED DOCUMENTS, DURING THE YEAR UNDER CONSIDERATION AND THE SAID PAYMENT WAS ACCEPT ED BY THE AO. IT IS ALSO SEEN THAT THE ASSESSEE HAS PAID FURTHER SUM OF RS.2 5.00 LAKHS IN THE SUCCEEDING YEAR AND ALSO EXPLAINED THE MANNER OF DISCHARGE OF THE REMAINING AMOUNT BY WAY OF TRADE ADJUSTMENTS MADE THROUGH REGISTERED DO CUMENTS. THE LD A.R SUBMITTED THAT THE PAYMENTS MADE IN THE SUBSEQUENT YEARS WERE ALSO ACCEPTED BY THE AO. HENCE A SPECIFIC QUERY WAS PUT TO THE LD D.R AS TO WHETHER THE AO WAS JUSTIFIED IN MAKING THE IMPUGNED ADDITION, WHEN HE DID NOT PROVE THAT THE DEVELOPMENT AGREEMENTS WERE FICTITIOUS AND ALSO ACC EPTED THE PAYMENTS MADE TO M/S SHREE SAI ENTERPRISES DURING THE INSTANT YE AR AND ALSO DURING SUBSEQUENT YEARS, THE LD D.R COULD NOT GIVE ANY CONVINCING EXP LANATION AND LEFT THE MATTER FOR CONSIDERATION OF THE BENCH. 7. WE HAVE SEEN THAT THE ASSESSEE HAS PURCHASE D DEVELOPMENT RIGHTS FROM M/S SHREE SAI ENTERPRISES FOR A SUM OF RS.1.17 CROR ES THROUGH REGISTERED DOCUMENTS. DURING THE YEAR UNDER CONSIDERATION, TH E ASSESSEE PAID RS.10.00 LAKHS ONLY. SINCE THE ASSESSEE HAS ACCOUNTED THE ENTIRE AMOUNT OF RS.1.17 CRORES AS PURCHASE OF LAND, IT HAD TO NECESSARILY SHOW THE BALANCE AMOUNT OF RS.1.07 CRORES AS PAYABLE TO M/S SHREE SAI ENTERPRI SES. THE LD CIT(A) HAS ALSO ACCEPTED THE FACT THAT ABOVE SAID LIABILITY WAS DIS CHARGED IN THE SUBSEQUENT YEARS. CONSIDERING THE FACTS AND CIRCUMSTANCES SUR ROUNDING THIS ISSUE AND ALSO THE EXPLANATIONS FURNISHED BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE IMPUGNED ADDIT ION OF RS.1.07 CRORES MADE BY THE ASSESSING OFFICER. ACCORDINGLY, WE CONFIRM HIS ORDER ON THIS ISSUE. I.T.A. NO.3997/MUM/2012 5 8. IN THE RESULT, THE APPEAL FILED BY THE REVEN UE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 28TH AUG, 2014 . 2 %$ . 3 4 5 6 28TH AUG, 2014 - 7/ 8 SD SD ( . / D. MANMOHAN ) ( . . , / B.R. BASKARAN ) / VICE- PRESIDENT / ACCOUNTANT MEMBER . / MUMBAI: 28TH AUG,2014. . ' . ./ SRL , SR. PS !'#$% &%'# / COPY OF THE ORDER FORWARDED TO : 1. !&' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. . =0 ( ! ) / THE CIT(A)- CONCERNED 4. . =0 / CIT CONCERNED 5. >?7 ('0'@# , !1 !@#$ , . / / DR, ITAT, MUMBAI CONCERNED 6. 7 / / GUARD FILE. A . / BY ORDER, TRUE COPY * (ASSTT. REGISTRAR) !1 !@#$ , . / /ITAT, MUMBAI