DCIT CEN CIR 8(4), MUMBAI V. SILVER ARCH BUILDERS & PROMOTERS P. LTD, MUMBAI

ITA 4024/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0554 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 13-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Keywords: Search and seizure; Corroborative evidences
• Section: 143(3); 153A; 132; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 4024 /MUM/ 2016 : A.Y : 2009 - 10 DCIT, CENTRAL CIRCLE - 8(4), MUMBAI (APPELLANT) VS. M/S. SILVER ARCH BUILDERS & PROMOTERS PVT. LTD., 12/14, GOVARDHAN BUILDING, PAREKH STREET, PRATHANA SAMAJ, MUMBAI 400 004 . (RESPONDENT) PAN : AA YFS2047M APPELLANT BY : SHRI R.P. MEENA RESPONDENT BY : SHRI ANUJ KISNADWALA DATE OF HEARING : 0 2 / 11 /201 7 DATE OF PRONOUNCEMENT : 30 /0 1 /201 8 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 4 7 , MUMBAI DATED 14 . 03 .201 6 , PERTAINING TO THE ASSESSMENT YEAR 200 9 - 1 0 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 29 . 0 3.2014 UNDER SECTION 153A R.W.S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 2 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ON MONEY OF RS.2,70,60,000/ - RECEIVED ON SALE OF FLATS RELYING ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. (I TA NO. 523 OF 2013) WITHOUT APPRECIATING THE FACTS THAT THE ABOVE SAID DECISION OF THE HIGH COURT HAS NOT BEEN ACCEPTABLE BY THE DEPARTMENT AND SLP HAS BEEN FILED IN THE SUPREME COURT AND THE SAME IS ADMITTED BY THE SUPREME COURT. 2. ON THE FACTS AND IN T HE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF ON MONEY OF RS.2,70,60,000/ - RECEIVED ON SALE OF FLATS RELYING ON THE DECISION OF THE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTIC LTD. (ITA NO. 523 OF 2013) WITHOUT APPRECIATING THE FACTS THAT THE ADDITION WAS MADE ON THE BASIS OF THE STATEMENT OF THE DIRECTOR SHRI HARESH MOHANALAL MEHTA AND THREE KEY EMPLOYEES OF THE ASSESSEE GROUP NAMELY MS. CHAULA JOSHI (SALES AND MARKETING EXECUTIVE OF ROHAN GROUP) A ND MR. VIJAY JASANI (ACCOUNTANT OF THE ROHAN GROUP) AND ALSO OF MR. PARESH PANCHLOTIYA (OFFICE ASSISTANT/LIAISON OFFICER) DURING THE COURSE OF SEARCH. THE CIT(A) FURTHER FAILED TO APPRECIATE THAT THE ROHAN GROUP HAD BEEN SEARCHED EARLIER TOO ON 10.08.2006 AND EVEN DURING THE COURSE OF THAT SEARCH, THE SAME MS. CHAULA JOSHI HAD ADMITTED TO THE FACT THAT THE GROUP EXECUTED SALES DEED BY ACCEPTING ON MONEY IN CASH WHICH WAS OVER AND ABOVE THE AGREEMENT PRICE. 3. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE RESPONDENT - ASSESSEE MADE A PRELIMINARY POINT WHICH WAS TO THE EFFECT THAT A SIMILAR POINT HAS BEEN DECIDED BY THE TRIBUNAL IN THE CASE OF THE ASSESSEE ITSELF FOR ASSESSMENT YEARS 2007 - 08 AND 2008 - 0 9 VIDE ORDER IN ITA NOS. 3162 & 3163/MUM/2016 DATED 02.05.2017 . IN THIS CONTEXT, TO DEMONSTRATE THE SIMILARITY OF THE FACTS AND CIRCUMSTANCES IN THE INSTANT YEAR, THE RESPECTIVE ORDERS OF THE ASSESSING OFFICER AS WELL AS THE CIT(A), AS ALSO THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THOSE YEARS HAVE ALSO BEEN REFERRED TO, 3 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. COPIES OF WHICH HAVE BEEN PLACED IN THE PAPER BOOK. ON THAT BASIS, IT IS SOUGHT TO BE CANVASSED THAT THE MANNER IN WHICH CIT(A) HAS DELETED THE ADDITION , BASED ON THE RATIO OF THE JU DGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD., 374 ITR 645 (BOM) , DESERVES TO BE AFFIRMED. 4. THE LD. CIT - DR HAS NOT CONTROVERTED THE FACTUAL MATRIX ASSERTED BY THE LEARNED REPRESENTATIVE, BUT POINTED OUT THAT TH ERE WAS A CONTRARY VIEW ALSO, AS MANIFESTED BY THE JUDGMENTS OF THE HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS. ST. FRANCIS CLAY DECOR TILES , 385 ITR 624 (KERALA) , CIT VS. DR. P. SASIKUMAR, 387 ITR 8 (KERALA) AND E.N. GOPAKUMAR VS. CIT, 390 ITR 131 (K ERALA) . IT WAS ALSO POINTED OUT THAT PRESENTLY THE SLP AGAINST THE ORDER OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MGF AUTOMOBILES LTD. ON SIMILAR ISSUE IS ADMITTED BEFORE THE HON'BLE SUPREME COURT AS REPORTED IN [2016] 241 TAXMAN 440 (SC). 5. THE AFORESAID DISCUSSION CLEARLY POINTS OUT THAT THE ISSUE ARISING FROM THE ORDER OF CIT(A) IS COVERED INASMUCH THE SAME IS BASED ON THE PRINCIPLES LAID DOWN IN THE BINDING JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE 4 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. CASE OF ALL CARGO GLOBAL LOGISTICS LT D. (SUPRA) ; SO, HOWEVER, IN ORDER TO IMPART COMPLETENESS TO THE ORDER, THE FOLLOWING DISCUSSION IS RELEVANT. 6. THE APPELLANT BEFORE US IS A PARTNERSHIP FIRM, WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND IS A PART OF ROHAN GROUP OF CASE S WHEREIN A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT WAS CARRIED OUT ON 26.05.2011. CONSEQUENT TO SUCH SEARCH, ASSESSMENT FOR ASSESSMENT YEAR 2009 - 10 HAS BEEN COMPLETED BY THE ASSESSING OFFICER U/S 153A R.W.S. 143(3) OF THE ACT DATED 29.03.2014 WHEREI N AN ADDITION OF RS.2,70,60,000/ - HAS BEEN MADE PRIMARILY ON ACCOUNT OF UNACCOUNTED RECEIPT OF SALE PROCEEDS. AS PER THE REVENUE, ASSESSEE WAS IN RECEIPT OF ON - MONEY ON SALE OF FLATS/PROPERTIES WHICH WAS NOT DISCLOSED AND, THEREFORE, THE SAME WAS ASSESSAB LE AS UNACCOUNTED ON - MONEY RECEIVED ON SALES. THE CIT(A), FIRSTLY, NOTED THAT ON THE DATE OF SEARCH, I.E. 26.05.2011, THE ASSESSMENT FOR ORIGINALLY FILED RETURN OF INCOME U/S 139 DATED 30.09.2009 WAS NOT PENDING SINCE THE TIME PERMISSIBLE TO ISSUE NOTICE FOR ASSESSMENT U/S 143(2) HAD LAPSED ON 30.09.2010. AS A CONSEQUENCE, IN VIEW OF THE SECOND PROVISO TO SEC. 153A OF THE ACT, IN THE ABSENCE OF ASSESSMENT BEING PENDING, THE ORIGINAL ASSESSMENT DID NOT ABATE. AS A CONSEQUENCE, FOLLOWING THE RATIO OF THE J UDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO 5 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. GLOBAL LOGISTICS LTD. (SUPRA) , AN ADDITION COULD ONLY BE MADE IN THE ENSUING ASSESSMENT U/S 153A R.W.S. 143(3) OF THE ACT , EITHER BASED ON OR CONNECTED TO INCRIMINATING MATERIAL FOUND AND SE IZED IN THE COURSE OF SEARCH. FURTHER, THE FACTUAL FINDING OF CIT(A) IS THAT THE IMPUGNED ADDITION IS NOT RELATABLE TO ANY MATERIAL OR EVIDENCE FOUND IN THE COURSE OF SEARCH, AND IN THAT CONTEXT, SHE HAS MADE THE FOLLOWING OBSERVATIONS IN PARA 5.1.5 : - 5.1.5 AS NOTED EARLIER, THE CASE OF THE APPELLANT FOR A.Y 2009 - 10 WAS NOT A PENDING OR ABATED ASSESSMENT. AS SUCH, IN TERMS OF THE ORDER OF THE JURISDICTIONAL HIGH COURT CITED ABOVE, WHEN THE ASSESSMENT WAS NON - ABATED, ADDITIONS, IF ANY, SHOULD BE BAS ED ON INCRIMINATING MATERIAL SEIZED DURING THE SEARCH. THE ONLY DOCUMENT REFERRED TO IN THE IMPUGNED ORDER IS THE SEIZED PAPER AT PAGE 114, ANNEXURE A - 1 AND THE STATEMENTS OF SHRI HARESH MOHANLAL MEHTA, DIRECTOR ALONG WITH STATEMENTS OF MS. CHAULA JOSHI ( SALES AND MARKETING EXECUTIVE IN THE GROUP), MR. VIJAY JASANI (ACCOUNTANT IN THE GROUP), MR. PARESH PANCHLOTIYA (OFFICE ASSISTANT/LIAISON OFFICER). ON PERUSAL OF THE SEIZED PAPER AT PAGE 114 IT IS SEEN THAT THERE IS NO MENTION OF THE APPELLANT COMPANY OR THE PROJECT UNDERTAKEN BY IT ON THE SAID PAGE AND THAT THE PROJECTS LISTED ON IT ARE NAMELY SIDDHESH DARSHAN; MAYURESH APARTMENTS; LIFESCAPES KSHITIJ; SIDDHESH JYOTI. IN THE SUBMISSIONS MADE IN APPEAL, IT IS STATED THAT THESE PROJECTS ARE UNDERTAKEN BY TH E FOLLOWING ENTITIES : SR. NAME OF PROJECT ENTITY OF ROHAN GROUP 1. SIDDHESH DARSHAN MERIDIAN CONSTRUCTION PRIVATE LIMITED 2. MAYURESH APARTMENT ROHAN DEVELOPERS PRIVATE LIMITED 3. LIFESCAPES KSHITIJ ROXINA REAL ESTATE PRIVATE LIMITED 4. SIDDHESH JYOTI MANAV BUILDERS PRIVATE LIMITED THUS, THE SEIZED PAPER DOES NOT MAKE ANY MENTION OF THE APPELLANT COMPANY OR THE PROJECT UNDERTAKEN BY IT DURING THE YEAR. SIMILARLY, PERUSAL OF THE STATEMENTS OF MS. CHAULA JOSHI (SALES AND MARKETING EXEC UTIVE IN 6 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. THE GROUP), MR. VIJAY JASANI (ACCOUNTANT IN THE GROUP), MR. PARESH PANCHLOTIYA (OFFICE ASSISTANT/LIAISON OFFICER) DID NOT MAKE ANY SPECIFIC MENTION OF RECEIPT OF ON - MONEY BY THE APPELLANT COMPANY. IN THIS BACKGROUND, THE ADDITION MADE ON ACCOUNT OF ON - MONEY, NOT EMANATING FROM THE MATERIAL YIELDED BY SEARCH, CANNOT BE UPHELD. THEREFORE CONSIDERING THE FACTS OF THE CASE AND THE JUDICIAL PRONOUNCEMENTS CITED ABOVE, IT IS EVIDENT THAT THE IMPUGNED ASSESSMENT IS NOT BASED ON ANY INCRIMINATING MATERIA L PERTAINING TO THE APPELLANT SEIZED DURING THE SEARCH. FOR THESE REASONS, THE ADDITION OF ON MONEY MADE IN THE ASSESSMENT ORDER BEING BEYOND THE SCOPE AND AMBIT OF ASSESSMENT UNDER SECTION 153A IS DELETED AND THE GROUNDS NO. 1 AND 2, RAISED BY THE APPELL ANT ARE ALLOWED. FOLLOWING THE AFORESAID DISCUSSION, CIT(A) HAS SINCE DELETED THE ADDITION. IN THIS CONTEXT, WE FIND THAT THE CIT(A) HAS CLEARLY BROUGHT OUT THAT THE IMPUGNED ADDITION IS NOT BASED ON ANY MATERIAL FOUND IN THE COURSE OF SEARCH. ON SIMILAR FACTS, OUR CO - ORDINATE BENCH, VIDE ITS ORDER DATED 02.05.2017 (SUPRA), HAS OBSERVED AS FOLLOWS : - 5. WE HAVE PERUSED THE AVAILABLE MATERIAL. WE FIND THAT THE FAA HAS GIVEN A CATEGORICAL FINDING OF FACT THAT NO INCRIMINATING MATERIAL WAS FOUND DUR ING THE SEARCH AND SEIZURE OPERATION THAT COULD JUSTIFY THE ADDITION MADE BY THE AO. SHE HAS ANALYSED THE PAGE NUMBER 114 THAT WAS SEIZED BY THE AUTHORISED PARTY CARRYING OUT THE SEARCH PROCEEDINGS. IT IS VERY CLEAR THAT NEITHER THE NAME OF THE ASSESSEE NO R THE NAME OF THE PROJECT IS APPEARING IN THE PAPER. THE ASSESSEE HAD OBJECTED BEFORE THE AO THAT THE STATEMENTS OF THE EMPLOYEES WERE NOT GIVEN TO IT. WE DO NOT KNOW AS TO WHETHER SAME WERE MADE AVAILABLE TO THE ASSESSEE OR NOT. THE STATEMENTS OF THE EMPL OYEES, IN SEARCH AND SEIZURE CASES, CAN BE USED IF THEY ARE SUPPORTED BY SOME KIND OF COLLABORATIVE EVIDENCE. ON A SPECIFIC QUERY BY THE BENCH TO THE DR ABOUT SUPPORTING EVIDENCE PROVING THE RECEIPT OF ALLEGED ON MONEY, SHE COULD NOT REFER TO ANY MATERIAL. AS THE ASSESSMENT FOR THE AY. 2007 - 08 WAS NOT PENDING, SO, WITHOUT SOME INCRIMINATING 7 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. MATERIAL THE AO SHOULD NOT HAVE MADE THE ADDITION TO THE TOTAL INCOME OF THE ASSESSEE. THE FAA HAD TAKEN NOTICE OF THE ORDER OF THE SPECIAL BENCH AND DISMISSAL OF THE DE PARTMENTAL APPEAL BY THE HONBLE BOMBAY HIGH COURT AND HAD DECIDED THE ISSUE. IN OUR OPINION, HER ORDER DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY . 7. QUITE CLEARLY, THE REFERENCE TO THE STATEMENT OF EMPLOYEES, ETC. COLLECTED AT THE TIME OF SEARCH, WHICH HAS BEEN REFERRED TO IN THE STATED GROUNDS OF APPEAL BEFORE US, HAS ALREADY BEEN CONSIDERED BY OUR CO - ORDINATE BENCH IN ITS ORDER DATED 02.05.2017 (SUPR A) AND IT HAS BEEN HELD THAT THE SAME DOES NOT JUSTIFY THE INCLUSION OF IMPUGNED ADDITION IN AN ASSESSMENT MADE U/S 153A R.W.S. 143(3) OF THE ACT HAVING REGARD TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA) . IN VIEW OF THE SIMILARITY OF FACTS, IN THE INSTANT CASE ALSO, WE HEREBY AFFIRM THE ORDER OF THE CIT(A), WHICH IS IN LINE WITH THE RATIO LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LTD. (SUPRA). 8. SO FAR AS THE PLEA RAISED BY THE LD. CIT - DR BASED ON THE JUDGMENT OF THE HON'BLE KERALA HIGH COURT IS CONCERNED, IN OUR VIEW, THE SAME IS UNTENABLE SINCE THE JUDGMENT OF THE HON'BLE JURISDICTIONAL HIGH COURT IS DIRECTLY AVAILABLE ON THE POINT AND THE SAME HAS BEE N JUSTIFIABLY INVOKED BY THE CIT(A) TO DELETE THE IMPUGNED ADDITION, WHICH IS HEREBY AFFIRMED. 8 ITA NO. 4024/MUM/2016 SILVER ARCH BUILDERS & PROMOTERS PVT. LTD. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H JANUARY, 2018. SD/ - SD/ - (RAM LAL NEGI) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H JANUARY, 2018 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI