DCIT CEN CIR 0, MUMBAI V. ASCENT HOUSING P.LTD, MUMBAI

ITA 4126/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75237 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 31-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 12-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRITAM SINGH
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Deemed to accrue or arise in india; Documents seized
• Section: 69C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . . , !'#$ , % & BEFORE SHRI B.R. MITTAL, JM AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 4126/MUM/2012 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 THE ACIT, CENTRAL CIRCLE-9 OLD CGO ANNEXE BLDG., M.K. ROAD, MUMBAI-400 020 / VS. M/S. ASCENT HOUSING PVT. LTD., ACME GHAR, 19, K.D. ROAD, VILE PARLE (W), MUMBAI-400 056 ( % ./ )* ./ PAN/GIR NO. : AAECA 9261C ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI PRITAM SINGH ,-(+ / . / RESPONDENT BY : SHRI VIJAY MEHTA / 01% / DATE OF HEARING : 31.12.2013 23' / 01% / DATE OF PRONOUNCEMENT :08.01.2014 4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-37, MUMBAI DT.22.03.2012 PERTAINING TO A.Y. 2007-08. 2. THE ONLY GRIEVANCE OF THE REVENUE IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A ) HAS ERRED IN DELETING THE ADDITION MADE U/S. 69C OF THE I.T. ACT ON ACCOU NT OF UNEXPLAINED ITA NO. 4126/M/2012 2 EXPENSES BASED ON PAPER SEIZED DURING THE COURSE OF SEARCH & SEIZURE ACTION. 3. A SEARCH AND SEIZURE ACTION U/S. 132(1) OF THE A CT WAS CONDUCTED IN THE CASE OF THE ACME GROUP AND ITS GROUP CONCERNS, DIRECTORS AND RELATED PERSONS ON 24.7.2008. DOCUMENTS PERTAINING TO THE ASSESSEE WERE SEIZED FROM THE OFFICE PREMISES OF ACME HOUSING INDIA PVT. LTD. ACCORDINGLY NOTICE U/S. 153C WAS ISSUED AND SERVED UPON THE ASS ESSEE. 3.1. THE ASSESSEE FILED RETURN OF INCOME IN RESPONS E TO THE SAID NOTICE DECLARING TOTAL INCOME AT RS. (-) 4,761/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REFER RED TO PAGE NO. 90 OF ANNEXURE-A-1 TO PANCHNAMA SEIZED FROM THE OFFICE P REMISES OF ACME HOUSING INDIA PVT. LTD. THE AO OBSERVED THAT ACCO RDING TO THE SEIZED DOCUMENT, THE ASSESSEE HAS INCURRED EXPENSE OF RS. 3,24,48,707/- ON PROPERTY TRANSACTION MENTIONED AS SHAH MALLEABLE CA STINGS. WHEN THIS DOCUMENT WAS CONFRONTED TO THE ASSESSEE, THE ASSESS EE ACCEPTED THAT EXPENSES TO THE TUNE OF RS. 2,74,43,707/- HAS ALREA DY BEEN RECORDED IN ITS BOOKS OF ACCOUNT. THE AO OBSERVED THAT THE ASSESSE E DID NOT GIVE ANY EXPLANATION IN RESPECT OF THE REMAINING EXPENDITURE OF RS. 50,05,000/- WHICH WAS FOUND RECORDED IN THE SAID SEIZED DOCUMEN T. THE ASSESSEE WAS FURTHER GIVEN AN OPPORTUNITY TO EXPLAIN WHY THIS EX PENSE OF RS. 50,05,000/- SHOULD NOT BE CONSIDERED AS UNEXPLAINED AND DEEMED TO BE THE INCOME OF THE ASSESSEE U/S. 69C OF THE ACT. TH E ASSESSEE EXPLAINED THAT THE SEIZED DOCUMENT CONTAINS ESTIMATED ENTRIES AND NOT FAIR ENTRIES AND IT WAS CONTENDED THAT THE ASSESSEE DID NOT INCU R THESE EXPENSES. THE SUBMISSIONS OF THE ASSESSEE DID NOT FIND ANY FAVOUR FROM THE AO WHO WAS OF THE BELIEF THAT MOST OF THE ENTRIES MENTIONED IN THE SEIZED DOCUMENTS IN THE NATURE OF EXPENDITURE INCURRED ARE FOUND DEBITE D IN THE BOOKS OF ITA NO. 4126/M/2012 3 ACCOUNTS WITH THE SAME FIGURES AND UNDER THE SAME H EAD. THEREFORE, THE EXPENSES OF RS. 50,05,000/- ARE ALSO INCURRED BY TH E ASSESSEE WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT AND NO SATISFA CTORY EXPLANATION ABOUT THE SOURCE HAS BEEN PROVIDED BY THE ASSESSEE. THE AO WENT ON TO TREAT THE UNEXPLAINED EXPENDITURE OF RS. 50,05,000/ - AS DEEMED INCOME U/S. 69C OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). IT WAS EXPLAINED THAT THE ACME GROUP HAS PURCHASED THE FAC TORY PREMISES FROM SHAH MALLEABLE CASTINGS LTD. (SMCL) FOR A CONSIDERA TION OF RS. 5.86 CRORES ON WHICH IT HAS INCURRED VARIOUS EXPENSES WH ICH ARE DULY ACCOUNTED IN THE BOOKS OF ACCOUNT BY THE ASSESSEE. IT WAS FURTHER EXPLAINED THAT THE LOOSE SEIZED PAPERS WHICH IS THE SUBJECT MATTER OF ADDITION MIGHT HAVE BEEN PREPARED MENTIONING THE EX PENSES INCURRED AND FURTHER MORE EXPENSES HAVE TO BE ESTIMATED. IT WAS EXPLAINED THAT EXPENSES HAVE BEEN INCURRED FROM FINANCIAL YEAR 200 2-03 TO 2006-07 WHICH ARE DULY RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. REGARDING THE BALANCE AMOUNT, THE ASSESSEE CONTENDE D THAT THEY ARE NOTHING BUT ESTIMATED FIGURES WHICH COULD BE REQUIR ED TO BE INCURRED BY THE ASSESSEE. THE ASSESSEE EXPLAINED THAT IT HAS I NCURRED ONLY RS. 2,74,43,707/- WHICH ARE DULY RECORDED IN ITS BOOKS OF ACCOUNT. 4.1. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S MADE BY THE ASSESSEE, THE LD. CIT(A) WAS CONVINCED THAT ROUND SUMS MENTIONED IN THE SEIZED LOOSE DOCUMENTS WERE DEFINITELY ESTIMATE D IN NATURE WHICH IS APPARENT FROM THE FACT THAT THE AO HAS HIMSELF ALLO WED A BENEFIT OF RS. 2 LAKHS OUT OF ESTIMATED EXPENDITURE OF RS. 11 LAKHS IN THE NAME OF ANANT TARE WHICH WAS RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE LD. CIT(A) FURTHER OBSERVED THAT NO OTHER CORROBOR ATIVE EVIDENCE HAVE ITA NO. 4126/M/2012 4 BEEN FOUND DURING THE COURSE OF SEARCH TO SUGGEST T HAT SUCH EXPENDITURE WAS MADE BY THE ASSESSEE FOR ACQUIRING SUCH PROPERT Y. ACCORDING TO THE LD. CIT(A), ANY ADDITION MADE ON THE BASIS OF CONJE CTURE AND SURMISES CANNOT BE SUSTAINED IN THE EYES OF LAW WITHOUT THER E BEING A SUBSTANTIATION. THE LD. CIT(A) ACCORDINGLY DELETED THE ADDITION. 5. AGGRIEVED BY THIS, REVENUE IS BEFORE US. THE LD . DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTING THE ORDER OF THE ASSESSMENT SUBMITTED THAT THE LD. CIT(A) HAS TAKEN TWO VIEWS ON THE SAME DOCUMENT WHICH CONTAINS CERTAIN ENTRIES FOUND TO BE RECORDED IN TH E BOOKS AND THE BALANCE AMOUNT WAS TREATED CORRECTLY AS UNEXPLAINED EXPENDI TURE BY THE AO. IT IS THE SAY OF THE LD. DR THAT IF SOME ENTRIES ARE FOUN D RECORDED, THE OTHER ENTRIES CANNOT BE SAID TO BE ESTIMATED FIGURES. 6. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE REI TERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE RELEVAN T MATERIAL EVIDENCE BROUGHT ON RECORD. WE HAVE ALSO CAREFULLY PERUSED THE SAID SEIZED DOCUMENTS. IT IS NOT IN DISPUTE THAT THE SEIZED DO CUMENT RECORDED TOTAL SUM OF RS. 3,24,48,707/-. IT IS ALSO NOT IN DISPUT E THAT ENTRIES PERTAINING TO RS. 2,74,43,707/- WERE FOUND RECORDED IN THE BOO KS OF ACCOUNT OF THE ASSESSEE WHICH LEAVES THE BALANCE OF RS. 50,05,000/ -. EXCEPT FOR DISBELIEVING THE ASSESSEES CONTENTION THAT THE SUM OF RS. 50,05,000/- REPRESENTS FIGURES WHICH ARE ONLY ESTIMATED FIGURES , THE AO HAS NOT BROUGHT ANY OTHER MATERIAL EVIDENCE ON RECORD TO SU BSTANTIATE HIS CLAIM THAT THIS AMOUNT WAS ALSO INCURRED BY THE ASSESSEE. THE AO HAS ACCEPTED THAT THE AMOUNT HAS BEEN INCURRED FOR THE PURCHASE OF PROPERTY OF SHAH ITA NO. 4126/M/2012 5 MALLEABLE CASTINGS. THE AO HAS ALSO NOT MADE ANY E FFORT TO EXAMINE THE PERSONS IN WHOSE NAMES THE AMOUNTS HAVE BEEN FOUND RECORDED IN THE SEIZED DOCUMENTS. MOREOVER, IN THE NAME OF ANANT TARE 11 LAKHS IS MENTIONED OUT OF WHICH THE AO HAS ACCEPTED RS. 2 LA KHS AS EXPLAINED BUT NO VERIFICATION IS FOUND TO BE DONE FROM ANANT TARE AND ALSO FROM OTHER PERSONS WHOSE NAMES ARE MENTIONED IN THE SAID SEIZE D DOCUMENTS. NO EVIDENCE HAS BEEN BROUGHT ON RECORD WHICH COULD SU GGEST THAT THE AO HAS MADE INVESTIGATIONS FROM THE SELLER OF THE PROP ERTY TO VERIFY WHETHER A SUM OF RS. 50,05,000/- HAS BEEN PAID TO THEM OVER A ND ABOVE THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSEES EXPLANATION THAT THESE FIGURES ARE ONLY ESTIMATED FIGURES CANNOT BE BRUSHE D ASIDE LIGHTLY AS IN SUCH TRANSACTIONS SOME ESTIMATES ARE ALSO MADE WHIC H MAY NOT MATERIALIZE. MOREOVER, THE LOOSE PAPER RELIED UPON BY THE AO HAS NO INTRINSIC VALUE NOR IT IS SUPPORTED BY ANY DIRECT S UBSTANTIAL EVIDENCE THEREFORE, THE ADDITIONS MADE BY THE AO ARE MERELY OUT OF SURMISES AND CONJECTURES AND SUSPENSION. THE TRIBUNAL CUTTACK BENCH IN THE CASE OF ACIT VS PRASANT AHLUWALIA 92 TTJ 464 HAS HELD THAT AMOUNTS NOTED IN ROUND FIGURES CLEARLY INDICATE THAT THEY WERE ROUG H ESTIMATES AND BECAUSE THEY WERE NOT ACTUALLY EXPENDED, ALL THE FIGURES W ERE IN ROUND FIGURES. AS NO CORROBORATIVE MATERIAL WAS BROUGHT ON RECORD BY THE AO FOR REJECTING ASSESSEES CONTENTION THAT JOTTING ON THE PIECE OF PAPER WAS AN ESTIMATE AND NOT ACTUALLY EXPENDED, ADDITIONS BASED ON CHIT PAPERS AND PRESUMPTION OF THE AO COULD NOT BE SUSTAINED IN THE ABSENCE OF ANY CORROBORATIVE MATERIAL OR EVIDENCE. SIMILAR VIEW HAS BEEN TAKEN BY THE TRIBUNAL MUMBAI BENCH IN THE CASE OF S.P. GOYAL VS DCIT 82 ITD 85. CONSIDERING ALL THE FACTS IN TOTALITY, IN OUR HUMBL E OPINION, THE LD. CIT(A) HAS VERY JUDICIOUSLY AND CORRECTLY CONSIDER ED THE FACTS OF THE CASE AND THE DECISIONS RELIED UPON BY THE LD. CIT(A ) ARE WELL FOUNDED. ITA NO. 4126/M/2012 6 WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FIN DINGS OF THE LD. CIT(A). ACCORDINGLY APPEAL OF THE REVENUE IS DISMIS SED. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JANUARY, 2014 . 4 / 3' % 5 67 08.01.2014 3 / 8 SD/- SD/- (B.R. MITTAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER % / ACCOUNTANT MEMBER MUMBAI; 6 DATED 08.01.2014 . . ./ RJ , SR. PS 4 4 4 4 / // / ,0! ,0! ,0! ,0! 9!'0 9!'0 9!'0 9!'0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. !;8 ,0 , , / DR, ITAT, MUMBAI 6. 8< = / GUARD FILE. 4 4 4 4 / BY ORDER, -!0 ,0 //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI