The Dy.Commissioner of Income-tax, Amritsar. V. M/s. V.M. Reality P.Ltd, Amritsar.

ITA 455/ASR/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8666 (ITAT-AMRITSAR)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 09-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VARINDER WADHWACA
• Keywords: Search and seizure; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.455(ASR)/2014 ASSESSMENT YEAR:2007-08 PAN : AACCV3399L DY.COMMISSIONER OF INCOME TAX, VS. M/S. V.M. REALIT Y (P) LTD., CIRCLE-5, AMRITSAR. 48, THE MALL, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.TARSEM LAL, DR RESPONDENT BY:SH.VARINDER WADHWA,CA DATE OF HEARING:04/02/2015 DATE OF PRONOUNCEMENT:05/02/2015 ORDER PER A.D.JAIN,JM: THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEA R 2007-08 AGAINST THE ORDER DATED 22.04.2014 PASSED BY THE CIT(A), AM RITSAR, DELETING PENALTY OF RS.20,50,522/- LEVIED ON THE ASSESSEE UNDER SECT ION 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT). 2. VIDE ORDER DATED 31.12.2010, PASSED UNDER SECTIO N 153C/153A OF THE ACT, I.E., THE ASSESSMENT ORDER, THE AO MADE CERTAI N ADDITIONS TO THE INCOME OF THE ASSESSEE, AMOUNTING TO RS.70,00,000/-. ITA NO.455(ASR)/2014 2 3. BY VIRTUE OF THE ORDER DATED 26.03.2013, PASSED UNDER SECTION 271(1)(C) OF THE ACT, THE AO LEVIED A PENALTY OF RS .20,50,522/- QUA THE ADDITION MADE IN THE ASSESSMENT. 4. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CANCELLED THE PENALTY. AGGRIEVED, THE DEPARTMENT IS IN APPEAL BEFORE US. 5. IN THE ONLY GROUND TAKEN BY THE DEPARTMENT BEFOR E US, IT HAS BEEN STATED AS UNDER: WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS RIGHT IN DELETING THE PENALTY U/S 271(1)(C) RS.20,5 0,522/- ON THE GROUND THAT QUANTUM ADDITION HAS BEEN DELETED BY TH E HONBLE ITAT, AMRITSAR VIDE ORDER DATED 24.02.2014 IN ITA NO.473( ASR)/2011 WHICH HAS BEEN DELIVERED NOT ON MERITS OF THE ISSUE. THE ORDER OF THE HONBLE ITAT HAS NOT BEEN ACCEPTED BY THE DEPARTMENT AND TH E SAME HAS ALREADY BEEN CHALLENGED BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT, CHANDIGARH. 6. THUS, ACCORDING TO THE DEPARTMENT, IN THE QUANTU M PROCEEDINGS, THE TRIBUNAL DID NOT DELETE THE ADDITION MADE, ON MERI TS. IT HAS ALSO BEEN CONTENDED THAT THE TRIBUNAL ORDER DATED 24.02.2014 IN THE QUANTUM APPEAL IS UNDER CHALLENGE BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. 7. THE LD. DR HAS BROADLY REITERATED THE GRIEVANCE TAKEN BY THE DEPARTMENT IN ITS GROUND OF APPEAL. 8. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, HAS PLACED RELIANCE ON THE IMPUGNED ORDER. BESIDES, OUR ATTENT ION HAS BEEN DRAWN TO THE ORDER OF THE TRIBUNAL, DATED 24.02.2014, COPY THERE OF HAS BEEN PLACED ON ITA NO.455(ASR)/2014 3 RECORD BEFORE US. THE LD. COUNSEL FOR THE ASSESSEE HAS STATED THAT THE TRIBUNAL, VIDE THE AFORESAID ORDER, DELETED THE ADD ITION MADE IN THE ASSESSMENT. 9. HAVING HEARD THE PARTIES IN THE LIGHT OF THE MAT ERIAL PLACED ON RECORD, WE FIND THAT WHILE CANCELLING THE PENALTY LEVIED ON THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED AS FOLLOWS: 4. I HAVE CONSIDERED THE SUBMISSION OF THE LEARNED COUNSEL FOR THE APPELLANT. IT IS CORRECT THAT QUANTUM ADDITION HAS BEEN DELETED BY THE HONBLE ITAT, AMRITSAR BENCH VIDE ORDER DATED 24.02 .2014 IN ITA NO.473(ASR)/2011. AS THE QUANTUM ADDITION HAS BEEN DELETED, THE CONCEALMENT PENALTY LEVIED CANNOT SURVIVE. HENCE, T HE PENALTY OF RS.20,50,522/- IMPOSED BY THE AO UNDER SECTION 271( 1)(C) OF THE ACT IS CANCELLED. 10. THUS, THOUGH, THE BASIS OF THE CANCELLATION OF THE PENALTY AT THE HANDS OF THE LD. CIT(A) IS THAT ACCORDING TO HIM, THE QUA NTUM ADDITION HAS BEEN DELETED BY THE TRIBUNAL VIDE ORDER DATED 24.02.2014 (SUPRA ) AND SO THE PENALTY CANNOT SURVIVE, THE DEPARTMENT MAINTAINS TH AT SINCE THE DELETION OF THE ADDITION BY THE TRIBUNAL WAS NOT ON MERITS, THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY AND THAT THE TRIBUNAL ORDER I S UNDER APPEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. 11. WE, HOWEVER, DID NOT FIND OURSELVES IN AGREEMEN T WITH THE STAND TAKEN BY THE DEPARTMENT. A PERUSAL OF THE TRIBUNAL ORDER DATED 24.02.2014 (SUPRA), PASSED IN ITA NO.473(ASR)/2014 FOR THE ASSESSMENT Y EAR 2007-08 IN ASSESSEES CASE IN THE QUANTUM MATTER SHOWS THAT AS MANY AS 13 GROUNDS ITA NO.455(ASR)/2014 4 WERE TAKEN BY THE ASSESSEE BEFORE THE TRIBUNAL AGAI NST THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION MADE BY THE AO, W HICH ADDITIONS HAVE FORMED THE BASIS OF THE LEVY OF PENALTY PRESENTLY B EFORE US. IT IS SEEN THAT THE TRIBUNAL DELETED THE ADDITIONS BY ACCEPTING GROUNDS NO. 3 TO 12 TAKEN BY THE ASSESSEE. IT IS THESE GROUNDS NO. 3 TO 12 WHICH ARE SPECIFIC AGAINST THE ADDITIONS MADE. THE DELETION OF THE ADDITION HAS BE EN MADE BY PASSING AN ELABORATE SPEAKING ORDER AFTER HEARING BOTH THE PAR TIES. THE REASONING OF THE TRIBUNAL IN DELETING THE ADDITION IS CONTAINED IN P ARAS 7 TO 9, AT PAGES 8 TO 13 OF THE SAID ORDER. FOR THE SAKE OF READY REFERENCE, THE SAID RELEVANT PARAS OF THE TRIBUNAL ORDER DATED 24.02.2014 (SUPRA) ARE BEI NG REPRODUCED HEREUNDER: 7. AS REGARDS GROUNDS NO. 3 TO 12 WITH REGARD TO AD DITION OF RS.70 LACS AND ENHANCEMENT OF RS.8,60,000/- OF ADDITION H AS BEEN MADE ON THE ASSESSEE ON THE BASIS OF ONE AGREEMENT, WHICH IS PLACED AT PB 12 TO 15, WHICH WAS SEIZED FROM THE PREMISES OF SH. VI PIN VERMA. IT IS NOT IN DISPUTE THAT THE AGREEMENT HAS BEEN SIGNED ON BE HALF OF THE ASSESSEE, BUT THERE IS NO SIGNATURE OF OTHER PARTY. THE CLAIM OF THE ASSESSEE THAT THIS IS NOT A VALID DOCUMENT, SINCE T HE SAME HAS BEEN DENIED BY THE MANAGING DIRECTOR OF THE ASSESSEE COM PANY, SH. MANINDER SINGH IN THE STATEMENT RECORDED BY THE ADI , AMRITSAR AND ALSO BY THE AO IN THE ASSESSMENT PROCEEDINGS. COPIE S OF THE STATEMENTS ARE PLACED ON RECORD AT PB 22 TO 33 & 34 TO 43. STATEMENT OF THE PERSON CONCERNED OF SPLENDER LAND BASE LTD; HAS ALSO BEEN DENIED HAVING MADE ANY PAYMENT BY CASH IS A MATTER OF RECORD. AFFIDAVIT DULY NOTORIZED FROM THE NOTARY HAS BEEN FURNISHED BY THE ASSESSEE, WHICH IS PLACED AT PB 21. THE CLAIM OF TH E ASSESSEE IS THAT A MIDDLEMAN/BROKER AND AUDITED BALANCE SHEET HAS BEEN PLACED ON RECORD, WHICH SHOWS THE AMOUNT RECEIVED FROM M/S. S PLENDOR LAND BASE LTD; AND ADVANCES GIVEN FOR PURCHASE OF LAND T O THE FARMERS, WHICH IS PLACED AT PB-5 AND ONWARDS IN THE IMPUGNED ORDER. IT IS ALSO ARGUED BY THE LD. COUNSEL THAT THE ASSESSEE DOES N OT OWN ANY LAND NOR IT HAD TO PURCHASE THE LAND FROM THE FARMERS WHICH IS EVIDENT FROM THE ITA NO.455(ASR)/2014 5 AUDITED BALANCE SHEET AND PROFIT & LOSS ACCOUNT AT PB 5 & 6. IT WAS ARGUED THAT THE BUSINESS OF THE ASSESSEE IS TO ARRA NGE LAND ON BEHALF OF THE COMPANIES AND GET THE LAND REGISTERED DIR ECTLY FROM THE FARMERS TO SUCH BUILDERS I.E. M/S. SPLENDER LAND BA SE LTD. OUR ATTENTION WAS INVITED BY SH. SUDHIR SEHGAL, THE LD. COUNSEL FOR THE ASSESSEE THAT THE ASSESSEE DOES NOT OWN IMMOVABLE P ROPERTY IN THE AUDITED BALANCE SHEET AND WHATEVER HAS BEEN RECEIVE D IS AN ADVANCE RECEIPT AND CANNOT BE TAXED AS INCOME, SINCE THE AS SESSEE IS A COMMISSION AGENT AND MAINTAINING ACCOUNTS ON MERCAN TILE SYSTEM, WHICH HAS BEEN ACCEPTED BY THE LD. CIT(A) IS UNDISP UTED. MOREOVER, THE SAID SUM OF RS.70 LACS IS ALLEGED TO HAVE BEEN ADDED AS INCOME IN THE HANDS OF THE ASSESSEE, ARGUED BY THE LD. COUNSE L FOR THE ASSESSEE THAT THE SAID INCOME HAS BEEN ADDED IN THE HANDS OF M/S. SPLENDOR LAND BASE LIMITED AND THERE CANNOT BE DOUBLE TAXATI ON AND THE SAID AMOUNT CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE AND IT IS AGAINST THE SCHEME OF THE ASSESSEE. MOREOVER, THE ADDITION CANNOT BE MADE UNDER SECTION 69A WHICH, IN FACT, HAS BEEN MAD E IN THE HANDS OF M/S. SPLENDOR LAND BASE LIMITED; HAS BEEN ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE. IT WAS ARGUED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE LD. CIT(A) HAS ACCEPTED THAT THE ASSESSEE IS M AINTAINING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE, THE AMOUNT RECEIVED THROUGH CHEQUES HAVE BEEN TREATED ON BEHALF OF M/S. SPLENDOR LAND BASE LIMITED; AMOUNTING TO RS.4.30 CRORES. IT HAS B EEN ACCEPTED BY THE LD. CIT(A) THAT COMMISSION OF 2% ON RS.4.30 CRO RES I.E. RS.8.60 LACS HAS BEEN EARNED BY THE ASSESSEE, WHICH HAS NOT BEEN DECLARED BY THE ASSESSEE. THE LD. CIT(A) CANNOT BLOW HOT AND C OLD IN THE SAME BREATH THAT ON ONE HAND, HE HAS ADMITTED THAT THE A SSESSEE IS DOING COMMISSION BUSINESS AND EARNING ONLY COMMISSION INC OME FROM M/S. SPLENDER LAND B ASE LIMITED AND OUT OF THE SAME AGREEMENT AN AMOUNT OF RS.4.30 CRORES HAS BEEN CONSIDERED BELONG ING TO M/S. SPLENDER LAND BASE LTD; AND ONLY RS.70 LACS HAS BEE N CONSIDERED BELONGING TO THE ASSESSEE. ON THE OTHER HAND, THE L D. CIT(A), ON ONE HAND HAS ADMITTED THAT THE ASSESSEE IS MAINTAINING ACCOUNTS ON MERCANTILE SYSTEM BASIS AND ON THE OTHER HAND HAS E NHANCED THE INCOME @ 2% ON RS.4.30 CRORES INSPITE OF THE EXPLAN ATION SUBMITTED BEFORE HIM THAT NONE OF THE DEAL HAS BEEN FINALIZE D. IT WAS ALSO SUBMITTED THAT WHILE FRAMING ASSESSMENT OF THE ASS ESSEE-COMPANY FOR THE FOLLOWING YEAR I.E. 2008-09 THE RETURNED INCOME WAS ACCEPTED, WHICH WAS BASED ON THE COMMISSION EARNED ON PROCURE MENT OF LANDS INCLUDING M/S. SPLENDER BASE LTD. THE LD. COUNSEL F OR THE ASSESSE ITA NO.455(ASR)/2014 6 RELIED UPON THE DECISIONS OF VARIOUS COURTS OF LAW IN THIS REGARD AS UNDER: I) SMT. PANNA DEVI CHOWDHARY VS. CIT 208 ITR 849 ( BOM) II) RAJENDER KUMAR GARG VS. DCIT 66 TTJ (DEL-TRIB) 347 III) SMT. SAROJ KUMAR VS. ACIT 91 TTJ(ASR-TRIB) 733 IV) D.A.PATEL VS. DCIT 70 TTJ (MUM-TRIB) 200 V) AMARJIT DAHYABHAI PATEL (HUF) VS. ACIT 81 TTJ (DEL- TRIB) 169 VI) M M FINANCIERS (P) LTD. VS. DCIT 107 TTJ (CHENNAI-T RIB) 200 VII) PANKAJ DAHYABHAI PATEL (HUF) VS. ACIT 63 TTJ (AHD-T RIB) 790. VIII) CIT VS. RAVI KUMAR 294 ITR 78 (P&H) IX) SMT. NEENA SYAL VS. ACIT 69 TTJ (CHD-TRIB) 516 X) PIYUSH INFRASTRUCTURE INDIA PVT. LTD. VS. ACIT 35 C CH (DEL- TRIB) 2013. 8. THE LD. JCIT (DR), MR. MAHAVIR SINGH, ON THE OTH ER HAND, ARGUEDTHAT ALL MONEY TRANSACTIONS OF RS. 20 LACS AN D RS.50 LACS TOTALING RS. 70 LACS HAVE NOT BEEN DECLARED BY THE ASSESSEE, CANNOT BE DISPUTED, EVEN IF THE AGREEMENT HAS NOT BEEN SIGNED BY M/S. SPLENDER LANDBASE PVT. LTD. THE LD. DR, THEREFORE, RELIED UP ON THE ORDERS OF THE LD. CIT(A) AND THAT OF THE ASSESSING OFFICER. 9. AFTER HEARING THE PARTIES AND PERUSING THE MATER IAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE AGREEMENT IS UN SIGNED BY THE PARTY M/S. SPLENDER LANDBASE LIMITED; CANNOT BE DISPUTED THAT THE ASSESSEE IS ACTING AS A COMMISSION AGENT, WHICH HAS BEEN ADM ITTED AND ACCEPTED BY THE LD. CIT(A), WHO HAS COMPUTED THE CO MMISSION INCOME @ 2% OF RS.4.30 CRORES RECEIVED BY THE ASSESSEE ON BEHALF OF M/S. SPLENDER LANDBASE LIMITED., AS PER AGREEMENT SEIZED DURING THE SEARCH AND SEIZURE OPERATIONS AT THE PREMISES OF S H. VIPIN VERMA OF DELHI.. OUT OF THE SAME AGREEMENT, THE ASSESSEE HAD RECEIVED CASH OF RS.70 LACS, WHICH THE ASSESSEE CLAIMED THAT THE SA ME HAS NOT BEEN RECEIVED AND M/S. SPLENDER LANDBASE LIMITED HAS AL SO STATED THAT THE SAID CASH HAS ALSO NOT BEEN PAID. THEREFORE, ON TH E BASIS OF ASSUMPTION AND PRESUMPTION, THE LD. CIT(A) CANNOT C OME TO THE CONCLUSION THAT THE SAID CASH HAS ACTUALLY BEEN R ECEIVED BY THE ASSESSEE. IF THE SAID CASH HAS BEEN RECEIVED BY THE ASSESSEE THEN THE SAID CASH HAS BEEN RECEIVED FOR AND ON BEHALF OF M/ S. SPLENDER LANDBASE LIMITED AND THE SAME HAS BEEN PAID TO THE FARMERS AND SUCH RECEIPT CAN BE TREATED AS CAPITAL RECEIPT AND ONLY A COMMISSION INCOME @ 2% CAN BE ADDED AS INCOME IN THE HANDS OF THE ASSESSEE, ITA NO.455(ASR)/2014 7 THOUGH THE SAID AMOUNT OF RS.70 LACS HAVE BEEN ADD ED IN THE INCOME OF M/S. SPLENDER LANDBASE LIMITED. THEREFORE, THERE CANNOT BE DOUBLE TAXATION IN THE HANDS OF THE ASSESSEE UNLESS PROPER AGREEMENT HAS BEEN EXECUTED. THE HALF BAKED AGREEMENT CANNOT BE A BASIS FOR ADDITION OF INCOME. IN THE FACTS AND CIRCUMSTANCES, WHEN THE LD. CIT(A) HAS ACCEPTED THAT THE ASSESSEE HAS RECEIVED THE MONEY FOR AND ON BEHALF OF M/S. SPLENDER LANDBASE LIMITED. IT IS ALSO NOT DENIED BY THE LD. CIT(A) THAT THE ASSESSEE IS NOT MAINTAINING BOOKS OF ACCOUNT ON MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE, T HE LD. CIT(A) IS NOT JUSTIFIED IN ASSESSING THE INCOME IN THE IMPUGN ED YEAR. THE ASSESSEE HAS STATED THAT THE DEALS WERE COMPLETED I N THE FOLLOWING YEAR I.E. ASSESSMENT YEAR 2008-09 AND THE COMMISSIO N HAS BEEN DECLARED IN THE ASSESSMENT YEAR AND HAS BEEN INVES TED, WHICH IS NOT DISPUTED BY THE INCOME TAX DEPARTMENT. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE CASES RELIED UPON BY THE LD. CO UNSEL FOR THE ASSESSEE, WE ARE OF THE VIEW THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.70 LACS AND ENHANCING THE COMMISSION AT RS.8,60,000/-.. THUS, ALL THE ADDITIONS MADE ARE DIRECTED TO BE DELETED. HENCE, GROUNDS NO. 3 TO 12 OF THE ASSESSE E ARE ALLOWED. 12. A PERUSAL OF THE AFORESAID RELEVANT PORTION OF THE TRIBUNAL ORDER DATED 24.02.2014(SUPRA) CLEARLY SHOWS THAT THE ADDITIONS WERE DELETED BY A REASONED, SPEAKING AND ELABORATE ORDER, ON MERITS. THAT BEING SO, THE GRIEVANCE OF THE DEPARTMENT THAT THE TRIBUNAL ORDER DATED 24.02.2014 (SUPRA) HAS BEEN DELIVERED NOT ON MERITS OF THE ISSUE IS ILL FOUNDED AND MISCONCEIVED. THE LD. CIT(A) HAS CORRECTLY TAKEN IN TO CONSIDERATION THE FACTUM OF DELETION OF QUANTUM ADDITION BY THE TRIBU NAL AND HAS RIGHTLY HELD THAT IN THE FACE OF SUCH DELETION OF THE ADDITION , THE CONCEALMENT PENALTY CANNOT SURVIVE. ITA NO.455(ASR)/2014 8 13. APROPOS THE DEPARTMENTS CONTENTION THAT IT IS IN APPEAL AGAINST THE AFORESAID TRIBUNAL ORDER IN THE QUANTUM PROCEEDINGS , THIS IS OF NO AVAIL TO THE DEPARTMENT. THE TRIBUNAL ORDER HAS NOT BEEN SHO WN TO EITHER HAVE BEEN SET ASIDE, OR CANCELLED, OR EVEN STAYED BY THE HON BLE HIGH COURT. THEREFORE, THE MERE FACTUM OF THE DEPARTMENT BEING IN APPEAL B EFORE THE HONBLE HIGH COURT CANNOT FURTHER THE CASE OF THE DEPARTMENT. A S CORRECTLY HELD BY THE LD. CIT(A), ONCE THE QUANTUM ADDITION STANDS DELETED BY THE TRIBUNAL, THE PENALTY LEVIED CANNOT STAND. 14. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE GRIEVANCE RAISED BY THE DEPARTMENT AND THE SAME IS HEREBY REJECTED. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5TH FEBRUARY, 2015. SD/- SD/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 5TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. V.M.REALTY (P) LTD., AMRITSAR. 2. THE DCIT, CIRCLE-5, AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR.S 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.