DCIT CEN CIR 5(1), MUMBAI V. AUSTER PROPERTIES LTD, MUMBAI

ITA 455/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 4618 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 22-01-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: BRAJENDRA KUMAR
• Keywords: Reopening of assessment; Unexplained cash credit; Bogus Share capital; Search and seizure; Additional evidence
• Section: 153A; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , A BENCH MUMBAI BEFORE : SHRI M.BALAGANESH, A CCOUNTANT M EMBER & SHRI PAVAN KUMAR GADALE , JUDICIAL MEMBER ITA NO. 455 /MUM/ 20 18 ( ASSESSMENT YEAR : 20 08 - 09 ) DCIT, CC - 5(1) R. NO.1928, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 VS. M/S. AUSTER PROPERTIES LTD., 324, MASTER MIND - IV, ROYAL PALMS, AAREY MILK COLONY GOREGAON EAST MUMBAI - 400 065 PAN/GIR NO. AAGCA5453Q (APPELLANT ) .. (RESPONDENT ) CO NO.179/MUM/2018 (ARISING OUT OF ITA NO. 455 /MUM/ 2018 ( ASSESSMENT YEAR : 2008 - 09 ) M/S. AUSTER PROPERTIES LTD., 324, MASTER MIND - IV, ROYAL PALMS, AAREY MILK COLONY GOREGAON EAST MUMBAI - 400 065 VS. DCIT, CC - 5(1) R. NO.1928, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI 400 021 PAN/GIR NO . AAGCA5453Q (APPELLANT ) .. (RESPONDENT ) REVENUE BY SHRI BRAJENDRA KUMAR ASSESSEE BY SHRI VIJAY MEHTA DATE OF HEARING 20 / 04 /202 1 DATE OF PRONOUNCEMENT 21 / 05 /202 1 ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 2 / O R D E R PER M. BALAGANESH (A.M) : THIS APPEAL OF REVENUE IN ITA NO. 455/MUM/2018 AND CROSS OBJECTION OF ASSESSEE IN CO NO.179/MUM/2018 FOR A.Y. 2008 - 09 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 53, MUMBAI IN APPEAL N O. CIT(A) - 53/IT - 28/DCCC - 5(1)/2015 - 16 DATED 17/11/2017 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 31/03/2015 BY THE LD. DY. COMMISSIONER OF INCOME TAX, CENTRAL CI RCLE - 5(1), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND: - 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) HAS JUSTIFIED IN DELETING THE PROTECTIVE ADDITIONS IN THIS CASE CONSIDERING THAT THE ISSUE OF SUBSTANTIVE ADDITION IN THE CASE OF SHREE GLOBAL TRADEFIN LTD. HAS NOT REACHED FINALITY.? 3. IN THE CROSS OBJECTIONS OF THE ASSESSEE, THE ASSESSEE HAS RAISED SEVERAL GROUNDS CHALLENGING THE VALIDITY OF RE - ASSESSMENT PROCEED INGS. 4 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THEE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE GROUNDS RAISED BY THE ASSESSEE IN ITS CROSS OBJECTIONS ARE LEGAL IN NATURE AND HENCE, THEY ARE FIRST TAKEN UP FOR ADJUDICATION. WE FIND THAT ASS ESSEE HAS CHALLENGED THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS IN ITS CROSS OBJECTIONS. WE FIND THAT ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPMENT AND HAD FILED ITS RETURN OF INCOME FOR THE A SST YEAR 2008 - 09 DECLARING INCOME OF RS. NI L. SUBSEQUENTLY, A SEARCH AND SEIZURE ACTION U/S.132(1) OF THE ACT WAS CONDUCTED BY THE INVESTIGATION WING OF THE INCOME TAX DEPARTMENT IN JOGIA GROUP ON 04/03/2010. PURSUANT TO THE SEARCH, I N RESPONSE TO NOTICE ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 3 U/S.153A OF THE ACT, THE ASSESSEE FILED ITS RETURN OF INCOME ON 26/02/2011 DECLARING TOTAL INCOME OF RS. NIL. THE ASSESSMENT WAS COMPLETED U/S.143(3) R.W.S. 153A OF THE ACT ON 26/12/2011 DETERMINING TOTAL INCOME OF RS 1,00,00,000/ - . SUBSEQUENTLY, THIS ASSESSMENT WAS SOUGHT TO BE REOPENED BY ISSUANCE OF NOTICE U/S. 148 OF THE ACT ON THE BASIS OF INFORMATION RECEIVED FROM INVESTIGATION WING. THE NOTICE U/S.148 OF THE ACT WAS ISSUED ON 21/03/2014 WHICH WAS SERVED ON THE ASSESSEE ON 28/03/2014. IN RESPONSE TO THE SAME, THE ASSESSEE VIDE LETTER DATED 02/0 4/2014 REQUESTED THE LD. AO TO TREAT THE RETURN FILED U/S. 153A OF THE ACT ON 26/02/2011 AS A RETURN FILED IN RESPONSE TO NOTICE U/S.148 OF THE ACT. 4.1. FROM THE AFORESAID PRIMARY FACTS , IT COULD BE SEEN THAT REOPENING OF ASSESSMENT FOR THE A SST YEAR 200 8 - 09 HAS BEEN ADMITTEDLY MADE BY THE LD. AO AFTER A PERIOD OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. WE FIND THAT IN THE RE - ASSESSMENT PROCEEDINGS COMPLETED U/S.143(3) R.W.S. 147 OF THE ACT ON 31/03/2014 , THE LD. AO HAD MADE AN ADDITION O F RS.2,50,00,000/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT U/S.68 OF THE ACT IN RESPECT OF SHARE APPLICATION MONEY RECEIVED BY THE ASSESSEE COMPANY ON THE GROUND THAT THE THREE NECESSARY INGREDIENTS OF SECTION 68 VIZ., IDENTITY OF SHARE SUBSCRIBER, CREDITWOR THINESS OF THE SHARE SUBSCRIBER AND GENUINENESS OF THE TRANSACTIONS WERE NOT PROVED BY THE ASSESSEE COMPANY. THIS ADDITION ALSO INCLUDES RS 1,00,00,000/ - ALREADY ADDED BY THE LD. AO IN THE ASSESSMENT FRAMED U/S 153A OF THE ACT. WE FIND THAT THE LD. AO ALS O ADDED A SUM OF RS.7,50,000/ - ON ACCOUNT OF COMMISSION @3% ON THE AFORESAID ADDITION OF RS 2,50,00,000/ - . WE FIND THAT THE LD. CIT(A) BY PASSING AN ELABORATE ORDER DELETED THE PROTECTIVE ADDITION MADE IN THE CASE OF THE ASSESSEE IN THE SUM OF RS. 2,50, 00,0 00/ - BUT HOWEVER, OBSERVED THAT THE ADDITION NEED TO BE MADE ON SUBSTANTIVE BASIS IN THE HANDS OF SHREE GLOBAL TRADEFIN LTD., (SGT L ). CORRESPONDING LY, THE COMMISSION OF RS.7,50,000/ - WAS ALSO DIRECTED TO BE DELETED BY THE LD. CIT(A) IN ASSESSEES HANDS . ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 4 4 .2. WE FIND THAT THE REASONS FOR REOPENING OF THE ASSESSMENT WERE PROVIDED TO THE ASSESSEE BY THE LD. AO AND ASSESSEE FILED OBJECTIONS TO THE SAME VIDE LETTER DATED 29/09/2014. THE LD. AO VIDE LETTER DATED 20/01/2015 AND 03/02/2015 REJECTED THE OBJECTIONS SO RAISED BY THE ASSESSEE. THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS WAS ALSO CHALLENGED BY THE ASSESSEE BEFORE THE LD. CIT(A) APART FROM CHALLENGING THE ADDITION ON MERITS. 4.3. AS STATED EARLIER , A SEARCH AND SEIZURE ACTION U/S.132 OF THE ACT WAS COND UCTED IN THE BUSINESS PREMISES OF JOGIA GROUP ON 04/03/2010. IN THE COURSE OF SEARCH, IT WAS FOUND THAT M/S. JOGIA PROPERTIES LTD., WAS MAINTAINING ITS BOOKS OF ACCOUNTS AT NO.29, BHATIA NIVAS, 233/235, SAMUEL STREET, MASJID BUNDER, MUMBAI 400 009. THIS PREMISES WAS ALSO COVERED U/S.1 5 3A OF THE ACT , WHEREIN I T WAS FOUND THAT VARIOUS COMPANIES WERE OPERATING FROM TH IS PREMISES INCLUDING THE ASSESSEE COMPANY BEFORE US. THE FOLLOWING ARE LIST OF COMPANIES OPERATING FROM THIS ADDRESS: - AUSTER PROPERTIES LTD. , REVA PROPERTIES LTD., ARCHIVE REALTY DEVELOPERS LTD., VEDISA PROPERTIES LTD., MARTAND PROPERTIES LTD., KARBURI PROPERTIES LTD., CIKURA PROPERTIES LTD., 4.4. ALL THE ABOVE LISTED COMPANIES WERE FOUND TO HAVE SHOWN INVESTMENT ACTIVITIES AND HAD MADE AN INV ESTMENT IN EQUITY SHARES OF VARIOUS COMPANIES. THESE INVESTMENTS WERE MADE OUT OF THE SHARE CAPITAL OF THE RESPECTIVE COMPANIES WHICH SOLELY CONSIST OF SHARE APPLICATION MONEY RECEIVED FROM VARIOUS OTHER CONCERNS. IT WAS FOUND THAT THERE WAS COMMON DIRECTO RS IN THESE COMPANIES AS TABULATED BELOW: - ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 5 S.NO. NAME OF DIRECTOR NAME OF COMPANY 1. SH. AJAY KUMAR JOGIA PROPERTIES LTD. 2. SH. AJAY KUMAR AUSTER PROPERTIES LTD 3. SH. AJAY KUMAR REVA PROPERTIES LTD. 4. SH. OM HARI HALAN ARCHIEVE REALTY DEVELOPERS LT D., 5. SH. OM HARI HALAN VEDISA PROPERTIES LTD. 6. SH. NARAYAN HARI HALAN MARTAND PROPERTIES LTD. 7. SH. NARAYAN HARI HALAN KARBURI PROPERTIES LTD. 8. SH. NARAYAN HARI HALAN CIKURA PROPERTIES LTD. 4.5. IT WAS ALSO FOUND THAT THESE DIRECTORS OF THE VA RIOUS COMPANIES WERE RELATED AND WERE BROTHERS BELONGING TO THE SAME FAMILY. MOREOVER, D URING THE COURSE OF SEARCH ACTION CARRIED OUT IN THE CASE OF SHRI MUKESH CHOKSI , A HAWALA OPERATOR, IT WAS FOUND THAT M/S. JOGIA PROPERTIES LTD., AND OTHER CONCERNS HAV E RECEIVED BOGUS SHARE APPLICATION MONEY FROM THE CONCERNS OPERATED BY MR. MUKESH CHOKSI. 4.6. WE FIND THAT THE LD. CIT(A) DISMISSED THE GROUNDS RAISED BY THE ASSESSEE CHALLENGING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS. WE FIND THAT THE LD. CIT(A) HAD GRANTED RELIEF TO THE ASSESSEE ON MERITS OF THE ADDITION. 5. AGGRIEVED BY THIS ORDER, THE REVENUE HAS FILED AN APPEAL BEFORE US CHALLENGING THE ACTION OF THE LD. CIT(A) DELETING THE ADDITION ON MERITS AND ASSESSEE HAS FILED CROSS OBJECTIONS BEFORE US CHA LLENGING THE ACTION OF THE LD. CIT(A) DELETING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS. 6. BEFORE US, LD. AR VEHEMENTLY ARGUED THAT THE APPROVAL OF THE LD. PR. COMMISSIONER OF INCOME TAX (PCIT) U/S.15 1 OF THE ACT WAS SOUGHT IN THE INSTANT CASE IN A MECH ANICAL MANNER WHEREIN , IN THE APPROVAL PAPERS , THE LD. P CIT HAD MERELY PUT ONLY HIS INITIAL AND HIS SATISFACTION WAS NOT EVEN ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 6 MENTIONED IN THE SAID DOCUMENT. IN SUPPORT OF THESE, HE PLACED RELIANCE ON THE DECISION OF THE CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ASTRA EXIM PVT. LTD., IN ITA NO.277/MUM/2018 DATED 31/08/2018. 7. WE FIND THAT ASSESSEE VIDE LETTER DATED 26/04/2019 HAD FILED ADDITIONAL EVIDENCES CONTAINING 5 PAGES AND ALSO REQUESTED THIS TRIBUNAL TO ADMIT THOSE ADDITIONAL EVIDENCES FOR DEALING WITH THE LEGAL ISSUE OF CHALLENGING INITIATION OF RE - ASSESSMENT PROCEEDINGS. THESE ADDITIONAL EVIDENCES ARE SUMMARISED AS UNDER: - 1. APPLICATION MADE VIDE LETTER DATED 25/06/2018 FOR INSPECTION AND COPIES OF RECORDS FOR A.Y.2008 - 09. 2. LETTER IS SUED BY THE ASSESSING OFFICER DATED 12/07/2018 IN RESPONSE TO OUR APPLICATION. 3. LETTER OF THE ASSESSING OFFICER DATED 13/3/2014 FORWARDING THE PROPOSAL FOR REOPENING TO THE COMMR. OF INCOME TAX, CENTRAL - III. 4. LETTER OF THE ADDL. COMMR. OF INCOME TAX, CENTRAL RANGE - VIII DATED 18/03/2014 FORWARDING THE PAPERS TO THE COMMR. OF INCOME TAX, CENTRAL - III. 5. ITO HEADQUARTERS PUT UP FOR THE APPROVAL OF THE COMMR. OF INCOME TAX A PROPOSAL DATED 20/03/2014. THE COMMR. OF INCOME TAX, CENTRAL CIRCLE - III HAS NOT GRANTED ANY APPROVAL IN THE CASE OF THE APPELLANT. 8 . THESE ADDITIONAL EVIDENCES WERE FILED BY THE ASSESSEE BEFORE US FOR THE FIRST TIME AND ADMITTEDLY THESE DOCUMENTS WERE NOT AVAILABLE BEFORE THE LD. CIT(A) WHILE ADJUDICATING THE GROUND RAISED REGARDIN G CHALLENGING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS. WE FEEL THAT THESE ADDITIONAL EVIDENCES GO TO THE ROOT OF THE MATTER FOR DECIDING THE LEGAL ISSUE OF VALIDITY OF RE - ASSESSMENT PROCEEDINGS. HENCE, WE DEEM IT FIT AND APPROPRIATE TO ADMIT THESE ADDITI ONAL EVIDENCES AND SINCE THESE EVIDENCES WERE NOT PLACED BEFORE THE LD. CIT(A) , WE DEEM IT FIT AND APPROPRIATE , TO REMAND THESE APPEALS TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE CHALLENGING THE VALIDITY OF REOPENING OF ASSESSMENT BY CONSIDERING THE SE EVIDENCES, IN ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 7 ACCORDANCE WITH LAW. WE ARE CONSCIOUS OF THE FACT THAT THE APPEALS ARE REMANDED BACK TO THE FILE OF THE LD. CIT(A) ONLY FOR THE LIMITED PURPOSE OF ADJUDICATION OF THE LEGAL ISSUE OF CHALLENGING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS. BU T SINCE, THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS AND CHALLENGING THE ADDITION ON MERITS ARE TO BE CONSIDERED TOGETHER FOR THE PURPOSE OF BETTER ADMINISTRATION AND CONVENIENCE, W E DEEM IT FIT TO REMAND THESE APPEALS TO THE FIL E OF THE LD. CIT(A) FOR DENOV O ADJUDICATION OF THE LEGAL ISSUE ALONE I.E. CHALLENGING THE VALIDITY OF RE - ASSESSMENT PROCEEDINGS. AFTER CONSIDERING THESE ADDITIONAL EVIDENCES (5 PAGES) AS TABULATED ABOVE IN ACCORDANCE WITH LAW , W E FURTHER DIRECT THAT THE LD. CIT(A) SHOULD NOT DEVIATE F ROM THE EARLIER STAND TAKEN BY HIM ON MERITS OF THE CASE. THESE DIRECTIONS, IN OUR CONSIDERED OPINION , WOULD MEET THE ENDS OF JUSTICE FOR BOTH THE PARTIES BEFORE US. ACCORDINGLY, THE GROUNDS RAISED IN CROSS OBJECTIONS AND APPEAL OF THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL OF THE REVENUE AND CROSS OBJECTIONS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES SUBJECT TO ABOVE MENTIONED DIRECTIONS. ORDER PRONOUNCED ON 21 / 05 /202 1 BY WAY OF PROPER MENTIONING IN THE NO TICE BOARD. SD/ - ( PAV AN KUMAR GADALE ) SD/ - (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 2 1 / 05 / 2021 KARUNA , SR.PS ITA NO . 455/MUM/2018 & CO NO.179/MUM/2018 M/S. AUSTER PROPERTIES LTD., 8 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGI STRAR) ITAT, MUMBAI 1. THE APPELLA NT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//