A.C.I.T.C.C.47, MUMBAI V. HARRESH N. MEHTA, MUMBAI

ITA 4552/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71788 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 19-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 05-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ABHA KALA CHANDER
• Keywords: Income from undisclosed sources; Search and seizure; Bogus loan
• Section: 153A; 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL H HH H BENCH, BENCH, BENCH, BENCH, MUMBAI MUMBAI MUMBAI MUMBAI , . . . !' !' !' !' , # # # # $% $% $% $% BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM VIJAY PAL RAO, JM & & & & SHRI SHRI SHRI SHRI N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA N. K. BILLAIYA, AM , AM , AM , AM ./ I.T.A I.T.A I.T.A I.T.A. NO. . NO. . NO. . NO.4552/MUM/2012 4552/MUM/2012 4552/MUM/2012 4552/MUM/2012 ( & & & & ' ' ' ' / ASSESSMENT YEAR :2007-08) ACIT, CIR. 47 R. NO. 658, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. RD. MUMBAI-400020 / VS. SHRI HARRESH N. MEHTA 2601, SHIV TAPI, 26 TH FLOOR, HARISHCHANDRA GOREGAONKAR MARG, GAMDEVI MUMBAI-400007 %( # ./ ) ./ PAN/GIR NO. :AALPM3811G ( (* / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( +,(* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) & && & -. -. -. -. 0 1 0 1 0 1 0 1 /ASSESSEE BY : MS. ABHA KALA CHANDER % % % % 0 1 0 1 0 1 0 1 / REVENUE BY : SHRI VIJAY MEHTA 0 00 0 .# .# .# .# / DATE OF HEARING : 21 ST NOVEMBER 2013 23' 23' 23' 23' 0 00 0.# .# .# .# /DATE OF PRONOUNCEMENT: 27 TH NOVEMBER 2013 $4 / O R D E R PER : , . . / VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 23.4.2012 OF COMMISSIONER OF INCOME TAX(APPEALS) FO R THE ASSESSMENT YEAR 2007-08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) ERRED IN DIRECTING THE ASSESSING OFFICER TO DELETE ADDITION OF ` 4,80,00,000/- AS INCOME FROM UNDISCLOSED SOURC E U/S 68 OF THE ACT, IF THE SETTLEMENT COMMISSION DECIDES THE I SSUE IN CASE OF M/S SILVER ARCH BUILDERS & PROMOTERS, THAT THE O N MONEY RECEIPTS OFFERED BY THE FIRM IS UTILISED FOR OBTAIN ING BOGUS LOANS BY THE PARTNER SHRI HARESH N. MEHTA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE BOGUS LO AN WERE DULY ITA NO.4552/M/2012 HARRESH N. MEHTA 2 OFFERED BY THE ASSESSEE AS UNACCOUNTED INCOME IN TH E STATEMENT RECORDED U/S 132(4) OF THE ACT AND THERE WAS NO DOC UMENTARY EVIDENCE TO SUBSTANTIATE THE CLAIM THAT BOGUS LOAN OBTAINED WAS OUT OF THE ON MONEY RECEIVED BY THE FIRM M/S SILVER ARCH BUILDERS & PROMOTERS. 3. THE BRIEF FACTS GIVING RISE TO THE DISPUTE ARE T HAT THERE WAS A SEARCH AND SEIZURE ACTION U/S 132(1) CARRIED OUT ON 10.8.2 006 IN CASE OF M/S ROHAN GROUP INCLUDING DIRECTORS OF DIFFERENT ASSOCI ATED AND SISTER COMPANIES AND IN ASSESSEES CASE. IN RESPONSE TO NO TICE U/S 153A THE ASSESSEE FILED HIS RETURN OF INCOME DECLARING TOTAL INCOME OF ` 75,59,190/-. THE A.O NOTED THAT THE ASSESSEE HAS SHOWN A LOAN OF ` 4.8 CRORES FROM THREE PARTIES WHICH WERE FOUND DURING THE SEARCH AS TAINTED PARTIES PROVIDING BOGUS LOAN ENTRIES. THE A.O ASKED THE ASS ESSEE WHY THIS AMOUNT OF ` 4.8 CRORES SHOULD NOT BE ADDED AND BROU GHT TO TAX. THE ASSESSEE EXPLAINED BEFORE THE A.O THAT HE IS A MANA GING PARTNER OF THE FIRM M/S SILVER ARCH BUILDERS & PROMOTERS. CONSEQUE NT TO THE SEARCH PROCEEDINGS THE SAID FIRM HAS OFFERED THE INCOME BY WAY OF RECEIPT OF MONEY ON SALE OF FLATS AMOUNTING TO ` 7.6 CRORES DU RING THE ASSESSMENT YEAR 2006-07, 2007-08 AND 2008-09 RESPECTIVELY. THU S, THE AMOUNT WAS ACCORDINGLY CREDITED IN THE BOOKS OF ACCOUNTS OF TH E FIRM IN THE RESPECTIVE ASSESSMENT YEARS. THE ASSESSEE EXPLAINED THAT THE S OURCE OF THIS BOGUS LOAN IS WITHDRAWAL OF THE AMOUNT BY THE ASSESSEE FR OM THE FIRM WHICH HAS BEEN OFFERED BY THE FIRM TO TAX AS THE RECEIPT OF M ONEY ON SALE OF FLATS. IT WAS FURTHER POINTED OUT THAT THE PARTNERSHIP FIRM H AD FILED AN APPLICATION FOR SETTLEMENT BEFORE THE SETTLEMENT COMMISSION ON 24.5.2007 WHICH WAS ADMITTED ON 5.12.2007. THUS, THE ASSESSEE CONTENDED BEFORE THE A.O THAT ITA NO.4552/M/2012 HARRESH N. MEHTA 3 THE AMOUNT HAS ALREADY BEEN OFFERED TO TAX BY THE F IRM AND IT WAS ONLY AN APPLICATION OF INCOME OF THE FIRM AS WITHDRAWN BY T HE ASSESSEE. THE A.O DID NOT ACCEPT THE EXPLANATION AND CONTENTION OF TH E ASSESSEE AND MADE ADDITION OF ` 4.8 CRORES ON ACCOUNT OF BOGUS LOAN. ON APPEAL, THE CIT(A) HAS EXAMINED THE FACTS AND RECORD AND FOUND THAT TH E AMOUNT HAS ALREADY BEEN OFFERED BY THE PARTNERSHIP FIRM M/S SILVER ARC H BUILDERS & PROMOTERS AND ACCORDINGLY HELD THAT IF THE SETTLEMENT COMMISS ION HOLDS IN THE CASE OF FIRM THAT THE INCOME OFFERED BY THE FIRM IS UTIL ISED FOR OBTAINING BOGUS LOAN BY THE ASSESSEE BEING THE PARTNER, THE ADDITIO N IN THE HANDS OF THE ASSESSEE WOULD BE DELETED AND IN CASE IF NO SUCH DI RECTIONS FROM SETTLEMENT COMMISSION THE ADDITION IN THE PRESENT C ASE WOULD STAND CONFIRMED. 4. BEFORE US THE LD. D.R HAS SUBMITTED THAT THE CIT (A) HAS COMMITTED AN ERROR IGNORING THE FACT THAT THE BOGUS LOAN WERE OFFERED BY THE ASSESSEE AS AN UNACCOUNTED INCOME IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND FURTHER THERE IS NO DOCUMENTARY EVID ENCE TO ESTABLISH THE CLAIM THAT THE BOGUS LOAN OBTAINED WAS OUT OF MONEY RECEIVED FROM THE FIRM. SHE HAS RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER. ON THE OTHER HAND, THE LD. A.R OF THE ASSESSEE HAS SUBMITTED THA T THE ASSESSEE HAS DULY EXPLAINED THE SOURCE OF THE BOGUS LOAN OF ` 4. 8 CORES AS THE SAID INCOME HAS BEEN OFFERED BY THE FIRM BEING THE MONEY RECEIVED ON SALE OF FLATS. IF THE SAID AMOUNT IS ASSESSED IN THE HANDS OF THE PARTNERSHIP FIRM THEN IT CANNOT BE TAXED TWICE BY MAKING AN ADDITION IN THE HANDS OF THE ASSESSEE. HE HAS FURTHER CONTENDED THAT WHEN THE PA RTNERSHIP FIRM HAS ITA NO.4552/M/2012 HARRESH N. MEHTA 4 OFFERED THIS AMOUNT TO TAX THEN IT IS AN APPLICATIO N OF THE INCOME OF THE PARTNERSHIP FIRM AND THEREFORE CANNOT BE BROUGHT TO TAX IN THE HANDS OF THE ASSESSEE. HE HAS FURTHER POINTED OUT THAT THE S TATEMENT MADE IN THE GROUNDS OF APPEAL AS WELL AS THE CONTENTION OF THE LD. D.R IS FACTUALLY NOT CORRECT TO THE EXTENT THAT THE ASSESSEE OFFERED THE SUM OF ` 4.8 CRORES IN THE STATEMENT RECORDED U/S 132(4). IN SUPPORT OF HI S CONTENTION HE HAS REFERRED THE ASSESSMENT ORDER AND SUBMITTED THAT TH E A.O HIMSELF HAS RECORDED THE FACT THAT THE ASSESSEE HAS DECLARED A SUM OF ` 58,52,443/- IN THE STATEMENT U/S 132(4) ON ACCOUNT OF UNEXPLAINED JEWELLERY AND UNACCOUNTED CASH EARNED FROM HORSE RACING. HE HAS S UPPORTED THE ORDER OF THE CIT(A). 5. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND CARE FUL PERUSAL OF THE RECORD WE NOTE THAT THE ASSESSING OFFICER HAS RECOR DED IN PAR 6 OF THE ORDER THAT THE ASSESSEE HAS DECLARED A SUM OF ` 58, 52,443/- AS ADDITIONAL INCOME U/S 132(4) AS UNDER: 6. THE ASSESSEE HAS DECLARED A SUM OF ` 58,52,443/ - AS ADDITIONAL INCOME U/S 132(4) ON ACCOUNT OF UNEXPLAI NED JEWELLERY OF ` 32,52,443/- AND UNACCOUNTED CASH OF ` 26,00,00 0/- CLAIMED TO HAVE EARNED FROM HORSE RACING. 6. IT IS CLEAR FROM THE FACTS RECORDED IN THE ASSES SMENT ORDER THAT THE ASSESSEE DECLARED ONLY A SUM OF ` 58,52,443/- AND N OT THE AMOUNT OF ` 4.8 CRORES AS ALLEGED BY THE REVENUE IN THE GROUNDS OF APPEAL. THERE IS NO DISPUTE THAT THE PARTNERSHIP FIRM IN WHICH THE ASSE SSEE IS MANAGING PARTNER HAS OFFERED A SUM OF ` 7.6 CRORES AS INCOME FROM SALE OF FLATS. THIS INCOME HAS BEEN OFFERED BY THE FIRM IN THREE ASSESS MENT YEARS I.E. ` 5.32 ITA NO.4552/M/2012 HARRESH N. MEHTA 5 CRORES DURING THE ASSESSMENT YEAR 2006-07, ` 1.52 C RORES DURING THE ASSESSMENT YEAR 2007-08 AND ` 76 LACS DURING THE AS SESSMENT YEAR 2008- 09. FURTHER THE PETITION FILED BY THE PARTNERSHIP F IRM IS PENDING ADJUDICATION BEFORE THE SETTLEMENT COMMISSION AND T HEREFORE THE ADDITION OF THE SAID AMOUNT IS SUBJECTED TO THE OUTCOME OF T HE DIRECTIONS OF THE SETTLEMENT COMMISSION. THE ASSESSEE EXPLAINED BEFOR E THE CIT(A) WITH SUPPORT OF THE EVIDENCE IN THE FORM OF INCOME TAX R ETURN, LEDGER ACCOUNT AND CASH BOOK THAT THE BOGUS LOAN OBTAINED BY THE A SSESSEE WAS NOTHING BUT THE APPLICATION OF INCOME EARNED BY THE FIRM BY WAY OF ON-MONEY ON SALE OF FLATS. THE CIT(A) AFTER EXAMINATION OF THE RECORD HAS DECIDED THE ISSUE IN PARA 6.3 AS UNDER: 6.3 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE APPELLANT AND THE ORDER OF THE A.O. THE ONLY ISSUE IN THE PRE SENT GROUND IS RELATING TO SET-OFF OF INCOME EARNED BY ONE ASSESSE E AGAINST ITS APPLICATION BY ANOTHER ASSESSEE. IT IS TRUE THAT DO UBLE ADDITION CANNOT BE MADE IN RESPECT OF SOURCE OF AN INCOME AN D ITS APPLICATION. HOWEVER, THE INCOME IN THE PRESENT CAS E HAS BEEN OFFERED BY THE FIRM M/S SILVER ARCH BUILDERS & PROM OTERS. FURTHER, THE SAID FIRM HAS FILED PETITION BEFORE HONBLE SET TLEMENT COMMISSION WHICH IS PENDING. IN THE CIRCUMSTANCES, THE DIRECTIONS GIVEN BY HONBLE SETTLEMENT COMMISSION W OULD BE BINDING AS REGARDS THE APPLICATION OF INCOME EARNED BY THE SAID FIRM. IF THE HONBLE SETTLEMENT COMMISSION HOLDS IN THE CASE OF THE FIRM THAT THE INCOME OFFERED BY THE FIRM IS UTI LISED FOR OBTAINING BOGUS LOANS BY THE PARTNER SHRI HARRESH M EHTA, BEING THE APPELLANT, THE ADDITION IN THE PRESENT CASE WOU LD BE DELETED. SIMILARLY, IN THE ABSENCE OF SUCH DIRECTIONS FROM H ONBLE SETTLEMENT COMMISSION, THE ADDITION IN THE PRESENT CASE WOULD STAND CONFIRMED. THIS GROUND OF APPEAL IS ACCORDING LY DECIDED AND THE DIRECTIONS GIVEN BY HONBLE SETTLEMENT COMM ISSION WOULD BE BINDING IN THE PRESENT CASE. HENCE, THE GR OUND OF APPEAL IS PARTLY ALLOWED. 7. THUS, IT IS CLEAR THAT THE ASSESSEE HAS EXPLAINE D THE SOURCE OF OBTAINING THE BOGUS LOAN BEING THE AMOUNT RECEIVED FROM THE FIRM WHICH ITA NO.4552/M/2012 HARRESH N. MEHTA 6 HAS BEEN OFFERED BY THE FIRM TO TAX AND SUBJECTED T O THE PROCEEDINGS BEFORE THE SETTLEMENT COMMISSION. THEREFORE, WE DO AGREE WITH THE FINDING OF THE CIT(A) THAT DOUBLE ADDITION CANNOT B E MADE IN RESPECT OF THE AMOUNT WHICH IS ALREADY SUBJECTED TO TAX IN THE HAN D OF THE PARTNERSHIP FIRM AND THE ASSESSEE RECEIVED THE SAME AS APPLICAT ION OF THE INCOME OF THE PARTNERSHIP FIRM. ACCORDINGLY, WE DO NOT FIND A NY ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A) QUA THIS ISSUE. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF NOVEMBER 2013 SD/- SD/- ( . . !' ) # $% (N. K. BILLAIYA) ACCOUNTANT MEMBER ( ) & $% (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 27 TH NOVEMBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI