ACIT CC 47, MUMBAI V. OFFBEAT DEVELOPERS P.LTD, MUMBAI

ITA 4724/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100776 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-04-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 18-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DEEPKANT PRASAD
• Keywords: Bogus purchase; Search and seizure; Accommodation entries
• Section: 153A

Judgement Text

M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH L , MUMBAI . . , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , J UDICIAL MEMBER ITA NO. : 4724 /MUM/20 1 3 ( ASSESSMENT YEAR: 200 7 - 0 8 ) AC IT CC - 47 , R. NO. 658, 6 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400 020 VS M/S OFFBEAT DEVELOPERS PVT LTD , 462, THE PHOENIX MILLS LTD. PREMISES, SENAPATI BAPAT MARG, LOWER PAREL, MUMBAI - 400 013 .: PAN: AA A C O 5140 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DEEPKANT PRASAD RESPONDENT BY : SHRI VI JAY MEHTA /DATE OF HEARING : 06 - 0 7 - 201 5 / DATE OF PRONOUNCEMENT : __ - 08 - 201 5 ORDER , . . : PER AMIT SHUKLA, AM : THE A FORESAID APPEAL HA S BEEN FILED BY THE REVENUE AGAINST IMPUGNED ORDER DATED 28.03.2013 PASSED BY CIT(A) - 38, MUMBAI FOR THE QUANTUM OF ASSESS MENT PASSED U/S 153A R.W.S. 144(3) FOR THE ASSESSMENT YEAR 2007 - 08, ON THE FOLLOWING GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WHILE CONFIRMING THE REDUCTION IN WIP, ERRED IN DELETING THE ADDITION OF RS. 1,00,79 ,576/ - MADE BY THE ASSESSING OFFICER UNDER THE HEAD INCOME FROM OTHER SOURCES ON ACCOUNT OF UNDISCLOSED INCOME BY WAY OF CASH RECEIVED BACK IN RESPECT OF THE TRANSACTIONS RELATING TO ACCOMMODATION BILLS. 2. AT THE OUTSET, BOTH THE PARTIES ADMITTED T HAT THIS ISSUE IS EXACTLY SIMILAR TO THE ISSUE RAISED BY THE DEPARTMENT IN THE CASE OF PHOENIX MILLS LTD. IN THE ASSESSMENT YEARS 2006 - 07 & 2007 - 08. M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 2 3. AFTER CONSIDERING THE RELEVANT FINDING GIVEN IN THE IMPUGNED ORDERS, WE FIND THAT ASSESSEE IS PART OF PHOENIX GROUP AND THE ISSUE INVOLVED IS EXACTLY SIMILAR TO THAT DECIDED IN THE APPEAL OF PHOENIX MILLS LTD. IN ITA NO. 7423/MUM/2012 AND OTHERS VIDE ORDER OF EVEN DATE, WHEREIN THIS ISSUE HAS BEEN DISCUSSED IN DETAIL AND REVENUES APPEAL HAS BEEN DISMISSE D ON THIS SCORE . 4. BRIEFLY STATED, THE RELEVANT FACTS ARE THAT, DURING THE COURSE OF SEARCH IN THE CASE OF PHOENIX MILLS LTD. , CERTAIN INCRIMINATING DOCUMENTS IN THE FORM OF BOGUS BILLS WERE FOUND. WHEN THESE BILLS WERE CONFRONTED WITH THE DIRECTORS OF THE GROUP COMPANY, THE COMPANY CLAIMED THAT MATERIALS WERE PURCHASED FROM THE FOLLOWING CONCERNS NAMELY , M/S GRUKRUPA ENTERPRISE & M/S MANJU ENTERPRISES DURING THE ASSESSMENT YEAR 2007 - 08, THE DETAILS OF WHICH ARE AS UNDER: NAME OF THE PARTY AY 2007 - 08 ( RS.) M/S GURUKRUPA ENTERPRISE 79,52,802 M/S MANJU ENTERPRISE 21,26,774 TOTAL(RS.) 1,00,79,576 5. THE ASSESSING OFFICER, FIRST OF ALL, ADDED THE SAID ADDITION OF RS. 100,79,576/ - AS INCOME FROM OTHER SOURCES ON THE GROUND THAT THE ASSESSEE MUST HAVE R ECEIVED BACK THE CASH IN RESPECT OF TRANSACTIONS RELATING TO ACCOMMODATION BILLS. THEREAFTER, HE AGAIN PROCEEDED TO REDUCE THE WORK - IN - PROGRESS BY THE QUANTUM OF AMOUNT OF ALLEGED BOGUS PURCHASES OF RS. 100,79,576/ - . SIMILAR ADD I TION WAS MADE IN THE CASE O F PHOENIX MILLS LTD. ALSO , WHEREIN, THIS ISSUE HAS BEEN DEALT AND DISCUSSED IN DETAIL BY THE CIT(A) AND THE TRIBUNAL, WHEREIN THE ACTION OF THE ASSESSING OFFICER FOR REDUCING THE CAPITAL WORK - IN - PROGRESS ON ACCOUNT OF BOGUS BILLS BEING PURCHASES HAVE BEE N CONFIRMED , HOWEVER, SEPARATE ADDITION ON ACCOUNT OF INCOME FROM OTHER SOURCES FOR THE SAME AMOUNT HAS BEEN DELETED . M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 3 6 . IN THE CASE OF PHOENIX MILLS LTD., LD. CIT(A) HAS HELD THAT SO FAR AS THE ASSESSEES CLAIM THAT THESE BILLS ARE GENUINE AND THERE IS NO ACCOMMODATION ENTRY THE SAME CANNOT BE SUSTAINED AND HAS BEEN REJECTED . T HIS FINDING OF THE CIT(A) HAS ALSO BEEN CONFIRMED BY US , IN THE CASE OF PHOENIX MILLS LTD. IN ITA NO. 7423/MUM/2012 & 7425/MUM/2012 IN REVENUES APPEALS FOR AYS 2006 - 07 & 2008 - 09 R ESPECTIVELY . HOWEVER, THE MAIN CASE OF THE ASSESSEE BEFORE THE CIT(A) AND BEFORE US WAS THAT THE ASSESSING OFFICER HAS ALREADY REDUCED THE CAPITAL WORK - IN - PROGRESS (WIP) ON ACCOUNT OF BOGUS BILLS OF PURCHASES AND THEREAFTER HAS FURTHER MADE DOUBLE ADDITION BY TAXING THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES. LD. CIT(A) AGREED WITH THAT THE CONTENTION OF THE ASSESSEE THAT ONCE CAPITAL WIP HAS BEEN REDUCED , THEN NO FURTHER ADDITION OF THE SAME AMOUNT CAN BE MADE AS UNDISCLOSED INCOME. THE FINDIN G OF THE CIT(A) IN THIS REGARD HAS ALSO BEEN CONFIRMED BY US. THE RELEVANT DISCUSSION AND THE FINDING GIVEN IN THE CASE OF PHOENIX MILLS LTD. VIDE ITS RELEVANT PARAS 30 TO 32 FOR AY 2006 - 07 IN ITA NO. 7423/MUM/2012, VIDE ORDER OF EVEN DATE, FOR THE SAKE OF CONVENIENCE IS REPRODUCED HEREUNDER : - 30. THE ASSESSEE FURTHER RAISED THE OBJECTION THAT ONCE THE EFFECT OF BOGUS PURCHASES HAS BEEN MADE BY REDUCING THE WIP, THEN AGAIN THE SAME AMOUNT OF PURCHASES HAS BEEN ADDED BY THE ASSESSING OFFICER, SEPARATELY UNDER THE HEAD INCOME FROM OTHER SOURCES FOR ALL THE ASSESSMENT YEARS, VIZ., RS. 1,12,87,068/ - , RS. 2,35,29,537/ - , 4,05,88,531/ - FOR THE ASSESSMENT YEARS 2006 - 07, 2007 - 08 & 2008 - 09 RESPECTIVELY. THE REASON GIVEN BY THE ASSESSING OFFICER WAS THAT THE ASSES SEE MUST HAVE RECEIVED EQUIVALENT CASH ON SUCH BOGUS PURCHASES. THE ASSESSEES SUBMISSION IN THIS REGARD BEFORE CIT(A) HAS BEEN DEALT BY THE CIT(A) IN PARA 18 FROM PAGES 30 TO 32 OF THE APPELLATE ORDER. SUM AND SUBSTANCE OF THE ASSESSEES SUBMISSION IS THA T THE EFFECT OF BOGUS PURCHASES HAS ALREADY BEEN GIVEN BY THE ASSESSING OFFICER BY REDUCING M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 4 THE WIP IN RESPECTIVE ASSESSMENT YEARS, THEREFORE, THERE CANNOT BE DOUBLE ADDITION OF SAME AMOUNT AS UNDISCLOSED INCOME. IF THE STAND OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVED THE CASH BACK, IS ACCEPTED OR HELD TO BE CORRECT, THEN IT WAS ASSESSEES OWN MONEY GONE FROM THE BOOKS WHICH WAS NOT IN THE CHARACTER OF UNDISCLOSED MONEY, WHICH SHOULD BE TAXED UNDER THE PROVISIONS OF THE INCOME - TAX ACT. IF THE ASSESSEE HAS RECEIVED THE CASH BACK, THE THEN SOURCE OF IT WAS ALREADY PART OF THE BOOKS OF ACCOUNT. FURTHER, ONCE THE ASSESSING OFFICER HAS ADJUSTED THE BOGUS PURCHASES BY REDUCING THE WIP THEN EFFECT OF BOGUS PURCHASE HAS ALREADY BEEN GIVEN BY THE ASSES SING OFFICER. THERE IS NO QUESTION OF FURTHER ADDING THE SAID AMOUNT AS UNDISCLOSED INCOME, BECAUSE IT AMOUNTS TO DOUBLE TAXATION. RELIANCE WAS PLACED ON VARIOUS DECISIONS IN THIS REGARD, IN SUPPORT OF HIS CONTENTION. THE LD. CIT(A) AGREED WITH THE CONTE NTION OF THE ASSESSEE THAT, IF THE ASSESSING OFFICER HAS REDUCED THE WORK - IN - PROGRESS (WIP) TO THE EXTENT OF BOGUS PURCHASES, WHICH ACTION TOO HAS BEEN CONFIRMED BY HIM, THEN FURTHER ADDITION OF THE SAME CANNOT BE MADE AS INCOME FROM OTHER SOURCES. NO EV IDENCE OF RECEIPT OF THE CASH OR AVAILABILITY OF THE CASH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS. THUS, HE HELD THAT NO FURTHER ADDITION OF THIS KIND SHOULD BE MADE IN THE FORM OF INCOME FROM OTHER SOURCES. THE RELEVANT FINDING OF CIT(A) IN THIS REGARD READS AS UNDER: 19.0 THE REASONS STATED BY THE AO IN THE ASSESSMENT ORDER FOR MAKING ADDITIONS UNDER THE HEAD 'OTHER SOURCES' EQUIVALENT TO THE VALUE OF BOGUS PURCHASES AND THE CONTENTIONS OF THE APPELLANT AS CAPTURED IN THE FOREGOIN G PARAGRAPHS ARE CAREFULLY EXAMINED. THE ACTION OF THE A.O IN REDUCING THE WIP TO THE EXTENT OF BOGUS PURCHASES IS UPHELD IN THE FOREGOING PARAGRAPHS OF THIS APPELLATE ORDER. A.O HAS MADE ANOTHER ADDITION TO THE RETURNED INCOMES ON THE GROUND THAT TH E BOGUS PURCHASES HAVE RESULTED IN CASH M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 5 RECEIPTS IN THE HANDS OF THE APPELLANT. APPELLANT HAS CONTENDED THAT THERE IS NO EVIDENCE TO PROVE THAT THE APPELLANT HAS RECEIVED CASH ON ACCOUNT OF THE BOGUS PURCHASE TRANSACTIONS. IT IS ALSO CONTENDED THAT NO EVID ENCE OF THE RECEIPT OF CASH OR THE AVAILABILITY OF CASH WAS FOUND DURING THE SEARCH & SEIZURE PROCEEDINGS. APPELLANT HAS VEHEMENTLY CONTENDED IN THE ALTERNATIVE SUBMISSION THAT THE ALLEGED BOGUS PURCHASES RESULTING IN CASH RECEIPTS CANNOT BE TAXED AS INCOM ES ACCRUED IN THE HANDS OF THE APPELLANT SINCE SUCH ALLEGED RECEIPTS OF CASH REPRESENT THE MONEY BELONGING TO THE APPELLANT ITSELF AND THE SOURCES OF SUCH CASH ARE THE BOOKS OF ACCOUNTS OF THE APPELLANT ITSELF. FURTHER, THE APPELLANT HAS CONTENDED THAT ONL Y REAL INCOME CAN BE BROUGHT TO TAX, WHILE A.0 HAS SOUGHT TO ASSESS CERTAIN AMOUNTS WHICH HAVE NEITHER ACCRUED NOR RECEIVED AS INCOMES BY THE APPELLANT. 19.1 I FIND THAT THERE IS ADEQUATE FORCE IN THE CONTENTIONS OF THE APPELLANT. ON THE ISSUE OF BOGUS P URCHASES, I HAVE UPHELD REDUCTIONS IN THE WIP TO THE EXTENT OF BOGUS PURCHASES IDENTIFIED BY THE DEPARTMENT. AS REGARDS ASSESSING THE QUANTUM OF BOGUS PURCHASES AS ALSO THE INCOMES OF THE APPELLANT IS CONCERNED, SUCH AN ACTION DOES NOT PASS THE TEST OF REA L INCOME. AS CONTENDED BY THE APPELLANT, THE SOURCES OF SUCH ALLEGED CASH RECEIPTS ARE NOTHING BUT THE BOOKS OF ACCOUNT OF THE APPELLANT ITSELF. IT IS HEREBY HELD THAT THE ISSUE OF BOGUS PURCHASES IS ADEQUATELY DEALT WITH BY REDUCING THE WIP TO THE EXTENT OF BOGUS PURCHASES IDENTIFIED BY THE DEPARTMENT. IN VIEW OF THE ABOVE, THE ADDITIONS MADE BY THE A.0 UNDER THE HEAD 'OTHER SOURCES' ARE HEREBY DELETED. 31. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUSED THE RELEVANT FINDING GIVEN IN THE IMPUGNED OR DERS. SO FAR AS THE FACTUM OF ALLEGED BOGUS PURCHASES FROM 3 CONCERNS, THE M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 6 SAME HAS NOT BEEN DISPUTED BEFORE US BY THE ASSESSEE. THE LD. CIT(A) HAS ALREADY CONFIRMED THE ACTION OF THE ASSESSING OFFICER THAT THE ALLEGED PURCHASE TRANSACTION OF THE MATERIALS HAS BEEN FOUND TO BE NOT GENUINE AS THESE PARTIES HAVE ADMITTED THAT THEY WERE PROVIDING ACCOMMODATION ENTRIES. THEREFORE, WHETHER THE PURCHASES ARE GENUINE OR NOT THE SAME IS NOT THE SUBJECT MATTER OF DISPUTE OR ISSUE BEFORE US. THE ASSESSEE HAS CONSTRUC TED A MALL AT LOWER PAREL IN RELATION TO WHICH HUGE PURCHASE OF BUILDING MATERIALS WERE MADE. SOME OF THE BILLS FOR THE PURCHASE OF MATERIALS HAVE BEEN HELD TO BE BOGUS ON THE GROUND THAT THESE WERE TAKEN FROM THE PARTIES WHO ARE PROVIDING ACCOMMODATION EN TRIES. THE ASSESSING OFFICER HAS REDUCED THE CAPITAL WORK - IN - PROGRESS BY QUANTUM OF SUCH ALLEGED BOGUS PURCHASE IN THE FOLLOWING MANNER : - AY 2006 - 07(RS.) 2007 - 08 (RS.) 2008 - 09 (RS.) THE NET CAPITAL WIP AS PER BALANCE 26,06,36,296 96,96,39,053 178,16 ,91,793 THE REDUCTION IN CAPITAL WIP DUE TO BOGUS BILLS AS DISCUSSED 1,12,87,068 2,35,29,537 4,05,88,531 THE REVISED CAPITAL WIP THE A.Y. 24,93,49,228 94,61,09,516 174,11,03,262 SUCH REDUCTION OF WIP HAS BEEN CONFIRMED BY THE CIT(A), AGAIN ST WHICH, THE ASSESSEE HAS NOT PREFERRED ANY APPEAL OR RAISED ANY OBJECTIONS BEFORE US IN ANY OF THE ASSESSMENT YEARS. AFTER MAKING THE ADDITION IN THE AFORESAID MANNER I.E. BY REDUCING THE WIP BY THE QUANTUM OF ALLEGED BOGUS PURCHASE, THE ASSESSING OFFICE R HAS FURTHER MADE THE ADDITION ON THE GROUND THAT THE ASSESSEE MUST HAVE RECEIVED THE EQUIVALENT AMOUNT OF CASH FROM THE BOGUS PURCHASES. WE ARE UNABLE TO APPRECIATE AS TO HOW SUCH AN ADDITION CAN BE MADE AGAIN. FIRSTLY, EVEN GOING BY THE VERSION OF THE A SSESSING OFFICER IF THE ASSESSEE HAS PAID CHEQUE TO THE PARTIES FOR THE PURCHASE OF MATERIAL THEN SUCH A CHEQUE IS DULY REFLECTED IN THE CASH BOOK / BOOKS OF ACCOUNT OF THE ASSESSEE. FURTHER IF THE ASSESSEE HAS RECEIVED BACK THE EQUIVALENT AMOUNT OF M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 7 CASH, THEN HOW AN ADDITION CAN BE MADE FOR THE SAME AMOUNT AGAIN AS UNDISCLOSED INCOME OR OUTSIDE THE BOOKS BECAUSE, IT IS THE SAME MONEY WHICH HAS BEEN RECEIVED BACK; SECONDLY, THERE IS NO ACTUAL EVIDENCE TO PROVE THAT ASSESSEE HAS RECEIVED CASH ON ACCOUNT OF B OGUS PURCHASE TRANSACTION, AT LEAST NOTHING HAS BEEN BROUGHT ON RECORD EVEN AFTER EXTENSIVE SEARCH AND SEIZURE ACTION AND ENQUIRY BY THE DEPARTMENT. NO AVAILABILITY OF CASH WAS FOUND DURING THE COURSE OF SEARCH AND SEIZURE PROCEEDINGS. THUS, NO ADDITION ON ACCOUNT OF ALLEGED RECEIPTS OF CASH IN THE HANDS OF THE ASSESSEE CAN BE MADE. EVEN OTHERWISE ALSO, IF THE ADDITION HAS ALREADY BEEN UPHELD BY CIT(A) ON ACCOUNT OF BOGUS PURCHASES BY REDUCTION IN WIP, THEN AGAIN ADDING THE SAME AMOUNT AS ALLEGED CASH RE CEIPTS WOULD AMOUNT TO DOUBLE ADDITION AND DOUBLE TAXATION WHICH CANNOT BE SUSTAINED AT ALL. THE FINDING OF THE CIT(A) AS RECORDED ABOVE, IS NOT ONLY FACTUALLY CORRECT BUT ALSO IN ACCORDANCE WITH THE PROVISIONS OF THE LAW AND ACCORDINGLY, SUCH A FINDING OF THE CIT(A) IS AFFIRMED AND THUS THE GROUND NO. 5 AS RAISED BY THE REVENUE IS DISMISSED. 32. IN THE RESULT, APPEAL OF THE REVENUE FOR THE ASSESSMENT YEAR 2006 - 07 IS DISMISSED . 7 . THE AFORESAID FINDING WILL APPLY MUTATIS MUTANDIS HERE IN THIS CASE ALSO AND ACCORDINGLY , THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8 . IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST , 2015. SD/ - SD/ - ( . . ) ( ) ( B R BASKARAN ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 19 TH AUGUST , 2015 M/S OFFBEAT DEVELOPERS PVT LTD ITA NO. 4724 /MUM/20 1 3 8 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 38 , MUMBAI. 4) THE CIT CENTRAL - IV , MUMBAI. 5) , , / THE D.R. C BENCH, MUMBAI. 6) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS