DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(2), MUMBAI V. MIHIR NERURKAR, MUMBAI

ITA 4900/MUM/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8178 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 13-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH; D G PANSARI D R S
• Assessee Lawyers: RISHABH S HAH
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Unexplained expenditure; Business expenditure; Search and seizure; Reassessment proceedings
• Section: 153A; 131; 144; 139

Judgement Text

P A G E | 1 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO.4900/MUM/2017 (ASSESSMENT YEAR: 2011 - 12 ) DCIT, CC - 6(2) R. NO. 1903, 19 TH FLOOR, AIR INDIA BUILIDNG, NARIMAN POINT, MUMBAI 400 021 VS. SHRI MIHIR NERURKAR G - 8, SHRIKANT CHAMBERS NEXT TO R.K. STUDIO SION TROMBAY ROAD, CHEMBUR, MUMBAI - 400071 PAN AAAPN3999H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI H.N. SINGH & SHRI D.G.PANSARI, D.R S RESPONDENT BY: SHRI RISHABH SHAH, A.R DATE OF HEARING: 26 .06.2019 DATE OF PRONOUNCEMENT: 1 2 .0 7 .2019 O R D E R PER RAVISH SOOD, JM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), 54, MUMBAI, DATED 07.04.2017, WHICH IN TURN ARISES FROM THE ORDER PASSED BY THE A.O UNDER SEC. 144 R.W.S 153A OF THE INCOME TAX ACT, 1961 (FOR SHORT ACT), DATED 26.03.2015. THE REVENUE ASSAILING THE ORDER OF THE CIT(A) HAS RAISED BEFORE US THE FOLLOWING GROUNDS OF APPEAL: (1) WHETHER THE LD CIT(A) HAS ERRED IN LAW AND FACTS IN GRANTING RELIEF TO THE ASSESSEE WHILE HOLDING THAT NO ADDITION CAN BE MADE IN P A G E | 2 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR RESPECT OF AN UNABATED ASSESSMENT WHICH HAS BECOME FINAL IF NO INCRIMINATING MATER IAL IS FOUND DURING THE SEARCH. 2. BRIEFLY STATED, THE ASSESSEE HAD FILED HIS ORIGINAL RETURN OF INCOME FOR A . Y 2011 - 12 ON 02.09.2011, DECLARING TOTAL INCOME AT RS.19,05,140/ - . SEARCH AND SEIZURE OPERATION S UNDER SEC. 131 OF THE ACT WERE CARRIED OUT IN THE CASE OF SAMIRA G ROUP ON 21.03.2013. AS SESSEE WAS COVERED IN THE AFORESAID SEARCH PROCEEDINGS, AND WARRANTS FOR HIS RESIDENTIAL PREMISES AT 7, SHIVAYAN SHRINAGAR COMPLEX, P.L LOKHANDE MARG , CHEMBUR, MUMBA I AND FOR LOCKER NO. 87 HELD BY HIM WITH SARASWAT COOPERATIVE BANK OF INDIA, CHEMBUR WERE EXECUTED. IN COMPLIANCE TO THE NOTICE ISSUED UNDER SEC.153A, THE ASSESSEE FILED HIS RETURN OF INCOME ON 12.12.2014 DISCLOSING TOTAL INCOME OF RS.19,05,140/ - . ASSESSME NT UNDER SEC.144 R.W.S 153A, DATED 26.03.2015 WAS FRAMED AT A TOTAL INCOME OF RS.3,93,20,360/ - . THE A.O WHILE FRAMING THE ASSESSMENT HAD INTER ALIA MADE THE FOLLOWING ADDITIONS/DISALLOWANCES IN THE HANDS OF THE ASSESSEE : SR. NO. PARTICULARS AMOUNT 1. ADDITION OF THE COMMISSION INCOME ON SALE OF LAND AN OTHER REAL ESTATE TRANSACTIONS AS WAS OFFERED BY THE ASSESSEE AS HIS ADDITIONAL INCOME DURING THE YEAR BEFORE THE INCOME TAX SETTLEMENT COMMISSION. RS.6,00,000/ - 2. ADDITION OF ON - MONEY RECEIVED BY TH E ASSESSEE ON SALE OF FLAT (AS GATHERED ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS) RS.18,00,000/ - 3. ADDITION TOWARDS ON - MONEY RECEIVED BY THE ASSESSEE ON SALE OF FLAT (AS GATHERED ON THE BASIS OF INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH PROCEEDINGS) RS.21,00,000/ - 4. ADDITION TOWARDS IRRECONCILED SALE CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF IMMOVABLE PROPERTY (AS WAS DISCERNIBLE FROM THE ITS DETAILS OF THE ASSESSEE) RS.4 8,30,980/ - 5. ADDITION AS PER THE DEEMED PROVISIONS OF SEC.50C ON SALE OF PROPERTY (AS PER THE DETAILS DISCERNIBLE FROM THE ITS DATA) RS.1,12,56,500/ - P A G E | 3 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR 6. DISALLOWANCE OF UNSUBSTANTIATED DEDUCTIONS CLAIMED BY THE ASSESSEE UNDER CHAPTER VIA RS.1,10,796/ - 7. DISALLOWANCE OF CURRENT YEAR INTEREST OF HOUSING LOAN. RS.1,50,000/ - 8. DISALLOWANCE OF UNSUBSTANTIATED CLAIM OF CARRY FORWARD OF SHORT TERM CAPITAL LOSS. RS.1,475/ - 9. DISALLOWANCE OF UNSUBSTANTIATED BUSINESS EXPENSES CLAIMED BY THE ASSESSEE RS.1,50 ,000/ - 10. UNEXPLAINED EXPENDITURE TOWARDS PURCHASE OF MUTUAL FUNDS AND PAYMENT OF INSURANCE PREMIUM BY THE ASSESSEE RS.51,60,446/ - 11. UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE (AS DISCERNIBLE FROM THE ITS DATA) RS.1,12,56,500/ - 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A). IT WAS OBSERVED BY THE CIT(A) THAT THE PROCESSING OF THE RETURN OF INCOME FILED BY THE ASSESSEE UNDER SEC. 139 OF THE ACT WAS ALREADY COMPLETED, AND AS ON THE DATE OF INITIATION OF THE SEARCH PROCEEDING I.E ON 21.03.2013 NO ASSESSMENT/RE - ASSESSMENT PROCEEDINGS WERE PENDING IN HIS CASE FOR THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE CIT(A) OBSERVED, THAT AS ON THE DATE ON WHICH SEARCH PROCEEDINGS WERE CONDUCTED I.E ON 21.03.2013 NO AS SESSMENT PROCEEDINGS WERE PENDING FOR THE YEAR UNDER CONSIDERATION I.E A.Y. 2011 - 12, THEREFORE, THE ASSESSMENT IN THE CASE OF THE ASSESSEE WAS UNABATED. IT WAS FURTHER OBSERVED BY HIM THAT NEITHER ANY NOTICE WAS ISSUED TO THE ASSESSEE UNDER SEC.143(2)/148 OF THE ACT FOR THE YEAR UNDER CONSIDERATION AS ON THE DATE OF SEARCH, I.E 21.03.2013, NOR ANY ASSESSMENT PROCEEDINGS WERE PENDING BEFORE THE A.O FOR THE RELEVANT YEAR. FURTHER, THE CIT(A) CALLED UPON THE A.O TO VERIFY FROM HIS RECORDS AND SUBMIT THE FACTUA L REPORT , AS TO WHETHER FOR THE ABOVE REFERRED ASSESSMENT YEAR ANY ASSESSMENT/REASSESSMENT WAS PENDING AS ON THE DATE OF INITIATION OF THE SEARCH PROCEEDINGS , WHICH HAD GOT ABATED IN TERMS OF THE PROVISIONS OF SEC.153A OF THE ACT. APART THERE FROM, THE A.O WAS ALSO REQUESTED TO SPECIFY WHETHER ANY INCRIMINATING MATERIAL/DOCUMENTS P A G E | 4 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR WERE FOUND DURING THE COURSE OF THE SEARCH PROCEEDINGS IN RESPECT OF THE DISALLOWANCES/ADDITIONS MADE , ALONG WITH THE DETAILS OF THE SAME. IN REPLY, IT WAS SUBMITTED BY THE A.O THA T ON VERIFICATION OF THE AVAILABLE RECORDS AND AS PER THE ITD SYSTEM, IT STOOD REVEALED THAT NO SCRUTINY PROCEEDINGS WERE PENDING PRIOR TO THE SEARCH PROCEEDINGS . FURTHER, IT WAS SUBMITTED BY HIM THAT UP TO THE DATE OF INITIATION OF THE SEARCH PROCEEDINGS NO NOTICE UNDER SEC.143(2)/148 WAS ISSUED TO THE ASSESSEE , AND THUS NO ASSESSMENT/REASSESSMENT WAS PENDING IN HIS CASE FOR THE YEAR UNDER CONSIDERATION. ALSO , IT WAS STATED BY THE A.O THAT THE SCRUTINY ASSESSMENT WAS FRAMED UNDER SEC.153A AFTER MAKING THE FOLLOWING ADDITIONS/DISALLOWANCES IN THE HANDS OF THE ASSESSEE : SR. NO. DISALLOWANCE/ADDITION REMARKS 1. ADDITION OF RS.60000/ - BEING COMMISSION INCOME. THIS ADDITIONS BASED ON THE ASSESSES OFFERING BEFORE THE HONBLE ITSC. 2. DISALLOWANCE OF RS.1,50,000/ - THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS AS BASED ON NON RECONCILIATION OF AIR/ITS DETAILS. 3. DISALLO W ANCE OF RS.1,50,000/ - THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS BASED ON NON RECONCILIATION OF AIR/ITS DETAILS.4. 4. ADDITION OF RS.51,60,446/ - BEING UNEXPLAINED EXPENDITURE THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS BASED ON NON RECO NCILIATION OF AIR/ITS DETAILS. 5. DISALLOWANCE OF RS.110796/ - BEING CLAIM OF CHAPTER VIA DEDUCTION. THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS BASED ON NON RECONCILIATION OF AIR/ITS DETAILS. 6. ADDITION OF RS.48,30,980/ - THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS BASED ON NON RECONCILIATION OF AIR/ ITS DETAILS. 7. ADDITION OF RS.1,12,56,500/ - THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING P A G E | 5 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR THE SEARCH AS IT IS BASED ON NON RECONCILIATION OF AIR/ITS DETAILS. 8. ADDITION OF RS.1,12,56,500/ - BEING UNEXPLAINED INVESTMENT IN PROGRESS THIS DISALLOWANCE IS NOT ON ACCOUNT OF INCRIMINATING EVIDENCE FOUND DURING THE SEARCH AS IT IS BASED ON NON RECONCILIATION OF AIR/ITS DETAILS. 4. IN THE BACKDROP OF THE AFORESAID FACTS, IT WAS OBSERVED BY THE CIT(A) THAT AS ON THE DATE OF INITIATION OF THE SEARCH PROCEEDINGS, I.E ON 21.03.2013 NO ASSESSMENT/REASSESSMENT PROCEEDINGS WERE PEN DING IN RESPECT OF THE YEAR UNDER CONSIDERATION I.E A.Y 2011 - 12, THEREFORE, THE ASSESSMENT PROCEEDINGS IN THE CASE OF THE ASSESSEE DID NOT ABATE. THE CIT(A) DRAWING SUPPORT FROM THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. CONTI NENTAL HOUSING CORPORATION (NHAVA SHEVA) LTD. 58 TAXMAN.COM 78 (BOM) OBSERVED, THAT IN RESPECT OF COMPLETED ASSESSMENTS WHICH DID NOT GET ABATED, THE ASSESSMENT COULD BE MADE BY THE A.O U/S 153A ONLY ON THE BASIS OF THE BOOKS OF ACCOUNTS OR OTHER DOCUMEN TS NOT PRODUCED IN THE COURSE OF THE ORIGINAL ASSESSMENT BUT FOUND IN THE COURSE OF SEARCH PROCEEDINGS, AND ALSO ON THE BASIS OF THE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF THE SAID SEARCH PROCEEDINGS. THE CIT(A) RELYING ON T HE AFORESAID JUDGMENT OF THE HONBLE HIGH COURT OBSERVED, THAT AN UNABATED/COMPLETED ASSESSMENT COULD BE INTERFERED WITH BY THE A.O WHILE MAKING OF AN ASSESSMENT UNDER SEC.153A, ONLY ON THE BASIS OF SOME INCRIMINATING MATERIAL UNEARTHED DURING THE COURSE OF THE SEARCH PROCEEDINGS , AND IN ABSENCE OF ANY SUCH INCRIMINATING MATERIAL THE COMPLETED ASSESSMENT COULD ONLY BE REPEATED . ACCORDINGLY, IT WAS OBSERVED BY THE CIT(A) THAT IN RESPECT OF ABATED ASSESSMENT/REASSESSMENTS , THE A.O IS VESTED WITH THE JURISDIC TION TO EXERCISE NORMAL ASSESSMENT POWERS I.E THE FULL POWER TO ASSESS/REASSESS ANY INCOME ON THE BASIS OF FINDINGS OF THE SEARCH , AND ALSO ON THE BASIS OF ANY OTHER MATERIAL P A G E | 6 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR EXISTING OR BROUGHT ON HIS RECORD. HOWEVER, IT WAS OBSERVED BY THE CIT(A), THAT I N RESPECT OF COMPLETED ASSESSMENTS WHICH DID NOT ABATE ON THE DATE ON WHICH SEARCH PROCEEDINGS ARE CONDUCTED , ASSESSMENT COULD ONLY BE MADE ON THE BASIS OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS NOT PRODUCED IN THE COURSE OF THE ORIGINAL ASSESSMENT AND FOUND DURING THE COURSE OF SEARCH PROCEEDINGS, AND ALSO THE UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF THE SAID PROCEEDINGS . 5. ADMITTEDLY, AS I N THE CASE BEFORE US, NO ASSESSMENT / REASSESSMENT PROCEEDINGS WERE PENDING IN THE C ASE OF THE ASSESSEE ON THE DATE OF INITIATION OF THE SEARCH PROCEEDINGS I.E ON 21.03.2013 IN RESPECT OF THE YEAR UNDER CONSIDERATION VIZ. A.Y. 2011 - 12, THEREFORE, THE QUESTION OF ABATEMENT OF THE ASSESSMENT PROCEEDINGS FOR THE SAID YEAR DOES NOT ARISE AT A LL. WE FIND THAT IN THE BACKDROP OF THE AFORESAID FACTS, THE CIT(A) R ELYING ON THE JUDGMENT S OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. CONTINENTAL HOUSING CORPORATION (NHAVA SHEVA) LTD. 58 TAXMAN.COM 78 (BOM) AND THAT OF THE HONBLE HIGH C OURT OF DELHI IN THE CASE OF CIT VS. KABUL CHAWLA (61 TAXMAM.COM 412) (DEL) HAD RIGHTLY CONCLUDED , THAT IN RESPECT OF THE UNABATED ASSESSMENT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION VIZ. AY. 2011 - 12, THE ADDITIONS/DISALLOWANCES WHICH WERE NOT MADE ON THE BASIS OF ANY INCRIMINATING MATERIAL OR UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY , DISCOVERED IN THE COURSE OF THE SAID PROCEEDINGS, COULD NOT BE SUSTAINED AND WAS LIABLE TO BE STRUCK DOWN. ON THE BASIS OF HIS AFORESAID OBSERVATIONS, WE FIND THAT T HE CIT(A) HAD DELETED CERTAIN ADDITION S /DISALLOWANCE S WHICH WERE NOT BACKED BY ANY INCRIMINATING MATERIAL OR UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY, DISCOVERED IN THE COURSE OF THE SAID PROCEEDINGS , AS UNDER : P A G E | 7 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR SR. NO. PARTICULAR AMOUNT 1. ADDITION MADE BY THE A.O TOWARDS CAPITAL GAIN ON SALE OF PROPERTY NOT OFFERED FOR TAX BY THE ASSESSEE (AS WAS DISCERNIBLE FROM THE ITS DATA) RS.48,30,980/ - 2. ADDITION OF CAPITAL GAIN ON SALE OF PROPERTY I.E FLAT NO.1302, 13 TH FLOOR STERLING APARTMENT, DEVANAGAR, SOLD BY THE ASSESSEE DURING THE YEAR (AS WAS DISCERNIBLE FROM THE ITS DATA) RS.1,12,56,500/ - 3. DISALLOWANCE OF UNSUBSTANTIATED DEDUCTIONS CLAIMED BY THE ASSESSEE UNDER CHAPTER VIA RS.1,10,796/ - 4. DISALLOWANCE OF THE UNSUBSTANTIATED CLAIM OF INTEREST ON HOUSING LOAN RAISED BY THE ASSESSEE RS.1,50,000/ - 5. DISALLOWANCE OF CARRY FORWARD OF SHORT TERM CAPITAL LOSS RS.1475/ - 6. DISALLOWANCE OF UNSUBSTANTIATED BUSINESS EXPENSES RS.1,50,000/ - 7. ADDITION TOWARDS UNEXPLAINED EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS CREDIT CARDS PAYMENTS AND PAYMENTS MADE FOR PURCHASE OF MUTUAL FUNDS AND INSURANCE PREMIUM (AS WAS DISCERNIBLE FROM THE ITS DATA) RS.51,60,446/ - 8. ADDITION TOWARDS UNEXPLAINED INVESTMENT IN PROPERTIES (AS WAS DISCERNIBLE FROM THE ITS DA TA) RS.1,12,56,500/ - 6. WE HAVE PERUSED THE ORDER OF THE CIT(A) , AND FIND THAT RELYING ON THE JUDGMENT OF THE HONBLE HIGH COURT OF BOMBAY IN THE CASE OF CIT VS. CONTINENTAL HOUSING CORPORATION (NHAVA SHEVA) LTD. 58 TAXMAN.COM 78 (BOM) , HE HAD AFTER CONS IDERING THE LIMITED SCOPE OF ADDITIONS/DISALLOWANCES THAT COULD BE MADE IN THE ASSESSMENT FRAMED U/S 153A IN RESPECT OF THE UNABATED ASSESSMENT OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION VIZ. A.Y 2011 - 12, HAD RIGHTLY CONCLUDED THAT ADDITIONS/DISALLOW ANCES MADE BY THE A.O WHICH WERE NOT BASED ON ANY INCRIMINATING MATERIAL OR UNDISCLOSED INCOME OR UNDISCLOSED PROPERTY DISCOVERED IN THE COURSE OF THE SEARCH PROCEEDINGS COULD N OT BE SUSTAINED , AND WERE LIABLE TO BE VACATED. ACCORDINGLY, FINDING NO INFIRMI TY IN THE ORDER OF THE CIT(A) TO THE EXTENT THE SAME HA S BEEN P A G E | 8 ITA NO. 4900/MUM/2017 AY. 2011 - 12 DCIT, CC - 6(2) VS. SHRI MIHIR NERURKAR ASSAILED BEFORE US BY THE REVENUE, WE UPHOLD THE SAME. THE SOLITARY GROUND OF APPEAL NO. 1 RAISED BY THE REVENUE IS DISMISSED. 7 . THE APPEAL OF THE REVENUE IS DISMISSED. ORDER P RONOUNCED IN THE OPEN COURT ON 1 2 .0 7 .2019 S D / - S D / - ( SHAMIM YAHYA) (RAVISH SOOD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; 1 2 .0 7 .2019 PS. ROHIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI