Mount Echo Buildwell Pvt. Ltd., Delhi V. DCIT, New Delhi

ITA 4908/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3846 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 08-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Search and seizure; Loose papers; Block assessment; Onus to prove; Retraction
• Section: 132

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH E , NEW DELHI BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4908/DEL./2014 ASSESSMENT YEAR: 2011 - 12 MOUNT ECHO BUILDWELL PVT. LTD., 208, SAVITA VIHAR, SIKKA MANSION, LSC, 2 ND FLOOR, DELHI. PAN AAECM 6235C (APPELLANT) VS. DCIT, CENTRAL CIRCLE - 18, NEW DELHI. (RESPONDENT) APPELLANT BY DR. RAKESH GUPTA, ADVOCATE RESPONDENT BY MS. RAKHI VIMAL, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 14.08.2014 PASSED BY THE LEARNED CIT(A) III NEW DELHI ON THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - III ERRED ON FACTS AS WELL AS IN LAW, IN CONFIRMING AN ADDITION OF RS. 5,06,795/ - [ON ACCOUNT OF DIFFERENCE BETWEEN THE INCOME FIRST SURRENDERED AND THAT LATER RETURNED], OUT OF SUCH TOTAL AD - HOC ADDITION OF RS. 15 LACS MADE BY LD. A O. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - III ERRED ON FACTS AS WELL IN LAW, IN NOT PROPERLY APPRECIATING THE VARIOUS SUBMISSIONS & ARGUMENTS FILED, IN SUPPORT OF OUR CONTENTIONS. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - III ERRED ON FACTS AS WELL AS IN LAW, IN RELYING MERELY ON CERTAIN LEGAL PRECEDENTS, WITHOUT AT ALL APPRECIATING THE PECULIAR & SPECIFIC FACTS & CIRCUMSTANCES OF DATE OF HEARING 27.09.2017 DATE OF PRONOUNCEMENT 25 .10.2017 ITA NO. 4908/DEL./2014 2 THE WHOLE MATTER AND WITHOUT ANY SPECIF IC & CONCRETE ADVERSE EVIDENCE/S, ON WHICH TO BASE HIS CONCLUSION. THAT THE ABOVE GROUNDS OF APPEAL; ARE WITHOUT PREJUDICE TO EACH OTHER. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON 11/03/2011 IN M/S PARAMO UNT, GULSHAN AND AJNARA GROUP OF CASES. THE CASE OF THE ASSESSEE WAS ALSO COVERED UNDER SECTION 132 (1) OF THE INCOME TAX ACT. THE ASSESSEE COMPANY BELONGS TO PARAMOUNT GROUP OF COMPANIES. PARAMOUNT GROUP IS ENGAGED IN RESIDENTIAL AND COMMERCIAL PROJECTS I N UTTAR PRADESH. THE MAIN OBJECTS OF THE COMPANY IS TO CARRY ON THE BUILDERS AS OWNERS BUILDERS, COLONIZERS, DEVELOPERS AND PROMOTERS. DURING THE SEARCH OPERATION, STATEMENT WAS RECORDED OF THE DIRECTORS OF THE ASSESSEE COMPANY, WHO ADMITTED THAT THE PARAM OUNT GROUP WILL BE OFFERING AN INCOME OF RS. 35 CRORE IN RESPECT OF THE COMPANIES OF PARAMOUNT GROUP AND INDIVIDUAL ASSESSEE RELATED WITH THE GROUP. IT WAS SUBMITTED BY THE ASSESSEE COMPANY THAT AN AMOUNT OF RS. 2.00 CRORES HAS BEEN THE ESTIMATED INCOME RE COGNISED DURING THE YEAR BY FOLLOWING THE PERCENTAGE OF COMPLETION METHOD. HOWEVER IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS DECLARED AN INCOME OF RS. 19493205/ - IN THE RETURN OF INCOME. THE ASSESSEE DID NOT RECOGNISE THE INCOME ADMITTED UNDER SECTION 132 (4) OF THE I NCOME T AX A CT MADE BY MUKESH AGGARWAL AND SUBSEQUENT BIFURCATION OF INCOME MADE WIDE LETTER DATED 06/07/2011. THE LD. ASSESSING OFFICER RELIED ON THE JUDGEMENT OF BHAGIRATH AGGARWAL VERSUS CIT IN ITA NO. 28 / 2012 OF HON BLE JURISDICTIONAL HIGH COURT OF DELHI. THE LD. ASSESSING OFFICER MADE ADDITION OF RS. 15.00 LACS AND COM PLETED THE ASSESSMENT AT AN INCOME OF RS. 20993205/ - . AGGRIEVED BY THE ABOVE ADDITIONS THE ASSESSEE APPEALED BEFORE THE LD. CIT (A) . THE ASSESSEE MADE DETA IL ED SUBMISSIONS BEFORE THE LD. CIT (A) . AFTER CONSIDERING THE ORDER ITA NO. 4908/DEL./2014 3 OF THE ASSESSING OFFICER AS WELL AS SUBMISSIONS MADE BY THE ASSESSEE , HE DELETED THE AD D ITIONS OF RS. 993205/ - BY GIVING THE FOLLOWING FINDINGS : 4. I HAVE GONE THROUGH THE ABOVE SUBMISSIONS OF THE APPELLANT AND HAVE CONSIDERED THE FACTS AND EVIDENCES ON RECORD AS WELL AS THE CASE LAWS RELIED UPON BY THE AO. IT IS SEEN THAT THE SEARCH ON PARAMOUNT GROUP WAS CONDUCTED ON 11.03.2011 AND MR. MUKESH AGG ARWAL, THE CHAIRMAN OF THE GROUP ADMITTED DURING THE SEARCH IN A STATEMENT RECORDED UNDER SECTION 132(4) THAT THEY WILL SURRENDER RS. 35 CRORES IN THE GROUP AS ADDITIONAL INCOME, HOWEVER, AT THE TIME OF SEARCH NO BREAKUP OF RS. 35 CRORES WAS GIVEN. IT WAS THROUGH LETTER DATED 06.07.2014, THE APPELLANT GAVE THE FOLLOWING TENTATIVE BREAK UP OF RS. 35 CRORES SURRENDERED DURING THE SEARCH, FROM WHICH IT IS FOUND THAT RS . 2 CRORE PERTAINED TO THE APPELLANT COMPANY. DETAILS OF SURRENDER OF RS. 35 CRORES MADE IN P ARAMOUNT GROUP AS PER LETTER DATED 06.07 . 2014 IS AS UNDER: - S.NO. DESCRIPTION TENTATIVE AMOUNT (RS. IN CRORES) 1 ESTIMATED INCOME RECOGNIZED PERTAINING TO PARAMOUNT RESIDENCY P. LTD. 9.00 2 ESTIMATED INCOME RECOGNIZED PERTAINING TO PARAMOUNT PROBUILD P. LTD. 1.50 3 ESTIMATED INCOME RECOGNIZED PERTAINING TO MOUNT ECHO BUILDWELI P. LTD 2.00 4 ESTIMATED INCOME RECOGNIZED PERTAINING TO PARAMOUNT TOWERS P. LTD. 6.00 5 INCOME OFFERED MRS MEENAKSHI AGARWAL, INCLUDING JEWELLERY AND CASH 0.75 6 INCOME OFFERED BY MR. MUKESH KUMAR 1.25 7 OTHERS, BEING MADE TO COVER ALL SORTS OF DISALLOWANCES, DISCREPANCY FOUND IN THE SEIZED MATERIAL PERTAINING TO ENTIRE GROUP INTERPRETATION AND/OR OPERATION OF LAW, INCLUDING MONEY TRANSACTIONS, IF ANY HAND LED BY AN EMPLOYEE OR AUTHORIZED PERSONS OR BY THIRD PARTIES WITHOUT THE KNOWLEDGE OF MANAGEMENT OR DIRECTORS, MATTERS ARISING WHERE WE MAY UNABLE TO DISCHARGE OUR ONUS ON ACCOUNT OF RECENT DEVELOPMENT ETC, SUBJECT TO INCREASE/ DECREASE DEPENDING UPON DETE RMINATION OF EXTENT OF INVOLVEMENT OF THE GROUP. 14.50 TOTAL 35.00 4.1 AS IS EVIDENT FROM ABOVE, THE DIRECTOR OF THE APPELLANT'S COMPANY AGREED TO SURRENDER RS. 2 CRORES BUT IN FACT THEY FILED THEIR RETURNS OF INCOME OF RS,1,94,93,205, THUS IT IS A CASE OF PARTIAL RETRACTION OF SURRENDER WHICH HAS BEEN MADE IN A CLANDESTINE MANNER. IT IS PERTINENT TO NOTE HERE THAT THE STATEMENT WHICH IS RECORDED UNDER SECTION 132(4) AND ON OATH CANNOT BE DISMISSED LIGHTLY. AS HAS BEEN HELD BY HON. SUPREME COURT IN AWADH KISHORE DAS V RAM GOPAL AIR 1979 SC ITA NO. 4908/DEL./2014 4 881 THAT ' A N ADMISSION IS THE BEST EVIDENCE THAT AN OPPOSITE CAN RELY UPON AND THOUGH NOT CONCLUSIVE COULD BE DECISIVE OF THE MATTER, UNLESS SU CCESSFULLY WITHDRAWN OR PROVED ERRONEOUS.' THEREFORE, STATEMENT UNDER SECTION 132(4) HAS A VERY HIGH EVIDENTIARY VALUE AND IT CANNOT BE RETRACTED WITHOUT SOUND REASONING AND CORROBORATIVE EVIDENCE. IT HAS BEEN HELD IN A NUMBER OF JUDICIAL PRONOUNCEMENTS TH AT IN CASE OF RETRACTION, THE BURDEN OF PROOF IS ON THE ASSESSEE AND NOT ON THE DEPARTMENT. UNLESS SHOWN OR EXPLAINED TO BE WRONG, A STATEMENT GIVEN ON OATH UNDER SECTION 132(4) IS AN EFFICACIOUS PROOF OF FACTS ADMITTED. AS HAS BEEN HELD BY THE HON. TRIBUN AL IN DHANVARSHA BUILDERS & DEVELOPERS P. LTD V. DCIT 102 1TD 375(PUNE), A STATEMENT VALIDLY RECORDED UNDER SECTION 132(4) CAN BE USED IN EVIDENCE IN BLOCK ASSESSMENT PROCEEDINGS ALSO EVEN IF THE STATEMENT IS LATER ON RETRACTED. SIMILARLY, WHERE THE ASSESSEE ADMITTED UNDISCLOSED INCOME ON THE BASIS OF LOOSE PAPERS AND CASH FOUND DURING SEARCH, HIS SUBSEQUENT RETRACTION THAT THE CASH REPRESENTED HIS AGRICULTURAL INCOME AND INCOME FROM HIS OTHER BUSINESS WAS NOT FOUND TENABLE BY THE HON. TRIBUNAL IN THE CASE OF KANTILAL PRABHUDAS PATEL V. DCIT( I NV) 93 ITD 117(LNDORE) (TM) . I N ANOTHER CASE OF CARPENTER CLASSICS (EXIM) (P) (LTD.) V DCIT 108 ITD 142{BANG), WHERE THE MANAGING DIRECTOR OF THE ASSESSEE COMPANY SURRENDERED RS.1.07 CRORE BEING 50% OF CASH RECEIPTS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND DID NOT TAKE ANY STEP TO RECTIFY THE DECLARATION BEFORE THE SEARCH AUTHORITIES BEFORE WHOM IT WAS MADE, THE ADDITION OF RS.1.07 CRORE WAS HELD TO BE JUSTIFIED. IN RAMESH CHANDRA & CO. VS. C I T (198 7) 168 1TR 375 (BOM), THE BOMBAY HIGH COURT OBSERVED THAT 'WHERE AN ASSESSEE HAS MADE A STATEMENT OF FACTS, HE CAN HAVE NO GRIEVANCE IF THE TAXING AUTHORITY TAXES HIM IN ACCORDANCE WITH THAT STATEMENT' THE LEARNED AHMEDABAD BENCH IN THE CASE OF DY . CIT VS . BHOGILAL MOO L CHAND (2005) 98 TTJ (AND) 108 : (2005) 96 ITD 344 (AHD) HELD THAT 'STATEMENT GIVEN UNDER SECTION 132(4} IS NOT CONCLUSIVE AND PERSON CAN RETRACT UNDER CERTAIN CIRCUMSTANCES. HOWEVER, TIME GAP BETWEEN STATEMENT AND RETRACTION OF STATEMENT IS ONE OF THE IMPORTANT POINTS TO BE TAKEN INTO ACCOUNT TO DECIDE AS TO WHETHER THE STATEMENT WAS GIVEN UNDER MISTAKEN BELIEF OF EITHER FACT OR LAW. HOWEVER WHEN ASSESSEE RETRACTED STATEMENT MADE UNDER SECTION 132(4) AFTER THREE AND A HALF MONTHS OF DISCLOSUR E AND THERE WAS NOT AN IOTA OF EVIDENCE TO SUPPORT RETRACTION THEN AO WAS JUSTIFIED IN NOT ACCEPTING ASSESSEE'S RETRACTION.' 4.2 KEEPING THE SPIRIT OF THE ABOVE MENTIONED JUDICIAL DECISION INTO CONSIDERATION, IN THE FACTS OF THE APPELLANT'S CASE, IT IS SE EN THAT BY SURRENDERING A SUM OF RS, 35 CRORE IN A STATEMENT GIVEN BY THE DIRECTOR OF THE PARAMOUNT GROUP UNDER SECTION 132(4) IN THE PRESENCE OF 2 INDEPENDENT WITNESSES , THE PARAMOUNT GROUP AVOIDED FURTHER SCRUTINY AND DEEPER INVESTIGATION BY THE DEPARTM ENT, HENCE THE APPELLANT CANNOT BE ALLOWED TO RETRACT (EVEN PARTIALLY), UNLESS THE APPELLANT SHOWS THAT THE SURRENDER WAS TAKEN FROM HIM UNDER THREAT, COERCION ETC., WHICH IS NOT THE CASE HERE. ITA NO. 4908/DEL./2014 5 4.3 HENCE IN A SCENARIO, WHERE THE SHARE OF SURRENDER OF INCOME OF THE APPELLANT IS RS, 2 CRORES (OUT OF THE TOTAL SURRENDER OF RS. 35 CRORES) AND THE APPELLANT IN ITS RETURN OF INCOME HAS FINALLY DECLARED INCOME ONLY TO THE TUNE OF RS.1,94,93,205, THEREFORE IN MY HUMBLE VIEW, THE AO CAN AT BEST ADD ONLY TO THE EXTENT OF RS. 5,06,795 (RS. 2,00,00,000 MINUS RS, 1,94,93,205) BEING SHORTFALL NOT DECLARED. 4.4. THUS FROM THE ABOVE DISCUSSION AND KEEPING ALL THE FACTS AND EVIDENCE INTO CONSIDERATION, THE ADDITION TO THE EXTENT OF RS.5,06,795 STANDS CONFIRMED. THE APP ELLANT THUS GETS A RELIEF OF RS.9,93,205. 3. AGGRIEVED BY THE ORDER OF THE LD. CIT (A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT BY RAISING THE ABOVE GROUNDS OF APPEAL. 4. THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT DURING THE COURSE OF RECORDING OF STATEMENTS THE ASSESSEE HAD DISCLOSED A SUM OF RS. 35 CRORES ON TENTATIVE BASIS IN CASE OF GROUP COMPANIES OUT OF WHICH RS. 2.00 CRORE IS RELATED TO THE ASSESSEE COMPANY. TH E ASSESSEE IS FOLLOWING REGULARLY PERCENTAGE OF COMPLETION METHOD FOR THE COM PUTATION OF TAXABLE INCOME. THE ASSESSEE ADMITTED DURING STATEMENTS ONLY ON THE BASIS OF PAPERS FOUND DURING SEARCH . HE ALSO REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (A) AND SUBMITTED THAT THE INCOME DECLARED IN THE RETURN OF INCOME IS BASED ON EXACT CALCULATIONS. HE ALSO SUBMITTED THAT DURING THE COURSE OF SEARCH NO ANY INCRIMINATING MATERIALS WERE FOUND AT THE TIME OF SEARCH. THE ADDITIONS WERE PURELY ON THE BASIS OF HIS STATEMENTS. THE LAW DOES NOT COMPEL THE ASSESSEE TO DECLARE THE EXACT AMOUNTS SURRENDERED DURING THE COURSE OF SEARCH. 5. ON THE OTHER HAND THE LD. DR RELIED ON THE ORDER OF THE CIT (A) AND HE SUBMITTED THAT THE LD. CIT (A) HAS DONE GOOD REASONED ORDER AN D IT DOES NOT REQUIRE ANY INTERFERENCE . THE LD. CIT APPEAL HAS RIGHTLY ALLOWED THE APPEAL OF THE ASSESSEE IN PART. ITA NO. 4908/DEL./2014 6 6. AFTER HEARING BOTH THE SIDES AND PERUSING THE MATERIALS AVAILABLE ON RECORD BE WE OBSERVE FROM THE ORDERS OF THE ASSESSING OFFICERS AS WEL L AS THE LD. CIT(A) THAT THE LD. CIT(A) HAS DONE GOOD REASONED ORDER. THE CASE LAWS R ELIED BY THE LD. CIT(A) ARE SQUARELY APPLICABLE IN THE CASE OF THE ASSESSEE. THE ASSESSEE HAS DECLARED A SUM OF RS. 2.00 CRORES DURING THE STATEMENTS RECORDED U/S. 132(4). THE ASSESSEE SHOULD HAVE DISCLOSED IN THE RETURN OF INCOME RS.2.00 CRORES BUT HE HAS SHOWN IN THE RETURN OF INCOME LESSER AMOUNT . THE HON BLE JURISDICTIONAL HIGH COURT HAS SETTLED THIS ISSUE . T HEREFORE , WE ARE BOUND TO FOLLOW THE ORDER OF THE HON BLE DELH I HIGH COURT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS RIGHT TO DISMISS TO THE APPEAL OF THE ASSESSEE . T HEREFORE THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.10.2017 . SD/ - SD/ - ( BHAVNESH SAINI ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25.10.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI