ACIT CEN CIR-37, MUMBAI V. HOUSING DEVELOPMENT & INFRASGTRUCTURE LTD (FORMELY KNOWN AS HOUSING DEVELOPMENT AND INPROVEMENT INDIA P.LTD), MUMBAI

ITA 4979/MUM/2009

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3984 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 22-07-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 01-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K C P PATNAIK
• Assessee Lawyers: K SHIVRAM SHRI RAHUL K HAKANI
• Keywords: Search and seizure; Document seized; Principle of natural justice; Documents seized
• Section: 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H B ENCH, MUMBAI . . , !'#$ , % &' BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./ I.T.A. NO. 4979/MUM/2009 ( ( ( ( ( / ASSESSMENT YEAR : 2005-06 THE ACIT,CENTRAL CIRCLE-37, AAYAKAR BHAVAN, MUMBAI-400 020 M/S. HOUSING DEVELOPMENT & INFRASTRUCTURE LTD. (FORMERLY KNOWN AS HOUSING DEVELOPMENT AND IMPROVEMENT INDIA PVT. LTD), 9-01, DHEERAJ ARMA, ANANT KANEKAR MARG, BANDRA (E),MUMBAI-400 051 ') % ./ *+ ./PAN/GIR NO. :AAACH 5443F ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY : ` SHRI K.C.P. PATNAIK -.), 0 / /RESPONDENT BY : SHRI K. SHIVRAM SHRI RAHUL K. HAKANI 0 12% / DATE OF HEARING :22.07.2013 34( 0 12% / DATE OF PRONOUNCEMENT : 24.07.2013 &5 / O R D E R PER N.K. BILLAIYA, AM: WITH THIS APPEAL THE REVENUE HAS CHALLENGED THE FI NDINGS OF THE ORDER OF THE LD. CIT(A)-VIII, MUMBAI DT.16.06.2009 PERTAINING TO A.Y. 2005-06. 2. THERE ARE SIX GROUNDS OF APPEAL. HOWEVER, ALL T HE SIX GROUNDS RELATE TO ONE ISSUE OF DELETING THE ADDITION OF O N MONEY OF RS,1,66,40,000/-. ITA NO.4979/M/09 2 3. DURING THE COURSE OF THE SCRUTINY ASSESSMENT PRO CEEDINGS, THE ASSESSING OFFICER OBSERVED THAT SEARCH AND SEIZURE PROCEEDINGS WERE CONDUCTED IN THE CASE OF M/S. ROCHEM SEPARATION SYS TEM (I) PVT. LTD. AND SHRI K.K. GOEL HUF. THE AO OBSERVED THAT IN TH OSE SEARCH OPERATIONS, IT WAS FOUND THAT THEY HAVE PAID CERTAI N ON MONEY OUTSIDE REGULAR BOOKS TO THE ASSESSEE COMPANY FOR PURCHASE OF OFFICE AND RESIDENTIAL PREMISES. BASED ON THESE FACTS OF M/S. ROCHEM SEPARATION SYSTEM AND M/S. K.K. GOEL, THE AO ISSUED NOTICE U/S . 153C AND SERVED UPON THE ASSESSEE. THE ASSESSEE FILED REQUISITE RE TURN OF INCOME DECLARING TOTAL INCOME AT RS. 5,41,27,880/-. THE ASSESSEE IS ENGAGED IN BUSINESS OF REAL ESTATE DEVELOPMENTS. THE AO FURTHER NOTED THA T THE ASSESSEE HAS SOLD OFFICE PREMISES NO. 101 IN A BUILDING KNOWN AS DHE ERAJ ARMA SITUATED AT BANDRA (E), MUMBAI TO M/S. ROCHEM SEPARATION SYSTEM FOR A CONSIDERATION OF RS. 508 LACS VIDE AGREEMENT DT. 16 .12.2004. 3.1. DURING THE COURSE OF SEARCH AND SEIZURE ACTIO N IN THE CASE OF M/S. ROCHEM SEPARATION SYSTEM, SHRI K.K. GOEL WAS EXAMIN ED AND HIS STATEMENT WAS RECORDED U/S. 132(4) OF THE ACT. THE AO FURTHER OBSERVED THAT SHRI K.K. GOEL IN HIS STATEMENT HAD ADMITTED T HAT IN THE AFOREMENTIONED TRANSACTION OF SALE OF PROPERTY AT B ANDRA, THE PURCHASER HAS PAID CASH OF RS. 1,66,40,000/- AS ON MONEY. THE ASSESSEE WAS ASKED TO EXPLAIN WHY THIS ON MONEY RECEIPT OF RS . 1,66,40,000/- SHOULD NOT BE TREATED AS UNDISCLOSED INCOME OF THE ASSESSE E. THE ASSESSEE FILED A DETAILED REPLY VIDE LETTER DT. 6.6.2008. THE ASSES SEE IN ITS REPLY GAVE THE FULL DETAILS RELATING TO THE TRANSACTION OF SALE OF OFFICE PREMISES AT BANDRA AND CHALLENGED THE PROPOSED ADDITION OF RS. 1,66,40 ,000/-. THE ASSESSEE FURTHER QUESTIONED THE STATEMENT OF SHRI K.K. GOEL STATING THAT IMMEDIATELY AFTER THE DATE OF SEARCH, NEITHER THE D DI WHO WAS INVESTIGATING THE CASE OF THE PURCHASER COMPANY HAS CONFRONTED THE ITA NO.4979/M/09 3 ASSESSEE COMPANY SEEKING CLARIFICATION IN RESPECT O F THE SALE TRANSACTION OF THE PURCHASER COMPANY WITH THE ASSESSEE COMPANY. THE ASSESSEE IN ITS REPLY FULLY DENIED HAVING RECEIVED ANY EXTRA MONEY IN ANY FORM OTHER THAN THE AGREED PRICE SPECIFIED IN THE AGREEMENT FO R SALE. THE ASSESSEE FURTHER EXPLAINED THAT THE TRANSACTION OF RS. 80 LA KHS FOUND IN A SEIZED PAPER WAS NOTHING BUT AN ADVANCE GIVEN BY CHEQUE WH ICH WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF BOTH THE PARTI ES I.E. ASSESSEE COMPANY AND THE PURCHASING COMPANY. THEREFORE, THERE IS NO QUESTION OF ANY RECEIPT OF ON MONEY. 3.2. REFERRING TO THE PAPER, WHEREIN IT HAS BEEN ME NTIONED THAT SOME ON MONEY OF RS. 1,66,40,000/- HAS BEEN PAID, THE ASSESSEE EXPLAINED THAT NOWHERE IN THE SAID PAPER, IT IS MENTIONED TH AT THE PURCHASING COMPANY HAS PAID THIS AMOUNT TO THE ASSESSEE COMPA NY. AGAIN REFERRING TO THE SEIZED PAPER WHEREIN THE DETAILS OF PAYMENT OF RS. 1,66,40,000/- MENTIONED, THE ASSESSEE POINTED OUT THAT NOWHERE IN THIS PAPER, THE DATE OF CASH PAYMENT IS SHOWN. IN ANY CASE , IF AT ALL THE SE PAYMENTS WERE MADE TO THE ASSESSEE COMPANY THEN THEY SHOULD HAVE BEEN MADE BEFORE THE EXECUTION OF THE SALE DEED. THE ASSESSEE FURTHER P OINTED OUT THAT THE SEIZED PAPER ON WHICH THE DEPARTMENT IS RELYING DOE S NOT EVEN MENTION THE CORRECT AREA OF THE PROPERTY TRANSACTED. THE S EIZED PAPER CONTAINS THAT THE AREA IS 7045 SQ.FT WHEREAS THE SALEABLE AREA OF THE PREMISES IS 7470 SQ. FT. 3.3. THE AO AFTER RECEIVING THE DETAILED SUBMISSION OF THE ASSESSEE ONCE AGAIN ISSUED SUMMONS TO SHRI K.K. GOEL U/S. 1 31 OF THE ACT. A DETAILED REPLY WAS FILED ON BEHALF OF SHRI K.K. GOE L EXPLAINING THAT M/S. ROCHEM SEPARATION SYSTEM PURCHASED OFFICE PREMISES IN FINANCIAL YEAR 2004-05 FROM M/S. HDIL FOR A TOTAL CONSIDERATION OF RS. 341.60 LAKHS. IT WAS ALSO EXPLAINED THAT IN ADDITION TO THE TOTAL C ONSIDERATION OF RS. ITA NO.4979/M/09 4 341.60 LAKHS, M/S. ROCHEM SEPARATION SYSTEM ALSO IN CURRED IN CASH A SUM OF RS. 1,66,40,000/- FOR THE INTERIOR ELECTRICA L, PLUMBING, CIVIL AND FINISHING WORK DONE IN THE OFFICE, WHICH WAS PAID T O THE CONTRACTORS OF THE BUILDER DIRECTLY. SINCE DEVELOPER DID NOT WANT TO PROVIDE THE SAID SERVICES AS PER SPECIFICATION OF THE BUYER COMPANY, THEREFORE, THE AMOUNT OF RS. 1,66,40,000/- WAS PAID IN CASH NOT TO THE B UILDER (ASSESSEE) BUT TO THE CONTRACTORS. 3.4. AFTER CONSIDERING THE REPLY OF BOTH THE ASSESS EE AND THE PURCHASER M/S. ROCHEM SEPARATION SYSTEM, THE AO WAS OF THE FI RM BELIEF THAT THE TOTAL PURCHASE AGREEMENT VALUE WAS RS. 341.60 LAKHS AND THE BALANCE AMOUNT OF RS. 1,66,40,000/- WAS PAYABLE IN CASH OUT OF WHICH RS. 50 LAKHS WAS IMMEDIATELY PAID AND THE BALANCE OF RS. 8 0 LASKHS WAS PAID BY THE CHEQUE TO M/S. HDIL I.E. ASSESSEE AS SHOWN IN T HE BOOKS OF THE PURCHASING COMPANY. ON SUCH FIRM BELIEF, THE AO WE NT ON TO MAKE AN ADDITION OF RS. 1,66,40,000/- AS UNDISCLOSED INCOME OF THE ASSESSEE. 4. THE ASSESSEE CARRIED THIS MATTER BEFORE THE LD. CIT(A) AND REITERATED ITS STAND AND EXPLANATION AS MADE BEFORE THE AO. AFTER CONSIDERING THE FACTS AND SUBMISSIONS, THE LD. CIT( A) WENT ON TO DISCUSS THE SEIZED DOCUMENTS ON PAGE 17 OF LD. CIT(A)S OR DER AT PARA 3.1. THE LD. CIT(A) OBSERVED AT PARA 3.7 OF PAGE 20 OF HIS O RDER THAT THE AO HAS RELIED ON THE STATEMENT OF SHRI K.K. GOEL, ONE OF T HE DIRECTOR OF M/S. ROCHEM SEPARATION SYSTEM RECORDED U/S. 132(4) OF TH E ACT. THE LD. CIT(A) OBSERVED THAT NO OPPORTUNITY HAS BEEN ALLOWE D TO THE ASSESSEE COMPANY TO CROSS EXAMINE SHRI K.K. GOEL IN RESPECT OF HIS STATEMENT REGARDING PAYMENT OF ON MONEY TO THE ASSESSEE COM PANY. EVEN DURING THE ASSESSMENT PROCEEDINGS OF M/S. ROCHEM SEPARATIO N SYSTEM, THE ASSESSEE WAS NEVER ALLOWED ANY OPPORTUNITY TO CROSS EXAMINE SHRI K.K. GOEL . IT IS SETTLED PROPOSITION OF LAW THAT ANY E VIDENCE COLLECTED BEHIND ITA NO.4979/M/09 5 THE BACK OF THE ASSESSEE CANNOT BE USED AGAINST THE ASSESSEE UNLESS THE ASSESSEE HAS BEEN GIVEN A REASONABLE OPPORTUNITY TO REBUT THE SAID EVIDENCE. THE LD. CIT(A) FURTHER OBSERVED AT PARA 3.10 AT PAGE-23 OF HIS ORDER AS UNDER: SINCE THE PURCHASER COMPANY HAS DENIED PAYMENT OF ON MONEY TO THE ASSESSEE IN CLEAR TERMS AND STATED T HAT THE PAYMENT HAS BEEN MADE FOR INTERIORS AND DECORATORS FOR FINISHING THE JOB DIRECTLY, THEREFORE, THE PAYMENT OF ON MONEY TO THE ASSESSEE IS NOT ESTABLISHED. 4.1. THE LD. CIT(A) FURTHER OBSERVED THAT THE LOOSE PAPER REGARDING PAYMENT OF ON MONEY DO NOT EVEN CONTAIN THE DAT E OF PAYMENT NOR THERE IS ANY SIGNATURE OF ACCEPTANCE GIVEN BY THE ASSESSEE TO THE SAID LOOSE PAPER. EVEN ON FACTUAL POSITION, THE AREA DO NOT AGREE WITH THE AREA MENTIONED IN THE AGREEMENT. THE LD. CIT(A) WENT ON TO RELY UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT I N THE CASE OF ACIT VS MISS LATA MANGESHKAR 97 ITR 696 AND ALSO RELIED UPO N THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF V.C. SHUKL A. THE LD. CIT(A) CONCLUDED THAT THE DOCUMENTS WHICH WERE SEIZED REM AINED THIRD PARTY EVIDENCE SO FAR AS ASSESSEE IS CONCERNED AND SINCE NO OPPORTUNITY TO CROSS EXAMINE HAS BEEN ALLOWED TO THE ASSESSEE, SUC H AN ACT IS VIOLATION TO THE RULE OF NATURAL JUSTICE AND WENT ON TO DELETE T HE ADDITION MADE BY THE AO. 5. THE REVENUE IS AGGRIEVED BY THIS FINDINGS OF THE LD. CIT(A) AND IS BEFORE US. 6. THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUP PORTED THE ASSESSMENT ORDER. IT IS THE SAY OF THE LD. DR THAT THE ONUS IS UPON THE ASSESSEE TO ESTABLISH THAT THE SUM OF RS. 1,66,40,0 00/- REFERRED TO IN THE LOOSE PAPER WAS ACTUALLY PAID BY THE COMPANY M/S. R OCHEM SEPARATION ITA NO.4979/M/09 6 SYSTEM DIRECTLY TO THE CONTRACTOR FOR INTERIORS AND DECORATION AND FURNISHING. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIAL EVIDENCES BR OUGHT ON RECORD. THE UNDISPUTED FACTS EMERGING OUT OF THE ASSESSMENT REC ORD SHOW THAT THE SEARCH AND SEIZURE OPERATION WERE CONDUCTED AT M/S. ROCHEM SEPARATION SYSTEM AND SHRI K.K. GOEL. IT IS ALSO NOT IN DISPU TE THAT THE PAYMENT OF ON MONEY WAS ACCEPTED BY SHRI K.K. GOEL IN HIS ST ATEMENT RECORDED U/S. 132(4) OF THE ACT. HOWEVER, IT IS ALSO NOT IN DISPUTE THAT NO OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO CROSS EXAM INE THE SAID STATEMENT OF SHRI K.K. GOEL. IT IS ALSO AN UNDISPUTED FACT T HAT SUBSEQUENTLY DURING THE ASSESSMENT PROCEEDINGS OF M/S. ROCHEM SEPARATIO N SYSTEM, IT WAS EXPLAINED THAT NO SUCH PAYMENT WAS MADE DIRECTLY TO THE ASSESSEE BUT THE PAYMENT WAS MADE TO CERTAIN CONTRACTORS FOR FURNISH ING AND INTERIOR DECORATION WORK. IN OUR HUMBLE OPINION, NO ADDITIO N CAN BE MADE TO THE INCOME OF THE ASSESSEE ON THE BASIS OF DOCUMENTS S EIZED FROM THIRD PARTY WITHOUT ANY CORROBORATIVE EVIDENCE AND WITHOUT ALL OWING OPPORTUNITY TO CROSS EXAMINE THE PERSON CONCERNED WHO WERE ALLEGE D THE PAYMENT OF ON MONEY. 9. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF MISS LATA MANGESHKAR (SUPRA) HAS HELD THAT MERE ENTRIES IN TH E ACCOUNTS REGARDING PAYMENTS TO THE ASSESSEE WAS NOT SUFFICIENT AS THER E WAS NO GUARANTEE THAT THE ENTRIES WERE GENUINE. THE HONBLE HIGH COURT C ONFIRMED THE FINDINGS OF THE TRIBUNAL AS THEY WERE BASED ON FIND INGS OF THE FACTS. THE FACTS OF THE CASE OF THE ASSESSEE SHOWS THAT THE EN TRIES UPON WHICH THE ITA NO.4979/M/09 7 DEPARTMENT IS RELYING UPON WAS FOUND ON A LOOSE PAP ER THEREFORE SUCH EVIDENCE IS MORE VULNERABLE THAN THE ENTRIES FOUND RECORDED IN THE BOOKS OF ACCOUNTS AS IN THE CASE OF MISS LATA MANGESHKAR. MOREOVER SUCH ENTRIES FOUND ON THE LOOSE SHEET HAVE NOT BEEN CORR OBORATED BY THE REVENUE BY ANY COGENT MATERIAL EVIDENCE ON RECORD. THE ONLY EVIDENCE, IF AT ALL, IT CAN BE CONSIDERED AS EVIDENCE, IS THE STATEMENT OF SHRI K.K. GOEL BUT EVEN THAT CANNOT BE ACCEPTED BECAUSE IT HA S BEEN ADMITTED BY THE AO IN GROSS VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE. IT IS ALSO A FACT THAT THE CONSIDERATION SPECIFIED IN THE INSTRUMENT OF TRANSFER IS MUCH HIGHER THAN THE MARKET VALUE AND FURTHER THE ASSESS EE HAS SOLD OFFICE PREMISES TO MANY OTHER PERSONS THEREFORE, THE SALE PRICE IS VERY MUCH COMPARABLE WITH SIMILAR KINDS OF SALE AFFECTED IN T HE SAME BUILDING. 10. CONSIDERING ALL THESE FACTS IN TOTALITY AND RES PECTFULLY PLACING RELIANCE ON THE DECISION IN THE CASE OF MISS LATA M ANGESHKAR ((SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE/TAMPER WITH THE FINDINGS OF THE LD. CIT(A). 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH JULY, 2013 . &5 0 4( % 6 7&8 24.7.2013 4 0 9 SD/- SD/- (H.L. KARWA ) (N.K . BILLAIYA ) /PRESIDENT % &' / ACCOUNTANT MEMBER MUMBAI; 7& DATED 24/07/2013 . . ./ RJ , SR. PS ITA NO.4979/M/09 8 &5 &5 &5 &5 0 00 0 -1! -1! -1! -1! :!(1 :!(1 :!(1 :!(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. ; ( ) / THE CIT(A)- 4. ; / CIT 5. !<9 -1 , , / DR, ITAT, MUMBAI 6. 9= > / GUARD FILE. &5 &5 &5 &5 / BY ORDER, .!1 -1 //TRUE COPY// ? ?? ? / @ @ @ @ * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI