JCIT RG 21(2), MUMBAI V. SAI SHIV DVELOPERS, MUMBAI

ITA 5048/MUM/2010

• Counselvise Citation: 504819914 RSA 2010
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 24-08-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: D C JAIN
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH: MUMBAI BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.5048/MUM/2010 (ASSESSMENT YEARS: 2007-08) ACIT, CIRCLE -21(2), 508, 5TH FLOOR, C-10, BANDRA KURLA COMPLEX, MUMBAI -400 051 ....... APPELLANT VS M/S. SAI SHIV DEVELOPERS, GROUND FLOOR, AMAR MAHAL, ANANDRAO DEVLE ROAD, NEAR CHANDAN CINEMA, JUHU, MUMBAI -400 049 ..... RESPONDENT PAN: AANFS 2229 J APPELLANT BY: SHRI V.V. SHASTRI RESPONDENT BY: SHRI D.C. JAIN DATE OF HEARING: DATE OF PRONOUNCEMENT: 24.08.2011 16.09.2011 O R D E R PER R.S. PADVEKAR, JM: THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-32, MUMBAI DATED 31.03.201 0 FOR THE A.Y. 2007-08. THE REVENUE HAS TAKEN THE FOLLOWING EFFEC TIVE GROUND:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT (A) ERRED IN DELETING THE F OLLOWING ADDITIONS:- I) ` 1,79,51,625/- BEING UNACCOUNTED CASH RECEIPTS ON SALE OF FLATS. ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 2 II) ` 5,70,000/- BEING CASH RECEIPTS OF BROKERAGE RECEIVED BACK FROM BROKERS III) ` 16,00,000/- BEING CASH RECEIPTS ON SALE OF CAR PARKING. IN DOING SO, THE LD. CIT (A) FAILED TO APPRECIATE T HE PREPONDERANCE OF PROBABILITY BASED ON THE EVIDENCE FOUND DURING THE SURVEY OPERATION. 2. BRIEFLY STATED THE FACTS ARE AS UNDER. THE ASSE SSEE-FIRM IS IN THE BUSINESS AS A BUILDER AND DEVELOPER. THERE WAS A S URVEY ACTION U/S.133A OF THE ACT IN THE BUSINESS PREMISES OF THE ASSESSEE ON 2.03.2006. DURING THE COURSE OF SURVEY ACTION, STA TEMENTS OF ONE SHRI ANTHONY FERNANDES AND SHRI KAMLESH YADAV WERE RECORDED, WHO WERE WORKING AS BROKERS / AGENTS FOR THE ASSESSEE. AS PER THE STATEMENTS OF SHRI ANTHONY FERNANDES AND SHRI KAMLE SH YADAV, IT WAS REVEALED THAT THE ASSESSEE WAS SELLING THE CAR PARKING AREA, WHICH WAS NOT RECORDED IN THE BOOKS OF ACCOUNT. IT WAS F URTHER REVEALED THAT THE ASSESSEE WAS RECEIVING BACK THE BROKERAGE FROM THE BROKERS AT 40% OF THE BROKERAGE CHARGED BY THEM FROM THE PURCH ASER OF FLATS AND THE SAID AMOUNT WAS ALSO NOT RECORDED. WHILE COMPL ETING THE ASSESSMENT OF THE ASSESSEE FOR THE A.Y. 2006-07, FO LLOWING ADDITIONS WERE MADE: (I) ADDITION ON THE ALLEGED ON-MONEY RECEIVED SALE OF FLATS ` 7,41,08,829/- (II) ADDITION TOWARDS SALE OF PARKING SPACE ` 39,00,000/- (III) ADDITION TOWARDS UNACCOUNTED BROKERAGE PAYMENT RECEIVED BACK ` 11,70,000/- ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 3 IN THIS YEAR THE A.O. SOUGHT EXPLANATION OF THE ASS ESSEE WHY THE ASSESSMENT SHOULD NOT BE COMPLETED ON THE BASIS OF THE EVIDENCE GATHERED DURING THE SURVEY. THE ASSESSEE FILED OBJ ECTIONS BEFORE THE A.O. VIDE SUBMISSIONS DATED 28.11.2009, WHICH ARE R EPRODUCED IN THE ASSESSMENT ORDER ON PAGE NO.2 & 3. THE ASSESSEE ST ATED THAT THE ADDITIONS MADE IN THE EARLIER YEARS CANNOT BE THE G ROUND FOR THE ADDITIONS IN THE CURRENT YEAR. THE ASSESSEE OBJECT ED TO FOR RELYING ON THE ALLEGED EVIDENCE FOUND DURING THE COURSE OF THE SURVEY ACTION. THE A.O. REJECTED ALL THE OBJECTIONS OF THE ASSESSEE AN D MADE THE FOLLOWING ADDITIONS:- (I) SALE OF 19 FLATS HAVING TOTAL AREA OF 17364 SQ.FT. ADOPTING SALE-PRICE @ ` 4500 PER SQ. FT. ` 1,79,51,625/- (II) UNACCOUNTED BROKERAGE RECEIVED BACK ON THE SALE OF 19 FLATS @ 40% PER FLAT ` 5,79,000/- (III) SALE OF PARKING SPACE OF ` 1 LAKH PER CAR-PARKING X 16 CAR PARKING SOLD DURING THE YEAR ` 16,00,000/- 3. THE ASSESSEE CHALLENGED ASSESSMENT ORDER BEFORE THE LD. CIT (A) AND THE LD. CIT (A) DELETED ALL THE ADDITIONS MADE BY THE A.O. NOW, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE LD. COUNSEL SUBMITS THAT THE IDENTICAL ADDITIONS WERE M ADE BY THE A.O. IN THE A.Y. 2006-07 AND ALL THE ADDITIONS WERE DELETED BY LD. CIT (A) AND ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 4 THE ORDER OF THE LD. CIT (A) HAS BEEN CONFIRMED BY THE TRIBUNAL. THE LD. COUNSEL FILED THE COPY OF THE TRIBUNAL ORDER IN THE ASSESSEES OWN CASE FOR THE A.Y. 2006-07 BEING ITA NO.2095/MUM/201 0 DATED 11.06.2010 WHICH IS PLACED ON RECORD. WE FIND THAT IN THE A.Y. 2006- 07, THE A.O. HAS MADE THE IDENTICAL ADDITIONS IN RE SPECT OF THE ALLEGED ON-MONEY RECEIVED, UNACCOUNTED MONEY FROM THE PARKI NG SPACE AND RETURNED BACK 40% OF BROKERAGE. THE ASSESSEE HAS SO LD 21 FLATS IN A.Y. 2006-07 AND IN THIS YEAR THE ASSESSEE HAS SOLD TOTALLY 19 FLATS. FOR A.Y. 2006-07, THE TRIBUNAL HAS CONFIRMED THE OR DER OF THE LD. CIT (A), TO EXTENT THE AMOUNT WHICH WAS FOUND RECORDED IN DOCUMENT NO.8 SEIZED AND BALANCE ADDITION WAS DELETED IN RESPECT OF THE ONMONEY RECEIPTS. IN THIS YEAR, AS NOTED BY THE LD. CIT (A, ) THE A.O. WAS CONFRONTED WHETHER ANY OF 19 FLATS SOLD DURING THE YEAR RELEVANT TO THE A.Y. 2007-08, HAS BEEN MENTIONED IN THE IMPOUNDED L OOSE-PAPER MARKED AS PAGE NO.8. AS PER THE REPLY GIVEN BY THE A.O. NONE OF THE FLATS, OUT OF THE 19 FLATS IS MENTIONED IN THE IMPO UNDED DOCUMENT NO.8 OF THE LOSE-PAPERS. SO FAR AS ALLEGED UNACCOU NTED MONEY RECEIVED ON THE SALE OF FOUR PARKING SPACES AND REC EIPT OF 40% OF THE BROKERAGE RECEIVED BACK, THE TRIBUNAL HAS CONFIRMED ORDER OF THE LD. CIT(A) DELETING ENTIRE ADDITIONS. WE REPRODUCE HER EUNDER THE OPERATIVE PART OF THE TRIBUNAL ORDER IN THE ASSESSE ES OWN CASE FOR THE A.Y. 2006-07 BEING ITA NO.2095/MUM/2010:- 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND R ELEVANT RECORD INCLUDING THE STATEMENTS RECORDED AND RELIED UPON BY THE REVENUE AS WELL AS THE IMPOUNDED DOCUMENTS. IT IS ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 5 EVIDENT FROM THE RECORD THAT EXCEPT THE STATEMENT R ECORDED ON 02.03.2006 OF MR. ANTHONY FERNANDES ALL OTHER STATEMENTS HAVE NOT BEEN ATTESTED BY ANY OF THE AUT HORIZED OFFICER WHO ADMINISTERED THE OATH TO THE WITNESSES. THUS, IT IS CLEAR THAT EXCEPT THE STATEMENT OF SHRI ANT HONY FERNANDES RECORDED ON 02.03.2006 ALL OTHER STATEM ENTS ARE NOT RECORDED AFTER ADMINISTERING THE OATH AS NO THING REVEALS FROM THE STATEMENT THAT THE AUTHORIZED OFF ICER HAS ADMINISTERED THE OATH. EVEN OTHERWISE, THE STATEMEN T RECORDED U/S 133A HAVE NOT EVIDENTIARY VALUE UNLESS AND UNTIL THE SAME ARE CORROBORATED BY THE DOCUMENTARY EVIDENCE. THIS PROPOSITION OF LAW SET OUT BY THE DE CISION OF THE HONBLE KERALA HIGH COURT IN THE CASE OF PAUL M ATHEWS AND SONS V/S CIT (SUPRA) AS WELL AS THE DECISION OF THE HOH. MADRAS HIGH COURT IN THE CASE OF CIT V/S S KHA NDAR KHAN CHAND (SUPRA). 11. IN THE CASE IN HAND, ADMITTEDLY, THE STATEMENTS RELIED UPON BY THE REVENUE RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS AND EVEN SUBSEQUENT TO THE SURVEY WERE OF REAL ESTATE AGENTS AND NOT OF THE ASSESSEE OR OF AN Y PERSON WORKING ON BEHALF OF THE ASSESSEE OR CONNECT ED WITH THE BUSINESS OF THE ASSESSEE. IT IS ALSO UNDISPUTE D FACT EMERGING FROM THE RECORD THAT SHRI ANTHONY FERNANDE S AND HIS ASSISTANT SHRI KAMLESH YADAV WERE DOING THEIR ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 6 BUSINESS FROM THE PREMISES OF THE ASSESSEE. WE FIND THAT THE DOCUMENTS IMPOUNDED DURING THE SURVEY IN THE SH APE OF LOOSE SHEETS WERE ALSO ADMITTEDLY PREPARED BY TH E ASSISTANT OF SHRI ANTHONY FERNANDES, REAL ESTATE AG ENT. 11.1 THE AO HAS MADE THE ADDITION BY ADOPTING THE E STIMATED RATE OF SALE PRICE OF THE FLAT AT THE RATE OF ` 4500/- PER SQ.FT. WHICH IS NOT BORN OUT FROM ANY OF THE IMPOUNDED DOCUMENTS. THEREFORE, THE SAID RATE OF ` 4500/- AS ESTIMATED BY THE AO IS PURELY BASED ON THE STATEME NTS OF SHRI ANTHONY FERNANDES AND SHRI KAMLESH YADAV IS NO T SUSTAINABLE PARTICULARLY WHEN THESE TWO PERSONS I N THEIR OWN STATEMENTS HAVE STATED WHILE ANSWERING THE QUE STION NO.8 THAT THE RATE OF FLATS SOLD IS ` 3800 PER SQ.FT. AND THE CURRENT BOOKING WAS STATED AT AROUND ` 4500/- PER SQ. FT.. AS FAR AS THE ASSESSED INCOME FOR THE ASSESSMENT YE AR UNDER CONSIDERATION IS CONCERNED, THE SAME IS ASSES SED ONLY WITH RESPECT TO THE FLATS SOLD DURING THE YEAR AND NOT FOR THE BOOKING OF THE FLATS UNDERTAKEN BY THE ASSE SSEE. 12. EVEN OTHERWISE AS PER THE STATEMENTS OF SHRI AN THONY FERNANDES AND SHRI KAMLESH YADAV, THE RATE OF ` 4500/- PER SQ.FT. IS NOT PERTAINING TO THE FLATS WHICH WER E ALREADY SOLD. NEEDLESS TO SAY, SHRI ANTHONY FERNANDES WAS NOT CROSS-EXAMINED BY THE ASSESSEE DURING THE COURSE OF ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 7 ASSESSMENT PROCEEDINGS AND LATER ON WHEN THE CIT(A) ALLOWED THE CROSS-EXAMINATION IN THE REMAND PROCEED INGS THE SHRI ANTHONY FERNENDES RETRACTED FROM HIS EARLI ER STATEMENT. THEREFORE, THERE IS NO EVIDENTIARY VALU E OF THESE STATEMENTS OF SHRI ANTHONY FERNANDES AND SHRI KAMLE SH YADAV. WE FURTHER NOTE THAT THE AO MADE THE ADDIT ION FOR THE SALE RATE ON THE ASSUMPTION THAT THE ASSESSEE H AS SHOWN THE RATE AT ` 2200/- PER SQ.FT., WHEREAS, EVEN AS PER THE SALE DOCUMENTS AND RATE ADMITTED AND UNDISCLOSE D BY THE ASSESSEE IN MAJORITY OF FLATS IS ` 2750 PER SQ.FT. AND IN SOME CASES RS.3280/- PER SQ.FT.. 13. THE CIT (A) HAS HEAVILY RELIED UPON THE IMPOUND ED DOCUMENT NO.8 WHICH IS AT PAGE 160 OF THE PAPER BOO K, WHEREIN THE RATE AND AREA OF THE VARIOUS FLATS HAVE BEEN MENTIONED. THE CIT (A) HAS ACCEPTED THE RATES AND A REA GIVEN IN THE SAID DOCUMENTS BUT HAS NOT ACCEPTED THE BROKERAGE MENTIONED IN THE SAID DOCUMENTS, THEREFOR E, THE DOCUMENTS CANNOT BE ACCEPTED IN PART. MOREOVER, TH E AREA OF A FLAT SOLD BY THE ASSESSEE CANNOT BE MORE THAN THE AREA WHICH IS TRANSFERRED BY THE SALE DOCUMENT AND THE PURCHASER CANNOT HAVE LEGAL RIGHT AND TITLE OVER TH E AREA MORE THAN WHAT HAS TRANSFERRED UNDER THE SAID DOCUM ENT. EVEN OTHERWISE THE AREA IS ALWAYS CONSTANT AND SUBJ ECT TO PHYSICAL VERIFICATION BUT THE AO DID NOT TAKE ANY S TEP EITHER ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 8 DURING THE ASSESSMENT PROCEEDINGS OR DURING THE REM AND PROCEEDINGS TO VERIFY PHYSICALLY AND ASCERTAIN ACTU AL POSITION OF FLATS SOLD BY THE ASSESSEE DURING THE Y EAR. THE CIT (A) WHILE CONFIRMING THE ADDITION AS PER THE AR EA MENTIONED IN THE IMPOUNDED DOCUMENT NO.8 HAS COMMIT TED THE GRAVE ERROR BECAUSE THE AREA WAS NOT DISPUTED B Y THE AO AS DISCLOSED BY THE ASSESSEE AND MENTIONED IN TH E SALE DOCUMENTS. MOREOVER, THE IMPUGNED ORDER OF CIT (A) REGULATED ENHANCED ASSESSMENT TO THE EXTENT OF ADDI TION OF AREA AS PER THE IMPOUNDED DOCUMENT NO.8 WITHOUT FOLLOWING THE PROCEDURE U/S 251(2) OF THE ACT. THE REFORE THE ADDITION OF AREA BY CIT (A) IS NOT SUSTAINABLE. 14. HOWEVER, WHEN THE DOCUMENTS WERE IMPOUNDED FROM THE PREMISES OF THE ASSESSEE AND CONTAIN THE INFORMATIO N ABOUT THE BUSINESS OF THE ASSESSEE THEN THE RATES MENTION ED IN THE IMPOUNDED DOCUMENT NO.8 AND CORROBORATES THE STATEMENTS OF SHRI ANTHONY FERNANDES RECORDED DURI NG THE SURVEY ON 2.3.2006. THEREFORE, THE CONFIRMATION OF ADDITION BY THE CIT (A) TO THE EXTENT OF RATES MENTIONED IN DOCUMENT NO.8 IS JUST AND PROPER. HENCE, WE UPHOLD THE ORDER OF THE CIT (A) TO THAT EXTENT. 15. SINCE, THERE IS NO DOCUMENTARY EVIDENCE WITH RE SPECT TO THE SALE OF CAR PARKING AREA EXCEPT THE DOCUMENT NO.15 OF THE IMPOUNDED DOCUMENTS WITH RESPECT TO FLAT NO.C-38, W HEREIN ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 9 ALSO ` 50,000/- ARE MENTIONED AGAINST CAR PARKING. THEREFORE, THERE IS NO BASIS FOR MAKING ADDITION OF ` 1,00,000/- FOR EACH FLAT FOR CAR PARKING. THE A O HAD NOT MADE ANY INQUIRY OR VERIFICATION TO EXAMINE THE FAC TS REGARDING THE RATE OF SALE, AREA, ON MONEY PAYMENT OF BROKERAGE CHARGES AND CAR PARKING CHARGES FROM ANY OF THE AVAILABLE SOURCES INCLUDING THE BUYERS OF FLATS AS NONE OF THE BUYERS OF THE FLATS WAS EXAMINED BY THE DEPARTM ENT TO VERIFY THE INVOLVEMENT OF ON-MONEY PAYMENT AND OTHE R CHARGES AS ALLEGED BY THE REVENUE. EVEN THE UNDERSTATEMENT OF AREA IS NOT EXAMINED BY THE AO AT ANY STAGE OF PROCEEDINGS. THEREFORE, IT CANNOT BE PRES UMED THAT ALL THE FLATS WERE SOLD BY THE ASSESSEE THROUG H THE REAL ESTATE AGENT AND INVOLVED BROKERAGE CHARGES. 16. IN VIEW OF THE ABOVE DISCUSSION AND FACTS AND C IRCUMSTANCE OF THE CASE, WE ARE OF THE VIEW THAT WHEN THE STATE MENTS U/S 133A WERE RECORDED AT BACK OF THE ASSESSEE AND WERE SUBSEQUENTLY RETRACTED BY THE WITNESSES HAVE NO EVIDENTIARY VALUE TO THE EXTENT OF CONTENTS WHICHE VER CORROBORATED BY DOCUMENTS IMPOUNDED DURING THE SUR VEY PROCEEDINGS. THEREFORE, NO ADDITION IS WARRANTED W ITH REGARD TO THE AREA, PARKING CHARGES AND BROKERAGE. THE ADDITION REGARDING RATE IS SUSTAINABLE ONLY TO THE EXTENT OF RATES MENTIONED IN THE IMPOUNDED DOCUMENTS. ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 10 5. AS OUT OF THE 19 FLATS NONE OF THE FLAT IS MENTI ONED ON THE PAGE NO.8 OF THE IMPOUNDED LOOSE-PAPERS SEIZED, WE DO NO T FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) ON T HIS ISSUE. MOREOVER, SO FAR AS OTHER ADDITIONS ARE CONCERNED, WHICH WERE ON THE IDENTICAL REASONING MADE IN THE A.Y. 2006-07 AND WHICH WERE D ELETED BY THE LD. CIT (A) AND SAID ORDER HAS BEEN CONFIRMED BY TH E TRIBUNAL. WE, THEREFORE, FOLLOWING THE ORDER OF THE TRIBUNAL IN T HE ASSESSEES OWN CASE FOR THE A.Y. 2006-07 ( CITED SUPRA ), CONFIRM THE ORDER OF THE LD. CIT (A) DELETING THE ADDITIONS. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6TH SEPTEMBER 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATED : 16TH SEPTEMBER 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)32, MUMBAI. 4) THE CIT-CITY -21, MUMBAI. 5) THE D.R. H BENCH, MUMBAI. BY ORDER ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 6TH SEPTEMBER 2011. SD/- SD/- ( P.M. JAGTAP ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER ITA 5048/MUM/2010 M/S. SAI SHIV DEVELOPERS 11 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 01.09.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 04.09.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER