SUDHAKAR S. MODY, MUMBAI V. ASST CIT CIR 7(2), MUMBAI

ITA 5064/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9119 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 05-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJIT MANWANI
• Assessee Lawyers: S K MISHRA
• Keywords: Search and seizure; Document seized; Additional evidence; Reasonable cause; Documents seized
• Section: 69; 132; 2

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -I BENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA, ACCOUNTANT MEMBER AND C.N. PRASAD, JUDICIAL MEMBER / ITA NO.5064/MUM/2014 : /ASSESSMENT YEAR-2009-10 SHRI SUDHAKAR S. MODY 1601/1602, MARATHON NEXT GEN. ERA-II, OFF. GANPATRAO KADAM MARG, LOWER PAREL, MUMBAI-400 013 PAN: AACPM 4423 B VS. THE ASST. CIT, CIRCLE 7(2), MUMBAI-400 020 (APPELLANT) (RESPON DENT) REV ENUE BY: SHRI AJIT MANWANI ASS ESSEE BY: SHRI S. K. MISHRA / DATE OF HEARING: 03.11.2016 / DATE OF PRONOUNCEMENT: 06/01/2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , / PER RAJENDRA A.M. - CHALLENGING THE ORDER,DATED 6.6.2014 OF THE CIT(A)- 13, MUMBAI, THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL FILED HIS RET URN OF INCOME ON 26.9.2009, DECLARING TOTAL INCOME AT RS.1.85 CRORES.THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT, ON 16.12.2011,DETERMINING HIS INCOME AT RS .2.56 CRORES. 2.THE EFFECTIVE GROUND OF APPEAL IS ABOUT UPHOLDING THE ADDITION OF RS.71 LACS. DURING THE ASSESSMENT PROCEEDINGS IT WAS FOUND THAT THE ASSESS EE HAD PURCHASED A SHOP (NO.105, LITTLE WORLD MALL AT KHARGHAR, NAVI MUMBAI) ALONG WITH HIS SON AND THAT THE VALUE DECLARED IN THE SALE AGREEMENT WAS RS.50 LACS,THAT THE SHOP WAS PUR CHASED FROM M/S. GAYATRI HOMES, THAT THE AGREEMENT WAS SIGNED BY MAYUR PATEL, A PARTNER OF M/S. GAYATRI HOMES, THAT AN ACTION U/S. 132(1) OF THE ACT WAS CARRIED OUT IN THE CASE OF SIDDHI GROUP ON 19.02.2009, THAT DURING THE COURSE OF SEARCH AN INCRIMINATING PAPER WAS SEI ZED FROM THE PREMISES OF THE KEY PERSONS OF THE GROUP, THAT THE PAPER REVEALED THAT THE ASSE SSEE HAD BOOKED A SHOP FOR A TOTAL CONSIDERA -TION OF RS.1.21 CRORES,THAT STATEMENT OF KANTILAL PATIL,A KEY PERSON OF THE GROUP,WERE RECORD - ED ON 02.04.2009,THAT HE ADMITTED THAT CASH WAS REC EIVED OVER AND ABOVE THE AGREEMENT VALUE AND SAME HAD NOT BEEN ACCOUNTED FOR IN THE BOOKS OF ACCOUNT, THAT KANTILAL PATIL HAD OFFERED RS.12.50 CRORES AS THE UNDISCLOSED INCOME OF M/S.GA YATRI HOMES AND THE AMOUNT INCLUDED THE SALE CONSIDERATION RECEIVED FROM THE ASSESSEE A ND OTHER PURCHASER OF THE SHOP IN THE SAID MALL,THAT THE ADMISSION MADE BY KANTILAL PATIL WAS CONFIRMED BY MAYUR PATIL AND KIRIT PATIL. REFERRING TO THE STATEMENTS OF KANTILAL PATIL (DATE D 2.4.2009) AND KANTILAL M PATIL (DATED 04. 05.2005),THE AO HELD THAT DETAILS MENTIONED AGAINST SHOP PURCHASED BY THE ASSESSEE AS APPEARING IN THE SEIZED PAPER MATCHED WITH THE DETA ILS OF THE SHOP PURCHASED BY HIM, I.E., ITA /5064/ MUM/2014-AY.2009-10,SUDHAKAR S. MODY 2 SHOP NO., NAME OF PURCHASER, CONSIDERATION RECEIVED BY CHEQUE, ETC. HE ISSUED A SHOWCAUSE NOTICE TO THE ASSESSEE REQUIRING HIM TO SHOW AS TO WHY THE CASH PAYMENT MADE FOR PURCHASE OF THE SHOP SHOULD NOT BE TREATED AS HIS UNDISCLOSE D INCOME U/S.69 OF THE ACT. AFTER CONSIDERING REPLY OF THE ASSESSEE,THE AO HELD THAT THE ASSESSEE HAD PURCHASED SHOP NO. 105 FOR A SALE CONSIDERATION OF RS.50 LACS, THAT PA PER SEIZED FROM THE PREMISES OF THE VENDORS HAD ALL THE DETAILS OF THE PAYMENT RECEIVED FROM TH E ASSESSEE, THAT THE VENDORS HAD ACCEPTED ALL THE CONTENTS OF THE PAPER,THAT THEY HAD ADMITTE D RECEIPT OF CASH ELEMENT OVER AND ABOVE THE APPARENT CONSIDERATION MADE BY WAY OF CHEQUE,THAT T HEY HAD ADMITTED SUCH CASH RECEIPTS OF SALE CONSIDERATION AS THERE UNDISCLOSED INCOME, THA T ASSESSEE WAS NOT ABLE TO REFUTE ANY OF THE CONTENTS OF THE SEIZED PAPER, THAT HE HAD MADE A PA YMENT BY WAY OF CASH AMOUNTING TO RS.71 LACS TO THE VENDORS.ACCORDINGLY, THE AO MADE AN ADD ITION OF RS.71 LACS TO THE INCOME OF THE ASSESSEE TREATING IT AS UNDISCLOSED INCOME AS PER T HE PROVISIONS OF THE SECTION 69 OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE ELABORATE SUBMISSI ONS.BEFORE HER,THE ASSESSEE SUBMITTED THAT HE HAD WRITTEN TO THE AO TO SUMMON THE BUILDER FOR CROSS EXAMINATION,THAT A REMAND REPORT SHOULD BE CALLED FROM THE AO AFTER THE BUILD ER WAS CROSSED EXAMINED BY HIM, THAT HE HAD NOT PAID ANY CASH MONEY TO THE BUILDER.THE ASSE SSEE REQUESTED THE FAA TO ALLOW HIM TO CROSS EXAMINE THE BUILDER IN PRESENCE OF THE AO DUR ING THE APPELLATE PROCEEDINGS. THE FAA HELD THAT THE ASSESSEE HAD NOT ASKED FOR THE CROSS- EXAMINATION OF THE BUILDER DURING THE ASSESSMENT PROCEEDINGS,THAT THE VERY ISSUE OF CROSS EXAMINATION WAS RAISED ONLY AFTER 2 YEARS AFTER THE ASSESSMENT ORDER WAS PASSED,THAT TH E ASSESSEE HAD NOT TAKEN ANY GROUND IN THAT REGARD.REFERRING TO RULE 46A OF THE INCOME TAX RULE S, 1962 (RULES),THE FAA HELD THAT THE ASSESSEE DID NOT HAVE ANY REASONABLE CAUSE AS REQUI RED BY THE PROVISIONS OF 46A OF THE RULES. REFERRING TO THE STATEMENTS RECORDED BY THE INVESTI GATION WING OF THE DEPARTMENT, THE FAA HELD THAT THE ASSESSEE HAD ACCEPTED HALF OF THE DET AILS OF THE SEIZED PAPER, THAT THE BUILDER HAD ADMITTED TO HAVE RECEIVED CASH OF RS.71 LACS FROM T HE ASSESSEE. SHE REFERRED TO THE MATTER OF POONAM CHAWLA DECIDED BY THE HONBLE DELHI COURT IN CM(M) 374/2008 DATED 17.3.2009 AND H. SIDDHIQUE VS. A. RAMA LINGAM (2011) 5 SCR 58 7 AND HELD THAT THERE WAS NO DENIAL THAT THE DOCUMENT WAS SEIZED DURING THE COURSE OF S EARCH AND SEIZED PROCEEDINGS, AND THE CONTENTS WERE ADMITTED BY THE BUILDERS, THAT THE AS SESSEE HAD ADMITTED THE BASIC FACTS ABOUT PURCHASE OF SHOP,THAT HIS OWN ADMISSION WAS CORROBO RATED WITH THE OTHER DETAILS AVAILABLE IN THE SAME VERY DOCUMENT, THAT HE DID NOT ASK FOR AN OPPORTUNITY TO CROSS EXAMINE THE BUILDER DURING THE ASSESSMENT PROCEEDINGS, THAT THE DOCUMEN T HAD TO BE READ IN FULL AND NOT IN PART. FINALLY,THE FAA HELD THAT THE AO WAS JUSTIFIED IN M AKING THE ADDITION OF RS.71 LACS. ITA /5064/ MUM/2014-AY.2009-10,SUDHAKAR S. MODY 3 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI ZED REPRESENTATIVE (AR) ARGUED THAT THE ASSESSEE HAD PAID RS.50 LACS ONLY TO THE BUILDER, T HAT AS PER THE SEIZED DOCUMENT THE PRICE OF THE SHOP WAS RS.41 LACS,THAT THE ASSESSEE HAD DENIE D TO PAID CASH TO THE BUILDER WHEN HIS STATEMENTS WERE RECORDED ON 20.2.2009, THAT THE PAP ER SEIZED BY THE DEPARTMENT WAS A MERE LOOSE PAPER,THAT THE STATEMENT OF THIRD PARTY WAS N OT BINDING ON THE ASSESSEE, THAT KIRTI PATIL HAD,LATER ON,STATED THAT IN EACH CASE CASH WAS NOT CHARGED. HE REFERRED TO THE CASE OF SYNTHETIC HYDRO CARBON (ITA NO. 5188/MUM/2011-AY.2008-09,DATE D 12.9.2009) AND REFERRED TO PG. NO.2,17,29,32,38 OF THE PAPER BOOK.THE DEPARTMENTAL REPRESENTATIVE(DR)CONTENDED THAT THE SEIZED PAPER CLEARLY ESTABLISHED CASH PAYMENT OF RS .71 LACS BY THE ASSESSEE TO THE BUILDER,THAT THE ASSESSEE HIMSELF HAD ACCEPTED THE PART OF THE P APER, THAT THE ASSESSEE HAD PURCHASED 1190 SQ. FT.,THAT THE BUILDER HAD ADMITTED AN UNDISCLOSE D INCOME OF RS.12.50 CRORES. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT A UNSIGNED PAPER WAS SEIZED FROM THE RESIDENTIAL PREM ISES OF ONE OF THE GROUP MEMBERS OF THE BUILDERS,THAT THE GROUP HAD MADE A DISCLOSURE OF RS .22.50 CRORES,THAT THERE ARE TWO STATEMENTS OF SAME MEMBER OF THE GROUP,THAT IN ONE OF THE STAT EMENTS HE HAD STATED THAT IN ALL THE CASES CASH WAS NOT RECEIVED,THAT THE ASSESSEE HAD DENIED PAYMENT OF CASH FOR PURCHASE OF THE SHOP, THAT HE WAS NOT ALLOWED TO CROSS EXAMINE THE BUILDE R.IN OUR OPINION,RULE 46A IS NOT APPLICABLE TO THE FACTS OF THE CASE.THE ASSESSEE HA D NOT FILED ADDITIONAL EVIDENCES BEFORE THE FAA,SO,THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISIONS OF RULE 46A OF THE RULES.WE FIND THAT IN THE CASE OF SYNTHETIC HYDRO CARBON(SUP RA),THE TRIBUNAL HAS DEALT WITH THE SAME ISSUE.IN THAT MATTER ALSO A SHOP WAS PURCHASED FROM THE SAME VENDOR AND ON THE BASIS OF THE SEIZED PAPER THE AO HAD MADE AN ADDITION TO THE INC OME OF THE ASSESSEE.IN THE APPELLATE PROCEEDINGS,THE FAA DELETED THE ADDITION.THE GROUND OF APPEAL RAISED BY THE AO,BEFORE THE TRIBUNAL READ AS UNDER: 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 52,26,000/- MADE BY TH E AO AS THE ASSESSEE HAD MADE PAYMENT OF UNACCOUNTED MONEY OF RS. 52,26,000/- FOR ACQUISITIO N OF SHOP NO. 119 IN LITTLE WORLD, KHHARGHAR, NAVI MUMBAI.' THE TRIBUNAL NARRATED THE FACTS OF THE CASE AS FOLL OW: 3. THE FACTS GIVING RISE TO THE GRIEVANCE OF THE RE VENUE SHOW THAT A SEARCH AND SEIZURE ACTION U/S. 132 WAS CONDUCTED IN THE CASE OF SIDDHI GROUP ON 19.2.2009. DURING THE COURSE OF THE SEARCH, SOME DOCUMENTS WERE SEIZED FROM THE PREMISE S OF KEY PERSONS OF THE GROUP IN WHICH IT WAS FOUND THAT M/S. SYNTHETIC HYDROCARBONS (ASSESSE E) HAD BOOKED A SHOP AT 119, LITTLE WORLD, KHARGHAR, NAVI MUMBAI FOR WHICH THE TOTAL CO NSIDERATION OF THE SHOP WAS RS. 92,26,000/- AS PER THE SEIZED DOCUMENT. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF TRANSAC TIONS AND AMOUNTS PAID FOR PURCHASE OF SHOP AND WAS ASKED TO EXPLAIN THE SOURCE OF CASH WH ICH WAS PAID FOR THE PURCHASE OF SHOP NO. 119. IN RESPONSE TO WHICH, THE ASSESSEE VIDE LE TTER DT.6.8.2010 EXPLAINED THAT IT HAS ITA /5064/ MUM/2014-AY.2009-10,SUDHAKAR S. MODY 4 PURCHASED SHOP AT LITTLE WORLD FOR RS. 47,11,000/-. THE AO OBSERVED THAT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AT SIDDHI GROUP, ON E SHRI KANTILAL M. PATEL, PARTNER OF M/S. GAYATRI HOMES OF SIDDHI GROUP IN HIS STATEMENT HAS EXPLAINED THE CONTENTS OF THE SEIZED DOCUMENTS. THE SAID SEIZED DOCUMENT CONTAINED SUMMA RY OF SALE OF SHOPS OF LITTLE WORLD MALL INCLUDING DETAILS SUCH AS SHOP NO., NAME OF PU RCHASER, CHARGEABLE ARE, TOTAL DEAL VALUE (INCLUDING CHEQUE AND CASH COMPONENT), TOTAL CHEQUE VALUE (WHICH IS THE VALUE APPEARING IN THE SALE AGREEMENT OF THE RESPECTIVE SHOP). THE TOT AL OF THE COLUMN 'CASH RECEIVED' IS RS. 12.05 CRORES. THE DEPONENT SHRI KANTILAL M. PATEL ADMITTE D THAT THE AMOUNT OF RS. 12.05 CRORES WAS RECEIVED IN CASH OVER AND ABOVE THE AGREEMENT VALUE AND OFFERED THE SAME AS UNDISCLOSED INCOME OF M/S. GAYATRI HOMES. 4. TAKING A LEAF OUT OF THE AFOREMENTIONED STATEMEN T OF SHRI KANTILAL M. PATEL, THE AO CONFRONTED THE DECLARATION MADE BY SHRI KANTILAL M. PATEL AND SOUGHT EXPLANATION FROM THE ASSESSEE IN RESPECT OF CASH AMOUNTING TO RS. 52,26, 000/- PAID AGAINST THE PURCHASE OF SHOP NO. 119 AT LITTLE WORLD. THE ASSESSEE REQUESTED FOR CROSS EXAMINATION OF THE BUILDER WHO HAD STATED THAT CASH HAS BEEN RECEIVED FROM SHRI UTPAL B. SHAH (PARTNER OF M/S. SYNTHETIC HYDROCARBON (ASSESSEE). AN OPPORTUNITY TO CROSS EXA MINE SHRI KANTILAL M. PATEL WAS AFFORDED TO THE ASSESSEE. 5. THE AO CONCLUDED THAT ON ANALYSIS OF THE STATEME NT RECORDED DURING THE CROSS EXAMINATION PROCEEDINGS, IT IS ESTABLISHED THAT THE SAID BUILDE R HAS RECEIVED TOTAL CASH AMOUNTING TO RS. 12.05 CRORES FROM THE PARTIES WHO HAD PURCHASED SHO P AT LITTLE WORLD FROM M/S. GAYATRI HOMES AND IN THE SEIZED DOCUMENTS, IT IS MENTIONED AGAINST SHOP NO. 119, THE NAME OF SHRI UTPAL B. SHAH (PARTNER OF THE ASSESSEE FIRM) AND AM OUNT OF CASH RECEIVED AS RS. 52,26,000/-. ACCORDING TO THE AO, THIS CASH PAYMENT AMOUNTING TO RS. 52,26,000/- FOR THE PURCHASE OF SHOP NO. 119 AT LITTLE WORLD IS NOT RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE AO WENT ON TO TREAT THE SAID PAYMENT AS UNDISCLOSED IN VESTMENT U/S. 69 OF THE ACT AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE FIRM. AFTER CONSIDERING THE ARGUMENTS OF THE DR AND THE A R,THE MATTER WAS DECIDED BY AS UNDER: 9.WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE ORDERS OF LOWER AUTHORITIES. THE WHOLE DISPUTE REVOLVES AROUND THE ENTRIES IN THE DOCUMENT FOUND DURING SEARCH AND SEIZURE OPERATION CARRIED ON AT THE PREM ISES OF THE BUILDER M/S. GAYATRI HOMES. THE ENTIRE ASSESSMENT HAS BEEN MADE ONLY ON THE BAS IS OF ALL THE ENTRIES FOUND IN THE SEIZED DOCUMENT AND THE STATEMET OF SHRI KANTILAL M. PATEL OF GAYATRI HOMES. IT WOULD BE PERTINENT TO NOTE THAT IN THE SEIZED DOCUMENT, THE TOTAL AREA OF SHOP MENTIONED IS 909 SQ. FT., HOWEVER, THE ACTUAL AREA PURCHASED BY THE ASSESSEE IS 454.50 SQ. FT ONLY THIS FACT IS ALSO NOT DISPUTED BY THE ASSESSING OFFICER. IT APPEARS THAT THE AO HA S ACCEPTED PARTLY THE GENUINENESS OF THE SEIZED DOCUMENT IN SO FAR AS IT RELATES TO THE CASH PAYMENT IS CONCERNED I.E. RS. 52,26,000/- AND IGNORED THE AREA OF SHOP AS NOTED IN THE SEIZED MATERIAL AS 909 SQ. FT. ON GOING THROUGH THE CROSS EXAMINATION, STATEMENT OF SHRI KANTILAL M . PATEL RECORDED ON 20.12.2010 AND EXHIBITED AT PAGES 17 TO 19 OF THE PAPER BOOK FILED BY THE ASSESSEE, WE FIND THAT THE SAID SHRI KANTILAL M. PATEL HAS NOT GIVEN ANY SPECIFIC ANSWER WHICH COULD POINT OUT THAT THE ASSESSEE HAS ACTUALLY PAID RS. 52,26,000/- OVER AND ABOVE TH E PURCHASE CONSIDERATION PAID BY CHEQUE. ON THE CONTRARY, WE FIND THAT SHRI KANTILAL M. PATE L HAS STATED THAT THE SEIZED DOCUMENT IS A COMPUTER GENERATED PAPER AND HE IS NOT AWARE OF WHO HAS PREPARED IT. HE HAS OFFERED THE CASH RECEIPT AMOUNT AS HIS ADDITIONAL INCOME TO PUR CHASE PEACE OF MIND AND TO AVOID LITIGATION. 10. BE THAT AS IT MAY, WE DO NOT FIND ANY MATERIAL BROUGHT ON RECORD BY THE AO TO SUBSTANTIATE HIS CLAIM THAT ASSESSEE HAS ACTUALLY PAID RS. 52,26 ,000/- OVER AND ABOVE THE CHEQUE AMOUNT FOR THE PURCHASE OF SHOP NO. 119 AT LITTLE WORLD. T HE ENTIRE ASSESSMENT HAS BEEN MADE ONLY ON THE BASIS OF SURMISE, ASSUMPTIONS AND CONJECTURE S. IN OUR HUMBLE OPINION, SUCH ADDITIONS CANNOT BE SUSTAINED , MORE SO IN THE LIGHT OF THE R ATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF CBI VS V.C. SHUKLA & ORS (SUPR A). WE DO NOT FIND ANY REASON TO TINKER WITH THE FINDINGS OF LD. CIT(A) WHICH WE CONFIRM. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ITA /5064/ MUM/2014-AY.2009-10,SUDHAKAR S. MODY 5 WE FIND THAT THE FACTS OF THE CASE ARE SIMILAR TO T HE FACTS OF SYNTHETIC HYDRO CARBON(SUPRA). NOTHING CONTRARY WAS BROUGHT ON RECORD FOR NOT FOLL OWING THE SAID ORDER OF THE TRIBUNAL.SO, RESPECTFULLY FOLLOWING THE ABOVE ORDER OF THE ITAT AND REVERSING THE ORDER OF THE FAA,WE DECIDE THE EFFECTIVE GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE AS SESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JANUARY, 2017. , 201 7 SD/- SD/- ( . . / C. N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 06. 01.2017. ROSHANI, SR.PS./JV. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.