ITO 25(2)(4), MUMBAI V. SAMTA INVESTMENT, MUMBAI

ITA 5068/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3375 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 13-02-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 17-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Documents seized
• Section: 143(3)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI . . , . !'#$ , % & BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLA IYA, AM ./ I.T.A. NO. 5068/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2006-07 THE ITO 25(2)(4), C-11,1 ST FLOOR, PRATYAKSHAKAR BHAVAN, B.K.C, BANDRA(E), MUMBAI - 51 / VS. M/S. SAMTA INVESTMENT, A-2/12, PUNIT NAGAR, PLOT NO.1, S.V.ROAD, BORIVALI (W), MUMBAI - 400 092. ( % ./ )* ./ PAN/GIR NO. : ABGFS 9065E ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: MS.NEERAJA PRADHAN ,-(+ / . / RESPONDENT BY : SHRI VIMAL PUNMIYA / 0% / DATE OF HEARING : 07/05/2013 12' / 0% / DATE OF PRONOUNCEMENT :17/05/2013 3 / O R D E R PER I.P.BANSAL,J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER PASSED BY LD. CIT(A)-35 MUMBAI DATED 23/3/2010 FOR ASSESSMENT YEAR 2006- 07. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.36 LACS MADE BY THE ASS ESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S. 69B OF THE I.T. ACT, 19 61. ./ I.T.A. NO. 5068/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2006-07 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.66 LACS MADE BY THE AO ON ACCOUNT OF UNRECORDED. INCOME OF THE ASSESSEE 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 30/12/200 9 PASSED UNDER SECTION 143(3) R.W.S. 153C OF THE INCOME TAX ACT, 1961 (THE ACT). A SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) WAS CONDUCTED I N THE CASE OF M/S. OSTWAL BUILDERS PVT. LTD AND SHRI UMRAO SINGH OSTWAL ON 21/2/2007. DURING HE COURSE OF THAT SEARCH CERTAIN LOOSE PAPERS FILE WAS SEIZED FROM THE RESIDENCE OF SHRI UMRAO SINGH OSTWAL WHICH ACCORDING TO AO PERTA IN TO M/S. SAMATA INVESTMENTS. THE A.O OF THE ASSESSEE RECEIVED IN FORMATION FROM THE A.O OF THE PERSON IN CASE OF WHOM SEARCH WAS MADE AND ON THE B ASIS OF THAT INFORMATION NOTICE UNDER SECTION 153C WAS ISSUED TO THE ASSESSE E IN RESPONSE TO WHICH RETURN WAS FILED AT NIL. THE FIRST ISSUE RELATES T O AN ADDITION OF RS.36.00 LACS. IT WAS NOTICED THAT PAGE-34 RELATED TO A LAND DEAL (S. SL.NO.242 MAHESH NAYAK). FROM THE ENTRIES MADE ON THE PAPER IT WAS INFERRED THAT TOTAL PURCHASE PRICE WAS FIXED AT RS.72.00 LACS FOR LAND AREA OF 4000 SQ. YA RDS AND A PAYMENT OF RS.15.00 LAC WAS MADE WHICH CONSISTED OF RS.5.00 LACS BY CHE QUE AND RS.10.00 LACS BY CASH AND IT WAS INFERRED THAT NOTING ON THE PAPER I NDICATE THAT 50% OF THE PAYMENT AMOUNTING TO RS.36.00 LACS WAS PAID BY CHE QUE AND THE BALANCE WAS IN CASH BY THE ASSESSEE. THE ASSESSEE WAS REQUIRED TO EXPLAIN THESE ENTRIES AND REPLY OF THE ASSESSEE HAS BEEN INCORPORATED IN PARA 7.1 OF THE ASSESSMENT ORDER. IT WAS SUBMITTED THAT THE SAID PAPER WAS ONLY A ROU GH WORKING OF LAND DEAL IN WHICH A TOKEN PAYMENT WAS MADE AT RS.5.00 LACS AND RS.10.00 LACS BY POST DATED CHEQUE AND FURTHER CHEQUE PAYMENTS WERE ALSO NOTED ON THE ROUGH WORKING PAPER. SUCH DEAL NEVER MATERIALIZE AND THE ASSESSEE HAS PAID ONLY RS.2,50,000/- OUT OF WHICH RS.2.00 LAC PAID BY SHRI GYANCHAND SANCHETI PARTNER OF THE ASSESSEE FIRM AND RS.50,000/- WAS PAID BY S HRI KULDIPSINGH U. OSTWAL AND THE SAID AMOUNT HAS TO BE RECOVERED BY THE ASS ESSEE FROM THE SAID PARTY AND RECOVERY IS DOUBTFUL. THE AO IN PARA 7.2 AND 7 .3 HAS COME TO A CONCLUSION THAT ASSESSEE DID NOT DENY THAT TRANSACTION OF LAND MENTIONED IN PAPER NO.34 HAD NEVER BEEN UNDERTAKEN BY THE ASSESSEE. ACCORDI NG TO A.O THE ASSESSEE HAS ./ I.T.A. NO. 5068/MUM/2010 ( ' ' ' ' / ASSESSMENT YEAR : 2006-07 3 ADMITTED TO HAVE MADE PORTION OF THE PAYMENT IN CHE QUE. THE PAYMENT FOR THE SAID LAND DEAL WAS IN THE FORM OF CASH OF RS.36.00 LACS WHICH IS NOT FOUND TO BE RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE ASSESSEE STATED THAT SUCH DEAL WAS NEVER MATERIALIZE. HOWEVER, SUCH DEAL HAS ALSO NOT BEEN CANCELLED AND THEREFORE, THE EXPLANATION FURNISHED BY THE ASSESSE E IS NOT SATISFACTORY AND THE AMOUNT OF RS.36.00 LACS IS DEEMED TO BE INCOME OF T HE ASSESSEE UNDER SECTION 69B OF THE ACT. 3. THE AFOREMENTIONED ADDITION WAS CHALLENGED IN AN APPEAL FILED BEFORE LD. CIT(A) AND IT MAY BE MENTIONED HERE THAT A.O HAD RE PRESENTED BEFORE LD. CIT(A). APART FROM THE SUBMISSIONS MADE BEFORE A.O IT WAS S UBMITTED THAT FOR THE SAID TRANSACTION EVEN PURCHASE AGREEMENT WAS NOT ENTERED INTO. THE SEIZED PAPER DID NOT REVEAL ANY ENTRY OF CASH PAYMENT AND IN FACT T HE WORD CASH HAS NOT BEEN USED ANYWHERE IN THE NOTING OF THE LOOSE PAPER. THE A.O BY MISTAKE HAS ASSUMED THAT ASSESSEE HAS PAID RS.5.00 LACS BY CHEQ UE AND RS. 10.00 LACS BY CASH WHERE AS THE WORD CASH DOES NOT APPEAR ON T HE SEIZED SLIP. IT WAS SUBMITTED THAT THERE WAS A PROPOSAL BY SHRI MAHESH NAYAK REQUESTING ONE PARTNER TO PAY RS.5.00 LACS BY CHEQUE AND THE OTHER PARTNER TO PAY RS.10.00 LACS BY CHEQUE AND BALANCE AMOUNT WAS TO BE PAID BY CHEQ UE AND THERE WAS NO OTHER PAYMENT MADE BY THE ASSESSEE EXCEPT RS.2,50,000/- BY CHEQUE. IT WAS SUBMITTED THAT AO EVEN DID NOT CONDUCT ANY ENQUIRY WITH SHRI MAHESH NAIK TO ESTABLISH THAT ASSESSEE HAS PAID MORE THAN RS.2,50, 000/- AND BASED ON ASSUMPTION AND SUSPICION ADDITION HAS BEEN MADE BY THE AO. 3.1 ON THESE SUBMISSIONS LD. CIT(A) AFTER PERUSING AND REPRODUCING THE CONTENTS OF SEIZED DOCUMENTS HAS COME TO A CONCLUSI ON THAT THE WORD CASH HAS NOT BEEN USED ANYWHERE AND IT IS ONLY ASSUMED BY THE A.O. THE WORDS USED IN THE SAID DOCUMENTS CQ OR CH AND AS CONTENDED BY THE ASSESSEE, THE TRANSACTION DID NOT MATERIALIZE AND EVEN THE PURCH ASE AGREEMENT WAS NOT ENTERED AND THE ASSESSEE MADE ADVANCE PAYMENT OF R S.2,50,000/- BY CHEQUE, THEREFORE, THERE WAS NO INDICATION IN THE SEIZED SL IP THAT THE ASSESSEE HAS PAID RS.36.00 LACS IN CASH. THE AO WHO WAS PRESENT AT THE TIME OF HEARING ALSO DID