KANTILAL S. SOLANKI, MUMBAI V. ITO WARD - 20(2)(3), MUMBAI

ITA 5145/MUM/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0398 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 08-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Reopening of assessment
• Section: 131; 69

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 5145 /MUM/ 2 016 (ASSESSMENT YEAR 20 07 - 08 ) SHRI KANTILAL S. SOLANKI 1103 - 903/A, DEEPAK JYOTI TOWER, G.D. AMBEDKAR MARG PAREL TANK ROAD KALACHOWKI, MUMBAI - 4000 33. VS. ITO 20(2)(3) MUMBAI ( APPELLANT ) ( RESPONDENT ) PAN NO . AAEPS4189A ASSESSEE BY SHRI SUCHEK ANCHALIYA DEPARTMENT BY MS. N. HEMALATHA DATE OF HEARING 21 . 8 . 201 7 DATE OF PRONOUNCEMENT 21 . 8 . 201 7 O R D E R THE APPEAL FILED BY THE A SSESSEE IS DIRECTED AGAINST THE ORDER DATED 17.6.2016 PASSED BY THE LEARNED CIT(A) - 32, MUMBAI AND IT RELATES TO A.Y. 2007 - 08. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION OF ` 34 LAKHS , BEING THE AMOUNT PAID T O THE BUILDER BY WAY O F CASH. THE ASSESSEE IS ALSO C H A LLENGING THE VALIDITY OF REOPENING OF THE ASSESSMENT. 2. I HAVE HEARD THE PARTIES AND PERUSED THE RECORD. ORIGINAL RETURN OF INCOME FILED BY THE ASSESSEE WAS PROCESSED U/S. 143(1) OF THE ACT. SUBSEQUE NTLY, THE REVENUE RECEIVED A TAX EVASION PETITION TO THE EFFECT THAT CERTAIN INVESTORS HAVE MADE PAYMENTS BY WAY OF CASH FOR BOOKING OF FLATS TO BE DEVELOPED BY M/S. ESQUE FINMARK PVT. LTD. AT KALA CHOWKIE, MUMBAI. ACCORDINGLY, SUMMONS U/S. 131 WAS ISSUED TO THE INVESTORS WHO HAVE BOOKED FLATS. THE ASSESSEE HAD ALSO BOOKED A FLAT AND AS PER THE PETITION THE ASSESSEE HAS PAID A SUM OF ` 35 LAKHS TO THE BUILDER . THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID A SUM OF ` 1 LAKH ONLY BY WAY OF CHEQUE AND REMAINING SHRI KANTILAL S. SOLANKI 2 PAYMENT S HA VE BEEN MADE BY WAY OF CASH. THE AO NOTICED THAT THE B UILDER HAD ISSUED ALLOTMENT LETTER TO THE ASSESSEE ON 28.11.2006 AND THE A LLOTMENT LETTER DISCLOSED PAYMENT OF ` 1 LAKH ONLY TO THE BUILDER. THE ASSESSEE SUBMITTED THAT THE BAL ANCE AMOUNT OF ` 34 LAKHS WAS GIVEN BY WAY OF CASH TO THE BUILDER DURING THE FINANCIAL YEAR 2005 - 06, AS PER THE DE T AILS GIVEN BELOW: - ` 5,00,000/ - AS TOKEN MONEY ON 9/1/2006 IN CASH ` 5,00,000/ - AS PART PAYMENT ON 20/1/2006 IN CASH ` 5,00,000/ - AS PART PAYMENT ON 2/2/2006 IN CASH ` 5,00,000/ - AS PART PAYMENT ON 14/2/2006 IN CASH ` 5,00,000/ - AS PART PAYMENT ON 27/2/2006 IN CASH ` 5,00,000/ - AS PART PAYMENT ON 13/3/2006 IN CASH ` 4,00,000/ - AS PART PAYMENT ON 28/3/2006 IN CASH THE ASSESSEE SUBMITT ED BEFORE THE AO THAT HE HAD MADE CASH PAYMENT OUTSIDE HIS BOOKS, BUT THEY WERE MADE DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 2006 - 07. 3. THE ASSESSING OFFICER DID NOT ACCEPT THE SUBMISSION S OF THE ASSESSEE THAT SUM OF ` 34 LAKHS WAS PAID DURING THE FINANCIAL YEAR 2005 - 06 RELEVANT TO A.Y. 2006 - 07. THE ASSESSING OFFICER TOOK THE VIEW THAT THE ASSESSEE SHOULD HAVE PAID AMOUNT OF ` 34 LAKHS DURING THE YEAR UNDER CONSIDERATION , SINCE THE ALLOTMENT LETTER WAS GIVEN BY THE BUILDER ONLY ON 28.10. 2006. ACCORDINGLY, HE ASSESSED UNDISCLOSED AMOUNT OF ` 34 LAKHS AS INCOME OF THE ASSESSEE IN A.Y 2007 - 08. 4. BEFORE THE LEARNED CIT(A), THE ASSESSEE REITERATED THAT THE CASH AGGREGATING TO ` 34 LAKHS WAS PAID DURING THAT PERIOD FROM JANUARY 2006 TO MARCH 2006 AS PER THE KACCHA CHITTI . HE FURNISHED COPY OF KACCHA CHITTI WHEREIN THE R ECIPIENT NAMED MR. PARAS HAD ACKNOWLEDGED THE RECEIPTS. ACCORDINGLY, IT WAS CONTENDED THAT THE IMPUGNED AMOUNT OF ` 34 LAKHS SHOULD NOT HAVE BEEN ASSESSED IN A.Y. 2007 - 08. HO WEVER, THE LEARNED C IT(A) REFUSED TO ACCEPT KACCHA CHITTI BY OBSERVING THAT THE IDENTITY OF MR. PARAS IS A MY ST E RY TILL DATE AND HIS CONNECTION WITH THE BUILDER IS ALSO A MYSTERY. SHRI KANTILAL S. SOLANKI 3 ACCORDINGLY, HE AGREED WITH THE VIEW TAKEN BY THE ASSESSING OFFICE R AND CO NFIRMED THE ADDITION OF ` 34 LAKHS MADE BY THE AO. 5. LEARNED AR SUBMITTED THAT THE ASSESSEE HA S RECEIVED ALLOTMENT LETTER UPON PAYMENT OF FULL AMOUNT OF ` 35 LAKHS TO THE BUILDER. HE SUBMITTED THAT THE PAYMENT HAS BEEN DULY NOTED DOWN IN THE KACCHA CHIT TI AND RECEIPT OF CASH WAS DULY ACKNOWLEDGED BY A PERSON NAMED MR. PARAS. HE SUBMITTED THAT MR. PARAS IS ONE OF THE DIRECTOR S OF A BUILDER M/S. ESQUE FINMARK PVT. LTD. IN SUPPORT OF THIS SUBMISSION, LEARNED AR FURNISHED COPY OF PRINTOUT TAKEN FROM THE MINI STRY OF CORPORATE AFFAIRS, WHEREIN IT IS STATED THAT MR. PARAS SHANTILAL PORWAL IS A DIRECTOR FROM THE PERIOD FROM 10.9.2001 TO 2.12.2016. LEARNED AR SUBMITTED THAT THE ASSESSEE HAD MADE PAYMENT TO MR. PARAS ON BEHALF OF THE BUILDER DURING THE FINANCIAL YE AR RELEVANT TO A.Y. 2006 - 07. ACCORDINGLY, HE SUBMITTED THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING THE EVIDENCE FURNISHED BY THE ASSESSEE. 6. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS BEEN GIVEN ALLOTM ENT LETTER ON 28.10.2016 AND HENCE ENTIRE PAYMENT SHOULD HAVE BEEN MADE BY THAT DATE ONLY, ACCORDINGLY SHE SUBMITTED THAT THE LEARNED CIT(A) WAS JUSTIFIED IN CONFIRMING THE ADDITION OF ` 34 LAKHS IN AY 2007 - 08 . 7. I HAVE HEARD THE RIVAL CONTENTION S AND P ERUSED THE RECORD. T HE ASSESSING OFFICER HAS MADE ADDITION U/S. 69 OF THE ACT , SINCE THE PAYMENT OF ` 34 LAKHS WAS NOT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND FURTHER THE ASSESSEE ALSO DID NOT SPECIFY SOURCES THEREOF. THOUGH THE ASS ESSEE AGREES THAT THE ABOVE SAID PAYMENT HAS BEEN MADE FROM UNDISCLOSED RESOURCES, HIS ONLY CONTENTION IS THAT THESE PAYMENTS WERE MADE DURING THE FINANCIAL YEAR RELEVANT TO A.Y. 2007 - 08. SUBMISSIONS OF THE ASSESSEE IS THAT THESE PAYMENTS HAVE BEEN MADE DU RING THE FINANCIAL YEAR RELEVANT TO A.Y. 2006 - 07 AND HENCE THE ASSESSING OFFICER WAS NOT RIGHT IN LAW IN MAKING THE ADDIT I ON IN A.Y. 2007 - 08. IN SUPPORT OF THE SUBMISSIONS SO MADE, THE ASSESSEE SHRI KANTILAL S. SOLANKI 4 HAS FURNISHED COPY OF THE KACCHA CHITTI , WHEREIN DETAILS OF P AYMENT MADE TOWARDS FLAT HAVE BEEN NOTED DOWN. IN THE KACCHA CHITTI THE PAYMENTS MADE BY WAY OF CASH AND ALSO BY WAY OF CHEQ U E HAVE BEEN NOTED DOWN . IT IS PERTINENT TO NOTE THAT THE RECIPIENT NAMED MR. PARAS HAS DUL Y ACKNOWLEDGED THE RECEIPT OF PAYMENTS . I HAVE NOT IC ED THAT THE LEARNED CIT(A) HAS REJECTED THIS DOCUMENT ONLY ON THE REASONING THAT THE IDENTITY OF MR. PARAS IS NOT ESTABLISHED AND ALSO DET AILS OF HIS CONNECTION WITH THE BUILDER IS ALSO NOT ESTABLISHED. THE ASSESSEE HAS NOW FILED A COPY OF DIRE CTORSHIP DETAILS OF MR. PARAS SHANTILAL PORWAL FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS . PERUSAL OF THE SAME WOULD SHOW THAT MR. PARAS IS A DIRECTOR OF MANY COMPANIES AND HE HAS BEEN A DIRECTOR OF M/S. ESQUE FINMARK PVT. LTD., TO WHOM THE IMPUGNED PAYMENTS HAVE BEEN MADE, FROM 10.9.20 01 TO 2.12.2006. IN MY VIEW THI S DOCUMENT DOWNLOADED FROM THE WEBSITE OF MINISTRY OF CORPORATE AFFAIRS ESTABLISHES THE IDENTITY OF MR. PARAS BUT ALSO HIS CONNECTION WITH THE BUILDER M/S. ESQUE FINMARK PVT. LTD. SINCE THIS DOCUMENT IS A PUBLIC DOCUMENT, I AM OF THE VIEW THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING THE SUBMISSIONS OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, I AM OF THE OPINION THAT THE KACCHA CHITTI FURNISHED BY THE ASSESSEE CANNOT BE REJECTE D ALT OGETHER. PERUSAL OF THE ENTRIES MADE IN THE KACCHA CHITTI WOULD SHOW THAT THE ASSESSEE HAS MADE PAYMENTS BY WAY OF CASH DURING THE PE RIOD FROM 9.1.2006 TO 28.3.2006 AGGREGATING TO ` 34 LAKHS. HENCE, IN MY VIEW THE SUBMISSIONS OF THE ASSESSEE SHOULD B E ACCEP T ED AND HENCE CAU SE OF ACTION, IF ANY, WOULD NOT ARISE IN THE A.Y. 2007 - 08 SINCE THE PAYMENT HAVE NOT BEEN MADE DURING THE YEAR RELEVANT TO A.Y. 2007 - 08. ACCORDINGLY, I SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE AS SESSING OFFICER TO DELETE THE IMPUGNED ADDITION OF ` 34 LAKHS. SINCE I HAVE GRANTED RELIEF TO THE ASSESSEE ON MERITS, I DO NOT FIND IT NECESSARY TO DEAL WITH GROUNDS RELATING TO VALIDITY OF REOPENING OF ASSESSMENT. SHRI KANTILAL S. SOLANKI 5 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 21 . 8 . 201 7. SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 8 / 20 1 7 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBAI