Entellus Builders & Developers, Bhopal V. ACIT, Central-2, Bhopal

ITA 54/Ind/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 8632 (ITAT-INDORE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 17-10-2022
• Assessment Year: 2011-2012
• Appeal Filed On: 13-03-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 148; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (CONDUCTED THROUGH VIRTUAL COURT) BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER & SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER I .T .A . N o s. 5 4 & 5 5 / I n d / 2 0 2 2 ( A s se ss m e n t Y e a r s : 2 0 1 1 - 1 2 & 2 0 1 2 - 1 3 ) E n t e l lu s B u il d e r s & D e v e lo p e r s , FB - 3 4 , 3 5 O p p . H a b ib g a n j R a i lw a y S ta ti o n , M a n s a r o v a r C o m p le x , B h o p a l - 4 6 2 0 1 6 V s.A C I T C e n tr a l - 2 , B h o p a l PA N N o .A A D FE 1 3 4 3 B (Appellant) .. (Respondent) Appellant by : Shri S. S. Deshpandeey, A.R. Respondent by : Shri Ashish Porwal, Sr. D.R. D a t e o f H e a r i ng 18.10.2022 D a t e o f P r o no un c e m e nt 11.11.2022 O R D E R PER SUCHITRA KAMBLE - JM: Both the appeals are filed by the assessee against the order dated 18.01.2022 passed by the Ld. CIT(A)-3, Bhopal for A.Ys. 2011-12 & 2012-13. 2. The grounds of appeal raised by the assessee ITA No. 54/Ind/2022 read as under: “1. That on the facts and in the circumstances of the case of the assessee the Ld. Commissioner of Income Tax was not justified in confirming the addition of Rs. 50,00,000.00 as unexplained investment. 2. The assessee craves leave to add, alter amend or withdraw any ground of appeal on or before the time of hearing.” ITA Nos.54&55/Ind/2022 Entellus Builders & Developers vs. ACIT Asst.Years –2011-12 & 2012-13 - 2 – 3. The grounds of appeal raised by the assessee ITA No. 55/Ind/2022 read as under: “1. That on the facts and in the circumstances of the case of the assessee the Ld. Commissioner of Income Tax was not justified in confirming the addition of Rs. 1,00,00,000.00 as unexplained investment. 2. The assessee craves leave to add, alter amend or withdraw any ground of appeal on or before the time of hearing.” 4. The assessee firm is engaged in the business of real estate in Bhopal. The return of income for the years under consideration was filed by the assessee on 20.01.2012 and on 27.04.2013 for A.Ys. 2011-12 and 2012-13 respectively declaring total income at Rs. NIL. Search and Seizure action was carried out in the case of Signature Group of Bhopal on 29.01.2014 wherein various incriminating documents were found and seized as observed by Assessing Officer. Some MOU/agreements between assessee and M/s. Signature Colonisers were also found and seized. The Assessing Officer observed that as per MOU the assessee would have responsibility of acquiring 75 acres of land at Village Satgarhi, Ratibad Bhopal for which Rs. 50,00,000/- was paid on 12.03.2011 by Signature Colonisers to the assessee and Rs. 1,00,00,000/- more has to be paid before 30.04.2011 and Rs. 2,00,00,000/- will be paid after acquiring the remaining approximately 57 acres of land. The Assessing Officer after recording the reasons of belief for initiating the reassessment proceedings issued notice under Section 148 of the Act on 27.03.2017. The assessee in compliance to the notice issued had filed return of income on 04.04.2017. During the course of reassessment proceedings the assessee was required to establish nature of transactions ITA Nos.54&55/Ind/2022 Entellus Builders & Developers vs. ACIT Asst.Years –2011-12 & 2012-13 - 3 – undertaken with M/s. Signature Colonisers as per the agreements. The assessee in his reply submitted that this was as unsigned draft of a proposed agreement which was not executed. The Assessing Officer examined all the issues and aspects of the case and after considering the various facts and circumstances of the case, it is held that the explanation furnished by the assessee is not acceptable and made the addition of Rs. 50,00,000/- in A.Y. 2011-12 and this Rs. 1,00,00,000/- in A.Y. 2012-13 on account of unexplained investment under Section 69/69A of the Act. 5. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) dismiss the appeal of the assessee. 6. The Ld. A.R. submitted that the Assessing Officer was very aware that the said Joint Venture (“JV”) between Signature Group and the assessee was proposed to be executed but as no consensus could be reached on the terms and conditions of the MOU, the same could not be executed and hence the Draft MOU/agreement does not have any legal sanctity as such. This can be seen from the fact that the agreement was unsigned and undated. The Ld. A.R. further submitted that the Assessing Officer was informed that the agreement under reference was carrying on the work in Joint Venture, however as the same could not be executed and the other party to the agreement M/s. Signature Colonisers had purchased the land of its own which is a undisputed fact established that the Draft Joint Venture agreement was not executed at all. The assessee also submitted an affidavit from M/s. Signature Colonisers confirming on oath that the agreement under reference was never executed and no ITA Nos.54&55/Ind/2022 Entellus Builders & Developers vs. ACIT Asst.Years –2011-12 & 2012-13 - 4 – amount was given in cash. The Ld. A.R. further submitted that the terms and conditions is mentioned in the unsigned Draft MOU when read in totality clearly signifies that the amounts mentioned therein are paid as security deposit and/or advance for purchase of land and they do not signify earning of any income by the assessee as such. Para 9 of the MOU which mentions that out of the amounts received by the assessee from M/s. Signature Colonisers, Rs. 2 crore will be retained by the assessee as advanced for land/security deposit and M/s. Signature Colonisers will be entitled to get the registration of lands in its favour or in favour of any person nominated by it of the amount paid to the assessee in excess of Rs. 2 crore. The Ld. A.R. in alternate submitted that even if it is presumed that the unsigned MOU under reference was executed, the amount mentioned therein do not signify earning of any income by the assessee and therefore, the addition cannot be made as unexplained investment. The Ld. A.R. further submitted that in case of Signature Colonisers the addition was deleted related to the consideration all payments mentioned in the Joint Venture. Thus, once it has been held that the payment made by the Signature Colonisers is not established, there is no scope for the assessee to have been received any payment. Further once the addition on the basis of these loose papers were found not maintainable in the hands of the person in whose possessing the loose paper was found and in which case the presumptive provisions of Section 132(4A) were applicable, no addition can be made in the hands of the assessee. The Ld. A.R. submitted that these were the dumb documents ITA Nos.54&55/Ind/2022 Entellus Builders & Developers vs. ACIT Asst.Years –2011-12 & 2012-13 - 5 – and cannot be taken into account at all hence the addition based on such documents does not sustain on the eyes of law. 7. The Ld. D.R. submitted that the CIT(A) has categorically observed that there is a clear nexus between the said MOU/agreement and subsequent acquisition and purchase of land by the assessee and Signature Colonisers. The decision taken in the said document has been properly executed though it is unsigned, undated, unregistered. Thus, the document under consideration are not dumb document. The Ld. D.R. further submitted that subsequent MOU/agreement and sale deed are the conclusive proof regarding execution of the MOU/agreement. The assessee failed to bring any cogent material to discredit the reasons given by the Assessing Officer in the assessment order. Thus, the Ld. D.R. relied upon the assessment order and the order of the CIT(A). 8. We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that the MOU/agreement was unsigned and was a Draft MOU/agreement. There was a subsequent document which was properly registered and hence the Draft MOU/agreement does not have any value in the eyes of law. Thus, the said agreement upon which the Assessing Officer is relying is a dumb document. This fact also is confirmed after seeing the decision of Signature Colonisers and Group wherein the addition related to these documents (Draft MOU/Agreement unsigned and undated) have been treated as dumb document. The additions were also deleted in the case Signature Colonisers. It is pertinent to note herein that the very addition ITA Nos.54&55/Ind/2022 Entellus Builders & Developers vs. ACIT Asst.Years –2011-12 & 2012-13 - 6 – which was made by the Assessing Officer has been properly explained by the assessee as in consonance with the actual consideration received by the assessee and the terms and conditions which in practicality/reality has been concluded by the assessee and M/s. Signature Colonisers. Thus, the addition does not sustain. 9. In result, both the appeals of the assessee are allowed. This Order pronounced in Open Court on 11 /11/2022 Sd/- Sd/- Sd/- Sd/- (BHAGIRATH MAL BIYANI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 11/11/2022 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Indore 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, (Sr. Private Secretary) ITAT, Indore 1. Date of dictation 09.11.2022 2. Date on which the typed draft is placed before the Dictating Member 09.11.2022 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S .11.2022 5. Date on which the fair order is placed before the Dictating Member for pronouncement .11.2022 6. Date on which the fair order comes back to the Sr.P.S./P.S .11.2022 7. Date on which the file goes to the Bench Clerk .11.2022 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order.......................................... O r d e r p r o n o u n c e d o n 1 1 /11/ 2 0 2 2 b y p l a c i n g t h e r e s u l t o n t h e N o t i c e B o a r d a s p e r R u l e 3 4 ( 4 ) o f t h e In c o m e T a x ( A p p e l l a t e T r i b u n a l ) R u l e , 1 9 6 3 .