ACIT 25 (3), MUMBAI V. PRAVIN VIRAM SATRA, MUMBAI

ITA 5505/MUM/2018

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8724 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RASHMIKANT C MOD I; KETKI RAJESHIRKE
• Assessee Lawyers: V SREEKAR
• Keywords: Business income; Income from undisclosed sources; Loose papers; Bonafide belief; Source of fund; Additional evidence; TDS; Set aside
• Section: 133A; 40(a)(ia); 194C; 201; 192; 43; 13; 22; 131; 148; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , C BENCH MUMBAI BEFORE : HONBLE JUSTICE P.P. BHATT, PRESIDENT & SHRI M.BALAGANESH, AM ITA NO. 5505 /MUM/ 20 18 ( ASSESSMENT YEAR : 201 0 - 1 1 ) ITA NO. 5506 /MUM/ 2018 ( ASSESSMENT YEAR : 2013 - 14 ) ITA N O. 6708 /MUM/ 2018 ( ASSESSMENT YEAR : 2010 - 11 ) ASST. COMMISSIONER OF INCOME TAX - 25(3) ROOM NO.601, C - 10, 6 TH FLOOR PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 VS. SHRI PRAVIN V. SATRA 1/A, SAGAR COMPLEX, 1 ST FLOOR, M.G. ROAD VILE PARLE (E) MUMBAI 400 057 PAN/GIR NO. AAVPS3963P (APPELLANT ) .. (RESPONDENT ) ITA NO. 5980 /MUM/ 2018 ( ASSESSMENT YEAR : 2010 - 1 1 ) SHRI PRAVIN V. SATRA 1/A, SAGAR COMPLEX, 1 ST FLOOR, M.G. ROAD VILE PARLE (E) MUMBAI 400 057 VS. ASST. COMMISSIONER OF INC OME TAX - 25(3) ROOM NO.601, C - 10, 6 TH FLOOR PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI 400 051 PAN/GIR NO. AAVPS3963P (APPELLANT ) .. (RESPONDENT ) ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 2 ASSESSEE BY SHRI V. SREEKAR & MS. SHREEKALA PARDESHI REVENUE BY SHRI RASHMIKANT C. MODI & MS. KETKI RAJESHIRKE DATE OF HEARING 27 / 02 /202 1 DATE OF PRONOUNCEMENT 24 / 03 /202 1 / O R D E R PER M. BALAGANESH (A.M) : ITA NO.5505/MUM/2018 (A.Y.2010 - 11) THIS APPEAL IN ITA NO. 5505/MUM/2018 FOR A.Y. 2010 - 11 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 37, MUMBAI IN APPEAL NO. CIT(A) - 37/IT - 139/ACIT - 25(3)/2017 - 18 DATED 16/07/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 28/03/2013 BY THE LD. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 3, MUMBAI (HEREINAFTER REFERRED TO AS LD. AO). 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE OF RS 62,94,857/ - U/S 40(A)(IA) OF THE ACT IN THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE. 2.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS A BUILDER CUM DEVELOPER AND HAD FILED HIS RETURN OF INCOME FOR THE ASST YEAR 2010 - 11 ON 15.10.2010 DECLARING TOTAL INCOME OF RS 11,96,630/ - . DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD REVISED HIS TOTAL INCOME BY ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 3 FILING REVISED COMPUTATION OF TOTAL INCOME OF RS 13,45,280/ - . W E FIND THAT THE LD. AO CALLED FOR DETAILS OF LEGAL & PROFESSIONAL FEES, CONSULTANCY CHARGES, TESTING & SURVEYING FEES, SUB - CONTRACTOR (LABOUR) CHARGES AND BROKERAGE CHARGES DURING THE COURSE OF ASSESSMENT PROCEEDINGS WHICH WERE DULY FURNISHED BY THE ASSESS EE. FROM THE PERUSAL OF THE DETAILS SUBMITTED BY THE ASSESSEE, THE LD AO OBSERVED THAT CERTAIN EXPENSES WERE NOT SUBJECTED TO DEDUCTION OF TAX AT SOURCE AS UNDER: - 2.2. THE LD AO PROCEEDED TO DISALLOW THE AFORESAI D EXPENDITURE OF RS . 69,31,657/ - U/S 40(A)(IA) OF THE ACT. 2.3. WE FIND THAT IN RESPECT OF BROKERAGE EXPENSES, THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON THE SERVICE TAX COMPONENT OF RS 28,388/ - BY FOLLOWING THE CBDT CIRCULAR NO. 4/ 2008 DATED 28.4.2008 IN THAT REGARD. WE FIND THAT THE LD CITA HAD RIGHTLY APPRECIATED THE SAME AND DIRECTED PRAVIN V SATRA ASST YEAR 2010 - 11 NATURE OF EXPENSES TOTAL EXPENSES F OR EXPENSES FOR WHICH TAX EXPENDITURE WHICH TAX WAS WAS NOT DEDUCTED AND DEDUCTED HENCE DISALLOWED UNDER SECTION 40(A)(IA) BROKERAGE 258073 229685 28388 SUB - CONTRACTOR (LABOUR) 11243613 6426632 4816981 LEGAL & PROFESSIONAL FEES 2264874 2148159 116715 TESTING & SURVEYING CHARGES 1117476 117476 1000000 CONSULTANCY CHARGES 2964463 1994890 969573 17848499 10916842 6931657 ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 4 THE LD AO TO DELETE THE DISALLOWANCE MADE U/S 40(A)(IA) OF THE ACT IN THE SUM OF RS 28,388/ - . 2.4. WITH REGARD TO SUB - CONTRACTOR (LABOUR CHARGES ), WE FIND THAT THE ASSESSEE HAD DURING THE REMAND PROCEEDINGS EXPLAINED THAT HE HAD DEDUCTED TAX AT SOURCE IN RESPECT OF EXPENDITURE TO THE TUNE OF RS 1,12,32,333/ - . WITH REGARD TO THE REMAINING SUM OF RS 11,290/ - , IT WAS PROVED BY THE ASSESSEE BEFORE TH E LD AO THAT HE WAS NOT REQUIRED TO DEDUCT TAX AT SOURCE. WE FIND THAT THE LD CITA HAD RIGHTLY APPRECIATED THESE FACTS AND THE SAME WAS ALSO CONFIRMED BY THE LD AO IN THE REMAND REPORT. ACCORDINGLY THE LD CITA RIGHTLY DIRECTED THE LD AO TO DELETE THE DIS ALLOWANCE U/S 40(A)(IA) OF THE ACT TO THE TUNE OF RS 48,16,981/ - . 2.5. WITH REGARD TO LEGAL AND PROFESSIONAL FEES, WE FIND THAT THE ASSESSEE HAD EXPLAINED THAT OUT OF DISALLOWANCE OF RS 1,16,715/ - MADE BY THE LD AO, EXPENDITURE TO THE TUNE OF RS 41,715 / - WAS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE FOR WHICH NECESSARY DOCUMENTARY EVIDENCES WERE DULY FURNISHED BEFORE THE LD AO IN REMAND PROCEEDINGS AND ASSESSEE ACCEPTED FOR CONFIRMATION OF DISALLOWANCE OF REMAINING RS 75,000/ - . ACCORDINGLY, WE FIND THAT THE LD CITA HAD RIGHTLY DELETED THE DISALLOWANCE IN THE SUM OF RS 41,715/ - AND RIGHTLY SUSTAINED THE DISALLOWANCE FOR RS 75,000/ - U/S 40(A)(IA) OF THE ACT. 2.6. WITH REGARD TO TESTING AND SURVEYING CHARGES (LABOUR CONTRACT CHARGES), WE FIND THAT THE L D AO OBSERVED THAT THE ASSESSEE HAD NOT DEDUCTED TAX AT SOURCE ON PAYMENT MADE TO KUBER TRADING CO. TO THE TUNE OF RS 10,00,000/ - IN RESPECT OF INTERIOR WORK. WE FIND THAT THE LD AO IN THE REMAND PROCEEDINGS VERIFIED THE FACT THAT ASSESSEE HAD PURCHASED MA TERIAL FROM KUBER TRADING CO. FOR RS 14,36,045/ - PLUS MVAT OF ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 5 RS . 57,442/ - THEREON, WHICH IS NOT LIABLE FOR DEDUCTION OF TAX AT SOURCE U/S 194C OF THE ACT. IT WAS PROVED BEFORE THE LD AO THAT ONLY A SUM OF RS . 1,17,476/ - WAS DEBITED TO INTERIOR WORK LABOUR CHARGES FOR WHICH DUE TDS COMPLIANCE WAS MADE BY THE ASSESSEE. WE FIND THAT THIS WAS DULY APPRECIATED BY THE LD CITA BY RIGHTLY DIRECTING THE LD AO TO DELETE THE DISALLOWANCE OF RS 10,00,000/ - U/S 40(A)(IA) OF THE ACT. 2.7. WITH REGARD TO CONSULTANCY CHARGES, WE FIND THAT THE LD AO HAD OBSERVED THAT TAX WAS NOT DEDUCTED AT SOURCE ON PAYMENT OF RS 9,69,573/ - OUT OF TOTAL EXPENDITURE OF RS 29,64,463/ - . WE FIND THAT IN THE REMAND PROCEEDINGS, THE ASSESSEE PROVED THAT TAX WAS DULY DEDUCTED AT SOURCE ON THE TOTAL EXPENDITURE OF RS 23,97,633/ - . IN RESPECT OF RS 5,66,800/ - , IT WAS EXPLAINED THAT TAX IS NOT DEDUCTIBLE AT SOURCE FOR RS 5,61,800/ - , BEING THE PAYMENT MADE TO NATIONAL INSTITUTE OF OCEANOGRAPHY (GOVERNMENT COMPA NY) AND SIMILARLY, TAX IS NOT DEDUCTIBLE AT SOURCE FOR RS 5000/ - BEING PAYMENT MADE TO PR CONSULTANCY. IT WAS FURTHER EXPLAINED THAT REMAINING SUM OF RS 4,02,773/ - WAS OUT OF THE PURCHASE OF MATERIAL FROM KUBER TRADING CO. OF RS 14,93,487/ - SUPRA . WE F IND THAT THE LD CITA ON PERUSAL OF THE REMAND REPORT HAD RIGHTLY SUSTAINED THE DISALLOWANCE U/S 40(A)(IA) OF THE ACT TO THE TUNE OF RS 5,61,800/ - BEING THE AMOUNT PAID TO NATIONAL INSTITUTE OF OCEANOGRAPHY FOR WANT OF SUBMISSION OF CERTIFICATE FOR NON DED UCTION OF TDS. HENCE WE DO NOT FIND ANY INFIRMITY IN THE SAID ORDER OF THE LD CITA IN RESPECT OF THIS ISSUE. 2.8. MOREOVER, ALL THE AFORESAID ITEMS WERE PRACTICALLY ACCEPTED BY THE LD AO IN THE REMAND PROCEEDINGS BY NOT MAKING ANY ADVERSE COMMENTS ON THE EVIDENCES SUBMITTED BY THE ASSESSEE. HENCE WHEN THE LD CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO HAD ACCEPTED TO THE ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 6 CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COUL D NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). 2.9. IN VIEW OF THE AFORESAI D OBSERVATIONS IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO BY RESPECTFULLY FOLLOWING THE JUDICIAL PRECEDENT RELIED UPON HEREINABOVE, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 3. THE SECOND ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WH ETHER THE LD CITA WAS JUSTIFIED IN DELETING THE DISALLOWANCE MADE ON ACCOUNT OF BMC EXPENSES OF RS 61,67,802/ - ON THE GROUND THAT ON VERIFICATION OF THE LEDGER ACCOUNT OF THOSE EXPENSES AND BILLS SUBMITTED BY THE ASSESSEE, SOME OF THE BILLS WERE NOT IN TH E NAME OF THE ASSESSEE NOR IN ANY OF ITS PROJECT NAME. 3.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD EXPLAINED THAT HE HAS VARIOUS PROJECTS FOR WHICH HE HAD PAID THE CHARGES TO BOM BAY MUNICIPAL CORPORATION (BMC) BY ACCOUNT PAYEE CHEQUES. COPY OF RECEIPTS FOR THE PAYMENT AND RELEVANT PAGES OF THE BANK STATEMENTS REFLECTING THE PAYMENTS MADE TOGETHER WITH THE COPY OF LEDGER ACCOUNTS WERE DULY FURNISHED BY THE ASSESSEE IN THE REMAND P ROCEEDINGS. IT WAS STATED THAT THE BMC RAISED THE BILL IN THE NAME OF ORIGINAL LANDLORD EVENTHOUGH THE ORIGINAL LANDLORD SOLD THE PROPERTY OR ENTERED INTO DEVELOPMENT AGREEMENT. AS PER THE AGREEMENT, THE BUYER IS LIABLE TO PAY ALL THE BMC CHARGES FOR THE P ROPERTY PURCHASED . THIS EXPLANATION WAS PRACTICALLY ACCEPTED BY THE LD AO IN THE REMAND PROCEEDINGS BY NOT MAKING ANY ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 7 ADVERSE COMMENTS ON THE EVIDENCES SUBMITTED BY THE ASSESSEE. HENCE WHEN THE LD CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, T HE LD AO HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DE CISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). ACCORDINGLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 4. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUS TIFIED IN DELETING THE DISALLOWANCE OF RS 1,26,37,560/ - MADE ON ACCOUNT OF SRA PROJECT EXPENSES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD AO OBS ERVED THAT THE ASSESSEE HAD DEBITED THE FOLLOWING EXPENSES TOWARDS SRA PROJECT EXPENSES : - SRA (DADAR MADHANI) - 28,19,200 TENANCY SURRENDER CHARGES - 6,61,000 TEMPORARY ALTERNATE ACCOMODATION EXPENSES - 91,57,360 ---- ------------- 1,26,37,560 ----------------- 4.2. WE FIND THAT THE LD AO HAD OBSERVED THE ASSESSEE HAD NOT CALCULATED THE PROFIT AS PER PERCENTAGE OF COMPLETION METHOD AND ALSO THE SAID EXPENSES ARE TO BE CARRIED FORWARD AS WORK IN PROGRESS IN DARSHAN DEVELOPER WHICH IS NOT ALLOWABLE AS PER MERCANTILE SYSTEM OF ACCOUNTING. ACCORDINGLY, THE LD AO PROCEEDED TO DISALLOW THIS SUM OF RS 1,26,37,560/ - IN THE ASSESSMENT. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 8 4.3.WE FIND THAT THE ASSESSEE SUBMITTED EVIDENCES TO PROVE THE FACT THESE EXPENSES ARE INCLUDED IN THE CLOSING STOCK OF WORK IN PROGRESS OF RS 25,56,10,614/ - AND THEREFORE ADDITION MADE BY THE LD AO WOULD RESULT IN DOUBLE ADDITION. WE FIND THAT THE LD CITA HAD GIVEN A CATEGORICAL FINDING THAT THE SRA PROJECT EX PENSES ARE DULY SUBSTANTIATED AND SUPPORTED BY PROPER DOCUMENTS WHICH WAS NOT CONTROVERTED BY THE LD DR BEFORE US. WE FIND THAT THE LD CITA HAD DULY APPRECIATED THE FACT THAT THIS DISALLOWANCE MADE BY THE LD AO WOULD ONLY RESULT IN DOUBLE ADDITION, ON WHI CH WE FIND NO INFIRMITY AND ACCORDINGLY ORDER OF THE LD CITA IS NOT INTERFERED WITH. HENCE THE GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. 5. THE GROUND NOS. 4 & 5 RAISED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDI CATION. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IN ITA NO. 5505/MUM/2018 FOR THE ASST YEAR 2010 - 11 IN QUANTUM PROCEEDINGS IS DISMISSED. ITA NO. 6708/MUM/2018 ASST YEAR 2010 - 11 REVENUE APPEAL ITA NO. 5980/MUM/2018 ASST YEAR 2010 - 11 ASSESSEE APPEAL 7. THESE CROSS APPEAL S IN ITA NO. 5980/MUM/2018 & ITA NO.6708/MUM/2018 FOR A.Y. 2010 - 11 ARISE OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 37, MUMBAI IN APPEAL NO. CIT(A) - 37/IT - 539/ACIT - 25(3)/2017 - 18 DATED 14/09/2018 (LD. CIT(A) I N SHORT) IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961. 8. THIS IS THE SECOND ROUND OF PENALTY APPEAL PROCEEDINGS BEFORE THIS TRIBUNAL. WE FIND THAT IN THE FIRST ROUND OF APPEAL, THIS TRIBUNAL HAD REMANDED THE APPEAL TO THE FILE OF LD CITA. IN THE SECOND ROUND OF ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 9 PROCEEDINGS, THE LD CITA RESTRICTED THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT TO THE TUNE OF RS 11,17,600/ - AND DELETED THE REMAINING PENALTY AMOUNT OF RS 79,12,106/ - . AGGRIEVED, BY THIS ACTION, BOTH THE A SSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE US. 9. THE ONLY ISSUE TO BE DECIDED IN THESE CROSS APPEALS IS CHALLENGING THE LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT. THESE CROSS APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 9.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD AO HAD LEVIED PENALTY OF RS 82,41,963/ - U/S 271(1)(C ) OF THE ACT ON TOTAL ADDITIONS / DISALLOWANCES MADE IN THE ASS ESSMENT TO THE TUNE OF RS 2,66,73,019/ - . WE FIND THAT THE LD CITA DELETED THE PENALTY U/S 271(1)(C ) OF THE ACT TO THE TUNE OF RS 79,12,106/ - ON THE GROUND THAT CORRESPONDING QUANTUM ADDITIONS FOR WHICH PENALTY WAS LEVIED WERE DELETED BY HIM. WE HAVE ALREADY DISMISSED THE REVENUES APPEAL AGAINST THE QUANTUM PROCEEDINGS FOR ASST YEAR 2010 - 11 HEREINABOVE IN ITA NO. 5505/MUM/2018. ONCE THE QUANTUM ADDITIONS ARE DELETED, THEN THE PENALTY ON THOSE ADDITIONS WOULD HAVE NO LEGS TO STAND, WHICH HAS BEEN RIGH TLY DELETED BY THE LD CITA. ACCORDINGLY, THE APPEAL OF THE REVENUE CHALLENGING THE DELETION OF PENALTY OF RS 79,12,106/ - IN ITA NO. 6708/MUM/2018 IS HEREBY DISMISSED. 9.2. WITH REGARD TO PENALTY SUSTAINED BY THE LD CITA TO THE TUNE OF RS 11,17,600/ - , W E FIND THAT THE SAID PENALTY IS LEVIED ON THE FOLLOWING DISALLOWANCES / ADDITIONS MADE BY THE LD AO: - ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 10 A ) DISALLOWANCE OF GENUINE EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS U/S 40(A)(IA) OF THE ACT RS 6,36,800/ - B ) ADDITION TOWARDS PERSONAL EXPENSES ON AN ESTIMATED BASIS RS 50,000/ - C ) SHIFTING OF HEAD OF INCOME I.E FROM INCOME FROM HOUSE PROPERTY SHOWN BY THE ASSESSEE TO INCOME FROM BUSINESS BY NOT ALLOWING 30% FLAT DEDUCTION FOR REPAIRS AMONG OTHERS RS 4,30,800/ - 9.3. WITH REGARD TO DISALLOWANCE O F GENUINE EXPENDITURE INCURRED FOR THE PURPOSE OF BUSINESS U/S 40(A)(IA) OF THE ACT TO THE TUNE OF RS 6,36,800/ - , WE FIND THAT THE ASSESSEE HAD PAID A SUM OF RS 5,61,800/ - BY ACCOUNT PAYEE CHEQUE TO NATIONAL INSTITUTE OF OCEANOGRAPHY (GOVERNMENT COMPANY) W ITHOUT DEDUCTION OF TAX AT SOURCE. WE FIND THAT THE ASSESSEE HAD DULY FURNISHED THE COPY OF RECEIPT ISSUED BY THE SAID ORGANIZATION. WE FIND THAT THE ASSESSEE HAD EXPLAINED THAT HE WAS UNDER THE BONAFIDE BELIEF THAT SINCE PAYMENT WAS MADE TO A GOVERNMENT COMPANY, NO TAX IS REQUIRED TO BE DEDUCTED AT SOURCE. THIS EXPLANATION GIVEN BY THE ASSESSEE WAS NOT FOUND TO BE FALSE. MOREOVER ANY CASE, THE GENUINENESS OF EXPENDITURE WAS NEVER DISPUTED BY THE REVENUE. SIMILARLY, A SUM OF RS 75,000/ - WAS PAID BY TH E ASSESSEE TO CHANDRAKANT S SAWANT TOWARDS LEGAL AND PROFESSIONAL FEES WITHOUT DEDUCTION OF TAX AT SOURCE. THE NATURE OF SERVICES RENDERED BY THE SAID RECIPIENT WAS NEVER DISPUTED BY THE REVENUE. ACCORDINGLY THE GENUINENESS OF EXPENDITURE WAS NOT IN DOUB T AT ALL. IN ANY CASE, FOR DISALLOWANCE OF EXPENSES MADE U/S 40(A)(IA) OF THE ACT , THERE CANNOT BE ANY CONSCIOUS CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME THAT COULD BE ATTRIBUTED ON THE ASSESSEE WARRANTING LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED ON THE DECISION OF CO - ORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF ACIT VS WIRE AND ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 11 WIRELESS TISAI SATELLITE LTD IN ITA NO. 9/MUM/2016 DATED 13.6.2018 BY THE LD AR BEFORE US. NO OTHER CONTRARY DECISION WAS QUOTED BY THE LD DR BEFORE US. HENCE WE HOLD THAT THIS IS NOT A FIT CASE FOR LEVY OF PENALTY U/S 271(1)(C ) OF THE ACT IN VIEW OF THE AFORESAID OBSERVATIONS AND JUDICIAL PRECEDENT HEREINABOVE. ACCORDINGLY, WE DIRECT THE LD AO TO DELETE THE PENALTY IN RESPECT OF DISALLOWANCE OF EXPENSES OF RS 6,36,800/ - ( 5,61,800 + 75,000) U/S 40(A)(IA) OF THE ACT . 9.4. WE FIND THAT THE LD AO HAD MADE AN ADDITION TOWARDS PERSONAL EXPENSES OF RS 50,000/ - ON AN ESTIMATED BASIS. IT IS WELL SETT LED THAT THERE CANNOT BE ANY LEVY OF PENALTY ON AN ESTIMATED ADDITION. MOREOVER, FROM THE PERUSAL OF THE QUANTUM ASSESSMENT ORDER, WE FIND THAT THE LD AO HAD CHOSEN NOT TO INITIATE ANY PENALTY PROCEEDINGS U/S 271(1)(C ) OF THE ACT IN RESPECT OF THIS ADDIT ION, WHEREAS WHILE PASSING THE PENALTY ORDER, HE HAS DIRECTLY LEVIED THE PENALTY. ON THIS GROUND ALSO, THE PENALTY LEVIED DESERVES TO BE DELETED AND IS HEREBY DELETED. 9.5. WITH REGARD TO SHIFTING OF HEAD OF INCOME FROM HOUSE PROPERTY TO INCOME FROM B USINESS, WE FIND THAT THE ASSESSEE HAD DERIVED RENTAL INCOME WHICH WAS DULY OFFERED TO TAX BY THE ASSESSEE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AFTER CLAIMING DEDUCTION AT A FLAT RATE OF 30% FOR REPAIRS. THIS INCOME WAS SOUGHT TO BE SHIFTED BY THE LD AO TO INCOME FROM BUSINESS IN THE QUANTUM PROCEEDINGS. WE FIND THAT THIS ACTION OF THE LD AO WAS UPHELD BY THE LD CITA IN QUANTUM PROCEEDINGS. AGAINST THIS QUANTUM ORDER, THE ASSESSEE DID NOT PREFER ANY APPEAL BEFORE THE TRIBUNAL AND HENCE THE MATTER HAS REACHED FINALITY IN QUANTUM PROCEEDINGS. LATER THE LD AO HAD LEVIED PENALTY U/S 271(1)(C ) OF THE ACT ON THIS SUSTAINED ADDITION DUE TO CHANGE IN HEAD OF INCOME OF RS 4,30,800/ - . WE FIND THAT THIS PENALTY WAS ALSO CONFIRMED BY THE LD CITA ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 12 ON THE G ROUND THAT QUANTUM ADDITION MADE THEREON HAD BEEN UPHELD BY HIM AND NO FURTHER APPEAL HAS BEEN PREFERRED BY THE ASSESSEE BEFORE THE TRIBUNAL. WE FIND THAT THE LD CITA HAD GONE BY THE PREMISE THAT THE LEVY OF PENALTY IS AUTOMATIC SINCE THE QUANTUM ADDITION IS CONFIRMED AND HAD ATTAINED FINALITY. WE FIND THAT THE ASSESSEE IN THE INSTANT CASE HAD DULY DISCLOSED THE RENTAL INCOME UNDER THE HEAD INCOME FROM HOUSE PROPERTY IN THE RETURN OF INCOME , WHICH WAS SOUGHT TO BE SHIFTED BY THE REVENUE UNDER THE HEAD INCOME FROM BUSINESS. HENCE THERE CANNOT BE ANY CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME THAT COULD BE ATTRIBUTED ON THE ASSESSEE. WE HOLD THAT THERE WAS ABSOLUTELY NO CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PART ICULARS OF INCOME BY THE ASSESSEE IN THE RETURN OF INCOME AS EVERY DETAIL THEREON COULD BE DECIPHERED EASILY FROM THE RETURN ITSELF. RELIANCE IN THIS REGARD IS PLACED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF PRICEWATERHOUSE COOPERS REPO RTED IN 348 ITR 306 (SC) . HENCE WE HAVE NO HESITATION IN DIRECTING THE LD AO TO DELETE THE PENALTY LEVIED U/S 271(1)(C ) OF THE ACT IN RESPECT OF T HIS ADDITION OF RS 4,30,800/ - 9.6. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED AND LD AO I S DIRECTED TO DELETE THE PENALTY LEVIED U/S 271(1)(C ) OF THE ACT IN THE TOTAL SUM OF RS 11,17,600/ - . 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE (PENALTY APPEAL) IN ITA NO. 5980/MUM/2018 FOR THE ASST YEAR 2010 - 1 IS HEREBY ALLOWED. ITA NO. 5506/MUM /2018 ASST YEAR 2013 - 14 REVENUE APPEAL 11. THIS APPEAL IN ITA NO. 5506/MUM/2018 FOR A.Y. 2013 - 14 ARISES OUT OF THE ORDER BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 37, MUMBAI IN APPEAL NO. CIT(A) - 37/IT - 872/ACIT - 25(3)/2016 - 17 DATED ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 13 16/07/2018 (LD. CIT(A) IN SHORT) AGAINST THE ORDER OF ASSESSMENT PASSED U/S.14 4 R.W.S. 147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS ACT) DATED 30/12/2016 BY THE LD. ASST. COMMISSIONER OF INCOME TAX, 25(3), MUMBAI (HEREINAFTER REFERRED TO AS LD. AO ). 12. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE A.O. FOR THE YEAR UNDER CONSIDERATION AS THE SAME WERE MADE WERE MADE AFTER VERIFICATION OF THE INFORMATION AVAILABLE IN THE IMPOUNDED MATERIAL IMPOUNDED UNDER THE PROVISION OF SECTION 133{3)(2)(VII) OF THE I.T. ACT,1961 AND ALSO THE MATERIAL ON THE RECORD AND IN LIGHT OF CHRONIC NON CO - OPERATION BY THE ASSESSEE.' 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT THE ADDITIONS OF RS.14,58,14,389/ - & RS.49,38,84,500/ - ON ACCOUNT OF INCOME FROM JOGESHWARI PROJECT & VILE PARLE PROJECT RESPECT IVELY, WERE MADE AFTER VERIFICATION OF THE IMPOUNDED LOOSE PAPERS THAT SHOWS THE NET PROFIT OF THE PROJECTS WHICH IS NOTED TO HAVE BEEN COMPLETED IN THE PREVIOUS YEAR RELEVANT TO A.Y.2013 - 14. ' 3. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THAT ADDITION OF RS.75,00,000/ - ON ACCOUNT OF CASH PAYMENTS TO RETIRING PARTNERS WAS MADE ON THE BASIS OF A RETIREMENT DEED WHICH WAS IMPOUNDED DURING SURVEY PROCEEDINGS. THE ASSESSEE WAS SHOW CAUSED TO WI TH RELEVANT AND COGENT DOCUMENTARY EVIDENCE THE SOURCE OF FUNDS FOR THE PAYMENTS OF CASH OF RS,75 LAKHS. HOWEVER, THE ASSESSEE HAS CHOSEN TO IGNORE AND HAS NOT REPLIED TO THE SHOW CAUSE NOTICE.' 4. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT THE ADDITION OF RS.25,00,000/ - WAS MADE ON VERIFICATION OF THE IMPOUNDED LOOSE PAPER (ANNEXURE A - 2 PAGE 43), ARE HANDWRITTEN NOTING OF MODUS OPERANDI OF CREATION OF CASH BY BOOKING BOGUS EXPENSES / LOANS ETC. FROM THE NOTING IT IS SEEN THAT 25 CHEQUES OF RS.1,00,000/ - ARE TO BE ISSUED ON WEDNESDAY AND CASH TO BE RECEIVED ON FRIDAY AFTER DEDUCTING COMMISSION @2%.' 5. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACT THAT AS PER THE RETURN FILED IN RESPONSE TO NOTICE U/S.148, THE TOTAL INCOME IS DECLARED AT RS.20,54,721/ - AND THE NET PROFIT SHOWN IN P&L ACCOUNT SEEN DURING THE SURVEY PROCEEDING IS 28,90,850/ - . FURTHER, THE ASSESSEE NOT FUR NISHED ANY DETAILS NOR RECONCILE NOR OFFERED ANY EXPLANATION TO FALL IN NET PROFIT BY RS.8,35,871/ - . HENCE, THE DIFFERENCE OF NET PROFIT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 6. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE G ROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED.' ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 14 7. 'THE APPELLANT CRAVES LEAVE TO AMEND OR TO ALTER ANY GROUND OR ADD A NEW GROUND, WHICH MAY BE NECESSARY'. 13. THE GROUND NO.1 RAISED BY THE REVENUE WOULD BE COMMON FOR ALL THE OTHE R GROUNDS RAISED AND HENCE CONSIDERED GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 14. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 14,58,14,389/ - AND RS 49,38, 84,500/ - ON ACCOUNT OF INCOME FROM JOGESHWARI PROJECT AND VILE PARLE PROJECT RESPECTIVELY IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 14.1. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF TWO PROPRIETARY CONCERNS STYLED AS DARSHAN DEVELOPERS AND AKANSHA CONSTRUCTIONS, ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE ASSESSEES PREMISES ON 7/8.3.2014 AND DURING THE COURSE OF SURVEY, VARIOUS MATERIAL / LOOSE PAPERS WERE FOUND WHICH WERE DULY INVENTORISED AND IMPOUNDED UNDER THE PROVISIONS OF SECTION 133(3)(2)(VIII) OF THE ACT. AS ON THE DATE OF SURVEY, THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME FOR TH E ASST YEAR 2013 - 14 AND ACCORDINGLY A NOTICE U/S 148 OF THE ACT WAS ISSUED TO THE ASSESSEE CALLING FOR RETURN OF INCOME. THE ASSESSEE FILED HIS RETURN OF INCOME ON 10.5.2016 IN RESPONSE TO NOTICE U/S 148 OF THE ACT DECLARING TOTAL INCOME OF RS 20,54,850/ - . THE ASSESSMENT PROCEEDINGS WERE COMPLETED U/S 144 RWS 147 OF THE ACT ON 30.12.2016 DETERMINING TOTAL INCOME AT RS 65,67,74,110/ - DUE TO CONTINUOUS NON CO - OPERATION FROM THE SIDE OF THE ASSESSEE BY FURNISHING THE REQUISITE DETAILS. HOWEVER THE REQU ISITE DETAILS WERE FILED BY THE ASSESSEE DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS. THE LD CITA ADMITTED THOSE EVIDENCES IN ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 15 THE FORM OF ADDITIONAL EVIDENCES AND RIGHTLY SOUGHT FOR A REMAND REPORT FROM THE LD AO. THE LD AO FURNISHED THE REMAND REP ORT DATED 13.4.2018 AFTER ELABORATELY ADDRESSING EACH OF THE ISSUES IN DISPUTE BY SPECIFIC REFERENCE TO THE DOCUMENTS IMPOUNDED DURING SURVEY. THE RELEVANT OPERATIVE PORTION OF THE REMAND REPORT IN RESPECT OF THESE TWO ISSUES ARE REPRODUCED HEREIN FOR THE SAKE OF CONVENIENCE: - 6. ADDITION OF ESTIMATED PROFIT OF JOGESHWARI PROJECT OF RS.14,58,14,389/ - : 6.1.BACKGROUND: THE IMPOUNDED LOOSE PAPER SHOWS THE NET PROFIT OF RS. 14,5844,389/ -- OF THE PROJECT AT JOGESHWARI WHICH IS NOTED TO HAVE BEEN COMPLETED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2013 - 2014, (ANNEXURE A2, PAGE NO. 15). FURTHER, AS PER THE ASSESSING OFFICER, THE LAST FLAT WAS SOLD IN THE YEAR 2013 AND THEREFORE, THE PROJECT REACHED ITS COMPLETION STAGE. SINCE, THE ASSESSEE OFFERED N O EXPLANATION AND SUBMISSION ON THE SAID RELEVANT IMPOUNDED PAPERS, THE AMOUNT OF RS. 14,58,14,389/ - IS HELD AS INCOME FROM THE JOGESHWARI PROJECT BASED ON THE IMPOUNDED MATERIALS AND THE SAME WAS ADDED TO THE TOTAL INCOME BY THE ASSESSING OFFICER. 6.2.CO NTENTION OF THE ASSESSEE: DURING THE REMAND PROCEEDINGS, THE ASSESSEE STATED THE FOLLOWING AS DETAILED BELOW: A. THE IMPOUNDED LOOSE PAPER IS JUST ESTIMATED PROJECT REPORT DATED 11.19.2011 AND WAS PREPARED BY KETAN VAIDYA AND ASSOCIATE WHICH WAS NEVE R SIGNED. B. THE LOOSE PAPER IS NOT RELATED TO THE PROJECT CARRIED OUT BY THE ASSESSEE AND THE SAME WAS NOT EXECUTED BY THE ASSESSEE. C. THE PAPER FOUND IS JUST AN ESTIMATE PREPARED BY THE ARCHITECT AND ASSESSEE HAS NOT CARRIED OUT ANY CONSTRUCTION ACT IVITY ON THE SAID PLOT DURING THE YEAR UNDER CONSIDERATION. D. THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT THE JOGESHWARI PROJECT BELONGS TO THE ASSESSEE AND HAS NOT GIVEN ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE LAST SALE OF THE FLAT IN 2013. E. THE ADDITION ON THE BASIS OF ESTIMATION NOT SUPPORTED BY ANY RELIABLE WORKING. F. THE SAID LOOSE PAPER IS A DUMB DOCUMENT. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 16 IN ORDER TO SUBSTANTIATE THE ABOVE THAT THE DEVELOPMENT OF THE SAID PROJ ECT WAS NOT CARRIED OUT BY THE ASSESSEE, HE SUBMITTED THE FOLLOWING IN RESPECT OF THE SAID PROJECT AT JOGESHWARI DURING REMAND PROCEEDINGS VIDE LETTER DATED 20.03.2018: A. THE PROJECT WAS CARRIED OUT BY OMKAR VENTURES PVT LTD, OMKAR HOUSE, OFF. EASTERN EXPRESS HIGHWAY, OPP. SION CHUNNABHATTI SIGNAL, SION (E), MUMBAI - 400 022. B. A COPY OF A BRIEF SUMMARY OF PROJECT SUBMITTED BY OMKAR VENTURES PVT LTD TO THE EXPERT APPRAISAL COMMITTEE (EAC), MOEFCC, DELHI IS SUBMITTED. 6.3.COUNTER COMMENTS OF THE A SSESSING OFFICER: FURTHER, TO VERIFY THE AUTHENTICITY OF THE CONTENT OF THE SAID IMPOUNDED PAPER (ANNEXURE A2, PAGE NO. 15), A STATEMENT U/S 131 OF THE INCOME TAX_ ACT, 1961 OF MR. KETAN VAIDYA, ARCHITECT WAS RECORDED ON 20.03.2018 ON OATH BEFORE ME. THE RELEVANT EXTRACTS OF THE STATEMENT RECORDED IS REPRODUCED BELOW: Q.1 PLEASE IDENTIFY YOURSELF ? ANS: KETAN VAIDYA, AGED YEARS, RESIDING AT 203/8, RAJKAMAL CO - OP. HOUSING SOCIETY, PARANJAPE SCHEME 8, SUBHASH ROAD, VILE PARLE - EAST, MUMBAI - 400 057, CO NTACT IS 9867336930. Q.2. CAN YOU READ & WRITE ENGLISH ? ANS: YES, I/WE C AN READ & WRITE ENGLISH. Q.3. ARE YOU FILLING YOUR RETURN OF INCOME REGULARLY, IF YES WHAT IS YOUR PAN ? YES, I AM FILLING - MY RETURN OF INCOME REGULARLY AND MY PAN IS AAFPV0408E. Q.4. WHAT IS YOUR PROFESSION? ANS: I AM PROF ESSIONAL ARCHITECT. Q.5 HOW DO YOU KNOW SHRI PRAVI N SATRA ? ANS. I KNOW HIM SINCE 2010 THROUGH ONE OF MY FRIEND AND PROVIDE HIM 'PROFESSIONAL SERVICE FOR HIS PROJECTS IN MUMBAI. Q.6. HAVE YOU RECEIVED ANY F EES FROM SHRI PRAWN V SATRA ? ANS. YES I RECEIVED FEES APPROX. RS.5 LAKHS IN THE YEAR 2011 & 2012 AS CONSULTATION HIM FOR HIS BOR I VALI AND ANDHERI PROPERTY. Q.7. I AM S H OWING YOU A PAGE MARKED AS PAGE NUMBER 15 WHICH WAS IMPOUNDED DURING SURVEY ACTION CON DUCTED ON SHRI PRAWN V SATRA, WHAT DO YOU HAVE TO SAY ABOUT IT ? ANS. THIS IS A PROJECT REPORT I HAVE PREPARED FOR ONE OF PROPERTY LOCATED AT JOGESHWARI EAST, MUMBAI, CTS NO.L54(PT), 155(PT). THE AREA OF PLOT IS 2799 SQ. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 17 MTR. AND APPROX. PROJECT COST IS RS. 11.45 CR. AND NET PROFIT ESTIMATED WAS RS.14.58 CR. BUT SHRI PRAVIN SATRA DIDN'T SHOWN HIS INTEREST TO DEVELOP THE SAID PROJECT. Q.8. DO YOU WANT TO SAY ANYTHING ELSE ? A.S. NO. 6.4. IN THE PRESENT CASE, THE SUBMISSIONS MADE IN THE COURSE OF REMAN D PROCEEDINGS, THE DETAILS FILED BY THE ASSESSEE IN COURSE OF APPELLANT PROCEEDINGS BY WAY OF ADDITIONAL EVIDENCE AND STATEMENT OF KETU L - VAIDYA RECORDED U/S.131 ON OATH IN COURSE OF REMAND PROCEEDINGS ARE TAKEN ON RECORDS AND ALSO THE EXPLANATION OF THE AS SESSEE ON THE SAID IMPOUNDED PAPER IS TAKEN ON RECORD. CONSIDERING THE ABOVE FACTS, THIS GROUND OF APPEAL OF. THE ASSESSEE MAY BE DECIDED ON MERITS. 14.2. FROM THE AFORESAID REMAND REPORT, IT COULD BE SAFELY CONCLUDED THAT THE ASSESSEE HAD NOT CARRIED OU T ANY PROJECT IN JOGESHWARI WHICH HAD YIELDED HIM PROFIT OF RS 14.58 CRORES . WE FIND THAT THE LD AO HAD NOT CHOSEN TO FURTHER CONFRONT MR KETUL VAIDYA (ARCHITECT) ON THE REPLY GIVEN BY HIM IN RESPONSE TO QUESTION NO. 7 DURING THE COURSE OF RECORDING SWORN STATEMENT U/S 131 OF THE ACT IN THE REMAND PROCEEDINGS. NO ADVERSE COMMENTS WHATSOEVER WERE EVEN MADE BY THE LD AO IN THE REMAND REPORT ON THE SUBMISSIONS MADE BY THE ASSESSEE AND ALSO ON THE STATEMENT OF MR KETUL VAIDYA. IN THESE CIRCUMSTANCES, IT COU LD BE SAFELY CONCLUDED THAT THE LD AO HAD INDEED ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE WITH REGARD TO THIS ADDITION MADE OF RS 14.58 CRORES. THIS ASPECT HAS BEEN DULY TAKEN ON RECORD BY THE LD CITA WHILE GRANTING RELIEF, ON WHICH WE FIND NO INFIRM ITY. WE ALSO FIND THAT THE LD CITA HAD GIVEN A CATEGORICAL FINDING THAT IMPOUNDED LOOSE PAPERS MARKED AS 15 OF A - 2 ARE NOT IN THE FORM OF EXECUTED DOCUMENTS OR BOOKS OF ACCOUNTS OR CERTIFICATES WHICH CAN PROVE CONCLUSIVELY THAT ASSESSEE HAD EARNED UNDIS CLOSED OR UNACCOUNTED INCOME. THESE IMPOUNDED PAPERS HAVE NO ACCEPTABLE NARRATION AND DO NOT BEAR THE CERTIFICATE OF THE ASSESSEE OR ANY AUTHORIZED PERSON AND THEY ARE IN THE NATURE OF DUMB DOCUMENTS HAVING NO EVIDENTIARY VALUE. INFACT THESE DUMB DOCUMEN TS ARE FURTHER ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 18 CORROBORATED BY STATEMENT OF MR KETUL VAIDYA THAT THE ASSESSEE DID NOT EVINCE INTEREST IN DEVELOPING THE SAID PROJECT. MOREOVER, WHEN THE LD CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). 14.3. SIMILARLY WITH REGARD TO THE ADDITION MADE IN THE SUM OF RS.49,38,84,500/ - , TH E ADDITION MADE ON ACCOUNT OF PROFIT PERTAINING TO VILE PARLE PROJECT. WE FIND THAT THIS ADDITION WAS MADE BASED ON IMPOUNDED DOCUMENT PAGE NO.192 OF ANNEXURE A - 1, COMPRISING OF PROJECT HARIDARSHAN VILE PARLE WHICH WAS COMPLETED DURING THE YEAR UNDER CONSIDERATION AND DUE TO NON - FURNISHING OF ANY EXPLANATION BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCE EDINGS, THE LD. AO BY PLACING RELIANCE ON THE PROVISIONS OF SECTION 292C OF THE ACT PROCEEDED TO MAKE AN ADDITION OF RS.49,38,84,500/ - REPRESENTING THE ALLEGED PROFIT PERTAINING TO VILE PARLE PROJECT. BEFORE THE LD. CIT(A), THE ASSESSEE SUBMITTED THAT IMPO UNDED LOOSE PAPER IN PAGE NO.192 OF ANNEXURE A - 1 WAS JUST AN ESTIMATED PROJECT REPORT LEFT BY BROKER AND THAT THE SAID PROJECT NEVER TOOK PLACE. THE ASSESSEE ALSO GAVE THE NAME OF THE BROKER MR. ARUN(DADAR) TOGETHER WITH THE MOBIL E NUMBER WHOSE NAME WAS MENTIONED IN THE SAID IMPOUNDED DOCUMENTS. THE ASSESSEE SUBMITTED THAT THE LD. AO HAD MENTIONED IN HIS ASSESSMENT ORDER THAT THE SAID LOOSE PAPER BELONG TO HARI D ARSHAN SOCIETY, VILE PARLE , WHICH WAS CONTROVERTED BY THE ASSESSEE ST ATING THAT THE SAID PAPER DOES NOT BELONG TO HARI D ARSHAN SOCIETY PROJECT. THE ASSESSEE FURTHER PLEADED THAT HE HAD SHOWN SALE OF FLAT FOR THE YEAR ENDED 31/03/2013 AT RS.5,63,58,000/ - WHICH ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 19 ADMITTEDLY INCLUDED SALE OF FLAT FROM HARI DARSHAN SOCIETY OF RS. 5,54,06,000/ - . THE LD. CIT(A) REMANDED THE MATTER BACK TO THE LD. AO FOR VERIFICATION. IN THE REMAND PROCEEDINGS, THE LD. AO RECORDED A STATEMENT OF SHRI SUNIL GOPAL PAWAR , ASSOCIATE OF MR. ARUN JAITLY , ON OATH U/S. 13 1 OF THE ACT WHEREIN HE EXPLAINED THAT THE SAID LOOSE PAPERS ARE RELATED TO THE PROJECT LOCATED AT KABUTARKHANA, DADAR (W) AND IT WAS NEVER EXECUTED AS THE RELATED DOCUMENTS ASKED BY THE ASSESSEE WERE NEVER BROUGHT BY MR. ARUN JAITLY. IN THIS REGARD, THE RELEVANT OPERATIVE PORTION OF THE REMAN D REPORT PERTAINING TO THIS ADDITION IS REPRODUCED HEREUNDER: - 7. ADDITION OF ESTIMATED PROFIT OF VILE PARLE PROJECT OF 49,38,84,500/ - 7.1.BACKGROUND: AS PER THE ASSESSING OFFICER, THE IMPOUNDED LOOSE PAPER (ANNEXURE A1, PAGE 192) SHOWS THE NET PROFIT O F RS. 49,38,84,500/ - OF THE PROJECT AT HARI DARSHAN,; VILE PARLE WHICH IS NOTED TO HAVE BEEN COMPLETED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2013 - 2014. (ANNEXURE AL, PAGE NO. 192). FURTHER AS PER THE ASSESSING OFFICER, AS PER THE IMPOUNDED LO OSE PAPERS, THE LAST FLAT IS SOLD IN THE YEAR 2013 AND THEREFORE, THE PROJECT REACHED ITS COMPLETION STAGE. THE ASSESSING OFFICER MADE THE ADDITION OF RS.49,38,84,500/ - BECAUSE, THE ASSESSEE OFFERED NO EXPLANATION AND SUBMISSION ON THE SAID RELEVANT IMPOU NDED PAPERS, THE AMOUNT OF RS. 49,38,84,500/ - IS HELD AS INCOME FROM THE HARI DARSHAN, VILE PARLE PROJECT BASED ON THE IMPOUNDED MATERIALS AND THE SAME WAS ADDED TO THE TOTAL INCOME BY THE ASSESSING OFFICER. 7.2.CONTENTION OF THE ASSESSEE: DURING THE REM AND PROCEEDINGS, THE ASSESSEE STATED THE FOLLOWING AS DETAILED BELOW: A. THE IMPOUNDED LOOSE PAPER IS JUST AN ESTIMATED PROJECT REPORT LEFT BY A BROKER. IT IS UNSIGNED AND DOES NOT CONTAIN ANY DETAILS ABOUT THE ADDRESS OF SITE BEING CTS NO. TO ESTABLISH THAT THE SAID PAPER PERTAINS TO THE PROJECT AT HARI DARSHAN, VILE PARLE. THIS IMPOUNDED PAPER IS A DUMB DOCUMENT. B. THE ASSESSEE HAS SHOWN IN THE PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED 31.03.2013 OF DARSHAN DEVELOPERS (PROPRIETOR PRAVIN SARRA), SALE FROM SALE OF FLAT AT RS. 5,63,58,000/ - . THIS INCLUDES SALE OF FLAT FROM HARIDARSHAN SOCIETY OF RS. 554,06,000/ - . A COPY OF LEDGER ACCOUNT OF SALE OF FLAT (HARIDARSHAN) FROM ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 20 APRIL, 2009 TILL 31 ST MARCH,2014. (PAGE NO.49 OF PAPER BOOK NO.II), A COPY OF TRADI NG AND PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 ST MARCH/2013 OF DARSHAN DEVELOPER ALSO FILED BY WAY OF ADDITIONAL EVIDENCE TO SUBSTANTIATE THE SAME. (PAGE NO.16 OF PAPER BOOK NO.II). C. THE LEARNED ASSESSING OFFICER HAS NOT BROUGHT ON REC ORD ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT THE HARIDARSHAN PROJECT BELONGS TO THE ASSESSEE AND HAS NOT GIVEN ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE LAST SALE OF THE FLAT IN 2013. D. THE ADDITION IS MADE ON THE BASIS OF ESTIMATION AND NOT S UPPORTED BY ANY CONCRETE EVIDENCES. IN ORDER TO SUBSTANTIATE THE ABOVE THAT THE DEVELOPMENT OF THE SAID PROJECT WAS NEVER CARRIED OUT BY THE ASSESSEE, AND THE CONTENT OF THE SAID IMPOUNDED PAPER IS NOT RELATING TO THE PROJECT OF THE HARI DARSHAN SOCIETY, HE SUBMITTED THE FOLLOWING IN RESPECT OF THE SAID PROJECT AT HARI DARSHAN, VILE PARLE DURING REMAND PROCEEDINGS VIDE LETTER DATED 20.03.2018: A. THE IMPOUNDED LOOSE PAPER WAS BROUGHT BY MR. ARUN (ESTATE AGENT) FOR RE - DEVELOPMENT OF PROPERTY OF 1865 SQ. MTS AND THE PROFITABILITY OF THE PROJECT WAS WORKED ON THE PAPER WAS RS. 49,38,84,500/ - BUT HE FAILED TO PROVIDE THE REQUIRED DOCUMENTS LIKE PROPERTY TITLE, OWNERS DETAILS, ETC SO THE REDEVELOPMENT OF THE SAID PROJECT WAS REJECTED. B. FURTHER, .ATTENTIO N WAS DRAWN TO THE PROJECT OF HARI DARSHAN AT VILE PARLE BEARING PLOT AREA OF 511.71 SQ. MTS WHICH WAS RE - DEVELOPED BY HIM VIDE CONVEYANCE DEED 08.12.2008. A COPY OF CONVEYANCE DEED DATED 08.12.2008 IS SUBMITTED IN THE COURSE OF REMAND PROCEEDINGS. C. THE TOTAL SALE OF FLATS AND SHOPS IS RS. 5,54,06,000/ - AND THE TOTAL AREA OF FLATS AND SHOPS CONSTRUCTED WAS 11,995 SQ. FT CARPET, A DETAIL LIST OF WHICH IS ON RECORD. 7.3. COUNTER COMMENTS OF THE ASSESSING OFFICER: FURTHER, TO VERIFY THE AUTHENTICITY OF THE CONTENT OF THE SAID IMPOUNDED PAPER (ANNEXURE AL, PAGE NO. 192), A STATEMENT U/S 131 OF THE INCOME TAX ACT, 1961 OF MR. SUNIL GOPAL PAWAR, ASSOCIATE OF MR. ARUN JAITLY WAS RECORDED ON 9.03.2018 ON OATH BEFORE ME. THE RELEVANT EXTRACTS OF THE STATEMENT R ECORDED IS REPRODUCED BELOW: ' Q. 1 PLEASE IDENTIFY YOURSE L F ? ANS. I AM SUNIL GOPAL PAWAR AGED 51 YEARS RESIDING AT 0 - 1, SHRI SADGURU CHS LTD, CENTRAL PARK NALASOPARA EAST, TALUKA VASA, DISTRICT PALGHAR, PIN 401209. MY CELL PHONE NUMBER IS 996771 5556. Q.2 CAN YOU READ & WRITE ENGLISH ? ' ANS. YES, I/WE CAN READ & WRITE ENGLISH. Q.3 ARE YOU FILING YOUR RETURN OF INCOME REGULARLY, IF YES WHAT IS YOUR PAN ? ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 21 ANS: ' - YES, I AM FILLING MY RETURN OF INCOME REGULARLY AND MY P AN IS AGOPP9516G Q.4 WHAT IS YOUR EDUCATIONAL QUALIFICATION? ANS. I AM 12 TH PASS. Q.5 PLEASE PROVIDE THE NATURE OF PROFESSION CARRIED BY YOU. ANS I AM A ESTATE AGENT SINCE LAST 12 YEARS Q.6 HOW DO YOU KNOW SHRI PRAVIN SATRA ? A NS. I KNOW SHRI PRAVIN SATRA SINCE LAST 10 YEARS. HE IS REPUTED BUILDER. WHENEVER, I GET SOME REDEVELOPMENT PROJECTS, I APPROACH HIM. Q.7 NOTICE U/S 131 DATED 22.02.2018 WAS ISSUED TO SHRI ARUN JAITELY TO APPEAR BEFORE THE UNDERSIGNED. HOWEVER, Y OU HAVE APPEARED ON HIS BEHALF. PLEASE EXPLAIN ? ANS. ARUN JAITELY WAS MY FRIEND. HE WAS ALSO AN ESTATE AGENT. HE US ED TO SHARE LAND, REDEVELOPMENT OPPORTUNITIES, WITH ME FOR LOOKING NEW CLAIENTS AND VICE VERSA. HE PASSED AWAY ONE MONTH BACK. I RECEIV ED A CALL FROM SHRI PRAVIN SATRA THAT THERE WAS A SURVEY ACTION CARRIED OUT BY THE INCOME - TAX DEPARTMENT WHERE A REDEVELOPMENT PROJECT PROPOSAL SHARED BY YOU AND ARUN JAITELY FOR A BUILDING IN DADAR(W) WAS IMPOUNDED BY THE INCOME - TAX DEPARTMENT. HE TOLD ME THAT A SUMMON HAS BEEN SERVED TO ARUN REGARDING THAT MATTER. HE THEN REQUESTED TO APPEAR ON HIS BEHALF AS I KNEW THE DETAILS OF THE PROPOSAL AND ARUN HAD EXPIRED. SINCE, ARUN JAITELY WAS MY CLOSE FRIEND AND I KNEW ABOUT THE PROPOSAL, THEREFORE, I AM APPEA RING ON HIS BEHALF. Q.8 I AM SHOWING YOU A PAGE MARKED AS PAGE NUMBER 192 WHICH WAS IMPOUNDED DURING SURVEY ACTION CONDUCTED ON SHRI PRAVIN V SATRA, WHAT DO YOU HAVE TO SAY ABOUT IT ? ANS. YES,. I AM AWARE ABOUT THE DETAILS IN THIS PAGE. THIS PA GE CONTAINS DETAILS OF A REDEVELOPMENT PROJECT SITUATED NEAR KABATURKHANA, DADAR(W). THE PROPOSAL WAS BOUGHT BY ARUN JAITELY TO ME. THEREAFTER,! ARRANGED A MEETING BETWEEN PRAVIN SATRA AND ARUN. THIS PAGE CONTAINS THE DETAILS OF THE SAME PROJECT WHICH WAS SUBMITTED BY ME AND ARUN TO SHRI PRAVIN SATRA. Q.9 PLEASE GIVE THE COMPLETE DETAILS ABOUT THE ABOVE STATED PROJECT ? ANS. MADAM, SINCE THE PROPOSAL WAS BOUGHT BY THE ARUN JAITLY, I DON'T HAVE COMPLETE DETAILS OF THE PROJECT. AFTER SUBMITTING THE PROPOSAL TO SHRI PRAVIN SATRA,! WAS REQUESTED BY SHRI PRAVIN SATRA TO VISIT THE SITE. MADAM, I HAD VISITED THAT SITE ON HIS REQUEST. SINCE IT MAS LONG BACK IN 2010 OR 2011, WHICH I DON'T REMEMBER EXACTLY. ALL I REMEMBER IS THAT FT WAS NEAR KABOOTARKHANA, DADAR(W). Q.10. IN THE ABOVE STATED QUESTION, YOU HAVE MENTIONED THAT YOU DON'T REMEMBER EXACTLY THE PROJECT DETAILS OF DADAR(W) PROJECT SINCE IT WAS IN 2010 OR 2011. HOWEVER, WHEN I SHOWED YOU THE IMPOUNDED PAGE, WITH PAGE NUMBER 192. YOU ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 22 SEEMED TO HAV E RECOGNIZED IT AT THE SAME INSTANT EVEN THOUGH THIS PAGE CONTAINING THE PROPOSAL WAS SUBMITTED IN 2010 OR 2011 I.E 7 YEARS BACK. PLEASE EXPLAIN? ANS MADAM, WHATEVER YOU ARE SAYING IS TRUE. MADAM, I JUST WANT TO TELL YOU THAT, I AM A SMALL TIME REAL ESTATE AGENT. THIS WAS A VERY BIG DEAL WHICH I HAVE NEVER EXECUTED IN MY LIFE TILL DATE. I WAS EXCITED AT THAT TIME AS THE BROKERAGE POTENTIAL WAS VERY GOOD. THEREFORE, I STILL REMEMBER THE FINANCIAL OF THIS DEAL. Q. 11. WHEN WAS THE PROJECT SITUATED IN DADAR(W) AS STATED ABOVE EXECUTED BY SHRI PRAWN SATRA? ANS MADAM, THIS PROJECT NEVER TOOK OFF. SHRI PRAVIN SATRA HAD CALLED FOR OTHER DOCUMENTS RELATED TO THE PROPERTY. I ASKED SHRI ARUN JAITEIY TO PROVIDE THE DOCUMENTS. HOWEVER, THE SAME WERE NOT PROVIDED BY HIM. Q.12 DO YOU WANT TO SAY ANYTHING ELSE? ANS MADAM, I JUST WANT TO SAY IF YOU HAVE TO MAKE ANY ENQUIRY FROM ARUN JAITLY IN THIS CASE, YOU CAN CALL ME FOR THE DETAILS AS I WAS THE MEDIATOR BETWEEN ARUN AND SHRI PRAVIN SATRA DEAL IN THE DADAR(W) PROJECT DETAILS WHICH UNFORTUNATELY NEVER TOOK OFF. 7.4. IN THE PRESENT CASE, THE SUBMISSIONS MADE IN THE COURSE OF REMAND PROCEEDINGS, THE DETAILS FILED BY THE ASSESSEE IN COURSE OF APPELLANT PROCEEDINGS BY WAY OF ADDITIONAL EVIDENCE AND ST ATEMENT OF MR. SUNIL GOPAL PAWAR, PARTNER ASSOCIATE OF MR. ARUN, RECORDED U/S.131 ON OATH IN COURSE OF REMAND PROCEEDINGS ARE TAKEN ON RECORD AND THEREFORE EXPLANATION OF THE ASSESSEE ON THE SAID IMPOUNDED PAPER IS TAKEN ON RECORD. CONSIDERING THE ABOVE F ACTS, THIS GROUND OF APPEAL OF THE ASSESSEE MAY BE DECIDED ON MERITS. 14.3.1. WE FIND THAT THE LD. CIT(A) HAD TAKEN DUE COGNIZANCE OF THE AFORESAID REMAND REPORT WHERE NO ADVERSE INFERENCE WAS DRAWN BY THE LD. AO IN ANY MANNER WHATSOEVER. THE LD. CIT(A) A LSO TOOK NOTE OF THE FACT THAT THE LD. AO HAD INDEED RECORDED A STATEMENT O N OATH U/S.131 OF THE ACT FROM MR. SUNIL GOPAL PAWAR , ASSOCIATE OF MR. ARUN JAITLY , DURING REMAND PROCEEDINGS , WHO HAD CATEGORICALLY STATED THAT THE PROJECT MENTIONED IN THE LOOSE P APER NEVER TOOK OFF AND WHICH WAS NEVER EXECUTED. SINCE, THIS ADDITION WAS MADE BY THE LD. AO BASED ON THE LOOSE PAPER MARKED AS PAGE 192 OF ANNEXURE A - 1 IN THE ASSESSMENT ORDER, THE SAME LOOSE DOCUMENT WAS INDEED SHOWN TO MR. SUNIL GOPAL PAWAR AT THE ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 23 TIME OF RECORD ING THE STATEMENT AND MR. SUNIL GOPAL PAWAR HAD EXPLAINED THE SAID LOOSE DOCUMENTS AS THE PAPER CONTAINING THE ESTIMATED PROJECTIONS AND THE ESTIMATED PROFITABILITY THEREOF AND THAT THE SAID PROJECT NEVER TOOK OFF. WE ALSO FIND THAT IN THE SAID S TATEMENT, MR. SUNIL HAD ALSO STATED THAT THE RELATED DOCUMENTS THAT WERE CALLED FOR BY THE ASSESSEE WERE NEVER PROVIDED BY MR. ARUN TO THE ASSESSEE AND HENCE, THE PROJECT NEVER TOOK OFF. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE LOOSE PAPER BECOMES MERE DUMB DOCUMENT WHICH STANDS TOTALLY UNCORROBORATED WITH ANY EVIDENCE DETRIMENTAL TO THE ASSESSEE. ON THE CONTRARY , CORROBORATION COMES IN THE FORM OF A STATEMENT RECORDED FROM SHRI SUNIL GOPAL PAWAR WHO HAD STATED THE FACTS PERTAINING TO THE SAID LOOSE PAP ERS BY PROPER EXPLANATION THEREON. HENCE, THE DENIAL OF THE FACT BY THE ASSESSEE ABOUT THE LOOSE PAPER GETS STRENGTHENED BY THE STATEMENT OF SHRI SUNIL GOPAL PAWAR. WE FIND THAT THE LD. CIT(A) HAD PLACED RELIANCE ON THESE FACTS AND ON THE REMAND REPORT OF THE LD. AO WHILE GRANTING RELIEF. WE FIND THAT THE LD. AO HAD INDEED ACCEPTED THE CONTENTIONS OF THE ASSESSEE IN THE REMAND PROCEEDINGS. MOREOVER, WHEN THE LD CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIGH COURT IN T HE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). 14.4. ACCORDINGLY, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. 15. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.75 LAKHS MADE ON ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 24 ACCOUNT OF CASH PAYMENTS TO RETIRING PARTNERS ON THE BASIS OF RETIREMENT DEED WHICH WAS IMPOUNDED DURING SURVEY PROCEEDINGS. 15.1. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE LD. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAVE OBSERVED FROM THE IMPOUNDED DOCUMENT ANNEXURE A - 2 VIDE PAGES 89 - 91 THAT AS PER RETIREMENT DEED OF PARTNERSHIP, EACH PARTNER IS TO BE PAID RS.1 CRORE AND OUT OF WHICH RS.25 LAKHS IS TO BE PAID IN CASH TO T HE PARTNERS. A FIRM M/S. KENSTRO ISLAND COMPRISE OF 5 PARTNERS I.E. SHRI AJAY H GOSALIA, SHRI SHANTANOO V RANE, SHRI PRABHAKAR SHETTY, SHRI PRAVIN SATRA (I.E. ASSESSEE) AND SHRI GIRISH GODA. THE LD. AO CALLED UPON THE ASSESSEE TO EXPLAIN THE ASSESSEE AS TO WHY THIS AMOUNT SHOULD NOT BE ADDED TO THE TOTAL INCOME. NO EXPLANATIONS WERE FILED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ACCORDINGLY, THE LD. AO MADE AN ADDITION OF RS.75 LAKHS ON THE GROUND THAT ASSESSEE HAS PAID RS.25 LAKHS IN CASH TO THREE PARTNERS I.E. SHRI AJAY H GOSALIA, SHRI SHANTANOO V RANE & SHRI PRABHAKAR SHETTY OUT OF HIS UNACCOUNTED INCOME. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE STATED THAT THESE PAPERS I.E. PAGES 89 - 91 OF ANNEXURE - A - 2 WHICH WERE IMP OUNDED DURING SURVEY WERE UNSIGNED AND UNDATED AND NO PAYMENTS WERE MADE TO ANY OF THE SO CALLED RETIRING PARTNERS BY THE ASSESSEE. IT WAS ALSO POINTED OUT THAT THE PROJECT OF SAIDARSHAN CO - OPERATIVE SOCIETY AS STATED IN THOSE IMPOUNDED PAPERS WAS NOT CARR IED OUT BY THE ASSESSEE. THE LD. CIT(A) DULY CALLED FOR A REMAND REPORT FROM THE LD. AO IN RESPECT OF THESE SUBMISSIONS MADE BY THE ASSESSEE. THE RELEVANT PORTION OF THE REMAND REPORT GIVEN BY THE LD. AO WITH REGARD TO THIS ADDITION IS REPRODUCED HEREUNDER : - ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 25 ADDITION OF CASH PAYMENT OF RS. 75,00,000/ - TO THE RETIRING PARTNER: 8.1. BACKGROUND: THE IMPOUNDED LOOSE PAPERS ARE ACKNOWLEDGEMENT FOR CASH PAID TO THE THREE RETIRING PARTNERS OF M/S. KENSTRO ISLAND AS PER THE DEED OF RETIREMENT (UNDATED) OF RS. 2 5 LAKHS EACH AND THE ASSESSEE HAS PAID RS. 25,00,000/ - EACH TO THE THREE PARTNERS, AGGREGATING TO RS. 75,00,000 / - . (ANNEXURE A2, PAGE 89 TO 91). THE NAME OF THE PARTNERS ARE SHRI AJAY H GOSALIA, SHRI SHANTANOO V RANE, SHRI PRABHAKAR SHETTY SINCE, THE ASSES SEE OFFERED NO EXPLANATION AND SUBMISSION ON THE SAID RELEVANT IMPOUNDED PAPERS, THE AMOUNT OF RS. 75,00,000/ - IS HELD AS INCOME FROM BASED ON THE IMPOUNDED MATERIALS AND THE SAME WAS ADDED TO THE TOTAL INCOME BY THE ASSESSING OFFICER. 8.2. CONTENTION OF THE ASSESSEE: DURING THE - 'REMAND PROCEEDINGS, THE ASSESSEE STATED THE FOLLOWING AS DETAILED BELOW; A. THE SAID IMPOUNDED PAPERS ARE UNSIGNED AND UNDATED AND DO NOT CONTAIN ANY DATE WISE DETAIL REGARDING THE PAYMENT MADE TO SO CALLED RETIRING PARTNERS A ND THE ASSESSEE DID NOT MAKE ANY SUCH PAYMENTS TO THE PARTNERS. THEREFORE, THEY ARE THE DUMB DOCUMENTS. B. THERE IS NO DETAIL ABOUT THE DATE ON WHICH THE SAID PAYMENT IS MADE. C. THE PROJECT OF SAI DARSHAN CO - OPERATIVE SOCIETY AS STATED IN THE IMPOUND ED PAPERS IS NOT CARRIED OUT BY THE ASSESSEE. D. NO PARTNERS RETIRED FROM THE FIRM TILL DATE. 8.3. COUNTER COMMENTS OF THE ASSESSING OFFICER: FURTHER, TO VERIFY THE AUTHENTICITY OF THE CONTENT OF THE SAID IMPOUNDED PAPER (ANNEXURE A2, PAGE 89 TO 91), A STATEMENT U/S 131 OF THE INCOME TAX ACT, 1961 OF THE PARTNERS OF M/S. KENSTRO ISLAND VIZ. 1) AJAY GOSALIA 2) SHANTANU V RANE, AND 3) PRABHAKAR SHETTY WERE RECORDED ON 20.03.2018, 23.03.2018 & 23.03.2018 RESPECTIVELY ON OATH BEFORE ME. THE RELEVANT EXTRA CTS OF THE STATEMENT RECORDED IS REPRODUCED BELOW: ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 26 STATEMENT OF AJAV H GOSALIA Q.I PLEASE IDENTIFY YOURSELF? ANS. I AM SHRI AJAY HIMMATLAL GOSALIA, AGED 65 YEARS, RESIDING AT A/403 - 404, RAM TOWER, OFF LINK ROAD, BORIVALI WEST, MUMBAI - 4000 92, MY CONTACT IS 9920931115. Q.2 CAN YOU READ & WRITE ENGLISH? ANS. YES, I/WE CAN READ & WRITE ENGLISH, Q.3 ARE YOU FILING YOUR RETURN OF INCOME REGULARLY, IF YES WHAT IS YOUR PAN ? ANS. YES, I AM FILLING MY RETURN OF INCOME REG ULARLY AND MY PAN IS AABPG2466K. Q.4 DESCRIBE ABOUT M/S. KENSTRO ISLAND ? ANS. IT IS A REGISTERED PARTNERSHIP FIRM, SINCE 29.03.2006, WHEREIN AT THE TIME OF INCEPTION WE WERE 3 PARTNERS & LATER ADDED 2 MORE PARTNERS VIDE PARTNERSHIP DEED DATED 0 4.07.2009 Q.5 WHAT WAS THE OBJECT OF THE FIRM M/S. KENTRO ISLAND ? ANS. THE MAIN OBJECT OF THE FIRM WAS TO CARRY ON THE BUSINESS OF DEVELOPMENT AND CONSTRUCTIONS OF RESIDENTIAL / COMMERCIAL/ INDUSTRIAL UNITS FOR SALE OR LEASE. Q.6 HOW DO Y OU KNOW SHRI PRAVIN SATRA ? ANS. SHRI PRAVIN SATRA, IS AN ESTABLISHED BUILDER & DEVELOPERS & I HAD PLANNED A CONSTRUCTION BUSINESS WITH HIM, UNDER PARTNERSHIP, WHEREIN WE ADDED SHRI PRAVIN SATRA & ANOTHERSHRI GIRISH GADA ALSO AS THE PARTNER W.E.F. DAT ED 04.07.2009. Q. 7 HOW. MANY PROJECTS HAVE BEEN DEVELOPED BY M/S. KENSTRO ISLAND ? ANS. NONE. TILL THIS DATE, WE HAD TRIED TO NEGOTIATE WITH THE SOCIETIES MENTIONED IN LOOSE PAPERS BUT IT DID NOT MATERIALIZED. Q.8 WHAT WAS THE CAPITAL INT RODUCED BY YOU IN THE FIRM STATED ABOVE. ANS I HAVE NOT INTRODUCED ANY CAPITAL IN THE FIRM.. Q.9 HOW CAN A FIRM OPERATE WITHOUT INTRODUCING CAPITAL BY THE PARTNERS? ANS THE PARTNERSHIP WAS MADE FOR THE PROPOSED SRA PROJECT AT KANDIVALI(E ) AND SINCE NO ACTIVITY WAS CARRIED OUT IN RESPECT OF THE SAID PROJECT THE CAPITAL WAS NOT REQUIRED. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 27 THERE WAS VERY PRELIMINARY TALK INVOLVING NO FINANCIAL COMMITMENTS. EVEN NO BANK ACCOUNT IS OPENED IN THE NAME OF THE FIRM. Q.10. PLEASE PROVIDE THE CO PY OF PARTNERSHIP DEED/ AMENDMENTS/DISSOLUTION DEED. ANS A COPY OF DEED OF PARTNERSHIP DATED 29 TH MARCH, 2006 AND A COPY OF ADMISSION CUM PARTNERSHIP DATED 04 JULY, 2009 ARE SUBMITTED HEREWITH. Q.11 PLEASE PROVIDE THE COPY OF ALL THE RETURNS FILED BY M/S. KENSTRO ISLAND SINCE IT WAS FORMED. ANS THE FIRM HAS NOT FILED ANY RETURN OF INCOME FOR AY 2013 - 14 AND OTHER YEARS AS THERE WAS NO ACTIVITY CARR IED OUT BY THE FIRM. PAN OF THE FIRM: AAJFK7626F AND THERE WAS NO INCOME OF THE FIRM FOR AY 2013 - 14. Q.12 I AM SHOWING YOU A PAGE MARKED AS PAGE NUMBER 89 WHICH WAS IMPOUNDED DURING SURVEY ACTION CONDUCTED ON SHRI PRAVIN VSATRA, WHAT DO YOU HAVE TO SAY ABOUT IT? ANS. I AM NOT AT ALL AWARE OF THIS PAPER, NOR HAVE I RETIRED FROM THE PARTNERSHIP FIRM . AS MENTIONED IN THIS LOOSE UNSIGNED PAPER AND I HAVE NOT RECEIVED ANY AMOUNT FROM SHRI PRAVIN VSATRA. Q.13 PLEASE GIVE THE COMPLETE DETAILS ABOUT TH E PROJECT OF KANDIVALI MENTION IN THE GIVEN PAGE? ANS. THE KANDIVALI PROJECT WAS UNDER SRA SCHEME WE HAVE TRIED TO ACQUIRE AND DEVELOP THE SAME BUT IT DID NOT MATERIALIZED. Q. 14 PLEASE PROVIDE THE ADDRESS OF THE PROVIDE THE ADDRESS OF THE PROPOS ED KANDIVALI SITE. ANS THE ADDRESS OF THE SAID SITE IS SRI SAI DARSHAN GANGA DARSHAN CHS LTD. AKRULI ROAD, KANDIVALI EAST, MUMBAI - 400101. STATEMENT OF SHANTANOO V RANE Q,L PLEASE IDENTIFY YOURSELF? ANS. I AM SHRI SHANTANU VISHWANATH RAN E, AGED 44 YEARS, RESIDING AT 9, INDRAPRASAD, NEAR TEACHERS COLONY, BANDRA EAST, MUMBAI - 400 051, MY CONTACT IS 9820440606. Q.2 CAN YOU READ & WRITE ENGLISH ? ANS. YES, I/WE CAN R6AD - & WRITE ENGLISH. Q.3 ARE YOU FILIN G YOUR RETURN OF INCOME REGULARLY, IF YES WHAT IS YOUR PAN ? ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 28 ANS. YES, I AM FILLING MY RETURN OF INCOME REGULARLY AND MY PAN IS AEKPR2556J. Q.4 DESCRIBE ABOUT M/S. KENSTRO ISLAND ? ANS. IT IS A REGISTERED PARTNERSHIP FIRM, SINCE 29.03.2006 , WHEREIN AT THE TIME OF INCEPTION WE WERE 3 PARTNERS & LATER ADDED 2 MORE PARTNERS VIDE PARTNERSHIP DEED DATED 04.07.2009. Q.5 WHAT WAS THE OBJECT OF THE FIME M/S. KENTRO ISLAND ? ANS. THE MAIN OBJECT OF THE FIRM WAS TO CARRY ON THE BUSINESS O F DEVELOPMENT AND CONSTRUCTIONS OF RESIDENTIAL/ COMMERCIAL/ INDUSTRIAL UNITS FOR SALE OR LEASE. Q.6 HOW DO YOU KNOW SHRI PRAVIN SATRA ? ANS. SHRI PRAVIN SATRA, IS AN ESTABLISHED BUILDER & DEVELOPERS & I HAD PLANNED A CONSTRUCTION BUSINESS WITH H IM, UNDER PARTNERSHIP, WHEREIN WE ADDED SHRI PRAVIN SATRA & ANOTHER SHRI GIRISH GADA, ALSO AS THE PARTNER WEF. DATED 04.07.2009. Q. 7 HOW MANY PROJECTS HAVE BEEN DEVELOPED BY M/S. KENSTRO ISLAND ? ANS. NONE. TILL THIS DATE, WE HAD TRIED TO NEGO TIATE WITH THE SOCIETIES MENTIONED IN LOOSE PAPERS BUT IT DID NOT MATERIALIZED. Q.8 I AM SHOWING YOU A PAGE MARKED AS PAGE NUMBER 90 WHICH WAS IMPOUNDED DURING SURVEY ACTION CONDUCTED ON SHRI PRAVIN V SATRA, WHAT DO YOU HAVE TO SAY ABOUT IT ? ANS. I AM NOT AT ALL AWARE OF THIS PAPER, NOR HAVE I RETIRED FROM THE PARTNERSHIP FIRM AS MENTIONED IN THIS LOOSE UNSIGNED PAPER AND I HAVE NOT RECEIVED ANY AMOUNT FROM SHRI PRAVIN V SATRA. Q.9 PLEASE GIVE THE COMPLETE DETAILS ABOUT THE PROJECT OF KAND IVALI MENTION IN THE GIVEN PAGE ? ANS THE KANDIVALI PROJECT WAS UNDER SRA SCHEME WE HAVE TRIED TO ACQUIRE AND DEVELOP THE SAME BUT IT DID NOT MATERIALIZED. Q.10 DO YOU WANT TO SAY ANYTHING ELSE ? ANS. NO. STATEMENT OF PRABHAKAR M SHETTV Q.I PLEASE IDENTIFY YOURSELF? ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 29 ANS. I AM SHRI PRABHAKAR M. SHETTY, AGED 55 YEARS, RESIDING AT A/304, SAILEEIA, ANAND NAGAR, DAHISAR EAST, MUMBAI - 400068, MY CONTACT IS 7715000744. Q.2 CAN YOU READ & WRITE ENGLISH ? ANS. YES, I/WE CAN R EAD & WRITE ENGLISH. Q.3 ARE YOU FILING YOUR RETURN OF INCOME REGULARLY, IF YES WHAT IS YOUR PAN ? ANS. YES, I AM FILLING MY RETURN OF INCOME REGULARLY AND MY PAN IS AIWPS3270Q. Q.4 DESCRIBE ABOUT M/S. KENSTRO ISLAND ? ANS. IT IS A REGISTERED PARTNERSHIP FIRM, SINCE 29.03.2006, WHEREIN AT THE TIME OF INCEPTION WE WERE 3 PARTNERS & LATER ADDED 2 MORE PARTNERS VIDE PARTNERSHIP DEED DATED 04.07.2009. Q.5 WHAT WAS THE OBJECT OF THE FIRM M/S. KENTRO ISLAND ? ANS. THE MAIN OBJE CT OF THE FIRM WAS TO CARRY ON THE BUSINESS OF DEVELOPMENT AND CONSTRUCTIONS OF RESIDENTIAL/ COMMERCIAL/ INDUSTRIAL UNITS FOR SALE OR LEASE. Q.6 HOW DO YOU KNOW SHRI PRAWN SATRA ? ANS. SHRI PRAVIN SATRA, IS AN ESTABLISHED BUILDER & DEVELOPERS & I HAD PLANNED A CONSTRUCTION .BUSINESS WITH HIM, UNDER PARTNERSHIP, WHEREIN WE ADDED SHRI PRAVIN SATRA & ANOTHER SHRI GIRISH GADA, ALSO AS THE PARTNER WEF. DATED 04.07.2009. Q. 7 HOW MANY PROJECTS HAVE BEEN DEVELOPED BY M/S. KENSTRO ISLAND ? ANS. NONE. TILL THIS DATE, WE HAD TRIED TO NEGOTIATE WITH THE SOCIETIES MENTIONED IN LOOSE PAPERS BUT IT DID NOT MATERIALIZED. Q.8 I AM SHOWING YOU A PAGE MARKED AS PAGE NUMBER 91 WHICH WAS IMPOUNDED DURING SURVEY ACTION CONDUCTED ON SHRI PRAVIN V SATR A, WHAT DO YOU HAVE TO SAY ABOUT IT ? ANS. I AM NOT AT ALL AWARE OF THIS PAPER, NOR HAVE I RETIRED FROM THE PARTNERSHIP FIRM AS MENTIONED IN THIS LOOSE UNSIGNED PAPER AND I HAVE NOT RECEIVED ANY AMOUNT FROM SHRI PRAVIN V SATRA. Q.9 PLEASE GIVE T HE COMPLETE DETAILS ABOUT THE PROJECT OF KANDIVALI MENTION IN THE GIVEN PAGE? ANS. THE KANDIVALI PROJECT WAS UNDER SRA SCHEME WE HAVE TRIED TO ACQUIRE AND DEVELOP THE SAME BUT IT DID NOT MATERIALIZED. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 30 Q.10 DO YOU WANT TO SAY ANYTHING ELSE ? ANS . NO. IN THE COURSE OF STATEMENT OF AJAY GOSALIA, A PARTNER OF THE SAID FIRM, A COPY OF PARTNERSHIP DEED DATED 29 TH MARCH, 2006 AND. A COPY OF ADMISSION CUM PARTNERSHIP DATED 04 TH JULY, 2009 WERE SUBMITTED BY HIM. 8.4. IN THE PRESENT CASE, THE SUBMI SSIONS MADE IN THE COURSE OF REMAND PROCEEDINGS, THE DETAILS FILED BY THE ASSESSEE IN COURSE OF APPELLANT PROCEEDINGS BY WAY OF ADDITIONAL EVIDENCE AND STATEMENT OF 1) AJAY GOSALIA, 2) SHANTANU V RANE, AND 3) PRABHAKAR SHETTY WERE, RECORDED U/S.131 ON OATH IN COURSE OF REMAND PROCEEDINGS ARE TAKEN ON RECORD AND THEREFORE EXPLANATION OF THE ASSESSEE ON THE SAID IMPOUNDED PAPER JS TAKEN ON RECORD. CONSIDERING THE ABOVE FACTS, THIS GROUND OF APPEAL OF THE ASSESSEE MAY BE DECIDED ON MERITS. 15.2. FROM THE ABOVE, IT IS EVIDENT THAT THE LD. AO HAD INDEED RECORDED STATEMENT O N OATH U/S.131 OF THE ACT FROM THE THREE ALLEGED RETIRING PARTNERS I.E. SHRI AJAY H GOSALIA, SHRI SHANTANOO V RANE & SHRI PRABHAKAR SHETTY TO WHOM THE VERY SAME IMPOUNDED DOCUMENTS I.E. PA GES 89 - 91 OF ANNEXURE A - 2 WERE CONFRONTED AS IS EVIDENT FROM THE AFORESAID STATEMENTS AND ALL THOSE THREE PARTIES HAD CATEGORICALLY DENIED THAT THEY HAD NOT RETIRED FROM THE PARTNERSHIP FIRM M/S. KENSTRO ISLAND AND THEY HAD NOT RECEIVED ANY PAYMENT IN CASH FROM THE ASSESSEE. HENCE, THE CONTENTION OF THE ASSESSEE THAT THESE THREE DOCUMENTS NAMELY PAGES 89 - 91 OF ANNEXURE A - 2 ARE TOTALLY UNSIGNED AND UNDATED PAPERS AND WERE NOT AT ALL ACTED UPON , GETS STRENGTHENED AND CORROBORATED BY THE STATEMENTS GIVEN ON OA TH BY THE THREE PARTNERS I.E. SHRI AJAY H GOSALIA, SHRI SHANTANOO V RANE & SHRI PRABHAKAR SHETTY. WE FIND THAT THE LD. CIT(A) HAD GIVEN A CATEGORICAL FINDING BASED ON THE REMAND REPORT OF THE ASSESSING OFFICER THAT THE LOOSE PAPERS COMPRISING OF PAGES 89 - 9 1 OF ANNEXURE A - 2 ARE NOT IN THE FORM OF EXECUTED DOCUMENTS OR BOOKS OF ACCOUNTS OR CERTIFICATES WHICH CAN PROVE CONCLUSIVELY THAT ASSESSEE HAD EARNED UNDISCLOSED OR UNACCOUNTED INCOM E. FURTHER THIS IMPOUNDED ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 31 PAPER DOES NOT HAVE ANY ACCEPTABLE NARRATION AN D DO NOT BEAR THE CERTIFICATE OF THE ASSESSEE OR ANY AUTHORISED PERSON AND THAT THEY ARE IN THE NATURE OF DUMB DOCUMENTS HAVING NO EVIDENTIARY VALUE. ACCORDINGLY, IT WAS HELD THAT THE SAID DOCUMENTS MAY NOT BE THE SOLE BASIS FOR DETERMINATION OF THE INCOME OF THE ASSESSEE. WE FIND THAT THIS FINDING OF THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD. DR BEFORE US. MOREOVER, WE FIND THAT THE LD. CIT(A) WHILE GRANTING RELIEF TO THE ASSESSEE HAD ALSO PLACED RELIANCE ON THE REMAND REPORT OF THE LD. AO AND THA T THE LD. AO HAS ALSO NOT GIVEN ANY ADVERSE AMOUNT IN HIS REMAND REPORT IN VIEW OF THE STATEMENTS GIVEN ON OATH BY THREE PARTNERS U/S.131 OF THE ACT CATEGORICALLY DENYING ANY PAYMENT RECEIVED IN CASH FROM ASSESSEE AND ALSO CATEGORICALLY DENYING THE FACT TH AT THEY HAVE RETIRED FROM KENSTRO ISLAND . H ENCE, IT COULD BE SAFELY CONCLUDED THAT THE LD. AO HAD INDEED ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE IN THE REMAND PROCEEDINGS WHICH WAS ALSO ONE OF THE BASIS FOR THE LD. CIT(A) TO GRANT RELIEF TO THE ASSESSE E. MOREOVER, WHEN THE LD CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). ACCORDINGLY, THE GROUND NO.3 RAISED BY THE REVENUE IS DISMISSED. 16. THE NEXT ISSUE TO BE DECIDED IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING ADDITION OF RS. 25 LAKHS WHICH WAS MADE BASED ON THE IMPOUNDED LOOSE PAPER ANNEXURE - A - 2 PAGE 43 IN THE FACTS AND CIRCUMSTANCES OF THE CASE. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 32 16.1. WE HAVE HEARD RIVAL SU BMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT DURING THE COURSE OF SURVEY AN IMPOUNDED LOOSE PAPER MARKED AS ANNEXURE A - 1 IN PAGE 43 WAS IMPOUNDED WHICH CONTAINED THE NOTING THAT 25 CHEQUES OF RS.1 LAKH ARE TO BE ISSUED ON WEDNESDAY AND CASH TO BE RECEIVED ON FRIDAY AFTER TAKING THE COMMISSION AT 2%. THE ASSESSEE HAD NOT FURNISHED ANY EXPLANATION REGARDING THESE LOOSE SHEETS DURING THE ASSESSMENT PROCEEDINGS. ACCORDINGLY, THE LD. AO ON THE BASIS OF THE SAID IMPOUNDED DOCUMENT MADE AN ADDITION OF RS.25 LAKHS BY INVOKING THE PROVISIONS OF SECTION 292C OF THE ACT. DURING THE COURSE OF FIRST APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED VIDE LETTER DATED 09/11/2017 THAT IMPOUNDED LOOSE PAPER WAS JUST A DISCUSSION POINT OF INSTRUCTIONS GIV EN TO BROKER TO GIVE 25 CHEQUES OF RS.1 LAKH IN ADVANCE OUT OF TOTAL AMOUNT OF RS.65 LAKHS AND THE COMMISSION WILL BE 2% ON THE SALE AMOUNT. THE ASSESSEE PLEADED THAT NO SUCH TRANSACTION TOOK PLACE IN HIS BANK ACCOUNT. THE ASSESSEE FURTHER STATED THAT THE SAID PAPER IS NOT SIGNED, THE DETAILS OF CHEQUES ISSUED ARE NOT GIVEN AND DATE OF PAYMENTS ARE NOT WRITTEN ON THE PAPERS AND THEREFORE, THE SAID PAPER BECOMES A DUMB DOCUMENT WHICH CANNOT BE RELIED UPON FOR THE PURPOSE OF MAKING ANY ADDITION IN HIS HANDS. THE LD. CIT(A) DULY CALLED FOR REMAND REPORT FROM THE LD. AO WITH REGARD TO THESE SUBMISSIONS OF THE ASSESSEE. WE FIND THAT THE LD. AO GAVE HIS REMAND REPORT WITH REGARD TO THIS ADDITION AND THE OPERATIVE PORTION OF THE SAID REPORT IS REPRODUCED HEREUNDER: - F 10. ADDITION OF BROKERAGE EXPENSES OF RS.25,00,000/ - : 10.1. BACKGROUND: THE IMPOUNDED LOOSE PAPER SHOWS THE HANDWRITING NOTING OF MODUS OPERAND! OF CREATION OF CASH BY BOOKING BOGUS EXPENSES / LOANS, ETC WHEREIN 25 CHEQUES OF RS. 1,00,000/ - TO BE ISSUED ON WEDNESDAY AND CASH TO BE RECEIVED ON FRIDAY AFTER DEDUCTING COMMISSION @ 2%. (ANNEXURE AL - PAGE 43) ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 33 IN RESPECT OF THE ABOVE, THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DENIED THE OCCURRENCE OF SUCH TRANSACTIONS A ND STATED THAT IT WAS ONLY A DISCUSSION RELATING TO PAYMENT INSTRUCTION TO BROKERS FOR SALE OF FLATS TO GET 25 CHEQUES OF RS, 1 LAC EACH IN ADVANCE AGGREGATING TO RS. 25,00,000/ - AND HIS COMMISSION IS 2%. SINCE, THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE TH E ABOVE BY ANY COGENT EVIDENCES TO PROVE THAT IT PERTAINS TO BROKERAGE EXPENSES AND NOT SUBMITTED THE DETAILS OF BROKERS TO ENABLE CROSS VERIFICATION AND THEREFORE, HE FAILED TO EXPLAIN THE SAID IMPOUNDED LOOSE PAPERS, THE SAME WAS ADDED TO THE TOTAL INCOM E OF THE ASSESSEE BY THE ASSESSING OFFICER. 10.2. CONTENTION OF THE ASSESSEE: DURING THE REMAND PROCEEDINGS, THE ASSESSEE STATED THE FOLLOWING AS DETAILED BELOW: A. THE IMPOUNDED LOOSE PAPER WAS JUST A DISCUSSION POINT OF INSTRUCTIONS GIVEN TO BROK ER TO PAY 25 CHEQUES OF RS. 1 LAKH IN ADVANCE AND TOTAL PAYMENT IS RS. 25 LAKHS AND THE COMMISSION WILL BE 2% ON SALE AMOUNT. B. THERE IS NO SUCH TRANSACTION THAT TOOK PLACE AS PER THE BANK STATEMENT OF M/S. DARSHAN DEVELOPERS, PROPRIETARY CONCERN OF TH E ASSESSEE PRODUCED DURING THE COURSE OF REMAND PROCEEDINGS. C. THESE PAPERS ARE UNSIGNED AND NO DATEWISE DETAILS OF PAYMENTS ARE MENTIONED THEREON AND THEREFORE DUMB DOCUMENTS. D. THE NAME OF THE BROKERS AND THE DETAILS OF THE PROPERTY IN RESPECT OF W HICH THE ALLEGED BROKERAGE IS PAID IS NOT MENTIONED ANYWHERE ON THE SAID IMPOUNDED LOOSE PAPER AND QUALIFIES FOR DUMB DOCUMENT. E THE ADDITION OF RS. 25,00,000/ - IS MADE BASED ON DUMB DOCUMENT WITHOUT HAVING CORROBORATIVE EVIDENCE. 10.3. COUNTER COMME NTS OF THE ASSESSING OFFICER: IN THE PRESENT CASE, THE DETAILS FILED BY WAY OF ADDITIONAL EVIDENCE AND THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDINGS ARE CONSIDERED AND TAKEN ON RECORD AND THEREFORE, T HE EXPLANATION OF THE ASSESSEE ON THE SAID IMPOUNDED PAPER IS TAKEN ON RECORD. CONSIDERING THE ABOVE FACTS, THIS GROUND OF APPEAL OF THE ASSESSEE MAY BE DECIDED ON MERITS. 16.2. WE FIND THAT THE NAME OF THE BROKERS AND THE DETAILS OF THE PROPERTY IN RE SPECT OF WHICH BROKERAGE PAID WAS NOWHERE MENTIONED ON THE SAID IMPOUNDED LOOSE PAPER. WE FIND THAT THE LD. CIT(A) HAD CATEGORICALLY OBSERVED THAT THE SAID IMPOUNDED PAPER DOES NOT HAVE ANY ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 34 ACCEPTABLE NARRATION AND DO NOT BEAR THE CERTIFICATE OF THE ASSESS EE OR ANY AUTHORISED PERSON AND THEY ARE MERELY IN THE NATURE OF DUMB DOCUMENTS HAVING NO EVIDENTIARY VALUE AND HENCE, CANNOT BE TAKEN AS THE SOLE BASIS FOR MAKING THE ADDITION IN THE HAND S OF THE ASSESSEE. HE HAS ALSO RECORDED A FINDING THAT THE LD. AO HA D NEITHER IN THE ASSESSMENT PROCEEDINGS NOR IN THE REMAND PROCEEDINGS CORROBORATED NOTING IN THE LOOSE PAPER BY BRINGING SOME COGENT MATERIAL ON RECORD AND CONCLUSIVELY PROVE THAT THE NOTING IN THE IMPOUNDED PAPER REVEAL T HE UNACCOUNTED TRANSACTION OF THE ASSESSEE. WE ALSO FIND ON PERUSAL OF THE REMAND REPORT OF THE LD. AO THAT THE LD. AO HAD INDEED ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE AND THAT IS THE REASON HE HAD NOT DRAWN ANY ADVERSE INFERENCE ON THE EXPLANATION FURNISHED BY THE ASSESSEE IN THE RE MAND PROCEEDINGS. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE LD. AO HAD INDEED ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE IN THE REMAND REPORT. MOREOVER, WHEN THE LD CIT ( A ) GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIG H COURT IN THE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). ACCORDINGLY, THE GROUND NO.4 RAISED BY THE REVENUE IS DISMISSED. 17. THE LAST ISSUE TO BE DECIDED IN THIS APPEAL OF THE REVENUE IS WHETHER THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE ON ACCOUNT OF D IFFERENTIAL NET PROFIT OF RS.8,35,871/ - . 17.1. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND THAT THE TOTAL INCOME DISCLOSED BY THE ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 35 ASSESSEE IN THE RETURN OF INCOME FILED IN RESPON SE TO NOTICE ISSUED U/S.148 OF THE ACT WAS RS.20,54,850/ - . WE FIND THAT THE PROFIT AND LOSS ACCOUNT PRINT OUT TAKEN AT THE TIME OF SURVEY PROCEEDINGS DISCLOSED THE PROFIT OF RS.28,90,721/ - AS ON THE DATE OF SURVEY . THE LD. AO OBSERVED THAT THE PROFIT ON TH E DATE OF SURVEY WAS RS.28.90 LAKHS AND WHEREAS THE FINAL PROFIT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME IS RS.2 0 .54 LAKHS AND ACCORDINGLY PROCEEDED TO ADD THE DIFFERENCE OF RS.8,35,871/ - AS PROFIT NOT DISCLOSED BY THE ASSESSEE. THE MATTER WAS UL TIMATELY REMANDED BACK BY THE LD. CIT(A) TO THE FILE OF THE LD. AO CALLING FOR REMAND REPORT. IN THE REMAND PROCEEDINGS, THE ASSESSEE STATED THAT THE LD. AO MADE COMPARISON BETWEEN TOTAL INCOME OF ASSESSEE OF RS.20,54,850/ - WITH THE PROVISIONAL PROFIT SHOW N IN THE PROVISIONAL PROFIT AND LOSS ACCOUNT ON THE DATE OF SURVEY OF RS.28,90,721/ - . IT WAS PLEADED THAT THE NET PROFIT AS PER THE AUDITED ACCOUNTS OF M/S. DARSHAN DEVELOPERS (PROPRIETARY CONCERN OF THE ASSESSEE) FOR THE YEAR ENDED 31/03/2013 WAS RS.59,63 ,620/ - AND THE SAME WAS DULY DISCLOSED AS BUSINESS INCOME IN THE COMPUTATION OF TOTAL INCOME BY THE ASSESSEE. ACCORDINGLY, IT WAS PLEADED THAT THERE WAS ABSOLUTELY NO SHORTFALL IN THE PROFIT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME WARRANTING ANY ADDITION THEREON. THIS FACT WAS ACCEPTED BY THE LD. AO IN THE REMAND REPORT WHICH IS EVIDENT FROM HIS REMAND REPORT WHICH IS REPRODUCED BELOW: - 11. ADDITION OF DIFFERENTIAL NET PROFIT AS PER SURVEY 133A OF RS.8,35,871/ - : 11.1. BACKGROUND: THE TOTAL INC OME OF RS. 20,54,850/ - IS SHOWN IN THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE ISSUED U/S 148. HOWEVER, ON PERUSAL OF THE LEDGER ACCOUNTS AND PROFIT AND LOSS ACCOUNT PRINT OUTS TAKEN AT THE TIME OF SURVEY PROCEEDINGS, THE PROFIT WAS RS. 28,90,721/ - . THE ASSESSEE FAILED TO RECONCILE AND EXPLAIN THE SAID DIFFERENCE OF RS. 8,35,871 / - AND THEREFORE, THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER. ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 36 11.2. CONTENTION OF THE ASSESSEE: DURING THE REMAND PROCEEDINGS, THE ASSESS EE STATED THE FOLLOWING AS DETAILED BELOW: A . THE LEARNED ASSESSING OFFICER MADE COMPARISON BETWEEN TOTAL INCOME OF ITR (RS. 20,54,850/ - ) AND PROFIT SHOWN IN PROVISIONAL PROFIT AND LOSS ACCOUNT ( RS. 28,9 0 ,721/ - ) AS PER IMPOUNDED PAPER OF M/S. DARS HAN DEVELOPERS. B. THE NET PROFIT FOR THE YEAR ENDED 31 ST MARCH, 2013 OF M/S. DARSHAN DEVELOPERS AS PER AUDITED ACCOUNTS IS RS. 59,63,620/ - . (REFER PAGE NO. 16 OF THE PAPERBOOK NO. II) EVEN IN THE COMPUTATION OF TOTAL INCOME, THE BUSINESS INCOME FROM M/S. DARSHAN DEVELOPERS IS SHOWN BY TAKING THE NET PROFIT AS PER PROFIT AND LOSS ACCOUNT OF RS. 59,63,619/ - FOR THE YEAR ENDED 31 ST MARCH, 2013. (REFER PAGE NO. 1 - 3 OF THE PAPERBOOK NO. II). THE SAME IS PREPARED FROM THE REGULAR BOOKS OF ACCOUNTS MAINTAI NED IN COMPUTERIZED ACCOUNTING SOFTWARE. C. THE PROFIT AND LOSS ACCOUNT FOR THE PERIOD UP TO 7 TH AND 8 TH MARCH, 2013 AS PER THE IMPOUNDED PAPERS IS RS. 28,90,721/ - (REFER PAGE NO. 63 OF THE PAPERBOOK NO. II) AND AS PER THE AUDITED ACCOUNTS IT IS RS. 59, 63,620/ - . THEREFORE/THERE IS NO SHORT FALL OF NET PROFIT IN THE NET PROFIT AS PER RETURN OF INCOME FILED AND THE LEARNED ASSESSING OFFICER HAS ERRED IN TAKING THE TOTAL INCOME AS PER THE RETURN OF INCOME FILED TO COMPARE WITH THE NET PROFIT AS PER PROVISIO NAL PROFIT AND LOSS ACCOUNT IMPOUNDED AT THE TIME OF SURVEY PROCEEDINGS. THE SAID PROVISIONAL PROFIT AND LOSS ACCOUNT IS EXTRACTED FROM THE REGULAR BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 11.3. COUNTER COMMENTS OF THE ASSESSING OFFICER: IN THE PRES ENT CASE, THE DETAILS FILED BY WAY OF ADDITIONAL EVIDENCE AND THE SUBMISSIONS MADE BY THE ASSESSEE DURING THE REMAND PROCEEDINGS ARE CONSIDERED AND TAKEN ON RECORD AND THEREFORE, THE EXPLANATION OF THE ASSESSEE ON THE SAID IMPOUNDED PAPER IS TAKEN ON RECOR D AND THE DIFFERENCE OF RS. 8,35,871/ - IS THUS EXPLAINED. CONSIDERING THE ABOVE FACTS, THIS GROUND OF APPEAL OF THE ASSESSEE MAY BE DECIDED ON MERITS. 17.1. FROM THE PERUSAL OF THE AFORESAID REMAND REPORT, IT COULD BE SAFELY CONCLUDED THAT THE LD. AO HAD NOT DRAWN ANY ADVERSE INFERENCE AGAINST THE EXPLANATIONS GIVEN BY THE ASSESSEE IN THE REMAND PROCEEDINGS. HENCE, IT COULD BE SAFELY CONCLUDED THAT THE LD. AO HAD INDEED ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE IN THE REMAND REPORT. MOREOVER, WHEN THE L D CITA GRANTS RELIEF ON THE GROUND THAT IN REMAND REPORT, THE LD AO ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 37 HAD ACCEPTED TO THE CONTENTIONS OF THE ASSESSEE, THE REVENUE OUGHT NOT TO HAVE PREFERRED FURTHER APPEAL BEFORE US AS THERE COULD NOT BE ANY LOGICAL GRIEVANCE FOR THE REVENUE. RELIANCE IN THIS REGARD HAS BEEN RIGHTLY PLACED BY THE LD AR ON THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF B JAYALAKSHMI VS ACIT REPORTED IN 407 ITR 212 (MAD). ACCORDINGLY, THE GROUND NO.5 RAISED BY THE REVENUE IS DISMISSED. 18. THE GROUND NO.6 & 7 RAI SED BY THE REVENUE ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 19. IN THE RESULT, APPEAL OF THE REVENUE IN ITA NO.5506/MUM/2018 IS DISMISSED. 20. TO SUM UP: ITA NO. APPEAL BY AY RESULT 5505/MUM/2018 REVENUE APPEAL 2010 - 11 DISM ISSED 6708/MUM/2018 REVENUE APPEAL (PENALTY) 2010 - 11 DISMISSED 5980/MUM/2018 ASSESSEE APPEAL (PENALTY) 2010 - 11 ALLOWED 5506/MUM/2018 REVENUE APPEAL 2013 - 14 DISMISSED ORDER PRONOUNCED ON 24 / 03 /202 1 BY WAY OF PROPER MENTIONING IN THE NOTICE BOARD. SD/ - ( JUSTICE P P BHATT ) SD/ - (M.BALAGANESH) PRESIDENT ACCOUNTANT MEMBER MUMBAI ; DATED 24 / 03 / 2021 KARUNA , SR.PS ITA NOS.5505/MUM/2208 AND OTHER APPEALS SHRI PRAVIN VIRAM SATRA 38 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//