HARSHA LAND P.LTD, URAN V. ITO 10(3)(2), MUMBAI

ITA 5666/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8506 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-12-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN LD
• Assessee Lawyers: MADHUR AGARWALLD
• Keywords: Unexplained investment; Unexplained expenditure; Search and seizure; Loose papers; Reassessment proceedings
• Section: 69C; 143(3); 32; 147; 132

Judgement Text

ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO. 5666/MUM/2015 ( / ASSESSMENT YEAR: 2009-10) HARSHA LAND PRIVATE LIMITED OFFICE NO.D-416, 7 TH FLOOR PLOT NO. 6, SECTOR-11 DRONAGIRI, TAL URAN 400 702 / VS. INCOME TAX OFFICER 10(3)(2) AAYKAR BHAVAN MUMBAI 400 020 ./ ./PAN/GIR NO. AABCH-9709-F ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) A SSESSEE BY : MADHUR AGARWAL,LD.AR RE VENUE BY : T.A.KHAN, LD.DR / DATE OF HEARING : 03/10/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2009-10 ASSAILS THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 2 (APPEALS)- 24 [CIT(A)], MUMBAI, APPEAL NO. CIT(A)-22/ITO-10(3)(2)/IT 157/2013-14 DATED 28/10/2015. THE ASSESSMENT FOR THE IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER-10(3)(2), MUMBAI [AO] U/S 14 3(3) READ WITH SECTION 147 ON 30/03/2013. THE ASSESSEE HAS RAISED 8 GROUNDS IN ALL OUT OF WHICH GROUND NUMBERS 1 & 2 AR E NOT PRESSED AND GROUND NUMBERS 7 & 8 IS CONSEQUENTIAL AND GENERAL I N NATURE. GROUND NUMBERS 4 TO 6 ARE SUPPORTIVE OF MAIN GROUND NO.3. THE ONLY EFFECTIVE GROUND NO. 3 READS AS FOLLOWS:- 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A), ERRED IN CONFIRMING THE ADDITION ON ACCOUNT OF ALLE GED UNEXPLAINED EXPENDITURE IN LANDS U/S.69C OF THE ACT, IGNORING T HE EXPLANATION OF SEIZED MATERIAL AND APPELLANTS RELIANCE OF VARIOUS DECISI ONS. IT IS PRAYED THAT THE ADDITION ON ACCOUNT OF ALLEGED UNEXPLAINED EXPENDIT URE OF RS.1,01,25,000/- MAY BE DELETED. 2.1 FACTS IN BRIEF ARE THAT THE ASSESSE BEING RESIDENT CORPORATE ASSESSEE ENGAGED AS BUILDER AND DEVELOPER WAS SUBJECTED TO AN ASSESSMENT FOR IMPUGNED AY U/S 143(3) READ WITH SECTION 147 OF THE INCOME TAX ACT ON 30/03/2013 AT RS.101.20 LAKHS AS AGAINST RETURNED LOSS OF RS.4,188/- FILED BY THE ASSESSE ON 22/09/20 09. THE ASSESSEE HAS SUFFERED ADDITION U/S 69C FOR UNEXPLAINED INVESTMEN T AMOUNTING TO RS.101.25 LAKHS IN THE REASSESSMENT PROCEEDINGS AND THE SAME IS THE SOLE SUBJECT MATTER OF THIS APPEAL. 2.2 PURSUANT TO SEARCH AND SEIZURE OPERATIONS U/S 1 32 ON 05/03/2009 IN THE CASE OF JAI CORP GROUP OF COMPANIES, ITS ASS OCIATED PERSONS, EMPLOYEES AND CLOSE ASSOCIATES, CERTAIN INCRIMINATI NG EVIDENCES AND DOCUMENTS WERE FOUND AND SEIZED AND THE SAME ALSO C ONTAINED CERTAIN INFORMATION ABOUT ASSESSEES DEALINGS. SUBSEQUENTLY , THE CASE OF THE ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 3 ASSESSEE WAS SUBJECTED TO REASSESSMENT PROCEEDINGS UPON RECEIPT OF INFORMATION FROM DCIT CC 39 VIDE LETTER NO. DCIT/CC-39/LAND COMP./JAI CORP GROUP/2011-12 DATED 02/02/2012. 2.3 IT WAS NOTED THAT THE SAID GROUP WAS PARTNER IN TWO MAJOR UPCOMING SPECIAL ECONOMIC ZONES OF INDIA BEING DEVELOPED IN THE VICINITY OF MUMBAI, NAMELY NAVI MUMBAI SPECIAL ECONOMIC ZONE [NMSEZ] AND MUMBAI SPECIAL ECONOMIC ZONE [MSEZ] . THE GROUP HAD PURCHASED HUGE CHUNKS OF LAND IN THE VICINITY OF THESE SEZS W ITH AN OBJECTIVE TO DEVELOP TOWNSHIP IN THESE AREAS ANTICIPATING POTENT IAL PRICE RISE AND GOOD RETURN. THIS GROUPS REAL ESTATE OPERATIONS WE RE BEING HANDLED MAINLY BY VIRENDRA JAIN, GAURAV JAIN AND DILIP DHERAI . AS PER EVIDENCES GATHERED DURING SEARCH, DILIP DHERAI WAS FOUND TO BE MANAGING AND HANDLING THE ENTIRE LAND ACQUISITION OPERATIONS FOR MSEZ AND OUTSIDE MSEZ WHICH WAS POPULARLY KNOWN AS OMSEZ . THE LAND OUTSIDE MSEZ WAS PURCHASED IN THE NAME OF NUMEROUS PRIVATE LIMIT ED COMPANIES NUMBERING MORE THAN ONE HUNDRED WHICH WERE CALLED A S LAND COMPANIES BY THE GROUP. THE ASSESSEE WAS ONE OF SUCH LAND COM PANIES FOR WHICH LAND OUTSIDE MSEZ WAS ACQUIRED. 2.4 UPON PERUSAL OF PAGE NO. 22 & 23 OF LOOSE PAPER FOLDERS REFERRED TO AS ANNEXURE-1 SEIZED FROM DILIP DHERAI, IT WAS FOUND THAT THE ASSESSEE MADE UNACCOUNTED CASH PAYMENT TOWARDS ACQU ISITION OF LAND IN VANGNI TT VILLAGE . THE ASSESSEES PROPORTIONATE AMOUNT OF CASH PAID WAS RS. 101.25 LACS WHICH WAS ADDED TO THE INCOME O F THE ASSESSEE AS UNEXPLAINED INVESTMENT U/S 69C. ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 4 3. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITHO UT ANY SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 28/10/2 015 WHERE THE APPEAL WAS DISMISSED BY MAKING FOLLOWING OBSERVATIO NS: 2.4.25. I ALSO FIND THAT EXACTLY SAME ISSUE CAME UP FOR ADJUDICATION BEFORE THE THEN LD. CIT(A)-41, MUMBAI IN THE CASE OF ONE OF THE BEN EFICIARIES VIZ.HITA LAND PVT.LTD. IN APPEAL NO. CIT(A)-41/DCCC-39/IT-638/10-11 WHERE VIDE ORDER DATED 28.10.2011, THE ASSESSEES GROUNDS OF APPEAL OF SIMILAR NATURE WERE DISMISSED. FURTHER, IN YET ANOTHER CASE OF THIS GROUP NAMELY M/S EKDANTA LAND PVT.LTD., THE MATTER CAME UP FOR ADJUDICATION BEFORE LD. CIT(A)-2, THANE AND ON SAME SET OF FACTS, APPELLANTS GROUNDS OF APPEAL WERE DISMISSED. I FIND LOT OF PER VASIVE VALUE IN THE ABOVE TWO ORDERS WHERE THE SAME LOOSE PAPERS WERE TAKEN INTO CONSIDERATION FOR FRAMING THE ASSESSMENTS AND WHICH CAME TO BE CONFIRMED BY THE R ESPECTIVE LD. CIT(A) REFERRED TO ABOVE. 2.4.26. FACTS AND CIRCUMSTANCES OF THE PRESENT CAS E ARE COVERED BY THE DECISIONS OF HONBLE DELHI HIGH COURT (SUPRA) BECAUSE IN THE PRESENT CASE, IT IS CONFIRMED BY THE LAND OWNER ALSO THAT THEY HAVE RECEIVED CASH PA YMENT WHICH WAS DULY DECLARED IN THE RETURN OF INCOME AND PAID TAXES ACCORDINGLY. ALTHOUGH, THE SEARCH AND SURVEY WAS CONDUCTED ONLY IN TWO CASES OF M/S. PATHIK CONS TRUCTIONS AND SHRI SUNIL GULATI, THEY HAVE CONFIRMED THAT CASH PAYMENTS HAVE BEEN RE CEIVED FROM THE APPELLANT COMPANY OVER AND ABOVE THE CHEQUE PAYMENTS DECLARED IN THEIR BOOKS OF ACCOUNT. SINCE THE LD. AR OF THE APPELLANT HAS FAILED TO SUB MIT ANY DOCUMENTARY EVIDENCE TO REBUT THE ENTRIES OF SEIZED PAPERS AND STATEMENT RE CORDED DURING THE COURSE OF SEARCH OF SHRI DILIP DHERAI, THEREFORE, THE ADDITIO N MADE BY THE LD. AO OF RS.1,01,25,000/- U/S 69C OF THE I.T.ACT IS UPHELD A ND THE GROUNDS OF APPEAL NO.(C) & (D) ARE DISMISSED. AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR], AT THE OUTSET , SUBMITTED THAT IDENTICAL ADDITIONS WERE MADE IN THE CASE OF SEVERA L OTHER ENTITIES. HOWEVER, ALL THESE ADDITIONS HAVE BEEN DELETED BY T HIS TRIBUNAL ON MERITS WHICH HAS SINCE BEEN CONFIRMED BY HONBLE BO MBAY HIGH COURT AND HENCE, THE ADDITION COULD NOT BE SUSTAINED. THE COPIES OF THE RELEVANT ORDERS OF THE TRIBUNAL AND BOMBAY HIGH COU RT HAVE BEEN PLACED BEFORE US. PER CONTRA, LD. DR ALTHOUGH PLACED RELIANCE ON THE STAND OF LOWER AUTHORITIES BUT COULD NOT CONTROVERT THE FACTUAL SITUATION. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED THE RELEVANT MATERIAL ON RECORD. AFTER GOING THROUGH TH E DOCUMENTS, WE FIND THAT THE IMPUGNED ADDITIONS HAVE BEEN DELETED AND T HE ISSUE STAND ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 5 SQUARELY COVERED IN ASSESSEES FAVOR BY FOLLOWING J UDICIAL PRONOUNCEMENTS:- 1. AVKASH LAND REALTY PRIVATE LIMITED VS. DCIT & OT HERS [ITA NOS. 8237/MUM/2011 & OTHERS, ORDER DATED 22/03/2013] AGA INST WHICH REVENUES APPEALS TITLED AS CIT VS. LAVANYA LAND PRIVATE LIMI TED [ITA NO. 72 OF 2014 AND OTHERS] HAS BEEN DISMISSED BY HONBLE BOMBAY HI GH COURT VIDE JUDGMENT DATED 23/06/2017] 2. TIMBLE REALTY PRIVATE LIMITED VS. ITO & OTHERS [ ITA NOS. 5664/MUM/2015 & OTHERS, ORDER DATED 27/10/2016] THE OPERATIVE PART OF THE ORDER OF THE TRIBUNAL IN ITA NO. 8237/MUM/2011 IS REPRODUCED BELOW:- 24. OUR VIEW IS FORTIFIED BY THE DECISION OF THE DE LHI HIGH COURT IN THE CASE OF MALIK BROTHERS PVT.LTD. VS CIT 162 TAXMANN 43 WHICH IS RELIED UPON BY THE LD. DR. IN THAT CASE, THE ASSESSE PURCHASED THE PROPERTY ALLEG EDLY FOR RS.6 LAKHS. THE VENDOR IN HER STATEMENT CONFIRMED THAT THE SALE CONSIDERAT ION OF SAID PROPERTY WAS RS.45 LAKHS AND PAID TAX THEREON. IN VIEW OF VENDORS STA TEMENT, THE AO MADE AN ADDITION OF RS.39 LAKHS TO THE INCOME OF THE ASSESSEE TOWARD S UNEXPLAINED INVESTMENT. THE ACTION OF THE AO WAS JUSTIFIED AND THE ADDITIONS WE RE CONFIRMED. THUS IN VIEW OF THE AFORESAID DECISION, IN THE PRESENT CASE, ONE OF THE SELLERS HAVE BEEN EXAMINED BY THE AO TO STRENGTHEN HIS VIEWS THAT CASH HAS BEEN P AID OVER AND ABOVE THE REGISTERED AMOUNT. THERE IS NOT EVEN A SINGLE DOCUM ENT/EVIDENCE OF PARTIES INVOLVED IN THE SALE OF LAND AT DIFFERENT VILLAGES BROUGHT O N RECORD TO SHOW THAT AN AMOUNT OTHER THAN THE PAYMENT OF CONSIDERATION HAS EXCHAN GED HANDS. NO CONFESSION FROM THE SELLERS HAVE BEEN BROUGHT ON RECORD. THE ENTIRE ADDITIONS HAVE BEEN MADE MERELY ON THE STRENGTH OF LOOSE PAPERS FOUND DURING THE COURSE OF THE SEARCH NOT SUPPORTED BY ANY INDEPENDENT AUTHORITY. CONSIDERING THE ENTIRE ADDITION, IN THE LIGHT OF THE PROVISIONS OF SEC. 69C, AS PER A.OS OWN INT ERPRETATION, INVESTMENTS IN PURCHASE OF LAND HAVE BEEN FULLY FINANCED BY SOME O THER PERSONS, THEREFORE, THE ADDITION IN THE HANDS OF THE ASSESSE CANNOT BE JUST IFIED AS THE ASSESSE HAS NOT INCURRED ANY EXPENDITURE. THERE MAY BE ONE MORE POS SIBILITY THAT THE PERSONS WHO WERE DOING LAND PURCHASE MIGHT HAVE INFLATED THE SA LE PRICE IN THESE LOOSE SHEETS JUST TO EXTRACT MONIES FROM THEIR HIGHER AUTHORITIE S IN THE GUISE OF ON-MONEY TO BE PAID TO THE VENDORS. MAY BE BECAUSE OF HIS POSSIBIL ITY NO DOCUMENTS WERE FOUND TO SHOW THAT THE MONEY ACTUALLY CHANGED HANDS. 25. A PERUSAL OF THE BALANCE SHEET OF THE ASSESSE S HOW THAT THE AUTHORIZED, ISSUED AND SUBSCRIBED PAID UP CAPITAL IS AT RS.ONE LAKH AN D THE ASSESSE HAD NOT DONE ANY BUSINESS DURING THE YEAR UNDER CONSIDERATION. WITH SUCH A SMALL CORPUS AND NO BUSINESS ACTIVITY, NOR ANY HAS BEEN BROUGHT ON RECO RD BY THE REVENUE, IT IS NOT ACCEPTABLE THAT THE COMPANY MAY HAVE INCURRED SUCH HUGE EXPENDITURE OUTSIDE ITS BOOKS OF ACCOUNT. FURTHER IN HIS ENTIRE ASSESSMENT ORDER, THE AO HIMSELF HAS POINTED OUT TIME AND AGAIN DIFFERENT PERSONS, WHO A RE ALLEGED, TO HAVE MADE CASH PAYMENTS. EVEN ON THAT COUNT, THE ADDITIONS CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSE. IN OUR CONSIDERATE VIEW, THERE BEING NO EV IDENCE TO SUPPORT THE REVENUES CASE THAT A HUGE FIGURE WHATEVER BE ITS QUANTUM , O VER AND ABOVE THE FIGURE BOOKED IN THE RECORDS AND ACCOUNTS CHANGED HANDS BETWEEN T HE PARTIES NO ADDITION COULD THEREFORE BE MADE U/S.69C OF THE ACT TO THE INCOME OF THE ASSESSE. CONSIDERING THE ITA NO.5666/M/2015 HARSHA LAND PRIVATE LIMITED ASSESSMENT YEAR 2009-10 6 ENTIRE FACTS BROUGHT ON RECORD, WE HAVE NO HESITATI ON TO HOLD THAT EVEN ON MERITS, NO ADDITION COULD BE SUSTAINED. FURTHER, THE APPEAL OF THE REVENUE AGAINST THE ABOV E ORDER OF THE TRIBUNAL HAS BEEN DISMISSED BY HONBLE BOMBAY HIGH COURT. WE ARE ALSO OF THE CONSIDERED OPINION THAT ADDITIONS COULD NOT BE MADE MERELY ON THE BASIS OF ENTRIES IN LOOSE PAPERS WITHOUT BRI NGING ON RECORD ANY COGENT MATERIAL TO SUBSTANTIATE THE SAME AND FURTHE R ADDITIONS COULD NOT BE MADE MERELY ON THE BASIS OF DOUBTS, CONJECTURES OR SURMISES. HENCE, RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE DELE TE THE IMPUGNED ADDITIONS AND ALLOW ASSESSEES GROUND OF APPEAL. 6. RESULTANTLY THE ASSESSEES APPEAL STANDS PARTLY ALLOWED IN TERMS OF OVER ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11 .2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. #&- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI