VELJI DHARMSHI VAVIA, NAVI MUMBAI V. ACIT CC 1, THANE

ITA 5714/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0056 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2008-2009
• Appeal Filed On: 17-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S PADMAJA
• Assessee Lawyers: HARI S RAHEJA
• Keywords: Unexplained expenditure; Search and seizure; Loose papers
• Section: 133A

Judgement Text

, F , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM & SHRI SANDEEP GOSAIN, JM ITA NO.5714/MUM/2013 : ASST.YEAR 2008-2009 SHRI VELJI DHARMSHI VAVIA B-200, ARENJA CORNER, PLOT NO.71, SECTOR 17, VASHI NAVI MUMBAI 400 703. PAN : ABSPV8228Q. / VS. ASST.COMMISSIONER OF INCOME - TAX CENTRAL CIRCLE 1 THANE. ( / APPELLANT) ( / RESPONDENT) /APPELLANT BY : SHRI HARI S.RAHEJA /RESPONDENT BY : MS.S.PADMAJA / DATE OF HEARING : 09.08.2017 / DATE OF PRONOUNCEMENT : 22..08.2017 / O R D E R PER SHAMIM YAHYA, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST ORDER OF LEARNED CIT(A) DATED 08.07.2013 AND PERTAINS TO ASSESSMENT YEAR 2008-2009. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW THE LD.CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.46,60,000/- ON ACCOUNT OF UNACCOUNTED EXPENDITURE MADE BY THE A.O. ON THE GROUND OR GROUNDS AS CONTAINED IN THE ASSESSMENT ORDER OR OTHERWISE. 2. THE APPELLANT CRAVE LEAVES TO ADD, AMEND, ALTER, MODIFY AND OR WITHDRAW ANY OF THE ABOVE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEARING. ITA NO.5714/MUM/2013. SHRI VELJI DHARMSHI VAVIA. 2 3. THE ASSESSEE IN THIS CASE IS BUILDER AND DEVELOPER. A SEARCH AND SEIZURE ACTION IN PATEL GROUP OF CASES WAS CONDUCTED ON 17.01.2008. SURVEY PROCEEDINGS U/S 133A WERE ALSO CARRIED OUT SIMULTANEOUSLY IN BUSINESS PREMISES OF THE PATEL GROUP OF CASES. ONE OF THE CASE COVERED IN THIS GROUP WAS SHRI VELJI DHARAMSHI VAVIA. THE ASSESSING OFFICER HAS MENTIONED THAT DURING THE COURSE OF SEARCH / SURVEY ACTION, NUMBERS OF INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED / IMPUGNED. 4. THE A.O. FURTHER OBSERVED THAT DURING THE COURSE OF SEARCH AT THE RESIDENCE OF ASSESSEE, CERTAIN LOOSE PAPERS WERE FOUND AND SEIZED BY THE PARTY NO. BR-2. THE EXPLANATION OF THESE LOOSE PAPERS WERE CALLED FOR DURING THE COURSE OF ASSESSMENT PROCEEDING. ON PERUSAL OF THE SEIZED MATERIAL AND EXPLANATION FILED, THE FOLLOWING ENTRIES / NOTING FROM THE SEIZED MATERIAL WERE FOUND UNACCOUNTED: BUNDLE NO. PAGE NO. AMOUNT (RS.) 1 2 8,00,000 1 4 10,000 1 5 3,39,50,000 1 10 45,00,000 1 40 30,00,000 1 42 23,00,000 8 1 16,90,000 8 2 14,00,000 9 10 13,00,000 9 11 20,00,000 9 12 8,00,000 9 13 31,00,000 9 14 20,00,000 TOTAL 5,68,50,000 THE ASSESSEE WAS ASKED TO EXPLAIN AS TO WHY THE AFORESAID AMOUNT OF RS.5,68,50,000. ITA NO.5714/MUM/2013. SHRI VELJI DHARMSHI VAVIA. 3 5. BASED UPON ASSESSEES REPLY WITHOUT REFERENCE TO THE NOTING / CONTENTS IN THE SEIZED MATERIAL, THE ASSESSING OFFICER PROCEEDED TO ACCEPT THAT RS.2,43,79,400 WAS THE INCOME OF THE ASSESSEE. HE FURTHER ACCEPTED THE ASSESSEES SUBMISSION THAT A GOOD PORTION OF THE ABOVE LOOSE SHEET NOTING WAS EXPENDITURE OF THE ASSESSEE. THE EXPENDITURE OF THE ASSESSEE WAS COMPUTED AS UNDER:- PARA NO. AMOUNT (RS.) 7.1 7,29,400 7.2 10,000 7.3 1,16,00,000 7.4 45,00,000 7.5 30,00,000 7.8 & 7.9 92,00,000 TOTAL 2,90,39,400 6. THE ONLY DISPUTE IN THE PRESENT APPEAL RELATES TO THE TREATMENT OF RS.92,00,000 AS EXPENDITURE. IN THE ORIGINAL STATEMENT DURING SEARCH ASSESSEE HAD CLAIMED THAT THE SAME WAS EXPENDITURE. HOWEVER, SUBSEQUENTLY DURING THE POST SEARCH ENQUIRIES ASSESSEE FILED A LATTER ON 24.04.2009 WHEREIN IT WAS STATED THAT THE SAID SUM OF RS.92,00,000 WAS NOT PAYMENT BUT IT WAS AMOUNT RECEIVED AS INCOME IN LAND DEALING. 7. HOWEVER, DESPITE MAKING THE ADDITION IN INCOME AS WELL AS ACCEPTING THE EXPENDITURE AS PAYMENT TOTALLY BASED UPON ASSESSEES STATEMENT, THE A.O. PROCEEDED TO DISBELIEVE THE STATEMENT THAT THE SAID SUM OF RS.92 LAKH WAS NOT INCOME. HE HELD THAT THE SAME WAS ASSESSEES EXPENDITURE. THE A.O. PROCEEDED TO COMPUTE THE DIFFERENCE BETWEEN THE ASSESSEES CLAIM OF ITA NO.5714/MUM/2013. SHRI VELJI DHARMSHI VAVIA. 4 INCOME AND THE CLAIM OF EXPENDITURE. HE ALSO ADJUSTED THE CASH SEIZED AND MADE AN ADDITION OF RS.46,00,000 BY CONCLUDING AS UNDER:- AFTER CONSIDERING THE ASSESSEES CLAIM THAT UNACCOUNTED RECEIPTS HAVE BEEN UTILIZED FOR UNACCOUNTED PAYMENTS, UNACCOUNTED EXPENDITURES FOR THE YEAR UNDER CONSIDERATION WORKS OUT TO RS.2,90,39,400/- AGAINST WHICH IN THE RETURN OF INCOME THE ASSESSEE HAS OFFERED TO TAX ONLY RS.2,43,79,400/- (TOTAL DECLARATION OF RS.2,75,79,400/- LESS OFFERED ON ACCOUNT OF CASH SEIZED RS.32,00,000). HENCE, DIFFERENCE OF RS.46,60,000/- IS ADDED TO THE TOTAL INCOME BEING UNACCOUNTED EXPENDITURE. 8. AGAINST THE ABOVE ORDER, ASSESSEE APPEALED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) PROCEEDED TO AFFIRM THE ACTION OF THE ASSESSING OFFICER. HE ALSO NOTED THAT ASSESSEES EXPLANATION REGARDING RECEIPT OF INCOME WAS A MOTIVATED ONE JUST TO CIRCUMVENT THE TAX LIABILITY. 9. AGAINST THE ABOVE ORDER ASSESSEE IS IN APPEAL BEFORE US. 10. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE MATERIAL. WE FIND THAT AS PER THE SEIZED MATERIAL THERE WERE JOTTING TOTALING TO RS.5,68,50,000. ASSESSEES EXPLANATION OF SOME PART OF PAYMENT BEING INCOME AND SOME PART OF THE NOTING BEING EXPENDITURE WERE FULLY ACCEPTED EXCEPT THE ITEM UNDER CHALLENGE IN THIS APPEAL. IN ACCEPTING THE ASSESSEES STATEMENT NO CO- RELATION WHATSOEVER HAS BEEN DONE WITH THE CONTENTS OR NARRATION OF ENTRIES IN THE SEIZED MATERIAL. IN THESE CIRCUMSTANCES WHEN THE ENTIRE EXERCISE HAS BEEN DONE ON THE BASIS OF ASSESSEES STATEMENT, WE DO NOT FIND ANY REASON AS TO WHY THE ORIGINAL CLAIM OF EXPENDITURE IF THE SAME IS RETRACTED AND CLAIMED AS INCOME SHOULD HAVE BEEN DISBELIEVED. IT IS FURTHER NOT UNDERSTANDABLE AS TO HOW THE REVENUE WILL BE PREJUDICED IF A LOOSE SHEET ITA NO.5714/MUM/2013. SHRI VELJI DHARMSHI VAVIA. 5 JOTTING IS SUBSEQUENTLY CLAIMED AS INCOME BY THE ASSESSEE DESPITE THE ASSESSEES CLAIMING THE SAID AMOUNT ORIGINALLY AS EXPENDITURE AS THESE ARE JOTTINGS IN SEIZED MATERIAL OUTSIDE BOOKS. THE A.O. INSISTED UPON THAT THE SAME IS EXPENDITURE WITHOUT REFERENCE TO ANY COGENT MATERIAL AND THEREAFTER WENT ON TO FIND THE DIFFERENCE BETWEEN TOTAL INCOME AND EXPENDITURE CLAIMED AND MADE AN ADDITION OF RS.46 LAKH BEING THE DIFFERENTIAL AMOUNT. IN OUR CONSIDERED OPINION THE ADDITION IS BASED UPON SURMISES AND CONJECTURE AND THE SAME IS NOT SUSTAINABLE IN LAW IN THE BACKGROUND OF THE FACTS THAT A.O. HAS ACCEPTED ALL OTHER STATEMENT OF THE ASSESSEE. HENCE, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.46,00,000. 11. IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED ON THIS 22 ND DAY OF AUGUST, 2017. SD/- SD/- ( SANDEEP GOSAIN ) ( SHAMIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED : 22 ND AUGUST, 2017. DEVDAS* / COPY OF THE ORDER FORWARDED TO : / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT, MUMBAI. 4. / CIT(A), MUMBAI 5. , , / DR, ITAT, MUMBAI 6. [ / GUARD FILE.