ITO 15(3)(3), MUMBAI V. FAIRDEAL CONSTRUCTION CO., MUMBAI

ITA 5745/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1451 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 18-05-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 12-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: M P MAKHIJA
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, F, MUMBAI BEFORE SHRI R V EASWAR, PRESIDENT AND SHRI A L GEHLOT, ACCOUNTANT MEMBER I T A NO: 5659/MUM/2008 (ASSESSMENT YEAR: 2005-06) M/S FAIRDEAL CONSTRUCTION COMPANY, MUMBAI APPELL ANT (PAN: AABFF1884E) VS INCOME TAX OFFICER 15(3)(3), MUMBAI RESPONDENT I T A NO: 5745/MUM/2008 (ASSESSMENT YEAR: 2005-06) INCOME TAX OFFICER 15(3)(3), MUMBAI APPELLANT VS M/S FAIRDEAL CONSTRUCTION COMPANY, MUMBAI RESPON DENT ASSESSEE BY: SHRI M P MAKHIJA REVENUE BY: SHRI VIRENDRA OJHA O R D E R R V EASWAR, PRESIDENT: THESE ARE CROSS APPEALS RELATING TO THE ASSESSMENT YEAR 2005- 06. THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE CONSTRUCTION AND DEVELOPMENT OF PROPERTY. THE APPEALS ARISE OUT OF THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961, ON 27.12.2007. 2. WHILE COMPLETING THE ASSESSMENT THE ASSESSING OF FICER NOTED THAT THERE WERE CASH CREDITS IN THE NAMES OF FIFTEE N PARTIES IN THE ASSESSEES BOOKS OF ACCOUNT. HE THEREFORE CALLED U PON THE ASSESSEE TO PRODUCE THE PARTIES. IT WAS THE ASSESSEES EXPL ANATION THAT THE ITA NO: 5659 & 5745/MUM/2008 2 AMOUNTS WERE RECEIVED FOR BOOKING FLATS / SHOPS. T HE ASSESSEE COULD PRODUCE ONLY TWO PERSONS. THE ASSESSING OFFICER EX AMINED THESE TWO PERSONS BUT FOUND THAT THEY WERE NOT MEN OF SUBSTAN CE. SHRI NAVIN BHANUSHALI WAS FOUND TO BE A PERSON STAYING AT VITH ALWADI IN A CHAWL HAVING A TOTAL INCOME OF ONLY RS.82,294/-. HIS FAM ILY CONSISTED OF NINE MEMBERS WHO WERE DOING SMALL TIME LABOUR JOBS. THE ASSESSING OFFICER OBSERVED THAT IT WAS UNBELIEVABLE THAT SUCH A PERSON CAN BOOK THREE FLATS WORTH RS.27.00 LAKHS IN POWAI AREA. TH E OTHER PERSON, SHRI JUNED JADA HAD PAID RS.2.00 LAKHS TO THE ASSESSEE. HE STATED THAT HE HAD PAID THE AMOUNT IN CASH BUT WHEN THE BUILDER PR ESSURIZED HIM FOR PAYMENT OF THE BALANCE, HE CANCELLED THE BOOKING AN D GOT BACK THE CASH. THE ASSESSING OFFICER FOUND IT DIFFICULT TO BELIEVE THAT SHRI JUNED JADA WAS CAPABLE OF ADVANCING RS.2.00 LAKHS. THERE WERE LETTERS FROM THREE OTHER CREDITORS, ALL OF WHOM TOOK THE LINE TH AT THEY PAID THE MONEY IN CASH TO THE ASSESSEE AND WHEN THEY COULD NOT ARR ANGE FOR THE BALANCE PAYMENT, THEY CANCELLED THE BOOKING AND TOO K THE MONEY BACK THROUGH BEARER CHEQUE. THE ASSESSING OFFICER WAS O F THE VIEW THAT ALL THE PERSONS WHO CLAIMED TO HAVE ADVANCED THE MONIES TO THE ASSESSEE WERE NOT PERSONS OF MEANS AND THAT THEY CO ULD NOT HAVE ADVANCED THE MONIES TO THE ASSESSEE. HE FURTHER NO TED THAT THE ASSESSEE HAD OBTAINED COMMENCEMENT CERTIFICATE FROM THE MUMBAI MUNICIPAL AUTHORITY ONLY ON 17.12.2004 AND ONLY THE REAFTER THE WORK COULD HAVE STARTED. HE THEREFORE HELD THAT THE CAS H CREDITS WERE BOGUS AND TREATED THE AGGREGATE AS THE ASSESSEES UNEXPLA INED INCOME ITA NO: 5659 & 5745/MUM/2008 3 UNDER SECTION 68 OF THE ACT. THE ACTUAL ADDITION C AME TO RS.62,25,000/-. 3. ON APPEAL THE CIT(A) EXAMINED THE CREDITS ITEM B Y ITEM AND ACCEPTED THE ASSESSEES CONTENTION WITH REGARD TO T EN PARTIES WHO HAD ADVANCED AN AGGREGATE OF RS.43,75,000/- TO THE ASSE SSEE. AS REGARDS THE BALANCE OF RS.18,50,000/- ADVANCED BY FOUR PART IES, HE REJECTED THE ASSESSEES CONTENTIONS AND UPHELD THE ADDITION. BEFORE TAKING A DECISION, THE CIT(A) ALSO OBTAINED A REMAND REPORT FROM THE ASSESSING OFFICER. 4. BOTH THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL BEFORE THE TRIBUNAL. WE HAVE CAREFULLY CONSIDERED THE FAC TS AND THE RIVAL CONTENTIONS. IT IS NOT IN DISPUTE THAT THE ASSESSE E WAS ENGAGED IN THE CONSTRUCTION OF PROPERTIES. THE ASSESSEE HAS ALSO NOT DISPUTED THAT ALL THE MONIES WERE TAKEN IN CASH AND WERE REPAID BY BE ARER CHEQUES. THE FACTS RELATING TO ALL THE CREDITS ARE MORE OR L ESS SIMILAR. THE PARTIES WERE ALL RESIDING IN PLACES OUTSIDE MUMBAI AND THEY WERE NOT AFFLUENT PERSONS IN ORDER TO BE ABLE TO BOOK FLATS IN POWAI AREA. SOME OF THEM STATED THAT THEY ADVANCED THE MONIES OUT OF THEIR M EAGER EARNINGS AND SOME OF THEM HAVE STATED THAT THEY COLLECTED THE MO NIES FROM THEIR CLOSE FAMILY MEMBERS AND MUSTERED THE REQUISITE MON EY TO BOOK THE FLAT BY PAYING THE INITIAL AMOUNT. SOME OF THE CRE DITORS HAD ALSO FILED COPIES OF THEIR INCOME TAX RETURNS SHOWING SOME INC OME AND ALSO SHOWING THE AMOUNTS ADVANCED TO THE ASSESSEE. MANY OF THE CREDITORS HAD STATED THAT THEY WERE AGRICULTURISTS IN GUJARAT PRODUCING MAKAI, BAJRI, MOONGFALI, ETC. AND THE AMOUNTS ADVAN CED WERE OUT OF ITA NO: 5659 & 5745/MUM/2008 4 THE AGRICULTURAL INCOME. THE CIT(A) HAS MADE A DIS TINCTION BETWEEN MONIES ADVANCED BY A CREDITOR ALL BY HIMSELF AND MO NIES ADVANCED BY HIM AFTER COLLECTING FUNDS FROM HIS CLOSE RELATIVES . HE HAS EXAMINED EACH CREDIT AND HAS ALSO GIVEN SOME WEIGHTAGE TO CA SES WHERE THERE WAS SOME AGRICULTURAL INCOME. A PERUSAL OF THE REM AND REPORT OF THE ASSESSING OFFICER SUBMITTED BEFORE THE CIT(A) [PAGE S 31 AND 32 OF THE PAPER BOOK] SHOWS THAT SOME OF THE PARTIES WHO WERE STAYING IN GUJARAT AND RAJASTHAN HAVE RECEIVED THE SUMMONS ISS UED BY THE ASSESSING OFFICER AND SIX PERSONS HAVE ALSO FILED E XTRACTS OF 7/12 TO SHOW THEIR LAND HOLDINGS. ALL THESE FACTS HAVE BEE N DULY TAKEN INTO CONSIDERATION BY THE CIT(A) AND HE HAS EXAMINED EAC H AND EVERY CREDIT ITEM BY ITEM. AFTER GOING THROUGH HIS ORDER , WE ARE OF THE OPINION THAT THE CIT(A) HAS TAKEN A DECISION BASED ON THE E VIDENCE ADDUCED BEFORE HIM IN RESPECT OF EACH CREDIT. THE PARTIES HAVE RELIED ON THE SAME EVIDENCE EVEN BEFORE US. HOWEVER, THEY HAVE N OT BEEN ABLE TO POINT OUT ANY SERIOUS INFIRMITY IN THE MANNER IN WH ICH THE EVIDENCE WAS APPRECIATED BY THE CIT(A). IN THIS VIEW OF THE MAT TER, WE HOLD THAT THE ORDER OF THE CIT(A) DESERVES TO BE CONFIRMED. WE D O SO AND DISMISS THE APPEALS FILED BOTH BY THE ASSESSEE AS WELL AS T HE DEPARTMENT. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH JUNE 2010. SD/- SD/- (A L GEHLOT) (R V EASWAR) ACCOUNTANT MEMBER PRESIDENT MUMBAI, DATED 18 TH JUNE 2010 SALDANHA ITA NO: 5659 & 5745/MUM/2008 5 COPY TO: 1. M/S FAIRDEAL CONSTRUCTION COMPANY 6, MEHAR HOMES, NEXT TO KOHINOOR APARTMENTS NEAR JOGESHWARI STATION, JOGESHWARI (WEST) MUMBAI 400 102 2. ITO 15(3)(3) 3. CIT-15 4. CIT(A)-XV 5. DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI