NRS DEVELOPERS, MUMBAI V. DCIT CC 6(4), MUMBAI

ITA 5910/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4880 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 15-10-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJEEV HARIT
• Keywords: Sale consideration of property below Jantri Value; Business income; Corroborative evidences; Retraction; Set aside
• Section: 15; 50C; 201; 22; 153C; 20

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAMLAL NEGI ( J M) I.T.A. NO. 5910/MUM/2018 (ASSESSMENT YEAR 2015 - 16) I.T.A. NO. 5911 /MUM/ 2018 (ASSESSMENT YEAR 20 16 - 17 ) NRS DEVELOPERS B - 1120, PANCHSHEEL PLAZA, HUGHES ROAD MUMBAI - 400 007. PAN : AAAFS6364F V S . DCIT CC - 6(4) 1925, 19 TH FLOOR AIR INDIA BUILDING NARIMAN POINT MUMBAI - 400 021. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SANJIV M. SHAH DEPARTMENT BY DR.RAJEEV HARIT DATE OF HEARING 20.03 . 2 01 9 DATE OF PRONOUNCEMENT 22 . 0 5 . 201 9 O R D E R PER SHAMIM YAHYA (AM) : THESE ARE APPEALS BY THE ASSESSEE DIRECTED AGAINST THE RESPECTIVE ORDER OF LEARNED CIT(A) FOR CONCERNED ASSESSMENT YEARS. SINCE ISSUE S ARE CONNECTED AND APPEALS WERE HEARD TOG ETHER, THEY ARE CONSOLIDATED FOR THE SAKE OF CONVENIENCE. 2. ONE ISSUE RAISED IN ASSESSEES APPEAL FOR A.Y. 2015 - 16 IS THAT LEARNED CIT(A) ERRED IN APPROVING ASSUMPTION OF JURISDICTION BY THE ASSESSING OFFICER FOR MAKING ASSESSMENT U/S.153C OF THE I.T. A CT. 3. BRIEF FACTS ARE THAT THERE WAS A SEARCH ACTION CARRIED OUT IN THE CASE OF M/S. RAJESH LIFE S PACES GROUP (RLS) ON 10.3.2016. D URING THE COURSE OF SEARCH, CERTAIN LO SE PAPERS, DOCUMENTS WERE SEIZED ON T HE BASIS OF WHICH NOTICE U/S. 15 3C W AS ISSUED T O NRC DEVELOPERS ( ASSESSEE ) . DURING THE COURSE OF SEARCH MR. VISHAL DOSHI, VICE PRESIDENT (SALES AND MARKETING) OF M/S. RAJESH LIFE S PACES GROUP IN HIS STATEMENT RECORDED U/S. 132(4) HAS ACCEPTED RECEIPT OF ON MONEY ON SALE OF SOME UNITS OF FLATS BELONGING TO THE ASSESSEE NRS DEVELOPERS 2 FIRM PROJECT 92 BELLEVENUE . ASSESSEE HAS CHALLENGED BEFORE LEARNED CIT(A) THAT NO SEARCH WAS CONDUCTED UPON THE ASSESSEE AND MATERIAL FOUND IN SEARCH FROM M/S. RAJESH LIFE S PACES (RLS) GROUP DID NOT BELONG OR PERTAIN TO THE ASSESSEE. IT WAS SUBMITTED THAT M/S. RAJESH LIFESPACES GROUP IS ONE OF THE SISTER CONCERNS WHICH IS THE PARTNER OF 1/3 RD OF THE SHARES IN THE ASSESSEE - FIRM. LEARNED CIT(A) HAS REJECTED THIS CONTENTION. HE OBSERVED THAT ON MONEY RECEIPT OF PAYMENT S FROM THE PROJECT 92 - BELLEVEUE WERE FOUND DURING THE COURSE OF SEARCH. HENCE HE STATED THAT THE ASSESSING OFFICER HAS ASSUMED PROPER JURISDICTION. HE REFERRED TO ADMISSION OF ON MONEY BY MR. VISHAL DOSHI, VP (SALES & MARKETING) HEAD OF GROUP. LEARNED CIT(A) HELD THAT THIS IS CLEARLY INCRIMINATING MATERIAL PERTAINING TO THE ASSESSEE. HE FURTHER REFERRED THAT LOSE SHEETS FOUND WITH MR. AMIT S H ETH EVIDENCING CASH TRANSACTIONS THE ASSESSEE HAD WITH GROUP CONCERN, ALSO CONSTITUTE INCRIMINATING MATERIAL. THEREFORE LEARNED CIT(A) UPH ELD THE VALIDITY OF JURISDICTION. AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. UPON CAREFUL CONSIDERATION, WE FIND THAT SECTION 153C MANDATES THAT UPON SEARCH CONDUCTED UPON A PERSON, IF CERTAIN INCRIMINATING MATERIAL RE LATING TO THIRD PERSON IS FOUND, T HE ASSESSING OFFICER OF THE THIRD PERSON IS ENTITLED TO ISSUE NOTICE TO HIM U/S. 153C UPON RECEIPT OF INFORMATION AND SATISFACTION THAT INCRIMINATING MATERIAL RELATING TO ASSESSEE HAS BEEN FOUND IN THAT SEARCH. NOW MATERIALS FOUND IN THAT SEARCH ARE STATEMENT U/S. 132(4) BY MR. VISHAL DOSHI, VP (SALES AND MARKETING) HEAD OF THE GROUP THAT HE HAS RECEIVED ON MONEY REGARDING PROJECT NAMED 92 - BELLLEVEUE, WHICH WAS ASSESSEES PROJECT. FURTHERM ORE, LOSE SHEETS PERTAINING TO CASH TRANSACTION OF THE ASSESSEE WITH ASSESSEE GROUP WAS FOUND. WE FIND THAT ALTHOUGH NO MENTION IS THERE REGARDING NATURE OF LOSE SHEETS PERTAINING TO CASH TRANSACTION, STATEMENT OF SHR VISHAL DOSHI DOES CONSTITUTE MATERIAL FOR ISSUE OF NOTICE TO THE ASSESSEE. HENCE IN OUR CONSIDERED OPINION LEARNED CIT(A) IS CORRECT IN UPHOLDING THAT JURISDICTION OF THE ASSESSING OFFICER TO ISSUE NOTICE U/S. 153C. ACCORDINGLY, NRS DEVELOPERS 3 ASSESSEE CHALLENG ED TO THE VALIDITY OF ASSESSING OFFICERS ASSUMP TION OF JURISDICTION U/S. 153C IS DISMISSED. 5. O NE COMMON ISSUE RAISED IN THESE APPEALS PERTAIN TO MERITS OF CONFIRMATION OF LEARNED CIT(A) OF THE AMOUNTS AS UNACCOUNTED BUSINESS INCOME. 6. AS REFERRED IN THE SEARCH MENTIONED IN AB OVE GROUND, SHRI VISHA L DOSHI, VP (MARKETING AND SALES) OF M/S. RAJESH LIFESPACES GROUP ADMITTED FL AT WISE DETAILS OF RECEIPT OF ON MONEY FOR FLATS BEING DEVELOPED BY THE ASSESSEE IN TH E PROJECT NAMED 92 BELLEVUE. C UMULATIVE AMOUNT OF ON MONEY IS SAID TO BE RECEIVED IS RS. 15 ,35,00,000/ - OUT OF WHICH RS. 12,95,00,000/ - WAS CLAIMED TO BE RECEIVED DURING A.Y. 2015 - 16 AND RS. 2,40,00,000/ - WERE RECEIVED DURING A.Y. 2016 - 17. THIS STATEMENT OF VISHAL DOSHI WAS CONFRONTED TO MR. RAJESH PATEL, GROUP HEAD OF M/S. RAJESH LIFESPACES GRO UP AND HE CONFIRMED THE SAME. FURTHER DURING THE COURSE OF SEARCH AT THE RESIDENCE OF MR. AMIT SHETH, CFO OF THE GROUP, CERTAIN LOSE PAPERS WERE FOUND AND SEIZED WHICH HAD ENTRIES OF CASH TRANSACTION OF THE ASSESSEE WITH OTHER ENTITIES OF M/S. RAJESH LIFE SPACES GROUP AMOUNTING TO RS. 1,00,02,500/ - . THE ASSESSING OFFICER HAD ISSUED SHOW - CAUSE NOTICE IN BOTH ASPECTS. THE ASSESSING OFFICER IN THE ASSESSMENT HAD FINALLY MADE ADDITION FOR THE ON MONEY RECEIPT FOR SUM OF RS. 12,95,00,000/ - AND RS. 2,40,00,000/ - FOR A.Y. 2016 - 17. THE ASSESSING OFFICER HAD REJECTED THE RETRACTION OF THE STATEMENT OF THESE PERSONS ON THE GROUND THAT RETRACTIONS ARE NOT SUPPORTED BY ANY MATERIAL EVIDENCE. THE ASSESSEES STATEMENT THAT NO ENTRY OF ON MONEY IN THE BOOKS WAS NOTED WAS A LSO REJECTED. THE ASSESSEE HAS ALSO GIVEN AFFIDAVITS FROM FLAT BUYERS WHO HAVE STATED THAT THEY HAVE NOT PAID ANY ON MONEY . THESE WERE A LSO REJECTED. LEARNED CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. HE REJECTED THE CONTENTION THAT RETRA CTION HAS BEEN DONE WITHIN FEW DAYS OF SEARCH. LEARNED CIT(A) OBSERVED THAT STATEMENT GIVEN UNDER O ATH HAS GOT EVIDENTIARY VALUE. HE OBSERVED THAT RETRACTION SHOULD HAVE SOME SUPPORTING EVIDENCE. NRS DEVELOPERS 4 SIMILARLY, HE HAS ALSO REJECTED THE AFFIDAVITS OF THE FLAT B UYERS. LEARNED CIT(A) ALSO DREW ADVERSE INFERENCE UPON THE FACT THAT M/S. RAJESH LIFESPACES GROUP H AS GONE TO SETTLEMENT COMMISSION WHERE ADMISSION OF ON MONEY HAS BEEN DONE. LEARNED CIT(A) ALSO REJECTED THE CONTENTION THAT NO EVIDENCE ANY ASSET ACCUMULATE D BY THE ASSESSEE OUTSIDE BOOKS WAS DETECTED IN AS MUCH AS HE FOUND THAT THIS WAS NOT POSSIBLE AS ASSESSEE HAS NOT BEEN SEARCHED. LEARNED CIT(A) WHILE CONCLUDING ALSO PLACED RELIANCE OF THE DECISION OF HON'BLE APEX COURT IN THE CASE OF SUMATI DAYAL (314 IT R 801) AND IN THE CASE OF DURGA PRASAD MORE (82 ITR 540). AGAINST THIS ORDER, ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT STATEMENT OF VISHAL DOSHI WHICH IS TH E BASIS OF ADDITION OF ON MONEY IS TOTALLY UNRELIABLE. HE SUBMITTED THAT SHRI VISHAL DOSHI IS NOT AN EMPLOYEE OF THE ASSESSEE. FURTHERMORE, HE SUBMITTED THAT SHRI VISHAL DOSHI HA S DULY RETRACTED HIS ADMISSION. LEARNED COUNSEL SUBMITTED THAT THE AUTHORITIES BELOW HA VE DISMISSED THE RETRACTION ON THE GROUND THAT THERE IS NO SUPPORTING FOR RETRACTION. IN THIS REGARD, LEARNED COUNSEL SUBMITTED THAT STATEMENT GIVEN B Y SHRI VISHAL DOSHI ALSO HAS NO SUPPORTING WHATSOEVER. HE SUBMITTED THAT WHEN THE STATEMENT GIVEN BY SHRI VISHAL DOSHI HAD NO BASIS OR EVIDENCE, NO ADVERSE INFERENCE CAN BE TAKEN AGAINST RETRACTION ON THE GROUND THAT IT IS NOT BASED UPON ANY EVIDENCE. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT ADDITION CANNOT BE MADE SIMPLY ON THE BASIS OF STATEME NT OF SHRI VISHAL DOSHI, WHO W AS NOT AN EMPLOYEE OF THE ASSESSEE AND WHICH HAS ALSO BEEN DULY RETRACTED. LEARNED COUNSEL FURTHER SUBMITTED THAT ASSESSEE HAS DULY GIVEN AFFIDAVIT FROM SEVERAL OF THE FLAT BUYERS FOR THE PROPOSITION THAT NO ON MONEY HAS BEEN PAID. HE SUBMITTED THAT WITHOUT ANY REASON WHATSOEVER THESE AFFIDAVITS BY THE FLAT BUYERS HAVE BEEN REJECTED. LEARNED COUNSEL FURTHER REFERRED THAT PRICE ON WHICH FLATS HAVE BEEN SOLD ARE WELL ABOVE THE STAMP DUTY RATE HENCE INFERENCE O F ON - MONEY RECEIPT I S NOT JUSTIFIED. LEARNED COUNSEL SUBMITTED THAT SETTLEMENT APPLICATION MADE BY RLS GROUP CANNOT BE A REASON TO TAKE ADVERSE INFERENCE NRS DEVELOPERS 5 AGAINST THE ASSESSEE . LEARNED COUNSEL REFERRED TO SEVERAL CASE LAWS FOR THE PROPOSITION THAT IN ABSENCE OF ANY CORROBORATI VE MATERIAL , ADDITION IS NOT PERMISSIBLE ONLY UPON STATEMENT OBTAINED U/S. 132(4) WHICH HAS BEEN DULY RETRACTED. 8. PER CONTRA, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ADDITION HAS BEEN MADE BASED UPON COGENT MATERIAL OBTAINED. HE SUBMITTED TH AT THOUGH SHRI VISHAL DOSHI WAS NOT AN EMPLOYEE OF THE ASSESSEE FIRM, HE WAS VICE PRESIDENT (MARKETING AND SALES) OF RLS GROUP, WHICH HAD 1/3 RD SHARES IN THE PARTNERSHIP FIRM OF THE ASSESSEE. HE FURTHER SUBMITTED THAT RETRACTION IS WITHOUT ANY SUPPORTING. HE FURTHER SUBMITTED THAT AFFIDAVITS OF THE FLAT BUYERS ARE SELF SERVING STATEMENT. LEARNED DEPARTMENTAL REPRESENTATIVE FURTHER SUPPORTED THE ORDER OF LEARNED CIT(A) AND CASE LAW RELIED UPON BY HIM 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AND PERUS ED THE RECORD. WE FIND THAT ADDITION OF ON MONEY RECEIPT IS BASED UPON THE STATEMENT GIVEN BY SHRI VISHAL DOSHI, VICE PRESIDENT (MARKETING AND SALES) OF RLS GROUP, WHO HAVE 1/3 RD SHARES IN ASSESSEES FIRM . T HERE IS NO OTHER MATERIAL WHATSOEVER RELATING TO ON MONEY RECEIPT. SHRI VISHAL DOSHI HAS RETRACTED HIS STATEMENT. THIS RETRACTION HAS BEEN REJECTED BY AUTHORITIES BELOW ON THE GROUND THAT IT IS NOT BASED UPON ANY SUPPORTING DOCUMENT. IN THIS REGARD, WE FIND THAT STATEMENT OBTAINED FROM SHRI VISHAL DOSHI IS ALSO NOT BASED UPON ANY SUPPORTING MATERIAL. IF THIS VIEW IS ACCEPTED, THEN LEARNED COUNSEL OF THE ASSESSEE IS CORRECT THAT THE REVENUE CANNOT REJECT RETRACTION ON THE GROUND THAT IT IS NOT BASED UPON ANY COGENT MATERIAL. IN OUR CONSIDERED OPINION REVEN UE CANNOT APPLY SHIFTING STAND. IT IS ACCEPTING STATEMENT WITHOUT ANY SUPPORTING MATERIAL BUT REJECT ING RETRACTION ON THE GROUND THAT IT IS NOT BASED UPON ANY SUPPORTING MATERIAL. 10. ASSESSEE FURTHER SUBMITTED AFFIDAVIT FROM FLAT BUYERS WHO HAVE GIVEN S TATEMENT THAT THEY HAVE NOT PAID ANY ON MONEY. THE REASON DUE TO WHICH NRS DEVELOPERS 6 AFFIDAVIT S ARE REJECTED HAS NOT BEEN SPECIFIED BY AUTHORITIES BELOW. IT IS NOT THE CASE THAT ANY INQUIRY HAS BEEN CONDUCTED WITH REGARD TO THE FLAT BUYERS AND IT HAS BEEN FOUND THAT THE RE IS DEFECT IN THE AFFIDAVIT SUBMITTED BY THEM. HENCE REJECTION OF THE FLAT BUYERS AFFIDAVIT BY THE REVENUE WITHOUT ANY ENQUIRY IS NOT SUSTAINABLE. ANOTHER POINT WHICH HAS BEEN CANVASSED BY THE ASSESSEE IS THAT ALL THE SALES HA VE BEEN AFFECTED ABOVE STAM P VALUE AND HENCE THERE CANNOT BE ANY ADVERSE INFERENCE OF ON MONEY RECEIVED. WE FIND THAT THIS STATEMENT OF THE ASSESSEE HAS ALSO COGENCY. IT IS ONLY WHEN SALE CONSIDERATION REFLECTED IN THE AGREEMENT IS BELOW THAT PERMISSIBLE FOR THE STAMP VALUE REGISTRA TION, THERE IS PRESUMPTION U/S. 50C REGARDING THE VALUE REFLECTED IN THE AGREEMENT IS LOWER . TH IS FACT ALSO SUPPORT S THE CASE OF THE ASSESSEE. FURTHERMORE, AUTHORITIES BELOW HAVE DRAWN ADVERSE INFERENCE FOR THE SETTLEMENT COMMISSION APPLICATION MADE BY RLS GROUP. WE FIND THAT THIS IPSO FACTO CANNOT BE A REASON TO DRAW ADVERSE INFERENCE AGAINST THE ASSESSEE AS ADDITION ON THIS ISSUE IS TO BE BASED UPON MATERIAL FOUND IN ASSESSEES CASE. 11. ANOTHER PLEA OF THE ASSESSEE BEFORE LEARNED CIT(A) WAS THAT NO UNA CCOUNTED MONEY OR ASSET OF THE ASSESSEE HAS BEEN FOUND. THIS HAS BEEN REJECTED BY LEARNED CIT(A) ON THE GROUND THAT NO SEARCH HAS BEEN CONDUCTED ON THE ASSESSEE, HENCE THERE IS NO QUESTION OF SUCH FINDING . IN THIS REGARD WE FAIL TO UNDERSTAND AS TO WHAT ST OP PED THE REVENUE FROM MAKING SEARCH OR TO MAKE FURTHER INQUIRY WITH REGARD TO ANY UNACCOUNTED ASSET GENERATED BY THE ASSESSEE. IF SEARCH HAS NOT BEEN CONDUCTED BY THE DEPARTMENT UPON THE ASSESSEE, IT CANNOT BE PRESUMED THAT THERE ARE UNACCOUNTED ASSET IN THE HANDS OF THE ASSESSEE. IN FACT, SUCH PRESUMPTION IS QUITE PREPOSTEROUS. AS HELD BY HON'BLE APEX COURT IN THE CASE OF K.P. VERGHESE (131 ITR 597), WHEN THESE ALLEGATION OF ON MONEY RECEIPT, THE BURDEN IS UPON THE REVENUE TO PROVE THE SAME. IN THE PRESE NT CASE WE FIND THAT REVENUE HAS FAILED TO DISCHARGE THE BURDEN 12. IN THIS REGARD WE ALSO PLACE RELIANCE ON HON'BLE APEX COURT DECISION IN THE CASE OF P. V. KALYANSUNDARAM (CIVIL APPEAL NO. 4262 OF 2007 VIDE ORDER NRS DEVELOPERS 7 DATED 14 .9.2007) , WHERE DELETION OF ADDITION MERELY BASED UPON LOSE S HEET D E HO RS ANY CORROBORATIVE MATERIAL WAS UPHELD. 13. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENT, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION ON MERITS. 14. IN THE RESULT, ASSESSEES APPEAL NO. 5910/MUM/2018 IS PARTLY ALLOWED AND ITA NO. 5911/MUM2018 IS ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 22 . 5 . 201 9 . SD/ - SD/ - (RAMLAL NEGI ) (SH A MIM YAHYA ) J U DICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 22 / 5 / 20 1 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, / /TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI