DCIT CEN CIR 44, MUMBAI V. SHASHIKIRAN SHETTY, MUMBAI

ITA 5978/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3497 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANJUNATHA SWAMY
• Keywords: Capital asset; Gift; Business income; Search and seizure; Loose papers; Principle of natural justice; Additional evidence; Accommodation entries; Capital expenditure
• Section: 143(3); 133A; 153A; 43(5); 131; 132; 139

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5813 /MUM/2013 ( / ASSESSMENT YEAR : 2007-08) SHASHIKIRAN SHETTY, 5 TH FLOOR, DIAMOND SQUARE, CST ROAD KALINA, SANTACRUZ (EAST), MUMBAI 400 098. / V. DCIT, CEN. CIR. 44, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AMEPS 5601 B ( / APPELLANT ) .. ( / RESPONDENT ) ./ I.T.A. NO. 5978 /MUM/2013 ( / ASSESSMENT YEAR : 2009-10) DCIT, CEN. CIR. 44, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. / V. SHASHIKIRAN SHETTY, 5 TH FLOOR, DIAMOND SQUARE, CST ROAD KALINA, SANTACRUZ (EAST), MUMBAI 400 098. ./ PAN : AMEPS 5601 B ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI PARESH SHAPARIA REVENUE BY : SHRI MANJUNATHA SWAMY ( CIT D .R.) / DATE OF HEARING : 29-2-2016 / DATE OF PRONOUNCEMENT : / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 2 THESE TWO APPEALS, ONE FILED BY THE ASSESSEE, BEING ITA NO. 5813/MUM/2013, AND ANOTHER FILED BY THE REVENUE BEI NG ITA NO. 5978/MUM/2013 ARE DIRECTED AGAINST TWO SEPARATE ORD ERS DATED 26-7-2013 AND 29-7-2013 RESPECTIVELY PASSED BY THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS)- 38, MUMBAI (HEREINAFTER CALLED THE CIT(A)), FOR THE ASSESSMENT YEARS 2007-08 AND 2009-10 RESPECTIVELY, THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 30-12-2009 PASSED BY THE LEARNED ASSESSING OF FICER (HEREINAFTER CALLED THE AO) U/S 143(3) R.W.S. 153AOF THE INCOME TAX A CT,1961 (HEREINAFTER CALLED THE ACT) & THE PENALTY ORDER DATED 30-6-20 10 PASSED BY THE AO U/S 271AAA OF THE ACT RESPECTIVELY. BOTH THESE APPEALS WERE HEARD TOGETHER AND WE DECIDE THEM BY THIS COMBINED ORDER. FIRST, WE SHALL TAKE ASSESSEES APPEAL IN ITA NO. 5 813/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1) THE COMMISSIONER (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.35,00,000/-TO THE INCOME OF THE ASSESSEE ON THE GROU ND THAT THE ASSESSEE HAD PAID CONSIDERATION OF RS.35,00,000/- I N CASH ON PURCHASE OF THE LAND FROM THE MASKAR FAMILY. 2) THE COMMISSIONER (APPEALS) ERRED IN NOT ADMITTING THE AFFIDAVIT DATED 22ND JANUARY, 2010 FILED BY THE ASSESSEE IN TH E COURSE OF THE APPELLATE PROCEEDINGS ON THE GROUND THAT NEW EVIDENCE NOT FILED BEFORE THE ASSESSING OFFICER COULD NOT BE ADMITTED IN THE AP PELLATE PROCEEDINGS. 3) THE COMMISSIONER (APPEALS) HAS FAILED TO' APPRECI ATE THE CASE OF THE ASSESSEE THAT THE TITLE TO THE PROPERTY WAS NOT CLEAR AND THE ASSESSEE HAD TO INDULGE INTO LITIGATION WHEREBY THE TR ANSFER OF THE LAND WAS DELAYED BY A YEAR AND THEREFORE, THE ASSESSEE H AS NOT PAID THE CASH CONSIDERATION TO THE MASKAR FAMILY. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 3 4) THE ORDER OF THE COMMISSIONER (APPEALS) IS BAD IN LAW AND WITHOUT JURISDICTION. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL BEING MANAGING DIRECTOR OF ALL CARGO GLOBAL LOGISTICS LIM ITED , DERIVING INCOME MAINLY FROM SALARY FROM ALL CARGO GLOBAL LOGISTICS LIMITED . 4. THERE WERE A SEARCH ACTION CONDUCTED BY THE REVE NUE ON 26-04-2007 U/S 132(1) OF THE ACT IN THE CASE OF M/S ALL CARGO GROU P OF COMPANIES, THEIR DIRECTORS AND OTHER IMPORTANT EMPLOYEES. THE ASSES SEE BEING MANAGING DIRECTOR OF ALL CARGO GLOBAL LOGISTICS LIMITED WAS ALSO COVERED BY THE SEARCH CONDUCTED BY THE REVENUE ON 26-04-2007 U/S 132(1) O F THE ACT. SIMULTANEOUSLY , THERE WAS SURVEY OPERATIONS U/S.13 3A OF THE ACT CONDUCTED BY THE REVENUE ON 26-04-2007 IN THE CASE OF ALL CAR GO GLOBAL LOGISTICS LIMITED AT KOPROLI VILLAGE, TALUKA URAN, DISTRICT R AIGAD , MAHARASHTRA. 5.NOTICE U/S 153A OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE AND IN RESPONSE TO THE NOTICE , THE ASSESSEE FILED RETURN OF INCOME U/S 153A OF THE ACT ON 25 TH JANUARY, 2008 DECLARING TOTAL INCOME OF RS. 4,11,8 6,820/-. 6. DURING THE COURSE OF SEARCH AND SURVEY ACTION CO NDUCTED BY THE REVENUE ON 26 TH APRIL, 2007, CERTAIN LOOSE PAPERS MARKED AS ANNEXU RE A-14 (PAGES 108 TO 117) WERE IMPOUNDED BY THE REVENUE DURING TH E SURVEY CONDUCTED AT THE PREMISES OF THE ALL CARGO GLOBAL LOGISTICS LTD. , AT KOPROLI VILLAGE, TALUKA URAN, DISTRICT RAIGAD , MAHARASHTRA . THESE LOOSE PAPERS AS ARE RELEVANT FOR THIS APPEAL, INTER-ALIA, REVEALED THAT ASSESSEE HAD ACQUIRED LAND AT NAGPUR FROM THE MASKAR FAMILY. THESE DOCUMENTS IMPOUNDED B Y THE REVENUE REVEALED THAT THE ASSESSEE HAS PAID RS.35,00,000/- TO THE MASKER FAMILY IN UNACCOUNTED CASH FOR ACQUIRING NAGPUR LAND. THE ASS ESSEE CONFIRMED THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 4 STATEMENT OF HIS EMPLOYEE SHRI DIWAN SINGH RECORDED U/S 131 OF THE ACT ON 26-04-2007 , VIDE HIS OWN STATEMENT RECORDED ON OAT H ON 27 TH APRIL, 2007 U/S 132(4) OF THE ACT ADMITTING OF HAVING PAID UNACCOUN TED CASH, INTER ALIA, OF RS. 35 LACS TO MASKAR FAMILY FOR PURCHASE OF NAGPUR LAN D AND OFFERING THE SAME FOR TAXATION AS UNDISCLOSED INCOME OF THE ASSESSEE. 7.IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 153A OF THE ACT WITH THE REVENUE ON 25-01-2008 FOR THE RELEVANT ASSESSMENT Y EAR 2007-08, THE ASSESSEE FAILED TO DECLARE THE SAID AMOUNT OF UNACC OUNTED CASH OF RS.35 LACS PAID TO THE MASKER FAMILY. 8. ON BEING ASKED BY THE AO, THE ASSESSEE EXPLAINED THAT THERE WAS A DISPUTE WITH THE MASKAR FAMILY REGARDING THE AREA MEASUREME NT AND NON AVAILABILITY OF APPROVALS FOR PERMISSION TO SELL FROM THE STATE GOVERNMENT AS THE SAID LAND WAS ADIVASI/KUL LAND. IN VIEW OF THE ABOVE SAID FA CT , THE ASSESSEE PAID THE ONLY PAYMENT OF RS. 1.10 CRORES VIDE REGISTERED SAL E DEED DATED 13-09-2006 BY CHEQUE, AND UN-ACCOUNTED CASH PAYMENT OF RS. 35 LACS AS AGREED TO BE PAID BY THE ASSESSEE WAS WITHHELD BY THE ASSESSEE A ND NOT PAID TO MASKAR FAMILY. THE ASSESSEE CONTENDED THAT IN THE TWO SEA RCHES CONDUCTED BY THE REVENUE, THE ASSESSEE AND HIS GROUP CONCERNS HAS DE CLARED A SUM OF RS. 35 CRORES U/S 132(4) OF THE ACT AS AN UNDISCLOSED INCO ME AND THERE WAS NO REASON FOR NOT OFFERING THE SAID AMOUNT OF RS. 35 L ACS WHICH IS LESS THAN 1% OF THE TOTAL DECLARATION MADE, WHILE REST OF THE DECLA RATIONS WERE HONORED BY THE ASSESSEE AND HIS GROUP CONCERNS. THE AO HELD THAT AS PER PAGE 112 OF ANNEXURE A-14 D ATED 13-02-2007 IMPOUNDED BY THE REVENUE DURING SURVEY OPERATIONS O N 26-04-2007, THE MASKAR FAMILY COMPLETED THE DEAL ON 13 TH SEPTEMBER, 2006 AND THE LAND WAS TRANSFERRED IN THE NAME OF THE ASSESSEE. THE A.O. REJECTED THE CONTENTION OF THE ASSESSEE IN VIEW OF THE LAND DEAL WITH MASKAR F AMILY BEING COMPLETED ON ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 5 13 TH SEPTEMBER, 2006 AND HENCE THE AO HELD THAT THE CON TENTION OF THE ASSESSEE THAT THE LAND DEAL IS UNDER PROCESS CANNOT BE ACCEPTED AS CORRECT . THE A.O. HELD THAT THE STATEMENT RECORDED U/S 131 O F THE ACT ON 26 TH APRIL, 2007 IN REPLY TO Q. NO. 6 SHRI DIWAN SINGH, EMPLOYE E, CATEGORICALLY STATED AS UNDER : Q.6. KINDLY GIVE THE DETAILS OF THE LANDS, NAMES O F THE SELLERS AND TRANSACTION VALUE IN CHEQUE AND CASH? ANS. IN THE CASE OF MASKERS APPEARING IN SL NO. 5, 6 & 7 THE TOTAL CONSIDERATION OF THE LAND ADMEASURING 11.78 ACRES A MENTIONED IN THE STATEMENT (WHEREAS ON PHYSICAL VERIFICATION THE ACT UAL MEASUREMENT OF THE LAND COMES TO 10 ACRES AS MENTIONED IN THE SALE AGREEMENT) COMES TO RS.1,70,81,000/- @ RS.14.50 LAKHS/ACRES . AS STATED ABOVE THE ACTUAL MEASUREMENT OF THE LAND IS 10 ACRES ONLY @ RS.14.50 LAKHS/ACRES. HOWEVER PAYMENTS WERE MADE TO THE SELLERS FOR 10 AC RES ONLY @RS.14.50 LAKHS/ACRES. AS STATED ABOVE THE ACTUAL MEASUREMENT OF THE LAND 10 ACRES ONLY. THEREFORE THE TOTAL PAYMENT MADE TO THE SELLER IN RESPECT OF THIS LAND IS RS.1,45,00,000/- OUT OF WHICH RS.1,10, 00,000/- PAID IN CHEQUE AND THE BALANCE AMOUNT OF RS.35,00,000/- WAS PAID IN CASH. THUS, VIDE STATEMENT U/S 131 OF THE ACT DATED 26/04 /2007 , EMPLOYEE OF THE ASSESSEE SH. DIWAN SINGH STATED THAT THE ASSESSEE A CQUIRED THE LAND ADMEASURING 10 ACRES @ RS. 14.50 LAKHS PER ACRE FRO M MASKAR FAMILY , FOR WHICH THE TOTAL PAYMENT WERE MADE BY THE ASSESSEE I N RESPECT OF THIS 10 ACRES LAND AGGREGATING TO RS. 1,45,00,000/- @ RS.14 .50 LAKHS/ACRE, OUT OF WHICH RS. 1,10,00,000/- WAS PAID BY THE ASSESSEE TO MASKAR FAMILY BY CHEQUE AND THE BALANCE AMOUNT OF RS. 35 LACS WERE P AID IN CASH. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 6 THE A.O. HELD THAT THE ASSESSEES EXPLANATION THAT CASH OF RS.35 LACS WAS NOT PAID TO MASKAR FAMILY OWING TO DISPUTE WITH THE MAS KAR FAMILY WITH RESPECT TO THE AREA MEASUREMENT OF THE LAND AND NON AVAILABILI TY OF APPROVALS FOR PERMISSION TO SELL FROM THE STATE GOVERNMENT AS THE LAND WAS ADIVASI/KUL LAND ARE NOT SUPPORTED BY ANY EVIDENCE ON RECORD AN D IS AN AFTERTHOUGHT BY THE ASSESSEE TO WRIGGLE OUT OF THE TAX LIABILITY . IN VIEW OF THE ABOVE FACTS, THE A.O. ADDED AN AMOUNT OF RS. 35 LACS , BEING UN-ACCO UNTED CASH OF RS.35 LACS PAID BY THE ASSESSEE TO THE MASKAR FAMILY FOR ACQUI RING NAGPUR LAND , TO THE INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDER DATED 30 TH DECEMBER, 2009 PASSED BY THE AO U/S 143(3) R.W.S. 153A OF THE ACT. 9. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30-12-20 09 PASSED BY THE A.O. U/S 143(3) READ WITH SECTION 153A OF THE ACT, THE A SSESSEE FILED FIRST APPEAL BEFORE THE LEARNED CIT(A). 10. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITT ED THAT THE LAND AT NAGPUR WAS PURCHASED FOR A TOTAL CONSIDERATION OF R S. 1.10 CRORES FROM MASKAR FAMILY VIDE REGISTERED SALE DEED DATED 13 TH SEPTEMBER, 2006 VIDE CHEQUE PAYMENTS , AND IT WAS ALSO AGREED MUTUALLY T HAT THE ASSESSEE WOULD PAY EXTRA CONSIDERATION OF RS. 35 LACS BUT THE ASSE SSEEE CAME TO KNOW SUBSEQUENTLY THAT THE LAND PURCHASED BY THE MASKAR FAMILY FROM ADIVASI/KUL AND CERTAIN APPROVALS AND PERMISSION ARE TO BE OBTA INED FOR CANCELLATION OF KUL FROM THE LAND FOR ITS TRANSFER. IT WAS SUBMIT TED BY THE ASSESSEE THAT IT WAS AGREED THAT THE MASKAR FAMILY WOULD OBTAIN THE APPROVAL AND SUBSEQUENTLY THE ASSESSEE WOULD MAKE THE PAYMENT OF RS. 35 LACS TO THEM. IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE MADE AN APPLICATION TO THE HONBLE COLLECTOR FOR PE RMISSION FOR THE SALE OF TENANCY BUT THE TRANSACTION WAS DECLARED INVALID AN D LAND VESTED BACK TO THE STATE GOVERNMENT BY THE HONBLE COURT OF TAHASILDAR (RURAL) NAGPUR VIDE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 7 ORDERS DATED 17 TH OCTOBER, 2007. SINCE THE MASKER FAMILY COULD NOT O BTAIN THE NECESSARY APPROVALS, THE LAND WAS NOT TRANSFERABLE DUE TO NON-AVAILABILITY OF STATE GOVERNMENT CLEARANCE. HOWEVER, THE ASSESSEE MADE SUBSEQUENT APPEAL AGAINST THE ORDER DATED 17-10-2007 OF THE TAHSILDAR BEFORE THE HONBLE SUB- DIVISIONAL OFFICER, NAGPUR AND THE SALE WAS DECLARE D LEGAL VIDE APPELLATE ORDERS DATED 29 TH NOVEMBER, 2007 PASSED BY HONBLE SDO , NAGPUR IN F AVOUR OF THE ASSESSEE. THUS, THOUGH THE SALE DEED WAS EX ECUTED ON 13 TH SEPTEMBER, 2006 , THE SAME WAS HELD TO BE LEGAL ONLY VIDE APPE LLATE ORDERS DATED 29 TH NOVEMBER, 2007 OF THE HONBLE SDO. IN VIEW OF THE ABOVE, THE ASSESSEE SUBMITTED BEFOR E THE LEARNED CIT(A) THAT THE ONLY PAYMENT MADE WAS RS. 1.10 CRORES BY CHEQUE VIDE REGISTERED SALE DEED DATED 13-09-2006 AND THE ASSESSEE HAS NOT PAID UNACCOUNTED CASH PAYMENT OF RS. 35 LACS TO MASKAR FAMILY FOR PURCHAS E OF THE NAGPUR LAND. THE ASSESSEE FURTHER SUBMITTED THAT THE IMPOUNDED P APER PAGE NO. 112 OF ANNEXURE A-14 DURING SURVEY OPERATIONS U/S. 133A OF THE ACT ON 26-04-2007 ONLY GIVE DETAILS ABOUT THE DEAL WITH THE MASKAR FA MILY SUCH AS NAME OF THE FARMER, KHASRA NUMBER, AREA , DEAL COMPLETION DATE AND RATE PER ACRE. IT DOES NOT MENTION ANY UNACCOUNTED CASH PAYMENT OF RS. 35 LACS TO MASKAR FAMILY . IT WAS SUBMITTED THAT THE ASSESSEE IN HIS STATEMENT ON OATH RECORDED U/S 132(4) OF THE ACT ON 27-04-2007 MERELY REITERATED T HE FACTS STATED BY HIS MANAGER MR. DIWAN SINGH WITH RESPECT TO THE MASKAR FAMILY PROPERTY AT NAGPUR , THE APPLICATION FOR PERMISSION WAS ALREADY MADE AND ASSUMING THAT THE SAME WILL BE GRANTED. IT WAS SUBMITTED BEFORE T HE LEARNED CIT(A) THAT HIS EMPLOYEE MR. DIWAN SINGH AND THE ASSESSEE OFFERED T HE AFORE-STATED UNDISCLOSED INCOME OF UN-ACCOUNTED CASH OF RS. 35 LACS PAID TO MASKAR FAMILY TOWARDS PURCHASE OF NAGPUR LAND WITH A VIEW TO BUY PEACE WITH THE REVENUE AND NOT TO LITIGATE THE MATTER ANY FURTHER. IT WAS SUBMITTED THAT AT THE TIME OF FILING OF RETURN OF INCOME U/S. 153A OF THE ACT WITH THE REVENUE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 8 ON 25 TH JANUARY, 2008, THE ENTIRE DETAILS WERE AGAIN VERIF IED AND IT CAME TO THE KNOWLEDGE OF THE ASSESSEE THAT THE CASH OF RS. 35 LACS WAS NOT PAID AT ALL IN VIEW OF THE LITIGATION EXPENSES INCURRED BY THE ASSESSEE AND SINCE THE TITLE TO THE PROPERTY WAS DISPUTED. IT WAS SUBMITTED THA T THE DECLARATIONS OF RS.35 CRORES HAVE BEEN MADE BY THE ASSESSEE AND HIS GROU P CONCERNS U/S 132(4) OF THE ACT IN TWO SEARCHES CONDUCTED BY THE REVENUE WHICH HAVE BEEN HONORED BY THE ASSESSEE AND HIS GROUP CONCERNS AND THERE WAS NO REASON NOT TO OFFER THE AMOUNT OF RS. 35 LACS WHICH IS LESS TH AN 1% OF THE TOTAL DECLARATION MADE OVER AND ABOVE THE REGULAR INCOME. THE LEARNED CIT(A) CONSIDERED THE SUBMISSIONS OF TH E ASSESSEE AND THE FACTS OF THE CASE ON RECORD INCLUDING THE ASSESSMENT ORDE R. THE LEARNED CIT(A) OBSERVED THAT BASED ON THE ANNEXURE A-14, PAGE NO. 112 IMPOUNDED DURING SURVEY OPERATIONS ON 26-04-2007 U/S 133A OF THE ACT AGAINST ALL CARGO LOGISTICS LIMITED AT KAPOROLI VILLAGE, TEHISL URAN, DISTRICT RAIGADH, MAHARASHTRA , AND ALSO THE STATEMENT OF SHRI DIWAN SINGH, THE EMPLOYEE OF THE COMPANY U/S 131 OF THE ACT RECORDED ON 26 TH APRIL 2007, WHEREBY IT WAS STATED THAT THE TOTAL CONSIDERATION OF LAND OF 10 A CRES @ RS. 14.5 LAKHS PER ACRE WHICH WAS SOLD BY THE MASKAR FAMILY TO THE ASS ESSEE FOR TOTAL CONSIDERATION OF RS. 1,45,00,000/-. THERE WAS SOME DISCREPANCY IN THE AREA MEASUREMENT AS THE DOCUMENT IMPOUNDED REFERS TO THE TOTAL AREA OF THE LAND SOLD AT 11.75 ACRES BUT ON PHYSICAL VERIFICATION, T HE ACTUAL MEASUREMENT OF THE LAND SOLD WAS ONLY 10 ACRES AS MENTIONED IN THE SALE AGREEMENT AND MR DIWAN SINGH CLARIFIED THAT FINALLY OUT OF TOTAL CON SIDERATION OF RS. 1.45 CRORES, PAYMENT OF RS. 1.10 CRORES WAS MADE IN CHEQUE AND R S. 35 LACS WAS PAID IN CASH TO THE MASKAR FAMILY, FOR 10 ACRES OF THE LAND SO TRANSFERRED TO THE ASSESSEE BY THE MASKAR FAMILY. THE STATEMENT OF S HRI DIWAN SINGH , EMPLOYEE OF THE ASSESSEE RECORDED U/S 131 OF THE AC T ON 26-04-2007, WAS FURTHER CONFIRMED BY THE ASSESSEE VIDE HIS STATEME NT ON OATH RECORDED ON 27.04.2007 U/S 132(4) OF THE ACT WHEREBY THE ASSESS EE ADMITTED TO HAVE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 9 MADE PAYMENT OF UN-ACCOUNTED CASH OF RS. 35 LACS TO MASKAR FAMILY FOR ACQUISITION OF LAND AT NAGPUR. THE ASSESSEE HAS NO T DECLARED THE UNACCOUNTED AMOUNT OF CASH PAYMENT OF RS. 35 LACS FOR PURCHASE OF LAND AT NAGPUR FROM MASKAR FAMILY IN THE RETURN OF INCOME F ILED WITH THE REVENUE U/S 153A OF THE ACT ON 25-01-2008 ON THE GROUND THA T THIS CASH PAYMENT OF RS. 35 LACS WAS NEVER MADE SINCE THE PROPERTY WAS I N DISPUTE . BUT AS PER THE STATEMENT ON OATH U/S 132(4) OF THE ACT BY THE ASS ESSEE ON 27-04-2007 , THE NARRATION OF THE EVENTS REVEALS THAT THE MATTER STA NDS SETTLED AND THE SALE WAS DECLARED LEGAL VIDE ORDER OF THE SUB DIVISIONAL OFF ICER DATED 19-11-2007. THE LEARNED CIT(A) OBSERVED THAT THE ASSESSEE STATED TH AT SINCE THE LITIGATION INVOLVED CERTAIN EXPENSES, THE CASH PAYMENT OF RS. 35 LACS WAS NOT PAID TO MASKAR FAMILY TOWARDS ACQUISITION OF NAGPUR LAND BU T THE SAID CONTENTION CANNOT BE ACCEPTED FOR THE REASONS THAT THE IMPOUN DED DOCUMENT DURING SURVEY REFERS TO THE TRANSACTION IN QUESTION AS OF A DEAL COMPLETED AS ON 13 TH SEPTEMBER, 2006 WHICH WAS LATER CONFIRMED BY SHRI DIWAN SINGH IN STATEMENT RECORDED U/S 131 OF THE ACT ON 26-04-2007 AND CORROBORATED FURTHER BY THE ASSESSEE VIDE HIS STATEMENTS RECORDE D U/S 132(4) OF THE ACT ON 27-04-2007 RESPECTIVELY. THE CIT(A) OBSERVED THAT THE PAYMENT OF RS. 14.5 LAKHS PER ACRE MUST HAVE BEEN PAID BY 13 TH SEPTEMBER, 2006 WHICH IS CLEARLY EVIDENT FROM THE IMPOUNDED DOCUMENT WHICH SHOWS TH AT THE DEAL WAS COMPLETED ON 13 TH SEPTEMBER, 2006 OTHERWISE THE ASSESSEE COULD HAVE SHOWN THE TRANSACTION AS UNDER PROCESS WHICH IS SIMILAR TO THE CASE OF CERTAIN LAND TRANSACTIONS WITH A PERSON NAMED AS MOTIRAM J. KHAI RKAR VIDE PAGE 112 OF EXHIBIT A-14. THE STATEMENT OF SHRI DIWAN SINGH AD MITTING PAYMENT OF RS. 35 LACS HAVING BEEN MADE IN CASH TO MASKAR FAMILY F OR PURCHASE OF LAND AT NAGPUR WAS ALSO CONFIRMED BY THE ASSESSEE WHICH COR ROBORATE THE CONTENTS OF THE IMPOUNDED DOCUMENT. THE ASSESSEE ALSO SUBMITTE D AN AFFIDAVIT DATED 22 ND JANUARY, 2010 FROM MASKAR FAMILY BEFORE THE LEARNE D CIT(A) WHEREBY IT IS STATED IN THE NOTORIZED AFFIDAVIT THAT THE TOTAL CONSIDERATION WAS ONLY 1.10 CRORES AND NO EXTRA PAYMENT AS ORIGINALLY AGREED WA S RECEIVED BY THE MASKAR ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 10 FAMILY. THIS DOCUMENT WAS AN ADDITIONAL EVIDENCE F URNISHED BY THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDINGS BEFO RE THE LEARNED CIT(A) AND IT WAS HELD BY THE LEARNED CIT(A) THAT NO CASE WAS MAD E OUT BY THE ASSESSEE FOR ADMISSION OF AN ADDITIONAL EVIDENCES AS REQUIRED UN DER RULE 46A(1) OF THE INCOME TAX RULES, 1962. THIS FRESH EVIDENCE VIDE A FFIDAVIT DATED 22-01-2010 FROM MASKAR FAMILY WAS NOT ADMITTED BY THE LEARNED CIT(A) SINCE IT WAS NOT PRODUCED BEFORE THE A.O. . THE LEARNED CIT(A) REJE CTED ALL THE CONTENTIONS OF THE ASSESSEE AND THE ADDITION MADE BY THE A.O. OF R S. 35 LACS TOWARDS UNACCOUNTED CASH PAID TO THE MASKAR FAMILY FOR PURC HASE OF NAGPUR LAND WAS CONFIRMED, VIDE APPELLATE ORDERS DATED 26-07-20 13 PASSED BY LEARNED CIT(A). 11.AGGRIEVED BY THE APPELLATE ORDERS DATED 26-07-20 13 PASSED BY THE LEARNED CIT(A), THE ASSESSEE FILED SECOND APPEAL BEFORE TH E TRIBUNAL. 12. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS. 35 LACS HAVE BEEN MADE ON ACCOUNT OF UNACCOUNTED CASH PAYMENT MADE AGAINST THE PURCHASE OF LAND AT NAGPUR FROM THE MASKAR FAM ILY. THERE WAS A SEARCH AND SURVEY OPERATION CARRIED OUT BY THE REVENUE IN THE PREMISES OF ALL CARGO GROUP ON 26 TH APRIL, 2007. THE SURVEY TEAM HAS IMPOUNDED SOME MATERIAL FROM OFFICE PREMISES OF ALL CARGO GLOBAL LOGISTICS LIMITED AT KOPROLI VILLAGE, TALUKA URAN, DISTRICT RAIGADH, MAHARASHTRA WHICH IS MARKED AS ANNEXURE A14 PAGE 108 TO 117 WHICH REFLECTS THE LAND TRANSAC TION FOR THE PURCHASE OF PROPERTIES. THE DISPUTE IS WITH RESPECT TO THE NAG PUR LAND PURCHASED BY THE ASSESSEE FROM THE MASKAR FAMILY WHEREBY THERE WAS A STIPULATION TO PAY CASH PAYMENT OF RS. 35 LACS AND THE BALANCE OF RS. 1.10 CRORES BY CHEQUE FOR THE TOTAL LAND PURCHASE OF 10 ACRES @ RS. 14.5 LAKHS PE R ACRE. THERE WAS SOME VARIATION IN THE AREA OF LAND MEASUREMENT , WHEREBY THE ASSESSEE FINALLY ACQUIRED 10 ACRES OF LAND AS AGAINST AREA OF 11.75 ACRES MENTIONED IN THE IMPOUNDED DOCUMENT VIDE PAGE 112,ANNEXURE A-14. WI TH RESPECT TO THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 11 OTHER LAND PURCHASED AS MENTIONED IN THE IMPOUNDED DOCUMENTS A-14 PAGE 112, THE ASSESSEE HAS DULY DECLARED THE CASH PAYMEN T MADE FOR THE ACQUISITION OF THE SAID LANDS IN THE RETURN OF INC OME FILED WITH THE REVENUE U/S. 153A OF THE ACT. WITH RESPECT TO THE LAND IN NAGPUR PURCHASED FROM MASKAR FAMILY, IT WAS STATED BY THE LD. COUNSEL FO R THE ASSESSEE THAT NO CASH PAYMENT HAS BEEN MADE AND HENCE THERE WAS NO DECLAR ATION OF INCOME MADE BY THE ASSESSEE IN THE RETURN OF INCOME FILED ON 25 -01-2008 WITH THE REVENUE U/S 153A OF THE ACT . IT WAS SUBMITTED THAT THE ASS ESSEE HAS NEVER MADE THE AFORE-STATED CASH PAYMENT OF RS. 35 LACS AS THERE W AS SOME DISPUTE WITH RESPECT TO THE LAND. THE ENTIRE INCOME AS PER DECL ARATION DURING SEARCH AND SURVEY OPERATIONS BY THE ASSESSEE AND HIS GROUP CON CERNS HAS BEEN OFFERED FOR TAXATION IN THE RETURN OF INCOME FILED U/S 153A OF THE ACT , EXCEPT RS. 35 LACS AS THE SAID PAYMENT WAS NEVER MADE WAS THE CON TENTIONS OF THE LD COUNSEL FOR THE ASSESSEE. THE ASSESSEE DREW OUR AT TENTION TO THE CHRONOLOGICAL EVENTS WITH RESPECT TO THE PURCHASE O F NAGPUR LAND FROM MASKAR FAMILY WHICH IS STIPULATED AS UNDER:- S.NO. DATE PARTICULARS OF EVENT. 1 11.05.2006 APPLICATION TO COLLECTOR FOR PERMISSION FOR SALE OF TENANCY 2 13.09.2006 REGISTERED SALE DEED FOR NAGPUR LAND FROM MASKAR FAMILY CONSIDERATION OF RS.1.10 CRORES 3 26.04.2007 DATE OF SEARCH U/S 132 (FIRST) 4 27.04.2007 STATEMENT U/S 132(4) OFFERING INCOME INCLUDING RS.35.00.000 FOR NAGPUR LAND. 5 11.06.2007 SHOW CAUSE NOTICE U/S 122(1) OF B.T. & A.L. (V.R.) ACT. 1958 (BOMBAY TENANCY AND AGRICULTURAL LANDS (VIDHARBHA REGION) SERVED ON ASSESSEE FOR DECLARING THE TRANSACTION FOR NAGPUR LAND AS INVALID AND TO RESTORE THE LAND TO STATE GOVERNMENT. 6 31.07.2007 RETURN FILED U/S 139 (I) DECLARING INCOME OF RS. 4,11.86.818 7 17.10.2007 COURT OF SMT. VIJAYA BANKAR TAHASIDAR (RURAL) NAGPUR ORDER U/S 57 B.T. & A.L. (V.R.) ACT. 1958 OF DECLARING AGREEMENT DATED 13.9.2006 ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 12 AS INVALID AND INITIATED PROCEEDINGS U/S 122(3) FOR LAND TO BE VESTED WITH STATE GOVERNMENT. 8 31.10.2007 AN APPEAL UNDER SECTION 247 OF MAHARASHTRA LAND REVENUE CODE.1966 FILED AGAINST THE ORDER DATED 17.10.2007 BEFORE COURT OF SUB DIVISIONAL OFFICER, NAGPUR. 9 1.11.2007 COURT OF SUB DIVISIONAL OFFICER, NAGPUR PASSED A STAY ORDER AGAINST THE ORDER DATED 17.10.2007. 10 29.11.2007 COURT OF SUB DIVISIONAL OFFICER, NAGPUR PASSED QUASHING THE ORDER DATED 17.10.2007. 11. 25.01.2008 RETURN IN RESPONSE TO NOTICE U/S 153A DECLARING INCOME OF RS.4,11,86,818 12. 10.07.2009 DATE OF SEARCH U/S 132(SECOND) 13. 29.10.2009 RETURN IN RESPONSE TO NOTICE U/S. 153A DECLARING INCOME OF RS.4,11,86,818 14. 31.12.2009 ASSESSMENT ORDER U/S 143(3) R.W.S.153A DETERMINING INCOME AT RS.4,46,86,820 (ADDITION OF RS. 35,00,000 FOR NAGPUR LAND) 15. 22.01.2010 NOTORIZED AFFIDAVIT OF MASKAR FAMILY FOR NOT HAVING RECEIVED ANY OTHER CONSIDERATION OTHER THAN RS.1.10 CRORES AS PER AGREEMENT DATED 13.09.2006 THE LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE PAGE 18-22 OF THE PAPER BOOK WHEREBY THE TAHSILDAR (RURAL) NAGPUR DIR ECTED FOR TOOK OVER OF THE LAND BY THE STATE VIDE ORDER DATED 17 TH OCTOBER, 2007 BY DECLARING THE SALE TRANSACTION BETWEEN THE ASSESSEE AND THE MASKAR FAM ILY AS INVALID AND VESTING ALL THE LAND WITH THE STATE GOVERNMENT. TH E LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE ORDER OF THE SDO, NAGPUR DATED 29 TH NOVEMBER, 2007 WHEREBY THE ORDER OF THE TAHSILDAR, NAGPUR HAS BEEN QUASHED AND SET ASIDE AND THE SALE TRANSACTION DECLARED AS VALID (PAPER B OOK PAGE NO. 36 TO 43). THE LD. COUNSEL ALSO DREW OUR ATTENTION TO THE AFFI DAVIT DATED 22 ND JANUARY, 2010 FROM MASKAR FAMILY WHICH IS PLACED AT PAPER BO OK PAGE NO. 44-45 WHEREBY THEY CONFIRMED HAVING RECEIVED RS.1.10 CROR ES TOWARDS SALE CONSIDERATION OF THEIR NAGPUR LAND AND HAVE DENIED TO HAVE RECEIVED THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 13 UNACCOUNTED CASH PAYMENT TOWARDS SALE CONSIDERATION OF THEIR NAGPUR LAND. THE LEARNED CIT(A) REFUSED TO ADMIT THE ADDITIONAL EVIDENCE BY WAY OF NOTORIZED AFFIDAVIT DATED 22-1-2010 FILED FOR THE F IRST TIME BEFORE THE LEARNED CIT(A). THE LD. COUNSEL SUBMITTED THAT PERMISSION FOR THE TRANSFER OF THE LAND WAS OBTAINED BY THE BUYER INSTEAD OF THE SELLER AND THE ADDITIONAL LITIGATION EXPENSES WERE INCURRED BY THE BUYER AND HENCE DUE T O THE DISPUTE IN THE LAND AND THE LITIGATION EXPENSES BEING ADDITIONALLY INC URRED BY THE ASSESSEE INSTEAD OF THE SELLER, THE AMOUNT OF RS. 35 LACS WA S WITHHELD BY THE ASSESSEE AND NOT PAID TO THE SELLER. 13. THE LD. D.R., ON THE OTHER HAND, SUBMITTED THAT THE LD. CIT(A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCE BY WAY OF AFFIDAVI T DATED 22-1-2010 FROM THE SELLERS OF THE LAND MASKAR FAMILY WHICH IS AN AFTER THOUGHT AND A SELF SERVING DOCUMENT WHICH WAS FILED ALMOST THREE YEARS AFTER D ATE OF SEARCH AND SURVEY ON 26-04-2007. THE LD. D.R. RELIED UPON THE ORDERS OF AUTHORITIES BELOW AND SUBMITTED THAT SHRI DIWAN SINGH HAS GIVEN A STATEME NT U/S 131 OF THE ACT ON 26-04-2007 THAT RS. 35 LACS WAS PAID IN CASH TO MAS KAR FAMILY IN RESPECT OF NAGPUR LAND DEAL WHICH IS ALSO EVIDENT FROM THE IMP OUNDED MATERIAL. THE ASSESSEES STATEMENT ON OATH WAS ALSO RECORDED U/S 132(4) OF THE ACT ON 27- 04-2007 WHEREBY THE ASSESSEE HAS ALSO CONFIRMED THE STATEMENT OF HIS EMPLOYEE SHRI DIWAN SINGH ALONG WITH THE IMPOUNDED MATERIAL AND CONFIRMED AND ADMITTED THAT RS. 35 LACS UNACCOUNTED CASH HAD BEEN PAID TO THE MASKAR FAMILY FOR THE PURCHASE OF NAGPUR LAND. THE LD. D.R. SUBMITTED THAT THE MONEY WHICH HAS BEEN PAID FOR THE NAGPUR L AND PURCHASE WAS @ RS. 14.5 LAKHS PER ACRE AND THE TOTAL LAND PURCHASED WA S 10 ACRES , AND RS. 1.10 CRORES WAS PAID BY CHEQUE WHICH IS EMANATING FROM T HE REGISTERED SALE DEED , WHILE RS. 35 LACS WAS PAID IN CASH WHICH WAS CONFIR MED AND ADMITTED BY THE ASSESSEE VIDE STATEMENT ON OATH RECORDED ON 27 TH APRIL, 2007 U/S 132(4) OF THE ACT OF THE ASSESSEE WHICH IS PLACED AT PAPER BO OK PAGE 13-17. THE LD. D.R. SUBMITTED THAT THE DEAL WAS COMPLETED ON 13 TH SEPTEMBER, 2006. THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 14 AFFIDAVIT DATED 22-1-2010 SUBMITTED BY THE ASSESSEE OF THE MASKAR FAMILY IS AN AFTERTHOUGHT AND WHICH HAS BEEN PRODUCED , IS A SELF SERVING DOCUMENT AND THE LEARNED CIT(A) HAS RIGHTLY REFUSED TO ADMIT THE SAME AS THE SAID BELATED AFFIDAVIT HAS NO EVIDENTIARY VALUE. THE LD . D.R. RELIED ON THE DECISION IN THE CASE OF MEHTA PARIKH & COMPANY V. CIT (1956) 30 ITR 181 (SC), IN THE CASE OF SMT. GUNWANTBAI V. CIT (1983) 146 ITR 140(M P HC) AND IN THE CASE OF SILK MUSEUM V. CIT (2003) 257 ITR 22(GUJ. HC). THE LD. DR SUBMITTED THAT THE PERUSAL OF THE IMPOUNDED DOCUMENTS DURING THE S URVEY OPERATION CLEARLY SHOWS THAT RS. 35 LACS HAVE BEEN PAID IN CASH. THE STATEMENT OF SHRI DIWAN SINGH WAS RECORDED ON 26-04-2007 U/S 131 OF THE ACT WHEREBY HE CONFIRMED AND ADMITTED THAT UNACCOUNTED CASH OF RS 35 LACS WA S PAID BY THE ASSESSEE TO MASKAR FAMILY FOR PURCHASE OF NAGPUR LAND. HE A LSO RELIED ON THE DECISION IN THE CASE OF RAM RATAN V. CIT (1983)142 ITR 618(A LL. HC) AND SUBMITTED THAT BELATED AFFIDAVIT HAS BEEN FILED BY THE ASSESS EE AFTER LONG GAP OF 3 YEARS, HENCE, IT COULD NOT BE ADMITTED. THE LD. D.R. SUBM ITTED THAT THE STATEMENT RECORDED U/S 131 OF THE ACT OF MR DIWAN SINGH AND U /S 132(4) OF THE ASSESSEE BY THE REVENUE ON 26-04-2007 AND 27-04-2007 RESPECT IVELY HAD NOT BEEN RETRACTED. HE RELIED ON THE DECISION IN THE CASE O F FAIRDEAL FILAMENTS LIMITED V. CIT (2008)302 ITR 173(GUJ. HC) AND IN THE CASE O F SMT PRABHADEVI S SHAH V. CIT (1998) 231 ITR 0001(BOM. HC) AND IN THE CASE OF TEK RAM(DEAD THROUGH LRS) V. CIT (2013) 093 DTR 0350(SC) 14. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE CASE LAWS RELIED UPON BY THE RIVAL PARTIES. THERE WERE A SEARCH AND SEIZURE ACTION CONDUCTED BY THE REVENUE ON 26-04- 2007 U/S 132(1) OF THE ACT IN THE CASE OF M/S ALL C ARGO GROUP OF COMPANIES, THEIR DIRECTORS AND OTHER IMPORTANT EMPLOYEES. THE ASSESSEE BEING MANAGING DIRECTOR OF ALL CARGO GLOBAL LOGISTICS LIMITED WAS ALSO COVERED BY THE SEARCH CONDUCTED BY THE REVENUE ON 26-04-2007 U/S 132(1) O F THE ACT. SIMULTANEOUSLY THERE WAS SURVEY OPERATIONS U/S.133A OF THE ACT ON 26-04- ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 15 2007 IN THE CASE OF ALL CARGO GLOBAL LOGISTICS LIMI TED AT KOPROLI VILLAGE, TALUKA URAN, DISTRICT RAIGAD , MAHARASHTRA. DURING THE SURVEY OPERATIONS U/S 133A OF THE ACT, CERTAIN LOOSE PAPERS MARKED AS ANNEXURE A-14, PAGE 108 TO 117 WERE IMPOUNDED IN THE SURVEY CONDUCTED AT OF FICE PREMISES OF ALL CARGO GLOBAL LOGISTICS LTD. AT KOPROLI VILLAGE, TAL UKA URAN, DISTRICT RAIGAD , MAHARASHTRA. AS PER THE AFORE-STATED IMPOUNDED DOC UMENTS, IT WAS INTER-ALIA OBSERVED BY THE AUTHORITIES THAT THE ASSESSEE HAS P AID UNACCOUNTED CASH OF RS. 35 LACS TO THE MASKAR FAMILY FOR PURCHASE OF LA ND AT NAGPUR FROM MASKAR FAMILY. THE TOTAL LAND ACQUIRED WAS 10 ACRES AND T HE CONSIDERATION WAS RS. 14.5 LAKHS PER ACRE AND THE DEAL WAS COMPLETED ON 1 3 TH SEPTEMBER, 2006 VIDE REGISTERED SALE DEED I.E. PRIOR TO THE SEARCH AND S URVEY OPERATIONS ON 26-04- 2007. THERE WAS MENTION OF 11.75 ACRES OF LAND AT NAGPUR TO BE ACQUIRED FROM MASKAR FAMILY BUT DUE TO DIFFERENCE IN AREA ME ASUREMENT, THE LAND ACQUIRED WAS 10 ACRES WHICH IS NOW AN ADMITTED AND UNDISPUTED POSITION BETWEEN THE RIVAL PARTIES. IT IS CLEARLY EMANATING FROM THE IMPOUNDED MATERIAL THAT THE ASSESSEE HAS PAID RS. 14.5 LAKHS PER ACRE FOR THE PURCHASE OF THE NAGPUR LAND FROM MASKAR FAMILY AND DEAL WAS COMPLET ED ON 13-09-2006 I.E. THE DATE WHEN REGISTERED SALE DEED IS EXECUTED BY M ASKAR FAMILY IN FAVOUR OF THE ASSESSEE. THE TOTAL CONSIDERATION AS PER IMPOU NDED DOCUMENT WAS RS. 1.45 CRORES , OUT OF WHICH RS. 1.10 CRORES WAS PAID THROUGH CHEQUE WHICH HAS BEEN RECORDED IN THE REGISTERED SALE DEED EXECUTED BY MASKAR FAMILY IN FAVOUR OF THE ASSESSEE ON 13-9-2006 . THE DEAL WAS COMPLE TED ON 13 TH SEPTEMBER, 2006 AND THE TITLE WAS TRANSFERRED IN FAVOUR OF THE ASSESSEE VIDE REGISTERED SALE DEED AND POSSESSION WAS ALSO ENJOYED BY THE AS SESSEE W.E.F 13-09-2006. THE STATEMENT OF SHRI DIWAN SINGH, EMPLOYEE OF THE ASSESSEE WAS RECORDED ON 26 TH APRIL, 2007 U/S. 131 OF THE ACT , WHEREBY HE WHILE EXPLAINING THE IMPOUNDED DOCUMENT A-14 PAGE 112 ADMITTED THAT THE UNACCOUNTED CASH PAYMENT OF RS. 35 LACS WAS PAID BY THE ASSESSEE TO MASKAR FAMILY FOR PURCHASE OF NAGPUR LAND, WHICH STATEMENT OF SH DIWA N SINGH WAS CONFIRMED BY THE ASSESSEE VIDE HIS STATEMENT ON OATH U/S 132( 4) OF THE ACT RECORDED ON ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 16 27-04-2007 WHEREBY THE ASSESSEE ADMITTED TO HAVE PA ID RS. 35 LACS IN UN- ACCOUNTED CASH TO MASKAR FAMILY FOR PURCHASE OF NAG PUR LAND. THE AFORE- SAID STATEMENTS RECORDED OF BOTH OF MR DIWAN SINGH AND THE ASSESSEE RECORDED ON 26-04-2007 AND 27-04-2007 RESPECTIVELY HAD NOT BEEN RETRACTED SO-FAR. THE IMPOUNDED DOCUMENT WHICH IS DATED 13-02-2007 , A-14 PAGE 112 CLEARLY REFERS TO THE NAGPUR LAND AS DEAL COMPLETED 13 SE P 06, WHILE WITH RESPECT TO NAGPUR LAND DEAL WITH MR. MOTIRAM J KHAIRKAR IT IS DESCRIBED THAT THE DEAL IS UNDER PROCESS THE STATEMENT ON OATH RECORDED U/S 131 OF THE ACT HAS NOT BEEN RETRACTED BY DIWAN SINGH NOR THE ASSESSEE HAS RETRACTED HIS STATEMENT RECORDED U/S 132(4) OF THE ACT ON 27-04-2007. THE A SSESSEE HAS FILED NOTORIZED AFFIDAVIT DATED 22 ND JANUARY, 2010 OF THE MASKAR FAMILY DENYING THAT CASH PAYMENTS WERE RECEIVED BY THE MASKER FAMI LY FROM THE ASSESSEE , WHICH IS ALMOST AFTER THREE YEARS OF THE DATE OF SE ARCH AND SURVEY WHICH CANNOT BE ADMITTED AS ADDITIONAL EVIDENCE AT THIS L ATE STAGE AND IS MERELY A SELF SERVING DOCUMENT AND IS AN AFTER-THOUGHT . MOR EOVER, THE MASKER FAMILY IS RECIPIENT AND BENEFICIARY OF THIS UNACCOUNTED CA SH OF RS. 35 LACS AND IT IS VERY MUCH UNDERSTANDABLE THAT TO PROTECT THEMSELVES AGAINST ANY POTENTIAL ACTION BY THE REVENUE UNDER THE PROVISIONS OF THE A CT , THEY HAVE GIVEN THIS AFFIDAVIT DATED 22-1-2010 ALMOST AFTER THREE YEARS AFTER DATE OF SEARCH AND SURVEY OPERATIONS ON 26-04-2007 AGAINST THE ASSESSE E AND HIS GROUP CONCERNS. WITH REGARD TO THE PERMISSION/APPROVAL WHICH ARE RE QUIRED FROM THE COURTS AS CONTENDED BY THE ASSESSEE BEING IN THE NATURE OF DI SPUTE WITH THE MASKAR FAMILY AND THE MAIN REASON FOR NON PAYMENT OF CASH OF RS 35 LACS TO THE MASKAR FAMILY, THE ASSESSEE WAS FULLY AWARE OF THE PERMISSIONS REQUIRED FROM THE AUTHORITIES AND THE APPLICATION WAS DULY FILED WITH THE HONBLE COLLECTOR FOR APPROVAL ON 11-05-2006 . THE ASSESSEE GOT THE LAND TRANSFERRED ON 13-09- ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 17 2006 FROM MASKAR FAMILY IN HIS FAVOUR VIDE REGISTER ED SALE DEED DATED 13-09- 2006 WHEREBY THE CONSIDERATION OF RS.1.10 CRORES W AS DULY PAID BY THE ASSESSEE TO MASKAR FAMILY BY THE CHEQUE AS REFLECTE D IN THE SAID REGISTERED SALE DEED AGAINST THE TOTAL AGREED CONSIDERATION OF RS.1.45 CRORES . NOW W.E.F 13-09-2006 THE ASSESSEE IS THE OWNER OF THE PROPERT Y ENJOYING THE POSSESSION OF THE PROPERTY AND IT IS HIGHLY IMPROBABLE ON TOUC H STONE OF PREPONDERANCE OF PROBABILITIES THAT THE MASKAR FAMILY WILL TRANSFER THE TITLE OF THE LAND ON RECEIVING PAYMENT OF RS.1.10 CRORES AS IS STATED IN THE REGISTERED SALE DEED, WITHOUT RECEIVING THE ENTIRE CONSIDERATION OF RS 1. 45 CRORES WHICH IS ALSO CONFIRMED VIDE IMPOUNDED MATERIAL VIDE PAGE 112 ANN EXURE A-14 WHEREBY IT IS STATED THAT DEAL WITH MASKAR FAMILY IS COMPLETED BY 13-09-2006 AND THE UN-ACCOUNTED CASH PAYMENT OF RS. 35 LACS HAVING BEE N MADE IN CASH TO MASKAR FAMILY FOR PURCHASE OF NAGPUR LAND FROM MASK AR FAMILY IS FURTHER CONFIRMED BY THE STATEMENT RECORDED U/S 131 OF THE ACT OF MR DIWAN SINGH AND ALSO THE STATEMENT ON OATH U/S 132(4) OF THE AC T OF THE ASSESSEE RECORDED BY THE REVENUE ON 26-04-2007 AND 27-04-2007 RESPECT IVELY . WE HAVE GIVEN OUR ANXIOUS THOUGHT TO THE PLEA OF TH E ASSESSEE THAT BECAUSE THE CERTAIN PERMISSIONS WERE FOUND TO BE TAKEN TO D ELETE THE WORD ADIVASI/KUL, THE CONSIDERATION OF RS. 35 LACS WAS W ITHHELD BUT WE ARE NOT AGREEABLE WITH THE CONTENTIONS OF THE ASSESSEE AS T HE ASSESSEE COMPANY HAS NOT PRODUCED ANY DOCUMENTS TO SUPPORT ITS CONTENTIO NS AND HAS MADE A BALD STATEMENT TO THAT EFFECT. IN-FACT AS PER THE DOCUME NTS WHICH ARE PRODUCED BY THE ASSESSEE IN THE PAPER BOOK FILED BEFORE THE TRI BUNAL, THE ASSESSEE PURCHASED THIS LAND FROM MASKAR FAMILY WHICH WAS AN AGRICULTURAL LAND BEARING NO. 93/1, 93/2 AND 93/3 ADMEASURING 2.35 , 1.21 AND 1.21 HR RESPECTIVELY OF MAUZA BORKHEDI(RAILWAY), TEHSIL AND DISTRICT NAGPUR. THE MASKAR FAMILY WAS OCCUPYING THIS LAND AS OCCUPANCY TENANTS W.E.F 13-05- 1966. THE LAND IS GOVERNED BY THE PROVISIONS OF BOM BAY TENANCY AND AGRICULTURAL LAND (VIDHARBHA REGION) ACT,1958 AND I N VIEW OF SECTION 57 OF ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 18 THE SAID ACT OF 1958, THE PREVIOUS SANCTION FOR TR ANSFER IS MANDATORY EXCEPT IN A CASE LAND IS PURCHASED BY AN OCCUPANCY TENANT. THE TRANSFER OF THE SAID LAND IS SUBJECT TO APPROVAL OF THE HONBLE COLLECTO R AS PROVIDED U/S 57 OF THE SAID ACT OF 1958 AS UNDER: 57 (1) NO LAND PURCHASED BY A TENANT UNDER SECTI ON 41 OR 46 OR 49A OR 57D OR 130 OR SOLD TO ANY PERSON UNDER SECTION 91 OR 122 SHALL BE TRANSFERRED BY SALE, GIFT, EXCHANGE , MORTGAGE, LEA SE OR ASSIGNMENT WITHOUT THE PREVIOUS SANCTION OF THE COLLECTOR .SUC H SANCTION SHALL BE GIVEN BY THE COLLECTOR IN SUCH CIRCUMSTANCES AND SU BJECT TO SUCH CONDITIONS AS MAY BE PRESCRIBED BY THE STATE GOVERN MENT. (2) ANY TRANSFER OF LAND IN CONTRAVENTION OF SUB-SE CTION(1) SHALL BE INVALID. PROVIDED THAT NOTHING IN THIS SECTION SHALL APPLY T O THE LAND PURCHASED BY AN OCCUPANCY TENANT. THE ASSESSEE APPROACHED THE HONBLE COLLECTOR WHO V IDE LETTER DATED 11-05- 2006 REFERRED THE MATTER TO THE HONBLE SDO AND THE HONBLE SDO VIDE LETTER DATED 21-07-2007 REFERRED THE MATTER TO THE HONBLE COURT OF TAHASILDAR (RURAL), NAGPUR TO ENQUIRE THE SAID APPLICATION ACC ORDING TO THE LAW AND SUBMIT THE REPORT TO HONBLE SDO FOR PERMISSION FOR THE SALE OF TENANCY LAND TO THE ASSESSEE. THUS, THE ASSESSEE WAS FULLY AWARE OF THE PERMISSION REQUIRED U/S 57 OF THE ACT OF 1958 FOR SALE OF THIS TENANCY LAND BY THE MASKAR FAMILY WHO WERE THE OCCUPYING THE LAND AS OCCUPANCY TENANT S AS THE APPLICATION WAS MADE FOR PERMISSION BY THE ASSESSEE WITH HONBLE CO LLECTOR ON 11-05-2006 THE HONBLE COURT OF THE TAHASILDAR WHO RECEIVED TH E DIRECTIONS FROM SDO ON 21-07-2007 WAS OF THE VIEW THAT THE ASSESSEE HAS VI OLATED THE PROVISIONS OF SECTION 57 OF THE ACT OF 1958 AS NO PREVIOUS SANCTI ON WAS OBTAINED FROM THE HONBLE COLLECTOR BEFORE PURCHASING THE LAND . THE ASSESSEE SUBMITTED BEFORE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 19 THE HONBLE COURT OF TAHASILDAR THAT THE LAND IS PU RCHASED BY THE ASSESSEE AND THE SAID LAND IS ALSO MUTATED IN HIS FAVOUR IN THE REVENUE RECORD .THE ASSESSEE ALSO STATED THAT NOT ANY OBJECTIONS ARE RE CEIVED FROM THE SELLERS OR ANY OTHER PERSON AFTER THE PUBLICATION OF JAHIRNAMA DATED 08-06-2007. IT IS THE AVERMENT OF THE ASSESSEE THAT THE SARPANCH OF B ORKHEDI(RAILWAY) HAS GIVEN A POSITIVE CERTIFICATE DATED 08-06-2007 FOR R EGULARIZATION OF THE SAID TRANSACTION. THE ASSESSEE CONTENTION BEFORE THE COU RT OF TAHASILDAR WAS THAT THE LAND IS SITUATED IN RESIDENTIAL ZONE AND THEREF ORE THE PROVISIONS OF ACT OF 1958 ARE NOT APPLICABLE TO THIS LAND AS PER PROVISI ONS OF SECTION 128(B) OF THE ACT OF 1958 WHICH PROVIDED AS UNDER: 128. NOTHING IN THE FOREGOING PROVISIONS OF THIS A CT SHALL APPLY,- ***** (B) TO ANY AREA WHICH THE STATE GOVERNMENT MAY, FR OM TIME TO TIME , BY NOTIFICATION IN THE OFFICIAL GAZETE , SPECIFY AS BE ING RESERVED FOR NON- AGRICULTURAL OR INDUSTRIAL DEVELOPMENT ; ***** ***** THE ASSESSSEE RELIED UPON THE GOVERNMENT NOTIFICAT ION DATED 12/05/2000 AND THE ORDER DATED 13-03-2007 PASSED BY HONBLE CO LLECTOR PUNE IN THE SIMILAR MATTER. THE ASSESSEE MADE ALTERNATIVE ARGU MENT THAT EVEN IF SECTION 57 OF THE ACT OF 1958 IS APPLICABLE, STILL THE SANC TION IS NOT REQUIRED AS THE LAND IS PURCHASED BY THE OCCUPANCY TENANT. FURTHER , IT WAS SUBMITTED THAT IF THE PERMISSIONS IS REQUIRED U/S. 57 OF THE ACT OF 1 958 AND THE LAND IS SOLD WITHOUT PRIOR PERMISSION OF THE HONBLE COLLECTOR, THEN THE HONBLE COLLECTOR HAS TO GRANT THE SANCTION TO THE SAID TRANSACTION O F SALE OF THE LAND BY FOLLOWING RULE 31-A OF THE BOMBAY TENANCY AND AGRI CULTURAL LAND (VIDHARBHA REGION) RULES,1959. THE ASSESSEE DID NOT FURNISHED THE COPY OF REGISTERED SALE DEED NOR SPECIFIED THE DATE OF PURC HASE OF THE LAND BEFORE HONBLE COURT OF TAHASILDAR DESPITE BEING SPECIFICA LLY ASKED BY THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 20 HONBLE COURT OF TAHASILDAR . THE HONBLE COURT OF TAHASILDAR DECLARED THE SALE AS INVALID AS PER THE PROVISIONS OF SECTION 57 OF THE ACT OF 1958, AS THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 57 OF THE ACT OF 1958 AND RULES FRAMED THERE-UNDER AND ALSO GAVE DIRECTIONS F OR VESTING THE SAID LAND TO THE STATE GOVERNMENT. THE ASSESSEE THEREAFTER FILED REVENUE APPEAL AND AN APPLICATION FOR GRANT OF STAY WITH HONBLE SUB-DIVISIONAL OFFICER, NAGPUR ON 31.10.2007 . THE ASSESSEE SUBMITTED BEFORE THE HONBLE SDO THAT THE ASSESSEE PURCHASED THE LAND FROM THE ORIGINAL LANDLORD MR VITHOBA SAKHARAM MASKAR VI DE REGISTERED SALE DEED DATED 13/09/2006. IT WAS SUBMITTED THAT AFTER THE E XECUTION OF SALE DEED ON 13-09-2006, THE ASSESSEE CAME TO KNOW THAT THE ORIG INAL LANDLORD WAS HOLDING THE LAND AS OCCUPANCY TENANT AS DEFINED UND ER THE ACT OF 1958 AND THE SAID OCCUPANCY TENANT BECAME OWNER OF THE LAND ON 13-05-1966 BY DEPOSITING THE PURCHASE PRICE AS DETERMINED BY AGRI CULTURAL LAND TRIBUNAL AND TAHASILDAR, NAGPUR BY WAY OF DEPOSIT OF RS.1179 .95 IN THE GOVERNMENT TREASURY. THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS BONAFIDE PURCHASER IN POSSESSION OF THE LAND. THE ASSESSEE MADE APPLICATI ON WITH HONBLE COLLECTOR FOR PERMISSION WHICH WAS FORWARDED TO THE HONBLE S DO WHO IN TURN FORWARDED TO THE HONBLE COURT OF TAHASILDAR FOR RE PORT , BUT HONBLE COURT OF TAHASILDAR INSTEAD OF SUBMITTING THE REPORT DECLARE D THE SALE AS INVALID AS PER THE PROVISIONS OF SECTION 57 OF THE ACT OF 1958, ON THE GROUNDS THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 57 OF THE ACT OF 1958 AND RULES FRAMED THERE-UNDER AND ALSO GAVE DIRECTIONS F OR VESTING THE SAID LAND TO THE STATE GOVERNMENT, WHICH IS ILLEGAL. THE ASSESSE E REITERATED ITS SUBMISSIONS AND THE HONBLE SDO, NAGPUR VIDE ORDERS DATED 29-11-2007, QUASHED AND SET ASIDE THE ORDERS DATED 17-10-2007 O F THE HONBLE COURT OF TAHASILDAR, NAGPUR AND GRANTED SANCTION TO THE SALE TRANSACTION DATED 13/09/2006 IN RESPECT OF THE LAND PURCHASED BY THE ASSESSEE. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 21 THUS, THE PERUSAL OF THE ABOVE CLEARLY REVEALS THAT THE ASSESSEE WAS AWARE OF THE MASKAR FAMILY HOLDING THE LAND AS OCCUPANCY TEN ANT FOR WHICH THE APPLICATION WAS MADE TO HONBLE COLLECTOR AS EARLY AS ON 11-05-2006 I.E. BEFORE THE SALE DEED WAS REGISTERED IN ASSESSEES F AVOUR ON 13-09-2006 BY THE MASKER FAMILY. THE DISPUTE MAINLY AROSE WHEN THE HO NBLE COURT OF TAHASILDAR ISSUED NOTICE TO THE ASSESSEE AFTER RECE IPT OF LETTER DATED 21-07- 2007 FROM HONBLE SDO , AND BY THAT TIME THE LAND W AS ALREADY PURCHASED BY THE ASSESSEE VIDE REGISTERED SALE DEED DATED 13-09- 2006 AND POSSESSION WAS ALSO ENJOYED BY THE ASSESSEE .ONE OF THE CONTENTION S FOR INVALIDATING THE SALE TRANSACTION TAKEN IS VIOLATION OF SECTION 57 OF THE ACT OF 1958 BY THE HONBLE COURT OF TAHASILDAR(RURAL),NAGPUR, BUT THE ASSESSE E CONDUCT WAS ALSO NOT UPTO THE MARK AS THE ASSESSEE DID NOT SUPPLIED THE COPIES OF THE SALE DEED AND THE DATE OF SALE DESPITE BEING CALLED UPON THE HONBLE COURT OF TAHASILDAR(RURAL), NAGPUR THE ASSESSEE WAS AWARE THAT THE MASKAR FAMILY WAS H AVING RIGHT TO TRANSFER THE LAND WHICH WAS VESTED VIDE ORDERS DATED 13-05-1 966 PASSED BY THE LAND AGRICULTURAL TRIBUNAL AND PURCHASE PRICE HAS BEEN D EPOSITED BY MASKAR FAMILY WITH THE GOVERNMENT TREASURY.THE MASKAR FAMI LY WAS HAVING CULTIVATING CONTINUED POSSESSION OF THE LAND SINCE THEN AND HENCE HAVE DULY COMPLIED WITH THE REQUIREMENTS OF THE SECTION 43(5) OF THE ACT OF 1958. THE ASSESSEE WAS AWARE THAT THE STATE GOVERNMENT HA S ISSUED NOTIFICATION DATED 12/05/2000 AND IN VIEW OF THE PROVISIONS OF S ECTION 128(B) OF THE ACT OF 1958, NO PRIOR SANCTION OF THE HONBLE COLLECTOR WI LL BE REQUIRED UNDER THE ACT OF 1958. THE ASSESSEE WAS AWARE THAT IF THE PERMISSIONS IS R EQUIRED U/S. 57 OF THE ACT OF 1958 AND THE LAND IS SOLD WITHOUT PRIOR PERMISSI ON OF THE HONBLE COLLECTOR, THEN THE HONBLE COLLECTOR CAN GRANT THE SANCTION T O THE SAID TRANSACTION OF ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 22 SALE OF THE LAND BY FOLLOWING RULE 31-A OF THE BOM BAY TENANCY AND AGRICULTURAL LAND (VIDHARBHA REGION) RULES,1959. NOTHING IS EMANATING FROM THE RECORDS THAT THE MASK AR FAMILY AGREED TO OBTAIN THE PERMISSION FOR THE SALE OF THE AFORE-STA TED LAND. THE MASKER FAMILY HAS RIGHT AND TITLE TO SELL THE LAND , BUT OF COURS E SUBJECT TO APPROVAL AS SET OUT ABOVE. IT IS A CONTRACTUAL OBLIGATION WHICH EME RGES FROM THE CONTRACT BETWEEN THE PARTIES AS TO THE RIGHTS AND OBLIGATION S OF EACH OF THE CONTRACTING PARTIES WHICH EMERGES FROM THE CONTRACT ENTERED INT O BETWEEN THE PARTIES TO THE CONTRACT. IT WAS FOR THE ASSESSEE TO DEMONSTRAT E WITH POSITIVE EVIDENCE THAT THE MASKAR FAMILY OBLIGATED TO OBTAIN THE PERM ISSION FOR SALE OF THE PROPERTY AT THEIR COST BY BRINGING ON RECORD AGREEM ENT TO SALE/REGISTERED SALE DEED BUT THE SAID DOCUMENTS ARE NOT BROUGHT ON RECO RD TO EVIDENCE THE OBLIGATION OF THE SELLER TO SEEK THE PERMISSION FOR TRANSFER OF THE SAID LAND AT THEIR COST. RATHER , THE ASSESSEE MADE AN APPLICATI ON WITH HONBLE COLLECTOR AND ALSO WITH OTHER RELEVANT AUTHORITIES AS APPLICA NT WHILE THE SELLER MASKAR FAMILY IS A NON-APPLICANT , WHICH ALSO DEMONSTRATE IN THE ABSENCE OF EVIDENCE TO THE CONTRARY THAT IT WAS THE ASSESSEE WHO WAS OB LIGATED TO TAKE THE NECESSARY PERMISSIONS FOR TRANSFER OF THE LAND IN H IS FAVOUR IN COMPLIANCE OF THE LAW. IN THE ABSENCE OF ANY COGENT MATERIAL AND EVIDENCES BROUGHT ON RECORD BY THE ASSESSEE TO THE CONTRARY , THE PRESUM PTION WILL BE AGAINST THE ASSESSEE AS THE EVIDENCES ARE WITHHELD BY THE ASSES SEE. IN ANY CASE IF THE ASSESSEE CAME TO KNOW ONLY ON 11-5-2006 FOR THE FIR ST TIME THAT LAND HELD BY THE MASKAR FAMILY IS HELD BY THEM AS AN OCCUPANCY T ENANT WHEN HE MADE THE APPLICATION WITH HONBLE COLLECTOR FOR GRANT OF PER MISSION U/S 57 OF THE ACT OF 1958, NOTHING PREVENTED THE ASSESSEE FROM CANCELLIN G THE DEAL WITH THE MASKAR FAMILY AS THE SALE DEED WAS REGISTERED ONLY ON 13-09-2006 OR ATELAST PUTTING THE SAID NEW FACTS IN WRITING WITH MASKAR F AMILY PUTTING ONUS ON THE MASKAR FAMILY TO BEAR ALL ADDITIONAL LITIGATION COS TS WITH RESPECT TO THE SEEKING APPROVAL U/S 57 OF THE ACT OF 1958 TO AVOID ANY DIS PUTE/LITIGATION WITH THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 23 MASKAR FAMILY IN FUTURE AS THE SAME WAS NOT DISCLOS ED TO THE ASSESSEE BY THE MASKAR FAMILY PRESUMABLY AT THEIR FAULT WHILE ENTER ING INTO THE DEAL AS CLAIMED BY THE ASSESSEE, IF THE CONTENTIONS OF THE ASSESSEE IS TO BE BELIEVED TO BE TRUE , WHICH IN OUR HUMBLE AND RESPECTFUL OPINIO N WE ARE NOT INCLINED TO ACCEPT THE SAME. THE CONTENTION OF THE ASSESSEE THAT IT IS BECAUSE O F ADIVASI/KUL LAND AND ADDITIONAL PERMISSION TO GET THE KUL DELETED FROM THE RECORDS WAS UNDERTAKEN BY THE ASSESSEE AT HIS OWN COST, IS NOT BORNE FROM THE RECORDS AND CANNOT BE ACCEPTED. THE AFFIDAVIT OF MASKER FA MILY IS DATED 22-1-2010 WHICH IS ALMOST 3 YEARS AFTER THE DATE OF SEARCH/ S URVEY ON 26-04-2007 AND IS A SELF SERVING DOCUMENT WHICH IS AN AFTERTHOUGHT AS MASKAR FAMILY IS THE RECIPIENT/BENEFICIARY OF RS 35 LACS RECEIVED FROM T HE ASSESSEE AND IT IS UNDERSTANDABLE TO PROTECT THEMSELVES AS AGAINST ANY POTENTIAL THREAT OF ACTION BY THE REVENUE TO FASTEN TAX LIABILITY AGAINST THEM , THEY HAVE DENIED HAVING RECEIVING UN-ACCOUNTED CASH OF RS. 35 LACS IN ORDER TO SUPPORT THE CLAIM OF THE ASSESSEE TO WRIGGLE OUT OF POSSIBILITY FOR AN P OTENTIAL ADVERSE ACTION BY THE REVENUE AGAINST THEM UNDER THE PROVISIONS OF THE AC T. FROM THE RECORDS AND FACTS AS EMERGING FROM OUR DET AILED DISCUSSIONS AND REASONING AS SET OUT ABOVE IN THE PRECEDING PARAS, WE CONCLUDE ON THE TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES AS UND ER - A) THAT THE MASKER FAMILY EXECUTED REGISTERED SALE DEED ON 13-09-2006 IN FAVOUR OF THE ASSESSEE WITH RESPECT TO THE LAND UND ER CONSIDERATION . B). THE ASSESSEE IS ENJOYING PEACEFUL VACANT AND PH YSICAL POSSESSION OF THE LAND UNDER CONSIDERATION SINCE THE EXECUTION OF REG ISTERED SALE DEED IN HIS FAVOUR W.E.F. 13-09-2006 BY THE MASKER FAMILY. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 24 C). THE LAND UNDER CONSIDERATION WAS DULY MUTATED I N FAVOUR OF THE ASSESSEE IN THE REVENUE RECORDS AFTER REGISTERED SALE DEED W AS EXECUTED IN FAVOUR OF THE ASSESSEE BY THE MASKER FAMILY. D). THE IMPOUNDED DOCUMENT A-14,PAGE 112 CLEARLY SP EAKS THAT THE LAND WAS PURCHASED AT THE RATE OF RS.14.50 LACS PER ACRE, WH ILE THE SALE DEED IS REGISTERED @ RS.11 LACS PER ACRE . THE SALE DEED IS REGISTERED FOR RS.1.10 CRORES FOR 10 ACRES AND ACTUAL SALE TRANSACTION VAL UE IS RS.1.45 CRORES , THUS, RS.35 LACS WAS DULY PAID IN CASH BY THE ASSESSEE TO MASKER FAMILY BEFORE EXECUTION OF THE REGISTERED SALE DEED ON 13-09-2006 . THE SAID IMPOUNDED DOCUMENT CLEARLY REVEALS THAT THE DEAL WITH MASKER FAMILY IS COMPLETED ON 13- 09-2006, WHILE SOME OTHER DEAL WAS STATED TO BE UND ER PROCESS IN THE SAME DOCUMENTS WHICH IS A DOCUMENT DATED 13-02-2007. E). SH DIWAN SINGH , EMPLOYEE OF THE ASSESSEE VIDE HIS STATEMENT RECORDED U/S. 131 OF THE ACT ON 26-04-2007 WHILE CONFIRMING THE IMPOUNDED DOCUMENT A-14, PAGE 112 HAS CONFIRMED AND ADMITTED THAT RS. 35 LACS WAS PAID BY THE ASSESSEE IN UNACCOUNTED CASH TO THE MA SKAR FAMILY FOR PURCHASE OF LAND AT NAGPUR, WHICH IS CONFIRMED AND ADMITTED BY THE ASSESSE VIDE HIS STATEMENT ON OATH DATED 27-04-2007 RECORDED U/S 132 (4) OF THE ACT. F). THE STATEMENTS RECORDED ON 26-04-2007 AND 27-04 -2007 OF SH DIWAN SINGH U/S 131 OF THE ACT AND THE ASSESSEE U/S 132(4 ) OF THE ACT RESPECTIVELY ARE NEITHER RETRACTED BY MR DIWAN SINGH NOR BY THE ASSESSEE SO-FAR. G). IT IS HIGHLY IMPROBABLE ON THE TOUCHSTONE OF PR E-PONDERANCE OF THE PROBABILITIES THAT MASKAR FAMILY TRANSFERRED THE LA ND VIDE REGISTERED SALE DEED ON 13-09-2006 , HANDED OVER THE PEACEFUL, PHYSICAL AND VACANT POSSESSION OF THE LAND ON 13-09-2006 AND ALLOWED THEIR LAND TO BE MUTATED IN REVENUE RECORD IN FAVOUR OF THE ASSESSEE WITHOUT RECEIVING TOTAL CONSIDERATION OF ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 25 RS.1.45 CRORES FOR SALE OF 10 ACRES OF THEIR LAND A T NAGPUR BEFORE EXECUTION OF REGISTERED SALE DEED ON 13-09-2006. THUS, WE CONCLU DE THAT THE REGISTERED VALUE WAS RS.1.10 CRORES , WHILE RS. 35 LACS WAS UN ACCOUNTED CASH PAID BY THE ASSESSEE OUT OF UNDISCLOSED INCOME BEFORE THE E XECUTION OF REGISTERED SALE DEED BY THE MASKER FAMILY ON 13-09-2006 IN FAVOUR O F THE ASSESSEE WITH RESPECT TO THE LAND UNDER CONSIDERATION. H). THE NOTORISED AFFIDAVIT DATED 22-01-2010 EXECUT ED BY MASKAR FAMILY PRODUCED AFTER 3 YEARS AND 5 MONTHS OF COMPLETION O F DEAL ON 13-09-2006 AND ALMOST THREE YEARS AFTER THE DATE OF SEARCH AND SURVEY ON 26-04-2007 IS AN AFTER-THOUGHT AND SELF SERVING DOCUMENT HAVING N O EVIDENTIARY VALUE AS THE MASKER FAMILY ITSELF IS BENEFICIARY AND RECIPIENT O F THE SAID UN-ACCOUNTED CASH OF RS.35 LACS WHICH AFFIDAVIT IS GIVEN TO WRIGGLE O UT THEMSELVES FROM POSSIBILITY OF AN POTENTIAL THREAT OF ACTION BY THE REVENUE AG AINST THEM UNDER THE PROVISIONS OF THE ACT. I). THERE WAS NO EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE WITH RESPECT TO THE SELLER TAKING AN OBLIGATION TO GET THE CLEARANC ES/PERMISSION FOR THE SALE OF THE LAND AT THEIR COST. J). THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE A SSESSEE THAT THERE WAS DELAY TAKEN PLACE IN TRANSFER OF LAND IN HIS FAVOUR DUE TO LAND BEING PURCHASED BY MASKER FAMILY FROM ADIVASI/KUL AND THE SO-CALLED DELAY OCCURRED DUE TO THE DELETION OF KUL FROM THE RECO RDS AND EXTRA LITIGATION CHARGES WERE INCURRED BY THE ASSESSEE AND HENCE PAY MENT OF RS. 35 LACS TO BE PAID AS UN-ACCOUNTED CASH TO MASKAR FAMILY WAS WITH HELD BY THE ASSESSEE. K). THE ASSESSEE APPLIED BEFORE THE HONBLE COLLECT OR ON 11-05-2006 FOR PERMISSION U/S 57 OF THE ACT OF 1958 . THEREAFTER T HE LAND WAS TRANSFERRED AND REGISTERED IN FAVOUR OF THE ASSESSEE ON 13-09-2 006 AND THERE-AFTER THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 26 ASSESSEE WAS ENJOYING PEACEFUL POSSESSION OF THE LA ND UNDER CONSIDERATION . THE LAND UNDER CONSIDERATION WAS MUTATED IN FAVOUR OF THE ASSESSEE IN REVENUE RECORD. THE DISPUTE STARTED WHEN THE HONBL E COURT OF TAHASILDAR ISSUED NOTICE ON 21-07-2007 AS SET OUT ABOVE , BUT BY THAT TIME LAND WAS ALREADY TRANSFERRED IN FAVOUR OF THE ASSESSEE AND T HE ENTIRE CONSIDERATION WAS PAID OUT BY THE ASSESSEE TO THE MASKAR FAMILY AS SE T OUT ABOVE IN DETAILS. L). WITH RESPECT TO THE TECHNICAL ASPECT OF THE DIS PUTE WITH RESPECT TO CLEARANCE UNDER SECTION 57 OF THE ACT OF 1958 ETC., WE HAVE DISCUSSED THE ENTIRE FACTUAL MATRIX OF THE DISPUTE IN PRECEDING PARAS AS SET OU T ABOVE WHICH IS NOT REPEATED FOR SAKE OF CONVENIENCE AND BREVITY, AS TH E SAME ALSO DOES NOT ADVANCE THE CASE OF THE ASSESSEE. THUS KEEPING IN VIEW THE ENTIRE FACTUAL MATRIX OF C ASE AND ON TOUCHSTONE OF PREPONDERANCE OF PROBABILITIES, WE HOLD THAT THE AS SESSEE DID PAID AN UN- ACCOUNTED CASH OF RS. 35 LACS TO MASKAR FAMILY FOR ACQUISITION OF LAND UNDER CONSIDERATION AT NAGPUR FROM MASKAR FAMILY BEFORE C OMPLETION OF THE REGISTRATION OF SALE DEED DATED 13-09-2006 AND THE ADDITIONS SO MADE TO THE INCOME OF THE ASSESSEE AS MADE BY THE AO AND CONFIR MED BY THE LEARNED CIT(A) IS UPHELD. WE FIND NO INFIRMITY IN THE ORDER S DATED 26-07-2013 OF THE LEARNED CIT(A) WHICH WE CONFIRM AND SUSTAIN.THIS DI SPOSES OF ALL THE GROUNDS RAISED BY THE ASSESSEE IN GROUNDS OF APPEAL FILED W ITH THE TRIBUNAL. WE ORDER ACCORDINGLY. WE MAY ALSO CLARIFY THAT WE HAVE DULY TAKEN INTO CO NSIDERATION ALL THE CASE LAWS RELIED UPON AND CITED BY THE PARTIES IN THEIR PLEADINGS BEFORE US, BEFORE ARRIVING AT OUR ABOVE CONCLUSIONS. 15. IN THE RESULT , APPEAL FILED BY THE ASSESSEE IN ITA NO. 5813/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08 IS DISMISSED. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 27 NOW, WE SHALL TAKE UP THE APPEAL FILED BY THE REVEN UE IN ITA NO. 5978/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10. 16. THE GROUNDS OF APPEAL RAISED BY THE REVENUE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBA I (HEREINAFTER CALLED THE TRIBUNAL) READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE ID. CIT(A) ERRED IN DELETING THE PENALTY LEVIED U/S.27LAA A WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT FULFILLED THE PRE-REQUISITE CONDITIONS FOR CLAIMING IMMUNITY FROM LEVY OF PENAL TY U/S 271 AAA. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ID CIT(A), ERRED IN DELETING THE PENALTY LEVIES U/S 27LAAA WITHOU T APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT SUBSTANTIATED WITH DOCUMENT ARY EVIDENCE AS TO HOW THE SUM OF RS. 153 CRORES HAS COME TO THE COMPANIES, M/S SEALAND PORTS PVT. LTD, M/S AVASH LO GISTICS PVT. LTD. AND M/S ALL CARGO GLOBAL LOGISTICS PVT. LTD. , WHERE THE ASSESSEE IS A MANAGER AND WHICH WAS FURTHER ROUTED THROUGH THESE C OMPANIES. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFIC ER BE RESTORED. 17. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH A ND SEIZURE OPERATION U/S 132(1) OF THE ACT WAS CONDUCTED BY THE REVENUE ON 1 0 TH JULY, 2009 IN THE CASE OF ALL CARGO GROUP OF COMPANIES, THEIR DIRECTO RS AND OTHER IMPORTANT EMPLOYEES. THE ASSESSEE BEING MANAGING DIRECTOR OF THE COMPANY WAS ALSO COVERED U/S. 132(1) OF THE ACT . PURSUANT TO THE SEARCH OPERATION U/ 132(1) OF THE A CT, THE ASSESSEE WAS ISSUED AND SERVED WITH THE NOTICE U/S 153A OF THE A CT. THE ASSESSEE HAS FILED HIS ORIGINAL RETURN OF INCOME U/S. 139 ON 30 TH SEPTEMBER, 2009 DECLARING TOTAL INCOME OF RS. 27,56,94,930/- . THE ASSESSEE A LSO FILED HIS RETURN OF INCOME U/S 153A OF THE ACT ON 29 TH OCTOBER, 2009 DECLARING TOTAL INCOME OF ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 28 RS. 27,56,94,930/-. THE AO COMPLETED THE ASSESSMEN T U/S 143(3) R.W.S. 153A OF THE ACT ON 30 TH DECEMBER, 2009 COMPUTING THE TOTAL ASSESSED INCOME OF RS. 27,56,94,930/- WHEREBY RETURNED INCOM E WAS ACCEPTED. THE PENALTY PROCEEDINGS U/S 271AAA OF THE ACT WAS INITI ATED AGAINST THE ASSESSEE BY THE AO . DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, CE RTAIN LOOSE PAPERS SEIZED FROM THE OFFICE PREMISES OF ALL CARGO GLOBAL LOGIST ICS LTD. I.E. ANNEXURE A-11, PAGE NO. 38 & 39 REVEALED THAT THE ASSESSEE HAS SPE NT A SUM OF RS. 10 LAKHS IN CASH TO ACQUIRE ANTIQUE FURNITURE FOR HIS PROPER TY CALLED BASTWAL HOUSE AND SPENT RS. 17,15,980/- IN CASH FOR CARRYING OUT CIVIL WORKS IN HIS PROPERTY CALLED SKS ENCLAVE, MANGALORE. THERE WAS ALSO A DIS CLOSURE BY THE ASSESSEE WITH RESPECT TO CAPITAL OF RS. 23 CRORES INTRODUCED IN THE COMPANY PROMOTED BY THE ASSESSEE NAMELY INDIA TOURIST AND HERITAGE VILLAGE PRIVATE LIMITED THESE AMOUNTS WERE DECLARED IN HIS RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/S 153A OF THE ACT I.E. TOTALING RS.23,27,1 5,980/- AS UNDISCLOSED BUSINESS INCOME , ALONG WITH HIS OTHER ACCOUNTED FO R INCOMES FROM SALARY , HOUSE PROPERTY, CAPITAL GAINS AND INCOME FROM OTHER SOURCES. PENALTY PROCEEDINGS WERE INITIATED BY THE AO AGAINS T THE ASSESSEE VIDE NOTICE U/S 271AAA OF THE ACT ON 30 TH DECEMBER, 2009 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE ASSESSEE DID NOT CONTEST THE QUA NTUM ADDITION MADE BY THE REVENUE BEFORE THE LEARNED CIT(A) AND HENCE QUA NTUM ASSESSMENT ATTAINED FINALITY. THE ASSESSEE SUBMITTED THAT HE ALSO DECLARED RS. 23 CRORES FOR CAPITAL INTRODUCTION ALONG WITH RS. 10 LACS FOR ACQUIRING A NTIQUE FURNITURE AT BASTWAL HOUSE AND RS. 17,15,980/- FOR CARRYING OUT CIVIL WO RKS AT SKS ENCLAVE, MANGALORE WHICH WAS OFFERED IN THE STATEMENT RECORD ED U/S 132(4) OF THE ACT ON 11/12 TH JULY, 2009. THE ASSESSEE SUBMITTED THAT HE ALSO E XPLAINED THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 29 MANNER IN WHICH SAID UNDISCLOSED INCOME WAS DERIVED AND PAID THE TAXES THEREON ALONG WITH INTEREST. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) R.W.S. 153A OF THE ACT ON 30 TH DECEMBER, 2009 WHEREBY THE AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 27,56,94,930/- I.E. T HE SAME AS RETURNED INCOME . THUS, THE INCOME DISCLOSED IN THE RETURN O F INCOME FILED U/S 153A OF THE ACT WAS ACCEPTED BY THE A.O. WHILE FRAMING THE AFORE-STATED ASSESSMENT ORDERS DATED 30-12-2009. PENALTY PROCEEDINGS WERE INITIATED U/S 271AAA OF TH E ACT FOR WHICH THE ASSESSEE SUBMITTED THAT HE HAS FULFILLED ALL THE TH REE CONDITIONS AS LAID DOWN U/S. 271AAA OF THE ACT . THE ASSESSEE SUBMITTED THA T DURING THE COURSE OF THE SEARCH, STATEMENT OF THE ASSESSEE U/S 132(4) OF THE ACT WAS RECORDED ON 11/12 TH JULY 2009 AND 03.09.2009 , WHEREBY THE ASSESSEE HA S OFFERED THE SUM OF RS.23,27,15,980/- AS THE UNDISCLOSED INCOME AND SPECIFIED THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED AND AL SO PAID THE TAX ALONG WITH INTEREST IN RESPECT OF THE AFORE-STATED UNDISC LOSED INCOME BEFORE FILING OF THE RETURN OF INCOME WITH THE REVENUE. WITH REFERE NCE TO THE STATEMENT DATED 11/12 TH JULY 2009 QUESTION AND ANSWERS NO. 16 & 18 AND THE STATEMENT DATED 3 RD SEPTEMBER, 2009 QUESTION AND ANSWER NO.2 & 5, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS OFFERED UN DISCLOSED INCOME U/S 132(4) OF THE ACT AND SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED AND PAID DUE TAXES ON THE SAME. THE ASSESS EE SUBMITTED THAT DURING THE COURSE OF THE RECORDING OF THE STATEMENT U/S 13 2(4) OF THE ACT ON 11/12 TH JULY, 2009 THE ASSESSEE WAS CONFRONTED WITH QUESTIO NS WHICH DEALS WITH THE MODUS OPERANDI AND THE MANNER IN WHICH THE UNDISCLO SED INCOME WAS DERIVED FOR WHICH REPLIES HAVE BEEN GIVEN BY THE AS SESSEE ACCEPTING THE FACTS UNEARTHED BY THE REVENUE. THE ASSESSEE SUBMITTED T HAT IN RESPECT OF SUM OF RS. 23 CRORES AS SHARE CAPITAL MONEY IN INDIA TOUR IST AND HERITAGE VILLAGE PRIVATE LTD. IN Q NO. 16, THE WHOLE MODUS OPERAND I , MOVEMENT OF FUND WAS EXPLAINED AND ACCEPTED BY THE ASSESSEE. FURTHER, T HE ANNEXURE A-1, PAGE NO. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 30 41 FOUND AND SEIZED ON 3 RD SEPTEMBER, 2009 REFERRED TO THE FUND FLOW OF THE ASSESSEE WHICH INCLUDED RS. 23 CRORES WHICH HAS BEE N DEALT WITH IN THE STATEMENT RECORDED U/S 132(A) OF THE ACT ON 3 RD SEPTEMBER, 2009. THE Q NO. 2 AND THE ANSWER WHICH IS REPRODUCED BELOW:- Q.2. DURING THE COURSE OF P.O. ACTION TODAY AT YOUR OF FICE, FOLLOWING PAPERS ARE SEIZED AND MARKED AS ANNEXURE AI CONTAINI NG 59 PAGES. PLEASE GO THROUGH THE SAME AND GIVE YOUR EXPLANATION AND REPLY TO THE SAME. ANS. PAGE NO. EXPLANATION 1-2 THIS IS MY CAPITAL ACCOUNT FOR THE MONTH OF MARC H 2008. 3-12 IT IS THE LEDGER ACCOUNT OF YES BANK IN THE BOOKS OF M/S SEALAND PORTS PRIVATE LIMITED FOR THE YEAR ENDED MAR CH, 2008. . 41 THIS IS THE PENDING IOU CLEARANCE STATEMENT FOR MA Y 2009. LEFT HAND SIDE IS THE FUND FLOW OF CASH FOR THE MONTH. ON THE RIGHT HAND SIDE IS THE RECORDING OF CASH RECEIPT OF RS.23 CRORE FROM RAVI JAKHAR, MY EMPLOYEE . THIS IS PERTAINING TO MY INVESTMENT IN M/S INDIA HERITA GE AND TOURIST VILLAGE PRIVATE LIMITED WHICH WAS ROUTED THROUGH M/S SUPREME COMMUNICATION PRIVATE LIMITED BY GIVING THEM THE CASH AND IN TURN CHEQUE WAS RECEIVED . THIS WAS SHOWN AS SHARE APPLICATION MONEY IN THE SAI D COMPANY IN THE NAME OF M/S SUPREME COMMUNICATION PRIVATE LIMITED. THIS PARTICULAR TRANSACTION WAS ACCEP TED BY ME IN MY EARLIER STATEMENT ON 11.7.2009 AND TAXES WERE ACCORDINGLY PAID BY ME IN AUGUST 2009. . FROM THE ABOVE IT CAN BE SEEN THAT THE ASSESSEE HAS CLEARLY SUBSTANTIATED THE MANNER IN WHICH UNDISCLOSE D INCOME WAS DERIVED. THUS THE SECOND CONDITION IS ALS O FULFILLED. (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF ANY, IN R ESPECT OF THE UNDISCLOSED INCOME. THE ASSESSEE HAS PAID ALL THE TAXES ALONGWITH INTEREST DUE ON THE INCOME DISCLOSED IN THE STATEMENT U/S 132(4), ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 31 RATHER EVEN BEFORE THE FINAL STATEMENT U/S 132(4) WAS RECORDED ON 3.9.2009 THE ASSESSEE PAID THE TAXES IN AUGUST 2009. THUS THE THIRD CONDITION IS ALSO FULFIL LED. FROM THE ABOVE FACTS AND EXPLANATION IT CAN BE OBSERV ED THAT THE OFFER OF RS. 23,27,15,980/- IT IS ALREADY COVE RED UNDER THE EXCEPTION TO SECTION 271 AAA (2), AS THE ASSESSEE HAS DECLARED THE SAME UNDER STATEMENT RECORD ED U/S 132(4) AND FULFILLED ALL THE CONDITIONS STIPULATED IN THE SAID SECTION. UNDER THE CIRCUMSTANCES THE PENALTY PROCEEDINGS INITIATED REQUIRES TO BE DROPPED .' IT WAS OBSERVED BY THE A.O. THAT THE ASSESSEE HAS ONLY HIG HLIGHTED THE UNDISCLOSED INCOME OF RS. 23,27,15,980/- AND CLAIME D THAT THIS UNDISCLOSED INCOME WAS OFFERED IN THE RETURN OF INCOME FILED WI TH THE REVENUE AND THE FULFILLMENT OF THE CONDITIONS STIPULATED IN SECTION 271AAA OF THE ACT , WHEREAS THE ASSESSEE HAS NOT FULFILLED ALL THE CONDITIONS S TIPULATED IN SECTION 271AAA OF THE ACT. THE AO OBSERVED THAT THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WHICH THE AMOUNT OF RS. 23,27,15,980/- WA S DERIVED WHICH WAS ONE OF THE PRE-CONDITIONS TO GET IMMUNITY FROM THE PENALTY. THE AO OBSERVED THAT THE ASSESSEE IN THIS CASE FIRST ADMITTED THIS INCOME IN THE HANDS OF THE COMPANY BUT SUBSEQUENTLY DECLARED IN HIS OWN HANDS FOR WHICH THE REASON IS NOT KNOW, THE ASSESSEE WAS OBLIGED TO SUBSTANTIATE THE SOURCE AND MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN EARNED. THE S AID INCOME WAS UNEARTHED ONLY DUE TO SEARCH AND IF THERE WOULD NOT HAVE BEEN SEARCH U/S 132(1) OF THE ACT, THE ASSESSEE WOULD NOT HAVE DISC LOSED THIS UNDISCLOSED INCOME OF RS.23,27,15,980/- . THE ASSESSEE HAS ALSO NOT FILED THE RETURN OF INCOME BY 31-08-2009 I.E. THE DUE DATE OF FILING OF RETURN OF INCOME AND RETURN OF INCOME WAS FILED ON 30-09-2009. THE A. O. RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF UOI V. DHAR MENDRA TEXTILE PROCESSOR, (2008) 306 ITR 277(SC), DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF INDUS ENGINEERING CO. V. ACIT (INV.) (2 009)184 TAXMAN 269(BOM.) AND HELD THAT THE ASSESSEE HAS NOT FULFILLED THE CO NDITIONS OF 271AAA OF THE ACT FOR THE IMMUNITY FROM PENALTY AND THEREFORE THE SUM OF RS. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 32 23,27,15,980/- DECLARED AS UNDISCLOSED INCOME IN TH E RETURN OF INCOME U/S 153A OF THE ACT IS LIABLE FOR PENALTY DUE TO CONTR AVENTION OF SECTION 271AAA OF THE ACT , 10% OF THE UNDISCLOSED INCOME WHICH WO RKS OUT TO RS. 2,32,71,598/- IS LIABLE TO BE PAID BY THE ASSESSEE AS PENALTY U/S 271AAA OF THE ACT , VIDE PENALTY ORDERS DATED 30-06-2010 PASS ED U/S. 271AAA OF THE ACT BY THE AO WITH THE PRIOR APPROVAL OF THE LEARNED AD DITIONAL COMMISSIONER OF INCOME TAX. 18. AGGRIEVED BY THE PENALTY ORDERS DATED 30-06-201 0 PASSED BY THE A.O. U/S 271AAA OF THE ACT, THE ASSESSEE FILED FIRST APPEAL BEFORE THE LEARNED CIT(A). 19. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITT ED THAT THE ASSESSEE HAS OFFERED FOR TAXATION THE UNDISCLOSED INCOME AGG REGATING TO RS. 23,27,15,980/- VIDE RETURN OF INCOME FILED U/S 153A OF THE ACT BASED ON THE STATEMENT RECORDED U/S 132(4) OF THE ACT ON 11/12 TH JULY,2009 AND 3 RD SEPTEMBER 2009 ON ACCOUNT OF SHARE APPLICATION MONE Y RECEIVED IN INDIA TOURIST AND HERITAGE VILLAGE PVT. LTD. OF RS. 23 C RORES, INVESTMENT IN BASTWAL HOUSE OF RS. 10 LACS AND INVESTMENT OF RS. 17,15,98 0 IN MANGALORE PROPERTY, AGGREGATING TO RS. 23,27,15,980/-. THE ASSESSEE CO NTENDED THAT THE ASSESSEE HAD EXPLAINED THE MANNER IN WHICH THE INCOME WAS DE RIVED AND PAID THE TAXES THEREOF ALONG WITH INTEREST BEFORE FILING OF RETURN OF INCOME WITH THE REVENUE AND SATISFIED ALL THE CONDITIONS LAID DOWN IN SECTION 271AAA OF THE ACT. THE ASSESSEE SUBMITTED THAT THE DATE OF FILIN G OF RETURN U/S 139(1) OF THE ACT HAS NOT EXPIRED BEFORE THE DATE OF SEARCH I.E. 10 TH JULY, 2009 . THE ASSESSEE WAS SUBJECTED TO TAX AUDIT U/S 44AB OF THE ACT THEREFORE THE DUE DATE FOR FILING THE RETURN OF INCOME WAS 30 TH SEPTEMBER, 2009 AND NOT 31 ST AUGUST 2009 AS CONTENDED BY THE REVENUE AND THE DUE DATE HAD NOT EXPIRED WHEN THE ASSESSEE FILED ITS RETURN OF INCOME U/S 13 9 OF THE ACT. THE ASSESSEE ALSO DID NOT FURNISHED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10 BEFORE THE DATE OF SEARCH ON 10-07-2009 . THE ASSE SSEE SUBMITTED THAT ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 33 ASSESSMENT YEAR 2009-10 CAN BE REGARDED AS SPECIFIE D PREVIOUS YEAR AS DEFINED U/S 271AAA OF THE ACT . THE ASSESSEE SUBMIT TED THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT ON 11/ 12 TH JULY 2009 AND 03- 09-2009 HAS OFFERED THE SAID UNDISCLOSED INCOME OF RS.23,27,15,980/- WHICH IS EVIDENT FROM ANSWERS TO THE QUESTION NUMBER 16 & 18 OF THE STATEMENT DATED 11/12 TH JULY 2009 AND ANSWERS TO QUESTION NOS. 2 AND 5 OF THE STATEMENT DATED 03-09-2009. THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF RECORDING OF THE STATEMENT U/S 132(4) OF THE ACT , THE INVESTIGATION WING HAS PUT VARIOUS QUESTIONS WHICH ITSELF DEAL WITH THE MO DUS OPERANDI AND THE MANNER IN WHICH THE AFORE-STATED UNDISCLOSED INCOME WAS DERIVED FOR WHICH REPLIES HAVE BEEN GIVEN ACCEPTING THE FACTS UNEARTH ED BY THE REVENUE. THE ASSESSEE SUBMITTED THAT IN RESPECT OF THE SUM OF R S.23 CRORES AS SHARE CAPITAL MONEY INTRODUCED IN INDIA TOURIST AND HERI TAGE VILLAGE PRIVATE LIMITED , THE WHOLE MODUS OPERANDI AND THE MOVEMEN T OF THE FUND IS EXPLAINED AND SUBSTANTIATED IN ANSWER TO QUESTION N O. 16 OF THE STATEMENT DATED 12.07.2009. IT WAS ALSO SUBMITTED THAT VIDE A NNEXURE A-1, PAGE NO. 41 FOUND AND SEIZED ON 03.09.2009 REFERS TO THE FUND F LOW OF THE ASSESSEE WHICH INCLUDE THE SAID SUM OF RS 23 CRORES AND THE SAME I S DEALT WITH IN THE STATEMENT U/S. 132(4) OF THE ACT DATED 03.09.2009. THUS , THE ASSESSEE CONTENDED THAT IT HAD COMPLIED WITH ALL THE REQUIRE MENT OF PROVISIONS OF SECTION 271AAA OF THE ACT. THE ASSESSEE SUBMITTED T HAT DURING THE COURSE OF RECORDING OF STATEMENT U/S 132(4) ON 11/12 TH JULY, 2009 THE ASSESSEE OFFERED THE INCOME OF RS. 23 CRORES IN THE HANDS OF INDIA TOURIST AND HERITAGE VILLAGE PVT. LTD. BUT SUBSEQUENTLY ON SEEKING LEGAL ADVICE AND IN VIEW OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT V. LOVE LY EXPORTS LTD.,216 CTR 195 (SC) AND CIT V. DIVINE LEASING & FINANCE LTD. D ATED 21 ST JANUARY, 2008 TIOL 118 SC IT , THE ASSESSEE OFFERED THE SAID INCO ME AS HIS PERSONAL INCOME AS HE WAS THE SHAREHOLDER OF THIS COMPANY. THE PEN ALTY PROCEEDINGS WHICH WERE INITIATED FOR ALL EARLIER YEARS HAS BEEN DROPP ED BY THE REVENUE. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 34 THE ASSESSEE FURTHER MADE THE FOLLOWING SUBMISSIONS WITH RESPECT TO THE UNDISCLOSED INCOME ON ACCOUNT OF SHARE APPLICATION MONEY BEFORE THE LEARNED CIT(A):- SHRI MATAJI ASHAPURA PORTS PRIVATE LIMITED (SMAPPL) , A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT AHMEDABAD, GUJARAT, IS INTO THE BUSINESS OF DEVELOPMENT OF SHIP BUILDING/REPAIR YARD. SUBSEQUENTLY, THE NAME O F SMAPPL HAS BEEN CHANGED TO GUJARAT INTEGRATED MARITIME COMPLEX PR IVATE LIMITED (GIMCO) W. E. F. NOVEMBER 3, 2008. SMAPPL WAS THE AB SOLUTE OWNER OF AND SEIZED AND POSSESSED OR OTHERWISE BENEFICIALLY, WELL AND SUFFICIENTLY ENTITLED TO APPROXIMATELY 367 ACRES AND 35 GUNTHAS OF L AND IN TRAVERSE SURVEY NO. 192/2 SITUATED AT NANA LAYJA, TALUKA MANDV I IN THE STATE OF GUJARAT. SMAPPL HAD ENTERED INTO AN MOU DATED 30.9.20 07 WITH GUJARAT MARITIME BOARD (GMB) FOR DEVELOPMENT OF SHIP BUILDING / REPAIR YARD. THE PAID UP SHARE CAPITAL OF SMAPPL IS RS.10,0 0,000 COMPRISING OF 100,000 EQUITY SHARES OF RS.10 EACH FULLY PAID. MR. VASUDEV RAMDAS THACKER ALONGWITH HIS RELATIVES HELD 99,900 FULLY PAI D-UP EQUITY SHARES OF RS.10/- EACH, CONSISTING OF 99.99% OF THE TO TAL PAID-UP EQUITY SHARE CAPITAL. MR. SHASHI KIRAN SHETTY (SKS) AND OR HIS NOMINEES D ESIRED TO SET-UP A SHIP BUILDING AND SHIP REPAIR FACILITY IN AND AROUN D NANA LAYJA/MADVI TALUKA (HEREINAFTER REFERRED TO AS 'THE SAID PROJECT') AND FOR THIS PURPOSE HAS AGREED TO ACQUIRE 90,000 EQUITY SHARES O F RS. 10/- EACH THROUGH SEALAND WAREHOUSING PVT. LTD. CONSISTING 90% OF THE TOTAL PAID UP SHARE CAPITAL OF SMAPPL FROM MR. VASUDEV RAMDAS T HACKER AND HIS RELATIVES SUBJECT TO FULFILLMENT OF TERMS AND CONDITION S AS SET OUT IN THE MOU DATED 7.2.2008. TO FINANCE THE AFORESAID ACQUIS ITION OF SHARES OF SMAPPL, SKS THROUGH HIS NOMINEE ALLCARGO GLOBAL LOG ISTICS LTD AND INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED (IL&FS), INVESTED 50% EACH OF THE COST BY ACQUIRING 50% EQUITY STAKE IN SWPL. SWPL IN TURN ACQUIRED SMAPPL. SWPL IN TURN ACQUIRED 90% SHAR ES OF SMAPPL FROM THEN SHAREHOLDERS. SWPL IS A COMPANY WHEREIN AG L & IL&FS IS EQUAL SHAREHOLDERS. IN FY 2007-08, THE SHARE CAPITAL WAS RS. 1,00,000 CONTRIBUTED EQUALLY BY BOTH THE SHAREHOLDERS. OVER THE LAST TWO YEARS I.E. A. Y. 2008-2009 & 2009-2 010 THE GROUP IS ALSO IN THE PROCESS OF SETTING UP A FTWZ & SEZ AT MOTA LYZA AND OTHER SURROUNDING VILLAGE NEAR MANDVI IN KUTCH. TO SET UP THIS PROJECT THE GROUP THROUGH FLAGSHIP COMPANY ALL CARGO GLOBAL LOGI STICS LTD. ALONG WITH IL & FS LTD. SET UP TWO SPECIAL PURPOSE VEHICL ES (SPV) IN JOINT VENTURE NAMELY AVASH LOGISTICS PARK P. LTD. & SEALAN D PORT P. LTD., WHEREIN THEY ACQUIRED 1156 & 1460 ACRES OF LAND. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 35 AS A RESULT OF THE SEARCH, IT WAS FOUND THAT ALL THE JOINT VENTURES HAD DEBITED HUGE AMOUNTS IN THEIR BOOKS AS CAPITAL EXPEND ITURES ON ACCOUNT OF LAND AND LAND DEVELOPMENT CHARGES, OF WHIC H CERTAIN AMOUNTS WHICH FOUND THEIR WAY INTO THE ACCOUNTS OF VARIO US HAWALA OPERATORS. ON BEING QUESTIONED ABOUT THESE PAYMENTS TH E GROUP CHAIRMAN MR SHASHI SHETTY, THE APPELLANT IN HIS STATEM ENT U/S 132(4) DATED 11/07/2009 STATED THAT THE JOINT VENTURES HAD APPO INTED SHRI. VASUDEV THACKER AS A CONSOLIDATOR/AGGREGATOR/FACILITATO R FOR THE ACQUISITION OF THE ENTIRE LAND BANK REQUIRED FOR THE SHIP REPAIRING, FTWZ AND SEZ PROJECT, AS ACQUIRING LAND OF THIS SIZE FROM VARIOUS FARMERS REQUIRED GREAT ACUMEN AND FAMILIARITY WITH TH E LOCALS, TO OBTAIN IT FREE OF ALL LEGAL AND ILLEGAL ENCUMBRANCES. FURTHE R HE STATED THAT SHRI. VASUDEV THACKER AT THE TIME OF ENTERING THE M. O. U. HAD MADE IT CLEAR THAT HE WOULD BE REQUIRED TO MAKE MANY VARIOUS PAYMENTS FOR LAND ACQUISITION IN CASH. ACCORDINGLY, THE JOINT VENTURES KEPT MAKING PAYMENTS TO SHRI. VASUDEV THACKAR AND PARTIES NOMINAT ED/DIRECTED BY HIM, AS PER HIS INSTRUCTIONS FROM TIME TO TIME, WHICH HE UTILIZED IN HIS CASH DEALINGS. THE SAID PAYMENTS WERE MADE FROM THE CAPITAL CONTRIBUTIONS OF THE JOINT VENTURE PARTNERS. SHRI. VASU DEV THACKER IN HIS STATEMENT RECORDED U/S 131 DATED 17/07/2009 ACCE PTED ALL THE FACTS STATED BY THE ASSESSEE, THE ASSESSEE GROUPS AS PER THE INSTRUCTIONS OF MR. VASUDEV THACKER MADE PAYMENTS FO R VARIOUS TRANSACTIONS /ACCOMMODATION BILLS FROM HAWALA OPERATORS NAMELY MR BABULAL DOSHI, MR TARACHAND SHAH, MR NILESH T SHAH, MR SANTOSH BHOSALE, MR. VIPUL RANA, MR MANOJ PRAJAPATI, MR SAN DIP SHETH AND THEIR VARIOUS GROUP ENTITIES LIKE M/S JALIYAN CONSTRUCTI ON & DEVELOPERS PVT LTD , M/S POOJA TRADE LINK, M/S SUJEET DEVELOPER S, M/S KINJAL DEVELOPERS PVT LTD, M/S SUNLIGHT AGENCY PVT LTD, M/S TU TICORIN VINCOM PVT LTD, VIBHANKAR LAND DEVELOPER PVT LTD , M/ S VIOLENT COMMERCIAL PVT LTD., M/S TARAL VINCOM PVT LTD, M/ SUP REME COMMUNICATION LTD ETC. THERE HAD ALSO BEEN SEARCH U/S 132 ON MR. VASUDEV T HACKER OF KUTCH AND SURVEY U/S 133A IN THE CASE OF MR BABULAL DOSHI & MR TARACHAND SHAH. THE SUM OF RS.23.00. CRORE WAS INTRODUCED AS SHARE APPLICATION MONEY BY M/S SUPREME COMMUNICATION LTD (ENTITY OF MR BABUL AL DOSHI & MR TARACHAND SHAH) IN INDIA TOURIST AND HERITAGE VILLAGE PVT LTD (A COMPANY PROMOTE BY THE APPELLANT) ON 12.12.2008. THE SAID SHARE APPLICATION MONEY WAS ROUTED AGAINST PAYMENTS MADE BY SEALAND PORT PVT. LTD. TO KINJAL DEVELOPERS PVT LTD (ENTITY OF MR BABULAL DOSHI & MR TARACHAND SHAH) OF RS.20.00 CRORE ON 24.10.2008 AND RS.3.00 CRORE ON 12.12.2008. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 36 IN THIS CONNECTION REFERENCE IS MADE TO Q.NO 16 OF THE STATEMENT RECORDED U/S 132 ON 12.7.2009 OF MR SHASHI KIRAN SH ETTY WHICH IS REPRODUCED: Q.16. IN THE SHARE APPLICATION MONEY ACCOUNT OF M/S IN DIA TOURIST AND HERITAGE PRIVATE LIMITED AS ON 31/03/2009, IT IS SHOW N THAT M/S SUPREME COMMUNICATION PRIVATE LIMITED HAS PAID RS.23 ,00,00,000/- TOWARDS SHARE APPLICATION. ON EXAMINATION OF THE BANK ACCOUNT OF M/S SUPREME COMMUNICATION PRIVATE LIMITED IN UNION BANK OF INDIA NARIMAN POINT BRANCH (A/C NO 378901010036661), IT WA S FOUND THAT AGAINST THE PAYMENT OF RS.23 CRORE BY THIS COMPANY, S IMILAR AMOUNT OF MONEY WAS CREDITED ON THE SAME DAY FROM ONE COMPANY NAMELY M/S NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED. SIMI LARLY, IN THIS BANK ACCOUNT ON THE SAME BRANCH, MONEY OF SAME AMOUNT WAS CREDITED FROM VARIOUS GROUP CONCERNS OF SHRI TARACHAND D SHAH. IN THESE ACCOUNTS IN THE SAME BRANCH, CASH IS DEPOSITED ON THE SAME DAY AND WAS TRANSFERRED TO M/S NISHADH INVESTMENT AND FINANCE PRIVA TE LIMITED TO THE TUNE OF RS.23 CRORE. I AM SHOWING YOU THE STATEMEN T RECORDED FROM SHRI TARACHAND D SHAH DURING THE COURSE OF SURVEY AC TION U/S 133A ON 29/08/2008 AT 42/48, RAMWADI, KALBADEVI, MUMBAI IN W HICH HE HAS CLEARLY STATED THAT THROUGH HIS CONCERNS ONLY ACCOMMOD ATION ENTRIES ARE PROVIDED AND HE DOES NOT DO ANY BUSINESS AT ALL. IN THIS CASE, APPARENTLY, CASH IS BEING GIVEN AND CHEQUES HAVE BEE N RECEIVED BY THE PARTIES CONCERNED. SINCE THE INTERMEDIARY COMPANIES A RE ONLY PAPER COMPANIES, YOU ARE REQUESTED TO ESTABLISH THE IDENTITY OF THE CREDITOR AND CREDITWORTHINESS OF THE CREDITOR TO PROVE THE GENUIN ENESS OF THE CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S INDIA T OURIST AND HERITAGE VILLAGE PRIVATE LIMITED? ANS: BASED ON THE FACTS STATED BY YOU ABOVE, I AM NOT IN A POSITION TO PROVE THE GENUINENESS OF THE CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S INDIA TOURIST & HERITAGE VILLAGE PVT. LIMITED. TH EREFORE, WITH A VIEW TO NOT TO LITIGATE MATTER AND TO BUY PEACE OF MIND, I OFFE R RS. 23,00,00,000 IN THE HANDS OF THE SAID COMPANY FOR THE AY 2009-10 AND THE NECESSARY TAXES THEREON SHALL BE PAID WITHIN 30 DA YS TIME. THE ABOVE SPECIFIC QUESTION RAISED BY THE INVESTIGATIO N WINGS CLEARLY SPELT OUT THE MODUS OPERANDI AND IT ALSO SUBSTANTIATE D THE MANNER IN WHICH THE FUNDS AND TRANSACTION WAS ROUTED. THE APPEL LANT IN THE STATEMENT HAS ACCEPTED THE FACTS AND OFFERED TO TAX THE S UM OF RS. 23.00 CRORES. FROM THE ABOVE IT IS VERY CLEAR THAT THE APPELLANT HAS SPECIFIED THE MANNER IN WHICH INCOME WAS DERIVED I.E. ROUTING OF F UNDS FROM GROUP COMPANIES TO HAWALA OPERATOR'S VARIOUS COMPANIES WHIC H ARE ONLY PAPER COMPANIES FOR WHICH AGAINST CHEQUE PAYMENTS CA SH WAS ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 37 RECEIVED. THE SAID CASH RECEIVED WAS UTILIZED FOR O BTAINING CHEQUE AS SHARE APPLICATION MONEY, WHICH IS NOTHING BUT APPELLA NTS OWN CASH WHICH IS ROUTED. THEREFORE THE APPELLANT ACCEPTED THE FACT AND OFFERED THE INCOME FOR TAXATION. FURTHER THE REFERENCE TO CASH O F RS. 23.00 CRORE IS REFERRED ON PAGE NO 41 OF ANNEXURE A- 1. ( ALSO REFERRED IN STATEMENT U/S 132(4) DATED 3.9.2009) WHICH ALSO SUBSTA NTIATES THE APPELLANTS CONTENTION. THE ABOVE REFERRED TRANSACTION/ROUTING OF FUNDS AGAIN ST CASH CLEARLY SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCO ME HAS BEEN DERIVED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT IS CLEA R THAT THE APPELLANT HAS SATISFIED ALL THE CONDITIONS FOR CLAIMI NG IMMUNITY FROM PENALTY U/S 271 AAA. FURTHER, THE APPELLANT HAS SUBMITTED BEFORE THE LEA RNED CIT(A) A FLOW CHART EXPLAINING THE MANNER OF DERIVING THE UNDISCL OSED INCOME OF RS.23.00 CRORES WHICH IS AS UNDER: - 'POINT 1: SEALAND PORTS PVT. LTD., AVASH LOGISTICS PARK PVT. LT D. & SEALND WAREHOUSING PVT. LTD. ARE GROUP CONCERNS OF ALLCARG O GLOBAL LOGISTICS PVT. LTD., WHERE THE APPELLANT IS THE MANAGING DIRECTOR . POINT 2: CHEQUES ARE ISSUED BY COMPANIES REFERRED TO IN 1, FO R VARIOUS TRANSACTIONS/ACCOMMODATION BILLS FROM HAWALA OPERATORS NAMELY MR. BABULAL DOSHI, MR. TARACHAND SHAH, MR. NILESH T. SH AH, MR. SANTOSH BHOSALE, MR. VIPUL RANA, MR. MANOJ PRAJAPATI, MR. S ANDIP SHETH AND THEIR VARIOUS GROUP ENTITIES LIKE M/S. JALIYAN CONSTR UCTION & DEVELOPERS PVT. LTD., M/S. POOJA TRADE LINK, M/S SUJ EET DEVELOPERS, M/S. KINJAL DEVELOPERS PVT. LTD., M/S SUNLIGHT AGENCY PVT. LTD., M/S. TUTICORIN VINCOM PVT. LTD., M/S. VIBHANKAR LAND DEVEL OPER PVT. LTD., M/S. VIOLENT COMMERCIAL PVT. LTD., M/S. TARAL VINCO M PVT. LTD., M/S SUPREME COMMUNICATION LTD. ETC. THE SAME IS DETAILED I N Q.7 OF STATEMENT RECORDED U/S.132(4) DATED 11.07.2009. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 38 THE CHEQUES WERE ISSUED AS PER INSTRUCTIONS RECEIVED FROM MR. VASUDEV THAKKER WHO KNEW THE ABOVE PARTIES. COPY OF SAMPLE L ETTERS BY MR. VASUDEV THAKKER INSTRUCTING TO ISSUE CHEQUES ARE ENCL OSED HEREWITH. FURTHER, HE ALSO ACKNOWLEDGED THE RECEIPT OF THE CHEQU ES, SAMPLE COPIES ENCLOSED. THE TOTAL OF CHEQUES ISSUED AS PER THE STATEMENT RECORD ED U/S.132(4) IS OF RS.153 CRORES. POINT 3: THE ABOVE HAWALA OPERATORS / THEIR CONCERNS GAVE BACK THE CASH OF RS.153 CRORES AGAINST THE CHEQUES ISSUED TO THEM. POINT 4: OF THE SAID RS. 153 CRORES, RS.130 CRORES WAS RECEIV ED BACK BY MR. VASUDEV THAKKER. THE SAID FACT IS ACKNOWLEDGED BY MR . VASUDEV THAKKER IN HIS STATEMENT RECORDED U/S.131 DATED 17.07 .2009. HE HAS OFFERED HIS NET INCOME IN HIS RETURNS U/S.153A AND PA ID TAXES ACCORDINGLY. POINT 5: THE BALANCE RS.23 CRORES (RS.153 CRORES - RS.130 CR ORES), WAS RECEIVED BY THE APPELLANT AND IS RECORDED AS HIS INFLOW. THE S AME IS EVIDENT FROM THE SEIZED PAPER (PAGE 41 OF ANNEXURE A1 CONTAINING 1 -59 PAGES) AS WELL AS STATEMENT RECORDED U/S.132(4) DATED 03.09.200 9, REFER Q.2 & ANS. POINT 6 TO 9: THE SAID CASH OF RS.23 CRORES RECEIVED BY THE APPEL LANT, WAS GIVEN TO MR. TARACHAND SHAH WHO IN TURN TRANSFERRED THE MONEY TO HIS VARIOUS GROUP CONCERNS. FROM WHICH THE FUNDS TO THE EXTENT OF R S.23 CRORES WERE TRANSFERRED TO NISHADH INVESTMENT & FINANCE PVT. LTD., WHO IN TURN TRANSFERRED THE SUM OF RS.23 CRORES TO SUPREME CO MMUNICATION PVT. LTD. ALL THE ABOVE TRANSACTIONS WERE ROUTED VIA U NION BANK OF INDIA, NARIMAN POINT BRANCH OF ALL ENTITIES BELONGI NG TO BABULAL DOSHI / TARACHAND SHAH. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 39 SUPREME COMMUNICATION PVT. LTD. IN TURN TRANSFERRED THE SAID SUM OF RS.23 CRORES TOWARDS SHARE APPLICATION MONEY TO INDIA TOURIST & HERITAGE PVT. LTD., A COMPANY PROMOTED BY THE APPELLAN T. IN THIS CONNECTION REFERENCE IS MADE TO Q.NO.16 OF THE STATEMEN T RECORDED U/S.132 ON 12.07.2009 OF MR. SHASHIKIRAN SHETTY. THE ABOVE CLEARLY EXPLAINS THE MODUS OPERANDI AND I T ALSO SUBSTANTIATES THE MANNER IN WHICH THE FUNDS AND TRANSA CTIONS WERE ROUTED AND ALL THE ENTITIES INVOLVED THEREIN AND THEIR ROLE IN THE MOVEMENT OF FUNDS. THE APPELLANT IN THE STATEMENT HAS ACCEPTED THE FACTS AN D OFFERED TO TAX THE SUM OF RS. 23.00 CRORES AND PAID TAXES THEREON WI TH INTEREST.' THE ASSESSEE RELIED UPON THE FOLLOWING JUDICIAL DEC ISIONS DURING THE APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(A): (I) CIT VS. MAHENDRA C. SHAH (2008) 299 ITR 305 (GUJ.) (II) CIT VS. E.V. BALASHANMUGHAM (2006) 286 ITR 626 (MAD .) (III) CIT VS. NEM KUMAR JAIN (2006) 151 TAXMAN 187 (ALL.) (IV) CIT VS. RADHA KISHAN GOEL (2005) 278 ITR 454 ( ALL.) (V) GULABRAI V. GANDHI VS. ACIT (2003) 84 ITD 370 (MUM. ) (VI) ASHOK KUMAR SHARMA VS. DCIT (ITA NOS.476 & 477/CTK/2011) (ITAT, CUTTACK) DATED 22.12.2011. (VII) PRAMOD KUMAR JAIN, BARGARH VS. DCIT (ITA NOS.131,13 2 & 133/CTK/2012) (ITAT CUTTACK) DATED 20.07.2012 (VIII) CIT VS. RADHA KISHAN GOEL (278 ITR 454) (ALL.) (IX) DCIT VS. PIONEER ONLINE (ITA NO.1324/KO1/2011) DATE D 17.02.2012 (X) DCIT VS. RAJENDRA PRASAD DOKANIA (ITA NO.525/AHD.L2012) DATED 04.05.2012. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 40 (XI) ACIT(OSD) VS. M/S. KANAKIA SPACES PVT. LTD. (ITA NO.6763/MUM/2011) DATED 10.07.2013. (XII) CONCRETE DEVELOPERS VS. ACIT, C(C)-2(2) (2013) 34 TAXMANN.COM 62 (NAGPUR TRIB.) THE LEARNED CIT(A) AFTER CONSIDERING THE REPLIES OF THE ASSESSEE AS WELL AS THE CONTENTIONS RAISED BY THE ASSESSEE DURING THE PENAL TY PROCEEDINGS OBSERVED THAT FROM THE Q. NO. 16 OF THE STATEMENT U/S 132(4) OF THE ACT DATED 11 TH JULY, 2009 RECORDED FROM THE ASSESSEE , THE MANNER IN WHI CH THE INCOME HAS BEEN DERIVED IS NARRATED AND ON THE BASIS OF WHICH THE A SSESSEE ADMITTED UNDISCLOSED INCOME OF RS. 23 CRORES. THE EXTRACTS OF Q NO. 16 AND THE ANSWER IS AS UNDER:- Q NO. 16: IN THE SHARE APPLICATION MONEY ACCOUNT O F M/S. INDIA TOURIST AND HERITAGE PRIVATE LIMITED AS ON 31.03.20 09, IT IS SHOWN THAT M/S. SUPREME COMMUNICATION PRIVATE LIMIT ED HAS PAID RS.23,00,00,000/- TOWARDS SHARE APPLICATION. O N EXAMINATION OF THE BANK ACCOUNT OF M/S. SUPREME COMMUNICATION PRIVATE LIMITED IN UNION BANK OF INDI A, NARIMAN POINT BRANCH (A/C. NO. 378901010036661), IT WAS FOU ND THAT AGAINST THE PAYMENT OF RS.23 CRORES BY THIS COMPANY , SIMILAR AMOUNT OF MONEY WAS CREDITED ON THE SAME DAY FROM ONE COMPANY NAMELY M/S. NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED. SIMILARLY, IN THIS BANK ACCOUNT ON THE SAM E BRANCH, MONEY OF SAME AMOUNT WAS CREDITED FROM VARIOUS GROU P CONCERNS OF SHRI TARACHAND D. SHAH. IN THESE ACCOUNTS IN THE SAME BRANCH, CASH IS DEPOSITED ON THE SAME DAY AND WAS T RANSFERRED TO M/S. NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED TO THE TUNE OF RS.23 CRORES. I AM SHOWING YOU THE STATEMENT REC ORDED FROM SHRI TARACHAND D. SHAH DURING THE COURSE OF SURVEY ACTION U/S.133A ON 29.08.2008 AT 42/48, RAMWADI, KALBADEVI , MUMBAI IN WHICH HE HAS CLEARLY STATED THAT THROUGH HIS CON CERNS ONLY ACCOMMODATION ENTRIES ARE PROVIDED AND HE DOES NOT DO ANY BUSINESS AT ALL. IN THIS CASE, APPARENTLY, CASH IS BEGIN GIVEN AND CHEQUES HAVE BEEN RECEIVED BY THE PARTIES CONCERNED . SINCE THE INTERMEDIARY COMPANIES ARE ONLY PAPER COMPANIES, YO U ARE REQUESTED TO ESTABLISH THE IDENTITY OF THE CREDITOR AND CREDITWORTHINESS OF THE CREDITOR TO PROVE THE GENUI NENESS OF THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 41 CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S. IND IA TOURIST AND HERITAGE VILLAGE PRIVATE LIMITED? ANS. BASED ON THE FACTS STATED BY YOU ABOVE, I AM N OT IN A POSITION TO PROVE THE GENUINENESS OF THE CREDITS RE CEIVED IN THE CAPITAL ACCOUNT OF M/S. INDIA TOURIST AND HERITAGE VILLAGE PRIVATE LIMITED. THEREFORE, WITH THE VIEW TO NOT TO LITIGAT E MATTER AND TO BUY PEACE OF MIND, I OFFER RS. 23,00,00,000/- IN T HE HANDS OF THE SAID COMPANY FOR THE A. Y. 2009-10 FOR THE A.Y. 200 9-10 AND THE NECESSARY TAXES THEREON SHALL BE PAID WITHIN 30 DAY S TIME. FROM THE ABOVE, THE LEARNED CIT(A) HELD THAT IT IS CLEAR THAT THE A.O. EXAMINED THE MANNER IN WHICH THE UNDISCLOSED HAS BEEN DERIVE D VIDE Q NO. 16 OF THE STATEMENT RECORDED U/S 132(4) OF THE ACT DATED 11 TH JULY, 2009. IN REPLY, THE ASSESSEE ADMITTED THE UNDISCLOSED INCOME OF RS. 23 CRORES. THE ASSESSEE LATER ON ADMITTED THE UNDISCLOSED INCOME IN HIS HAN DS INSTEAD OF THE COMPANY IN VIEW OF THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT V. LOVELY EXPORTS LTD. , 216 CTR 195 AND THE D ECISION IN THE CASE OF CIT V. DIVINE LEASING & FINANCE LTD. DATED 21 ST JANUARY 2008 (TIOL 118 SC IT). THE LD. CIT(A) AFTER CONSIDERING THE DECISION OF HO NBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. MAHENDRA C. SHAH, 299 ITR 305 AN D THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT V. RADHA KI SHAN GOEL [2005] 278 ITR 454 (ALL.) AND THE DECISION OF ITAT IN THE CASE OF ACIT V. KANAKIA SPACES PVT. LTD. (ITA NO. 6763/MUM/2011 DATED 10 TH JULY, 2013) AND IN THE CASE OF CONCRETE DEVELOPERS V. ACIT [2013] 34 TAXMANN.COM 6 2 , THE LEARNED CIT(A) HELD THAT THE ASSESSEE HAS DURING THE COURSE OF STA TEMENT RECORDING U/S 132(4) OF THE ACT ADMITTED THE UNDISCLOSED INCOME A ND HAS SPECIFIED AS WELL AS SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSE D INCOME WAS DERIVED AND ALSO PAID THE DUE TAXES ON THE UNDISCLOSED INCO ME, THE PENALTY WAS NOT EXIGIBLE AND LEARNED CIT(A) CANCELLED THE PENALTY O F RS. 2,32,71,598/- LEVIED BY THE AO U/S 271AAA OF THE ACT, VIDE APPELLATE ORD ERS OF THE LEARNED CIT(A) DATED 29-07-2013. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 42 20. AGGRIEVED BY THE APPELLATE ORDERS DATED 29-07-2 013 PASSED BY THE LEARNED CIT(A), THE REVENUE HAS FILED THIS APPEAL BEFORE TH E TRIBUNAL. 21. THE LD. D.R. SUBMITTED BEFORE THE TRIBUNAL THAT THE PENALTY OF RS.2,32,71,598/-WAS CORRECTLY LEVIED U/S 271AAA OF THE ACT BY THE A.O. VIDE ORDERS 30 TH JUNE, 2010. THE LEARNED DR RELIED UPON THE PENALTY ORDERS DATED 30-06-2010 PASSED BY THE AO U/S. 271AAA OF THE ACT. IT WAS SUBMITTED THAT THE ASSESSEE HAS PAID CASH OF RS. 23 CRORES FOR GET TING THE SHARE MONEY IN HIS COMPANY INDIA TOURIST & HERITAGE VILLAGE PVT. LTD . . THE ASSESSEE HAS STATED IN HIS STATEMENT RECORDED U/S 132(4) OF THE ACT TO HAVE ADMITTED THE INCOME OF RS. 23.27 CRORES AS UNDISCLOSED INCOME WHICH WAS OFFERED FOR TAXATION. THE ASSESSEE HAS NOT SUBSTANTIATED THE MANNER IN WH ICH THE UNDISCLOSED INCOME WAS EARNED. THE LD. D.R. RELIED UPON THE DE CISION IN THE CASE OF UOI V. DHARMENDRA TAXTILE PROCESSORS (2008) 306 ITR 277 (SC) AND THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA PRIVA TE LIMITED V. CIT (2013) 358 ITR 593 (SC). HE ALSO RELIED UPON THE ORDER OF A.O. AND SUBMITTED THAT THE RETURN OF INCOME WAS FILED LATE BY THE ASSESSSE E ON 30 TH SEPTEMBER, 2009 AGAINST THE DUE DATE OF 31 ST AUGUST, 2009. 22. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, REITERATED ITS SUBMISSIONS AS WERE MADE BEFORE THE AUTHORITIES BEL OW WHICH ARE NOT REPEATED FOR THE SAKE OF BREVITY. THE LD. COUNSEL F OR THE ASSESSEE RELIED UPON THE ORDERS OF THE LEARNED CIT(A). THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THERE WAS A SEARCH AND SEIZURE OPERATIONS U/S 132(1) OF THE ACT CARRIED OUT ON 10 TH JULY, 2009. THE DUE DATE OF FILING OF THE RETURN WAS NOT 31 ST AUGUST, 2009 AS THE ASSESSEE WAS SUBJECTED TO TAX A UDIT UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND HENCE DUE DATE FOR F ILING RETURN OF INCOME WAS 30 TH SEPTEMBER 2009. THE ASSESSE FILED THE RETURN OF I NCOME U/S 139(1) OF THE ACT ON 30 TH SEPTEMBER, 2009 WHEREBY THE INCOME OF RS.23.27 CRO RES WHICH WAS OFFERED FOR TAXATION DURING THE COURSE OF SEARCH VIDE STATEMENT ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 43 RECORDED ON 11/12 TH JULY 2009 AND 03.09.2009 U/S 132(4) OF THE ACT WAS DULY DECLARED AND DISCLOSED IN THE RETURN OF INCOME FILED WITH THE REVENUE AND DUE TAXES WERE PAID PRIOR TO THE FILING OF RETU RN OF INCOME WITH THE REVENUE. THE LD. COUNSEL SUBMITTED THAT THE ASSESS MENT YEAR 2009-10 IS A SPECIFIED PREVIOUS YEAR AS DEFINED U/S 271AAA OF THE ACT AND THE ASSESSEE IS ENTITLED FOR CLAIMING EXEMPTION FROM LEVY OF PENALT Y U/S 271AAA OF THE ACT. THE ASSESSEE IN RESPONSE TO QUESTION NO. 16 AND 18 WITH RESPECT TO THE STATEMENT RECORDED ON 11/12 TH JULY, 2009 HAS SPECIFIED THE MANNER IN WHICH THE UNDISCLOSED INCOME HAS BEEN DERIVED (PAGES1-6/P APER BOOK) . THE LD. COUNSEL SUBMITTED THAT THE ASSESSEE HAS SURRENDERED RS. 25 CRORES DURING THE COURSE OF SEARCH TO BUY PEACE AND AVOID LITIGAT ION. THE UNDISCLOSED INCOME HAS BEEN DULY DECLARED IN THE RETURN OF INCO ME FILED WITH THE REVENUE AND DUE TAXES PAID TO THE REVENUE. THE LD. COUNSEL SUBMITTED THAT IN RESPONSE TO Q. NO. 2 AND 5 IN THE STATEMENT RECORDE D U/S 132(4) OF THE ACT ON 3 RD SEPTEMBER, 2009, THE ASSESSEE HAS DULY DECLARED TH E MANNER IN WHICH THE UNDISCLOSED INCOME WAS GENERATED. THE SAID STATEMEN TS ARE PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE WITH THE TRIBUNAL AT PAGE 7-9. DUE TAXES HAVE BEEN PAID TO THE REVENUE IN THE MONTH OF AUGUS T 2009 EVEN BEFORE THE SECOND STATEMENT U/S 132(4) OF THE ACT WAS RECORDED ON 03-09-2009 AND SUBSTANTIAL COMPLIANCE OF THE PROVISIONS OF SECTION 271AAA OF THE ACT WAS ACHIEVED. DETAILED REPLIES WERE SUBMITTED WITH RES PECT TO THE MANNER AND SUBSTANTIATION AS TO HOW THE UNDISCLOSED INCOME OF RS 23 CRORES WAS GENERATED/EARNED. THE CASE LAWS RELIED UPON BY T HE ASSESSEE ARE PLACED IN THE CASE LAW PAPER BOOK FILED WITH THE TRIBUNAL . I N PARTICULAR, THE ASSESSEE RELIED UPON THE DECISION OF HONBLE DELHI HIGH COUR T IN THE CASE OF CIT V. SUDHIR JAIN(2014)41 TAXMANN.COM 234 (DELHI HC) AND THE DECISION OF THE TRIBUNAL IN THE CASE OF JANAK MADHUSUDAN VAKHARIA V . ACIT IN ITA NO. 2900/MUM/2012 ORDER DATED 26 TH JULY, 2013. THE ASSESSEE ALSO RELIED ON THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT V. MAHENDRA C. SHAH, (2008)299 ITR 305 (GUJ.)AND ALSO THE DECISION OF HONBLE ALLAHABAD ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 44 HIGH COURT IN THE CASE OF CIT V. RADHA KISHAN GOEL, (2006) 278 ITR 454 (ALL. HC). 23. IN THE REJOINDER, THE LD. D.R. SUBMITTED THAT T HE RATIO OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF MAK DATA (P.) LTD. V. CIT [2013] 38 TAXMANN.COM 448 (SC) IS DIRECTLY APPLICABLE, BECAU SE DUE TO THE SEARCH ONLY THE INCOME WAS DECLARED BY THE ASSESSEE OTHERWISE T HIS UNDISCLOSED INCOME OF RS. 23,27,15,980/-WOULD NOT HAVE DETECTED. 24. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE MATERIAL PLACED ON RECORD INCLUDING THE CASE LAWS RELIED UPO N BY BOTH THE PARTIES. WE HAVE OBSERVED THAT THERE WAS A SEARCH ACTION U/S 13 2(1) OF THE ACT CARRIED OUT BY THE REVENUE ON 10 TH JULY, 2009 IN THE CASE OF ALL CARGO GROUP OF COMPANIES, THEIR DIRECTORS AND OTHER IMPORTANT EMPL OYEES. THE ASSESSEE BEING MANAGING DIRECTOR OF THE COMPANY WAS ALSO COV ERED U/S 132(1) OF THE ACT. DURING THE COURSE OF SEARCH U/S 132(1), THE A SSESSEE WHILE RECORDING HIS STATEMENT U/S 132(4) OF THE ACT ON 11/12 TH JULY, 2009 DECLARED AN AMOUNT OF RS. 23 CRORES WITH RESPECT TO THE CAPITAL INTRODUCE D IN THE COMPANY PROMOTED BY HIM NAMELY INDIA TOURIST & HERITAGE VILLAGE PVT . LTD. AS THE ASSESSEE WAS NOT IN A POSITION TO PROVE THE GENUINENESS OF THE C REDIT RECEIVED IN THE CAPITAL ACCOUNT OF INDIA TOURIST & HERITAGE VILLAGE PVT. LTD AND ALSO IN ORDER TO BUY PEACE AND TO AVOID LITIGATION WITH THE REVENUE. DURING SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE ACT, CERTAIN LO OSE PAPERS WERE FOUND AND SEIZED FROM THE OFFICE PREMISES OF ALL CARGO GLOBAL LOGISTICS LTD., ANNEXURE A- 11, PAGE NO. 38 & 39 WHICH DURING THE ASSESSMENT PR OCEEDINGS REVEALED THAT THE ASSESSEE HAS SPENT RS. 10 LACS IN CASH TO ACQUI RE ANTIQUE FURNITURE FOR HIS PROPERTY NAMELY BASTWAL HOUSE AND SPENT RS. 17, 15,980/- IN CASH FOR CARRYING OUT CIVIL WORKS FOR HIS PROPERTY CALLED SK S ENCLAVE, MANGALORE , TOTALING TO RS. 23,27,15,980/- WHICH WAS OFFERED FO R TAXATION BY THE ASSESSEE AS UNDISCLOSED INCOME IN THE STATEMENT RECORDED U/S 132 (4) OF THE ACT ON ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 45 11/12 TH JULY 2009 AND 03-09-2009 , WHEREBY TOTAL DISCLOSUR E OF RS. 25 CRORES WAS MADE , OUT OF WHICH DISCLOSURE OF RS 2 CROERS W AS MADE TO COVER DISCREPANCIES IN ANNEXURES A-1 TO A-11 SEIZED DURIN G SEARCH OPERATIONS VIS-- VIS BOOKS OF ACCOUNTS. THE ASSESSEE DECLARED THIS INCOME OF RS. 23,27,15,980/- IN HIS RETURN OF INCOME FILED WITH T HE REVENUE U/S 139(1) OF THE ACT ON 30-09-2009 , AS WELL IN THE RETURN OF IN COME FILED U/S 153A OF THE ACT WITH THE REVENUE ON 29-10-2009 AND DUE TAXES WE RE PAID BY THE ASSESSEE TO THE REVENUE IN THE MONTH OF AUGUST 2009 ITSELF , I.E. BEFORE FILING OF THE RETURN OF INCOME WITH THE REVENUE. THE REVENUE LEVI ED PENALTY OF RS.2,32,71,598/- U/S 271AAA OF THE ACT VIDE PENALTY ORDERS DATED 30-06- 2010 WHEREBY IT IS THE CONTENTION OF THE REVENUE TH AT THE ASSESSEE HAS NOT COMPLIED WITH THE PRESCRIBED CONDITIONS OF THE SECT ION 271AAA OF THE ACT TO GET THE IMMUNITY FROM THE PENALTY PRESCRIBED U/S 27 1AAA OF THE ACT. BEFORE, WE PROCEED FURTHER IT IS PROFITABLE TO REFE R TO SECTION 271AAA OF THE ACT WHICH IS REPRODUCED BELOW: [ PENALTY WHERE SEARCH HAS BEEN INITIATED. 271AAA. (1) THE ASSESSING OFFICER MAY, NOTWITHSTANDING ANYT HING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, DIRE CT THAT, IN A CASE WHERE SEARCH HAS BEEN INITIATED UNDER SECTION 132 ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE ASSESSEE SHALL PAY BY WAY OF PENALT Y, IN ADDITION TO TAX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED AT THE RATE OF TEN PER CENT OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. (2) NOTHING CONTAINED IN SUB-SECTION (1) SHALL APPL Y IF THE ASSESSEE, (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT U NDER SUB- SECTION (4) OF SECTION 132 , ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED; ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 46 (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISC LOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. (3) NO PENALTY UNDER THE PROVISIONS OF CLAUSE (C) O F SUB-SECTION (1) OF SECTION 271 SHALL BE IMPOSED UPON THE ASSESSEE IN RESPECT OF T HE UNDISCLOSED INCOME REFERRED TO IN SUB-SECTION (1). (4) THE PROVISIONS OF SECTIONS 274 AND 275 SHALL, SO FAR AS MAY BE, APPLY IN RELATION TO THE PENALTY REFERRED TO IN THIS SECT ION. EXPLANATION.FOR THE PURPOSES OF THIS SECTION, (A) UNDISCLOSED INCOME MEANS (I) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR REP RESENTED, EITHER WHOLLY OR PARTLY, BY ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING OR ANY ENTRY IN THE BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS FOUND IN THE COURSE OF A SEARCH UNDER SECTION 132 , WHICH HAS (A) NOT BEEN RECORDED ON OR BEFORE THE DATE OF SE ARCH IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN T HE NORMAL COURSE RELATING TO SUCH PREVIOUS YEAR; OR (B) OTHERWISE NOT BEEN DISCLOSED TO THE CHIEF COM MISSIONER OR COMMISSIONER BEFORE THE DATE OF SEARCH; OR (II) ANY INCOME OF THE SPECIFIED PREVIOUS YEAR RE PRESENTED, EITHER WHOLLY OR PARTLY, BY ANY ENTRY IN RESPECT OF AN EXP ENSE RECORDED IN THE BOOKS OF ACCOUNT OR OTHER DOCUMENTS MAINTAINED IN THE NORMAL COURSE RELATING TO THE SPECIFIED PREVIOUS YEAR WHIC H IS FOUND TO BE FALSE AND WOULD NOT HAVE BEEN FOUND TO BE SO HAD TH E SEARCH NOT BEEN CONDUCTED; ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 47 (B) SPECIFIED PREVIOUS YEAR ME ANS THE PREVIOUS YEAR (I) WHICH HAS ENDED BEFORE THE DATE OF SEARCH, BU T THE DATE OF FILING THE RETURN OF INCOME UNDER SUB-SECTION (1) O F SECTION 139 FOR SUCH YEAR HAS NOT EXPIRED BEFORE THE DATE OF SEARCH AND THE ASSESSEE HAS NOT FURNISHED THE RETURN OF INCOME FOR THE PREVIOUS YEAR BEFORE THE SAID DATE; OR (II) IN WHICH SEARCH WAS CONDUCTED.] AS COULD BE SEEN FROM SECTION 271AAA(2) OF THE ACT, THE PENALTY U/S 271AAA OF THE ACT IS NOT EXIGIBLE WHEN FOLLOWING THREE PRE SCRIBED CONDITIONS ARE CUMULATIVELY MET AS UNDER: (I) IN THE COURSE OF THE SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SECTION 132 , THE ASSESSEE ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHICH SUCH INCOME HAS B EEN DERIVED; (II) SUBSTANTIATES THE MANNER IN WHICH THE UNDISC LOSED INCOME WAS DERIVED; AND (III) PAYS THE TAX, TOGETHER WITH INTEREST, IF AN Y, IN RESPECT OF THE UNDISCLOSED INCOME. IT IS THE CONTENTION OF THE ASSESSEE THAT THE ASS ESSEE HAS DULY ADMITTED THE UNDISCLOSED INCOME OF RS. 23,27,15,980/- DURING THE COURSE OF SEARCH U/S 132(1) OF THE ACT AGAINST THE ASSESSEE ON 10-07-200 9 , IN AN STATEMENT RECORDED U/S 132(4) OF THE ACT ON 11/12 TH JULY 2009 AND 03-09-2009 RESPECTIVELY AND ALSO EXPLAINED THE MANNER IN WHICH THE SAID ADMITTED INCOME OF RS.23,27,15,980/- WAS DERIVED WHILE RECOR DING HIS STATEMENTS BY ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 48 THE SEARCH TEAM U/S 132 (4) OF THE ACT ON 11-07-200 9 AND 03-09-2009. HOWEVER, THE A.O. DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AS IN THE OPINION OF THE AO THE ASSESSEE HAS NOT SUBSTANTIATE D THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED BY THE ASSESSEE WHICH IS ALSO ONE OF THE PRESCRIBED CONDITIONS U/S 271AAA(2) OF THE ACT TO G ET IMMUNITY FROM THE LEVIABILITY OF PENALTY U/S 271AAA OF THE ACT. ACC ORDINGLY, PENALTY OF RS.2,32,71,598/- U/S 271AAA OF THE ACT WAS IMPOSED BY THE AO ON THE ASSESSEE VIDE PENALTY ORDERS DATED 30-06-2010 PASSE D U/S 271AAA OF THE ACT. IT WAS ALSO HELD BY THE A.O. THAT THE ASSESSEE HAS DELAYED THE FILING OF RETURN U/S 139 OF THE ACT AS THE DUE DATE WAS 31 ST AUGUST, 2009 WHILE THE RETURN OF INCOME WAS FILED BY THE ASSESSEE U/S 139 OF THE ACT WITH THE REVENUE ON 30 TH SEPTEMBER, 2009. IT WAS ALSO OBSERVED BY THE A.O. THAT INITIALLY THE UNDISCLOSED INCOME WAS DECLARED IN THE HANDS OF THE COMPANY WHILE LATER ON IT WAS DECLARED IN THE HANDS OF THE ASSESSEE. HOWE VER, ON APPEAL THE LD. CIT(A) CANCELLED THE PENALTY LEVIED BY THE A.O. AS THE ASSESSEE HAS DULY EXPLAINED IN DETAIL THE MANNER IN WHICH THE UNDISCL OSED INCOME ADMITTED BY THE ASSESSEE HAS BEEN DERIVED AND DULY SUBSTANTIATE D THE SAME VIDE LEARNED CIT(A) APPELLATE ORDERS DATED 29-07-2013. WE HAVE OBSERVED FROM THE QUESTION NO. 16 AND 18 PUT TO THE ASSESSEE WHILE ST ATEMENT U/S 132(4) OF THE ACT WAS BEING RECORDED ON 11/12 TH JULY, 2009 AND ALSO QUESTION NO 2 AND 5 VIDE RECORDING OF STATEMENT U/S 132(4) OF THE ACT O N 03-09-2009, THE ASSESSEE HAS NARRATED THE MANNER IN WHICH THE INCOME HAS BEE N DERIVED AND ON THE BASIS OF WHICH THE ASSESSEE ADMITTED THE UNDISCLOSE D INCOME OF RS. 23 CRORES. THE Q. NO. 16 AND THE ANSWER IS REPRODUCED BELOW:- Q NO. 16: IN THE SHARE APPLICATION MONEY ACCOUNT O F M/S. INDIA TOURIST AND HERITAGE PRIVATE LIMITED AS ON 31.03.20 09, IT IS SHOWN THAT M/S. SUPREME COMMUNICATION PRIVATE LIMIT ED HAS PAID RS.23,00,00,000/- TOWARDS SHARE APPLICATION. O N EXAMINATION OF THE BANK ACCOUNT OF M/S. SUPREME COMMUNICATION PRIVATE LIMITED IN UNION BANK OF INDI A, NARIMAN POINT BRANCH (ALE. NO. 378901010036661), IT WAS FOU ND THAT ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 49 AGAINST THE PAYMENT OF RS.23 CRORES BY THIS COMPANY , SIMILAR AMOUNT OF MONEY WAS CREDITED ON THE SAME DAY FROM ONE COMPANY NAMELY M/S. NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED. SIMILARLY, IN THIS BANK ACCOUNT ON THE SAM E BRANCH, MONEY OF SAME AMOUNT WAS CREDITED FROM VARIOUS GROU P CONCERNS OF SHRI TARACHAND D. SHAH. IN THESE ACCOUNTS IN THE SAME BRANCH, CASH IS DEPOSITED ON THE SAME DAY AND WAS T RANSFERRED TO M/S. NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED TO THE TUNE OF RS.23 CRORES. I AM SHOWING YOU THE STATEMENT REC ORDED FROM SHRI TARACHAND D. SHAH DURING THE COURSE OF SURVEY ACTION U/S.133A ON 29.08.2008 AT 42148, RAMWADI, KALBADEVI , MUMBAI IN WHICH HE HAS CLEARLY STATED THAT THROUGH HIS CON CERNS ONLY ACCOMMODATION ENTRIES ARE PROVIDED AND HE DOES NOT DO ANY BUSINESS AT ALL. IN THIS CASE, APPARENTLY, CASH IS BEING GIVEN AND CHEQUES HAVE BEEN RECEIVED BY THE PARTIES CONCERNED . SINCE THE INTERMEDIARY COMPANIES ARE ONLY PAPER COMPANIES, YO U ARE REQUESTED TO ESTABLISH THE IDENTITY OF THE CREDITOR AND CREDITWORTHINESS OF THE CREDITOR TO PROVE THE GENUI NENESS OF THE CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S. IND IA TOURIST AND HERITAGE VII/AGE PRIVATE LIMITED? ANS. BASED ON THE FACTS STATED BY YOU ABOVE, I AM N OT IN A POSITION TO PROVE THE GENUINENESS OF THE CREDITS RE CEIVED IN THE CAPITAL ACCOUNT OF M/S. INDIA TOURIST AND HERITAGE VII/AGE PRIVATE LIMITED. THEREFORE, WITH THE VIEW TO NOT TO LITIGAT E MATTER AND TO BUY PEACE OF MIND, I OFFER RS. 23,00,00,000/- IN T HE HANDS OF THE SAID COMPANY FOR THE A. Y. 2009-10 FOR THE A.Y. 200 9-10 AND THE NECESSARY TAXES THEREON SHALL BE PAID WITHIN 30 DAY S TIME. FURTHER, THE ANNEXURE A-1, PAGE NO. 41 FOUND AND SE IZED ON 3 RD SEPTEMBER, 2009 REFERRED TO THE FUND FLOW OF THE ASSESSEE WHIC H INCLUDED RS. 23 CRORES WHICH HAS BEEN DEALT WITH IN THE STATEMENT RECORDED U/S 132(A) OF THE ACT ON 3 RD SEPTEMBER, 2009, AS EXPLAINED BY THE ASSESSEE . T HE Q NO. 2 AND THE ANSWER WHICH IS REPRODUCED BELOW:- Q.2. DURING THE COURSE OF P.O. ACTION TODAY AT YOUR OF FICE, FOLLOWING PAPERS ARE SEIZED AND MARKED AS ANNEXURE AI CONTAINI NG 59 PAGES. PLEASE GO THROUGH THE SAME AND GIVE YOUR EXPLANATION AND REPLY TO THE SAME. ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 50 ANS. PAGE NO. EXPLANATION 1-2 THIS IS MY CAPITAL ACCOUNT FOR THE MONTH OF MARC H 2008. 3-12 IT IS THE LEDGER ACCOUNT OF YES BANK IN THE BOOKS OF M/S SEALAND PORTS PRIVATE LIMITED FOR THE YEAR ENDED MAR CH, 2008. . 41 THIS IS THE PENDING IOU CLEARANCE STATEMENT FOR M AY 2009. LEFT HAND SIDE IS THE FUND FLOW OF CASH FOR THE MONTH. ON THE RIGHT HAND SIDE IS THE RECORDING OF CASH RECEIPT OF RS.23 CRORE FROM RAVI JAKHAR, MY EMPLOYEE . THIS IS PERTAINING TO MY INVESTMENT IN M/S INDIA HERITA GE AND TOURIST VILLAGE PRIVATE LIMITED WHICH WAS ROUTED THROUGH M/S SUPREME COMMUNICATION PRIVATE LIMITED BY GIVING THEM THE CASH AND IN TURN CHEQUE WAS RECEIVED . THIS WAS SHOWN AS SHARE APPLICATION MONEY IN THE SAI D COMPANY IN THE NAME OF M/S SUPREME COMMUNICATION PRIVATE LIMITED. THIS PARTICULAR TRANSACTION WAS ACCEP TED BY ME IN MY EARLIER STATEMENT ON 11.7.2009 AND TAXES WERE ACCORDINGLY PAID BY ME IN AUGUST 2009. . THE ASSESSEE HAD FURTHER MADE THE FOLLOWING SUBMISS IONS WITH RESPECT TO THE UNDISCLOSED INCOME ON ACCOUNT OF SHARE APPLICATION MONEY BEFORE THE LEARNED CIT(A):- SHRI MATAJI ASHAPURA PORTS PRIVATE LIMITED (SMAPPL) , A COMPANY INCORPORATED UNDER THE COMPANIES ACT, 1956, HAVING ITS REGISTERED OFFICE AT AHMEDABAD, GUJARAT, IS INTO THE BUSINESS OF DEVELOPMENT OF SHIP BUILDING/REPAIR YARD. SUBSEQUENTLY, THE NAME O F SMAPPL HAS BEEN CHANGED TO GUJARAT INTEGRATED MARITIME COMPLEX PR IVATE LIMITED (GIMCO) W. E. F. NOVEMBER 3, 2008. SMAPPL WAS THE AB SOLUTE OWNER OF AND SEIZED AND POSSESSED OR OTHERWISE BENEFICIALLY, WELL AND SUFFICIENTLY ENTITLED TO APPROXIMATELY 367 ACRES AND 35 GUNTHAS OF L AND IN TRAVERSE SURVEY NO. 192/2 SITUATED AT NANA LAYJA, TALUKA MANDV I IN THE STATE OF GUJARAT. SMAPPL HAD ENTERED INTO AN MOU DATED 30.9.20 07 WITH GUJARAT MARITIME BOARD (GMB) FOR DEVELOPMENT OF SHIP BUILDING / REPAIR YARD. THE PAID UP SHARE CAPITAL OF SMAPPL IS RS.10,0 0,000 COMPRISING OF 100,000 EQUITY SHARES OF RS.10 EACH FULLY PAID. MR. VASUDEV RAMDAS THACKER ALONGWITH HIS RELATIVES HELD 99,900 FULLY PAI D-UP EQUITY ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 51 SHARES OF RS.10/- EACH, CONSISTING OF 99.99% OF THE TO TAL PAID-UP EQUITY SHARE CAPITAL. MR. SHASHI KIRAN SHETTY (SKS) AND OR HIS NOMINEES D ESIRED TO SET-UP A SHIP BUILDING AND SHIP REPAIR FACILITY IN AND AROUN D NANA LAYJA/MADVI TALUKA (HEREINAFTER REFERRED TO AS 'THE SAID PROJECT') AND FOR THIS PURPOSE HAS AGREED TO ACQUIRE 90,000 EQUITY SHARES O F RS. 10/- EACH THROUGH SEALAND WAREHOUSING PVT. LTD. CONSISTING 90% OF THE TOTAL PAID UP SHARE CAPITAL OF SMAPPL FROM MR. VASUDEV RAMDAS T HACKER AND HIS RELATIVES SUBJECT TO FULFILLMENT OF TERMS AND CONDITION S AS SET OUT IN THE MOU DATED 7.2.2008. TO FINANCE THE AFORESAID ACQUIS ITION OF SHARES OF SMAPPL, SKS THROUGH HIS NOMINEE ALLCARGO GLOBAL LOG ISTICS LTD AND INFRASTRUCTURE LEASING & FINANCIAL SERVICES LIMITED (IL&FS), INVESTED 50% EACH OF THE COST BY ACQUIRING 50% EQUITY STAKE IN SWPL. SWPL IN TURN ACQUIRED SMAPPL. SWPL IN TURN ACQUIRED 90% SHAR ES OF SMAPPL FROM THEN SHAREHOLDERS. SWPL IS A COMPANY WHEREIN AG L & IL&FS IS EQUAL SHAREHOLDERS. IN FY 2007-08, THE SHARE CAPITAL WAS RS. 1,00,000 CONTRIBUTED EQUALLY BY BOTH THE SHAREHOLDERS. OVER THE LAST TWO YEARS I.E. A. Y. 2008-2009 & 2009-2 010 THE GROUP IS ALSO IN THE PROCESS OF SETTING UP A FTWZ & SEZ AT MOTA LYZA AND OTHER SURROUNDING VILLAGE NEAR MANDVI IN KUTCH. TO SET UP THIS PROJECT THE GROUP THROUGH FLAGSHIP COMPANY ALL CARGO GLOBAL LOGI STICS LTD. ALONG WITH IL & FS LTD. SET UP TWO SPECIAL PURPOSE VEHICL ES (SPV) IN JOINT VENTURE NAMELY AVASH LOGISTICS PARK P. LTD. & SEALAN D PORT P. LTD., WHEREIN THEY ACQUIRED 1156 & 1460 ACRES OF LAND. AS A RESULT OF THE SEARCH, IT WAS FOUND THAT ALL THE JOINT VENTURES HAD DEBITED HUGE AMOUNTS IN THEIR BOOKS AS CAPITAL EXPEND ITURES ON ACCOUNT OF LAND AND LAND DEVELOPMENT CHARGES, OF WHIC H CERTAIN AMOUNTS WHICH FOUND THEIR WAY INTO THE ACCOUNTS OF VARIO US HAWALA OPERATORS. ON BEING QUESTIONED ABOUT THESE PAYMENTS T HE GROUP CHAIRMAN MR SHASHI SHETTY, THE APPELLANT IN HIS STATEM ENT U/S 132(4) DATED 11/07/2009 STATED THAT THE JOINT VENTURES HAD APPOI NTED SHRI. VASUDEV THACKER AS A CONSOLIDATOR/AGGREGATOR/FACILITATO R FOR THE ACQUISITION OF THE ENTIRE LAND BANK REQUIRED FOR THE SHIP REPAIRING, FTWZ AND SEZ PROJECT, AS ACQUIRING LAND OF THIS SIZE FROM VARIOUS FARMERS REQUIRED GREAT ACUMEN AND FAMILIARITY WITH TH E LOCALS, TO OBTAIN IT FREE OF ALL LEGAL AND ILLEGAL ENCUMBRANCES. FURTHE R HE STATED THAT SHRI. VASUDEV THACKER AT THE TIME OF ENTERING THE M. O. U. HAD MADE IT CLEAR THAT HE WOULD BE REQUIRED TO MAKE MANY VARIOUS PAYMENTS FOR LAND ACQUISITION IN CASH. ACCORDINGLY, THE JOINT VENTURES KEPT MAKING PAYMENTS TO SHRI. VASUDEV THACKAR AND PARTIES NOMINAT ED/DIRECTED BY HIM, AS PER HIS INSTRUCTIONS FROM TIME TO TIME, WHICH HE UTILIZED IN HIS CASH DEALINGS. THE SAID PAYMENTS WERE MADE FROM THE CAPITAL CONTRIBUTIONS OF THE JOINT VENTURE PARTNERS. SHRI. VASU DEV THACKER IN HIS STATEMENT RECORDED U/S 131 DATED 17/07/2009 ACCE PTED ALL THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 52 FACTS STATED BY THE ASSESSEE, THE ASSESSEE GROUPS AS PER THE INSTRUCTIONS OF MR. VASUDEV THACKER MADE PAYMENTS FO R VARIOUS TRANSACTIONS /ACCOMMODATION BILLS FROM HAWALA OPERATORS NAMELY MR BABULAL DOSHI, MR TARACHAND SHAH, MR NILESH T SHAH, MR SANTOSH BHOSALE, MR. VIPUL RANA, MR MANOJ PRAJAPATI, MR SAN DIP SHETH AND THEIR VARIOUS GROUP ENTITIES LIKE M/S JALIYAN CONSTRUCTI ON & DEVELOPERS PVT LTD , M/S POOJA TRADE LINK, M/S SUJEET DEVELOPER S, M/S KINJAL DEVELOPERS PVT LTD, M/S SUNLIGHT AGENCY PVT LTD, M/S T UTICORIN VINCOM PVT LTD, VIBHANKAR LAND DEVELOPER PVT LTD , M/ S VIOLENT COMMERCIAL PVT LTD., M/S TARAL VINCOM PVT LTD, M/ SUP REME COMMUNICATION LTD ETC. THERE HAD ALSO BEEN SEARCH U/S 132 ON MR. VASUDEV T HACKER OF KUTCH AND SURVEY U/S 133A IN THE CASE OF MR BABULAL DOSHI & MR TARACHAND SHAH. THE SUM OF RS.23.00. CRORE WAS INTRODUCED AS SHARE APPLICATION MONEY BY M/S SUPREME COMMUNICATION LTD (ENTITY OF MR BABUL AL DOSHI & MR TARACHAND SHAH) IN INDIA TOURIST AND HERITAGE VILLAGE PVT LTD (A COMPANY PROMOTE BY THE APPELLANT) ON 12.12.2008. THE SAID SHARE APPLICATION MONEY WAS ROUTED AGAINST PAYMENTS MADE BY SEALAND PORT PVT. LTD. TO KINJAL DEVELOPERS PVT LTD (ENTITY OF MR B ABULAL DOSHI & MR TARACHAND SHAH) OF RS.20.00 CRORE ON 24.10.2008 AND RS.3.00 CRORE ON 12.12.2008. IN THIS CONNECTION REFERENCE IS MADE TO Q.NO 16 OF THE STATEMENT RECORDED U/S 132 ON 12.7.2009 OF MR SHASHI KIRAN SH ETTY WHICH IS REPRODUCED: Q.16. IN THE SHARE APPLICATION MONEY ACCOUNT OF M/S IN DIA TOURIST AND HERITAGE PRIVATE LIMITED AS ON 31/03/2009, IT IS SHOW N THAT M/S SUPREME COMMUNICATION PRIVATE LIMITED HAS PAID RS.23 ,00,00,000/- TOWARDS SHARE APPLICATION. ON EXAMINATION OF THE BANK ACCOUNT OF M/S SUPREME COMMUNICATION PRIVATE LIMITED IN UNION BANK OF INDIA NARIMAN POINT BRANCH (A/C NO 378901010036661), IT WA S FOUND THAT AGAINST THE PAYMENT OF RS.23 CRORE BY THIS COMPANY, S IMILAR AMOUNT OF MONEY WAS CREDITED ON THE SAME DAY FROM ONE COMPANY NAMELY M/S NISHADH INVESTMENT AND FINANCE PRIVATE LIMITED. SIMI LARLY, IN THIS BANK ACCOUNT ON THE SAME BRANCH, MONEY OF SAME AMOUNT WAS CREDITED FROM VARIOUS GROUP CONCERNS OF SHRI TARACHAND D SHAH. IN THESE ACCOUNTS IN THE SAME BRANCH, CASH IS DEPOSITED ON THE SAME DAY AND WAS TRANSFERRED TO M/S NISHADH INVESTMENT AND FINANCE PRIVA TE LIMITED TO THE TUNE OF RS.23 CRORE. I AM SHOWING YOU THE STATEMEN T RECORDED FROM SHRI TARACHAND D SHAH DURING THE COURSE OF SURVEY AC TION U/S 133A ON 29/08/2008 AT 42/48, RAMWADI, KALBADEVI, MUMBAI IN W HICH HE HAS CLEARLY STATED THAT THROUGH HIS CONCERNS ONLY ACCOMMOD ATION ENTRIES ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 53 ARE PROVIDED AND HE DOES NOT DO ANY BUSINESS AT ALL. IN THIS CASE, APPARENTLY, CASH IS BEING GIVEN AND CHEQUES HAVE BEE N RECEIVED BY THE PARTIES CONCERNED. SINCE THE INTERMEDIARY COMPANIES A RE ONLY PAPER COMPANIES, YOU ARE REQUESTED TO ESTABLISH THE IDENTITY OF THE CREDITOR AND CREDITWORTHINESS OF THE CREDITOR TO PROVE THE GENUIN ENESS OF THE CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S INDIA T OURIST AND HERITAGE VILLAGE PRIVATE LIMITED? ANS: BASED ON THE FACTS STATED BY YOU ABOVE, I AM NOT IN A POSITION TO PROVE THE GENUINENESS OF THE CREDITS RECEIVED IN THE CAPITAL ACCOUNT OF M/S INDIA TOURIST & HERITAGE VILLAGE PVT. LIMITED. T HEREFORE, WITH A VIEW TO NOT TO LITIGATE MATTER AND TO BUY PEACE OF MIND, I OFFE R RS. 23,00,00,000 IN THE HANDS OF THE SAID COMPANY FOR THE AY 2009-10 AND THE NECESSARY TAXES THEREON SHALL BE PAID WITHIN 30 DA YS TIME. THE ABOVE SPECIFIC QUESTION RAISED BY THE INVESTIGATIO N WINGS CLEARLY SPELT OUT THE MODUS OPERANDI AND IT ALSO SUBSTANTIATE D THE MANNER IN WHICH THE FUNDS AND TRANSACTION WAS ROUTED. THE APPEL LANT IN THE STATEMENT HAS ACCEPTED THE FACTS AND OFFERED TO TAX THE S UM OF RS. 23.00 CRORES. FROM THE ABOVE IT IS VERY CLEAR THAT THE APPELLANT HAS SPECIFIED THE MANNER IN WHICH INCOME WAS DERIVED I.E. ROUTING OF F UNDS FROM GROUP COMPANIES TO HAWALA OPERATOR'S VARIOUS COMPANIES WHIC H ARE ONLY PAPER COMPANIES FOR WHICH AGAINST CHEQUE PAYMENTS CA SH WAS RECEIVED. THE SAID CASH RECEIVED WAS UTILIZED FOR O BTAINING CHEQUE AS SHARE APPLICATION MONEY, WHICH IS NOTHING BUT APPELLA NTS OWN CASH WHICH IS ROUTED. THEREFORE THE APPELLANT ACCEPTED THE FACT AND OFFERED THE INCOME FOR TAXATION. FURTHER THE REFERENCE TO CASH O F RS. 23.00 CRORE IS REFERRED ON PAGE NO 41 OF ANNEXURE A- 1. ( ALSO REFERRED IN STATEMENT U/S 132(4) DATED 3.9.2009) WHICH ALSO SUBST ANTIATES THE APPELLANTS CONTENTION. THE ABOVE REFERRED TRANSACTION/ROUTING OF FUNDS AGAIN ST CASH CLEARLY SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCO ME HAS BEEN DERIVED. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES IT IS CLE AR THAT THE APPELLANT HAS SATISFIED ALL THE CONDITIONS FOR CLAIMI NG IMMUNITY FROM PENALTY U/S 271 AAA. FURTHER, THE ASSESSEE SUBMITTED BEFORE THE LEARNED CIT(A), A FLOW CHART EXPLAINING THE MANNER OF DERIVING THE UNDISCLOSED I NCOME OF RS.23.00 CRORES WHICH IS AS UNDER: - ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 54 'POINT 1: SEALAND PORTS PVT. LTD., AVASH LOGISTICS PARK PVT. LT D. & SEALND WAREHOUSING PVT. LTD. ARE GROUP CONCERNS OF ALLCARG O GLOBAL LOGISTICS PVT. LTD., WHERE THE APPELLANT IS THE MANAGING DIRECTOR . POINT 2: CHEQUES ARE ISSUED BY COMPANIES REFERRED TO IN 1, FO R VARIOUS TRANSACTIONS/ACCOMMODATION BILLS FROM HAWALA OPERATORS NAMELY MR. BABULAL DOSHI, MR. TARACHAND SHAH, MR. NILESH T. SH AH, MR. SANTOSH BHOSALE, MR. VIPUL RANA, MR. MANOJ PRAJAPATI, MR. S ANDIP SHETH AND THEIR VARIOUS GROUP ENTITIES LIKE M/S. JALIYAN CONSTR UCTION & DEVELOPERS PVT. LTD., M/S. POOJA TRADE LINK, M/S SUJ EET DEVELOPERS, M/S. KINJAL DEVELOPERS PVT. LTD., M/S SUNLIGHT AGENC Y PVT. LTD., M/S. TUTICORIN VINCOM PVT. LTD., M/S. VIBHANKAR LAND DEVEL OPER PVT. LTD., M/S. VIOLENT COMMERCIAL PVT. LTD., M/S. TARAL VINCO M PVT. LTD., M/S SUPREME COMMUNICATION LTD. ETC. THE SAME IS DETAILED I N Q.7 OF STATEMENT RECORDED U/S.132(4) DATED 11.07.2009. THE CHEQUES WERE ISSUED AS PER INSTRUCTIONS RECEIVED FROM MR. VASUDEV THAKKER WHO KNEW THE ABOVE PARTIES. COPY OF SAMPLE L ETTERS BY MR. VASUDEV THAKKER INSTRUCTING TO ISSUE CHEQUES ARE ENCL OSED HEREWITH. FURTHER, HE ALSO ACKNOWLEDGED THE RECEIPT OF THE CHEQU ES, SAMPLE COPIES ENCLOSED. THE TOTAL OF CHEQUES ISSUED AS PER THE STATEMENT RECORD ED U/S.132(4) IS OF RS.153 CRORES. POINT 3: THE ABOVE HAWALA OPERATORS / THEIR CONCERNS GAVE BACK THE CASH OF RS.153 CRORES AGAINST THE CHEQUES ISSUED TO THEM. POINT 4: OF THE SAID RS. 153 CRORES, RS.130 CRORES WAS RECEIV ED BACK BY MR. VASUDEV THAKKER. THE SAID FACT IS ACKNOWLEDGED BY MR . VASUDEV THAKKER IN HIS STATEMENT RECORDED U/S.131 DATED 17.07 .2009. HE HAS ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 55 OFFERED HIS NET INCOME IN HIS RETURNS U/S.153A AND PA ID TAXES ACCORDINGLY. POINT 5: THE BALANCE RS.23 CRORES (RS.153 CRORES - RS.130 CR ORES), WAS RECEIVED BY THE APPELLANT AND IS RECORDED AS HIS INFLOW. THE S AME IS EVIDENT FROM THE SEIZED PAPER (PAGE 41 OF ANNEXURE A1 CONTAINING 1-59 PAGES) AS WELL AS STATEMENT RECORDED U/S.132(4) DATED 03.09.200 9, REFER Q.2 & ANS. POINT 6 TO 9: THE SAID CASH OF RS.23 CRORES RECEIVED BY THE APPEL LANT, WAS GIVEN TO MR. TARACHAND SHAH WHO IN TURN TRANSFERRED THE MONEY TO HIS VARIOUS GROUP CONCERNS. FROM WHICH THE FUNDS TO THE EXTENT OF R S.23 CRORES WERE TRANSFERRED TO NISHADH INVESTMENT & FINANCE PVT. LTD., WHO IN TURN TRANSFERRED THE SUM OF RS.23 CRORES TO SUPREME CO MMUNICATION PVT. LTD. ALL THE ABOVE TRANSACTIONS WERE ROUTED VIA U NION BANK OF INDIA, NARIMAN POINT BRANCH OF ALL ENTITIES BELONGIN G TO BABULAL DOSHI / TARACHAND SHAH. SUPREME COMMUNICATION PVT. LTD. IN TURN TRANSFERRED THE SAID SUM OF RS.23 CRORES TOWARDS SHARE APPLICATION MONEY TO INDIA TOURIST & HERITAGE PVT. LTD., A COMPANY PROMOTED BY THE APPELLAN T. IN THIS CONNECTION REFERENCE IS MADE TO Q.NO.16 OF THE STATEMEN T RECORDED U/S.132 ON 12.07.2009 OF MR. SHASHIKIRAN SHETTY. THE ABOVE CLEARLY EXPLAINS THE MODUS OPERANDI AND I T ALSO SUBSTANTIATES THE MANNER IN WHICH THE FUNDS AND TRANSA CTIONS WERE ROUTED AND ALL THE ENTITIES INVOLVED THEREIN AND THEIR ROLE IN THE MOVEMENT OF FUNDS. THE APPELLANT IN THE STATEMENT HAS ACCEPTED THE FACTS AN D OFFERED TO TAX THE SUM OF RS. 23.00 CRORES AND PAID TAXES THEREON WI TH INTEREST.' WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDERS DAT ED 30-12-2009 PASSED BY THE AO U/S 143(3) READ WITH SECTION 153A OF THE ACT WHEREBY THE RELEVANT PARA 5 OF THE SAID ORDER IS REPRODUCED HEREUNDER: ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 56 OVER THE TWO YEARS THE ASESSEE ALONG WITH A FEW OF HIS GROUP COMPANIES IS IN THE PROCESS OF SETTING UP A SHIP BUILDING YARD & SEZ A T NANA LYZA NEAR MANDVI IN KUTCH. TO SET UP THIS PROJECT THE ASSESSEE THROUGH HIS FLAGSHIP COMPANY ALL CARGO GLOBAL LOGISTICS LTD. ALONG WITH IL&FS , SET UP A JOINT VENTURE COMPANY CALLED SEALAND WAREHOUSING PVT LTD. THE SAID JOINT VENTURE ON THE BASIS OF A M.O.U. BETWEEN THE ASSESSEE AND SHR I VASUDEV THAKKAR, PROMOTER OF A COMPANY CALLED SAIMATA ASHAPURA PORT P. LTD(SMAPPL) ACQUIRED THE SHARES OF SAIMATA ASHAPURA PORT P. LTD FR OM ITS VARIOUS SHAREHOLDERS FOR A SUM OF RS.100 CRORES. THE SAID S AIMATA(SMAPPL) WAS THE OWNER OF 367 ACRES OF LAND AT MANDVI ALONG WITH VARIO US GOVERNMENT LICENSES/PERMISSIONS TO RUN A FERRY WHARF TERMINAL E TC. . THEREAFTER THE ASSESSEE CREATED TWO SPECIAL PURPOSES VEHICLES(SPV) IN JOINT VENTURE WITH IL & FS NAMELY AVASH LOGISTICS PARK P. LTD. & SEALAND PO RT P.LTD., WHEREIN THEY ACQUIRED 1156 ACRES AND 1460 ACRES OF LAND CONTIGUOU S TO THE LAND OF SAIMATA ASHAPURA PORT P. LTD.. THE ASSESSEE PARTICIPAT ED IN THESE TWO SPVS IN HIS PERSONAL CAPACITY THROUGH HIS PERSONAL COMPA NY CALLED INDIA HERITAGE & TOURIST VILLAGE P.LTD. (IH&TV PVT. LTD.). AS A RESU LT OF THE SEARCH, IT WAS FOUND THAT ALL THE THREE JOINT VENTURES HAD DEBITED HUGE AMOU NTS(153 CRORES) IN THEIR BOOKS AS CAPITAL EXPENDITURE ON ACCOUNT OF LAND AND LAND DEVELOPMENT CHARGES, WHICH FOUND THEIR WAY INTO THE ACCOUNTS OF VA RIOUS HAWALA OPERATORS. ON BEING QUESTIONED ABOUT THESE PAYMENTS THE ASSESSEE IN HIS STATEMENT DATED 11/07/2009 STATED THAT THE THREE JOINT VEN TURES HAD APPOINTED SHRI VASUDEV THAKKAR AS A CONSOLIDATOR , A GGREGATOR AND FACILITATOR FOR THE ACQUISITION OF THE ENTIRE LAND BANK REQUIRED FOR THE SHIP REPAIRING AND SEZ PROJECT , AS ACQUIRING LAND OF THIS SIZE FROM VARIOUS FARMERS REQUIRED GREAT ACUMEN AND FAMILIARITY WITH THE LOCALS, TO OBTAIN IT FREE OF ALL LEGAL AND ILLEGAL ENCUMBERANCES. FURTHER HE STATED T HAT SHRI VASUDEV THAT SHRI VASUDEV THAKKAR AT THE TIME OF ENTERING THE M.O. U. HAD MADE IT CLEAR THAT HE WOULD BE REQUIRED TO MAKE MANY PAYMENTS FOR LA ND ACQUISITION IN CASH. ACCORDINGLY, THE THREE JOINT VENTURES KEPT MAKIN G PAYMENTS TO SHRI. VASUDEV THAKKAR AND PARTIES NOMINATED BY HIM, AS PER HIS INSTRUCTIONS FROM TIME TO TIME, WHICH HE MIGHT HAVE UTILIZED IN HIS CASH DEALINGS. THE SAID PAYMENTS WERE MADE FROM THE CAPITAL CONTRIBUTIONS OF THE JOINT VENTURE PARTNERS. SHRI VASUDEV THAKKAR IN HIS STATEMENT DAT ED 17/07/2009 ACCEPTED ALL THE FACTS STATED BY THE ASSESSEE, BUT M AINTAINED THAT HE HAD RECEIVED ONLY 130 CRORES AND NOT 153 CRORES AS STAT ED BY THE ASSESSEE. ON BEING CONFRONTED WITH THE STATEMENT OF SHRI VASUDEV THAKKAR, THE ASSESSEE IN HIS STATEMENT U/S. 132(4) GIVEN ON 03/09/ 2009 CONFESSED THAT HE WAS UNABLE TO EXPLAIN THE CAPITAL CONTRIBUTION OF 23 CRO RES IN HIS PERSONAL COMPANY I.E. INDIA HERITAGE & TOURIST VILLAGE PVT. LT D. , WHICH HAD COME TO HIM THROUGH THE ACCOUNT OF ONE OF THE HAWALA OPERATORS NAMELY SUPREME COMMUNICATION PVT. LTD. AND ACCORDINGLY OFFERED THE SAME FOR TAX. FROM THE ABOVE SUBMISSIONS OF THE ASSESSEE BEFORE T HE AUTHORITIES BELOW AND THE ASSESSMENT ORDER DATED 30-12-2009, IT BECOMES C LEAR THAT THE ALLEGED PAYMENTS VIDE CHEQUES HAVE BEEN MADE TO VARIOUS ACC OMMODATION ENTRIES ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 57 GIVING COMPANIES PROMOTED BY HAWALA OPERATORS AND I N TURN CASH WAS ALLEGEDLY TAKEN BACK FROM THESE HAWALA OPERATORS BY MR VASUDEV THAKKAR IN CONNECTION WITH THE LAND ACQUISITION ACTIVITIES WHI CH WERE HANDLED BY SAID MR VASUDEV THAKKAR FOR PROPOSED SHIP BUILDING YARD AND SEZ AT NANA LYZA NEAR MANDVI WHEREBY IL&FS WERE JOINT PARTNER WITH THE AS SESSEE. THE PAYMENTS OF RS 153 CRORES WERE ALLEGEDLY MADE FROM THE CAPITAL CONTRIBUTION OF THE JOINT VENTURE PARTNERS AGAINST WHICH RS 130 CRORES WERE A DMITTED TO HAVE BEEN RECEIVED BY MR VASUDEV THAKKAR VIDE STATEMENT DATED 17/07/2009 WHICH WAS CONFRONTED TO THE ASSESSEE WHEN HIS STATEMENT O F THE ASSESSEE U/S 132(4) OF THE ACT ON 03-09-2009 WAS RECORDED WHEREBY THE A SSESSEE ADMITTED THAT HE IS NOT ABLE TO EXPLAIN THE CAPITAL INTRODUCTION OF RS 23 CRORES IN INDIA TOURIST AND HERITAGE VILLAGE PRIVATE LIMITED , WHI CH HAD ALLEGEDLY COME THROUGH THE ACCOUNT OF ONE OF THE HAWALA OPERATOR M R TARACHAND D SHAH PROMOTED COMPANY SUPREME COMMUNICATIONS LIMITED WHE REBY CASH IS ALLEGEDLY GIVEN BY THE ASSESSEE TO HAWALA OPERATOR TO GET CHEQUES TOWARDS CAPITAL INTRODUCTION OF RS.23 CRORES IN INDIA TOUR IST AND HERITAGE VILLAGE PRIVATE LIMITED . THE MODUS OPERANDI OF ROUTING T HE FUNDS ALLEGEDLY FROM JOINT VENTURE GROUP COMPANIES TO HAWALA OPERATORS T HROUGH VARIOUS ACCOMMODATION ENTRIES GIVING COMPANIES PROMOTED BY THESE HAWALA OPERATORS WHICH ARE ONLY PAPER COMPANIES FOR WHICH AGAINST CH EQUES GIVEN BY THE ASSESSEE, EQUIVALENT CASH WAS ALLEGEDLY RECEIVED AN D THE SAID CASH RECEIVED WAS UTILIZED FOR OBTAINING CHEQUES FOR SHARE APPLIC ATION MONEY OF RS 23 CRORES WHICH ARE NOTHING BUT ASSESSEES OWN CASH WHICH IS ROUTED BACK INTO THE ASSESSEE COMPANY INDIA TOURIST AND HERITAGE VILLAG E PRIVATE LIMITED VIA HAWALA OPERATORS THROUGH THEIR ACCOMMODATION ENTRIE S GIVING COMPANIES . THIS HAS BEEN BROADLY EXPLAINED AND ACCEPTED BY THE ASSESSEE WHEN THE STATEMENT WAS RECORDED DURING THE COURSE OF SEARCH U/S 132(4) ON 11 TH JULY, 2009 AND 3 RD SEPTEMBER 2009. IT WAS IN-FACT INCUMBENT ON THE RE VENUE AUTHORITIES TO HAVE BROUGHT TO THE NOTICE OF THE AS SESSEE IMPLICATIONS OF THE PENALTY PROCEEDINGS U/S 271AAA OF THE ACT WHILE THE STATEMENT OF THE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 58 ASSESSEE WAS RECORDED U/S 132(4) OF THE ACT, AS THE ASSESSEE IS NOT EXPECTED TO BE AWARE OF ALL THE TECHNICAL ASPECTS OF THE PRO VISIONS OF THE ACT . THE ASSESSEE WHILE RECORDING STATEMENT SPECIFIED THE MA NNER AND ADMITTED THE UNDISCLOSED INCOME OF RS. 25 CRORES ON ACCOUNT OF I NABILITY TO PROVE THE GENUINENESS OF SHARE CAPITAL INTRODUCTION OF RS 23 CRORES IN INDIA TOURIST AND HERITAGE PRIVATE LIMITED AND AS WELL RS 2 CRORES T O COVER DISCREPANCIES IN ANNEXURE A-1 TO A-11 VIS--VIS BOOKS OF ACCOUNTS .T HE REVENUE AUTHORITIES CONFRONTED THE ASSESSEE WITH THE STATEMENT DATED 17 /07/2009 OF SH VASUDEV THAKKAR WHILE RECORDING ASSESSEES STATEMENT U/S 13 2(4) OF THE ACT ON 3-09- 2009 WITH RESPECT TO THE CONFIRMATION OF RS 130 CRO RES HAVING RECEIVED BY MR VASUDEV THAKKAR , WHILE THE JOINT VENTURE PARTNERS HAVING MADE PAYMENTS OF ALLEGEDLY RS 153 CRORES TO THE ACCOMMODATION ENTRIE S GIVING COMPANIES PROMOTED BY HAWALA OPERATORS , WHICH LEFT A GAP OF RS 23 CORES AND THE ASSESSEE ON BEING CONFRONTED SURRENDERED RS 23 CROR ES CAPITAL INTRODUCTION IN HIS PROMOTED COMPANY INDIA TOURIST AND HERITAGE VI LLAGE PRIVATE LIMITED IN ORDER TO BUY PEACE AND AVOID LITIGATION WITH REVENU E. THE FACT OF SUCH STATEMENT DATED 17/07/2009 OF SH. VASUDEV THAKKAR B EING CONFRONTED TO THE ASSESSEE ON 03-09-2009 WHILE RECORDING STATEMENT U/ S 132(4) OF THE ASSESSEE ON 03-09-2009 IS BORNE OUT FROM PARA 5 OF THE ASSES SMENT ORDER DATED 30-12- 2009 PASSED BY THE AO U/S 143(3) READ WITH SECTION 153A OF THE ACT, BUT UNFORTUNATELY THE SAME WAS NOT RECORDED BY THE REVE NUE AUTHORITIES IN THE STATEMENT RECORDED OF THE ASSESSEE U/S 132(4) OF TH E ACT ON 03-09-2009. IT IS WELL KNOWN THAT THE STATEMENTS UNDER THE PROVISIONS OF THE ACT ARE RECORDED IN QUESTION AND ANSWER FORM , WHEREBY THE REVENUE A UTHORITIES ASK QUESTION AND THE TAX-PAYER ANSWER THE SPECIFIC QUESTION PUT BY THE REVENUE AUTHORITIES TO THE TAX-PAYER. NORMALLY, STRESS LEVEL OF THE TAX -PAYERS IS VERY HIGH WHILE THE STATEMENTS ARE BEING RECORDED BY THE REVENUE AUTHOR ITIES AS THESE STATEMENTS CAN BE USED BY THE REVENUE AGAINST THE TAX-PAYER LA TER ON AND IT IS NOT EXPECTED THAT THE ANSWERS OF THE TAX-PAYER, WHICH ARE GIVEN NORMALLY OUT OF THE TAX-PAYER MEMORY AS THE PROFESSIONALS/EMPLOYEE S OF THE TAX-PAYER ARE ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 59 NOT NORMALLY ALLOWED TO PARTICIPATE IN THE RECORDIN G OF THE STATEMENT, SHALL BE MARKED WITH PERFECTION UNDER THESE ABNORMAL SITUATI ONS. IT BECOMES ALL THE MORE IMPORTANT AND ONEROUS RESPONSIBILITY IS CAST O N THE SHOULDERS OF THE REVENUE AUTHORITIES TO ENSURE THAT COMPLETE AND COR RECT STATEMENTS ARE RECORDED OF THE TAX-PAYER WHEREBY THE RIGHTS AND DU TIES OF THE TAX-PAYER ARE PROPERLY EXPLAINED TO THE TAX-PAYER AND PROPER ASSI STANCE SHOULD BE AFFORDED TO THE TAX-PAYER BY THE REVENUE AUTHORITIES WHILE R ECORDING STATEMENT UNDER THE PROVISIONS OF THE ACT, OF COURSE WITHOUT COMPRO MISING ON THE COLLECTION OF THE CORRECT TAXES FROM THE TAX-PAYER WHICH UNDISPUT EDLY IS THE MANDATE OF THE ACT . IT IS NOT EXPECTED FROM THE REVENUE THAT THEY WILL EXTRACT THE DISCLOSURES FROM THE TAX-PAYER TO SUIT THEIR CONVENIENCE , WHIL E THE TAX-PAYER IS NOT MADE AWARE OF THE PROVISIONS OF THE ACT WHICH MAY LATER BURDEN THEM WITH PENALTIES AND PROSECUTION SUCH AS PROVISIONS OF SECTION 271AA A OF THE ACT ENTITLING THE TAX-PAYER IMMUNITY FROM PENALTY. ATTENTION IS DRAWN TO CIRCULAR NO. 14(XL-35) OF 1955, DATED 11.4.1955 , ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES READS A S UNDER: 'OFFICERS OF THE DEPARTMENT MUST NOT TAKE ADVANTAGE OF IGNORANCE OF AN ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THEIR DUTIE S TO ASSIST A TAX PAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEFS AND IN THIS REGARD THE OFFICERS SH OULD TAKE THE INITIATIVE IN GUIDING A TAX PAYER WHERE PROCEEDINGS OR OTHER P ARTICULARS BEFORE THEM INDICATE THAT SOME REFUND OR RELIEF IS DUE TO HIM. THIS ATTITUDE WOULD, IN THE LONG RUN, BENEFIT THE DEPARTMENT, FOR IT WOULD INSPIRE CONFIDENCE IN HIM THAT HE MAY BE SURE OF GETTING A SQUARE DEAL FROM THE DEPARTMENT. ALTHOUGH, THEREFORE, THE RESPONSIBILITY FOR CLAIMING REFUNDS AND RELIEFS RESTS WITH THE ASSESSEE ON WHOM IT IS I MPOSED BY LAW, OFFICERS SHOULD ( A ) DRAW THEIR ATTENTION TO ANY REFUNDS OR RELIEFS TO W HICH THEY APPEAR ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 60 TO BE CLEARLY ENTITLED BUT WHICH THEY HAVE OMITTED TO CLAIM FOR SOME REASON OR OTHER; ( B ) FREELY ADVISE THEM WHEN APPROACHED BY THEM AS TO TH EIR RIGHTS AND LIABILITIES AND AS TO THE PROCEDURE TO BE ADOPTED F OR CLAIMING REFUNDS AND RELIEFS'. IN THE RETURN OF INCOME FILED WITH THE REVENUE, THE ASSESSEE HAS DECLARED THE UNDISCLOSED INCOME OF RS. 23,27,15,980/- OFFERED FO R TAXATION VIDE STATEMENT RECORDED U/S 132(4) OF THE ACT ON 11/12 TH JULY 2009 AND 03/9/2009 DURING THE COURSE OF SEARCH OPERATIONS U/S 132(1) OF THE A CT AND DUE TAXES HAVE BEEN PAID BY THE ASSESSEE TO THE REVENUE IN THE MON TH OF AUGUST 2009 ITSELF BEFORE FILING OF RETURN OF INCOME WITH THE REVENUE . IN OUR CONSIDERED VIEW, THE ASSESSEE HAS DULY EXPLAINED THE MANNER IN WHICH THE UNDISCLOSED INCOME OF RS. 23,27,15,980/- HAS BEEN GENERATED WHILE RECO DING THE STATEMENT U/S 132(4) OF THE ACT ON 11/12 TH JULY 2009 AND 03-09-2009 PERSUANT TO THE SEARCH ACTION U/S 132(1) OF THE ACT CONDUCTED BY TH E REVENUE ON 10-07-2009. SO FAR AS SUBSTANTIATION OF THE MANNER OF DERIVING THE UNDISCLOSED INCOME OF RS.23,27,15,980/- BY THE ASSESSEE IS CONCERNED WHIC H IS ALSO ONE OF THE CONDITIONS FOR AVAILING IMMUNITY FROM PENALTY U/S 2 71AAA OF THE ACT , AS PER THE FACTS EMERGING FROM THE RECORDS BEFORE US, THE ASSESSEE CAME FORWARD WITH THE DETAILS AS SET OUT ABOVE TO SUBSTANTIATE T HE MANNER IN WHICH UNDISCLOSED INCOME WAS DERIVED BEFORE THE LEARNED C IT(A) IN PENALTY PROCEEDINGS FOR THE FIRST TIME WHO ACCEPTED THE CON TENTIONS OF THE ASSESSEE WITHOUT AFFORDING OPPORTUNITY TO THE REVENUE TO EXA MINE AND VERIFY THE BONA- FIDE AND CORRECTNESS OF THE CLAIMS AND THE CONTENTI ONS OF THE ASSESSEE TO THAT EFFECT AS PER THE REQUIREMENT OF RULE 46A(3) OF THE INCOME TAX RULES, 1962. THE PRINCIPLES OF NATURAL JUSTICE ARE THEREFORE CLE ARLY BREACHED AS THE REVENUE IS DEPRIVED OF AN OPPORTUNITY TO EXAMINE AND VERIFY THE CORRECTNESS OF THE CLAIMS AND CONTENTIONS OF THE ASSESSEE WHICH WERE R AISED BEFORE THE LEARNED ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 61 CIT(A) FOR THE FIRST TIME, BEFORE AFFORDING THE ASS ESSEE AN IMMUNITY FROM PENALTY UNDER THE PROVISIONS AS WELL MANDATE OF SEC TION 271AAA OF THE ACT. THE CIT(A) ALSO DID NOT MADE ANY ATTEMPT TO VERIFY THE CLAIMS AND CONTENTIONS OF THE ASSESSEE AND ACCEPTED THE SAME WITHOUT VERIF ICATION. THUS , IN OUR CONSIDERED VIEW AND IN THE INTEREST OF JUSTICE, THE ORDER OF THE LEARNED CIT(A) CANCELLING THE PENALTY LEVIED U/S 271 AAA OF THE AC T CANNOT BE SUSTAINED AND IS TO BE SET ASIDE AND ISSUE IS RESTORED TO THE FIL E OF THE AO TO DECIDE DE-NOVO ON MERITS THE ISSUE OF LEVIABILIY OF PENALTY U/S 27 1AAA OF THE ACT WITH RESPECT TO THE ADMISSION OF UNDISCLOSED INCOME OF RS. 23,27 ,15,980/- BY THE ASSESSEE IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT ON 11/12 TH JULY 2009 AND 03-09-2009 AND WHICH WAS DULY DECLARED AND DISCLOSE D IN THE RETURN OF INCOME FILED BY THE ASSESSEE WITH THE REVENUE, AFTE R EXAMINING AND VERIFYING THE CORRECTNESS OF THE CLAIMS AND CONTENTIONS OF TH E ASSESSEE WITH RESPECT TO SUBSTANTIATION OF THE MANNER IN WHICH UNDISCLOSED I NCOME ADMITTED BY THE ASSESSEE WAS DERIVED. WITH RESPECT TO THE CONTENTI ON OF THE REVENUE THAT THE ASSESSE FILED RETURN OF INCOME U/S 139 (1) OF THE A CT ON 30-09-2009 , WHILE DUE DATE WAS 31-08-2009 AS PER THE AO, THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE WAS LIABLE TO GET HIS ACCOUNTS AUDITED U/S 44AB OF THE ACT AND HENCE THE DUE DATE WAS 30-09-2009 , THIS ISSUE IS A LSO SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION. THE CONTENTION OF THE AO T HAT INITIALLY THE ASSESSEE OFFERED THE UNDISCLOSED INCOME IN THE HANDS OF HIS COMPANY INDIA TOURIST AND HERITAGE VILLAGE PRIVATE LIMITED IN WHICH SHAR E CAPITAL OF RS. 23 CRORES WERE RECEIVED WHILE RECORDING STATEMENT U/S 132(4) OF THE ACT , AND WHILE FILING RETURN OF INCOME THE ASSESSEE DECLARED THE S AID INCOME OF RS 23 CRORES IN HIS PERSONAL RETURN. THE ASSESSEE HAS GIVEN BONA -FIDE AND SATISFACTORY REPLIES THAT IN VIEW OF HONBLE SUPREME COURT DECIS ION IN THE CASE OF CIT V. LOVELY EXPORTS LTD. , 216 CTR 195 AND THE DECISION IN THE CASE OF CIT V. DIVINE LEASING & FINANCE LTD. DATED 21 ST JANUARY 2008 (TIOL 118 SC IT), THE SAID INCOME WAS OFFERED AS HIS PERSONAL INCOME AS A GAINST THE COMPANYS INCOME, WHICH IN OUR VIEW THE SAID DECISION OF THE ASSESSEE CANNOT BE FAULTED ITA 5813/MUM/2013 & ITA NO. 5978/MUM/2013 62 WITH AND IN ANY CASE NO PREJUDICE IS CAUSED TO THE REVENUE AS THE ENTIRE INCOME WAS OFFERED FOR TAXATION ALBEIT IN PERSONAL HANDS INSTEAD OF COMPANYS HAND. THUS, APPEAL FILED BY THE REVENUE IS ALLOWE D FOR STATISTICAL PURPOSES. WE ORDER ACCORDINGLY. 25. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E IN ITA N0. 5813/MUM/2013 FOR THE ASSESSMENT YEAR 2007-08 IS DI SMISSED AND THE REVENUE APPEAL IN ITA NO. 5978/MUM/2013 FOR THE ASS ESSMENT YEAR 2009-10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MAY , 2016. # $% &' 25-05-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 25-05-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI