Assistant Commissioner of Income-tax, V. M/s. Raja Rani Developers, Aurangabad

ITA 620/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4895 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 07-02-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S B PRASAD
• Keywords: Unexplained investment
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI VIKAS AWASTHY, JM / ITA NO. 620/PUN/2016 / ASSESSMENT YEAR : 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, AURANGABAD. ....... / APPELLANT / V/S. M/S. RAJA RANI DEVELOPERS, C/O. M.B. PATIL CONSTRUCTION LTD. 115/116, APNA BAZAR, JALNA ROAD, AURANGABAD. PIN-431 005 PAN : AAQFR0673L / RESPONDENT ASSESSEE BY : NONE REVENUE BY : SHRI S.B PRASAD, CIT / DATE OF HEARING : 07.02.2019 / DATE OF PRONOUNCEMENT : 15.02.2019 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE O RDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, PUNE DATED 20.01 .2016 FOR THE ASSESSMENT YEAR 2008-09. 2. THE NOTICE OF APPEAL WAS SENT TO THE ASSESSEE/RESPO NDENT THROUGH RPAD. A PERUSAL OF THE RECORDS SHOW THAT THE REPEATED NOTICES SENT TO THE 2 ITA NO.620/PUN/2016 A.Y.2008-09 ASSESSEE/RESPONDENT WERE DULY SERVED. THE ACKNOWLEDGM ENTS OF SERVICE OF NOTICES ARE AVAILABLE ON RECORD. DESPITE SERVICE OF NOTICE S, NEITHER THE ASSESSEE NOR HIS AUTHORIZED REPRESENTATIVE HAS PUT IN A PPEARANCE TO OPPOSE THE APPEAL BY DEPARTMENT. IT SEEMS THAT THE ASSESSEE IS NOT INTEREST IN PURSUING THE MATTER BEFORE THE TRIBUNAL. IN SUCH CIRCUMS TANCES, THE APPEAL OF REVENUE IS TAKEN UP FOR HEARING ON THE BASIS OF MATER IAL AVAILABLE ON RECORD AND WITH THE ASSISTANCE OF LD. DR. 3. IN APPEAL, THE REVENUE HAS ASSAILED THE ORDER OF COMM ISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION OF RS.15,45,00,00 0/- MADE BY ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INVESTMENT U/S.6 9 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ON PROTECTIVE B ASIS. 4. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE: THE ASSESSEE IS A PROPRIETORSHIP FIRM AND IS A REAL ESTATE DEVELOPER. A S EARCH ACTION U/S.132 OF THE ACT WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF PATIL GROUP OF AURANGABAD/PUNE ON 24.11.2011. DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS WERE SEIZED. ONE OF SUCH DOCUM ENT I.E. LOOSE PAPER BUNDLE NO.10 (PAGES 98 TO 136) REVEAL THAT THE PAR TNERS OF THE FIRMS HAD PURCHASED LAND AT KOMPALLY, HYDERABAD. AS PER THE S EIZED DOCUMENT, SUBSTANTIAL ON MONEY WAS PAID FOR PURCHASE OF LAND. CONS EQUENTLY, NOTICE U/S.153C OF THE ACT WAS ISSUED TO THE ASSESSEE ON 07.10 .2013 TO FURNISH THE RETURN OF INCOME FOR ASSESSMENT YEAR UNDER CONSIDERATION . IN COMPLIANCE OF THE SAID NOTICE, THE ASSESSEE FILED RETURN OF INCOME ON 24.0 3.2014 FOR IMPUGNED ASSESSMENT YEAR DECLARING NIL INCOME. HOWEVER , NO COMPUTATION SHEET/STATEMENT OF ACCOUNT OR STATEMENT AS PER PROVIS ION OF SECTION 139(9)(F) WAS ATTACHED ALONG WITH THE RETURN OF INCOME. ON ACCOUNT OF NON- 3 ITA NO.620/PUN/2016 A.Y.2008-09 COOPERATION OF THE ASSESSEE, THE ASSESSING OFFICER WAS CO NSTRAINT TO COMPLETE THE ASSESSMENT U/S.144 OF THE ACT. A SALE DEED QUA KOM PALLY LAND WAS EXECUTED ON 10.10.2007 BETWEEN I) SHRI BHIM RAO PATIL II) SHRI D. RAM MOHAN RAO & III) SHRI S. VINOD KUMAR ON ONE SIDE (THE PURCHA SERS) AND SHRI G. ASHOK REDDY OF BOWENPALLY, HYDERABAD (THE SELLER) ON THE OTHER. THE SALE DEED WAS EXECUTED FOR PURCHASE OF LAND ADMEASURING 3 AC RES 9 GUNTAS AT SURVEY NO.148, KOMPALLY, QUTUBULLAPUR MANDAL, R.R. DISTRICT HYD ERABAD FOR A CONSIDERATION OF RS.3,35,00,000/-. THEREAFTER, A DEED OF PAR TNERSHIP WAS EXECUTED BETWEEN THE AFORESAID PERSONS AND FIVE OTHERS ON 26.10.2007 BY VIRTUE OF WHICH THE PRESENT ASSESSEE FIRM HAD COME INTO EXISTENCE. THE PARTNERS IN THE FIRM AND THEIR SHARES ARE AS UNDER: I. SHRI B.R. PATIL 30% II. SHRI VINOD SHRIRIRAMVAR 20% III. SHRI D. RAM MOHAN RAO 10% IV. SMT. D. VANAJA 10% V. SHRI SHASHIKANT MORALWAR 10% VI. SMT. K. KAVITA 16% VII. SHRI D. RAJA REDDY 02% VIII. SHRI K. PRABHAKAR REDDY 02% AFTER EXAMINING THE FACTS AND THE SOURCE OF INVESTMENT FOR PURCHASE OF LAND, THE ASSESSING OFFICER HELD THAT THE INVESTMENT FOR PU RCHASE OF LAND WAS MADE BY THE PARTNERS. HOWEVER, ON ACCOUNT OF NON COMPLIA NCE BY THE PARTNERS, THE ASSESSING OFFICER MADE ADDITION OF RS.15,45,00,00 0/- AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT ON PROTECTIVE BA SIS IN THE HANDS OF ASSESSEE. 4 ITA NO.620/PUN/2016 A.Y.2008-09 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 27.03.2014 PASSED U/S. 144 R.W.S. 153C OF THE ACT, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPE ALS) SOUGHT REPORT FROM THE ASSESSING OFFICER REGARDING STATUS OF ADDIT ION ON ACCOUNT OF UNACCOUNTED INVESTMENT IN THE HANDS OF INDIVIDUAL PARTNERS AND ALSO SOUGHT THE COPY OF ORDER OF SETTLEMENT COMMISSION U/S.245D(4) IN T HE CASE OF SHRI B.B.PATIL. AFTER ANALYSING THE ORDER OF SETTLEMENT COMMISSIO N DATED 19.03.2015 AND THE REPORT OF ASSESSING OFFICER, THE COMMISSIO NER OF INCOME TAX (APPEALS) HELD THAT THE INVESTMENT IN LAND WAS MADE B Y INDIVIDUALS WHO LATER ON BECAME THE PARTNERS IN THE FIRM. THUS, PROTECTIV E ADDITION MADE BY THE ASSESSING OFFICER IN THE HANDS OF ASSESSEE WAS DELETED. 6. NOW, THE REVENUE IS IN APPEAL AGAINST THE AFORESAID FIND INGS OF THE COMMISSIONER OF INCOME TAX (APPEALS). 7. SHRI S.B. PRASAD REPRESENTING THE DEPARTMENT VEHEMEN TLY DEFENDED THE ASSESSMENT ORDER AND PRAYED FOR REVERSING THE FINDIN GS OF COMMISSIONER OF INCOME TAX (APPEALS). 8. WE HAVE HEARD THE SUBMISSIONS OF LD. DR AND HAVE PERU SED THE ORDERS OF AUTHORITIES BELOW. THE SOLITARY ISSUE RAISED IN THIS APPEAL IS QUA ADDITION MADE IN RESPECT OF PAYMENT OF ON MONEY RS.15,45,00,000 /- FOR PURCHASE OF LAND ADMEASURING 3 ACRES 9 GUNTAS AT SURVEY NO. 148, K OMPALLY, QUTUBULLAPUR MANDAL, R.R. DISTRICT, HYDERABAD . THE LAND WAS PURCHASED VIDE SALE DEED DATED 10.10.2007 FOR CONSIDERATION OF RS.3,35,0 0,000/- JOINTLY BY THREE PERSONS I.E. I) SHRI BHIM RAO PATIL II) SHRI D. RAM MOHA N RAO AND 5 ITA NO.620/PUN/2016 A.Y.2008-09 SHRI S. VINODKUMAR (VINOD SRIRAMWAR). THE SAID THREE PERSONS ALONG WITH FIVE OTHERS JOINED HANDS TOGETHER TO FORM A PARTNERSHIP FIRM. ONE OF THE PARTNERS, SHRI B.R PATIL WAS SUBJECT TO SEARCH ACTION U/ S.132 OF THE ACT. LATER ON, HE FILED PETITION BEFORE THE SETTLEMENT COMMISSION WHEREIN HE OFFERED RS.5.92 CRORES AS HIS SHARE IN THE INVESTMENT IN LAN D AT KOMPALLY. THE SETTLEMENT COMMISSION VIDE ORDER DATED 19.03.2015 ACC EPTED THE SAME. THE COMMISSIONER OF INCOME TAX (APPEALS) IN FIRST APPELLATE PROCEEDINGS DIRECTED THE ASSESSING OFFICER TO ASCERTAIN THE STATUS OF INCOME OFFERED/TAXED ON SUBSTANTIVE BASIS IN THE HANDS OF OTHER PARTNERS. THE ASSESSING OFFICER IN HIS REPORT POINTED THAT APART FROM SHRI B.R. PATIL NO OTHE R PARTNER OF THE FIRM HAS ADMITTED INVESTMENT IN LAND IN THEIR RESPECTIVE RETURN OF INCOME. FURTHER, HE OBSERVED THAT IT WAS THE FIRST YEAR OF EXISTE NCE OF THE FIRM AND THE LAND IN QUESTION WAS PURCHASED BEFORE REGISTRATION OF THE PARTNERSHIP DEED. THUS, IN ABSENCE OF INCOME OF ITS OWN, THE FIRM COULD NOT HA VE INVESTED FOR PURCHASE OF LAND. THEREFORE, THE INVESTMENT HAS TO BE CON SIDERED IN THE HANDS OF THE PARTNER AS THEIR RESPECTIVE UNEXPLAINED INV ESTMENT. SINCE, PARTNERS OF THE FIRM FAILED TO RESPOND TO THE NOTICES ISSUE D BY ASSESSING OFFICER, THE ENTIRE INVESTMENT OF RS.15,45,00,000/- WAS ADDED AS UNEXPLAINED INVESTMENT U/S.69 OF THE ACT, ON PROTECTIVE BASIS IN THE HANDS OF ASSESSEE PARTNERSHIP FIRM. 9. IT IS AN UNDISPUTED FACT THAT THE REGISTERED SALE DEE D FOR PURCHASE OF LAND WAS EXECUTED ON 10.10.2007 AND THE PARTNERSHIP DEE D WAS EXECUTED ON 26.10.2007. SINCE, THE PARTNERSHIP DEED IS SUBSEQUENT TO T HE DATE OF PURCHASE OF LAND, THE PARTNERSHIP FIRM BY NO MEANS COULD H AVE MADE INVESTMENT FOR PURCHASE OF LAND. CONSEQUENTLY, NO ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN LAND PURCHASED PRIOR TO EXISTEN CE OF ASSESSEE 6 ITA NO.620/PUN/2016 A.Y.2008-09 (PARTNERSHIP FIRM) COULD HAVE BEEN MADE IN THE HANDS OF ASS ESSEE, NOT EVEN ON PROTECTIVE BASIS. WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS), HENCE, THE SAME IS U PHELD AND THE APPEAL OF REVENUE IS DISMISSED. 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF ANY MERITS. ORDER PRONOUNCED ON FRIDAY, THE 15 TH DAY OF FEBRUARY, 2019. SD/- SD/- R. S. SYAL VIKAS AW ASTHY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 15 TH FEBRUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-12, PUNE. 4. THE PR. CIT, CENTRAL, NAGPUR. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, A BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 7 ITA NO.620/PUN/2016 A.Y.2008-09 DATE 1 DRAFT DICTATED ON 12.02.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12.02.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER