DCIT CC 39, MUMBAI V. HILL ROCK CONSTRUCTION LTD, MUMBAI

ITA 6365/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8250 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 15-09-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 17-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIEK A PERAMPURNA
• Keywords: Unexplained expenditure; Search and seizure; Loose papers; Document seized; Deemed to accrue or arise in india; Assessment record; Documents seized
• Section: 69C; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL H , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI SANJAY GARG, J M ITA NO. 6365 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 9 - 10 ) ACIT , CENT.CIR - 39 , MUMBAI - 400 0 20 VS. M/S HILL ROCK CONSTRUCTION LTD. 11B MITTAL TOWERS, NARIMAN POINT, MUMBAI - 400 021 PAN/GIR NO. : A A BCH 7169 M ( APPELLANT ) .. ( RESPONDENT ) /REVENUE BY : SHRI VIEK A. PERAMPURNA /ASSESSEE BY : SHRI VIJAY MEHTA & SHRI ANUJ KISNADWALA DATE OF HEARING : 1 8 TH SEPT , 201 4 DATE OF PRONOUNCEMENT : 31 ST OCT. , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH IS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A ) , DATED 1 - 8 - 2012 FOR THE ASSESSMENT YEAR 200 9 - 10 , IN THE MATTER OF ORDER PASSED U/S. 143 ( 3 ) OF TH E I.T. ACT . 2 . IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF CIT(A) FOR DELETING THE ADDITION OF RS. 32, 90,625/ - MADE ON THE BASIS OF MATERIAL FOUND FROM THE HEAD OFFICE AND PUNE OFFICE OF JAI CORPORATION GROUP. 3. RIVAL CONTENTIONS HA VE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT A SEARCH AND SEIZURE OPERATION U/S. 132 OF I.T. ACT WAS CARRIED OUT ON 05.03.2009 IN THE CASES OF JAI CORP GROUP, ITS EMPLOYEES AND CLOSE ASSOCIATES WHO WERE CLOSELY INVOLVED IN THE PROCESS OF ITA NO. 6365 /1 2 2 ACQUIR ING LAND. JAI CORP LTD. IS THE FLAGSHIP COMPANY OF THE GROUP. JAI CORP GROUP IS TRADITIONALLY IN THE BUSINESS OF COLD ROLLED COILS, GALVANIZED COILS, GALVANIZED CORRUGATED SHEETS, SMALL WOVEN SACKS, FABRICS, JUMBO BAGS AND PARTIALLY ORIENTE D YARN. THE AFFA IRS OF THIS GROUP ARE MANAGED BY JAIN FAMILY VIZ. MR. ANAND JAIN, MR. JAI KUMAR JAIN, MR. VIRENDRA JAIN, MR. SATYAPAL JAIN, MR. GAURAV JAIN AND MR. H A RSH JAIN, IN RECENT YEARS, THIS GROUP HAS EXTENDED ITS OPERATION REALTY SECTOR. THEI R GROUP IS PARTNER IN TWO MAJOR UPCOMING SPECIAL ECONOMIC ZONES OF INDIA (SEZS), BEING DEVELOPED IN VICINITY OF MUMBAI, NAMELY NAVI MUMBAI SPECIAL ECONOMIC ZONE (NMSEZ) & MUMBAI SPECIAL ECONOMIC ZONE (MSEZ). THE OTHER KEY PARTNER IN THESE SEZS I S RELIANCE INDUSTRIES LTD. (RIL). MR. ANAND JAIN IS CHAIRMAN OF BOTH NMSEZ AND MSEZ. THE GROUP HAS ALSO PURCHASED HIGE CHUNKS OF LAND IN THE VICINITY OF THESE SEZS WITH AN OBJECTIVE TO DEVELOP TOWNSHIP IN THESE AREAS ANTICIPATING POTENTIAL PRICE RISE AND GOOD RETURNS. THE GROUP HAS ALSO P URCHASED HUGE AGRICULTURAL/NON AGRICULTURAL LANDS IN THE SUBURBS OF MUMBAI, THANE, PANVEL, ALIBAUG AND PUNE. THE LANDS HAVE BEEN PURCHASED IN THE NAME OF VARIOUS COMPANIES OF THE GROUP. THIS GROUP HAS ALSO FLOATED A LARGE NUMBER OF COMPANIES AND REGISTERED /CORPORATE OFFICE OF MOST OF THE COMPANIES ARE 806/807, EMBASSY CENTRE, NARIMAN POINT, MUMBAI - 400 021, 82, MAKER CHAMBERS III, NARIMAN POINT, MUMBAI - 400 021 AND 11 - B WING MITTAL TOWERS, NARIMAN P O INT, MUMBAI. FROM DETAILS FOUND DURING THE SEARCH, IT IS SEE N THAT CERTAIN LAND HAS BEEN PURCHASED IN INDIVIDUAL NAMES ALSO. ITA NO. 6365 /1 2 3 4. DURING THE COURSE OF ASSESSMENT, THE AO OBSERVED THAT IN COURSE OF SEARCH & SEIZURE OPERATION INCRIMINATING DOCUMENTS WERE FOUND AND SEIZED. FROM THE PERUSAL OF THESE SEIZED DOCUMENTS, IT WAS OBSERVED THAT SOME OF THESE PAGES ARE IN THE FORM OF FUND REQUESTS AND OTHERS ARE IN THE FORM OF STATEMENTS. TOTAL COST OF THE LAND PURCHASED IS BIFURCATED IN PART A & PART B AS GIVEN AT PAGE NO. 11 TO 13 OF THE ASSESSMENT ORDER. THE AO HAS REPRODUC ED THE ENTRIES OF SEIZED PAPERS. THE AO HAS ALSO OBSERVED THAT PART A OF THESE LOOSE PAPERS REPRESENTS THE PAYMENTS MADE BY CHEQUE AND PART B IS THE CASH PAYMENTS NOT REFLECTED IN THE BOOKS OF ACCOUNT. IN VIEW OF THESE FACTS, THE AO HAS GIVEN A SHOW CAUS E NOTICE TO THE ASSESSEE. IN RESPONSE TO THIS SHOW CAUSE NOTICE, THE A.R. OF THE APPELLANT HAS SUBMITTED ITS REPLY WHICH IS DISCUSSED AT PAGE NO. 15 OF THE ASSESSMENT ORDER. THE AO HAS ALSO DISCUSSED THE AFFIDAVIT FILED. BY MR. ATUL PAWAR IN WHICH HE HAS S TATED THAT PART B PAYMENT ARE PROBABLE DEVELOPMENT CHARGES IN RESPECT OF THE LAND. AFTER DISCUSSING ALL THE FACTS IN GREAT LENGTH, THE AO HAS CONCLUDED THAT AS PER THE PROVISO TO SECTION 69C THE UNEXPLAINED EXPENDITURE HAS TO BE TREATED AS DEEMED INCOME OF THE ASSESSEE. THUS, THE AO HAS HELD THAT AS PER ANNEXURE R - 4 THE AMOUNT OF RS. 32,90,625/ - SHOWN AS UNEXPLAINED EXPENDITURE IS NOT ALLOWABLE AS PER THE PROVISO TO SECTION 69C OF THE I.T.ACT. HENCE, AN ADDITION OF RS. 32,90,625/ - WAS MADE TO THE TOTAL INCOME . 5 . BY THE IMPUGNED ORDER, THE CIT(A) DELETED THE ADDITION AFTER RECORDING THE FOLLOWING FINDINGS : - 1.4 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT, ORDER OF THE AO AND FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COURSE OF SEARCH & SEIZURE OP ERATION, INC RI MINATING DOCUMENTS WERE FOUND & SEIZED BY ITA NO. 6365 /1 2 4 INTERPRETING THE ENTRIES GIVEN IN THESE LOOSE PAPERS SPECIFICALLY ANNEXURE R - 4 ATTACHED WITH THE ASSESSMENT ORDER IS RELATING TO THE YEAR UNDER CONSIDERATION. IN THIS SEIZED PAPER, THE DETAIL OF LAND PAYMENTS MADE ARE GIVEN WITH NAME OF THE SELLER AND NAME OF THE BUYER ALSO NAME OF THE VILLAGE AND LOCATION. THE FURTHER DETAIL OF LAND CONSIDERATION AND DETAIL OF PAYMENT BY DD AND CASH ARE ALSO MENTIONED. ON THE BASIS OF THESE PAPERS THE AC HAS HELD THAT SINCE THESE PAPERS ARE FOUND AND SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE, THEREFORE THESE ARE TO BE TREATED AS BELONGING TO THE ASSESSEE AND AN AMOUNT OF RS. 32,90,625/ - WAS TREATED AS UNEXPLAINED CASH EXPENDITURE AND ADDED BACK TO THE TAXABLE I NCOME. ON THE OTHER HAND, THE A.R. OF THE APPELLANT HAS SUBMITTED THAT ALTHOUGH THESE PAPERS ARE FOUND AND SEIZED FROM ITS BUSINESS PREMISES BUT THESE ARE NOT BELONGING TO THE ASSESSEE BECAUSE NEITHER THE NAME OF THE ASSESSEE HAS BEEN MENTIONED IN THESE PA PERS NOR ANY LAND WAS PURCHASED BY THE ASSESSEE IN THIS VILLAGE. THE NAME OF THE SELLER IS MENTIONED AS MR. NILESH DILIP KAMDAR AND THE NAME OF BUYER MS. BIJAL MANIAR. BOTH THE NAME OF THE SELLER AND BUYER ARE NOT RELATING TO EVEN ANY FAMILY MEMBER OF THE ASSESSEE. NO PAYMENT HAS BEEN REFLECTED IN THE BOOKS OF ACCOUNT AS MENTIONED PAYMENT MADE THROUGH DD IN FAVOUR OF MR. NILESH DILIP KAMDAR. ON THESE BASIS, THE A.R. OF THE APPELLANT HAS ARGUED THAT SINCE THESE PAPERS ARE NOT BELONGING TO THE ASSESSEE AND NO T EVEN A SINGLE ENTRY MATCHING WITH THE BOOKS OF ACCOUNT, THEREFORE NO ADVERSE INFERENCE CAN BE DRAWN. FROM THE PERUSAL OF THE SUBMISSIONS OF THE APPELLANT AND CONTENTS OF THE SEIZED PAPERS, IT IS NOTICED THAT THE NAME OF THE SELLER AND BUYER ARE SPECIFICA LLY MENTIONED ON THESE PAPERS WHICH SHOWS THAT THE ASSESSEE IS NEITHER A BUYER OR SELLER AND MOREOVER THE ASSESSEE HAS ALSO NOT PURCHASED OR SOLD ANY LAND IN THE VILLAGE NAMED AS SHIDGAON. ALTHOUGH THE PAPERS WERE SEIZED FROM THE BUSINESS PREMISES OF THE A SSESSEE AND ALSO RELATING TO THE SALE/PURCHASE OF LAND IN WHICH THE ASSESSEE COMPANY IS DEALING BUT NO PART OF THESE PAPERS IS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE COMPANY. HAD THERE BEEN ANY RELATION THE PAYMENTS SHOWN BY DD SHOULD HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNT AS IN THE CASE OF PAPERS FOUND AND SEIZED IN OTHER GROUP COMPANIES WHERE THE PAYMENTS MADE THROUGH DD OR CHEQUE ARE REFLECTED IN THE BOOKS OF ACCOUNTS BUT ONLY CASH PAYMENT PART WAS NOT REFLECTED. BUT IN THE PRESENT CASE, NO PART OF THE SEIZED PAPER IS REFLECTED IN THE BOOKS OF ACCOUNT WHICH PROVES THAT THESE PAPERS ARE NOT BELONGING TO THE ASSESSEE COMPANY. THE PRESUMPTION OF THE AO THAT SIMILAR TYPE OF PAPERS WERE FOUND AND SEIZED IN OTHER GROUP CASES WHERE THE PAYMENTS MADE THROUGH CHEQUE AND CASH WAS SHOWN CANNOT BE MECHANICALLY USED IN EACH AND EVERY CASE. SIMILARLY THESE PAPERS ARE ALSO BELONGING TO THE ASSESSEE. IN TOTALITY OF THE FACTS, IT IS HELD THAT NEITHER THE NAME OF THE ASSESSEE IS MENTIONED IN THESE PAPERS NO R ITA NO. 6365 /1 2 5 THE ASSESSEE HAS PURCHASED OR SOLD ANY LAND IN THE VILLAGE MENTIONED IN THESE PAPERS, THEREFORE IT CANNOT BE TREATED AS UNACCOUNTED EXPENDITURE OF THE ASSESSEE. THUS THE ADDITION MADE BY THE AO IS DELETED, GROUND OF APPEAL IS ALLOWED. 6 . THE ASSESSEE HA S ALSO RAISED AN ADDITIONAL GROUND UNDER RULE 27 OF THE I.T. ACT TO THE EFFECT THAT THE CIT(A) OUGHT TO HAVE BEEN HELD THAT THE AO HAS ERRED IN MAKING A PROTECTIVE ADDITION IN THE CASE OF ASSESSEE WHEN NO ADDITION WAS MADE ON SUBSTANTIVE BASIS IN CASE OF A NY OTHER ASSESSEE ON THE DATE OF PASSING OF ASSESSMENT ORDER OF THE ASSESSEE. IT WAS CONTENDED BY THE LEARNED AR THAT UNDER PROVISIONS OF RULE 27, ASSESSEE HAS RIGHT TO SUPPORT THE ORDER APPEALED AGAINST ON ANY OF THE GROUNDS DECIDED AGAINST THE RESPONDENT . HE FURTHER CONTENDED THAT IN THE ORDER THE CIT(A) HAS HELD THAT SINCE THE ASSESSEE HAS NOT PURCHASED OR SOLD ANY LAND IN THE VILLAGE MENTIONED IN THE IMPOUNDED PAPERS, THEREFORE, IT CANNOT BE TREATED AS UNACCOUNTED EXPENDITURE OF THE ASSESSEE. ACCORDINGL Y, THE PROTECTIVE ADDITION MADE BY THE AO WAS DEL E TED. 7 . AS PER LEARNED AR, UNDER THESE CIRCUMSTANCES, THE CIT(A) ALSO OUGHT TO HAVE HELD THAT THE AO HAS ERRED IN MAKING PROTECTIVE ADDITION IN THE HANDS OF ASSESSEE WITHOUT MAKING ANY SUBSTANTIVE ADDITION IN ANY OTHER HANDS . 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT ADDITION WAS MADE BY AO ON THE PLEA THAT SOME OF THE DOCUMENTS FOUND DURING SEARCH INDICATED INVESTMENT IN LAND MADE BY ASSESSEE. THE CIT(A) AFTER VERIFYING THE ASSESSMENT RECORDS RECORDED A CATEGORICAL FINDING THAT ALTHOUGH PAPERS WERE SEIZED FROM THE BUSINESS PREMISES OF THE ASSESSEE AND ALSO RELATING TO SALE AND PURCHASE OF LAND IN WHICH ASSESSEE ITA NO. 6365 /1 2 6 COMPANY IS DEALING BUT NO PART OF THESE PAPERS WERE REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE COMPANY NOR ASSESSEE HAD ENTERED INTO TRANSACTION ON ANY SALE OF LAND IN THE VILLAGE MENTIONED IN THESE PAPERS. THE CIT(A) ALSO RECORDED A CATEGORICAL FINDING TO THE EFFECT THAT HAD THERE BEEN ANY RELATION OF THE PAYMENT SHOWN BY DD IN THESE PAPERS, THE SAME SHOULD HAVE BEEN REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS IN THE CASE OF SEIZED PAPERS FOUND AND SEIZED IN OTHER GROUP COMPANIES WHERE PAYMENTS MA DE THROUGH DD OR CHEQUES WERE REFLECTED IN THE BOOKS OF ACCOUNTS. HOWEVER, IN THE PRESENT CASE NO PART OF SEIZED PAPER IS REFLECTED IN THE BOOKS OF ACCOUNTS WHICH PROVED THAT THESE PAPERS WERE NOT BELONGING TO THE ASSESSEE COMPANY. WE HAVE ALSO CAREFULLY G ONE THROUGH THE COPY OF THE PAPERS FOUND IN ASSESSEES PREMISES AS MENTIONED BY THE AO IN ANNEXURE - R/4 AND FOUND THAT NEITHER THE NAME OF ASSESSEE WAS MENTIONED IN THESE PAPERS AS A BUYER OR A SELLER NOR AS A MEDIATOR NOR ANY LAND WAS PURCHASED BY THE ASSE SSEE IN THE VILLAGE MENTIONED IN THESE PAPERS. THE NAME OF SELLER IN THE SEIZED DOCUMENTS WAS MENTIONED AS MR. NILESH DILIP KAMDAR AND NAME OF BUYER IS MENTIONED AS MS. BIJAL MANIAR .. BOTH NAME OF THE SELLER AND BUYER WERE NOT RELATING TO ASSESSEE OR ANY O F ITS FAMILY MEMBER . SINCE THESE PAPERS WERE NOT BELONGING TO THE ASSESSEE , WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS RECORDED BY THE CIT(A) TO THE EFFECT THAT AMOUNT MENTIONED IN THE PAPER BOOK CANNOT BE TREATED AS UNACCOUNTED EXPENDITURE OF THE ASSESS EE. THE DETAILED FINDING RECORDED BY CIT(A) AT PARA 1.4 OF HIS APPELLATE ORDER ARE AS PER MATERIAL ON RECORD, WHICH DO NOT REQUIRE ANY ITA NO. 6365 /1 2 7 INTERFERENCE ON OUR PART. NOTHING WAS BROUGHT ON RECORD BY LEARNED DR TO CONTROVERT THE FINDING RECORDED BY THE CIT(A), W HICH ARE AS PER MATERIAL ON RECORD. 9 . THE ADDITIONAL GROUND WAS RAISED BY ASSESSEE UNDER RULE 27 TO THE EFFECT THAT AO HAS ERRED IN MAKING A PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE, WHERE NO SUBSTANTIVE ADDITION HAS BEEN MADE IN CASE OF ANY OTHE R ASSESSEE ON THE DATE OF PASSING ASSESSMENT ORDER OF THE ASSESSEE. WE FOUND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE, INSOFAR AS NO SUBSTANTIVE ADDITION HAS BEEN MADE IN THE HANDS OF ANY OTHER PERSON, THERE IS NO REASON TO MAKE PROTECTIVE ADDITION IN T HE HANDS OF THE ASSESSEE IN VIEW OF THE FINDING RECORDED BY THE CIT(A) THAT ASSESSEE HAS NOT PURCHASED ANY LAND IN THE VILLAGE MENTIONED IN THE IMPOUNDED PAPERS, THEREFORE, IT CANNOT BE TREATED AS UNEXPLAINED EXPENDITURE OF THE ASSESSEE. 10 . FROM THE RECO RD, WE FOUND THAT ASSESSEE IS RELATED TO JAI CORP LTD. GROUP CASE, WHERE SEARCH WAS CONDUCTED ON 5 - 3 - 2009. AFTER SEARCH ADDITION WAS MADE IN THE HANDS OF THE ASSESSEE U/S. 153C WITH REGARD TO DOCUMENT MARKED AS ANNEXURE - R. THE AO WAS OF THE VIEW THAT AMOUNT MENTIONED IN THESE DOCUMENTS IS UNDISCLOSED INCOME OF ASSESSEE, THEREFORE, ADDITION WAS MADE U/S. 69C. SOME OF THESE PAPERS ARE IN THE FORM OF FUNDS REQUEST AND OTHERS ARE IN THE FORM OF STATEMENTS. THE AO STATED THAT BUYER OF THE ABOVE MENTIONED LAND IS S HOWN AS ONE BIJAL MANIAR IN THE SEIZED/IMPOUNDED DOCUMENTS. THE AO ADDED THE AMOUNT IN THE HANDS OF THE ASSESSEE U/S.69C ON PROTECTIVE BASIS, HOWEVER, AS A NATURAL COROLLARY SUBSTANTIVE ADDITION HAS TO BE MADE IN THE HANDS OF SO ITA NO. 6365 /1 2 8 CALLED MS.BIJAL MANIAR. W E FOUND THAT NO SUBSTANTIVE ADDITION WAS MADE IN THE HANDS OF MS. BIJAL MANIAR, THEREFORE, THERE IS NO JUSTIFICATION FOR MAKING ANY PROTECTIVE ADDITION IN THE HANDS OF THE ASSESSEE WITHOUT HAVING ANY SUBSTANTIVE ADDITION IN THE HANDS OF PERSONS SHOWN AS BU YER IN THE IMPOUNDED DOCUMENTS . 1 1 . IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31/10 / 201 4 . 31/10 / 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 31/10 /2014 /PKM , PS COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A) , MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//