RAJEEV YESHWANT PATIL , VIRAR V. ACIT CC-3 THANE , THANE

ITA 6646/MUM/2019

• Counselvise Citation: [NaN] 107 COUNSELVISE.COM (IT) 2170 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2011-2012
• Appeal Filed On: 24-10-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 11; 15; 271(1)(b); 139; 143(3); 92; 153A; 133(6); 250; 153C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.6646/Mum./2019 (Assessment Year : 2011–12) Shri Rajeev Yeshwant Patil Mauli Bungalow, Gaothan Virar (West), Dist. Palghar 401 303 PAN – ACKPP1441N ................ Appellant v/s Asstt. Commissioner of Income Tax Central Circle–3, Thane ................ Respondent ITA No.6834/Mum./2019 (Assessment Year : 2014–15) Asstt. Commissioner of Income Tax Central Circle–3, Thane ................ Appellant v/s Shri Rajeev Yeshwant Patil 1, Praijat Apartment, Gaothan Road, Palghar, Virar(W)-401303 PAN – ACKPP1441N ................ Respondent Assessee by : Shri Subodh Ratnaparkhi Revenue by : Shri Salil Mishra, CIT–DR Date of Hearing – 22.02.2022 Date of Order – 02/05/2022 Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 2 O R D E R PER SANDEEP SINGH KARHAIL, J.M. These appeals by either parties are against impugned common order dated 19.08.2019, passed by the learned Commissioner of Income Tax (Appeals)–11, Mumbai [“learned CIT(A)”], under section 250 of the Income Tax Act, 1961 ("the Act") for the assessment year 2011–12 by the assessee and for the assessment year 2014–15 by the Revenue. 2. As both the appeals pertain to the same assessee and impugned order passed by the learned CIT(A) is also common, therefore, both the appeals were heard together as a matter of convenience and are being adjudicated by way of this consolidated order. ITA no.6646/Mum./2019 Assessee’s Appeal – A.Y. 2011–12 3. In this appeal, the assessee has raised following grounds:– “1. On the facts and in law, the Hon. CIT(A) erred in confirming the addition of Rs.25,00,000/- as unexplained cash loan given by the appellant to one, M/s. Maad Realtors & Infra Pvt. Ltd. (Maad) based on entries on seized page no.6 of bundle no.1/party A-2, found and seized from the premises of the said' Maad, not appreciating that the appellant had not given any such cash loan and the issue was explained by the said Maad to be an accounting error on their part and therefore the addition was not justified. 2. On the facts and in law, the Hon. CIT(A) erred in upholding the addition of Rs.25,00,000/- as unexplained cash loan given by the appellant to one, M/s. Maad Realtors & Infra Pvt. Ltd. (Maad) based on entries on seized page no.6 of bundle no. 1/party A-2, found and seized from the premises of the said Maad, without affording the appellant any opportunity to cross examine the said Maad to establish Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 3 the genuineness of his claim and in the result, the salient principles of equity, fairplay and natural justice have been breached and for that reason also the addition is required to be deleted.” 4. The only issue arising in assessee’s appeal is with regard to addition of Rs. 25,00,000 as unexplained cash loan given by the assessee to M/s Maad Realtors and Infra Private Limited. 5. The brief facts of the case pertaining to this issue as emanating from the record are: The assessee is an individual and engaged in business of construction activities in the name and style “M/s Y.K. & Sons”. The assessee is also a partner in various firms. A search and seizure action under section 132 of the Act was carried out on 31.07.2014 in AMEYA group of cases including at the residence of the assessee. Notice under section 153A of the Act was issued on 15.12.2014 for the assessment years 2009–10 to 2014–15. In response to notice under section 153A of the Act, assessee filed his return of income for the assessment years 2009– 10 to 2014–15 and regular return of income for the assessment year 2015–16. The assessee was provided with the copies of statement recorded during the search and survey vide letter dated 23.03.2015. 6. Separately, during the course of search proceedings in the office premises of M/s Maad Realtors and Infra Private Limited loose paper bundles were found and seized. The said documents contain details of loans received from various parties in the books of M/s Maad Realtors and Infra Private Limited. At page No. 6 of such document, Rs. 2,25,00,000 in Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 4 the loan column against “Rajiv Patil (Nana)” was shown. At page No. 15 of the said bundle, Rs. 2,00,00,000 paid in cheque and Rs. 25,00,000 paid in cash by Nana (Rajiv Patil) was mentioned. The assessee was asked to show cause. In response, assessee submitted that the same is investment made by Rashmi Ameya Developers Housing & Estate Realtors Pvt. Ltd. through the assessee. By mistake accountant has passed entry in Ledger account of assessee. 7. The Assessing Officer vide order dated 19.09.2016 passed under section 143(3) read with section 153A of the Act did not agree with the submission of the assessee and held that assessee failed to submit cogent supporting evidence in support of his claim. Accordingly, the Assessing Officer, inter-alia, treated Rs. 25,00,000 as unexplained cash loan made by the assessee and added the same to the total income of the assessee. 8. In appeal before learned CIT(A), the assessee submitted that it has no connection to the premises of the third-party from where the documents were found and seized. The assessee further submitted that M/s Maad Realtors and Infra Private Limited vide letter dated 08.09.2016 explained to the Assessing Officer that by mistake the said entry was credited to the account of the assessee by the accountant and subsequently the said error was rectified at seized paper No. 59, which only mentions loan of Rs. 2,00,00,000 in the name of assessee as liability in the books of M/s Maad Realtors and Infra Private Limited. Accordingly, the assessee submitted Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 5 that the said paper No. 59 was also seized from the premises of M/s Maad Realtors and Infra Private Limited and therefore has to be considered as evidence. The assessee also submitted that the Assessing Officer has relied upon the documents seized from premises of 3 rd party without granting the assessee opportunity to cross examine the said person. 9. The learned CIT(A) vide common impugned order dated 19.08.2019 held that perusal of document at page 15 indicates that it is a Ledger account for the period 01.04.2004 to 26.04.2011 and the receipt of cash of Rs. 25,00,000 against the name of Nana i.e. the assessee is appearing in voucher No. 55 at seized page 15 dated 16.12.2010. The learned CIT(A) further observed that at page No. 59 is the unsecured loan from other group summary for the period 01.04.2012 to 31.05.2013 indicating liability of Rs. 2,00,00,000 towards Rajiv Patil. Accordingly, the learned CIT(A) held that the 2 accounts do not relate to the same period and therefore the claim of the assessee on the basis of seized page 59 cannot be accepted. The learned CIT(A) further held that the assessee was given full information on the documents found during the course of search and which was sought to be used against the assessee. As a result, the learned CIT(A) dismissed the appeal filed by the assessee on this issue. Being aggrieved, the assessee is in appeal before us. 10. During the course of hearing, Shri Subodh Ratnaparkhi, learned Authorised Representative (“learned A.R.”) submitted that the assessee Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 6 only gave loan of Rs. 2,00,00,000 to M/s Maad Realtors and Infra Private Limited which was rightly recorded at seized page No. 59. The learned A.R. by referring to letter dated 08.09.2016 filed by accountant of M/s Maad Realtors and Infra Private Limited further submitted that the entries at seized page 15 were the investments made by Rashmi Ameya Developers Housing & Estate realtors Pvt. Ltd. through the assessee and by mistake accountant has passed entry in Ledger account of the assessee. The learned A.R. also submitted that the Assessing Officer failed to grant opportunity to cross examine directors/partners of M/s Maad Realtors and Infra Private Limited from where the documents were seized. 11. On the other hand, Shri Salil Mishra, learned Departmental Representative (“learned D.R.”) vehemently relied upon the orders passed by the lower authorities and submitted that the facts in special knowledge of a person need to be explained by that person only. The learned D.R. also placed reliance on section 292C of the Act. In rejoinder, learned A.R. submitted that section 292C of the Act is not applicable in the present case as the seized documents were not in the possession of the assessee. 12. We have considered the rival submissions and perused the material available on record. In the present case, the addition made by the Assessing Officer was based on the documents seized during the course of search at the office premises of M/s Maad Realtors and Infra Private Limited. As per the assessee, Rs. 2,00,00,000 was paid to M/s Maad Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 7 Realtors and Infra Private Limited by four cheques in the month of December 2010. We find that this transaction was recorded in the books of the assessee and represented on the asset side of the balance sheet, forming part of the paper book at page No. 42. Further the assessee submitted that no amount in cash was paid by the assessee to M/s Maad Realtors and Infra Private Limited. Vide letter dated 08.09.2016, which is forming part of the paper book at page 28, the accountant of M/s Maad Realtors and Infra Private Limited clarified that Rs. 25,00,000 mentioned at seized page 15 is the investment by Rashmi Ameya Developers Housing & Estate Realtors Ltd. through the assessee. We, at page 40 of the paper book, scheduled to the balance sheet of the assessee, find that Rs. 25,00,000 is shown as unsecured loan to Rashmi Ameya Developers. Though, the letter dated 08.09.2016 filed before the Assessing Officer submitted that the entry of Rs. 25,00,000 in cash was by mistake of the accountant was passed in the Ledger account of the assessee and the same in fact was investment by Rashmi Ameya Developers Housing & Estate Realtors Ltd, the Assessing Officer neither called for any information / document from Rashmi Ameya Developers Housing & Estate Realtors Ltd. nor issued any notice under section 133(6) of the Act to ascertain the authenticity of such a statement. In the present case, it is evident that the Assessing Officer completely dis-regarded the aforesaid letter dated 08.09.2016 and merely on the basis of seized document page 15 made addition in the hands of the assessee as unexplained cash loan to M/s Maad Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 8 Realtors and Infra Private Limited. Further, the Assessing Officer also neither recorded any statement of the director/partner of M/s Maad Realtors and Infra Private Limited nor granted opportunity of cross examination to the assessee. Thus, the impugned addition is based only on entry found in the seized documents, without the same being corroborated with any other evidence found during the course of search or post search investigations and assessments. Further, we agree with the submission of learned A.R. that section 292C of the Act is not applicable in the present case, as it is not the claim of Revenue that seized documents were found in the possession of the assessee. Therefore, in view of the above, we are of the considered opinion that the addition on account of alleged cash loan is not justified in the facts of the present case and is, therefore, directed to be deleted. As a result, grounds raised in assessee’s appeal are allowed. ITA no.6834/Mum./2019 Revenue Appeal – A.Y. 2014–15 13. In this appeal, the Revenue has raised following grounds:– “1. Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting addition of Rs.2,11,97,690 (for A.Y. 2014–15) on account of unexplained expenditure. 2. Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in accepting the fact that the onus was not on the assessee to explain the transactions mentioned in the seized document found during the search action. 3. Whether On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in not considering the applicability of provision of section 292 of the I.T. Act, 1961.” Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 9 14. The only issue arising in revenue’s appeal is with regard to deletion of addition of Rs. 2,11,97,690 on account of unexplained expenditure. 15. The brief facts of the case pertaining to this issue as emanating from record are: During the course of survey proceedings in the office premises of the assessee on 31.07.2014, loose paper identified as No. 108 to 112 of bundled 2 were found and seized. These papers show interest calculation from March 2007 to March 2014 in respect of Gokhivare-Vasai and Central Park, Nallasopara. The principal amount shown at Rs. 1,32,30,000 as on March 2007 and interest at 2% per month. The cumulative amount is shown at Rs. 6,98,19,104.17 out of which Rs. 5,65,89,104 is interest component. Further principal amount of Rs. 47,00,000 on March 2007 and cumulative figure of Rs. 2,52,99,530 as on March 2014 which includes interest component of Rs. 2,05,99,530. The assessee vide letter dated 26.08.2016 submitted that these papers do not pertain to it. However, vide show cause notice dated 02.09.2016, the assessee was asked to show cause as to why interest of Rs. 5,65,89,104 and Rs. 2,05,99,530 been treated as undisclosed income on the basis of loose papers found in assessee’s premises during the course of survey. In reply, assessee submitted that he is actively involved in political and social affairs of his area and his guidance is sought by various personal in social, political as well as business affairs. In the course of such activity, the above papers must have been brought to his office and have remained there. The Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 10 assessee further submitted that the papers found and impounded from his office belong to various entities with which he has no direct connection and on the basis of such papers proceedings under section 153C of the Act have been initiated. The assessee further submitted that from the examination of the said papers it is apparent that the concern investments have been made in financial years which are prior to the assessment years under consideration. 16. The Assessing Officer vide order dated 19.09.2016 passed under section 143(3) read with section 153A of the Act did not agree with the submission of the assessee and held that the documents seized were found in the possession of the assessee and thus the onus is on the assessee of explaining the same. Accordingly, the Assessing Officer made an addition of Rs. 2,11,97,690 as unexplained payment made by the assessee. 17. In appeal before the learned CIT(A), the assessee submitted that he is not involved in any project named in the loose documents. The assessee also submitted that working of interest in these documents represents notional interest to determine the value as on 31.03.2014 and thus, entries in these documents do not indicate any income or expenditure arising in the hands of any person during the period covered by assessment years 2009–10 to 2015–16. 18. The learned CIT(A) vide impugned order dated 19.08.2019 held that from the documents it is seen that cumulative interest on month-to-month Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 11 basis has been increasing and the only inference that can be derived from the entries is that interest has been charged in the next month on the principal plus interest of the preceding month and that no interest was received or paid. The learned CIT(A) further held that if the payments were made by the assessee on monthly basis, then there would not be any reason for the interest to be calculated on cumulative basis. The learned CIT(A) also held that nothing has been found during the course of search or post search investigations and assessments that the assessee is involved in 2 projects mentioned in the loose documents. Accordingly, the learned CIT(A) allowing assessee’s appeal on this issue held that the impounded documents can only be held as “dumb document” and same cannot be basis for any addition for the purpose of assessment of income. Being aggrieved, the Revenue is in appeal before us. 19. During the course of hearing, learned D.R. submitted that date, amount and name of the project was clearly mentioned on the documents. Further, the assessee also did not discharge the onus casted on it to explain the ownership of the documents. Thus, there is no basis to held that the documents were dumb documents. 20. On the other hand, learned A.R. relied upon the order passed by learned CIT(A). 21. We have considered the rival submissions and perused the material available on record. From the contents of loose documents, as mentioned Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 12 at internal page 6 – 8 of the impugned order passed by the learned CIT(A), it is evident that the same is nothing but the calculation of cumulative interest on month-to-month basis by charging the interest in the next month on the principal plus interest of the preceding month. Further, the details do not show any payment or receipt of interest on monthly basis, otherwise, the principal amount would have been actually reduced rather than being increased. In the present case, no evidence has been brought on record by the Assessing Officer to prove that assessee was involved in 2 projects named in the loose documents. In view of the above, we find no infirmity in the order passed by the learned CIT(A) deleting the addition made by the Assessing Officer on account of unexplained expenditure. Accordingly, grounds raised in Revenue’s appeal are dismissed. 22. In the result, appeal by the assessee for assessment year 2011–12 is allowed, while appeal by the Revenue for assessment year 2014–15 is dismissed. Order pronounced in the open court on 02/05/2022 Sd/- AMARJIT SINGH ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 02/05/2022 Shri Rajeev Yeshwant Patil ITA no.6646/Mum./2019 ITA no.6834/Mum./2019 13 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai