JAGDISH LALWANI AS LEGAL HEIR OF LATE SMT. KOSHY LALWANI, THANE V. INCOME TAX OFFICER, WARD 2(2), KALYAN

ITA 6881/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8344 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Reopening of assessment; Unexplained investment; Set aside
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI O.P. MEENA , HON'BLE ACCOUNTANT MEMBER ITA NO. 6881 /MUM/201 7 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI AS LEGAL HEIR OF LATE SMT . KOSHY LALWANI 2401, ROYCE, RODAS ENCLAVE, HIRANANDANI ESTATE, GHODBUNDAR ROAD THANE 400 607 PAN: AAKPL 5060 H V. INCOME TAX OFFICER WARD 2(2) 2 ND FLOOR, MOHAN PLAZA, WAYALE NAGAR, KHADAKPADA, KALYAN (WEST), THANE 421 301 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NEHA PARANJ PE DEPARTMENT BY : SHRI RAJIV GUBGOT RA DATE OF HEARING : 13 .02.2019 DATE OF PRONOUNCEMENT : 05 .0 4 .2019 O R D E R PER C. N. PRASAD (JM) 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS) 3, THANE , [HEREINAFTER IN SHORT LD.CIT(A)] DATED 12.09.2017 FOR THE ASSESSMENT YEAR 2007 - 08. 2. BRIEFLY STATED THE FACTS ARE THAT, BASED ON THE INFORMATION RECEIVED FROM DIRECTOR OF INCOME - TAX (INV.) - II , MUMBAI , THE CASE OF THE ASSESSEE WAS REOPENED BY ISSUE OF NOTICE U/S. 1 4 8 OF THE ACT, FOR THE REASON THAT 2 ITA NO.6881/MUM/2017 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI THE ASSESSEE HAD PAID ON MONEY FOR PURCHASE OF FLAT NO. 2503 IN THE BUILDING CALLED BROOK HILL, HIRANANDANI ESTATE, THANE (WEST) AND T HEREFORE, INCOME HAD ESCAPED ASSESSMENT. IN THE COURSE OF THE SEARCH IN THE CASE OF HIRANANDANI GROUP CERTAIN INCRIMINATING MATERIAL WERE SEIZED WHEREIN IT WAS STATED THAT THERE WERE SOME ON MONEY PAYMENTS WITH BUYERS TO THE DEVELOPERS IN RESPECT OF PROPERTIES PU RCHASED IN DIFFERENT PROJECTS OF HIRANANDANI GROUP. BASED ON THIS INFORMATION AND THE STATEMENT OF SHRI NIRANJAN HIRANANDANI RECORDED U/S. 132(4) OF THE ACT, THE ASSESSING OFFICER WAS OF THE VIEW THAT ASSESSEE HAD PAID ON MONEY TO THE BUILDER M/S. ROMA BUILDERS PVT. LTD. IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE CONTENDED THAT SHE HAS NEVER PAID ANY ON MONEY FOR PURCHASE OF HER FLAT. HOWEVER, THE ASSESSING OFFICER BASED ON THE STATEMENT AND THE ADMISSION MADE BY SHRI NIRANJAN HIRANANDANI CONCLUDED THAT ASSESSEE HAS PAID ON MONEY TO THE BUILDER AND ACCORDINGLY TREATED . 51,53,100/ - AS UNACCOU NTED INVESTMENT OF THE ASSESSEE . ON APPEAL , LD.CIT(A ) SUSTAINED THE SAID ADDITION. 3. AT THE TIME OF HEARING , LD. COUNSEL FOR THE ASSESSEE SUBMITTED TH AT THE ASSESSEE HAD NEVER PAID ANY ON MONEY FOR PURCHASE OF HER FLAT AND THE SAID ADDITION WAS MADE ONLY BA SED ON THE STATEMENT RECORDED I N THE COURSE OF SEARCH IN HIRANANDANI GROUP . IT WAS CONTENDED THAT ADDITION CANNOT BE MADE MERELY ON THE STAT EMENT OF BUILDER WITHOUT BRINGING ANY 3 ITA NO.6881/MUM/2017 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI CORROBORATIVE EVIDENCE ON RECORD SUGGESTING THAT THE PAYMENT OF ON MONEY WAS MADE BY THE ASSESSEE. L D. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IDENTICAL ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN THE CASE OF ANIL JAGGI V. ACIT IN ITA.NO. 3049/MUM/2019 DATED 20.12.2017 [89 TAXMANN.COM 266 (MUMBAI TRIB.)] , WHEREIN SIMILAR ADDITION MADE IN THAT CASE BASED ON THE STATEMENT MADE BY SHRI NIRANJAN HIRANANDANI THAT THE ASSESSEE ANIL JAGGI PAID ON MONEY TO THE BUILDER FOR PURCHASE OF THE FLAT WAS DELETED . LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ADDITION WAS DELETED AS THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HA D PAID ON MONEY AND THE ADDITION WAS SIMPLY MADE BASED ONLY ON THE STATEMENT OF SHRI NIRANJAN HIRANANDANI AS WAS DONE IN THE CASE OF THE ASSESSEE BEFORE US . LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION IN THE CASE OF PRIYANK PRADEEP AGARWAL V. ITO IN ITA.NO. 6883/MUM/2017 DATED 31.05.2018 , WHEREIN SIMILAR ADDITI ON WAS DELETED FOLLOWING THE DECISION IN THE CASE OF ANIL JAGGI V. ACIT (SUPRA) . 4. LD. DR VEHEMENTLY SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT THE ADDITION WAS MADE BASED ONLY ON THE STATEMENT OF SHRI NIRANJAN HIRANANDANI THAT THE ASSESSEE MADE SOME ON MONEY 4 ITA NO.6881/MUM/2017 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI PAYMENTS. THERE ARE NO OTHER EVIDENCES ON RECOR D SUGGESTIN G THAT THE ASSESSEE PAID ON MONEY TO THE BUILDER. WE FIND THAT O N ID ENTICAL FACT SITUATION THE COORDINATE BENCH DELETED ADDITION IN THE CASE OF ANIL JAGGI V. ACIT (SUPRA) , WHEREIN IT HAS BEEN HELD THAT MERE ADMISSION OF AMOUNT S RECORDED IN PEN DRIVE AS THE ADDITIONA L UNEXPLAINED INCOME WOULD NOT LEAD TO DRAW AN ADVERSE INFERENCE THAT UNEXPLAINED INVESTMENT WAS MADE BY THE ASSESSEE FOR PURCHASE OF PROPERTY PARTICULARLY WHEN NO EVIDENCE WAS BROUGHT ON RECORD . WHILE HOLDING SO , IT HAS BEEN OBSERVED AS UNDER : - 14. WE SHALL NOW TAKE UP THE CASE OF THE ASSESSEE ON MERITS AND DELIBERATE ON THE VALIDITY OF THE ADDITION OF RS. 2.23 CRORE MADE BY THE A.O ON THE GROUND THAT THE ASSESSEE HAD MADE A PAYMENT OF ON MONEY FOR PURCHASE OF FLATS FROM M/S LAKEVIEW DEVELOPERS. WE HAVE PERUSED THE FACTS OF THE CASE AND THE MATERIAL AVAILABLE ON RECORD ON THE BASIS OF WHICH THE ADDITION OF RS. 2.23 CRORE HAD BEEN MADE IN THE HANDS OF THE ASSESSEE. WE HAVE FURTHER DELIBERATED ON THE MATERIAL PLACED ON RECORD AND THE CONTENTIONS OF THE LD. A.R TO DRIVE HOME HIS CONTENTION THAT NO PAYMENT OF ANY ON MONEY WAS MADE BY THE ASSESSEE FOR PURCHASE OF FLATS FROM M/S LAKEVIEW DEVELOPERS. WE FIND THAT THE GENESIS OF THE CONCLUSION OF THE A.O THAT THE ASSESSEE HAD PAID ON MONEY OF RS. 2.23 CRORE FOR PURCHASE OF PROP ERTY UNDER CONSIDERATION IS BASED ON THE CONTENTS OF THE PEN DRIVE WHICH WAS SEIZED FROM THE RESIDENCE OF AN EX - EMPLOYEE OF HIRANANDANI GROUP. WE HAVE PERUSED THE PRINT OUT OF THE PEN DRIVE (PAGE 42 OF APB) AND FIND OURSELVES TO BE IN AGREEMENT WITH THE VI EW OF THE LD A.R THAT THOUGH AGAINST THE HEADING AMOUNT OF ON MONEY PAID THE NAME, ADDRESS AND PAN NO. OF THE ASSESSEE IS MENTIONED ALONGWITH THE DETAILS OF THE PROPERTY PURCHASED BY HIM, VIZ. FLAT NO.2501 IN SOMERSET BUILDING FROM LAKEVIEW DEVELOPERS (A HIRANANDANI GROUP CONCERN), HOWEVER, THE SAME WOULD NOT CONCLUSIVELY PROVE SUPPRESSION OF INVESTMENT AND PAYMENT OF ON MONEY BY THE ASSESSEE FOR PURCHASE OF THE PROPERTY UNDER CONSIDERATION. WE FIND THAT THE INFORMATION AS EMERGES FROM THE PRINT OUT O F THE PEN DRIVE FALLS SHORT OF CERTAIN MATERIAL FACTS, VIZ. DATE AND MODE OF RECEIPT OF ON MONEY, WHO HAD PAID THE MONEY, TO WHOM THE MONEY WAS PAID, DATE OF AGREEMENT AND WHO HAD PREPARED THE DETAILS, AS A RESULT WHEREOF THE ADVERSE INFERENCES AS REGARD S PAYMENT OF ON MONEY BY THE ASSESSEE FOR PURCHASE OF THE PROPERTY UNDER CONSIDERATION REMAIN UNCORROBORATED. WE FURTHER FIND THAT WHAT WAS THE SOURCE FROM WHERE THE INFORMATION WAS RECEIVED IN THE PEN DRIVE ALSO REMAINS A MYSTERY TILL DATE. WE FIND THAT SH. NIRANJAN HIRANANDANI IN THE COURSE OF HIS CROSS - EXAMINATION HAD CLEARLY STATED THAT NEITHER HE WAS AWARE OF THE PERSON WHO HAD MADE THE ENTRY IN THE PEN DRIVE, NOR HAD WITH HIM ANY EVIDENCE THAT THE ASSESSEE HAD PAID ANY CASH TOWARDS PURCHASE OF FLAT. WE HAVE DELIBERATED ON THE FACT THAT SH. NIRANJAN HIRANANDANI IN HIS STATEMENT RECORDED ON OATH IN THE COURSE OF THE SEARCH & SEIZURE PROCEEDINGS HAD CONFIRMED THAT THE AMOUNTS AGGREGATING TO RS. 5 ITA NO.6881/MUM/2017 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI 475.60 CRORE RECORDED IN THE PEN DRIVE WERE THE ON - MONEY RE CEIVED ON SALE OF FLATS, WHICH WAS OFFERED AS ADDITIONAL INCOME UNDER SEC. 132(4) AND THEREAFTER OFFERED AS SUCH FOR TAX IN THE PETITION FILED BEFORE THE SETTLEMENT COMMISSION. WE ARE OF THE CONSIDERED VIEW THAT THERE IS SUBSTANTIAL FORCE IN THE CONTENTION OF THE LD. A.R THAT MERE ADMISSION OF THE AMOUNTS RECORDED IN THE PEN DRIVE AS THE ADDITIONAL INCOME BY SH. NIRANJAN HIRANANDANI, FALLING SHORT OF ANY SUCH MATERIAL WHICH WOULD INEXTRICABLY EVIDENCE PAYMENT OF ON MONEY BY THE ASSESSEE WOULD NOT LEAD TO DRAWING OF ADVERSE INFERENCES AS REGARDS THE INVESTMENT MADE BY THE ASSESSEE FOR PURCHASE OF THE PROPERTY UNDER CONSIDERATION. WE RATHER HOLD A STRONG CONVICTION THAT THE VERY FACT THAT THE CONSIDERATION PAID BY THE ASSESSEE FOR PURCHASE OF THE PROPERTY UN DER CONSIDERATION WHEN PITTED AGAINST THE MARKET VALUE FIXED BY THE STAMP VALUATION AUTHORITY IS FOUND TO BE SUBSTANTIALLY HIGH, FURTHER FORTIFIES THE VERACITY OF THE CLAIM OF THE ASSESSEE THAT HIS INVESTMENT MADE TOWARDS PURCHASE OF THE PROPERTY UNDER C ONSIDERATION WAS WELL IN ORDER. WE ARE OF THE CONSIDERED VIEW THAT THOUGH THE MATERIAL ACTED UPON BY THE DEPARTMENT FOR DRAWING OF ADVERSE INFERENCES AS REGARDS PAYMENT OF ON MONEY BY THE ASSESSEE FORMED A STRONG BASIS FOR DOUBTING THE INVESTMENT MADE BY THE ASSESSEE FOR PURCHASE OF THE PROPERTY UNDER CONSIDERATION, BUT THE SAME FALLING SHORT OF CLINCHING MATERIAL WHICH WOULD HAVE IRREFUTABLY EVIDENCED THE SAID FACT, THUS, DOES NOT INSPIRE MUCH OF CONFIDENCE AS REGARDS THE WAY THEY HAVE BEEN CONSTRUED BY THE LOWER AUTHORITIES FOR DRAWING OF ADVERSE INFERENCES IN THE HANDS OF THE ASSESSEE. WE THUS ARE OF A STRONG CONVICTION THAT AS THE MATERIAL RELIED UPON BY THE LOWER AUTHORITIES DOES NOT CORROBORATE THE ADVERSE INFERENCES DRAWN AS REGARDS THE INVESTMENT M ADE BY THE ASSESSEE, THEREFORE, THE SAME CANNOT CONCLUSIVELY FORM A BASIS FOR CONCLUDING THAT THE ASSESSEE HAD MADE PAYMENT OF ON MONEY FOR PURCHASE OF THE PROPERTY UNDER CONSIDERATION. WE THUS IN THE BACKDROP OF OUR AFORESAID OBSERVATIONS ARE OF THE CON SIDERED VIEW THAT THE ADVERSE INFERENCES DRAWN BY THE A.O AS REGARDS PAYMENT OF ON MONEY OF RS. 2.23 CRORE BY THE ASSESSEE FOR PURCHASE OF FLAT NO. 2501 FROM M/S LAKEVIEW DEVELOPERS ARE BASED ON OF PREMATURE OBSERVATIONS OF THE A.O, WHICH IN THE ABSENCE OF ANY CLINCHING EVIDENCE CANNOT BE SUSTAINED. WE THUS ARE UNABLE TO SUBSCRIBE TO THE VIEW OF THE LOWER AUTHORITIES AND SET ASIDE THE ORDER OF THE CIT(A) SUSTAINING THE ADDITION OF RS. 2.23 CRORES IN THE HANDS OF THE ASSESSEE. 6. FACTS AND CIRCUMSTANCES BEIN G IDENTICAL , THIS DECISION SQUARELY APPLIES TO THE PRESENT CASE IN HAND. THUS , RESPECTFULLY FOLLOWING THE SAID DECISION , WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND ALLOW THIS GRO UND OF APPEAL OF THE ASSESSEE. 7. THOUGH GROUND HAS BEEN RAISED ON REOPENING OF ASSESSMENT , NO ARGUMENTS HAVE BEEN ADVANCED IN THE COURSE OF THE HEARING AND T HEREFORE 6 ITA NO.6881/MUM/2017 (A.Y: 2007 - 08) SHRI JAGDISH LALWANI THE GROUND RAISED ON CHALLENGING THE REOPENING OF ASSESSMENT IS NOT ADJUDICATED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED AS INDICATED ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON THE 05 TH APRIL, 2019 SD/ - SD/ - ( O.P. MEENA ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 05/04 / 2019 GIRIDHAR , S R. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM