CORNETSTENE ESTATE DEVELOPMENT P.LD, MUMBAI V. DCIT CEN CIR 1, MUMBAI

ITA 7301/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101140 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 12-12-2013
• Court: TRIBUNAL
• Department Lawyers: B S BIST
• Keywords: Income from undisclosed sources; Loose papers; Opportunity of being heard; Principle of natural justice; Revised return
• Section: 143(3); 133A; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI R. C. SHARMA , ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ./ I.T.A. NO S . 7321 & 7300 /MUM/2013 ( / A SSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ) AMI ESTATES PVT. LTD. , 13A, GROUND FLOOR, SURYA KIRON BLDG., BEHIND TEJPAL AUDITORIUM, AUGUST KRANTI MAIDAN, MUMBAI - 36 / VS. DY. CIT, CENTRAL CIRCLE - 1, MUMBAI ./ ./ PAN/GIR NO. AAFCA 7231 H ( / APPELLANT ) : ( / RESPONDENT ) ./ I.T.A. NOS. 7301 , 7302 & 7303 /MUM/2013 ( / ASSESSMENT YEAR S : 2007 - 08 & 2008 - 09 ) CORNETSTENE ESTATE DEVELOPMENT PVT. LTD.13A, GROUND FLOOR, SURYA KIRON BLDG., BEHIND TEJPAL AUDITORIUM, AUGUST KRANTI MAIDAN, MUMBAI - 36 / VS. DY. CIT, CENTRAL CIRCLE - 1, MUMBAI ./ ./ PAN/GIR NO. AAFCA 7231 H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI ANA NT PAI / RESPONDENT BY : SHRI B.S.BIST / DATE OF HEARING : 11.08.2015 / DATE OF PRONOUNCEMENT : 23.09. 2015 / O R D E R PER R. C. SHARMA, A. M.: TH E S E ARE THE AP PEAL S FILED BY THE ASSESSEE AGAINST THE ORDER BY THE LD. CIT(A) - 36, MUMBAI FOR THE ASSESSMENT YEAR (A.Y.) 2007 - 08 AND 2008 - 09, IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER). 2 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 2. COMMON GROUNDS HAVE BEEN TAKEN BY BOTH THE ASS ESSEE WITH RESPECT TO LEVY OF PE NALTY U/S.271(1)(C) OF THE ACT IN ALL THE APPEALS UNDER CONSIDERATION. THEREFORE, ALL THE APPEALS WERE HEARD TOGETHER AND NOW DECIDED BY THIS CONSOLIDATED ORDER. 3. THE GROUND TAKEN IN ITA NO. 7321/MUM/2013 READS AS UNDER: 1. A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE PENALTY LEVIED BY THE DEPUTY COMMISSIONER OF INCOME TAX U/S 271(1) (C) OF THE INCOME TAX ACT, 1961 OF RS.87,43,185/ - ON THE ALLEGED GROUND THAT THE APPELLANT HAS NO T SUBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED AND ONE TO ONE SOURCE OF CASH AND APPLICATION OF CASH WAS NOT ESTABLISHED. B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) IGNORED THE FACT THAT COMPANY HAD NEVER CARRIED OUT ANY BUSINESS ACTIVITY TO GENERATE UNDISCLOSED INCOME. C) VOLUNTARY DECLARATION OF RS.2,59,75,000/ - FOR A.Y.2007 - 08 U/S. 132(4) OF THE ACT WAS MADE BY THE APPELLANT TO BUY PEACE AND AVOID ANY FURTHER LITIGATION. 2 THE LEARNED COMMISSIONER OF INCOME TAX ( APPEALS) ERRED IN CONFIRMING THE PENALTY ORDER U/ S . 271(1)(C) WITHOUT GRANTING THE APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD. THE PENALTY ORDER IS IN CONTRAVENTION OF THE PRINCIPLES OF NATURAL JUSTICE AND HENCE BAD IN LAW. 3 THE APPELLANT CRAVES TO LEAVE ADD ALTER AMEND OR DELETE ANY GROUNDS OF APPEAL ON OR BEFORE THE DAY OF HEARING. 4 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED ON 20 TH MAY, 2005 AND D ULY REGISTERED UNDER THE PROVISIONS OF COMPANIES ACT, 1956. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF CONSTRUCTION, DEVELOPMENT AND LEASING OF PROPERTIES RESIDENTIAL AS WELL AS COMMERCIAL. THE ASSESSEE HAD FILED ORIGINAL RETURN OF INCOME ON 28.10. 2007 SHOWING TOTAL INCOME OF RS. NI L. THE 3 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) SEARCH & SURVEY OPERATIONS U/S . 132 (1) AND 133A OF INCOME TAX ACT, 1961 WAS CONDUCTED IN THE CASES OF M /S. POOJA EXPORTS AND ITS GROUP CONCERNS. NOTICE U/S 153C OF THE INCOME TAX ACT, 1961 DATED 29.9.2010 WAS ISSUE D. IN RESPONSE TO THIS NOTICE, THE ASSESSEE FILED THE RETURN OF INCOME ON 28.10.2010 DECLARING TOTAL INCOME OF RS. NIL, SUBSEQUENTLY THE ASSESSEE ALSO FILED REVISED RETURN OF INCOME ON 21.12.2011 DECLARING TH E TOTAL INCOME AT 2,59,75,000/ - TO BUY PEACE AND ON CONDITION OF NO PENALTY . AN ASSESSMENT ORDER U/S 143(3) R.W.S. 153C OF THE I T. ACT WAS PASSED ON 28.12.2011 DETERMINING THE TOTAL INCOME AT RS. 2,59,75,000/ - . THERE WERE NO CHANGES IN THE RETURNED INCOME AS R EVISED BY ASSESSEE . THE LEARNED AO ACCEPTED THE ASSESSEE S REVISED COMPUTATION WITHOUT DISTURBING THE SAME OR ADJUSTED ANY OTHER ADDITION TO THE SAME. T HE A.O. OBSERVED THAT THE ASSESSEE HAS DECLARED ITS INCOME FOR THE A.Y.2007 - 08 VIDE ITS REVISED RETURN , THE ASSESSEE HAS NOT ABLE TO SUBSTANTIATE TH E MANNER IN WHICH THE INCOME WAS DERIVED AND ALSO FAILED TO EXPLAIN THE SOURCES OF CASH INVESTMENT AND APPLICATION THEREOF . THERE AFTER PENALTY PROCEEDINGS, U /S. 271(1)(C) OF THE I .T. ACT ,1961 WERE INITIATED SEPARATELY BY ISSUANCE OF NOTICE U/S. 274 R.W.S. 271 OF THE I T. ACT, 1961. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUIRED TO SUBSTANTIATE ONE TO ONE SOURCE OF CASH IN VESTMENTS IN PUNE PROPERTIES. IT WAS REPLIED BY THE ASSESSEE THAT IT HAD ENTERED INTO AGREEMENT FOR ACQUISITIO N OF PROPERTIES AT PUNE. THE INVESTMENT IN PROPERTIES IN PUNE WAS MADE BETWEEN THE PERIODS FROM JULY 2006 TO SEPTEMBER 2007. MONEY APPLIED IN ACQUISITION OF PUNE PROPERTIES WAS MAINLY OUT OF MONEY RECEIVED FROM SALE OF SHARES OF A GROUP 4 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) CONCERN. DETAILS OF SOURCE AND APPLICATION OF INVESTMENT IN PUNE PROPERTIES WAS FILED ON RECORD DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT THERE WAS NO NEED TO OFFER THE ADDITIONAL INCOME OF RS.2.59 CRORES SINCE TH E MONEY A PPLIED IN ACQUISITION OF PUNE PROPERTIES WAS MAINLY OUT OF THE MONEY RECEIVED FROM THE SALE OF SHARES OF THE GROUP CONCERN AND THAT THERE CANNOT BE DOUBLE TAXATION ON THE SAME INCOME ONCE AT A POINT OF SOURCE AND ANOTHER AT POINT OF APPLICATION. HOWEVER IN ORDER TO HAVE PEACE WITH THE REVENUE AUTHORITY THE AMOUNT WAS OFFERED BY ASSESSEE AND ACCEPTED BY THE AO . HENCE, ASSESSEES IS BEFORE US AGAINST THE LEVY OF PENALTY U/S.271(1)(C). 4. IT WAS ARGUED BY THE LD. AR THAT PENALTY HAS BEEN LEVIED BY THE AO ON THE PLEA THAT INVESTMENT IN PUNE PROPERTY COULD NOT BE EXPLAINED BY THE ASSESSEE. AS PER LD. AR CASH INVESTMENT FOR THE PURCHASE OF PUNE PROPERTY AS PER THE AO TOOK PLACE FROM JULY 2006 TO SEPTEMBER, 2007 WHEREAS AGREEMENT FOR SALE OF SHARES OF COMPANIES HOLDING PROPERTIES AT BANGALORE TOOK PLEA ON 15 - 6 - 2009. THE MAIN GRIEVANCE OF THE AO WAS THAT ASSESSEE HAS NOT SUBSTANTIATED THE SOURCE OF CASH INVESTMENT IN PUNE PROPERTIES WHICH WAS FUNDED BY KOTHARI ON SALE OF SHARES. 5. LD. AR CONTENDED THAT ASSESSEE C OMPANY HAD NO EARNING DURING THE YEAR S UNDER CONSIDERATION AND FOR THIS PURPOSE OUR ATTENTION WAS INVITED TO PAGES 5 OF THE PAPER BOOK WHICH CONTAINS PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE COMPANY. OUR ATTENTION WAS ALSO INVITED TO THE S TATEMENT OF SUNIL KOTHARIS DATED 29 - 7 - 2009, WHICH HAS BEEN CORRECTED IN SUBSEQUENT STATEMENT 5 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) UNDER SECTION 132(4) DATED 25 - 9 - 2009. OUR ATTENTION WAS INVITED TO QUESTION NO.9 AND ITS REPLY OF THE STATEMENT DATED 29 - 7 - 2009. IT WAS SUBMITTED THAT QUESTION AND ANSWER NO.3 IN THE STATEMENT DATED 25 - 9 - 2009 CLEARLY EXPLAINED THAT MAJOR PORTION OF CASH RELATING TO SALE OF SHARES WAS RECEIVED FROM THE FINANCIAL YEARS 2006 - 07 AND 2007 - 08. AS PER LD. AR, EVEN THOUGH THE MOU FOR SALE OF SHARES WAS RECORDED ON 15 - 6 - 2009 , THE TRANSACTION WAS INITIATED IN PRIOR YEARS AND PAYMENTS MADE ON ACCOUNT IN PRIOR YEARS. OUR ATTENTION WAS ALSO INVITED TO PAGE 37 OF THE PAPER BOOK WHICH CONTAINS DETAILS OF CHEQUE PAYMENT RECEIVED IN PRIOR YEARS. LD. AR FURTHER CONTENDED THAT ASSESSEE GROUP HAS NOT DISHONOURED THE OFFERS MA D E IN THE STATEMENT UNDER SECTION 132(4), EXPLAINED IN LETTER DATED 17 - 11 - 2011. IT WAS SUBMITTED THAT DEPARTMENT SHOULD NOT TAX BOTH THE INCOME AND ALSO ITS APPLICATION AS THE SAME WOULD AMOUNT TO DOUBLE TAXATION. OU R ATTENTION WAS ALSO INVITED TO SUBMISSION DATED 21 - 12 - 2011 PLACED AT PAGE 52 TO 58 OF THE PAPER BOOK, WHICH GIVE DATEWISE AND MONTHWISE NEXUS BETWEEN CASH RECEIVED FROM SALE OF SHARES VIS - - VIS INVESTMENT IN PUNE PROPERTIES. AS PER LD. AR THE AO HAS NOT G IVEN ANY COGENT REASON NOR CONTROVERTED THE NEXUS FOR FUNDING OF PUNE PROPERTIES. THE AO HAS ONLY SKIRTED THE ASSESSEES EXPLANATION BY SAYING THAT MOU IS ENTERED ON 15 - 6 - 2009 I.E. AFTER THE PURCHASE OF PUNE PROPERTIES. AS PER LD. AR CASH FUNDING OF PUNE P ROPERTIES WAS DONE BY SUNIL AND SNEHA KOTHARIS ON WHICH THEY HAD ALREADY PAID TAXES. THE FUNDING WAS NOT BY THE ASSESSEE COMPANY, INSOFAR AS THE ASSESSEE COMPANY WAS HAVING NO ACTIVITY, THEREFORE, ORIGINAL RETURN WAS CORRECTLY FILED AT NIL INCOME. AS PER L D. AR ASSESSEE 6 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) HAS DISCLOSED RS.2.59 CRORES IN REVISED RETURN, EVEN THO UGH THE SAME WAS NOT ITS INCOME, JUST TO BUY PEACE WITH DEPARTMENT. HE FURTHER CONTENDED THAT THE ASSESSEE COMPANY HAS NOT ADMITTED OR CAPITALIZED ITS OFFER IN ITS BOOKS OF ACCOUNT IN S UBSEQUENT YEARS, THEREFORE, ASSESSEE SHOULD NOT BE PENALIZED U/S.271(1)(C) OF THE ACT. WITH REGARD TO THE RELIANCE PLACED BY THE AO ON THE STATEMENT RECORDED U/S.132(4) DATED 29 - 7 - 2009, LD. AR RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO., 91 ITR 18 (SC), WHEREIN IT WAS HELD THAT ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE, IT CANNOT BE TAKEN AS CONCLUSIVE. IT IS OPEN TO THE ASSESSEE WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT AND THE ASSESSE E SHOULD BE GIVEN A PROPER OPPORTUNITY. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF NIRMALA L. MEHTA, 269 ITR 1, WHEREIN IT WAS HELD THAT NO TAXATION CAN BE MADE ON BASIS OF A WRONG ADMISSION. ANY ITEM WHICH IS NOT TAXABLE UNDER THE LAW CANNOT BE TAXED BECAUSE THE SAME HAS BEEN WRONGLY OFFERED TO TAX BY THE ASSESSEE. RELIANCE WAS ALSO PLACED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CEMENT MARKETING CO. OF INDIA PVT. LTD., 124 ITR 15(SC), DECISION OF PU NE BENCH OF THE TRIBUNAL IN THE CASE OF JYOTICHAND BHALCHAND SARAF & SONS (P) LTD., 139 ITD 10, CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF RMP INFOTECH (P) LTD. 25 TAXMANN.COM 12 ITR (TRIB) 581 AND IN THE CASE OF RELIANCE PETROPRODUCTS PVT. LTD., 322 ITR 158 (SC). 6. IN SUPPORT OF THE PROPOSITION THAT SINCE THE ASSESSEE HAD MADE A COMPLETE DISCLOSURE IN RETURN OF INCOME AND OFFERED SURRENDERED AMOUNT FOR PURPOSES OF 7 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) TAX, WHICH WAS ACCEPTED AND BROUGHT TO TAX, THERE COULD BE NO QUESTION OF TREATING ASSESS EE AS HAVING CONCEALED PARTICULARS OF INCOME OR FURNISHED I NACCURATE PARTICULARS OF INCOME , L D. AR RELIED ON THE FOLLOWING JUDICIAL PRONOUNCEMENTS : - I) MUNINAGA REDDY, 37 TAXMANN.COM 440; II) VASAVI SHELTERS, 32 TAXMANN.COM 26; III) AJAY SANGARI & CO., 1 6 TAXMANN.COM 115; IV) SHANKERLAL NEBHUMAL UTTAMCHANDANI, 311 ITR 327; V) DILIP KEDIA, 40 TAXMANN.COM 102 VI) VEGA AUTO ACCESSORIES (P) LTD., 26 TAXMANN.COM 335 VII) SVC PROJECTS (P) LTD., 12 TAXMANN.COM 155; VIII) AUTO BHARATI, 296 ITR 659(BOM) ; IX) KANBA Y SOFTWARE INDIA (P) LTD., 31 SOT 153(PUNE); X) SHRI RADHESHYAM SARDA & SMT. SUMANRANI SARDA, ITA NOS.222&223/IND/2012; XI) BHAGAT & CO., 10 SOT 37 (MUM); XII) GIRI RAJ GUPTA , 162 TAXMANN 81; XIII) NEW SORATHIA ENGINEERING CO., 282 ITR 642(GUJ) XIV) LAKHDI R LALJI, 85 ITR 77 (GUJ) XV) C.K.NAHA & BROS., 117 ITR 19 (CAL) XVI) PADMA RAM BHARALI, 110 ITR 54 (CAL); AND XVII) SADIQ ALI & BROS., 92 TAXMAN 276 (J&K) 7 . ON THE OTHER HAND, LD. DR CONTENDED THAT REVISED RETURN FILED BY THE ASSESSEE WAS NOT VOLUNTARILY OFFERED AND THAT ASSESSEE HAS CONCEALED INCOME THEREFORE, AO WAS JUSTIFIED IN LEVYING THE P ENALTY. LD. DR FURTHER SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 8 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELO W AND VARIOUS PAGES OF THE PAPER BOOK TOWARDS WHICH OUR ATTENTION WAS INVITED. WE HAD ALSO PERUSED THE VARIOUS STATEMENT RECORDED U/S.132(4) DATED 29 - 7 - 2009, 25 - 9 - 2009. WE HAD ALSO CONSIDERED THE VARIOUS EXPLANATION FILED BY THE ASSESSEE BEFORE LOWER AUTHO RITIES VIDE THEIR LETTER DATED 8 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 17 - 11 - 2011. VARIOUS JUDICIAL PRONOUNCEMENTS CITED AT BAR AS WELL AS REFERRED BY LOWER AUTHORITIES IN THEIR ORDERS HAVE ALSO BEEN CONSIDERED WITH REFERENCE TO THE FACTUAL MATRIX OF THE INSTANT CASE. FROM THE RECORD WE FOUND TH AT THERE WAS SEARCH AT POOJA EXPORT GROUP ON 28 - 7 - 2009, OF WHICH ASSESSEE IS PART, WHO SE CASE IS COVERED U/S.153C OF THE ACT. WHILE FILING RETURN OF INCOME IN RESPONSE TO NOTICE U/S.153A & AFTER VISUALIZING ALL THE SEIZED MATERIAL SEIZED FROM VARIOUS PREMI SES IN DIFFERENT ENTITIES. ASSESSEE H A D WORKED OUT THE AMOUNT UNDISCLOSED INCOME & FILED RETURN AS UNDER : - A) M/S POOJA EXPORTS 12.25 CR. B) MR. SUNIL KOTHARI 14.80 CR. C) MRS. SNEHA KOTHARI - 13.30 CR. THE RETURN OF INCOME OF AMI ESTATE & CORNETSTENE WAS F ILED NIL AS AGAINST 5.19 CR. IN CASH COMPANY, BECAUSE BOTH ENTITIES WERE INCORPORATED TO ACQUIRE THE PROPERTY IN THE NAMES OF COMPANY AT PUNE. OTHER THAN THAT NO ACTIVITY HAS BEEN CARRIED OUT IN THE SAID COMPANIES. HENCE, QUESTION OF EARNING ANY ACCOUNTED OR UNACCOUNTED INCOME DOES NOT ARISE. BUT IT DOES NOT CONCERN THAT THE CASH COMPONENT WAS NOT THERE IN ACQUISITION OF PROPERTY AT PUNE. THE SAID CASH & CHEQUE COMPONENT WERE ARRANGED & FUNDED BY PROMOTER OF THE COMPANY, IN THIS CASE MR. SUNI & MRS. SNEHA K OTHARI. THE SOURCE OF THE ABOVE CASH WAS MADE AVAILABLE FROM THE SALE PROCEED OF SHARES OF M/S AMI BUILDERS PVT. LTD & S.K. PROJECTS PVT. LTD. AMOUNTING TO RS.14.63 CRORES UNDISCLOSED INCOME. THE DECLARATION OF 50.62 CR. BY THE GROUP WAS BASICALLY A SUM TO TAL OF ALL THE ISSUES AROSE FROM THE SEIZED MATERIAL WITHOUT CONSIDERING INDIVIDUAL SOURCE & 9 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) APPLICATION FROM ALL THESE ISSUE & AFTER ANALYZING THE SEIZED MATERIAL THE ASSESSEE HAD FILED A RETURN OF INCOME OF RS.40.35 CRORES. MR. SUNIL KOTHARI WHILE RECORD ING STATEMENT U/S.132(4) DATED 24 - 07 - 2009 VIDE REPLIES OF QUESTION NO.9 ADMITTED PAYMENT OF CASH FOR ACQUISITION OF PROPERTIES AT PUNE AMOUNTING TO RS.14,57,95,996/ - . FROM THE SAID STATEMENT RECORDED U/S.132 OF THE IT ACT, SUNIL KOTHARI HAVE CLEARLY ADMIT TED THAT HE HAD PAID CASH OF RS.14.57 CRORES FOR ACQUISITION OF THE PROPERTIES IN PUNE (WAKAD AND HINJEWADI) AND THE MONEY HAS BEEN PAID OUT OF UNACCOUNTED INCOME GENERATED ON ACCOUNT OF SALE OF SHARES OF M/S AMI BUILDERS PVT. LTD. AND M/S S.K.PROJECTS PVT . LTD. WHICH IS ALREADY OFFERED AND TAXED IN HANDS OF MR. SUNIL KOTHARI AND MRS. SNEHA KOTHARI BEING THE PROMOTER OF THE ABOVE REFERRED COMPANIES. IN THIS TRANSACTION SUNIL KOTHARI HAS RECEIVED AN AMOUNT OF RS.14.63 CRORES RECEIVED IN CASH WHICH WAS APPLIE D FOR MAKING CASH PAYMENTS FOR ACQUISITION OF THE PROPERTIES IN PUNE. DURING THE COURSE OF SEARCH FIRST STATEMENT UNDER SECTION 132(4) OF SUNIL KOTHARI ON 29 - 7 - 2009 WAS RECORDED, WHEREIN QUESTION NO.9 AND ITS REPLY WAS AS UNDER : - Q.9 I AM SHOWING YOU THE ANNEXURES FOUND IN THE SAID PREMISE IN WHICH SEVERAL CASH TRANSACTIONS WERE RECORDED IN THE NAME OF YOUR GROUP CONCERNS. I AM ALSO SHOWING YOU STATEMENT RECORDED UNDER OATH OF SHRI RASHMIKANT SHAH AND SHIR PRAMOD AMBERKAR IN WHICH THEY HAVE CATEGORICALLY STATED THAT ALL THE TRANSACTIONS ARE ONLY KNOWN TO SHRI SUNIL KOTHARI. IN THIS CONTEXT, PLEASE GO THROUGH THE CONTENTS AND EXPLAIN THE SAME. ANS. PAGE NO.34 TO 41 OF ANNEXURE A - 3 RECOVERED FROM THIS PREMISE RELATES TO PURCHASE AND SALE OF ONE PROPERTY AT BANGALORE WHERE CASH OF RS.14.63 CRORES WAS TRANSACTED IN THE F.Y.2005 - 06. I VOLUNTARILY OFFER THIS SAID AMOUNT OF RS.14.63 CRORES AS MY ADDITIONAL INCOME AND SHALL PAY TAXES ON ITS ACCORDINGLY. THE SPECIFIC TRANSACTION AND ITS TAXABILITY SHALL BE EXPLAINE D TO YOU IN DUE COURSE. HOWEVER, IN THE SAME PROPERTY TRANSACTION, I HAVE ALSO EARNED RS.11.5 CRORE ON ACCOUNT OF SALE OF THE SAID PROPERTY 10 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) WHICH I HAVE NOT SO FAR DISCLOSED TO THE DEPARTMENT. THIS AMOUNT OF RS.11.5 CRORE IS ALSO HEREBY DECLARED AS MY ADDI TIONAL INCOME FOR WHICH I SHALL PAY THE TAXES DULY. SIMILARLY, PAGE NO.56 TO 60 OF ANNEXURE - A - 2 RECOVERED FROM THE OFFICE PREMISES OF M/S POOJA GROUP RAWAL BUILDING, LAMINTON ROAD AND PAGE NO. 19 OF ANNEXURE A - 3 RECOVERED IN THE SAID PREMISES RELATES TO A P ROPERTY (WAKAD PROPERTY) AT PUNE WHICH WAS PURCHASED BY M/S AMI ESTATES PVT. LTD. AND CORNETSTENE PVT. LTD. AND PART OF SALE CONSIDERATION WAS PAID IN CASH THROUGH SHRI RAJAN RAISONI TO SHRI B.U.BHANDARI. THE TOTAL CASH PAID IN THIS TRANSACTION WAS RS.10.3 9 CRORES IN THE YEAR 2006 - 07 AND SINCE THIS MONEY HAS BEEN PAID OUT OF UNACCOUNTED INCOME I OFFER THE SAID AMOUNT OF RS.5,19,50,000/ - IN THE HANDS OF M/S AMI ESTATES PVT. LTD. AND RS.5,19,50,000/ - IN THE HANDS OF M/S CORNERSTENE PVT. LTD. AS ADDITIONAL IN COME AND OFFER THE SAME FOR TAXATION. AS PER THIS QUESTION AND ANSWER, THE BANGALORE PROPERTY WAS SOLD IN FINANCIAL YEAR 2005 - 06, CASH PORTION OF RS.14.63 CRORES AND RS.11.50 CRORE, DOCUMENTS WERE CONSIDER ED AND THE SAME WAS OFFERED TO TAX BY SUNIL KOTH ARI IN PERSONAL RETURNS. THE QUESTION AND ANSWER ALSO INDICATE THAT AMI ESTATES & CORNETSTENE PVT. LTD. ( THE ASSESSEE BEFORE US) PURCHASED PUNE PROPERTY IN 2006 AND PAID CASH CONSIDERATION OF RS.10.59 CRORES AND SAME WAS OFFERED AT RS.5,19,50,000/ - IN EACH HAND AS ADDITIONAL INCOME IN THE HANDS OF AMI ESTATES AND CORNETSTENE PVT. LTD.. IT IS PERTINENT TO MENTION HERE THAT SUNIL KOTHARI IS DIRECTOR IN BOTH THESE COMPANY. 9 . FURTHER QUESTION AND ANSWER NO. 11 READS AS UNDER : - Q.11 DO YOU HAVE TO SAY ANYTHIN G ELSE ? ANS. I, ON BEHALF OF OUR GROUP CONCERNS AND ON MY OWN, HAVE DECLARED AN ADDITIONAL INCOME OF RS.50.62 CRORES ON VARIOUS HEADS IN THE HANDS OF VARIOUS PERSONS OF THIS GROUP AND IN DIFFERENT RELEVANT YEARS, AS APPLICABLE. THIS DECLARATION STATEMENT IS VOLUNTARILY OFFERED BY ME WITH A REQUEST THAT NO PENALTY OR PROSECUTION BE LAUNCHED AGAINST ME OR MY FAMILY MEMBERS, PARTNERS/DIRECTORS/CONCERNS OF OUR GROUP. 10 . IT IS CLEAR FROM THE ABOVE QUESTION AND ANSWER THAT THERE WAS TOTAL OFFER BY THE POOJA EXPORTS GROUPS AT RS.50.62 CRORES. THERE WAS DETAILS OF OFFER 11 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) BIFURCATION OF ASSESSEE AS WELL AS YEARWISE BIFURCATION. AS PER CHART PLACED AT PAGE 26 INCOME OFFERED BY SUNIL KOTHARI & SNEHA KOTHARI WAS AT RS. 14.80 CRORES, AMI ESTATE PVT. AT RS.5.18 CRORE S M/S CORNETSTENE PVT. LTD. AT RS.5.18 CRORES, AND SUNIL KOTHARI AND SNEHA KOTHARI FOR SALE TRANSACTION OF BANGALORE PROPERTIES AT RS.13.30 CRORES EACH IN THE YEAR 2010 - 11 I.E. THE YEAR IN WHICH SALE CONCLUDED. WITH RESPECT TO T HE MOU DATED 15 - 6 - 2009 AS PO INTED OUT BY THE AO FOR SALE OF BANGALORE PROPERTIES, WE FOUND THAT SUNIL AND SNEHA KOTHARI OWN SHARES IN AMI BUILDERS PVT. LTD. & S.K.PROJECTS PVT. LTD.. THESE TWO COMPANIES JOINTLY HOLD PROPERTY IN BANGALORE, WHICH IS MORTGAGED TO DIWAN HOUSING FINANCE C ORPORATION LTD.(TWO COMPANIES HAVE GIVEN PROPERTY FOR RENT) . IT IS ALSO CLEAR THAT THIS MOU IS IN FURTHERANCE OF PAST AGREEMENT DATED 10 - 1 - 2006. THUS, WE CAN SAFELY INFER THAT AGREEMENT INITIATED IN THE FINANCIAL YEAR 2005 - 06, PART CONSIDERATIONS PAID IN F INANCIAL YEAR 2006 - 07 AND 2007 - 08. THE TRANSFER OF SHARES TO BE COMPLETED IN FEBRUARY, 2010. HENCE, THE CAPITAL GAINS WAS LIABLE TO TAX IN ASSESSMENT YEAR 2010 - 2011, THEREFORE, CORRECTLY OFFERED IN STATEMENT UNDER SECTION 132(4) IN THE ASSESSMENT YEAR 2010 - 11. AS PER AGREEMENT FOR SALE AND PURCHASE OF SHARES OF AMI BUILDERS PVT. LTD. AND S.K.PROJECTS PVT. LTD. DATED 15 - 6 - 2009, THE SALE CONSIDERATION WAS AGREED AT RS.11.50 CRORES. RUPEES 1 CRORE WAS RECEIVED AS ADVANCE PAYMENT THROUGH CHEQUE NO. 920776 DATED 1 0 - 12 - 2005 AND VIDE PAY ORDER NO. 4364401 DATED 12 - 1 - 2006 OF RS.4,47,27,310/ - , BALANCE ON ACCOUNT OF RS.6,02,73,690/ - WAS PAYABLE BY 28 - 2 - 2010. ALL THESE PAYMENTS 12 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) ARE FURTHER CORROBORATED BY STATEMENT RECORDED U/S.132(4) DATED 25 - 9 - 2009 AS PLACED AT PAGE 29 OF THE PAPER BOOK. 1 1 . THE SECOND STATEMENT UNDER SECTION 132(4) WAS RECORDED ON 25 - 9 - 2009 OF SUNIL KOTHARI. IN THE STATEMENT SO RECORDED THE SALE TRANSACTION OF SHARES IN AMI BUILDERS PVT. LTD. AND S.K.PROJECTS PVT. LTD. IN RESPECT OF BANGALORE PROPERTY W AS EXPLAINED INCLUDING CASH AND CHEQUE COMPONENTS. 1 2 . THE QUESTION NO. 3 AND ITS ANSWER READS AS UNDER : - Q.3 PLEASE EXPLAIN HOW CAPITAL GAIN IS CLAIMED BY YOU IN THE FINANCIAL YEAR 2009 - 10 WHEN YOU HAVE RECEIVED FIRST CHEQUE OF RS. 1,00,00,000 AS EARLY AS ON 10/12/2005 AND AFTER THAT CHEQUE OF RS. 4,47,27,310 WAS RECEIVED ON 12/0112006 AND CASH WAS RECEIVED FROM TIME TO TIME AS STATED BY YOU. A.3 TOTAL TRANSACTION WAS FOR RS. 26.60 CRORE OUT OF WHICH THE PURCHASE PARTY HAS TO GIVE RS. 11.5 CRORE IN CHE QUE AND RS. 14.63 CRORE IN CASH. MAJOR PORTION OF THE CASH WAS RECEIVED IN FINANCIAL YEAR 2006 - 07 AND 2007 - 08 AND OTHER THAN THE CHEQUE AMOUNT RECEIVED AS MENTIONED ABOVE, BALANCE AMOUNT IS TO BE RECEIVED IN THE CURRENT FINANCIAL YEAR AS PER THE MOU SUBMI TTED. IN THE SAID TRANSACTION, MAIN TERM IS TO ABSOLVE THE RESPONSIBILITY OF LIABILITY OF RS. 24 CRORE FROM DHFL BY REPLACING A PERSONAL GUARANTEE OF ME TO THE PURCHASER IE, SHRI HARESH PUNJABI AND SHRI CHANDNI SACHDEV WHICH HAS BEEN DONE BY SIGNING THE MO U DATED 12TH JUNE 2009. TRANSFER OF OWNERSHIP OF THE COMPANIES IS COMPLETED DURING THE FINANCIAL YEAR AND HENCE CAPITAL GAINS IN THE FINANCIAL YEAR 2009 - 10. THROUGH THIS QUESTION AND ANSWER IT WAS EXPLAINED THAT MAJOR PORTION OF CASH COMPONENT WAS RECEIVE D IN FINANCIAL YEARS 2006 - 07 AND 2007 - 08. THUS, THE AVAILABILITY OF SUFFICIENT CASH FOR PURCHASES OF PUNE PROPERTY WAS CLEARLY ESTABLISHED. 1 3 . WE HAD ALSO GONE THROUGH THE LETTER DATED 17 - 11 - 2011 FILED BEFORE THE AO WHEREIN IT WAS CLEARLY EXPLAINED THAT I N RESPECT OF PUNE PROPERTIES, CASH COMPONENT WAS FUNDED FROM CASH COMPONENT RECEIVED FROM SALE OF SHARES BY KOTHARI IN AMI BUILDERS PVT. LTD. & S.K.PROJECTS PVT. LTD. THE ASSESSEE HAS ALSO 13 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) FILED MONTHWISE CASH STATEMENT IN RESPECT OF BANGALORE TRANSACTIONS AND PAYMENT FOR PUNE PROPERTY PURCHASE D WHICH WAS COMPILED FROM LOOSE PAPERS. FURTHER LETTER DATED 20 - 12 - 2011 FILED BEFORE THE AO, ON 20 - 12 - 2011 WHICH IS PLACED AT PAGE 52 TO 53 OF THE PAPER BOOK , REITER AT ED ONE TO ONE NEXUS BETWEEN CASH FUNDS RECEIVED FR OM BANGALORE PROPERTY S SALE AND UTILIZATION FOR PURCHASE OF PUNE PROPERTY. THE RECEIPT OF CASH AND ITS UTILIZATION, DATEWISE CASH FLOW FURNISHED BEFORE THE AO WAS AS UNDER : - 14 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 15 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 16 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 17 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 18 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 1 4 . IT IS CLEAR FROM THE ABOVE STATEMENT THAT M ONEY APPLIED IN ACQU ISITION OF PUNE PROPERTIES WAS MAINLY OUT OF MONEY RECEIVED FROM SALE OF SHARES OF M/S AMI BUILDERS PVT. LIMITED & S.K.PROJECTS PRIVATE LIMITED. NO FAULT HAS BEEN FOUND BY THE AO OR CIT(A) IN THE ABOVE CASHFLOW STATEMENT INDICATING ONE TO ONE NEXUS BETWEEN THE CASH FUND S RECEIVED ON SALE OF BANGALORE PROPERTY AND UTILIZATION FOR PURCHASE OF PUNE PROPERTY. SINCE ALL THESE INCOME HAD BEEN OFFERED FOR TAX, THERE CANNOT BE DOUBLE TAXATION ON THE SAME INCOME ONE AT A POINT OF SOURCE AND ANOTHER AT A POINT OF AP PLICATION. TAXES HAVE BEEN PAID ON ADDITIONAL INCOME OUT OF SALE OF SHARES OF M/S AMI BUILDERS PVT. LIMITED & S.K.PROJECTS PRIVATE LIMITED THEREFORE, AGAIN THERE CANNOT BE TAX ON THE SAME INCOME AT THE TIME OF ACQU ISITION OF PROPERTY AT PUNE. 1 5 . IN VIEW OF THE ABOVE FACTS WE MAY APPRECIATE THAT DECLARING ADDITIONAL INCOME OF RS.40.35 CRORE AS NARRATED IN THE LETTER DATED 08/12/20 11 FILED BEFORE LOWER AUTHORITIES , COVERS EACH & EVERY ISSUE THAT H AS BEEN P OINTED OUT DURING THE SEARCH AS WELL AS POST SEARCH PROCEEDINGS. ASSESSEE HAD PAID TAXES WITH A VIEW TO BUY A PEACE & TO AVOID LITIGATIONS. AS A MATTER OF RECORD GROUP COMPANIES AND THEIR PROMOTERS HAVE BEEN FILING RETURN OF INCOME SINCE MORE THAN TWO DECADES & ALSO PAYING TAXES THEREON. 1 6 . IT IS ALSO CL EAR FROM THE ABOVE STATEMENT SO RECORDED BY THE DEPARTMENT U/S. 132(4) THAT CASH COMPONENT WAS THERE FOR THE PURCHASE OF PROPERTY AT PUNE . T HE SAID CASH AND CHEQUE COMPONENT WAS ARRANGED AND FUNDED BY THE PROMOTERS OF THE COMPANY, NAMELY, SUNIL AND SNEHA K OTHARIS. THE SOURCE OF 19 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) CASH WAS MADE AVAILABLE FROM THE SALE PROCEEDS ON SHARES OF M/S AMI BUILDERS PVT. LTD. AND S.K. PROJECTS LTD. WHICH WAS DECLARED AND OFFERED FOR TAX. 1 7 . IN VIEW OF THE CASH FLOW STATEMENT AS DISCUSSED ABOVE, THE ASSESSEE HAS EXPLAIN ED ONE TO ONE NEXUS NAMELY CASH FUNDS RECEIVED FROM SALE OF BANGALORE PROPERTY, AND ITS UTILIZATION FOR PUNE PROPERTY. THE REVISED DECLARATION OF INCOME SO FILED BY THE ASSESSEE WAS BONAFIDE AND VOLUNTARY AND WITHOUT D ETECTION OF ANY IRREGULARITIES FOUND B Y THE DEPARTMENT. THE RETURN WAS REVISED WITH A VIEW TO COOPERATE THE DEPARTMENT AND TO BUY PEACE AND TO AVOID LITIGATION. THE DISCLOSURE WAS WITH A SPECIFIC P L EA THAT NO PENALTY PROCEEDINGS BE INITIATED U/S.271AAA OR 271(1)(C) OF THE ACT. 1 8 . C ONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES AS DISCUSSED ABOVE, WE DO NOT FIND ANY MERIT IN THE PENALTY IMPOSED U/S.271(1)(C) OF THE ACT IN RESPECT OF BOTH THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09 UNDER CONSIDERATION. 1 9 . IN THE RESULT, THE APPEAL OF BOTH THE A SSESSEE FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 23 , 201 5 SD/ - SD/ - ( PAWAN SINGH ) ( R. C. SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI ; / DATED : 23.09 .201 5 . . ./ ROSHANI , SR. PS /PKM,PS / COPY OF THE ORDER FORWARDED TO : 1 . / THE APPELLANT 2. / THE RESPONDENT 20 ITA NO S . 7321 & 7300 TO 7303/ MUM/2013 (A.Y S . 2007 - 08 & 2008 - 09) 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI