Shiv Kishan Mohta, Kolkata V. DCIT, Central Circle - XXVIII, Kolkata, Kolkata

ITA 80/KOL/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4269 (ITAT-KOLKATA)
• Duration Of Justice: 4 year(s) 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-10-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 13-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C JAIN FCA SHRI NIRAJ
• Keywords: Unexplained investment; Search and seizure; Document seized; Opportunity of cross examination; Corroborative evidences; Third party statement; Documents seized
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH B KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI K.NARSIMHA CHARY, JUDICIAL MEMBER ITA NO.80/KOL/2012 ASSESSMENT YEAR:2007-08 SHIV KISHAN MOHTA 2/1A, BABYLON, BURDWAN ROAD, KOLKATA-700 027 [ PAN NO.AFHPM 1971 N ] / V/S . DCIT, CENTRAL CIRCLE- XXVIII, 18, RABINDRA SARANI, 5 TH FLOOR, KOLKATA-700 001 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI B.C. JAIN, FCA /BY RESPONDENT SHRI NIRAJ KUMAR, CIT-DR /DATE OF HEARING 18-10-2016 /DATE OF PRONOUNCEMENT 09-11-2016 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), CENTRAL-I, KOLKATA DATED 30.1 1.2011. ASSESSMENT WAS FRAMED BY DCIT, CENTRAL CIRCLE-XXVIII, KOLKATA U/S 153A/143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 31.12.2010 FOR ASSESSMENT YEAR 2007-08. SHRI B.C. JAIN, LD. AUTHORIZED REPRESENTATIVE APPEA RED ON BEHALF OF ASSESSEE AND SHRI NIRAJ KUMAR, LD. DEPARTMENTAL REPRESENTATI VE APPEARED ON BEHALF OF REVENUE. ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 2 2. SOLITARY ISSUE RAISED BY ASSESSEE IS THAT LD. CI T(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER BY SUSTAINING THE AD DITION OF 68,03,465/- ON ACCOUNT OF UNACCOUNTED CASH. 3. BRIEFLY STATED FACTS ARE THAT THE APPELLANT IN T HE PRESENT CASE IS A LEGAL HEIR OF THE DECEASED ASSESSEE. THE DECEASED ASSESSE E FOR THE YEAR UNDER CONSIDERATION DECLARED INCOME FROM OTHER SOURCE, CA PITAL GAIN AND RENTAL INCOME AMOUNTING TO RS.14,10,652/- BY FILING RETURN OF INCOME ON 29.03.2008 UNDER SECTION 139(1) OF THE ACT. SUBSEQUENTLY A SEARCH AND SEIZURE OPERATION WAS CON DUCTED ON 11.09.2008 AND ON SUBSEQUENT DATES IN MERLIN GROUP OF COMPANIE S (MG FOR SHORT). THE DECEASED ASSESSEE WAS THEN A DIRECTOR OF THE SAID M G GROUP. DURING THE COURSE OF SEARCH PROCEEDING VARIOUS DOCUMENTS WERE SEIZED INCLUDING DOCUMENTS MARKED AS SSA/3 AND SSA/5. THESE DOCUMENT S CONTAINED A MEMORANDUM OF UNDERSTANDING (MOU FOR SHORT) FOR THE PURCHASE OF THE LAND. AS PER MOU THREE COMPANIES ASSOCIATED TO MG NAMELY M/S ANIKET COMMERCE (P) LTD., M/S DIGNITY SALES (P) LTD AND M/ S. CHETAK VYAPAAR (P) LTD., HAD PURCHASED LAND AND INCURRED DEVELOPMENT C OST ON THE LAND. THE MAIN PERSON OF THE MG GROUP, MR. SUSHI KR. MOHTA WA S CALLED UPON TO EXPLAIN THE CONTENTS OF THE MOU WHO AGREED BY WAY OF DISCLO SURE PETITION DATED 11.10.2008 TO OFFER SUCH INVESTMENT AS ADDITIONAL I NCOME FOR THE YEAR UNDER CONSIDERATION. BUT ON A LATER DATE, SHRI SUSHIL KR . MOHTA VIDE HIS LETTER DATED 08.04.2010 RETRACTED FROM HIS STATEMENT BY STATING THAT SHRI SHIV KISHAN MOHTA-ASSESSEE WAS THE AUTHORISED PERSON TO SETTLE THE DEAL FOR THE PURCHASE OF IMPUGNED LAND ON BEHALF OF ABOVE STATED THREE CO MPANIES. SHRI SUSHIL KR. MOHTA ALSO SUBMITTED THAT THE INVESTMENT IN THE IMP UGNED LAND WAS MADE BY THE ABOVE STATED THREE COMPANIES WHICH WERE DISCLOS ED IN THEIR RESPECTIVE BOOKS OF ACCOUNTS. HOWEVER THE DEVELOPMENT COST HAS BEEN INCURRED BY THE ASSESSEE FROM THE PROCEEDS OF SALE OF THE FLATS BEL ONGING TO M/S JAYSHREE BUILDERS (MJB FOR SHORT) WHICH HAS BEEN DISCLOSED B Y IT I.E. MJB IN ITS BOOKS OF ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 3 ACCOUNTS. THEREFORE THE DEVELOPMENT COST INCURRED B Y THE ASSESSEE IS NOT THE ADDITIONAL UNDISCLOSED INCOME OF THE ASSESSEE BUT I T IS APPLICATION OF INCOME OF MJB. HOWEVER, AO DISREGARDED THE CLAIM OF ASSESS EE BY OBSERVING THAT NO AUTHENTIC DOCUMENTS/ CASH BOOK HAD BEEN PRODUCED TO PROVE THAT THE MONEY WAS RECEIVED FROM MJB. THEREFORE, IT WAS ADDED TO T HE TOTAL INCOME OF THE ASSESSEE AS UNACCOUNTED MONEY. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHERE ASSESSEE SUBMITTED THAT MONEY WAS RECEIVED FROM MJB FOR THE DEVELOPMENT OF THE LAND. HOWEVER, LD. CIT(A) CONSIDERING THE PL EA OF THE ASSESSEE DISREGARDED THE CLAIM OF ASSESSEE AND CONFIRMED ORD ER OF AO BY OBSERVING AS UNDER:- 3.3 I DIDNT FIND ANY INFIRMITY IN THE FINDING OF THE ASSESSING OFFICER. CONSIDERING THE FACT THAT NO EVIDENCE WAS FOUND DUR ING THE COURSE OF SEARCH THAT THE UNACCOUNTED PAYMENT IN QUESTION WAS MADE OUT OF UNACCOUNTED RECEIPT OF THE FIRM M/S JAYSHREE BUILDE RS. MOREOVER DURING POST SEARCH PROCEEDING IN THE DISCLOSURE PETITION I T WAS DULY ADMITTED BY THE ASSESSEE THAT THE PAYMENT IN QUESTION WAS MADE BY UNACCOUNTED CASH AND ACCORDINGLY IT WAS OFFERED FOR TAXATION AS ADDITIONAL UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER DURING THE ASSESSMENT PROCEEDING NO SUPPORTING EVIDENCE WAS FURNISHED TO PROVE THAT THE INVESTMENT IN QUESTION HAS BEEN MADE BY UNACCOUNTED RECEIPT DECLARED BY A THIRD PARTY. CONSIDERING ALL THE FACTS INTO CO NSIDERATION IT IS HELD THAT THE AO HAS RIGHTLY REJECTED THE CLAIM OF THE ASSESS EE THAT THE UNACCOUNTED INVESTMENT HAS BEEN MADE OUT OF UNACCOU NTED RECEIPT OF THE M/S JAYSHREE BUILDER. ACCORDINGLY THE ADDITION OF RS.68,03,465/- MADE BY THE AO ON ACCOUNT OF UNACCOUNTED CASH IS C ONFIRMED. BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) ASSESSE E CAME IN SECOND APPEAL BEFORE US. 5. BEFORE US LD. AR FILED PAPER BOOK WHICH IS RUNNI NG PAGES 1 TO 67 AND STATED THAT THE FLAGSHIP COMPANY I.E. MERLIN PROJEC TS LTD. OF THE MG WAS ALSO THE PARTNER IN THE MJB AND THE ASSESSEE WAS THEN TH E DIRECTOR IN THE MERLIN PROJECTS LTD. THE ASSESSEE RECEIVED A TOTAL CASH OF 3,20,18,400/- OUT OF SALE PROCEEDS OF FLATS BELONGING TO MJB. THE RECEIPT OF THE SAME AMOUNT OF ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 4 RS.3,20,18,400/- WAS REFLECTING IN THE SEIZED DOCUM ENTS WHICH ARE PLACED ON PAGES 13 TO 15 OF THE PAPER BOOK. THE LD. AR IN SUP PORT OF HIS CLAIM HAS SUBMITTED AUDITED FINANCIAL STATEMENT OF MJB WHICH ARE PLACED ON PAGES 1 TO 10 OF THE PAPER BOOK AND ALSO DEMONSTRATED THAT THE SAID AMOUNT HAS BEEN DEBITED IN THE NAME OF THE DECEASED ASSESSEE. THE L D. AR FURTHER SUBMITTED THAT THE ASSESSEE HAS NEVER ADMITTED THAT THE COST INCURRED IN THE DEVELOPMENT OF THE LAND IS THE UNDISCLOSED INCOME. THE LD. AR ALSO FILED THE COPY OF THE ASSESSMENT ORDER OF MJB WHICH IS PLACED ON PAGES 11 AND 12 OF THE PAPER BOOK AND DEMONSTRATED THAT THE AO HAS ACC EPTED THE INCOME OF RS.3.20 CRORES IN THE HANDS OF MJB. LD. AR ALSO SUB MITTED THAT CASH BOOK MAINTAINED BY ASSESSEE WHICH IS PLACED ON PAGES 16 AND 17 OF THE PAPER BOOK. THE CASH BOOK IS PART OF THE SEIZED DOCUMENTS WHICH IS REFLECTING THE RECEIPT OF CASH COMPONENT FROM MJB. THE LD. AR PRA YED BEFORE THE BENCH TO QUASH THE ORDER OF AUTHORITIES BELOW. ON THE OTHER HAND, LD. DR SUBMITTED THAT DECEASED A SSESSEE, SHRI SUSHIL KR. MOHTA, MAIN PERSON OF MG GROUP HAS MADE DISCLOSURE IN THE PETITION THAT THIS IS THE ADDITIONAL INCOME WHICH WILL BE OFFERED TO T AX. THE COPY OF THE STATEMENT IS PLACED ON PAGES 51 AND 52 OF THE SUPPLEMENTARY B OOK. THE ASSESSEE IN THE INSTANT CASE, RETRACTED FROM THE STATEMENT ON 08.04 .2010 ALMOST AFTER A GAP OF ONE AND HALF YEAR. LD. DR VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW. IN REJOINDER LD. AR SUBMITTED THAT INVESTMENT IN LA ND WAS NOT MADE BY DECEASED ASSESSEE AND THEREFORE IT WAS REFLECTING I N THE NAME OF THREE DIFFERENT COMPANIES. THE ASSESSEE NEVER ADMITTED AN Y UNDISCLOSED INCOME BUT IT WAS ADMITTED BY A THIRD PARTY. LD. AR FURTHE R SUBMITTED THE ADDITION CANNOT BE MADE IN THE HANDS OF DECEASE ASSESSEE ON THE BASIS OF THIRD PARTY STATEMENT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE FOREGOING D ISCUSSION WE FIND THAT THE AO HAS MADE THE ADDITION IN THE HANDS OF THE ASSESS EE FOR RS.68,03,465/- ON ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 5 ACCOUNT OF INVESTMENT IN THE DEVELOPMENT OF THE LAN D OUT OF UNEXPLAINED CASH. THE SAME ADDITION WAS CONFIRMED BY THE LD CIT(A). I N THE CASE BEFORE US THE ASSESSEE SUBMITTED THAT THE INVESTMENT WAS MADE OUT OF SALE PROCEEDS OF THE FLATS BELONGING TO M/S JAY SHREE BUILDERS. BUT THE SUBMISSION OF THE ASSESSEE WAS REJECTED BY THE LOWER AUTHORITIES BY OBSERVING THAT THE MAIN PERSON OF THE GROUP SHRI SUSHIL KUMAR MOHTA LOOKING AFTER THE AFF AIRS OF THE GROUP HAS ADMITTED IN THE STATEMENT U/S 132(4) OF THE ACT ABO UT THE IMPUGNED UNDISCLOSED INVESTMENT. THE LOWER AUTHORITIES ALSO OBSERVED THAT THE ASSESSEE HAS NOT PRODUCED ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE ITS CLAIM THAT THE MONEY WAS RECEIVED FROM MJB. HOWEVER FROM THE SUBMISSION OF THE AR WE FIND THAT A SUM OF RS. 3.20 CRORES WAS RECEIVED BY THE ASSESSEE OUT OF THE SALE PROCEEDS OF THE FLATS BELONGING TO MJB. THE FACT FOR THE RECEIPT OF RS. 3.20 CRORES HAS BEEN SUBSTANTIATED BY THE AS SESSEE ON THE BASIS OF AUDITED FINANCIAL STATEMENTS OF MJB. ACCORDINGLY, W E DISAGREE WITH THE FINDING OF LOWER AUTHORITIES THAT THE ASSESSEE FAILED TO FU RNISH ANY DOCUMENTARY EVIDENCE IN SUPPORT OF HIS CLAIM THAT THE MONEY WAS RECEIVED FROM MJB. WE ALSO FIND THAT THE SEIZED DOCUMENTS WERE SHOWING TH E RECEIPT OF RS.3.20 CRORES BY THE ASSESSEE. NOW, COMING TO THE ISSUE OF THE ADMISSION OF UNDISCLOSED INCOME IN PURSUANCE TO STATEMENT U/S 13 2(4) OF THE ACT, WE FIND THAT THE STATEMENT WAS GIVEN BY SHREE SUSHIL KUMAR MOHTA AND NOT BY THE ASSESSEE. WE ALSO FIND THAT SUCH STATEMENT WAS RETR ACTED BY THE SHRI SHUSHIL KUMAR MOHTA BEFORE THE COMPLETION OF THE ASSESSMENT . EVEN IF THE RELIANCE IS PLACED ON THE STATEMENT GIVEN IN U/S 132(4) OF THE ACT YET IN OUR CONSIDERED VIEW THE LOWER AUTHORITIES HAVE TO BRING OTHER SUPP ORTING EVIDENCE TO TAX THE UNDISCLOSED INCOME. IN THIS CONNECTION, WE ARE PUTT ING OUR RELIANCE IN THE ORDER OF HONBLE ITAT CHENNAI IN THE CASE OF M. MAHENDRA VS. ACIT 133 TTJ 98, WHERE IT WAS OBSERVED AS UNDER:- IT IS FOUND FOR A FACT ON PERUSAL OF RECORD THAT T HE ASSESSEE HAD GIVEN BREAK-UP DETAILS OF CASH BALANCES AVAILABLE IN THE HANDS OF ALL FAMILY MEMBERS. COPIES OF CASH BOOK FOR THE ACCOUNTING PER IOD FROM 1ST APRIL, 2004 TO 1ST MARCH, 2005 IN RESPECT OF ALL THE ABOVE FIVE FAMILY MEMBERS WERE FILED BEFORE THE AO ALONG WITH THE COPIES OF R ETURNS, STATEMENT OF THEIR ACCOUNTS AND OTHER RELEVANT DOCUMENTS. IT IS ALSO A FACT THAT THE ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 6 ASSESSEE HAS RETRACTED THE ADMISSION MADE DURING SU RVEY ALTHOUGH IT IS BELATED, BUT AS HAS BEEN ESTABLISHED, AS A GUIDANCE INSOFAR AS STATEMENTS RECORDED UNDER S. 133A ARE CONCERNED, SU CH ADMISSIONS CANNOT BE MADE BASIS FOR ADDITION. WHEN THE ASSESSE E HAS EXPLAINED BY GIVING ENTIRE DETAILS INCLUDING THEIR PAN, ETC. AND THE AVAILABILITY OF CASH AT THE TIME OF SURVEY OR DURING THE RELEVANT P ERIOD, BY SIMPLY MENTIONING WHY THE CASH SHOULD BE KEPT IN ASSESSEE S HOUSE MAY NOT BE A VALID REASON WHEN ALL THE MEMBERS ARE ASSESSED TO TAX AND HAVE MADE A VALID CLAIM WITH PROOF. THE ASSESSEES FATHE R HAS OFFERED RS. 3,83,000 IN HIS ASSESSMENT AND HE WAS SIMULTANEOUSL Y SURVEYED ALONG WITH THE ASSESSEE ON THE SAME DAY AND SAME TIME. TH E FAR-FETCHED REASONING GIVEN IN TITS AND BITS CANNOT MAKE A COMP REHENSIVE SENSE. THE CASE OF THE ASSESSEE IS ON BETTER FOOTING, THER EFORE, THE AVAILABILITY OF ENTIRE CASH IS ACCEPTED AS EXPLAINED AND THE IMP UGNED ADDITION IS DELETED.CIT VS. S. KHADER KHAN SON (2008) 214 CTR (MAD) 589 : (2008) 300 ITR 157 (MAD) FOLLOWED. WE ARE ALSO PUTTING OUR RELIANCE IN THE ORDER OF HO NBLE ITAT DELHI IN THE CASE OF DCIT VS. EASTERN MEDIKIT LTD. 135 ITD 461 WHERE IT WAS OBSERVED AS UNDER:- INCOMEADDITION ON ACCOUNT OF SHORTAGE OF CASEEXC ESS STOCK AND SHORTAGE IN CASH WERE FOUND ON THE DATE OF SURVEYB OTH THESE AMOUNTS WERE OFFERED FOR TAX IN STATEMENT RECORDED U/S 133A(3)(III)IN THE RETURN FILED, EXCESS STOCK WAS OFFERED FOR TAXA TION BUT SHORTAGE IN CASH WAS NOT OFFERED FOR TAXATIONIT WAS SUBMITTED THAT THE STATEMENT WAS FURNISHED BY WAY OF FREE WILL WITHOUT ANY PRESS URE OR COERCIONAO MADE ADDITION FOR BOTH THE AMOUNT ON THE BASIS OF S TATEMENT AND ALSO ON ACCOUNT OF CASH DISCREPANCY NOTED BY THE SURVEY OFFICERHELD, HAVING GONE THROUGH THE STATEMENT, IT IS FOUND THAT IT WAS TENDERED VOLUNTARILY AND THERE WAS NO ATTEMPT TO OBTAIN THE CONFESSION HOWEVER, THE SURVEY OFFICERS LOST FOCUS AND CONCENT RATION ON COLLECTION OF EVIDENCE OF INCOME WHICH LEADS TO INFORMATION ON WHAT HAS BEEN DISCLOSED OR WHAT IS NOT LIKELY TO BE DISCLOSED IN THE RETURNTHEY WERE HAPPY BECAUSE THE DIRECTOR-CUM- DGM (FINANCE) MADE A STATEMENT SURRENDERING THE CASH FOR TAXATION AND DID NOT GO F URTHER TO GATHER FACTS AS TO WHAT HAS HAPPENED TO THE MISSING CASHWHILE O NE MAY AGREE WITH THE LD. CIT, DR THAT THE ASSESSEE HAS DISPLAYE D LOW TAX MORALITY, THAT CANNOT BE A GROUND FOR SUSTAINING AN ADDITION, WHICH INFERENCE IS OTHERWISE NOT DEDUCTIBLE UNDER THE LAWTHE DEPARTME NT HAS NO EVIDENCE EXCEPT SHORTAGE OF CASH, WHICH DOES NOT LE AD TO THE INFERENCE OF EARNING EQUIVALENT INCOMEIN THESE CIRCUMSTANCES , THE ORDER OF THE LD. CIT(APPEALS) CANNOT BE SAID TO BE PERVERSE OR I LLEGALACCORDINGLY, THE LD. CIT(APPEALS) WAS RIGHT IN DELETING THIS ADD ITION ITA NO.80/KOL/2012 A.Y.2007-08 SHIV KISHAN MOHTA VS. DCIT, CC-XXVII I, KOL. PAGE 7 WE ALSO FIND THAT ALL THE UNDISCLOSED INVESTMENTS W ERE MADE IN THE NAME OF THREE PRIVATE LIMITED COMPANIES AND THAT THERE WAS NO INVESTMENT IN THE NAME OF ASSESSEE. THEREFORE IN OUR CONSIDERED VIEW NO IN COME IN THE HANDS OF THE ASSESSEE CAN BE ADDED ON THE BASIS OF DISCLOSURE ST ATEMENT GIVEN BY THE 3 RD PARTY. FROM THE ABOVE, WE ALSO FIND THAT THE LD. AR HAS GIVEN THE ASSESSMENT ORDER OF MJB WHERE THE MONEY IS RECEIVED BY THE ASS ESSEE HAS BEEN TAXED IN THE HANDS OF MJB. IN VIEW OF ABOVE, WE HAVE NO HESI TATION IN THE REVERSING ORDER OF LOWER AUTHORITIES. AO IS DIRECTED ACCORDIN GLY. HENCE THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 09/11/2016 SD/- SD/- (K.NARSIMHA CHARY) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S ! - 09/11/2016 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SHIV KISHAN MOHTA, 2/1A, BABYLON, BURDWA N RD., KOL-27 2. /RESPONDENT-DCIT, CC-XXVIII, 18 RABINDRA SARANI, 5 TH FLOOR, KOL-01 3. '# % / CONCERNED CIT 4. % - / CIT (A) 5. &'( ))'# , '# / DR, ITAT, KOLKATA 6. (*+ / GUARD FILE. BY ORDER / , /TRUE COPY/ / '#,