ACIT CEN CIR 13, MUMBAI V. GREEN VALLEY DEVELOPERS P. LTD, NAVI MUMBAI

ITA 953/MUM/2012

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3309 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 07-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B B RAJENDRA PRASAD
• Keywords: Business income; Income from undisclosed sources
• Section: 271(1)(c); 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI PAWAN SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 953/MUM/2012 ASSESSMENT YEAR: 2007 - 08 & ITA NO. 954/MUM/2012 ASSESSMENT YEAR: 20 08 - 09 & ITA NO. 6794/MUM/2012 ASSESSMENT YEAR: 2009 - 10 & ITA NO. 5681/MUM/2014 ASSESSMENT YEAR: 2010 - 11 THE DCIT CENT. CIR - 13 ROOM NO. 1006, 10 TH F LOOR, OLD CGO ANNEXE BLDG., MUMBAI - 400020. VS. M/S GREEN VALLEY DEVELOPERS P. LTD., ROYAL PALACE, SECTOR, NO. 2, KHARGHAR, NAVI MUMBAI. PAN NO. AAACA4509R APPELLANT RESPONDENT REVENUE BY : MR. B.B. RAJENDRA PRASAD , DR ASSESSEE BY : MR. RUSHABH MEHTA , AR DATE OF HEARING : 27/11 /2018 DATE OF PRONOUNCEMENT: 18/02/2019 ORDER PER N.K. PRADHAN, AM THE CAPTIONED APPEALS FILED BY THE REVENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 37 , MUMBAI [IN SHORT CIT(A) ]. AS COMMON ISSUES ARE INVOLVED, WE ARE PROCEEDING TO GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 2 DISPOSE THEM OFF THROUGH A CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. ITA NO. 953/MUM/2012 ASSESSMENT YEAR: 2007 - 08 2. THE GROUND OF APPEAL READ S AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN REDUCING THE PENALTY OF RS.83,82,904/ - TO RS.2,99,574/ - IN RESPECT OF CASH COMPONENT FOR ONLY 3 UNITS FOR WHICH EVIDENCE WAS FOUND DURING THE SEARCH WHEREAS, PENALTY WAS LEVIED IN RESPECT OF CASH COMPONENT FOR ALL UNITS FOLLOWING THE MODUS OPERANDI OF THE ASSESSEE ON THE STRENGTH OF REPRESENTATIVE EVIDENCE. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS AS BUILDER AND DEVELOPER. HARE SH N. PATEL IS ONE OF THE D IRECTORS OF THE ASSESSEE - COMPANY. A SEARCH ACTION WAS CARRIED OUT BY THE R EVENUE IN THE RESIDENCE OF SHRI PATEL AND CONNECTED PERSONS ON 10.01.2007 AT VASHI. A SIMULTANEOUS SURVEY ACTION U/S 133A WAS CARRIED OUT AT THE OFFICE PREMISES OF THE ASSESSEE AT KHARGHAR. CONSEQUENTLY, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR (AY) 2007 - 08 ON 31.10.2007 DECLARING TOTAL INCOME OF RS.56,14,377/ - . THE ASSESSING OFFICER (AO) COMPLETED THE ASSESSMENT U/S 143(3) R.W.S. 153C ON 30.12.2008 DETERMINING TAXAB LE INCOME AT RS.10,89,70,630/ - , BY MAKING AN ADDITION OF RS.11,34,04,646/ - ON ACCOUNT OF UNEXPLAINED INCOME. THE AO WAS OF THE OPINION THAT THE ASSESSEE IS IN THE HABIT OF ACCEPTING UNACCOUNTED MONEY TOWARDS SALE OF SHOPS IN GLOMAX MALL AND CALCULATED THE CASH COMPONENT RECEIVED ON SALES AT 77.38% BASED ON PAGE NO. 5 OF ANNEXURE A - 1 IMPOUNDED DURING THE COURSE OF SURVEY. THE GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 3 AO ALSO NOTED THAT THE TOTAL SALES REFLECTED IN THE BOOKS AS ON DATE OF SURVEY STOOD AT RS.18.42 CRORE, OUT OF WHICH SALES PERTAIN ING TO THE IMPUGNED ASSESSMENT YEAR IS R S.11.34 CRORE. THE AO THUS MADE AN ADDITION OF RS.11,34,04,646/ - BY TREATING THE SAME AS UNEXPLAINED INCOME. IN AP PEAL, THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE AO TO THE EXTENT OF RS.2,49,04,646/ - AS UNEXPLAINED INCOME AND DELETED THE BALANCE ADDITION. THEREAFTER, THE AO LEVIED A MINIMUM PENALTY OF RS.83,82,904/ - U/S 271(1)(C) OF THE ACT ON CONCEALED INCOME OF RS.2,49,04,646/ - . 4. IN APPEAL, THE LD. CIT(A) OBSERVED THAT THE ADDITION WAS MADE IN THIS CASE BY ESTIMATING UNACCOUNTED EARNINGS AT 77.38% ON THE ADVANCES RECEIVED WHICH HAS BEEN REDUCED BY THE CIT(A) BY ESTIMATING THE SAME AT 17%. THUS IT IS A CASE O F ESTIMATION. RELYING ON DECISION IN VIP INDUSTRIES (2009) 30 SOT 254 (MUM), NARENDRA KUMAR V. ITO (2005) 94 TTJ 156 AND SHIVLAL TAK V. CIT 251 ITR 373 (RAJ), THE LD. CIT(A) OBSERVED THAT THE ADDITIONS WERE MADE ON ESTIMATED BASIS BY EXTRAPOLATING THE PERCENTAGE OF ON - MONEY OFFERED ON MORE THAN 100 PARTIES, WHEREAS THERE WERE EVIDENCE OF CASH RECEIPTS ONLY RESPECT OF 3 UNITS, IT WOULD BE INC ORRECT TO HOLD THAT PENALTY COULD BE LEVIED FOR THE ENTIRE AMOUNT OF UNACCOUNTED INCOME ASSESSED ON THE BASIS OF ESTIMATION. AS THE 3 UNITS IN RESPECT OF WHICH CASH RECEIPT WAS SPECIFICALLY FOUND, AS PER TABLE GIVEN BELOW, THE LD. CIT(A) REDUCED THE PENAL TY U/S 271(1)(C) CORRESPONDINGLY TO THE SAID CASH RECEIPTS AND FOR THE BALANCE CANCELLED THE PENALTY: GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 4 UNIT NAME OF CUSTOMER DT. OF RECEIPT AMT. OF RECEIPT IN CASH AGREEMENT VALUE F - 53 BALA THOPTE 08.01.2007 1,00,000 14,60,000 T - 9 RAJESH BALWAN 05.01.2007 & 09.01.2007 2,50,000 3,40,000 17 , 10,000 T - 15 K.B. AGARWAL 05.01.2007 2,00,000 24,60,000 5. BEFORE US, THE LD. DR RELIES ON THE ORDER PASSED BY THE AO WHEREAS THE LD. COUNSEL OF THE ASSESSEE RELIES ON THE ORDER OF THE TRIBUNAL IN QUANTUM PROCEEDINGS IN ASSESSEES OWN CASE FOR THE IMPUGNED ASSESSMENT YEAR AND SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS MENTIONED EARLIER THE LD. CIT(A) RESTRICTED THE ADD ITION TO THE EXTENT OF 17% AND DELETED THE BALANCE 83% OF ESTIMATE. IN APPEAL, THE ITAT G BENCH MUMBAI IN ASSESSEES OWN CASE FOR AY 2007 - 08 (ITA NO. 5066/MUM/2009) VIDE ORDER DATED 14.06.2017 HAVE DIRECTED THE AO TO DELETE THE ADDITION MADE ON ACCOUNT O F EXTRAPOLATION IN RESPECT OF ADVANCES RECEIVED DURING THE YEAR. OBSERVING THAT SUCH AN EXAGGERATED/WILD EXTRAPOLATION IN THE MATTER IS UNJUST AND UNWARRANTED, ESPECIALLY WHEN ENQUIRIES WERE DONE AND NOTHING ADVERSE WAS FOUND AGAINST THE ASSESSEE AND AS TH E OFFER OF RS.1 CRORE MADE COVERS ALL THE DISCREPANCIES, THE TRIBUNAL HELD THAT NO FURTHER ADDITIONS MADE BY THE AO/CIT(A) IS SUSTAINABLE. ALSO IN RESPECT OF THE ADDITIONAL GROUND FILED BY THE ASSESSEE TO THE EFFECT THAT NOTICE U/S 143(2) WAS NOT ISSUED TO THE ASSESSEE WITHIN A PERIOD OF 12 MONTHS FROM THE DATE OF FILING OF RETURN FOR THE IMPUGNED ASSESSMENT YEAR, THE TRIBUNAL RESTORED THE GROUND TO THE FILE OF THE AO FOR DECIDING AFRESH AS PER LAW AFTER VERIFYING THE RECORDS. GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 5 IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE UPHOLD THE ORDER OF THE LD. CIT(A). 7. IN THE RESULT, THE APPEAL IS DISMISSED. ITA NO. 954/MUM/2012 ASSESSMENT YEAR: 2008 - 09 8. DURING THE COURSE OF SURVEY U/S 133A ON 10.01.2007, CERTAIN DOCUMENTS MARKED AS ANNEXURE A - 1 (PAGES 1 TO 5) WERE FOUND AND IMPOUNDED BY THE AUTHORIZED OFFICER. AS PER THE AO, THE CONTENTS OF THESE DOCUMENTS REVEAL THAT THE ASSESSEE HAD RECEIVED CASH TOWARDS SALE OF SHOPS IN ITS PROJECT GLOMAX MALL. THE STATEMEN T OF SHRI BHAVANBHAI M. PATEL, D IRECTOR OF THE ASSESSEE - COMPANY WAS RECORDED ON OATH DURING THE COURSE OF SURVEY ON 10.01.2007. THE AO OBSERVED THAT THE ASSESSEE HAD ADMITTED UNACCOUNTED INCOME OF RS.1 CRORE ON ACCOUNT OF UNACCOUNTED SALES, WHICH IS OVER AND ABOVE THE AGREEMENT VALUE OF THE SHOPS OF THE PROJECT GLOMAX MALL. AS PER THE IMPOUNDED DOCUMENTS, THE AO ARRIVED AT A FINDING THAT THE AGREEMENT VALUE OF THE SHOP T - 34 IN GLOMAX MALL IS RS.16,30,000/ - , THE ON - MONEY RECEIV ED IS RS.12,61,400/ - . THUS THE CASH COMPONENT WAS 77.38% OF AGR EEMENT VALUE. ACCORDINGLY, THE AO INFERRED THAT THE ASSESSEE WAS RECEIVING 77.38% OF AGREEMENT VALUE AS CASH COMPONENT. THE ASSESSMENTS FOR THE AYS 2006 - 07 & 2007 - 08 WERE COMPLETED BY MAKING THE FOLLOWING ADDITIONS : S. NO. F.Y. (A.Y) FIGURE OF SALES/ADVA NCES AS CONFRONTED TO THE ASSESSEE (RS.) PROPOSED ADDITION ON ACCOUNT OF UNEXPLAINED SALES (RS.) 1. 2005 - 06 (AY 2006 - 07) 3 , 76 , 44 , 500 2 , 91 , 29 , 314 GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 6 2. 2006 - 07 (2007 - 08) 1 , 46 , 55 , 500 11 , 34 , 04 , 646 TOTAL 18,42,00,000 14,25,33,960 THE AO FURTHER NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR THE ASSESSEE WAS CONTINUING THE SAME PROJECT I.E. GLOBAL MALL AT KHARGHAR, NAVI MUMBAI AND RECEIVED ADVANCES FOR SHOPS AMOUNTING TO RS.9,36,72,949/ - . IN RESPONSE TO A QUERY RAISED BY THE AO , THE ASSESSEE FILED PARTY - WISE DETAILS, FROM WHOM THE ADVANCES WERE RECEIVED. IN RESPONSE TO A SHOW CAUSE NOTICE DATED 16.12.2010 ISSUED BY THE AO TO EXPLAIN AS TO WHY THE SAME PERCENTAGE SHOULD NOT BE ADOPTED FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE FIL ED A REPLY DATED 18.12.2010. HOWEVER, THE AO WAS NOT CONVINCED WITH THE SAID REPLY FOR THE REASON THAT EVEN IN EARLIER ASSESSMENT YEAR, THE ASSESSEE HAD RECEIVED ADVANCES BY WAY OF CHEQUES BUT CASH WAS ALSO RECEIVED OVER AND ABOVE IT. THE AO ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE LD. CIT(A) HAS REDUCED THE PERCENTAGE OF CASH COMPONENT FROM 77.38% TO 17% ON THE GROUND THAT FURTHER APPEAL U/S 253(2) WAS FILED BEFORE THE ITAT AND THE ORDER IS STILL AWAITED. FURTHER, THE AO REJECTED THE CONTENTIO N OF THE ASSESSEE THAT EACH ASSESSMENT YEAR IS DISTINCT ON THE GROUND THAT THE ONLY ONGOING PROJECT OF THE ASSESSEE WAS GLOMAX MALL AT KHARGHAR, NAVI MUMBAI AND THE ASSESSEE WAS RECEIVING ADVANCES FOR THE SAME PROJECT. MOREOVER, THERE WAS NO CHANGE OR INCR EASE IN THE AGREEMENT VALUE. WITH THE ABOVE REASONS, THE AO ESTIMATED THE UNDISCLOSED INCOME @ 77.38% OF ADVANCES OF RS.9,36,72,949/ - AND THUS MADE AN ADDITION OF RS.7,24,84,127/ - . GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 7 9. IN APPEAL THE LD. CIT(A) FOLLOWED THE ORDER OF HIS PREDECESSOR - IN - OFFICE FOR THE AY 2006 - 07 AND DELETED THE ADDITION OF RS.7,24,84,127/ - MADE BY THE AO. 10. BEFORE US, THE LD. DR RELIES ON THE ORDER OF THE AO. ON THE OTHER HAND, THE LD. COUNSEL OF THE ASS ESSEE FILES A COPY OF THE ORDER OF THE ITAT G BENCH, MUMBAI IN ASSESSEES OWN CASE FOR THE AYS 2006 - 07 & 2007 - 08 AND RELIES ON IT. THE LD. COUNSEL THUS SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE ITAT G BENCH, MUMBAI IN ASSESSEES OWN CASE (ITA NO. 5065/MUM/2009 FOR AY 2006 - 07 & ITA NO. 5066/MUM/2009 FOR AY 2007 - 08) VIDE ORDER DATED 14.06.2017 HAVE OBSERVED THAT IN AY 2007 - 08, SIMILAR ADDITION WAS MADE BY THE AO ON ACCOUNT OF ON - MONEY. THE CIT(A) RESTRICTED THE ADDITION TO THE EXTENT OF 17% AND DELETED THE BALANCE 83% OF ESTIMATE BASIS. THE TRIBUNAL OBSERVED AT PARA 24 AS UNDER: 24. WITH REGARD TO THE ALLEGATION OF DEPARTMENT THAT THE ASSESSEE - COMPANY HAS RECEIV ED ON - MONEY, IT IS IMPORTANT TO NOTE THAT THE DIRECTOR OF THE ASSESSEE COMPANY HAD BEEN SEARCHED AND THE ASSESSEES PREMISES SURVEYED. HOWEVER, NO UNDISCLOSED CASH, INVESTMENTS, EXPENDITURE, ETC. HAD BEEN FOUND EITHER IN THE COURSE OF SEARCH AND SURVEY PRO CEEDINGS IN RELATION TO THE ASSESSEE. IT MAY BE APPRECIATED THAT IF IN FACT THERE WAS SUCH A HUGE RECEIPT OF ON - MONEY AS ALLEGED BY THE REVENUE, THEN THE REVENUE SHOULD HAVE BEEN ABLE TO CORROBORATE IT WITH EVIDENCES IN THE FORM OF UNDISCLOSED CASH, INVEST MENT OR EXPENDITURE. THE FACT THAT NO SUCH EVIDENCES WERE AVAILABLE AS GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 8 REGARD TO UNDISCLOSED CASH, EXPENSES OR INVESTMENT IN FACT ALSO SUBSTANTIATES THE CLAIM OF THE ASSESSEE THAT NO ON - MONEY WAS RECEIVED BY IT. WITH THE ABOVE OBSERVATIONS, THE TRIBUNAL DIRECTED THE AO TO DELETE THE ADDITION MADE ON ACCOUNT OF EXTRAPOLATION IN RESPECT OF ADVANCES RECEIVED DURING THE YEAR. FURTHER OBSERVING THAT SUCH AN EXAGGERATED/WILD EXTRAPOLATION IN THE MATTER IS UNJUST AND UNWARRANTED ESPECIALLY WHEN INQUIRIES WERE DO NE AND NOTHING ADVERSE WAS FOUND AGAINST THE ASSESSEE AND AS THE OFFER OF RS.1 CRORE COVERS ALL THE DISCREPANCIES, THE TRIBUNAL HELD THAT NO FURTHER ADDITIONS MADE B Y THE AO/CIT(A) IS SUSTAINABLE. AS MENTIONED EARLIER, THE AO HAS FOLLOWED THE ORDER OF HIS PREDECESSOR FOR AYS 2006 - 07 & 2007 - 08. IN VIEW OF THE DECISION OF THE TRIBUNAL FOR THE SAID TWO ASSESSMENT YEARS AS MENTIONED ABOVE, WE UPHOLD THE ORDER OF THE LD. CIT(A). FACTS AS WELL AS THE GROUNDS OF APPEAL BEING IDENTICAL, OUR DECISION FOR THE AY 2008 - 09 APPLIES MUTATIS MUTANDIS TO AYS 2009 - 10 & 2010 - 11. 12. IN THE RESULT, THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18/02/2019. SD/ - SD/ - ( PAWAN SINGH ) ( N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 18/02/2019 RAHUL SHARMA, SR. P.S. GREEN VALLEY ITA NOS 953, 954 & 6794/MUM/2012 & 5681/MUM/2014 9 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI