ITO(IT)-3(3)(1), MUMBAI, KAUTILYA BHAWAN, BKC, MUMBAI V. .ABHISHEK SHRIKISHAN PODDAR, MUMBAI

ITA 4634/MUM/2024

AI Insights

The case involves an appeal by the revenue against the order of the ld. CIT(A) which pertained to the assessment year 2011-12. The revenue challenged the deletion of an addition of Rs. 10,50,00,000 on account of alleged 'on-money' paid by the assessee to M/s Nish Developers Pvt Ltd. The primary evidence for the addition was a pen drive containing data from a search and seizure operation at M/s Nish Developers, which the revenue claimed indicated receipt of 'on-money'. The assessee contested this addition, citing previous ITAT decisions where similar additions were deleted under comparable circumstances. The Tribunal, referencing these precedents and the specifics of the transactions in question, upheld the CIT(A)'s decision to delete the addition.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 469894 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2024
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2024
• Other Referred Cases: M/s. Sanjay V. Parmar ITA No. 3534/Mum/2019, Arvind Poddar ITA No. 3479/Mum/2023, M/s. Nish Developers ITA No. 3490/Mum/2018 & Ors.
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K.R. SUBHASH; DR
• Assessee Lawyers: VIJAY MEHTA; AR
• Keywords: Set aside; Search and seizure
• Section: 143(1); 72

Judgement Text

"| आयकर अपीलीय अिधकरण \fा यपीठ, मुंबई | IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, MUMBAI SHRI NARENDRA KUMAR BILLAIYA, HON’BLE ACCOUNTANT MEMBER & BEFORE ANIKESH BANERJEE, HON’BLE JUDICIAL MEMBER I.T.A. No. 4634/Mum/2024 Assessment Years: 2011-12 ITO (IT)-3(3)(1), Mumbai, Kautilya Bhawan, BKC, Mumbai Vs Abhishek Shrikishan Poddar, Mumbai 85, Mount Unique 11th Floor, 62-A, Peddar Road Mumbai - 400026 [PAN: AACPP1925F] अपीला थ\u0016/ (Appellant) \u0017\u0018 यथ\u0016/ (Respondent) Assessee by : Shri Vijay Mehta, A/R Revenue by : Dr. K.R. Subhash, CIT, D/R सुनवाई की तारीख/Date of Hearing : 09/12/2024 घोषणा की तारीख /Date of Pronouncement: 11/12/2024 आदेश/O R D E R PER NARENDRA KUMAR BILLAIYA, AM: This appeal by the revenue preferred against the order of the ld. CIT(A) -57, Mumbai, dated 13/06/2024, pertaining to AY 2011-12. The appeal is late by 11 days. The delay is condoned. 2. The grievance of the revenue reads as under:- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in deleting addition of Rs. 10,50,00,000/- on account of on money paid by the assessee to M/s Nish Developers Pvt Ltd. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) was right in ignoring the fact that employee of the M/s Nish Developers Pvt Ltd. In their statement have admitted to have received money from customer. 3. The appellant craves leave to amend or alter any ground or add a new ground which may be necessary.” 3. Briefly stated the facts of the case are that the assessee filed his return of income on 30/07/2011 declaring total income of Rs. 4,27,439/- . The return was processed u/s 143(1) of the Act. Information has been I.T.A. No. 4634/Mum/2024 2 received from the DDIT (Inv.), Unit-8(3), Mumbai, that a search action u/s 132 of the Act was conducted on 04/04/2014 in the case of M/s. Nish Developers Pvt. Ltd. & Group which is developing premium residential apartments in Currey Road, Mumbai under the project name, “One Avighna Park”. Several incriminating evidence were unearthed during the course of search action. 3.1. As per the information received, the assessee had paid On-money to M/s. Nish Developers Pvt. Ltd., amounting to Rs. 17,50,00,000/- for purchase of flat. As per the information, the estimation of cash component in the case of M/s. Nish Developers, came out to be 233% of the agreement value. Taking a leaf out of the proceedings in the case of M/s. Nish Developers, the AO was convinced that the assessee must have paid On-money of Rs.10.50 Crores and accordingly completed the assessment by making the addition of the same. 3.2. The assessee challenged the addition before the ld. CIT(A) and strongly challenged the addition made by the AO based upon the alleged incriminating material and the statement recorded at the time of search proceedings in the case of M/s. Nish Developers. During the appellate proceedings, the assessee submitted copy of order of the ITAT in the case of M/s. Sanjay V. Parmar in ITA No. 3534/Mum/2019, wherein on identical set of facts, the Tribunal had deleted the additions. Strong reliance also placed on the decision of the ITAT in the case of Arvind Poddar in ITA No. 3479/Mum/2023. Drawing support from the decision cited by the assessee, the ld. CIT(A) was convinced and deleted the impugned additions. 4. Before us, the ld. D/R strongly supported the findings of the AO and read the operative part. I.T.A. No. 4634/Mum/2024 3 Per contra, the ld. Counsel for the assessee reiterated what has been stated before the lower authorities and placed decisions of the Tribunal in the case of M/s. Sanjay V. Parmar (supra) and Arvind Poddar (supra). The ld. Counsel for the assessee also provided copy of the decision of the Co-ordinate bench in the case of M/s. Nish Developers in ITA No. 3490/Mum/2018 & Ors. 5. We have given a thoughtful consideration to the orders of the authorities below. We find that on identical set of facts, for similar quarrel, the Co-ordinate Bench in the case of Arvind Poddar (supra), has held as under:- “7. We find that this Tribunal in a batch of appeal in the case of M/s.Nish Developers Pvt. Ltd. in ITA No. 3490/MUM/2016 and others, for the A.Ys. 2011-12 to 2015- 16, had the occasion to consider the said pen-drive. The relevant findings read as under: - \"28. In the present case also during cross examination before AO during assessment proceeding, Mr Pravin Mishra admitted that he has prepared all this data on his own imagination which is not related to the assessee. The cross examination being conducted in the presence of the AO, the AO has also not re-examined Mr Pravin Mishra, thus acceding to the same. In case the AO was not convinced of the said statement, he ought to have re-examined or carried out further investigation to gather further evidences for substantiating his stand. Therefore, considering the facts of the case and judicial pronouncements in this regard, the order of CIT(A) on the issue of pen drive cannot be accepted. Considering all these facts of the assessee, we are of the view that the order of Ld. CIT(A) applying a blanket rate of 20% on the on-money calculated on the basis of data in the pen drive wherein the name of the customers were not even matching with the data in the pen drive and also the fact the amounts mentioned against the various flats purchasers having glaring and huge variations and that the pen drive was recovered from the premises of the employee of the assessee, the onus is on the Revenue to prove that data in pen drive are related to affairs of the assessee. Though the AO has not done his duty to determine correct income of the assessee by carrying out proper investigation of the case, yet the Tribunal being highest fact finding body is equally duty bound to determine correct income of the assessee based on the facts available on record....\" 8. The above observations of the Coordinate Bench show that the very basis of the assessment has been removed. Therefore, the impugned additions do not have any legs to stand. Therefore, we decline to interfere with the findings of the Ld. CIT(A).” I.T.A. No. 4634/Mum/2024 4 6. The entire quarrel revolves around the search and seizure action conducted at the premises of M/s. Nish Developers wherein on the basis of a pen drive, the alleged additions for receiving On-money were made in the hands of M/s. Nish Developers and the Co-ordinate Bench in a bunch of appeal in ITA No. 3490/Mum/2018 & Ors, order dated 12/03/2021, has held as under:- “28. In the present case also during cross examination before AO during assessment proceeding, Mr Pravin Mishra admitted that he has prepared all this data on his own imagination which is not related to the assessee. The cross examination being conducted in the presence of the AO, the AO has also not reexamined Mr Pravin Mishra, thus acceding to the same. In case the AO was not convinced of the said statement, he ought to have re-examined or carried out further investigation to gather further evidences for substantiating his stand. Therefore, considering the facts of the case and judicial pronouncements in this regard, the order of CIT(A) on the issue of pen drive cannot be accepted. Considering all these facts of the assessee, we are of the view that the order of Ld. CIT(A) applying a blanket rate of 20% on the on- money calculated on the basis of data in the pen drive wherein the name of the customers were not even matching with the data in the pen drive and also the fact the amounts mentioned against the various flats purchasers having glaring and huge variations and that the pen drive was recovered from the premises of the employee of the assessee, the onus is on the Revenue to prove that data in pen drive are related to affairs of the assessee. Though the AO has not done his duty to determine correct income of the assessee by carrying out proper investigation of the case, yet the Tribunal being highest fact finding body is equally duty bound to determine correct income of the assessee based on the facts available on record. Considering the statement of third parties and sales pattern of the assessee as submitted before us by the assessee as also before the authorities below, we observe that the selling rate of the flats in the assessee's project is varying from Rs.20,000 per sq Ft to Rs.30,000 per sq. ft. during this period. Such variation pattern suggest that there may be some involvement of on-money in these transactions. This fact was also admitted by five buyers in their statement recorded Us 132(4) of the Act during the course of search. Therefore to meet ends of justice, it would be reasonable to determine on-money by comparing average rate of sale for each year with the transaction to determine on- money for the period upto the date of search for all 71 flats sold during this period, as out of 72 flats one of the flat was cancelled. In other words as per data available on records, average rate for A Y 2011-12 works out to Rs.22,214/- so any flats sold during this year lower than this rate, the difference should be considered as on-money received on account of sale of the said flat. In our considered this aspect needs to examined at the level of AO to ascertain the amount of on-money. Accordingly, we set aside the order of ld CIT(A) on this issue and direct the AO to examine working I.T.A. No. 4634/Mum/2024 5 of average sale rate on the basis of sales data on yearly basis and determine on-money for A Y 2011-12 to A Y 2014-15 on the same lines. Needless to mention that the AO will give sufficient opportunity of hearing to the assessee.” 7. Thus, the basis was whether the average rate worked out to Rs. 22,214/-, any transaction below this rate, had to be considered involving On-money payment, so any flats sold during this year, lower than this rate, the difference should be considered as on-money received on account of sale of the said flat. The assessee’s flat A2203 & A2204, were transacted at Rs. 23597/- per sq.ft.. Thus, both the flats were above the cut off rate of Rs.22,214/- and, therefore, by the decision of the Co- ordinate Bench (supra), there is no involvement of any On-money. 8. Considering the facts of the case in totality, in light of the decisions of the Co-ordinate Bench (supra), we do not find any reason to interfere with the findings of the ld. CIT(A). 9. In the result, appeal of the revenue is dismissed. Order pronounced in the Court on 11th December, 2024 at Mumbai. Sd/- Sd/- (ANIKESH BANERJEE) (NARENDRA KUMAR BILLAIYA) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated 11/12/2024 *SC SrPs *SC SrPs *SC SrPs *SC SrPs I.T.A. No. 4634/Mum/2024 6 आदेश की \u0014ितिलिप अ\u0019ेिषत /Copy of the Order forwarded to : 1. अपीलाथ\u001b / The Appellant 2. \u0014\u001cथ\u001b / The Respondent 3. संबंिधत आयकर आयु! / Concerned Pr. CIT 4. आयकर आयु! ) अपील ( / The CIT(A)- 5. िवभागीय \u0014ितिनिध ,आयकर अपीलीय अिधकरण, मुंबई /DR,ITAT, Mumbai, 6. गाड% फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Mumbai "