Deputy Commissioner of Income tax, Central circle-1(4), Bangalore V. M/s HM Constructions, Bangalore

ITSSA 10/BANG/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0624 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 24-02-2015
• Assessment Year: misc
• Appeal Filed On: 03-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: V K GURUNATHAN SHRI O P YADAV
• Keywords: Additional evidence; Block assessment
• Section: 143(3); 131; 132; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER IT ( SS ) A NO. 9 / BANG/20 14 (BLOCK PERIOD: 01/04/1991 TO 29/05/2001 ) M/S .H M CONSTRUCTIONS, NO.14, GENEVA HOUSE, CUNNINGHAM ROAD, BANGALORE - 560052. APPELLANT PAN: AAA FH 8510 L VS. ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 8 ( 1 ), BANGALORE. RESPONDENT AND IT(SS)A NO. 10 /BANG/2014 (BLOCK PERIOD: 01/04/1991 TO 29/05/2001) (BY THE DE PARTMENT) A SSESSEE BY: SHRI V.K.GURUNATHAN, ADVOCATE REVENUE BY: SHRI O.P.YADAV , CIT(DR). DATE OF HEARING : 24 /02/2015. DATE OF PRONOUNCEMENT: 23 /0 3 /2015. O R D E R PER SMT.P.MADHAVI DEVI, JM: THESE ARE CROSS APPEALS, BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE ORDER OF THE CIT(A),LTU, BANGALORE, DATED 20/05/2014 FOR THE BLOCK PERIOD 1/4/1991 TO 29/5/2001. IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 2 OF 9 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM WHICH IS ENGAGED IN THE BUSINESS OF REAL ESTATE. THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE AS WELL AS THE PARTNERS OF THE ASSESSEE ON 29/5/2001 U/S 132 OF THE INCOME - TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT' FOR SHORT]. DURING THE SEARCH PROCEEDINGS, CERTAIN INCRIMINATING DOCUMENTS WERE FO UND AND SEIZED. DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S.158BC OF THE ACT, THE ASSESSING OFFICER (AO) MADE CERTAIN ADDITIONS ON ACCOUNT OF ON - MONEY PAID BY THE ASSESSEE FOR PURCHASE OF IMMOVABLE PROPERTY. THE ISSUE TRAVELLED UP TO THE TRIBUNAL A ND THE TRIBUNAL REMANDED THE ISSUE TO THE FILE OF THE AO TO ESTABLISH THAT THE ASSESSEE HAS PAID ON - MONEY AND THAT SUCH PAYMENT OF ON - MONEY CAN BE HELD TO HAVE BEEN PAID ON PREPONDERANCE OF PROBABILIT IES AFTER EXAMINING THE PARTY CONNECTED WITH THE TRANSAC TION. 3. IN THE REMAND PROCEEDINGS, THE AO ISSUED NOTICES U/S 143(2) OF THE ACT BUT SINCE NONE APPEARED FOR THE ASSESSEE NOR WAS THERE ANY REPRESENTATION ON BEHALF OF THE ASSESSEE, THE AO COMPLETED THE ASSESSMENT U/S 144 OF THE ACT BY RE - CONFIRMIN G THE ASSESSMENT ORDER PASSED EARLIER. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) ALONG WITH AN APPLICATION TO ADMIT THE AFFIDAVIT OF ONE JAYARAM AS ADDITIONAL EVIDENCE IN TERMS OF RULE 46A. THE CIT(A) AFTER CONSIDERING THAT THE ASSESSEE WAS GIVEN AMPLE IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 3 OF 9 OPPORTUNITIES BY THE AO AND THAT THE ASSESSEE WAS NOT CO - OPERATING OR ASS ISTING THE AO TO COMPLETE THE ASSESSMENT AND ON FURTHER EXAMINATION OF THE AFFIDAVIT GIVEN BY JAYARAM , HELD THAT THE SIGNATURES OF JAYARAM WERE NOT TALLYI NG WITH THAT OF HIS SIGNATURES AT THE TIME OF STATEMENT U/S 131 OF THE ACT. HE FURTHER OBSERVED THAT THE STAND OF THE ASSESSEE IN THE EARLIER PROCEEDINGS AND IN THE AFFIDAVIT FILED BEFORE HIM W ERE CONTRARY TO EACH OTHER AND THEREFORE IT WAS NOTHING BUT SE LF - SERVING DOCUMENT. HE THEREFORE REJECTED THE ASSESSEE S PRAYER TO ADMIT ADDITIONAL EVIDENCE. THEREAFTER, HE PROCEEDED TO CONSIDER THE GROUND OF THE ASSESSEE AGAINST SURCHARGE LEVIED U/S 113 OF THE ACT AND DELETED THE SAME HOLDING THAT IT IS ONLY PROSPE CTIVE IN NATURE AND CANNOT BE APPLIED IN THE ASSESSEE S CASE WHERE SEARCH WAS CONDUCTED ON 29/5/2001. AGAINST THE RELIEF GIVEN BY THE CIT(A) AGAINST LEVY OF SURCHARGE, THE REVENUE IS IN APPEAL BEFORE US WHILE AGAINST CONFIRMATION OF THE ADDITION ON ACCOUN T OF ON - MONEY ALLEGEDLY PAID BY THE ASSESSEE, THE ASSESSEE IS IN APPEAL BEFORE US. 5. AS REGARDS THE REVENUE S APPEAL, THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS VATIKA TOWNSHIP PVT. LTD. , DATED 15/9/2014 REPORTED IN (2014) 109 DTR(SC) 33 WHEREIN IT WAS HELD THAT THE PROVISIONS OF SEC.113 ARE ONLY PROSPECTIVE IN NATURE AND ARE NOT APPLICABLE TO SEARCHES IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 4 OF 9 CONDUCTED PRIOR TO 1/6/2002 . COPY OF THE SAID JUDGMENT IS FIL E D BEFORE US. HAVING HEARD BOTH THE PARTIES AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF VATIKA TOWNSHIP PVT. LTD. , (CITED SUPRA) WE DISMISS THE REVENUE S APPEAL. 6. AS REGARDS THE ASSESSEE S APP EAL IS CONCERNED, THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE DOCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH WHICH IS AT PAGE 70 OF THE PAPER BOOK AND SUBMITTED THAT THE ASSESSEE HAD PURCHASED TWO PROPERTIES FROM TWO DIFFEREN T VENDORS I.E. SMT.VENKATAMMA AND SMT.VENKATANARASAMMA WHO HAD ALSO EXECUTED THE REGISTERED SALE DEED S IN FAVOUR OF THE ASSESSEE. HE SUBMITTED THAT THE ASSESSEE HAD PAID SALE CONSIDERATION AS RECORDED IN THE REGISTERED SALE DEED S AND THERE WAS NO ON - MONEY PAID AS ALLEGED BY THE REVENUE AUTHORITIES. HE FURTHER SUBMITTED THAT EVEN AS PER DOCUMENT FOUND AND SEIZED, THERE WAS A BALANCE DUE TO BE PAID AND THEREFORE IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS PAID ON - MONEY AND IT WAS FOR THIS VERY REASON THAT T HE TRIBUNAL HAD REMANDED THE ISSUE TO THE FILE OF THE AO FOR RE - CONSIDERATION. HE SUBMITTED THAT THE AO DID NOT CALL FOR ANY EVIDENCE NOR DID HE ALLOW CROSS - EXAMINATION BY THE ASSESSEE BUT HAS CONFIRMED THE ADDITION EX - PARTE ASSESSEE. HE SUBMITTED THAT T HE ASSESSEE HAD FILED ADDITIONAL EVIDENCE IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 5 OF 9 BEFORE THE CIT(A) IN THE FORM AN AFFIDAVIT OF JAYARAM WHO IS A SIGNATORY TO THE REGISTERED SALE DEED AS ATTESTING WITNESS AND HAD STATED THAT THERE WAS NO ON - MONEY PAID BY THE ASSESSEE. HE SUBMITTED THAT THE CIT( A) HAS ERRONEOUSLY REJECTED THE ADDITIONAL EVIDENCE ON THE PREMISE THAT THE SIGNATURE OF JAYARAM DID NOT MATCH WITH HIS SIGNATURE DURING THE COURSE OF RECORDING OF STATEMENT U/S 131 OF THE ACT . HE SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE BEEN GIVEN AN OPP ORTUNITY TO CROSS - EXAMINE THE PART Y BEFORE RELYING ON HIS STATEMENT TO MAKE THE ADDITION. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE DID NOT CO - OPERATE WITH T HE AO IN THE REMAND PROCEEDINGS AND DID NOT PRODUCE RELEVANT PARTIES FOR EXAMINATION BY THE AO. HE SUBMITTED THAT SHRI JAYARAM HAD BEEN EXAMINED BY THE AO U/S 131 AND IT WAS THE STAND OF THE ASSESSEE ALL ALONG THAT JAYARAM WAS , IN NO W AY CONCERNED WITH TH E TRANSACTION AND HIS STATEMENT CANNOT BE RELIED UPON. HE SUBMITTED THAT THE ASSESSEE HAD HIMSELF FILED THE AFFIDAVIT OF JAYARAM BEFORE THE CIT(A) STATING THAT HE WAS AWARE OF THE TRANSACTION AND THAT THERE WAS NO ON - MONEY PAID FOR THE TRANSACTION. HE SU BMITTED THAT THESE AVERMENTS OF JAYARAM WERE CONTRARY TO THE EARLIER STAND OF THE ASSESSEE. THEREFORE, ACCORDING TO HIM, THE CIT(A) HAS RIGHTLY REJECTED THE CONTENTIONS OF THE ASSESSEE AS WELL AS ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND WAS ALSO RIG HT IN CONFIRMING THE ADDITION ON IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 6 OF 9 PREPONDERANCE OF PROBABILIT IES AS DIRECTED BY THE TRIBUNAL. HE SUBMITTED THAT AGREEMENT OF SALE WAS ENTERED INTO BY THE ASSESSEE WITH THE SAID PART IES IN THE YEAR 1994 AND THE REGISTERED SALE DEED WAS EXECUTED IN THE YEAR 1995 WHEREAS THE SEARCH WAS CONDUCTED IN THE ASSESSMENT YEAR 2000 - 01 AND THEREFORE AS HELD BY THE TRIBUNAL THE TRANSACTION COULD NOT HAVE BEEN CONCLUDED WITHOUT PAYMENT OF ON - MONEY AND IT IS ALSO NOT PROBABLE THAT THE REGISTERED SALE DEED WOULD HAVE BEEN EXECUTED WITHOUT PAYMENT OF ON - MONEY. THEREFORE, ACCORDING TO HIM, THE ORDER OF THE CIT(A) WAS WELL REASONED AND NEEDS NO INTERFERENCE. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND TRIED TO REBUT THE FINDINGS OF THE CIT(A) AND HAS ALSO PLACE D RELIANCE UPON THE JUDGMENT OF THE HON BLE KERALA HIGH COURT IN THE CASE OF CIT VS. SMT. K.C.AGNES (262 ITR 354) AND THE JUDGMENT OF THE HON BLE SUPREME COURT IN THE CASE OF CIT VS. P.V.KALYANASUNDARM (294 ITR 49) IN SUPPORT OF HIS CONTENTION THAT IN THE A BSENCE OF ANY INDEPENDENT INQUIRY, THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION IN THE BLOCK ASSESSMENT TOWARDS PURCHASE CONSIDERATION OF LAND MERELY ON THE BASIS OF THE STATEMENT OF SELLER WHO GAVE CONFLICTING STATEMENTS. THUS , ACCORDING TO HIM, THE A DDITION MADE BY THE AO ON THE BASIS OF STATEMENT OF JAYARAM AND ALSO THE NON - SPEAKING DOCUMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH IS NOT SUSTAINABLE. IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 7 OF 9 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DUR ING THE COURSE OF SEARCH, A DOCUMENT WAS FOUND AND SEIZED IN WHICH ARE RECORDED THE TRANSACTION S OF THE ASSESSEE WITH SMT.VENKATAMMA AND SMT.VENKATNARASAMMA FOR PURCHASE OF IMMOVABLE PROPERT IES. IN THIS DOCUMENT, THE DATES OF AGREEMENT OF SALE, SALE CONSID ERATION AS PER THE AGREEMENT, DATE OF EXECUTION OF SALE DEED, AMOUNTS PAID AND THE AMOUNTS DUE TO BE PAID ARE ALL RECORDED. IT IS ALSO NOT IN DISPUTE THAT THE SALE DEED WAS REGISTERED IN THE ASSESSMENT YEAR 1995 - 06 ITSELF. THEREFORE, BY THE DATE OF SEARC H THE TRANSACTIONS HAVE BEEN CONCLUDED. IN THE EARLIER PROCEEDINGS BEFORE THE TRIBUNAL, IT WAS THE STAND OF THE ASSESSEE THAT ON - MONEY WAS NOT PAID BY THE ASSESSEE AND THERE WAS NO EVIDENCE TO THIS EFFECT. IT WAS ALSO THE STAND OF THE ASSESSEE THAT THE AS SESSEE HAS PAID ONLY THE AMOUNT AS RECORDED IN THE REGISTERED SALE DEED S . THE TRIBUNAL, HOWEVER, HAS OBSERVED THAT THERE ARE NO TRANSACTIONS IN REAL ESTATE WITHOUT ON - MONEY AND THEREFORE IT WAS SET ASIDE TO THE FILE OF THE AO FOR THE ASSESSEE TO ESTABLISH THAT ON - MONEY WAS NOT PAID. THE AO WAS DIRECTED TO EXAMINE THE ISSUE ON THE BASIS OF PREPONDERANCE OF PROBABILIT IES AFTER EXAMINING THE PARTIES TO THE TRANSACTION. THE ASSESSEE NE ITHER APPEARED BEFORE THE AO DURING THE REMAND PROCEEDINGS NOR DID HE FILE ANY EVIDENCE IN SUPPORT OF HIS CONTENTION THAT ON - MONEY , AS RECORDED IN THE SEIZED DOCUMENT , WAS NEVER PAID. EVEN BEFORE THE CIT(A), THE ASSESSEE HAD UNDERTAKEN TO PRODUCE ONE IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 8 OF 9 OF THE SELLERS AS THE OTHER SELLER WAS ALREADY DEAD BUT FAILED TO PRODUCE SAID PERSON OR HER AFFIDAVIT . THE ONLY AFFIDAVIT FILED BEFORE THE CIT(A) IS THAT OF ONE JAYARAM , WHOSE STATEMENT WAS RECORDED BY THE AO U/S 131 DURING THE ASSESSMENT PROCEEDINGS. DURING THE RECORDING OF STATEMENT U/S 131, JAYARAM HAD STATED THAT THERE WAS ON - MONEY INVOLVED IN THE TRANSACTION. HOWEVER, IN THE AFFIDAVIT FILED BEFORE THE CIT(A), JAYARAM HAS CONTROVERTED THE STATEMENT. HOWEVER, WE FIND THAT THE CIT(A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE ON THE GROUND THAT THE SIGNATUR E OF THE DEPONENT DID NOT MATCH. THUS OBSERVING, THE CIT(A) HAS REJECTED THE ADDITIONAL EVIDENCE. THOUGH AS RIGHTLY POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE ASSESSEE FAILED TO DISCHARGE ITS ONUS BY PRODUCING BOTH THE PARTIES BEFORE THE AO FOR EXAMINATION AND TO ESTABLISH THAT ON - MONEY WAS NOT PAID , R ELIANCE BY THE AO AS WELL AS THE CIT(A) ON THE STATEMENT OF JAYARAM FOR MAKING THE ADDITION IS ALSO NOT SUSTAINABLE BECAUSE HE WAS ONLY AN ATTESTING WITNESS TO THE DOCUMENT . THE ATTESTING W ITNESS TO A DOCUMENT IS A WITNESS ONLY TO THE EXECUTION OF THE DOCUMENT, BUT NOT TO THE CONTENTS OF THE DOCUMENT. THEREFORE , HIS STATEMENT OR THE SUBSEQUENT AFFIDAVIT HAVE NO RELEVANCE AS REGARDS THE CONSIDERATION BY THE ASSESSEE TO HIS VENDORS. BUT THE ASSESSEE HAS NOT PRODUCED HIS VENDORS, NOR HAS HE FILED CONFIRMATIONS FROM THEM TO REBUT THE FINDINGS OF THE AO THAT ON - MONEY HAS BEEN PAID BY THE ASSESSEE , EVEN IN THE REMAND PROCEEDINGS. IT ( SS ) A NO S . 9&10 /BANG/20 1 4 M/S. H M CONSTRUCTIONS. PAGE 9 OF 9 THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT( A). THE ASSESSEE S APPEAL IS THUS DISMISSED. PRON OUNCED IN THE OPEN COURT ON 23 RD MARCH , 201 5 . S D/ - S D/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE