Deputy Commissioner of Income-tax, Central Circle - 2(4), Pune V. M/s. Bhimashankar Developers, Pune

ITSSA 101/PUN/2017

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3942 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-06-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Assessee Lawyers: V L JAIN
• Keywords: Unexplained investment; Source of fund
• Section: 132; 143(3); 153A

Judgement Text

आयकरअपीलीयअिधकरण“ए”᭠यायपीठपुणेमᱶ। IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, PUNE BEFORE SHRI PARTHA SARATHI CHAUDHURY, JM AND DR. DIPAK P. RIPOTE, AM आयकरअपीलसं. / IT(SS)A No.101/PUN/2017 िनधाᭅरणवषᭅ / Assessment Year: 2012-13 The Deputy Commissioner of Income Tax, Central Circle-2(4), Pune. Vs M/s.Bhimashankar Developers, 1182/1/3, F C Road, Shivaji Nagar, Pune – 411003. PAN: AAKFB 4859 Q Appellant/ Assessee Respondent /Revenue Assessee by Shri V L Jain – AR Revenue by Shri S P Walimbe – DR Date of hearing 24/03/2022 Date of pronouncement 14/06/2022 आदेश/ ORDER PER DR. DIPAK P. RIPOTE, AM: This is an appeal filed by the Revenue is directed against the order of ld.Commissioner of Income Tax(Appeals)-12, Pune in Appeal No.PN/CIT(A)-12/10257-10254/2016-17 dated 16.10.2017 for the Assessment Year 2012-13.The Revenueraised the following grounds of appeal: “1. On the facts and the circumstances of the case and in the law, the ld. CIT(A) erred in deleting the entire addition in the A.Y. 2012- 13 by holding the fact that on-money was offered in A.Y. 2009-10 and unaccounted investment was made in land in A.Y. 2012-13 by allowing telescopic benefit, despite the fact that the assessee could not furnish evidences related to generation of sources and entry wise nexus between the source of fund and its investment in purchase of land. 2. On the facts and the circumstances of the case and in the law, the ld. CIT(A) erred in holding that the source of investment in the impugned land of Rs. 2,00,00,000/- for A.Y. 2012-13 stands explained from the cash available in the form of unaccounted sale proceeds offered in the hands of the other firm, despite the fact that the assessee could not satisfactorily explain how the funds from the other entities have flowed for meeting the expenditure on investment of the assessee. IT(SS)A No.101/PUN/2017for A.Y. 2012-13 DCIT vs. Bhimashankar Developers (R) 2 3. The appellant craves leave to add, amend or alter any ground/grounds of appeal which may be necessary.” 2. Brief facts of the case are that the assessee is a firm engaged in the business of real estate development and construction. The search action under section 132 of the Act was conducted on 26.02.2014 in the case of Porwal, Mutha, Kariya, Agarwal and Bhandari Group. The office premises of the appellant also covered.As per the seized documents, certain undisclosed investments were noted by the Assessing Officer in land of Rs.1.5crores for AY 2011-12 and Rs.2 crores for AY 2012-13. Therefore, the Assessing Officer(AO) made addition of Rs.2,00,00,000/- for the year under consideration. During the assessment proceedings, the assessee explained that said unaccounted investment were out of certain receipts pertaining to other entities of the group for earlier years. Therefore, the assessee asked for benefit of telescoping. However, the AO denied the same. The assessee filed appeal before the ld.CIT(A). The ld.CIT(A) has discussed this issue in para 4.2. The relevant part of the ld.CIT(A)’s order is reproduced as under: “It can be seen that the group as a whole admitted additional income u/s 132(4) and also admitted undisclosed investments made by the group. Assessment year wise cash flow was submitted before the AO for the entire group. It was contended that funds were available on account of undisclosed sale proceed in the construction projects developed by the group firms to the extent of Rs. 9.6 Crores as was admitted u/s 132(4) and later on offered in the return filed u/s153A which was accepted by the AO in the order passed u/s 143(3) rws 153A incases of M/s B U Bhandari Enterprises and of M/s B U Bhandari Nandgude PatilAssociates for A.Y. 2009-10. It was further submitted that investment in form ofon-money in the Punawale, Mirth, Land and Bhimashankar Land were made out of this “on-money” admitted and offered in the hands of the firm. I find merit in the submission filed by the appellant. I have verified from the assessment records of the firmsM/s B U Bhandari Enterprises and of M/s B U Bhandari Nandgude Patil Associates for A.Y. 2009-10 that additional sale proceeds of Rs. 7 crores and Rs.2.6 crores was offered in the return IT(SS)A No.101/PUN/2017for A.Y. 2012-13 DCIT vs. Bhimashankar Developers (R) 3 filed u/s 153A and also claimed deduction u/s 8018(10) which was accepted by the AO in the order passed u/s 143(3) rws 153A. In light of the fact that additional income was disclosed by Shri Rajnish M. Bhandari u/s 132(4) for all the entities of the Bhandari Group and cash flow was prepared to link unexplained income with theunexplained investments the cash flow has to be considered for the group as awhole in view of various decisions cited by the appellant. In view of the fact thaton-money was offered in the Assessment Year 2009-10 and unaccountedinvestment was made in various lands during assessment year 2011-12 and 2012-13 the claim of telescopic benefit appears to be in order. Source of investmentin the impugned land of Rs. 2,00,00,000/- stands explained from the cashavailable in form of unaccounted sale proceeds offered in the firms. No separateaddition is therefore justified. Addition made by the AO is directed to be deletedand ground raised by the appellant is hereby allowed.” 3. Aggrieved by the order of the ld.CIT(A), the Department filed appeal before this Tribunal. 4. The ld.Departmental Representative(ld.DR) for the Revenue heavily relied on the order of the Assessing Officer. 5. The ld.Authorised Representative(ld.AR) for the assessee took us through the statement recorded during the Search action. In reply to the last question i.e. Q.No.33, the Mr.Rajnish Bhandari had explained about the receipt of ‘on money’ and its application. The same chart is reproduced by the ld.CIT(A) in the order. 6. We have heard both the parties, perused the material available on record and have gone through the orders of the Lower Authorities. We find that at the time of Search Action, Mr.Rajnish Bhandari had made the disclosure of Rs.28 crores on behalf of various firms. In reply to Question No.33, he had explained the source of undisclosed investments as undisclosed IT(SS)A No.101/PUN/2017for A.Y. 2012-13 DCIT vs. Bhimashankar Developers (R) 4 on money earned from the business. The chart of the said is reproduced here as under: B.U.BHANDARI Landmarks Group RECEIPT AND PAYMENT SUMMARY Receipts Amount Payments Amount Mar-09 Unaccounted Sales (Enterprises) 7,00,00,000 Unaccounted Sales (Nandgude Patil) 2,60,00,000 Closing Balance 9,60,00,000 9,60,00,000 9,60,00,000 Mar-10 Opening Balance 9,60,00,000 Personal Expenses – AMB 4,09,910 Closing Balance 9,55,90,090 9,60,00,0000 9,60,00,000 Mar-11 Opening Balance 9,55,90,090 Investments in Lands (Bhimashankar) 1,50,00,000 Unaccounted Sales (Navlakha) 94,05,790 Closing Balance 8,99,95,880 10,49,95,880 10,49,95,880 Mar-12 Opening Balance 8,99,95,880 Investment in Lands (Mirth) 4,47,92,500 Investment I Lands (Schemes) 66,00,000 Investment in Lands (Bhimashankar) 2,00,00,000 RMB Expenses 2,30,00,000 UDI 43,96,620 9,43,92,500 9,43,92,500 Mar-13 Opening Balance - Investment in Land – Techno 30,00,000 Personal Expenses – AMB 7,37,190 RMB Expenses 2,02,50,000 UDI 2,39,87,190 2,39,87,190 2,39,87,190 Mar-14 Opening Balance - Seized Cash – AMB 10,00,000 Flat No.302 (AurumVatiak)-UDR 6,08,400 Unrecorded Cash – RMB 9,85,985 Personal Expenses – AMB 51,87,110 UDI 65,64,695 Closing Balance - 71,73,095 71,73,095 IT(SS)A No.101/PUN/2017for A.Y. 2012-13 DCIT vs. Bhimashankar Developers (R) 5 7. On careful examination of the impugned chart, it is observed that investment of land of Rs.2,00,00,000/- is explained by taking into consideration the undisclosed on money income. Since the Department has accepted the receipt of on money and taxed it, the benefit of telescoping has to be given. Therefore, we agree with the finding of the ld.CIT(A) that the undisclosed investment of Rs.2,00,00,000/- stands explained by telescoping. Therefore, grounds of appeal raised by the Revenue are dismissed. 8. In the result, appeal of the Revenue is dismissed. Order pronounced in the open Court on 14 th June, 2022. Sd/- Sd/- (PARTHA SARATHI CHAUDHURY) (DR. DIPAK P. RIPOTE) JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / Pune; ᳰदनांक / Dated : 14 th June, 2022/ SGR* आदेशकᳱᮧितिलिपअᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A) concerned. 4. The Pr. CIT concerned. 5. िवभागीयᮧितिनिध,आयकरअपीलीयअिधकरण, “ए” बᱶच, पुणे / DR, ITAT, “A” Bench, Pune. 6. गाडᭅफ़ाइल / Guard File. आदेशानुसार / BY ORDER, // TRUE COPY // Senior Private Secretary आयकरअपीलीयअिधकरण, पुणे/ITAT,Pune.