The ACIT, Central Circle-1(2), Ahmedabad V. M/s. Devi Durga Construction, Ahmedabad

ITSSA 102/AHD/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0194 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 11-07-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2004-2005
• Appeal Filed On: 14-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Keywords: Accommodation entries; Condonation of delay
• Section: 143(3); 133A; 133(6); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AH MEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T(SS). A. NOS: 181 TO 187/AHD/2011 (ASSESSMENT YEARS: 2004 -05 TO 2007-08) M/S. DEVI DURGA CONSTRUCTION C/O. L.G. THAKKAR, 1 ST FLOOR, KASHMIRA CHAMBERS, B/H. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD V/S THE ASSTT. COMM. OF INCOME TAX, CENTRAL CIRCLE-1(2), AHMEDABAD (APPELLANT) (RESPONDENT) I.T(SS).A. NOS. 102 TO 109/AHD/2011 (ASSESSMENT YEARS: 2004-0 5 TO 2007-08) THE ASSTT. COMM. OF INCOME TAX, CENTRAL CIRCLE- 1(2), AHMEDABAD V/S M/S. DEVI DURGA CONSTRUCTION C/O. L.G. THAKKAR, 1 ST FLOOR, KASHMIRA CHAMBERS, B/H. OLD HIGH COURT, NAVRANGPURA, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AADFD 7243D APPELLANT BY : SHRI VIMALENDU VERMA CIT/D .R. RESPONDENT BY : SHRI ASEEM THAKKAR AR. ( )/ ORDER DATE OF HEARING : 17-06-2014 DATE OF PRONOUNCEMENT : 11 -07-2014 PER BENCH 1. THESE 15 APPEALS OF WHICH 8 ARE FILED BY THE REV ENUE AND THE OTHER 7 ARE FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF CIT(A)-I, AHMEDABAD DATED 2.12.2010 AND 3.12.2010 FOR A.YS. 2004-05 TO 2007-08. IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 2 2. THE REGISTRY INFORMED THAT THERE IS DELAY OF 2 D AYS IN FILING THE APPEAL. ASSESSEE HAS MADE AN APPLICATION FOR CONDONATION OF DELAY AN D HAS ALSO FILED AN AFFIDAVIT OF THE PARTNER EXPLAINING THE REASON FOR DELAY AND SEEKING ITS CONDONATION. CONSIDERING THE SUBMISSIONS MADE BY THE ASSESSEE IN THE APPLICATION AND IN THE AFFIDAVIT, WE ARE OF THE VIEW THAT THE DELAY HAS BE EN EXPLAINED AND WE THUS CONDONE THE DELAY AND ADMIT THE APPEALS. 3. AT THE OUTSET BOTH THE PARTIES SUBMITTED THAT TH E ISSUES INVOLVED IN ALL THE APPEALS ARE IDENTICAL EXCEPT FOR THE YEAR AND AMOUNT AND TH E SUBMISSION MADE BY THEM IN ONE CASE WOULD BE EQUALLY APPLICABLE TO ALL THE OTHER CASES. IT WAS THEREFORE SUBMITTED THAT ALL THE APPEALS CAN BE HEARD TOGETHE R. WE THEREFORE FOR THE SAKE OF CONVENIENCE PROCEED TO DISPOSE OF ALL THE APPEAL S BY A CONSOLIDATED ORDER. WE THUS PROCEED WITH THE FACTS IN THE CASE OF IT(SS)A NO. 181 & 102/AHD/2011 A.Y. 04-05 . 4. A SEARCH OPERATION U/S. 132 OF THE ACT WAS CONDU CTED IN RADHE GROUP OF CASES ON 04.08.2006 INCLUDING THE ASSESSEE. DURING THE CO URSE OF SEARCH VARIOUS DOCUMENTS/OTHER THINGS WERE FOUND AND SEIZED FROM T HE RESIDENCE/BUSINESS PREMISES OF THE ASSESSEE. DURING THE SEARCH PROCEED INGS CONDUCTED AT RADHE GROUP OF CASES, IT WAS DISCOVERED THAT SHRI ASHISH PATEL OF RADHE GROUP WAS APPOINTED BY SAHARA GROUP OF LUCKNOW FOR ACTING A S MEDIATOR/NEGOTIATOR FOR THE ACQUISITION OF LAND BY SAHARA GROUP. THE USUAL METH ODOLOGY ADOPTED WAS THAT SAHARA GROUP ENTERED INTO SEPARATE MOU WITH MEDIATO R/NEGOTIATORS FOR NEGOTIATING WITH THE ORIGINAL LAND OWNERS AND PROCU REMENT OF BANAKHAT (LAND PURCHASE DOCUMENTS). SAHARA GROUP OF LUCKNOW USED T O SEND CHEQUES/DDS TO SHRI ASHISH PATEL FOR PURCHASES OF LAND AT DIFFEREN T CITIES. ON RECEIPT OF SUCH CHEQUES/DDS, SHRI ASHISH PATEL OR AGENTS WOULD PAY A PART OF THE AMOUNT RECEIVED FROM SAHARA GROUP TO THE ORIGINAL LAND OWN ERS AND THE SALE OF LAND DOCUMENTS WOULD BE REGISTERED IN THE NAME OF SAHARA GROUP. THE BALANCE AMOUNT OF THE SUBSTANTIAL PORTION OF MONEY RECEIVED FROM SAHARA GROUP WOULD BE CLAIMED AS EITHER LAND DEVELOPMENT EXPENSES OR B ANAKHAT EXPENSES. IN ORDER IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 3 TO CLAIM THE DEVELOPMENT EXPENSES ON LAND PURCHASED THROUGH SHRI ASHISH PATEL OF RADHE GROUP, CERTAIN CONCERNS WERE CREATED AND T HEY WERE PAID DEVELOPMENT CHARGES IN HUGE AMOUNTS THROUGH CHEQUES AND SUBSEQU ENTLY THE CASH WAS WITHDRAWN FROM THE BANK ACCOUNTS OF THESE CONCERNS. THESE CONCERNS IN TURN CLAIMED BOGUS EXPENSES ALTHOUGH NO WORK WAS CARRIED OUT FOR DEVELOPMENT OF LAND. ONE OF THE CONCERN CREATED WAS THE ASSESSEE F IRM WHICH HAD CLAIMED TO HAVE SHOWN EXPENSES FOR CLEARING/LEVELING, DEVELOPI NG OF LAND AT BHAVNAGAR. MOST OF THE PAYMENTS IN THE GARB OF LAND DEVELOPMEN T, BANAKHAT EXPENSES FOR SAHARA CITY LAND IN GUJARAT WAS PAID TO THESE CONCE RNS. DURING THE COURSE OF SEARCH, STATEMENT OF SHRI A. SEENIVASAN AND SHRI RA JESH P. SHAH WAS RECORDED WHEREIN IT WAS ADMITTED BY THEM THAT NO WORK OF DEV ELOPMENT WAS DONE ON THE LAND WHICH WAS PROCURED BY SHRI ASHISH PATEL FOR SA HARA GROUP. FROM THE PERUSAL OF THE PROFIT AND LOSS ACCOUNT, IT WAS NOTI CED THAT ASSESSEE HAD RECEIVED AN AMOUNT OF RS. 2,05,09,754/- AS RECEIPT TOWARDS C ONTRACT WORK FOR LEVELING OF LAND AND AGAINST THIS ASSESSEE HAD CLAIMED EXPENSES UNDER VARIOUS HEADS AND DECLARED A NET PROFIT OF RS. 1,00,381/-. THE ASSESS EE WAS REQUESTED TO EXPLAIN THE NATURE OF EXPENSES TO WHICH THERE WAS NO COMPLI ANCE BY THE ASSESSEE. THEREAFTER INFORMATION WAS CALLED U/S. 133(6) FROM VARIOUS BANKS IN WHICH THE ASSESSEE HAD ITS ACCOUNT. ON PERUSING THE BANK STAT EMENTS, A.O NOTICED THAT ASSESSEE HAD RECEIVED 2,05,09,754/- FROM SHRI ASHIS H PATEL AND AFTER EVERY PAYMENT RECEIVED THERE WAS AN IMMEDIATE CASH WITHDR AWAL OF THE SAME AMOUNT ON THE SAME DAY OR THE VERY NEXT DAY. SHRI ASHISH P ATEL IN HIS STATEMENT HAD ALSO ADMITTED REGARDING THE BOGUS LAND DEVELOPMENT EXPEN SES PAID TO THE ASSESSEE. SHRI A. SEENIVASAN IN HIS STATEMENT HAD ADMITTED TO THE RECEIPT OF AMOUNT ON ACCOUNT OF BOGUS BILLS RAISED BY THE ASSESSEE FOR D EVELOPMENT EXPENSES. IN THE AFFIDAVIT IT WAS ADMITTED THAT COMMISSION WAS EARNE D @ 1.5% OF THE TOTAL AMOUNT OF BILL RAISED. A.O THEREFORE CONCLUDED THAT NO DEV ELOPMENT ACTIVITY WAS ACTUALLY CARRIED OUT BY THE ASSESSEE ON ANY OF THE LANDS WHI CH WAS SOLD BY SHRI ASHISH PATEL TO SAHARA GROUP. HE ALSO CONCLUDED THAT ALL T HE EXPENSES CLAIMED BY THE ASSESSEE AGAINST THE RECEIPT OF RS. 2,05,09,754/- W ERE INCORRECT AND BOGUS. HE ACCORDINGLY CONSIDERED THE ENTIRE AMOUNT OF RS. 2.0 5,09,754/- AS INCOME OF THE IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 4 ASSESSEE AND ALSO ALL THE EXPENSES CLAIMED BY THE A SSESSEE WAS DISALLOWED IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE WHICH INCLU DED RS. 30 LAC ADDED ON PROTECTIVE BASIS. ON THE AFORESAID ADDITION MADE, A.O VIDE PENALTY ORDER DATED 29.06.2009 LEVIED PENALTY OF RS. 7,19,32,874/- U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE ORDER OF A.O IN QUANTUM PROCEEDING S, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING A S UNDER:- 8. I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELLANT. THE UNCONTROVERTED FACTS OF THE CASE ARE THAT A SEARCH ACTION U/S.132 OF THE INCOME-TAX ACT WAS CAR RIED OUT AT THE BUSINESS PREMISES OF APPELLANT ON 04.08.2006. SEARCH ACTION ON THE RADHE GROUP OF CASES WAS ALSO CONDUCTED. DURING THE SEARCH PROCEEDINGS CONDUCTED AT THE RADHE GROUP OF CASES, IT WAS DISCOVERED THAT SHRI ASHISH PATEL OF RADHE GROUP OF CASES HAS BEEN APPOINTED BY THE 'SAH ARA GROUP' OF LUCKNOW FOR ACTING AS MEDIATOR / NEGOTIATOR FOR ACQUISITION OF THE LAND B Y 'SAHARA GROUP'. THE USUAL METHODOLOGY ADOPTED WAS THAT THE SAHARA GROUP ENTERED INTO SEPA RATE MOU WITH MEDIATORS / NEGOTIATORS FOR NEGOTIATING WITH ORIGINAL LAND OWNERS (FARMERS) AND PROCUREMENT OF BANAKHAT (LAND PURCHASE DOCUMENTS). THE 'SAHARA GROUP' OF LUCKNOW USED TO S END CHEQUES / DDS TO SHRI ASHISH PATEL FOR PURCHASE OF LAND AT DIFFERENT CITIES. ON RECEIPT OF SUCH CHEQUES / DDS, SHRI ASHISH PATEL OR AGENTS WOULD PAY A PART OF THE AMOUNT RECEIVED FROM THE SA HARA GROUP TO THE ORIGINAL LAND OWNERS AND THE SALE OF THE LAND DOCUMENTS WOULD BE REGISTERED IN THE NAME OF SAHARA GROUP. THE BALANCE AMOUNT WHICH FORMED SUBSTANTIAL PORTION OF THE MONE Y RECEIVED FROM SAHARA GROUP, WOULD BE CLAIMED AS EITHER LAND DEVELOPMENT EXPENSES OR BANA KHAT EXPENSES. IN ORDER TO CLAIM THE DEVELOPMENT EXPENSES ON LAND PURCHASED THROUGH SHRI ASHISH PATEL (OF RADHE GROUP), CERTAIN CONCERNS WERE CREATED AND THEY WERE PAID, DEVELOPME NT CHARGES IN HUGE AMOUNTS THROUGH CHEQUES AND SUBSEQUENTLY, THE CASH WAS WITHDRAWN FR OM THE BANK ACCOUNTS OF THESE CONCERNS. THESE CONCERNS, IN TURN, CLAIMED BOGUS EXPENSES, AL THOUGH NO WORK WAS ACTUALLY CARRIED OUT FOR DEVELOPMENT OF LAND. THESE FACTS ARE ALSO APPARENT FROM THE STATEMENT OF SHRI ASHISH PATEL, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER, AT PA GE NO.7 OF THE ASSESSMENT ORDER. THE RELEVANT Q.NO.8 AND ANSWER OF STATEMENT OF SHRI ASHISH PATEL , RECORDED ON 29.09.2006, READS AS UNDER:- 'Q.8 DURING SEARCH OPERATION ON 04.08.2006, AT 7 SEVEN SCHEMES OF SAHARA CITY HOMES, PHOTOGRAPHY AND VIDEOGRAPHY OF THE SITES WAS TAKEN AND THE STATEMENT OF NUMBER OF PERSONS WERE ALSO TAKEN FROM THE SAME IT WAS PROVED THAT NO LAND DEVELOPMENT ETC. OF THE ABOVE SITES HAS TAKEN PLACE. YOU HAVE ALSO ACCEPTED THE SAME IN THIS STAT EMENT THAT ALL THE FOUR CONCERNS, ALLEGEDLY ENGAGED IN LAND DEVELOPMENT ACTIVITY, I.E. RANA PRO JECTS, DEVI DURGA, L.R. CONSTRUCTION AND ANJANI CONSTRUCTION, HAVE RECEIVED THE CHEQUES, JUS T TO GIVE THE CASH FROM THEIR ACCOUNTS, TO PAY THE SAME TO THE FARMERS, LOCAL BROKERS, AND ADVISOR OF SAHARA INDIA, SHRI SUNDERLAL. IN THIS WAY, DO YOU ACCEPT THAT ENTIRE SCHEME OF LAND DEVELOPMEN T WAS NOTHING BUT A MEANS OF WITHDRAWING CASH AMOUNTS FROM THE ACCOUNT OF LAND DEVELOPER ENT ITIES. A.8 ALL THE ABOVE MENTIONED 4 CONCERNS, I.E. RA NA PROJECTS, DEVI DURGA, L.R. CONSTRUCTION AND ANJANI CONSTRUCTION, ALL WERE INTRODUCED TO ME BY S HRI SUDERLALJI WHICH I HAVE STATED EARLIER ALSO. WHATEVER PAYMENTS HAVE BEEN MADE TO THESE CONCERNS, HAVE BEEN WITHDRAWN IN CASH ON BEHALF OF SAHARA AND HAVE BEEN USED AS PER INSTRUCTIONS OF SA HARA. THIS WORK HAS BEEN DONE BY THESE FOUR CONCERNS AFTER TAKING COMMISSION @ 1.5%. THIS IT IS CLEAR THAT THIS SCHEME OF SHOWING THE BILLS WAS THAT OF SHRI SUNDERLALJI AND ALL THE SCHEMES OF NOT DOING REAL LAND DEVELOPMENT, ISSUING THE BILLS, MAKING THE CASH PAYMENTS, ETC. WERE THE DESI GNS OF SHRI SUDERLALJI.' 9. FROM THE AFOREMENTIONED FACTS, IT IS APPARENT THAT THE ROLE OF THE APPELLANT IS ONLY 'HAVALA GIVER' I.E. GIVING ACCOMMODATION ENTRIES IN THE WHOLE SEQU ENCE OF TRANSACTIONS. THE APPELLANT IS AN ENTITY CREATED FOR THE PURPOSE OF A SIPHONING AWAY SUBSTANTIAL AMOUNT OF FUNDS RECEIVED FROM 'SAHARA GROUP' UNDER THE GUISE OF DEVELOPMENT EXPENSES. IN FACT, APPELLANT HAS NOT CARRIED OUT ANY CIVIL CONSTRUCTION ACTIVITY OR DEVELOPMENT ACTIVITY ON TH E LANDS PROCURED BY 'SAHARA GROUP'. THE IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 5 APPELLANT FIRM IS MERELY A PAPER ENTITY AND IN FACT , IT HAS NOT CARRIED OUT ANY WORK. THE APPELLANT IS RECEIVING SOME COMMISSION FOR PROVIDING ACCOMMOD ATION ENTRIES IN THE WHOLE SCHEME OR ARRANGEMENTS. IN SUCH ARRANGEMENTS, THE ENTIRE RECE IPTS COULD NOT BE TAXABLE PROFITS OF ANY ENTITY. IN SUCH CIRCUMSTANCES, THE COMPUTATION .OF TOTAL TA XABLE INCOME ON THE BASIS OF TOTAL DEPOSITS DISCOVERED IN THE BANK ACCOUNTS I.E. THE TOTAL AMOU NT RECEIVED BY THE APPELLANT FROM SHRI ASHISH PATEL AND HIS GROUP, IS NOT CONSIDERED JUSTIFIED. 10. IN THE STATEMENT, THE APPELLANT AS WELL AS SHRI ASH ISH PATEL OF RADHE GROUP, IT HAS BEEN CLAIMED THAT THE APPELLANT WAS ENTITLED FOR THE COMMISSION @1.5% OF THE BILLS RAISED BY HIM. HOWEVER, I AM OF THE OPINION THAT THE APPELLANT MUST HAVE EARN ED SOMETHING MORE THAN WHAT HAS BEEN ADMITTED. IN SUCH 'HAVALA TRANSACTIONS', THE NORMAL COMMISSIONS CHARGED BY HAVALA GIVER IS ABOUT 5% OF VALUE OF SUCH TRANSACTIONS. CONSIDERING THE FACTS IN TOTALITY, THE ASSESSING OF FICER IS DIRECTED TO COMPUTE THE TOTAL TAXABLE INCOME OF THE APPELLANT IN THE YEAR UNDER CONSIDERATION @5% OF THE TOTAL AMOUNTS RECEIVED FROM SHRI ASHISH PATEL (OR HIS GROUP) DURING THE YEAR UNDER CONSIDERATION; 5. AGGRIEVED BY THE ORDER OF CIT(A). ASSESSEE AS WE LL AS REVENUE ARE NOW IN APPEAL BEFORE US. ASSESSEE IS AGGRIEVED ON ACCOUNT OF THE ADDITION MADE AND REVENUE IS AGGRIEVED ON ACCOUNT OF REDUCTION OF THE ADDITION BY THE AO. 6. THE GROUNDS RAISED BY THE ASSESSEE READS AS UNDE R:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ASSESSMENT MADE BY THE ASSESSING OFFICER U/S.153A(1)(B) R.W.S.143(3 ) OF THE INCOME TAX ACT, 1961 WHICH IS ILLEGAL AND BAD IN LAW AND THEREFORE, THE SAME REQUIRES TO BE CANCELLED . 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN MAKING ADDITIONS MERELY ON SUR MISES AND CONJECTURE AND WITHOUT ANY BASIS. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ADDITION TO THE EXTENT OF 5% OF THE TOTAL AMOUNT OF BILLS ISSUED ON AN ESTIMATE BASIS & WITHOUT ANY OTHER EVIDENCES AND MATERIAL TO SUPPORT THE ESTIMATION. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT FIRM HAS RECEIVED IN CASH ONLY COMMISSION @1.5% OF THE TOTAL AMOUNT BILLS ISSUED AFTER DEDUCTION OF TDS WHICH FORMS PART OF THE COMMISSION . 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HA S ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNT S OF THE FIRM U/S. 145(3) OF THE I.T. ACT, 1961 WITHOUT POINTING OUT ANY SPECIFIC DEFECT OR DISCREP ANCY THEREIN. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSING OFFICER, WHILE COMPUTING THE TOTAL INCOME OF THE APPELLANT HAS NOT CONSIDERED ALL THE EVIDENCES, STATEMENTS, AFFIDAVITS, MATERIAL AND OTH ER INFORMATION GATHERED U/SS.132 AND/OR 133A OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS , SEARCH PROCEEDINGS & POST SEARCH PERIOD, ASSESSMENT PERIOD AS WELL AS THAT FORMING PART OF T HE SEIZED RECORDS ETC. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OU GHT TO HAVE CONSIDERED THE FACT THAT THE ASSESSING OFFICER HAS NOT CONSIDERED THE FACT THAT THE AMOUNT OF TOTAL RECEIPTS FOR THE DEVELOPMENT OF THE LAND ETC. HAS BEEN WITHDRAWN ON THE SAME OR NEXT DAY AND GIVEN BACK TO SHRI ASHISH PATEL WHICH CAN BE VERIFIED FROM THE EVIDENCES FOUND FROM THE SEARCH PROCEEDINGS & DULY ACCEPTED BY SHRI ASHISH PATEL. 8. THE APPELLANT SUBMITS THAT THE APPROPRIATE SET OFF OF THE INCOME/ADDITIONS/EXPENSES ETC. MAY KINDLY BE GIVEN, IN CASE THE ADDITIONS /DISALLOWANCES OF T HE SAME IF MADE AND CONFIRMED BY THE I.T. AUTHORITIES FINALLY IN THE HANDS OF EITHER RADHE GR OUP, ASHISH PATEL, M/S. SAHARA INDIA COMMERCIAL CORPORATION LIMITED (SICCL), OR ALL THE FOUR PARTNERSHIP FIRMS AND THEIR PARTNERS INCLUDING THEM IN THEIR INDIVIDUAL CAPACITIES INTER SE. IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 6 7. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REV ENUE READS AS UNDER:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIVING RELIEF OF 9 5% ON ADDITION OF RS 20,05,09,754/-I.E. RS. 19,04,84,266/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT (A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 8. GROUND NO 1,2, 5 & 6 RAISED BY THE ASSESSEE WERE NOT SERIOUSLY PRESSED AND THEREFORE DISMISSED. 9. SINCE THE GROUNDS RAISED IN GROUND NO. 3,4, 7 & 8 OF THE ASSESSEE AND GROUND NO. 1 OF REVENUES APPEAL ARE INTERCONNECTED BOTH A RE CONSIDERED TOGETHER. 10. BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE A.O AND CIT(A). HE FURTHER SUBMITTED THAT THE ADDITION MADE BY CIT(A) AT 5% IS ON A HIGHER SIDE AND IS ALSO NOT BASED ON ANY MATERIAL ON RECORD. HE FAI RLY ADMITTED THAT AS AGAINST THE ESTIMATE MADE BY CIT(A), A REASONABLE ESTIMATE MAY BE MADE BY THE HBLE TRIBUNAL. ON THE OTHER HAND, THE LD. D.R. SUPPORTED THE ORDER OF AO AND SUBMITTED THAT AO WAS FULLY JUSTIFIED IN MAKING THE ADDITION AS IT WAS BASED ON THE MATERIAL FOUND DURING THE SEARCH AND THE STATEM ENTS OF THE PARTNERS THAT WERE RECORDED. HE THUS STRONGLY SUPPORTED THE ORDER OF T HE AO. 11. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE UNDISPUTED FACTS ARE THAT A SEARCH ACTION U/S.132 O F THE INCOME-TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF APPELLANT A ND RADHE GROUP. ON THE BASIS OF SEARCH PROCEEDINGS AT RADHE GROUP IT WAS DISCOVE RED THAT SHRI ASHISH PATEL OF RADHE GROUP WAS APPOINTED BY THE 'SAHARA GROUP' OF LUCKNOW FOR ACTING AS MEDIATOR / NEGOTIATOR FOR ACQUISITION OF THE LAND B Y 'SAHARA GROUP'. IT WAS FOUND THAT OUT OF THE MONEY RECEIVED FROM 'SAHARA GROUP' FOR PURCHASE OF LAND, SHRI ASHISH PATEL OR AGENTS WOULD PAY A PART OF THE AMOU NT RECEIVED TO THE ORIGINAL IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 7 LAND OWNERS AND THE SALE OF THE LAND DOCUMENTS WOUL D BE REGISTERED IN THE NAME OF SAHARA GROUP AND THE SUBSTANTIAL AMOUNT WOULD BE CLAIMED AS EITHER LAND DEVELOPMENT EXPENSES OR BANAKHAT EXPENSES. IN ORDER TO CLAIM THE DEVELOPMENT EXPENSES ON LAND PURCHASED THROUGH SHRI ASHISH PATE L (OF RADHE GROUP), CERTAIN CONCERNS (INCLUDING THE ASSESSEE) WERE CREATED AND THEY WERE PAID, DEVELOPMENT CHARGES IN HUGE AMOUNTS THROUGH CHEQUES AND SUBSEQUENTLY, THE CASH WAS WITHDRAWN FROM THE BANK ACCOUNTS OF THESE CONCERNS. THESE CONCERNS, IN TURN, CLAIMED BOGUS EXPENSES, ALTHOUGH NO WORK W AS ACTUALLY CARRIED OUT FOR DEVELOPMENT OF LAND. WE FIND THAT CIT(A) AFTER CONS IDERING THE SUBMISSIONS OF THE ASSESSEE AND THE MATERIAL ON RECORD HAS GIVEN A FINDING OF FACT THAT THE ROLE OF ASSESSEE WAS TO GIVE ACCOMMODATION ENTRIES AND I T WAS ONLY A HAWALA GIVER CREATED FOR THE PURPOSE OF SIPHONING AWAY SUBSTANTI AL AMOUNT OF FUNDS UNDER THE GUISE OF DEVELOPMENT EXPENSES. HE HAS FURTHER GIVEN A FINDING THAT ASSESSEE HAS NOT CARRIED OUT ANY CIVIL CONSTRUCTION ACTIVITY OR THE DEVELOPMENT ACTIVITY ON THE LANDS PROCURED BY SAHARA GROUPS. THE ASSESSEE W AS RECEIVING SOME COMMISSION FOR PROVIDING ACCOMMODATION ENTRIES. HE HAS ALSO NOTED THAT ASSESSEE AS WELL AS SHRI ASHISH PATEL OF RADHE GROU P HAD CLAIMED THAT ASSESSEE WAS ENTITLED FOR COMMISSION AT 1.5% OF THE BILLS RAISED. BEFORE US, NO MATERIAL HAS BEEN BROUGHT ON RECORD BY EITHER OF TH E PARTIES TO CONTROVERT THE AFORESAID FINDINGS OF CIT(A). WE ALSO FIND THAT CIT (A) HAS CONCLUDED THAT ASSESSEE MUST HAVE EARNED SOMETHING MORE THAT WAS A DMITTED DURING THE SEARCH PROCEEDINGS AND THE ASSESSEE WAS A HAWALA GI VER AND IN SUCH HAWALA TRANSACTIONS, THE NORMAL COMMISSION CHARGED BY HAWA LA WAS 5% OF THE VALUE OF SUCH TRANSACTIONS. WE FIND THAT CIT(A) HAS NOT BROU GHT ON RECORD ANY MATERIAL TO ARRIVE AT THE BASIS FOR WORKING OUT THE COMMISSION AT 5% AND AT THE SAME TIME THE ASSESSEE AND THE REVENUE HAS ALSO NOT BROUGHT O N RECORD ANY MATERIAL TO SUPPORT THEIR RESPECTIVE CONTENTIONS. IN VIEW OF TH E AFORESAID AND CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE VIEW THAT THE ENDS OF JUSTICE SHALL BE MET IF AN ESTIMATION OF INCOME EARNED BY THE ASSESSEE IS MADE IN THE PRESENT CASE. WE ARE OF THE VIEW THAT AN ESTIMATE OF 2.5% OF THE TOT AL AMOUNT RECEIPTS RECEIVED BY IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 8 THE ASSESSEE WOULD MEET THE ENDS OF JUSTICE. WE THU S DIRECT ACCORDINGLY AND THUS THESE GROUNDS OF THE ASSESSEE AND REVENUE ARE PARTLY ALLOWED. IT(SS)A NOS. 183 & 104/AHD/2011 (FOR A.Y. 2005-06), 185 &106/AHD/2011 ( FOR A.Y. 2006-07) & 187 & 108/AHD/2011( FOR A.Y. 2007-08). 12. BEFORE US, IT IS ADMITTED BY BOTH THE PARTIES T HAT THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE YEAR UNDER APPEAL ARE IDENTICAL TO THAT OF A.Y. 04-05 AND THE GROUNDS RAISED IN THE ABOVE APPEALS ARE IDENTICAL T O THE GROUNDS RAISED IN AY 2004-05. WE THEREFORE FOR THE REASONS GIVEN WHILE PARTLY ALLOWING THE APPEALS OF ASSESSEE AND REVENUE FOR AY 2004-05 HEREINABOVE, AL SO PARTLY ALLOW ALL THE AFORESAID APPEALS. 13. IN THE RESULT, THE APPEALS OF ASSESSEE AND REVE NUE ARE PARTLY ALLOWED. ITA NO. 103/AHD/2011A.Y. 2004-05 FOR REVENUES APPE AL PENALTY APPEAL THE ABOVE APPEAL RELATES TO THE LEVY OF PENALTY LEV IED U/S 271(1)(C) ON THE QUANTUM ADDITIONS MADE BY THE AO IN A.Y 2004-05 14. IN THIS CASE ON THE ADDITION OF RS. 20,05,09,75 4/- WHICH WAS MADE PURSUANT TO ORDER PASSED UNDER SECTION 153A(1)(B) R.W.S. 143(3) , PENALTY U/S 271(1)(C) OF RS. 7,19,32,874/- WAS LEVIED BY THE AO VIDE ORDER DATED 29.6.2009. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CI T(A). CIT(A) VIDE ORDER DATED 03.12.2010, GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER:- 11. IN THE LIGHT OF THE ABOVE, THE FACTS OF THE PRESENT CASE TO BE EXAMINED. IN THE PRESENT CASE, THE APPELLANT HAS ADMITTED THAT IT HAS DEBITED BOGUS EX PENSES IN THE ACCOUNTS IN THE NAME OF DEVELOPMENT EXPENSES. THE APPELLANT USED TO RECEIVE CHEQUES FROM SHRI ASHISH PATEL AND GROUP AND WITHDREW THE EQUAL AMOUNT OF MONEY FROM THE BAN K ACCOUNTS. IN TURN, THE APPELLANT USED TO GET SOME COMMISSION IN THE ENTIRE TRANSACTIONS FOR PROVIDING ACCOMMODATIONS ENTRIES. ON PAPER, IT WAS SHOWN THAT APPELLANT IS RECEIVING MONEY FOR DOING THE DEVELOPMENT WORK. HOWEVER, THE FACTS REMAIN THAT THE APPELLANT WAS ABETTING IN THE TAX EVASION. CONSIDERING THE FACTS OF THE CASE, IT IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 9 IS HELD TO BE FIT CASE FOR THE LEVY OF PENALTY U/S. 271(1)(C) OF THE INCOME-TAX ACT. THE ASSESSING OFFICER IS DIRECTED TO LEVY THE PENALTY, @100% OF T HE TAX SOUGHT TO BE EVADED. HOWEVER, THE CONCEALED INCOME SHOULD BE DETERMINED AS PER APPELL ATE ORDER DATED 02.12.2010, PASSED IN APPEAL RELATED TO QUANTUM ADDITIONS. 15. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NO W IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN GIV ING RELIEF OF 95% OF PENALTY IMPOSED OF RS. 7,19,32,874/- I.E. RS. 6,83,36,230/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE A.O. 3. IT IS, THEREFORE, PRAYED THAT THE ORDER OF THE CIT( A) BE SET ASIDE AND THAT OF THE A.O. BE RESTORED TO THE ABOVE EXTENT. 16. BEFORE US, LD. D.R. SUBMITTED THAT IN THE PRESE NT CASE SINCE THE FACTS OF DEBITING BOGUS EXPENSES HAS BEEN CONFIRMED, THE ORDER OF THE AO LEVYING PENALTY BE UPHELD. IT WAS FURTHER SUBMITTED THAT IN THE PRESEN T CASE, THE PENALTY WAS RIGHTLY LEVIED BECAUSE THE ASSESSEE HAD NOT FILED THE RETUR N OF INCOME. HE THUS SUPPORTED THE ORDER OF A.O. LD. A.R. ON THE OTHER H AND SUBMITTED THAT IN THE PRESENT CASE SINCE THE ADDITION HAS BEEN MADE ON TH E BASIS OF ESTIMATION NO PENALTY BE LEVIED. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. WE FIND THAT CIT(A) HAS HELD THAT FOR LEVY OF PENALTY IT SHOULD BE FOUND THAT ALL THE CONDITIONS OF SECTION 271(1)(C) MUST EXIST BEFORE L EVY OF PENALTY AND THAT IT IS FOR THE REVENUE TO ESTABLISH THAT SUCH CONDITIONS EXIST . WE FIND THAT THERE IS NO SUCH FINDING RECORDED BY CIT(A) IN THE IMPUGNED ORDER PA SSED BY HIM THAT ALL THE CONDITIONS FOR LEVY OF PENALTY WERE FULFILLED BEFOR E LEVY OF PENALTY IN THIS CASE AND THAT REVENUE HAS ESTABLISHED THAT SUCH CONDITIONS E XIST. WE FIND THAT THE ONLY FINDING RECORDED BY CIT(A) FOR CONFIRMING THE PENAL TY IN THIS CASE WAS THAT ASSESSEE WAS ABATING IN TAX EVASION. THE ACT OF ABA TEMENT IN TAX EVASION FOR SOME OTHER PERSON COULD NOT BE MADE THE BASIS FOR L EVY OF PENALTY U/S. 271(1)(C) IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 10 ON THE ASSESSEE. WE FURTHER FIND THAT CIT(A) HAS PA SSED A CRYPTIC ORDER. ON THESE FACTS OF THE CASE, WE ARE OF THE VIEW THAT TH E IMPUGNED ORDER COULD NOT BE SUSTAINED. HOWEVER IN THE INTEREST OF JUSTICE TO BO TH THE PARTIES, WE CONSIDER THAT IT SHALL BE APPROPRIATE TO RESTORE THE ISSUE OF PEN ALTY U/S. 271(1)(C) TO THE FILE OF A.O TO PASS A DE NOVO ORDER IN ACCORDANCE WITH LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND A.O SHAL L RECORD A CLEAR FINDING ON THE ISSUE THAT THE CONDITIONS FOR LEVY OF PENALTY U /S. 271(1)(C) EXISTS AND PROVED IN THIS CASE. WE DIRECT ACCORDINGLY. 18. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. IT(SS)A NOS. 182 & 105/AHD/2011 (FOR A.Y. 2005-06), 184 & 107/AHD/2011 (FOR A.Y. 2006-07) & 186 & 109/AHD/201 1 (FOR A.Y. 2007-08). 19. IN ALL THESE CASES, ON THE QUANTUM ADDITION MAD E BY A.O, PENALTY @ 300% WAS LEVIED BY A.O U/S. 271(1)(C) OF THE ACT. AGGRIEVED BY THE PENALTY ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE LD. CIT(A). CIT( A) VIDE ORDER HIS ORDER RESTRICTED THE PENALTY FROM 300% TO 100%. AGGRIEVED BY THE ORDER OF LD. CIT(A), REVENUE AND ASSESSEE ARE NOW IN APPEAL BEFORE US. T HE REVENUE IS AGGRIEVED FOR THE REASON THAT THE PENALTY HAS BEEN RESTRICTED TO 100% WHEREAS ASSESSEE IS AGGRIEVED FOR THE REASON THAT THE PENALTY HAS BEEN UPHELD TO THE EXTENT OF 100%. WE FIND THAT THE REASON GIVEN BY LD. CIT(A) FOR RED UCING THE PENALTY FROM 300% TO 100% IS IDENTICAL TO THE REASONS GIVEN IN A.Y. 04-0 5. SINCE THE FACTS IN THE PRESENT CASE ARE SIMILAR TO THAT OF A.Y. 04-05. WE FOR SIMILAR REASONS ALSO REMIT ALL THESE APPEALS TO THE FILE OF A.O WITH SIMILAR D IRECTIONS AS GIVEN WHILE DECIDING THE APPEAL IN IT(SS)A NO. 103/AHD/2011 (SUPRA) IN A LL THE AFORESAID CASES. 20. IN THE RESULT, ALL THESE APPEALS ARE ALLOWED FO R STATISTICAL PURPOSES. 21. IN THE RESULT, ASSESSEES APPEAL IN IT(SS)A NOS . 181,183,185 & 187/AHD/2011 ARE PARTLY ALLOWED AND REVENUES APPEA L IN IT(SS)A NOS. IT(SS)A NOS 181 TO 18 7 & 102 TO 109/A/2011 . A.YS. 2004-05 TO 200 7- 08 11 102,104,106,108/AHD/2011 ARE PARTLY ALLOWED. ASSES SEES APPEAL IN IT(SS)A NOS. 182,184 & 186/AHD/2011 ARE ALLOWED FOR STATIST ICAL PURPOSES AND REVENUES APPEAL IN IT(SS)A NOS. 105,107 & 109/AHD2 011 ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 11 - 07 - 2014. SD/- SD/- (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD