MOHYAMMED IIYAS SHADAT, MUMBAI V. ACIT CIR 17(3), MUMBAI

ITSSA 31/MUM/2010

• Counselvise Citation: [2012] 124 COUNSELVISE.COM (IT) 7778 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 20-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-01-2012
• Assessment Year: misc
• Appeal Filed On: 08-04-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Assessee Lawyers: RAKESH K MILWANI
• Keywords: Block assessment
• Section: 132

Judgement Text

1 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI F BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI R.K. PAN DA, A.M. IT(SS)A NO. 31/MUM/2010 (BLOCK PERIOD 01.04.1996 TO 21.01.2003) MOHAMMED LLYAS SHAHADAT, FLAT NO. 201, II FLOOR, BAGE-E-REHMAT, 17 MEGHRAJ SATHIA MARG, AGRIPADA, MUMBAI 400 008. VS ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 17(3), PIRAMAL CHAMBERS, LALBAUG, MUMBAI. 400 012. (APPELLANT) (RESPONDENT) PAN NO. ADDPC9345A APPELLANT BY SHRI RAKESH K. MILWANI RESPONDENT BY SHRI SHANTAM BOSE DATE OF HEARING 16.01.2012 DATE OF PRONOUNCEMENT 20.01.2012 ORDER PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 16.02.2010 OF THE CIT(A) -29, MUMBAI RELATING TO BL OCK PERIOD 01.04.1996 TO 21.01.2003. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE, THEY ALL RELATE TO THE ORDER OF THE LD. CIT(A) IN CONFIR MING THE ADDITION OF RS. 5,56,339/- MADE BY THE A.O. AS UN-DISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT A SEARCH AN D SEIZURE ACTION U/S 132 WAS CONDUCTED AT THE RESIDENTIAL AND BUSINESS PREMI SES OF M/S KEYSTONO 2 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT REALTORS PVT. LTD. M/S.CREDENCE PROPERTY DEVELOPERS PVT. LTD. (CPDPL), A GROUP COMPANY WAS ALSO COVERED U/S.132 OF THE I.T. ACT, THE BLOCK ASSESSMENT PROCEEDINGS IN THE CASE OF THE COMPANY I .E., CPDPL WAS COMPLETED ON 31.3.2005. THE ASSESSING OFFICER OBSER VED THAT THE ASSESSEE ALONGWITH HIS FATHER AND FOUR OTHER CO-OWNERS HAD A CQUIRED AN IMMOVABLE PROPERTY IN ANDHERI. ALL THE OWNERS OF THE LAND HAD ENTERED INTO A DEVELOPMENT AGREEMENT WITH CPDPL ON 15.2.2002. AS P ER THE SETTLEMENT THE GROSS SALE PROCEEDS WAS TO BE DISTRIBUTED IN THE RA TIO OF 48% TO DEVELOPERS, 26% TO THE FIRM, M/S PREMIER IRON AND METAL INDUSTR Y AND 25% TO OTHER CO- OWNERS OF THE PROPERTY. OUT OF THIS 26% GOING TO TH E CO-OWNERS OF THE LAND 4.42% RELATES TO THE ASSESSEE. DURING THE COURSE OF SEARCH, EVIDENCE WAS FOUND THAT CPDPL RECEIVED ON- MONEY AMOUNTING TO RS .125,98,175/- BEING THE DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION AN D THE AGREEMENT VALUE. HENCE, AS PER THE JOINT VENTURE AGREEMENT 48% OF TH IS ON-MONEY RELATED TO CPDPL AND WAS TAXED IN THEIR HANDS AS UNDISCLOSED I NCOME AMOUNTING TO RS.60,47,124/- IN THE BLOCK ASSESSMENT. IT WAS HELD THAT REMAINING 52% WHICH RELATED TO THE LAND OWNERS HAVE TO BE TAXED I N THEIR INDIVIDUAL HANDS. AN INTIMATION WAS SENT BY THE DCIT. CEN. CIRCLE TO THE A.O. OF THE ASSESSEE VIDE LETTER DATED 10.9 2005 U/S.158 BD TO INITIATE PROCEEDINGS IN THE HANDS OF THE ASSESSEE. 2.2 THE A.O. THEREAFTER INITIATED PROCEEDINGS U/S 1 58BD. THE A.O. SUMMONED AND RECORDED THE STATEMENT OF THE ASSESSEE U/S.131 ON 25.5.2007. THE ASSESSEE STATED THAT HIS BROTHER ON THE BASIS OF IRREVOCABLE POWER OF ATTORNEY ISSUED BY HIM HAS ENTERED INTO DE VELOPMENT AGREEMENT 3 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT WITH CPDPL FRAUDULENTLY. IT WAS ARGUED BEFORE THE A .O. THAT HE HAS NOT AUTHORISED HIS BROTHER TO SELL THE PROPERTY. A COPY OF ORDER OF THE HONBLE BOMBAY HIGH COURT WAS FILED REGARDING LITIGATION WH EREIN THE HONBLE COURT HAS OBSERVED THAT FRAUD HAS BEEN PERPETRATED ON HIM . THE A.O. OBSERVED THAT EVEN THOUGH ASSESSEE DENIED RECEIVING ANY ON-M ONEY AS PER DEVELOPMENT AGREEMENT, ON MONEY HAS BEEN PASSED AND THERE IS CLINCHING EVIDENCE OF THIS IN THE SEIZED PAPER. THE LAND OWN ERS HAVE RECEIVED THE TOTAL 52% OF THE ON-MONEY AND THERE IS NO CONCLUSIVE EVID ENCE THAT THE ASSESSEE DID NOT RECEIVE HIS SHARES. THE A.O. NOTED THAT EV EN THE OBSERVATION OF THE HIGH COURT DOES NOT SAY ANYTHING ABOUT THE ISSUE OF ON-MONEY. HE ACCORDINGLY MADE AN ADDITION OF RS. 5,56,339/- BEIN G THE SHARE OF ON-MONEY IN THE HANDS OF THE ASSESSEE. 2.3 BEFORE THE LD. CIT(A) THE ASSESSEE REITERATED T HE SAME SUBMISSIONS AS MADE BEFORE THE A.O. HE ALSO FILED A COPY OF HIGH COURTS ORDER IN SUIT NO. 4007 OF 2002. IT WAS ARGUED THAT A FRAUD HAS BEEN COMMITTED BY THE BROTHER OF THE ASSESSEE AND HE HAS NOT RECEIVED ANY COMPENSATION. 2.4 HOWEVER, THE LD. CIT(A) WAS NOT CONVINCED WITH THE EXPLANATION GIVEN BY THE ASSESSEE. HE OBSERVED THAT THE FACT OF ON-MO NEY HAS BEEN ESTABLISHED BEYOND DOUBT BY THE EXISTENCE OF SEIZED PAPERS RELA TING TO THEM. CERTAINLY THE LAND OWNERS HAVE BEEN GIVEN THEIR SHARE OF THE ON-MONEY. THE ASSESSEE HAS ARGUED THAT BECAUSE OF FRAUDULENT ACTIVITY OF H IS BROTHER HE HAS NOT RECEIVED ANYTHING. HOWEVER, THERE IS NO CONCLUSIVE EVIDENCE AS HE HIMSELF 4 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT HAS GIVEN IRREVOCABLE POWER OF ATTORNEY IN FAVOUR O F HIS BROTHER. THE COURT HAS NOT CONCLUSIVELY ARRIVED AT A CONCLUSION THAT A SSESSEE IS INNOCENT. THE PORTION OF ON-MONEY RELATING TO THE LAND OWNERS HAV E TO BE TAXED. THE ASSESSEES PORTION BEING 4.42% AMOUNTING TO RS.5,56 839/- HE HELD THAT THE A.O. HAS RIGHTLY TAXED THIS AMOUNT IN THE HANDS OF THE ASSESSEE AS UNDISCLOSED INCOME. ACCORDINGLY HE UPHELD THE ADDIT ION MADE BY THE A.O. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A) THE ASS ESSEE IS IN APPEAL BEFORE US. 2.3 THE LD. COUNSEL FOR THE ASSESSEE REFERRING TO T HE INTERIM ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT SUBMITTED THAT TH E HONBLE HIGH COURT HAS STATED THAT THE ASSESSEE HAS NOT RECEIVED ANY MONEY . HE SUBMITTED THAT MONEY INCLUDES BOTH ON-MONEY AND OFF-MONEY. ACCORDING TO HIM CPDPL MAY BE INVOLVED IN GETTING ON-MONEY BUT THE ASSESSE E IS NOT AT ALL INVOLVED IN GETTING ANY ON-MONEY AS ALLEGED BY THE REVENUE A UTHORITIES. HE REITERATED THAT A FRAUD HAS BEEN COMMITTED BY THE OTHER PARTY. NO EVIDENCE WHATSOEVER WAS FOUND DURING THE SEARCH TO SUBSTANTIATE THAT TH E ASSESSEE HAS RECEIVED ANY ON-MONEY. HE SUBMITTED THAT THE ASSESSEE HAS G IVEN POWER OF ATTORNEY TO HIS BROTHER. THEREFORE, HE IS NOT AWARE AS WHAT HAS HAPPENED IN BETWEEN HIS BROTHER AND THE DEVELOPER. HOWEVER THE FACT RE MAINS THAT THE ASSESSEE HAS NOT RECEIVED ANY ON-MONEY. HE ACCORDINGLY SUBM ITTED THAT THE ADDITION MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) SH OULD BE DELETED. 2.4 THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIE D ON THE ORDER OF A.O. AND LD. CIT(A). 5 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT 3. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. DURING THE CO URSE OF ARGUMENT BEFORE US THE LD. COUNSEL FOR THE ASSESSEE WAS NOT ABLE TO THROW ANY LIGHT ABOUT THE OUTCOME OF THE INCOME-TAX PROCEEDINGS IN CASE OF HI S BROTHER OR OTHER CO- OWNERS. THE LD. D.R. WAS ALSO NOT IN A POSITION TO THROW ANY LIGHT ON THIS ISSUE. FURTHER THE ORDER OF THE HONBLE JURISDICTI ONAL HIGH COURT IS ONLY AN INTERIM ORDER AND THE FINAL ORDER IS AWAITED. WE FU RTHER FIND THE A.O. HAS TAXED AN AMOUNT OF RS. 5,56,339/- BEING 4.42% OUT O F 52% OF THE ON- MONEY. IT IS NOT CLEAR AS TO THE TAXABILITY OF THE BALANCE ON-MONEY IN THE HANDS OF THE OTHER CO-OWNERS AND THE FINAL OUTCOME OF THE SAME. UNDER THESE CIRCUMSTANCES WE DEEM IT PROPER TO RESTORE TH E ISSUE TO THE FILE OF THE A.O. WITH A DIRECTION TO DECIDE THE ISSUE AFRESH AF TER CONSIDERING THE ASSESSMENT PROCEEDINGS OF THE OTHER CO-OWNER INCLUD ING THE BROTHER OF THE ASSESSEE. HE SHOULD ALSO CONSIDER THE FINAL ORDER OF THE HONBLE HIGH COURT, IF AVAILABLE, WHILE DECIDING THE ISSUE. THE GROUND RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSE. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 20.01.2012. SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 20.01.2012 6 IT(SS)A NO. 31/MUM/2010 SHRI MOHAMMED LLYAS SHAHADAT RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT(A) 29, MUMBAI, MUMBAI 4 CIT -17, MUMBAI, 5 DR BENCH F 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI