The ACIT,(OSD)-I,Range-4, Ahmedabad V. Labh Construction and Industries Ltd., Ahmedabad

ITSSA 319/AHD/2010

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0785 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 29-05-2015
• Assessment Year: misc
• Appeal Filed On: 15-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Keywords: Unexplained investment; Search and seizure; Loose papers; Document seized; Block assessment; Documents seized
• Section: 143(3); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI RAJPAL YADAV , JUDICIAL MEMBER AND SHR I ANIL CHATURVEDI , ACCOUNTANT MEMBER THE ACIT, (OSD) - 1, RANGE - 4, AHMEDABAD NAVJIVAN TRUST BLDG., OFF. ASHRAM ROAD, AHMEDABAD (APPELLANT) VS LABH CONSTRUCTION & INDUSTRIES LTD, 104, SHANTANU, OPP. HOTEL CLASSIC GOLD, SARDAR PATELNAGAR, ELLIS - BRIDGE, AHMEDABAD PAN: AAACL2648G (RESPONDENT) REVENUE BY : S H RI T.P. KRISHNAKUMAR , CIT - D . R. ASSESSEE BY: S H RI SAKAR SHARMA , A.R. DATE OF HEARING : 29 - 05 - 2 015 DATE OF PRONOUNCEMENT : 16 - 06 - 2 015 / ORDER P ER : RAJPAL YADAV , JUDICIAL MEMBER : - REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDER OF LD. COMMISSIONER DATED 07 - 12 - 2009 PASSED FOR BLOCK PERIOD STARTING FROM 01 - 04 - 1996 AND ENDING ON 25 TH JULY, 2002 2. THE SOLITARY GRIEVANCE OF THE R EVENUE IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 24,70,520/ - I T (SS) A NO . 319 / A HD/20 10 BLOCK PERIOD: 1.4.96 TO 25.7.2002 I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 2 WHICH WAS ADDED BY THE ASSESSING OFFICER ON THE GROUND THAT ASSESSEE HAS RECEIVED MONEY IN CASH OVER AND ABOVE THE ONE STATED IN THE SALE DEED ON SALE OF FLATS. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE WAS CARRIED OUT U/S. 132 OF THE INCOME TAX ACT IN KHURANA GROUP OF CASES ON 25 TH JULY, 2002. THE PREMISES OF KAMAL GALANI, AT 35, ANGAN, 501, UNION PARK, KHAR(W), MUMBAI AND PREM ISES OF M/S GALANI DEVELOPERS WERE ALSO COVERED UNDER SEARCH ACTION . DURING THE COURSE OF SEARCH AT THE PREMISES OF M/S. GALANI DEVELOPERS, CERTAIN DOCUMENTS/LOOSE PAPERS EXHIBITING THE PAYMENTS MADE TO THE ASSESSEE COMPANY I.E. LABH CONSTRUCTION INDUSTRI ES LTD WERE FOUND AND SEIZED AS ANNEXURE A - 6, A - 13. THESE LOOSE PAPERS CONT AINED DETAILS REGARDING INVESTMENT MADE IN SHI LALEKH AND SARJAN PROPERTIES AT AHMEDABAD. THE DCIT, CENTRAL CIRCLE - 1(2) HAD FO RWARDED COPY OF THE LOOSE PAPERS FOUND DURING THE COUR SE OF SEARCH TO THE ASSESSING OFFICER WHO HAS A JURISDICTION OVER THE PRESENT ASSESSEE. A NOTICE U/S. 158BD OF TH E INCOME TAX ACT WAS ISSUED TO THE ASSESSEE WHICH WAS DULY SERVED UPON THE ASSESSEE ON 14 TH FEB, 2006. IN RESPONSE TO THE SAID NOTICE, THE AS SESSEE COMPANY FILED RETURN OF INCOME FOR THE BLOCK ASSESSMENT DECLARING NIL INCOME. THE LD. ASSESSING OFFICER HAD ISSUED NOTICE U/S. 143(2) OF THE INCOME TAX ACT AND PASSED AN ASSESSMENT ORDER U/S. 158BD R.W.S. 143(3) ON 18 - 02 - 2008. THE ASSESSING OFFICER HAD MADE AN ADDITION OF RS. 24,70,520/ - ON THE GROUND THAT THIS MONEY WAS RECEIVED IN CAS H BY THE ASSESSEE FROM SHRI KAMAL GALANI IN RESPECT OF PROPERTY AT SHILALEKH AND SARJAN PROJECT. THIS CASH HAS NOT BEEN ACCOUNTED BY THE ASSESSEE IN THE BOOKS OF ACC OUNT. THE LD. ASSESSING OFFICER HAS TREATED THIS AMOUNT AS UNDISCLOSED INCOME OF THE ASSESSEE. I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 3 4. ON APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE ADDITION BY RECORDING THE FOLLOWING FINDING: - 5.5 I HAVE CONSIDERED THE FACTS AND SUB MISSIONS OF THE LEARNED AR CAREFULLY. I HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER MADE IN THE CASE OF SHRI KAMAL GALANI BY THE ACIT, CENTRAL CIRCLE - 1(2), AHMEDABAD FOR THE BLOCK PERIOD AND THE DECISION OF HON'BLE ITAT, AHMEDABAD THEREON. THERE IS NO DISPUTE ABOUT THE FACT THAT THE DOCUMENTS UNDER REFERENCE ON THE BASIS OF WHICH ADDITION HAS BEEN MADE IN THE HANDS OF THE APPELLANT WERE SEIZED FROM THE OFFICE PREMISES OF M/S GALANI DEVELOPERS. THERE IS NOTHING ON RECORD TO SHOW THAT SHRI ARVIND GUPTA WAS EXAMINED BY THE ASSESSING OFFICER OR SOME PROCEEDINGS TO GET HIM CROSS EXAMINED BY THE APPELLANT WERE CARRIED OUT BY HIM. IT IS FURTHER TO BE SEEN THAT ALL THE CONCERNED PARTIES HAVE DENIED THE ALLEGED TRANSACTION IN CASH IN RELATION TO PURCHASE OF FLA TS IN SARJAN AND SHILAKEKH SCHEME OF THE APPELLANT. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY OTHER CORROBORATIVE EVIDENCE TO SHOW THAT THE APPELLANT RECEIVED THE CASH AMOUNTING TO RS. 24,70,520/ - . IT IS A WELL SETTLED POSITION OF LAW THAT ON THE BASIS OF THIRD PARTY DOCUMENTS, NO ADDITION CAN BE MADE PURELY ON THE BASIS OF ENTRIES WITHOUT BRINGING ANY CORROBORATIVE MATERIAL IN SUPPORT THEREOF. 5.6 IT MAY BE POINTED OUT THAT THE ADDITION WAS MADE BY THE ACIT CENTRAL CIRCLE - 1(2), AHMEDABAD, IN T HE HANDS OF SHRI KAMAL GALANI AMOUNTING TO RS. 24,70,520 ON THE BASIS OF DOCUMENT UNDER REFERENCE AS UNEXPLAINED INVESTMENT ON PURCHASE OF FLATS IN SHILALEKH AND SARJAN SCHEMES OF THE APPELLANT COMPANY. THE ADDITION SO MADE HAS BEEN DELETED BY THE HON'BL E ITAT, AHMEDABAD, VIDE ITS ORDER DATED 13 TH AUGUST, 2009 . THE RELEVANT EXTRACTS OF THE DECISION OF THE HON'BLE ITAT IN THIS REGARD ARE AS UNDER: ; 'WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF THE LOWER AUTHORITIES AND THE MATERIALS AVAILABLE ON RECORD. DURING THE COURSE OF THE SEARCH DOCUMENTS MARKED AT PAGE 22 OF ANNEXURE A - 13 WAS FOUND FROM THE PREMISES OF GILANI DEVELOPERS P. LTD. AHMEDABAD. THE SAID DOCUMENTS SHOWS THAT ASSESSEE PURCHASED CERTAIN PROPERTIES FROM M/S LABH CON STRUCTION , FOR WHICH TOTAL PAYMENT WAS TO BE MADE OF RS. 84,00,000/ - OUT OF WHICH RS. 22,00,000/ - WAS PAYABLE. THE SEIZED DOCUMENTS ALSO EVIDENCES THAT RS. 24, 70,000/ - WAS PAID IN CASH AGAINST THE ABOVE PURCHASE. THE ASSESSEE I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 4 CONTENDED THAT THE PROPER TIES WERE PURCHASED BY THE RELATIVES VIS. RAJESH GALANI, MIRA BHAGTANI, SATISH GALANI AND SURESH GALANI AND HE ON BEHALF OF THEM SUPERVISED THE TRANSACTIONS ONLY. HE CONTENDED THAT HE HAS NOT MADE ANY INVESTMENT IN THE ABOVE PROPERTIES. THE A.O CONSIDER ING THE FACT THAT IN THE SEIZED DOCUMENT, NAME OF THE ASSESSEE WAS WRITTEN AND THE ASSESSEE WAS EMPOWERED TO GIVE THE NAME OF THE PERSONS IN WHOSE NAME THE PROPERTIES WERE TO BE ALLOTTED. HE OPINED THAT PROPERTIES WERE IN FACT PURCHASED BY THE ASSESSEE IN THE NAME OF THOSE PERSONS. FURTHER, THE A.O ALSO OBSERVE D THAT PAYMENT OF RS. 59,00,000 / - WAS DISCLOSED BY THE SAID PER SON AND THEREFORE RS. 24,70,000 / - INVESTED IN THE PROPERTY REMAINED UNEXPLAINED. IN VIEW OF THIS THE A.O ADDED RS. 24,70,000/ -- T O THE INCOME OF THE ASSESSEE, WHICH WAS CONFIRMED BY THE LD. CIT(A). WE FIND THAT IT IS NOT IN DISPUTE THAT THE PROPERTIES IN QUESTION STANDS IN THE NAME OF 4 OR 5 PERSONS WHICH DOES NOT INCLUDE THE NAME OF THE ASSESSEE. FUR THER INVESTMENT OF RS. 59,00,000 / - WAS ACCEPTED BY THE REVENUE AS BEING MADE BY THESE PERSONS AND NO ADDITION IN RESPECT OF THAT AMOUNT WAS MADE IN THE HANDS OF THE ASSESSE E. AFTER ACCEPTING RS. 59,00,000 / - AS NOT INVESTED BY THE ASSESSEE, WE FIND NO GOOD REASON FOR THE REVENUE TO TAKE A DI FFERENT STAND IN R ESPECT OF BALANCE AMOUNT OF RS. 24,70,000 / - WITHOUT BRINGING ON RECORD ANY COGENT MATERIAL TO ESTABLISH THE SAME. WE FIND THAT NO INQUIRY WAS MADE BY THE A.O FROM ANY OF THE PERSON NAMED AS THE OWNER OF THE PROPERTY BY THE ASSESSEE OR FRO M THE BUILDER TO BRING ANY MATERIAL ON RECORD TO SHOW THAT THE INVESTMENT WAS MADE IN FACT BY THE ASSESSEE ONLY AND THE ABOVE PERSONS WERE MERE LY BENAMIDARS OF THE ASSESSEE. FURTHER, THE ASSESSEE ALSO EXPLAINED BEFORE THE LOWER AUTHORITIES THAT THE CASH P AYMENTS WERE ALSO PAID BY WITHDRAWING MONEY FROM NRE ACCOUNT OF THOSE PER SON WHO ARE THE OWNERS OF THE PROPERTY. WE FIND THAT NO MATERIAL WAS BROUGHT ON RECORD BY THE REVENUE TO REBUT THE ABOVE EXPLANATION OF THE ASSESSEE. IN OUR CONSIDERED OPINION, WHE N THE PROPERTIES IN QUESTION STANDS IN THE NAME OF THE PERSONS OTHER THAN THE ASSESSEE, THEN I CANNOT BE ASSUMED THAT ASSESSEE WOULD HAVE MADE ANY INVESTMENT THEREIN AND THE ONUS LIES UPON THE DEPARTMENT TO PROVE THAT INVESTMENT WAS ACTUALLY MADE BY THE AS SESSEE EVEN THOUGH, THE RESULTANT PROPERTY STANDS IN THE NAME OF SOME OTHER PERSONS. WE FIND THAT THE REVENUE HAS TAKEN NO STEPS IN THE I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 5 INSTANT CASE TO DISCHARGE THE ABOVE BURDEN AND SIMPLY HAS PRESUMED THAT PART OF MONEY IN RESPECT OF PROPERTIES IN QUESTI ON HAS BEEN PAID BY THE ASSESSEE. IN OUR CONSIDERED OPINION, SUCH A PRESUMPTION CANNOT BE SUSTAINED. WE THEREFORE, DELETE THE ADDITION OF RS. 24, 70,000/ - MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PROPERTIES AND ALLOW THE GROUND OF APPEAL OF THE ASSESSEE .' 5.7 IN VIEW OF HON'BLE ITAT'S DECISION IN THE CASE OF SHRI KAMAL GALANI, THERE IS NO BASIS TO HOLD THAT THE APPELLANT ACCEPTED CASH TO THAT EXTENT FROM SHRI KAMAL GALANI AND OTHER PERSONS AS PER DOCUMENT UNDER REFERENCE FOR SALE OF ITS FLATS IN SARJAN AND SHILAKEKH SCHEMES. IN VIEW OF THIS, THE ADDITION MADE BY THE ASSESSING OFFICER IS HEREBY DELETED. 5. LD. CIT(DR) WHILE IMPUGNING THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) HAS CONTENDED THAT ADDITION IN THE CASE OF K AMAL GALANI WAS DELETED BY THE ITAT ON THE GROUND THAT CASH PAYMENT WAS NOT MADE BY HIM RATHER IT WAS PAID BY THE BUYERS OF THE FLATS DIRECTLY AFTER WITHDRAWING MONEY FROM NRE ACCOUNT S OF THO S E PERSONS. T HUS , THE FACT OF CASH PAYMENT MADE TO THE ASSESSEE HAS BEEN ACCEPTED BY THE IT AT . T HEREFORE, ADDITIONS IN ITS HAND DESERVES TO BE MADE. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASS ESSEE RELIED UPON THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). 6. THE S EIZED MATERIAL INVENTO RISED AS ANNEXURE A - 6, A - 13 CONTAINING RELEVANT PAG ES 22,23 OF A - 6 AND 21,22 OF A - 13 ARE PRODUCED BEFORE US. ANNEXURE A - 13 IS TABLE/CHART . NAMES OF THE OWNER OF THE FLAT, AREA, PAID THROUGH BANK , UNDER THE HEADING CASH, SIMILAR NOTINGS ARE THERE BUT THEY ARE SCORED OFF. IT ALSO CONTAINS DETAILS OF COST, LEGAL CHARGES , ELECTRICITY CHARGES ETC. THIS PAYMENT OF RS. 59,85,700/ - HAS DULY BEEN ACCOUNTED BY THE A SSESSEE IN ITS BOOKS OF ACCOUNTS. THIS DETAILS ARE COMPILED IN A TABULAR FORM , WHO HAS COMPILED THESE DETAILS HAS NOT COME FORWARD , HOW IT I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 6 WILL INDIC ATE THE PAYMENTS IN CASH H AVE BEEN MADE OVER AND ABOVE THE TOTAL CONSIDERATION IS NOT DISCERNABLE. THE TOTAL CONSIDERATION COMPUTED IN THESE DETAILS HAVE DULY BEEN ACCOUNTED FOR. THE NEXT DOCUMENT IS A LETTER WRITTEN ON 9 TH DECEMBER 1997. IN THIS LETTER , BASIC COST HAS BEEN WORKED AT RS. 80,6,000/ - AFTER ADDING MAINTENANCE DEPOSIT THE TOTAL COST HAS BEEN WORKED OUT AT RS. 84,56,220/ - . THIS PAPER ALSO AGAIN DOES NOT TALK OF PAYMENT OF ANY AMOUNT IN CASH. IT ALSO SUGGEST S THAT IF CASH IS BEING PAID THE N CAS H RECEIPT WOULD BE GIVEN. NO ACTION HAS BEEN TAKEN IN THESE CASES OF THE PURCHASERS. I T HAS NOT BEEN COLLECTED , WHETHER THEY MADE THE PAYMENTS IN CASH TO THE ASSESSEE OR NOT? THE FINDING OF T HE TRIBUNAL (EXTRACTED ABOVE) IS THAT THERE IS NO EVIDENCE WIT H THE REVENUE INDICATING THAT SUM OF RS. 24,70,000/ - WAS EVER PAID TO THE AS SESSE E BY M/S GALANI DEVELOPERS. SIMIL ARLY, THERE IS NO EVIDENCE THAT ASSESSEE I S A SIGNATORY TO THE LETTER INDICATING THAT , IT AGREED FOR THE TOTAL SALE PRICE OF RS. 80,6,000/ - . THESE ARE THE CALCULATION MADE BY A THIRD PERSON AND ACCORDING TO HIS UNDERSTANDING . H OW ASSESSEE CAN BE HELD LIABLE FOR THE DETAILS COMPILED BY A THIRD PERSON AT HIS PREMISES. THE BUYERS HAVE NOT BEEN EXAMINED NOR ANY EVIDENCE EXHIBITING THAT PAYMENT WAS EVER MADE TO THE AS S ESSEE. THEREFORE, WE ARE OF THE VIEW THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DELETED THE ADDITION. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE. IT IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN COURT ON 16 - 06 - 2015 SD/ - SD/ - ( ANIL CHATURVEDI ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 16 /06 /2015 AK I.T (SS) .A NO. 319/AHD/2010 A.Y. BLOCK PERIOD PAGE NO ACIT VS. LABH CONSTRUCTION & INDUSTRIES LTD 7 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,