Shri Anil Sethi, Jabalpur V. Deputy Commissioner of Income Tax (Invest.), Central Circle, Jabalpur

ITSSA 34/JAB/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8022 (ITAT-JABALPUR)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 16-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P D CHOUGALE
• Assessee Lawyers: DR H S MODH
• Keywords: Unexplained investment; Search and seizure
• Section: 40A(3); 143(3); 153A; 69B; 132; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH , JABALPUR BEFORE SHRI A. D. JAIN, VICE PRESIDENT AND SHRI T. S. KAPOOR, ACCOUNTANT MEMBER IT (SS) A NO. 33, 40 & 34/JAB/2018 ASSESSMENT YEAR: 2009 - 10, 2010 - 11 & 2011 - 12 SHRI ANIL SETHI 78, ADARSH N AGARL JABALPUR V. DY. C.I.T. (INVESTIGATION) CENTRAL CIRCLE JABALPUR T AN /PAN : ALNPS1918D (APP ELL ANT) (RESPONDENT) APPELLANT BY: DR. H. S. MODH, ADVOCATE RESPONDENT BY: SHRI P. D. CHOUGALE, D.R. DATE OF HEARING: 02 04 201 9 DATE OF PRONOUNCEMENT: 03 04 201 9 O R D E R PER A. D. JAIN, V.P . : THIS IS ASSESSEES APPEAL AGAINST SEPARATE ORDERS OF THE LD. CIT(A) - 1, JABALPUR, ALL DATED 4/9/2018 FOR ASSESSMENT YEAR S 2009 - 10, 2010 - 11 & 2011 - 12. 2 . SINCE A SINGLE COMMON ISSUE IS INVOLVED IN THESE APPEALS, THESE APPEALS ARE BEING DISPOSED OF BY THIS COMPOSITE ORDER. THE FACTS, FOR CONVENIENCE, ARE BEING TAKEN FROM ITA NO.33/JAB/2018 . 3 . THE ADDITIONS OF RS.81,776/ - , FOR THE ASSESSMENT YEAR 2009 - 10, RS.3,87,517/ - , FOR THE ASSESSMENT YEAR 2010 - 11 AND RS.7,91,362/ - , F OR THE ASSESSMENT YEAR 2011 - 12 WERE MADE AS UNEXPLAINED INVESTMENT. 4 . THE FACTS ARE THAT I N THIS CASE , SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE INCOME - TAX ACT, 1961 WAS CARRIED OUT IN THE SAMDARIYA GROUP OF CASES ON 16/ 5 / 2013. CONSEQUENTLY, RESIDENCE OF THE ASSESSEE LOCATED AT 78, ADARSH NAGAR, NARMADA ROAD, JABALPUR WAS ALSO IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 2 OF 10 SEARCHED U/S 132 OF THE ACT. THE RETURN OF INCOME FILED ON 5/10/2015 U/S 153A AND DECLARING TOTAL INCOME OF RS.3,19,690/ - . THE ASSESSMENT WAS COMPLETED U/S 153 R.W. S 143(3) OF THE I. T. ACT ON A TOTAL INCOME OF RS. 2,40,016 / - ON 18/3/2016. THE A.O. OBSERVED AS FOLLOWS: - 11.3. THE ENTIRE INVESTMENT PAYMENT HAS BEEN MADE IN CASH. THE ASSESSEE WAS VIDE ORDER SHEET QUERY DATED 1 0 . 03.2016 , WAS ASKED TO EXPLAIN THE SOURCE OF SUCH INVESTMENT . THE ASSESSEE IN TURN PRODUCED CASH BOOK OF PROPRIETORSHIP CONCERN MILLENNIUM BUILDERS. CREDIBILITY OF THE CASH BOOK OF MILLENNIUM BUILDERS ITSELF IS QUESTIONABLE. FOLLOWING INFIRMITIES WERE NOTICED 1 . FOLLOWING PAYMENT HAVE BEEN MADE IN CONTRAVENTION OF SEC TION 40A(3) AS APPEARING IN TALLY ON THE DATE SEARCH. FROM 16.01.2010 TO 20.01.2010 CASH PAYMENT OF 20,000 / - EACH DAY, A) 03.04.2010 CASH PAYMENT RS.1,50,000 / - B) 03 . 04.2010 CASH PAYMENT RS.50,000 / - C) 07.04.2010 CASH PAYMENT RS.84,000 / - 2. ASSESSEE'S CAS H BOOK IS FICTITIOUS. WHENEVER THE ASSESSEE WANTS LIQUIDITY TO MAKE CASH PAYMENT, HE INTRODUCES MONEY THROUGH AGREEMENT OF SALE OF PLOTS. WHICH ARE NOT ACTUALLY BOUGHT OR SOLD. 3. ASSESSES THROUGH ITS OTHER FIRMS J.S. BUILDERS & TECHNOCRAT BUILDERS INTRODU CES CASH. THE MONEY IS THUS CIRCULATED AMONGST HIS OWN FIRMS & A CIRCULAR CASH TRAIL IS MADE. 4. WHEN BOOKS OF KRISHNA BUILDERS WERE EXAMINED, SHRI ANIL SETHI APPEARED UNDER 'ADVANCE BOOKING' ACCORDINGLY, BOTH KRISHNA BUILDERS & THE ASSESSEE WAS ASKED TO PRODUCE AGREEMENT, MOU, TERMS OF INVESTMENT, DETAILS OF ADVANCE BOOKING OR ANY OTHER DOCUMENTARY EVIDENCE OF SHARE IN INVESTMENT & RETURNS ON INVESTMENT THEREIN. NEITHER PARTY COULD PRODUCE ANY DOCUMENTARY EVIDENCE. IT IS HIGHLY IMPROBABLE THAT WHILE MAKIN G ENTIRE INVESTMENT IN CASH PARTIES DID NOT EVEN INTER INTO WRITTEN AGREEMENT. IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 3 OF 10 11.4 DURING THE COURSE OF ASSESSMENT PROCEEDING BOOKS OF ACCOUNT SUBMITTED BY THE ASSESSEE WE R E EXAMINED AND IT WAS FOUND THAT THE ASSESSEE HAS MADE CASH PAYMENT OF MORE THAN RS.20,000/ - IN CONTRAVENTION TO SECTION 40 A (3) OF THE ACT. DETAIL OF SUCH PAYMENT IS AS UNDER: S.NO. DATE OF PAYMENT RELEVANT A.Y. TO WHOM THE PAYMENT WAS MADE AMOUNT 1 11.04.2007 2008 - 09 M/S PRAGYA ENTERPRISES 220000/ - 2 20.04.2007 2008 - 09 SHRI ANANT ENTERPRISES 148000/ - 3 29.06.2007 2008 - 09 SATISH ARTS 25000/ - 4 05.09.2007 2008 - 09 MACHINERY 50000/ - 5 30.11.2007 2008 - 09 BHASKAR CABLE NETWORK 65000/ - TOTAL 508000/ - 11.5 THE AMOUNT OF INVESTMENT SHOWN IN THE YE AR 2011 - 12 BY THE ASSESSEE DOES NOT TALLY WITH THE AMOUNT AS MENTIONED IN THE ADVANCE BOOKING IN THE BOOKS OF KRISHNA BUILDERS. THE ASSESSEE WAS ASKED TO EXPLAIN SUCH DIFFERENCE. THE ASSESSEE COULD NOT PROVIDE ANY SATISFACTORY REPLY. 11.6 IN VIEW OF THE ABOVE DISCUSSION, COUPLED WITH THE FACT THAT, THE ASSESSEE'S INVESTMENT APPEARS INCREDULOUS, AS APPARENT FROM THE LEDGER IS SCANNED ABOVE. ADDITION U/S 69B IS MADE IN THIS CASE IN THE RELEVANT ASSESSMENT YEARS AS UNDER AS THE SOURCE OF INVESTMENT OFFERED B Y THE ASSESSEE IS NOT SATISFACTORY. 11.7 SINCE THE SOURCE OF INVESTMENT AS OFFERED BY THE ASSESSEE, IS NOT SATISFACTORY, HENCE ADDITION U/S 69B IS MADE IN HIS CAS E IN THE RELEVANT YEAR AS UNDER: ASTT YEAR DATED AMOUNT OF UNEXPLAINED INVESTMENT 2008 - 09 -- 4996568 2009 - 10 -- 81766 IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 4 OF 10 2010 - 11 -- 387517 2011 - 12 -- 791362 2012 - 13 OLD AMOUNT 1400000 3725000 2012 - 13 11.06.2011 2000000 2012 - 13 14.09.2011 200000 2012 - 13 29.09.2011 125000 TOTAL 9982213 5 . THE LD. CIT(A) CONFIRMED TH E ADDITION, HOLDING AS UNDER: 6.3.3. THIS GROUND OF APPEAL IS RELATED TO THE ADDITION OF RS.81,766/ - ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE AO MADE THE ADDITION BEC AUSE THE ASSESSEE WAS NOT ABLE TO EXPLAIN SATISFACTORILY THE SOURCE OF C ASH OF RS. 81,766/ - GIVEN TO M/S KRISHNA BUILDERS. 6.3.4 THE ID AR SUBMITTED THAT THE ASSESSEE HAD INVESTED MONEY IN KRISHNA BUILDER BY WITHDRAWING THE AMOUNT FROM BOOKS OF ACCOUNTS OF MILLENNIUM BUILDER. FOR THIS REASON THE AO WAS NOT JUSTIFIED IN TREATING CASH OF RS.81,766/ - GIVEN TO M/S KRISHNA BUILDERS AS UNEXPLAINED. 6.3.5 CONSIDERING THE FACT THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE ARE REJECTED, HENCE THE EXPLANATION OF THE ID AR WHICH IS BASED ON REJECTED BOOKS OF ACCOUNTS IS NOT ACCEPTABLE. ACCORD INGLY THE ADDITION OF RS.81,766/ - MADE BY THE AO IS CONFIRMED. IN RESULT THIS GR OUND OF APPEAL IS DECIDED AGAINST THE ASSESSEE. 6 . THE LD. A.R. OF THE ASSESSEE, AT THE OUTSET, HAS PLACED ON RECORD A COPY OF THE ORDER DATED 14/11/2017, PASSED BY THE JABALPUR BENCH OF THE TRIBUNAL, IN THE ASSESSEES OWN CASE, IN ITA NO.25/JAB/2016 AND C.O. NO.02/JAB/2017 , FOR ASSESSMENT YEAR 2008 - 09. THE LD. A.R. OF THE ASSESSEE HAS CONTENDED THAT THE ASSESSMENTS, IN IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 5 OF 10 ALL, ARE FOR SIX YEARS, I.E., ASSESSMENT YEARS 2008 - 09 TO 20 14 - 15 AND THAT THEY HAVE BEEN DECIDED BY THE A.O. BY A CONSOLIDATED ORDER DATED 18/3/2016; THAT THE APPEALS FOR ASSESSMENT YEARS 2008 - 09, 2012 - 13 AND 2013 - 14 AND CORRESPONDING CROSS OBJECTION S WERE DISPOSED OF BY THE TRIBUNAL BY VIRTUE OF THE SAID ORDER DA TED 14/11/2017; THAT FOR ASSESSMENT YEAR 2008 - 09 , THE TRIBUNAL HAS HELD AS FOLLOWS: - 7. WE HAVE PERUSED THE CASE RECORDS AND WE FIND THAT IN THE REMAND REPORT WHICH IS ANNEXED IN THE PAPER BOOK FILED BEFORE US IN PAGE ONO.23, THE A.O. IN THE REMAND REPORT HAS ACCEPTED THAT ENTRIES FOR INVESTMENT MAINTAINED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE CANNOT BE DENIED. THAT EVEN IN THE; ACCOUNT STATEMENT OF KRISHNA HEIGHT WHICH IS PART OF THE ASSESSMENT ORDER IN PAGE 7 IT IS CLEARLY REFLECTED THE AMOUNT OF PAYME NT AND CLOSING BALANCE. THAT WHEN THE DEPARTMENT HAS INVESTIGATED AND AGREED AS APPEARING IN THE REMAND REPORT THAT THE ENTRIES OF INVESTMENT IN BOOKS CANNOT BE DENIED AND WHICH IS ALSO EVIDENT IN THE ASSESSMENT ORDER THEREFORE IN SUCH CIRCUMSTANCES U/S.69 B NO ADDITION CAN BE CALLED FOR AND IT IS ABSOLUTELY UNWARRANTED. THAT IT IS ALSO ON RECORD THAT THE ASSESSEE HAS NOT MADE ANY PAYMENT IN CONTRAVENTION TO PROVISION OF SECTION 4 0A( 3) OF THE ACT AND THAT AS REGARDS THE CASH PAYMENT FOR PURCHASE, THE ASSESSE E S PURCHASES WERE A CCEPTED BY SALES TAX DEPARTMENT. WE HAVE ALREADY OBSERVED THAT THE ASSESSEE'S INVESTMENT IN KRISHNA HEIGHT IS PROPERLY REFLECTED IN THE BOOKS OF MILLENNIUM BUILDERS AND T H EREFORE WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION OF RS.49, 96,568/ - HAS BEEN RIGHTLY DELETED BY T HE LEARNED CIT(A) AND THE RELIEF GRANTED TO THE ASSESSEE IS HEREBY SUSTAINED. THIS GROUND OF APPEAL BY THE REVENUE IS DISMISSED AND THE C O BEING SUPPORTIVE OF THE LEARNED C.I.T.( A ) S ORDER BECOMES INFRUCTUOUS. 8. I N THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED AS INDICATED ABOVE. 9. THE SAME DECISION SHALL FOLLOW FOR ALL OT H ER APPEALS AND CROSS OBJECTION AS APPEARING IN THE CAUSE TITLE. IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 6 OF 10 7 . THE LD. A.R. OF THE ASSESSE E HAS CONTENDED THAT SINCE THE ASSESSMENT WAS MADE TOGETHER FOR ALL THESE ASSESSMENT YEARS, INCLUDING THE THREE ASSESSMENT YEARS PRESENTLY U NDER CONSIDERATION, A COMMON RE MAND REPORT WAS FURNISHED BY THE A.O. BEFORE THE LD. CIT(A) AND THAT THEREFORE, THE F INDING OF THE TRIBUNAL REGARDING THE A.O. HAVING ACCEPTED, IN THE REMAND REPORT , THE ENTRIES FOR INVESTMENT MA DE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, PERTAINING TO INVESTMENT IN KRISHNA HEIGHT /BUILDERS HAVING BEEN PROPERLY REFLECTED IN THE BOOKS OF MIL LENNIUM BUILDER S, BE TAKEN FOR THE YEAR UNDER CONSIDERATION PRESENTLY ALSO. 8 . THE LD. D.R., ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. 9 . HEARD. THE CONTENTION OF THE ASSESSEE IS FOUND TO BE CORRECT. THE TRIBUNAL, IN ITA NO.25/JAB/20 16 AND C.O. NO.02/JAB/2017, FOR ASSESSMENT YEAR 2008 - 09, VIDE ITS ORDER (SUPRA) DATED 14/11/2017, HAS RECORDED A CATEGORICAL FINDING OF FACT BASED ON THE A.O.S REMAND REPORT, THAT THE A.O., IN THE REMAND REPORT, HAS HIMSELF ACCEPTED THAT THE ENTRIES FOR I NVESTMENT MAINTAINED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE CANNOT BE DENIED. THE T RIBUNAL OBSERVED AND HELD THAT THE ASSESSEES INVESTMENT IN KRISHNA HEIGHT S /BUILDERS IS PROPERLY REFLECTED IN THE BOOKS OF MILLENNIUM BUILDERS AND THAT THEREFORE, THE ADDI TION HAD RIGHTLY BEEN DELETED BY THE LD. CIT(A). 10 . THE ASSESSEE HAS PLACED ON RECORD, A COPY OF THE REMAND REPORT DATED 26/9/2016, IN THE ASSESSEES OWN CASE, BEFORE US. THE ASSESSEE IS SHOWN TO HAVE INVESTED MONEY IN KRISHNA HEIGHT S /BUILDERS BY WITHDRAWING THE AMOUNT FROM THE BOOKS OF ACCOUNT OF MILLENNIUM BUILDERS. THE FINDING OF THE TRIBUNAL REGARDING ENTRIES FOR INVESTMENT MADE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE HOLDING STEADFAST AND REGARDING THE ASSESSEES INVESTMENT IN KRISHNA HEIGHT S /BUILDERS B EING IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 7 OF 10 PROPERLY REFLECTED IN THE BOOKS OF MILLENNIUM BUILDERS, REMAINS UNHI NGED . THEREFORE, THE OBSERVATION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE HIMSELF IS SQUARELY APPLICABLE TO ALL THE YEARS UNDER CONSIDERATION ALSO. 11 . THE ASSESSEE HAS ALSO FILED B EFORE US THE COP IES OF RECONCILIATION STATEMENT S SHOWING INVESTMENT IN KRISHNA HEIGHT S/BUILDERS IN THE BOOKS OF MILLENNIUM. FOR THE SAKE OF COMPLETENESS, SUCH RECONCILIATION STATEMENTS ARE BEING MADE AS PART OF THIS ORDER, AS FOLLOWS: IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 8 OF 10 IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 9 OF 10 THE AMOUNT O F INVESTMENT DECLARED IN KRISHNA HEIGHT S/BUILDERS TALLIES WITH THE INVESTMENT MADE IN THE BOOKS OF MILLENNIUM FOR THE RELEVANT YEAR. IT(SS)A NO.33, 40 & 34/JAB/2018 PAGE 10 OF 10 12 . IN VIEW OF THE ABOVE, FINDING THE GRIEVANCE OF THE ASSESSEE FOR ALL THE THREE ASSESSMENT YEARS UNDER CONSIDERATION TO BE JU STIFIED, THE SAME IS ACCEPTED. THE ORDERS UNDER APPEAL ARE REVERSED AND ALL THE THREE ADDITIONS MADE RESPECTIVELY FOR ASSESSMENT YEARS 2009 - 10 TO 2011 - 12, ARE DELETED. 13 . IN THE RESULT, ALL THE APPEALS ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03 / 0 4 /201 9 . SD/ - SD/ - [ T. S. KAPOOR ] [ A. D. JAIN ] ACCOUNTANT MEMBER VICE PRESIDENT DATED: 03 /0 4 / 201 9 JJ: 0204 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR