The ITO, Ward-2(4), Baroda V. M/s. Othello Developers, Baroda

ITSSA 356/AHD/2014

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3615 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 13-09-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 17-10-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S N SOPARKAR
• Keywords: Income from undisclosed sources; Document seized; Additional evidence; Documents seized
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) IT(SS)A. NOS: 356 & 357/AHD/2014 (ASSESSMENT YEARS: 2008-09 & 2009-10) INCOME TAX OFFICER, WARD- 2(4), BARODA V/S M/S. OTHELLO DEVELOPERS 402/2 & 402/3, 4 TH FLOOR, R K CENTRE, FATEHGANJ, BARODA (APPELLANT) (RESPONDENT) PAN: AABFO4301M APPELLANT BY : SHRI MUDIT NAGPAL, SR. D.R . RESPONDENT BY: SHRI S N.SOPARKAR & URVASHI SHODHA N ( )/ ORDER DATE OF HEARING : 27 -02-201 8 DATE OF PRONOUNCEMENT : 28 -02-2018 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. IT(SS)A NOS. 356 & 357/AHD/2014 ARE TWO SEPARATE AP PEALS BY THE REVENUE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)-IV, A HMEDABAD DATED 28.08.2014 PERTAINING TO A.Y. 2008-09 & 2009-10 . IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 2 2. SINCE THE FIRST APPELLATE AUTHORITY HAS DISPOSED TH ESE APPEALS BY A COMMON ORDER, BOTH THESE APPEALS WERE HEARD TOGETHER AND A RE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVIT Y. 3. THE COMMON GRIEVANCE IN BOTH THESE APPEALS RELATE T O THE LEVY OF PENALTY U/S. 271(1)(C) OF THE ACT AMOUNTING TO RS. 15.45 LACS IN A.Y. 2008-09 AND RS. 34.39 LACS IN A.Y. 2009-10 WHICH HAVE BEEN DELETED BY THE LD. CIT(A). 4. REPRESENTATIVES OF BOTH SIDES AGREED THAT THE UNDER LYING FACTS IN ISSUE ARE COMMON IN BOTH THE YEARS, THEREFORE, ON SUCH CONCES SION, WE HEARD THE APPEAL IN IT(SS)A NO. 356/AHD/2014. 5. THE ROOTS FOR THE LEVY OF PENALTY LIE IN THE ASSESS MENT ORDER DATED 28.03.2013 FRAMED U/S. 153A R.W.S. 143(3) OF THE ACT. A SEARCH OPERATION WAS CONDUCTED ON 09.04.2010 IN THE OTHELLO GROUP OF CASES WHICH ALSO INCLUDED THE ASSESSEE. IN RESPONSE TO THE NOTICE U/S. 153A OF THE ACT, THE ASSESSEE FILED A RETURN OF INCOME DECLARING INCOME AT RS. 56,52,440/- AS AGAIN ST INCOME OF RS. 6,52,440/- DECLARED IN THE RETURN OF INCOME FILED U/S. 139(1) OF THE ACT ON 28.09.2008. 6. THE A.O. WAS OF THE STRONG BELIEF THAT THE INCOME O F RS. 50 LACS DISCLOSED IN THE RETURN FILED PURSUANT TO THE NOTICE U/S. 153A O F THE ACT WHICH WAS ONLY DUE TO THE SEARCH OPERATION CONDUCTED AT THE PREMISES O F THE ASSESSEE GROUP, THE ASSESSEE HAS CONCEALED THE INCOME TO THIS EXTENT AN D PROCEEDED BY LEVYING PENALTY U/S. 271(1)(C) OF THE ACT. 7. BEFORE THE LD. CIT(A), THE ASSESSEE STRONGLY CONTEN DED THAT EXPLANATION 5A TO SECTION 271(1)(C) OF THE ACT IS NOT AT ALL APPLICAB LE ON THE FACTS OF THE CASE. THE IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 3 ASSESSEE EXPLAINED THAT THE ADDITIONAL INCOME DISCL OSED IN THE RETURN U/S. 153A OF THE ACT WAS NOT BASED ON ANY SPECIFIC SEIZED MAT ERIAL. AT THE INSTANCE OF THE FIRST APPELLATE AUTHORITY, THE ASSESSEE ALSO FILED AN AFFIDAVIT DATED 27.08.2014. 8. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) WAS CONVINCED THAT EXPLANATION 5A IS NOT APPLICABLE ON THE FACTS OF THE CASE AND DRAWING SUPPORT FROM THE DECISION OF THE TRIBUNAL IN ITA NO . 1287/RJT/2010 AND 129/RJT/2010. THE LD. CIT(A) HELD THAT PENALTY LEVI ED BY THE A.O. IS NOT JUSTIFIED AND DELETED THE PENALTY FOR BOTH THE YEAR S. 9. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. THE LD . D.R. STRONGLY SUPPORTED THE FINDINGS OF THE A.O. IT IS THE SAY OF THE LD. D.R. THAT BY ACCEPTING THE AFFIDAVIT OF THE ASSESSEE AT THE APPELLATE STAGE. THE LD. CIT (A)HAS VIOLATED RULE 46A OF THE I.T. RULES AND THEREFORE THE SAME SHOULD NOT BE CONSIDERED. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY STATED THAT THE ENTIRE ISSUE REVOLVES AROUND WHETHER EXPLANATION 5A IS APPLICABLE ON THE FACTS OF THE CASE OR NOT. IT IS THE SAY OF THE LD. COUNSEL THAT IF THE STATEMENT OF THE ASSESSEE RECORDED AT THE TIME OF SEARCH IS TO BE CONSIDERED THEN IT CAN BE S EEN THAT THERE IS NO REFERENCE TO F.Y. 2007-08 & F.Y. 2008-09, THE IMPUGNED YEARS UNDER APPEAL. THE LD. COUNSEL PLACED RELIANCE ON THE SAME JUDGMENTS OF TH E TRIBUNAL WHICH WERE RELIED UPON BY THE LD. CIT(A). 10. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. LET US FIRST EXAMINE EXPLANATION 5A TO SECTI ON 271(1)(C) OF THE ACT AND THE SAME IS AS UNDER:- EXPLANATION 5A,- WHERE IN THE COURSE OF A SEARCH I NITIATED UNDER SECTION 132 ON OR AFTER THE 1 ST DAY OF JUNE, 2007, THE ASSESSEE IS FOUND TO BE THE OWNER OF, - IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 4 (I) ANY MONEY MULLION, JEWELLERY OR OTHER VALUABLE ARTI CLE OR THING (HEREINAFTER IN THIS EXPLANATION REFERRED TO AS ASSETS) AND THE ASSESSEE CLAIMS THAT SUCH ASSETS HAVE BEEN ACQUIRED BY HIM BY UTILIZING (WHOLLY OR IN PART) HI S INCOME FOR ANY PREVIOUS YEAR; OR (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOU NT OR OTHER DOCUMENTS OR TRANSACTIONS AND HE CLAIMS THAT SUCH ENTRY IN THE B OOKS OF ACCOUNT OR OTHER DOCUMENTS OR TRANSACTIONS REPRESENTS HIS INCOME (WHOLLY OR IN PART) FOR ANY PREVIOUS YEAR, WHICH HAS ENDED BEFORE THE DATE OF THE SEARCH AND T HE DUE DATE FOR FILING THE RETURN OF INCOME FOR SUCH YEAR HAS EXPIRED AND THE ASSESSEE HAS NOT FILE D THE RETURN, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY HIM IN ANY RETURN OF INCOME F URNISHED ON OR AFTER THE DATE OF SEARCH, HE SHALL FOR THE PURPOSES OF IMPOSITION OF A PENALTY U NDER CLAUSE OF SUB-SECTION(1) OF THIS SECTION, BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF HIS INCOME OR FURNISHED INACCURATE PARTICULARS OF SUCH INCOME. 11. A PERUSAL OF THE ABOVE SHOW THAT THE CONDITIONS PRE CEDENT FOR INVOKING EXPLANATION 5A ARE (I) THE ASSESSEE IS FOUND TO BE THE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG AND (II) ANY INCOME BASED ON ANY ENTRY IN ANY BOOKS OF ACCOUNTS OR OTHER DOCUMEN TS OR TRANSACTIONS FOUND DURING THE COURSE OF SEARCH, THEN, NOTWITHSTANDING THAT SUCH INCOME IS DECLARED BY THE ASSESSEE , HE SHALL FOR THE PURPOSES OF IMPO SITION OF A PENALTY BE DEEMED TO HAVE CONCEALED THE PARTICULARS OF INCOME OR FURN ISHED INACCURATE PARTICULARS OF THE INCOME. 12. IN THE LIGHT OF THE ABOVE, LET US NOW CONSIDER THE OPERATIVE PART OF THE ASSESSMENT ORDER AND THE SAME READS AS UNDER:- 4.1. IT WON'T BE OUT OF PLACE TO MENTION HERE THAT DURING THE COURSE OF SEARCH AS WELL AS POST SEARCH INQUIRIES, SHRI CHIMAN DEDHIA, PARTNER AND MAIN PERSON OF THE GROUP WHO LOOKS AFTER ALL THE BUSINESS ACTIVITIES O F THE GROUP, IN HIS STATEMENT U/S 132(4) ADMITTED THE MODUS OPERAND! OF CHARGING ON M ONEY FROM THE CUSTOMERS AND BASED ON SEIZED DOCUMENTS AND EVIDENCES, HAD AD MITTED TOTAL UNDISCLOSED IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 5 INCOME OF RS.10 CRORES ON ACCOUNT OF 'ON MONEY' FOR VARIOUS YEARS WHICH INCLUDE DISCLOSURE OF RS. 50,00,000/- FOR THE YEAR UNDER CO NSIDERATION. THE INCOME SO DISCLOSED HAS NOW BEEN INCLUDED AND OFFERED FOR TAX ATION IN THE RETURN OF INCOME FILED U/S 153A. ACCORDINGLY, I AM SATISFIED THAT TH E ADDITIONAL INCOME NOW OFFERED FOR TAXATION IN THE RETURN OF INCOME FILED U/S 153A REPRESENT THE UNDISCLOSED INCOME OF THE ASSESSEE. THEREFORE, PENALTY PROCEEDINGS U/S 271(1)(C) OF THE /APT ARE INITIATED SEPARATELY FOR CONCEALMENT OF INCOME OF RS. 50,00,000/-. 13. IT CAN BE SEEN FROM THE ABOVE THAT THERE IS NO REFE RENCE TO ANY MONEY, BULLION, JEWELLERY OR ARTICLE FOUND AT THE TIME OF SEARCH NO R THERE IS ANY REFERENCE TO ANY ENTRY IN THE BOOKS OF ACCOUNTS. 14. LET US NOW SEE WHETHER THERE IS ANY REFERENCE TO AN Y SEIZED MATERIAL FOUND DURING SEARCH REFLECTING COLLECTION OF ON-MONEY BY THE APPELLANT. THE RELEVANT QUESTION OF THE STATEMENT RECORDED U/S. 132(4) OF T HE ACT ARE AS UNDER:- QTN. 8 PLEASE EXPLAIN THE MODUS OPERAND! OF SALE OF UNITS PER SQUARE FEET OR UNIT WISE SALE. PLEASE A/SO STATE WHETHER THE CASH IS ALSO RE CEIVED ALONGWITH CHEQUE AMOUNT? PLEASE ALSO STATE WHETHER THE CASH RECEIPT IS ACCOUNTED OR NOT? ANS. 8 IN THIS BU SINESS IT IS A NORMAL TREND THAT SALE IS MADE IN CHEQUES AND CASH BOTH. TO ACCOMMODATE CUSTOMER, UNACCOUNTED CASH IS RECEIVED WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNTS AND FOR WHICH NO RECEIPTS HAV E BEEN ISSUED. TO ACCOMMODATE CUSTOMER IN SOME CASES UNACCOUNTED CASH IS RECEIPT. THE CASH RECEIPTS ARE NOT REFLECTED IN THE SALE DEED DOCUMEN TS. WE ARE IN PRACTICE TO PREPARE TWO TYPE OF DOCUMENTS I.E. ONE FOR SALES OF LAND AND ANOTHER FOR PROVIDING EXTRA AMENITIES. HOWEVER, NO SUCH AMENITIES PROVIDE D TO THE CUSTOMERS. MEANING BY THAT THE AMOUNT REFLECTED IN SUCH EXTRA AMENITIE S AGREEMENT IS OUR PROFIT. QTN. 9 HOW MANY PROJECT YOU HAVE COMPLETED AND UNDER COMPL ETION IN WHICH THE ABOVE MODUS-OPERANDI OF UNACCOUNTED INCOME ACCEPTED AND E XTRA AMENITIES AGREEMENT EXECUTED? PLEASE ALSO STATE THE PROFIT MARGIN PER S QUARE FEET IN RESIDENTIAL AND COMMERCIAL PROJECTS? ANS. 9 OUR PROJECTS AADI AKOTA, AADI POINT, AADI VISTA, AR HAM ABD NUGGET ARE FULLY COMPLETED IN THE F.Y. 2009-10. THE PROJECT NAUTILUS AND ARHAM ENCLAVE ARE UNDER GOING ON AND BOOKING ARE GOING ON. IN THE COMPLETED PROJECTS APPROX. 55000 SQ. FT. CONSTRUCTION AREA HAS BEEN SOLD. IN THE RUNNING PRO JECTS NAUTILUS CONSTRUCTION AREA IS AROUND 1.55 LACS SQ. FT. OUT OF WHICH AROUND 50, 000 SQ. FT. HAS BEEN BOOKED IN F.Y. 2009-10. I HAVE ALSO SOLD LAND IN THE F. Y 2009-10 IN WHICH UNACCOUNTED CASH WERE RECEIPTS. AS PROJECT OF WHOLE IN ALL THE PROJECTS MY UNACCOUN TED INCOME IN COMPLETE PROJECTS IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 6 ON SOLD UNITS OF RUNNING PROJECT TILL F.Y. 2009 - 10, THE UNACCOUNTED INCOME EARNED INCLUDING SALE OF LAND RS.5 CRORES. I VOLUNTARILY D ISCLOSED UNACCOUNTED INCOME OF RS.5 CRORES UPTO F.Y. 2009-10 IN ALL COMPLETED IN R UNNING PROJECT BOOKED UNITS AND LAND. / ALSO STATE THAT IN CURRENT FINANCIAL YEAR I.E. F. Y. 2010-11 AS THE MARKET CONDITIONS ARE BETTER AND POSSIBILITIES OF BOOKING OF UNITS UN DER RUNNING PROJECTS / EXISTING PROJECTS; MY FURTHER UNACCOUNTED INCOME OF RS.5 CRO RE WILL BE EARNED AND I WILL PAY DUE TAXES ON IT. AS THE BOOKING TREND IS THE SAME A S IT WAS IN THE LAST FINANCE YEAR AND TO GET FAST BOOKING, WE HAVE TO ACCOMMODATE CUS TOMERS. THEREFORE, CONSIDERING THE FACTS I VOLUNTARILY DISCLOSE RS. 5 CRORES FOR FY 2009-10 AND AMOUNT OF RS.5 CRORES FOR CURRENT FINANCIAL YEAR I.E. 2010 -11. THE AMOUNT OF UNACCOUNTED INCOME ADMITTED DURING SEARCH PROCEEDING IS MADE VE RIFICATION OF RECORDS AND AFTEP CONSULTING MY PARTNERS / DIRECTORS OF RESPECT IVE FIRM / COMPANIES I WILL FURNISH THE FIRM / COMPANY WISE OR PROJECT WISE DET AILS AFTER VERIFICATION OF MY ACCOUNTS AND RECORDS. 15. THE BIFURCATION OF THE DISCLOSURE AS EXHIBITED ON P AGE 10 OF THE PAPER BOOK IS AS UNDER:- FINANCIAL YEAR TOTAL AREA SOLD/BOOKED (SQ. FT.) MAX PRICE S/SFT. (RS.) 06- 07 07- 08 08- 09 09- 10 06- 07 07- 08 08- 09 09- 10 SR. NO . PROJECT A1 A2 A3 A4 TOTAL P1 P2 P3 P4 A1XP1+A2XP2 (RS) TOTAL AMOUNT AS PER BOOKS (RS.) DIFFERENC E (RS) 1 AADI AKOTA 290 0 6010 0 1200 10110 101 1 218 7 0 319 3 19909406 17565128 2344278 2 AADI POINT 0 0 0 2005 2005 0 0 0 122 7 2460000 2066500 393500 3 AADI VISTA 0 1155 9 0 4648 16207 0 229 8 0 239 5 3796983 33099882 4868101 4 ARHAM 0 1738 2847 6952 11537 0 121 8 174 5 190 8 20349819 18239500 2110319 5 NAUTILU S 0 0 2739 7 3242 5 59822 0 0 190 7 197 8 116390667 92358582 2430208 5 6 NAUTILU S E3 0 0 0 9520 9520 0 0 0 237 7 22632500 219 82500 650000 7 PARAM PROJECT 0 0 0 4200 4200 0 0 0 186 9 7851000 7600000 251000 8 ARHAM ENCLAV E 0 2998 2408 4 27082 0 108 2 173 6 451839650 37381402 7802558 TOTAL 290 0 1930 7 3324 2 8503 4 14048 3 272745335 23029349 4 4245184 1 YEAR WISE AMOUNT DISCLOSED AY 2008-09 5000000 AY 209-10 10000000 AY 2010-11 35000000 TOTAL 50000000 IT(SS)A NOS. 356 & 357/AHD/2014 . A.YS. 2008-0 9 & 2009-10 7 16. A PERUSAL OF THE STATEMENT RECORDED 132(4) OF THE A CT AS EXHIBITED HEREINABOVE SHOW THAT THE ASSESSEE HAS VOLUNTARY DISCLOSED UNA CCOUNTED INCOME OF RS. 5 CRORES FOR F.Y. 2009-10 AND HAS FURTHER MADE ADDITI ONAL DISCLOSURE OF RS. 5 CRORES FOR F.Y. 2010-11. THUS, THERE IS NO REFERENC E/DISCLOSURE IN THE STATEMENT RECORDED RELATING TO F.Y. 2007-08 & 2008-09. 17. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF T HE RELEVANT PROVISIONS OF THE ACT, IN OUR CONSIDERED OPINION, THE A.O. HAS IMPOSE D PENALTY WITHOUT REFERRING TO ANY SPECIFIC MATERIAL POINTING OUT TOWARDS INCRI MINATING EVIDENCE LEADING TO ANY UNDISCLOSED INCOME IN ASSESSEES HAND, THEREFOR E EXPLANATION 5A IS NOT AT ALL APPLICABLE. THEREFORE, WE DO NOT FIND ANY REAS ON TO THE INTERFERE WITH THE FINDINGS OF THE LD. CIT(A). BOTH THE APPEALS ARE AC CORDINGLY ALLOWED. 18. BEFORE CLOSING, AS POINTED OUT ELSEWHERE, THE LD. D .R. HAS STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE IN VIOLATI ON OF RULE 46A OF THE I.T. RULES. WE FIND NO FORCE IN THIS CLAIM OF THE D.R. B ECAUSE EXHIBIT 43, WHICH IS A REPLY FILED BEFORE THE LD. CIT(A), SHOWS THAT THE A SSESSEE HAS FILED THE AFFIDAVIT AS DIRECTED BY THE LD. CIT(A). THEREFORE, THERE IS NO VIOLATION OF RULE 46A BECAUSE IT IS COVERED BY CLAUSE (4) OF RULE 46A. ORDER PRONOUNCED IN OPEN COURT ON 28 - 02- 20 18 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 28 /02/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT.