M/s. Savvy Construction Co., Ahmedabad V. The Dy.CIT.,Cent.Circle-1(3), Ahmedabad

ITSSA 682/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0049 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 18-02-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 06-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T P KRISHNA KUMAR
• Assessee Lawyers: P M MEHTA
• Keywords: Income from undisclosed sources; Loose papers
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL C HATURVEDI, A.M.) I.T.(SS) A. NO. 682 /AHD/2010 (ASSESSMENT YEAR: 2004-05) M/S SAVVY CONSTRUCTION CO. 9 TH FLOOR, SHAPATH-IV, OPP. KARNAVATI CLUB, S.G. ROAD, AHMEDABAD V/S DCIT CENTRAL CIRCLE-1(3), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AAPFS 9044R APPELLANT BY : SHRI P.M. MEHTA RESPONDENT BY : SHRI T.P. KRISHNAKUMAR, CIT D .R. ( )/ ORDER DATE OF HEARING : 18-02-201 4 DATE OF PRONOUNCEMENT : 07 -03-2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF CIT(A)-I, AHMEDABAD DATED 27.07.2010 FOR A.Y. 2004-05. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. IN THIS CASE, A SEARCH OPERATION UNDER SECTION 132( 2) WAS CONDUCTED IN THE CASE OF SAVVY GROUP ON 14.02.2007 AND VARIOUS D OCUMENTS, BOOKS OF ACCOUNTS AND OTHER THINGS WERE FOUND AND SEIZED FRO M VARIOUS PREMISES. IN THE CASE OF ASSESSEE ALSO, A SEARCH WARRANT WAS ISSUED AND EXECUTED IT(SS)A NO 682/AHD/2010 . A.Y. 2004-0 5 2 ON 14.02.2007 AND NOTICE UNDER SECTION 153A WAS ISS UED ON 27.02.2008 AND SERVED ON ASSESSEE. IN RESPONSE TO IT ASSESSEE FILED ITS RETURN OF INCOME ON 26.05.2008 DECLARING TOTAL INCOME OF RS. 32,02,910/-. THE ASSESSMENT WAS THEREAFTER FRAMED UNDER SECTION 153A R.W.S. 143(3) VIDE ORDER DATED 31.12.2008 AND THE TOTAL INCOME WAS DET ERMINED AT RS. 49,02,910/-. AGGRIEVED BY THE ORDER OF A.O., ASSES SEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 27.07.2010 D ISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING EFFEC TIVE GROUND:- 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 1 OF THE APPELLANT'S APPEAL BEFORE HIM CHALLENGING THE VALIDITY OF THE ASSESSMENT ORDER IMPUGNED BEFORE HIM. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 17,00,000 MA DE TO THE APPELLANT'S RETURNED INCOME ON THE BASIS OF SOME JOTTINGS ON THE BACK SIDE OF A PAPER SEIZED DURING OPERATIONS U/S. 132. HE OUGHT TO HAVE APPRECIATED, INTER ALIA,: (A) THAT IT WAS THE ADMITTED POSITION THAT THE JOTTINGS ON THE SEIZED PAPER WERE MADE ON 5 TH MARCH, 2003 AND BEING SUCH, THEY COULD NOT BE USED TO SUPPORT A SUGGESTION THAT THE APPELLANT HAD RECEIVED CASH AMOUNTING TO RS. 17 LACS AFTER THE SAID DATE V IZ., 5.3.2003; (B) THAT EVEN AS OFFICES BEARING NOS, 204 AND 205 W ERE SOLD TO SHRI YOGESHBHAI LAKHANI WHOSE NAME APPEARED AT THE TOP OF THE PAPER, THE DETAILS OF TH E ACTUAL TRANSACTION IN RELATION TO THOSE OFFICES INCLUDING THEIR MEASUREMENTS AND THE SCHEDULE OF PA YMENTS ETC. SHOWED THAT THE JOTTINGS IN THE SEIZED PAPER WERE ONLY ROUGH AND WIDELY OFF THE MARK; (C) THAT THE IMPUGNED ADDITION HAD BEEN MADE MERELY ON THE BASIS OF A PRESUMPTION AND WITHOUT ONCE ATTEMPTING TO CONTACT SHRI YOGESHBHAI LAKHANI WITH A VIEW TO CROSS-VERIFYING WITH HIM THE INTERPRETATION OF THE RECORD WHICH THE LEARNED ASSE SSING OFFICER HAD CONVENIENTLY SOUGHT TO PLACE. GROUND NO. 1 WAS NOT PRESSED AND THEREFORE THE SAME IS DISMISSED AS NOT PRESSED. GROUND NO. 2 AND ITS SUB GROUNDS ARE WITH RESPECT T O ADDITION OF RS. 17 LAC MADE BY THE A.O. AND UPHELD BY CIT(A). 4. DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREM ISES OF SHRI SAMIR SINHA, ONE OF THE PARTNERS OF THE ASSESSEE, CERTAIN DOCUMENTS WERE FOUND IT(SS)A NO 682/AHD/2010 . A.Y. 2004-0 5 3 AND SEIZED. PAGE NO. 220 OF ANNEXURE-A1 BACK SIDE C ONTAINED CERTAIN TRANSACTIONS AND THE DATE APPEARING ON IT WAS 5 TH MARCH, 2003. IT CONTAINED RECEIPTS IN CASH AS WELL AS CHEQUE UP TO 16 TH JUNE. THE ASSESSEE WAS ASKED TO EXPLAIN THE TRANSACTION. TH E ASSESSEE INTERALIA SUBMITTED THAT THE NOTINGS WAS IN CONNECTION WITH A N ORAL DISCUSSION AND PROPOSAL FOR THE PURCHASE UNIT 204, 205 IN PROJECT KNOWN AS SAPATH-III WHICH SHRI YOGESHBHAI LAKHANI WHO WAS INTERESTED IN PURCHASING ALONG WITH TERRACE RIGHTS FOR RUNNING A PLAY HOUSE FOR SM ALL CHILDREN. THE DEAL HOWEVER DID NOT CULMINATE AND SHRI YOGESHBHAI ONLY BROUGHT TWO UNITS WITHOUT ANY EXCLUSIVE RIGHT OF THE TERRACE. AS THE TERRACE RIGHTS WERE NOT GIVEN TO SHRI YOGESHBHAI, ONLY THE ACTUAL PRICE WIT H REFERENCE TO TWO UNITS WERE RECOVERED AND REFLECTED IN BOOKS OF ACCOUNTS. THE ASSESSEE ALSO SUBMITTED THAT THE NOTINGS WERE ROUGH WORKING PROBA BLY NOTED DURING THE COURSE OF DISCUSSION OF THE TENTATIVE TERMS OF PAYM ENT AND THE TENTATIVE PERIOD IN WHICH THE PAYMENT REQUIRED TO BE MADE. T HE SUBMISSION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE TO THE A.O. HE CON CLUDED THAT SINCE THE DOCUMENT CONTAINS AMOUNT RECEIVED UP TO 15 TH JUNE SHOWING CHEQUE OF RS. 6 LAC AND CASH OF 17 IMPLYING THAT RS. 6 LAC HAD BEEN RECEIVED BY CHEQUE AND 17 LAC RECEIVED IN CASH AND THEREFORE TH E ASSESSEE HAS RECEIVED THE PAYMENT UP TO 15 TH JUNE, 2003. HE THEREFORE CONSIDERED THE ALLEGED CASH RECEIPTS OF RS. 17 LACS TO BE UNEXPLAI NED RECEIPT AND ACCORDINGLY CONSIDERED IT TO BE UNACCOUNTED INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O., ASSESSEE CARRIED TH E MATTER BEFORE CIT(A). CIT(A) DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER:- 3.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE ABOVE SUBMISSIONS. IT IS SEEN' THAT THE A.O. HAS REFERRED TO A LOOSE PAPER FOUND FROM THE RESIDENCE OF SAMIR SINHA WHICH IS DATED 5-3-2003. ON THIS LOOSE PAPER, HE HAS NOTICED THAT THERE WAS A NOTING ABOUT CHEQUE - 6.0 AND CSH (CASH) - 17. IT IS, THEREFORE, STATED THAT IT IMPLIES THAT RS.6 LAKH HAS BEEN RECEIVED BY CHEQUE AND RS.17 LAKH HAS BEEN RECEIVED BY CASH. IT IS ALSO NOTICED THAT THE PREMI SES IN QUESTION (I.E. UNIT NO. 204 AND 205 OF THE BUILDING) HAVE ACTUALLY BEEN SOID TO MR. LAKHANI. A NY NOTINGS MADE IN A DOCUMENT HAS TO BE SEEN IN TOTALITY. THE FACT REMAINS THAT THE PREMISES IN QU ESTION (I.E. UNIT NO.204 AND 205) HAVE BEEN SOLD TO MR. LAKHANI. WHEN A NOTING ON A 'DOCUMENT' HAS BEEN FOUND TO BE CORRECT, THEN, THESE IS STRONG IT(SS)A NO 682/AHD/2010 . A.Y. 2004-0 5 4 PREPONDERANCE OF PROBABILITY THAT THE OTHER NOTINGS MADE ON THE SAME 'DOCUMENT' IS ALSO CORRECT. NORMALLY, THERE CANNOT BE ANY DIRECT EVIDENCE OF SU CH CASH TRANSACTIONS. BUT, CIRCUMSTANTIAL EVIDENCES CLEARLY POINT OUT THAT THE NOTINGS RELATED TO CASH TRANSACTION IS CORRECT. THEREFORE, WHEN THE EVIDENC E (I.E. SEIZED PAPER) IS EXAMINED IN TOTALITY, IT IS APPARENT THAT THE APPELLANT HAS ACTUALLY CHARGED 'UNACCOUNTED CASH' IN THE TRANSACTION WITH MR. LAKH ANI. IN VIEW OF ABOVE, I AM OF THE OPINION THAT ADDITION OF RS.17.00 LACS ON THIS ISSUE IS FULLY JU STIFIED AND SAME IS CONFIRMED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS N OW IN APPEAL BEFORE US. BEFORE US, THE LD. A.R. SUBMITTED THAT THE NOT INGS ON THE LOOSE PAPERS WERE ROUGH AND WAS NOT HAVING ANY RELEVANCE IT WAS THE NOTINGS MADE AT THE TIME OF DISCUSSION WITH THE TENTATIVE CUSTOMER REGARDING TERMS OF PAYMENT. IT WAS SUBMITTED THAT THE ASSESSEE WAS HA VING DISCUSSION WITH YOGESHBHAI LAKHANI FOR PURCHASE OF UNIT NO. 204 & 2 05 IN RESPECT OF SCHEME SHAPATH 3. MR. LAKHANI WAS INTERESTED IN HAV ING TERRACE RIGHTS ALONG WITH THE PURCHASE OF UNITS. THE DEAL HOWEVER DID NOT CULMINATE AND THE ASSESSEE PURCHASED ONLY 2 UNITS WITHOUT ANY TER RACE RIGHTS AND THEREFORE THE ROUGH NOTINGS WHICH WERE THE NOTINGS REGARDING THE TERMS OF PAYMENT AND TENTATIVE TERMS OF PAYMENT WAS NOT H AVING ANY RELEVANCE. HE FURTHER SUBMITTED THAT A DISCLOSURE OF RS. 2 CRORE WAS MADE BY ASSESSEE FOR A.Y. 07-08 WHERE AS THE NOTINGS SHO WED PAYMENT UP TO 15 TH JUNE, 2003 AND THEREFORE DISCLOSED AMOUNT ALREADY COVERS THE AMOUNT SHOWN IN SUCH NOTINGS ALSO. 6. BEFORE US, THE LD. A.R. FURTHER SUBMITTED THAT A.O. HAS MADE ADDITION WITHOUT BRINGING ON RECORD ANY CORROBORATIVE MATERI AL TO PROVE THAT THE SAID CASH TRANSACTION HAD ACTUALLY TAKEN PLACE AND RS. 17 LAC WAS RECEIVED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS. HE F URTHER SUBMITTED THAT THE A.O. HAD NOT EXAMINED THE PURCHASER SHRI YOGESH BHAI LAKHANI TO WHOM SUCH UNITS WERE SOLD. HE FURTHER SUBMITTED THA T EVEN DURING THE TIME OF SEARCH NO STATEMENT OF THE ASSESSEE WITH RE SPECT TO THE AFORESAID RECEIPT WAS RECORDED BY THE A.O. HE FURTHER PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT VS. MAULIK KUMAR SHAH R EPORTED IN 307 ITR 137. HE THUS SUBMITTED THAT THE ADDITION HAS BEEN MA DE BY A.O. WITHOUT IT(SS)A NO 682/AHD/2010 . A.Y. 2004-0 5 5 BRINGING ANY MATERIAL ON RECORD AND THEREFORE THE A DDITION MADE BY A.O. BE DELETED. 7. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT IN VI EW OF THE PROVISIONS OF CONTAINED IN SECTION 132(4A) AND 292C, THE PRESUMPT IONS IS THAT THE DOCUMENTS/BOOKS OF ACCOUNTS BELONGS TO THE PERSON F ROM WHOM THE DOCUMENTS HAVE BEEN FOUND AND THE SAME HAS TO BE RE BUTTED BY THE ASSESSEE. HE THEREFORE SUBMITTED THAT IN THE ABSENC E OF REBUTTAL BACKED BY TANGIBLE EVIDENCE, THE ORDER OF A.O. AND CIT(A) NEEDS TO BE UPHELD. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ADDITION OF RS. 17 LACS HAS BEEN M ADE ON THE BASIS OF LOOSE PAPER, THE COPY OF WHICH IS PLACED AT PAGE 29 OF THE PAPER BOOK. WE ALSO FIND THAT NO STATEMENT OF ASSESSEE WAS RECO RDED AT THE TIME OF SEARCH WITH RESPECT TO THE AFORESAID CASH RECEIPTS. FURTHER, THE A.O. HAD ALSO NOT EXAMINED THE PURCHASER SHRI YOGESHBHAI LAK HANI TO WHOM THE SAID UNIT WAS SOLD AND FROM WHOM THE ALLEGED CASH O F RS. 17 LACS IS SAID TO HAVE BEEN RECEIVED BY ASSESSEE. BEFORE US, THE LD. A.R. SUBMITTED THAT THE NOTINGS WERE WITH RESPECT TO THE TENTATIVE DISC USSION HELD WITH YOGESHBHAI LAKHANI FOR THE PURCHASE OF UNITS WHICH ULTIMATELY DID NOT CULMINATE. WE FIND THAT THE AFORESAID CONTENTION H AS NOT BEEN CONTROVERTED BY REVENUE BY BRINGING ANY TANGIBLE MA TERIAL ON RECORD AND THE ADDITION HAS BEEN MADE ON THE BASIS OF THE NOTI NGS FOUND AT THE TIME OF SEARCH. WE ALSO FIND THAT IN THE CASE OF MAULIK KUMAR SHAH (SUPRA) THE HONBLE GUJARAT HIGH COURT HAS HELD AS UNDER:- 'EVIDENCE IN THE SEIZED DIARY FOUND FROM THE PREMIS ES WHEREIN THE ONLY MATERIAL ON THE BASIS OF WHICH THE A.O. HAD MADE THE IMPUGNED ADDITIONS. THE A.O. HAD NOT BROUGHT ANY CORROBORATIVE MATERIAL ON RECORD TO PROVE THAT SUCH SALES WERE MADE AND ON-MO NEY WAS RECEIVED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. THE A.O. HAD NOT EXAMINED ANY PUR CHASER TO WHOM THE SALES OF SHOPS WERE EFFECTED. ONUS HEAVILY LIES ON THE REVENUE TO PROVE IT WITH C ORROBORATIVE EVIDENCE THAT THE ENTRIES IN THE SEIZE D DIARY ACTUALLY REPRESENTED THE SALES MADE BY THE AS SESSEE. SUCH ONUS HAD NOT BEEN DISCHARGED BY THE IT(SS)A NO 682/AHD/2010 . A.Y. 2004-0 5 6 REVENUE. MERE ENTRIES IN THE SEIZED MATERIAL WERE N OT SUFFICIENT THAT THE ASSESSEE INDULGED INTO SUCH A TRANSACTION.' 9. CONSIDERING THE TOTALITY OF FACTS AND RELYING ON TH E AFORESAID DECISION OF HONBLE GUJARAT HIGH COURT, WE ARE OF THE VIEW THAT N O ADDITION CAN BE MADE IN THE PRESENT CASE. THUS THIS GROUND OF ASSE SSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN OPEN COURT ON 07 - 03 - 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,AHM EDABAD