SUNIL MANTRI REALTY LTD, MUMBAI V. ASST. CIT CIR 4 (3) , MUMBAI

MA 375/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4685 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 23 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 21-02-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 28-06-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AMIT PRATAP SINGH
• Keywords: Rectification of order; Search and seizure; Retraction; Set aside
• Section: 143(3); 153A; 201; 254(2)

Judgement Text

T HE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA ( A M) & SHRI RAMLAL NEGI (JM) M.A. NO. 375/MUM/2019 ARISING OUT OF I.T.A. NO. 6167 /MUM/ 201 1 (ASSESSMENT YEAR 20 0 7 - 0 8 ) M/S. SUNIL MANTRI REALTY LTD. G - 1, COURT CHAMBERS GRO UND FLOOR, V. THAKERSEY MARG, 35, NEW MARINE LINES CHURCHGATE, MUMBAI - 400020. PAN AADCM6966F V S . ACIT, CENTRAL CIRCLE 29, ROOM NO. 411 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI SANJAY C. SHAH DEPARTMENT BY SHRI A MIT PRATAP SINGH DATE OF HEARING 13.12.2019 DATE OF PRONOUNCEMENT 21 . 0 2 . 20 20 O R D E R PER SHAMIM YAHYA (AM) : - BY WAY OF THIS MISCELLANEOUS APPLICATION THE ASSESSEE SEEKS RECTIFICATION OF MISTAKE APPARENT FROM RECORDS U NDER SECTION 254(2) IN THE ORDER OF THIS TRIBUNAL IN ITA NO. 6167/MUM/2011 VIDE ORDER DATED 28.12.2018 2. W E HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE NOTE THAT IN THE APPEAL BY THE REVENUE THE I TAT HAS SET ASIDE THE ORDER OF LEARNED CIT (A ) WHEREIN HE HAD DELETED THE ADDITION MADE BY THE ASSESSEE OFFICER PURSUANT TO SEARCH AND SEIZURE ACTION. IN THE MISCELLANEOUS APPLICATION ASSESSEE SUBMITS THAT THE SAME INCOME IS TAXED TWICE WHICH DEFEATS THE CONCEPT OF REAL INCOME. THE ASSESSEE RELIES UP ON LEARNED CIT (A) OBSERVATIONS AND OTHER CASE LAWS. THE ASSESSEE STATES THAT WHY THESE CASE LAWS HAVE BEEN HELD TO BE NOT APPLICABLE TO BE FURTHER ELABORATED. IT IS THE SUBMISSION OF THE ASSESSEE THAT THERE IS NO CORROBORATING EVIDENCE. I T IS FURTHER SUBMI TTED THAT ACCOUNTING STANDARD 9 IS NOT COVERED IN ITAT ORDER. IT HAS FURTHER BEEN SUBMITTED THAT RETRACTION OF THE M/S. SUNIL MANTRI REALTY LTD. 2 STATEMENT RECORDED UNDER SECTION 132(4) HAS NOT BEEN ACCEPTED BY THE ITAT. IT IS FURTHER SUBMITTED THAT ITAT IGNORED THAT THE BOOKS OF ACCOUN T ARE NOT CONCLUSIVE AND DETERMINATIVE OF THE CORRECT TAXABLE INCOME. 3. P ER CONTRA LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE IS SEEKING A REVIEW OF THE ORDER OF THE ITAT IN THE GARB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD. THE LEARNED DR SUBMITTED THAT THE ITAT HAS PASSED AN ELABORATE ORDER AND HAS REVERSED THE ORDER OF LEARNED CIT (A) . HE SUBMITTED THAT THE ITAT ORDER CONTAINS ALL THE REASONING. HE SUBMITTED THAT A REVIEW OF THE ORDER OF THE ITAT IS NOT PERMISSIBLE IN AN ORDER U NDER SECTION 254(2) OF THE IT A CT. 4. UPON CAREFUL CONSIDERATION WE FIND OURSELVES IN AGREEMENT WITH THE SUBMISSION OF THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THIS REGARD IT MAY BE GAINFUL TO REFER TO THE FINDING OF THE ITAT IN ITS ORDER AS UNDER : - 19. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. FIRST OF ALL WE NOTE THAT THIS ADDITION HAS BEEN MADE PURSUANT TO A SEARCH ACTION. THE ASSESSMENT HAS BEEN FRAMED U/S. 143(3) R/W S. 153A OF THE ACT. THERE WAS A SEARCH AND SEIZURE ACTION U/S. 1 32(4) ON THE ASSESSEE GROUP ON 09.07.2008. THE ASSESSEE HAD FILED THE RETURN OF INCOME U/S. 153A ON 20.10.2010. IN THE COURSE OF SEARCH CONDUCTED ON 09.07.2008, THE DEPARTMENT HAS SEIZED FROM THE ASSESSEES BUSINESS PREMISES, PAGES CONTAINING PROFIT AND LO SS ACCOUNT AND BALANCE SHEET FOR THE PERIOD ENDING MARCH, 2008 AND SCHEDULE THERETO. PAGE NO. 7 OF THE SAID PAGES REFLECTED THE BALANCE SHEET FOR THE PERIOD 31 ST MARCH, 2008 AND IT WAS SIGNED BY THE DIRECTOR OF THE COMPANY. WE MAY GAINFULLY REFER TO THE SA ID PROFIT AND LOSS ACCOUNT AND BALANCE SHEET WHICH IS REPRODUCED HEREUNDER: M/S. SUNIL MANTRI REALTY LTD. 3 M/S. SUNIL MANTRI REALTY LTD. 4 M/S. SUNIL MANTRI REALTY LTD. 5 20. SHRI SUNIL P. MANTRI, CMD OF THE SAID COMPANY GAVE A STATEMENT OF OATH ON 10.07.2008. IN THE SAID STATEMENT, THE SAID DIRECTOR, DULY ACCEPTED THE DETAIL PROVIDED IN THE UNAUDITED BALANCE SHEET. HE FULLY ACCEPTED THE VERACITY OF THE FIGURES SHOWN THEREIN. HE ACCEPTED THAT AS PER THESE ACCOUNTS PROFIT BEFORE TAX WAS RS.73.72 CRORES AND THE PROVISION FOR TAXATION IS ESTIMATED AT RS.25.08 CRORES. HE ALSO ACCEPTED THAT THESE ARE THE REFLECTION OF THE BOOKS OF ACCOUNTS OF THE ASSESSEE. SUBSEQUENTLY, THE SAID DIRECTOR MADE A RETRACTION. IT WAS CLAIMED THAT THE BALANCE SHEET FOUND DURING SEARCH WAS MEANT FOR GIVING THE SAME TO THE BANK FOR OBTAINING HIGHER CREDITS. IT MAY BE NOTE D THAT NO EVIDENCE WHATSOEVER OF THE ASSESSEE HAVING SUBMITTED THE SAID BALANCE SHEET TO THE BANK WAS FOUND. HENCE, THIS THEORY ENTERS COGENCY. FURTHERMORE, THE ASSESSEE ITSELF HAS MADE CONTRARY CLAIM THAT THE SAID ACCOUNT CONTAINED VARIOUS JOURNAL ENTR IES PASSED BY INEFFICIENT ACCOUNTS PEOPLE WHICH WERE SUBSEQUENTLY CORRECTED. THERE IS NO EXPLANATION M/S. SUNIL MANTRI REALTY LTD. 6 WHATSOEVER AS TO HOW IN - EXPERIENCED ACCOUNTING STAFF CAN PASS JOURNAL ENTRIES, RESULTING IN A THOROUGHLY DIFFERENT BALANCE SHEET. WE FIND THAT IN THIS CASE A STATEMENT HAS BEEN OBTAINED U/S. 132(4) THAT DULY PROVIDES THAT SUCH A STATEMENT OBTAINED HAVE AN EVIDENTIALLY VALUE. WE MAY GAINFULLY REFER TO THE PROVISION OF SECTION 132(4) IN THIS REGARD AS UNDER: SEARCH AND SEIZURE. 132. (4) THE AUTHORISED OFFICER MAY, DURING THE COURSE OF THE SEARCH OR SEIZURE, EXAMINE ON OATH ANY PERSON WHO IS FOUND TO BE IN POSSESSION OR CONTROL OF ANY BOOKS OF ACCOUNT, DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING AND ANY STATEMENT MADE BY SUCH PERSON DURING SUCH EXAMINATION MAY THEREAFTER BE USED IN EVIDENCE IN ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. EXPLANATION. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY DECLARED THAT THE EXAMI - NATION OF ANY PERSON UNDER THI S SUB - SECTION MAY BE NOT MERELY IN RESPECT OF ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS OR ASSETS FOUND AS A RESULT OF THE SEARCH, BUT ALSO IN RESPECT OF ALL MATTERS RELEVANT FOR THE PURPOSES OF ANY INVESTIGATION CONNECTED WITH ANY PROCEEDING UNDER THE INDIAN INCOME - TAX ACT, 1922 (11 OF 1922), OR UNDER THIS ACT. 21. FURTHER, THE DOCUMENTS FOUND DURING SEARCH HAVE EVIDENTIARY VALUE. THIS IS DULY REFLECTED IN THE PROVISION OF SECTION 132(4A) OF THE ACT WHICH READS AS UNDER: SEARCH AND SEIZURE. 132. (4A) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH, IT MAY BE PRESUMED ( I ) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS , MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING BELONG OR BELONGS TO SUCH PERSON ; ( II ) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHER DOCUMENTS ARE TRUE ; AND ( III ) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOOKS OF ACCOUN T AND OTHE R DOCUMENTS WHICH PURPORT TO BE IN THE HANDWRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE ASSUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF, ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING, AND IN THE CASE OF A D OCUMENT STAMPED, EXECUTED OR ATTESTED, THAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 22. FROM THE ABOVE, IT IS APPARENT THAT THE ADVERSE INFERENCE AGAINST THE ASSESSEE HAS BEEN FO RMED NOT ONLY ON THE BASIS OF THE STATEMENT OF THE M/S. SUNIL MANTRI REALTY LTD. 7 DIRECTOR U/S. 132(4) BUT ALSO ON THE BASIS OF THE INCRIMINATING DOCUMENTS FOUND DURING SEARCH. IT IS SETTLED LAW THAT THE ADDITION U/S. 153A CAN BE MADE IF INCRIMINATING MATERIAL IS FOUND DURING SEARCH. BY NO STRETCH OF IMAGINATION, THESE BALANCE SHEET, PROFIT AND LOSS ACCOUNT DULY SIGNED BY THE DIRECTOR ACCOMPANIED BY SCHEDULE THERE FOUND CAN BE SAID TO BE NOT INCRIMINATING. THERE IS NO EVIDENCE THAT THEY WERE MEANT TO BE PRESENTED AT BANK. THERE IS NO EVI DENCE THAT THEY RESULTED FROM WRONG JOURNAL ENTRIES PASSED BY THE INEFFICIENT ACCOUNTING STAFF. 23. THE ASSESSEE HAS STATED IN EXPLANATION THAT INEXPERIENCED STAFF HAS MADE THE FOLLOWING WRONG ACCOUNTING ENTRIES: SR. NO. PARTICULAR AMOUNT 1. ADVANCE RE CEIVED FROM INDO SAIGAON AGENCY WRONGLY BOOKED IN SALE 10,00,00,000/ - 2. ENTITY OF MANTRI PARK FLAT SALE TO GROUP COMPANY (ALLIANCE FINSTOCK LTD.) 10,40,00,000/ - 3. ENTRY OF MANTRI PARK FLAT SALE TO GROUP COMPANY (MA NTRI HOSPITALITY PVT. LTD.) 14,27,52,500/ - 4. ENTRY OF HYDERABAD PROPERTY SALE TO GROUP COMPANY CARDINAL REALTORS PVT. LTD. 95,00,00,000/ - TOTAL 1,29,67,52,500/ - SUBSEQUENTLY, THE ASSESSEE STATED THAT FOLLOWING WRONG ENTRIES WERE PASSED: DEBTORS A/C. C R. 1,26,65,61,454 TO SALE OF FLATS & LANDS A/C (INCOME) CR. 1,26,65,61,454 (BEING SALES BOOKING, ADVANCES, ENQUIRIES OF SALES RECORDED) 24. FIRSTLY WE NOTE THAT THE FIGURES IN THE SO CALLED DETAIL AND THE SO CALLED WRONG JOURNAL ENTR IES DO NOT MATCH. HENCE, THE VERACITY OF THIS IS NOT ACCEPTABLE. FURTHER, IF SUCH A HUGE ERROR ENTRY WAS MADE AT THE END OF THE YEAR, AND IT REMAINED UNDETECTED TILL THE DATE OF SEARCH, I.E., 09.07.2008, IS TOTALLY IMPROBABLE. THAT SUCH WRONG OVER STATED S ALES OF MORE THAN RS.100 CRORES BEING TWICE OF THAT OF ACTUAL INCOME WAS STATED IN THE ACCOUNTS AND THE DIRECTOR WAS NOT AWARE WHEN HE SIGNED THE ACCOUNT, IS ALSO NOT ACCEPTABLE. THESE ARE CLEARLY AN AFTERTHOUGHT OF THE ASSESSEE. THE ASSESSEE HAS TRIED TO MAKE AN EXPLANATION THAT UNSOLD ITEMS HAVE BEEN ACCOUNTED FOR SALES WITHOUT PROPER EVIDENCE. THE LD. CIT(A) HAS DEVOTED HIS ENTIRE ORDER IN REFERRING TO THE ASSESSEES EVIDENCE AS TO HOW THESE PLOTS HAVE REMAINED UNSOLD. IN OUR CONSIDERED OPINION, THESE AR E CLEARLY AN AFTERTHOUGHT OF THE ASSESSEE WITH NO IOTA OF EVIDENCE. THE VIEW THAT THE ASSESSEE HAS ONLY MADE AN AFTERTHOUGHT TO REDUCE THE PROFIT IS EVIDENT BY THE FACT THAT IT IS NOT A CASE OF WRONGLY ACCOUNTING FOR M/S. SUNIL MANTRI REALTY LTD. 8 CERTAIN SALES. FULLY AWARE THAT SUC H REVERSAL OF SALE WILL RESULT IN ABNORMAL COMPARABLE PROFITS, IN THE SUBSEQUENT ACCOUNT THE COST OF SALES HAS ALSO REDUCED BY RS.89,20,48,427/ - FROM RS.1,62,79,86,886/ - TO RS.73,59,38,459/ - . ADMITTEDLY, THIS CAN ONLY BE RESULT OF UNEXPLAINED OTHER ACCOUNT ING INGENUITY. NO DETAIL EXPLANATION FOR THIS IS ON RECORD. HENCE, IT IS EVIDENT THAT THE ACCOUNTS HAVE BEEN REVISED AFTER SEARCH TO REDUCE THE INCIDENCE OF TAX AND HALF BAKED FACTS HAVE BEEN SUBMITTED IN EXPLANATION. THIS HAS ALSO TO BE CONSIDERED IN THE BACKGROUND OF THE FACTS THAT IN THE SAME SEARCH, AUDITED ACCOUNTS WERE ALSO FOUND OF EARLIER YEAR, WHICH WERE LATER CLAIMED BY THE ASSESSEE TO BE WRONG. 25. IN OUR CONSIDERED OPINION, THE ASSESSEE HAS FAILED TO REBUT THE PRESUMPTIONS U/S. 132(4) AND 132(4 A) OF THE ACT AND THE CLEAR INCRIMINATING MATERIAL FOUND. THE LD. CIT(A) HAS ACCEPTED VARIOUS REASONING OF THE ASSESSEE WHICH PUT ONUS ON THE A.O. TO PROVE THAT CERTAIN ITEMS WHICH WERE IMAGINARY AND THE EXPLANATION OF THE ASSESSEE WHICH ARE CLEARLY AN AFT ERTHOUGHT, WERE ACTUALLY SOLD AND THE SALE PROCEED WAS RECEIVED. IN OUR CONSIDERED OPINION, ONCE THE ASSESSEE HAS BEEN FOUND TO HAVE FAILED TO DISPROVE THE PRESUMPTION U/S. 132(4) AND 132(4A) AND THE INCRIMINATING MATERIAL FOUND, THE VARIOUS OTHER SUBMISSI ONS OF THE ASSESSEE ARE IMAGINARY AND MERELY AN AFTERTHOUGHT. THE LD. CIT(A) IS REFERRING TO CASE LAWS WHICH ARE NOT AT ALL IN THE CONTEXT OF THE ADDITION U/S. 153A. THESE ARE OLD CASE LAWS PRIOR TO THE INSERTION OF SECTION 153A. THE LD. CIT(A) IS EVEN MEN TIONING THAT EVEN IF THE ADDITION IS BASED UPON THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THE SAME SHOULD NOT BE DONE AS THE A.O. HAS NOT BEEN ABLE TO PROVE THAT WHAT IS RECORDED IN THE BOOKS AS PER ASSESSEES AFTERTHOUGHT HAS ACTUALLY BEEN REALIZED BY THE AS SESSEE. THIS, IN OUR CONSIDERED OPINION, IT IS TOTALLY UNSUSTAINABLE IN LAW. ACCORDINGLY, IN THE BACKGROUND OF THE AFORE - SAID DISCUSSION AND PRECEDENT, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THAT OF THE A.O. 5. A READING OF THE ABOVE MAKES IT CLEAR THAT IN THIS MISCELLANEOUS APPLICATION ASSESSEE IS SEEKING A REVIEW OF THE ORDER OF THE ITAT IN THE GARB OF RECTIFICATION OF MISTAKE APPARENT FROM RECORD UNDER SECTION 254(2) OF THE INCOME TAX ACT. THE ASSESSEE IN ITS MISCELLANEOUS APPLICATION IS AGITATING THE SAME POINTS WHICH HAVE ALREADY BEEN DEALT WITH IN THE ITAT ORDER. NOW THE SAME CANNOT BE REVIEWED. AS REGARDS THE ISSUE OF CASE LAWS MENTIONED IN THE MISCELLANEOUS A PPLICATION, THE ITAT ORDER AS REFERRED ABOVE DULY DEALS WITH THE SAME. 6. A CCORDINGLY IN OUR CONSIDERED OPINION THERE IS NO MISTAKE APPARENT FROM RECORD IN THE ORDER OF THE ITAT LIABLE FOR RECTIFICATION UNDER SECTION 254(2) OF THE INCOME TAX ACT. M/S. SUNIL MANTRI REALTY LTD. 9 7. ACCORDINGLY THIS MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE STANDS DISMI SSED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 21 . 2 . 20 20 . SD/ - SD/ - ( RAMLAL NEGI ) (SH A MIM YAHYA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 0 2 / 20 20 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( ASSISTANT REGISTRAR ) PS ITAT, MUMBAI