NIMESH UMAKANT MANANIA,MUMBAI V. DCIT-20(1), MUMBAI

ITA 6179/MUM/2024

AI Insights

The case involves three appeals by the assessee, Nimesh Umakant Manania, against the additions made by the Assessing Officer (AO) under section 69 of the Income Tax Act, which pertained to unexplained investments in the purchase of flats. The additions were based on information found in the iPhone of Shri Pankaj D. Goshar during a search operation, which allegedly contained details of cash transactions for flat purchases. The Tribunal noted that similar additions were made in the hands of M/s Kalyanji Velji HUF, the developer, which were later deleted by the Tribunal on similar grounds. The Tribunal found that the evidence against the assessee was uncorroborated and the procedural requirements for admitting electronic evidence were not met.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 37958 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Other Referred Cases: Anvar P V vs. P.K.Basheer and Others, Arjun Pandit Rao Khotkar vs. Kailash Khushan Rao
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MONIKA H. PANDE
• Assessee Lawyers: SUCHEK ANCHALIYA
• Keywords: Set aside; Corroborative evidences; Unexplained cash credit; Unexplained investment; Reopening of assessment; Search and seizure; Opportunity of cross examination
• Section: 147; 148; 132; 69; 153C; 133A

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI “B” BENCH : MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI RAJ KUMAR CHAUHAN, JUDICIAL MEMBER ITA No. A.Y. Appellant Respondent 6179/Mum/2024 2010-11 Nimesh Umakant Manania, Flat No. 8A, Mont Blanc, Jam-e-Jamshed Road, Matunga East, Mumbai PAN: AACPM0546K Deputy Commissioner of Income Tax-20(1), 406, Piramal Chambers, Lalbaugh, Parel, Mumbai. 6178/Mum/2024 2011-12 6180/Mum/2024 2012-13 Assessee by : Shri Suchek Anchaliya Revenue by : Ms. Monika H. Pande Date of Hearing : 15/01/2025 Date of Pronouncement : 24/01/2025 PER BENCH: All the three appeals filed by the assessee are directed against the orders passed by Ld CIT(A), NFAC, Delhi and they relate to the Assessment Years (AYs.) 2010-11, 2011-12 and 2012-13. Since the underlying facts relating to the addition made in these three years are common in nature, these appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The assessee is aggrieved by the decisions rendered by Ld CIT(A) in confirming the additions relating to unexplained investment by way of 2 ITA Nos. 6178, 6179 & 6180/Mum/2024 alleged cash payments made in purchase of flat, made by the AO u/s 69 of the Act in all the three years. 3. The facts relating to the above said issue are discussed in brief. The Revenue carried out search and seizure action u/s 132 of the Act in the hands of Shri Pankaj Dhanji Goshar on 10-09-2015 and survey action u/s 133A of the Act in the hands of M/s Kalyanji Velji HUF. During the course of search and survey actions, it was noticed that M/s Kalyanji Velji HUF was developing a real estate project named Vishrani Niwas/Vivaria. Shri Pankaj D Goshar was acting as real estate consultant for the above projects. During the course of search action in the hands of Shri Pankaj D Goshar, certain details relating to the project developed by M/s Kalyanji Velji HUF were recovered from iphone 6 plus mobile of Shri Pankaj D Goshar. It contained details of payments received on sale of flats by way of cash. As per the observations made by the AO in AY 2010-11, the information found in the iphone disclosed that the Manania family has purchased two flats for an aggregate consideration of Rs.19.50 crores, out of which the agreement value was shown as Rs.7.00 crores and the cash component was shown as Rs.12.50 crores. One flat was purchased in the name of Shri Jayesh Umakant Manania and another flat was purchased in the name of the assessee herein. (In AY 2012-13, the AO has stated that the aggregate consideration of two flats was Rs.16.95 crores, the registration value was Rs.7.00 crores and the cash component was Rs.9.55 crores. An extra cash consideration of Rs.2.55 crores was mentioned against first flat.) The cash component was stated to have been received in different years. During the three years under consideration, the AO has mentioned that the assessee has paid cash component as detailed below:- 3 ITA Nos. 6178, 6179 & 6180/Mum/2024 Asst. Year Amount (Rs.) 2010-11 25,02,000 2011-12 70,00,000 2012-13 2,00,00,000 The Revenue also carried out survey operations in the hands of M/s Krazee Properties Pvt Ltd and the documents impounded there from also contained the details of cash received by M/s Kalyanji Velji HUF. The documents also contained list of buyers of flats and car parking and the said list contained the name of the assessee herein. 4. Accordingly, the AO asked the assessee to explain the sources of above payments made by way of cash. The assessee, however, stated that he did not make any payment by way of cash outside the books towards purchase of flat from M/s Kalyanji Velji HUF. The assessee also requested the AO to provide the opportunity of cross examination of parties. Accordingly, the AO provided opportunity of cross examination of Shri Pankaj Goshar and Shri Ajay Vishrani of M/s Kalyanji Velji HUF on 22-12- 2017. It was a joint cross examination and the questions and answers have been extracted by the AO in the assessment order passed for AY 2012-13 at pages 10 to 14. It is pertinent to note that both Shri Pankaj Goshar and Shri Ajay Vishrani denied receipt of any cash from the assessee outside the books of accounts. However, the AO took the view that the evidences found from the iphone of Shri Pankaj Ghoshar and the documents impounded from M/s Krazee Properties P Ltd clearly show that the assessee has paid cash towards purchase of flat. Accordingly, the AO assessed the amounts mentioned above in the respective assessment years as undisclosed investment u/s 69 of the Act. The Ld CIT(A) also confirmed the same and hence the assessee has filed these appeals. 4 ITA Nos. 6178, 6179 & 6180/Mum/2024 5. The Ld A.R raised a legal contention that the AO was not legally correct in completing the assessments of these years u/s 147 of the Act by reopening them u/s 148 of the Act. He submitted that the AO has received information about alleged cash payments from the documents recovered from the search conducted in the hands of Shri Pankaj Dhanji Goshar. Hence, the AO ought to have initiated proceedings u/s 153C of the Act. Accordingly, he submitted that the reopening of assessments of these three years is void ab initio and consequently, the impugned assessment orders are liable to be quashed. On merits, the Ld A.R submitted that the addition has been made on the basis of uncorroborated images found in the iphone of Shri Pankaj D Goshar, which has not been accepted by Shri Pankaj D Goshar, the developer M/s Kalyanji Velji HUF and the assessee. He submitted that income tax proceedings were initiated in the hands of M/s Kalyanji Velji HUF by reopening its assessments of AY 2010-11 to 2013-14 by issuing notices u/s 148 of the Act, on the basis of very same information recovered from the iphone of Shri Pankaj D Goshar during the course of search operations. The additions were made on the basis of very same details in the hands of M/s Kalyanji Velji HUF, since it was the recipient of alleged cash payments made by the assessee herein. Thus, the same materials were the basis of making addition in the hands of the assessee as well as in the hands of M/s Kalyanji Velji HUF. Those additions were challenged by M/s Kalyaji Velji HUF before Ld CIT(A) and also before the Tribunal both on legal grounds and on merits. The Tribunal, vide its order dated 08-01-2021 passed in ITA No.2284 to 2287/Mum/2019 for AY 2010-11 to 2013-14, has held that the AO should have initiated the proceedings u/s 153C of the Act only and hence the assessment orders passed u/s 147 of the Act would get vitiated. On merits, the Tribunal deleted the additions by observing that none of the parties have admitted to have paid/received any on-money; Shri Pankaj 5 ITA Nos. 6178, 6179 & 6180/Mum/2024 Goshar was not authorized to undertake financial transactions on behalf of M/s Kalyanji Velji HUF and further the information found in his iphone remained uncorroborated. The Ld A.R submitted that the decision rendered by the Tribunal would be applicable in entirety in the present cases also. 6. The Ld D.R, on the contrary, submitted that the information relating to the cash payments have been found by the revenue not only from the iphone of Shri Pankaj D Goshar (the searched person) and also from the survey operations conducted in the case of M/s Krazee Properties Pvt Ltd also. Further, survey action has been conducted in the hands of M/s Kalyanji Velhi HUF. Hence, it cannot be said that the information was passed on by the assessing officer of the searched person in accordance with the provisions of sec.153A of the Act. Accordingly, the Ld D.R submitted that the reopening of assessment u/s 147 of the Act was valid in all these three years. With regard to the merits of additions, the ld D.R submitted that the evidences found from the iphone of Shri Pankaj D Ghoshar has disclosed yearwise receipt/payment of cash outside the books and they cannot be brushed against. Accordingly, the Ld D.R submitted that the Ld CIT(A) was justified in confirming the additions made by the AO in all the three years under consideration. 7. We heard rival contentions and perused the record. We notice that the entire basis for making the additions in these three years is the information about the receipt/payment of cash relating to the assessee herein, which was found in the iphone of Shri Pankaj D Goshar. Those information was stated to be related to the flat purchased by the assessee from M/s Kalyaji Velji HUF. It was brought to our notice that the revenue has reopened the assessment of M/s Kalyanji Velji HUF and also made additions in its hands on the basis of very same information found in the 6 ITA Nos. 6178, 6179 & 6180/Mum/2024 iphone of Shri Pankaj D Goshar. The said additions were disputed before the Tribunal by M/s Kalyaji Velji HUF and the co-ordinate bench has since adjudicated the issues by deleting the additions both on legal ground and on merits. We find that certain observations made by the Tribunal in the above said case on facts and merits of additions are relevant in this case. Accordingly, we extract relevant observations made by the Co-ordinate Bench:- “3.3 During the course of search action, page nos. 1 to 3 as per Annexure-1 were seized by the department, a copy of which was supplied to the assessee. The image of seized papers was also recovered from the mobile phone used by Shri Pankaj Goshar (PG) which was imaged in his presence by investigation wing using sophisticated forensic software. The image of above pages was present in the mobile phone of Pankaj Goshar in the folder named 'Umkant Manania'. It transpired that Shri Umakant Manania's family had booked two flats in the name of Shri Jayesh Umakant Manania & Shri Nimesh Umakant Manania in the project Vivaria at agreement value of Rs.350 Lacs each. However, the two buyers had allegedly paid on-money in cash on various dates for purchase of two flats over and above the aggregate registration / agreement value of Rs.7 Crores. The seized paper nos. 1 to 3 showed that an amount of Rs.25.20 Lacs (written as 25.02) was received in cash by the assessee from two buyers on 02/12/2009. Since, the same was not offered to tax, it was to be considered as concealed income of the assessee in the background of the fact that the image of pages was found in the mobile phone of Shri Pankaj Goshar and hard copy thereof was also seized from his premises. The associated concern of Shri Pankaj Goshar rendered end- to-end project consultancy for assessee. Shri Pankaj Goshar and Karta of assessee HUF were stated to be relatives of each other and entered into few financial transactions in the past. 3.4 A page No. 68 of Annexure-H was also impounded by the department during survey u/s 133A on 10/09/2015 in the case of M/s Krazee Properties Private Ltd. (a concern owned by Shri Pankaj Goshar). This page showed booking made by the various parties in the project Vivaria being developed by the assessee. The project management consultancy services of the same were being rendered by M/s Goshar Ventures Private Limited, another associated concern of Shri Pankaj Goshar. 3.5 As per assessee' request, cross-examination of Shri Pankaj Goshar, Shri Umakant Manania, Shri Jayesh Manania & Shri Nimesh Manania was provided to the assessee on 14/12/2017 which took place before Ld. AO. In the background of all these facts, the amount of Rs.25.20 Lacs was added back to the income of the assessee u/s 68 as unexplained cash credit. 7 ITA Nos. 6178, 6179 & 6180/Mum/2024 4. The copy of cross-examination proceeding has been placed before us in the paper-book. Upon perusal of same, we find that Shri Pankaj Goshar submitted that statement recorded during the course of search and survey was under duress and the same has subsequently been retracted by him on 11/12/2015, 13/01/2016 & 19/02/2016. He further submitted that his associated concern M/s Goshar Ventures Pvt. Ltd. was engaged as project management consultant for the said project which would include seeking permission from Municipal Corporation, execution of job work, procurement of material required for construction, assisting the buyers and certifying bills for payments. Shri Pankaj Goshar also submitted that image found on the mobile was sent by somebody and wrongly stored in the folder. He also denied having undertaken any financial transaction with Shri Umakant Manania during last more than 10 years. Shri Nimesh Manania, upon cross examination, submitted as under: - I have agreed to purchase the flat in Vishrani Niwas at lumsum price of Rs.3,50,00,000/- in the year 2012 necessary flat agreement has already registered on 18.12.2013. So far I have paid Rs.50 lakhs by cheque in the month of April, 2012. Secondly I have not made any cash payment / on money payment towards purchase of flats to Kalyanji Velji (HUF) or Pankaj Goshar on behalf of Kalyanji Velji (HUF). Similar was the statement of Shri Jayesh Manania who denied having paid any cash payment / on money to the assessee. In nutshell, all the three parties denied having received or paid any cash against sale of the two flats. Shri Pankaj Goshar submitted that his entity was merely acting as project management consultant for the project. The two buyers denied having paid any on-money against purchase of the two flats. The Karta of assessee HUF, Shri Ajay Vishrani, submitted that M/s Goshar Ventures Pvt. Ltd. had no authority for any financial dealing with any buyer. Their role included selecting vendors, suppliers and contractors. He also denied having received any cash / on-money from the two buyers over and above the agreement / registered value. Upon perusal of the said cross examination proceedings, it is quite evident that none of the party has admitted to having paid or received any cash / on money in the course of transactions of sale / purchase of two flats.” It can be noticed the assessing officer of M/s Kalyanji Velji HUF (the developer of the project and the alleged recipient of cash component) had made additions in the hands of above said developer. The said additions made in AYs.2010-11 to 2013-14 have been deleted by the Co-ordinate Bench on merits with the following observations:- 8 ITA Nos. 6178, 6179 & 6180/Mum/2024 “11. Lastly, none of the parties have admitted to have paid or received any on-money which is evident from cross-examination proceedings. The two buyers denied having paid any cash while purchasing the flat. The assessee denied having received the on-money. Shri Pankaj Goshar was not authorised to undertake financial transactions on behalf of the assessee. He also denied having undertaken any financial transactions with Manania family. Therefore, the whole basis of making addition is mere dumb document found at the premises of a third party, without there being any corroborative evidences to support the same. No much weightage could be attached to the said document in the absence of any cogent material supporting the entries therein.” 8. We noticed that the additions made by the AO in the hands the recipient of alleged cash payments (M/s Kalyanji Velji HUF) on the basis of very same material have been deleted by the Co-ordinate Bench. The reasons given by the co-ordinate bench are:- (a) None of the parties involved in the transactions of sale and purchase of flat has admitted to have received/paid money outside the books of accounts. (b) The information about alleged cash transactions was found in the iphone of Shri Pankaj D Ghoshar. He was only a project consultant for M/s Kalyanji Velji HUF. He was not authorized to undertake financial transactions on behalf of the above said assessee. (c) Shri Pankaj D Ghoshar has also denied having undertaken financial transactions with Manania family. (d) The information found in the iphone was not corroborated with any other material. Hence it was a dumb document found at the premises of a third party. It can be noticed that the above mentioned reasoning given by the Co-ordinate Bench would equally apply to the present cases also. Even 9 ITA Nos. 6178, 6179 & 6180/Mum/2024 though the AO has observed that the details of sale of flats by M/s Kalyanji Velji HUF were found from M/s Krazee Properties P Ltd during the course of survey operation, yet it is not mentioned whether those information contained details of alleged cash transactions. In that case, the mere availability of details of flats sold in the projects developed by M/s Kalyanji Velji would not support the theory of cash transactions. Hence, it cannot be said that the information found in M/s Krazee Properties P Ltd would corroborate the images found in the iphone of Shri Pankaj D Goshar. 9. There is one more deficiency on the part of the AO in placing reliance on the information found in the iphone, which was an electronic device. We notice that the AO has not followed the procedure prescribed in sec.65B of the Indian Evidence Act before placing reliance on a data supposed to have been collected from an electronic device. In that case, the AO could not have placed reliance on it. In this regard, we may refer to the decision rendered by Hon'ble Supreme Court in the case of Anvar P V vs. P.K.Basheer and Others (Civil Appeal No.4226 of 2012)(2014)(10 SCC 473)(SC), wherein it was held that the certificate prescribed u/s 65B(4) of the Indian Evidence Act is compulsory. This two member decision of Hon'ble Supreme Court was later approved by Three Judges Bench of Hon'ble Apex Court in the case of Arjun Pandit Rao Khotkar vs. Kailash Khushan Rao (2020)(4 SCC (civil) -3 judges). In the present case, the AO has not mentioned that the said certificate has been obtained. Hence, on this count also, the additions made by the AO are liable to be deleted. 10. Accordingly, following the decision rendered by the co-ordinate bench in the case of Kalyanji Velji HUF (supra), we hold that the AO could not have made the impugned additions in all the three years on the basis of uncorroborated dumb document. Further, these additions are also liable 10 ITA Nos. 6178, 6179 & 6180/Mum/2024 to be deleted in view of non-compliance of the procedure prescribed u/s 65B of the Indian Evidence Act. 11. The assessee has also raised a legal issue on the validity of reopening of assessments of these three years. According to the assessee, the AO should have initiated proceedings u/s 153C of the Act. The very same contentions were raised before the Co-ordinate Bench in the case of Kalyanji Velji HUF and the Co-ordinate Bench has also accepted those contentions. Accordingly, it was contended that the reopening of assessments of all these three years may be held to be void ab-initio. Since we have deleted the additions on merits, we are of the view that the above said legal issue is rendered academic in nature. Accordingly, we leave this legal issue open. 12. Accordingly, we set aside the orders passed by Ld CIT(A) in all the three years under consideration and direct the AO to delete the impugned addition made in all the three years. 13. In the result, all the three appeals of the assessee are allowed. Order pronounced in the open court on 24-01-2025 Sd/- Sd/- [RAJ KUMAR CHAUHAN] [B.R. BASKARAN] JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, Dated: 24-01-2025 TNMM 11 ITA Nos. 6178, 6179 & 6180/Mum/2024 Copy to : 1) The Appellant 2) The Respondent 3) The CIT concerned 4) The D.R, “B” Bench, Mumbai 5) Guard file By Order Dy./Asst. Registrar I.T.A.T, Mumbai "