SAJJAN INDIA LIMITED,MUMBAI V. DCIT-8(1)(2), MUMBAI

ITA 3100/MUM/2024

AI Insights

Sajjan India Limited appealed against the order of the Commissioner of Income Tax (Appeals) which upheld the addition of Rs. 1,62,08,640 to their income for the Assessment Year 2012-13. This addition was based on information received from a search and seizure operation in the case of HN Safal Group, which allegedly showed that the assessee had paid on-money for a property transaction. The Tribunal found that the assessee had not actually paid this on-money, as the transaction was cancelled and the initial payment was refunded. The Tribunal criticized the lower authorities for not conducting an independent inquiry and for relying solely on the information provided by another authority.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 473753 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2012-2013
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM KRISHN KEDIA
• Assessee Lawyers: S. J. JAIN
• Keywords: Set aside; Search and seizure; Opportunity of cross examination
• Section: 147; 148; 143(3); 69A; 153C; 2(A)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “G” BENCH, MUMBAI BEFORE MS. KAVITHA RAJAGOPAL, JM AND SHRI. GIRISH AGRAWAL, AM ITA No. 3100/Mum/2024 (Assessment Year: 2012-13) Sajjan India Limited Urmi Estate, Tower A, 14th Floor, 95, Ganapatrao Kadam Marg, Lower Parel, West, Mumbai Delisle Road, S. O. Mumbai – 400013. Vs. Deputy Commissioner of Income Tax 8(1)(2) Aayakar Bhavan, Mumbai -400020. PAN/GIR No. AAACS6498M (Assessee) : (Respondent) Assessee by : Shri. S. J. Jain Respondent by : Shri. Ram Krishn Kedia (Sr. DR.) Date of Hearing : 06.12.2024 Date of Pronouncement : 04.03.2025 O R D E R Per Kavitha Rajagopal, J M: This appeal has been filed by the assessee, challenging the order of the learned Commissioner of Income Tax (Appeals) (‘ld. CIT(A)’ for short), National Faceless Appeal Centre (‘NFAC’ for short) passed u/s.250 of the Income Tax Act, 1961 (‘the Act'), pertaining to the Assessment Year (‘A.Y.’ for short) 2012-13. 2. The assessee has raised the following grounds of appeal including the legal grounds, challenging the validity of the notice issued u/s. 148 of the Act, which are as follows: “1. The Ld. Commissioner of Income Tax (Appeals) erred in upholding validity of notice u/s.148 merely based on information received from DCIT, Central Circle 1 (4), Ahmedabad, alleging cash payment by the appellant company on booking of office with M/s. Goyal Safal Developers on 3-12-2011, although fact of payment not supported by any material available on record. 2 ITA No. 3100/Mum/2024 (A.Y. 2012-13) Sajjan India Limited 1.1 The Ld. Commissioner of Income Tax (Appeals) erred in upholding validity of notice u/s.148 although LD AO issued notice u/s 148 just based on information received from another authority without carrying out any independent verification before issue of notice. 1.2 The Ld. Commissioner of Income Tax (Appeals) erred in upholding validity of notice u/s.148 without considering the fact that seized information clearly reflected that no cash payment is made by the appellant, hence no belief of escapement of income could be arrived at reasonably. 1.3 The Ld. Commissioner of Income Tax (Appeals) failed to appreciate that in the reasons recorded, there is no charge of non-disclosure of any material facts by appellant, hence as per 1 proviso to section 147, notice u/s.148 dtd.23/03/18 is bad in law. 2. The Ld. Commissioner of Income Tax (Appeals) erred in upholding validity of notice u/s.148 although sanction issued by the Authority was without application of mind as LD AO sought sanction in the proposal for application of Expl 2(a) to sec 147 i.e., non filling of return of income, a non existing fact. 3. The Ld. Commissioner of Income Tax (Appeals) erred in upholding addition of Rs.1,62,08,640/- as made by LD A O while addition was made without carrying out any independent enquiry in assessment proceeding just based on information received from another Authority and ignoring appellant's denial of any such alleged cash payment. 4. The Ld. Commissioner of Income Tax (Appeals) erred in upholding addition although not supported by any statement recoded of the searched party or any corroborating material proving cash payment. 5. The Ld. Commissioner of Income Tax (Appeals) erred in upholding addition u/s 69A although the annexure retrieved from pen drive data of M/s. Goyal Safal Developers nowhere reflected any cash/discount paid by appellant but reflected as unpaid and outstanding., Alleged cash payment not being made no addition u/s 69A was permissible. 6. The Ld. Commissioner of Income Tax (Appeals) erred in upholding addition based on extract of Pen Drive found in search of 3rd party being no valid evidence under Evidence Act. 7. The Ld. Commissioner of Income Tax (Appeals) erred in upholding assessment made u/s 147 based on seized material belonging to appellant found in search of 3rd party without following provisions of sec 153C of the Act. 8. The appellant pray that addition made be deleted. 3 ITA No. 3100/Mum/2024 (A.Y. 2012-13) Sajjan India Limited 9. The appellant craves your honour's leave to add, alter or amend any grounds of appeal at the time of hearing or before.” 3. Brief facts of the case are that the assessee company filed its return of income on 26.09.2012, declaring total income at Rs. 40,83,08,564/- and assessment u/s. 143(3) was completed in assessee’s case vide order dated 27.02.2015, where the ld. AO determined total income at Rs. 41,51,95,880/-. Subsequent to the search and seizure operation u/s. 132A of the Act, dated 04.09.2013, in the case of HN Safal Group, the learned Assessing Officer (ld. A.O. for short) received information that in a hard disk soft data of Mondreal Square Scheme of Goyal Safal Developers, the assessee company had paid on-money of Rs. 1,62,08,640/- for purchase of unit no. B-907 in Mondreal Square Project. Pursuant to the said information, the assessee’s case was reopened vide notice u/s. 148 of the Act, dated 23.03.2018, for the reason that income has escaped assessment. In response to the same, the assessee stated that the original return filed by the assessee should be treated as return of income in response to notice u/s. 148 of the Act. The ld. AO then passed the assessment order u/s. 143 r.w.s. 147 of the Act, dated 22.12.2018, determining total income at Rs. 43,14,04,520/-, after making an addition of Rs. 1,62,08,640/- u/s. 69A of the Act. 4. Aggrieved the assessee was in appeal before the first appellate authority, who vide order dated 15.04.2024, upheld the addition made by the ld. AO on the ground that the assessee has failed to substantiate its contentions. 5. The assessee is in appeal before us, challenging the impugned order of the ld. CIT(A). 6. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that Rs.11 lacs paid as token for the said booking was returned back by the developer 4 ITA No. 3100/Mum/2024 (A.Y. 2012-13) Sajjan India Limited to the assessee and that the said transaction did not materialize. This has been admitted by the ld. AO during the assessment proceeding and the same has also been stated in the assessment order. The ld. AR for the assessee further stated that the ld. AO has merely reopened the assessment based on the information received from DCIT and there was no other incriminating material against the assessee beyond that. Further, the ld. AR stated that the assessee was not given an opportunity of cross examination of the persons whose statement was relied upon by the lower authorities. The ld. AR also contended that the only material that was provided by the ld. AO was an annexure with particulars of the amount paid and the outstanding as per M/s. Goyal Safal Developers in which nowhere it has mentioned about on-money receipt and has merely stated it to be an outstanding due. The ld. AR also contended that no independent inquiry or verification has been made by the ld. AO over and above the information received during the search and seizure operation in the case of HN Safal Group. The ld. AR relied on a catena of decisions in support of the assessee’s contentions. 7. The learned Departmental Representative (ld. DR for short) on the other hand controverted the said fact and contended that the findings of the lower authorities are corroborated by the fact that the assessee has paid Rs. 11 lacs by cheque payment for booking of the office premises and that the assessee has failed to contradict the payment of on-money by any documentary evidences. The ld. DR relied on the order of the lower authorities. 8. We have heard the rival submissions and perused the materials available on record. It is observed that the assessee’s case was reopened for the reason that the assessee has paid on-money of Rs. 1,62,08,640/- which was unearthed during the search and seizure 5 ITA No. 3100/Mum/2024 (A.Y. 2012-13) Sajjan India Limited action carried out in the group of M/s. Goyal Safal Developers. It is also an undisputed fact that the assessee has paid Rs. 11 lacs by cheque at the time of booking of the office premises which transaction was subsequently cancelled and the said amount was received back by cheque dated 29.12.2012, by the assessee from the builder. It is also observed that the ld. AO has reproduced the details of the accounts of the assessee in the books of M/s. Goyal Safal Developers which is reproduced hereinunder: Date S. No. Floor Unit No. Area Ref. Name Sold U Sold Rate G. Value CH Receivable DISC Receivable 03.12.11 112 Office B- 907 6432 Goyal SAJJAN INDIA LTD. 6432 0 6300 405,21,600 243,12,960 162,08,640 Due Collection Q Collection DISC Due o/s. CH. NET o/s. Net o/s. 1,01,30,400 11,00,000 90,30,400 232,12,960 394,21,600 9. From the above, it is evident that the total area of sale was 6,432 sq. ft. @ Rs. 6,300/- per sq. ft. where the gross sale price is arrived at Rs. 4,05,21,600/-. In the above tabular column, at number 13, it is mentioned as ‘Discount Receivable’ is Rs. 1,62,08,640/-, which is the alleged on-money payment made by the assessee to the builder. It also has specified that Rs. 11 lacs has been paid and the balance outstanding is Rs. 3,94,21,600. The aggregate of the amount received and the amount receivable is Rs. 4,05,21,600/- which includes the alleged on-money of Rs. 1,64,08,640/-. From this, it could be inferred that the assessee has not paid the alleged on-money to the builder as per the details extracted by the ld. AO. The said amount has been recorded as ‘Discount Receivable’ and not as ‘Cash Received’. There is no iota of doubt that the assessee has not paid the on-money subsequently, for the reason that the ld. AO himself has admitted that the advanced money has been refunded due to the cancellation of the sale transaction. Further, we are in agreement with the argument enhanced by the ld. AR 6 ITA No. 3100/Mum/2024 (A.Y. 2012-13) Sajjan India Limited that the lower authorities have not made any independent inquiry or for that case, any further inquiry as to the payment of on-money by the assessee to the builder and whether or not the same has been returned back by the builder upon cancellation of the said transaction. In the absence of the relevant findings, we do not find any justification in the action of the ld. AO in making the impugned addition merely on surmises and conjectures without any valid basis. We therefore deem it fit to set aside the order of ld. CIT(A) and allow the appeal of the assessee. As we have decided the issue on the merits, the other legal grounds raised by the assessee requires no further adjudication. 10. In the result, the appeal filed by the assessee is allowed. Order pronounced in the open court on 04.03.2025 Sd/- Sd/- (GIRISH AGRAWAL) (KAVITHA RAJAGOPAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated: 04.03.2025 Karishma J. Pawar (Stenographer) Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. CIT- concerned 4. DR, ITAT, Mumbai 5. Guard File BY ORDER, (Dy./Asstt.Registrar) ITAT, Mumbai "