M/s. Mandviwala Developers,, Surat v. The Dy.Commissioner of Income Tax,Circle-1(2),, Surat

ITA 1192/AHD/2016 | 2012-2013
Pronouncement Date: 26-03-2021 | Result: Dismissed

Appeal Details

RSA Number 119225614 RSA 2016
Assessee PAN AAQFM7563C
Bench Surat
Appeal Number ITA 1192/AHD/2016
Duration Of Justice 4 year(s) 10 month(s) 20 day(s)
Appellant M/s. Mandviwala Developers,, Surat
Respondent The Dy.Commissioner of Income Tax,Circle-1(2),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 26-03-2021
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 26-03-2021
Assessment Year 2012-2013
Appeal Filed On 06-05-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL SURAT BENCH SURAT BEFORE SHRI PAWAN SINGH JUDICIAL MEMBER AND DR. ARJUN LAL SAINI ACCOUNTANT MEMBER ITA NO. 1192/AHD/2016 (ASSESSMENT YEAR: 2012-13) ( VIRTUAL COURT HEARING) M/S MANDVIWALA DEVELOPERS SURVEY NO.405-406 OPP. DIN DAYAL ASHRAM SACHIN MAGDALLA ROAD SURAT (GUJARAT). PAN : AAQFM7563C VS DEPUTY COMMISSIONER OF INCOME TAX CIRCLE-1(2) SURAT APPELLANT RESPONDEDNT APPELLANT BY SHRI S AURABH SOPARKAR SR. ADVOCATE WITH MS URVASHI SHODHAN ADVOCATE RESPONDENT BY SHRI S T BIDARI CIT (DR) & SH. O.P VAISHNAV CIT-DR DATE OF HEARING 05/02/2021 DATE OF PRONOUNCEMENT 26 / 03 / 202 1 ORDER UNDER SECTION 254(1) OF INCOME-TAX ACT PER PAWAN SINGH JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-II SURAT [IN SHORT THE LD. CIT(A)] DATED 18.03.2016 FOR THE ASSESSMENT YEAR (AY) 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL:- (1) ON THE FACTS AND CIRCUMSTANCES THE HONORABLE CIT(A)-II HAS ERRED IN CONFIRMING THE ACTION OF LD. A.O. BY REJECTING THE SUBMISSION OF ASSESSEE IN TREATING GROSS RECEIPTS OF UNACCOUNTED TRANSACTIONS AS NET INCOME AND MAKING ADDITION OF DIFFERENTIAL AMOUNT OF RS.6 78 00 000/- TO THE TOTAL INCOME OF ASSESSEE. ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 2 (2) ON THE FACTS AND CIRCUMSTANCES THE HONORABLE CIT(A)-II HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD. A.O. ONLY ON THE BASIS OF DISCLOSURE MADE DURING THE SURVEY CONDUCTED U/S 133A OF THE I.T. ACT REJECTING THE FACTS AND EXPLANATION OFFERED BY ASSESSEE ON THE VERY MATERIAL FOUND DURING THE SURVEY. (3) ON THE FACTS AND CIRCUMSTANCES THE HONORABLE CIT(A)-II HAS ERRED IN REJECTING THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE. (4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ADDITION STATED ABOVE DESERVE TO BE DELETED HENCE IT IS PRAYED TO YOUR HONOUR TO DELETE THE SAME AND DO THE JUSTICE. (5) THE APPELLANT CRAVES LEAVE TO ADD ALTER OR VARY ANY OF THE GROUNDS OF APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF DEVELOPMENT OF LAND AND BUILDING. A SURVEY ACTION WAS CONDUCTED ON 05.07.2011 UNDER SECTION 133A OF INCOME TAX ACT ON THE BUSINESS PREMISES OF ASSESSEE. DURING THE COURSE OF SURVEY ACTION CERTAIN INCRIMINATING DOCUMENTS WERE FOUND IN POSSESSION OF PARTNERS OF ASSESSEE FIRM WHICH WAS IMPOUNDED BY SURVEY PARTY AS ANNEXURE-BF-16(BI-1) AND BF- 17(BI-2). THE STATEMENT OF ONE OF THE PARTNER OF ASSESSEE FIRM NAMELY SHRI DIVYANG MANDVIWALA WAS RECORDED ON OATH. IN THE STATEMENT PARTNER OF FIRM DISCLOSED UNACCOUNTED INCOME OF RS.10.78 CRORE AS NET INCOME FOR ASSESSMENT YEAR (AY) 2012-13. IN HIS STATEMENT HE FURTHER AFFIRMED THAT NO OTHER EXPENSES OR DEDUCTION SHALL BE CLAIMED FROM THE SAID UNACCOUNTED INCOME DISCLOSED DURING THE COURSE OF SURVEY. THE PARTNER OF ASSESSEE ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 3 ALSO FURNISHED THE BIFURCATION OF UNACCOUNTED INCOME OF RS.10.78 CRORE. 3. THE ASSESSEE FILED ITS RETURN OF INCOME FOR AY.2012-13 ON 27.09.2013 DECLARING TAXABLE INCOME OF RS.4.00 CRORE. THE CASE WAS SELECTED FOR SCRUTINY; THE ASSESSING OFFICER AFTER SERVING NOTICE UNDER SECTION 143(2) PROCEEDED FOR ASSESSMENT AND ISSUED SHOW CAUSE NOTICE AS TO WHY RETURN OF INCOME OF RS.4.00 CRORE IS FILED AGAINST THE INCOME DECLARED DURING THE SURVEY. THE ASSESSEE FILED HIS DETAILED REPLY VIDE REPLY DATED 19.02.2015 THE ASSESSEE FURNISHED THE PARTY-WISE EXPLANATION WITH REGARD TO INCRIMINATING MATERIAL IN THE FOLLOWING MANNER: ANNEXURE PAGE NO. DETAILS ACCOUNTED IN THE BOOKS OF ASSESSEE. BF-17[BI- 2] 12 THIS PAPER CONTAINS BUSINESS RECEIVABLE FOR APRIL 2011. IT HAS BEEN WRITTEN IN CODED LANGUAGE DELETING 5 ZEROS. THE FIGURES WRITTEN ARE GROSS BUSINESS RECEIPTS WRITTEN AS 360 TOTAL LEVANA BAKI MEANING THEREBY 360 TOTAL TO BE RECEIVABLE. ACTUAL GROSS RECEIVABLES AS PER THIS PAPER SHALL BE RS.3 60 00 000/-. THE RECEIVABLES ARE GROSS RECEIPTS OF UNACCOUNTED BUSINESS TRANSACTION. ASSESSEE HAS VOLUNTARILY SHOWN NET PROFIT FROM THESE TRANSACTION IN THE RETURN NET PROFIT OF RS. 4 CRORE SHOWN IN ITR FOR F.Y.2011-12. ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 4 INCOME AMOUNTING TO RS.4 00 00 000/- 17 THIS PAPER CONTAINS BUSINESS RECEIVABLES FOR MAY 2011. IT HAS BEEN WRITTEN IN CODED LANGUAGE DELETING 5 ZEROS. THE FIGURES WRITTEN ARE GROSS BUSINESS RECEIPT WRITTEN AS 335 UGHRANI BAKI MEANING THEREBY 335 TOTAL TO BE RECEIVABLE. ACTUAL GROSS RECEIVABLE AS PER THIS PAPER SHALL BE RS.3 35 00 000/-. THE RECEIVABLES ARE GROSS RECEIPTS OF UNACCOUNTED BUSINESS TRANSACTION. ASSESSEE HAS VOLUNTARILY SHOWN NET PROFIT FROM THESE TRANSACTION IN THE RETURN OF INCOME AMOUNTING TO RS.4 00 00 000/-. NET PROFIT OF RS.4 CRORE SHOWN IN ITR FOR F.Y. 2011-12. 18 THIS PAPER CONTAINS BUSINESS RECEIVABLES FOR MAY 2011. IT HAS BEEN WRITTEN IN CODED LANGUAGE DELETING 5 ZEROS. THE FIGURES WRITTEN ARE GROSS BUSINESS RECEIPT WRITTEN AS 280 UGHRANI BAKI MEANING THEREBY 280 TOTAL TO BE RECEIVABLE. ACTUAL GROSS RECEIVABLES AS PER THIS PAPER SHALL BE RS.2 80 00 000/-. THE RECEIVABLES ARE GROSS RECEIPTS OF UNACCOUNTED BUSINESS TRANSACTION. ASSESSEE HAS VOLUNTARILY SHOWN NET PROFIT FROM THESE TRANSACTION IN THE RETURN OF INCOME NET PROFIT OF RS. 4 CRORE SHOWN IN ITR FOR F.Y. 2011-12. ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 5 AMOUNTING TO RS.4 00 00 000/-. 4. THE AFORESAID EXPLANATION FURNISHED BY ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT DURING THE SURVEY THE STATEMENT OF PARTNER WAS RECORDED ON OATH. THE PARTNER DISCLOSED UNACCOUNTED INCOME OF RS.10.78 CRORE AS NET INCOME FOR AY-2012-13. THE PARTNER ALSO AFFIRMED THAT NO OTHER EXPENSES OR DEDUCTION WOULD BE CLAIMED. THE OTHER PARTNERS OF THE FIRM ALSO ENDORSED THE CORRECTNESS OF THE STATEMENT. THE ASSESSING OFFICER FURTHER HELD THAT ASSESSEE HAS NOT EXPLAINED THE BASIS FOR STATING THAT DISCLOSED INCOME DURING THE SURVEY AND ALSO ARRIVING AT THE NET INCOME WHICH ACCORDING TO THE ASSESSEE OFFERED FOR TAXATION. NO DOCUMENTARY EVIDENCES OF CORRESPONDING EXPENSES INCURRED IN ARRIVING THE NET INCOME IS FILED. ACCORDINGLY THE ASSESSING OFFICER ON THE BASIS OF ABOVE OBSERVATION ISSUED SHOW CAUSE NOTICE DATED 24.02.2015 AS TO WHY THE DIFFERENCE OF UNACCOUNTED UNDISCLOSED INCOME DECLARED DURING THE SURVEY AND FROM THE INCOME OFFERED FOR TAXATION SHOULD NOT BE ADDED TO THE TOTAL INCOME BY TREATING THE RETRACTION AS AN AFTERTHOUGHT. THE ASSESSING OFFICER HAS RECORDED THE CONTENTS OF THE SHOW CAUSE NOTICE DATED 24.02.2015 IN PARA 5 OF ASSESSMENT ORDER. ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 6 5. IN RESPONSE TO SHOW-CAUSE NOTICE DATED 24.02.2015 THE ASSESSEE FILED ITS REPLY DATED 03.03.2015. THE REPLY OF ASSESSEE IS EXTRACTED BY ASSESSING OFFICER IN PARA 6 OF THE ASSESSMENT ORDER (PAGE NO 8 TO 17 OF ASSESSMENT ORDER). IN REPLY THE ASSESSEE STATED THAT DURING THE COURSE OF SURVEY ACTION SOME LOOSE PAPERS WERE IMPOUNDED WHICH WERE INVENTORISED AS BF-16 AND BF-17. THE ASSESSEE HAS EXPLAINED THE CONTENTS OF IMPOUNDED MATTER IN THE FOLLOWING MANNER: PAGE NO. CONTENTS PAGE NO. 12 THE PAGE CONTAINED DETAILS OF UGHRANI BAKI DURING 1/4/2011 TO 30/4/2011 TOTAL AMOUNTING TO 360 (TOTAL LEVANA BAKI) PAGE NO. 17 THE PAGE CONTAINED DETAILS OF UGHRANI BAKI DURING 1/5/2011 TO 30/5/2011 TOTAL AMOUNTING TO 335 (TOTAL LEVANA BAKI) PAGE NO. 18 THE PAGE CONTAINED DETAILS OF UGHRANI BAKI FOR JUNE 2011 TOTAL AMOUNTING TO 280 (TOTAL LEVANA BAKI). 6. IT WAS FURTHER STATED THAT IN ANSWER TO QUESTION NO.33 THAT DIFFERENCE OF CASH AND CASH OF PAPER BOOK OF RS.7 86 857/- WAS UNACCOUNTED CASH OF THE ASSESSEE AND IN ANSWER TO QUESTION NO.34 THE PARTNER ADMITTED TOTAL UNACCOUNTED INCOME OF RS.10.78 CRORE IN THE FOLLOWING MANNER: PARTICULARS SUM WRITTEN ACTUAL AMOUNT PAGE NO. 12 360 3 60 00 000 PAGE NO. 17 335 3 35 00 000 ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 7 PAGE NO. 18 280 2 80 00 000 TOTAL 9 75 00 000 7. IT WAS EXPLAINED THAT WHILE FILING RETURN OF INCOME THE PARTNER OF ASSESSEE-FIRM REALIZED THEIR MISTAKE THAT THE DISCLOSURE OF UNACCOUNTED INCOME HAS BEEN MADE ON THE BASIS OF BUSINESS RECEIVABLES WHICH IS GROSS RECEIPTS OF UNACCOUNTED TRANSACTION. THE TAX IS ALWAYS PAYABLE ON PROFIT AND NOT ON THE TRANSACTION WHETHER ACCOUNTED OR UNACCOUNTED. ALL THE PARTNERS WERE UNDER MENTAL PRESSURE AND IN SUCH SITUATION ALL AGREED FOR DISCLOSURE OF UNACCOUNTED INCOME TAKEN INTO CONSIDERATION BUSINESS RECEIVABLES WHICH ARE GROSS RECEIPTS ONLY. THE ASSESSEE ALSO FILED RETRACTION- AFFIDAVIT OF ALL THE PARTNERS INTERALIA STATING THEREIN THAT AT THE TIME OF RECORDING THE STATEMENT OF PARTNER THEY WERE UNDER THE IMPRESSION THAT TRANSACTION RECORDED IN THE IMPOUNDED PAPER IS NET UNACCOUNTED PROFIT WHICH IS ACTUALLY GROSS BUSINESS RECEIPTS. THE ASSESSEE ALSO RELIED ON CERTAIN CASE LAW ON THE RATIO THAT THERE IS NO EVIDENTIARY VALUE OF THE STATEMENT RECORDED DURING SURVEY ACTION UNDER SECTION 133 OF THE ACT. 8. THE CONTENTION/EXPLANATION FURNISHED BY ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT THE ASSESSEE HAS NOT DISPUTED THE FACT ABOUT THE INCRIMINATING EVIDENCE SPECIFICALLY PAGE NO.12 17 & 18 OF ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 8 ANNEXURE-BF-1/B1-2 OF THE IMPOUNDED DOCUMENTS. THE ASSESSEE HAS NOT DISPUTED THE WRITING ON THESE THREE PAPERS. THE SUBMISSION OF THE ASSESSEE THAT PARTNERS REALIZED THEIR MISTAKE THAT THE DISCLOSURE WAS MADE ON THE BASIS OF BUSINESS RECEIVABLES WHICH IS GROSS RECEIPT OF UNACCOUNTED TRANSACTION WAS ALSO NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER HELD THAT THE PARTNER OF THE FIRM SPECIFICALLY AND CATEGORICALLY STATED THAT THE FIGURES IN THE CODED FORM AGAINST THE NAME OF THE PARTNERS OF THE FIRM ARE THE NET PROFIT OF THE FIRM OR THE QUARTER ENDING ON JUNE 2011. HOWEVER THE LOWER PORTION OF PAGE NO.17 THE FIGURES WERE DISTRIBUTION OF MONEY AMONG THE PARTNERS IN THEIR PROFIT SHARING RATIO AND THAT PARTNERS OF THE FIRM CATEGORICALLY STATED THAT THE AMOUNT WAS DISTRIBUTED AMONG THE PARTNERS ARE THE UNRECORDED AND UNACCOUNTED RECEIVABLES OF THE FIRM. THE ASSESSING OFFICER ALSO HELD THAT STATEMENT OF DIVYANG MANDVIWALA WAS ENDORSED BY TWO OTHER PARTNERS NAMELY SHAILESH SURESH CHAND MANDVIWALA AND VIPUL KIRIT KUMAR MANDVIWALA AND THEIR CHARTERED ACCOUNTANT PRADEEP SINGHI. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF NAME PAN AND COMPLETE ADDRESS OF THE PERSONS FROM WHOM SUCH RECEIVABLE OF RS. 9.75 CRORE. IN RESPONSE TO THE SAID QUESTION IT WAS EXPLAINED THAT RECEIVABLE OF RS. 9.75 CRORE WERE OUT OF THE BOOKS TRANSACTIONS FOR WHICH NO TRACK RECORD WAS MAINTAINED. THE ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 9 ASSESSING OFFICER FURTHER HELD THAT TILL 29/03/2013 THE ASSESSEE HAD PAID TAX OF RS. 2.10 CRORE WHICH IS MORE THAN 50% OF THE RETURN INCOME. IT WAS ALSO HELD THAT DURING THE ASSESSMENT NO BILLS VOUCHER OR NATURE OF EXPENSES WAS BROUGHT ON RECORD. THE ASSESSING OFFICER FINALLY HELD THAT DURING THE STATEMENT RECORDED IN SURVEY ACTION THE PARTNER OF THE ASSESSEE DISCLOSED NET INCOME AND NOT GROSS INCOME FURTHER THE MANNER IN WHICH UNACCOUNTED INCOME WAS GENERATED WAS NOT EXPLAINED. ON THE AFORESAID OBSERVATION THE ASSESSING OFFICER BROUGHT THE DIFFERENCE OF UNDISCLOSED INCOME AND THE RETURN INCOME OF RS.6 78 00 000/- TO TAX IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) DATED 28.03.2015. 9. ON APPEAL BEFORE THE LD. CIT(A) THE ADDITION WAS UPHELD. THE LD. CIT(A) WHILE UPHOLDING THE ADDITION HELD THAT DURING THE STATEMENT RECORDED IN THE SURVEY PROCEEDING THE PARTNERS SPECIFICALLY STATED THAT THE AMOUNT IS DISTRIBUTED AMONG THE PARTNERS ARE UNRECORDED AND UNACCOUNTED RECEIVABLES OF THE FIRM. THE STATEMENT OF PARTNER OF ASSESSEE WAS RECORDED IN THE PRESENCE OF CHARTERED ACCOUNTANT. THE PROFESSIONAL ADVICE WAS AVAILABLE TO THE ASSESSEE AT THE TIME OF RECORDING THE STATEMENT. THE ASSESSEE FILED RETURN OF INCOME AFTER ONE YEAR AND HAS PAID TAX OF RS.2.10 CRORE TILL 29.03.2013 WHICH IS MORE THAN 50% OF TOTAL INCOME RETURNED WHICH CLEARLY INDICATES THAT INCOME WAS ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 10 REDUCED WHILE FILING RETURN OF INCOME BEING AFTERTHOUGHT. NO PLAUSIBLE EXPLANATION WAS OFFERED BY THE ASSESSEE FOR PAYING TAX OF RS.2.10 CRORE AS AN ADVANCED TAX. THE RETRACTION STATEMENT AFTER TWO YEARS IS AN AFTERTHOUGHT. IT WAS ALSO HELD THAT IN NORMAL CIRCUMSTANCES THE APPELLANT REALIZES MISTAKE IMMEDIATELY AND WOULD HAVE NOT WAITED FOR TWO YEARS. THE ADMISSION IS AN IMPORTANT PIECE OF EVIDENCE. THE BURDEN TO PROVE THAT STATEMENT WAS OBTAINED BY PRESSURE OR INTIMIDATION WAS ON THE ASSESSEE. THE ASSESSEE CLAIMED THAT HE MADE STATEMENT UNDER THE MISTAKEN BELIEF OF FACT OR LAW AND THAT RETRACTION SHOULD BE MADE AT THE EARLIEST OPPORTUNITY. THE LD.CIT(A) FURTHER HELD THAT ASSESSEE FAILS TO PRODUCE THE EVIDENCE WITH REGARD TO THE EXPENDITURE FOR VERIFICATION BEFORE THE ASSESSING OFFICER DESPITE SEVERAL OPPORTUNITY. THUS THE ASSESSEE FAILED TO DISCHARGE THE BURDEN REGARDING THE EXPENDITURE. THE PARTNER OF ASSESSEE MADE DISCLOSER OF UNACCOUNTED INCOME ON THE BASIS OF DOCUMENT AND THE LOOSE PAPERS FOUND AND IMPOUNDED FROM THEIR PREMISES. SHRI DIVYANG MANDVIWALA IS AN ACTIVE PARTNER OF THE BUSINESS AND WAS WELL-INFORMED OF THE NATURE OF BUSINESS AND THE DOCUMENTS/PAPERS LYING AT HIS PREMISES. THE DISCLOSURE STATEMENT WAS MADE AFTER CONSULTING THE BOOKS OF ACCOUNTS. ON THE SUBMISSIONS OF ASSESSEE THAT THE ASSESSEE INCURRED EXPENSES ON THE RECEIVABLE THE LD CIT(A) HELD THAT THE ASSESSEE FAILED TO ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 11 EXPLAINED THAT ANY EXPENDITURE WAS INCURRED AS THE SAME IS NOT SUPPORTED WITH ANY EVIDENCE. 10. THE LD. CIT(A) FURTHER NOTED THAT DURING THE APPELLATE STAGE THE ASSESSEE RAISED NEW ISSUES WHICH WAS NEITHER RAISED DURING ASSESSMENT OR AT THE TIME OF FILING APPEAL. FIRST CLAIM/ISSUE WAS REGARDING THAT SOURCE OF UNACCOUNTED INCOME AND THE NATURE OF UNACCOUNTED BUSINESS THAT IS WAS FROM TRADING OF SAREES AND DRESS MATERIAL AND NOT FROM LAND AND BUILDING DEVELOPMENT. AND THAT FOR SAREES AND DRESS MATERIAL BUSINESS THE ASSESSEE MAINTAINED LOOSE PAPERS. THE LD CIT(A) DISCARDED THE SUBMISSIONS OF ASSESSEE BY TAKING VIEW THAT IT IS A MAKE BELIEVE STORY. NO SUCH CLAIM OF BUSINESS OF SAREES AND DRESS MATERIAL EITHER DURING THE SURVEY ACTION OR IN ASSESSMENT OR WHILE FILING RETRACTION-AFFIDAVIT WAS MADE. THE INCRIMINATING MATERIAL FOUND WAS CONFRONTED WITH THE PARTNER WHO DISCLOSED UNACCOUNTED INCOME WITNESSED BY TWO OTHER PARTNERS AND THEIR CA. THE CLAIM OF ASSESSEE WITH REGARD TO UNDISCLOSED TEXTILE BUSINESS AND PROFIT OF RS. 4 CRORE ON UNACCOUNTED BUSINESS RECEIVABLE OF RS. 9.76 CRORE GIVING A PROFIT @ 41% IN UNIMAGINABLE. OTHERWISE THE ASSESSEE FAILED TO PROVIDE COMPLETE DETAILS OF THE PARTIES WITH WHOM THE ASSESSEE TRADED IN SUCH SAREES AND TEXTILE BUSINESS. ON THE AFORESAID OBSERVATION THE LD. CIT(A) AFFIRMED THE ACTION OF ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 12 ASSESSING OFFICER. THUS FURTHER AGGRIEVED THE ASSESSEE HAS FILED PRESENT APPEAL BEFORE THE TRIBUNAL. 11. WE HAVE HEARD THE SUBMISSIONS OF SHRI SAURABH SOPARKAR LEARNED SENIOR ADVOCATE ASSISTED BY MS URVASHI SHODHAN ADVOCATE (LD. COUNSEL/LD. AR) AND SHRI S. T. BIDARI LD. CIT(DR) FOR THE REVENUE AND HAVE GONE THROUGH THE ORDER OF THE LOWER AUTHORITIES CAREFULLY. THE LEARNED SR COUNSEL FOR THE ASSESSEE SUBMITS THAT A SURVEY ACTION UNDER SECTION 133A WAS CONDUCTED ON THE BUSINESS PREMISES OF THE ASSESSEE ON 5 TH JULY 2011. DURING THE COURSE OF SURVEY SOME LOOSE PAPERS WERE FOUND AND IMPOUNDED AND WERE INVENTORISED AT THE BF-16 AND BF-17. THE STATEMENT OF ONE OF THE PARTNER OF WAS RECORDED. DURING THE COURSE OF SURVEY PROCEEDING THE IMPOUNDED MATERIAL WAS SHOWN TO THE PARTNER AND WAS ASKED TO EXPLAIN THE CONTENTS OF THE PAPER. IN QUESTION WAS 27 AND 30 THE PARTNER WAS ASKED TO EXPLAIN THE PAGE NUMBER 12 17 AND 18 OF SEIZED MATERIAL. IN ANSWER TO THE QUESTION THE PARTNER REPLIED THAT SUM MENTIONED ON THE PAGE IN LAKHS AND THOSE ARE UNACCOUNTED BUSINESS RECEIVABLE THE SUMMARY WAS EXPLAINED TO THAT OF 9.75 CRORE. THE PARTNER FURTHER ADMITTED IN ANSWER TO QUESTION NUMBER 33 THAT DIFFERENCE OF CASH FOUNDED AS PER BOOKS AMOUNTING TO RS. 7 86 857/- WAS UNACCOUNTED CASH OF ASSESSEE FORM. FURTHER IN ANSWER TO QUESTION NUMBER 34 PARTNER ADMITTED UNACCOUNTED ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 13 TOTAL INCOME OF FIRM OF 10.78 CRORE. LATER ON THE ASSESSEE REALISED THEIR MISTAKE THAT THEY HAD DISCLOSED GROSS RECEIPT OF INCOME AS NET INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESSEE FILED RETURN OF INCOME ON 27 TH SEPTEMBER 2013 SHOWING TOTAL INCOME AT 4.00 CRORE. DURING THE ASSESSMENT THE ASSESSEE REQUESTED TO THE ASSESSING OFFICER TO PROVIDE THE COPY OF STATEMENT OF PARTNER RECORDED BY SURVEY TEAM. THE COPY OF THE STATEMENT OF PARTNER NAMELY DIVYANG MANDVIWALA WAS PROVIDED TO THE ASSESSEES REPRESENTATIVE. ON RECEIPT OF STATEMENT OF PARTNER THE ASSESSEE IMMEDIATELY FILED RETRACTION AFFIDAVIT EXPLAINING THE FACT THAT AT THE TIME OF SURVEY ACTION REGARDING GROSS RECEIPT WERE TAKEN AS NET RECEIVED. LEARNED SENIOR COUNSEL FURTHER SUBMITTED THAT DURING THE COURSE OF SURVEY NOT EVEN A SINGLE DOCUMENT FOUND WHICH CAN ESTABLISH ANY ON MONEY WAS RECEIVED UNDER THE CONSTRUCTION PROJECT. THE SOLE MATERIAL ON THE BASIS OF WHICH THE ADDITION WAS PROPOSED AND MADE HAD BEEN MADE ARE THREE PAPERS CONTAINING THEREIN BUSINESS RECEIVABLE OF THREE MONTHS. THE LEARNED SENIOR COUNSEL FOR THE SUBMITS THAT UNDER THE INCOME TAX ONLY NET INCOME IS TAXABLE AND NOT THE TOTAL GROSS RECEIPT RECEIVED BY THE ASSESSEE DURING THE COURSE OF ITS BUSINESS. THE ASSESSEE AFTER REALISATION THAT ASSESSEE HAD SPENT CERTAIN EXPENSES OFFERED THE NET INCOME AFTER DEDUCTION OF EXPENSES AND OFFER THE REAL INCOME EARNED BY THE ASSESSEE. ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 14 12. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT THE STATEMENT RECORDED BY SURVEY PARTY PER SE NOT ADMISSIBLE IN THE EVIDENCE. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT VARIOUS HIGH COURTS HELD THAT THE SURVEY PARTY HAS NO AUTHORITY TO RECORD THE STATEMENT ON OATH AND THOSE STATEMENT HAS NO EVIDENTIARY VALUE. 13. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE IS IN THE BUSINESS OF REAL ESTATE DEVELOPMENT AND WHAT COULD BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE A REASONABLE AMOUNT OF PROFIT WHICH THE ASSESSEE COULD HAVE EARNED. IN SUPPORT OF HIS SUBMISSION THE LEARNED SENIOR COUNSEL RELIED UPON THE DECISION OF COORDINATE BENCH OF THE AHMEDABAD TRIBUNAL IN KISHORE MOHANLAL TELWALA VS ACIT (107 TAXMAN 86) WHEREIN IT WAS HELD THAT WHAT COULD BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 158BC WAS A REASONABLE AMOUNT OF PROFIT WHICH THE ASSESSEE COULD HAVE EARNED BY CHARGING ON MONEY IN RESPECT OF FLATS. IN THAT CASE THE ASSESSEE OFFERED 8% ON THE TOTAL RECEIPT WHICH WAS CONSIDERED AS REASONABLE AND FAIR. THE LEARNED SENIOR COUNSEL FOR THE ASSESSEE SUBMITS THAT DECISION OF TRIBUNAL WAS CHALLENGED BY REVENUE BEFORE JURISDICTIONAL HIGH COURT IN INCOME TAX APPEAL NO. 411 OF 1999. THE APPEAL OF THE REVENUE WAS DISMISSED VIDE ORDER DATED 24.04.2000. THE LEARNED SENIOR COUNSEL BY REFERRING THE SAID ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 15 DECISION INVITED OUR ATTENTION ON THE QUESTION NO. 2 AS FRAMED BY HONBLE HIGH COURT WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE ITAT HAVING HELD THAT ONLY THE PROFIT OF UNDISCLOSED INCOME HAS TO BE TAXED IN THE BLOCK ASSESSMENT WAS JUSTIFIED IN ADMITTING THE CLAIM OF EXPENDITURE ON THE BASIS OF ORAL EVIDENCE DEPARTMENT HAS CLEARLY DISCHARGED ITS ONEROUS TO PROVE THE UNDISCLOSED RECEIVED IN THE FORM OF ON MONEY ON THE BASIS OF MATERIAL FOUND AND SEIZED DURING THE COURSE OF SEARCH . THE LEARNED SENIOR COUNSEL SUBMITS THAT HONBLE HIGH COURT WHILE DECIDING THE SAID QUESTION NO. 2 HELD THAT TRIBUNAL HAS RIGHTLY CONSIDERED THAT IN ABSENCE OF ANY FINANCIAL RECORD OR ACCOUNT BEING MAINTAINED BY THE RESPONDENT-ASSESSEE THE PROFIT EARNED BY THE RESPONDENT-ASSESSEE FOR THE BLOCK ASSESSMENT WAS PRESUMED TO BE MORE THAN 8% AS PER THE PROVISIONS OF SECTION 44AD OF THE ACT. FURTHER THE CONTENTION OF REVENUE WAS NOT ACCEPTED THAT NO ACCOUNT HAS BEEN MAINTAINED ON NOTHING TO SUBSTANTIATE THE AMOUNT OF EXPENDITURE INCURRED BY THE RESPONDENT-ASSESSEE WAS SHOWN. THE LEARNED SENIOR COUNSEL SUBMITS THAT THE RATIO OF CASE LAW IN KISHORE MOHANLAL TELWALA IS A SQUARELY IN APPLICABLE ON THE FACTS OF THE PRESENT CASE. 14. TO BUTTRESS HIS SUBMISSIONS THE SENIOR COUNSEL OF THE ASSESSEE ALSO RELIED UPON THE FOLLOWING DECISIONS: 1 GUJARAT HIGH COURT IN CASE OF SHARDABEN K MODI IN TAX APPEAL ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 16 NO. 123 OF 2013 DATED 30.04.2013 2 HON'BLE KERALA HIGH COURT IN CASE OF PAUL MATHEWS & SONS VS CIT (2003) 263 ITR 101 (KERALA) 3 SUPREME COURT IN CIT VS S. KHADER KHAN SON (2013) 352 ITR 480 SC 4 MADRAS HIGH COURT CIT VS S. KHADER KHAN SON (2008)300 ITR 157 (MADRAS) 5 GUJARAT HIGH COURT IN CIT VS GOLDEN FINANCE[2013] 40 TAXMANN.COM 329 (GUJARAT) 6 MADHYA PRADESH HIGH COURT IN CIT VS DIGAMBAR KUMAR JAIN (HUF)(2012) 83 CCH 0236 MPHC 7 DELHI HIGH COURT IN CIT VS DHINGRA METAL WORKS[2011] 196 TAXMAN 488(DELHI) 8 GUJARAT HIGH COURT IN CIT VS PRESIDENT INDUSTRIES(2002) 258 ITR 654 (GUJ) 9 GUJARAT HIGH COURT IN DCIT VS PANNA CORPORATION IN TAX APPEALNO. 323& 325OF 2000 DATED 16.06.2012 10 GUJARAT HIGH COURT IN CIT VS LEO FORMULATION (P.) LTD [2014] 48 TAXMANN.COM 328 (GUJARAT) 11 GUJARAT HIGH COURT IN CIT VS SAMIR SYNTHETICS MILL[2010] 326 ITR 410 (GUJARAT) 12 GUJARAT HIGH COURT IN CIT VS V R TEXTILE IN TAX APPEAL NO. 1828 OF 2010 13 BOMBAY HIGH COURT IN CIT VS SHRI HARIRAM BHAMBHANI INCOMT TAX APPEAL NO. 313 OF 2013 14 ALLAHABAD HIGH COURT IN ASHOK KUMAR RASTOGI VS CIT [1991] 55 TAXMAN 433(ALLAHABAD) 15 KISHOR MOHANLAL TELWALA 107 TAXMANN 86 ITAT AHMEDABAD 16 KISHOR MOHANLAL TELWALA T.A. NO. 411 TO 1999 GUJARAT HIGH COURT 17 GREEN FIELD REALTY PVT. LTD. ITSS NOS. 289 TO 291 320 TO 322/AHD/2018 ITAT AHMEDABAD 15. THE ASSESSEE HAS FILED FOLLOWING DOCUMENTS ON RECORD: 1 ITR WITH COMPUTATION OF TOTAL INCOME 2 AUDIT REPORT 3 WRITTEN SUBMISSION BEFORE CIT (A) 4 DOCUMENTS IMPOUNDED DURING SURVEY - PG NO. 12 17 & BF17 5 AFFIDAVIT DATED 25/02/2015 6 SHOW CAUSE NOTICE DATED 24/02/2015 7 REPLY TO S.C.N. DATED 03/03/2015 ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 17 8 DETAILS OF DOCUMENTS IMPOUNDED DURING SURVEY 9 STATEMENT RECORDED U/S 131 OF THE ACT A) DIVYANG MANDWILA (IN GUJARATI) B) BRIJESH MANDWILA (IN GUJARATI) C) HEMISH MANDWILS 10 EXPLANATION FOR DOCUMENTS IMPOUNDED DURING SURVEY 11 APPLICATION FOR ADDITIONAL EVIDENCE MADE BEFORE CIT(A) ALONG WITH DETAILS OF FLAT BOOKING AS ON 05/07/201 1 12 REMAND REPORT DATED 07/03/2016 ALONG WITH BALANCE SHEET FOR A.Y. 2011-12 13 REJOINDER TO REMAND REPORT DATED 1 5/03/20 1 6 14 FREE ENGLISH TRANSLATION OF DOCUMENTS RECORDED ORIGINALLY IN GUJARATI A) STATEMENT OF DIVYANG MANDWILA B) STATEMENT OF BRIJESH MANDWILA 16. ON THE OTHER HAND THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF THE LOWER AUTHORITIES. THE LD. DR FOR THE REVENUE FURTHER SUBMITS THAT DURING THE SURVEY ACTION CERTAIN INCRIMINATING MATERIAL IN THE FORM OF VARIOUS DOCUMENTS WAS FOUND AT THE PREMISES OF ASSESSEE. THE DOCUMENTS WERE INVENTORISED AND SEIZED. DURING THE COURSE OF SURVEY PROCEEDING THE STATEMENT OF ONE OF THE PARTNER OF ASSESSEE WAS RECORDED IN THE STATEMENT THE SAID PARTNER DISCLOSED UNACCOUNTED INCOME OF 10.78 CRORE AS INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THE STATEMENT THE PARTNER AFFIRMED THAT NO OTHER EXPENSES DEDUCTION WILL BE CLAIMED FROM THE UNACCOUNTED INCOME DISCLOSED DURING THE COURSE OF SURVEY. DURING THE ASSESSMENT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD NOT DISPUTED THAT THE SUM WRITTEN ON THESE PAGES ARE IN CODED FORMS I.E. THREE DIGITS WERE ACTUALLY STAND FOR CRORES. IN REPLY TO VARIOUS ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 18 QUESTIONS THE PARTNER SUBMITTED A REVISED EXPLANATION AND STATED THAT ACTUAL FIGURE WRITTEN ON THESE DOCUMENTS IS RS. 9.75 CRORE. DURING THE ASSESSMENT THE ASSESSING OFFICER ASKED THE ASSESSEE TO PROVIDE THE COMPLETE PAN NAME AND ADDRESS FROM WHOM THIS 9.75 CRORE IS RECEIVABLE. THE ASSESSEE IN ITS REPLY DATED 3 RD MARCH 2015 BEFORE ASSESSING OFFICER SUBMITTED THAT 9.75 CRORE WERE OUT OF BOOKS TRANSACTION FOR WHICH THEY HAVE NOT MAINTAINED ANY TRACK RECORD AND THEREFORE NO DETAILS CAN BE PROVIDED. THUS THE ASSESSEE FAILED TO SUBSTANTIATE THE NAMES OF PERSON FROM WHOM SUCH RECEIVABLE IS CLAIMED. THE STATEMENT OF PARTNER WAS RECORDED IN THE PRESENCE OF TWO OTHER PARTNERS AND THEIR CHARTERED ACCOUNTANT. BOTH THE PARTNERS AND SAID CHARTERED ACCOUNTANT ENDORSED THE STATEMENT OF THE PARTNER. THE STATEMENT WAS GIVEN AFTER DUE CONSULTATION OF OTHER PARTNERS AND THE CONSULTANT/CHARTERED ACCOUNTANT WHO IS THEIR REGULAR CHARTERED ACCOUNTANT. THE ASSESSEE WHILE FILING RETURN OF INCOME ON 27 TH SEPTEMBER 2013 I.E. AFTER ONE YEAR OF THE DUE DATE FOR IMPUGNED ASSESSMENT YEAR AS PRESCRIBED UNDER SECTION 139 (1) ON OR BEFORE 30 TH SEPTEMBER 2012. BEFORE FILING RETURN OF INCOME THE ASSESSEE PAID TAX OF 2.10 CRORE. THE PAYMENT OF TAX OF RS. 2.10 CRORE TILL 29 TH MARCH 2013 WAS PAID BEFORE RETURN OF INCOME WAS FILED WHICH IS MORE THAN 50% OF TOTAL INCOME RETURN WHICH INDICATES THAT INCOME WAS REDUCED ONLY WHILE FILING RETURN OF ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 19 INCOME AND THE STAND OF THE ASSESSEE THAT THEY REALISED THEIR MISTAKE IN DISCLOSING NET INCOME INSTEAD OF GROSS INCOME IS NOTHING BUT AN AFTERTHOUGHT STORY. THE LEARNED DR FOR THE REVENUE FURTHER SUBMITS THAT RETRACTION SHOULD BE MADE AT THE EARLIEST POSSIBLE OPPORTUNITY. THE ASSESSEE HAS NOT EXPLAINED SUCH CIRCUMSTANCES AS TO WHY THERE WAS SUCH DELAY OF ABOUT TWO YEARS IN RETRACTING FROM THE STATEMENT OF THE PARTNER WHICH WAS RECORDED IN THE PRESENCE OF TWO OTHER PARTNERS AND THE CONSULTANT OF THE ASSESSEE. THE PARTNER (S) OF ASSESSEE HAS MADE A GENERAL STATEMENT IN THE AFFIDAVIT WHICH IS NOT SUPPORTED BY ANY EVIDENCE; THE RETRACTION WAS MADE AFTER TWO YEAR OF INITIAL STATEMENT WHICH ITSELF CREATED SERIOUS DOUBT. 17. THE STATEMENT MADE BY ONE PARTNER ENDORSED BY TWO OTHER PARTNERS DURING THE SURVEY WAS IN HIS EXCLUSIVE KNOWLEDGE. THE LEARNED DR FOR THE REVENUE SUBMITS THAT THE RETRACTION MADE BY PARTNER IS GENERAL STATEMENT IS NOT RETRACTION IN THE EYES OF LAW AND IS LIABLE TO BE DISCARDED. THE LEARNED DR FURTHER SUBMITS THAT EVEN IF IT IS PRESUMED FOR THE SAKE OF ARGUMENT THAT THE DISCLOSURE WAS MADE FOR A GROSS PROFIT /RECEIVABLE AND THE ASSESSEE INCURRED EXPENSES FOR EARNING SUCH GROSS RECEIPT THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SUBSTANTIATE THE FACT THAT THEY HAVE ACTUALLY INCURRED ANY EXPENSES. THE ASSESSEE IS MAKING INCONSISTENT STATEMENT WHICH IS FAR FROM TRUTH. THE ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 20 ASSESSEE FAILED TO PRODUCE ANY EVIDENCE IN THE FORM OF BILLS VOUCHER TO ESTABLISH THAT EXPENDITURE HAD BEEN INCURRED TO EARN THE UNDISCLOSED INCOME WHICH REQUIRED TO BE SET OFF AGAINST THE CLAIM OF ALLEGED GROSS RECEIVABLE. THE NETTING OF INCOME OUT OF UNACCOUNTED INCOME DISCLOSED IS NOT ALLOWABLE UNDER THE LAW. EVEN OTHERWISE THE ASSESSEE HAS NOT DISCLOSED THAT WHAT TYPE OF EXPENDITURE INCURRED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER OR BEFORE FIRST APPELLATE AUTHORITY. THE ASSESSEE FAILED TO BRING ANY IOTA OF EVIDENCE OF THE EXPENSES INCURRED FOR EARNING SUCH UNDISCLOSED RECEIVABLE INCOME. THE LD. DR FOR THE REVENUE PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 18. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF THE LEARNED COUNSEL AND REPRESENTATIVES OF PARTIES AND HAVE AGAIN GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. WE HAVE ALSO DELIBERATED ON EACH AND EVERY CASE LAW RELIED BY LD. SR COUNSEL FOR THE ASSESSEE. THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER MADE ADDITION OF RS. 6.78 CRORE BY HOLDING THAT DURING THE SURVEY STATEMENT OF DIVYANG MANDVIWALA WAS RECORDED AND WAS ENDORSED BY TWO OTHER PARTNERS NAMELY SHAILESH SURESH CHAND MANDVIWALA AND VIPUL KIRIT KUMAR MANDVIWALA AND THEIR CHARTERED ACCOUNTANT (CA) PRADEEP SINGHI. DURING THE ASSESSMENT THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF NAME PAN AND COMPLETE ADDRESS OF THE PERSONS FROM WHOM ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 21 SUCH RECEIVABLE OF RS. 9.75 CRORE WAS RECEIVABLE. NO DOCUMENTARY EVIDENCES OF CORRESPONDING EXPENSES INCURRED FOR EARNING SUCH NET INCOME IS FILED. THE EXPLANATION OF ASSESSEE THAT RECEIVABLE OF RS. 9.75 CRORE WERE OUT OF THE BOOKS TRANSACTIONS FOR WHICH NO TRACK RECORD WAS MAINTAINED WAS ALSO NOT ACCEPTED BY ASSESSING OFFICER. THE ASSESSING OFFICER FURTHER HELD THAT TILL 29/03/2013 THE ASSESSEE HAD PAID TAX OF RS. 2.10 CRORE WHICH IS MORE THAN 50% OF THE RETURN INCOME. IT WAS ALSO HELD THAT DURING THE ASSESSMENT NO BILLS VOUCHER OR NATURE OF EXPENSES WAS BROUGHT ON RECORD. THE ASSESSING OFFICER FINALLY HELD THAT DURING THE STATEMENT RECORDED IN SURVEY ACTION THE PARTNER OF THE ASSESSEE DISCLOSED NET INCOME AND NOT GROSS INCOME FURTHER THE MANNER IN WHICH UNACCOUNTED INCOME WAS GENERATED WAS NOT EXPLAINED AND ADDED THE DIFFERENCE OF UNDISCLOSED INCOME DECLARED DURING THE SURVEY AND OFFERED IN RETURN INCOME. 19. BEFORE THE LD CIT(A) THE ASSESSEE RAISED ADDITIONAL GROUNDS OF APPEAL AND CONTENDED THAT THE UNDISCLOSED INCOME OFFERED DURING THE SURVEY ACTION IS INCOME FROM THE BUSINESS OF SAREES AND DRESS MATERIAL. THE LD. CIT(A) WHILE CONSIDERING THE ADDITIONAL GROUND OF APPEAL NOTED THAT DURING THE APPELLATE STAGE THE ASSESSEE RAISED NEW ISSUES WHICH WAS NEITHER RAISED DURING ASSESSMENT OR AT THE TIME OF FILING APPEAL. THE ASSESSEE CLAIMED ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 22 THAT SOURCE OF UNACCOUNTED INCOME AND THE NATURE OF UNACCOUNTED BUSINESS THAT IS WAS FROM TRADING OF SAREES AND DRESS MATERIAL AND NOT FROM LAND AND BUILDING DEVELOPMENT. THE ASSESSEE CLAIMED THAT OF THE BUSINESS OF SAREES AND DRESS MATERIAL BUSINESS THE ASSESSEE MAINTAINED RECORD OF ITS BUSINESS ON LOOSE PAPERS. THE LD CIT(A) DISCARDED THE SUBMISSIONS OF ASSESSEE BY TAKING VIEW THAT IT IS A MAKE BELIEVE STORY. NO SUCH CLAIM OF BUSINESS OF SAREES AND DRESS MATERIAL EITHER DURING THE SURVEY ACTION OR IN ASSESSMENT OR WHILE FILING RETRACTION-AFFIDAVIT WAS MADE. THE INCRIMINATING MATERIAL FOUND DURING THE SURVEY WAS CONFRONTED WITH THE PARTNER WHO DISCLOSED UNACCOUNTED INCOME WHICH WAS CONFIRMED BY TWO OTHER PARTNERS AND THEIR CA. THE CLAIM OF ASSESSEE WITH REGARD TO UNDISCLOSED TEXTILE BUSINESS/ SAREES BUSINESS AND PROFIT OF RS. 4 CRORE ON UNACCOUNTED BUSINESS RECEIVABLE OF RS. 9.76 CRORE GIVING A PROFIT @ 41% IN UNIMAGINABLE AND REJECTED THE ADDITIONAL GROUND RAISED BY THE ASSESSEE. 20. ON THE PRIMARY CONTENTION OF THE ASSESSEE THAT THE PARTNERS OF THE ASSESSEE MADE STATEMENT OF GROSS BUSINESS RECEIVABLE THE LEARNED CIT(A) HELD THAT WHILE MAKING STATEMENT IN THE SURVEY PROCEEDING THE PARTNERS SPECIFICALLY STATED THAT THE AMOUNT IS DISTRIBUTED AMONG THE PARTNERS ARE UNRECORDED AND UNACCOUNTED RECEIVABLES OF THE FIRM. THE STATEMENT OF PARTNER OF ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 23 ASSESSEE WAS RECORDED IN THE PRESENCE OF CHARTERED ACCOUNTANT. THE PROFESSIONAL ADVICE WAS AVAILABLE TO THE ASSESSEE AT THE TIME OF RECORDING THE STATEMENT. THE ADMISSION MADE IN THE STATEMENT IS AN IMPORTANT PIECE OF EVIDENCE. THE ASSESSEE FILED RETURN OF INCOME AFTER ONE YEAR AND HAS PAID TAX OF RS.2.10 CRORE TILL 29.03.2013 WHICH IS MORE THAN 50% OF TOTAL INCOME RETURNED WHICH CLEARLY INDICATES THAT INCOME WAS REDUCED WHILE FILING RETURN OF INCOME. IT WAS ALSO HELD THAT NO PLAUSIBLE EXPLANATION WAS OFFERED BY THE ASSESSEE FOR PAYING TAX OF RS.2.10 CRORE AS AN ADVANCED TAX. THE RETRACTION STATEMENT AFTER TWO YEARS IS AN AFTERTHOUGHT. IT WAS ALSO HELD THAT IN NORMAL CIRCUMSTANCES THE APPELLANT REALIZES MISTAKE IMMEDIATELY AND WOULD HAVE NOT WAITED FOR TWO YEARS. THE BURDEN TO PROVE THAT STATEMENT WAS OBTAINED BY PRESSURE OR INTIMIDATION WAS ON THE ASSESSEE. THE ASSESSEE CLAIMED THAT HE MADE STATEMENT UNDER THE MISTAKEN BELIEF OF FACT OR LAW AND THAT RETRACTION SHOULD BE MADE AT THE EARLIEST OPPORTUNITY. THE LD.CIT(A) FURTHER HELD THAT ASSESSEE FAILS TO PRODUCE THE EVIDENCE WITH REGARD TO THE EXPENDITURE FOR VERIFICATION BEFORE THE ASSESSING OFFICER DESPITE SEVERAL OPPORTUNITY. THE ASSESSEE FAILED TO DISCHARGE THE BURDEN REGARDING THE EXPENDITURE. THE PARTNER OF ASSESSEE MADE DISCLOSER OF UNACCOUNTED INCOME ON THE BASIS OF DOCUMENT AND THE LOOSE PAPERS FOUND AND IMPOUNDED FROM THEIR PREMISES. SHRI ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 24 DIVYANG MANDVIWALA IS AN ACTIVE PARTNER OF THE BUSINESS AND WAS WELL-INFORMED OF THE NATURE OF BUSINESS AND THE DOCUMENTS/PAPERS LYING AT HIS PREMISES. THE DISCLOSURE STATEMENT WAS MADE AFTER CONSULTING THE BOOKS OF ACCOUNTS. ON THE SUBMISSIONS OF ASSESSEE THAT THE ASSESSEE INCURRED EXPENSES ON THE RECEIVABLE THE LD CIT(A) HELD THAT THE ASSESSEE FAILED TO EXPLAINED THAT ANY EXPENDITURE WAS INCURRED AS THE SAME IS NOT SUPPORTED WITH ANY EVIDENCE. 21. WE HAVE NOTED THAT WHILE FILING THE PRESENT APPEAL THE ASSESSEE HAS NOT CHALLENGED THE ORDER OF LD CIT(A) ON THE ADDITIONAL GROUND OF APPEAL WHICH WAS RAISED BEFORE HIM NOR MADE ANY ORAL SUBMISSIONS ON SUCH ADDITIONAL FACTS. THE LEARNED SENIOR COUNSEL CONFINED HIS SUBMISSIONS MAINLY ON THE FACTS THAT THE UNDISCLOSED INCOME OFFICERED BY THE PARTNER WAS BUSINESS RECEIVABLE OF THE ASSESSEE. AND THAT SAID BUSINESS RECEIVABLE IS THE GROSS BUSINESS RECEIPT OF ASSESSEE AND THE ASSESSEE IS ELIGIBLE FOR EXPENSES AND THE UNDER THE INCOME TAX ONLY INCOME COMPONENT IS TAXABLE AND NOT THE ENTIRE RECEIPT. WE ARE FULLY AGREED WITH THE SUBMISSIONS OF THE LEARNED SENIOR COUNSEL THAT ONLY INCOME COMPONENT IS TAXABLE UNDER THE INCOME TAX ACT AND NOT THE ENTIRE GROSS RECEIPT. HOWEVER THE ASSESSEE IS UNDER OBLIGATION TO PROVE THAT FOR EARNING SUCH INCOME THE ASSESSEE HAS INCURRED EXPENSES. AS NOTED ABOVE THE PARTNER OF THE ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 25 ASSESSEE DURING THE SURVEY ACTION OFFERED UNDISCLOSED INCOME OF RS. 10.78 CRORE UNDISCLOSED INCOME WAS DECLARED IN THE PRESENCE OF CA PAID ADVANCE TAX TO THE EXTENT OF RS. 2.10 CRORE. NO RETRACTION WAS MADE DESPITE THE FACT THAT THAT STATEMENT MADE DURING THE SURVEY WAS MADE IN THE PRESENCE OF WELL KNOWN CA. THE SAME CA PREPARED THE AUDIT REPORT. THERE IS NO DISPUTE ABOUT THE LEGAL POSITION BY VARIOUS HIGH COURTS THAT THE SURVEY TEAM HAS NO AUTHORITY TO RECORD THE STATEMENT OF PERSON ON OATH AND THE STATEMENT RECORDED DURING SURVEY IS PER SE NOT ADMISSIBLE IN THE EVIDENCE. 22. BEING LAST FACT FINDING AUTHORITY WE HAVE ALSO EXAMINED THE ENTIRE FACTS OF THE CASE AND MATERIAL PLACED BEFORE US VERY CAREFULLY. THERE IS NO DISPUTE THAT DURING THE SURVEY ACTION ON 05.07.2011 THE PARTNER OF THE ASSESSEE DECLARED ADDITIONAL UNDISCLOSED INCOME OF RS. 10.78 CRORE. IT WAS ALSO STATED IN THE STATEMENT THAT IT IS THE NET INCOME OF ASSESSEE AND THAT NO EXPENSES AGAINST THE SAID UNDISCLOSED INCOME WOULD BE CLAIMED. AT THE COST OF REPETITION WE RETREAT THAT THERE IS NO DISPUTE ABOUT THE LEGAL POSITION THAT THE SURVEY TEAM HAS NO AUTHORITY TO RECORD THE STATEMENT OF PERSON ON OATH MEANING THEREBY THE STATEMENT RECORDED DURING SURVEY IS PER SE NOT ADMISSIBLE IN THE EVIDENCE. HOWEVER IN THE PRESENT CASE NOT ONLY ONE PARTNER OF THE ASSESSEE MADE DISCLOSER OF ADDITIONAL UNDISCLOSED INCOME ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 26 BUT IT WAS ENDORSED BY TWO OTHER PARTNERS IN PRESENCE OF THEIR CA. THE STATEMENT WAS ACTED UPON BY MAKING THE PAYMENT OF TAX OF RS. 2.10 CRORE TILL 29.03.2012 ON SUCH UNDISCLOSED INCOME. DURING FIRST APPELLATE STAGE THE ASSESSEE TRY TO INTRODUCE NEW FACTS THAT THE UNDISCLOSED ADDITIONAL INCOME WAS EARNED FROM THE BUSINESS OF SAREES AND DRESS MATERIAL FOR WHICH NO SEPARATE ACCOUNTS WERE MAINTAINED. 23. BEFORE TRIBUNAL THE ASSESSEE HAS FILED AUDIT REPORT COPY OF WHICH IS AVAILABLE AT PAGE NO. 3 TO 29 OF PB. THE AUDIT REPORT IS DULY SIGNED BY LEARNED CA WHO WAS PRESENT DURING THE SURVEY ACTION AND ENDORSED THE STATEMENT OF THE PARTNER OF ASSESSEE. IN PARA 8 (A) OF THE AUDIT REPORT THE ASSESSEE/ AUDITOR HAS SHOWN ITS BUSINESS OF LAND & BUILDING DEVELOPMENT IN PARA 8(B) WHICH RELATES TO CHANGE IN THE BUSINESS OR PROFESSION THE ASSESSEE HAS WRITTEN N.A.. FURTHER IN PARA 9 OF THE AUDIT REPORT IT IS REPORTED THAT THE BOOKS OF ACCOUNTS ARE MAINTAINED IN COMPUTER SYSTEM. NOW AGAIN ADVERTING TO THE STANDS TAKEN BY THE ASSESSEE; BEFORE SURVEY TEAM THE PARTNER OF THE ASSESSEE DISCLOSED ADDITIONAL INCOME OF RS. 10.78 CRORE THE ASSESSEE PAID TAX OF RS. 2.10 CRORE TILL 29.03.2013 WHICH SHOWS THE CONDUCT OF THE ASSESSEE THAT THE STAMEN MADE DURING THE SURVEY ACTION WAS ACTED UPON. HOWEVER AT THE TIME OF FILING RETURN OF INCOME DECLARED INCOME OF RS. 4.00 CRORE. THE ASSESSEE RETRACTED FROM ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 27 THE STATEMENT OF THE PARTNER AFTER MORE THAN TWO YEARS. NO REASONABLE AND PLAUSIBLE EXPLANATION IN RETRACTING THE STATEMENT WAS OFFERED EXCEPT SIMPLY STATING THAT THEY REALISED THEIR MISTAKE LATER ON. IF THE MISTAKE WAS REALISED LATER ON THE STATEMENT SHOULD HAVE BEEN RETRACTED IMMEDIATELY. IN THE RETRACTION AFFIDAVIT THE PARTNERS OF THE ASSESSEE HAS NO WHERE STATED THAT THERE WAS ANY PRESSURE OR ANY COERCIVE MEASURE WAS USED AGAINST THEM WHILE RECORDING THE STATEMENT. BEFORE LD CIT(A) THE ASSESSEE RAISED ANOTHER STORY OF BUSINESS OF SAREES AND DRESS MATERIAL WHICH WAS NOT SUBSTANTIATED. THUS THE ADDITIONAL PLEA OF THE ASSESSEE WAS NOT ALLOWED. STRANGELY AGAIN THE DECISION OF LD CIT(A) IN NOT ACCEPTING THE ADDITIONAL PLEA NO GROUNDS OF APPEAL WAS RAISED BEFORE THIS TRIBUNAL. THE AFORESAID DISTINCTIVE PLEA RAISED BY THE ASSESSEE DOES NOT INSPIRE CONFIDENCE. IN VIEW OF THE AFORESAID DISCUSSIONS WE DO NOT FIND MERIT IN THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 24. THE RATIO OF CASE LAWS RELIED BY LEARNED SENIOR COUNSEL IN KISHORE MOHANLAL TELWALA (SUPRA) IS NOT APPLICABLE OF THE FACTS OF THE PRESENT CASE AS THE ASSESSEE HAS TAKEN INCONSISTENT STAND BEFORE THE LOWER AUTHORITIES. HOWEVER IN CASE OF KISHORE MOHANLAL TELWALA (SUPRA) THE ASSESSEE INITIALLY THE ASSESSES HAS SHOWN IGNORANCE ABOUT THE SALE TRANSACTION BUT LATER ON ADMITTED THAT ON MONEY WAS BEING RECEIVED FOR THE PROJECT ITA NO. 1192/AHD/2016 ASSESSMENT YEAR.2012-13 M/S. MANDVIWALA DEVELOPERS 28 UNDERTAKEN BY HIM AND IT WAS HELD BY THE UNACCOUNTED INCOME WAS OFFERED TO TAX BY ASSESSEE. THE ASSESSEE CLAIMED BENEFIT OF SECTION 44AD IN THAT CASE. HOWEVER THE FACTS OF THE CASE IN HAND ARE QUITE DIFFERENT. 25. IN THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ORDER PRONOUNCED ON 26/03/2021 BY PLACING RESULT ON NOTICE BOARD AS PER RULE 34(5) OF INCOME-TAX (APPELLATE TRIBUNALS) RULES 1963. SD/- SD/- (DR. ARJUN LAL SAINI) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER SURAT DATED: 26/03/2021 SAMANTA PS COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR/SR. PS/PS ITAT SURAT