Kirti Realtors Pvt. Ltd., New Delhi v. ITO, New Delhi

ITA 4888/DEL/2010 | 2007-2008
Pronouncement Date: 13-02-2012 | Result: Allowed

Appeal Details

RSA Number 488820114 RSA 2010
Assessee PAN AACCK2036M
Bench Delhi
Appeal Number ITA 4888/DEL/2010
Duration Of Justice 1 year(s) 3 month(s) 3 day(s)
Appellant Kirti Realtors Pvt. Ltd., New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 13-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 13-02-2012
Date Of Final Hearing 16-01-2012
Next Hearing Date 16-01-2012
Assessment Year 2007-2008
Appeal Filed On 09-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA NO. 4888/DEL/2010 ASSTT. YR: 2007-08 KIRTI REALTORS PVT. LTD. VS. ITO WARD 5(3) (NOW MERGED WITH NEW DELHI. M/S AEZ INFRATECH PVT. LTD.) C/O DR. RAVI GUPTA D-10. KAILASH COLONY NEW DELHI-110048. PAN/GIR NO. AACCK2036M (APPELLANT) ( RESPONDENT ) APPELLANT BY : SH. RAVI GUPTA ADV. & SH. RAJESH JAIN CA RESPONDENT BY : SHRI N.K. CHAND SR. DR O R D E R PER R.P. TOLANI J.M : THIS IS ASSESSEES APPEAL AGAINST CIT (A)S ORDER DATED 14-9-2010 RELATING TO A.Y. 2007-08. FOLLOWING EFFECTIVE GROUN DS ARE RAISED : 1. THAT THE LD. CIT(APPEALS) HAS ERRED IN LAW AND ON FACTS IN HOLDING THAT THE AO WAS JUSTIFIED IN MAKING AN A DDITION OF RS. 27 71 500/- BY INVOKING THE PROVISION OF SECTIO N 69C OF THE INCOME TAX ACT 1961. 2. THAT THE LD. CIT(APPEALS) HAS ERRED IN HOLDING T HAT THE APPELLANT HAS FAILED TO ESTABLISH NEXUS BETWEEN THE ADVANCE PAID BY THE APPELLANT TO SH. JAGDISH BENIWAL AND THE CA SH PAYMENTS MADE TO THE LAND OWNERS. 3. THAT THE LD. CIT(APPEALS) HAS ERRED IN RELYING U PON THE STATEMENT OF SH. JAGDISH BENIWAL WHICH WAS RECORDED BEHIND THE BACK OF THE APPELLANT AND NO OPPORTUNITY OF CRO SS EXAMINATION WAS AFFORDED. ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 2 2. LEANED COUNSEL FOR THE ASSESSEE STATED BRIEF FAC TS AS UNDER: THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF REAL ESTATE. DURING THIS YEAR IT PURCHASED SOME LAND IN DISTRICT ALWAR (RAJASTHAN ) THROUGH SHRI JAGDISH BENIWAL WHO USED TO COORDINATE IN PURCHASES BETWEE N THE ASSESSEE COMPANY AND THE SELLERS OF THE LANDS BEING LOCAL F ARMERS. IN THE COURSE THEREOF ASSESSEE ADVANCED A SUM OF RS. 88 55 000/- TO SHRI JAGDISH BENIWAL WITH THE DIRECTIONS TO OF AND ON DELIVER THE PART A MOUNTS TO THESE FARMERS/ SELLERS OF THE LANDS. THE LAND BEING SITUATED IN RU RAL AREAS THE SELLERS/ FARMERS INSISTED FOR CASH PAYMENTS WHICH WERE THUS GIVEN BY SHRI JAGDISH BENIWAL OUT OF THE IMPREST ACCOUNT SO ADVANCED BY T HE ASSESSEE THROUGH BANK A/C. SHRI JAGDISH BENIWAL DISBURSED THE AMOUNT OF RS. 27 71 500/- BY WAY OF CASH WHICH IS QUESTIONED BY AO DURING THE C OURSE OF ASSESSMENT PROCEEDINGS. AO ISSUED SUMMONS U/A 131 TO SHRI JAGD ISH BENIWAL TO ATTEND ON 16-12-2009 AS HE HAD FALLEN ILL SHRI JAGDISH B ENIWAL COULD NOT ATTEND. HOWEVER THE ASSESSEES CA SH. TARUN KANDHARI APPEA RED BEFORE AO AND EXPLAINED THE NATURE OF IMPREST ACCOUNT OF RS. 88 5 5 000/- PAID TO SHRI JAGDISH BENIWAL FOR COORDINATION OF PURCHASE OF LAN DS IN ALWAR. AO HOWEVER HELD THAT THE ASSESSEE HAD FAILED TO EXPLA IN THIS AMOUNT OF ADVANCES AND MADE THE IMPUGNED ADDITION AS UNEXPLAINED EXPEN DITURE U/S 69C. 2.1. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL WH ERE FOLLOWING SUBMISSIONS WERE MADE: (I) DURING THE RELEVANT PREVIOUS YEAR THE APPELLANT PURCHASED CERTAIN LAND AT DISTRICT ALWAR RAJASTHAN . (II) COMPLETE DETAILS OF THE TRANSACTIONS WERE DULY FURNISHED BEFORE THE LD. AO ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 3 (III) COPIES OF REGISTERED SALE DEEDS OF THE LANDS IN QUESTION WERE ALSO SUBMITTED BEFORE THE LD. AO DURI NG THE ASSESSMENT PROCEEDINGS. (IV) THE DETAILS OF PAYMENTS MADE FOR ACQUISITION OF LAN D WERE ALSO DULY SUBMITTED BEFORE THE LD. AO AND THE SAME WERE ALSO DEPICTED IN THE COPIES OF THE REGIST ERED SALE DEEDS SUBMITTED BEFORE THE LD. AO DURING THE ASSESSMENT PROCEEDINGS. (V) THE APPELLANT PAID RS. 88 55 000 BY CHEQUE TO MR. JAGDISH BENIWAL WHO MADE CASH PAYMENTS AMOUNTING TO RS. 27 71 500 OUT OF THE WITHDRAWALS MADE BY HIM FROM THE ABOVE SAID AMOUNT OF RS. 88 55 000. IN SUPPORT O THE ABOVE COPY OF BANK STATEMENT OF MR. JAGDISH BENIWAL WAS ALSO SUBMITTED BEFORE THE LD. A O (VI) AO FAILED TO APPRECIATE THE NATURE OF IMPREST ACC OUNT AND PAYMENTS OUT OF IT AND INSISTED FOR THE PRESEN CE OF MR. JAGDISH BENIWAL ALTHOUGH WHEN ASSESSEE HAD DEBIT BALANCE AGAINST HIM IN BOOKS OF ACCOUNTS. . (VII) MR. JAGDISH BENIWAL COULD NOT APPEAR BEFORE THE LD. AO DUE TO HIS ILLNESS AFFIDAVIT TO THIS EFFECT HAS BEEN FILED BY THE APPELLANT. THE LD. AO NOT ONLY TOTALLY IGNORED THE AFFIDAVIT FILED BY THE APPELLANT BUT AL SO FAILED TO VERIFY THAT THE CASH PAYMENTS MADE BY MR. JAGDISH BENIWAL IS ONLY OUT OF THE WITHDRAWALS FROM HIS BANK ACCOUNT. ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 4 (VIII) COPY OF LEDGER ACCOUNT OF MR. JAGDISH BENIWAL IN TH E BOOKS OF APPELLANT ALONG WITH COPY OF BANK STATEMEN T AS WELL AS MR. JAGDISH BENIWAL WERE FILED BEFORE T HE LD. AO ALONG WITH COPIES OF REGISTERED SALE DEEDS. THE LD. AO MADE NO ATTEMPT TO APPRECIATE THIS EVIDENCE AND VERIFY THE GENUINENESS OF THE TRANSACTION AO ARBITRARILY MADE THE ADDITION OF RS. 27 71 500 AS PAYMENTS MADE OUTSIDE THE BOOKS OF ACCOUNTS BY INVOKING THE PROVISIONS OF SECTION 69C OF THE IT AC T ALTHOUGH WHEN THEY WERE OUT OF IMPREST ACCOUNT MAINTAINED BY ASSESSEE. (IX) COPIES OF RELEVANT EXTRACTS OF BANK STATEMENT OF MR . JAGDISH BENIWAL ALONG WITH STATEMENT OF CASH FLOW WAS ALSO FILED. 2.2. CIT(A) CALLED A REMAND REPORT FROM AO IN THIS BEHALF. AO RECORDED THE STATEMENT OF MR. JAGDISH BENIWAL AND SUBMITTED A REMAND REPORT BY FOLLOWING OBSERVATIONS: IN THIS CONNECTION IT IS TO INFORM YOU THAT AS DE SIRED BY YOUR GOOD SELF SHRI JAGDISH BENIWAL WAS SUMMONED ON 09- 06-2010 TO RECORD HIS STATEMENT SO AS TO COLLECT NECESSARY INFORMATION WITH RESPECT TO HIS BACKGROUND HIS BUSINESS/ PROFE SSIONAL ACTIVITIES AND THE CIRCUMSTANCES IN WHICH HE WAS A PPOINTED BY THE APPELLANT COMPANY TO ACT ON HIS BEHALF. A PHOTO COPY OF THE STATEMENT OF SHRI JAGDISH BENIWAL RECORDED U/S 131 OF THE I.T. ACT 1961 IS ENCLOSED FOR YOUR KIND PERUSAL/ CONSID ERATION. IT IS WORTH MENTIONING THERE THAT AS PER THE STATEM ENT GIVEN BY SHRI JAGDISH BENIWAL IT HAS BEEN CLAIMED BY HIM THAT HE CAME INTO CONTACT WITH M/S KIRTI REALTORS PVT. L TD. WHEN THE ASSESSEE COMPANY APPROACHED HIM FOR PURCHASE OF LAN D ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 5 BELONGING TO HIS WIFE AND PAID AN AMOUNT OF RS. SIX TY LACS FOR THE SAME. IT IS ALSO STATED BY HIM THAT THEREAFTER THE COMPANY ASKED HIM TO ARRANGE FOR PURCHASE OF CONTIGUOUS LAN D MEASURING ABOUT A HUNDRED BIGHAS S A RESULT OF WHICH ADVANCES WERE GIVEN TO THE FARMERS BY SHRI BENIWAL OUT OF THE FUNDS R ECEIVED FROM THE COMPANY FROM TIME TO TIME THE AMOUNT OF SUCH P AYMENTS AND THE PERSONS TO WHOM THE PAYMENTS WERE MADE COUL D NOT BE RECOLLECTED BY HIM IN LIEU OF WHICHKATCHACHA RECEI PTS WERE ISSUED. THE WHOSE EXERCISE WAS DONE BY SHRI BENIW AL WITHOUT RECEIVING ANY COMMISSION/ CONSIDERATION FROM THE AS SESSEE COMPANY WHICH IS QUITE INTRIGUING. IT HAS ALSO BEEN CLAIMED BY SHRI BENIWAL THAT AFT ER MAKING FARMERS TO SELL THEIR LAND TO THE COMPANY AN D PAYING ADVANCES FOR THE PURPOSE THE COMPANY DIRECTLY DEAL T WITH THE FARMERS AND GOT THE REGISTRY DONE IN ITS NAME WITHO UT HIS FURTHER INVOLVEMENT. AS SUCH THE FACTS STATED BY SHRI BENIWAL DO NOT ESTABLISH THAT THE PAYMENTS MADE BY HIM HAD ANY REL ATION WHATSOEVER WITH THE PROCESS OF PURCHASING LAND BY T HE ASSESSEE COMPANY. NOR ANY EVIDENCES TO THIS EFFECT HAS BEEN FILED BY SHRI BENIWAL SUBSTANTIATING THE CLAIM OF THE COMP ANY OR HIS OWN CLAIM. THE ASSESSEE COMPANY DESPITE BEING AFFORDED MANY OPPORTUNITIES DURING THE COURSE OF ASSESSMENT AS EV IDENT FROM THE ASSESSMENT ORDER COULD NOT ESTABLISH THE NEXUS BETWEEN PAYMENTS BEING MADE BY SHRI BENIWAL TO THE FARMER S. THE SITUATION REMAINS THE SAME AFTER CONSIDERING THE ST ATEMENTS OF SHRI BENIWAL. 2.3. A COPY OF REMAND REPORT WAS SUPPLIED TO ASSESS EE TO WHICH A REJOINDER WAS FILED BY THE ASSESSEE INTER ALIA IN FOLLOWIN G TERMS: 4. THE LD. AO HAS NEITHER GONE INTO THE DETAILS OF THE PAYMENT MADE BY THE APPELLANT TO MR. JAGDISH BENIWA L NOR THE PAYMENT MADE BY MR. JAGDISH BENIWAL TO THE FARMERS FOR PURCHASE OF THEIR LAND. ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 6 5. IN LAST PARA AT PAGE ONE OF THE REMAND REPORT T HE LD. AO HAS WRONGLY MENTIONED THAT THE FACTS STATED BY MR. JAGDISH BENIWAL DO NOT ESTABLISH THAT THE PAYMENTS MADE BY HIM HAD ANY RELATION WHATSOEVER WITH THE PROCESS OF PURCHAS ING LAND BY THE ASSESSEE COMPANY DESPITE THE FACT THAT IN REPLY TO Q 5 (AT PAGE 3 OF THE STATEMENT) AND Q 7 (AT PAGE 4 OF THE STATEMENT) IT HAS BEEN CATEGORICALLY ADMITTED BY MR. JAGDISH BENI WAL THAT HE PAYMENTS MADE TO THE FARMERS IS OUT OF THE WITHDRAW ALS MADE BY HIM OUT OF THE SAME ADVANCE WHICH HAS BEEN RECEI VED BY HIM FROM THE ASSESSEE COMPANY. 6. IN LAST PARA AT PAGE ONE OF THE REMAND REPORT T HE LD. AO HAS AGAIN WRONGLY MENTIONED THAT THE NO EVIDENCE HA S BEEN FILED BY MR. JAGDISH BENIWAL SUBSTANTIATING THE CLA IM OF THE COMPANY OR HIS OWN CLAIM. 7. COMPLETE DETAILS OF THE PAYMENTS MADE TO THE FAR MERS BY MR. JAGDISH BENIWAL WERE FURNISHED DURING ASSESSMEN T PROCEEDINGS BY MR. JAGDISH BENIWAL ALONG WITH COPY OF HIS BANK STATEMENT AND THE SAME WERE ALSO DEPICTED IN T HE COPIES OF THE REGISTERED SALE DEEDS SUBMITTED BEFORE THE LD. AO. HOWEVER ONE FAILS TO UNDERSTAND THE OBSERVATIONS M ADE BY THE LD. AO IN THIS CONTEXT. 8. ON PAGE TWO OF THE REMAND REPORT IN THE CONCLUD ING PARA THE LD. AO HAS AGAIN WRONGLY OBSERVED THAT TH E ASSESSEE COMPANY COULD NOT ESTABLISH THE NEXUS BETWEEN PAYME NTS BEING MADE BY MR. JAGDISH BENIWAL TO THE FARMERS. 9. MR. BENIWAL HAS CLEARLY INFORMED TO THE LD. AO DURING REMAND PROCEEDINGS THAT HE HAS ENTERED INTO AN AGR EEMENT WITH THE ASSESSEE COMPANY FOR ACQUISITION OF FARMERS LAN D AND AFTER THAT AGREEMENT HE WAS PAID TOTAL RS. 81 00 000/- WH ICH WAS DEPOSITED BY HIM IN HIS BANK ACCOUNT WITH PUNJAB NA TIONAL BANK AT SHIVAJI PARK ALWAR. ALL THE PAYMENTS TO TH E FARMERS WERE MADE AFTER WITHDRAWING THE MONEY FROM THIS ACC OUNT. 10. THE LD. AO HAS FAILED TO LOOK INTO THE DETAILS OF PAYMENTS MADE BY THE APPELLANT TO MR. JAGDISH BENIW AL AND THE PAYMENT MADE BY MR. JAGDISH BENIWAL TO THE FARMERS FOR PURCHASE OF THEIR LAND AND THEREFORE REACHED TO A W RONG CONCLUSION AS WAS DONE DURING ASSESSMENT PROCEEDING S. ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 7 2.4. CIT(A) HOWEVER REJECTING THE SUBMISSIONS MAD E ON BEHALF OF ASSESSEE CONFIRMED THE ORDER OF AO. AGGRIEVED ASSESSEE IS BEFORE US. 3. LEARNED COUNSEL FOR THE ASSESSEE CONTENDS AS UND ER: (I) MR. JAGDISH BENIWAL HAS HIMSELF ACCEPTED HIS RELATI ONSHIP WITH THE ASSESSEE COMPANY (II) MR. BENIWAL HAS NOT DENIED THE DISBURSEMENT TO THE FARMERS/ SELLERS OUT OF THE IMPREST ACCOUNT. THIS REPLY IN S TATEMENT HE COULD NOT RECOLLECT DOES NOT MEAN THAT HE DENIED SUCH PAYMENT OUT OF IMPREST A/C. (III) THE LAND TRANSACTIONS IN QUESTION COORDINATED THROU GH MR. BENIWAL HAS BEEN COMPLETED AND CONVERTED INTO PROPER SALE TRANSACTIONS AND SUCH SALE DEEDS HAVE BEEN EXECUTED. THE EVIDENC E HAS NOT BEEN CONSIDERED BY CIT(A). (IV) THE STATEMENT OF MR. BENIWAL WAS RECORDED BY AO BEH IND THE BACK OF THE ASSESSEE AND IF IT WAS PROPOSED BY AO T O TREAT THAT STATEMENT AGAINST THE ASSESSEE IN THAT CASE OPPORT UNITY OF CROSS- EXAMINATION OF MR. BENIWAL SHOULD HAVE BEEN AFFORDE D TO THE ASSESSEE. (V) AO IN HIS REMAND REPORT HAS HIMSELF ACCEPTED THAT M R. BENIWAL CLAIMED TO THE EFFECT THAT HE PERSUADED FARMERS TO SELL THEIR LAND TO THE COMPANY AND MADE ADVANCES FOR THE PURPOSE AND C OORDINATED. THIS STATEMENT OF MR. BENIWAL ITSELF SIGNIFIES THAT HE CORROBORAT ED THE ASSESSEES VERSION THAT FOR ENTERING INTO AGRE EMENT TO SELL AND ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 8 BEFORE EXECUTION OF REGISTERED DEED MR. BENIWAL WAS COORDINATING THE ACTIVITIES OF ARRANGING SUCH PURCHASES. (VI) IT HAS NOT BEEN DISPUTED THAT ASSESSEE GAVE A SUM O F RS. 88 55 000/- BY WAY OF IMPREST ADVANCES TO MR. BENIW AL. 3.1. LEARNED COUNSEL PLEADS THAT BOTH THE LOWER AUT HORITIES HAVE ERRED IN APPRECIATING THE CORRECT FACTS THAT IT WAS ASSESSE ES OWN MONEY WHICH WAS DISBURSED BY MR. BENIWAL ON ITS BEHALF TO THE SELLE RS OF THE LAND. THE ADDITION MAY BE DELETED. 4. LEARNED DR RELIED ON THE ORDERS OF AUTHORITIES BELOW. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH TH E ENTIRE MATERIAL AVAILABLE ON RECORD. THE REMAND REPORT SUBMITTED BY AO DOES NOT DENY THE FACT THAT MR. JAGDISH BENIWAL WAS ACTING AS A COORD INATOR FOR FACILITATING THE PURCHASE OF PIECES OF LANDS IN ALWAR FOR AND ON BEH ALF OF THE ASSESSEE. IT HAS ALSO NOT BEEN DENIED THAT ASSESSEE DID NOT GIVE ADV ANCE IMPREST MONEY TO HIM. MR. JAGDISH BENIWAL HAS ACCEPTED THAT HE USED TO ASSIST ASSESSEE AND THEREAFTER THE ASSESSEE WAS DEALING WITH FARMERS DI RECTLY. THIS DOES NOT RULE OUT HIS ROLE AS A COORDINATOR TILL THE CONVEYANCES WERE REGISTERED. IN HIS STATEMENT HE HAS HIMSELF ACCEPTED HAVING RECEIVED A N AMOUNT OF RS. 60 00 000/- FROM ASSESSEE AND ABOUT THE CASH DISBUR SEMENT ON PERTINENT QUESTION . HE HAS ONLY STATED THAT HE COULD NOT RE COLLECTED AT THAT TIME; THIS CANNOT BE INFERRED TO BE DENIAL OF TRANSACTION WITH ASSESSEE . IT HAS ALSO NOT BEEN DISPUTED THAT MR. JAGDISH BENIWALS STATEMENT WAS RECORDED BY AO IN REMAND PROCEEDINGS BEHIND THE BACK OF THE ASSESSEE. IF THE SAME WAS PROPOSED TO BE USED AGAINST ASSESSEE AS IMPLYING TO BE DENYING ITS STAND IN THAT CASE PRINCIPLE OF NATURAL JUSTICE DEMANDED OFF ERING THE WITNESS FOR ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 9 CROSS-EXAMINATION OF THE ASSESSEE. THE ASSESSEE WAS UNDER PRIMA FACIE IMPRESSION THAT HE HAD NOT DENIED THE TRANSACTIONS . IN THE ENTIRETY OF FACTS AND CIRCUMSTANCES IN OUR CONSIDERED VIEW INTEREST OF JUSTICE WILL BE SERVED IF THE ISSUE IN QUESTION IS RESTORED BACK TO THE FI LE OF AO TO DECIDE THE SAME AFRESH AFTER ALLOWING THE ASSESSEE CROSS-EXAMINATIO N OF MR. JAGDISH BENIWAL AND AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 6. IN THE RESULT ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 13-02-2012. SD/- SD/- ( B.C. MEENA ) ( R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13-02-2012. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA 4888/DEL/10 KIRTI REALTORS PVT. LTD. 10