THE DY CIT CEN CIR-1, THANE v. M/S. HARSIDDHA DEVELOPERS, MUMBAI

ITA 6484/MUM/2007 | 2004-2005
Pronouncement Date: 16-04-2010 | Result: Dismissed

Appeal Details

RSA Number 648419914 RSA 2007
Assessee PAN AADFH6044C
Bench Mumbai
Appeal Number ITA 6484/MUM/2007
Duration Of Justice 2 year(s) 5 month(s) 22 day(s)
Appellant THE DY CIT CEN CIR-1, THANE
Respondent M/S. HARSIDDHA DEVELOPERS, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 16-04-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 16-04-2010
Date Of Final Hearing 17-02-2010
Next Hearing Date 17-02-2010
Assessment Year 2004-2005
Appeal Filed On 25-10-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H: MUMBAI BEFORE SHRI D MANMOHAN VICE PRESIDENT AND SHRI RAJENDRA SINGH ACCOUNTANT MEMBER ITA NO.6484/MUM/2007 ASSESSMENT YEARS 2004-05 THE DY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE I THANE MUMBAI VS M/S HARSIDDHA DEVELOPERS 1 LAXMI VILLA TAGORE ROAD SANTACRUZ (WEST) MUMBAI PAN AADFH 6044 C (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI S M KESHKAMAT FOR RESPONDENT : SHRI DEEPAK TRALSHWALA ORDER PER RAJENDRA SINGH AM 1. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 14.08.2007 OF CIT (A) FOR THE ASSESSMENT YEAR 2004-05. THE ONLY DISPUTE RAISED BY THE REVENUE IN THIS APPEAL I S REGARDING DELETION OF ADDITION OF RS 1.51 CRORES MADE BY THE ASSESSING OFFICER BEING THE CASH PAYMENTS MADE BY THE ASSESSEE TO M/S SHIV SAI DEVELOPERS FOR PURCHASE OF LAND. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT A SEARCH HAD BEEN CONDUCTED ON THE PREMISES OF M/S SHIV SAI DEVE LOPERS (SSD) AT 201 ARIHANT AGYARI LANE THANE ON 9.9.2004. DURI NG THE COURSE OF SEARCH A MEMORANDUM OF UNDERSTANDING (MOU) DATED 2 7.11.2003 WAS FOUND AT THE OFFICE OF ADVOCATE OF M/S SSD WHIC H SHOWED THAT THE ASSESSEE M/S HARSIDHA DEVELOPERS HAD ENTERED INTO M OU WITH SSD FOR THE PURCHASE OF PLOT OF LAND BEARING SEARCH NO.168 169 170 OF M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 2 KAVESAR THANE. THE MOU STATED THAT HARASIDDH DEVEL OPERS HAD PAID RS 20 LAKHS BY CHEQUE AND RS 1.51 CRORE BY CASH AS CONSIDERATION FOR THE PURCHASE OF SAID PLOT. A SURVEY ACTION U/S 133 A WAS CARRIED ON THE PREMISES OF ASSESSEE ON 14.9.2004. DURING THE COUR SE OF SURVEY NO CASH OR ANY VALUABLE WAS FOUND. THE ASSESSEE FIRM ADMITTED DURING SURVEY THAT IT HAD INDEED ENTERED INTO MOU WITH SSD AND DID NOT DENY THE CONTENTS OF MOU AND ADMITTED HAVING BEEN PAID C HEQUE AND CASH AMOUNT. WHEN ASKED TO EXPLAIN SOURCE SHRI MUKUND PATEL THE PARTNER OF THE ASSESSEE FIRM AND DIRECTOR IN THE GR OUP COMPANIES STATED THAT THE CASH AMOUNT WAS AVAILABLE AS ADDITI ONAL INCOME DURING THE FY 2003-04 WHICH WAS PAID ON 26.11.2003 TO SSD . THE SAID AMOUNT WAS EXPLAINED AS PART OF THE AMOUNT DISCLOSE D BY THE GROUP DURING SURVEY ON THE HARASIDDH GROUP ON 16 TH DECEMBER 2003. THE GROUP HAD DISCLOSED AN ADDITIONAL INCOME OF 3 CORES IN THE NAME OF THE FOLLOWING GROUP CONCERNS DURING SURVEY ON 16.12.200 3. I) M/S RUTU DEVELOPERS P LTD 1.50 CRORES II) M/S HARISH DEVELOPERS P LTD 1.00 CRORE III) M/S HARISH PROPERTY LTD . 50 CRORE 3. ASSESSING OFFICER HOWEVER DID NOT ACCEPT THE EXPLANATION. IT WAS OBSERVED BY HIM THAT THE DECLARATION MADE DU RING THE COURSE OF SURVEY ON 16.12.2003 WAS NOT IN CASE OF ASSESSEE BU T IN CASE OF ASSOCIATE COMPANIES. THE CASH WAS NOT ENTERED INTO BOOKS OF ACCOUNTS OF THE ASSESSEE OR ANY OTHER GROUP CONCERN . THE ASSESSEE HAD THUS NOT PROVED THE SOURCE OF CASH OF RS 1.51 C RORE PAID TO SSD. THE ASSESSING OFFICER THEREFORE TREATED THE SUM O F RS 1.51 CRORES AS INCOME FROM UNDISCLOSED SOURCES AND ADDED TO THE TO TAL INCOME OF THE ASSESSEE. THE ASSESSEE DISPUTED THE DECISION OF TH E ASSESSING OFFICER AND SUBMITTED BEFORE THE CIT (A) THAT DISCLOSER OF RS 3 CRORES BY THE GROUP COMPANIES WAS OUT OF SALE OF FLATS IN THE EAR LIER ONGOING PROJECTS OF OTHER GROUP COMPANIES. THE CASH WAS THEREFORE AVAILABLE TO THE M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 3 GROUP AS ADDITIONAL UNDISCLOSED INCOME DURING THE F INANCIAL YEAR 2003- 04 AS CLEARLY STATED BY SHRI MUKUND PATEL IN STATEM ENT RECORDED ON 14.9.2004. THE ASSESSEE FIRM HAD COME INTO EXISTEN CE ONLY ON 4.9.2003 AND THEREFORE COULD NOT HAVE GENERATED S O MUCH OF INCOME WITHIN SHORT PERIOD. THERE WAS NO MATERIAL TO SHOW THAT MONEY BELONGED TO THE ASSESSEE FIRM OR IT HAD GENERATED S UCH INCOME. SINCE THE ASSESSEE FIRM DID NOT HAVE INITIAL MONEY TO STA RT THE VENTURE WITH SSD THE GROUP COMPANIES HAD ADVANCED THE SUM TO TH E ASSESSEE TO ENABLE IT TO BUILD THE BUSINESS AND AFFIDAVIT TO TH AT EFFECT HAD BEEN FILED ON 20 TH MARCH 2007. CIT (A) FORWARDED THE SUBMISSION OF T HE ASSESSEE TO THE ASSESSING OFFICER ASKING FOR A REMA ND REPORT. THE ASSESSING OFFICER IN THE REMAND REPORT DATED 13.4.2 007 POINTED OUT THAT IN THE STATEMENT DURING SURVEY ON 16.12.2003 SHRI MUKUND PATEL HAD NOT MENTIONED ANYTHING ABOUT THE ASSESSEE FIRM THOUGH SPECIFIC QUESTION HAD BEEN ASKED ABOUT THE NAMES OF BUSINESS CONCERNS OF FAMILY MEMBERS. THE PAYMENT OF RS 1.51 CRORES HAD BEEN MADE ON 27.11.2003 I.E. BEFORE DISCLOSURE MADE ON 16.12.200 3 BUT NO MENTION WAS MADE REGARDING THIS CASH INVESTMENT MADE BEFORE DATE OF SURVEY. HAD THE INVESTMENT BEEN ACTUALLY MADE SHRI MUKUND PATEL WOULD HAVE DEFINITELY REFERRED TO IT AT THE TIME OF DISCL OSURE. THE ASSESSING OFFICER ALSO POINTED OUT THAT MONEY WAS SUBSEQUENTL Y CLAIMED TO HAVE BEEN RECEIVED BACK BUT NO RECEIPT WAS GIVEN FOR THI S. FURTHER THE AMOUNT HAS BEEN CLAIMED TO HAVE BEEN RECEIVED BACK FROM SSD IN MARCH 2004 BUT THE MOU SIGNED BY BOTH THE PARTIES W AS STILL LYING WITH THE ADVOCATE ON THE DATE OF SEARCH ON 9.9.1994 WHI CH WAS QUITE UNUSUAL. THE ASSESSING OFFICER REPORTED THAT THE P LEA OF THE ASSESSEE HAD NO MERIT. 4. IN REPLY THE ASSESSEE STATED BEFORE THE CIT (A ) THAT EVEN IN THE REMAND REPORT THE ASSESSING OFFICER HAD MAD E NO CASE THAT CASH OF RS 1.51 CRORE BELONGED TO THE ASSESSEE. TH E ASSESSING OFFICER M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 4 IN CASE HE DOUBTED THE STATEMENTS AND AFFIDAVIT WOU LD HAVE MADE FURTHER ENQUIRES TO PROVE HIS CASE BUT NO SUCH ACTI ON HAD BEEN TAKEN NOR ANY MATERIAL PLACED ON RECORD. THE ASSESSING O FFICER COULD HAVE ALSO QUESTIONED THE ADVOCATES AS TO WHY HE HAD KEPT MOU EVEN AFTER CASH HAD BEEN RETURNED BUT NO SUCH ACTION HAD BEEN TAKEN. AS THERE WAS NO MATERIAL TO DISPROVE THE STATEMENT IN AFFIDA VIT THE CLAIM OF THE ASSESSEE HAD TO BE ACCEPTED. 5. CIT (A) WAS SATISFIED BY THE EXPLANATION GIVEN BY THE ASSESSEE. IT WAS OBSERVED BY HIM THAT ADMITTEDLY THE ASSESSEE FIRM HAD NOT STARTED ANY BUSINESS EVEN TILL 27.11.2003. THE ASSESSING OFFICER HAD NOT BROUGHT ANY EVIDENCE TO SHOW THAT T HE ASSESSEE FIRM WAS HAVING INCOME FROM BUSINESS ACTIVITY RIGHT FROM ITS INCEPTION TO THE DATE OF ENTERING THE MOU. IN THE ABSENCE OF AN Y SUCH EVIDENCE IT WAS DIFFICULT TO BELIEVE THAT THE ASSESSEE WAS HAVI NG ACTIVITY BEFORE 27.11.2003 FROM WHICH IT COULD EARN INCOME OF RS 1. 51 CRORES. FURTHER THE CLAIM OF SHRI MUKUND PATEL THAT THE AM OUNT WAS AVAILABLE WITH THE PARTNERS FROM THE ONGOING CONSTRUCTION TR ADING HAD NOT BEEN CONTROVERTED BY THE ASSESSING OFFICER. THE ASSESSI NG OFFICER COULD NOT ELABORATE AS TO HOW THE ASSESSEE FIRM GENERATED THE INCOME OF RS 1.51 CRORES. SINCE THE CONCERNS BELONGING TO THE GROUP HAD DECLARED ADDITIONAL INCOME OF RS 3 CRORES DURING THE SURVEY U/S 133A ON 16.12.2003 IT WAS POSSIBLE THAT THE SAME WAS AVAIL ABLE WITH THE PARTNERS AND WAS UTILIZED AS PER THE MOU. CIT (A) THEREFORE ACTIVITIES THE CLAIM OF THE ASSESSEE. HE PLACED RE LIANCE ON THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE O F BHARAT ENGINEERING AND CONSTRUCTION CO (83 ITR 187). ACCO RDINGLY CIT (A) SET ASIDE THE ORDER OF THE ASSESSING OFFICER AND DE LETED THE ADDITION MADE AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL B EFORE THE TRIBUNAL. M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 5 6. BEFORE US THE LEARNED DEPARTMENTAL REPRESENTAT IVE ASSAILED THE ORDER OF THE CIT (A) AND STRONGLY SUPP ORTED THE ORDER OF THE ASSESSING OFFICER AND FINDINGS GIVEN THEREIN. HE ALSO POINTED OUT THAT DURING SURVEY U/S 133A THE ASSESSEE HAD DISCL OSED AN ADDITIONAL INCOME OF RS 1.51 CRORES BUT IN THE RETURN OF INCO ME NO SUCH INCOME WAS DECLARED. THE LEARNED AUTHORIZED REPRESENTATIV E FOR THE ASSESSEE ON THE OTHER HAND PLACED RELIANCE ON THE ORDER OF THE CIT (A) AND POINTED OUT THAT THERE WAS NO MATERIAL WITH THE ASSESSING OFFICER TO SHOW THAT THE ASSESSEE COULD HAVE GENERA TED SO MUCH OF UNACCOUNTED INCOME. THE REFERENCE WAS ALSO MADE TO THE JUDGMENT OF HONBLE SUPREME COURT IN CASE OF BHARAT ENGINEERING CO (83 ITR 187) RELIED UPON BY THE CIT (A). THE LEARNED AUTHORIZED REPRESENTATIVE ALSO DISPUTED THE CONTENTION OF THE LEARNED DEPARTM ENTAL REPRESENTATIVE THAT THE ASSESSEE HAD DISCLOSED SUM OF RS 1.51 CRORES DURING THE SURVEY. IT WAS SUBMITTED THAT NO SUCH I NCOME HAD BEEN DISCLOSED. 7. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS ACCORDINGLY. THE DISPUTE IS REGARDING ADDITION ON ACCOUNT OF CASH PAYMENT OF RS 1.51 CRORES BY THE ASSESSEE T O SSD IN TERMS OF MOU DATED 27.11.2003. THE SAID MOU HAD BEEN FOUND DURING THE COURSE OF SEARCH ON 9.9.2004 FROM THE PREMISES OF A DVOCATE OF THE GROUP. THE SOURCE OF PAYMENT HAS BEEN EXPLAINED OU T OF THE SUM OF RS 3 CRORES DISCLOSED BY THE GROUP IN THE NAME OF T HREE DIFFERENT CONCERNS DURING THE COURSE OF SURVEY ON 16.12.2003 . THE CASE OF THE ASSESSEE IS THAT SINCE THE ASSESSEE FIRM HAD COME I NTO EXISTENCE ONLY ON 4.9.2003 AND DID NOT HAVE ANY INCOME OF OWN THE GROUP HAD CONTRIBUTED SUM OF RS 1.51 CRORES FOR STARTING THE JOINT VENTURE WITH SSD AND AFFIDAVIT DATED 20TH MARCH 2007 HAS BEEN FI LED IN SUPPORT OF THE CLAIM. THE CASE OF THE REVENUE IS THAT SHRI MU KUND PATEL IN THE STATEMENT DURING SURVEY ON 16.12.2003 HAD NOT MENTI ONED ANYTHING M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 6 ABOUT THIS THOUGH SPECIFIC QUESTION HAD BEEN RAISE D ABOUT THE CONCERNS OF THE GROUP. SECONDLY IT HAS BEEN CLAIM ED THAT THE AMOUNT PAID TO SSD HAD BEEN RECEIVED BACK IN MARCH 2004 B UT THE MOU WAS STILL LYING WITH THE ADVOCATE AFTER THAT DATE ON 9. 9.1994. IN OUR VIEW WHETHER THE AMOUNT WAS SUBSEQUENTLY RECEIVED ACTUAL LY OR NOT IS NOT RELEVANT AS WE ARE CONCERNED ONLY ABOUT SOURCE OF R S 1.51 CRORES GIVEN BY THE ASSESSEE TO SSD ABOUT WHICH THERE IS N O DISPUTE. THERE IS ALSO NO DISPUTE THAT GROUP HAD DECLARED ADDITION AL INCOME OF RS 3 CRORES IN THE NAME OF DIFFERENT CONCERNS ON 16.12.2 003 AS UNACCOUNTED INCOME OF THE GROUP FROM VARIOUS ONGOIN G PROJECTS. THE SAID DISCLOSURE HAS BEEN ACCEPTED. THE DEPARTMENT HAD NOT ASKED FOR SPECIFIC DETAILS OF DISCLOSURE AS TO THE HEADS UNDE R WHICH THE DISCLOSURE HAD BEEN MADE. THEREFORE THE SUM OF RS 3 CRORES B EING AVAILABLE WITH THE GROUP ON 16.12.2003 CAN BE USED TO EXPLAIN THE SOURCE OF INVESTMENT OF RS 1.51 CRORES MADE BY THE ASSESSEE W HO IS A MEMBER OF THE GROUP. THIS CLAIM IS ALSO SUPPORTED BY AFFI DAVIT DATED 20 TH MARCH 2007 OF MR PATEL AND THERE IS NO MATERIAL PRO DUCED BY THE REVENUE TO CONTROVERT THE CONTENTS OF THE SAID AFFI DAVIT. THERE IS ALSO NO MATERIAL PRODUCED TO SHOW THAT THE SUM OF RS 3 C RORES WAS ALREADY INVESTED IN SOME OTHER MODE AND WAS NOT AVAILABLE O N 26.11.2003 FOR ADVANCING TO SSD. THERE ARE ALSO OTHER FACTORS SUP PORTING THE CLAIM OF THE ASSESSEE. THE ASSESSEE HAD BEEN FORMED ONLY ON 4.9.2003 AND THERE IS NO MATERIAL ON RECORD TO SHOW THAT ASSESSE E COULD HAVE GENERATED SO MUCH OF INCOME FROM ANY BUSINESS ACTIV ITY UNDERTAKEN TILL THE EXECUTION OF MOU DATED 27.11.2003. THEREF ORE CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTANCES IN OUR VIE W THE SUM OF RS 1.51 CRORES ADVANCED BY THE ASSESSEE ON 27.11.2003 HAS TO BE TAKEN AS EXPLAINED SATISFACTORILY. WE THEREFORE SEE NO INFIRMITY IN THE ORDER OF THE CIT (A) DELETING THE ADDITION MADE BY THE AS SESSING OFFICER AND SAME IS THEREFORE UPHELD. M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 7 8. IN THE RESULT APPEAL OF THE REVENUE STANDS DIS MISSED. ORDER PRONOUNCED ON 16TH DAY OF APRI L 2010. SD/- SD/- (D MANMOHAN) (RAJENDRA SINGH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATE: 16TH APRIL 2010. COPY TO 1. THE APPELLANT. 2. THE RESPONDENT 4. CIT(A)-I THANE. 5. CIT CENTRAL THANE. 6. D R H BENCH MUMBAI. 7. GUARD FILE. BY ORDER / / TRUE COPY / / ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI *CHAVAN/- M/S HARSIDDHA DEVELOPERS ITA 6484/M/2007 8 SNO DATE INITIALS 1 DRAFT DICTATED ON 12-03-2010 25-03-2010 SR.P.S 2. DRAFT PLACED BEFORE AUTHOR 30-03-2010 SR.P.S 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER V.P. 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER A.M 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.P.S 6. KEPT FOR PRONOUNCEMENT ON SR.P.S 7. FILE SENT TO THE BENCH CLERK SR.P.S 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER