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TMI Blog2022 (5) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ent orders of the Learned Principal Commissioner of Income Tax, Central - 4, Mumbai [hereinafter in short "Ld. Pr.CIT"] dated 27.03.20219 for the A.Ys. 2012-13 and 2014-15. 2. Since the issues raised in both these appeals are identical, therefore, for the sake of convenience, these appeals are clubbed, heard and disposed off by this consolidated order. We are taking Appeal in ITA.No. 3522/MUM/2019 for Assessment Year 2012-13 as a lead case. 3. Brief facts of the case are, assessee filed its return of income u/s.139(1) of the Income Tax Act (hereinafter, 'the Act') on 30.09.2012 wherein deemed total income u/s 115JB was at ₹.82,43,377/-. A search and seizure action u/s.132 of the Act was carried out on 18.02.2014 in the case of Raj K Shah & Group at its office and residence of the key person Raj K Shah. The assessee is a Private Limited Company in which Raj K Shah is a Director. The assessment in the case of the assessee company was completed u/s 143(3) r.w.s. 153C of the Act, determining total income at ₹.2,89,66,121/- on 30.12.2016. In response to notice u/s.153C of the Act, assessee filed return of income manually declaring total income at ₹.12,48,04,590/- on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he learned Pr. CIT erred in setting aside the assessment order dated 31st December 2016 passed by the Dy. Commissioner of Income Tax, Central Circle - 8(1), Mumbai and directing the Assessing Officer to pass a fresh Assessment Order. 3. On the facts and in the circumstances of the case, the learned Pr. CIT erred in holding the assessment order passed under section 143(3) r.w.s. 153C of the Act as erroneous or prejudicial to the interest of revenue wherein additional income disclosed by the Appellant was not considered. The Pr. CIT ought to have appreciate that any further addition in this regards will amount to double taxation of single receipts and against the provision of Income Tax Act. 4. The appellant craves leave to add, alter, amend and/or withdraw any ground or grounds of appeal either before or during the course of hearing of the appeal." 7. Ld. AR submitted his written submissions which is reproduced below: - "Facts of the case: 2. The following are the facts of the case relevant to dwell upon the issue as to whether the Pr. CIT was justified in passing the revision order u/s.263 of the Act:- (a) A search and seizure action under section 132 of the Act was carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d during the course of search 11,42,104 27,99,25,495 Offer in statement Rounded off to 28,00,00,000 (e) Based upon the statement recorded and offer made as above as per application of funds, the total unaccounted income of Rs.28 crs was offered in the hands of the Appellant herein and bifurcated in 3 Asst. Years 2012-13, 2013-14 and 2014-15 on the contention that the Appellant herein follows project completion method of accounting and the project was completed and occupancy certificate received in July 2011 and thereafter agreements for sales were executed and profits offered in the regular books of account. Based upon the same and following the method of accounting regularly employed i.e. project completion method of accounting, the total amount of Rs.28 crs. was bifurcated and offered in the assessment years as per following tabulation- Assessment year Sales offered as per audited financials %of total offer Undisclosed income offered 2012-13 35,25,23,880 44.94 12,58,38,469 2013-14 13,18,22,552 16.81 4,70,55,956 2014-15 30,00,45,550 38.25 10,71,05,575 Total 28,00,00,000 (f) On the basis of the evidences found in the form of 15 red coloured n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed u/s.153C of the Act for AY 2012-13 and AY 2014-15 and could not pay the same even in response to the notices issued for defective returns by the AO u/s.139(9) of the Act for both these years. 9. In view of the defective returns for want of payment of Self-Assessment Tax, the AO ignored the return of income filed u/s.153C of the Act for AY 2012-13 and AY 2014-15 as if no return of income were filed by the Appellant for these two years in response to notice issued u/s.153C of the Act. 10 In respect of the invalidation of return of income for both the AYs 2012-13 and 2014-15, the AO has made the following observation in para 7.13 and 7.14 in the Assessment orders of all the 3 years i.e. AY 2011-12, AY 2012-13:- "7.13 Invalidation of Return of Income filed u/s.153C for A. V 2012-13 & 2014-15: However, the return of income for A. Y. 2012-13 and 2014-15, filed manually, were invalidated by the fact that Self-Assessment Tax remained unpaid for more than 11 months. Vide letter dated 15.11.2016, the assessee had been intimated about the defect in the return of income for A. Ys 2008-09, 2012-13, 2013-14 and A.Y 2014-15. The assessee had been given 15 days time to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the A.O. has held the return of income filed under section 153C of the Act for both the AY 2012-13 and 2014-15 as invalid and defective. 12. The AO in the above observation also very clearly noted that the entire on-money receipts related to FY 2010-11 and is thus taxed in AY 2011-12, and the contention of the Appellant that total amount of Rs.28 crores is offered in respect of on-money receipts based upon 15 red colored notebooks and apportioning the same in subsequent years following project completion method of accounting was rejected. 13. With respect to the Application of Funds i.e. accommodation entries taken in the books of account of Shri Raj K. Shah and the Appellant herein as also the excess jewellery seized in the course of search action and for which the Appellant had asked set off against the source of funds being on-money receipts, the same is also rejected by the AO since the AO has added the accommodation entry relating to the Appellant amounting to Rs.3 crores in its hands in AY 2012- 13 and the remaining amount of accommodation entries and excess jewellery is added in the assessment orders passed in the case of Shri Raj K. Shah. 14. The total addition made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his opinion without pointing out as to how the assessment order was erroneous in so far as prejudicial to the interest of the revenue. [Paper book pages 90 to 110 & 113 to 131 - reply to 263 notices] 19. The Pr. CIT passed order u/s.263 of the Act for both the Asst. Years vide order dated 27.03.2019 and held as under- "5.2 I have gone through the assessee's submission and following observations are made: (a) The assessee 's submission that the entire receipts were taxed by the AO in AY 2011-12 after due application of mind is not found acceptable. The said conclusion is neither apparent from the assessment order nor the assessment records. The Assessment order clearly shows that the AO has not taken into consideration the details of undisclosed income submitted by the Assessee, vide the manual revised return u/s 139(5) of the Act. The AO has held the manual return to be invalid for non-payment of Self Assessment Tax, without taking into consideration the information and figures regards income suo moto offered in manual return, even as it was treated as invalid for non-payment of Self Assessment Tax, while assessing the total income u/s 143(3) of the Act. Hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant herein thereby rejecting the claim of set off of application of funds from source of funds; e) the other accommodation entries and excess jewellery aggregating to more than Rs.24 crores that were offered in the statement recorded of Shri Raj K Shah and part of Rs.28 crores is separately added in the assessment orders passed in the case of Shri Raj K. Shah for respective assessment years in which the same falls after detailed discussion on this issue. Thus, entire amount of Rs.28 crores is added again based upon the disclosure made in the statement relating to application of funds. [Copy of assessment order of Shri Raj K. Shah for AY 2011-12 to AY 2014-15 are attached with this written submission] 22. The order passed by the Pr. CIT is based on incorrect facts and baseless allegations and the observations made in para 5.2 of the order as reproduced hereinabove are contrary to the factual position. The observation of the Pr. CIT in para 5.2 - clauses (a) to (c) are factually incorrect and rebutted as under- (i) it is undisputed fact that entire on-money addition is made by the AO in AY 2011-12 whereas the Pr. CIT observes that the same is neither apparent from assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loured note book". After analysis of seized material and after due application of mind the total receipts was assessed in A.Y. 2011-12. As the on-money receipts were taxed in A.Y. 2011-12, the A.O. has not made any further addition in A.Y. 2012-13 and AY 2014-15 on account of same issue of on-money disclosure made by the Appellant on the basis of project completion method of accounting and offering the income to the extent of Application of funds totaling to Rs.28 cr. 27. The A.O. has after due application of mind not made addition of the on-money as disclosed in the return u/s.153C of the Act for AY 2012-13 and 2014-15 in order to avoid double taxation of the same on-money issue, which the AO taxed entirely on gross basis in AY 2011-12. 28. Had the AO once again added the on-money disclosed and offered by the Appellant in AY 2012-13 and 2014-15 after holding the return u!s.153C as invalid, the AO would have contradicted his own stand of - (a) firstly, taxing the entire gross on-money receipt plus scrap sales of Rs.47 cr. as against the offer of the Appellant of Rs.28 cr. as this would have lead to conclusion that the AO has accepted the offer of Rs.28 cr.; (b) secondl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the amount of ₹.28 Crores in the hands of one of the real-estate entity viz. Rahul Raj Estates Private Limited i.e. assessee company in which he is the director, in the return of income filed u/s. 153C of the Act for the below mentioned Assessment Years :- Assessment year Income offered 2012-13 12,58,38,469 2013-14 4,70,55,956 2014-15 10,71,05,575 Total 28,00,00,000 10. Accordingly, assessee filed manual return for the above said Assessment Years. For the assessment year under consideration the Assessing Officer observed that the return filed manually were invalidated by the fact that Self-Assessment Tax remained unpaid for more than 11 months. We observed that Assessing Officer intimated the same to the assessee and assessee was given 15 days' time to rectify the defect in the return by paying Self-Assessment Tax. Further several intimations were made to the assessee regarding defects in the return and since Assessing Officer has not received any communication from the assessee, he treated the return filed by the assessee manually as invalid. We observed that Assessing Officer himself observed that assessee has offered ₹.12,58,38,469/- based on the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f F.Y 2010-11 need to be added to the. total income of the assessee for the A-Y 2011-12. Exception to the addition is only made in the case of bogus unsecured loan of Rs. 3 crores availed from Rose Gems Pvt. Ltd (M/s Rose Gems Pvt. Ltd. is one of the bogus concern managed and controlled by Bhanwarlal Jain Group] during F.Y 2011-12 relevant to AY 2012-13 in the books of M/s RahulRaj Estates Pvt Ltd which has been added to the total income of the assessee for that year. Unaccounted receipts pertaining to RRM amounting to 46,94,71,274/- are added to the total income of the assessee for the year. Penalty proceedings initiated u/s 271(1)(c) for concealment of income" 12. It clearly shows that the Assessing Officer has made total addition of unaccounted receipts found in 15 red colored notebooks was already made in A.Y. 2011-12. The initiation of 263 proceedings based on the invalidation of manual return filed by the assessee u/s. 153C is not proper, considering the fact that same income cannot be added in two Assessment Years. Therefore, we are in agreement with the submissions of the Ld. AR. Accordingly, we are inclined to set-aside the order passed u/s. 263 of the Act, hence, grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X
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