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TMI Blog2023 (3) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the above facts, we are inclined to accept the findings of the Ld.CIT(A). No reason to interfere with the findings of the Ld.CIT(A) by deleting the additions proposed by the Assessing Officer u/s. 69C - Decided against revenue. - ITA.NO.1425/MUM/2022 And C.O. NO.105/MUM/2022 [ARISING OUT OF ITA.NO.1425/MUM/2022 - - - Dated:- 22-2-2023 - Shri Kuldip Singh, Hon'ble Judicial Member And Shri S. Rifaur Rahman, Hon'ble Accountant Member For the Assessee : Madhur Aggarwal And Lata Parulekar For the Department : Shri Nimesh Yadav ORDER PER S. RIFAUR RAHMAN (AM) 1. This appeal and cross objection are filed by the Revenue and assessee respectively against the order of the Learned Commissioner of Income Tax (Appeals) 54, Mumbai [hereinafter in short Ld.CIT(A) ] dated 07.01.2022 for the A.Y. 2008-09. 2. Revenue has raised following grounds in its appeal: - (1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the addition made u/s.69C aggregating to Rs.17,67,72,393/- (5,40,00,000+ 12,23,72,393) even though Shri Madan Kolambekar, in his statement recorded on oath u/s. 132(4) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessing Officer observed that search u/s.132 of the Act was carried out on 05.03.2009 in the case of Jai Corp Group which also included the search in the case of the appellant. During the course of search proceedings, it was revealed that Jai Corp Group was traditionally in the business of cold rolled coils, galvanized coils, galvanized corrugated sheets, small woven sacks, fabrics, jumbo bags and partially oriented yam. In recent past, this group had extended its operation to realty sector. The group was partner in two major upcoming Special Economic Zones of India (SEZS.), being developed in the vicinity of Mumbai namely Navi Mumbai Special Economic Zone (NMSEZ) Mumbai Special Industries Ltd. (MSEZ). Mr.Anand Jain was chairman of both NMSEZ and MSEZ The group had also purchased huge chunks of land in the vicinity of these SEZS with an objective to develop township in these areas anticipating potential price rise and good returns. The group had also purchased huge agricultural/non-agricultural lands in the suburbs of Mumbai, Thane, Panvel, Alibaug and Pune. The lands were purchased in the name of various companies of this group as well as in individual names. 4. This group&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mr.Anand Jain, Mr Virendra Jain, Mr.Gaurav Jain, Mr.L.M.Dhanda, Mr.Jeevan Surve, Mr. Atul Pawar, Mr.Hiren Oza, Mr.Dilip Dherai and Mr. Sanjay Punkhia were recorded. Further, during the course of survey/search in the case of Mr. Madan Kolambekar, certain incriminating documents regarding unaccounted cash payments were also seized/impounded and statement of Mr. Madan Kolambekar was also recorded. The affidavits were filed by Mr.Hiren OZa and Mr.Madan Kolambekar in which they retracted from their admission about unaccounted cash receipts and cash expenditure on behalf of M/s Jai Corp Group. However, the Assessing Officer has rejected these affidavits for the reason that the affidavits were filed after four months from the date of recording the statement. Further, there was no pressure or coercion on them by the authorized officers during the course of search proceedings. 8. Thereafter, the Assessing Officer had issued a show cause notice dated 18.10.2020, 07.12.2010. In response to the show cause notice, the assessee had submitted replies/information to the Assessing Officer. After considering the submissions of the assessee, the Assessing Officer has discussed various aspects of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icultural land deals with Jailaxmi Realtors and Developers Ltd. Further, Mr.Madan Kolambekar had included the brokerage and commission income from land transactions on behalf of the group companies of Jai Corp group as income in the return filed after search proceedings. Further, incriminating evidences seized during the search proceedings also indicated the land transactions done by Mr.Mahendra Banthia and Mr.Ganesh Mokashe with M/s Novelty Realty Developers Ltd, and other group companies. 12. During the assessment proceedings, the assessee has submitted that its transactions with Mr.Madan Kolambekar were on principal to principal basis and Mr Madan Kolambekar was an independent land aggregator. However, the Assessing Officer was of the view that many tripartite agreements were made by the assessee directly with sellers/farmers inspite of Mr. Madan Kolambekar being facilitator of such transactions. During the course of search, it was revealed that control was exercised by the Jal Corp Group over Mr Madan K. Kolambekar regarding land transaction and utilization of funds. Further, disclosure of brokerage/commission income from such transaction for taxation in the return of inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madan Kolambekar. This proved that Mr.Madan Kolambekar was acting as per the directions of Jai Corp Group. 17. Thereafter, the Assessing Officer has referred to MIS report/Status report which contained the land transactions carried out by Jai Corp Group through Mr Mudan Kambekar. 18. Further, the Assessing Officer has referred to page No.64 65 of Annexure A-2 impounded from the office of M/s. Welldone Real Estate Pvt Ltd. The contents of these pages shown that ₹.12,23,72,393/- was transferred from Iconic (Iconic Realtors Ltd) to Deva (M/s. Deva Realtors) and an amount of ₹.13,00,00,000/- was transferred from Jailaxmi (Jailaxmi Realty Developers Ltd.) to Deva (M/s Deva Realtors). The amount of ₹.13,00,00,000/- was reflected in the books of Jailaxmi Realty Developers Ltd. but the amount of ₹.12,23,72,393/- and ₹.5,44,00,000/- (development charges) was not appearing either in the books of Iconic Realtors Ltd. or Jailaxmi Realty Developers Ltd. 19. Further, page No.27 of Annexure A-1 impounded from Mr.Hiren Oza contained the details of sources and deployment of funds. The amount of ₹.4,30,00,000/- and ₹.1,14,00,000/- (totaling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbekar and other nominated farmers of M/s Deva Realtors was subsequently transferred in the name of nominated farmers viz. Mr.Balaprasad Gupta, Mr.Hirasingh Rawat, Mr.Bijay Kumar Saraf, Mr.Manoj Dadhich and Mr.Ramswaroop Gupta of Jailaxmi Realty Developers Ltd. The above facts further confirmed that all the agricultural transactions actually took place in the hands of Jailaxmi Realty Developrs Ltd. (through the nominated farmers) after making the above-mentioned unaccounted/unexplained payments. 23. Accordingly, the unexplained payments/unaccounted cash payments of ₹.5,44,00,000/- was held by the Assessing Officer as unexplained expenditure in the hands of Jaylaxmi Realty Developers Ltd. u/s.69C of the Act for AY 2008-09. Further, the unexplained payments (including unaccounted cash payments) of ₹.12,23,72,393/- was held as unexplained expenditure in the hands of the assessee u/s 69C of the Act for A.Y.2008-09. 24. Further, the Assessing Officer held that in the computation of total income, the unexplained expenditure of ₹.12,23,72,393/- and ₹.5,44,00,000/- could not be allowed as a deduction as per proviso to section 69C under any head of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional High Court has deleted the similar additions made by the Assessing Officer. He relied on the order of the Coordinate Bench in the case of JCIT v. M/s. Krupa Land Limited in ITA.No. 633/Mum/2012 dated 18.10.2018 and decision of the Hon'ble Jurisdictional High Court in the case of CIT v. M/s. Lavanya Land Pvt. Ltd., in Income Tax Appeal No. 72 of 2014 dated 23.06.2017. 29. Considered the rival submissions and material placed on record, we observe that the addition was made u/s. 69 of the Act in respect of the unexplained expenditure mainly on the basis of documents seized and impounded from the premises of Mr. Madan Kolambekar and office premises of M/s. Welldon Realty Pvt. Limited. Similar additions u/s. 69 of the Act was made in all the group concerns of Jai Corp Group based on the documents seized from Mr. Dilip Dherai one of the land aggregator and his statement admitting cash payment in respect of purchase of lands by the group concerns of Jai Corp Group. The facts in this appeal is exactly similar to the facts in M/s Krupa Land Limited, M/s. Lavanya Land Pvt. Ltd., and other concerns of Jai Corp Group. We observe from the record that Ld.CIT(A) has deleted the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and impact of a transaction, but noting on slip of papers or loose sheet of papers are required to be supported/ corroborated by other evidence. There is also a distinction between loose papers found from the possession of assessee and similar documents found from a third person. In the present case, impugned documents were not found from the possession of the assessee but was found from the possession of a third person i.e. Shri Dilip Dherai. Mere mention of the names of the villages where the companies may have purchased lands would not give any basis to assume/presume/surmise that the name of the companies are mentioned in the impugned documents. The very foundation of Sec. 153C has been shaken by not fulfilling the condition precedent for the issue of notice. It is the say of the Ld DR that in the present case there is no need for recording of the satisfaction. If this plea of the DR is accepted then the legislative intent of inserting sec. 153C in the Act would get defeated because the AO will get unstoppable powers to reopen assessments for 6 year in the case of the ' Other Person ' without recording any basis [ satisfaction ] for his action. Therefore this plea of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o are alleged, to have made cash payments. Even on that count, the additions cannot be sustained in the hands of the assessee. In our considerate view, there being no evidence to support the Revenue's case that a huge figure, whatever be its quantum, over and above the figure booked in the records and accounts changed hands between the parties, no addition could therefore be made u/s. 69C of the Act to the income of the assessee. Considering the entire facts brought on record, we have no hesitation to hold that even on merits, no addition could be sustained. 22. We do not think that this case is any different from the one considered by the Division Bench in the case of M/s. Arpit Land Pvt. Ltd. and M/s. Ambit Reality Pvt. Ltd. The Assessment Year in the case of M/s. Arpit Land Pvt. Ltd. was 200809 and in the case of M/s. Ambit Reality Pvt. Ltd., it was 200708. The controversy was identical. The Division Bench, having concluded that no substantial question of law arises for consideration in the Appeals by the Revenue in the case of identical land transactions of two assessees involved in Income Tax Appeal Nos. 83 of 2014 and 150 of 2014, then, a different conclusion is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the Coordinate Bench in the appeal for the A.Y. 2009-10 adjudicated the issue on the merits and concluded that the provisions of section 69C are not applicable on the facts of the present case as the statement of Mr. Dilip Dheria has been withdrawn by him. Further, the Coordinate Bench has held that addition made by the Assessing Officer is merely on the basis of the loose paper found during search, however the same is not supported by any material showing cash passing hands. Further, the revenue authorities have not brought a single statement on record of the vendors to substantiate the claim of the Revenue that extra cash has actually change hands. The Coordinate Bench has held as under in the case of Krupa Land Limited (supra) on merits: - 20. Now coming on to the merits of the case, which is without prejudice to our findings hereinabove, the submissions of the Ld. Sr. Counsel have been incorporated hereinabove to which the Ld. DR in addition to his oral arguments filed a written submission. The Ld. DR has mainly relied upon the findings of the AO. So far as payments outside the regular books of accounts are concerned, in his written submission, the Ld. DR has expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion recorded in the seized documents 101 to 108. 21. We have considered the rival submissions on merits and perused the orders of the lower authorities. The entire assessment revolves around the statement of Shri Dilip Dherai recorded u/s. 132(4) of the Act on the date of search i.e. 5.3.2009. The relevant question which has been relied upon by the AO and the Ld. CIT(A) is as under: Q. 24. Please note page No. 22 and page No. 23 which is kept before you. As I understand these are the statement as on 28th November, 2008 for the land purchased herein list of accounted payments are provided against each village. Please clarify the same.? Ans. These documents reflect total amounts disbursed for purchase of land. The details of area, village, payments made through cheque alongwith payments made through ―cash‖ is shown very clearly in the chart. The highlighted portion reflects the cash payments disbursed through Jaicorp Office at Maker and Jai Towers. The same has been mentioned separately. The cash payment from Maker adds upto Rs. 28.01 Cr and cash payment from Jai Towers adds upto Rs. 10.43 cr. All these cash were received for these projects from Jaicorp Ltd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lip Dherai has stated that they are only estimates / budgetary figures. However, the allegations made by the lower authorities are not supported by actual cash passing hands. The entire additions are based on the seized documents and no other material has been adverted to and which could conclusively show that the huge amount of the magnitude mentioned in the seized documents travelled from, one side to the other. The Revenue authorities have not brought a single statement on record of the vendors of land in different villages. None of the seller has been examined to substantiate the claim of the Revenue that extra cash has actually changed hands. 24. Our view is fortified by the decision of the Delhi High Court in the case of Malik Brothers Pvt. Ltd. Vs CIT 162 Taxmann 43 which is relied upon by the Ld. DR. In that case, the assessee purchased the property allegedly for Rs. 6 lakhs. The vendor in her statement confirmed that the sale consideration of said property was Rs. 45 lakhs and paid tax thereon. In view of vendor s statement, the AO made an addition of Rs. 39 lakhs to the income of the assessee towards unexplained investment. The action of the AO was justified and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustained. 26. Since we have allowed the issue in the case of the present assessee on both counts i.e. on legal issue and on merit and the issues involved in all other appeals of other assessees are similar and identical, though quantum may differ, for similar reasons, we quash the assessments and delete the additions on merit as well as on point of law in all other cases also. 27. In the result, the appeals filed by the assessees are allowed. 31. We observe from the above decision that the fact in the present case is similar to the case of Krupa Land Ltd. (supra) as the present proceedings also arise from the same search. Instead of the statement of Mr. Dilip Dheria, the Revenue is relying on the statement of Mr. Madan Kolambekar in the present proceedings. However, in the present case also, Mr. Madan Kolambekar has withdrawn his statement and other than loose papers, no further material has been brought on record by the Revenue to justify the addition in the hands of the assessee. The Revenue has not supported the allegation by any material showing cash passing hands. Further, the Revenue authorities have not enquired with the vendors or brought any statement on rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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