TMI Blog2023 (9) TMI 979X X X X Extracts X X X X X X X X Extracts X X X X ..... dictional AO of the Assessee. This is evident in last para of the letter dated 23/02/2015. Even otherwise on the merits the coordinate bench in case of the cooperative society has categorically held that income is chargeable to tax in the hands of the members of the society, therefore, we are not in a position to give any other finding with respect to the receipt of above sum and its addition in the hands of the assessee on the merits also. Accordingly, reopening of the assessment in case of the assessee is quashed. - Shri Prashant Maharishi, AM And Shri Sandeep Singh Karhail, JM For the Assessee : Shri K. Gopal, Adv. For the Revenue : Shri Shambhu Yadav, DR ORDER PER PRASHANT MAHARISHI, AM: 01. ITA No.1837/Mum/2018 for A.Y. 2008-09 is filed by Om Developers (assessee/appellant) against the appellate order passed by the Commissioner of Income-tax (Appeals)-26, Mumbai [the learned CIT (A)] dated 20th December, 2017 wherein the appeal filed by the assessee against the assessment order passed under section 143 (3) of the Income-tax Act, 1961 (the Act) by the Dy. Commissioner of Income Tax -28 (2), Mumbai (the learned AO) dated 21st March, 2016 was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut on 18.02.2009 in the case of M/s Pathik Construction Group by the Investigation Wing Mumbai. M/s Pathik construction Group is engaged in the purchase and sale of land. During the course of the search and survey, some incriminating evidences were seized/impounded in which there is mention of land deal between M/s Pathik Constructions and M/s Jai Ganesh Co-operative Housing Society Ltd. M/s Pathik Construction has purchased the said land which is situated at Plot No. 31, Sector 47, Dronagiri, Uran from the Jai Ganesh CHS for a consideration of Rs 5,94,96,000/- by tripartite agreement on 24.04.2007. In this transaction, Jai Ganesh CHS has received the consideration of Rs 5,94,96,000/- in cash as per the report given by the Jt. Commissioner of Income- tax (OSD), CC-39 Mumbai vide letter dated 02.02.2012 for necessary action against Jai Ganesh CHS On verification and enquiries it was found that the assessee Jai Ganesh CHS was a non-filer. The society does not have PAN. Notice u/s 148 of the Income-tax Act, 1961 was issued on 04.02.2013. During the assessment proceedings it came to be known that the assessee society has 37 members who are project affected people. The agricultural ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er :- Annexure M/s OM DEVELOPERS In this case, the assessee field his ROI for the AY 2006-07 on 19/09/2000 declaring total income at Its. 63,16,3907. The regular assessment in this case was completed u/s 143(3) on 20.12.2010 there by determining the total income of assessee at Rs. 71,06,500/-. Information was received from ITO ward 3, Panvel vide letter No. PIL/WD 3/2008/2014-15 dated 23.02.2015 that in the land deal between M/s Pathik Construction and M/s Jai Ganesh Co-operative Housing Society Ltd.. the society has received Rs. 8,16,26,625/ out of which Rs. 5,94,96,000/- as cash and Rs. 2,21,30,625/- by Cheque through M/s. Om Developers. The Jai Ganesh CHS has assigned all the right, title, interest and benefits to M/s Om Developers a partnership firm, through its partners 11 Mr. Promd D. More and 2) Mr. Gajanan R. Kanade. In fact, it was Om Developers who executed the whole transaction. Further on going through the sale agreement it was found that the sale consideration was to the tune of Rs. 2,22,00,000/- This amount received by Om Developers on behalf of Jai Ganesh CHS. It was Om Developers who executed the whole transaction in the name Jai Ganesh CHS. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly). The assigning has already paid to the society and or its members the entire agreed consideration in like of the said agreement. v. On 12/4/2007, the chairperson of the cooperative society got permission from the joint registrar cooperative society approving the proposal for the sale/transfer of the property of society to the highest bidder M/s Pathik constructions. Thus, the permission was granted to the society to sale/transfer of society s property to the above entity. vi. On 23/4/2007 and agreement of assignment cum sale entered into between the society, assessee as they assign or and Pathik construction as the assigning in this assignment of assignment cum sale agreement, the cooperative society were shown as the lessee, assessee as they assignor and Pathik construction as assignee. This was an agreement with a consideration of ₹ 222 lakhs to be paid to assignor by the assignee. The consideration was to be paid of ₹ 172 lakhs at the time of transfer of the above plot of land in the name of assignee and ₹ 50 lakhs was paid as an advance on the date of signing of this agreement vii. on 24/4/2007 registered tripartite agreement was entered into bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ein the addition of ₹5.94 crores was made as per the assessment order passed under section 143 (3) read with section 147 of the Act dated 21st March, 2016. 010. The assessee challenged the same before the learned CIT (A). The assessee challenged the same only on the merits of the addition. The learned CIT (A) confirmed the addition as under: 6.1. Regarding issue (a), perusal of Information available on records shows that the said property stood assigned to the appellant, M/s Om Developers, by Jai Ganesh Co-op Society Ltd. for a sale consideration of Rs. 2,21,98,360/- as per 'agreement to transfer and assign executed on 15.10.2006. This fact has also been reiterated in the recitals for agreement of assignment-cum sale dated 23-04-2007 for plot No 31, Sector 47 admeasuring 5549.59 sq meters situated at Dronagiri Uran between M/s Jai Ganesh Co- op Society Ltd.(Lessee), M/s Om Developers( Assignor) and M/s Pathik Constructions (Assignee) as below. 7. Whereas the lessee JAY GANESH CO-OPERATIVE HOUSING SOCIETY LIMITED vide an Agreement dated 15th October 2006 assigned all its right, title, interest and benefits in respect of the said Plot no. 31 admeasuring 5549. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in turn paid the same to members of the society. Hence, the sale consideration has been reflected as business income in the P/L a/c of the appellant firm for the year ended on 31.03.2008 and the payments to these members has been reflected in the opening stock as on 01.04.2007. This contention of the appellant is also not tenable in view of the following: I. The appellant was not a pass through intermediary or a confirming party to the sales made to M/s Pathik Constructions. The appellant was the assignor as it was the owner of the property being transferred as discussed in para 6.1 above. ii. The appellant had already made payments for purchase of the property at the time of executing agreement to transfer and assign' entered into with Jai Ganesh Co-op Society Ltd. on 15.10.2006 for a consideration of Rs. 2,21,98,360/-. It is an absurd proposition that the appellant received the consideration of Rs. 2.22 crores as confirming party and in turn paid the same to members of the society when the said consideration has been received much later after 15.10.2016. iii. The notings in the sheet of paper seized under annexure O-2 at the premises of M/s Pathik Construction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thik Constructions is an admission of the fact that it had paid Rs. 5,94,96,000/- in cash to the appellant though in response to notice issued u/s 133(6) issued by the AO it had confirmed only the cheque payment of Rs. 2,22,00,000/- and remained silent on the issue of cash payment of Rs. 5,94,96,000/-. In any sale/purchase transaction, the consideration involved would be the same for both the seller and the buyer. 6.7. To sum up, in view of the discussions at paras 6.1 to 6.6 above, I am of the considered opinion that the cash component of Rs. 5,94,96,000/- of the sales consideration on account of sale of Plot No.31, sect-47, Dronagiri has to be taxed in the hands of the appellant. The addition made by the Assessing Officer is sustained. The appellant's ground of appeal on this issue is dismissed. 011. As the learned CIT (A) has confirmed the addition of ₹5.94 crore in the hands of the assessee, this appeal is filed before us. 012. At the time of hearing of the appeal the assessee has preferred an additional ground of appeal challenging the reopening of the assessment and various facets of reopening. The assessee submitted by all these grounds of appeal again ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the ITO, Ward-3, New panvel clearly shows that action is required to be taken not in the hands of the assessee. He extensively referred that what is the information available with the learned assessing officer. He submitted that necessary action was required to be taken in the hands of Jai Ganesh Cooperative Housing Society . That society is a non-filer, as it did not have any Permanent Account Number. The notice was issued under section 148 of the Act on 4th February 2013. The above sum was also added in the hands of that society by an order under section 144 read with section 147 of the Act on 24 March 2014 wherein the total income of that entity was determined at ₹81,626,625. As the demand could not be recovered from the said cooperative housing society, as it was not in existence, the learned Assessing Officer noted that the members of the cooperative housing society are all farmers and they are illiterate. They do not know much about the transaction, while going through the sale of the agreement of the assessee society it was noted that the Jai Ganesh Cooperative Housing Society has assigned all the rights, title, interest and benefits to the assessee partnershi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded in the total income of the assessee. He further stated that the cash component and the cheque component of the world transaction has been taxed in the hands of the cooperative society. Even otherwise, it was stated that there is no information available on record that the assessee has received the above sum and therefore it cannot be taxed in the hands of the assessee. 017. The learned departmental representative vehemently submitted that that reopening is valid as reasons were recorded properly, there is a tangible material, approval granted is in order. 018. We have carefully considered the rival contention and perused the orders of the lower authorities. The facts are already been culled out hereinbefore. Succinctly, it shows that CIDCO as police agreement executed on 13/10/2006 least out of plot number 31 and measuring 5549.59 m to a co-operative society consisting of 37 members in view of 12.5% scheme for project-affected persons. The agreement to transfer between wherein the sale consideration was determined at ₹ 22,198,360 paid to individual members of the society is the members were the real onus of the plot of land. Thereafter the permission of CIDCO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion in the name of the cooperative society. Someone under section 131 of the act was issued to Mr. Manohar Desai, an office assistant of the assessee. From his statement the permanent account number of the assessee and assessment jurisdiction was found. Accordingly, it was communicated to the assessing officer of the assessee stating that it appears that the income is taxable in the hands of the assessee. Accordingly recorded the reasons for reopening of the assessment stating that assessee has filed return of income on 19/9/2018 declaring a total income of ₹ 6,316,300/ . The regular assessment took place under section 143 (3) on 20/12/2010 where the total income of the assessee was assessed at ₹ 7,106,530. The reasons recorded also stated that assessee has shown ₹ 22,488,685/ as sale from the cooperative society, which was, credited to the profit and loss account however total sum of ₹ 81,626,625 should have been recorded as income and therefore ₹ 59,137,940/ chargeable to tax has escaped the assessment. The approval under section 151 was also obtained from the Commissioner of income tax 28, Mumbai who granted approval stating that yes, I am sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilure on part of the assessee to disclose fully and truly all material facts necessary for assessment year for that assessment year. On perusal of the reasons recorded, we do not find that there is any allegation of failure on the part of the assessee to disclose full and true material facts. The learned authorized representative has supported his argument by placing reliance on the decision of the honourable Bombay High Court in case of German remedies limited versus Deputy Commissioner of Income Tax 287 ITR 494 (Bom) wherein in absence of any such allegation, the notice was set-aside. Therefore, respectfully following the decision of the honourable Bombay High Court, in absence of any allegation of such failure on part of the assessee, reopening of the assessment cannot be sustained. Further in the paragraph number 16 (2) the honourable Bombay High Court in case of Sea Sagar Construction Co V V.A. Nair, Income-tax Officer [2022] 141 taxmann.com 107 (Bombay) has also taken a view that Even for a moment we assume that the observations of the Tribunal could be stated to be a finding or a direction as contemplated by Section 150 of the Act, still in view of the proviso to Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut tax could not be recovered. For this reason, the sum cannot be taxed in the hands of the assessee, without any material against the assessee. 023. In view of the above facts, applying the principles laid down by the honourable Bombay High Court in the above judicial precedents, we find that the reasons recorded for reopening of the assessment, in absence of any allegation on the part of the assessee to fully and truly disclosed material facts in the reasons recorded, are not sustainable. 024. Statement u/s 131 of Mr. Manohar Desai also do not state that cash is received by assessee. Letter of ITO ward 3 panvel says that he has only stated PAN and Jurisdictional AO of the Assessee. This is evident in last para of the letter dated 23/02/2015. 025. Even otherwise on the merits the coordinate bench in case of the cooperative society has categorically held that income is chargeable to tax in the hands of the members of the society, therefore, we are not in a position to give any other finding with respect to the receipt of above sum and its addition in the hands of the assessee on the merits also. 026. Accordingly, reopening of the assessment in case of the assessee is qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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