9911796707
TMI Blog2022 (9) TMI 1547X X X X Extracts X X X X X X X X Extracts X X X X ..... eral papers and books were impounded. The AO came to conclusion that assessee has not accounted several cash receipts in the books of accounts. 03. Cash receipt entries with regard to the assessment year 2007 - 08 were also found and therefore original return filed by the assessee on 5/2/2008 declaring Rs Nil income, was reopened u/s 148 of the act, and reassessment order was passed on 28/12/2011 u/s 143 (3) rws 148 of The Income Tax Act, 1961 (The Act) whereby an addition of Rs. 48,867,846/- was made and income was assessed at that amount. 04. The assessee challenged the same the learned CIT - A deleted the above addition and allowed the appeal of the assessee therefore, the learned AO is in appeal for assessment year 2007 - 08 in ITA number 4124/M/ 2012. 05. ITA number 4124/MUM/2012 filed by the learned assessing officer for assessment year 2007 - 08 has raised following grounds of appeal:- i. on the facts and in the circumstances of the case and in law, the learned CIT (A) erred in deleting the additions made by the AO of Rs. 48,867,850/- on account of unaccounted cash receipt found in books impounded during survey. ii. On the facts and in the circumstances of the case an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT - A passed an order on 30/11/2012 allowing the appeal of the assessee. Therefore, the learned assessing officer is in appeal in ITA number 1100/M/2013 for assessment year 2008 - 09. 013. For assessment year 2009 - 10, assessee filed its return on 11/10/2010 at a total income of Rs. 1,079,970/-. Based on survey, assessee declared undisclosed income for assessment year 2009 - 10 of Rs. 33,558,200/-, however return of income filed by the assessee did not include the same. The learned AO passed an assessment order u/s 143 (3) read with Section 144 of The Act on 28/12/2011 assessing the total income of the assessee at Rs. 33,558,200/-. 014. The assessee preferred appeal before the learned CIT - A, who partly allowed the appeal of the assessee reading that the learned assessing officer has made the addition without any material evidence. Accordingly, the appeal of the assessee was partly allowed. Therefore, the learned AO has preferred this appeal in ITA number 4122/M/2012 for assessment year 2009 - 10. 015. The learned AO in ITA no. 4122/Mum/2012 has raised following grounds of appeal:- "(i) On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssued by ITO - 25 (3) (4), Mumbai. iv. However the order u/s 143 (3) dated 28/12/2011 is passed by another officer i.e. the Asst Commissioner of income tax - 25 (3), Mumbai. v. The assessment order passed u/s 143 (3) dated 28/12/2011 passed by the Asst Commissioner of income tax is bad in law since notice u/s 143 (2) which is essential for initiation of assessment proceedings is not issued by him but by The Income Tax Officer - 25 (3) (4) Mumbai . vi. The assessing officer who has passed the assessment order has not issued notice u/s 143 (2) of the act. vii. Notice u/s 143 (2) of the act was issued by a different assessing officer whereas the order was passed by the different assessing officer renders the entire proceedings and order passed as bad in law. viii. Issuing of notice u/s 143 (2) by one officer and finalizing the assessment by the different officer is not permitted. ix. To support its contention the assessee relied on the decision of the honourable Bombay High Court in the case of Ashok Devichand Jain versus Union of India and others (Writ Petition number 3489 of 2019 dated 8/3/2022. x. It is further prayed that the provisions of Section 292BB cannot also c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale of galas Under phase V at Pelhar during financial year 2007 - 08 and 2008 - 09 at Rs. 6,568,200/- and Rs. 33,558,200/- respectively. Please state whether these cash components have been shown are reflected in books of accounts maintained by from. If the same is not reflective, please state why cash component received by the firm during FY seven - 08 and thousand eight - 09 be considered as additional income over and above the regular income in respect of assessment year 2008 - 09 and 2009 - 10. You have stated that the firm has already filed the return for assessment year 2008 - 09, Under these circumstances the firm should filed revised return for assessment year 2008 - 09 showing additional income of Rs. 6,568,200/- for assessment year 2008 - 09. Ans:- the firm has not recorded the cash component in the books of accounts maintained by the firm has hit is related to payments over and above the agreement value. Therefore, the firm will file revised return for assessment year 2008 - 09 and include Rs. 6,568,200/- as additional income. The firm will file its revised return at the earliest. At present the firm has PAN number allotted by Mumbai jurisdiction. Necessary action wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he returned income of the assessee at Rs. 7,883,435/- and assessee the gross total income at Rs. 626,988,804/-. 024. Assessee preferred an appeal before the learned CIT - A who passed an appellate order on 27 March 2012 wherein addition to the extent of Rs. 9,136,813 was upheld. 025. The learned CIT - A further passed an order u/s 154 of the act in appeal of the assessee against the order passed by the learned AO u/s 154 of the act dated 5/10/2012 wherein the addition was confirmed to the extent of Rs. 9,136,813/-. 026. Therefore the learned assessing officer is aggrieved and is in appeal before us where the only challenge is the deletion of the addition of Rs. 609,968,556/- by the learned CIT - A which was added by the learned assessing officer on account of unexplained cash receipts found in the books/documents impounded during survey. 027. The learned departmental representative vehemently supported the order of the learned assessing officer. The learned departmental representative submitted that the addition deleted by the learned CIT - A is not proper. 028. On the merits, The learned authorised representative referred to the order of the learned CIT - A. He submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that whatever has not been received cannot be considered for taxing for various projects. ix. learned CIT - A deleted the addition with respect to cash advances of Rs. 31,692,383/- and Rs. 64,621,024 for assessment year 2007 - 08 and 2009 - 10 respectively from addition made in assessment year 2008 - 09. x. He further found that there is a duplicate entry of Rs. 13,493,471/- which needs to be deleted. xi. learned CIT - A deleted the addition because in the audited balance sheet the advances received from the customer are shown at Rs. 191,385,396/- whereas the advances received reflected in the impounded document is only Rs. 38,903,965/- and therefore the advance for the project of Rs. 38,903,965 was also deleted. xii. He further referred to the second remand report wherein the addition of Rs. 378,796,697/- was considered. The learned CIT held above sums are not appearing in impounded books and the learned assessing officer has taken so merely on basis of balancing figure of amount receivable and received. Therefore as there is no evidence of having received any such amount the addition was deleted to that extent. xiii. It was further stated that the learned CIT - A has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , letter dated 09.03.2012 was issued to the Assessing Officer, ACIT.25(3), Mumbai, with a copy to the concerned Jt.CIT., Mumbai (i.e. Jt.CIT.Rg.25(3), Mumbai) and the concerned CIT I.e. CIT.25, Mumbai. In his letter the A.O. was requested to produce the original impounded materials. Similarly, a copy of this letter was issued to the appellant to produce the Xerox copies of the impounded materials. The case was fixed for hearing on 19.03.2012. 15.2.2. On 19.03.2012, Shri Abhyuday Anand, ACIT.25(3) appeared along with Shri Santosh Kumar Jha, Inspector of Income-tax and produced the original impounded materials. Similarly, Shri Jayesh Kala, FCA and A.R. of the appellant appeared along with Ms. Radhika Agarwal, C.A. and his Junior and produced Xerox copies of impounded materials. 15.2.3. The original impounded materials (produced by the A.0.) were tallied with reference to the Xerox copies of the impounded materials (produced by the appellant) and both the parties were allowed to cross check the contents of the impounded materials. Thereafter, the same were examined by me. Further, the case was adjourned for filing written submission/comments by the appellant on the second Remand R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rather they can be termed as liabilities and, therefore, not taxable. 15.4.2. However, there are certain amounts reflected in the impounded materials and which the appellant have put their own money in the name of relatives, cannot get away and has to be considered as appellant's money and can be taxed accordingly. In the above referred Remand Report of the A.O. dated 20.9.2011, the A.O. have concluded such amount at Rs.91,36,813/- and the appellant also failed to rebut the same during the appellate proceeding, needs to be sustained and, therefore, the amount of addition made to the extent of Rs.91,36,813/- is upheld. 15.5. I have further considered the stand taken by the A.O. in the letter dated 18/08/2011, 11/11/2011, second remand report dated 05/03/2012 as well as submissions of the A.R. It is seen that without having any cogent materials to substantiate & just to prove his point the AO concluded in his remand report dated 05/03/2012 and concluded that appellant has received Rs. 7,93,93,324/-, Rs. 13,17,910/- and Rs. 4,18,02,252/-. 15.5.1. However on verification of the original impounded papers, it was found that the top of header of the pages of the impounded materia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come to the conclusion that the same amount cannot be considered twice for the purpose of taxation therefore, I hereby direct the A.O. to delete the additions made in respect of Rs. 1,34,93,471/-. 15.5.4. As regards Rs. 3,89,03,965/-, it may be mentioned that in the Audited Balance Sheet for A.Y.2008-09 reflects the amount of advances received from customers at Rs.19,13,85,396/- which is higher than Rs.3,89,03,965/-. Since it is already a part of liability by the appellant therefore the same shall not be considered as income of the appellant. Also the AO has never denied that the alleged cash receipt is pertaining to the projects which have not been started / completed as of 31 March 2008. The AR has also mentioned that the projects against which the advance has been recd has been scrapped for want of Government approval. The necessary documents have been submitted by him. I have pursued the same. Based on the factual observations and the documents produced I am of the opinion that the advance for the projects recd of Rs. 3,89,03,965/- should be deleted. Accordingly, I direct the A.O. to delete the amount of Rs.3,89,03,965/-. 15.5.5. The AO in his second remand report (para 4.4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cement, cannot be accepted and, therefore, is rejected. 15.5.5.4 That, Rs. 3,08,77,221/- Is duly reflected in books of the accounts under the head "Advance Received from Customers which is duly appearing in the books of accounts for year ended 31/03/2008 (refer Table in para 6 of page 3 of First Remand Report, where the A.O. has not made any suggestion addition/inclusion of this amount). 15.5.5.5 As regards amount of Rs.91.36,813/- (refer para 7 page 3 of the First Remand Report of the A.O.), it has been explained by the A.O. in the Remand Report that "After going through the submission of the A.R. and the various entries in the impounded materials, the assessee and his AR were confronted with various entries which the assessee and Authorised Representative had claimed to double entries or either as those which did not exist. During this process, it was accepted by them that Rs.91,36,813/- has not been accounted by them and the same may be treated as unaccounted cash receipts for the A.Y.2008-2009. The assessee has also submitted post dated cheques for Rs.50 lacs as tax payments towards Rs.91,36,813/- undisclosed income declared during the remand proceedings". During the subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at all received. Same is the fate of sum of Rs. 6,664,617. Naturally, the sum of Rs. 31,692,3 83/- and Rs. 64,621,024/- pertains to assessment year 2007 - 08 and assessment year 2009 - 10 and therefore naturally they could not have been added in the hands of the assessee for assessment year 2008 - 09 and therefore same are deleted. Obviously, whether the same are taxable in the hands of the assessee or not in those years were required to be dealt with by deciding the appeal of the learned assessing officer for those respective years. The learned assessing officer as per paragraph number 4.1.2 has already granted a relief in the remand proceedings amounting to Rs. 14,120,120/- therefore same addition could not have been made. Furthermore duplicate entries have been deleted by the learned CIT - A to the extent of Rs. 4 67,68,927 -. Thus in fact the total addition suggested by the learned assessing officer is Rs. 751,981,580/- against which the addition already deleted by the learned CIT - A is of Rs. 748,451,911/- which leaves the balance sum of Rs. 35,29,669/- against which the learned CIT - A upheld the addition to the extent of Rs. 91,36,813/-. Therefore as the amount of additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ese ground of appeal of the learned AO is dismissed. 033. Accordingly, appeal of the learned assessing officer in ITA number 4123/M/2012 for assessment year 2008 - 09 is dismissed. 034. on the issue of invocation of Rule 27 of The Income Tax Appellate Tribunal Rules 1963, the fact clearly shows that the assessee has mentioned all these facts in the statement of facts as well as in the grounds of appeal before the learned CIT - A. The learned CIT - A decided the issue on the merits of the case. Before us the assessee says that this is a jurisdictional issue which can be raised at any time of pendency of the appeal which goes to the root of the matter. For this proposition the decision of the honourable Bombay High Court in case of Mr. Peter Vaz is relied upon. In view of the fact that the issue has been raised before the learned CIT - A mentioned in form number 35 in statement of facts as well as in the grounds of appeal, the issue is a jurisdictional issue, goes to the root of the matter and therefore assessee is entitled to raise the same at any point of time. 035. Now coming to the facts for assessment year 2008 - 09, tax at the cost of repetition shows that return of income w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbai admits that such a defective notice has been issued but according to him, PAN of Petitioner was lying with ITO Ward (12)(3)(1), Mumbai and it was not feasible to migrate the PAN having returned of income exceeding Rs. 30 lakhs to the charge of DCIT, Circle 12(3)(1), Mumbai, as the time available with the ITO 12(3)(1) was too short to migrate the PAN after obtaining administrative approval from the higher authorities by 31st March, 2019. 5. The notice under section 148 of the Act is jurisdictional notice and any inherent defect therein is not curable. In the facts of the case, notice having been issued by an officer who had no jurisdiction over the Petitioner, such notice in our view, has not been issued validly and is issued without authority in law. 6. In the circumstances, we have no hesitation in setting aside the notice dated 30th March, 2019. 7. Consequently the order dated 18th November, 2019 rejecting Petitioner‟s objection is also quashed and set aside." 036. The honourable High Court has categorically held that notice u/s 148 of the act is a jurisdictional notice and any inherent defect therein is not curable. Similarly , notice u/s 143 (2) of the act is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A wherein assessee submitted that a sum of Rs. 1,913,000 is amount in nature of the bank balance in cash countered by the appellant, Rs. 11 lakhs have been considered by the AO by adding 2 zeros,, a sum of Rs. 8,790,058 - is not in the nature of income but is the amount of expenditure incurred for purchase of land and no basis was found during the course of assessment proceedings with respect to the balance in figure of Rs. 1,751,440/-. It was also contended that a sum of Rs 156,09,472/- is amount already recorded in the books of accounts and therefore no addition can be made to that extent. With respect Rs. 28 lakhs it was stated that it is not related to the appellant and further a sum of Rs. 121,001/- is in the nature of the duplication entries. Assessee further contended that a sum of Rs. 2,862,000/- is the amount pertaining to assessment year 2008 - 09 and a sum of Rs 1,39,20,875 was never received by the assessee. The learned CIT - A Austin order on 21/3/2012 wherein he deleted the above addition for following reasons as held in his order:- "I have considered the stand of the AO, submission of the Appellant and the impounded materials and my observations can be summed up as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further assets or investments or bank deposits or any further advances. Since the gross amount figure taken by the A.O. has not been correlated other, it can be safely concluded that the receipt of such figures in the hand d to/ appellant remained unsubstantiated. Consequently, the AO is directed t delete the additions of Rs. 11,00,000/-. 5.4. On verification of the impounded papers it is found that amount of 87,90,058/- has been paid by the appellant towards purchase of land or expenses while basis of addition in respect of Rs. 17,51,440/- is not reflected in impounded papers receivable as actual receipt. However on verification of the original impounded papers, it was found that the top of header of the pages of the impounded materials represents agreed value of gala/shops/flats while the middle part represents part amount received by the appellant in respect of gala/shops/flats. Therefore from the impounded papers it is clear that appellant has not received the balance amount. At the same time the A.0. has failed to substantiate and correlate the gross amount reflected in the Header/Heading of the pages, with reference to any concrete evidence of having received the same by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he addition of Rs. 2,862,000 holding that same is pertaining to assessment year 2008 - 09 and therefore same cannot be considered in assessment year 2007 - 08. This finding has been given by the learned CIT - A without first ensuring that the same has been added in the assessment year 2008 - 09 or not. Therefore, we direct the learned assessing officer to examine that if the amount of Rs. 2,862,000 has been already added in assessment year 2008 - 09 then same may be deleted in this year is there cannot be any addition of the same amount in two different assessment years. 046. Further, the addition of Rs. 8,790,058/- made by the learned assessing officer with respect to the own money is not in fact the receipt of the money but the payment for purchase of land and other brokerage expenses which are already accounted for in the books of accounts of the assessee and therefore they are not own money and cannot be added as income of the assessee. Those are correctly deleted by the learned CIT - A. 047. Coming to the addition of Rs. 28 lakhs - wherein the learned CIT - capital has deleted the addition stating that it is not related to the appellant as it was not reflected anywhere in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruction the same should have been assessed by the learned assessing officer. The issue is squarely covered in favour of the assessee by the decision of the honourable Bombay High Court in case of Ashok Devichand Jain (supra) dated 8 March 2022 which is already been considered by us in deciding the similar issue for assessment year 2008 - 09. Therefore, the order of the learned assessing officer deserves to be quashed. 052. However for the completeness of the order in the appeal of the learned AO we have decided the issues on merit also. 053. Accordingly the appeal of the learned assessing officer is partly allowed and application Under rule 27 of the assessee is allowed. Assessment year 2009 - 10 054. Assessment year 2009 - 10, assessee filed its return of income u/s 139 (1) at Rs. 1,079,970 on 11/10 2010. The Return of Income Was Assessed in the Order Was Passed U/s 143 (3) read with Section 144 of the act by the Asst Commissioner of income tax - 25 (3), Mumbai for order dated 28/12/2011. The learned assessing officer made an addition of Rs. 32,478,230/- which has been challenged before the learned CIT - A, who passed an order on 29/3/2012 deleting the above addition. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatement of Shri Bakul J.Parmar one of the partners was also recorded on oath in the presence of another partner Shri Nitesh J Pannar Based on the notings in Note Book and Loose Papers, with regard to cash component received by the firm, the additional income was offered for taxation as under: Sr. No. FY. Additional Income offered 1) 2007-08 Rs 65,68,200/ 2) 2008-09 Rs.3,35,58,200/ The firm will file revised return for A.Y.2008-09 with the ITO Wd-4(2). Thane and it will pay the tax liability at the earliest. The firm will pay advance tax liability for 4. Y. 2009-10 as per the law. "The undisclosed income of Rs.3,35,58.200/- declared during the survey held on 16.10.2008 is shown as undisclosed income in the Profit and Loss Account for the AY 2009-10. However various expenses and costs of work in progress have been debited against this undisclosed income and other income and finally Rs.11,39,264/- is shown as net profit. The AR for the assessee was asked to submit details of all expenses claimed, the working/calculation of WIP of various projects and calculation to prove that cash receipts found in the books impounded have been accounted. Repl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellant had declared revenue of Rs. 3,35,58,200/- in his books of accounts & has claimed expenses incurred for generating the revenue. The Net profit of Rs. 10,79,970/ after deducting all the expenses was reflected in the Return of Income filed by the appellant for the relevant assessment year. The books of accounts of the appellant were duly audited by the Chartered Accountant u/s 44AB as per the provision of the Income Tax Act, 1961. During the course of the assessment all the relevant supporting for the expenses were provided to the Ld. Assessing Officer. Even the Id. Assessing Officer did not deny the fact that the appellant has given the related vouchers/ bills. However the Id. Assessing Officer did not take cognizance of the documents submitted and made the disallowance of entire expenditure incurred for generating the revenue of Rs. 3.35.58,200/-. The Ld. Assessing Officer was of the opinion that the declaration made by the appellant was final and that no other facts can be considered. He failed to appreciate that an admission made at the time of survey, although is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed on some material and cannot be arbitrary. The round figure estimated additions without giving any basis cannot be sustained. The Nagpur Tribunal in the case Elite Developers vs. Deputy Commissioner of Income-tax [2000] 73 ITD 379 (NAG.) held that the Assessing Officer had completely ignored the fact that there was no solid material or cogent evidence on the basis of which it could be said that the assessee had charged on-money on sale of flats. The main reasons and fundamental basis for assessing the undisclosed income of Rs. 40 lakhs on account of on money was that the partner of assessee had declared undisclosed money at Rs. 40 lakhs while deposing under section 132(4) Undoubtedly, the partner declared firm's undisclosed income at Rs 40 lakhs on 28-11-1996, but later on the retracted from his original statement on the ground that the same was made without proper application of mind and under tension. However, the Assessing Officer preferred to apply Nelson's eye only to assess Rs. 40 lakhs in the hands of the assessee only as against nil income declared by the assessee in the return. No reason had been given for assessing the entire amount of Rs. 40 lakhs as undis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elied upon the statement given by one of the partner at the time of survey. He failed to appreciate that an admission made at the time of survey, although is an extremely important piece of evidence, but it cannot be said that it is conclusive and it is open to the person, who made it, to show it has incorrectly been made and the person, making the statement should be given proper opportunity to show that it does not show the correct state of facts. Therefore looking at the issue from any angle, the Assessing Officer was absolutely wrong in arriving at the conclusion; without any material and evidence that the expenditure incurred for generating the turnover of Rs. 3,35,58,200/- should be disallowed. The best course of action available before the AO was to prove that the expenses claimed by the Appellant in the P & L Account were bogus and to that extent he could have disallowed. But without proving the same he could not have done so. When there is a receipt of Rs. 3,35,58,200/-, there definitely to have certain expenses. Since the expenses in the P & L Account have not been proved as bogus, the action of the AO cannot be sustained. Consequently the AO is directed to delete the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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