M. D. Infra Developers Vs DCIT (ITAT Surat)
Facts- The assessee firm is in the real estate business. A search action under section 132 of the Income-tax Act, 1961, was carried out on 17-07-2012 in the group cases of Dalia (Badshah) Babariya Group of Surat.
The AO observed the modus operandi for purchase of said land that the Builder has paid full amount of consideration in cash and SATAKHAT at Jantri price has been executed. After payment of Document price by cheque, the same amount to the tune of cheque payment has been returned in cash to the Builder and additional amount (on-money) is being kept by the Land Seller. On the same line the payment of Rs.13,00,00,000/- was made to Shri Gulabkaka (Land Owner). The same is confirmed by Shri Naresh Talavia in his statement. The assessee was afforded necessary facility of inspection of seized material and also was requested to explain the contents of the said papers. However, the assessee did not prefer to avail the opportunities of submitting explanations, even though inspection of the documents was undertaken. Therefore, summons were served on the partners/ key persons of the group to explain the contents of the said pages. However, none of the partners did neither appear personally nor undertook any correspondence to present their case regarding these documents.
Post issuance of show cause notice and reply furnished by the assessee, AO noted that explanation merely disowns the sanctity of the documents as established by the statement u/s 132(4) of the Act and it is the claim of the assessee that the documents seized which indicate the evidence of the actual amount paid in the lands acquired for the project, are mere rough working for future projections. The same has also been submitted by way of an affidavit. AO however rejected the contention raised by the assessee in retracted affidavit.
Finally, the AO observed that the assessee-firm has made unaccounted investment of Rs. 6,50,00,000/- in AY 2011-12 and INR 9,35,91,500 during AY 2012-13 and accordingly made addition u/s 69B of the Act. further, the amount pertains to the AY 2011-12 to the tune of Rs.3,24,060/- and AY 2012-13 to the tune of Rs.26,19,720/- is held as paid by way of cash, so the provisions of section 40A(3) are attracted to these payments.
Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A) who has confirmed the action of the Assessing Officer. Aggrieved, the assessee is in further appeal before us.
Conclusion- The Shri Naresh Talviya, (partner), being responsible for the functioning of the business, voluntarily gave statement u/s 132(4) of the Act, on 1807-2012, which does not indicate any sort of pressure or coercion but alert, presence of mind and clarity of thought of the assessee. By this statement, it was categorically and unequivocally stated that assessee-firm got on-money. These facts were within the exclusive knowledge of the assessee, who voluntarily stated the same. Therefore, with these facts in exclusive knowledge domain, once disclosed voluntarily in full consciousness, are binding on the assessee, as the contrary could not be proved. The seized documents along with the statement recorded under sections 132 (4)/131 of the Act constituted valid piece of evidence, which could be used in assessing undisclosed income. In the instant case, the assessee has clearly linked the unaccounted entries of concern to undisclosed income in statement under section 132(4) of the Act and hence, such statement is binding on the assessee. By filing retraction statement, the assessee is taking a plea to get away from his voluntary statement, which is an after-thought. The assessee has not produced any evidence that how and why his earlier statements were wrong. The Hon`ble Gujarat High Court in the case of Council of Institute of Chartered Accountants of India vs. Mukesh R. Shah (2004) 134 Taxman 265 (Guj), held that “a retraction, so as to dislodge the admission made, should come about at the earliest point of time. It goes without saving that a retraction made after a considerable length of time, would not have the same efficacy in law as a retraction made at the earliest point of time from the clay of admission. A belated retraction would fall in the category of afterthought instead of being retraction. That apart, for a retraction to be effective so as to dislodge the admission made earlier in point of time, the retraction has to be supported by contemporaneous evidence and the onus is on the person making such admission and retraction.
FULL TEXT OF THE ORDER OF ITAT SURAT
Captioned five appeals filed by the Assessee and Revenue, pertaining to Assessment Years (AY) 2011-12, 2012-13 and 2013-14 are directed against the separate orders passed by the Learned Commissioner of Income Tax (Appeals)-4, Surat [in short “the ld. CIT(A)”], which in turn arise out of separate assessment orders passed by the Assessing Officer under section 144 r.w.s 153A of the Income Tax Act, 1961 (hereinafter referred to as “the Act”).
2. Since, the issues involved in all the appeals of assessee and Revenue are common and identical, therefore these appeals have been clubbed and heard together and are being disposed of by this consolidated order. For the sake of convenience, the grounds as well as the facts narrated in ITA No. 3058/AHD/2016, for AY.2011-12, have been taken into consideration for deciding the above appeals en masse.
3. Although, these cross appeals filed by assessee and Revenue contain multiple grounds of appeals. However, at the time of hearing, we have carefully perused the grounds raised by the assessee as well as grounds of appeal raised by Revenue. We find that most of the grounds raised by the assessee as well as Revenue, are either academic in nature or contentions in nature. However, to meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the assessee and the Revenue as well. With this background, we summarize and concise the grounds raised by the Assessee as well as Revenue, as follows:
(1) In assessee’s appeal in ITA No.3058/AHD/2016 for A.Y. 2011-12 and in ITA No.3059/AHD/2016 for AY 2012-13, the assessee’s solitary grievance is that Assessing Officer as well as Ld. CIT(A) erred in making addition under section 69B of the Income Tax Act, on account of unaccounted investments in the purchase of land.
(i) In assessment year 2011-12, addition was made to the tune of Rs.6,50,00,000/-. (ii)In assessment year 2012-13, the addition was made to the tune of Rs.9,35,91,500/-.
These alleged additions were made by the Assessing Officer invoking the provision of section 69B of the Income Tax Act, for the alleged “On-money” payment in purchase of the land, on the basis of the loose papers (incriminating material) found during the search at page no. 7, 10 and 11 of Annexure A-1. Assessing officer also rejected the retracted affidavit filed by partner. In both the assessment years, that is, AY.2011-12 and 2012-13, assessee raised eight grounds of appeals along with Form No.36, which we have considered.
(2) In the Revenue’s appeal, in ITA No.3093/AHD/2016 for assessment year 2012-13, the Revenue has raised two grounds against deletion of following additions:
(i) Assessee made payment in cash, thus violated the provisions of section 40A(3) of the Act, therefore Assessing Officer made addition to the tune of Rs.26,19,720/-, which was deleted by ld. CIT(A).
(ii) Assessing officer made addition of Rs.7,88,97,461/- on account of unexplained expenditure. Learned CIT(A) deleted the said addition. Therefore, Revenue is in appeal before us.
(3) Assessee’s appeal, in ITA No.3085/AHD/2016 for AY.2013-14 and Revenue’s appeal in ITA No.3094/AHD/2016 for AY.2013-14, are cross appeals.
(a) In assessee’s appeal, in ITA No.3085/AHD/2016 for AY.2013-14, the solitary grievance of the assessee is that addition restricted by the ld. CIT(A) to the tune of Rs.5,15,52,281/-made on account of alleged unaccounted income for suppressed receipts (i.e. “on-money” taken on sale of flats), is purely on estimated basis thus should be deleted. Assessing officer erred in rejecting affidavit and also erred in rejecting books of accounts. Assessee raised nine grounds of appeals along with Form No.36, which we have considered.
(b) In Revenue’s appeal in ITA No.3094/AHD/2016 for AY.2013-14, the solitary grievance of the Revenue is that ld. CIT(A) erred in restricting addition of Rs.5,15,52,281/- against the total addition made by the Assessing Officer to the tune of Rs.31,47,36,000/-.
Therefore, in these cross appeals, assessee’s grievance is that the addition restricted to Rs.5,15,52,281/- should also be deleted, whereas Revenue pleads that total addition made by the Assessing Officer to the tune of Rs.31,47,36,000/- should be sustained, therefore Assessee and Revenue both are in cross-appeals for the addition of Rs.5,15,52,281/- for the assessment year 2013-14.
4. Now, we shall take concise and summarized ground no.1, which is reproduced below for ready reference:
(1) In assessee’s appeal in ITA No.3058/AHD/2016 for A.Y. 2011-12 and in ITA No.3059/AHD/2016 for AY 2012-13, the assessee’s solitary grievance is that Assessing Officer as well as Ld. CIT(A) erred in making addition under section 69B of the Income Tax Act, on account of unaccounted investments in the purchase of land.
(i) In assessment year 2011-12, addition was made to the tune of Rs.6,50,00,000/-. (ii)In assessment year 2012-13, the addition was made to the tune of Rs.9,35,91,500/-.
These alleged additions were made by the Assessing Officer invoking the provision of section 69B of the Income Tax Act, for the alleged “On-money” payment in purchase of the land, on the basis of the loose papers (incriminating material) found during the search at page no. 7, 10 and 11 of Annexure A-1. Assessing officer also rejected the retracted affidavit filed by partner. In both the assessment years, that is, AY.2011-12 and 2012-13, assessee raised eight grounds of appeals along with Form No.36, which we have considered.
5. The relevant material facts, (qua above concise ground No. 1), as culled out from the material on record, are as follows. Assessee before us is a partnership firm. The assessee firm is in the real estate business. A search action under section 132 of the Income-tax Act, 1961, was carried out on 17-07-2012 in the group cases of Dalia (Badshah) Babariya Group of Surat. M/s M. D. Infra Developers is, one of the assessees who is covered u/s 132 of the Act. A notice u/s 153A of the Income Tax Act was issued on 22.01.2013 and served upon the assessee. In response to the said notice, the assessee furnished the return of his income on 31-07-2011, declaring total income at NIL. Thereafter, a notice u/s 143(2) was issued on 14.10.2014 subsequently, a questionnaire along with notice u/s 142(1) of the Income Tax Act, was issued to assessee. In the assessment year under consideration, the assessee – firm has been in the process of developing a Mega Township in the name and style of OM Township, at village Pasodara, Kamrej, Surat. Shri Bhagirath Manubhai Baldha (Pithavadiwala) is the main partner of the assessee firm. Shri Naresh Talavia and Shri Ankit Kachadiya, are other partners actively involved in the sub-group.
6. Shri Naresh Talavia (one of the partners) is actively involved in the day to day affairs of the assessee-firm. During the course of search proceedings, vide statement u/s 132(4) of the I.T. Act, Shri Naresh Talavia has disclosed Rs.15,00,00,000/- as an unaccounted additional income, over and above the regular income, in the hand of the firm. Shri Naresh Talavia, admitted that they (all partners) have charged ‘on-money’ on sale of units/flats and disclosed to have received on money @ Rs.200/-per square feet. The total super built-up area for project, OM township, arrived at approx. 7,50,000 square feet and disclosure of Rs.15,00,00,000/- was made in current year i.e. F.Y. 2012-13. The statement of Shri Naresh Talavia, was further also confirmed by Shri Bhagirath Baldha and Shri Ankit Kachadiya. The statements of Shri Naresh Talavia and other partners were recorded u/s 132(4) of the Act on 17th/18th/19th July 2012.
7. This is important to note that amount of disclosure was also confirmed by partner in post search enquiries and statements recorded u/s 131(1A) of the Act.
8. The details of project, as furnished by Shri Naresh Talavia (one of the partners) in his statement are reproduced below:
