Case Law Details
Riveria Properties (P) Ltd. Vs. ITO (ITAT Mumbai)
Assessing officer is not correct in coming to the conclusion that on money is exchanged between the parties based on a loose sheet found in the premises of a third person. To sustain the addition, the assessing officer should have conducted an independent inquiry about the value of the property and ascertain whether any under valuation is done, if so what is the correct value of the property. Further, the assessing officer did not brought on record any evidence to support his contention to say that there is on-money exchanged between the parties. In the absence of proper inquiry and sufficient evidences, we find no reason to confirm addition made by the assessing officer towards on money. Therefore, we direct the assessing officer to delete addition of Rs. 3,05,00,000 made towards on money.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
These are appeals filed by the assessee directed against the order of Commissioner (Appeals)-13, Mumbai and order of the Commissioner (Appeals)-14, Mumbai dated 28-1-2016 for the assessment year 2006-07. Since facts are identical and issues are common, these appeals were heard together and are disposed of by this common order, for the sake of convenience.
2. The brief facts of the case are that the assessee company engaged in the business of development of properties and construction filed its return of income for the assessment year 2006-07 on 30-11-2006 declaring total income of Rs. 6,830. The return of income was processed under section 143(1) of the Income tax Act, 1961. Subsequently, the case was reopened under section 147 of the Act for the reasons recorded which states that the information gathered during the course of search in the case of M/s. Hicons group of companies revealed that the assessee has sold immovable property for a consideration of Rs. 170 lakhs as per registered deed of conveyance whereas the actual consideration received for sale of property is Rs. 475 lakhs which includes Rs. 170 lakhs paid by cheque and Rs. 305 lakhs paid by cash. Based on the information received from Investigation Wing the assessing officer reopened the assessment for the reasons recorded by him. In response to notice under section 148 the authorized representative of the assessee, M/s. Dalal & Dalal, CAs stated that the return originally filed may be treated as return filed in response to notice under section 148 of the Act. The case has been selected for scrutiny and accordingly notices under section 143(2) and 142(1) of the Act were issued. In response to notices, the authorized representative of the assessee appeared from time to time and furnished the details, as called for. During the course of assessment proceedings, the assessing officer noticed that information received from Investigation Wing of the department in connection with search proceedings in the case of Hicons group of companies revealed that the assessee has received Rs. 305 lakhs in cash towards sale of property which had not been disclosed in the return of income filed for the relevant assessment year. The assessing officer further observed that the seized document in the form of cash book contained certain financial transactions in the name of assessee company which states that M/s. Hicons group has paid Rs. 3.05 crores in cash for purchase of property from assessee company. The director of M/s. Hicons Constructions (P) Ltd., Mr. Rafique Mohd Nazir Sheikh, in his statement recorded under section 132(4) of the Act admitted that the transactions recorded in the impugned seized material related to cash receipts and cash payments in respect of sale/purchase of properties. Based on the information gathered during the course of search, the ADIT (Inv), Unit 3(2), Mumbai issued summons under section 131 of the Act to M/s. Riveria Properties (P) Ltd. for causing necessary examination of the directors thereof in the context of information relating to cash expenditure incurred by M/s. Hicons Constructions. The statement of Shri Bhagwan D Rathod, director of M/s. Riveria Properties (P) Ltd. was recorded on oath under section 131 of the Income Tax Act, 1961 to ascertain whether the said cash receipts had been accounted for in the books of the assessee company. Shri Bhagwan D Rathod, director of the assessee company in the statement recorded during the course of investigation categorically denied of having received any cash from M/s. Hicons Constructions (P) Ltd. for sale of property. He further stated that the property has been sold by an indenture dated 6-5-2005 for a consideration of Rs. 170 lakhs and the same has been disclosed in the return of income filed for the relevant assessment year. The assessee has reiterated its stand taken at the time of investigation before the assessing officer and submitted that the company does not receive any amount over and above whatever stated in the sale deed for sale of property. The assessing officer, after considering the relevant submissions of the assessee and also taking into account the information received from the Investigation wing observed that the assessee failed to furnish any details with respect to alleged cash payment received for sale of property from M/s. Hicons Constructions (P) Ltd. The assessing officer further observed that though the assessee sought for cross examination of the director of M/s. Hicons Constructions (P) Ltd. did not accept an opportunity of cross examination. He opined that as per the clear cut proof of payment made in cash of Rs. 3.05 crores and also the fact that the director of M/s. Hicons Construction (P) Ltd. has accepted that they have paid cash for purchase of property made additions of Rs. 3.05 crores under section 69A of the Income Tax Act, 1961. The assessing officer also initiated penalty proceedings under section 271(1)(c) for concealment of particulars of income.
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