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Income Tax Act, 1961 – Sections 143(3) and 147 – Reopening of assessment – Validity – Appellant/assessee firm which is engaged in business of a builder and developer had filed its return of income for AY 2008-09 – AO completed assessment under Section 143(3) of the Act – On basis of information that assessee received on-money on sale of property, AO reopened case of assessee under Section 147 of the Act – AO completed reassessment under Section 143(3) read with Section 147 of the Act by making addition of undisclosed income – CIT(A) dismissed appeal filed by assessee – Whether CIT(A) has erred in confirming validity of reassessment proceedings initiated by AO under Section 147 of the Act – HELD – Assessee has assailed validity of reassessment proceedings on ground that AO had initiated reassessment proceedings in absence of sufficient material which would have led him to arrive at a bonafide belief that income of assessee chargeable to tax had escaped assessment – AO was informed that sale transaction was executed by assessee firm – AO had sufficient reasons to believe that assessee which had accounted for aforesaid sale transaction had suppressed sale consideration to some extent – Material before AO was sufficient enough for him to arrive at a bonafide belief that income of assessee chargeable to tax had escaped assessment within meaning of provisions of Section 147 of the Act for year under consideration – After considering reasons to believe, CIT had granted sanction for reopening of concluded assessment – Findings rendered by CIT(A) on this issue uphold – Appeal dismissed.

 

Issue 2: Addition of undisclosed income – Whether CIT(A) has erred in confirming action of AO of taxing alleged undisclosed income in hands of Appellant – HELD – As per Agreement to Transfer and Assign, assessee firm was vested with rights, interest and benefits in respect of Plot from a Co-operative Housing Society for a consideration – On basis of an Agreement of Assignment-Cum-Sale, assessee had transferred all its rights, interest and benefits in respect of aforesaid Plot to buyer for an ostensible consideration – Assessee was the de facto owner of Plot in question on date of sale of same to buyer – Notings in document seized from premises of buyer clearly points out undisclosed consideration – In course of search proceedings, buyer had categorically admitted payment of on-money for purchase of property in question – When assessee had accounted for part sale consideration received from buyer in its books of accounts, there is no justification on its part to distance itself from unaccounted sale consideration, i.e, on-money received from said buyer – There is no infirmity in view taken by CIT(A) that cash component of sale consideration on account of sale of Plot had to be taxed in hands of assessee – Impugned order passed by CIT(A) affirmed.

 

2023-VIL-1414-ITAT-MUM

 

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI BENCH “C”, MUMBAI

 

ITA No. 1837/MUM/2018

(Assessment Year: 2008-09)

 

Date of Hearing: 24.09.2020

Date of Pronouncement: 06.10.2020

 

M/s OM DEVELOPERS

 

Vs

 

DCIT-28(2)

 

Appellant by: Shri Manoj Harit, A.R

Respondent by: Shri Manoj Kumar, D.R.

 

BENCH

SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER

SHRI RAVISH SOOD, JUDICIAL MEMBER

 

ORDER

 

PER RAVISH SOOD, J.M:

 

The present appeal filed by the assessee is directed against the order passed by the CIT(A)-26, Mumbai, dated 20.12.2017, which in turn arises from the order passed by the A.O under Sec. 143(3) r.w.s 147 of the Income Tax Act, 1961 (for short ‘Act’), dated 21.03.2016. The assessee has assailed the impugned order on the following grounds of appeal before us:

 

“On the circumstances of the case,

 

1. The ld. CIT(A) has erred in agreeing to A.O’s holding that the appellant firm is in receipt of cash of Rs.5,94,96,000/- from M/s Pathik Constructions and thereby has erred in confirming the action of A.O of taxing alleged undisclosed income of Rs.5,94,96,000/- in the hands of the appellant.

 

2. The ld. CIT(A) has also erred in confirming the action of A.O of not following the principle of natural justice and not granting the opportunity of cross examination to the appellant. The appellant craves leave to add, amend, supplement, alter and/or delete any of the above Grounds of Appeal.

 

Further, the assessee has also filed before us revised additional grounds of appeal, as under:

 

“(a) Whether on facts and circumstances of the case and in law, the reasons recorded by the Assessing Officer were sufficient for forming a belief that income chargeable to tax has escaped assessment, or, the Assessing Officer excluded / suppressed material facts, thereby vitiating the mandate of proviso to Section 147 of the Income Tax Act, 1961, and, hence, the entire foundation of re-assessment is vitiated and all proceedings are bad in law

 

(b) Whether on facts and circumstances of the case and in law, notice issued under section 148 dated 25/03/2015 is void ab-initio, non-est and is without valid jurisdiction and authority of law and it makes all subsequent proceedings including order passed by learned Assessing Officer and impugned Order passed by Ld. CIT Appeal (26) bad in law, void abinitio and non-est;

 

(c) Whether on facts and circumstances of the case and in law, the Assessment Order dated 21/03/2016 issued by the Ld. AO is bad in law for being in flagrant violation of the Proviso u/s 147 of the Income Tax Act, 1961;

 

(d) Whether on facts and circumstances of the case and in law, it was bad in law to reopen assessment u/s 147 of the Income Tax Act, 1961 by placing heavy reliance only on a handwritten chit of paper whose author is unknown and which did not even disclose the name of the Appellant?

 

(e) Whether the Impugned Orders suffer from a jurisdictional error in as much as they have proceeded to render a finding on title, that too, erroneous; and, have further proceeded on the assumption that the Appellant was the owner of the Property No. 31, Sector 47 admeasuring 5549.59 sq. mtrs. Situated at Dronagiri, Taluka Uran, Disrict Raigad as on the date of sale of this Property to M/s Pathik Construction on 23rd April 2007. More so, when the Agreement to transfer and assign dated 15th October 2006 [‘MoU’] entered into between Jay Ganesh Co-operattve Housing Society Ltd. and the Appellant was stamped on a Rs. 100 stamp paper and was unregistered thereby not effecting any transfer of property in favor of the Appellant?

 

(f) Whether on facts and circumstances of the case and in law, the Impugned Order passed by the Dy.CIT on 21st March 2016 suffers from a patent error in as much as it takes a directly contrary view despite specifically taking note the findings of this Hon'ble Tribunal Order No. ITA 1498&1499/Mum/2012 dated 13th February 2015 which categorically records the receipt of cash of Rs. 5,94,96,000/- (Rupees Five Crores Ninety Four Lacs Ninety Six Thousand only) by the said Society?

 

(g) Whether the Impugned Order passed by the CIT(Appeals) on 20th December 2017 suffers from a patent error in as much as it fails to consider the fact that the cash component of Rs. 5,94,96,000/- (Rupees Five Crores Ninety Four Lacs Ninety Six Thousand only) has been taxed in the hands of Jai Ganesh CHS which has been confirmed by the CIT(Appeals) and that further appeal before this Hon'ble Tribunal is pending, therefore, it is impermissible and bad in law to tax the very same amount also in the hand of the Appellant?

 

(h) Whether in the light of the fact that the valuation report dated 09/05/2019 determining the fair market value of the said plot "as on 13/10/2006" by Mr. S. B. Chinchghare, Valuation Officer, Income Tax department Thane, at Rs.1,94,23,600/- (Rupees One Crore Ninety Four Lacs Twenty Three Thousand Six Hundred only) renders the Impugned Order passed by the CIT(Appeals) on 20th December 2017 otiose / perverse?

 

(i) Whether the Impugned Orders suffer from perversity by holding that “illiterate and men of no means” are incompetent to contract and whether such finding is sufficient and reasonable enough to disbelieve and disregard Hon’ble Tribunal’s finding of facts of the Society Members having received the cash component of Rs.5,94,96,000/- (Rupees five Crores Ninety-Four Lacs Ninety- Six Thousand Only)?

 

(j) Whether the lower authorities failed to consider that the entire proceedings against the Appellant initiated on the purported payment of cash by or on behalf of one Pathik Construction is purely based on suspicion, surmises, assumptions and conjectures?”

 

2. Briefly stated, the assessee firm which is engaged in the business of a builder and developer had filed its return of income for A.Y 2008-09 on 26.09.2008, declaring its total income at Rs.63,16,295/-. Income of the assessee firm was originally assessed by the A.O vide his order passed under Sec. 143(3), dated 16.12.2010 at an amount of Rs.71,06,560/-. Subsequently, information was received from the Assessing Officer, Panvel, wherein it was stated inter alia that in the course of a search conducted u/s 132 of the Act on Pathik Construction group certain incriminating documents pertaining to a land deal executed between M/s Pathik Constructions and Jai Ganesh Cooperative Housing Society Ltd. were seized. As per the information, M/s Pathik Constructions had purchased a property situated at Plot No. 31, Sector 47, Dronagiri, Uran Dist: Raigad from Jai Ganesh Co-operative Housing Society Ltd., vide a tripartite agreement dated 24.04.2007. As per the aforesaid information, though the sale receipts aggregating to Rs. 8,16,26,625/- [Rs. 5,94,96,000/- (cash receipt) + Rs. 2,21,30,625/- (agreement value)] were brought to tax in the hands of Jai Ganesh Co-operative Housing Society Ltd., vide an assessment order passed u/s 144 r.w.s 147, dated 24.03.2014, but the resultant demand could not be recovered as Jai Ganesh Co-operative Housing Society Ltd. was found to be no more in existence. On the basis of the information received, a perusal of the agreement to sell revealed that Jai Ganesh Co-operative Housing Society Ltd. had assigned all of its rights, title, interest and benefits in the property in question to M/s Om Developers (i.e the assessee firm) through the latters partners viz. (i). Mr. Pramod D. More; and (ii). Mr. Gajanan R. Kanade. Further, as per the information the whole transaction was executed by the assessee firm in the name of Jai Ganesh Co-operative Housing Society Ltd., and the sale consideration to the tune of Rs. 2,22,00,000/- was also received by the assessee firm on behalf of Jai Ganesh Co-operative Housing Society Ltd. In the backdrop of the aforesaid information the case of the assessee was reopened by the A.O under Sec. 147 of the Act. In compliance to the notice issued under Sec. 148 of the Act, it was requested by the assessee that its original return of income may be treated as a return filed in compliance to the said notice.

 

3. During the course of the reassessment proceedings, it was observed by the A.O, that by way of an “agreement of assignment-cum sale”, dated 23.04.2007 for Plot No. 31, Sector 47 (admeasuring 5549.59 sq. mtrs.) Dronagiri, Uran, Dist: Raigad, executed between (i) Jai Ganesh Co-operative Housing Society Ltd, i.e ‘the lessee’; (ii). M/s Om Developer (assessee firm), i.e the ‘assignor’; and (iii) M/s Pathik Constructions, i.e. the ‘assignee’, the land was transferred to the assignee. As noticed by the A.O, the aforesaid sale transaction was recorded in the assessee’s books of account at an amount of Rs. 2,22,00,000/-. On a perusal of the records, it was gathered by the A.O that search proceedings were conducted by the Investigation wing, Mumbai under Sec. 132 of the Act on 09.02.2009 in the case of Pathik Construction Group. It was observed by the A.O, that the documents seized during the course of the search proceedings included a sheet of paper with handwritten notes, identified as Annexure O-2 - Page no.92 (of the seized material). On a perusal of the seized document, it was noticed by the A.O that the same made a mention of certain payments in relation to a transaction in property styled as ‘Jai Ganesh CHS’, viz. (i) Cheque :Rs.2,22,00,000/-; and (ii) Cash: Rs.5,94,96,000/-. Observing that the assessee had disclosed the amount of sale consideration of Rs. 2,22,00,000/- which was received vide cheques in its return of income and statements of accounts for the year under consideration, i.e A.Y. 2008-09, the A.O held a conviction that the balance cash receipt of Rs. 5,94,96,000/- (supra) represented the on-money that was received by the assessee on sale of the aforesaid property in question. In the backdrop of his aforesaid conviction, the A.O called upon the assessee to put forth an explanation as to why the aforesaid amount of Rs. 5,94,96,000/- may not be treated as undisclosed sale consideration in its hands. In reply, the assessee denied of having received any sale consideration over and above what was disclosed in its books of accounts. However, the A.O did not find favour with the claim of the assessee, and being of the view that the aforesaid notings in the seized document viz. Annexure O-2 – Page 92 revealed the actual sale consideration that was received by the assessee on sale of property i.e Plot No. 31, Sector 47 (admeasuring 5549.59 sq. mtrs.) to M/s Pathik Constructions, therein made an addition of Rs. 5,94,00,000/- as the undisclosed income of the assessee. Accordingly, the income of the assessee firm was assessed by the A.O vide his order passed under Sec. 143(3) r.w.s 147, dated 21.03.2016 at an amount of Rs. 6,65,06,560/-.

 

4. Aggrieved, the assessee assailed the assessment framed by the A.O before the CIT(A). In the course of the appellate proceedings, the CIT(A) observed, that two issues were required to be adjudicated, viz. (i) that who was the effective owner of the property i.e. Plot No. 31, Sector 47 (admeasuring 5549.59 sq. mtrs.) situated at Dronagiri, Taluka, Uran, District: Raigad, on the date of sale of the same to M/s Pathik Construction, vide “Agreement of Assignment-Cum-Sale”, dated 23.04.2007; and (ii). that what was the actual consideration received on sale of the aforesaid property to M/s Pathik Constructions. After necessary deliberations, it was observed by the CIT(A) that vide an ‘agreement to transfer and assign’, dated 15.10.2006 the property in question i.e Plot No. 31, Sector 47 (admeasuring 5549.59 sq. mtrs.) situated at Dronagiri, Taluka, Uran, District: Raigad was assigned by Jai Ganesh Co-operative Housing Society Ltd. to the assessee firm i.e M/s Om Developers for a consideration of Rs. 2,21,98,360/-. It was observed by the CIT(A), that the said factual position was also clearly discernible from the recitals of the “Agreement of Assignment-Cum Sale”, dated 23.04.2007. As observed by the CIT(A), the aforesaid property in question formed part of the ‘Opening stock’ of the assessee firm as on 01.04.2007. Further, as noticed by the CIT(A), the assessee had accounted for the sale receipts of Rs. 2,22,00,000/- that was received by cheques in its sales for the year under consideration. Accordingly, it was concluded by the CIT(A) that the assessee firm was the effective owner of the property on the date of its sale to M/s Pathik Constructions i.e 23.04.2007. As regards the claim of the assessee that it was just a pass through intermediary or a confirming party to the sales made to M/s Pathik Constructions, the CIT(A) observed, that as the assessee was the effective owner of the property in question, therefore, its aforesaid claim did not merit acceptance. Insofar the sale consideration of the property in question was concerned, the CIT(A) after referring to the contents of the document i.e Annexure O-2 - Page 92 that was seized in the course of the search proceedings conducted u/s 132 from the premises of M/s Pathik Constructions i.e the buyer of the property in question observed, that it was evident from the notings that M/s Pathik Constructions had purchased the property from the assessee @ Rs. 14,720/- per sq. mtr. (as mentioned in the seized document), which worked out to an amount of Rs. 8,16,96,000/- [5550 sq. mtrs X Rs. 14,720/- per sq. mtr.]. It was observed by the CIT(A) that out of the total sale consideration of Rs. 8,16,96,000/- the assessee had received an amount of Rs. 2,22,00,000/- by cheques, while for the balance amount of Rs. 5,94,96,000/- was received in cash. In order to fortify his aforesaid observation support was drawn by the CIT(A) from the fact that M/s Pathik Constructions in the course of its assessment u/s 153C of the Act, had claimed ‘set off’ of the unaccounted purchase consideration of Rs. 5,94,96,000/- that was paid by it in cash, as against the unaccounted sale consideration that was received by it on a subsequent sale of the property in question, which was accepted by the Tribunal while disposing off the revenue’s appeal in its case in ITA No. 1498 & 1499/Mum/2012, dated 13.02.2015. As such, it was observed by the CIT(A) that the admission on the part of the purchaser i.e M/s Pathik Constructions of having paid the aforesaid amount of on-money for purchase of the property under consideration fortified the factual position as could be gathered from the seized document i.e Annexure O-2 - Page no. 92. For the sake of clarity, the observations recorded by the CIT(A) while dismissing the assessee’s appeal are culled out as under:

 

“6. I have considered the facts of the case and the appellant ‘s submissions. The pertinent issues to be decided are the following:

 

(a) The effective owner of property Plot No 31, Sector- 47 admeasuring 5549.59 sq. meters situated at Dronagiri, Tal. Uran, Dist. Raigad as on the date of sale of this property to M/s Pathik Constructions on 23.04.2007.

 

(b) The actual consideration received on account of sale of the above mentioned property to M/s Pathik Constructions.

 

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 Coop Society Ltd.(Lessee), M/s Cm Developers(Assignor) and M/s Pathik Constructions (Assignee ) as below:

 

“7. W hereas 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 5549.59 sq. mtrs. of JAI GANESH CO-operative Housing Society Limited, at Sector-47, Dronagiri, Tal. Uran, Dist. Raigad to M/s. GM DEVELOPERS a Partnership firm, through its Partners 1) MR. PRAMOD D. MORE and 2) MR GAJANAND G. KANADE (hereinafter referred to as the ASSIGNOR) for proper consideration and had upon receipt of the Agreed consideration for the same, handed over possession of the plot to the Assignor."

 

6.2. It is abundantly clear from the above that the appellant was the effective owner of the said property as on the date of s ale of the s ame to MIs Pathik Cons tructions on 23.04.2007. The property has also been shown by the appellant as part of its opening stock as on 0.1.04.2007 and the cheque receipts of Rs. 2,22,00,000/- on account of sale of the property has also been reflected in its Profit and Loss acc ount. The total s ales consideration received including the cash component therefore, has to be taxed in the hands of the appellant.

 

6.3. The appellant has submitted that the cheque as well as the cash component of Rs. 5,94,96,000/- has been taxed in the hands of Jai Ganesh Co -op Society Ltd. which has been c onfirm ed by the CIT(A) against which further appeal was pending before the Hon'ble ITAT. The appellant has, therefore, contended that the cash component of Rs. 5,94,96,000/- in any case cannot be taxed in its hands as it would amount to double taxation of the same income. The appellants contention is not tenable in view of the undisputed fact that the appellant was the owner of the property as on the date of sale of the s aid prope r ty t o M/s Pa thik Co ns tr uc tions on 23.04.200 7. The fac t of the c as h component of sales consideration being taxed in the hands of Jai Ganesh Co-op Society Ltd. for whatever reason does not absolve the appellant of its rightful liability.

 

6.4. The appellant has also submitted that the addition had been made on the basis of sheet of paper seized under annexure 0 -2 at the premises of M/s Pathik Constructions during search which has been reproduced on page 3 of the assessment order. I hat it was clearly mentioned on the said paper that if at all, the amounts have been paid, the same have been paid to members of Jai Ganesh Society and that Jai Ganesh Society and Om Developers were just passing through intermediaries. That the appellant firm received the consideration of Rs. 2.22 crores as confirming party and 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 pa yments 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 0-2 at the premises of M/s Pathik Constructions have to be interpreted considering the surrounding facts and circumstances of the case. The notings mention payment details in respect of Plot no.31, Sector-47, Dronagiri which is the property sold by the appellant to M/s Pathik Constructions. Though the appellant's name is not mentioned therein, the logical conclusion to be drawn is that the payments noted therein pertain to the appellant and more so as the cheque component of the payment mat ches with the consideration received shown by the appellant

 

6 . 5 . A s regards the a ctual consideration received on account of sale of the aforementioned property to M/s Pathik Constructions, it would be relevant to consider the notings in the sheet of paper seized under annexure 0-2 at the premises of M/s Pathik Constructions. For the sake of ease and clarity, the legible contents written on the sheet are being typed out below:

 

Annexure 0-2

DCO File No- 5550 Sqm

Plot No.3 1, sect-47, Dronagiri

 

Rate 14720/- sqm

 

Payment Details

Paid to Jali ganesh co-op. members

(a) Cheque 2,22,00,000/-

(b) Ca 5,94,96,000/-

 

Sold to ------(not legible) - Rate – 25600/- sqmt

 

6.6. It is evident from the above notings that M/s Pathik Constructions had purchased the property from the appellant @ of Rs. 14,720/- per sq. mtr. which works out to Rs.8,16,96,000/- out of which Rs. 222,00,000/- was paid by cheque and Rs. 5,94,96,000/- was paid in cash. The working is very precise and the amounts mentioned are not estimated figures. This sheet was found during the course of search u/s 132 of the Act from the premises of M/s Pathik Constructions who was the buyer of the property sold by the appellant. It is therefore, to be construed that the notings in the seized sh eet represent the true state of affairs of the transaction. Both the cheque and cash payments have been mentioned in the same sheet. The appellant has accounted for the cheque component in its books of account. The rules of evidence/appreciation of evidence as elaborated by the various Courts stipulates that the evidentiary document has to be read consistently and a holistic view taken. It is also pertinent to mention here that M/s Pathik Constructions had claimed this amount of Rs.5,94,96,000/- paid in cash to be set off against its unaccounted cash receipts which has been allowed by the Hon'ble ITAT, Mumbai. This claim made by M/s Pathik 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 AG 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.

 

7. As regards the appellant's contention that no opportunity was given by the A.O to cross examine the party, I find that the AO had issued show cause notice to the appellant to explain as to why the amount of Rs. 5,94,96,000/- noted in the seized document should not be treated to have been received by the appellant. In response, the appellant had simply stated that the sale of land was included in the sale a/c of Jai Ganesh Society in its books and that the P & L a/c showed the true picture of the sales and no further proceeds were received. There is nothing on record to indicate that the appellant had sought for cross examination of the party. Nothing to that effect has been brought to my notice during appellate proceedings also. I find that due opportunity of being heard was accorded to the appellant and there was no violation of principles of natural justice. The appellant’s ground of appeal on this issue is dismissed.”

 

5. The assessee being aggrieved with the order of the CIT(A) has carried the matter in appeal. Before us, the assessee has assailed the addition made by the A.O on merits, as well as challenged the validity of the jurisdiction assumed by the A.O for reopening of its case u/s 147 of the Act. We shall first deal with the challenge thrown by the assessee to the validity of the jurisdiction assumed by the A.O for reopening of its case under Sec. 147 of the Act. As observed by us hereinabove, the assessee has assailed the validity of the jurisdiction assumed by the A.O on multiple grounds, which are hereinafter being dealt with by us.

 

6. The ld. Authorized Representative (for short ‘A.R’) for the assessee at the very outset of the hearing of the appeal submitted, that as on the date on which the case of the assessee was reopened under Sec.147 i.e on 12.03.2015, the very basis for such reopening formed a subject matter of an appeal that was filed by Jai Ganesh Cooperative Society Ltd., and was pending adjudication at the relevant point of time. On the basis of his aforesaid contention, it was the claim of the ld. A.R that now when on the date on which the case of the assessee was reopened i.e on 12.03.2015, the matter forming the very basis for such reopening was a subject matter of an appeal filed by Jai Ganesh Cooperative Society Ltd., the A.O, therefore, as per the 3rd proviso to Sec. 147 was divested of his jurisdiction to reassess the income involving such matter in the hands of the assessee. In order to buttress his aforesaid contention the ld. A.R took us through the 3 rd proviso to Sec. 147 of the Act. The ld. A.R drawing support from the 3 rd proviso to Sec. 147 submitted, that an A.O is divested of his jurisdiction to assess or reassess any such income involving matters which on the said date are subject matter of any appeal, reference or revision.

 

6.1 We have given a thoughtful consideration to the aforesaid claim of the ld. A.R and are unable to persuade ourselves to subscribe to the same. Before adverting any further, we think it apt to reproduce the 3 rd proviso to Sec. 147, which as was available on the statute during the year under consideration, read as under:

 

“[Provided further that the Assessing Officer may asses or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.]

 

In our considered view, the aforesaid 3 rd proviso to Sec. 147 provides for an embargo on the A.O in assessing or reassessing the income of an assessee, involving matters which are subject matter of an appeal, reference or revision in the case of the assessee. In other words, the restriction provided in the 3 rd proviso to Sec. 147 is qua the assessing or reassessing of income of an assessee involving matters which are subject matter of an appeal, reference or revision in its case. We are unable to agree with the claim of the ld. A.R, that pendency of an appeal, reference or revision on a particular matter in the case of an assessee would preclude the revenue from reopening the case of a third party. To sum up, though the legislature in all its wisdom had in order to avoid parallel proceedings contemplated a restriction by way of a 3 rd proviso to Sec.147, but the same, in our considered view cannot be stretched to the extent of reading restrictions on reopening the case of a third party. In fact, if the 3 rd proviso to Sec. 147 is construed in the manner it has been projected by the ld. A.R before us, the same would disentitle the revenue from initiating reassessment proceedings in the hands of a third party, within the prescribed period of limitation, on the basis of information gathered in the case of an assessee. We thus not being able to persuade ourselves to subscribe to the aforesaid contention so advanced by the ld. A.R, reject the same. The additional Ground of appeal No. (c) is accordingly dismissed.

 

7. We shall now advert to the claim of the ld. A.R that the reasons recorded by the A.O, were insufficient, for arriving at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment. In fact, the ld. A.R has assailed the validity of the reassessment proceedings, on the ground, that the A.O had in the absence of sufficient material which would have led him to arrive at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment, initiated reassessment proceedings in its hands. As is discernible from the records, the concluded assessment of the assessee was reopened on the basis of the following reasons to believe:

 

“In this case, the asessee field his ROI for the A.Y. 2008 -09 on 19/09/2008 declaring total income at Rs.63,16,300/. . The regular assessment in this case was completed u/s 14(3) on 20. 12.2010 there by determining the total income of assessee at Rs. 71,05,530/-. Information was received from ITO ward -3, panvel vide letter No. PNL/W D 3/JGCS/2014-15 dated 23.02.2015 that in the land deal between M/s Pathik Construction and M/s Jai Ganesh Cooperative Housing Society Ltd., the society has rec eived 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 1) Mr. Promod 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.

 

However, on perusal of the record of the assessee M/s. OM Developers, it is. seen that the assessee has shown Rs.2,24,88,685/- as sale from Jai Ganesh Society. The amount as required to the credited to the profit & l oss account for the A.Y. 2008 -09 was at Rs. 8,16,26,625/-.

 

Thus, I have reasons to believe that the income to the extent of Rs. 5,91,37,940/- chargeable to tax had escaped the assessment within the meaning of provisions of Section 147 of the Act. Hence, this is a fit case for reopening the assess ment by issue of notice u/s 148 of the Act. Accordingly, if approved notice u/s 148 of the Act will be issued.

 

Sd/-

(Sudha Ramchandani)

Dy. Commissioner of Income tax-28(2), Mumbai

 

As can be gathered from the aforesaid reasons, the A.O was in receipt of information from the ITO, Ward-3, Panvel, vide a letter dated 23.02.2015, wherein it was intimated that a land deal was executed between M/s Pathik Construction and Jai Ganesh Cooperative Housing Society Ltd. for a total consideration of Rs. 8,16,26,625/-, which comprised of viz. (i) Cheque payment: Rs.2,21,30,625/-; and (ii) Cash receipt: Rs.5,94,96,000/-. As is discernible from the reasons to believe, the A.O was inter alia intimated that Jai Ganesh Cooperative Housing Society Ltd. had assigned its rights, title, interest and benefits pertaining to the aforesaid property to the assessee firm, i.e. M/s Om Developers, through the latters partners viz. (i). Mr. Pramod D. More; and (ii) Mr. Gajanan R. Kanade. Apart from that, the A.O was informed that the aforesaid sale transaction was executed by the assessee firm. Observing, that the assessee had accounted for the sale consideration only to the extent of Rs.2,24,88,685/-, the A.O held a bonafide belief that the income of the assessee to the extent of Rs.5,91,37,940/- that was chargeable to tax had escaped assessment within the meaning of the provisions of Sec. 147 of the Act. Accordingly, the A.O backed by his aforesaid bonafide belief reopened the concluded assessment of the assessee.

 

7.1 We have given a thoughtful consideration to the aforesaid facts and are unable to agree with the ld. A.R that the A.O de hors sufficient material had formed a belief that the income of the assessee chargeable to tax had escaped assessment. As observed by us hereinabove, the A.O was in receipt of information from the ITO, Ward-3, Panvel, vide a letter dated 23.02.2015, wherein he was informed that a land deal was executed between M/s Pathik Constructions and Jai Ganesh Cooperative Housing Society Ltd. for total consideration of Rs. 8,16,26,625/-, which comprised of viz. (i) Cheque payment: Rs.2,21,30,625/-; and (ii) Cash receipt: Rs.5,94,96,000/-. As per the information so received, it was intimated that Jai Ganesh Cooperative Housing Society Ltd. had assigned its rights, title, interest and benefits pertaining to the property in question to the assessee firm i.e M/s Om Developers. Also, the A.O was informed that the aforesaid sale transaction was executed by the assessee firm. In the backdrop of the aforesaid facts, we are of the considered view that the A.O had sufficient reasons to believe that the assessee which had accounted for the aforesaid sale transaction only to the tune of Rs.2,24,88,685/- in its books of accounts, had thus, suppressed the balance sale consideration to the extent of Rs. 5,91,37,940/-. In the backdrop of the aforesaid facts, we are of a strong conviction that the material before the A.O was sufficient enough for him to arrive at a bonafide belief that the income of the assessee chargeable to tax had escaped assessment for the year under consideration. At this stage, we may herein observe that what is required at the stage of reopening of a concluded assessment is that the formation of belief by the A.O that the income of the assessee chargeable to tax had escaped assessment should have a nexus with the material available with him. We are unable to subscribe to the claim of the ld. A.R, who had tried to impress upon us that the material available before the A.O prompting the reopening of a concluded assessment should conclusively prove that the income of the assessee had escaped assessment. We thus not finding favour with the claim of the ld. A.R that the A.O had reopened the case of the assessee in the absence of sufficient material, reject the same. The additional ground of appeal No. (a) is accordingly dismissed.

 

8. We shall now deal with the claim of the ld. A.R that the notice under Sec.148 was issued by the A.O de hors necessary satisfaction of the appropriate authority as required per the mandate of Sec.151 of the Act. As averred by the ld. A.R, the Commissioner of Income-tax-28, Mumbai, while sanctioning the issuance of notice under Sec. 148 to the assessee, on the basis of the reasons recorded by the A.O, had failed to apply his mind and had recorded his satisfaction in a mechanical manner. In order to buttress his aforesaid claim the ld. A.R took us through the form wherein the approval of the Commissioner of Income-tax was obtained, i.e Page 39 of the APB. The ld. A.R drew our attention to ‘Column 13’ of the form, and submitted, that the CIT-28, Mumbai by merely stating “Yes, I am satisfied that it is a fit case for issue of notice u/s 148 of the Act”, had thus, granted his approval in a mechanical manner without any application of mind. It was the claim of the ld. A.R that the CIT was obligated to have applied his mind to the reasons recorded by the A.O, and therein explicitly recorded that he was satisfied that it was a fit case for issue of notice u/s 148 of the Act. As submitted by the ld. A.R, the satisfaction of the CIT as the sanctioning authority, as required per the mandate of Sec. 151(1) of the Act, was not discernible from the records. It was averred by the ld. A.R that in the absence of the recording of the requisite satisfaction of the sanctioning authority the very assumption of jurisdiction by the A.O under Sec. 147 of the Act would stand vitiated. In order to support his aforesaid claim the ld. A.R had relied on the order of the ‘SMC’ bench of ITAT, Delhi in the case of Anurag Vs. ITO, Ward-1(1), Ghaziabad [ITA No.1023/Del/2019, dated 25.11.2019].

 

8.1 We have deliberated at length on the aforesaid issue in the backdrop of the contentions advanced by the ld. A.R and are unable to find ourselves to be in agreement with the same. As per the mandate of sub-section (1) of Sec 151, as was available on the statute during the year under consideration, in a case where an assessment under sub-section (3) of Sec.143 or Sec.147 had been made for the relevant assessment year, no notice shall be issued under Sec. 148 after the expiry of 4 years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner was satisfied on the reasons recorded by the assessing officer, that it was a fit case for the issue of such notice. Admittedly, assessment in the case of the assessee before us for A.Y 2008-09 was earlier framed under Sec.143(3), vide order dated 16.12.2010. As the aforesaid concluded assessment was sought to be reopened by the A.O on 12.03.2015 i.e beyond a period of 4 years from the end of the relevant assessment year i.e A.Y. 2008-09, therefore, as per the mandate of subsection (1) of Sec.151 the sanction for issuance of such notice had to be obtained from either of the aforementioned appropriate authorities. Insofar obtaining of approval from Commissioner of Income-tax-28, Mumbai as the appropriate authority is concerned, we find that there is no dispute to the said extent. The grievance of the assessee before us is that the CIT-28, Mumbai, had granted the sanction in a mechanical manner i.e without application of mind. We have deliberated at length on the issue under consideration and are unable to accept the aforesaid claim of the assessee. As observed by us hereinabove, the CIT-28, Mumbai, had after considering the reasons to believe that were recorded by the A.O i.e. DCIT-28,(2), Mumbai, dated 12.03.2015, had categorically stated, as under:

 

“Yes, I am satisfied that it is a fit case for issue of notice under Sec. 148 of I.T. Act.”

 

In our considered view, the aforesaid recording of satisfaction by the appropriate authority i.e CIT-28, Mumbai, can by no means be brought within the realm of grant of approval in a mechanical manner, as had been canvassed by the ld. A.R before us. On a perusal of the records, we find, that the A.O had vide his letter dated 12.03.2015 (through Jt. CIT, Range-28(2), Mumbai) forwarded his proposal for reopening of the concluded assessment u/s 147 in the case of the assessee. As per the records, the Commissioner of Income-tax-28, Mumbai, had as on 24.03.2015 in unequivocal terms recorded his satisfaction that it was a fit case for issue of notice u/s 148 of the Act. We are unable to agree with the claim of the ld. A.R that the satisfaction of the sanctioning authority is not discernible from the records. In our considered view, the CIT-28, Mumbai had in no way fallen short of words to clearly express that as per the reasons recorded by the A.O, he was satisfied that it was a fit case for issue of notice u/s 148 of the Act. The ld. A.R has failed to point out as to how the approval granted by the sanctioning authority could be stamped as grant of approval in a mechanical manner or without application of mind. Insofar the order of the ‘SMC’ bench of ITAT, Delhi in the case of Anurag Vs. ITO, Ward-1(1), Ghaziabad [ITA No.1023/Del/2019, dated 25.11.2019] relied upon by the ld. A.R before us is concerned, the same in our considered view being distinguishable on facts would not assist the case of the assessee. Accordingly, not finding favour with the claim of the ld. A.R that the appropriate authority had failed to record his satisfaction as per the mandate of sub-section (1) of Sec.151 of the Act, we reject the same. The additional ground of appeal No. (b) is accordingly dismissed.

 

9. We shall now advert to the claim of the ld. A.R, that as the A.O had proceeded with the assessment without providing the assessee a copy of the reasons to believe on the basis of which its concluded assessment was reopened, therefore, the assessment framed u/s 143(3) r.w.s 147, dated 21.03.2016 would stand vitiated. It was submitted by the ld. A.R that the A.O had failed to supply the copy of the reasons to believe on the basis of which the original assessment that was earlier framed in its case vide order passed u/s 143(3), dated 16.12.2010 was reopened. On a specific query by the bench as to whether the assessee had applied for a copy of the reasons to believe, the ld. A.R answered in the negative. However, it was submitted by the ld. A.R that there was an innate statutory obligation cast upon the A.O to furnish the copy of the reasons to believe to the assessee before proceeding with and framing the assessment in its hands.

 

9.1 We have given a thoughtful consideration to the aforesaid claim of the assessee and are unable to accept the same. Admittedly, in case an assessee applies for a copy of the reasons to believe on the basis of which recourse has been taken to proceedings u/s 147 of the Act, the A.O remains under a statutory obligation to furnish the same before proceeding any further with the assessment. But then, where there is no request by the assessee for supply of the reasons to believe, no obligation in our considered view would be cast upon the A.O to furnish the same. As the assessee in the case before us had at no stage applied for a copy of the reasons to believe on the basis of which its case was reopened, therefore, no fault can be attributed to the A.O in not supplying the same. In the backdrop of the aforesaid facts, finding no substance in the claim of the ld. A.R that the assessment framed u/s 143(3) r.w.s 147, dated 21.03.2016 would stand vitiated as the A.O had failed to supply the copy of the reasons to believe to the assessee, we reject the same. The additional ground of appeal no. (b) is accordingly dismissed.

 

10. We shall now advert to the contentions advanced on the merits of the case by the ld. A.R in his attempt to impress upon us that the CIT(A) had erred in sustaining an addition of Rs. 5,94,96,000/- towards undisclosed income of the assessee. Before proceeding any further, we would briefly cull out the facts of the case in a chronological manner, as the same in our considered view will have a strong bearing on the adjudication of the issue before us, as under:

 

(i). The State government of Maharashtra had acquired land owned by 37 land owners and vested the same with CIDCO for development and disposal. As the said 37 land owners were eligible for allotment of a piece or parcel of land from CIDCO under the scheme of allotment of land to the project affected persons under 12.5% scheme, they applied for the same vide their respective applications. CIDCO decided to allot to them a piece or parcel of land according to their eligibility taking into consideration total land held by them which was acquired by the State government for development of Navi Mumbai. However, all the 37 land owners requested CIDCO that instead of allotting them land at different locations, one plot admeasuring 5549.59 sq. mtrs be allotted to them jointly to facilitate them to form themselves into a co-operative housing society and to get the land allotted finally in the name of such Cooperative Housing Society.

 

(ii). Subsequently, all the 37 land owners formed a Co-operative Housing Society, viz. “Jai Ganesh Co-operative Housing Society Ltd” (hereinafter referred to as “CHS”), and got the same registered under the Maharashtra Co-operative Societies Act, 1960.

 

(iii). On the basis of an ‘Agreement to Lease’, dated 13.10.2006 registered with the Sub-registrar, Panvel-3 on 16.10.2006, CIDCO agreed to lease land bearing Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47, Dronagiri, Taluka: Uran, District: Raigad to the CHS.

 

(iv). On the basis of an “Agreement To Transfer and Assign”, dated 15.10.2006, the CHS assigned all its rights, title, interest and benefits in respect of the aforesaid Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka: Uran, District: Raigad to M/s Om Developers i.e the assessee firm, through the latters partners (i). Mr. Pramod D. More and (ii). Mr. Gajanan G. Kanade for a consideration of Rs. 2,21,98,360/-. As stated in the agreement, the assessee i.e M/s Om developers after paying the aforesaid purchase consideration was put into possession of the property in question.

 

(v). On the basis of an “Agreement of Assignment-Cum-Sale”, dated 23.04.2007 the assessee firm agreed to transfer its rights, title, interest and benefits in respect of the aforesaid Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka : Uran, District: Raigad, to M/s Pathik Constructions (“Assignee”), for a consideration of Rs. 2,22,00,000/-. The CHS was also made a party to the said “Agreement of Assignment-Cum-Sale”, dated 23.04.2007, in order to enable M/s Pathik Constructions to get the land in question transferred in its name. The consideration of Rs. 2,22,00,000/- was received by the assessee i.e M/s Om Developers (“Assignor”) from M/s Pathik Constructions (“Assignee”), as under:

 

S. No

Particulars

Amount

1.

Cheque No. 000197, dated 13.03.2007, drawn on IDBI Bank, Vashi Branch.-

Rs. 25,00,000/-

2.

Cheque No. 007072, dated 10.04.2007, drawn on IDBI Bank, Vashi Branch.

Rs. 25,00,000/

3.

Cheque No. 007080, dated 25.04.2007, drawn on IDBI Bank, Vashi Branch

Rs. 60,50,000/-

4.

Cheque No. 007081, dated 30.04.2007, drawn on IDBI Bank, Vashi Branch.

Rs. 30,00,000/-

5.

Cheque No. 007083, dated 16.05.2007, drawn on IDBI Bank, Vashi Branch.

Rs. 20,00,000/

6.

Cheque No. 007084, dated 18.05.2007, drawn on IDBI Bank, Vashi Branch.

Rs. 61,50,000/-

 

(vi). On the basis of a “Tripartite Agreement”, dated 24.04.2007 executed between viz. (i). CIDCO (for short “Corporation”); (ii). Jai Ganesh Cooperative Housing Society Ltd. (for short “Original licensee”); and (iii) M/s Pathik Constructions (for short “New Licensee”), the lease of the aforesaid Plot No. 31 admeasuring 5549.59 sq. mtrs at Sector 47 Dronagiri, Taluka : Uran, District: Raigad was given to the new licensee i.e M/s Pathik Constructions.

 

11. In the backdrop of the aforesaid facts, the sequence of events therein involved to the extent relevant for adjudicating the issue before us can be summed up as under:

 

(i). As per the “Agreement to Transfer and Assign”, dated 15.10.2006, the assessee firm i.e M/s Om Developers, through its partners (i). Mr. Pramod D. More and (ii). Mr. Gajanan G. Kanade was vested with the rights, interest and benefits in respect of the aforesaid Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka : Uran, District: Raigad from Jai Ganesh Co-operative Housing Society Ltd. for a consideration of Rs. 2,21,98,360/-.

 

(ii). Thereafter, on the basis of an “Agreement of Assignment-Cum-Sale”, dated 23.04.2007 the assessee firm i.e M/s Om Developers had transferred all its rights, interest and benefits in respect of the aforesaid Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri,Taluka: Uran, District: Raigad to M/s Pathik Constructions, for an ostensible consideration of Rs. 2,22,00,000/-.

 

Accordingly, it can safely be concluded beyond any scope of doubt that the assessee vide an “Agreement to Transfer and Assign”, dated 15.10.2006, was vested with the rights, interest and benefits in the aforesaid property in question i.e Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka: Uran, District: Raigad from Jai Ganesh Co-operative Housing Society Ltd. for a consideration of Rs. 2,21,98,360/-. Thereafter, the rights, interest and benefits in the aforesaid property were transferred by the assessee firm to M/s Pathik Constructions, vide an “Agreement of Assignment-Cum-Sale”, dated 23.04.2007 for an ostensible consideration of Rs. 2,20,00,000/-. Insofar the claim of the ld. A.R that as the “Agreement to Transfer and Assign”, dated 15.10.2006 entered into between the assessee firm and Jai Ganesh Cooperative Housing Society Ltd was an unregistered agreement executed on a Rs. 100/- stamp paper, therefore, de hors transfer of the title of the property under consideration no adverse inference as regards vesting of the ownership of the same in the assessee could have been drawn, we are afraid does not find favour with us. Admittedly, transfer of title of any immovable property of a value of one hundred rupees and upwards as per Sec. 17 of The Registration Act, 1908, has to be carried out on the basis of a registered document. But then, we cannot remain oblivious of the fact that the contents of the aforesaid ‘agreement’, dated 15.10.2006 had been referred to and form part of the recitals of the “Agreement of Assignment-cum-sale”, dated 23.04.2007, executed between, viz. (i). Jai Ganesh Cooperative Housing Society Ltd.; (ii). M/s Om Developers (i.e the assessee firm); and (iii). M/s Pathik Constructions, on the basis of which the ostensible sale consideration of Rs. 2,22,00,000/- was received by the assessee through 6 cheques from M/s Pathik Constructions, which therein lends credence to the contents of the aforesaid “agreement”, dated 15.10.2006. As such, the de facto ownership of the assessee firm in respect of rights, interest and benefits of the property in question cannot be ruled out. In the backdrop of the aforesaid facts the claim of the assessee that it was merely a pass through intermediary and had received the consideration of Rs. 2,22,00,000/- from M/s Pathik Constructions on behalf of Jai Ganesh Cooperative Housing Society Ltd. is disproved to the hilt. Our aforesaid view is further supplemented by the fact that the aforesaid property in question, as observed by the CIT(A) formed part of the ‘Opening stock’ of the assessee firm for the year under consideration i.e A.Y 2008-09. On the basis of our aforesaid deliberations, we find ourselves to be in agreement with the observation of the CIT(A) that the assessee firm i.e M/s Om Developers was the de facto owner of the land in question on the date of sale of the same to M/s Pathik Constructions i.e on 23.04.2007.

 

12. We shall now advert to the issue as regards the amount of consideration for which the property in question was transferred by the assessee to M/s Pathik Constructions. As observed by us hereinabove, the rights, interest and benefits in the aforesaid property in question i.e Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka: Uran, District: Raigad was as per the “Agreement of Assignment-Cum-Sale”, dated 23.04.2007 transferred by the assessee to M/s Pathik Constructions for an ostensible consideration of Rs. 2,22,00,000/-. However, in the course of the search proceedings conducted by the Investigation wing, Mumbai on 09.02.2009 under Sec. 132 in the case of M/s Pathik Construction, a sheet of paper with handwritten notes identified as Annexure O-2 - Page no. 92 (of the seized material) was inter alia seized from its premises, which read as under:

 

Annexure 0-2

 

“DCO File No- 5550 Sqm

Plot No.31, sect-47, Dronagiri

 

Rate 14720/- sq m

 

Payment Details

 

Paid to Jai ganesh co-op. members

 

(c) Cheque 2,22,00,000/-

(d)Ca 5,94,96,000/-

 

Sold to ------ (not legible)- Rate – 25600/- sq mt”

 

As the aforesaid document i.e Annexure O-2 – Page 92 was seized in the course of the search proceedings from the premises of M/s Pathik Construction, the contents of the same have to be read in the backdrop of the said fact. Notings in the seized document i.e Annexure O-2 – Page 92 clearly refer to certain payments made in relation to a transaction in a property styled as ‘Jai Ganesh CHS’, viz. (i). Cheque :Rs.2,22,00,000/-; and (ii) Cash: Rs.5,94,96,000/-. On a perusal of the contents of the aforesaid seized document, we further find that the rate at which purchase of the property was transacted is clearly stated to be @ Rs. 14,720/- per sq. mtr. Further, the rate at which the said property was thereafter sold is also clearly mentioned to be @ Rs. 25,600/- per sq. mtr. On the basis of the aforesaid notings it was observed by the lower authorities that the assessee firm i.e M/s Om Developers had transferred its rights, interest and benefits in the property in question i.e Plot No. 31 (admeasuring 5549.59 sq. mtrs) at Sector 47 Dronagiri, Taluka: Uran, District: Raigad to M/s Pathik Construction for a total consideration of Rs. 8,16,96,000/-. As observed by the lower authorities, out of the total consideration of Rs. 8,16,96,000/- an amount of Rs. 2,22,00,000/- was received by the assessee firm by 6 cheques and was accounted for in its books of account, while for the balance amount of cash of Rs. 5,94,96,000/- received had remained unaccounted. Insofar the claim of the ld. A.R that the aforesaid seized document i.e Annexure O-2 – Page 92 is a dumb document, and thus, the contents of the same cannot be relied upon for drawing of adverse inferences in the hands of the assessee, we are afraid does not find favour with us. The notings in the seized document i.e Annexure O-2 – Page 92 beyond any doubt refers to a transaction that had actually taken place in respect of the property therein mentioned i.e “5550 Sqm Plot No.31, sect-47, Dronagiri”. In fact, the noting “Cheque : Rs. 2,22,00,000/-”, is the aggregate amount of sale consideration that was received by the assessee i.e M/s Om Developers through 6 cheques drawn on IDBI Bank, Vashi Branch from M/s Pathik Construction. As the aforesaid seized document i.e Annexure O-2 – Page 92 clearly refers to an actual transaction that had materialized, it could thus not be scrapped by stamping it as a dumb document. Insofar the claim of the ld. A.R that the contents of the aforesaid seized document cannot be relied and acted upon, we are afraid that the same does not merit acceptance. As the aforesaid document was seized in the course of search proceedings conducted at the premises of M/s Pathik Constructions (buyer of the property), the contents of the same as per the innate presumption in Sec. 292C of the Act have to be assumed to be true and in the handwriting of the person from whose possession the same was recovered. Apart from that, we find that the rate of Rs. 14,320/- per sq. mtr mentioned in the seized document i.e Annexure O-2 – Page 92, therein works out to a total consideration of Rs. 8,16,96,000/- i.e 5,550 sq. mtr X Rs. 14,320/- per sq. mtr, which is the aggregate of the consideration mentioned in the seized document i.e Rs. 8,16,96,000/- [Cheque :Rs. 2,22,00,000/- + Cash : Rs. 5,94,96,000/-]. On the basis of the aforesaid clinching facts, we are of the considered view that the notings in the document i.e Annexure O-2 – Page 92 seized from the premises of M/s Pathik Construction i.e the buyer of the property in question clearly points out to the undisclosed consideration that had changed hands. The Ld. A.R had placed on our record an order that was passed by the ITAT “C” Bench, Mumbai while disposing off the revenue’s appeal in the case of M/s Pathik Constructions (ie. buyer of the property in question) in ITA No. 1498 to 1499/Mum/2012, dated 13.02.2015. As is discernible from the said order, M/s Pathik Constructions i.e the buyer of the property in the course of the search proceedings conducted in its case was found to have received onmoney of Rs.10.65 crores (i.e over and above the accounted sale consideration of Rs. 3.25 crores) on a subsequent sale of the property in question to M/s Iconic Realtors Ltd. In the course of the search proceedings partners of M/s Pathik Constructions had categorically admitted the payment of on-money for purchase of the property in question. Although, the aforesaid statement was subsequently retracted, but in the absence of any material supporting such retraction the same was rejected by the A.O. As is discernible from the aforesaid order M/s Pathik Construction had in the course of the post search assessment proceedings in its case claimed that its undisclosed income from sale of the property in question be computed as under:

 

“Unexplained Cash Receipt

Rs.10,95,00,000/-

Less Expenses on account payment made to Persons who sold the plot to assessee

 

 

Rs.5,94,96,000/-

cash paid to Mitra Mandal, agents etc

Rs.3,05,00,000/-

Undisclosed income (ignoring Rs.4000/-)

Rs.1,95,00,000/-“

 

Accordingly, M/s Pathik Construction had categorically admitted of having paid on-money of Rs.5,94,96,000/- for purchase of the property in question. In fact, it was the claim of the aforesaid buyer i.e M/s Pathik Construction that the undisclosed income on sale of the property in question be worked out after inter alia taking into account the cash expenses of Rs.5,94,96,000/- that was paid to the seller of the property. Further, we find that on appeal by M/s Pathik Constructions the CIT(A) had inter alia directed the A.O to allow the credit of Rs.5,94,96,000/- while computing its undisclosed income from the land transaction in question. On the basis of the aforesaid facts as are discernible in the case of M/s Pathik Construction i.e buyer of the property, there remains no doubt that a consideration of Rs.5,94,96,000/- had changed hands on transfer of the property under consideration. Insofar, the attempt on the part of the assessee to distance itself from the receipt of the aforesaid on-money of Rs.5,94,96,000/-, on the ground that it was just a pass through intermediary or a confirming party between M/s Pathik Constructions and Jai Ganesh Cooperative Housing Society Ltd., the same for the reason given by us hereinabove while rejecting a similar claim of the assessee that it had nothing to do with the sale consideration of Rs.2,22,00,000/- (supra) that was though duly accounted for in its books of accounts, is on the same terms rejected. To be brief and explicit, now when it is clear from the records that the assessee had purchased/acquired all the rights, interests and benefits in respect of the property in question from Jai Ganesh Co-operative Housing Society Ltd., vide the “Agreement to Transfer and Assign”, dated 15.10.2006 for a consideration of Rs.2,21,98,360/-, it would therefore be beyond comprehension as to how any part of consideration received on a subsequent sale of the said property was not to be accounted for in its hands. In fact, now when the assessee had accounted for the part sale consideration of Rs.2,22,00,000/- received from M/s Pathik Constructions in its books of accounts, there is no justification on its part to distance itself from the unaccounted sale consideration i.e the onmoney of Rs.,5,94,60,000/- received from the said buyer. To sum up, now when the assessee firm i.e M/s Om Developers vide an agreement, dated 15.10.2006 was vested with the interests, rights and benefits in the property in question, therein de hors any material proving to the contrary it would thus be the rightful owner of any consideration received pursuant to a subsequent sale of the property/rights in the property in question. We thus not being able to persuade ourselves to subscribe to the claim of the ld. A.R that the aforesaid amount of Rs.5,94,96,000/- (supra) was paid by M/s Pathik Constructions to Jai Ganesh Co-operative Housing Society Ltd, decline to accept the same. Accordingly, finding no infirmity in the view taken by the CIT(A) that the cash component of Rs.5,94,96,000/- of the sale consideration on account of sale of Plot No. 31, Sector 47, Dronagiri, Taluka: Uran, Dist: Raigad had to be taxed in the hands of the assessee firm, therein uphold the same. The Grounds of appeal No. 1 & 2 a.w additional grounds of appeal nos. (d) to (g) and (j) are dismissed in terms of our aforesaid observations.

 

13. As the ld. A.R had not made any submissions in context of the additional grounds of appeal nos. (h) & (i), the same are thus dismissed as not pressed.

 

14. Resultantly, finding no merit in the appeal of the assessee, the same is dismissed.

 

Order pronounced under rule 34(4) of the Income Tax (Appellate Tribunal) Rules, 1962, by placing the details on the notice board.

 

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