Income Tax Appellate Tribunal - Delhi
Countrywide Promoters Pvt. Ltd., New ... vs Acit, New Delhi on 11 September, 2017
1
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCHES: "B" NEW DELHI ]
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI L. P. SAHU, ACCOUNTANT MEMBER
I. T. Appeal No. 6303/Del/2013
Assessment Year : 2006-07.
Countrywide Promoters Pvt. Ltd., Asstt. Commissioner
M - 11, Middle Circle, Vs. of Income Tax,
Connaught Circus, Central Circle : 23,
New Delhi - 110 001. New Delhi.
PAN : AAACC 3536 A
AND
I. T. Appeal No. 6342/Del/2013
Assessment Year : 2006-07.
Asstt. Commissioner Countrywide Promoters Pvt. Ltd.,
of Income Tax, Vs. M - 11, Middle Circle,
Central Circle : 23, Connaught Circus,
New Delhi. New Delhi - 110 001.
PAN : AAACC 3536 A
(Appellants) (Respondents)
Assessee by : Shri V. S. Rastogi, A. R.;
Department by : Ms. Rachna Singh, CIT [DR];
Date of Hearing : 21.08.2017
Date of Pronouncement : 11.09.2017
O R D E R.
2
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
PER I. C. SUDHIR, J. M. :
Ground Nos. 1 and 7 are not pressed by the assessee.
2. Ground No. 2 of the assessee : This ground is as under :-
" 2. That on the facts and circumstances of the case and in
law, the CIT (Appeals) erred in rejecting the appellant's contention
that the assumption of jurisdiction by Assessing Officer for
making assessment u/s 153C of the I.T. Act was bad on facts
and in law, thereby rendering the whole assessment also as bad in
law and void ab-initio. "
3. In this ground, the assessee has challenged the assumption
of jurisdiction by the Assessing Officer in making assessment u/s 153C.
In elaboration of this contention the assessee has taken a specific
ground by way of Additional Ground, as under :-
" That on the facts and circumstances of the case and in law,
the CIT (Appeals) erred in rejecting the appellant's contention
that the assumption of jurisdiction by the Assessing Officer for
making assessment u/s 153C was bad on facts and in law on
the ground that the Assessing Officer of the searched person
had not recorded satisfaction in the file of the searched person,
for assuming jurisdiction u/s. 153C of the Act in the case of
the appellant. "
3
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
3.1 Assessee is one of the group company of M/s BPTP Ltd,
which is the Flagship company, engaged in the development of real
estates. The assessee has either acted as a land holding company
purchasing land and transferring the development rights in respect
of land purchased to BPTP Ltd. or accumulating development rights
in respect of land purchased by other group companies and transferring
these land development rights to BPTP Ltd. A search was conducted
on M/s BPTP Ltd on 15.11.2007 whereby some documents were seized.
As some documents were found to belong to the assessee i.e. M/s
Countrywide Promoters Pvt. Ltd, action u/s 153C of the Act was taken
and a notice u/s 153C of the Act was issued to the assessee on
16.07.2009. Return was filed by the assessee on 25.08.2009 in response
to the notice under section 153C. Assessment was made on 31.12.2009,
which is the subject matter of the present appeal.
3.2 It was contended by the learned AR of the assessee that in the
present case the satisfaction note was not recorded by the Assessing
Officer of the searched person namely, M/s BPTP Ltd in the file of
BPTP Ltd. Instead, the satisfaction note was recorded by the Assessing
Officer of Countrywide Promoters Pvt. Ltd i.e. the assessee, being the
other person in the file of the assessee. Relying on the Circular
no.24/2015 dated 31.12.2015 of CBDT, it was contended that the
satisfaction note having not been recorded as envisaged by law, the
assumption of jurisdiction by the Assessing Officer u/s. 153C in the
4
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
present case was bad in law. Accordingly, it was submitted that the
assessment made was also bad in law and be annulled.
3.3 On behalf of the Revenue, learned CIT-DR objected to the
admission of Additional Ground for which reliance was placed on
number of cases. On merits, reliance was placed on the judgment of
the Hon'ble Delhi High Court in Ganpati Fincap Services Pvt. Ltd vs.
CIT decided on 25.05.2017 in WP(C) 525/2015.It was pointed out that
in the present case, the AO of the searched person i.e. M/s BPTP Ltd,
and of the assessee being the same, there was no infirmity in recording
of the satisfaction, as held in the aforesaid case by the Hon'ble Delhi
High Court.
3.4 Submissions made by the parties have been considered. It
cannot be doubted that the objection raised in the additional ground by
the assessee is purely a question of law, going to the root of the matter
and the relevant facts are also on record. Accordingly, the additional
ground, taken by the assessee, is admitted based on the judgment of the
Hon'ble Supreme Court in NTPC vs. DCIT 229 ITR 383 (SC). On merits,
the contention of the learned CIT-DR is, however accepted, which is
based on the judgment in Ganpati Fincap Services (supra). Since the
Assessing Officer of the searched person also happens to be Assessing
Officer of the other person i.e. the assessee, there is no infirmity in the
satisfaction note recorded in the present case. Accordingly, both
Ground No. 2 and the additional ground, are rejected.
5
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
4. Ground No.3 and 3.1 of the Assessee's Appeal : These grounds
are as under :-
" 3. That on the facts and circumstances of the case and in
law, the CIT (Appeals) erred in holding, to quote, "that seized
documents definitely proves that interest is paid on PDC' in view
of the fact that no enquiries were made from any of the alleged
recipients of interest to that effect and none was confronted with
the relevant document(s);
3.1 That the findings of the Assessing Officer and CIT (Appeals)
are based on mere surmises and conjectures without proof and
corroboration by independent evidence that any interest was
actually paid by the appellant and received by the recipient. "
5. Ground No.1 of Department Appeal : This ground is as under :-
" 1. On the facts and in the circumstances of the case, the
CIT (Appeals) has erred in deleting the addition of
Rs.1,72,42,433/- made by the Assessing Officer in
assessment year 2006-07 on account of interest on PDCs
paid outside the books of account. "
5.1 The grounds of the assessee and the Department are dealt
with together.
6
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
5.2 It has been pointed by the assessee that the addition of
Rs.1,72,42,433/- has since been rectified to Rs.77,36,402/- by the
Assessing Officer vide order u/s 154 dated 31.03.2010 and copy of
order u/s 154 dated 31.03.2010 has been filed at page no.99-100 of
Paper Book filed on 21.06.2017.
5.3 Briefly stated the facts of the case are as follows. During
assessment proceedings, Assessing Officer noticed that the assessee
company is one of the group company of BPTP group. The assessee had
purchased several tracts of land in the NCR (National Capital Region)
and transferred development rights in respect of land purchased to
BPTP Ltd. like as other group companies have purchased land and
transferred development rights to assessee. In some cases, the assessee
company has made only part payment of sale consideration to the
sellers at the time of executing sale deed and balance payment is
made by way of post dated cheques (PDCs). During the assessment, the
Assessing Officer obtained details of such PDCs given at the time of
registration to the seller and date of encashment. The Assessing Officer
applied rate of15% interest per annum paid for the period from sale deed
to date of encashment, on the amount of PDCs in all cases on the basis
of seized material related to any of the companies of BPTP group
including assessee. The Assessing Officer gave the finding in the
assessment order that total such interest payable comes to
Rs.17242433/- (which was rectified later on u/s 154 to Rs.7736402/-)
on PDCs and such interest was held to be paid in cash outside the books
7
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
of account. Therefore, such interest was added as Income on account of
unaccounted / unexplained expenses.
5.4 Aggrieved by order, the assessee preferred an appeal before the
learned CIT (Appeals). The learned CIT (Appeals) dealt with the matter in
para 6 of his order. The learned CIT (Appeals) after examining the seized
papers / documents directed to recompute interest on PDCs. His
directions contained in para 6.5 were as under :-
" If it is not possible to work out the extension of PDCs in each
case then Assessing Officer is directed to recomputed interest on
PDCs after six months from the date of issue of PDCs i.e. date of
sale, as six months is taken as reasonable period for giving PDC
as per sale deed "
5.5 As a result of this order the entire addition of Rs.77,36,402/-
as revised in order u/s 154 dated 31.03.2010 was deleted.
6. On behalf of assessee, reliance was placed on the order of
Tribunal in 'C' Bench, Delhi in the case of group company M/s IAG
Promoters and Developers Pvt. Ltd. dated 31.10.2014 in ITA Nos.
1674/D/2013 and 1765/D/2013 for assessment year 2008-09. In this
order, in para 3, the Tribunal held as under :-
" The CIT (Appeals) directed to recalculate the interest on PDCs
and there was a sound logic for such direction. His direction is
8
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
based on material found and seized at the time of search. In view of
the above, we do not find any justification to interfere with the
order of learned CIT(A) in this regard and accordingly, we reject
ground No.1 of the Revenue's appeal. "
6.1 It was submitted by the learned AR that the facts of the
case of M/s IAG Promoters and Developers Pvt. Ltd. (supra) and those
of the assessee are identical. It was stated that the said order in M/s
IAG Promoters and Developers Pvt. Ltd. has been accepted by the
Department and no appeal has been filed to the Hon'ble High
Court. It was also pointed that the said order has since been followed
in number of the cases by the Coordinates Benches, of ITAT, Delhi
for which a compilation was filed. It was therefore submitted that
the order in case of M/s IAG Promoters and Developers Pvt. Ltd.
may be followed and the appeal of the Department on Ground No. 1
be dismissed.
6.2 The learned CIT-DR in her submissions contended that the
facts of the case of the assessee were distinguishable from the facts of
the case of M/s IAG Promoters and Developers Pvt. Ltd. She filed a
paper book, containing 54 seized documents, which were categorized
as PDC 1 to PDC 54 by the Assessing Officer and were annexed to
the assessment order. She made her arguments on the premise that
the facts in the present case were distinguishable from the facts in
the case of M/s IAG Promoters and Developers Pvt. Ltd. She argued
9
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
on some of the seized documents from the Paper Book filed by her at
length which were related to addition of interest on PDCs paid in cash
outside books of account to put forth her argument that trend of
payment of interest on PDCs was clearly visible and pleaded that the
order of the Tribunal in M/s IAG Promoters and Developers Pvt. Ltd
be not followed and instead the order of the Assessing Officer be
sustained, where the addition of Rs.77,36,402/- was made in respect
of PDC interest right from the date of sale deeds to the date of
encashment of the cheques.
6.3 In the rejoinder the learned AR filed copies of all seized
documents, explanation in respect of each and every seized
documents as to show to whom the said seized records belong / relate /
pertain to and the period to which the said seized documents pertain
to, copies of replies filed before Assessing Officer. The ld. AR strongly
objected to the statement made by the learned CIT-DR to the effect
that the facts in the case of the assessee were different, and were
therefore distinguishable, from the facts of the case in M/s IAG
Promoters & Developers Pvt. Ltd. It was submitted by learned AR of the
assessee that the Assessing Officer in the present case had listed 54
seized documents (seized in the search on BPTP Ltd. on 15.11.2007) and
marked them as PDC 1 to PDC 54. The Assessing Officer dealt with these
documents in para 2.2 of the assessment order, describing each
document by the particular PDC number given to the said document. All
the 54 seized documents were made as annexures to the assessment
order. He gave finding in the same para at pages 13 to 14 and held
10
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
that interest to be added as income and be taxed on all the PDCs from
the date of sale deed to till the date of encashment. He worked out the
addition at Rs.1,72,42,433/- which was later on reduced to
Rs.7736402/- under section 154. The learned AR filed copies of those
seized documents which were relied and argued by the Ld. CIT-DR and
show that most of these documents either do not belong to the assessee
or did not pertain to the year under consideration.
6.4 It was submitted that in the assessment order of M/s IAG
Promoters and Developers Pvt. Ltd. also, same 54 seized documents were
used by the Assessing Officer. Not only that the same seized documents
were used in the assessment of M/s IAG Promoters and Developers
Pvt. Ltd., the conclusion drew by the Assessing Officer in that case was
also identical. The Assessing Officer had worked the addition of interest
on PDCs of Rs.506625/- in that case.
6.5 We were also taken through the relevant portions of the orders
of the learned CIT (Appeals) in the two cases. The learned CIT (Appeals)
in both the cases specifically dealt with the very same 54 seized
documents and gave his finding. In the case of M/s IAG Promoters &
Developers Pvt. Ltd., the learned CIT (Appeals) dealt with the seized
documents in para 5 at pages 4 to 15 and gave his finding in para
5.4; the concluding portion of the finding was this :-
11
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
" If it is not possible to work out the extension of PDCs in each
case then Assessing Officer is directed to recomputed interest on
PDCs after six months from the date of issue of PDCs i.e. date of
sale, as six months is taken as reasonable period for giving PDC as
per sale deed "
6.6 It was also shown that in the present case, the learned CIT
(Appeals) dealt with the same 54 seized documents in para 6 at pages
9 to 19. After dealing with same documents as were dealt with in case
of M/s IAG Promoters & Developers Pvt. Ltd. and after going through
them the learned CIT (Appeals) gave similar finding as quoted above,
which was contained in para 6.5.
6.7 Having shown that the facts of the two cases being exactly
identical, and the orders of the Assessing Officer and the ld. CIT
(Appeals) also being identical, it was submitted that the learned
CIT-DR was factually wrong and incorrect in stating that the facts of
the present appeal were different and therefore she erroneously sought
liberty to distinguish them. Since the facts in the two cases were
identical, there was no question of distinguishing them. It was
pleaded by the learned AR that on the facts stated above in view of
principles of judicial discipline and doctrine of precedent, the order of
the ITAT Bench in case of M/s IAG Promoters & Developers Pvt. Ltd.
(supra) be followed.
12
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
6.8 In support following submission was made where above
principles were laid down :-
"i)
Hon'ble Gujarat High Court in Sayaji Iron and Engineering Co.
v. CIT 253 ITR 749 (Guj.) has reiterated that no Tribunal of fact
has any right or jurisdiction to come to a conclusion entirely
contrary to the one reached by another bench of the same Tribunal
on the same facts, and if a bench of a Tribunal on identical facts
is allowed to come to a conclusion directly opposed to the
conclusion reached by another bench of the Tribunal on an earlier
occasion, that will be destructive of the institutional integrity itself.
If the Tribunal wants to take an opinion different from the one
taken by an earlier bench, it should place the matter before the
President of the Tribunal so that he could have the case referred to
a full bench of the Tribunal consisting of three or more members
for which there is a provision in the Act. Reference was made to the
similar view taken in CIT vs. L.G. Ramamurthi 110 ITR 453 (Mad.).
Reference was also made to the judgment of Hon'ble Supreme
Court in Union of India vs. Paras Laminates Pvt. Ltd. 1991 AIR
696, where it was held :-
" It is true that a Bench of two members must not lightly
disregard the decision of another Bench of the same Tribunal
on an identical question. -------------------------------. The rationale
13
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
of this rule is the need for continuity, certainty and predictability in
the administration of justice. Persons affected by decisions of
Tribunals or Courts have a right to expect that those exercising
judicial functions will follow the reason or ground of the judicial
decision in the earlier cases on identical matters. Classification of
particular goods adopted in earlier decisions must not be lightly
disregarded in subsequent decisions, lest such judicial
inconsistency should shake public confidence in the administration
of justice. "
Hon'ble MP High Court in Agarwal Warehousing and Leasing
Ltd v. CIT 257 ITR 235 (MP) has held that the orders passed by
the Tribunal are binding on all the tax authorities functioning
under the jurisdiction of the Tribunal. While so holding it followed
the decision of the Hon'ble Supreme Court in UOI v. Kamlakshi
Finance Corporation Ltd AIR 1992 SC 711, 712 which has
ruled thus :-
" The principle of judicial discipline require that the orders
of the higher appellate authorities should be followed
unreservedly by the subordinate authorities. The mere fact
that the order of the appellate authority is not
'acceptable' to the Department - in itself an objectable
phrase - and is the subject matter of an appeal can
furnish no ground for not following it unless its operation
has been suspended by a competent court. If this healthy
14
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
rule is not followed, the result will only be undue harassment
to assessees and chaos in administration of tax law. "
ii) Instructions of CBDT F. No. 279/Misc/52/2014-(ITJ) dt.
10.12.2015
CBDT has directed in these instructions to the field officers
that if a question raised is covered by any earlier decision
of the Tribunal, which has been accepted by the Revenue,
and no appeal has been filed, then such appeals should
either be withdrawn or dismissed as not pressed.
Understandably, violation of these instructions is bound to be
adversely viewed by the CBDT, if it comes to the notice of the
Board. Section 119(1) of the IT Act, 1961 states :-
" 119. Instructions to subordinate authorities.- (1) The
Board may, from time to time, issue such orders, instructions
and directions to other income-tax authorities as it may deem
fit for the proper administration of this Act, and such
authorities and all other persons employed in the execution
of this Act shall observe and follow such orders, instructions
and directions of the Board. "
Section 119(1) uses the word 'shall', which means that
the orders / directions / instructions of the Board have to
be followed mandatorily / unreservedly by the authorities
15
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
working under the CBDT. The learned CIT-[DR] is one
such authority functioning on whom the aforesaid
instructions are binding. "
6.9 It was also submitted by the learned AR that the order in
case of M/s IAG Promoters & Developers Pvt. Ltd. has been accepted
by the Department and has been followed by the Coordinate Benches
of ITAT, on identical facts in the following cases :-
Order of ITAT 'F' Bench, New Delhi in M/s Poonam Promoter and
Developer Pvt. Ltd. in ITA No.4064/Del/2013 & 1590/Del/2013
for the assessment year 2006-07;
order of ITAT 'F' Bench, New Delhi in case of M/s Precision
Infrastructure Pvt. Ltd 2542/Del/2013 dated 09.01.2015 for the
assessment year 2008-09;
order of ITAT 'G' Bench, New Delhi in M/s Saraswati Kunj
Infrastrucure Pvt. Ltd in ITA No. 1369/Del/2013 &
1766/Del/2013 for the assessment year 2007-08;
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Business Park Builders Pvt. Ltd in ITA No. 1768/Del/2013 &
1530/Del/2013 for the AY 2006-07 and ITA No.1733/Del/2013 for
the assessment year 2007-08;
16
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Anupam Tower Pvt. Ltd in ITA No.1740/Del/2013 &
1536/Del/2013 for the assessment year 2006-07;
Copy of order of ITAT 'C' Bench, New Delhi in case of
M/s ISG Estate Pvt. Ltd. in ITA. Nos. 1532/Del/2013 and
1756/Del/2013 dated 23.01.2015 for the assessment year
2006-07;
Copy of order of ITAT 'B' Bench, New Delhi in M/s Fragrance
Construction Pvt. Ltd in ITA No. 2547/Del/2013 &
2314/Del/2013 for the assessment year 2008-09;
Copy of order of ITAT 'B' Bench, New Delhi in case of M/s Druzba
Overseas Pvt. Ltd in ITA No. 2545/Del/2013 dated 25.02.2015
for the assessment year 2008-09;
Copy of order of ITAT 'B' Bench, New Delhi in case of
M/s Eventual Builders Pvt. Ltd in ITA No. 1368/Del/2013 for
the assessment year 2007-08;
Copy of order of ITAT 'A' Bench, New Delhi in M/s Business Park
Overseas Pvt. Ltd in ITA No. 1731/Del/2013 & 1403/Del/2013
for the assessment year 2006-07.
17
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
6.10 It was also submitted by the learned AR that the arguments
made by the learned CIT-DR on some of the seized documents be
not considered as it would amount to revisiting the same documents,
which were already considered by the ITAT in the case of M/s IAG
Promoters & Developers Pvt. Ltd. and by the Coordinate Benches in
the various cases where on same facts the order in M/s IAG
Promoters & Developers Pvt. Ltd was followed. It was also reiterated
that in the circumstances, like the present case, where on similar
facts the orders of the Tribunal have been accepted, even
administratively the CBDT has instructed the Department not to press
such matters and instead withdraw the appeals or get them dismissed.
All the orders of the Benches including that in the case of M/s IAG
Promoters & Developers Pvt. Ltd, it was reiterated, have been accepted
by the Department. The learned AR relied on judgement of Hon'ble
Jurisdictional Delhi High Court in case of Kabul Chawla and latest
judgement in case of Meeta Gutgutia to put forth argument that as
it is held by Hon'ble High Court in cases as mentioned supra that
in search cases where assessment is completed under section 153-A /
153-C, the addition must be restricted to incriminating seized
documenrts only. As in this case, none of the incriminating seized
documents related to issue of payment of interest on PDCs belong
to appellant and also none of the documents pertain to year
under consideration, accordingly no addition is to be made in
respect of issue related to payment of interest on PDCs in cash
outside books of accounts following the judgements as referred
above.
18
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
6.11 We have considered the arguments advanced by the parties
that the assessee is right in pointing out that the facts in the case of
M/s IAG Promoters & Developers Pvt. Ltd and those in the case of the
assessee are identical. Same 54 seized documents were used by the AOs
in making the assessments in both the cases. The conclusion drawn
was also the same. Further, the orders of the learned CIT (Appeals)
in both the cases are also identical. Both the orders are passed by
the same learned CIT (Appeals), who examined each of the seized
document and gave his finding. The findings of the learned CIT
(Appeals) in both the cases are same. The finding of the learned
CIT (Appeals) has been affirmed by the Tribunal in the case of M/s IAG
Promoters & Developers Pvt. Ltd. (supra). By the principle of judicial
discipline and doctrine of precedent and as there is no change in
the facts of two cases, we are bound by the order in the case of
M/s IAG Promoters & Developers Pvt. Ltd., which has also been
consistently followed by various Coordinate Benches of the
ITAT.
7. Before concluding, it may be stated that the learned CIT-DR
argued some of the seized documents. In rejoinder the learned AR has
explained in writing those documents and submitted that most of
these seized documents not belong to assessee and none of these
seized document relate to period under consideration. We are afraid
that we cannot take cognizance of the arguments made by the CIT-DR
on the seized documents and also of the rejoinder by the learned AR
19
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
on them, because that would be amounting to revisiting the same
documents, which have already been considered in the M/s IAG
Promoters & Developers Pvt. Ltd. (supra) by the Tribunal and on which
decision has already been given and also by the successive Benches in
the cases which followed the order of M/s IAG Promoters & Developers
Pvt. Ltd. Accordingly, following the order of M/s IAG Promoters &
Developers Pvt. Ltd. (supra) the order of the learned CIT (Appeals)
is sustained and the ground of the Revenue is rejected. As a result,
the groundsNo.3 and 3.1 of the assessee will not survive and are
rejected as such.
8. Grounds Nos. 4, 4.1 & 4.2 of the Assessee : These grounds are
as under :-
" 4. That on the facts and circumstances of the case and in law
the CIT (Appeals) erred in not accepting the appellant's contention
that Additional Payments having not been claimed as deduction by
appellant, no disallowance could have been made in the hands of
the appellant.
4.1 That without prejudice the CIT (Appeals) erred in upholding
the disallowance of Additional Payments made to the recipients
who were not the owners of land and to the payment made in cash.
4.2 That without prejudice the CIT (Appeals) erred in not himself
quantifying the addition to be made."
20
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
8.1 Ground No. 2 of the Department : This ground is as under :-
" 2. On the facts and in the circumstances of the case, the
CIT(A) has erred in law in deleting the addition of
Rs.25924132/- made by the Assessing Officer in assessment
year 2006-07 respectively, in view of the provisions of Section
37(1) of the income tax act, 1961 on account of additional
payment in violation of stamp duty Act, 1899. "
8.2 Both these grounds are dealt with together.
9. The Assessing Officer made a disallowance of Rs.2,59,24,132/-
on account of additional payment made for the purchase of land.
The assessee company purchased lands from farmers and land
owners and transferred100% development rights in land to the flagship
company i.e M/s BPTP Ltd under collaboration agreement for
development and received Rs.40000/- per acre from BPTP Ltd as
collaboration fees. It was explained about nature of Additional
payment that it is a payment which is made subsequent to registration
of sale deed either to seller of land or their relatives to settle the
disputes if any on account of increase in prices of land as on date of
sale deed to till the date of actual payment, standing crops on the
land, tube well connection, structure on land etc. or to any third
parties having any interest in the land. The Assessing Officer held that
the additional payment is not allowable as per Explanation 37(1) of the
21
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
Act as the same was to avoid correct stamp duty. The assessee
challenged the addition made before the learned CIT (Appeals). It
was submitted that no deduction has been claimed by assessee with
regard to the additional payment for the purchase of land and hence,
no disallowance can be made. The learned CIT (Appeals) did not
accept the contention of the assessee. The learned CIT (Appeals) held
that there is no violation of any of the provisions of stamp duty and
provisions of Section 37(1) are not applicable in respect of disallowance
of Additional payment. He gave certain directions to quantify the
disallowance made. These directions were to the following effect
in para 7.3.8 :-
" Additional Payment made is in connection with possession of
particulars land, therefore, it is in business expediency. Therefore,
additional payment to the extent of enhancement in land price
is an allowable expenditure, as the same is not covered to be
included for stamp duty, as it is subsequent phenomena. However,
as in some cases, the additional payment itself is questioned
or payment is not made to owner of land, etc., Those payment,
I do not find for business expediency as these person to not have
legal right over the land in question, the same is not mentioned
in the sale deed.
In view of the above additional payment made to the owner of the
Land by way of account payee cheque is hereby allowed as an
expense u/s 37 and additional payment made to other payments
22
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
are not supported by any legal right over the land and similarly
payment made in cash to the owner of land is confirmed as, there
are instance of not conforming the receipt by few seller as stated
supra. Therefore, the ground is partly allowed."
9.1 As a result of the above directions addition of Rs.1,55,80,945/-
was deleted and balance of Rs.1,03,43,187/- was confirmed.
9.2 It was submitted by the learned AR that the assessee has not
claimed the expenses made categorized as Additional payment as a
deduction either by debiting to Profit and Loss account or through
computation and therefore Assessing Officer was not justified in
disallowing the same. It was submitted that similar disallowance was
made in M/s Westland Developers Pvt. Ltd., a group company, for the
assessment year 2006-07. It was partly allowed by the learned CIT
(Appeals). The Tribunal in further appeal vide order dated 22.08.2014
in ITA No.1752/Del/2013 has deleted the addition. It was submitted
that since the facts of the case are identical to the facts of the case of
the assessee the order of the Co-ordinate Bench of the Tribunal in
M/s Westland Developers Pvt. Ltd. may be followed. It was submitted by
the learned AR that the order in the case of M/s Westland Developers
Pvt. Ltd. (supra) has been accepted by the Department and no appeal
has been filed to the Hon'ble High Court. It was also stated that the said
order has since been followed by the various Co-ordinate Benches of
the ITAT in following cases :-
23
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
Order of ITAT 'C' Bench, New Delhi in case of M/s Glitz Builders
and Promoters Pvt. Ltd. in ITA. Nos. 1747/Del/2013 &
1406/Del/2013 dated 02.01.2015 for the assessment year
2006-07;
Order of ITAT 'H' Bench, New Delhi in M/s Wellworth Developers
Pvt. Ltd. in ITA Nos. 1675/Del/2013 & 1761/Del/2013 for the
assessment year 2006-07 dated 10.02.2016;
Order of ITAT 'F' Bench, New Delhi in M/s Poonam Promoter and
Developer Pvt. Ltd. in ITA Nos. 4064/Del/2013 & 1590/Del/2013
for the assessment year 2006-07;
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Business Park Builders Pvt. Ltd. in ITA Nos. 1768/Del/2013
& 1530/Del/2013 for the assessment year 2006-07 and ITA
No.1733/Del/2013 for the assessment year 2007-08;
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Anupam Tower Pvt. Ltd. in ITA Nos. 1740/Del/2013 &
1536/Del/2013 for the assessment year 2006-07;
Copy of order of ITAT 'C' Bench, New Delhi in case of
M/s ISG Estate Pvt. Ltd. in ITA. Nos. 1532/Del/2013 and
24
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
1756/Del/2013 dated 23.01.2015 for the assessment year
2006-07;
Copy of order of ITAT 'B' Bench, New Delhi in M/s Fragrance
Construction Pvt. Ltd in ITA Nos. 2547/Del/2013 &
2314/Del/2013 for the assessment year 2008-09;
Copy of order of ITAT 'A' Bench, New Delhi in M/s Business Park
Overseas Pvt. Ltd in ITA Nos. 1731/Del/2013 & 1403/Del/2013
for the assessment year 2006-07.
9.3 The learned CIT-DR contended that the order of the
Co-ordinate Bench in M/s Westland Developers Pvt. Ltd (supra) be not
followed on the ground that the facts in the present case were different
from the facts in the case of M/s Westland Developers Pvt. Ltd (supra).
It was argued by her that Additional payment is not recorded in books
of account. It was pleaded that the expenditure was required to be
considered in the hands of the assessee. It was also contended that
the documents dealt with by the Assessing Officer in the assessment
order were also required to be considered. In the rejoinder the learned
AR submitted that the facts in the two cases were identical and so also
the orders of the learned CIT (Appeals). The facts in the present case
being identical there can be no scope of accepting any arguments on
the specious ground that the facts were distinguishable. It was
submitted by the learned AR that argument of the learned CIT [DR]
25
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
that Additional payment is not recorded in books of account is factually
incorrect and not borne out from assessment order and order of the
learned CIT (Appeals) and there is no finding from Assessing Officer
or the learned CIT (Appeals) to the effect that Additional payments are
made out of books of account.
9.4 Since no deduction was claimed for additional payment,
which position has been accepted by the Tribunal on similar facts in
the case of M/s Westland Developers Pvt. Ltd., any discussion on
those documents is a non issue. The learned CIT-DR reiterated that
the order of M/s Westland Developers Pvt. Ltd be followed, as has
been done in the other cases of the Coordinate Benches on similar
facts.
9.4.1 The learned AR relied on judgement of Hon'ble Jurisdictional
Delhi High Court in the case of Kabul Chawla and latest judgement in
the case of Meeta Gutgutia to put forth argument that as it is held
by Hon'ble High Court in cases as mentioned supra that in search
cases where assessment is completed under section 153-A / 153-C,
the addition or disallowance must be restricted to incriminating seized
documents only. As in this case, addition / disallowance of additional
payment is not on the basis of any incriminating seized documents,
accordingly addition / disallowance of Additional payment need to be
deleted following the judgements as referred above.
26
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
9.5 We have considered submissions made by the parties and
perused the material on record. In the case of M/s Westland Developers
Pvt. Ltd., where the facts were identical, the Tribunal vide its order dated
22.08.2014 in ITA No.1752/Del/2013 held as under :-
" 13. We have heard the rival submissions and perused the
material available on record. The case law relied upon by the
parties has been taken into consideration. On a consideration of
the same we are of the view that since in the facts of the present
case the material issue is that the said expenditure was never
claimed as assessee's business expenditure the occasion to make a
disallowance of the same does not arise. On this fact there is no
dispute as admittedly the expenditure was not claimed as an
expense by the assessee and consequently has not been routed
through its P & L A/c. In the circumstances, the occasion to make
an addition of the same by way of a disallowance in these peculiar
facts and circumstances of the case does not arise. The reasoning
and finding given while considering the arguments qua Ground No.
4 would fully apply here also. The difference that here the entire
amount is added u/s 37 as opposed to part of the expenditure
disallowed U/S 40A(3) is not so material as the finding is arrived at
taking cognizance of the material fact that herein also no such
claim of expenditure has been made. The fact that the additional
payments were warranted in order to avoid potential disputes
amongst the claimants of the land holding which have been passed
through to the land holders from generation to generation wherein
27
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
there may be informal arrangements of ownership and or the
payments were for commercial expediency to facilitate peaceful
possession and registration of the landholding; where by the time
Registry was made the landholders felt a higher payment was
necessitated due to increase in value are issues which are not
required to ITA Nos.1532 & 1756/Del/20137 be addressed in the
present proceedings. Ground No-3 on the facts available on record
considering the judicial precedent referred to in detail while
deciding Ground No. 4 has to be decided in favour of the
assessee. "
9.5.1 We have gone through the records and find that the
assessee has also either acted as a land holding company purchasing
land and transferring the development rights in respect of land
purchased to BPTOP Ltd. or accumulating development rights in respect
of land purchased by other group companies and transferring these
land development rights to BPTOP Ltd. To that extent, the facts of
case of assessee company are similar and identical to the facts
of other cases which are decided by various coordinate benches of
Tribunal, New Delhi on which reliance is placed by the learned AR
of the assessee.
9.5.2 There is nothing on record that Additional payment is not
recorded in books of account and we are unable to find any mention
by the Assessing Officer in assessment order or by the learned CIT
28
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
(Appeals) in his order. Accordingly, the argument of the learned CIT [DR]
that Additional payment is not recorded in books of accounts is
not factually correct.
9.6 As facts of case of assessee are similar and identical to the
various cases decided by coordinate benches of Tribunal, New Delhi
where similar disallowance has been deleted by the Tribunal in other
group cases cited by the assessee. Being bound by the decision of the
Coordinate Bench, it is held that no disallowance of additional
payment can be made. In the result, it is held that the learned CIT
(Appeals) was not justified in upholding part of the disallowance
of additional payment on the ground that neither the assessee has
debited additional payment in its Profit & Loss account nor has claimed
it. Accordingly, Ground No. 4 of the assessee is allowed and the addition
upheld by the learned CIT (Appeals) is deleted. In this view, Grounds
No. 4.1 and 4.2 of the assessee do not survive. Ground No. 2 of the
Department is rejected.
10. Ground Nos. 5 and 5.1 of the assessee are as under :-
" 5. That on the facts and circumstances of the case and in
law the CIT (Appeals) erred in upholding the disallowance u/s.
40A(3) of Rs.32,28,037/- in respect of which no deduction was
claimed by the appellant.
5.1 That even on merits the disallowance was not justified. "
29
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
10.1 The assessee company had made cash payments for acquiring
certain lands. The Assessing Officer invoked provision of section 40A(3)
and disallowed 20% amounting to Rs.32,28,037/-. The assessee being
aggrieved filed appeal before the learned CIT (Appeals), who confirmed
this disallowance. Being aggrieved, the assessee is in appeal
before us.
10.2 The learned AR submitted that the issue in question is fully
covered in favour of the assessee by the order of the Tribunal in case
of Westland Developers Pvt. Ltd in ITA No.1752/Del/2013 vide order
dated 22.08.2014 for the AY 2006-07. It was submitted that this order
of the Tribunal has been accepted by the Department and no appeal
has been filed before the Hon'ble High Court. It was also submitted
that on identical facts the order of the Westland Developers Pvt. Ltd.
(supra) has been followed in the following cases by the various
Coordinate Benches :-
Order of ITAT 'C' Bench, New Delhi in case of M/s Glitz Builders
and Promoters Pvt. Ltd 1747/Del/2013 & 1406/Del/2013 dated
02.01.2015 for the assessment year 2006-07;
Order of ITAT 'H' Bench, New Delhi in M/s Wellworth Developers
Pvt. Ltd. in ITA Nos. 1675/Del/2013 & 1761/Del/2013 for the
assessment year 2006-07 dated 10.02.2016;
30
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
Order of ITAT 'F' Bench, New Delhi in M/s Poonam Promoter and
Developer Pvt. Ltd. in ITA Nos. 4064/Del/2013 & 1590/Del/2013
for the assessment year 2006-07;
Order of ITAT 'G' Bench, New Delhi in M/s Saraswati Kunj
Infrastrucure Pvt. Ltd. in ITA Nos. 1369/Del/2013 &
1766/Del/2013 for the assessment year 2007-08;
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Business Park Builders Pvt. Ltd. in ITA Nos. 1768/Del/2013
& 1530/Del/2013 for the assessment year 2006-07 and ITA No.
1733/Del/2013 for the assessment year 2007-08;
Order of ITAT 'C' Bench, New Delhi dated 29.04.2015 in
M/s Anupam Tower Pvt. Ltd. in ITA Nos. 1740/Del/2013 &
1536/Del/2013 for the assessment year 2006-07;
Order of ITAT 'B' Bench, New Delhi in M/s Fragrance
Construction Pvt. Ltd. in ITA Nos. 2547/Del/2013 &
2314/Del/2013 for the assessment year 2008-09;
Order of ITAT 'A' Bench, New Delhi in M/s Business Park
Overseas Pvt. Ltd. in ITA Nos. 1731/Del/2013 & 1403/Del/2013
for the assessment year 2006-07.
31
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
10.2.1 The learned AR relied on judgement of Hon'ble Jurisdictional
Delhi High Court in the case of Kabul Chawla and latest judgement
in the case of Meeta Gutgutia to put forth his argument that as it is
held by Hon'ble Delhi High Court in cases as mentioned supra that
in cases where search assessment is completed under section 153-A /
153-C, the addition or disallowance must be restricted to incriminating
seized documents only. As in this case, disallowance of cash payment
under section 40A(3) is not on the basis of any incriminating seized
documents, accordingly disallowance of cash payment made under
section 40A(3) need to be deleted following the judgements as
referred above.
10.3 The learned CIT-DR was unable to controvert the submission
made by the learned authorized representative.
10.4 We have considered submissions made by the parties and
perused the material made available on record. In Westland Developers
Pvt. Ltd. (supra) on identical facts it was held as under :-
" 10.10. We have also taken ourselves through the judgement of the
Jurisdictional High Court in the case of CIT vs Industrial
Engineering Projects Pvt. Ltd. (cited supra) which has been relied
upon before us for the proposition that reimbursement of expenses
cannot be treated to be a Revenue receipt. How the judgement of
the Apex Court in Tuticorin Alkali Chemicals & Fertilizers is
32
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
applicable to the facts of the present case has not been set out in
the order of the authorities nor has the Ld. DR been able to address
the applicability of the said judgement to the issue at hand. We
have taken ourselves through the said judgement and seen that it
proceeds on entirety different facts and circumstances and has no
applicability to the facts of the present case. Consequently, it is
seen that from the ratio of the judgements relied upon before the
CIT(A) and also before us which have been discussed in the earlier
part of this order no arguments have been advanced by the
Revenue so as to contend how they are not applicable to the case at
hand, no distinguishing fact, circumstance or position of law has
been relied upon so as to come to a contrary finding than the one
arrived at. Accordingly on a consideration of the peculiar facts and
circumstances of the case and the judgements relied upon
considering the relevant provision of the Act namely Section 40A(3),
we hold for the detailed reasons given hereinabove that Section
40A(3) of the Act has been wrongly invoked as admittedly no
expenses relatable to the addition has been claimed and the
assessee has successfully demonstrated that the payment were
reimbursement made by CWPPL. Accordingly Ground No.4 is
allowed. "
10.5 As facts of case of assessee are similar and identical to
the various cases decided by coordinate benches of Tribunal, New
Delhi details of which are given above where similar disallowance
by following the order in case of M/s Westland Developers Pvt. Ltd.
33
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
(supra) as aforesaid is deleted by various coordinate benches of
the Tribunal, New Delhi, the ground No. 5 is allowed and disallowance
of cash payment made under section 40A(3) is deleted as assessee
has not claimed any deduction in respect of cash payment
made.
11. Ground No.6 of the assessee : This ground is against addition
of Rs.9 lacs based on document of Page 11 of Annexure A-25/Party
BO-III. The assessee took a basic objection that in the Satisfaction
Note recorded by the Assessing Officer, this document was not
mentioned. It was therefore argued that the document could not be
used in the assessment made u/s 153C.
11.1 It was contended by the learned AR of assessee that as
this is a case of other person as per provisions of section 153-C where
search did not take place and jurisdiction is assumed under section
153-C of I. T. Act, the Assessing Officer has to record satisfaction
listing all seized documents which belong to assessee and are
incriminating in nature and contain noting or information regarding
undisclosed income.
11.2 We have perused the satisfaction note and find that the
assessee is right in stating that the relevant document was not included
in the Satisfaction Note. The assessee's contention is that in CIT vs
Singhad Technical Education Society [2015] 63 taxmann.com 14
34
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
(Bombay) it was held that the validity of notice was not upheld on
the ground that satisfaction note was silent about the assessment year
in which incriminating information was discovered on search. The
judgment has since been affirmed by the Hon'ble Supreme Court in Civil
Appeal No. 11080 of 2017 dated 29.08.2017.
11.3 As the Assessing Officer has failed to record the said documents
in the satisfaction note and in our considered view, the Assessing Officer
cannot go beyond the documents referred in the satisfaction note.
Accordingly on this reason alone, this document could not be considered
for assessment under section 153-C and the above document cannot be
used in the assessment made u/s. 153-C, therefore, the addition of Rs. 9
lacs is not warranted and is hereby deleted. Ground No. 6 of the
appeal is thus allowed.
12. In summary, appeal preferred by the assessee is partly allowed
and that of the Revenue is dismissed.
13. The order is pronounced in the Open Court on : 11 th September,
2017.
Sd/- Sd/-
( L. P. SAHU ) ( I. C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : the 11th September, 2017.
*MEHTA*
35
I. T. Appeal No. 6303/Del/2013
AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.
Copy of the Order forwarded to:-
1. Appellants;
2. Respondents;
3. CIT;
4. CIT (Appeals);
5. DR, ITAT, ND.
BY ORDER
ASSISTANT REGISTRAR Date Draft dictated on 11.09.2017 Draft placed before author 11.09.2017 Draft proposed & placed before the second member Draft discussed/approved by Second Member.
Approved Draft comes to the Sr.PS/PS Kept for pronouncement on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk.
Date of dispatch of Order.
36I. T. Appeal No. 6303/Del/2013 AND I. T. Appeal No. 6342/Del/2013.
Assessment Year : 2006-07.