Income Tax Appellate Tribunal - Mumbai
Sunil Mantri Realty Ltd, Mumbai vs Assessee on 27 August, 2011
आयकर अपील य अ धकरण,
धकरण, मंुबई यायपीठ 'ई
ई' मंुबई
IN THE INCOME TAX APPELLATE TRIBUNAL
"E" BENCH, MUMBAI
ी बी.
बी रामकोट
रामकोट य,
य लेखा सद य,
य एवं ी अ मत शु ला, या यक सद य के सम
BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND
SHRI AMIT SHUKLA, JUDICIAL MEMBER
आयकर अपील सं. / ITA no. 6988/Mum./2011
( नधारण वष / Assessment Year : 2009-10)
M/s. Sunil Mantri Realty Ltd. .................... अपीलाथ /
G-1, Court Chambers, Ground Floor
Appellant
V. Thakersey Marg, 35, New Marine Lines
Churchgate, Mumbai 400 020
बनाम v/s
Asstt. Commissioner of Income Tax ................... यथ /
Central Circle-29, Mumbai Respondent
थायी लेखा सं./ Permanent Account Number - AADCM6966F
राज व क ओर से / Assessee by : Mr. Prakash Jhunjhunwala
नधा रती क ओर से / Revenue by : Mrs. Parminder
सनवाई
ु क तार ख / आदे श घोषणा क तार ख /
Date of Hearing - 16.04.2013 Date of Order - 03.05.2013
आदे श / ORDER
अ मत शु ला, या यक सद य के ारा /
PER AMIT SHUKLA, J.M.
The present appeal is preferred by the assessee challenging the impugned order dated 27th August 2011, passed by the learned Learned Commissioner (Appeals)-XXXX, Mumbai, for the quantum of assessment passed under section 143(3) of the Income Tax Act, 1961 (for short "the Act"), for the A.Y. 2009-10.
M/s. Sunil Mantri Realty Ltd.
22. Facts in brief:- The assessee is a company which is engaged in the business of construction of residential and commercial units at various places in the country. On 9th July 2008, a search and seizure action under section 132(1) of the Act was carried out in Mantri Group of cases including that of the assessee. During the course of search and seizure action, cash worth ` 46,09,800, was found from the premises of the assessee, out of which an amount of ` 35 lakhs was seized. The Assessing Officer, after considering the statement on oath recorded under section 132(4) of Mr. Sunil Mantri, came to the conclusion that the cash sum of ` 35,11,878 stands unexplained. The reconciliation of the unexplained cash was worked out as under by the Assessing Officer:-
Total Cash Found ` 49,09,800
Less: Actual cash balance as per book ` 10,97,922
----------
Hence, total excess cash ` 35,11,878
The working of actual cash balance as per
book was as under:-
Cash balance available for the group (ref. ` 30,62,672
q.no.7)
Less: (1) amount debited in cash book but ` 16,00,000
not withdrawn (ref. q.no.20 21, 24,
25 & 27)
(2) Amount spent but not reduced in ` 3,64,750
cash book ----------
Actual cash balance as per book ` 10,97,922
========
He further observed that the assessee could not explain or give any cogent reason for explaining this excess cash found. Accordingly, he added excess cash of ` 32,11,787 under section 69A.
3. Before the Learned Commissioner (Appeals), the assessee submitted that it has received cash of ` 10 lakhs from its Solapur Branch which was withdrawn from its bank account and the director of the assessee company had brought this cash to Mumbai. In support of the same cash book of M/s. Sunil Mantri Realty Ltd.
3Solapur Branch wherein cash paid of ` 10 lakhs to Mr. Sunil Mantri, was reflected on 26th June 2008, along with bank statement of cash withdrawal. It was further submitted that the Assessing Officer has already taxed cash receipts of ` 79,08,150 which was received from various customers from Pune project M/s. Home Makers in cash in the assessment year 2008-09. The said cash can be said to be duly available with the assessee and credit of such cash should have been given while making the addition of ` 35,11,878, which was in the form of excess cash found. The relevant argument of the learned Counsel for the assessee before the learned Commissioner (Appeals) was as under:-
"5.5 The ld. A.R. further argued that alleged cash received by the appellant from M/s. Home Makers for Pune project at ` 79,08,150 has been brought to tax in hands of the appellant under section 68 as unexplained cash receipts in assessment of earlier year viz. A.Y. 2008-09. The ld. A.R. pleaded that it is required to be presumed that the same cash of ` 79,08,150 ought to have remained in hand on the date of search and excess cash found during search cannot be brought to tax as it would amount to double taxation. The ld. A.R. argued that there is no evidence found during search action and post search investigation of any unexplained expenditure or unexplained investment which would have been sourced out of cash receipt of ` 79,08,150."
4. The learned Commissioner (Appeals) rejected the said contentions of the assessee and gave benefit of ` 10 lakhs only which was withdrawn from the Solapur branch by the director. Accordingly, the addition of ` 25,11,878 was made. The relevant observations of the Learned Commissioner (Appeals) while confirming the addition are as under:-
"5.6 I have carefully considered the facts of the case and arguments advanced before me and do not entirely agree to the contention of the appellant for the reason that no evidence has been brought on record to prove that same cash of ` 79,08,150 taxed in earlier year A.Y. 2008-09 would have remained in hand till the date of search on 8.7.2008. It is difficult to believe that appellant would have kept the huge cash of over ` 79 lacs idle and it is possible that appellant would have used such cash in some other activity which are not brought to tax. Accordingly, I do not agree that the cash receipt of ` 79,08,150 taxed in earlier year would have been found during search action carried on 8.7.2008. However, the passage of time between withdrawal of ` 10,00,000 from Solapur branch of the bank and the date of search justifies to allow the set-ff. Thus, addition of unexplained cash is sustained at ` 25,11,878 (` 46,09,800 - 10,97,922 - ` 10,00,000) and sustain the balance addition of ` 25,11,878."
M/s. Sunil Mantri Realty Ltd.
45. Before us, the learned Counsel submitted that in the immediately preceding year, a sum of ` 79,08,150, was added by the Assessing Officer in the form of cash receipts which was received from various customers from Pune project under section 68 of the Act. Without there being any evidence or material on record found during the course of search or post-search investigation that assessee has incurred any expenditure or has made any investment out of the said cash amount, the benefit of availability of cash should have been given. The excess cash of ` 35,11,878 would definitely get explained from the earlier cash of ` 79,08,150. He further submitted that the learned Commissioner (Appeals), vide order dated 27th August 2011, for the assessment year 2008-09, has confirmed this addition of unaccounted cash receipt under section 68 for sums totaling to ` 70,12,150. This finding of the Learned Commissioner (Appeals) has attained finality as the assessee has not preferred any appeal against this finding. He also drew our attention to the relevant finding of the Learned Commissioner (Appeals). Based on this, he has submitted the following reconciliation of the cash account.
Cash in hand as per books:- 30,62,672
Less: Cash not withdrawn from bank (16,00,000)
Less: Cash spended not recorded in books (3,64,750)
Cash Balance as per Assessment order 10,97,922
Add: Cash received from Solapur branch out of
10,00,000
bank withdrawals (allowed in 1st appeal)
Cash Balance as per Ld. CIT(A) 20,97,922
Add: Additions made in A.Y. 2008-09
Add: Unaccounted cash received on sale of 20,76,250
property at Pune
Add: Unaccounted cash received from M/s. 49,35,900 70,12,150
Homemakers for Pune Project
Cash balance as per books including additions 9,10,072
made in A.Y. 2008-09
Less: Physical cash found during search (46,09,800)
Less: Unexplained cash expense (15,99,000) 62,08,800
Cash Shortage / Excess 29,01,272
M/s. Sunil Mantri Realty Ltd.
5
6. Thus, he pleaded that the addition of ` 25,11,878, should be telescoped or be given benefit out of the addition of ` 70,12,150, as sustained by the learned Commissioner (Appeals) in the earlier assessment year. In support of this contention, he has also filed a compilation of the following case laws on account of telescoping of such kind of addition.
i) S.M. Dalvi v/s ACIT, [2011] 137 TTJ (Mum.) 581;
ii) P.R. Patel v/s DCIT, 78 ITD 51 (Mum.);
iii) CIT v/s Venkateswara Timber Depot, 222 ITR 768 (AP) and
iv) DCIT v/s Vishwanath Prasad Gupta, 130 ITD 73, (TM) (Jab.).
7. On the other hand, the learned Departmental Representative strongly relied upon the findings of the learned Commissioner (Appeals) and submitted that there has to be some basis or explanation by the assessee that it was the same amount which was found during the course of search. Such a benefit cannot be given without any cogent reason. Moreover, in the statement recorded, no such explanation or clarification was given. Therefore, the plea taken by the learned Counsel of giving benefit of earlier addition of cash receipts cannot be accepted.
8. We have heard the rival contentions, perused the relevant findings of the Assessing Officer as well as the Learned Commissioner (Appeals) and also the relevant material placed on record. At the time of search on 8th July 2008, physical cash of ` 46,09,800, was found. Out of the said amount, the Assessing Officer has held that as per the actual cash balance, the amount of ` 10,97,922, was actually available in the books. This reconciliation of cash found and cash recorded in the books of account has been worked out by the Assessing Officer which has already been incorporated in Para-2 above, whereas the assessee has given its own reconciliation before the Assessing Officer as well as the learned Commissioner (Appeals) which has been incorporated in Para-5 of the impugned appellate order. Before the learned Commissioner (Appeals), in addition to this, a plea was taken that in the immediately preceding assessment year, a huge addition of more than ` 70,00,000 has already been sustained on account of cash receipts from the M/s. Sunil Mantri Realty Ltd.
6Pune project which has addition has become final in the assessment year 2008-09. Before us, the learned Counsel too has reiterated the same submissions and has pleaded that the benefit of such an addition on account of cash should be given because here also the addition relates to on account of excess cash found. The learned Commissioner (Appeals) has rejected the said contentions and has given benefit of ` 10 lakhs which was withdrawn from the bank account of Solapur Branch by the assessee. The balance sum of ` 25,11,878 was confirmed by the learned Commissioner (Appeals) on the ground that it is very difficult to derive that the assessee would have kept a huge cash of over ` 79 lakhs idle and it is quite possible that the assessee would have used such cash in other activity. In our opinion, such a presumption is to farfetched firstly, this was a case of a search and seizure and no evidence or material has been found during the course of search and seizure action or post-search investigation that the assessee has either incurred any expenditure or has made investment out of the cash receipt of more than ` 70 lakhs which has been confirmed as deemed income of the assessee under section 68 in the immediately preceding assessment year and secondly, in the absence of adverse material that sum of ` 70 lakhs and odd has been spent, then it can be presumed that this cash was available at the time of search with the assessee. If such an addition of more than ` 70 lakhs has been confirmed, the benefit of telescoping has to be given unless there is some material on record to show that the money has been utilised somewhere else. Thus, we hold that the addition of ` 25,11,878 is covered by the addition of ` 70,12,150, as sustained by the learned Commissioner (Appeals) in the immediately preceding 2008-09. Accordingly, the assessee will get relief of ` 25,11,878.
9. In the second ground of appeal, the assessee has challenged the addition of ` 15,99,000, on account of unexplained expenditure under section 69C.
10. The Assessing Officer noted that during the course of search action, spiral pocket diary containing 15 written pages was found wherein certain M/s. Sunil Mantri Realty Ltd.
7expenditure relating to the business was found. In the statement recorded under section 132(4), the managing director Mr. Sunil Mantri, has given page-wise total which aggregated to ` 15.99 lakhs and were in the nature of misc. expenses to co-ordinate with various persons relating to project and were not accounted for in the books of account. This amount was offered as undisclosed income in the form of unaccounted expenditure in the hands of the assessee company. Accordingly, the Assessing Officer made the addition of ` 15.99 lakhs.
11. Before the learned Commissioner (Appeals), the assessee has raised specific ground being ground no.3 and 3.1, inter-alia, contending that this amount has already been brought to tax as unexplained expenditure in the earlier assessment year 2008-09. The learned Commissioner (Appeals), in Paras-6 and 6.1, has held that the assessee has not made any submission in this regard and has dismissed the grounds as "not pressed".
12. Before us, the learned Counsel submitted that even otherwise also, the said addition will also get covered by the unaccounted cash added under section 68 in assessment year 2008-09 and referred to the reconciliation of cash which has been incorporated above in Para-5 of the order.
13. Learned Departmental Representative submitted that once this issue has not been argued before the learned Commissioner (Appeals), the same cannot be agitated during the course of second appeal and, hence, should be dismissed as such.
14. We have heard the rival contentions and perused the material available on record. It is undisputed that the sum of ` 15.99 lakhs has been admitted to be unexplained expenditure which were not accounted for in the regular books of account by the assessee in the course of statement recorded u/s 132(4).
15. Before the learned Commissioner (Appeals), specific grounds have been taken that this addition has already been made in the assessment year 2008-09 and now before us the learned Counsel has submitted that, in any M/s. Sunil Mantri Realty Ltd.
8case, the said addition should be telescoped from the addition of ` 70,12,150 made in the immediately preceding assessment year which was on account of cash only. Since there is no clarity on this issue as to whether this addition has already been taxed in assessment year 2008-09 or it pertains to the present assessment year 2009-10. Moreover, this issue has not been adjudicated by the learned Commissioner (Appeals), even though specific ground was raised. Therefore, in the interest of justice, we are of the opinion that this issue needs to be restored back to the file of the learned Commissioner (Appeals). Consequently, we set aside the impugned order and restore this issue back to the file of the learned Commissioner (Appeals) for deciding the matter afresh after examining the issue whether this amount has already been taxed in the assessment year 2008-09 or whether any benefit of telescoping can be given. Needless to say that the learned Commissioner (Appeals) will provide due and effective opportunity of hearing to the assessee. This ground is, thus, treated as partly allowed for statistical purposes.
16. प रणामतः नधा रती क अपील सां यक य उ े य के लए आं शक वीकत ृ मानी जाती है ।
17. In the result, assessee's appeal is partly allowed for statistical purposes.
आदे श क घोषणा खले
ु यायालय म दनांकः 3rd May 2013 को क गई ।
Order pronounced in the open Court on 3rd May 2013 Sd/- Sd/-
बी.
बी. रामकोट
रामकोट य अ मत शु ला
लेखा सद य या यक सद य
B. RAMAKOTAIAH AMIT SHUKLA
ACCOUNTANT MEMBER JUDICIAL MEMBER
मंुबई MUMBAI, दनांक DATED : 3rd May 2013
M/s. Sunil Mantri Realty Ltd.
9
आदे श क त ल प अ े षत / Copy of the order forwarded to:
(1) नधा रती / The Assessee;
(2) राज व / The Revenue;
(3) आयकर आयु (अपील) / The CIT(A);
(4) आयकर आयु / The CIT, Mumbai City concerned;
(5) वभागीय त न ध, आयकर अपील य अ धकरण, मंुबई / The DR, ITAT, Mumbai;
(6) गाड फाईल / Guard file.
स या पत त / True Copy
आदे शानसार
ु / By Order
द प जे. चौधर / Pradeep J. Chowdhury
वर नजी स चव / Sr. Private Secretary
उप / सहायक पंजीकार / (Dy./Asstt. Registrar)
आयकर अपील य अ धकरण, मंुबई / ITAT, Mumbai