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ACIT, Cent.Cir-39, Mumbai-400 020 Vs. M/s Hill Rock Construction Ltd. 11B Mittal Towers, Nariman Point, Mumbai-400 021
November, 06th 2014
                                                          ,,   ,
     IN THE INCOME TAX APPELLATE TRIBUNAL "H", BENCH MUMBAI
                                                          ,

                   BEFORE : SHRI R.C.SHARMA, AM
                                     &
                            SHRI SANJAY GARG, JM
                                    ITA No.6365/Mum/2012
               (                 Assessment Year :2009-10)
     ACIT, Cent.Cir-39, Mumbai-400     Vs. M/s Hill Rock Construction Ltd.
     020                                   11B Mittal Towers, Nariman
                                           Point, Mumbai-400 021
                                  PAN/GIR No. : AABCH 7169 M
          (         Appellant)        ..        (       Respondent)

                   /Revenue by           :     Shri Viek A. Perampurna
                    /Assessee by         :     Shri Vijay Mehta &
                                               Shri Anuj Kisnadwala

                    Date of Hearing :           18th Sept, 2014
                   Date of Pronouncement :       31st   Oct., 2014

                                      ORDER

PER R.C.SHARMA (A.M.) :

        This is an appeal filed by the Revenue against the order of CIT(A),

dated 1-8-2012 for the assessment year 2009-10, in the matter of order

passed u/s.143 (3) of the I.T. Act.


2.      In this appeal, the Revenue is aggrieved by the order of CIT(A) for

deleting the addition of Rs.32,90,625/- made on the basis of material

found from the head office and Pune office of Jai Corporation Group.

3.      Rival contentions have been heard and record perused. Facts in

brief are that a search and seizure operation u/s.132 of I.T. Act was

carried out on 05.03.2009 in the cases of Jai Corp Group, its employees

and close associates who were closely involved in the process of
                                     2
                                                              ITA No.6365/12

acquiring land. Jai Corp Ltd. Is the flagship company of the Group. Jai

Corp Group is traditionally in the business of cold rolled coils, galvanized

coils, galvanized corrugated sheets, small woven sacks, fabrics, jumbo

bags and partially oriented yarn. The affairs of this group are managed by

Jain family viz. Mr. Anand Jain, Mr. Jai Kumar Jain, Mr. Virendra Jain, Mr.

Satyapal Jain, Mr. Gaurav Jain and Mr. Harsh Jain, in recent years, this

group has extended its operation realty sector. Their group is partner in

two major upcoming Special Economic Zones of India (SEZs), being

developed in vicinity of Mumbai, namely Navi Mumbai Special Economic

Zone (NMSEZ) & Mumbai Special Economic Zone (MSEZ). The other key

partner in these SEZs is Reliance Industries Ltd. (RIL). Mr. Anand Jain is

chairman of both NMSEZ and MSEZ. The group has also purchased hige

chunks of land in the vicinity of these SEZs with an objective to develop

township in these areas anticipating potential price rise and good returns.

The group has also purchased huge agricultural/non agricultural lands in

the suburbs of Mumbai, Thane, Panvel, Alibaug and Pune. The lands

have been purchased in the name of various companies of the group.

This group has also floated a large number of companies and

registered/corporate office of most of the companies are 806/807,

Embassy Centre, Nariman Point, Mumbai-400 021, 82, Maker Chambers

III, Nariman Point, Mumbai-400 021 and 11-B Wing Mittal Towers,

Nariman Point, Mumbai. From details found during the search, it is seen

that certain land has been purchased in individual names also.
                                       3
                                                                  ITA No.6365/12




4.    During the course of assessment, the AO observed that in course of

search & seizure operation incriminating documents were found and

seized. From the perusal of these seized documents, it was observed that

some of these pages are in the form of fund requests and others are in

the form of statements. Total cost of the land purchased is bifurcated in

Part A & Part B as given at page No. 11 to 13 of the assessment order.

The AO has reproduced the entries of seized papers. The AO has also

observed that Part A of these loose papers represents the payments

made by cheque and Part B is the cash payments not reflected in the

books of account. In view of these facts, the AO has given a show cause

notice to the assessee. In response to this show cause notice, the A.R. of

the appellant has submitted its reply which is discussed at page No. 15 of

the assessment order. The AO has also discussed the Affidavit filed. by

Mr. Atul Pawar in which he has stated that Part B payment are probable

development charges in respect of the land. After discussing all the facts

in great length, the AO has concluded that as per the proviso to section

69C the unexplained expenditure has to be treated as deemed income of

the assessee. Thus, the AO has held that as per Annexure R-4 the

amount of Rs.32,90,625/- shown as unexplained expenditure is not

allowable as per the proviso to section 69C of the I.T.Act. Hence, an

addition of Rs.32,90,625/- was made to the total income.

5.    By the impugned order,          the CIT(A) deleted the addition after

recording the following findings :-

      "1.4 I have considered the submissions of the appellant,
      order of the AO and facts o f t h e ca se in b r ie f a re t h a t
      d u rin g t h e co u r s e o f se a rch & se i zu re o p e ra t io n ,
      incriminating documents were found & seized by
                                      4
                                                                    ITA No.6365/12

interpreting the entries given in these loose papers
specifically Annexure R-4 attached with the assessment
order is relating to the year under consideration. In this
seized paper, the detail of land payments made are given
with name of the seller and name of the buyer also name of
the village and location. The further detail of land
consideration and detail of payment by DD and cash are
also mentioned. On the basis of these papers the AC has
held that since these papers are found and seized from the
business premises of the assessee, therefore these are to
be treated as belonging to the assessee and an amount of
Rs. 32,90,625/- was treated as unexplained cash
expenditure and added back to the taxable income. On the
other hand, the A.R. of the appellant has su b mi t t e d t h a t
a lt h o u g h t h e se p a p e rs a re f o u n d a n d se i ze d f ro m i t s
b u sin e ss premises but these are not belonging to the
assessee because neither the name of the assessee has
been mentioned in these pa pers nor any land was
purchased by the assessee in this village. The name of the
seller is mentioned as Mr. Nilesh Dilip Kamdar and the
name of buyer Ms. Bijal Maniar. Both the name of the
seller and buyer are not relating to even any family member
of the assessee. No payment has been reflected in the
books of account as mentioned payment made through DD
in favour of Mr. Nilesh Dilip Kamdar. On these basis, the
A.R. of the appellant has argued that since these papers
are not belonging to the assessee and no t even a single
entry matching with the books of account, therefore no
adverse inference can be drawn. From the perusal of the
submissions of the appellant and contents of the seized
papers, it is noticed that the name of the seller and buyer
are specifically mentioned on these papers which shows
that the assessee is neither a buyer or seller and moreover
the assessee has also not purchased or sold any land in the village
named as Shidgaon. Although the papers were seized
from the business premises of the assessee and also
relating to the sale/purchase of land in which the assessee
company is dealing but no part of these papers is reflected
in the books of accou nt s of th e asse ssee co mpan y. Had
t he re b een a ny re la tion t he pa ymen ts shown by DD
should have been reflected in the books of account as in
the case of p a p e rs f o u n d a n d se i ze d in o t h e r g ro u p
co mp a n ie s w h e re t h e p a y me n t s ma d e through DD or
cheque are reflected in the books of accounts but only cash
payment p a rt w a s n o t re f le ct e d . B u t i n t h e p re se n t ca s e ,
n o p a rt o f t h e se i ze d p a p e r is reflected in the books of
account which proves that these papers are not belonging to the
assessee company. The presumption of the AO that
similar type of papers were found and seized in other
group cases where the payments made through cheque
and cash was shown cannot be mechanically used in each
and every case. Similarly these papers are also belonging
to the assessee. In totality of the facts, it is held that neither
the name of the assessee is mentioned in these papers nor
                                     5
                                                             ITA No.6365/12

      theassessee has purchased or sold any land in the village
      mentioned in these papers, therefore it cannot be treated
      as unaccounted expenditure of the assessee. Thus the
      addition made by the AO is deleted, ground of appeal is allowed."

6.    The assessee has also raised an additional ground under Rule 27

of the I.T. Act to the effect that the CIT(A) ought to have been held that

the AO has erred in making a protective addition in the case of assessee

when no addition was made on substantive basis in case of any other

assessee on the date of passing of assessment order of the assessee. It

was contended by the learned AR that under provisions of Rule 27,

assessee has right to support the order appealed against on any of the

grounds decided against the respondent. He further contended that in the

order the CIT(A) has held that since the assessee has not purchased or

sold any land in the village mentioned in the impounded papers, therefore,

it cannot be treated as unaccounted expenditure of the assessee.

Accordingly, the protective addition made by the AO was deleted.




7.    As per learned AR, under these circumstances, the CIT(A) also

ought to have held that the AO has erred in making protective addition in

the hands of assessee without making any substantive addition in any

other hands.

8.    We have considered rival contentions, carefully gone through the

orders of the authorities below and found from the record that addition

was made by AO on the plea that some of the documents found during

search indicated investment in land made by assessee. The CIT(A) after

verifying the assessment records recorded a categorical finding that

although papers were seized from the business premises of the assessee

and also relating to sale and purchase of land in which assessee
                                   6
                                                           ITA No.6365/12

company is dealing but no part of these papers were reflected in the

books of account of the assessee company nor assessee had entered

into transaction on any sale of land in the village mentioned in these

papers. The CIT(A) also recorded a categorical finding to the effect that

had there been any relation of the payment shown by DD in these papers,

the same should have been reflected in the books of accounts of the

assessee as in the case of seized papers found and seized in other group

companies where payments made through DD or cheques were reflected

in the books of accounts. However, in the present case no part of seized

paper is reflected in the books of accounts which proved that these

papers were not belonging to the assessee company. We have also

carefully gone through the copy of the papers found in assessee's

premises as mentioned by the AO in Annexure-R/4 and found that neither

the name of assessee was mentioned in these papers as a buyer or a

seller nor as a mediator nor any land was purchased by the assessee in

the village mentioned in these papers. The name of seller in the seized

documents was mentioned as Mr. Nilesh Dilip Kamdar and name of buyer

is mentioned as Ms. Bijal Maniar.. Both name of the seller and buyer

were not relating to assessee or any of its family member. Since

these papers were not belonging to the assessee, we do not

find any infirmity in the findings recorded by the CIT(A) to the

effect that amount mentioned in the paper book cannot be

treated as unaccounted expenditure of the assess ee. The

detailed finding recorded by CIT(A) at para 1.4 of his appellate

order are as per material on record, which do not require any
                                    7
                                                            ITA No.6365/12

interference on our part. Nothing was brought on record by

learned DR to controvert the finding recorded by the CIT(A),

which are as per material on record.

9.    The additional ground was raised by assessee under Rule 27 to the

effect that AO has erred in making a protective addition in the hands of

the assessee, where no substantive addition has been made in case of

any other assessee on the date of passing assessment order of the

assessee. We found substance in the contention of the assessee, insofar

as no substantive addition has been made in the hands of any other

person, there is no reason to make protective addition in the hands of the

assessee in view of the finding recorded by the CIT(A) that assessee has

not purchased any land in the village mentioned in the impounded papers,

therefore, it cannot be treated as unexplained expenditure of the

assessee.

10.   From the record, we found that assessee is related to Jai Corp Ltd.

group case, where search was conducted on 5-3-2009. After search

addition was made in the hands of the assessee u/s.153C with regard to

document marked as Annexure-R. The AO was of the view that amount

mentioned in these documents is undisclosed income of assessee,

therefore, addition was made u/s.69C. Some of these papers are in the

form of funds request and others are in the form of statements. The AO

stated that buyer of the above mentioned land is shown as one `Bijal

Maniar' in the seized/impounded documents. The AO added the amount

in the hands of the assessee u/s.69C on protective basis, however, as a

natural corollary substantive addition has to be made in the hands of so
                                            8
                                                                           ITA No.6365/12

called Ms.Bijal Maniar. We found that no substantive addition was made

in the hands of Ms. Bijal Maniar, therefore, there is no justification for

making any protective addition in the hands of the assessee without

having any substantive addition in the hands of persons shown as buyer

in the impounded documents.

11.    In the result, appeal of the Revenue is dismissed.

       Order pronounced in the open court on this 31/10/2014.
                                                              31/10/2014


                  Sd/-                                                Sd/-
           (      )                                               (       )
        (SANJAY GARG)                                           (R.C.SHARMA)
                / JUDICIAL MEMBER                              / ACCOUNTANT MEMBER
      Mumbai;              Dated 31/10/2014
       /pkm,      PS
                        Copy of the Order forwarded to :
1.         / The Appellant
2.       / The Respondent.
3.                      / The CIT(A), Mumbai.
4.              / CIT
5.                                       / DR, ITAT, Mumbai

6.           Guard file.

                                   //True Copy//
                                                                                / BY ORDER,



                                                                      (Asstt.   Registrar)
                                                                              / ITAT, Mumbai

 
 
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