Referred Sections: Section 143(3) of the I.T. Act. Section 153C of the I.T. Act.
Referred Cases / Judgments: Supreme Court in the case of Pooran Lal vs. CIT [1974] 93 ITR 505 (SC) . ACIT, Central Circle-23, New Delhi vs. M/s. IAG Promoter & Developers (P) Ltd., Business Park Builders Pvt. Ltd., New Delhi vs. ACIT, Central Circle-23,
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "E": DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA.No.1742/Del./2013
Assessment Year 2007-2008
M/s. Gitanjali Promoters
The ACIT,
Pvt. Ltd., M-11, Middle
Central Circle-23, E-2,
Circle, Connaught Circus, vs.,
New Delhi 110 001. ARA Centre, Jhandewalan
PAN AABCG0237D Extension, New Delhi.
(Applicant) (Respondent)
For Assessee : -None-
For Revenue : Ms. Rinku Singh, Sr. D.R.
Date of Hearing : 04.09.2019
Date of Pronouncement : 16.09.2019
ORDER
PER BHAVNESH SAINI, J.M.
2. Briefly the facts of the case are that assessee
company filed return of income declaring income of
Rs.31,000/-. The A.O. noted brief history of the case that
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
the assessee company belongs to BPTP Group. This group is
a leading real estate developer operating all over India but
mainly it is working in the NCR area. A search operation
was carried out on BPTP Ltd. and some of its group
companies on 15.11.2007 by Directorate of Investigations
(Delhi). The assessee company also belongs to this group
but no search was carried out on it though a number of
documents indicating discrepancies and transactions of
suppression of income in the case of the assessee were also
noticed. The A.O. noted at assessment proceedings that the
assessee company is one of the Group Company which has
purchased the land in District Faridabad. On perusal of the
details of payment of purchase consideration it has been
noticed that in four cases as mentioned in para 2.1 of the
assessment order that assessee has made only part
payment of the purchase consideration at the time of
execution of the sale deed and the balance consideration
was paid through post dated cheques (PDCs), which were
encashed after several months from the date of sale deed.
The A.O. further noted that the modus operandi of the BPTP
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
Group companies and assessee that they are in practice of
issuing post dated cheques. The land is purchased through
sale deed, but, only part consideration have been paid and
balance consideration has been paid through post dated
cheques (PDCs) and for the intervening period i.e. period
between the date of sale deed and the date of encashment of
PDC, interest was paid in cash to the vendors of the land by
the vendee company on monthly basis @ 1.25% p.m. on the
amount of PDC. During post search enquiries, it was
noticed that the said payment of interest by the vendee
company in cash have not been recorded by them in their
books of account. On being confronted with this fact, the
assessee came forward with the explanation that the records
are just a `memorandum of discussions' and not actual
payment. The explanation of assessee were found as an
afterthought and without any basis. The A.O. referred to
several documents in the assessment order to show that the
Group companies issued PDC have been collected and
interest payment @ 15% has been worked-out on the period
for which PDCs remained unencashed (outstanding). The
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
details and seized documents are reproduced in the
assessment order. The A.O. also noted that there are other
seized documents which prove that interest have been paid
to the vendors. The explanation of assessee was called for
that as to why the addition be not made on account of
interest paid in cash on PDCs which are not recorded in the
books of account. The assessee was directed to produce
these vendors to whom payments have been made through
PDCs. The assessee however, did not produce any such
vendor to whom payments were made through PDCs. The
assessee filed reply in which assessee denied to have paid
any interest to the vendors. The A.O. did not accept
explanation of assessee and considering the material on
record computed the interest @ 15% p.a. which is paid
outside the books of account towards the sale transactions
carried out by the assessee company and made the addition
of Rs.13,54,914/-.
3. The assessee challenged the addition before the Ld.
CIT(A) that in this case assessment should not be framed
under section 143(3) as assessment should have been
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
framed under section 153C only. The Ld. CIT(A) however
noted that assessment order nowhere mentions that any
part of the seized material belong to company. The assessee
company is one of the group company of BPTP group and
the material on record shows that there is an unaccounted
expenditure on account of interest paid on PDCs. The Ld.
CIT(A), therefore, held that assessment have been made
correctly under section 143(3). The Ld. CIT(A) also noted
that addition is made on the basis of the material on record.
The Ld. CIT(A) also noted that assessment could be framed
on the basis of the material obtained from the search even if
search is made in contravention of the provisions of the Act
and relied upon Judgment of Hon'ble Supreme Court in the
case of Pooran Lal vs. CIT [1974] 93 ITR 505 (SC) . This
ground of appeal of assessee was accordingly dismissed.
4. The Ld. CIT(A) also considered the issue of
interest payment on PDCs in the light of incriminating
material on record and held that interest payment of
extension of period of PDCs are established on the basis of
the seized documents. The Ld. CIT(A), however, noted that it
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
is not possible to work-out extension of PDCs in each case
then A.O. was directed to re-compute the interest of PDCs
after six months from the date of issue of PDCs i.e., date of
the sale as six months is taken as reasonable period for
giving PDCs as per sale deed. Appeal of assessee was partly
allowed.
5. On the last date of hearing on 02.07.2019, appeal
was adjourned on the request of Counsel for Assessee to
04.09.2019. However, on the date of hearing on 04.09.2019,
none appeared on behalf of the assessee. The appeal is,
therefore, heard in the absence of assessee.
6. We have heard the Ld. D.R. and perused the
material on record. The Ld. D.R. relied upon the impugned
orders and submitted that in the following cases, the ITAT,
Delhi Bench confirmed the Order of the Ld. CIT(A) in which
A.O. was similarly directed to re-compute the interest on
PDCs after six months from the date of issue of PDCs.
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
(i) Business Park Builders Pvt. Ltd., New Delhi vs.
ACIT, Central Circle-23, New Delhi & Others in
ITA.Nos.1768 & 1733/Del./2013 etc., Dated
29.04.2015.
(ii) ACIT, Central Circle-23, New Delhi vs. M/s. IAG
Promoter & Developers (P) Ltd., New Delhi in
ITA.Nos.1674 & 1765/Del./2013, Dated
31.10.2014.
7. We have considered the rival submissions and do
not find any merit in the appeal of assessee. The assessee in
the present appeal has challenged the assessment order
under section 143(3) on the premise that assessment ought
to have been framed under section 153C of the I.T. Act. It is
also stated in the grounds of appeal that there is no
material available on record to make the above addition. It
is also stated that the Ld. CIT(A) has erred in not
quantifying the addition and instead giving ambiguous
directions to compute the interest after six months from the
date of the sale. The Ld. CIT(A) has specifically noted in his
findings that A.O. has nowhere mentioned in the
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
assessment order any part of the seized material belongs to
the assessee. Therefore, conditions of Section 153C are not
satisfied in this case. The A.O, therefore, rightly framed
regular assessment under section 143(3) after considering
the incriminating material available on record. The A.O. in
para-2 with regard to addition of the interest on PDCs has
mentioned that on perusal of the bills of payments of
purchase consideration it was noticed that only part
payments have been made while executing the sale deed
and balance consideration was paid through PDCs.
Therefore, the addition is made by the A.O. on the basis of
the documentary evidences produced by the assessee with
regard to the payments mentioned in the sale deed. The
A.O, therefore, correctly made assessment under section
143(3) of the I.T. Act. Further, the A.O. has examined the
evidences available on record and rightly came to the
conclusion that assessee paid interest in cash on PDCS. The
Ld. CIT(A) on examination of the material on record in the
light of seized material and others rightly directed the A.O.
to compute interest from PDCs after six months from the
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
date of issue of PDCs. The Ld. D.R. relied upon the above
decisions of the ITAT, Delhi Bench in which similar
directions of the Ld. CIT(A) have been confirmed by the
Tribunal. In this view of the matter and in the absence of
any representation from the side of the assessee, we do not
find any merit in the appeal of assessee and the same is
accordingly dismissed.
8. In the result, appeal of Assessee dismissed.
Order pronounced in the open Court.
Sd/- Sd/-
(PRASHANT MAHARISHI) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 16th September, 2018
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT "E" Bench
6. Guard File
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ITA.No.1742/Del./2013 M/s. Gitanjali
Promoters Pvt. Ltd., New Delhi.
//By Order//
Asst. Registrar : ITAT : Delhi Benches :
DELHI.
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