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Income Tax Appellate Tribunal, DELHI BENCH “H” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & Dr. B.R.R. KUMAR
सुनवाईक�तारीख/ Date of hearing 03.01.2023 : उ�ोषणाक�तारीख/Pronouncement 23.02.2023 on : आदेश / O R D E R PER C. N. PRASAD, J.M.
1, This appeal is filed by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)-9, New Delhi [hereinafter referred to CIT (Appeals)] dated 27.11.2019 for the Assessment Year 2016-17.
The assessee has raised the following substantive grounds of appeal:-
“1. The lower authorities have erred in not appreciating either the facts &circumstances of the case or the submissions of appellant and has further erred in passing an order which is bad in law & on facts.
2. The CIT(A) has erred in confirming the addition of Rs.2,20,00,000, being the alleged suppressed sale consideration received from Mr. Karanvir Rajput, under section 69A of the Income Tax Act, 1961 without considering the facts and submissions of the appellant that the said amount represents the down payment received from the developer Mr. Karanvir Rajput for joint development of property A-3l3, Shivalik, Malviya Nagar as per the terms of development agreement dated 23.05.2014 and the same has already been declared in the gross receipts/turnover of the said property by the appellant for this assessment year. 2.1 The lower authorities have appreciated the breakup of the gross receipts/turnover of Rs.5,84,91,000 received in this year in respect of sale of property A-313, Shivalik, Malviya Nagar as details given below but has erred in making the addition on the ground that the appellant has not declared the sum of Rs.2,20,00,000 received from Mr. Karanvir Rajput Developer) against the down payment as the same was found noted in form 26QB on which the TDS was deducted by the developer on the such down payment of Rs.2,20,00,000. a) Down Payment received from Mr. Karanvir Rajput (Developer) 2,20,00,000/- b) Sale Consideration of Basement (Owner's Share) 42,50,000/- c) Sale Consideration of Ground Floor (Owner's Share) 2,30,00,000/-
d) Sale Consideration of Third Floor (Owner's Share) 90,41,000/- e) TDS 2,00,000/- TOTAL : 5,84,91,000/- 2.2 The ClT(A) has erred in confirming the addition of Rs.2,20,00,000 under section 69A of the act, being the undisclosed money, bullion, jewellery or other valuable article without appreciating that the appellant has declared the impugned amount as its income in the profit and loss account being the part of gross receipts in respect of the property A-313, Shivalik, Malviya Nagar as mentioned above.
3. The ClT(A) has erred in confirming the addition of notional amount of Rs.20,00,00,000 being notional guarantee charges being 4% of the total guarantee amount of Rs.500,00,000 without considering the facts and submissions of the appellant that the appellant has agreed for mortgage of the property to the bank for guarantee on behalf of M/s. Jindal Bullion Ltd. With whom the appellant was going to develop the property jointly situated at Tarun Enclave. Since the joint development agreement could not get through therefore, the appellant has sold property of Tarun Enclave in the previous year relevant to assessment year 2018-19 and has declared the business profit on the same in the income tax return. 3.1 The ClT(A) has erred in confirming the addition of notional income of Rs.20,00,00,000 even when there is no provision in the income tax act for charging of such income in the hands of appellant.
The ClT(A) has erred in not accepting the request made under rule 46A of the act for additional evidence being the copy of the collaboration agreement which could not be provided to the assessing officer as the same was misplaced by the appellant and the copy whereof was not readily available from the collaborator due to his non-availability in the month of December 2018.”
Ground Nos. 2 to 2.2 relate to addition made under section 69A of the Act towards willful suppressed sales. The assessee who is engaged in the business of purchase and sale of immovable properties filed its return of income on 31.03.2017 declaring ‘NIL’ income. The assessment was completed under section 143(3) of the Income Tax Act, 1961 (the Act) on 14.12.2018 determining the loss from business at Rs.83,85,751/-. The Assessing Officer while completing the assessment also made addition under section 69A read with section 115BBE of the Act at Rs.2,20,00,000/- observing as under :-
7, As per the submissions of the assessee company, the plot A-313 Shivalik, Malviya Nagar was purchased by them in an auction conducted by the Union Bank of India for Rs. 7,72,54,100. On perusal of the subsequent Sale deeds (03) (uploaded by the assessee company) entered into by the assessee company with the buyers of different floors of the property A-313 Shivalik, Malviya Nagar it is observed that — Basement with 10% land rights sold on 13-01-2016 for Rs. 42,50.000 Ground and first floor with 45% land rights sold on 19-01-2016 for Rs.4,30,00,000 Third floor with 10% land rights sold on 13-01-2016 for Rs. 90,41,000 In response to the query about the remaining floors, vide reply uploaded on 10- 12- 2018 the assessee company has informed that they had entered into a Collaboration Agreement with Mr. Karan Vir Rajput s/o Late Mr. T. C Rajput resident of E-72 Saket, New Delhi for reconstruction of the above house property. Further it was stated that the Builder had “agreed to reconstruct the house with his own funds and will further pay Rs. 2,20,00,000 and in lieu will get the first and second floor of the reconstructed building.
Vide questionnaire dated 11-12-2018 the assessee company was requested to upload the above Collaboration Agreement entered into by them with Mr. Karan Vir Rajput. However the assessee company failed to upload any such agreement / contract. Vide questionnaire dated 23-03-2018 issued by this Office, the assessee company was informed that as per Form 26QB it is reported that the following sales consideration was received by them during the financial year 2015-16 relevant to A.Y 2016-17 – Sale deed Buyer name Buyer PAN Sale value date - - - - 25-01- ADZPR5360G Rs. 2,20,00,000 2016 KARANVIR RAJPUT 01-03- 2016 NEELU SHARMA AQBPS8603E Rs. 90,41,000 29-01- 2016 PRIANKA JAIN AHHPJ5823C 29-01- 2016 ASHOK KUMAR JAIN AAGPJ4796E 29-01-2016 ASHOK KUMAR JAIN AAGPJ4796E Rs.4,30,00,000 On the contrary, only the following sales consideration has been reported by the assessee company in their return of income / Profit & Loss a/c –
Mr. Nooralam Kasim Mirza & Mr. Arman Rs. 1,35,00,000 23, 24 fifth floor, Dheeraj Reza Noor Alam On 29-10-15 Heritage, Mumbai Mirza Mr. Dinesh Kumar Sharma & Mr. Suman 42,50,0007 Basement A-313 Shivalik, Sharma On 13-01-2016 Malviya Nagar Mr. Ashok Kumar Rs. A-313 Shivalik, Jain, 4,30,00,000 Malviya Nagar Ms. Purnima Jain, On 13-01-2016 Ms. Prianka Jain Rs.90,41,000 A-313 Shivalik, On Malviya Nagar Ms. Neelu Sharma 13-01-2016 Rs.10,00,000 1153 Kucha Mahajani, Mr. Rajesh Kumar On 05-10-15 Chandni Chowk Mr. Sandeep Chanana Rs. 12,30,000 890 Kucha Kabil Attar, & Mr. Rajesh On 27-05-15 Chandni Chowk Chanana M/S Ram Traders Rs. Forfeited amount by the (AFHPJQ282M) 3,00,00,000 assessee company Rs. - TOTAL 10,20,21,000 From a comparison and analysis of the data contained in the above two tables it is apparent that the sum of Rs. 2,20,00,000 received by the assessee company from Mr. Karanvir Rajput (PAN ADZPR5360G) has not been offered by them to tax. The above discrepancy was brought to the notice of the assessee company vide questionnaire dated 11-12-2018. However no satisfactory reply was received. Therefore it is apparent that the above sum of Rs.2.20.00.000 represents the quantum of willfully suppressed sales. Sec. 69A of the Income Tax Act, 1961 deals with unexplained money, etc. It states that “Where in any financial year the assessee is found to be the owner of any money, bullion, jewellery or other valuable article and such money, bullion, jewellery or valuable article is not recorded in the books of account, if any, maintained by him for any source of incomefjjand the assessee offers no explanation about the nature and source of acquisition of the money, bullion, jewellery or other valuable article, or the explanation offered by him is not, in the opinion of the Income-tax Officer, satisfactory, the money and the value of the bullion, jewellery or other valuable article may be deemed to be the income of the assessee for such financial year".
4. On appeal the ld. CIT (Appeals) sustained the addition made by the Assessing Officer. The ld. Counsel for the assessee submits that the addition was made towards suppressed sale consideration without properly appreciation of the evidences placed before the Assessing Officer which was sustained by the ld. CIT (Appeals). The ld. Counsel for the assessee referring to page 173 of the paper book which is the copy of the sale deed executed by the assessee for sale of the property in Shivalik Colony in favour of the cendees, namely, Shri Ashok Kumar Jain, Mrs. Purnima Jain and Mrs. Prianka Jain, submits that the sale deed was executed for total consideration of Rs.4,30,00,000/- and as per clause ‘O’ of the sale deed out of total consideration of Rs.4,30,00,000/- a sum of Rs.2,30,00,000/- shall be paid to the vendor towards sale and transfer of the entire ground floor and without rights appurtenant thereto and the balance of Rs.2,00,00,000/- shall be paid to the confirming party towards the sale of entire first floor and other rights appurtenant thereto. The ld. Counsel for the assessee submits that the confirming party here is Shri Karan Vir Rajput as can be seen from page 162 of the paper book. Therefore, it is the submission of the ld. Counsel that under the sale deed assessee has received only Rs.2,30,00,000/- and not Rs.4,30,00,000/- as considered by the Assessing Officer as well as the ld. CIT (Appeals). Referring to page 15 of the order of the ld. CIT (Appeals) which is the table showing the receipts by the assessee on account of the transaction of the properties the ld. Counsel pointed out that the lower authorities considered Rs.4,30,00,000/- as received from Shri Ashok Kumar Jain, Mrs. Purnima Jain and Mrs. Prianka Jain, whereas the document i.e. sale deed dated 19.01.2016 though entered into for a consideration of Rs.4,30,00,000/- clearly demarcated towards sale consideration between the vendor and the confirming party and this fact was completely ignored by the lower authorities.
The ld. Counsel further submits that the additional evidence furnished before the ld. CIT (Appeals) in the form of collaboration agreement with Mr. Karan Vir Rajput for re-construction of the property was not admitted by the ld. CIT (Appeals) on the ground that the same was not produced before the ld. Assessing Officer. Therefore, the ld. Counsel for the assessee submits that an opportunity may be provided to explain before the Assessing Officer and produce the document i.e. collaboration agreement entered into with Shri Karan Vir Rajput, which was not placed before the Assessing Officer in the course of assessment proceedings as it was not available immediately with the assessee which was also the main reason for making the addition under section 69B of the Act towards suppressed sale consideration.
The ld. DR has no serious objection in restoring the matter back to the file of the Assessing Officer for re-examining the entire issue in the light of the evidences on record.
On hearing both the parties and perusing the orders of the authorities below we observe that the sale deed referred to by the ld. Counsel which is placed at pages 161 to 181 for sale of property at Plot No. A-313, Shivalik Colony, Malviya Nagar, clearly suggests that as per clause ‘O’ of the agreement a sum of Rs.2,30,00,000/- only shall be paid to the vendor i.e. M/s. U.V. Buildcon (India) Pvt. Ltd., which is the assessee towards sale and transfer of the entire ground floor and balance of Rs.2,00,00,000/- shall be paid to the confirming party, Shri Karan Vir Rajput. This fact appears to be completely ignored by the Assessing Officer as well as the ld. CIT (Appeals). It is also observed from the order of the Assessing Officer that the collaboration agreement entered into with Shri Karan Vir Rajput even though was requested by the Assessing Officer was not up-loaded in the course of assessment proceedings. It is observed that though the copy of the collaboration agreement was produced as additional evidence before the ld. CIT (Appeals) the same was not admitted as the assessee failed to produce before the Assessing Officer. Considering the totality of facts and circumstances and in the interest of justice we are of the opinion that this matter should go back to the Assessing Officer for de novo examination of the issue afresh in accordance with law after providing adequate opportunity of being heard to the assessee. Thus, this issue is restored to the file of the Assessing Officer for deciding afresh in accordance with law. These grounds are allowed for statistical purposes.
Coming to ground no. 3 i.e. in respect of disallowance of notional interest it is the submission of the ld. Counsel for the assessee that the Assessing Officer disallowed Rs.20,00,000/- as notional interest being 4% of the sanctioned limit of Rs.5,00,00,000/- for the guarantee/pledge given by the assessee for obtaining loan by M/s. Jindal Bullion Ltd., which is a sister concern of the assessee on the ground that assessee has paid interest on the borrowings from M/s. Priyanka Jewellers, Prop. Shri Anoop Kumar Soni. The ld. Counsel submits that there is absolutely no nexus of borrowing and payment. The ld. Counsel submits that the assessee agreed with M/s. Jindal Bullion Ltd. for development of property at Tarun Enclave and has permitted for mortgage of the property to M/s. Jindal Bullion Ltd. and since the joint development agreement could not get through the assessee sold property in the previous year relevant to assessment year 2018-19 and has declared a business profit/loss and there is no charge continued on this property after the sale made in the financial year 2017-18. The ld. Counsel for the assessee, therefore, submits that there cannot be any notional disallowance by the Assessing Officer. 9
Heard rival submissions perused the orders of the authorities below. The Assessing Officer made a disallowance under section 36(1)(iii) of the Act at 4% of Rs.5,00,00,000/- the guarantee provided by the assessee to its sister concern on behalf of M/s. Jindal Bullion Ltd. In the absence of development agreement furnished by the assessee the submissions were disbelieved by the Assessing Officer and a notional disallowance of interest was made which was confirmed by the ld. CIT (Appeals). It is the contention of the ld. Counsel for the assessee that absolutely there is no nexus of borrowing and payment and, therefore, there cannot be any notional disallowance. Taking the totality of facts and circumstances into consideration, we are of the view that this issue also should go back to the ld. Assessing Officer for de novo adjudication in accordance with law after providing adequate opportunity of being heard. The assessee is at liberty to file necessary evidences in support of its submissions. Thus, we restore this issue to the file of the Assessing Officer for fresh adjudication in accordance with law. This ground of appeal is allowed for statistical purposes.
In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the open court on : 23/02/2023