ATAAT RAHAT KHAN,GURGAON vs. DCIT/ACIT-INT-TAX GURGAON, GURGAON

PER BRAJESH KUMAR SINGH, AM, This appeal by the assessee is directed against the order of the Ld. CIT(A)-43, New Delhi, dated 27.03.2023 for Assessment Year 2017-18, arising out of order of DCIT/ACIT, International Taxation, Gurgaon, dated 23.05.2022 u/s 147 r.w.s 144 of the Income Tax Act, 1961 (hereinafter ‘the Act’). 2. Grounds of appeal raised by the assessee are as under:- 1. That on the facts and circumstances of the case and in law, the notice under Section 148 of the Income-tax Act, 1961 ("the Act") is illegal, bad in law and without juri iction. 2. That on the facts and circumstances of the case and in law, the order of Assessing Officer ["AO"] dated 23.05.2022 passed under section 144 read with section 147 of the Act and the additions made, is without juri iction, illegal, barred by time limitation, bad in law, unsustainable and liable to be quashed. 3. That on the facts and circumstances of the case and in law, the proceedings under section 148 of the Act is been initiated on the basis of incorrect facts and without there being 'reason to believe that income of the appellant had escaped assessment. 4. That on the facts and circumstances of the case and in law, reassessment order is illegal and bad in law, since proper and valid sanction for issuance of notice was not obtained under section 151 of the Act and communication to the appellant. 5. That on the facts and circumstances of the case and in law no draft assessment order under Section 144B of the Act was served upon the appellant and as such the order passed is without following the mandatory provisions of the Act. 6. That, in view of the facts and circumstances of the case and in law, the addition of Rs.1,29,18,254/- made by the assessing officer and upheld by CIT(A) is erroneous, bad in law and without juri iction. 7. That on the facts and circumstances of the case and in law, the CIT(A) erred in upholding the addition under section 69 of the Act without any cogent evidence, necessary enquiry and contrary to facts on record. 8. That the provision of section 69 of the Act does not apply to the present case. Hence the addition made under section 69 and charging of tax under section 115BBE on the additions made does not have any legal leg to stand. 9. That on the facts and circumstances of the case and in law, the CIT(A) erred in not appreciating that under- deed read with agreement to sell. 10. That the Assessment Order and the CIT(A) order are passed without giving reasonable and proper opportunity to the Appellant. In any case the Appellant was prevented by sufficient reasonable cause for not filing the details/ explanations/ evidences 11. That, without prejudice to the above, on the facts and circumstances of the case and in law, the AO erred in charging interest under sections 234A, 234B of the Act. 12. That on the facts and circumstances of the case and in law, the AO erred in mechanically/ vaguely initiating penalty proceedings under section 270A and under section 271 AAC of the Act. 13. Under the facts and circumstances of the case and in law, the observations made by the CIT(A) and AO are unjust, illegal, arbitrary, bad in law and based on surmises and conjectures.” 3. In ground No.1 and 2 of the appeal, the assessee has challenged the passing of the assessment order on the lack of juri iction of the Assessing Officer to pass the assessment order and also that the impugned order passed was barred by limitation. However, the assessee did not make any submission in this regard. Hence, the same are not maintainable. 3.1. Resultantly, ground no.1 and 2 of the appeal are dismissed. 4. In grounds No.3 and 4, the assessee has challenged the reopening of the assessment by the Assessing Officer on the basis of wrong facts and also for not obtaining the approval u/s 151 of the Act and its communication to the assessee. However, the assessee did not make any submission in this regard. Hence, the same are not maintainable. 4.1. Resultantly, ground no.3 and 4 of the appeal are dismissed. 5. Ground No.5: In this ground the assessee submits that no draft assessment order u/s 144B of the Act was served upon the assessee and as such the order passed is without following the mandatory provisions of the Act. However, the assessee did not make any submission in this regard. Further, on perusal of the documents available in the appeal folder before us, it is seen that a draft assessment order u/s 144C of the Act was passed on 17.03.2022 in this case. The said fact has also been noted by the Assessing Officer in para no.6 of the order u/s 147 r.w.s. 144 of the Act dated 23.05.2022, wherein, it is stated that no evidence was filed by the assessee to show that objections were filed before the DRP .Therefore the Assessing Officer finalized the assessment order as proposed in draft order and informed the assessee that the assessee can file an appeal before the ld. CIT(A)-43, New Delhi within 30 days of the receipt of this order. The said para no.6 is reproduced as under:- “6. A draft order on the above lines was served on the assessee with an option to file objection before the Dispute Resolution Penal (DRP) within 30 days of receipt of draft order. Records reveal that counsel of the assessee submitted his response on 13.04.2022 through system and tried to furnish explanation on the above issues. However, no evidences were filed to show that objections have been filed before the DRP and copy of such objections has not been provided in this office as per law. Therefore, assessment is being finalized as proposed in the draft order and the assessee can file appeal before the Ld. CIT (A)-43, New Delhi within 30 days of receipt of this order.” 5.1. In view of the above facts, this ground of the appeal is not maintainable and hence, this ground is dismissed. 6. Ground no. 6 is against the addition of Rs.1,29,18,254/-(Rs 1,20,00,000/-u/s 69 of the Act + Rs 9,18,254/-the details as discussed in this para). In this case, the assessee had not filed his return of income and the assessee was not complying to the notices of hearing issued by the Assessing Officer. The Assessing Officer found that the assessee had received salary of Rs.7,15,000/- from M/s Clear Path Healthcare Services Pvt. Ltd., interest of Rs.31,219/- from HSBC Bank and dividend of Rs.1,72,035/- from M/s Franklin Templeton Mutual Fund and asked the assessee vide show-cause notice dated 11.01.2022 as to why the said amounts should not be added to his total income. In absence of any reply, the Assessing Officer added the above amounts. During the appellate proceedings, the assessee did not make any submission regarding the above additions. Therefore, the ground no.6 to the extent of above additions amounting to Rs.9,18.,254/-(Rs 7,15,000/- + Rs 31,219/-+ Rs 1,72,035/-) is not maintainable and the same is dismissed. As discussed later in this order, the assessee in ground no.7, 8, 9 and 10 has challenged the addition of Rs.1,20,00,000/- u/s 69 of the Act r.w.s. 115BBE of the Act which is dealt hereinafter. 7. Brief facts of the case:- The AO had information that the assessee had not filed his return of income and he had purchased an immovable property amounting to ₹4,70,00,000/-, for which the AO accepted the source amounting to ₹3,50,00,000/- taken as loan. However, since no documentary evidence was furnished for the balance source of investment amounting to ₹1,20,00,000/- despite opportunities given, the AO completed the assessment under section 147 r.w.s. 144 of the Act on 23.05.2022, making an edition of Rs.1,20,00,000/- under section 69 of the Act r.w.s. 115BE of the Act in respect of the undisclosed investment in aforesaid property before passing a draft order u/s 144 C of the Act on 17/03/2022 in this case for the addition of the said amount. 7.1. In this regard, the assessee in its written submission filed on 17.12.2024 explained the background of the assessee and the transaction as under:- 1. Background of the Appellant and the Transaction - The Appellant, Dr. Ataat Rahat Khan, an Indian national residing in Saudi Arabia for over 22 years, entered into an Agreement to Sell dated 21.05.2016 with M/s Blue Rose Construction Pvt. Ltd. (Builder) for the purchase of two floors of a property. The total consideration for the property was agreed at Rs4.70 Crores, contingent upon the completion of specified fittings and fixtures. During reassessment proceedings, the Assessing Officer (AO) accepted Rs 3.50.00.000/- as a loan from HSBC Bank but made an addition of Rs1.20,00,000/- under Section 69 of the Income Tax Act, 1961 ('Act'). The assessing Officer doubted the source of such an amount. The AO presumed that this amount was paid in cash to the Builder, a presumption incorrectly upheld by the CIT(A) and unsupported by cogent evidence. 8. Against the said order dated 23.05.2022 of the AO, the assessee preferred an appeal before the ld. CIT(A). The Ld. CIT(A) in paragraph number 5.3 of his order noted that the assessee had deducted TDS @ 1% of ₹470000 against the sale consideration and deposited as per law. Further the assessee submitted before the Ld. CIT(A) that he was committed to pay balance amount of ₹1,10,30,000/- containing two HSBC Bank Cheques of Rs.53,65,000/- bearing number 994704 dated 15.09.2016 and Rs.56,65,000/- bearing the number 994708 dated 15.09.2016 after the completion of fittings and fixtures of said flats. The assessee further submitted that after getting the registry of the said flats the builder did not complete flats with fittings and fixtures as per agreement. Therefore, as per assessee, the above mentioned two cheques were never presented or debited from assessee’s HSBC Bank account till now. Further, the Ld. CIT(A) noted that the assessee submitted few photographs as reproduced on pages number 7 and 8 of its order to submit that the furniture and fixtures in the said flats as per the terms and the conditions with the builder were not fulfilled by the builder. However, the Ld. CIT(A) held on the basis of the said pictures that the flat was well equipped and with fittings and fixtures as mentioned in the sale deed. The ld. CIT(A) also noted that the doors and windows, railings and modular kitchen pictures are substantial enough to establish the veracity of the terms and conditions mentioned in the Sale Deed. 8.1. The ld. CIT(A) further noted that the assessee in his submission dated 27.12.2022 submitted that the assessee could not arrange confirmation letter by builder of fully unfurnished flat handover to the assessee as the builder was untraceable. The ld. CIT(A) held that the said submission remains irrelevant as there is no mention of furnishing of flats in the sale deed and observed that the terms "fittings & fixtures" and "furnishing & furniture" have altogether different meanings and cannot be inter-related with each other. According to the ld. CIT(A) normally, if fittings & fixtures are mentioned in the sale deed agreement then there is an annexure to the Sale Deed mentioning the details and list of fittings & fixtures like fans, air conditioners, cupboards etc., which has not been annexed with the sale deed nor the details have been provided during assessment or appellate proceedings. Therefore, the ld. CIT(A) noted that the assessee had received the flats as per the terms mentioned in the sale deed. Thereafter, the ld. CIT(A) discussed about significance of sale deed and observed that generally, the parties sign the sale deed after the satisfaction and completion of the terms and conditions. According to the Ld. CIT(A) , the sale deed is a proof of the transfer of the ownership which describes the details of the property and the rights and duties of the parties and it was crucial document that establishes the transfer of ownership of a property from Seller to Buyer. 8.2. Further, the ld. CIT(A) observed the fact that Sale Deed has been registered in favour of Buyer is evidence enough to suggest that the Sale Consideration has been received by the Seller either in cash or cheque. The ld. CIT(A) noted that the deed mentions cheque no. 994704 dated 15.09.2016 amounting to Rs.53,65.000/- & cheque no. 994708 dated 15.09.2016 amounting to Rs.56,65.000/-having been received by the Seller before signing the agreement of registering the Sale deed. According to the ld. CIT(A), the assessee had claimed in the submission that "he had committed to pay balance amount after the completion of fittings & fixtures of said flats," but according to the Ld. CIT(A) this fact was not forming part of Sale deed and in the absence of any such specific mention in the Sale deed and any other evidence; the argument of the assessee cannot be accepted. The Ld. CIT(A) also noted that the sale deeds submitted by the assessee were registered in September 2016 in the office of the