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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI ANIL CHATURVEDI & SHRI YOGESH KUMAR U.S.
PER YOGESH KUMAR U.S., JUDICIAL MEMBER: The present appeal is preferred by the assessee for the assessment year
2014-15 against order dated 31.01.2017 passed under Section 250(6) of the
Income-Tax Act, 1961 (“the Act”) by the Commissioner of Income-Tax(Appeals),
31, New Delhi.
The assessee is an individual deriving income from house properties and
income from other sources. A search and seizure operation was conducted u/s
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132 of the Act in AKN Group of cases during which the premises of the
assessee was covered. Accordingly, proceedings were initiated, a notice u/s
142(1) of the Act was issued. In response, the assessee has filed return on
30/03/2015 declaring an income of Rs. 38,90,638/-. Subsequently, a notice
u/s 143(2), 142(1) of the Act along with questionnaire were issued. The
assessment was completed u/s 143(3) of the Act vide order dated 29/03/2016
by the A.O by making an addition of Rs. 14,88,110/- on account of notional
rent on vacant property and of Rs. 44,51,750/- on account of unexplained
cash. As against the assessment order dated 29/03/2016, the assessee has
travel as to CIT(A) by way of an appeal. The Ld.CIT(A) by order dated
31/01/2017 dismissed the appeal by confirming the order of the A.O.
Aggrieved by the order of the CIT(A), the assessee has preferred the
present appeal on following grounds:-
“On the facts and in the circumstances of the case and in law, the authorities below have erred in confirming addition of Rs. 14,88,110/- on account of rent which was never earned and realized by the assessee. The action of the authorities below is wrong, illegal, misconceived, unjustified and bad at law therefore it should be quashed.
On the facts and in the circumstances of the case and in law, the authorities below have erred in confirming addition of Rs.44,51,750/- as unexplained cash found during search whereas this was received as advance against sale of property. The action of the authorities below is wrong, illegal, misconceived, unjustified and
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bad at law therefore it should be quashed.
On the facts and in the circumstances of the case and in law, the authorities below have erred in charging interest u/s 234A Rs. 1,92,640/-, interest u/s 234B Rs.5,52,160/- and interest u/s 234C Rs.21,188/-. The action of the authorities below is wrong, illegal, misconceived, unjustified and bad at law therefore it should be quashed.
The Ld. Counsel for the assessee submitted that, the Ground No. 1 is in
respect of addition of Rs.14,88,110/- on account of rent which was never
earned and realized by the assessee. Further contended that, the said issue is
fully covered and order passed by the Tribunal in Assessee’s own case vide
order dated 09/03/2022 for the immediately preceding years i.e. Assessment
Year 2013-14, 2012-13 and Assessment Year 2011-12, wherein the very same
additions made by the A.O has been deleted by the Tribunal in ITA No.
1267/Del/2017, 1268/Del/2018 and 1269/Del/2017.
Per contra, the Ld. DR has vehemently contended that, the order of the
Ld. A.O and CIT(A) has no infirmity or error and the same requires no
interference from the Tribunal and further the Ld. DR has relied on the orders
of the Lower Authorities.
We have heard the parties perused the materials on record and gave our
thoughtful consideration.
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In the present case in hand, the addition of Rs.14,88,110/- has been
sustained by CIT(A) on the observation that ‘the assessee has stated that, the
house was very old, partly damaged and was not in livable condition but on
verification by the A.O found that, a well built structure was in exist at the given
address’. Further, the Ld. A.O estimated the ALV of the property at Rs. 123 lac
for the Assessment Year 2008-09 and added an annual enhancement of
Rs.10% on the same by referring the provision of Section 23(1)(c) of the Act.
The similar additions have been made for the Assessment Year 2011-12, 2012-
13 and 2013-14 which are hereunder:-
ASSESSMENT Returned Total Additions Income YEAR Income assessee 2011-12 Rs. 1,84,575/- Rs.11,18,040/- Rs.12,82,615/- 2012-13 Rs.28,87,749/- Rs.12,29,844/- Rs.40,97,593/- 2013-14 Rs.24,37,540/- Rs.13,52,828/- Rs.37.90.388/-
The above additions made in the Assessment Years 2011-12, 2012-13 &
2013-14 was subject to the Appeal in ITA No. 1267/Del/2017, 1268/Del/2018,
1269/Del/2017 and the Coordinate Bench of the Tribunal vide order dated
19/03/2022 held as under:-
“9. We are not in agreement with the arguments o f the ld. AR on the issue o f benefit of 23(1)(c) were not being allowed where property was vacant met vacancy in actual rent receivable shout have been taken as Nil. In that case , sub-Section (a) would be applicable.
5 ITA No. 2000/Del/2017 Sh. Sunil Kumar Vs. ACIT
We have considered the findings recorded by the AO as per the assessment order, the submissions made by the ld. AR and the facts of the case on record. As per the assessment orders, the AO observed that in view o f the provisions of section 23 o f the Act, the deemed rental income of the property at C-17A, NOSE, Delhi, which remained vacant during the year was required to be taxed under the head Income from House Property’. The AO, therefore, con fronted the appellant who stated that the house was very old and partly damaged and was not in a livable condition. However, the AO got field verification done and found that a well-built structure existed at the given address. He, accordingly, rejected the explanation and estimated the ALV of the property at Rs. 12,00 ,000/- for the AY 2008-09 and added an annual enhancement of 10% on the same for the subsequent years. Referring to the provisions o f section 23(1)(c), the AO held that since the property was not let out at ITA Nos. 1267, 1268 & 1269/Del/2018 Sunil Kumar 6 any time during the period, the vacancy allowance was not available to the appellant. The AO has not based the estimate on any reasonable working in determining the annual letting value . No description of the property as to the area and the market rates prevalent for rentals has been brought on record. Since, the annual value determined is devoid o f any rational endorsement, we hereby delete the addition made by the revenue authorities.
In the result, the appeals o f the assessee are allowed.”
In the present case also, the Ld. A.O has not based the estimated on any
reasonable working in determining the annual letting value. No description of
the property as to the area and the market rate prevalent for the relevance has
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been brought on record. By respectfully following the ratio laid down in the
above decisions, we are inclined to delete the addition made by the Lower
Authorities. Accordingly, Grounds of Appeal No. 1 is allowed.
The Ground of appeal No. 2 is on addition of Rs. 44,51,750/-as
unexplained cash found during the search. The Ld. Counsel for the assessee
submitted that, the said amount is the advance received against the sale of
property which did not materialized and as such the agreement was cancelled.
The assessee has produced the agreement to sale dated 20/08/2013 entered
into between Sh. Sunil Kumar and Sh. Ajit Singh and also produced the
cancellation of the agreement dated 11/09/2016. The Ld. Counsel for the
assessee further submitted that the entire amount of Rs. 45 lacs advance sale
consideration received from Mr. Ajit Singh has been refunded by way of cheque
on 12/04/2022 to substantiate the same, also produced the statement of
account of the assessee.
The Ld. Counsel for the assessee further submitted that, the Ld. A.O has
committed an error by making an addition without even making necessary
enquiries, the assessee has discharged his onus by showing the materials for
the source of the income, the Assessing Officer without even examining Sh.
Ajit Singh completely brush aside the evidence and documents provided by the
assessee. The assessee has relied on following citations:-
7 ITA No. 2000/Del/2017 Sh. Sunil Kumar Vs. ACIT
� Principal Commissioner of Income Tax, Central-1 Vs Adamine Construction (P.) Ltd. reported at 99 taxmann.com 44 (2018) [Hon’ble High Court of Delhi & SLP Dismissed by Hon’ble Supreme Court of India]
� Kumar Nirman & Nivesh (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Bangalore reported at 121 taxmann.com 174 [Hon’ble High Court of Karnataka].
� Adhithiya Gears (P.) Ltd. Vs. Assistant Commissioner of Income Tax, Circle-I reported at 120 taxmann.com 399 (2020) [Hon’ble High Court of Madras]
� Commissioner of Income-tax Vs. T.B Kunhimahin Haji reported at 109 taxmann.com 237 (2019) [Hon’ble High Court of Kerala].
� Commissioner of Income Tax-1 Vs. Hitesh Somani (2014) reported at 41 taxmann.com 119 [Hon’ble High Court of Gujrat].
� Commissioner of Income Tax Vs. Puran Chand Mittal (2013) reported at 33 taxmann.com 531 [Hon’ble High Court of Punjab and Haryana]
Per contra, the Ld. DR has drew our attention to the statement recorded by the Assessing Officer. It was contended that the assessee was having only property i.e. 1804/2, Kota, Mubarakpur, and no other property is in exist with the assessee to have huge sum in cash which was found during the
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search and further relied on the order of the lower authorities and contended
that no interference is required by this Tribunal.
We have heard the parties on the above issue, the case of the assessee is
that, the cash found during the search was the advance sale consideration
received one Mr. Ajit Singh, since the deal could not be materialized, the same
has been repaid to him in due course. Further, submitted that, the assessee
was having immovable properties apart from 1804/2, Kota, Mubarakpur and
was drawing the rental income from those properties to substantiate the same
produced ITR for the Assessment Year 2012-13 and 2013-14 which are
hereunder:-
9 ITA No. 2000/Del/2017 Sh. Sunil Kumar Vs. ACIT
The documents relied by the assessee i.e. the agreement to sale dated
20/08/2013 and the cancellation of agreement to sale dated 11/09/2016 has
been seriously disputed by the DR. But the fact remain that the Ld. A.O has
not examined Sh. Ajit Singh to know the veracity of the claims of the Assessee.
It is well settled law that, once assessee discharges the onus initially cast upon
him by providing basic details, it is for the Assessing Officer to enquire the
same and come to the conclusion. In the present case, the Assessing Officer
has failed to make any enquiry against the information and particulars of the
source of income provided by the assessee and proceeded to make additions.
Therefore, in our opinion, the addition made by the A.O which was confirmed
by the CIT(A) is required to be deleted. Accordingly, Ground No. 2 of the appeal
is allowed.
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In the result, the appeal of the assessee is allowed.
Order pronounced in the open court on 12th July, 2022.
Sd/- Sd/- ( ANIL CHATURVEDI ) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 12th July, 2022. * R.N*