ACIT, RANGE-1,, FARIDABAD vs. NAVEEN VERMA, , FARIDABAD

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ITSSA 90/DEL/2005Status: DisposedITAT Delhi20 March 20257 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal addressed the Revenue's appeal first. Regarding the addition of Rs.1,24,000/- for investment in land in village Dhatir, the Tribunal noted that the actual investment was Rs.25,000/- and Rs.75,000/-, and found no merit in the Revenue's ground seeking to revive the extrapolated amount, thus rejecting it. For the addition of Rs.3,50,000/- related to plot no. 438, Sector-3, Faridabad, the Tribunal observed that the actual figure was Rs.10,000/-, which already stood upheld, and rejected the revival of the remaining addition. Concerning the substantial issue of Rs.1,13,41,500/- involving investments in 'HUDA' plots/properties, the Tribunal found that the assessee did not own the properties but his name appeared in seized material along with asset rates, leading to the conclusion that he acted as a real estate broker earning commission income. Applying Section 292C of the Act, the Tribunal rejected the assessee's contentions against assessing commission income and directed the Assessing Officer to assess a lump sum of Rs. 2 lakhs, stating this would not be treated as a precedent. The Revenue's third ground was partly accepted to this extent. The Revenue's appeal was partly allowed. For the assessee's appeal, the Tribunal held that the lump sum addition of Rs. 2 lakhs would cover all substantive grounds through the 'telescoping' method. The assessee's former grounds challenging the validity of the section 158BD assessment, which were settled in a prior round up to the High Court, were rejected. The assessee's appeal was partly allowed. The Revenue's penalty appeal was dismissed as no quantum additions were upheld in principle. The Tribunal decided that the Rs. 2 lakh commission income assessment would cover all substantive grounds of the assessee, applying the 'telescoping' method. The assessee's grounds challenging the validity of the section 158BD assessment were rejected as they were already settled up to the High Court. The Revenue's penalty appeal was dismissed because the underlying quantum additions were not upheld.

What were the facts?

The Income Tax Appellate Tribunal (ITAT), Delhi Bench, heard a batch of three appeals concerning the assessee, Sh. Naveen Verma, and the Revenue. The appeals stemmed from a block assessment order dated 30.04.2003 passed by the ACIT, Range-1, Faridabad, under section 158BD(2)/144 of the Income-tax Act, 1961, for the block period 01.04.1988 to 16.04.1999. The Revenue also filed an appeal against a penalty order dated 27.03.2006 passed by the CIT, Range-1, Faridabad, under section 158BFA(2). The assessee's appeal challenged the jurisdiction of the ACIT, compliance with legal provisions, and additions made on account of investments in M/s. Nasa Systems, agriculture land, PNB Building, a plot at Gurgaon, and income from STD Booth and M/s Spreadcom. The Revenue's cross-appeal challenged the deletion of additions made on account of investments in land in village Dhatir, plot no. 438, Sector-3, Faridabad, and various other properties.

What were the issues?

1. Whether the Commissioner of Income Tax (Appeals) erred in holding that the ACIT, Range-1, had jurisdiction to assess the assessee and that the Block Assessment Order was valid (Question of law and fact, concerning jurisdiction and validity of assessment). 2. Whether the Commissioner of Income Tax (Appeals) erred in holding that mandatory provisions of law were complied with (Question of law and fact, concerning procedural compliance). 3. Whether the Commissioner of Income Tax (Appeals) erred in holding that investments in M/s. Nasa Systems (Rs.11,000), agriculture land (Rs.1 Lakh), PNB Building (Rs.43,750), and advance for a plot at Gurgaon (Rs.10,000 and Rs.34,155) constituted undisclosed income from unexplained sources (Question of law and fact, concerning the nature and source of investments). 4. Whether the Commissioner of Income Tax (Appeals) erred in holding that income from STD Booth and M/s Spreadcom could not be established and was Nil, and in denying set-off against alleged undisclosed investments (Question of law and fact, concerning the ascertainment and utilization of income). 5. Whether the Commissioner of Income Tax (Appeals) erred in deleting additions of Rs.1,24,000/- (land in village Dhatir), Rs.3,50,000/- (plot no. 438, Sector-3, Faridabad), and Rs.1,13,41,500/- (various properties) made on account of investment from undisclosed sources (Question of law and fact, concerning the quantum of additions for investments from undisclosed sources). Assessee's Contentions: The assessee argued that the ACIT lacked jurisdiction and that mandatory provisions of law were not complied with. They also contended that various investments and income from STD Booth and M/s Spreadcom were wrongly treated as undisclosed income or not properly accounted for. The assessee relied on the findings of the lower appellate authority where certain additions were deleted. Revenue's Contentions: The Revenue argued that the Commissioner of Income Tax (Appeals) erred in deleting substantial amounts of additions made on account of investments from undisclosed sources in land, plots, and various properties. They sought to revive the Assessing Officer's additions in their entirety.

Which sections of the Income-tax Act were involved?

Section 158BD,Section 144,Section 158BFA,Section 292C

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI

Before: SHRI SATBEER SINGH GODARA

For Appellant: Dr. Rakesh Gupta, Adv
Hearing: 20.03.2025Pronounced: 20.03.2025

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’ NEW DELHI BEFORE SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER AND SHRI AMITABH SHUKLA, ACCOUNTANT MEMBER IT(SS)A No.90/Del/2005 Block Period: 01.04.1988 to 16.04.1999 With IT(SS)A No.108/Del/2007 Block Period: 01.04.1988 to 16.04.1999 ACIT, Vs. Sh. Naveen Verma, Range-I, I-16, Sector-10, Faridabad Faridabad PAN:ADBPV7392L (Appellant) (Respondent) With IT(SS)A No.8/Del/2005 Block Period: 01.04.1988 to 16.04.1999 Vs. ACIT, Sh. Naveen Verma, I-16, Sector-10, Range-I, Faridabad Faridabad PAN: (Appellant) (Respondent) Assessee by Dr. Rakesh Gupta, Adv. Sh. Somil Agarwal, Adv. Department by Sh. Sunil Yadav, CIT(DR) Date of hearing 20.03.2025 Date of pronouncement 20.03.2025 ORDER PER SATBEER SINGH GODARA, JM The instant batch of three appeals involves the single assessee herein, Sh. Naveen Verma. This assessee and the Revenue

IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

have filed their respective cross appeals IT(SS)A Nos.8/Del/2005 and 90/Del/2005 for block assessment 01.04.1988 to 16.04.1999 against the ACIT, Range-1, Faridabad’s order dated 30.04.2003 involving proceedings under section 158BD(2)/144 of the Income- tax Act, 1961 (in short ‘the Act’). The Revenue has filed the appeal IT(SS)A No.108/Del/2007 against the CIT, Range-I, Faridabad’s order dated 27.03.2006 involving section 158BFA(2) penalty proceedings. Heard both the parties at length. Case files perused. The assessee’s appeal IT(SS)A No.8/Del/2005, raises the following grounds of appeal: 1. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that ACIT, Range - 1, had jurisdiction to assess the assessee and consequently, the Block Assessment Order dispute was valid. 2. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that the mandatory provisions of law were complies with. 3. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that investment of Rs.11,000/= in M/s. Nasa Systems was undisclosed income of the assessee being from unexplained sources. 4. The Id. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that investment of Rs. 1 Lakh in Agriculture Land measuring 20 K 8M was undisclosed income of the assessee from unexplained sources. 5. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that the investment of Rs.43,750/= in PNB Building at Ballabgarh was undisclosed income of the assessee being from unexplained sources. 6. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that advance of Rs. 10,000/= paid for purchase 2 | P a g e

IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

of Plot No.438/3 was undisclosed income of the assessee being from unexplained sources. 7. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that the source of payment of Rs.34.155/= towards booking of Plot at Gurgaon was undisclosed income of the assessee being from unexplained sources. 8. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in holding that the income from STD Booth and M/s Spreadcom could not be established and therefore the same was Nil. 9. The Ld. Commissioner of Income Tax (Appeals) erred on facts as well as in law in not considering incomes earned from M/s. Spreadcom and STD Booth and in denying set-off of the same against alleged undisclosed investment, to the assessee. 10. The assessee craves leave to add, amend or delete any of the Grounds of Appeal. 3. The Revenue’s cross appeal IT(SS)A No. 90/Del/2005, on the other hand, pleads the following substantive grounds: 1. In deleting the addition of Rs.1,24,000/- out of the total addition of Rs.2,24,000/- made on account of investment from undisclosed sources in land in village Dhatir. 2. In deleting the addition of Rs.3,50,000/- out of total addition of Rs.3,60,000/- made on account of investment from undisclosed sources in plot no. 438, sec-3, Faridabad. 3. In deleting the addition of Rs.1,13,41,500/- made on account of investment from undisclosed sources in various properties. 4. We come to the Revenue’s appeal first of all for the sake of convenience and brevity. The instant batch of three appeals has admittedly emanated from the department’s search assessment dated 12.03.2019 involving block assessment period from 01.04.1988 to 16.04.1999. The assessee further appears to have proceeded under section 158BD of the Act. It is in this factual backdrop that the learned Assessing Officer has framed his assessment on 30th April, 2003 making the impugned additions 3 | P a g e

IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

which stand partly deleted in lower appellate discussion leaving both the parties aggrieved to the extent of their respective grievances pleaded in the instant cross appeals. 5. We now advert to the Revenue’s first and foremost substantive ground seeking to revive the Assessing Officer’s action adding unexplained investment from undisclosed sources in entirety to the tune of Rs.2.24 lakhs. A perusal of the lower appellate discussion in paras 8 to 7.1 (pages 8 to 9) indicates that the assessee was actually found to have actually invested only an amount of Rs.25,000/- as advance(s) on 16.06.1996 and Rs.75,000/- later on. That being the case, we hardly find any merit in the Revenue’s instant substantive ground seeking to revive extrapolated addition amount of Rs.1.24 lakhs. Rejected accordingly. 6. Next comes the Revenue’s second substantive ground is that the CIT(A) has erred in law and on facts in reversing the assessment findings making unexplained investment addition of Rs. 3.50 lakhs out of Rs. 3.60 lakhs relating to plot no. 438, Sector-3, Faridabad. We note from a perusal of case records/seized material(s) that the corresponding actual figure therein is only Rs.10,000/- which already stands upheld. We thus see no reason to revive the

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IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

impugned remaining addition of Rs.3.5 lakhs. Rejected accordingly. 7. Lastly comes the third substantive issue between the parties relating to investment from undisclosed sources involving the amount of Rs.1,13,41,500/-. 8. It emerges during the course of hearing that the assessee was nowhere found to have actually made any such investments in “HUDA” plots/properties etc. as per the remand report coming from the Assessing Officers end. The fact, however, remains that although the assessee himself does not own the property(ies) in question. A perusal of the corresponding seized material at pages 137 to 147 reveals his name along with the rate of the relevant asset which fairly leads us to an irresistible conclusion that he in fact worked as a real estate broker deriving commission income from various lands dealings. There would be hardly any dispute that such seized material carries presumption of correctness regarding the contents thereof as per section 292C of the Act. We, thus, reject the assessee’s vehement contentions against the assessment of his commission income and direct the learned Assessing Officer to assess a lump sum amount of Rs. 2 lakhs only,

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IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

in these peculiar facts and circumstances with a rider that the same shall not be treated as a precedent. The Revenue’s instant third and last substantive grounds of the main appeal IT(SS)A No. 90/Del/2005 is partly accepted to this limited extent. Revenue’s appeal IT(SS)A No. 90/Del/2005 is partly allowed. 10. So far as the assessee’s IT(SS)A No. 8/Del/2005 is concerned, we are of the considered view that the above lump sum addition of Rs. 2 lakhs would cover of all his substantive grounds pleaded herein as per ‘telescoping’ method. We further make it clear that the assessee has not pressed for it’s former twin substantive grounds challenging validity of the impugned section 158BD assessment which stood settled in the first round travelling upto hon’ble jurisdiction high court. These former twin grounds are rejected in very terms. This assessee’s instant appeal IT(SS)A No. 8/Del/2005 is partly allowed in above terms. 12. Same order to follow in the Revenue’s consequential section 158BF penalty appeal IT(SS)A No.108/Del/2007 as none of the quantum additions made by the learned Assessing Officer have

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IT(SS)A Nos.8 & 90/Del/2005 & 108/Del/2007;

been upheld in principle in the preceding terms. This Revenue’s IT(SS)A No. 108/Del/2007 fails therefore. 12. No other grounds or arguments have been pressed before us. 13. To sum up, the assessee’s and Revenue’s “quantum” cross appeals IT(SS)A No.8/Del/2005 and IT(SS)A No.90/Del/2005 are partly allowed and the latter’s penalty case IT(SS)A No. 108/Del/2007 is dismissed, in above terms. A copy of this common order be placed in the respective case files. Order pronounced in the open court on 20th March, 2025 Sd/- Sd/- (AMITABH SHUKLA) (SATBEER SINGH GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 20th March, 2025. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi

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