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Income Tax Appellate Tribunal, DELHI BENCH “C” NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI
O R D E R PER AMIT SHUKLA, JM
The aforesaid appeal has been filed by the Assessee against the impugned order dated 16.03.2018 passed by Commissioner of Income Tax (Appeals)-II, Gurgaon for the Assessment Year 2010-11. In the grounds of appeal, the assessee has merely challenged the addition of Rs.21,45,600/- as unexplained investment made for the 1/10 share as co-owner in two flats of Mumbai even when no incriminating material was found in the search for purchasing of such shares in the flats and were duly disclosed in the regular books of account and bank account of the assessee. Similarly, the assessee has also challenged enhancement in the income alleging an unexplained investment of Rs.12,24,600/- being 1/5th share of the assessee in L-11, APMC Navi Mumbai property which was also disclosed in the audited balance sheet of proprietorship concern.
The facts in brief are that the assessee has filed its return of income for the Assessment Year 2010-11 on 15.10.2010 u/s 139(1). A search and seizure action was carried out u/s. 132(1) at the residential/business premises of the assessee on 17.01.2014. At the time of search, the assessment for the Assessment Year 2010-11 had attained finality. From the perusal of the impugned order as well as the assessment order we find that Assessing Officer has made the addition in the impugned assessment order in the following manner:
5.3 On the date of hearing, neither assessee attended nor any written submissions were filed by the assessee. These flats were acquired by assessee alongwith his family members as discussed above, out of them one Sh. Sahil Mittal during assessment proceedings for the A.Y. 2010-11 filed his reply on dated 25.02.2016. Sh. Sahil Mittal is also co-owner of these flats and reply filed by him in his case is also considered in the case of the assessee Sh. Hitesh Mittal because he has not filed any reply/explanation and also co-owner of these flats. On perusal of reply filed by Sh. Sahil Mittal in his case, it is apparent that they have jointly purchased both the flats i.e. Flat No. 1001 & 1002, Shabri Basera Building, Opp. Diamond Garden, Chembur, Mumbai for Rs. 90,00,000/- & Rs. 90,00,000/- respectively excluding stamp duty & other misc. expenses. After including the expenses related to stamp duty & other misc. expenses, the cost of each flat is calculated as under:- Description of expenses Flat No. 1001, Shabri Basera Flat No. 1002, Shabri Basera Building, Opp. Diamond Building, Opp. Diamond Garden, Chembur, Mumbai Garden, Chembur, Mumbai 90,00,000/- 90,00,000/- Amount paid to seller as per sale deed Stamp duty 51,000/- 51,000/- Misc. Expenses 13,991/- 13,991/- Legal Charges 91,530/- 91,530/- Sub Registrar Fee 30,000/- 30,00/- Total 91,86,521/- 91,86,521/-
The cost of each flat comes Rs. 91,86,521/- after including the above mentioned expenses. Hence, the total registered value of both the flats is Rs. 1,83,73,042/- (Rs.91,86,521 * 2).
5.4 Further, the statement of assessee Sh. Hitesh Mittal, also co-owner of both flats recorded on 17.01.2014 during search conducted at Flat No. 1001 & 1002, Sabari Basera Building, Opp. Diamond Garden., Chembur, Mumbai is also considered in which he himself admitted that the entire investment of Rs. 2.50 Cr. (Rs. 2.00Cr. purchase amount + Rs. 0.50 Cr. renovation cost) made in these flats equally by him (Sh. Hitesh Mittal) alongwitih his family members namely Sh. Sahil Mittal, Sh. Neeraj Mittal, Sh. Sunny Mittal, Sh. Nihar Mittal & Sh. Kushal Mittal. The assessee has not filed reply in response to show cause issued on 12.02.2016 for fixing the case on 17.02.2016. Onus for the same lies on the assessee & he failed to discharge the same. So the source of payment made by all the co-owners is not explained with documentary evidence.
5.5 Keeping in view of the above discussion, the statement of the assessee Sh. Hitesh Mittal recorded on oath is considered and accepted in which lie himself admitted that they had made jointly investment of Rs. 2.0 Crore approx. to acquire both flats and Rs. 0.50 Cr. expenses incurred on renovation of said flats. The source of investment made by the all the shareholders is remained unexplained and investment amount of Rs. 2.00 Cr. for purchase of these flats is proportionately divided and required to be added in above mentioned shareholder's taxable income separately. The investments amount in the hands of the assessee is calculated at Rs. 33,33,333/- (Investment of Rs. 2,00,00,000/- divided by 6 share holders).
5.6 Further, assessee Sh. Hitesh Mittal, also co-owner of flats in his statement also admitted that expenses of Rs. 0.50 Cr. is made on renovation of these flats and date of renovation has not been furnished by him. Hence, the addition of Rs. 33,33,333/- is being made in the year under consideration as the sale deed of both the flats was made in the F.Y. 2009-10 relevant to the year under consideration and balance amount of Rs. 0.50 cr. is proportionately divided and added to the subsequent year as the sale deed was made on 17.03.2010 and construction might had been made thereafter i.e. during F.Y. 2010-11. Penalty u/s 271(l)(c) of the I.T. Act, 1961 is being initiated on this issue for concealment of income & furnishing of inaccurate particulars of his income.
(Addition of Rs. 33,33,333/-) 3. Ld. CIT(A) has given part relief on this addition and thereafter has made the enhancement of Rs.12,24,600/- after observing and holding as under: I have given careful consideration to the submission of the appellant and find that that share of the appellant and his brother Mr. Neeraj Mittal is only 1/10th of the total cost of the flat which comes to Rs. 18,00,000/- each. Regarding source of the funds for investment in flat, it was explained that funds had come in the account of Satellite Exports the proprietorship concern of the appellant, from Satya Corporation, the proprietorship concern of Mr. Nihar Mittal. On 15.03.2010 two pay orders of Rs.9,00,000/- each (total Rs. 18,00,000/-) for purchase of share of appellant was made and another transfer of Rs. 18,10,000/- on the very same date was made to the bank account of Sh. Neeraj Mittal from Satya Corporation. The Assessing Officer has considered the share of the six co-owners (Neeraj Mittal, Hitesh Mittal, Sunny Mittal, Nihar Mittal, Sahil Mittal and Kushal Mittal) as Rs.33,33,333/- which is l/6th each taking the cost of flat as Rs. 2,00,00,000/-. The submission of the appellant regarding his actual share in the flats is accepted/ The total cost of the two flats at Mumbai jointly co-owned by five brothers is Rs.1.8 crores as reflected in the purchase documents submitted and not Rs. 2,00,00,000/- taken by the AO, a figure given by Sh. Hitesh Mittal in his statement during search. A perusal of the Sale Deed confirms that the total cost of the two flats at Mumbai was Rs.1.80 crores only. Therefore the share of the brothers in these two flats comes to l/5th in case of Sh. Sunny Mittal, Nihar Mittal, Sahil Mittal, Kushal Mittal and 1/10th in case of Neeraj Mittal and Hitesh Mittal. However, a perusal of the balance sheet of M/s Satellite Exports, proprietorship appellant shows Rs 21,45,060/- (not Rs. 18,00,000/-) as investment in new s.33,33,333/- as concluded by the Assessing Officer. Accordingly, an addition of Rs. 21,45,060/- is confirmed in the hands of the appellant Sh. Hitcsh Mittal as his unexplained investment in 1/10th share of the flat 1001-1002, Shabri Basera Building, Opp. Diamond Garden Chembur, Mumbai. The appellant gets a relief of Rs. 11,88,273/-.
The ground is appeal, is therefore partly allowed.
2. Further, the balance Sheet of Satellite Exports shows under fixed assets,' an addition of Rs. 12,24,600/- on account of l/5th share L-II Godown. The appellant was asked to explain the investment property but he has not furnished any reply regarding the same and submitted that the Godown APMC was taken on rent. No such property was purchased. The submission of the appellant is contrary to the facts as seen from the audit account of M/s Satellite Exports. Therefore, an addition of Rs. 12,24,600/- is a made to the total income of the appellant.
The total income of the appellant is therefore, enhanced by an amount Rs.12,24,600/-.
The other facts in this case are similar to the facts in the case of Sh. Hitesh Mittal for A.Y. 2014-15 as discussed above. Keeping in view the detailed factual and legal position discussed in the aforesaid case, the appeal filed by the appellant for Assessment Year 2010-11 is partly allowed with enhancement as above.”
None of these addition or finding are based on any seized material or incriminating document found during the course of search.
Before us, ld. counsel has highlighted these facts from the material placed on record and submitted that in view of these facts, the additions made by the Assessing Officer and also by the ld. CIT(A) cannot be sustained in view of the decision of Hon’ble Jurisdictional High Court in the case of CIT vs Kabul Chawla (380 ITR 573)(Del.) and CIT vs. Meeta Gutgutia (395 ITR 526).
On the other hand, ld. DR pointed out that this issue has not raised before the ld. CIT(A).
7. We have heard the rival contentions and also perused the relevant findings given in the impugned order as well as material referred to before us. As noted above the first addition of Rs. 21,45,060/- under challenge is for the value of 1/10th share of the assessee in the two joint residential flat nos. 1001 and 1002 at Shabri Basera, Diamond Garden, Chembur, Mumbai though the said investment of Rs. 21,45,060/- in the said flats by the assessee is duly disclosed in the regular books of account of the assessee and audited balance sheet submitted in the original return of income. During the course of search, though no incriminating material at all was found about the same but in the statement of the assessee recorded by the revenue, he stated the cost of the two flats at Rs. 2,00,00,000/- besides another investment of Rs 50,00,000/- in its renovation. It was stated before us that the total actual investment in the said two flats was Rs. 1.83 crores and out of which the assessee had invested the above sum as per his balance sheet as above. No evidence for any other investment was found during the course of search. The revenue officers also did not make any inventory at the time of search for any such renovation, etc. Nothing is mentioned in the orders of the authorities below in this regard. Thus, no reliance can be placed on the said statement which is not corroborated with any incriminating material found at the time of search. Thus in view of decision of Hon’ble Jurisdictional High Court in the case of CIT vs Harjeev Aggarwal (2016) 241 Taxman 0199 (Del). Such statement cannot be taken adversely. Once it is admitted that no incriminating material was found in respect of the same, then no addition can be made. Here, the original return of income was filed on 15/10/2010 and the search took place on 17/01/2014 and therefore, it is a case of completed assessment and not abated and no adverse material or facts are on record. Therefore, relying on CIT vs Kabul Chawla (380 ITR 573)(Del.) and CIT vs Harjeev Aggarwal (2016) 241 Taxman 0199 (Del), we hold that no addition is warranted and should be deleted.
In so far as second addition for Rs 12,24,600/- for l/5th share of the assessee in a godown bearing number L-l 1, APMC Navi Mumbai which is duly disclosed in the balance sheet of the assessee as on 31/03/2010 filed as above. Qua this addition again, no incriminating material in respect of the same was found at the time of search. In fact, the CIT(A) made this addition, though not made by the Assessing Officer, by picking up the above figure only from the audited balance sheet of the assessee as above and from nowhere else. Thus, since the above investment is duly disclosed in the regular books of account, no adverse cognizance is permitted.
Accordingly, the additions which has been made by the Assessing Officer and ld. CIT(A) are beyond the scope of Section 153A as per law and principle laid down by the Hon’ble Delhi High Court cited supra wherein it has been held that in the case where assessment has attained finality and not abated in term of 2nd proviso to Section 153A the addition cannot be made without there being any incriminating documents found during the course of search. Here, in this case, as noted above there is no such incriminating document found during the course of search albeit the addition has been made on the basis of disclosures made in the regular balance-sheet and bank accounts. Therefore, the additions made are deleted and to that extent the order of the Assessing Officer and ld. CIT(A) is bad in law.
In the result, the appeal of the Assessee is allowed.
Order pronounced in the open Court on 15th November, 2021.