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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 PRASHANT MAHARISHI, A. M. 1. This appeal is filed by the ld DCIT, Central Circle-2, New Delhi [ the ld AO ] against the order passed by the ld. Commissioner of Income Tax (Appeals)–23, New Delhi, [ the ld CIT (A) ] dated 30.03.2017, for assessment year 2013-14, raising following grounds of appeal:- “1. The order of Ld. CIT (A) is not correct in law and on facts.
2. On the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting the addition of 1,56,96,660/- on account of ‘Suppression of Income’.
3. The appellant craves leave to add, amend any/all the ground of appeal before or during the course of hearing of the appeal.”
2. The brief facts of the case shows that the assessee is a company engaged in the business of real estate development. It filed its return of income on 29.03.2014 declaring loss of Rs. 5736/-. A search and seizure operation u/s 132 of the Act was carried out on 18.10.2012 in M/s. Bhasin Infotech and Infrastructure Pvt. Ltd. The assessee was issued a notice u/s 143(2) of the Act.
3. The LD AO noted that during the course of search on M/s. Bhasin Infotech and Infrastructure Pvt. Ltd some loose papers prepared by various employees of Bhasin in the form incentive sheets were found and seized. These papers are prepared on allotment of commercial office Page | 1 booked by several other persons. The assessee has assured customers payment of an assured return at the rate of 12% per annum. Therefore, the LD AO presumed that 1% per month interest on the amount actually paid by the customers is payable. Accordingly, the LD AO noted that on such 1% assured return tax was required to be deducted by the assessee. As the assessee did not deduct, the tax at source he proposed to disallow the same. As no reply was received from the assessee, the LD AO held that the assessee company has not deducted tax at source on interest paid to the customers u/s 194A of the Act and failed to deposit the same. He disallows the above sum u/s 40 a (ia) of the Act. He also made the identical addition as undisclosed income of the assessee. Therefore, he made the addition of Rs. 1, 56, 96,660/- twice in the assessment order. The assessment order was passed u/s 143(3) of the Act on 30.03.2015 determining total income of the assessee at Rs. 43488150/-.
4. The assessee preferred an appeal before the ld CIT (A). The assessee challenged a sum of Rs. 15596660/- added to the total income of the assessee. The ld CIT (A) decided the above ground vide para No. 4.2 of his order deleting the addition. Therefore, the revenue is aggrieved with the order and has preferred this appeal.
The ld CIT DR vehemently supported the order of the lower authorities.
Despite notice, none appeared on behalf of the assessee. The assessee as on earlier six occasions did not appear. As per the direction of the bench on earlier occasions, the notice was directed to be served on assessee through learned AO. A letter is received on 11/10/2021 from the departmental representative wherein the email dated 11 October 2021 is attached along with the report of a fixture by the Inspector of the Department. In the email, it has been stated that notice in the case of the above assessee was issued and served on the assessee company through email based on the email address mentioned in the latest income tax return filed for assessment year 2020 – 21 as well as through a fixture by The Income Tax Inspector and notice server. The report of the notice server is pursued and it is found that that no person with the name of the above company is available at the given address. The notice was also affixed on 7/9/2021. In view of this the issue is decided on the merits of the case as per information available on record.
We have carefully considered the contentions of the learned authorised representative. We find that the ld AO has made an addition of Rs. 15696660/- on account of concealment of estimated sales alleged to be paid by the assessee on one account and the same sum was disallowed holding that such payment is made in cash without tax deduction at source and therefore, same is also disallowed u/s 40a(ia) of the Act. The fact shows that based on certain documents and statement recorded of Mr. Jagdish Krishna, Jawahar Matoo being allottees at the proposed mall of the assessee at Greater Noida, the LD AO inferred interest Page | 2 1% per month was paid on booking advance or down payment made by the allottees. The LD AO extrapolating the total consideration received by the assessee and computed the consideration paid in cash after allowing for payment made by cheques. The LD AO extrapolated amount of cash payment. The ld AO also held such payment is in the form of assured returns to the allottees in the nature of interest. On such interest, assessee should have deducted tax at source u/s 194A of the Act. Assessee has failed to deduct and deposit the same therefore; he disallowed a sum of Rs. 15596660/- u/s 40(a) (ia) of the Act. The orders of the lower authorities shows that the memorandum of understanding with the allotees shows that the assessee has offered assured return to the allottees, however, the rate of assured return was not mentioned in the seized documents with reference to 11 allottees which was taken into consideration. On examination of the facts, the LD CIT (A) noted that with respect to the certain allotment letters in case of some allottees namely Veena Kakar, Kiran Bala Yadav, and Nipun & Veena Sharma. It is specifically mentioned of committed return to those persons after they pay full consideration. In case of other eight persons the MOU were examined by the LD CIT (A) and he found that there is no mention of any such ‘committed return’. Therefore, he held that the LD AO without any evidence with respect to any committed return with respect to the other allottees extrapolated the interest payment and held that assessee has made such payment out of the books of accounts and therefore the addition was made. It was also held that as assessee has paid interest to those allottees but has not deducted any tax at source u/s 194A disallowance u/s 40a (ia) is also made. The learned CIT – A has made a categorical finding that extrapolation so made by the learned assessing officer is merely based on presumption and on estimated basis without finding any documentary evidence either during the course of search or during the assessment proceedings. Therefore, he deleted the addition of amount of Rs. 1,56,96,660/-. Before us the ld CIT DR could not show that there is any evidence of payment of interest to such persons amounting to Rs. 15696660/-. The person in whose case the interest payment was mentioned in the MOU the amount of TDS has been paid by the assessee. This is also not disputed. Therefore naturally in such cases addition could have been made as undisclosed income of the assessee or any disallowance u/s 40a (ia) of the act. Further, wherever the tax is required to be deducted, the assessee has deducted tax at source; it is mentioned at para No. 6.4 of the assessment order. Even otherwise with respect to the concealed income of the assessee suppressed income to the extent of Rs. 1,21,565/- that was confirmed with respect to the concealed income by the learned CIT – A. As the addition is made by the learned assessing officer merely on the basis of assumption despite memorandum of understanding with those allottees did not show any clause of committed return, no addition could have Page | 3 been made on account of undisclosed payment to those parties. As there is no payment made to those parties there is no question of making any tax deduction at source on such payment. The above finding of the learned CIT – A is not at all controverted. Therefore, we do not find any infirmity in the order of the learned CIT – A. Accordingly the solitary ground raised
in the appeal of the learned assessing officer by ground number 2 of the appeal is dismissed.
8. Ground number 1 and 3 are merely supportive in nature and therefore do not require any adjudication hence, dismissed.
9. In the result, appeal filed by the LD AO is dismissed. Order pronounced in the open court on : 17/11/2021.