DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE - 3, GUWAHATI vs. SHRI SANJAY GOSWAMI, GUWAHATI

आयकर अपील�य अधीकरण, खंङपीठ गुवाहाट� , IN THE INCOME TAX APPELLATE TRIBUNAL GUWAHATI BENCH, GUWAHATI Before Shri S.S.Godara, Judicial Member and Dr. A.L. Saini, Accountant Member ITA No.80/Gau/2017 Assessment Year :2013-14 DCIT, Circle-3 V/s. Shri Sanjay Goswami Aayakar Bhawan, 7th Sarumatoria, dispur, Floor, G.S. Road, Guwahati-781002 Guwahatii-781005 [PAN No.AELPG 5124 J] .. अपीलाथ� /Appellant ��यथ�/Respondent

Shri Rabindro Singh, JCIT-DR अपीलाथ� क� ओर से/By Appellant Shri R.P. Agarwalla, Sr. Advocate, Shri ��यथ� क� ओर से/By Respondent Ramesh Goenka, Sr. Advocate and Shri Amit Goenka, Advocate 05-07-2019 सुनवाई क� तार�ख/Date of Hearing 02-08-2019 घोषणा क� तार�ख/Date of Pronouncement आदेश /O R D E R PER BENCH:- This Revenue’s appeal for assessment year 2013-14 arises against the Commissioner of Income Tax (Appeals)-2, Guwahati’s order dated 23.02.2017 passed in case No.Gaua-126/2015-16, involving proceedings u/s 144 of the Income Tax Act, 1961; in short ‘the Act’. 2. The Revenue’s two substantive grievances challenge correctness of the CIT(A)’s order reversing Assessing Officer’s action adding the alleged undisclosed investment of Rs.1,23,29,300/- and undisclosed income amounting to Rs.85 lac vide following detailed discussion:- “7. Ground No.6 This ground pertains to addition of Rs.1,23,29,300/- on account of alleged undisclosed investment in the immovable property.

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 2 In course of the assessment proceedings the Assessing Officer found that as per seized material marked as “SG-11 & STG-13” which contain the valuation reports of the two properties of the appellant both situated in Guwahati, the valuation of the above properties came to Rs.1,53,57,000/-, whereas in the balance sheet, the appellant had shown the investment at Rs.30,27,700/-. The appellant, in course of the assessment proceedings had stated that the documents contained in the seized material marked as “SG-11 & SG-13” related to the valuation of the above properties and that the same had no relation with the actual investment made in the property. The Assessing Officer however, held that the appellant had not furnished any details/documents in support of his explanation. He, therefore, treated the difference of Rs.1,23,29,300/- between the value shown in the valuation report and the cost shown in the balance sheet as undisclosed investment of the appellant and added the same in his total income. 7.1 Before me the appellant vide its written submission dated 25.01.2016 has submitted as follows: ‘5. Ground NO.6: (Addition of rs.1,23,29,300/- on account of alleged un- disclosed investment in the immovable property) ‘(i) This ground pertains to the addition of rs.1,23,29,300/- in the total income of the appellant on account of alleged undisclosed investment in the immovable property. (ii) The relevant facts are that in course of search in the case of the appellant on 06.12.2012, documents marked as “SG-11 to SG-18” were seized. The seized material marked SG-11 and SG-13 contained the valuation report of the two properties i.e. Assam Type House at Tripura Road, Jaya Nagar Chariali, Khanapara, Guwahati and building at B.R.Road, Jhanakpur bye lane, Beltola, Guwahati. In para 7.2 of the assessment order the Assessing Officer has worked out the difference in the value of the above properties as shown in the valuation reports and the cost of these properties as shown by the appellant in his balance sheet as follows: Books Page Description of property Cost of building Amount difference marked as No. by the Register shown in Valuer (lakhs) balance sheet SG-11 2 & 1 Assam type building 11.66 Rs.30,27,700 1,23,29,300 including boundary wall at [9.6+1.80+0.25] Tripura Road, Jaya Nagar Chariali, Khanapara SG-13 1 to 3 Three stories RCC building 141.91 [128.16 wall & security9room etc. + 6.5 +0.45+ H.No.15, B.R. Road, 4.25+ 2.55] Jhanakpur Byelane, Beltola Tiniali, Guwahati

In course of the assessment proceedings the appellant explained that the documents marked as SG-11 and SG-13 related to the valuation of above properties for the purpose of taking loan and submitting of tender and that this valuation has no relation with the actual investment made in the above properties. The Assessing Officer, however, held that the appellant has suppressed the value for the above properties by Rs.1,23,29,300/- and treated this amount as undisclosed investment of the appellant. (iii) It is respectfully submitted that the addition made by the Assessing Officer was not justified for the following reasons: (a) The first property i.e., the Assam type building situated at Tripura Road, Jayanagar Chariali, Khanapara was acquired by the appellant in the financial year 31.03.2009 at a total cost of Rs.90,505/-. This was duly disclosed by the appellant in its return of income. A copy of the purchase deed of the above property is enclosed hereby for your kind perusal.

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 3 The land on which the second property i.e., house property at B.R. Road, Jhanakpur Byelane, Beltdola Tinialai, Guwahati, Assam was situated was acquired by the appellant on 29.10.2004 for a total consideration for Rs.2,35,000/-. After acquisition of the land, the appellant started construction of house on the said land and up to 31.03.2006 the appellant made investment of Rs.15,45,000/- in construction of the house. Thereafter the appellant made further investment of Rs.5,50,00/- in the financial year 2006-07 and Rs.9,32,700/- in the financial year 2008-09. Thus the total cost of this property came to Rs.32,62,700/- as follows: Cost of land Rs.2,35,000/- Cost of construction Rs.30,27,700/- Total Rs.32,62,700/- The cost of construction of this property was also disclosed by the appellant in the returns of income file for relevant assessment years and this has been accepted as such. (iv) As stated above the valuation reports as mentioned in seized materials marked SG-11 & SG-13 were obtained only for the purpose of obtaining loans and/or submitting tenders. There is no material or evidence to show that the appellant invested more than what was disclosed by his in his return for acquiring these properties. No incriminating material was found during the course of search relating to investment in the aforesaid properties. (v) In view of the above it is submitted that the difference in the valuation as shown in the valuation reports and the cost of the properties as shown by the appellant cannot be treated as undisclosed investment made by the appellant. The valuation made by valuer is merely an estimate of the market value of the property and not the determination of cost. There is no material either on record or otherwise to show that the appellant invested more than what was shown by him in his return of income. In support of our above contention, reliance is placed on the following case law: - CIT vs. Roshan Lal Seth 178 ITR 660 (P&H) 7.2 I haves considered the sub missions made before me. Io haves also gone through the assessment order and the remand report sent by the Assessing Officer. In his remand report the Assessing Officer has reiterated what has been mentioned in the assessment order. He has however, stated that he has no objection to the admission of fresh or additional evidence if it was considered to be relevant for disposal of this issue. 7.3 I find that the first property i.e. Assam Type building situated at Tripura Road, Jaya Nagar Chariali, Khanapara, Guwahati was acquired by the appellant in the financial year 2008-09 at a total cost of Rs.90,505/-. This property was duly disclosed by the appellant in his return of income. The land on which the second house property at B.R. Road, Jhanakpur Byelane, Beltola Tiniali, Guwahati was situat4ed, was acquired by the appellant on 29.10.2004 for a total consideration of Rs.2,35,000/-. After acquisition of the land, the appellant started construction of house on the said land and upto 31.03.2006 the appellant made investment of Rs.15,45,000/- in construction of the house. Thereafter the appellant made further investment of Rs.5,50,000/- in the financial year 2006-07 and Rs.9,32,700/- in the financial year 2008-09. Thus, the total cost of this property including the cost of land came to Rs.32,62,700/-. The cost of construction of this property has also been disclosed by the appellant in the returns of income filed for relevant assessment years and this has been accepted as such by the Assessing Officer. The contention of the appellant is that the valuation reports comprised in the seized materials marked as “SG-11 & SG-13” were obtained only for the purpose of obtaining loans and/or submitting tenders. These are not the reports determining the cost of these properties. I find that no incriminating material was

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 4 found during the course of search relating to the investment in the aforesaid properties to show that the appellant invested more than what was disclosed by him in his return of income. That being the case, the difference in the value shown in the valuation report and cost shown by the appellant in his return of income cannot be treated as the un-disclosed investment of the appellant. The fair market value of the properties as determined by the valuer was not determinative of investment made by the appellant. The judgment of Hon’ble Punjab & Haryana High Court in the case of Roshanlal Seth (supra) supports the contention of the appellant. In view of my above discussion the addition of Rs.1,23,29,300/- made by the Assessing Officer in respects of un-disclosed investment is hereby deleted. This ground of appeal is, therefore, allowed. 8. Ground No.2 This ground pertains to addition of Rs.85,00,000/-- on account of undisclosed income. The relevant facts are that in curse of search and seizure operations a bunch of loose sheets marked as “SAN-1” was seized from the residence of the appellant. Pages No.41 & 42 of the seized material marked as “SAN-1” revealed total transactions of Rs.85,00,000/- (65 + 10 + 10). The appellant explained that this was a message received from Saidullaha Nongrum for sale of flat at Gitanagar, near petrol pump at Rs.65,00,00,000/- and on receipt of sale proceeds to pay Rs.10,00,000/- each to two other persons mentioned in the same messages. The Assessing Officer, however, added this amount of Rs.85,00,000/- in the total income of the appellant treating it as undisclosed investment in the absence of any supporting evidence. 8.1 Before me the appellant vide its written submission dated 25.01.2016 has submitted as follows: ‘6. Ground No.7 (Addition of Rs.85,00,000/- on account of alleged un- disclosed income) (i) While making the assessment, td he Assessing Officer has added Rs.85,,00,000/- in the total income of the appellant on account of alleged undisclosed income. (ii) The relevant facts are that in course of search a bunch of loose sheets marked as “SAN-1” was seized from the residence of the appellant. In reply to Q. No.3 of his statement dated 30.01.2013 recorded u/s. 132(4) of the Income Tax Act, 1961, the appellant had stated as follows: Q.No.3 : Please go through the bunch of loose sheet marked SAN-1 found and seized today during the course of search and explain the same. Ans: SAN-1 from page no 1 to 117 are the copies of sanpshots of incoming and outgoing SMSs of my mobile phone.: Then again on 03.04.2013, the appellant was questioned about seized material marked SAN-1 at the time of recording of his statement u/s. 131 of the Act. In reply to Q. No.12 of the aforesaid statement the appellant had stated as follows: Q.No.12 Please go through the following pages of the bunch of loose sheet marked as SAN-1 seized during the course of search in your residential premises on 30.01.2013 and explain the same. Page Date Message from Amount Remarks 41 25.5.12 Saidullah 65 lakhs Sourabh Barua 42 Non 10 lakh Dulal Hira 10 lakh Rahman

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 5 Ans: This message was received from Saidullah Nongrum for sale of a flat at Gitanagar, Near Petrol Pump @ 65 lakhs. And on receipt of sale proceeds to pay Rs.10 lakh each to other two persons.” (iii) In course of the hearing, the appellant explained that the above SMS was received from one Saidulla Norgrum for sale of a flat at Gita Nagar and on receipt of sale proceeds to pay Rs.10 lakhs each to two other persons. The appellant also stated that he was engaged in the purchase/sale of land on commission basis and that the commission income has duly been disclosed by him in his return of income. The Assessing Officer however added the total amount of Rs.85,00,00/- in the total income of the appellant treating it as his undisclosed investment in the absence of any supporting evidence. (iv) It is respectfully submitted that the addition of rs.85,00,000/- made by the Assessing Officer is legally and factually incorrect for the following reasons: (a) Admittedly, the seized documents on the basis of which the addition is made are copies of the snapshots of the incoming./outgoing SMS of the appellant’s mobile phone. Obviously, these snap shorts would reveal the phone nos. from where these SMS have been received. (b) Despite the appellant having disclosed the identity of the person from whom the SMS was received no enquiry what-so-ever was made by the Assessing Officer about the nature of the transaction appearing in the SMS. (c) In the absence of any enquiry by the Assessing Officer, the addition made by him stands vitiated and is liable to be deleted. The onus lay on the Assessing Officer to prove that Rs.85,00,000/- was the undisclosed investment of the appellant, the appellant having discharged the onus which lay on him. In view of the above, it is prayed that the addition of Rs.85,00,000/- may kindly be deleted. 8.2 I have considered the submissions made before me. I have also gone through the assessment order at well as the remand report of the Assessing Officer. The Assessing Officer in his remand report has reiterated what has been mentioned by the Assessing Officer in the assessment order. He has however, stated that he has no objection to the admission any fresh or additional evidence if it is considered necessary for disposal of this issue. 8.3 The contention of the appellant is that pages No.41 & 42 of the s\seized material marked as “SAN-1” are the snap shots of the incoming/outgoing SMS of the appellant’s mobile phone which were taken by the officials of the department at the time of search. Obviously the snap shots would reveal the phone numbers of the person from whom these messages were received. A perusal of the snap short i.e. page No.41 & 42 of the seized material marked as “SAN-1” show that it contains the names of three persons, Sourav Baruah, Guwahati (Rs.65 lacs), Dulal Hira, Mangaldoi (Rs.10 lacs) and Rahman, Ulubari (Rs.10 lac). In reply to Question No.12 of his statement recorded u/s. 131 of the Income Tax Act, 1961 on 03.04.2013 the appellant had stated that this message was received from Saidullah Nongrum for sale of a flat at Gitanagar near petrol pump at Rs.65,00,000/- and on receipt of sale proceeds to pay Rs.10,00,00/- each to two other persons whose name also appear in the SMS. Despite the appellant having disclosed the identity of the person from whom the SMS was received, no enquiry what-so-ever was made by the Assessing Officer about the nature of transaction appearing the SMS. It was stated before the Assessing Officer that the appellant was involved in the aforesaid transaction as a commission agent, as he was engaged in the business of sale/purchase of land. It

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 6 was also stated before the Assessing Officer that he has shown income earned from such commission in his returns of income. I find that the appellant had shown commission on sale of land at Rs.4,00,000/- in his returns of income which has been assessed as such by the Assessing Officer. As stated by me above, no enquiry was made by the Assessing Officer about the nature of transaction despite the identity of the person from whom the SMS was received. In the absence of enquiry by the Assessing Officer, the addition made by him stands vitiated and is liable to be deleted. The onus lay on the Assessing Officer to prove that Rs.85,00,000/- was the undisclosed investment of the appellant, the appellant having discharged the onus that lay on him. In view of my above discussion, the addition of Rs.85,00,00/- is hereby deleted. Learned departmental representative vehemently submits during the course of hearing that the Assessing Officer had rightly made the impugned addition based on incriminating material found in the course of search in issue dated 06.12.2012. He refers to “SG-11” and “SG-13” to this effect suggesting suppression of the actual value of investments. All these Revenue’s arguments fail to evoke our concurrence. We make it clear first of all that this is an instance of addition in the nature of value of assessee’s investments. The assessee had duly placed on record all the relevant details of acquisition of his both properties (supra). He then got preparedly valuation report(s) in issue. Even if it is accepted that these reports depict correct valuation of the two properties, we observe that there is no material on record which could act as foundation of the impugned addition in order to conclude that the differential sums had been paid over and above the actual cost of the two acquisition(s) and cost of construction or improvement; if any. Coupled with this, the taxpayer yet another argument though learned senior counsel that these valuation document(s) were subsequently prepared for a limited purpose of securing bank loan has also not been rebutted from Revenue’s side before us. We conclude in these fact that the CIT(A) has rightly deleted the impugned addition of ₹1,23,29,300/-. 3. Next comes the latter issue of the assessee’s alleged undisclosed income addition of ₹85,00,000/- based on mobile snapshots (supra). Mr. Singh vehemently argues that the same comprises of three sum(s) of ₹65 and 10 lac each (in lakhs) in case of S/Sh Sourabh Barua, Dulal Hira and Rehman’ respectively. There is hardly any dispute that the department has made the

ITA No.80/Gau/2017 A.Y. 2013-14 DCIT, Cir-3, Guwa Vs. Sh. Sanjay Goswami Page 7 impugned addition based on mobile snapshots. We see no merit in Revenue’s instant latter grievance as well. We make it clear that the case file nowhere suggests as to whether the assessee had acquired on transferred any of his assets. Or that he had held any stake therein. It has rather came on record that the assessee had been carrying out brokerage/commission activities in immovable proprieties giving rise to ₹ 4 lac income (supra). The Assessing Officer never summoned the concerned parties at any stage to rebut all these details. We therefore hold that the CIT(A) has rightly deleted the impugned addition of ₹85 lakh in these peculiar facts and circumstances. 4. This Revenue’s appeal is dismissed. Order pronounced in the open court 02/08/2019 Sd/- Sd/- (लेखा सद#य) (%या&यक सद#य) ( A.L.Saini) (S.S.Godara) (Accountant Member) (Judicial Member) Guwahati, *Dkp 'दनांकः- 02/08/2019 गूवाहाठ� । आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. अपीलाथ�/Appellant-DCIT, Cir-3, R.No.714, 7th Fl, Aayakar Bhawan, G.S. Road Guwahati-781005 2. ��यथ�/Respondent-Shri Sanjay Goswami, Sarumatoria, Dispur, Guwahati-781002 3. संबं2धत आयकर आयु3त गृवाहाठ8 / Concerned CIT Guwahati 4. आयकर आयु3त- अपील / CIT (A) Guwahati 5. ;वभागीय �&त&न2ध, आयकर अपील�य अ2धकरण, गूवाहाठ8 खंङपीठ / DR, ITAT, Guwahati 6. गाडA फाइल / Guard file. By order/आदेश से, /True Copy/ Sr. Private Secretary (on tour) आयकर अपील�य अ2धकरण, गूवाहाठ� ।