PICHESWAR GADDE,NEW DELHI vs. ITO, WARD- 10(1), NEW DELHI

This appeal by the assessee is preferred against the order of the CIT(A)-16, New Delhi, dated 29.03.2019, pertaining to Assessment Year 2013-14.

The assessee is aggrieved by the following additions:- i. Addition of Rs.8,71,55,000/- on account of unsecured loan under section 68 of the Act. ii. Addition of Rs.11,17,50,000/- as short term capital gain on account of understatement of consideration received on sale of land. iii. Addition of Rs.1,57,00,000/- under section 69 of the Act on account of unexplained investment made in the property.

The return was selected for limited scrutiny for verification of cash deposits in the bank account and sale of property at DLF Chattarpur, New Delhi. However, on 04.03.2016, the AO moved application to PCIT for conducting complete scrutiny and the assessment order was framed under section 143(3) of the Act on 31.03.2016.

While scrutinizing the bank statements, the AO noticed that there are deposits through banking channels of Rs.8,71,55,000/-, this was one of the main reason for seeking permission for complete scrutiny.

The assessee explained that the said deposit is out of unsecured loans taken from 11 parties. The AO asked the assessee to explain the transaction in the light of the provisions of section 68 of the Act. Obviously, the specific query was raised after seeking permission from the PCIT for conducting complete scrutiny. Since, the time available was not sufficient, the assessee could not furnish the necessary details, the AO proceeded by making addition of Rs.8,71,55,000/- under section 68 of the Act.

The matter was agitated before the CIT(A) and the appellant furnished documentary evidences to prove the genuineness of the unsecured loans from 11 parties.

However, the evidences furnished by the assessee were out-rightly rejected by the CIT(A) stating that the AO had given sufficient opportunity to the assessee during the course of assessment proceedings itself.

We do not find any merit in this observations of the CIT(A). As mentioned elsewhere, the return was selected for limited scrutiny and only in the month of March, permission for complete scrutiny was taken and the assessment order was framed on 31st March as it was getting barred by limitation. In our considered view, any opportunity/hearing given prior to the permission of complete scrutiny would not amount to give sufficient opportunity to the assessee to explain his case.

We have carefully perused the documentary evidences, we find that out of 11 parties, the loan has been repaid either in the same year or in the subsequent year in the case of 8 parties and in respect of other 3 parties, the loan has been partly repaid and the same can be seen from the following chart.

If the CIT(A) had gone through the evidences then he would have found that almost entire loan has been repaid. Not only, these transactions are reflected in the bank statement but have also been duly confirmed by the parties and the documents are exhibited from pages 111 to 117 of the paper book.

We further find that during the course of remand proceedings, the AO had issued summons under section 131 of the Act to the aforementioned parties and all the summons were duly served, which means that the names and addresses of the parties are genuine. Merely because the parties did not appear before the AO would not lead to the inference that the loans are not genuine. Moreover, the year in which the summons was served upon the parties, their loans have been repaid by the appellant. We find that the AO has not taken any further step after serving the summons under section 131 of the Act.

The Lower authorities have also heavily relied upon the statement of Pavan Gupta, who in his statement stated that he has given only Rs.1.13 Crores and denied given a loan Rs.4.70 Crores. The facts on record shows that Rs.4.70 Cores was received from Pavan Gupta/ Emperor International and the same has been repaid as per exhibits page 124 to 134 of the paper book. It may be possible that Pavan Gupta gave Rs.1.13 Crores and the balance was given by the Emperor International as the repayment of Rs.4.47 Crores have not been doubted, no adverse inference should be drawn.

Considering the clinching evidences, we are of the considered view that the assessee has successfully discharged the onus cast upon him by the provisions of section 68 of the Act. We accordingly direct the AO to delete the addition of Rs.8,71,55,000/-.

Ground no.3 with all its sub-grounds is allowed.

Before closing both the representatives have relied upon various judicial decisions.

The facts relating to this addition are that the assessee has sold property at 15 - DLF, Chattarpur, New Delhi for a total consideration of Rs.2.26 Crores. Since, the assessee was 50% owner of the property; he computed the capital gains by taking actual sale consideration of Rs.1.13 Crores. A survey operation was conducted under section 133A of the Act at the premises of the assessee on 30.06.2014 and 01.07.2014. During the survey proceedings, some rough register and papers were found from the possession of the employee Neha Kukreja and Rajesh Sejwal. Statement of Ms. Neha Kukreja was also recorded.

On the basis of the rough noting and the statement of Neha Kukreja, the AO came to the conclusion that the actual sale consideration is Rs.24.61 Crores and since the assessee is 50% of the owner of the property, 50% of the total sale consideration was considered for the computation of the capital gains and accordingly the addition of Rs.11,17,50,000/-

The documents having rough noting impounded during the survey which prompted the AO to make the addition are Annexure-A7 page 6 and 8, which are as under:-

A careful perusal of these noting on impounded document would show that the alleged cash transactions are dated 09.11.2012, 15.11.2012 and 22.01.2013. The Registered sale deed of the land sold to Pavan Gupta was executed on 18.10.2012 and the possession of the land was also provided at the time of execution of the sale deed.

If the logic and findings of the lower authorities are to be accepted then it would be inconceivable as to why the buyer would give payment post the registration of the sale deed and receipt of possession of the property. Further, Pavan Gupta appeared before the AO during the course of assessment proceedings on 28.03.2014 and whose statement was recorded.

A perusal of the statement of Pavan Gupta shows that nowhere he has admitted that he has paid a consideration of Rs.24.61 Crores over and above the transaction value of the Lands.

Further, there is no adverse inference by the Stamp Valuation Authorities in respect of sale consideration on which Stamp Duty has been paid and accepted by the Land Revenue Authority. The AO has brought no evidence on record to show that the fair market value of the land sold is much more than the sale value on which the sale deed has been executed.

The entire addition have been made on the basis of the rough noting exhibited elsewhere and on the statement of the employee Neha Kukreja. As mentioned elsewhere, the dates mentioned in the rough noting are post sale deed and is against the human probability because if there is some under hand dealing by which cash is taken over and above by cheque value then cash transactions preceeds the cheque transactions.

Ground no.5 is accordingly allowed.

Facts relating to this addition show that during the course of survey at the business premises of the assessee on 30.06.2014 and 01.07.2014, some noting were found on a piece of paper which was impounded as Annexure-A4 page 13 from which the AO form a belief that advances had been made to Jain family for purchase of a farm house in DLF Chhatarpur. The said notings are as under:-

On the basis of this document, the AO made the addition ofRs.1.57 Cores being 50% of Rs.3.14 Crores u/s 69 of the Act. A close perusal of the impounded documents mentioned hereinabove would show that the transaction pertains to FY 2011-12 relevant to AY 2012-13.

Incidentally, the same loose sheet was considered in AY 2012-13 and the addition of Rs.5.45 Crores was made vide order dated 17.12.2019 framed under section 143(3) r.w.s. 147 of the Act and the said assessment order is placed at pages 177 to 192 of the paper book. For the sake of completeness, the relevant paragraphs of the assessment order are extracted here in below:-

Since, the addition has already been made in AY 2012-13, on the basis of the same documents addition made during the year under consideration amounts to double addition and have to be deleted. We accordingly directed the AO to delete the addition of Rs.1.57 Crores.

Facts relating to this addition show that during the course of the assessment proceedings, the assessee was asked to furnish the details of the cash deposits in the bank account. In his reply, the assessee stated that the cash amounting to Rs.45.75 Lakhs has been deposited and explained that the deposit was out of opening cash in hand as on 01.04.2012 amounting to Rs.8,03,479/- and another amount of Rs.38 Lakhs was cash withdrawn during the year. This explanation of the assessee was rejected by the AO, who treated the opening balance as NIL observing that the assessee had not furnished any details to substantiate his claim of the opening cash in hand. Thereafter, on the basis peak balance theory, the AO made the addition of Rs.7.75 Lakhs u/s 69 of the Act.

The assessee furnished additional evidence before the CIT(A) but the admission of the same was heavily objected by the AO and the CIT(A) did not admit those evidences and confirmed the addition.

Before us, the counsel once again heavily relied upon those evidences which have not been considered by the lower authorities. We have given a thoughtful consideration to the documentary evidences brought to our notice. In our considered opinion, it would be unfair to out-rightly reject the evidences without examining the same. Therefore, in the interest of justice and fair play, we restore this issue to the files of the AO. The assessee is directed to furnish the demonstrative evidences to explain the source of cash deposited in the bank account and the AO is directed to examine/verify the details and decide this issue afresh.

This ground is accordingly treated as allowed for statistical purposes. 34. In the result, the appeal of the assessee is allowed in part for statistical purposes. Order pronounced in the open court on 13 /01/2021 Sd/- Sd/- [KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER Delhi; Dated: 13/01/2021. P.S f{x~{tÜ? f{x~{tÜ? fÜA f{x~{tÜ? f{x~{tÜ? fÜA fÜA P.S fÜA P.S P.S