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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
Before: SH. H.S. SIDHU & SH. ANIL CHATURVEDI
ORDER
PER ANIL CHATURVEDI, AM:
This appeal filed by the Assessee is directed against the order dated 22.09.2017 of the Commissioner of Income Tax (A)- 21, New Delhi relating to Assessment Year 2008-09.
The relevant facts as culled from the material on records are as under:
Assessee is an individual stated to be having income from salary, capital gains, property etc. Assessee filed return of income for A.Y. 2008-09 on 31.07.2008 declaring total income of Rs.5,82,668/-. The return of income was initially processed u/s 143(1) of the Act. Subsequently, on the basis of information received by the AO from the Investigation Wing w.r.t cash payments for the purchase / booking of the property, the details of which according to the AO were not disclosed by the assessee in the return of income, notice u/s 148 of the Act was issued on 25.3.2015. Thereafter, the assessment was framed u/s 148/143(3) vide order dated 14.03.2016 and the total income was determined at Rs. 62,09,830/-. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who vide order dated 22.09.2017 in appeal no. 21/2016-17 dismissed the appeal of the assessee. Aggrieved by the order of CIT(A), assessee is now before us and has raised the following grounds: “
On the facts and in the circumstances of the case and in law the Ld CIT(A) erred.
1. In confirming the addition of Rs.56,27,160/- made by the Ld. AO in the total income of the assessee, whereas all the relevant documents were being duly been submitted by the assessee before the Assessing Officer as well as to Ld. CIT(A).
2. That the appellant may be allowed to add, alter, delete, or amend any ground of appeal if considered necessary at the time of hearing of appeal.
3. That the appellant prays that the demand confirmed by the Ld CIT(A) may kindly be deleted.”
Assessee has also raised the additional grounds which read as under: “Additional Grounds of appeal
1. (a) That under the facts and circumstances of the case, the Assessing Officer was not justified to resort to reassessment proceedings u/s 147 of the Income Tax Act, which were initiated on the basis of a document seized from a third party. (b) That the Assessing Officer was justified to resort to frame assessment on the basis of a seized document seized from a third party since in this case provisions of Sec. 153C were applicable and not the provision of section 147 of the Income Tax Act as held in various decisions of Hon’ble I.T.A.T.
2. That the Assessing Officer was no. justified to assume jurisdiction u/s 148 of the Income Tax Act simply on the basis of information received from Investigation Department without making independent inquiry or verification at his end before issue of notice u/s 148 of the Income Tax Act and without proper & requisite approval u/s. 151 of IT Act, 1961.
3. That the Assessing Officer was not justified to make addition of Rs.56,27,160/- based on a computer printout allegedly seized from the hard disk of AEZ Vaishali without making any independent inquiry or verification in support of authenticity of the transaction.”
5. Before us, Ld AR at the outset submitted that though assessee has raised various grounds but the sole issue which needs to be adjudicated is w.r.t addition of Rs 56,27,160/-.
6. AO has noted that a search and seizure operation was conducted on 17.02.2011 in the case of AEZ (AERENS GROUP) wherein a Hard Disk was seized. From the details discovered from hard disk it was noticed that AEZ group had sold commercial Page | 3 spaces to different parties by receiving part cash payments and the cash payments were not reflected in its books of accounts. From the details obtained from hard disk, it was noticed that assessee had also purchased Shop No. UG-1 at AEZ Vaishali and from the details it was noticed that assessee is stated to have paid Rs. 42,63,000/- through cheque and Rs. 56,27,160/- in cash to AEZ group. AO noted that the assessee had admitted to the investment of Rs. 42,63,000/- with AEZ group for purchase of property. The Assessee was therefore, asked to explain the source of cash payment of Rs. 56,27,160/- to AEZ group. Assessee denied the making of cash payment. The submission of the assessee was not found acceptable to AO. AO concluded that assessee has made investments in cash out of the income generated from undisclosed sources amounting to Rs. 56,27,160/-. He accordingly made its addition u/s 69 of the Act. Aggrieved by the order of AO, assessee carried the matter before CIT(A) who upheld the order of AO. Aggrieved by the order of CIT(A), assessee is now before us.
7. Before us, Ld .AR reiterated the submissions made before lower authorities and further submitted that the AO has merely relied on the unauthenticated hard disk found during a search at the premises of third party and that the AO has not brought out any evidence to corroborate the contents of the hard disk. He submitted that identical issue (addition based on the hard disk found at the premises of AEZ group) arose in the case Subhash Page | 4 Khattar and other cases. The Tribunal has decided the issue in favour of the assessee in the case of Subhash Khattar (ITA No. 902/Del/2015) and the order of the Hon’ble Tribunal has been affirmed by Hon’ble Delhi High Court. He further submitted in the context of proceedings u/s 153A and 147 of the Act in the case of Arvind Nath Seth & Sons HUF (ITA No.1660/Del/2015), Deepak Gupta (ITA No.5464/Del/2018 order dated 28.01.2019 and other cases, identical matters have been decided in assessee’s favour. He pointed to the copy of the orders of Tribunal which are placed in the paper book. He therefore, submitted that the case of the assessee is identical to that of Subhash Khattar and Arvind Nath Seth (supra) and other cases and therefore following the decision of the co-ordinate Bench in those cases, the addition made in the case of assessee be deleted.
Ld DR on the other hand did not controvert the submissions made by Ld AR but however supported the order of lower authorities.
We have heard the rival submissions and perused the material on record. The issue in the present ground is w.r.t addition on account of alleged cash payment for purchase of shop on the basis of the material retrieved from the hard disk found at the time of search in the case of AEZ group. We find that similar addition was made in the case of Deepak Gupta. The coordinate Page | 5 Bench (ITA No.5464/Del/2018 order dated 28.01.2019) after following the Tribunal decision in the case of Subhash Khattar (supra) has deleted the addition by observing as under:
“4. We have heard the rival submissions and perused the relevant material on record. The identical issue has been adjudicated by the Tribunal in the case of Asha Rani Lakhotia (Through Legal Heir Sh. R.N. Lakhotia) Vs. ACIT, in for AY: 2007-08, dated 16.01.2018. In the said case also, entries of cash payments were found on the basis of the extracts taken from the hard disc in the case of AEZ Group. In the said case, entries of cash as well as cheque were found to be recorded on such sheets extracted from the hard disc. The Tribunal following the decision in the case of other Investors deleted the addition of unexplained investment under Section 69 of the Act. The paras of order of Tribunal mentioning the facts of material found from AEZ Group are as under: “5. Further, both the Assessing Officer as well as the Ld. CIT-(A) has noted that the fact of cash investment was recorded in two documents found during the course of search action at the ‘AEZ Group’. Those two documents are as under: (i) Excel file named “down payment booking details.xls printed from the hard disk found during search on 17/08/2011 from the corporate office of the AEZ group at 301/303, Bakshi house, Nehru Place, New Delhi (ii) Excel file named “down payment booking details.xls retrieved from the hard disk found and seized as Annexure A-27 from the corporate office of AEZ group 6. The Ld. CIT-(A) has mentioned that in both these ‘Excel files’ name of the assessee as purchaser, covered area, sale price, cheque amount and cash amount received by the seller are recorded.
The Ld. CIT-(A) in para-6.1.2 of the impugned order has mentioned that on the basis of the ‘Excel sheet’, the amount received from the assessee by way of cheque and cash was shown at Rs.7,90,000/- and Rs.31,85,850/- respectively aggregating to Rs.39,35,850/- and the balance of Rs.40,000 was again shown to have been received by cheque.”
The addition has been deleted by the Tribunal observing as under: “14. Before us, the Ld. counsel of the assessee also relied on the decision of the Hon’ble High Court of Delhi dated 25/07/2017 in the case of Principal CIT, Central-2, New Delhi Vs. Subhash Khattar in ITA 60/2017. In the said case, the Tribunal in observed as under: “8. Considering the above submissions, we find that the Learned CIT(Appeals) has upheld the addition in question mainly on the basis of (i) the details written on the hard disc found during the course of search from the premises Aerens Group, wherein payment through cheque and cash have been mentioned against the name of assessee at Sr. No.32; Shri I.E. Soomar appearing at Sr. No. 39 of the said hard disc had admitted the cash investment of Rs.6.64 crores being made in the said project and had paid the taxes on the same; (iii) the said hard disc cannot be relied upon in part as the assessee has admitted the payment through cheque but denied the cash payment shown therein etc. In our view, a huge addition of Rs.3,21,00,000 cannot be made in a casual manner without having corroborative evidence in support. It is a prevailing practice in the dealings of immoveable properties that cash amount, if any, out of the agreed consideration is paid during the course of execution/registration of the sale deed and admittedly in the present case no sale deed or other mode of transfer has been effected. Merely because name of the assessee is appearing in the said hard disc and amongst other investors are investor Shri I.E. Soomar appearing in the said hard disc has admitted payment of cash amount, cannot be a basis for arriving at a definite conclusion, in absence of corroborative evidence in, support, that the assessee had also paid the amount of Rs.3,21,00,000 in cash. The Hon'ble jurisdictional High Court of Delhi in the case of CIT vs. Prem Prakash Nagpal (supra) wherein Assessing Officer had made certain additions under sec. 69 of the Act on the basis of the documents found during search at a place of third party which indicated that assessee Page | 7 had purchased a plot by paying consideration in cash, it was held by the Hon’ble High Court that the Assessing Officer could not prove by evidence that said documents belonged to the assessee and thafany on money transaction had taken place. The documents at the best only showed tentative/projected purchase consideration held the Hon'ble High Court. Again, in the case of CIT vs. Alpha Impact Pvt. Ltd. (supra), the Hon'ble Bombay High Court has been pleased to hold that addition to assessee’s income in respect of additional sales consideration received in sale of land merely on the basis of Email recovered during the course of search action at the premises of another person and there being no independent material available supporting such additions, was not justified. Besides, we also find substance in the contention of the Learned AR that assessment under sec. 153 A of the Act in absence of incriminating material found during the course of search at the premises of the assessee and in absence of abatement of assessment on the date of search, cannot be made in the present case as per the above cited decisions including the decision of Hon'ble jurisdictional Delhi High Court in the case of CIT vs. Kabul Chawla (supra). Under the circumstances, we are of the view that the Assessing Officer was not justified in assuming jurisdiction under section 153 A and authorities below were also not justified in making and sustaining the addition in question merely on the basis of a hard disc found during the course of search at the premises of Aerens Group without any corroborative evidence in support. We thus hold that the assessee/appellant succeeds on both The above issues i.e. on validity of assumption of jurisdiction under sec. 153A and the addition in question. The grounds involving the above issues are accordingly allowed.”
We find that the Tribunal, both on the validity of addition under section 153A of the Act and merit of the addition in question has decided the issue in favour of the assessee. In the instant case, also the Assessing Officer has relied on the statement of Sh. I.E. Soomar for making addition in the hands of the assessee. Page | 8
On further challenge of the decision of the Tribunal in above case, the Hon’ble Delhi High Court upheld the order of the Tribunal with following observations: “7. A question was posed to the learned counsel for the Revenue whether in the present case anything incriminating has been found when the premises of the Assessee was searched. The answer was in the negative. The entire case against the Assessee was based on what was found during the search of the premises of the AEZ Group. It is thus apparent on the face of it, that the notice to the Assessee under Section 153 A of the Act was misconceived since the so-called incriminating material was not found during the search of the Assessee's premises. The Revenue could have proceeded against the Assessee on the basis of the documents discovered under any other provision of law, but certainly, not under Section 153A. This goes to the root of the matter. 8. Consequently, the impugned order of the ITAT calls for no interference of this Court. The question framed by this Court on 7th February, 2017 is answered in negative, that is, in favour of the Assessee and against the Revenue.
Since the facts and circumstances in the instant case are identical to the facts and circumstances in the case of Subhash Khattar (supra), thus, respectfully relying on the decision of the Hon’ble Delhi High Court in the above case, we are of the opinion that no addition could have been made in the instant assessment year in absence of any incriminating material found from the premises of the assessee. 18. The facts and circumstances of the case being identical to the facts and circumstances of Sh. Subhash Khattar (supra), the addition on merit also deserve to be deleted following the finding of the Tribunal in ITA 902/Del/2015. We hold accordingly. The grounds of the appeal are allowed.” 6. In para-18 (above), the Tribunal has deleted the addition on merit. As the identical issue is involved in the instant case, respectfully following above findings of the Tribunal, the addition Page | 9
made in the instant case, is also deleted on merit. Since we have already deleted the addition on merit, we are not adjudicating the grounds, challenging the validity of reassessment proceedings. 7. In the result, the appeal of the assessee is allowed.”
Before us, no distinguishing feature in the facts of the present case and that of Subhash Khattar/Deepak Gupta (supra) has been pointed out by the Revenue. Further it has also not brought on record any material to show that the decisions of the co-ordinate bench of the Tribunal in the case of Subhash Khattar/Deepak Gupta (supra) has been set-aside/stayed or over ruled by higher judicial forum. We therefore following the order of the co-ordinate bench in the case of Deepak Gupta (supra) and for similar reasons hold that the Revenue was not justified in making the addition of Rs. 56,27,160/-. We therefore, set aside the action of AO. Thus the ground of Assessee is allowed.
In the result, appeal of assessee is allowed.