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Income Tax Appellate Tribunal, DELHI ‘G’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS SUCHITRA KAMBLE & Shri S. D. Kathuria
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
These two appeals by the assessee are preferred against two separate orders of the ld. CIT(A), Ludhiana dated 28.01.2011 and the ld. CIT(A), Gurgaon dated 05.12.2013 for Assessment Year 2002-03. is in respect of levy of penalty u/s 271(1)(c) of the Income-tax Act, 1961 [hereinafter referred to as 'The Act'] on the addition made in the assessment order dated 24.12.2007 framed u/s 143(3) r.w.s 153A of the Act. Both these appeals were heard together and are disposed of by this common order for the sake of convenience.
The basis of the addition can be understood from the following observations of the Assessing Officer.
“4. Unexplained profit of Rs.16,97,362/- 4.1.1 During the course of search document detailed as A-1 and A-2 was seized from the residential premises of Sh Navneet Jhamb partner of firm M/s Reliance Estate Agency along with Sh S. D. Kathuria. Page 46 of A-1 details as summary of three accounts i.e office account, Bahl account and Manmohan Singh Account. A perusal of Page 46 of A-1 shows that there is a profit of Rs.32,80,305 in BAHL account. After including cash in hand of Rs.3,39,800/- and profit of Indo American Electricals Ltd of Rs.6,23,300/-, the total profit has been worked out at Rs.42,43,405/-. This profit of Rs.42,43,405/- has been divided between Sh. Navneet Jhamb and Shri S.D. Kathuria in the ratio of 60% and 40%. Thus the assessee as per page 46 of A-1 gets a profit of Rs.16,97,362/- and Navneet Jhamb got a profit of Rs.25,46,043.”
It can be seen from the above that 60% addition was made in the hands of Shri Navneet Jhamb and 40% in the hands of the assessee.
Appeal of Shri Navneet Jhamb, when heard by the co-ordinate bench, the co-ordinate bench vide a consolidated order dated 25.06.2018 confirmed the addition in the hands of Shri Navneet Jhamb.
The assessee carried the matter before the Hon'ble High Court and the Hon'ble High Court of Punjab and Haryana deleted the addition in order dated 29.01.2020. The relevant findings of the Hon'ble High Court read as under:
“4. Learned counsel for the appellant argued that the Tribunal erred in sustaining addition inspite of the fact that the additions made on the same basis, in the hands of the purchaser was deleted by the Tribunal and in case of of 2010 — Prem Parkash Nagpal v. Assistant Commissioner of Income-tax, and the appeal filed by the revenue was dismissed by Delhi High Court. It is submitted that no addition was made in the hands of the owner of the property, i.e. either the seller- company or the Managing Director.
Learned counsel for the revenue defended the order and 4. argued that the addition made in the case of buyer was deleted on technical ground, moreover the documents were seized from the premises of the appellant and the said deletion is of no help to the appellant.
There is no dispute that on the basis of the loose sheet 5. seized during the search, the addition was made on the buyer and the same has been deleted. Learned counsel for the revenue is not in a position to the averment that no addition was made in the hands of the seller.”
In the light of the above, while confirming the assessment, the ld. CIT(A) observed as under:
“6.2 I have considered the submissions of the AR. In this regard, it is stated that similar issue is involved in this asstt year as decided in the case of Sh. Navneet Jhamb partner of M/s Reliance Estate Agency for the asstt year 2002-03 by order of even date in appeal No. 35-IT/CIT(A)-I/Ldh./2007-08 where addition on similar grounds has been upheld. Since the issue is identical for the detailed reasons discussed in appeal order for AY 2002-03 (supra) in the case of Sh. Navneet Jhamb, the addition of RS. 16,97,362/- on account of alleged unexplained profit is upheld. This ground of appeal is, therefore, rejected.”
8. From the above findings of the ld. CIT(A), it can be seen that the addition has been sustained on the basis of reasons given in the case of Shri Navneet Jhamb.
9. As mentioned elsewhere, in the hands of Shri Navneet Jhamb, addition has been deleted by the decision of the Hon'ble High Court of Punjab and Haryana. Therefore, we do not find any reason why the addition in the hands of the appellant should not be deleted.
As a result, appeal of the assessee stands allowed.
While deciding the appeal in herein above, we have deleted the quantum addition and since the basis has been removed, the super structure must fall. Accordingly, penalty is directed to be deleted.
As a result, the appeal of the assessee is allowed.
In the result, both the appeals of the assessee are allowed.
The order is pronounced in the open court on 20.02.2020.