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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI ANADEE NATH MISSHRA
(A) This appeal by Assessee is filed against the impugned appellate order of Learned Commissioner of Income Tax (Appeals)-18, New Delhi, [“Ld. CIT(A)”, for short], dated 16.08.2016 for Assessment Year 2007-08. The grounds of appeal are as under:
“ The Ld. Commissioner of Income Tax (Appeals) has erred in law and on facts:
1. 1. In sustaining the addition of Rs. 7,00,000/- as unexplained investment in purchase land relying on the statement of some of the sellers of land to the assessee.
2. In sustaining addition of Rs. 4,08,000/- being cash deposited in the bank account of lender, out of total of Rs. 12,93,200/- borrowed by assessee through bank transaction.
In sustaining the addition of Rs. 3,24,000/- on account of low drawings without any substantial evidence in hands. Assessee craves leave of this Hon’ble Tribunal to add or amend the aforesaid grounds at the time of hearing or before disposal of appeal.”
(B) Original return was filed on 01/08/2007 declaring income of Rs. 2,13,240/-.
Proceedings U/s 147 read with section 148 of Income Tax Act, 1961 (“I.T. Act”, for short) were initiated by the Assessing Officer (“AO”, for short), by issue of notice dated 07/03/2013 U/s 148 of I.T. Act on the basis of one Ikrarnama (agreement) between two co-owners of the land (vendors) and one Mr. Bhupinder Singh; found during a search at the premises of a third party. In the aforesaid Ikrarnama (agreement) the agreed consideration for piece of land was shown at a figure higher than the consideration for which subsequently the piece of land was transferred to the assessee. Although, the aforesaid Ikrarnama (agreement to sell) was abandoned and did not result in transfer of land between the two co-owners and the aforesaid Mr. Bhupinder Singh; the AO took note of the aforesaid Ikrarnama (agreement to sell) while completing the assessment vide Assessment Order U/s 147 read with section 143(3) of I.T. Act passed on 31/03/2014 wherein the following additions were made:
Addition of Rs. 65,67,000/- on account of assessee 1/3rd share in a. the payment of Rs. 1,97,00,000/- made for the purchase of land at Tipra, Kalka, Panchkula, Haryana treating the same as unexplained investment in the hands of the assessee and added as income from undisclosed sources to the declared income of the assessee. b. Addition of Rs. 12,93,200/- on account of unexplained credit in the hands of the assessee and added as income from undisclosed sources to the declared income of the assessee. c. Addition of Rs. 3,24,000/-, on account of income from undisclosed sources is made to the declared income of the assessee, for personal and for contribution to household expenses.
(B.1) Aggrieved by the above stated additions, the Assessee filed an appeal before the Learned Commissioner of Income Tax (Appeals)-18, New Delhi. Vide the aforesaid impugned appellate order dated 16.08.2016 of the Ld. CIT(A); assessee was allowed partial relief. However, out of total of Rs. 65,67,000/- and addition of Rs. 7,00,000/-; an addition of Rs. 4,08,000/- out of the aforesaid addition of Rs. 12,93,200/-; and the entire aforesaid additions of Rs. 3,24,000/- were sustained by the Ld. CIT(A). Still aggrieved, the assessee has filed this present appeal.
(C) In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), the following particulars i.e, Paper Book, ‘Case Law Book’ and Synopisis, were filed from the assessee’s side:
Contents of Paper Book:
Copy of ITR acknowledgement filed on 01.08.2007 along with computation of income for the A.Y. 2007-08.
Copy of the written submissions filed before Ld. CIT(A)-18. 3. Copy of the Purchase Deed dated 07.04.2006 in favour of the appellant & others duly filed before Ld. CIT(A)-18.
Copy of the sale Deed dated 21.05.2007 by appellant & others duly filed before Ld. CIT(A)-18.
Copy of Ikrarnama dated 31.10.2005 duly filed before Ld. CIT(A)-18. 6. Copy of statements recorded by ADIT, Chandigarh. 7. Copy of reasons recorded for re-opening the assessment. 8. Copy of ITR acknowledgment alongwith Pan Card and Loan confirmation Certificate for the A.Y. 2007-08 of Shri Rahul Kalsi.
Contents of ‘Case Law Book’:
1. 1. Order of Hon’ble Supreme court in CIT Vs. P.V. Kalayansundraram (2007) 294 ITR 49/164 Taxman 78 confirming the decision of Madras High Court in CIT Vs. P.V. Kalyansundaram (2006) 282 ITR 259/155.
2. Order in the case of Paramjit Singh vs. ITO (2010), 323 ITR 588 of Punjab and Haryana Court followed in Sunita Dhadda Vs. Dy. CIT, 2013(Jaipur-Tribunal) by ITAT Jaipur.
3. Order of Rajasthan High Court in the case of CIT Vs. Sunita Dhadda, shri Padam Chand Dhadda And Smt. Vijay Laxmi Dhadda, D.B. Income Tax Appeal No. 197/2012, D.B. Income Tax Appeal No. 199/2012 and D.B. Income Tax Appeal No. 198/2012, Dated:- 31 July 2017.
4. Order in the case of M/s Kamakshi Hospitality Pvt. Ltd. Versus the Dcit Central Circle-1, Jaipur 2018.
5. Order in the case of Sheth Akshay Pushpavadan Versus Dcit ITA No. 3178/AHD/2009; 2010 ITAT, Ahemdabad.
6. Order in the case of CIT v. Lovely Exports (P) Ltd [2008] 216 CTR 195 (SC) 7. Order in the case of CIT v. Gagandeep Infrastructure (P) Ltd (2017) 394 ITR 680 (Bombay HC) 8. Order in the case of CIT v. Orchid Industries (P) Ltd (2017) 397 ITR 136 (Bombay HC) 9. Order in the case of PCIT v. Apeak Info Tech (2017) 397 ITR 148 (Bombay HC) 10. Order in the case of Cit Vs. Diamond Products Limited (2009) (Delhi) ITA No. 1004/2008
Contents of Synopsis (C.1) Further, a copy of the order of Income Tax Appellate Tribunal, Lucknow Benches dated 28.04.2016 in the case of Shri Rajendra Kumar Somani vs. DCIT in Page 9 of 14 ITA No.- 35,36 & 37/Lkw/2016 for Assessment Years 2004-05, 2005-06 & 2006-07; order dated 24/08/2016 in the case of A.C.I.T. Central Circle-2, New Delhi versus Punit Beriwala 2016 (10) TMI 254-ITAT Delhi in and order dated 23.07.2012 of Income Tax Appellate Tribunal, ‘B’ Bench, Chennai, in the case of The Jt. Commissioner of Income Tax vs. Shri V. Sampath in ITA no. 710, 711, 712, 713, 714, 715 and 716/Mds/2012 and C.O. Nos. 73, 74,75,76,77, 78 and 79/Mds/2012 for A.Ys. 2002-03, 03-04, 04-05, 05-06, 06-07, 07-08 and 08-09 were also filed from assessee’s side during the course of appellate proceedings in ITAT.
(D) At the time of hearing before us, the Ld. Counsel for assessee reiterated the submissions made on behalf of the Assessee before the Ld. CIT(A) which have been duly incorporated in the aforesaid impugned order dated 16.08.2016 of Ld. CIT(A).
The Ld. Counsel for assessee placed further reliance on the particulars filed during the appellate proceedings in ITAT, which have been listed already in foregoing paragraph no. (C). On the other hand, the Ld. Departmental Representative (“Ld.
DR” for short) relied on the Assessment Order and the Order of the Ld. CIT(A). He read out the relevant portions from the orders of the Ld. CIT(A) and the AO to draw our attention to the facts of the case.
(E) We have heard both sides patiently. We have perused the materials available on records. We have referred to the judicial precedents mentioned in our records and also the judicial precedents towards which our attention has been drawn in the course of appellate proceedings in ITAT.
(E.1) As far as the First Ground of appeal is concerned. We find that the Ld. CIT(A) has sustained the addition of Rs. 7,00,000/- as an unexplained investment in purchase of land on account of on-money payment. However, both the lower authorities namely, the Ld. CIT(A) as well as the AO have failed to bring anything on record to prove conclusively, that the allegation of payment of on-money is in consonance with circle rate or with valuation of the land by Stamp Duty Authority.
The addition is also not based on valuation of land by any registered valuer.
Moreover, the addition is also not based on any report of Valuation Officer. The lower authorities have also failed to bring any material on record to show that the addition is justified on the basis of fair market value of the land. In fact, from the perusal of the orders of the Ld. CIT(A) and the AO; we find no material to even indicate that the true value of land commanded a figure higher than what is reported by the assessee. There is also no material on record to show that any on-money payment might have been required to be paid by the assessee having regard to true market value of the land in the market or having regard to circle rate / valuation by Stamp Duty Authority / valuation by Registered Valuer / valuation by Valuation Officer. Having regard to the facts and circumstances of the case, the materials on record, and in view of aforesaid discussion, we delete the aforesaid addition of Rs. 7,00,000/- which was confirmed by the Ld. CIT(A).
(F) The Second Ground of appeal pertains to addition of Rs. 4,08,000/- being cash deposited in bank account of the lender. From perusal of record, we find that this amount is part of the amount borrowed by the assessee for purchase of the aforesaid piece of land. The assessee had borrowed the total amount of Rs. 12,93,200/- out of which the Ld. CIT(A) has confirmed the addition of Rs. 4,08,000/-. Mr. Rahul Kalsi, the loan creditor has submitted Loan Confirmation Certificate, which was filed by the Assessee before the AO during the assessment proceedings. The relevant portion of the Loan Confirmation Certificate of Mr. Rahul Kalsi is reproduced as under:
“LOAN CONFIRMATION CERTIFICATE I, Rahul Kalsi, S/o Ravi Kalsi, resident of 117, Arjun Marg, DLF Phase-1, Gurgaon, Haryana- 122002, has given loan to the tune of Rs. 12,93,200/- during the month of April, 2006 to Sh. Vijay Mohan Gupta, S/o B.M. Gupta, resident of E-211, Lajpat Nagar-1, New Delhi-24. The same loan has been given from my HDFC Account No. 0921000026260, by making direct payment to seller from whom Sh. Vijay Mohan Gupta has purchased agricultural land. The same payment has been made based on instruction received from Sh. Vijay Mohan Gupta. That I am assessed to Income Tax and my PAN. ABMPK0274H. Sd/- (Rahul Kalsi)”
(F.1) From perusal of records, we find that the assessee has conclusively proved that the assessee took loan from Mr. Rahul Kalsi, the loan creditor, for the purpose of purchasing the aforesaid piece of land and has explained the source of funds for purchase of the aforesaid piece of land, the loan creditor has also submitted Loan Confirmation Certificate, which is part of record. From the perusal of record we find that the assessee has proved the identity of the loan creditor, the capacity of the loan creditor and the genuineness of the loan transaction. The Ld. CIT(A) has expressed doubt about the aforesaid amount of Rs. 4,08,000/-, on the ground that such huge amount was paid by the loan creditor directly to the seller of land and on this basis, the Ld. CIT(A) has confirmed the addition. However in doing so, the Ld. Page 12 of 14 CIT(A) has contradicted himself because he has accepted the genuineness of the rest of the loan amount of Rs. 8,13,200/- (i.e. 12,93,200 minus Rs. 4,08,000/-), in identical facts and circumstances. Moreover, there is no provision under law prohibiting the loan creditor to make direct payment to the seller of land. Having regard to the facts and circumstances of the case, the materials on record, and the foregoing discussion, we delete the aforesaid addition of Rs. 4,08,000/-, which was sustained by the Ld. CIT(A).
(G) The Third Ground of appeal is regarding addition of Rs. 3,24,000/- on account of low drawings for household expenses. This addition is based on estimated monthly household expenses of Rs. 30,000/- per month. On perusal of records, and having regard to facts and circumstances of the case, we are of the view that this estimate made by AO cannot be said to be excessive, unreasonable or high pitched. Therefore, this addition made by the AO, and sustained by the Ld. CIT(A) is hereby confirmed.
(H) In the result, appeal is partly allowed for statistical purposes.
Order pronounced in the open court on 22nd day of August, 2019.