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Income Tax Appellate Tribunal, DELHI ‘A’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI LALIET KUMAR
PER N.K. BILLAIYA, ACCOUNTANT MEMBER,
This appeal by the assessee is preferred against the order of the Ld. CIT(A)-16, New Delhi, dated 26/12/2018, pertaining to Assessment Year 2012-13.
The grievance of the assessee is twofold. Firstly, the assessee is aggrieved by the initiation of the reassessment proceedings and framing the assessment order u/s 147 of the Act. Secondly, the assessee is aggrieved by the addition made u/s 69C of the Act amounting to Rs.94 lakhs.
The brief, facts of the case are that a search and seizure operation was conducted in Dkriish Group of companies on 15/1/2013 by DDIT(Inv.)-II, Noida. During the course of search proceedings, certain incriminating documents were found and seized from the premises of Dkrrish group. In one of such seized documents, it was found that Shri Atul Bansal (assessee) has paid cash to the tune of Rs.94 lakhs towards purchase of farm house on various dates during the financial year 2011-12.
On the basis of report from DDIT(Inv.), the assessment was reopened by issuing notice u/s 148 of the Act. The reasons for reopening of assessment read as under:-
“A letter dated 13.05.2015 was received in this office on 19.05.2015 from Dy Director of Income Tax (Inv.)-II, Noida. As per the letter, it IS noted that a search and seizure operation was executed on 15.10.2013 111 Dkrrish group of companies. During the course of search, certain incriminating documents were found and seized from the premises of Dkrrish group. On perusal of Party No. F4, Page No. 14 of Annexure A-2, it is seen that the assessee, Shr. Atul Bansal has paid cash to the tune of Rs.94,00,000/- towards the purchase of farm house on various dates during the financial year 2011-12. Further, as per this letter received from Dy. Director of Income Tax (Inv.)-II, Noida summons u/s 131(1A) was issued to the assessee to explain the source of cash invested for the purchase of the farm house, but the assessee was unable to explain the source of cash which was invested for the purchase of farm house. It is pertinent to mention that in the case of CIT vs Nova Promoters & FinLease (P). Ltd. (ITA No.342 of 2011) dated 15.02.2012, the Hon’ble Delhi High Court, which is the jurisdictional High Court, held that as long as there is a live link between the material which was placed before the Assessing Officer at the time when reasons for reopening were recorded, proceedings u/s 147 would be valid. The Court also held “ We are aware of the legal position that at the stage of issuing the notice u/s 148, the merits of the matter are not relevant and the Assessing Officer at that stage is required to form only a prima facie belief or opinion that income chargeable to tax has escaped assessment.” Furthermore, in the case of Jyoti Goyal vs ITO (ITA No.1259/Del/2010), the Hon’ble ITAT Delhi held that “As regards the other contentions of the assessee that the reopening was done in a mechanical manner without application of mind, we find there is nothing on record to support such a contention. The reopening was also not done on account of change of opinion as prior to reopening of the assessment the case was only processed u/s 143(1) of the Act. There is a live link between the information which was available with the Assessing Officer and his formation of belief that income has escaped assessment. Sufficiency of such information cannot be gone into while deciding the issue of validity of reopening. The Assessing Officer also cannot make any enquiry as no proceedings were pending before him for the relevant assessment year. In the above view of the matter, we are in agreement with the finding of the Ld CIT(A) that the reopening of assessment u/s 147 of the Act was valid.” In view of the above discussion and analysis of the material provided by Dy. Director of Income Tax (Inv.)-II, Noida, the reasons for belif that income has escaped assessment has been sufficient demonstrated. Consequently, I have reason to believe that the assessee has furnished inaccurate particulars of his income for AY 2012-13 and income has escaped assessment within the meaning of section 14 of I.T. Act, 1961. Accordingly, necessary approval u/s 151 of the I.T. Act, 1961 is solicited to issue notice u/s 148 of the I.T. Act to re-open the assessment u/s 147 of the I. T. Act. 1961.”
During the course of assessment proceedings, the assessee was given copy of the seized paper and was asked to explain the purchase made through cheque alongwith document/agreement for the transaction of rupees one lakh and explained the source of funds for making payments of Rs.94 lakhs in cash. The assessee was also asked to explain why the payments of Rs.94 lakhs to be not added as unexplained investment and added back to the income.
The assessee filed a detailed reply explaining that cheque of rupees one lakh was towards purchase of land and since, the assessee did not buy the plot owned by Dkrrish builder, money was returned by them through cheque in February 2012. In respect of cash payment of Rs.94 lakhs is concerned, the assessee replied that since the transactions did not materialised, he never paid any sum to Dkrrish builder. It was explained that the assessee has actually purchased plot in village Chankmangraula, district, Dadri Gautam Budh Nagar.
The assessee supplied the copy of the deed of purchase. The reply of the assessee did not find any favour with the AO who was of the firm belief that the notings in the seized documents clearly show that the assessee has made investment of Rs.94 lakhs for which he has no known sources income and accordingly completed the assessment proceedings by making additions of Rs.94 lakhs.
The assessee carried the matter before the Ld. CIT(A) but without any success.
Before us, the counsel for the assessee vehemently stated that there is no basis for making impugned additions. It is the say of counsel that the document was seized from third party Dkrrish builder and therefore any presumption to be drawn from the said document should be drawn against Dkrrish group and not the assessee. The counsel further stated that the addition made u/s 69 of the Act is unlawful and deserves to be deleted.
Per contra, the Ld. DR strongly supported the findings of the AO. It is the say of the ld. DR that the seized document is not a dumb document because the entry of rupees one lakhs which has been admitted by the assessee is very much apparent from the seized document. The ld. DR further stated that if one entry is accepted then the presumption is that the other entries belong to the assessee and therefore there is no error in addition of Rs.94 lakhs made by the AO.
We have given thoughtful consideration to the orders of authorities below. The documents seized from the premises of Dkrrish group can be understood as under:-
The cheque entry of rupees one lakh pertaining to transactions done through Union Bank of India can be verified from the bank statement exhibited at pages 47 and 48 of the paper book. At page-47, the date of payment is shown as 07/12/2011 and on page-48 the same amount has been refunded by Dkrrish builder on 09/02/2012. The repayment of rupees one lakhs is substantiated by the certificate from the Union Bank of India which is placed at page-49 of the paper book. Except for the investigation wing report, there is no other evidence with the AO to demonstrate that the assessee has actually paid a sum of Rs.94 lakhs to Dkrrish builder. We find that during the course assessment proceedings, the AO himself called for information u/s 133(6) of the Act from Dkrrish builders Pvt. Ltd. and the reply of the same is as under:-
A perusal of the above reply clearly shows that the alleged transactions of Rs.94 lakhs was never done by the assessee with Dkrrish builder.
It would be pertinent to mention here that vide letter dated 13/12/2013, the DDIT(Inv.), unit-2, Noida, asked the assessee to furnish details pertaining to its income tax return, bank statements, copy of cashbook and sources of cash for purchase of farm land from Green Beauty farm group and vide reply dated 20/12/2013, the assessee furnished the copy of sale deed along with bank statement with Union Bank of India. In this reply, the assessee has clearly stated that it has not purchased any farm land from Dkrrish builder for the alleged consideration of Rs.94 lakhs but has purchased a plot at Chakmangraula, Dist. Dadri, Gautam Budh Nagar. After receiving this reply, no further enquiry was made by the Investigation Wing in respect of alleged payments of Rs.94 lakhs. The AO has emphasized that on the basis of the seized document, there is a clear mention of property sold to the assessee. However, no registered documents have been brought on record to demonstrate that there was a transaction of purchase and sale of any immovable property mentioned in the seized documents.
Considering the reply of Dkrrish builder in response to the notices u/s 133(6) of the Act and considering the nature of entries in the impounded documents, we are of the considered view that the Revenue has failed to demonstrate that there was any investment outside the books of accounts to attract the provisions of section 69 of the Act. Considering the peculiar facts of the case in hand, we do not find any merit in the impugned addition, we accordingly direct the AO to delete the additions of Rs.94 lakhs.
Though the assessee has challenged the reopening of the assessment also, but since the impugned additions have been deleted by us, we do not find it necessary to dwell into adjudication of this grievance of the assessee and the same is left open.
In the result, appeal filed by the assessee is allowed.
The order is pronounced in the open court on 25/07/2019.