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Income Tax Appellate Tribunal, DELHI BENCHES “A” : DELHI
Before: SHRI BHAVNESH SAINI & SHRI L.P. SAHU
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “A” : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA.No.1948/Del./2019 Assessment Year 2010-2011 Shri Balraj Gupta, The ACIT, E-108, Greater Kailash Part-II, New Delhi-048. Circle-61(1), PAN AAHPG9233G vs C/o. M/s. RRA Tax India, New Delhi. D-28, South Extension, Part-I, New Delhi-110049. (Respondent) Shri Somil Agarwal, And Shri Deepesh Garg, Advocates For Assessee : And Shri Priyansh Jain, C.A. For Revenue : Shri P.V. Gupta, Sr. D.R. Date of Hearing : 22.04.2019 Date of Pronouncement : 29.04.2019 ORDER PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed against the Order of the Ld. CIT(A)-20, New Delhi, Dated 19.02.2019, for the A.Y. 2010-2011.
2 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi.
Briefly the facts of the case are that return of income was filed by assessee on 25.09.2010 declaring total income of Rs.14,17,760/-. The case was reopened under section 148 of the I.T. Act. The A.O. recorded reasons for reopening of the assessment and served notice upon assessee under section 148 of the I.T. Act, 1961. The assessee is a Doctor by profession and derived income from Business and Profession and Income from Other Sources. The A.O. noted that during the course of search conducted upon AKN group of cases, a hard disc was found at the residential premises of Shri. Nareesh Gupta who is a deed writer and an advocate by profession. As per agreement to sell found in the said hard disc, Assessee and his Wife have given Rs. 1 Crore in cash to M/s. Sabh Infrastructure Ltd. on account of purchase of a property at E-108, Greater Kailash Part II, New Delhi, which fact is mentioned in the report received from Investigation Wing. Explanation of assessee was called for in which he is denied to have made any cash payment. The A.O. considering the agreement to sell made the addition of Rs.1 crore under section 69 of the 3 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. I.T. Act, 1961. The assessee challenged the reopening of the assessment as well as addition before the Ld. CIT(A). However, the appeal of assessee has been dismissed.
The Learned Counsel for the Assessee reiterated the submissions made before the authorities below and referred to PB-28 which is reasons for reopening of the assessment under section 147/148 of the I.T. Act, 1961. He has referred to PB-92 which is copy of the agreement to sell found during the course of search from third party which is not signed by the assessee. He has submitted that unsigned document have been found during the course of search is not admissible in evidence and would not prove anything against the assessee. He has further submitted that assessment in the case of M/s. Sabh Infrastructure Ltd., for the same A.Y. 2010-2011 was also reopened under section 147/148 of the I.T. Act and the A.O. after examining the details, accepted the returned income vide Order dated 29.12.2017 under section 147 r.w.s. 143(3) of the I.T. Act [PB-175]. He has, therefore, submitted that there is no reason to believe that income chargeable to tax has escaped 4 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. assessment. He has submitted that issue is covered by the Order of ITAT, Delhi Bench in the case of Shri Krishan Gopal, New Delhi vs. ITO, Ward-39(1), New Delhi in ITA.No.3249/Del./2015, Dated 16.05.2017 [PB-108]. He has, therefore, submitted that reopening of the assessment may be quashed and entire addition may be deleted which is without any basis.
On the other hand, Ld. D.R. relied upon the Orders of the authorities below and submitted that agreement to sell though unsigned found during the course of search was electronic evidence and as such same is admissible IN evidence against the assessee.
We have considered the rival submissions. The department has provided copy of the reasons to the assessee for reopening of the assessment, copy of which is filed at Page-28 of the PB. The same reads as under :
"An information with respect to Dr. Balraj Gupta and Mrs. Madhu Gupta, A. Y. 2009-10 has been received in the O/o. the 1TO. Ward-30(2) from the ACIT, Central 5 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. Circle-26, New Delhi, vide F.No. ACIT/CC-26/2015- 16/2012 dated 21-03-2016. Office of the ACIT, Central Circle-26, New Delhi informed that during the course of search conducted upon AKN Group of cases, a hard disc was found at the residential premises of Shri. Nareesh Gupta who is a deed writer and an Advocate by profession. As per agreement to sell found in the said hard disc, Dr. Balraj Gupta and Mrs. Madhu Gupta, R/o G-1405, C.R. Park, New Delhi has given Rs.1 Crore in cash to M/s. Sabh Infrastructure Ltd. on account of purchase of a property at E-108. Greater Kailash Part 11, New Delhi which is mentioned in the Page 79 in the appraisal report received from Investigation Wing. Consequently, scrutiny assessment was re-opened u/s. 147 of the l.T. Act, 1961. The case file ’was transferred to Circle-61 (1). New Delhi from ITO, Ward-30(2) on 30-11-2016. During the scrutiny assessment proceedings, for A.Y. 2009-10, AR Sh. Anil Kumar Chandra in his reply dated 02-12-2016, stated that the assessee’s wife, Mrs. 6 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. Madhu Gupta, sold her property at G-1405, C.R. Park. New Delhi - 110019 on 13-08-2009 which falls under Asstt Year 2010-11. The said property was sold for a consideration of Rs. 1 crore out of which she invested Rs. 94,50,000’ in another property namely First Floor, at E-108, Greater Kailash Part II and claimed deduction u/s.
Assessee Sh. Balraj Gupta S/o late Shri Om Prakash and Mrs. Madhu Gupta w/o Dr. Balraj Gupta were the equal share holder of the ownership of the said property at First Floor, at E-108, Greater Kailash Part 11, New Delhi in which Mrs. Madhu Gupta W/o Dr. Balraj Gupta, and Sh. Balraj Gupta S/o late Shri Om Prakash, hold 30% share each. Also, in the agreement to sell, provided by Central Circle-26, New Delhi, there were two payments by cheque on 22-07-2009 and 02-08-2009, falling in the F.Y. 2009-10. In the purchase deed executed on 26/08/2009, the payment details include three cheque payments dated 22-07-2009, 02-08-2009 and 7 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. 26/08/2009, which are also in the duration of F.Y. 2009-10 (A.Y: 2010-11). The assessee had field return of income for A.Y. 2010-11 on 25-09-2010 declaring income of Rs.14,17,760/-. Hence, as per the agreement to sell of the said property, the assessee has given Rs. 1 crore in cash in A. Y. 2010-11 for purchase of the aforesaid property at E-108, Greater Kailash Part-II, New Della.
With this I have reason to believe that the income of the assessee has escaped assessment within the meaning contained in section 147 of the Act for A. Y 2010-11. ”
5.1. It is well settled Law that validity of the re- assessment proceedings shall have to be judged with reference to the reasons recorded for reopening of the assessment. The A.O. after going through the agreement to sell as was intimated by the Investigation Wing also noted in the reasons that the said agreement to sell was found from the residential premises of Shri Naresh Gupta, a deed writer/Advocate. According to the agreement to sell found 8 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. from third party, assessee has given Rs.1 crore in cash to M/s. Sabh Infrastructure Ltd., on account of purchase of property at E-108, Greater Kailash Part-II, New Delhi. The A.O, therefore, believed that assessee has given Rs.1 crore in cash to the aforesaid company. Copy of the seized agreement to sell is filed at page-92 of the PB which is unsigned by any of the party to the agreement and even there is no witness to the said agreement. It was just a typed copy like photo copy as found during the course of search may be an electronic document found in search. Since it is not signed by the assessee or any other person on behalf of M/s. Sabh Infrastructure Ltd., therefore, it has no evidentiary value and cannot be read in evidence against the assessee. Similarly, the case of M/s. Sabh Infrastructure Ltd., was reopened by the A.O. for assessment year under appeal i.e., 2010-2011, but, no adverse inference has been drawn against the said Company and no addition on account of any amount received from assessee have been made in the case of their assessment under section 147 of the I.T. Act, Dated 29.02.2017. There is no other tangible 9 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. material on record to justify if assessee has paid any cash amount to M/s. Sabh Infrastructure Ltd., on account of purchase of any property. Therefore, in the absence of any tangible material and in the absence of any legally enforceable agreement found during the course of search, it is difficult to believe that assessee has paid any amount in cash to M/s. Sabh Infrastructure Ltd., as is mentioned in the reasons. Thus, there was no reason for the A.O. to record that there is an income escaped assessment on account of the fact mentioned in the agreement to sell. The ITAT, Delhi Bench in the case of Shri Krishan Gopal vs. ITO, Ward-39(1), New Delhi in paras 4 to 6 held as under :
“4. I have considered rival submissions. It is well settled law that validity of the reassessment u/s 147/148 to be considered with reference to the reasons recorded by the AO. The assessee has filed copy of the reasons recorded u/s 147 of the I.T. Act at page 116 of the paper book. The same is reproduced as under :-
10 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. “Reasons for Action under section 147 of the I.T. Act, 1961 for the A.Y. 2005-06 in the case of Shri Krishan Gopal Prop. M/s. Kay Pee Lock Ind. 221 Teliwari, Delhi – 110 006. Date : 21.3.2012 The assessee filed a return of income on 2005 declaring total income of Rs. 61,288/-. As per information received the assessee has entered into an agreement to sell a property bearing No. 65/59, New Rohtak Road for a consideration of Rs.40,00,000/- whereas the sale deed for the said property was executed for Rs. 6,00,000/- therefore there is an escapement of capital gain of Rs. 34,00,000/- for the assessment year 2005-06.
This capital gain has been calculated with reference to Rs.6,00,000/- as sale price instead of agreement value of Rs.40,00,000/- is taken in the return of the assessee for 11 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. the A.Y. 2005-06. Therefore, I have reason to belief that the assessee has escapement of capital gain amounting to Rs.34,00,000/- which has not been disclosed in the turn of income and the provisions of section 147 of the Act are attracted in this case.
In the light of the above facts, proposal is sent to the JCIT, Range 39, New Delhi for according approval for issue of notice under section 148 of the I.T. Act, 1961 in this case. Sd/- (Sobhana Rajan) Income-tax Officer, Ward 39 (1), New Delhi.”
5. The AO in the reasons merely mentioned that information has been received that assessee entered into an agreement to sale of property in question for a consideration of Rs.40 lacs whereas in the sale deed Rs.6 lacs have been mentioned. The approval of the Addl. CIT is obtained which is in proforma in which column No. 12, it is mentioned “ I am satisfied”. The AO 12 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. has not mentioned any source of information in the reasons recorded. However in the assessment order, AO has mentioned that department is having only photocopy of the “ bayana receipt” as is mentioned above. Ld. Counsel for assessee relied upon decision of the Punjab & Haryana High Court in the case of Surjit Rai vs. Prem Kr. Khera & amp; Other Punjab Law Reporter – Vol. Ex-1995(2) PLR P.40 (P&H) in which it was held that signature cannot be compared from the photocopy of the agreement. He has also relied upon decision of Delhi High Court in the case of Ms. Arati Bhargava vs. Kavi Kumar Bhargava 1991 (3) Civil Court Cases – P. 377 (Delhi High Court) in which it was held that “further documents sought tobe produced was photo copy of original document and same cannot be admitted in evidence ”. Ld. Counsel for assessee also relied upon the decision of the Supreme Court in the case of Moosa S Madha & Azam S. Madha vs. CIT (1973) 89 ITR 0065 (Supreme Court) in which it was held that photo copies have very little evidentiary value.
13 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. He has also relied upon decision of Kerela High Court in the case of CIT vs. Smt. K.C. Agnes (2003) 262 ITR 354 in which it was held that “unless it is proved that the agreement was acted upon and unless the amount stated in the agreement was paid for the sale, one can not come to the conclusion that the price mentioned in the sale deed is not correct. On the other hand Ld. DR submitted that on the basis of the photo copy of the receipt, prima facie case was made out for reopening of the assessment. Assessee did not raise objection to reassessment proceedings and that the photocopy of documents which is admissible as secondary evidence.
6. After considering rival submissions, it is clear that the revenue department was having only one photo copy of the bayana receipt and on that basis the reassessment of the assessee have been made. However in the reasons recorded, the AO has not explained the source of the information received for entering into an agreement to sell for a sum of Rs.40 lacs and the AO has not verified the photo copy of the 14 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. receipt before recording reasons and it is not clarified as to where is the original receipt and no persons mentioned in the photocopy receipt have been examined. Thus before recording the reasons for the reassessment, the AO did not verify the information so received for the purpose of reopening of the assessment. In absence of existence of any primary evidence, there is no question of considering the photo copy as secondary evidence. Thus the AO has not applied his mind to the photo copy of the receipt which has little evidentiary value. The AO therefore acted in haste and in mechanical manner to reopen the assessment. The reasons should have live link between the material placed on record and conclusion drawn by the AO before issuing the notice u/s 148 of the Act. The AO is not competent person to compare the signature from the photocopy copy with the original signature on the sale deed. Thus it was a mere suspicion on the part of the AO that assessee received higher sale consideration. Therefore there cannot be a reason to believe with the 15 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. AO to reopen assessment in the matter on vague information considering inadmissible document for forming the belief to reopen the assessment.”
5.2. The issue is, therefore, covered in favour of the assessee by the aforesaid decision of ITAT, Delhi Bench. Considering the totality of the facts and circumstances of the case, we are of the view that there was no justification for the A.O. to record reasons for reopening of the assessment and there was no justification for the A.O. to record his belief that income chargeable to tax has escaped assessment in the matter. In view of the above discussion, we set aside the Orders of the authorities below and quash the reopening of the assessment under section 147/148 of the I.T. Act. Resultantly, the entire additions shall stand deleted. Appeal of Assessee is allowed.
In the result, appeal of Assessee allowed.
16 ITA.No.1948/Del./2019 Shri Balraj Gupta, New Delhi. Order pronounced in the open Court.