Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: “A+SMC”, NEW DELHI
Before: SHRI AMIT SHUKLA & SHRI O.P. KANT
ORDER PER O.P. KANT, A.M.: This appeal by the assessee is directed against the order dated 06.06.2018 passed by the Ld. CIT(A), Meerut [in short ‘the CIT(A)’] for assessment year 2007-08, raising the following grounds of appeal:
1. That reopening made u/s 148 by Ld AO on basis of undated reasons recorded u/s 148 which has ultimately resulted in addition of Rs 560,000 u/s 69 as confirmed by Ld CIT-A , is invalid and unlawful, as apparent from cursory look to said reasons same are not only vague and farfetched but also same nowhere provides any live nexus or rational connection in the belief formed which is evident from glaring fact that said reasons completely leave it to guesses as to how stated search and seizure operation at Arens Group has resulted in allegation of cash payment against the assessee and what is the basis of the same, sans which substratum of reasons collapse thus resulting in making the entire proceedings as nullity.
2. That reopening made u/s 148 by Ld AO on basis of undated reasons recorded u/s 148 which has ultimately resulted in addition of Rs 560,000 u/s 69 as confirmed by Ld CIT-A , is invalid and unlawful, as only provision which could have been used in extant facts was section 153C and not section 148 due to which entire proceedings become nullity. 3. That reopening made u/s 148 by Ld AO on basis of undated reasons recorded u/s 148 which has ultimately resulted in addition of Rs 560,000 u/s 69 as confirmed by Ld CIT-A , is invalid and unlawful, as till end that crucial evidence which is jugular vein and focal point of Ld AO’s case has remained completely aborted and never brought on records much less being confronted to assessee, as evident from orders passed by Ld AO and Ld CIT-A wherefrom it would be patent and manifest that so called invisible evidence which has kick started impugned proceedings is no where discussed, analyzed and examined. 4. That addition of Rs 560,000 made by Ld AO as sustained by Ld CIT-A to say the least is completely a product of speculation and guesswork and no where same is based on legally admissible evidence as so called invisible entry in documents of Aerens group nowhere brought on records and no where confronted to assessee cannot justify arbitrary invocation of section 69 where Ld AO is under statutory burden to establish factum of unaccounted payment which burden has remained un-discharged in present facts. Even otherwise so called entry in Aerens Group documents cannot be used against assessee u/s 292C of the Act.
To quash the orders passed by Ld AO and Ld CIT-A in violation of mandatory jurisdictional conditions stipulated under the Act; ii) To delete the sole addition of Rs 560,000/- u/s 69A on a/c of alleged cash payment which is no where proved here even by probability/suspicion; iii) To restore returned income iv) Any other appropriate relief
Briefly stated facts of the case are that the assessee, an individual, derived income from Job work of Gold Smith and Profit from firm Kid Zee Petals. For the year under consideration, the assessee filed return of income on 25.03.2008, declaring total income of Rs.1,30,630/- after claiming deduction of Rs.84,958/- under Chapter VI-A of the Income-tax Act, 1961 (for short ‘the Act’). Subsequently, in the case of the assessee, information was received from Assistant Director of Income-tax (Investigation), New Delhi. According to the said information, during the search carried out at the premises of AEZ Group (Part of Aerens Group) on 17.08.2011, computer hard disks and documents were seized, which included information relating to construction of various projects and receipt of cash payments from different parties for sale of commercial spaces. Those cash payments were not accounted for in the books of the relevant Companies as well as in the books of the investors. For verification of said investments, survey operation was conducted on 10.02.2012 on seven investors group out of 23 investors. Few Investors accepted the payment of unaccounted cash for booking/purchases of the property in the various projects of AEZ Group. In the information extracted from the hard disks, it is observed that the assessee, Shri Deepak Gupta also booked ground Floor Unit of Area 300 on 15.03.2007 in Raj Nagar Project, by payment of cheque of Rs.25,000/- and cash of Rs.5,60,000/-, total amounting to Rs.5,85,000/-. In view of above information, the Assessing Officer reopened the assessment proceedings in the case of the assessee by way of issue of notice under Section 148 of the Act. The Assessing Officer issued notice under Section 142(1), dated 28.11.2013 along with questionnaire. There was no compliance by the assessee. Thereafter, a show-cause notice for for completion of the ex-parte assessment under Section 144 of the Act was issued on 04.03.2014 and served upon the assessee. In response, the Authorized Representative of the assessee attended and filed submission before the Assessing Officer. Learned Authorized Representative of the assessee submitted that the assessee made payment of Rs.25,000/- to the Aerens Group on 20.03.2007 as advance payment to purchase property with the condition that the balance amount would be paid before the end of the Financial Year 2006-07 and if the assessee would not pay the balance amount within above time, then the advance of the Rs.25,000/- would be forfeited and property would not be sold to the assessee. The Ld. AR submitted that no property from Aerens Group is registered in the name of the assessee till date. The assessee also submitted that there is no entry of withdrawal of Rs.5,60,000/- in the bank accounts of the assessee to justify the cash payment of Rs.5,60,000/-. The Assessing Officer rejected the contention of the assessee and on the basis of the entry recorded in the sheets extracted from the hard disks of the AEZ Group, held the cash of Rs.5,60,000/- as unexplained investment of the assessee under Section 69 of the Act. Before the Ld. CIT(A), the assessee challenged the reassessment proceeding as well as the addition on merit. The Ld. CIT(A) rejected the plea of challenging the reassessment proceedings on the ground that the same was filed without raising any additional ground of appeal
. On merit, the Ld. CIT(A) held that once the payment of Rs.25,000/- paid in cheque, has been admitted by the assessee, there was no reason not to accept the payment of Rs.5,60,000/- made in cash recorded in the same document. According to him, it is settled law that the evidence cannot be admitted in part and when one part is accepted the other part is also confirmed unless the assessee comes with credible countervailing evidences. Aggrieved with the finding of the Ld. CIT(A), the assessee is in appeal before the Tribunal, raising the grounds reproduced above.
3. In the ground raised, the assessee has challenged validity of initiation of reassessment proceedings in the case of the assessee as well as challenged the addition on merit.
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.
7. 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 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, Assessing Officer has relied on the statement of Sh. I.E. Soomar for making addition in the hands of the assessee.
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. 17. 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.”
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 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.
In the result, the appeal of the assessee is allowed. Order is pronounced in the open court on 28th January, 2019.