DCIT, NEW DELHI vs. SH. MOHIT MITTAL, NEW DELHI

Brief facts of the case are that pursuant to the search and seizure operations that were conducted on the assessee on 27.01.2012, notice u/s 142 (1) of the Act was issued on 25.10.2012. Assessee filed the return of income for the assessment year 2012-13 on 29.09.2012 declaring total income of Rs.5,15,70,340/-. During the scrutiny Ld. Assessing Officer found that the assessee debited such an expense like vehicle depreciation, tour and travelling, telephone and vehicle expenses to the tune of Rs.1,46,543/-. Ld. Assessing Officer recorded that the assessee failed to furnish the documentary evidence as such he added back a sum of Rs. 14,654/- represent 10% of the expenses on the ground possibility of personal use.

Further Ld. Assessing Officer on a perusal of the agreement of sale in favour of the assessee in respect of the property in Karol Bagh, New Delhi under which the sale consideration was Rs.7,50,00,000/- but the parties agreed that the property had to be registered at Rs.1.20 crores thereby leaving a scope of Rs.6.30 crores payable by way of cash. In his statement the assessee admitted to have paid a sum of Rs.2.65 crores in cash and at the time of search the assessee was found to be carrying a sum of Rs.2.8 crores in cash to be paid to the seller. Ld. AO, therefore, noted that the cash component involved till such date was Rs 5.13 crores, leaving a balance of Rs.1.17 crores to be paid. Assessee offered an explanation that during the year for about 7 months he did business of sale and purchase of property from which cash of Rs.5.13 crores was generated. Basing on this the Ld. Assessing Officer assumed that during the year the assessee might have entered into other similar transactions by earning undisclosed income and in the absence of any details regarding the such transactions a sum of Rs.2.5 crores including the sum of Rs.1.17 had to be added, on estimate basis, as undisclosed income earned from property transactions during the year.

When the assessee preferred an appeal against this addition before the Ld. CIT (A) and argued that the Ld. Assessing Officer has not justified in assuming that the balance sale consideration of Rs.1.17 crores will be paid only out of the unaccounted money without considering the possibility of the assessee borrowing the amounts either from the banks or from relatives to pay the amount of the sellers. Further u/s 69 and 69B of the Act the word investment does not a include the investment there is likely to be made in future and there shall be some evidence to show the availability of unexplained investment to make any addition, Ld. CIT (A) agreed with the contentions on behalf of the assessee and deleted the addition stating that no addition could be made basing on the surmises and conjectures, and further that there is no guarantee that the man who earned 5.13 crores in 7 months will continue to earn at the same rate for the remaining period also. Further the Ld. CIT(A) observed that without rejecting the books of accounts and without pointing any specific discrepancy in the expenses recorded by the assessee, disallowance of expenditure and estimation of income to form the basis for addition, is not justified.

Revenue is, therefore, preferred this appeal stating that the Ld. CIT(A) erred in deleting these two additions. 6. First coming to the addition of Rs.2.5 crores as undisclosed income, it is the submission on behalf of the assessee that the amounts that were paid in cash to the seller had already been disclosed in the return of income of the assessee and the addition is only on the surmises and junctures which have no place under tax law. There is no material available with the Ld. Assessing 3