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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI N.K. SAINI & SHRI SUDHANSHU SRIVASTAVA
4857/Del/2014 is directed against the order passed by the Ld. CIT (Appeals)-XII, New Delhi dated 14.07.2014 for A.Y. 2007-08 and challenges the action of the Ld. CIT (A) in deleting the penalty of Rs. 1,17,20,973/- imposed u/s 271(1)(c ) of the Income Tax Act, 1961 (hereinafter called ‘the Act’). ITA 4858/Del/2014 is directed against the order passed by the Ld. CIT (Appeals)-XII, New Delhi dated 14.07.2014 for A.Y. 2008-09 and challenges the 1 Assessment year 2007-08 action of the Ld. CIT (A) in deleting the penalty of Rs. 5,95,06,047/- imposed u/s 271(1)(c ) of the Act.
The ground of appeal raised by the revenue is that the ld.
CIT(A) has erred on the facts and circumstances of the case and in law in deleting the penalty u/s 271(1)(c) of the I.T.Act amounting to Rs. 1,17,20,973/-.
At the outset, the Ld. Authorised Representative submitted that the cross appeals of the assessee as well as the Department for both the years under consideration in the quantum proceedings were decided by the ITAT in assessee’s favour in which the assessee’s appeals were allowed and the department’s appeal were dismissed. He placed on record copy of the order of the ITAT in 335, 617, 618, 619 and 620/Del/2012 and submitted that in view of the impugned quantum additions having been deleted by the ITAT, the penalties do not survive any way.
The Ld. Sr. DR, after perusing the order of the ITAT, agreed that indeed the Departmental appeals were dismissed and the assessee’s appeals were allowed and, therefore, the action of the Ld. CIT (A) in deleting the impugned penalties could not be challenged. Assessment year 2007-08
After hearing both the parties and after perusal of the order of the ITAT in the quantum proceedings in 335, 617, 618, 619 and 620/Del/2012 vide order dated 29.11.2016, we find that the averment of the assessee is indeed correct. The relevant observations of ITAT are contained in Para 13 to 16 of the said order and the same are being reproduced for a ready reference:
“13. The brief facts of the case are that the Search and Seizure U/s 132 of the I.T. Act was carried out at the business and residential premises of Nimitaya and Khinda group during which the residential premises of Sh. Sandeep Singh Khinda and his wife Ms. Samta Khinda were also searched on 6.11.2008 wherein certain documents were found and seized. In view of the same notice u/s. 153A of the Act was issued on 08.7.2009. In response thereto the assessee filed a return on 27.11.2009 declaring an income of Rs. NIL. Thereafter notice u/s. 143(2) of the Act was issued on 24.12.2009 and served upon the assessee. As there was a change in incumbent, notice u/s. 143(2) and 142(1) along with detailed questionnaire was issued on 12.8.2010 and served upon the assessee. In response thereto the assessee’s AR attended the proceedings and filed the submissions from time to time. Thereafter, AO assessed the income of the assessee at Rs. 3.50 crores by making the addition vide his order dated 31.12.2010 passed u/s. 153A/143(3) of the I.T. Act, 1961. Aggrieved with the AO’s order, the assessee appealed before the ld. CIT (A) who vide his impugned order dated 28.11.2011 has dismissed the appeal of the Assessee.
Ld. Counsel of the assessee stated that Ld. CIT(A) was erred in confirming the addition in dispute in the hands of the assessee as unaccounted income or receipt during the year under consideration on sale of property D-17, Pushpanjali even when the assessee is not the owner of the subject sold Assessment year 2007-08
property. He further stated that Ld. CIT(A) was further erred in applying Section 292C of the I.T. Act, merely because some papers were found from the premises of the assessee while ignoring vital facts and contentions of the assessee. To support his contention he relied upon the decision of the Hon’ble Supreme Court of India in the case of Sumati Dayal 214 ITR 801 and the ruling of the Hon’ble Delhi High Court dated 3.4.2014 in the case of True Zone Buildwell and the Hon’ble Allahabad High Court in the case of Babu Mohan Lal order dated 7.11.2013. In view of the above, he stated that the Appeals of the assessee may be allowed.
On the other hand, Ld. DR relied upon the orders of the authorities below and stated that the orders passed by them are the well reasoned orders which do not require any interference on our part, hence, the same may be upheld and appeals of the Assessee may be dismissed.
We have heard both the parties and perused the records especially the sale deed. We find that in the case of assessee, Ld. CIT(A) while converting protective addition to substantive addition, has merely relied on presumption u/s. 292C of the Act, whereas the underlying property i.e. D-17, Pushpanjali, New Delhi is not owned by the assessee, just on the basis of Hon’ble Supreme Court of India ruling in the case of Sumati Dayal 214 ITR 801 which is plainly bad because non owner cannot be made as beneficial owner on the basis of limited presumptions, for making 21 protective / substantive addition vis-à-vis on money where revenue has accepted capital gains on same property in the hands of other assessee i.e. Smt. Sudhiksha Singh.
16.1 There is thorough lack of corroborative and confirming evidence and thorough lack of enquiry on the part of AO where all cases were with him only. No attempt is made to make reference to DVO by AO or CIT-A. There is no examination of any concerned witness/party to transaction. Only suspicion has weighed to make the colossal addition. There is no hidden bank a/c so as to transact the given money. There is no bayana agreement or any other Assessment year 2007-08 adversarial document found during extensive search operation specific to charge made. The charge made against the assessee only resolves around a single piece of Paper which is not handwritten from any of the transacting parties. Even if the document is taken on face value then no gainful premium construction can be taken as neither the seller nor the buyer is taken on board at the time when this subject paper was found. This paper is out of syllabus for Mr. Sandeep Khinda not being the owner of the property. Section 292C being rebuttable presumption cannot made assessee's burden to be infallible as the same can't be elevated to be proven to the hilt i.e as far as Sudhiksha is concerned, assumption of jurisdiction u/s 153C is concerned to make a document to be belonging to the assessee, presumption u/s 292C can't be resorted i.e belonging to criteria can't be satisfied on the basis of presumption & assumption. As per record Mrs. Sudhiksha Singh another assessee had disclosed this transaction voluntarily in normal course by paying due capital gain u/s 50C read with section 48 i.e there is no sanction & under the present law to tax a seller over & above the given transaction rate which is well 22 considers the applicable rate otherwise sec 50c will become redundant. This can be a fiction in fiction i.e. 292 can't be infused a incorporated in section 50c. In our view, suspicion how grave & strong can't substitute the place of reliable cogent evidence to fasten a tax liability.
16.2 We have also perused the Sale deed dated 27.2.2008 of the property bearing No. D-17, Pushpanjali, New Delhi which was executed by Mrs. Sudiksha Singh in favour of M/s Vijeta Properties (P) Ltd. which establish that no such property bearing no D-17 Pushpanjali ever belonged to the assessee (Sandeep Singh Khinda) and no purchase/sale of aforesaid property has ever been made by the assessee. Therefore, there is no question of any undisclosed income which can be attached to the assessee with respect to above alleged property transactions. Assessee has never received/paid any payment in cash with respect to such property as the above property never belonged to the assessee. The AO has made the addition in the hands of the assessee on protective basis under See 292C of the Income Assessment year 2007-08
Tax Act as the paper has been seized from the premises of the assessee. As per the provisions of Sec 292C of the Income Tax Act, where any books of account, other documents, money, bullion, jewellery or other valuable article or thing are or is found in the possession or control of any person in the course of Search u/s 132 of the Income tax, it may in any proceedings under this act, be presumed-
1) That such books of account, other documents, money, bullion, jewellery or other valuable article or thing belong or belongs to such person;
2) That the contents of such books of account and other documents are true.
16.3 Considering the language of See 292C of the Income Tax Act, there is a presumption that the contents of the documents are true as document was found from the premises of the assessee. However, nowhere in the Section has been mentioned that the amount represented undisclosed income and be taxed in the hands of the assessee from whose premises the said paper has been seized. The presumption as envisaged in section 292C is limited to the correctness of the documents found at the time of search or survey, but that presumption has not been extended by the statute to be presumed to be the income of the assessee. Taxing statues have to be interpreted strictly. In deeming provision what is prescribed is to be deemed and deeming provision cannot be extended beyond the legislative scope. The presumption under see 292C is a rebuttable presumption and all the facts are to be considered before drawing an inference of undisclosed income on the basis of loose papers. The deeming provision cannot be applied mechanically ignoring the facts of the case and surrounding circumstances. There should be some business connection or any such connection of the seized document with the assessee that can attach undisclosed income in the hands of the searched person. In the present case, the detail of the property i.e D-17 Pushpanjali, against which it has been alleged by the Ld AO that" On Money" has been received against the sale of property was never owned by the assessee. However, there Assessment year 2007-08 is no iota of evidence with the Department to suggest that loose sheet disclose receipts resulting in an undisclosed income on the part of the assessee. Therefore there is no question of assessing any income in the hands of the assessee. To support this view, we are placing reliance on the following judgements/decisions:-
- CIT vs. VP Bansal Order dated 2.8.2010 – The Hon’ble Delhi High Court has held that in the said case, the figures mentioned on the seized paper without there being any corroborator material in support thereof, contents were not capable of describing any transaction. Hence, addition cannot be made.
- of 2009 dated 10.8.2010 CIT vs. BM Transport -The Hon’ble High Court of Gujarat at Ahmedabad has held that unsigned loose paper may be clue for further investigation but cannot be a conclusive evidence to make addition.
- Nirmal Fashions (P) Ltd. vs. DCIT 123 TTJ 180 - - it was observed that the presumption under section 292C is rebuttal presumption and the document has to be considered considering the totality of the facts of the case. The deeming provision cannot be applied mechanically ignoring the facts of the case and the surrounding circumstances.
In the background of the aforesaid discussion and respectfully following the precedents as aforesaid, we delete the additions in dispute and allow both the assessee’s appeals”
4.1 Accordingly, in view of the quantum additions having been deleted by the ITAT in both the impugned years, the department’s challenge to deletion of penalty does not survive. Assessment year 2007-08
In the result, both the appeals of the revenue stand dismissed.
Order pronounced in the Open Court on 27th July, 2018.