ACIT, NEW DELHI vs. SHRI RAJENDRA AGGARWAL, NEW DELHI

Date of Hearing 09.06.2016 Date of Pronouncement 10.08.2016 ORDER

PER DIVA SINGH, JM

1. The present appeal has been filed by the Revenue assailing the correctness of the order dated 29.10.2012 of CIT(A), XXXI, Delhi pertaining to 2007 –08 assessment year on the following grounds:-

2. On the facts and circumstances of the case the Ld. CIT(A) has erred in deleting the addition amounting to Rs.2,27,50,000/- made by AO on account of undisclosed Consideration received, on sale of property transaction belonging to company, by the assessee who transacted the deal on behalf of the company in the capacity as Director of the company. 3. The appellant craves leave to add, amend any/all the grounds of appeal before or during the course of hearing of the appeal.”

I.T.A .No.-6474/Del/2012

Considering that the very same property had been sold during the year under consideration for less than even one-half for what it would have been sold to the said Iqbal Wasu, the AO was of the view that there can be no justification for such an act on behalf of the assessee. The natural inference from these interlinked transaction it was concluded is that assessee would have got healthy underhand consideration which the assessee has not reported for Tax purpose. The AO was of the view that even if it is assumed that the prices over the year had fallen they could not fall by 60% as has happened in this case. Page 2 of 6

I.T.A .No.-6474/Del/2012 2.1. In view of these peculiar facts and on comparing these two set of agreements within a period of one year. It was concluded that the assessee must have realized at least Rs. 4 crores on sale of the said Property. Accordingly addition was made for the balance amount of Rs. 2,27,50,000/- as undisclosed consideration.

Considering those, it was held that the addition in the hands of the assessee was not maintainable.

5. The Ld. CIT DR places reliance upon the assessment order. However no arguments were advanced in support of the ground raised in order to justify how the addition in the hands of the assessee could have been maintained. The Ld.AR on the other hand inviting attention to the findings recorded in the impugned order and the paper book filed on behalf of the assessee submitted that in his Paper Book pages 1 to 67 would show that the documents demonstrating that the ownership of the said property vested with the Page 3 of 6

I.T.A .No.-6474/Del/2012 said company has been placed on record. These documents have not been rebutted.

Accordingly in the absence of any justification how the addition can be said to be maintainable in the hands of the assessee, he would rely on the facts, evidences and arguments recorded by the CIT(A) and supported by the Paper Book filed has not been addressed by the Revenue. In the circumstances, heavy reliance was placed upon the impugned order.

We find that in support of the prayer made in the present appeal, the Ld. AR on behalf the assessee has Canvassed the issue as under before the CIT(A):

4. Submission of the appellant:- 4.1. “The AR has made written as well as oral submissions. She has pointed out that the AO has mixed up the facts of the assessee with those of the sister concern namely Rite Pac Industries Pvt. Ltd. The Property in question does not belong to the appellant and that the ownership of the property vested with Rite Pac Industries Pvt. Ltd. During the previous year relevant to AY 2007-08 the appellant did not offer any short term capital gain as stated in the Assessment Order. A copy of computation of income for the current AY has been produced in support of her submissions. Further she has submitted that the property in question was in fact sold during the year and the resultant short term capital gain has been duly offered to taxation in the hands of his owner namely Rite Pac Industries Pvt. Ltd. In support her submissions the AR has also made available acknowledgment copy of the return of the said company for AY 2007-08 along with computation of total income. She has also produced photocopies of the original documents relating to lease of the said property from UP state industrial development corporation Ltd. and the possession certificates.” 6.1. Considering these arguments, the CIT(A) came to the following conclusion:-

Rs. 1,72,50,000/-. Such consideration is claimed to be the value as per sec. 50C of the IT Act. It is further observed that as against the said sale assessee has claim the cost of land had Rs. 50,79,430/-, cost of building at Rs. 1,04,27,668/- and cost of electrical fitting and also been claimed has computed a short term capital gain Rs. 16,11,367/- which has been offered for taxation as per the return.................... 5.2. It may "be seen in the above paragraph that the AO refers to assessee as "company" and has adopted the figures not found in the asssessee's return of income. From the copy of return of Rite Pac Industries Pvt. Ltd. filed during the appellate proceeding it is observed that amounts referred to by the AC are very much tallying with the amounts offered for the taxation under the head short term capital gain including the break up thereof. The same is reproduced below: Income from Capital Gain (Chapter IV E) 1611367 Short Term Capital Gain Property at Dehradun 12/05/2006 Value u/s 50C 17250000 Sales Consideration Received 17250000 Sale Consideration 17250000 Less; Transfer Expenses 105946 1714405 4 Land 5079430 Building 1042766 8 Electric Fittings 23266 Furnitures & Fixtures 2323 1553268 7 1611367 1611367 5.3. From the submissions of the AR. copies of computation of income and the R/I it becomes clear that there is a mix up of facts of assessee and Rite Pac Industries Pvt. Ltd. After examine these details there appears to be no ground for sustaining the additions. No purpose will be served in going into the merits of the addition as the mix up of facts is evident from the order. The AO may take suitable remedies as deemed fit in the matter. The addition made by the AO is deleted.” (emphasis provided)

6.2. In the absence of any rebuttal on facts, we find considering the evidences placed in the Paper Book, the view taken by the CIT(A) cannot be faulted with. Thus, on a consideration of the entirety of the peculiar facts and circumstances finding ourselves in agreement with the conclusion arrived at by the CIT(A), we find no good reason to I.T.A .No.-6474/Del/2012 interfere with the same. Accordingly the departmental appeal is dismissed. The said order was the pronounced in the open Court at the time of hearing itself.