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Before: SHRI R. S. SYAL & SMT SUCHITRA KAMBLE
ORDER PER SUCHITRA KAMBLE, JM
This appeal is filed against the order dated 11/02/2013 passed by CIT(A) -XXX, New Delhi 2. The grounds of appeal are as under:-
“1. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in holding that the assumption of jurisdiction u/s 147 of the Income Tax Act, 1961 in the case was bad in law.
That the Commissioner of Income Tax (Appeals) erred in law and on facts of case in deleting the addition of Rs.87,32,500/- made u/s 69C of the Act on account of unexplained expenditure. 3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts.
The assessee filed its return of income on 21st July, 2008 declaring an income of Rs 47,58,310/- comprising income from salary, income from house property and from other sources as a senior citizen. Thereafter the assessee was issued a notice dated 7th June, 2010 under Section 148 of the Income Tax Act, 1961 wherein stated that income had escaped assessment and therefore the assessee was required to file the return of income disclosing true particulars thereof. The assessee filed a return on 11th October, 2010 in response to the aforesaid notice issued under Section 148 of the Act, declaring the same income as was declared in the income tax return filed on 21st July, 2008. The Assessing Officer was requested by the assessee for intimating the reasons for issuing the aforesaid notice under Section 148 of the Act. Thereafter the assessee was supplied with the ‘reasons’ recorded for reopening of assessment for the period under consideration. The reasons recorded for reopening of assessment as provided to the assessee are as follows:
“In this case an information has been received from Asstt. Director of Income Tax, Unit-1, New Delhi according to which Shri Brij Kishore Kochhar the assessee has been allotted 5,000 sq. ft. area on the 6* floor of AMR IT Project at Plot No. 9 Tech Zone, Greater Noida. A survey operations conducted in respect of M/s Real Gans Estate Pvt. Ltd. on 20.11.2008 during which certain incriminatory documents were seized regarding understating of prices of property sold by the company. As per the papers seized relating to the investment of the transaction the assessee the total cost of the office came to Rs.2,15,00,000/- for 5000 sq. ft. which comes out to be Rs.4,300/- per sq. ft. and costs Rs. 1,62,32,500/- after some discounts. The form mentioned receipt of Rs.64,25,000/- and the amount pending at Rs.87,32r,500/~. However, in the 2nd part of the booking form the rate is mentioned as Rs.1,500/-per sq. ft. making it clear that the difference i.e. Rs.2,800/- per sq. ft. has been received in cash which comes to 2800 x 5000 = Rs. 1,40,00,000/-. Thus, it is evident that the assessee ihas concealed the particulars of income to evade tax. As these transactions took place during the Financial Year 2007-08, a notice u/s 148 is being issued”
Subsequently vide letter dated 2nd August, 2011 the assessee objected to the proposed assessment proceedings. The AO has passed the assessment order making an addition of Rs. 87,32,500/- under section 69C of the Income Tax Act. Assessee had acquired from M/s AMR Infrastructure Ltd. (and not M/s Real Gain Estate (P) Ltd as wrongly noted by the AO in the reasons recorded u/s 148 of the Act) 6000 sq. ft. area (and not 5000 Sq. ft. area as wrongly noted by the AO in the reasons recorded u/s 148 of the Act) on the 6th floor for a total committed sum of Rs 90 lakhs
(and not Rs.1,62,32,500/- as wrongly noted by the AO in the reasons recorded u/s 148 of the Act).
In this regard an Application Form was submitted by the assessee to M/s AMR Infrastructure Ltd. for booking/allotment of IT/ITeS unit in its Tech Zone Project titled “KESSEEL i - VALLEY” at Greater Noida. Two separate applications were filed by the assessee, one for allotment of 5,000 sq foot area (copy enclosed pages 9 to 13 of PB) and second for 1,000 sq foot area. Both these applications were filed accepting the base price of the property at Rs 1,500/- per sq. ft. It is submitted that both these applications were made by the assessee jointly along with his wife Mrs. Prabha Kochar.
Two separate Memorandums of Understanding dated 20th July 2007 were signed by the assessee in regard with M/s AMR Infrastructure Limited. The same was on record during the assessment proceeding. The Memorandum of Understandings were signed by partied after acceptance of booking applications by M/s AMR Infrastructure Limited. Both these MOU’s accepted the rate of allotment as Rs 1,500/- per sq ft. The payment details accepted under the Memorandum of Understandings was as under For 5,000 sq foot area:
Total Consideration = Rs.75,00,000/- Less: paid by assessee: Cheque No. 193279 dated 12.06.2007 Rs. 15,57,000/- Cheque No. 771437 dated 12.06.2007 Rs. 5,65,000/-
Cheque no. 771439 dated 30/06/2007 Rs.43,03,000/- Rs.64,25,000/- Balance due at time of possession Rs. 10,75,000/-
For 1,000 sq foot area; Total consideration = Rs.15,00,000/- Less: Paid by assessee: Cheque no. 462468 dated 4/5/2007 Rs. 12,85,000/- Balance due at time of possession Rs. 2,15,000/-
As regards M/s Real Gains Estate (P) Ltd it was submitted that no investments were made by the assessee with them. Actually the relationship between assessee and M/s Real Gains Estate was that of a money lender and borrower. In this regard, it is submitted that a short term interest free loan of Rs 43,00,000/- was advanced by M/s Real Gains Estate to the assessee vide cheque no. 492695 dated 26th June 2007 and that this debt was completely discharged by the assessee subsequently as under: (copy of certificate dated 02nd April 2008 issued by M/s Real Gains Estate (P) Ltd in this regard is enclosed in paper book at page 28): Cheque No. Date Amount 725947 21.01.2008 10,00,000/- 725948 21.01.2008 6,00,000/- 725950 22.02.2008 15,00,000/- 725952 29.03.2008 2,00,000/- 462469 15.01.2008 10,00,000 Total 43,00,000/- It is submitted that the loan of Rs 43 lakhs granted by M/s Real Gains Estate was only a short term time loan arrangement facilitated by M/s AMR Infrastructures Limited so as to help the assessee in arranging funds falling short while making the down payment for the 5,000 sq ft property in the month of June 2007.
Considering that a substantial down payment of 85.66% was made by the assessee for both the properties. As per the terms of MOU M/s AMR Infrastructures Limited agreed to compensate the assessee by monthly interest payment till the date of possession of both the properties. It is submitted that the assessee has offered to tax this interest income in AY 09-10 and AY 10-11. This fact is verifiable from the TDS certificates issued by M/s AMR Infrastructures Limited credit for which has been claimed by the assessee in AY 09-10 and AY 10-11 {refer pages 41 to 44 of PB}.
During the course of assessment proceedings in the case of M/s AMR Infrastructures Ltd. summons u/s 131(1 A) dated 16h April 2009 were issued to the assessee. In reply vide letter dated 22nd April 2009 the assessee submitted that it has purchased 6000 sq ft area on 6th floor for a total agreed sales consideration of Rs 90 lakh.
During the course of assessment proceedings in the case of assessee, AO made enquiries from M/s AMR Infrastructures Limited. In this regard M/s AMR Infrastructures Limited confirmed to the AO that the rate at which property was sold to the assessee was Rs. 1,500/- per sq ft.
The Assessing Officer added Rs.87,42,500/- as unexplained expenditure. Aggrieved by this, the assessee filed appeal before the CIT(A). The CIT(A) allowed the appeal of the assessee. The Revenue is before us.
The Ld. DR submitted that the Assessing Officer has rightly added the said amount as unexplained expenditure as the assessee has not given any clear reply and it was not acceptable. The standard sale price varies from place to place, therefore, the re-opening u/s 147 was right and Assessing Officer has rightly added the said amount. The CIT(A) failed to look into the same. 13. The Ld. AR submitted that the AO in complete disregard to the law laid down by Hon’ble Apex Court in the case of GKN Driveshaft (supra) did not pass an order disposing off the objections raised by the assessee vis-à-vis assumption of jurisdiction u/s 147 of the Act. The Ld. AR submitted that the rate described was clearly explained as AMR Group & there is no suspicion about the transaction. Therefore, the CIT(A) has taken all the relevant material. The CIT(A) held as follows:-
“I am also of the view that assumption of jurisdiction u/s 147 of the Act in the instant case is also bad in law. Contradictions exists vis a vis factual matrix of case on reasons recorded by Ld Assessing Officer. There is non- applicability of mind by the Ld Assessing Officer to the information received and to the material available on record while recording the reasons. In the reason recorded it is noted that “The form mentioned receipt of Rs. 64,25,000/- and the amount pending at Rs.87,32,500”. The total of these two figures is Rs 1,51,57,500/-. Contrary to this it is then noted by AO in the reasons that “as per the papers seized relating to the investment of the transaction of the assessee, the total cost of the office came to Rs.2,15,00,000/- for 5000 Sq. feet which comes out to Rs.4,300/- per Sq. feet and cost Rs.1,62,32,500/- after some discounts”. In the reasons it is noted by the AO that “in the 2nd part of the booking form the rate is mentioned as Rs. 1,500/- per Sq. feet making it clear that the difference i.e., Rs.2,800/- per Sq feet has been received in cash which comes to 2800 X 5000= Rs.1,40,00,000”. It is submitted that in the reasons the AO has also noted a total discounted price for the property at Rs 1,62,32,500/-. The per sq ft rate as per this is Rs 3246.50. The difference in such a case should be Rs 1746.50 per sq ft and not Rs 2,800 per sq ft. Once the appellant has deposed the details of his investment before the Investigation cell, then the above reasons cannot be held to be based on tangible materials so as to constitute a “reason to believe”. Mu view gets supported by the orders passed by Hon’ble Jurisdictional High Court in the case of United Electrical Co. 258 ITR 317 (Del) and Orient Craft Ltd ITA N. 555/2012 order 12th December 2012. The AO should have brought out a comparable case of selling of property in the same building by the builder to some other person at higher rate. The property value in Greater Noida is going low for so many years as the population of the area is not increasing and it is about 40 to 50 KM high way from Cannaught Place of Delhi. There is no proper communication facility to Greater Noida from Delhi. Considering above facts and circumstances, I find the AO had not made up the case properly. The Investigation Wing of the department had also not done proper investigation before handing over the information to the AO. The addition of Rs.87,32,500/- stands deleted.” The assessee also relied on the judgment of the Hon'ble High Court in the case of CIT Vs. Ved Prakash Choudhary 305 ITR 245.
We have perused all the records and heard both the parties. The assessee put up all the relevant documents during the assessment proceedings. During the search the papers seized clearly mentioned that: “in the 2nd part of the booking form the rate is mentioned as Rs. 1,500/- per Sq. feet making it clear that the difference i.e., Rs.2,800/- per Sq feet has been received in cash which comes to 2800 X 5000= Rs.1,40,00,000”. Thus there does not constitute any substantial reason to believe that the Assessee is incorrect in showing the genuineness of the transaction. The Assessing Officer has not made out finding on the factual & documentary bases. There is no substantial material taken by the Assessing Officer while making that addition. The CIT(A) has rightly deleted the addition. Therefore, we uphold the order of CIT(A).
In the result, appeal is dismissed.
The order is pronounced in the open court on 26th of August, 2016.