MR. RAMESH GROVER,NEW DELHI vs. ITO, NEW DELHI

ORDER The present appeal has been filed by the assessee assailing the correctness of the order dated 16.05.2014 of CIT(A)-XXVIII, New Delhi pertaining to 2004-05 assessment year on the following grounds:-

1) “That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as in facts in holding that the Ld. Income Tax Officer was justified in assessing the Income of the appellant at a total income of Rs.18,67,850/-as against the returned Income of Rs.67,850/-. 2) That the Ld. Commissioner of Income Tax (Appeals) has, therefore, erred in law as well as in facts in sustaining the addition of Rs.18,00,000/- to the total Income of the appellant. 3) That the order of the Ld. Commissioner of Income Tax (Appeals) to the extent stated above is against the facts of the case and illegal. That the appellant craves leave to add, alter, amend or vary from the aforesaid grounds of appeal at or before the time of appeal as the circumstances of the case might require or justify.”

However, it was passed over as considering the grounds and the material the Ld.Sr.DR was unable to show how the entire addition made in the year under consideration could be added

I.T.A .No.-4308/Del/2014 in the year under consideration. Considering the material on record, it was a common stand of the parties that the facts as found recorded in the orders need to be re-considered and addressed afresh.

{3} “In the appeal filed, the appellant has raised the following grounds:

1. That the Income Tax Officer has erred in law as well as in facts in making the assessment at total income of Rs. 18,67,850/- as against the same declared at Rs. 67,850/-.

2. That the Income Tax Officer has erred in law as well as in facts in treating the amount of Rs. 18,00,000/- as income from undisclosed sources.

3. That the Income Tax Officer failed to appreciate the fact that the said amount of Rs. 18,00,000/- represents the principal amount as well as interest thereon, which was lent by the appellant as well as his family members over a period of eight years i.e. From 1995 to 2003 and alter on treated as advance towards purchase of property in December, 2003 on account of inability of the owners to repay the same.

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{5} Grounds of appeal No. 2 and 3 are directed against, treatment of Rs.18,00,000/-as income from undisclosed sources. In this regard, the appellant vide letter dated 18.06.2012 filed written submissions as under:-

Reference above, the appellant is an engineer by profession, and after completing his engineering way back in 1974, he started his career initially in service and thereafter started his own business alongwith his brothers and finally set out on his own in 1990 as a self employed professional. That the appellant left his native place Jallandhar (Punjab) in 1976 in search of better job opportunities and has been living in Delhi ever since.

That in December, 1979 the appellant moved into property no. 559, Double Storey, New Rajinder Nagar, New Delhi - 110060 as a tenant at a monthly rent of Rs. 800/-. That the said house was owned by Mrs. Harjinder Kaur at that time and was subsequently sold to Mrs. Ram Payari Khosla in 1982, who admitted the tenancy in continuation. Further, in September, 1985 on account of the good conduct of the appellant, the landlady rented out barsati floor of property no. 559/560, Double Storey, New Rajinder Nagar, New Delhi- 110060, to the appellant's brother/mother on an enhanced monthly rent of Rs.1,500/- for 559, 1st Floor and another lease was executed for the barsati floor at a monthly rent of Rs. 1,200/-.

In December, 1986 the landlady expired, leaving behind 4 sons and 3 daughters as legal heirs. That there was a dispute amongst the legal heirs and the sister with an intention to claim a share filed a court case. That with a view to buy the portion of the property under his occupation, the appellant agreed to advance an interest bearing loan to sons of Mrs. Ram Payari Khosla so as to reach an out of court settlement with their sister and once the matter was resolved the property would be sold to the appellant. That in December. 2003 a Memorandum of Understanding was executed wherein it was agreed to sell the said property for a total consideration of Rs.28,00,000/-(Rupees twenty eight lakhs only) out of which the appellant had already paid a sum of Rs. 18,00,000/- (Rupees eighteen lakhs only) which is the subject matter of the addition in the present appeal.

That the assessment in the present case had been completed vide orders the Ld. Income Tax Officer, Ward 39(4), New Delhi and it was vide these orders that the returned income of Rs.67,850/- was converted into assessed Income of Rs.18,67,850/-thereby adding the entire advance payment of Rs,18,00,000/-(Rupees eighteen lakhs only) to the returned income of the assessee without looking into the merits of the case, thereby creating a huge demand.

Coming towards the grounds of appeal raised.

Ground no.1 is general in nature and relates to the returned income of Rs. 67,850/-being assessed at Rs. 18,67,850/-.

Grounds No.2 & 3 relate to the addition of Rs. 18,00,000/- whereby the Ld. Income Tax Officer has taken a myopic view and treated the entire advance

I.T.A .No.-4308/Del/2014 payment towards purchase of property as undisclosed income failing to appreciate the fact that the sum was paid out of the hard earned money of the appellant over a period of eight years i.e. 1995 to 2003 and that too was not entirely only by the assessee himself but by his family members as well. That the details of the payments had been discussed with the Ld. Income Tax Officer and are being provided as under for your kind consideration.

Details of Rs.14,75,000/- (Fourteen lakhs seventy five thousand only).

Year Particulars Amount 1995 Cash paid to Mr. Satya Dev by Mrs. Sheel Graver out of sale 5,00,000/- proceeds of her property. Later on treated as interest bearing loan@ 9% in December, 2003 when the MOU was drawn up as a lot of time had elapsed. A sum of Rs.7,50,000/- was withdrawn from her Savings Bank A/c bearing no. 14445 with State Bank of India on 9-12-1994. That the appellant is now in possession of the Bank Statement a copy of which is attached alongwith and original is being Produced for verification. 1996 Paid by Cheque to Svs. Satya Dev, Hari Dev, Baldev & K.K. Khosla 90,000/- (Details annexed) 1997 Cash paid to Mr. Satya Dev by Mrs. Sheel Grover out of sale 10,000/- proceeds of her property is interest bearing 90% as mentioned above 1996 Paid by Cheque to Svs. Satya Dev, Hah Dev, Baldev & K.K. Khosla 26,000/- (Details annexed) 1999 Paid by Cheque to Svs. Satya Dev, Hari Dev.Baldev & K.K. Khosla 52,000/- (Details annexed) 2000 Paid by Cheque to Svs. Satya Dev, Hari Dev, Baldev & K.K. Khosla 30,000/- (Details annexed) 2001 Paid by Cheque to Svs. Satya Dev, Hari Dev, Baldev & K.K. Khosla 80,000/- (Details annexed)

2002 Paid by Cheque to Svs. Satya Dev, Hari Dev, Baldev& K.K. Khosla 1,20,000/- (Details annexed) 2003 Paid by Cheque to Svs. Satya Dev, Hari Dev, Baldev & K.K. Khosla 60,000/- (Details annexed) 2003 Interest on loan of Rs. 5,00, 000/- for 8 years @9% 3,60,000/- 2003 Interest on loan of Rs. 5,00,000/- for 8 years @9% 54,000/- Total Rs.14,72,000/- treated as 14,75,000/- as agreed 14,75,000/- Details of Rs.3,25,000/- (Three lakhs twenty five thousand only) in of, 2003 at the time of entering into Memorandum of Understanding.

Particulars Relationship Amount Cash paid by Mrs. Geetanjali Graver Wife 40,000/- Cash paid by Mr. Ramesh Graver Self 60,000/- Cash paid by Mr. Arun Graver Son 45,000/- Page 4 of 6

I.T.A .No.-4308/Del/2014

Cash paid by Mr Amit Graver Son 40,000/- Cash Loan taken from Mr. Rajesh Graver Brother 20,000/- Cash Loan taken from Mr. K.K. Manchanda Brother 20,000/- Cash paid by Mrs. Geetanjali Graver by pledging her Wife 1,00,000/- Jewellery, copy of affidavit submitted before the id, A.O. enclosed. Total Amount 3,25,000/-

That as can be seen from the above, the payments had been made by the appellant as well as his family members over the years. The fact that the appellant is a Qualified engineer and has been earning since 1974 cannot be discounted. The Income Tax Officer had been appraised of the facts but he failed to appreciate the fact that the amounts had been paid over a period of eight years, by the appellant as well as his family members and represented his savings over the years. Further the amount even includes sums paid by the family members of the appellant.

Confirmations and copies of Income tax return acknowledgements of the family members, as well as Affidavit pertaining to pledging of jewellery by the appellant's wife had been submitted before the Ld. Assessing Officer and are once again enclosed for/our honour's perusal. Further, a copy of the Memorandum of understanding as well as affidavit of the appellant submitted before Honourable Delhi High Court is attached alongwith that the AG has failed to appreciate that the fact that the property was to be jointly purchased by the appellant as well as his mother even though the MOV was entered into by the appellant.

Ground No. 4 relates to initiation of penalty proceedings u/s 271(1)(c) of the Income Tax Act, 1961, in this regard it is respectfully submitted that as can be seen on the basis of the above submissions, that the appellant did not conceal any Income, hence it is prayed that consequentially, the same may please be dropped.

Finally summing up it is once again requested that your honour look into the facts of the case considerately. The above facts were presented before the Ld. Income Tax Officer as well, but the appellant had been denied justice. It is prayed that in the wake of the above facts having been brought on record, a favourable and sympathetic decision be please taken in the matter and oblige.”

I.T.A .No.-4308/Del/2014 directing him to address the issues de-novo and pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard.