ACIT, NEW DELHI vs. YATINDER KUMAR GUPTA, NEW DELHI

This appeal filed by the Revenue is directed against the order dated 29.04.2015 of the learned CIT(A)-II, Agra, relating to Assessment Year 2010-11.

“1. The learned CIT(A) has erred in law and facts while deleting the addition of Rs.2,15,00,000/- made on account of unaccounted money was invested by the assessee for purchase of property in J.P. Green, Greater Nodia.” 3. Facts of the case, in brief, are that the assessee is an individual and derives income from business, income from house property and income from other sources. A search u/s 132(1) of the I.T. Act, was conducted on 17.09.2010 at the premises of the Sharda Group of Agra including the premises of the assessee in which certain documents and assets, etc. were found and seized. In response to notice u/s 153A dated 17.01.2012, the assessee filed his return of income on 21.09.2012 declaring total income of Rs.19,47,520/-. During the course of assessment proceedings, the AO noted that certain papers marked as Annexure A-II in party A-I which were seized relates to same property transaction which gives calculation of payments made for purchasing a house. The AO observed that as per this paper, a house was purchased in a colony developed by Jaypee group. On enquiry being made about the entries made in this paper, the assessee explained before the AO in a reply filed on 29.03.2013 stating that one person named Shri Rohit Gupta who had earlier booked one residential property in Jaypee Greens, Greater Noida wanted to sell the said property mentioned in the seized paper. All the notings, in the seized paper are as per purchase terms agreed by Shri Rohit Gupta. The broker informed to the assessee that Shri Rohit Gupta was not in a position to pay further instalments and hence, he wanted to transfer his allotment. As

per the assessee’s reply submitted before the AO, he contacted the concerned person of Jaypee Greens, Greater Noida to confirm whether the said property has been allotted to Shri Rohit Gupta or not. He got it confirmed from Jaypee Greens that the property was booked by Shri Rohit Gupta and he had already paid Rs.1.65 crore and further amount due from him to be paid immediately was approximately Rs.1.00 crore. Jaypee Greens people informed that if the assessee wanted to transfer the allotment in his favour, he had to pay Rs.1.65 crore to Shri Rohit Gupta and Rs.1.00 crore to the company, Jaypee Greens, Greater Noida. The assessee further mentioned in his reply filed before the AO that he agreed to purchase the said property and to pay Rs.1.65 crore to Shri Rohit Gupta. After payment to Shri Rohit Gupta, his allotment was cancelled and the property was booked in the name of Shri Pradeep Kumar Gupta jointly with his wife Smt Seema Gupta by Jaypee Greens, Greater Noida and total purchase amount finalized with Jaypee Greens was Rs.5.85 crore out of which, Rs.1.65 crore was paid to Shri Rohit Gupta from the bank account of Smt. Seema Gupta and further Rs.1.00 crore was paid to Jaypee Green, Greater Noida from the bank account of Smt. Seema Gupta and partly from the bank account of Shri Pradeep Gupta. The assessee mentioned in his reply to the AO that these payments are verifiable from the bank statement filed by him. Thus, as per the assessee, total payment made to acquire this property is Rs.2.65 crore and the same is clear from the payment plan letter issued by Jaypee Greens. The assessee also filed copy of the provisional allotment letter and the payment plan issued by Jaypee Greens, Greater Noida. It was clarified by the assessee in his reply to the AO that he has not made any payment on 15.11.2009 and 01.11.2009. He further clarified that he has no concern with the noting as mentioned in the impugned paper and the same has been explained giving following facts:-

“(A) The property has been allotted in favour of Shri

(B) The total purchase price for the said property as

per the provisional allotment letter is Rs.5.85 crore.

(C) The payment of Rs.2.65 crore was paid out of Rs.5.85 crore and the balance amount is to be paid as

per the payment plan issued by Jay Pee Greens,

Greater Noida”

4.1. However, the AO was not satisfied with the reply given by the assessee. He noted that as per assessee’s reply total purchase price for the said property as per the provisional allotment letter is Rs.5.85 crore while on paper this was finalized at Rs.4.92 crore and then at Rs.5.65 crore. He noted that the assessee has said in his reply that the property has been allotted in favour of Pradeep Kumar Gupta jointly with Smt. Seema Gupta by Jaypee Greens as per their provisional allotment letter dated 17.09.2012 while as per paper assessee has made payments till 15.11.2009 and further the payment of Rs.1.65 crore was done on 01.10.2009.

Therefore, he concluded that considering the above dates of payment, the house should be transferred on or near about this date. As regards the name of Shri Rohit Gupta and Reeva Khetrpal, the AO pointed out that both these names are mentioned on these papers and the assessee has purchased property from Shri Rohit Gupta but he is now denying about knowing Shri Rohit Gupta and Reeva Khetrpal. The AO examined the seized documents and was of the opinion that this is a common practice of the assessee that he used the word ‘A’ for accounted money and ‘B’ for unaccounted money.

The AO further discussed in the assessment order after examination of the seized papers keeping in view his findings that the word ’A’ & ‘B’ is mentioned in other papers found in search that this is very clear that on first, Shri Rohit Gupta finalized the deal of property with Jaypee for Rs.492.25 lakh in which he paid to Jaypee at Rs.1.55 crore on 11.01.2008 and Rs.10 lac on 31.10.2008. The AO further discussed in the assessment order that the assessee purchased the property from Mr. Rohit Gupta and Rs.1.65 crore was given as accounted ‘A’ amount to him with premium of Rs.72.72 lac as unaccounted ‘B’ amount. Therefore, total amount of Rs.237.72 lakhs were paid to Shri Rohit Gupta and rest amount is to be paid is Rs.254.53 lakhs. The AO further discussed in the assessment order that during transfer process, Jaypee increased total amount to Rs.565 lakhs because of the following reasons as mentioned in the seized papers.

10% penalty charges of Rs.492.25 lakhs = Rs.49.23 lakhs Golf Membership charge + sports membership =Rs.23.52 lakhs 5. After giving the above details of increase in the price of the property purchased from Jaypee, the AO has held that the amount of Rs.565 is divided in two parts, amount ‘A’ of Rs.350 lakhs and ‘B’ of Rs.215 lakhs. The AO has also pointed out that because amount of Rs.165 lakhs was already paid to Shri Rohit Gupta, therefore, rest amount is calculated at Rs.185 Lakhs and in ‘B’ amount Rs.72.75 lakhs has already been paid and rest amount of Rs.142.25 is paid on 01/11/2009 to the Jay Pee as per calculation mentioned on paper. After examining the above mentioned facts from the seized paper, the AO concluded that this is very clear that amount of Rs.215 lakh mentioned as amount ‘B’ is unaccounted income of the assessee and treated the same as undisclosed. The AO accordingly made addition of Rs.2.15 Crore to the total income of the assessee.

6. Before the learned CIT(A), the assessee made elaborate arguments stating that the AO has made addition on the basis of presumption and surmises without appreciating that neither he purchased the property nor he made any payment. Further, the allotment letter was not in the name of the assessee or his wife. Although the seized papers were found from the residence of the assessee but it is not related to the assessee. The presumption drawn by the AO u/s 292C of the Act is not supported by any corroborative evidence.

Further, the document found is not in the handwriting of the assessee. It was submitted that the transaction took place for a sum of Rs.5.50 Crores and out of the said amount a sum of Rs.1.65 Crores was made to Mr. Rohit Gupta which was already paid by him to the builder. Further, the price of the property is more than the amount mentioned in the seized document found and the entire payment were made by cheque through banking channel and no unaccounted cash is involved. The assessee filed the affidavit of the concerned broker with request to admit the same under Rule 46A of I.T.

Rules and also requested the learned CIT(A) to examine the broker to prove the correctness of the affidavit filed before him.

The learned CIT(A) after admitting the additional evidence filed before him, examined the broker and also called for a remand report from the AO. After considering the submission of the assessee, the remand report of the AO and the rejoinder of the assessee to such remand report, the learned CIT(A) deleted the addition by observing as under:-

“5.10 I have examined all the details brought before me by Id. AR as well as the AO relating to the seized document in which certain recording has been made relating to purchase of a property under dispute. In order to decide the issue relating to alleged unexplained investment made by the assessee in the said property, I have decided to first examine the impugned seized document. This seized document is place as Annexure A-1 of this order. Looking to this seized document, total price of the property has been found to be mentioned as Rs.5.65 crore out of which, Rs, 3.5 crore is mentioned as ‘A’ and Rs. 2.15 is mentioned as ‘B’. Thus, total price of the property has come to Rs.5.65 crore. Out of the amount mentioned as ‘A’ at Rs.3.5 crore, payment of Rs.1.65 crore has been shown and against the balance amount of Rs.1.85 crore, Jaypee Greens, Greater Noida is written. On the basis of these notings made in the seized document, the AO concluded that out of Rs 3.5 crore mentioned as ‘A’ amount, Rs.1.65 crore is paid by cheque to Shri Rohit Gupta from whom property was purchased and balance Rs.1.85 crore was required to be paid to Jaypee Greens, Greater Noida. For ‘E3’ amount of Rs.2.15 crore, it has been concluded by the AO that the same has been paid in cash to the person from whom this property has been purchased as unaccounted payment and hence, he added this amount in the income of the assessee assuming that this payment has been made by the assessee (appellant). Now, these notings made in the seized document are required to be examined in the light of the factual position relating to this property. It is undisputed fact that this property is in the name of elder brother of assessee (Shri Pradeep Kumar Gupta and his wife Smt. Seema Gupta). This fact has also been told to the AO during the assessment proceeding. As far as the price of the property is concerned, i have found from the allotment letter issued by Jaypee Greens as well as the payment plan that total price of the property is Rs.5.85 crore. This fact has also been stated by the assessee to the AO during the assessment proceeding. The price of Rs.5.85 crore mentioned in allotment letter of Jaypee issued to Sri Pradeep Kumar Gupta and Smt. Seema Gupta is more than the amount of Rs.5.65 crore mentioned in the seized document. The AO has also not brought any evidence on the record to show thaTthe value or the price of the impugned property is more than the amount of Rs.5.85 crore mentioned in the allotment letter issued by Jaypee Greens. The assessee(appellan.t) has very clearly shown by giving the details of cheques issued so far that total payment of Rs.2,67,57,500/- is made as per the details given below:-

Date Cheque No. Amount 1.10.2009 230832 issued from Syn 1,65,00,000 Bank of Smt. Seema Gupta 31.93.2012 778618 issued from 50,00,000/- Syn Bank of Pradeep Kumar Gupta 31.03.2012 230845 issued from 52,57,500/- Syn Bank of Smt. Seema Gupta 5.11 From the payment plan issued by Jaypee Greens, Greater Noida, it has been shown by the assessee(appellant) that total price of the property is Rs.5.85 crore out of which, Rs.2.65 crore has been paid including service tax and remaining amounting of Rs.3.20 crore is outstanding. 5.12 Considering the above details of price of the property and the payments made so far, I find that the possibility of any payment made in cash does not arise because price of the property itself is more than what is shown in the seized document out of which Rs.2.65 core have been paid in cheque and balance amount of Rs.3.20 crore are still shown outstanding in the payment plan of Jaypee Greens. The question of making payment in cash over and above the price of the property mentioned in the allotment letter arises only when it is proved that the value /price of the property is more than the price mentioned in the allotment letter. Neither seized document establishes that the price of the property is more than the price mentioned in the allotment letter nor the AO has brought any evidence on record to show that the price of the property is more than Rs.5.85 crore mentioned in the allotment letter. It is also important to note here that the property is not in the name of assessee(appellant) but it is in name of brother Shri Pradeep Kumar Gupta & Smt. Seema Gupta and so far all payments have been made by them. Therefore, possibility of making any unaccented investment in this property by the assessee(appellant) does not arise. The AO only argument is that though the property is in the name of Shri Pradeep Kumar Gupta and Smt. Seema Gupta but all the dealings have been made by the assessee and he is a key person for making this dealing. Therefore, irrespective of the fact whether property is in the name of Shri Pradeep Kumar Gupta and Smt.Seema

Gupta, as per the AO, unaccounted investment in cash to the extent of Rs.2.15 crore has been made by the assessee. If this argument of the AO is accepted that the unaccounted payment of Rs.2.15 crore in cash has been made by Shri Y.K. Gupta for purchase of the impugned property, the total price of impugned property would come to Rs.8 crore (Rs.5.85 crore +Rs.2.15 crore). However, no evidence has been brought on record by the AO showing that total price of the property or its value is asessed at Rs.8 crore. In fact the AO has not even disputed the total price of the property or its value shown in the allotment letter submitted by the assessee(appellant). Therefore, his argument of making of unaccounted payment in cash by the assessee to the extent of Rs.2.15 crore for purchasing this property has not been found to be convincing at all. His another argument of making of unaccounted investment by the assessee in the said property because he was involved in the deal irrespective of the fact that the property is in the name of his elder brother, has also not been found convincing. In this regard, I agree with the Id. AR as argued by him in the rejoinder that the argument of the AO that with regard to the property at Jaypee Greens, Greater Noida , the broker met Shri Y.K. Gupta and he does not know Shri P.K. Gupta, does not make any material difference as all the payments are made from the bank account of Shri P.K. Gupta and Smt. Seema Gupta and the property is also booked and allotted in the joint name of Shri Pradeep Kumar Gupta & Smt. Seema Gupta and all the documents and evidences in this regard, are already on record and show that this property belongs to them. It is also important to note here that there is nothing on record to show /proof that the cheques to Shri Rohit Gupta and further cheque to Jaypee Greens were given by Shri Y.K. Gupta. As regards to amount mentioned as ‘A’ & ‘B’ in the seized document and conclusion drawn by the AO that amount ‘B’ is paid in cash, I find that the Id. AR has correctly referred to decision of the Hon’ble ITAT Agra in the appeal of Sharda Educational Trust with regard to the paper seized from the residence of Shri Y.K. Gupta. In this decision, it has been held that in absence of any recovery of incriminating material against the assessee and any corroborative evidence during the course of search, the Hon’ble Tribunal was of view that various documents /list annexed with the impugned order is not admissible in evidence against the assessee. Therefore, the argument of AO that ‘B’ amount mentioned in seized document is payment in cash cannot be accepted because as I have already discussed that there is no possibility of making cash payment for purchase of this property in view of the fact that total price of the property as mentioned in the allotment letter of Jaypee Greens is more than what is mentioned in the seized document. Out of the total price of Rs. 5.85 crore mentioned in the allotment letter, the payment made by the elder brother of the assessee and his wife totaling to Rs.2.65 crore has already been mentioned in the payment plan of Jaypee Greens and balance amount of Rs.3.20 is still shown outstanding. There is no evidence that the value of the property is more than Rs. 5.85 crore. Therefore, on the basis of the seized document, it is not proved that the amount ‘A’ mentioned as Rs.3.5 crore is cheque amount and Rs.2.15 crore mentioned as ‘B’ is cash amount. Therefore, considering all the above facts and circumstances of the case as discussed by me and taking into account the fact that the property is not in the name of the assessee(appellant), no addition can be made in the hand of the assessee treating Rs.2.15 crore as unaccounted investment made by the assessee(appellant). Therefore, I delete the addition of Rs.2.15 crore made in the assessment order. Accordingly, grounds taken in appeal disputing the addition of Rs.2.15 crore are allowed.”

7. Aggrieved with such order of the learned CIT(A), the Revenue is in appeal before the Tribunal.

8. The Ld. DR heavily relied on the order of the Assessing Officer and submitted that the ld. CIT(A) was not justified in deleing the addition without appreciating that seized documents contains noting which clearly shows that amount of Rs.2.15 lakhs is the unaccounted money given in black. He accordingly submitted that the order of the learned CIT(A) be set-aside and the order of the AO should be restored.

Referring to the order of the AO as well as the learned CIT(A) and the various pages of the paper book, he submitted that the property is in the name of elder brother of the assessee namely Shri Pradeep Kumar Gupta and his wife Smt. Seema Gupta. The price of Rs.5.85 crores mentioned in allotment letter of Jaypee Group issued to Shri Pradeep Kumar Gupta and Smt. Seema Gupta is more than the amount o Frs.5.65 crores mentioned in the seized document. He submitted that the AO has not brought any evidence on record to show that the value or the price of the impugned property is more than the amount of Rs.5.85 crores mentioned in the allotment letter issued by Jaypee Greens. He submitted that the price of the property itself is more than what is shown in the seized documents out which Rs.2.65 crore have already been paid in cheque and balance amount of Rs.3.20 crore are still shown outstanding in the payment plan of Jaypee Greens. Therefore, the possibility of any payment made in cash does not arise. He submitted that neither the seized document establishes that the price of the property is more than the price mentioned in the allotment letter nor the AO has brought any evidence on record to show that the price of the property is more than Rs.5.85 crores mentioned in the allotment letter. He submitted that the property is not in the name of the assessee but it is in the name of elder brother Shri Pradeep Kumar Gupta and Smt. Seema Gupta. Therefore, possibility of making any unaccounted investment in this property by the assessee does not arise. He submitted that if the argument of the AO is accepted that the unaccounted payment of Rs.2.15 crore in cash has been made by the assessee for purchase of the impugned property, the total price of the impugned property would come to Rs.8 crore. However, no evidence has been brought on record by the AO to show that the total price of the property or its value is assessed at Rs.8 Crores. He submitted that the AO has never disputed the total price of the property or its value shown in the allotment letter submitted by the assessee.

i. CIT vs Praveen Juneja (Delhi High Court) ii. CIT vs Praveen Juneja (Delhi High Court) iii. Pr. CIT vs Umesh Ishrani [2019] 108 taxmann.com 437(Bom.) iv. Pr. CIT vs Delco India (P) Ltd. [2016] 67 taxmann.com 357 (Del.) v. Sharda Educational Trust vs CIT (C), Kanpur [2014] 43 taxmann.com 95 (Agra. Trib.)

Further, no evidence has been brought on record by the AO that total price of the property or its value is assessed at Rs.8 Crores. The AO has never disputed the total price of the property or its value shown in the allotment letter submitted by the assessee. Other argument of the AO that with regard to the property at Jaypee Greens, Greater Noida, the broker met Shri Y.K. Gupta and he does not know Shri P.K. Gupta in our opinion does not make any material difference at all, since, all the payments have been made from the bank account of Shri P.K. Gupta and Smt. Seema Gupta and the property is also booked and allotted in the joint name of Shri Pradeep Kumar Gupta and Smt. Seema Gupta.

13.1. We find an identical issue had come up before the Mumbai Bench of the Tribunal in the case of Pr. CIT vs Umesh Ishrani (supra). In that case, the assessee was a partner in the firm. During the course of search, certain loose papers in respect of purchase of shops were found and seized. On the basis of loose papers, additions were made in the hands of the individual partners and on protective basis in the hands of the firm. While deleting such addition in case of the assessee, the Tribunal noted that such loose papers nowhere show that any payments were made by same partner and further no enquiry was made with the seller of the shops or the developer. The Tribunal, concluded that entries reflected in the loose papers, were not corroborated with any other evidence on record. The Hon’ble Bombay High Court upheld the order of the Tribunal and dismissed the appeal filed by the Revenue.

“4. A search took place in the premises of the Respondent/Assessee pursuant to which certain documents were seized. The document on the basis of which the above addition was made was a piece of paper dated 24th November, 2003. It contained a hand-written figure of '8050'. In two columns it set out details of purportedly expenses on drive way, tennis court, garden lights etc. in the left column totalling '9.45' and some other expenses relating to the architect, wooden fittings, bathroom fittings, etc. in the right column totaling '13.45'.

Order was pronounced in the open court on 15/07/2021.