Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI
Before: SHRI N. K. SAINI & MS SUCHITRA KAMBLE
This appeal is filed by the assessee against the order dated 27/11/2014 passed by CIT(A)- XXVII, New Delhi for Assessment Year 2006-07.
The grounds of appeal are as under:-
1. That the Ld. CIT (Appeal) has erred in law and on facts in confirming the addition of Rs. 25,20,884/- as income from undisclosed sources which was added by the ACIT, Central Circle-9, New Delhi in as much as the entire addition is unwarranted, based on surmises and conjectures, without any basis, illegal and thus, requires to be deleted in toto.
2. That the Ld. CIT (Appeal) has erred in law and on facts in not appreciating that the addition of Rs. 25,20,884/- has been made without
any positive & cogent evidence and rather on irrelevant facts. 3. That the Ld. CIT (Appeal) has erred in law and on facts in not appreciating that the Ld. AO has not considered the evidences produced by the appellant which clearly establishes that no cash payment was made by the appellant. 4. That the impugned appellate order is arbitrary, illegal, bad in law and in violation of rudimentary principles of contemporary jurisprudence.
Consequent to the search conducted in Aerens group of cases on 17.08.2011, a search and seizure operation u/s 132 of the I.T. Act, 1961 was also conducted at the premises of the assessee on 10.02.2012. A notice u/s 153A of the Income Tax Act, 1961 was issued and served upon the assessee on 5.09.2013. In response to the same, it was stated that the return filed u/s 139(1) on 11.09.2006 be treated as the return filed in response to notice u/s 153A. Subsequently, statutory notices u/s 143(2) and 142(1) were issued and served upon the assessee. In response to the same, the Authorized Representative of the assessee attended the assessment proceedings and furnished the requisite information, documents, accounts etc. It was observed by the Assessing Officer that the return filed declaring Nil income included income from interest amounting to Rs.2,41,328/-. The Assessing Officer observed that as per audit report submitted in Form No. 10B, as against this income received during the previous year relevant to assessment year under consideration, the assessee applied a sum of Rs. 1,81,005/- for charitable / religious purposes in India. The Assessing Officer observed that the income applied was not in accordance with the provisions of Section 11 of the IT Act, 1961 as the assessee trust failed to utilize the donation at 85% of the receipt. The Assessing Officer observed that the total receipt of the trust during the year was Rs.2,41,328/- and 85% of the same worked out Rs.2,05,128/- whereas, the appellant utilized only a sum of Rs.1,81,005/- and no declaration regarding the nature of utilization of the balance amount in future was made. Therefore, the Assessing Officer brought the balance amount of Rs.60,223/- to tax. In the course of search proceedings u/s 132 in cases of AEZ group, an excel sheet in the form of hard disk was found at the corporate office of AEZ group at 301- 303, Bakshi House, Nehru Place, New Delhi which was seized and marked as annexure A-32. The file name of the hard disk was “D.P.Correction Sheet.xls” which contained me following details of sales status of Indirapuram Habitat Centre:
Sales Status- Indrapuram Habitat Centre (Down payment)
Sl Name Sup Basic Achiev Cheq Cash Total( Cheq Cash Total( Cheq Ca Total( N of er sale ed rate ue (Rs.) Rs.) ue (Rs.) Rs.) ue sh Rs.) o. purcha Are price (Rs./sq (Rs.) (Rs.) (Rs.) (Rs ser a Rs./Sq .ft. .) Spft .ft) ) GROUND FLOOR 2 Subha 500 6881.7 9200 25208 34408 7500 25208 32708 1700 0.0 17000 9. sh ) 66 00 83 83 00 83 83 00 0 0 Sushil a Lakhot ia, Trust On perusal of the above details the Assessing Officer found that the assessee invested a sum of Rs.32,70,884/- for purchase of flat / space / land with M/s Indirapuram Habitat Centre, a concern of AEZ group. The Assessing Officer observed that the out of the above amount of Rs.32,70,884/-, the assessee paid a sum of Rs.7,50,000/- by cheque which was duly reflected in the balance sheet but no details of the cash payment amounting to Rs.25,20,884/- were available on record. According to the Assessing Officer no satisfactory explanation was also furnished by the assessee except denial of the cash payment. Since the cash payment was proved on basis of material seized, the Assessing Officer opined that the assessee made the above cash payment out of the books of account and treated it as unexplained income of the assessee.
However, before adding back the same, vide notice dated 5.02.2014, the Assessing Officer gave an opportunity to the assessee to furnish a reply. According to the Assessing Officer, the assessee filed reply. The Assessing Officer further observed that in the same excel sheet the name of one Sh. I.E. Soomar, E-405, Greater Kailash-ll, New Delhi also appeared at Sr. No. 39 who admitted the cash investment of Rs.6.64 crores being made in the said project, and paid the taxes on the same. In view of the above, the Assessing Officer observed that the assessee failed to adduce and iota of evidence in respect of the cash investment of Rs.25,20,884/-. Therefore, in the light of the above discussion and the surrender made by Sh. I.E. Soomar on the basis of similar evidence, the Assessing Officer opined that the cash investment of Rs.25,20,884/- made by the assessee was out of the income not disclosed by it in its books of account. Accordingly, the Assessing Officer added the above amount of Rs.25,20,884/- to the income of the assessee as income from undisclosed sources. Accordingly, the assessment was completed in terms of an order u/s 153A read with section 143(3) of the I.T. Act, 1961 at a total income of Rs.25,81,107/- as against the nil income declared by the assessee in its return of income.
Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee
The Ld. AR submitted that the present appeal of the assessee is arising from the order of CIT(A) dated 27/11/2014 and relates to Assessment Year 2006-07. The Ld. AR pointed out certain dates which are as under:-
Date Event Remark if any 11.09.2006 Original Return of Processed u/s 143(1) of Income has been filed by the Act. the assessee.
17.08.2011 A search and seizure Alleged document action was conducted on showing investment of the premises of AEZ Rs.25,20,884/- has been group found in this search 10.02.2012 A search and seizure Submissions before the action in the case of the CIT(A) at Page No. 13 assessee was conducted Para 27(b) of the Act. where no incriminating Finding of CIT(A) that no document was found incriminating documents was found in the assessee search is at Page No-15.
30.09.2013 Notice u/s 153A of the Act was issued and the assessee filed its ROI as originally filed
The Ld. AR submitted that the assessee is a trust and filed its Original return on 11.09.2006. The return filed by the assessee was processed and not pending on the date of search. On 17.08.2011, a search and seizure action has undertaken in The case of AEZ group during this search it is alleged that it has come to light (details of this light is not mentioned in Assessment order) that assessee has invested an amount of Rs 25,20,884/-via cash in M/s Indrapuram Habitat Center Pvt. Ltd. Thereafter, a search action has also been undertaken in the case of assessee on 10.02.2012. The Ld. AR submitted that no evidence supporting the case of revenue vis-a-vis investment in cash in Indrapuram Habitate Center has been found. The Ld. AR further submitted that the Assessing Officer issued notice to the assessee asking the source of alleged investment. The Ld. AR submitted that during the course of assessment proceedings the assessee explained that the assessee had not invested anything in the alleged property. However, the Assessing Officer relying of the confession of some I.E. Soomar made the addition in the hands of the assessee. The Ld. AR further submitted that the Assessee filed appeal before the CIT (A) and argued that no addition can be made as no incriminating material has been found in the search of assessee. The Ld. AR submitted that the CIT(A) dismissed the appeal without taking cognizance of the correct facts.
The Ld. AR submitted that in one similar matter namely in the case of Subhash Khattar a similar addition of Rs 3,21,00,000/- has been made by the revenue. In that case also two searches were conducted one at AEZ group on 17.08.2011 and one at Mr Subhash Khattar on 10.02.2012. This addition was also made in respect of investment in Indrapuram Habitat Center Gziabad and on the basis of confession of Shri I.E.Soomar. The appeal of the assessee Subhash Khattar when come up before the ITAT, the Tribunal in of 2015 held that no addition under section 153A of the Act can be made in absence of any incriminating documents found in search. The Tribunal further gave a finding that merely because some third party has surrendered some amount in his hands that does not mean that such surrender binds all other independent assessees. The Ld. AR submitted that all these aspects have been considered by the Tribunal in its order dated 30.06.2016. The Ld. AR further submitted that order of the Tribunal has now been affirmed by the High Court in ITA no 60 of 2017 order dated 25.07.2017. The Ld. AR submitted that while deciding the case of Subhash Khattar, the Hon’ble High Court decided the issue after framing the question of law. The Ld. AR submitted that the Tribunal in the case of Asha Rani Lakhotiya, which belongs to same group, following the verdict of Delhi High Court has allowed the appeal of the assessee. Therefore, the Ld. AR submitted that the issue is squarely covered by the judgment of Hon’ble Delhi High Court and hence no addition can be made in the hands of the assessee.
The Ld. DR relied upon the order of the Assessing Officer and the CIT(A), but could not controvert the decision of the Hon'ble High Court in case of Subhash Khattar of 2017 (Delhi High Court).
We have heard both the parties and perused all the records. It is pertinent to note that in present case on 17.08.2011, a search and seizure action has undertaken in the case of AEZ group during this search it is alleged that the assessee invested an amount of Rs 25,20,884/-via cash in M/s Indrapurarn Habitat Center Pvt Ltd. Thereafter, a search action was also undertaken in the case of assessee on 10.02.2012. However, no evidence supporting the case of revenue vis-a-vis investment in cash in Indrapurarn Habitate Center was found. AO issued notice to the assessee asking the source of alleged investment. During the course of assessment proceedings, the assessee explained that assessee had not invested anything in the alleged property. However, the Assessing Officer relied upon the confession of some I.E. Soomar and made the addition in the hands of the assessee. The said confession and the said Group search is already taken into account in co- investor’s case by this Tribunal. The Tribunal has allowed the appeal of the co- investor which is mentioned in the proceedings of the present assessee (Subhash Khattar Vs. ACIT A.Y. 2006-07 order dated 30/06/2016). The Hon’ble Tribunal held in para 8 as under:
“8. Considering the above submissions, we find that the Learned CIT(Appeals) has upheld the addition in question mainly on the basis of (i) the details written on the hard disc found during the course of search from the premises Aerens Group, wherein payment through cheque and cash have been mentioned against the name of assesee at Sr. No. 32; Shri I. E. Soomar appearing at Sr. No. 39 of the said hard disc had admitted the cash investment of Rs.6.64 crores being made in the said project and had paid the taxes on the same; (iii) the said hard disc cannot be relied upon in part as the assessee has admitted the payment through cheque but denied the cash payment shown therein etc. In our view, a hue addition of Rs.3,21,00,000/- cannot be made in a casual manner without having corroborative evidence in support. It is a prevailing practice in the dealings of immovable properties that cash amount, if any, out of the agreed consideration is paid during the course of execution/registration of the sale deed and admittedly in the present case no sale deed or other mode of transfer has been effected. Merely because name of the assessee is appearing in the said hard disc and amongst other investors are investor Shri I. E. Soomar appearing in the said hard disc has admitted payment of cash amount, cannot be a basis for arriving at a definite conclusion, in absence of corroborative evidence in support, that the assessee had also paid the amount of Rs.3,21,00,000/- in cash. The Hon’ble Jurisdictional High Court of Delhi in the case of CIT Vs. Prem Prakash Nagpal (Supra) wherein Assessing Officer had made certain additions u/s 69 of the Act on the basis of the documents found during search at a place of third party which indicated that assesseee had purchased a plot by paying consideration in cash, it was held by the Hon’ble High Court that the Assessing Officer could not prove by evidence that said docuemtns belonged to the assessee and that any on money transaction had taken place. The documents at the best only showed tentative/projected purchase consideration held the Hon’ble High Cout. Again, in the case of CIT Vs. Alpha Impact Pvt. Ltd (Supra), the Hon’ble Bombay High Court has been pleased to hold that addition to assessee’s income in respect of additional sales consideration received in sale of land merely on the basis of Email recovered during the course of search action at the premises of another person and there being no independent material available supporting such addition, was not justified. Besides, we also find substance in the contention of the Learned AR that assessment u/s153A of the act in absence of incriminating material found during the course of search at the premises of the assessee and in absence o abatement of assessment on the date of search, cannot be made in the present case as per the above cited decisions including the decision of Hon’ble Jurisdictional Delhi High Court in the case of CIT vs Kabul Chawla (Supra). Under the circumstances, we are of the view that the Assessing Officer was not justified in assuming jurisdiction u/s 153A and authorities below ere also not justified in making and sustaining the addition in question merely on the basis of a hard disc found during the course of search at the premises of Aerens Group without any corroborative evidence in support. We thus hold that the assessee/appellant succeeds on both the above issues, i.e. on validity of assumption of jurisdiction u/s153A and the addition in question. The grounds involving the above issues are accordingly allowed.
The issue contested herein is confirmed by the Hon’ble Delhi High Court vide order dated 25.07.2017. Thus, the issue raised in the present appeal is already covered in co-investors’ case.
In result, appeal of the assessee is allowed.
Order pronounced in the Open Court on 1st June, 2018.