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Income Tax Appellate Tribunal, DELHI BENCH ‘F’, NEW DELHI
ORDER
Per N. K. Saini, AM:
This is an appeal by the assessee against the order dated 09.02.2010 of ld. CIT(A), Barely.
Following grounds have been raised in this appeal: “1. The Learned Assessing Officer as well as Hon’ble CIT(A) has erred in doing the addition of Rs. 10,65,000/- u/s 68 of IT Act, 1961 for sale of building material.
2. The Learned Assessing Officer as well as Hon’ble CIT(A) had erred in charging interest u/s 234B.
3. Your Appellant prays to alter, to add or to reduce any grounds of appeal at the time of hearing of appeal.”
2 Pramod Agarwal 3. Facts of the case in brief are that the assessee filed the return of income on 09.10.2007 declaring an income of Rs. 21,62,786/- which was processed u/s 143(1) of the Income Tax Act, 1961 (hereinafter referred to as the Act). Later on, the case was selected for scrutiny. During the course of assessment proceedings, the AO noticed that the capital account of the assessee was credited by a sum of Rs. 18,65,000/- with the narration “sale of house and building material”. The AO asked the details from the assessee, in response, it was stated that house was sold for Rs. 8,00,000/- on 28.11.2006 and the building material was sold for Rs. 10,65,000/- on different dates during the year. The AO did not accept the explanation of the assessee relating to the sale of building material worth Rs. 10,65,000/- and considered the same as own money of the assessee introduced in the books of accounts. Accordingly, an addition of Rs. 10,65,000/- was made considering the same as income from undisclosed sources.
Being aggrieved the assessee carried the matter to the ld. CIT(A) and submitted as under: “The Ld. Assessing Officer has erred in addition of income u/s 68 Rs. 10,65,000/- of sale of building material. The appellant has residential house one-half portion consisting covered area at Ground Floor 143.61 Sq. Mtr., 1st Floor 143.61 Sq. Mtr., 2nd Floor 143.61 Sq. Mtr., 3rd Floor 143.61 Sq. Mtr. – Total 574.44 Sq. Mtr. There was no purchaser available to purchase the house in the same condition. The appellant amended in the house and some of the portion was dismantled at ground floor 3 Pramod Agarwal = 28.82 Sq. Mtr., 1st Floor = 44.26 Sq. Mtr., 2nd Floor = 125.53 Sq. Mtr., 3rd Floor = 143.61 Sq. Mtr. Total 342.22 Sq. Mtr. Which material was sold by the assessee for the value of Rs. 10,65,000/-. The account copy of the sale of building material was submitted to the Ld. Assessing Officer. The Ld. Assessing Officer have also stated the facts of cash receipt out of sale of building material at Pate-3, Para-4. The Ld. Assessing Officer have not gone to the facts of the case and said only a make believe story, which has been drafted to prove which is established to be false. The appellant have dismantled the portion as mentioned above before sale and the sale value had been used for the purpose of purchase of residential house which is exempt u/s 54F of IT Act, 1961. The covered area of the rest of house was 232.22 Sq. Mtr. which was sold by registered sale deed.” The facts, in brief, are that the assessee sold house for Rs. 8,00,000/-. It was further stated that, in addition to sale of house, the assessee also sold building material for Rs. 10,65,000/- on different dates and the same was recorded in the books with narration as “being the amount received for the sale of building material”. The assessee also contended that the first and second storeys were dismantled and the material of the same was sold for Rs. 10.65 lakh. It was also argued that the storeys were dismantled because there was no buyer for the house in that position.”
The ld. CIT(A) after considering the submissions of the assessee confirmed the addition by observing as under: “After careful consideration of the facts of the case, submission of the assessee and the findings of the AO, it was reasonably established that the assessee did not substantiate the claim made in the return of income as receipt from sale of 4 Pramod Agarwal building material. The contents of the sale deed of the house were a conclusive evidence to justify the action of the AO. Accordingly, the addition is confirmed.”
Now the assessee is in appeal. The ld. Counsel for the assessee submitted that neither the AO nor the ld. CIT(A) appreciated the fact in right prospective. It was further submitted that the AO made the additions in arbitrary manner and the ld. CIT(A) without appreciating the fact and considering the submissions of the assessee confirmed the addition made by the AO.
In her rival submissions the ld. DR strongly supported the orders of the authorities below.
We have considered the submissions of both the parties and perused the material available on record. In the present case, the claim of the assessee was that the old building was dismantled and the material was sold for Rs. 10,65,000/-, the reasons given for dismantling the building was that there was no buyer for the house in that position. The various details for sale of the building material were furnished and this fact has also been mentioned by the AO in para 5 of the assessment order. In the present case, it appears that the AO without making any inquiry from the buyers of the material made the addition. The assessee has furnished the affidavit of the buyers which are placed at page nos. 1 to 13 of the assessee’s paper book. However, it is not clear as to whether 5 Pramod Agarwal those affidavits from the buyers were furnished before the authorities below. We, therefore, to meet the ends of justice and keeping in view the principles of natural justice deem it appropriate to set aside this issue back to the file of the AO to be adjudicated afresh in accordance with law after providing due and reasonable opportunity of being heard to the assessee.
In the result, the appeal of the assessee is allowed for statistical purposes. (Order Pronounced in the Court on 11/12/2015)