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Income Tax Appellate Tribunal, DELHI BENCHES : H : NEW DELHI
Before: SHRI J. SUDHAKAR REDDY, AM & SHRI SUDHANSHU SRIVASTAVA, JM
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : H : NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, AM AND SHRI SUDHANSHU SRIVASTAVA, JM ITA Nos.5473 to 5477/Del/2010 Assessment Years : 2002-03 to 2007-08 Vijay Kumar Kataria, Vs. DCIT, B-14, GF, Geetanjali Enclave, Central Circle 11, Malviya Nagar, New Delhi. New Delhi. PAN: AAFPK4146G (Appellant) (Respondent) Assessee By : Shri R.S. Singhvi, Advocate Department By : Smt. Jyoti Kumari, CIT, DR Date of Hearing : 29.10.2015 Date of Pronouncement : 17.11.2015
ORDER PER J. SUDHAKAR REDDY, AM: All these appeals by the assessee are directed against the separate orders passed by the CIT(A)-I, New Delhi, wherein the orders passed by
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the AO u/s 143(3) read with section 153 of the Income-tax Act, 1961 were confirmed.
As the issues arising from all these appeals are common, for the sake of convenience, they were heard together and are being disposed of by way of this common order.
The facts in brief: The assessee is a civil contractor. A search and seizure operation u/s 132 of the Act was carried out on 24.4.2007 on the assessee. Therefore, a notice u/s 153A dated 10.8.2009 was issued to the assessee for AY 2002-03, requiring him to file the return within 15 days of the service of the notice. Pursuant to the above notice, the assessee has filed the return on 17.9.2009 submitting the total income of Rs.14,21,810/- (Rs.3,28,774/- for AY 2004-05, Rs.7,52,189/- for AY 2005-06, Rs.17,71,791/- for AY 2006-07 and Rs.15,41,300/- for AY 2007-08) which was processed u/s 143(1) of the Act. Thereafter, the assessments were completed on 27.12.2009 u/s 143(3) read with section 153A of the Act, making certain additions which are in dispute before us.
ITA Nos.5473 to 5477/Del/2010
We have heard Shri R.S. Singhvi, the ld. counsel for the assessee and Smt. Jyoti Kumari, the ld. CIT, DR for the Revenue.
First we take up ITA No.5473/Del/2010 for the assessment year 2002-03. The grounds of appeal read as under:-
“1. That on the facts and circumstances of the case, CIT(A) was not justified in making an exparte order without proper service of notice and proper opportunity for hearing of appeal. (ii) That exparte order is on illegal and arbitrary basis and appeal has been disposed off on mechanical basis without proper adjudication of various grounds on merits. 2(i). That assessment being u/s. 153A in the context of search u/s. 132(1), the same has to be on the basis of any material or evidence found as a result of search in respect of any undisclosed income. (ii). That various additions in the assessment u/s. 153(A) are without jurisdiction as same are not on the basis of any evidence or incriminating material found during the course of search and in total disregard to the fact that all the particulars of income are supported from regular records. 3(i) That lower authorities have erred in estimating business income at 10% as against declared income of 5.7% even though the return income is supported from the books of accounts and audited records and no mistake or irregularity has been found in the same. (ii) That in the absence of any evidence or incriminating material found as a result of search in respect of trading result supported from audited books of accounts, it is not open to consider any addition in an illegal and arbitrary manner.
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(iii) That the estimation of income at 10% is on presumption and surmises and there is no valid basis for estimation of same particularly when there is no case of application of provisions of sec. 145 of the Income Tax Act, 1961. 4. That CIT(A) has erred in confirming addition of Rs. 10 lacs in respect of investment in immovable property at Faridabad. 5. That the addition of Rs. 35 lacs in respect of alleged investment in purchase of shares of M/s. Kaveri Infrastructure Pvt. Ltd. is factually incorrect and based on presumption and surmises and without proper appreciation of facts. 6. That the CIT(A) has also erred in confirming addition of Rs. 4 lacs in respect of investment in immovable property at Pune even though the investment is supported from bank account and other details and there is no case of any undisclosed income or investment. 7. That the orders of the lower authorities are not justified on facts and same are bad in law.”
Ground No.1 is not pressed.
Ground No.2 is to be held in favour of the assessee in view of the decision of the Hon’ble Delhi High Court in the case of CIT, Central-III vs. Kabul Chawla in ITA No.707/2014 vide judgment dated 20th April, 2015, wherein at para 37 and 38 it has been held as follows:-
“37. On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
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i. Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place. ii. Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise. iii. The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax". iv. Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material." v. In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings. vi. Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO. vii. Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not 5
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already disclosed or made known in the course of original assessment. Conclusion 38. The present appeals concern AYs, 2002-03, 2005-06 and 2006- 07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed.”
The ld. DR vehemently contended that there were certain material found during the course of search for the AY 2006-07 and this fact proves that the AO is right in making additions for the assessment year 2002-03 onwards.
We are unable to accept this contention for the reason that the additions for the impugned assessment year are not based on any material found during the course of search and as the assessment have not abated. The assessee has filed his return of income and the time for issue of notice u/section 143(2) had expired and, under those circumstances, it cannot be said that the assessments in question have abated as argued by the ld. DR. The Delhi Bench of the ITAT in the
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case of Kusum Gupta vs. CIT in ITA No.4873/Del/2009 at para 6 of its order had discussed the issue and concluded as follows:-
“In the present case, the assessment has been completed under summary scheme u/s 143(1) and time limit for issue of notice u/s 143(2) had expired on the date of search. Therefore, there was no assessment pending in this case and, as such, there was no question of abatement.”
Respectfully following the co-ordinate Bench order, we uphold the contention of the assessee on this issue.
Ground No.3 is against the estimation of business income @ 10%. This issue is admittedly covered by the decision of the Á’ Bench of the ITAT in ITA No.3105, 3106 and 3107/Del/2011 for AYs 2002-03, 2003-04 & 2006-07 in the case of ACIT vs. Ms Asha Kataria vide its order dated 20.5.2013, wherein at para 10 and 11 it is held as follows:-
“10. We have carefully considered the submissions and perused the records. We find that the Assessing Officer in this case has estimated the trading results of the assessee @10% of gross profits as against 8.03% reflected by the assessee. The Assessee in this case is executing small contracts. The contracts are of same nature and regular books are maintained. No specific defect has been pointed out in the books maintained. It is further noted that
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on similar facts, Assessing Officer has not made any addition in the assessment order passed u/s. 153A for A.Y. 2001-02; 2004-05; 2005-06 & 2006-07. As such there is a clear contradiction in the approach of the Assessing Officer. Furthermore, reference to net profit in the case of Vijay Kumar Kataria and assessee in the past is factually incorrect, as per details cited above. 11. We further note that this is a case of search and assessment order was passed u/s. 153A of the I.T. Act. It is noted that no incriminating material or evidence was found or seized at the time of search and there is no reference to the same in the Assessing Officer’s order. In this regard, we further placed reliance the Order of the Special Bench of the ITAT in the case of All Cargo Global Logistics Ltd. vs. DCIT 137 ITD 287. In this case with reference to the assessment u/s. 153A of the I.T. Act, it was held that any assessment that are abated, the Assessing Officer retains the original jurisdiction as well as jurisdiction conferred on him u/s. 153A for which assessment shall be made for each assessment year separately. In other cases in addition to the income that have already been assessed, the assessment u/s. 153A will be made on the basis of incriminating material which in the context of relevant provisions means (i) books of accounts, other documents found in the course of search, but not produced in the course of original assessment & (ii) undisclosed income or property discovered during the course of search.”
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Respectfully following the same, this ground of the assessee is allowed.
Ground No.4 is against an addition of Rs.10 lac in respect of the investment in moveable property at Faridabad.
A perusal of the assessment order reveals that this addition is not based on any material found or seized during the course of search. Under such circumstances, applying the ratio of the decision in the case of CIT, Central-III vs. Kabul Chawla (supra), this addition has to be deleted.
Ground No.5 is against an addition made in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd. This addition has to be deleted for the reason that it is not based on any material found or seized during the course of search. In addition, the assessee demonstrates that the addition is factually incorrect. For these reasons, we delete the addition made.
ITA Nos.5473 to 5477/Del/2010
Ground No.6 is against an addition of Rs.4 lac in respect of investment in immoveable property at Pune. During the course of search, copies of two agreements executed on 6.6.2001 by the assessee for the purchase of Flat Nos.13 and 16 of E-4 in Kumar Galaxy, Pune, were seized and marked as M 494/07 at page Nos.144 to 147 of the seized material. The assessee has not offered any explanation as to the source of funds for making these purchases. Under these circumstances, as this addition is based on seized material, and, as the assessee, despite repeated opportunities, has failed to demonstrate the source of investment, we confirm the addition and dismiss this ground of the assessee.
Ground No.7 is general in nature.
In the result, the appeal of the assessee is allowed in part.
ITA No.5474/Del/2010 (AY : 2004-05)
The grounds of appeal raised by the assessee read as under:-
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“1. That on the facts and circumstances of the case, CIT(A) was not justified in making an exparte order without proper service of notice and proper opportunity for hearing of appeal. (ii) That exparte order is on illegal and arbitrary basis and appeal has been disposed off on mechanical basis without proper adjudication of various grounds on merits. 2(i). That assessment being u/s. 153A in the context of search u/s. 132(1), the same has to be on the basis of any material or evidence found as a result of search in respect of any undisclosed income. (ii). That various additions in the assessment u/s. 153(A) are without jurisdiction as same are not on the basis of any evidence or incriminating material found during the course of search and in total disregard to the fact that all the particulars of income are supported from regular records. 3. That CIT(A) has erred in confirming addition of Rs. 63,82,000/- u/s 69 of the Income Tax Act, 1961 in respect of purchase of immovable property at Geetanjali Enclave, New Delhi even though the investment is supported from bank account and other details and there is no case of any undisclosed income or investment. That the addition has been made merely on the basis of the report of District Valuation Officer and without appreciating the documents available on records. 4. That the orders of the lower authorities are not justified on facts and same are bad in law.” 20. Ground No.1 is dismissed as not pressed.
Ground No.2 is decided in favour of the assessee consistent with the view taken by us on similar grounds in ITA No.5473/Del/2010 for
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AY 2002-03, wherein we have applied the decision of the jurisdictional High Court in the case of Kabul Chawla (supra).
Ground No.3 has to be allowed in favour of the assessee by applying the decision of the Á’ Bench of the Tribunal in the case ACIT vs. Mrs. Asha Kataria, wherein at page 26 and 27, para 50 & 51, it is held as follows:-
“50. We have carefully considered the submissions and perused the records. We find that the value of the property in this case as reflected in the registered sale deed was Rs. 55,00,000/-. Reference u/s. 142A was made to the DVO by the Assessing Officer. DVO determined the value of the property at Rs. 70,36,700/- as against Rs. 55,00,000/- shown by the assessee. Hence, there was difference of Rs. 15,36,000/-. This was added to the income of the assessee. However, Ld. Commissioner of Income Tax (A) deleted the addition as there was no evidence of adverse material regarding payment of under hand consideration. Similarly, no other incriminating material was found during the course of search. In our considered opinion, Ld. Commissioner of Income Tax (A) is correct in this regard. Addition in this case has been made pursuant to search on the basis of Valuation Report of the DVO. It has been settled that in case of search in the absence of any incriminating material found during search, no addition can be made on the basis of Report of the DVO. In this regard, the case laws referred by the assessee are germane and support the case of the assessee. We may further refer to the following case laws:- a) C.I.T. vs. Abhinav Kumar Mittal [2013] 351 ITR 20 (DHC) Held, dismissing the appeal, that there was no material found in the search and seizure operations, which would justify the Assessing Officer’s action in referring the matter of the District Valuation Officer for his opinion on valuation of the properties. Therefore, 12
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the valuation arrived at by the District Valuation Officer would be of no consequence. In any event, the Tribunal had also, on facts, held that the District Valuation Officer’s valuation was based on incomparable sales, which is not permissible in law. b) C.I.T. vs. Mahesh Kumar (2011) 196 Taxman 415 (DHC) Where no evidence could be gathered that assessee had invested more than value declared in registered sale deed of plots purchase and, comparable instances taken by the Valuation Officer were situated for way, addition made under section 69 on account of unexplained investment with respect of purchase of said plots was not justified. 51. From the above, it is evident that in the absence of any evidence that the assessee has invested more than value declared in the registered sale deed of property purchased, the addition in this regard on the basis of Valuation Report by the DVO is not sustainable.”
Consistent with the view taken therein, we delete the addition as confirmed by the ld.CIT(A).
Ground No.4 is general in nature and needs no adjudication.
In the result, the appeal of the assessee is allowed in part.
ITA No.5475/Del/2010 (AY : 2005-06)
Grounds of appeal reads as under:-
“1. That on the facts and circumstances of the case, CIT(A) was not justified in making an exparte order without proper service of notice and proper opportunity for hearing of appeal. 13
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(ii) That exparte order is on illegal and arbitrary basis and appeal has been disposed off on mechanical basis without proper adjudication of various grounds on merits. 2(i). That assessment being u/s. 153A in the context of search u/s. 132(1), the same has to be on the basis of any material or evidence found as a result of search in respect of any undisclosed income. (ii). That various additions in the assessment u/s. 153(A) are without jurisdiction as same are not on the basis of any evidence or incriminating material found during the course of search and in total disregard to the fact that all the particulars of income are supported from regular records. 3(i) The CIT(A) erred in estimating business income at 10% as against declared income of 5% even though the return income is supported from the books of accounts and audited records and no mistake or irregularity has been found in the same. (ii) That in the absence of any evidence or incriminating material found as a result of search in respect of trading result supported from audited books of accounts, it is not open to consider any addition in an illegal and arbitrary manner. (iii) That the estimation of income at 10% is on presumption and surmises and there is no valid basis for estimation of same particularly when there is no case of application of provisions of sec. 145 of the Income Tax Act, 1961. 4. That there is no legal or factual basis in addition of Rs.45,50,000 in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd. 5. That there is no legal or factual basis in addition of Rs.25,49,900/- in respect of share investment. 6. That the orders of the lower authorities are not justified on facts and same are bad in law.”
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Ground No.1 is dismissed as not pressed.
Ground No.2 is to be held in favour of the assessee in view of the decision of the Hon’ble Delhi High Court in the case of CIT, Central-III vs. Kabul Chawla in ITA No.707/2014 vide judgment dated 20th April, 2015, the relevant part of which i.e., paras 37 and 38 have been reproduced above while dealing with Ground No.2 for AY 2002-03. Ground No.2 is, therefore, allowed.
Ground No.3 is against the estimation of business income @ 10%. This issue is admittedly covered by the decision of the Á’ Bench of the ITAT in ITA No.3105, 3106 and 3107/Del/2011 for AYs 2002-03, 2003-04 & 2006-07 in the case of ACIT vs. Ms Asha Kataria vide its order dated 20.5.2013, the relevant portion of which viz., paras 10 and 11 have been reproduced above while dealing with Ground No.3 for AY 2002-03. Consistent with the view taken therein, this ground is allowed.
Ground No.4 is against an addition made in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd.
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This addition has to be deleted for the reason that it is not based on any material found or seized during the course of search. In addition, the assessee demonstrates that the addition is factually incorrect. For these reasons, we delete the addition made
Ground No.5 is to be deleted for the reason that this is not based on any material found or seized during the course of search and also for the reason that factually the addition is incorrect as demonstrated by the assessee. The ld. DR could not controvert these submissions. The assessee has furnished a certificate from M/s Waterflow Infrastructure Pvt. Ltd. (formerly known as Kaveri Infrastructure Pvt. Ltd.) dated 22nd October, 2012 certifying that they have made certain payments on behalf of Mr. Vijay Kumar Kataria during the financial year 2005-06 amounting to Rs.25,20,588/- (APB-7 for FY 2006-07). A copy of the account of Mr. Vijay Kumar Kataria in the books of Kaveri Infrastructure Pvt. Ltd., for the financial year 2005-06 was also furnished. All these are disclosed transactions and they appear in the bank account of the assessee and are received in the books of account.
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The findings of the AO at page 3 are factually incorrect. When Waterflow Infrastructure Pvt. Ltd., formerly known as Kaveri Infrastructure Pvt. Ltd., has certified that it has made the payments on behalf of Mr. Vijay Kumar Kataria, the question of the assessee not explaining the sources of funds, does not arise. Anyhow, in view of the proposition laid down in the case of Kabul Chawla, both these additions disputed in Ground Nos.4 and 5 are to be deleted. Ground Nos.4 and 5 are, therefore, allowed.
Ground No.6 is general in nature and dismissed as such.
In the result, the appeal of the assessee is allowed in part.
ITA No.5476/Del/2010 (AY: 2006-07 34. Grounds of appeal read as under:- “1. That on the facts and circumstances of the case, CIT(A) was not justified in making an exparte order without proper service of notice and proper opportunity for hearing of appeal. (ii) That exparte order is on illegal and arbitrary basis and appeal has been disposed off on mechanical basis without proper adjudication of various grounds on merits. 2(i). That assessment being u/s. 153A in the context of search u/s. 132(1), the same has to be on the basis of any material or evidence found as a result of search in respect of any undisclosed income. 17
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(ii). That various additions in the assessment u/s. 153(A) are without jurisdiction as same are not on the basis of any evidence or incriminating material found during the course of search and in total disregard to the fact that all the particulars of income are supported from regular records. 3(i) The CIT(A) erred in estimating business income at 10% as against declared income of 5% even though the return income is supported from the books of accounts and audited records and no mistake or irregularity has been found in the same. (ii) That in the absence of any evidence or incriminating material found as a result of search in respect of trading result supported from audited books of accounts, it is not open to consider any addition in an illegal and arbitrary manner. (iii) That the estimation of income at 10% is on presumption and surmises and there is no valid basis for estimation of same particularly when there is no case of application of provisions of sec. 145 of the Income Tax Act, 1961. 4. That CIT(A) has erred in confirming addition of Rs.25,20,588/-in respect of unsecured loan received from M/s Kaveri Infrastructure Pvt. Ltd. That the amount was received through payee cheque and observation of assessing officer is factually incorrect and based on presumption and surmises and without proper appreciation of facts. 5. That CIT(A) has erred in confirming addition of Rs.5 lacs in respect of investment in PNB Principal Junior Cap Fund. 6. That the CIT(A) has erred in confirming addition of Rs.3 Crore (US $ 659000) in respect of alleged investment in immovable property at USA.
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That CIT(A) has also erred in confirming addition of Rs.1,13,800/- (US $ 1000+US$ 1500) in respect of opening of bank account and reimbursement of expenses. 6. That the orders of the lower authorities are not justified on facts and same are bad in law.”
Ground No.1 is dismissed as not pressed.
Ground No.2 is to be held in favour of the assessee in view of the decision of the Hon’ble Delhi High Court in the case of CIT, Central-III vs. Kabul Chawla in ITA No.707/2014 vide judgment dated 20th April, 2015, the relevant part of which i.e., paras 37 and 38 have been reproduced above while dealing with Ground No.2 for AY 2002-03. Ground No.2 is, therefore, allowed.
Ground No.3 is against the estimation of business income @ 10%. This issue is admittedly covered by the decision of the Á’ Bench of the ITAT in ITA No.3105, 3106 and 3107/Del/2011 for AYs 2002-03, 2003-04 & 2006-07 in the case of ACIT vs. Ms Asha Kataria vide its order dated 20.5.2013, the relevant portion of which viz., paras 10 and
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11 have been reproduced above while dealing with Ground No.3 for AY 2002-03. Consistent with the view taken therein, this ground is allowed.
Ground No.4 is against an addition made in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd. This addition has to be deleted for the reason that it is not based on any material found or seized during the course of search. In addition, the assessee demonstrates that the addition is factually incorrect. For these reasons, we delete the addition made
Ground No.5 is against an addition made in respect of alleged investment in PNB Principal Junior Cap Fund. This addition has to be deleted for the reason that it is not based on any material found or seized during the course of search. In addition, the assessee demonstrates that the addition is factually incorrect. For these reasons, we delete the addition made
Ground Nos.6 and 7. The assessee pleads that these have to be restored to the file of the AO on the ground of natural justice, as sufficient opportunity has not been given to the assessee. He submits 20
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that the AO sought explanation from the assessee on 18.12.2009 and within a period of nine days passed the assessment order on 27.12.2009. The ld. DR strongly opposed the contention and submitted that sufficient opportunity has been given to the assessee. She further submitted that the assessee had opportunity before the first appellate authority which he had not availed. In reply, the ld. counsel for the assessee pointed out that the ld.CIT(A)-I, New Delhi has passed ex parte order.
After hearing the rival contentions, we are of the considered opinion that these issues should be set aside to the file of the AO for fresh adjudication in accordance with the law on grounds of natural justice. The AO has in his office letter dated 18.12.2009, given a show cause notice to the assessee. The assessee denied making an investment in purchase of property in USA. The assessee stated that the relative of the assessee Shri Nazir Singh Dhaliwal had made the payment and the balance was made by the Bank of USA and that the property was sold thereafter and repayment was made to Shri Nazir Singh Dhaliwal and bank. The factual submissions of the assessee needs verification. Time
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should have been given to the assessee to furnish documents in this regard. The AO can also make direct inquiries from bank of USA and from Shri Nazir Singh Dhaliwal. The ld.CIT(A) has passed an ex parte order. Under these circumstances, Ground Nos.6 and 7 are restored to the file of AO for fresh adjudication in accordance with the law.
Ground No.8 is general in nature.
In the result, the appeal of the assessee is allowed in part.
ITA No.5477/Del/2010 (AY : 2007-08)
Grounds of appeal filed by the assessee read as under:-
“1. That on the facts and circumstances of the case, CIT(A) was not justified in making an exparte order without proper service of notice and proper opportunity for hearing of appeal. (ii) That exparte order is on illegal and arbitrary basis and appeal has been disposed off on mechanical basis without proper adjudication of various grounds on merits. 2(i). That assessment being u/s. 153A in the context of search u/s. 132(1), the same has to be on the basis of any material or evidence found as a result of search in respect of any undisclosed income. (ii). That various additions in the assessment u/s. 153(A) are without jurisdiction as same are not on the basis of any evidence or incriminating material found during the course of search and in total
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disregard to the fact that all the particulars of income are supported from regular records. 3(i) The CIT(A) erred in estimating business income at 10% as against declared income of 5% even though the return income is supported from the books of accounts and audited records and no mistake or irregularity has been found in the same. (ii) That in the absence of any evidence or incriminating material found as a result of search in respect of trading result supported from audited books of accounts, it is not open to consider any addition in an illegal and arbitrary manner. (iii) That the estimation of income at 10% is on presumption and surmises and there is no valid basis for estimation of same particularly when there is no case of application of provisions of sec. 145 of the Income Tax Act, 1961. 4. That there is no legal or factual basis in addition of Rs.25,00,000 in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd. 5. That CIT(A) has erred in confirming addition of Rs.5 lacs in respect of investment in Max New York even though the investment is supported from bank account and other details and there is no case of any undisclosed income or investment. 6. That the CIT(A) has erred in confirming addition of Rs.9,00,100/- in the investment of shares even though the investment is supported from bank account and other details and there is no case of any undisclosed income or investment. 7. That the orders of the lower authorities are not justified on facts and same are bad in law.”
Ground No.1 is dismissed as not pressed.
ITA Nos.5473 to 5477/Del/2010
Ground No.2 is to be held in favour of the assessee in view of the decision of the Hon’ble Delhi High Court in the case of CIT, Central-III vs. Kabul Chawla in ITA No.707/2014 vide judgment dated 20th April, 2015, the relevant part of which i.e., paras 37 and 38 have been reproduced above while dealing with Ground No.2 for AY 2002-03. Ground No.2 is, therefore, allowed.
Ground No.3 is against the estimation of business income @ 10%. This issue is admittedly covered by the decision of the Á’ Bench of the ITAT in ITA No.3105, 3106 and 3107/Del/2011 for AYs 2002-03, 2003-04 & 2006-07 in the case of ACIT vs. Ms Asha Kataria vide its order dated 20.5.2013, the relevant portion of which viz., paras 10 and 11 have been reproduced above while dealing with Ground No.3 for AY 2002-03. Consistent with the view taken therein, this ground is allowed.
Ground No.4 is against an addition made in respect of alleged investment in purchase of shares of M/s Kaveri Infrastructure Pvt. Ltd. This addition has to be deleted for the reason that it is not based on any material found or seized during the course of search. In addition, the
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assessee demonstrates that the addition is factually incorrect. For these reasons, we delete the addition made
Ground No.5 is an addition of Rs.5 lac in respect of investment in Max New York. This addition is not based on any seized material. The assessee has disclosed this amount in his balance sheet. Payment was made from the bank account of the assessee, which is very much in the knowledge of the AO. Under these circumstances, this addition is directed to be deleted.
Ground No.6 is against the addition of Rs.9,00,100/- in respect of investment in shares. The figure taken by the AO is a mistake as the total amount is Rs.9,00,000/- and not Rs.9,00,100/-. This includes an opening balance of 81,00,100/- and investments during the year of Rs.9 lac. These investments were made through banking channel and the bank account was an official bank account in the knowledge of the department. The addition is not based on any seized material. All the investments are disclosed in the balance sheet of the assessee. This addition has to be deleted by applying the ratio laid down by the Hon’ble
ITA Nos.5473 to 5477/Del/2010
High Court in the case of Kabul Chawla (supra). This ground is, thus, allowed.
Ground No.7 is general in nature.
In the result, the appeal of the assessee is allowed in part.
The order pronounced in the open court on 17.11.2015. Sd/- Sd/- [SUDHANSHU SRIVASTAVA] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated, 17th November, 2015. dk Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT
AR, ITAT, NEW DELHI.