ANURAG ARORA,DELHI V. DCIT, CENTRAL CIRCLE-31, DELHI

ITA 537/DEL/2024

AI Insights

The case involves Anurag Arora, who appealed against the order of the Commissioner of Income Tax (Appeals) which confirmed the additions made to his income by the Deputy Commissioner of Income Tax. The additions were based on a purported cash transaction related to the purchase of a property at Sagar Plaza, where it was alleged that a significant portion of the transaction was conducted in cash, contrary to the declared registered value. The Tribunal examined the evidence, including a 'kaccha parchi' (a rough note) allegedly detailing the cash transaction, and found it lacked legal sanctity as it was not signed or witnessed. The Tribunal also noted that the lower authorities did not adequately address the dual quotes made by the property broker, which suggested an intention to pocket the cash component.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 471799 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2021-2022
• Other Referred Cases: CIT v/s SM Agarwal
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAVED AKHTAR
• Assessee Lawyers: VIPIN JAIN
• Keywords: Unexplained investment; Fair market value; Principle of natural justice; Search and seizure; Competent authority
• Section: 143(3); 142(1); 143(2); 143(1); 131; 69; 13; 139; 153C; 271D

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘A’: NEW DELHI) BEFORE SHRI S RIFAUR RAHMAN, ACCOUNTANT MEMBER AND SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No:- 537/Del/2024 (Assessment Year- 2021-22) Anurag Arora, B-12, Preet Vihar, Delhi-110092. Vs. Deputy Commissioner of Income Tax, Centre Circle-31, New Delhi. PAN No: DSMPA1632K APPELLANT RESPONDENT Assessee by : Shri Vipin Jain, CA Revenue by : Shri Javed Akhtar, CIT(DR) Shri Amit Katoch, Sr. DR Date of Hearing : 27.12.2024 Date of Pronouncement : 27.03.2025 ORDER PER SUDHIR PAREEK, JM: The aforetitled appeal by the assessee preferred against the order of the Learned Commissioner of Income Tax (Appeals)-30, New Delhi-110055, (hereinafter referred to as [“Ld. CIT(A)”]), dated ITA No.- 537/Del/2024 Anurag Arora Page 2 of 15 02.02.2024 pertaining to Assessment Year (A.Y.) 2021-22, on the following grounds of appeal: “1. That the Ld DCIT Central Circle 31, New Delhi, has erred on facts and in law in determining the income of the assessee at Rs 72,44,375, as against return filed declaring income at Rs 4,91,260, after making addition aggregating Rs 67,53,135 to the income shown, on surmise and conjecture, assumptions, presumptions and hypothetical evidences not tenable in law. It is prayed that Rs 67,53,135 added to income be directed to be deleted. 2. That addition made to income on the basis of screen shot image of some kacha parchi noted by the search party on the mobile of the property broker, such kaccha parchi not found to exist and not confronted to the assessee, without evidentiary value, is bad in law. 3. That the \"Sagar Plaza\" flat having been sold at value 14.29% above the circle rate, Rs 67,00,000 added to income u/s 69 of the I Tax Act, 1961 is bad in law and is required to be deleted. 4. That the Ld AO, despite request made by the assessee, did not provide copies of the statement of Sh Praveen Jain and his son Vaibhav Jain recorded by the DDIT (Inv) u/s 131 at the time of search, AND did not provide confront the assessee with copies of other material and information collected behind the assessee's back adversely used against him, acted against the principles of natural justice, rendering the addition made to income bad in law, liable to be deleted. 5. That Sh Pravin Jain, property broker AND his son Vaibhav Jain having affirmed in their affidavit / statement that the \"sagar plaza flat was not sold through them, Rs 67,00,000 added to income is incorrect and is required to be deleted. 6. That addition made to income without considering the submissions of the assessee, without rebutting and without showing that the submissions made by the assessee are false and incorrect, and by concealing and misrepresenting facts is unsustainable in law, liable to be deleted. 7. That parallel proceedings carried out u/s 153C and u/s 143(3) of the I Tax Act, 1961 are bad in law. The satisfaction notes dated 28.07.2022 issued by The DCIT CC 31, New Delhi and ITA No.- 537/Del/2024 Anurag Arora Page 3 of 15 satisfaction note dated 24.08.2022 issued by the AO Ward 59(3) ND are without a DIN No. and are bad in law. 8. That Rs 67,00,000 added to income on surmise and conjecture, without establishing that the assessee could possess such cash amount is bad in law. 9. That the Ld AO has erred in disallowing Rs 53,135 u/s 23 of the I Tax Act, 1961, under \"Income from House property\". 10. That the assessee craves leave to be permitted to modify all or any of the above grounds, delete or add any fresh ground of appeal, before or during the appeal proceedings.” 2. Facts of the case may be summarized as that the assessee is an individual, having income from house property, profits and gains from business or profession and income from other sources during the year under consideration. The assessee filed return u/s 139 (1) of the Act, on 27.12.2021 declaring total income of Rs. 4,91,260/-, which was processed u/s 143(1) of the Act on 22.03.2022. Subsequently, the case of the assessee / appellant was selected for scrutiny assessment by issuance of notice u/s 143(2) of the Act, dated 30.06.2022 which was delivered on the regd. e-mail id of the assessee on 30.06.2022. thereafter, notices u/s 142(1) of the Act dated 09.11.2022 and 18.11.2022 alongwith questionnaire were issued and delivered on the regd. Email id of the assessee thorough ITBA and assessee / appellant responded with requisite details and ITA No.- 537/Del/2024 Anurag Arora Page 4 of 15 clarifications. Thereafter, in the course of search and seizure on Hans Group of cases on 06.01.2021, mobile phone of Shri Praveen Kumar Jain broker was seized from c-42, c-block, Preet Vihar, Delhi and on perusal of WhatsApp chat between shri Praveen Kumar Jain and Shri Anil Sharma, dated 20.10.2021, it was found that Shri Anil Sharma sent an image relating to sale of property at G-5, Sagar Plaza, Laxmi Nagar, Delhi, giving details of actual sale consideration of Rs. 1,15,00,000/- and on perusal of abovecited image on WhatsApp Chat, it has been observed that the sale consideration of the property was fixed at Rs. 1,15,00,000/- out of which Rs. 48,00,000/- was to be registered value and balance amount of Rs. 67,00,000/- was to be transacted in cash. The Ld. AO found that assessee / appellant invested an amount of Rs. 67,00,000/- in cash in purchasing of property as aforesaid during FY 2020-21, over and above registered value and Ld. AO made addition of Rs. 67,00,000/- vide order dated 31.12.2022 as unexplained investment u/s 69 of Act, on account of failure on the part of assessee / appellant to establish the source of cash payments for purpose of property. ITA No.- 537/Del/2024 Anurag Arora Page 5 of 15 3. The assessee / appellant assails the above order before the Ld. CIT(A) by way of appeal, and the Ld. CIT(A) dismissed the appeal of the assessee and confirmed the addition made by the Ld. AO, aggrieving by the same, the assessee / appellant before us by preferring instant appeal. 4. Heard rival submissions and carefully perused the material available before us. 5. In the course of hearing, the Ld. AR submitted that the assessee had purchased commercial flat No G-5 Sagar Plaza, District Centre, Laxmi Nager Delhi, from Smt. Ira Sharma, (50% owner) PAN: AATPS0759H, AND Anil Sharma & Sons HUF (50% owner), PAN: AAAHA4471K, W-68 Greater Kailash-1 New Delhi 110048, for Rs 48,00,000. and the fair market value of the flat on the date of purchase of the flat as per the circle rate was Rs 42,00,000. The assessee purchased the flat at 14.29% above the circle rates value. The deal was direct in which no Brokerage was paid, as no broker was engaged. The Ld. AR further submitted that the assessee, born on 7.6.2002, became major on 7.6.2020. He took a loan of Rs 15,00,000 from his grandmother Smt ITA No.- 537/Del/2024 Anurag Arora Page 6 of 15 Santosh Arora PAN ADHPA2586M and a loan of Rs 36,00,000 from his mother Smt Deepika Arora PAN AFNPS5838E to pay for the flat. The assessee had no money and no cash money to pay for the flat and as per contention of the assessee, Sh Anil Sharma (seller) was suffering from cancer and had insisted to receive the entire sale consideration by account payee cheque only to avoid any complications as he was unwell. He expired on 07.07.2024. It was also submitted that on 06.01.2021, the premises of Sh Pravin Jain, property broker was searched by The DDIT (Inv) unit 8(2), New Delhi. The search party scanned the mobile phone of Sh Pravin Jain and downloaded the image of a hand written slip dated 19.10.2020, which read as under:- G-5 Sagar Plaza, Laxmi Nagar District Centre, Delhi-92 19.10.2020 354 Sq ft Price Rs. 1, 15,00,000 (Rs. One crore fifteen lacs only) Payment time 4 months (120 days) Registry value Rs 48,00,000 (Rs Forty Eight Lacs only) Cash Rs. 67,00,000 (Rs Sixty Seven Lacs only) That the premises on lease to M/s HDFC Standard. That all the Said Lease terms & condition will be transferred to the new purchaser along with Security will be transferred Purchaser Sh Vijay Arora & Others Rs.5,00,000 (Rs Five lacs) has been paid in cash. That the seller will pay 2% (Two percent) of sale price as brokerage to ITA No.- 537/Del/2024 Anurag Arora Page 7 of 15 for broker Mr Praveen K Jain, Preet Vihar. Deals all inclusive the purchaser except stamp duty transfer charges will be borne by the Seller along with House Tax/Electricity/water etc, the execution of agreement. 6. It was also submitted that the hand written kaccha slip did not exist, and was not found. Even it was not seized by the search party. Assessee is not named anywhere in the hand written kaccha slip. The kaccha hand written slip is in the handwriting of Sh. Pravin Jain, property broker, and not in the handwriting of the assessee, The kaccha hand written slip is not an agreement and cannot be enforced in a court of law as it unsigned and unwitnessed, having no legal sanctity. There is no proper mention of the names, addresses and other particulars of the Buyers and the Sellers in the slip. Pravin Jain (property broker) admitted that he made dual quotes to secretly pocket the cash component of Rs 67,00,000. He quoted all cheque payments Rs 48,000 to Anil Sharma and Rs 1,15,00,000 to the buyers and kept a copy of the offer made to the buyer on his mobile for his record and reference. It is this noting on the mobile which is based to make addition to income. ITA No.- 537/Del/2024 Anurag Arora Page 8 of 15 7. The Ld. AR further submitted that, Sh Pravin Jain admitted this fact in his Affidavit filed before The CIT(A) on 07.01.2023, which is placed at page 32 to 34 on PB and paras 4 to 8 are reproduced as under: “ 4. That I quoted the sale price of the \"Sagar Plaza\" flat to Anil Sharma at Rs 48,00,000 all cheque, brokerage at 2% of the sale value and expenses on registration of the property in favour of the Buyer to be borne by the Seller. Other terms of sale of the property like period of payment, due diligence of the title of the property, transfer of rental rights etc were discussed. Anil sharma was keen on only cheque payment as he had health problems. Mr Anil replied one mail on 19.10.2020 stating that he will pay brokerage at and declined to pay the expenses on registration. 6. That in the meantime I quoted the sale value of the \"sagar plaza\" flat at Ra 1,15,00,000 to Sh. Vijay Arora (Rs 48,00,000 in cheque and Rs 67,00,000 in cash), nil brokerage and expenses on registration to be paid by the Seller. Other related aspects of the property were discussed, I had sent the quotation on a kachi parchi on 20.10.2020. Before sending the kachi parchi to Sh. Vijay Arora, I took a screen shot of the slip and saved it on my mobile under the file named \"Anil Sharma sagar plaza. 7. The deal did not materialize and fizzled out, perhaps the Buyer found the price to be excessive. Because of that I did not also respond to Sh Anil Sharma. As the deal did not materialize, I did not earn any brokerage either from the Buyer or from the Seller. 8. I came to know later on that Sh Anurag Arora, grandson of Vijay Arora, through the assistance of my office staff Sh Sudama, purchased the \"sagar plaza\" flat directly from sh Anil Sharma for Rs 48,00,000.” 8. The Ld. AR contended that the Anil Sharma and Smt. Ira Sharma, filed submissions before the Ld. CIT(A), and in this ITA No.- 537/Del/2024 Anurag Arora Page 9 of 15 regard the Ld. AR vehemently argued that the Ld. DCIT CC 31 ND, and the Ld. CIT(A) did not dispute or rebut the fact that Sh Pravin Jain, property broker, made dual quote to secretly pocket the cash component Rs 67,00,000, and also did not also seek any clarification from Sh Pravin Jain. The authorities below impliedly accepted that Pravin Jain made dual quotes with intentions to pocket the cash component. 9. Per contra, the Ld. DR relied upon the orders of the both lower authorities. 10. From the perusal of the impugned order of the Ld. AO, it reveals that he strangely concluded “kachi parchi” is not rough jotting but an agreement to sell for the immovable property writing down all the conditions for transfer of properly. Bare perusal of above Kachi parchi, it appears that it neither signed of anybody or not specification of handwriting regarding whom has written the matter, when the assessee raises such objections before the Ld. AO regarding its non-evidentiary value, the Ld. AO stated that sufficiency of documents is not practically possible in search proceedings, by treating kachi parchi as agreement to sale, the Ld. ITA No.- 537/Del/2024 Anurag Arora Page 10 of 15 AO ignored the basic principle of law that agreement will taken its shape when both concerned persons make signature upon it and without signature of necessary party to agreement, may not be termed as an agreement in the eye of law. So far the comparison, as mentioned by the Ld. AO in page 15 of the impugned assessment order, it may not alone sufficient to make inference regarding cash transaction of Rs. 67,00,000/-. 11. There is material substance in the submissions advanced on behalf of the assessee / appellant that hand written kaccha Slip did not exist as not found and seized by the search party and even upon the same, no mention of name of assessee and such a slip is can’t said to be in the handwriting of the assessee / appellant. The contention of the Ld. AR having force that upon the slip in question, there is no any name mentioned of witness or also no signature of any witness in order to endorse / establish the veracity of alleged document and above all there is no any signature of the assessee upon it. So far, affidavit filed by Praveen Jain, before the Ld. CIT(A) is concerned, the Ld. CIT(A) observed that such an affidavit filed after lapse of serval years does not hold any evidentiary value but ITA No.- 537/Del/2024 Anurag Arora Page 11 of 15 the Ld. CIT(A) erroneously hold the same because an affidavit filed after a lapse of several years doesn’t automatically lost its evidentiary value solely due to such delay and competent authority / court may consider the delay alongwith other factors to determine its weight and relevance. Strangely, the Ld. CIT(A) confirms the observation of the Ld. AO by treating kachi parchi as agreement to sell and both the lower authorities ignored the basic principles of law, that for a valid agreement to sell of immovable properly, it needs to be in writing include key details like parities, property description, price, payment terms and timelines , and be signed by both parties, ideally with witnesses and registered with the sub-register’s office and in present case it is admitted fact that there is no signature of parties and witnesses upon it. 12. In the course of hearing, the Ld. AR also submitted that in the case of Anil Sharma & Sons (HUF) ITBA/PNL/F/271D-1/2023- 24/1053924007(1) and in the case of Ira Sharma, it is clearly mentioned in the order u/s 271D of the Act, dated 23.06.2023 that the assessee of that case (Anil Sharma & Sons HUF) submitted that the flat was sold for Rs. 48,00,000/- and not for Rs. 1,15,00,000/- ITA No.- 537/Del/2024 Anurag Arora Page 12 of 15 and the entire sale consideration of Rs. 48,00,000/- was received by account payee cheques, deposited in the bank account of the sellers and no amount was transacted in cash and long-term capital gain on sale of flat was included in the return filed and income offered to the assessee to tax. It is also submitted the entire relevant facts were raised before the both lower authorities. 13. Even the Ld. AO was of the view that sufficiency of documents to the satisfaction of the assessee is not practically possible in search proceedings, what needs to be ascertained is whether considering the circumstances of the particular’s material on record. The existence of cash transaction may be inferred as a probable consequence. 14. Per contra, the Ld. AR denied of any cash transaction and it is also declined by Anil Sharma, Ira Sharma. In this regard, the Ld. AR vehemently argued that addition in question is based on simply surmises and conjectures and liable to deleted. It was also submitted that the both the lower authorities did not dispute or rebut the fact that Praveen Jain broker, made dual quote to secretly pocket the cash component Rs. 67,00,000/- and also contended ITA No.- 537/Del/2024 Anurag Arora Page 13 of 15 that the both lower authorities were under legal obligation to seek clarification from Praveen Jain, broker and but they did not do so and by this alone, it may be presumed that the both lower authorities impliedly by accepted that Pravin Jain made true quotes with intentions to pocket the cash component. It is also submitted that alleged deal did not materialized and no any cash transaction took place and addition in question without any definite evidence to support the same as it being only and only as surmises, conjecture, assumptions and presumptions. The Ld. AR also relied upon the judgment (2007) 211 CTR (Del) 180 CIT v/s SM Agarwal in which Hon’ble Delhi High Court held that it is well settled that the only person competent to give evidence on the truthfulness of the contents of the document is writer thereof. So, unless and until, the contents of the documents are proved against a person, the possession of the document or hand writing of that person, on such document by itself cannot prove the contents of the documents. On the basis of above fact situation, we are of the considered opinion that the Ld. AO made addition in question only on the basis of surmises and conjectures, which was erroneously confirmed by the ITA No.- 537/Del/2024 Anurag Arora Page 14 of 15 Ld. CIT(A) in quite unsustainable, in the eye of law and deserves to be deleted. 15. Consequently, the appeal of assessee is allowed as indicated above. Order pronounced in the Open Court on 27.03.2025 Sd/- Sd/- (S RIFAUR RAHMAN) (SUDHIR PAREEK) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 27/03/2025. Pooja/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.- 537/Del/2024 Anurag Arora Page 15 of 15 1. Date of dictation of Tribunal order 24.03.25 2. Date on which the typed draft Tribunal Order is placed before the Dictating Member 25.03.25 3. Date on which the typed draft Tribunal order is placed before the other Member 4. Date on which the approved draft Tribunal order comes to the Sr. PS/PS 5. Date on which the fair Tribunal order is placed before the Dictating Member for pronouncement 6. Date on which the signed order comes back to the Sr.PS/PS 7. Date on which the final Tribunal order is uploaded by the Sr.PS/PS on official website 8. Date on which the file goes to the Bench Clerk alongwith Tribunal order 9 Date of killing off the disposed of files on the judisis Portal of ITAT by the Bench Clerks 10. Date on which the file goes to the Supervisor (Judicial) 11. The date on which the file goes to the Assistant Registrar for endorsement of the order 12. Date of Despatch of the order "