Shri. N.S.S. Mani, New Delhi V. ACIT, New Delhi

CO 11/DEL/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6614 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 18-11-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 11-11-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 10-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R S NEGI
• Keywords: Unexplained investment; Capital asset; Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E NEW DELHI BEFORE SHRI G.D. AGGRAWAL , VICE PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER I.T.A NO. 5331/DEL/10 ASSTT. YEAR : 2007-08 ACIT, CIRCLE 23 (1), ROOM NO. 190,C.R. BUILDING, I.P. ESTATE, NEW DELHI. VS. N.S.S. MANI, B-20, 1 ST FLOOR, PAMPOSH ENCLAVE, GREATER KAILASH, NEW DELHI. AAAPN2860P (APPELLANT) (RESPONDENT) AND CROSS OBJECTION NO. 11/DEL-2011 IN I.T.A NO. 5331/DEL/10 ASSTT. YEAR : 2007-08 N.S.S. MANI, B-20, 1 ST FLOOR, PAMPOSH ENCLAVE, GREATER KAILASH, NEW DELHI. AAAPN2860P VS. ACIT, CIRCLE 23 (1), ROOM NO. 190, C.R. BUILDING, I.P. ESTATE, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. NEGI, SR. DR RESPONDENT BY: SHRI K. SAMPATH, ADVOCATE ORDER PER RAJPAL YADAV : JM ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 2 THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LD. CIT(A) DATED 2 ND SEPTEMBER, 2010 PASSED FOR ASSTT. YEAR 2007- 08. ON RECEIPT OF NOTICE IN THE REVENUES APPEAL, A SSESSEE HAS FILED CROSS OBJECTION BEARING NO. 11/DEL/2011. THE FIRST GRIEVANCE OF THE REVENUE IS THAT LD. CIT(A) HAS ERR ED IN DELETING THE ADDITION OF ` 20 LACS MADE BY THE AO IN THE SAL E CONSIDERATION RECEIVED BY THE ASSESSEE ON SALE OF F LATS WHILE COMPUTING THE CAPITAL GAIN. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS AN INDIVIDUAL. HE IS 80 YEARS OLD HAVING NO CHILD. HIS WIFE EXPIRED ON 31 ST DECEMBER, 2005. HE HAS FILED HIS RETURN OF INCOME ON 31 ST AUGUST, 2007 DECLARING AN INCOME OF ` 28,60,564/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSE SSMENT AND NOTICE UNDER SECTION 143(2) OF THE INCOME TAX WAS I SSUED ON 12 TH AUGUST, 2008 WAS DULY SERVED UPON THE ASSESSEE. IN RESPONSE TO THE NOTICE, SHRI P.K. JAIN, FCA APPEARE D BEFORE THE AO AND SUBMITTED THE REQUISITE DETAILS. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT ASSESSEE HAS P URCHASED PROPERTY IN BANGALORE ON 15.12.2004 FOR A CONSIDERA TION OF ` 49,99,716/- WHICH INCLUDE STAMP DUTY OF ` 4,49,760/ - AND FEES ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 3 TO THE LAWYER AT ` 50,000/-. THESE WERE TWO FLATS A ND THESE WERE SOLD VIDE REGISTERED SALE DEED FOR A CONSIDERA TION OF ` 52,90,000/-. THE ASSESSEE HAS SHOWN SALE CONSIDERAT ION OF ` 70 LACS WHILE COMPUTING THE CAPITAL GAIN. HE HAS SHOWN SHORT TERM CAPITAL GAIN OF ` 20,00,240/-. THE AO ON AN ANALYSI S OF THE AGREEMENTS AND OTHER DETAILS FOUND THAT IN FACT IT WAS SETTLED BETWEEN THE ASSESSEE AND THE VENDEE TO PURCHASE THE PROPERTY FOR A SUM OF ` 1,00,00,000/- WHICH INCLUDES ` 70,00 ,000/- TOWARDS THE PROPERTY AND ` 30,00,000/- TOWARDS THE FURNITURE FIXTURES AND OTHER ITEMS AVAILABLE IN THE FLATS. AC CORDING TO THE ASSESSEE, NO CAPITAL GAIN WOULD BE EARNED BY THE AS SESSEE ON SALE OF PERSONAL EFFECTS WHICH INCLUDE SOFAS, BEDS, MATTRESSES, DINING TABLE, FIXED WARDROBES, WOODEN BEDS TV, AC, FRIDGE, INVERTER, ETC. THE ASSESSEE HAS SUBMITTED COMPLETE LIST OF FIXTURES BEFORE THE AO. HE HAS ALSO SUBMITTED THE D ETAILS OF BANK STATEMENT EXHIBITING THE SOURCE OF FUNDS FOR A CQUIRING SUCH FIXTURES, BUT THE AO WAS NOT SATISFIED WITH TH E EXPLANATION OF ASSESSEE. HE ESTIMATED VALUE OF ALL THESE ITEMS AT ` 10,00,000/- AND THE SALE CONSIDERATION OF THE PROPE RTY HAS BEEN INCREASED TO ` 90,00,000/- INSTEAD OF ` 70,00,000/- DISCLOSED BY ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 4 THE ASSESSEE. IN THIS WAY, AN AMOUNT OF ` 20,00,000 /- WAS ADDED IN THE SALE CONSIDERATION AND ACCORDINGLY SHO RT TERM CAPITAL GAIN WAS COMPLETED. 3. DISSATISFIED WITH THE ACTION OF AO, ASSESSEE CAR RIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). HE POINTED OUT THAT HE HAD SPENT AN AMOUNT OF ` 30,00,000/- TO EQUIP THE H OUSE WITH FURNITURE ETC. THE FURNISHING OF THE HOUSE WAS MADE ACCORDING TO THE CHOICE OF ASSESSEE AND HIS WIFE. FURTHER ALL OF A SUDDEN HIS WIFE DIED AND HE DROPPED THE IDEA OF SHIFTING T O BANGALORE. HE RETURNED TO DELHI AND CONSEQUENTLY SOLD THE PROP ERTY ALONGWITH ALL FIXTURES AND FURNITURE. FIRST APPELLA TE AUTHORITY HAS GONE THROUGH THE EVIDENCE SUBMITTED BY THE ASSE SSEE AND ARRIVED AT A CONCLUSION THAT SECTION 48 OF THE INCO ME TAX ACT TALKS ABOUT THE FULL VALUE OF THE CONSIDERATION REC EIVED OR ACCRUING TO AN ASSESSEE AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET FOR THE PURPOSE OF COMPUTATION OF INCOME CHAR GEABLE UNDER THE HEAD CAPITAL GAINS. IT DOES NOT TALK THE FAIR VALUE OF THE CAPITAL ASSET. THE ASSESSEE HIMSELF HAS DISCLO SED A SUM OF ` 70,00,000/- INSTEAD OF ` 59,90,000/- MENTIONED IN THE REGISTERED SALE DEED. THERE IS NO EVIDENCE WITH THE AO TO SAY ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 5 THAT FULL CONSIDERATION OF THE CAPITAL ASSET WAS ` 90,00,000/- AND NOT ` 70,00,000/-. HE FURTHER OBSERVED THAT ASS ESSEE HAS PRODUCED THE EVIDENCE INDICATING THE SOURCE OF FUND S FOR INCURRING THE EXPENSES OF ` 30,00,000/- TOWARDS FUR NISHING OF THE HOUSE. ON THE BASIS OF ALL THESE MATERIAL, LD. CIT(A) HAS HELD THAT AO WAS NOT JUSTIFIED IN ENHANCING THE SAL E CONSIDERATION BY ` 20,00,000/-. HE ACCORDINGLY DELE TED THE AMOUNT. 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HA VE GONE THROUGH THE RECORD CAREFULLY. ON AN ANALYSIS OF THE ORDER OF LD. CIT(A), WE ARE OF THE OPINION THAT AO HAS ENHANCED THE SALE CONSIDERATION OF THE FLATS BY `. 20,00,000/- WITHO UT BRINGING ANY EVIDENCE ON THE RECORD. HE JUST DISBELIEVED THE CONTENTION OF THE ASSESSEE THAT A SUM OF ` 30,00,000/- WAS SPE NT TOWARDS PURCHASE OF AC, FURNITURE, INTERIOR DECORATION, INV ERTOR, SOFA, BED ETC. HE ACCEPTED THAT RENOVATION OF THE FLATS H AVE BEEN DONE BY THE ASSESSEE BUT IN HIS OPINION ASSESSEE HA D NOT SPENT ` 30,00,000/-. IN HIS OPINION, A SUM OF ` 10,00,000 /- WAS SUFFICIENT TO MEET THE EXPENSES. ON THE OTHER HAND, LD. CIT(A) IS OF THE OPINION THAT ASSESSEE HAS PRODUCED THE DE TAILS ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 6 INDICATING THE WITHDRAWAL OF ` 30,00,000/- TO FURNI SH THE HOUSE. THE ASSESSEE HAD ENTERED INTO SEPARATE AGREEMENTS W ITH VENDEE I.E. ONE FOR THE PROPERTY AND OTHER FOR FUR NITURE AND FIXTURES. IF WE COMPARE BOTH THESE FINDINGS THEN CE RTAINLY SCALE WOULD TILT IN FAVOUR OF THE FINDING RECORDED BY THE LD. FIRST APPELLATE AUTHORITY. THE ASSESSEE HAS FILED THE PAP ER BOOK ON THE RECORD WHEREIN HE HAS PLACED ON RECORD COPY OF THE SALE AGREEMENT, COPY OF THE SALE DEEDS AND ALSO THE BANK STATEMENTS INDICATING THE AMOUNTS WITHDRAWN BY HIM AT THAT POINT OF TIME. WITH THE ASSISTANCE OF LD. REPRESENT ATIVE, WE HAVE GONE THROUGH THESE DOCUMENTS AND WE ARE OF THE VIEW THAT ORDER OF THE LD. CIT(A) DOES NOT CALL FOR ANY INTERFERENCE ON THIS ISSUE. ACCORDINGLY GROUND NO. 1 IS REJECTED. 5. THE GROUND NO. 2 TAKEN BY THE REVENUE IS INTERCO NNECTED WITH THE SOLITARY GROUND TAKEN BY THE ASSESSEE. THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING FOUND THAT ASSE SSEE HAS DEPOSITED A SUM OF ` 4,96,000/- ON 17 TH APRIL, 2006 AND ` 2 LACS ON 21 ST APRIL, 2006. HE FAILED TO PRODUCE THE EVIDENCE IND ICATING SOURCE OF THESE DEPOSITS HENCE AN ADDITION OF ` 6,9 6,000/- HAS BEEN MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT. ON APPEAL ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 7 LD. CIT(A) DELETED THE ADDITION OF ` 4,96,000/- AND CONFIRMED THE ADDITION OF ` 2 LACS. THE REVENUE IS CHALLENGIN G DELETION OF THE AMOUNT WHEREAS ASSESSEE IN THE CROSS OBJECTION IMPUGNING CONFIRMATION OF ADDITION OF ` 2 LACS. 6. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN O RDER TO EXPLAIN THE SOURCE OF FUNDS OUT OF WHICH THESE DEPO SITS HAVE BEEN MADE, IT WAS CONTENDED BY THE ASSESSEE BEFORE THE AO THAT ASSESSEE HAS WITHDRAWN A SUM ` 5 LACS FROM HIS BANK ACCOUNT ON 5 TH APRIL, 2006. THIS AMOUNT WAS WITHDRAWN FROM THE BANK FOR THE PURPOSE OF BOOKING OF A PLOT IN NOIDA BUT THE DEAL DID NOT MATERIALIZED AND A SUM OF ` 4,96,000/- WAS DEPOSITED IN THE BANK ACCOUNT ON 17 TH APRIL, 2006. WITH REGARD TO ` 2 LACS, IT WAS CONTENDED BY THE ASSESSEE THAT HE IS AN OLD MAN OF 80 YEARS. HE HAS WITHDRAWN MORE THAN ` 20 LACS IN ASST T. YEAR 2005-06. THERE WAS A BALANCE WITH THE ASSESSEE AND HE DEPOSITED FROM THE CASH IN HAND. LD. AO DID NOT ACC EPT BOTH THESE CONTENTIONS AND MADE THE ADDITION. LD. COUNSE L FOR THE ASSESSEE FURTHER SUBMITTED THAT ON APPEAL LD. CIT(A ) ACCEPTED THE EXPLANATION OF ASSESSEE TO THE EXTENT OF `. 4,9 6,000/- BUT DID NOT ACCEPT QUA ` 2 LACS. WHILE IMPUGNING THE OR DER OF LD. ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 8 CIT(A), HE TOOK US THROUGH THE BANK STATEMENT OF TH E ASSESSEE AVAILABLE ON PAGES NO. 9 TO 21 OF THE PAPER BOOK AN D POINTED OUT, THAT FUNDS FLOWING IN THESE STATEMENTS WOULD I NDICATE SUFFICIENT WITHDRAWALS BY THE ASSESSEE, OUT OF WHIC H A SUM OF ` 2 LACS CAN BE DEPOSITED. ON THE OTHER HAND, LD. DR SUBMITTED THAT AO DID NOT ACCEPT THE CONTENTION OF THE ASSESS EE ON ACCOUNT OF HUMAN PROBABILITIES, IF THE ASSESSEE HAS SUFFICIENT AMOUNTS AS CASH IN HAND THEN THERE WAS NO OCCASION FOR THE ASSESSEE TO WITHDRAW SMALL AMOUNTS, WHICH INDICATE THAT THERE WAS NO CASH IN HAND WITH THE ASSESSEE AND HE FAILED TO ESTABLISH THE DIRECT NEXUS. HE RELIED UPON THE ORDE R OF LD. AO. 7. WE HAVE DULY CONSIDERED THE RIVAL CONTENTION AND GONE THROUGH THE RECORD CAREFULLY. ON PAGE NO. 9 OF THE PAPER BOOK, BANK STATEMENT WITH ICICI BANK HAS BEEN PLACED ON T HE RECORD . IT DEPICTS THE TRANSACTIONS OF WITHDRAWALS OR DEPOS ITS RIGHT FROM 3 RD MAY, 2005 UPTO 7 TH APRIL, 2005. THEREAFTER, THE STATEMENT CONTINUED UPTO 27 TH APRIL, 2006 ON PAGES NO. 10 14. SIMILARLY, ON PAGES NO. 15 21 BANK STATEMENT OF STANDARD & CHARTERED BANK HAS BEEN PLACED ON RECORD. WE HAVE PERUSED THE WITHDRAWALS AS WELL AS DEPOSITS MADE BY THE ASSESSE E IN THESE ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 9 BANK ACCOUNTS. HE HAS WITHDRAWN A SUM OF ` 5 LACS O N 5 TH APRIL, 2006 FROM THE STANDARD & CHARTERED BANK AND ON 17 TH APRIL, 2006 ` 4,96,000/- WAS DEPOSITED. THERE IS NO OTHER TRANSACTION IN THIS ACCOUNT. IN OUR OPINION, LD. CIT(A) HAS RIG HTLY ACCEPTED THE EXPLANATION OF ASSESSEE WITH REGARD TO THE SOUR CE OF DEPOSITS OF ` 4,96,000/-. AS FAR AS THE AMOUNT CON FIRMED BY THE LD. CIT(A) IS CONCERNED IF WE MAKE AN ANALYSIS OF T HE TOTAL WITHDRAWALS MADE BY THE ASSESSEE FROM 31 ST MARCH, 2004 UPTO THE DATE OF DEPOSITS I.E. APRIL, 2006 THEN IT WOULD REVEAL THAT ASSESSEE HAS WITHDRAWN SUBSTANTIAL AMOUNT IN CASH. HE WITHDRAWALS ` 30,000/-, `45,000/-, ` 60,000/-, ` 62 ,000/- IN APRIL, 2005 AND IN OTHER MONTHS WHICH GIVES AN INDICATION THAT PROBABLY ASSESSEE MIGHT BE KEEPING SUFFICIENT FUNDS WITH HIMSELF FOR HEALTH PURPOSES OR OTHERWISE, KEEPING I N VIEW THE OLD AGE. EACH INDIVIDUAL BEHAVE IN DIFFERENT MANNER . THERE CANNOT BE ANY STRAIGHT JACKET FORMULA DEFINING THE HUMAN CONDUCTS. WE HAVE TO EVALUATE ALL THE CIRCUMSTANCES IN ORDER TO FIND OUT WHETHER THE POSSIBILITY OF AVAILABILITY OF ` 2 LACS WITH THE ASSESSEE FROM THE AMOUNTS WITHDRAWN IN THE PAST . CONSIDERING THE STATUS OF THE ASSESSEE AND HIS FINA NCIAL ITA NO. 5331/DEL/10 & CO NO. 11/DEL/11 ASSTT. YEAR 2007-08 10 POSITION, WE ARE OF OPINION THAT A SUM OF ` 2 LACS WAS AVAILABLE WITH THE ASSESSEE AS CASH IN HAND FROM THE WITHDRAW ALS MADE IN EARLIER YEARS. LD. CIT(A) HAS ERRED IN CONFIRMIN G THE ADDITION OF `. 2 LACS . IN THE RESULT WE DO NOT FIND ANY MER IT IN THE GROUND RAISED BY THE REVENUE WHEREAS WE FIND SUBSTANTIAL F ORCE IN THE GROUND RAISED IN THE CROSS OBJECTION. THE ADDITION OF ` 2 LACS IS DELETED. 8. IN THE RESULT, CROSS OBJECTION FILED BY THE ASSE SSEE IS ALLOWED WHEREAS APPEAL FILED BY THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH NOVEMBER, 2011. SD/- SD/- [G. D. AGGRAWAL] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 18.11.2011 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES