GURSHARAN SINGH CHHABRA,NEW DELHI V. ACIT, CIRCLE-7(2), DELHI

ITA 4937/DEL/2024

AI Insights

The case involves Gurusharan Singh Chhabra, a director at M/s Dolly Farms and Resorts Pvt. Ltd., who appealed against the order of the Commissioner of Income Tax (Appeals)-3, New Delhi. The appeal was related to additions made to his income assessment for the block period 1986-87 to 15.09.1995, following a search operation under Section 132 of the Income Tax Act, 1961. The primary contention was the lack of documentary evidence to support the additions made by the Assessing Officer (AO), which included various cash payments and interest on tax. The Tribunal found that the assessee was not provided with necessary documents by the department, which hindered his ability to produce evidence in support of his claims. Consequently, the Tribunal remanded the matter back to the AO for a fresh assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34428 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: SANJIV KUMAR GAMBHIR
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 142(1); 132; 158BC

Judgement Text

"P a g e | 1 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No. 4937/Del/2024 (A.Y. 1985-86) Gurusharan Singh Chhabra, 33, Sukhdev Vihar, New Delhi 110025 Vs. ACIT, Circle 7(2) Room No. 403, CR Building, New Delhi – 110002 \u0001थायी लेखा सं./जीआइआर सं./PAN/GIR No.: AAAPC0912D Appellant .. Respondent Appellant by : Sh. Sanjiv Kumar Gambhir, CA Respondent by : Sh. Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 19.02.2025 Date of Pronouncement 28.02.2025 O R D E R PER MADHUMITA ROY: (JM): The instant appeal filed by the assessee is directed against the order passed by the Ld. Commissioner of Income Tax (Appeals)-3, New Delhi dated 22.11.2018 for the block period 1986-87 to 15.09.1995 arising out of the order dated 02.11.2018 passed by the ACIT, Circle 7(2), New Delhi under Section 254/158BC of the Income P a g e | 2 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) Tax Act, 1961 (hereinafter referred as “Act”) on the following grounds:- 1. That the order passed by AO to the extent of making additions is bad at law, wrong in facts and against the principle of natural justice. 2. That the AO has erred in making addition of Rs. 20,000/- paid to Shri Shabbir. 3. That the AO has erred in making addition of Rs. 100,000/- paid to Shri Krishan Singh. 4. That the AO has erred in making addition of Rs. 229,080/- being 1/3rd share of Rs. 678,240/- paid to Shri SK Seth. 5. That the AO has erred in raising a demand of Rs. 582,265/- on account of interest calculated on tax of Rs. 209,448/- totaling to Rs. 7,91,710/- relating to the period 1995 to 2018. However, this order was revised and the total demand outstanding is Rs. 209450/- vide order dated 28.1.2019. 6. That the appellant craves the right to add, amend, delete or substitute the grounds of P a g e | 3 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) appeal at any time before the finalization of appeal proceedings. Prayer:- It is prayed that the additions made as above by the AO may kindly be deleted and necessary relief allowed. 2. The brief facts leading to the matter are that the assessment was completed under Section 158BC of the Act at a total undisclosed income of Rs. 2,14,66,973/- on 27.9.1996. The assessee is one of the directors of M/s Dolly Farm and Resorts Pvt. Ltd. In this case on 15.09.1995 a search operation under Section 132 of the Act was carried out in the case of Executive Club C/o M/s Dolly Farms & Resorts Pvt. Ltd., where the assessee was a director. Subsequently, the assessment order under Section 158BC of the Act was passed by the Ld. AO on 27.09.1996. upon making addition of Rs. 2,14,66,973/- on account of undisclosed income in the hands of the assessee. Being aggrieved by the said order passed by the Ld. AO, the assessee preferred an appeal before the Tribunal, who vide Appeal No. P a g e | 4 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) IT(SS)5570(Del)/96 dated 23.6.2004 remanded back the matter to the file of the Ld. AO to examine the same afresh. Aggrieved with the order of the Tribunal, the Revenue preferred an appeal before the Hon’ble Delhi High Court and the Hon’ble Delhi High Court has instructed the department to complete the remand proceedings. In compliance of the direction of the Hon’ble High Court of Delhi passed in ITA 170/2005 dated 05.07.2018, a notice under Section 142(1) of the Act was issued and the assessee was asked to produce the documents in support of his claim, but as per AO only incomplete reply was filed. On 09.10.2018, a show cause notice was issued to the assessee, as to why the addition made by the AO in his order under Section 158BC of the Act and as remanded by the ITAT should not be added as undisclosed income in the hands of the assessee. In response, assessee filed reply, but as the assessee failed to produce the documentary evidence in respect of the claim i.e. the expenditure (i) Rs. 20,000/-, (ii) Rs. 1,00,000/- paid to Krishan Singh and (iii) Rs. 2,29,080/- (1/3rd share of Rs. 6,87,240/-) were made out of his declared source of income, the Ld. AO made the P a g e | 5 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) aforesaid additions in the hands of assessee on account of non-production of evidences and assessed the income at Rs. 3,49,080/- under Section 254/158BC of the Act. 3. Being aggrieved by and/or dissatisfied with the action of the Ld. AO, the assessee preferred appeal before the Ld. CIT(A), who vide his impugned order dated 22.11.2018 dismissed the appeal preferred by the assessee. Hence, the instant appeal before us. 4. We have heard the rival contentions made by the respective parties and also perused the relevant materials available on records. As regards ground No. 2 relating to addition of Rs. 20,000/-, the Ld. AO has made the addition due to non-production of documentary evidence by the assessee. However, the Ld. CIT(A) has observed that it was contended by the Assesse that since the documents were not provided by the department, the assessee could not give any documentary evidence in support of the same, whereas the AO in the remand report clearly says that in spite of getting copy during the earlier proceedings under Section 158BC, he could not produce them. The assessee has P a g e | 6 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) also submitted that it could be possible that the same was paid out of his saving or from saving of his wife or cash in transaction. However, the absence of any cogent clarification, the Ld. AO confirmed the addition. 5. Ground No. 3 relates to addition of Rs. 1,00,000/- due to non-production of documentary evidence by the assessee. However, the Ld. CIT(A) has observed that in the remand report, the AO has submitted that the assessee submitted that the said amount was related to M/s Dolly Farms and Resorts P Ltd before the ITAT. Further the assessee was requested to provide the correct details regarding disclosure of these amounts. Ld. CIT(A) further noted as the relevant documents were not provided by the Department the assessee became unavailable to place the said evidence in support of the case made out by him. On the contrary, in the remand report the Ld. AO claimed that in spite of copy of those documents being supported to the assessee in the earlier proceedings under Section 158BC, the assessee did not produce the same and in the absence of documentary evidences, it is difficult to decipher the exact nature of this transaction and confirmed the addition. P a g e | 7 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) 6. Ground No. 4 relates to addition of Rs. 2,29,080/- (1/3rd share of Rs. 6,78,240/-) before the Ld. CIT(A) the assessee submitted that an amount of Rs. 687,240/- was paid by Shri SK Seth for purchase of property as per sale deed dated 12.11.1990 which was executed by the seller Mr. SK Seth in the joint names of Shri Devender Nath, Mr. Surinder Nath and Mr. Gursharan Singh Chhabra. The particulars of payment made to Mr. SK Seth were mentioned at page (2) of the said sale deed, which was missing when the copy of sale deed was provided to assessee out of seized material. As such the exact particulars of payment could not be ascertained. However, it could be possible that the full payment of Rs. 687,240/- was made by Sh. Devender Nath and Shri Surender Nath as they held major share or M/s Green Land Farms Pvt. Ltd. in which all these were the directors. During the remand proceedings, the addresses of the other two persons were also not been provided by the assessee. In the absence of documentary evidences, exact nature of this transaction could not be P a g e | 8 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) ascertained and in the absence of any cogent clarification Ld. CIT(A) confirmed the addition. 7. Considering the aforesaid facts and circumstances of the case, we find that as the assessee was not provided with the relevant documents by the department, the assessee was not been able to submit the same in support of his claim. 8. In that view of the matter, the issue is required to be examined at the level of the Ld. AO denovo, upon considering the documents lying with the department. We thus dispose of this appeal directing the Assessing Officer to decide the assessee de novo, after giving adequate opportunity of being heard to the assessee and to pass a reasoned order. 9. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 28.02.2025 Sd/- (M Balaganesh) Sd/- (Madhumita Roy ) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 28.02.2025 PS: Rohit P a g e | 9 ITA No.4937/Del/2024 Gurusharan Singh Chhabra (AY: 1985 -86) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "