Sh. Kishan Lal Ahuja, Sonepat V. ITO, Sonepat

ITA 18/DEL/2010

• Counselvise Citation: 1820114 RSA 2010
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 08-07-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 04-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Keywords: Unexplained investment; Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRESIDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER ITA NO. 18(DEL)2010 ASSESSMENT YEAR: 2006-07 SHRI KISHAN LAL AHUJA, INCOM E TAX OFFICER, H.NO. 61 PP, SEC.15, SONEPAT V. WARD 3, SON EPAT (HARYANA). (HARYANA). (APPELLANT) (RESPON DENT) APPELLANT BY: SHRI K. SAMPATH, ADVOCATE RESPONDENT BY: SHRI SAL IL MISHRA, DR ORDER PER A.D. JAIN, J.M. THIS IS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2006- 07 AGAINST THE ORDER DATED 3.11.2009 PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS), ROHTAK CONFIRMING THE ADDITION OF ` 2 LAKHS ON ACCOUNT OF EARNEST MONEY, TREATING THE SAME AS INCOME FROM UNDISCLOSED SOURCE S AND SUSTAINING THE ADDITION OF ` 52,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS:- THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN- ITA 18(DEL)2010 2 I) CONFIRMING THE ACTION OF THE AO IN INITIATING PROCE EDINGS U/ 147 OF THE I.T. ACT ON SUSPICION AND COMPLETING THE ASSESSMENT WITHOUT PROVIDING REASONS TO THE ASSESSEE. THE OR DER IS MOST ERRONEOUS, UNLAWFUL AND UNTENABLE AND MUST BE QUASH ED. II) CONFIRMING THE ADDITION OF ` 2 LAKHS ON ACCOUNT OF RECEIPT OF EARNED MONEY, TREATING THE SAME AS INCOME FROM UND ISCLOSED SOURCES. THE ACTION BEING MOST ARBITRARY, ERRONEO US AND UNTENABLE, MUST BE QUASHED. III) IN SUSTAINING THE ACTION OF THE AO IN MAKING ADDITI ON ON ACCOUNT OF UNEXPLAINED INVESTMENT IN A SUM OF ` 52,000/-. THE ORDER BEING MOST ARBITRARY, ERRONEOUS AND UNTE NABLE, MUST BE QUASHED. 3. THE FOLLOWING ADDITIONAL GROUND HAS ALSO BEEN RA ISED:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE ACTION OF THE LD. CIT(A) IN SUSTAINING THE ADDITION OF ` 12,000/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. THE ORDER BEIN G ARBITRARY AND ERRONEOUS MUST BE QUASHED. 4. AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE HAS STATED AT THE BAR THAT THE ADDITIONAL GROUND AND GROUND NO.(I) ARE NO T PRESSED. REJECTED AS NOT PRESSED. 5. APROPOS GROUND NO.(II), AS PER THE ASSESSMENT O RDER, THE ASSESSEE HAD GIVEN EARNEST MONEY OF ` 1 LAKH FOR PURCHASE OF LAND. THE SELLER SCUTTLED THE AGREEMENT AND RETURNED DOUBLE THE AMOUNT OF THE EAR NEST MONEY AMOUNTING TO ` 2 LAKHS TO THE ASSESSEE. THE AO TAXED THE SAID AM OUNT OF ` 2 LAKHS. ITA 18(DEL)2010 3 6. ON APPEAL, THE LD. CIT(A) REMITTED THE MATTER TO THE AO FOR FURTHER EXAMINATION. THE AO RECORDED THE STATEMENT OF THE SELLER, SHRI RAM CHAND. HE ACCEPTED THAT THE AMOUNT OF ` 2 LAKHS HAD BEEN RETURNED BY HIM. 7. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE ADDITION, TREATING THE AMOUNT OF ` 2 LAKHS AS INCOME FROM OTHER SOURCES. 8. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CONTEND ED THAT THE LD. CIT(A) HAS WRONGLY CONFIRMED THE ADDITION; THAT WHILE DOIN G SO, THE LD. CIT(A) HAS FAILED TO CONSIDER THAT SHRI RAM CHAND, THE SELLER HAD HIMSELF CONFIRMED HAVING RETURNED DOUBLE THE AMOUNT OF ` 1 LAKH TO THE ASSESSEE; THAT THERE HAD BEEN NO ACTUAL TRANSFER OF LAND AND IT WAS ONLY THA T THE SELLER BEING UNWILLING TO SELL, HAD RETURNED DOUBLE THE AMOUNT OF ` 1 LAKH , AMOUNTING TO ` 2 LAKHS, TO THE ASSESSEE, IN ACCORDANCE WITH THE AGREEMENT; THAT THEREFORE, THE AMOUNT OF ` 1 LAKH OVER AND ABOVE THE ACTUAL AMOUNT OF ` 1 LAKH, WAS BY WAY OF DAMAGES. ATTENTION HAS BEEN DRAWN TO PAGE 26 O F THE ASSESSEES PAPER BOOK (APB FOR SHORT), WHICH IS THE BALANCE SHEET OF THE ASSESSEE AND WHEREIN THE TRANSACTION HAS BEEN SHOWN. ATTENTION HAS ALSO BEEN DRAWN TO APB 10, THE STATEMENT OF SHRI RAM CHAND. WE HAVE ALSO BEEN TAKEN THROUGH APB 5 TO 7, WHICH IS THE REMAND REPORT OF T HE AO. ITA 18(DEL)2010 4 9. THE LD. DR, ON THE OTHER HAND, HAS STRONGLY SUPP ORTED THE IMPUGNED ORDER. HE HAS CONTENDED THAT WHEREAS THE EARNEST MONEY WAS GIVEN IN MAY 2005, DOUBLE THE AMOUNT OF EARNEST MONEY WAS RETURN ED TO THE ASSESSEE IN NOVEMBER, 2005; THAT THERE WAS NO WRITTEN AGREEMENT FOR THE SALE/PURCHASE; THAT THERE WAS NO EVIDENCE REGARDING THE PAYMENT OF ` 1 LAKH AS EARNEST MONEY IN JANUARY 2005, NOR ANY EVIDENCE FOR THE REC EIPT BACK OF ` 2 LAKHS IN JUNE 2005; THAT THE STATEMENT GIVEN BY RAM CHAND WA S OBVIOUSLY A MOTIVATED STATEMENT, WHEREIN, EVEN THE DESCRIPTION OF THE LAND HAD NOT BEEN GIVEN; AND THAT THE AMOUNT OF 2 LAKHS, RECEIVED BA CK BY THE ASSESSEE PERTAINED TO ASSESSMENT YEAR 2006-07, I.E., THE YEA R UNDER CONSIDERATION, AS RIGHTLY OBSERVED BY THE LD. CIT(A) AND IT WAS, IN F ACT, THE ASSESSEES OWN UNDISCLOSED MONEY. 10. WE HAVE HEARD THE PARTIES ON THIS ISSUE AND HAV E PERUSED THE MATERIAL ON RECORD WITH REGARD THERETO. IT IS TRUE THAT TH ERE IS NO WRITTEN AGREEMENT WITH REGARD TO THE TRANSACTION OF THE LAND. IT IS ALSO TRUE THAT NEITHER THE PAYMENT, NOR THE REPAYMENT ALONG WITH THE ALLEGED D AMAGES, HAVE ANY EVIDENCE TO SUPPORT THAT AS THE ONLY MATERIAL EVID ENCE IS THAT OF RAM CHAND, THE SELLER OF THE LAND WHO HAD, AS PER THE ASSESSEE , RESILED FROM HIS EARLIER STAND OF WILLINGNESS TO SELL HIS LAND TO THE ASSESS EE. THIS STATEMENT, HOWEVER, HAS BEEN THROWN OUT BY THE AUTHORITIES BE LOW THROWN BY MERELY ITA 18(DEL)2010 5 SAYING THAT IT IS A MOTIVATED STATEMENT, WITHOUT SU PPORTING AS TO HOW IT IS SO. IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY OR A NYTHING TO SHAKE THIS STATEMENT, WE ARE OF THE OPINION THAT THE AUTHORITI ES BELOW HAVE ERRED IN HOLDING THE AMOUNT OF ` 2 LAKHS TO BE THE ASSESSEES OWN INCOME. EVEN OTHERWISE, IT IS PATENT ON RECORD, BY WAY OF BALANC E SHEET PRODUCED BY THE ASSESSEE, THAT THE AMOUNT OF ` 1 LAKH WAS INDEED ADVANCED BY THE ASSESSEE TO THE PROPOSED SELLER. THAT BEING SO, ONLY THE AMOU NT OF ` 1 LAKH OVER AND ABOVE THE SAID ADVANCED AMOUNT/EARNEST MONEY OF ` 1 LAKH, CAN, HOWEVER, IF AT ALL, BE BROUGHT TO TAX. HOWEVER, IN VIEW OF THE UNREBUTTED STATEMENT OF RAM CHAND, EVEN THIS AMOUNT, TO OUR MIND, CAN BE TA XED. MORE OVER, THE CONTENTS OF THE AFFIDAVIT OF RAM CHAND, THE SELLER( APB 12) ALSO SUPPORT HIS STATEMENT. HE WAS NOT PUT TO ANY FURTHER THAT WHI LE RECORDING HIS STATEMENT ON OATH, THE ONLY THREE QUESTIONS ASKED BY THE AO O F HIM WERE WITH REGARD TO HIS PARTICULARS, AS TO WHETHER HE WAS AN INCOME TAX ASSESSEE AND IF HE KNEW THE ASSESSEE AND SOME TRANSACTION HAD TAKEN PL ACE BETWEEN HIM AND THE ASSESSEE. THE AO SAT SATISFIED ON THE REPLIES GIVEN BY RAM CHAND TO THESE QUERIES. 11. ACCORDINGLY, THE GRIEVANCE OF THE ASSESSEE IN THIS REGARD IS ACCEPTED. THE ORDER OF THE LD. CIT(A) REGARDING THIS ISSUE IS CANCELLED. THE ADDITION IS, AS SUCH, DELETED. ITA 18(DEL)2010 6 12. COMING TO GROUND NO. 3, THE LD. CIT(A) CONFIRME D THE ADDITION OF ` 52,000/-. THE AO HAD MADE ADDITION OF ` 5,30,000/-, AS DECLARED BY THE ASSESSEE, AS INVESTMENT IN PROPERTY. THE LD. CIT(A ), HOWEVER, DELETED THEREFROM, THE AMOUNT OF ` 4,78,000/-. THIS COMPRISED OF ` 2 LAKHS CLAIMED AS RECEIVED BY THE ASSESSEE FROM RAM CHAND, AS ABOV E, AND RENT CLAIMED OF ` 2,78,000/- (1,20,000 + 1,20,000 + 26,000 + 12,000), OBSERVING THAT THE ASSESSEE WAS, THUS, HAVING CASH OF ` 4,78,000/-. 13. THE LEARNED COUNSEL FOR THE ASSESSE HAS CONTEND ED THAT THE AO HAD MADE THE ADDITION AS UNEXPLAINED INVESTMENT, OBSER VING THAT THE ASSESSEE HAD SHOWN EXPENSES INCURRED OF ` 5,30,000/- DURING THE YEAR ON CONSTRUCTION ON A PLOT, BUT NO DETAILS HAD BEEN FURNISHED; THAT THE LD. CIT(A) HAS, OUT OF THE ABOVE AMOUNT OF ` 5,30,000/-, SUSTAINED THE AMOUNT OF ` 1,60,000/-, REPRESENTING ADVANCE RENT RECEIVED FROM DHABA, AND OTHER SHOPS AND FOR OPEN SPACE AS PER THE BALANCE SHEET OF THE ASSESSEE ; THAT THE DEPARTMENT HAS NOT CHALLENGED THIS PART OF THE CIT(A)S ORDER; THA T AS PER THE BALANCE SHEET OF THE ASSESSEE, COPY AT APB 26, THE ADVANCE RECEIV ED WAS ALSO SHOWN, WHICH HAS NOT BEEN DISPUTED BY THE AO; AND THAT THE CREDIT THEREOF HAS NOT BEEN GIVEN BY THE LD. CIT(A). 14. THE LD. DR HAS STRONGLY SUPPORTED THE IMPUGNED ORDER. ITA 18(DEL)2010 7 15. HAVING CONSIDERED THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL ON RECORD, THE ASSESSEES GRIEVANCE ON THIS ISSUE IS A LSO FOUND TO BE CORRECT. THE AMOUNT OF ` 1,60,000/- REPRESENTING ADVANCE RENT WAS SUSTAINED. THE DEPARTMENT HAS NOT RAISED ANY ISSUE THERE AGAINST. IT IS SEEN THAT IN THE BALANCE SHEET OF THE ASSESSEE, THE ADVANCE RECEIPT HAS ALSO BEEN SHOWN. THE AO DID NOT DISPUTE THIS FACT. THE LD. CIT(A), HOW EVER, DID NOT GIVE CREDIT THEREOF TO THE ASSESSEE. THIS, IN OUR OPINION, IS NOT SUSTAINABLE. THEREFORE, GROUND NO.(III)IS ALSO ACCEPTED. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED, AS INDICATED. ORDER PRONOUNCED IN THE OPEN COURT ON 09.09.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: 09.09.2011 *RM COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ITA 18(DEL)2010 8 DEPUTY REGISTRAR