DCIT, Faridabad V. M/s. S.V.S. Propmart Pvt. Ltd., Gurgaon

ITA 2230/DEL/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2911 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 22-05-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 16-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Assessee Lawyers: RAJESH ARORA
• Keywords: Sale consideration of property below Jantri Value; Document seized; Documents seized
• Section: 142(1); 131; 132

Judgement Text

1 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI MS SUCHITRA KAMBLE, JUDICIAL MEMBER AND SH. PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO. 2229/DEL/2 013 ( A.Y 2006-07) ITA NO. 2230/DEL/2 013 (A.Y 2007-08 DCIT CENTRAL CIRCLE-II FARIDABAD (APPELLANT) VS S.V.S PROPMART PVT. LTD. 2 ND FLOOR, D, GLOBAL BUSINESS PARK, M. G. ROAD, GURGAON AAHCS1214L (RESPONDENT) APPELLANT BY SH. S. S. RANA, CIT DR RESPONDENT BY SH. RAJESH ARORA, CA ORDER PER SUCHITRA KAMBLE, JM THESE APPEALS ARE FILED BY THE REVENUE AGAINST THE ORDER DATED 08/02/2013 PASSED BY CIT(A)-, GURGAON. 2. THE GROUNDS OF APPEAL ARE SAME IN BOTH ASSESSMEN T YEAR AND THE SAME IS AS UNDER: - 1. WHETHER ON FACTS AND IN THE CIRCUMSTANCE OF THE CAS E, THE LD.CIT(A) WAS RIGHT IN DELETING THE ADDITION OF RS.58,53,262/-, R S.7,24,000/- AND RS.17,64,000/- MADE BY THE A.O ON ACCOUNT OF COMMIS SION/BRAKEAGE RECEIVABLE ESPECIALLY WHEN THE ASSESSEE HAD RAISED BILLS OF COMMISSION AND HAD NOT INCLUDED THE SAME IN ITS INCOME?. DATE OF HEARING 05.03.2018 DATE OF PRONOUNCEMENT 07.03.2018 2 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I 3. THE FACTUAL ASPECT OF THE MATTER ARE SIMIL AR IN BOTH THE ASSESSMENT YEAR, THEREFORE THE FACTS OF A.Y. 2006-07 ARE NARRATED HE REINAFTER. THE DIRECTOR (INVESTIGATION) CHANDIGARH U/S132(1) (A) OF THE INC OME TAX ACT, 1961 IN THE CASE OF THE ASSESSEE AMONG OTHERS CARRIED OUT SEARC H AND SEIZURE OPERATIONS AT THE BUSINESS PREMISES OF S.V. S PROPMART PVT. LTD, 2 ND FLOOR, TOWER-D, GLOBAL BUSINESS PARK, M. G. ROAD, GURGAON, ON 29/4/2008. A SEARCH OPERATIONS U/S 132(1) AND SURVEY U/S133A(1) OF THE ACT WERE ALSO C ONDUCTED IN THE VARIOUS PREMISES OF OTHER ASSESSEES OF THE SPAZE GROUP, SIMULTANEOUSLY AND SOME RELEVANT BOOKS AND DOCUMENTS WERE SEIZED AND IMPOUN DED IN THE COURSE OF THE OPERATIONS. THE SEIZED DOCUMENTS AND THE APPRAISAL REPORT IN THE GROUP WERE RECEIVED BY THE ASSESSING OFFICER ON 14/05/2009 IN ACCORDANCE WITH THE PROVISIONS OF SECTION 153A(1) (A) READ WITH SECTION 132 OF THE ACT. A NOTICE WAS ISSUED TO THE ASSESSEE REQUIRING HIM TO FILE HI S RETURN OF INCOME IN RESPECT OF ASSESSMENT YEAR 2006-07 AND ASSESSMENT YEAR FOLL OWING WITHIN THE SIX ASSESSMENT YEARS IMMEDIATELY PRECEDING THE ASSESSME NT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SEARCH WAS CONDUCTED IN HIS CASE ON 29/04/2008 AND THE SAME WAS PROPERLY SERVED ON THE ASSESSEE BY THE REGISTERED POST IN RESPONSE TO THE SAME NOTICE. THE ASSESSEE FILED H IS RETURN OF INCOME DULY VERIFIED AND SINGED AS PER THE PROVISIONS OF SECTIO N 140 OF THE ACT ON 14/05/2010 DECLARING A TOTAL INCOME OF RS.3,09,30,5 70/-. NOTICE U/S 143 (2) AND 142(1) TO FURNISH DETAILS RELATED TO SEARCH ISS UE WAS ISSUED ON 25/05/2010 FOR COMPLIANCE BY 22 /06/2010. THE ASSESSEE ACKNOWLEDGED A NOTICE ON 22/06/2010 AND REQUESTED THAT THE CASE MAY BE PO STPONED FOR A FEW DAYS. THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE ATTEN DED THE PROCEEDINGS FROM TIME TO TIME AND DISCUSS THE MATTER. THE ASSESSEE COMPANY IS DEALING IN THE BUSINESS OF COMMISSION AND BROKERAGE ON REAL ESTATE TRANSACTION FROM THE OFFICE PREMISES AT IIND FLOOR, TOWER D, GLOBAL BUSI NESS PARK, M. G. ROAD, GURGAON. THE ASSESSING OFFICER ON THE BASIS OF SE ARCH DOCUMENTS AND THE REPLY GIVEN BY THE DIRECTOR OF THE ASSESSEE COMPANY MADE AN ADDITION OF RS.58,53,262/- IN RESPECT OF DOCUMENTS RELATING TO VIPUL WORLD BY OBSERVING 3 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I THAT BROKERAGE ON THE CASH COMPONENT ON TOTAL CONSI DERATION WAS ALREADY RECEIVED BY THE ASSESSEE. THE ASSESSING OFFICER AL SO ADDED 7,24,000/- IN RESPECT OR CASH RECEIVED AGAINST THE DEDUCTION MADE IN THE WORKING OUT COMMISSION RECEIVABLE/RECEIVED FURTHER THE ASSESSIN G OFFICER ALSO MADE AN ADDITION OF RS.17,64,000/- AS THE INCOME OF THE ASS ESSEE COMPANY COMMISSION INCOME NOT REFLECTED IN THE BOOKS OF ACCOUNTS. 4. BEING AGGRIEVED BY THIS ASSESSMENT ORDER, TH E ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. 5. THE LD. DR SUBMITTED THAT THE CIT(A) HAS N OT TAKEN THE COGNIZANCE OF THE DOCUMENTS WHICH WERE SEIZED DURING THE SEARCH A ND SEIZURE OPERATIONS ESPECIALLY WHEN THE ASSESSEE HAS RAISED BILLS OF CO MMISSION AND HAD NOT INCLUDED THE SAME IN ITS INCOME. 6. THE LD. AR SUBMITTED THAT THE CIT(A) HAS TAKEN C OGNIZANCE OF ALL THE DOCUMENTS WHICH WAS SEIZED DURING THE SEARCH AND SE IZURE AT THE ASSESSEE BUSINESS PREMISES IN PARA 5 OF THE CIT(A)S ORDER T HE DETAILED FINDING WAS GIVEN. 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDER OF THE CIT(A) HELD AS UNDER:- 5.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND THE IMPUGNED ORDER. THERE NO DOUBT THAT THE DOCUMENTS W ERE SEIZED DURING THE COURSE OF SEARCH. THESE DOCUMENTS HOWEVER CATEG ORICALLY STATE THAT MONEY WAS RECEIVABLE, PAYABLE OR WERE ONLY CLAIMS. NO CORROBORATIVE EVIDENCE IS THERE TO PROVE THAT THE ASSESSEE HAD IN DEED RECEIVED THE MONEY. . EVEN THE STATEMENT RECORDED OF SHRI AMAN S HARMA ON THE DATE OF SEARCH DOES NOT BEAR ANY SUCH RECEIPT. 'THE RESPONS E TO THE SUMMONS U/S 131 ISSUED BY THE AO, ALSO DO NOT PROVE THAT THE MO NEY HAD INDEED BEEN PAID TO THE ASSESSEE. THE BOOKS OF ACCOUNTS ALSO DO NOT HAVE ANY ENTRIES EITHER IN THE CASE OF THE ASSESSEE OR THAT OF M/S V IPUL. THEREFORE IT EMERGES THAT THERE IS NOT EVEN A SHRED OF EVIDENCE TO SHOW THAT THE ASSESSEE HAS RECEIVED THE MONEY OR FOR THAT MATTER EVEN THAT A DEBT HAD BEEN CREATED IN THE NAME OF THE ASSESSEE IN THE BOO KS OF M/S VIPUL. 4 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I IN NATIONAL HANDLOOM DEVELOPMENT CORPORATION LTD. ( V) DCIT 266 ITR 647 (ALL), IT HAS BEEN HELD THAT A BASIC CONCEP T OF IN THE INCOME TAX LAW IS THAT THE ASSESSEE MUST HAVE RECEIVED OR HAVE THE RIGHT TO RECEIVE INCOME BEFORE IT CAN BE TAXED. THERE MUST BE A DEBT OWED T O HIM BY SOMEBODY, IF THE AMOUNT IS TO BE TAXED ON MERCANTILE BASIS. UNLE SS A DEBT HAS BEEN CREATED IN FAVOUR OF THE ASSESSEE BY SOME BODY IT C ANNOT BE SAID THAT THE INCOME HAS ACCRUED TO HIM OR HE HAS A RIGHT TO RECE IVE THE INCOME. WHEN ONE REFERS TO THE RIGHT OF THE ASSESSEE TO RECEIVE AN AMOUNT SO AS TO MAKE IT TAXABLE, IT NECESSARILY MEANS A RIGHT ENFORCEABL E UNDER LAW. IF THE CLAIM IS NOT LEGALLY ENFORCEABLE THE ASSESSEE CANNOT BE S AID TO BE VESTED WITH A RIGHT TO CLAIM THE AMOUNT. IN SHOORJT VALLABHDAS & CO (1962) 46 ITR 144,148 (S C), IT WAS HELD INCOME TAX IS A LAW ON INCOME. NO DOUBT, THE INCOME TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAXIS ATTRACTED, VIZ. THE ACCRUAL OF INCOME OR ITS RECEIPT; BUT THE SUBSTANCE OF THE MATTER IS IN THE INCOME. IF INCOME DOES NOT RESULT AT ALL THERE CANN OT BE A :AX EVEN THOUGH IN BOOK- KEEPING AN ENTRY IS MADE ABOUT A HYPOTHETI CAL INCOME, WHICH DOES NOT MATERIALISE. UNLESS A DEBT HAS BEEN CREATED IN FAVOUR OF THE ASS ESSEE IT CANNOT BE SAID THAT THE INCOME HAS ACCRUED TO IT OR IT HAS A RIGHT TO RECEIVE THE INCOME AS HELD IN ED SASSOON & CO LTD. (V) CIT (954] 26 ITR @ 7 (SC); SETH PUSHAAL MANSINGKA (P) LTD. (V) CIT (1967) 66 ITR 159 (SC) A ND CIT (V) ASHOKBHAI CHIMANBHAI (1965) 56 ITR 42 (SC). IN VIEW OF THE ABOVE DISCUSSION, IT IS APPARENT THA T THERE IS NO EVIDENCE, LEAST OF ALL A CORROBORATIVE ONE, WHICH WOULD PROVE THAT A DEBT HAD BEEN CREATED OR THAT THE ASSESSEE HAD RECEIVED THE AMOUN T EVEN OUTSIDE THE BOOKS OF ACCOUNTS. AS SUCH, I AM INCLINED TO HOLD T HAT THE AMOUNT OF RS. 58,53,262/- CANNOT BE TAXED IN THE HANDS OF THE ASS ESSEE. THE ASSESSEE SUCCEEDS IN THIS GROUND OF APPEAL. 5.3 SIMILAR GROUND OF APPEAL FOR AY 2007-08 WAS RAI SED WHICH READS AS UNDER: 1. THE LD A.O HAS ERRED IN LAW & FACTS OF THE CASE IN MAKING ADDITION ON ACCOUNT OF COMMISSION INCOME ALLEGED TO BE RECEIVABLE BY THE COMPANY AMOUNTING RS. 2,00,59,459/- AT A NOT IONAL RATE OF 4% ON THE COST OF THE FLATS/ PROPERTY, WHICH IS HIG HLY ARBITRARY, 5 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I UNJUSTIFIED, BAD-IN LAW, UNCALLED FOR AND MERELY ON PRESUMPTION OF THE LD. A.O. 5.3.1 THE FACTS ARE IDENTICAL. THE NOTIONAL RATE TAKEN IN THIS YEAR WAS 4% INSTEAD OF 5%. THE AMOUNT OF RS. 2,00,59,459/- HERE HAS BEEN CLUBBED BUT THE ISSUE IS THE SAME. THUS, FOR THE DETAILED DISCU SSION IN PARA 5.2 ABOVE, 6.2 AND 7.2 HEREUNDER, THE ADDITION ALSO STAND DELE TED. .. 6.2 I HAVE GONE THROUGH THE SUBMISSIONS OF THE AS SESSEE. I HAVE ALSO GONE THROUGH THE IMPUGNED ORDER. THERE IS NO DOUBT THAT THE SEIZED MATERIAL DOES NOT LEAD ANY EVIDENCE THAT THE ASSESS EE HAS BEEN PAID ANY COMMISSION, IN CHEQUE OR IN CASH. IN SUCH CIRCUMSTA NCES, UPHOLDING AN ADDITION ON NOTIONAL INCOME WOULD BE NON-JUDICIOUS. WHEN THE LEGISLATURE DESIRED TO HAVE/ CONSIDER NOTIONAL INCOME, THE SAME HAS BEEN PROVIDED SUCH AS MAT, SECTION 50C. CONSEQUENTLY, THE STAND T AKEN BY THE AO IS DIRECTED TO BE DELETED. 7.2 I HAVE GONE THROUGH THE SUBMISSIONS OF THE AS SESSEE. I HAVE ALSO GONE THROUGH THE IMPUGNED ORDER. THERE IS NO D OUBT THAT THE SEIZED MATERIAL DOES NOT LEAD ANY EVIDENCE THAT THE ASSESS EE HAS BEEN PAID ANY COMMISSION, IN CHEQUE OR IN CASH. IN SUCH CIRCUMSTA NCES, UPHOLDING AN ADDITION ON NOTIONAL INCOME WOULD BE NON-JUDICIOUS. WHEN THE LEGISLATURE DESIRED TO HAVE/ CONSIDER NOTIONAL INCOME, THE SAME HAS BEEN PROVIDED SUCH AS MAT, SECTION 50C. CONSEQUENTLY, THE STAND T AKEN BY THE AO IS DIRECTED TO BE DELETED. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSING OF FICER HAS MENTIONED IN THE ASSESSMENT ORDER ABOUT THE SUBMISSIONS MADE BY THE ASSESSEE THAT THE COMMISSION WAS NOT RECEIVED BY THE ASSESSEE COMPANY ON ACCOUNT OF DISPUTE WITH THE SAID PARTY. SINCE THE COMMISSION INCOME HA S NOT BEEN SETTLED AND CRYSTALLIZED, THE SAME HAS NOT ACCRUED TO THE ASSES SEE COMPANY. THE SAID CONTENTION OF THE ASSESSEE WAS NOT DEALT WITH BY TH E ASSESSING OFFICER. THERE WAS NO FINDING GIVEN BY THE ASSESSING OFFICER THAT THE AMOUNT WAS RECEIVED BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNT. THIS ASP ECT WAS TAKEN INTO ACCOUNT BY THE CIT(A). THE CIT(A) HAS GIVEN DETAILED FINDIN G FOR BOTH THE YEARS THE FACTUAL ASPECTS ARE SIMILAR. THEREFORE, THERE IS N O NEED TO INTERFERE WITH THE ORDER OF THE CIT(A). BOTH THE APPEAL OF THE REVENU E ARE DISMISSED. 6 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I 8. IN RESULT, BOTH THE APPEALS OF THE REVENUE ARE D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07TH MARCH, 2018 . SD/- SD/- (PRASHANT MAHARISHI) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 07/03/2018 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 7 ITA NOS. 2229/DEL/2013 &2230/DEL/2013 I DATE 1. DRAFT DICTATED ON 06/03/2018 PS 2. DRAFT PLACED BEFORE AUTHOR 06/03/2018 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2018 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 7.03.2018 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 7 .03.2018 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.