ACIT, New Delhi V. Sh. Kamal Kishan Arora, New Delhi

ITA 2294/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86780 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 18-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIVEK WADEKAR
• Keywords: Search and seizure; Documents seized
• Section: 143(3); 153A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO.2294/DEL./2011 (ASSESSMENT YEAR : 2007-08) ACIT, CENTRAL CIRCLE 2, VS. SHRI KAMAL KISHAN ARO RA, NEW DELHI. B 4/48, PASCHIM VIHAR, NEW DELHI. (PAN : AAIPA0350P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL JAIN, CA REVENUE BY : SHRI VIVEK WADEKAR, CIT DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-III, DELHI DATED 17.02.2011 FOR THE ASSES SMENT YEAR 2007-08. 2. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT A T THE WINGS PHARMACEUTICALS PVT. LTD. GROUP OF CASES ON 14.02.2 008. THE ASSESSEE WAS ALSO COVERED IN THE SEARCH OPERATION. THE ASSESSME NT WAS FINALIZED U/S 143(3) AND 153A OF THE INCOME-TAX ACT, 1961 ON 30.1 2.2009. THE ASSESSEES APPEAL WAS ALLOWED ON VARIOUS GROUNDS BY THE CIT (A) AGAINST WHICH THE REVENUE IS IN APPEAL BY TAKING THE FOLLOW ING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE A DDITION OF ITA NO.2294/DEL./2011 2 RS.56,93,200/- MADE BY THE ASSESSING OFFICER U/S 69 B OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE A DDITION MADE BY THE ASSESSING OFFICER U/S 69B OF THE INCOME TAX AC T, 1961 ON THE GROUND OF ABSENCE OF ANY ACTUAL EVIDENCE ALLEGI NG OR ESTABLISHING THAT ANY EXTRA INVESTMENT WAS MADE BY THE ASSESSEE, AS IT PLACES AN UNFAIR BURDEN ON THE DEPARTMENT BEC AUSE AVAILABILITY OF DIRECT EVIDENCE IS IMPOSSIBLE IN SU CH TYPE OF CASES WHERE BOTH PARTIES GAIN BY UNDERSTATING THE REAL CO NSIDERATION OF IMMOVABLE PROPERTY WHICH IS TRANSFERRED? 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE A DDITION OF RS.4,25,600/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF FAIR RENTAL VALUE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE CIT (A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE A DDITION OF RS.1,00,000/- MADE BY THE ASSESSING OFFICER ON ACCO UNT OF UNDISCLOSED RECEIPT OF SCRAP SALE. 5. THE ORDER OF LD. CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AME ND ANY / ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURS E OF THE HEARING OF THE APPEAL. 3. IN THE GROUND NOS.1 & 2, THE ISSUE INVOLVED IS D ELETING THE ADDITION OF RS.56,93,200/- MADE U/S 69B OF THE ACT. 4. THE ASSESSEE HAS PURCHASED PROPERTY BEARING NO.1 0/78, PUNJABI BAGH (WEST), NEW DELHI FROM SHRI S.K. SACHDEVA ON 22.01. 2007 ALONG WITH OTHER THREE CO-OWNERS FOR A CONSIDERATION OF RS.1,0 5,00,000/- AND STAMP DUTY WAS PAID OF RS.8,40,000/-. THE ASSESSEES SHA RE IN THIS PROPERTY WAS 1/4 TH AND THE OTHER CO-OWNERS WERE HIS BROTHERS. THE AS SESSING OFFICER ITA NO.2294/DEL./2011 3 REFERRED THE ISSUE TO THE DISTRICT VALUATION OFFICE R FOR VALUATION AND HE HAS VALUED THE PROPERTY AT RS.6,47,72,800/-. ONE-FOURT H OF THE SHARE OF THE ASSESSEE COMES TO RS.1,61,93,200/-. ACCORDINGLY, D IFFERENCE OF RS.56,93,200/- (RS.1,61,93,200/- MINUS RS.1,05,00,0 00/-) WAS ADDED TO THE INCOME OF THE ASSESSEE. THE CIT (A) DELETED THE AD DITION. 5. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED T HAT THIS ISSUE HAS BEEN CONSIDERED BY THE ITAT, BENCH F, NEW DELHI I N ITS ORDER DATED 08.08.2014 IN ITA NO.2293/DEL/2011 AND RELIEF HAS B EEN GRANTED IN THE CO-OWNERS CASE. HE RELIED ON THE ORDER OF THE ITAT ON THIS ISSUE. 6. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE AFORESAID DECISION OF THE ITAT. RELEVANT PORTION OF THE ORDER IS REPRODUCED HEREUNDER :- 11. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT LD. CI T (A) HAS DELETED THE ADDITIONS ON ACCOUNT OF DIFFERENCE IN M ARKET PRICES OF PROPERTIES AS COMPARED TO DECLARED VALUES FOLLOWING CERTAIN JUDICIAL PRONOUNCEMENTS AND BY ELABORATING THE FACT S CLEARLY. THEREFORE, WE DO NOT SEE ANY REASON TO INTERFERE WI TH HIS FINDINGS. HIS ORDER ON OTHER ADDITIONS IS ALSO VER Y ELABORATE AND MERITS NO INTERVENTION. SINCE THE ADDITION HAS BEEN DELETED IN THE CASE OF CO-OWNERS OF THE PROPERTY ON THE SIMILAR FACTS AND CIRCUMSTANCES, TH EREFORE, WE DISMISS THESE TWO GROUNDS OF ASSESSEES APPEAL RELATING TO THE ADDITION MADE U/S 69B OF THE INCOME-TAX ACT, 1961. ACCORDINGLY, GROU ND NOS.1 & 2 ARE DISMISSED. ITA NO.2294/DEL./2011 4 7. IN THE GROUND NO.3, THE ISSUE INVOLVED IS DELETI NG THE ADDITION OF RS.4,25,600/- MADE ON ACCOUNT OF FAIR RENTAL VALUE. 8. ON THIS ISSUE ALSO, LD. AR SUBMITTED THAT THE FA IR RENTAL VALUE ESTIMATED IN THE CASE OF SHOP AT BHAGIRATH PLACE, N EW DELHI HAS BEEN DEALT WITH IN THE CASE OF ACIT VS. ANIL ARORA IN ITA NO.2 293/DEL./2011 BY THE ITAT, BENCH F, NEW DELHI IN ITS ORDER DATED 08.08 .2014. ON THE SIMILAR FACTS AND CIRCUMSTANCES, THE ADDITION WAS DELETED. IT WAS ALSO PLEADED THAT THE FLAT AT KAILASH VIHAR, BADDI WAS INCOMPLETE AND INHABITABLE DURING THE RELEVANT PERIOD. IT WAS SUBSEQUENTLY LET OUT TO M/ S. WING PHARMACEUTICALS PVT. LTD. IN THE FINANCIAL YEAR 2007-08 AND THE REN TAL INCOME OF RS.3,50,000/- OF THE SAME WAS OFFERED FOR TAXATION. THEREFORE, IN THIS YEAR, THERE WAS NO JUSTIFICATION FOR ESTIMATING THE RENTA L INCOME FROM THIS PROPERTY. HE PLEADED TO SUSTAIN ORDER OF CIT (A) O N THIS ISSUE. 9. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THIS ISSUE IS PARTLY COVERED BY THE AFORESAID DECISION OF ITAT IN RESPEC T OF RENTAL ESTIMATED FOR BHAGIRATH PLACE, CHANDNI CHOWK, NEW DELHI SHOP. THE FLAT AT KAILASH VIHAR, BADDI WAS NOT HABITABLE DURING THE RELEVANT PERIOD. IN THE SUBSEQUENT YEARS, IT WAS LET OUT AND THE RENT HAS B EEN DECLARED IN THE INCOME OF ASSESSEE. IN VIEW OF THESE FACTS, WE FIN D NO MERITS IN THIS GROUND OF REVENUES APPEAL AND THE SAME IS DISMISSE D. 10. IN THE GROUND NO.4, THE ISSUE INVOLVED IS DELET ING THE ADDITION OF RS.1 LAC ON ACCOUNT OF UNDISCLOSED INCOME FROM SCRA P SALES. ITA NO.2294/DEL./2011 5 11. THE ASSESSING OFFICER HAS DEALT THIS ISSUE IN P ARA 7 WHICH IS REPRODUCED AS UNDER :- 7. DURING THE COURSE OF SEARCH AT THE BUSINESS PRE MISE OF M/S WINGS PHARMACEUTICALS (P) LTD AT BADDI, ANNEXURE A- 20 PARTY WB-5 WAS SEIZED. THE FOLLOWING PAGES ARE IN THE NATURE O F PETTY CASH BOOK WHICH REVEALS THAT CASH AMOUNTING TO RS.10,000/- WA S BEING DRAWN BY THE ASSESSEE ON REGULAR BASIS: PAGE NO. DATE AMOUNT (RS.) 75 03/10/2002 10,000/- 79 17/10/2002 10,000/- 88 31/08/2007 10,000/- 87 14/09/2007 10,000/- 90 28/09/2007 10,000/- 103 18/01/2008 10,000/- 107 28/11/2007 10,000/- 109 05/11/2008 10,000/- 114 01/11/2007 10,000/- 200 30/11/2007 10,000/- THE ASSESSEE WAS ASKED TO GIVE DETAILS OF SUCH RECE IPTS DURING THE YEAR, IF ANY. THE ASSESSEE HAS NOT ADMITTED ANY PA YMENT RECEIVED OUT OF SCRAP SALES. IN VIEW OF THE FACT THAT DURING FY 2007-08, SUBSTANTIAL AMOUNT OF SCRAP SALES HAS COME TO NOTICE FROM THE S EIZED DOCUMENTS. AS THE COMPANY IS IN THE SAME BUSINESS AND NO SCRAP SALES HAS BEEN SHOWN DURING THE YEAR UNDER CONSIDERATION IN THE HA NDS OF THE COMPANY, AN AMOUNT OF RS.1,00,000/- IS BEING ADDED IN HANDS OF THE ASSESSEE ON ESTIMATE BASIS IN VIEW OF THE DOCUMENTS SEIZED PERTAINING TO FY 2007-08. ..... ADDITION RS.1,00,000/- THE CIT (A) HAS GRANTED THE RELIEF BY HOLDING AS UN DER :- 7. GROUND OF APPEAL NO.XII : THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND THE PROVISIONS OF THE LAW, THE LEARNED ASSESSING OFFICE R HAS ERRED IN MAKING AN ADDITION OF RS.100000/- ON ACCOUNT OF UND ISCLOSED RECEIPTS FROM SCRAP SALES. ON THE BASIS OF SOME SCRIBBLING ON ANNEXURE A-20 PA RTY WB-5 THE LD AO HAS MADE AN ADDITION OF RS.1,00,000/- ON ACCOUNT OF UNDISCLOSED RECEIPT FROM SCRAP SALES. DURING THE COURSE OF ASSE SSMENT PRECEDING IT WAS SUBMITTED BEFORE THE LD. AO THAT THE ALLEGED PA YMENT RECEIVED ON ITA NO.2294/DEL./2011 6 ACCOUNT OF SALE OF SCRAP IS NOT IN MY INDIVIDUAL CA PACITY BUT FOR COMPANY M/S WINGS PHARMACEUTICALS PVT. LTD. SO IT W AS SUBMITTED NO NEGATIVE INFERENCE SHOULD BE DRAWN ON THIS ACCOUNT. MORE OVER IT WAS FURTHER SUBMITTED THAT IN THE ASSESSMENT OF THE ABO VE SAID COMPANY ADDITION ON ACCOUNT OF SCRAP SALES ALSO HAS BEEN MA DE. THUS, IT WAS PLEADED THAT THERE IS NO JUSTIFICATION FOR MAKING A DDITION ON THIS ACCOUNT IN INDIVIDUAL CAPACITY AS THE ASSESSEE WAS WORKING IN THE CAPACITY OF THE MANAGER OF THE COMPANY 'AND ALL THE SE ALLEGED PAYMENTS WERE RELATED TO THE SAID COMPANY. 7.1 I HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE AND THE ASSESSMENT ORDER. AS IT IS AN UNDISPUTED FACT THAT THE ASSESSEE WAS WORKING AS MANAGER OF M/S WINGS PHARMACEUTICALS PVT . LTD. AND THE ALLEGED PAYMENTS WERE RELATED TO THE SAID COMPANY A ND THE AO HAS ALREADY MADE THE ADDITION ON THIS ACCOUNT IN THE HA NDS OF THE COMPANY ALSO, THERE IS NO JUSTIFICATION FOR MAKING FURTHER ADDITION ON THIS ACCOUNT IN THE HANDS OF THE ASSESSEE. THUS, AO IS D IRECTED TO DELETE THE ADDITION OF RS.1 LAC MADE ON THIS ACCOUNT. 12. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. LD. AR SUBMITTED THAT THE ADDITION HAS BEEN SUSTAINED IN THE CASE OF ACIT , CENTRAL CIRCLE 2, NEW DELHI VS. M/S. WINGS PHARMACEUTICALS PVT. LTD. IN I TA NO.3287/DEL/2012 & ORS. BY THE ITAT, DELHI BENCH H, NEW DELHI AND HE RELIED ON THE PARAS 87 TO 89 OF THE SAID ORDER. HE SUBMITTED THA T THE ADDITION ON ACCOUNT OF SCRAP CANNOT BE MADE IN THE HANDS OF ASSESSEE WH O IS AN INDIVIDUAL. WE FIND THAT THE SEIZED PAPER ANNEXURE A-20 PARTY WB-5 SHOWS THAT THE CASH AMOUNTING TO RS.10,000/- WAS BEING DRAWN BY THE ASS ESSEE ON REGULAR BASIS. DETAILS HAVE BEEN PROVIDED IN THE ASSESSMEN T ORDER WHERE PAGE NUMBER, DATE AND AMOUNT HAS BEEN MENTIONED. THEREF ORE, THE ADDITION MADE IN THE HANDS OF THE INDIVIDUAL WAS JUSTIFIED A S IT WAS AN UNACCOUNTED RECEIPT IN THE HANDS OF THE INDIVIDUAL ASSESSEE. I N VIEW OF THESE FACTS, WE ITA NO.2294/DEL./2011 7 SET ASIDE THE ORDER OF THE CIT (A) ON THIS ISSUE AN D SUSTAIN THE ORDER OF THE ASSESSING OFFICER. THIS GROUND OF REVENUES APPEAL IS ALLOWED. 13. GROUND NOS.5 & 6 ARE GENERAL IN NATURE AND DO N OT REQUIRE ANY ADJUDICATION. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 19 TH DAY OF FEBRUARY, 2015. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 19 TH DAY OF FEBRUARY, 2015 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-III, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.