ITO ward-32(2), New Delhi V. Sukhbir Singh Dagar, New Delhi

ITA 2757/DEL/2019

AI Insights

The case involves an appeal by the revenue against the order of the CIT(A)-15, New Delhi, which had deleted the addition made by the Assessing Officer (AO) regarding undisclosed long term capital gains amounting to Rs. 5,17,11,467 for the Assessment Year 2006-07. The revenue contended that substantial evidence, including an excel sheet recovered during a search operation, indicated that a significant portion of the sale proceeds was received in cash and not recorded in the sale deed. The CIT(A)'s decision to delete the addition was challenged on the grounds that the evidentiary value of the seized documents was not adequately considered. The Tribunal found that the CIT(A) had erred in granting relief to the assessee without substantial basis, leading to the restoration of the AO's assessment order.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131255 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2023
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 08-05-2023
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M. S. DAGAR
• Keywords: Capital asset; Document seized; Documents seized; Reassessment proceedings; Set aside; Capital Gains
• Section: 147; 148; 144; 2(14)

Judgement Text

Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE Shri C.M. Garg, Judicial Member AND Shri Pradip Kumar Kedia, Accountant Member ITA No. 2757/Del/2019 (Assessment Year: 2006-07) ITO, Ward-32(2), New Delhi Vs. Sukhbir Singh Dagar, K-259, High Gate Mansion, Maidan Garhi Road, Chattarpur Enclave, Phase-2, New Dlehi (Appellant) (Respondent) PAN: ACIPD3262H Assessee by : Sh. M. S. Dagar, Adv Revenue by: Ms. Raja Rajeshwari R, JCIT Date of Hearing 09/07/2023 Date of pronouncement 10/08/2023 O R D E R PER C. M. GARG, J. M.: 1. This appeal has been filed by the revenue against the order of the ld CIT(A)-15, New Delhi dated 14.09.2018 for AY 2006-07. 2. The revenue has raised the following grounds of appeal:- “1. Whether the Ld CIT(A) is correct in deleting the addition made by the AO amounting to Rs. 5,17,11,467/- on account of undisclosed long term capital gain. 2. Whether the Ld CIT(A) is correct in deletion of undisclosed long term capital gain without appreciating the facts that during DRI, Mumbai, search evidence were found in the possession of Zaver Cyprus Dadlani, wherein it was categorically mentioned that the sale proceeds of the property were also in cash and not recorded in sale deed. 3. Whether the Ld CIT(A) erred in not appreciating the facts that M/s Saturn Advisory Services Pvt Ltd and M/s Merino Realtors Pvt Ltd were actually purchaser, hence the same yardsticks could not be applied in the case of the instant assessee being seller. 4. Whether the Ld CIT(A) erred in not appreciating the fact that the seized documents have evidentiary values. From the seized documents, it is revealed that the amount stated therein to be paid by DD/Cheque exactly matched with the amount entered into the registered sale deed(s) which further emphasizes that the cash transactions mentioned ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 2 in the seized documents took place and should therefore be taken as to be part of sale consideration for computation of long term capital gains.” 3. The ld CIT DR submitted that the ld CIT(A) has erred in deletion of undisclosed long term capital gain without appreciating the facts that during search operation by DRI, Mumbai substantial evidence were found in the possession of Zaver Cyprus Dadlani, Deputy Manager (Accounts), wherein it was categorically mentioned that the major part of sale proceeds of the property sold by assessee were also in cash which was not recorded in sale deed. The ld CIT DR further contended that the ld CIT(A) has also erred in not appreciating the facts that M/s Saturn Advisory Services Pvt Ltd and M/s Merino Realtors Pvt Ltd were actually purchaser, hence the same yardsticks could not be applied in the case of the instant assessee being seller. The ld CIT Dr vehemently pointed out that the first appellate authority have also erred in not appreciating the fact that the seized documents have evidentiary value. From the seized documents, it is revealed that the amount stated therein to be paid by DD/Cheque exactly matched with the amount entered into the registered sale deed(s) which further emphasizes that the cash transactions mentioned in the same seized documents including excel sheet took place and should therefore be taken as to be part of sale consideration for computation of long term capital gains. 4. The ld CIT DR drawing our attention towards relevant para page 1 to 3 of the assessment order and submitted that the AO was right in dismissing the contention of the assessee that he did not have any relationship with M/s. Zaver Cyprus Dadlani who was Dy. Manager (Accounts), NITCO because she was well aware of the transaction between the assessee and the purchaser companies M/s. M/s. Saturn Advisory Services Pvt. Ltd and M/s. Merino Realtors Pvt. Ltd. The ld CIT DR further submitted that the Investigation Wing of the Directorate of Income Tax informed the AO that the assessee has sold his share in land situated at Maidan Garhi worth of Rs. 10,92,46,024/- out of which ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 3 50% share of total consideration was pertaining to the assessee having 50% of share in the property sold. The ld DR submitted that the capital gain arising out transfer of land which is a capital asset as per section 2(14) of the Income Tax Act, 1961 (for short the Act) has escaped assessment therefore, reassessment proceedings were initiated against the assessee. The ld CIT DR submitted that the full value of consideration as per sale Deed was shown at Rs. 21,87,500/- but self speaking documentary evidence submitted by the Investigation Wing clearly revealed that the assessee, in fact, had received a total sum of R. 5,46,23,012/- out of which Rs. 21,87,500/- by cheque and remaining amount of Rs. 5,24,35,112/- by cash. The ld DR submitted that despite repeated opportunities granted to the assessee the assessee had not submitted any explanation, therefore, the AO was right in making additions in the hands of the assessee as income from long term capital gain after allowing indexation cost of acquisition out of said sale consideration. The ld DR finally submitted that the impugned first appellate order may kindly be set aside by restoring that of the AO as the ld first appellate authority has granted relief to the assessee without any justified reason and basis by considering irrelevant factual position. 5. Replying to the above the ld AR supported the first appellate order and submitted that the ld CIT(A) was right in directing the AO to recomputed the long term capital gain on the basis of sale consideration mentioned in the registered sale deed as there was no evidence to substantiate that the assessee under said transaction of sale of capital assets, had taken cash money which was not shown in the sale deed and not disclosed to the department for calculation long term capital gain. The ld AR submitted that the ld CIT(A) has granted relief to the assessee by considering the fact and circumstances in right perspective therefore, appeal of the revenue may kindly be dismissed. 6. On careful consideration of the above submission, first of all, we note that AO initiated the reassessment proceedings u/s 147 of the Act ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 4 by issuing notice u/s 148 of the Act on 22.03.2013 after recording the reason in pursuance to the information received from the Investigation Wing of Directorate of Income Tax vide communication dated 15.03.2013 that the assessee has sold his share of land situated at Maidan Garhi worth of Rs. 10,92,46,024/- and assessee was having 50% of share in the said property sold. We further note that undisputedly the property sold was a capital asset as per section 2(14) of the Act and capital gain arising there from was liable to be taxed as long term capital gain keeping in view the time limit between purchase and sale of property by the assessee. The AO issued show cause notice to the assessee requiring to file return of income but he assessee did not file any return of income. Thereafter, the AO issued notice u/s 142(1) of the Act which is also remained un-complied. Thereafter, the AO again gave final opportunity to the assessee fixing the hearing on 10.02.2014 and in the reply the assessee submitted that he has sold land measuring 8190 sq yards for a total consideration of Rs. 21,87,500/- mentioned in the sale deed. It is also admitted fact that the assessee did not have any direct relationship but it is also admitted fact that the document impounded from the possession of Ms. Zaver Cyprus Dadlani did not include the name of the assessee along with amount of registry and amount of cash paid of Rs. 5,24,35,512/- besides cheque payment mentioned in the sale deed. 7. The ld CIT(A) at page 19 in middle para noted that during the course of enquiry it was gathered that entire land deal was organized by NITCO group through its sister concerns and individuals known to the Directors/ key persons in the group who acted as the purchasers. The objective of such transaction was consolidation of various holdings and change of its land use for development purpose. When the excel sheet contains all the details of sellers, purchasers, details of property sold and sale consideration, paid through cheque and in cash and except cash amount all the other details and figures are exactly matching with the sale deeds then the factum of cash payment of ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 5 consideration cannot be washed away on the basis of the irrelevant material. The ld CIT(A), while granting relief to the assessee, also taken into consideration as incorrect fact that no statement of Ms. Zaver Cyprus Dadlani and on the other hand, in para 11.9 noted the fact of recording of statement not only of Ms. Dadlani but also of Mr. Atul Sud thus, his conclusion based on incorrect appreciation of facts cannot be termed a sustainable being perverse and contrary to the facts of the case. Therefore, we hold that the AO was very justified and correct in granting cost of indexation to the assessee and thereafter calculated the long term capital gain on the 50% share of the assessee in the property sold. We are unable to see any ambiguity, perversity or any other finding to interfere with the finding of the assessment order passed on the material available before the AO. 8. From the first appellate order, we note that the ld CIT(A) granted relief to the assessee by considering the irrelevant facts and circumstances and without controverting the substantial evidence in the hands of the AO received from the investigation wing to which the assessee did not file any application and documentary evidence before the AO during the assessment proceedings and the notice issued by the AO were remained un-complied. From para 10.1 of first appellate order we clearly note that this Addl. Director General, DRI vide office letter dated 22.09.2009, addressed to Director General, DRI informed that during the course search undertaken 27.08.2009 on the residential premises of Ms. Zaver Cyrus Dadina, Dy Manager, NITCO two electronic storage devices were recovered consisting of a hard disk and a pan drive. It was also a fact that on examination of contents of hard disk, an excel sheet was found, containing details of purchase and payments made for 36 landed properties in Maidan Garhi popularly known as Sainik Farms of South Delhi, mainly during 2005. Addl. Director General, DRI had forwarded the said excel sheet to Director General, DRI, listing 36 properties and including the sale of property under consideration in the present case. The excel sheet containing ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 6 details of sellers/buyers and payment (both in demand draft and cash mode). The total amount paid for acquisition was approximately 56.29 crores, which included DD components amounting to Rs. 14.43 crores and cash components amounting to Rs. 41.86 crores. The investigation Wing of Mumbai informed director General of Income Tax (Investigation), New Delhi informed the said transaction and receipt of cash consideration by the sellers including the present assessee. 9. In the present case, we in agreement with the contention AO as well as CIT DR that the said excel sheet was containing all details including description of land, sale consideration as per registered sale deed, cash payment of part consideration and amount written in an appropriate form. The assessee is merely taking shelter that the sale consideration mentioned in the sale deed is the only amount which is received by cheque but he has no explanation regarding mentioning of transactions and payment of cash to the purchaser to the sellers including the assessee amounting to Rs. 5,24,35,112/- in cash. At the cost repetition, we may point out during the assessment proceeding the assessee did not appear before the AO and AO passed ex parte order u/s 147/ 144 of the Act on the basis of material available, particularly report of Investigation Wing supported by excel sheet recovered from the Assistant Manager of Accounts Ms. Dadlani of the purchaser entity. 10. In our considered opinion the ld CIT(A) was not correct and right in granting relief to the assessee ignoring the vital self speaking evidence showing cash payment by the purchaser to the seller assessee and his co owner out of which assessee received 50% amount of Rs. 5,24,35,112/- in cash. Accordingly, the AO was right and justified in calculating long term capital gain after allowing index cost of acquisition to the assessee. The ld CIT(A) granted relief to the assessee without any basis therefore, impugned first appellate order is set aside by restoring the assessment order dated 24.03.2014 passed u/s ITA No. 2757/Del/2019 Sukhbir Singh Dagar Page | 7 147/144 as well as addition made therein. Accordingly, grounds of revenue are allowed. 11. In the result, the appeal of revenue is allowed. Order pronounced in the open court on 10/08/2023. -Sd/- -Sd/- (Pradip Kumar Kedia) (C. M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 10/08/2023 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi