ACIT, Gurgaon V. Sh. Rattan Pal Singh, Gurgaon

ITA 2976/DEL/2012

• Counselvise Citation: 297620114 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 14-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VINOD ARORA
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.2976/DEL/2012 ASSESSMENT YEAR : 2007-08 ACIT, SHRI RATTAN PAL SINGH, CIRCLE-2, H.NO.709, SECTOR-4, GURGAON. V. GURGAON. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AKSPS AKSPS AKSPS AKSPS- -- -2299 2299 2299 2299- -- -D DD D APPELLANT BY : SHRI NEEHAR RANJAN PANDEY, DR. RESPONDENT BY : SHRI VINOD ARORA, C.A. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF LD CIT(A) DATED 26.3.2012. THE REVENUE HAS TAKEN FIVE GROUNDS OF APPEALS. HOWEVER, THE SOLE GRIEVANCE OF REVENUE IS AGA INST DELETION OF ADDITION AMOUNTING TO ` .25 LAKHS MADE BY THE ASSESSING OFFICER. THE REVENUE HAS ALSO TAKEN GROUND NO.3 AS AGAINST ADMISSION O F ADDITIONAL EVIDENCE UNDER RULE 46A OF THE IT RULES, 1962 IN THE SHAPE OF DOCUMENT BEING CANCELLATION AGREEMENT DATED 26.4.20 11. 2. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE ENTERED INTO AN AGREEMENT WITH ONE M/S PARAS BUILDTECH INDIA PVT. LTD . FOR SALE OF HIS LAND AND RECEIVED AN AMOUNT OF ` .49,50,000/- AS ADVANCE. THE MEMORANDUM OF UNDERSTANDING ENTERED INTO BETWEEN THE ASSESSEE AND M/S PARAS BUILDTE INDIA PVT. LTD., PROVIDED THAT ASSESSEE WILL BE GIVEN AN AMOUNT OF ` .50 LAKHS PER ACRE AS INTEREST FREE SECURITY DEPOSIT ITA NO2976/DEL/2012 2 AND OUT OF WHICH ` .25 LAKHS PER ACRE WILL BE A REFUNDABLE SECURITY AND THE REMAINING ` .25 LAKHS PER ACRE WILL BE A NON REFUNDABLE SECURITY. THE ASSESSEE WAS ASKED VIDE LETTER DATED 8.12.2009 TO EXP LAIN AS TO WHY THE NON REFUNDABLE SECURITY OF ` .25 LAKHS OBTAINED FROM M/S PARAS BUILDTECH INDIA PVT. LTD. MAY NOT BE TREATED AS INCO ME FOR ASSESSMENT YEAR 2007-08. THE ASSESSEE VIDE LETER DATED 19.12.2009 SUBMITED AS UNDER:- SECURITY DEPOSIT OF ` .25 LAKHS RECEIVED FROM M/S PARAS BUILDTECH INDIA PVT. LTD. THE SAME IS CLEAR FROM THE DOCUMENTS F ILED WITH YOUR GOODSELF, A COPY OF REFUNDABLE SECURITY OF THE A SSESSEE IN THE BOOKS OF ACCOUNTS OF M/S PARAS BUILDTECH INDIA PVT. LTD. IS SUBMITTED HEREWITH. AS THE AMOUNT IS REFUNDABLE THE SAM E SHOULD NOT BE TREATED AS INCOME. 3. IN SUPPORT OF THIS THE ASSESSEE FILED CONFIRMATION FRO M M/S PARAS BUILDTECH INDIA PVT. LTD. HOWEVER, THE ASSESSING OFFICE R HELD THAT ` .25 LAKHS RECEIVED FROM M/S PARAS BUILDTECH INDIA PVT. LT D. WAS NON REFUNDABLE WHICH WAS RECEIVED AS PER TERMS AND CONDITI ONS OF MEMORANDUM OF UNDERSTANDING SIGNED ON 12.1.2007 AND F URTHER HELD THAT CONFIRMATION FILED BY THE ASSESSEE SHOWING THAT THE WHOLE AMOUNT OF ` .49,50,000/- WAS REFUNDABLE WAS AN AFTER THOUGHT TO A VOID TAXATION OF INCOME. THEREFORE, THE ASSESSING OFFICER MADE THE AD DITION OF ` .25 LAKHS CONSIDERING IT TO BE NON REFUNDABLE. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD CIT(A ) AND REITERATED HITS SUBMISSIONS BEFORE THE ASSESSING OFFICER AND FURTHER SUBMITTED THAT THE AGREEMENT ENTERED INTO M/S PARAS BU ILDTECH INDIA PVT. LTD. HAS BEEN CANCELLED AND THE AMOUNT OF ` .49,50,000/- RECEIVED AS REFUNDABLE SECURITY HAS ALREADY BEEN REPAID. THE LD AR FURTHER SUBMITTED COPY OF BANK STATEMENT CONFIRMING THE PAYME NTS OF SUCH ITA NO2976/DEL/2012 3 AMOUNTS ALONG WITH THE COPY OF CANCELLATION AGREEMEN T AND ALSO A COPY OF ACCOUNTS OF ASSESSEE IN THE BOOKS OF M/S PARAS BUIL DTECH INDIA PVT. LTD. SHOWING THE REPAYMENT OF THE ABOVE AMOUNT. THE LD AR ALSO FILED APPLICATION UNDER RULE 46A FOR ADMISSION NO ADD ITIONAL EVIDENCE. THE ASSESSING OFFICER WAS REQUIRED TO OFFER HER COMMENTS VIDE LETTER DATED 30.11.2011 ON THE ADDITIONAL EVIDENCES AND IN THE REMAND REPORT THE ASSESSING OFFICER SUBMITTED THAT THE ASSESSEE WAS NOT ABLE TO PROVIDE EVIDENCE TO PROVE THAT SECURITY OF ` .25 LAKHS WAS INDEED REFUNDABLE AND FURTHER COMMENTING UPON THE MERITS TH E ASSESSING OFFICER SUBMITTED THAT FROM THE BANK ACCOUNT, IT IS A PPARENT THAT ON 21.4.2011 THERE IS A DEBIT ENTRY OF ` .44,62,000/- WITH A NARRATION OF DEBIT YOURSELF AND THEREFORE HE HELD THAT IT WAS A NO T REPAYMENT AND RATHER IT WAS A WITHDRAWAL BY ASSESSEE HIMSELF. THEREFORE , IN THE REMAND REPORT SHE STRONGLY OBJECTED TO THE ADMISSION OF ADDITIONAL EVIDENCE AS WELL AS DISMISSED THE SAME ON MERITS ALSO. TH E LD CIT(A) AFTER OBTAINING REJOINDER ON THE REMAND REPORT DELE TED THE ADDITION MADE BY THE ASSESSING OFFICER BY HOLDING AS UNDER:- IN GROUND NO.2, THE APPELLANT HAS CHALLENGED THE AD DITION OF ` .25 LAKHS. THE APPELLANT AND HIS WIFE BEING THE CO-OW NER OF A LAND SITUATED AT SECTOR-74, VILLAGE BEGUM PUR KHATOL A, ENTERED INTO A MEMORANDUM OF UNDERSTANDING WITH PARAS BUILDTE CH INDIA PVT. LTD. ON 12.1.2007 FOR DEVELOPMENT OF THEIR LAN D COMPRISING OF 44 KANALS AND 05 MARLA INTO IT COMPLEX. AS PER SUBS EQUENT COLLABORATION AGREEMENT ENTERED INTO ON 2.2.2007 TH E APPELLANT AND HIS WIFE AGREED TO ACCEPT 36./7% OF THE BUILT UP AREA IN THE DEVELOPED IT COMPLEX IN LIEU OF VALUE OF THEIR LAND . PURSUANT TO THE MOU THE APPELLANT RECEIVED ` .11.00 LAKHS AS TOKEN MONEY AND ` .46.50 LAKHS AS SECURITY DEPOSIT. THE TERMS OF MOU PROVIDED THAT A SUM OF ` .50 LAKHS PER ACRE WAS TO BE PAID BY THE ITA NO2976/DEL/2012 4 SECOND PARTY TO THE FIRST PARTY AS A INTEREST FREE SECUR ITY DEPOSIT. OUT OF THIS ` .25 LAKHS PER ACRE WAS TO BE PAID BY THE SECOND PARTY TO THE FIRST PARTY AS A REFUNABLE SECURITY AND ` .25 LAKHS PER ACRE AS NON REFUNDABLE SECURITY. THE APPELLANT RECEIV ED A SUM OF ` .44.50 LAKHS FOR HIS SHARE OF LAND BEING 1 ACRE 6 KANA L AND 5 MARLA I.E. 285 MARLA AS REFUNDABLE SECURITY DEPOSIT. N ECESSARY DOCUMENTS IN THIS REGARD WERE FILED BEFORE THE ASSESSING OFFICER. THE APPELLANTS CONTENTION HAS BEEN THAT THE AMOUNT R ECEIVED WAS REFUNDABLE SECURITY DEPOSIT WHEREAS THE ASSESSING OFFIC ER HAS TREATED PART AMOUNT OF ` .25 LAKHS AS NON REFUNDABLE SECURITY DEPOSIT AND CONSIDERED FOR TAXATION. WITH REGARD TO E NHANCEMENT NOTICE ISSUED BY THE LD CIT(A) PANCHKULLA THE APPELLA NT HAS FILED NECESSARY DOCUMENTS AND CLARIFIED THAT THE INITIAL AMO UNT OF ` .11.00 LAKHS WAS RECEIVED AS TOKEN MONEY PURSUANT TO TH E MOU WHICH WAS LATER REFUNDED DURING THE YEAR AFTER RECEI VING THE SECURITY DEPOSIT AS STIPULATED IN THE MOU. AS SUCH THERE IS NO QUESTION AS TO THE TAXABILITY OF SAID AMOUNT. THOUGH T HE TERMS OF MOU PROVIDED FOR SECURITY DEPOSIT IN TERMS OF PER ACR E AND THE APPELLANT RECEIVED HALF OF THE SECURITY I.E. @ ` .25 LAKHS PER ACRE FOR HIS AREA OF LAND, THE ASSESSING OFFICER HAS WRONGLY CONSIDERED THE AMOUNT OF ` .25 LAKHS AS NON REFUNDABLE AND TAXED THE SAME. I AGREE WITH THE LD COUNSEL THAT A PRUDENT BUSINESSMAN WILL FIRST PAY REFUNDABLE PORTION OF SECURITY DEPOSIT AND NON RE FUNDABLE WILL BE PAID LATER ON WHEN HE GETS CONFIRMATION THAT THE PROJECT WILL TAKE OFF FOR SURE. HOWEVER, THE CONTROVERSY NOW STANDS RESOLVED AS THE SAID MOU HAS BEEN CANCELLED AND THE AMO UNT STANDS REFUNDED TO PARAS BUILDTECH INDIA PVT. LTD. AS P ER THE COPY OF CANCELLATION AGREEMENT DATED 26.4.2011 AND COPY OF BANK ACCOUNT FILED IN THE PAPER BOOK. THE ASSESSING OFFICER S OBSERVATION REGARDING ADMISSIBILITY OF SAID AGREEMENT A S ITA NO2976/DEL/2012 5 ADDITIONAL EVIDENCE IN THE REMAND REPORT IS OUT OF C ONTEXT. THE CANCELLATION AGREEMENT HAS BEEN ENTERED INTO AFTER PASSING OF THE ASSESSMENT ORDER AND THERE WAS NO OCCASION FOR THE ASSESSEE TO FILE THE SAME BEFORE THE ASSESSING OFFICER IN ASSESSMENT PROCEEDINGS. THEREFORE, THE ADDITIONAL EVIDEN CE IN THE SHAPE OF CANCELLATION AGREEMENT AND COPY OF BANK ACCOUNT STATEMENT ARE ADMITTED UNDER CLAUSE ( C) OF IT RULES, 1962. THE AMOUNT OF ` .5 LAKHS HAS BEEN REFUNDED ON 8.6.207 BY CHEQUE NO. 791304 DRAWN ON PUNJAB NATIONAL BANK, SECTOR-4, GUR GAON AND ` .44,50,000/- HAS BEEN REFUNDED ON 21.4.2011 BY DEMAN D DRAFT DRAWN ON THE SAME BANK ACCOUNT BY DEBIT TO SAID ACCOU NT OF THE ASSESSEE. THE ASSESSING OFFICERS OBSERVATION THAT THE AMOUNT SHOWN TO HAVE BEEN REFUNDED TO PARAS BUILDTECH INDIA PVT. LTD. APPEARS TO BE WITHDRAWN BY THEASSE IN CASH SINCE THE CHE QUE WAS ISSUED FAVOURING YOURSELF IS NOT CORRECT. FROM THE OVERWHELMING EVIDENCE IT IS ABUNDANTLY CLEAR THAT AN AMOUNT OF ` .44,62,000/- HAS BEEN DEBITED IN THE BANK ACCOUNT ON 21.4.2011 WHICH INCLUDES DD COMMISSION OF ` .12000/- ALSO. THE APPELLANT HAS ALSO FILED A CERTIFICATE FROM PUNJAB NATIONAL BAN K DATED 13.3.2013 AND THE CANCELLATION AGREEMENT ALSO CLEARL Y REFLECTS THE TRANSACTIONS OF REPAYMENT OF ` .44.50 LAKHS THROUGH DD NO. 991719 ISSUED BY PNB DATED 21.4.2011. CONSIDERING THE ABOVE FACTS AND THE EVIDENCES FILED BY THE APPELLANT, THE A DDITION OF ` .25 LAKHS IS DELETED AND GROUND NO.2 OF THE APPEAL IS ALLOWED. 5. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, THE LD DR SUBMITTED THAT AGREEMENT RELIED UPON BY LD CIT(A) WAS ENTERED INTO BY ASSESSEE WITH M/S PARA S BUILDTECH INDIA PVT. LTD. AFTER PASSING OF ASSESSMENT ORDER AND THE REFORE CANNOT ITA NO2976/DEL/2012 6 BE RELIED UPON FOR MAKING THE DELETION. FURTHER AR GUING HE SUBMITTED THAT THOUGH REMAND REPORT ON ADDITIONAL EVIDENCE WA S OBTAINED BUT THE ASSESSING OFFICER COMMENTED UPON THE MERITS AND DID NOT AGREE WITH IT. 7. THE LD AR, ON THE OTHER HAND, TOOK US TO PAPER BO OK PAGE 14 WHERE A COPY OF REMAND REPORT WAS PLACED AND INVITED OUR ATTENTION TO THE FACT THAT ASSESSING OFFICER HAD INDEED COMMENTED UP ON THE MERITS. HE FURTHER TOOK US TO PAGE 19 OF PAPER BOOK WHERE A COPY OF ACCOUNT OF ASSESSEE IN THE BOOKS OF M/S PARAS BUILDTECH INDIA PVT. LTD. WAS PLACED AND WHEREIN THE FACT THAT IT WAS A REFUNDABL E SECURITY WAS MENTIONED. FURTHER HE TOOK US TO PAGE 10 OF PAPER BO OK WHERE ON 21.4.2011 ENTRY OF ` .44,62,000/- SHOWING REPAYMENT OF THE AMOUNT WAS PLACED. FURTHER HE TOOK US TO PAGE 11 WHERE A CON FIRMATION FROM PUNJAB NATIONAL BANK WAS PLACED CONFIRMING THAT A DE MAND DRAFT WAS MADE OF ` .44,50,000/- IN FAVOUR OF PARAS BUILDTECH INDIA PVT. LTD. OUT OF SAVINGS ACCOUNT OF SHRI RATTAN PAL SINGH. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT ASSESSING OFFICER INITIALLY ON THE BASIS OF MEMORANDUM OF UNDERSTANDING ARRIVED AT THE CONCLUSION THAT ` .25 LAKHS OUT OF ` .49,50,000/- WAS A NON REFUNDABLE SECURITY WHEREAS THE ASSESSEE AS WELL AS M/S PARAS BUILDTECH INDIA PVT. LTD. MAINTAINED THAT THE ENTIRE AMOUNT WAS REFUNDABLE. THE MATTER BECAME CLEAR WITH THE ASSESSEE REPAYING THE WHOLE OF THE AMOUNT VIDE DEMAND DRAFT DRAWN FROM HIS ACCOUNT IN PUNJAB NATIONAL BANK. THE ASSESSING OFFICER IN HIS REMAND REPORT MISREAD THE BANK STATEMENT WHEREBY COMMENTING UPON MERITS SHE ARRIVED AT THE CONCLUSION THAT ` .44,62,000/- DEBITED IN THE ACCOUNT OF ASSESSEE WAS ON ACCOUNT OF DEBIT TO YOURSELF WHICH MEA NS THE ITA NO2976/DEL/2012 7 ASSESSEE HIMSELF HAD WITHDRAWN THE CASH AND THEREFORE HEL D THAT IT WAS NOT A REPAYMENT WHEREAS THE FACT REMAINS THAT THI S WAS A REPAYMENT MADE TO M/S PARAS BUILDTECH INDIA PVT. LTD. IN THE FORM OF DEMAND DRAFT WHICH INCLUDED ` .12000/- BANK CHARGES WHICH IS APPARENT FROM THE CONFIRMATION FROM PUNJAB NATIONAL BANK PLACED AT PAPER BOOK PAGE 11. THE ADDITIONAL EVIDENCE WAS ONL Y IN THE FORM OF CANCELLATION AGREEMENT AND COPY OF BANK STATEMENT W HICH WAS DULY SUBMITTED TO ASSESSING OFFICER FOR HER COMMENTS AND ON W HICH SHE HAD COMMENTED ALSO. MOREOVER THE AGREEMENT WAS ENTERED IN TO AFTER THE ASSESSMENT ORDER WAS PASSED BUT STILL THE OPPORTUNITY WAS PR OVIDED TO ASSESSING OFFICER. THEREFORE, GROUND NO.3 TAKEN BY THE REVENUE IS NOT SUSTAINABLE. REGARDING MERITS ALSO WE FIND THAT ASSESSEE H AD DULY REFUNDED THE ENTIRE AMOUNT WHICH PROVED THAT AMOUNT WAS INDEED REFUNDABLE AND THUS THERE IS NO SCOPE OF MAKING ANY AD DITION ON THIS ACCOUNT. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY I NFIRMITY IN THE ORDER OF LD CIT(A). 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 10. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F DECEMBER, 2013. SD/- SD/- (I.C. SUDHIR) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.31.12.2013. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO2976/DEL/2012 8 DATE OF HEARING 9.12.2013 DATE OF DICTATION 19.12.2013 DATE OF TYPING 20.12.2013 DATE OF ORDER SIGNED BY 31.12.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET NET NOT WORKING & SENT TO THE BENCH CONCERNED.