ACIT, New Delhi V. M/s JKG Construction (P) Ltd, New Delhi

ITA 3394/DEL/2015

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 3519 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 27-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NIDHI SRIVASTAVA
• Assessee Lawyers: R K SHARMA
• Keywords: Document seized; Documents seized
• Section: 6; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DLEHI BEFORE SHRI O.P. KANT, ACCOUNTANT MEMBER AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NOS. 3394, 4176 & 4801/DEL/2015 ASSESSMENT YEARS: 2009-10, 2010-11 & 2011-12 ACIT, CENTRAL CIRCLE -4, VS. JKG CONSTRUCTION PVT. LTD., NEW DELHI. B-174, YOJNA VIHAR, DELHI PAN : AABCJ1045L (APPELLANT) (RESPONDENT) APPELLANT BY : MS. NIDHI SRIVASTAVA, CIT/DR RESPONDENT BY: SH. R.K. SHARMA, ADVOCATE DATE OF HEARING: 08/04/2021 DATE OF ORDER : 10 /06/2021 ORDER PER K. NARASIMHA CHARY, J.M. AGGRIEVED BY THE ORDERS PASSED BY THE LEARNED COMMI SSIONER OF INCOME TAX (APPEALS)-23 (LD. CIT(A)), IN THE CASE OF JKG CONSTRUCTIONS PVT. LTD (THE ASSESSEE), FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12, DELETING THE ADDITIONS, REVENUE PREFERRED THESE APP EALS. SINCE THE FACTS OUT OF WHICH THE ISSUES REQUIRING ADJUDICATION ARIS E, ARE IDENTICAL, WE DEEM IT JUST AND PROPER TO DISPOSE THESE APPEALS BY WAY OF THIS COMMON ORDER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY AND AS THE NAME INDICATES IS INVOLVED IN CONSTRUCTION ACTI VITIES. SEARCH AND 2 SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME T AX ACT, 1961 (FOR SHORT THE ACT) WAS CARRIED OUT IN THE CASE OF M/S JKG CONSTRUCTIONS PVT. LTD BELONGING TO THE JKG GROUP ON 04/08/2011 AND DU RING SUCH SEARCH CERTAIN DOCUMENTS WERE FOUND. SUCH DOCUMENTS INCLUD E A CALCULATION SHEET FOR BOOKING FLAT BY ONE SH. CHAYA SINGH AND B HUWAN PRAKASH YADAV SIGNED BY CHHAYA AND JK GOEL SHOWING THE TOTAL COST OF THE FLAT AS RS. 48,83,625/-, DATED 29/3/2011 FOR RS. 31,30,750/-, A PAYMENT CLEARANCE DATED 28/3/2011AND A KACHI PARCHI DATED 12/02/2011 FOR RECEIPT OF A SUM OF RS. 2.65 LACS BY SANJAY SINGH IN RESPECT OF SUCH FLAT NO. 802; AND LETTER DATED 30/7/2008 REQUESTING ALLOTTEE RK GAUBA TO PAY RS. 1,54,910/-SPELL THAT JKGCPL, MENTIONING THE COST AS RS. 13,57,800/-AND THE AGREEMENT IN RESPECT OF FLAT NO. A-601. FLAT NU MBER A-601 WAS SOLD TO PUSHPA GAUBA AT RS. 23,37,650/-. 3. BASING ON THESE DOCUMENTS LEARNED ASSESSING OFFI CER CONCLUDED THAT THE GROUP HAS BEEN RECEIVING MONEY IN EXCESS O F THE DISCLOSED SALE CONSIDERATION FOR THE FLATS; THAT THE REAL PRICE OF FLAT NUMBER A-802 WAS RS. 48,83,625/-WHEREAS THE PRICE OF FLAT NUMBER A-6 01 WAS RS. 30,57,800/-WHICH SHOWS THAT THE DISCLOSED CONSIDERA TION IN RESPECT OF FLAT NUMBER A-802 WAS ONLY 64% OF THE ACTUAL CONSID ERATION WHEREAS THE SAME FOR FLAT NUMBER A-601 WAS 83% THEREOF. ON THIS PREMISE, LEARNED ASSESSING OFFICER CALCULATED THE DIFFERENCE BETWEEN THE ACTUAL PRICE ACCORDING TO HIM AND THE DISCLOSED PRICE IN RESPECT OF ALL THE SALES THAT TOOK PLACE IN THE FINANCIAL YEARS 2008-09 TO 2010-1 1 (CORRESPONDING TO THE ASSESSMENT YEARS 2009-10 TO 2011-12) AND MADE A N ADDITION OF RS. 1,97,37,919/-, RS. 5,35,32,673/-AND RS. 3, 94, 75, 181/-FOR THE ASSESSMENT YEARS 2009-10 TO 2011-12 RESPECTIVELY. 3 4. AGGRIEVED BY SUCH ADDITIONS ASSESSEE PREFERRED A PPEALS BEFORE THE LD. CIT(A) AND CONTENDED THAT THE AMOUNT OF RS. 2.6 5 LACS WAS PAID FOR STAMP DUTY TO MR. SINGH WHO IS A DOCUMENT WRITER; T HAT THE PAYMENTS CANNOT BE CONSIDERED AS EVIDENCE OF UNDERSTATEMENT IN SALE CONSIDERATION BECAUSE THE SALE OF FLATS BY BUILDERS IS ALWAYS SUBJECT TO NEGOTIATIONS AND THE FINAL CONSIDERATION DIFFERS FR OM THE INITIAL PRICES BASING ON THE DOWN PAYMENTS OR DELAYS IN HANDING OV ER POSSESSION WHICH RESULTS IN REDUCTION OF PRICE. ASSESSEE CONTENDED T HAT IN RESPECT OF FLAT NO. A-802 THE INITIAL COST OF RS. 3600/-PER SQUARE FEET WAS RENEGOTIATED TO RS. 2300/- PER SQUARE FEET BY DOWN PAYMENT OF RS . 16,40,000/-ON 9/11/2010 AND PROMISE OF REMAINING PAYMENT WITHIN 6 MONTHS. SO ALSO IN RESPECT OF FLAT NUMBER A-601, THE SAID PLOT WAS BOOKED ON DOWN PAYMENT BASIS WHICH CARRIED A DISCOUNT. LD. CIT(A) CONSIDERED THESE CONTENTIONS, ACCEPTED THE SAME AND DIRECTED THE ADD ITIONS TO BE DELETED. 5. REVENUE IS, THEREFORE, AGGRIEVED BY SUCH DELETIO N AND FILED THESE APPEALS STATING THAT THE LD. CIT(A) IGNORED THE FAC T OF SUPPRESSION OF SALE PRICE OF THE FLATS IN ORDER TO EVADE THE TAX AND WH AT IS EVIDENCED BY THE DOCUMENTS IS NOT PROPERLY APPRECIATED BY THE LD. CI T(A). 6. IT IS THE SUBMISSION OF LD. DR THAT THE LD. CIT( A) FAILED TO CONSIDER THE PRESUMPTION UNDER SECTION 292C OF THE ACT AS TO THE DOCUMENTS AND SUCH PROVISIONS CLEARLY STATE THAT THE DOCUMENTS FR OM PREMISES OF ASSESSEE BELONGED TO THE ASSESSEE ARE TRUE AND IN T HE ABSENCE OF ANY EVIDENCE TO THE CONTRARY THEY HAVE TO BE RELIED UPO N. FURTHER ACCORDING TO THE LD. DR THE ORDER OF THE LD. CIT(A) IS A NONS PEAKING ORDER. SHE FURTHER SUBMITS THAT THE DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF KABUL CHAWLA HAS NO APPLICATION TO T HE FACTS OF THIS CASE, AS IT HAS NOT ATTAINED THE FINALITY. 4 7. IT IS ARGUED BY LD. AR THAT BASING ON THE DOCUME NTS FOR TWO FLATS, THE LEARNED ASSESSING OFFICER EXTRAPOLATED THE INFE RENCE TO ALL THE SALES MADE IN 3 YEARS AND IT IS NOTHING BUT SURMISES AND CONJECTURES THAT THE ASSESSEE SUPPRESSED THE SALE CONSIDERATION OF THE F LATS IN RESPECT OF ALL SUCH SALES TO EVADE THE TAX. EVEN OTHERWISE AS RIGH TLY FOUND OUT BY THE LD. CIT(A) ON FACTS THAT DEPENDING UPON SEVERAL FAC TORS THE SALE CONSIDERATION OF THE FLATS IS SUBJECT TO NEGOTIATIO NS AND ANNOUNCEMENTS AND DIRECTIONS. FACTORS LIKE IMMEDIATE PAYMENT OR D ELAYS IN HANDING OVER THE POSSESSION OF THE FLAT WOULD REDUCE THE SALE CO NSIDERATION. FOR THESE REASONS HE PRAYED THAT THE ORDER OF THE LD. CIT(A) NEED NOT BE INTERFERED WITH. 8. WE HAVE GONE THROUGH THE RECORD IN THE LIGHT OF THE SUBMISSIONS MADE ON EITHER SIDE. IT IS A FACT THAT IN THE SEARC H OPERATION, EVEN ACCORDING TO THE REVENUE, THE DOCUMENTS THAT ARE FO UND RELATE ONLY TO 2 FLATS, NAMELY, A-601 AND A-802. INSOFAR AS FLAT NUM BER A-601 IS CONCERNED THE DOCUMENTS ARE THAT THE LETTER DATED 30/7/2008 R EQUESTING THE ALLOTTEE BY NAME RK GAUBA TO PAY A SUM OF RS. 1, 54 , 910/-OUT OF THE TOTAL SALE CONSIDERATION OF RS. 30,57,800/-. THOUGH THE S UBSEQUENT AGREEMENT IN FAVOUR OF SMT. PUSHPA GOUBA SHOWS THE SALE CONSI DERATION AS RS. 23,37,650/-ON THE GROUND THAT IN VIEW OF THE DOWN P AYMENT SUCH SALE CARRIED DISCOUNT AT 15% REDUCING THE INITIAL PRICE OF RS. 30,57,800/-TO RS. 25,99,130/-. LD. CIT(A) RECORDED THAT THE CIRCLE RA TE COST OF SUCH FLAT WAS RS. 33,73,000/- IN JUNE, 2011 WHEREAS THE SALE OF T HIS PLOT TOOK PLACE IN THE YEAR 2008 AND THEREFORE, SUCH A PRICE AS MENTIO NED IN THE AGREEMENT IS NOT AT ALL LOW AND IS UNJUSTIFIABLE ONE. THOUGH THE LD. CIT(A) COMPARED THE COST OF THE PLOT AS IN THE MONTH OF JUNE 2011 W ITH THE COST MENTIONED IN THE AGREEMENT IS CONCERNED TO DRAW AN INFERENCE, BUT IT IS NOT 5 EQUIVALENT TO THE VERIFICATION OF THE COST MENTIONE D IN THE AGREEMENT WITH THE PREVAILING MARKET VALUE, WHICH EXERCISE HA D TO BE DONE BY THE LEARNED ASSESSING OFFICER. 9. IN RESPECT OF THE FLAT NUMBER A-802, LD. CIT(A) FOUND THAT THE PAYMENT OF RS. 2.65 LACS TO SANJAY SINGH IS CORROBO RATING THE 8% OF THE SALE CONSIDERATION TOWARDS A STAMP DUTY. LD. CIT(A) FURTHER FOUND THAT IN VIEW OF THE DOWN PAYMENT OF RS. 16.4 LACS ON 9/11/2 010 WITH A PROMISE OF REPAYMENT OF BALANCE WITHIN 6 MONTHS, THE COST O F THIS PLOT WAS ALSO REDUCED. EXCEPT DRAWING INFERENCES ON THE BASIS OF THE DOCUMENTS, LEARNED ASSESSING OFFICER DID NOT REFER TO THE PREV AILING MARKET PRICES IN THE VICINITY SO AS TO CONCLUDE THAT THERE IS AN ATT EMPT TO REDUCE THE SALE CONSIDERATION FOR THE SOLE PURPOSE OF EVADING THE T AX. NO MATERIAL WAS PRODUCED BEFORE THE LD. CIT(A) TO REACH A CONCLUSIO N AS TO THE ACTUAL COST OF THE PLOT IN COMPETITION WITH THE PREVAILING MARK ET VALUE. IN RESPECT OF THIS FLAT ALSO, THE LEARNED ASSESSING OFFICER REQUI RES TO MAKE ENQUIRY AS TO THE PREVAILING MARKET VALUE OF THE PLOT VIS--VIS T HE FIGURES MENTIONED IN THE DOCUMENTS. 10. NOW COMING TO THE OMNIBUS ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER FOR ALL THE 3 YEARS, BASING ON TH ESE DOCUMENTS RELATING TO 2 FLATS, LEARNED ASSESSING OFFICER, WHILE STATIN G THAT THERE WAS UNDERSTATEMENT OF THE COST OF THE FLATS BY 36% AND 26.5% RESPECTIVELY THE AVERAGE OF WHICH COMES TO 24.5%, EXTRAPOLATED T HE SAME IN RESPECT OF ALL THE SALES OF PLOTS THAT TOOK PLACE BETWEEN T HE ASSESSMENT YEAR 2009-10 AND 2011-12. IT REMAINS AN ADMITTED FACT TH AT INSOFAR AS THE OTHER FLATS ARE CONCERNED NO MATERIAL WHATSOEVER, M UCH LESS INCRIMINATING MATERIAL IS FORTHCOMING. IT IS ONLY T HE IMAGINATION OF THE LEARNED ASSESSING OFFICER THAT MERELY BECAUSE THERE APPEARS TO BE 6 UNDERSTATEMENT IN RESPECT OF ONE OR 2 FLATS THE SAM E MUST HAVE OCCURRED IN RESPECT OF ALL. ABSOLUTELY THERE IS NO MATERIAL TO SUPPORT SUCH AN EXTRAPOLATION OF THE INFERENCES DRAWN BY THE LEARNE D ASSESSING OFFICER BASING ON THE DOCUMENTS RELATING TO TWO FLATS, TO A LL THE SALES THAT TOOK PLACE FOR LONG THREE YEARS. THE MAXIM FALSUS IN UNO AND FALSUS IN OMNIBUS HAS AN OBLIGATION IN INDIA AND IT HAS NOT RECEIVED ANY ACCEPTANCE OR APPROVAL BY THE HIGHER COURTS. IT IS THEREFORE CLEA R THAT THE ACTION OF THE LEARNED ASSESSING OFFICER IN CALCULATING THE SO-CAL LED UNDERSTATEMENT OF THE COST OF THE FLATS FOR ALL THE 3 YEARS AND MAKIN G ADDITION IS ACCORDINGLY CANNOT BE JUSTIFIED. 11. FOR THESE REASONS, WE ARE OF THE CONSIDERED OPI NION THAT THE ADDITIONS MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF ALL THE SALES THAT TOOK PLACE IN ALL THE 3 YEARS CANNOT BE SUSTAI NED. WHILE SETTING ASIDE THE IMPUGNED ORDERS, WE RESTORE THE ISSUE FOR VERIF ICATION OF THE ACTUAL COST OF THE FLATS NOS. A-601 AND A-802 WITH REFEREN CE TO THE PREVAILING MARKET VALUE VIS--VIS THE FIGURES MENTIONED IN THE SEIZED DOCUMENTS. ASSESSEE IS FREE TO PUT FORTH THEIR CONTENTIONS ON THESE DOCUMENTS BEFORE THE LEARNED ASSESSING OFFICER AND THE LEARNE D ASSESSING OFFICER WILL TAKE A FRESH VIEW IN RESPECT OF THOSE TWO FLAT S ALONE. 12. IN THE RESULT, ALL THE APPEALS OF THE REVENUE A RE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 10/06/2021. SD/- SD/- (O.P. KANT) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10/06/2021 AKS