Sh. Bikram Singh, New Delhi V. DCIT, New Delhi

ITA 3522/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 8346 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income
• Section: 143(3); 54B; 142(1); 234B; 69; 144

Judgement Text

1 ITA NO. 3522/DEL/20 13 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE, JUDICIA L MEMBER I.T.A .N O.-3522/DEL/2013 (ASSESSME NT YEAR-2009-10) BIKRAM SINGH 8/34, MEHRAM NAGAR NEW DELHI ABKPS5232P (APPELLANT) VS DCIT CIRCLE 15 (1), NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 1/3/2 013 PASSED BY CIT (A)- XVIII, NEW DELHI BY THE ASSESSEE. 2. THE GROUNDS OF APPEAL ARE FOLLOWS:- 1. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APP EALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADD ITIONS MADE IN AN ORDER OF ASSESSMENT U/S 143(3) OF THE ACT DATED 19/ 12/2011 AT RS.1,03,14,960/- AS AGAINST THES INCOME DECLARED AT RS.57,12,774/- 1.1 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE TH AT, THE INCOME RETURNED BY THE ASSESSEE AGGREGATED TO RS. 57,12,774/-; WHEREAS THE APPELLANT BY SH. C. S. AGGARWAL, SR. ADVOCATE & SH. R. P. MALL, ADV RESPONDENT BY SHRI J. JAMES SINGH, SR. DR DATE OF HEARING 11.02.2016 DATE OF PRONOUNCEMENT 13.04.2016 2 ITA NO. 3522/DEL/20 13 A.O. WHILE COMPUTING THE TOTAL INCOME PROCEEDED TO COMPUTE THE TOTAL INCOME BY ADOPTING THE SUM OF RS. 76,22,919/- BEING THE INCOME ASSESSED U/S 143(1) OF THE INCOME TAX ACT. 1. 2 THAT THE CIT (A) HAS FAILED TO APPRECIATE THAT T HE AFORESAID DIFFERENCE OF RS. 19, 10,145/- REPRESENTED THE INCOME DECLARED BY THE ASSESSEE AS AN AGRICULTURAL INCOME AND THUS THERE WAS NO JUS TIFICATION TO HAVE PROCEEDED TO COMPUTE THE INCOME ON THE BASIS OF THE INCOME COMPUTED U/S 143(1) OF THE INCOME TAX ACT, AS THE A .O. WHILE FRAMING THE ASSESSMENT HAS HELD 50% OF THE SAID SUM AS DECLARED BY WAY OF AN AGRICULTURAL INCOME IS EXCESS IVE. IN ANY CASE THE ADDITION MADE IS DOUBLE ADDITION. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS FURTHER ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADD ITION OF RS. 14,85,641/- ALLEGEDLY REPRESENTING THE COMMISSION E ARNED BY THE APPELLANT FROM THE SALE OF AGRICULTURAL LAND. 2.1 THAT IN SUSTAINING THE AFORESAID ADDITION, THE LEAR NED CIT(A) HAS COMPLETELY FAILED TO COMPREHEND THAT THE ASSESSEE W AS NOT ENGAGED IN THE BUSINESS OF SELLING OR PURCHASING OF LAND AN D AS SUCH THERE COULD BE NO INCOME DERIVED OR ACCRUED ON THE INVEST MENT AND DISINVESTMENT MADE. THE FINDINGS OF THE CIT(A) IN T HE APPELLATE ORDER IN PARA 4.3 IS HIGHLY MISCONCEIVED AND ARE ARBITRARY. 2 .2 THAT THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS) HAS GROSSLY ERRED IN FAILING TO APPRECIATE THAT APPELLANT WAS T HE OWNER OF THE AGRICULTURAL LAND AND SOLD THE AFORESAID AGRICULTUR AL LAND MEASURING 15 KANAL 11 MARLAS FOR A CONSIDERATION OF RS. 3,11,00,000/- AND OUT OF THE AFORESAID SUM, HAS RECEIVED ONLY A SUM OF RS . 3 ITA NO. 3522/DEL/20 13 2,97,12,813/-, AS SUCH, SINCE THE APPELLANT WAS THE OWNER OF THE AFORESAID AGRICULTURAL LAND, FINDING THAT APPELLANT HAS EARNED ALLEGED COMMISSION INCOME FROM THE AFORESAID TRANSA CTION OF SALE AGRICULTURAL LAND IS HIGHLY MISCONCEIVED, ARBITRARY AND CONTRARY TO THE FACTS. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN DIRECTING THE LEA RNED AO TO BRING TO TAX THE ALLEGED COMMISSION FROM THE PURCHASE OF AGR ICULTURAL LAND OF RS. 4,33,85,625/-, FAILING TO APPRECIATE THAT SINCE THE APPELLANT HAD PURCHASED THE AFORESAID LAND AND FOR HIMSELF, THE F INDING THAT APPELLANT HAS EARNED ALLEGED COMMISSION INCOME FROM THE AFORESAID TRANSACTION OF PURCHASE OF AGRICULTUR AL LAND IS HIGHLY MISCONCEIVED, ARBITRARY AND CONTRARY TO THE FACT. 4. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING AN ADDITION O F RS. 9,55,074/- OUT OF AN INCOME OF RS. 19,10,145/- BEING THE INCOME DECLARED FROM AGRICULTURE, FAILING TO APPRECIATE THAT APPELLANT I S AN AGRICULTURALIST AND POSSESS THE AGRICULTURAL LAND AND IS REGULARLY DECLARING INCOME FROM AGRICULTURE IN PRECEDING ASSESSMENT YEARS AND AGRICULTURAL INCOME SO DECLARED BY THE APPELLANT HAS DULY BEEN A CCEPTED BY THE REVENUE. 4.1 THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN SUSTAINING THE AF ORESAID ADDITION, FAILING TO APPRECIATE THAT THE APPELLANT HAS PRODUC ED COMPLETE INFORMATION WITH REGARD TO THE SALE OF THE AGRICULT URAL PRODUCE I.E. BILL NUMBER, DATE AND NAME OF THE PURCHASER ALONGWITH TH E SALE SLIPS, AS SUCH, ADDITION SUSTAINED IGNORING THE EVIDENCE/MATE RIAL IS PERVERSE 4 ITA NO. 3522/DEL/20 13 AND UNTENABLE IN LAW. 5. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN DIRECTING THE LEARNED AO TO BRING TO TAX THE CAPITAL GAIN ON SALE AND PUR CHASE OF THE AGRICULTURAL LAND, AS SUCH A DIRECTION UNDER SECTIO N 251 (1) OF THE ACT IS SUBJECT TO THE CONDITIONS UNDER SECTION 251( 2) OF THE ACT, AND DIRECTION TO ENHANCE THE INCOME WITHOUT GIVING ANY SPECIFIC NOTICE TO THE ASSESSEE IS AGAINST THE STATUTORY PRO VISIONS AND IS THUS UNTENABLE. 5.1 WITHOUT PREJUDICE TO THE AFORESAID, THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ERRED BOTH IN LAW AND ON FACTS IN DIRECTING THE LEARNED ASSESSING OFFICER TO BRING TO TAX THE CAPITAL GAIN ON SALE AND PURCHASE OF THE AGRICULTUR AL LAND, AS COMPUTATION OF CAPITAL GAIN WAS NEITHER THE SUBJECT MATTER OF ASSESSMENT NOR THE APPELLANT HAS RAISED ANY GROUND TO THAT EFFECT, AS SUCH, IT WAS BEYOND THE JURISDICTION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) TO INTRODUCE A NEW SOURCE OF INCOME AND POWER OF LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) IS CONFINED TO THOSE ITEMS OF INCOME WHIC H WERE THE SUBJECT-MATTER OF ORIGINAL ASSESSMENT IN AN APPEAL FILED BY THE ASSESSEE. 5.2 THAT THE LEARNED CIT(A) HAD ACTED WITHOUT JURISDICT ION WHEN BY AN ORDER SHEET ENTRY DATED 12.09.2012, IT WAS DIREC TED TO SHOW CAUSE ON THE SALE PROCEEDS OF AN AGRICULTURAL LAND SHOULD NOT BE CHARGED TO CAPITAL GAIN. 5.3 THAT THE LEARNED CIT(A) FAILED TO COMPREHEND THAT, THE TAXABILITY OR NON-TAXABILITY OF THE SAID GAIN WAS NEITHER THE SUBJECT MATTER OF ASSESSMENT NOR WAS THE SUBJECT MATTER OF APPEAL BEFORE HER 5 ITA NO. 3522/DEL/20 13 AND FURTHER THE A.O HAD NOT CONSIDERED IN HIS ORDER OF ASSESSMENT, EVEN THE HEAD OF INCOME NAMELY CAPITAL GAINS. 5.4 THAT THE LEARNED CIT(A) HAS FURTHER ERRED IN FAILIN G TO COMPREHEND AND APPRECIATE THAT, SHE HAD NO JURISDIC TION, TO DIRECT THE A.O TO BRING TO TAX THE PURPORTED GAIN, WHICH AROSE ON THE SALE OF AN AGRICULTURAL LAND, AS PROFIT ON SALE OF THE AGRICULTURE LAND HAD NOT BEEN SUBJECTED TO TAX OR E VEN SUCH A HEAD OF INCOME, WAS EVEN CONSIDERED BY A.O WHILE FR AMING THE ASSESSMENT. 5.5 THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE TH AT, IN THE ABSENCE OF AN ASSESSMENT HAVING BEEN MADE IN RESPEC T OF THE PURPORTED CAPITAL GAIN BY THE A.O OR WAS CONSIDERED BY A.O IN THE ORDER OF ASSESSMENT, THE SAME WAS NOT THE SUBJE CT MATTER OF APPEAL AND WAS THUS OUTSIDE THE SCOPE OF THE PROVIS ION OF SECTION 246A OF THE INCOME TAX ACT. 5.6 THAT FURTHER THE FINDINGS OF THE LEARNED CIT(A) IS IN DISREGARD OF THE JUDGMENT OF THE FULL BENCH OF THE DELHI HIGH CO URT IN THE CASE OF SARDARI LAL & SONS AND THUS THE APPELLATE O RDER SUFFERS FROM THE LACK OF JURISDICTION, IN RESPECT OF ADDITI ON WHICH HAS BEEN DIRECTED TO BE MADE IN THE IMPUGNED APPELLATE ORDER. 5.7 THAT, EVEN OTHERWISE AND WITHOUT PREJUDICE, THE LEA RNED CIT(A) HAS FAILED TO COMPREHEND THAT, SINCE THE DIRECTIONS ISSUED RESULTED INTO ENHANCEMENT OF INCOME, NO SUCH DIRECT ION COULD HAVE BEEN ISSUED WITHOUT ISSUING A NOTICE OF ENHANC EMENT AND NOTICE ISSUED TO THE APPELLANT CANNOT BE REGARDED A S NOTICE OF ENHANCEMENT. 6. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED BOTH IN LAW AND ON FACTS IN RECORDING AN ERRO NEOUS FINDING 6 ITA NO. 3522/DEL/20 13 THAT NO PURCHASE DEED OR SALE DEED HAS BEEN FURNIS HED BY THE APPELLANT EITHER DURING ASSESSMENT PROCEEDINGS OR DURING APPELLATE PROCEEDINGS, AS SUCH A FINDING RECORDED IS PERVERSE AND CONTRARY TO FACTS ON RECORD. 7. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ADD ITION OF RS.2,51,325/-, WHICH ADDITION IS UNSUSTAINABLE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 8. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST OF RS.29,2 32/- U/S 234A OF THE ACT AND, INTEREST OF RS.4,82,328/- U/S 234B OF THE ACT AND RS.18,426/- U/S 234C OF THE ACT, WHICH IS NOT LEVIA BLE AT ALL. IT IS THEREFORE, PRAYED THAT, ADDITIONS/DISALLOWAN CES MADE TO THE INCOME RETURNED BY THE APPELLANT ALONG WITH INTERES T LEVIED MAY KINDLY BE DELETED AND APPEAL OF THE APPELLANT BE AL LOWED. 3. THE ASSESSEE FILED RETURN OF INCOME OF RS. 57,12 ,774/- ON 30.09.2009. THE RETURN WAS PROCESSED UNDER SECTION 143(1) OF TH E INCOME TAX ACT, 1961 AT AN INCOME OF RS. 76,22,919/-. THE ASSESSEE HAS SHOW N INCOME FROM SALARY, BUSINESS, HOUSE PROPERTY AND OTHER SOURCES. UNDER T HE PROPRIETARY BUSINESS, THE ASSESSEE HAS SHOWN RECEIPTS AT RS.19,95,610/- A GAINST WHICH NET PROFIT OF RS. 2,96,060/- WAS DECLARED. AS RECORDED IN ASSESSM ENT ORDER, NOTICE UNDER SECTION 142(1) OF THE ACT DATED 09.12.2011 WAS ISSU ED AND ASSESSEE WAS ASKED TO FURNISH THE DETAILS/INFORMATION AND THE CASE WAS FIXED FOR HEARING ON 16.12.2011 BUT ON THE SAID DATE NO ONE ATTENDED THE PROCEEDINGS. ACCORDINGLY, THE ASSESSMENT WAS COMPLETED EX-PARTE ON MERITS ON THE BASIS OF THE INFORMATION AVAILABLE ON RECORD. 7 ITA NO. 3522/DEL/20 13 4. AT THE BEGINNING OF THE ASSESSMENT YEAR, ASSESSE E WAS HOLDING AGRICULTURAL LAND VALUING RS. 2,54,30,709/- AND DURING THE YEAR, IT PURCHASED LAND VALUING RS. 5,78,92,966/- AND AFTER SELLING THE AGRICULTURAL LAND OF RS. 2,97,12,813/- CLOSING BALANCE OF THE AGRICULTURAL LAND WAS DECLAR ED AT RS. 5,36,10,862/-. THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEE DINGS, PRODUCED THE LIST OF THE AGRICULTURAL LAND PURCHASE D DURING THE YEAR ALONG WITH THE PROPERTY DOCUMENTS OF THE AGRICULTURAL LAND PUR CHASED DURING THE YEAR ( PAGE 109 OF THE PAPER BOOK). THE ASSESSEE ALSO FURNISHED AL L THE DOCUMENT RELATING TO THE SALE OF THE AGRICULTURAL LAND SOLD DURING THE YEAR AND IT WAS SPECIFICALLY SUBMITTED THAT THOUGH THE DOCUMENTS OF SALE WOULD SHOW THAT AMOUNT PAYABLE TO THE ASSESSEE WAS RS. 3,11,00,000/ -, HOWEVER, THREE CHEQUES OF RS. 13,7,187/- WAS NOT HONORED AS SUCH, CONSIDERATION OF THE SALE OF THE AGRICULTURAL LAND WAS DECLARED AT RS. 2,97,1 2,813/- ( PAGE 144 -145 OF THE PAPER BOOK). 5. THE ASSESSING OFFICER MADE AN ADDITION OF RS. 14 ,85,641/- TOWARDS A COMMISSION AS BROKERAGE AT 5% ON THE MADE BY THE AS SESSEE OF ITS OWN LAND. IN MAKING THE AFORESAID ADDITION A.O OBSERVED THAT THE ASSESSEE HAD SOLD LAND MEASURING 50 CANAL, 11 MARLAS FOR A CONSIDERATION O F RS.3,11,000/- AND THE ASSESSEE HAS FURNISHED ONLY SALE DEED AND NO PURCHA SE DEED HAS BEEN FILED. THE A.O FURTHER OBSERVED THAT MAJOR PORTION OF THE INVESTMENT HAS BEEN OUT OF BORROWED FUNDS. THE ASSESSING OFFICER FURTHER DIS ALLOWED 50% OF TOTAL AGRICULTURAL INCOME OF RS.19,10,149/-, HE RELIED ON THE JUDGMENT OF PUNJAB AND HARYANA HIGH COURT IN THE CASE OF SMT. KUSUM SHARMA VS. CIT(A) 158 TAXMAN 303. THE A.O FIRSTLY ADDED ENTIRE INCOME BY WAY OF AGRICULTURAL INCOME OF RS.19,10,149/- IN THE INTIMATION U/S 143(1) AND THE REAFTER IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. BUT FURTHER ADDED RS.9 , 55,074/- BEING 50% OF THE TOTAL AGRICULTURAL INCOME. THE ASSESSING OFFICER F URTHER DISALLOWED ONE FOURTH OF THE VENDING MACHINE EXPENSES AT AROUND RS.10,05, 299/-. THE ASSESSING OFFICER OBSERVED THERE WERE NO DETAILS GIVEN FOR VE NDING MACHINE EXPENSES BY 8 ITA NO. 3522/DEL/20 13 THE ASSESSEE. THE ASSESSEE WENT IN APPEAL BEFORE T HE CIT (A). THE CIT (A) DIRECTED THE ASSESSING OFFICER TO TAX CAPITAL GAINS IN RESPECT OF INCOME EARN BY THE ASSESSEE ON THE SALE OF LAND AT GURGAON. THUS, HE UPHELD THE ORDER OF THE ASSESSMENT, WHEN HE DIRECTED THE ASSESSING OFFICER TO COMPUTE THE COMMISSION EARN BY THE ASSESSEE IN RESPECT OF BOTH SALE AS WELL AS PURCHASE OF AGRICULTURAL LAND CARRIED OUT DURING THE YEAR I.E. AT 5%, ON RS.3,11,00,000/- AND RS.4,33,85,625/-. 6. THE CIT (A) HELD THAT THE ASSESSING OFFICER ON P ERUSAL OF THE ASSESSEES BANK ACCOUNT FOUND THAT THE ASSESSEE HAD SOLD LAND FOR RS.3, 11,000/-, BUT IT WAS FOUND THAT THE LAND MEASURED 15 CANAL AND 11 MA RLA WAS SITUATED IN GURGAON AND WAS SOLD TO M/S SRP BUILDERS LTD, THERE WAS NO DOCUMENTARY EVIDENCE IN REGARD TO PURCHASE OF THE SAID LAND FIL ED BY THE ASSESSEE. THE CIT(A) FURTHER NOTED THAT THE SAID LAND WHETHER WAS AGRICULTURAL AND SITUATED OUTSIDE THE MUNICIPAL LIMITS WAS NOT SUPPORTED BY A NY EVIDENCE AS ASSESSEE DID NOT FILED ANY DOCUMENTARY EVIDENCE. WHILE TAKI NG FURTHER NOTE OF ASSESSING OFFICER MENTIONED IN THE ASSESSMENT ORDER THAT INS TEAD OF SALE CONSIDERATION OF RS.3,11,000/-. THE ASSESSEE ONLY RECEIVED AN AMOUN T OF RS.2, 97, 12,813/- I.E. THE SHORT SALE CONSIDERATION WAS RECEIVED AT RS.13, 87,187/- NON RECEIPT OF BALANCE SALE CONSIDERATION WAS ATTRIBUTED BY THE AS SESSING OFFICER TOWARDS THE AMOUNT OF COMMISSION WHICH THE ASSESSEE OF THE BUIL DER HAD EARLIER FORGOTTEN TO TAKE INTO ACCOUNT. THUS, THE ASSESSING OFFICER WORKED OUT COMMISSION AT 5% ON THE SALE MADE BY THE ASSESSEE AND MADE AN ADD ITION OF RS.14, 85,641/- BEING COMMISSION BROKERAGE ON THE SALE TRANSACTION UNDERTAKEN BY THE ASSESSEE. BEFORE THE CIT (A) THE ASSESSEE TOOK STA ND THAT THE SAID COMMISSION PAID IS THE EXPENSE IN THE HANDS OF THE ASSESSEE AN D NOT INCOME WHILE TAKING STAND THE ASSESSEE POINTED OUT THE ORDER-SHEET ENTR Y DATED 16/8/2012 THE SALE WAS SUBMITTED BEFORE THE CIT(A). THE CIT (A) FINAL LY HOLD THAT NO PURCHASE DEED OR SALE DEED WAS FURNISHED BY THE ASSESSEE. E ITHER DURING ASSESSMENT PROCEEDINGS OR DURING APPELLATE PROCEEDINGS EXCEPT DEED SHOWING FURTHER INVESTMENT EXCLUDING THE PURCHASE OF LAND AT GURGAO N. THE CIT (A) ONCE AGAIN 9 ITA NO. 3522/DEL/20 13 REPEATED THAT THERE IS NO EVIDENCE THAT THIS INVEST MENT MADE BY HIM WAS IN THE PURCHASE OF AN AGRICULTURAL LAND AND, THEREFORE, HE LD THAT THE SAID SALE PROCEEDS CAN THUS NOT BE CLAIM AS EXEMPT U/S 54B OF THE INCOME TAX ACT 1961. THUS, UPHELD THE ORDER OF THE ASSESSING OFF ICER. AS RELATES TO AGRICULTURAL INCOME THE CIT (A) HELD THAT THERE WAS NO EVIDENCE HOW THE PRODUCE HAS BEEN TAKEN TO THE MARK OR THE SOURCE AN D QUANTUM OF THE EXPENDITURE INCURRED ON PURCHASE OF SEEDS, WATERING AND LABOUR ETC, AND THUS REJECTED THE APPEAL OF THE ASSESSEE. AS RELATES TO ADDITION OF RS.2, 51,325/- WHILE DISALLOWING 25% OF EXPENSES. THE CIT (A) HEL D THAT THE LEDGER ACCOUNT WAS NOT SUPPORTED BY ANY DOCUMENTARY EVIDENCE/VOUCH ERS. THUS, THE SAID GROUND WAS REJECTED. 7. THE LD. AR SUBMITTED THAT THE ASSESSING OFFICER MADE NO ENQUIRY. THE ASSESSING OFFICER DID NOT ALLEGE THAT THE ASSESSEE HAD DERIVED ANY INCOME BY WAY OF CAPITAL GAIN. THE ASSESSING OFFICER NEVER CO MMENTED ON THE HEAD OF CAPITAL GAIN OR THE SOURCE THEREOF. THE ONLY FINDING GIVEN BY THE ASSESSING OFFICER WAS THAT THE ASSESSEE DID NOT PRODUCE THE P URCHASE DEED. THE SAME WAS ENTIRELY IRRELEVANT, THE A.O. COULD HAVE D RAWN AN INFERENCE THE SOURCE OF PURCHASE/ACQUISITION HAS SINCE NOT BEEN E XPLAINED AN ADDITION COULD BE MADE UNDER SECTION 69 OF THE INCOME TAX AC T AND NO MORE. U NLESS THE AO MAKES AN ADDITION OR TOUCHES THE SOURC E OR EVEN THE HEAD WHICH COULD BE SUBJECT MATTER OF APPEAL OR MAKES AN ENQUIRY ABOUT THE HEAD AND SOURCE OF INCOME, THE CIT(A) DOES NOT HAVE ANY POWER UNDER SECTION 251 OF THE ACT EITHER TO MAKE AN ADDITION OR EVEN SET ASID E THE ASSESSMENT TO DO SO. THIS IS WELL SETTLED LAW. IN THIS CONTEXT HEAVY REL IANCE HAD BEEN PLACED ON THE JUDGMENT OF FULL BENCH OF DELHI HIGH COURT IN THE C ASE OF CIT VS. SARDARI LAL & CO. REPORTED IN 251 ITR 864. THE LD. AR FURTHER SUBMITT ED THAT THE DIRECTION OF THE CIT(A) TO AO TO TAX CAPITAL GAINS ALLEGED TO HAVE BEEN EARNED BY THE ASSESSEE ON THE SALE OF LAND AT GURGAON DESP ITE THE FACT, IN THE ORDER OF ASSESSMENT, NO SUCH ADDITION WAS EITHER MADE OR WAS SUCH AN ISSUED WAS 10 ITA NO. 3522/DEL/2 013 SUBJECT MATTER OF APPEAL. THE CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT ARISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTSIDE THE SCOPE OF THE ORDER OF THE ASSESSMENT I.E. THE SUBMISSION OF THE ASSESSEE IS THAT, THE CIT(A) ACTED IN EXCESS OF JURISDICTION AS ENHANCEME NT IS BEYOND THE POWERS AVAILABLE TO THE CIT(A) UNDER SECTION 251(1)(A) OF THE ACT. 8. THE LD. AR FURTHER SUBMITTED THAT WHEN THE ASSES SEE HAD SOLD HIS OWN LAND, THERE COULD BE NO OCCASION TO EVEN ARBITRARIL Y ASSUME THAT THE ASSESSEE HAS EARNED INCOME BY WAY OF COMMISSION. DESPITE THE AFORESAID FACTS ON RECORD, HE HELD THAT THE ASSESSEE HAS EARNED A COMM ISSION @ 5% ON THE SALE OF THE LAND AND THUS MADE AN ADDITION OF RS. 14,85,641 1-. IT IS ABSOLUTELY EVIDENT FROM THE AFORESAID FACTS SUCH AN ADDITION HAS BEEN MADE WHICH IS ENTIRELY ARBITRARY. THERE BEING NO SOURCE OF INCOME FROM COM MISSION, NO COMMISSION CAN BE ESTIMATED. FURTHER, SINCE THE ASSESSEE HAS E ITHER BEEN ACQUIRING OR SELLING THE LAND, WHICH IS OWNED BY HIM, THE ASSUMP TION THAT HE HAS EARNED COMMISSION IS WITHOUT ANY BASIS AND IS ENTIRELY MIS CONCEIVED AND IS UNSUSTAINABLE IN THE EYES OF LAW. FURTHER, THE ALLEGATION OF THE A. O. THAT A NOTICE DATED 09.12.2011 ( PAGE 146 OF THE PAPER BOOK) WAS NOT COMPLIED IS ALSO ERRONEOUS. THE LD. AR SUBMITTED THAT THE SAID SHOW CAUSE NOTICE WAS RECEIVED BY THE ASSESSEE ON 15.12.2011 AND VIDE THE AFORESAI D NOTICE, ASSESSEE WAS REQUIRED TO FILE ITS REPLY ON 16.12.2011. IT IS SUB MITTED THAT AS THE ASSESSEE WAS AT MUMBAI ON 15.12.2011, 16.12.2011, 17.12.2011 AND 18.12.2011 BEING SATURDAY AND SUNDAY MADE COMPLIANCE ON THE NEXT WOR KING DAY I.E. ON 19.12.2011 ( PAGE 147 148 OF THE PAPER BOOK) . THUS THE ALLEGATION WAS REFUTED BY THE LD. AR. AFORESAID FACT WAS DULY STAT ED IN THE GROUNDS OF APPEAL BEFORE THE CIT(A) AND ALSO THE SUPPORTING DOCUMENT THAT ON 15.12.2011 & 16.12.2011 WAS IN MUMBAI, ASSESSEE FILED THE SUPPOR TING DOCUMENTS BEFORE THE CIT(AO ( PAGE 159 I.E. PAPER BOOK FILED BEFORE THE CIT(A). DURING TH E COURSE OF THE ASSESSMENT, ASSESSEE HAS COMPLIED ALL THE NO TICES ISSUED TO IT AND AS SUCH, ASSESSMENT FRAMED UNDER SECTION 144 OF THE AC T WAS WITHOUT SATISFYING THE STATUTORY CONDITIONS OF SECTION 144 OF THE ACT. THAT THE LEARNED CIT(A) IN 11 ITA NO. 3522/DEL/2 013 THE IMPUGNED ORDER THUS HAVING BEEN AS SUBMITTED AB OVE, THUS MADE NO ADVERSE COMMENTS AS NONE OF THE ADDITIONS MADE WERE AS A RESULT OF ANY NON- COMPLIANCE OF A NOTICE WARRANTING AN ASSESSMENT U/S 144 OF THE ACT. THAT ASSESSEE IS EARNING AGRICULTURAL INCOME YEAR AFTER YEAR AND IN ALL PRECEDING YEARS, AGRICULTURAL INCOME EARNED BY THE ASSESSEE H AS BEEN ACCEPTED AS SUCH, AN ADDITION MADE TO THE TOTAL INCOME BY REDUCING TH E DECLARED INCOME FROM AGRICULTURAL ACTIVITIES FROM RS. 19,10,149/- TO RS. 9,55,074/- IS MANIFESTLY ERRONEOUS. THE INCOME EARNED AND ACCEPTED WAS RS. 1 8,62,549/- AND THE SAID INCOME WAS EARNED IN THE IMMEDIATELY PRECEDING YEAR AND WAS ALSO ACCEPTED. THAT THE DISALLOWANCE MADE BY THE LEARNED A.O. AND SUSTAINED BY CIT(A) OUT OF THE CLAIM OF EXPENDITURE INCURRED IN RESPECT OF THE BUSINESS ACTIVITY BEING VENDING MACHINE EXPENSES OF RS. 10,05,299/-, A DISA LLOWANCE OF 25% OF THE TOTAL EXPENDITURE HAS ARBITRARILY BEEN SUSTAINED AS THERE IS NO BASIS TO UPHELD THE DISALLOWANCE. THE CIT(A) FAILED TO APPRECIATE T HAT HAD DISCLOSED A NET PROFIT OF RS. 2,96,060/- ON RECEIPT OF RS. 14,01,143/- WHI CH INCLUDED VENDING MACHINE EXPENSES OF RS. 10,05,299/- AND MARGIN OF P ROFIT DECLARED BY THE ASSESSEE IS 15%. FURTHER, IN RESPECT OF DETAILS OF EXPENSES, IT IS SUBMITTED THAT INCOME FROM AFORESAID ACTIVITY I.E. SALE OF TEA COF FEE THROUGH VENDING MACHINE ,WAS EARNED IN CASH AND ALSO THE EX PENDITURE FOR VENDING MACHINE IS ALSO MADE IN CASH, HOWEVER ALL SUCH EXPE NSES ARE DULY RECORDED IN THE BOOKS OF ASSESSEE. AS SUCH, DISALLOWANCE MADE P URELY ON ADHOC BASIS AND IS NOT PERMISSIBLE IN LAW. FURTHER, THERE IS NO BAS IS TO MAKING A DISALLOWANCE OF 25%. 9. THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT G IVEN THE RELEVANT DOCUMENTS AND PROCEEDINGS DESPITE GIVING SEVERAL OP PORTUNITIES, AND, THEREFORE, THE ASSESSING OFFICER HAS PASSED ORDER U /S 144. THE LD. CIT (A) ALSO HAS GIVEN AMPLE OPPORTUNITY TO THE ASSESSEE BUT THE SAME WAS NOT AVAILED BY THE ASSESSEE. THE CASE LAWS WHICH WAS REFERRED BY THE LD. AR ARE NOT AT ALL 12 ITA NO. 3522/DEL/2 013 RELEVANT IN THIS PARTICULAR CASE AS THE ASSESSEE HI MSELF HAS NOT AVAILED ANY OPPORTUNITY GIVEN TO HIM. 10. THE LD. AR IN REJOINDER SUBMITTED THAT THE ASSE SSEE ON 19/11/2011 I.E. ON THE VERY SAME DAY WHEN HE ARRIVED FROM BOMBAY HA S GIVEN HIS REPLY AND THE ENCLOSURES THEREIN AS A DETAILED TO HIS ASSESSM ENT PROCEEDINGS HE HAS SHOWN THE ACKNOWLEDGEMENT OF THE DEPARTMENT. THERE FORE, THE LD. AR SUBMITTED THAT THIS APPEAL SHOULD BE ALLOWED. 11. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH THE COUNSELS, IT IS PERTINENT TO KNOW THAT THE ASSESSING OFFICER HAS NO T DEALT THE REPLY AND THE ENCLOSURES/DOCUMENTS GIVEN ON THE DATE OF ASSESSMEN T ORDER I.E. 19/11/2011, THE SAME WAS NOT TESTIFIED BEFORE THE CIT(A). THE C IT(A) SHOULD HAVE TAKEN COGNIZANCE OF ALL THOSE RECORDS AND THE LETTERS. T HIS SHOWS THAT THE CIT (A) HAS TOTALLY IGNORED THIS LETTER ALONG WITH THE ENCLOSUR ES/DOCUMENTS AND PASSED THE ORDER ACCORDINGLY WHICH IS NOT TENABLE UNDER THE LA W. THE APPROPRIATE OPPORTUNITY WAS NOT GIVEN TO THE ASSESSEE. THE A.O HAS PROCEEDED TO COMPUTE INCOME OF THE ASSESSEE ON THE BASIS OF THE INCOME A S PER INTIMATION U/S 143(1) OF THE ACT; WHEREAS THE A.O WAS REQUIRED TO COMPUTE THE INCOME OF THE ASSESSEE ON THE BASIS OF INCOME RETURNED. THIS WAS A GROUND RAISED BEFORE THE CIT(A) AND IS A PART OF GROUND OF APPEALS IN THE PR ESENT APPEAL. IT BEING WHOLLY LEGAL GROUND OF THE APPEAL DESERVES TO BE ADJUDICAT ED. THE ASSESSING OFFICER HAS ACTED BEYOND THE JURISDICTION BY COMPUTING INCO ME OF THE ASSESSEE ON THE BASIS OF THE INCOME AS PER SECTION 143(3) WHERE AS THE INTIMATION WAS U/S 143(1). THE CIT(A) ACTED BEYOND ITS POWER BY DIREC TING THE ASSESSING OFFICER TO TAX THE CAPITAL GAINS IN RESPECT OF SALE OF LAND A T GURGAON, THOUGH, THERE WAS NO ADDITION MADE BY THE ASSESSING OFFICER IN THE AS SESSMENT ORDER TO THAT RESPECT. CAPITAL GAIN IS AN INDEPENDENT AND DIFFER ENT SOURCE OF INCOME AND WAS NOT THE SUBJECT MATTER OF APPEAL BEFORE HIM NOR WAS THE ISSUE CONSIDERED BY THE ASSESSING OFFICER BY FRAMING AN ASSESSMENT O RDER. INSTEAD, THE ASSESSING OFFICER TERMED THE SAME AS COMMISSION ON THE SALE OF LAND. THE LD. 13 ITA NO. 3522/DEL/2 013 AR HAS RELIED ON THE VARIOUS CASE LAWS MORE PRECIOU SLY THAT OF SHAPOORJI PALLONJI MISTRY VS. CIT REPORTED IN 34 ITR 342 (CON FIRMED BY THE APEX COURT IN 44 ITR 891) WHEREIN THE HONBLE BOMBAY HIGH COURT W HILE DEALING WITH THE POWERS OF THE CIT(A) HELD THAT CIT(A) WAS NOT EMPOW ER TO ENHANCE AN INCOME ON AN ISSUE WHICH WAS NOT THE SUBJECT MATTER OF THE ASSESSMENT. THE RATIO LAID DOWN IN THE JUDGMENT OF FULL BENCH OF DELHI HIGH CO URT IN THE CASE OF CIT VS. SARDARI LAL & CO. REPORTED IN 251 ITR 864 IS ALSO RELEVANT IN ASSESSE ES CASE THAT T HE CIT(A) CANNOT TOUCH UPON AN ISSUE WHICH DOES NOT ARISE FROM THE ORDER OF THE ASSESSMENT AND WAS OUTSIDE THE SCOPE O F THE ORDER OF THE ASSESSMENT . THE ORDER OF THE CIT(A) DOES NOT SUSTAIN. 12. IN RESULT, APPEAL IS ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 13TH OF APRIL, 2016. SD/- SD/- ( S. V. MEHROTRA) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13/04/2016 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 12.02.2016 PS 14 ITA NO. 3522/DEL/2 013 2. DRAFT PLACED BEFORE AUTHOR 12.02.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .02.2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. .02.2016 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 13.04.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON .04.2016 PS 7. FILE SENT TO THE BENCH CLERK 13.04.2016 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.