Kumkum Kanodia, New Delhi V. DCIT, New Delhi

ITA 3673/DEL/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2910 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 20-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VED JAIN ADV SH AASHISH GOYAL
• Keywords: Document seized; Documents seized
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBE R & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3673/DEL/2014 ( ASSESSMENT YEAR: 2010-11) KUMKUM KANODIA C-175, PUSHPANJALI ENCLAVE, PITAMPURA, NEW DELHI. AANPK6021C VS DCIT CENTRAL CIRCLE -11, NEW DELHI. APPELLANT RESPONDENT ASSESSEE BY SH. VED JAIN, ADV. SH. AASHISH GOYAL, CA REVENUE BY SH. J.K. MISHRA, CIT (DR) ORDER PER SHRI BHAVNESH SAINI, J.M. THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-XXXI, NEW DELHI DATED 09.05.201 4 FOR AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH AN D SEIZURE OPERATION U/S 132(1) OF THE I.T. ACT WAS CONDUCTED AT RESIDENTIAL DATE OF HEARING 01.11.2018 DATE OF PRONOUNCEMENT 05.11.2018 2 ITA NO. 3673/DEL/2014 PREMISES AS WELL AS BUSINESS PREMISES OF SH. RAJESH KUMAR KANODIA AND HIS GROUP CONCERNS/COMPANIES/FAMILY MEM BERS ON 28.03.2011. NOTICE U/S 153C WAS ISSUED TO THE ASSE SSEE. THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS. 7,35,920/-. DURING THE COURSE OF SURVEY OPERATION U/S 133A OF T HE I.T. ACT AT THE BUSINESS PREMISES NO. 10174, GURUDWARA ROAD, KA ROL BAGH, NEW DELHI DOCUMENTS MARKED AS ANNEXURE A-3 WAS FOUND/IMPOUNDED. ON PAGE NO. 6 OF ANNEXURE A-3, IT IS SEEN THAT RS. 33 LAKHS RENT SECURITY RECEIVED IN CASH DURING THE YEAR. THE ASSESSEE WAS ASKED TO FURNISH DETAILS OF RENT SECUR ITY AMOUNTING TO RS. 33 LAKHS RECEIVED IN CASH DURING THE YEAR. THE ASSESSEE FILED THE REPLY, WHEREIN IT WAS SUBMITTED THAT THE SAID DOCUMENT DOES NOT PERTAIN TO THE UNDERSIGNED RATHER IT PERTA INS TO M/S CHAK DE HOSPITALITY PRIVATE LIMITED WHICH WAS THE TENANT IN THE SAID PLACE. THE DETAILS OF RENTAL INCOME ALONG WITH COP Y OF THE RENT AGREEMENT IN FAVOUR OF THE ASSESSEE PROP. OF HOTEL TRIPTI HAS ALREADY BEEN PLACED ON RECORD. ALL THE TRANSACTION S OF HOTEL TRIPTI WITH M/S CHAK DE HOSPITALITY PRIVATE LIMITED HAVE B EEN DULY SHOWN IN THE REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE AND DULY OFFERED TO TAX IN THE RESPECTIVE YEAR. IT WAS SUBMITTED 3 ITA NO. 3673/DEL/2014 THAT IT IS IMPORTANT TO MENTION THAT THE SAID CAPTI ONED PAGE WAS SIGNED BY MR. RAVINDER SINGH WHO IS THE DIRECTOR OF M/S CHAK DE HOSPITALITY PRIVATE LIMITED. THEREFORE, INDEPENDEN T INQUIRY MAY BE MADE DIRECTLY FROM HIM. THE AO, HOWEVER, NOTED THAT EXPLANATION OF THE ASSESSEE IS NOT CONVINCING. AS PER DOCUMENT, IT WAS SEEN THAT TOTAL RENTAL AMOUNT PER MONTH IS RS. 5,25,000/-. AS PER COPY OF THE BALANCE SHEET OF TRIPTI HOTEL AV AILABLE AS ON 31.03.2010 ON HARD DISC IMPOUNDED NO SUCH SECURITY RENT WAS REFLECTED. MOREOVER, RENT OF RS. 30 LAKHS ONLY WAS FOUND TO HAVE BEEN SHOWN IN THE P&L ACCOUNT FOR THE ENTIRE FINANC IAL YEAR UNDER APPEAL. THIS IS INDICATIVE OF THE FACT THAT RENT D ECIDED WAS RS. 5,25,000/- PER MONTH WHICH COMES TO RS. 63 LAKHS FO R 12 MONTHS. OUT OF THIS RS. 63 LAKHS, RS. 30 LAKHS FOR 12 MONTH S WAS RECEIVED THROUGH CHEQUE AND THE BALANCE OF RS. 33 LAKHS WAS RECEIVED IN CASH AS ADVANCE RENT, WHICH WAS NOT OFFERED FOR TAX ATION. THE AO, ACCORDINGLY, WRITTEN A LETTER TO M/S CHAK DE HOSPIT ALITY PRIVATE LIMITED FOR VERIFICATION. STATEMENT OF SH. RAVINDE R SINGH, WHO WAS LOOKING AFTER ADMINISTRATIVE WORK WAS RECORDED ON 26.03.2013, WHEREIN HE HAS CONFIRMED THAT HE HAD TA KEN PREMISES FROM TRIPTI HOTEL ON RENT DURING AUGUST 2008 TO MAR CH 2011. AS 4 ITA NO. 3673/DEL/2014 REGARDING RENT SECURITY, HE HAS STATED THAT HE HAD ALSO PAID A RENT SECURITY OF RS. 21 LAKHS AND ADVANCE PAYMENT OF RS. 16,08,716/- TO THE ASSESSEE RELATED TO TENANCY OF THIS HOTEL PR EMISES, WHICH HAD NOT BEEN RETURNED BACK TO THEM FROM SH. RAJESH KUMAR KANODIA. AS REGARDS PAGE NO. 6 OF ANNEXURE A-3 IMP OUNDED, HE HAS STATED THAT PRESENTLY HE WAS NOT ABLE TO EXPLAI N THIS AND WILL EXPLAIN IT LATER ON. HE WAS NOT INVOLVED IN THE FI NANCIAL MATTER, THOUGH HIS SIGNATURE APPEARED ON THE DOCUMENT. THE AO, ACCORDINGLY, NOTED THAT M/S CHAK DE HOSPITALITY PRI VATE LIMITED WAS TENANT OF THE ASSESSEE AND HAD PAID RENT AS WEL L AS RENT SECURITY IN CASH AMOUNTING TO RS. 33 LAKHS WHICH HA S NOT BEEN DISCLOSED BY THE ASSESSEE. ON PAGE NO. 6, FOUR MON THS SECURITY RENT SHOWN AT RS. 21 LAKHS FROM WHICH IT IS CLEAR T HAT RENT FOR 1 MONTH WAS RS. 5,25,000/- AND NOT RS. 2,50,000/- SHO WN BY THE ASSESSEE. ON THE SAME PAGE IT HAS BEEN MENTIONED T HAT CASH RENT SECURITY SHOWN AT RS. 33 LAKHS. THIS CLEARLY SHOWS THAT THE RENT DECIDED WAS RS. 5,25,000/- PER MONTH WHICH COMES TO RS. 63 LAKHS FOR 12 MONTHS. OUT OF THIS RS. 63 LAKHS, RS. 30 LAKHS FOR 12 MONTHS WAS RECEIVED THROUGH CHEQUE AND THE BALANCE OF RS. 33 LAKHS WAS RECEIVED IN CASH AS ADVANCE RENT WHICH WA S NOT OFFERED 5 ITA NO. 3673/DEL/2014 FOR TAXATION. THE AO, ACCORDINGLY, NOTED ASSESSEE RECEIVED RS. 33 LAKHS IN CASH AS RENT SECURITY AND TREATED THE SAME AS UNDISCLOSED RENTAL INCOME OF THE ASSESSEE FROM THE ABOVE PROPER TY. THE AO, ACCORDINGLY, PASSED THE ASSESSMENT ORDER U/S 153C O F THE ACT DATED 28.03.2013. 3. THE ASSESSEE REITERATED THE SUBMISSIONS BEFORE L D. CIT(A) AND IT WAS SUBMITTED THAT SH. RAVINDER SINGH, DIREC TOR OF THE TENANT COMPANY DID NOT DENY THAT THE DOCUMENT IN QU ESTION DID NOT BELONG TO HIM. THEREFORE, ACTION OF THE AO IN TAKING RENT AT RS. 5.25 LACS PER MONTH INSTEAD OF RS. 2.5 LACS PER MONTH WAS WITHOUT ANY BASIS. THE ASSESSEE ALTERNATIVELY CONT ENDED THAT 30% REBATE U/S 24(A) OF THE ACT MAY BE ALLOWED. THE LD .CIT(A) NOTED THAT THE DOCUMENT WAS FOUND IN POSSESSION OF THE AS SESSEE AND SAME HAS MANY HAND WRITTEN NOTINGS ALONG WITH COMPU TER PRINTOUT OF THE RENT DETAILS OF HOTEL TRIPTI CLEARL Y INDICATE THAT THE DOCUMENT BELONGED TO THE ASSESSEE. IN THE DOCUMENT THE DETAILS OF RENT ARE NOTED WHICH INDICATE THAT THE DOCUMENT BELONGED TO THE ASSESSEE AND NOT TO THE TENANT. SINCE, ASSESSEE DI D NOT EXPLAIN THE SAME DOCUMENT, THEREFORE, RENT OF RS. 5.25 LACS WAS TAKEN AND 6 ITA NO. 3673/DEL/2014 THE ADDITION IN PRINCIPLE WAS CONFIRMED BUT DEDUCTI ON U/S 24(A) @ 30% WAS ALLOWED THUS, ADDITION TO THE EXTENT OF RS. 23,10,000/- WAS CONFIRMED AS AGAINST ADDITION OF RS. 33 LAKHS. 4. THE ASSESSEE IN THE PRESENT APPEAL HAS CHALLENGE D THE INITIATION OF THE PROCEEDINGS U/S 153C OF THE ACT A ND CLAIMED THAT SAME ARE NOT VALID AND BAD IN LAW, LIABLE TO BE QUA SHED. THE ASSESSEE ALSO CHALLENGED THE ADDITION OF RS. 23,10, 000/- ON ACCOUNT OF UNDISCLOSED RENT. 5. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL ON RECORD. LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AS WELL AS REFERRED TO IMPOUND DOCUMENTS AND STATEMENT OF S H. RAVINDER SINGH RECORDED BY THE AO AND SUBMITTED THAT NO EVID ENCE WAS FOUND THAT ASSESSEE RECEIVED RS. 33 LAKHS IN CASH A S ADVANCE SECURITY RENT. ON THE OTHER HAND, LD. DR RELIED UP ON THE ORDERS OF THE AUTHORITIES BELOW. 6. IT IS NOT IN DISPUTE THAT NO SEARCH WAS CONDUCTE D IN THE CASE OF THE ASSESSEE. NO DOCUMENT WAS FOUND DURING THE COURSE OF SEARCH TO CONNECT THE ASSESSEE WITH THE ABOVE ADDIT ION. DURING 7 ITA NO. 3673/DEL/2014 SURVEY OPERATION U/S 133A OF THE ACT AT KAROL BAGH, NEW DELHI THE DOCUMENT A-3 WAS IMPOUNDED WHICH CONTAINED THAT RS. 33 LAKHS RENT SECURITY RECEIVED IN CASH DURING THE YEAR. CO PY OF THE SEIZED DOCUMENTS ARE FILED AT PAGES 24, 25 AND 26 OF THE P B. ON PAGE 24 THERE IS NO INDICATION OF ANY ALLEGED ADVANCE SECUR ITY RENT. IT IS NOT RELEVANT. ON PAGE 25 THE DETAILS OF MONTHS SECURIT Y RENT AND SECURITY RENT HAVE BEEN MENTIONED ALONG WITH RENT A ND SERVICE TAX FOR THE PERIOD FROM 01.04.2009 TO 31.03.2010 AND 01 .04.2010 TO 28.02.2011. ON PAGE 26 THE RENT DETAILS OF HOTEL T RIPTI ARE MENTIONED FOR THE PERIOD FROM 07.10.2010 TO 7.12.20 11. THIS DOCUMENT IS NOT RELEVANT AS IT WAS BEYOND THE PURVI EW OF THE ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THE ONLY DOCUMENT LEFT IS THE DETAILS OF SECURITY RENT FILED AT PAGE 25 OF THE PB. THE ASSESSEE EXPLAINED THAT THE SAID DOCUMENT DID NOT B ELONG TO HER RATHER IT PERTAINS TO M/S CHAK DE HOSPITALITY PRIVA TE LIMITED WHICH WAS THE TENANT AT THE SAID PLACE. IT IS NOT CLARIFIED BY THE AO IN THE ASSESSMENT ORDER AS TO FROM WHOSE EXCLUSI VE POSSESSION THE SAID DOCUMENT WAS FOUND DURING THE COURSE OF SU RVEY. THE ASSESSEE FILED DETAILS OF RENTAL INCOME ALONG WITH COPY OF THE RENT AGREEMENT AND EXPLAINED THAT THE IMPOUNDED PAPER IS SIGNED BY 8 ITA NO. 3673/DEL/2014 SH. RAVINDER SINGH WHO IS THE DIRECTOR OF M/S CHAK DE HOSPITALITY PRIVATE LIMITED AND INDEPENDENT INQUIRY COULD BE MADE FROM HIM DIRECTLY. THE AO RECORDED STATEMENT OF SH RI RAVINDER SINGH ON 26.03.2013. COPY OF WHICH IS FILED AT PAG E 55 OF THE PB IN WHICH HE HAS ADMITTED THAT HE WAS LOOKING AFTER ADMINISTRATIVE WORK OF M/S CHAK DE HOSPITALITY PRIVATE LIMITED AND GOOD TIME HOTELS. HE HAS EXPLAINED THAT RENT FOR THE PREMISE S HAVE BEEN GIVEN AT RS. 2,50,000/- PER MONTH AND ALSO PAID REN T SECURITY OF RS. 21 LAKHS AND ADVANCE PAYMENT RS. 16,08,716/- WH ICH IS NOT RETURNED TO THEM. HE HAS ADMITTED THAT THE SEIZED PAPERS BELONG TO THEIR COMPANY AND SIGNED BY HIM, CONTAINING THE TRANSACTIONS UPTO 20.03.2011. AS REGARDS THE PAYMENT OF CASH SE CURITY OF RS. 33 LAKHS, HE HAS EXPLAINED THAT PRESENTLY HE WAS NO T ABLE TO EXPLAIN IT AND WILL EXPLAIN LATER ON BUT SUBSEQUENT LY NO OTHER STATEMENT WAS RECORDED. ON THE FACE OF THIS STATEM ENT, IT IS CLEAR THAT SH. RAVINDER SINGH, DIRECTOR OF THE TENANT COM PANY HAS ADMITTED IN HIS STATEMENT THAT IMPOUNDED DOCUMENT B ELONG TO THE TENANT COMPANY. AS REGARDS THE RENT SECURITY MENTI ONED IN THE IMPOUNDED DOCUMENT, HE HAS EXPLAINED THAT PRESENTLY HE WAS NOT ABLE TO EXPLAIN THE SAME. ON THE FACE OF THE DOCUM ENT ON RECORD 9 ITA NO. 3673/DEL/2014 IN THE LIGHT OF THE STATEMENT OF SH. RAVINDER SINGH , IT IS CLEAR THAT THE IMPOUNDED DOCUMENT DID NOT BELONG TO THE ASSESS EE AND THAT RENT PAID PER MONTH BY THE TENANT COMPANY WAS RS. 2 ,50,000/- ONLY. THE IMPOUNDED DOCUMENT DID NOT CONTAIN SIGNA TURE AND HAND WRITING OF THE ASSESSEE. SH. RAVINDER SINGH A DMITTED THAT THE IMPOUNDED DOCUMENT BELONG TO THE TENANT COMPANY , AND BORE HIS SIGNATURE, THEREFORE, ONUS WAS UPON THE TENANT COMPANY TO EXPLAIN THE IMPOUNDED DOCUMENT. LD. CIT(A) WAS NOT JUSTIFIED TO HOLD IMPOUNDED DOCUMENTS BELONG TO THE ASSESSEE. SH . RAVINDER SINGH DID NOT CONFIRM IF THE TENANT COMPANY HAS PAI D CASH OF RS. 33 LAKHS TO THE ASSESSEE AS RENT SECURITY OR ADVANC E RENT. THE AO, EVEN AS PER THE IMPOUNDED DOCUMENT MENTIONED IN THE ASSESSMENT ORDER THAT THE IMPOUNDED DOCUMENT SHOWS RS. 33 LAKHS RENT SECURITY RECEIVED IN CASH DURING THE YEA R BUT THE AO DID NOT AFFIRM THAT THE ALLEGED AMOUNT OF RS. 33 LAKHS IN CASH HAVE BEEN RECEIVED BY THE ASSESSEE. EVEN THE TENANT HAS NOT CONFIRMED TO HAVE PAID ANY CASH OF RS. 33 LAKHS TO THE ASSESS EE. THEREFORE, NO CREDENCE COULD BE GIVEN TO THE SEIZED/IMPOUNDED PAPER BECAUSE IT DID NOT CONTAIN ANY SPECIFIC THING AGAIN ST THE ASSESSEE. THE SEIZED DOCUMENT IS NOT RELIABLE AS IT WAS NOT S UPPORTED BY SH. 10 ITA NO. 3673/DEL/2014 RAVINDER SINGH IN HIS STATEMENT, IF ANY, CASH OF RS . 33 LAKHS HAVE BEEN PAID TO THE ASSESSEE. THUS, THERE IS NO BASIS OR MATERIAL AVAILABLE ON RECORD TO JUSTIFY THE ADDITION OF RS. 33 LAKHS IN THE HANDS OF THE ASSESSEE. THE AUTHORITIES BELOW THUS, WERE UNJUSTIFIED IN MAKING ADDITION OF RS. 33 LAKHS IN T HE HANDS OF THE ASSESSEE AS UNEXPLAINED RENTAL INCOME RECEIVED FOR THE ABOVE PROPERTY. WE, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. 7. LD. COUNSEL FOR THE ASSESSEE ALSO ARGUED THAT IN ITIATION OF THE PROCEEDINGS U/S 153C OF THE ACT ARE ILLEGAL AND BAD IN LAW BECAUSE NO INCRIMINATING MATERIAL WAS FOUND DURING THE COUR SE OF SEARCH. HOWEVER, NO SATISFACTION NOTE U/S 153C OF THE ACT H AVE BEEN PRODUCED ON RECORD, THEREFORE, SUCH CONTENTION OF T HE ASSESSEE CANNOT BE EXAMINED IN DETAIL. WE MAY ALSO NOTE THA T SINCE ADDITIONS ON MERIT HAVE ALREADY BEEN DELETED, THERE FORE, THIS ISSUE IS LEFT WITH ACADEMIC DISCUSSION ONLY. WE, THEREFO RE, DO NOT PROPOSE TO ADJUDICATE UPON THE SAME. 11 ITA NO. 3673/DEL/2014 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (L.P. SAHU) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 05.11.2018 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION 01.11.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 02.11.2018/05.11.18 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P S/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 05.11.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 05.11.2018 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 05.1 1.2018 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 12 ITA NO. 3673/DEL/2014