ACIT, New Delhi V. Sh. Brij Kishor Kochar, New Delhi

ITA 3826/DEL/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7321 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 03-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 14-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Keywords: Reopening of assessment; Unexplained expenditure; Tangible material; Reason to believe
• Section: 69C; 147; 148

Judgement Text

1 ITA NO. 3826/DEL/2013 IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER AND SMT SUCHITRA KAMBLE, J UDICIAL MEMBER I.T.A .NO.- 3826/DEL/2013 (ASSESSMENT YEAR 2008-09) ACIT CENTRAL CIRCLE-9 NEW DELHI (APPELLANT) VS BRIJ KISHOR KOCHAR SECTOR-A, 1316, POCKET- B & C. VASANT KUNJ NEW DELHI AAIPK1338H (RESPONDENT) APPELLANT BY SH. S. K. JAIN, SR. DR RESPONDENT BY SH. TARANDEEP SINGH, ADV ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 11/02/ 2013 PASSED BY CIT(A) -XXX, NEW DELHI 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED IN LAW AND ON FACTS OF THE CASE IN HOLDING THAT THE ASSUMPTION OF JURISDICTION U/S 147 OF THE INCOME TA X ACT, 1961 IN THE CASE WAS BAD IN LAW. DATE OF HEARING 03.08.2016 DATE OF PRONOUNCEMENT 26.08.2016 2 ITA NO. 3826/DEL/2013 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN LAW AND ON FACTS OF CASE IN DELETING THE ADDITION O F RS.87,32,500/- MADE U/S 69C OF THE ACT ON ACCOUNT O F UNEXPLAINED EXPENDITURE. 3. (A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. 3. THE ASSESSEE FILED ITS RETURN OF INCOME ON 21 ST JULY, 2008 DECLARING AN INCOME OF RS 47,58,310/- COMPRISING IN COME FROM SALARY, INCOME FROM HOUSE PROPERTY AND FROM OT HER SOURCES AS A SENIOR CITIZEN. THEREAFTER THE ASSESSE E WAS ISSUED A NOTICE DATED 7 TH JUNE, 2010 UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 WHEREIN STATED THAT INCOME HAD ESCAPE D ASSESSMENT AND THEREFORE THE ASSESSEE WAS REQUIRED TO FILE THE RETURN OF INCOME DISCLOSING TRUE PARTICULARS THEREO F. THE ASSESSEE FILED A RETURN ON 11 TH OCTOBER, 2010 IN RESPONSE TO THE AFORESAID NOTICE ISSUED UNDER SECTION 148 OF TH E ACT, DECLARING THE SAME INCOME AS WAS DECLARED IN THE IN COME TAX RETURN FILED ON 21 ST JULY, 2008. THE ASSESSING OFFICER WAS REQUESTED BY THE ASSESSEE FOR INTIMATING THE REASON S FOR ISSUING THE AFORESAID NOTICE UNDER SECTION 148 OF T HE ACT. THEREAFTER THE ASSESSEE WAS SUPPLIED WITH THE REAS ONS RECORDED FOR REOPENING OF ASSESSMENT FOR THE PERIOD UNDER CONSIDERATION. THE REASONS RECORDED FOR REOPENING O F ASSESSMENT AS PROVIDED TO THE ASSESSEE ARE AS FOLLO WS: IN THIS CASE AN INFORMATION HAS BEEN RECEIVED FROM ASSTT. DIRECTOR OF INCOME TAX, UNIT-1, NEW DELHI ACCORDING TO 3 ITA NO. 3826/DEL/2013 WHICH SHRI BRIJ KISHORE KOCHHAR THE ASSESSEE HAS BE EN ALLOTTED 5,000 SQ. FT. AREA ON THE 6* FLOOR OF AMR IT PROJECT AT PLOT NO. 9 TECH ZONE, GREATER NOIDA. A SURVEY OPERATIONS CONDUCTED IN RESPECT OF M/S REAL GANS ES TATE PVT. LTD. ON 20.11.2008 DURING WHICH CERTAIN INCRIM INATORY DOCUMENTS WERE SEIZED REGARDING UNDERSTATING OF PRI CES OF PROPERTY SOLD BY THE COMPANY. AS PER THE PAPERS SEI ZED RELATING TO THE INVESTMENT OF THE TRANSACTION THE A SSESSEE THE TOTAL COST OF THE OFFICE CAME TO RS.2,15,00,000 /- FOR 5000 SQ. FT. WHICH COMES OUT TO BE RS.4,300/- PER S Q. FT. AND COSTS RS. 1,62,32,500/- AFTER SOME DISCOUNTS. T HE FORM MENTIONED RECEIPT OF RS.64,25,000/- AND THE AM OUNT PENDING AT RS.87,32R,500/~. HOWEVER, IN THE 2 ND PART OF THE BOOKING FORM THE RATE IS MENTIONED AS RS.1,500/ -PER SQ. FT. MAKING IT CLEAR THAT THE DIFFERENCE I.E. RS .2,800/- PER SQ. FT. HAS BEEN RECEIVED IN CASH WHICH COMES TO 28 00 X 5000 = RS. 1,40,00,000/-. THUS, IT IS EVIDENT THAT THE ASSESSEE IHAS CONCEALED THE PARTICULARS OF INCOME T O EVADE TAX. AS THESE TRANSACTIONS TOOK PLACE DURING THE FI NANCIAL YEAR 2007-08, A NOTICE U/S 148 IS BEING ISSUED 4. SUBSEQUENTLY VIDE LETTER DATED 2 ND AUGUST, 2011 THE ASSESSEE OBJECTED TO THE PROPOSED ASSESSMENT PROCEEDINGS. TH E AO HAS PASSED THE ASSESSMENT ORDER MAKING AN ADDITION OF R S. 87,32,500/- UNDER SECTION 69C OF THE INCOME TAX ACT . ASSESSEE HAD ACQUIRED FROM M/S AMR INFRASTRUCTURE LTD. (AND NOT M/S REAL GAIN ESTATE (P) LTD AS WRONGLY NOTED BY THE AO IN THE REASONS RECORDED U/S 148 OF THE ACT) 6000 SQ. FT. AREA (AND NOT 5000 SQ. FT. AREA AS WRONGLY NOTED BY THE AO IN THE REASONS RE CORDED U/S 148 OF THE ACT) ON THE 6 TH FLOOR FOR A TOTAL COMMITTED SUM OF RS 90 LAKHS 4 ITA NO. 3826/DEL/2013 (AND NOT RS.1,62,32,500/- AS WRONGLY NOTED BY THE AO IN THE REASONS RECORDED U/S 148 OF THE ACT). 5. IN THIS REGARD AN APPLICATION FORM WAS SUBMITTED BY THE ASSESSEE TO M/S AMR INFRASTRUCTURE LTD. FOR BOOKING/ALLOTMEN T OF IT/ITES UNIT IN ITS TECH ZONE PROJECT TITLED KESSEEL I - V ALLEY AT GREATER NOIDA. TWO SEPARATE APPLICATIONS WERE FIL ED BY THE ASSESSEE, ONE FOR ALLOTMENT OF 5,000 SQ FOOT AREA ( COPY ENCLOSED PAGES 9 TO 13 OF PB) AND SECOND FOR 1,000 SQ FOOT AREA. BOTH THESE APPLICATIONS WERE FILED ACCEPTING THE BASE PRICE OF THE PROPERTY AT RS 1,500/- PER SQ. FT. IT IS SUBMITTED THAT BOTH TH ESE APPLICATIONS WERE MADE BY THE ASSESSEE JOINTLY ALONG WITH HIS WIFE MRS. PRABHA KOCHAR. 6. TWO SEPARATE MEMORANDUMS OF UNDERSTANDING DATED 20 TH JULY 2007 WERE SIGNED BY THE ASSESSEE IN REGARD WITH M /S AMR INFRASTRUCTURE LIMITED. THE SAME WAS ON RECORD DURI NG THE ASSESSMENT PROCEEDING. THE MEMORANDUM OF UNDERSTAND INGS WERE SIGNED BY PARTIED AFTER ACCEPTANCE OF BOOKING APP LICATIONS BY M/S AMR INFRASTRUCTURE LIMITED. BOTH THESE MOUS ACCE PTED THE RATE OF ALLOTMENT AS RS 1,500/- PER SQ FT. THE PAYMENT DETAILS ACCEPTED UNDER THE MEMORANDUM OF UNDERSTANDINGS WAS AS UNDER FOR 5,000 SQ FOOT AREA: TOTAL CONSIDERATION = RS.75,00,000/- LESS: PAID BY ASSESSEE: CHEQUE NO. 193279 DATED 12.06.2007 RS. 15,57,000/- CHEQUE NO. 771437 DATED 12.06.2007 RS. 5,65,000/- 5 ITA NO. 3826/DEL/2013 CHEQUE NO. 771439 DATED 30/06/2007 RS.43,03,000/- RS.64,25,000/- BALANCE DUE AT TIME OF POSSESSION RS. 10,75 ,000/- FOR 1,000 SQ FOOT AREA; TOTAL CONSIDERATION = RS.15,00,000/- LESS: PAID BY ASSESSEE: CHEQUE NO. 462468 DATED 4/5/2007 RS. 12,85,0 00/- BALANCE DUE AT TIME OF POSSESSION RS. 2,1 5,000/- 7. AS REGARDS M/S REAL GAINS ESTATE (P) LTD IT WAS SUB MITTED THAT NO INVESTMENTS WERE MADE BY THE ASSESSEE WITH THEM. AC TUALLY THE RELATIONSHIP BETWEEN ASSESSEE AND M/S REAL GAINS ES TATE WAS THAT OF A MONEY LENDER AND BORROWER. IN THIS REGARD, IT IS SUBMITTED THAT A SHORT TERM INTEREST FREE LOAN OF RS 43,00,000/- W AS ADVANCED BY M/S REAL GAINS ESTATE TO THE ASSESSEE VIDE CHEQUE N O. 492695 DATED 26 TH JUNE 2007 AND THAT THIS DEBT WAS COMPLETELY DISCHA RGED BY THE ASSESSEE SUBSEQUENTLY AS UNDER: (COPY OF CER TIFICATE DATED 02 ND APRIL 2008 ISSUED BY M/S REAL GAINS ESTATE (P) LTD IN THIS REGARD IS ENCLOSED IN PAPER BOOK AT PAGE 28): CHEQUE NO. DATE AMOUNT 725947 21.01.2008 10,00,000/- 725948 21.01.2008 6,00,000/- 725950 22.02.2008 15,00,000/- 725952 29.03.2008 2,00,000/- 462469 15.01.2008 10,00,000 TOTAL 43,00,000/- 6 ITA NO. 3826/DEL/2013 IT IS SUBMITTED THAT THE LOAN OF RS 43 LAKHS GRANTE D BY M/S REAL GAINS ESTATE WAS ONLY A SHORT TERM TIME LOAN ARRANG EMENT FACILITATED BY M/S AMR INFRASTRUCTURES LIMITED SO AS TO HELP THE A SSESSEE IN ARRANGING FUNDS FALLING SHORT WHILE MAKING THE DOWN PAYMENT F OR THE 5,000 SQ FT PROPERTY IN THE MONTH OF JUNE 2007. 8. CONSIDERING THAT A SUBSTANTIAL DOWN PAYMENT OF 85.6 6% WAS MADE BY THE ASSESSEE FOR BOTH THE PROPERTIES. AS PER TH E TERMS OF MOU M/S AMR INFRASTRUCTURES LIMITED AGREED TO COMPENSAT E THE ASSESSEE BY MONTHLY INTEREST PAYMENT TILL THE DATE OF POSSESSION OF BOTH THE PROPERTIES. IT IS SUBMITTED THAT THE ASSES SEE HAS OFFERED TO TAX THIS INTEREST INCOME IN AY 09-10 AND AY 10-11. THIS FACT IS VERIFIABLE FROM THE TDS CERTIFICATES ISSUED BY M/S AMR INFRASTRUCTURES LIMITED CREDIT FOR WHICH HAS BEEN C LAIMED BY THE ASSESSEE IN AY 09-10 AND AY 10-11 {REFER PAGES 41 T O 44 OF PB}. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF M/S AMR INFRASTRUCTURES LTD. SUMMONS U/S 131(1 A) DATED 16H APRIL 2009 WERE ISSUED TO THE ASSESSEE. IN REPLY VIDE LE TTER DATED 22 ND APRIL 2009 THE ASSESSEE SUBMITTED THAT IT HAS PURCH ASED 6000 SQ FT AREA ON 6 TH FLOOR FOR A TOTAL AGREED SALES CONSIDERATION OF RS 90 LAKH. 10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN THE CASE OF ASSESSEE, AO MADE ENQUIRIES FROM M/S AMR INFRASTRUC TURES LIMITED. IN THIS REGARD M/S AMR INFRASTRUCTURES LIM ITED CONFIRMED TO THE AO THAT THE RATE AT WHICH PROPERTY WAS SOLD TO THE ASSESSEE WAS RS. 1,500/- PER SQ FT. 7 ITA NO. 3826/DEL/2013 11. THE ASSESSING OFFICER ADDED RS.87,42,500/- AS UNEXP LAINED EXPENDITURE. AGGRIEVED BY THIS, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSES SEE. THE REVENUE IS BEFORE US. 12. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY ADDED THE SAID AMOUNT AS UNEXPLAINED EXPENDITURE AS THE A SSESSEE HAS NOT GIVEN ANY CLEAR REPLY AND IT WAS NOT ACCEPTABLE . THE STANDARD SALE PRICE VARIES FROM PLACE TO PLACE, THEREFORE, T HE RE-OPENING U/S 147 WAS RIGHT AND ASSESSING OFFICER HAS RIGHTLY ADD ED THE SAID AMOUNT. THE CIT(A) FAILED TO LOOK INTO THE SAME. 13. THE LD. AR SUBMITTED THAT THE AO IN COMPLETE DISREG ARD TO THE LAW LAID DOWN BY HONBLE APEX COURT IN THE CASE OF GKN DRIVESHAFT (SUPRA) DID NOT PASS AN ORDER DISPOSING OFF THE OBJ ECTIONS RAISED BY THE ASSESSEE VIS--VIS ASSUMPTION OF JURISDICTION U /S 147 OF THE ACT. THE LD. AR SUBMITTED THAT THE RATE DESCRIBED WAS CLEARLY EXPLAINED AS AMR GROUP & THERE IS NO SUSPICION ABOU T THE TRANSACTION. THEREFORE, THE CIT(A) HAS TAKEN ALL T HE RELEVANT MATERIAL. THE CIT(A) HELD AS FOLLOWS:- I AM ALSO OF THE VIEW THAT ASSUMPTION OF JURISDICTI ON U/S 147 OF THE ACT IN THE INSTANT CASE IS ALSO BAD IN LAW. CONTRADICTIONS EXISTS VIS A VIS FACTUAL MATRIX OF CASE ON REASONS RECORDED BY LD ASSESSING OFFICER. THERE IS NON- APPLICABILITY OF MIND BY THE LD ASSESSING OFFICER T O THE INFORMATION RECEIVED AND TO THE MATERIAL AVAILABLE ON RECORD WHILE RECOR DING THE REASONS. IN THE REASON RECORDED IT IS NOTED THAT THE FORM MENTIONED RECEIPT OF RS. 64,25,000/- AND THE AMOUNT PENDING AT RS.87,32,500 . THE TOTAL OF THESE TWO FIGURES IS RS 1,51,57,500/-. CONTRARY TO THIS IT IS THEN NOTED BY AO IN THE REASONS THAT AS PER THE PAPERS SEIZED RELATING TO THE INVESTMENT OF THE TRANSACTION OF THE ASSESSEE, THE TOTAL COST OF THE OFFICE CAME TO 8 ITA NO. 3826/DEL/2013 RS.2,15,00,000/- FOR 5000 SQ. FEET WHICH COMES OUT TO RS.4,300/- PER SQ. FEET AND COST RS.1,62,32,500/- AFTER SOME DISCO UNTS. IN THE REASONS IT IS NOTED BY THE AO THAT IN THE 2 ND PART OF THE BOOKING FORM THE RATE IS MENTIONED AS RS. 1,500/- PER SQ. FEET MAKIN G IT CLEAR THAT THE DIFFERENCE I.E., RS.2,800/- PER SQ FEET HAS BEEN RE CEIVED IN CASH WHICH COMES TO 2800 X 5000= RS.1,40,00,000. IT IS SUBMITTED THAT IN THE REASONS THE AO HAS ALSO NOTED A TOTAL DISCOUNTE D PRICE FOR THE PROPERTY AT RS 1,62,32,500/-. THE PER SQ FT RATE AS PER THIS IS RS 3246.50. THE DIFFERENCE IN SUCH A CASE SHOULD BE RS 1746.50 PER SQ FT AND NOT RS 2,800 PER SQ FT. ONCE THE APPELLANT HAS DEPOSED THE DETAILS O F HIS INVESTMENT BEFORE THE INVESTIGATION CELL, THEN THE ABOVE REASONS CANN OT BE HELD TO BE BASED ON TANGIBLE MATERIALS SO AS TO CONSTITUTE A REASON TO BELIEVE. MU VIEW GETS SUPPORTED BY THE ORDERS PASSED BY HONBLE JURISDIC TIONAL HIGH COURT IN THE CASE OF UNITED ELECTRICAL CO. 258 ITR 317 (DEL) AND ORIENT CRAFT LTD ITA N. 555/2012 ORDER 12 TH DECEMBER 2012. THE AO SHOULD HAVE BROUGHT OUT A COMPARABLE CASE OF SELLING OF PROPERTY IN THE SAME BUILDING BY THE BUILDER TO SOME OTHER PERS ON AT HIGHER RATE. THE PROPERTY VALUE IN GREATER NOIDA IS GOING LOW FOR SO MANY YEARS AS THE POPULATION OF THE AREA IS NOT INCREASING AND IT IS ABOUT 40 TO 50 KM HIGH WAY FROM CANNAUGHT PLACE OF DELHI. THERE IS NO PROP ER COMMUNICATION FACILITY TO GREATER NOIDA FROM DELHI. CONSIDERING A BOVE FACTS AND CIRCUMSTANCES, I FIND THE AO HAD NOT MADE UP THE CA SE PROPERLY. THE INVESTIGATION WING OF THE DEPARTMENT HAD ALSO NOT D ONE PROPER INVESTIGATION BEFORE HANDING OVER THE INFORMATION T O THE AO. THE ADDITION OF RS.87,32,500/- STANDS DELETED. THE ASSESSEE ALSO RELIED ON THE JUDGMENT OF THE HON 'BLE HIGH COURT IN THE CASE OF CIT VS. VED PRAKASH CHOUD HARY 305 ITR 245. 15. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH THE PARTIES. THE ASSESSEE PUT UP ALL THE RELEVANT DOCUMENTS DURI NG THE ASSESSMENT PROCEEDINGS. DURING THE SEARCH THE PAPE RS SEIZED CLEARLY MENTIONED THAT: IN THE 2 ND PART OF THE BOOKING FORM THE RATE IS MENTIONED AS RS. 1,500/- PER SQ. FEET MAKING IT CLEAR THAT THE 9 ITA NO. 3826/DEL/2013 DIFFERENCE I.E., RS.2,800/- PER SQ FEET HAS BEEN RE CEIVED IN CASH WHICH COMES TO 2800 X 5000= RS.1,40,00,000. THUS THERE DOES NOT CONSTITUTE ANY SUBSTANTIAL REASON TO BELIEVE THAT THE ASSESSEE IS INCORRECT IN SHOWING THE GENUINENESS OF THE TRANSACTION. THE ASSESSING OFFICER HAS NOT MADE OU T FINDING ON THE FACTUAL & DOCUMENTARY BASES. THERE IS NO SU BSTANTIAL MATERIAL TAKEN BY THE ASSESSING OFFICER WHILE MAKIN G THAT ADDITION. THE CIT(A) HAS RIGHTLY DELETED THE ADDITI ON. THEREFORE, WE UPHOLD THE ORDER OF CIT(A). 16. IN THE RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 26 TH OF AUGUST, 2016. SD/- SD/- (R.S. SYAL) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26/08/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI 10 ITA NO . 3826/DEL/2013 DATE 1. DRAFT DICTATED ON 03.08.2016 PS 2. DRAFT PLACED BEFORE AUTHOR 03.08.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 2 6 .08 .2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 2 6 .08 .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.