Sh Virender Nehra, New Delhi V. Addl. CIT, New Delhi

ITA 4221/DEL/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4255 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 03-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 03-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S K KOHLI
• Section: 143(3); 133A; 131; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4221/DEL/2012 ASSESSMENT YEAR: 2008-09 VIRENDER NEHRA, VS ADDL. CIT, A-1/84, CHANAKYA PLACE, RA NGE 26, NEW DELHI-110059 NEW DELHI. (PAN: ACFPN8347Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. KOHLI, CA RESPONDENT BY : SHRI ATIQ AHMAD, SR. DR DATE OF HEARING: 03.07.2017 DATE OF PRONOUNCEMENT: 26.09.2017 PER SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGA INST THE ORDER PASSED BY LD. CIT(A)-XXIV, NEW DELHI VIDE ORD ER DATED 07.06.2012 AND PERTAINS TO AY 2008-09. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE :- 1. THAT THE LD. AUTHORITY BELOW GROSSLY ERRED IN P ASSING THE ORDER ON ERRONEOUS GROUND & INSUFFICIENT GROUND S. 2. THE LD. ADD. CIT. MADE IN ADDITIONS OF RS. 2250 00/- BEING THE CASH COMPONENT OF RENT NOT DECLARED BY THE ASSE SSEE WHILE IT HAS BEEN CONFIRMED BY BOTH I.E. TENANT AND LANDL ORD THAT NO SUCH CASH RENT HAS BEEN GIVEN /TAKEN. THE CONFIRMAT ION HAD ALREADY BEEN FILED WHILE FILING THE APPEAL AT PAGE NO. 22. SO, THE FICTITIOUS ADDITION SHOULD BE DELETED BEING AGA INST THE FACTS OF THE CASE. HOWEVER THE LD. CIT RESTRICTED THE ADD ITION TO 75% OF THE AMOUNT RS. 118750/- BEING THE SHARES OF ASSE SSEE. ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 2 3. THAT IN ANY EVENT THE ORDER PASSED IS ILLEGAL U NLAWFUL AND UNJUSTIFIED TAKING INTO CONSIDERATION THE FACTS OF THE CASE APPARENT ON RECORDS. 3. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS R UNNING A BUSINESS OF EXPORT OF READYMADE GARMENTS AS A PROPR IETOR OF M/S DELHI FASHION AND SPORTS. THE RETURN OF INCOME WAS FILED DECLARING TAXABLE INCOME OF RS. 28,28,660/-. THE C ASE WAS SELECTED FOR SCRUTINY AND DURING THE PENDENCY OF AS SESSMENT PROCEEDINGS, THE ASSESSING OFFICER RECEIVED A REPOR T FROM ADIT(INV) THAT A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) WAS CONDUCTED AT THE B USINESS PREMISES OF THE ASSESSEE ON 2.2.2010 DURING THE COU RSE OF WHICH CERTAIN INCRIMINATING MATERIAL WAS FOUND AND IMPOUN DED AND WAS MARKED AS ANNEXURE A-1 TO A-13. THE DOCUMENTS IMPOUNDED INCLUDED AN AGREEMENT TO SALE IN RESPECT OF PROPERTY NO. B-53, B-1, COMMUNITY CENTRE, JANAKPURI, NEW DEL HI WHICH HAD BEEN ENTERED INTO ON 14.1.2008 BETWEEN THE ASSE SSEE ON BEHALF OF M/S SMRITI BUILDCON PVT. LTD., SHRI SANJA Y PARWAL AND SHRI H.S. SARAN. AS PER THIS AGREEMENT, TOTAL CONS IDERATION FOR THE AFORESAID PROPERTY WAS RS. 12.95 CRORES AND AS PER TERMS AND CONDITIONS, AN AMOUNT OF RS. 25 LAKH IN CASH WAS RE CEIVED BY THE ASSESSEE FROM SHRI H.S. SARAN AS TOKEN MONEY. THE STATEMENT OF ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 3 THE ASSESSEE WAS RECORDED UNDER OATH U/S 131 OF THE ACT BY THE ASSESSING OFFICER AND THE AMOUNT OF RS. 25 LAKH WAS ADDED TO HIS INCOME AS UNDISCLOSED COMMISSION RECEIVED BY HIM. THE ASSESSING OFFICER FURTHER NOTICED THAT AS PER THE I MPOUNDED ANNEXURE A-11, THE ASSESSEE HAD RENTED OUT A PARTIC ULAR PROPERTY AT A MONTHLY RENT OF RS. 1.75 LAKH WHEREBY RS. 75,0 00 WAS TO BE RECEIVED IN CASH AND THE BALANCE OF RS. 1 LAKH BY C HEQUE. AS PER THE IMPOUNDED MATERIAL, IT WAS INDICATED THAT THE A SSESSEE HAD RECEIVED RS. 8.70 LAKH IN CASH AS RENT DEPOSIT ON 2 4.10.2007. THE ASSESSING OFFICER CAME TO A CONCLUSION THAT THE RE PAPERS PERTAINED TO RENTING OUT OF PROPERTY NO. F-1 AND F- 2, FIRST FLOOR, MALIK PLAZA, PLOT NO. 5, SECTOR 4, DWARKA WHICH WAS JOINTLY OWNED BY THE ASSESSEE (75% SHARE) AND ONE SHRI JOHNSON BE NCHANIN (25% SHARE) W.E.F. 1.1.2008. ACCORDINGLY, THE ASSE SSING OFFICER CALCULATED CASH COMPONENT OF RENT AT RS. 2,25,000 F OR THREE MONTHS AND ADDED THE SAME TO THE INCOME OF THE ASSE SSEE. CERTAIN OTHER ADDITIONS WERE ALSO MADE AND THE ASSE SSMENT WAS COMPLETED U/S 143(3) OF THE ACT AT A TOTAL INCOME O F RS. 64,34,650/-. 4. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE LD. CIT(A) WHICH WAS PARTLY ALLOWED AND NOW THE ASSESSE E IS IN ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 4 APPEAL BEFORE US AND HAS RAISED THE SOLE GROUND CHA LLENGING THE ADDITION PERTAINING TO CASH COMPONENT OF RENT NOT D ECLARED BY THE ASSESSEE. 5. THE GROUND TAKEN BY THE ASSESSEE READS AS UNDER: - 2. THE LD. ADD. CIT MADE ADDITIONS OF RS. 225000/ - BEING THE CASH COMPONENT OF RENT NOT DECLARED BY TH E ASSESSEE WHILE IT HAS BEEN CONFIRMED BY BOTH I.E. T ENANT AND LANDLORD THAT NO SUCH CASH RENT HAS BEEN GIVEN/TAKEN. THE CONFIRMATION HAD ALREADY BEEN FIL ED WHILE FILING THE APPEAL AT PAGE NO. 22. SO, THE FI CTITIOUS ADDITION SHOULD BE DELETED BEING AGAINST THE FACTS OF THE CASE. HOWEVER, THE LD. CIT RESTRICTED THE ADDITION TO 75% OF THE AMOUNT RS. 118750/- BEING THE SHARES OF ASSESSEE. 6. LD. AR SUBMITTED THAT THE ADDITION ON ACCOUNT OF ALLEGED CASH COMPONENT OF RENT WAS BASED ONLY ON THE DOCUME NTS IMPOUNDED DURING THE COURSE OF SURVEY. IT WAS FURT HER SUBMITTED THAT BOTH THE TENANT AS WELL AS THE CO-OWNER HAVE C ONFIRMED BEFORE THE LD. CIT(A) THAT THE RENT DID NOT HAVE AN Y CASH COMPONENT. IT WAS ALSO SUBMITTED THAT THE PAPER IM POUNDED HAD NO EVIDENTIARY VALUE BECAUSE THE IMPOUNDED DOCUMENT S WERE ONLY PIECES OF PAPER WHEREAS A FORMAL RENTAL AGREEM ENT HAD BEEN SUBSEQUENTLY EXECUTED AND THE AMOUNT OF RENT AS PER THE RENTAL AGREEMENT WAS DULY RECORDED IN THE BOOKS OF THE ASS ESSEE AS WELL AS THE TENANT. IT WAS ALSO SUBMITTED THAT THE DEPA RTMENT HAD ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 5 ACCEPTED THE RENTAL INCOME SHOWN BY THE ASSESSEE FO R THE SUCCEEDING ASSESSMENT YEAR I.E. ASSESSMENT YEAR 200 9-10 WHEREIN VIDE ORDER DATED 30.11.2011 PASSED U/S 143( 3) OF THE ACT, NO ADDITION ON THIS ACCOUNT HAD BEEN MADE. LD . AR ALSO FILED COPY OF THE AFORESAID ASSESSMENT ORDER IN SUPPORT O F ITS CONTENTION. 7. LEARNED DEPARTMENTAL REPRESENTATIVE PLACED HEAVY RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND VEHEMENT LY ARGUED THAT THE ADDITION HAD BEEN RIGHTLY MADE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y PERUSED THE RELEVANT MATERIAL PLACED ON RECORD. LD. CIT(A) HAS DISCUSSED THE ISSUE AT LENGTH IN PARA 4.5 OF THE IMPUGNED ORD ER WHICH IS BEING REPRODUCED HEREUNDER FOR A READY REFERENCE:- 4.5 IN THE NEXT GROUND OF APPEAL, THE APPELLANT HA S IMPUGNED THE ADDITION OF THE ALLEGED NON-EXISTENT C ASH PORTION OF RENT OF RS.75,000/- PER MONTH, WHICH IS SUPPOSED TO HAVE BEEN RECEIVED BY THE APPELLANT FRO M M/S. SOMNATH BUILDTECH, THE TENANT OF THE APPELLANT . THIS ADDITION WAS MADE BY THE AO ON THE BASIS OF TH E DOCUMENTS IMPOUNDED DURING THE COURSE OF SURVEY ON THE APPELLANT, CARRIED OUT BY THE INVESTIGATION WIN G U/S. 133A OF THE ACT ON 02.02.2010 AT HIS BUSINESS PREMI SES A-1/84, CHANAKYA PLACE, NEW DELHI. DOCUMENTS IMPOUNDED AS PER ANNEXURE A-11/PAGE 2-4 INDICATED THAT SH. VIRENDER NEHRA HAD RENTED OUT A PARTICULAR PROPERTY AT A MONTHLY RENTAL OF RS. 1,75 LAKHS ON A N UNDERSTANDING THAT RS.75,000/- OUT OF THE SAME WOUL D BE RECEIVED BY HIM IN CASH AND THE BALANCE RS.L LAC BY CHEQUE. THE AO HAS MENTIONED IN THE ASSESSMENT ORDE R ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 6 THAT PAGE 2 OF THE ANNEXURE CLEARLY MENTIONS THAT T HE APPELLANT SH. VIRENDER NEHRA RECEIVED RS.8.70 LAKHS IN CASH AS RENT DEPOSIT ON 24.10.2007. THE SIGNATURE O F THE APPELLANT, SH. VIRENDER NEHRA APPEARS ON THIS PAGE AND WHEN THE APPELLANT WAS CONFRONTED WITH THIS DOCUMEN T AND WAS ASKED TO EXPLAIN THE CONTENTS OF THE SAME DURING THE COURSE OF RECORDING HIS STATEMENT UNDER OATH U/S. 131 OF THE ACT, THE APPELLANT COULD NOT GIVE A NY SATISFACTORY ANSWER. THE AO HAD MENTIONED THAT THE RENT WAS RECEIVED BY THE APPELLANT IN RESPECT OF PREMISES AT F-L/F-2, FIRST FLOOR, MALIK PLAZA, PLOT NO. 5, SECTOR-4, DWARKA, NEW DELHI-110075 WHICH WAS RENTED OUT W.E.F. 01.01.2008 TO M/S. SOMNATH BUILDTECH REPRESENTED BY SH. MAYUR PATEL AND SH. CHHAGAN BHAI PATEL. THE AO HAS ALSO MENTIONED THAT THESE PREMISE S ADMEASURING 1260.39 SQ. FT. WAS OWNED BY THE APPELLANT JOINTLY WITH ONE SH. JOHNSON BENCHANIN WI TH THE APPELLANT BEING OWNER TO THE EXTENT OF 75% AND SH. BENCHANIN TO THE EXTENT OF 25%. SINCE THE RENT AGREEMENT WAS EFFECTIVE FROM 01.01.2008, AND THE CA SH PORTION OF THE RENT AMOUNTED TO RS.75,000/- PER MON TH AS PER THE IMPOUNDED DOCUMENT, THE AO MADE AN ADDITION OF RS.2.25,000/- TO THE INCOME OF THE APPE LLANT AS UNDISCLOSED RENTAL INCOME. IN RESPONSE, THE APPE LLANT HAS DENIED HAVING RECEIVED ANY RENTAL IN CASH. AT T HE SAME TIME, WHILE FILING A REJOINDER TO THE REMAND R EPORT, THE APPELLANT HAS SUBMITTED THAT HE HAD FILED A RECTIFICATION APPLICATION U/S. 154 TO THE ID. AO. A COPY OF THIS RECTIFICATION APPLICATION REVEALS THAT THE APP ELLANT HAS CLAIMED TO BE ONLY 75% OWNER OF THE PREMISE AND HAS STATED THAT IF AT ALL AN ADDITION HAS TO BE DON E IN HIS HANDS ON THE BASIS OF IMPOUNDED DOCUMENTS, IT SHOUL D BE ONLY TO THE EXTENT OF 75 /O OF RS.2,25,000/-, I. E. A SUM OF RS. 1,68,750/- ONLY. I HAVE CAREFULLY PERUSE D THE ARGUMENTS OF BOTH SIDES AND I AM OF THE CONSIDERED OPINION THAT THE IMPOUNDED DOCUMENTS, WHICH WERE FOUND IN THE BUSINESS PREMISES OF THE APPELLANT AND ALSO BEARS HIS SIGNATURES CLEARLY REVEAL THAT THE APPELL ANT WAS RECEIVING PART OF THE RENTAL INCOME FROM HIS PREMISES IN DWARKA IN CASH. THEREFORE, THE AO WAS F ULLY JUSTIFIED IN MAKING ADDITION OF UNACCOUNTED RENTAL INCOME RECEIVED IN CASH BY THE APPELLANT. HOWEVER, THE ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 7 AO SHOULD HAVE RESTRICTED THE ADDITION TO THE EXTEN T OF 75% SINCE HE HAS HIMSELF GIVEN A FINDING THAT THE APPELLANT WAS OWNER OF THE PREMISES TO THE EXTENT O F 75% ONLY AND THE BALANCE 25% WAS BEING OWNED BY SHR I JOHNSON BENCHANIN. THUS, THE ASSESSING OFFICER IS DIRECTED TO RESTRICT THE ADDITION ON THIS ACCOUNT T O A SUM OF RS. 1,68,750/- ONLY. 9. WE HAVE ALSO GONE THROUGH THE RELEVANT SEIZED DO CUMENTS WHICH ARE AT PAGES 9-10 AND 11 OF THE PAPER BOOK FI LED BY THE ASSESSEE. IT IS UNDISPUTED THAT THESE DOCUMENTS WE RE FOUND DURING THE COURSE OF SURVEY IN THE PREMISES OF THE ASSESSEE AND, THEREFORE, THE BURDEN WAS ON THE ASSESSEE TO DISPRO VE THE DOCUMENTS WHICH, IN OUR OPINION, HE HAS FAILED TO D O. THE CASH RECEIPT DATED 24.10.2007 FOR RS. 8,75,000/- IS DULY SIGNED BY THE EXECUTANT AS WELL A WITNESS. LD. CIT(A) HAS ALSO M ENTIONED THAT WHILE FILING REJOINDER TO THE REMAND REPORT, THE AS SESSEE HAD SUBMITTED THAT HE HAD FILED A RECTIFICATION APPLICA TION U/S 154 TO THE ASSESSING OFFICER WHEREIN THE ASSESSEE HAD CLAI MED TO BE ONLY 75% OWNER OF THE PREMISES AND HAD ALSO STATED THAT IF AT ALL AN ADDITION HAD TO BE MADE IN HIS HANDS ON THE BASIS O F IMPOUNDED DOCUMENTS, IT SHOULD ONLY BE TO THE EXTENT OF 75% O F RS. 2,25,000/- I.E. A SUM OF RS. 1,68,750/- ONLY. LD. CIT(A) HAS GIVEN PROPORTIONATE RELIEF TO THE ASSESSEE ON THIS ACCOUN T BY RESTRICTING THE ADDITION TO RS. 1,68,750/- ONLY. AS FAR AS TH E ASSESSMENT ITA NO. 4221/DEL/2012 ASSESSMENT YEAR 2008-09 8 ORDER FOR THE SUCCEEDING ASSESSMENT YEAR 2009-10 IS CONCERNED, IT IS SEEN THAT THE INCOME UNDER THE HEAD HOUSE PRO PERTY HAS BEEN ACCEPTED WITHOUT ANY DISCUSSION BY THE ASSESSI NG OFFICER AND IT IS NOT DISCERNIBLE FROM THE ASSESSMENT ORDER AS TO HOW THE INCOME FROM HOUSE PROPERTY WAS ACCEPTED WITHOUT ANY INQUIRY. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS AND CONCLUSIONS OF THE LD. CIT(A) AND WE, THEREFORE, UPHOLD HIS ORDER AND DISMISS THE APPEAL OF THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26.09.2017. SD/- SD/- (N.K. SAINI) (SUDHANSHU SRIVASTAVA) ACCOUNTA NT MEMBER JUDICIAL MEMBE R DATED: 26 TH SEPTEMBER, 2017 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR