Mr. Ramesh Grover, New Delhi V. ITO, New Delhi

ITA 4308/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7363 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 21-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 07-08-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: FARHAT KHAN
• Assessee Lawyers: ROHIT MADAN
• Keywords: Income from undisclosed sources; Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-3 NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-430 8/DEL/2014 (ASSESSMENT YEAR-20 04-05) RAMESH GROVER, 559, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI-110060. PAN-AEXPG5390J (APPELLANT) VS ITO, WARD-39(4), NEW DELHI. (RESPONDENT) APPELLANT BY SH. ROHIT MADAN, ADV RESPONDENT BY SH. FARHAT KHAN, SR.DR ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED 16.05.2014 OF CIT(A)-XXVIII, NEW DELHI PERTAINING TO 2004-05 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEAL S) HAS ERRED IN LAW AS WELL AS IN FACTS IN HOLDING THAT THE LD. INCOME TAX OFFICER WAS JUSTIFIED IN ASSESSING THE INCOME OF THE APPELLANT AT A TOTAL INCOME OF RS.18, 67,850/-AS AGAINST THE RETURNED INCOME OF RS.67,850/-. 2) THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS, THEREFORE, ERRED IN LAW AS WELL AS IN FACTS IN SUSTAINING THE ADDITION OF R S.18,00,000/- TO THE TOTAL INCOME OF THE APPELLANT. 3) THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) TO THE EXTENT STATED ABOVE IS AGAINST THE FACTS OF THE CASE AND I LLEGAL. THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEN D OR VARY FROM THE AFORESAID GROUNDS OF APPEAL AT OR BEFORE THE TIME OF APPEAL A S THE CIRCUMSTANCES OF THE CASE MIGHT REQUIRE OR JUSTIFY. 2. BOTH THE PARTIES HAVE BEEN HEARD. THE LD.AR HAD MOVED AN ADJOURNMENT PETITION. HOWEVER, IT WAS PASSED OVER AS CONSIDERING THE GRO UNDS AND THE MATERIAL THE LD.SR.DR WAS UNABLE TO SHOW HOW THE ENTIRE ADDITION MADE IN THE YEAR UNDER CONSIDERATION COULD BE ADDED DATE OF HEARING 21.06.2016 DATE OF PRONOUNCEMENT 19 .08.2016 I.T.A .NO.-4308/DEL/2014 PAGE 2 OF 6 IN THE YEAR UNDER CONSIDERATION. CONSIDERING THE M ATERIAL ON RECORD, IT WAS A COMMON STAND OF THE PARTIES THAT THE FACTS AS FOUND RECORDED IN THE ORDERS NEED TO BE RE-CONSIDERED AND ADDRESSED AFRESH. 3. THE RECORD SHOWS THAT THE ASSESSEE IN THE YEAR U NDER CONSIDERATION RETURNED AN INCOME OF RS.68,150/-. A TAX EVASION PETITION (AS TEP) WAS RECEIVED BY THE TAX AUTHORITIES ALLEGING THAT A PAYMENT OF RS.14 LACS FOR A PURCHAS E OF SPECIFIC PROPERTY AT 559-560, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI WAS MADE. TH E ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME. THE ASSESSEE IS FOUND TO HAVE EXPLAINED THAT AN AMOUNT OF RS.14,75,000/- HAD BEEN PAID TO THE SELLER FROM 1996 TO 2003. THE SAID CLAI M WAS STATED TO HAVE BEEN SUPPORTED BY A MOU FILED IN THE COURT. THE ASSESSEE CLAIMED THAT LOANS HAD BEEN GIVEN TO THE PARTIES ON THE VARIOUS DATES AND SINCE THE PARTY WAS UNABLE TO REP AY THE AMOUNTS ALONGWITH THE INTERESTS THEREON, IT WAS THUS ADJUSTED AS AN ADVANCE AGAINST THE SAID PROPERTY. THE SUBMISSION AS EXTRACTED AT PAGE 3 & 4 OF THE IMPUGNED ORDER SHOWS THAT THE ASSESSEE CLAIMED THAT VARIOUS PAYMENTS WERE MADE BY CHEQUE AND SOME WERE STATED T O HAVE BEEN PAID IN CASH AT THE TIME OF ENTERING INTO THE MEMORANDUM OF UNDERSTANDING. THE RELEVANT PORTION IS EXTRACTED HEREUNDER:- {3} IN THE APPEAL FILED, THE APPELLANT HAS RA ISED THE FOLLOWING GROUNDS: 1. THAT THE INCOME TAX OFFICER HAS ERRED IN LAW AS WELL AS IN FACTS IN MAKING THE ASSESSMENT AT TOTAL INCOME OF RS. 18,67,850/- AS AG AINST THE SAME DECLARED AT RS. 67,850/-. 2. THAT THE INCOME TAX OFFICER HAS ERRED IN LAW AS WELL AS IN FACTS IN TREATING THE AMOUNT OF RS. 18,00,000/- AS INCOME FROM UNDISCLOSED SOURC ES. 3. THAT THE INCOME TAX OFFICER FAILED TO APPRECIATE THE FACT THAT THE SAID AMOUNT OF RS. 18,00,000/- REPRESENTS THE PRINCIPAL AMOUNT AS WELL AS INTEREST THEREON, WHICH WAS LENT BY THE APPELLANT AS WELL AS HIS FAMILY MEM BERS OVER A PERIOD OF EIGHT YEARS I.E. FROM 1995 TO 2003 AND ALTER ON TREATED A S ADVANCE TOWARDS PURCHASE OF PROPERTY IN DECEMBER, 2003 ON ACCOUNT OF INABILITY OF THE OW NERS TO REPAY THE SAME. .. I.T.A .NO.-4308/DEL/2014 PAGE 3 OF 6 {5} GROUNDS OF APPEAL NO. 2 AND 3 ARE DIRECTED AGA INST, TREATMENT OF RS.18,00,000/-AS INCOME FROM UNDISCLOSED SOURCES. IN THIS REGARD, TH E APPELLANT VIDE LETTER DATED 18.06.2012 FILED WRITTEN SUBMISSIONS AS UNDER:- REFERENCE ABOVE, THE APPELLANT IS AN ENGINEER BY PR OFESSION, AND AFTER COMPLETING HIS ENGINEERING WAY BACK IN 1974, HE STARTED HIS CAREER INITIALLY IN SERVICE AND THEREAFTER STARTED HIS OWN BUSINESS ALONGWITH HIS BROTHERS AND FINALLY SET OUT ON HIS OWN IN 1990 AS A SELF EMPLOYED PROFESSIONAL. THAT THE APPELLANT LEFT HIS NATIVE PLACE JALLANDHAR (PUNJAB) IN 1976 IN SEARCH OF BETTER JOB OPPORTUNITIES AND HAS BEEN LIVING IN DELHI EVER SINCE. THAT IN DECEMBER, 1979 THE APPELLANT MOVED INTO PRO PERTY NO. 559, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI - 110060 AS A TENANT AT A MONTHLY RENT OF RS. 800/-. THAT THE SAID HOUSE WAS OWNED BY MRS . HARJINDER KAUR AT THAT TIME AND WAS SUBSEQUENTLY SOLD TO MRS. RAM PAYARI K HOSLA IN 1982, WHO ADMITTED THE TENANCY IN CONTINUATION. FURTHER, IN S EPTEMBER, 1985 ON ACCOUNT OF THE GOOD CONDUCT OF THE APPELLANT, THE LANDLADY RENTED OUT BARSATI FLOOR OF PROPERTY NO. 559/560, DOUBLE STOREY, NEW RAJINDER NAGAR, NEW DELHI- 110060, TO THE APPELLANT'S BROTHER/MOTHER ON AN ENHA NCED MONTHLY RENT OF RS.1,500/- FOR 559, 1ST FLOOR AND ANOTHER LEASE WAS EXECUTED FOR THE BARSATI FLOOR AT A MONTHLY RENT OF RS. 1,200/-. IN DECEMBER, 1986 THE LANDLADY EXPIRED, LEAVING BEH IND 4 SONS AND 3 DAUGHTERS AS LEGAL HEIRS. THAT THERE WAS A DISPUTE AMONGST THE LEGAL HEIRS AND THE SISTER WITH AN INTENTION TO CLAIM A SHARE FILED A COURT CASE. THAT WITH A VIEW TO BUY THE PORTION OF THE PROPERTY UNDER HIS OCCUPA TION, THE APPELLANT AGREED TO ADVANCE AN INTEREST BEARING LOAN TO SONS OF MRS. RA M PAYARI KHOSLA SO AS TO REACH AN OUT OF COURT SETTLEMENT WITH THEIR SISTER AND ONCE THE MATTER WAS RESOLVED THE PROPERTY WOULD BE SOLD TO THE APPELLAN T. THAT IN DECEMBER. 2003 A MEMORANDUM OF UNDERSTANDING WAS EXECUTED WHEREIN IT WAS AGREED TO SELL THE SAID PROPERTY FOR A TOTAL CONSIDERATION OF RS.28,00 ,000/-(RUPEES TWENTY EIGHT LAKHS ONLY) OUT OF WHICH THE APPELLANT HAD ALREADY PAID A SUM OF RS. 18,00,000/- (RUPEES EIGHTEEN LAKHS ONLY) WHICH IS T HE SUBJECT MATTER OF THE ADDITION IN THE PRESENT APPEAL. THAT THE ASSESSMENT IN THE PRESENT CASE HAD BEEN CO MPLETED VIDE ORDERS THE LD. INCOME TAX OFFICER, WARD 39(4), NEW DELHI AND IT WAS VIDE THESE ORDERS THAT THE RETURNED INCOME OF RS.67,850/- WAS CONVERTED INTO ASSESSED INCOME O F RS.18,67,850/-THEREBY ADDING THE ENTIRE ADVANCE PAYMENT OF RS,18,00,000/-(RUPEES EIG HTEEN LAKHS ONLY) TO THE RETURNED INCOME OF THE ASSESSEE WITHOUT LOOKING INTO THE MER ITS OF THE CASE, THEREBY CREATING A HUGE DEMAND. COMING TOWARDS THE GROUNDS OF APPEAL RAISED. GROUND NO.1 IS GENERAL IN NATURE AND RELATES TO THE RETURNED INCOME OF RS. 67,850/-BEING ASSESSED AT RS. 18,67,850/-. GROUNDS NO.2 & 3 RELATE TO THE ADDITION OF RS. 18,0 0,000/- WHEREBY THE LD. INCOME TAX OFFICER HAS TAKEN A MYOPIC VIEW AND TREA TED THE ENTIRE ADVANCE I.T.A .NO.-4308/DEL/2014 PAGE 4 OF 6 PAYMENT TOWARDS PURCHASE OF PROPERTY AS UNDISCLOSED INCOME FAILING TO APPRECIATE THE FACT THAT THE SUM WAS PAID OUT OF TH E HARD EARNED MONEY OF THE APPELLANT OVER A PERIOD OF EIGHT YEARS I.E. 1995 TO 2003 AND THAT TOO WAS NOT ENTIRELY ONLY BY THE ASSESSEE HIMSELF BUT BY HIS FA MILY MEMBERS AS WELL. THAT THE DETAILS OF THE PAYMENTS HAD BEEN DISCUSSED WITH THE LD. INCOME TAX OFFICER AND ARE BEING PROVIDED AS UNDER FOR YOUR KIND CONSI DERATION. DETAILS OF RS.14,75,000/- (FOURTEEN LAKHS SEVENTY F IVE THOUSAND ONLY). YEAR PARTICULARS AMOUNT 1995 CASH PAID TO MR. SATYA DEV BY MRS. SHEEL GRAVER OUT OF SALE PROCEEDS OF HER PROPERTY. LATER ON TREATED AS INTER EST BEARING LOAN@ 9% IN DECEMBER, 2003 WHEN THE MOU WAS DRAWN UP AS A LOT OF TIME HAD ELAPSED. A SUM OF RS.7,50,000/- WA S WITHDRAWN FROM HER SAVINGS BANK A/C BEARING NO. 14445 WITH STATE B ANK OF INDIA ON 9-12-1994. THAT THE APPELLANT IS NOW IN POSSESSION OF THE BANK STATEMENT A COPY OF WHICH IS ATTACHED ALONGWITH AND ORIGINAL IS BEI NG PRODUCED FOR VERIFICATION. 5,00,000/- 1996 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV, BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 90,000/- 1997 CASH PAID TO MR. SATYA DEV BY MRS. SHEEL GROVER OUT OF SALE PROCEEDS OF HER PROPERTY IS INTEREST BEARING 90% AS MENTIONED ABOVE 10,000/- 1996 PAID BY CHEQUE TO SVS. SATYA DEV, HAH DEV, BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 26,000/- 1999 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV.BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 52,000/- 2000 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV, BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 30,000/- 2001 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV, BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 80,000/- 2002 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV, BALDEV& K.K. KHOSLA (DETAILS ANNEXED) 1,20,000/- 2003 PAID BY CHEQUE TO SVS. SATYA DEV, HARI DEV, BALDEV & K.K. KHOSLA (DETAILS ANNEXED) 60,000/- 2003 INTEREST ON LOAN OF RS. 5,00, 000/- FOR 8 YEARS @9% 3,60,000/- 2003 INTEREST ON LOAN OF RS. 5,00,000/- FOR 8 YEARS @9% 54,000/- TOTAL RS.14,72,000/- TREATED AS 14,75,000/- AS AGRE ED 14,75,000/- DETAILS OF RS.3,25,000/- (THREE LAKHS TWENTY FIVE T HOUSAND ONLY) IN OF, 2003 AT THE TIME OF ENTERING I NTO MEMORANDUM OF UNDERSTANDING. PARTICULARS RELATIONSHIP AMOUNT CASH PAID BY MRS. GEETANJALI GRAVER WIFE 40,000/- CASH PAID BY MR. RAMESH GRAVER SELF 60,000/- CASH PAID BY MR. ARUN GRAVER SON 45,000/- I.T.A .NO.-4308/DEL/2014 PAGE 5 OF 6 CASH PAID BY MR AMIT GRAVER SON 40,000/- CASH LOAN TAKEN FROM MR. RAJESH GRAVER BROTHER 20,000/- CASH LOAN TAKEN FROM MR. K.K. MANCHANDA BROTHER 20,000/- CASH PAID BY MRS. GEETANJALI GRAVER BY PLEDGING HER JEWELLERY, COPY OF AFFIDAVIT SUBMITTED BEFORE THE I D, A.O. ENCLOSED. WIFE 1,00,000/- TOTAL AMOUNT 3,25,000/- THAT AS CAN BE SEEN FROM THE ABOVE, THE PAYMENTS HA D BEEN MADE BY THE APPELLANT AS WELL AS HIS FAMILY MEMBERS OVER THE YEARS. THE FACT THAT THE APPELLANT IS A QUALIFIED ENGINEER AND HAS BEEN EARNING SINCE 1974 CANNOT BE DISCOUNTED. THE INCOME TAX OFFICER HAD BEEN APPRAISED OF THE FACTS BUT HE FAILED TO AP PRECIATE THE FACT THAT THE AMOUNTS HAD BEEN PAID OVER A PERIOD OF EIGHT YEARS, BY THE APPELLANT AS WELL AS HIS FAMILY MEMBERS AND REPRESENTED HIS SAVINGS OVER THE YEARS. FURTHER THE AMOUNT EVEN INCLUDES SUMS PAID BY THE FAMILY MEMBERS OF THE APP ELLANT. CONFIRMATIONS AND COPIES OF INCOME TAX RETURN ACKNO WLEDGEMENTS OF THE FAMILY MEMBERS, AS WELL AS AFFIDAVIT PERTAINING TO PLEDGING OF JEWE LLERY BY THE APPELLANT'S WIFE HAD BEEN SUBMITTED BEFORE THE LD. ASSESSING OFFICER AND ARE ONCE AGAIN ENCLOSED FOR/OUR HONOUR'S PERUSAL. FURTHER, A COPY OF THE MEMORANDUM OF UNDER STANDING AS WELL AS AFFIDAVIT OF THE APPELLANT SUBMITTED BEFORE HONOURABLE DELHI HIGH CO URT IS ATTACHED ALONGWITH THAT THE AG HAS FAILED TO APPRECIATE THAT THE FACT THAT THE PRO PERTY WAS TO BE JOINTLY PURCHASED BY THE APPELLANT AS WELL AS HIS MOTHER EVEN THOUGH THE MOV WAS ENTERED INTO BY THE APPELLANT. GROUND NO. 4 RELATES TO INITIATION OF PENALTY PROCE EDINGS U/S 271(1)(C) OF THE INCOME TAX ACT, 1961, IN THIS REGARD IT IS RESPECTFULLY SUBMIT TED THAT AS CAN BE SEEN ON THE BASIS OF THE ABOVE SUBMISSIONS, THAT THE APPELLANT DID NOT CONCE AL ANY INCOME, HENCE IT IS PRAYED THAT CONSEQUENTIALLY, THE SAME MAY PLEASE BE DROPPED. FINALLY SUMMING UP IT IS ONCE AGAIN REQUESTED THAT YOUR HONOUR LOOK INTO THE FACTS OF THE CASE CONSIDERATELY. THE ABOVE FACTS WERE PRESENTED BEFORE THE LD. INCOME TAX OFFICER AS WELL, BUT THE APPELLANT HAD BEEN DENIED JUSTICE. IT IS PRAYED THAT IN THE WAKE OF THE ABOVE FACTS HAVING BEEN BROUGHT ON RECORD, A FAVOURABLE A ND SYMPATHETIC DECISION BE PLEASE TAKEN IN THE MATTER AND OBLIGE. 4. CONSIDERING THE ABOVE SPECIFIC FACTS, WE FIND NO THING HAS BEEN BROUGHT ON RECORD TO SHOW HOW THE ENTIRE AMOUNT CAN BE ADDED IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY, AFTER HEARING BOTH THE SIDES AND FINDING THAT THE P RAYER FOR REMAND WAS JUSTIFIED IT WAS CONSIDERED APPROPRIATE TO SET ASIDE THE IMPUGNED OR DER AND RESTORE THE ISSUE BACK TO THE AO I.T.A .NO.-4308/DEL/2014 PAGE 6 OF 6 DIRECTING HIM TO ADDRESS THE ISSUES DE-NOVO AND PAS S A SPEAKING ORDER IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 19 TH AUGUST 2016. SD/- (DIVA S INGH) JUDICIA L MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI