ITO, New Delhi V. Sh. Sandeep Singh Khinda, New Delhi

ITA 4857/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6590 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2007-2008
• Appeal Filed On: 05-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K TEWARI
• Keywords: Sale consideration of property below Jantri Value; Income from undisclosed sources
• Section: 50C; 132

Judgement Text

ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 4857/DEL/2014 ASSESSMENT YEAR : 2007-08 ITA NO. 4858/DEL/2014 ASSESSMENT YEAR: 2008-09 INCOME TAX OFFICER, VS SHRI SANDEEP SINGH K HINDA, WARD 17(3), 2 GOLDEN GATE, WESTEND GREENS, NEW DELHI. RAJOKARI, NEW DELHI-110038 (PAN: ATVPK2160R) (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI K. TEWARI, SR. DR ASSESSEE BY : SHRI KAPIL GOEL, ADV. DATE OF HEARING: 23.07.2018 DATE OF PRONOUNCEMENT: 27.07.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. BOTH THE APPEALS ARE FILED BY THE REVENUE. ITA 4857/DEL/2014 IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT (APPEALS)-XII, NEW DELHI DATED 14.07.2014 FOR A .Y. 2007-08 AND CHALLENGES THE ACTION OF THE LD. CIT (A) IN DEL ETING THE PENALTY OF RS. 1,17,20,973/- IMPOSED U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT). ITA 4 858/DEL/2014 IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT (A PPEALS)-XII, NEW DELHI DATED 14.07.2014 FOR A.Y. 2008-09 AND CHA LLENGES THE ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 2 ACTION OF THE LD. CIT (A) IN DELETING THE PENALTY O F RS. 5,95,06,047/- IMPOSED U/S 271(1)(C ) OF THE ACT. THE GROUND OF APPEAL RAISED BY THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW IN DELETING THE PENALTY U/S 271(1)(C) OF THE I.T.ACT AMOUNTING TO RS. 1,17,20,973/-. 2. AT THE OUTSET, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CROSS APPEALS OF THE ASSESSEE AS WELL AS T HE DEPARTMENT FOR BOTH THE YEARS UNDER CONSIDERATION IN THE QUANT UM PROCEEDINGS WERE DECIDED BY THE ITAT IN ASSESSEES FAVOUR IN WHICH THE ASSESSEES APPEALS WERE ALLOWED AND THE D EPARTMENTS APPEAL WERE DISMISSED. HE PLACED ON RECORD COPY OF THE ORDER OF THE ITAT IN ITA NOS. 334, 335, 617, 618, 619 AND 62 0/DEL/2012 AND SUBMITTED THAT IN VIEW OF THE IMPUGNED QUANTUM ADDITIONS HAVING BEEN DELETED BY THE ITAT, THE PENALTIES DO N OT SURVIVE ANY WAY. 3. THE LD. SR. DR, AFTER PERUSING THE ORDER OF THE ITAT, AGREED THAT INDEED THE DEPARTMENTAL APPEALS WERE DISMISSED AND THE ASSESSEES APPEALS WERE ALLOWED AND, THEREFORE, THE ACTION OF THE LD. CIT (A) IN DELETING THE IMPUGNED PENALTIES COUL D NOT BE CHALLENGED. ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 3 4. AFTER HEARING BOTH THE PARTIES AND AFTER PERUSAL OF THE ORDER OF THE ITAT IN THE QUANTUM PROCEEDINGS IN ITA NOS. 334, 335, 617, 618, 619 AND 620/DEL/2012 VIDE ORDER DATED 29. 11.2016, WE FIND THAT THE AVERMENT OF THE ASSESSEE IS INDEED CORRECT. THE RELEVANT OBSERVATIONS OF ITAT ARE CONTAINED IN PARA 13 TO 16 OF THE SAID ORDER AND THE SAME ARE BEING REPRODUCED FO R A READY REFERENCE: 13. THE BRIEF FACTS OF THE CASE ARE THAT THE SEARC H AND SEIZURE U/S 132 OF THE I.T. ACT WAS CARRIED OUT AT THE BUSINESS AND RESIDENTIAL PREMISES OF NIMITAYA AND K HINDA GROUP DURING WHICH THE RESIDENTIAL PREMISES OF SH. SANDEEP SINGH KHINDA AND HIS WIFE MS. SAMTA KHINDA WERE ALS O SEARCHED ON 6.11.2008 WHEREIN CERTAIN DOCUMENTS WER E FOUND AND SEIZED. IN VIEW OF THE SAME NOTICE U/S. 1 53A OF THE ACT WAS ISSUED ON 08.7.2009. IN RESPONSE THERETO TH E ASSESSEE FILED A RETURN ON 27.11.2009 DECLARING AN INCOME OF RS. NIL. THEREAFTER NOTICE U/S. 143(2) OF THE ACT W AS ISSUED ON 24.12.2009 AND SERVED UPON THE ASSESSEE. AS THER E WAS A CHANGE IN INCUMBENT, NOTICE U/S. 143(2) AND 142(1 ) ALONG WITH DETAILED QUESTIONNAIRE WAS ISSUED ON 12.8.2010 AND SERVED UPON THE ASSESSEE. IN RESPONSE THERETO THE A SSESSEES AR ATTENDED THE PROCEEDINGS AND FILED THE SUBMISSIO NS FROM TIME TO TIME. THEREAFTER, AO ASSESSED THE INCOME OF THE ASSESSEE AT RS. 3.50 CRORES BY MAKING THE ADDITION VIDE HIS ORDER DATED 31.12.2010 PASSED U/S. 153A/143(3) OF T HE I.T. ACT, 1961. AGGRIEVED WITH THE AOS ORDER, THE ASSES SEE APPEALED BEFORE THE LD. CIT (A) WHO VIDE HIS IMPUGN ED ORDER DATED 28.11.2011 HAS DISMISSED THE APPEAL OF THE AS SESSEE. 14. LD. COUNSEL OF THE ASSESSEE STATED THAT LD. CIT (A) WAS ERRED IN CONFIRMING THE ADDITION IN DISPUTE IN THE HANDS OF THE ASSESSEE AS UNACCOUNTED INCOME OR RECEIPT DURING TH E YEAR UNDER CONSIDERATION ON SALE OF PROPERTY D-17, PUSHP ANJALI EVEN WHEN THE ASSESSEE IS NOT THE OWNER OF THE SUBJ ECT SOLD ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 4 PROPERTY. HE FURTHER STATED THAT LD. CIT(A) WAS FUR THER ERRED IN APPLYING SECTION 292C OF THE I.T. ACT, MERELY BE CAUSE SOME PAPERS WERE FOUND FROM THE PREMISES OF THE ASSESSEE WHILE IGNORING VITAL FACTS AND CONTENTIONS OF THE ASSESSE E. TO SUPPORT HIS CONTENTION HE RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT OF INDIA IN THE CASE OF SUMAT I DAYAL 214 ITR 801 AND THE RULING OF THE HONBLE DELHI HIG H COURT DATED 3.4.2014 IN THE CASE OF TRUE ZONE BUILDWELL A ND THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BABU MO HAN LAL ORDER DATED 7.11.2013. IN VIEW OF THE ABOVE, HE STA TED THAT THE APPEALS OF THE ASSESSEE MAY BE ALLOWED. 15. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER S OF THE AUTHORITIES BELOW AND STATED THAT THE ORDERS PASSED BY THEM ARE THE WELL REASONED ORDERS WHICH DO NOT REQUIRE A NY INTERFERENCE ON OUR PART, HENCE, THE SAME MAY BE UP HELD AND APPEALS OF THE ASSESSEE MAY BE DISMISSED. 16. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE RECORDS ESPECIALLY THE SALE DEED. WE FIND THAT IN THE CASE OF ASSESSEE, LD. CIT(A) WHILE CONVERTING PROTECTIVE ADDITION TO SUBSTANTIVE ADDITION, HAS MERELY RELIED ON PRESUMPTION U/S. 292 C OF THE ACT, WHEREAS THE UNDERLYING PROPERTY I.E. D-17, PUS HPANJALI, NEW DELHI IS NOT OWNED BY THE ASSESSEE, JUST ON THE BASIS OF HONBLE SUPREME COURT OF INDIA RULING IN THE CASE O F SUMATI DAYAL 214 ITR 801 WHICH IS PLAINLY BAD BECAUSE NON OWNER CANNOT BE MADE AS BENEFICIAL OWNER ON THE BASIS OF LIMITED PRESUMPTIONS, FOR MAKING 21 PROTECTIVE / SUBSTANTIV E ADDITION VIS--VIS ON MONEY WHERE REVENUE HAS ACCEP TED CAPITAL GAINS ON SAME PROPERTY IN THE HANDS OF OTHE R ASSESSEE I.E. SMT. SUDHIKSHA SINGH. 16.1 THERE IS THOROUGH LACK OF CORROBORATIVE AND CO NFIRMING EVIDENCE AND THOROUGH LACK OF ENQUIRY ON THE PART O F AO WHERE ALL CASES WERE WITH HIM ONLY. NO ATTEMPT IS M ADE TO MAKE REFERENCE TO DVO BY AO OR CIT-A. THERE IS NO EXAMINATION OF ANY CONCERNED WITNESS/PARTY TO TRANS ACTION. ONLY SUSPICION HAS WEIGHED TO MAKE THE COLOSSAL ADD ITION. THERE IS NO HIDDEN BANK A/C SO AS TO TRANSACT THE G IVEN MONEY. THERE IS NO BAYANA AGREEMENT OR ANY OTHER ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 5 ADVERSARIAL DOCUMENT FOUND DURING EXTENSIVE SEARCH OPERATION SPECIFIC TO CHARGE MADE. THE CHARGE MADE AGAINST THE ASSESSEE ONLY RESOLVES AROUND A SINGLE PIECE OF PAPER WHICH IS NOT HANDWRITTEN FROM ANY OF THE TRANSACTIN G PARTIES. EVEN IF THE DOCUMENT IS TAKEN ON FACE VALUE THEN NO GAINFUL PREMIUM CONSTRUCTION CAN BE TAKEN AS NEITHER THE SE LLER NOR THE BUYER IS TAKEN ON BOARD AT THE TIME WHEN THIS S UBJECT PAPER WAS FOUND. THIS PAPER IS OUT OF SYLLABUS FOR MR. SANDEEP KHINDA NOT BEING THE OWNER OF THE PROPERTY. SECTION 292C BEING REBUTTABLE PRESUMPTION CANNOT MADE ASSES SEE'S BURDEN TO BE INFALLIBLE AS THE SAME CAN'T BE ELEVAT ED TO BE PROVEN TO THE HILT I.E AS FAR AS SUDHIKSHA IS CONCE RNED, ASSUMPTION OF JURISDICTION U/S 153C IS CONCERNED TO MAKE A DOCUMENT TO BE BELONGING TO THE ASSESSEE, PRESUMPTI ON U/S 292C CAN'T BE RESORTED I.E BELONGING TO CRITERIA CA N'T BE SATISFIED ON THE BASIS OF PRESUMPTION & ASSUMPTION. AS PER RECORD MRS. SUDHIKSHA SINGH ANOTHER ASSESSEE HAD DI SCLOSED THIS TRANSACTION VOLUNTARILY IN NORMAL COURSE BY PA YING DUE CAPITAL GAIN U/S 50C READ WITH SECTION 48 I.E THERE IS NO SANCTION & UNDER THE PRESENT LAW TO TAX A SELLER OV ER & ABOVE THE GIVEN TRANSACTION RATE WHICH IS WELL 22 CONSIDE RS THE APPLICABLE RATE OTHERWISE SEC 50C WILL BECOME REDUN DANT. THIS CAN BE A FICTION IN FICTION I.E. 292 CAN'T BE INFUSED A INCORPORATED IN SECTION 50C. IN OUR VIEW, SUSPICION HOW GRAVE & STRONG CAN'T SUBSTITUTE THE PLACE OF RELIABLE COG ENT EVIDENCE TO FASTEN A TAX LIABILITY. 16.2 WE HAVE ALSO PERUSED THE SALE DEED DATED 27.2 .2008 OF THE PROPERTY BEARING NO. D-17, PUSHPANJALI, NEW DELHI WHICH WAS EXECUTED BY MRS. SUDIKSHA SINGH IN FAVOUR OF M/S VIJETA PROPERTIES (P) LTD. WHICH ESTABLISH THAT NO SUCH PROPERTY BEARING NO D-17 PUSHPANJALI EVER BELONGED TO THE ASSESSEE (SANDEEP SINGH KHINDA) AND NO PURCHASE/SAL E OF AFORESAID PROPERTY HAS EVER BEEN MADE BY THE ASSESS EE. THEREFORE, THERE IS NO QUESTION OF ANY UNDISCLOSED INCOME WHICH CAN BE ATTACHED TO THE ASSESSEE WITH RESPECT TO ABOVE ALLEGED PROPERTY TRANSACTIONS. ASSESSEE HAS NEVER RECEIVED/PAID ANY PAYMENT IN CASH WITH RESPECT TO S UCH PROPERTY AS THE ABOVE PROPERTY NEVER BELONGED TO TH E ASSESSEE. THE AO HAS MADE THE ADDITION IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS UNDER SEE 292C OF THE INCOME ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 6 TAX ACT AS THE PAPER HAS BEEN SEIZED FROM THE PREMI SES OF THE ASSESSEE. AS PER THE PROVISIONS OF SEC 292C OF THE INCOME TAX ACT, WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENT S, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PER SON IN THE COURSE OF SEARCH U/S 132 OF THE INCOME TAX, IT MAY IN ANY PROCEEDINGS UNDER THIS ACT, BE PRESUMED- 1) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THI NG BELONG OR BELONGS TO SUCH PERSON; 2) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND O THER DOCUMENTS ARE TRUE. 16.3 CONSIDERING THE LANGUAGE OF SEE 292C OF THE I NCOME TAX ACT, THERE IS A PRESUMPTION THAT THE CONTENTS O F THE DOCUMENTS ARE TRUE AS DOCUMENT WAS FOUND FROM THE PREMISES OF THE ASSESSEE. HOWEVER, NOWHERE IN THE S ECTION HAS BEEN MENTIONED THAT THE AMOUNT REPRESENTED UNDI SCLOSED INCOME AND BE TAXED IN THE HANDS OF THE ASSESSEE FR OM WHOSE PREMISES THE SAID PAPER HAS BEEN SEIZED. THE PRESUMPTION AS ENVISAGED IN SECTION 292C IS LIMITED TO THE CORRECTNESS OF THE DOCUMENTS FOUND AT THE TIME OF S EARCH OR SURVEY, BUT THAT PRESUMPTION HAS NOT BEEN EXTENDED BY THE STATUTE TO BE PRESUMED TO BE THE INCOME OF THE ASSE SSEE. TAXING STATUES HAVE TO BE INTERPRETED STRICTLY. IN DEEMING PROVISION WHAT IS PRESCRIBED IS TO BE DEEMED AND DE EMING PROVISION CANNOT BE EXTENDED BEYOND THE LEGISLATIVE SCOPE. THE PRESUMPTION UNDER SEE 292C IS A REBUTTABLE PRES UMPTION AND ALL THE FACTS ARE TO BE CONSIDERED BEFORE DRAWI NG AN INFERENCE OF UNDISCLOSED INCOME ON THE BASIS OF LOO SE PAPERS. THE DEEMING PROVISION CANNOT BE APPLIED MECHANICALL Y IGNORING THE FACTS OF THE CASE AND SURROUNDING CIRC UMSTANCES. THERE SHOULD BE SOME BUSINESS CONNECTION OR ANY SUC H CONNECTION OF THE SEIZED DOCUMENT WITH THE ASSESSEE THAT CAN ATTACH UNDISCLOSED INCOME IN THE HANDS OF THE SEARC HED PERSON. IN THE PRESENT CASE, THE DETAIL OF THE PROP ERTY I.E D-17 PUSHPANJALI, AGAINST WHICH IT HAS BEEN ALLEGED BY T HE LD AO THAT' ON MONEY' HAS BEEN RECEIVED AGAINST THE SALE OF PROPERTY WAS NEVER OWNED BY THE ASSESSEE. HOWEVER, THERE ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 7 IS NO IOTA OF EVIDENCE WITH THE DEPARTMENT TO SUGGE ST THAT LOOSE SHEET DISCLOSE RECEIPTS RESULTING IN AN UNDIS CLOSED INCOME ON THE PART OF THE ASSESSEE. THEREFORE THERE IS NO QUESTION OF ASSESSING ANY INCOME IN THE HANDS OF TH E ASSESSEE. TO SUPPORT THIS VIEW, WE ARE PLACING RELI ANCE ON THE FOLLOWING JUDGEMENTS/DECISIONS:- - ITA NO. 936/2009 CIT VS. VP BANSAL ORDER DATED 2 .8.2010 THE HONBLE DELHI HIGH COURT HAS HELD THAT IN THE SAID CASE, THE FIGURES MENTIONED ON THE SEIZED PAPER WITHOUT T HERE BEING ANY CORROBORATOR MATERIAL IN SUPPORT THEREOF, CONTE NTS WERE NOT CAPABLE OF DESCRIBING ANY TRANSACTION. HENCE, A DDITION CANNOT BE MADE. - ITA NO. 769 OF 2009 DATED 10.8.2010 CIT VS. BM T RANSPORT -THE HONBLE HIGH COURT OF GUJARAT AT AHMEDABAD HAS HELD THAT UNSIGNED LOOSE PAPER MAY BE CLUE FOR FURTHER INVESTIGATION BUT CANNOT BE A CONCLUSIVE EVIDENCE T O MAKE ADDITION. - NIRMAL FASHIONS (P) LTD. VS. DCIT 123 TTJ 180 - - IT WAS OBSERVED THAT THE PRESUMPTION UNDER SECTION 292C IS REBUTTAL PRESUMPTION AND THE DOCUMENT HAS TO BE CONSIDERED CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE. THE DEEMING PROVISION CANNOT BE APPLIED MECHANICALLY IGNORING T HE FACTS OF THE CASE AND THE SURROUNDING CIRCUMSTANCES. 17. IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND RESPECTFULLY FOLLOWING THE PRECEDENTS AS AFORESAID, WE DELETE THE ADDITIONS IN DISPUTE AND ALLOW BOTH THE ASSESSE ES APPEALS 4.1 ACCORDINGLY, IN VIEW OF THE QUANTUM ADDITIONS H AVING BEEN DELETED BY THE ITAT IN BOTH THE IMPUGNED YEARS, THE DEPARTMENTS CHALLENGE TO DELETION OF PENALTY DOES NOT SURVIVE. ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 8 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAN D DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2018. SD/- SD/- (N.K. SAINI) (S UDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH JULY, 2018 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT BY ORDER ASSTT. REGISTRAR ITA NO. 4857/DEL/2014 ASSESSMENT YEAR 2007-08 9 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1