ACIT, New Delhi V. Shri Rajendra Aggarwal, New Delhi

ITA 6474/DEL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4118 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 09-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NANDITA KANCHAN
• Assessee Lawyers: VINOD KR BINDAL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure
• Section: 50C; 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: F NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SH.O.P.KANT, ACCOUNTANT MEMBER I.T.A .NO.-647 4/DEL/2012 (ASSESSMENT YEAR-20 07-08) AC IT, CENTRAL CIRCLE-5, ROOM NO.361, 3 RD FLOOR, ARA CENTRE, E-2, JHANDEWALAN EXTENSION, NEW DELHI. (APPELLANT) VS RAJENDRA AGGARWAL, 23/5, KALA BHAWAN, SHAKTI NAGAR, NEW DELHI-110007. PAN-ADQPA4147F (RESPONDENT) APPELLANT BY MRS. NANDITA KANCHAN, CIT DR RESPONDENT BY SH. VINOD KR. BINDAL, CA ORDER PER DIVA SINGH, JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AS SAILING THE CORRECTNESS OF THE ORDER DATED 29.10.2012 OF CIT(A), XXXI, DELHI PERTA INING TO 2007 08 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD. CIT(APPEALS) IS NOT CORRE CT IN LAW AND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION AMOUNTING TO RS.2,27,50,000/- MADE BY AO ON ACCOUNT OF UNDISCLOSED CONSIDERATION RECEIVED, ON SALE OF PROPERTY TRANSAC TION BELONGING TO COMPANY, BY THE ASSESSEE WHO TRANSACTED THE DEAL ON BEHALF OF T HE COMPANY IN THE CAPACITY AS DIRECTOR OF THE COMPANY. 3. THE APPELLANT CRAVES LEAVE TO ADD, AMEND ANY/AL L THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. DATE OF HEARING 09.06.2016 DATE OF PRONOUNCEMENT 10 .0 8 .2016 I.T.A .NO.-6474/DEL/2012 PAGE 2 OF 6 2. THE RELEVANT FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 OF INCOME TAX ACT 1961 WAS CARRIED OUT IN THIS CASE ALONG WITH OTHER CASES OF RAJDARBAR GROUPON 31.07.2008. ACCORDINGLY AFTER ISSUANCE OF NOTICE UNDER SECTION 153A AND QUESTIONNAIRE ETC. THE ASSESSING OFFICER TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSEE CLAIMED TO HAVE SOLD ITS LAND AND FACTORY SITUATED AT DEHRADUN FORRS.1,72,50,000/-. TAKING NOTE OF THE FACT THAT THE CONSIDERATION WAS CLAIMED TO BE THE VALUE AS PER SECTION 50C OF THE I.T. ACT AND THAT A GAINST THE SAID SALE ASSESSEE HAS CLAIMED THE COST OF LAND AT RS.50,79,430/-, COST OF BUILDING AT RS.1,04,27,668/- AND COST OF ELECTRICAL FITTINGS ETC WERE ALSO CLAIMED AND THUS COMPUTED A SHORT TERM CAPITAL GAIN AT RS.16,11,367/- WHICH HAD BEEN OFFERED FOR TAXATION AS PER THE RETURN. IT WAS NOTED THAT THE SALE WAS CLAIMED TO HAVE BEEN MADE TO ONE M/S E. VISION OF DEHRADUN. HOWEVER, THE AO WAS OF THE VIEW THAT THERE WAS ANOTHER ASPECT OF THIS ISSUE AS THE SAME PROPERTY WAS AGREED TO BE SOLD TO ONE SH. IQBAL WASU IN THE IMME DIATE PREVIOUS YEAR I.E. A.Y. 2006-07 FROM WHOM ADVANCE OF RS. 18 LACS WAS ALSO RECEIVED BACK IN A.Y. 07-08. THE AGREEMENT WITH THE SAID IQBAL WASU, IT WAS NOTED WAS FOR A CO NSIDERATION OF RS.4.29 CRORES. CONSIDERING THAT THE VERY SAME PROPERTY HAD BEEN SO LD DURING THE YEAR UNDER CONSIDERATION FOR LESS THAN EVEN ONE-HALF FOR WHAT IT WOULD HAVE BEEN SOLD TO THE SAID IQBAL WASU, THE AO WAS OF THE VIEW THAT THERE CAN B E NO JUSTIFICATION FOR SUCH AN ACT ON BEHALF OF THE ASSESSEE. THE NATURAL INFERENCE FROM THESE INTERLINKED TRANSACTION IT WAS CONCLUDED IS THAT ASSESSEE WOULD HAVE GOT HEALTHY U NDERHAND CONSIDERATION WHICH THE ASSESSEE HAS NOT REPORTED FOR TAX PURPOSE. THE AO WAS OF THE VIEW THAT EVEN IF IT IS ASSUMED THAT THE PRICES OVER THE YEAR HAD FALLEN TH EY COULD NOT FALL BY 60% AS HAS HAPPENED IN THIS CASE. I.T.A .NO.-6474/DEL/2012 PAGE 3 OF 6 2.1. IN VIEW OF THESE PECULIAR FACTS AND ON COMPARI NG THESE TWO SET OF AGREEMENTS WITHIN A PERIOD OF ONE YEAR. IT WAS CONCLUDED THAT THE ASSESSEE MUST HAVE REALIZED AT LEAST RS. 4 CRORES ON SALE OF THE SAID PROPERTY. A CCORDINGLY ADDITION WAS MADE FOR THE BALANCE AMOUNT OF RS. 2,27,50,000/- AS UNDISCLOSED CONSIDERATION. 3. AGGRIEVED THE ASSESSEE CAME IN APPEAL BEFORE THE CIT(A) CONTENDING THAT THE FACTS OF ASSESSEES CASE HAVE BEEN MIXED UP BY THE AO WIT H FACTS OF A SISTER CONCERN. IT WAS SUBMITTED THAT THIS SPECIFIC PIECE OF LAND AND BUIL DING WAS OWNED BY ITS SISTER CONCERN NAMELY RITE PAC INDUSTRIES PVT. LTD. ACCORDINGLY N EITHER THE PROPERTY BELONGED TO THE ASSESSEE NOR ANY SHORT TERM CAPITAL GAIN WAS OFFERE D IN THE YEAR UNDER CONSIDERATION. IN SUPPORT OF THE ARGUMENTS, IT WAS SUBMITTED THAT PRO PERTY WAS SOLD BY THE SISTER CONCERN IN THE YEAR UNDER CONSIDERATION AND COPY OF SHORT TERM CAPITAL GAIN OFFERED FOR TAXATION WHICH RETURN OF RITE PAC INDUSTRIES PVT. LTD. WAS A CKNOWLEDGED BY THE DEPARTMENT WAS FILED ALONGWITH COPY OF COMPUTATION OF INCOME FILED BY RITE PAC INDUSTRIES PVT. LTD. ORIGINAL DOCUMENTS IN SUPPORT OF THE PROPERTY WERE ALSO PRODUCED BY THE ASSESSEE. CONSIDERING THOSE, IT WAS HELD THAT THE ADDITION IN THE HANDS OF THE ASSESSEE WAS NOT MAINTAINABLE. 4. AGGRIEVED BY WHICH THE REVENUE IS IN APPEAL BEFO RE THE ITAT. 5. THE LD. CIT DR PLACES RELIANCE UPON THE ASSESSME NT ORDER. HOWEVER NO ARGUMENTS WERE ADVANCED IN SUPPORT OF THE GROUND RA ISED IN ORDER TO JUSTIFY HOW THE ADDITION IN THE HANDS OF THE ASSESSEE COULD HAVE BE EN MAINTAINED. THE LD.AR ON THE OTHER HAND INVITING ATTENTION TO THE FINDINGS RECORDED IN THE IMPUGNED ORDER AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE SUBMITTED THAT IN H IS PAPER BOOK PAGES 1 TO 67 WOULD SHOW THAT THE DOCUMENTS DEMONSTRATING THAT THE OWNERSHIP OF THE SAID PROPERTY VESTED WITH THE I.T.A .NO.-6474/DEL/2012 PAGE 4 OF 6 SAID COMPANY HAS BEEN PLACED ON RECORD. THESE DOC UMENTS HAVE NOT BEEN REBUTTED. ACCORDINGLY IN THE ABSENCE OF ANY JUSTIFICATION HOW THE ADDITION CAN BE SAID TO BE MAINTAINABLE IN THE HANDS OF THE ASSESSEE, HE WOULD RELY ON THE FACTS, EVIDENCES AND ARGUMENTS RECORDED BY THE CIT(A) AND SUPPORTED BY T HE PAPER BOOK FILED HAS NOT BEEN ADDRESSED BY THE REVENUE. IN THE CIRCUMSTANCES, HEA VY RELIANCE WAS PLACED UPON THE IMPUGNED ORDER. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT IN SUPPORT OF THE PRAYER MADE IN THE P RESENT APPEAL, THE LD. AR ON BEHALF THE ASSESSEE HAS CANVASSED THE ISSUE AS UNDER BEFORE TH E CIT(A): 4. SUBMISSION OF THE APPELLANT:- 4.1. THE AR HAS MADE WRITTEN AS WELL AS ORAL SUBMI SSIONS. SHE HAS POINTED OUT THAT THE AO HAS MIXED UP THE FACTS OF THE ASSESSEE WITH THOSE OF THE SISTER CONCERN NAMELY RITE PAC INDUSTRIES PVT. LTD. THE PROPERTY I N QUESTION DOES NOT BELONG TO THE APPELLANT AND THAT THE OWNERSHIP OF THE PROPERT Y VESTED WITH RITE PAC INDUSTRIES PVT. LTD. DURING THE PREVIOUS YEAR RELEV ANT TO AY 2007-08 THE APPELLANT DID NOT OFFER ANY SHORT TERM CAPITAL GAIN AS STATED IN THE ASSESSMENT ORDER. A COPY OF COMPUTATION OF INCOME FOR THE CURRENT AY HAS BEE N PRODUCED IN SUPPORT OF HER SUBMISSIONS. FURTHER SHE HAS SUBMITTED THAT THE PRO PERTY IN QUESTION WAS IN FACT SOLD DURING THE YEAR AND THE RESULTANT SHORT TERM C APITAL GAIN HAS BEEN DULY OFFERED TO TAXATION IN THE HANDS OF HIS OWNER NAMEL Y RITE PAC INDUSTRIES PVT. LTD. IN SUPPORT HER SUBMISSIONS THE AR HAS ALSO MADE AVA ILABLE ACKNOWLEDGMENT COPY OF THE RETURN OF THE SAID COMPANY FOR AY 2007-08 AL ONG WITH COMPUTATION OF TOTAL INCOME. SHE HAS ALSO PRODUCED PHOTOCOPIES OF THE OR IGINAL DOCUMENTS RELATING TO LEASE OF THE SAID PROPERTY FROM UP STATE INDUSTRIAL DEVELOPMENT CORPORATION LTD. AND THE POSSESSION CERTIFICATES. 6.1. CONSIDERING THESE ARGUMENTS, THE CIT(A) CAME T O THE FOLLOWING CONCLUSION:- 5. DETERMINATION: - 5.1. I HAVE CONSIDERED THE ASSESSMENT ORDER AND TH E SUBMISSIONS OF THE AR. IT APPEARS THAT THE AO HAS MIXED UP THE FACTS WHILE CO MPLETING ASSESSMENTS IN THE GROUP CASES. THE PARA 2 OF THE ASSESSMENT ORDER STA RTS AS UNDER WHICH IS FOUND FACTUALLY INCORRECT AS PER COMPUTATION OF TOTAL INC OME FILED WITH THE RETURN OF INCOME : IT IS SEEN THAT DURING THE YEAR UNDER CONSIDERATION ASSESSEE COMPANY IS CLAIMED TO HAVE SOLD ITS LAND AND FACTORY BUILDING SITUATED AT DEHRADUN FOR I.T.A .NO.-6474/DEL/2012 PAGE 5 OF 6 RS. 1,72,50,000/-. SUCH CONSIDERATION IS CLAIMED TO BE THE VALUE AS PER SEC. 50C OF THE IT ACT. IT IS FURTHER OBSERVED THAT AS A GAINST THE SAID SALE ASSESSEE HAS CLAIM THE COST OF LAND HAD RS. 50,79,4 30/-, COST OF BUILDING AT RS. 1,04,27,668/- AND COST OF ELECTRICAL FITTING AN D ALSO BEEN CLAIMED HAS COMPUTED A SHORT TERM CAPITAL GAIN RS. 16,11,367/- WHICH HAS BEEN OFFERED FOR TAXATION AS PER THE RETURN.................... 5.2. IT MAY 'BE SEEN IN THE ABOVE PARAGRAPH TH AT THE AO REFERS TO ASSESSEE AS 'COMPANY' AND HAS ADOPTED THE FIGURES NOT FOUND IN THE ASSSESSEE'S RETURN OF INCOME. FROM THE COPY OF RETURN OF RITE PAC INDUSTR IES PVT. LTD. FILED DURING THE APPELLATE PROCEEDING IT IS OBSERVED THAT AMOUNTS RE FERRED TO BY THE AC ARE VERY MUCH TALLYING WITH THE AMOUNTS OFFERED FOR THE TAXA TION UNDER THE HEAD SHORT TERM CAPITAL GAIN INCLUDING THE BREAK UP THEREOF. THE SA ME IS REPRODUCED BELOW: INCOME FROM CAPITAL GAIN (CHAPTER IV E) 1611367 SHORT TERM CAPITAL GAIN PROPERTY AT DEHRADUN 12/05/2006 VALUE U/S 50C 17250000 SALES CONSIDERATION RECEIVED 17250000 SALE CONSIDERATION 17250000 LESS; TRANSFER EXPENSES 105946 1714405 4 LAND 5079430 BUILDING 1042766 8 ELECTRIC FITTINGS 23266 FURNITURES & FIXTURES 2323 1553268 7 1611367 1611367 5.3. FROM THE SUBMISSIONS OF THE AR. COPIES OF COMP UTATION OF INCOME AND THE R/I IT BECOMES CLEAR THAT THERE IS A MIX UP OF FACTS OF ASSESSEE AND RITE PAC INDUSTRIES PVT. LTD. AFTER EXAMINE THESE DETAILS THERE APPEARS TO BE NO GROUND FOR SUSTAINING THE ADDITIONS. NO PURPOSE WILL BE SERVED IN GOING I NTO THE MERITS OF THE ADDITION AS THE MIX UP OF FACTS IS EVIDENT FROM THE ORDER. THE AO MAY TAKE SUITABLE REMEDIES AS DEEMED FIT IN THE MATTER. THE ADDITION MADE BY THE AO IS DELETED. (EMPHASIS PROVIDED) 6.2. IN THE ABSENCE OF ANY REBUTTAL ON FACTS, WE FIND CONS IDERING THE EVIDENCES PLACED IN THE PAPER BOOK, THE VIEW TAKEN BY THE CIT(A) CANNOT BE FAULTED WITH. THUS, ON A CONSIDERATION OF THE ENTIRETY OF THE PECULIAR FACTS AND CIRCUMSTANCES FINDING OURSELVES IN AGREEMENT WITH THE CONCLUSION ARRIVED AT BY THE CIT (A), WE FIND NO GOOD REASON TO I.T.A .NO.-6474/DEL/2012 PAGE 6 OF 6 INTERFERE WITH THE SAME. ACCORDINGLY THE DEPARTMENT AL APPEAL IS DISMISSED. THE SAID ORDER WAS THE PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 10 TH AUGUST 2016. SD/- SD/- (O. P.KANT) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR, ITAT NEW DELHI