DCIT, New Delhi V. Sh. Mohit Mittal, New Delhi

ITA 801/DEL/2015

• Counselvise Citation: [2018] 124 COUNSELVISE.COM (IT) 9909 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 10-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI SWAROOP
• Assessee Lawyers: BL GUPTA
• Keywords: Unexplained investment; Depreciation; Search and seizure
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI G.D. AGRAWAL, HON BLE PRESIDENT & SHRI K. NARASIMHA CHARY , JUDICIAL MEMBER ITA NO - 801 /DEL/201 5 ( ASSESSMENT YEAR: 20 1 2 - 13 ) DCIT C ENTRAL C IRCLE 20 NEW DELHI VS SH. MOHIT MITTAL 70/5399, REGAR PURA, KAROL BAGH, NEW DELHI - 110005 PAN ACJPM2316C APPELLANT ASSESSEE REVENUE BY MS. SHEFALI SWAROOP, CIT DR ASSESSEE BY SH. B. L. GUPTA, ADVOCATE ORDER PER K. NAR A SIMHA CHARY, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 0 6.0 6 .201 3 PASSED BY THE COMMIS SIONER OF INCOME TAX (APPEALS) - XXXI , DELHI FOR A.Y. 20 1 2 - 1 3 . 2. BRIEF FACTS OF THE CASE ARE THAT PURSUANT TO THE SEARCH AND SEIZURE OPERATIONS THAT WERE CONDUCTED ON THE ASSESSEE ON 27.01.2012, NOTICE U/S 142 (1) OF THE ACT WAS ISSUED ON 25.10.2012. ASSESSEE FILED THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2012 - 13 ON 29.09.2012 DECLARING TOTAL INCOME OF RS.5,15,70,340/ - . DURING THE SCRUTINY LD. ASSESSING OFFICER DATE OF HEARING 19 .0 9 .2018 DATE OF PRONOUNCEMENT 24 .0 9 .2018 ITA NO. 801 /DEL/201 5 2 FOUND THAT THE ASSESSEE DEBITED SUCH AN EXPENSE LIKE VEHICLE DEPRECIATION, TOUR AND TRAVELLING , TELEPHONE AND VEHICLE EXPENSES TO THE TUNE OF RS.1,46,543/ - . LD. ASSESSIN G OFFICER RECORDED THAT THE ASSESSEE FAIL ED TO FURNISH THE DOCUMENTARY EVIDENCE AS SUCH HE ADDED BACK A SUM OF RS. 14 , 654/ - REPRESENT 10% OF THE EXPENSES ON THE GROUND POSSIBILITY OF PERSONAL USE. 3. FURTHER LD. ASSESSING OFFICER ON A PERUSAL OF THE AGREEMENT OF SALE IN FAVOUR OF THE ASSESSEE IN RESPECT OF THE PROPERTY IN KAROL BAGH, NEW DELHI UNDER WHICH THE SALE CONSIDERATION WAS RS.7,50,00,000/ - BUT THE PARTIES AGREED THAT THE PROPERTY HAD TO BE REGISTE RED AT RS.1.20 CRORES THEREBY LEA VING A S COPE OF RS.6.30 CRORES PAYABLE BY WAY OF CASH. IN HIS STATEMENT THE ASSESSEE ADMITTED TO HAVE PAID A SUM OF RS.2.65 CRO R ES IN CASH AND AT THE TIME OF SEARCH THE ASSESSEE WAS FOUND TO BE CARRYING A SUM OF RS.2.8 CRORES IN CASH TO BE PAID TO THE SELLER. LD. AO, THEREFORE , NOT ED THAT THE CASH COMPONENT INVOLVED TILL SUCH DATE WAS RS 5.13 CRORES , LEAVING A BALANCE OF RS.1.17 CRORES TO BE PAID. ASSESSEE OFFERED AN EXPLANATION THAT DURING THE YEAR FOR ABOUT 7 MONTHS HE DID BUSINESS OF SALE AND PURCHASE OF PROPE RTY FROM WHICH CASH OF RS. 5.13 CRORES WAS GENERATED. BASING ON THIS THE LD. ASSESSING OFFICER ASSUMED THAT DURING THE YEAR T HE ASSESSEE MIGHT HAVE ENTERED INTO OTHER SIMILAR TRANSACTIONS BY EARNING UNDISCLOSED INCOME AND IN THE ABSENCE OF ANY DETAILS REGAR DING THE SUCH TRANSACTIONS A SUM OF RS.2.5 CRORES INCLUDING THE S UM OF RS.1.17 HAD TO BE ADDED , ON ESTIMATE BASI S , AS UNDISCLOSED INCOME EARNED FROM PROPERTY TRANSACTIONS DURING THE YEAR. ITA NO. 801 /DEL/201 5 3 4. WHEN THE ASSESSEE PREFERRED AN APPEAL AGAINST THIS ADDITION BE FORE THE LD. CIT (A) AND ARGUED THAT THE LD. ASSESSING OFFICER HAS NOT JUSTIFIED IN ASSUMING THAT THE BALANCE SALE CONSIDERATION OF RS.1.17 CRORES WILL BE PAID ONLY OUT OF THE UNACCOUNTED MONEY WITHOUT CONSIDERING THE POSSIBILITY OF THE ASSESSEE BORROWING THE AMOUNT S EITHER FROM THE BANKS OR FROM RELATI VES TO PAY THE AMOUNT OF THE SELLERS. FURTHER U/S 69 AND 69B OF THE ACT THE WORD INVESTMENT DOES NOT A INCLUDE THE INVESTMENT THERE IS LIKELY TO BE MADE IN FUTURE AND THERE SHALL BE SOME EVIDENCE TO SHOW THE A VAILA BILITY OF UNEXPLAINED INVESTMENT TO MAKE ANY ADDITION, LD. CIT (A) AGREED WITH THE CONTENTIONS ON BEHALF OF THE ASSESSEE AND DELETED THE ADDITION STATING THAT NO ADDITION COULD BE MADE BASING ON THE SURMISES AND CONJECTURES, AND FURTHER THAT THERE IS NO GUARANTEE THAT THE MAN WHO EARN ED 5.13 CRORES IN 7 MONTHS WILL CONTINUE TO EARN AT THE SAME RATE FOR THE REMAINING PERIOD ALSO. FURTHER THE LD. CIT(A) OBSERVED THAT WITHOUT REJECTING THE BOOKS OF ACCOUNTS AND WITHOUT POINTING ANY SPECIFIC DISCREPANCY IN THE EXPENSES RECORDED BY THE ASSESSEE, DISALLOWANCE OF EXPENDITURE AND ESTIMAT ION OF INCOME TO FORM THE BASIS FOR ADDITION, IS NOT JUSTIFIED. 5. REVENUE IS, THEREFORE, PREFERRED THIS APPEAL STATING THAT THE LD. CIT(A) ERRED IN DELETING THESE TWO ADDITIONS. 6. FIRST COMING TO THE ADDITION OF RS.2.5 CRORES AS UNDISCLOSED INCOME, IT IS THE SUBMISSION ON BEHALF OF THE ASSESSEE THAT THE AMOUNTS THAT WERE PAID IN CASH TO THE SELLER HAD ALREADY BEEN DISCLOSED IN THE RETURN OF INCOME O F THE ASSESSEE AND THE ADDITION IS ONLY ON THE SURMISES AND JUNCTURES WHICH HAVE NO PLACE UNDER TAX LAW. THERE IS NO MATERIAL AVAILABLE WITH THE LD. ASSESSING ITA NO. 801 /DEL/201 5 4 OFFICER IN RESPECT OF EITHER 1.17 CRO R ES OR 2.50 CRORES TO JUSTIFY THE ADDITION. THE ASSESSING OFFICER SAYS THAT ONLY BECAUSE THE ASSESSEE EARNED RS.5.13 CRORES IN A PERIOD OF 7 MONTHS , T HE ASSESSEE COULD HAVE EARNED ANOTHER RS. 2.50 CORES IN THE REMAINING PERIOD. 7. ON A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW , WE ARE OF THE CONSID ERED OPINION THAT EXCEPT THIS PRESUMPTION ON PART OF THE ASSESSING OFFICER THAT THE ASSESSEE WILL HAVE TO MAKE THE BALANCE SALE CONSIDERATION OF RS.1.17 CRORES IN CASH , BESIDES WHICH THE ASSESSEE SHOULD HAVE ENTERED INTO CONTRACTS SIMILAR NATURE TO MAKE AN ADDITION OF RS.2.5 CRORES , ABSOLUTELY THERE IS NOTHING IN THE CUSTODY O F THE ASSESSING OFFICER TO JUSTIFY THE SAME . AS RIGHTLY OBSERVED BY THE LD. CIT(A) THE SUBMISSION OF THE ASSESSEE THAT IF, IN A SPAN OF 7 MONTHS , THE ASSESSEE EARNED A SUM OF RS.5.13 CRORES , IT DOES NOT GUARANTEE THAT HE WENT ON EARNING AT SIMILAR PROPORTIONS IN THE BALANCE PERIOD ALSO. THE ASSESSING OFFICER IS NOT SURE WHERE THE ASSESSEE MADE PAYMENT OF BALANCE SALE CONSIDERATION OR NOT. HOWEVER, THE SUBMISSION OF THE LD. AR IS THAT SUBSEQUENTLY ON 17.01.2013 , ULTIMATELY, THE SALE WAS CANCEL LED BY WAY OF A CANCELLATION DEED AND A COPY OF THE CANCELLATION DATE IS PLACED ON RECORD. 8. IN THESE CIRCUMSTANCES WE FIND JUSTIFICATION IN THE OBSERVATIONS OF THE LD. CIT(A) THAT THERE IS NO GUARANTEE THAT THE ASSESSEE PAID THE BALANCE SALE CONSIDERATION OUT OF THE UNEXPLAINED EARNING S DURING THE REMAINING PERIOD OF THE YEAR. NO ADDITION COULD BE SUSTAINED ON PRESUMPTION S . WE, THEREFORE, FIND ANY AMOUNT OF STRENGTH IN THE REASONING ADOPTED L D. CIT(A), AND ITA NO. 801 /DEL/201 5 5 WE DO NOT FIND ANY REASON TO IN TER FERE WITH THE SAME. WE ACCORDINGLY DISMISS THIS GROUND OF APPEAL. 9 . NOW, COMING TO THE ADDITION MADE ON ACCOUNT OF PERSONAL USE ALSO IT IS AN ADMITTED FACT THAT THE FINAL ACCOUNTS SUBMITTED BEFORE THE AS SESSING OFFICER ARE ACCEPTED AND THE BALANCE SHEET SHOWS THE WITHDRAWAL S BY THE ASSESSEE WHICH ARE ADEQUATE FOR THEIR EXPENSES. LD. CIT (A) HELD THAT IN THE ABSENCE OF ANY SPECIFIC DISCREPANCY POINTED OUT BY THE LD. ASSESSING OFFICER NO ADDITION CANNOT BE SUSTAINED. IN THE FACTS AND CIRCUMSTANCES INVOLVED IN THE CASE WE ARE ALSO OF THE SAME OPINION. WE, THEREFORE, UPHOLD THE FINDINGS OF THE LD. CIT(A) ON THIS ASPECT. 10 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ACCORDINGLY DISMISSED. ORDER PR ONOUNCED IN THE OPEN COURT ON 24 .09.2018. SD/ - SD/ - (G. D. AGRAWAL ) (K. NAR A SIMHA CHARY) PRESIDENT JUDICIAL MEMBER DATED: 24 .0 9 .2018 NEHA COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(APPEALS) 5 . DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA NO. 801 /DEL/201 5 6 DATE OF DICTATION 20.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 24.09.2018 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER 24.09.2018 DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS 24.09.2018 DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 24.09.2018 DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 24.09.2018 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 24.09.2018 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