Income Tax Appellate Tribunal - Delhi
Pramod Panday, New Delhi vs Assessee
ITA NO. 4295/Del/2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "F", NEW DELHI
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER
AND
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
I.T.A. No. 4295/Del/2012
A.Y. : 2006-07
Pramod Panday, VS. Asstt. Commissioner
B-67, Sarita Vihar, of Income Tax,
New Delhi - 110 0 76 Central Circle - 10,
(PAN: AALPP2708H) New Delhi
(APPELLANT) (RESPONDENT)
Assessee by : Sh. Suresh Anantharaman, CA &
M.P. Rastogi, Adv.
Department by : Ms. Anuradha Misra, CIT(DR)
ORDER
PER SHAMIM YAHYA: AM This appeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals)-XXXII, New Delhi dated 12.6.2012 pertaining to assessment year 2006-07.
2. The grounds raised read as under:-
1. The CIT (Appeals) has erred in holding that there is no infirmity in the order of the Assessing Officer assuming jurisdiction u/s 153A of the Act. Such findings are opposed to the mandate of section 153A of the Act.
2. The Assessing Officer having held that the 'diary' reveals the business activities of Sh. Dinesh Panday, 1 ITA NO. 4295/Del/2012 the assessment framed on the appellant u/s 153A of the Act is without jurisdiction.
3. The assessment of the appellant having been framed u/s 143(3) of the Act, before the date of initiation of search u/s 132 of the Act, the order passed u/s 153A of the Act is without jurisdiction.
4. The finding of the CIT (Appeals) that "the contentions of the appellant that the contents of the impugned diary could not be attributed to the appellant is not acceptable" is perverse, and is opposed to evidences on record.
5. It is contended that mere notings in a diary, a piece of paper etc., without corroborative evidences, cannot result in the finding that undisclosed investment has been made by the appellant.
6. The CIT (Appeals) has erred in confirming the addition of Rs.35,OO,OOO/- as undisclosed investment. The same is based on surmises and conjectures, and is not based on evidences.
7. The assessment having been framed and confirmed by CIT (Appeals), having been based on the statements of third parties, is without jurisdiction and is contrary to the principles laid down in Kishinchand Chellaram vs. CIT 125 ITR 713 (sq.
8. The CIT (Appeals) has erred in holding that the appellant has failed to rebut the legal presumption available u/s 132(4) / 292C of the Act. Such findings 2 ITA NO. 4295/Del/2012 are opposed to the legal mandate of the section 292C of the Act.
3. The brief facts of the case are as under:-
A diary marked as B-1/A-13 was found and seized from the office of Sh Dines Pande, assessee's elder brother at B-67, Sarita Vihar, New Delhi. This, diary contains date wise entries a out the business activities of Sh. Dinesh Pandey. From the perusal of this diary it was inferred that cash has been paid by the assessee group to one Sh. S.C. Jain from whom a farmhouse situated at Bhatti Village, Chattarpur, Delhi has been purchased in the name of the assessee. Pages 53, 54, 71 and 75 of the above diary inter-alia reflect the following entries:
B-1/A-13/53 dated 16-07-2005 "Arrange cash for S.C.Jain/farmhouse" B-1/A-13/54 dated 18-07-2005 "Agreement with S. G.Jain on Chhatarpur area" B-1/ A-13/71 dated 16-08-2005 "Deliver cash to Jain/Bhatti (20L)" B-1/A-13/75 dated 20-08-2005 "Give 15L & all cleared for Bhatti + 5L Cheque" 3.1 In view of the above, the assessee, vide order sheet entry dated 15-12-2010, was asked to explain the above contents of the seized document. In response to the same, the assessee has furnished his reply on 27-12-2010. The same is reproduced as under:
3
ITA NO. 4295/Del/2012 "During the course of hearing, in addition to the explanation sought for of items seized vide Annexure B-1, you had also called our explanation in connection with page 53,54,71 & 75 of item no. A
13. You had stated to our authorized representative to clarify relating to the noting and jotting which was stated by your good self to be related to the property being the Farm House at Bhattia. You had also stated that there were certain statement of some brokers who had stated that the Farm House was of a much higher value than the sum of RS.1,OO,OO,OOO/- for which the property was purchased by the assessee. In this connection, it may be appreciated that the land relating to the said Farm House which has been purchased is under multiple conflicts and litigations. That. the aggregate area of the farm house comprising of lot of various Khasara no. which are disjoined and accordingly is one single plot of land to fetch a good value which may have been stated by broker at so called suggested rates. Without the availability of copy of such statements as well as the facility of cross examining those person we are providing this explanation. It may be seen from the location and the spread to such farm house land that it comprising of various disjoined scattered plots of small lands and is also quite away from the approach road. It is thus small disjoined pieces of lands without proper connectivity Also some of the in between plot are reserved for Forest Department and also some of the plots comprised in such farm 4 ITA NO. 4295/Del/2012 are in litigations in connection with the boundaries with the adjoining owners. Some of such plots have also title problems Accordingly, from the enclosed map and the detailed explanation provided herein above, you will appreciate that there is no question of any payment over and above what has been reflected in the books of account. To the best of our knowledge, the matter had come up for consideration by search parties who had made independent inquiries with the seller of land who to the best of knowledge has also denied having received any consideration over and above registered consideration."
3.2 The Assessing Officer did not accept the above contention. He mentioned that during the course of search statement of local property dealers were recorded. These property dealers reported that the market value of the plot was higher. One property dealer stated that the market value of the property in the given area was Rs. 80-90 lacs per acre. Another dealer reported that the said farm was sold for a total consideration of Rs. 3.5 crores. Another broker stated the value of the farm house at the time of deal at Rs. 5-6 crores. These statements as well as the entries made on the above seized documents were also confronted to the vendor of the farm house. But the seller denied having received any payments other than those reflected in his bank account. Despite the above denial of the vendor, Assessing Officer observed from the above details, it can be safely inferred that the assessee has paid an amount of Rs.
35,00,000/- in cash over and above the sale consideration disclosed by him from undisclosed sources of his income. Accordingly, an addition of Rs. 35 lacs was made.
5ITA NO. 4295/Del/2012
4. Against the above addition Assessee appealed before the Ld. CIT(A). The first objection of the assessee before the ld. CIT(A) was that jurisdiction assumed by the Assessing Officer in this case u/s. 153A is not valid. It was submitted that proceeding u/s. 153A is to be taken on seized material only. No incriminating material was found in the case of the assessee. Hence, assessment or reassessment was not possible for the instant assessment year 2006-07 u/s. 153A of the I.T. Act. However, the Ld. CIT(A) was not convinced. He held as under:-
"The initiation of valid search u/s 132 or requisition u/s 132A is the only condition for invoking the provisions of section 153A. From the copy of Panchnama dated 29/01/2009 drawn in the name of the appellant filed at pages 3 to 8 of the Paperbook submitted by the appellant, it is clear that search was conducted in the case of the appellant u/s 132 of the Act. Further, copy of Panchnama of the same date in respect of search in the case of Sammag Group at the premises B-67, Sarita Vihar , New Delhi filed at pages 9 to 15 of the Paper book submitted by the appellant, also indicates that the office premises of the appellant was also covered during search operations conducted u/s 132 of the Act. Therefore, I do not find any infirmity in the order of the Assessing Officer assuming Jurisdiction u/s 153A of the Act."
5. Another ground taken by the assessee before the Ld. CIT(A) was that the impugned seized diary belonged to the brother of the assessee and was found from his office. Therefore, the content of the diary should have been confronted from the assessee brother 6 ITA NO. 4295/Del/2012 Sh. Dinesh Panday and not the assessee. It was further contended that the seized diary neither belongs to the assessee nor was found from his position and no addition can be made on the basis of the said diary. However, CIT(A) was not convinced and he concluded as under:-
"Therefore, even if the said diary was found from the office chamber of the appellant's brother, it cannot be treated as a thirdparty document as the same was found during the search of a common premises of which both the appellant as well as his brother had control. Since the transaction of purchase of the impugned immovable property was undertaken in the name of the appellant, it was but natural that the relevant evidence was confronted to him and assessment was made accordingly. Therefore, the contention of the appellant that the contents of the impugned diary could not be attributed to the appellant is not acceptable and the second additional ground is also dismissed."
6. On merits of the case, Ld. CIT(A) rejected the contention of the assessee in this regard. Assessee has placed reliance upon the decision of the K.P. Varghese vs. ITO 131 ITR 597 and C.I.T. vs. Mahesh Kumar reported in 2010-TIOL-606-HC-DEL-IT and C.I.T. vs. Smt. Suraj Devi, 2010-TIOL-596-DEL-IT for the proposition that apart from the valuation report, much more information, evidences, materials will have to be available with the Assessing officer to make an addition u/s. 69 of the Act. It can not be solely on the basis of valuation report of the DVO. However, ld. CIT(A) held that these case laws were not applicable. As in the instant case incriminating material was found which was not the case in the case laws referred above. Ld. CIT(A) further referred to the provision of section 292C 7 ITA NO. 4295/Del/2012 and 132(4A). The observed that any person subjected the search cannot get away by merely pleading that it is not for him, but it is department to establish the veracity of the materials found and seized during the search. Ld. CIT(A) rejected all the contention of the assessee and concluded as under:-
"In the instant case, when asked to explain the incriminating notings in the seized diary B-1/A-13, the appellant simply stated the farm house was purchased for the disclosed amount only and the price paid was lower than the price quoted by the brokers contacted by the Department due to the fact that the impugned land was comprising of small disjointed pieces of land having litigation and title problems. No evidence, however, was produced to substantiate the above explanation. I am, therefore, not satisfied that the appellant has been able to rebut the legal presumption available u/s. 132(4A)/292C of the Act before the Assessing officer. Since the appellant has failed to rebut the legal presumption, the Assessing Officer was well within his rights to draw adverse inference against the appellant on the basis of incriminating evidence contained in the seized documents and to make the impugned addition of Rs. 35 lacs on account of undisclosed investment in the said farmhouse."
7. Against the above order the Assessee is in appeal before us.
8. We have heard both the counsel and perused the records. Ld. Counsel of the assessee submitted that the jurisdiction assumed by the Assessing Officer in this case u/s. 153A was not proper. He submitted that no incriminating material belonging to the assessee 8 ITA NO. 4295/Del/2012 was found during the course of search. Hence, he contended that assumption of jurisdiction by the AO in this case is not proper. In this regard, he placed reliance upon the several case laws as follows:-
- CIT vs. SM Aggarwal, 293 ITR 43 (DHC) - TS Venkatesan vs. ACIT 74 ITD 298 (ITAT, Kolkata) - Surendra M. Khandhar vs. ACIT & Ors. 321 ITR 254 (Bombay H.C.) - CIT vs. Indeo Airways Pvt. Ltd. 349 ITR 85 (DHC) - CIT vs. Vishal Rubber Products, 264 ITR 542 (P&HHC) - CIT vs. ITAT & Ors. 246 CTR 554 (Chattisgarh HC) - Ashwani Kumar vs. ITO 39 ITD 183 (ITAT, Delhi.)
9. Furthermore, on merits of the case Ld. Counsel of the assessee contended that addition was made based on that diary seized from the brother of the assessee. The same belonged to the brother of the assessee Sh. Dinesh Panday. He submitted that the contents of the seized material was not confronted to the assessee's brother. There is no mention of the assessee's name in the seized material. Hence, he submitted that the above is not based on any cogent material. He submitted that when this matter was confronted to the seller to the property, he denied that any payment has been made over and above the sale consideration disclosed. Ld. Counsel of the assessee further submitted that query from the broker un-related in this case cannot be said to have conclusive evidence against the assessee. In these circumstances, Ld. Counsel of the 9 ITA NO. 4295/Del/2012 assessee submitted that the addition in this case in the hands of the assessee is not at all sustainable.
10. Ld. Departmental Representative on the other hand, relied upon the orders of the authorities below.
11. We have carefully considered the submissions and perused the records. In this case a search and seizure operation was conducted against the Saamang Group to which the assessee is said to be also belonging. Various persons and premises were covered during the search by the Investigation Wing of the Department including the farm house at Village Bhatti and at B-67, Sarita Vihar, New Delhi which house is registered office of the various companies of the Saamang Group in which the assessee is also the Director alongwith his brother Dinesh Panday. During the course of search at B-67, Sarita Vihar a diary was found and seized from the office of Sh. Dinesh Panday, the elder brother of the assessee. From the seized documents it was inferred that cash amounting to Rs. 35 lacs has been paid to Shri SC jain from whom farm house situated at Bhatti Village, Chattar Pur, New Delhi has been purchased in the name of the assessee. On the basis of the seized material, proceedings were initiated u/s. 153A of the I.T. Act. Some brokers were also examined in this regard, who confirmed that the market value of the property was much higher. However, the seller of the property denied having received any amount over and above the total consideration disclosed.
12. The first ground of the assessee that assumption of jurisdiction u/s. 153A was not proper in as much as it was not based on any seized material belonging to the assessee, seized during the search. However, Ld. CIT(A) has rejected the contention of the assessee. He held that the proceedings u/s. 132 or requisition 10 ITA NO. 4295/Del/2012 of 132A is the only condition for invoking the provisions of section 153A. From the copy of Panchnama, Ld. CIT(A) has observed that it is clear that search was conducted in the case of the assessee u/s. 132 of the Act. Further the copy of the panchnama of the same was in respect of the search and seizure in the case of Saamang Group at the premises B-67, Sarita Vihar, New Delhi also indicates the office premises was also covered during the search operation conducted u/s. 132 of the I.T. Act. Therefore, Ld. CIT(A) held that, he did not find any infirmity in the order of the Assessing Officer assuming the jurisdiction u/s. 153A of the Act.
13. Now we find that as per the ratio emanating from the case laws submitted by the Ld. Counsel of the assessee, where assessment has abated assessment u/s. 153A can be made only on the basis of incriminating material recovered during the search. Hence, Ld. CIT(A)'s view that in such cases assessment u/s. 153A can be made without finding any seized material is not sustainable.
14. However, we find that it is not denied that it was a valid search and material was found from the premises which also houses of the group companies in which the assessee is also a Director. In this view of the matter, it cannot be said that Assessing Officer has assumed jurisdiction without any material found during search. Whether addition on the basis of the said material is sustainable or not is a matter which has to be considered subsequently after the assumption of jurisdiction. In our considered opinion, we do not agree with the Ld. Counsel of the assessee that the assumption of jurisdiction u/s. 153A was not proper in this case. We hold that material was found from the premises which also belonged to the assessee group company, hence, jurisdiction of assessment u/s. 153A was valid. Consequently this ground of the assessee stands dismissed.
11ITA NO. 4295/Del/2012
15. Now we adjudicate upon the merits of the case. In this case addition of Rs. 35 lacs has been made on the basis of seized material found in the shape of diary which contains the following entries:-
B-1/A-13/53 dated 16-07-2005 "Arrange cash for S.C.Jain/farmhouse"
B-1/A-13/54 dated 18-07-2005 "Agreement with S. G.Jain on Chhatarpur area"
B-1/ A-13/71 dated 16-08-2005 "Deliver cash to Jain/Bhatti (20L)"
B-1/A-13/75 dated 20-08-2005 "Give 15L & all cleared for Bhatti + 5L Cheque"
16. We note that the said seized material in the shape of diary did not belong to the assessee. It belonged to the assessee's brother. He has not at all been confronted with the contents of the said diary. Assessee cannot be called upon to explain the contents of diary which belonged to the assessee's brother and was found from the brother.
17. We also note that there is no mention of the assessee's name in the particulars of diary as contained hereinabove. Though there is mention of the farm house belonging to the assessee, there is no mention of the total price paid etc. From the jottings as above, Assessing Officer has inferred that assessee has paid Rs. 35 lacs over and above the disclosed consideration to the seller. Now we find that the seller has denied having taken any money over and 12 ITA NO. 4295/Del/2012 above the disclosed sale consideration. It is also not the case that seized material were in the hand writing of the assessee or the seller or were seized from the premises of the seller. Even the total price paid for the property is not mentioned in the seized material. The jottings in the diary by no stretch of imagination can be treated as conclusive proof of on money transactions by the assessee. It is not the case that the circle rate or the value as per stamp registration authorities of the impugned property is more than what has been disclosed. There is no case that any part of the jottings in the diary has been corroborated from any other findings. Hence, in the background, we find that presumption u/s. 132(4A)/292C of the Act cannot be taken against the assessee. Thus, from the facts and circumstances of the case, we find that addition of on money transaction in this case is not sustainable.
18. In this regard we place reliance of the Hon'ble Apex Court decision in the case of K.P. Vargheser vs. ITO and Ernakula and Another 131 ITR 587 (SC), wherein it has been held that the burden of proving is that of Revenue when there is allegation of understatement on concealment in the consideration shown. Here we find that revenue has failed to discharge the burden cast on it.
19. We also place reliance from the Hon'ble Apex Court decision in the case of CIT vs. Kalyansundaram in (2007) 294 ITR 49 (SC) in which allegations of on money transaction on the basis of non- convincing loose sheets found during the course of search and conflicting statement of the seller, was deleted by the Tribunal and the same was affirmed by the Hon'ble High Court and Hon'ble Apex Court.
20. We further find that addition on account of on money paid on the basis of unconvincing loose sheets found during the search has 13 ITA NO. 4295/Del/2012 been deleted by this tribunal in the case of Dua Auto Components Pvt. Ltd. in ITA No. 4802/Del/2009 for the asstt. year 2003-04 vide order dated 16.7.2010 and further addition in the case of M/s Indication Instruments Ltd. in ITA No. 3513/Del/2010 for asstt. year 2002-03 vide order dated 28.9.2010 has been deleted by the tribunal. We find that the above decisions of the Tribunal was subject matter of appeal before the Hon'ble Jurisdictional High Court in the case of ITA No. 603/2011 in the case of CIT vs. Indication Instruments Ltd. The decisions were also referred by the Hon'ble High Court in ITA No. 570/2012 in the case of CIT vs. Prem Prakash Nagpal vide order dated 8.10.2012 and the Hon'ble High Court has dismissed the Revenue appeals. In the case of Prem Prakash Nagpal (Supra) the concluding remarks of the Hon'ble High Court is as under:-
"The above decision, made in M/s Indication Instruments Ltd. (Supra) was affirmed by a Division Bench of this Court in ITA No. 603/2011, CIT vs. Indication Instruments Ltd.
(decided on 10.5.2012). In view of the above and having regard to the fact that the Tribunal took into the account and applied the ratio in KP Varghese vs. ITO, Ernakulam, (1981) 131 ITR 597 (SC) as well as the subsequent ruling in CIT vs. PV Kalyansundaram, (2007) 294 ITR 49(SC), this Court 14 ITA NO. 4295/Del/2012 is of the opinion that no substantial question of law arises for consideration."
21. In the background of the aforesaid discussion and respectfully following the precedents as above, we set aside the orders of the authorities below and decide the issue in favour of the assessee.
22. In the result, the appeal filed by the Assessee stands partly allowed.
Order pronounced in the open court on 06/12/2013.
Sd/- Sd/-
[R.P. TOLANI]
TOLANI] [SHAMIM YAHYA]
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date 06/12/2013
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant 2.Respondent 3. CIT 4. CIT(A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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ITA NO. 4295/Del/2012
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