Income Tax Appellate Tribunal - Delhi
Anil Arora, New Delhi vs Department Of Income Tax on 8 August, 2014
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ' F', NEW DELHI)
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND
SHRI T.S. KAPOOR, ACCOUNTANT MEMBER
I.T.A. Nos.2293 /Del/2011
Assessment year : 2008-09
ACIT, CC-2, Vs. Anil Arora,
New Delhi B-4/48, Paschim Vihar,
New Delhi
GIR / PAN:AAAGPA1400L
I.T.A.No. 2295/Del/2011
(assessment year 2008-09)
ACIT, CC-2, Vs. Rakesh Kumar Arora,
New Delhi B-4/48, Paschim Vihar,
New Delhi
GIR / PAN:AAFPA7076H
(Appellant) (Respondent)
Appellant by : Shri Sunil Bajpai, CIT DR
Respondent by : Shri Salil Kapoor Adv.&
Shri Anil Jain, CA
ORDER
PER T.S. KAPOOR, AM:
These are two appeals filed by the Revenue against separate orders of Ld. CIT(A) both dated 17.02.2011. Grounds No.1, 2 & 3 of both the appeals are similar in facts as well as in amounts. In grounds No.1 & 2 in both the appeals, the Revenue is aggrieved with the action of Ld. CIT(A) by which he had deleted the addition of Rs.71,93,200/- made by the Assessing Officer u/s 69B of the Income-tax Act, 1961. Vide ground No.3, the Revenue is 2 ITA Nos.2293 & 2295/Del/2011 aggrieved by the action of Ld. CIT(A) by which he had deleted the addition of Rs.79,800/- made by the Assessing Officer on account of fair rental value. Vide ground No.4 in I.T.A.No. 2293/Del/2011, the Revenue is aggrieved by the action of Ld. CIT(A) by which he had deleted the addition of Rs.3,22,200/- made by the Assessing Officer on account of unexplained cash found at the residence of the assessee during the search. Vide ground No.4 in I.T.A.No. 2295/Del/201, the Revenue is aggrieved with the action of Ld. CIT(A) by which he had deleted an addition of Rs.2,66,667/- made by the Assessing Officer on account of unexplained expenditure incurred during foreign travel. Grounds No.5 & 6 in both the appeals are general in nature and do not require any adjudication.
2. The brief facts of the case are that search and seizure action u/s 132 of the Income-tax Act, 1961 was carried out in Wings Pharmaceuticals Pvt. Ltd. group of cases on 14.02.2008 and the assessees were also covered under search and accordingly proceedings were initiated u/s 153A of the Act. During assessment proceedings, both assessees were confronted with the following similar queries:
""You have purchased a property from Sh. Munish Sachdeva s/o Late Sh. A.S. Sachdeva of 10/78, Punjabi Bagh (West), New Delhi. Sale deed was executed on 19.04.2007 for Rs.90,00,000/- on which stamp duty of Rs.7,20,000/- was paid. This is a prime location property located in most posh area of Punjabi Bagh having much higher market value. This property is measuring 2275.92 Sq. yards and you are owner of 1/4th share in this property. Though registration deed for this property was executed after about more than three months of purchase of property by your co-owners and brothers Sh. K.K. Arora and R.P. Arora, for Rs.1,05,00,000/- each, yet after three months, your registered deed value for same share in the same property has been taken on the lower side than the deed executed on 22.01.2007. Difference in the value of registration deed executed for your equal such share works out to Rs.15,00,000/- (Rs.1,05,00,000/-3 ITA Nos.2293 & 2295/Del/2011
Rs.90,00,000/-). This difference of Rs.15,00,000/- is found unexplained and apparently your undisclosed investment made in this property. You are requested to produce your seller for examination, You are, therefore, requested to 'explain why the same amount of Rs.15, 00,000/- should not be added to your income apart from the inclusive of total suppressed investment made by you in this property as may be found by the department during course of this proceeding."
3. In response, the assessees furnished similar replies which is reproduced as under:
"We have purchase a undivided property no. 10/78, Punjabi Bagh (West) for a total sales consideration of Rs.3,90,00,000 from Sh. S. K. Sachdeva, Director of M/s. Sachdeva Promoters & Properties Pvt.
Ltd. and Sh. Manish Sachdeva. This property had a dispute since 1987 between Mis. Sachdeva Promoters & Properties Pvt. Ltd. and the family of Sh. Bhagwant Singh & others who were the owners of the said property at that time in the year 1987. Sh. Bhagwant Singh & others had an agreement to sell with M/s. Sachdeva Promoters & Properties Pvt. Ltd. but later on this deal was not executed by the family of Sh. Bhagwant Singh & others. In 1989 Mis. Sachdeva Promoters & Properties Pvt. Ltd. filed a suit in the honourable Delhi High Court vide suit no. 3061189 the same suit was pending till 2002. We entered in an agreement cum MOU with S. K. Sachdeva, Director of M/s. Sachdeva Promoters & Properties Pvt. Ltd. for the settlement of the dispute with the family of Sh. Bhagwant Singh & others. Our family had an influence on the family of Sh. Bhagwant Singh & others. Mr. Manish Sachdeva is a step brother of Mr. S. K. Sachdeva was in possession of the property and they also have a dispute regarding the ownership and the possession. Both Sachdeva brothers were good friend of mine. It was also made an understanding between the both brothers and us, if we made an effort to resolve the dispute by using my influence. There was an agreement cum MOU made between myself and Mr. S.K. Sachdeva director of Sachdeva Promoters and Properties Ltd. for selling his part of share property for RS. 210 Lacs and decided that the payment to be made if any to Mr. Munish Sachdeva will be apart from this and shall be made by us directly to Mr. Munish Sachdeva. We made a consolidated deal of undivided above said property from both the brothers at a total amount of Rs.
4 ITA Nos.2293 & 2295/Del/20113,90,00,000 in the year 2003. After our efforts a settlement deed was signed between two brothers on dt. 20.06.2003. In light of theses all above efforts for resolving all the disputes between the two sachdeva brothers and subsequently in the month of October-2005 with the family of Sh. Bhagwant Singh & others, It was mutually decided between the two sachdeva brothers that M/s. Sachdeva Promoters & Properties Pvt. Ltd. will make a payment of Rs. 1,27,50,000 at the time of sale deed in favour of sachdeva brothers by the family of Sh. Bhagwanti Singh & others. Mr. Manish Sachdeva had made a payment of Rs. 1,00,00,000 at the time of registration of sale deed in his favour. Subsequently at the time of sale Mis. Sachdeva Promoters & Properties Pvt. Ltd. Will receive Rs. 30,00,000 extra than Mr. Manish Sachdeva. The portion of plot in possession of Mr. Manish Sachdeva adjoining to a property no. 8/78 which is having multiple and multistory flats and location is comparatively inferior as compared to the portion in possession of M/s. Sachdeva Promotoers & Properties Pvt. Ltd. That is why I had paid proportionately Rs. 15 Lacs less t Mr. Manish Sachdeva as a part of full deal.
Hence I have to state that I have not made any unexplained and undisclosed investment in this property of Rs. 15 Lacs. As on today the seller is not in touch with me and I don't know his present where about even than I will try me level best to produce him before your goodself. I request your goodself to issue summon u/s 131 for examining the seller".
4. The Assessing Officer after considering the submissions of the assessee, made an addition of Rs.71,93,200/- in both cases by holding as under:
"I have considered the facts and circumstance of the case and reply file by the assessee. The contention of the assessee is contradictory. In first part of the letter it has been stated by the assessee that he was having good relations and having influence on Mr. Munish Sachdeva and the other party Bhagwant Singh & Other and acted as Arbitrator to settle the dispute among them. However, in the concluding part, it has been stated that seller i.e. Munish Sachdeva is not in touch with the assessee and his present address etc 5 ITA Nos.2293 & 2295/Del/2011 is not known. Further, it has been contended that the portion of plot in possession of Munish Sachdeva is comparatively inferior and because of which consideration of lesser amount in comparison to other buyers were made but it has also been stated in the same reply that Munish Sachdeva was in possession of entire property. The contention of the assessee is contradictory and full of loop holes. The assessee at his own convenience tries to mould the facts to cover-up the whole issue by fabricating facts which are not supported by any documentary evidence whatsoever. Accordingly, the contentions of the assessee are not found to be justifiable and therefore rejected. The property is a prime location property located in most posh area of Punjabi Bagh, New Delhi having much higher market value than shown by the assessee. This property is measuring 2275.92 Sq. yards and the assessee is the owner of 1I4th share in this property along with his three brothers who are owning the rest of the properties in equal one fourth share each.
4.2 It is found that the assessee's co-owners (brothers) Sh. K.K. Arora and R.P. Arora had paid Rs.1,05,00,000/- each and their registration deed for this property was executed on 22.01.2007 for their part of 1I4th share. But the assessee for his 1/4th share in same property made registration on 19.04.2007 after about more than three months at only, Rs.90,00,0001- for purchase of equal share in this property. Difference in the deed amount executed on 22.01.2007 and 19-04-07, was Rs 15,00,000/-. The person who sold the property to this assessee was in possession of the entire property, and was in a better position to decide the consideration. No prudent person will sell part of the same property after three months at substantially lower price which is lower by Rs.15,00,000/- than the earlier deed executed in January, 2007. Difference in the value of registration deeds executed for assessee's equal 1/4th share works out to Rs.15,00,0001- (Rs.1,05,00,000- Rs.90,00,000). This difference of Rs.15,00,000/- is found unexplained which is nothing but the unaccounted payment made by the assessee for consideration of this property. The explanation of the assessee in this regard is unsubstantiated and not acceptable.
4.3 Further, documentary evidences have been found during course of search operation in respect of unaccounted consideration 6 ITA Nos.2293 & 2295/Del/2011 decided and paid by the assessee in respect of the property transaction decided/executed by the assessee and family at Baddi HP, which has been discussed separately in the case of assessee in this order. However the same is mentioned here only to point out that the assessee and his family members are found to have been investing their unaccounted income in properties. It was also found that the assessee is transferring the immovable properties for unaccounted consideration also.
4.4. In this respect informal agreement entered into by the assessee for plot no.50 of Kailash Co-op Housing Building Society Ltd. Kailash Vihar, Baddi as per page No.9 of annexure A-3, annexed as per Annexure I, is reproduced as under:
15 Lac Plot at 50 Kailash Vihar I Ist January 08 Bayana 25% 2 Final Payment 28 Feb 2008 3 White 4 Lac Sd.
Signed by Shri R.K. Arora (Arvainder Jeet Singh)
On 27.12.2007 9815609506
Sd./- Sd./-
(Japanjeet Singh) (Satbeer Singh)
9815608915 921633711
As per this document the assessee has decided the sale/purchase consideration of this plot at Rs.15 Lacs whereas the accounted component was decided at Rs 4 Lacs only on 27-12-2007. The paper clearly mentions total cost as Rs.15 lacs and 'white' as Rs.4 lacs. It is common knowledge that 'white' in ordinary business communication refers to the accounted transactions. This paper is signed by the assessee and three other persons as appeared from their signatures.
They are Sapan Jeet Singh, Mr. Arwind jeet Singh and Mr Satveer Singh. It is mentioned in this documents that the final payment was to be made before 28-02-2008, which means period of final payments was decided in Two months. On the basis of this paper, additions have been made in the case of the assessee in A Y 2005-06 & 2006-07.
7 ITA Nos.2293 & 2295/Del/20114.5 From the seized material in the case of the assessee it is found that M/s. Empire Castings Pvt. Ltd., the company was taken over by the assessee and his brothers on 23.07.2004. As per page 4 to 8 of Annexure A-4 of WB-l (copy enclosed to this order), seized during the course of search, the assessee has done Valuation of the said company at Rs.1,15,00,000/- (at page no 5). However on this page only the payment through cheque was mentioned at Rs 37,11,000/-. Further payment of rupees one lac has also been paid in cash as per page no. 5 (enclosed as annexure II) which is reproduced as under:
Total Value 11500000 Less Payment by cheque 3711000 Less Cash given 100000 Less Withheld cash 7689000
The assessee has also calculated cash balance given for the company amounting Rs.77,89,0001-. It is the fact that the assessee has acquired the said company and paid consideration for the same out of books amounting Rs 77,89,000/-. On the basis of this document, separate addition has been made in the case of the assessee in A Y 2005-06. 4.6 In this way it is clear from the above that the assessee is investing his unaccounted income in the immovable properties and is habitual of using the unaccounted cash in sale/purchase of immovable properties and investment. Under the facts and circumstances as discussed in detail, surrounded facts and direct evidence found in the case of the assessee as discussed above the difference in two registered deeds amounting to Rs. 15,00,000/-, it is apparent that the assessee has made his unaccounted investment in this property of at Rs.15,00,000/-.
4.7 As discussed earlier, it was noticed that l/4th part each of the said property has been registered in the names of four brothers. It was observed that the same property in parts has been transferred for different values to the four brothers, therefore, to ascertain the correct value the said property was referred to the departmental valuation cell. A report from the District Valuation Officer, LT. Department has been received vide letter F.No.:DVO/New Delhi/IT-16/2009- 10/151 dated 30/12/2009 determining the value of the property at 8 ITA Nos.2293 & 2295/Del/2011 Rs.6,47,72,800/- and assessee's share being 114 at Rs.1,61,93,2001-. The assessee was accorded opportunity to show cause as to why his unaccounted investment in the said property in Punjabi Bagh should not be estimated as per this valuation report as well as other facts available with this office. The counsel of the assessee submitted a detailed reply dated 30/12/2009.
4.7(i) I have considered the submissions of the assessee. To summarize, the assessee has challenged the reference of valuation to DVO and termed it illegal and bad in law. Further, it has been contended that the valuation made by the DVO is illegal and without jurisdiction. It has also been contended that the property was acquired at a consideration of Rs.3.90 crores by the four brothers as the property was under dispute and assessee's brother utilized his influence and relation to settle the matter amongst the parties. Assessee has also relied on the fact that similar properties situated in the nearby area has been registered at values lower than the price paid by the assessee, some instances in support along with copy of documents have been submitted. Finally, the assessee has relied on the judgement of Supreme Court in the case of K.P. Verghese and contended that no inference should be drawn as no document of any payment over and above the declared payment pertaining to this property has been seized 1 found during the course of search. The assessee has also contended that other alleged facts have no relevance for estimating the investment in the property.
4.7(ii) The contention of the assessee that the reference to valuation cell is illegal and bad in law is without any contention. The valuation was made as per provision of section 142A of the LT. Act as the property was lying in one of the posh areas of the capital and the declared value was quite low in comparison to prevailing rate which has been evidenced by the valuation report. The valuation made by the valuer in no way can be termed as illegal and without jurisdiction as specific reference has been made to him to value the property and valuer is an authorized officer to estimate the value of the property. The other contention that the assessee was having influence and control over the two parties has been discussed at length in Para 4.1 and for ready reference is reproduced hereunder:
9 ITA Nos.2293 & 2295/Del/2011In first part of the letter it has been stated by the assessee that he was having good relations and having influence on Mr. Munish Sachdeva and the other party Bhagwant Singh & Other and acted as Arbitrator to settle the dispute among them. However, in the concluding part, it has been stated that seller i.e. Munish Sachdeva is not in touch with the assessee and his present address etc is not known. Further, it has been contended that the portion of plot in possession of Munish Sachdeva is comparatively inferior and because of which consideration of lesser amount in comparison to other buyers were made but it has also been stated in the same reply that Munish Sachdeva was in possession of entire property. The contention of the assessee is contradictory and full of loop holes. The assessee at his own convenience tries to mould the facts to cover-up the whole issue by fabricating facts which are not supported by any documentary evidence whatsoever.
The comparable rate quoted by the assessee is in respect of small plots whereas the property in question is a big plot and is not comparable. The judicial pronouncements quoted by the assessee in no way stop the revenue to arrive at the true value of asset as the circumstances of the case points out that the money is part of such deals and money change hands which is a fact of common knowledge. It cannot be said that merely because some part of the consideration has not been recorded in the regular books of the assessee or that the department has not found concrete evidence of the assessee making such payment out of book, that the assessee has not made any such payment because out of book payments because of their nature are difficult to track. The assessee has not been in a position to disprove the fact that over and above payment for acquiring this property has not been paid which is evident from valuation report as well as other documents seized during the course of search from which it is evident that the assessee was in the practice of making unaccounted for acquisition of properties at Baddi, acquisition of shares of M/s Empire Casting Pvt. Ltd.
4.7(iii) In view of the above facts, it is clear that the value arrived at by valuer is true value of the property and as such the same is adopted as investment made by the assessee for the acquisition of the above 10 ITA Nos.2293 & 2295/Del/2011 property. Accordingly, the difference of Rs.71,93,200/- [1,61,93,00 (-) 90,00,000/-] is treated as unexplained investment made by the assessee U/S 69B of the I.T. Act added to the income of the assessee. I am satisfied that the assessee has concealed particulars of income hence penalty proceedings U/S 271(1)(c) are treated and initiated separately.
....................Addition Rs.71,93,200/-.
5. The Assessing Officer further observed that in the case of Shri Anil Arora that the assessee was having a shop at Bhagirath Place, which was reflected at Rs.2.55 lacs & which was purchased many years back. The Assessing Officer estimated the value of the shop at Rs.19 lacs and estimated the rental income of Rs.79,800/- on the basis of 6% of Rs.19 lacs u/s 23(4)(b) of the Act. The Assessing Officer further made an addition of Rs.3,22,200/- on account of cash found at the premises of Anil Arora on 14.02.2008. The assessee was asked to explain the source of such cash on which assessee submitted that Rs.2.50 lacs was belonging to the company and Rs.72,200/- was out of his past savings. The Assessing Officer however, did not agree with the contention of the assessee and made the addition of Rs.3,22,200/- by holding as under:
"During the course of search operation from the residential premise of the assessee i.e. 1st Floor, B-4/48, Paschim Vihar, New Delhi cash of Rs.3,22,200/- was found on 14/02/08. The assessee was asked to explain the source of cash so found. The assessee has stated that out of the cash so found, cash of Rs.2,50,000/- was pertaining to the company and balance Rs.72,200/- was out of my past savings. Contention of assessee is not found acceptable. The fact was found that unaccounted cash expenses was incurred by his company M/s Wings Pharmaceuticals Pvt. Ltd for meeting expenditure on wages which has been suppressed in its books to arrive at higher exempt profits during A. Y. 06-07, 07-08 and 08-09 establishes that cash balance as claims of company is unreliable and incorrect. Books of account of M/s Wings Pharmaceuticals (P) Ltd. are found 11 ITA Nos.2293 & 2295/Del/2011 unreliable on several accounts. Book result of this company is proposed to be rejected. As such it leaves no basis for reliance on assessee's contention and treat amount alleged to be belonging to M/s Wings Pharmaceuticals Pvt. Ltd.
The assessee has shown opening cash in hand of Rs.5,94,344/- which has been stated to be part of disclosure made under VDIS Scheme 1997. The assessee has not filed statement of affairs and copy of bank account for the period 1997 to 2000 to justify the claim that the cash declared under VDIS scheme remains in the same form. The explanation made for availability of cash is not justifiable as no prudent businessman will keep the money declared under VDIS .scheme in the same form and hide in a locker but invest the same in business or deposit in a bank. As the assessee has failed to file any documentary evidence in support of the contention that the cash of Rs.2,50,000/- belongs to the company and as regard to balance cash, it is seen that assessee has been drawing minimal amount ranging to Rs.10,000/- to 60,000/- in cash in the preceding years i.e. A Y 2002-03 to 2006-07. Under the circumstances, the cash so found from the residential premises of the assessee remains unexplained and added to the income of the assessee as per provision of section 69 A of the I. T. Act. I am satisfied that the assessee has furnished inaccurate particulars of income, hence penalty proceedings U/S 271(1)(c) are attracted and initiated separately.
6. In the case of Rakesh Kumar Arora, besides the addition u/s69B and on account of rental value, another addition of Rs.2,60,667/- was made by the Assessing Officer on account of unexplained expenditure during foreign travel. The Assessing Officer has made the addition by holding as under:
"6. During the year under consideration the assessee has undertaken foreign travel to Australia and Newzeland. The assessee was asked to furnish details of such expenses along with details of countries visited, period of travel, ticket expenses, boarding and lodging expenses etc. The assessee has submitted as under:
I had made a foreign traveling to Australia and New Zealand in the year 2007-08, through a package tour name by Add on New Zealand 12 ITA Nos.2293 & 2295/Del/2011 on AMAZING Australia and Australians Splendors. Detail Brochure of Grand Tour of Europe of Mis Kuoni India Travels is enclosed for your reference which is self explanatory that the package tour includes the Air Tickets, Local Travelling, Hotel Stay, Breakfast Lunch and Dinner. It was a package tour and I had made an expenditure for Rs. 1555323/- out of which expenditure ofRs. 1221611/- borne my wife Smt. Kiran Arora and balance Rs. 333712/- borne by me i.e. Sh. R.K. Arora. Photo copy of the cheques through which payment has been made and other documents is enclosed herewith for your kind reference.
6.l I have considered the submission of the assessee. In absence of details of expenditure incurred on other related activities, such as passports, places visited, tickets for monuments 1 parks 1 museums, period of stay, gifts/souvenirs, shopping etc., the expenditure so claimed is not being treated to be adequate and accordingly the same is estimated at Rs.18,00,000/- out of which Rs. 15,33,323/- has been claimed to have been incurred by the assessee and his wife. As such an addition of Rs 2,66,677/- is being made in the hands of the assessee being expenditure made out of undisclosed sources. ............(Addition Rs.2,66,677/-)."
7. Aggrieved with the addition, assessee filed appeal before Ld. CIT(A) and made various submissions. Ld. CIT(A) has deleted the addition made by the Assessing Officer by holding as under:
5.6 "I have carefully considered the impugned order of the Ld AO and the submissions made by the assessee. During the year under consideration, the assessee along with his three brothers purchased the property situated at 10/78 Punjabi Bagh, New Delhi for a total sale consideration of Rs. 3.90 Cr. from Sh. Munish Sachdeva and Mis Sachdeva Promoters & Properties Ltd. The assessee along with Sh. Anil Arora purchased the share of Sh. Munish Sachdeva in the above said property for a consideration of RS 180 Lacs. According to AO purchase value of the property was apparently highly suppressed by the appellant therefore, the case was referred to the Valuation Cell u/sI42(A) of the IT Act to determine the FMV of the property. The DVO determined the FMV of share of the assessee in 13 ITA Nos.2293 & 2295/Del/2011 the complete property at Rs. 16193200/-. The assessee had shown the value of his share in the above said property at Rs 90,00000/- in his sale deed as well as in the books of accounts. After giving the appellant an opportunity of being heard the AO has added difference of Rs 7193200/- as undisclosed investment under section 69B.
It is an undisputed fact that no document has been found from the office of the company & residence of the directors which indicate that any investment in this property was made over and above the purchase price paid and reflected in the books of accounts by the assessee. In the hands of the seller the sale consideration has been accepted no addition has been made. It is not open to the A5 to take a different stand I or make any addition on investment, on the basis of alleged valuation report, in the hands of the purchaser/assessee. The assessee also placed reliance on the judgments given in K P Varghese vs ITO 131 ITR 597(SC) which clearly says that onus of establishing that the condition of taxability are fulfilled is always on the revenue and burden lies on the revenue to show that there is an understatement of the consideration. This principal has been consistently followed by the various high courts and IT AT benches. Reliance was also placed on the judgment of IT AT Delhi bench in Tej Pratap Singh V s ACIT 307(2008) ITR PAGE 244 & Ashok Soni Vs ITO (2006) 102 TTJ 964. It has also been held that the valuation report is an expert opinion at the most. In relation to the transaction of the transfer, such report cannot be treated to be proof of the fact that there is some under hand dealing and consideration has passed more than what is disclosed. The appellant also placed reliance on the following judgements wherein it has been held that it is settled law that primary burden to prove under statement or concealment of income is on the Revenue and it is only when such burden is discharged, it would be permissible to rely upon the valuation given by the DVO.
a)CIT Vs BAJRANG LAL BANSAL ITA 18212010 (DELHI HIGH COURT)
b)CIT Vs RAMESH KAKKAR ITA 1550/2010 (DELHI HIGH COURT)
c)CIT Vs. Shakuntala Devi 316 ITR 46 (DELHI HIGH COURT) The division Bench of Hon'ble Delhi High Court in CIT Vs Ashok Khetrapal 294 ITR 143 observed that by referring to the report of 14 ITA Nos.2293 & 2295/Del/2011 valuation officer in the absence of any incriminating documents found in the course of a search no addition could be made by treating investment as undisclosed on the basis of DVO's report. The decision in CIT Vs Manoj Jain 287 ITR 285 is also to the same effect . In view of the discussion made above, and the views of different Courts including the jurisdictional Hon'ble Delhi High Court in my considered opinion the addition made by 'the AO, only on the basis of Valuation Report without having any material on record on the basis which reasonable inference can be made of some investment over and above the disclosed consideration is not tenable. Therefore the appeal of the appellant on this ground is allowed and the AO is directed accordingly.
The Assessing officer has also observed that the registered value of 1I4th share in the complete property at 10/78 Punjabi Bagh, Delhi has been shown by the assessee at lesser value by Rs. 15 lacs as compared to the value shown by the other two brothers Sh.K.K. Arora and Sh. R.P. Arora for their equal share in the property. Accordingly on this account he opined that the assessee has made unaccounted investment in this property of at least Rs. 15 lacs. In this regard also I have considered the facts of the case and the submission made by the assessee. The AO has missed the point that the portion of the plot purchased by the assessee is adjoining to property no. 8/78 which is having multiple and multi story flats and thus is having comparative inferior location as compared to the portion of the plot purchased by the other two brothers. Thus this vital fact cannot be ignored which is bound to have impact on the· value of the said portion of the plot/property purchased by the assessee. Accordingly in my considered opinion the above said observation of the AO that the assessee has made unexplained investment of at least Rs. 15 lacs in this plot/property is also not correct.
Thus the AO is directed to delete the entire addition of Rs.71,93,200/- and the appellant gets relief of Rs.71,93,200/-.
6.Ground of Appeal no. XI "That on the facts and the circumstances of the case and the provisions of the Law the Ld AD has erred in making an addition of Rs. 79800/- U/S 23(4)(b) of the IT Act on account of fair rental value of the shop situated at 3rd floor of 15 ITA Nos.2293 & 2295/Del/2011 BhagirathPlace by arbitrarily estimating the market price at Rs. 1900000/-."
On mere presumption and assumption the Assessing Officer has estimated the market value of the shop situated at Bhagirath Place (Chandni Chowk) at Rs.19 lacs and also determined rental value of the shop at Rs.1,14,000.0.
As the Assessing Officer has not brought anything on record in this regard, there is no justification for making any addition on this account. Moreover, it was submitted that during the entire year the said shop was lying vacant.
In view of the above the Assessing Officer is directed to delete the addition of Rs.79,800/- made u/s 23(4)(b).
7. Ground of appeal No.XII:
"That on the facts and the circumstances of he case and the provisions of the law, the learned Assessing Officer has erred in making an addition of Rs.3,22,200/- u/s 69B as unexplained cash found at residence at the time of the search proceedings."
During the course of search operation from the residential premises of the assessee i.e. 1st Floor, B-4/48 Paschim Vihar, New Delhi cash of Rs.3,22,200/-was found on 14-02-2008 .The assessee was asked to explain the source of cash so found .The assessee stated that out of the cash so found cash of Rs.2,50,000/- was pertaining to the company M/s Wings Pharmaceuticals Pvt. Ltd. And balance Rs. 72200/- was out of his past saving. The assessee being the director of the company is looking after the marketing functions of the company M/s Wings Pharmaceuticals Pvt. Ltd. And to meet out day to day expenses of the marketing division situated at Delhi the cash to the tune of s. 2 to 3 lacs is normally kept with the assessee. Thus on the date of search also out of the total cash found, cash of Rs. 2.50 lacs was belonging to the company .As on 14.02.2008 total cash of company as per their books was Rs. 686080/- .The company in its books of account has also shown cash of Rs. 6.00 Lacs as cash seized. Moreover the search proceeding was carried out at all the premises of the company and your kind honor will observe that no cash was found from the premises of the company apart from the cash of Rs. 322200/- found from the assessee and Rs. 4,29,380/- found from the residence of Mr. R.P.Arora . Out of Rs. 3,22,200/- found from the residence of the 16 ITA Nos.2293 & 2295/Del/2011 assessee it was stated that the remaining cash of Rs. 72200/- was out of his past accumulated saving which was also verifiable from the cash book of the assessee . A copy of the same along with confirmation by M/s Wings Pharmaceuticals Pvt. Ltd. was also placed on record. I have considered the impugned order and the submissions of the assessee it is an undisputed fact that M/s Wings Pharmaceuticals Pvt. Ltd. has shown cash of Rs. 6 lacs in its balance sheet under the head other current assets as cash with the income tax dept. and out of it Rs. 2.50 lacs pertains to the cash found from the residence of the assessee. Accordingly in my considered opinion the source of this cash of Rs. 2.50 lacs is explained. With regard to balance cash of Rs. 72,2001- the assessee has filed a copy of the cash book wherein also the same cash has been shown as outstanding on 14.02.2008 the date of the search. Accordingly on this account also no addition is called for.
Thus, the AO is directed to delete the addition of Rs. 3,22,200/- made on his account."
8. First two additions in the case of Shri Rakesh Kumar Arora in I.T.A.No. 2295/Del/2011 were deleted holding the same observations as held in I.T.A.No. 2293/Del/2011. However, the addition on account of foreign travel expenses was deleted by holding as under:
"Ground of appeal No.XII:
"That on the facts and the circumstances of the case and the provisions of the law, the learned Assessing Officer has erred in making an addition of Rs.2,66,677/- on account of foreign traveling. On mere presumption and assumption the Assessing Officer has estimated total expenditure on foreign traveling to Australia & New Zealand at Rs.18 lacs. And as the assessee has already disclosed expenditure of Rs.1533323/-, the Assessing Officer has made an addition of Rs.266677/- on this account.
It is an undisputed fact that the said tour was a package tour arrange by SOTC which includes all the things i.e. cost of air tickets, accommodations foodings, transfers, sight scene etc. No question of any unexplained expenditure in this regard arises. Thus in my considered opinion there is no justification for making any addition 17 ITA Nos.2293 & 2295/Del/2011 on this account. Accordingly, Assessing Officer is directed to delete the addition of Rs.266677/- made on this account."
9. Aggrieved with the action of Ld. CIT(A), the revenue is in appeal before us.
10. Arguing first on appeal in the case of Mr. Anil Arora, Ld. D.R. invited our attention to para 4 on page 2 of the assessment order and similarly, our attention was invited to relevant finding of Ld. CIT(A) and in view of the same, it was submitted that Ld. CIT(A) has merely rejected the Assessing Officer's findings. It was submitted that the Assessing Officer has clearly held that in the case of brother of the assessee and that of the assessee there was difference in consideration and moreover, Assessing Officer had found various documents from which it could be concluded that the assessee was indulging into dubious transactions and, therefore, the property of the assessee was referred to valuation officer and Ld. A.R. of assessee had not pointed out any discrepancy in the valuation report. Arguing ground No.3, Ld. D.R. submitted that here also Ld. CIT(A) had deleted the addition without assigning any reason. Further, arguing ground No.4 regarding cash found at the premises, Ld. D.R. submitted that Ld. CIT(A) had simply accepted the contention of the assessee that the cash belonged to the company which should not have been accepted as the said company is a different assessee and the cash belonging to a different assessee cannot be said to be kept at the residence of the director of the assessee company. It was further submitted that if the cash belonging to company was with the Director, the assessee was also hit by the provisions of Section 269SS and 269T. Arguing the other appeal in I.T.A.No. 2295/Del/2011, Ld. D.R. submitted that his arguments on the first three grounds were the same 18 ITA Nos.2293 & 2295/Del/2011 whereas in respect of ground No.4, he placed heavy reliance on the order of the Assessing Officer. Ld. A.R. replying on the grounds No.1 & 2 in both the appeals submitted that Mr. Anil Arora, the assessee in I.T.A.No. 2293/Del/2011 had purchased one plot along with his brother for a total consideration of Rs.1.80 crores, so the share of both assessees came to be Rs.90 lacs each. He further explained that there was another plot which was a separate plot and which was purchased by other two brothers of the assessee namely Shri R P Arora and Shri K K Arora from a different person for a total consideration of Rs.2.10 crores and the other brothers had paid Rs.1.05 crores each. He further submitted that plots purchased by brothers of assessee had a better location as there were small flats in front of the property of assessees whereas the plot purchased by brothers of the assessee had larger properties. So, due to locational advantage, the brothers of the assessee had paid a different amount. Further arguing, Ld. A.R. submitted that the difference in price can be further proved from the fact that the seller of these plots had also purchased at different rates and the plots purchased by assessees were purchased by its seller for a lower price of Rs.1 crores as compared to Rs.1.27 crores paid by the sellers of the plot purchased by brothers of the assessee. He further submitted that during the search no documents were found to show that the assessee had paid extra amount other than the declared amount in the sale deed. Ld. A.R. further submitted that during assessment proceedings, the assessee had filed sale deed which the Assessing Officer had ignored. In view of the above, it was submitted that Ld. CIT(A) has very elaborately considered the submissions of the assessee and has passed the order. Regarding cash found, Ld. A.R. submitted that since the assessee was director and therefore, he was in an appropriate 19 ITA Nos.2293 & 2295/Del/2011 position to keep the cash belonging to the company and it was not a loan from the company, therefore, the violation of the provision of Section 269SS and 269T as mentioned by Ld. D.R. was not relevant. Regarding addition on account of fair rental value and foreign travel expenses the Ld. A.R. relied upon the order of Ld. CIT(A). The Ld. D.R. in his rejoinder submitted that the fact that the difference was due to different properties was not before the Assessing Officer. Therefore, it was additional evidence which was considered by Ld. CIT(A) in violation of Rule 46A. He further submitted that the property owned by four brothers was undivided, so, therefore, different brothers cannot make different payments.
11. We have heard the rival parties and have gone through the material placed on record. We find that Ld. CIT(A) has deleted the additions on account of difference in market prices of properties as compared to declared values following certain judicial pronouncements and by elaborating the facts clearly. Therefore, we do not see any reason to interfere with his findings. His order on other additions is also very elaborate and merits no intervention.
12. In view of the above, both the appeals filed by the Revenue are dismissed.
13. Order pronounced in the open court on 08th Aug., 2014.
Sd./- Sd./-
( I. C. SUDHIR ) (T.S. KAPOOR)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Date: 08th Aug., 2014
Sp
20 ITA Nos.2293 & 2295/Del/2011
Copy forwarded to:-
1. The appellant
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
By Order (ITAT, New Delhi).