Income Tax Appellate Tribunal - Delhi
Smt. Aruna Chaudhary, New Delhi vs Acit, New Delhi on 4 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A", NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND
SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER
ITA Nos.3438 to 3443/Del/2017
A.Ys. : 2008-09, 2009-10, 2011-12 to 2014-15
Aruna Chaudhary, ACIT, Central Circle-26,
39, Gadai Pur, Mahrauli, Vs. New Delhi.
New Delhi.
PAN : AAEPC0681R
(Appellant) (Respondent)
Appellant by : Shri Ajay Wadhwa, Adv.
Respondent by : Smt. Aparna Karan, CIT(DR)
Date of hearing : 30-11-2017
Date of pronouncement : 04-01-2018
ORDER
PER R. K. PANDA, AM :
The above batch of appeals filed by the assessee are directed against the common order dated 31.03.2017 of the CIT(A)-31, New Delhi relating to assessment years 2008-09, 2009-10 and 2011-12 to 2014-15 respectively. For the sake of convenience these appeals were heard together and are being disposed of by this common order.
2. First, we take up ITA No.3438/Del/2017 for assessment year 2008-09 as the lead case.
3. Facts of the case, in brief, are that the assessee is an individual and filed her return of income on 12.03.2010 declaring income of Rs.92,23,790/-. A search and seizure operation u/s 132 was carried out on 11.09.2013 and 2 ITA Nos.3438 to 3443/Del/2017 17.09.2013 in the case of AKN Group of cases. The case of the assessee was also covered in the said search. During the course of search, certain incriminating documents were found and seized. In response to notice u/s 153A, the assessee filed her return of income on 31.07.2014 declaring income of Rs.92,23,790/- which is the same income as declared in the original return filed u/s 139 of the I.T. Act. Further, during the assessment proceedings, the assessee revised her computation of income and declared an amount of Rs.1,50,000/- as agricultural income.
4. The Assessing Officer, during the course of assessment proceedings, observed that no documents substantiating the claim of agricultural income were filed. Further, the assessee had not declared any agricultural income in the original return filed u/s 139 of the I.T. Act. He, therefore, held that declaration of agricultural income and claim the same as exempt is an afterthought only to conceal her unaccounted income and therefore, the same cannot be acceptable as the assessment u/s 153A is being made in the interest of revenue and not to the benefit of the assessee. He accordingly treated the agriculture income of Rs.1,50,000/- declared by the assessee as "income from other sources".
5. Following similar reasoning the Assessing Officer also treated the agricultural income declared in the other years as income from other sources, the details of which are as under :-
2009-10 Rs.1,75,000/-
3
ITA Nos.3438 to 3443/Del/2017
2011-12 Rs.3,25,000/-
2012-13 Rs.4,10,000/-
2013-14 Rs.4,25,000/-
2014-15 Rs.4,50,000/-
6. The Assessing Officer further noted that during the search operation, carried out at the premise i.e. 2/1, Chattarpur More, New Delhi, page no.37 & 38 of annexure A-8 was found regarding the purchase and sale of property made by the assessee in Singapore and commission was also paid with regard to this transaction. During the assessment proceedings, the assessee was confronted with the above documents and was asked to explain the same vide questionnaire dated 09.03.2016. The assessee in response to the same vide letter dated 16.03.2016 denied to have made any investment in property at Singapore. The relevant part of her submission as reproduced by the Assessing Officer in the body of the assessment order reads as under :-
"that as already explained before the ADIT during the appraisal proceedings, I have not purchased any property at Singapore. One proposal came to me for one property at Singapore which was never purchased. Certain offer documents were received which are neither send by me nor in my handwriting. The broker had sent some working to me. However, nothing materialized."
7. The Assessing Officer observed that a reference was made to FT&TR by the Pr.CIT, (Central)-3, New Delhi on 24.09.2015 to request the Singapore land authority for providing information in respect of the property bearing no.383, 4 ITA Nos.3438 to 3443/Del/2017 Tangling Road No.06-06 Tangling Regency, S(247966) which is mentioned in the seized documents and whether the assessee has entered into any transaction in respect of the above property in the concerned financial year. Subsequently the FT&TR vide his letter F.No.504/513/2015-FT&TR-IV-659 dated 29.02.2016 forwarded the information received from Singapore authority according to which the property mentioned in the above stated annexure was held by Sh. Naintara Bhati from 28.12.2004 to 16.04.2006 and sold the same to Aruna Gujjar at a price of Singapore dollar (hereinafter referred as SGD) 5,00,000 and held by her from 17.04.2006 to 26.12.2007. The said property was sold by Smt. Aruna Gujjar at a sale consideration of SGD 7,80,000. Further as per information provided by the Singapore authority the assessee has also paid property tax of SGD 440 for the period January 2006 to April 2006, SGD 1320 for the period 01.01.2007 to 31.12.2007 and SGD 1620 for the period 01.01.2008 to 31.12.2008. Further, on perusal of the page no.38 of annexure A-8 of party TO-2, he noted that the assessee has paid a commission of SGD 8346 to Era Realty Network Pte. Ltd. for arranging the buyer for sale of property bearing no.383, Tangling Road # 06-06 Tangling Regency, S(2477966) on which signature of the assessee is also appearing.
8. The Assessing Officer confronted the assessee with the information received from FT&TR vide this office letter dated 16.03.2016. The copy of the information received from Singapore authority was also provided to the 5 ITA Nos.3438 to 3443/Del/2017 assessee. The assessee vide letter dated 16.03.2016 was show caused as to why the capital gain received on this property and the payment with regard to the property tax and commission should not be added to the total income of the assessee for the year under consideration. The assessee was also afforded an opportunity to file any submission/objection in this regard by date 22.03.2016. However, the assessee did not file any submission/objection in this regard. The Assessing Officer therefore made addition of the capital gains earned on this property and unaccounted payments made by assessee with regard to property tax and commission to the total income of the assessee, the details of which is as under :-
S. Date of Amount in Exchange rate of Total amount in
No. transaction Singapore Singapore dollar INR
dollar vis a vis INR as
on that date
1 Sale consideration received 26.12.2007 7,80,000 27.2253 2,12,35,734
on account of sale of
property situated in
Singapore
Less cost of purchase 17.04.2006 5,00,000 27.9595 1,39,79,750
Capital gains 2,80,000 72,55,984
2 Commission expenses 26.12.2007 8,346 27.2253 2,27,222
3 Property tax 31.03.2008 1,476 26.309 41,784
75,24,990
9. The Assessing Officer further observed that during the year under consideration, the assessee sold agricultural lands in Village Ghitorni and Dera land and earned long term capital gains on it. On perusal of the computation filed by the assessee, he noted that with regard to agricultural land in Dera land, the assessee has claimed an amount of Rs.31,84,299/- as cost of construction and its indexation on this land. However, no supporting documents were 6 ITA Nos.3438 to 3443/Del/2017 submitted in this regard. Hence vide this office letter dated 18.03.2016, he issued a show cause to assessee to explain as to why the amount claimed as cost of construction and its indexation should not be disallowed. In reply, the assessee vide letter dated 25.03.2016 has simply submitted that the said construction was made with regard to boundary walls construction on this land. The assessee submitted a simple confirmation on plain piece of paper from Sh. Sanjay Sharma, Prop. I & U International that he has received Rs. 65 lakhs as cost of construction of Dera Land.
9.1 The Assessing Officer noted that out of total amount, an amount of Rs.25 lakh was paid by the assessee to Sh. Sanjay Sharma in cash. The assessee failed to give any substantiating documents, i.e. any agreement/MoU with regard to genuineness of her claim. Just filing a confirmation on plain paper from a person according to the Assessing Officer is not a satisfactory evidence to prove genuineness of her claim. The Assessing Officer therefore rejected the claim made by the assessee with regard to the cost of construction and its indexation, i.e. Rs.31,84,299/- and added back the same to the total income of the assessee. The Assessing Officer accordingly determined the total income of the assessee at Rs.2,00,83,079/-.
10. Before the ld. CIT(A), the assessee challenged the various additions made by the Assessing Officer. So far as treatment of agricultural income as "income of other sources" is concerned, it was submitted that assessment u/s 153A can 7 ITA Nos.3438 to 3443/Del/2017 only be made on the basis of incriminating material found during search. For the above proposition, the decision of the Hon'ble Delhi High Court in the case of CIT vs. Kabul Chawla reported in 61 taxmann.com 412 was relied upon. So far as observation of the Assessing Officer that the claim of declaring such agricultural income is an afterthought and the assessee in the original return has not declared the same and that the assessment u/s 153A is for the benefit of revenue and not for the assessee is concerned, it was submitted that it was due to omission or over-sight that this agricultural income got excluded both u/s 139(1) as well as u/s 153A for assessment year 2008-09 to 2010-11. The moment the assessee came to know the mistake, it was declared suo-motu by way of revised computation and no credit has been taken of the said income to explain any undisclosed income. It was argued that since no evidence was unearthed during the search, the Assessing Officer is not correct when he calls the same to be an afterthought. Various decisions were also brought to the notice of the ld. CIT(A). So far as other years are concerned, it was argued that in assessment year 2011-12 to 2013-14 it has been declared in the original return filed u/s 139(1) as well as return filed in response to notice u/s 153A. Certain additional evidences were also filed before the CIT(A), who forwarded these additional evidences to the Assessing Officer along with additional ground raised before him for his comments. After considering the remand report of the Assessing Officer and after considering the rejoinder of the assessee to such 8 ITA Nos.3438 to 3443/Del/2017 remand report, the ld. CIT(A) upheld the action of the Assessing Officer in treating the agricultural income as "income from other sources". The relevant observation of the ld. CIT(A) from para 4.1 onwards read as under :-
"4.8 On the merits of the addition of agriculture income treating it as the income from other sources, the six appeals under consideration can be divided into two categories- one, for the Assessment Years 2008-09 and 2009-10 where the same was neither shown in the returns filed u/s 139(1) nor in the same filed u/s 153A and for which the additional evidence in the form of Girdawari of land at Punjab Khor has been filed; and two, for the Assessment Years 2011-12 to 2013-14 where the same was shown in both the returns u/s 139(1) and 153A, but according to the AO, the returns u/s 139(1) were filed after the date of search. The appeal for the Assessment Year 2014-15 is dealt with in the second category. On the merits of the addition of agriculture income, the aforesaid two categories of the appeals are dealt with separately hereunder.
4.8.1 Coming to the first category of appeals, undisputedly the agricultural income was not shown in the original returns filed u/s 139(1) for the Assessment Years 2008- 09 and 2009-10, where otherwise the appellant in the ITR forms had done verification that whatever was stated therein was correct. Though, the appellant had sufficient time to revise the returns, no revision was done u/s 139(5). Even when the appellant was caned upon to file return u/s 153A, this agricultural income was not included for the aforesaid assessment years in the returns filed in response to the said notice. Constant non-disclosure of this agricultural income is indicative of the fact that definitely the appellant did not have any agricultural income and had it been there, it would have been definitely included in the original returns filed or at least in the returns filed in response to the notice u/s 153A It is not understood as to what prevented the appellant to disclose agricultural income in the returns u/s 153A for the Assessment Years 2008-09 to 2010-11, when the same was shown in such returns for the Assessment Years 2011-12 to 2014-15, all of which were filed simultaneously on the same date i.e. 31.07.2014. As per the law, the revision of return can take place within the time prescribed u/s 139(5) and any attempt to change the disclosures made in the original return of income is otherwise not allowed. What cannot be done directly u/s 139(5) cannot be allowed to be done indirectly in the garb of revising the computation of income (which was done for the Assessment years 2008-09 to 2010-11, where the agricultural income was shown by filing a revised computation of income), because by doing so what effectively is done is to change/modify the disclosures already made. In this context, useful reference can be made to Hon'ble Supreme Court's judgment in the case of Goetz (India) Ltd. (284 ITR 323)(SC), where it was held that a return of income cannot be revised by way of filing a letter. It has also been held by Hon'ble Apex Court that the revision of return is not valid if the assessee is not able to establish inadvertent mistake or omission in the original return filed (G.C. Agarwal 186 ITR 571 SC). Relying upon this decision, Hon'ble Punjab and Haryana High Court in the case of Prempal Gandhi (335 ITR 23) held that are vision of income, which was not patent omission or mistake, was not acceptable. As a matter of fact the filing of letter offering agricultural income is nothing but the change of opinion on the part of the appellant to make good of the deliberate suppression of the material facts not shown earlier and hence it is clear that the appellant has failed to 9 ITA Nos.3438 to 3443/Del/2017 establish inadvertent mistake or omission in original return. As has been held in the case of G.C. Agarwal, 186 ITR 571 SC, it is an essential requirement to be satisfied before revising the return or computation.
4.8.2 In support of the agricultural income for the Assessment Years 2008-09 to 2010-11, a Girdawari of land at Punjab Khor was filed as additional evidence. However, some discrepancies are noticed therein. In the said Girdawari, the land is recorded as self cultivated by the Patwari who prepared the same, whereas, the appellant has claimed it to have been given for cultivation on 'batai' to one Sh. Rakesh Kumar, whose confirmations/certificates were also filed before the AO. On going through the original certificates, following discrepancies have been noticed:
(i) every year the payment of the money for the land was made in advance, i.e. for the year 2007-08, it was paid on 20.05.2007 and for the year 2008-09, it was paid on 15.05.2008 and so on. It is not possible that the farmer would pay the money in advance i.e. in the beginning of the year before he had sown/harvested the crops.
(ii) all the certificates, though prepared with a gap of one year approx, are written in identical language.
(iii) on perusal of the original certificates it was seen that the flow of the handwriting, ink and the paper of all the certificates are identical.
(iv) there is no lease agreement for giving the agricultural land.
(v) there no mention of date of taking the land on lease or for that matter the date of handing over the money in any of the certificates,
(vi) no details of the crop are mentioned in the certificates,
(vii) complete name/address of the cultivator is not mentioned.
(viii) it is not understood as to why a fanner from a far off place like Raebarelie would come to take a land on lease.
(ix) the said land at Punjab Khor was sold by the appellant in the month of December, 2009, yet an agriculture income of Rs.2,00,000/- has been shown for eight months which is more than what was shown in the earlier years comprising of full 12 months.
In view of the aforesaid discrepancies, when tested on the anvil of Hon'ble Apex Court's decision in the case of Sumati Dayal (214 ITR 801), this evidence is not found credible.
4.8.3 As regards the entry in the column in respect of the name of the cultivator being 'self cultivated', the Id. AR in the rejoinder submitted that 'the Patwari only sees at the time of inspection whether land is cultivated or not and he does not check the fact that the land is cultivated by some other person or the owner,' This contention which doubted the correctness of the land records and the performance of the official duties by the Patwari, a public authority, is not acceptable as it is a well know fact that all the entries in the land records are made after due verification by the land revenue authorities.
4.8.4 Not only this, there are contradictions in the submission of the appellant as far as the facts of returning the agricultural income is concerned. As per chart attached with the submission dated 07.12.2016, it was mentioned that agricultural income was shown in the returns of income filed for the Assessment Years 2008-09 to 2010-11 whereas, as per the chart attached with the submission dated 14.12.2016, it was mentioned that the same was not shown for the said years in both the returns filed i.e. u/s 139(1) and u/s 153A.
4.8.5 In view of the aforesaid discrepancies, the Girdawari filed as additional evidence is not taken on record and the confirmations/certificates filed by the appellant in support of the agricultural income are not found credible evidences. 10
ITA Nos.3438 to 3443/Del/2017 4.8.6 The failure of the appellant to not to show agricultural income at the time of filing of the return of income u/s 139 for three Assessment Years i.e. 2008-09 to 2010-11 goes to show that she clearly did not have any genuine agricultural income. The inference that the appellant did not have any agricultural income gets supported again by the appellant's failure to show it in the returns filed in response to notice issued u/s 153A of the Act, as it is improbable that a genuine income which otherwise also was exempt would not be offered in the return, particularly when the same was shown in the subsequent years for which returns u/s 153A were simultaneously filed. 4.8.7 The act of the appellant of having failed to reflect agricultural income on two earlier occasions i.e. in the returns filed u/s 139(1) and then u/s 153A and still making an attempt to offer it by way of letter during the course of assessment proceedings, is nothing but an afterthought. Desperate attempt of the appellant to offer otherwise tax exempt agricultural income particularly when, as contended, the same was not used to explain an unaccounted asset, makes one easily infer that such attempt of the appellant is probably aimed at claiming at a later stage an exemption/deduction u/s 548 which was claimed on sale of land at Punjab Khor in the Assessment Year 2010-11, where an indispensable requirement under the law is actual user of the land for agricultural operations/purposes.
4.8.8 The chain of events noticed i.e. non-returning of agricultural income in the original return filed; non-disclosure of agricultural income even in the return filed u/s 153A; failure of the appellant to raise the appropriate ground at the time of filing of the appeal, apparent contradictions in the contention of the appellant vis-a-vis the Revenue records (showing the land to be self-cultivated), contradictions between the appellant's own submission (i.e. as per letter dated 07.12.2016 it was claimed that the agricultural income was shown in the returns whereas as per letter dated 14.12.2016 it was stated to have been not shown in returns u/s 139(1) and 153A), absence on record of any lease agreement entered into by the appellant with the farmer, and a presumption of public records being correct, true and conclusive gets attracted. All the above clearly show that the prayer of the appellant lacks bonafide and that the appellant has not approached the appeal proceedings with clean hands. In view of this the action of the ld. AO in treating the agricultural income as income from other sources is upheld and the ground nos. 2 of the appeals for the Assessment Years 2008-09 and 2009-10 are rejected.
4.9 Now coming the ground in respect of addition of agricultural income for the Assessment Years 2011-12 to 2013-14, it is seen that for these years, though the agricultural income was shown in both the returns i.e. u/s 139(1) and u/s 153(A), but the returns u/s 139( 1) were filed after the date of the search. Thus, I find force in the argument of the Id. AO that this was an afterthought.
4.9.1 For challenging the addition of agricultural income for the Assessment Years 2011-12 to 2014-15, the appellant has relied upon confirmations/certificates issued by one Sh. Pravin. On perusal of the said certificates in original, all the discrepancies as were found in respect of the certificates issued by Sh. Rakesh Kumar for the Assessment Years 2008-09 to 2010-11, were noticed. All such discrepancies have been discussed in para 4.8.2 supra and are, therefore, not repeated here for the sake of brevity. In view of such discrepancies, the said certificates are not found to be credible evidences, when tested on the anvil of the decision in the case of Sumati Dayal (214 ITR 801).
4.9.2 Other than the aforesaid certificates, which carry number of discrepancies, no other evidence like a copy of lease agreement for leasing the land, a copy of Girdawari or khasra khatuni, were produced by the appellant The fact that the 11 ITA Nos.3438 to 3443/Del/2017 returns u/s 139(1) where the alleged agricultural income was shown were filed after the date of search also raises questions about the genuineness of the agricultural income, Under these circumstances, I do not find any reason to interfere with the order of the ld. AO, whose action is confirmed. Accordingly, the grounds nos. 2 and 3 of the appeals for the Assessment Years 2011-12 to 2014-15 are dismissed."
11. So far as capital gain on Singapore property is concerned, the assessee filed additional grounds as well as certain additional evidences. The ld. CIT(A) forwarded those additional grounds as well as additional evidences to the Assessing Officer for his comments. After considering the remand report of the Assessing Officer, ld. CIT(A) rejected the additional evidences filed before him and upheld the action of the Assessing Officer in making the addition of Rs.75,24,990/- by observing as under :-
"5.7 I have considered the impugned order, the submissions of the appellant, the remand reports furnished by the ld. AO and the rejoinder thereto, the facts of the case on record and the position of the law. The appellant vide her letter dated 29.09.2016 raised the following additional grounds:
"(a) The Id. AO has erred in law and on facts in adding a sum of Rs.
75,24,990/- on account of alleged capital gains earned on purported sale of property bearing No.383 Tangling Road, 06-06 Tangling Regency, Singapore 247966.
(b) That the ld. AO has erred in making the aforesaid addition without providing sufficient and meaningful opportunity before making this addition." 5.8 The facts in short relevant to the aforesaid additional grounds are that in the appellant's case a search and seizure operation took place wherein documents indicating existence of one (impugned above) property at Singapore connected with the appellant were recovered. The Investigating Officer during the search specifically questioned the appellant about this property but she categorically denied her relationship/ownership with/of the said property. Again during the course of assessment proceedings, the AO vide his letter dated 16.03.2016 specifically questioned the appellant on this issue, but she again denied having ever purchased the said property. The only reply filed was that one proposal did come to her but it did not materialise. The Id. AO took up the matter with the Singapore Authorities (through FT & TR Unit of CBDT) and in reply, the Singapore Authorities informed that the above referred to property was sold by Smt. Naintara Bhati to Smt. Aruna Gurjar for 5 lac SGD. The said property was in turn sold by her (the appellant) at Rs.7,80,OOO/- SGD. Despite having been afforded two opportunities (i.e. on 16.03.2016 and again on 22.03.2016), the appellant chose not to file any reply before the Id. AO. Taking note of the failure of the appellant to avail the opportunities given 12 ITA Nos.3438 to 3443/Del/2017 by him, the ld. AO brought the capital gains to tax as arising out of the sale of the above property for Rs.7,80,000/- SGD, which he worked out at Rs.75,24,990/-. 5.9 In support of her claim for admission of the additional grounds the appellant has submitted as under:
(i) due to personal and financial problems, she was unable to concentrate on the tax proceedings which were going on before the AO;
(ii) the AO did not afford meaningful opportunity to her,
(iii) aSr. Tax Counsel advised that property does not belong to her and therefore, not taxable and hence the ground manifesting from the records can be taken.
(iv) the omission to take the ground is neither wilful nor unreasonable.
Further, it was submitted that the above property was kept in trust for her sister due to marital discord in her family.
5.10 Before adverting to the adjudication, it is relevant to mention here that for allowing admission of additional ground u/s 250(5), the CIT(A) is duty bound to record a satisfaction that the omission of the ground from the form of appeal was not wilful or unreasonable. Thus, the issue of additional ground has to be tested on the anvil of section 250(5) in the sense that, only when the omission was not wilful or unreasonable, it can be entertained, otherwise not. All along (during the search as well as during the assessment proceedings), there were denials by the appellant qua the relationship with the Singapore property. The failure of the appellant to file a reply to the AO's specific queries on the report received from Singapore Authorities, wherein they had confirmed ownership of the property by the appellant, goes to show that the omission on the appellant's part in not raising this ground originally in the appeal form N0.35 was wilful. As already indicated, despite having been associated with the aforesaid Singapore property, constant denial or failure to file reply to the Id. AO's specific query also shows that omission to take ground to this effect in appeal form was not only wilful but unreasonable also. For failure of the appellant to satisfy the test prescribed u/s 250(5), the additional grounds raised much after having filed the appeal cannot be allowed to be entertained. The appellant cannot be allowed to rake up the stale issue of Singapore property which got settled by efflux of time. 5.11 It is also not understood as to why the appellant did not make any mention in the Statement of Facts that the Singapore property was in fact owned by Smt. Naintara Bhati and not by her. This failure also shows that definitely the findings recorded by the ld. AO duly supported by the Singapore authorities' report were correct If the facts and circumstances of the case are considered in the light of the Supreme Court judgment in the case of Sumati Dayal (supra), it will become very obvious that subsequent raking up of this issue is nothing but an after thought, change of opinion and far from being true. Had the appellant not been the owner of the property or had the property been owned by Smt. Naintara Bhati, the appellant should have disclosed these material facts before the AO or the Investigation Wing at the very first instance. The evidences gathered during the search indicated otherwise and that is why the appellant took her chance to maintain silence probably thinking that the Revenue would not be able to gather clinching evidences to this effect because the property was located in a foreign territory over which the AO had no jurisdiction to make inquiries etc. Subsequent facts/evidences gathered revealed that the appellant in fact owned the property. The information provided by the Singapore Authorities has to be given precedence over the subsequent evidences (sworn affidavit etc. of Smt. Naintara Bhati, Advocate etc.) produced by the appellant. The said evidences produced by the appellant are nothing but a desperate attempt to belie the evidences produced by the Public authority. All these evidences produced now when 13 ITA Nos.3438 to 3443/Del/2017 tested on the anvil of the Supreme Court's judgment in the case of Sumati Dayal (supra), fail to enthuse confidence in so far as their genuineness and reliability is concerned. Explanation now filed that because of very personal and financial reasons these were not produced earlier, in my view, are too vague to accept. Not only that no evidence in support of the alleged personal and financial reasons has been brought on record, but also no evidence in support of the alleged marital discord in the family of Smt. Nayantara Bhati has been furnished. Admittedly no other property except the impugned property was allenieted due to the so called marital dispute, 5.12 This apart, it is considered relevant to deal with the argument of the appellant that by virtue of the judgment of the Supreme Court in NTPC Ltd. (supra), the additional ground needs to be entertained. While placing reliance on this judgment of the Supreme Court, the appellant has failed to realize that this was the judgment in the context of raking up of the additional ground before the Tribunal and not the first appellate authority whose power to enter into the additional ground is very limited in the sense that, only on satisfaction of two conditions as mentioned u/s 250(5), it can be entertained and otherwise not. This apart, the appellant has failed to appreciate that the question whether the appellant was connected with the Singapore property or not or whether she was owning the property or not are pure questions of fact especially in the light of the unimpeached report of the Singapore Authorities where they have clearly certified the appellant to have owned the above property. Since, the issue is purely of facts, even with the aid of the Supreme Court judgment in the case of NTPC Ltd. it cannot be allowed to be raked up precisely because the said judgment can be pressed into service only when the question is found to be purely of law, 5.13 The solitary reason given by the appellant in its prayer for admission of the addition grounds is that "That the ld. AO has erred in making the aforesaid addition without providing sufficient and meaningful opportunity before making this addition." As against this as demonstrated above, the AO had given multiple opportunities to the appellant but all these opportunities were consciously not availed of. The attempt of the appellant to aver that while making the addition, the AO had not provided sufficient opportunities, is nothing short of just putting blinkers on the eyes, As a matter of fact, the argument of the appellant gets belied on the very face of it and hence for this reason also the additional ground is required to be dismissed and it is accordingly rejected as 'not admitted'. 5.14 Since the very additional ground is dismissed as 'not admitted', the additional evidences introduced u/r 46A hovering around the Singapore property become meaningless or inconsequential and hence they are not taken on records for the purpose of present adjudication.
5.15 Above apart, if the appellant's view for argument's sake is considered it will become apparent that by adducing evidences for the first time (being declaration by Smt. Naintara Bhati, dissolution of Trust Deed, Trust Deed etc.) now in appeal, it will tantamount to making out a new case as against the case which was there before the AO. Having failed to adduced evidences before the ld. AO that too when sufficient time and opportunities were given, in my view, the appellant cannot be allowed to make out a new case in appeal entirely different from what was made out before the AO because inherently in appeal it is the finding of the AO which needs to be shown as not being correct in the light of the facts and circumstances and the legal position as brought before him (the AO). As held by Punjab & Haryana High Court in the case of Punjab Feed Mills (228 ITR 386, 94 Taxman 405), grievance can be raised against 14 ITA Nos.3438 to 3443/Del/2017 the order of the lower authority and if matter was never contested on a particular issue before lower authority, no grounds can legitimately be raised before the appellate authority. Further reference can be made to Hon'ble Kerala High Court's judgment in the case of C.K. Gopinath vs CIT (260 ITR 213), where it was held that alternative plea (like that the property was held by her in trust etc.) not raised before AO cannot be considered in appeal. Law is well settled as held by the Supreme Court in Chevalier I Iyyappan v. Dharmodahyam Co. {AIR 1966 SC 1017}, that a party cannot change its stand and make a new case at appellate stage which was never raised earlier. For all these reasons, the additional grounds as well as the additional evidences being introduced in appeal are hereby rejected. Accordingly, the order of the ld. AO making an addition of Rs.75,24,990/- is not tinkered with."
12. So far as unexplained cost of construction is concerned, ld. CIT(A) also upheld the action of the Assessing Officer by observing as under :-
"6.4 I have considered the impugned order, the submissions of the appellant, the facts of the case on record and the position of the law. The appellant had shown Capital gains in respect of a land at Dera. While computing the Capital Gains, the appellant claimed deduction towards cost of acquisition as well as towards the cost of improvement being indexed cost of construction carried out. The cost of construction under taken is shown to be in four Assessment Years i.e. from AY 2006-07 to AY 2009-10. As submitted, this cost of construction is towards the construction of a boundary wall around the land and is said to be covered under section 48 r.w. clause 2(ii) of section 55 of the Act.
6.5 Since it is the appellant who is claiming the deduction of the cost of improvement, therefore, under the law, it is her exclusive burden to prove it by adducing necessary evidences to this effect that she did incur this cost on the said improvement. It is seen that despite there being clear burden on her to prove her case with requisite evidences, the appellant has only given the details/confirmation of the person who is said to have under taken this construction. In the context of this construction, the payments (and probably the construction also) strangely, are found to have continued for more than four long years that too the payments being mostly in cash. It is not understood as to why the construction of merely a boundary wall took such a long period. It is incomprehensible as to why, to attach credibility to her claim, it was not possible for her to make payments by cheque. This apart, it is seen that even the measurement details of the boundary wall so constructed like the width, height, length etc. have not been given. Even other relevant details like; whether it was required to plastered or whether it was required to be barbed etc. are not given. It is in the common knowledge that for a construction of this magnitude which lasted for more than four years and on which allegedly an amount of Rs.54 lakhs (approx.) was incurred, a written agreement which spells out all the relevant details like the rate, the period to be taken for construction etc was not required. It is surprising that a copy of such an agreement entered into with the contractor has not been made available. The copies of the running bill as filed by the contractor, which would have given date-wise and quality wise construction, have also not been filed. 6.6 In the absence of all these details, which were very germane to the issue, the claim of the appellant for the cost of improvement/construction is found to be bald. As 15 ITA Nos.3438 to 3443/Del/2017 a matter of fact, the claim of the appellant when tested on the anvil of the Supreme Court judgement in the case of Sumati Dayal (214 ITR 801) fails to qualify as a genuine and allowable claim u/s 55(2)(ii) r.w.s. 48 of the Act, because it is highly improbable that;
(i) the appellant would undertake construction without entering into any Contract;
(ii) the construction of a simple boundary wall would take a long period of more than four years.
(iii) the appellant would not be in a position to make payments by cheque;
(iv) the contractor would claim payments without drawing running quantity bills etc;
(v) the appellant would award contract without specifying the type of the boundary wall (whether barbed or otherwise etc.) to be constructed.
6.7 Further, during the assessment proceedings u/s 153A, vide show cause notice dated 18.03.2016, the Id. AO confronted the assessee as regards the existence of the boundary stating that 'in the sale deed there is no mention of any structure situated on the said land'. This finding of the ld. AO remained unrebutted. I have gone through the assessment records, where a copy of the sale deed executed on 30.09.2008 in respect of Dera land by the appellant is kept and find that no where the existence of the boundary wall on the said land has been mentioned, Not only this, in the 'Form-A' which is a part of the sale deed, the year of construction and the nature of construction is mentioned as 'Nil', in the respective columns. This also proves that no boundary wall existed on the said land at Dera.
6.8 Thus, on being tested on the anvil of the Supreme Court judgment in the case of Sumati Dayal(supra), the claim of the appellant fails to qualify as proved and hence the order of the Assessing Officer in denying the cost of improvement is upheld. Accordingly, the ground nos. 3 of the appeals for the Assessment Year 2008-09 and Assessment Year 2009-10 are dismissed. Resultantly, the ground nos. 4 of the aforesaid two appeals also stand rejected."
13. Aggrieved with such order of the ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds :-
"1. That the order of the Ld. CIT (A) passed u/s 250 of the Income Tax Act, 1961 is bad in law and on facts.
2. That the Ld. CIT (A) has erred in sustaining the addition of Rs. 75,24,990/- made by the Ld. AO on account of alleged capital gain on sale of Singapore Property particularly when irrefutable evidence establishing the fact that the said property did not belong to her, nor was paid for by her was before the Ld. CIT(A).
3. That the Ld. CIT(A) has erred in not admitting the additional ground taken u/s 250 (5) of the I. T Act and additional evidences filed under rule 46A of the Income Tax Rules, 1962 in respect of the impugned addition of capital gain on Singapore Property despite the following;
a. The appellant was able to satisfy the criteria of reasonable cause and no willful intention in respect of omission of additional grounds and failure to file additional evidences.16
ITA Nos.3438 to 3443/Del/2017 b. The Ld. CIT(A) has failed to appreciate the judgement in the case of Shahrukh Khan vs. DCIT [2007] 13 SOT 61 (Mumbai) whereby it was held that "After calling of remand report on merit as contemplated in sub-rule (3) of rule 46A, Commissioner (Appeals) was precluded with his discretion for refusing to admit additional evidence"
c. The Ld. CIT(A) is not justified in rejecting the additional grounds and additional evidences after having discussed the impugned issue in more than ten hearings and having accepted and discussed the written submissions of assessee and remand reports by the ld. AO.
4. That the ld. CIT(A) has erred in not deciding the issue particularly when all the evidences, facts and submissions relating to the addition of Rs.75,24,990/- were before him and this act tantamount abdication of his role of a quasi judicial appellate authority.
5. That the ld. CIT(A) has erred in sustaining the addition of Rs.1,50,000/- on account of agricultural income which is otherwise treated as exempt income under Income Tax Act.
5.1 That the addition was sustained despite the fact that numerous submissions were filed and sufficient evidences in form of certified Khasra Girdawari and certificate of farmer were provided to establish that the impugned agricultural income was earned.
5.2 That the Ld. AO as well as Ld. CIT(A) overlooked the fact that the appellant was disclosing the agricultural income in her returns from past years.
6. That the Ld. CIT(A) has erred in sustaining the addition of Rs.31,84,299/- being the indexed cost of construction claimed on sale of Dera land. 6.1 That the addition was sustained despite the fact that amount was duly recorded in the books of the appellant and necessary evidences and submissions were filed.
7. That the Ld. AO as well as Ld. CIT(A), in respect of addition in para 5 and 6 (supra), ignored the judgement of jurisdictional Hon'ble Delhi High Court in the case of CIT v Kabul Chawla [2016] 380 ITR 573 (Delhi) whereby it has held that completed assessments can be interfered with by the Ld. AO while making addition u/s 153A only on the basis of some incriminating material found during search.
8. That the order passed by the Ld. CIT(A) is against the principles of natural justice.
9. That the appellant prays the Hon'ble Tribunal to award suitable cost of appeal under sub-section 2B of section 254 of the Income Tax Act, 1961.
10. That the appellant craves leave to add, alter, amend, substitute, delete and modify any or all the grounds of appeal, which are without prejudice to one another, before or at the time of hearing of the appeal."
14. Grounds no.1, 8, 9 and 10 being general in nature are dismissed.
15. Ground no.2 to 4 by the assessee relates to the order of the ld. CIT(A) in sustaining the addition of Rs.75,24,990/- made by the Assessing Officer on account of capital gain on sale of Singapore Property.
17
ITA Nos.3438 to 3443/Del/2017
16. Ld. counsel for the assessee referring to the family chart at page 60 of the Paper Book submitted that the Smt. Aruna Chaudhary and Smt. Bhati Naintara are relatives. Referring to page 57-58 of the Paper Book, he submitted that Smt. Bhati Naintara is a permanent resident of Singapore since 2001. Referring to mortgage documents at page 200 to 207 and FT&TR report at page 221, he submitted that the Singapore property was purchased by Smt. Bhati Naintara on 04th January, 2005 at Singapore Dollar 5,05,000/- by raising loan from OCBC Bank, Singapore. He submitted that since Smt. Bhati Naintara was having matrimonial dispute with her husband in late 2005 and early 2006 during pregnancy of her third child, she on advice of her lawyer, Mr. S. Rasanathan, a Trust was created on 17th January, 2006. Referring to Notarised Trust Deed at page 190-195 and confirmation of lawyer at page no.196, he drew the attention of the Bench to the Trust Deed and submitted that under Singapore Trust Law, Private Trusts are not required to be registered. He submitted that Singapore Property was registered on 17th April, 2006. Referring to page 223 to 230 of the Paper Book, he drew the attention of the Bench to the property registration documents filed by the Singapore Authorities. Referring to page 221 of the Paper Book, he submitted that the property was purchased by Smt. Bhati Naintara for Singapore Dollar 5,05,000/- and shown to be transferred to the assessee under trust for Singapore Dollar 5,00,000/-. He submitted that no mode of consideration has been mentioned in property registration documents 18 ITA Nos.3438 to 3443/Del/2017 because no money was given and amount of Singapore Dollar 5,00,000/- was only mentioned to enable effective transfer. Therefore, the question of bank statement of Smt. Bhati Naintara does not arise. Referring to statutory declaration and affidavit of assessee at page 186-188 and 208-211, he submitted that the property taxes were borne by Smt. Bhati Naintara and possession was remained with her at all times. He submitted that on 26th December, 2007, Singapore Property sold to third party for Singapore Dollar 7,80,000/- on instructions of Smt. Bhati Naintara and the consideration was received by her in her bank account. For the above proposition, he referred to the confirmation sent by Smt. Bhati Naintara through email dated 18.11.2016 placed at page 120 of the Paper Book. He submitted that this was done to save stamp duty. Otherwise, the property would have been transferred to Smt. Bhati Naintara first and then sold to the buyer. He submitted that the bank statement of Smt. Bhati Naintara could not be furnished as Banks in Singapore are not required to keep the record of banking data beyond 5 years. He submitted that the trust was dissolved on 03rd January, 2008.
17. Ld. counsel for the assessee referring to page 37 and 38 of Annexure 37 submitted that the seized documents were confronted on 09.03.2016 and these documents were unsigned and contradictory as at page 37, the property is mentioned as 303 whereas at page no.38, the property is mentioned as 383. Referring to para 4 at page 2 of the assessment order and reply dated 16.03.2016 19 ITA Nos.3438 to 3443/Del/2017 at page no.218-219, he submitted that the assessee at every stage of proceedings was denying to own the property in Singapore since the same was held in Trust. Referring to page 220 of the Paper Book, he submitted that the show cause notice dated 16.03.2016 was grossly incorrect stating wrong fact that sale to have taken place in financial year 2006-07 and not in 2007-08. Further, sufficient and meaningful opportunity was not given while passing assessment order on 30.03.2016. He submitted that additional grounds and additional evidences under Rule 46A of the Income Tax Rules relating to Singapore property were taken by the ld. CIT(A) vide letter dated 29.09.2016 which is available as per page 212-216 and 179-211 of the Paper Book. Referring to page 173-178 of the Paper Book, he drew the attention of the Bench to interim remand report dated 19.10.2016 on additional grounds and additional evidences filed. He submitted that during remand proceedings, the Assessing Officer verified each and every additional evidence and examined passport copies of assessee to confirm the date of visits to Singapore. Referring to page 112-114 of the Paper Book, he drew the attention of the Bench to the final remand report dated 16.11.2016 which was provided to the assessee on 23.11.2016. He submitted that the ld. CIT(A) also verified and examined the additional evidences and raised various queries. However, filing various submissions and attending numerous hearings, ld. CIT(A) rejected the additional ground as well as the additional evidences on baseless and vague reasons and sustained the 20 ITA Nos.3438 to 3443/Del/2017 addition of alleged capital gain. He submitted that the Assessing Officer has examined all facts relating to documents and assessee has filed all plausible evidence and since the affidavit and statutory declarations are not controverted, therefore, no useful purpose will be served in setting aside the matter as no more evidence is likely to be produced from the side of the assessee. He submitted that the Revenue should not be given second innings to improve its case by setting aside. Further, the Revenue is not able to show that any money has changed hands or that the assessee had any bank account in Singapore or the mode of transfer of money, if any. Further, the seized documents are unsigned and look like rough draft and photo copies. He accordingly submitted that the additions made by the Assessing Officer and sustained by the ld. CIT(A) should be deleted.
18. Ld. DR on the other hand heavily relied on the order of the ld. CIT(A). He submitted that the Assessing Officer proved that the property was held by Smt. Bhati Naintara from 28.12.2004 to 16.04.2006 and was sold to the assessee at a price of Singapore Dollar 5,00,000/- who held the property from 17.04.2006 to 26.12.2007 and further sold the same for the consideration of Singapore Dollar 7,80,000/-. Further, the property taxes amounting to Singapore Dollar 3380 were also paid. The assessee, as per Annexure, A-8, has also paid commission of Singapore Dollar 8346 to Era Realities Network Pte. Ltd. for arranging the buyer for selling the property. He submitted that the various 21 ITA Nos.3438 to 3443/Del/2017 submissions made by the assessee are all afterthought. Therefore, in view of irrefutable evidences which were examined by the ld. CIT(A) before upholding the addition made by the Assessing Officer and since the assessee could not produce any other evidence to negate the findings given by the Assessing Officer as well as the CIT(A) the order of the ld. CIT(A) should be upheld and the grounds raised by the assessee should be dismissed.
19. We have considered the rival arguments made by both the sides, perused the orders of the authorities below and the Paper Book filed on behalf of the assessee. We find during the course of search operation at the premises of the assessee on 11.09.2013 and 17.09.2013 seized documents being page 37-38, Annexure A-8 was found which according to the revenue shows the purchase and sale of property made by the assessee in Singapore for which commission was also paid with regard to the transactions. During the course of assessment proceedings, on being confronted with the above documents, the assessee denied to have made any such investment in property at Singapore. As per the information received from FT&TR, the property mentioned in the said seized papers was held by Smt. Bhati Naintara from 28.12.2004 to 16.12.2006 and sold the same to Aruna Gujjar at a price of Singapore Dollar 5,00,000/- and was held by her from 17.04.2008 to 26.12.2007. As per the said report, the property was sold by Aruna Gujjar at sale consideration of Singapore Dollar 7,80,000/-. As per the said information, property taxes for the said was also paid by the 22 ITA Nos.3438 to 3443/Del/2017 assessee. The assessee has also paid a commission of Rs.8346 Singapore Dollar to Era Realty Network Pte. Ltd. for arranging the buyer for sale of property bearing no.383, Tangling Road # 06-06 Tangling Regency, Singapore. We find since the assessee could not substantiate with evidence to the satisfaction of the Assessing Officer that the property does not belong to her, the Assessing Officer brought to tax an amount of Rs.75,24,990/- being the capital gain on sale of Singapore property, the details of which are already given earlier. We find the ld. CIT(A) upheld the addition made by the Assessing Officer, the reasons for which have already been reproduced in the preceding paragraphs. It is the submission of the ld. counsel for the assessee that sufficient and meaningful opportunity was not provided by passing the assessment order on 30.03.2016. Further, the assessee had held the property as a trustee and was never the owner of the property. It is also his submission that no mode of consideration was mentioned in the property registration documents because no money was given and amount of Singapore Dollar 5,00,000/- was only mentioned to enable effective transfer. It is also his submission that property taxes was borne by Smt. Bhati Naintara and the possession remained with her at all times. Further, according to him, at every stage of the proceedings, the assessee denied to have held the property. We find the assessee filed certain additional evidences before CIT(A) which were forwarded to the Assessing Officer for his comments. The Assessing Officer examined those evidences in the remand proceedings and 23 ITA Nos.3438 to 3443/Del/2017 gave a report. However, the CIT(A) did not admit the additional evidences and additional grounds raised before him. In our opinion, the matter requires a re- visit to the file of the Assessing Officer with the direction to grant one more opportunity to the assessee to substantiate with evidence to his satisfaction that the property bearing no.383, Tangling Road # 06-06 Tangling Regency, Singapore does not belong to her. The assessee has to prove that she was not the owner of the said property. She has to prove that the consideration was neither paid by her for acquiring the property nor received by her on account of sale of property. The Assessing Officer shall decide the issue afresh and in accordance with law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. The grounds no.2 to 4 raised by the assessee are accordingly allowed for statistical purposes.
20. Grounds no.5 to 5.2 relate to the order of the ld. CIT(A) in sustaining the addition of Rs.1,50,000/- made by the Assessing Officer treating the agricultural income as "income from other sources".
21. After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) sustaining the addition. Admittedly, the assessee neither in the original return nor in the return filed in response to notice u/s 153A had declared such agricultural income. The assessee could not produce any evidence to justify the earning of such huge agricultural income. Since the order of the ld. CIT(A) on this issue is a reasoned one and the ld. counsel for the 24 ITA Nos.3438 to 3443/Del/2017 assessee could not bring any material so as to take a contrary view than the view taken by the ld. CIT(A), therefore, we do not find any infirmity in his order on this issue. Accordingly, the same is upheld and the grounds no.5 to 5.2 raised by the assessee are dismissed.
22. Grounds no.6 to 7 relate to the order of the ld. CIT(A) in sustaining the addition made by the Assessing Officer on account of indexed cost of construction.
23. After hearing both the sides, we do not find any infirmity in the order of the ld. CIT(A) on this issue also. While computing the capital gain, the assessee claimed deduction towards cost of acquisition as well as towards the cost of improvement being indexed cost of construction carried out. The cost of construction of the boundary wall could not be corroborated with evidence to the satisfaction of the lower authorities. Ld. CIT(A) in the instant case, in our opinion, has given justifiable reasons as to why the claim of the assessee cannot be entertained. Nothing more was brought to our notice on this issue, during the course of hearing. Therefore, the grounds raised by the assessee on this issue are dismissed.
ITA No.3439/Del/2017 (A.Y. 2009-10)
24. Grounds no.1, 6, 7 and 8 being general in nature are dismissed. 25
ITA Nos.3438 to 3443/Del/2017
25. Grounds no.2 to 3.2 relate to the order of the ld. CIT(A) in sustaining the addition made by the Assessing Officer treating the agriculture income as income from other sources.
26. After hearing both the sides, we find the grounds are identical to ground of appeal no.5 to 5.2 in ITA No.3438/Del/2017. We have already decided the issue and the grounds raised by the assessee have been dismissed. Following same reasoning, these grounds raised by the assessee are dismissed.
27. Grounds no.4 and 5 relate to the order of the ld. CIT(A) in sustaining the addition of Rs.22,98,299/- being the indexed cost of construction on sale of Dera land.
28. After hearing both the sides, we find the grounds are identical to ground of appeal no.6 and 7 in ITA No.3438/Del/2017. We have already decided the issue and the grounds raised by the assessee have been dismissed. Following similar reasoning, these grounds raised by the assessee are dismissed. ITA Nos.3440 to 3443/Del/2017 (A.Ys. 2011-12 to 2014-15 )
29. In all the appeals, the grievance of the assessee is regarding the order of the ld. CIT(A) in sustaining the addition made by the Assessing Officer treating the agricultural income as income from other sources.
30. After hearing both the sides, we find the agricultural income declared by the assessee was treated by the Assessing Officer as income from other sources on the ground that the assessee could not substantiate with evidence regarding 26 ITA Nos.3438 to 3443/Del/2017 the earning of such agricultural income. Further, the assessee had not filed the original return of income before the due date declaring such agricultural income. We find the ld. CIT(A) while deciding the issue has given justifiable reasons for not accepting such agricultural income. Ld. counsel for the assessee could not bring any material to our notice so as to take a different view than the view taken by the ld. CIT(A) on this issue. We, therefore, do not find any infirmity in the order of the ld. CIT(A) treating such agricultural income as income from other sources. The order of the ld. CIT(A) is, therefore, upheld and the grounds raised by the assessee in all these appeals are dismissed.
31. In the result, ITA No.3438/Del/2017 filed by the assessee is partly allowed for statistical purposes and the remaining appeals of the assessee are dismissed.
Order pronounced in the open Court on this 04th day of January, 2018.
Sd/- Sd/-
(SUDHANSHU SRIVASTAVA) (R. K. PANDA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 04-01-2018.
Sujeet
Copy of order to: -
1) The Appellant
2) The Respondent
3) The CIT
4) The CIT(A)
5) The DR, I.T.A.T., New Delhi
By Order
//True Copy//
Assistant Registrar
ITAT, New Delhi