Income Tax Appellate Tribunal - Delhi
Usha Aggarwal , New Delhi vs Department Of Income Tax
1
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : "H" NEW DELHI
BEFORE SHRI J.SUDHAKAR REDDY, A.M.
AND SHRI A.T. VARKEY, J.M.
ITA nos. 2506 - 2507 - 2508 - 2509 and 2510/Del/2011
Assessment Years : 2002-03, 2003-04, 2004-05, 2006-07, 2007-08
ACIT, C.C. 11, Room no.364 vs. Usha Aggarwal
ARA Centre, Jhandewalan Extn. Prop.Usha Construction Co. S-1,
New Delhi 2nd floor, Usha Chambers 37-38
Central Market, Ashok Vihar
New Delhi
PAN: ADSPA 5179 K
(Appellant) (Respondent)
Appellant by:- Smt.Sweety Kothari, Adv.
Respondent by:- Shri R.S.Meena, CIT, D.R.
ORDER
PER J.SUDHAKAR REDDY, AM
All these appeals are filed by the Revenue with the following common grounds of appeal.
"1. The order of the Ld.Commissioner of Income Tax (Appeals) is not correct in law and facts.
2. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in accepting the registration charges paid to the state government for registration of plot and is showing the same under the head of loans advances recoverable which is a wrong method of according. Similarly, the Electrification charges were also being recovered in the same manner and treated similarly in the books of account. Such registration or electrification charges can never be 2 recoverable as debtors, loans and advance. These are not the revenue expenditure and as such they cannot be adjusted against revenue receipt.
3. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions made on charging on interest on delayed payments.
4. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions made on account of cancellation charges out of earnest money.
For A.Y. 2003-04 onwards the following common grounds are taken by the Revenue.
1. On the facts and in the circumstances of the case, Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the addition made by the Assessing Officer on account of transfer charges which are very well covered by the documents found from the premises of the assessee during the course of search.
2. On the facts and in the circumstances of the case, Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions for which the assessee had not been able to produce details and evidence in respect of investments in the shares of M/s Supreme Agro Products Ltd.
The following additional grounds are taken by the Revenue for the A.Y. 2007-08.
1. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions made on account of ground rent which was retained by the assessee and had been utklised for the expenses of the firm.
2. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions of interest being unearned on 3 amount received as security deposits for contingencies from the buyers.
3. On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the additions made by the Assessing Officer on account of valuation made by the Valuation Officer.
2. We have heard Shri R.S.Meena, the Ld.CIT, D.R. on behalf of the Revenue and Smt.Sweety Kothari, the Ld.Counsel on behalf of the assessee. Both the parties agreed that the issues in question that arise in all these appeals are similar to the issues that were adjudicated by the 'C' Bench of the ITAT in ITA 2512-2513-2514/Del/2011 and ITA 2515-2516 and 2517/Del/2011 in the case of ACIT vs. Kamal Kishore Agarwal and others, vide order dt. 25.5.2012, a copy of which has been placed on record.
3. In view of the above submissions, we dispose off the appeals in the following manner.
4. The addition on account of registration and electrification charges is covered in favour of the assessee vide paras 3 to 7 of the order in the case of Shri Kamal Kishore Aggarwal, which reads as follows.
This ground is similar in other appeals, the details of which are as under:-
Issue of Addition towards Registration & Electrification charges. In the case of Shri Kamal Kishore Aggarwal:4
I.T.A. No. A.Y. Ground No Amount 2512/D/2011 2002-03 2 14,17,338/- 2513/D/2011 2003-04 2 33,88,116/- 2514/D/2011 2004-05 2 17,85,275/- 2515/D/2011 2005-06 2 1,64,500/- 2516/D/2011 2006-07 2 4,03,420/- 2517/D/2011 2007-08 2 1,21,447/- In the case of Smt. Garima Aggarwal I.T.A. No. A.Y. Ground No Amount 2519/D/2011 2002-03 2 24,19,549/- 2520/D/2011 2003-04 2 23,50,120/- 2521/D/2011 2004-05 2 22,28,777/- 2522/D/2011 2005-06 2 90,440/- 2523/D/2011 2006-07 2 7,74,360/- 2524/D/2011 2007-08 2 96,288/- In the case of Manish Aggarwal I.T.A. No. A.Y. Ground No Amount 2964/D/2011 2002-03 2 44,39,049/- 2965/D/2011 2003-04 2 23,25,520/- 2966/D/2011 2004-05 2 1,96,125/- 2967/D/2011 2005-06 2 8,12,222/- 2968/D/2011 2006-07 2 1,04,641/-
4. A search & seizure operation was carried out in the premises of the assessee on 16.3.2007. During the course of search certain documents were seized and it was found that the assessee was charging registration charges @ 7% paid to State Government for registration of plot and was showing the same under the head of loans and advances recoverable which according to Assessing Officer is a wrong method of accounting. Similarly, the electrification charges @ 15% were also being recovered in similar manner and were being treated similarly in the books of account.
According to Assessing Officer such registration and electrification charges shall never be recoverable as debtors, loans and advances. Therefore, these are not revenue expenditure and as such it cannot be adjusted against revenue receipts. At best, they could be capitalized and added to the cost of works in progress.
55. In the reply, it was submitted by the assessee that as per the system of accounting fallowed by the company, registration charges paid to the State Government and electrification charges have not been included either in the cost of land or in the work in progress or cost of project and the amount so paid for registration has been shown recoverable from different buyers. No charges for electrification have actually been levied but as per the accounting policy followed by the company, the surplus of receipt if any over the amount actually spent was shown as income of the year of such receipt. The Assessing Officer stated that such a system of setting off revenue receipts against capital expenditure is not an accepted principle of accountancy and in this manner a sum of Rs.14, 17 ,338/- was added to the income of the assessee on account of registration charges.
6. Ld CIT(A) deleted this addition following his order for assessment year 2003-04. It was submitted that this issue is covered in favour of the assessee by the earlier decision of the Tribunal which has also been confirmed by the Hon'ble Delhi High Court in the case of ClT vs. Manish Buildwell Pvt. Ltd., vide decision pronounced on 15.11.201l. A copy of the order of Hon'ble Delhi High Court has been placed at pages 362 to 392 of the paper book. This aspect has been dealt by the Hon'ble Delhi High Court as per para 11 to 15 wherein the deletion of the amount was confirmed. For the sake of completeness these paras are reproduced below:-
11. Question NO.5 relates to the addition of RS.3,82,94,536/- being stamp duty and electrification charges recoverable by the assessee. This issue is dealt with in paragraph 7 of the assessment order.
The Assessing Officer stated that the seized documents revealed that the assessee was charging registration charges @ 7% and was showing the same as loans and advances recoverable from the customers. According to him this was a wrong method of accounting. A similar procedure was found to have been adopted by the ITA NO.928/2011 Page 14 of 31 assessee in respect of electrification charges which werecharged@ 15% and shown to be recoverable as loans and advances. According to the assessing officer these were not items of revenue expenditure since they related to the flats/space and formed part of the cost thereof and therefore they were not 6 adjustable against the revenue of the assessee. According to the assessing officer these items of expenditure could be capitalized and added as part of the work in progress. On these facts he called upon the assessee to explain why the registration and electrification charges collected from customers cannot be added as revenue receipts. The assessee submitted that according to the system of accounting followed, the registration and electrification charges were not included either in the cost of land or in the work in progress or as cost of the project and they were rightly shown to be recoverable from the buyers. It was also explained that in case there is any surplus of the registration and electrification charges collected from the customers over the amounts paid to the State Government, the surplus would be shown as income in the year of receipt. The assessing officer rejected the explanation on the ground that revenue receipts and capital expenditure cannot be adjusted ITA No. 928/2011 Page 15 of 31 against each other. He, therefore, added the amount of Rs.3,82,94,536/- as the assessee's income. 12. On appeal the CIT(A) recorded the following findings:- a) The assessee declared the amount as advances recoverable in its balance sheet. b) The electrification and registration charges did not represent capital expenditure because they were incurred in relation to the construction of the mall project which was stock-in- trade for the assessee as he is engaged in the business of developing and selling real estate. c) The amount paid has not been claimed as expenses in the profit and loss account and was shown in the asset side of the balance sheet as recoverable from the customers. d) When the registration and electrification charges are recovered from the buyer later they are duly recorded in the books of accounts. This is at the time of handing- over possession or execution of sale deeds. Neither the payment of the registration and electrification charges nor the recovery ITA NO.928/2011 Page 16 of 31 thereof from the buyers is shown in the profit and loss account and thus there is no revenue effect e) The finding of the AO that the 7 capital expenditure has been adjusted against revenue receipts is not factually correct since no such adjustment has been made in the books of accounts.
13. On the above factual findings, the CIT (A) deleted the addition of Rs.3,82,94,536/-.
14. On appeal by the Revenue to the Tribunal it was held that the assessee could have adopted two ways of recording the transaction - either by crediting the amount received from the buyers in the cost of the project account and claiming the payment of the registration and electrification charges as an expense on the debit side or to make an entry in such a manner that the amount is shown as recoverable from the buyers, credit the account with recoveries made from the buyers and jf there is any surplus of the recoveries over and above the amount shown as recoverable, offer the same for income tax. The Tribunal held that the assessee has adopted the second of these two methods and both the methods were acceptable. It was also found ITA NO.928/2011 Page 17 of 31 by the Tribunal that when the assessee paid the registration and electrification charges they were not claimed as deduction in the profit and loss account. On these findings of fact the Tribunal agreed with the CIT(A) that the amount cannot be added. 15. The aforesaid discussion would show that the decision of the Tribunal is based on factual findings recorded by the CIT (A) with which it agreed. No material was brought before the Tribunal or before us to disturb the factual findings recorded by the aforesaid authorities. The decision of the Tribunal is not therefore open to the challenge as being perverse. Further since the Tribunal's decision is based on findings of fact recorded on the basis of the entries made in the books of accounts, no question of law can be said to arise from the order of the Tribunal on this point. Question NO.5 is therefore not admitted.
7. In this view of the situation, after hearing both the parties, we do not find any infirmity in the order of the Ld ClT(A) vide which the impugned addition has been deleted. These grounds. of revenue in all the aforementioned cases are dismissed. "
84.1. Respectfully following the same this ground of Revenue is dismissed. ., ,..
5. The issue of addition for transfer charges @ 3.6% of sale consideration on transfer of flats is covered vide paras 8 to 11 of the Order of the Tribunal at pages 8 to 12 in the case of Shri Kamal Kishore Agarwal (supra) which is extracted for ready reference.
"8. In the case of Shri Kamal Kishore Aggarwal, deletion of addition on the issue of transfer charges @ 3.6% of sale consideration has been agitated as ground no.3 for A.Y. 2003-04. This ground reads as under:
"Ground NO.3. On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law and on facts in deleting the addition made by the Assessing Officer on account of transfer charges which are very well covered by the charges which are very well covered by the documents found from the premises of the assessee during the course of search. (hereinafter referred to as issue of addition towards transfer charges @ 3.6%).
Issue of addition towards Transfer charges @ 3.6.%. In the case of Shri Kamal Kishore Aggarwal.
I,T.A No.. A.Y. Ground No Amount
2512/D/2 2002-03 Nil Nil
011
2513/D/2 2003-04 3 21600/-
2514/D/2 2004-05 3 261540/- --
2515/D/2 2005-06 3 123001/- --
2516/D/2 2006-07 3 108580/-
011
2517/D/2 2007-08 3 218991/-
9
In the case of Smt. Garima Aggarwal.
I,T.A. No. A.Y. Ground No Amount
2519/D/201 2002-03 Nil Nil
1
2513/D/201 2003-04 3 21600/-
2514/D/201 2004-05 3 261540/- --
2515/D/201 2005-06 3 123001/- --
2516/D/201 2006-07 3 108580/-
1
2517/D/201 2007-08 3 218991/-
In the case of Shri Manish Aggarwal.
I,T.A. No. A.Y. Ground No Amount
2964/D/2011 2002-03 3 82277/-l
2965/D/2011 2003-04 3 111753/-
2966/D/2011 2004-05 3 180133/- --
2967/D/2011 2005-06 3 446494/- --
2968/D/2011 2006-07 3 129490/-
2969/D/2011 2007-08 3 733249/-
9. This issue is stated to be covered by the aforementioned decision of the Tribunal in the case of M/s Manish Buildwell Pvt. Ltd. dated 31.1.2012 (supra) vide para 16 to 18 wherein similar addition was deleted.
10. This issue is discussed by the Assessing Officer in the assessment order in para 5 of his order. From the documents seized and impounded, it was noticed that the assessee was Charging transfer charges equivalent to 3.6% at the time of execution of the receipt and following the stand taken in the case of M/s K.K. Enterprise (Group case) the Assessing Officer has estimated the transfer value of flats in the hands of the assessee at Rs.6 lakhs and addition of Rs.21,600/- being 3.6% of the total transfer value has been added to the income of the assessee. Ld CIT(A) has deleted this addition on the basis of his order in the case of M/s K.K. Enterprise in which similar addition was deleted.10
For the sake of convenience relevant observations of the Tribunal from the said order are reproduced below:-
"16. Ground no.5 in ITA nos. 2788/Del/2010 and 2790/Del/2010 to 2793/Del/2010 and ground no.6 in ITA no.2789/Del/2010 are similar except the difference in amount and, therefore, for the sake of brevity, we reproduce ground no.5 in ITA no.2788/Del/2010 as under:-
"On the facts and circumstances of the case, the Ld. CIT(A) has erred in law and facts on the case in deleting the addition of Rs.1,92,513/- towards undisclosed transfer charges as recorded in seized documents holding that there was no evidence of such receipts and AO did not confront the concerned parties. In doing so, Learned CIT (A) ignored the facts that seized documents are substantial evidence of such receipts and it is in the mutual benefit of the assessee and its clients to deny such payments if confronted.
17. In this ground, the revenue has raised the issue regarding the undisclosed transfer charges of 3.6%.
18. We have heard both the sides. We have also gone through the seized material on which the addition has been made. This issue has also been considered in the case of CIT VS. Manish Buildwell (P) Ltd., cited supra. In para 10, the Hon'ble Delhi High Court has decided the issue as under :- "10. So far as the question No.4 is concerned, it is seen that before the Assessing Officer, in response to a query raised by him, the assessee submitted that merely on the basis of the seized material showing one transaction in respect of which the assessee had received transfer charges at 3.6% of the cost of the shop it should not be assumed that similar transfer charges had been received from all customers in whose cases such transfers were effected. The assessing officer did not accept the contention and proceeded to make an addition of Rs.2,19,701/- at 3.6% of Rs. 61,02,800/- which was the value of flats/space transferred during the relevant accounting year. The CIT(A) held on a perusal of the seized receipt that it mentioned the names of only the seller and the purchaser and the name of the assessee was not mentioned therein either as recipient or payer. He also found that the receipt did not mention any transfer charges being received by the assessee. It was found to mention that allied charges were "to be paid" by the buyers from which the CIT(A) concluded that the receipt cannot be taken as evidence for actual payment of any transfer charges to the assessee. In this view of the matter and for lack of any 11 evidence he deleted the addition. In the appeal filed by the Revenue to the Tribunal we do not find any ground taken to challenge the decision of the CIT (A) to delete the addition of Rs.2,19,701/-. The order of the Tribunal also does not show that any additional ground was filed by the Revenue which was admitted and adjudicated upon. In this view of the matter, question No.4 does not arise from the order of the Tribunal and we, therefore, decline to admit the same. "
Since the Hon'ble High Court on the same facts and circumstances allowed the claim of the assessee, we find no fault in the order of the CIT(A). Therefore, this ground is also dismissed."
11. In this view of the situation, respectfully following the aforementioned decision of the Tribunal in the group case, we do not find any infirmity in the order of the Ld.Commissioner of Income Tax (Appeals) vide which the necessary relief has been granted to the assessee. This ground of the revenue in respect of all the aofre mentioned cases are dismissed."
5.1. Respectfully following the same, we dismiss this ground of the assessee.
6. On the addition on account of cancellation charges received and cancellation of booking, the ITAT in the case of Shri Kamal Kishore Agarwal (supra) at paras 12 to 15, held as follows.
11. In this view of the situation, respectfully following the aforementioned decision of the Tribunal In the group case, we do not find any infirmity in the order of the Ld CIT(A) vide which the necessary relief has been granted to the assessee. This ground of the revenue in respect of all the aforementioned cases are dismissed.
12. Ground No.4. In the appeal of Shri Kamal Kishore Aggarwal for assessment year 2003-04 read as under:-
"On the facts and in the circumstances of the case, the Ld CIT(A) 12 has erred in law and on facts in deleting the additions made on account of cancellation charges out of earnest money. (hereinafter referred to as the issue of addition towards cancellation charges)."
The issue of Addition towards Cancellation charges In the case of Shri Kamal Kishore Aggarwal:
I.T.A. No. A.Y. Ground No Amount 2512/D/2011 2002-03 Nil Nil 2513/D/2011 2003-04 4 525500/- 2514/D/2011 2004-05 4 1571250/- 2515/D/2011 2005-06 4 777625/- 2516/D/2011 2006-07 Nil Nil 2517/D/2011 2007-08 6 29625/- In the case of Smt. Garima Aggarwal I.T.A. No. A.Y. Ground No Amount 2519/D/2011 2002-03 6 65000/- 2520/D/2011 2003-04 5 919986/- 2521/D/2011 2004-05 6 1844125/- 2522/D/2011 2005-06 5 2015500/- 2523/D/2011 2006-07 5 112500/- 2524/D/2011 2007-08 5 580000/- In the case of Manish Aggarwal I.T.A. No. A.Y. Ground No Amount 2964/D/2011 2002-03 6 764500/- 2965/D/2011 2003-04 6 1560500/- 2966/D/2011 2004-05 6 2110538/- 2967/D/2011 2005-06 6 201125/- 2968/D/2011 2006-07 6 188500/- 2969/D/2011 2007-08 6 136250/-
It was noticed by the Assessing Officer that the group concern namely M/s K.K. Enterprises was charging 25% earnest money on cancellation of booking and taking clue there from, the Assessing Officer observed that 25% of an amount of Rs. .21,02,000/-, has been charged by the assessee as cancellation charges with regard to Shri Kailash Chand Khandelwal from whom an amount of Rs.4,17,425/- was forfeited and in this manner the Assessing Officer had made addition of Rs.5,25,500/-.
1313. The Ld CIT(A) has deleted this addition on the basis of his decision in the case of M/s K.K. Enterprises and also in the case of M/s Manish Bui/dwell Pvt. Ltd. Which decision was upheld by the ITAT and in this manner the addition has been deleted by CIT(A) and the Department is aggrieved.
14. After hearing both the parties, we are of the opinion that this issue is covered in favour of the assessee by the decision" of the ITAT in the above-mentioned case of M/s K.K. Enterprise vide decision dated 31.1.2012. The relevant portion of the Tribunal's order is reproduced below:-
"This issue is discussed by the Assessing Officer in para 7 of his order wherein the deletion was upheld with the following observations:-
6. We have heard both the sides on the issue. Learned DR .
relied on the order of Assessing Officer. Learned AR relied on the order of CIT (A). From the facts of the case, we hold that the paper seized referred to by the Assessing Officer for making the addition is a letter to Usha Construction Company by Parmod Ahlawat requesting for cancellation of plot. The persons mentioned in the letter are separate entities. This paper also does not suggest that the amount was refunded to the buyer after charging cancellation charges by that party and assessee has received any cancellation charges. The Assessing Officer has presumed by applying a rate of 25% on all the cancellation though no incriminating documents have been found during the search. In absence of any such evidence, no adverse inference can be drawn which can attract the additions on this count. 6.1 On the similar facts, the ITAT in the case of sister concern in ITA NO.3062/DeI/2010 in the case of DCIT vs. Manish Buildwell Pvt. Ltd. vide order dated 22.12.2010 has decided the issue in favour of the assessee by holding as under-
17. Apropos the first issue about notional addition of cancellation charges, we find no infirmity in the order of 14 CIT(A), in as much as the addition has been made by AD on the ground that assessee should have charged the cancellation charges from customers who cancelled their bookings. In our view the Assessing Officer cannot step into the shoes of businessman and review the business expediency of the assessee's decision of not charging cancellation charges. Assessee contends it to be in the interest of market reputation and customer's relations. It has not been alleged that assessee have received cancellation charges and did not disclose in the books.
Assessee having not received any such charges CIT(A) has rightly deleted this addition. "
It is also noticed that the assessee has filed conformation from all the buyers whose booking were cancelled during the year under consideration. All these buyers have confirmed the receipt of the entire booking amount through account payee cheques without deducting any cancellation charges, Since the assessee has discharged its onus by filing their confirmations from the buyers in respect of the amount received after cancellation without charging any cancellation charges, therefore, in our considered view, the CIT(A) was justified in deleting the addition made by the Assessing Officer on this count. We dismiss ground no.2 in all the revenue appeals.
15. In this view of the situation, after hearing both the parties, we found that this issue is covered in favour of the assessee by the aforementioned decision of the Tribunal and this ground of the revenue in all the aforementioned appeals are. dismissed.
6.1. Respectfully following the same these grounds that arise for all the impugned AYs are dismissed.
7. The next common issue is charging interest on late payment of instalments which is ground no.3 for the Assessment Year 2002-03 and 15 ground no.5 in all the other AYs. The Tribunal at paras 20 to 22, pages 22 to 29 held as follows.
20. The next ground relates to charging of interest On late payments. This ground is as ground NO.3 in the appeal of Shri Kamal Kishore Aggarwal for assessment year 2002-03 which reads as under:-
"On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law and on facts in deleting the additions made on charging on interest on late payments (hereinafter referred to as the issue of addition towards interest on late payments)."
Issue of addition towards interest on late payments:
In the case of Shri Kamal Kishore Aggarwal.
I,T.A No.. A.Y. Ground No Amount
2512/D/2 2002-03 3 125000
011
2513/D/2 2003-04 3 125000
2514/D/2 2004-05 3 125000 --
2515/D/2 2005-06 3 125000 --
2516/D/2 2006-07 3 125000
011
2517/D/2 2007-08 3 125000
In the case of Smt. Garima Aggarwal.
I,T.A. No. A.Y. Ground No Amount
2519/D/201 2002-03 5 125000
1
2513/D/201 2003-04 3 125000
2514/D/201 2004-05 - - --
2515/D/201 2005-06 - - --
2516/D/201 2006-07 - -
1
2517/D/201 2007-08 - -
16
In the case of Shri Manish Aggarwal.
I,T.A. No. A.Y. Ground No Amount
2964/D/2011 2002-03 5 125000
2965/D/2011 2003-04 5 125000
2966/D/2011 2004-05 Nil - - --
2967/D/2011 2005-06 5 125000 --
2968/D/2011 2006-07 5 125000
2969/D/2011 2007-08 5 125000
21. This issue has been dealt by the Assessing Officer in para 5 of the assessment order for Assessment Year 2002-03. It is noticed by the Assessing Officer that during the course of search several documents were found which indicated that the assessee group was charging interest on delayed payments @ 2% per month from buyers of the space.
Referring to different pages of the seized documents, Ld.AO has observed that the group of the assessee in practice transfer such account of interest into notes of payments and therefore the amount of collection has to be estimated and he estimated the sum of Rs.1,25,000/- on account of interest payment on delayed installments in cash which is not entered into the books of account and in this manner a sum of Rs.1,25,0001- was added to the income of the assessee. This issue was also stated to be covered by the decision of the Tribunal in the group case of DCIT v. KK Enterprise in I.T.A. No. 2787 to 2793/De1/2010 dated 31.l.2012, copy of which is placed at pages 397 to 413 'of the paper book. The relevant discussion is found In para 10 to 12 and this issue was restored back to the file of Assessing Officer. The Ld DR was required to examine that as to whether the facts of that case and the case of the assessee are identical. ld DR could not point out any difference in the facts. The relevant observations of the Tribunal while deciding the said ground in restoring the matter back to the file of the .Assessing Officer are reproduced below:-
10. Ground No.4 in ITA Nos.2787/Del/2010 & 17 789/Del/2010 and Ground NO.3 in ITA Nos.2788/Del/20l0 & 2790/Del/2010 to2793/Del/2010are similar and accordingly, ground no.4 from ITA No. 2787/Del/2010 is reproduced as under:- .
"4. On the facts and Circumstances of the case, the Ld. CIT [A) has erred in law and facts of the case in deleting . the addition .of Rs.5,OO,OOO/- on account of interest on account of delayed payments even though such entries of realisation are recorded in seized material .and in doing SO, Learned CIT (A) ignored contents of seized documents and specific instances of charging of interest from persons who had deposed before Directorate of Income Tax (Investigation) and rather relied on mere arguments of the assessee that no enquiries were made from concerned parties.
11. The Assessing Officer made the addition by holding as under: :-
Page no. 39 of this annexure reflects the calculation of interest charged against shop/space no. 8-5 & 6 (4) in Usha Construction Co. The total amount of interest charged against this shop/space has been shown Rs.227300/-.
Thus from these documents it is quite clears that the assessee group is having the practice of charging interest payments on delayed payments of ground rent and installments. Moreover the fact of liability to pay interest on delayed payments is also given on the booking forms of the assessee company. The summons u/s 131, of IT Act were also issued by the Investigation wing to some of the persons who have paid interest as per these above annexures.
They were asked to appear personally before
the ,wing. But only one person Shri jaideep appeared
18
before the department. His statement was also recorded on oath u/s 131 of I T Act on 3.8.07. In his statement recorded and vide reply to question no. 5 he has admitted that he has paid interest of Rs. 6500/- in cash for which no receipt was issued. The assessee was asked to furnish details of delayed payments. He submitted that no such interest on delayed payments is charged. However, the seized materials present a different sotry. Ind the light of these evidences therefore was held that the assessee has charged interest on delayed payments and in the absence of any data being furnished by the assessee and considering the quantum reflected in the seized documents mentioned above, we . estimate e the same to be Rs.5, 00,000/- per annum. The same is added to the income of the assessee."
CIT (A) deleted the addition by holding as under:-
"6.3.1. I have perused the assessment order and submissions of the appellant. On perusal of the seized material it was seen that pages 1, 19, 20 of Annexure-4 and page no.39 of Annexure A-21 do not belong to the appellant but to other assessees of the group and therefore no adverse cognizance can be taken against the assessee for the said pages. Page 13 shows calculations made for payment of advance tax and the amount of gross profit computed on sale of property. has been wrongly construed as interest by the assessing officer which is not correct. The only relevant page is page 15 which shows calculation of interest of Rs.49, 783/- for some property at Plot 2 of the appellant. On perusal of the said page, it appears that the said calculation has been made at one go and not on regular intervals of time and therefore it appears to be made at the time of settling the account with buyer when they were not paying the installment or were delaying in making the payments. The said calculations mention the amount due and received and the balance and some amount of interest but it does not mention on the said page that the interest has been 19 received from them.
6.3.1 Further, the assessee produced confirmations from the buyers that no interest was charged from them. Thus the onus of the assessee got discharged and shifted on the assessing officer to prove otherwise. However, theassessing officer did not bring any evidence on record to prove otherwise even in the remand proceedings. Thus the assessing officer failed to discharge the onus shifted on him. I agree with the contention of the appellant that the statement of Mr. jaideep recorded at the back of the appellant cannot be relied upon without giving an opportunity to the appellant. The assessing officer did not give the assessee an opportunity to cross-examine Mr. jaideep even in the remand proceedings. In view of the same, no adverse cognizance of his statement can be taken against the asssessee.
6.3.2 The assessing officer asked the voluminous details on 24/12/2008 regarding the delayed payments and therefore, the assessee was unable to produce the said details. However, even if the details would have been submitted, addition could have been made for that interest which has been mentioned in the .seized material. The assessing officer cannot make additions on presumptions and surmises even in assessments made u/s 153A. Even while making assessments u/s 153A, additions can be made only on the basis of seized material and not on the basis of presumption or surmises. Therefore the additions of Rs. 5 lacs made by the assessing officer in each year on 20 account of interest on delayed payments cannot be sustained.
6.3.3 However, page 15 mentions figure of interest at Rs.49,783/- regarding the property held by Mr.Jaideep stated in his statement recorded before the Investigation Wing to have paid Rs. 6,500/- as interest. Thus the statement of Mr. jaideep does not corroborate with the seized material and shows that interest of Rs. 49,783/- has also not been received by the appellant. Statement of Mr. jaideep cannot be relied upon as no opportunity to cross- examination has been given to the appellant. Thus no addition can be made for the said amount. Thus the addition of Rs.5,00,000/- made on estimated basis merely on presumptions is hereby deleted.
12. We have heard both the sides and from the record, we find that this addition was made on the basis of statement of jaideep recorded by Investigation Wing on 3.08.2007 wherein he has admitted to have paid interest of Rs.6,500/- in cash to the assessee. The CIT(A) granted the relief on the ground that the statement recorded before the Investigation Wing does not corroborate with the seized material where the interest payment shown as Rs.49, 783/- whereas jaideep only admitted Rs.6,500/- as interest. Further, the statement of jaideep cannot be relied upon as no opportunity of cross examine has been given to the assessee. We find hat the Assessing Officer made an addition of Rs. 5 lacs. The seized material shown that the jaideep paid interest of Rs.49,783/- and he admitted in the statement of Rs.6,500/-. The CIT (A) deleted the addition that no opportunity was provided to cross examine. Considering all these facts and in the interest of justice and equity, we find it proper to restore the issue to the file of the Assessing Officer with a direction to decide the issue afresh after providing opportunity of being heard and also, if desire, to cross examine jaideep. Accordingly, this ground of appeal is allowed for statistical purposes.
22. In this view of the situation, after hearing both the parties, we restore this ground of revenue in respect of all the years to the file of the Assessing Officer with similar directions. For statistical purposes, these grounds are treated to be allowed."21
7.1. Consistent with the view taken therein, the issue is remitted back to the file of the A.O. for fresh adjudication in accordance with law.
8. For the Assessment Year 2003-04 the Revenue has raised ground on the issue of investment in purchases of shares which were held as bogus. The Tribunal in the case of Shri Kamal Kishore Agarwal (supra) at paras 23 to 29 held as follows.
"23. The next ground in the case of Shri Kamal Kishore Aggarwal for Assessment Year 2003-04 relates to investment in the shares of M/s Supreme Agro Products Ltd. which is as under:
"On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting additions for which the assessee had not been able to produce details and evidence in respect of investments in the share of M/s Supreme Agro Products Ltd. (Hereinafter referred to the issue of addition towards investment in shares.)"
Issue of addition towards investment in shares.
In the case of Shri Kamal Kishore Aggarwal:
I.T.A. No. A.Y. Ground No Amount
2512/D/2011 2002-03 Nil Nil
2513/D/2011 2003-04 6 62000
2514/D/2011 2004-05 6&7 1968000 =
(63000 & 1905000)
2515/D/2011 2005-06 - -
2516/D/2011 2006-07 - -
2517/D/2011 2007-08 - -
22
In the case of Smt. Garima Aggarwal
I.T.A. No. A.Y. Ground No Amount
2519/D/2011 2002-03 - -
2520/D/2011 2003-04 6 62000/-
2521/D/2011 2004-05 5& (7&8) 1970000/- =
(63000 + 1907000)
2522/D/2011 2005-06 - -
2523/D/2011 2006-07 - -
2524/D/2011 2007-08 - -
In the case of Manish Aggarwal
I.T.A. No. A.Y. Ground No Amount
2964/D/2011 2002-03 - -
2965/D/2011 2003-04 8 62000/-
2966/D/2011 2004-05 5&7 1970000/- +
(63000 + 1907000)
2967/D/2011 2005-06 - -
2968/D/2011 2006-07 - -
2969/D/2011 2007-08 - -
24. Ground no.6 for Assessment Year 2003-04, this issue has been discussed in para 4 of the assessment order whereby an addition of Rs.62,000/- has been made. The assessee has purchased 20000 equity shares of M/s Supreme Agro Products Ltd. for a sum of Rs.62,000/- through M/s R.N.Aggarwal & Co. (stock & share broker & financial consultants), 5889/4B, Dev Nagar, New Delhi. The Assessing Officer conducted enquiry through an inspector to verify the address of M/s Supreme Agro Products Ltd. Inspector visited the premises and submitted his report. It was reported that no official activities were carried out from the said address and no one ever heard the name of M/s Supreme Agro Products Ltd. at the said address. Therefore, the Assessing Officer treated the investment of Rs.62,000/- shown by the assessee in the shares of M/s Supreme Agro Products Ltd. as bogus and the amount of Rs.62,000/- was added to the income of the assessee.
2325. Ld CIT(A) has deleted this addition on the ground that a sum of Rs.62,OOO/- has gone from the coffer of the assessee which is not a receipt in the hands of the assessee. The investment made by the assessee is also explained and the shares are registered in the name of the assessee. Therefore, no addition was called for.
26. It was submitted by the Ld.DR that it is not a simple case of investment. He submitted that Shri RN Aggarwal had admitted before the Investigation Wing that he is engaged in the business of giving accommodation entries in the shape of sale & purchase of shares, Therefore, the Assessing Officer had made the enquiry through Inspector and thus investment has been held to be bogus by the Assessing Officer. He submitted that in the immediate preceding Assessment year the assessee has sold the very same shares at a very high price which is also added to the income of the assessee. He submitted that Ld CIT(A) without considering all these facts has deleted the addition without going into the root of the matter. He, therefore, submitted that the matter in this regard may be restored back to the file of the Assessing Officer. Ld DR submitted that this issue is required to be examined at length as it is only a device adopted by the assessee to convert undisclosed income into disclosed income as in subsequent year those very shares have been sold at a very high price.
27. It is the case of the Ld .R that a detailed reply was given to the Assessing Officer as per letter dated 15th Sept ,2010 a copy of which is enclosed at pages 74 to 82 of the paper book and accordingly copies of bills of M/s RNAggarwal & Co. Dalip Kr. Regarding sale & purchase of shares were submitted along with details thereof. He submitted that the assessee had also filed an affidavit of Shri RN Aggarwal, copy of which is placed at pages )82 to 284 of the paper book in which he has stated all the facts regarding sale & purchase of shares of the assessee and his statement on oath recorded by the DDIT on 12.7.2004. He never mentioned the name of the assessee with regard to sale & purchase of shares entered into by him and he has affirmed that these transactions were actually and truly entered into by the assessee. He has also given his Permanent Account Number (PAN). Therefore, it is the case of the Ld AR that the assessee had placed on record all the evidences of share purchased by the assessee from the concern of RN Aggarwal & Co. to prove that these transaction are genuine.
24He submitted that in the next year these shares were sold. In the immediate preceding assessment year a similar addition of Rs.62,000/- is made. He submitted that having filed all the evidences before the Assessing Officer and the Ld CIT(A), the addition has rightly been deleted by-the CIT(A).
28. In other cases also similar additions are made in the assessment years described in the aforementioned table . In the years of purchase and in the years of sales, these additions are made which have been deleted by CIT(A). Revenue in these grounds agitating the deletion.
29. We have heard the parties and perused the material available on record and in the light of material placed before us. The revenue has made these additions for the reason that small investment has yielded a large gain within a short span of time as share purchased for a paltry sum have been sold for several lacs in the immediate preceding year the issue to the file of the Assessing Officer with a direction to decide the issue afresh after providing opportunity of being heard and also, if desire, to cross examine Jaideep. Accordingly, this ground of appeal is allowed for statistical purposes.
22. In this view of the situation, after hearing both the parties, we restore this ground of revenue in respect of all the years to the file of the Assessing Officer with similar directions. For statistical purposes, these grounds are treated to be allowed."
8.1. Consistent with the view taken therein, we restore the matter back to the file of the A.O. for fresh adjudication in accordance with law.
9. For the A.Y. 2007-08 the following separate grounds are adjudicated as under.
259.1. Ground no.4 is on an addition for ground rent received from buyers to be paid to DDA which were shown as a liability. The Tribunal in the case of Shri Kamal Kishore Agarwal (supra) at paras 16 to 19 pages 15 to 22 held as follows.
"16. The ground relating to ground rent received from buyers and to be paid to DDA shown as liability has been taken in the case of Shri Kamal Kishore Aggarwal as ground NO.7 for assessment year 2007-08. This ground reads as under. (hereinafter referred to issue of addition towards ground rent).
"On the facts and in the circumstances of the case, the Ld CIT(A) has erred in law and on facts in deleting the additions made on account of ground rent which was retained by the assessee and had been utilized for the expenses of the firm."
The issue of Addition towards ground rent In the case of Shri Kamal Kishore Aggarwal:
I.T.A. No. A.Y. Ground No Amount
2512/D/2011 2002-03 Nil Nil
2513/D/2011 2003-04 - -
2514/D/2011 2004-05 - -
2515/D/2011 2005-06 - -
2516/D/2011 2006-07 Nil -
2517/D/2011 2007-08 4 166000/-
In the case of Smt. Garima Aggarwal
I.T.A. No. A.Y. Ground No Amount
2519/D/2011 2002-03 4 Infructuous
2520/D/2011 2003-04 - -
2521/D/2011 2004-05 4 64323/-
2522/D/2011 2005-06 4 514584/-
2523/D/2011 2006-07 4 514584/-
2524/D/2011 2007-08 4 272305/-
(128646 + 143659)
26
In the case of Manish Aggarwal
I.T.A. No. A.Y. Ground No Amount
2964/D/2011 2002-03 4 25374/-
2965/D/2011 2003-04 4 25374/-
2966/D/2011 2004-05 4 288311/-
2967/D/2011 2005-06 4 974406/-
2968/D/2011 2006-07 4 1076992/-
2969/D/2011 2007-08 4 698541/-
17. This issue has been discussed in para 7 of Assessing Officer's order. The Assessing Officer has made addition of Rs.1,66,000/- on account of ground rent and interest on ground rent collected by the assessee alleging that since the said amount was collected by the assessee from space buyers has not been paid to DDA but utilized by the assessee for its own business needs and therefore the same is income in the hands of the assessee. The Ld ClT(A) has deleted this addition following his order in the group case of M/s K.K. Enterprise in which this similar addition has been deleted.
18. At the outset, it was pointed out that this ground is covered In favour of the assessee by the aforesaid decision of the Tribunal in the case of K.K. Enterprise dated 31.1.2012 (supra). The Tribunal has dealt with this ground in para 7 to 9 wherein reference to the decision of Hon'ble Delhi High Court has been made & deletion of the impugned addition is confirmed with the following observations:-
7. Ground NO.3 in ITA Nos.2787/Del/2010 and 2789/De//2010 for assessment years 2001-02 and 2003-04 respectively is related to the deletion of addition of Rs.66,724/- for AY 2001-02 and Rs.1,51,928/- for AY 2003-04 made on account of realization of statutory ground rent and interest thereon on behalf of the assessee. The ground in ITA No. 2787/Del/2010 read as under:-
"3. On the facts and circumstances of the case, the Ld. CIT (A) has erred in law and facts of the case in deleting the addition of Rs.66, 724/- on account of realization of statutory ground rent and interest thereon on behalf of DDA despite failure of the assessee to pay the same to DDA. "
8. Learned DR relied on the order of the Assessing Officer. Learned AR relied on the order of CIT (A) and also submitted that this issue is also covered in favour of the assessee by the decision of Hon 'ble Delhi High 27 Court in the case of CIT vs. Manish Buildwell (P) Ltd. in ITA NO.928/2011 vide order dated 15.1l.201l.
9. We have heard both the sides. In the assessee's case, the issue is regarding the calculation of ground rent and interest thereon from the buyers and then paid to the DDA and the case relied upon by the assessee, the issue was regarding calculation of registration and electrification charges on behalf of the DDA whereas the Hon'ble High Court has not admitted the question by holding that no question of law can be said to arise from the order of the ITA T. The registration and electrification charges were recoverable from the buyers by the assessee. The Hon'ble High Court in the aforesaid case has held as under :-
"11. Question NO.5 relates to the addition of Rs.3,82,94,536/- being stamp duty and in paragraph 7 of the assessment order. The Assessing Officer stated that the seized documents revealed that the assessee was charging registration charges @ 7% and was showing the same as loans and advances recoverable from the customers. According to him this was a wrong method of accounting. A similar procedure was found to have been adopted by the assessee in respect of electrification charges which were charged @ 15% and shown to be recoverable as loans and advances. According to the assessing officer these were not items of revenue expenditure since they related to the flats/space and formed part of the cost thereof and therefore they were not adjustable against the revenue of the assessee. According to the assessing officer these items of expenditure could be capitalized and added as part of the work in progress. On these facts he called upon the assessee to explain why the registration and electrification charges collected from customers cannot be added as revenue receipts. The assessee submitted that according to the system of accounting followed, the registration and electrification charges were not included either in the cost of land or in the work in progress or as cost of the project and they were rightly shown to be recoverable from the buyers. It was also explained that in case there is any surplus of the registration and electrification charges collected from the customers over the amounts paid to the State Government, the surplus would be shown as income in the year of receipt. The assessing officer rejected the explanation on the ground that revenue receipts and capital expenditure cannot be adjusted against each other. He, therefore, added the amount of Rs.3,B2,94,536/- as the assessee's income.
12. On appeal the CIT (A) recorded the following findings:-28
a) The assessee declared the amount as advances recoverable in its balance sheet.
b) The electrification and registration charges did not . represent capital expenditure because they were incurred in relation to the construction of the mall project which . was stock-in-trade for the assessee as he is engaged in the business of developing and selling real estate.
c) The amount paid has not been claimed as expenses in the profit and loss account and was shown in the asset side of the balance sheet as recoverable from the customers.
d) When the registration and electrification charges are recovered from the buyer later they are duly recorded in the books of accounts. This is at the time of handing over possession or execution of sale deeds. Neither the payment of the registration and electrification charges nor the recovery thereof from the buyers is shown in the profit and loss account and thus there is no revenue effect.
e) The finding of the AO that the capital expenditure has been adjusted against revenue receipts is not factually correct since no such adjustment has been made in the books of accounts.
13. On the above factual findings, the CIT(A) deleted the addition of Rs.3, 82,94,536/-.
14. On appeal by the Revenue to the Tribunal it was held that the assessee could have adopted two ways of recording the transaction - either by crediting the amount received from the buyers in the cost of the project account and claiming the payment of the registration and electrification charges as an expense on the debit side or to make an entry in such a manner that the amount is shown as recoverable from the buyers, credit the account with recoveries made from the buyers and if there is any surplus of the recoveries over and above the amount shown as recoverable, offer the same for income tax. The Tribunal held that the assessee has adopted the second of these two methods and both the methods were acceptable. It was also found by the Tribunal that when the assessee paid the registration and electrification charges they were note/aimed as deduction in the profit and loss account. On these findings of fact the Tribunal agreed with the CIT(A) that the amount cannot be added.
15. The aforesaid discussion would show that the decision of the Tribunal is based on factual findings recorded by the CIT(A) with which it agreed. No material was brought before the Tribunal or before us to disturb the factual 29 findings recorded by the aforesaid authorities. The decision of the - Tribunal is not therefore open to the challenge as being perverse. Further since the Tribunal's decision is based on findings of fact recorded on the basis of the entries made in the books of accounts, no question of law can be said to arise from the order of the Tribunal on this point. Question NO.5 is therefore not admitted. This ground is similar to ground No.4 for essessment year 2004-05, 2005-06 and ground NO.6 for assessment year 200708. Facts of assessee's case are similar to - the facts of Manish Buildwell (P) Ltd.'s case. In view of this, respectfully following the decision of Hon'ble jurisdictional High Court, cited supra, which is in the case of assessee's sister concern, we sustain the order of CIT (A). The similar payment collected on behalf of the DDA and paid to DDA were held to be not taxable in the case of the assessee and the Hon'ble High Court has held that the factual findings recorded in the order of the Tribunal has not been dislodged, therefore, the order of the Tribunal cannot be said to be perverse. The findings of the Tribunal were recorded on the basis of entries made in the books of account and no question of law has arisen from the order of the ITAT and Hon'ble High Court did not admit the question. Since the factual position is the same, we find no merits in this ground of revenue's appeal which is accordingly dismissed.
19. In this view of the situation, after hearing both the parties, finding that there is no difference in the facts and circumstances of the present case as compared to the case mentioned above, we hold that Ld CIT(A) has rightly deleted this addition. This ground of the revenue in all the appeals are dismissed. Before parting with the issue it is mentioned that revenue: has taken this ground in the case of Smt. Garima Aggarwal for assessment year 2002-03 but no such issue is involved in the impugned assessment year. Therefore, this ground of revenue in the case of Smt. Garima Aggarwal for the assessment year 2002-03 is infructuous."
9.2. Respectfully following the same we uphold the order of the Ld.Commissioner of Income Tax (Appeals) and dismiss this ground of the Revenue.
3010. Ground no.7 for A.Y. 2007-08 is on the issue of remitting interest on security deposits received for contingencies from the buyers. This issue is also covered in favour of the assessee. The Tribunal in the case of Shri Kamal Kishore Agarwal (supra) at paras 30 to 32 held as follows.
"30. The next ground in the case of Shri Kamal Kishore Aggarwal (only) i.e. ground no.7 relates to security deposit for Assessment Year 2007-08 read as under:
"On the facts and in the circumstances of the case, the Ld.Commissioner of Income Tax (Appelas) has erred in law and on facts in deleting the additions being unearned on amount received as security deposits for contingencies ;from the buyers. (hereinafter referred to as issue of addition towards security deposit.)
31. This issue has been discussed by the Assessing Officer in para 9 from the impounded documents, it was noticed by the Assessing Officer that the buyers of various spaces in the group concern including that of assessee had made security deposits with the group by way of Pay order/Draft order which was to be adjusted against any pending tax liability by way of VAT/Sales Tax and after adjusting amount remains the same and has to be refunded to the buyers. If such tax liability exceeds the security deposit then, the concerned buyer has to pay the same immediately to the assessee. From the details, it was noticed, that such security deposit then, the concerned buyer has to pay the same immediately to the assessee. From the details, it was noticed, that such security deposits collected by the assessee were to the tune of Rs.23,50,500/-. According to Assessing Officer the assessee had kept the said amount with him and has earned interest thereon. He has estimated @ 10% p.a. and accordingly the addition 31 of Rs.2,35,050/- has been made. The CIT(A) has deleted the addition on the ground that the security deposits were received by the assessee for the purpose of his business and there was no evidence of any nature to hold that any interest other than declared in the books was received by the assessee. The utilization of deposit is clearly evident from the balance sheet which proves that no interest has been received or earned over and above the interest declared in the books. When the receipt as well as the utilization of security deposit is recorded and declared in the books then no addition can be made by presuming that notional interest is earned on the interest free deposits. In this manner, the Ld.Commissioner of Income Tax (Appeals) has deleted this addition.
32. We have heard the rival parties and perused the material available on record. No notional income can be assessed on account of security deposit lying with the assessee as those very deposits were utilized by the assessee in his business. We find no9 fault in finding recorded by the Ld.Commissioner of Income Tax (Appeals) and we decline to interfere in the same. This ground of the revenue is dismissed.
10.1. Respectfully following the same we dismiss this ground of the Revenue.
11. Ground no. 8 in the Revenue's appeal for the A.Y. 2007-08 is on the addition of unexplained investments in property on the basis of departmental valuer's report. The Tribunal in the case of Shri Kamal Kishore Agarwal (supra) at paras 35 to 38 held as follows.32
"35. This facts relating to Shri Kamal Kishore are discussed by the Assessing Officer in para 10 of assessment order. A flat was purchased by the assessee bearing no.A-101, 1st floor, Patel Cooperative Group Housing Society (Umiya Sadan), Plot no.4, Sector 4, dwarka, New Delhi for a reported value of Rs.21,60,000/-. The Assessing Officer referred the valuation of the same u/s 142A of the Income Tax Act, 1961. The VO has determined the fair market value of the property at Rs.25,73,400/-. The assessee was required to explain as to why the difference in the valuation of difference in the valuation of Rs.4,13,400/- should not be added to the income of the .assessee. The assessee has filed various objections which inter alia include that Valuation Officer had adopted the Land & Building method and the assessee had not purchased the land and constructed the building thereon and rather had purchased a flat and therefore the method of Land & Bldg. was not an appropriate method. While estimating the land cost, the Valuation Officer had relied on sale instance of janakpuri which was a fully developed area in 2006 as against Dwarka which was at. a development stage. Therefore, the. instance compared by Valuation' Officer was not comparable. The agreement of sale was only for 1350 sq.ft. and the flat has been purchased through registered sale deed. Therefore, there was no reason for the Department to presume any under hand dealing and onus is on the revenue to show that no, extra consideration was paid. The Assessing Officer did not accept these submissions of the assessee and added the said amount of f.4,13,400/- to the income of the assessee. This issue has been discussed by the Ld ClT{A) in para 10 of his order. After considering the submissions of the assessee, Ld CIT(A) has found that the comparable case selected by the Valuation Officer being a plot at janakpuri which was auctioned in january, 2004 i.e. two years prior the purchase made by the assessee. The area 33 considered by the Valuation Officer was more developed in which the flat of the assessee was located. He also found that the onus is not discharged by the Department to prove any on money is paid by the assessee for the purchase of flat. In this manner, the Ld CIT(A) deleted the addition of Rs.4,13,400/-.
36. In the' case of Shri Manish Aggarwal, the issue has been discussed by the Assessing Officer in para 10. The assessee had purchased a flat bearing No.504, 5th Floor, Vasundhra Cooperative Group Housing Society, Plot No.5, Sector-5, Dwarka. New Delhi for an amount of Rs.21, 70,800/-. The Assessing Officer made a reference u/s 142A of the Income Tax Act, 1961 and the Valuation Officer had valued the said property at Rs.24,98,810/-.Adopting the similar course of action, the Assessing Officer added the difference of ~.3,28,010/- to the income of the assessee' which has been deleted by Id ClT(A) following the logic given by him in the appeal order of Shri Kamal Kishore Aggarwal. The Department is aggrieved and has raised aforementioned ground. These grounds in both the cases were argued together by both the parties.
After narrating the facts and relying upon the assessment order, it was pleaded by Ld DR that the difference in the valuation was rightly added by the Assessing Officer and Ld ClT(A) has wrongly deleted the same.
37. On the other hand, relying upon the order passed by Ld ClT(A), it is the contention of the Ld AR that there is no basis for making .the addition. Therefore, the Ld CIT(A) has rightly deleted the addition.34
38. We have heard the rival parties and perused the record and in the light of material placed before. The addition has been deleted by Ld CIT(A) on two grounds:-
1) The comparable case selected by the Ld Assessing Officer was not appropriate;
2) Secondly, that there was no evidence on record to show that any extra consideration other than stated in the sale deed was paio by the assessee to the seller of the flat.
It is not the case of the department that the flat has been purchased by the assessee below the circle rate and entire facts were available with the Assessing Officer. The Assessing Officer did not make any enquiry regarding the purchase price paid by the assessee. In the absence of any such evidence, merely on presumption or valuation, the amount cannot be added to the income of the assessee. Moreover, the difference in valuation is also not a significant difference. Keeping in view all these facts, we are of the opinion that there is no infirmity in the order of Ld.Commissioner of Income Tax (Appeals) vide which the impugned addition has been deleted. We decline to interfere. This ground of revenue in; both the cases is dismissed."
11.1. Respectfully following the same we uphold the order of the Ld.Commissioner of Income Tax (Appeals) and dismiss this ground of the Revenue.
3512. In the result all the appeals by the Revenue are dismissed.
Order pronounced in the Open Court on 23rd January, 2014.
Sd/- Sd/-
(A.T. VARKEY) (J.SUDHAKAR REDDY)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: the 23rd January, 2014
*manga
Copy of the Order forwarded to:
1. Appellant; 2.Respondent; 3.CIT; 4.CIT(A); 5.DR; 6.Guard File By Order Asst. Registrar