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Pankaj Sapra, H-1481, 1st Floor, C. R. Park, New Delhi – 110 019. Vs. Income Tax Officer, Ward – 23(2), New Delhi.
November, 22nd 2019

Referred Sections:
Section 147 of the Income Tax Act, 1961.
Section 15(2) of the Income Tax Act, 1961
Section 148 of the Income Tax Act, 1961.
Section 68 of the I.T. Act, 1961.

Referred Cases / Judgments:
Sh. Inderjeet Vs. ITO (ITA No.2740/D/18) (Delhi ITAT) (03.12.2018)
CIT v. Suren International P. Ltd. [2013] 357 ITR 24 (Del)
Pr. CIT v. SNG Developers Ltd. (Delhi HC) (ITA 92/2017) (12.07.2017)
High-tech Construction P. Ltd v. ITO (ITA No.1605/D/19) (ITAT Delhi) (22.03.2019)
Sh. Jagat Singh v. ITO (ITA No.2749/D/18) (Dated 04.09.2018) (ITAT, Delhi)
Maveric Electronics (P) Ltd. v. ITO (Delhi ITAT) (ITA No.1835/D/14) (21/03/2017)

                                         1                     ITA No. 5747/Del/2018


                   IN THE INCOME TAX APPELLATE TRIBUNAL
                        DELHI BENCH: `F' NEW DELHI

            BEFORE MS SUCHITRA KAMBLE, JUDICIAL MEMBER
                                    AND
                  SHRI O. P. MEENA, ACCOUNTANT MEMBER

                   I.T.A. No. 5747/DEL/2018 (A.Y 2008-09)

     Pankaj Sapra,                       Vs    Income Tax Officer,
     H-1481, 1st Floor, C. R. Park,            Ward ­ 23(2),
     New Delhi ­ 110 019.                      New Delhi.
     (PAN : BBOPS 2128 D)

     (APPELLANT)                               (RESPONDENT)


                 Appellant by         Sh. R. S. Singhvi, C.A.
                 Respondent by        Shri S. N. Meena, Sr. D.R.


                  Date of Hearing               21.11.2019
                  Date of Pronouncement         22.11.2019

                                      ORDER

PER SUCHITRA KAMBLE, JM

     This appeal is filed by the Assessee against the order of the
Commissioner of Income Tax [Appeals]-31, New Delhi dated 31.07.2018 for
Assessment Year 2008-09.


2.   The Grounds of appeal are as under :-

     1(i)   "That on the facts and circumstances of the case and under the law,
            the Assessing Officer has wrongly assumed jurisdiction u/s. 148
            without proper appreciation of facts, recording of satisfaction and
            requisite approval in terms of provisions of sec. 151 of the Act.
     (ii)   That there is no case of any income escaping assessment and whole
            basis of reassessment is illegal and without jurisdiction.
                                          2                       ITA No. 5747/Del/2018


      2(i)    That on the facts and circumstances of the case, the CIT(A) was not
              justified in confirming addition of Rs.27,27,350/- as unexplained
              investment in terms of provisions of sec. 69 of I.T. Act, 1961.
      (ii)    That there is no case of any unexplained investment and finding
              and conclusion of the CIT(A) is without proper appreciation of facts,
              application of mind and opportunity to the appellant.
      (iii)   That addition of Rs. 27,27,350/- is highly arbitrary and unjustified.

      3(i)    That CIT(A) is also not justified in confirming addition of Rs.
              23,48,615/- as unexplained cash deposit in terms of provisions of
              sec. 68 of the I.T. Act, 1961.
      (ii)    That there is no factual or legal basis for alleged cash deposit of Rs.
              23,48,615/- and Assessing Officer has considered the same in
              arbitrary manner without any reference to bank account or any
              other material.
      (iii)   That impugned addition is highly arbitrary, unjustified and merely
              based on presumption and surmises.

      4.      That the assessee crave leave to add, amend, alter or forgo any or
      all of the grounds as may be necessary and in the interest of justice.

      5.   That orders of the lower authorities are not justified on facts and
      same are bad in law."







3.    The assessee carried on business as a property consultant. The return of
income was filed on 25.02.2010 declaring income of Rs.1,25,400/- and the
same was processed u/s 143(1) of the Income Tax Act, 1961. Subsequently, the
case was re-opened and a notice dated 26/03/2013 u/s 148 of the Income Tax
Act, 1961 was issued on the basis of the information received from Addl.
Director Income Tax (Inv.) that the assessee has deposited cash of
Rs.23,48,615/- and made unexplained investment of Rs. 27,27,350/-. The
reasons recorded by the Assessing Officer are extracted as under:

      Reasons recorded for initiating proceedings u/s. 148 of the IT Act, 1961 in
      the case of Sh. Pankaj Sapra (BBOPS2128D) for the A.Y. 2008-09

      The Addl. Director Income Tax (inv.), Unit-V, New Delhi vide his letter F.No.
      Addl. DIT (Inv.)/U-V/2011-12/251, dated 16.03.2012 had sent a report in
      the case of Sh. Pankaj Sapra.
                                        3                      ITA No. 5747/Del/2018


      As per the investigations made, the assesse had deposited unaccounted
      cash in his Bank account and also made large investment in assets. The
      details are as follows:-
      1. Unexplained cash deposit:-
         A.Y. 2008-09                     Rs. 23,48,615/-
      2. Unexplained investments:         Rs. 27,27,350/-

      In view of the above mentioned facts, the unexplained cash deposits and
      unexplained investments are liable to tax u/s. 68 & 69 of the Income Tax
      Act, 1961. The income has escaped assessment in the case of Sh. Pankaj
      Sapra for A.Y. 2008-09 to the extent of Rs. 50,75,965/-, as per the
      provisions of the Income Tax Act, 1961.

      In view of the above mentioned facts, I have reason to belief that income to
      the tune of Rs. 50,75,965/- has escaped assessment within the meaning
      of section 147 of the Income Tax Act, 1961. Accordingly, necessary
      permission/approval under section 15(2) of the Income Tax Act, 1961 may
      kindly be accorded for issuance of notice u/s 148 of the Income Tax Act,
      1961 for A.Y. 2008-09."

      Subsequently, the reassessment proceedings u/s 147 were completed
vide order dated 19/03/2014 at an income of Rs. 52,01,510/- after making
addition of Rs. 50,76,110/- being Rs. 23,48,615/- on account of unexplained
cash deposits u/s 68 of the Act and Rs. 27,27,350/- as unexplained
investments u/s 69 of the Act.


4.    Being aggrieved by the assessment order, the assessee filed appeal before
the CIT(A). The CIT(A) dismissed the appeal of the assessee.


5.    As regards Ground No.1 relating to validity of notice u/s 148 and
assumption of jurisdiction u/s 147 of the Act, the Ld. AR submitted that the
Assessing Officer initiated the reassessment proceedings merely on the basis of
information received from Additional Director of Income Tax (Investigation),
New Delhi. The Ld. AR further submitted that the Assessing Officer without
conducting any enquiry / investigation in respect of cash deposits and
agreement to sale entered into by the assessee has presumed that the income
has escaped assessment. However, as per the facts of the case and based on
relevant bank account, there is no case of cash deposits as referred to in the
                                       4                      ITA No. 5747/Del/2018


reasons recorded by the Assessing Officer. The Ld. AR pointed out the relevant
bank account and its details which were produced before the Assessing Officer
as well as CIT(A). The Ld. AR further submitted that in fact on the identical
grounds, proceedings u/s 148 relating to A.Y. 2007-08 was set aside by the
Tribunal vide order dated 28.03.2019 being ITA No.4253/Del/2018. The Ld.
AR further submitted that there are various decisions of Jurisdictional High
Court in respect of reasons recorded on the basis of wrong facts and the
Hon'ble High Court held that there is no justification for assuming Jurisdiction
u/s 148 of the Act. In this connection, the Ld. AR relied upon the following
decisions:
      i.     Sh. Inderjeet Vs. ITO (ITA No.2740/D/18) (Delhi ITAT)
             (03.12.2018)
      ii.    CIT v. Suren International P. Ltd. [2013] 357 ITR 24 (Del)
      iii.   Pr. CIT v. SNG Developers Ltd. (Delhi HC) (ITA 92/2017)
             (12.07.2017)
      iv.    High-tech Construction P. Ltd v. ITO (ITA No.1605/D/19) (ITAT
             Delhi) (22.03.2019)
      v.     Sh. Jagat Singh v. ITO (ITA No.2749/D/18) (Dated 04.09.2018)
             (ITAT, Delhi)
      vi.    Maveric Electronics (P) Ltd. v. ITO (Delhi ITAT) (ITA No.1835/D/14)
             (21/03/2017)

6.    As regards Ground No.2 relating to an addition u/s 69 of the Act on
account of unexplained investment of Rs.27,27,350/-, the Ld. AR submitted
that Shri S. N. Arora (Father of the assessee) entered into a collaboration
agreement in respect of property no. H-1481, C.R. Park, New Delhi with Sh.
Nilamber vide the agreement dated 13.09.2005 for a consideration of Rs.
56,50,000/- and as such an advance of Rs. 46,50,000/- was paid by Sh. S. N.
Sapra / Arora. The Ld. AR submitted the collaboration agreement during the
course of hearing which was also before the CIT(A). In fact Assessing Officer in
case of Sh. S N Sapra has made addition of Rs.46,00,000/- as unexplained
investment in A.Y. 2006-07. The Ld. AR further submitted that due to non-
compliance of the terms & conditions of the collaboration agreement, the
aforesaid collaboration agreement was cancelled by Sh. S N Sapra & Sh.
Nilamber and the arrangement was made between the parties to adjust the
                                       5                     ITA No. 5747/Del/2018


advance of Rs. 46,50,000/-. Subsequently, on 13/02/2008, Sh. Pankaj Sapra
i.e. assessee along with Smt. Daya Sapra i.e. Mother of the assessee purchased
rights of second floor with terrace that of property mentioned hereinabove vide
sale deed for a consideration of Rs. 27,27,350/-. Similarly, on 14/02/2008,
Smt. Daya Sapra along with Smt. Kamlesh Gupta having 50% share each
purchased first floor from sale property from Sh. Nilamber vide agreement to
sell for a consideration of Rs. 27,27,350/- in joint ownership. The Ld. AR
further submitted that the balance amount of Rs. 5,58,975/- [46,50,000 -
27,27,350 - 13,63,675] was received by Sh. S. N. Sapra from Sh. Nilamber in
full and final settlement of the transaction. The assessee has submitted
memorandum of understanding before the Revenue authorities. The Ld. AR
further submitted that the assessee has not made any investment and as such
the complete transaction is related to the collaboration agreement entered into
by Sh. S N Sapra and Sh. Nilamber as per mutual settlement. Moreover, the
Assessing Officer has already made an addition of Rs. 46,00,000/- in the case
of Sh. S N Sapra for A.Y. 2006-07 by passing re-assessment order u/s 147 of
the Act and accordingly, the impugned addition is in the nature of double
addition.


7.    As regards Ground No.3 relating to addition u/s 68 of Rs. 23,48,615/-
on account of unexplained cash deposits in the bank accounts, the Ld. AR
submitted that cash deposits in the bank accounts is only to the extent of Rs.
60,835/- and as such whole basis of addition is highly arbitrary and without
any basis. The Ld. AR further submitted that the assessee has taken a loan of
Rs.13,00,000/- from Sh. Arun Gupta and received two cheques of Rs.
3,00,000/- and Rs.10,00,000/- respectively and the same were duly deposited
in the bank account of the assessee. However, the cheque of Rs.10,00,000/-
was not cleared due to insufficient balance in the account of Sh. Arun Gupta
and infact, a new cheque of Rs. 10,00,000/- was given by Sh. Arun Gupta to
the assessee. Thus the total deposits in the form of cheques was only to the
extent of Rs. 13,00,000/-. The Ld. AR further submitted that the Assessing
                                          6                       ITA No. 5747/Del/2018


Officer in the remand report dated 01.05.2008 made an observation that the
returned cheque of Rs.10,00,000/- has to be considered. The CIT(A) ignored
the said observations and upheld the additions made in the assessment order.


8.      The Ld. DR, as regards Ground No.1 submitted that the reasons are
properly drafted and there is a proper satisfaction given by the Assessing
Officer for reopening the matter. As regards Ground No.2, the Ld. DR
submitted that the addition u/s 69 on account of unexplained investment has
duly been added, as the fact remains that before the Assessing Officer, the
assessee could not established any direct nexus about the investigation. As
regards Ground No.3 the Ld. DR submitted that the addition u/s 68 on
account of unexplained cash deposits in the bank account was not properly
demonstrated before the Assessing Officer, therefore, the addition was properly
made.







9.      We have heard both the parties and perused all the materials available
on record. The issue relating to proceedings initiated u/s 148 whether the
same is valid or not, has already been decided in assessee's own case for A.Y.
2007-08 by the Tribunal. The Tribunal held as under:


        "8.    I have considered the rival submissions made by both the sides and
        perused the orders of the authority below. I find the AO on the basis of the
        information received from the investigation wing of the Department that the
        assessee has made cash deposit of Rs. 4,97,452/- reopened the
        assessment by issuing notice under section 148 and thereafter made
        addition of Rs. 4,97,452/- to the total income of the assessee by invoking
        the provisions of Section 68 of the I.T. Act, 1961. I find the learned CIT(A)
        upheld the action of the AO, the reasons of which have already been
        reproduced in the preceding paragraph. It is the submission of the learned
        counsel for the assessee that there is complete non application of mind of
        the AO while recording the reasons and he has not verified the facts
        properly and the reopening was made on the basis of report of the
        investigation wing. Further the deposits in the bank accounts are fully
        explained and therefore no addition is called for.

        9.     I find force in the above arguments advanced by the learned counsel
        for the assessee. A perusal of the notice issued under section 148 shows
                                        7                        ITA No. 5747/Del/2018


      that the notice has been issued in a very casual manner, Clause 3 of the
      notice reads as under:-

            "Notice under section 148 of the Income Tax Act, 1961.
            3. This notice is being issued after obtaining the necessary
            satisfaction of the commissioner of Income Tax ............./the Central
            Board of Direct Taxes."

      10. Similarly, a perusal of the bank account maintained with Vijaya
      Bank account no. 004427, copy of which has been placed at page no. 25
      and 26 of the paper book, shows that an amount of Rs. 2,50,000/- was by
      way of clearing of Cheque No. 719443 and not cash deposit. If the same is
      excluded from the total deposits made during the year from the two bank
      accounts then there is no such cash deposit of Rs. 4,97,452/- in the two
      bank accounts maintained by the assessee. Therefore, I find force in the
      argument of learned counsel for the assessee that the reasons recorded
      are either vague reasons or not based on ITA No. 4253/Del/2018 & ITA
      No. 4254/Del/2018 6 any application of mind. In any case, the assessee
      has explained the source of each deposit made both in cash as well as in
      cheque and therefore, even on merit also no addition is called for. I,
      therefore, set aside the order of the learned CIT(A) and direct the AO to
      delete the addition. The ground raised by the assessee is allowed."

      Thus the reasons given by the Assessing Officer in notice u/s 148 of the
Act are merely mechanical and have not given any concrete reasons as to why
the re-opening is justified. As regards Ground No. 2 relating to addition u/s 69,
the assessee has given a detail of investments and the fact that the addition of
the said amount is already made in the hands of the father of the assessee
does not sustain in the hands of the assessee. As regards Ground No.3 relating
to addition u/s 68 in respect of cash deposits, the Assessing Officer himself
admitted that the cheque of Rs.10,00,000/- has been returned back which was
not at all considered by the CIT(A). The reasons are mechanical as all the
investment as well as the loans were demonstrated by the assessee as per the
audited balance sheet itself. Therefore, the Assessing Officer was not right in
reopening the assessment which is bad in law and without any justified
reasons for the additions. Thus, the appeal of the assessee is allowed.
                                        8                      ITA No. 5747/Del/2018




10.   In result, appeal of the assessee is allowed.
      Order pronounced in the Open Court on 22nd day of November, 2019.

        Sd/-                                                    Sd/-

   (O. P. MEENA)                                         (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER                                         JUDICIAL MEMBER

Dated:            22/11/2019
Priti Yadav, Sr. PS *

Copy forwarded to:

1.    Appellant
2.    Respondent
3.    CIT
4.    CIT(Appeals)
5.    DR: ITAT


                                                      ASSISTANT REGISTRAR

                                                        ITAT NEW DELHI

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