IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH `F' : NEW DELHI)
BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER
AND
SHRI C.M. GARG, JUDICIAL MEMBER
ITA No.2294/Del./2011
(ASSESSMENT YEAR : 2007-08)
ACIT, Central Circle 2, vs. Shri Kamal Kishan Arora,
New Delhi. B 4/48, Paschim Vihar,
New Delhi.
(PAN : AAIPA0350P)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Anil Jain, CA
REVENUE BY : Shri Vivek Wadekar, CIT DR
ORDER
PER B.C. MEENA, ACCOUNTANT MEMBER :
This appeal filed by the revenue emanates from the order of CIT
(Appeals)-III, Delhi dated 17.02.2011 for the assessment year 2007-08.
2. A search and seizure operation was carried out at the Wings
Pharmaceuticals Pvt. Ltd. group of cases on 14.02.2008. The assessee was
also covered in the search operation. The assessment was finalized u/s
143(3) and 153A of the Income-tax Act, 1961 on 30.12.2009. The
assessee's appeal was allowed on various grounds by the CIT (A) against
which the revenue is in appeal by taking the following grounds :-
"1. On the facts and in the circumstances of the case, the CIT
(A) has erred in law and on facts in deleting the addition of
2 ITA No.2294/Del./2011
Rs.56,93,200/- made by the Assessing Officer u/s 69B of the
Income Tax Act, 1961.
2. On the facts and in the circumstances of the case, the CIT
(A) has erred in law and on facts in deleting the addition made by
the Assessing Officer u/s 69B of the Income Tax Act, 1961 on
the ground of absence of any actual evidence alleging or
establishing that any extra investment was made by the assessee,
as it places an unfair burden on the Department because
availability of direct evidence is impossible in such type of cases
where both parties gain by understating the real consideration of
immovable property which is transferred?
3. On the facts and in the circumstances of the case, the CIT
(A) has erred in law and on facts in deleting the addition of
Rs.4,25,600/- made by the Assessing Officer on account of fair
rental value.
4. On the facts and in the circumstances of the case, the CIT
(A) has erred in law and on facts in deleting the addition of
Rs.1,00,000/- made by the Assessing Officer on account of
undisclosed receipt of scrap sale.
5. The order of Ld. CIT(A) is erroneous and is not tenable
on facts and in law.
6. The appellant craves leave to add, alter or amend any / all
of the grounds of appeal before or during the course of the
hearing of the appeal."
3. In the ground nos.1 & 2, the issue involved is deleting the addition
of Rs.56,93,200/- made u/s 69B of the Act.
4. The assessee has purchased property bearing no.10/78, Punjabi Bagh
(West), New Delhi from Shri S.K. Sachdeva on 22.01.2007 along with
other three co-owners for a consideration of Rs.1,05,00,000/- and stamp
duty was paid of Rs.8,40,000/-. The assessee's share in this property was
1/4th and the other co-owners were his brothers. The Assessing Officer
3 ITA No.2294/Del./2011
referred the issue to the District Valuation Officer for valuation and he has
valued the property at Rs.6,47,72,800/-. One-fourth of the share of the
assessee comes to Rs.1,61,93,200/-. Accordingly, difference of
Rs.56,93,200/- (Rs.1,61,93,200/- minus Rs.1,05,00,000/-) was added to the
income of the assessee. The CIT (A) deleted the addition.
5. At the outset of the hearing, ld. AR submitted that this issue has
been considered by the ITAT, Bench `F', New Delhi in its order dated
08.08.2014 in ITA No.2293/Del/2011 and relief has been granted in the
co-owners case. He relied on the order of the ITAT on this issue.
6. We have heard both the sides on the issue. The issue is covered in
favour of the assessee by the aforesaid decision of the ITAT. Relevant
portion of the order is reproduced hereunder :-
"11. We have heard the rival parties and have gone through
the material placed on record. We find that Ld. CIT (A) has
deleted the additions on account of difference in market prices of
properties as compared to declared values following certain
judicial pronouncements and by elaborating the facts clearly.
Therefore, we do not see any reason to interfere with his
findings. His order on other additions is also very elaborate and
merits no intervention."
Since the addition has been deleted in the case of co-owners of the
property on the similar facts and circumstances, therefore, we dismiss
these two grounds of assessee's appeal relating to the addition made u/s
69B of the Income-tax Act, 1961. Accordingly, ground nos.1 & 2 are
dismissed.
4 ITA No.2294/Del./2011
7. In the ground no.3, the issue involved is deleting the addition of
Rs.4,25,600/- made on account of fair rental value.
8. On this issue also, ld. AR submitted that the fair rental value
estimated in the case of shop at Bhagirath Place, New Delhi has been dealt
with in the case of ACIT vs. Anil Arora in ITA No.2293/Del./2011 by the
ITAT, Bench `F', New Delhi in its order dated 08.08.2014. On the similar
facts and circumstances, the addition was deleted. It was also pleaded that
the flat at Kailash Vihar, Baddi was incomplete and inhabitable during the
relevant period. It was subsequently let out to M/s. Wing Pharmaceuticals
Pvt. Ltd. in the financial year 2007-08 and the rental income of
Rs.3,50,000/- of the same was offered for taxation. Therefore, in this year,
there was no justification for estimating the rental income from this
property. He pleaded to sustain order of CIT (A) on this issue.
9. We have heard both the sides on the issue. This issue is partly
covered by the aforesaid decision of ITAT in respect of rental estimated
for Bhagirath Place, Chandni Chowk, New Delhi shop. The flat at Kailash
Vihar, Baddi was not habitable during the relevant period. In the
subsequent years, it was let out and the rent has been declared in the
income of assessee. In view of these facts, we find no merits in this
ground of revenue's appeal and the same is dismissed.
10. In the ground no.4, the issue involved is deleting the addition of
Rs.1 lac on account of undisclosed income from scrap sales.
5 ITA No.2294/Del./2011
11. The Assessing Officer has dealt this issue in para 7 which is
reproduced as under :-
"7. During the course of search at the business premise of M/s
Wings Pharmaceuticals (P) Ltd at Baddi, Annexure A-20 Party WB-5
was seized. The following pages are in the nature of petty cash book
which reveals that cash amounting to Rs.10,000/- was being drawn by
the assessee on regular basis:
Page No. Date Amount (Rs.)
75 03/10/2002 10,000/-
79 17/10/2002 10,000/-
88 31/08/2007 10,000/-
87 14/09/2007 10,000/-
90 28/09/2007 10,000/-
103 18/01/2008 10,000/-
107 28/11/2007 10,000/-
109 05/11/2008 10,000/-
114 01/11/2007 10,000/-
200 30/11/2007 10,000/-
The assessee was asked to give details of such receipts during the
year, if any. The assessee has not admitted any payment received out
of scrap sales. In view of the fact that during FY 2007-08, substantial
amount of scrap sales has come to notice from the seized documents.
As the company is in the same business and no scrap sales has been
shown during the year under consideration in the hands of the
company, an amount of Rs.1,00,000/- is being added in hands of the
assessee on estimate basis in view of the documents seized pertaining
to FY 2007-08. ..... Addition Rs.1,00,000/-"
The CIT (A) has granted the relief by holding as under :-
"7. Ground of Appeal No.XII :
That on the facts and the circumstances of the case and the
provisions of the law, the learned assessing officer has erred in
making an addition of Rs.100000/- on account of undisclosed
receipts from scrap sales.
On the basis of some scribbling on annexure A-20 Party WB-5 the Ld
AO has made an addition of Rs.1,00,000/- on account of undisclosed
receipt from scrap sales. During the course of assessment preceding it
was submitted before the Ld. AO that the alleged payment received on
6 ITA No.2294/Del./2011
account of sale of scrap is not in my individual capacity but for
company M/s Wings Pharmaceuticals Pvt. Ltd. So it was submitted no
negative inference should be drawn on this account. More over it was
further submitted that in the assessment of the above said company
addition on account of scrap sales also has been made. Thus, it was
pleaded that there is no justification for making addition on this
account in individual capacity as the assessee was working in the
capacity of the manager of the company 'and all these alleged
payments were related to the said company.
7.1 I have considered the submissions of the assessee and the
assessment order. As it is an undisputed fact that the assessee was
working as manager of M/s Wings Pharmaceuticals Pvt. Ltd. And the
alleged payments were related to the said company and the AO has
already made the addition on this account in the hands of the company
also, there is no justification for making further addition on this
account in the hands of the assessee. Thus, AO is directed to delete the
addition of Rs.1 lac made on this account."
12. We have heard both the sides on the issue. Ld. AR submitted that
the addition has been sustained in the case of ACIT, Central Circle 2, New
Delhi vs. M/s. Wings Pharmaceuticals Pvt. Ltd. in ITA No.3287/Del/2012
& Ors. by the ITAT, Delhi Bench `H', New Delhi and he relied on the
paras 87 to 89 of the said order. He submitted that the addition on account
of scrap cannot be made in the hands of assessee who is an individual. We
find that the seized paper Annexure A-20 Party WB-5 shows that the cash
amounting to Rs.10,000/- was being drawn by the assessee on regular
basis. Details have been provided in the assessment order where page
number, date and amount has been mentioned. Therefore, the addition
made in the hands of the individual was justified as it was an unaccounted
receipt in the hands of the individual assessee. In view of these facts, we
7 ITA No.2294/Del./2011
set aside the order of the CIT (A) on this issue and sustain the order of the
Assessing Officer. This ground of revenue's appeal is allowed.
13. Ground Nos.5 & 6 are general in nature and do not require any
adjudication.
14. In the result, the appeal of the revenue is partly allowed.
Order pronounced in open court on this 19th day of February, 2015.
Sd/- sd/-
(C.M. GARG) (B.C. MEENA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated the 19th day of February, 2015
TS
Copy forwarded to:
1.Appellant
2.Respondent
3.CIT
4.CIT(A)-III, Delhi.
5.CIT(ITAT), New Delhi.
AR, ITAT
NEW DELHI.
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