Subject: M/s. Sabh Infrastructure Ltd. on account of purchase of a property at E-108, Greater Kailash Part II,
Referred Sections:
Section 148 of the I.T. Act.
Section 69 of the I.T. Act, 1961.
Section 147/148 of the I.T. Act, 1961.
Section 147 r.w.s. 143(3) of the I.T. Act
Referred Cases / Judgments
Shri Krishan Gopal, New Delhi vs. ITO, Ward-39(1),
Shri Krishan Gopal vs. ITO,Ward-39(1),
Surjit Rai vs. Prem Kr. Khera & amp;
Bhargava vs. Kavi Kumar Bhargava 1991 (3)
S. Madha vs. CIT (1973) 89 ITR 0065 (Supreme Court)
CIT vs. Smt. K.C. Agnes (2003) 262 ITR 354
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES "A" : DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA.No.1948/Del./2019
Assessment Year 2010-2011
Shri Balraj Gupta,
E-108, Greater Kailash The ACIT,
Part-II, New Delhi-048.
PAN AAHPG9233G vs Circle-61(1),
C/o. M/s. RRA Tax India,
D-28, South Extension, New Delhi.
Part-I, New Delhi-110049.
(Respondent)
Shri Somil Agarwal, And
Shri Deepesh Garg, Advocates
For Assessee :
And
Shri Priyansh Jain, C.A.
For Revenue : Shri P.V. Gupta, Sr. D.R.
Date of Hearing : 22.04.2019
Date of Pronouncement : 29.04.2019
ORDER
PER BHAVNESH SAINI, J.M.
This appeal by Assessee has been directed
against the Order of the Ld. CIT(A)-20, New Delhi, Dated
19.02.2019, for the A.Y. 2010-2011.
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Shri Balraj Gupta, New Delhi.
2. Briefly the facts of the case are that return of
income was filed by assessee on 25.09.2010 declaring total
income of Rs.14,17,760/-. The case was reopened under
section 148 of the I.T. Act. The A.O. recorded reasons for
reopening of the assessment and served notice upon
assessee under section 148 of the I.T. Act, 1961. The
assessee is a Doctor by profession and derived income from
Business and Profession and Income from Other Sources.
The A.O. noted that during the course of search conducted
upon AKN group of cases, a hard disc was found at the
residential premises of Shri. Nareesh Gupta who is a deed
writer and an advocate by profession. As per agreement to
sell found in the said hard disc, Assessee and his Wife have
given Rs. 1 Crore in cash to M/s. Sabh Infrastructure Ltd.
on account of purchase of a property at E-108, Greater
Kailash Part II, New Delhi, which fact is mentioned in the
report received from Investigation Wing. Explanation of
assessee was called for in which he is denied to have made
any cash payment. The A.O. considering the agreement to
sell made the addition of Rs.1 crore under section 69 of the
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Shri Balraj Gupta, New Delhi.
I.T. Act, 1961. The assessee challenged the reopening of the
assessment as well as addition before the Ld. CIT(A).
However, the appeal of assessee has been dismissed.
3. The Learned Counsel for the Assessee reiterated
the submissions made before the authorities below and
referred to PB-28 which is reasons for reopening of the
assessment under section 147/148 of the I.T. Act, 1961. He
has referred to PB-92 which is copy of the agreement to sell
found during the course of search from third party which is
not signed by the assessee. He has submitted that unsigned
document have been found during the course of search is
not admissible in evidence and would not prove anything
against the assessee. He has further submitted that
assessment in the case of M/s. Sabh Infrastructure Ltd., for
the same A.Y. 2010-2011 was also reopened under section
147/148 of the I.T. Act and the A.O. after examining the
details, accepted the returned income vide Order dated
29.12.2017 under section 147 r.w.s. 143(3) of the I.T. Act
[PB-175]. He has, therefore, submitted that there is no
reason to believe that income chargeable to tax has escaped
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Shri Balraj Gupta, New Delhi.
assessment. He has submitted that issue is covered by the
Order of ITAT, Delhi Bench in the case of Shri Krishan
Gopal, New Delhi vs. ITO, Ward-39(1), New Delhi in
ITA.No.3249/Del./2015, Dated 16.05.2017 [PB-108]. He
has, therefore, submitted that reopening of the assessment
may be quashed and entire addition may be deleted which
is without any basis.
4. On the other hand, Ld. D.R. relied upon the
Orders of the authorities below and submitted that
agreement to sell though unsigned found during the course
of search was electronic evidence and as such same is
admissible IN evidence against the assessee.
5. We have considered the rival submissions. The
department has provided copy of the reasons to the
assessee for reopening of the assessment, copy of which is
filed at Page-28 of the PB. The same reads as under :
"An information with respect to Dr. Balraj Gupta and
Mrs. Madhu Gupta, A. Y. 2009-10 has been received in
the O/o. the 1TO. Ward-30(2) from the ACIT, Central
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Shri Balraj Gupta, New Delhi.
Circle-26, New Delhi, vide F.No. ACIT/CC-26/2015-
16/2012 dated 21-03-2016.
Office of the ACIT, Central Circle-26, New Delhi
informed that during the course of search conducted
upon AKN Group of cases, a hard disc was found at the
residential premises of Shri. Nareesh Gupta who is a
deed writer and an Advocate by profession. As per
agreement to sell found in the said hard disc, Dr. Balraj
Gupta and Mrs. Madhu Gupta, R/o G-1405, C.R. Park,
New Delhi has given Rs.1 Crore in cash to M/s. Sabh
Infrastructure Ltd. on account of purchase of a property
at E-108. Greater Kailash Part 11, New Delhi which is
mentioned in the Page 79 in the appraisal report
received from Investigation Wing. Consequently,
scrutiny assessment was re-opened u/s. 147 of the l.T.
Act, 1961. The case file 'was transferred to Circle-61
(1). New Delhi from ITO, Ward-30(2) on 30-11-2016.
During the scrutiny assessment proceedings, for A.Y.
2009-10, AR Sh. Anil Kumar Chandra in his reply dated
02-12-2016, stated that the assessee's wife, Mrs.
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Madhu Gupta, sold her property at G-1405, C.R. Park.
New Delhi - 110019 on 13-08-2009 which falls under
Asstt Year 2010-11. The said property was sold for a
consideration of Rs. 1 crore out of which she invested
Rs. 94,50,000' in another property namely First Floor,
at E-108, Greater Kailash Part II and claimed
deduction u/s. 54.
Assessee Sh. Balraj Gupta S/o late Shri Om Prakash
and Mrs. Madhu Gupta w/o Dr. Balraj Gupta were the
equal share holder of the ownership of the said property
at First Floor, at E-108, Greater Kailash Part 11, New
Delhi in which Mrs. Madhu Gupta W/o Dr. Balraj
Gupta, and Sh. Balraj Gupta S/o late Shri Om Prakash,
hold 30% share each.
Also, in the agreement to sell, provided by Central
Circle-26, New Delhi, there were two payments by
cheque on 22-07-2009 and 02-08-2009, falling in the
F.Y. 2009-10. In the purchase deed executed on
26/08/2009, the payment details include three cheque
payments dated 22-07-2009, 02-08-2009 and
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Shri Balraj Gupta, New Delhi.
26/08/2009, which are also in the duration of F.Y.
2009-10 (A.Y: 2010-11). The assessee had field return
of income for A.Y. 2010-11 on 25-09-2010 declaring
income of Rs.14,17,760/-. Hence, as per the agreement
to sell of the said property, the assessee has given Rs. 1
crore in cash in A. Y. 2010-11 for purchase of the
aforesaid property at E-108, Greater Kailash Part-II,
New Della.
With this I have reason to believe that the income of the
assessee has escaped assessment within the meaning
contained in section 147 of the Act for A. Y 2010-11. "
5.1. It is well settled Law that validity of the re-
assessment proceedings shall have to be judged with
reference to the reasons recorded for reopening of the
assessment. The A.O. after going through the agreement to
sell as was intimated by the Investigation Wing also noted in
the reasons that the said agreement to sell was found from
the residential premises of Shri Naresh Gupta, a deed
writer/Advocate. According to the agreement to sell found
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Shri Balraj Gupta, New Delhi.
from third party, assessee has given Rs.1 crore in cash to
M/s. Sabh Infrastructure Ltd., on account of purchase of
property at E-108, Greater Kailash Part-II, New Delhi. The
A.O, therefore, believed that assessee has given Rs.1 crore
in cash to the aforesaid company. Copy of the seized
agreement to sell is filed at page-92 of the PB which is
unsigned by any of the party to the agreement and even
there is no witness to the said agreement. It was just a
typed copy like photo copy as found during the course of
search may be an electronic document found in search.
Since it is not signed by the assessee or any other person on
behalf of M/s. Sabh Infrastructure Ltd., therefore, it has no
evidentiary value and cannot be read in evidence against the
assessee. Similarly, the case of M/s. Sabh Infrastructure
Ltd., was reopened by the A.O. for assessment year under
appeal i.e., 2010-2011, but, no adverse inference has been
drawn against the said Company and no addition on
account of any amount received from assessee have been
made in the case of their assessment under section 147 of
the I.T. Act, Dated 29.02.2017. There is no other tangible
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Shri Balraj Gupta, New Delhi.
material on record to justify if assessee has paid any cash
amount to M/s. Sabh Infrastructure Ltd., on account of
purchase of any property. Therefore, in the absence of any
tangible material and in the absence of any legally
enforceable agreement found during the course of search, it
is difficult to believe that assessee has paid any amount in
cash to M/s. Sabh Infrastructure Ltd., as is mentioned in
the reasons. Thus, there was no reason for the A.O. to
record that there is an income escaped assessment on
account of the fact mentioned in the agreement to sell. The
ITAT, Delhi Bench in the case of Shri Krishan Gopal vs. ITO,
Ward-39(1), New Delhi in paras 4 to 6 held as under :
"4. I have considered rival submissions. It is well
settled law that validity of the reassessment u/s
147/148 to be considered with reference to the reasons
recorded by the AO. The assessee has filed copy of the
reasons recorded u/s 147 of the I.T. Act at page 116 of
the paper book. The same is reproduced as under :-
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ITA.No.1948/Del./2019
Shri Balraj Gupta, New Delhi.
"Reasons for Action under section 147 of the I.T. Act,
1961 for the A.Y. 2005-06 in the case of Shri Krishan
Gopal Prop. M/s. Kay Pee Lock Ind. 221 Teliwari, Delhi
110 006.
Date : 21.3.2012
The assessee filed a return of income on 2005
declaring total income of Rs. 61,288/-.
As per information received the assessee has
entered into an agreement to sell a property bearing No.
65/59, New Rohtak Road for a consideration of
Rs.40,00,000/- whereas the sale deed for the said
property was executed for Rs. 6,00,000/- therefore there
is an escapement of capital gain of Rs. 34,00,000/- for the
assessment year 2005-06.
This capital gain has been calculated with reference
to Rs.6,00,000/- as sale price instead of agreement value
of Rs.40,00,000/- is taken in the return of the assessee for
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Shri Balraj Gupta, New Delhi.
the A.Y. 2005-06. Therefore, I have reason to belief that
the assessee has escapement of capital gain amounting to
Rs.34,00,000/- which has not been disclosed in the turn
of income and the provisions of section 147 of the Act are
attracted in this case.
In the light of the above facts, proposal is sent to
the JCIT, Range 39, New Delhi for according approval
for issue of notice under section 148 of the I.T. Act, 1961
in this case.
Sd/-
(Sobhana Rajan)
Income-tax Officer,
Ward 39 (1), New Delhi."
5. The AO in the reasons merely mentioned that
information has been received that assessee entered
into an agreement to sale of property in question for a
consideration of Rs.40 lacs whereas in the sale deed
Rs.6 lacs have been mentioned. The approval of the
Addl. CIT is obtained which is in proforma in which
column No. 12, it is mentioned " I am satisfied". The AO
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Shri Balraj Gupta, New Delhi.
has not mentioned any source of information in the
reasons recorded. However in the assessment order, AO
has mentioned that department is having only
photocopy of the " bayana receipt" as is mentioned
above. Ld. Counsel for assessee relied upon decision of
the Punjab & Haryana High Court in the case of Surjit
Rai vs. Prem Kr. Khera & amp; Other Punjab Law
Reporter Vol. Ex-1995(2) PLR P.40 (P&H) in which it
was held that signature cannot be compared from the
photocopy of the agreement. He has also relied upon
decision of Delhi High Court in the case of Ms. Arati
Bhargava vs. Kavi Kumar Bhargava 1991 (3) Civil Court
Cases P. 377 (Delhi High Court) in which it was held
that "further documents sought tobe produced was
photo copy of original document and same cannot be
admitted in evidence ". Ld. Counsel for assessee also
relied upon the decision of the Supreme Court in the
case of Moosa S Madha & Azam S. Madha vs. CIT
(1973) 89 ITR 0065 (Supreme Court) in which it was
held that photo copies have very little evidentiary value.
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He has also relied upon decision of Kerela High Court in
the case of CIT vs. Smt. K.C. Agnes (2003) 262 ITR 354
in which it was held that "unless it is proved that the
agreement was acted upon and unless the amount
stated in the agreement was paid for the sale, one can
not come to the conclusion that the price mentioned in
the sale deed is not correct. On the other hand Ld. DR
submitted that on the basis of the photo copy of the
receipt, prima facie case was made out for reopening of
the assessment. Assessee did not raise objection to
reassessment proceedings and that the photocopy of
documents which is admissible as secondary evidence.
6. After considering rival submissions, it is clear
that the revenue department was having only one photo
copy of the bayana receipt and on that basis the
reassessment of the assessee have been made.
However in the reasons recorded, the AO has not
explained the source of the information received for
entering into an agreement to sell for a sum of Rs.40
lacs and the AO has not verified the photo copy of the
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Shri Balraj Gupta, New Delhi.
receipt before recording reasons and it is not clarified as
to where is the original receipt and no persons
mentioned in the photocopy receipt have been
examined. Thus before recording the reasons for the
reassessment, the AO did not verify the information so
received for the purpose of reopening of the assessment.
In absence of existence of any primary evidence, there
is no question of considering the photo copy as
secondary evidence. Thus the AO has not applied his
mind to the photo copy of the receipt which has little
evidentiary value. The AO therefore acted in haste and
in mechanical manner to reopen the assessment. The
reasons should have live link between the material
placed on record and conclusion drawn by the AO
before issuing the notice u/s 148 of the Act. The AO is
not competent person to compare the signature from the
photocopy copy with the original signature on the sale
deed. Thus it was a mere suspicion on the part of the
AO that assessee received higher sale consideration.
Therefore there cannot be a reason to believe with the
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Shri Balraj Gupta, New Delhi.
AO to reopen assessment in the matter on vague
information considering inadmissible document for
forming the belief to reopen the assessment."
5.2. The issue is, therefore, covered in favour of the
assessee by the aforesaid decision of ITAT, Delhi Bench.
Considering the totality of the facts and circumstances of
the case, we are of the view that there was no justification
for the A.O. to record reasons for reopening of the
assessment and there was no justification for the A.O. to
record his belief that income chargeable to tax has escaped
assessment in the matter. In view of the above discussion,
we set aside the Orders of the authorities below and quash
the reopening of the assessment under section 147/148 of
the I.T. Act. Resultantly, the entire additions shall stand
deleted. Appeal of Assessee is allowed.
6. In the result, appeal of Assessee allowed.
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Shri Balraj Gupta, New Delhi.
Order pronounced in the open Court.
Sd/- Sd/-
(L.P. SAHU) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Delhi, Dated 29th April, 2019.
VBP/-
Copy to
1. The appellant
2. The respondent
3. CIT(A) concerned
4. CIT concerned
5. D.R. ITAT `A' Bench, Delhi
6. Guard File.
// BY Order //
Assistant Registrar : ITAT Delhi Benches :
Delhi.
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