Subject:- Brief facts of the case shows that assessee is an individual, who was issued notice u/s 153A
Referred Sections:
Section 153A read with section 143 (3) of The Income Tax Act
Section 133A of the income tax act.
Referred Cases / Judgments
Harish Daulatram Inanni vs deputy Commissioner of income tax (2008) 24 SOT 541 (MUM).
INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "A": NEW DELHI
BEFORE SHRI H.S.SIDHU, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 2581/Del/2015
(Assessment Year: 2011-12)
Braham Arenja, Vs. ACIT,
C/o. M/s. Rohit Malik & Central Circle-18,
associates, 1403, Chiranjiv New Delhi
Tower-43, Nehru Place,
New Delhi
PAN: AADPS1953D
(Appellant) (Respondent)
Assessee by : Shri Styen Sethi, Adv
Revenue by: Shri Munish Kumar Gupta, CIT
DR
Date of Hearing 09/05/2019
Date of pronouncement 13/05/2019
ORDER
PER PRASHANT MAHARISHI, A. M.
1. This appeal is filed by assessee, individual against the order of
the Commissioner of income tax appeals XXVII, New Delhi
dated 27/2/2015 for assessment year 2011 12.
2. The assessee has raised the following grounds of appeal:-
1. That the search u/s 132 conducted at the premises of the
appellant on 10-02-2012 was without jurisdiction and not
based on any incriminating material on record. Therefore,
the proceeding; initiate erroneous and without jurisdiction,
deserves to be quashed.
2. a) All the transactions of the appellant with Mr. Jayant
Ghadia were duly recorded in the books of accounts. The
CIT (Appeals) went wrong on facts and in law in
sustaining the addition made by the assessing Officer of a
sum of Rs. 75,00,000/- as unexplained income of the
appellant based on a receipt of Rs. 75,00,000/- given by
Mr. Jayant Ghadia to the appellant as a security.
b) The consequent addition of Rs. 75,00,000/- made by the
assessing officer and sustained by Ld CIT(A) being illegal,
erroneous and without jurisdiction, deserves to be
deleted."
3. The only dispute in this appeal is with respect to the addition
of INR 7,500,000 made by the learned assessing officer in the
hands of the assessee. Brief facts of the case shows that
assessee is an individual, who was issued notice u/s 153A of
The Income Tax Act on 13/12/2013 in pursuance to search
conducted in the Arens group on 17/8/2011. The assessee
filed his return of income declaring income of INR 645770/.
Notices u/s 142 (1) was issued to the assessee.
4. Search was conducted on 17/08/2011 on Arens group.
Consequent to that search on residential premises of the
assessee was also conducted on 10/2/2012. The office of the
assessee was also covered and survey was conducted thereon.
During survey 1 memorandum of understanding dated
25/6/2010 along with the receipt signed by one Mr Jayant
Ghadia was found. The receipt contains the information that
Mr Jayant Ghadia has received INR 2,500,000 by cheque
dated 25/06/2010 and INR 7,500,000 in cash. The dispute is
about the addition of INR 7,500,000 in the hands of the
assessee. On enquiry by the learned assessing officer,
Assessee submitted that the cash amount of INR 7,500,000
shown in the receipt appearing at page number 62 of
annexure A 1 of the seized document was never paid by the
assessee nor received by him. Thus the receipt of Rs. one
crore is null and void as by giving the cheque number 894382
dated 25/06/2010 the assessee squared up his account with
Shri Jayant as on 25/06/2010 and no amount was
receivable for him at that time. However the learned assessing
officer rejected the contention of the assessee stating that the
explanation given by the assessee is not satisfactory and no
evidence whatsoever has been given by the assessee relating to
the correspondence between the assessee and Sri Jayant
regarding the negotiation of other properties. The learned AO
noted that the MOU and receipt are duly signed by Sri Jayant
and 2 witnesses from the office of the assessee. One of the
witness also confirmed that he along with another witness has
signed the document on the direction of assessee and Mr
Jayant. Therefore the learned assessing officer noted that it
clearly shows that INR 7,500,000 has been received by Shri
Jayant from the assessee. He further stated that on perusal
of the receipt given by Sri Jayant on which the word ,,received
itself confirms the receipt of the entire amount of Rs. One
crore and not only INR 2,500,000/- as claimed by the
assessee. He further stated that during the course of
assessment proceedings the assessee produced Shri Jayant
who has reiterated the stand of the assessee. Accordingly he
made an addition of INR 7,500,000 and determined the total
taxable income of INR 8145770/- vide order under section
153A read with section 143 (3) of The Income Tax Act dated
27/3/2014.
5. The assessee aggrieved with the order of the learned assessing
officer preferred an appeal before the learned CIT A who
confirmed the addition stating that the explanation of the
assessee with regard to the cash payment of INR 7,500,000 is
vague and motivated and afterthought. Therefore assessee
aggrieved with the order of the learned CIT A has preferred
this appeal before us.
6. At the beginning of the hearing the learned authorised
representative submitted that the ground number 1 of the
appeal is not pressed. Therefore same is dismissed.
7. Ground number 2 of the appeal is with respect to the addition
made by the learned assessing officer of INR 7,500,000 as
unexplained income of the assessee based on receipt of INR
7,500,000 given by Mr Jayant to the appellant as security.
He submitted that memorandum of understanding dated
25/6/2010 and receipt signed were found during the course of
survey under section 133A of the income tax act. He
submitted that in case of a survey addition u/s 6960 9C can
you made if explanation of the assessee is not satisfactory.
Merely on the basis of the memorandum of understanding
without further collaborating the material no addition can be
made. He further relied upon the decision of Harish
Daulatram Inanni vs deputy Commissioner of income tax
(2008) 24 SOT 541 (MUM). He further submitted that from
the bare reading of the memorandum of understanding dated
25/6/2010 it is evident that no person would give INR
7,500,000 on the security of documents referred to in the
memorandum of understanding. He further stated that
property K 2036, CR Park belong to the other person who
died on 8/4/1992. And therefore the person who received the
money had no title or interest in the above property therefore
the explanation of the appellant that no payment on the
strength of memorandum of understanding was made cannot
be brushed aside. He further stated that presumption u/s
132 (4A of the income tax act is rebuttable and the assessee
has reported it. He further stated that the documents and the
MOU in the receipt belong to the appellant and it is for the
appellant to explain the contents of the documents and
transaction has been the consistent stand of the revenue. He
further stated that the memorandum of understanding which
is placed at page number 18 of the paper book. Shows that to
wound the property belongs to. He further stated that
memorandum of the understanding does not have the
signature of the assessee. He further referred to the receipt
placed at page number 24 of the paper book wherein same is
on dated. He further referred to memorandum of
understanding which shows that property does not belong to
the person who has claimed to have received the money in the
receipt. He further stated that the assessee as well as the
person who is alleged to have received the money both have
appeared before the learned assessing officer and confirmed
that there is no such transaction which has taken place. He
otherwise submitted that in absence of any corroborative
material merely on the basis of the document these additions
cannot be made.
8. The learned CIT DR vehemently supported the orders of the
lower authorities and submitted that there is a receipt which
is being found by the income tax department which clearly
shows that assessee has paid a sum of INR 7,500,000 to the
Shri Jayant. Therefore the addition has been correctly made
by the learned assessing officer and confirmed by the learned
CIT A.
9. We have carefully considered the rival contention and perused
the orders of the lower authorities. Admittedly during the
course of survey the office of the assessee 1 memorandum of
understanding and 1 receipt was found. Based on this the
addition has been made by the learned assessing officer and
confirmed by the learned CIT A. The brief fact shows that
there is an memorandum of understanding dated 25/6/2010
with respect to the property K 2036, 3 and in part, New
Delhi. The above property belong to One Shri bankim
Gangully who passed away on 8/4/1999. On is that the
property bequeathed to Smt Deepa Chakraborty. By
agreement to sale dated 29/09/2007 and a general power of
attorney dated 9/10/2007 , Mrs Chakraborty sold the
property to Mr Jayant. Based the document of agreement to
sale and general power of attorney he approached the
appellant for financial assistance of rupees one crore. Mr Jan
was to repay INR 1 50,00,000 x 30/11/2010 within 6 months
of the memorandum of understanding, failing which he was to
transfer K 2036, Chittenden Park, New Delhi property to the
assessee on payment of INR 5,000,000. Based on MOU dated
25/6/2010 Mr Jayant prepared the receipt of Rs. one crore.
Neither the MOU got fructified as it did not result into
transaction executed, nor the memorandum was signed by the
assessee. During the course of assessment proceedings on
11/2/2012, the statement of the assessee was recorded wherein
the assessee submitted the complete detail of the transaction
with respect to property at A 66, Chittenden Park for which
assessee has paid 1,60,00,000 which are recorded in the
books of accounts of the assessee. However with respect to the
memorandum of understanding which is found, he submitted
that there is no such transaction which has taken place. He
therefore submitted that he has not paid the impugned some
as found in the receipt in the memorandum of understanding.
He further submitted that the payment of INR 2,500,000 by
cheque number 894382 dated 25/6/2010 was not in respect
of the property at a 2036, Chittenden Park, New Delhi
referred to in MOU dated 25/6/2010 but it was that the
payment of INR 2,500,000 due to Mr Jayant. Therefore the
stand of the assessee before the learned assessing officer that
the payment was of only INR 2,500,000 on 25/6/2010 and
there is no payment of cash of INR 7,500,000. The learned
assessing officer further recorded the statement of Mr Jayant
on 06/03/2014. He also confirmed that he has not received
any payment in cash of INR 7,500,000 from assessee. He also
explains the nature of the transaction as explained by the
assessee. It is very important to note that had this transaction
actually taken place, then along with the memorandum of
understanding and the receipt the relevant documents/title
deed of the property, should also have been found from the
premises. No question has been raised by the learned
assessing officer about the existence of the documents of that
property in the form of title deed et cetera. Though the
memorandum of understanding and receipt were found from
the office of the assessee however in absence of any
corroborative material the addition cannot be made. Further
the memorandum of understanding that has been found from
the office of the assessee was not signed at all by the assessee.
Even the property mentioned in that particular memorandum
of understanding was never transacted at all. Further on
reading of the memorandum of understanding it is clear that
Mr. Jayant did not have any right in the property. Preamble of
the memorandum of understanding clearly shows that the
property is in dispute. Further the assessee has also
explained the other transactions entered into by Mr. Jayant
with the assessee. Further the receipt found from the office of
the assessee was also not dated and therefore it was not
known that on which date the assessee has paid the alleged
money to Mr Jayant. It is also interesting to note that
memorandum of understanding has been signed by the
witness who confirms that both the parties have signed in
theirs presence; however there is no signature of another
party on the memorandum of understanding itself. Further on
the receipt also the signature of these 2 parties have been
obtained, however none of the parties confirmed that in fact
there witness to the payment of INR 7,500,000 by assessee to
Mr Jayant.
10. In view the fact that
i. property did not belong to Mr Jayant,
ii. even otherwise he did not have any right to sell this
property,
iii. property mentioned in the memorandum of
understanding remains untransacted,
iv. no enquiry by the learned assessing officer with respect
to the original title deed of the property mentioned in the
memorandum of understanding along with the receipt
but not found during the course of search
v. memorandum of understanding not signed by the
assessee,
vi. confirmation of both the parties that the transactions
have not fructified,
vii. version of the witness not confirming the memorandum
of understanding and
viii. in absence of any corroborative material found during the
course of search with respect to the above property,
We are not inclined to confirm the above addition.
Accordingly the orders of the lower authorities are reversed
and the addition of INR 7,500,000 is deleted.
11. Accordingly ground number 2 of the appeal of the assessee is
allowed.
12. In the result appeal is partly allowed.
Order pronounced in the open court on 13/05/2019.
-Sd/- -Sd/-
(H.S.SIDHU) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 13/05/2019
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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