ITO, Ward-20(3),, v. Kailash Nath Gupta,,

ITA 2202/DEL/2005 | misc
Pronouncement Date: 21-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 220220114 RSA 2005
Assessee PAN ACRPN7147G
Bench Delhi
Appeal Number ITA 2202/DEL/2005
Duration Of Justice 5 year(s) 10 month(s) 16 day(s)
Appellant ITO, Ward-20(3),,
Respondent Kailash Nath Gupta,,
Appeal Type Income Tax Appeal
Pronouncement Date 21-03-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted I
Tribunal Order Date 21-03-2011
Date Of Final Hearing 14-03-2011
Next Hearing Date 14-03-2011
Assessment Year misc
Appeal Filed On 05-05-2005
Judgment Text
ITA NO. 2202/DEL/2005 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH I NEW DELHI BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2202/DEL/2005 A.Y. : 1988-89 INCOME TAX OFFICER WARD 20(3) ROOM NO. 307-F VIKAS BHAVAN NEW DELHI (PAN/GIR NO. : ACRPN7147G) VS. SHRI KAILASH NATH GUPTA C-25 CC COLONY DELHI 110 009 (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : NONE DEPARTMENT BY : MS. BANITA DEVI NAOREM SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM PER SHAMIM PER SHAMIM PER SHAMIM YAHYA: AM YAHYA: AM YAHYA: AM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 25.2.2 005 PERTAINING TO ASSESSMENT YEAR 1988-89. 2. THE FIRST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN REDUCING THE UNDISCLOSED BUS INESS INCOME TO ` 59 552/- AS AGAINST ` 1 LAKH ESTIMATED BY THE ASSES SING OFFICER . 3. ON THIS ISSUE THE ASSESSING OFFICER NOTED THAT ASSESSEE WAS MAINTAINING BANK ACCOUNTS WITH THE BANK OF BARODA AN D THE STATE BANK OF INDIA AND HAS SHOWN THE TOTAL DEPOSITS DURING T HE YEAR ENDING 31.3.1988 AMOUNTING TO ` 10 692/- AND ` 48 860/- R ESPECTIVELY. ASSESSEE HAS RESPONDED THAT HE WAS NOT MAINTAINING BOOKS OF ACCOUNTS AND DID NOT HAVE REMEMBER THE SOURCE OF TH ESE DEPOSITS. ITA NO. 2202/DEL/2005 2 CONSIDERING THEM ASSESSING OFFICER ESTIMATED THE BU SINESS INCOME OF ` 1 LAKH AND MADE ADDITION THEREOF. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT THE TOTAL OF THE DEPOSITS IN T HE BANK COMES TO ` 59 552/-. THE ASSESSEE COULD NOT EXPLAIN THE SOUR CES THEREOF. HE HELD THAT IT WOULD BE FAIR TO SUSTAIN THE ADDITION OF ` 59 552/- AND DELETED THE BALANCE. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE . ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS. WE HAVE CAREFULLY GONE THROUGH THE SUBMISSIONS. IN OUR CONSIDERED OPINION LD. COM MISSIONER OF INCOME TAX (APPEALS) HAS MADE A FAIR AND REASONABLE ORDER. THE TOTAL AMOUNT DEPOSITED IN THE BANK WHICH THE ASSESSEE COUL D NOT EXPLAIN HAS BEEN ADDED AND THE BALANCE DELETED. THIS IN OUR CONSIDERED OPINION IS QUITE COGENT ENOUGH. 7. IN THE RESULT WE UPHOLD THE ORDER OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 8. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN REDUCING THE ADDITION OF 72 LAKHS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PLOTS OF LAND TO ` 4 50 0 00/-. IT HAS BEEN FURTHER URGED THAT LD. COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN DELETING THE ADDITION OF ` 4.5 LAKHS BEING PROFI T ON SALE OF PLOTS. 9. IN THIS CASE DURING SEARCH AND SEIZURE OPERATION AGREEMENT TO SELL FOR 18 PLOTS WERE FOUND IN THE POSSESSION OF T HE ASSESSEE. THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THA T IS NOT AN OWNER ITA NO. 2202/DEL/2005 3 OF THESE PLOTS BUT ONLY HAVING GENERAL POWER OF AT TORNEY IN HIS NAME AND NO INVESTMENT HAS BEEN MADE BY HIM. 10. THE ASSESSING OFFICER OPINED THAT ASSESSEES C ONTENTION ARE NOT ACCEPTABLE. HE HELD IN THAT CASE THE ASSESSEE HAS TO PROVE THAT WHO IS THE OWNER OF THESE PLOTS AND COULD PRODUCE THOSE PERSONS FOR VERIFICATION. THE MERE CONTENTION OF THE ASSESSEE I S THAT A WRIT PETITION HAS BEEN FILED WITH THE HIGH COURT HAS NO FORCE AND EVEN U/S 53A OF THE TRANSFER OF PROPERTIES ACT THE GENERAL POWER OF ATTOR NEY HOLDER IS THE OWNER OF THE PROPERTY. THE FILING OF THE WRIT PETIT ION BY THESE PERSONS REALLY DOES NOT MAKE THE ASSESSEE GET HIMSELF OUT OF TAX NET TO PROVE THAT IS NOT THE OWNER OF THESE PLOTS. IN THESE CIR CUMSTANCES ASSESSING OFFICER HELD THAT HE HAS NO ALTERNATIVE BUT TO E STIMATE THE COST OF ` 4 LAKHS AND THUS MAKING THE ADDITIONS OF ` 72000/- TOW ARDS THE UNDISCLOSED INCOME OF THE ASSESSEE BEING THE PURCHA SE PRICES OF THESE 18 PLOTS. HE FURTHER ADDED ` 4.50 LACS AS P ROFIT ON SALE OF THESE PLOTS. 11. THE DEVELOPMENT CHARGES TOWARDS BOUNDARY WALL COST OF CONSTRUCTION OF ONE ROOM WAS ESTIMATED@ ` 5000/- PER PLOT COST OF DEVELOPMENT WAS ESTIMATED AT ` 5000/- AND SALARY OF CHOWKIDAR @ ` 500/- PM SHALL TOTAL OF ` 1 46 000/- WAS FURTHER AD DED TO THE INCOME FROM UNDISCLOSED SOURCES. 12. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSEE HAS FURNISHED SOME SAL E DEEDS IN RESPECT OF PURCHASE OF THESE PLOTS BY THE LEGAL OWN ERS AND THE CONSIDERATION OF SUCH PURCHASES FOR A PLOT SIZE OF 500 SQ. YDS. HAS BEEN SHOWN AT ` 25 000/- IN MOST OF THE CASES. EA RLIER IN THE ASSESSMENT MADE IN THE CASE OF ASSESSEE THE COST O F INVESTMENT IN ITA NO. 2202/DEL/2005 4 SUCH PLOTS WAS TAKEN AT ` 25000/- PER PLOT ON THE B ASIS OF SUCH PURCHASE PRICE PER PLOT AT ` 4 LACS BECAUSE OF THE FACT THAT THE AGREEMENT TO SALE WAS MADE AT ` 4 25 000/- ONLY AFTE R 5 MONTHS FROM THE EXECUTION OF THE GENERAL POWER OF ATTORNEY. H OWEVER LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSE SSING OFFICER HAS NOT BROUGHT ANY EVIDENCE OR MATERIAL FACTS ON RECORD TO ESTABLISH THAT THE ASSESSEE HAD ACTUALLY PAID ` 4 0 0 000/- PER PLOT FOR OBTAINING THE GENERAL POWER OF ATTORNEY TO EXECUTE THE SALE EITHER BY HIMSELF OR ON BEHALF OF THE LEGAL OWNERS. LD. COMMIS SIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSING OFFICER HAS ALS O NOT REFERRED TO ANY SEIZED MATERIAL OR CIRCUMSTANTIAL EVIDENCES TO PROVE THE INVESTMENT MADE BY THE ASSESSEE ` 4 00 000/- PER PLOT. HENCE L D. COMMISSIONER OF INCOME TAX (APPEALS) RESTRICTED THE ADDITION TO ` 25000/- PER PLOT. AS REGARDS THE ADDITION ON ACCOUNT OF PROFIT OF ` 2 5 000/- PER PLOT. LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSE SSING OFFICER HAS NOT BROUGHT ANY RECORD IN RESPECT OF THESE PLOTS ACCORDING TO THE AGREEMENT TO SALE. HENCE HOLDING THAT NO EVID ENCE HAVE BEEN BROUGHT ON RECORD LD. COMMISSIONER OF INCOME TAX (APP EALS) HAS DELETED THESE ADDITIONS. 13. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 14. THE REVENUES CONTENTION IS THAT LD. COMMISSION ER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THESE ADDITION. ON THE OTHER HAND ASSESSEE HAS SUBMITTED THAT ASSESSEE IS ONLY HAVING POWER OF ATTORNEY OF THE 18 PLOTS AND COPY OF AFFIDAVITS OF THE OWN ERS HAVE BEEN FILED TO LOWER AUTHORITIES. IT IS SUBMITTED THAT THE SAID PLOTS ARE STILL IN THE NAME OF THE OWNERS AS PER MUNICIPAL RECORDS AND THE Y HAVE FILED WRIT ITA NO. 2202/DEL/2005 5 PETITION BEFORE THE HONBLE HIGH COURT OF DELHI AG AINST THE ACQUISITION BY THE LAND ACQUISITION COLLECTOR. 15. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS A ND PERUSED THE RECORDS. WE FIND THAT ASSESSING OFFICER IN THIS C ASE HAS ESTIMATED THE ADDITION BASED UPON THE AGREEMENT TO SELL FOUND AT THE PREMISES OF THE ASSESSEE. THE AGREEMENTS TO SELL WERE FOUND WHICH CONTAIN SALE PRICE OF ` 4.25 LAKHS. FROM THE AGREEMENT TO SELL FOUND ASSESSING OFFICER HAS NOTED THAT ASSESSEE WAS SELLING THE PI ECE OF LAND AT ` 4.25 LACS WITHIN THE PERIOD OF 5 MONTHS FROM THE D ATE OF PURCHASE. ASSESSING OFFICER HAS TAKEN THAT ASSESSEE MUST HAV E PURCHASED THESE PLOTS FOR ` 4 00 000/- AND ALSO MAKING A CLEAR PROFI T OF ` 25 000/- PER PLOT. HERE WE NOTE THAT THERE IS CONTRADICTION IN THE FINDING OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND THAT OF THE ASSESSING OFFICER. LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS NOTED THAT AS A RESULT OF SEARCH OPERATION IN THE PREMISES OF T HE ASSESSEE THE DEPARTMENT HAD RECOVERED 18 GENERAL POWER OF ATTORN EY IN RESPECT OF 18 PLOTS. HOWEVER ON THE OTHER HAND ASSESSING OFFICER HAS TAKEN STAND THAT ASSESSEE HAS NEVER PRODUCED GENERAL POWE R OF ATTORNEY BY WHICH HE BECAME THE OWNER OF THESE PLOTS. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALSO REFERRED THAT THE ASS ESSEE HAS FURNISHED SOME SALE DEEDS IN RESPECT OF PURCHASE OF THESE PLO TS. THIS CRUCIAL ASPECT DOES NOT FIND ANY MENTION IN ASSESSING OFFIC ERS ORDER. UNDER SUCH CIRCUMSTANCES INTEREST OF JUSTICE WILL BE SERV ED IF THE MATTER IS REMITTED TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE ISSUE AFRESH. ACCORDINGLY THE ISSUE STANDS REMITTED TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH IN LIGHT OF THE FINDINGS GIVEN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS ). NEEDLESS TO ITA NO. 2202/DEL/2005 6 ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPO RTUNITY OF BEING HEARD. 16. THE LAST ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 8 0 500/- INAPPROPRIATELY HOLDING THAT THE ASSESSEE WAS NOT GIVEN OPPORTUNITY TO CROSS EXAMINE SHRI PURAN WHEREAS HIS STATEMENT WAS RE CORDED IN THE PRESENCE OF THE ASSESSEE WHO DID NOT CROSS EXAMINE S HRI PURAN. 17. ON THIS ISSUE ASSESSING OFFICER NOTED THAT IN THE BANK DEPOSITS WERE FOUND IN THE NAME OF SHRI PURAN WHO WAS SUMMONED U/S 131 AND HAD ADMITTED THAT HE WAS WORKING AS MALI IN SCHOOL IN LIBASPUR AND HIS SALARY AT THAT TIME WAS ` 1760/- PER MONTH. COPY O F HIS BANK STATEMENT SHOWED THAT THERE WAS TOTAL DEPOSITS OF ` 80500/-. ASSESSING OFFICER OPINED THAT HE BEING ILLITERATE PERSON AN D FOR HIM IT COULD NOT BE POSSIBLE FOR HIM TO FUNCTION AS PROPERTY BROKER INDEPENDENTLY. HE HELD THAT ` 80 500/- HAS BEEN DEPOSITED IN THE SAID BANK ACCOUNT AS ASSESSEE UNDISCLOSED INCOME OF THE ASSESSEE. 18. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT ASSESSING OFFICER HAD MADE TH IS ADDITION ON THE BASIS OF ENTRIES IN THE BANK ACCOUNTS OF SHRI PURAN WHO ADMITTED THAT HE WAS WORKING AS MALI IN A SCHOOL AND HE WAS ILLIT ERATE PERSON AND HE ALSO ADMITTED THAT HE WAS AN EMPLOYEE OF THE ASSESSEE SINCE 1971-72. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME T AX (APPEALS) NOTED THAT SHRI PURAN WAS EXAMINED U/S 131 OF THE IT ACT BEFORE THE ASSESSING OFFICER AND THE HE ADMITTED IN HIS STATEM ENT THAT HE WAS ITA NO. 2202/DEL/2005 7 WORKING AS MALI IN A SCHOOL FOR A SALARY OF ` 1760/ - PER MONTH. THERE WERE CREDIT ENTRIES AGGREGATING TO ` 80500/- IN THE BANK ACCOUNT OF SHRI PURAN. SHRI PURAN STATED BEFORE THE ASSESSING OFFICER THAT HE WAS DOING PROPERTY BROKING BUSINESS. THE ASSESSEE WAS NOT GIVEN A CHANGE TO CROSS EXAMINE SHRI PURAN AND THE COPY OF HIS STATEMENT RECORDED BY THE ASSESSING OFFICER WAS NOT MADE AVA ILABLE TO THE ASSESSEE. LD. COMMISSIONER OF INCOME TAX (APPEALS) NO TED THAT IT IS AN ESTABLISHED PRINCIPLE OF LAW THAT ANY PIECE OF E VIDENCE OBTAINED BY THE ASSESSING OFFICER CANNOT BE USED AGAINST THE A SSESSEE WITHOUT GIVING HIM AN OPPORTUNITY OF BEING HEARD. IN THE INSTANT CASE NO SUCH OPPORTUNITY WAS GIVEN TO THE ASSESSEE. HENCE LD . COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION MADE. 19. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 20. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE SUBMISSIONS OF THE ASSESSEE. WE FIND THAT SHRI PURAN WAS SUMMONED BY THE ASSESSING OFFICER. HE ADMITTED THAT HE WAS DOING PROPERTY BROKING BUSINESS WITH THE HELP OF THE ASSE SSEE AND EARNINGS WAS DEPOSITED IN HIS BANK ACCOUNT. UNDER THE CIRC UMSTANCES IT CAN NOT BE PRESUMED THAT IF A PERSON IS NOT PROPERLY LI TERATE HE CANNOT DO ANY PROPERTY BROKING BUSINESS. HENCE WE AFFIRM TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IN THE RESULT WE SET ASIDE ITA NO. 2202/DEL/2005 8 THE ORDER OF THE ASSESSING OFFICER AND UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE. 21. IN THE RESULT THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21/03/2011. SD/- SD/- [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 21/03/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT DELHI BENCHES