Kamal Kishan Arora, New Delhi vs Department Of Income Tax

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.