Sanjay Ghai, Dehradun vs Assessee

Date of Hearing 11.03.2015 Date of Pronouncement 31 .03.2015

ORDER PER DIVA SINGH, JM

The present appeal has been moved by the Revenue against the order of the CIT(A), Dehradun dated 04.12.2009 pertaining to 2003-04 assessment year on the following grounds:-

1. "The Ld. CIT(A) has erred in law and on facts in deleting the addition without causing enquiry in the matter and also in the absence of the evidence suggesting that amount of sale proceeds received by the assessee were not his income.

2. The order of the Ld. CIT(A) be set-aside and that of the AO be restored."

2 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

2. Addressing the delay of 34 days pointed out by the Registry. The Ld. Sr. DR relied upon condonation of delay dated 22.04.2010 wherein the AO gives the following explanation:-

"The due date of filing appeal before Hon'ble ITAT in the above case was 23/03/2010. The assessment record in this case was sent to Additional Commissioner of Income Tax seeking approval to refund arising on account of appeal order. Simultaneously proposal for filing further appeal was also sent. Somehow the matter relating to the filing of further appeal was inadvertently got overlooked. Due to this unavoidable reason the filing of the appeal got delayed. It is humbly requested that the delay may kindly be condoned and the appeal may kindly be allowed to be filed."

2.1. Accordingly it was his prayer that the delay caused inadvertently may be condoned. Ld. AR had no objection to the delay being condoned accordingly considering the explanation and the submissions of the parties the delay of 34 days is condoned.

3. Ld. Sr. DR inviting attention to the findings arrived at by the Ld. CIT(A) at para 7.4 submitted that in the facts of the present case the issue needs to be restored as the facts remain that the assessee has not given the sale proceeds to the alleged owner M/s Golden Tourist Resorts India Pvt. Ltd. and if the assessee is the owner than he should have disclosed capital gain thereon. Accordingly the matter needs to be restored because if the assessee has not returned the funds to M/s Golden Tourist Resorts India Pvt. Ltd. than whether the assessee has committed fraud on that party and what action the party has taken against the assessee, the necessary facts are to be seen. It was his submission that the observation of the CIT(A) that the AO is at liberty to take action against the real owner is of no relevance after so many years. In the circumstances it was his prayer that the matter requires re-consideration as such may be restored. The Ld. AR in reply inviting attention to the assessment order at page 1 submitted that it is nobody's case that the assessee has committed a fraud and a perusal of the assessment order would show that the assessee claimed that it has transferred as Power of Attorney holder of M/s Golden Tourist Resorts India 3 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

Pvt. Ltd., Chandigarh a specific piece of land i.e 487 bighas situated at Misraj patti, Tehsil Vikas Nagar, in favour of Sh. Rajeev Berry, Sanjay Mohan Uniyal & Rakesh Aggarwal for a consideration of Rs. 18 lac. Inviting attention to the impugned order it was his submission that it has been shown as a liability in 2004-05 assessment year which has been accepted by the department and no adverse inference has been drawn. This fact it was submitted has been taken note of by the CIT(A). On query he was unable to say whether the amount has been returned or when, but the fact remains that it has continued as a liability in the subsequent assessment year. It was reiterated that the assessee is a Power of Attorney holder who transferred the said property on behalf of M/s Golden Tourist Resorts India Pvt. Ltd. and these are the admitted facts. A perusal of the Remand Reports at page 17 of the Paper Book it was submitted shows that when the matter is remanded to the AO whose Remand Report is available he fails to address the facts which now the Ld. Sr. DR is trying to canvass may be allowed to be considered by remitting the matter. It was his submission that consistently the assessee has claimed that he is a Power of Attorney holder of M/s Golden Tourist Resorts and this claim of the assessee till date has not been upset by the Revenue despite the fact that the CIT(A) remanded the matter back to the AO who merely reports that the sale proceeds have been utilized by the assessee. The fact that it has been shown as a liability in the subsequent assessment year has been ignored by the Sr. DR.

3.1. Accordingly it was his submission that the liberty granted to the AO in 2009 by the impugned order has to be seen in the context of the Remand Report of the AO and if despite the availability of time the department has not made any effort to rebut the claim of the assessee then the request to seek a remand at this stage without any evidence to the contrary it was submitted should not be permitted. Accordingly it was his submission that the departmental ground deserves to be dismissed as it is devoid of any merit as apart from suspicions no fact has been brought on record to assail the correctness of the order.

4 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

4. We have heard the rival submissions and perused the material available on record. For ready-reference, we reproduce from the impugned order the facts as summarized from the assessment order:-

7.1 "According to the AO, as a result of survey action conducted at the premises of the appellant on 25.09.2003, it has been revealed that appellant has sold 487 bighas of land as mentioned earlier at Misraj Path, Tehsil, Vikas Nagar to Shri Rajeev Berry, Sanjay Mohan Uniyal and Shri Rakesh Aggarwal. It has been claimed that such land has been transferred by the appellant as power of attorney holder of M/s Golden Tourist Resort Chandigarh and registered on 29.11.2002 against sale consideration of Rs.18,00,000/-. The appellant has received Rs.7.30 lakhs in cash from one Shri Rajeev Berry, Rs.6,00,000/- from Sanjay Mohan Uniyal and Rs.10,00,000/- from Rakesh Aggarwal and aggregate amount of receipts pertaining to F.Y. 2002-03 relevant to A.Y. 2003-04 is Rs.23.30 lakhs.

Incidentally, there was a receipt of Rs.2.50 Lakhs during the F.Y. 2001-02 relevant to A.Y. 2002-03 and the said amount was assessed as income in the hand of the appellant for the detailed reasons incorporated in the assessment order for A.Y. 2002-03. In this regard, the counsel of the appellant submitted before the AO that the appellant had received an aggregate amount of Rs.25.80 lakhs as power of attorney holder to M/s Golden Tourist Resort India on account of sale of the impugned land to the buyers. These facts were also explained during the assessment proceedings for A.Y. 2002-03 and unfortunately the Id. Assessing Officer has added RS.2.5 lakhs to the total income for A.Y. 2002-03 and due to oversight appeal was not preferred against such order but a petition was moved before the Commissioner of Income-tax u/s 264 in this regard. It has been again reiterated that the appellant is nothing but a power of attorney holder of M/s Golden Tourist Resort India and the money was lying with him as advance on behalf of M/s Golden Tourist Resort India and it is definite liability on the part of the appellant which is to be paid to the company in due course of time. In this regard, the appellant requested the AO to get the necessary confirmation from the purchaser.

7.2. However, the AO was not convinced with the aforesaid submission of the counsel of the appellant because of the fact that the entire sale proceeds on account of the sale of the above noted property have been utilized by the appellant for meeting household expenses, office expenses and payment of income-tax dues etc. Therefore, it has been observed that the sale proceeds have never reached the owner, i.e. M/s Golden Tourist Resort India because of some arrangement between the two. Moreover, the receipt of the entire amount in cash from the buyer makes it clear that the appellant had the intention of using the sale proceeds as his own money and ultimately he had utilized the funds for meeting his own expenses. Keeping in view these facts, the AO has added the entire sum of Rs.23.30 lakhs in the hand of the appellant by treating the same as 'income from other sources'."

5 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

4.1. A perusal of the order further shows that on behalf of the assessee it was pleaded that the specific land was purchased by M/s Golden Tourist Resorts India Pvt. Ltd. on 28.04.1995 and it was sold on behalf of the M/s Golden Tourist Resorts India Pvt. Ltd. by the assessee as per Registry executed on 29.11.2002. It was submitted that the buyer of the land had also accepted that the assessee was the authorized representative of the owner as per the sale deed on record the amount was shown consequently as a liability and not the income of the assessee.

4.2. A perusal of the submissions made further shows that the AO's action of assessing the sale proceeds in the hands of the assessee as income escaping assessment was also assailed on the ground that the AO ignored the fact that he had option to get the information if doubted confirmed from the purchases of the owners of the land. For ready-reference, we extract the relevant submissions from page 7 of the AO:-

(iv) "The AO have assessed the sale proceeds in the hand of the appellant i.e Shri. Sanjay Ghai as income escaping assessment whereas he had the option to get the confirmation from the purchasers or the owner of the land i.e Golden Tourist Resorts India Pvt. Ltd. The amount received also do not fall under the definition of income u/s 2(24) of I. Tax Act.

Hence the addition of 23.30 lacs as income of Sanjay Ghai is without any basis."

4.3. In the afore-mentioned peculiar facts and circumstances where neither in the assessment proceedings and even before us nothing has been placed by the Revenue to show that the assessee contrary to his consistent claim was actually the owner of the land and not a Power of Attorney holder of M/s Golden Tourist Resort, we find in the absence of any evidence on record assailing the finding there is no good reason to seek a remit of the issue except suspicion. In the absence of any evidence to the contrary, the request so made cannot be accepted. For ready-reference, we extract para 7.4 hereunder which is challenged by the Revenue:-

7.4 "I have considered the above submission of the counsel of the appellant and the other facts indicated by the AD in the assessment order.

It is observed that it is not in dispute that the land situated at Misraj Patti, 6 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

Pargana, Pachvadoon, Tehsil, Vikasnagar, Khata Sankhya 1, Khasra 234/1, Area 94.29 acres was in the ownership of Golden Tourist Resort India (P) Ltd. situated at SCB-834, Mani Majra, UT Chandigarh. The said land was purchased by M/s Golden Tourist Resort India (P) Ltd. on 20.04.1995. The said company empowered Shri Sanjay Ghai, the appellant, as duly appointed representative of the company and authorized him to execute the sale. Shri Sanjay Ghai, the appellant, on behalf of the company, sold the land in favour of Shri Rajeev Berry, Shri Sanjay Mohan Uniyal and Shri Rajeev Aggarwal. The sale deed for the sale of land was executed on 29.11.2002 for and on behalf of M/s Golden Tourist Resorts India (P) Ltd. by the appellant, namely, Shri Sanjay Ghai and the buyers of land have accepted the appellant, as authorized representative as per the sale deed. The relevant sale deed has been produced which justifies the contentions raised by the counsel of the appellant. As far as ownership of the land in the hand of M/s Golden Tourist Resort India (P) Ltd. Is concerned it has been observed that the said land has been purchased from Sachendra Singh S/o Shri Lala Navratan Singh and the name of the company has been entered at page No.2 of the khatauni which proves the ownership of this company for the impugned land.

In addition the appellant has filed the return of income for A.Y. 2004-05 on 06.12.2006 declaring nil income wherein in the statement of affairs, liability has been shown on account of M/s Golden Tourist Resort India (P) Ltd, at Rs.25,80,000/- for the period ending 31.03.2004. The same has been shown as liability towards the company as on 31.03.2003 also. The department has already made assessment for A.Y. 2004-05 wherein no adverse inference has been drawn as regards such liability claimed as per the enclosed statement of affairs filed along with such return of income. All these evidences point to the fact that the ownership of the impugned land does not vest with the appellant and, therefore, the contention of the appellant that the sale of the land has been effected as power of attorney holder of M/s Golden Tourist Resort India (P) Ltd., cannot be brushed aside. The fact that the sale proceeds of land received in cash have been expended by the appellant do not mean that the appellant is the actual owner of the land for which the sale consideration has been received by him and duly appropriated also.

The AO would have caused enquiries with the purchasers of the land and also with the owner of the land before coming to the finding that the land actually belonged to the appellant and, therefore, the sale proceeds were his own income which had been appropriated by him. However no such material facts have been brought on record as a result of such enquiries. Under these facts and circumstances of the case, I am not in a position to uphold the assessment of the receipt of sale proceeds to the tune of RS.23.30 in the hand of the appellant and the AO is hereby directed to delete such addition. However the AO is at liberty to cause any enquiry to arrive at a contrary view that the appellant has been the real owner of the impugned land and appropriate action as per law may be taken after reaching to such conclusion on the basis of material facts brought on record."

4.4. In view of the above being satisfied by the reasoning and finding of the CIT(A) the departmental ground is dismissed.

7 I.T.A .No.-1881/Del/2010 & CO No.-176/Del/2010

5. The CO filed by the assessee is dismissed as not pressed in view of the finding arrived at in the departmental appeal which was pronounced on the date of hearing itself the Ld. AR submitted that it may be treated as not pressed

6. In the result the appeal of the Revenue and CO of the assessee are dismissed.

The order is pronounced in the open court on 31st of March 2015.

Sd/- Sd/- (G.D.AGRAWAL) (DIVA SINGH) VICE PRESIDENT JUDICIAL MEMBER

Dated: 31/03/2015 *Amit Kumar*

Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI