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Judgment
Per Raj Kumar Chauhan, Judicial Member:
The appeal of the Revenue is directed against the order dated 05.12.2024 of Ld. Deputy Commissioner of Income Tax, Central Circle-5, New Delhi passed u/s of the Income Tax Act, 1961 [hereinafter referred to as “the Act”] wherein the addition made by the assessment order dated 16th March, 2024 were deleted and the appeal of the assessee was allowed.
The facts in brief as culled out from the proceedings of the authorities below are that the assessee filed original return of income u/s 139/(1) of the Act for AY 2018-19 on 28th December, 2018 declaring returned income of Rs. 93,51,550/-. The order u/s 143(1) was passed by the CPC vide intimation dated 30th April, 2019. A search and seizure operation u/s 132 of the Act was carried out on 22nd October, 2022 on Imtiyaz Ahmad Shah wherein the incriminating materials belonging and pertaining to the assessee was allegedly found and the said materials included purchase agreements of 9 flat of Amarpali Group, the details as mentioned in para 2 of the Assessment Order extracted below as under:
| Sl No | Flat No | Developer | Date of allotment cum Builder Buyer agreement | Amount Paid |
|---|---|---|---|---|
| 1 | D2-0702 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 25,00,000/- |
| 2 | D1-1204A | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 30,00,000/- |
| 3 | T1702 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 20,00,000/- |
| 4 | B1-2307 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 20,00,000/- |
| 5 | B1-1402 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 20,00,000/- |
| 6 | B6-1903 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 18.04.2017 | Rs 30,00,000/- |
| 7 | B6-1902 | Amarpali Smart City | 18.04.2017 | Rs 30,00,000/- |
| Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | ||||
| 8 | B6-1901 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 18.04.2017 | Rs 30,00,000/- |
| 9 | B1-2305 | Amarpali Smart City Developers Pvt Ltd, Corporate office C56/40 Sector-62, Noida, UP | 20.04.2017 | Rs 16,00,000/- |
| Total | Rs. 2,21,00,000/- | |||
During investigation it is alleged that during the search proceedings, the searched person stated that the agreement in respect of above mentioned flats were lying in his house as there were outstanding dues on M/s Shanti International (Proprietorship of the Dharamvir Khosla), the assessee which they had to pay to M/s J.K. Carpet House. It was stated by the assessee that he has kept those agreements in order to secure the payment and kept the same as securities. It is further alleged that from the tally data seized from the premise of J.K. Carpet House, it was noticed that the following entries pertaining to ledger account of Shanti International in the books of M/s J.K. Carpet House were found and extracted below as under:
| Date | Particulars | Vch Type | Vch No | Debit | Credit |
|---|---|---|---|---|---|
| 1-4-2010 To | Opening Balance | 11,63,93,852.00 | |||
| 4-8-2010 By | J K Bank New Delhi 4674 | Receipt | 19 | 7,50,000.00 | |
| 2-11-2010 By | J K Bank New Delhi 4674 | Receipt | 30 | 50,00,000.00 | |
| 3-12-2010 By | J K Bank New Delhi 4674 | Receipt | 36 | 35,00,000.00 | |
| 29-1-2010 By | J K Bank New Delhi 4674 | Receipt | 47 | 15,00,000.00 | |
| 11,63,93,852.00 | 1,57,50,000.00 | ||||
| 10,56,43,852.00 | |||||
| By | Closing Balance | 11,63,93,852.00 | 11,63,93,852.00 | ||
| 1-4-2010 To | Opening Balance | 10,56,43,852.00 | |||
| 15-6-2010 By | J K Bank New Delhi 4674 | Receipt | 8 | 5,00,000.00 | |
| 30-10-2010 By | J K Bank New Delhi 4674 | Receipt | 29 | 20,00,000.00 | |
| 22-11-2010 By | J K Bank New Delhi 4674 | Receipt | 33 | 10,00,000.00 | |
| 29-11-2010 By | J K Bank New Delhi 4674 | Receipt | 36 | 10,00,000.00 | |
| 3-1-2014 By | Cash | Receipt | 40 | 2,00,000.00 | |
| By J K Bank New Delhi 4674 | Receipt | 41 | 20,00,000.00 | ||
| 7-1-2014 By | J K Bank New Delhi 4674 | Receipt | 42 | 5,00,000.00 | |
| 10,56,43,852.00 | 72,00,000.00 | ||||
| 9,84,43,852.00 | |||||
| By | Closing Balance | 10,56,43,852.00 | 10,56,43,852.00 | ||
| 1-4-2014 To | Opening Balance | 9,84,43,852.00 | |||
| 1-5-2014 By | J K Bank New Delhi 4674 | Receipt | 3 | 2,00,000.00 | |
| 27-8-2014 By | J K Bank New Delhi 4674 | Receipt | 15 | 16,00,000.00 | |
| 13-10-2014 By | J K Bank New Delhi 4674 | Receipt | 21 | 25,00,000.00 | |
| 2-3-2015 By | J K Bank New Delhi 4674 | Receipt | 30 | 4,50,000.00 | |
| 9,84,43,852.00 | 49,50,000.00 | ||||
| 9,34,93,852.00 | |||||
| By | Closing Balance | 9,84,43,852.00 | 9,84,43,852.00 | ||
| 1-4-2015 To | Opening Balance | 9,34,93,852.00 | |||
| 1-6-2015 By | J K Bank New Delhi 4674 | Receipt | 5 | 10,00,000.00 | |
| 28-3-2016 By | J K Bank New Delhi 4674 | Receipt | 22 | 30,00,000.00 | |
| 9,34,93,852.00 | 40,00,000.00 | ||||
| 8,94,93,852.00 | |||||
| By | Closing Balance | 9,34,93,852.00 | 9,34,93,852.00 |
It is thus seen from the above ledger account of Ms. Shanti International in the books of Ms. J.K. Carpet House, a huge amount of Rs. 8,94,93,852/- was outstanding against M/s. Shanti International since long. Accordingly, the statutory notice u/s 143(2) of the Act dated 23.11.2024 was issued and served upon assessee through ITBA. The assessee has filed a reply and challenged the proceedings initiated u/s 153C of the Act. It was observed by the AO that the required details were not filed by the assessee hence the reply of the assessee was not tenable and as there was sufficient materials/documents which constituted as incriminating in nature, one more opportunity was given to the assessee by show cause notice dated 06.03.2024 to which the assessee filed reply on 08.03.2024 through ITBA. The Id. AO further observed that there was a mismatch between the figure reported in the balance sheet uploaded by the assessee along report dated 05.09.2018 and the balance sheet submitted by the assessee in the reply dated 08.03.2024 in response to the show cause notice. It was therefore concluded by the AO that the assessee has failed to record his investment (9 flats purchased in the financial year 2017-18), in books of account submitted with the tax audit report in the financial year 2017-18. It is further observed that even the source of such investment was also not recorded in the books of account of the relevant financial year, hence section 69 of the Act was attracted. Accordingly, the addition of Rs. 2,21,00,000/- was made u/s 69 of the Act by the Assessing Officer.
Aggrieved by the assessment order, the assessee filed an appeal before the Id. CIT(A) who has allowed the grounds raised therein and deleted the addition made. The Id. CIT(A) has made following observations after going through the balance sheet as on 31.03.2018, the ledger account of Amrapali flats in the books of appellant for AY 2018-19 as under:
"4.1.11The undersigned has gone through the balance sheet as on 31.03.2018, ledger account of Amrapali flats in the books of appellant for AY 2018-19. group summary of Amrapali flats, balance sheet as on 31.03.2017 and 31.03.2018, ledger of investments (Amrapali summary) for AY 2016-17, ledger of Ultra Homes Construction Pvt Ltd for flats (AY 2015-16 & 2016-17), flat wise ledger accounts etc. and noticed that all these flats are already part of the books of account of the appellant. All these investments done in earlier years and shown in balance sheet and no investment has been made by the appellant in these flats in year under consideration."
The revenue is aggrieved by the impugned order of the first appellate authority and has come before the Tribunal against it and raised the following grounds of appeal:
1.Whether on the facts and circumstances of the case and in law, the Ld. CIT (A) was justified in ignoring the stand of the AO w.r.s. section 69 of the Act regarding unexplained investments of the assessee and thereby deleting the addition of Its. 2,21,00,000/-made in assessment order.
2.The Ld CIT(A) has erred in not noticing the fact that the assessee has tried to limit the scope of verification by not providing the evidences to the AO at the time of assessment proceedings, and therefore not fulfilled its statutory obligations.
3.The Id. CIT(A) has erred in applying the condition of rejecting the books of account on the applicability of section 69 of the Act.
4.The appellant craves leave to add, alter, amend or withdraw any or all ground(s) of appeal raised above at the time of hearing."
We have heard the Id. DR as well as Id. AR.
The Id. AR at the very outset, pointed out that the assessee has filed cross objections to this appeal and therefore entitled to raise legal grounds with respect to recording of satisfaction u/s 153C in a mechanical manner which is evident from page 7 of the paper book.
The Id. DR on the other hand, has submitted that since it is an appeal by the revenue hence the assessee is not entitled to raise legal grounds without filing an appeal. We have also heard the parties on merits. First we proceed to consider the ground in the appeal of the revenue on merits and if occasion arises then we will proceed to consider grounds raised in cross objection along with additional grounds being pressed before us with regard to the satisfaction u/s 153C being mechanical as having been accorded in a composite manner for many assessment years i.e. AYs 2015-16 to AY 2021-22.
The Id. DR while relying upon the assessment order would submit that the Id. CIT(A) has not examined the assessment order along with reasons given by the Id. Assessing Officer in an objective manner and has thus committed the illegality and perversity while passing the impugned order and for that reason the appeal should allowed and the grounds raised in appeal should be allowed in favour of the assessee.
The Id. AR on the other hand would submit that there is no illegality on perversity in the impugned order because the Id. CIT has rightly concluded that all the investments on the basis of which the Id. AO has proceeded u/s 153C were done in earlier years and has been categorically shown in the balance sheet and no investment has been made by the appellant in the year under consideration, hence the proceedings u/s 153C were bad in law and therefore the appeal of the assessee has rightly been allowed by the Id. CIT(A). It is further argued that nothing has been stated in the grounds raised in the appeal by the revenue with regard to the above observations of the Id. AO on the basis of which appeal of the assessee was allowed. It is therefore submitted that grounds raised in the appeal are ambiguous have no legal basis and are not emanating from the finding returned by the Id. CIT(A) in the impugned order and the appeal therefore liable to be dismissed.
We have considered the rival submissions and examined the record. The finding returned by the Id. CIT(A) from para 4.1.9 onwards are relevant and extracted below as under:
"4.1.9During the course of appellate proceedings, vide reply dated 24.10.2024, the appellant submitted the following:
1."During the course of hearing it was explained that material found during search at Srinagar belonging to assessee are in the nature of agreements signed by the assessee with the builder known as Amarpali Group. The assessee used to make investment with this builder also and against the outstanding amount these flats were finally allotted is FY 17-18 relevant to AY 18-19. Thus, there was no Investment male during the year in concern and only agreements were signed which were kept as security against the outstanding of the searched person.
2.It is submitted that the assessing officer did not appreciate these faces even after making assessments for AYs 2015-16 10 2017-18 in which outstanding amount against various flats was clearly depicted in the ledger account and against the outstanding under various heads i.e. Rs. 4,30,00,000/- against six flats and Rs. 1,18,68,000 in M/s Ultra Home Construction Pvt. Ltd as depicted at page 20 of the written submissions. For the convenience's sake same is again enclosed in Annexure A. Copy of ledger accounts showing opening balance in FY 2016-17 under various heads are also enclosed as Annexure B.
3.At para 7, page 3 of the written submissions a table was submitted showing the outstanding amount paid through Cheques/RIGS in FYs 2013-14 to 2015-16 which clearly explain that the amount was outstanding with the builder M/s Ultra Home Construction Pvt. Ltd. and the bank statement enclosed as Annexure B was also submitted. The same is again enclosed as Annexure C for your kind perusal.
4.It is submitted that the assessing officer has examined these payments during assessment made u/s 153C for AYs 2015-16, 2016-17 and 2017-18 and did not make any addition of the investment made by the assessee with the builder. Copy of assessment orders were enclosed in the PB at Pages 122-130
5.It is submitted that during the assessment for AY 2018-19 the assessing officer was informed that these agreements were only signed during the year and are not incriminating material as the same do not relate to any disclosed income while assessment u's 153C can be made only for undisclosed income. The investment has already been declared and accepted in earlier years and merely signing during the year in concern cannot be treated as undisclosed income specifically when there was opening balance or outstanding amount wat only adjusted during the year.
6.It may be relevant to state that the outstanding amount was duly been reflected in the balance sheets filed and were also enclosed at pages 13-16 in which total investment was declared as per annexure E for Rs. 25,44,72,000 which includes investment in Amarpali flats at PB 16 of Re 7,48,95,374 while sundry creditors have been shown of Rs. 33,92,94,068/- of which details were given in annexure B showing outstanding amount to Amrapali group of Rs. 2,00,27,574/- This amount is also shown at page 20 of the written submissions showing investment of Rs. 5,48,68,000/- against six flats and also with M/s Ultra Home Construction Pvt. Ltd as explained in para 2 above.
7.The balance sheets for various other years were also enclosed at PB pages 131-164 for FY 13-14 to 16-17 showing outstanding amount in each year. It would be seen that at PB 132 (annexure E showing investment last four figures are relating to investment with ultra-one construction Pvt. Ltd. in which four figures were mentioned two of 75 lacs each and two of Rs. 65 lacs). These investments were paid through cheque as depicted in bank statement enclosed as Annexure B as shown in the table at page 3 of the written submissions Similarly, investment made during FY 14-15 has been shown at FB page 140 and in subsequent year i.e., FY 15-16 out of these investments the amount has been taken back relating to four flats (page 17-18 of written submissions) as depicted at PB 140 and 149 in the balance sheet. Finally in FY 16-17 the amount outstanding was against six flats (Page 19 of WS) which is depicted in balance sheet at PB 157 and this outstanding has been has been adjusted against allotment of 23 flats as shown in page 20 of written submissions
It is hoped that from the perusal of the aforesaid facts your goodself would appreciate that there was no investment made during the year and only agreements were signed to adjust the outstanding amount shown as opening balance during the year in concern or as an outstanding with M/s Ultra Home Construction Pvt. Lid These agreement cannot be treated as incriminating material relating to escaped or undisclosed income as the same has already been disclosed in the books of accounts.”
4.1.10The appellant has further submitted its reply vide its letter dated 27.11.2024 explaining all the entries appearing in Balance Sheet of the appellant and reconciling the investment made in these flats. For ready reference, the same is reproduced as follows:
1.It was clarified that there was no difference but only presentation of fixed assets and investment was different, as Rs. 80,00,000/- Invested for commercial space bearing no. U-64 Hotel Hyatt Regency was shown in the fixed assets in the first balance sheet PB 17 and was subsequently shown separately under investment, PB 44.
2.It is further submitted that in the balance sheet (PB 44), investment in Amarpali Flats was shown of Rs. 7.48.95.574/- while assessing officer has added investment in Amarpali Flats of Rs. 2,21,00,000/-relating 9 flats whose agreements were found during the course of search at Srinagar, which were mentioned in the satisfaction note also. It is submitted that assessee has made investment in various group companies in earlier years and the balance outstanding during the year in concern amounted to Rs. 5.48,68,000/-which were adjusted during the year in concern against 23 flats which amounted to Rs. 7.48,95,574/-and the outstanding amount of Rs. 2.00.27.574 was shown under the head sundry creditors, Kindly refer to page 43 and 44 of the paper book. In this connection, relevant annexures along with the group summary and ledger account of Amarpali group are enclosed for your kind personal.
3.At page 1. Investment of Rs. 7,48,95,574/- was shown in investment i.e. annexure E' for Amarpali flats, also placed at PB page 44 being part of the balance sheet relevant to the year in concern ending on 31.03.2018. Details of various flats is placed at page 2. At page 3 adjustment of outstanding amount in various companies was made in the ledger account of Amarpali group in the books of account and the balance amount to be paid amounted to Rs 2,00,27,574/-is depicted in sundry creditors at annexure 'B' of the balance sheet PB 43 which is enclosed herewith for convenience's sake at page 4.
4.It would be seen that the investment was made in the earlier years Le, in FY 2013-14,14 15 and 15-16 amounted to Rs. 5,80,00,000 Copy of balance sheet for FY ending on 31.03.2016 relevant to AY 2016-17 is enclosed at page 5 to 11. It would be seen that total investment as shown in annexure F amounted to Rs. 18,99,76,426/- and at page 7 the amount of investment in Amrapali group of companies amounted to Rs 5,80,00,000/-Copy of group summary is placed at page 12 and relevant ledger accounts of various companies in the year of investment are enclosed at page 13 to 19.
5.Out of this Investment the amount of Rs. 31, 32,000/- was returned and the balance amount of R. 5,48,68,000- remained at investment in the Amarpali Group of companies. Copy of balance sheet as on 31.03.2017 is placed at page 20, it would be seen that out of total investment of Rs. 20,38,44,426 the investment in Amarpali Group companies amounted to Rt. 3.48. 68,000-as shown in Annexure F. page 22. A group summary of investment is prepared at page 29 and a ledger account of Ultra Home Construction Pvt. Ltd. is placed at page 30 and 31 showing return of Rs. 31,32,000/-out of Rs 1,30,00,000/- invested in earlier years, shown as opening balance in the ledger account at page 30.
6.It is therefore humbly submitted that the investment made in the earlier years was examined while completing the assessment for AY's 2015-16, 2016-17 and 2017-18 and the same was accepted without any interference."
4.1.11.The undersigned has gone through the balance sheet as on 31.03.2018, ledger account of Amrapali flats in the books of appellant for AY 2018-19, group summary of Amrapali flats, balance sheet as on 31.03.2017 and 31.03.2018, ledger of investments (Amrapali summary) for AY 2016-17, ledger of Ultra Homes Construction Pvt. Ltd for flats (AY 2015-16 & 2016-17), flat wise ledger accounts etc. and noticed that all these flats are already part of the books of account of the appellant. All these investments done in earlier years and shown in balance sheet and no investment has been made by the appellant in these flats in year under consideration.
4.1.2.Considering all these facts, the appellant's claim is accepted. Accordingly, ground nos. 1 to 4 of appeal are allowed.
5.In the result, the appeal is allowed."
We have noticed from the above extracts of the impugned order that the Id. CIT(A) has very meticulously examined and the relevant fact and materials brought on record and submissions made by the assessee with regard to the addition made by the Assessing Officer. We have further noticed that before the Id. CIT(A) vide reply dated 24.10.2024, the assessee has claimed that during the assessment year 2018-19, the Assessing Officer was informed that these agreements were only examined during the assessment of concerned years and does not constitute incriminating material and same are not relevant to undisclosed income for the relevant assessment year because the assessment u/s 153C can be made only for undisclosed income. It was further mentioned in the reply that the investment has already been declared and accepted in earlier years and merely signing of agreement during the year concerned cannot be treated as undisclosed income specifically when there was opening balance or outstanding amount was only adjusted during the year. The Id. CIT(A) has further taken note of contents of letter dated 27.11.2024 by the assessee explaining of the entries appearing in the balance sheet of the appellant and reconciling investments made in these flats. After considering the reply dated 24.10.2024 and letter dated 27.11.2024, the Id. CIT has passed the following observations while allowing appeal of the assessee and setting aside the assessment order in para 4.1.11 to para 5 extracted as below:
'4.1.11 The undersigned has gone through the balance sheet as on 31.03.2018, ledger account of Amrapali flats in the books of appellant for AY 2018-19. group summary of Amrapali flats, balance sheet as on 31.03.2017 and 31.03.2018, ledger of investments (Amrapali summary) for AY 2016-17, ledger of Ultra Homes Construction Pvt Ltd for flats (AY 2015-16 & 2016-17), flat wise ledger accounts etc. and noticed that all these flats are already part of the books of account of the appellant. All these investments done in earlier years and shown in balance sheet and no investment has been made by the appellant in these flats in year under consideration.
4.1.2.Considering all these facts, the appellant's claim is accepted. Accordingly, ground nos. 1 to 4 of appeal are allowed.
5.In the result, the appeal is allowed."
On examining the grounds raised in the appeal before us, we have noticed that the finding returned by the Id. CIT(A) in para 4.1.11 and the observations made while considering the reply dated 24.10.2024 and letter dated 24.11.2024, nothing has been mentioned in these grounds with regard to the said findings of the Id. CIT(A). For these reasons, we find force in the arguments made on behalf of the assessee by the Id. AR to the effect that grounds raised in the appeal do not emanate from the finding of the Id. CIT(A) and are thus seems to be ambiguous, having no valid legal basis.
We have considered the finding of the Id. CIT(A) extracted above in our order and are of the view that the said finding is based on meticulous examination of material facts and submissions made by the parties. For these reasons, we do not find any illegality and perversity in appreciating the facts and submissions in the Id. CIT(A), while passing the impugned order.
In view of the above discussion, we are of the considered opinion that the grounds raised in the appeal by the revenue are not tenable and liable to be dismissed.
We order accordingly.
In the result, the appeal of the revenue is accordingly dismissed.
C.O. No. 76/Del/2025 for AY 2018-19
The assessee has raised the grounds of appeal in C.O. No. 76/Del/2025 as under:
"1.That the learned Commissioner of Income Tax (Appeals) has erred in law as well as on facts in not giving clear direction that income returned u/s 153C at Rs. 93,51,550/- has to be taken while computing Income and not income returned u/s 143(1) of the Act of Rs. 97,09,380/- which stands abated.
The above cross-objection are independent of, and without prejudice to each other.
That the appellant craves leave to add, alter, amend or withdraw all or any Cross-objection herein or add any further grounds of Cross objection as may be considered necessary either before or during the hearing of the grounds."
During arguments, the Id. AR of assessee also pointed out that the assessee has raised the legal grounds with respect to the satisfaction recorded in a mechanical manner for proceedings u/s 153C in this case. Raising of the said legal ground in C.O. is opposed by the revenue on the grounds that since it is an appeal by the revenue, hence the assessee is not entitled to raise additional legal grounds. Since we have dismissed the appeal on merits, therefore, the decision on grounds raised in cross objection along with the legal grounds agitated by the assessee pales into insignificance as having been rendered academic. We have not decided the same and these grounds raised in cross objection and the decision therein is left open.
The cross objection of the assessee is disposed of accordingly in our term.