Late Harbhajan Singh Makkar Vs ACIT (ITAT Delhi)
When the assessee had specifically asked for the cross-examination and if same was not given to the assessee, the addition cannot be made in the hands of the assessee, as denial of opportunity to the assessee to cross-examine the witness whose statements were made the sole basis of the assessment is a serious flaw rendering the order as nullity in as much as it amounted to violation of the principles of the natural justice.
The fact shows that assessee has sold the property at 1st floor, BB – 17 greater Kailash part – 2, New Delhi for a consideration of INR 14,000,000 to Mrs. Santhosh Rani Gupta. The sale deed was registered on 26/11/2009 wherein the agreed consideration paid by the assessee was INR 14,000,000 .
Sale consideration stated in Para number 6 of the sale deed shows various cheques issued on various dates in the favour of the The contention of the assessee is that this amount of money has been paid by Mr. Mittal and not Mrs. Gupta. Learned Assessing Officer noted that Mr. Honey Gupta, son of the buyer made a statement on oath on 12/11/2010 before the Assistant Director Of Income Tax (Investigation), New Delhi wherein in response to question No. 3 and Question Number 9 , he submitted that part payment for the purchase of property was made in cash and therefore he voluntarily surrendered the difference on account of payment made in cash to the seller (assessee) of property to the tune of Rs. 1.70 crores as paid by mother of the Mr. Honey Gupta for 1st floor during financial year 2010-11 and Rs. 1.40 crores paid by him for 2nd floor during financial year 2000-11.
The statement of the broker Mr. Naveen was also recorded in case of Mr. Mittal on 24/1/2011 by the Additional Director Of Income Tax (Investigation) New Delhi wherein in response to Question No 4 he stated that sale of the property at the 1st floor belonging to the assessee was sold to Mr. Santhosh Rani Gupta for Rs. 31,000,000/-. In response to Question No. 6 he submitted that the above payment was made in cash to the sellers (assessee) in the morning of the date of execution of sale deed. Further the statement of Mr. Honey Gupta was also recorded on 27/12/2012 by the Assistant Commissioner of Income Tax (AO) wherein he denied that he has not made any cash payment. He further stated that he has only made cheque payment for purchase of this property and source of which has already been explained.
He further submitted that the original statement given by him is because of his illness and therefore there cannot be relied upon. Therefore, it is apparent that the buyer has not given any statement to the investigation wing or to the Assessing Officer. It is the statement of the son of the buyer which was used against the assessee for making the addition. The son of the buyer has retracted the same statement when called upon by the learned assessing officer. Further, the statement of the broker was also recorded who has not received any brokerage on the transaction from either of the parties. It is further apparent that no opportunity was given to the assessee to cross-examine as Mr. Honey Gupta or Shri Naveen, broker.
Further with respect to the amount of cash paid allegedly by the buyer of the property to the assessee there is a contradictory statement with respect to the timing between the buyer and this broker on the period in which the above cash was paid. Furthermore, the learned Authorized Representative produced before us the order passed u/s 143 (3) read with section 148 of the income tax act dated 31/1/2014 wherein the total income of the buyer was assessed at Rs. 492380/– as originally assessed u/s 143 (3) that the returned income and no addition with respect to Rs. 1.40 crores alleged cash paid by her to the assessee was made.
Therefore, when the addition has not been made in the hands of the buyer, who is the source of the cash payment to the seller (assessee), no addition can be made in the hands of the assessee. In fact the addition should have been made in the hands of the buyer on account of cash paid to the seller and in the hands of the seller as unaccounted sale consideration subject to capital gains tax.
Even otherwise the assessee has requested for the cross-examination of Sri Honey Gupta as well as the broker during the assessment proceedings however same has been denied. The only evidence available with the Assessing Officer is the statement of Mr. Honey Gupta and the broker which has been used against the assessee for making the addition.
When the assessee had specifically asked for the cross-examination and if same was not given to the assessee, the addition cannot be made in the hands of the assessee, as denial of opportunity to the assessee to cross-examine the witness whose statements were made the sole basis of the assessment is a serious flaw rendering the order as nullity in as much as it amounted to violation of the principles of the natural justice as held by Honourable Supreme Court in 281 CTR 241. In view of this we do not have any other alternative but to direct the learned assessing officer to delete the addition of INR 17,000,000 made in the hands of the assessee over and above the declared sales consideration of INR 14,000,000 towards the sale of the property for the computation of the capital gain. Accordingly we reverse the finding of the lower authorities. Accordingly ground number 1 of the appeal of the assessee is allowed.
FULL TEXT OF THE ITAT JUDGMENT
1. This appeal is filed by the assessee against the order of the ld CIT(A), Rohtak dated 30.03.20 15 for the Assessment Year 2010-11, wherein, the order of the ld AO passed u/s 143(3) of the Act dated 07.03.20 13 was confirmed. The only issue in dispute is the addition of Rs. 1,70,00,000/- , being alleged on money received on sale of property, made by the ld AO confirmed by the ld CIT (A) .
2. The assessee has raised the following grounds of appeal:-
“1A. That under the facts and circumstances, both the lower authorities erred in law as well as 011 merits in making and sustaining the addition of Rs. 1,70,00,000/- as alleged undisclosed / un accounted sales consideration received against sale of property at 1st floor of BB – 17, G K, Part – II, New Delhi, over and above the apparent and declared sales consideration of Rs. 1,40,00,000/- which is as per registered sale deed.
B. That without prejudice, the adverse inference taken in the absence of providing complete material collected on the back of the assessee, and without allowing opportunity of cross – examining such persons whose statements have been recorded on the back and have been used in Asstt., is not permissible and no such material can be used against the assessee.
C. That without prejudice, under the facts and circumstances, under no circumstance, the alleged receipts can be considered to be in A.Y. 2010- 11.
2. That without prejudice, the complete proceedings are illegal and un – sustainable for not initiating and not issuing the notices for these proceedings to all the legal heirs and thus for not allowing the participation of all legal heirs.”
3. The brief facts of the case is that the assessee is an individual who filed his return of income on 29.11.2010 declaring income of Rs. 33,41,166/-. The assessee has shown a consideration of Rs. 1,40,00,000/- on sale of his residential property at Greater Kailash, Part-II, New Delhi on which long term capital gain of Rs. 30,13,119/- has been declared.
4. The ld AO dealt with the above issue as per Para No. 4 to 11 of his order as under:-
4. As per the information received from the office of Asstt. Director of Income Tax (Investigation)-Unit 111(3), New Delhi, during the course of post search proceeding in the case of Triveni Group, summons u/s 131(A) were issued to Shri Honey Gupta and Smt. Santosh Rani Gupta. Shri Lloney Gupta, while deposing his statement with regard to purchase of lsl Floor of House property at BB-17, G.K. Part If, Delhi, has admitted that his mother has made part payment in cash of Rs.1.70 Giores, over and above the amount as shown in the sale deed during the F.Y. 2009-10. Copy of statement of Shri Honey Gupta recorded on oath on 12.11.2010 by ADI (Investigation)-Unit-III(3), New Delhi, is annexed at page 11 to 12 as Annexure-L In the statement Shri Honey Gupta has deposed that first floor of the property BB-17, G.K. EncIaveII, New Delhi was purchased by his mother Smt. Santosh Rani Gupta for Rs.3.10 crores. The registry value of first floor of this property was Rs.1.4 crores. He has further admitted to have made part payment Jbr this property in cash and voluntarily surrendered the difference of Rs.1.70 crore on account of payment made in cash to the seller of property i.e., Sh. Harbhajan Singh Makkar paid by his mother. Statement of Sh. Naveen Nangia, Property Dealer who had arranged the deal, residence of Flat No. 14B, Pocket, A-11, Surya Apartments, Kaikaji Extension, New Delhi was also recorded on oath on 24.01.2011 by ADI (Investigation) Unit-Ill (3). New Delhi, to corroborate the statement given by Sh. Honey Gupta and he has also admitted that he had arranged sale of property BB:17, G.K. Enclave-11, New Delhi and first floor of the said property was sold for Rs. 3.10 crores. He has also deposed that cash component over and above sale consideration shown in the sale deed was received by Sh. Harbhajan Singh on the date-when sale deed was executed. He has even deposed that he had seen that handing over the cash component received by Sh. Harbhajan Singh and actually he had even assisted in counting and handing over the cash component to the respective parties as a part of his .profession and service. He has further stated that the entire deal was arranged by him and Sh. Avdhesh Mittal had nothing to do with the said deal. Statement of Sh. Naveen Nangia is annexed at page 13 to 16 as Annexure-H. Photocopies of above statements of Sh. Honey Gupta, Son of Smt. Santosh Rani Gupta and Sh. Naveen Nangia, the property dealer who had arranged the deal, were also supplied to the assessee.
5. Vide order sheet entry dated 29.10.2012, assessee was asked to explain as to why the unaccounted sale proceeds of immovable property amounting to Rs. 1,70,00,000/- paid in cash over and above the registered sale consideration to him by Smt. Santosh Gupta, should not be added to the income of the assessee by treating the same as undisclosed income of the assessee, as-per information received from the ADI(Inv.) Unit-III(3), New Delhi, where the excess undisclosed amount paid by the purchaser has been surrendered for taxation.
6. In response to this show cause, assessee furnished written reply on 26.11.2012 relevant portion of which is reproduced below:-
“Your Worthyself have issued show cause notice for addition of Rs. 170 lacs relying on the statement of Sh. Honey Gupta and Sh. Naveen Nangia recorded by Hon‟ble ADI, Unit -III, New Delhi.
The statement of Sh. Honey Gupta and Sh. Naveen nagia cannot be relied upon in the case, as they have concealed a major fact, that property BB-1 7 G.K. Enclave II, New Delhi 1st floor was purchased by Sh. Avdhesh Mittal S/o Sh. B.L. Mittal R/o 91 Greater Kailash, New Delhi for an agreed sum of Rs. 140 lacs from Sh. Harbhajan Singh Makkar. Sh. Avdhesh’Mittal made the toted payment of Rs. 140 lacs for the sale of property to Sh. Elarbhajcin Singh Makkar. Sh. Avdhesh Mittal purchased his property in the month of Sep. 2009 and issued two cheques from his personal SB A/c with HDFC Bank, New Delhi for Rs. 10 lacs bearing cheque no. 344021 and 20 lac bearing cheque no. 344022 dt. 23.09.2009. and 30.09.2009 respectively. (Photocopies of cheques are enclosed). These cheques were credited in the PNB, New Delhi Account of Sh. Harbhajan Singh Makkar on 25.09.2009 and 03.10.2009. The copy of PNB, New Delhi Account of Sh. Harbhajan Singh Makkar have already been submitted with your Worthyself with reply dt. 29.10.2012. Sh. Avdesh Mittal further handed over two pay orders for Rs. 50 lac each bearing nos. 085716 and 085717 respectively and one pay order of Rs. 10 lac bearing no. 085718 of HDFC’Bank Ltd., New Delhi on dt. 27.11.2009. These pay orders were encashed in PNB, New Delhi Account of Sh. Harbhajan Singh Makkar on dt. 01.12.2009. Sh. Avdesh Mittal got the property registered ip the name of Smt. Santosh Rani Gupta on 26.11.2009.
Sh. Harbhajan Singh Makkar did not know Smt. Santosh Rani Gupta at all, this properly was transferred in her name at instance of Sh. Avdhesh Mittal who was purchaser of the property from Sh. Harbhajan Singh Makkar. ”
7. Statement of Sh. Honey Gupta, son . of Smt. Santosh Rani Gupta, purchaser of the property was also recorded on 27.12.201.2 by this office by issuing summons u/s 131 of the I.T. Act. In the statement he admitted that-statement had been given by him before ADIT (Investigation) Unit-III(3), New Delhi on 12.11.2010 on behalf of his mother: Copy of the statement of Sh. Honey Gupta was also provided to the assessee on his request.
8. Assessee vide reply received on this office on 28.01.2013 further submitted as under:-
“ The show cause have been issued on the basis of statement of Sh. Honey Gupta recorded by learned ADI, New Delhi. The statement of Sh. Honey Gupta was given on. behalf of her mother Smt. Santosh Rcmi Gupta who was the purchaser of property from the assessee. It is not. clear why the statement of ‘Sh Honey Gupta, was recorded on behalf of her mother when the mother is alive and having good health and more so independent income tax assessee having PAN N&. AAEPG7465K. The statement of Sh. Honey Gupta canpot be relied upon in this case, as he is not purchaser of the property in question.
Even in his statement recorded before learned. ADI (Unit III). New Delhi., Sh. Honey Gupta stated thatjhe payment of Rs. 170 Lacs are being paid during the current financial year i.e. 2010-2011. It is.pointed out here that sale deed was entered on dt. 30.11.2009 i.e. during financial year 2009-1 0, how a payment of the sale f property can be made one year after the sale agreement, registered before the registrar of property New Delhi. The statement of Sh. Honey Gupta cannot be relied upon for this reason also for making addition during financial year 2009-2010.
In the statement of Sh. Honey Gupta recorded by your worthy self on dated 27.12.2012, he has denied any cash payment having been made by his mother or himself to Sh. Harbhajan Singh Makkar.
He has further stated that statement given before the ADI (Unit-Ill), New Delhi way under-Pressure and at that time he was a patient of sleep disorder also for which he was under treatment from a doctor, the prescription of which was also submitted by him to your Worthyself.
The assessee was not given an opportunity to cross examine the witness that is Sh. Honey Gupta neither by learned ADI nor by your worthyself. The assessee had put in a written request on 27.12.2012 in this regard before the statement of Sh. Honey Gupta was recorded by your worthyself.
The only reliable evidence of sale of 1st floor of property No. BB-17, G.K. Enclave, New Delhi is the Sale Deed registered before the sub Registrar V, New Delhi. It is requested that Sub Registrar may be summoned as witness for which the assessee is ready to deposit the requisite charges.
In the light of above facts the Show Cause issued for addition of Rs. 170 Lacs in this case is bad in law as well as on the ‘given facts of the case. It is requested that Show Cause notice may be filed and assessment may be framed accordingly. “
9. Reply of the assessee has been considered. Assessee has mainly raised following three contentions
i) Honey Gupta has given statement on- behalf of his mother Smt. Santosh Rani Gupta who is alive and having good health and also independent income-tax assessee.
ii) In the statement recorded before ADI(Iny.) Unit-III(3), New Delhi Sh. .Honey Gupta stated that payment of Rs. 1.70 crores is being paid during the current financial year i.e. 2010-11 whereas sale deed was entered on 30.1 1.2009J.e. during financial year 2009- 10. As such statement of Sh. .Honey Gupta cannot be relied upon for making addition during financial year 2009 -10.
iii) In the statement of Sh. Honey Gupta recorded on 27.12.2012 by this office, he has denied any cash payment having been made by his mother or himself to Sh. flarbhajan Singh Makkar.’
10. Contentions raised by the assessee have been considered and found not tenable for the following reasons:-
i) In the statement recorded on oath on 12.11.2010 by ADIT (Inv.) Unit-HI(3), New Delhi, Sh. Honey Gupta has clearly stated that he is competent to give statement on behalf of his mother Smt. Santosh Rani.
ii) He has voluntary surrendered the difference on account of payment made in cash to the seller of the property to the tune of Rs. 70 crores paid by his mother.
iii) Naveen Nangia, property dealer who had arranged the deal, whose statement was also recorded on oath on 24.01.2011 has also clearly stated that amount of Rs. 1.70 crores for the 1st floor over and above the sale consideration was made in cash to the seller in the morning of date of execution of sale deed. He has further stated that the 1st floor was sold by Sh. Harbhajan Singh and cash of Rs. 1.70 crores was taken by him over and above the sale price shown in the sale deed.
iv) Naveen Nangia has also denied in the statement that buyers were brought to them by Sh. Avdhesh Mittal and further stated that entire deal was arranged; by him and Sh. Avdhesh Mittal has nothing to do with the said deal.
v) In the statement given on 27.12.2012 on oath in this office (Annexure-III to this order at page 17 to 21) Sh. Honey Gupta has not been able to corroborate and prove as correct his version that statement given on 12.11.2010 before ADI (Inv.) Unit-III(3), New Delhi, on behalf of his mother Smt. Santosh Rani Gupta was given under pressure and under the influence of medicine. On being pointedly and repeatedly asked by this office to explain as to what kind of pressure was there upon him, as claimed by him, under which he admitted the true facts before the ADIT, he could not give any satisfactory reply. It can be clearly seen from his statement that he is just trying to deny the true facts of the case as already confessed by him before the ADIT but he has completely failed in his attempt to do so as he could not give any satisfactory explanation/reply in response to pointed questions put to him by this office. He also admitted in his statement given before this office that he had given his statement before the ADIT to avoid further action by the Department which clearly proves that he had surrendered the unaccounted/undisclosed cash payment made by his mother and himself, voluntarily, in order to avoid penal and prosecution action by the department.
vi) The sale deed of aforesaid property has been registered in the office of the Sub- Registrar V, New Delhi on 30.11.2009 and, therefore, the entire sale consideration,,, including the undisclosed/unaccounted cash component of Rs. 1.70 crores, must have been paid/received on or before 30.11.2009 and hence, the same is assessable in the hands of the assessee as his income of financial year 2009-10 relevant to A. Y. 2010- 11. This fact has also been confirmed by the ADIT(Inv.) UnitIII(3), New Delhi vide his office letter No. As.stt. DIT (Inv.)/ Unit III(3)/2010-1 1/117 dated 25.01.2011 and further vide his office letter ADIT(Inv.)/ Unit III(3)/2012-13/253 dated 19.12.2012.
vii) It is a common knowledge that as per practice generally prevalent in the real estate .market, a substantial part of the sale consideration is paid/received in cash, in order to avoid the correct payment of taxes. While giving his statement on oath before the ADITHnv.) Unit -XII(3). New Delhi on 12.11.2010, Sh. Honey Gupta was confronted .by the ADIT in question number .9 of the statement, to furnish the details of cash/unaccounted payment made by him and his mother for the purchase of first and second floor of the aforesaid property, in the light of fact that ground floor and basement of the same property was purchased by Sh. Avdhesh Mittal for consideration of Rs. 4.25 crores and’ Rs.2. 75 crores respectively. On being confronted with this information, Sh. Honey Gupta admitted to have paid unaccounted cash payment of Rs. 1.70 crores by his mother and Rs. 1.40 crores by himself to the sellers of the first floor and second floor of the aforesaid property respectively and surrendered the unaccounted payment made by his mother and himself for taxation and further requested that no penal/prosecution proceedings may be initiated against them as the undisclosed amount was being surrendered voluntarily by them./ ‘.
11. From the above discussion, it is clear that the assessee has received cash payment of Rs. 1.70 crores over and above that sale consideration amount mentioned in – the sale deed i.e. Rs. 1.40 crores against sale of first floor residential property BB-1 7, G.K. Enclave, New Delhi. In the computation, assessee has taken Rs. 1.40 crores as sale price for computation of capital gains arising on sale of this property. Thus, assessee has shown less long term capital gain to the tune of Rs. 1.70 crores which is now added to the returned income of the assessee shown under the head „Income from Capital Gains‟ . I have reason to believe that assessee has concealed his income and furnished inaccurate particulars of his income in respect of long term capital gain of Rs. 1.70 crores, therefore, penalty proceedings u/s 271(1 )(c) are being initiated separately.”
5. Thus, the assessment order u/s 143(3) was passed where in the addition of Rs 1.70 crore was made towards the sale consideration of the property over and above the declared sales consideration. The assessee preferred an appeal before the ld CIT(A) who dealt with the whole issue vide para No. 4 onwards as under:-
“4. I have perused the facts ‘of the case as well as the submissions made by the assessee. The addition in the assessment order is based on the findings of the AO as mentioned hereunder:-
“As per the information received from the office of Asstt. Director of Income Tax (Investigation)-Unit 111(3), New Delhi, during the course of post search proceeding in the case of Triveni Group, summons u/s 131(A) were issued to Shri Honey Gupta and Smt. Santosh Rani Gupta. Shri Honey Gupta, while deposing his statement with regard to purchase of 1st Floor of Housp property at BB-1 7, G.K. Part II, Delhi, has admitted that his mother has made part payment in cash of Rs. 1.70 crores, over and above the amount as shown in the sale deed during the F.Y. 2009-10. Copy of statement of Shri Honey Gupta recorded on oath on 12.11.2010 by ADI (Investigation)-Unit-III(3), New Delhi, is annexed at page 11 to 12 as Annexure-I. In the statement Shri Honey Gupta has deposed that first floor of the property BB-1 7, G.K. Enclave-II, New Delhi was purchased by his mother Smt. Santosh Rani Gupta for Rs.3. 10 crores. The registry value of first floor of this property was Rs. 1.4 crores. He has further admitted to have made part payment for this property in cash and voluntarily surrendered the difference of Rs. 1.70 crore on account of payment made in cash to the seller of property i.e., Sh. Harbhajan Singh Makkar paid by his mother. Statement of Sh. Naveen Nangia, Property Dealer who had arranged the deal, residence of Flat No. 14B, Pocket, A-ll, Surya Apartments, Kalkaji Extension, New Delhi was also recorded on oath on 24.01.2011 by ADI (Investigation) Unit-Ill (3), New Delhi, to corroborate the statement given by Sh. Honey Gupta and he has also admitted that he had arranged sale of property BB-1 7, G.K. Enclave-II, New Delhi and first floor of the said property was sold for Rs. 3.10 crores. He has also deposed that cash component over and above sale consideration shown in the sale deed was received by Shri Harbhajan Singh on the date when sale deed was executed.
He has even deposed that he had seen that handing over the cash component received by Sh. Harbhajan Singh and actually he had even assisted in counting and handing over the cash component to the respective parties as a part of his profession and service. He has further stated that the entire deal was arranged by him and Sh. Avdhesh Mittal had nothing to do with the said deal. Statement of Sh. Naveen Nangia is annexed at page 13. to 16 as AnnexureII.JPhotocopies of above statements of Sh. Honey Gupta, Son of Smt. Santosh Rani Gupta and Sh. Naveen Nangia, the property dealer who had arranged the deal, were also supplied to the assessee.
5. Vide order sheet entry dated 29.10.2012, assessee was asked to explain as to why the unaccounted sale proceeds of immovable property amounting to Rs. 1,70,00,000/- paid in cash over and above the registered sale consideration to him by Smt. Santosh Gupta, should not be‟added to the income of the assessee by treating the same as undisposed income of the assessee, as per information received from the ADI(Inv.) Unit-III(3), New Delhi, where the excess undisclosed< amount paid by the purchaser has been surrendered, for taxation.
6. In response to this show cause, assessee furnished written reply on 11.2012 relevant portion of which is reproduced below:-
“Your Worthy self have issued show cause notice for addition of Rs. 170 lacs relying on the statement of Sh. Honey Gupta and Sh. Naveen Nangia recorded by Hon ‟ble ADI Unit-Ill, New Delhi.
The statement of Sh. Honey Gupta and Sh. Naveen Nangia canno t be relied upon in the case, as they have concealed a major fact, that property BB-1 7 G.K. Enclave II, New Delhi 1st floor was purchased by Sh. Avdhesh Mittal S/o Sh. B.L. Mittal RJo 91 Greater Kailash, New Delhi for an agreed sum of Rs. 140 lacs from Sh. Harbhajan Singh Makkar. Sh. Avdhesh Mittal made the total payment of Rs. 140 lacs for the sale of property to Sh. Harbhaj an Singh Makkar. Sh. Avdhesh Mittal purchased his property in the month of Sep. A009 and issued two cheques flrom his personal SB A/c with HDFC Bank, New Delhi for Rs. 10 lacs bearing cheque no. 344021 and 20 lac bearing cheque no. 344022 dt. 23.09.2009 and 30.09.2009 respectively. .(Photocopies of cheques are enclosed). These cheques were credited in the PNB, New Delhi Account of Sh. Harbhaj an Singh Makkar on 25.09.2009 and 03.10.2009. The copy of PNB, New Delhi Account of Sh. Harbhajan Singh Makkar have already been submitted with your Worthyself with reply dt. 29.10.2012. Sh. Avdesh Mittal farther handed over two pay orders ‘ for Rs. 50 lac each bearing nos. 085716 and 085717 respectively and one pay order of Rs. 10 lac bearing no. 085718 of HDFC Bank Ltd., New Delhi on dt. 27.11.2009. These pay orders were ‟ encashed in PNB, New Delhi Account of Sh. Harbhajan Singh Makkar on dt. 01.12.2009. Sh.- Avdesh Mittal got the property registered in the name ofSmt. Santosh Rani Gupta on 26.11:2009.
Sh. Harbhajan Singh Makkar did not know Smt. Santosh Rani Gupta at all, this property was transferred in her name at instance of Sh. Avdhesh Mittal who was purchaser of the property from Sh. Harbhajan Singh Makkar. ”
7. Statement of Sh. Honey Gupta, son of Smt. Santosh Rani Gupta, purchaser of the property was also recorded on 27.12.2012 by this office by issuing summons u/s 131 of the I.T. Act. In the statement he admitted that statement had been given by him before ADIT (Investigation) Unit-III(3), New Delhi on 12.11.2010 on behalf of his Copy of the statement of Sh. Honey Gupta was also provided to the assessee on his request.
8. Assessee vide reply s received on this office on 28.01.2013 further submitted as under:-
“The show cause have been issued on the basis of statement of Sh. Honey Gupta recorded by learned ADI, New Delhi. The statement of Sh. Honey Gupta was given on behalf of her mother Smt. Santosh Rani Gupta who was the purchaser of property from the assessee. It is not clear why the statement of Sh. Honey Gupta was recorded on behalf of her mother when the mother is alive and having good health and more so independent income tax assessee having PAN No. AAEPG7465K. The statement of Sh. Honey Gupia cannot be relied upon in this case as he is not purchaser of the property in question.
Even in his statement recorded before learned ADI (Unit III), New Delhi, Sh. Hortey Gupta stated that the payment of Rs. 170 Lacs are being paid during the current financial year i.e. 2010-2011. It is pointed out here that sale deed was entered on dt. 30.lj.2009 i.e. during financial year 2009-10, how a payment of the sale of property can be made one year after the sale agreement registered before the registrar of property New Delhi. The statement’ of Sh. Honey Gupta cannot be relied upon for this reason also for making addition during financial year 2009-2010.
In the statement of Sh. Honey Gupta recorded by your worthyself on dated 27.12.2012, he has denied any cash payment having been made by his mother or himself to Sh. Harbhajan Singh Makkar.
He has further stated that statement given before the ADI (Unit-Ill), New Delhi was under Pressure and at that time he was a patient of sleep disorder also for which he was under treatment from a doctor, the prescription of which} was also submitted by him to your Worthy self.
The assessee was not given an opportunity to cross examine the witness that is Sh. Honey Gupta neither by learned ADI nor by your worthyself. The assessee had put in a written request on 27.12.2012 in this regard before the statement ofSh. Honey Gupta was recorded by your worthy self.
The only reliable evidence of sale of 1st floor of property No. BB-17, G.K. Enclave, New Delhi is the Sale Deed registered before the sub Registrar V, New Delhi. It is requested that Sub Registrar may be summoned as witness for which the assessee is ready to deposit the requisite charges.
In the light of above facts the Show Cause issued for addition of Rs. 170 Lacs in this case is bad in law as well as on the given facts of the case. It- is requested that Show Cause notice may be filed and assessment may be framed accordingly. ”
9. Reply of the assessee has been considered. Assessee has mainly raised following three contentions:-
i) Honey Gupta has given statement on behalf of his mother Smt. Santosh Rani Gupta who is alive and having good health and also independent income-tax assessee.
ii) In the statement recorded before ADI(Inv.) Unit-III(3). New Delhi Honey Gupta stated that payment of Rs. 1.70 crores is being paid during the current financial year i.e. 2010-11 whereas sale deed was entered on 30.11.2009 i.e. during financial year 2009-10. As such statement of Sh. Honey Gupta cannot be relied upon for making addition during financial year 2009-10.
iii) In the statement of Sh. Honey Gupta recorded on 27.12.2012 by this office, hejhas denied any cash payment having been made by his mother or himself to Sh. Harbhajan Singh Maklcar.
10. Contentions raised by the assesses have been .considered and found not tenable for the following reasons
i) In the statement recorded on oath on 12.11.2010 by ADIT (Inv.) Unit ~III(3), New Delhi, Sh. Honey Gupta has clearly stated that he is competent to give statement on behalf of his mother Smt. Santosh Rani.
ii) He has voluntary surrendered the difference on account of payment made in cash to the seller of the property to the tune of Rs. 1.70 crores paid by his mother.
iii) Naveen Nangia, property dealer who had arranged the deal, whose statement was also recorded on path on 24.01.2011 has also clearly stated that amount of Rs. 1.70 crores for the 1st floor over and above the sale consideration was made in cash to the seller in, the morning of date of execution of sale deed. He has further stated that the 1st floor was sold by Sh. Harbhajan Singh and cash of Rs. 1.70 crores was taken by him over and above the sale price shown in the sale deed.
iv) Naveen Nangia has also denied in the statement that buyers were brought to them by Sh. Avdhesh Mittal and further stated that entire deal was arranged by him and Sh. Avdhesh Mittal has nothing to do with the said deal.
v) In the statement given on 27.12.2012 on oath in this office (Annexure-Ill to this order at page 17 to 21) Sh. Honey Gupta has not been able to corroborate and prove as correct his version that statement given on 12.11.2010 before ADI (Inv.) Unit-III(3), New Delhi, on behalf of his mother Smt. Santosh Rani Gupta was given under pressure and under the influence of medicine. On being pointedly and repeatedly asked by this office to explain as to what kind of pressure was there upon him, as claimed by him, under which he admitted the true facts before the ADIT, he could not give any satisfactory reply. It can be clearly seen from‟ his statement that he is just trying to deny the true facts of the case as already confessed by him before the ADIT but he has completely failed in his attempt to do so as he could not give any satisfactory explanation/reply in response to pointed office that he had given his statement before the ADIT to avoid further action by the Department which clearly proves that he had surrendered the unaccounted/undisclosed cash payment made by his mother and himself, voluntarily, in order to avoid penal and prosecution action by the department.
vi) The sale deed of aforesaid property has been registered in the office of the Sub- Registrar V, New Delhi on 30.11.2009 and, therefore, the entire sale consideration, including the undisclosed/unaccounted cash component of 1.70 crores, must have been paid/received on or before 30.11.2009 and hence, the same is assessable in the hands of the assessee as his incqme of financial year 2009-10 relevant to A. Y. 201(3-11. This fact has also been confirmed by the ADIT(Inv.) Unit-III(3), New Delhi vide his office letter No. Asstt. DIT (Inv.)/ Unit III(3)/2010-1 1/117 dated 25.01.2011 and further vide his office letter No. ADIT(Inv.)/ Unit III(3)/2012-1 3/253 dated 19.12.2012.
vii) It is a common knowledge that as per practice generally prevalent in the real estate market, a substantial part of the sale consideration is paid/received in cash, in order to avoid the correct payment of taxes. While giving his statement on oath before the , ADIT(Inv.) Unit-III(3), New Delhi on 11.2010, Sh. Honey Gupta was confronted by the ADIT in question number 9 of the statement, to furnish the details of cash/unaccounted payment/made by him and his mother for the purchase of first and second floor of the aforesaid property, in the light of fact that ground floor and basement of the same property was purchased by Sh. Avdhesh Mittal for consideration of Rs. 4.25 crores and Rs.2. 75 crores respectively. On being confronted with this information, Sh. Honey Gupta admitted to have paid unaccounted cash payment of Rs. 1.70 crores by his mother and Rs. 1.40 crores by himself to the sellers of the first floor and second floor of the aforesaid property respectively and surrendered the unaccounted payment made by his mother and himself for taxation and further requested that no penal/prosecution proceedings may be initiated, against them as the undisclosed amount was being surrendered voluntarily by them.
11. From the above discussion, it is clear that the assessee has received cash payment of Rs. 1.70 crores over and above that sale consideration amount mentioned in the sale deed i.e. Rs. 1.40 crores against sale of first floor residential property BB-1 7, G.K. Enclave, New Delhi. In the computation, assessee has taken Rs. 1.40 crores as sale price for computation of capital gains arising on sale of this property. Thus, assessee has shown less long term capital gain to the tune of Rs. 1.70 crores which ;is now added to the returned income of the assessee shown under the head „Income from Capital Gains‟. I have reason to believe that assessee has concealed his income and furnished inaccurate particulars of his income in respect of long term capital gain.
From the statement of Shri Naveen Nangia before the ADIT unit III (3) Delhi recorded on 24.01.2011, a property at BB1 7, GK Part-II, New Delhi had the following levels which were sold to various parties in the FY 2009-10 as under:-
