Pawan Agarwal Vs DCIT (ITAT Delhi)
Property Broker Not Owner of Deal – Broker Can’t Be Expected to Produce Clients -Broker Only Taxable on Commission
Assessee, a property broker & director in LRG Developers Pvt. Ltd., was subjected to survey u/s 133A on 27.09.2011. During survey, two diaries were impounded – (i) “Day Book” reflecting cash entries of ₹4.29 crore & (ii) “Trison Ledger” showing balance of ₹1.62 crore in name of Shri Bharatpal. AO treated both as unexplained income of Assessee & completed assessment at ₹6.00 crore against returned income of ₹5.40 lakh. CIT(A) confirmed the additions, holding that Assessee failed to produce originals or third parties (Bharatpal / Garg family) to substantiate claim.
Before Tribunal, Assessee argued that he was only a property broker for transactions between Bharatpal (Director, GWC Infrastructure) & Garg family / Kulbir Singh for purchase of land in Faridabad. Impounded documents recorded deal flow of ₹8.80 crore, in which Assessee earned brokerage of 1% (₹4.25 lakh), duly declared in subsequent year. Bank statements of Bharatpal showed cheque payments of ₹1.52 crore matching entries in ledger, proving that transactions related to third parties.
ITAT accepted Assessee’s plea, observing:
- Documents clearly linked to Bharatpal & Garg/Kulbir Singh, not to Assessee’s own funds.
- Section 292C presumption cuts both ways – if contents are presumed correct, then evidence shows Assessee acted only as broker.
- AO/CIT(A) erred in demanding impossible compliance like producing originals retained by parties or producing third parties personally, when department itself had statutory powers to summon them.
- Photocopy agreement & bank statements sufficiently corroborated Assessee’s explanation.
Accordingly, ITAT deleted both additions – ₹4.29 crore (Day Book) & ₹1.62 crore (Trison Ledger) – holding that income belonged to third parties, not to Assessee.
