Case Law Details
Sh. Sanjay Garg Vs DCIT (ITAT Chandigarh)
Facts- A search and seizure operation in terms of section 132(1) was carried out at the business and residential premises of M/s Longowalia Group of Cases and the assessee Shri Sanjay Garg also was one of the persons covered in such search. Accordingly, notice u/s 153A of the Act was issued on 23.06.2016 for the impugned AY and the assessee submitted his ROI declaring total income of Rs.10,45,490/-.
Subsequently, during the course of assessment proceedings, the AO noticed that the assessee had forfeited an amount of Rs.70 lacs said to have been received as advance against the sale of property. This amount was received in assessment year 2011-12 from a Delhi based company M/s Namo Resorts Private Limited and the amount was shown under the head ‘current liability’ in the Balance Sheet. The Assessing Officer (AO) required the assessee to submit complete details regarding the transaction alongwith documentary evidences like copy of agreement, ITR, bank account and Balance Sheet of M/s Namo Resorts Private Limited. The assessee submitted a reply alongwith the copy of bank account and submitted that he was the co-owner of the property bearing No.171/2, Major Gurdial Singh Road, Civil Lines, Ludhiana alongwith his brother Shri Sandeep Garg and that they had entered into an agreement with M/s Namo Resorts Private Limited to sell the said property for a total consideration of Rs.1,40,00,000/-. It was further submitted before the AO that the assessee thereafter, attempted, thrice to get the final registry executed but the representative of the said company did not appear and, therefore, the assessee, alongwith his brother, forfeited the amount received as advance. However, the AO was of the view that the assessee had failed to submit any financial details in respect of M/s Namo Resorts Private Limited and, as per the opinion of the AO, the impugned transaction appeared to be suspicious. It was also noted that earlier a commission u/s 131(1)(d) of the Act through the Investigation Directorate at Delhi requesting them to make in-depth enquiries in the activities of the company M/s Namo Resorts Private Limited had been issued but it was informed by the Delhi Directorate that none of the persons to whom the summons u/s 13 1(1) of the Act were served, had responded/attended to the enquiries. The AO reached the conclusion that the assessee had failed to discharge his onus with respect to the creditworthiness, identity as well as the genuineness. Placing reliance on the concept of preponderance of probability, the AO proceeded to add the amount of Rs.70 lacs u/s 68 of the Act and completed the assessment at Rs.85,45,490/-.
Aggrieved, the assessee carried the matter before the Ld.CIT(A), who dismissed the appeal of the assessee by upholding the order of the AO. Aggrieved, the assessee has now approached the Tribunal challenging the confirmation of addition by the Ld.CIT(A).
Conclusion- Accordingly, following the ratio of various judicial precedents, we hold that in absence of any incriminating material found during the course of search with respect to the impugned transaction, the AO did not have any power to make the impugned addition. We set aside the order of the Ld.CIT(A) and direct the AO to delete the addition.
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