$ 7 * IN HIGH COURT OF DELHI AT NEW DELHI % DECIDED ON: 06.04.2015 + ITA 2/2014 VATIKA LIMITED (FORMERLY VATIKA LAND BASE PRIVATE LIMITED) ..... Appellant Through: Mr. C.S. Aggarwal, Sr. Advocate with Mr. Prakash Kumar, Advocate. versus COMMISSIONER OF INCOME TAX ..... Respondent Through: Mr. N.P. Sahni, Sr. Standing Counsel with Mr. Nitin Gulati, Jr. Standing Counsel. CORAM: HON'BLE MR. JUSTICE S. RAVINDRA BHAT HON'BLE MR. JUSTICE R.K. GAUBA S.RAVINDRA BHAT, J. (OPEN COURT) 1. assessee is aggrieved by order of Income Tax Appellate Tribunal (hereafter referred to as Tribunal) dated 8.3.2013 in IT(SS)A No.117/Del/2006. It urges following substantial questions of law: - (a) Whether, there was any material with Income Tax Appellate Tribunal to hold that addition made of Rs.1,35,00,000/- representing sale consideration and sustained ITA 2/2014 Page 1 by Commissioner of Income Tax (Appeals) was sustainable in law or on facts? (d) Without prejudice to aforesaid, whether on proper construcion of documents seized as Annexure A1/60, could Income Tax Appellate Tribunal validly and legally hold that assessee had received any on money, and in event it was so held that assessee had received such on money on basis of one loose sheet (page 122 of Annexure A1/60), after having so held, has not Tribunal acted arbitrarily in not having allowed deduction of loss of Rs.17,93,217/- on basis of same document? (e) Whether, on true and proper construction of document (31-A) found from possession of Shri Mrinal Nag, was Income Tax Appellate Tribunal legally justified in holding that, amount of Rs.49,64,904/- was received by assessee in cash and was its income. 2. facts are that search and seizure operations were conducted in assessee s premises on 8.5.2013. Notice was thereafter issued as to why block assessment should not be completed in respect of AY 1998-99 to AY 2004-05. assessee filed NIL assessment. On 31.5.2005, AO framed assessment bringing to tax sum of `45,89,68,630/-. AO, inter alia, held that true value of consideration received by assessee towards transactions entered into with flat buyers has not been disclosed. These findings were sustained, inter alia, on basis of reworking of consideration said to have been received. AO took into account materials secured and placed on record in course of search and seizure operations under Section 132 and ITA 2/2014 Page 2 also statements made by individuals. 3. assessee appealed to CIT (Appeals). During course of appeal, CIT (Appeals) sought remand report. After taking note of materials, remand report was furnished to CIT (Appeals). assessee was afforded opportunity as result of which it filed response/rejoinder to remand report. remand report and rejoinder are part of record. Based on submissions made and all available materials, CIT (Appeals) accepted assessee s contentions in regard to certain amounts and at same time sustained addition to extent it pertained to `7,69,98,484/-. This included sum of `1,35,00,000/- and further figure of `49,64,904/-. This also included sum of `17,93,217/-. Tribunal on further appeal directed deletion of all amounts except these three amounts, i.e., `1,35,00,000/-, `49,64,904/- and `17,93,217/-. 4. It is argued on behalf of assessee that order of Tribunal affirming sum of `1,35,00,000/- is manifestly erroneous. To say so, learned senior counsel relied upon pages 484 and 483 of paper book which is part of Annexure A-1/60. It was submitted that said amount represented difference between estimated value of area booked by some individuals, i.e., Bhatias in Vatika Triangle, one of assessee s projects and value of area in another project, i.e., Vatika World. This difference was `17,93,217/-. It is evident consequently that documents could be easily explained as determinative of difference but not value of concealed or undeclared income as has been erroneously ITA 2/2014 Page 3 assumed by concerned authorities, i.e., CIT (Appeals) and ITAT. Counsel also submitted that sum of `49,64,904/- was wrongly added. In this regard, he relied upon two sheets of paper which were taken into consideration by all authorities (including ITAT which has reproduced scanned copies of those documents). It is submitted that this was in respect of inclusion of area of 1805.42 sq. ft. which was seized from one Mrinal Nag and not seized from assessee. statement of individual, without any material to show what amount represented, was attributed as assessee s income. Such addition could not, therefore, have been made in subject assessment, since it had nothing to do with assessee at all. 5. This Court notices that so far as sum of `1,35,00,000/- is concerned, CIT (A) arrived at his findings on basis of following reasoning: - a) Computer file Vatika World in folder My Documents in C drive computer of Sh. Anupam Nagalia This file contains copy of letter from Sh. Pankaj Pal G.M. (Marketing) of appellant to investors of Vatika World. There is no mention of any specific sales instance. Thus, no addition is possible on account of this document. b) Sale of Flat No.110 to Sh. Rajesh Bhatia & Smt. Poonam Bhatia This sales instance has been pointed out by A.O. on basis of seized document at page no.122 of annexure A-1/60. This paper was referred to in respect of discussion in case of Vatika Triangle as well. Since, this document shows sale of flat in Vatika Triangle and purchase in ITA 2/2014 Page 4 Vatika Triangle as it was not indicating sale by appellant but, by these investors. This paper also indicates sale of flat no.110 of 10,000 Sq. Ft. In Vatika World towards which unaccounted receipt of Rs.1,35,00,000/- out of unaccounted sale receipt in Vatika Triangle of Rs.1,52,93,217/- has been adjusted. Thus, it is clear that in sale of flat no.110 in Vatika World there is under statement of sale consideration of Rs.1,35,00,000/-. This addition is thus sustainable. 6. Likewise as far as sum of `49,64,904/- is concerned, CIT (Appeals) had this to say: - Sale of Flat No.111 to 116 to Mr. Rajesh Tiwari Regarding this sales instance A.O. has referred to documents at pages 28, 15 and 30 of annexure A-9 seized from residence of Sh. Anupam Nagalia. He has also referred to list of flat owners in file New Site Sales/My documents/C:/ computer of Jyoti Tiwari . He has also referred to page no.31A of annexure A-13. As per observation of A.O. on page 28 of annexure A-9 there is evidence of sale of 6,000 sq. ft. In Vatika World . As per A.O. total sale consideration in respect of sale of two flats was Rs.78,53,577/- and not Rs.28,88,672/-. difference of Rs.49,64,904/- is mentioned as cash in various documents. These documents have been linked by A.O. Thus, addition on account of undisclosed sale to this party to extent of Rs.49,64,904/- is sustainable. 7. Tribunal took note of submissions of parties and had before it primary material as well as remand report on basis of which CIT (Appeals) arrived at his findings. It is to be noted that impugned order has made factual analysis of each of amounts which was directed to be added by CIT (Appeals) (who in turn had not sustained entire larger sum of `45,89,68,630/-). Tribunal dealt with question of addition of ITA 2/2014 Page 5 both sums of `1,35,00,000/- as well as `49,64,904/- in following terms: 33. We have duly considered rival contentions and gone through record carefully. first document considered by learned Assessing Officer harbouring belief that assessee has received on money while making booking of flats which was not disclosed in regular books of account is, page No.122 of Annexure A1/60. Basically, these are three pages, they are available on page No.s120 to 122 of paper book. On page 121 of paper book i.e. page 122 of seized material, there is typed table which suggests that assessee has purchased flats bearing Nos.410, 414, 417, 504, 504A having total area of 48538 sq. ft. @ Rs.4800 and Rs.4682 per sq. ft. In this transaction, cheque consideration is Rs.1600 per sq. ft. And rest of amount was in cash. WE have noted down details in paragraph 17 of order, while taking note of assessee s arguments. Similarly, assessee has sold 10,000 sq. ft. areas to Bhatias. It received premium of 1350 per sq. ft. According to assessee, it had suffered loss of Rs.17,93,217 in transaction whereas according to Learned DR in submissions extracted supra, assessee has made adjustment of unaccounted money of Rs,1,35,00,000/-. On due consideration of both these explanations, we are of view addition of Rs.1,35,00,000/- has been rightly retained by Learned CIT (Appeals). assessee has repurchased area in Vatika Triangle, thus its stock has been increased. In calculation made by assessee, it nowhere recognizing increased area. alleged unaccounted payment made to Mr. Bhatia s was not paid in cash but, adjusted in investment. In way, it has considered value of Rs,1,35,00,000/- as premium for investment in Vatika World. Thus, at one place this amount has to be added as income of assessee i.e. either at Vatika Triangle on account of value of enhanced stock or at Vatika World. Considering findings of Learned CIT (Appeals), we do not see any reason to interfere in it. Addition of Rs.1,35,00,000/- is confirmed. ITA 2/2014 Page 6 34. next documents referred by Assessing Officer are page Nos.28, 15 and 30 of Annexure A-9 which were found from residence of Shri Anupam Nagalia. According to learned Assessing Officer, on page 28, mention of 6000, new sites @ Rs.2600 is mentioned. Similarly, on page 15 of Annexure A-9, he concluded that Mr. Tiwari, New Project Joint Name, 4000 sq. ft. is mentioned. On basis of these pages, learned Assessing Officer has concluded that flat Nos.405 and 411 were sold to Shri Tiwari for amount of Rs.78,53,577 and not for Rs.28,88,672 disclosed in sales register. Learned CIT (Appeals) has also confirmed addition of Rs.49,64,904/-. For appreciating this issue, we deem it appropriate to take note of seized material whose photo copies are made part of this order. 8. With regard to addition of `1,35,00,000/-, Tribunal s findings are as follows: - 38. On due consideration of facts and circumstances, we are of view that ITAT in case of Vatika Green Field has considered documents found from premises of Shri Anupam Nagalia. Learned CIT (Appeals) has made reference to page No.23 of Annexure 1 and page No.49 of Annexure A-11. These pages are available on page Nos.197-198 of paper book. Assessing Officer on page 27 of assessment order has observed that these documents were confronted to Shri Anupam Nagalia in post search inquiry and he disclosed that these are estimated value of flats at which company would be willing to repurchase same on completion of project which suggests that how much return project can give to investors. paper in itself does not disclose cash components, otherwise, Learned CIT (Appeals) instead of confirming addition with regard to flat No.401 purchased by Shri D. Chahal ought to have considered names of other persons available on this page. This document was used by learned Assessing Officer as corroborative evidence indicating rate of flats sold by ITA 2/2014 Page 7 assessee in Vatika World. It does not deal with specific sale instances. However, on this paper, no where rates are written nor any cash component or cheque component is written. Therefore, this document cannot lead to conclusion that assessee has understated sales consideration in booking of space at Vatika World. We do not find any merit in ground of appeal raised by revenue whereas grounds of appeal raised by assessee bearing Nos.2 to 2.5 are partly allowed. order of Learned CIT (Appeals) sustaining additions at Rs.1,35,00,000 and Rs.49,64,904 is confirmed whereas addition of Rs.15,50,000 is deleted. 9. As stated earlier, Tribunal took note of each of adverse findings recorded against appellant. In fact paragraphs 35-37 deal with other amounts and held that sum of `15,15,000/- which was sustained by CIT (Appeals) was unwarranted. Likewise, relief was granted in respect of addition of `20,00,000/- by AO. 10. Having regard to this conspectus of facts, submissions of assessee in this Court s opinion amount to re-appreciation of circumstances at third appellate level. Although, interpretation of document made in certain circumstances require interpretation of law, we are clear that in overall circumstances of case, given concurrent nature of findings by three authorities as far as three amounts in question are concerned, at least no such question of law arises. As to whether interpretation placed upon document is such as to amount to patent error or not, in any case interpretation given to two documents in question and inference drawn on basis of statements made are not such as to attract jurisdiction of Court which is confined to framing and ITA 2/2014 Page 8 answering substantial question of law. Since no such substantial question of law arises for consideration, appeal is devoid of merit and is accordingly dismissed. S. RAVINDRA BHAT (JUDGE) R.K. GAUBA (JUDGE) APRIL 06, 2015 /vikas/ ITA 2/2014 Page 9 Vatika Limited (Formerly Vatika Land Base Private Limited) v. Commissioner of Income-tax