ARUN KUMAR SINHA V. CIT

ITA/612/2011

AI Insights

The case involves Arun Kumar Sinha, the appellant, who contested the additions made to his income by the Income Tax Department following a search and seizure operation at his premises. The operation revealed loose sheets documenting various transactions with M/s. Sunglow Builders Pvt. Ltd., which were not recorded in the appellant's books. The Income Tax Appellate Tribunal treated these as undisclosed income, applying a gross profit rate of 8% after reducing the initial 15% applied by the Assessing Officer. The appellant challenged the Tribunal's decision, arguing that the findings were perverse and that the income from monthly retainerships was taxed without deducting expenses. The High Court found no substantial question of law arising from the Tribunal's decision and upheld the additions made to the appellant's income.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 746187 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 11-04-2012
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: DEEPAK CHOPRA; HARPREET AJMANI
• Assessee Lawyers: ANJU JAIN
• Keywords: Assessment years; Income Tax; Loose Sheets; Search and seizure; Undisclosed income
• Section: 132; 153A

Judgement Text

"$-24-26 * IN THE HIGH COURT OF DELHI AT NEW DELHI + ITA 612/2OIL + ITA 668/2OIL + ITA 669120TT ARUN KUMAR SINHA ..... Appellant Through: Ms. Anju Jain, Adv. VETSUS CIT T'hrough: Mr. Deepak chopr;;nt #ndent Harpreet S. Ajmani, Advocates. CORAM: IION'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE R.V.EASWAR ORDER 11.04.2012 We have heard counsel for the appellant in these appeals on the issue/ contention that the order passed by the Tribunal is perverse. . 2. Two factual findings recorded in the impugned comrnon order passed by the Income Tax Appellate Tribunal ('Tribunal', for short) dated 10.09.2010 are challenged. These are exatnined below. 3. Firstly, it is stated that loose sheets perlaining to billing and payments received from IWs. Sunglow Builders Pvt. Ltd. has wrongly been taken as { 29,00,0001- onthe basis of a proposal and estimate, instead of { 15,30,000/-. oh Digitally Signed By:AMULYA Signature Not Verified 4 It is further submitted that at best the total payment for the work undertaken should have been taken as 7 22,00,000/- in view of the receipt which was found during the course of search. Secondly, it is submitted that the Tribunal has erred in making addition of { 1,50,000/- on account of monthly retainership of < 25,000/- allegedly received fiorn 4/s. Sunglow Builders Pvt. Ltd. It is submitted that this monthly retainership has been brought to tax on the gross amount without reducing any expense. 4. In the present case the search and seizure under Section 132 of the Income Tax Act, 1961 ('Act', for short) was carried out at the premises of the appellant-assessee on 18.1 1 .2005. Thereafter, proceedings under Section 1534 were initiated for issue of notice for the assessrlent years 2004-05, 2005-06 and2006-07. Atthe time of search certain loose sheets were found. Loose sheets disclosed various bills had been raised by the appellant- assessee for the work done for zlls. Sunglow Builders Pvt. Ltd. The first loose sheet was a bill which indicated the different work performed along with the arealquantum and the charges for the same. Another loose sheet was bill for payment of work at Mangalam in Module Nos.8, 9 & 7. The third loose sheet was a receipt of payment of < 22,00,000/- in Mangalam Module No.8, 9 & 7. There was another loose sheet dated 11.10.2005 in which total payment of { 15,30,000/- stands recorded. There are also payments thereafter upto 17.1I.2005. We rnay note here that the entire amount mentioned in the loose sheets was treated as undisclosed income of the appellant-assessee, as it was not recorded in the books. The total amount mentioned in the loose sheets added up and gross profit rate of 8% has 1 treated as undisclosed income earned by the appellant-assessee. The Assessing Officer had applied gross profit rate of 15% 6n was reduced to 8% by the CIT (Appeals). This has been upheld by the Tribunal. Having considered the contention, we hold that it is a pure finding of fact and reasoning of the Tribunal, which are as under, cannot be treated as perverse:- *45. We have carefully considerl3d (sic') the rival submissions in the light of the material placed before us. Even till today the assessee has not sztbmitted any evidence to substantiate his contention that the contents of page Nos.53, 54 and 56 were relating to the sanne transaction. It has categorically been recorded in the order of Ld. CIf @) that the assessee has faited to produce any documentary evidence to substantiate such contention. It is not the case of the assessee that he has bad relation with the firnt M/s Sunglow Builders Pvt. Ltd. If it is so, then the assessee could have got confirmationfrom them that all these three docwnents relate to one transaction only and the antount which was initially quoted at Rs.29 lac was reduced to fts./l 30,000/- in further negotiation. In the absence of any such evidence, we are unable to interfere in thefindings recorded by CIT (A). So as it relates to other additions also, we are of the opinion that there is no correlation estabiished by the assessee of these entries with the entries disclosed in the retrtrn. Therefore, the request of the assessee that set off of these entries should be given against the disclosed receipts cannot be accepted and it has rightly been rejected by the clr (4. There is no material with us to interfere with the findings recorded by the CIf (4. We decline to interfere and this gt'ound is dismissed. \" 5. With regard to second contention, we note that another loose sheet was found at the time of search. The loose sheet indicated payment made on different dates and for different arnounts under separate heads. < 25,000/- was paid every month with description rnonthly. The Assessing Officer, the CIT (Appeals) and Tribunal have concuuently held that { 25,0001- was a monthly payment, received by the appellant-assessee. The fact that the payments were \"monthly\" was specifically rnentioned in the lose sheet. It was open to the appellant-assessee to show and establish that he was incurring some expenses ffid, therefore, this payment was towards reimbursement. No such evidence was led to establish the claim. No substantial question of law arises. 6. At this stage learned counsel for the appellant has raised another contention and submits that the Tribunal has emed by upholding addition of < 1,50,000/- on account of unexplained investment. It is submitted that the appellant-assessee has more than20 years of experience and, therefore, there was no justification in upholding addition of investment. The Tribunal after considering various aspects including the income declared by the appellant-assessee for the assessment year 200I-02, 2002-03 and2003-04, has upheld to the said addition. The details of taxable income as per refums was as under: - \"Sr. No. (a) (b) (c) (d) Asstt. Year 2000-01 200r-02 2002-03 2003-04 Income dcclared Rs.57,200 Rs.1,07,000 Its.45,332 Rs.48,667\" 7. The Tribunal observed that the CIT (Appeals) was right in deleting addition to the extent of { 1,00,000/- out of {2,50,000/-. Thus addition of { 1 1,50,000/- was sustained. The findings are l'easonable and factual. The said finding are not perverse. The appeals are disrnissed accordingly. 4 tl ? -'l( (- SANJI i rcfrmNa, J et l{'tl *'( R.V.EASWAR, J APRIL tt,20t2 hs "