Sh. Baljeet Singh Bakshi, Meerut V. ACIT, Meerut

CO 373/DEL/2009

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 108264 (ITAT-DELHI)
• Duration Of Justice: 13 year(s) 5 month(s) 3 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 19-04-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 01-03-2023
• Assessment Year: misc
• Appeal Filed On: 15-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Block assessment; Tax effect; Condonation of delay
• Section: 158BC; 158BD

Judgement Text

1 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH: ‘A’ NEW DELHI ] BEFORE SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER C. O. No. 373/DEL/2009 [ in IT (SS) A. No. 65/DEL/2009 ( Block Assessment Years 1997-98 TO 2003-04 ] Baljeet Singh Bakshi, 314, Arvindpuri, Meerut Cantt. PAN No. AHQPB0004Q ( APPELLANT ) Vs. ACIT, Circle : 2, Meerut. ( RESPONDENT ) Assessee by : Shri K. Sampath, Advocate; & Shri V. Raj Kumar, Advocate. Department by : Shri P. Praveen Sidharth, [CIT] - D. R.; ORDER PER YOGESH KUMAR U.S., JM The present cross objection is filed by the assessee against the order dated 10.07.2009 of the ld. Commissioner of Income Tax (Appeals) [(hereinafter referred to CIT (Appeals)] Meerut, for Block assessment years 1997-98 to 2003- 04. Date of Hearing 02.03.2023 Date of Pronouncement 20.04.2023 2 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut 2. The assessee in the cross objection has raised the following grounds of appeal :- “1. That the delay in filing of cross objections if any caused due to illness of assessee be kindly condoned. 2. That the ld. CIT (A) not justified in estimating and taking assessee’s investment in subscription of lotteries at Rs.8,00,000/- as against Rs.4,00,000/- as shown by assessee and thereby sustaining of addition of Rs.4,00,000/-, the addition of Rs.4,00,000/- being unwarranted and uncalled for under the facts and circumstance of case be kindly deleted. 3. That the ld. CIT (A) is not justified in confirming/sustaining following additions: A. Advanced to Mehmood Rs.10,000/-; B. Unexplained expenditure on purchase of wine Rs.25,000/-; C. Out of advance to Shri Alok (opening balance) Rs.73,000/-. That the impugned additions being unwarranted and uncalled for under the facts and circumstances of case be kindly deleted. 4. That in any case, but without any prejudice to grounds 2 and 3 as above the various additions as sustained are very excessive and even overlap each other. 5. That the ld. CIT (A) is fully justified in accepting the lottery transactions and allowing the consequential relief, which is based on his perusal and examination of ceased material and relevant records, the Departmental appeal be kindly dismissed.” 3 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut Additional Ground of appeal: 6. “ That the Ld. CIT(A) is not justified and has erred in rejecting assessee’s ground that the impugned assessment is untenable and unsustainable in law to the extent additions have been made on the basis of material seized from 187-A, Abu-lane, Meerut in course of search on M/s Savera Credits P Ltd. and used in assessee’s case even without resorting to sec 158-BD” 3. Brief facts of the case are that, the assessee is a partner of a firm i.e. Jeet Construction Company. A search was conducted on assessee on 23/12/2002 at the residence i.e. 314, Arvindpuri, Meerut Cantt and old residence at 209, West-end road, Meerut Cantt, where the Assessee’s brother lived. No search was conducted on firm M/s Jeet Construction Company. Simultaneously a search was also carried out at 187, Abu lane, Meerut on Savera credits P. Ltd., with which assessee had no concern, however assessee’s owned 50% share in the premises which assessee used to use for himself, however there is no physical division of the property between the two co-owners. Besides some other annexures, annexure B-7 and B-8 were seized from 187, Abu Lane, Meerut Cantt, as per search panchnama in name of M/s Savera credits P. A search was also carried out at the residence of Sh. Pankaj Narang , director of M/s Savera credits P. Ltd. On same day, besides other documents, one diary marked as Ann.-B-6 was also seized which according to AO contained a ledger 4 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut account of the assessee and which had a balance of over rupees one crore on the date of search. 4. The assessee filed return incompliance with the notice u/s 158BC declaring undisclosed income of Rs.10,00,000/- for the block period (Assessment years 1997-98 to 2003-04) (up to 23/12/2002)) on estimate basis, the block assessment had been completed on undisclosed income of Rs. 1,31,08,880/-vide assessment order dated 31/12/2004. 5. As against the assessment order, the assessee preferred an appeal before the CIT(A), the CIT(A) vide order dated 10/07/2009 deleted the addition of Rs. 31,00,000/-which was made based on the basis of seized materials being unexplained investment, deleted the addition of Rs. 83,86,505/- which was in the nature of interest and further deleted the addition of Rs. 9.87 lakhs made on account of loans and advances, further the CIT(A) sustained the addition of Rs. 4,00,000/- out of investment in subscription of lotteries at Rs. 8,00,000/- and further confirmed the following additions:- i. Advanced to Mehmood Rs.10,000/-; ii. Unexplained expenditure on purchase of wine Rs.25,000/-; iii. Out of advance to Shri Alok (opening balance) Rs.73,000/-. 6. As against the deletion of the additions, the Department filed an appeal in IT(SS)A No. 65/Del/2009. The appeal filed by the Department has been 5 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut dismissed for low tax effect by the Co-ordinate Bench of the Tribunal vide order dated 09/03/2022 as the appeal is not maintainable as per CBDT Circular No. 17/19 dated 08/08/2009. As against sustaining the additions by the CIT(A), the assessee filed the present C.O. No. 373/Del/2009 on the grounds mentioned above. 7. The Ground No. 1 of the Assessee’s Cross Objection is regarding condonation of delay in filing the C.O. and pleaded that there is a delay of 12 days in filing the C.O. which was caused due to ‘indisposition of the then counsel of the assessee Sh. A. S. Jindal’, therefore, pleaded for condoning the delay in filing the Cross Objection. By considering the days of delay involved in filing the C.O. and for the reasons stated in Ground No. 1, delay in filing the appeal is hereby condoned. 8. In Ground No. 2 is regarding sustaining addition of Rs. 4,00,000/- by the CIT(A). The Ld. Counsel for the Assessee submitted that the Annexure B8 Page 1 which contains the entries was not found from the premises of the assessee during the search, but was seized from the neighboring premises of the assessee i.e. M/s Savera Credits Private Ltd. located at 187A, Abu Lane, Meerut. Being so the entries in the seized documents could not have been made the subject matter of consideration or addition in the case of the assessee u/s 158BC of the Income-tax Act, 1961 (the Act), an independent and 6 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut separate appraisal and action thereafter possibly u/s 158BD of the Act was warranted which was not done by the AO. 9. Further submitted that an addition can be made in a search assessment only as for unexplained entries contained in the material seized/ recovered during the search. The Ld. CIT(A) candidly observes in para 5.3 that, finding no such material in the seized paper, he would still estimate the addition at Rs. 8 lacs as against the sum of Rs. 4 lacs suo moto offered by the assessee. Such action of the Ld. CIT(A) is not in accordance with law and the addition as made must be quashed on the reason that it did not arise out of any material recovered during search. 10. On the contrary, the Ld. DR submitted that though the assessee claimed that the seized annexure found and seized from the business premise of M/s Jeet Construction, but it was duly admitted by the assessee that these documents were in his own handwriting. It was further argued by the Ld. DR that the contention of the assessee that these documents belonged to Jeet Construction was found to be false as the transactions recorded in these documents were not found to have been recorded in the books of Jeet Constructions. It was further argued by the Ld. DR that the premises from which these documents were seized belonged to M/s Jeet Construction in which the assessee was found to be a partner of 50% and the documents are 7 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut admittedly in hand writing of the assessee, therefore, the presumption u/s 132(4A) gets established. Thus, the adddtiioin sustained by the CIT(A) requires no interference. 11. Heard the parties and perused the material on record. It is not in dispute that the entries were found from the premises at 187A Abu Lane, Meerut and the same belongs to M/s Savera Credit Pvt. Ltd., wherein the assessee having 50% ownership on the property and there is no bifurcation between the co- owners. It is the specific case of the assessee that seized Annexure B7 and B8 are belonging to M/s Jeet Construction, but in the books of M/s Jeet Construction, those transactions were not found entry in the books of account maintained. The Ld. A.O. has treated B7 & B8 belongs to the assessee on the presumption u/s 132(4A) as the documents were seized from the premises of M/s Jeet Construction in which the assessee was found to be partner as well as the documents were admittedly hand written by the assessee himself. When the assessee was asked regarding the nature and type of the entries found in the Annexure A & B and the description of those entries, the assessee could not give any answer. Further, the Ld. A.O. has also observed that Assessee’s contention that the Annexure such as B7 & B8 belong to M/s Jeet Construction was found to be false as a transaction recorded in B7 & B8 were not found recorded in the books of Jeet Construction. The Ld. A.O. had not only taken into consideration of presumption u/s 132(4A) of the Act, but also 8 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut considering the fact that the documents were found was in hand writing of the assessee himself and the documents are not belongs to M/s Jeet Construction and the documents were seized from the premises of Jeet Construction in which the assessee was found to be partner. Since the documents were written by assessee himself the presumption u/s 132(4A) of the Act gets established. It has also been observed that the assessee himself had offered Rs. 4,00,000/- based on the very documents as additional income while filing his return of income in compliance to search and seizure proceedings. Once the assessee himself had offered income by considering the entries being recorded in those documents, now the assessee cannot claim that such documents does not belong to him. For the above reasons, we don’t find no merit in the ground No. 2 and therefore it stands dismissed. 12. Ground no 3 and 4 are regarding sustaining three additions i.e. (i) Advanced to Mehmood Rs.10,000/- (ii). Unexplained expenditure on purchase of wine Rs.25,000/- (iii). Out of advance to Shri Alok (opening balance) Rs.73,000/-. 13. We have gone through the material and also considered the submissions of the parties. (i) The Ld CIT(A) has clearly observed in his order that the assessee has himself admitted that he has given an accommodation advance of Rs. 10,000/- to Shri Mahmood and there were blank cheques issued by him towards 9 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut repayment of advance and stamp papers signed by him, which corroborate the transaction. The smallness of the amount is not a relevant factor while adjudicating the addition made by the Department, therefore, we do not find any merit in the submissions of the appellant, accordingly, the addition of Rs. 10,000/- sustained by the CIT(A) is hereby confirmed. (ii) Further, the CIT(A) has given a factual finding regarding addition of Rs. 73,000/- as an advance. Ld. CIT(A) held that the said amount represents opening balance/first entry on the said page which represents investment at a particular time and this amount has remained unexplained. We do not find any infirmity in the finding of the CIT(A) in the absence of any contrary evidence put forth by the assessee, accordingly the addition of Rs. 73,000/- sustained by the CIT(A) is hereby confirmed. (iii) In so far as addition on account of unexplained expenditure of Rs. 25,000/ is concerned, since the assessee had offered Rs. 10,00,000/- as an additional income after the search and seizure action, the said amount of Rs. 25,000/- stands covered in the additional income offered by the assessee. Therefore, there is no requirement of separate addition on this account. Therefore, the addition of Rs. 25,000/- confirmed by the CIT(A) stands deleted. 14. In view of dismissal of the Appeal filed by the Revenue due to low tax effect, the Ground No. 5 of the C.O. has become in-fructuous, accordingly Ground No. 5 is dismissed. 10 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut Additional Ground (Ground No. 6) 15. It is the case of the assessee in the Additional Ground that the Revenue has not resorted to the provisions of Section 158BD although the seized material used against the assessee has been seized in a search action conducted on a third party, therefore, the order should have been passed u/s 158 BD of the Act which makes the order unsustainable and untenable in law. 16. We have perused the record and found that the search action has also been taken place in the Assessee’s own premises and the assessment has been made by invoking the provisions of Section 158BC of the Act, therefore, there is no requirement to the Revenue for resorting to provisions of Section 158BD of the Act, when the search has been taken place in the Assessee’s premises as well. The Revenue has rightly assessed the income in the hands of the assessee u/s 158 BC and therefore, the additional ground taken by the appellant deserves to be dismissed. 17. In the result, Cross Objection of the Assessee is partly allowed. Order pronounced in the open court on : 20/04/2023 . Sd/- Sd/- (Dr. B.R.R. KUMAR ) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 20/04/2023 *MEHTA/R. N, Sr. PS* 11 C. O. No. 373/Del/2009 [ in IT(SS)A. No. 65/Del/2009 ] Baljeet Singh Bakshi, Meerut Copy forwarded to :- 1. Appellant 2. Respondent 3. CIT 4. CIT (Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI