M/s Dua Auto Components P Ltd., New Delhi V. ITO, New Delhi

CO 43/DEL/2010

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4920 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-07-2010
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 13-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 22-02-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Document seized; Onus to prove; Reason to believe; Documents seized

Judgement Text

ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 4802/DEL/2009 A.Y. : 2003-04 ITO, WARD-10(4) VS. M/S DUA AUTO COMPONENTS P . LTD., ROOM NO. 199C, C.R. BLDG., 294, FOREST LANE, NEB SARAI, NEW DELHI NEW DELHI (PAN: AABCD8479L) AND C.O. NO. 43/DEL/2010 (IN ITA NO. 4802/DEL/09) A.Y.. : 2003-04 M/S DUA AUTO COMPONENTS P LTD. VS. ITO, WARD-10(4 ) C/O RRA TAX INDIA, R.NO. 248, C.R. BLDG., D-28, SOUTH EXTENSION, PART-I, NEW DELHI NEW DELHI 110 049 (PAN: AABCD8479L) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAKESH GUPTA, ADVOCATE DEPARTMENT BY : SHRI MANISH GUPTA, D.R. O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDER OF LD. CIT(A) DATED 15.10.200 9 FOR THE ASSESSMENT YEAR 2003-04. ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 2 REVENUES APPEAL (ITA NO. 4802/DEL/09 2. THE ISSUE RAISED READS AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE ORDER OF THE C.I.T.(A) HAS ERRED IN DELETING THE ADDITION OF RS. 60,36,000/- PAID IN CASH FOR ACQUISITION OF PLOT NO. 3-8, VILL. JHARSENTLY, DIST T. FARIDABAD (HARYANA) AS THE SOURCES OF INVESTMENT WERE NOT PROVED BEFORE THE AS SESSING OFFICER IN SPITE OF SEVERAL OPPORTUNITIES AFFORDED TO THE ASSE SSEE. 3. THE ASSESSMENT IN THIS CASE WAS REOPENED ON THE BASIS OF FOLLOWING REASONS RECORDED AS MENTIONED IN THE ASSESSMENT ORDER. ON THE BASIS OF THE INFORMATION RECEIVED FORM THE DCIT (CENTRAL), NEW DELHI CGO COMPLEX, N.H. IV, FARIDABAD THAT THE SEAR CH AND SEIZURE OPERATIONS WERE CARRIED OUT BY THE INVESTIGATION WI NG AT THE BUSINESS AND OTHER PREMISES OF M/S MANAV RACHNA GROUP OF COMPANI ES ON 04.8.2005. DURING THE SEARCH CERTAIN INCRIMINATING DOCUMENTS W ERE SEIZED WHICH INDICATED THAT THE ASSESSEE COMPANY PURCHASED A IN DUSTRIAL PLOT NO. 3-8, VILLAGE JHARESNTLI DISTT., FARIDABAD, HARYANA (PLO T MEASURING 8016 SQ.FT.). THE PLOT HAS BEEN REGISTERED FOR RS. 13,20,521/-. T HE DOCUMENTS SEIZED INDICATES THAT THE ASSESSEE HAS ALSO INVESTED RS. 60,36,000/- IN CASH IN THIS PROPERTY WHICH HAS NOT BEEN DECLARED IN ITS RETURN FOR THE YEAR. I HAVE THE REASON TO BELIEVE THAT ASSESSABLE INCOME HAS ESCAP ED TAXATION TO THE TUNE OF RS. 60,36,000/-. 3.1 NOTICES WERE ISSUED TO THE ASSESSEE AND COPIES OF THE RELEVANT PAGES OF THE REPORT/INFORMATION ON THE BASIS OF SEARCH AND SEIZU RE OPERATION CARRIED OUT BY THE INVESTIGATION WING AT THE BUSINESS AND OTHER PREMIS ES OF M/S MANAV RACHNA GROUP OF COMAPANIES WERE PROVIDED TO THE ASSESSEE. ASSESSEE RESPONDED THAT THERE IS NOTHING IN THE DOCUMENTS SUPPLIED TO US A S MENTIONED ABOVE ON THE BASIS OF WHICH, THE PROPOSED ADDITIONS CAN BE MADE IN OUR HANDS. ASSESSING OFFICER PROCEEDED TO REPEAT THE REASONS RECORDED A S HIS OBSERVATION AND THEREAFTER MENTIONED THAT IT WAS NOT THE DUTY OF T HE ASSESSING OFFICER TO RUN ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 3 FROM PILLAR TO POST TO COLLECT EVIDENCE FAVOURABLE TO THE ASSESSEE AND HELD IT WAS THE ONUS OF THE ASSESSEE TO PROVE THE GENUINENESS O F THE TRANSACTIONS ENTERED INTO BY IT. HE HELD THAT IT WAS CLEAR THAT DESPITE AVAILING NUMBER OF OPPORTUNITIES THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF PR OVING THE SAME AND GENUINENESS OF THE TRANSACTIONS. HENCE HE HELD THAT THE ENTIRE AMOUNT OF RS. 60,36,000/- WAS ADDED TO THE INCOME OF THE ASSESSEE . 4. ASSESSEE APPEALED BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AGITATING THE REOPENING AS WELL AS THE MERITS OF TH E CASE. LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT REOPENING WAS JUSTIFI ED. HOWEVER, WITH REGARD TO MERITS OF THE CASE, HE HELD AS UNDER:- PERUSAL OF SEIZED DOCUMENTS AS FILED BY APPELLANT BEFORE ASSESSING OFFICER AND HERE SHOWS THAT ONE BIG CHUNK OF LAND HAS BEEN SOLD BY DIVIDING IT INTO SMALLER PIECES BY ONE M/S INDO AMERICAN ELECTRICALS LTD., CALCUTTA TO VARIOUS PERSONS. THE NAME OF ASSESEE HAS BEEN MEN TIONED AT PAGE 31 OF THE PAPER BOOK SHOWING PLOT NO. B-8 AGAINST THE N AME OF THE ASSESSEE AS BUYER AND THE NAME OF M/S INDO AMERICAN ELECTRICAL LTD. AS SELLER AND THE SALE AMOUNT HAS BEEN MENTIONED AT RS. 8,00,000/- WH EN COMPARED IT WITH THE REGISTERED SALE DEED, (COPY OF WHICH IS SUBMITT ED BEFORE ME AT PB 16- 24) SHOWING THAT ONE PLOT HAS BEEN PURCHASED BY THE ASSESSEE COMPANY FROM THE SAME SELLER ON THE SAME DATE I.E. 23.5.20 02 FOR THE SAME AMOUNT I.E. RS. 8,00,000/-, BUT THE PLOT NUMBER MENTIONED IN THE SALE DEED IS NOT THE SAME AS B-8 AS MENTIONED IN THE SEIZED DOCUME NTS. ON THE OTHER HAND, IN THE REASONS RECORDED, IT HAS BEEN MENTIONE D THAT ASSESSEE PURCHASED PLOT NO. 3-8. THEREFORE, THE FIRST INFIRM ITY IS THAT THE PLOT NUMBERS DID NOT MATCH. FURTHER, THE SEIZED DOCUMENT S SHOWED SALES OF RS. 8,00,000/- WHEN AND SALES DEED SHOWED TRANSACTION V ALUE FOR RS. 8,00,000/- AND THEREFORE, SO FAR THERE WAS NO ELEME NT OF MAKING UNDISCLOSED INVESTMENT. ON THE OTHER HAND, THE REAS ONS RECORDED INDICATE THAT PLOT HAS BEEN REGISTERED FOR RS. 13,20,521/-. IN ANY CASE IF THE DOCUMENTS ARE PERUSED FURTHER, IT IS FOUND THAT AT PAGE 34 OF PAPER BOOK IN FRONT OF PLOT NO. B-8, IT IS MENTIONED THAT THIS PLOT IS NOT SOLD. ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 4 THEREFORE, THERE IS AGAIN ONE MORE CONTRADICTION. I F PAGE 38 OF THE PAPER BOOK IS PERUSED (INTERNAL PAGE 67 AT PARA 4.14.7), IT HAS BEEN MENTIONED THAT THE SALE CONSIDERATION WAS AT RS. 8,00,000/- A ND CHEQUE COMPONENTS RS. 19,80,000/-. FURTHER, PERUSAL OF THESE DOCUMENT S SHOWS THAT PAGE 48 OF THE PAPER BOOK (INTERNAL PAGE 77), THE PROPOSED ADD ITION HAS BEEN MENTIONED AT RS. 72,60,000/-. THUS, AT VARIOUS PL ACES VARIOUS FIGURES ARE APPEARING AND THE PLOT NUMBER IS NOT MATCHING NOR T HE FIGURES ARE MATCHING. IT IS NOT COMING OUT WHO HAS GIVEN CASH TO WHOM; T HERE IS NO MENTION OF EVIDENCES. IT IS NOT COMING OUT WHO HAS PREPARED TH E PAPERS AND THESE PAPERS BELONG TO WHOM. 4.1 THEREAFTER, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CA SE OF C.I.T. VS. PRADEEP GUPTA, 303 ITR 95 AND REFERRED THAT THE PRIMARY BURDEN OF PROOF IS UPON THE ASSESSING OFFICER WHICH HE HAS NOT DISCHARGED WITH THE HELP OF COGENT MATERIAL. HE HELD THAT EXCEPT THE DOCUMENTS WHICH WERE DISCUSSED ABOV E, NOTHING ELSE HAS BEEN BROUGHT ON RECORD; NOTHING WAS COMING OUT OF THE SE DOCUMENTS; NOTHING WAS CLEAR AS TO WHAT THESE DOCUMENTS ARE. HE PROCEEDE D TO HOLD THAT THE ADDITION OF RS. 60,36,000/- WAS WITHOUT ANY EVIDENCE AND THE SA ME COULD NOT BE SUSTAINED. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. WE FIND THAT THE ASSESSMENT ORDER MENTIONS ABOUT THE SEARCH AND SEIZ URE OPERATION CARRIED OUT BY THE INVESTIGATION WING AT THE BUSINESS PREMISES OF M/S MANAV RACHNA GROUP OF COMPANIES ON 4.8.2005, WHEREIN IT HAS BEEN CLAIMED THAT CERTAIN INCRIMINATING DOCUMENTS WERE SEIZED WHICH INDICATED THAT THE ASSE SSEE COMPANY PURCHASED A PLOT. THE PLOT HAD BEEN SAID TO BE REGISTERED FOR R S. 1320521/- AND THE ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 5 DOCUMENTS SEIZED INDICATED THAT ASSESSEE HAS INVEST ED RS. 60,36,000/- IN CASH FOR PURCHASE THE SAID LAND. 6.1 WE FIND THAT THAT THE ASSESSING OFFICER HAS NOT BROUGHT EVEN A SINGLE WORD REGARDING THE NATURE OF DOCUMENT AND HOW HE HA S CONCLUDED THAT THEY BELONG TO THE ASSESSEES AND THAT ON MONEY TRANSACT ION HAS BEEN TAKEN PLACE. HE HAS SIMPLY RELIED UPON THE REASONS RECORDED WITHOU T SHOWING ANY APPLICATION OF MIND ON HIS PART. 6.2 IN THIS REGARD WE NOTE THAT IT IS ALSO NOT THE CASE THAT THE SELLER HAS MADE ANY STATEMENT OR HAD ACCEPTED THE RECEIPT OF ON M ONEY I.E. CONSIDERATION OVER AND ABOVE THAT DISCLOSED. IT IS ALSO NOT THE CASE THAT THE SEIZED DOCUMENTS WERE IN THE HANDWRITING OF THE ASSESSEE OR THE SELLER OR WERE SEIZED FROM THE PREMISES OF SELLER AND PURCHASER. LD. COMMISSIONER OF INCOM E TAX (APPEALS) HAS BROUGHT OUT VARIOUS DISCREPANCIES IN THE SEIZED DOCUMENT S RELIED UPON BY THE REVENUE AND STRIKING FEATURE OF THESE ANOMALIES IS THAT IN THE SEIZED DOCUMENTS, IT HAS BEEN MENTIONED THAT THE IMPUGNED PLOT WAS NOT SOLD . THUS, THE WORKING AND THE FIGURES MENTIONED THEREIN CAN AT BEST BE SAID TO BE TENTATIVE OR EXPECTED AMOUNT. THIS BY NO STRETCH OF IMAGINATION CAN BE TREATED AS CONCLUSIVE PROOFS OF ON MONEY TRANSACTIONS. MOREOVER, IT IS AN ADMITTED F ACT THAT THE DOCUMENTS BEING RELIED UPON SHOWED ACCOUNT AS ON 31.10.2001, WHILE AS PER THE REGISTERED SALE DEED THE PLOT WAS SOLD ON 23.5.2002. UNDER THE C IRCUMSTANCES, THESE ADDITIONS HAVE BEEN MADE ON THE BASIS OF DOCUMENTS FOUND DU RING SEARCH AT THE PLACE OF A THIRD PARTY WHICH AT BEST ONLY SHOWED THE TENTATIVE /PROJECTED PURCHASE CONSIDERATION. IT IS NOT THE CASE THAT THE CIRCLE RATE OR THE VALUE AS PER STAMP REGISTRATION AUTHORITIES OF THE IMPUGNED PROPERTY I S MORE THAN WHAT HAS BEEN ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 6 DISCLOSED. IT IS ALSO NOT THE CASE THAT UNACCOUN TED CASH HAS BEEN FOUND TO BE PAID BY THE ASSESSEE OR RECEIVED BY THE SELLER. THERE IS ALSO NO STATEMENT OF THE SELLER ON RECORD THAT HE HAS OBTAINED ON MONEY. UN DER THE CIRCUMSTANCES, THE ADDITIONS MADE IN THIS REGARD IS NOT SUSTAINABLE. 6.3 IN THIS REGARD, WE PLACE RELIANCE UPON THE HON BLE APEX COURT IN THE CASE OF K.P. VARGHESE VS. INCOME TAX OFFICER, ERNAKULAM AND ANOTHER 131 ITR 597 (SC), WHEREIN IT HAS BEEN HELD THAT THE BURDEN OF PROVING IS THAT OF REVENUE WHEN THERE IS ALLEGATION OF UNDERSTATEMENT ON CONCEALME NT IN THE CONSIDERATION SHOWN. 6.4 WE ALSO PLACE RELIANCE UPON THE JUDGEMENT OF TH E HONBLE APEX COURT IN THE CASE OF C.I.T. VS. P.V. KALYANASUNDARAM IN (2007) 294 ITR 49 (SC) IN WHICH ALLEGATIONS OF ON MONEY TRANSACTION ON THE BASIS OF NON-CONVINCING LOOSE SHEETS FOUND DURING THE COURSE OF SEARCH AND CONFLICTING S TATEMENT OF THE SELLER, WAS DELETED BY THE TRIBUNAL (TO WHICH, ONE OF US THE AC COUNTANT MEMBER WAS THE PARTY) AND THE SAME WAS AFFIRMED BY THE HONBLE H IGH COURT AND HONBLE APEX COURT. 6.5 WE ALSO FIND THAT IN THE GROUNDS OF APPEAL TH E REVENUE HAS URGED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN D ELETING THE ADDITION OF RS. 60,36,000/- PAID IN CASH AS THE SOURCE OF INVESTMEN T WERE NOT PROVED BEFORE THE ASSESSING OFFICER IN SPITE OF SEVERAL OPPORTUNITIE S AFFORDED TO THE ASSESSEE. IN OUR OPINION, THIS GROUND ITSELF IS MISCONCEIVED, I N AS MUCH AS THE QUESTION OF PROVING THE SOURCE OF INVESTMENT WILL ARISE ONLY W HEN THE INVESTMENT IS CONCLUSIVELY PROVED. WE HAVE ALREADY FOUND ABOVE T HAT THE CLAIM OF ON MONEY TRANSACTIONS HAS NOT AT ALL PROVED IN THIS CAS E. AS HELD BY THE HONBLE SUPREME ITA NO. 4802/DEL/2009 & CO NO.43/DEL/2010 A.Y. 2003-04 7 COURT DECISIONS ABOVE, THE ONUS IS THAT OF REVENUE TO PROVE THE SAME AND AS CLEARLY FOUND BY US ABOVE THE REVENUE HAS FAILED TO DO SO THE SAME. 6.6 ACCORDINGLY, IN THE BACKGROUND OF THE AFORESAID DISCUSSION AND PRECEDENTS, WE UPHOLD THE ORDER OF THE LD. COMMISSIONER OF INC OME TAX (APPEALS). 7. IN THE RESULT, APPEAL FILED BY THE REVENUE STA NDS DISMISSED. ASSESSEES CROSS OBJECTION (NO. 43/DEL/2010) 8. IN THE CROSS OBJECTION THE ASSESSEE HAS OBJECTED T HE VALIDITY OF REOPENING, CONFIRMED BY THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT HE SHALL NOT BE PRESSING TH IS GROUND. ACCORDINGLY, THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED A S NOT PRESSED. 9. IN THE RESULT, APPEAL FILED BY THE REVENUE IS D ISMISSED AND THE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NO T PRESSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/07/2010. SD/- SD/- [A.D. JAIN] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 16/07/ 2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR , ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES