ACIT, New Delhi V. M/s. Balaji Perfumes, New Delhi

ITA 1013/DEL/2010

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6718 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 04-01-2017
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: A K JAIN
• Keywords: Business income; Search and seizure; Opportunity of being heard; Principle of natural justice; Additional evidence; Retraction
• Section: 234B; 145; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.935/DEL./2010 (ASSESSMENT YEAR : 2006-07) M/S. BALAJI PERFUMES, VS. DCIT, CENTRAL CIRCLE 15, 1/149/23, FRIENDS COLONY, NEW DELHI. GALI NO.1, G.T. ROAD, SHAHDARA, DELHI 110 032. (PAN : AADFB9533G) ITA NO.1013/DEL./2010 (ASSESSMENT YEAR : 2006-07) DCIT, CENTRAL CIRCLE 15, VS. M/S. BALAJI PERFUMES, NEW DELHI. 1/149/23, FRIENDS COLONY, GALI NO.1, G.T. ROAD, SHAHDARA, DELHI 110 032. (PAN : AADFB9533G) ITA NO.3655/DEL./2011 (ASSESSMENT YEAR : 2006-07) ACIT, CENTRAL CIRCLE 15, VS. SHRI VARUN GUPTA, NEW DELHI. PROP.: M/S. BALAJI PERFUMES 3641, MORI GATE, DELHI. (PAN : AEPPG7835J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.K. JAIN, CA REVENUE BY : SHRI RAVI JAIN, CIT DR ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 2 DATE OF HEARING : 04.01.2017 DATE OF ORDER : 10.02.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : ITA NOS.935/DEL/2010 & 1013/DEL/2010 PRESENT CROSS APPEALS FILED BY THE ASSESSEE AS WELL AS BY THE REVENUE ARE BEING DISPOSED OFF BY WAY OF CONSOLIDAT ED ORDER TO AVOID REPETITION OF DISCUSSION. 2. THE APPELLANT, M/S. BALAJI PERFUMES (HEREINAFTER REFERRED TO AS THE ASSESSEE) IN ITA NO.935/DEL/2010 BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 14.12.2009 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- II, NEW DELHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUND S INTER ALIA THAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT (A) HAS ERRED IN HOLDING AND DIRECTING TO CALCULATE THE UNACCOUNTED TURNOVER OF THE ASSESSEE ON PROPORTIONATE BASIS FOR FOUR MONTHS AND THEREBY ALLOWING A RELIEF OF RS.67,50,000/- TO THE ASSESSEE. 2. THE ORDER OF THE LD. CIT (A) IS ERRONEOUS AND NO T TENABLE IN LAW AND ON FACTS. 3. THE APPELLANT, DEPUTY COMMISSIONER OF INCOME-TAX , CENTRAL CIRCLE 15, NEW DELHI (HEREINAFTER REFERRED TO AS THE ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 3 REVENUE) IN ITA NO.1013/DEL/2010 BY FILING THE PRE SENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 14.12. 2009 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, NEW DE LHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE ASSESSMENT ORDER PASSED BY THE LD AO IS BAD IN LAW AND WRONG ON FACTS. 2. THAT THE LD CIT APPEAL II HAS FAILED TO APPRECIA TE THAT IMPUGNED ASSESSMENT ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND HAS BEEN PASSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD. 3. THAT THE LD CIT APPEAL IJ HAS FAILED TO APPRECIA TE THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E VARIOUS OBSERVATIONS AND FINDINGS OF THE LEARNED ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER IS IRRELEVANT AND VITIATED IN THE LAW. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE LD A.O. HAS ERRED IN RELYING ON A STATEMENT OF A THIRD PARTY WITHOUT ANY BASIS ENQUIRY AND ALSO WITHOUT ALLOWING ANY CROSS EXAMINATION. 5. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE LD AO HAS ERRED IN COMPLETING THE ASSESSMENT ON THE BASIS OF THIRD PARTY DOCUMENTS, ENQUIRY AND STATEMENTS WITHOUT ANY BASIS, MATERIAL AND EVIDENCE. 6. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE LD AO HAS ERRED IN ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 4 RELYING ON THIRD PARTY ENQUIRY AND EVIDENCE WITHOUT ITS OWN SATISFACTION AND JUSTIFICATION. 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE LD AO HAS ERRED IN NOT AGREEING WITH THE RETRACTED STATEMENT WITHOUT ANY BASIS MATERIAL AND EVIDENCE AND ALSO WITHOUT PROVING THE SAME AS NOT CORRECT. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS FAILED TO APPRECIATE THAT THE LD AO HAS ERRED IN CONSIDERING THE ALLEGED SURRENDER WHILE COMPLETING THE ASSESSMENT EVEN WITHOUT CONSIDERING THE RETRACTED STATEMENT. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION LAW THE LD. CIT APPEAL II HAS ERRED IN ESTIMATING THE INCOME AT RS. 4111764/- WITHOUT ANY VALID REASON, BASIS AND MATERIAL. 10. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE PROVISION OF LAW THE LD CIT APPEAL II HAS ERRED IN UPHOLDING THE ALLEGED UNACCOUNTED SALES AT RS.130,00,000/- ON MERE PRESUMPTION , ASSUMPTION , CONJECTURES AND SURMISES. 11. THAT THE LD CIT APPEAL II HAS ERRED ON FACTS AN D IN LAW IN SUSTAINING THE APPLICABILITY OF G.P. RATI O OF 25% ON THE TOTAL TURNOVER INCLUDING THE UNACCOUNTED SALES. 12. THAT WITHOUT PREJUDICE THE LD CIT APPEAL II WHI LE DETERMINING THE TRADING ADDITION HAS ERRED ON FACTS AND IN LAW IN NOT ALLOWING THE CREDIT OF RS 855654/- BEING THE G.P. ALREADY DECLARED. 13. THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF T HE CASE AND THE PROVISION OF LAW THE LD ERR APPEAL II HAS ERRED IN SUSTAINING THE ADDITION OF RS 3845985/- EVEN IN THE CASE OF NON INVOCATION OF PROVISION OF SECTION 145 OF THE ACT BY THE LD. AO. ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 5 14. THAT THE LD CIT APPEAL II HAS FAILED TO APPRECI ATE THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD AO HAS ERRED IN LAW IN NOT CONSIDERING THE RELEVANT MATERIAL ON RECORD AND HAS MADE THE ADDITION EVEN WHEN NO ADVERSE MATERIAL IS THERE. 15. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED ASSESSING OFFICER HAS ERRED IN INITIATING T HE PENALTY PROCEEDINGS U/S 271 (1)(C) OF THE INCOME TAX ACT 1961. 16. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE INTEREST CHARGED U/S 234A , 234B AND 234C IS EXCESSIVE AND HAS BEEN WRONGLY AND ILLEGALLY CHARGED. 4. BRIEFLY STATED FACTS OF THIS CASE NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : ASSESSEE IS INTO THE TRADE OF MANUFACTURING OF GUTKA UNDER THE BRAND NAME OF M ARUTI, AJEET AND KAVERI. A SEARCH AND SEIZURE OPERATI ON WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 22.03.2006. M/S. BALAJI PERFUMES BELONGS TO THE FAMILY OF LATE SHRI BISHAN SARUP GUPTA WHO HAS THREE SONS, NAMELY, SHRI ABHAY GUPTA, SHRI ANOOP GUPTA AND SHRI AJAY GUPTA. THE ENTIRE BUSINE SS OF MANUFACTURING OF GUTKA AND SALE PURCHASE OF ARCANUT IS LOOKED AFTER BY THREE BROTHERS THROUGH M/S. BALAJI PERFUME S AND M/S. ASSAM SUPARI TRADERS, WHICH IS IN THE NAME OF SMT. DAYAWANTI, WHOSE OPERATIONS ARE BEING LOOKED AFTER BY SHRI ANO OP GUPTA. SINCE THE ENTIRE BUSINESS OF MANUFACTURING OF SUPAR I AND ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 6 SALE/PURCHASE OF SUPARI WAS MANAGED BY THE FAMILY A S A WHOLE AND THE ENTIRE DETAILS WERE FURNISHED BY ABHAY GUPTA AT THE TIME OF SEARCH AND HAS SURRENDERED INCOME OF RS.3.5 CRORES (RS.1.50 CRORES FOR FINANCIAL YEAR 2004-05 AND RS.2 CRORES FOR FINA NCIAL YEAR 2005-06). STATEMENT GOT RECORDED BY ABHAY GUPTA WA S COUNTERSIGNED BY ALL THE SEVEN MEMBERS OF THE FAMIL Y, NAMELY : I. SHRI AJAY GUPTA II. SHRI ANOOP GUPTA III. SHRI VARUN GUPTA IV. SMT. DEEPA GUPTA V. SMT. DAYAWANTI VI. SMT. SUNITA GUPTA VII. SMT. PREETY GUPTA STATEMENT RECORDED DURING THE SEARCH AND SEIZURE OP ERATION WHICH WAS BASED UPON FACTS HAS BEEN RETRACTED UNDER THE G UISE OF MENTAL PRESSURE AND DURESS AND THAT IT WAS NOT PROPERTY RE CORDED. IT HAS ALSO COME ON RECORD THAT A SEARCH WAS CONDUCTED BY DIRECTOR GENERAL OF CENTRAL EXCISE (INTELLIGENCE) IN THE BUS INESS PREMISES OF THE ASSESSEE ON 07.10.2004 AND ASSESSEE HAS SUO MOT U PAID ADDITIONAL EXCISE DUTY OF RS.35,00,000/- PURSUANT T O THE SHOW- CAUSE NOTICE ISSUED TO IT. 5. THE NOTICE U/S 143 (2) WAS ISSUED ON 25.07.2007 AND THE ASSESSEE FILED RETURN OF INCOME DECLARING INCOME OF RS.2,65,779/- ON 25.03.2007. THEN, NOTICE U/S 143(2) ALONG WITH QUESTIONNAIRE ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 7 DATED 30.11.2007 WAS ISSUED BUT NONE APPEARED. THE REAFTER, SHRI VIRENDER GOEL, CA APPEARED AND FILED WRITTEN REPLY ALONG WITH PHOTOCOPY OF THE DISSOLUTION DEED OF PARTNERSHIP SH OWING THAT THE FIRM WAS TAKEN OVER BY SHRI VARUN GUPTA AS A PROPRI ETOR WITH EFFECT FROM 27.07.2005. AO FOUND DISCREPANCY IN TH E BOOKS OF ACCOUNT SEIZED AT THE TIME OF SEARCH AND ISSUED A S HOW-CAUSE NOTICE TO THE ASSESSEE TO WHICH ASSESSEE FILED REPLY BY ST ATING THAT THE DIFFERENCE IS ON ACCOUNT OF THE FACT THAT THE BOOKS SEIZED ARE KACHA KHATA WHICH WERE INCOMPLETE AT THE TIME OF SEARCH A ND STATED THAT THE PROPER BOOKS OF ACCOUNT HAVE BEEN MAINTAINED IN THE COMPUTER SYSTEM SHOWING CORRECT RESULT. 6. SIMULTANEOUSLY, A SEARCH WAS ALSO CONDUCTED BY T HE REVENUE AT THE BUSINESS PREMISES OF M/S. SUPARIWALA & CO. A ND DURING THE SEARCH PROCEEDINGS, MAHABIR PRASAD GUPTA, PROPRIETO R OF SUPARIWALA & CO. ADMITTED THAT SUPARI WORTH RS.1,85 ,10,541/- HAS BEEN SOLD OUTSIDE THE BOOKS OF ACCOUNT TO M/S. ASSA M SUPARI TRADERS AND THIS FACT HAS ALSO BEEN ADMITTED BY ABH AY GUPTA, ELDEST MEMBER OF THE FAMILY THAT THIS UNACCOUNTED SUPARI PURCHASED FROM M/S. SUPARIWALA & CO. WAS ULTIMATELY GONE TO M/S. BALAJI PERFUMES FOR MANUFACTURING OF GUTKA. A SSESSEE FOUND TO HAVE SHOWN THE SALE OF RS.34,47,054/- IN THE BOO KS OF ACCOUNT BUT THE TOTAL SALES AFTER ACCOUNTING OF UNACCOUNTED SALES CAME TO ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 8 RS. 4,34,47,054/- AND ESTIMATED THE PROFIT @ 25% W HICH CAME TO RS.1,08,61,764/- AND MADE ADDITION THEREOF TO THE I NCOME OF THE ASSESSEE. 7. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT ( A) WHO HAS PARTLY ALLOWED THE APPEAL BY EXTENDING THE RELIEF O F RS.67,50,000/-. FEELING AGGRIEVED, BOTH THE ASSESSEE AS WELL AS THE REVENUE HAVE COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PR ESENT CROSS APPEALS. 8. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 9. AT THE VERY OUTSET, LD. AR FOR THE ASSESSEE CONT ENDED THAT HE ONLY PRESSES GROUND NO.13 AND ALL OTHER GROUNDS ARE ACADEMIC IN NATURE. GROUND NO.15 IS PREMATURE, HENCE NEEDS NO ADJUDICATION. GROUND NO.16 NEEDS NO ADJUDICATION AS THE SAME IS C ONSEQUENTIAL IN NATURE 10. UNDISPUTEDLY, THE AO HAS MADE ADDITION OF RS.1, 08,61,764/- TO THE INCOME OF THE ASSESSEE ON THE BASIS OF STATE MENT OF ABHAY GUPTA, ONE OF THE PARTNERS OF THE ASSESSEE FIRM AND ADMISSION MADE BY MAHABIR PRASAD GUPTA, PROPRIETOR OF M/S. SUPARIW ALA & CO. ON WHOSE PREMISES SEARCH WAS ALSO CONDUCTED. IT IS AL SO NOT IN DISPUTE ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 9 THAT THE ASSESSEE HAS SHOWN SALES OF RS.34,47,054/- . ON THE BASIS OF STATEMENT OF ABHAY GUPTA AND MAHABIR PRASAD GUPT A, THE AO TAKEN THE UNACCOUNTED SALES OF RS.4,34,47,054/- AND ESTIMATED THE PROFIT THEREON @ 25% WHICH COMES TO RS.1,08,61,764/ -. 11. THE FIRST CONTENTION RAISED BY THE LD. AR FOR T HE ASSESSEE IS THAT SINCE THE ENTIRE ADDITION HAS BEEN MADE ON THE BASIS OF STATEMENT OF ABHAY GUPTA DURING THE SEARCH AND SEIZ URE OPERATION AND THEREAFTER WHICH WAS SUBSEQUENTLY RETRACTED BEI NG UNDER DURESS, THE SAME IS NOT SUSTAINABLE. THIS CONTENTI ON IS NOT SUSTAINABLE BEING MISPLACED ON THE GROUND THAT THE SAME WAS VOLUNTARILY MADE BY ABHAY GUPTA IN CONCURRENCE WITH HIS FAMILY MEMBERS/PARTNERS OF THE BUSINESS WHO HAVE COUNTER S IGNED THE SAME AND HIS SUBSEQUENT RETRACTION IS NOT SUSTAINAB LE. ABHAY GUPTA HAS NOT GOT RECORDED HIS STATEMENT ON HIS OWN BEHALF ONLY RATHER THE SAID STATEMENT WAS MADE ON BEHALF OF ALL THE PARTNERS OF M/S. BALAJI PERFUMES. 12. WHEN ABHAY GUPTA BEING ELDEST MEMBER OF THE FAM ILY GOT RECORDED HIS COMPREHENSIVE STATEMENT WHICH WAS ALSO COUNTERSIGNED BY ALL THE SEVEN MEMBERS OF THE FAMIL Y INCLUDING SHRI VARUN GUPTA, THE QUESTION OF RECORDING THE SAM E UNDER DURESS OR UNDUE INFLUENCE DOES NOT ARISE. MOREOVER, DETAI LED STATEMENT OF ABHAY GUPTA RECORDED ON 03.05.2006 WAS RECORDED IN CONTINUATION ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 10 OF HIS EARLIER STATEMENT RECORDED ON 18.04.2006 U/S 132 (4) OF THE ACT. SO, IN THE GIVEN CIRCUMSTANCES, RETRACTION MA DE BY ABHAY GUPTA FROM THE STATEMENT IS AN AFTERTHOUGHT JUST TO AVOID THE TAX LIABILITY. 13. MOREOVER, DURING RECORDING OF STATEMENT U/S 132 (4), ABHAY GUPTA WAS CONFRONTED WITH DOCUMENTS AND INFORMATION COLLECTED DURING THE COURSE OF SEARCH AND ONLY THEN HE HAS SU RRENDERED AN AMOUNT OF RS.3,50,00,000/-. SO, ON THE BASIS OF AD MISSION MADE BY ABHAY GUPTA, THE UNDISCLOSED TURNOVER OF THE ASSESS EE CAME TO RS.4,00,00,000/- DURING THE PERIOD UNDER ASSESSMENT WITH PROFIT @ 25%. 14. NOT ONLY THIS, TIME GAP DURING THE RECORDING OF BOTH THE STATEMENT OF ABHAY GUPTA, FIRST ON 18.04.2006 AND S ECOND ON 03.05.2006 ITSELF, GOES TO PROVE THAT DURING THE SA ID PERIOD, THE ASSESSEE HAD THE SUFFICIENT OPPORTUNITIES FOR CONSU LTATION WITH THE TAX EXPERT AND CANNOT BE HELD TO MAKE THE STATEMENT UNDER DURESS. HAD IT BEEN SO, ABHAY GUPTA WOULD HAVE RETRACTED TH E STATEMENT OF 18.04.2006 ON 03.05.2006. MOREOVER, THE ADMISSION MADE BY ABHAY GUPTA HAS BEEN ENDORSED BY SHRI VARUN GUPTA R EGARDING TURNOVER OF RS.4,00,00,000/- APPROXIMATELY DURING 2 005-06. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 11 CIT (A) THAT ABHAY GUPTA HAS VOLUNTARILY MADE THE S TATEMENT IN CONCURRENCE WITH HIS FAMILY MEMBERS. 15. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER LD. CIT (A) HAS ERRED IN HOLDING TO CALCULATE THE UNACCOUNTED TURNOVER OF THE ASSESSEE ON PROPORTIONATE BASIS FOR FOUR MONTHS AND THEREBY ALLOWING THE RELIEF OF RS.67,50,000/- TO THE ASSESS EE? 16. UNDISPUTEDLY, M/S. BALAJI PERFUMES OWNED/RUN TH E BUSINESS FOR ABOUT FOUR MONTHS AS PER ADMISSION MADE BY ABHA Y GUPTA RELIED UPON BY THE AO TO COMPLETE THE ASSESSMENT WH ICH HAS BEEN FURTHER ENDORSED BY VARUN GUPTA REGARDING TURNOVER OF RS.4,00,00,000/- APPROXIMATELY DURING THE FY 2005-0 6. ADMISSION MADE BY ABHAY GUPTA AND VARUN GUPTA RELIE D UPON BY AO TO COMPLETE THE ASSESSMENT MAKES IT APPARENTLY C LEAR THAT FOR THE REMAINING 8 MONTHS, THE BUSINESS WAS OWNED BY V ARUN GUPTA. 17. WHEN THIS FACT HAS NOT BEEN DISPUTED BY THE REV ENUE, THE CIT (A) HAS RIGHTLY ACCOUNTED FOR THE TURNOVER IN C ASE OF ASSESSEE FIRM FOR FOUR MONTHS I.E. 1/3 RD OF RS.4,00,00,000/- AND REMAINING UNACCOUNTED TURNOVER OF RS.2,70,00,000/- OF M/S. BA LAJI PERFUMES HAS BEEN ACCOUNTED FOR IN THE HANDS OF SHRI VARUN G UPTA. WHEN ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 12 THE REVENUE HAS RELIED UPON THE STATEMENT OF ABHAY GUPTA AND SHRI VARUN GUPTA, THE SAID STATEMENTS CANNOT BE TAK EN ON PIECEMEAL BASIS AND MOREOVER, THE INCOME HAS TO BE ASSESSED IN WHOSE HANDS IT ACTUALLY COMES. WHEN THE INCOME IN THE HANDS OF ABHAY GUPTA HAS ONLY FOR FOUR MONTHS, HE CANNOT BE TAXED FOR THE ENTIRE FINANCIAL YEAR QUA THE UNACCOUNTED TURNOVER. SO, AGAIN, WE FIND NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RE TURNED BY LD. CIT (A) IN CALCULATING THE UNACCOUNTED TURNOVER OF THE ASSESSEE ON PROPORTIONATE BASIS FOR FOUR MONTHS. 18. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER THE AO WAS HAVING SUFFICIENT MATERIA L TO ESTIMATE THE RATE OF PROFIT @ 25% ON THE UNACCOUNTE D SALES IN THE HANDS OF THE ASSESSEE? 19. PERUSAL OF THE IMPUGNED ORDER PASSED BY LD. CIT (A) APPARENTLY SHOWS THAT THE LD. CIT (A) HAS NOT THRAS HED THIS ISSUE RATHER PROCEEDED ON THE BASIS OF ADMISSION OF ABHAY GUPTA AND DID NOT INTERFERE IN THE ASSESSMENT ORDER PASSED BY THE AO. 20. APPARENTLY, THERE IS NO COGENT MATERIAL ON THE FILE WITH AO TO ADOPT THE GP RATE OF 25% ON ACTUAL SALE. WHEN B OOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND GP RATE OF EARLIER YEAR WAS 18%, THE ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 13 AO CANNOT BE ALLOWED TO ADOPT THE GP RATE ARBITRARI LY ON THE BASIS OF GUESSWORK. KEEPING IN VIEW THE NATURE OF BUSINE SS BEING CARRIED OUT BY THE ASSESSEE, THE GP RATE TO BE ADOP TED BY THE AO IS SETTLED AT 18% AND THIS HAS NOT BEEN OBJECTED TO BY THE LD. AR FOR THE ASSESSEE DURING THE COURSE OF ARGUMENT. 21. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNE D ORDER CONTENDED THAT BARE PERUSAL OF ANNEXURE A-1, A-2 AN D A-3 TAKEN INTO ACCOUNT BY THE AO TO COMPLETE THE ASSESSMENT, ARE HAVING NO RELEVANCE TO THE YEAR UNDER ASSESSMENT RATHER ALL T HESE DOCUMENTS ARE QUA THE EARLIER PERIOD AND AS SUCH, ON THESE BA SIS, NO ADDITION CAN BE MADE. HOWEVER, WE ARE UNABLE TO AGREE WITH THE CONTENTION RAISED BY THE LD. AR ON THE SOLE GROUND THAT THIS A RGUMENT HAS NEVER BEEN ADDRESSED BY THE LD. AR BEFORE THE LD. C IT (A) NOR THESE DOCUMENTS HAVE BEEN BROUGHT TO THE NOTICE OF THE LD. CIT (A) AND AS SUCH, NO NOTICE THEREOF CAN BE TAKEN AT THIS STAGE. SO, WITHOUT GOING INTO THE MERITS OF THESE DOCUMENTS, T HE CONTENTION RAISED BY THE LD. AR IS REJECTED. ITA NO.3655/DEL/2011 22. THE APPELLANT, ASSISTANT COMMISSIONER OF INCOME -TAX, CENTRAL CIRCLE 15, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) IN ITA NO.3655/DEL/2011 BY FILING THE PRE SENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 20.05. 2011 PASSED BY ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 14 THE COMMISSIONER OF INCOME-TAX (APPEALS)-II, DELHI QUA THE ASSESSMENT YEAR 2006-07 ON THE GROUNDS INTER ALIA T HAT :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED IN LAW IN DELETING THE AD DITION OF RS.1,00,00,000/- MADE ON ACCOUNT OF INCOME SURRENDERED AT THE TIME OF SEARCH. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OFRS.18,79,313/- MADE ON ACCOUNT OF UNEXPLAINED CRE DIT. 3. (A) THE ORDER OF THE CIT (A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. (B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DU RING THE COURSE OF THE HEARING OF THE APPEAL. GROUND NO.1 23. AO MADE ADDITION BY ESTIMATING THE BUSINESS INC OME AT RS.1,00,00,000/- ON THE BASIS OF SURRENDER. LD. CI T (A) VIDE IMPUGNED ORDER THRASHED THE ISSUE THREADBARE AND CA ME TO THE CONCLUSION THAT ASSESSEE HAS NOWHERE STATED IN HIS STATEMENT RECORDED ON 12.03.2006 THAT ENTIRE AMOUNT OF RS.1,0 0,00,000/- BELONGS TO HIM AND THE DECLARATION WAS MADE BY HIM ON BEHALF OF COMPLETE FAMILY. CIT (A) HAS ALSO OBSERVED THAT AP ART FROM ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 15 STATEMENT DATED 22.03.2006 OF THE ASSESSEE, VARUN G UPTA, THERE IS NO DOCUMENT/MATERIAL ON RECORD TO CORROBORATE THE E STIMATION OF INCOME OF M/S. BALAJI PERFUMES AT RS.1,00,00,000/- BASED ON ABOVE SURRENDER. 24. FURTHERMORE, WHEN THIS FACT IS EXAMINED IN THE LIGHT OF THE ORDER DATED 14.12.2009 PASSED BY CIT (A) CHALLENGED VIDE ITA NO.935/DEL/2010 DECIDED BY THIS BENCH, THE UNACCOUN TED TURNOVER OF RS.2,70,00,000/- OF M/S. BALAJI PERFUMES FOR THE FY 2005-06 HAS ALREADY BEEN TREATED IN THE HANDS OF VARUN GUPT A, ASSESSEE OF THE PRESENT CASE. THE ORDER DATED 14.12.2009 (SUPR A) HAS ALREADY BEEN CONFIRMED BY THE TRIBUNAL IN ITA NO.935/DEL/20 10 TO THE EXTENT THAT OUT OF UNACCOUNTED TURNOVER OF RS.3,50, 00,000/- TO RS.4,00,00,000/- DURING FY 2005-06 IN CASE OF M/S. BALAJI PERFUMES, THE TURNOVER OF RS.1,30,00,000/- HAS BEEN HELD TO BE IN THE HANDS OF M/S. BALAJI PERFUMES BEING OWNER OF TH E SAME FOR FOUR MONTHS AND REMAINING UNACCOUNTED TURNOVER OF RS.2,7 0,00,000/- HAVE BEEN HELD TO BE IN THE HANDS OF VARUN GUPTA, T HE ASSESSEE, WHO HAS ADMITTEDLY TAKEN OVER M/S. BALAJI PERFUMES AS A PROPRIETOR FOR REMAINING EIGHT MONTHS OF FY 2005-06. FURTHER ADDITION OF RS.1,00,000/- ON THE BASIS OF SOLITARY STATEMENT OF VARUN GUPTA CANNOT BE MADE. ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 16 25. SO, WE ARE OF THE CONSIDERED VIEW THAT WHEN INC OME OF M/S. BALAJI PERFUMES AND VARUN GUPTA FOR FY 2005-06 HAS ALREADY BEEN ASSESSED ON THE BASIS OF STATEMENT OF ABHAY GUPTA R ECORDED ON HIS OWN BEHALF AND ON BEHALF OF HIS OTHER FAMILY MEMBER S WITH THEIR CONCURRENCE INCLUDING VARUN GUPTA, AS DISCUSSED IN THE PRECEDING PARAS IN ITA NO.935/DEL/2010, ON PRORATA BASIS I.E. FOR FIRST FOUR MONTHS, THE TURNOVER TO THE TUNE OF RS.1,30,00,000/ - HAS BEEN ATTRIBUTED TO M/S. BALAJI PERFUMES AND FOR REMAININ G EIGHT MONTHS, THE SAID TURNOVER OF RS.2,70,00,000/- HAS BEEN ATTR IBUTED TO VARUN GUPTA, THE ASSESSEE, THE ADDITION AGAIN ON THE SOLI TARY STATEMENT OF VARUN GUPTA CANNOT BE MADE AND CIT (A) HAS RIGHTLY DELETED THE SAME. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN T HE FINDINGS RETURNED BY THE LD. CIT (A) SO FAR AS ADDITION OF R S.1,00,00,000/- ON THE MERE STATEMENT OF VARUN GUPTA IS CONCERNED. GROUNDS NO.2 & 3 : 26. SO FAR AS QUESTION OF DELETING THE ADDITION OF RS.18,79,313/- BY LD. CIT (A) VIDE IMPUGNED ORDER IS CONCERNED, TH E LD. CIT (A) HAS ENTERTAINED THE ADDITIONAL EVIDENCE IN THE FORM OF COPY OF ACCOUNT, CONFIRMATION AND COPY OF BANK STATEMENT OF THE ASSESSEE IN SUPPORT OF THE FACT THAT NOT ONLY LOAN HAS BEEN ACCEPTED BY CHEQUE BUT REPAID ALSO BE CHEQUE. ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 17 27. IN CASE OF LOAN OF RS.5,86,807/- OUTSTANDING IN THE NAME OF BANKEY BIHARI GOYAL COMPRISING OPENING BALANCE OF R S.5,24,246/- PLUS INTEREST OF THE YEAR AND NO FRESH LOAN IS PROV ED TO HAVE BEEN RECEIVED DURING THE YEAR AND IN CASE OF BALANCE OF RS.5,27,848/- IN THE ACCOUNT OF ROYAL PACKAGING, IT IS RIGHTLY FOUND TO BE A TRADE CREDIT BY LD. CIT (A). 28. LIKEWISE, AMOUNT OF RS.4,97,371/- IN THE NAME O F DEVKI KRISHNA TRADERS, ALSO REPRESENTS ADVANCE FROM CUSTO MERS IN THE NORMAL COURSE OF BUSINESS. IN THE FACE OF CONFIRMA TIONS FROM ALL THESE PARTIES FILED BY THE ASSESSEE, WHICH HAVE NOT BEEN FILED BEFORE THE AO, ADDITION HAS BEEN RIGHTLY DELETED BY THE LD . CIT (A). 29. SO FAR AS LOAN AND ADVANCES OF RS.2,65,287/- IN A CASE OF GAURAV ENTERPRISES IS CONCERNED, WHEN THE AO HAS HI MSELF ACCEPTED THE PURCHASE ON 20.03.2006 AND 21.03.2006 DEBITED TO THE TRADING ACCOUNT AND AO HAS NOT DISPUTED THE TRADING ACCOUNT, PROFIT & LOSS ACCOUNT AND BALANCE SHEET, THE SAID TRADING PURCHASES DOES NOT FALL WITHIN THE PURVIEW OF SECTION 68. SO, THE ADDITION OF RS.2,65,287/- IN CASE OF GAURAV ENTERPRISES HAS ALS O BEEN RIGHTLY DELETED BY THE LD. CIT (A). 30. WE ARE OF THE CONSIDERED VIEW THAT WHEN THE CON FIRMATION FROM ALL THE PARTIES HAVE BEEN FILED, WHICH WERE NO T FILED BY THE ASSESSEE BEFORE THE AO, THERE IS NO JUSTIFICATION F OR MAKING AN ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 18 ADDITION IN THIS REGARD. SO, FINDING NO ILLEGALITY OR PERVERSITY IN THE FINDINGS RETURNED BY THE LD. CIT (A), GROUNDS NO.1, 2 & 3 ARE DETERMINED AGAINST THE REVENUE. 31. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, FINDI NGS RETURNED BY THE LD. CIT (A) IN ITA NO.405/2007-08 QUA AY 200 6-07 CHALLENGED BEFORE THE TRIBUNAL VIDE ITA NO.935/DEL/ 2010 FILED BY THE ASSESSEE ARE HEREBY AFFIRMED FIRSTLY TO THE EXT ENT THAT 1/3 RD I.E. RS.1,30,00,000/- OF TURNOVER OF RS.4,00,00,000/- IS ACCOUNTED FOR AS TURNOVER IN THE HANDS OF M/S. BALAJI PERFUMES AN D REMAINING UNACCOUNTED TURNOVER OF RS.2,70,00,000/- OF M/S. BA LAJI PERFUMES IS TO BE ACCOUNTED FOR IN THE HANDS OF VARUN GUPTA AND SECONDLY, AO IS TO COMPUTE THE INCOME IN THEIR HANDS BY ADOPT ING GP RATE AT 18%. CONSEQUENTLY, APPEAL NO.935/DEL/2010 FILED BY THE ASSESSEE IS PARTLY ALLOWED AND APPEALS NO. 1013/DEL/2010 AND 3655/DEL/2011 FILED BY THE REVENUE ARE HEREBY DISMI SSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 10 TH DAY OF FEBRUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBE R DATED THE 10 TH DAY OF FEBRUARY, 2017 TS ITA NOS.935 & 1013/DEL./2010 ITA NO.3655/DEL./2011 19 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-II, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.