DCIT CC-17, V. Sanwar Mal Pansari,

ITA 148/DEL/2008

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9749 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 30-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 16-01-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: LALITHA KRISHNAMURTY
• Keywords: Search and seizure
• Section: 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G : NEW DELHI BEFORE SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NOS.148 & 149/DEL/2008 ASSESSMENT YEARS : 2003-04 & 2004-05 ASSTT. COMMISSIONER OF INCOME-TAX, SH. SANWAR MAL PANSARI, CENTRAL CIRCLE 17, NEW DELHI. VS. 2638/8, L.H. CHA MBER NAYA BAZAR, DELHI. C.O. NOS.104 & 105/DEL/2009 (IN I.T.A. NOS.148 & 149/DEL/2008) ASSESSMENT YEARS : 2003-04 & 2004-05 SH. SANWAR MAL PANSARI, ASSTT. COMMISSIONER OF I. TAX, NAYA BAZAR, DELHI. VS. CENTRAL CIRCLE-17, NEW DE LHI. (APPELLANTS) (RESPONDENT) ASSESSEE BY : SHRI ASHWANI KUMAR MAHAJAN, CIT-D R. RESPONDENT BY : MS. LALITHA KRISHNAMURTY, CA. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE AND CROSS OBJECTIONS B Y THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS OF THE LEARNED COMMISSI ONER OF INCOME-TAX (APPEALS)-II, NEW DELHI, BOTH DATED 29 TH OCTOBER, 2007 FOR THE ASSESSMENT YEARS 2003-04 AND 2004-05 IN APPEALS AGAINST ASSESS MENTS FRAMED UNDER SECTION 143 READ WITH SECTION 153A OF THE INCOME-T AX ACT, 1961 (THE ACT). 2 2. FOR ASSESSMENT YEAR 2003-04 THE REVENUE HAS RAIS ED THE FOLLOWING GROUNDS BEFORE US:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) HAS ERRED IN REDUCING THE ADDITION FROM RS.1 5,85,262/- TO 1,25,085/- MADE BY THE A.O. ON ACCOUNT OF DALALI RECEIVED BY THE ASSESSEE. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.59,380/- M ADE BY THE A.O. ON ACCOUNT OF SHORT DALALI DECLARED BY THE ASS ESSEE. FOR ASSESSMENT YEAR 2004-05 THE REVENUE HAS RAISED THE FOLLOWING GROUND BEFORE US:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE CIT(A) HAS ERRED IN REDUCING THE ADDITION FROM RS.6,73,173 /- TO RS.1,99,900/- MADE BY THE A.O. ON ACCOUNT OF DALALI RECEIVED BY THE ASSESSEE. 3. IN THE CROSS OBJECTION THE ASSESSEE CHALLENGES T HE SUSTENANCE OF ADDITION OF RS.1,25,085/- FOR ASSESSMENT YEAR 2003- 04 AND RS.1,99,900/- FOR ASSESSMENT YEAR 2004-05. 4. FACTS FOR ASSESSMENT YEAR 2003-04 ARE A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON THE ASSESSEE ON 07.10.2004 AND SEIZED CERTAIN ASSETS AND DOCUMENTS. IT WAS FURTHER STATED THAT AS PER ANNEXURE A-1 PAGE 1 & 2, THE ASSESSEE E ARNED A COMMISSION OF RS.15,25,523/- & RS.53,14,024/- RESPECTIVELY. FURT HER A NET PROFIT OF RS.8,92,219/- AND RS.40,08,812/- WAS EARNED DURING TWO YEARS OF GROSS 3 DALALI. THESE NET PROFITS HAVE BEEN SHOWN AS SHARE D BETWEEN SHRI SANWAR MAL PANSARI AND SHRI SHIV KUMAR. IN RESPONSE TO LE TTER DATED 03.10.2005, IT WAS STATED BY ASSESSEE THAT THE TOTAL RECEIPT OF RS .53,14,024/- IS IN FACT RELATES TO TWO FINANCIAL YEARS I.E. F.Y. 2002-03 & 2003-04 CONSISTING OF RS.47,97,091/- FOR F.Y. 2002-03 & RS.5,16,933/- FOR F.Y. 2003-04. IT WAS FURTHER STATED THAT AFTER DEDUCTION OF EXPENSES OF RS.11,96,795/-, NET PROFIT COMES TO RS.36,00,296/- AND ASSESSEES SHARE IS RS. 21,60,177/- FOR F.Y. 2002-03, OUT OF WHICH ASSESSEE CLAIMED ADDITIONAL E XPENSES AMOUNTING TO RS.31,20,930/- (INCLUDING SHRI SHIV KUMARS SHARE O F RS.15,74,928/-) ON ACCOUNT OF DALALI/LOADING UNLOADING EXPENSES PAID T O OUTSIDERS TO PERSONS OF INDIVIDUAL CONTACTS. THE ASSESSEE AND SHRI SHIV KU MAR CARRIED OUT THE DALALI WORK WITH ORAL UNDERSTANDING THAT ANY EXPENSES ON A CCOUNT OF USE OF INDIVIDUAL LOADING/UNLOADING CONTRACTOR WILL BE PAI D OUT OF INDIVIDUAL SHARE OF PROFIT AND NOT CLAIMED FROM THE GROSS DALALI. T HIS WAS AGREED TO AVOID ANY MISUNDERSTANDING. THEREFORE, NET INCOME WAS CA LCULATED AT RS.8,87,882/- AGAINST WHICH THE ASSESSEE HAS DECLAR ED RS.9,00,000/- FOR A.Y. 2003-04. 5. FACTS FOR ASSESSMENT YEAR 2004-05 ARE A SEARCH AND SEIZURE OPERATION WAS CONDUCTED ON THE ASSESSEE ON 07.10.2004 AND SEIZED CERTAIN ASSETS AND DOCUMENTS. IT WAS FURTHER STATED 4 THAT AS PER ANNEXURE A-1 PAGE 1 & 2, THE ASSESSEE E ARNED A COMMISSION OF RS.15,25,523/- & RS.53,14,024/- RESPECTIVELY. FURT HER A NET PROFIT OF RS.8,92,219/- AND RS.40,08,812/- WAS EARNED DURING TWO YEARS OF GROSS DALALI. THESE NET PROFITS HAVE BEEN SHOWN AS SHARE D BETWEEN SHRI SANWAR MAL PANSARI AND SHRI SHIV KUMAR. IN RESPONSE TO LE TTER DATED 03.10.2005, IT WAS STATED BY ASSESSEE THAT THE TOTAL RECEIPT OF RS .15,25,523/- IS IN FACT FOR PERIOD FROM 1.06.2003 TO 31.3.2004 & RS.5,16,933/- FOR PERIOD FROM 1.4.2003 TO 31.5.2003 (F.Y. 2003-04). TOTAL DALALI RECEIPT IS RS.20,42,456/- (1525523+516933). IT WAS FURTHER STATED THAT AFTER DEDUCTION OF EXPENSES OF RS.7,36,721/-, NET PROFIT COMES TO RS.13,05,735/- ( INCLUDING SHRI SHIV KUMARS SHARE OF RS.2,97,762/- ON ACCOUNT OF DALALI /LOADING UNLOADING EXPENSES PAID TO OUTSIDERS TO PERSONS OF INDIVIDUAL CONTACTS. THE ASSESSEE AND SHRI SHIV KUMAR CARRIED OUT THE DALALI WORK WIT H ORAL UNDERSTANDING THAT ANY EXPENSES ON ACCOUNT OF USE OF INDIVIDUAL LOADIN G/UNLOADING CONTRACTOR WILL BE PAID OUT OF INDIVIDUAL SHARE OF PROFIT AND NOT CLAIMED FROM THE GROSS DALALI. THIS WAS AGREED TO AVOID ANY MISUNDERSTAND ING. THEREFORE, NET INCOME WAS CALCULATED AT RS.1,86,055/- AGAINST WHIC H THE ASSESSEE HAS DECLARED RS.2,00,000/- FOR A.Y. 2004-05. FOR ASSESSMENT YEAR 2003-04 THE ASSESSEE SUBMITTED THAT AS PER SEIZED MATERIAL ANNEXURE A-20 THE GROSS DALALI RECE IPTS WERE RS.47,97,091/-. 5 THE EXPENSES AS PER SEIZED MATERIAL ANNEXURE A-20 A ND A-29 WERE AS UNDER:- A.Y.2003-04 A.Y.2004-05 BROKERAGE AS PER ANNEXURE A-20 RS.47,97,091/- * RS.20,42,456/- LESS EXPENSES (ANNEXURE A-20/29) RS.11,96,795/- RS. 7,36,721/- NET BROKERAGE RS.36,00,296/- RS.13,05,835/- DIVIDED IN SH. SANWAR MAL PANSARI RS.21,60,177/- RS. 8,73,16 3/- SH.SHIV KUMAR RS.14,40,119/- RS. 4,32, 672/- NET BROKERAGE SHARE OF PROFIT OF SHRI SANWAR MAL RS.21,60,177/- RS. 8,73,163/- *BROKERAGE FOR F.Y. 2003-04 RS.15,25,523 + BROKERAG E FROM A-20 (PAGE 1 TO 13) RS.5,16,933. THE ASSESSEE THEREAFTER REDUCED INCOME RECEIVED BY WAY OF CHEQUES AND DECLARED IN THE REGULAR RETURN FOR TWO YEARS AS UND ER:- A.Y.2003-04 A.Y.2004-05 RS.2,45,668/- RS.1,42,641/- THE ASSESSEE THEREAFTER REDUCED PAYMENTS AS SHOWN I N THE SEIZED MATERIAL AMOUNTING TO RS.11,01,415/- AND RS.5,31,469/- FOR A SSESSMENT YEAR 2003- 04 AND 2004-05 RESPECTIVELY. THE ASSESSING OFFICER HELD THAT ONLY THE INCOME PRIOR TO CLAIM OF EXPENSES WILL BE CONSIDERE D AND THE EXPENSES 6 CLAIMED WHICH ARE STATED TO BE PAID BY THE ASSESSEE AFTER RECEIVING HIS SHARE OF BROKERAGE INCOME IS NOT ALLOWABLE FOR THE FOLLOW ING REASONS:- 1. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE/CONF IRMATIONS IN SUPPORT OF HIS CLAIM. 2. THE ASSESSEE HAS NOT EVEN FURNISHED THE PARTICUL ARS OF PERSONS, THE JOB UNDERTAKEN BY THEM ETC. TO WHOM PA YMENTS WERE MADE. 3. IN ALL BUSINESS WHERE PARTNERS ARE INVOLVED, SHA RE IS DIVIDED FROM THE NET INCOME AND NO EXPENSES ALLOWABLE THERE AFTER. 4. THE VERY ACCOUNT AS PER ANNEXURE A-1 PAGE 1 & 2 CLEARLY SUGGEST THAT THE ACCOUNTS FOR FINALLY SETTLED. 6. BEFORE THE LEARNED CIT(A) IT WAS CONTENDED THAT AS PER THE UNDERSTANDING ONCE THE DALALI INCOME WAS TO BE RECE IVED, THE ASSESSEE AND SHRI SHIV KUMAR WITH WHOM THE DALALI INCOME WAS TO BE SHARED, WERE TO INCUR THEIR SHARE OF RESPECTIVE EXPENSES. THESE AR E ALSO RECORDED IN THE SEIZED MATERIAL AND HENCE SINCE THE INCOME IS COMPU TED ON THE BASIS OF SEIZED MATERIAL, SIMILARLY THE EXPENSES AS RECORDED IN THE SEIZED MATERIAL SHOULD ALSO BE ALLOWED. THE ASSESSEE NEVER SHARED NET BROKERAGE INCOME BUT THE INCOME WAS SHARED AT GROSS LEVEL AND THE EXPENS ES WERE TO BE INCURRED BY BOTH THE JOINT EARNERS OUT OF THEIR OWN INCOME. THE LEARNED CIT(A) HELD THAT ALL THE PAYMENTS TO VARIOUS PERSONS ARE RECORD ED IN THE SEIZED MATERIAL AND DULY DEBITED TO THE ACCOUNT OF THE ASSESSEE. T HE PAYMENTS ARE RECORDED IN THE SEIZED BOOKS EVEN BEFORE THE SEIZURE OF BOOK S BY THE DEPARTMENT. TO 7 THE EXTENT OF CHEQUES RECEIVED IN THE NAME OF FAMIL Y MEMBERS WERE DEPOSITED IN INDIVIDUAL BANK ACCOUNT AND WERE OFFER ED FOR TAXATION PRIOR TO SEARCH. HOWEVER, TO THE EXTENT THERE IS NO DETAIL IN RESPECT OF EXPENSES OF RS.1,25,085/- FOR ASSESSMENT YEAR 2003-04 AND RS.1, 99,900/- FOR ASSESSMENT YEAR 2004-05. THE SAME IS NOT ALLOWABLE AS IT NEITHER MENTIONS THE NAME OF PERSON OR THE PURPOSE OF SUCH EXPENSES. ACCORDINGLY PARTIAL RELIEF WAS GIVEN TO THE ASSESSEE. AGAINST RELIEF G IVEN, THE REVENUE IS IN APPEAL IN GROUND NO.1 FOR ASSESSMENT YEARS 2003-04 AND 2004-05 WHEREAS THE ASSESSEE HAS RAISED CROSS OBJECTION TO THE EXTE NT OF DISALLOWANCE SUSTAINED BY THE LEARNED CIT(A). 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE ORDERS OF THE AUTHORITIES BELOW. AS PER THE DETAILS OF INCOME AN D EXPENDITURE SUBMITTED, WE FIND THAT THE SAME WERE FILED ON THE BASIS OF SE IZED MATERIAL ITSELF. THUS THERE IS NO JUSTIFICATION TO HOLD THAT AFTER THE BR OKERAGE WAS SHARED BY THE ASSESSEE, THE ASSESSEE WAS NOT UNDER OBLIGATION TO INCUR ANY EXPENSES. THE EVIDENCE IS IN THE FORM OF SEIZED MATERIAL ITSELF. WHEN THE SEIZED MATERIAL IS CONSIDERED FOR COMPUTING THE INCOME, THE SAME SEIZE D MATERIAL CANNOT BE IGNORED WHEN THE EXPENSES ARE ALSO RECORDED THEREIN AND FORMING PART OF THE VERY SAME SEIZED MATERIAL IN WHICH THE INCOME IS AL SO RECORDED. THE DETAILS OF PERSONS ARE MENTIONED IN THE SEIZED MATERIAL ALS O. THOUGH THE ACCOUNTS 8 ARE SETTLED BETWEEN THE PARTIES, AS PER THE SEIZED MATERIAL, THE ASSESSEE HAD INCURRED EXPENDITURE AND THE NAME OF RESPECTIVE PER SONS TO WHOM SUCH BROKERAGE WAS PAID IS ALSO DULY RECORDED. IN SUCH CIRCUMSTANCES, THE LEARNED CIT(A) WAS JUSTIFIED IN TAKING A HOLISTIC VIEW OF T HE ENTIRE SEIZED MATERIAL AND CONSIDERING THE EXPENSES AS ALLOWABLE. WE ALSO FIND THAT IN RESPECT OF EXPENSES CLAIMED FOR ASSESSMENT YEAR 2003-04 OF RS. 1,10,000/-, THE SAME MERELY MENTIONS OTHERS AND IS ALSO NOT PART OF SE IZED MATERIAL. SIMILARLY FOR ASSESSMENT YEAR 2004-05 THE AMOUNT CLAIMED OF R S.1,59,900/- IS ALSO IN RESPECT OF PAYMENT TO OTHERS WITHOUT ANY NAME AND WITHOUT ANY REFERENCE TO THE SEIZED MATERIAL. THUS THE SAID AMOUNTS WERE RIGHTLY DISALLOWED BY THE LEARNED CIT(A). SIMILARLY IN RESPECT OF VARIOUS EX PENSES CLAIMED OF RS.15,085/- FOR ASSESSMENT YEAR 2003-04 AND RS.40,0 00/- FOR ASSESSMENT YEAR 2004-05, EXCEPT THE CLAIM BY STATING THE PURPO SE, THE SAME IS NEITHER SUPPORTED BY ANY OTHER EVIDENCE AND IS ALSO NOT FIN DING PLACE IN THE SEIZED MATERIAL. THEREFORE, SUCH EXPENSES WERE ALSO RIGHT LY DISALLOWED BY THE LEARNED CIT(A). SINCE THE LEARNED CIT(A) HAS COMPU TED THE INCOME AS ALSO ALLOWED THE EXPENSES ONLY ON THE BASIS OF ENTRIES F OUND IN THE SEIZED MATERIAL AND THE PRESENT ASSESSMENT UNDER SECTION 153A IS AL SO FRAMED PURSUANT TO THE SEARCH CONDUCTED AND IS TO BE MADE ON THE BASIS OF SEIZED MATERIAL FOUND, THE ENTIRE SEIZED MATERIAL IS TO BE CONSIDERED. TH E SAME CANNOT BE ACCEPTED 9 ONLY FOR THE PURPOSE OF TAXING THE INCOME AND CAN B E IGNORED FOR ALLOWING THE EXPENSES. SUCH VIEW WILL BE AGAINST THE NORMAL CANNON OF TAXATION AS ALSO ACCOUNTING. ACCORDINGLY, THERE IS NO INFIRMIT Y IN THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD. 8. AS REGARDS GROUND NO.2 FOR ASSESSMENT YEAR 2003- 04, WE FIND THAT THERE IS NO SHORT DALALI OFFERED FOR TAX BY THE ASS ESSEE. THE AMOUNT HAS BEEN RECONCILED BY THE ASSESSEE ON THE BASIS OF SEIZED M ATERIAL ITSELF WHICH IS DULY CONSIDERED BY THE LEARNED CIT(A). SINCE THE SEIZED MATERIALS WERE FOR THE PERIOD 1.4.2003 TO 31.3.2005 AND SINCE THE ASSESSEE HAS BIFURCATED THE INCOME ON THE BASIS OF FINANCIAL YEAR, THE DIFFEREN CE WAS DULY RECONCILED. THEREFORE, THE ADDITION IS NOT SUSTAINABLE. 9. IN THE RESULT, THE APPEALS AND CROSS OBJECTIONS ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 11 TH SEPTEMBER, 2009. SD/- SD/- (GEORGE MATHAN) (DEEPAK R. SHAH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 11 TH SEPTEMBER, 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT BY ORDER 4. CIT(A) 5. DR *MG DEPUTY REGISTRAR, ITAT.