Satish Chand Gupta, Kanpur V. Dy. Commissioner of Income Tax, Kanpur

ITA 175/LKW/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3346 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 03-06-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 11-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Keywords: Gross profit estimation; Business income; Income from undisclosed sources; Corroborative evidences; Block assessment; Retraction
• Section: 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B : LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER I.T.A. NO. 175 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SHRI SATISH CHAND GUPTA, VS. DY. C.I.T., 18 - 19, BLOCK - P, GOVIND NAGAR, RANGE - 2, KANPUR. KANPUR. PAN:AADYPG8714D (APPELLANT) (RESPONDENT) I.T.A. NO. 199 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 DY. C.I.T., VS. SHRI SATISH CHAND GUPTA, RANGE - 2, KANPUR. KANPUR. (APPELLANT) ( RESPONDENT) C.O.NO.48/LKW/2012 (IN I.T.A. NO. 199 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SHRI SATISH CHAND GUPTA, VS. DY. C.I.T., 18 - 19, BLOCK - P, GOVIND NAGAR, RANGE - 2, KANPUR. KANPUR. PAN:AADYPG8714D (OBJECTOR) (RESPONDENT) ASSESSEE BY : SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY : SMT. RANU BISWAS, D.R. 2 I.T.A. NO. 173 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SMT. KANTI GUPTA, VS. DY. C.I.T., 69/156, DANA KHORI, RANGE - 2, KANPUR. KANPUR. PAN:ADJPG0585E (APPELLANT) ( RESPONDENT) I.T.A. NO. 197 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 A.C.I.T. - II, VS. SMT. KANTI GUPTA, KANPUR. KANPUR. (APPELLANT) (RESPONDENT) C.O.NO.46/LKW/2012 (IN I.T.A. NO. 197 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SMT. KANTI GUPTA, VS. DY. C.I.T., 69/156, DANA KHORI, RANGE - 2, KANPUR. KANPUR. PAN:ADJPG0585E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY : SHRI PRAVEEN KUMAR, CIT, D.R. I.T.A. NO. 172 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SHRI SHAILESH GUPTA, VS. DY. C.I.T., 69/156, DANA KHORI, RANGE - 2, KANPUR. KANPUR. PAN:AEPPG3810D (APPELLANT) (RESPONDENT) 3 I.T.A. NO. 196 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 A.C.I.T. - II, VS. SHRI SHAILESH GUPTA, KANPUR. KANPUR. (APPELLANT) (RESPONDENT) C.O.NO.45/LKW/2012 (IN I.T.A. NO. 196 /LKW/ 2012) ASSESSMENT YEAR: 2008 - 09 SHRI SHAILESH GUPTA, VS. A.C.I.T. - II, KANPUR. KANPUR. (APPELLANT) (RESPONDENT) I.T.A. NO. 174 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 SHRI AKHILESH GUPTA, VS. DY.C.I.T., 69/156, DANA KHORI, RANGE - 2, KANPUR. KANPUR. PAN:AEPPG6785B (APPELLANT) (RESPONDENT) I.T.A. NO. 198 /LKW/ 2012 ASSESSMENT YEAR: 2008 - 09 A.C.I.T. - II, VS. SHRI AKHILESH GUPTA, KANPUR. KANPUR . (APPELLANT) (RESPONDENT) C.O.NO.47/LKW/2012 (IN I.T.A. NO. 198 /LKW/ 2012) ASSESSMENT YEAR: 2008 - 09 SHRI AKHILESH GUPTA, VS. A.C.I.T. - II, KANPUR. KANPUR. (APPELLANT) (RESPONDENT) 4 ASSESSEE BY : SHRI ABHINAV MEHROTRA, ADVOCATE RESPONDENT BY : SMT. RANU BISWAS, D.R. DATE OF HEARING : 03 /0 6 /201 3 DATE OF PRONOUNCEMENT : 07/06/2013 ORDER PER SUNIL KUMAR YADAV: TH ESE CROSS APPEAL S ARE PREFERRED BY THE ASSESSEE AS WELL AS THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE CIT(A) IN FOUR GROUP OF CASES. IN SUPPORT OF THE ORDER OF CIT(A), THE ASSESSEE HAS ALSO FILED THE CROSS OBJECTIONS. SINCE COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS , THEY HAVE HEARD TOGETH ER AND ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. IN ASSESSEES APPEAL, THE ORDER OF THE CIT(A) IS ASSAILED ON THE GROUND THAT HE HAS ERRED IN CONFIRMING THE ADDITIONS MADE ON ACCOUNT OF LOW GROSS PROFIT. IN REVENUES APPEAL THE ORDER OF THE CIT(A) WAS CHALLENGED FOR DELETION OF ADDITION MADE ON ACCOUNT OF SURRENDER STATEMENT MADE DURING THE COURSE OF SURVEY PROCEEDINGS U/S 133A OF THE I.T. ACT, 1961. 2. THE FACTS, IN BRIEF, BORNE OUT FROM THE RECORDS WITH REGARD TO THE IMPUGNED ISSUES, ARE T HAT THE SURVEY PROCEEDINGS WERE CONDUCTED ON 10/10/2007 AT THE FOLLOWING PREMISES: 1. OFFICE PREMISES AT 4/7, NAVSHEEL APARTMENT, 56, CANTT, KANPUR 2. OFFICE PREMISES AT 69/156, DANAKHORI, KANPUR 3. FACTORY PREMISES AT 18 - 19, P - BLOCK, GOVIND NAGAR, KANP UR 5 4. FACTORY PREMISES AT E - 27, SITE NO. 2, PANKI INDUSTRIAL AREA, KANPUR 3. DURING THE COURSE OF SURVEY PROCEEDINGS A STATEMENT OF SHRI SATISH CHAND GUPTA, PROPRIETOR OF M/S SHINO & SONS WAS RECORDED AND HE SURRENDERED ` 1.5 CRORE OF WHICH DETAILS ARE AS UNDER: SI. NO. NAME OF ASSESSEE SURRENDERED AMOUNT NATURE OF CONCEALMENT DETECTED ( IN BRIEF) 1 SATISH CHAND GUPTA 40,00,000 UNDISCLOSED INCOME FROM BUSINESS REPRESENTED IN THE STOCK, PURCHASES SALES A EXPENSES IN MARRIAGE OF SON, INVESTMENT IN PROPERTY. 2 KANTI BEVI 70,00,000 UNDISCLOSED INCOME FROM BUSINESS REPRESENTED IN THE STOCK, PURCHASES SALES A EXPENSES IN MARRIAGE OF SON, INVESTMENT IN PROPERTY. 3 SHAILESH SUPTA 20,00,000 UNDISCLOSED INCOME FROM BUSINESS REPRESENTED IN THE STOCK, PURCHASES SALES & EXPENSES IN MARRIAGE OF SON, INVESTMENT IN PROPERTY. F 4 AKHILESH GUPTA 20,00,000 UNDISCLOSED INCOME FROM BUSINESS REPRESENTED IN THE STOCK, PURCHASES AND SALES & ACQUISITION OF PROPERTY. TOTAL SURRENDER 1,50,00,000 4. AFTER THE SURVEY SHRI SATISH CHAND GUPTA HAS RETRACTED HIS SURRENDER OF ` 1.5 CRORE ON THE FOLLOWING GROUNDS: (I) HE HAS MADE SURRENDER IN HIS HAND OUT OF RS. 40 LAKH WITHOUT EXAMINING SEIZED MATERIAL AT THE TIME HE WAS MENTALLY 6 DISTURBED AND PHYSICALLY UNFIT TO MADE PROPER STATEMENT. HE HAS FILED AFFIDAVIT BEFORE THE WING ON THIS ACCOUNT. (II) THE ABOVE PARTY NAMELY SMT. KANTI DEVI PROP, OF AA/S. SHINO CHEMICALS, SHAILESH SUPTA PROP, OF M/S. SHAILESH PAINT AND AKHILESH GUPTA PROP, OF M/S. M.P ENTERPRISES HAS DISPUTED THE SURRENDER OF RS. 70 LAKH, 20 LAKH AND 20 LAKH RESPECTIVELY IN THE RESPECTIVE HAND ON THE GROUND T HAT THEY WERE NOT CONSENTED/CONFRONTED EITHER BY SA R ISH CHAND GUPTA OR BY THE ASSISTANT DIRECTOR OF INCOME - TAX (INV) - L, KANPUR. (III) THE STATEMENT/ SURRENDER MADE BY 5ATISH CHAND GUPTA AGAINST THE ASSESSEE IN QUESTION ARE NOT LEGALLY BINDING. 5. AFTER SURVEY THE ASSESSEE HAS WORKED OUT UNDISCLOSED INCOME AND THE QUANTUM OF UNDISCLOSED INCOME WAS FOUND TO BE FAR BELOW THE SURRENDER MADE BY SHRI SATISH CHAND GUPTA FOR HIMSELF AND ON BEHALF OF HIS FAMILY MEMBERS. THE ASSESSING OFFICER DID NOT ACCEPT THE RETRACTION MADE BY THE ASSESSEE AND HAVING RELIED UPON THE SURRENDER STATEMENT OF SHRI SATISH CHAND GUPTA, MADE ADDITION OF SURRENDERED AMOUNT IN THE HANDS OF SHRI SATISH CHAND GUPTA AND OTHER ASSESSEES. ACCORDINGLY, THE ADDITION OF ` 40 LAKHS IN THE HANDS OF SHRI SATISH CHAND GUPTA, ` 70 LAKH IN THE HANDS OF SMT. KANTI GUPTA, ` 20 LAKHS IN THE HANDS OF SHRI SHAILESH GUPTA AND ` 20 LAKHS IN THE HANDS OF SHRI AKHILESH GUPTA WAS MADE, AGAINST WHICH THE ASSESSEES PREFERRED AN APPEAL BEFORE THE CIT(A) WITH TH E SUBMISSION THAT JUST AFTER THE SURRENDER STATEMENT SHRI SATISH CHAND GUPTA HAS RETRACTED FROM THE STATEMENT OF SURRENDER BY FILING AN AFFIDAVIT BEFORE THE ADI, KANPUR. BESIDES, HE HAS ALSO PLACED RELIANCE UPON VARIOUS CASE LAWS IN SUPPORT OF HIS CONTENT ION THAT ON THE BASIS OF THE SURRENDER STATEMENT MADE DURING THE COURSE OF SURVEY, THE ADDITION CANNOT BE MADE. FINDING FORCE IN THE CONTENTION OF THE ASSESSEE, THE CIT(A) HAS DELETED THE 7 ADDITIONS. AGAINST THE DELETION OF ADDITION, THE REVENUE IS IN APP EAL IN ALL THESE CASES BEFORE THE TRIBUNAL. 6. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE HAS MADE UNDISCLOSED SALES WITH REGARD TO WHICH NO DISPUTE WAS RAISED. THE DETAILS OF UNDISCLOSED SALES AND THE BIFURCATION CHART PRODUCED BY THE AS SESSEE AMONGST DIFFERENT CONCERNS OF THE GROUP ARE AS UNDER: TOTAL SALES (F.Y.2007 - 08) (01/04/2007 TO 10/10/2007) PANKI GOVIND NAGAR OFFICE TOTAL MONTHS 1 CANTT LP - 34 2405220.00 842336.00 675095.00 3922651.00 APR - 07 2 CANTT IP - 33 1888537.00 998581 - 00 514806,00 3401924.00 MAY - 07 3 CANTT IP - 35 1497440.00 1073210.00 495869.00 3066519.00 JIM - 07 4 CANT! IP - 36 576040.00 458477.00 210700.00 1245217.00 JUL - 07 5 CANTT IP - 10 193060.00 184531.00 64280.00 441871.00 JUL - 07 6 CANTT LP - 13 668620.00 664980.00 183554.00 1517154.00 JUL - AUG - 07 7 CANTT LP - 26 720370.00 559875.00 197387.00 1477632.00 AUG - 07 8 DNK LP - 32 1297480.00 1345351.00 326318.00 2969149.00 SEP - 07 9 DNK LP - 54 290720.00 449230.00 122125.00 862075.00 OCT - 07 9537487.00 6576571.00 2790134.00 18904192.00 10 DNK BK - 129 SALES TO MP SALES TO MP SALES TO MP 513885.00 TOTAL 19418077.00 8 F.Y.2007 - 08 CHART OF DISTRIBUTION OF SALES PANKI 9537487 50% SC 50% SP GOVIND NAGAR 6576571.00 100% SS OFFICE 2790134.00 33% SC 33% SP SHINO CHEMICALS SHAIL ESH PAINTS SHINO &SONS 33% SS PANKI 4768743.00 PANKI 4768743. 00 GOVIN D NAGAR 6576571. 0 OFFICE 930045.00 OFFICE 930045.0 0 OFFICE 930045.0 0 TOMP 513885.00 50% SC MP 256943.00 MP 256943.0 0 50% SP TOTAL SALES (01 - 04 - 07TO 10 - 10 - 07) 19418077.00 5955731.00 5955731. 00 7506616. 00 SALE AS PER REGULAR BOOKS 3550085.00 1824105. 00 2616314. 00 UNDISCLOSE D SALES 2405646.00 4131626. 00 4890302. 00 7. THE ASSESSEE WAS ASKED FOR THE BIFURCATION OF SALES AMONGST ALL THE CONCERNS AND TO EXPLAIN AS TO WHY GROSS PROFIT OF 13% MAY NOT BE APPLIED AS UNDISCLOSED PROFIT FROM UNDISCLOSED SALES. SHRI SATISH CHAND GUPTA, VIDE REPLY SUBMITTED THAT SALES TAX REGISTR ATION CERTIFICATE OF DIFFERENT 9 BUSINESS CONCERNS MAY BE USED TO BIFURCATE THE BUSINESS UNDERTAKEN BY EACH FIRM. THE ASSESSEE HAS ALSO FILED THE CONFIRMATION OF THE RESPECTIVE PROPRIETORS OF THE CONCERNS IN WHICH THEY HAVE NO OBJECTION AND ACCEPTED THAT TH IS MUCH SALES WAS EFFECTED BY THEM. THE ASSESSING OFFICER ACCORDINGLY APPLIED THE GROSS PROFIT RATE AT 13% ON THE UNDISCLOSED SALES AND MADE ADDITION OF ` 6,58,859/ - IN THE HANDS OF SHRI SATISH CHAND GUPTA, ` 5,37,111/ - IN THE HANDS OF SHRI SHAILESH GUPTA, ` 3,12,734/ - IN THE HANDS OF SMT. KANTI GUPTA AND ` 4,02,852/ - IN THE HANDS OF SHRI AKHILESH GUPTA. AGAINST THESE ADDITIONS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. 8. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TR IBUNAL. THROUGH THESE APPEALS, TWO ISSUES ARE RAISED FOR CONSIDERATION. ONE IS WITH REGARD TO THE ADDITION OF STATEMENT OF SURRENDER AND OTHER IS WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF GROSS PROFIT ON UNACCOUNTED SALES. WITH REGARD TO THE FIRST I SSUE, THE LEARNED COUNSEL FOR THE ASSESSEE HAS STRONGLY CONTENDED THAT THE SURRENDER STATEMENT WAS MADE BY ONE OF THE ASSESSEE SHRI SATISH CHAND GUPTA DURING THE COURSE OF SURVEY PROCEEDINGS AND JUST AFTER THE SURVEY SHRI SATISH CHAND GUPTA HAS RETRACTED F ROM THE SURRENDER STATEMENT BY FILING AN AFFIDAVIT BEFORE THE ADI, KANPUR. THEREFORE, THE STATEMENT ALONE DOES NOT HAVE MUCH EVIDENTIARY VALUE ON THE BASIS OF WHICH ADDITION CAN BE MADE. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE STA TEMENT RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS CAN ONLY BE USED AS PIECE OF EVIDENCE IN ORDER TO CORROBORATE OTHER EVIDENCE FOUND IN THIS REGARD. BUT THE STATEMENT RECORDED DURING THE COURSE OF SURVEY CANNOT BE USED AS A SOLITARY EVIDENCE FOR MAK ING AN 10 ADDITION. IT WAS FURTHER CONTENDED THAT U/S 133A OF THE ACT, STATEMENT OF THE ASSESSEE WAS NOT RECORDED ON OATH; THEREFORE, THE STATEMENT RECORDED U/S 133A CANNOT BE TERMED TO BE A STATEMENT RECORDED ON OATH U/S 132(4) OF THE ACT. 9. THE LEARNED D .R., ON THE OTHER HAND, CONTENDED THAT THE ASSESSING OFFICER CAN MAKE A N ADDITION ON THE BASIS OF THE SURRENDER STATEMENT MADE BY THE ASSESSEE. BESIDES HE ALSO PLACED RELIANCE UPON THE ORDER OF THE ASSESSING OFFICER. 10. HAVING GIVEN A THOUGHTFUL CONSIDE RATION TO THE RIVAL SUBMISSIONS AND FROM A C AREFUL PERUSAL OF THE RECORD, WE FIND THAT UNDISPUTEDLY THE SURRENDER STATEMENT WAS RECORDED DURING THE COURSE OF SURVEY PROCEEDINGS CONDUCTED U/S 133A OF THE ACT ON 11/10/2007. JUST IMMEDIATELY AFTER THE STATEM ENT RECORDED BY THE SURVEY TEAM, THE ASSESSEE HAS FILED AN AFFIDAVIT RETRACTING FROM THE STATEMENT OF SURRENDER BEFORE THE ADI, KANPUR. WHEN THE SURRENDER STATEMENT WAS IMMEDIATELY RETRACTED BY FILING AN AFFIDAVIT ON OATH, THE SURRENDER STATEMENT RECORDED BY THE SURVEY TEAM LOSES ITS EVIDENTIARY VALUE. MOREOVER, U/S 133A THE STATEMENTS OF THE ASSESSEES ARE NOT RECORDED ON OATH, AND , THE ORDINARY STATEMENT RECORDED BY THE SURVEY TEAM WAS RETRACTED BY FILING A STATEMENT ON OATH THROUGH AN AFFIDAVIT. BESIDE S, NO OTHER EVIDENCE WAS FOUND OR COLLECTED BY THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR MAKING ADDITIONS ON THE BASIS OF THE SURRENDER STATEMENT OF SHRI SATISH CHAND GUPTA. MOREOVER SHRI SATISH CHAND GUPTA DID NOT MAKE A SURRE NDER STATEMENT FOR HIMSELF. HE MADE A STATEMENT OF SURRENDER FOR OTHER FAMILY MEMBERS WHO WERE THE PROPRIETORS OF OTHER 11 BUSINESS CONCERNS. THE OTHER PROPRIETORS OF OTHER BUSINESS CONCERNS HAVE ALSO DISPUTED THE SURRENDER STATEMENT OF SHRI SATISH CHAND GU PTA. IN THE LIGHT OF ALL THESE EVIDENCES, WE ARE OF THE VIEW THAT SURRENDER STATEMENT LOSES ITS EVIDENTIARY VALUE AND ADDITION CAN ONLY BE MADE IF THE ASSESSING OFFICER FOUND SOME INCRIMINATING MATERIAL RELATING TO SURRENDER STATEMENT BUT IN ABSENCE OF TH E SAME, ADDITION CANNOT BE MADE. THE CIT(A) HAS EXAMINED THIS ISSUE IN DETAIL IN HIS ORDER. FOR THE SAKE OF REFERENCE, WE EXTRACT THE SAME AS UNDER: 7. I HAVE ALSO GONE THROUGH THE STATEMENT OF SHRI SATISH CHAND GUPTA RECORDED BY DDIT(INV.) - 3, KANPUR ON 11/10/2007. I FIND THAT ONLY STATEMENT OF SHRI SATISH CHANDRA GUPTA WAS RECORDED IN CONNECTION WITH ALL BUSINESS CONCERNS EVEN OWNED BY OTHERS (FAMILY MEMBERS). HE HAS BEEN INTERROGATED BY THE WING OFFICIAL WITH REGARD TO TRANSACTIONS APPEARING IN THE I MPOUNDED DOCUMENTS. HE HAS NOT ANSWERED ANY SPECIFIC REPLY THEREOF BUT SIMPLY STATED THAT IT WILL BE EXPLAINED ONLY AFTER VERIFICATION LATER ON. SHRI SATISH CHAND GUPTA EXPLAINED THAT HE WAS A CHEMICAL ENGINEER AND HAD NO KNOWLEDGE OF ACCOUNTANCY. HIS SON SHRI AKHILESH GUPTA IS COMMERCE GRADUATE AND QUALIFIED MBA AND OTHER SON IS ALSO GRADUATE AND HIS WIFE IS A EDUCATED LADY AND SHE IS BEING ASSISTED BY HIS SON SHRI AKHILESH GUPTA. AT THE END WHEN HE WAS ASKED BY THE DDIT(INV.) - 3, KANPUR DO YOU WANT TO SAY ANYTHING MORE, HE HAS SIMPLY STATED THAT AGAINST BOOKS OF ACCOUNTS, PAPERS FOUND FROM DIFFERENT PREMISES OF BUSINESS CONCERNS, I AM SURRENDERING RS. 1.5 CRORE IN THE HANDS OF FAMILY MEMBERS AND WILL PAY TAX. THE CONTENT OF HIS STATEMENT IS BEING REPRODUCED AS UNDER: - IN THE CONTEXT OF SURVEY U/S, 133A CARRIED OUT IN PREMISES NO. 69/156, DANA KHORI, PLOT NO. 18 - 19, GOVIND NAGAR, PREMISES E - 27, SITE II; PANKI, KANPUR, RESIDENCE 4/7, NAVSHEEL APARTMENT, CANTT, KANPUR 12 BELONG TO VARIOUS CONCERNS OWNED BY ME AND MY OTHER FAMILY MEMBERS AND ALSO AFTER CONSIDERATION OF FACTS ___________ IN THE COURSE OF SURVEY INCLUDING THOSE WITH WHICH I WAS CONFRONTED WITH, I WILLINGLY, VOLUNTARILY AND WITHOUT ANY PRESSURE OR DURESS MAKE FOLLOWING SURRENDER AS UNDISCLOSED IN COME INCLUDE UNDISCLOSED EXPENDITURE / INVESTMENTS, STOCK, SALES ETC. FOR THE YEARS TO WHICH THE DOCUMENTS FOUND AND NOT EXPLAINING PERTAINS IS AS UNDER : NAME IN WHICH SURRENDER AMOUNT SMT. KANTI DEVI GUPTA 70,00,000.00 SHRI SATISH CHANDRA GUPTA 40,00,000.00 SHRI SHAILESH GUPTA 20,00,000.00 SHRI AKHILESH GUPTA 20,00,000.00 TOTAL 1,50,00,000.00 I, FURTHER UNDERTAKE TO DEPOSIT THE TAX ON THE AMOUNT SURRENDERED AND WHICH IS THE FOLLOWING MANNER: - RS. 10,00,000 BY 31/10/2007 RS. 20,00,000 BY 31/12/2007 RS. 20.00.000 BY 31/03/2008 RS. 50.00.000 TOTAL 8. DURING THE COURSE OF ASSESSMENT PROCEEDING A.O HAS ASKED THE ASSESSEE FOR THIS SURRENDER WHICH WAS MADE BY HIMSELF AND ON BEHALF OF HIS FAMILY MEMBERS ALSO. THE ASSESSEE HAS FILED A DETAILED REPLY AND A COPY OF THE SAME WAS ALSO EXAMINED, WHICH IS ALSO FOR MING A PART IN WRITTEN SUBMISSIONS. THE A.O HAS GIVEN FINDING IN PARA 3 & 4 OF ASSESSMENT ORDER. THE FINDINGS OF THE A.O IS THAT SHRI SATISH CHANDRA GUPTA, IS HANDLING THE BUSINESS OF THE FAMILY AND IMPOUNDED MATERIAL FOUND FROM DIFFERENT PERSON CANNOT BE BIFURCATED AMONGST THE BUSINESS CONCERNS OF THE APPELLANT AND OF HIS FAMILY MEMBERS. THE A.R HAS PRODUCED BEFORE ME 13 A COPY OF AFFIDAVIT FILED BEFORE THE INVESTIGATION WING DATED 11/10/2007. 9. THE CONTENTS OF THE AFFIDAVIT ONLY SHOWS THAT HE IS WILLING TO PAY TAX TO THE EXTENT OF ACTUAL INCOME ARRIVED AT ON THE BASIS OF IMPOUNDED MATERIAL THEREON AND NOT UPON HE SURRENDERED INCOME AS HE HAS NOT EXAMINED THE PAPERS FOUND AND SEIZED. HE ALSO STATED THAT SURRENDER MADE ON BEHALF OF FAMILY MEMBERS IS NOT BIN DING. 10. FROM THE FINDING OF THE A.O AND CONTENTS OF THE STATEMENT RECORDED BY THE DDIT(INV.) - 3, KANPUR IN THIS CASE ON 11/10/2007, AND EXPLANATION OF THE A.R BEFORE THE A.O AND WRITTEN SUBMISSIONS FILED BEFORE ME, I FIND THAT THE A.O HAS HIMSELF ACCEPT ED THAT BIFURCATION OF SALES, PURCHASES AND EXPENSES AS PER IMPOUNDED MATERIAL, THEREFORE, HIS FINDING CANNOT BE ACCEPTED. 11. FROM THE CONTENTS OF STATEMENT RECORDED BY THE DDIT(INV) - 3, KANPUR IT IS CLEAR THAT NOWHERE THE APPELLANT HAS CONSIDERED ANY DO CUMENTS, VALUABLE, ASSETS, VALUABLE MATERIAL TO BE UNDISCLOSED IN NATURE THAT COMPEL THE ASSESSEE TO OFFER SURRENDER OF INCOME AGAINST IT. AT THE SAME TIME THE INVESTIGATION WING HAS THOROUGHLY EXAMINED THE IMPOUNDED MATERIAL AND THEY COULD NOT COME TO THE QUANTIFICATION OF UNACCOUNTED INCOME/ INVESTMENT /EXPENDITURE ETC. ON VERIFICATION IT IS FOUND THAT THERE IS NO NEXUS BETWEEN THE INCOME RECORDED IN HIS STATEMENT AND MATERIAL FOUND DURING THE COURSE OF SURVEY. THEREFORE, THERE IS NO MALA FIDE IN FILING T HE RETURN OF INCOME. 12. THE IMPOUNDED MATERIALS HAVE BEEN CONSIDERED BY THE A.O AND THE WORKING OF THE UNDISCLOSED SALES HAS BEEN ACCEPTED. THE YEAR WISE TRANSACTION HAS BEEN BIFURCATED AND THE UNDISCLOSED INCOME HAS BEEN COMPUTED ACCORDINGLY. UNDER THI S CIRCUMSTANCES THE STATEMENT CONTAINING THE SURRENDER OF INCOME (WHICH HAS BEEN RETRACTED ON THE SAME DAY) HOLDS NO GOOD LAW, THE ASSESSEE HAD SUBMITTED THE WORKING OF UNDISCLOSED SALES IN RESPECT OF SHRI SATISH CHAND 14 GUPTA, SMT. KANTI GUPTA, SHRI SHAILES H GUPTA & SHRI AKHILESH GUPTA. THE A.R HAS FURTHER RELIED UPON CBDTS INSTRUCTION NO.2862/2003/IT (INV.), DATED 13/03/2003. HE HAS FURTHER SUPPORTED HIS CONTENTION WITH THE HELP OF JUDICIAL PRONOUNCEMENT IN THE CASE OF PAUL MATHEW & SONS, 263 ITR 101 (KER) AND VARIOUS OTHER JUDGMENTS. THEREFORE, UNLESS THERE IS CLINCHING EVIDENCE AND MATERIAL FOR COMPUTATION OF UNACCOUNTED INCOME, THE ADDITION ON ACCOUNT OF UNACCOUNTED INCOME/INVESTMENT CANNOT BE MADE. MOREOVER, THE ASSESSEE HAD FILED HIS RETRACTION ON THE S AME DAY BEFORE THE SAME AUTHORITY THE BONAFIDE OF THE ASSESSEE IS PICKS VOLUME AS THE RETRACTION OF THE STATEMENT HAS BEEN FILED BEFORE THE SAME AUTHORITY WHO HAS NOT NEGATED THE AFFIDAVIT OF RETRACTION FILED BEFORE HIM. AS THE RETRACTION HAS BEEN FILED ON THE SAME DAY AND BEFORE THE SAME AUTHORITY, THE ACTION OF THE ASSESSEE CANNOT BE TERMED AS AFTERTHOUGHT. THE PROCESSES HAVE TO BE SAME IN SEQUENCE WITHOUT THE CONSIDERATION OF CONSEQUENCES. THE RECORDING OF STATEMENT WITHOUT SPECIFYING THE HEADS OF UNACCO UNTED INCOME AND INVESTMENT AND CONSEQUENTIAL RETRACTION OF THE SAME ON THE SAME DAY AND BEFORE THE SAME AUTHORITY NEEDS TO BE CONSIDERED. UNDER THESE CIRCUMSTANCES THE STATEMENT RECORDING THE SURRENDER OF INCOME HAS NO RELEVANCE AS FAR AS COMPUTATION OF U NDISCLOSED INCOME/ INVESTMENT IS CONCERNED. 13. I HAVE CONSIDERED FACTS AND CIRCUMSTANCES OF THE CASE NARRATED HEREINABOVE AND I AM OF THE VIEW THAT IN THE GIVEN CIRCUMSTANCES OF THE CASE, NO SEPARATE ADDITION OF SURRENDERED INCOME CAN BE MADE IN THE HAND S OF APPELLANT. FURTHER NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT RECORDED BY FOR AND ON BEHALF OF THIRD PARTY UNLESS, SUPPORTED BY EVIDENCE /CONSENT OF THIRD MEMBERS. THE FINDING OF THE A.O IS CONTRADICTORY AS STATED HEREINABOVE HE HAS NOT PROVED ANY NEXUS WITH THE CONTENTS OF IMPOUNDED MATERIAL AND SURRENDERED AMOUNT. THERE IS NO QUANTIFICATION OF UNDISCLOSED BY THE DDI(INV.) - 3, KANPUR ALSO MEANING THEREBY THE SURRENDER IS BASED ON PRESUMPTION AND NOT ON THE FOOTING OF CONCRETE MATERIAL, EVIDENCE ETC. 15 14. THE DDIT (INV) - 3, KANPUR SHOULD ALSO HAVE TAKEN CONSENT OF THE OTHER FAMILY MEMBERS BY THEIR COUNTER SIGNATURE IN THE STATEMENT DATED 11/10/2007 TO SUPPORT THE VALIDITY OF SURRENDER MADE BY SHRI SATISH CHANDRA GUPTA FOR AND ON BEHALF OF OTHER PE RSONS. THE OTHER PERSONS ARE REGULAR TAX PAYER INDEPENDENTLY AND ARE REGISTERED WITH TRADE TAX DEPARTMENT SEPARATELY. THE BOOKS OF ACCOUNTS ARE MAINTAINED BY EACH OF THEM. NO MATERIAL HAS BEEN BROUGHT ON RECORD BY THE A.O TO JUSTIFY THE ADDITION EXCEPT THE FINDING IN PARA 3 & 4 OF THE ORDER WHICH IS ITSELF CONTRADICTORY FOR THE REASON STATED HEREINABOVE. THE CONTENTS OF THE AFFIDAVIT SHOWS THAT THE APPELLANT WANTED TO PAY TAX ON UNDISCLOSED TRANSACTION OF PURCHASE AND SALE THOROUGH THE RECORDS WHICH WERE WI TH THEM. I ALSO FIND FROM THE SUBMISSION OF ID. A.R STATING THEREIN THAT THE APPELLANT HAS PRODUCED ACTUAL WORKING BASED ON IMPOUNDED MATERIAL AND THE A.O HAS NOT CONTRADICTED IT JUST TO MATCH THE SAME WITH THE AMOUNT OF SURRENDER THEREFORE STATEMENT REN DERED AND SHRI SATISH CHANDRA GUPTA AT THE TIME OF SURVEY CANNOT BECOME SOLE MATERIAL TO REST ASSESSMENT, MORE SO, WHEN ASSESSEE SEEKS TO WITHDRAW THE SAME BY PRODUCING MATERIAL IN SUPPORT OF RETRACTION MADE. IN THIS CASE SURRENDER IS ALSO NOT CORROBORATED BY INDEPENDENT EVIDENCE. THE APPELLANT ALSO RELIED UPON DECISION IN THE CASE OF ACIT VS. MANGAT RAM CHAUDHARY HUF REPORTED IN 123 ITD 359 (HYD). IN THIS JUDGMENT IT HAS BEEN HELD THAT THE STATEMENT TAKEN U/S 133A OF THE I.T ACT DURING THE COURSE OF SURVEY CANNOT HAVE SAME VALUE AS EVIDENCE RECORDED DURING SEARCH U/S 132(4). SINCE THE I.T. ACT PRESCRIBES ONLY TIME DURING WHICH AN INCOME - TAX AUTHORITY CAN ENTER BUSINESS PREMISES AND THERE IS NO FORMAL COMMENCEMENT AND COMPLETION OF SURVEY PROCEEDING. IT MEAN S SURVEY IS AN INVESTIGATION PROCEEDING ONLY. BUT, AT THE SAME TIME WHERE DURING CONTINUATION OF SURVEY PROCEEDING, SEARCH PROCEEDINGS U/S 132 ARE INITIATED ON THE BASIS OF INFORMATION OBTAINED IN SURVEY, IT CAN BE SAID THAT SURVEY PROCEEDING HAS LOST ITS IDENTITY AND IN FACT HAS MERGED WITH SEARCH PROCEEDING AND IN SUCH CASE UNACCOUNTED INCOME IS LIABLE TO BE ASSESSED IN 16 BLOCK ASSESSMENT PROCEEDING ONLY. I HAVE ALSO CONSIDERED THE SUBMISSION OF A.R THAT THE A.O HAS NOT MENTIONED ANY COGENT REASONS FOR NOT ACCEPTING THE RETRACTION OF THE STATEMENT AND AT THE SAME TIME HE HAS NOT SUBSTANTIATED THE ADDITION OF INCOME RECORDED IN STATEMENT. THEREFORE, THE ADDITION MADE BY A.O DESERVES TO BE DELETED. 15. THE A.R HAS SUBMITTED THAT, WHEN THE APPELLANT'S STATEME NT IS NOT CORRECT IN THE CONTEXT OF MATERIAL FOUND DURING THE COURSE OF SURVEY AND, THEREFORE, A.O. CANNOT ADD THE INCOME RECORDED IN STATEMENT. THE APPELLANT ALSO RELIED UPON THE FOLLOWING CASE LAWS: - SMT. SHIVBALA BEVI VS. ACIT REPORTED IN 88ITD 333(MAD) PAUL MATHEW & SONS VS. CIT REPORTED IN 263IT R 101 (KER) LR GUPTA VS. UNION OF INDIA REPORTED IN 194 ITK 32 (DEL) 16. THE SURVEY IN THE ASSESSEE'S PREMISES WAS CONDUCTED ON 10/10/2007. DURING THE COURSE OF SURVEY PROCEEDING, TH E STATEMENT, DATED 11/10/2007 OF SHRI SATISH CHAND GUPTA HAS BEEN RECORDED WHEREIN SURRENDER OF RS.1.5 CRORE IS RECORDED IN THE NAME OF DIFFERENT CONCERNS HELD BY HIS FAMILY MEMBERS ALONG WITH HIS CONCERN. THE A.R OF THE ASSESSEE AGITATED THAT SHRI SATISH CHAND GUPTA WAS NOT IN POSSESSION OF KNOWLEDGE OF BUSINESS ACTIVITIES OF OTHER CONCERNS HELD BY DIFFERENT FAMILY MEMBERS, THEREFORE, THE DISCLOSURE MADE BY HIM IS BASELESS. FURTHER THE STATEMENT DATED 11/10/2007 HAS BEEN RETRACTED/WITHDRAWN BY HIM ON 11/10 /2007 (THE SAME DAY ONLY AND BEFORE THE SAME AUTHORITY). THE RETRACTION HAS BEEN MADE BY FILING THE AFFIDAVIT OF SHRI SATISH CHAND GUPTA WHEREIN IT IS STATED THAT SURRENDER OF RS.1.5 CRORE HAS BEEN HURRIEDLY REACHED WITHOUT CONSULTING THE BOOKS OF ACCOUNTS AND THE OTHER RELEVANT DOCUMENTS. HOWEVER, THE TAXES WILL BE PAID ON ACTUAL WORKING OF THE PROFIT AND ACCORDINGLY THE SURRENDERED INCOME MAY GET ENHANCED AND REDUCED. AS THE RETRACTION HAS BEEN FILED ON THE SAME DAY, IT CANNOT BE TAKEN AS AN AFTERTHOUGHT. THE ASSESSEE HAS CALCULATED THE UNDISCLOSED SALES AND OFFERED THE SAME IN THE RETURN OF INCOME. THE A.O HAS ESTIMATED THE INCOME ON THE BASIS OF 17 ENHANCEMENT OF G.P WHEREAS THE SURRENDERED INCOME HAS ALSO BEEN ADDED. THE ADDITION OF SURRENDERED INCOME BY T HE A.O IS BASELESS AS THE SAME HAS NOT BEEN SUPPORTED BY ANY CORROBORATIVE EVIDENCES OR PROOF. MERE STATEMENT OF INCOME SHOULD NOT BE TAKEN AS THE BASIS FOR THE ADDITION TO THE INCOME OF THE ASSESSEE SPECIALLY WHEN THE SURRENDERED INCOME HAS BEEN RETRACTED OR WITHDRAWN ON THE SAME DATE AND BEFORE THE SAME AUTHORITY. THE ASSESSEE MADE HIS MIND CLEAR BY FILING THE AFFIDAVIT OF RETRACTION AFTER CONSULTATION WITH THE DIFFERENT FAMILY MEMBERS HOLDING THE DIFFERENT CONCERNS. AS THE G.P. HAS BEEN COMPUTED BY THE A .O. THEREFORE, THE ADDITION OF INCOME AS PER THE STATEMENT DATED 11/10/2007 CANNOT BE MADE. THE A.R HAS RELIED ON JUDGMENT OF HON'BLE KERALA HIGH COURT IN THE CASE OF PAUL MATHEW AND SON:, 263 ITR 101 (KER), 2003 AND 300 ITR 157 (MAD.). THE STATEMENT CONT AINING THE SURRENDERED INCOME, IF RETRACTED, NEEDS TO BE SUBSTANTIATED WITH CORROBORATIVE EVIDENCES AND PROOF FOR ADDITION OF THE SAME. THE A.O HAS NOT SUBSTANTIATED THE ADDITION OF RS.40.00 LAKH IN THE HANDS OF ASSESSEE SHRI SATISH CHAND GUPTA. THE A.O. H AS CALCULATED THE COMPLETE AND CORRECT PROFIT BY ESTIMATING THE G.P @13% ON UNDISCLOSED SALES (WORKED OUT BY A.O) AGAINST THE G.P OF 11.12% SHOWN BY THE ASSESSEE. WHEN THE A.O HAS REACHED TO THE CONCLUSION OF CALCULATING THE G.P. @13%, THE ADDITION OF RETR ACTED INCOME I.E. RS.40.00 LAKH CANNOT BE ADDED TO THE INCOME OF THE ASSESSEE. THEREFORE, THE ADDITION OF REFRACTED INCOME OF RS.40.00 LAKH IS BEING DELETED BUT THE COMPUTATION OF INCOME @13% OF G.P. ON UNDISCLOSED SALES IS CONFIRMED. HOWEVER, THE A.R HAS STATED THAT THE CALCULATION OF UNDISCLOSED SALES OF THE ASSESSEE SUBMITTED TO THE A.O ALONG WITH UNDISCLOSED EXPENDITURE BUT THE A.O. HAS NOT CONSIDERED THE UNDISCLOSED EXPENDITURE WHILE CALCULATING THE PROFIT ON ESTIMATED G.P. @13% ON UNDISCLOSED SALES. THE A.O. SHOULD HAVE CONSIDERED THE UNDISCLOSED EXPENDITURE ALSO WHILE CONSIDERING THE UNDISCLOSED SALES, AND ON THIS ASPECT THE A.O HAS NOT RECORDED HIS COMMENTS, THEREFORE, TO MEET THE ENDS OF THE JUSTICE, THE A.O IS DIRECTED TO RECOMPUTE THE CORRECT PRO FIT OF 18 THE ASSESSEE AFTER VERIFICATION OF GENUINENESS OF THE EXPENDITURE TRANSACTIONS AS THE G.P. HAS BEEN BASED ON UNDISCLOSED SALES. 17. WITH REFERENCE TO ADDITION OF RS.1,77,847/ - ON ACCOUNT OF UNDISCLOSED SALES, THE A.O HAS DESCRIBED THIS DIFFERENCE, REACHED AFTER VERIFICATION OF LPS, IN THE PARA NO. '7' OF ASSESSMENT ORDER. THE WHOLE UNDISCLOSED SALES OF RS.1,77,847/ - HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE IN ADDITION TO CUMULATIVE UNDISCL OSED SALES OF RS.1,14,27,574/ - IN THE PRECEDING PARAGRAPHS, IT IS DISCUSSED THAT THE A.O HAS TAKEN G.P. @13% FOR COMPUTATION OF CORRECT PROFIT OF THE ASSESSEE. FOLLOWING THE SAME PRINCIPLE, THE A.O. IS DIRECTED HEREBY TO COMPUTE THE PROFIT ON THIS UNDISCLOSED SALES OF RS.1,77,847/ - @13% G.P. ALREADY TAK EN BY HIM. 11. DURING THE COURSE OF HEARING NOTHING HAS BEEN PLACED BY THE REVENUE TO SUBSTANTIATE THAT THE ADDITIONS WERE NOT MADE ONLY ON THE BASIS OF SURRENDER STATEMENT BUT FOR INCRIMINATING EVIDENCE COLLECTED BY THE ASSESSING OFFICER. UNDER THESE CI RCUMSTANCES WE ARE OF THE VIEW THAT THE CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE ON ACCOUNT OF SURRENDER MADE BY SHRI SATISH CHAND GUPTA IN ALL THESE CASES. 12. SO FAR AS OTHER ISSUE OF ADDITION MADE ON ACCOUNT OF GROSS PROFIT ON UNDISCLOSED SALE, WE FIND THAT THE ASSESSEE HIMSELF HAS ADMITTED THAT UNACCOUNTED SALES WERE AFFECTED. THEREFORE, THE QUESTION ARISES HOW MUCH WOULD BE THE GROSS PROFIT OF UNACCOUNTED SALES. THE ASSESSING OFFICER HAS ADOPTED THE GROSS PROFIT ON THE BASIS OF GROSS PROFIT SHOW N BY THE ASSESSEE FOR THE RECORDED SALES. IN MOST OF THE CASES, THE GROSS PROFIT WAS SHOWN BY THE ASSESSEE ON RECORDED SALES AT 11.2% AND THE ASSESSING OFFICER HAD ADOPTED THE SAME AT 13%. IN THIS ESTIMATION, WE FIND NO INFIRMITY. WE, THEREFORE, CONFIRM THE ADDITIONS MADE ON ACCOUNT OF PROFIT 19 ON UNDISCLOSED SALES. ACCORDINGLY, THE APPEALS OF THE REVENUE AS WELL AS THE ASSESSEE ARE DISMISSED. 13. SO FAR THE CROSS OBJECTIONS ARE CONCERNED, THESE WERE FILED IN SUPPORT OF THE ORDER OF THE CIT(A). SINCE T HE ORDER OF CIT(A) IS CONFIRMED IN THE REVENUES AS WELL AS IN ASSESSEES APPEAL, THE CROSS OBJECTIONS HAVE BECOME INFRUCTUOUS. WE ACCORDINGLY REJECTED THE SAME. 14. IN THE RESULT, THE APPEALS OF THE REVENUE AND THE ASSESSEE ARE DISMISSED. (ORDER PRON OUNCED IN THE OPEN COURT ON 07/06/2013 ) SD/. SD/. ( PRAMOD KUMAR) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER D ATED: 07/06/2013 *SINGH COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR