DCIT, Jaipur V. RAM BABU GUPTA, Jaipur

ITA 198/JPR/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 9672 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 28-02-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: S L PODDAR
• Keywords: Unexplained investment; Value adopted by valuation officer; Income from undisclosed sources; Document seized; Cost of acquisition; Documents seized

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 198/JP/2013 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2007-08 DCIT CENTRAL CIRCLE-1, JAIPUR CUKE VS. SHRI RAM BABU GUPTA, 12-13, PATEL COLONY, SARDAR PATEL MARG, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACPPG7427A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPOND ENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A.VERMA (ADDL.CIT) FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.L. PODDAR (ADVOCATE) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 14/02/2017 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 28/03/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A), ALWAR DATED 18.12.2012 FOR A.Y. 2007-08 WHEREIN REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL. (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A), ALWAR HAS ERRED IN DIRECTING TO ALLOW SET OFF OF R S. 2,51,60,000/- INSTEAD OF RS. 1,28,00,000/- NOTWITHSTANDING THE FA CT THAT ASSESSED INCOME WOULD FALL TO RS. 7,37,94,94,065/- I.E. BELO W THE RETURNED INCOME OF RS. 8,27,40,410/-, WHICH DIRECTIONS ARE AGAINST THE ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 2 FINDINGS OF CIT(A) AND ITAT IN ORIGINAL APPELLATE O RDERS REPRODUCED BY THE AO IN THE SET-ASIDE ASSESSMENT ORDER. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A), ALWAR HAS ERRED IN DIRECTING TO COMPUTE THE INCOME BELOW THE INCOME DECLARED BY THE ASSESSEE HIMSELF IN HIS RETU RN OF INCOME. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS EXCEEDED HIS POWERS IN DIRECTING TO ALLOW THE S ET OFF OVER AND ABOVE THE AMOUNT DETERMINED BY THE APPELLATE AUTHOR ITIES IN THE ORIGINAL APPELLATE PROCEEDINGS. 2. IT IS NOTED THAT THIS IS THE SECOND ROUND OF APP EAL WHERE THE MATTER HAS REACHED THE TRIBUNAL. THE GENESIS OF THI S APPEAL LIES IN THE THE ADDITIONAL GROUND OF APPEAL WHICH WAS TAKEN BY THE APPELLANT IN THE FIRST ROUND OF APPEAL BEFORE THE TRIBUNAL. HERE I T WOULD BE RELEVANT TO REFER TO THE FINDINGS OF THE LD CIT(A) IN THE FIRST ROUND OF APPEAL WHICH WAS THE SUBJECT MATTER OF APPEAL BEFORE THE COORDIN ATE BENCH AND WHICH FORMED THE BASIS OF FILING THE ADDITIONAL GRO UND OF APPEAL BEFORE THE TRIBINAL: AS REGARDS TO ADDITION OF UNDISCLOSED PROFIT FROM T HE SALE OF MAHALA PROPERTY AMOUNTING TO RS. 12800000/- IT IS S UBMITTED THAT THE SALE OF PROPERTY UNDER QUESTION WAS MADE ON 3.7.200 6 WHICH IS BEYOND THE AY UNDER APPEAL I.E. THE SAME RELATES TO AY 200 7-08. THUS NO ADDITION CAN BE MADE IN THE YEAR RELEVANT ASSESSMEN T YEAR THE ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 3 UNDISCLOSED PROFIT FROM THE SALE OF MAHALA PROPERTY AMOUNTING TO RS. 12800000/-. MORE OVER THE LD A/R SUBMITS THAT SINC E THE PROPERTY IS OWNED BY THE COMPANY NO ADDITION CAN BE MADE IN THE CASE OF ASSESSEE INDIVIDUAL. THIS ARGUMENT OF THE A/R IS FOUND UNAC CEPTABLE AS ABOVE ON THE GROUND THAT THE ASSESSEE HIMSELF TAKEN THE RESP ONSIBILITY TO PAY THE ADDITIONAL TAX ON THE INCOME ARISING OUT OF UNDISCL OSED TRANSACTIONS OF THE INDIVIDUALS OR COMPANIES OF ASSESSEE GROUP IN H IS STATEMENTS U/S 132(4) OF THE IT ACT. SINCE THE UNDISCLOSED TRANSA CTIONS ARE CARRIED OUT BY THE ASSESSEE INDIVIDUAL CAPACITY ON BEHALF OF OT HER INDIVIDUAL OR COMPANY THE UNDISCLOSED INCOME ARISING OUT OF UNDIS CLOSED TRANSACTIONS IS CORRECTLY ASSESSED IN THE HANDS OF THE ASSESSEE INDIVIDUAL ON HIS OWN EXPRESSED TAKING OF RESPONSIBILITY. THE TOTAL SALE OF PROPERTY UNDER QUESTION IS FOUND BY THE AO RS. 37660000 ON THE BAS IS OF SEIZED PAPERS AS AGAINST RS. 12500000/- AS PER SALE DEED IN THE N AME OF COMPANY AS AGAINST PURCHASE BY THE COMPANY FOR A SUM OF RS. 24 805000 ON THE BASIS OF SEIZED MATERIALS. THEREFORE, THERE WAS UN DISCLOSED TRANSACTIONS OF PURCHASE AND SALE OF THIS PROPERTY OTHER THAN TH E SALE DEEDS IN THE NAME OF COMPANY. THUS THE PROFIT ARISING OUT OF TH E UNDISCLOSED TRANSACTIONS RS. 12800000 CAN BE ASSESSED IN THE HA NDS OF THE ASSESSEE INDIVIDUAL. HOWEVER THE PROPERTY STANDS SOLD ON 3.7 .2006 AS PER DATE OF SALE DEED. THEREFORE THE UNDISCLOSED PROFIT IS TO BE CONSIDERED IN THE ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 4 YEAR OF ITS SALE I.E. IN AY 2007-08 AND THE ADDITIO N OF UNDISCLOSED PROFIT RS. 12800000 DURING THIS YEAR IS DELETED. HOWEVER A DUE SET OFF SHOULD BE ALLOWED IF SIMILAR PROFIT ARISE IN AY 2007-08 FR OM THE PURCHASE AND SALE OF THIS PROPERTY WITH THE SURRENDERED AMOUNT O F UNDISCLOSED INVESTMENTS FROM PROPERTIES BY THE ASSESSEE GROUP I N AY 2007-08. 2.1 IN THE ABOVE BACKGROUND, THE ADDITIONAL GROUND OF APPEAL WAS FILED BY THE APPELLANT AND WE NOW REFER THE OBSERVA TIONS AND THE FINDING OF THE COORDINATE BENCH IN RESPECT OF THE SAID ADDI TIONAL GROUND OF APPEAL FILED BY THE APPELLANT WHICH READS AS UNDER: - 49. AFTER GOING THROUGH THE WRITTEN SUBMISSION AND TAKING INTO CONSIDERATION THE ARGUMENTS OF THE PARTIES, WE FIND THAT FACTS ARE NOT CLEAR IN RESPECT OF THE ISSUE RAISED THROUGH ADDITI ONAL GROUNDS. ADDITION DIRECTED TO BE MADE FOR AY 2007-08 HAS NOT BEEN CHA LLENGED BY THE ASSESSEE. HOWEVER ASSESSEE IS ASKING TO ALLOW SET OFF OF UNDISCLOSED PROFIT OF RS. 1.28 CRORES AGAINST THE AMOUNT SURREN DER BY THE ASSESSEE. SINCE THE FACTS ARE NOT CLEAR, THEREFORE, WE ARE OF VIEW THAT THIS MATTER SHOULD GO BACK TO THE FILE OF AO TO CONSIDER THE SU BMISSION OF THE ASSESSEE. THERE IS NO DISPUTE THAT SET OFF IS ALLO WABLE AGAINST SURRENDERED AMOUNT. HOWEVER, ONUS IS ON THE ASSESS EE TO PROVE THAT THE SURRENDERED AMOUNT WAS AVAILABLE WITH THE ASSES SEE FOR ALLOWING SET ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 5 OFF AGAINST THE INCOME ADDED BY THE AO OR BY THE LD . CIT(A). IF THE SET OFF IS NOT ALLOWED, THEN IT WILL TANTAMOUNT TO DOUB LE TAXATION. THEREFORE, THE SET OFF HAS TO BE ALLOWED. 50. ONE OF THE CONTENTIONS OF THE ASSESSEE THAT THE AO IS NOT ALLOWING SET OFF FOR THE REASON THAT IF SET OFF IS ALLOWED, THEN THE ASSESSED INCOME WILL BE REDUCED OR NOT. THE QUESTION IS TO ALLOW S ET OFF. THE AO HAS ADDED THE AMOUNT FOR AY 2006-07. HOWEVER THE LD CI T(A) HAS DIRECTED TO ADD THIS AMOUNT FOR AY 2007-08. THEREFORE, FOR THIS REASON IF THE ASSESSED INCOME OF THE AY 2006-07 BECOMES LESS THAN THE DISCLOSED INCOME, THEN EFFECT HAS TO BE GIVEN AS PER DIRECTIO N OF LD CIT(A) AS ASSESSEE HAS NOT FILED ANY APPEAL AGAINST SUCH FIND INGS OF LD CIT(A). 51. IN VIEW OF THESE FACTS AND CIRCUMSTANCES, WE SE T ASIDE THIS ISSUE TO THE FILE OF AO TO EXAMINE THE ADDITIONAL GROUNDS IN THE LIGHT OF OUR OBSERVATION AS ABOVE AND AFTER TAKING INTO CONSIDER ATION THE WRITTEN SUBMISSION FILED ON BEHALF OF THE ASSESSEE HERE BEF ORE THE TRIBUNAL. THE ASSESSEE MAY BE ALLOWED REASONABLE OPPORTUNITY OF B EING HEARD. WE ORDER ACCORDINGLY. 2.2 IN VIEW OF THE ABOVE DIRECTIONS OF THE COORDINA TE BENCH IN RESPECT OF THE ADDITIONAL GROUND OF APPEAL, THE MATTER WAS AGAIN TAKEN UP FOR FRESH CONSIDERATION BY THE ASSESSING OFFICER AND TH E RELEVANT FINDING OF ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 6 THE ASSESSING OFFICER ARE CONTAINED AT PARA NO. 17 TO 20 OF ITS ORDER WHICH IS REPRODUCED AS UNDER:- 17. ABOVE SUBMISSIONS ARE CAREFULLY CONSIDERED AND THE SAME ARE FOUND TO BE NOT ACCEPTABLE BEING BEYOND THE DIRECTIONS OF THE HIGHER AUTHORITIES. THERE IS NO DIRECTIONS OF SET OFF OF ENTIRE SALE PROCEEDS OF MAHALA PROPERTY EITHER BY THE CIT(A) OR BY THE ITAT . WHERE THE DIRECTIONS OF THE CIT(A) ARE CLEAR THAT SET OFF BE ALLOWED OF PROFIT EARNED, IF THE SAME PROFIT IS PART OF SURRENDER IN AY 2007- 08. THE DIRECTIONS OF THE ITAT ARE THAT SET OFF OF PROFIT BE ALLOWED TO T HE ASSESSEE SUBJECT TO PROOF BY THE ASSESSEE THAT SURRENDERED AMOUNT WAS A VAILABLE WITH THE ASSESSEE FOR ALLOWING SET OFF AGAINST THE INCOME AD DED BY THE AO. ASSESSEE HAS NEVER CLAIMED SET OFF OF ENTIRE SALE P ROCEEDS BEFORE THE CIT(A) OR THE ITAT. SO THERE IS NO QUESTION OF ALL OWING OF SET OFF OF PROFIT OF RS. 1.28 CRORES AGAINST THE INVESTMENT IN AY 2007-08. NOW THE A/R WANTS TO TRAVEL BEYOND THE DIRECTIONS OF THE HI GHER AUTHORITIES WHICH CANNOT BE DONE IN SET ASIDE/RESTORED PROCEEDINGS. IN SUCH PROCEEDINGS THE AO IS RESTRICTED TO ACT STRICTLY IN ACCORDANCE WITH THE DIRECTIONS OF THE HIGHER AUTHORITIES. 17. IT MAY BE SEEN FROM THE ORDER OF THE LD CIT(A) THAT SET OFF OF PROFIT PART COULD ONLY BE ALLOWED IF THE SAME PROFI T ARISES IN AY 2007-08 ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 7 FROM SALE AND PURCHASE OF THIS PROPERTY WITH THE SU RRENDERED AMOUNT OF UNDISCLOSED INVESTMENT FROM PROPERTIES IN AY 2007-0 8. THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY DETAILS IN THIS RE SPECT. UNDISPUTEDLY THE PROFIT WAS EARNED IN AY 2007-08 INSTEAD OF AY 2 006-07 AND THEREFORE THE SAME AMOUNT WAS EXCLUDED FROM THE ASS ESSED INCOME OF AY 2006-07 AND IT WAS REQUIRED TO BE ADDED SEPARATE LY IN AY 2007-08 SUBJECT TO SPECIFIC OBSERVATION OF THE CIT(A) THAT A DUE SET OFF SHOULD BE ALLOWED IF SIMILAR PROFIT ARISES IN AY 2007-08 FROM PURCHASE AND SALE OF THIS PROPERTY WITH THE SURRENDERED AMOUNT OF INVEST MENT. THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY DETAILS AS TO HOW HE HAS COMPUTED THE REVISED INCOME BEFORE THE AO AT THE TIME OF GIVING EFFECT TO THE ORDER OF CIT(A). IT MAY BE SEEN THAT THE ASSESSEE HAS DECLA RED FOLLOWING UNDISCLOSED INCOME IN AY 2007-08 AS REFERRED IN PAR A 5.1 OF THE ASSTT ORDER:- S. NO. DETAILS OF INCOME SURRENDER AMOUNT 1. UNDISCLOSED INVESTMENT MADE IN THE PROPERTY AT N RI COLONY JAIPUR ON THE BASIS OF SEIZED ANNEX A-1 AND OTHER PAPERS RS. 5340000 2. UNDISCLOSED INVESTMENT MADE IN THE PROPERTY AT S HRI NATH NAGAR, JAIPUR ON THE BASIS OF SEIZES ANNEXURE A-4 PAGE 6 AND OTHE R SEIZED ANNEXURES RS. 816000 3. UNDISCLOSED INVESTMENT MADE IN THE PROPERTY AT C -10, JAI SINGH HIGHWAY, JAIPUR ON THE BASIS OF ANNEXURE A-4, PAGE 1 TO 24, A-15 PAGE RS. 16500000 ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 8 1 TO 40 AND OTHER SEIZED ANNEXURES 4. UNDISCLOSED INVESTMENT MADE IN THE PROPERTY AT S UBHASH CHOWK AMER ROAD JAIPUR ON THE BASIS OF SEIZED ANNEXURE A-6, PA GE 44, A-10 PAGE 12 TO 18, A-13 PAGE 1 TO 39 AND OTHER SEIZED ANNEXU RES RS. 3015000 5 UNDISCLOSED INVESTMENT MADE IN THE EXCESS STOCK F OUND DURING THE COURSE OF SEARCH IN THE BUSINESS CONCERN RS. 28000000 RS. 48336340 19. IT MAY BE SEEN THAT THE ABOVE DETAILS OF UNDISC LOSED INCOME NO WHERE PRESCRIBES THE PROFIT EARNED ON SALE OF MAHAL A PROPERTY AS DIRECTED BY THE LD CIT(A) AND THEREFORE QUESTION OF GIVING SET OFF HAS NO RELEVANCE. FROM THE ORDER OF THE LD CIT(A) IT MAY FURTHER BE SEEN THAT THE DISCLOSED INVESTMENT IN THE SAID PROPERTY WAS O NLY OF RS. 10936055 WHEREAS THE AO FOUND UNDISCLOSED INVESTMENT IN THE SAID PROPERTY OF RS. 1.50 CRORES IN THIS PROPERTY WHICH STANDS CONSIDERE D IN AY 2006-07 AND ALSO PARTLY CONFIRMED BY THE CIT(A). NOW THE ONLY Q UESTION REMAINED IS OF SET OFF OF PROFIT OF RS. 1.28 CRORES ON THE DATE OF SALE OF THE PROPERTY IF THE SAME IS PART OF SURRENDER IN AY 2007-08 AS PER THE DIRECTIONS OF THE LD CIT(A) BUT IT IS NOT SO AS IS EVIDENT FROM THE C HART OF UNACCOUNTED INCOME SURRENDERED IN THE RETURN, DETAILS OF WHICH ARE REPRODUCED ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 9 ABOVE. AS SUCH THE ASSESSEE DOES NOT DESERVE ANY S ET OFF, IF THE DIRECTIONS OF THE LD CIT(A) ARE CONSIDERED. 20. HOWEVER, THE DIRECTIONS OF THE ITAT ARE ON DIFF ERENT FOOTINGS DIRECTING TO SET OFF OF THIS AMOUNT OF PROFIT AS AV AILABLE FOR UNDISCLOSED INVESTMENTS SURRENDERED BY THE ASSESSEE IN AY 2007- 08 BECAUSE IF IT WAS NOT DONE IT WOULD AMOUNT TO DOUBLE TAXATION ONC E IN THE FORM OF EARNING OF PROFIT AND THEN IN THE FORM OF UNDISCLOS ED INVESTMENT. ACCORDINGLY, FOLLOWING THE DIRECTIONS OF THE ITAT S ET OFF OF PROFIT EARNED FROM THIS PROPERTY IS ALLOWABLE, IF IT IS USED FOR INVESTMENT IN OTHER PROPERTIES WHICH HAVE BEEN SURRENDERED IN AY 2007-0 8 ARE MADE AFTER THE SALE OF THE MAHALA PROPERTY I.E. 3.6.2007 OR BE FORE THIS DATE, THE ASSESSEE WAS SPECIFICALLY ASKED TO PROVIDE THE DATE WISE DETAILS OF UNDISCLOSED INVESTMENT IN AY 2007-08. BUT THE ASSES SEE HAS NOT FURNISHED DATE WISE DETAILS OF INVESTMENT IN AY 200 7-08 BUT HAS CLAIMED THAT SUCH SET OFF IS ALLOWABLE AGAINST SURRENDER OF STOCK OF RS.2.80 CRORES. SINCE SEARCH WAS CARRIED OUT ON 1.11.2006 W HEREAS THE PROPERTY WAS SOLD ON 3.7.2006, SET OFF OF PROFIT CAN BE ALLO WED AGAINST THIS DISCLOSURE OF STOCK ON 1.11.2006. ACCORDINGLY SET O FF OF PROFIT OF RS.1.28 CRORES IS ALLOWED AGAINST UNDISCLOSED/EXCESS STOCK SURRENDERED. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 10 WITH THESE REMARKS INCOME OF THE ASSESSEE IS COMPU TED AS UNDER GIVING EFFECT TO THE ORDER OF THE ITAT AND PRESENT PROCEEDINGS. INCOME AS PER ORDER U/S/154/143(3)/153A DATED 28.1. 2009 RS.89551227 (LTCG RS9519089+RS.80032138) LESS RELIEF ALLOWED BY THE LD CIT(A) (I) ON ACCOUNT OF UN-NAMED PROPERTY (-) RS.2000000 (II) ON ACCOUNT OF MI ROAD PROPERTY (-) RS.3075000 ( -)RS.5075000 LESS:- LTCG ON MI ROAD PROPERTY TO BE CONSIDERED BASED ON DVO REPORT RS.2270079 ADD:- CAPITAL GAIN ON MI REPORT AS PER DVO REPORTS AS DISCUSSED RS.1002862 ADD:-PART INVESTMENT IN MAHALA PROPERTY PERTAINING TO THIS YEAR AS PER ORDER OF THE CIT(A) R S.4504000 ADD:- PROFIT ON SALE OF MAHALA PROPERTY RS.12800000 LESS:- SET OFF FOR INVESTMENT IN UNDISCLOSED STOCK SURRENDERED AS DISCUSSED RS.12800000 RS. NIL TOTAL INCOME RS.8771301 0 2.3 BEING AGGRIEVED WITH THE ABOVE ORDER OF AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND HIS FINDINGS ARE CONTAINED AT PARA 4.3 OF ITS ORDER WHICH IS REPRODUCED BELOW: - 4.3 I HAVE CONSIDERED THE ASSESSMENT ORDER OF THE AO U/ S 254/250/154/143(3) DATED 28.12.2011 AND THE SUBMISS IONS MADE BY THE AR OF THE APPELLANT. (I) I AM INCLINED TO AGREE WITH THE OBSERVATION OF THE AO THAT THE AO HAS TO ACT STRICTLY IN ACCORDANCE WITH THE FINDINGS AND DIRECTIONS OF THE HIGHER AUTHORITIES IN SET ASIDE PROCEEDINGS AND WHILE GIVING EFFECT TO APPELLATE ORDERS. THE FINDINGS AND DIREC TIONS BY THE LD. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 11 CIT(A) WITH RESPECT TO MAHLA PROPERTY IN ORDER DATE D 19.05.2009 ARE AS UNDER:- (A) PARA 1,2 & 3 PAGE 31: THE UNDISCLOSED INVESTMENT IN THE FORM OF CASH PAYM ENT FOR PURCHASE OF MAHLA PROPERTY AT RS. 95,15,000/- IS CO NFIRMED. BALANCE RS. 328,390/- IS DELETED. OUTSTANDING LIABILITY FOR PAYMENT FOR PURCHASE RS. 45,04,000/- IS TO BE CONSIDERED IN NEXT YEAR AS INV ESTMENT ON ACTUAL PAYMENT BASIS. SIMILARLY SALE PROCEEDS O F THIS PURCHASE MAY BE SET OFF WITH THE AVAILABLE SURRENDE R OF THE INVESTMENT IN NEXT ASSESSMENT YEAR IF CO-RELATED. THUS THE PROFIT ARISING OUT OF THE UNDISCLOSED TRAN SACTIONS RS. 128,000,000/- CAN BE ASSESSED IN THE HANDS OF T HE ASSESSEE INDIVIDUAL. HOWEVER, THE PROPERTY STANDS S OLD ON 03.07.2006 AS PER THE DATE OF SALE DEED. THEREFORE, THE UNDISCLOSED PROFIT IS TO BE CONSIDERED IN THE YEAR OF ITS SALE I.E. IN AY 2007-08 AND THE ADDITION OF THE UNDISCLO SED PROFIT OF RS. 128,00,000/- DURING THE RELEVANT ASSESSMENT YEAR IS DELETED. HOWEVER, A DUE SET OFF SHOULD BE ALLOWED IF SIMILAR ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 12 PROFIT ARISES IN ASSESSMENT YEAR 2007-08 FROM THE P URCHASE AND SALE OF THIS PROPERTY WITH THE SURRENDERED AMOU NT OF UNDISCLOSED INVESTMENT FOR PROPERTIES BY THE ASSESS EE GROUP IN AY 2007-08. THUS, THERE IS A CLEAR FINDING OF LD. CIT(A) THAT U NDISCLOSED INVESTMENT OF RS. 45,04,000/- IN MAHLA PROPERTY AND SIMILAR PROFIT ARISING ON ITS SALE IS TO BE ASSESSED TO TAX IN AY 2007-08 AS AGAINST ADDITION OF RS. 1.28 CRORES MADE BY THE AO IN AY 20 06-07. FURTHER, THERE IS A DIRECTION TO GIVE SET OFF OF SALE PROCEE DS OF THIS PURCHASE AND OF PROFITS ARISING ON ITS SALE IN AY 2007-08. THE AO HAS ACCORDINGLY ADDED RS. 45,04,000/- AND R S. 1.28 CRORES IN AY 2007-08 AND HAS OBSERVED THAT THE ASSESSEE DO ES NOT DESERVE ANY SET OFF, IF THE DIRECTIONS OF THE LD. CIT(A) AR E CONSIDERED SINCE ASSESSEE HAS NOT CORRELATED THE SALE PROCEEDS OF MA HLA PROPERTY (WHICH WAS SOLD ON 03.07.2006) WITH THE SURRENDER O F INCOME OF RS. 4.83 CRORES BY WAY OF UNDISCLOSED INVESTMENT IN VAR IOUS PROPERTIES AND IN EXCESS STOCK (OF RS. 2.8 CRORES) OF BUSINESS FOUND ON THE DATE OF SEARCH I.E. 01.11.2006. HOWEVER, THE AO HAS BEEN GRACIOUS ENOUGH TO ALLOW SET OFF OF RS. 1.28 CRORES BEING PROFIT ON SALE OF THE SAID PROPER TY BY FOLLOWING THE ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 13 DIRECTIONS OF THE HONBLE ITAT, OTHERWISE IT WOULD AMOUNT TO DOUBLE TAXATION. FURTHER, THE AO HAS SIMPLY IGNORED/EXCLU DED THE SET OFF OF RS. 26723945/- ALLOWED BY AO IN ORDER DATED 29.06.2 009. (II) THE APPELLANT HAD TAKEN FOLLOWING ADDITIONAL GROUND BEFORE THE ITAT FOR AY 2007-08 IN ITA NO. 646/JP/09. THE LEARNED CIT(A) HAS ERRED IN NOT GIVEN DIRECTIO N TO THE ASSESSING OFFICER TO GIVE EFFECT TO THE FOLLOWING F INDINGS GIVEN BY HIM IN THE ORDER FOR AY 2006-07- UNDISCLOSED PROFIT OF RS. 1,28,00,000/- ON SALE OF MAHLA PROPERTY REQUIRED TO BE CONSIDERED IN AY 2007-08. SET OFF O F THIS PROFIT REQUIRED TO BE ALLOWED WITH THE SURRENDERED AMOUNT OF UNDISC LOSED INVESTMENTS FOR PROPERTIES BY THE ASSESSEE GROUP IN AY 2007-08 . THE HONBLE ITAT SET ASIDE THIS ISSUE TO THE FILE O F AO TO CONSIDER THE ISSUE OF SET OFF OF UNDISCLOSED PROFIT OF RS. 1.28 CRORES AGAINST THE AMOUNT SURRENDER BY THE ASSESSEE SINCE FACTS IN THA T REGARD WERE NOT CLEAR (III) THE AR HAS SUBMITTED THAT THE SAID MAHLA PROPERTY W AS SOLD ON 3.7.2006 AS PER DATE OF SALE DEED AND THE LD. CIT(A ) DIRECTED THE AO TO GIVE SET OFF OF SALE CONSIDERATION AND PROFIT IN THE YEAR OF SALE ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 14 WHICH IS AVAILABLE FOR OTHER INVESTMENT MADE BY THE ASSESSEE IN THE AY 2007-08. IT HAS BEEN SUBMITTED BY THE AR THAT THE SAID P ROPERTY WAS SOLD FOR RS. 3,76,60,000/- AS PER SALE DEED AND THE PURCHASE COST AS PER REGISTERED DEED IS RS. 109,36,055/-. SO SET OFF OF RS. 267,23,945/- SHOULD BE ALLOWED SINCE THE SALE CONSI DERATION WAS RECEIVED OUT OF BOOKS ON 3.07.2006 AND WAS FOUND AS INVESTMENT IN STOCK OF RS. 2.80 CRORE ON THE DATE OF SEARCH ON 01 .11.2006. IT HAS BEEN FURTHER SUBMITTED THAT PROFIT FROM THE SALE OF SAID PROPERTY OF RS. 15,63,945/- WAS RECORDED/DISCLOSED IN THE REGUL AR BOOKS OF ACCOUNTS OF THE COMPANY M/S MAHLA REAL ESTATE PVT. LTD. AND THEREFORE UNACCOUNTED PROFIT WHICH REQUIRES TO BE A DDED IN THE HANDS OF ASSESSEE AT RS. 112,36,055/- (RS. 128,00,0 00-15,63,945). (IV) I FIND FROM ORDERS AND SUBMISSIONS THAT AS PER SEIZED DOCUMENTS, THE VALUE OF SALES RECORDED IS RS. 3,76, 60,000/- AS AGAINST THE SALES RECORDED IN REGISTERED SALE DEED AT RS. 125,00,000/-. THEREFORE, UNRECORDED SALES PROCEEDS WORK OUT TO RS. 251,60,000/-. COST OF THE LAND AS PER SEIZED D OCUMENTS HAS BEEN WORKED OUT AT RS. 248,55,000/-. FURTHER, COST OF PROPERTY AS RECORDED IN REGISTERED DEEDS IS RS. 109,36,055/-. T HUS PROFIT OF RS. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 15 15,63,945/- HAS BEEN RECORDED/BOOKED IN THE CASE OF MAHLA REAL ESTATE PVT. LTD. THEREFORE, UNDISCLOSED PROFIT FRO M SALE OF SAID PROPERTY WOULD WORK OUT TO (RS. 128,05,000-RS. 15,6 3,945)= 112,41,055/-. (V) LD. CIT(A) IN ORDER DATED 19.05.09 HAD DIRECTED THA T UNDISCLOSED PROFIT IS TO BE CONSIDERED IN THE YEAR OF ITS SALE AND QUANTUM OF THIS PROFIT WAS REQUIRED TO BE WORKED OUT BY THE AO FOR AY 2007- 08. IN VIEW OF ABOVE DISCUSSION, THE AO IS DIRECTE D TO ASSESS THE UNDISCLOSED PROFIT FROM THIS PROPERTY AT RS. 112,41 ,055/- FOR AY 2007-08 INSTEAD OF RS. 128,00,000/- IN ORDER DATED 28.12.2011. THE ADDITION OF RS. 45,04,000/- IS FOUND TO B E IN ORDER AS IT IS AS PER DIRECTIONS OF THE LD. CIT(A). THEREFORE, GR OUND NO. 2 IN THIS REGARD IS DISMISSED. (VI) HOWEVER, THE SET OFF WOULD BE AVAILABLE AGAINST THE UNDISCLOSED STOCK SURRENDER OF RS. 2.8 CRORES FOUND AT THE TIME OF SEARCH OUT OF SALE PROCEEDS REALIZED OUT OF BOOKS O F RS.251,60,000/- (RS. 376,60,000- RS. 125,00,000) ON 03.07.06 SINCE THERE IS NO MATERIAL/EVIDENCE ON RECORD THAT THIS AMOUNT WAS INVESTED ELSEWHERE AND IN VIEW OF THE CLEAR DIRECTI ONS OF THE LD. CIT(A) IN HIS ORDER DATED 19.05.09. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 16 FURTHER, THE HONBLE ITAT HAS ALSO OBSERVED I N THIS REGARD IN THEIR ORDER DATED 26.11.2010 (PARA 49) THAT EFFECT OF SET OFF HAS TO BE GIVEN AS PER DIRECTION OF LD. CIT(A) SINCE THE A O HAS ADDED THE AMOUNT FOR AY 2006-07, WHEREAS THE LD. CIT(A) HAS D IRECTED TO ADD THIS AMOUNT FOR AY 2007-08. THUS, IN THIS CASE THERE IS SHIFTING OF INCOME FROM AY 2006-07 TO AY 2007-08 AN D THE RATIO OF THE HONBLE SUPREME COURT DECISION OF CIT VS SHELLY PRODUCTS 261 ITR 367 IS NOT APPLICABLE. IN VIEW OF ABOVE DISCUSSION, THE AO IS DIRECT ED TO ALLOW SET OFF OF RS.251,60,000/- INSTEAD OF RS. 128,00,000/- IN T HE ORDER DATED 28.12.11, NOTWITHSTANDING THE FACT THAT THE ASSESSE D INCOME WOULD FALL TO RS. 737,94,065/- I.E. BELOW THE RETUR NED INCOME OF RS. 827,40,410/-. IN FACT, IT IS ALSO SEEN THAT THE ALTHOUGH THE ASSESSED INCOME WOULD FALL BELOW THE RETURNED INCOM E IN AY 2007- 08 BY RS. 89,46,345/- BUT AT THE SAME TIME, THE ASS ESSED INCOME HAS GONE UP BY RS. 94,15,000/- IN AY 2006-07 ON ACC OUNT OF ADDITIONS RELATING TO THE MAHLA PROPERTY. THE AO IS DIRECTED TO WORK OUT THE REVISED INCOME AND RELIEF AS DIRECTED ABOVE. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 17 IN VIEW OF THE ABOVE, THE GROUND NO. 1,4 & 5 A RE PARTLY ALLOWED ON ABOVE TERMS, GROUND NO. 3 IS ALLOWED AND GROUND NO. 2 IS DISMISSED. 2.4 NOW THE REVENUE IS IN APPEAL BEFORE US. LD. DR HAS VEHEMENTLY ARGUED THE MATTER, TOOK US THROUGH THE ORDERS OF CO ORDINATE BENCH IN THE FIRST ROUND OF APPEAL AND THE ORDER OF THE LD C IT(A) IN THE FIRST ROUND OF APPEAL AND THE LATEST CIT(A) ORDER UNDER CHALLEN GE. HE SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT T HE AO HAS CORRECTLY GIVEN EFFECT TO THE DIRECTIONS OF THE ITAT IN THE F IRST ROUND OF APPEAL AND THERE IS NO INFIRMITY IN SUCH ORDER. 2.5 THE LD. AR RELIED ON AND SUPPORTED THE ORDER OF THE LD CIT(A) AND SUBMITTED THAT BROADLY TWO ISSUES ARE INVOLVED IN T HIS CASE. FIRST ISSUE IS REGARDING SET OFF AGAINST SURRENDERED INCOME AND SE CONDLY SHIFTING OF INCOME FROM ASSESSMENT YEAR 2006-07 TO 2007-08 AND ALSO WHETHER ASSESSED INCOME CAN BE BELOW THE RETURN INCOME. ON EACH OF THIS MATTER, LD. AR HAS SUBMITTED AS UNDER:- 1. ISSUE OF SET OFF AGAINST SURRENDERED INCOME:- IT WAS SUBMITTED THAT THE ISSUE INVOLVED REVOLVES A ROUND THE IMMOVABLE PROPERTY TITLED AS MAHLA PROPERTY. ALTHOUGH THIS P ROPERTY HAS BEEN ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 18 PURCHASED IN THE HANDS OF THE M/S MAHLA REAL ESTATE PVT. LTD. BUT THE UNACCOUNTED INVESTMENT/PROFIT IN RESPECT OF THIS PR OPERTY HAS BEEN CONSIDERED IN THE HANDS OF THE ASSESSEE. THE ASSES SEE BEING A DIRECTOR IN THIS COMPANY HAD OFFERED THE UNACCOUNTED INVESTM ENT AND THE INCOME PERTAINING TO THE PURCHASE AND SALE OF THIS PROPERTY IN HIS INDIVIDUAL HANDS. THE FACTS OF PURCHASE AND SALE O F THIS PROPERTY AS PER REGISTERED DEED AND AS PER SEIZED PAPERS FOUND DURI NG SEARCH ARE AS UNDER:- PARTICULARS OF PURCHASE AND SALE OF MAHLA PROPERTY: MAHLA PROPERTY PURCHASE AMOUNT SALE AMOUNT PROFIT AS PER REGISTERED DEED 10936055 12500000 1563945 AS PER SEIZED DOCUMENTS 24855000 37660000 12805000 THE ADMITTED FACTS ARE THAT WHEREAS THE PROPERTY WA S PURCHASED IN ASSESSMENT YEAR 2006-07 IT WAS SOLD IN ASSESSMENT Y EAR 2007-08. THE ASSESSEE HAD CLAIMED THAT ON THE SALE OF THIS PROPE RTY FUNDS OVER AND ABOVE AND IN ADDITION TO THAT ACCOUNTED FOR ON SALE OF THIS PROPERTY AMOUNTED TO RS. 2,51,60,000/- (37660000-125000000) WERE RECEIVED. THE PROPERTY ACTUALLY WAS SOLD AS PER SEIZED DOCUME NTS FOR A SUM OF RS. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 19 3,76,60,000/- WHEREAS AS PER SALE DEED THE SALE WAS SHOWN ONLY FOR A SUM OF RS. 1,25,00,000/-. THUS ACTUALLY ASSESSEE W AS IN RECEIPT OF ON MONEY FUNDS OF RS. 2,51,60,000/- (37660000-12500000 0). THE SET OFF OF THIS AMOUNT WAS SOUGHT AGAINST SURRENDERED INVES TMENTS IN OTHER PROPERTIES IN ASSESSMENT YEAR 2007-08. THE LEARNED CIT(A) HAS ALLOWED THE SAME AS PER PARA (VI) ON PAGE 19 OF THE APPELLATE ORDER. THE LEARNED CIT(A) HAS CORRECTLY HELD THAT THE SET OFF OF THIS AMOUNT OF RS. 2,51,00,000/- WOULD BE AVAILABLE AGAINST THE UN DISCLOSED STOCK SURRENDERED BY THE ASSESSEE AT THE TIME OF SEARCH O F RS. 2.8 CRORES. THE LEARNED CIT(A) HAS FURTHER OBSERVED THAT THERE IS NOTHING ON RECORD WHICH MAY SHOW THAT THIS AMOUNT OF RS. 2,51,60,000/ - WAS INVESTED ELSEWHERE. THE FINDING OF THE LEARNED CIT(A) IS PE RFECTLY IN ORDER. THIS FINDING OF THE LEARNED CIT(A) IS IN TUNE WITH THE E ARLIER ORDER DATED 19.05.2009 WHEREIN THE LEARNED CIT(A) HAD DIRECTED THAT THE SALE PROCEEDS OF THE PURCHASE OF THIS PROPERTY REQUIRE T O BE SET OFF WITH THE AVAILABLE SURRENDER OF THE INVESTMENT. 2. SHIFTING OF INCOME FROM ASSESSMENT YEAR 2006-07 TO 2007-08 IT WAS SUBMITTED THAT THE LEARNED CIT(A) HAS FURTHE R CORRECTLY HELD THAT AS PER THE EARLIER ORDER DATED 19.05.2009 THE PROFI T ON SALE OF THIS PROPERTY WAS REQUIRED TO BE CONSIDERED IN ASSESSMEN T YEAR 2007-08 ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 20 INSTEAD OF IN ASSESSMENT YEAR 2006-07. THUS THE IN COME ON SALE OF THIS PROPERTY OF RS. 1,28,05,000/- WAS WRONGLY TAKEN IN ASSESSMENT YEAR 2006-07 WAS SHIFTED/TRANSFERRED TO ASSESSMENT YEAR 2007-08. THE PROFIT ON SALE OF THIS PROPERTY WAS FURTHER CORRECT ED. IT WAS HELD THAT THE ASSESSEE AS PER REGISTERED SALE DEED DECLARED PROFI T OF RS. 15,63,945/- IN THE BOOKS OF ACCOUNTS AS IS CLEAR FROM THE TABLE AB OVE. WHEREAS THE PROFIT AS PER SEIZED DOCUMENTS WORKED OUT TO RS. 1, 28,05,000/-. THUS ONLY THE DIFFERENCE BETWEEN THE TWO WHICH COMES TO RS. 1,12,41,055/- (12805000-1563945) WAS ASSESSABLE AS INCOME IN ASSE SSMENT YEAR 2007-08 AS INCOME TO THE EXTENT OF RS. 15,63,945/- ALREADY STOOD DECLARED BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS. THE DIRECTIONS OF THE LEARNED CIT(A) ARE PERFECTLY LAWFUL, LEGAL AND JUST IFIED. THERE IS NO CASE FOR THE REVENUE FOR AGITATING THE MATTER. 3. ISSUE OF ASSESSED INCOME BEING BELOW THE RETURNED I NCOME:- IT WAS SUBMITTED THAT THE REVENUE HAS ALSO AGITATED THE MATTER ON THE GROUND THAT THE DIRECTION OF THE LEARNED CIT(A) WOU LD RESULT IN DETERMINATION OF INCOME LESSER THAN SHOWN IN THE RE TURN BY THE ASSESSEE. THIS ISSUE HAD CROPPED UP IN THE FIRST R OUND OF APPEAL BEFORE THE HONBLE ITAT AND THE SAME WAS DECIDED IN CROSS- OBJECTION NO. 127/JP/2009 AND ITA NO. 645, 646/JP/2009 ORDER DATE D 26.12.2010. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 21 THE RELEVANT DIRECTIONS OF THE HONBLE ITAT ARE IN THE CONTEXT OF THIS VERY PROPERTY THE SAME APPEAR IN PARA NO. 49 & 50 O F PAGE 37 OF THE ORDER DATED 26.11.2010 OF THE ITAT. THE SAME ARE Q UOTED BELOW:- THERE IS NO DISPUTE THAT SET OFF IS ALLOWABLE AGAI NST THE SURRENDERED AMOUNT ..(PARA 49) . ONE OF THE CONTENTION O F THE ASSESSEE THAT THE ASSESSING OFFICER IS NOT ALLOWING SET OFF FOR THE REASON THAT IF THE SET OFF IS ALLOWED THEN THE ASSESSED INCOME WILL BE LESS THAN THE DISCLOSED INCOME. THIS IS NOT A QUESTION WHETHER R ETURNED INCOME WILL BE REDUCED OR NOT. THE QUESTION IS TO ALLOW THE SE T OFF.(PARA 50) IN VIEW OF THE AFORESAID FINDING AND OBSERVATION OF THE HONBLE ITAT THE MATTER STANDS SETTLED. THE DIRECTION OF THE LEARNE D CIT(A) ARE IN TUNE WITH THE OBSERVATIONS OF THE HONBLE ITAT. THE REV ENUES APPEAL ON THIS POINT DOES NOT HOLD GOOD AND FAILS. THE DECISION O F THE LEARNED CIT(A) DESERVES TO BE CONFIRMED. IT IS FURTHER SUBMITTED THAT IT IS ALSO THE ESTABLISHED POSITION OF LAW THAT THE INCOME OF THE ASSESSEE HAS TO BE DETERMINED AS PER PROVISIONS OF LAW AND THE SAME CA N BE ASSESSED LESSER THAN SHOWN IN THE RETURN. THE FOLLOWING DEC ISIONS ARE QUOTED IN SUPPORT:- (I) SUSHIL KUMAR DAS VS. INCOME TAX OFFICER (2011) 11 I TR 0017 ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 22 THE MOOT QUESTION ARISING OUT OF THIS APPEAL IS WHE THER THE INCOME DETERMINED BY THE AO ON THE BASIS OF THE RETURN FIL ED BY THE ASSESSEE CAN BE A FIGURE LOWER THAN THE INCOME RETURNED BY T HE ASSESSEE. IT IS A WELL SETTLED THAT THE PRINCIPLE FOR DETERMINING THE TAXABLE INCOME OF THE ASSESSEE UNDER THE IT ACT SHOULD BE WITHIN THE PURV IEW OF THE LAW IN FORCE. IF THE TAXABLE INCOME DETERMINED BY THE AO I S NOT IN ACCORDANCE WITH SUCH PRINCIPLE IT IS OPEN TO THE ASSESSEE TO C ONTEND THE SAME BEFORE THE HIGHER AUTHORITIES TO FOLLOW THE CORRECT APPLIC ATION OF LAW TO DETERMINED THE ACTUAL TAXABLE INCOME OF THE ASSESSE E. IN OUR CONSIDERED VIEW, THE LOWER AUTHORITIES, NOT EXPECTED, TO SAY T HAT MERELY BECAUSE THE ASSESSEE HAS RETURNED INCOME WHICH IS HIGHER THAN T HE INCOME DETERMINED IN ACCORDANCE WITH LEGAL PRINCIPLES SUCH RETURNED INCOME CAN BE TREATED AS LAWFULLY ASSESSED. AN ASSESSEE IS LIA BLE TO PAY TAX ONLY UPON THE TAXABLE INCOME. THE LAW IMPOSED BY THE AO TO ASSESS THE INCOME ACCORDING TO LAW AND DETERMINED THE TAX PAYA BLE THEREON. IN DOING SO, THE AO CANNOT ASSESS THE INCOME OF THE AS SESSEE AN AMOUNT WHICH IS NOT TAXABLE AS PER LAW THOUGH SHOWN BY THE ASSESSEE IN THE RETURN. IT IS ALWAYS OPEN TO THE ASSESSEE TO TAKE A PLEA THAT THE TAXABLE INCOME THOUGH SHOWN AS INCOME IS NOT TAXABLE UNDER LAW BEFORE THE HIGHER AUTHORITIES. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 23 (II) UNITED PHOSPHOROUS LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (2012)67 DTR -395 IN VIEW OF THE PROVISIONS OF THE IT ACT, THERE CAN BE DETERMINATION OF INCOME UNDER THE PROVISIONS OF THE ACT LESS THAN TH E RETURNED INCOME DUE TO VARIOUS FACTORS. THERE IS NO BAR IN DETERMIN ING THE TOTAL INCOME/UNDISCLOSED INCOME LESS THAN THE RETURNED IN COME IF FACTS SO WARRANT. (III) NIRMALA L.MEHTA VS. BALASUBRAMANIAM, COMMISSIONER O F INCOME TAX & ORS. (2004) 269 ITR 0001 IT MAY BE HELD THAT MERELY BECAUSE THE PETITIONER O FFERED THE PRIZE MONEY WON IN THE LOTTERY OF THE SIKKIM GOVERNMENT, TO TAX UNDER THE IT ACT, 1961, THAT SHALL NOT TAKE AWAY HER RIGHT IN CO NTENDING THAT THE SAID PRIZE MONEY WAS NOT CHARGEABLE AND ASSESSABLE TO TA X UNDER THE IT ACT IN THE REVISIONAL JURISDICTION. IN VIEW OF THE AFORESAID FACTS IT WAS SUBMITTED THA T THE ORDER OF THE LEARNED CIT(A) IS PERFECTLY LAWFUL AND DESERVES TO BE CONFIRMED. THE DIRECTIONS GIVEN BY HIM ARE IN ACCORDANCE WITH THE LAW AND FACTS OF THE CASE. THE APPEAL OF THE REVENUE DESERVES TO BE DISM ISSED. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 24 2.6 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDER OF THE LD C IT(A) AND THE COORDINATE BENCH IN THE FIRST ROUND OF APPEAL AS WE LL AS THE LATEST ORDER OF LD CIT(A) UNDER CHALLENGE BEFORE US AND THE LD A RS CONTENTIONS AS REPRODUCED ABOVE. THE LIMITED ISSUE UNDER CONSIDER ATION IS THE NATURE OF DIRECTIONS ISSUED BY THE COORDINATE BENCH IN THE FIRST ROUND OF APPEAL AND WHETHER THE SAME HAS BEEN GIVEN DULY EFFECT TO BY THE AO. THE DIRECTIONS OF THE COORDINATE BENCH ARE CLEAR THAT THE ASSESSEE IS ASKING TO ALLOW SET OFF OF UNDISCLOSED PROFIT OF RS 1.28 C RORES AGAINST THE AMOUNT SURRENDERED BY THE ASSESSEE AND SINCE THE FA CTS ARE NOT CLEAR, THEREFORE, WE ARE OF THE VIEW THAT MATTER SHOULD GO BACK TO THE FILE OF THE AO TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE. AND WE SET ASIDE THIS ISSUE TO THE FILE OF THE AO TO EXAMINE THE ADD ITIONAL GROUND OF APPEAL IN THE LIGHT OF OUR OBSERVATIONS AS ABOVE AN D AFTER TAKING INTO CONSIDERATIONS THE WRITTEN SUBMISSIONS FILED ON BEH ALF OF THE ASSESSEE. 2.7 UNDISPUTEDLY, THE IMPUNGED PROCEEDINGS ARE SET- ASIDE PROCEEDINGS WITH DIRECTIONS TO CONSIDER THE ADDITIO NAL GROUND AS SUBMITTED BEFORE THE CO-ORDINATE BENCH IN TERMS OF EXAMINING THE SET OFF OF UNDISCLOSED PROFIT OF RS 1.28 CRORES AGAINST THE AMOUNT SURRENDERED BY THE ASSESSEE. AND IN LIGHT OF THESE DIRECTIONS, THE AO ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 25 HAS CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND HAS STATED THAT SINCE THE SALE OF MAHALA PROPERTY HAS HAPPENED ON 3 .7.2006, THE PROFIT ARISING FROM SUCH SALE OF MAHALA PROPERTY AMOUNTING TO RS 1.28 CRORES (AFTER CONSIDERING THE SALE CONSIDERATION OF RS 3.7 6 CRORES AND COST OF PURCHASE OF RS 2.48 CRORES AS PER SEIZED DOCUMENTS) HAS BEEN WORKED OUT AND THE SAME WAS ALLOWED SET OFF AGAINST THE SU RRENDER OF STOCK OF RS 2.8 CRORES. IN OUR VIEW, THE AO HAS RIGHTLY GIV EN EFFECT TO THE DIRECTIONS OF THE COORDINATE BENCH AND WE SEE NO IN FIRMITY IN THE SAME. 2.8 AT THE SAME TIME, WE ARE NOT IN AGREEMENT WITH THE FINDINGS OF THE LD CIT(A) WHERE HE STATES AT PARA 4.3 (VI) OF H IS ORDER THAT SET OFF OF SALE PROCEEDS WOULD BE AVAILABLE AGAINST THE UNDISC LOSED STOCK SURRENDER OF RS 2.8 CRORES FOUND AT THE TIME OF SEARCH OF SAL E PROCEEDS REALIZED OUT OF BOOKS OF RS 2.51 CRORES SINCE THERE IS NO MATERI AL/EVIDENCE ON RECORD THAT THIS AMOUNT WAS INVESTED ELSEWHERE AND IN VIEW OF THE CLEAR DIRECTIONS OF THE LD CIT(A) IN HIS ORDER DATED 19.5 .09. THE REASON FOR THE SAME IS THAT THERE IS NO SUCH DIRECTIONS BY THE LD CIT(A) IN THE FIRST ROUND AND THATS PRECISELY THE REASON WHY THE ASSES SEE TOOK THE ADDITIONAL GROUND BEFORE THE COORDINATE BENCH AND W HICH HAS BEEN RIGHTLY GIVEN EFFECT TO BY THE AO. ITA NO. 19 8/JP/2013 DCIT VS. SHRI RAM BABU GUPTA 26 IN LIGHT OF ABOVE DISCUSSIONS, WE SET ASIDE THE ORD ER OF THE LD CIT(A) AND RESTORE THE ORDER PASSED BY AO. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/03/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 28/03/2017. * GANESH*. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- DCIT, CENTRAL CIRCLE-1, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SHRI RAM BABU GUPTA, 12-13, PATEL COLONY, SARDAR PATEL MARG, JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 198/JP/2013}. VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR