ANIL KUMAR BAJAJ, NEW DELHI V. ACIT, CENTRAL CIRCLE- 15, NEW DELHI

ITA 2/DEL/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3569 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 01-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANJAY GOEL
• Keywords: Business income; Search and seizure; Document seized; Documents seized
• Section: 143(3); 142(1); 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER, AND SHRI N.K. BILLAIYA ACCOUNTANT MEMBER ITA NO. 2/DEL/2018 [A.Y. 2011-12] SHRI ANIL KUMAR BAJAJ VS. THE A.C.I.T H. NO. 3/47, ROOP NAGAR CENTRAL CIRCLE - 15 DELHI NEW DELHI PAN : AALPB 2378 R [APPELLANT] [RESPONDENT] DATE OF HEARING : 03.03.2020 DATE OF PRONOUNCEMENT : 04.03.2020 ASSESSEE BY : SHRI RAKESH GUPTA, A DV SHRI SOMIL AGARWAL, ADV REVENUE BY : SHRI SANJAY GOEL, CI T-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER, THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER OF THE CIT(A) - 26, NEW DELHI DATED 29.11.2017 PERTAININ G TO A.Y 2011-12. 2 2. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER I N IMPOSING PENALTY OF RS. 64,40,000/- U/S 271AAA OF THE ACT. 3. THE ROOTS FOR LEVY OF PENALTY LIE IN THE SEARCH AND SEIZURE OPERATION CARRIED OUT AT THE BUSINESS AND RESIDENTI AL PREMISES OF THE ASSESSEE ON 11.11.2010. 4. NOTICE U/S 142(1) OF THE ACT WAS ISSUED AND SERV ED UPON THE ASSESSEE, REQUIRING THE ASSESSEE TO FILE HIS RETURN OF INCOME. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE ENCLOSED RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 INCLUDING THEREIN AN AMOUNT OF RS. 4 CRORES AS ADDITIONAL INCOME OVER AND ABOVE THE INCOME FILED I N INCOME RETURNED ON 30.09.2011. 5. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER OBSERVED THAT IN THE STATEMENT RE CORDED U/S 132(4) OF THE ACT, DURING THE COURSE OF SEARCH, THE ASSESS EE, INTER ALIA, SURRENDERED A SUM OF RS. 2.60 CRORES AS ADDITIONAL INCOME FOR ASSESSMENT YEAR 2011-12 IN RESPECT OF UNACCOUNTED S ALES TRANSACTION FOUND RECORDED IN ANNEXURE A-1 AND ANNEXURE A-2. H OWEVER, DURING 3 THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT THE STATEMENT MADE U/S 132(4) OF THE ACT WAS RETRACTED ON 31.12.2010 AS PER COMMUNICATION SENT BY HIM TO THE DIRECTOR OF IN COME TAX [INV] AS THE SAID STATEMENT WAS MADE BY HIM UNDER A MISTAKEN BELIEF OF FACT/LAW. THE RELEVANT PORTION OF THE ASSESSEES S TATEMENT READ AS UNDER: AS REGARDS THE AMOUNT OF RS.2.44 CRORES WHICH ARE THE OUTSTANDING BALANCES AS ON 1.1.1998 NOTED IN THE SE IZED 1998 DIARY IN ANNEXURE A- 3 FOUND DURING THE COURSE OF S EARCH, THE ASSESSEE HAS EXPLAINED IN ITS LETTER DATED 4 TH MATRCH,2013 AS WELL AS IN ITS LETTER DATED 31.12.2010 THAT SUCH IO TTINSS PERTAIN TO 1998 AND AS PER LAW CANNOT BE TAXED IN ASSESSMEN T YEAR 2011- 12. IT HAS FURTHER BEEN EXPLAINED IN THE SURRENDER OF RS. 4.00 CRORES MADE BY THE ASSESSEE WHICH INCLUDES BOTH THE CASH SEIZED FROM THE ASSESSEE ON THE DATE OF SEARCH AS A LSO THE UNACCOUNTED BUSINESS TRANSACTIONS FOUND RECORDED IN ANNEXURE A-L AND A-2. IN THIS REGARD IT IS FURTHER SUBMITTED THAT YOUR GOODSELF HAS DULY EXAMINED SEIZED ANNEXURE A-L AND A-2 WHICH CONSIST OF UNACCOUNTED BUSINESS TRANSACTIONS AND TH E TOTAL OF UNACCOUNTED SALES TURNOVER AS PER ANNEXURE A-L AND A-2 IS RS.2.60 CRORES WHICH IS THE TOTAL SALES TURNOVER. I T MAY BE APPRECIATED THAT SALES TURNOVER CANNOT BE THE SAME AS TAXABLE INCOME OF THE ASSESSEE. IT IS RESPECTFULLY SUBMITTE D THAT THE ASSESSEE HAS DULY SURRENDERED THE WHOLE AMOUNT OF R S.2.60 4 CRORES WHILE FILING ITS RETURN OF INCOME AND OFFERE D TO PAY TAX ON THE ENTIRE AMOUNT OF RS.2.60 CRORES WHICH IN FAC T IS THE TOTAL UNACCOUNTED SALES TURNOVER AND NOT THE PROFIT ARISI NG TO THE ASSESSEE OUT OF SUCH UNACCOUNTED SALES TURNOVER. IT IS FURTHER SUBMITTED THAT IF THE PROFIT ON SUCH UNACCOUNTED SA LES TURNOVER OF RS.2.60 CRORES IS CALCULATED BY APPLYING THE G.P . RATE OF 4% THEN IN SUCH A CASE THE PROFIT ARISING TO THE ASSES SEE ON THE AFORESAID UNACCOUNTED SALES TURNOVER WOULD ONLY BE RS. 10.40 LACS (4% OF RS.2.60 CRORES). AS AGAINST THIS PROFIT OF RS.LU.40 LACS, THE ASSESSEE HAS ALREADY INCLUDED AN AMOUNT O F RS.2.60 CRORES IN ITS RETURN OF INCOME AND HAS OFFERED THE SAME FOR TAXATION INSPITE OF THE FACT THAT THE PROFIT/INCOME COMPONENT IN THE ABOVE AMOUNT OF RS.2.60 CRORES IS ONLY RS. 10.4 0 LACS ARISING OUT OF SUCH BUSINESS TRANSACTIONS, THEN THE BENEFIT OF TELESCOPING SHOULD BE ALLOWED TO THE ASSESSEE IN RE SPECT OF EXCESS AMOUNT SO OFFERED FOR TAXATION. IN THE INSTA NT CASE EVEN IF THE AMOUNT OFRS.2.44 CRORES WHICH IS THE OUTSTAN DING BALANCE AS ON 1.1.1998 IS C ONSIDG&EDFNASS ESS MENT YEAR 20 11-12 THEN ALSO THE EXCESS AMOUNT OF IN CQ/FIELQFFFIFIY THE ASSESSEE FOR TAXATION OUT OF RS.2.60 CRORES DULY COVERS THE AMOU NT OF RS.2.44 CRORES OUTSTANDING AS ON 1.1.1998 AND THEREFORE, AL SO THERE IS NO JUSTIFICATION IN MAKING FURTHER ADDITION OF RS.2.44 CRORES OVER AND ABOVE THE AMOUNT OF RS.2.60 CRORES. 5 6. THIS STATEMENT OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE ASSESSING OFFICER WHO WAS OF THE FIRM BELIEF THAT T HE ENTRIES FOUND IN THE DIARY AMOUNTING TO RS. 2.44 CRORES ARE INDEPEND ENT ENTRIES AND CANNOT BE RELATED WITH SALES TRANSACTION WHICH ARE ALSO INDEPENDENT ENTRIES FOUND IN THE SEIZED DOCUMENTS AS PER ANNEXU RE A -1 AND A-2. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS. 2.44 CORES AND COMPLETED ASSESSMENT AS UNDER: INCOME FROM BAJAJ COMPANY AS DECLARED INCOME FROM HOUSE PROPERTY AS DECLARED INCOME FROM BUSINESS INCLUDING THE INCOME OF 4,OO,000/- OFFERED U/S 132(4) OF THE ACT II DECLARE D BY THE ASSESSEE INCOME FROM OTHER SOURCES AS DECLARED ADD: UNDISCLOSED INCOME AS DISCUSSED ABOVE TOTAL: LESS DEDUCTION UNDER CHAPTER VIA AS CLAIMED TOTAL TAXABLE INCOME ASSESSED U/S 143(3) AT RS.6,73,38,487/-. 7. IT CAN BE SEEN FROM THE ABOVE THAT THE ADDITION OF RS. 2.44 CRORES IS OVER AND ABOVE INCOME OF RS. 4 CRORES OFFERED U/ S 132(4) OF THE ACT AS DECLARED IN THE RETURN OF INCOME BY THE ASSESSEE . SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271AAA OF THE ACT RS. 15,00,000/- RS. 41,424/- RS.4,01,51,012/. RS. 13,46,051/- RS.2.44.00.000/ - RS.6,74,38,487/ - RS. 1.00.000/- RS. 6,73,38,487/- 6 AND LEVIED PENALTY OF RS. 64.40 LAKHS, WHICH WAS CO NFIRMED BY THE LD. CIT(A). 8. HAVING HEARD THE RIVAL SUBMISSIONS, WE HAVE CARE FULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IN SO FAR AS THE ADDITION OF RS. 2.44 CRORES IS CONCERNED, WHICH WAS OVER AND ABOVE THE DECLARED SUM OF RS. 4 CRORES, THE TRIBUNAL IN ITA NO. 4392/DEL/2 014, VIDE ORDER DATED 28.06.2018, HAS HELD THAT THE SUM OF RS. 2.44 CRORES IS PART OF THE SUM OF RS. 4 CRORES AND, THEREFORE, NO SEPARATE ADDITION SHOULD BE MADE IN RESPECT OF THIS AMOUNT. THE RELEVANT FINDI NGS OF THE TRIBUNAL READ AS UNDER: 18. NOW COMING TO GROUND NO.4, IT IS NOT IN DISPUT E THAT THE DECLARATION OF RS.2.6 CRORE BY THE ASSESSEE U/S 132 (4) OF THE ACT WAS ON ACCOUNT OF SALES OUTSIDE THE BOOKS. BOTH THE AUTHORITIES BELOW DID NOT DISPUTE THIS FACT. WHEN T HE SALES ARE TO THE TUNE OF RS.2.6 CRORE, WE FIND IT DIFFICULT T O UNDERSTAND AS TO HOW THE ENTIRE SALES COULD BE BROUGHT TO TAX. IT IS ALSO AN ADMITTED FACT THAT IN RESPECT OF THIS ASSESSMENT YE AR, THE GP RATE OF THE ASSESSEE'S BUSINESS OF TRADING IN CHEMI CALS IN THE NAME AND STYLE OF M/S SAMIT INTERNATIONAL AT 3.74% WAS ACCEPTED BY THE AO WHILE PASSING THE ASSESSMENT ORD ER. IT IS, THEREFORE, QUITE REASONABLE TO APPLY THE SAME GP RA TE ON THE UNACCOUNTED SALES OF RS.2.6 CRORES ALSO WHICH COMES TO RS.10.40 7 LACS. AFTER REDUCING THE SEIZED CASH OF ABOUT RS.1. 30 CRORES, THERE REMAINS THE BALANCE OF RS.2.7 CRORES OUT OF T HE SURRENDERED AMOUNT ALONG WITH THE RETURN OF INCOME FILED ON 11.1.2013. OUT OF THIS RS.2.7 CRORES IF THE INCOME TO THE TUNE OF RS.10.40 LACS IS ADJUSTED, STILL THEIR REMAINS RS.2 .49 CRORE OUT OF WHICH THE ALLEGED OUTSTANDING BALANCE TO BE FOUND F ROM THE DIARY OF RS.2.44 CRORE COULD BE ADJUSTED. AFTER THI S, THERE REMAINS NO AMOUNT TO BE BROUGHT TO TAX. 19. THE REASONS GIVEN BY THE AUTHORITIES BELOW THAT THESE TWO AMOUNTS ARE SURRENDERED SEPARATELY, AS SUCH, THEY C ANNOT BE TELESCOPED AGAINST EACH OTHER IS NOT SOUND AND CANN OT BE ACCEPTED. THESE TWO TRANSACTIONS HAVE AN INTRINSIC LINK AS SUBMITTED BY THE LEARNED AR THAT IT IS ONLY OUT OF THE SALE AMOUNT THE RECEIVABLE FROM THE PERSONS LISTED ON TH E LEAF RELATING TO 1.1.1998 ARISE. WE ACCEPT THE SAME AND DIRECT THE AUTHORITIES TO TELESCOPE RS.2.44 CRORES INTO RS.2.6 0 CRORES IN WHICH EVENT NOTHING OVER AND ABOVE THE DECLARATION OF RS.4 CRORE IS TAXABLE. WE ACCORDINGLY ANSWER GROUND NO.4 IN FA VOUR OF THE ASSESSEE. 9. IN LIGHT OF THE AFORE STATED FINDINGS OF THE TRI BUNAL, THE ENTIRE QUARREL BOILS DOWN TO THE DECLARED SUM OF RS. 4 CRO RES WHICH WAS OFFERED BY THE ASSESSEE IN HIS RETURN OF INCOME. A CAREFUL PERUSAL OF THE ORDER U/S 271AAA OF THE ACT WOULD SHOW THAT THE ASSESSING OFFICER 8 HAS CONSIDERED THE AMOUNT OF RS. 2.44 CRORES, OVER AND ABOVE THE SURRENDERED AMOUNT, AND HAS COMPUTED THE PENALTY AC CORDINGLY. SINCE THE ISSUE RELATING TO THE SUM OF RS. 2.44 CRORES IS NOW WELL SETTLED IN FAVOUR OF THE ASSESSEE, IN OUR CONSIDERED OPINION, THE ASSESSING OFFICER SHOULD NOW CONSIDER THE AMOUNT OF RS. 4 CRORES WHIC H WAS OFFERED U/S 132(4) OF THE ACT AND HONOURED IN THE RETURN OF INC OME FOR LEVY OF PENALTY U/S 271AAA OF THE ACT. WE, ACCORDINGLY, RE STORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER. 10. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER T HE LEVY OF PENALTY U/S 271AAA OF THE ACT ON THE SUM OF RS. 4 CRORES AS PER THE PROVISIONS OF LAW KEEPING IN MIND THAT THE SAID SUM WAS OFFERE D FOR TAXATION IN THE STATEMENT MADE U/S 132(4) OF THE ACT AND HONOUR ED IN THE RETURN OF INCOME. NEEDLESS TO MENTION, THE ASSESSING OFFI CER SHALL GIVE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEAR D TO THE ASSESSEE. 9 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT A NO. 2/DEL/2018 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04.03. 2020. SD/- SD/- [H.S. SIDHU] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 04 TH MARCH, 2020. VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 10 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER