ACIT, Meerut V. Sh. Ved Prakash Sharma, Ghaziabad

ITA 2311/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3434 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 1999-2000
• Appeal Filed On: 17-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Assessee Lawyers: ASHOK GA NDHI
• Keywords: Loose papers; Document seized; Documents seized
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A.NOS.2311, 2312 & 2313/DEL/2010 ASSESSMENT YEARS : 1999-2000, 2000-01 & 2001-02 ASSTT. COMMISSIONER OF INCOME-TAX, SHRI VED PRAKAS H SHARMA, CENTRAL CIRCLE, MEERUT. VS. 8/60, RAJENDRA NAGAR, SAHIBABAD, GHAZIABAD. PAN: ABLPS6836R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. CHAND, SR. DR. RESPONDENT BY : ASHOK GA NDHI, ADVOCATE. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THESE THREE APPEALS ARE FILED BY THE REVENUE AGAINS T THREE DIFFERENT ORDERS, ALL DATED 24.02.2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME- TAX (APPEALS) IN THE MATTER OF AN ASSESSMENT MADE U NDER SECTION 143(3)/153C OF THE INCOME-TAX ACT, 1961 (THE ACT), PERTAINING TO THE ASSESSMENT YEARS 1999-2000, 2000-01 AND 2001-02. 2. THE ONLY GROUND TAKEN IN ALL THESE 3 YEARS IS CO MMON AND IDENTICAL, WHICH READS AS UNDER:- THAT THE CIT(A) ERRED IN LAW IN DELETING THE ADDIT ION ON THE BASIS OF ENTRIES IN THE SEIZED DIARIES ON THE GROUN D THAT THE DIARY WAS NOT SEIZED FROM HIM BUT FROM SHRI DINESH SHARMA IGNORING 2 THE FACTS THAT SHRI DINESH SHARMA WAS THE BROTHER-I N-LAW OF THE ASSESSEE & IS A PERSON OF SMALL MEANS & WAS STAYING WITH THE ASSESSEE & HAD ALSO NOT OWNED UP THE DIARY IN COURS E OF SEARCH. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IN THIS CASE, A S EARCH AND SEIZURE OPERATION UNDER SECTION 132 OF THE ACT, WAS CARRIED OUT IN RE SPECT OF SUPER TECH GROUP OF CONSTRUCTION, GHAZIABAD, THAT WAS COMMENCED ON 7 .10.2003 AND CONCLUDED ON 13.10.2003. THE AO HAS STATED IN THE ASSESSMENT ORDER THAT THE RESIDENCE OF SHRI INDER JEET SHARMA AND SMT. RA JNI SHARMA AT 8/60, RAJINDER NAGAR, GHAZIABAD WAS SEARCHED ON 7.10.2003 . THE PRESENT ASSESSEE, SHRI VED PRAKASH SHARMA, SON OF SHRI IND ER JEET SHARMA AND SMT. RAJNI SHARMA, WAS LIVING WITH THEM AT THE PREMISES. IN THE COURSE OF SEARCH, VARIOUS DOCUMENTS, LOOSE PAPERS AND NOTEBOOKS WERE FOUND AND SEIZED. THE ASSESSING OFFICER HAS MADE OUT A CASE THAT SOME OF DOCUMENTS SEIZED, WERE BELONGING TO SHRI VED PRAKASH SHARMA, I.E. THE PRES ENT ASSESSEE. THE AO, THEREFORE, INITIATED PROCEEDINGS UNDER SEC. 153C BY ISSUING A NOTICE UNDER SECTION 153A(A) TO THE ASSESSEE, IN RESPONSE TO WHI CH, THE ASSESSEE FILED RETURN OF INCOME FOR ASSESSMENT YEARS 1997-98 TO 20 03-04 ON 22.02.2006. IN THE ASSESSMENT, AN ADDITION WAS MADE ON ACCOUNT OF CERTAIN NOTINGS IN THESE SMALL DIARIES LISTED AS ANNEXURE B-8 TO B-13. THESE DIARIES WERE CLAIMED BY THE ASSESSEE AS BELONGING TO ONE SHRI DI NESH KUMAR, WHOSE 3 AFFIDAVITS WERE FILED IN SUPPORT OF THE CLAIM OF OW NERSHIP OF THESE DIARIES BY SHRI DINESH KUMAR. HOWEVER, THE AO HAS REJECTED TH E ASSESSEES CLAIM AND TREATED THESE DIARIES AS BELONGING TO THE ASSESSEE, AND NOTINGS MADE THEREIN WERE TREATED TO BE UNDECLARED INCOME OF THE ASSESSE E AND, THEREFORE, ADDITION OF RS.13,81,896/- WAS MADE IN THE ASSESSMENT YEAR 1 999-2000, RS.3,99,709/- IN ASSESSMENT YEAR 2000-01 AND RS.7,0 4,134/- IN ASSESSMENT YEAR 2001-02. 4. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A), WHO, AFTER CONSIDERING THE FACTS AND CIRCUM STANCES OF THE CASE AND ASSESSING OFFICERS ORDER AS WELL AS ASSESSEES SUB MISSIONS, DELETED THE ADDITION FOR THE ASSESSMENT YEAR 1999-2000 BY OBSER VING AND HOLDING AS UNDER (WHICH HAS BEEN FOLLOWED IN SUBSEQUENT ASSESS MENT YEARS 2000- 01AND 2001-02):- 8.4 I HAVE CONSIDERED THE SUBMISSIONS MADE BY THE AR CAREFULLY. I HAVE ALSO GONE THROUGH THE EVIDENCE P LACED ON RECORDS. I HAVE EXAMINED THE PANCHNAMA PREPARED AT THAT TIME OF SEARCH BY THE AUTHORIZED OFFICER. IN THE PANCHN AMA LISTING THE SEIZED DOCUMENTS IDENTIFIED AS ANNEXURE B AT PA GE NUMBER 4 IT IS CLEARLY MENTIONED AGAINST SERIAL NUMBER 8 T O 13 {SEIZED FROM THE ROOM OF SHRI DINESH SHARMA}. I HAVE ALSO GONE THROUGH THE STATEMENT OF SHRI DINESH SHARMA RECORDE D UNDER OATH BY THE AO ON 10.03.06. I HAVE COME TO A FIRM AND CLEAR CONCLUSION THAT THE DIARIES MARKED AS ANNEXURE B-8 TO B-13 BELONG TO SHRI DINESH SHARMA. THE AO IS NOT JUSTIF IED TO CONSIDER THE ENTRIES RECORDED IN THE DIARIES SEIZED AND MARKED AS ANNEXURE B-8 TO B-13 IN THE HANDS OF THE APPELLANT SHRI VED PRAKASH SHARMA. IT IS INTERESTING TO NOTE THAT THI S PANCHNAMA IS 4 IN THE NAME OF INDERJIT SHARMA AND RAJNI SHARMA. T HE NAME OF THE APPELLANT SHRI VED PRAKASH SHARMA IS NOT MENTIO NED EVEN IN THE PANCHNAMA OR IN THE SEIZURE MEMO. THE AO HA S FAILED TO LINK CONCLUSIVELY THESE DIARIES AND ENTRIES RECORDE D THEREIN WITH SHRI VED PRAKASH SHARMA. IT IS SEEN THAT THE AO HA S NOT POINTED OUT ANY DEFECT OR AMBIGUITY IN THE STATEMEN T OF SHRI DINESH PATHAK RECORDED UNDER OATH ON 10.03.06. I H AVE ALSO EXAMINED THE STATEMENT OF SHRI INDERJIT SHARMA RECO RDED UNDER OATH AT THE TIME OF SEARCH ON 07.10.03. THESE DIAR IES WERE NOT CONFRONTED TO HIM FOR CONFIRMATION. I HAVE ALSO VE RIFIED THE CONTENTION OF THE AR THAT THE MANDATORY NOTICE UNDE R SECTION 142(1) OF THE ACT WAS NOT AT ALL ISSUED BY THE AO A FTER THE STATEMENT OF DINESH SHARMA WAS RECORDED UNDER OATH ON 10.03.06. I ALSO FIND FROM THE ORDER THAT THE AO H AS NOT EXAMINED THE APPELLANT VED PRAKASH SHARMA WHILE COM PLETING ASSESSMENT AFTER THE STATEMENT OF DINESH SHARMA WAS RECORDED. THESE DIARIES AND THE ENTRIES RECORDED THEREIN WERE NEVER CONFRONTED TO THE APPELLANT FOR CONFIRMATION. THE VIEW ADOPTED BY THE AO IS PATENTLY WRONG AND THE ADDITION OF RS. 13,81,896/- MADE TO THE INCOME OF THE APPELLANT IN RESPECT OF E NTRIES RECORDED IN DIARY MARKED AS ANNEXURE B-9 SEIZED FRO M THE ROOM OF DINESH SHARMA CANNOT BE SUSTAINED AND IS DE LETED. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 5. THE LEARNED DR HAS SUPPORTED THE ASSESSING OFFIC ERS ORDER AND REITERATED THE BASIS AND REASONS GIVEN BY THE AO IN MAKING THE ADDITIONS. 6. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS SUMMARIZED THE FACTS OF THE CASE AND THE ASSESSEES CONTENTION AS UNDER:- 1. THAT THE SEARCH WAS CONDUCTED AT THE RESIDENTIA L PREMISES OF SH. INDERJEET SHARMA, THE FATHER OF THE RESPONDE NT ON 07.10.03 AT THEIR ADDRESS AT 8/60, SECTOR-3, RAJIND ER NAGAR, SAHIBABAD, GHAZIABAD. 5 2. THAT THE PANCHNAMA FOR THE SEIZED DOCUMENTS WAS PREPARED IN THE NAME OF SH. INDERJEET SHARMA AND SMT. RAJNI SHARMA BEING THE FATHER AND MOTHER OF THE RESPONDENT. COPY OF PANCHNAMA FORMS PART OF THE PAPER BOOK. 3. THAT THE FIRST FLOOR OF THE HOUSE HAVING ONE BED ROOM, STORE, KITCHEN AND TOILET WAS OCCUPIED BY SH. DINESH PATHA K (READ SH. DINESH SHARMA) BEING THE BROTHER-IN-LAW OF SH. INDE RJEET SHARMA. 4. THAT THE ROOM OCCUPIED BY SH. DINESH SHARMA ALSO SEARCHED BY THE DEPARTMENT. THE PERSONAL DIARIES OF SH. DIN ESH SHARMA CONTAINING ACCOUNT OF PERSONAL EXPENSES CONNECTED W ITH HIS FAMILY WERE SEIZED FROM HIS ROOM AND WERE IDENTIFIE D AS ANNEXURE B-9 TO B-13 AS PER ANNEXURE-B OF THE PANCH NAMA. 5. THAT AT THE TIME OF SEARCH, THE STATEMENTS OF SH . INDERJEET SHARMA, SH. DINESH SHARMA AND SH. VED PRAKASH SHARM A WERE RECORDED UNDER OATH ON 07.10.03. THE PHOTOCOPIES O F THE STATEMENTS FORM PART OF THE PAPER BOOK. 6. THAT THE ASSISTANT COMMISSIONER OF INCOME TAX, C ENTRAL CIRCLE, MEERUT FRAMED ASSESSMENT ON THE RESPONDENT SH. VED PRAKASH SHARMA FOR THE ASSESSMENT YEARS 1998-99 TO 2004-05 BY TREATING THE SAID DIARIES OF SH. DINESH SHARMA B EARING ANNEXURE B-9 TO B-13 AS THAT BELONGING TO SH. VED P RAKASH SHARMA, THEREBY MAKING ADDITION TO THE INCOME OF TH E RESPONDENT FOR ALL THE SEVEN YEARS AS CALCULATED FR OM THE ENTRIES RECORDED IN THE SAID DIARIES. 6 7. THAT THE DEPARTMENT HAS TAKEN FOLLOWING GROUND I N THE APPEAL PETITION FILED FOR THE ASSESSMENT YEAR 1999- 2000, 2000- 01 AND 2001-02 ONLY. 1. THAT THE CIT(A) ERRED IN LAW IN DELETING THE ADDITION ON THE BASIS OF ENTRIES IN THE SEIZED DIARIES ON THE GROUND THAT THE DIARY WAS NOT SEIZED FROM HIM BUT FROM SH. DINESH SHARMA IGNORING THE FACTS THAT SH. DINESH SHARMA WAS THE BROTHER-IN- LAW OF THE ASSESSEE AND IS A PERSON OF SMALL MEANS AND WAS STAYING WITH THE ASSESSEE AND HAD ALSO NOT OWNED UP DIARY IN COURSE OF SEARCH. THE FIRST GROUND OF APPEAL ITSELF CLEARLY DEMONSTR ATES THE ADMISSION OF THE DEPARTMENT THAT THE DIARIES SEIZED BELONGED TO SH. DINESH SHARMA. THE RELATIONSHIP AND THE FINANC IAL STATUS OF SH. DINESH SHARMA AS STATED IN THE GROUND OF APPEAL HAS NO RELEVANCE TO THE CONTENTS OF DIARY FOR MAKING ADDIT ION TO THE INCOME OF THE RESPONDENT. 8. THAT AT THE TIME OF FRAMING ASSESSMENT UPON THE RESPONDENT, THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL C IRCLE, MEERUT HAD EXAMINED SH. DINESH PATHAK UNDER OATH ON 10.03.06 WHEN HE OWNED UP DIARIES. IN THIS CONNECT ION IT IS STATED THAT THE ANSWERS GIVEN BY SH. DINESH PATHAN TO QUESTION NUMBER-10, QUESTION NUMBER-12, QUESTION NUMBER-13, QUESTION NUMBER-14, QUESTION NUMBER-15, QUESTION NUMBER 17 A ND FINALLY QUESTION NUMBER-18 ARE VERY IMPORTANT TO BE CONSIDERED. THE PHOTOCOPY OF THE STATEMENT OF SH. DINESH PATHAK RECORDED UNDER OATH ON 10.03.06 FORMS PART OF THE PAPER BOOK . 9. SH. DINESH SHARMA HAD CATEGORICALLY AND CLEARLY RECOGNIZED AND OWNED UP THE DOCUMENTS SEIZED FROM HIS ROOM IDE NTIFIED AS 7 B-9 TO B-13. THIS FACT STANDS MENTIONED IN ANNEXUR E-B OF THE PANCHNAMA AND THE SAME FACT AHS BEEN ADMITTED BY TH E DEPARTMENT IN THE GROUND OF APPEAL. THE STATEMENTS OF SH. INDERJEET SHARMA, SH. DINESH KUMAR SHARMA AND SH. V ED PRAKASH SHARMA RECODED UNDER OATH BY SEARCH PARTY O N 07.10.03 FORMS PART OF THE PAPER BOOK. THE SEARCH PARTY DID NOT CONFRONT AND AT THE SAME TIME DID NOT ASK A SIN GLE QUESTION ABOUT THE DOCUMENTS B-9 TO B-13 TO SH. DINESH SHARM A AND SH. VED PRAKASH SHARMA DURING STATEMENT RECORDED UNDER OATH ON 07.10.03. 10. THAT THE CONTENTION OF THE DEPARTMENT AS TAKEN IN THE GROUND OF APPEAL THAT SH. DINESH SHARMA HAD NOT OWN ED UP THE DIARIES IN THE COURSE OF SEARCH IS NOT CORRECT. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE RESIDENTIAL PREMISES OF SHRI INDERJEET SHARMA, THE FATHER OF THE ASSESSEE, WERE SEARCHED ON 07.10.2003. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE WAS LIVING WITH HIS FATHER. IT IS ALSO FOUND THAT THE FIRST FLOOR OF THE HOUSE COMPRISING ONE BEDROOM, STORE, KITCHEN AND TOILET WAS OCCUPIED BY ONE SHRI DINESH PATHAK ALIAS SHRI DINESH SHARMA BEING THE BROTHER-IN-LAW OF SHRI INDERJEET S HARMA. THE ROOM OCCUPIED BY SHRI DINESH SHARMA WAS ALSO SEARCHED AN D CERTAIN DOCUMENTS MARKED AS ANNEXURE B-9 TO B-13 WERE FOUND FROM THE ROOM OCCUPIED BY SH. 8 DINESH SHARMA. IT IS THE CASE OF THE AO THAT THESE SEIZED DOCUMENTS IDENTIFIED AS ANNEXURE B-9 TO B-13 IN THE NATURE OF CERTAIN DIARIES WERE ACTUALLY BELONGING TO THE PRESENT ASSESSEE. ON THE OTHER HAND, THE ASSESSEE HAS CONTENDED THAT THE ASSESSEE HAS NOTHING TO DO W ITH THESE DOCUMENTS, WHICH WERE SEIZED FROM SHRI DINESH SHARMA. ON PERU SAL OF THE FACTS OF THE PRESENT CASE, WE FIND THAT SHRI DINESH SHARMA ALIAS SHRI DINESH PATHAK WAS EXAMINED BY ASSTT. COMMISSIONER OF INCOME-TAX, CENT RAL CIRCLE, MEERUT ON 10.03.2006 AND DURING THE COURSE OF RECORDING OF HI S STATEMENT, SHRI DINESH SHARMA OWNED THE AFORESAID SEIZED DIARIES. IN HIS STATEMENT RECORDED ON 10.03.2006, SHRI DINESH KUMAR PATHAK HAS CATEGORICA LLY STATED THAT TWO DIARIES WERE FOUND FROM HIS ROOM AND IN THOSE DIARI ES, NOTINGS ABOUT HIS WORK OR AFFAIRS WERE NOTED. HE ALSO MENTIONED THAT THE ENTRIES MADE IN THE DIARIES WERE RELATED TO HIS WORK OF MANUFACTURING P INS OF PRESSURE COOKERS AND THOSE DIARIES AND NOTINGS WERE WRITTEN BY HIM. HE ALSO MENTIONED THAT HE ALSO MAINTAINED THE ACCOUNTS OF HIS MOTHER, SMT. MAYA DEVI. READING HIS STATEMENT AS A WHOLE, IT IS, THUS, CLEAR THAT T HE DOCUMENTS OR PAPERS OR DIARY RECOVERED FROM HIS ROOM WERE OWNED UP BY HIM. MERELY BECAUSE HE WAS RESIDING IN THE HOUSE OF SHRI INDERJEET SHARMA, I.E. THE ASSESSEES FATHER, THE DOCUMENT FOUND FROM HIS POSSESSION, CANNOT BE C ONSIDERED TO THAT BELONGING TO THE PRESENT ASSESSEE, UNLESS POSITIVE AND ADEQUATE MATERIAL ARE 9 BROUGHT ON RECORD TO PROVE THAT THE SEIZED DIARIES WERE ACTUALLY BELONGING TO THE PRESENT ASSESSEE. THE AO HAS TREATED THE NOTIN GS IN THE DIARIES AS BELONGING TO THE PRESENT ASSESSEE MERELY ON SURMISE S AND PRESUMPTIONS WITHOUT THERE BEING ANY COGENT MATERIAL TO CONCLUDE SO. IT IS PERTINENT TO NOTE THAT MERE BECAUSE NO CATEGORICAL STATEMENT WAS MADE BY SHRI DINESH SHARMA AT THE TIME OF SEARCH, THAT BY ITSELF IS NOT SUFFICIENT TO PROVE AND ESTABLISH THAT THE SEIZED DIARY DID BELONG TO THE P RESENT ASSESSEE. MOREOVER, IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE STATEM ENT OF SHRI DINESH SHARMA WAS RECORDED AS DISCUSSED ABOVE, AND DURING HIS STATEMENT, THE AO HAS NOT BEEN ABLE TO BROUGHT ON RECORD ANY MATERIAL TO PROVE AND ESTABLISH THAT THE STATEMENT GIVEN BY SHRI DINESH SHARMA OWNI NG THE DIARY AS BELONGING TO HIM WAS NOT TRUE. THE LEARNED CIT(A) HAS APPRECIATED THE FACTS OF THE CASE IN THEIR RIGHT AND CORRECT PERSPECTIVE, AND HAS RIGHTLY CAME TO THE CONCLUSION THAT THE ADDITION MADE BY THE AO IN RESP ECT OF THE ENTRIES RECORDED ON THE DIARIES SEIZED FROM THE ROOM OF SHR I DINESH SHARMA, IS UNJUSTIFIED. AFTER CONSIDERING THE TOTALITY AND F ACTS AND CIRCUMSTANCES OF THE CASE, WE ARE IN FULL AGREEMENT WITH THE VIEW OF THE LEARNED CIT(A) THAT THE ACTION OF THE ASSESSING OFFICER IN MAKING THE ADDIT ION IN RESPECT OF THE ENTRIES RECORDED IN THE DIARY SEIZED FROM THE ROOM OF DINESH SHARMA, IS NOT SUSTAINABLE. THE LEARNED CIT(A) THEREFORE, RIGHTLY DELETED THE ADDITION IN ALL 10 THE THREE ASSESSMENT YEARS IN RESPECT OF NOTINGS IN DIARIES SEIZED FROM THE ROOM OF SHRI DINESH SHARMA. WE, ACCORDINGLY, UPHOL D THE ORDERS OF THE LEARNED CIT(A) AND REJECT THE GROUND RAISED BY THE REVENUE. 8. IN THE RESULT, ALL THE THREE APPEALS FILED BY TH E REVENUE ARE DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 30 TH JULY,2010. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JULY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.