SHIV SHANKAR LAL GUPTA, Jaipur V. ACIT, Jaipur

ITA 263/JPR/2013

• Counselvise Citation: 26323114 RSA 2013
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 11-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Assessee Lawyers: S L PODDAR
• Keywords: Search and seizure; Salary income; Loose papers; Document seized; Principle of natural justice; Deemed dividend; Documents seized
• Section: 69C; 143(3); 153A; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR ( BEFORE SHRI HARI OM MARATHA AND SHRI N.K. SAINI ) ITA NOS. 263 & 264/JP/2013 ASSESSMENT YEARS: 20004-05 & 2005-06 PAN: AADPG 3204 F SHRI SHIV SHANKAR LAL GUPTA VS. THE ACIT 4, GANGA VIHAR, SARDAR PATEL MARG CENTRAL CIRCLE- 1 C- SCHEME, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.L.PODDAR DEPARTMENT BY : SHRI A.K. KHANDELWAL DATE OF HEARING : 27.01.2014. DATE OF PRONOUNCEMENT : 05.03.2014 ORDER PER HARI OM MARATHA, J.M. THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINS T THE COMMON ORDER OF THE LD CIT(A), AJMER DATED 27-12-2013 FOR THE A. Y. 2004-05 AND 2005- 06. IN BOTH THE APPEALS, IDENTICAL ISSUES ARE INVOL VED. THEREFORE, FOR THE SAKE OF CONGRUENCE, BREVITY AND CONVENIENCE, WE ARE PROC EEDING TO DECIDE THEM BY A COMMON ORDER. ITA NO. 263/JP/2013 A.Y. 2004-05 (SHIV SHANKAR LAL GUPTA) 2.0 FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPE AL. 2 1 THAT THE ORDER PASSED BY THE A.O. U/S 143(3) / 153A IS VOID ABINITO. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD CIT(A) HAS ERRED IN SUSTAINING THE ADDITION U/S 69C/ 69 OF RS. 35,35,840/- ON THE BASIS OF PAGE 82 OF ANNEXURE A -1. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD CIT(A) HAS ERRED IN MAKING ADDITION OF RS. 12,61,235/- U /S 2(22)(E) OF THE INCOME-TAX ACT, 1961. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE A.O. IN RESTRICTING THE CAPITAL LOSS OF RS. 14,35,854/- TO RS. 6,89,460/- BY DISALLOWING ENTIRE EXPENSES OF RS. 7,64,394/-. 5. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AME ND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT T HE TIME OF HEARING. 3.1 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE AS AN INDIVIDUAL DERIVES INCOME FROM SALARY AND REMUNERAT ION FROM VARIOUS COMPANIES IN WHICH HE IS A DIRECTOR. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR S HORT) WAS CONDUCTED IN THE CASE OF THIS ASSESSEE ON 20-05-2009. CONSEQUENT UPON THIS SEARCH, NOTICE U/S 153A OF THE ACT WAS ISSUED ON 23-04-2010. THE A SSESSEE FILED THE RETURN OF INCOME [ROI] IN COMPLIANCE THEREOF ON 28-01-2011 . HOWEVER, THE ASSESSMENT WAS COMPLETED AT A TOTAL INCOME OF RS. 6 2,97,075/- BY MAKING FOLLOWING ADDITIONS, INTER ALIA. 3 1. ADDITION U/S 69C/69 OF RS. 35,35,840/- ON THE BASIS OF PAGE 82 OF ANNEXURE A-1. 2. ADDITION OF RS. 15,00,000/- ON THE BASIS OF PA GE 24 OF ANNEXURE A-1. 3. ADDITION OF RS. 12,61,235/- U/S 2(22)(E) OF TH E INCOME- TAX ACT, 1961. 4. ADDITION OF RS. 7,64,394/- BY WAY OF RESTRICTI NG CAPITAL GAIN LOSS. 3.2 AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE T HE LD CIT(A) WHO HAS CONFIRMED THE FOLLOWING ADDITIONS. 1. ADDITION U/S 69C/69 OF RS. 35,35,840/- ON THE BASIS OF PAGE 82 OF ANNEXURE A-1. 2. ADDITION OF RS. 12,61,235/- U/S 2(22)(E) OF TH E INCOME- TAX ACT, 1961. 3. ADDITION OF RS. 7,64,394/- BY WAY OF RESTRICTI NG CAPITAL GAIN LOSS. 3.3 DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE HAS NOT PRESSED THE GROUND NO. 1. HENCE, THE SAME IS DISMIS SED BEING NOT PRESSED. 3.4 THE GROUND NO.5 OF THE ASSESSEE IS GENERAL IN N ATURE WHICH NEEDS NO ADJUDICATION. 4.1 THE GROUND NO. 2 OF THE ASSESSEE PERTAINS TO AD DITION OF RS. 35,35,840/- U/S 59C/69 OF THE ACT MADE ON THE BAS IS OF PAGE 82 OF ANNEXURE A-1 FOUND DURING SEARCH. 4 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. THE FACTS APROPOS TO THI S GROUND ARE THAT ON THE BASIS OF CONTENTS OF THIS PAGE WHICH IS ENCLOSED AT 49 PAGE OF THE PAPER BOOK, THE A.O. HAS ADDED LEFT SIDE OF THIS PAGE AS PER T HE ASSESSEE WHICH IS BEING DEAF AND DUMB DOCUMENTS AND IT DOES NOT PERTAIN TO THE ASSESSEE . ON THIS PAPER THE NAME OF ASSESSEE DOES NOT APPEAR ANYWHER E NOR HIS SIGNATURES ARE THERE. AS PER LD. AR, NO ADDITION CAN BE MADE ON TH E BASIS OF THIS PAPER. THE LD. AR HAS PUT FORTH THE FOLLOWING REASONS. (A) THE PAPER DOES NOT CONTAIN THE NAME OF T HE ASSESSEE. (B) THE PAPER IS NOT IN THE WRITING OF THE ASS ESSEE. (C) THE PAPER DOES NOT CONTAIN THE SIGNATURE O F THE ASSESSEE. (D) THE PAPER CONTAINS THE SALES OF FLAT (KULB A TULIP) SHOWN FOR RS. 20,05,001/- WHICH IS ADMITTEDLY OF FIRM M/S S. GUPT A & CO. AND AS SUCH THE SAME DESERVED TO BE CONSIDERED IN THE HANDS OF THE FIRM AND EXCLUDED FROM BEING CONSIDERED IN THE HANDS OF THE ASSESSEE. (E) THE PAPER ESTABLISHES THE CONTENTION OF TH E ASSESSEE THAT IT IS IN THE NATURE OF MEMORANDUM KEPT BY THE DECEASED ACCOUNTAN T FOR THE WHOLE GROUP AND NOT FOR THE ASSESSEE ALONE. HENCE LEARNED CIT(A ) ERRED IN CONSIDERING THE TOTAL OF THE PAPER IN THE HANDS OF THE ASSESSEE WITHOUT APPLICATION OF MIND AND WITHOUT CAUSING ENQUIRIES IN THE LIST. THE LEARNED CIT(A) HAS MECHANICALLY SUSTAINED THE ADDITION. (F) THE LEARNED CIT(A) HAS ALSO NOT BEEN ABLE TO CONTROVERT THE SUBMISSION OF THE ASSESSEE THAT AT THE MOST THE TOT AL UNACCOUNTED MONEY MENTIONED IN THESE PAPERS (UCHANT CASH) IS ONLY OF RS. 2,95,000/-. THIS IS ON THE BASIS OF PAGES 1 TO 4 OF ANNEXURE A-L WHICH HAV E BEEN REFERRED TO BY THE LEARNED ASSESSING OFFICER. IT IS THE SUBMISSION OF THE ASSESSEE THAT FIRSTLY THESE PAPERS BEEN DUMP PAPERS SO FAR AS THE ASSESSE E IS CONCERNED AS SUCH 5 DID NOT REQUIRE TO BE CONSIDERED IN HIS HANDS AND S ECONDLY IF THESE WERE AT ALL TAKEN INTO ACCOUNT THEN THE APPARENT SHOULD HAVE BE EN ACCEPTED. IN THESE PAPERS THE UCHANT AMOUNT IS APPARENTLY OF RS. 2,95, 000/-ONLY. NO FURTHER ADDITION COULD HAVE BEEN MADE IN ANY CASE IN ANY HA ND. (G) THE LEARNED CIT(A) HAS ALSO NOT CONSIDERED THE SUBMISSION OF THE ASSESSEE THAT PRINCIPLE OF NATURAL JUSTICE REQUIRED THE LEARNED ASSESSING OFFICER TO HAVE SET OFF THE AMOUNT AVAILABLE ON THE SE SEIZED PAPERS OF RS. 11,11,674/- PERTAINING TO ASSESSMENT YEAR 2003-04. THE PRINCIPLES OF REVOLVING INVESTMENT OF THE PRECEDING YEAR TRICKLIN G DOWN TO SUCCEEDING YEAR SHOULD HAVE BEEN APPLIED. THE CAPITAL TO THE E XTENT OF RS. 11,11,674/- AVAILABLE IN ASSESSMENT YEAR 2003-04 AS PER THE SEI ZED PAPERS THEMSELVES SHOULD HAVE BEEN SET OFF FROM THE CAPITAL OF RS. 3 5,35,840/- IN ASSESSMENT YEAR 2004-05. (H) IT WAS SUBMITTED THAT THE LAW DOES NOT PERMIT A MBIGUOUS ADDITIONS QUOTING VARIOUS ACTIONS. IN THIS THE LEARNED ASSESS ING OFFICER MADE ADDITION U/S 69 AND 69C WITHOUT SPECIFYING THE QUANTUM OF AD DITIONS AND THE DETAILS OF SUCH ADDITIONS ATTRACTING SECTION 69 AND 69C. TH E LEARNED CIT(A) HAS FAILED TO CONSIDER THIS SUBMISSION OF THE ASSESSEE. IN THE LIGHT OF THE ABOVE SUBMISSIONS, IT HAS BEEN PRAYED THAT THE ORDERS OF THE AUTHORITIES BELOW MAY BE REVERSED. 4.3 PER CONTRA, THE LD DR HAS REITERATED THE REASON S GIVEN FOR THE ADDITIONS MADE BY THE A.O. AND THE REASONS GIVEN BY THE LD C IT(A) FOR CONFIRMING THE IMPUGNED ADDITIONS. 4.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE OBTAINING FACTS , CIRCUMSTANCES AND DECISIONS ON TH IS ISSUE WITH REFERENCE TO LEGAL POSITION ON THE ISSUE, WE ARE OF THE CONSIDER ED OPINION THAT ADDITION HAS BEEN WRONGLY BASED ON THIS PAPER AS THIS IS A DEAF AND DUMB PAPERS WHICH IS MUTE ABOUT THE JOTTINGS THEREON. ADMITTEDLY, THIS P APER IS NOT IN THE 6 HANDWRITING OF THE ASSESSEE NOR IT BEARS HIS SIGNAT URES. NOWHERE, ON THIS PAPER NAME OF THE ASSESSEE APPEARS. THIS PAPER CONT AINS ONLY THE MEMORANDUM OF TRANSACTIONS BUT DOES NOT MENTION ANY RECEIPT OR ACCRUAL OF ANY INCOME. WE ARE IN AGREEMENT WITH THE LD. AR TH AT THIS PAPER RELATES TO A GROUP OF SEVERAL PERSONS. IT WAS STATED BY THE ASSE SSEE THAT DURING SEARCH WHILE MAKING HIS STATEMENT U/S 132(4) OF THE ACT O N 20-05-2009 THAT THIS PAPER HAS BEEN WRITTEN IN THE HANDWRITING OF HIS EA RLIER ACCOUNTANT LATE SHRI RAM SHANKAR WHO DIED ABOUT THREE YEARS AGO. THE ASS ESSEE IS AROUND OF 82 YEARS OF AGE AND HE STATED THAT HE WAS UNABLE TO EX PLAIN THE CONTENTS OF THIS PAPER OR RELATE THEM WITH ANY CONCERN OF THE GROUP. ACCORDING TO HIM, IT WAS ONLY THE DECEASED ACCOUNTANT WHO KEPT THESE MEMORAN DUM PAPERS. HE STATED THAT THIS DOES NOT RELATE TO HIM. IT IS TRUE THAT T HE PERSON FROM WHOSE POSSESSION ANY EVIDENCE / DOCUMENT IS FOUND, THE BU RDEN LIES ON HIM TO EXPLAIN THE CONTENTS THEREOF BUT THE ASSESSEE HAS S IMPLY EXPLAINED THAT THIS PAPER DID NOT BELONG TO HIM AND IT WAS A MEMORANDUM OF THE GROUP CONCERNS. THEREFORE, PRESUMPTION OF SECTION 132(4A) OF THE ACT IS NOT ATTRACTED IN THIS CASE. NO SUPPORTING MATERIAL HAS BEEN BROUGHT ON RECORD BY THE A.O. TO SUBSTANTIATE HIS FINDINGS EVEN AFTER PO ST SEARCH INVESTIGATION. IN THIS REGARD FOLLOWING DECISIONS HELP THE CASE OF TH E ASSESSEE. 7 (I) DCIT VS. RAIENDRA KUMAR SANCHETI (ITAT JAIPU R) 42 TAXWORLD 152 DATED 27.03.2009 ADDITION CANNOT BE MADE ON THE BASIS OF SEIZED PAPE R WHICH IS NOT PREPARED BY THE ASSESSEE AND WHICH APPEARS TO BE A DEAF AND DUMB DOCUMENT. (II) MAHAAN FOODS LTD. VS. DCIT (ITAT DELHI) { 2009) 27 DTR 185 IN THE ABSENCE OF ANY OTHER EVIDENCE FOUND DURING T HE COURSE OF SEARCH OR BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE EXPENDITURE FOUND NOTED ON SEIZED DOCUMENTS WAS ACTUALLY INCURR ED BY THE ASSESSEE, THE SAME CANNOT BE ADDED TO THE UNDISCLOSED INCOME OF T HE ASSESSEE. NO INFERENCE COULD BE DRAWN AGAINST THE ASSESSEE MU CH LESS ANY INFERENCE OF UNEXPLAINED EXPENSES ON THE BASIS OF A DUMB DOCUMEN T FOUND AT THE RESIDENCE OF ITS DIRECTOR AS THERE IS NO PROOF TO S HOW THAT THE AMOUNT MENTIONED IN THE SAID DOCUMENT WAS PAID BY THE COMP ANY. (III) MOOLCHAND KUMAWAT & SONS VS. DCIT (AIMER) IT AT JAIPUR BENCH 42 TAXWORLD 241 IN M.A. NO. 93/JP/2008 ARISING OUT OF ITSSA NO. 24/JP/2005 ORDER DATED 20.02.2009 ADDITION CANNOT BE MADE ON THE BASIS OF A DUMB DOCU MENT OR ON THE BASIS OF ENTRIES FOUND RECORDED ON A PAPER SEIZED DURING SEA RCH WITHOUT CONDUCTING ANY ENQUIRY FROM THE CONCERNED PARTY. (IV) IT WAS HELD IN THE FOLLOWING CASES THAT ADDITI ON COULD NOT BE MADE ON THE BASIS OF UNCORROBORATED NOTING ON LOOSE SHEETS AND PAPERS (A) S.. GOYAL VS. DCIT (2002) 77 TTJ 1 (MUM) (B) CHANDRA MOHAN MEHTA VS. ACIT (1999) 65 TTJ 327 (PUNE) (C) BANSAL STRIPS PVT. LTD. VS ACIT (2006) 10 0 TTJ 665 (DEL) (D) KISHAN CHAND SOBHRAJ MAI (1991) 42 TTJ 423 (JP) IT IS SUBMITTED THAT THE RATIO OF THE AFORESAID CAS ES IS FULLY APPLICABLE TO THE FACTS OF THE CASE. IN THE CASE OF THE ASSESSEE ADDI TIONS HAVE BEEN MADE ON THE BASIS OF A MUTE PAPER WITHOUT CONDUCTING ANY ENQUIR Y AND WITHOUT ANY CORROBORATING MATERIAL. THE LEARNED ASSESSING OFFIC ER HAS NOT BROUGHT ANY MATERIAL ON RECORD TO ESTABLISH THE PAPER WITH THE AFFAIRS WITH THE ASSESSEE. IN VIEW OF THIS THE ADDITION MADE DESERVES TO BE DELET ED. 8 IN THE ALTERNATIVE, IT WAS ARGUED BY THE LD. AR OTH ERWISE ALSO, NO ADDITION IS CALLED FOR ON THE BASIS OF THIS PAGE. IT IS ENTAN GLED AND LABYRINTH SORT OF TRIAL BALANCE WHICH DO NOT SPECIFICALLY RELATE TO THE ASS ESSEE. THE TOTAL OF THIS COMES TO RS. 35,348.40 WHICH CONTAINS AN ENTRY OF T HE ASSET SIDE OF 2185.66 WITH A NARRATION OF WEALTH TAX OF SMT. GUPTA J. THE PAYMENT OF WEALTH TAX OF RS. 2,18,566/- IS REFLECTED IN THE ACCOUNT OF S MT. GUPTA. THE DETAILS OF THIS WEALTH TAX IS AVAILABLE AT PAGE WHICH IS A PAR T OF THE ASSESSMENT ORDER. THIS WEALTH TAX HAS BEEN DEPOSITED IN THE UCO BANK PERTAINING TO F.Y. 2001-02 AND COPY OF THIS PAGE IS AVAILABLE AT PAGE 49 OF THE PAPER BOOK. A COPY OF CHALLAN ALONG WITH COMPUTATION OF TOTAL WEA LTH FOR THE F.Y. 2002-03 IN THE CASE OF SMT. GANGA DEVI GUPTA IS AVAILABLE A T PAGES 50-52 OF THE PAPER BOOK. SURPRISINGLY, THE A.O. HAS NOT TAKEN AN Y ACTION IN THE CASE OF THE COMPANIES MENTIONED AT PAGE 52 OF THE ANNEXURE A-1 WHICH ALSO CONTAINS THE NAMES OF CLARITY SALT (P) LTD. WITH A DEBIT OF RS. 17,131.35, CLARITY GOLD (P) LTD. WITH A CREDIT OF R 1400/- . WHEN THE A.O. HAS NOT MADE ANY ADDITION IN THE HANDS OF THESE COMPANIES WHOSE NAMES ARE APP EARING ON THIS PAGE THEN ABSOLUTELY THERE IS NO JUSTIFICATION OF MAKIN G ADDITION IN THE HANDS OF THE ASSESSEE WHOSE NAME IS NOT AT ALL APPEARING ON THIS PAGE. ON THIS PAPER BOTH THE ASSETS AND LIABILITY SIDES ARE THERE. THER E IS NOT DEPOSIT OF THE ASSESSEE NOR THERE IS ANY DEBIT IN THE NAME OF THE ASSESSEE . WHEN THIS PAPER 9 DOES NOT INDICATE ANY INCOME OF THE ASSESSEE THEN H OW THE ADDITION CAN BE MADE IN THE HANDS OF THE ASSESSEE. THIS PAPER AT BE ST CAN BE TREATED AS A ROUGH PERTAINING TO RECEIPT OF MONEY FROM SOME PERS ONS ON ASSETS SIDE AND THE LIABILITY SIDE SHOWS THE EQUAL AMOUNT IN VARIOU S NAMES. HOWEVER THE A.O. HAS FAILED TO MAKE ANY ENQUIRY ABOUT THE CONTE NTS OF THIS PAGE. WE HAVE FOUND THAT THIS PAGE SPECIFICALLY REFERS TO UC HANTI AMOUNT WHICH AT BEST CAN BE TREATED AS UNACCOUNTED MONEY. THE A.O. HAS MENTIONED AT PAGE 7 OF HIS ORDER THAT PAGE 52 OF ANNEXURE A-1 CONTAIN S ANNUAL BALANCES OF ACCOUNTS WHEREAS OTHER PAGE 1 TO 49 ARE LEDGER ACCO UNTS AN MONTHLY CASH BOOK. IT IS ALSO NOTICED THAT THE EXISTENCE OF TRIA L BALANCE DISCLOSES THE EXISTENCE OF TRANSACTIONS IN EARLIER PERIOD AND THE TOTAL OF WHICH COMES TO RS. 11,11,674/-. THIS AMOUNT NEEDS TO BE SET OFF IN THE ASSESSEE 2004-05. A COPY OF TRIAL BALANCE FOR A.Y. 2002-03 IS AVAILABLE AT P AGES 58 TO 60 OF THE PAPER BOOK. IT WAS POINTED OUT BY THE LD. AR THAT THE DIS PUTE BETWEEN THE ASSESSEE AND THE DEPARTMENT AROSE WHICH LED TO LODGING OF FI R AND THE COPY OF WHICH IS ENCLOSED AT PAGES 19 TO 48 OF THE PAPER BOOK. TH IS INCIDENT MAY BE A FACTOR FOR GIVING IMPETUS AGAINST THE ASSESSEE. WE HAVE GONE THROUGH THE PROVISIONS OF SECTION 69 AND 69C. UNDER SECTION 69, ADDITION IS REQUIRED TO BE MADE ONLY WHEN ANY INVESTMENT IS FOUND OUTSIDE T HE BOOKS OF ACCOUNT AND THE ASSESSEE FAILS TO FURNISH ANY EXPLANATION O R AT BEST EXPLANATION IS NOT 10 FOUND SATISFACTORY. IN THIS CASE, NO INVEST IS NOT ICED TO HAVE BEEN MADE BY THE ASSESSEE MUCH LESS IT BEING OUTSIDE THE BOOKS O F ACCOUNT. THE IMPUGNED PAGE WHICH IS THE BASIS OF THIS ADDITION IS SELF EX PLANATORY. ANY PAPER OR EVIDENCE WHICH IS BEING USED AGAINST THE ASSESSEE H AS TO BE CONSIDERED IN ITS ENTIRETY AND NOT ON PICK AND CHOOSE BASIS. ON THIS PAPER, THE LIABILITY SIDE INDICATES THE SOURCE AND, THEREFORE, NO ADDITION IS CALLED FOR. FURTHERMORE, THE A.O. HAS NOT QUANTIFIED OR SPECIFIED THE UNEXPL AINED INVESTMENT AS FAR AS SECTION 69C ARE CONCERNED WHICH IS A DEEMING PROVIS ION AND THE SAME CONDITIONS AS REQUIRED U/S 69 ARE TO BE SATISFIED B EFORE INVOKING THE SAME. THE TRANSACTIONS JOTTED ON ASSET SIDE REFLECT THE E XPENDITURE AND INVESTMENT. NO CREDIT IN THE NAME OF THE ASSESSEE IS FOUND NOTE D ON THIS PAGE THIS MEANS THAT UNACCOUNTED CAPITAL OF THE ASSESSEE INVOLVED I N THESE TRANSACTIONS. THEREFORE, THE ACTION OF THE A.O. AS WELL AS LD CIT (A) ARE NOT JUSTIFIED. THEREFORE, THE IMPUGNED ADDITION IS ORDERED TO BE D ELETED. HENCE, GROUND NO 2 OF THE ASSESSEE IS ALLOWED. 5.1 THE GROUND NO. 3 OF THIS APPEAL IS IN RESPECT O F ADDITION OF RS. 12,61,235/- MADE U/S 2(22)(E) OF THE ACT. 5.2 THE FACTS PROPOS TO THIS GROUND ARE THAT M/S. C LARITY SALT (P) LTD. RECEIVED A SUM OF RS. 54.35 LACS FROM M/S. CLARITY GOLD (P) LTD.. M/S. CLARITY GOLD (P) LTD. WAS HAVING ACCUMULATED PROFIT S OF RS. 12,61,235/- AS 11 ON 31-03-2004. ADMITTEDLY, THE ASSESSEE IS DIRECTOR IN M/S. CLARITY SALT (P) LTD. WHO ALSO HOLDS SUBSTANTIAL SHARE IN THAT COMPA NY. ACCORDING TO THE A.O.,, ANY AMOUNT RECEIVED BY M/S. CLARITY SALT (P) LTD. HAS TO BE TREATED AS DEEMED DIVIDEND U/S 2(22)(E) OF THE ACT IN THE HAND S OF THE ASSESSEE. THEREFORE, HE HAS MADE AN ADDITION OF RS. 12,61,235 /- TO THE EXTENT OF ACCUMULATED PROFIT IN THE CASE OF M/S. CLARITY GOLD (P) LTD. THE CASE OF THE ASSESSEE IS THAT THERE WAS NO PROFITS IN THE HANDS OF M/S. CLARITY GOLD (P) LTD. IN COMMERCIAL PARLANCE AND THAT THESE TRANSACT IONS WERE ENTERED INTO BETWEEN TWO LEGAL ENTITIES BELONGING TO THE SAME GR OUP WHERE THE ASSESSEE IS A DIRECTOR IN BOTH THE COMPANIES. BOTH THESE COMPA NIES ARE INVOLVED IN THE BUSINESS OF GEMS AND JEWELLERY AND IN THE INTER-COR PORATE TRANSACTIONS HAVE BEEN EXECUTED BETWEEN THEM. AS PER THE ASSESSEE QUA THESE TRANSACTIONS UNDER THE PROVISIONS OF SECTION 2(22)(E) OF THE ACT ARE NOT ATTRACTED. THE TRANSACTIONS ARE FOUND IN RUNNING AND CURRENT ACCOU NTS. FURTHER, THE ASSESSEE HAS SUBMITTED THAT IN A.Y. 2004-05, THERE WAS NO PR OFIT AND THE COMPANY SUFFERED LOSS. MOREOVER, TO THE EXTENT OF RS. 12,61 ,235/-, THERE WAS RESERVE AND SURPLUS WHICH HAS BEEN TREATED BY THE A.O. AS A CCUMULATED PROFIT. AS PER THE ASSESSEE, DURING A.Y. 2004-05, THE COMPANY M/S. CLARITY GOLD (P) LTD. WAS NOT HAVING ANY ACCUMULATED PROFIT, RATHER SUFFERED LOSS TO THE EXTENT OF RS. 1,29,463/-. THEREFORE, IT WAS PLEADED THAT NO ADDITION AS 12 PROPOSED BY THE A.O. IS CALLED FOR. HOWEVER, THE A. O. DECLINED THE ASSESSEE'S ABOVE SUBMISSION AS WELL AS IGNORED THE DECISIONS RELIED ON BY THE ASSESSEE IN HIS SUPPORT. 5.3 THE LD CIT(A) HAS ALSO FOLLOWED THE SUIT. 5.4 BEFORE US, BOTH THE PARTIES HAVE REITERATED THE IR EARLIER ARGUMENTS, THE LD. AR HAS ALSO PLACED FOLLOWING DECISIONS IN SUPPO RT OF HIS ISSUE IN QUESTION. 1. NH SECURITY (P) LTD. VS DCIT (2007) 11 SOT 302 (MUM). 2. CIT VS AMBASSADOR TRAVEL (P) LTD. (2000) 220 CTR 475 (DEL.) 3. CIT VS CREATING DYEING & PRINTING (P) LTD. 184 TM 483 & 30 DTR 143. 4. BOMBAY OIL IND. LTD. VS DCIT,28 SOT 383 (MUM.) 5.5 ON THE OTHER HAND, THE LD DR HAS REITERATED TH E SAME REASONS WHICH HAVE BEEN GIVEN BY THE A.O. TO MAKE THIS ADDITION A ND BY THE LD CIT(A) TO CONFIRM THE SAME. 5.6 WE HAVE CAREFULLY EXAMINED THE ORAL SUBMISSIONS IN THE LIGHT OF THE AVAILABLE EVIDENCE ON RECORD. WE HAVE FOUND THAT TH E SAID COMPANY WAS NOT HAVING ANY ACCUMULATED PROFITS, RATHER, THERE WAS A LOSS AS DISCUSSED ABOVE. THE HON'BLE SUPREME COURT IN THE CASE OF P.K. BADIA NI VS CIT, 105 ITR 642 HAS HELD THAT EXPRESSION ACCUMULATED PROFITS IN SEC TION 2(22)(E) MEANS 13 PROFITS IN THE COMMERCIAL SENSE AND NOT ASSESSABLE OR TAXABLE PROFITS. THE POSITION OF PROFIT RELATED TO A.Y. 2004-05 IS WORK ED OUT AS UNDER:- RESERVE AND SURPLUS (TREATED AS RS. 12,61,235/- ACCUMULATE PROFIT BY THE A.O. ) LESS:- (A) PRE-OPERATIVE EXPENSES RS. 12,85,398/- (B) PRELIMINARY EXPENSES RS. 1,05,300/- TOTAL RS. 1390,698/- NET PROFIT RS. (-) 1,29,463/- ACCORDINGLY, BY FOLLOWING THE ABOVE DECISION OF HON 'BLE APEX COURT IN THE CASE OF BADIANI VS CIT (SUPRA), WE ARE OF THE CONSI DERED OPINION THAT THE IMPUGNED ADDITION IS NOT TENABLE IN THE EYES OF LAW AND DESERVES TO BE DELETED. ACCORDINGLY, WE ORDER TO DELETE THE ADDITI ON AND ALLOW GROUND NO.3 OF THE ASSESSEE. 6.1 THE NEXT GROUND NO. 4 OF THIS APPEAL IS REGARDI NG ADDITION OF RS. 14,53,854/- WHICH HAS BEEN RESTRICTED TO RS. 6,89 ,460/- BY THE LD CIT(A). 6.2 THE FACTS OF THIS ISSUE ARE THAT THE ASSESSEE S OLD A PROPERTY FOR A CONSIDERATION OF RS. 50.00 LACS AND CLAIMED EXPENSE S OF RS. 7,64,394/-. THE A.O. ALLOWED THIS EXPENSES WHILE PROCESSING THE RET URN BUT DURING THE REGULAR ASSESSMENT PROCEEDINGS, THE A.O. HAS DISALL OWED THE SAME. 6.3 BEFORE US, IT WAS ARGUED THAT NO PROPER OPPORTU NITY WAS GIVEN BY THE A.O. TO EXPLAIN THIS ISSUE AS SCRUTINY OF THE ASSES SMENT WAS MADE AFTER 07 14 YEARS. THE ASSESSMENT HAS BEEN COMPETED ON 18-08-20 11 WHEREAS THE MATTER RELATED TO PERIOD ENDING 31-03-2004. 6.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CA REFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH PARTIES HAVE REITER ATED THEIR EARLIER STAND ON THIS ISSUE BEFORE US. IT IS FOUND THAT IN THE ORIGI NAL RETURN FILED BY THE ASSESSEE LONG TERM CAPITAL GAIN OF RS. 14,53,854/- WAS CLAIMED ON SALE OF A RESIDENTIAL HOUSE. THE LOSS WAS ATTRIBUTED PARTLY O N ACCOUNT OF EXPENSES CLAIMED FOR TRANSFER OF A SUM OF RS. 7,64,493/-. DU RING THE COURSE OF REGULAR ASSESSMENT PROCEEDINGS AS A CONSEQUENCE OF SEARCH, THE A.O. HAS DISALLOWED THIS CLAIM AND ACCORDINGLY HAS RESTRICTED THE LOSS TO RS. 6,89,407/-. IT IS A FACT DURING THE COURSE OF SEARCH, NO INCRIMINATING MATER IAL OR DOCUMENT WAS FOUND REGARDING THE CLAIM OF EXPENDITURE OF RS.7,64 ,394/-. THE CASE OF THE ASSESSEE IS THAT SINCE THE A.O. HAD ALLOWED LONG BA CK THIS CLAIM BY PROCESSING WHICH CANNOT BE SETTLED AFTER A PERIOD O F 07 YEARS THAT TOO WITHOUT ANY FURTHER MATERIAL BEING FOUND AND BEING IN THE P OSSESSION OF REVENUE. IN THIS REGARD, RELIANCE HAS BEEN PLACED ON VARIOUS DE CISIONS. 6.5 PER CONTRA, THE LD DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. IT WAS STATED THAT THE EXPENSES HAVE BEEN INFLATED AND RATHER BASELESS. THEREFORE , HE JUSTIFIED THE ACTION OF THE AUTHORIT IES BELOW. 15 6.6 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND IN THE LIGHT OF THE FACTS AND PRECEDENTS THEREON, WE ARE OF THE CONSIDERED OP INION THAT WHEN ADMITTEDLY NO EVIDENCE/ INCRIMINATING EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IN REGARD TO THE EXPENDITURE OF RS. 7,64 ,394/-, WHICH COULD JUSTIFY THE ACTION OF THE A.O. IN HOLDING THAT THIS EXPENDI TURE CANNOT BE ALLOWED IN THE LIGHT OF THAT EVIDENCE. IN THIS REGARD, THE DE CISIONS OF ITAT DELHI BENCH IN THE CASE OF ANIL KUMAR BHATIA & ORS. VS ACIT (20 10) 1 ITR (TRIBUNAL) 484 (DEL.) AND ITAT KOLKATTA BENCH IN THE CASE OF L MJ INTERNATIONAL LTD. VS DCIT (2008) 14 DTR 540 (KOL TRIBUNAL) APART FROM OTHERS ARE RELEVANT. HENCE, IN VIEW OF THE ABOVE DISCUSSIONS, WE REVERSE THE FINDINGS OF THE LD CIT(A) AND ALLOW GROUND NO. 4 OF THE ASSESSEE. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ITA NO.264/JP/2013 A.Y. 2005-06 (SHIV SHANKAR LA L GUPTA) 7.1 IN THIS APPEAL, THE ASSESSEE HAS RAISED FOLLOWI NG GROUNDS:- 1 THAT THE ORDER PASSED BY THE A.O. U/S 143(3) / 153A IS VOID ABINITO. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD CIT(A) HAS ERRED IN SUSTAINING THE ADDITION U/S 69C/ 69 OF RS. 3,14,77,574/- ON THE BASIS OF PAGE 82 OF ANNEXURE A-1. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD CIT(A) HAS ERRED IN MAKING ADDITION OF RS. 12,46,770/- U /S 2(22)(E) OF THE INCOME-TAX ACT, 1961. 16 4. THE ASSESSEE CRAVES YOUR INDULGENCE TO ADD AME ND OR ALTER ALL OR ANY GROUNDS OF APPEAL BEFORE OR AT T HE TIME OF HEARING. 8.1 THE FACTS, ARGUMENTS AND THE SUBMISSIONS OF THE PARTIES IN RESPECT OF ABOVE GROUNDS ARE SAME AND SIMILAR AS WERE IN THE A .Y. 2004-05. THEREFORE, WITH SIMILAR REASONINGS, WE ARE OF THE CONSIDERED V IEW THAT THE DECISION TAKEN IN THAT YEAR WOULD APPLY MUTATIS MUTANDIS. AC CORDINGLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9.0 IN THE RESULT, APPEALS OF THE ASSESSEE ARE PART LY ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05-0 3-2014 SD/- SD/- ( N.K. SAINI ) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER *MISHRA COPY FORWARDED TO :- 1. SHRI SHIV SHANKAR LAL GUPTA, JAIPUR 2. THE ACIT, CENTRAL CIRCLE-1, JAIPUR 3. THE LD.CIT(A) 3. THE LD CIT 4. THE D/R 5. GUARD FILE (ITA NO.263/JP/2013) BY ORDER, AR ITAT, JAIPUR 17 18