DINESH KIRAN AGGARWAL, MUMBAI V. DCIT CEN CIR 47, MUMBAI

ITA 2634/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2082 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-03-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 05-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: READ AS UNDER ON FACTS; CIRCUMS
• Keywords: Unexplained investment; Search and seizure; Loose papers; Opportunity of being heard; Documents seized
• Section: 143(3); 131; 56; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI SAKTIJIT DEY(JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 2634 /MUM/201 3 ASSESSMENT YEAR: 2010 - 11 SHRI DINESH KIRAN AGGARWAL 101, 101, VAIKUNTH BLDG. SINDHI SOCIETY, CHEMBUR, MUMBAI - 400071 VS. DCIT, CENTRAL CIRCLE 47, MUMBAI. PAN NO. AA BPA 6638 D APPELLANT .. RESPONDENT DATE OF HEARING : 23 /08/2016 DATE OF PRONOUNCEMENT: 11 /11/2016 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE . THE RELEVANT ASSESSMENT YEAR IS 2010 - 11. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 3 8 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNE D CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN MAKING AN ADDITION OF RS.98,36,000/ - AS UNDISCLOSED INCOME ON ACCOUNT OF ALLEGED PROFIT EARNED ON SALE OF FLAT AT ASHOK TOWER, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OF TH E CASE. APPELLANT BY SHRI RAKESH JOSHI ,AR RESPONDENT BY SHRI S ATYA PAL KUMAR , SR. DR ITA NO: 2634/MUM - 2013 2 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT THE PROFIT ON SALE OF FLAT ALREADY BEEN OFFERED FOR TAXATION IN T HE HANDS OF MR. RAVI KIRAN AGARWAL AND THE SAME INCOME CANNOT BE TAXED TWICE IN THE HANDS OF TWO DIFFERENT PERSONS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF LEARNED ASSESSING OFFICER IN NOT APPRECIATING THE FACT THAT THE APPELLANT HAS DISCHARGED HIS ONUS BY EXPLAINING THE DOCUMENTS SEIZED IN HIS HANDS. 3. THERE WAS A SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT CARRIED OUT BY THE DEPARTMENT IN THE BUSINESS AND RESIDENTIAL PRE MISES OF M/S ORBIT CORPO RATION LTD. GROUP ON 11/02/2010. THE ASSESSEE IS THE BROTHER OF MR. RAVI K IRAN AGARWAL WHO IS THE MAIN DIRECTOR IN M/S ORBIT CORPORATION LTD. DURING THE SEARCH ACTION ON 11/02/2010 AT THE RESIDENTIAL PREMISES OF THE ASSESSEE , IT IS ALLEGED THAT CERTAIN INCRIMINATING DOCUMENTS INDICATING TRANSFER OF PROPERTY I.E. FLAT NOS. 0207 AND 0208 ON 2 ND FLOOR OF TOWER C AT ASHOK TOWERS, PAREL, MUMBAI - 400012 WERE FOUND AND SEIZED. THE AO , ON EXAMINATION OF PAGE NUMBER 123 OF SEIZED LOOSE PAPERS , NOTED THAT AS ON 10.12.2009, THE TOTAL COST OF THREE BED ROOMS FLAT AT ASHOK TOWER HA D BEEN SHOWN AT RS.4,60,00,000/ - . THE SAME WAS SOLD AT A TOTAL CONSIDERATION OF RS.5,58,36,000/ - ON 31.01.2010. THE AO THUS ARRIVED AT A FINDING THAT THERE IS PROFIT ON S ALE OF SUCH FLAT AT RS.98,36,000/ - . IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT , THE ASSESSEE STATED THAT THE HE HAD BOOKED THE SAID PROPERTY IN THE MONTH OF OCTOBER, 2009, WHICH WAS SUBSEQUENTLY SOLD TO M/S AVENTICS BIOSEEDS PVT. LTD. AND HE DERIVED A PROFIT OF RS.98 LACS WHICH HA D BEEN OFFERED FOR TAXATION. AGAIN IN THE STATEMENT RECORDED U/S 131 OF THE ACT ON 26.03.2010 , THE ASSESSEE STATED THAT THE F LAT AT ASHOK TOWER WAS MERELY BEING LOOKED AFTER BY HIM ON BEHALF OF HIS ELDER BROTHER SRI RAVI KIRAN AGARWAL. HE FURTHER STATED THAT THE CASH EARNED ON THE SAID DEAL WAS ALSO NOT FOUND WITH HIM BUT AT THE RESIDENCE OF HIS ELDER ITA NO: 2634/MUM - 2013 3 BROTHER WHICH WAS LATER ON SEIZED BY THE DEPARTMENT. THEN HE STATED THAT THOUGH, ALL HIS BUSINESS TRANSACTIONS WERE FROM KNOWN S OURCES ONLY AND DULY RECORDED, SO AS TO BUY PEACE OF MIND AND AVOID PROTRACTED LITIGATION, HE UNDERTOOK TO PAY TAXES ON THE SAID ALLEGED TRANSACTION. THE AO WAS NOT CONVINCED WITH THE ABOVE CONTENTION S OF THE ASSESSEE AS HE WAS THE DIRECTOR OF ORBIT CORP ORATION LTD. AS PER THE AO IT WAS ONLY IN ORDER TO SAVE STAMP DUTY ON TRANSFER, THE F LAT WAS EVENTUALLY REGISTERED IN THE NAME OF NAVINY A MULTI T RADE PVT. LTD. AND SOLD TO AVENTIS BIOSEEDS LTD. THE AO THUS CAME TO A FINDING THAT THE PROFIT RAISED OUT OF SAL E OF THE SAID F LAT BELONGS TO THE ASSESSEE AND NOT TO HIS BROTHER. THEREFORE, THE AO BROUGHT TO TAX THE ABOVE PROFIT ON SALE OF FLAT AT ASHOK TOWER AMOUNTING TO RS.98,36,000 / - . THE L D. CIT(A) HAS CONFIRMED THE ABOVE ACTION OF THE AO ON THE SAME REASONS . 4 . THE L D. COUNSEL OF THE ASSESSEE SUBMIT S BEFORE US THAT THE PROFIT ON SALE OF THE F LAT HAS ALREADY BEEN OFFERED FOR TAXATION IN THE HANDS OF MR. RAVI KIRAN AGARWAL AND THE SAME INCOME CANNOT BE TAXED TWICE IN THE HANDS OF TWO DIFFERENT PERSONS. HE ALSO ST ATE S THAT THE ASSESSEE HAS DISCHARGED HIS ONUS BY EXPLAINING THE DOCUMENTS SEIZED IN HIS HANDS. 5 . THE L D. DR SUPPORT S THE ORDER PASSED BY THE CIT (A) UPHOLDING THE ADDITION MADE BY THE AO. HE RELIES ON THE DECISION IN BHAGIRATH AGGARWAL V S. CIT [2 013] 31 TAXMANN.COM 274 (DELHI); DR. S.C. GUPTA V S. CIT [2001] 118 TAXMAN 252 (ALL) AND NAVDEEP DHINGRA V S. CIT 56 TAXMANN.COM 75 (P&H) 6 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE NOW DISCUSS THE DECISION S RELIED ON BY THE L D. DR. ITA NO: 2634/MUM - 2013 4 IN THE CASE OF BHAGIRATH AGARWAL (SUPRA) , IT HAS BEEN HELD THAT AN ADDITION IN ASSESSEES INCOME RELYING ON STATEMENTS RECORDED DURING SEARCH OPERATIONS CANNOT BE DELETED WITHOUT PROVING STATEMENTS TO BE INCORRECT. IN THE CASE O F NAVDEEP DHINGRA (SUPRA) , IT HAS BEEN HELD THAT WHERE THE ASSESSEE HAS MADE AN ADMISSION REGARDING UNACCOUNTED INVESTMENT AND BELATEDLY RETRACTED FROM THE SAME ON THE BASIS THAT THE ADMISSION WAS BASED ON COERCION AND FORCE WITHOUT GIVING ANY REASON, SAME WAS NOT ACCEPTABLE AN D ADDITION AS UNDISCLOSED INVESTMENT WAS TO BE UPHELD. IN THE CASE OF DR. S.C. GUPTA ( S UPRA) , IT HAS BEEN HELD THAT BURDEN LAY ON THE ASSESSEE TO ESTABLISH THAT ADMISSION MADE AT THE TIME OF SURVEY WAS WRONG. 6.1 WE MAY MENTION HERE THAT THE ABOVE DECISIONS DO NOT DWELL ON THE BASIC CONTENTIONS OF THE ASSESSEE THAT THE SAME INCOME HAS BEEN TAXED TWICE. 6 .2 AT THIS JUNCTURE, WE START WITH THE FACTS. WE FIND THAT MR. RAVI KIRAN AG G ARWAL HAS FILED A RETURN OF INCOME FOR THE AY 2010 - 11 ON 31.07.2010, DECLARING A TOTAL INCOME OF RS.22,70,21,590/ - . IN THE STATEMENT RECORDED U/S 1 3 1 ON 29.03.2010, SHRI RAVI KIRAN AGARWAL STATED THAT : Q. NO.12. I AM SHOWING YOU, YOUR STATEMENT RECORDED DURING THE COURSE OF SEARCH PROCEEDING ON 11.02.201 0 AT YOUR RESIDENCE, I AM REPRODUCING PART PART STATEMENT RELATING TO Q. NO. 16. Q.16 DURING THE COURSE OF SEARCH ACTION, THE SEARCH PARTY FOUND CASH OF RS. 12,69,85,000/ - . KINDLY EXPLAIN THE SOURCE OF THE SAME. ANS. I AM NOT IN A POSITION TO EXPLAIN THE S OURCE OF SAID CASH OF RS. 12, 69,85,000/ - . MY CASH BALANCE AS PER MY BOOKS OF ACCOUNT IS AROUND 21 LACS. THUS, I ACCEPT THAT THE AMOUNT FOUND IN MY HOUSE IS IN EXCESS OF MY CASH BALANCE AND HAS NOT BEEN PROPERLY REFLECTED IN THE BOOKS OF ACCOUNTS. THUS I O FFER THE ABOVE ITA NO: 2634/MUM - 2013 5 INCOME OF RS. 12,48,85,000/ - FOR ADDING UP TO MY TOTAL INCOME FOR THE CURRENT FINANCIAL YEAR. PLEASE CONFIRM AND COMMENT ON THE ABOVE. ANS: THE CASH FOUND AND SEIZED FROM MY RESIDENCE DOES BELONG TO ME. ALL THE SAID CASH WAS EARNED ONLY IN J ANUARY 2010. IT WAS EARNED PRIMARILY FROM MY BETTING ON THE SEASON OPENER OF THE DERBY THAT TOOK PLACE IN JANUARY 2010 AND FROM A FLAT SALE OF ASHOK TOWER. I HAVE EARNED A NET INCOME OF RS.11,00,00,000/ - FROM BETTING ON THE HORSE RACING. FURTHER THE FLAT S ALE AT ASHOK TOWER, PAPERS FOR WHICH HAVE BEEN FOUND IN THE POSSESSION OF MY YOUNGER BROTHER DINESH KIRAN AGGARWAL WAS ALSO BEING LOOKED INTO BY HIM ON MY BEHALF. IN FACT, THE CASH EARNED ON THE SAID DEAL WAS ALSO WITH ME AND FOUND AND SEIZ ED AT THE TIME O F THE SEARCH IN MY HANDS. ACCORDINGLY, I ALSO OFFER THE PROFIT EARNED THEREON IN MY HANDS ONLY. HOWEVER, I WOULD LIKE TO CLARIFY THAT THERE WAS NO INTENT NOT TO SHOW THE SAID PROFIT IN THE RETURN TO BE FILED. IT WAS JUST THAT THE BOOKS OF ACCOUNTS WERE N OT UPDATED SINCE THE INCOME HAD ONLY BEEN EARNED IN THE END OF JANUARY 2010 AND THE SEARCH ACTION TOOK PLACE ON 11.02.2010. 6.3 AFTER VERIFICATION OF THE RETURNS FILED, THE AO HAS ACCEPTED THE RETURN ED INCOME OF RS.22,70,21,590/ - FILED BY MR. RAVI KIRAN AGGARWAL. 6 .4 TO RECAPITULATE, THE AO HAS MADE AN ADDITION OF RS. 98,36,000/ - I.E PROFIT ON SALE OF FLAT AT ASHOK TOWER IN THE HANDS OF THE ASSESSEE I.E MR. DINESH KIRAN AGGARWAL. WE HAVE MENTIONED HERE - IN - ABOVE AT PARA 6. 2 THAT MR. RAVI KIRAN AGGARWAL HAS STATED IN HIS STATEMENT RECORDED U/S 131 OF THE ACT ON 29.03.2010 THAT HE HAD OFFERED IN HIS HANDS THE PROFIT EARNED ON THE SALE OF FLAT AT ASHOK TOWER FOR TAXATION . 6. 5 THE ONLY DISPUTE IS WHETHER THE ADDITION OF RS.98,36,000/ - AS INCOME ON ACCOUNT OF PROFIT EARNED ON SALE OF FLAT AT ASHOK TOWER OUGHT TO BE IN THE HAND S OF MR. RAVI KIRAN AGGARWAL OR MR. DINESH KIRAN AGGARWAL. THE AO FOR ITA NO: 2634/MUM - 2013 6 BOTH THE TAX PAYERS IS SAME I.E. DCIT, CENTRAL CIRCLE - 47, MUMBAI. IT HAS BEEN HELD BY THE HONBLE SUPREME COURT IN LA XMI PATH SINGHANIA V S. CIT (1969) (72 ITR) 291, 294 (SC) THAT IT IS THE FUNDAMENTAL RULE OF THE LAW OF TAXATION THAT, UNLESS OTHERWISE EXPRESSLY PROVIDED, INCOME CANNOT BE TAXED TWICE. IN VIEW OF THE ABOVE, THE ORDER OF THE L D. CIT(A) IS SET ASIDE AND THE CASE IS RESTORED BACK TO THE FILE OF THE AO TO EXAMINE THE ABOVE ISSUE AND MAKE A FRESH ASSESSMENT AS PER THE PROVISIONS OF THE ACT , KEEPING IN MIND THE ABOVE OBSERVATION , AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7 . IN THE RESUL T, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT 11 /11/2016 SD/ - SD/ - (SAKTIJIT DEY) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 11 /11/2016 AKS/ ON TOUR (DOC) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI