DCIT, New Delhi V. Shri Sandeep Gupta, New Delhi

ITA 3261/DEL/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7389 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 12-07-2016
• Assessment Year: 2000-2001
• Appeal Filed On: 02-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: B L GUPTA ITP
• Keywords: Search and seizure; Document seized; Block assessment; Documents seized
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G NEW DELHI BEFORE SH. H.S. SIDHU, JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 3261 /DEL/ 2010 ASSESSMENT YEAR: 2000 - 01 DCIT, CENTRAL CIRCLE - 19, ROOM NO. 3 19, ARA CENTRE, E - 2, JHANDEWALAN EXTENSION, NEW DELHI VS. SH. SANDEEP GUPTA, 292, TAGORE PARK EXTN., MODEL TOWN - I, NEW DELHI PAN : AAGPG G5542 E (APPELLANT) (RESPONDENT) APPELLANT BY SMT. RENUKA JAIN GUPTA, CIT(DR) RESPONDENT BY SH. B.L. GUPTA, ITP DATE OF HEARING 12.07.2016 DATE OF PRONOUNCEMENT 22.08.2016 ORDER PER O.P. KANT , A. M. : THIS APPEAL BY THE R EVENUE IS DIRECTED AGAINST ORDER DATED 01/04/2010 OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) - III, NEW DE LHI FOR ASSESSMENT YEAR 2000 - 01, RAISING FOLLOWING GROUNDS: I. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS IN ANNULLING THE ASSESSMENT MADE U/S 153C. II. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND ON FACTS BY HOLDING THAT THE SEIZED DOCUMENTS ON 2 ITA NO. 3261/DEL/2010 AY: 2000 - 01 THE BASIS OF WHICH PROCEEDINGS WERE INITIATED DO NOT BELONG TO THE ASSESSEE. III. WHETHER O N THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN INTERPRETING SECTION 153A/153C OF THE IT ACT. IV. THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON F ACTS. V. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPEAL. 2. THE F ACTS IN BRIEF OF THE CASE ARE THAT A SEARCH AND SEIZURE A CTION UNDER SECTION 132 OF THE I NCOME - T AX ACT, 1961 (IN SHORT THE ACT ) WAS CONDUCTED ON 15/12/2014 IN THE CASES OF B . M . GUPTA G ROUP . DURING THE COURSE OF SEARCH PROCEEDINGS, CERTAIN DOCUMENTS AND BOOKS OF ACCOUNTS WERE FOUND AND SEIZED. IN THE SAID BOOKS OF ACCOUNTS , ENTRIES CONTAINING NAME OF THE ASSESSEE WERE FOUND. THE ASSESSING OFFICER OF SH. B . M . GUPTA RECORDED SAT ISFACTION NOTE UNDER SECTION 153 C OF THE ACT AND ON THE BASIS OF THE SAID SATISFACTION NOTE, THE ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153A R.W.S. 15 3C OF THE ACT AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 153C OF THE ACT AT THE INCOME OF RS. 53,15, 523/ - AS AGAINST THE RETURNED INCOME OF RS. 1,42, 780/ - . BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX (A PPEALS), THE ASSESSEE CHALLENGED THE JURISDICTION ASSUMED BY THE ASSESSING OFFICER UNDER SECTION 153C OF THE ACT. THE ASSESSEE SUBMITTED THAT IN THE CASE OF THE ASSESSEE , BOOKS OF ACCOUNTS IN WHICH ENTRIES RELATED TO THE ASSESSEE ARE FOUND, ARE NOT BELONGING TO THE ASSESSEE AND , THEREFORE , PROCEEDINGS UND ER SECTION 153C OF THE ACT CANNOT BE INVOKED UNTIL AND UNLESS ANY MONEY, BULLION JEWELLERY OR BOOKS OF ACCOUNTS O R 3 ITA NO. 3261/DEL/2010 AY: 2000 - 01 DOCUMENTS BELONGING TO THE ASSESSEE ARE FOUND AND SEIZED DURING THE COURSE OF SEARCH AT THE PREMISES OF SAID B . M . GUPTA OR HIS ACCOUNTANT, SH . RAMAVTAR S INGHAL. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE PRECEDENTS CITED, THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) CAME TO THE CONCLUSION THAT IN THE CIRCUMSTANCES , PROCEEDINGS UNDER SECTION 153 C OF THE ACT WERE NOT JUSTIFIED A ND , HENCE , HE ANNULLED THE ASSESSMENT. AGGRIEVED , THE R EVENUE IS BEFORE US RAISING THE GROUNDS AS REPRODUCED ABOVE. 3. ADDRESSING THE GROUNDS RAISED, THE LEARNED COMMISSIONER OF INCOME TAX (DEPARTMENTAL R EPRESENTATIVE) SUBMITTED THAT THE CONNOTATION DOCU MENTS BELONGS TO IS A WIDE ENOUGH WHICH INCLUDE EVEN THE ENTRIES PERTAINING TO THE ASSESSEE AND, THEREFORE , THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) WAS NOT JUSTIFIED IN ANNULLING THE ASSESSMENT. 4. ON THE OTHER HAND , LEARNED AUTHORIZED R EPRESENTATIVE OF THE ASSESSEE, RELYING ON THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) , SUBMITTED THAT SIMILAR ISSUE CAME UP BEFORE CONSIDERATION IN THE CASE OF OTHER FAMILY MEMBERS AND IN THOSE CASES ALSO LIKE ADDITIONS ARE MADE IN THE BACKDR OP OF SIMILAR SATISFACTION RECORDED ON THE BASIS OF THE ENTRIES FOUND IN THE RECORD OF SH. B . M . GUPT A AND THE TRIBUNAL IN ITA NOS. 37 TO 40 /DEL/2010, IN THE CASE OF SH. ANKIT GUPTA AND ITA NO. 43 TO 44/DEL/2010 IN THE CASE OF SMT. ABHA GUPTA, UPHELD THE AN NULLING OF THE ASSESSMENT IN SIMILAR FACTS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD , INCLUDING THE DECISION S OF THE TRIBUNAL CITED 4 ITA NO. 3261/DEL/2010 AY: 2000 - 01 BY THE ASSESSEE. WE FIND FROM THE SATISFACTION NOTE RECORDED BY THE ASSESSING OFFICER IN T ERMS OF SECTION 153 OF THE ACT THAT ENTRIES IN THE NAME OF THE ASSESSEE ARE APPEARING ALONG WITH THE OTHER FAMILY MEMBERS. THE SATISFACTION NOTE RECORDED BY THE ASSESSING OFFICER HAS BEEN REPRODUCED BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) IN TH E IMPUGNED ORDER , HOWEVER , FOR THE PURPOSE OF CLARITY, WE ARE REPRODUCING THE SAME AS UNDER: ACTION U/S 132 OF L.T. ACT, 1961 WAS TAKEN ON 15.12.2004 IN SHRI GUPTA GROUP OF CASES AT THE RESIDENCE AND BUSINESS PREMISES OF SHRI B.M. GUPTA I.E. 2281 & 2282 G ALI HINGA BEG, VARIOUS LOCKERS OWNED BY HIS FAMILY MEMBERS, AT THE RESIDENCE OF SHRI RAM AVTAR SINGHAL, ACCOUNTANT OF SHRI B.M. GUPTA AND M/S VARAD BUILDERS PVT. LTD. DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS FOR THE BLOCK ASSTT. YEAR 1999 - 2000 TO 2004 - 05 IN THE CASE OF SHRI B.M. GUPTA AND EXAMINING THE DOCUMENTS /BOOKS OF ACCOUNTS SEIZED FROM HIS RESIDENTIAL AND BUSINESS PREMISES AS ALSO SEIZED FROM THE RESIDENCE OF SHRI RAM AVTAR SINGHAL, ACCOUNTANT OF SHRI BRIJ MOHAN GUPTA (ANNEXURES A - 5, A - 50 & A - 79 OF PARTY H - 4), IT HAS BEEN NOTICED THAT THERE ARE ENTRIES (CASH ADVANCED ON LOANS) IN THE NAMES OF THE FOLLOWING PERSONS: S. NO. NAME ASSTT. YEAR CASH AMOUNT ADVANCED INTEREST RECEIVED COMMISSION PAID 1 SHRI RAJEEV GUPTA 2000 - 01 21 2,16,000 2 MS. ABHA GUPTA 2002 - 03 10 1,33,067 3 - DO - 2003 - 04 25 88,967 4 SHRI SANDEEP GUPTA 2000 - 01 70 1,72,703 5 - DO - 2002 - 03 20 2,52,805 6 - DO - 2004 - 05 5 95,900 7 SH. ANKIT GUPTA 1999 - 00 5 51,667 8 - DO - 2000 - 01 300 19,72,399 9 - DO - 2001 - 02 334 18,10,642 10 SHRI MANOJ GUPTA 2000 - 01 163 1,53,351 11 - DO - 2002 - 03 104 25,618 5 ITA NO. 3261/DEL/2010 AY: 2000 - 01 IT IS ALSO FOUND FROM SEIZED RECORDS COUPLED WITH THE CONTENTS OF STATEMENTS OF SHRI RAJEEV GUPTA, SON OFSHRI B.M. GUPTA AND SHRI R.A. SINGHAL, ACCOUNTANT OFSHRI B.M. GUPTA THAT THE FIGURES OF CASH AMOUNT OF ABOVE ADVANCES INVESTED BY THESE PERSONS THROUGH SHRI B.M. GUPTA, WHO IS DOING MONEY LENDING BUSINESS AND EARNING COMMISSION ON SUCH ADVANCES, ARE IN LACS. IT MAY ALSO BE PERTINENT TO BRING ON RECORD THAT THE COMMISSION SO EARNED BY SHRI B.M. GUPTA ON THESE ADVANCES HAS BEEN SURRENDERED BY HIM FOR TAX AS HIS UNACCOUNTED COMMISSION/ BROKERAGE DURING THE RELEVANT ASSESSMENT YEAR. AFTER INVESTIGATION MADE BY THE INVESTIGATION WING OF THE DEPARTMENT, THESE CASES WE RE CENTRALIZED WITH THE MAIN CASE OF SHRI B.M. GUPTA. IN VIEW OF THE ABOVE FACTS BASED ON SEIZED DOCUMENTS AND COUPLED WITH THE STATEMENTS OF SHRI RAJEEV GUPTA AND SHRI RAM AVTAR SINGHAL, I AM SATISFIED THAT THE ABOVE ENTRIES FOUND FROM THE DOCUMENTS SEIZ ED DURING THE COURSE OF SEARCH IN SHRI B.M. GUPTA GROUP OF CASES BELONG TO THE ABOVE MENTIONED PERSONS. HENCE, ACTION U/S I53C OF THE INCOME TAX ACT, 1961 IS CALLED FOR IN THE CASES OF ABOVE NOTED PERSONS. WHO HAVE ADVANCED CASH LOANS AND EARNED INTEREST I NCOME THEREON AS INDICATED AGAINST THE NAME OF EACH PERSONS. NOTICE U/S 153C OF THE I.T.ACT, 1961 MAY ISSUE FOR THE BLOCK ASSTT. YEARS 1999 - 2000 TO 2004 - 05 IN CASES OF ABOVE ASSESSEES. 6. THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS ANNULLED T HE ASSESSMENT WITH FOLLOWING OBSERVATIONS: 3.4 ADVERTING BACK TO THE FACTS OF THE CASE, IT IS OBSERVED THAT SEARCH AND SEIZURE OPERATIONS U/S 132 OF THE ACT WERE UNDERTAKEN ON THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF SH BRIJ. MOHAN GUPTA AND HIS A CCOUNTANT SH. RAM AVTAR SINGHAL. DURING THE COURSE OF THE SEARCH OPERATIONS, DOCUMENTS SEIZED INDICATE THE NAME OF THE PERSONS WHO HAVE GIVEN CASH LOANS WITH DATES, PERIOD OF LOAN, INTEREST AND COMMISSION EARNED, DOCUMENT ON THE BASIS OF WHICH PROCEEDINGS U/S 153C OF THE ACT HAVE BEEN 6 ITA NO. 3261/DEL/2010 AY: 2000 - 01 INITIATED DOES NOT BELONG TO THE APPELLANT THESE DOCUMENTS HAVE BEEN PREPARED BY SH. B.M. GUPTA FOR THE PURPOSE OF HIS BUSINESS. THE TERM BELONGING IMPLIES SOMETHING MORE THAN THE IDEA OF CASUAL ASSOCIATION. IT INVOLVES NOTION OF CONTINUITY AND INDICATES MORE OR LESS INTIMATE CONNECTION WITH THE PERSONS OVER A PERIOD OF TIME. THE DOCUMENTS SEIZED DURING THE SEARCH RECORD THE TRANSACTIONS OF VARIES PERSONS. THE EXPRESSION BELONGING TO THE ASSESSEE CONNOTES BOTH THE COMPLETE OWNE RSHIP AND LIMITED OWNERSHIP OF INTEREST. OF COURSE, BELONGING TO IS A CAPABLE OF CONNOTING INTEREST WHICH IS LESS THAN ABSOLUTE PERFECT LEGAL TITLE. HOWEVER, THERE SHOULD BE SOME LIMITED OWNERSHIP OF INTEREST, IF IT IS TO BE PERMITTED THAT THE ASSETS BELON G TO THE ASSESSEE. IN THE INSTANT CASE, THE DOCUMENTS SEIZED DURING THE SEARCH CANNOT BE TERMED TO BE INDICATING ANY LIMITED INTEREST OF THE OWNERSHIP OF THE ASSESSEE IN SUCH DOCUMENTS. THE LANGUAGE USED IN SECTION 153C OF THE ACT IS MATERIALLY DIFFERENT F ROM THE LANGUAGE USED IN SECTION 158BD OF THE ACT. AS PER SECTION 158BD, IF ANY UNDISCLOSED INCOME RELATES TO OTHER PERSON, THEN ACTION AGAINS5T SUCH OTHER PERSON CAN BE TAKEN PROVIDED SUCH UNDISCLOSED INCOME IS REFERABLE TO THE DOCUMENT SEIZED DURING THE SEARCH. HOWEVER, SECTION 153B OF THE ACT SAYS THAT IF VALUABLE OR BOOKS OF ACCOUNTS OR DOCUMENTS BELONGING TO OTHER PERSONS ARE SEIZED THEN ACTION U/S 153C CAN BE TAKEN AGAINST SUCH OTHER PERSON. IN THE INSTANT CASE, THE DOCUMENTS SEIZED DO NOT BELONG TO T HE APPELLANT AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN INITIATING ACTION U/S 153A R.W.S. 153C OF THE ACT. IT IS, THEREFORE, HELD THAT THE PROCEEDINGS INITIATED U/S 153C OF THE ACT ARE NOT AS PER THE LAW. THE ASSESSMENT MADE U/S 153A R.W.S. 153C OF THE ACT CANNOT STAND OF ITS OWN AND HENCE, THE SAME IS CANCELLED. 7. T HE ASSESSEE HAS SUBMITTED COPY OF THE DECISION OF THE TRIBUNAL IN THE CASE OF SH. ANKIT GUPTA, IN ITA NO. 37 TO 40/DEL/2010 AND S MT . A BHA GUPTA IN ITA NO. 43 AND 44/DEL/2010. WE FIND THA T THE NAME OF BOTH SH. ANKIT GUPTA AND S MT . ABHA GUPTA ARE APPEARING IN THE SATISFACTION NOTE 7 ITA NO. 3261/DEL/2010 AY: 2000 - 01 ALONG WITH THE ASSESSEE, IN WHOSE NAME THE ENTRIES WERE FOUND RECORD ED IN THE BOOKS OF ACCOUNTS OF S H . B . M . GUPTA. IN BOTH OF THESE CASES , THE TRIBUNAL HAS HELD THAT LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) WAS CORRECT IN HOLDING THAT THE DOCUMENTS ON THE BASIS OF WHICH PROCEEDINGS UNDER SECTION 153C OF THE ACT HAD BEEN INITIATED, DID NOT BELONG TO THE ASSESSEE AND ACCORDINGLY UPHELD THE ORDER OF LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) IN ANNULLING THE ASSESSMENT. THE RELEVANT PART OF THE DECISION IN THE CASE OF ANKIT GUPTA (SUPRA) IS REPRODUCED AS UNDER: 10. AS EVIDENT FROM THE LANGUAGE OF SECTION ITSELF, IT IS THE BOOKS OF ACCO UNT PER SE ABOUT WHICH THE ASSESSING OFFICER NEEDS TO BE SATISFIED AS BELONGING TO A PERSON OTHER THAN A PERSON PREFERRED TO IN SECTION 153A. IN THE PRESENT CASE, UNDISPUTEDLY, THE BOOKS OF ACCOUNT WERE NOT OF THE ASSESSEE. ACTION U/S 153C OF THE ACT CAN BE TAKEN IN RESPECT OF ANY PERSON OTHER THAN THE ONE MENTIONED IN SECTION 153A, ONLY IF THE BOOKS OF ACCOUNT BELONGING TO SUCH OTHER PERSONS ARE SEIZED DURING THE SEARCH. NOW, THE ENTRIES IN THE NAME OF THE ASSESSEE, AS CONTAINED IN THE BOOKS OF SH. B.M. G UPTA CANNOT AND DO NOT AMOUNT TO THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE DEPARTMENT HAS NOT BROUGHT ANYTHING ON RECORD TO COUNTER THIS POSITION. IN FACT, THE DOCUMENTS SEIZED INDICATED THE NAMES OF PERSONS, INCLUDING THE ASSESSEE, WHO HAD GIVEN CASH LOAN S. 11. IN THESE FACTS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS CORRECT IN HOLDING THAT THE DOCUMENTS ON THE BASIS OF WHICH PROCEEDINGS U/S 153C OF THE ACT HAD BEEN INITIATED, DID NOT BELONG TO THE ASSESSEE. THE PROVISIONS OF SECTION 153C OF TH E ACT WERE INVOKED BY THE ASSESSING OFFICER WITHOUT THE SATISFACTION NOTE OF THE ASSESSING OFFICER OF THE PERSON IN WHOSE CASE THE SEARCH HAD BEEN CONDUCTED. 8 ITA NO. 3261/DEL/2010 AY: 2000 - 01 8. I N VIEW OF ABOVE, WE ARE OF THE CONSIDERED OPINION THAT ENTRIES IN THE NAME OF THE ASSESSEE AS CONTAIN ED IN THE BOOKS OF ACCOUNTS OF S H. B . M . GUPTA, ARE NOT THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND , THEREFORE , THE BOOKS OF ACCOUNTS DOES NOT BELONG TO THE ASSESSEE AND , THUS , RESPECTFULLY FOLLOWING THE DE CISION OF THE TRIBUNAL IN AFORE CITED ORDERS, WE APPROVE THE ACTION TAKEN BY THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) IN ANNULLING THE ASSESSMENT. 9. IN THE RESULT , APPEAL OF THE REVENUE IS DISMISSED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 2 2 N D AUGUST , 2016 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 N D AUGUST , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI