ACIT, New Delhi V. Sh. Vipin Kumar Agarwal, New Delhi

ITA 4063/DEL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74317 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 30-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMEER SHARMA
• Assessee Lawyers: ADESH KUMAR JAIN AKSHAT JAIN
• Keywords: Income from undisclosed sources; Search and seizure; Salary income
• Section: 142(1); 132

Judgement Text

ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.4063/DEL/2012 ASSESSMENT YEAR : 2009-10 ASSTT.COMMISSIONER OF INCOME TAX, VS VIPIN KU MAR AGARWAL, CENTRAL CIRCLE 2, ROOM NO. 323, 24 0, OKHLA INDUSTRIAL ESTATE, 3 RD FLOOR, ARA CENTRE, PHASE-III, NEW DELHI. JHANDEWALAN EXTN., NEW DELHI. (PAN:AAEPA5202G) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SAMEE R SHARMA, SR.DR RESPONDENT BY : S/SHRI ADESH KUMAR JAIN, AKSHAT JAIN O R D E R PER CHANDRAMOHAN GARG, J.M. THIS APPEAL HAS BEEN PREFERRED BY THE REVENUE AGAI NST THE ORDER OF COMMISSIONER OF INCOME TAX(A)-III, DELHI DATED 31. 05.2012 IN APPEAL NO. 724/10-11 FOR AY 2009-10. 2. GROUND NO. 2 & 3 OF THE REVENUE ARE GENERAL IN N ATURE WHICH NEED NO ADJUDICATION. SOLE REMAINING GROUND OF THE REVENUE READS AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.10,50,000/- MADE BY THE ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 2 ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED CASH FO UND DURING THE COURSE OF SEARCH. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THIS APP EAL ARE THAT THE ASSESSEE FILED A RETURN DECLARING INCOME OF RS.46,03,610/- O N 30.11.2009. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT) DATED 25.06.2010 ALONG WITH QUESTIONNAIRE WERE SERVED ON THE ASSESSE E. THE ASSESSING OFFICER OBSERVED AND HELD THAT BESIDES EXEMPT INCOM E U/S 10(2A) OF THE ACT, THE ASSESSEE HAS ALSO DERIVED INCOME FROM SALARY FR OM M/S GOPAL CORPORATION LTD. AND OTHER SOURCES AMOUNTING TO RS. 25,18,610 OUT OF WHICH RS.1,18,610 WAS ON ACCOUNT OF BANK INTEREST EARNED BY ASSESSEE HIMSELF AND 3 MINOR CHILDREN AND RS.24 LAKH ON ACCOUNT OF ADDIT IONAL INCOME DISCLOSED IN HIS RETURN OF INCOME. THE ASSESSING OFFICER OBS ERVED THAT IN SPITE OF BEING ASKED SPECIFICALLY, THE ASSESSEE HAS FAILED T O SUBMIT BIFURCATION OF THE ADDITIONAL INCOME SO DECLARED. CONSEQUENTLY, THE A SSESSING OFFICER MADE IMPUGNED ADDITION OF RS.10,50,000 WITH FOLLOWING OB SERVATIONS AND FINDINGS:- 3. A SEARCH AND SEIZURE ACTION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT C-31 12, SA FDARJUNG DEVELOPMENT AREA, BHIM NAGAR, HAUZ KHAS, NEW DELHI AND CASH AMOUNTING TO RS.10,50,000/- WAS FOUND OUT OF W HICH CASH OF RS.9,00,000/- WAS SEIZED. DURING THE COURSE OF S EARCH, WHEN THE ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF CASH, T HE ASSESSEE HAS STATED AS UNDER: ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 3 RS. 5,50,000/- HAS BEEN FOUND FROM MY WIFE ALMIRAH. THIS MONEY IS HER PERSONAL SAVING MOTE THA N THAT 1 AM NOT ABLE TO TELL YOU BECAUSE SHE HAS EXPI RED ON 23-12-2008. RS. 50,000/- HAVE BEEN WITHDRAWN BY MY FATHER FROM HIS PERSONAL SAVING ACCOUNT AND RS. 2,00,000/- YOU HAVE GOT FROM HIS BEDROOM, I THINK T HIS IS PERSONAL MONEY. HE IS 14-15 YEARS OLD AND HE IS A H EART PATIENT. RS. 40,000/-HAVE BEEN WITHDRAWN FROM MY SA VING ACCOUNT ON MONTHLY BASIS TO MEET OUT MY HOUSE HOLD EXPENSES. RS. 2,10,000/-, I HAD KEPT WITH ME TO ME ET OUT ANY EMERGENCY EXPENSE AS MY FATHER IS HEART PATIENT AND ALSO HAVE DIABETIC AND BLOOD PRESSURE PROBLEM'. 3.1 ON THE BASIS OF THE FACTS ABOVE, IT IS APPARENT THAT THE ASSESSEE HAS NOT BEEN IN A POSITION TO OFFER ANY EXPLANATION FOR SOURCE OF CASH AND AS SUCH THE CASH SO FOUND WAS SEIZED. AS THE ASSESSEE HAS FAILED TO FIL E ANY EXPLANATION FOR THE CASH OF RS. 10,50,000/- FOUND, THE SAME IS ADDED TO THE INCOME OF THE ASSESSEE AS INCO ME FROM UNDISCLOSED SOURCES. 1 AM SATISFIED THAT THE A SSESSEE HAS CONCEALED .PARTICULARS OF INCOME AND THEREFORE, PENALTY PROCEEDINGS U/S 271 (1) (C) ARE BEING INITI ATED SEPARATELY.' 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE HAS FAILED TO SUBMIT EXPLANATION FOR ADDITIONAL INCOME OF RS. 24 LAKH AND HAS NOT SPECIFIED THE MANNER IN WHICH SUCH INCOME HAS BEEN DERIVED. THE ASSESSING OFFICER ALSO OBSERVED THAT MOREOVER AS THE SAME WAS NOT PART OF DISCLOSURE MADE DURING THE SEARCH, THEREFORE, PENALTY PROCEEDI NGS U/S 271AAA OF THE ACT WERE ALSO INITIATED SEPARATELY. THE AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A) WHI CH WAS ALLOWED ON ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 4 THIS ISSUE BY THE IMPUGNED ORDER. NOW, THE REVENUE IS BEFORE THIS TRIBUNAL IN THIS SECOND APPEAL WITH THE SOLE GROUND AS REPRO DUCED HEREINABOVE. 5. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US, INTER ALIA PAP ER BOOK FILED ON BEHALF OF THE ASSESSEE SPREAD OVER 45 PAGES. 6. AT THE OUTSET, WE OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER WITH FOLLOWING OBSERVATIONS AND FINDINGS:- FROM THE ASSESSMENT ORDER IT IS NOTED THAT THE ASSESSEE HAD MADE A DISCLOSURE OF ADDITIONAL INCOME IN HIS RETURN OF INCOME FILED, WHICH IS FOR AN AMOUNT OF RS. 24 LACS. THE AO HAS RECORDED THAT NO DISCLOSURE U/S 132(4) WAS MADE DURING THE COURSE OF SEARCH PROCEEDINGS AND THAT IN SPITE OF BEING SPECIFICALLY ASKED FOR THE ASSESSEE HAS FAILED TO SUBMIT BIFURCATION O F THE ABOVE ADDITIONAL INCOME, EVEN DURING THE ASSESSMENT PROCEEDINGS. IT IS FURTHER SEEN FROM THE ASSESSMENT ORDER THAT WHILE A CASH OF RS. 10,50,000/- WAS FOUND AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AND OUT OF WHI CH RS. 9 LACS WAS SEIZED, THE ASSESSEE HAD IN HIS STATEMEN T RECORDED AT THE TIME OF SEARCH HAD EXPLAINED PART O F THIS MONEY FOR RS. 5,50,000/- AS THE PERSONAL SAVINGS OF HIS WIFE WHO HAD EXPIRED ON 23.12.08 AND FROM WHOSE ALMIRAH THIS CASH WAS FOUND. ANOTHER AMOUNT OF RS. 2 LACS, WHICH WAS FOUND FROM THE BEDROOM OF THE ASSES SEE'S FATHER WAS EXPLAINED AS HIS FATHER'S PERSONAL MONEY AND ANOTHER RS. 2,10,000/- WAS STATED TO BE KEPT WITH ASSESSEE TO MEET EMERGENCY MEDICAL EXPENSES OF HIS FATHER. ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 5 THE AO HAS HOWEVER IN THE ASSESSMENT ORDER TREATED THE ENTIRE CASH FOUND FOR RS. 10,50,000/- A S UNEXPLAINED AND HAS NOT ACCEPTED THE SUBMISSION MAD E BY THE ASSESSEE THAT THIS CASH OF RS. 10,50,000/- F ORMS PART OF THE ADDITIONAL INCOME DISCLOSED BY THE ASSE SSEE FOR RS. 24 LACS IN HIS RETURN OF INCOME. IN HIS SUBMISSION FILED DURING THE APPELLATE PROCEEDINGS THE APPELLANT HAS INTER ALIA SUBMITTED THAT WHILE THE ASSESSEE HAD DULY EXPLAINED THE SOURCE OF THE CASH FOUND FOR RS. 10,50,000/- IN HIS STATEMENT REC ORDED U/S 132(4) OF THE IT ACT DURING THE COURSE OF SEARC H AND SEIZURE OPERATION BUT HAS SUBSEQUENTLY CHOSEN TO DE CLARE THIS CASH FOUND OF RS. 10,50,000/- AS FORMING PART OF THIS ADDITIONAL INCOME FROM OTHER SOURCES' FOR RS. 24 L ACS, AS DISCLOSED IN THE RETURN AND ON WHICH TAXES HAVE BEEN DULY PAID. IT HAS ALSO BEEN ARGUED THAT IF NO BENEF IT OF TELESCOPING OF INCOME FOR THIS CASH OF RS. 10,50,00 0/- IS GIVEN IT WOULD RESULT IN TAXING THE SAME CASH TWICE , FIRSTLY BY THE APPELLANT VOLUNTARILY OFFERING THE ADDITIONA L INCOME OF RS. 24 LACS AND SECONDLY BY TREATING THIS AMOUNT OF RS. 10,50,000/-AS INCOME FROM UNDISCLOSED SOURCES. I HAVE CAREFULLY GONE THROUGH THE FINDING OF THE AO AND THE SUBMISSION OF THE ASSESSEE AS WELL THE COMPUTATION OF INCOME FILED TOGETHER WITH THE INC0M E TAX RETURN BY THE ASSESSEE, FROM WHICH IT IS EVIDENT TH AT A DISCLOSURE OF ADDITIONAL INCOME OF RS. 24 LACS HAS BEEN MADE BY THE ASSESSEE ON WHICH TAXES HAVE DULY BEEN PAID. THE FACT THAT PART OF THE CASH WAS FOUND AND SEIZED DURING THE COURSE OF SEARCH FROM THE ALMIRAH OF THE LATE WIFE OF THE ASSESSEE AND ALSO FROM THE BEDROOM OF T HE ASSESSEE'S FATHER PRIMA FACIE MAKES A CASE FOR TREA TING THE SAID CASH IN THE HANDS OF THESE PERSONS AND FINDING/SEEKING EXPLANATION RELATING TO THIS CASH I N THEIR HANDS ITSELF, AN EXERCISE WHICH HAS NOT BEEN UNDERT AKEN BY THE ASSESSEE, IN CASE HE WERE TO DISBELIEVE THE STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF TH E IT ACT. NOW, WHEN THE ASSESSEE HAS HIMSELF VOLUNTARILY ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 6 OFFERED AN AMOUNT OF RS.24 LACS AS HIS ADDITIONAL I NCOME THEN WITHOUT ANY FURTHER EVIDENCE ON RECORD TO PROV E THAT THIS DISCLOSED AMOUNT DOES NOT INCLUDE WITHIN ITSEL F THE CASH FOUND OF RS. 10,50,000/-, THE AO DOES NOT HAVE ANY CASE TO MAKE A FURTHER ADDITION TO INCOME IN THE FA CTS OF THE CASE, AS IT CERTAINLY RESULTS IN TAXING THE SAM E AMOUNT TWICE OVER AGAIN. ACCORDINGLY, THE ADDITION MADE FO R RS. 10,50,000/- IS DIRECTED TO BE DELETED.' 7. LD. DR SUBMITTED THAT IN SPITE OF BEING ASKED SP ECIFICALLY TO SUBMIT BIFURCATION OF THE ADDITIONAL INCOME OF RS.24 LAKH SO DECLARED BY THE ASSESSEE, THE ASSESSEE HAD FAILED TO SUBMIT EXPLANA TION AND BIFURCATION FOR ADDITIONAL INCOME AND ALSO ASSESSEE HAD NOT SPECIFI ED THE MANNER IN WHICH SUCH INCOME HAD BEEN DERIVED. THE DR FURTHER POINT ED OUT THAT IN THIS SITUATION, THE ASSESSING OFFICER RIGHTLY OBSERVED T HAT SINCE THE ASSESSEE HAS FAILED TO FILE THE EXPLANATION FOR THE CASH FOUND O F RS.10,50,000/-, THEREFORE, THE ASSESSING OFFICER RIGHTLY ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCES. THE DR FURTHER CO NTENDED THAT THE COMMISSIONER OF INCOME TAX(A) DELETED THE ADDITION ON WRONG PREMISE WITHOUT ANY JUSTIFICATION, THEREFORE, THE IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE ASSESSING OFFICER. 8. REPLYING TO THE ABOVE, LD. ASSESSEES REPRESENTA TIVE HAS DRAWN OUR ATTENTION TOWARDS PAPER BOOK PAGE NO. 6 & 7 WHEREIN THE ASSESSEE HAS SUBMITTED A REPLY BEFORE THE ASSESSING OFFICER TO T HE QUESTIONNAIRE DATED ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 7 15.10.2010 DURING THE ASSESSMENT PROCEEDINGS. WE A LSO OBSERVE THAT THE ASSESSMENT ORDER WAS PASSED ON 27.12.2010 I.E. AFTE R DETAILS AND EXPLANATION SUBMITTED BY THE ASSESSEE. FROM BARE READING OF TH E ASSESSMENT ORDER, WE ARE UNABLE TO SEE ANY REFERENCE TO THIS REPLY OF TH E ASSESSEE. PER CONTRA, THE ASSESSING OFFICER HAS OBSERVED THAT IN SPITE OF SPE CIFIC QUERY, THE ASSESSEE HAD FAILED TO SUBMIT BIFURCATION OF THE ADDITIONAL INCOME SO DECLARED WHICH WE FOUND INCORRECT AND CONTRARY AS PER REPLY SUBMIT TED BY THE ASSESSEE TO THE QUESTIONNAIRE DATED 15.10.2010 ISSUED BY THE ASSESS ING OFFICER HIMSELF. FOR THE SAKE OF CLARIFY IN THE FINDINGS, WE FIND IT APP ROPRIATE TO REPRODUCE RELEVANT PORTION OF DETAILS AND EXPLANATION OF THE ASSESSEE SUBMITTED BEFORE THE ASSESSING OFFICER PRIOR TO COMPLETION OF ASSESS MENT PROCEEDINGS WHICH READS AS UNDER:- DETAILS AND EXPLANATION ALONG WITH SOURCE OF CASH AND JEWELLERY FOUND DURING THE COURSE OF SEARC H IN THIS REGARD WE WOULD LIKE TO SUBMIT THAT CASH AMOUNTING TO RS 10,50,000/- WAS FOUND, OUT OF WHICH RS 9,00,000/- HAS BEEN SEIZED DURING THE COURSE OF SEA RCH & SEIZURE OPERATION UNDER SECTION 132 OF THE INCOME T AX ACT,1961 CARRIED OUT ON 15.01.2009. THE ASSESSEE HA S DECLARED RS. 24,00,000/- IN HIS RETURN OF INCOME FI LED FOR THE ASSESSMENT YEAR 2009-10 AS PER INCOME DECLARED IN THE STATEMENTS RECORDED UNDER SECTION 132(4) OF SHRI SR I GOPAL GUPTA. HENCE, THE SOURCE OF CASH FOUND IS DULY EXPL AINED AND COVERED IN THE DECLARATION UNDER SECTION 132(4) OF THE INCOME TAX ACT, 1961. COPY OF RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009 - 10 IS ENCLOSED HEREWITH AS ANNEXURE - 1. ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 8 9. IN VIEW OF ABOVE FACTUAL MATRIX OF THE CASE, WE CLEARLY OBSERVE THAT THE ASSESSEE HAS INTER ALIA SUBMITTED THAT THE ASSE SSEE HAD DULY EXPLAINED THE SOURCE OF CASH FOUND IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. SUBSEQ UENTLY, THE ASSESSEE HAS CHOSEN TO DECLARE THIS CASH OF RS.10,50,000 AS FORM ING PART OF HIS ADDITIONAL INCOME FROM OTHER SOURCES FOR RS.24 LAKH AS DISCLOS ED IN THE RETURN AND ON WHICH TAXES HAD BEEN DULY PAID. IN THIS SITUATION, THE COMMISSIONER OF INCOME TAX(A) RIGHTLY OBSERVED THAT IF NO BENEFIT O F TELESCOPING OF INCOME FOR CASH AMOUNT IS GIVEN, THEN IT WOULD RESULT IN T AXING THE SAME CASH TWICE, FIRSTLY BY THE APPELLANT VOLUNTARILY OFFERING THE A DDITION OF RS.24 LAKH AND SECONDLY BY TREATING THE SAME CASH AMOUNT OF RS.10, 50,000 AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES. FROM CAREFUL RE ADING OF ASSESSMENT ORDER AND IMPUGNED ORDER, WE CLEARLY OBSERVE THAT T HE ASSESSING OFFICER IGNORED THE DETAILS AND EXPLANATION SUBMITTED BY TH E ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND WRONGLY OBSERVED THAT TH E ASSESSEE HAD FAILED TO SUBMIT EXPLANATION AND BIFURCATION FOR ADDITIONAL I NCOME OF RS.24 LAKH. WE FURTHER OBSERVE THAT THE ASSESSING OFFICER IGNORED AND NOT CONSIDERED DETAILS AND EXPLANATION SUBMITTED BY THE ASSESSEE IN REPLY TO QUESTIONNAIRE DATED 15.10.2010 WHICH IS NOT A FAIR PRACTICE. ON THE OT HER HAND, FROM THE FINDINGS OF THE COMMISSIONER OF INCOME TAX(A), IN THE IMPUGN ED ORDER AS ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 9 REPRODUCED HEREINABOVE, WE CLEARLY OBSERVE THAT THE COMMISSIONER OF INCOME TAX(A) DECIDED THE ISSUE IN FAVOUR OF THE AS SESSEE AND DELETED THE ADDITION ON LOGICAL CONCLUSION BY HOLDING THAT WHEN THE ASSESSEE HAS HIMSELF VOLUNTARILY OFFERED AN AMOUNT OF RS.24 LAKH AS HIS ADDITIONAL INCOME FROM UNDISCLOSED SOURCES, THEN WITHOUT ANY FURTHER EVIDE NCE ON RECORD TO PROVE THAT THIS DISCLOSED AMOUNT OF RS. 24 LAKH DOES NOT INCLUDE WITHIN ITSELF THE CASH FOUND OF RS.10,50,000, THE ASSESSING OFFICER DOES NOT HAVE SUFFICIENT GROUND TO MAKE FURTHER ADDITION TO THE INCOME OF TH E ASSESSEE. THUS, WE ARE UNABLE TO SEE ANY AMBIGUITY OR PERVERSITY IN THE IM PUGNED ORDER AND WE ARE UNABLE TO SEE ANY VALID REASON TO INTERFERE WITH TH E SAME. ACCORDINGLY, SOLE GROUND OF THE REVENUE BEING DEVOID OF MERITS IS DIS MISSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.03.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 14TH MARCH 2014 GS ITA NO. 4063/DEL/2012 ASSTT.YEAR: 2009-10 10 COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR