Shravan Gupta, New Delhi V. ACIT, New Delhi

ITA 4133/DEL/2011

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7409 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 15-07-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 12-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNITA KEJRIWAL
• Keywords: Search and seizure; Salary income; Opportunity of being heard; Principle of natural justice; Additional evidence; Onus to prove
• Section: 142(1); 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH B, NEW DELHI BEFORE SHRI N. K. SAINI, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER I.T.A.NO.4133/DEL/2011 (ASSESSMENT YEAR 2008-09) SHRI SHRAVAN GUPTA , VS. ACIT,CC-7, 4 / 17B , MGF HOUSE , NEW DELHI ASAF ALI ROAD , NEW DELHI. GIR/PAN:AAAPG5165E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI G.C. SRIVASTAVA , CA SHRI SAURABH SRIVASTAVA , FCA RESPONDENT BY : SMT . SUNITA KEJRIWAL , CIT DR DATE OF HEARING: 26 . 11 . 2015 . DATE OF PRONOUNCEMENT: 06.01.2016 ORDER PER KULDIP SINGH, JM: THE APPELLANT SHRI SHRAVAN GUPTA (HEREINAFTER REFER RED TO AS ' THE ASSESSEE ' ), BY FILING THE PRESENT APPEAL , SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 11 . 07.2011 PASSED BY LD. CIT(A) , NE W DELHI QUA THE ASSESSMENT YEAR 2008-09 ON THE GROUNDS INTER ALIA T HAT: ' GROUND NO.1: GENERAL 1 . 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW , THE LEARNED CL ' T (A ) , ERRED IN PASSING THE 250 ORDER BY MISCONCEIVING THE FACTS AND MAKING UNFOUNDED ASSUMPTIONS AND BASE D ON THAT ARRIVING AT THE CONCLUSION THAT THE APPELLANT IS LI ABLE TO PAY TAXES ON 2 I.T.A.NO.4133/DEL/2011 THE CASH FOUND DURING SEARCH . BASED ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW , TH E ORDER PASSED BY THE LEARNED CIT (A) IS BAD IN LAW, VOID-AB-INITIO AND NEEDS TO BE QUASHED. GROUND NO.2: CASH FOUND DURING THE SEARCH DOES NOT BELONG TO THE APPELLANT , HENCE IS NOT LIABLE TO BE TAXED IN THE HANDS OF THE APPELLANT. 2.1 THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT CASH FOUND DURING THE SEARCH DOES NOT BELONG TO THE APPELLANT AND THE SAID CASH BELONGS TO M/S MGF DEVELOPMENTS LIMITED. 2.2 THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW I N NOT APPRECIATING THE FACT THAT THE APPELLANT HAS ' OFFERED COMPLETE EXPLANATION OF THE CASH FOUND AND SUBMITTED VARIOUS DOCUMENTS SUBSTANTIATING THAT THE CASH FOUND BELONGS TO M/S M GF DEVELOPMENT LIMITED . 2 . 3 THE ORDER OF LEARNED CIT (A) IS CONTRARY TO THE F ACTS , LAW AND PRINCIPLES OF NATURAL JUSTICE. . GROUND NO.3: NON ACCEPTANCE OF ADDITIONAL DOCUMENTS UNDER RULE 4 6A OF THE INCOME TAX RULE 1962 3 . 1 . THE LEARNED CIT (A) ERRED ON FACTS AND IN LAW IN NO T ACCEPTING THE ADDITIONAL DOCUMENTS FILED BY THE APPELLANT 3.2 . THE ORDER OF LEARNED CIT (A) IS CONTRARY TO THE FACTS, LAW AND P RINCIPLES OF NATURAL JUSTICE. ' 2. BRIEFLY STATED THE FACTS OF THIS CASE ARE: AFTER SEARCH AND SEIZURE OPERATION CONDUCTED U / S 132 OF THE ACT ON 12.09.2007, A NOTICE U / S 42(1) OF THE ACT WAS SERVED UPON THE ASSESSEE AND IN RESP ONSE THERETO , THE ASSESSEE HAS FILED RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2008-09 DECLARING AN INCOME OF RS . 2 , 13,88,860 / - SHOWING INCOME FROM SALARY INCOME, CAPITAL GAIN AND OTHER SOURCES . THEREAFTER, IN RESPONSE TO THE NOTICE SERVED UPON THE ASS ESSEE ALONG WITH THE QUESTIONNAIRE U / S 143(2) 3 I.T.A.NO.4133/DEL/2011 AND 142(1) , SHRI PANKAJ GUPTA, SHRI ADITYA PURWAR AND SHRI RUPE SH CHOUDHARY, CA/AR ATTENDED THE PROCEEDINGS. 3. DURING THE COURSE OF SEARCH , A CASH AMOUNT OF RS.62 , 21 , 000 / - WAS SEIZED FROM THE RESIDENCE OF THE ASSESSEE AND IN TH E PANCHNAMA , IT IS RECORDED THAT RS . 37 , 38 , 000 / - WAS FOUND FROM THE IIND FLOOR OF THE RESIDENCE, OUT OF WHICH RS . 37,00,000 / - WAS SEIZED AND DEEMED THAT THE SAID MONEY BELONGED TO SHRAVAN GUPTA WHO HAS FAILED TO FURNISH AN Y EXPLANATION OF THE SOURCE OF THE AFORESAID CASH AMO UN T W HICH HAS BEEN ADDED TO HIS INCOME . 4. FROM THE DETAILS FILED BY THE ASSESSEE , IT WAS TRANSPIRED THAT INTEREST ON DEPOSITED AMOUNT OF RS . 1 , 16 , 000 / - (INCLUDING R S .66 , 000 / - ACCRUED INTEREST WITH M / S. MGF INDIA LTD.) HAS NOT BEEN SHO W N IN THE RETURN FILED DURING THE RELEVANT YEAR. ON FAILURE OF THE ASSESSE E TO FILE AN Y REPLY, INTEREST @ 12% AMOUNTING TO RS . 13 , 920 1 - HAS BEEN ADDED TO THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 AND TOTAL INCOM E OF R S.2 , 51,02 , 780 / - HAS BEEN ASSESSED AS THE INCOME OF THE ASSESSEE. 5. THE ASSESSEE CARRIED THE MATTER BEFORE LD. CIT( A) W HO HAS DISMISSED THE APPEAL VIDE IMPUGNED ORDER . FEELING AGGRIEVED , THE A S SESSEE HAS COME UP BEFORE THE TRIBUNAL B Y FILING THE PRESENT APPEAL . 6. UNDISPUTEDLY , THE CASH AMOUNT OF RS . 37 , 00,000/- W AS SEIZED FROM THE ASSESSEE DURING THE SEARCH OPERATION CONDUCTED U / S 132. 7. WE HAVE HEAD LD. AUTHORIZED REPRESENTATIVES OF B OTH THE, GONE THROUGH THE MATERIAL PLACED ON RECORD IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE AND ORDERS OF TAX AUTHORI TIES BELOW. 8. LD. A.R. CONTENDED THAT THE SEIZED AMOUNT DOES NOT BELONG TO THE ASSESSEE FOR WHICH HE HAS FURNISHED COMPLETE E X PLANATION W HICH HAS NOT 4 I.T.A.NO.4133/DEL/2011 BEEN CONSIDERED BY THE ASSESSING OFFICER AS WELL AS LD. CIT(A) WHEREAS ON THE OTHER HAND , LD. D.R . RELIED UPON THE ORDER PASSED B Y LD . CIT(A ). 9. SINCE ALL THE GROUND BEING INTERLINKED , THE SAME ARE BEING TAKEN UP TOGETHER TO AVOID REPETITION OF DISCUSSION. THE ASS ESSE E VIDE LETTER DATED 14 . 1 0.2009 COME UP WITH THE SPECIFIC DEFENSE BEFORE T HE ASSESSING OFFICER THAT THE SEIZED AMOUNT FOR RS.37 , 00,000 / - DOES NOT BELONG TO HIM AND THE SAID CASH BELONG TO M / S. MGF DE V ELOPMENTS LTD . AND THIS LETTER DOES NOT F I ND MENTION IN THE ASSESSMENT ORDER. HOWEVER , A PERUSAL OF PARA 5 . 3 OF T H E IMP U GNED ORDER PASSED BY LD. CIT(A) , THERE IS SPECIFIC MENTION THAT THE ASSESSEE C L AIMED TO BE IN POSSESSION OF THE SEIZED AMOUNT GIVE N TO H I M AS IMPREST BY M / S . MGF DEVELOPMENTS LTD. 10. LD . CIT(A) D EC L INE D TO ENTERTAIN THE DOCUMENTS SOUGHT TO BE F URNI S H ED B Y THE ASSES SEE AS ADDITIONAL EVIDENC E DET AI L ED IN PARA 5 . 3, BY M A K I N G F OLL OWING O B SE R VAT I O N : ' 6 . I HAVE GONE THROUGH THE SUBMISSION FILED BY THE APP ELLANT AS WE L L AS COPY OF THE AFFIDAVIT FILED BY THE APPELLANT U NDER RULE 46A. WHILE FURNISHING THE REASON FOR PRODUCING IN THE FO RM OF AN AFFIDAVIT THE APPELLANT HAS MERELY STATED THAT IT W AS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE BEFORE THE ASSESSING OFFICER. THIS IS NO GROUND TO ACCEPT THE AFFIDAVIT AS AN ADDITIONAL EVIDENCE BECAUSE THE APPELLANT HAS TO JUSTIFY AND E XPLAIN WHAT W AS THAT CAUSE WHICH PREVENTED IT FROM FILING THE AFFID AVIT BEFORE THE ASSESSING OFFICER, THUS, THE ADDITIONAL EVIDENCE PR ODUCED BY THE APPELLANT IS NOT ACCEPTED UNDER RULE 46A. EVEN OTHE RWISE THE ALLAHABAD HIGH COURT IN THE CASE OF SRI KRISHNA VS. CIT 142 ITR 618 HAS OBSERVED THAT AFFIDAVIT NEED NOT ALWAYS BE ACCEPTED AS CORRECT 'AND THE ACCEPTANCE OR DENIAL IN IT IS NOT CONCLUSIVE . A SELF SERVING DOCUMENT IN THE FORM OF AN AFFIDAVIT CANNOT BE REGARDED TO HAVE ANY EVIDENTIARY VALUE. 6. 1 THE CONTENTION OF THE APPE L LANT THAT IT HAD RECEIVED THIS SUM AS AN IMPREST AMOUNT FROM M / S MGF D EVELOPMENT LTD CANNOT BE ACCEPTED FOR THE APPELLANT HAS FAILED TO EXPLAIN WH Y IT HAD TAKEN 5 I.T.A.NO.4133/DEL/2011 IMPREST FROM M / S MGF D EVELOPMENT LTD. AN IMPREST ACCOUNT IS LIKE A PETTY CASH AMOUNT WHERE THE PERSON RECEIVING IT S PENDS THE SAME ON BEHALF OF THE OWNER AND THE SAME MAY BE REPLENIS HED AFTER IT IS SPENT. THE INCOME TAX ACT PROHIBITS THE EXPENDITURE IN CASH OF OVER RS 20,000 / - U / S 0A (3) . THEREFORE , THE APPELLANT SHOULD HAVE EXPLAINED AS TO WHY IT HAS TAKEN IN CASH A HUGE AMO UNT TOTALING TO R S 37 , 38 , 000 / - . T HE BOOKS OF ACCOUNT OF M / S MGF DEVELOPMENT LTD WERE NOT FOUND DURING THE SEARCH OPERATION AND HENC E THE POSSIBILITY OF MANIPULATION CANNOT BE RULED OUT . THE APPELLANT HAS FILED COPY OF ACCOUNTS OF M / S MGF D EVELOPMENT LTD BUT THEY ARE NOT SIGNED BY ANY CHARTED ACCOUNTANT NOR DO THE ACC OUNTS SPECIFIED THE DATES ON W H IC H T HE P ROFIT AND LOSS A LE AND THE BALANCE SHEET OF M/S MGF DEVELOPMENT LTD WERE PREPARED. FURTHER, BEFORE THE ASSESSING OFFICER THE APPELLANT DID NOT GIVE ANY EXPLANATION REGARDING THE SOURCE OF CASH WHICH IS E VIDENT FROM PARAGRAPH 4 OF THE ASSESSMENT ORDER. 6 . 2 THE HON'BLE HIGH COURT IN THE CASE OF BRIENDRA S INGH VS. CIT [2002J 256 ITR 696 (KARN) FOLLOWING THE PRINCIP LE IN PARIMISETTI SEETHARAMAMMA VS. CIT [1965J 57 ITR 532 (SC) OBSERVED THAT 'IT IS FOR THE ASSESSEE TO PROVE THE SOURCE OF CASH FOUND IN HIS RESIDENCE. WHERE THIS AMOUNT AS WELL A S THE AMOUNT FOUND IN SON'S LOCKER WERE ATTRIBUTED TO A FIRM, IN WHICH HE WAS A PARTNER, IT WAS FOR THE ASSESSEE TO ESTABLISH THE C LAIM. ONE CANNOT AVOID THE BURDEN OF PROOF BY ATTRIBUTING THE SOURCE TO ANOTHER ASSESSEE, WHEN THE ASSETS WERE FOUND IN HIS CUSTODY AND POSSESSION . ' THE APPELLANT HAS COMPLETELY FAILED TO CO - RELATE THE POSSESSION OF THIS CASH WITH THE ALLEGED ADVANCE RE CEIVED FROM M/S MGF DEVELOPMENT LTD, THEREBY ATTRACTING THE PRO VISIONS OF SEC. 132 (4A) WHICH RAISES THE PRESUMPTION THAT IN THE ABSENCE OF ANY EVIDENCE AS TO DATE OF ACQUISITION, IT HAS TO B E PRESUMED THAT IT WAS ACQUIRED ON THE DATE OF SEARCH AND THAT IT A LSO BELONGS TO SUCH PERSON IN WHOSE POSSESSION IT WAS FOUND. THERE FORE, THE ADDITION OF RS. 37 , 00,000 / - MADE BY THE ASSESSING OFFICER IS UPHELD CONSIDERING THE FACTS OF THE CASE. ' 11. BARE PERUSAL OF THE ORDER PASSED BY LD. CIT(A) GOES TO PROVE THAT THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE H AVE NOT BEEN 6 I.T.A.NO.4133/DEL/2011 ENTERTAINED ON FLIMSY GROUNDS, BECAUSE WHEN THE ASS ESSEE HAS DISCLOSED THE COMPLETE SOURCE OF SEIZED AMOUNT OF RS.37,00,000/-, THE VERACITY OF THE SAME WAS TO BE DECIDED BY MAKING INVESTIGATION BY THE ASSESSING OFFICER ONLY. SUBSEQUENTLY, ASSESSING OFFICER HAS A RBITRARILY DECLINED TO INVESTIGATE THE SOURCE OF SEIZED AMOUNT VIDE LETTER DATED 14 . 10.2009 AND THEREAFTER, LD. CIT(A) HAS DECLINED TO ENTERTAIN TH E ADDITIONAL EVIDENCE SOUGHT TO BE BROUGHT ON RECORD BY THE ASSESSEE. BOT H THE ASSESSING OFFICER AS WELL AS LD. CIT(A) BEING QUASI JUDICIAL AUTHORITIES ARE REQUIRED TO PROVIDE THE COMPLETE OPPORTUNITY OF BEING HEAD T O THE ASSESSEE BEFORE PASSING THE IMPUGNED ORDER. LD. CIT(A) , INSTEAD OF GETTING THE MATTER INVESTIGATED IN THE LIGHT OF THE ADDITIONAL EVIDENC E , SOUGHT TO BE BROUGHT ON RECORD BY THE ASSESSEE , AS WELL AS IN THE LIGHT OF LETTER DATED 14.10.2009 FILED BEFORE THE ASSESSING OFFICER , PROCEEDED TO DISMISS THE APPEAL SUMMARILY ON THE BASIS OF CONJECTURES AND SURMISES. 12 . SO, WITHOUT ENTERING INTO THE MERITS OF THIS CASE , WE ARE OF THE CONSIDERED VIEW THAT THE MATTER IS REQUIRED TO BE R ESTORED TO THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH B Y CONSIDERING THE LETTER DATED 14 . 10.2009 FILED B Y THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. NEEDLES S TO SA Y THAT ADEQUA T E OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE GIVE N TO BOTH THE PARTIES BEFORE PASSING AFRESH ORDER . SO, WE HEREBY ACCEPT THE PRESENT APPEAL OF THE ASSESSEE FOR STATISTICAL PURP OSE. 13. ORDER PRONOUNCED IN THE OPEN COURT ON 06 TH JAN. , 2016 . SD./- SD./- (N. K. SAINI) (KULDIP S INGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 06.01. 2016 SP. 7 I.T.A.NO.4133/DEL/2011 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI) S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29/12,5,6/1 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 6/1/16 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 6/1 SR. PS/PS 7 FILE SENT TO BENCH CLERK 7/1 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER