ACIT, Central Circle-3, Surat V. Subodhkumar Ashokkumar Gupta, Vesu, Surat

ITA 47/SRT/2022

AI Insights

The case involves an appeal by the Revenue against the decision of the CIT(A) which had deleted the addition of Rs.1,82,77,965 made by the Assessing Officer. The addition was based on alleged unexplained cash payments linked to the assessee, Subodhkumar Ashokkumar Gupta, during a search operation at M/s Param Properties. The Revenue argued that the CIT(A) erred in deleting the addition without appreciating the incriminating documents and the connections established during the assessment proceedings. The CIT(A), however, found that the Assessing Officer had not conclusively proven that the transactions pertained to the assessee, as the name 'Rinku Tripathi' and the mobile number associated with the transactions did not definitively link to the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301875 (ITAT-SURAT)
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-05-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 28-02-2022
• Other Referred Cases: Andaman Timber Industries [281 CTR 241 (SC)]
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SAPNESH SHETH
• Keywords: Document seized; Opportunity of cross examination; Documents seized
• Section: 131; 132; 143(3); 142(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT BEFORE SHRI PAWAN SINGH, JM & DR. A. L. SAINI, AM आयकर अपील सं./ITA No.47/SRT/2022 Ǔनधा[रण वष[/Assessment Year: (2016-17) (Physical Hearing) The ACIT, Central Circle-3, Surat. Vs. Subodhkumar Ashokkumar Gupta, A/2/801, Nandni Appartment, Near- Jolly Residency, Vesu, Surat-395007. (Appellant) (Respondent) èथायीलेखासं./जीआइआरसं./PAN/GIR No.: ACJPG7129F Appellant by Shri Vinod Kumar, Sr. DR Respondent by Shri Sapnesh Sheth, CA Date of Hearing 31/05/2023 Date of Pronouncement 26/06/2023 आदेश / O R D E R PER DR. A. L. SAINI, AM: Captioned appeal filed by the Revenue, pertaining to Assessment Year (AY) 2016-17, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals)-1, Surat [in short “the ld. CIT(A)”], in Appeal No.CIT(A),Surat-4/10444/2018-19, dated 29.12.2021, which in turn arises out of an assessment order passed by the Assessing Officer under section 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’), dated 03.12.2018. 2. The Grounds of appeal raised by the Revenue are as follows: “1. Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in deleting the addition of Rs.1,81,77,965/- made by the Assessing Officer on account of unexplained cash payments. 2. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that the addition was made on the basis of details emanating from the incriminating documents Page | 2 ITA No.47/SRT/2022 Subodhkumar A. Gupta found and seized during the course of search and also on the basis enquiries carried out during the course of assessment proceedings. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition without ascertaining further facts of ownership of the properties directly or indirectly owned/held by the assessee in projects "Capital Life" and "Green Victory" sold by Param Properties. 4. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in not appreciating the fact that Shri Taresh Sanwal, the partner of the firm M/s. Param Properties in whose case search proceedings were carried out, has provided the mobile number and nick name "Rinku" which was subsequently confirmed by the assessee himself in his statement recorded on oath. 5. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in not appreciating that when the assessee has been identified by his mobile number which was old and cannot be obtained without proper KYC, the identity of the assessee could not be under any dispute/doubt. 6. It is, therefore, prayed that the order the Ld. CIT(A)-4, Surat may be set aside and that of the assessing officer may be restored to the above extent. 7. The assessee craves leave to add, alter, amend and/or withdraw any ground(s) of appeal either before or during the course of hearing of the appeal.” 3. All the above grounds of appeal raised by the Revenue are mixed and interconnected; therefore we shall adjudicate them together. 4. Brief facts of the issue in dispute are stated as under. The assessee before us is an Individual and has filed his return of income u/s 139 of the Income Tax Act, 1961 for assessment year (A.Y.) 2016- 17, on 07.10.2016, declaring his income at Rs.7,60,020/-. A search action u/s 132 of the Act was carried out on 04.09.2015 in the case of M/s Param Properties of Surat. During the course of search action, several incriminating documents and evidences were seized from the premises of M/s Param Properties which contain entries pertaining to an information contained therein related to assessee. Consequent to the said search-action, the case of the assessee was manually selected for Page | 3 ITA No.47/SRT/2022 Subodhkumar A. Gupta scrutiny for the year under consideration. Notice u/s 143(2) of the Act issued on 28.09.2017 which was duly served upon the assessee. Thereafter, notice u/s 142(1) of the Act along with questionnaire was issued to the assessee and the same was also duly served upon him. During the year under consideration the assessee has derived income from brokerage and wholesale trading. A search action u/s 132 of the IT. Act was carried out in the case of Param Group. During the course of search action, several incriminating documents and evidences were seized from the premises of M/s Param Properties. Out of these incriminating documents and evidences, Annexure BS-1, page No 54,58,59,57,62,61,63,4,72,38 and page no. 140 of BS-52 annexure reveal entries of cash payments of Rs.1,82,77,965/- made by Shri Subodhkumar A. Gupta @ Rinku Tripathi for booking/purchases of units in project “Capital Life and Green Victory”. Both the projects are developed by M/s Happy Home Corporation. The details of these unaccounted transactions of the assessee are featured in documents and evidences annexed as BS-1, page Nos. 54, 58, 59, 57, 62, 61, 63, 64, 72, 38 and page no.140 of BS-52. However, the entry does not specify that the payment is made directly to Happy Home Corporation. Shri Subodh kumar A. Gupta @ Rinku Tripathi was not identified by the partners of M/s Param Properties. The mobile number of Shri Subodh kumar A Gupta @ Rinku was provided by Shri Taresh Sanwal, one of the partners of M/s Param Properties. The mobile number of Rinku as provided by Shri Taresh Sanwal is 9825863427. During the assessment proceeding, a summon u/s 131 was issued to Shri Subodh Gupta on 01.11.2017 and statement was recorded under his oath on 14.11.2017 and statement was recorded under his oath on 14.11.2017 wherein he admitted vide answer of question number 6 that his mobile number is 9825863427 and using this number since 2004. Further in his Page | 4 ITA No.47/SRT/2022 Subodhkumar A. Gupta statement dated 14.11.2017 revealed that Shri Subodhkumar A. Gupta is a resident of A-2/801, Nandini Apartment-1, Vesu, Surat and also know Mr. Aagam vadecha and Mr. Taresh Sanwal. The transactions related to assessee i.e. Subodh Kumar A Gupta @ Rinku Tripathi, as featuring the documents and evidences seized from the premises of M/s. Param properties are mentioned by the assessing officer in the assessment order page No.3, which is reproduced below: Page | 5 ITA No.47/SRT/2022 Subodhkumar A. Gupta 5. Therefore during the course of assessment proceedings, the assessee vide notice u/s 142(1) of the Act dated 03.10.2018, was asked to explain the content of seized documents and transactions reflected therein. Various other details were also asked to be furnished from the side of the assessee. In response of notice u/s 142(1), the assessee vide submission dated 17.10.2018 has submitted only regular details. However, the assessee has simply stated that he has no any financial transaction with Param Group as mentioned in notice. Further, vide notice u/s 142(1) of the Act dated 22.11.2018, the assessee was once again requested to explain the same and was also show caused as to why in the absence of proper and satisfactory explanation, transactions reflecting in the seized material should not be treated as unexplained cash payment and should not to be added to his total income. 6. In response to notice of the assessing officer, the assessee replied vide letter dated 28.11.2018 and the same is reproduced as under: “1. It is contended by you that assessee has done transactions with M/s Param Properties as per table given in para 2 of above show cause notice. In this context, it is submitted at the outset that assessee has not done any transactions with M/s Param properties as depicted in above table. Assessee clearly denied to have done any transactions with M/s Param Properties in earlier letters also. 2. It is further submitted that in para 2 of show cause notice it is mentioned that during search in case of M/s param properties several entires in name of Shri Rinku Tripathi for booking of purchase of units in project capital life and name of Shri Rinku Tripathi in your above letter and it is not understood as to why the transaction are presumed to have been done by assessee when in seized materials itself the name shri Rinku Tripathi is stated. Assessee does not know any person in name of Shri Rinku Tripathi and in any case as in the seized material itself the name of Shri Rinku Tripathi is stated, there is no justification in presuming that such transactions pertain to assessee. 3. It is also mentioned in show cause notice that during course of search and post search proceedings ShriRinkuTripathi (SubodhAshokkumar Gupta) was not identified by partner of M/s Param Properties. Now when even the partners of the concern in whose case search action u/s 132 of the Page | 6 ITA No.47/SRT/2022 Subodhkumar A. Gupta Act was conducted were unable to identify any person in name of Shri Rinku Tripathi or assessee, adverse inference in assessee's case cannot be drawn because there is no material which indicates that it is assessee who made cash payments to M/s Param Properties. It is also not the case that partner of M/s Param Properties stated to have received such cash payments in respect of above two projects from assessee. Thus, presumption relating to such documents which are found in course of search conducted at premises of third party applies only to person searched and the same cannot be extended to assessee's case in absence of any corroborative evidence on record. 4. It is also not the case that such document viz. Bs-1 (various pages) are in assessee's handwriting or that the same contains signature / acknowledgement by assessee relating to such transactions. Hence, so far as assessee is concerned no addition can be made based on such documents found from the premises of 3 rd party. 5. As assessee has not purchased any flat in any of the above two projects for which independent inquiry can be made by your honor even now & as assessee has no connection with the developers of above projects, addition of such cash transactions in assessee's case must not be made as the same will tantamount to travesty of justice. Assessee does not have any means to make such huge investment in purchase of so many flats of above 2 projects depicted in para 2 of your above notice & earlier notice dated 03.10.2018. Hence, conclusion drawn by you that assessee made investment in so many flats of above projects is neither logical nor possible for a person like assessee. 6. Without prejudice to the submissions made as above, it is further submitted that in 1 st para of your above notice it is observed that search in case of M/s Param Properties resulted in seizure of various incriminating documents relating to cash transactions of its clients, financiers, other broker & builders etc. Hence, without prejudice to assessee’s contention that he has not done any such transaction with M/s Param properties, firstly the nature of transaction depicted in above Annexure BS-1 is required to be identified i.e. whether the same represent investment or transaction undertaken as broker. No reason is given for presuming such transaction as investment transaction instead of transaction undertaken as broker in which case there has to be estimation of income by way of brokerage only and entire amount cannot even otherwise be regarded as income of assessee. It is therefore submitted that even otherwise also addition of entire amount must not be made to the income of assessee. 7. It is further requested to kindly copy of relevant seized materials and the statement of partner of M/s Param Properties which has been made the basis for drawing adverse inference in assessee's case. It is also further requested to kindly allow opportunity of cross examination of the person whose statement has been relied upon for presuming that cash payments referred in table in Para 2 of above show cause notice is made by assessee.” Page | 7 ITA No.47/SRT/2022 Subodhkumar A. Gupta 7. Having gone through reply of the assessee, the Assessing Officer observed that assessee has clearly denied to have done any transaction with M/s Param Properties. The assessee has self-admitted vide his statement recorded u/s 131 dated 14.11.2017 by giving the answer of Question no.5 that he knows Mr. Aagam Vadecha and Mr. Taresh Sanwal but not known about Param Properties. The assessee has self-admitted vide his statement recorded u/s 131 dated 14.11.2017 by giving the answer of Question no. 6 that his mobile number is 9825863427 which he is using this mobile number since 2004. Mr. Taresh Sanwal who is one of the partner of M/s Param properties vide letter filed dated 08.12.2005 submitted that the mobile number of Rinku is 9825863427. The assessee has also self-admitted that by giving the answer of Question No. 7 that his nickname is Rinku Gupta and his number is 9825863427. Therefore, it is clearly established that the number is provided by Mr Taresh Sanwal and as confirmed by the assessee i.e. Subodhkumar A Gupta is same and also as named saved in the mobile of Mr. Taresh Sanwal is also matched with assessee's nickname. 8. The Assessing Officer observed that the entry reflecting in the seized material as Shri Subodhkumar A Gupta and transaction featured in name of assessee, as provided by Mr Taresh Sanwal, which is also a part of seized material, corroborates each other. Thus, these facts clearly establish the relation between the assessee and Mr Taresh Sanwal and also explain the transaction as per seized document. Moreover, if test of human probabilities is applied to the facts of the case becomes evident that transaction reflecting in the above mentioned seized document pertain to the assessee otherwise no reason can be there to keep the record of financial transaction of a person in Page | 8 ITA No.47/SRT/2022 Subodhkumar A. Gupta its cash book wherein entries related to its work / business has been recorded and sanctity of which has been proved on various grounds. Further, partners of Param Properties having admitted to have written the aforesaid documents in his own handwriting lends credibility whereby the document seized assumes much greater value than what it would have been otherwise. Therefore, admission of partners of admitting the entries reflecting in the seized document(s) cannot be washed away lightly. Also, the seized document itself and more so because of the nature of entries contained therein does not make it as a dumb documents. The author of the said seized documents have admitted to have written the said document in their own hand writing and also explained the most of the pages. Based on these facts, the assessing officer made addition of Rs.1,82,77,965/- on account of unexplained cash payments, in hands of the assessee. 9. Aggrieved by the order of the Assessing Officer, the assessee carried the matter in appeal before the Ld. CIT(A), who has deleted the addition made by the Assessing Officer. The ld CIT(A) observed that merely on the basis of assessee's mobile number present in the contact list and some person by the same name but with different surname is found in the incriminating material, it cannot be said that both persons are the same. Hence, the additions made by the assessing officer without proving the fact that assessee is Rinku Tripathi, cannot be sustained. 10. Aggrieved by the order of Ld. CIT(A), the Revenue is in appeal before us. 11. Learned Departmental Representative (Ld.DR) for the Revenue, argued that the decision of the Ld.CIT(A) in deleting the addition of Page | 9 ITA No.47/SRT/2022 Subodhkumar A. Gupta Rs.1,82,77,965/- is not acceptable. The assessing officer had ample evidences in the form of seized material which are co-related with other information gathered during the course of search as well as post search enquiries. The seized material viz. Annexuere BS-1, page No. 54, 58, 59, 57, 62, 61, 63, 64, 72, 38 and page No. 140 of BS-52 reveal entries of cash payments to tune of Rs.1,82,77,965/- made by 'Rinku Tripathi' for booking/purchase of units in project "Capital Life and Green Victory". Shri Taresh Sanwal, Partner of the Param Properties vide letter dated 08.12.2015 provided the number of "Rinku Tripathi" as 9825863427. This mobile number pertained to the assessee Shri Subodhkumar A Gupta. During the course of assessment proceedings, summons u/s 131 was issued to the assessee Shri Subodhkumar A. Gupta. Subsequently, a statement was recorded of the assessee on 14.11.2017, wherein, in Answer to Question No.7 has admitted that this nickname is Rinku and his mobile number is 9825863427. Therefore, it clearly establishes that the number is provided by Mr. Taresh Sanwal and as confirmed by the assessee i.e. Subodhkumar A Gupta is same and also as named saved in the mobile of Mr Taresh Sanwal is also matched with the assessee's nickname. All these facts indicate nothing but that cash payments, as revealed from the seized material, are made by Rinku and the Rinku is nobody but the assessee Shri Subodhkumar A. Gupta. Such clear facts established by the assessing officer in the assessment order, have not at all been appreciated by the Ld.CIT(A). The assessing officer has rightly made the addition of Rs.1,82,77,965/- which should be sustained. 12. On the other hand, Learned Counsel for the assessee, defended the order passed by the Ld. CIT(A). Page | 10 ITA No.47/SRT/2022 Subodhkumar A. Gupta 13. We have heard both the parties and carefully gone through the submissions put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the facts of the case including the findings of the ld. CIT(A) and other material brought on record. We note that assessee has submitted before us the following documents and evidences: (i) Copy of name plate displayed at Green Victory and Capital Life (vide PB.8 to 10) (ii) Letter filed before Assessing Officer (vide PB.11 to 13) (iii) Show cause notice issued by Assessing Officer (vide PB.14 to 16) (iv) Letter filed before Assessing Officer (vide PB.17) (v) Statement of assessee recorded u/s 131 of IT Act, 1961 and copy of seized materials (vide PB.18 to 36) 14. We note that the assessing officer has made addition to the income of assessee mainly on the ground that assessee's nickname ‘Rinku’ is appearing in the seized documents and further assessee's mobile number is the same which is given by Mr Taresh Sanwal, the partner of M/s Param Properties. The assessing officer has also presumed that the name 'Rinku' appearing in various seized documents is that of assessee and has therefore observed in assessment order that the name 'Rinku' is Shri Subodh Kumar Gupta alias Rinku Tripathi. In this context, the ld CIT(A) had gone through the seized documents viz. page number 54, 58, 59, 57, 62, 61, 63, 4, 72,38 and 140 of BS-52 and it was observed by ld CIT(A) that nowhere the name Rinku Gupta alias as Shri Subodhkumar gupta is mentioned. 15. The ld CIT(A) observed that the inference that assessee is ‘Rinku Tripathi’ cannot be drawn as surname of assessee is 'Gupta' and Page | 11 ITA No.47/SRT/2022 Subodhkumar A. Gupta not ‘Tripathi’ and further, nowhere in the seized materials, the name Rinku Gupta is seen or assessee's name Shri SubodhKumar Gupta. The assessee submitted before ld CIT(A) that in none of the documents assessee's hand writing or his signature is found. The contention of the assessing officer that mobile number given by Mr Taresh Sanwal is that of assessee, does not prove that the entries appearing in impugned materials in the name of Rinku Tripathi actually belong to assessee. This is more so because the partners of M/s Param Properties in whose case search was carried out failed to identify assessee and this fact has been noted by the assessing officer at page number 3 of assessment order and also in the show cause notice issued to the assessee. If assessee is ‘Rinku Tripathi’ then Mr. Taresh Sanwal, partner of M/s Param Properties would have identified him before the DDIT(Inv.)/assessing officer. The partner has also not confirmed that the investments in question were made by the assessee. 16. The ld CIT(A) observed that even during assessment proceedings, assessee categorically stated that he has not made any such investment in the projects appearing in the seized documents and he also requested the assessing officer to make necessary enquiry in this context. However, no such enquiry has been made by the assessing officer as seen from the assessment order. Further, assessee also demanded cross examination of the persons whose statement has been relied upon but the assessing officer did not allow any such opportunity of cross examination to assessee. As decided by Honorable Supreme Court in case of Andaman Timber Industries [281 CTR 241 (SC)] not allowing assessee, the cross examination, witness by adjudicating authority when statements of those witnesses were made as basis of impugned order amounted to serious flaw which make the impugned order nullity and it amounts to violation of the principles of Page | 12 ITA No.47/SRT/2022 Subodhkumar A. Gupta natural justice. Similarly, the jurisdictional Gujarat High Court in series of cases referred by the assessee has consistently held that if an opportunity of cross examination is not provided to assessee, addition cannot be sustained only on the basis of the statement of third party. Further, the assessing officer has not verified the lists of investors/ purchasers of the 2 projects viz. 'Capital Life' and 'Green Victory' from the Builder to prove that the assessee owns a property/flat in such projects, wherein the assessing officer has contended that assessee made the investment. During assessment proceedings, the assessee submitted the photos of the Boards containing the names of owners who owned the flats in both the said projects. In none of the lists, the name of Rinku alias Subodhkumar Gupta is found nor is name of Rinku Tripathi also found. Based on these facts, ld CIT(A) noted that the assessee is not an investor in the alleged 2 projects apparently. The ld CIT(A) also observed that there is no dispute that the incriminating material is about the transactions of Rinku Tripathi. The assessing officer has not been able to prove that the assessee whose pet name is Rinku himself is Rinku Tripathi. Further, as the partner of M/s Param Properties has not been able to identify the assessee as Rinku Tripathi who has made the investment in the project. Secondly, no opportunity of cross examination was granted to the assessee to cross examine the partners to prove the identity of the assessee. Therefore, merely on the basis of assessee's mobile number present in the contact list and some person by the same name but with different surname is found in the incriminating material, it cannot be said that both persons are the same. Hence, the additions made by the assessing officer without proving the fact that assessee is Rinku Tripathi, cannot be sustained. Considering these facts and circumstance, the ld CIT(A) deleted the addition of Rs.1,82,77,965/-. We have gone through the above findings of ld Page | 13 ITA No.47/SRT/2022 Subodhkumar A. Gupta CIT(A) and noted that there is no infirmity in the order of ld CIT(A). The conclusions arrived at by the CIT(A) are, therefore, correct and admit no interference by us. We, approve and confirm the order of the CIT(A) and dismiss the appeal of the Revenue. 17. In the result, appeal filed by the Revenue is dismissed. Order pronounced on 26/06/2023 in the open court. Sd/- Sd/- (PAWAN SINGH) (Dr. A.L. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER lwjr /Surat Ǒदनांक/ Date: 26/06/2023 SAMANTA Copy of the Order forwarded to 1. The Assessee 2. The Respondent 3. The CIT(A) 4. CIT 5. DR/AR, ITAT, Surat 6. Guard File By Order // TRUE COPY // Assistant Registrar/Sr. PS/PS ITAT, Surat