Appeal Details
Counselvise Citation
[2013] 120 COUNSELVISE.COM (IT) 2707 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-04-2013
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Assessment Year
2009-2010
Appeal Filed On
30-01-2013
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) SHRI U.B.S. BEDI, JUDICIAL MEMBER AND BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.551/DEL./2013 (ASSESSMENT YEAR : 2009-10) LATE SHRI SUDHIR JAIN, VS. ACIT, CC 9, (THROUGH SON & LEGAL HEIR SHRI RAHUL JAIN) NEW DE LHI. 4, UNDER HILL ROAD, CIVIL LINES, DELHI 110 054. (PAN : AAPPJ2083L) ITA NO.552/DEL./2013 (ASSESSMENT YEAR : 2009-10) SHRI VIRENDARA KUMAR GUPTA, VS. ACIT, CC 9, 1, SHANKARACHARYA MARG, NEW DELHI. CIVIL LINES, DELHI 110 054. (PAN : AAAPG6040N) ITA NO.553/DEL./2013 (ASSESSMENT YEAR : 2009-10) SHRI SHARAD JAIN, VS. ACIT, CC 9, D 6, 13B, VASANT VIHAR, NEW DELHI. NEW DELHI. (PAN : AAIPJ3610P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. SAMPATH ADVOCATE AND SHRI RAJ KUMAR, ADVOCATE REVENUE BY : SMT. RENUKA JAIN GUPTA, SENIOR DR ORDER ITA NOS.551, 552 & 553/DEL./2013 2 PER B.C. MEENA, ACCOUNTANT MEMBER : ALL THESE THREE APPEALS ARE DIRECTED AGAINST THE T HREE ORDERS MADE BY CIT (APPEALS)-XXXII, NEW DELHI ON 22.11.2012. 2. ALL THE APPELLANTS ARE INDIVIDUALS AND WERE DIRE CTORS IN GUPTA & COMPANY PRIVATE LIMITED. A SEARCH OPERATION WAS CO NDUCTED ON 10.02.2009 ON GUPTA & COMPANY PVT. LTD. GROUP. ALL THESE TH REE ASSESSEES WERE DIRECTORS IN GUPTA & COMPANY PVT. LTD. A STATEMENT U/S 132(4) OF INCOME- TAX ACT, 1961 WAS RECORDED DURING THE SEARCH OPERAT ION OF SHRI VIRENDARA KUMAR GUPTA IN WHICH IN ANSWER TO QUESTION NOS.18 & 19, THE FOLLOWING ANSWER WAS MADE :- Q.18 DO YOU WANT TO SAY ANYTHING? ANS. CONSIDERING THE POSITION DECLARED ABOVE I AS DIRECTOR OF M/S. GUPTA & CO. (P) LTD. DECLARED RS.20 CRORES (TWENTY CRORE) AS ADDITIONAL INCOME FOR THE F.Y. 2008-09 RELEVANT TO A.Y. 2009-10. THE ADDITIONAL INCOMES DECLARE OF RS.20 CRORES IS OVER AND ABOVE THE REGUL AR INCOME OF M/S. GUPTA & CO. (P) LTD. THE ADDITIONAL INCOME DECLARED ABOVE INCLUDES THE F OLLOWING HEADS:- I. AMOUNT RECEIVABLE ON A/C OF SALES MADE OUTSIDE T HE BOOKS OF ACCOUNTS BASED ON ANNEXURE A-3 & A-5 AS MENTIONED I N REPLY TO Q.NO.14 & 15. FURTHER I WANT TO STATE THAT ANNEXURE A-3 & A -5 REPRESENTS THE SALE OF 3 MONTHS ONLY AND IN ORDER TO BUY PEACE OF MIND I AS DIRECTOR OF M/S. GUPTA & CO. (P) LTD. AND WITH THE CONSENT OF OTHER DIRECTORS WANT TO EXTRA POLATE THE SALES AMOUNT RECEIVABLE OUT OF BOOKS FOR THE CURRENT F.Y. I.E. 2008-09. THE EXACT CALCULATION ON THIS A/C SHALL B E SUBMITTED SHORTLY. FURTHER ON BEHALF OF THE COMPANY IT IS CLARIFIED TH AT THE PURCHASES PENDING TO THE SAID SALES ARE ALSO OUT OF BOOKS. FURTHER TH E SUM HAS BEEN RECEIVED BY MAKING SALES BY THE DIRECTORS IN THE F.Y. 08-09 REL EVANT TO A.Y.09-10, THE AMOUNT WILL BE SPECIFIED SHORTLY AND THAT MAY BE TR EATED AS PART OF ADDITIONAL INCOME DECLARED OF RS.20 CRORES. FURTHER THE EXCESS AMOUNT OF PHYSICAL STOCK OVER THE CLOSING STOCK AS PER THE BO OKS OF A/C AMOUNTING TO RS.7,63,95,003/- MAY BE TREATED AS PAST OF RS.20 CR ORES WHICH HAS BEEN DECLARED INCOME AS STATED ABOVE. ITA NOS.551, 552 & 553/DEL./2013 3 IT MAY BE STATED THAT THIS ADDITIONAL INCOME OF RS. 20 CRORES HAS BEEN DECLARED TO BUY PEACE OF MIND AND FURTHER NO PENALT Y/PROSECUTION WILL BE LEVIED OR MISTAKE AGAINST THE DIRECTORS AND THE COM PANY. Q.19 HOW DO YOU WANT TO PAY THE TAX DUE ON THE ADDI TIONAL INCOME AS DECLARED ABOVE? ANS. FOR COVERING THE TAX LIABILITY. 1 OFFERS THE F OLLOWING CHEQUES:- S.NO. CHEQUE NO. DATE AMOUNT 1. 617973 01.03.09 1 CRORE 2 617974 02.04.09 1 CRORE 3. 617975 01.05.09 1 CRORE 4 617976 01.06.09 1 CRORE 5 617977 01.07.09 1 CRORE 6 617978 01.08.09 1 CRORE 7 617979 31.08.09 60 LACS FURTHER THIS TAX IS IN ADDITIONAL TO THE TAX ON THE REGULAR INCOME OF THE COMPANY FOR I.E. F.Y. 08-09 RELEVANT TO A.Y. 09-10. IN ANSWER TO QUESTION NOS.14 & 15, THE REPLY WAS AS UNDER :- Q.14 I AM SHOWING YOU ANNEXURE A-3 SEIZED FROM YOU R ROOM. PLEASE COMMENT UPON THE NATURE OF ENTRIES IN IT? ANS. THERE ARE THE SALES MADE BY M/S. GUPTA & CO. (P) LTD. OUT OF BOOKS. Q.15 I AM SHOWING YOU ANNEXURE A-5 WHICH CONSISTS OF A DIARY (BLACK COLOUR). PLEASE EXPLAIN THE NATURE OF ENTRI ES IN IT? ANS. THESE REPRESENTS THE SELL ACCOUNTS OF VARIOUS PARTIES. THESE ACCOUNTS ARE BASED ON THE SALE TRANSACTION CONTAINE D IN ANNEXURE A-3 AS MENTIONED IN ANSWER NO.14. THUS, THERE WAS A DISCLOSURE OF RS.20 CRORES BY THE GROUP IN THE STATEMENT RECORDED U/S 132(4) OF THE INCOME-TAX ACT, 1961 DUR ING THE SEARCH OPERATION. THE STATEMENT RECORDED U/S 132(4) WAS STARTED ON 10 .02.2009 AND COMPLETED ON 12.02.2009. THEREAFTER, AN AFFIDAVIT BY SHRI SHARAD JAIN WAS ALSO FILED ON 05.05.2009 WHEREIN THE DISCLOSURE OF RS.2 0 CRORES WAS MAINTAINED AND ITA NOS.551, 552 & 553/DEL./2013 4 DETAILS OF GROUP HISTORY WERE PROVIDED. THE DISCLO SURE WAS BIFURCATED IN THE FOLLOWING MANNER :- RS. IN CRORES A) EFFECT OF DISCREPANCIES IN THE INVENTORY PREPARED BY THE AUTHORISED OFFICERS ON 10.02.2009 AT THE BUSINESS PREMISES OF M/S GUPTA & COMPANY PVT. LTD., WITH 7.50 THE CLARIFICATION SUBMITTED FROM TIME TO TIME. B) INCOME EARNED THROUGH THE JOINT ENTERPRISE OF SHRI VIRENDARA KUMAR GUPTA, SHRI SUDHIR JAIN 12 .50 AND SHARAD JAIN (THE DEPONENT HERE) COMPENDIOUSLY KNOWN AS SUGANDH SANSAR' AS PER THE AGREEMENT DATED 09.01.1998. ____ TOTAL 20.00 AS PER THIS AFFIDAVIT, RS.12.5 CRORES WAS STATED TO BE BELONGING TO SUGANDH SANSAR, WHICH WAS A JOINT ENTERPRISE OF THESE THREE ASSESSEES AND WAS COMPENDIOUSLY KNOWN AS SUGANDH SANSAR AS PER AGRE EMENT DATED 09.01.2008. THE RETURN OF INCOME OF SUGANDH SANS AR WAS FILED FOR THE ASSESSMENT YEAR 2009-10 ON 30.10.2009 DECLARING INC OME OF RS.11 CRORES UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION AFTER CLAIMING OPERATIONAL EXPENSES OF RS.1.5 CRORES FROM THE SURR ENDERED AMOUNT OF RS.12.5 CRORES. THE CREDIT FOR TAXES PAID WAS CLAIMED IN T HE FOLLOWING MANNER :- 1) CASH SEIZED DURING SEARCH, REQUESTED TO BE TREATED AS ADVANCE TAX PAID RS.1,46,46,90 0/- 2) SELF ASSESSMENT TAX PAID RS.1,58,68,840/- 3) SELF ASSESSMENT TAX OF RS.1,05,00,000/- (35 LAC X 3) PAID BY ALL THE THREE MEMBERS OF AOP EQUALLY RS.1,05,00,000/- RS.4,10,15,740/- ITA NOS.551, 552 & 553/DEL./2013 5 THIS RETURN WAS REVISED BY CLAIMING THAT INCOME DEC LARED WAS UNDER THE HEAD INCOME FROM OTHER SOURCES INSTEAD OF INCOME FROM BUSINESS AND PROFESSION. THERE WAS NO CHANGE IN THE TAX LIABIL ITY AS INCOME REMAINS THE SAME. THE ASSESSMENT WAS MADE IN THE HANDS OF THRE E MEMBERS OF ASSOCIATION OF PERSONS (AOP) U/S 143(3) READ WITH S ECTIONS 153A & 153C ON 31.12.2010. ASSESSING OFFICER CHOSE TO TAX DECLARE D INCOME OF RS.12.5 CRORES IN THE INDIVIDUAL HANDS OF MEMBERS. THE INCOME OF RS.12.5 CRORES WAS ASSESSED IN THE INDIVIDUAL HANDS OF THE MEMBERS OF AOP AND NO RELIEF WAS GRANTED FOR OPERATIONAL EXPENDITURE. THE ENTIRE IN COME OF RS.12.5 CRORES WAS DIVIDED EQUALLY IN THREE HEADS. THE ASSESSMENT WAS MADE IN INDIVIDUAL HANDS OF MEMBERS OF AOP, THE CREDIT FOR TAXES PAID BY AOP WAS NOT ACCORDED IN THEIR INDIVIDUAL HANDS. ON THE APPLICATION BY THE AOP BEFORE THE CIT-VII, DELHI, AN ORDER U/S 264 OF THE INCOME-TAX ACT, 1961 WAS PASSED ON 18.06.2012. THE RELEVANT PARA OF THIS ORDER IS REP RODUCED AS UNDER :- 6. I HAVE GIVEN A CAREFUL CONSIDERATION TO THE CAS E LAW CITED BY THE ASSESSEE AND AM OF THE VIEW THAT THE RELIEF MAY BE ALLOWED TO THE ASSESSEE. THIS REMINDS ME THE JUDGEMENT OF SUPREME COURT IN T HE CASE OF ITO VS CH. ATCHAIAH (218 ITR 239) WHEREIN IT IS HELD THAT THE INCOME HAS TO BE ASSESSED IN THE HANDS OF 'RIGHT PERSON' ALONE. BY ' RIGHT PERSON' IS MEANT THE PERSON WHO IS LIABLE TO BE TAXED, ACCORDING TO LAW, WITH RESPECT TO A PARTICULAR INCOME. THERE ARE NO WORDS IN THE INCOME TAX ACT, WHICH EMPOWER THE INCOME TAX OFFICER OR GIVE HIM AN OPTIO N TO TAX EITHER THE AOP OR ITS MEMBERS INDIVIDUALLY. IF IT IS THE INCOM E OF THE AOP IN LAW, THE ASSOCIATION OF PERSONS ALONE HAS TO BE TAXED; THE M EMBERS OF THE AOP CANNOT BE TAXED INDIVIDUALLY IN RESPECT OF THE INCO ME OF THE AOP. CONSIDERATION OF THE INTEREST OF THE REVENUE HAS NO PLACE IN THIS SCHEME. IN THE PRESENT CASE, DEPARTMENT HAS TAKEN A VIEW THAT THE SURRENDERED INCOME OF RS.12.5 CRORE BELONGS TO THE MEMBERS INDIVIDUALL Y AND NOT TO THE AOP HENCE, NO DIFFERENT VIEW CAN BE TAKEN IN THE CASE O F AOP BY TAXING THE ITA NOS.551, 552 & 553/DEL./2013 6 SAME AMOUNT AGAIN ON THE GROUND THAT THE ASSESSEE H IMSELF HAD ORIGINALLY FILED THE RETURN OFFERING THE SURRENDERED AMOUNT IN THE HANDS OF AOP. HENCE THE 2ND REVISED RETURN FILED BY THE ASSESSEE ON 08.01.2011 REQUIRES CONSIDERATION. THE REVISIONAL POWERS OF THE COMMISS IONER U/S 264 OF THE INCOME TAX ACT 1961, HAS ALL THE TRAPPINGS OF A JUD ICIAL POWER. JURISDICTIONAL HIGH COURT IN THE CASE OF APARNA ASHRAM VS DIRECTOR OF INCOME TAX (258 ITR 401) , AFTER RELYING UPON THE JUDGEMENT OF SUPREME COURT IN THE CASE OF DWARKA NATH VS ITO (57 ITR 349) HAVE HELD THAT THE JURISDICTION CONFERRED U/S 264 IS A JUDICIAL ONE. T HE NATURE OF THE JURISDICTION AND THE RIGHTS DECIDED CARRY WITH THEM NECESSARILY THE DUTY TO ACT JUDICIALLY IN DISPOSING OF THE REVISION. THE RE VISIONAL POWER HAS TO BE EXERCISED ON AN OBJECTIVE CONSIDERATION OF THE FACT S AND CIRCUMSTANCES OF THE CASE. THE POWER IS COUPLED WITH A DUTY TO BE E XERCISED IN THE INTEREST OF DOING REAL JUSTICE BETWEEN THE PARTIES, PARTICULARL Y WHEN UNDER THE ACT THE ORDER PASSED U/S 263 IS FINAL. THE ASSESSEE'S CLAIM HAS SUBSTANTIAL MERIT. ASSESSMENT AT RS.22 CRORE MADE IN THE INTIMATION U/ S 143(1) REQUIRES TO BE SET ASIDE AND THE INCOME HAS TO BE DETERMINED AT 'N IL'. 7. IT WAS SPECIFICALLY ASKED TO THE ASSESSEE AS TO WHAT HAPPENED TO THE CASH OF RS.1,46,46,900/- SEIZED DURING SEARCH WHICH WAS REQUESTED TO BE TREATED AS ADVANCE TAX AND ALSO TO THE SUM OF RS.1, 05,00,000/- (RS.35 LAC X 3) PAID BY ALL THE 03 MEMBERS OF AOP EQUALLY AS SEL F ASSESSMENT TAX AS THE RELIEF HAS BEEN CLAIMED ONLY WITH RESPECT TO A SUM OF RS.1,58,68,840/- PAID BY THE AOP AS SELF ASSESSMENT TAX. IT HAS BEEN EXPL AINED BY THE ASSESSEE THAT THE CASH SEIZED DURING SEARCH IS ALREADY CONSI DERED IN THE HANDS OF PERSONS FROM WHOM THE SAME WAS SEIZED. SIMILARLY, AMOUNT OF RS.35 LAC PAID BY EACH MEMBER AS SELF ASSESSMENT TAX (TOTAL R S.1,05,00,000/-) HAS BEEN CONSIDERED IN THE HANDS OF EACH MEMBER AND THE REFORE, RELIEF IS CLAIMED ONLY WITH RESPECT TO A SUM OF RS.1,58,68,84 0/-. I AM OF THE VIEW THAT WHEN THE SUM OF RS.1,46,46,900/- AND RS.1,05,0 0,000/- HAS BEEN CONSIDERED IN THE HANDS OF MEMBERS THEN THE RELIEF MAY ALSO BE GRANTED TO THE ASSESSEE WITH RESPECT TO SELF ASSESSMENT TAX OF RS.1,58,68,8401- AND THE SAME BE CONSIDERED IN THE HANDS OF ALL THE 03 MEMBE RS OF AOP EQUALLY AS SELF ASSESSMENT TAX PAID BY THEM WITH RESPECT TO TH E SURRENDERED AMOUNT OF RS.12.5 CRORE. 8. IN VIEW OF THE FACT THAT THE APPEALS IN THE INDI VIDUAL CASES OF THE MEMBERS OF THE AOP NAMELY SHRI V.K. GUPTA, SHRI SUD HIR JAIN AND SHRI SHARAD JAIN ARE STILL PENDING BEFORE CIT(A), THE AS SESSEE WAS ASKED TO CLARIFY ITS POSITION WITH REGARD TO THESE APPEALS. THE ASSESSEE HAS FILED AN UNDERTAKING FROM ALL THE THREE MEMBERS OF THE AOP P OINTING OUT THAT THE APPEAL HAVE BEEN FILED AGAINST THE ADDITIONS MADE O F THE SAME AMOUNT WHICH HAD BEEN OFFERED TO TAX BY THE ASSESSEE AOP M /S SUGANDH SANSAR. FURTHER IT HAS BEEN STATED THAT IN CASE THE RELIEF I ALLOWED TO THE AOP M/S SUGANDH SANSAR, ALL THE THREE MEMBERS OF THE AOP UN DERTAKE TO WITHDRAW THEIR APPEALS FROM THE CIT(A). IN VIEW OF HIS UNDER TAKING, IT IS FURTHER HELD THAT THE RELIEF GRANTED IN THE PRECEDING PARA WILL BE EFFECTIVE ONLY AFTER THE APPEALS HAVE BEEN WITHDRAWN IN THE CASE OF MEMBERS OF THE AOP AND THE SAME HAVE BECOME FINAL . ITA NOS.551, 552 & 553/DEL./2013 7 WHILE MAKING THE ASSESSMENT IN THE HANDS OF INDIVID UAL PENALTY PROCEEDINGS U/S 271AAA OF THE INCOME-TAX ACT, 1961 WAS INITIATE D. THE ASSESSING OFFICER HAS LEVIED THE PENALTY WITH THE PRIOR APPRO VAL OF ADDL.CIT, CENTRAL RANGE 4, NEW DELHI ON 27.06.2011. THE ASSESSEE WEN T IN APPEAL AND THE CIT (A) HAS CONFIRMED THE PENALTY. NOW ALL THESE THREE ASSESSEES ARE IN APPEAL BEFORE US BY TAKING FOLLOWING GROUNDS OF APPEAL :- 1. THE ORDER OF THE LD. CIT (APPEALS) XXXII, NEW D ELHI IS BAD IN LAW AND ON FACTS. 2. THE LD. CIT (APPEALS) XXXII HAS ERRED IN CONFIRM ING THE PENALTY ORDER OF ACIT, CC-9, NEW DELHI WHEREIN LD. ACIT IMPOSED PENALTY U/S 271AAA OF THE ACT AMOUNTING TO RS.41,66,666/-. 3. THE LD. CIT (A) ERRED IN OVERLOOKING / SUMMARILY REJECTING THE DETAILED SUBMISSIONS MADE BY THE APPE LLANT ON THE ISSUE OF APPLICABILITY OF SECTION 271 AAA AND THERE UPON LEVYING OF PENALTY UNDER THE SECTION. 4. THE LD. CIT (APPEALS) XXXII HAS ERRED IN IGNORIN G THE FACT THAT THE QUESTIONED ADDITION TO THE ASSESSEE'S INCOME WAS ALREADY A DISCLOSED INCOME TO WHICH PROVISIONS OF S ECTION 271 AAA (1) HAS NO APPLICABILITY. 5. THE LD. CIT (APPEALS) XXXII HAS ERRED IN NOT CONSIDERING THE TRUE FACTS 111 HIS ORDER AND DENYIN G THE BENEFIT OF PROVISIONS OF SECTION 271AAA (2) OF THE ACT. 6. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR DELE TE ANY OF THE GROUNDS OF APPEAL AT THE TIME OF HEARING AND AL L THE ABOVE GROUNDS ARE WITHOUT PREJUDICE TO EACH OTHER. ITA NOS.551, 552 & 553/DEL./2013 8 3. WHILE PLEADING ON BEHALF OF THE ASSESSEE LD. AR SUBMITTED THAT AS PER THE PROVISIONS OF SECTION 271AAA, THE ASSESSING OFF ICER CAN DIRECT THE ASSESSEE TO PAY BY WAY OF PENALTY, IN ADDITION TO T AX, IF ANY, PAYABLE BY HIM, A SUM COMPUTED @ 10% OF THE UNDISCLOSED INCOME OF THE SPECIFIED PREVIOUS YEAR. THIS PROVISION IS NOT APPLICABLE WHERE THE A SSESSEE IN THE COURSE OF SEARCH, IN A STATEMENT UNDER SUB-SECTION (4) OF SEC TION 132, ADMITS THE UNDISCLOSED INCOME AND SPECIFIES THE MANNER IN WHIC H SUCH INCOME HAS BEEN DERIVED, SUBSTANTIATES THE MANNER IN WHICH THE UNDI SCLOSED INCOME WAS DERIVED AND PAYS THE TAX, TOGETHER WITH INTEREST, I F ANY, IN RESPECT OF THE UNDISCLOSED INCOME. IN THE CASE UNDER CONSIDERATIO N, A STATEMENT U/S 132(4) WAS RECORDED DURING THE SEARCH AND SEIZURE OPERATIO NS. IN THE STATEMENT RECORDED U/S 132(4), SHRI VIRENDARA KUMAR GUPTA, DI RECTOR ON BEHALF OF GUPTA & COMPANY GROUP, A DISCLOSURE OF RS.20 CRORES WAS MADE. RECORDING OF THE STATEMENT WAS COMMENCED ON 10.02.2009 AND IT WAS CONTINUED UP TO 12.02.2009. THE PANCHNAMA SHOWS THAT THE SEARCH C OMMENCED ON 10.02.2009 AND CONTINUED UP TO 12.02.2009 AT 4.50 A M. THEREAFTER, THIS DISCLOSURE WAS CONFIRMED BY AN AFFIDAVIT OF SHRI SH ARAD JAIN IN WHICH THE DISCREPANCIES FOUND DURING THE SEARCH AND THE TOTAL BACKGROUND OF THE GROUP HAS BEEN NARRATED ON OATH. THE DISCLOSURE REMAINED AT RS.20 CRORES ONLY BY THE GROUP, THERE WAS NO REDUCTION IN THE DISCLOSURE . RS.7.5 CRORES WERE DISCLOSED TOWARDS THE DISCREPANCY IN INVENTORY AND RS.12.5 CRORES WAS ITA NOS.551, 552 & 553/DEL./2013 9 DISCLOSED IN THE JOINT ENTERPRISE OF SHRI VUREBDARA JYNAR GUPTA, SHRI SUDHIR JAIN AND SHRI SHARAD JAIN COMPENDIOUSLY KNOWN AS S UGANDH SANSAR AS PER THE AGREEMENT DATED 09.01.1998. THE ASSESSMENT HAS BEEN MADE OF RS.12.50 CRORES IN THE INDIVIDUAL HANDS OF THE MEMBERS OF AO P. THERE ARE NO FURTHER ADDITION IN THE DECLARE INCOME. THE INCOME OF RS.1 2.50 CRORES HAS BEEN TRIFURCATED. THUS, THE AMOUNT OF DISCLOSURE OF THE GROUP REMAINS THE SAME WHICH WAS DISCLOSED DURING THE SEARCH OPERATION. I T IS ALSO A FACT THAT IN A CONTINUOUS SEARCH OPERATION FOR 3 DAYS, NO PERSON S HALL BE ABLE TO GIVE THE EXACT FIGURES OF THE DISCLOSURE, HOWEVER, IN THE CA SE UNDER CONSIDERATION, EVEN THE STOCK INVENTORY WAS DUPLICATED AND IT WAS OF LE SSER AMOUNT AND EVEN THEN FOR THE PEACE OF MIND, THE DISCLOSURE KEPT IN THE S AME LEVEL WHICH WAS DISCLOSED AT THE TIME OF SEARCH OPERATION. THE ASS ESSEE HAS ALSO NARRATED THE MANNER IN WHICH THE INCOME WAS DERIVED AND IT HAS S UBSTANTIATED THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED WHENEVE R THE ASSESSEE WAS ASKED TO SUBSTANTIATE THE SAME. THE ASSESSEE HAS P AID THE TAXES TOGETHER WITH INTEREST IN RESPECT OF THIS UNDISCLOSED INCOME DECL ARED IN THE STATEMENT RECORDED UNDER SUB-SECTION (4) OF SECTION 132 OF TH E INCOME-TAX ACT, 1961. THEREFORE, THE ASSESSEE SHOULD NOT BE VISITED BY PE NALTY U/S 271AAA OF THE INCOME-TAX ACT, 1961. 4. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDE RS OF THE AUTHORITIES BELOW AND ALSO PLEADED THAT DURING THE SEARCH, RECO RDING OF STATEMENT UNDER ITA NOS.551, 552 & 553/DEL./2013 10 SUB-SECTION (4) OF SECTION 132, THE ASSESSEE HAS NO T DISCLOSED THE NAME OF SUGANDH SANSAR FOR WHICH THE DISCLOSURE WAS MADE. SHE ALSO PLEADED THAT SUGANDH SANSAR WAS NOT HAVING ANY VISIBLE OPERATION FOR EARNING SUCH INCOME. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE SEARCH AND SEIZURE OPERATION WAS CARRIED OUT ON THE GROUP OF GUPTA & C OMPANY PVT. LTD. AT THE VARIOUS RESIDENTIAL AND BUSINESS PREMISES ON 10.02. 2009. THE STATEMENT WAS RECORDED U/S 132(4) OF THE INCOME-TAX ACT, 1961 OF SHRI VIRENDARA KUMAR GUPTA, ONE OF THE DIRECTORS OF GUPTA & COMPANY PVT. LTD. HE HAS DISCLOSED RS.20 CRORES IN THE STATEMENT. DETAILS OF WHICH HA VE BEEN GIVEN IN ANSWER TO QUESTION NO.18. THE CHEQUES WERE ALSO ISSUED BY HI M FOR THE TAX LIABILITY WHICH HAS ALSO BEEN RECORDED IN ANSWER TO QUESTION NO.19 OF THE STATEMENT. AN AFFIDAVIT WAS FILED BY ONE OF THE GROUP PERSONS, SHRI SHARAD JAIN, WHEREIN THE DISCLOSURE OF RS.20 CRORES WAS SUBSTANTIATED. RS.7.5 CRORES WAS MADE TOWARDS THE DISCREPANCY IN THE INVENTORY PREPARED O N 10.02.2009 AT THE PREMISES OF GUPTA & COMPANY PVT. LTD. AND RS.12.50 CRORES WAS FOR A JOINT ENTERPRISE OF SHRI VIRENDARA KUMAR GUPTA, SHRI SUDH IR JAIN AND SHRI SHARAD JAIN COMPENDIOUSLY AS SUGANDH SANSAR. ASSESSING OF FICER DID NOT ACCEPT THE AOP CONCEPT AND MADE THE ASSESSMENT OF RS.12.50 CRO RES IN THE INDIVIDUAL HAND OF THESE THREE MEMBERS OF AOP. THERE IS NO FU RTHER ADDITION TO THE INCOME DECLARED OF RS.12.5 CRORES. THE DECLARATION OF RS.12.5 CRORES IN THE ITA NOS.551, 552 & 553/DEL./2013 11 NAME OF SUGANDH SANSAR WAS TRIFURCATED IN THREE NAM ES. THE COMMISSIONER OF INCOME-TAX ON THE APPLICATION MADE BY AOP OF SUG ANDH SANSAR HAS DIRECTED TO ADJUST THE TAXES PAID IN THE HANDS OF A OP IN THE HANDS OF INDIVIDUALS ALSO WERE MEMBERS OF AOP. IN THIS ORDE R, IT HAS ALSO BEEN RECORDED THAT THERE ARE NO WORDS IN THE INCOME-TAX ACT, WHICH EMPOWER THE INCOME-TAX OFFICER OR GIVE HIM AN OPTION TO TAX EIT HER AOP OR ITS MEMBERS INDIVIDUALLY. IN THE PRESENT CASE, THE DEPARTMENT HAS TAKEN A VIEW THAT SURRENDERED AMOUNT OF RS.12.50 CRORES BELONGS TO TH E MEMBERS INDIVIDUALLY AND NOT TO AOP, HENCE NO DIFFERENT VIEW CAN BE TAKE N IN THE CASE OF AOP BY TAKING THE SAME AMOUNT AGAIN ON THE GROUND THAT THE ASSESSEE HIMSELF HAD ORIGINALLY FILED THE RETURN IN THE HANDS OF AOP. T HE APPEAL OF INDIVIDUAL CASES IS PENDING BEFORE THE CIT (A) AND THESE ASSES SEES HAVE GIVEN AN UNDERTAKING THAT IN CASE THE RELIEF IS ALLOWED TO T HE AOP SUGANDH SANSAR, ALL THE MEMBERS WILL WITHDRAW THE APPEALS FROM CIT (A). THUS, THE CIT HAS CONSIDERED THE ISSUE AND HAS FINALLY AGREED THAT TH E INCOME SHOULD BE TAXED IN THE HANDS OF THE INDIVIDUALS. THE TAXES HAD BEEN PAID ALONG WITH THE INTEREST IN ALL THESE INDIVIDUAL HANDS. SINCE A STATEMENT W AS GIVEN DURING THE COURSE OF SEARCH U/S 132 OF INCOME-TAX ACT, 1961 ADMITTING THE UNDISCLOSED INCOME OF RS.20 CRORES OF THE GROUP, THE QUANTUM OF DISCLO SURE OF INCOME WAS AFFIRMED BY AN AFFIDAVIT BY OTHER PERSON OF THE GRO UP. THE MANNER WAS ALSO STATED IN THE STATEMENT BY WHICH SUN INCOME WAS EAR NED. IN OUR CONSIDERED ITA NOS.551, 552 & 553/DEL./2013 12 VIEW, THE GROUP HAS ALSO SUBSTANTIATED THE MANNER I N WHICH THIS UNDISCLOSED INCOME WAS DERIVED. IN THE STATEMENT RECORDED U/S 132(4) OF THE ACT AND IN AN AFFIDAVIT DATED 15.05.2009, THE DISCLOSURE WAS M AINTAINED. THE ASSESSEES OF THE GROUP HAVE ALSO PAID THE TAXES APPLICABLE AL ONG WITH INTEREST. IN SUCH A SITUATION, THE CIT (A) WAS NOT JUSTIFIED IN SUSTAIN ING THE PENALTY U/S 271(1)(C) OF THE ACT LEVIED BY THE ASSESSING OFFICER. CONSID ERING ALL THESE FACTS AND CIRCUMSTANCES, WE SET ASIDE THE ORDERS OF THE AUTHO RITIES BELOW AND DIRECT TO DELETE THE PENALTY U/S 271AAA. 7. IN THE RESULT, ALL THE THREE APPEALS OF ASSESSEE S ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF APRIL, 2013. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF APRIL, 2013 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A) 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.
Mehul