ACIT, Meerut V. Shri Ram Kishore Arora, Ghaziabad

ITA 5806/DEL/2010

• Counselvise Citation: 580620114 RSA 2010
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 12-06-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 20-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIVEK WADEKAR
• Assessee Lawyers: ASHOK GA NDHI
• Keywords: Search and seizure; Document seized; Question of law; Tax effect; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI I.C. SUDHIR, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.5806/DEL/2010 (ASSESSMENT YEAR: 2001-02) ACIT, CENTRAL CIRCLE, VS. SHRI RAM KISHORE ARORA, MEERUT. 8 / 74, SECTOR 3, RAJINDER NAGAR, GHAZIABAD. (PAN : AAEPA1214G) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ASHOK GANDHI, ADVOCATE REVENUE BY : SHRI VIVEK WADEKAR, CIT DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS), MEERUT FOR THE ASSESSMENT YEAR 2001-02. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDER :- 1. THE CIT (A) ERRED IN LAW IN DELETING THE ADDITI ON OF RS.6,61,650/- BEING UNEXPLAINED DEPOSIT OF THE APPELLANT WITH MR. INDRAJEET SHARMA ON A WRONG APPRECIATION OF FACTS BY HOLDING THAT THIS DE POSIT HAS ALREADY BEEN CONSIDERED /' IN THE PETITION MADE BY MR. INDRAJEET SHARMA BEFORE THE SETTLEMENT COMMISSION. 2. THE CIT (A) HAS ERRED IN DELETING THE ADDITION I N VIEW OF THE FACT THAT ENTRIES IN THE BOOKS OF SHRI. INDRAJEET SHARMA HAVE BEEN FOUND TO BE TRUE AND THEREFORE THE MONEY APPEARING IN THE NAME OF THE ASSESSEE SHOULD ITA NO.5806/DEL/2010 2 BE ASSESSED IN THE NAME OF THE ASSESSEE. THE PAYMEN T OF TAX BY INDRAJEET SHARMA, THROUGH A PETITION TO SETTLEMENT COMMISSION , CANNOT CHANGE THE TAX INCIDENCE OF THE SAID AMOUNT IN THE CASE OF THE ASSESSEE. 3. THE CIT (A) ALSO IGNORED THE FACT THAT THE EVIDE NCE OF DEPOSIT OF MONEY OF THE APPELLANT WERE FOUND AND SEIZED FROM T HE PREMISES OF MR. INDRAJEET SHARMA AND IN TERMS OF SECTION 132(4) OF THE INCOME TAX ACT, 1961 TO CONSTITUTE EVIDENCE, THERE IS NO REQUIREMEN T OF CROSS EXAMINATION. 4. THAT THE ORDER OF THE LD. CIT (APPEALS) BEING ER RONEOUS IN LAW AND ON FACTS BE VACATED AND THE ORDER OF THE AG. BE RES TORED. 5. THAT THE APPELLANT CRAVES LEAVE TO AMEND ANYONE OR MORE OF THE GROUNDS OF THE APPEAL AS STATED ABOVE AS AND WHEN N EED FOR DURING SO MAY ARISE. 2. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE BUSINESS PREMISES OF M/S. SUPERTECH CONSTRUCTION PRIVATE LIM ITED, M/S. SUPERTECH BUILDERS AND PROMOTERS PRIVATE LIMITED AND ALSO AT THE RESIDENCES OF DIRECTORS AND VARIOUS PERSONS CONNECTED WITH THE DI RECTORS OF THE COMPANY. THE RETURN OF INCOME WAS FILED ON 12.07.2001 DECLAR ING INCOME AT RS.1,66,000/-. THE ASSESSMENT WAS COMPLETED AT RS. 8,27,350/-. THE ASSESSING OFFICER FOUND THAT IN THE BOOKS OF SHRI I NDERJEET SHARMA WHICH WAS SEIZED FROM THE RESIDENCE OF SHRI INDERJEET SHA RMA, THE NAME OF THE ASSESSEE WAS APPEARING AND AN ADDITION OF RS.6,61,3 50/- WAS MADE WHILE MAKING THE ASSESSMENT U/S 153A/143(3) OF THE INCOME -TAX ACT, 1961. THE CIT (A) HAD GRANTED THE RELIEF TO THE ASSESSEE BY H OLDING AS UNDER :- 5.4 DECISIONS & REASONS THEREFOR: I HAVE CONSIDERED CAREFULLY THE FACTS OF THE CASE AND SUBMISSIONS OF THE AR. I HAVE EXAMINED CAREFULLY THE ASSESSMENT OR DER PASSED BY THE' AO. I HAVE ALSO EXAMINED THE REPORT OF THE AO (ASSI STANT COMMISSIONER ITA NO.5806/DEL/2010 3 OF INCOME TAX, CENTRAL CIRCLE MEERUT BEING THE ASSE SSING OFFICER OF THE APPELLANT SHRI R. K. ARORA AND ALSO BEING THE ASSES SING OFFICER OF SAID SHRI INDERJEET SHARMA), FURNISHED TO THE HON'BLE SETTLEM ENT COMMISSION UNDER RULE 9 OF THE INCOME TAX SETTLEMENT COMMISSION (PRO CEDURE) RULES 1997. IT IS CLEAR FROM THE RECORDS OF THE CASE THAT THE AO DID NOT EXAMINE THE APPELLANT AND ALSO SHRI INDERJIT SHARMA WITH RE FERENCE TO THE NOTING OF THE TRANSACTIONS IN HIS DIARIES. IT IS ALSO VERIFIE D FROM THE RECORDS AND ALSO FROM THE SEIZED RECORDS WHICH WERE CALLED FOR FROM THE AO FOR EXAMINATION THAT THERE IS NO CORROBORATIVE EVIDENCE /NOTING OF SUCH TRANSACTIONS IN THE DOCUMENTS SEIZED FROM THE POSSE SSION OF SHRI R. K. ARORA ON RECORD TO PROVE THAT THE ALLEGED DEPOSITS WERE ACTUALLY MADE BY SHRI R.K.ARORA, THE APPELLANT WITH SHRI INDERJIT SH ARMA. THE AO DID NOT FIND ANY MATERIAL FROM THE POSSESSION OF THE APPELL ANT TO PROVE THE LIVE NEXUS WITH THE ALLEGED DEPOSITS IF ANY, MADE BY SHR I R.K.ARORA WITH SHRI INDERJIT SHARMA. THE AO SIMPLY RUSHED THROUGH MAKIN G ADDITION TO THE INCOME WITHOUT BRINGING MATERIAL EVIDENCE ON RECORD S TO JUSTIFY HIS ACTION. THE APPELLANT OR THE PERSON IN WHOSE NAME THE ENTRI ES ARE RECORDED CANNOT BE MADE ACCOUNTABLE AND ASSESSED TO INCOME ON THE B ASIS OF THE CONTENTS OF THE THIRD PARTY DOCUMENTS, WHICH ARE NOT CORROBO RATED BY ANY INDEPENDENT EVIDENCE. THE ORDER PASSED BY THE AO IS SILENT ON THIS ASPECT. IT IS SEEN THAT THE AO HAD RAISED LARGE NUMBER OF Q UERIES TO, THE APPELLANT ON THE BASIS OF THE DOCUMENTS/DIARIES SEIZED FROM T HE POSSESSION OF THE APPELLANT BUT THESE DOCUMENTS DID NOT CONTAIN ANY S UCH CORRESPONDING ENTRY RELATING TO SHRI INDERJEET SHARMA. THE AR HAS RIGHTLY POINTED OUT THAT THE QUERY CONNECTED WITH THESE DEPOSITS BEARIN G NUMBER 8A AND 8B WERE RAISED ONLY FROM THE DOCUMENTS/DIARIES OF THE THIRD PARTY WITHOUT FIRST PROVING NEXUS OF SUCH ENTRIES WITH THE APPELLANT. I HAVE ALSO EXAMINED THE ASSESSMENT ORDER AND IT IS SEEN FROM THE BODY OF TH E ORDER THAT THE APPELLANT HAD SUCCESSFULLY EXPLAINED EACH AND EVERY QUERY ISSUED BY THE AO IN RESPECT OF THE ENTRIES FOUND TO BE RECORDED I N THE DOCUMENTS/DIARIES SEIZED FROM THE POSSESSION OF THE APPELLANT AND AO DID NOT MAKE ANY ADDITION ON THE STRENGTH OF SUCH DOCUMENT SEIZED FR OM THE POSSESSION OF THE APPELLANT. THE AR HAS RIGHTLY POINTED OUT THAT AN AMOUNT OF RS .12,50,000/- PAID TO M/S SHAHDHARA CLOTH EMPORIUM (COMPANY OWNED BY SHRI INDERJEET SHARMA AND HIS FAMILY) WAS ALSO EXPLAINED TO THE SATISFACTION OF THE AO IN REPLY TO QUERY NUMBER 8C AT PAGE 3 OF THE ORDER. WHEREAS THE APPELLANT EXPLAINED ALL HIS TRANSACTION AND CONDUCT RECORDED IN THE SEIZED DOCUMENT AND AO DID NOT FIND ANY AMBIGUITY, HE MADE THE ADDITION ON THE STRENGTH OF THE NOTING FOUND RECODED IN THIRD PARTY DOCUMENTS WITHOUT CORROBORATING EVIDENCE ON RECORD. IN THE ABSENCE OF SUCH INDEPENDENT DOCUMENT/EVIDENC E, NO COGNIZANCE CAN BE TAKEN OF THE NOTING MADE BY SUCH THIRD PERSON IN HIS DIARY. I HAVE ALSO CONSIDERED THE DOCUMENTS RELATIN G TO SHRI INDERJIT ITA NO.5806/DEL/2010 4 SHARMA IN REGARD TO THE PROCEEDINGS BEFORE THE SETT LEMENT COMMISSION AND THE REPORT SUBMITTED BY THE AO HIMSELF UNDER RU LE 9 OF THE INCOME TAX SETTLEMENT COMMISSION (PROCEDURE) RULES 1997, I HAVE COME TO A FIRM CONCLUSION THAT ONCE SHRI INDERJEET SHARMA HAS OWNED UP ALL THE ENTRIES/TRANSACTIONS RECORDED IN HIS PERSONAL DIARI ES BEING THE DEPOSITS RECEIVED FROM DIFFERENT PERSONS INCLUDING THAT OF T HE APPELLANT TO BE HIS OWN INCOME AND AS DETERMINED BY THE HON'BLE SETTLEM ENT COMMISSION VIDE THEIR ORDER PASSED ON 31.03.08, THE SAME CANNO T BE ASSESSED AGAIN IN THE HANDS OF THE APPELLANT. I HOLD THAT THE ADDITIO N OF RS.6,61,350/- MADE BY THE AO TO INCOME OF THE APPELLANT CANNOT BE SUST AINED AND THE SAME IS DELETED. THE APPELLANT GETS A RELIEF OF RS. 6,61,35 0/-. 3. AT THE OUTSET OF THE HEARING, LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT TOTAL ADDITION DELETED BY THE CIT (A) WAS OF R S.6,61,350/- AND THE TAX EFFECT IN THIS CASE E IS LESS THAN RS. 3.00 LAKH. THIS POSITION IS ADMITTED BY THE LD. D.R. THEREFORE, AS PER THE INSTRUCTION NO . 3/2011 DATED 09.02.2011 THE REVENUE IS NOT PERMITTED TO FILE APPEAL BEFOR E THE TRIBUNAL IF THE TAX EFFECT IS LESS THAN RS. 3.00 LAKH. HE PLACED REL IANCE ON THE DECISION OF HONBLE DELHI HIGH COURT DATED 25.03.2011 IN ITA NOS. 3 TO 5/2010. ON THE OTHER HAND, LD. DR FOR THE REVENUE SUBMIT TED THAT INSTRUCTION NO.3/2011 IS NOT APPLICABLE FOR THE APPEALS FILE D PRIOR TO ISSUE OF THE SAID INSTRUCTIONS. IT IS ALSO SUBMITTED THAT THE DEC ISION OF FULL BENCH OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. VIR ENDRA CONSTRUCTION CO., 239 CTR 1, THAT REVISED MONETARY LIMITS ARE N OT APPLICABLE TO THE PENDING APPEALS, IS IN FAVOUR OF THE REVENUE. 4. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE MATERIAL AVAILABLE ON RECORD. INSTRUCTION NO. 3/2011 DATED 09.02.2011 HAS REVISED ITA NO.5806/DEL/2010 5 THE MONETARY LIMIT FOR FILING THE APPEAL BY THE D EPARTMENT BEFORE INCOME- TAX APPELLATE TRIBUNAL, HONBLE HIGH COURTS AND HONBLE SUPREME COURT. MONETARY LIMIT FOR FILING THE APPEAL BEFORE THE T RIBUNAL IS RS. 3.00 LAKH; BEFORE HONBLE HIGH COURT RS. 10.00 LAKH AND BEFOR E HONBLE SUPREME COURT RS. 25.00 LAKH. HONBLE DELHI HIGH COURT IN THEIR ORDER DATED 25.03.2011 REFERRED TO ABOVE HAS HELD AS UNDER:- IT IS STATED THAT THE TAX IMPACT IN THE PRESENT CASES IS LESS THAN RS. 10.00 LAKHS. THE DEPARTMENT HAS RECENTLY ISSUED AN INSTRUCTION BEARING NO. 3/2011 DATED 09.02.2011, WHICH IS IDENTICAL TO ITS EARLIER INSTRUCTION BEARING NO. 5/2008 DATED 15.05.2008 EXCEPT THAT IN SO FAR AS THE HIGH COURT IS CONCERNED, THE MONETARY LIMIT IN RESPECT OF APPEALS WHERE THE QUESTIONS OF LAW RAISED NEED NOT TO B E ANSWERED, HAS BEEN RAISED FROM RS. 4.00 LAKHS TO RS. 10.00 LAKHS. T HE DIVISION BENCH OF THIS COURT IN ITA NO. 89/1999 DECIDED ON 28.01.2 011 HAS ALREADY HELD THAT THE INSTRUCTION BEARING NO. 5/2008 DATED 1 5.05.2008 WOULD APPLY EVEN TO THE OLD PENDING REFERENCES AND APPEALS. THIS PRINCIPLE WOULD THUS NATURALLY EQUALLY APPLY TO THE INSTANT INSTR UCTION BEARING NO.3/2011 DATED 09.02.2011, AS WELL. THE TAX EFFECT BEING LESS THAN RS. 10.00 LAKHS, THE QUESTION OF LAW DOES NOT REQUIRE TO B E ANSWERED. THE APPEALS ARE DISPOSED OF ACCORDINGLY. 4.1 LD. AR FOR THE ASSESSEE HAS ALSO RELIED ON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. DELHI RACE CLUB LTD. IN ITA NO. 128/2008 DATED 03.03.2011 WHEREIN IT HAS BEEN HELD AS UNDER:- THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS RS. 4,65,860/-. AS PER THE RECENT GUIDELINES OF THE CBDT, APPEAL IN TH OSE CASES WHERE THE TAX EFFECT IS LESS THAN RS. 10.00 LAKHS, ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF CIT, DELHI-III VS. M/S P .S. JAIN & CO., BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. ITA NO.5806/DEL/2010 6 4.2 IN VIEW OF THE DECISION OF HONBLE DELHI HIGH COURT, WHICH IS THE JURISDICTIONAL HIGH COURT IN THIS CASE, IT IS HEL D THAT INSTRUCTION NO. 3/2011 DATED 09.02.2011 WILL APPLY TO ALL PENDING APPE ALS. RESPECTFULLY FOLLOWING THE PRECEDENT, IT IS HELD THAT THE AP PEAL IS NOT MAINTAINABLE IN THE INSTANT CASE AS THE TAX EFFECT IS LESS TH AN RS. 3.00 LAKHS. ACCORDINGLY, IT IS HELD THAT APPEAL FILED BY THE REVENUE IS NO T MAINTAINABLE. 5. IN THE RESULT, APPEAL FILED BY THE DEPARTMENT IS DISMISSED WITHOUT GOING INTO THE MERITS. ORDER PRONOUNCED IN OPEN COURT ON THIS 30 TH DAY OF JUNE, 2014. SD/- SD/- (I.C. SUDHIR) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 30 TH DAY OF JUNE, 2014 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), MEERUT. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.