Anil Ram Sutar, Noida V. DCIT, Central Circle, Noida

ITA 7930/DEL/2019

AI Insights

The case involves Anil Ram Sutar, an individual and director of various companies, who was subjected to a search and seizure operation under Section 132 of the Income Tax Act, 1961. Following the operation, a substantial amount of undisclosed income was alleged based on confessional statements and loose papers found during the search. The Assessing Officer made additions to Sutar's income for AY 2016-17, which were upheld by the CIT(A). However, the Tribunal found that the additions were unjustified as the income was either related to other assessment years or had already been taxed in the hands of associated companies. The Tribunal criticized the reliance on the confessional statement and loose papers, noting the lack of concrete evidence and the issue of double taxation.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121473 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2023
• Appeal Filed By: Assessee
• Order Result: AllowedAllowed
• Bench Allotted: A
• Next Hearing Date: 15-01-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 29-09-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Loose papers
• Section: 143(3); 153A; 201; 13; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A No.7930/DEL/2019 Assessment Year 2016-17 Anil Ram Sutar A-2, Sector-19, Noida. v. The Deputy Commissioner of Income Tax Central Circle, Noida. TAN/PAN: ABJPS2044L (Appellant) (Respondent) Appellant by: Shri Manoj Kumar, CA Respondent by: Shri P. Praveen Sidharth, CIT-DR Date of hearing: 16 01 2023 Date of pronouncement: 13 04 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order o f the Co mmissioner o f In co me Tax (Appeals) -IV, Ka npur (‘C IT(A )’ in short) dated 2 5.07. 2019 arising fro m the assess ment order dated 30. 12.2017 passed by the Asse ssing O fficer(AO ) under Section 143(3) of the Inco me Tax Act, 1961 (the Act) concerning AY 2016-17. 2. The grounds of appeal raised by the assessee reads as under: Th a t on t h e f a c t s a nd in t h e c i r c u m s t a n c e s o f t h e ap p e ll a n t' s c a s e , th e l e a r n e d C om m i s s i o ne r o f In c o m e t a x ( A p pe als ) e r r e d b ot h i n f ac t s an d i n l aw i n u ph ol d i ng t h e a dd i t io n o f R s I.T.A No.7930/Del/2019 2 1 2, 1 6 , 4 0 , 0 0 0 / - a s u n d is c l os e d i nc o m e o f t h e ap p e l l ant w hi c h i s m a d e by t h e as s e s s i n g o f f i c e r on l y o n t h e ba s i s o f c o n f e s s i o na l s t a t e m e nt r e c or d e d un de r s e c t i on 1 3 2 (4 ) o f t h e In c om e t ax A c t , 1 96 1 o f t h e ap p e ll a n t b y i gn or in g t h e c i r c ul a r i s s ue d b y C B D T i n t h is r e ga r d a n d a l s o w i t h o u t ap p r e c ia t i ng t he e x pl an a t i on f u r ni s he d b y t h e a p p e l l a nt t ha t t h e s ai d s ur r e nd e r ed i n c o m e s a r e n ot r e l a t e d t o t he a p pe l l an t . 3. Briefly stated, the asses see an individual is a director o f various co mpanies during the financial year 2015-16 relevant to Asses s ment Year 2016-17 in question. A search and seizure operation under S ection 132 of the Inco me Tax Act, 1961 was conducted at the premi ses o f th e Airwill Group of cases including the assessee on 30. 09.2015 and also on lockers on subsequent dates. Subsequent to search, the assess ee e-filed his Return of in co me (ROI) fo r AY 2016-17 on 5/8/2016 declaring total inco me at Rs. 38, 41, 130/-. The ROI so filed was subjected to asses s ment by i ssuance o f notice under S. 143(2) of the Act. As per paragraph 4 of the assessment order, the assessee atte nded the proceedings before the Assessing Officer fro m ti me to time and submitted the details as called fo r. While maki ng assess ment, the income return ed by the assessee was substantially enhanced by inter alia making additions of Rs. 12, 16,40, 000/- on account of u ndisclosed inco me. The i mp ugned addition was pri marily made in the light of ad missions and confessi ons made in the statement recorded under Section 132(4) o f the Act in the course o f the search. Certain other additions were also made on account of interest earned and undisclosed investment in jew ellery etc. which are not under challenge before us by either side. I.T.A No.7930/Del/2019 3 4. Aggrieved, the assessee prefe rred appeal before the CIT(A). 5. Befo re the C IT(A ), the assessee filed its counter-defense by way o f detailed submis sions on the i mpugned additions of Rs. 12, 16, 40,000/- and inter alia sub mitted that the confessional statement made under Section 132(4) cannot be relied upon in the absence of te nable corroboration thereof and the additions made solely on the basis of statement obtained in the course o f sea rch is not justified and such action is also in contravention o f Instruction Nu mber - F. No.286/2/2003-IT (Inv. II) d ated 10. 03.2003. It was contended that the additions made on the basis of a statement are not backed by any concrete underlying evidence and such additions are also in the nature of double additions. Several entries o f various amounts aggregating to i mpugned undisclosed income o f R s.12, 16, 40, 000/- were attempted to be explained before the CIT(A ). In conclusion, it was essentially contended that the asses see has rightly not included the inco me declared in state ment recorded under Section 132(4) o f the Act in the ROI. It was broadly contended that the income co mputed on the basis of va rious entries apparently do not pertain either to the assessee or not relatable to AY 2016-17 in question otherwis e. It was further contended that such inco me has been already assessed in the hands of approp riate assessee in appropriate assess ment years and thus no inco me has ultimately escaped assess ment. The assessee also furnished explanation on other additions/ disallowances made in the I.T.A No.7930/Del/2019 4 assess ment. The CIT(A) however discarded the detailed submis sion made on behalf o f the assessee pri marily on the ground that additions made by the As sessing Offi cer is not solely based on sworn state ment but is also corro borated by incriminating docu ments and unexplained cash fo und as a result o f search. The CIT(A ) thus endorsed the action of the Assessing O fficer and declined to interfere with the additions of Rs.12, 16,40,000/-. The CIT(A ) however found merit in the plea of the asses see towards certain other additions/disallowances and granted relie f with wh ich we are not concerned at present. 6. Aggrieved by the additions of Rs. 12,16,40, 000/- as sustained by the CIT(A), the asses see pre ferred appeal before the Tribunal. 7. Befo re the Tribunal, the assessee vocife rously placed its argu ments in length and refer red to various documents placed befo re the lower authorities as filed by way of volu mnous paper books and contended that wherever the alleged unaccounted income has actually accrued to the assessee or to other connected parties, such inco me has al ready been declared under direct tax Vivad Se Vishwa s Sch eme 2020 (VSVS) by the as sessee or by the respective connected parties in the relevant assess ment years. It was es sentially sub mitted that no escapement of inco me has resulted at the end of assessee when seen holistically along with group cases and appropriate asse ss ment years. We shall deal with the I.T.A No.7930/Del/2019 5 argu ments placed on behalf o f the assessee in succeeding paragraphs at appropriate place while adjudicating the issue. 8. The ld. DR fo r the Revenue, on the other hand, referred to and relied upon the averments made in the asses sment order and the first appellate order and reiterated the opinion expressed in the first appellate order. 9. We have carefully considered the rival sub missions and perused the assess ment order and t he first appellate order. We have also given our dispassion ate considerations to the material/docu men ts referred to and relied upon by the respective sides in the course of hearing in terms of Rule 18(6) of the Income Tax (Appellate Tribunal) Rules, 1963. 10. The short controversy be fore hand is justification of additions of Rs. 1 2, 16,40, 000/- to the returned income alleging undisclosed income o f the asses see detected in the course o f search and assessment fra med s ubsequent thereto fo r the Assess ment Yea r 2016-17. 11. The facts in the case are quite peculiar and the issue involved is essentially a question of fact. Thus, it would be desirable to briefly recapitulate the i mportant facts governing the issue. 11.1 A search and seizure operation under Section 132 of the Act was conducted at the pre mises o f Air will Grou p o f cases including the assessee on 30. 09. 2015. The group is engaged in the business of real estate at Noida. The group is headed by I.T.A No.7930/Del/2019 6 Shri Chittar Sing h and his sons Shri Manoj Ku mar Choudhary and Shri Sanjay Kumar Choudhary. The assessee in the instant case is associated with the business activities of the group and derives salary inco me in the capacity of director in various co mpanies. The premises of assessee were also covered by search operations. 11.2 In the course o f search, certain in cri minating documents in the form handwritten loose pap ers were found and seized fro m the pre mises of the assessee a t Noida. A statement of the assessee was reco rded under S. 132(4) o f the Act in the course of search. Statedly, the assessee inter alia conceded to have earned unaccounted inco me aggreg ating to Rs.12,16, 40,000/-. As per para 6 of the asses sment order, the i mpugned unaccounted income co mprises o f ; (i) Unaccounted Cash allegedly given to Shri Manoj Ku mar Choudhary, Director ( Ai rwill Group o f Co mpanies) aggregating to Rs. 10 crore by the Asse ssee. (ii) Cash pay ment o f Rs. 47,50, 000/- toward s unaccounted expenses. (iii) Cash found o f Rs. 1, 68,90,000/- at the Noida premises o f the assessee and declared as undisclosed inco me in the course o f search. 11.3 The basis of additions towards undisclosed income is the statement o f the Asse ssee in the course o f search and certain loose papers and jottings found in the course of searc h. 11.4 The copy of statement of the as ses see recorded under S. 132(4) o f the Ac t on 30/09/2015 in the course o f search is I.T.A No.7930/Del/2019 7 placed at page 162-194 of the paper book. Likewise. Copy of panchnama drawn on closure of sea rch proceedings on 1/10/2015 along with annexures of docu ments, loose papers, jottings etc, found/seized as inventorised is placed at page 241-250 of the pa per book. As per Annexure A to panchna ma, 42 no. loose papers were found / seized fro m the premi ses o f the Asses see marked as LP-I. Significantly, the loose papers as per this annexure ( page 243 o f Paper book) are noted to be relatable to period between 2008 to 2014 i. e. upto financial year ending 2014. 12. We shall now delineate on the controversy. 12.1 As regards the alleged undisclosed income co mponent of Rs. 10 crore noted above, the asses see contends that the basis fo r the afore said addition is loose paper / jotting Page 27 to Annexure LP -1 found in the course o f search and scanned at page 3 of the assessment order. A s per the loose paper scanned read with statement of the assess ee recorded under Section 132(4) of the Act, the assessee sub mits that it is the case of revenue that the a foresaid amount was allegedly given to Shri Manoj Ku ma r C houdhary in the month o f June, 2013 as demonstrable fro m the loose paper itself as well as fro m question no.13 of the state men t recorded under Section 132(4). On the basis o f loss paper (LP-1 Page 27) wh ich is the genesis o f the addition, the assessee es sentially makes two fold sub missions as follow s; (a) The loose pap er found is wholl y vague, ambiguous and I.T.A No.7930/Del/2019 8 non-descript and thus unreliable. As contended, except two figu res o f 7 cr. and 3 cr. June, 2013, nothing else is mentioned. Hence, no adverse inference can be drawn based on such non-descript loose paper. This notwithstanding, the i mpugned amount is categ orically recorded in the loose paper to be transaction occured in June, 2013 and therefore relates to FY 2013-14 relevant to AY 2014-15 and thus cannot be subject matter o f assess ment in FY 2015-16 relev ant to AY 2016-17 in question. The Assessee further sub mit s that Annexure LP-1 consists o f 42 pages only found and seized at the residential pre mises o f the as sessee which as per panchanama draw n, all pertains to Financial Years 2008 to 2014 and thus action of A O in making asses s ment o f undisclosed income in the hands of Asses see in co ntrast to the entries in so called loose paper is grossly unjusti fied only on the basis of statement extracted from the Ass essee. (b) R s. 8 crore (o ut of 10 cro re) was also assesse d in the hands of as sessee on the basis o f excel sheet correspondingly found in the premi ses o f Manoj Choudhary of Ai rwell g roup showing receipt of cash on variou s dates in Asses sment Year 2014-15 vide assess ment order dated 30. 12. 2017 passed under Section 153A r. w. Section 143(3) of the Act. The assessee contested the aforesaid addition befo re the CIT(A) in that year. The CIT(A) vide order dated 25. 07. 2019 relevant to Assess ment Year 2 014-15 granted relief to the assessee. Desp ite the relief gran ted by I.T.A No.7930/Del/2019 9 the CIT(A), the assessee availed ‘Vivad Se Vishwas Sche me 2020’ and paid taxes thereon in accordance with law. As a co rollary, the additions to the extent of Rs. 8 crore is clearly a case of double addition made in both AYs 2014-15 as well as AY 2016-17 in question. Such act of the Asse ssing Office r is not per mis sible to the extent of Rs. 8 crore. Hence, as contended, neither the loose paper supports the year in which the inco me is liable to be assessed nor the Revenue is prejudiced any longer to this extent owing to settlement o f taxes under VSVS. 12.2 As further contended on behalf o f the asses see, another amount o f Rs. 12,25,000/- was also added in AY 2014-15 towards undisclos ed cash inco me b y the AO. The C IT(A ) has given relief on this amount and Revenue has not filed appeal fo r the As sess me nt Year 2015-16 in question. Similarly, an amount of Rs. 1, 47, 00, 000/- towards unaccounted income in cash has also been added in FY 2014-15 relevant to AY 2015- 16 in question against which the assessee has si milar ly availed ‘Vivad Se Vishwas Sche me 2020’ and thus taxes has been collected the revenue. On similar footing, an a mount of Rs. 61, 25, 000/- has been added in AY 2016-17 in question towards unaccounted cash fo r which the CIT(A) has given appropriate relief. Thus, as contended, the unaccounted inco me is alread y asses sed in other as sess ment years and is being assessed yet again as undisclosed income i n this un- relatable and wrong assess ment year without corroborative basis. I.T.A No.7930/Del/2019 10 13. We straightaway find merit in the plea of the Asses see. The loose paper which is the foundation for as ses s ment o f R s. 10 cr. as unaccounted income cle arly speaks that purported transaction occurred so mewhere i n June 2013. Thus, without engaging into the debate of trut hfulness o f loos e paper or credibility of ad ditions, the undisclosed inco me could be possibly assessed only in the assess ment year 2014-15 at best and thus the addition in the wrong A Y 2016-17 in question is wholly untenable being opposed to the scheme of Act. Besides, the averments made in the state ment cannot be read as gospel truth and at any rate, do not operate as estoppel against statute. The AO is required to assess the inco me in the correct as sess ment year. As per loose paper fo und, the impugned inco me in the instant case is identifiable to AY 2014-15 and could not be assessed in AY 2016-17 in question. Notwithstanding, the i mpugned inco me is de mon strated to have already been assessed in other asses sment year and is a case of double assess ment o f same disclosure. Hence, the action of A O is not tenable on this score al so. In first appeal, the CIT(A) has also misdi rected hims elf in law and on facts in confi rming the additions solely on so called confession of the Assessee without taking cognizance of content and quality of loose papers and attendant circu ms tances. In totality, the plea of as sessee deserves acceptance on this score. 14. The second comp onent of undisclo sed inco me is alleged to be cash pay ment o f Rs. 47,50,000/- towards alleged unaccounted expenses on the basis of loose paper s canned at I.T.A No.7930/Del/2019 11 Page 4 of the Assess ment order. 14.1 In this regard, the Assessee sub mits that relevant page no.14 of LP-1 contains some written receiving note of Rs. 47, 50, 000/-. It is fu rther sub mitted that as p er the said note, an amount of Rs. 47,50, 000/- has been received by Shri Akshay Sharma fro m M/s. Shik har Fincap Pvt. Ltd. The assessee contends that the said page do not relate to the assessee at all but relates to M/s. Shikhar Fincap Pvt. Ltd. Hence, the afores aid receipt of Rs. 47,50, 000/- fo rming part of the i mpugned addition is not attributable to the case o f the assessee and thus not relevant for the purposes of making impugned addition. 14.2 On a bare perusal o f the loose paper/ jotting, the plea o f Assessee appears to be well founded. The loose paper represents so me receipt dated 4/7/2011 where one ‘Akshay Sharma’ seems to have acknowledged money Rs. 47, 50,000/- fro m M/s Shikh ar Fincap’. Thus, neither the transaction concerns A Y 20 16-17 in question nor does it c oncern the Assessee herein. The addition on this a mount is th us totally uncalled for. 15. We now tu rn to third co mponent o f alleged undisclosed inco me amounting to Rs. 1, 68, 90, 000/-. 15.1 This addition is statedly made on account of unexplained cash found o f Rs. 1, 68, 90,000/- from the premises A -2, Sector, 19, Noida in the course o f search operation. The assessee on I.T.A No.7930/Del/2019 12 its part sub mits t hat cash aggregating to Rs.3, 85, 90, 000/- was found during the course of search operation at the residential premises and lockers o f the asses see. The su mmary of cash aggregating to Rs. 3,85, 90, 000/- found during the course o f search operation fro m the premi ses/lockers o f the assessee is as follows. a . c a sh fo un d on r es i d en ti a l pr e m is e s N oi d a – Rs. 1, 68 , 9 0, 0 00 / - b . ca sh fr o m l oc ke r n o. 55 79 - Rs. 1 , 17, 0 0, 0 00/ - c . c a sh fr o m lo c k e r n o . 7 1 4 2 - Rs. 1 , 00, 0 0, 0 0 0/ - 15. 2 As agai nst the af oresai d a mount of Rs. 3, 85, 90,000/ - {i ncl udi ng Rs. 1, 68, 90, 000/ - w hi ch i s subj ect mat t er of addit ion}, Rs. 3 cr ore bel ongs to M/ s. Sutar Bui ldcon Pvt . Ltd. (SBPL) a nd dul y dul y assessed i n t he ha nds of t he co mpan y i n the Assess ment Year 201 6-17 vi de Assessment Year dat ed 30. 12. 2017 passe d un der Secti on 143( 3) of t he Act . Thus, the Reve nue has alr ea d y coll ected t axes on t he al le ged undi scl osed inco me t o the ext ent of Rs. 3 cr ore f ro m associate co. na mel y SBPL. 15. 3 The cash a mount of Rs. 76, 18, 373/ - in aggregat e repr esents cash i n hand on t he dat e of searc h and bel ongs t o di f ferent cos. Na mel y ; M/ s. Ut opi an I nfratech Pvt. Ltd. - Rs. 65090 ; M/s. Sutar B ui l dcon Pvt. Ltd. ( SBPL) - R s. 11, 28, 796/- ; M/ s. Shi kha r Fincap Pvt . Lt d. - Rs. 30,43,5 15/- ; M/ s. Ra m S ut ar Ar t Cr eati on Pvt. Lt d. - Rs. 11, 01, 184/ - and R a m Sut ar Fi ne A rt s Pvt. Lt d. - Rs.22,7 9, 788/ -. In al l t hese f ive companies, the assessee is a di rector and ke pt the cash bel ongi ng to these c o mpanies at his I.T.A No.7930/Del/2019 13 cust od y i n fi duciar y capaci t y. The cash of Rs. 76, 18, 373/ - t hus relates t o these cos as point ed out i n t he post search enqui ri es as wel l at t he t i me of assess ment and fi r st appel late pr oce edi ngs as can be not i ced fr om pa ge 96 of t he paper b ook. The l d. counsel furt her conte nds that the re mai ni ng amo unt of Rs. 9,71, 327/- i n agg regate bel ongs to assessee and it s f amil y me mbers as t hei r co mbi ned cash i n hand. The assessee t hus cont ends that t her e is no just if icat i on f or maki ng separat e a ddit i on of Rs. 1, 68, 90, 000/ - as undi scl osed i nc o me where t he t ot al c ash f ound it sel f emanates f r o m record or i n t he alt er nat i ve taxes have been pai d i n a ppropr iat e ha nds. The assessee t hus c ont ends the acti on of t he r evenue i s ma r red b y vice of d oubl e a ddi ti on once i n t he han ds of p vt. Cos. and agai n in t he hands of t he Assessee. 15. 4 The e xpl anati on of fer ed b y t he assessee t owar ds cash found and seized is self expl anat or y. The fact s suggeste d on beh al f of t he ass essee emant es fr o m recor d. A d mi tt edl y, t he una ccounted cas h of Rs. 3 cr. has been assessed i n t he hands of Pvt. Co. SBPL. Li kewi se, t he sourc e of re mai ni ng cash i n ha nd is expl ai ned wi th ref erence t o cas h avai labil i t y i n ot her P vt. Cos. . The addi ti on mad e is t hus in the nat ure of dou ble addi ti on and can not be sust ai ned o n f acts & circu mst ances of t he case. 16 To su m up, t he e xpl anati on off er ed b y t he assessee t owar ds undi scl osed i ncome in quest ion is self expl anat or y a nd pl ausi ble. T he course adopte d b y t he Reve nue i s t hus cl earl y not per mi ssi bl e in l aw. It ma y be pe rt inent t o obser ve t hat the CIT( A) has mainl y reli ed upon t he st at ement recor ded under Secti on 132(4) whe rei n t he ass essee has sur ren dere d t he I.T.A No.7930/Del/2019 14 af oresai d a mount of Rs.12, 16, 40, 000/ -. T he CI T(A ) has pr ocee ded on t he f ooti ng that st at ement r ecorded under Secti on 132( 4) i s sacrosanct w here the assessee f ai led to demonstr at e an y coerci on a nd duress and hence confi r med the action of t he Assessi ng Off icer . As recor de d i n the pr ecedi ng para graphs, the assessee has clear l y de monstrat ed on f act s t hat t he vari ous co mponents of all eged undi scl osed inco me are f ul l y explai nabl e on t he grounds of ei ther pa yment of t axes i n ot her a ssess ment yea r t o whi ch such al leged undi scl osed inc o me relates t o or t he addit ion i s i n t he natu re of double t axat io n or t he undi scl osed inco me do not r el at e t o the assessee as de monst rable f ro m t he loose paper f ound and sei zed for mi ng t he basi s f or addi t ion. The CIT( A) has t ot all y i g nored t he fact ual posit io n and has si mpl y reli ed upon t he state me nt made b y t he assessee on st andalo ne basi s in depart ure to t he Inst r ucti on N o. 286/ 2/2 023-I T (I N V.I I) dat ed 10. 03. 200 3. The assessee to our mi nd has c ontest ed the acti on of t he Re venue successful l y. We ar e th us i ncli ned t o agr ee wi t h t he ple a of t he assessee havi ng regard to t he fact ual ma tri x note d above. Hence, the or der of CI T( A) i s set aside a nd the i mpugned addi ti ons stands cancel led. 17. I n t he r esul t , t he appeal of the assessee i s all owed. Order pronounced in the open Court on 13/04/2023. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /04/2023 Prabhat