ITO, Mandi Gobindgarh V. Smt. Kailashwati Aggarwal (HUF), Mandi Gobindgarh

ITA 945/CHANDI/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8354 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 15-03-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 31-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Document seized; Tax effect; Documents seized
• Section: 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. RANO JAIN, ACCOUNTANT MEMBER ITA NO. 944/CHD/2014 ASSESSMENT YEAR: 2006-07 THE ITO VS. SH. PARSHOTAM AGGARWAL(HUF) WARD-1 C/O R.P. STEEL INDUSTRIES MANDI, GOBINDGARH G.T. ROAD MANDI GOBINDGARH PAN NO. AAAHP8995H & ITA NO. 945/CHD/2014 ASSESSMENT YEAR: 2006-07 THE ITO VS. SMT. KAILASHWATI AGGARWAL WARD-1 C/O R.P. STEEL INDUSTRIES MANDI, GOBINDGARH G.T. ROAD MANDI GOBINDGARH PAN NO. ABFPA2164B (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANOJ MISHRA RESPONDENT BY : SH. SUDHIR SEHGAL DATE OF HEARING : 15/03/2016 DATE OF PRONOUNCEMENT : 16/03/2016 ORDER PER BHAVNESH SAINI, J.M. BOTH THE APPEALS BY THE REVENUE ARE DIRECTED AGAINS T THE DIFFERENT ORDERS OF LD. CIT(A), PATIALA DT. 14/08/2014 FOR ASSESSMEN T YEAR 2006-07. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIALS ON RECORD. ITA NO. 944/CHD/2014 (PARSHOTAM AGGARWAL HUF) 3. THE REVENUE FILED THE APPEAL ON FOLLOWING GROUND : 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 50,69,140/- U/S 69B OF THE INCOME TAX ACT, 1961 BEING UNEXPLAINED INVESTMENT MADE IN PURCHASE OF 1910 SHA RES OF M/S. PRAGATI NIRMAN 2 PVT. LTD., WITHOUT APPRECIATING THE SEIZED MATERIAL / DOCUMENTS ON THE BASIS OF WHICH THE AO HAS MADE AFORESAID ADDITION. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT SEARCH AN D SEIZURE OPERATION WAS CONDUCTED ON 30/06/2010 AT THE RESIDENCE OF SH. SUR INDER GULATI, H.NO. 511, SECTOR 18, CHANDIGARH AND THE OFFICE PREMISES OF VT C TRANSPORT PVT. LTD., CHANDIGARH. DURING THE COURSE OF SEARCH OPERATION C ERTAIN DOCUMENTS RELATED TO TRANSACTIONS IN SHARES OF PRAGATI NIRMAN PVT. LT D., WERE FOUND AND SEIZED FROM THE RESIDENCE OF SH. SURINDER KUMAR GULATI AND FROM THE OFFICE OF VTC TRANSPORT PVT. LTD., THE CASE WAS REOPENED UNDER SECTION 148 OF THE INCOME TAX ACT. THE AO NOTED THAT M/S PRAGATI NIRMAN PVT. LTD. IS C LOSELY HELD COMPANY. THE ASSESSEE HAS PURCHASED THE SHARES OF M/S PRAGATI NI RMAN PVT. LTD. THE AO ON THE BASIS OF THE SEIZED DOCUMENTS CONTENDED THAT THE SH ARES OF M/S PRAGATI NIRMAN PVT. LTD. WAS PURCHASED @ RS. 6,554/- PER SHARE WHE REAS IN THE BOOKS OF ACCOUNT, THE PURCHASE PRICE OF THESE SHARES HAVE BE EN SHOWN AT RS. 3,900/- PER SHARES. THE CONTENTION OF THE AO IS BASED ON THE FA CT THAT DURING THE COURSE OF SEARCH OPERATION IN THE CASE OF SH. SURINDER KUMAR GULATI, A SHAREHOLDER OF M/S PRAGATI NIRMAN PVT. LTD., IT WAS NOTED THAT THE SHA RE WERE ACTUALLY PURCHASED @ 6,554/- PER SHARE. THE AO NOTED THAT SINCE ONE SHAR EHOLDER HAS SOLD THE SHARE AT RS. 6,554/- PER SHARE , THEREFORE, IT IS SAFE TO AS SUME THAT THE ASSESSEE HAS ALSO PURCHASED THE SHARES @ RS. 6,554/- PER SHARE. IN TH IS CONNECTION, THE AO HAS REFERRED TO THE BACK SIDE OF PAGE NO. 3 OF DOCUMENT NO. A5 AND PAGE NO. 33 OF DOCUMENT NO. A2. 5. THE ASSESSEE CHALLENGED THE REOPENING OF THE ASS ESSMENT BEFORE THE AO AND ALSO CHALLENGED THE PROPOSED ADDITION. IT WAS S UBMITTED THAT ASSESSEE DID NOT PURCHASED ANY SHARE FROM SH. SURINDER KUMAR GUL ATI. NO EVIDENCE WAS FOUND AGAINST THE ASSESSEE OF INFLATED VALUE OF PUR CHASE OF SHARES. IN THE ABSENCE OF ANY EVIDENCE ON RECORD, NO ADDITION COUL D BE MADE AGAINST THE 3 ASSESSEE. THE DETAILED SUBMISSIONS OF THE ASSESSEE ARE REPRODUCED IN THE APPELLATE ORDER. 6. LD. CIT(A) CONSIDERING THE SUBMISSIONS, REMAND R EPORT AND FOLLOWING THE ORDER OF LD. CIT(A) IN THE CASE OF SHRI. ASHISH SIN GLA IN APPEAL NO. 210/IT/CIT(A)- I/LUDHIANA/2012-2013 DT. 07.11.2013, DELETED THE EN TIRE ADDITION. 7. LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET CONTE NDED THAT THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSE BY ORDER OF ITAT, CHANDIGARH IN THE CASE OF CIT VS. SH. ASHISH SINGLA IN ITA NO. 129/CHD/2014, IN C ASE OF DCIT VS. SH. NARAIN SINGLA IN ITA NO. 127/CHD/2014, IN CASE OF ITO VS. SH. NA RAIN SINGLA (HUF) IN ITA NO. 943/CHD/2014 AND IN CASE OF DCIT VS. SHRI. MADAN LA L GULATI IN ITA NO. 545/CHD/2014 IN WHICH THE TRIBUNAL VIDE ORDER DT. 1 5/02/2016 DISMISSED THE DEPARTMENTAL APPEALS. THE FINDINGS IN THE CASE OF S H. ASHISH SINGLA IN PARA 10 AND 11 OF THIS ORDER ARE REPRODUCED AS UNDER: 10. WE HAVE HEARD RIVAL SUBMISSIONS. IT IS NOT IN D ISPUTE THAT SEIZED PAPERS WERE FOUND AND RECOVERED DURING THE COURSE OF SEARCH IN THE CASE OF SHRI SUR INDER GULATI. THESE DOCUMENTS WERE USED AGAINST SHRI 19 S URINDER GULATI IN HIS ASSESSMENT AND ALL THESE SEI ZED PAPERS HAVE BEEN M ENTIONED IN THE ASSESSMENT ORDER OF SHRI SURINDER GULATI DATED 28.02.2013 FOR ASSESSMENT YEAR 2006-07. THE STATEMENT OF SHRI SURINDER GULATI AT THE TIME OF SE ARCH WAS RECORDED UNDER SECTION 132(4) OF THE INCOME TAX ACT WHICH IS ALSO REPRODUCED IN HIS ASSESSMENT ORDER AS ABOVE. THE SEIZED PAPER ALONGWITH SMALL BL UE DIARY MARKED RAYMOND WERE CONFRONTED TO HIM IN WHICH HE HAS ADMITTED THA T DIARY WAS WRITTEN IN HIS HANDWRITING AND BELONGS TO HIM. HE HAS ALSO EXPLAIN ED THE ABBREVIATIONS CONTAINED IN THE SEIZED PAPER BUT NONE OF THE ABBRE VIATIONS WERE HAVING ANY LINK OR CONNECTION WITH THE ASSESSEE. IN ANSWER TO ONE O F THE QUESTION, WHILE REFERRING TO THE SEIZED PAPER, HE HAS EXPLAINED THAT THESE AR E ESTIMATES AND THE ACTUAL FACT REMAINED THAT HE HAS RECEIVED MONEY @ RS. 3900 /- PER SHARE. SHRI SURINDER GULATI DID NOT MAKE ANY ALLEGATION AGAINST THE ASSE SSEE IN RESPECT OF SHARES PURCHASED BY THE ASSESSEE. THE SEIZED PAPER AS REFE RRED IN HIS ASSESSMENT ORDER HAVE BEEN REPRODUCED IN WHICH, ON CERTAIN SHARES TH E VALUE HAVE BEEN SHOWN @ 3900/- AS WELL AS IN ANOTHER PAPER, THE SAME RATE I S MENTIONED AGAINST THE TOTAL SHARES OF 3258 AND IN THE THIRD SEIZED PAPER, TOTAL SALE PROCEEDS OF 3258 SHARES HAVE BEEN CONSIDERED BY ASSESSING OFFICER IN A SUM OF RS. 2.13 CRORES. THIS SALE CONSIDERATION WAS DIVIDED BY 3258 SHARES AND ASSESS ING OFFICER CONCLUDED THE VALUE OF EACH SHARE AT RS. 6554/-. HOWEVER, ALL THE ABOVE 20 MATERIAL ON RECORD I.E. STATEMENT OF SHRI SURINDER GULATI AND THE SEIZ ED PAPER DID NOT MAKE ANY ALLEGATION AGAINST THE ASSESSEE OF PURCHASE OF SHAR ES AT RS.6554/-. IT WAS A PRESUMPTION OF THE ASSESSING OFFICER THAT WHEN ONE OF THE TRANSACTIONS IS CONDUCTED BY SHRI SURINDER GULATI FOR A SUM OF RS. 6554/- THEN PRESUMPTION WOULD BE THAT OTHER SHARES HAVE ALSO BEEN TRANSFERRED AT THE SAME VALUE. HOWEVER, IT IS WELL SETTLED LAW THAT PRESUMPTION, WHAT-SO-EVER MAY BE STRONG BUT SAME CANNOT TAKE PLACE OF PROOF. IT IS ALSO ADMITTED FACT THAT ASSESSEE DID NOT HAVE ANY 4 TRANSACTION WITH SHRI SURINDER GULATI OR ANY OF HIS FAMILY MEMBERS. THE ASSESSEE HAD PURCHASED SHARES FROM CHADHA FAMILY AND EVEN IN SEARCH IN THE CASE OF CHADHA FAMILY, NO MATERIAL OR DOCUMENT WAS FOUND MA KING ANY ALLEGATION AGAINST THE ASSESSEE. 10(I) IT IS INTERESTING TO NOTE THAT WHEN ADDITION IS MADE BY THE ASSESSING OFFICER IN THE CASE OF SHRI SURINDER GULATI BASED ON THE SAME SEIZED MATERIAL BY TAKING THE SAME VALUE OF THE SHARE AT RS. 6554/-, SHRI SURINDE R GULATI PREFERRED APPEAL BEFORE LD. CIT(APPEALS), CENTRAL, GURGAON AND THE ENTIRE A DDITION, ON THE BASIS OF THE SAME SEIZED MATERIAL HAVE BEEN DELETED VIDE ORDER D ATED 25.03.2014. COPIES OF THE SAME ASSESSMENT ORDER AND APPELLATE ORDER IN TH E CASE OF SHRI SURINDER GULATI HAVE BEEN PLACED ON RECORD. THE LD. DR ADMITTED THA T SINCE TAX EFFECT WAS LOW IN THE CASE OF SHRI SURINDER 21 GULATI, THEREFORE, NO DEPARTMENTAL APPEAL HAVE BEEN FILED BEFORE THE TRIBUNAL. IT, THEREFORE, STANDS CO NCLUDED THAT THE ADDITION MADE ON THE BASIS OF THE SAME SEIZED MATERIAL FOUND FROM THE RESIDENCE OF SHRI SURINDER GULATI WAS NOT RELIABLE AND WOULD NOT LEAD TO ANY A DDITION EVEN IN THE CASE OF SHRI SURINDER GULATI FROM WHOSE POSSESSION, SEIZED PAPERS WERE FOUND AND RECOVERED. IT IS NOT EXPLAINED DURING THE COURSE OF ARGUMENTS HOW THE SAME SEIZED PAPERS CONTAINING NO ALLEGATION AGAINST THE ASSESSEE ARE ADMISSIBLE IN EVIDENCE AGAINST THE ASSESSEE. WHERE THERE IS NO IN CRIMINATING EVIDENCE AVAILABLE AGAINST THE ASSESSEE ON RECORD, THE ABOVE ADDITION FOR ENHANCING VALUE OF THE ASSET COULD NOT BE MADE ON SUSPICION A ND SURMISES. THE PRESUMPTION UNDER SECTION 132(4A) IS, THEREFORE, NOT AVAILABLE WHEN THE SEIZED PAPER IS RECOVERED FROM THE THIRD PARTY AND NOT FROM THE ASS ESSEE. WE ARE FORTIFIED IN OUR VIEW BY ORDER OF ITAT AHMEDABAD BENCH IN THE CASE O F AKSHAY PUSHPVANDAN VS DCIT (SUPRA). ONCE THE SEIZED PAPERS WERE NOT FOUND RELIABLE IN THE CASE OF SHRI SURINDER GULATI FROM WHOSE POSSESSION SAME WERE REC OVERED, THERE IS NOTHING LEFT FOR CONSIDERATION AGAINST THE ASSESSEE. 10(II) THE ASSESSEE IN ADDITION TO THE ABOVE ALSO E XPLAINED THAT WHEN STATEMENT OF SHRI SURINDER GULATI WAS ALSO RECORDED IN THE CA SE OF SHRI MADAN GULATI, HE HAS NOT SUPPORTED THE CASE OF THE REVENUE IN HIS 22 STA TEMENT. HE HAS ALSO EXPLAINED IN THE STATEMENT THAT RS. 80 LACS WAS SURRENDERED O N ACCOUNT OF DEALING WITH THE VARANASI PARTY WHICH HAS ALSO NO CONNECTION WITH TH E ASSESSEE. THE ASSESSEE ALSO FILED PROFIT & LOSS ACCOUNT OF THE PNPL TO SHOW THA T THERE WAS VERY LITTLE PROFIT IN THEIR CASE AND THAT PROPERTY WAS LEASE-HOLD HELD BY THEM AND THAT RE-VALUATION OF THE SHARES SHOWS THE LESSER AMOUNT AS AGAINST TH E PURCHASE CONSIDERATION DECLARED BY ASSESSEE WOULD CLEARLY SUPPORT THE CASE OF THE ASSESSEE THAT ADDITION WAS MADE AGAINST HIM WITHOUT ANY BASIS. TH E ASSESSEE ALSO CITED A COMPARABLE CASE OF JAGAT THEATER IN WHICH THE VALUE PER SHARE WAS LESSER AND THE SALE CONSIDERATION WAS ALSO LESSER. THESE EVIDE NCES AND MATERIAL ON RECORD ALSO SUPPORT THE FINDINGS OF THE LD. CIT(APPEALS) T HAT ADDITION WAS MADE MERELY ON PRESUMPTION AND WITHOUT ANY BASIS. SINCE NO DOCU MENT OR MATERIAL WAS FOUND DURING THE SEARCH AGAINST THE ASSESSEE TO PROVE THA T ASSESSEE PAID ANY AMOUNT OVER AND ABOVE WHAT IS PAID THROUGH THE BANKING CHA NNEL, WOULD CLEARLY INDICATE THAT ASSESSING OFFICER, WITHOUT ANY JUSTIF ICATION MADE THE ADDITION AGAINST THE ASSESSEE. THE LD. DR, HOWEVER, RELIED U PON DECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF JOGINDER LAL (SUPRA). IN THIS CASE, THE ASSESSEE PURCHASED A PLOT VIDE REGISTERED SALE DEED FOR CONSIDERATION OF RS. 3.70 LACS AND DURING THE SURVEY CONDUCTED UNDER SECTION 133A, VENDORS DECLAR ED SALE CONSIDERATION OF THE SAID PLOT AT RS. 38 LACS. IN THE 23 CASE OF HIREN VASANT LAL SHAH (SUPRA) PURSUANT TO THE SEARCH AT THE ASSESSEE 'S PREMISES, CERTAIN DOCUMENTS WERE FOUND AND ONE OF THE SAID DOCUMENT C ONTAINED WORKING OF INTEREST @ 3% ON THE TOTAL SUM OF RS. 3 LACS. HOWEV ER, IN THE CASE OF THE ASSESSEE, NO DOCUMENT OR MATERIAL WAS FOUND DURING THE COURSE OF SEARCH AGAINST THE ASSESSEE WHEN THE SEARCH WAS CONDUCTED IN THE CASE OF SHRI SURINDER GULATI OR IN THE CASE OF THE ASSESSEE. THEREFORE, BOTH DECISIONS ARE DISTINGUISHABLE ON FACTS. THE DECISION IN THE CASE OF R.P. VASHISHT (SUPRA) R ELIED UPON BY LD. DR IS ALSO NOT APPLICABLE TO THIS CASE. 5 11. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCU MSTANCES IN THE LIGHT OF THE FINDINGS OF LD. CIT(APPEALS), PARTICULARLY WHEN THE ADDITIONS HAVE BEEN DELETED IN THE CASE OF SHRI SURINDER GULATI AND THE MATTER HAS REACHED FINALITY, NOTHING SURVIVE IN FAVOUR OF THE REVENUE TO MAKE ANY ADDITI ON AGAINST THE ASSESSEE. IN THE ABSENCE OF ANY EVIDENCE ON RECORD AGAINST THE ASSES SEE, WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF THE LD. CIT(APPEALS) FO R DELETING THE ADDITION. NO ERROR HAVE BEEN POINTED OUT IN THE ORDER OF THE LD. CIT(A PPEALS). THE CONTENTION OF LD. DR HAVE NO FORCE THAT WHEN ONE TRANSACTION IS CONDU CTED AT THE SAME RATE, THE SAME RATE SHOULD BE APPLIED IN OTHER CASES. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY MERIT IN THE DEPARTMENTAL APPEAL. THE SAME IS A CCORDINGLY DISMISSED. COPY OF THE ABOVE ORDER IS GIVEN TO THE LD. DR. 8. BOTH THE PARTY STATED THAT ISSUE IS COVERED BY T HE ORDER OF THE TRIBUNAL IN THE CASE OF SHRI. ASHISH SINGLA(SUPRA). 9. ON CONSIDERATION OF THE FACTS OF THE CASE, WE AR E OF THE VIEW THAT ISSUE IS IDENTICAL AS HAVE BEEN CONSIDERED IN CASE OF SH. AS HISH SINGLA(SUPRA). THE LD. CIT(A) WHILE DELETING THE ADDITION FOLLOWED THE ORD ER IN THE CASE OF SH. ASHISH SINGLA DT. 07/11/2013, WHICH HAVE BEEN CONFIRMED BY THE TRIBUNAL IN CASE OF SH. ASHISH SINGLA (SUPRA) ETC. VIDE ORDER DT. 15/02/201 6. THE DEPARTMENTAL APPEAL HAS THUS NO MERITS, THE SAME IS ACCORDINGLY DISMISS ED. 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ITA NO. 945/CHD/2014 (SMT. KAILASHWATI AGGARWAL) 11. THIS APPEAL BY DEPARTMENT HAS FILED ON THE FOLL OWING GROUND: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 57,08,754/- U/S 69B OF THE INCOME TAX ACT, 1961 BEING UNEXPLAINED INVESTMENT MADE IN PURCHASES OF 2151 SH ARES OF M/S PRAGATI NIRMAN PVT. LTD., WITHOUT APPRECIATING THE SEIZED MATERIAL / DOCUMENTS ON THE BASIS OF WHICH THE AO HAS MADE AFORESAID ADDITION. 12. THIS ISSUE IS SAME AS HAVE BEEN CONSIDERED IN T HE CASE OF SH. PARSHOTAM AGGARWAL (HUF), IN ITA NO. 944/CHD/2014, THEREFORE FOLLOWING THE REASONS FOR DECISION IN THAT CASE, WE DISMISSED THIS DEPARTMENT AL APPEAL AS WELL. 13. IN THE RESULT BOTH THE DEPARTMENTAL APPEALS ARE DISMISSED. SD/- SD/- (RANO JAIN) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 MARCH 2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR