Smt , Harpal Kaur, Bhopal V. ACIT,Central Gwalior, Bhopal, Bhopal

ITSSA 126/Ind/2021

AI Insights

The case involves appeals by Shri Sumit Chandok and Smt. Harpal Kaur against the assessment orders passed by the Assessing Officer under section 153A read with section 143(3) of the Income Tax Act, 1961, for the assessment years 2010-11 to 2016-17. Following a search and seizure operation, both assessees declared additional income before the ITSC, which was later rejected as invalid due to lack of documentary evidence. The Assessing Officer added this declared income as undisclosed income in the assessments, which was upheld by the CIT(A). The Tribunal, however, relying on precedents and the absence of incriminating material, deleted the additions.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122504 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-04-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 21-10-2021
• Other Referred Cases: Anantnadh Constructions and Farms (P.) Ltd. vs. DCIT, Commissioner vs. Maruti Fabrics, Late Shri Sawarmal Hisaria vs. DCIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Tax effect; Documents seized
• Section: 132; 139; 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE (Conducted Through Virtual Court) Before: Shri T.R. Senthil Kumar, Judicial Member And Shri B.M. Biyani, Accountant Member Shri Sumit Chandok E-4/314, Arera Colony, Bhopal PAN No: AGMPC6881B (Appellant) Vs ACIT, Central, Gwalior, Camp Bhopal, Bhopal (Respondent) Smt. Harpal Kaur, E-4/314, Arera Colony, Bhopal PAN No: ACMPK3253F (Appellant) Vs ACIT, Central, Gwalior, Camp Bhopal, Bhopal (Respondent) As s e s s e e Re p re s e nte d: S h ri As hi s h G o ya l & S h ri N. D. P a tw a , A.Rs . Re ve nue Re p re s e nte d: S h ri P .K. Mis hra, CI T- DR Date of hearing : 22-02-2023 Date of pronouncement : 28-04-2023 आदेश/ORDER IT(SS)A Nos. 133 to 139/Ind/2021 Assessment Years: 2010-11 to 2016-17 IT(SS)A Nos. 126 to 132/Ind/2021 Assessment Years: 2010-11 to 2016-17 I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 2 PER BENCH:- These appeals are filed by the two Assessees as against separate Appellate orders both dated 13.09.2021 passed by the Commissioner of Income Tax (Appeals)-3, Bhopal, as against the Assessment orders passed under section 153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Years (A.Ys) 2010-11 to 2016-17. 2. The issue involved in these appeals are common for both the assessees, wherein Shri Sumit Chandok is the son and Smt. Harpal Kaur is the mother. Since common grounds of appeal are raised by the assessee in all the cases, the same are disposed of by this common order. 2.1. We have taken IT(SS)A No. 133/IND/2021 relating to Assessment Year 2010-11 as the lead case. 2.2. The brief facts of the case is that the assessee is an individual and Proprietor of Shiva Construction and Partner of Shiva Construction Company, Bhopal. The assesse filed his regular Return of Income from the above firms, income from house property and other sources. 2.3. There was a search and seizure action u/s. 132(1) of the Act on 01/07/2015 in the business premises of Shiva Construction Company as well as the residence of the assessee. Assessee’s Bank Locker at Central Bank of India was also subject matter of search. Subsequently, notice u/s. 153A for the Assessment Years 2010-11 to 2015-16 were issued. In response, the assessee filed the I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 3 Returns of Income which was declared in the original Returned Income as follows: AY Date of filing of ROI u/s 139 Returned income [Rs.] Date of filing of ROI in compliance to notice u/s 153A Income declared in return u/s 153A[Rs.] Additional income offered in return u/s 153A 2010-11 30/09/2010 88,58,710 28/10/2016 88,58,710 0 2011-12 30/03/2012 1,18,39,910 28/10/2016 1,18,39,910 0 2012-13 30/03/2013 18,26,070 28/10/2016 18,26,070 0 2013 -14 29/03/2014 24,07,490 24,07,490 24,07,490 0 2014-15 30/03/2015 9,88,610 28/10/2016 9,88,610 0 2015-16 29/03/2016 48,88,380 28/10/2016 48,88,380 0 2016-17 29/03/2017 16,09,270 NA NA NA 2.4. Subsequently, the assessee moved application u/s. 245C before Hon’ble Income Tax Settlement Commission, (ITSC) Additional Bench, Delhi on 30/11/2017 by offering additional income totaling to Rs.49,72,000/-. The Hon’ble Income Tax Settlement Commission vide order dated 30/01/2018 rejected the application filed by the assessee and her mother Ms. Harpal Kaur as follows: 12. In respect of two other applicants, namely, Mrs. Harpal Kaur and Mr. Sumit Chandhok it is noted that these are adhoc disclosures not substantiated by any documentary evidence the applicants have not been able to furnish even a single documentary evidence, either during proceedings u/s 245D(1) of I.T. Act or during present proceedings to substantiate the manner of earning of their additional income. It is further noted that their 'additional income' is not supported even by seized documents. Hence the 'manner of earning 'additional income' is not explained and in absence of any documentary evidence, substantiating the same. Since there are no documentary evidence, determination of income by the Commission would not be possible. In fact, in such circumstances, the cause of settlement does not arise. Thus, these two applications are held invalid. 2.5. Aggrieved against the same, the assessee filed a Writ Petition 7320 of 2018 before Hon’ble High Court of Madhya Pradesh and I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 4 the Hon’ble High Court vide order dated 02/04/2018 directed the Revenue to proceed with the assessment and the same will be subject to the final decision on the outcome of the Writ Petition. Thus the Ld. Assessing Officer proceeded with the assessments and completed the assessment orders vide order dated 24.06.2020 by making various additions, including the disclosures made by the assessee before Hon’ble Income Tax Settlement Commission. Therefore the assessee withdrawn the above Writ Petition on 23.06.2020. 3. Aggrieved against the Assessment Orders, the assessee filed appeals before Ld. CIT(A). The Ld. CIT(A) confirmed the addition on the income disclosed by the assessee before the ITSC and partly allowed the appeals observing as follows: Ground No. 2 for AY 2010-11 to 2016-17:- Through these grounds of appeal, the appellant has challenged the addition of Rs.28,22,000/- in AY 2010-11, Rs.8,09,000/- in AY 2011-12, Rs.1,00,000/- in AY 2012-13, Rs.1,00,000/- in AY 2013-14, Rs.1,95,000/- in AY 2014-15, Rs.8,29,000/- in AY 2015-16 & Rs.1,17,000/- in AY 2016-17 on account of additional profit on sale of duplex/plots which is offered before ITSC. The appellant had filed application u/s 245C before Hon'ble Income Tax Settlement Commission, Additional Bench, Delhi on 30/11/2017 for the assessment years 2010-11 to 2016-17 [Application number MP/BHCC-51/17 18/51- IT]. The appellant had offered additional income totaling to Rs. 49,72,000/- from additional profit on sale of duplex/plots in his application. Vide its order u/s 245D(2C) of the Income Tax Act, 1961 dated 30/01/2018, Hon'ble bench of ITSC had held the application of the assessee as "invalid". Against the above order of the Hon'ble ITSC, the appellant had filed writ petition [WP No. 7320-2018] before Hon'ble MP High Court on 02/04/2018. Hon'ble MP High Court vide its order dated 06/04/2018 had stayed passing of the order of assessment till the disposal of the writ petition. However, the Hon'ble MP High Court had held that the assessment proceedings may go on. Thereafter, the AO completed the assessment proceedings and passed the assessment order on 24.06.2020. In view of the above, the AO is justified in making the addition of Rs.28,22,000/- in AY 2010-11, Rs.8,09,000/- in AY 2011-12, Rs.1,00,000/- in AY 2012-13, Rs.1,00,000/- in AY 2013-14, Rs.1,95,000/- in AY 2014-15, Rs.8,29,000/- in AY 2015-16 & Rs. 1,17,000/- in AY 2016- I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 5 17 and hence, the additions made by the AO is Confirmed. Therefore, the appeal on these grounds is dismissed. 4. Aggrieved against the same, the assessee is in appeal before us raising the following common Grounds of Appeal (except change in ‘additional income’ offered before ITSC for various Assessment Years): 1. The Ld. AO has grossly erred in making addition only on the basis of income declared by the appellant before Hon'ble Income Tax Settlement Commission whereas there is no evidence or incriminating material pertaining to addition made. Thus, the addition made by the Ld. AO is unsustainable in law as well as on facts. 2. The Ld. CIT (Appeals) has grossly erred in sustaining the unjust and unlawful addition made by the Ld. AO only on the basis of income declared by the appellant before Hon'ble Income Tax Settlement Commission whereas there is no evidence or incriminating material pertaining to addition made. 3. The Ld. CIT(A) was not justified in sustaining the addition of Rs. 28,22,000/- towards income offered by the appellant before Income Tax Settlement Commission without any evidence or incriminating material in support of addition made. (Tax Effect Rs. 8,64,530/-) 4.1. Ld. Counsel Mr. Ashish Goyal appearing for the assessee submitted before us a Paper Book running to 67 pages which contains copies of the Return of Income, proceedings before the before ITSC, the order of the Hon’ble Income Tax Settlement Commission, Hon’ble High Court of Madhya Pradesh and various case laws. The Ld. Counsel submitted it is settled principle of law whether any confidential information disclosed in the settlement application can never be the basis to make addition by the Assessing Officer, where no incriminating material was found during the course of search. 4.2. On this proposition, the Ld. Counsel relied upon Mumbai Bench Tribunal decision in the case of Anantnadh Constructions I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 6 and Farms (P.) Ltd. vs. DCIT reported in [2017] 83 taxmann.com 164 (Mum.) and Hon’ble Gujarat High Court judgment in the case of Commissioner Vs. Maruti Fabrics reported in [2014] 47 taxmann.com 298 (Guj.) and Mumbai Bench Tribunal decision dated 05.04.2022 in the case of Late Shri Sawarmal Hisaria vs. DCIT in ITA No. 274/Mum/2021. Thus the Ld. Counsel pleaded that when the Hon’ble Income Tax Settlement Commission in the case of the assessee held that the disclosures made by the assessee are adhoc disclosure not substantiated by any documentary evidence and additional income is not supported even by seized documents. Therefore Income Tax Settlement Commission rejected the application made by the assessee as invalid. In the absence of any seized material and documentary evidences, the Assessing Officer erred in adding the disclosure made by the assessee, as the undisclosed income, which is not justifiable relying upon the case laws cited above. Therefore the Ld. Counsel pleaded to delete the addition made by the Assessing Officer. 5. Per contra, the ld. CIT-DR Shri P.K. Mishra appearing for the revenue supported the order passed by the Lower Authorities and he pleaded that the concurrent findings and the additions upheld by the Lower Authorities does not require any interference. Therefore requested to dismiss the appeals filed by the assessee. 6. We have given our thoughtful consideration and perused the materials available on record including the Paper Book and case laws filed by the assessee. As it can be seen from the order passed by the Hon’ble Income Tax Settlement Commission that the disclosures made by the assessee on ‘adhoc basis’ without any I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 7 documentary evidence and also not substantiated the manner of earning the additional income. Further the additional income offered by the assessee is not supported even by seized documents. Therefore in the absence of documentary evidence, the Income Tax Settlement Commission held that determination of income by it would not be possible and thereby rejected the application filed by the assessee as invalid. 6.1. Further it can be seen from the assessment orders, the Ld. A.O. issued a show cause notice as to why the above additional income admitted before the ITSC should not be added as the total income of the assessee for the relevant assessment years as follows: Assessment Year Amount [Rs.] 2010-11 28,22,000 2011-12 8,09,000 2012-13 1,00,000 2013-14 1,00,000 2014-15 1,95,000 2015-16 8,29,000 2016-17 1,17,000 Total 49,72,000 6.2. Though the assessee replied the additional income cannot be added relying upon Tribunal decisions in the case of Anantnadh Constructions and Farms (P.) Ltd. and Others. However the Assessing Officer held that the reply was not found tenable, as the assessee himself unconditionally admitted the additional income of Rs. 49.72 lakhs before Income Tax Settlement Commission. Similarly the Ld. CIT(A) has confirmed the above additions and he has failed to consider the case laws relied by the assessee. I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 8 6.3. It is settled principle of law by the Co-ordinate Bench of the Tribunal in the case of Anantnadh Constructions and Farms (P.) Ltd. (cited supra) held as follows: “The search was conducted in the business premises of Lodha Group and subsequent to search action assessee company along with other companies of Lodha Group filed a petition under section 245C(1) of the Act before Settlement Commission. The assessee has offered additional income of Rs.5 lakhs towards the land brokerage income. This offer was made for maintainability of petition before Settlement Commission as stated in clause (i) and clause (ia) of section 245C(1) of the Act. We are of the view that after reopening of the assessment order no addition can be made on the basis of income offered by the assessee before Settlement Commission. We find that no incriminating material was found during the course of search action substantiating that assessee has actually earned undisclosed income. Therefore, just because assessee has offered additional income before Settlement Commission, no addition can be made without basis. Hence, the addition made by the AO and Ld. CIT (A) is deleted.” 6.4. Further the Co-ordinate Bench of Mumbai Tribunal in the case of Late Shri Sawarmal Hisaria (cited supra) held as follows: “.....we are of the considered view that when the proceedings before the ITSC fail on the ground of non fulfilment of conditions laid down under section 245 of the Act by the assessee, AO is required to decide the issue independently and is not permitted to make addition merely on the basis of suo-moto disclosure made by the assessee before the ITSC, which is undisputedly on adhoc basis. More particularly, when "no Late Shri Sawarmal Hisaria incriminating material" was found or seized during the search and seizure operation carried out on the basis of which assessment has been framed, any addition made otherwise is not sustainable. 15. In view of what has been discussed above, we are of the considered view that the Ld. CIT(A) has erred in upholding the addition made by the AO in the absence of any incriminating material. merely on the basis of suo-moto disclosure made by the assessee before the ITSC, as the said proceedings got aborted due to non fulfilment of conditions by the assessee, no addition is sustainable in the eyes of law. So the question framed is decided in favour of the assessee and against the Revenue. Consequently, addition made by the AO and confirmed by the Ld. CIT(A) is ordered to be deleted. Hence, appeal filed by the assessee is hereby allowed.” 6.5. Respectfully following the above decisions of the Co-ordinate Benches of the Tribunal, we have no hesitation in deleting the I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 9 additions made by the Assessing Officer namely ‘additional income’ offered by the assessee before Hon’ble Income Tax Settlement Commission as the undisclosed income. Since there is no seized material by the Revenue during the course of search proceeding and the Hon’ble ITSC also held that the additional income offered by the assessee is without any basis and evidences. Thus the grounds raised by the Assessee are hereby allowed. 7. In the result, the appeals filed by the Assessee in IT(SS)A Nos. 133 to 139/IND/2021 are hereby allowed. IT(SS)A Nos. 126 to 132/IND/2021 in the case of Smt. Harpal Kaur for Assessment Years 2010-11 to 2016-17 8. The assessee herein is an individual and Partner of M/s. Shiva Construction Company and M/s. Gurukripa Builders, Bhopal. Pursuant to the search action u/s. 132 of the Act in the business premises of the assessee, the assessee filed her Returns of Income as it was filed originally u/s. 139 of the Act. However the assessee had offered ‘additional income’ of Rs. 5,00,000/- for each for Assessment Years 2010-11 to 2015-16 in all totaling Rs. 35,00,000/- before Income Tax Settlement Commission. Her application was also rejected stating that the additional income offered is not supported with any documentary evidence and is not seized during the course of search. However the Assessing Officer added the entire ‘additional income’ of Rs. 35,00,000/- as the undisclosed income of the assessee, which was confirmed by Ld. CIT(A) also. I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 10 9. Aggrieved against the same, the assessee is in appeal before us raising the solitary ground that the declaration made in ITSC cannot be added as the undisclosed income of the assessee. 10. For the detailed reasons stated in ITA No. 133/IND/2021 of this common order, the same ratio is applicable in the present facts of the case. Thus the ‘additional income’ of Rs. 35,00,000/- added as the undisclosed income by the Assessing Officer is hereby deleted. Thus the solitary ground raised by the assessee is hereby allowed. (There is no specific grounds filed by the assessee on the “unexplained jewellery” therefore no adjudication is required). 11. In the result, the appeals filed by the Assessee IT(SS)A Nos. 126 to 132/IND/2021 are hereby allowed. Order pronounced as per Rule 34 of I.T.A.T. Rules 1963/open court on 28-04-2023 Sd/- Sd/- (B.M. BIYANI) (T.R. SENTHIL KUMAR) ACCOUNTANT MEMBER JUDICIAL MEMBER Indore: Dated 28 /04/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order Assistant Registrar Income Tax Appellate Tribunal, Indore Bench, Indore I.T(SS)A No. 133 to 139/IND/2021and Ors. A.Ys. 2010-11 to 2016-17 Page No Shri Sumit Chandok and Ors. vs. ACIT 11 Strengthened preparation & delivery of orders in the ITAT 1) Date of dictation 10/04/2023 2) Date on which the typed draft is placed before the Dictating Member & Other Member /04/2023 3) Date on which the approved draft comes to the Sr. P.S./P.S. 04/2023 4) Date on which the fair order is placed before the Dictating Member for pronouncement /04/2023 5) Date on which the fair order comes back to the Sr. P.S./P.S. /04/2023 6) Date on which the file goes to the Bench Clerk /04/2023 7) Date on which the file goes the Head Clerk 8) Date on which the file goes to the Assistant Registrar for signature on the order 9) Date of Dispatch of the order