Shri Akash Shivhare, Gwalior V. The ACIT,Central-1, Hopal

ITSSA 138/Ind/2020

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 4708 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 09-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment; Gift; Business income; Search and seizure; Loose papers; Document seized; Opportunity of being heard; Principle of natural justice; Opportunity of cross examination; Maximum Marginal Rate; Question of law; Non compliance; Onus to prove; Documents seized; TDS
• Section: 68; 145; 37; 132; 139; 143(3); 153A; 40(a)(ia); 205; 69B; 192; 139(1); 142(2A); 44AB; 43; 48; 2(A); 13; 145(3); 22; 153C

Judgement Text

आयकरअपील यअ धकरण,इंदौर यायपीठ,इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A No.137 & 138/Ind/2020 Assessment Year: 2012-13 & 2014-15 Shri Akahsh Shivhare, Gwalior Vs. ACIT Central-1, Bhopal (Appellant) (Respondent ) P.A. No. BBZPS9891L IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 JCIT (OSD) Central-1, Bhopal Vs. Shri Akahsh Shivhare, Gwalior (Appellant) (Respondent ) P.A. No. BBZPS9891L Appellant by S/Shri Anil Kamal Garg & Arpit Gaur, CAs Respondent by Shri P.K. Mitra, CIT-DR Date of Hearing: 20.01.2022 Date of Pronouncement: 19.04.2022 IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 2 of 55 आदेश / O R D E R PER BENCH: The above captioned appeals filed at the instance of the Assessee and cross appeal filed by the Revenue are directed against the Common Order of the Ld. Commissioner of Income Tax (Appeals)-3, Bhopal (in short ‘CIT(A)’), dated 01.07.2020, which is arising out of the Common Assessment Order u/s. 153A r.w.s. 143(3) of the Income-Tax Act, 1961 (in short, ‘the Act’) dated 11.08.2018 framed by the ACIT (Central) -I, Bhopal. 2.1 Grounds of appeal raised by the Assessee for AY 2012-13 in IT(SS)A No.137/Ind/2020: “1a) That, on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred in confirming the action of the AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation to section 153B would be having no application for the reason that the direction issued by the AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 3 of 55 observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates only were referred to before making such proposal. The learned authorities below ought to have considered that for the assessment year under consideration, there was no circumstance warranting direction for special audit which is evident from the final assessment order itself in which no addition, whatsoever, has been made on account of books of account. 3 That, without prejudice to the above, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.2,05,64,000/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 4a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.2,05,64,000/- made by the AO in the appellant’s income on account of alleged unexplained investment in purchase of land at village Rau, Indore. 4b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the addition of Rs.2,05,64,000/- made by the AO in the appellant’s income on account of alleged unexplained investment in purchase of land at village Rau, Indore without considering the material fact that the subject land was purchased by the appellant, inter alia, out of the gifts received from his father on the occasion of appellant’s marriage. 5 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.2 Grounds of appeal raised by the Assessee for AY 2014-15 in IT(SS)A No.138/Ind/2020: 1a) That, on the facts and in the circumstances of the case, the ld. CIT(A) grossly erred in confirming the action of the AO in passing the impugned Assessment Order without considering the material fact that the impugned Assessment Order is barred by the time limit prescribed under s.153B(1)(a) of the Income-Tax Act, 1961 inasmuch in the instant case, last of the authorisations for search under s.132 of the Act was executed during the financial year ended on 31-03-2016 and consequently, the Assessment Order was statutorily required to be passed uptill 31-12-2017 whereas such Assessment Order has actually been passed after 31-12-2017, therefore, the impugned Assessment Order, being a nullity, deserves to be quashed on this legal ground alone. 1b) That, without prejudice to the above, the learned CIT(A) grossly erred in not considering the material fact that in the instant case, clause (ii) of Explanation IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 4 of 55 to section 153B would be having no application for the reason that the direction issued by the AO to the appellant to get his books of account audited under s.142(2A) of the Act by itself was illegal and void ab initio and consequently, based upon such direction, any extension of time limit for framing the assessment could not have been presumed. 2a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for directing the appellant to get his books of account audited by special auditors under s.142(2A) of the Act without giving any single opportunity of being heard to the appellant as contemplated under the proviso to sub-section (2A) of section 142 of the Act. 2b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the action of the AO for giving direction for Special Audit under s.142(2A) of the Act without bringing on record any specific observation and without confronting the same to the appellant as regard to the nature and complexity of the accounts or volume of accounts or doubts about the correctness of accounts or multiplicity of transactions or specialized nature of business activity of the appellant which could warrant the necessity of special audit under s.142(2A) of the Act, in a circumstance when the books of account of the appellant were not referred but books of account and documents of some other so-called Syndicates only were referred to before making such proposal. 3 That, without prejudice to the above, the learned CIT(A) grossly erred in confirming the action of the AO for framing the assessment, on the basis of the Report submitted by the Special Auditors under s.142(2A) of the Act, without first giving any opportunity of being heard to the appellant on the report and datas contained in such report, as required under the provisions of sub-section (3) of section 142 of the Act. 4 That, without prejudice to the above, on the facts and in the circumstances of the case, the action of the learned CIT(A) in confirming the additions to the extent of Rs.20,60,638/- made by the AO in the appellant’s income which is quite unjustified, unwarranted, excessive, arbitrary and bad-in-law. 5 That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the action of the AO for making trading additions in the business income of the appellant without first rejecting the regular books of account maintained by the appellant, by invoking the provisions of s.145(3) of the Act. 6a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in upholding the AO’s action of making allegation of appellant’s share in the inadmissible expenses incurred by so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 5 of 55 6b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in confirming the findings of the AO that the alleged syndicates had incurred inadmissible expenses. 7a) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially sustaining the addition to the extent of Rs.20,60,638/- out of the total addition of Rs.49,98,340/- made by the AO in the appellant’s income on account of alleged undisclosed capital investment of the appellant in so-called Syndicates without considering and appreciating the appellant’s submission to the effect that the appellant was carrying out the liquor business, in his individual capacity only, without forming any Syndicate or Group with others for carrying out such liquor business and therefore, neither he was required nor he actually made any capital investment in any syndicate. 7b) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially sustaining the addition to the extent of Rs.20,60,638/- out of the total addition of Rs.49,98,340/-, merely on some incomplete and fictitious accounts, documents and datas, the veracity whereof by themselves were not getting established. 7c) That, without prejudice to the above and without in any manner admitting the existence of any Syndicate and making of any investment by the appellant in such Syndicates, even if for the sake of presumption, it is assumed that the appellant had formed some association of persons, in the form of Syndicates, for carrying out the business of liquor and also made some investments in such Syndicates, then also working of the amount of alleged undisclosed investment so determined by the AO at Rs.49,98,340/- and confirmed by the learned CIT(A) to the extent of Rs.20,60,638/- is not correct but excessive. 7d) That, without prejudice to the above, the learned CIT(A) grossly erred, both on facts and in law, in partially confirming the addition to the extent of Rs.20,60,638/- as the appellant’s undisclosed investment in liquor business without considering and appreciating the investment, by way of own capital as well as borrowed funds, already recorded in the regular books of account maintained by the appellant and duly shown in the audited financial statements furnished along with the return of income. 8 That, the appellant further craves leave to add, alter and/or amend any of the foregoing grounds of appeal as and when considered necessary.” 2.3 Grounds of appeal raised by the Revenue for AY 2014-15 in IT(SS)A No. 10/Ind/2021: “1. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 2,60,46,189/- made by the AO on account of undisclosed income from liquor trade business. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 6 of 55 2. On the fact and in the Circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 3,18,200/- made by the AO on account of undisclosed investment in immovable properties” 3.1 The brief facts of the case as culled out from the records are that the assessee is an individual carrying out the business of liquor. The assessee furnished his original returns of income for the various years u/s. 139 of the I.T. Act, 1961. Search and seizure operations u/s. 132 were carried out at various premises of Shivhare group and the assessee on 07/01/2016. Consequently, notices u/s. 153A were issued to the assessee for A.Y. 2010-11 to A.Y. 2015-16 on 27/10/2016. In response to the above notices, the assessee filed returns of income for A.Y. 2012-13 on 29/03/2017 and for A.Y. 2014-15 on 01/03/2017. The details of returns of income for A.Y. 2012-13 and 2014-15 are as under: A.Y. Date of filing of Return u/s. 139 Returned income (in Rs.) Date of filing of Return in response to the notice u/s. 153A Income declared in Return u/s. 153A (In Rs.) Additional Income offered, if any (In Rs.) 2012-13 31/10/2012 24,49,120/- 29/03/2017 24,49,120/- Nil 2014-15 21/11/2015 30,38,610/- 01/03/2017 30,38,610/- Nil 3.2 In the case of the assessee, a reference was made for special audit u/s. 142(2A) of the Act and accordingly, the special auditors submitted their report on 18.07.2018. The report of the special auditors, as produced by the assessee, was duly perused and considered by the AO and as also, by the CIT(A). 3.3 Finally, the AO made additions of Rs.2,05,64,000/- in A.Y. 2012-13 and Rs.3,18,200/- in A.Y. 2014-15 on account of undisclosed investment in property (para 12) and Rs. 2,60,46,189/- in A.Y. 2014-15 on account of share of assessee in undisclosed income of some syndicates, share in inadmissible expenses incurred by such syndicates and some undisclosed capital invested by the assessee in various syndicates (para 11). 4. Aggrieved assessee preferred separate appeals for the assessment years under consideration before Ld. CIT(A). The ld. CIT(A), vide his common Order dated 01.07.2020 adjudicated the appeals of the assessee thereby giving IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 7 of 55 certain relief and also confirming certain additions for the assessment years under consideration. 5. Now, aggrieved by the additions confirmed by the ld. CIT(A), the assessee is in appeal before this Tribunal for the A.Y. 2012-13 & A.Y. 2014-15. Against the relief granted by the ld. CIT(A) to the assessee for A.Y. 2014-15, the revenue has preferred cross appeal before us. 6. As all the appeals relate to the same assessee and the issues raised are common, they were heard together and are being disposed off by this common order for sake of convenience and brevity. 7. Ground Nos. 1(a), 1(b), 2(a) & 2(b) of the Assessee for A.Y. 2012-13& A.Y. 2014-15 7.1 Through these grounds of appeal, the assessee has challenged the time limit for passing of the assessment order and as also auditing of books of account u/s. 142(2A) of the IT Act, 1961. 7.2 Before us, the counsel of the assessee did not press the grounds so raised and therefore, Ground Nos. 1(a), 1(b), 2(a) & 2(b) of the Assessee for A.Y. 2012-13 & A.Y. 2014-15 are hereby Dismissed. 8. Ground No. 3 of the Assessee for A.Y. 2012-13 and Ground No. 4 of the Assessee for A.Y. 2014-15 8.1 Through these Grounds, the assessee has challenged the additions confirmed by the ld. CIT(A). In the written submissions, the assessee himself has submitted that he has taken separate grounds of appeal in respect of each and every addition confirmed by the ld. CIT(A) and therefore, no separate adjudication is warranted. Accordingly, the assessee’s Ground No. 3 for A.Y. 2012-13 and Ground No. 4 for A.Y. 2014-15 are hereby Dismissed. 9. Ground Nos. 4(a) & 4(b) of the Assessee for A.Y. 2012-13 9.1 Through these Grounds of appeal, the assessee has challenged the action of the ld. CIT(A) in upholding the addition of Rs.2,05,64,000/- made by the AO in A.Y. 2012-13 on account of undisclosed investment in purchase of a land situated at village Rau, Tehsil & District Indore. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 8 of 55 9.2 Briefly stated facts of the issue, as emerging out from the assessment order, are that the AO, during the course of the assessment proceedings, vide show-cause notice dated 19/07/2018, required the assessee to furnish the sources of making investments in various immovable properties. In reply, the assessee furnished his detailed explanation which has also been reproduced by the AO at para (12.3) on page no. 19 of the Order. The assessee claimed that during the previous year relevant to A.Y. 2012-13, he had purchased subject agricultural lands vide two separate registered sale deeds for a total consideration of Rs.2,45,64,000/-. The assessee further submitted that the payments against the aforesaid purchase were made partly through account payee cheques of Rs.40,00,000/- and partly through cash of Rs.2,05,64,000/-. The assessee claimed that the sources of cash payment of Rs.2,05,64,000/- were from cash gift of Rs.2,21,00,000/- received by him from his father Shri Ramswaroop Shivhare. The AO, while framing the assessment order, duly considered the explanation of the assessee in respect of the payment of Rs.40,00,000/- made by the assessee through banking channels. However, in respect of the cash payment of Rs.2,05,64,000/-, the AO averted that the assessee failed to provide any evidence in support of his claim as regard to receipt of gift. Finally, the AO made an addition of Rs.2,05,64,000/- in the assessee’s income on account of undisclosed investment in the said land situated at village Rau. 9.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences, which has been reproduced by the ld. CIT(A) at page no. 13 to 16 of his Order. During the course of the appellate proceedings, before the ld. CIT(A), the assessee also furnished certain documents as additional evidences, in the form of confirmation letter from Shri Ramswaroop Shivhare declaring making of such cash gift to the assessee on the occasion of assessee’s marriage and a copy of the marriage invitation card, under Rule 46A of the Income-Tax Rules, 1962, which were forwarded to the Assessing Officer for comments. The copy of the Remand Report of the AO was provided by the ld. CIT(A) to the assessee and in response, the assessee filed his rejoinder. The Ld. CIT(A), after considering the remand report of the AO as well as the rejoinder of the assessee, noted that out of the total purchase consideration of Rs.2,45,64,000/-, the assessee has made IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 9 of 55 payment of a sum of Rs.40,00,000/- through banking channels and the remaining sum of Rs.2,05,64,000/- has been made by the assessee in the form of cash. The registration of the properties has taken place on 11-04-2011. The ld. CIT(A) further noted that for explaining the sources of payments in cash, the assessee contended that he had received cash gift amounting to Rs.2,21,00,000/- from his father Shri Ramswaroop Shivhare on the occasion of his marriage which was solemnized on 23-01-2011. The ld. CIT(A) also noted that although the assessee could establish the identity of the donor, blood relation with the donor and occasion of the gift besides furnishing the letter of confirmation of the donor, but, the assessee could not establish the immediate source of making gift by his father to him of such a huge amount. According to the ld. CIT(A), the assessee could not establish the sources of making gift by the alleged donor Shri Ramswaroop Shivhare. Thus, the ld. CIT(A) held that the assessee could not explain the sources of cash payments of Rs.2,05,64,000/- for purchase of land at village Rau, Indore. Accordingly, the ld. CIT(A)confirmed the entire addition of Rs.2,05,64,000/- made by the AO for A.Y. 2012-13. The ld. CIT(A) has given the relevant findings at paras (4.4.2) to (4.4.4) of his order which are reproduced as under: “4.4.2 I have considered the facts of the case, the assessment order, the written as well as oral submissions of the appellant, the remand report of the AO and the counter comments of the appellant. The appellant has made investment amounting to Rs.2,45,64,000/- in purchase of some properties situated at village Rau, Indore. Out of the total purchase consideration of Rs.2,45,64,000/-, the appellant has made payment of a sum of Rs.40,00,000/- through banking channels and the remaining sum of Rs.2,05,64,000/- has been made by the appellant in the form of cash. The registration of the properties has taken place on 11-04-2011. For explaining the sources of payments in cash, the appellant has contended that he had received cash gift amounting to Rs.2,21,00,000/- from his father Shri Ramswaroop Shivhare on the occasion of his marriage which was sermonized on 23-01-2011. In support of his contention, before the AO, the appellant could not furnish any documentary evidence. However, before me, the appellant has furnished a copy of confirmation letter from the donor Shri Ramswaroop Shivhare and a copy of the Marriage Invitation Card, as additional evidences. In the Remand Report, the AO has agitated the explanation of the appellant on the sole ground that there was a gap of around 12 months in the alleged date of gift on the occasion of marriage and date of making of cash payments for purchase of property. During the course of the appellate proceedings, the counsel of the appellant contended that the AO mis-appreciated the fact and the difference between two dates was not of 12 months but was only of nearly 3 months as the date of marriage of the appellant was 23-01-2011 and cash payment was made on 11-04-2011. However, on yet another ground, I could IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 10 of 55 not find any merit in the submission of the appellant as although he could establish the identity of the donor, blood relation with the donor and occasion of the gift besides furnishing the letter of confirmation of the donor, but, the appellant could not establish the immediate source of making gift by his father to him of such a huge amount. It is a settled law that in any transaction of gift, onus lies on the donee to inter alia establish the capacity of the donor for making the gift. In the present case, the appellant could not establish the sources of making gift by the alleged donor Shri Ramswaroop Shivhare. 4.4.3. Section 68 provides that any cash credit found in the books relating to which appellant offers no explanation about the nature and source thereof or such explanation is unsatisfactory, such credits could be charged to tax as income of the appellant. The principle embodied in section 68 is only a statutory recognition of what was always understood to be the law based upon the rule that burden of proof is on the taxpayer to prove the genuineness of borrowings or other credits in his books, since the relevant facts are exclusively within his knowledge. The expression “nature and source” has to be understood together as a requirement of identification of the source and the nature of the source, so that the genuineness or otherwise could be inferred. It is settled law that while considering the question whether the alleged cash payment by the appellant was a genuine transaction, the initial onus is always upon the appellant and if no explanation is given or the explanation given by the appellant is not satisfactory, the Assessing Officer can disbelieve the alleged transaction. But the law is equally settled that if the initial burden is discharged by the appellant by producing sufficient materials in support of the loan transaction, the onus shifts upon the Assessing Officer and after verification, he can call for further explanation from the appellant and in the process, the onus may again shift from the Assessing Officer to the appellant. Therefore, the appellant failed to discharge the burden of proof by not establishing the genuineness of transaction and explaining source of investment. 4.4.4. Accordingly, in my view, the appellant could not explain the sources of cash payments of Rs.2,05,64,000/- for purchase of land at village Rau, Indore and therefore, there was no infirmity in the addition made by the AO. The addition so made by the AO amounting to Rs.2,05,64,000/- is Confirmed. Therefore, appeal on these grounds is Dismissed.” 9.4 Aggrieved with the addition confirmed by the ld. CIT(A), the assessee is in appeal before us. 9.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 9.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A). IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 11 of 55 10.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, written and oral submissions made from both the sides and Remand Report of the AO as well as Rejoinder of the assessee. We find that in the instant case, the assessee was found to have purchased two properties for an aggregate consideration of Rs. 2,45,64,000/- and out of such consideration, consideration to the extent of Rs. 40,00,000/- only was found to have been made by the assessee through banking channel from his explained sources. However, for the remaining consideration of Rs. 2,05,64,000/-, the assessee has given an explanation that such consideration was paid by him out of gift amounting to Rs. 2,21,00,000/- received by him from his father on the occasion of his marriage which was solemnized on 20/01/2011 to 29/01/2011. Although, in support of his claim regarding receipt of gift, the assessee has filed a copy of letter of confirmation given by his father Shri Ramswaroop Shivhare, the Donor, is placed at page no. 205 of his Paper Book for A.Y. 2012-13, but, neither before the AO, nor before the ld. CIT(A) and not even before us, the assessee could establish the sources of availability of the funds in the hands of the Donor for making gift of such a huge amount to the assessee and that too, in the form of cash. Thus, in our considered view, the assessee could not discharge his burden with the necessary evidences regarding the sources of purchase of subject lands. Accordingly, we find no infirmity in the action of the ld. CIT(A) in confirming the addition of Rs. 2,05,64,000/- made by the AO in the assessee’s income for A.Y. 2012-13 on account of unexplained investment in purchase of land. Consequently, the Ground Nos. 4(a) & 4(b) of the Assessee for A.Y. 2012-13 are hereby Dismissed. 11. Ground No. 3 of the Assessee for A.Y. 2014-15 11.1 Through this ground of appeal, the assessee has challenged the framing of the assessment on the basis of the report submitted by the special auditors without giving any opportunity to the assessee on such report. 11.2 Before us, the counsel of the assessee has not pressed this ground and therefore, the Ground No. 3 for A.Y. 2014-15 is hereby Dismissed. 12. Ground No. 5 of the Assessee for A.Y. 2014-15 12.1 Through this ground of appeal for A.Y. 2014-15, the assessee has challenged the action of the ld. CIT(A) in upholding the action of the AO for IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 12 of 55 making trading additions in the business income of the assessee without first rejecting the regular books of account u/s. 145(3) of the Act. 12.2 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee agitated that in the impugned assessment order, the AO has made trading additions in the hands of the assessee but, before making such addition, she has not specifically rejected the books of account of the assessee. 12.3 The ld. CIT(A) by way of giving his finding at para (4.5.1) of his Order dismissed the similar ground so raised by the assessee before him. The ld. CIT(A) held that during the course of the search and seizure operation in the group, certain incriminating documents and tally data were recovered and from such seized material, it got emanated that the assessee had carried out the liquor business by forming some syndicates with the other persons and from such syndicates the assessee had derived income. The CIT(A) further found that income from such syndicates were not recorded by the assessee in his regular books of account. According to the ld. CIT(A), since the AO had detected an altogether different source of income of the assessee, there was absolutely no necessity for the AO to first reject the books of account of the assessee u/s. 145(3) of the Act which was maintained in respect of individual business of liquor carried out by the assessee and not in respect of syndicate businesses. Accordingly, the ld. CIT(A) dismissed the Ground so raised. 12.4 Aggrieved with the Order of the ld. CIT(A), the assessee is in appeal before us. 12.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 12.6 Per Contra, Learned Counsel for the assessee relied upon the written submissions made before the ld. CIT(A). The relevant portion of the submission, as made by the assessee before the ld. CIT(A), is being reproduced as under: “In this context, it is submitted as under: 1.00 Your Honour, in the instant case, the substantial additions have been made by the learned AO on the allegation of unaccounted share of profit of the IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 13 of 55 appellant in various syndicates. It is submitted that the appellant was maintaining regular books of account in ordinary course of his liquor business and in such books of account, his income from his proprietorship concern was duly incorporated. The books of accounts, so maintained, were subjected to audit by a firm of qualified chartered accountants. It is submitted that the appellant had obtained an Audit Report, in the prescribed form, from the Auditors in accordance with the provisions of s.44AB of the Act. The auditors conducting the audit had not found any defect or discrepancy in the maintenance of books of account of the appellant. It shall be worthwhile to note that during the course of the assessment proceedings, the appellant had furnished a copy of the aforesaid Audit Report before the learned AO and had also produced all his books of account, receipt books, bills, etc. before the learned AO for his verification. It is submitted that the learned AO has not found any defect or discrepancy in the books of account so maintained by the appellant. Since no defect or discrepancy was found, the learned AO has not rejected the books of account of the appellant by invoking the provisions of s.145(3) of the Act. Now, it is submitted that once the books of account of the appellant were accepted, the learned AO was duty bound to determine the business income of the appellant only as per the transactions shown in his regular books of account, in accordance with the provisions of sub-section (1) to section 145 of the Act. Consequently, without rejecting the books of account, the learned AO could not have made any addition in the appellant’s income on the presumption of receipt of income by the appellant from any liquor syndicate. 2.00 Your Honour, for the aforesaid proposition, reliance is placed on the following judicial pronouncements: i) Pyarelal Mittal vs. ACIT (2007) 291 ITR 214 (Gau) ii) The ACIT vs. M/s. Narendra Industries (2008) 10 ITJ 88 (Ind) (Trib) iii) CIT vs. Maharaja Shree Umed Mills Ltd. (1991) 192 ITR 565(Raj) iv) ITO vs. Skyjet Aviation (P) Ltd. (2006) 66 TTJ (Ahd) (TM) 21. In view of the above facts and circumstances of the case, the entire additions so made by the ld. AO on the ground of unaccounted business income deserve to be deleted in toto.” 13.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of lower authorities and written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. In our considered view, the AO has not disturbed the trading results shown by the assessee in his books of accounts which were containing the records only in respect of the liquor business carried out by the assessee in his individual capacity. We find that the AO has made addition in IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 14 of 55 the income of the assessee on a different ground i.e. the assessee's share of profit in various syndicates. Since, the addition has been made by way of discovering a new source of income by the assessee, without disturbing the results shown by the assessee in his regular books of account, there was absolutely no occasion for the AO to reject the regular books by invoking the provisions of s. 145(3) of the Act. Accordingly, the Ground No. 5 of the Assessee for A.Y. 2014-15, being devoid of any merit is hereby Dismissed. 14. Ground No. 1 of the Revenue for A.Y. 2014-15; andGround Nos. 6(a)& 6(b)of the Assessee for A.Y. 2014-15 14.1 Through the Ground No. 1, the revenue has challenged the action of the ld. CIT(A) in deleting the addition made by the AO in the assessee’s income in the assessment year under consideration, on account of undisclosed income from liquor trade business through Syndicates. Further, through the grounds of appeal for A.Y. 2014-15, the assessee has challenged the action of the ld. CIT(A) in confirming the finding of the AO that the assessee was carrying out the business through formation of Syndicates. The assessee also agitated that the ld. CIT(A) did not appreciate that corresponding to the undisclosed income determined by the AO, no undisclosed asset or investment or expenditure was detected during the course of search and seizure operations u/s. 132 of the Act. 14.2 Briefly stated facts of the issue, as culled out from the records, are that during the course of the search and seizure action u/s. 132 of the Act carried out in the premises of the assessee’s group on 07.01.2016, various incriminating documents were seized from which it was revealed that to operate liquor trading business, the assessee had formed syndicates/cartels/group in different districts as self organizing group formed to transact specific business, to pursue or promote a shared interest. The AO further taking support from dictionary clarified that such syndicates were formed by individuals or organizations to promote common interest of profit. According to the AO, the existence of syndicates was beyond doubts as the same was accepted by the various members of the group in their statements given during the search/post search investigation. Further, according to the AO, the term ‘syndicate’ was taken from the seized material and the statement of the father of the assesseeShriRamswaroopShivhare in which they have used this term to explain their modus operandi. At sub para IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 15 of 55 (v) of para 11.2 of the Order, the AO made a clear and unequivocal finding that various investigations strengthened the contention that there existed a syndicate and various assessees are part of such syndicates. The AO also found that incriminating documents seized during the course of the search also contained some bank transactions which were carried out by the assessee from his bank accounts. The AO further made reference of various incriminating data which inter alia include, tally accounts, balance sheet, profit and loss account etc. of various syndicates in which the assessee was found to be one of the members. The AO further made a finding that the seized data reflect the correct income of the syndicates and as also share of profit of the assessee in such syndicates as mentioned in such data. The AO further found, from the seized data and documents, that the aforesaid syndicates had incurred certain expenditure for payment of illegal gratification to local police and government officers etc. which were not allowable under the Act. The AO while examining the tally data of the syndicates also found that such syndicates had incurred expenses on payment of rents without making any TDS u/s. 194-IA of the Act. Further, some seized documents reveal that these syndicates have made payments towards commission which were not allowable. Likewise, expenses on gifts, donation, personal expenses, breakage and leakages, etc. were not permissible. The AO also noted that some expenditure exceeding amount of Rs. 20,000/- were incurred by the syndicates in violation of the provisions of section of 40A(3)/(3A) of the Act. The AO also relied upon the findings of the special auditors given in their report. At the same time, the AO also found that the assessee had made investment in various syndicates the sources whereof were not satisfactorily explained by the assessee. After giving detailed findings, reproducing various seized data and drawing the syndicate wise details in tabular form, the AO made additions, for the assessment year 2014-15, under two sub heads viz. (i) share of assessee in inadmissible expenditure incurred by the syndicate; and (ii) sum of undisclosed capital invested by the assessee in syndicate, by drawing a table at para 11.4. Finally, after fairly giving set-off for the assessee’s share in the losses incurred by the syndicate for the assessment year 2014-15, the AO made the addition, as per the table given at para 11.10 of the Order. The details of the assessment year wise additions made by the AO, as summarized by the ld. CIT(A) at para (4.6) of his Order, are as under: A.Y. Share of profit of the Share of loss of the assessee in Net Share of Profit of the assessee in Share of the assessee in inadmissible Undisclosed Capital Invested by Total IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 16 of 55 assessee in syndicate s (A) syndicates (B) syndicates (C=A-B) expenses incurred by the syndicates (D) the assessee in syndicates (E) (F = C+D+E) 2014-15 - 11,70,249 (-) 11,70,249 2,22,18,098 49,98,340 2,60,46,189 14.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences which were also furnished by him before the AO. Before the ld. CIT(A), the assessee also produced copy of Special Auditors’ Report. The Ld. CIT(A), on the basis of the various datas seized from the premises of third person, dismissing the grounds raised by the assessee to the effect that he was carrying out his liquor business in his individual capacity and had not formed any syndicate, came to the conclusion that the assessee had certainly formed Syndicates with various persons. The ld. CIT(A) has given the relevant findings at para (4.6.3) and (4.6.4) of his order which are reproduced as under: “4.6.3 I do not find any substance in the contention of the appellant that since he was carrying out the business of liquor in his individual capacity and was also showing income from carrying out such business in his returns of income, from year to year, no further income can be considered on the ground of share of his profit in the syndicates. From the records and seized material, it is evident that the appellant was carrying out liquor business by forming syndicate and therefore, there cannot be two views that the appellant had derived income from such syndicate. The appellant has vehemently claimed that factually, he had not formed any syndicate. In support of his contention, the A.R. of the appellant was heavily harping upon the license policy of the State Government and according to the A.R. of the appellant, the syndicate was not granted any separate license for carrying out the business of liquor and without having the license, such syndicate could not have carried out any business. However, such an argument of the A.R. of the appellant has no stand for the reason that merely because the appellant and other members of the syndicate have violated Excise Laws, it cannot be said that factually no syndicates were formed by them in a situation where the seized data and incriminating documents clearly reveal formation of such syndicates. Looking into totality of the facts, the appellant along with other persons had formed a syndicate to carry out the business of liquor in which the appellant and other members were having certain share as agreed upon between themselves. Further, such syndicate had incurred certain expenses which were either IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 17 of 55 prohibitory or inadmissible in the nature u/s. 37 of the Act or were not allowable for non compliance of the provisions of section 40(a)(ia) or section 40A(3)/(3A) of the Act. The appellant had made undisclosed investment towards his capital contribution in such syndicate for the assessment year 2014-15. 4.6.4 Having given the findings as aforesaid, now, it has to be adjudicated here that whether the share of profit of the appellant in the syndicates’ income, even if it remained undisclosed in the returns furnished by him, can legally be added to the income of the appellant and whether any tax, effectively, be levied on such income. As held in the earlier paras, the nature of share of appellant in the inadmissible expenses incurred by the syndicate is the same as that of share in profit from such syndicate, the tax treatment for both the additions in the hands of the appellant would remain the same. Thus, in my considered view, the appellant had derived undisclosed income in the form of share of profit from some syndicates, which are nothing but Association of Persons (AOP) or Body of Individuals (BOI) formed by the appellant along with various other persons for the purpose of carrying out the liquor business with a motive to earn profit from such business in an agreed ratio. In my view, under the provisions of section 2(31) of the Act which gives the definition of the expression ‘Person’, a person includes, an association of persons or a body of individuals, whether incorporated or not. The syndicate formed by the appellant along with others is a separate taxable legal entity and separately chargeable to tax u/s. 4 of the IT Act. Such syndicate (AOP/BOI) is chargeable to tax at the Maximum Marginal Rate (MMR). Thus, in the instant case, any assessment of income, on the basis of the seized incriminating material and data, ought to have been made in the hands of the syndicate, a separate taxable entity, either u/s. 153C of the Act or under any other legal recourse available to the Department. However, in view of the specific provisions of section 86 of the IT Act, 1961 r.w.s. 67A, in computing the total income of the appellant, his share, as member of the AOP/BOI, was not liable to be included. The appellant has also taken separate grounds taking the aforesaid plea and therefore, a detailed separate adjudication has been made elsewhere in the present order, while adjudicating the relevant grounds. However, since, in the Ground Nos. 6(a) & 6(b), the appellant is agitating the additions on account of share of appellant in inadmissible expenses of the syndicate, without having recourse to the provisions of section 86 and section 67A of the Act, these Grounds of Appeal of the appellant, for the assessment year 2014-15, are held as academic in the nature only, requiring no specific adjudication and therefore, the same are Dismissed.” However, after giving the aforesaid findings, the ld. CIT(A) held that although, the assessee had undisputedly formed various syndicates/groups with various persons for carrying out the business of liquor, for a definite share of profit, but, in any case, the share of the assessee in the profit of these syndicates and as also, in the inadmissible expenses incurred by such syndicates cannot be added to the income of the assessee in view of the specific IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 18 of 55 provisions of section 86 of the Income-Tax Act, 1961 r.w.s. 67A of the Act. According to the ld. CIT(A), the status of these syndicates is that of Association of Persons (AOP) or Body of Individuals (BOI) which are included in the definition of the expression 'Person' as ascribed to in section 2(31) of the Act. According to the ld. CIT(A), such syndicates are separate taxable legal entity and separately charged to tax u/s. 4 of the Act at the maximum marginal rate (MMR). The ld. CIT(A) further held that income derived by various syndicates, in which the assessee was one of the members, was required to be assessed in the hands of such syndicates only and the direct assessment in the hands of the assessee could not have been made in respect of such income derived by the syndicates. The ld. CIT(A) also held that even the question of admissibility or inadmissibility of any expenditure could have been raised only while making the assessment in cases of such syndicates. The ld. CIT(A) further held that the assessee could have, at the best, been assessed in respect of his share in taxable income of such syndicates but for the provisions of section 86 of the Act, which provides that Income Tax shall not be payable by the assessee in respect of his share in the income of the Association of Persons or Body of Individuals. Thus, relying upon the decisions of the Hon'ble Supreme Court in the case of ITO vs. CH. Atchaiah (1996) 218 ITR 239 (SC), the ld. CIT(A) deleted the entire additions made by the AO in the assessee's income, for various assessment years, on the grounds of assessee's share in profit of various syndicates and as also, share in the inadmissible expenses incurred by such syndicates. The relevant findings have been given by the ld. CIT(A) at para (4.7.1) to (4.7.5) of his Order. The same are being reproduced as under: 4.7.1 I have considered the facts of the case, the assessment order and the written as well as oral submissions of the appellant. From the seized tally data and other documents, it is amply evident that the appellant had formed syndicate with various persons and such syndicate had carried out liquor business for deriving profits to be shared by the appellant and other members of the syndicates in certain agreed ratio. The Special Auditors nominated under section 142(2A) of the Act have also given the same finding in their report. Further, the AO, at various places in the Order, has given clear findings that (i) the appellant had formed syndicates with various persons for carrying out the liquor business; (ii) from carrying out such businesses, the appellant had derived share of profit; (iii) such syndicates had incurred certain expenditure which were not permissible under the provisions of the Income Tax Act, 1961; and (iv) the appellant had made investment by way of capital contribution in such syndicates the sources whereof were not explained. Even, while adjudicating the ground nos. 6(a), 6(b), 7(a) & 7(b) for A.Y. 2014-15, supra, it was held that the appellant had formed syndicate for carrying out the liquor business. Once such findings are given, it IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 19 of 55 becomes apparent that under the scheme of the Income Tax Act, 1961, such syndicate would fall within the definition of ‘Persons’ as ascribed to under clause (31) of section 2 of the Act either as ‘Association of Persons’ or ‘Body of Individuals’. Consequently, in respect of any income derived by such syndicate, such syndicate alone would be chargeable to tax under section 4 of the Act. The Syndicate would be chargeable to tax independent from the members forming such syndicate. Needless to say, the income of such syndicate either under the head ‘Income from profits or gains from Business or Profession’ or under any other head would be required to be computed in accordance with the provisions of the Act only. Consequently, income under the head ‘Income from Profits or Gains from Business or Profession’, would be required to be computed in the manner provided under Part-D of the Chapter-IV of the Act which, inter alia, provides for disallowance of certain expenditure on various grounds. Such assessments in the hands of the syndicate, are to be made in accordance with the provisions of section 167B of the Act. Section 167B contemplates two situations. Sub-section (1) of section 167B deals with those cases in which individual shares of the members of an Association of Persons or Body of Individuals in the whole or any part of the income of such AOP/BOI are indeterminate or unknown. In such a situation, it has been provided that the tax shall be charged on the total income of the AOP or BOI at the maximum marginal rate and if any member of the AOP or BOI is chargeable to tax at a rate higher than maximum marginal rate, then, tax on the AOP or BOI shall be charged at such higher rate. Sub-section (2) of section 167B deals with other cases, viz. those cases which do not fall under sub-section (1) of section 167B of the Act. Accordingly, it envisages those cases in which the shares of the members of AOP or BOI are determinate and known. In such cases, if income of any of the members of the AOP or BOI exceeds the maximum amount which is not chargeable to tax, in the case of that member, such AOP or BOI would be chargeable to tax at the maximum marginal rate and where income of any member or members is chargeable at a rate or rates higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the AOP or BOI which is relatable to the income of such member or members and for the balance income, the tax shall be charged at the maximum marginal rate. In other words, irrespective of the status of the AOP/ BOI, it is required to pay tax at least at maximum marginal rate on its income. 4.7.2 I find a significant force in the contention of the appellant that if there existed any syndicates, then income earned by such syndicates from carrying out businesses would be required to be assessed in the hands of such syndicates and such income cannot directly be assessed to tax in the hands of its members forming the syndicates. The investigation wing during the course of search found that the appellant is doing liquor business along with other persons by forming syndicates. The investigation wing has emphasized the formation of syndicates (group) to carry out the liquor business. The emphasis is on that there exists an entity syndicate which is carrying out the business. Statements of key persons of the syndicates were also recorded wherein, they has accepted the existence of syndicates. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 20 of 55 The AO during the course of assessment proceedings has referred the matter to special auditor u/s 142(2A) of the Act for special audit in the case of appellant. The Auditor has also emphasized the formation of the syndicate and has given a finding that the syndicate is carrying out the business independently. The syndicates are functioning from separate offices and are preparing accounts separately. Further, the AO while passing the impugned assessment order from page no 7 to 17 of the assessment order has elaborately dealt that there exists a syndicate. The AO has also dealt with ingredients of the syndicates. Also, the AO has accepted the statements of key persons of the syndicates wherein they had accepted existence of the syndicate. Nevertheless, the appellant during appellate proceedings has brought to my knowledge that the AO’s of the syndicates in other group concern has made addition of the undisclosed income in the hands of syndicate for respective assessment years. In support appellant has filed copies of assessment orders passed in the case of syndicates (AOP). The brief details of assessment orders passed by ACIT 2(1), Indore/DCIT 3(1), Gwalior/ITO, Shivpuri are as under:- S.No Name of AOP Order under section AYs Income assessed 1 Shri Ramesh Chand Rai and manishRai& Others, AOP (mandiBamora) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2013-14, 2015-16 & 2016-17 (Rs. Nil.) AY 2014-15 (Rs. (-) 46,49,448/- 2 Shri Ramesh Chand Rai and manishRai& Others, AOP (Rau group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2013-14 & 2016-17 (Rs. Nil.) AY 2014- 15 (Rs. 44,79,831/- AY 2015-16(Rs. 1,17,71,839/- 3 Shri Ramesh Chand Rai and manishRai& Others, AOP (Mahakal Traders Dhar Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2014-15 & 2016-17 (Rs. Nil.) AY 2015- 16 (Rs. 9,30,92,022/- 4 Shri Ramesh Chand Rai and manishRai& Others, AOP (Gulabganj group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011- 12, 2013-14 to 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 32,78,188/- 5 Shri Ramesh Chand Rai and manishRai& Others, AOP (Dhar Group) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2014-15 & 2016-17 (Rs. Nil.) AY 2015-16 (Rs. 2,03,89,740/- 6 Shri Ram 144/153C r.w.s 2010-11 to Ays 2010-11 to IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 21 of 55 SwaroopShivhare& Others, AOP (Gwalior Group) 153A of the Act 2016-17 2012-13, 2015-16 & 2016-17 (Rs. Nil.) AY 2013-14 (Rs. 8,60,26,366/- AY 2014-15 (Rs. 2,51,72,607/- 7. Narwar&Magroni Group (through LaljiShivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011- 12, 2013-14, & 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 38,48,080/- AY 2014-15 (Rs. 45,90,173/- AY 2015-16 (Rs. 6,86,038/- 8. Hazira Group (through members Prem Narayan Shivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2015-16 (Rs. Nil.) AY 2016-17 (Rs. 39,84,558/- 9. Bhauti group (through members LaljiShivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11, 2011- 12, 2013-14, & 2016-17 (Rs. Nil.) AY 2012-13 (Rs. 1,28,04,240/- AY 2014-15 (Rs. 1,67,78,920/- AY 2015-16 (Rs. 1,05,55,480/- 10. Agar Malwa Group (through members RavindraShivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 2015-16 (Rs. Nil.) AY 2016-17 (Rs. 7,95,010/- 11. Barra Group (through members RavindraShivhare and others) 144/153C r.w.s 153A of the Act 2010-11 to 2016-17 Ays 2010-11 to 202- 13 (Rs. Nil.) AY 2013-14 (Rs. 26,36,970/- AY 2014-15 (Rs. 60,14,360/- AY 2015-16 (Rs. 27,64,300/- AY 2016-17 (Rs. 22,72,590/- On perusal of these assessment orders, it is found that the concerned AO i.e. ACIT 2(1), Indore/DCIT Circle-3(1), Gwalior/ITO, Shivpuri in the cases of AOP’s IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 22 of 55 has made additions on account of undisclosed business income from carrying out the liquor business have been assessed on the basis of various materials which were seized during the course of the search carried out in the case of Shivhare Group. Further, in these assessment orders, it has been held that these AOPs being the liquor syndicates, had carried out business of liquor in various years and as per the Special Auditors Report given under s.142(2A) of the Act in the case of Shivhare Group, these syndicates had earned profit and had also incurred some expenses which were liable for disallowance. The amount of profits/ inadmissible expenses, considered by the AO framing the separate assessments of the syndicates, were the same as were considered while making the assessment in the hands of the appellant and other members of Shivhare group. In view of the findings of the investigation wing, special auditor and AO of the appellant, the income earned by the syndicates is taxable in the hands of syndicate and not in the hands of appellant. Therefore, making any addition on account of income earned by syndicate in the hands of appellant is nothing but double taxation of the same income. The settled law is that right income should be added in the hands of the right person and in the right year. Under the new scheme of the law, there is no option available to an Assessing Officer either to make the assessment in the hands of the AOP/BOI or in the hands of the members of the AOP/BOI. The similar view was expressed by the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC). The relevant findings of the Hon’ble Apex Court are reproduced as under: “4. In our opinion, the contention urged by Dr. Gaurishanker merits acceptance. We are of the opinion that under the present Act, the ITO has no option like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By "right person", we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression "wrong person" is obviously used as the opposite of the expression "right person". Merely because a wrong person is taxed with respect to a particular income, the AO is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the Revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Sec. 183 shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is no doubt entitled to be relieved of it in accordance with law but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the AO (ITO) has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate. 5. Sec. 3 of the Indian IT Act, 1922, as amended by the Indian IT (Amendment) Act, 1939, read as follows: "3. Charge of Income-tax.—Where any Central Act enacts that income-tax shall be charged for any year at any rate or rates, tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, HUF, IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 23 of 55 company and local authority, and of every firm and other AOP or the partners of the firm or the members of the association individually." (Emphasis, italicised in print, supplied) The expression "person" was defined in cl. (9) of s. 2 in the following words : "9. `Person' includes an HUF and a local authority". As against the above provisions, s. 4 of the Present Act [before it was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989] read thus : "4(1). Where any Central Act enacts that income-tax shall be charged for any assessment year at any rate or rates, income tax at that rate or those rates shall be charged for that year in accordance with and subject to the provisions of this Act in respect of the total income of the previous year or previous years, as the case may be, of every person : Provided that where by virtue of any provision of this Act income-tax is to be charged in respect of the income of a period other than the previous year, income- tax shall be charged accordingly. (2) In respect of income chargeable under sub-s. (1), income-tax shall be deducted at the source or paid in advance, where it is so deductible or payable under any provision of this Act." (The amendments made by the aforesaid Amendment Act of 1987 do not make any difference so far as the present controversy is concerned.) The expression "person" is defined in cl. (31) of s. 2 in the following words : "`Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm, (v) an AOP or a BOI, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within any of the preceding sub- clauses." A comparison of the provisions of both enactments immediately bring out the difference between them. Sec. 3 of the 1922 Act provided that in respect of the total income of a firm or an AOP, the income tax shall be charged either on the firm or the AOP or on the partners of the firm or on the members of the AOP individually. It is evident that this option was to be exercised by him keeping in view of the interest of Revenue. Whichever course was more advantageous to Revenue, he was entitled to follow it. In such a situation, it was generally held that once the ITO opted for one course, the other course was barred to him. But no such option is provided to him under the present Act. Sec. 4 extracted hereinabove says that income-tax shall be charged on the total income "of every person" and the expression "person" is defined in cl. (31) of s. 2. The definition merely says that expression "person" includes inter alia a firm and an AOP or a BOI whether incorporated or not. There are no words in the present Act which empower the ITO or give him an option to tax either the AOP or its members individually or for that matter to tax the firm or its partners individually. If it is the income of the AOP in law, AOP alone has to be taxed; the members of the AOP cannot be taxed individually in respect of the income of the AOPs. Consideration of the interest of revenue has no place in this scheme. When s. 4(1) of the present Act speaks of levy of income-tax on the total income of every person, it necessarily means the person who is liable to pay income-tax in respect of that total income according to IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 24 of 55 law. The tax has to be levied on that person, whether an individual, HUF, Company, Firm, AOP/BOI, a local authority or an artificial juridical person. From this, it follows that if income of A is taxed in the hands of B, A may be legitimately aggrieved but that does not mean that B is exonerated of his liability on that account. B cannot say, when he is sought to be taxed in respect of the total income which is lawfully taxable in his hands, that since the ITO has taxed very same income in the hands of A, he himself cannot be taxed with respect to the said total income. This is not only logical but is consistent with the provisions of the Act. In this connection, it may be pointed out that where the Parliament wanted to provide an option, a discretion, to the ITO, it has provided so expressly. Sec. 183 [which has since been omitted w.e.f. 1st April, 1993 by the Finance Act, 1992] provided that in the case of an unregistered firm, it is open to the ITO to treat it, and make an assessment on it, as if it were a registered firm, if such a course was more beneficial to Revenue in the sense that such a course would fetch more tax to the public exchequer. Sec. 183 read as follows: "183. Assessment of unregistered firms.—In the case of an unregistered firm, the Assessing Officer— (a) may determine the tax payable by the firm itself on the basis of the total income of the firm, or (b) if, in his opinion, the aggregate amount of the tax payable by the firm if it were assessed as a registered firm and the tax payable by the partners individually if the firm were so assessed would be greater than the aggregate amount of the tax payable by the firm under cl. (a) and the tax which would be payable by the partners individually, may proceed to make the assessment under sub-s. (1) of s. 182 as if the firm were a registered firm; and, where the procedure specified in this clause is applied to any unregistered firm, the provisions of sub-ss. (2), (3) and (4) of s. 182 shall apply thereto as they apply in relation to a registered firm." It may be mentioned that s. 183 corresponded to s. 23(5)(b) of the 1922 Act. The 1922 Act not only provided an option to the ITO in the matter of firm and AOP under s. 3 but also expressly enabled him to assess an unregistered firm as a registered firm [s. 23(5)(b)], if by doing so, more tax accrued to the State. The 1961 Act has omitted the first option, while retaining the second. 6. In this connection, it would be relevant to notice the relevant provisions of the draft Bill proposed by the Law Commission in its XIIth Report, which constitutes the basis for the 1961 Act. Clause (27) of s. 2 of the draft (definition of "person") did expressly provide an option similar to the one contained in s. 3 of the 1922 Act. Clause 27 read thus : "(27) `Person' includes— (i) an individual, (ii) an HUF, (iii) a company, (iv) a firm or other AOPs, whether incorporated or not, or the partners of the firm or the members of the association individually, (v) a body of individuals, whether incorporated or not, (vi) a local authority, and (vii) every artificial juridical person, not falling within sub-cl. (i) to (vi)" [Emphasis, italicised in print, supplied] In the "Notes on Clauses" appended to the draft, the Commission stated : "27. Person. The definition of `person' in existing s. 2(9) has been amplified. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 25 of 55 The existing definition includes (a) HUF and (b) a local authority. The General Clauses Act, defines `person' as including a company or AOP or BOI whether incorporated or not. The charging section (s. 3) of the IT Act enumerates the units for taxation as `individual, HUF, company, local authority, firm and other AOPs or the partners of a firm or the members of the association individually'. Sec. 4 of the Act refers to a `person'. It seems desirable to have a comprehensive definition of the word `person' in the Act so as to cover all entities mentioned in— (i) the existing definition [s. 2(9)]. (ii) the existing charging provisions [ss. 3 and 4], and (iii) the General Clauses Act. The definition has therefore been amplified on the above lines." The Parliament, however, chose not to accept the suggested definition in toto; it deleted the words indicating the option. The Committee, which drafted the draft Bill comprised Sri P. Satyanarayana Rao, Sri G.N. Joshi and Sri N.A. Palkhivala, who was specifically appointed as a member for the purpose of the revision of the IT Act. [Extracts are taken from the XII th Report of the Law Commission of India, published by Govt. of India, Ministry of Law.] 7. This question has also been troubling the High Courts in the country. As a matter of fact, Patna and Andhra Pradesh High Courts have taken different views. Be that as it may, we may mention that the Patna High Court in Mahendra Kumar Agrawalla vs. ITO 1975 CTR (Pat) 33 : (1976) 103 ITR 688 (Pat), Punjab and Haryana High Court in RodamalLalchand vs. CIT (1977) 109 ITR 7 (P&H), Andhra Pradesh High Court in Choudry (supra) and Delhi High Court in Punjab Cloth Stores vs. CIT 1978 CTR (Del) 257 : (1980) 121 ITR 604 (Del) have taken the view which we have taken. On the other hand, Madras High Court in CIT vs. Blue Mountain Engg.Corpn. 1978 CTR (Mad) 142 : (1978) 112 ITR 839 (Mad) and Patna High Court in its earlier decision in CIT vs. Pure Nichitpur Colliery Co. 1975 CTR (Pat) 83 : (1975) 101 ITR 79 (Pat) have taken the opposite view. The Andhra Pradesh High Court first expressed the other view, then in Choudry it took the view which we have taken and again in B.R. Constructions (FB) (supra) it has gone back to the other view and reiterated the view taken in the judgment under appeal. In Ramanlal Madanlal vs. CIT (1979) 116 ITR 657 (Cal), Sabyasachi Mukharji, J., speaking for a Bench of the Calcutta High Court, recognised the distinction in the language employed in s. 3 of the 1922 Act and s. 4 of the present Act but that was a case of an unregistered firm where the ITO had assessed the incomes in the hands of the partners individually. In such a situation, the learned Judge held, the ITO cannot, at the same time, bring the unregistered firm to tax in respect of the very same income. Sec. 183 was also referred to in that connection. The decision of the High Courts taking the contrary view appears to have been influenced largely by the decisions of this Court in CIT vs. Kanpur Coal Syndicate (1964) 53 ITR 225 (SC) : TC 6R.197 and CIT vs. Murlidhar Jhawar & Purna Ginning & Pressing Factory (1966) 60 ITR 95 (SC) which were rendered under the 1922 Act and have not given due weight to the marked difference in the language of the relevant provisions in the two enactments.” 4.7.3 In view of the specific finding of the Hon’ble Supreme Court, I am of the firm view that income derived by the syndicate, in which the appellant was found IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 26 of 55 one of the members, was required to be assessed in the hands of such syndicate only and a direct assessment in the hands of the appellant could not have been made in respect of such income derived by the syndicate. Even the question of admissibility or inadmissibility of any expenditure could have been raised only while making the assessment in the cases of such syndicate. In my view, the appellant could have, at the best, been assessed in respect of his share in taxable income of such syndicate but for the provisions of section 86 of the Income Tax Act, 1961, which provide that income tax shall not be payable by an assessee in respect of his share in the income of the association of persons or body of individuals. 4.7.4 The AO while making the addition in the hands of the appellant, has worked out the appellant’s share in such syndicate under consideration. It is thus evident that the syndicate formed as AOP or BOI is such in which the shares of their members are determinate and known. In such circumstances, the share of the appellant, being a member of such AOP/ BOI, would be required to be computed in accordance with the provisions of section 67A of the Act. However, in view of the specific provisions of clause (a) of the proviso to section 86 of the Act, where the Association of Persons or Body of Individuals is chargeable to tax on its total income at the maximum marginal rate or at any higher rate under any of the provisions of Act, the share of a member in the income of such AOP/BOI as computed under section 67A shall not be included in the total income of such member. In my view, in the instant case, all the conditions for invoking the clause (a) to section 86 of the Act are getting explicitly fulfilled. For a ready reference, the provisions of section 86 are being reproduced as under: “S. 86: Share of member of an association of persons or body of individuals in the income of the association or body.-Where the appellant is a member of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India), income-tax shall not be payable by the appellant in respect of his share in the income of the association or body computed in the manner provided in Section 67A. Provided that,- (a) where the association or body is chargeable to tax on its total income at the maximum marginal rate or any higher rate under any of the provisions of this Act, the share of a member computed as aforesaid shall not be included in his total income; (b) in any other case, the share of a member computed as aforesaid shall form part of his total income: Provided further that where no income-tax is chargeable on the total income of the association or body, the share of a member computed as aforesaid shall be chargeable to tax as part of his total income and nothing contained in this section shall apply to the case." IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 27 of 55 4.7.5 In nutshell, (i) the appellant was a member of an Association of Persons or Body of Individuals; (ii) share of the members of such Association of Persons or Body of Individuals were determinate and known; and (iii) such Association of Persons or Body of Individuals were chargeable to tax on their total income at the maximum marginal rate or any higher rate. In such circumstances, the appellant’s case would squarely fall under substantive provisions of section 86 of the Act read with clause (a) of the first proviso to such section 86 and the other clause (b) of the first proviso and as also, the second proviso would have no application. Accordingly, in my view, there was no justification for the AO in making the addition in the appellant’s income on account of his share in inadmissible expenses incurred by the syndicates. Thus, addition made by the AO amounting to Rs. 2,60,46,189/- is Deleted. Therefore, appeal on these grounds is Allowed.” 14.4 Aggrieved with the additions deleted by the ld. CIT(A), the revenue is in appeal before us. Further, aggrieved with the findings of the ld. CIT(A) in holding that the assessee had carried out business through formation of Syndicates, the assessee has raised separate grounds before us. 14.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. The learned CIT(DR) argued that in the instant case, ample of documentary evidences and tally data were found during the course of the search and from such material, it was evident that the assessee had carried out unaccounted business of liquor by forming syndicates and groups with other persons. It was further contended that many of the syndicates could not be subjected to tax and therefore, for collecting the due tax for the exchequer, the tax should be collected from its members and assessee is one of the members. It was submitted that if the action of the learned CIT(A) is confirmed, then, it would result into a huge revenue loss. Finally, the learned CIT(DR) placed the reliance on the detailed findings given by the AO in the Assessment Order. 14.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A) and has also filed short hand notes before this Bench. The assessee's counsel at the first place, in support of his grounds raised before us, agitated the findings given by the AO, which was also confirmed by the ld. CIT(A), that the assessee had formed the syndicates with various other persons for carrying out the business of liquor with a definite share of profit in the syndicates. The relevant part of the assessee's submission for this contention, as made before the ld. CIT(A), is being reproduced as under: “4.01 Your Honour, the appellant belong to ‘Kalal’ community and since ages, his ancestors are carrying out liquor business. Almost, 5 years back, the IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 28 of 55 appellant joined the liquor business with his father and since then he along with his family members continued in the retail trading of Country liquor (CL) and Indian-made Foreign liquor (IMFL). 4.02 That, in any State, liquor business has to be carried out only in accordance with the relevant laws of Excise legislated by the concerning state and as also, in accordance with the rules, regulations and policies framed under such legislations from time to time. Accordingly, in the state of Madhya Pradesh, as per the policies prevailing for the last 8-10 years, first the State Excise Authorities, identifies the areas/ shops where from the retail sale of intoxicant, which inter- alia, includes liquor, can be sold. The right or privilege to sell liquor is given by grant of a liquor license. These licenses are granted for a period of one year. Such license is given for a consideration and is granted to the person who gets himself agreed for payment of highest local Excise duty, during the period of license, for any particular shop. For such purpose, the State Excise Authorities, by paper publications and gazette notifications, invites tenders from the interested bidders who wish to obtain right to sell liquor from any particular shop, commonly known as liquor license. The person bidding is commonly known as Liquor Contractor. Before participating in the bid, the liquor contractor is required to deposit a certain percentage of the license value for which he intends to bid. After bidding, the liquor contract for any liquor shop, in any specified area, is awarded to the highest bidder. Thus, the highest bidder for any shop, gets the license for one year to sell the liquor, in retail, subject to his agreeing to pay a minimum amount by way of duty for which he had made the bid. After bidding, the successful liquor contractor has to furnish bank guarantee of the stipulated amount in favour of the Excise Authorities. After getting the license, the liquor contractor has to identify any shop in the specified area at his own. After opening the shop, the contractor is required to procure the material (liquor), from the district warehouse of the Excise department (hereinafter referred to as the designated warehouse). For procuring material every time, over and above payment of duty at the prescribed rate, he is also required to make payment for the material, which in the case of purchase of country liquor is also known as Ceiling Charges. The IMFL is also uplifted from the designated warehouse by the liquor contractor. The designated warehouse obtain such IMFL from the various liquor manufacturing units, who have been so licensed and authorized on this behalf. After procuring the material from time to time, the liquor contractor effects sale thereof strictly in cash from his shop. As per Rule XV of General License Conditions under Other Madhya Pradesh Rules under the Madhya Pradesh Excise Act, 1915, all sales under licences for the sale of country liquor or for the retail sale of intoxicating drugs shall be for cash only, and such cash shall be paid over at the time of sale only. After collection of cash from sales, from time to time, either the cash is deposited into the Bank by the liquor contractor or it is utilized for making payment to the Excise Authorities towards duty or to the warehouses towards purchase of material. It is submitted that many a times, on the insistence of the designated warehouses and the State Excise Authorities, the liquor contractor is IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 29 of 55 required to make direct payment to the liquor manufacturing company on behalf of the Department of Excise, State Government. 4.03 That, in a particular financial year, a liquor contractor may hold several licenses for retail sale of liquor in various areas through various shops. Such sales are effected by the salesmen deputed on each shop by the liquor contractor himself. At the end of each day, every shop incharge use to send one daily consolidated report of a day to head office. In such daily report, the shop incharge, specifies the quantity of sales, rate of sales and as also amount of sales made on a particular day. In such report, the utilization of sales proceeds, in the form of cash, is also mentioned such as whether it was deposited in bank account or it was used for payment of duty or for payment to warehouse or for incurring day to day petty expenses. After obtaining daily sales report, in respect of various shops, a consolidated entry for sales is made by the liquor contractor in his regular cash book. Likewise, consolidated entries in respect of purchases, payment of duties, deposits in bank accounts and expenses etc. are made by the liquor contractor in the regular cash book maintained by him on day to day basis. From such cash book, in the computerized system, entries automatically get posted to concerning accounts. At the end of every financial year, the books of accounts are finalized on the basis of trial balance extracted and thereafter Financial Statements are drawn. It is submitted that the appellant was also regularly maintaining such accounts and maintenance of such accounts was also verified by the search party. During the course of search under s. 132 in appellant’s premises, the search party had also found these regular accounts maintained in his computer system and soft copies of all such accounts were also taken by them and such soft copies were placed on record of the assessing officer. 4.04 That after drawing the financial statements from year to year, the appellant used to get his books of accounts, regularly maintained in the ordinary course of business, duly audited from some qualified Chartered Accountants and also used to get Audit Reports, in the prescribed form no. 3CB and 3CD, under the provisions of section 44AB of the Income Tax Act, 1961. A copy of the Audited Financial Statements along with the Tax Audit Report, pertaining to the previous year under consideration, was already placed on record of the assessing officer. Such Audited Financial Statements are placed at page no. 58 to 61 of our paper book. 4.05 That, after obtaining Tax Audit Report under s. 44AB of the Act, the appellant used to furnish his returns of income, quite regularly, under the provisions of section 139(1) of the Act and in such returns, for year to year, the appellant, inter-alia, incorporated his income from liquor trade. It is submitted that for the assessment year under consideration, the appellant had shown an income of Rs.20,02,093/-, from carrying out the liquor trade business, in his Return of Income furnished for the year under consideration [kindly refer PB Page No. 39 & 40]. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 30 of 55 5.01 That, as noted by the learned AO herself at para No.(vi) at page No. 9 of the impugned assessment order, the license granted to a liquor contractor in respect of any particular shop or area cannot be sold, transferred or sub-leased to any other contractor, without the written permission of the Collector. It can also not be transferred to any partnership without the written permission of the Collector. Any such transfer is duly endorsed on the license. For a ready reference, we are reproducing herewith the relevant condition for grant of license, as enumerated in the General License Conditions under Other Madhya Pradesh Rules under the Madhya Pradesh Excise Act, 1915, as under : “VI. Transfer or sub-lease of Licence. - No privilege of supply or sale shall be sold transferred or sub-leased, nor shall a holder of any such privilege enter into a partnership for the working of such privilege in any way or manner without the written permission of the Collector, which shall be endorsed on the licence. A partner sub-lessee, or transferee shall be bound by all the conditions of the licence, but the original licensee shall also continue to be responsible to the State Government for the due payment of the licence fee and proper working of the shop.”(emphasis supplied) 5.02 That, during the course of the assessment proceedings, it was submitted before the learned AO that in the liquor trade, no purchase could be made from any private party. All the purchases have to be made only from the State Government, through its State Excise Department, after making payment of duties and cost of materials. The State Excise Authorities, while receiving the payment, are compulsorily required to collect tax at source in accordance with the provisions of section 206C of the Income Tax Act, 1961. It was further submitted that in the appellant’s case, no variation of even a single penny had arisen between the purchases and TCS thereon shown by the appellant in his regular books of accounts and that shown by the State Excise Authorities in their annual returns submitted before the Income Tax Authorities in respect of TCS made by them. Thus, in other words, purchases and payment of duties shown by the appellant in his Audited Financial Statements were fully verifiable and in such circumstances, there could not have been any slightest doubt as regard to suppression of any purchases in his Audited Books of accounts. 5.03 It was also submitted before the learned AO that, in response to the returns of income furnished by the appellant under s. 139(1) of the Act, out of the seven assessment years under assessment before the learned AO, assessments for one assessment year i.e. A.Y.2012-13 was completed, after full verification of books of accounts and other records of the appellant. A chart giving the details of the aforesaid assessment made under s. 143(3) in the appellant’s case is being submitted herewith for kind perusal and ready reference of Your Honour, as Annexure A-5.00 [PB Page No. 62]. On a perusal of the Order of Hon’ble ITAT, Agra Bench, passed in the appellant’s case for assessment year under consideration, in ITA No. -368/AGR/2015 dated 23-04-2018, which was IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 31 of 55 commonly passed, along with appeals of some other appellants in the same trade [kindly refer PB Page No. 155 to 204 of our Paper book for A.Y. 2012-13], it shall be appreciated by Your Honour that, the Hon’ble Bench at para 35 of the order, has clearly determined the N.P. rate of 2.70% on Sales of liquor. Although, according to the appellant, with all due respect to the Hon’ble Bench, no estimation of Net Profit was warranted over and above that shown in his regular Audited books of accounts but still it can safely be concluded that in the liquor trade, net profit ranges between 1.50% to 3.00% only. 6.00 Your Honour, the learned AO has made the allegation that the appellant was carrying out business of liquor trade by forming syndicates/ groups with various persons and in support of such allegation, the learned AO has made various findings in the body of the assessment order. In this regard, it is submitted that none of the findings of the learned AO is justifiable for the basic reason that without seeking the prior approval of the license granting authority, no one is permitted to assign the license in favour of anyone else or to any syndicate or group. It is submitted that the findings of the learned AO are based only upon some loose papers/ documents/ datas recovered from the premises of third person without taking into consideration various documentary evidences placed on his record. As has been demonstrated in the subsequent paras, all the findings of the learned AO are incorrect and not sustainable in the eyes of the law. 6.01 That, the first averment made in the impugned assessment order, on the subject issue, to the effect that during the course of search under s. 132 carried out at various premises incriminating evidences pertaining to the appellant were seized, it is submitted that such an averment is factually incorrect. The fact remained that during the course of the entire search and seizure proceedings, not even a single document or loose paper or any other material was found from which it could have been inferred that the appellant was indulged in carrying out of books transactions. It is submitted that the whole assessment of the learned AO is hinging on the pivot of some loose papers/ datas which were not found in the premises of the appellant and there is no positive material on record that such loose papers/ datas were prepared either by the appellant or by anyone else on the instruction of the appellant. 6.02 That, the second averment made in the impugned assessment order that the appellant had formed various syndicates/cartels/groups, in different districts, as self organizing group formed to transact specific business, to pursue or promote a shared interest is also factually incorrect. The fact remained that the appellant had not formed any syndicate/ group either for the purpose of carrying out liquor business jointly or for the purpose of deriving any income there from and therefore, the question of his earning any income from any syndicate/ group, in any of the assessment years under consideration, does not arise at all. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 32 of 55 6.03 That, the third averment made in the impugned assessment order that the existence of syndicate was also accepted by the key members of the group, it is submitted that first of all, there is no alleged group as such of the various persons, as referred to by the learned AO at para (11.2) of the impugned assessment order. It is submitted that Shri L.N. Shivhare, ShriAshishShivhare and Shri Ramesh Chandra Rai, whose names have been mentioned in the above referred para, are not family members of the appellant. It is submitted that the appellant was carrying out his liquor business independently and the above named persons were not in any manner associated with the retail liquor trading business of the appellant. It is further submitted that during the course of the assessment proceedings, despite making a request before the learned AO, the aforesaid persons were not produced before the appellant for cross examination. In these circumstances, any statement allegedly given by Shri L.N. Shivhare, Shri Ashish Shivhare and Shri Ramesh Chandra Rai cannot be used, as evidence against the appellant. It shall be pertinent to note that neither during the course of the post-search investigation proceedings, nor during the course of the assessment proceedings, any statement of the appellant himself was recorded by any of the Authorities on the issue of the alleged syndicate. 6.03.1 Your Honour, on the issue of cross-examination, the Hon’ble Supreme Court in the case of M/s. Andaman Timber Industries V/s. Commissioner of Central Excise, Kolkatta-II 2016 (15) SCC 785 (SC) was pleased to hold as under: “5. According to us, not allowing the Appellant to cross examine the witnesses by the Adjudicating Authority though the statements of those witnesses were made the basis of the impugned order is a serious flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the Appellant was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the Appellant disputed the correctness of the statements and wanted to cross examine, the Adjudicating Authority did not grant this opportunity to the Appellant. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the Appellant. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross examination of the said dealers could not have brought out any material which would not be in possession of the Appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the Appellant wanted to cross-examine those dealers and what extraction the Appellant wanted from them. 6. As mentioned above, the Appellant had contested the truthfulness of the statements of these two witnesses and wanted to discredit their testimony for which purpose it wanted to avail the opportunity of cross-examination. That IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 33 of 55 apart, the Adjudicating Authority simply relied upon the price list as maintained at the depot to determine the price for the purpose of levy of excise duty. Whether the goods were, in fact, sold to the said dealers/witnesses at the price which is mentioned in the price list itself could be the subject matter of cross-examination. Therefore, it was not for the Adjudicating Authority to presuppose as to what could be the subject matter of the cross examination and make the remarks as mentioned above. We may also point out that on an earlier occasion when the matter came before this Court in Civil Appeal No. 2216 of 2000, order dated 17-3- 2005 [2005 (187) E.L.T. A33 (S.C.)] was passed remitting the case back to the Tribunal with the directions to decide the appeal on merits giving its reasons for accepting or rejecting the submissions. 7. In view the above, we are of the opinion that if the testimony of these two witnesses is discredited, there was no material with the Department on the basis of which it could justify its action, as the statement of the aforesaid two witnesses was the only basis of issuing the show cause notice.” 6.03.2 The Hon’ble Supreme Court, again, in the case of Ayaaubkhan Noorkhan Pathan vs. The State of Maharashtra and Ors., 2013 AIR 58 (SC) was pleased to hold as under: “23. A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross- examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice. (See also: Union of India v. T.R. Varma, AIR 1957 SC 882; Meenglas Tea Estate v. Workmen, AIR 1963 SC 1719; M/s. Kesoram Cotton Mills Ltd. v. Gangadhar and Ors. ,AIR 1964 SC 708; New India Assurance Co. Ltd. v. Nusli Neville Wadia and Anr. AIR 2008 SC 876; Rachpal Singh and Ors.v. Gurmit Singh and Ors.AIR 2009 SC 2448; Biecco Lawrie and Anr. v. State of West Bengal and Anr. AIR 2010 SC 142; and State of Uttar Pradesh v. Saroj Kumar Sinha AIR 2010 SC 3131). 24. In Lakshman Exports Ltd. v. Collector of Central Excise (2005) 10 SCC 634, this Court, while dealing with a case under the Central Excise Act, 1944, considered a similar issue i.e. permission with respect to the cross-examination of a witness. In the said case, the Appellant had specifically asked to be allowed to cross-examine the representatives of the firms concern, to establish that the goods in question had been accounted for in their books of accounts, and that excise duty had been paid. The Court held that such a request could not be turned down, as the denial of the right to cross-examine, would amount to a denial of the right to be heard i.e. audialterampartem. 28. The meaning of providing a reasonable opportunity to show cause against an action proposed to be taken by the government, is that the government servant is afforded a reasonable opportunity to defend himself against the charges, on the IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 34 of 55 basis of which an inquiry is held. The government servant should be given an opportunity to deny his guilt and establish his innocence. He can do so only when he is told what the charges against him are. He can therefore, do so by cross- examining the witnesses produced against him. The object of supplying statements is that, the government servant will be able to refer to the previous statements of the witnesses proposed to be examined against him. Unless the said statements are provided to the government servant, he will not be able to conduct an effective and useful cross examination. 29. In Rajiv Arora v. Union of India and Ors. AIR 2009 SC 1100, this Court held: 30. The aforesaid discussion makes it evident that, not only should the opportunity of cross-examination be made available, but it should be one of effective cross examination, so as to meet the requirement of the principles of natural justice. In the absence of such an opportunity, it cannot be held that the matter has been decided in accordance with law, as cross-examination is an integral part and parcel of the principles of natural justice.” [Emphasis supplied] 6.03.3 The Hon’ble Gujarat High Court in the case of the Principal Commissioner of Income Tax Ahmedabad and Ors. vs. Kanubhai Maganlal Patel 2017 (3) TMI 271 (Guj.) has held as under: “12. We have heard Shri Varun K Patel, learned counsel appearing on behalf of the Revenue at length. It emerges from the impugned orders and even the order passed by the Assessing Officer that the Assessing Officer made additions under Section 69B of the Act, relying upon the statements of two farmers [i.e., two sellers of the land] in which, according to the Department, they admitted of having received on-money in cash. However, it is required to be noted and it is an admitted position that the statements of those two farmers upon which reliance was placed by the Department were not furnished/given to the appellant to controvert the same. Not only that when a specific request was made before the Assessing Officer to permit them to cross examine the aforesaid two farmers, the same was rejected by the Assessing Officer. Under the circumstances, as rightly observed by the learned Tribunal, the Assessing Officer was not justified in making addition under Section 69B of the Act solely relying upon the statements of those two farmers. 13. We see no reason to interfere with the findings recorded by the learned Tribunal. We are in complete agreement with the view taken by the learned Tribunal while deleting the addition made by the Assessing Officer made under Section 69B of the Act. No substantial question of law arises.” 6.03.4 The Hon’ble Gujarat High Court, again, in the case of the Commissioner of Income Tax-V vs. Indrajit Singh Suri 2013 (8) TMI 111 (Guj.) has held as under: “The entire issue is based on factual matrix presented before the authorities. We are in complete agreement with the findings of the Tribunal that the Assessing Officer had largely proceeded on the basis of the statement of one Shri Gajjar in whose books of account, the said transaction of Ninad Co-op. Housing Society IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 35 of 55 had emerged. It further appears that no opportunity of cross examination of Shri Gajjar, though requested for, was granted by the Assessing Officer. Cumulatively, thus, when the Tribunal found that there was violation of principles of natural justice by not allowing cross examination despite such request coupled with absence of any evidence, no error much less any substantial error is committed by the Tribunal in deleting the said amount. This issue, therefore, requires no further consideration.” 6.03.5 The Hon’ble Gujarat High Court, again, in the case of the CIT vs. Supertech Diamond Tools Pvt. Ltd. 2013 (12) TMI 1529 (Guj.) has held as under: “The reference to the statements made by some of the persons related with the said investing companies is of no effect because such statements could not have been utilized against the appellant Company when the appellant company had not been afforded an opportunity of confronting and cross-examining the persons concerned. There does not appear anything occurring in the statements of the persons relating with the appellant Company so as to provide a basis for the findings recorded by the AO.” [Emphasis supplied] 6.04 Your Honour, as regard to the appellant’s father namely Shri Ramswaroop Shivhare statement recorded under s. 132 on 08-03-2016, it is submitted that in reply to question no. 2, his father had clearly stated that in the name of “Gwalior Syndicate”, some liquor business was carried out by different persons, at their own, to whom liquor licenses have been granted by the State Government but at the same breath, in unequivocal terms, he had stated that the business was carried out by each of the persons, individually, i.e. in his personal capacity by maintaining their accounts individually. It was stated by him that no formal or in the legal form, any syndicate had been formed. It was further stated that sometimes, for the purpose of showing the strength to the outside world, they used to club the names of his family members and close friends hailing from the same trade, as a unit, without actually having any business connection with each other. It was submitted that such unit was commonly called as a Syndicate. A copy of the statement of the appellant’s father namely Shri Ramswaroop Shivhare duly recorded on 08-03-2016, as referred to by the learned AO, at para (11.2.iii.a) is being submitted herewith for kind perusal and record of Your Honour as Annexure A-6.00 [PB Page No. 63 to 74]. Even otherwise it is submitted that the appellant is an independent separate tax entity and it is not the allegation of even the ld. AO that the appellant had formed any syndicate with his father Shri Ramswarooop Shivhare and therefore, any statement given by Shri Ramswaroop Shivhare, in his individual capacity, has no relevance or bearing on the affairs of the appellant. 6.05 Your Honour, it was submitted before the learned AO that the liquor retail trade is carried out on the basis of a periodical license granted by the State Excise Authorities. It was reiterated that the license so obtained by any liquor licensee was not transferable and it could not be transferred to any partnership IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 36 of 55 firm or group even if the licensee himself was a partner or member of such firm or group. Such an exercise requires written permission of the concerning State Excise Authorities. It was also submitted that during the course of the entire Search, not even in a single premises any evidence of grant of any permission, for transfer of any license by any person to any firm or association or syndicate or group, by any Excise Authorities was found. 6.06 Your Honour, at para (v) at page No.9 of the impugned assessment order, the learned AO has averted that some investigations in the form of correspondence with various departments were made by him. It has further been averted that online searching of data as well as third party inquiries revealed that there existed a syndicate and various appellants were part of such syndicate. In this regard, it is submitted that first of all the averment so made by the learned AO is factually incorrect. Even otherwise, it is submitted that all such third party inquiries were never confronted to the appellant during the course of the assessment proceedings and, therefore, no reliance ought to have been placed by the learned AO on such inquiries for reaching to some conclusion against the appellant, as per the various judicial pronouncements, already referred to in the preceding paras. 7.01 Your Honour, in the instant case, the learned AO has made an allegation that the appellant had formed various syndicates/ groups with various persons but except making such allegation he could not bring on record many vital facts such as (i) when such syndicate/ group was formed; (ii) what was the mode of formation of syndicate/ group, whether oral or written; (iii) the place at which such syndicate/ group was formed; (iv) who were the other members of the syndicate/ group; (v) the specific purpose of the syndicate/ group, the place of operation of the group; (vi) profit/ loss sharing ratio of the members of the group; (vii) manner of distribution of profit/ loss of the group etc.. It is submitted that unless and until, the full identity of all the members of a group are made known, no allegation as regard to forming of any so-called group or syndicate can validly be made. It shall be appreciated that whenever any syndicate or AOP or partnership is formed, some documents are necessarily prepared between the members of such syndicate or AOP or partnership for determining the purpose, sharing ratio, capital contribution etc. of the members. However, in the instant case not even a single document of formation of any syndicate or group was found from any of the premises. It is submitted that allegation of formation of syndicate is mere assumption and not a reality. 7.01.1Your Honour, in the instant case, the learned AO has not conducted any independent enquiry that whether or not the appellant was running any liquor business by forming any syndicate. The learned AO could have deputed his officios for conducting enquiries at the places where the appellant had claimed to have run liquor shops in his individual capacity in the past. From the enquiries, it could have been gathered that whether it was appellant only or some other persons too, who were running the shops, in the capacity of owner. The learned IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 37 of 55 AO could have also made necessary enquiry from the employees and as also from the landlords of the shops, from which the appellant was running his liquor business. Merely on the basis of tally datas, which by themselves are not reliable and have no credence, the learned AO ought not to have formed a view that the appellant was carrying out the business of liquor by forming syndicates/ groups. 7.02 Finally, it is submitted that in view of the facts and circumstances of the appellant’s case and as also the submissions made herein above, it shall be appreciated by Your Honour that the allegations made by the learned AO in the body of the assessment order to the effect that the appellant had formed various syndicates/ groups for carrying out his liquor business, have no legs to stand and therefore, such allegations deserve to be negated at threshold only. Once, the allegation of forming any syndicate/ group gets disproved, the consequent additions made by the learned AO, in the appellant’s income, on such presumption would also get deleted automatically. 8.00 Your Honour, without prejudice to the above and without in any manner admitting that the appellant had formed any syndicate/ group for carrying out his liquor business, it is submitted that even for the sake of assumption, the allegation of the learned AO, on this count, is taken to be true on its face even then, the additions made by the learned AO on the various counts are not correct and sustainable in view of the foregoing discussion. 9.00 Your Honour, the learned AO, while framing the assessment for the year under consideration, has made an addition of Rs.2,60,46,189/- in the appellant’s income on the allegations of the appellant having formed syndicate and on the count of share of the appellant in the inadmissible expenses, allegedly incurred by such syndicate during the relevant previous year. The head-wise break-up of the above addition is given at para no. (2.02) supra. 10.00 That, it shall be observed by Your Honour that none of the incriminating documents, on the basis of which, huge additions of Rs.2,60,46,189/- have been made in the appellant’s income were found or seized from the appellant’s premises. It shall be observed by Your Honour that all such documents were found from the premises of third parties and therefore, the presumption under section 292C was not available to the learned AO against the appellant without first positively bringing on record that such documents contain the transactions relating to the appellant.” 14.6.1 The assessee after making submissions for grounds raised by him, agitate the ground raised by the revenue against the deletion of the addition made by the CIT(A) on account of assessee's share in profit and inadmissible expenses of the syndicates. The relevant abstracts of the assessee's submission are as under: IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 38 of 55 “1.00 In this context, without in any manner admitting that the appellant had formed any syndicate or group for carrying out any business even if, based upon the findings given by the learned AO in the assessment order itself, it is presumed that the appellant had formed various syndicates/ groups (AOPs) for carrying out the business of liquor with other persons and had derived share of income from such syndicates then also, no addition was warranted in the appellant’s hands in view of the foregoing submissions. 2.01 That, while passing the impugned assessment order, at various places such as at paras (11.1), (11.2), (11.3), (11.4) in the body of the order, it has been alleged that the appellant had formed various syndicates/ groups with other persons for carrying out the liquor business. It has further been asserted that in such syndicates, the appellant made certain investments by way of contribution of capital and also derived certain share in profit of such syndicates. Besides, in the body of the assessment order, it has also been asserted by the learned AO that such syndicates incurred some expenses which were not admissible as deduction from the net profit of the syndicates, in accordance with provisions of the Income-Tax Act, 1961. 2.02 That, as per findings given in the subject assessment order itself, the appellant had formed syndicate/ groups with various persons for carrying out the business of liquor and in such syndicate/ groups the appellant was having a definite, determinate and known share. Thus, there cannot be two views that according to the subject assessment order, the appellant derived share of income as a member of an association of persons (AOP), with the determinate and known share. Accordingly, in the instant case, for the relevant assessment year, the appellant’s share in the income of the AOPs, as a member, in accordance with the provisions of section 67A would work out to be as under: Sno. Description Amount 1 Share of Profit in syndicate (AOPs) Nil 2 Share of Profit in inadmissible expenses (AOPs) 2,22,18,098 2,22,18,098 3 Less Share of Loss in various syndicates (AOPs) 11,70,249 Net Share of Profit in various AOPs u/s. 67A 2,10,47,849 2.05 That, undoubtedly, the entire share of income of the appellant in various AOPs, as determined in the assessment order itself, at Rs.2,10,47,849/- has duly been incorporated and included in the total assessed income of the appellant at Rs.2,63,64,389/-. 2.06 That, as per the provisions of section 86, as contained in Chapter VII of the Income-Tax Act, 1961, the entire share of the appellant in income of the IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 39 of 55 Association of Persons, as computed in the manner provided in section 67A is not chargeable to income-tax. Further, since, undisputedly, such syndicates are separately chargeable to tax on their respective total income, at the maximum marginal rate, in accordance with the proviso (a) to section 86 of the Act, the share of the appellant, as a member in the syndicates, ought not to have been included in his total income. For a ready reference, the provisions of section 67A & 86 of the Income-Tax Act, 1961 are being reproduced as under: “CHAPTER VI AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD LOSS Aggregation of Income Method of computing a member’s share in income of association of persons or body of individuals. S. 67A (1) In computing the total income of an appellant who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known [other than a company or a co- operative society or society registered under the Societies Registration Act, 1860 (21 of 1860), or under any law corresponding to that Act in force in any part of India], whether the net result of the computation of the total income of such association or body is a profit or a loss, his share (whether a net profit or net loss) shall be computed as follows, namely :- (a) Any interest, salary, bonus, commission or remuneration by whatever name called, paid to any member in respect of the previous year shall be deducted from the total income of the association or body and the balance ascertained and apportioned among the members in the proportions in which they are entitled to share in the income of the association or body; (b) Where the amount apportioned to a member under clause (a) is a profit, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be added to that amount, and the result shall be treated as the member's share in the income of the association or body; (c) Where the amount apportioned to a member under clause (a) is a loss, any interest, salary, bonus, commission or remuneration aforesaid paid to the member by the association or body in respect of the previous year shall be adjusted against that amount, and the result shall be treated as the member's share in the income of the association or body. (2) The share of a member in the income or loss of the association or body, as computed under sub-section (1), shall, for the purposes of assessment, be apportioned under the various heads of income in the same manner in which the income or loss of the association or body has been determined under each head of income. (3) Any interest paid by a member on capital borrowed by him for the purposes of investment in the association or body shall, in computing his share chargeable under the head "Profits and gains of business or IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 40 of 55 profession" in respect of his share in the income of the association or body, be deducted from his share. Explanation : In this section "paid" has the same meaning as is assigned to it in clause (2) of section 43.” “CHAPTER VII INCOMES FORMING PART OF TOTAL INCOME ON WHICH NO INCOME- TAX IS PAYABLE Share of member of an association of persons or body of individuals in the income of the association or body. S. 86: "Share of member of an association of persons or body of individuals in the income of the association or body.-Where the appellant is a member of an association of persons or body of individuals (other than a company or a co-operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India), income-tax shall not be payable by the appellant in respect of his share in the income of the association or body computed in the manner provided in Section 67A. [emphasis supplied] Provided that,- (a) where the association or body is chargeable to tax on its total income at the maximum marginal rate or any higher rate under any of the provisions of this Act, the share of a member computed as aforesaid shall not be included in his total income; [emphasis supplied] (b) in any other case, the share of a member computed as aforesaid shall form part of his total income: Provided further that where no income-tax is chargeable on the total income of the association or body, the share of a member computed as aforesaid shall be chargeable to tax as part of his total income and nothing contained in this section shall apply to the case." 2.07 On a combined reading of the provisions of section 67A and section 86 of the Act, it shall be observed by Your Honour that the income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known shall be computed in accordance with the methodology provided in section 67A. However, after making the computation of share of a member in AOP or BOI, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. There are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body. 2.08 Your Honour, the necessary provisions, as regard to charging of tax on the total income of an association or body at the maximum marginal rate are contained in section 167B of the Act. For a ready reference, the relevant provisions of section 167B are reproduced, as under: IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 41 of 55 “CHAPTER XV LIABILITY IN SPECIAL CASES – FIRMS, AOPs, BOIs Charge of tax where shares of members in association of persons or body of individuals unknown, etc. (1) Where the individual shares of the members of an association of persons or body of individuals (other than a company or a co- operative society or a society registered under the Societies Registration Act, 1860 (21 of 1860 ), or under any law corresponding to that Act in force in any part of India) in the whole or any part of the income of such association or body are indeterminate or unknown, tax shall be charged on the total income of the association or body at the maximum marginal rate: Provided that, where the total income of any member of such association or body is chargeable to tax at a rate which is higher than the maximum marginal rate, tax shall be charged on the total income of the association or body at such higher rate. (2) Where, in the case of an association of persons or body of individuals as aforesaid[ not being a case falling under sub- section (1)],- (i) the total income of any member thereof for the previous year (excluding his share from such association or body) exceeds the maximum amount which is not chargeable to tax in the case of that member under the Finance Act of the relevant year, tax shall be charged on the total income of the association or body at the maximum marginal rate; (ii) any member or members thereof is or are chargeable to tax at a rate or rates which is or are higher than the maximum marginal rate, tax shall be charged on that portion or portions of the total income of the association or body which is or are relatable to the share or shares of such member or members at such higher rate or rates, as the case may be, and the balance of the total income of the association or body shall be taxed at the maximum marginal rate. Explanation.- For the purposes of this section, the individual shares of the members of an association of persons or body of individuals in the whole or any part of the income of such association or body shall be deemed to be indeterminate or unknown if such shares (in relation to the whole or any part of such income) are indeterminate or unknown on the date of formation of such association or body or at any time thereafter.] 2.09 Your Honour, in the instant case, as per the findings given by the learned AO himself, the share of the appellant as a member of the syndicates (AOPs) was determinate and therefore, the appellant’s case would not fall under the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the appellant would fall under the provisions of sub-section (2) to section IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 42 of 55 167B of the Act. In such a situation, the entire income of the alleged syndicates, of which the appellant is allegedly claimed to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of sub-section (2) to section 167B of the Act. 2.10 Your Honour, it is thus evident that the subject syndicates being liable for charge of tax at the maximum marginal rate, the first exclusion as contemplated in clause (b) read with clause (a) of proviso to section 86 of the Act would have no application. As regard the second proviso to section 86, it is submitted that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, the exclusion provision from operation of section 86 would not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it would be observed that the alleged share of profit of the appellant in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion of total income. However, in the instant case, the learned AO, in complete derogation of the scheme of law, has not taken such aspect into consideration and made the impugned addition. 2.11 Your Honour, in the instant case, the learned AO has made additions, to the extent of the appellant’s share in such syndicate, qua some alleged inadmissible expenses incurred by such syndicate. It is submitted that first of all, any disallowance for claim of any expenses can be made only in the hands of the person who claims it and not in the hands of the other persons. It is submitted that the appellant never claimed any alleged inadmissible expenses, in his audited books of account and therefore, the question of making any addition in the hands of the appellant does not arise. It is submitted that even if such disallowance was warranted then the additions ought to have been made, while making the assessment, in the hands of the syndicate only. It is submitted that after making such additions on account of disallowances of expenses, the income of the syndicate ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the appellant in the total income of the syndicate was required to be apportioned. Thus, any share of the appellant in the inadmissible expenses of the syndicate ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act. Needless to say, after making the addition on account of share of income, which in its turn ought to have been inclusive of share in inadmissible expenses, the necessary relief in accordance with the provisions of section 86 ought to have been granted to the appellant which has not been so done in the instant case. 3.00 Your Honour, to the best of the knowledge of the appellant, subsequent to the framing of the assessment in the case of the appellant under section 153A of the Act, separate proceedings have been initiated by the revenue under section 153C of the Act for making assessment in the hands of syndicates. It is IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 43 of 55 submitted that although the appellant has not been made a party to such assessments carried out under s. 153C of the Act but still, if the information of the appellant to this effect is found to be correct then having assessed the syndicates separately in the capacity of AOPs, now there would be no room and justification for sustaining the impugned addition in the hands of the appellant too. It is a well known maxim of the tax laws that the same income cannot be taxed twice in the hands of two different persons. 4.01 Your Honour, even if it is presumed that in the case of syndicate, the Department failed to make any assessment, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the appellant. It is submitted that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is duty bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. 4.02 Your Honour, in the similar circumstances, the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) was pleased to hold that under the present Act the right income has to be assessed in the hands of the right person. A copy of the judgment of the Apex Court is being submitted herewith for kind perusal and record of Your Honour, as Annexure A-7.00 [PB Page no. 75 to 81]. 4.03 Your Honour, in the instant case, having assessed the appellant in the capacity of member of syndicate, the revenue would still have a valid right to assess separately the syndicates which would result into making assessment of the same income in two hands which is not permissible in the eyes of the law. It is submitted that in the similar circumstances, the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) relying upon the decision of Hon’ble Supreme Court of Ch. Atchaiah held the same view. The Hon’ble High Court further held that merely because the right person could not be taxed it would not be open to the Revenue to tax a wrong person. A copy of the judgment of the Hon’ble High Court is being submitted herewith for kind perusal of Your Honour, as Annexure A-8.00 [PB Page no. 82 to 94] 4.04 The Hon’ble ITAT Delhi ‘G’ Special Bench, in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) held that under the 1961 Act, ITO has no option to assess the members of the AOP. A copy of the said judgment is being submitted herewith for kind perusal and record of Your Honour, as Annexure A-9.00[PB Page no. 95 to 117] IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 44 of 55 4.05 Reliance is also placed on the judgment of Hon’ble ITAT Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716. A copy of the said judgment is being submitted herewith for kind perusal and record of Your Honour, as Annexure A-10.00 [PB Page no. 118 & 119] 4.06 Reliance is also placed on the following judicial pronouncements: i) CIT vs. Virendra Kumar Gupta (2013) 87 CCH 0010 (Del) ii) CIT vs. MurugesaNaicker Mansion (2000) 244 ITR 0461 (Chen) 5.00 In view of the above facts and circumstances, it is submitted that the learned AO was not justified in making addition of Rs.2,10,47,849/- (after granting set-off against the share of loss of the appellant in the syndicate at Rs.11,70,249/-) in the total income of the appellant on the account of appellant’s share in inadmissible expenses from such syndicate. Accordingly, the same deserve to be deleted on this count too.” 15.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 15.2 First we would take the assessee's grounds of Appeal challenging the action of the ld. CIT(A) in confirming the AO's action of holding that the assessee had formed syndicates with various persons and had derived share of profit from such syndicates. In our view, considering the voluminous tally datas and as also, financial statements of the various syndicates as seized during the course of search u/s. 132 of the Act in the different premises of the liquor group, there is absolutely no infirmity in the AO's action in holding that the assessee had carried out liquor business with various other persons by forming group, under the garb of syndicates, for a definite share of profit. We find that the AO has rightly placed reliance on the statements of various members of the syndicates who have also admitted to have formed syndicates. We find that the Special Auditors appointed u/s. 142(2A) of the Act, have made a very detailed working in which they have determined the various inadmissible expenses incurred by such syndicates and have also worked out the assessee's share in profit as well as in inadmissible expenditure incurred by each of the syndicates. Before us, the counsel of the assessee could not establish that the seized material relied upon by the AO was not belonging to the syndicates in IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 45 of 55 which he was clearly stated to be one of the members. In these circumstances, we do not find any substance in the assessee's ground that he had not formed any syndicate. We also do not find any merit in the assessee's ground to the effect that corresponding to the quantum of share of profit of the assessee in various syndicates, as determined by the AO, no corresponding asset or expenditure was found. We find that first of all, this assertion itself is factually incorrect and contrary to the assessee's own submissions before us in respect of other grounds of appeals through which for explaining the sources of undisclosed investment/expenditure the assessee has claimed that these were the share of profit from the syndicates. Even otherwise, non finding of any corresponding asset/expenditure, ipso facto, cannot be a ground for presuming that the assessee had not derived undisclosed income, especially in a circumstance when such undisclosed income is evident from ample of documentary evidences found during the course of search. Accordingly, theGround Nos. 6(a)& 6(b) of the Assessee for A.Y. 2014-15, being without substance are Dismissed. 15.3 Now, coming to the Revenue's Ground, through which they have agitated the action of the ld. CIT(A) in deleting the additions, for various assessment years, made by the AO in the assessee's income on account of undisclosed income from liquor trade business. Upon overall consideration, we find absolutely no infirmity in the findings given by the ld. CIT(A). We find that undisputedly, the assessee had formed various Association of Persons (AOP), in form of syndicates/cartels/groups, with various other persons to carry out the business of liquor trade which is evident from the seized material/data and as also, report given by the Special Auditors. We also find ourselves in agreement with the findings given by the AO that the assessee was having specified percentage of share of profit in all such syndicates. We find that the AO at para (11.4), by way of drawing a table, has given the details of various syndicates and the assessee's share in such syndicates. Further, we find that in the same table, the ld. AO has also made a reference of the relevant seized documents. Thus, there cannot be two views that the assessee had formed the syndicates and had also derived share of profit from such syndicates. We find that while computing the income of the assessee from such syndicates, the AO at para (11.7) of his Assessment Order has taken into consideration the assessment year wise aggregate amount of share of profit/(loss) of the assessee from the syndicates and has also taken into consideration the assessee's share in IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 46 of 55 inadmissible expenses found incurred by such syndicates. We find that while making the assessment year wise additions in the assessee's income, the AO has taken the sum of both the figures after giving set-off for share of loss in syndicates for each year. We are of the view that that having given a finding to the effect that the assessee had formed the syndicates and such syndicates had carried out the liquor business as separate entities there was absolutely no justification for the AO to subject the assessee in respect of profit of such syndicates which in the legal phraseology are nothing but Association of Persons/Body of Individuals. 15.3.1 We find that as per the provisions of section 86, as contained in Chapter VII of the Income-Tax Act, 1961, the entire share of an assessee in income of the Association of Persons or Body of Individuals, as computed in the manner provided in section 67A shall not be chargeable to income-tax. In our view, in the present case, the clause (a) of the first proviso to section 86 would apply, inasmuch, the syndicates are chargeable to tax at the maximum marginal rate and consequently, the share of any member in the syndicates as computed in the manner provided in section 67A shall not be included in the total income of the member i.e. the assessee in the present case. 15.3.2 We find as per the provisions of section 67A of the Act, in computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known, after making certain adjustments share of each member is required to be computed. However, after making the computation of share of a member in AOP or BOI as per the provisions of section 67A, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. We find that there are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body, but, for the reasons discussed hereinbelow, none of the exceptions to section 86 are applicable in the present case. 15.3.3 We further find that in the instant case, as per the findings given by the AO himself, the share of the assessee as a member of the syndicates (AOPs) was determinate and therefore, the assessee’s case would not fall under IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 47 of 55 the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the syndicates, of which the assessee was found to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of sub- section (2) to section 167B of the Act in the hands of such syndicates only. 15.3.4 We find that since all the subject syndicates are liable for charge of tax at the maximum marginal rate and therefore, the first exclusion as contemplated in clause (b) of the first proviso to the section 86 read with clause (a) of the first proviso thereof would have no application. For the second proviso to section 86, we find that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, such proviso would also not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it can be safely concluded that the share of profit of the assessee in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion of total income of the assessee 15.3.5 In the light of the legal position, as stated hereinabove, in our considered view, income of all the syndicates, as determined by the AO, can be assessed in the hands of the respective syndicates only as these syndicates, being AOPs are classified as separate persons and tax entity u/s. 2(31) of the Act, but, in any circumstance, in the present case, any share of profit from such syndicates cannot be added as income chargeable to tax in the hands of any of its members. We find that, as per the findings given by the ld. CIT(A) at para (4.7.2) which remained uncontroverted by the Revenue, even in respect of some of the syndicates, separate assessments have already been framed by the various assessing officers u/s. 144/153C of Act and while making assessments in the hands of such syndicates, the amount of undisclosed income earned by these syndicates, have already been determined. It is well known maxim of the law that same income cannot be taxed twice in the multiple hands unless otherwise so warranted by the specific provisions of the Act itself. 15.3.6 In the present case, we also find that the AO besides making addition on account of assessee’s having derived share of profit from various syndicates, has also made addition, to the extent of the assessee’s share in such syndicate, qua some alleged inadmissible expenses incurred by such IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 48 of 55 syndicates. We find full substance in the assessee's contention that since none of these inadmissible expenditure was claimed by the assessee himself, and therefore, any disallowance for claim of any such expenses can only be made in the hands of the syndicates which have actually incurred such expenditure. In our view, after making such additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under section 67A of the Act, but again, after making such addition, the necessary relief in accordance with the provisions of section 86 ought to have been granted by the AO to the assessee which has not been so done in the instant case. 15.3.7 In our view, even if for any reason the Revenue failed to make any assessment in the hands of the syndicates, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. We find that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is statutorily bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. For such proposition, we rely on the decision of the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) in which their Lordships was pleased to hold that under the present Act there is no discretion available to an AO either to assess the income in the hands of AOP or its members, but the same has to be assessed only in the hands of the AOP. The Apex Court further held that right income must be assessed in the hands of the right person. We also respectfully follow the decision of the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) in which the Lordshipsrelying upon the decision of Hon’ble Supreme Court of Ch. Atchaiah held that merely because the right person could not be taxed it would not be IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 49 of 55 open to the Revenue to tax a wrong person. We find that the similar view was expressed by the Coordinate Delhi ‘G’ Special Bench, in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) and as also, by the Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716. 16. In view of the above findings, we find no infirmity in the findings given by the ld. CIT(A) in deleting the entire additions made by the AO in the hands of the assessee on account of assessee's share in profit and inadmissible expenses of various syndicates, for various assessment years in the appeal. Accordingly, Ground No. 1 of the Revenue for A.Y. 2014-15, being devoid of any merit, is hereby dismissed. 17. Ground No. 2 of the Revenue for A.Y. 2014-15 17.1 Through the Ground No. 2, for the A.Y. 2014-15, the revenue has challenged the action of the ld. CIT(A) in deleting the addition of Rs.3,18,200/- made by the AO on account of undisclosed investment in purchase of a land situated at village Amarpura, Tehsil Huzur, District Bhopal. 17.2 Briefly stated facts of the issue, as culled out from the records, are that the AO, during the course of the assessment proceedings, vide show-cause notice dated 19-07-2018, required the assessee to furnish the sources of making investments in various immovable properties as given by the AO in Annexure C-1 to such notice which inter alia comprised of the alleged investment of Rs.3,18,200/- in the land situated at village Amarpura, Tehsil Huzur, Bhopal. In reply, the assessee furnished his explanation before the AO demonstrating that he had not made any investment in the six immovable properties inter alia comprising of the subject land at Amarpura. The assessee claimed that these properties were in fact owned by some other persons and not by the assessee. The AO, while framing the assessment order, duly considered the explanation of the assessee in respect of the five other properties and had not taken any adverse view thereon. However, in respect of the subject property at Amarpura, the AO averted that the assessee failed to provide any document to explain the source of investment in such property and also had not given any reply with regard to such property. Finally, the AO made an addition of Rs.3,18,200/- in the assessee’s income on account of undisclosed investment in the said land situated at village Amarpura. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 50 of 55 17.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written submissions along with the documentary evidences. The Ld. CIT(A) observed that the assessee had not made any investment in any of properties mentioned in the Annexure “C-1” to the show-cause notice dated 19-07-2018 issued by the AO. The ld. CIT(A) further noted that the assessee also furnished a copy of the registered purchase deed of the said land demonstrating that such land was purchased by some other person namely Shri Devendra Mohan Sharma. The ld. CIT(A) observed that nowhere in the aforesaid Deed the name of the assessee was getting appeared either in the capacity of Buyer or seller or in any other capacity. The ld. CIT(A) further held that the AO without properly considering the facts of the case and evidences furnished by the assessee in support of his contention of not having made any investment in the said property, ventured to make the impugned addition without bringing any adverse material on record. According to the ld. CIT(A), the AO could not justify his action of making the addition without giving necessary details and without conducting proper enquiries. Accordingly, the ld. CIT(A) deleted the entire addition of Rs.3,18,200/- made by the AO on this count. The ld. CIT(A) has given the relevant findings at para (4.10.1) of his order which are reproduced as under: “4.10.1 I have considered the facts of the case, the assessment order, the written as well as oral submissions of the appellant and the documentary evidences placed on record. The appellant had not made any investment in any of properties mentioned in the Annexure “C-1” to the show-cause notice dated 19- 07-2018 issued by the AO. In support of the aforesaid assertion, the appellant also furnished a copy of the registered purchase deed of the said land demonstrating that such land was purchased by some other person namely ShriDevendra Mohan Sharma. On perusal of the Purchase Deed, it was observed that nowhere in the aforesaid Deed the name of the appellant is getting appeared either in the capacity of Buyer or seller or in any other capacity. The AO without properly considering the facts of the case and evidences furnished by the appellant in support of his contention of not having made any investment in the said property, ventured to make the impugned addition without bringing any adverse material on record. It is not the case of the AO that the appellant was benami owner of the subject property. The AO could not justify his action of making the addition without giving necessary details and without conducting proper enquiries. I find merit in the contention of the appellant that an addition cannot be made in the income of an assessee without any basis. Thus, the addition is made without any basis whatsoever and liable to be deleted. Hence, IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 51 of 55 addition made by the AO amounting to Rs.3,18,200/- is Deleted. Therefore, appeal on this ground is Allowed.” 17.4 Aggrieved with the addition deleted by the ld. CIT(A), the revenue is in appeal before us. 17.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO on this issue. 17.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A). 18.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides.We find that in the instant case, the AO has made addition in the income of the assessee on the basis of some documents seized and inventorized as IDS-7, LPS-1, Page No. 94-28. The details of such properties have been given by the AO in the Show Cause Notice issued to the assessee, and the relevant abstract is placed at page no. 136 of the assessee’s Paper Book for A.Y. 2014-15, which contains the details of purchase of some land by the assessee, situated at Gram Amarpura, Tehsil Huzur. We find that in the table of immovable properties given by the AO at para (12.1) of her Order, the purchaser of property has been shown to be the assessee but, from the copy of the Purchase Deed dated 27/03/2014, we find that in such registered Purchase Deed in respect of the subject property, the name of the purchaser is appearing as some Shri Devendra Mohan Sharma s/o Shri Sureshchandra Sharma of Bhopal. Thus, we find substance in the contention of the assessee that since, the subject property was neither purchased by him nor any investment in the said property was made by him, the question of making any addition on this count in his income ought not to have arisen. We find that before us, the ld. CIT(DR) has not rebutted the assertions made by the assessee. We find that it is not the case of the AO that the assessee purchased the subject property in the name of some third person. In such circumstances, we find no infirmity in the action of the ld. CIT(A) in deleting the addition of Rs. 3,18,200/- made by the AO on account of unexplained investment in property for A.Y. 2014-15. Consequently, the Ground No. 2 of the Revenue for A.Y. 2014-15 is hereby Dismissed. IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 52 of 55 19. Ground Nos. 7(a) to 7(d) of the Assessee for A.Y. 2014-15 19.1 Through these Grounds of appeal, the assessee has challenged the action of the ld. CIT(A) in partially upholding the addition to the tune of Rs.20,60,638/- out of the total addition of Rs.49,98,340/- made by the AO in A.Y. 2014-15, on account of undisclosed capital investment of the assessee in various syndicates. 19.2 Briefly stated facts of the issue have already been discussed while adjudicating the Ground No. 1 of the Revenue for A.Y. 2014-15 and Ground Nos. 6(a)& 6(b)of the Assessee for A.Y. 2014-15 and therefore, the same are not being repeated here. In the specific ground nos. 7(a) &7(b), the assessee has agitated the very making of the addition on the ground that he had neither formed any syndicate nor made any investment in such syndicates. The AO has dealt with the issue of unaccounted capital investment at clause (vii) of para (11.9) at page no. 16 & 17 of the impugned order. After reproducing the written submission made by the assessee before him, the AO, on the basis of the working of the Special Auditors, furnished the amount of undisclosed capital investment for the assessment year 2014-15 in respect of which the assessee was issued a show cause notice. As per the show-cause notice, the assessee was required to explain the sources of unexplained investment in capital of syndicate, at Rs.49,98,340/-. In reply to such show-cause notice, the assessee claimed that during the relevant year, the assessee had made fresh investment only to the tune of Rs.33,85,000/- and further, against such investment of Rs.33,85,000/-, cash amounting to Rs.13,24,362/- withdrawn by him on an earlier occasion in the same year was available with the assessee. Thus, according to the assessee, by any stretch of imagination, his alleged undisclosed investment, in the alleged syndicate, could not have been presumed to be more than a sum of Rs.20,60,638/- [Rs.33,85,000/- (-) Rs.13,24,362/-]. Finally, the AO, by discarding the claim of the assessee, determined the amount of undisclosed capital investment at Rs.49,98,340/- for A.Y. 2014-15. By raising the aforesaid grounds of appeal, the assessee has agitated that such amount of undisclosed investment in capital was not worked out correctly. 19.3 Aggrieved with the Order of Assessment, the assessee preferred an appeal for the subject assessment year before the ld. CIT(A). During the course of the first appellate proceedings, the assessee made detailed written IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 53 of 55 submissions along with the documentary evidences. The ld. CIT(A) noted that as per the seized loose paper in the form of ledger account, opening balance of capital investment of the assessee in some syndicate was to the tune of Rs.34,18,299/- and during the relevant previous year, the capital account of the assessee has been credited with three entries of Rs.2,36,333/- on 01-04- 2013, Rs.13,77,000/- on 07-02-2014 and of Rs.20,08,000/- on 28-02-2014. The first credit entry of Rs.2,36,333/- is in the form of a journal entry whereby bank guarantee expenses account has been debited and the assessee’s capital account has been credited. However, the remaining two entries of Rs.13,77,000/- and Rs.20,08,000/- clearly show cash payments by the assessee to the syndicate. The ld. CIT(A), on a further perusal of the same ledger account, found that before making cash payment of Rs.13,77,000/- on 07-02-2014, the assessee had made cash withdrawals from the same syndicate of Rs.13,24,262/- on 05-07-2013. The ld. CIT(A) found that the cash so withdrawn was available with the assessee for making re-deposition in the capital account. According to the ld. CIT(A), the AO made addition of Rs.49,98,340/- without taking into consideration that as per the capital account, the assessee was having opening credit balance of Rs.34,18,299/- in such syndicate. As per the ld. CIT(A), it is a settled law that opening balance cannot be added to the income of the assessee. Thus, the ld. CIT(A) restricted the addition only to the fresh cash deposits made during the year under consideration which was worked out by the ld. CIT(A) at Rs.33,85,000/- and against such cash deposits, the due credit was required to be given to the assessee for the cash withdrawals of Rs.13,24,362/- made before making of such cash deposition. Accordingly, the ld. CIT(A), confirmed the addition to the extent of Rs.20,60,638/- thereby giving a relief of Rs.29,37,702/- to the assessee. The ld. CIT(A) has given the relevant findings at para (4.9.2) of his order which are reproduced as under: “4.9.2 I have considered the AO’s findings, the appellant’s written as well as oral submissions, documentary evidences placed on record. In my considered view, the appellant had made capital investment in some syndicate and the sources of such capital investment were not satisfactorily explained by him before the AO. During the course of the appellate proceedings, the counsel of the appellant, filed a copy of the seized document on the basis of which the AO has made the subject addition of Rs.49,98,340/-. The seized document is in the form of a capital ledger account, for the financial year 2013-14, in which the name of the appellant has clearly been mentioned. As per the ledger account, opening balance of capital investment of the appellant in some syndicate was to the tune of Rs.34,18,299/- and during the relevant previous year, the capital account of the appellant has IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 54 of 55 been credited with three entries of Rs.2,36,333/- on 01-04-2013, Rs.13,77,000/- on 07-02-2014 and of Rs.20,08,000/- on 28-02-2014. The first credit entry of Rs.2,36,333/- is in the form of a journal entry whereby bank guarantee expenses account has been debited and the appellant’s capital account has been credited. However, the remaining two entries of Rs.13,77,000/- and Rs.20,08,000/- clearly show cash payments by the appellant to the syndicate. However, on a perusal of the same ledger account, I find that before making cash payment of Rs.13,77,000/- on 07-02-2014, the appellant had made cash withdrawals from the same syndicate of Rs.13,24,262/- on 05-07-2013. I find strong force in the contention of the appellant that the cash so withdrawn was available with the appellant for making re-deposition in the capital account. The AO has made addition of Rs.49,98,340/- without taking into consideration that as per the capital account, the appellant was having opening credit balance of Rs.34,18,299/- in such syndicate. It is a settled law that opening balance cannot be added to the income of the appellant. Thus, the addition has to be restricted only to the fresh cash deposits made during the year under consideration which works out to be Rs.33,85,000/- and against such cash deposits, the due credit is required to be given to the appellant for the cash withdrawals of Rs.13,24,362/- made before making of such cash deposition. In view of the above discussion, addition made by the AO amounting to Rs.20,60,638/- is Confirmed and appellant would get a relief of Rs.29,37,702/-. Therefore, appeal on these grounds is Partly Allowed.” 19.4 Aggrieved with the addition confirmed by the ld. CIT(A), the assessee is in appeal before us. 19.5 Before us, learned CIT(DR) vehemently argued supporting the observations of the AO and the ld. CIT(A) on this issue. 19.6 Per Contra, Learned Counsel for the assessee has relied upon the written submission made before the ld. CIT(A). 20.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, written and oral submissions made from both the sides. 20.2 We find that on the subject issue, the assessee had given a detailed submission along with documentary evidences before the AO which has been reproduced by the AO herself at para (11.9)(vii) of her Order. We find that before the AO, the assessee himself had admitted having made the fresh investments to the extent of Rs. 20,60,638/- in the syndicate. We find that before us, the assessee could not demonstrate the source of making such IT(SS)A No.137 & 138/Ind/2020 AY: 2012-13 & 2014-15 IT(SS)A No.10/Ind/2021 Assessment Year: 2014-15 Shri Akahsh Shivhare Page 55 of 55 investment. Accordingly, we find no substance in the Grounds taken by the assessee. Consequently, the Ground Nos. 7(a) to 7(d) of the Assessee for A.Y. 2014-15 are hereby Dismissed. 21. In the result, the appeal of the Assessee for A.Y. 2012-13 and A.Y. 2014-15 and the cross appeal by the Revenue for A.Y. 2014-15 are dismissed. The order pronounced as per Rule 34 of ITAT Rules, 1963 on 19.04.2022. Sd/- Sd/- (MAHAVIR PRASAD) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER दनांक /Dated : 19.04.2022 Patel/PS Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt. Registrar, I.T.A.T., Indore