ACIT, Circle-23(1), V. Soulmates,

ITSSA 16/DEL/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9146 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-07-2010
• Assessment Year: misc
• Appeal Filed On: 20-01-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANGEETA GUPTA
• Keywords: Document seized; Block assessment; Documents seized
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI B.C. MEENA ITA(SS) NO. 16/DEL/2006 BLOCK PERIOD: 1-4-90 TO 20-7-2000 ACIT CIR. 23(1) VS. M/S SOULMATES, NEW DELHI. 12/26, SARVPRIYA VIHAR, NEW DELHI. PAN/GIR NO. ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SMT. SANGEETA GUPTA CIT DR RESPONDENT BY : NONE O R D E R PER R.P. TOLANI , J.M : THIS IS REVENUES APPEAL AGAINST THE ORDER OF CIT (A)-XXIII, NEW DELHI DATED 4-10-2005 FOR THE BLOCK PERIOD 1-4-90 TO 20-7 -2000. FOLLOWING GROUNDS ARE RAISED: THE LEARNED CIT(A) HAS ERRED IN DELETING. ADDITION OF RS. 2,10,000/- ON ACCOUNT OF RENT PAID. ADDITION OF RS. 6,71,000/- ON ACCOUNT OF UNEXPLAINE D CASH ENTRIES. 2. THIS CASE HAS BEEN ADJOURNED NUMBER OF TIMES. DE SPITE SERVICE OF NOTICE FOR HEARING BY FIXTURE, NONE APPEARED ON BEHALF OF THE ASSESSEE. IN VIEW THEREOF THE APPEAL IS DECIDED EX PARTE QUA THE ASSESSEE, AFTER HEARING LEARNED DR AND PERUSAL OF THE MATERIAL AVAILABLE ON RECORD. 3. BRIEF FACTS ARE THAT ASSESSEE IS A PARTNERSHIP F IRM. SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN ASSESSEES PREMISES U /S 132 ON 20-7-2000, DURING THE COURSE OF WHICH VARIOUS DOCUMENTS WERE SEIZED. ASSE SSEE FILED BLOCK RETURN ITA(SS) 16/D/06 ACIT VS. M/S SOULMATES 2 DECLARING UNDISCLOSED INCOME AT NIL. FROM THE SEIZE D DOCUMENTS, AO MADE VARIOUS ADDITIONS IN THE HANDS OF ASSESSEE FIRM. AGGRIEVED, ASSESSEE PREFERRED FIRST APPEAL, WHERE CIT(A) DELETED THE ADDITIONS BY FOLLOWING OBS ERVATIONS: NOW THE CONTENTION OF THE APPELLANT IS FOUND TO BE CORRECT TO CERTAIN EXTENT. SO FAR AS THE ARGUMENT OF THE APPELLANTS C OUNSEL IS CONCERNED THAT SINCE THE DOCUMENTS WERE FOUND WITH THE PARTNER OF THE ASSESSEE FIRM AND NOT WITH THE ASSESSEE FIRM IT SELF, THEREFORE LOGICALLY AS WELL AS LEGALLY, IN TERMS OF SECTION 1 32(4)(A), THE SAID DOCUMENTS WERE THE P0ROPERTY OF THE ASSESSEE I.E. S MT. TAPTI AHUJA FROM WHOM THEY HAD BEEN RECOVERED AND NOT THE ASSES SEE WHOSE NAME WAS WRITTEN ON THE DOCUMENTS, IT DOES NOT APPE AR TO BE CORRECT AND LOGICAL. ANY DOCUMENT PERTAINING TO THE FIRM WO ULD NATURALLY BE WRITTEN AND FOUND IN THE POSSESSION OF THE FIRM AS IT IS JUST AN ARTIFICIAL JURIDICAL PERSON. THEREFORE IF THE DOCUM ENTS WERE FOUND IN THE POSSESSION OF THE PARTNER IN WHICH THE NAME OF THE FIRM WAS FOUND WRITTEN, NATURALLY IT BELONGED TO THE FIRM AN D IT WOULD BE THE DUTY OF THE FIRM TO EXPLAIN ITS CONTENTS. THE AO TH US WAS CORRECT TO INVOKE THE PROVISION OF SECTION 158BD IN RESPECT OF THE APPELLANT FIRM. NOW THE SEIZED DOCUMENT SHOWS THAT RENT OF RS . 1,20,000/- WAS GIVEN IN CASH FOR THE PERIOD 16 TH OCTOBER, 1998 TO OCTOBER, 1999 AND CHEQUE OF RS. 4,80,000/- WAS GIVEN. IT NOWHERE RECO RDS THE PAYMENT OF RENT IN RESPECT OF PERIOD OF 9 MONTHS FROM NOVEM BER, 1999 TON JULY, 2000 AMOUNTING TO RS. 90,000/- AS PRESUMED BY THE AO. IT HAS ONLY BEEN SURMISED BY THE AO THAT SINCE THE SEARCH WAS CONDUCTED IN JULY, 2000 AND AS THE ASSESSEE CONTINUED TO ENJO Y THE POSSESSION OF THE PROPERTY TILL THE DATE OF SEARCH, THEREFORE THE RENT @ RS. 10,000/- PER MONTH WOULD HAVE BEEN PAID IN CASH FOR THIS PERIOD OF 9 MONTHS AMOUNTING TO RS. 90,000/-. NO OTHER DOCUMENT ARY EVIDENCE WAS FOUND WHICH COULD SUPPORT THIS CONCLUSION. THER EFORE, THE ADDITION TO THIS EXTENT WAS BASED ON SURMISES ONLY. STILL IF THE AOS FINDINGS ARE HELD TO BE CORRECT AND THE ENTIRE AMOU NT OF RS. 2,10,000/- IS CONSIDERED AS UNDISCLOSED EXPENDITURE OF THE APPELLANT, THIS EXPENDITURE WOULD NATURALLY HAVE BEEN INCURRED OUT OF SUM AVAILABLE FROM UNDISCLOSED INCOME ONLY. SIMILAR IS THE POSITION IN RESPECT OF ENTRIES OF RS. 4,36,000/- AND RS. 6,71,0 00/- . THOUGH NO DATES HAVE BEEN MENTIONED AGAINST THE ENTRIES IN R ESPECT OF CASH OF RS. 6,71,000/-, THE IMMEDIATE ENTRY BELOW IT MENTIO NING AS TOTAL 10.07 INDICATES THAT THE TOTAL EXPENDITURE WAS FOR THE YEAR 1998-99 ONLY. THE SEARCH WAS CARRIED OUT ON 20-7-2000, AS A RESULT OF WHICH THE PARTNER OF THE APPELLANT FIRM I.E. SMT. TAPTI A HUJA SURRENDERED ITA(SS) 16/D/06 ACIT VS. M/S SOULMATES 3 THE AMOUNT OF RS. 14,21,527/- AS HER UNDISCLOSED IN COME IN HER BLOCK ASSESSMENT. THIS WAS IN ADDITION TO THE DISCL OSURE OF RS. 4,32,262/- IN VDIS. AS PER THE SEIZED DOCUMENT THE TOTAL AMOUNT SPENT WAS RS. 10.07 LAKHS PLUS RS. 1,20,000/-, IF T HE RENT PAYMENT OF RS. 90,000/- AS CONCLUDED BY THE AO IS ALSO TAKEN I NTO ACCOUNT, THE TOTAL EXPENDITURE WOULD NOT GO BEYOND RS. 12,17,000 /-. AS AGAINST THIS THE PARTNER OF THE ASSESSEE FIRM HAD MORE UNDI SCLOSED INCOME AVAILABLE BY WAY OF VDIS AND DISCLOSURE OF UNDISCLO SED INCOME IN THE BLOCK ASSESSMENT RETURN. THUS THE UNDISCLOSED E XPENDITURE RECORDED IN THIS SEIZED DOCUMENT WAS NOTHING BUT TH E OUT-GOING OUT OF THE UNDISCLOSED INCOME AVAILABLE WITH THE APPELL ANTS PARTNER, WHICH WAS SPENT BY HER ON BEHALF OF THE APPELLANT. SINCE THE DOCUMENTS WERE SEIZED FROM THE POSSESSION OF SMT. T APTI AHUJA, SHE WOULD HAVE BEEN REQUIRED BY THE AO TO EXPLAIN THEIR CONTENTS WHILE ASSESSING HER UNDISCLOSED INCOME FOR THE BLOCK PERI OD. NOW THE ORDER OF AO, CENTRAL CIRCLE-9, NEW DELHI DATED 31.7 .2002 PASSED U/S 158BC FOR THE BLOCK PERIOD IN THE NAME OF SMT. TAPTI AHUJA DOES NOT INDICATE THAT ANY ADVERSE CONCLUSION WAS DRAWN AGAINST SMT. TAPTI AHUJA BASED ON SUCH SEIZED DOCUMENTS. IT WAS OBVIOUSLY SO BECAUSE SHE HAD ALREADY SURRENDERED HER UNDISCLOSE D INCOME TO THE EXTENT OF RS. 14,26,527/-. THEREFORE TO SAY THAT SI NCE THE ENTRIES RECORDED IN THE SEIZED DOCUMENTS WERE NOT RECOVERED BY THE ITEMS AS DECLARED BY SMT. TAPTI AHUJA WOULD NOT BE CORRECT. IT IS SO BECAUSE WHAT WAS SURRENDERED BY SMT. TAPTI AHUJA WAS FOR TH E AY 1999- 2000 TO THE EXTENT OF RS. 3,60,000/- AND FOR A.Y. 2 001-02 RS. 10,66,527/-. SHE HAD FUNDS AVAILABLE OUT OF VDIS AL SO. THUS SHE HAD SUFFICIENT INCOME AVAILABLE FOR UNDISCLOSED EXPENDI TURE TO INCUR FOR AY 1999-2000. BECAUSE OF THESE REASONS ADDITION OF RS. 2,10,000/- AND RS. 6,71,000/- WERE NOT CALLED FOR THE SAME ARE THEREFORE HEREBY DELETED. AGGRIEVED, THE REVENUE IS BEFORE US. 4. WE HAVE HEARD LEARNED DR AND HAVE GONE THROUGH T HE ENTIRE MATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE ORDER OF CIT(A) IT EMERGES THAT SEIZED MATERIAL INDICATED PAYMENT OF RENT OF RS. 1,20,000/ -IN CASH FOR THE PERIOD 16-10- 1998 TO OCTOBER 1999, AO ESTIMATED IT FURTHER AND A DDED RS. 2,10,000/- ON THE GROUND THAT ASSESSEE WAS ENJOYING THE POSSESSION OF PROPERTY TILL THE SEARCH CARRIED ITA(SS) 16/D/06 ACIT VS. M/S SOULMATES 4 OUT IN JULY 2000. THEREFORE, THE RENT FOR INTERVENI NG PERIOD NOVEMBER 1999 TO JULY 2000 WAS ALSO ADDED ON ESTIMATE BASIS. BEFORE CIT(A ) IT WAS PLEADED THAT IN BLOCK ASSESSMENT, ADDITION CAN BE MADE TO THE EXTEN T OF MATERIAL SEIZED DURING THE COURSE OF SEARCH, THEREFORE, THE PART OF ESTIMATION SHOULD BE DELETED. 4.1. IN RESPECT OF ENTRIES OF CASH OF RS. 6,71,000 /- THE LEARNED CIT(A) IN THE LAST PARA OF HIS ORDER HAS HELD THAT ASSESSEES PARTNER SMT. TAPTI AHUJA HAD SUFFICIENT AVAILABILITY OF CASH OUT OF VDIS, WHICH CAN COVER BOTH THE ADDITIONS. 4.2. IN OUR VIEW, CIT(A) HAS CONSIDERED ALL THE REL EVANT FACTS OF ASSESSEE CONCERNED & SMT. TAPTI AHUJA PARTNER AND BY DETAILE D OBSERVATIONS HAS COME TO THE CONCLUSION THAT THE PARTNER HAD SUFFICIENT CASH TO COVER THESE EXPENSES. FACTUAL OBSERVATIONS OF THE CIT(A) HAVE NOT BEEN CONTROVERT ED BY THE LEARNED DR BY ANY RECORD. IN VIEW OF THESE CIRCUMSTANCES, NO INFIRMIT Y IS ATTRIBUTABLE TO THE OBSERVATIONS AND FINDINGS OF LEARNED CIT(A), THE SA ME ARE UPHELD. 5. IN THE RESULT, REVENUES APPEAL IS DISMISSED. PRONOUNCED IN OPEN COURT ON 30 TH JULY, 2010. SD/- SD/- (B.C. MEENA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:30 TH JULY 2010. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR ITA(SS) 16/D/06 ACIT VS. M/S SOULMATES 5