Suresh Chand Shivhare, Gwalior V. ACIT Central -1, Bhopal

ITSSA 172/Ind/2021

AI Insights

The case involves multiple appeals related to undisclosed investments and income from a syndicate business operated by the assessee, Suresh Chand Shivhare. The appeals were directed against the consolidated order of the CIT(A)-3, Bhopal, which confirmed the additions made by the AO for the Assessment Years 2010-11 and 2016-17. The Tribunal considered the arguments and evidence presented, including the impact of the COVID-19 pandemic on the timeliness of the appeals, and the legal provisions under sections 69, 86, and 67A of the Income Tax Act. The Tribunal found that the assessee had not satisfactorily explained the sources of the investments and the cash found, leading to the dismissal of the appeals.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122568 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2022
• Assessment Year: 2010-2011
• Appeal Filed On: 27-12-2021
• Other Referred Cases: ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Condonation of delay; Set aside
• Section: 69; 143(3); 153A; 142(2A); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER IT(SS)A No.172 & 173/Ind/2021 Assessment Year: 2010-11 & 2016-17 Suresh Chand Shivhare, 31, New Saket Nagar, Tansen Road, Gwalior, Madhya Pradesh – 474002. PAN: ARQPS6023C Vs. ACIT, Central-1, Bhopal. IT(SS)A No.106/Ind/2021 Assessment Year: 2011-12 ACIT, Central-1, Bhopal. Suresh Chand Shivhare, 31, New Saket Nagar, Tansen Road, Gwalior, Madhya Pradesh – 474002. PAN: ARQPS6023C (Appellant) (Respondent) Assessee by : Shri Anil Kamal Garg, CA; Shri Arpit Gaur; & Shri Devendra Bansal. Revenue by : Shri P.K. Mishra, CIT, DR Date of Hearing : 22.02.2023 Date of Pronouncement : 09.05.2023 ORDER PER C.M. GARG, JM : These appeals filed by the assessee are directed against the consolidated order dated 12.03.2021 of the CIT(A)-3, Bhopal, relating to Assessment Years 2010-11 & 2016-17. IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 Application of the assessee for condonation of delay in filing the appeal 2. The ld. Counsel of the assessee submitted that the assessee had filed the appeal before the Tribunal on 28.12.2021 against the order of CIT(A) dated 12.03.2021 which had to be filed as per prescribed time limit on or before 11.05.2021. The ld. Counsel submitted that due to Covid-19 pandemic, the appeal could not be filed on or before 11.05.2021 and, in fact, was filed on 28.12.2021 with the delay of 184 days. Therefore, in view of suo moto judgement of the Hon’ble Supreme Court dated 10.01.2022 it was submitted that the delay in filing appeal before the Tribunal of 184 days may kindly be condoned. The ld. CIT-DR, in all fairness, candidly agreed to the submissions of the ld. Counsel of the assessee that there was a pandemic of Covid-19 and the Hon’ble Supreme Court had extended the time limit for all purposes and clarified that the period from 15.03.2020 till 28.02.2022 shall also stand excluded in computing the periods prescribed for limitation in the provisions of the various Acts. In the present case, the date of filing the appeal falls within the period excluded by the Hon’ble Supreme Court and, therefore, we hold that there was no delay in filing the appeal before the Tribunal. In view of above, we proceed to adjudicate the appeal treating the same as filed within the prescribed time limit. IT(SS)A No.172/Ind./2021 (AY 2010-11) 3. The sole ground of the assessee is that on the facts and circumstances of the case, the ld.CIT(A) has erred in confirming addition of Rs.35,83,968/- on account of investment in syndicate business as unexplained investment, which is illegal, unjustified and bad in law. Drawing our attention to page 68 of the assessee’s paper book for AY 2010-11 which is relevant abstract of balance sheet as on 31.03.2011, it 2 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 was submitted that the capital as per audited financial statements was Rs.32,05,517/-. The ld. AR, further drawing our attention to page 120 of the relevant paper book of the assessee, submitted that the relevant abstract of LPS of Kheragarh Syndicate clearly reveals that in Kheragarh Syndicate, the amount of capital of Rs.35,83,968/- was inducted through journal entry. Therefore, no further addition is called for this regard in the hands of the assessee. 4. Replying to the above, the ld. CIT-DR drew our attention to para 11.8 of the assessment order and submitted that after considering the authenticity of the seized documents and corroborative evidence establishing the veracity of the evidence and nature of transaction, the AO rightly noted that the assessee has invested undisclosed capital in the syndicate business amounting to Rs.35,83,968/- which was rightly treated as undisclosed capital invested by the assessee during AY 2010-11. Therefore, the ground of the assessee may kindly be dismissed. 5. On careful consideration of the above rival submissions, perusal of the relevant documentary evidences available at the assessee’s paper book, the findings recorded by the AO and the ld.CIT(A) in para 4.2.8 and 4.2.9, we clearly note that the working done by the special auditors as well as the AO and the findings of the AO along with written and oral submissions of the assessee, it was clear that the assessee has made fresh investment of Rs.35,83,968/- during AY 2010-11 for which no satisfactory explanation was offered and, therefore, the same was liable to be taxed u/s 69 of the Act as unexplained capital investment. The ld. CIT(A) also observed that the onus lies on the assessee for explaining the source of investment made in capital which he has failed to explain and the necessary addition after applying peak theory has to be 3 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 upheld. It is not the case of the assessee that the assessee has only one business of liquor trading under Kheragarh syndicate and, thus, even if it is considered that the audited financial statements of the assessee and abstract of balance sheet as on 31.03.2011 revealed the capital invested of Rs.32,05,517/-, then also, from the said balance sheet, it is clear that the higher amount of capital than that shown in the balance sheet was invested by the assessee in Kheragarh Syndicate as capital of Rs.35,83,968/- which remained unexplained. It is also pertinent to note that the capital shown by the assessee in audited financial statements and balance sheet is lesser than the separate and undisclosed amount of capital invested by the assessee in the Kheragarh Syndicate which was revealed to the taxing authorities on the basis of seized documents, corroborative evidence establishing the veracity of evidence and nature of transaction including undisclosed capital invested by the assessee amounting to Rs.35,43,968/-. Therefore, the ld.CIT(A) was correct and justified in confirming the addition by holding that the assessee has made fresh investment during AY 2010-11 for which no satisfactory explanation was offered, therefore, the same was liable to be taxed u/s 69 of the Act as the assessee has failed to explain the source of capital investments by way of cogent and plausible evidence. Hence, the sole ground of the assessee for AY 2010-11 is dismissed. IT(SS)A No.173/Ind/2021 (AY 2016-17) 6. The sole ground of the assessee in this appeal is that the authorities below have erred in making addition of Rs.19,36,300/- on account of unexplained cash found during the course of search. The ld. AR vehemently pointed out that the addition made by the AO and confirmed by the ld.CIT(A) is illegal and unjustified and 4 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 bad in law as the alleged cash was out of accumulation of share of profit from syndicate of Rs.21,02,207/- as per the findings recorded by the AO at page 22 of assessment order. 7. Replying to the above, the ld.CIT-DR drew our attention to para 10.6 of the assessment order and para 4.1 at page 50 of the first appellate order and submitted that the source of acquisition of cash found and seized during the course of search operation does not stand explained satisfactorily, hence, the said action was rightly deemed to be income of the assessee for AY 2016-17. 8. The ld.CIT-DR, supporting the conclusion drawn by the ld. First appellate authority, submitted that the assessee tried to relate the cash found and seized from the cash shown in the books of Shri Sanjeev Shivhare, but, this was not a tenable explanation as the assessee failed to furnish any documentary evidence in support of his claim as no copies of cash book of Shri Sanjeev Shivhare and his bank account statement was filed nether before the AO nor before the CIT(A). Therefore, in absence of cogent and plausible evidence explaining the cash found and seized from the assessee during search and seizure operation, the AO was right in making addition and the ld.CIT(A) was also justified in upholding the same. 9. On careful consideration of the above rival submissions, we are of the view that the sole explanation of the assessee before the AO and ld.CIT(A) was that as his son Shri Sanjeev Shivhare was in liquor business in which all sales are affected in cash and such cash belongs to them and the alleged cash found and seized was out of cash balance available in the cash book of Shri Sanjeev Shivhare on the date of search, 5 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 which is also verifiable from the books of account maintained by Shri Sanjeev Shivhare and the assessee, the ld. AR, drawing our attention to reply dated 30.07.2018, reproduced by the AO in para 10.5, submitted that the seized cash was duly reflected in the balance sheet of the assessee and Shri Sanjeev Shivhare as on 31.03.2016, therefore, there is no valid reason to make addition of Rs.19,36,300/- on account of cash found and seized. 10. On being asked by the Bench, the ld. AR could not show us any copy of cash book, books of account or balance sheet of the assessee or his son Shri Sanjeev Shivhare as on the date of search and seizure operation on 07.01.2016 or at the end of the financial period as on 31.03.2016 to show and establish that the cash found and seized during the course of search and seizure operation was part of the sale proceeds received by the son of the assessee, Shri Sanjeev Shivhare from cash sales of trading of liquor business. The onus was on the assessee to establish the source of cash found and seized during the search and seizure operation, but, the assessee failed to discharge the same. Therefore, we are unable to agree with the contention of the ld. AR in this regard and consequently, we hold that the addition made by the AO and confirmed by the ld.CIT(A) is sustainable and valid. We are unable to see any valid reason to interfere with the findings recorded by the authorities below on this issue, as such, we uphold the same. Accordingly, the sole ground of the assessee for AY 2016-17 is dismissed. 11. In the result, both the appeals filed by the assessee are dismissed. Departmental Appeal in IT(SS)No.106/Ind/2021 (AY 2011-12) 6 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 12. Pressing into service the sole ground of the Revenue, the ld.CIT-DR submitted that the AO in para 11.6 noted a clear finding that the seized data are proofs that seized accounts are real transactions which was hidden by the assessee and not properly and duly disclosed in his return of income, hence, denial of the assessee to the tax liability on the income earned from liquor trading business through syndicate has no merits. The ld. CIT-DR further pointed out that these syndicates formed by the assessee during AY 2010-11 to 2016-17 were not filing various statutory tax returns and from the income-tax database, no existence of syndicates could be traded, syndicates do not have PAN and they never filed return of income. Therefore, it is apparent that the formation of syndicate is resulting into unaccounted investment of the assessee as the capital of syndicates and also resulting into generation of unaccounted income of the assessee. The ld. CIT-DR also pointed out that the details of undisclosed capital investment, undisclosed income and proportionate share of inadmissible expenses as per the seized documents of syndicate transactions along with corroborative evidences clearly show that the assessee have direct linkage in the liquor business of group/syndicates. 13. The AO issued show cause notice along with relevant corroborative evidence asking the assessee why not the same should be added to his total income for the relevant assessment year, but, the assessee had not complied with the notice and sought adjournment. Further, drawing our attention to relevant parts of the assessment order, submitted that the assessee was further granted adjournment to file his reply and finally, the assessee filed reply dated 30.07.2018 which was duly considered by the AO and, thereafter, found not acceptable. The ld. CIT-DR, drawing 7 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 our attention to para 11.10 of assessment order, submitted that the assessee failed to provide books of account or any document despite asking several times since the beginning of the assessment proceedings even during the special audit proceedings which could prove the assessee’s contention and which could justify the income of business of the assessee. The ld.CIT-DR also submitted that the assessee has claimed to have accounted all the income and expenses in his accounts and also replied that he has produced his books of account to the Department, but, despite giving several opportunities and notices by the AO and opportunities given by the special auditor, the assessee never produced the books of account which could justify the return of income filed by him. Thus, the reply of the assessee was false and not tenable. The ld. CIT-DR also contended that without verification of books of account or expenses accounted by the assessee, the submissions of the assessee cannot be accepted and the assessee has not produced any document to prove that all expenses and receipt have been incorporated in its books of account for liquor shops. 14. The ld.CIT-DR submitted that in view of the above factual position, the AO was right in holding that most of the liquor syndicates are illegal entities and have no significance on paper and also tax was not paid by them. The ld.CIT-DR also drew our attention to the conclusion drawn by the special auditor after referring to the books of account, material seized and other data after giving due opportunity of hearing to the assessee to the to the present case. The ld.CIT-DR submitted that the ld.CIT(A) has granted relief to the assessee by considering irrelevant facts and circumstances and by keeping aside the observations and allegations of the AO in the 8 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 assessment order and without dislodging the same. Therefore, the impugned first appellate order may kindly be set aside and the order of the AO may be restored. 15. Replying to the above submissions of the ld.CIT-DR, the ld. AR drew our attention to relevant part of the assessment as well as the first appellate order and submitted that the ld.CIT(A), after considering the entire facts and circumstances and the explanation filed by the assessee before the AO as well as before him and considering the judgement of the Hon’ble Supreme Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC) , rightly granted relief to the assessee. The ld. AR submitted that the income was actually derived by various syndicates, in which the assessee was found one of the members, was required to be assessed in the hands of such syndicate only as Association of Persons (AOP) and direct assessment in the hands of the assessee could not have been made in respect of such income derived by the syndicates. The ld. AR submitted that in view of specific provisions of clause (a) of proviso to section 86 of the Act where the association of persons (AOP) or body of individuals (BOI) is chargeable to tax on its total income at maximum marginal rate or at any higher rate, under any provisions of the Act, the share of income of such member in such AOP/BOI as computed u/s 67A of the Act shall not be included in the total income of such member. He further submitted that in the instant case, all the conditions for invoking clause (a) of section 86 of the Act are getting fulfilled, therefore, no addition could have been made in the hands of the assessee. The ld. AR submitted that when the income of the syndicates were liable to be assessed separately in the hands of the respective syndicates only, in the status of AOP/BOI, at the maximum marginal rate, the assessee’s share in the profit of such syndicates 9 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 cannot be added to the individual income of the assessee in view of the specific provisions of section 86 read with section 67A of the Act. 16. On careful consideration of above rival submissions, first of all, from the assessment order, we observe that the AO made addition with the following observations and findings:- 10 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 11 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 12 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 13 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 14 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 15 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 16 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 17 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 17. From the relevant part of the first appellate order, we note that the ld.CIT(A) has granted relief to the assessee with the following observations and findings:- 18 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 19 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 20 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 21 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 22 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 23 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 24 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 25 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 26 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 27 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 28 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 29 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 30 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 31 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 32 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 18. From the assessment order para 11.6, we observe that the AO, first of all, noted that the details mentioned in the seized data prove that the seized accounts are real transactions which was hidden by the assessee and not properly disclosed in his 33 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 return of income. The ld. AO also noted that these syndicates were formed by the assessee and his associates during AY 2010-11 to 2016-17 were not filing various statutory tax returns and from income-tax database, no syndicates could be traced, syndicates do not have PAN and they did not file any return of income. Thus, it was apparent that the formation of syndicate was resulting into unaccounted investment of the assessee as the capital of syndicates can also result into diversion of unaccounted income of the assessee. The AO also noted that the details of undisclosed capital investment, undisclosed income and proportionate share for inadmissible expenses as per seized documents of syndicate transactions along with corroborative evidences clearly show that the assessee have direct linkage with the liquor business of the groups/syndicates. The AO show caused the assessee regarding the above facts and the assessee filed his reply on 30.07.2018. The income earned by the assessee from liquor business have also been included in the return of income which is verifiable from the details produced. The assessee also stated that the licencee is solely responsible for depositing the prescribed licence fee to the Government and the licencee is only entitled to purchase liquor from the Government bonds after making payment of material cost. In this reply dated 30.07.2018, the assessee has not stated any submission explaining that the transactions mentioned in the seized data and seized accounts were real transactions. In this reply, the assessee did not state that: (i) the assessee was a member of association of persons or body of individuals; (ii) share of members of such association of persons or body of individuals were determined and known and such association of persons or body of individuals were chargeable to tax on their total income at the maximum marginal rate or in higher rate, therefore, the case of the assessee would squarely fall under substantive 34 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 provisions of section 86 r.w. clause (a) of the first proviso to such section and section 67A of the Act. From the relevant paras 4.2.5 to 4.2.9, as has been reproduced hereinabove, it is amply clear that the ld.CIT(A) granted relief to the assessee deleting the addition made by the AO on account of undisclosed income from liquor trading business by observing that the assessee was a member of an association of persons or body of individuals, share of members of such association of persons or body of individuals were determined and known and such association of persons or body of individuals were chargeable to tax on their total income at the maximum marginal rate, therefore, the issue is covered in favour of the assessee under clause (a) of first proviso to section 86 r.w. section 67A of the Act. The ld.CIT(A) also noted that there was no justification for the AO in making the additions in the assessee’s income on account of share in profit of syndicates and as also on account of a share in admissible expenses incurred by the syndicates. The main basis for granting relief to the assessee is that while making the assessment in the case of such syndicate, the income of syndicates as worked out by the special auditor has duly been incorporated and have been subjected to maximum marginal rate of tax such facts fortifies the claim of the assessee that income of the syndicates was liable to be taxed in the hands of the respective syndicates only in the status of AOP/BOI at the maximum marginal rate and the assessee’s share in the profit of such syndicates cannot be added to the individual income of the assessee in view of the specific provision of section 86 r.w. section 68 of the Act. 19. From the assessment order, we note that the AO in para 11.6 and 11.10 of the assessment order wherein the AO noted that syndicates were formed by the 35 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 assessee during AY 2010-11 to AY 2016-17 which were not filing various statutory tax returns. The ld. AO noted that from the income-tax database, no existence of syndicate could be traced, syndicates do not have PANs and they do not file any return of income. Thereafter, the AO also noted that the formation of syndicates is resulting into unaccounted investment by the assessee in capital of syndicates and also resulting in generation of unaccounted income of the assessee. 20. First of all, we note that it is a well settled legal position that as per clause (a) to proviso to section 86 of the Act r.w.s 67A of the Act, if the assessee is a member in AOP/BOI and income earned from such AOP/BOI have been offered to tax, then, the share received by the assessee from such AOP/BOI after payment of due taxes cannot be taxed again in the hands of the assessee. From the relevant part of the assessment order para 11.6 to 11.10, as has been discussed hereinabove, the AO recorded his observations and findings while making addition in the hands of the assessee on account of undisclosed income. At the same time, from relevant paras 4.2 to 4.2.9 of first appellate order, we further observe that the ld.CIT(A) in earlier paras noted the factual position, stand of the AO and submissions of the assessee. Thereafter, he considered the formation of syndicates by the assessee and his associates and in para 4.2.2 noted the contention of the assessee that if there exists any syndicate, then, the income earned by such syndicate from carrying out the business 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 including the assessee being member of syndicate forming the syndicates. The ld.CIT(A) also noted that during the search and seizure operation, the Investigation Wing found that 36 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 the assessee is doing liquor business along with their other associates by forming syndicates and the Wing has emphasized the formation of syndicates to carry out the liquor business. The emphasis was on the fact that there exist an entity i.e., syndicate which is carrying out business and, in this regard, submissions of key persons of syndicates were also recorded wherein they accepted the existence of syndicates. 21. The ld.CIT(A) further noted that the AO, during the course of assessment proceedings, referred the matter to special auditor u/s 142(2A) of the Act for a special auditor in the case of present assessee and the auditor also emphasized the formation of syndicate and given a finding that the syndicate is carrying out the business independently functioning from separate offices and maintaining separate books of account. The ld.CIT(A) at pages 38 to 40 noted a table of 11 syndicates and also took cognizance of the fact that the AOs of the syndicates in all the group concerns has made addition of undisclosed incomes in the hands of the syndicates for respective assessment years. The ld.CIT(A) noted brief details of various assessment orders passed by ACIT-2(1), Indore/DCIT-3(1), Gwalior/ITO, Shivpuri in a tabular form wherein name of syndicate/AOP, section under which orders have been passed, assessment years and income assessed has been mentioned. We also note that the ld.CIT(A), after perusal of the relevant assessment orders noted that these AOPs being the liquor syndicates had carried out the business of liquor in various years and as per special auditor’s report given u/s 142(2A) of the Act in the case of Shivhare group, these syndicates have earned profit and had also incurred some expenses which were liable for disallowance. The ld.CIT(A) further noted another factual matrix that the amount of profit/inadmissible expenses considered by the AO for framing 37 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 separate assessments of syndicates were the same as were considered while making assessments in the hands of the assessee and other members of Shivhare group. 22. Thereafter, the ld.CIT(A) referred to the legal position rendered by the Hon’ble Supreme Court in the case of ITO vs. Ch. Achataiya (supra) and took the view that the income derived by various syndicates in which the assessee was found one of the members, was required to be assessed in the hands of such syndicates only and a 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) rightly noted that the question of admissibility or inadmissibility of any expenditure could have been raised only while making the assessment in the cases of such syndicates and the assessee at the best could have been assessed in respect of his share in taxable income of such syndicate, but, as per provisions of first provision to clause (a) of section 86 r.w.s. 67A of the Act, income-tax will not be payable by an assessee in respect of a share received by the assessee in the income of association of persons or body of individuals/syndicates. 23. In view of the foregoing discussion, we conclude that the present assessee was a member of an association of persons or body individuals, share of members of such association of persons or body individuals were determinate and known. Such association of persons or body individuals were chargeable to tax on their total income at the maximum marginal rate or any higher rate. In such a factual position and circumstances, the share of profit/income received by the assessee from association of persons or body individuals/syndicates fall under the first proviso to 38 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 clause (a) of section 86 of the Act and, thus, the AO was not justified in making the addition in the hands of the assessee on account of his share in profits of syndicates and on account of his share of inadmissible expenses incurred by the syndicates. 24. On careful perusal of the chart/table as has been reproduced hereinabove, it is clearly discernible that the income of syndicates/associate of persons or body individuals have been assessed to tax and respective AO have framed assessment orders u/s 153A r.w.s 143(3) of the Act by making certain additions and disallowances pertaining to the income earned by the syndicates and inadmissible expenditures incurred by them. In view of the above, we are in agreement with the conclusion drawn by the ld.CIT(A) that while framing the assessments in the case of such syndicates, the income of syndicates as worked out by the special auditors have duly been incorporated and have been subjected to maximum marginal rate of tax, such facts fortifies the claim of the assessee that incomes of the syndicate were liable to be taxed separately in the hands of the respective syndicate in the status of AOP/BOI at the maximum marginal rate and the assessee’s share in the profit of such syndicates cannot be added as individual income of the assessee in view of specific provision of section 86 r.w. section 67A of the Act. The above noted facts and findings have not been controverted by the ld.CIT-DR in any manner and these observations and allegations made by the AO in para 11.6 to 11.10 of the assessment order cannot be held as correct and sustainable. 25. Thus, we are inclined to hold that the AO made additions by taking a hyper technical approach whereas the ld.CIT(A), after considering the entire facts and 39 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 circumstances of the case and factum of taxation of profit and disallowance of inadmissible expenses in the hands of syndicates/AOP or BOI, rightly held that the share of profit received by the assessee from such syndicates cannot be added to the individual income of the assessee in view of the proviso to clause (a) of section 86 r.w.s. 67A of the Act. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings arrived at by the ld.CIT(A). Therefore, we hold that the ld.CIT(A) was right in deleting the addition in the hands of the assessee and, consequently, the sole ground of the Revenue for AY 2011-12 being devoid of merits is dismissed. 26. In the result, the appeal of the Revenue i.e., IT(SS)A No.106/Ind/2021 for AY 2011-12 is dismissed. The appeals filed by the assessee in IT(SS)As No.172 & 173/Ind/2021 for AY 2010-11 and 2016-17 respectively are also dismissed. Order pronounced u/r 34(4) of the Income-tax (Appellate Tribunal) Rules, 1963 on 09 .05.2023. Sd/- Sd/- (BHAGIRATH MAL BIYANI) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 9th May, 2023. dk Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asstt. Registrar, ITAT, Indore 40 IT(SS)A No.172 & 173/Del/2021 IT(SS)A No.106/Ind/2021 00 Date 1. Draft dictated on 06.02.2023/ 01.05.2024 2. Draft placed before the author 07.02.2023/ 01.05.2023 3. Draft placed before the other Member 4. Approved Draft comes to the Sr.PS/PS 5. Order uploaded on 6. File sent to the Bench Clerk 7. Date on which file goes to the Head Clerk. 8. Date on which file goes to the AR 9. Date of dispatch of Order. [[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[[ 41