Pawan Kumar Jaggi, Delhi V. ACIT, New Delhi

ITSSA 2/DEL/2014

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3955 (ITAT-DELHI)
• Duration Of Justice: 8 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 12-06-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: misc
• Appeal Filed On: 22-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained investment; Search and seizure; Peak credit
• Section: 143(3); 142(2A); 158BC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘F’ NEW DELHI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER IT(SS)A No.02/Del/2014 Block Period: 01.04.1990 to 17.10.2000 Sh. Pawan Kumar Jaggi, F-1/6, Model Town, Delhi Vs. ACIT, Central Circle-25, New Delhi PAN :AAFPJ2191Q (Appellant) (Respondent) AND IT(SS)A No.03/Del/2014 Block Period: 01.04.1990 to 17.10.2000 ACIT, Central Circle-25, New Delhi Vs. Sh. Pawan Kumar Jaggi, F-1/6, Model Town, Delhi PAN :AAFPJ2191Q (Appellant) (Respondent) ORDER PER SAKTIJIT DEY, JM: Captioned cross appeals arise out of order dated 06.11.2013 of learned Commissioner of Income Tax (Appeals)-1, New Delhi, for the block period 01.04.1990 to 17.10.2000. Assessee by Sh. P.J. Khanna, CA Department by Sh. T Kipgen, CIT (DR) Date of hearing 28.03.2022 Date of pronouncement 13.06.2022 2 IT(SS)A Nos. 02 & 03/Del/2014 IT(SS)A No.02/Del/2014 (Assessee’s Appeal) 2. At the outset, we proceed to decide assessee’s appeal. In ground no. 1, the assessee has challenged the addition of Rs.90,000/- on account of unexplained jewellery. 2.1 Briefly the facts are, the assessee is a resident individual. Pursuant to a search and seizure operation conducted in case of the assessee, proceeding under section 158BC of the Income-tax Act, 1961 (for short ‘the Act’) was initiated against the assessee. In response to a notice issued under section 158BC, the assessee filed his return of income on 08.10.2002 for the block period 01.04.1990 to 17.10.2000 declaring nil income. Assessment in case of the assessee was completed for the aforesaid block period vide order dated 31.10.2002 determining income at Rs.6,77,97,225/-. Against the assessment order so passed, the assessee preferred an appeal before the Tribunal and vide order dated 31.12.2007, the Tribunal restored the issues back to the Assessing Officer for fresh adjudication. While completing the assessment afresh, in pursuance to the directions of the Tribunal, the Assessing Officer merely repeated the same assessment order which was passed earlier. In the process, he added an amount of Rs.5,61,580/- 3 IT(SS)A Nos. 02 & 03/Del/2014 towards investment in unexplained jewellery on protective basis while making identical addition at the hands of assessee’s wife Smt. Jyoti Jaggi on substantive basis. The assessee contested the aforesaid addition before learned Commissioner (Appeals). After considering the submissions of the assessee in the context of facts and materials on record, learned Commissioner (Appeals), though, deleted the protective addition of Rs.5,61,580/- at the hands of the assessee, however, he concluded that the addition to the extent of unexplained jewellery of 221.44 gms. has to be added on substantive basis at the hands of the assessee. 2.2 We have considered rival submissions and perused the materials on record. Undisputedly, the Assessing Officer added an amount of Rs.5,61,580/- representing unexplained jewellery at the hands of assessee’s wife on substantive basis while adding the same at the hands of the assessee on protective basis. 2.3 However, as could be seen from the facts on record, on the date of search on 17.10.2000 jewellery weighing 1046.90 gms valued at Rs.5,61,580/- was seized by the department. While completing the assessment in case of the assessee as well as his wife, Smt. Jyoti Jaggi, the Assessing Officer added the amount of Rs.5,61,580/- by treating it as unexplained jewellery at the hands 4 IT(SS)A Nos. 02 & 03/Del/2014 of assessee’s wife on substantive basis and at the hands of the assessee at protective basis. While deciding the issue in the first round in case of assessee’s wife, Mrs. Jyoti Jaggi, learned Commissioner (Appeals) held that out of jewellery weighing 1046.90 gms, jewellery weighing 488.84 gms was owned by the assessee. The aforesaid decision of learned first authority was also upheld by the Tribunal in IT(SS)A No. 09/Del/2011, dated 11.10.2013. It is to be noted, after examining the facts and evidences brought on record thoroughly, learned Commissioner (Appeals) has recorded a factual finding that jewellery worth of Rs.1,86,100/- representing 211.46 gms stands explained. Whereas, learned Commissioner (Appeals) has recorded a categorical finding that the assessee could not file any evidence in respect of source of acquisition of jewellery weighing 221.44 gms. Even, at this stage also, the assessee has not brought any material to explain the source of investment in jewellery weighing 221.44 gms. Thus, in absence of any contrary material brought on record by the assessee to point out any error in the factual finding of learned Commissioner (Appeals), we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed. 5 IT(SS)A Nos. 02 & 03/Del/2014 3. In ground no. 2, the assessee has challenged addition of Rs.1,45,904/- towards unexplained investment in equity shares. 3.1 Briefly the facts are, in course of search and seizure operation certain incriminating material was found revealing that the assessee had invested in shares of various companies. In course of assessment proceeding, when the Assessing Officer called upon the assessee to explain the source of such investment, the assessee stated that the investments were made prior to the block period. In support of such contention, the assessee filed the copy of the wealth tax return for the assessment year 1992-93. The Assessing Officer, however, did not find merit in the submission of the assessee and added back the amount of Rs.50 lakhs. Before the first appellate authority, the assessee took a specific plea that even, the seized material if is to be considered on its own merits, the unexplained investment in shares works out to Rs.1,45,904/-. After considering the submissions of the assessee, learned Commissioner (Appeals) restricted the addition to Rs.1,45,904/-. 3.2 We have considered rival submissions and perused the materials on record. As could be seen from the observations of learned Commissioner (Appeals) in para 8.8 of the impugned order, after examining the facts and materials on record, including the 6 IT(SS)A Nos. 02 & 03/Del/2014 seized materials, he has given a categorical finding that the investment in shares not reflected in the records of the assessee works out to Rs.1,45,904/-. The aforesaid factual finding of learned Commissioner (Appeals) remains uncontroverted before us. Therefore, we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed. 4. In ground no. 3, the assessee has challenged the addition of Rs.27,80,000/- made on account of unexplained deposit in foreign bank accounts. 4.1 Briefly the facts are, while completing the assessment under section 158BC read with section 143(3) of the Act, initially the Assessing Officer had made an addition of Rs.50 lakhs as undisclosed income of the assessee. The aforesaid amount represented the deposits made by the assessee in an account jointly held with his wife in Barclays Bank, London. The foresaid addition made was also confirmed by learned Commissioner (Appeals). 4.2 While deciding the issue in the appeal filed by the assessee, the Tribunal in order dated 31.12.2007 in IT(SS)A No. 108/Del/2005 restored the matter back to the Assessing Officer to decide afresh following the direction given by the Tribunal in 7 IT(SS)A Nos. 02 & 03/Del/2014 assessee’s wife case, Mrs. Jyoti Jaggi. In the assessment order passed in pursuance to the direction of the Tribunal, the Assessing Officer again repeated the addition. While deciding the issue in appeal filed by the assessee, learned Commissioner (Appeals) held as under: “9.5 I have considered the submissions made, orders of CIT(A) & Hon’ble ITAT, the reassessment order, and the records produced before me. The appellant no doubt had a bank account with Barkley's Bank, London (UK), held jointly with his wife. The appellant has filed copies of several letters written to the Bank for copy of the account statement from the date of incorporation up to date. However, from the details filed by the appellant it is seen that he held A/c No. 1021- 6089 in Barkley’s Bank, Isle of Man (UK), jointly with his wife and the closing amount in the said account was GBP 340.40 as on 16.12.2002. Perusal of the summary of interest / charges / tax relating to the account shows that there was no substantial transaction in the said account in the years 2000, 2001, & 2002. The appellant has himself claimed that he was working for one Mr. B S Thiara of Birmingham, UK, from November 1998 to April 1999 and had received UBP 4000 as allowance for meeting his expenses in UK. The appellant has filed confirmation from Mr. Thiara dated 15.05.2001 to this effect and also filed copy of British passport of Mr. Thiara to prove the identity of that person. There is no evidence contradict, the claim of the appellant. The verification of the foreign bank account was not carried out by the revenue as directed by Hon’ble ITAT. Although there is no basis for presuming that the deposit in the said bank account was equivalent of Rs.50,00,000/-, incomplete evidence has been produced by the appellant in the form of balance statement and summary of interest / charges / tax. No enquiry was made" by the revenue as directed by Hon’ble ITAT. Am agreement between the Government of Republic of India and the Government of the Isle of Man for the Exchange of Information with respect to taxes was signed at London on 4th day of February, 2011. The AO is directed to immediately make a reference to the authorities of Isle of Man through the FT&TR Division of CBDT to verify the details of the said account. This addition will be ultimately subject to the outcome of that enquiry, as the real facts will be revealed only thereafter. For the present, both the addition of Rs.25,00,000/- sustained, and relief of Rs.25.00,000 - allowed to the appellant, by the CIT(A) earlier shall subsist. Further, as the appellant has himself admitted that he received GBP 4000 from Mr. Thiara, which was 8 IT(SS)A Nos. 02 & 03/Del/2014 deposited in the said bank account, he is liable to tax for this amount separately. The appellant was paid this amount for the period November 1008 to April 1990. Thus, the said amount was taxable in the hands of the appellant for FYs 1998-99 and 1999-2000, which falls within the block period. It is not the case that the appellant is non-resident for tax purposes. The said amount has not been disclosed in the income tax returns filed by the appellant. Therefore, the said allowance of GBP 4000, claimed to have been deposited in said bank account, shall be chargeable to tax. The exchange rate of 1 GBP was Rs.70 in November-December, 1998. Therefore, the total value of GBP 4000 comes to Rs.2,80,000 -. Accordingly, 1 hold that the amount of Rs.2,80,000/- received and deposited in the bank account held by the appellant in UK shall be charged to tax as his undisclosed income for the block period. The addition is sustained to the extent of Rs. 25,00,000/- estimated earlier by the CIT(A) and Rs.2,80,000/- being value of GBP 4000 admitted to have been received by the appellant. Appellant gets relief of Rs.22.20,000/- which is deleted as addition not based on any evidence following observations / directions of Hon’ble ITAT cited above. This ground of appeal is disposed of in these terms.” 4.3 We have considered rival submissions and perused the materials on record. As could be seen from the observations of learned Commissioner (Appeals), he has given a factual finding that there is no evidence with the Revenue to prove that the deposits made in the said bank account was to the tune of Rs.50 lakhs. However, in the same vein, he has directed the Assessing Officer to make necessary inquiry regarding the deposits made in the same bank account and subject to such inquiry sustained the addition to the extent of Rs.25 lakhs while deleting the balance amount of Rs.25 lakhs. Further, learned Commissioner (Appeals) has given a categorical finding that the assessee had not disclosed the allowance amount of 4000 GBP received from Ms. Thiara. No 9 IT(SS)A Nos. 02 & 03/Del/2014 material has been brought before us to controvert the factual finding of learned Commissioner (Appeals). Accordingly, we do not see any reason to interfere with the decision of learned Commissioner (Appeals). This ground is dismissed. 5. In ground no. 4, the assessee has challenged the addition of Rs.11,76,300/- made on account of unexplained life insurance premium paid abroad. 5.1 We have heard the parties and perused the materials on record. While deciding the issue, learned Commissioner (Appeals) has observed as under: “11.4 I have considered the submissions made, orders of CIT(A) & ITAT, and the reassessment order. The ITAT, vide Para-38 quoted above, had rejected this ground of appeal raised by the appellant. There is not further appeal by the appellant before the Hon’ble High Court. This forum, being lower authority, is not competent to adjudication a ground already rejected by the Hon’ble ITAT. Accordingly, this ground of appeal is rejected.” 5.2 As could be seen from the aforesaid observations of learned Commissioner (Appeals), this issue was decided against the assessee by the Tribunal in earlier round of litigation vide order dated 31.12.2007 passed in IT(SS)A No. 03/Del/2005, which was accepted by the assessee. That being the factual position on record, this cannot be a subject matter of dispute now. Learned counsel 10 IT(SS)A Nos. 02 & 03/Del/2014 for the assessee fairly conceded to the aforesaid factual position. Accordingly, this ground is dismissed. 6. In the result, appeal is dismissed. IT(SS)A No.03/Del/2014 (Revenue’s Appeal) 7. Ground no. 1, being general in nature, does not require specific adjudication. 8. In ground no. 2, Revenue has challenged part deletion of the addition made on account of unexplained jewellery. This issue has already decided by us, while adjudicating ground no. 1 of assessee’s appeal in IT(SS)A No.02/Del/2014. 8.1 Since, we have upheld the decision of learned Commissioner (Appeals) while deciding the said ground, the ground raised by the Revenue is dismissed. 9. In ground no. 3, the Revenue has challenged additions of Rs.1,72,18,103/- and Rs.3,54,55,542/-, allegedly, representing undisclosed income of the assessee based on seized material. 9.1 Observing that these amount representing transaction belonging to business concerns of the assessee found from the seized materials and alleging that the assessee was unable to furnish any details, the Assessing Officer added them back to the 11 IT(SS)A Nos. 02 & 03/Del/2014 income of the assessee. When the matter came before learned Commissioner (Appeals), after examining the facts and materials on record, including the decision of the Tribunal in first round, he observed as under: “5.6 I have considered the assessment order, order of CIT(A), order of Hon’ble ITAT, the reassessment order and submissions of appellant. On query regarding the position of assessments in the case of M/s. Seasons Creations Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery, initially the AO stated vide letter dated 17.01.2013 that information had been sent to the AOs of these concerns for necessary action. However, the appellant submitted that the jurisdiction over the three concerns were still with the present AO and assessments were pending due to stay of Hon’ble Delhi High Court against orders u/s 142(2A) in the case of M/s Seasons Creations Pvt. Ltd. and M/s Duke Hosiery, while the stay was vacated in the case of M/s Mela Ram Jaggi & Sons. This fact was subsequently confirmed by the AO vide letter dated 21.10.2013. Accordingly, and in terms of findings of my Ld. predecessor and the ITAT, these additions shall be considered in the assessments to be made in the case of M/s Seasons Creations Pvt. Ltd., M/s Duke Hosiery and M/s Mela Ram Jaggi & Sons. The additions of Rs. 1,72,18,103/- and Rs.3,54,55,542/- made in the hands of the appellant are deleted. Appellant gets relief of Rs.5,26,73,645/-.” 9.2 We have considered rival submissions and perused the materials on record. The amount of Rs.1,72,18,103/- comprises of two items, an amount of Rs.59,38,103/- being peak balance of debtors and Rs.1,12,80,000/- being peak balance of creditors. Alleging that the seized material were found from a ledger maintained for M/s. Seasons Creation Pvt. Ltd. and Duke Hosiery, the Assessing Officer made the addition alleging that the assessee was unable to furnish the details called for. While deciding the 12 IT(SS)A Nos. 02 & 03/Del/2014 issue in the first round, learned Commissioner (Appeals) deleted the addition holding that the issue has to be examined by the Assessing Officer in the context of confirmation letter issued by M/s. Seasons Creation Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery and addition, if any, should be made in case of respective business entities. Against the aforesaid decision of learned Commissioner (Appeals), the Revenue came in appeal before the Tribunal. While deciding the issue, Tribunal restored the matter back to the Assessing Officer with a direction to decide the issue afresh keeping in view the decision taken in case of M/s. Seasons Creation Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery. As observed by learned Commissioner (Appeals) in the impugned order, assessments in case of the concerned entities are pending due to stay granted by Hon’ble Delhi High Court. Thus, learned Commissioner (Appeals) while deleting the additions at the hands of the assessee, has observed that additions, if any, has to be considered in the case of M/s. Seasons Creation Pvt. Ltd., M/s. Mela Ram Jaggi & Sons and M/s. Duke Hosiery. In our view, the aforesaid decision of learned Commissioner (Appeals) being in conformity with the direction of the Tribunal in the earlier round of 13 IT(SS)A Nos. 02 & 03/Del/2014 litigation, no interference is called for. Accordingly, this ground is dismissed. 10. In ground no. 4, the Revenue has challenged the deletion of addition of Rs.4,52,000/- made on account of unexplained foreign travel. 10.1 We have considered rival submissions and perused the materials on record. While deciding the issue, learned Commissioner (Appeal) has observed as under: “6.6 I have considered the submissions made, order of CIT(A), Hon’ble 1TAT and thereassessment order. It is apparent from the submissions made and records produced before me that the averment of the revenue, that no details were filed, is not factually correct. The identity of and confirmation from Mr. B S Thiara regarding giving GBP 4000 was filed not only before the CIT(A) but also before the AO during the subsequent assessment proceedings. No verification has been made nor any evidence adduced or reasons cited by the revenue to contradict the evidence filed by the appellant. Therefore, the addition made cannot be sustained. Further, the ITA f had specifically directed to verify the transaction of purchase of FC of US $ 4000, which does not appear to have been done. As the assessments in the case of M/s Seasons Creation and Duke Hosiery are pending, and the source of investments are claimed to be from those firms, the AO is directed to carry out the verification as per the ITAT order in those cases. Since the source of the purchase of FC is from these firms, the addition cannot be sustained in the hands of the appellant and is, accordingly, deleted. The appellant gets full relief of Rs.4,52,000/-.” 10.2 Before us, the learned Departmental Representative was unable to dislodge the aforesaid factual finding of learned Commissioner (Appeals). Thus, in absence of any contrary material brought before us to disturb the finding of learned Commissioner 14 IT(SS)A Nos. 02 & 03/Del/2014 (Appeals), we do not find merit in the ground raised. Accordingly, this ground is dismissed. 11. In ground no. 5, the Revenue has challenged deletion of Rs.48,54,096/- made on account of investment in shares/debentures. 11.1 While identical issued in the corresponding ground raised by the assessee, being ground no. 2 in IT(SS)A No.02/Del/2014 in the earlier part of the order, we have upheld the decision of learned Commissioner (Appeals) on the issue. Accordingly, this ground having become infructuous is dismissed. 12. In ground no. 6, the Revenue has challenged the deletion of addition made of Rs.22,20,000/- being deposits made in foreign bank accounts. 12.1 While deciding identical issue, arising in the corresponding ground raised by the assessee, being ground no. 3 in IT(SS)A No. 02/Del/2014 in the earlier para of the order, we have upheld the decision of learned Commissioner (Appeals). Accordingly, this ground, having become infructuous, is dismissed. 13. In ground no. 7, the Revenue has challenged the deletion of addition of Rs.25 lakhs made on account of foreign tour expenses. 15 IT(SS)A Nos. 02 & 03/Del/2014 13.1 We have heard the parties and perused the materials on record. While deciding the issue, learned Commissioner (Appeals) has held as under: “10.6 1 have considered the submissions made, orders of CIT(A) & I TAT, and the reassessment order. The ITAT had restored the matter to the AO with the direction that he should conduct inquires and verify the books of accounts and other relevant records of M/s Seasons Creations Pvt. Ltd. and M s Duke Hosiery with reference to the certificates filed by them and decide the issue afresh giving proper opportunity. As assessments in these cases are still pending, the AO is directed to carry out the directions of Hon’ble ITAT in those cases. It is not disputed that expenses on foreign travel were borne by these two concerns. Therefore, the expenses shall be considered in the hand of M/s Seasons Creations Pvt. Ltd. and M/s Duke Hosiery during the assessment proceedings in those cases. Addition in the hand of the appellant is not sustainable as there is no evidence of any expenditure by the appellant. I hold accordingly. The addition of Rs.25,00,000/- is deleted.” 13.2 As could be seen from the aforesaid observations of learned Commissioner (Appeals), in the first round of litigation, the Tribunal restored the matter to the Assessing Officer with a direction that necessary inquiry should be conducted and books of account and other relevant records of M/s. Seasons Creation Pvt. Ltd. and M/s. Duke Hosiery with reference to the certain confirmation filed by them should be verified and issue be decided accordingly. As observed by learned Commissioner (Appeals), assessments in case of M/s. Season Creation Pvt. Ltd. and M/s. Duke Hosiery are yet to be completed. It is a fact on record that the 16 IT(SS)A Nos. 02 & 03/Del/2014 expenses on foreign travels are on account of M/s. Seasons Creation Pvt. Ltd. and M/s. Duke Hosiery. Therefore, as rightly observed by learned Commissioner (Appeals), the expenses on foreign travel has to be considered at the hands of M/s. Seasons Creation Pvt. Ltd. and M/s. Duke Hosiery. More so, considering the specific direction of the Tribunal in the earlier round of litigation. 13.3 In view of the aforesaid, we do not find any reason to interfere with the decision of learned Commissioner (Appeals). Ground raised is dismissed. 14. In the result, the appeal is dismissed. 15. To sum up, both the appeals are dismissed. Order pronounced in the open court on 13 th June, 2022 Sd/- Sd/- (N.K. BILLAIYA) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 13 th June, 2022. RK/- Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi