LATE SHRI MUARARI LAL GUPTA, Jaipur V. ACIT, BHARATPUR

ITSSA 2/JPR/2012

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0247 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 05-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K KHANDELWAL
• Keywords: Document seized; Assessment record; Documents seized
• Section: 69C

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITSSA NO. 2/JP/2012 BLOCK PERIOD: 13-09-1995 TO 25-02-1997 (A.Y. 1987-88 TO 1997-98) PAN : ALGPG 4774 N LATE SHRI MURARI LAL GUPTA VS. THE ACIT THRU: L/H SMT. GULAB DEVI, CIRCLE-BHARATPUR SHRI HARI OM GUPTA & ORS V & P: KUMHER, BHARATPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI P.C. PARWAL DEPARTMENT BY: SHRI A.K. KHANDELWAL DATE OF HEARING: 09-07-2014 DATE OF PRONOUNCEMENT: 18-07-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST OR DER OF THE LD. CIT(A)- ALWAR DATED 20-03-2012 FOR THE BLOCK PERIOD 13-09- 1995 TO 25-02-1997 (A.Y. 1987-88 TO 1997-98) WHEREIN THE ASSESSEE HAS RAISED THE SOLITARY GROUND AS UNDER:- THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE HAS SHOWN ITS INABILITY T O MAKE DIRECT NEXUS BETWEEN THE CASH AVAILABLE AND THEREAF TER ITS UTILIZATION AS PER THE DIRECTION OF THE LD. CIT(A) IN THE FIRST ROUND OF APPEAL AND THEREFORE, THE AO HAS RIG HTLY NOT ALLOWED THE SET OFF OF INVESTMENT, EXPENSES AND CAS H 2 SEIZED ON 25-02-1997 AMOUNTING TO RS. 10,50,745/- AGAINST THE FUNDS AVAILABLE AS PER THE CASH FLOW STATEMENT. 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE EXPIRED ON 12-09- 1995. THEREAFTER THE SEARCH WAS CARRIED OUT ON 25-0 2-1997 IN THE PREMISES WHERE THE ASSESSEE AND HIS SONS USED TO LIVE. DURIN G THE COURSE OF SEARCH, VARIOUS INCRIMINATING DOCUMENTS WERE FOUND INDICATI NG THAT THE ASSESSEE WAS CARRYING OUT THE MONEY LENDING BUSINESS PRIOR TO HI S DEATH AS WELL AS AFTER THE DEATH BY HIS SONS. THE BLOCK PERIOD OF ASSESSEE 'S ASSESSABLITY CONSISTS OF TWO PARTS. (I) BEFORE DEATH - 1987-88 TO 25-02-1997. (II) AFTER DEATH THE SAID DECEASED LATE SHRI MURARI LA L GUPTA AS AOP 13-09-1995 TO 25-02-1997. IT WILL BE PERTINENT TO MENTION THAT THERE IS NO DI SPUTE ABOUT SUCH PERIODS. THE IMPUGNED APPEAL PERTAINS TO SECOND PERIOD. THE APPEAL IN QUESTION PERTAINS TO NOT ALLOWING THE SET OFF OF THE ASSETS ACQUIRED AND EXPENDITURE INCURRED AMOUNTING TO RS. 15,04,745/- WHICH IS MADE BY THE FAMILY MEMBERS AFTER THE DEATH OF THE ASSESSEE. THESE EXPENSES ARE CLAIMED BY THE ESTATE TO HAVE BEEN MADE OUT OF THE MONEY LENDING FUNDS REALI ZED BY THE MEMBERS. IT MAY BE MENTIONED THAT ORIGINALLY THIS AMOUNT WAS AD DED BY THE AO IN THE ASSESSMENT ON WHICH APPEAL WAS PREFERRED WHERE THE LD. CIT(A) SET ASIDE THE 3 ISSUE BACK TO THE FILE OF THE AO VIDE HIS ORDER DAT ED 18-04-2005 AND THE LD. CIT(A) AT PARA 6.2 OF HIS ORDER HAS OBSERVED AS UND ER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIO NS OF THE AR OF THE APPELLANT CAREFULLY. I HAVE ALSO GONE THR OUGH THE CASE LAWS CITED BY THE AR OF THE APPELLANT IN THIS REGARD. THE BLOC K ASSESSMENT OF THE APPELLANT HAS BEEN DIVIDED INTO TWO PERIODS AS SH. MURARI LAL EXPIRED WITHIN THE BLOCK PERIOD I.E. ON 12-9-95. THEREFORE, THE PERIOD PRIOR TO 13-9- 95 FALLING IN THE BLOCK IS THE FIRST PERIOD WHEN SH . MURARI LAL WAS ALIVE FOR WHICH A SEPARATE ASSESSMENT HAS BEEN MADE FOR THE B LOCK PERIOD. THE PERIOD FROM 13-9-95 UPTO 25-2-97 IS THE PERIOD AFTE R THE DEATH OF SH. MURARI LAL, THEREFORE, THE RETURN UNDER REFERENCE H AS BEEN FILED IN THE STATUS OF AOP BY HIS LEGAL HEIRS. HOWEVER, IF WE I GNORE THE DEATH OF SH. MURARI LAL, THERE IS A CONTINUOUS PERIOD OF 10 PREV IOUS YEARS FALLING IN THE BLOCK PERIOD. THEREFORE, IT IS DIFFICULT TO BEL IEVE THAT THE THINGS STARTED MOVING IN DIFFERENT DIRECTIONS AFTER THE DEATH OF S H. MURARI LAL. THE APPELLANT HAS CLAIMED THAT AFTER THE DEATH OF SHRI MURARI LAL PAWNING ADVANCES AND OTHER ADVANCES WERE REALIZED ON 13-9-9 5 ITSELF. THIS SITUATION CANNOT BE ACCEPTED IN THE GIVEN CIRCUMSTA NCES. THOUGH IT IS A FACT. THAT THE APPELLANT WAS ENGAGED IN PAWNING BUS INESS, YET IT IS DIFFICULT TO BELIEVE THAT AFTER HIS DEATH ENTIRE PAWNED ADVAN CES WERE REALIZED ON 13- 9-95 WHICH WERE UTILIZED BY HIS HEIRS FOR FINANCING THE ASSETS FOUND DURING THE COURSE OF SEARCH PERTAINING TO THIS PERI OD. THEREFORE, UNDER THESE CIRCUMSTANCES A BLANKET REDUCTION FROM THE IN VESTMENT ASSESSED FOR THE PRIOR PERIOD CANNOT BE ALLOWED TO THE APPELLANT FROM THE UNDISCLOSED INCOME/INVESTMENT FOR THE PERIOD UNDER REFERENCE. HOWEVER, IN PRINCIPLE THE APPELLANT'S CLAIM IS JUST IFIED TO THE EXTENT THAT EITHER THE INCOME OR THE INVESTMENT COULD BE A SSESSED FOR A PARTICULAR PERIOD. IT IS SEEN THAT THE APPELLANT HAS NOT PROVI DED RELEVANT DETAILS TO ESTABLISH THE LINK BETWEEN THE INVESTMENT AND THE A DVANCES REALIZED BY HIM DURING THE RELEVANT PERIOD. THEREFORE, UNDER THE GI VEN CIRCUMSTANCES THE AO IS DIRECTED TO ALLOW SET OFF TO THE APPELLANT AF TER VERIFYING THE DETAILS REGARDING UTILIZATION OF ADVANCES AND THEIR SUBSEQU ENT INVESTMENT IN THE ASSETS INCLUDED IN THE UNDISCLOSED INCOME OF TH E PERIOD UNDER REFERENCE. THE APPELLANT HAS TO PROVE A CLEAR CUT L INK BETWEEN THE REALIZATION OF ADVANCES AND ITS SUBSEQUENT INVESTME NT IN THE ASSET BEFORE THE AO . 2.2 IN SHORT, THE LD. CIT(A) HAD DIRECTED THE AO TO ALLOW SET OFF OF THE EXPENSES SUBJECT TO THE CONDITION THAT THE ASSE SSEE HAD TO PROVE CLEAR CUT LINK BETWEEN THE REALIZATION OF ADVANCES AND SU BSEQUENT INVESTMENTS. 4 THE AO CALLED UPON THE ASSESSEE TO COMPLY WITH THE DIRECTIONS OF THE LD. CIT(A) BUT THE ASSESSEE FAILED TO FURNISH THE REQUI SITE DETAILS BEFORE THE AO. THUS THE ADDITION WAS CONFIRMED AGAIN BY FOLLOW ING OBSERVATION. THE ASSESSEE HAS ONLY REPEATED THE FIGURE WHICH AR E ALREADY ENCLOSED IN THE RETURN OF INCOME SUBMITTED ON 09-08 -2000 AND THE SAME VERSION ARE SUBMITTED IN THE FORM OF THE AFFID AVIT OF SMT. GULAB DEVI W/O LATE SHRI MURARI LAL GUPTA AND SHRI HARI O M GUPTA S/O LATE SHRI MURARI LAL. HOWEVER, THE ASSESSEE FAILED TO FU RNISH THE CLEAR CUT LINK BETWEEN THE REALIZATION OF ADVANCES AND ITS SU BSEQUENT INVESTMENT IN THE ASSETS. THE ANNEXURE ATTACHED WIT H THE REPLY DATED 15-12-2006 ALREADY PART OF THE ASSESSMENT RECORD. A S THE ASSESSEE HAS FAILED TO FURNISH THE REQUISITE INFORMATION CLEAR C UT LINK BETWEEN REALIZATION OF THE ADVANCES AND ITS SUBSEQUENT INVE STMENT IN THE ASSETS, HENCE NO SET OFF IS ALLOWED TO THE ASSESSEE FROM THE UNDISCLOSED INCOME / INVESTMENT FOR THE PERIOD UNDE R REFERENCE. 2.3 AGGRIEVED, THE ASSESSEE CAME IN SECOND ROUND IN APPEAL ON THIS ISSUE BEFORE THE LD. CIT(A). IT MAY ALSO BE MENTION ED THAT AGAINST FIRST ORDER OF THE LD. CIT(A) THE ASSESSEE WENT IN APPEAL ON OTHER ISSUES BEFORE ITAT WHICH BY ORDER DATED 30-11-2007 STANDS DISPOSED OFF WHICH HAS NO EFFECT ON THESE SET ASIDE ISSUES. BY I MPUGNED ORDER, THE LD. CIT(A) DISMISSED THE SECOND ROUND OF APPEAL OF THE ASSESSEE BY FOLLOWING OBSERVATIONS. 4.3 I HAVE GONE THROUGH THE AOS ORDER DATED 19-1 2-2006, THE ORDER OF CIT(A), ALWAR DATED 18-04-2005, AS WEL L AS SUBMISSION MADE BY THE ASSESSEE AND CASES RELIED UPON. IN THE ORDER DATED 18-04-2005, THE LD. CIT(A) HAD O BSERVED AND DIRECTED AS UNDER:- IT IS SEEN THAT THE APPELLANT HAS NOT PROVIDED RELEVANT DETAILS TO ESTABLISH THE LINK BETWEEN THE INVESTMENT AND THE ADVANCES REALIZED BY HIM DURING THE RELEVAN T PERIOD. 5 THEREFORE, UNDER THE GIVEN CIRCUMSTANCES THE AO IS DIRECTED TO ALLOW SET OFF TO THE APPELLANT AFTER VERIFYING THE DETAILS REGARDING REALIZATION OF ADVANCES AND THEIR SUBSEQU ENT INVESTMENT IN THE ASSETS INCLUDED IN THE UNDISCLOSE D INCOME OF THE PERIOD UNDER REFERENCE. THE APPELLANT HAS TO PR OVE A CLEAR CUT LINK BETWEEN THE REALIZATION OF ADVANCES AND IT S SUBSEQUENT INVESTMENT IN THE ASSETS BEFORE THE AO. THE AO WAS BOUND TO ALLOW THE DIRECTIONS OF THE LD. CIT(A) AS ABOVE. THE APPELLANT HAS STATED ITS INABILITY TO MA KE DIRECT NEXUS BETWEEN THE CASH AVAILABLE LAND THEREAFTER ITS UTILIZATIONS BEFORE THE AO AS WELL AS BEFORE ME. THE DIRECTIONS OF THE LD. CIT(A) AS NOTE D ABOVE, HAVE BECOME FINAL. I FIND THAT THE AO HAS RIGHTLY NOT ALLOWED T HE SET OFF OF INVESTMENTS, EXPENSES AND CASH SEIZED ON 25-02-1997 AMOUNTING TO RS. 10,50,745/- AGAINST THE FUNDS AVAILABLE AS PER CASH IN FLOW, A S THE APPELLANT HAS FAILED TO PROVE A CLEAR LINK BETWEEN THE REALIZATION OF AD VANCES/ INCOMES AND ITS SUBSEQUENT INVESTMENT IN THE ASSETS. IN THE CIRCUMS TANCES, THE ORDER OF THE AO IS UPHELD. 2.4 AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 2.5 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE DECEASED ASSESSEE WAS NOT MAINTAINING THE REGULAR BOOKS OF ACCOUNT. S IMILARLY AFTER HIS DEATH, THE LEGAL HEIRS OF THE ASSESSEE ALSO DID NOT MAINTA IN THE REGULAR BOOKS OF ACCOUNT. THE ISSUE IN QUESTION WAS SET ASIDE BY TH E LD. CIT(A) WITH A DIRECTION TO PROVE THE CLEAR CUT LINK BETWEEN THE R EALIZATION OF ADVANCES WHICH IS USED IN THE INVESTMENT AND THE EXPENDITURE DETECTED BY THE AO. DURING THE COURSE OF SECOND ROUND PROCEEDINGS, THE ASSESSEE FURNISHED THE STATEMENT OF AFFAIRS FOR THE PRE-DEATH AND POST-DEA TH PERIODS AND THE CASH FLOW STATEMENT WHICH IS PLACED AT PAGE 16 OF THE PA PER BOOK. THUS THE ASSESSEE HAS DISCHARGED HIS BURDEN TO DEMONSTRATE T HAT ESTATE OF SUFFICIENT REALIZATION OUT OF WHICH INVESTMENT IN QUESTION WAS MADE. THE RELEVANT 6 DETAILS WERE ALSO ON THE RECORD OF THE AO BY WAY OF SEIZED DOCUMENT. AT PAGE 20 OF THE PAPER BOOK, A LIST OF REALIZATION OF ADVANCES TOTALING TO RS. 4,14,700/- AS PER SEIZED ANNEXURE A-16 IS MENTIONED . THE LD. COUNSEL FOR THE ASSESSEE MAKES A POINT THAT THIS STATEMENT IS A PART OF THE SEIZED RECORD WHICH WAS AVAILABLE WITH THE AO AND IT HAS N OT BEEN DISPUTED. THE DIRECTION TO DEMONSTRATE CLEAR CUT NEXUS WILL INCLU DE THE DOCUMENTS TO BE FILED BY THE ASSESSEE AS WELL AS THE DOCUMENTS IN T HE POSSESSION OF THE DEPARTMENT. IT IS SUBMITTED THAT THE HOLISTIC PICTU RE AS DEPICTED AT PAGE 16 OF THE PAPER BOOK REGARDING THE EXPENDITURE INVOLVED O R CASH FLOW STATEMENT OF LATE SHRI MURARI LAL GUPTA WILL MEET OUT THE DIRECT IONS GIVEN BY THE LD. CIT(A). THE ABOVE AMOUNT OF RS. 4,14,700/- IS INCLU DED IN THE CASH FLOW STATEMENT. THERE IS A REASONABLE PRESUMPTION THAT A FTER THE DEATH OF THE ASSESSEE, SOME OF THE INTEREST WILL BE RECEIVED BY THE ESTATE. NO ALLOWANCE WHATSOEVER HAVE BEEN GIVEN IN RESPECT OF INTEREST I NCOME. ACCORDING TO THE LD. COUNSEL FOR THE ASSESSEE, THE DIRECTIONS GIVEN BY THE LD. CIT(A) HAVE BEEN PROPERLY COMPLIED WITH BY THE ASSESSEE AND THE RE IS NO JUSTIFICATION IN RETAINING THE ADDITION. IN THE ALTERNATE, IT IS PLE ADED THAT SEIZED DOCUMENTS ITSELF HAVE NOT BEEN CONSIDERED BY THE LOWER AUTHOR ITIES AND THUS THE MATTER MAY BE SET ASIDE AND RESTORE BACK TO THE FILE OF TH E AO FOR PROPER ADJUDICATION. 7 2.6 ON THE OTHER HAND, THE LD. DR VEHEMENTLY CONTEN DS THAT IT IS NOT DISPUTED THAT NO BOOKS OF ACCOUNT WERE MAINTAINED. AFTER THE DEATH OF THE ASSESSEE, THERE WERE DISPUTES AMONGST THE BROTHERS TOO. IT IS SURPRISING TO NOTE THAT ON 12-09-1005, THE ASSESSEE EXPIRED AND O N 13-09-1995 THE ENTIRE PAWNED ADVANCES ARE CLAIMED TO BE REALIZED. IT IS B EYOND THE PREPONDERANCE OF THE PROBABILITIES THAT IN A HOUSE WHERE THE DEAT H HAS OCCURRED AND ON THE NEXT DAY THE DEBTORS WILL COME WITH MONEY IN CASH A ND GIVE IT TO THE GRIEVING RELATIVES. THE DIRECTION THAT CLEAR CUT NE XUS SHOULD BE ESTABLISHED IN EFFECTIVE TERMS MEANS THAT IT WAS THE BURDEN ON THE ASSESSEE TO PROVE THAT THAT ON A PARTICULAR DAY THE ASSESSEE HAD AVAILABI LITY OF THE REQUISITE CASH. SECTION 69B AND 69C ARE MEANT FOR SUCH EVENTUALITY WHEN EXPENSES/ INVESTMENT ARE TO BE EXPLAINED ON DATE BASIS. THE A SSESSEE HAS FAILED TO DISCHARGE HIS BURDEN. BEFORE THE AO NOTHING FRESH H AS BEEN PRODUCED EXCEPT THE AFFIDAVIT. THEREFORE, THE ASSESSEE HAS FAILED T O BRING ON RECORD ANY EVIDENCE OR ANY SUBMISSION EXCEPT WHAT WAS CLAIMED IN ORIGINAL PROCEEDINGS. AS PER THE LD. CIT(A)S ORDER, THE ENT IRE BURDEN WAS PASSED ON THE ASSESSEE TO ESTABLISH THE NEXUS OF RECEIPTS AND OUTGOING IN CLEAR TERMS WHICH THE ASSESSEE WAS TRYING TO SIDE TRACK BY GIVI NG AN ILLUSORY AND UNHOLISTIC CASH FLOW STATEMENT AT THE END OF THE PE RIOD. THIS FROM NO ANGLE COMPLIES WITH THE DIRECTION OF THE LD. CIT(A). THER E IS A JUSTIFICATION OF THE 8 DEMAND AND THE ASSESSEE CANNOT BE GIVEN INNING AFTE R INNING TO COME WITH NEW CONCOCTED STORY. HAVING ACCEPTED THE ORDER OF T HE LD. CIT(A) AND NOT COMPLYING WITH THE DIRECTION OF THE LD. CIT(A), THE RE IS NO JUSTIFICATION FOR FURTHER SET ASIDE OF THE ISSUE. 2.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE FIND IN THE ARGUMENTS OF TH E LD. COUNSEL OF THE ASSESSEE THAT LD. CIT(A)S DIRECTION TO ESTABLISH T HE NEXUS BETWEEN THE RECEIVABLES AND OUTGOING IN CLEAR CUT TERMS IS UNAM BIGUOUS AND UNACCEPTED. THIS MEANS THAT IN FRESH PROCEEDINGS THE ASSESSEE S HOULD HAVE COME UP WITH DATEWISE AND SPECIFIC RECEIVABLES WHICH IT HAS FAIL ED TO DO. THUS IN OUR CONSIDERED OPINION THE ASSESSEE HAS FAILED TO DISCH ARGE HIS BURDEN IN COMPLYING WITH THE DIRECTION OF THE LD. CIT(A). HOW EVER, WE FIND SOME MERIT IN THE ARGUMENTS OF THE LD. COUNSEL FOR THE A SSESSEE THAT THE EVIDENCE RELATING TO CLEAR CUT NEXUS CANNOT EXCLUDE THE SEAR CH MATERIAL WHICH IS IN THE POSSESSION OF THE DEPARTMENT. AT PAGE 20 OF THE ASS ESSEE'S PAPER BOOK, A LIST OF RECEIVABLES DATEWISE AND PERSONWISE FROM THE SEI ZED RECORD IS COMPLIED WHICH INCLUDES THE INTEREST ALSO. THUS THE MATERIAL BEING PART OF THE SEIZED RECORD AND GIVING THE DATE WHICH ARE AFTER THE DEAT H OF THE ASSESSEE BECOMES THE EVIDENCE TO THE EFFECT THAT THE AMOUNT OF RS. 4 ,14,700/- WAS RECEIVED BY THE ESTATE FROM THE SEIZED RECORDS ITSELF. IN OUR V IEW, A CLEAR CUT NEXUS IS 9 ESTABLISHED TO THIS EXTENT. APROPOS THE ASSESSEE'S PLEA OF GIVING REASONABLE ALLOWANCE FOR RECEIPT OF CASH AND INTEREST, THE SAM E CANNOT BE ACCEPTED INASMUCH AS THE RECORD OF THE RECEIVABLES AND INTER EST IS KEPT BY THE ASSESSEE IN SEIZED MATERIAL. IN ABSENCE OF ANY SEIZED MATERI AL, WE CANNOT GO BEYOND THIS LIST. IN THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO HOLD THAT THE ASSESSEE COULD PROVE FROM THE SEIZED RECOR D THAT AN AMOUNT OF RS. 4,14,700/- WAS RECEIVED BY HIM WHICH WILL GO TO SET OFF THE EXPENSES AND INVESTMENT, IN VIEW THEREOF, WE ALLOW THE RELIEF TO THE EXTENT OF RS. 4,14,700/- AND OTHER ADDITION IS CONFIRMED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED THE ORDER PRONOUNCED IN OPEN COURT ON 18 TH JULY, 2014. SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 18 TH JULY, 2014 *MISHRA COPY FORWARDED TO:- 1. LATE SHRI MURARI LAL GUPTA, BHARATPUR 2. THE ACIT , CIRCLE, BHARATPUR 3. THE LD. CIT BY ORDER 4. THE LD. CIT(A), JAIPUR 5..THE LD. DR 6.THE GUARD FILE (ITSSA NO. 2/JP/2012) AR ITAT, JAIPUR 10