M/s Hemkund Metals Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITSSA 21/DEL/2011

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 7976 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 21-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-11-2011
• Assessment Year: misc
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SALIL MISHRA
• Assessee Lawyers: PK MISHRA ARS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI C BENC H BEFORE SHRI C.L. SETHI, JM & SHRI A.N. PAHUJA, AM IT(SS) NO.21/DEL/2011 BLOCK PERIOD: 01.04.89 TO 30.08.99 M/S HEMKUND METALS PVT. LTD., C-64, HANS APARTMENTS, EAST ARJUN NAGAR, DELHI V/S . DY. C.I.T., CEN. CIRCLE-16, NEW DELHI [PAN NO.: AACCH 1546 F] (APPELLANT) (RESPONDENT) ASSESSEE BY S/SHRI NEERAJ JAIN & P.K. MISHRA,ARS REVENUE BY SHRI SALIL MISHRA, DR DATE OF HEARING 09-11-2011 DATE OF PRONOUNCEMENT 21-11-2011 O R D E R A.N.PAHUJA:- THIS APPEAL FILED ON 25-4-2011 BY THE ASSESSEE AGAI NST AN ORDER DATED 10.03.2011 OF THE LEARNED CIT(A)-II, DELHI, R AISES THE FOLLOWING GROUNDS:- 1. THAT THE ORDER OF THE LEARNED CIT(A) IS BAD IN L AW AND ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 2. IT IS CONTENDED THAT THE LEARNED CIT(A) HAS ERRE D IN SUSTAINING THE ADDITION OF ` `19,00,000/- ON ACCOUNT OF FDRS OWNED BY SHRI SURESH GUPTA (DIRECTOR) IN HIS PERSONAL CAPACITY. 3. THAT THE LEARNED CIT(A) HAS ERRED IN FINDING THA T IN NONE OF THE SEVEN GROUNDS OF THE APPEAL TAKEN BY THE APPELLANT, RELIEF ON ACCOUNT OF ANY MATTER CONNECTE D WITH THE SETTLEMENT APPLICATION OF THE SAID SHRI SURESH GUPTA HAS BEEN SOUGHT. WITHOUT APPRECIATING THE FACT TH AT THE PROCEEDINGS BEFORE THE ASSESSING OFFICER ITSELF WER E SUBJECTED TO FINAL ORDER OF SETTLEMENT COMMISSION P ASSED U/S 245D(4) IN THE CASE OF SHRI SURESH GUPTA, THE DIRECTOR. IT(SS)N O.21 /DEL./2011 2 4. IT IS CONTENDED THAT THE ADDITION OF ` `19,00,000/- IS BAD IN LAW SINCE THE SAME HAS BEEN CONSIDERED ON SUBSTANTI VE BASIS BOTH IN THE HANDS OF THE APPELLANT COMPANY AN D SHRI SURESH GUPTA IN ORDERS PASSED U/S 158BC OF THE INCOME-TAX ACT IN THE CASE OF APPELLANT COMPANY AND SHRI SURESH GUPTA RESPECTIVELY. 5. IT IS CONTENDED THAT THE LEARNED CIT(A) HAS ERRE D IN SUSTAINING THE ADDITION OF ` `19,00,000/- WITHOUT ADJUDICATING ON THE EVIDENCE BROUGHT ON RECORD IN T HE FORM OF RULE 9 REPORT OF ITSC RULES WHEREIN THE INV ESTMENT OF ` `19,00,000/- HAS BEEN CONSIDERED IN THE HANDS OF SH RI SURESH GUPTA. 6. THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC E TO EACH OTHER. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR MODIFY THE ABOVE GROUNDS OF APPEAL. 2. FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT A SEARCH U/S 132(1) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS TH E ACT) WAS CONDUCTED ON 23 RD JUNE, 1999 IN THE PREMISES OF M/S SHREE VALLABH S TEEL (P) LTD. AND M/S NISHANT STEEL PVT. LIMITED, AS ALSO AT THE RESIDENCE OF SHR I SURESH GUPTA. SUBSEQUENTLY, A SEARCH WAS CONDUCTED ON 30.08.1999 AT DENA BANK, M BLOCK, CONNAUGHT PLACE, NEW DELHI, WHEN A SUM OF ` `6,63,995/- WAS SEIZED FROM CURRENT ACCOUNT NUMBER 11601 OF THE ASSESSEE COMPANY . CONSEQUENTL Y, A NOTICE U/S 158BC WAS ISSUED AND LATER ASSESSMENT IN THIS CASE WAS CO MPLETED VIDE ORDER DATED 31 ST AUGUST, 2001, DETERMINING UNDISCLOSED INCOME OF ` `1,31,37,540/-.ON APPEAL, THE LD. CIT(A), INTER ALIA, DELETED THE ADDITION OF ` ` 19,00,000/- ON ACCOUNT OF UNEXPLAINED FDRS BY ADMITTING FRESH EVIDENCE. ON F URTHER APPEAL BY THE REVENUE, THE ITAT VIDE THEIR ORDER DATED 1 ST JUNE, 2007 IN IT(SS) NO.381/D/2003 RESTORED THE MATTER BACK TO THE FILE OF THE ASSESS ING OFFICER[AO IN SHORT] WITH THE FOLLOWING DIRECTIONS:- WE HAVE CONSIDERED RIVAL SUBMISSIONS. FROM THE OR DER OF SETTLEMENT COMMISSION IN THE CASE OF SURESH KUMAR G UPTA DATED 11.6.2001 U/S 245D(1),IT IS MERELY AN ORDER FOR ADM ITTING A PETITION IT(SS)N O.21 /DEL./2011 3 FILED BY SHRI SURESH GUPTA FOR SETTLEMENT OF HIS CA SE. THE TOTAL INCOME DECLARED BY SHRI SURESH GUPTA IS `RS.75 LACS . AS PER PAGE 3 OF THE SAID ORDER OF SETTLEMENT COMMISSION, THE T OTAL AMOUNT OF CASH SEIZED FROM THE RESIDENCE OF SHRI SURESH GUPTA AND VARIOUS OTHER COMPANIES INCLUDING THE ASSESSEE HEREIN EXCEE DED RS.`82.8 LACS. IT IS TO BE NOTED THAT THE AFORESAID SUM OF 82.8 LACS DO NOT INCLUDE THE VALUE OF FIXED DEPOSIT OF RS.`19 LACS I N THE NAME OF ASSESSEE HEREIN. THUS, IT WILL BE INCORRECT TO HOL D THAT THE FIXED DEPOSITS OF `RS.19 LACS HAVE BEEN ASSESSED IN THE H ANDS OF SHRI SURESH GUPTA AND ARE SUBJECT MATTER OF APPLICATION ADMITTED BY THE COMMISSION. HOWEVER, THE FACT STILL REMAINS THAT S HRI SURESH GUPTA THROUGH HIS VARIOUS OTHER COMPANIES WERE INDU LGING IN BOGUS TRANSACTION OF PURCHASE AND SALE/HAWALA AND COMMISS ION WAS EARNED OUT OF THIS WHICH IS STATED TO BE SOURCE OF THE FIXED DEPOSITS MADE, THE INCOME IS TO BE COMPUTED IN THE HANDS OF SHRI SURESH GUPTA IF SO OFFERED. WE ACCORDINGLY REMIT THE MATT ER BACK TO THE FILE OF THE ASSESSING OFFICER TO FIND OUT WHETHER THE IN COME COMPUTED BY SETTLEMENT COMMISSION FINALLY ALSO INCLUDES THE AFORESAID FIXED DEPOSIT OF RS.19 LACS (EITHER BY WAY OF SOURCE OR B Y WAY OF APPLICATION THERETO). IF SO FOUND, NO FURTHER ADDI TION NEED TO BE MADE IN THE HANDS OF THE ASSESSEE HEREIN. HOWEVER, IF THERE IS NO SUCH FINDING BY SETTLEMENT COMMISSION AND IF THE SO URCE OF `RS.19 LACS REMAINS UNEXPLAINED, THE SAME CAN BE ASSESSED IN THE HANDS OF ASSESSEE HEREIN. ACCORDINGLY, THE MATTER IS RES TORED TO THE FILE OF THE ASSESSING OFFICER. IT IS ALSO MADE CLEAR THAT THE ASSESSEE SHALL FURNISH COPY OF FINAL ORDER OF SETTLEMENT COMMISSIO N PASSED U/S 245D(4) AND ALSO DEMONSTRATE THAT THE SOURCE OF THE FIXED DEPOSIT IS ASSESSED TO TAX IN THE CASE OF SHRI SURESH GUPTA SO AS TO CLAIM RELIEF IN THE HANDS OF ASSESSEE HEREIN AS OTHERWISE THE SAME IS LIABLE TO BE TAXED. 2.1 ` IN PURSUANCE TO AFORESAID DIRECTIONS OF THE ITAT , THE AO REQUESTED THE ASSESSEE TO SUBMIT A COPY OF FINAL ORDER OF THE SET TLEMENT COMMISSION. HOWEVER, THE ASSESSEE DID NOT SUBMIT AND ACCORDINGL Y, AN ADDITION OF ` ` 19,00,000/- WAS REITERATED, RESULTING IN ASSESSMENT OF UNDISCLOSED INCOME OF ` ` 1,31,37,540/-. 3. ON APPEAL, THE LD. CIT(A) UPHELD THE FINDINGS O F THE AO, THE ASSESSEE HAVING FAILED TO SUBMIT A COPY OF THE FINAL ORDER O F THE SETTLEMENT COMMISSION AS DIRECTED BY THE ITAT VIDE THEIR AFORESAID ORDER DAT ED 1.6.2007. IT(SS)N O.21 /DEL./2011 4 4. THE ASSESSEE IS NOW IN APPEAL AGAINST THE AFORE SAID FINDINGS OF LEARNED CIT(A). THE LEARNED AR ON BEHALF OF THE ASSESSEE CO NTENDED THAT THE SETTLEMENT COMMISSION IS YET TO PASS THE FINAL ORDE R, EVEN THOUGH ORDER U/S 245D(1) WAS PASSED ON 26TH JULY, 2002. ON THE OTHE R HAND, THE LD. DR SUPPORTED THE FINDINGS OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROU GH THE FACTS OF THE CASE. WE FIND THAT THE ITAT VIDE AFORESAID ORDER DATED 1 ST JUNE, 2007 REMITTED THE MATTER BACK TO THE FILE OF THE AO WITH THE DIRECTIONS TO ASCERTAIN AS TO WHETHER OR NOT THE INCOME COMPUTED BY THE SETTLEMENT COMMISSION FINALL Y INCLUDED THE AMOUNT OF AFORESAID FIXED DEPOSITS OF ` ` 19,00,000/- AND IF SO , NO FURTHER ADDITION NEED T O BE MADE. HOWEVER, IF THERE IS NO SUCH FINDING BY T HE SETTLEMENT COMMISSION AND IF SOURCE OF ` ` 19,00,000/- REMAINS UNEXPLAINED, SAME CAN BE ASSESS ED IN THE HANDS OF THE ASSESSEE. THE ITAT ALSO DIRECTED THE ASSESSEE TO FURNISH A COPY OF FINAL ORDER OF SETTLEMENT COMMISSION PASSED U/S 245D(4) OF THE ACT AND ALSO DEMONSTRATE THAT THE SOURCE OF THE FIXED DEPOS IT IS ASSESSED TO TAX IN THE CASE OF SHRI SURESH GUPTA SO AS TO CLAIM RELIEF IN THE HANDS OF ASSESSEE. SINCE ACCORDING TO THE LD. AR, SETTLEMENT COMMISSION IS YET TO PASS THEIR FINAL ORDER U/S 245D(4) OF THE ACT, THE AFORESAID DIRECTIONS OF THE ITAT COULD NOT BE COMPLIED WITH. IN NUTSHELL , POSITION REMAINS THE SAME AS O N 1.6.2007, WHEN THE ITAT ISSUED THEIR AFORESAID DIRECTIONS. SINCE THE SETTL EMENT COMMISSION IS YET TO PASS THEIR FINAL ORDER U/S 245D(4) OF THE ACT, WE H AVE NO ALTERNATIVE BUT TO VACATE THE FINDINGS OF THE LD. CIT(A) AND REITERATE THE D IRECTIONS IN ORDER DATED 1.6.2007 IN IT(SS)A NO. 381/DEL./2003. WITH THESE OBSERVATIO NS, GROUND NOS. 1 TO 5 IN THE APPEAL ARE DISPOSED OF. 6. GROUND NO.6 IN THE APPEAL BEING GENERAL IN NATUR E NOR ANY SUBMISSIONS HAVING BEEN MADE, DOES NOT REQUIRE ANY SEPARATE AD JUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN T ERMS OF RESIDUARY GROUND NO.7 IN THE APPEAL, ACCORDINGLY, THESE GROUNDS ARE DISMI SSED. 7. NO OTHER PLEA OR ARGUMENT WAS RAISED BEFORE US. IT(SS)N O.21 /DEL./2011 5 8. IN RESULT, APPEAL IS PARTLY ALLOWED BUT FOR STAT ISTICAL PURPOSES. SD/- SD/- (C.L. SETHI) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) NS COPY OF THE ORDER FORWARDED TO :- 1. DY. C.I.T., CENTRAL CIRCLE-16, NEW DELHI. 2. M/S HEMKUND METALS PVT. LTD., C-64, HANS APARTME NTS, EAST ARJUN NAGAAR, DELHI. 3. CIT(A)-II, DELHI. 4. CIT CONCERNED. 5. DR, ITAT,C BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI ORDER PRONOUNCED IN OPEN COURT