DCIT, New Delhi V. M/s. Sri Endrash Investment & Finance Pvt. Ltd., New Delhi

ITSSA 25/DEL/2012

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8170 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 8 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 04-06-2012
• Assessment Year: misc
• Appeal Filed On: 30-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANURADHA MISRADR
• Assessee Lawyers: R C RAI
• Keywords: Unexplained investment; Document seized
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI G BEN CH BEFORE SHRI G.C. GUPTA,VP AND SHRI A.N. PAHUJA,AM IT(SS) A NO.25/DEL./2012 BLOCK PERIOD: 01.04.1989 TO 14.12.1999 DY. CIT,CENTRAL CIRCLE-17, ROOM NO.353,ARA CENTRE, E- 2, JHANDEWALAN, NEW DELHI VS. M/S SRI ENDRASH INVESTMENT & FINANCE PVT. LTD., 209, BHANOT PLAZA-II, 3-D.B. GUPTA ROAD, NEW DELHI-65 [PAN AABCS 6547 E ] (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI R.C. RAI, AR REVENUE BY SMT. ANURADHA MISRA,DR DATE OF HEARING 04-06-2012 DATE OF PRONOUNCEMENT 08-06-2012 O R D E R A.N. PAHUJA::- THIS APPEAL FILED ON 30.03.2012 BY THE REVENUE AGA INST AN ORDER DATED 09.01.2012 OF THE CIT(A)-II, DELHI, RA ISES THE FOLLOWING GROUNDS:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` ` 5 LACS MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE I.T. ACT, 1961 . 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION OF ` ` 5 LACS MADE ON ACCOUNT OF UNEXPLAINED DEPOSIT IN BANK ACCOUNT. 3) A) THE ORDER OF THE CIT(A) IS ERRONEOUS AND NOT TENABLE IN LAW AND ON FACTS. B) THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF TH E HEARING OF THE APPEAL. IT(SS)A N O.25/DEL./2012 2 2. ADVERTING FIRST TO GROUND NO.1 IN THE APPEAL, 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 THE ACT) WAS CONDUC TED IN THE PREMISES OF THE ASSESSEE ON 14.12.1999, WHEN A NUMBER OF DOCUMENTS WERE SEIZED. CONSEQUENTLY, IN RESPONSE TO A NOTICE U/S 158 BC OF THE ACT SERVED UPON THE ASSESSEE ON 18.12.2000, THE ASSESSEE COMPANY FILED RETURN DECLARING NIL UNDISCLOSED INCOME IN FORM NO.2B . LATER, AN ASSE SSMENT WAS COMPLETED U/S 158BC OF THE ACT ON UNDISCLOSED INCOME OF ` ` 10 LACS VIDE ORDER DATED 31.12.2001 WITH THE ADDITIONS OF ` `5 LACS ON ACCOUNT OF CASH SEIZED FROM THE BANK ACCOUNT OF THE COMPANY AND ANOTHER ` ` 5 LACS ON ACCOUNT OF AMOUNT PAID TO M/S EXPO GLOBE INDIA LTD. ON APPEAL, THE ITAT SET ASIDE THE ISSUE RELATING TO THESE TWO ADDITIONS TO THE FILE OF THE ASSESSING OF FICER[AO IN SHORT] FOR A FRESH DECISION IN THE LIGHT OF ORDER OF THE SETTLEMENT CO MMISSION IN THE CASE OF SHRI S.K. JAIN, MAIN PERSON OF THE GROUP, AFTER VERIFYIN G AS TO WHETHER OR NOT ANY SEARCH WARRANT WAS ISSUED IN THE NAME OF THE ASSESS EE COMPANY. IN TERMS OF THE DIRECTIONS OF THE ITAT, THE ASSESSEE WAS GIVEN ANOTHER OPPORTUNITY THROUGH A DETAILED QUESTIONNAIRE. AFTER CONSIDERING THE RE PLY OF THE ASSESSEE AND THE ORDER OF THE SETTLEMENT COMMISSION IN THE CASE OF S HRI S.K. JAIN, THE AO ADDED AN AMOUNT OF ` ` 5 LACS ON ACCOUNT OF SHARE APPLICATION MONEY GIVEN BY THE ASSESSEE TO M/S EXPO GLOBE INDIA PVT. LTD. U/S 69 O F THE ACT WHILE REJECTING THE CONTENTIONS OF THE ASSESSEE AND IN THE ABSENCE OF B OOKS OF ACCOUNT OF M/S TIMELY FINCAP PVT. LTD.. 3. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING A REMAND REPORT FROM THE AO AND THE COMMENTS OF THE A SSESSEE THEREON, IN THE FOLLOWING TERMS :- 10 I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTE N SUBMISSIONS FILED BY THE AR, THE REMAND REPORT OF T HE AO, THE REJOINDER FILED BY THE AR AS WELL AS THE FACTS OF T HE CASE AND THE POSITION OF LAW. IN THIS RESPECT IT IS OBSERVED THA T THE AO'S MAIN CONTENTION IS THAT THOUGH THE ASSESSEE HAS FILED TH E CONFIRMATION FROM M/S EXPO GLOBE INDIA LTD. BUT SOURCE THEREOF R EMAIN IT(SS)A N O.25/DEL./2012 3 UNEXPLAINED, AS NO BOOKS OF ACCOUNT OF M/S TIMELY F INCAP PVT. LTD. WERE PRODUCED BEFORE THE AO DURING ORIGINAL ASSESSM ENT OR BEFORE THE PRESENT AO, THE ADDITION HAS BEEN MADE. THE APP ELLANT'S MAIN CONTENTION IS THAT THE AO MADE THE ADDITION OF RS.5 ,00,000/- U/S 69 OF THE INCOME TAX ACT, 1961 ON THE STRENGTH OF A LO OSE SHEET FOUND AND SEIZED AT PAGE NO. 49 OF ANNEXURE-8, PARTY 1 WH ICH IS A DOCUMENT WHICH DOES NOT CONTAIN ANY DATE OR SIGNATU RE OF ANY PERSON AND IS AN UNSIGNED COMPUTER GENERATED PAPER. IT DOES NOT HAVE ANY EVIDENTIARY VALUE WITHOUT ANY CORRBORATING EVIDENCES. EVEN THE CHEQUE NUMBER MENTIONED IN THE ALLEGED DOC UMENTS IS NEVER DEBITED IN THE BANK ACCOUNT OF THE ASSESSEE. COPY OF BANK STATEMENT OF ASSESSEE FOR THE PERIOD FROM 1.4.1999 TO 30.6.2000 (SIX MONTHS BACK AND SIX MONTH AFTER DUE FROM THE D ATE OF SO CALLED CHEQUE ISSUED) HAS BEEN FILED TO SUBSTANTIATE THE C LAIM OF APPELLANT. THE AR HAS CITED THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT OF DELHI IN THE CASE OF CIT VS. KULWANT RAI REPORTED IN (2007)291 ITR 36, ON THE ISSUE OF UNSIGNED AGREEMEN T DOCUMENT FOUND AND SIZED AND ADDITION WAS MADE BY LD. ASSESS ING OFFICER, IN WHICH THE HON'BLE HIGH COURT HELD THAT :- 'ADMITTEDLY, THE ASSESSEE HAD NOT SIGNED THE AGREEM ENT IN QUESTION AND SINCE HE HAD NOT SIGNED THE AGREEMENT, NO LIABILITY COULD BE ATTRIBUTED QUA THAT AGREEMENT TOWARDS HIM SINCE HE WAS NOT A PARTY TO THE AGREEMENT TILL HE HAD SIGNED THE AGREEMENT. THE MERE FACT THAT THIS AGREEMENT WAS FOUND IN THE POSSESSION OF THE ASSESSEE DID NOT LEAD ANYWHERE. THUS, THE ADDIT ION OF 17,00,892 MADE BY THE ASSESSING OFFICER BY WAY OF H ALF SHARE OF THE ASSESSEE IN THE EARNEST MONEY WAS BASED ON SURM ISES AND GUESS WORK ONLY AND WAS LIABLE TO BE DELETED.' IN VIEW OF THE ABOVE POSITION IT IS HELD THAT IN TH E FIRST PLACE THE IMPUGNED DOCUMENT BEING UNSIGNED DOES GET COVERED B Y THE RATIO OF THE RULING GIVEN BY THE HON'BLE JURISDICTIONAL C OURT AS CITED ABOVE IN THE CASE OF KULWANT RAI. EVEN OTHERWISE ON MERIT S THE CHEQUE IN QUESTION HAS NEVER BEEN DEBITED IN THE BANK ACCOUNT OF THE APPELLANT. THE AO HAS TAKEN THE VIEW REGARDING THE SEIZED DOCUMENT WITHOUT CORROBORATING EVIDENCE OR FOLLOW U P ENQUIRY. THE ADDITION IS THEREFORE DELETED AND THE GROUND TAKEN IS ALLOWED. 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDIN GS OF THE LD. CIT(A). IT(SS)A N O.25/DEL./2012 4 5. WE HAVE HEARD FOR BOTH THE PARTIES AND GONE TH ROUGH THE FACTS OF THE CASE. INDISPUTABLY, THE AMOUNT WAS ADDED ON TH E BASIS OF DOCUMENT SEIZED DURING THE COURSE OF SEARCH. THE SAID DOCUMENT WAS COMPUTER GENERATED AND UNSIGNED WHILE THE CHEQUE NUMBER 365277 DATED 9.12. 1999 MENTIONED IN THE SAID DOCUMENT WAS NEVER DEBITED TO THE BANK ACCOUNT OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE LD. CIT(A) RELIED UPON THE DECIS ION OF HONBLE JURISDICTIONAL HIGH COURT IN KULWANT RAI (SUPRA) & DELETED THE A DDITION. THE LD. DR DID NOT PLACE ANY MATERIAL BEFORE US CONTROVERTING THE AFOR ESAID FINDINGS OF FACTS RECORDED BY THE LD. CIT(A) SO AS TO ENABLE US TO TA KE A DIFFERENT VIEW IN THE MATTER. IN THESE CIRCUMSTANCES ,ESPECIALLY WHEN T HERE IS NO BASIS TO INTERFERE, WE HAVE NO ALTERNATIVE BUT TO REJECT GROUND NO.1 IN THE APPEAL. 6.. NEXT GROUND NO.2 IN THE APPEAL RELATES TO ANOT HER ADDITION OF ` ` 5 LACS ON ACCOUNT OF CASH SEIZED FROM THE BANK ACCOUN T OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ISSUED A QUESTIONNAIRE DATED 22 ND MAY,2007, SEEKING SOURCE OF CASH. IN REPLY, THE AS SESSEE SUBMITTED THAT NO CASH WAS FOUND OR SEIZED DURING THE COURSE OF SEARC H. HOWEVER, AN AMOUNT OF ` `5 LACS WAS SEIZED FROM BANK ACCOUNT OF THE ASSESSE E WITH INDIA OVERSEAS BANK AND THE SAID BANK ACCOUNT WAS REFLECTED IN THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE. THE AO DID NOT ACCEPT THESE SUBMISS IONS ON THE GROUND THAT CASH FOUND FROM THE BANK ACCOUNT NO.3233 OF THE ASS ESSEE COMPANY WITH INDIAN OVERSEAS BANK AND M/S TIMELY FINCAP PVT.LTD. WAS SE IZED AND THE AMOUNT WAS ADDED IN THE CASE OF SRI S.K. JAIN AS WELL AS IN TH E CASES OF THE COMPANIES ON PROTECTIVE BASIS; THOUGH THE SETTLEMENT COMMISSION DELETED THE ADDITION IN THE CASE OF INDIVIDUAL, IN THE HANDS OF COMPANY AMOUNT REMAINED UNEXPLAINED. IN THESE CIRCUMSTANCES, THE AO ADDED THE AMOUNT EVEN I N SET ASIDE PROCEEDINGS AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE. 7. ON APPEAL, THE LD. CIT(A) DELETED THE ADDITION AFTER HAVING A REMAND REPORT FROM THE AO AND COMMENTS OF THE ASSES SEE THEREON, IN THE FOLLOWING TERMS:- IT(SS)A N O.25/DEL./2012 5 13 I HAVE CONSIDERED THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS FILED BY THE AR, THE REMAND REPORT OF T HE AO, THE REJOINDER FILED BY THE AR AS WELL AS THE FACTS OF T HE CASE AND THE POSITION OF LAW. IN THIS RESPECT IT IS OBSERVED THA T THE ASSESSING OFFICER HIMSELF IN HIS ORDER AT PAGE 3 PARA 2 HAS A CKNOWLEDGED THAT THE CASH FOUND FROM THE BANK ACCOUNT OF THE ASSESSE E COMPANY, AND M/S TIMELY FINCAP PVT. LTD., WERE SEIZED. THESE WERE AD DED IN THE CASE OF SH. S.K. JAIN AS WELL AS IN THE CASES OF RESPECTIVE COM PANIES ON PROTECTIVE BASIS. THOUGH SETTLEMENT COMMISSION HAS DELETED THI S ADDITION IN THE CASE OF INDIVIDUAL BUT IN THE CASE OF RESPECTIVE CO MPANIES THE AMOUNTS REMAINS UNEXPLAINED AS NO CASH BOOK WAS PRODUCED EI THER BEFORE THE AO DURING ORIGINAL ASSESSMENT OR BEFORE ME. IN THE CIR CUMSTANCES THE AMOUNT FOUND AND SEIZED REMAINS UNEXPLAINED. ACCORDINGLY, SAME IS ADDED TO THE TAXABLE INCOME OF THE COMPANY. THE BASIS TAKEN FOR THIS ADDITION DOES NOT APPEAR TO BE ON SOUND FOOTING AS THE SUBSTANTIV E ADDITION EARLIER MADE IN THE HANDS OF THE PRINCIPAL PARTY SH . S.K. JAIN HAS BEEN CONSIDERED AND DELETED BY THE HON'BLE SETTLEME NT COMMISSION UPON WHICH THE HON'BLE ITAT HAS REMANDED THE MATTER BACK TO THE AO TO RECONSIDER THE APPELLANT'S CASE IN THE LIGHT OF THE HON'BLE SETTLEMENT COMMISSION'S ORDER AFTER GIVING DUE OPPORTUNITY TO THE APPELLANT. HOWEVER, PLAIN READIN G OF THE AO'S ORDER DOES NOT REFLECT THE GROUND ON WHICH THIS ADD ITION HAS BEEN MADE IN THE FACE OF THE HON'BLE SETTLEMENT COMMISSI ON'S ORDER IN THIS RESPECT. THE ORDER ALSO DOES NOT REFLECT ANY OPPORTUNITIES OFFERED TO THE APPELLANT REGARDING PRODUCTION OF CA SH BOOK ON THIS ISSUE. THERE APPEARS TO BE SUBSTANCE IN THE APPELLA NT'S PLEA THAT THE RELEVANT ACCOUNT NO 3233, INDIAN OVERSEAS BANK, D.B. GUPTA ROAD, NEW DELHI-110055 WAS A DECLARED ACCOUNT IN TH E BALANCE SHEET OF THE APPELLANT AND THE RETURN FILED ON 30-1 0-1999 BEFORE THE DATE OF THE SEARCH (14.12.1999) TO THE DEPARTMENT F ROM WHICH THIS AMOUNT HAS BEEN SEIZED. THE LIST OF RULINGS CITED BY THE APPELLANT ALSO LEND SUBSTANTIVE SUPPORT TO THE APPELLANT'S PL EA ON THIS GROUND. THE ADDITION THEREFORE CANNOT BE UPHELD AND THE GRO UND IS THEREFORE ALLOWED. 8. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST THE AFORESAID FINDINGS OF THE LD. CIT(A).THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF THE ASSESSEE RELIED UPON THE FINDIN GS IN THE IMPUGNED ORDER. 9. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUG H THE FACTS OF THE CASE. INDISPUTABLY, THE CASH OF ` ` 5 LACS WAS SEIZED FROM BANK ACCOUNT NO.3233, IT(SS)A N O.25/DEL./2012 6 INDIAN OVERSEAS BANK, D.B. GUPTA ROAD, NEW DELHI-11 0055, WHICH ACCOUNT WAS REFLECTED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND RETURN FILED ON 30.10.1999 BEFORE THE DATE OF SEARCH. SINCE THE AMOUNT WAS DI SCLOSED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE, THIS COULD NOT BE CONSIDER ED UNDISCLOSED INCOME BY ANY YARDSTICKS. IN THE ABSENCE OF ANY BASIS, WE AR E NOT INCLINED TO INTERFERE. THEREFORE, GROUND NO.2 IN THE APPEAL IS ALSO DISMIS SED. 10. GROUND NO.3(A) IN THE APPEAL BEING GENERAL IN NATURE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITION AL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3(B) IN T HE APPEAL, ACCORDINGLY, THESE GROUNDS ARE DISMISSED. 11. NO OTHER PLEA OR ARGUMENT WAS MADE BEFORE US. 12. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (G.C. GUPTA) (A.N. PAHUJA) VICE PRESIDENT ACCOUNTANT MEMBER NS COPY OF THE ORDER FORWARDED TO :- 1. ASSESSEE 2. DY. CIT,CENTRAL CIRCLE-17, ROOM NO.353,ARA CENTR E, E-2, JHANDEWALAN, NEW DELHI 3. CIT CONCERNED 4. CIT(APPEALS)-II, DELHI 5. DR, ITAT,G BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI