Suresh Narhar Gharpure, Pune V. Deputy Commissioner of Income-tax, Circle - 1(1), Pune

ITSSA 3/PUN/2019

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 3555 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 13-07-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 03-07-2022
• Assessment Year: 2012-2013
• Appeal Filed On: 10-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BARVE
• Keywords: Search and seizure; Document seized; Capital Gains
• Section: 143(3); 133A; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH “B”, PUNE BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND DR. DIPAK P. RIPOTE, ACCOUNTANT MEMBER IT(SS)A Nos.2 & 3/PUN/2019 निर्धारण वषा / Assessment Years : 2008-09 & 2012-13 Suresh Narhar Gharpure C/o D.R. Barve & Co. Chartered Accountants 461/1, Sadashiv Peth, Tilak Road, Pune – 411030 PAN: AAXPG9833C Vs. DCIT, Circle 1(1), Pune Appellant Respondent आदेश / ORDER PER S.S. GODARA, JM : These assessee‟s twin appeals for assessment years 2008-09 and 2012-13 arise against the CIT(A)-11, Pune‟s separate orders; both dated 19.11.2018 passed in case Nos.Pn/CIT(A)-11/DCIT Cen. Cir 1(1)/PN/178/2014-15 and Pn/CIT(A)-11/DCIT Cen. Cir 1(1)/PN/179/2014-15; respectively in proceedings u/s 153A r.w.s. 143(3) in former and u/s 143(3) of the Income Tax Act, 1961, in short „the Act‟, in latter assessment year, respectively. Assessee by Shri D.R. Barve Revenue by Shri Rajarshi Dwivedy Date of hearing 04-07-2022 Date of pronouncement 14-07-2022 IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 2 Heard both the parties. Case files perused. 2. Coming to the assessee‟s former appeal IT(SS)A No.2/PUN/2019, we note that his sole substantive grievance raised herein seeks to reverse both the lower authorities‟ action adding an amount of Rs.14,80,508/- representing suppressed sale consideration on transfer of shares in the relevant previous year. The CIT(A)‟s detailed discussion affirming the Assessing Officer‟s impugned action to this effect reads as under: “5.1 The only ground of appeal is against the addition of Rs.14,80,508/- on the basis of the paper noting found during the course of the search proceedings. The appellant has claimed that the learned AO ignored the facts and submissions made by the assessee and could not appreciate the confirmations produced during the course of the assessment proceedings. 5.2 During the survey action u/s 133A on 05/02/2010 at the business premises of Gharpure Engineering and Construction Pvt Ltd (GECPL), certain incriminating documents were found and impounded as bundle containing 11 pages. Page No. 6 contained details of sale of share of Gharpure Engineering and Construction Pvt. Ltd. by share holders including Suresh Gharpure and working of valuation per share. This page was dated 09/09/2010 (today). As per this page, price of shares sold in assessment year 2008-09 was at Rs. 279.72/- per share. On verification of the computation sheet of income of assessee, the AO noted that the sale price of sShares as offered by the assessee was only Rs. 274/- per share. 5.3 It was argued before the AO that the price of shares, which were sold, was fixed after many negotiations. During negotiations, many alternatives were worked-out from Rs. 100 per share, to many others and several workings were written. It was further claimed before the AO that like this rough calculation, quite a few times rough workings IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 3 were made. But, ultimately the final figure was approved and exactly for that approved figure only, shares were transferred. Any unaccounted payment was denied by the assessee. It was claimed by the appellant that it had sold 258840 shares of face value of Rs. 100/- each. It was further claimed that the AO relied on the noting(s) made on plain paper which is neither signed nor written by the appellant. The paper was only one of the many rough proposal prepared during the course of the negotiations for sale. It was submitted that the appellant received consideration of Rs. 7,09,78,951/- and offered the same for taxation. It was also claimed that there is nothing on record or otherwise to show that the assessee did accept any additional amount over and above Rs. 274.23/- per share and that the addition was made on the basis of rough working/hypothetically with no corresponding basis for expending of cash. The appellant has also relied on the following case laws wherein the addition was made to the income of the assessee on the basis of loose/rough paper and the same was held to be a dumb document- (ACIT Cen. Circle-2 vs. Shri Sharad Chaudhary (933/Del/2012)). 6. As is evident from the assessment order, the AO has relied on the noting(s) on page 6 of the bundle impounded during the course of survey action on 05/02/2010 at the business premise of Gharpure Engineering and Construction Pvt. Ltd, n which the appellant is the director. The AO has held that the impounded piece of paper which is enclosed in Annexure (1) of the assessment order clearly indicates the price at which the shares were sold. The date written on this paper was '09/09/2009 (today)' and the transaction of shares were made in the financial year 2007-08. He therefore, held that the event of sale of shares had already taken place at a particular price. He held that as event had occurred prior to the date of the words written in paper, it was the final price of shares already sold. He also noted that the exact balance share as written in this piece of paper was subsequently sold which also confirms that this is not rough working. Under the circumstances, the price written in this incriminating page was taken as the actual price for which the shares were transferred and it was held that the assessee received the differential amount of Rs. 279.72- 274=Rs. 5.72/- per share in cash. As the total 258830 shares were sold by the assessee during the year, the differential amount was worked out at Rs. 14,80,508/- (258830x5.72) and the same was made liable to capital gains tax, as it was held that the assessee had suppressed the price to partly avoid capital gains tax liability to this amount. The information contained in the impounded document, which is also part of the assessment order, is as IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 4 Shares Total (Lacs) Valuation @ Total 5,72,010 1600 279.72/- Face value 100 Rs.each Sold 4,57,608 1280 80 Balance 1,14,402 Invested by UPL New shares 8,55,000 855 555(actual) @100 Rs./each Total shares 14,27,010 Today 09/09/2009 1,14,402/14,27,010 8% SNG and 92% UPL 7. A perusal of the above document indicates that a total share of Rs. 5,72,010/- was available for sale. Out of which Rs. 4,57,608/- has been sold, the price indicated is clearly Rs. 279.72/- per share, the face value of each share is indicated as Rs. 100/- each. In the last line, it is indicated that these noting(s) have been done on "today (09/09/2009)7. indicating 9 th September, 2009. As 258830 shares have actually been sold by the assessee during the financial year 2007-08; and the balance shares were actually sold subsequently, as indicated by the AO in his order, the claim of the assessee that this is a dumb document is not correct, as the entries shown in the document is also corroborated by facts which have actually happened subsequently, the inference that as the noting has been made on 09/09/2009 and that the transaction of sale of shares 258830 had actually happened in 2007-08 and therefore, the noting(s) were with regard to sale of shares which have actually happened at the rate of Rs. 279.72/- and the argument of the appellant that it was a mere estimation cannot be accepted. Reliance is placed on the judgment of the Delhi High Court in the case of SMT, URMILA GAMBHIR L/H OF LATE SUBHASH GAMBHIR vs. COMMISSIONER OF INCOME TAX (2010) 325 ITR 0171, wherein it was held as under: "On the basis of document seized, the AO having concluded that the figures were in hundreds and pertained to land purchased by assessee and assessee having failed to establish that it was only a rough estimate of the cost of setting up a new project, addition was rightly made and no interference was called for." Accordingly, I agree with the inference drawn by the AO that the sale of shares of 258830 by the assessee was done during financial year 2007-08- at the price of Rs. 279.72/- per share and accordingly, the differential amount of Rs. 5.72 /- per IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 5 share was not offered to capital gains tax and the addition made by the AO on this account totaling Rs.14,80,508/- is upheld.” This leaves the assessee aggrieved. 3. Learned counsel first of all argues in light of assessee‟s pleadings that both the lower authorities have erred in making the impugned addition based on a “dumb” document which nowhere revealed any such suppression of sale consideration. His further case is that although the original sale price was @ Rs.279.72 per unit, the same should be reduced in light of the subsequent negotiations between the parties. 4. These assessee‟s arguments fail to invoke our concurrence. We make it clear first of all that the assessee himself is fair enough in not disputing the sale consideration as Rs.279.72 per unit which is exactly as per the seized documents found and seized during the course of search at assessee‟s place. We quote section 292C of the Act drawing presumption of correctness qua contents of such seized documents are presumed to be correct. This is indeed coupled with the fact that although the assessee has sought to place reliance on IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 6 oral as well as alleged subsequent developments reducing the sale price, we are afraid that the same would hardly rebut the statutory presumption which otherwise stands admitted at his behest. We, therefore, find no merit in assessee‟s arguments. The impugned addition stands upheld. His former appeal IT(SS)A No.2/PUN/2019 fails. 5. Next comes assessee‟s latter appeal IT(SS)A No.3/PUN/2019. His first and foremost substantive grievance is that both the learned lower authorities have erred in law and on facts in adding unexplained cash found / seized during the course of search amounting to Rs.10 lacs. There is hardly any dispute about the recovery of impugned cash. Learned counsel‟s only argument is that the company herein M/s. Gharpure Engineering and Construction Pvt. Ltd. has already declared the same in its return filed post search and therefore, it amounts to a double addition. 6. We have given our thoughtful consideration to the assessee‟s foregoing vehement arguments and find no merit therein. We make it clear that the assessee has expressed his inability to produce the IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 7 company‟s cash book as on the date of search which could throw light as to in what the circumstances this cash was in his physical custody. Faced with this situation, we quote hon‟ble apex court‟s landmark decision in ITO vs. Ch Atchaiah (1996) 218 ITR 239 (SC) that it is only correct income in the hands of the right person hand only that has to be taxed. We draw strong support therefrom to conclude that it is the assessee only who is liable to be assessed qua the physical cash recovered from his custody during the course of search. We, accordingly, confirm the impugned addition of Rs.10 lacs in his hands. Learned counsel at this stage again reiterated his double addition plea(s). We reject the same in light of our foregoing reasoning. This former substantive ground raised at the assessee‟s behest fails in above terms. 7. The assessee‟s latter substantive ground seeks to delete addition of Rs.51,000/- which is in the nature of cash recovered during search. The Revenue could hardly dispute that the learned lower authorities have not specifically rejected his socio-economic conditions as well as the cash in hand all along. Faced with this IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 8 situation, we direct the learned Assessing Officer to delete the impugned addition. This latter substantive ground is accepted. The instant appeal IT(SS)A No.3/PUN/2019 partly succeeds. No other ground has been raised or pressed before us. 8. To sum up, the assessee‟s former appeal IT(SS)A No.2/PUN/2019 is dismissed and latter appeal IT(SS)A No.3/PUN/2019 is partly allowed in foregoing terms. A copy of this common order be placed in the respective case files. Order pronounced in the Open Court on 14 th July, 2022. Sd/- Sd/- (DIPAK P. RIPOTE) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER प ु णे Pune; ददिधांक Dated : 14 th July, 2022 GCVSR IT(SS)A Nos.2 &3/PUN/2019 Suresh N Gharpure 9 आदेश की प्रतिलिपि अग्रेपिि/Copy of the Order is forwarded to: 1. अपीऱधर्थी / The Appellant; 2. प्रत्यर्थी / The Respondent; 3. The CIT(A)-11, Pune 4. 5. The Pr.CIT(Central), Pune विभागीय प्रविविवि, आयकर अपीलीय अविकरण, पुणे “B” / DR „B‟, ITAT, Pune 6. गार्ड फाईल / Guard file आदेशान ु सार/ BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अविकरण ,पुणे / ITAT, Pune Date 1. Draft dictated on 06-07-2022 Sr.PS 2. Draft placed before author 08-07-2022 Sr.PS 3. Draft proposed & placed before the second member JM 4. Draft discussed/approved by Second Member. JM 5. Approved Draft comes to the Sr.PS/PS Sr.PS 6. Kept for pronouncement on Sr.PS 7. Date of uploading order Sr.PS 8. File sent to the Bench Clerk Sr.PS 9. Date on which file goes to the Head Clerk 10. Date on which file goes to the A.R. 11. Date of dispatch of Order.