Satpal Singh Bagga, Hyderabad V. DCIT, Hyderabad

ITSSA 50/HYD/2005

• Counselvise Citation: [2016] 122 COUNSELVISE.COM (IT) 2796 (ITAT-HYDERABAD)
• Duration Of Justice: 11 year(s) 10 month(s) 4 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 30-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 16-11-2016
• Assessment Year: misc
• Appeal Filed On: 24-02-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Search and seizure; Deemed to accrue or arise in india; Block assessment
• Section: 68; 132

Judgement Text

ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER IT(SS)A NO.50/HYD/2005 (BLOCK PERIOD: 1996-07 TO 2001-02) SHRI SATPAL SINGH BAGGA HYDERABAD PAN:ABXPB 9330 J VS DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 HYDERABAD FOR ASSESSEE : SHRI P. MURALI MOHAN RAO FOR REVENUE : SHRI K.J. RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS APPEAL OF THE ASSESSEE WAS INITIALLY HEARD AND DISPOSED OF VIDE ORDERS DATED 3.8.2005. THEREAFTER, IN M.A. NO.114/HYD/2013OF THIS TRIBUNAL VIDE ORDERS DATED 3 0.07.2015 HAS RECALLED GROUNDS OF APPEAL NO.5 & 6 BY OBSERVIN G AS UNDER: 3. AT PARA NO.22.1, WE FIND THAT THERE IS AN ERROR APPARENT ON RECORD IN THE ORDER OF THE TRIBUNAL. HENCE, WE RECALL THE ORDER FOR THE LIMITED PURPOSE O F RE-HEARING ISSUE IN PARA NO.22.1. REGISTRY IS DIRECTED TO RE-FIX THE HEARING ACCORDINGLY. 2. FOR THE SAKE OF CLARITY, WE REPRODUCE PARA 22.1 O F THE TRIBUNALS ORDER: 22.1 THERE IS A GROUND BY THE ASSESSEE IN IT(SS)A NO.50/HYD/05 WITH REGARD TO SUSTAINING ADDITION DATE OF HEARING : 21.11.2016 DATE OF PRONOUNCEMENT : 30.12.2016 ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 2 OF 6 OF RS.6 LAKHS CASH CREDIT IN THE NAME OF M/S. GOLDEN AGENCIES AND RS.1,50,000 IN THE NAME OF CITY DISTRIBUTORS. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. EVIDENCE BROUGHT ON RECORD BY THE ASSESSEE IS NOT ENOUGH TO EXPLAIN THE TRANSACTIONS TO THE SATISFACTION OF THE LOWER AUTHORITIES. BEING SO, CONSIDERING THE REASONS GIVEN BY THE LOWER AUTHORITIES TO SUSTAIN THE ADDITION, WE CONFIRM THE ORDER OF THE CIT (A) ON THESE TRANSACTIONS. THESE GROUNDS ARE DISMISSED. 3. THUS, THIS MATTER WAS AGAIN FIXED FOR HEARING AN D WE HAVE HEARD BOTH THE PARTIES. 4. BRIEF FACTS RELATING TO THIS ISSUE ARE THAT THER E WAS A SEARCH AND SEIZURE OPERATION U/S 132 OF THE I.T. AC T ON THE ASSESSEE ON 3.1.2002 AND SECTION 158 BC PROCEEDINGS WERE INITIATED BY ISSUING A NOTICE ON 5.6.2002. DURING T HE BLOCK ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED THE STATEMENT OF AFFAIRS TO EXPLAIN VARIOUS INVESTMENTS/ASSETS ACQUI RED DURING THE BLOCK PERIOD. FROM AN EXAMINATION OF THE SAID STATEM ENT OF AFFAIRS, THE AO OBSERVED THAT THERE WERE SEVERAL CR EDITS IN THE NAME OF THE ASSESSEE AND TWO OF SUCH CREDITS ARE M/ S. GOLDEN AGENCIES=RS.6.00 LAKHS DURING THE FINANCIAL YEAR 19 95-96 AND RS.1,59,589 OF M/S CITY DISTRIBUTORS DURING FINANCI AL YEAR 2000- 01. THE AO OBSERVED THAT THE ASSESSEE HAS FLOATED A NUMBER OF CONCERNS AND OPENED BANK A/C IN SUCH CONCERNS AND T RANSACTED HUGE AMOUNTS THROUGH THESE ACCOUNTS. HE OBSERVED TH AT M/S GOLDEN AGENCIES IS THE CREDITOR FOR A SUM OF RS.6.0 0 LAKHS AND THAT THE ASSESSEE HAS FAILED TO DISCHARGE THE ONUS OF PROVING THE CREDIT. SIMILARLY, IN THE CASE OF M/S CITY DISTRIBU TORS AND ALSO OTHERS, HE WAS OF THE OPINION THAT THE ASSESSEE HAS FAILED TO PROVE ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 3 OF 6 ITS CLAIM. ACCORDINGLY, HE BROUGHT THE ENTIRE AMOUN T TO TAX U/S 68 OF THE ACT. 5. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFO RE THE CIT (A) CHALLENGING THE ADDITIONS MADE BY THE AO AN D IT WAS STATED BEFORE THE CIT (A) THAT THE SUM OF RS.6.00 L AKHS HAS BEEN ADVANCED BY M/S GOLDEN AGENCIES TO THE ASSESSEE BY CHEQUES FOR THE PURPOSE OF PURCHASING THE PROPERTY I.E. GALA 8, ZAKARIA INDUSTRIAL ESTATE, MUMBAI OWNED BY M/S. DHARAM CHAN D & SONS AND THEREFORE, IT CANNOT BE TREATED AS UNDISCLOSED INCOME IN THE HANDS OF THE ASSESSEE. THE CIT (A) HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION BY OBSERVING THAT M/S. GOLDEN AGENCIES NEVER FILED ITS REGULAR RETURNS OF INCOME, THOUGH I T WAS CARRYING ON LEGAL BUSINESS IN MUMBAI AND THAT IN THE BANK A/ C OF THE SAID CONCERNS IN SYNDICATE BANK, MAROL MAROSHI BRANCH, M UMBAI THERE WERE DEPOSITS OF IDENTICAL SUM FROM WHERE THE CHEQUES HAVE BEEN ISSUED TO THE ASSESSEE. THEREFORE, HE HELD THA T THE NATURE AND SOURCE FOR RS.6.00 LAKHS REMAINS UNPROVED AND H AS TO BE TREATED AS DEEMED INCOME U/S 68 OF THE I.T. ACT. 6. WITH REGARD TO THE ADDITION OF RS.1,59,589, THE ASSESSEE SUBMITTED THAT A SUM OF RS.1,50,000 HAS BE EN DEPOSITED BY THE FIRM IN S.B. A/C NO.18137 OF UNION BANK OF I NDIA, KHAR BRANCH, BOMBAY ON 4.8.2000 AT THE REQUEST OF THE AS SESSEE FOR WHICH THE WITHDRAWAL WAS MADE AND THAT A SUM OF RS. 9,589 WAS PAID TO THE ASSESSEE BY THE FIRM BY WAY OF A CHEQUE ON 7.8.2000 TOWARDS DRAWINGS. IT WAS ALSO SUBMITTED THAT BOTH T HE ABOVE DEPOSITS OF RS.6.00 LAKHS AND RS.1,59,589 ARE NOT B ASED ON ANY INCRIMINATING DOCUMENTS FOUND DURING THE COURSE OF SEARCH TO ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 4 OF 6 ESTABLISH THAT IT IS THE UNDISCLOSED INCOME OF THE ASSESSEE AND THEREFORE, SHOULD BE DELETED. THE CIT (A), HOWEVER, DID NOT ACCEPT THE ASSESSEES CONTENTION AND GRANTED RELIEF ONLY O F RS.9,589 AS IT WAS RECEIVED THROUGH CHEQUE. THE BALANCE ADDITION O F RS.1,50,000 WAS CONFIRMED AGAINST WHICH, THE ASSESSEE IS IN APP EAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE BLOCK ASSESSMENT WAS COMPLETED U/S 158BC OF THE ACT AND THEREFORE, ANY ADDITION MADE IN THE COURSE OF SUCH BLOCK ASSESSMENT HAS TO BE ONLY ON THE BASIS OF INCRIMINA TING MATERIAL FOUND DURING THE COURSE OF SEARCH AND IT WAS NOT FO RMING PART OF THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE SUBMITTED THAT THE ASSETS STATED ABOVE AS WELL AS THE SOURCES FOR THE ASSETS WERE ALL PART OF THE BOOKS OF ACCOUNT AND THEREFORE, ACCORDI NG TO HIM, NO ADDITION CAN BE MADE ON THE BASIS OF SUCH MATERIAL DURING THE BLOCK ASSESSMENT PROCEEDINGS. HE HAS FILED THE COPI ES OF THE DOCUMENTS TO SHOW THAT THESE WERE RECORDED IN HIS R EGULAR BOOKS OF ACCOUNT. 8. THE LEARNED DR, HOWEVER, SUBMITTED THAT THE INVESTMENTS IN THE ASSETS WERE FOUND ONLY DURING TH E COURSE OF SEARCH AND THEREFORE, THE UNDISCLOSED INCOME FOR IN VESTMENTS IN SUCH ASSETS HAS RIGHTLY BEEN BROUGHT TO TAX AS UNEX PLAINED INVESTMENT U/S 68 OF THE ACT. ACCORDING TO HIM, THE ADDITIONS ARE TO BE SUSTAINED. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, IT IS A SETTLED POSITION THAT BLOCK ASS ESSMENT U/S 158BC CAN BE MADE ONLY ON THE BASIS OF INCRIMINATI NG MATERIAL ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 5 OF 6 FOUND DURING THE COURSE OF SEARCH AND WHICH HAS NOT BEEN DISCLOSED IN THE REGULAR BOOKS OF ACCOUNT. WE FIND THAT THE ASSESSEE HAD TAKEN A GROUND BEFORE THE CIT (A) THAT IN THE CASE OF M/S. GOLDEN AGENCIES AND ALSO M/S CITY DISTRIBUTORS , NO INCRIMINATING MATERIAL WAS FOUND TO ESTABLISH THAT IT IS THE UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER, IT IS A LSO SEEN THAT IN THE CASE OF M/S. GOLDEN AGENCIES, THE AMOUNTS HAVE BEEN RECEIVED BY THE ASSESSEE BY WAY OF CHEQUES AND IN T HE CASE OF M/S. CITY DISTRIBUTORS THE SUM OF RS.1,50,000 HAS B EEN DEPOSITED IN CASH AND CONFIRMATION LETTER TO THIS EFFECT HAS BEEN ISSUED BY THE SAID CONCERN. THEREFORE, IT IS CLEAR THAT THESE ENTRIES ARE MADE IN THE REGULAR BOOKS OF ACCOUNT OF THE ASSESSEE AND CANNOT BE CONSIDERED AS UNDISCLOSED INCOME OF THE ASSESSEE FO UND DURING THE COURSE OF SEARCH. THEREFORE, WE ARE INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSEE THAT THE ENTRIES IN THE REGULAR BOOKS OF ACCOUNT CANNOT BE CONSIDERED FOR MAKING ADDITIONS D URING THE BLOCK ASSESSMENT U/S 158BC OF THE ACT. IN VIEW OF T HE SAME, ASSESSEES GROUNDS OF APPEAL NO.5 & 6 ARE ALLOWED. 10. IN THE RESULT, ASSESSEES GROUNDS OF APPEAL NO. 5 & 6 ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DECEMBER, 2016. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH DECEMBER, 2016. VINODAN/SPS ITSSA NO 50 OF 2005 SATPAL SINGH BAGGA HYDERABAD PAGE 6 OF 6 COPY TO: 1 SHRI S. RAMA RAO, ADVOCATE, 103 INDIRADEVI NILAYA M, 3-6- 542/4,STREET NO.7, HIMAYATNAGAR, HYDERABAD 500029 2 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1 HYDERABAD 3 CIT (A)-1 HYDERABAD 4 CIT (CENTRAL) HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER