Vineet shivhare, Gwalior V. ACIT Central-1 , Bhopal

ITSSA 58/Ind/2021

AI Insights

The case involves cross-appeals by Shri Vineet Shivhare and the revenue authorities against the orders of the CIT(A) concerning the assessment years 2012-13 to 2014-15. The primary issue was the addition of Rs. 32,29,430 as unexplained investment in syndicate business and the corresponding undisclosed income from liquor trading through these syndicates. The Tribunal examined whether the income and inadmissible expenses of the syndicates, which were separately assessed and taxed, should also be added to the assessee's income. The Tribunal concluded that the income of the syndicates, after tax, should not be taxed again in the hands of the assessee, thus upholding the CIT(A)'s decision and dismissing the revenue's appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 122637 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 2 month(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-05-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 16-11-2022
• Assessment Year: 2014-2015
• Appeal Filed On: 08-03-2021
• Other Referred Cases: ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC), Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar), Pradeep Agencies \/ Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB), K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716
• Laws Referred To: Income-tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 69; 132; 143(3); 153A; 64; 142(2A); 48; 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH: DB: INDORE BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER AND SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT MEMBER IT (SS) A Nos.56 to 58/Ind/2021 Assessment Years: 2012-13 to 2014-15 Shri Vineet Shivhare, B-17, Tansen Road, Ashok Vihar, Gwalior, MP 474006 PAN BESPS1040D vs. The ACIT (Central)-1, Bhopal, (MP) 462001 (Appellant) (Respondent) IT (SS) A Nos.31, 47 & 48 /Ind/2021 Assessment Years: 2012-13 to 2014-15 The JCIT (OSD)(Central)-1, Bhopal, (MP) 462011 vs. Shri Vineet Shivhare, B-17, Tansen Road, Ashok Vihar, Gwalior, MP 474006 PAN BESPS1040D (Appellant) (Respondent) For Assessee : Shri Anil Kamal Garg, Shri Arpit Gaur, Shri Devendra Bansal For Revenue: Shri P.K. Mishra, CIT(DR) Date of Hearing : 22.02.2023 Date of Pronouncement : 09.05.2022 IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 2 of 28 ORDER PER CHANDRA MOHAN GARG, J.M. The above cross-appeals filed by the Assessee and Revenue are directed against the Order of the Ld. CIT(A)-3, Bhopal dated 18.12.2020 & 15.01.2021, for the A.Y’s. 2011-12 to 2014-15. Since common issues are involved in these appeals, these appeals were heard together and are being disposed of by this consolidated order. Appeals of assessee 2. Since the learned representatives of both sides have agreed to the factual position that the sole issue raises by the assessee in his all three appeals is identical and similar therefore for adjudication of sole issue agitated by the assessee in these appeals, the appeal for A.Y. 2012-13 is being taken as lead case. ITA No. 56/Ind/2021 for A.Y. 2012-13 3. The ground of appeal raised by the assessee read as under:- 1. On the facts and circumstances of the case the Id. CIT(A) has erred in confirming addition of Rs.3229430/- on account of investment in syndicate business as unexplained investment is illegal, unjustified and bad-in-law. 2. On the facts and circumstances of the case the Id. CIT(A) has erred in not considering the fact that no documents was found from the possession of the assessee and confirming addition of Rs.3229430/- on account of investment in syndicate business based on these documents found in possession of third party is illegal, unjustified and bad-in-law. IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 3 of 28 4. The learned assessee representative submitted that the Ld. CIT(A) has erred in confirming the addition of Rs. 32,29,430/- on account of investment in syndicate business as unexplained investment and therefore the addition has to be held as illegal, unjustified and bad-in-law. The learned AR further submitted that the Ld. CIT(A) has grossly erred in not considering the fact that no documents were found and seized from the possession of the assessee and the addition based on those documents found in the possession of third party is illegal, unjustified and bad-in-law. The learned AR also contended that as per audited financial statement and accounts for A.Y. 2011-12 the capital of assessee was 46,24,195/- and in addition to that share of profit from syndicate received by the assessee as determined by the AO was also available for investment. Therefore the addition made by the AO and uphold by the Ld. CIT(A) may kindly be deleted. 5. Replying to the above the Ld. CIT(DR) strongly supported the order of the authorities below and drew our attention towards para10.8 as page 23 of assessment order and submitted that the AO rightly appreciated the documentary evidences found and seized during search and seizure operation on Shivhare Group including the present assessee and they after rightly calculated the amount of undisclosed capital invested by the assessee during F.Y. 2011-12 to F.Y. 2013-14 pertaining to A.Y. 2012-13 to 2014-15 under consideration. The Ld. CIT(DR) also submitted that the share of profit received from the syndicate by the assessee cannot be taken as capital available for the assessee in the beginning of the year. The Ld. CIT(DR) also submitted that the assessee has multiple businesses and multiple syndicates therefore if there was any amount of opening capital then the same cannot be taken as source of investment in the syndicates in which assessee was a member and earning profit from the business. The Ld. CIT(DR) submitted IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 4 of 28 that it is a peculiar fact of the present case that the assessee doing business by forming syndicate was not informed to the Department and on account of search and seizure operation the fact of formation of syndicate and doing business through syndicate was revealed. Therefore AO was right in holding that the assessee has invested undisclosed amounts as capital investment in the syndicates. Further drawing our attention towards para 4.3.6 to 4.3.8 the Ld. CIT(DR) submitted that the learned first appellate authority after considering the basis taken by the AO and explanation of the assessee rightly confirmed the additions on this account in the hands of assessee by considering the theory of peak investment in the syndicates and has granted part relief to the assessee by taking a justified and sustainable approach therefore no interference is called for on this issue in the first appellate order. 6. On careful consideration of rival submission first of all we note that the Ld. CIT(A) has adjudicated the issue of undisclosed capital investment by the assessee in the syndicates with following observations and findings:- 4.3.6 The AO has dealt with the issue of unaccounted capital investment at para 10.7 of the impugned order. After reproducing the written submission made by the appellant before him, the AO, on the basis of the working of the Special Auditors, furnished the break-up of undisclosed capital investment for various assessment years in respect of which the appellant was issued a show cause notice. As per the break-up, the appellant was required to explain the sources of unexplained investment in capital of syndicates, for all the assessment years involved, at Rs.1,13,36,941/-. In the same para, the AO has also discussed, at length, the written submission made by the appellant before him. The AO has also IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 5 of 28 made a reference of various charts and finally, on the basis of such charts and considering the submissions of the appellant, the 10 in the body of assessment order, by way of giving a table, reached to the conclusion that the appellant had made unexplained investments towards capital of the syndicates, in various assessment years, for an aggregate sum of Rs. 1, 13,36,941/- in AYs 2012-13 to 2014-15. Finally, based upon such table, the A determined the amount of undisclosed capital investment at Rs.32,29,430/- in AY 2012-13, Rs. 34,53,262/- in AY 2013-14 and Rs. 46,54,248/- in AY 2014-15. 4.3.7 During the course of the appellate proceedings, the counsel of the appellant has contended that in the instant case, only peak investment ought to have been added and c edit for the additions already made in earlier years ought to have been granted by the AO. The counsel of the appellant got agreed that based upon the seized material, fresh investment in capital of syndicates for A. Y. 2012-13 at Rs.32,29,430/- can be said to be correct but, according to the counsel, from the seized material, it was evident that the investment so made got withdrawn in the subsequent years and the same was available to the appellant for making total investment of Rs.34,53,262/- in AY 2013-14. However, the appellant has failed to explain source of investment of fresh capital of Rs. 2,23,832/- during the financial year 2012-13 relevant to A.Y. 2013-14, instead of making addition for the entire fresh capital found invested in such year at Rs.34,53,262/-, the addition ought to have been restricted to Rs.2,23,832/-only. Thus, the total capital investment till the end of AY 2013-14 was at Rs. 34,53,262/- which was subsequently withdrawn time to time. Likewise in AY 2014-15 the total capital investment was at Rs. 46,54,248/- which was made out of withdrawn capital in AY 2013-14. However, the appellant failed to explain source of investment of fresh capital of Rs. 12,00,986/- (Rs. 46,54,248/- IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 6 of 28 - Rs. 34,53,262/-). The appellant before me as well as before A0 has taken a plea that the earlier investment made by appellant was withdrawn time to time and was readily available with the appellant for investment, however, on perusal of chart of investment as reproduced by the AO in para 10.7 of the impunged assessment order it is seen that the appellant has maximum investment of Rs. 46,54,248/- in AY 2014-15 which has been withdrawn and reinvested time to time and relevant relief as already been given to appellant. It was submitted that it is a settled law that undisclosed investment in any asset has to be made on the peak investment theory only by taking into consideration disinvestment of earlier investments. Thus, in nutshell, according to the appellant, in his case, only the addition of peak investment of Rs.46,54,248/- for all the assessment years was required to be added with the break-up of Rs.32,29,430/- in AY 2012-13, Rs. 2,23,832/- in AY 2013-14 and Rs. 12,00,986/- in AY 2014-15. 4.3.8 After going through the chart, which has been relied upon and reproduced by the AO, working made by the Special Auditors as well as the Assessing Officer, findings of the AC and written as well as oral submissions of the appellant made before me. The appellant has made fresh investment of Rs.32,29,430/- in AY 2012-13, Rs. 2,23,832/- in AY 2013-14 and Rs. 12,00,986/- in AY 2014-15 for which no satisfactory explanation was offered and therefore, the same was liable for making addition under section 69 of the Act. 7. First of all, from the assessment order we note that the AO, after considering the written submissions of the assessee placed before him, and on the basis of working and report furnished by the special auditor noted the break-up of undisclosed capital investment in the syndicates for various assessment years by the IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 7 of 28 assessee. The Assessing Officer by way of show cause notice asked the assessee to explain source of unexplained investment in the capital of syndicates for all the assessment years total amounting to Rs. 1,13,36,914/-. Thereafter the AO considered and referred various financial statements and charts and on the basis of tabular factual position noted the conclusion that the appellant had made unexplained investment towards capital of the syndicates in various assessment years. 8. The Ld. CIT(A) after considering the allegation of the AO and explanation of the assessee noted that the counsel of the appellant/AR got agreed that based on the seized material, fresh investment in capital of syndicates for A.Y. 2012-13 amounting to Rs. 32,29,430/- can be said to be correct. The Ld. AR also submitted that from the seized it was evident that investment made by the assessee got withdrawn in the subsequent years and same amount was available to the appellant for making total investment of Rs. 34,53,262/- and thus the assessee had failed to explain source of investment of fresh/additional capital of Rs. 2,33,832/- during A.Y. 2013-14. The Ld. CIT(A) after giving benefit of capital invested during A.Y. 2012-13 which was withdrawn and again reinvested in the subsequent A.Y. 2013-14 calculated the additional investment of Rs. 2,23,832/- for A.Y. 2013-14. In the similar manner the Ld. CIT(A) reduced the addition for A.Y. 2014-15 to Rs. 12,00,986/- after providing adjustment/benefit of capital invested during preceding A.Y. 2013-14 amounting to Rs. 34,53,262/-. 9. After careful consideration of the orders of the authorities below, particularly para 4.3.7 of assessment order, and factual position noted in the preceding paras of this order, we are of the considered view that the Assessing Officer relied and reproduced the chart based on the report and working of special auditor and IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 8 of 28 the learned counsel of assessee representing the case before the AO also gave is his consent on behalf of the assessee regarding fresh undisclosed investments in the syndicates by the assessee amounting to Rs. 32,29,430/- for A.Y. 2012-13, Rs. 2,23,832/- in A& 2013-14 and Rs. 12,00,986/- for A.Y. 2014-15 confirming the total undisclosed capital investments in the syndicates during said three assessments years amounting to Rs. 46,54,248/-. We are unable to see any ambiguity and perversity for any other valid reason and particularly factual finding recorded by the Ld. CIT(A) in para 4.3.7 based on the consent on behalf of the assessee placed on record through his counsel. Therefore we are inclined to hold that the Ld. CIT(A) was quite correct, justified in confirming the part addition in the hands of assessee on account of undisclosed investments in the syndicates by the assessee. Therefore, we are unable to see any valid reason to interfere in the findings recorded by the Ld. CIT(A) therefore, no interference is called for in the first appellate order in this regard. Accordingly, ground no 1 and 2 of assessee for A.Y. 2012-13 are dismissed. Since facts and circumstances of A.Y. 2013-14 & 2014-15 are identical and similar to the facts and circumstances of the appeals case of assessee for A.Y. 2012-13 therefore our findings recorded for A.Y. 2012-13 would apply mutatis mutandis to other two appeals pertaining to A.Y. 2013-14 & 2014-15. Accordingly, grounds raised by the assessee for A.Y. 2013-14 & 2014-15 are also dismissed. 10. In the result, all three appeals of the assessee are dismissed. IT (SS) A Nos.31, 47 & 48 Ind/2021 11. The learned representative of both the sides agreed to that the facts and circumstances in all three appeals are identical and similar on the sole issue agitated by the department challenging the deletion of addition and disallowance made by AO on account of IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 9 of 28 undisclosed income from liquor trading business and disallowance of share of inadmissible in the syndicate. Therefore, for the sake of brevity and conveyance, we take ITA SS 31/Ind/2021 for A.Y. 2012-13 as lead case for adjudication of sole issue in these appeals, wherein sole ground of revenue for A.Y. 2012-13 which read as under:- 1. “On the fact and in the circumstances of the case the Ld. CIT(A) has erred in deleting the addition of Rs. 1,60,57,565/- made by the AO on account of undisclosed income from liquor trading business.” 12. The Ld. CIT(DR) drawing attention towards relevant para of 10 to 10.4 assessment order submitted that on going through the seized documentary evidences the AO rightly found that the assessee has invested huge amounts of unaccounted capital in numerous groups/syndicates have also earned huge amount of undisclosed income. The Ld. CIT(DR) submitted that similar observations and findings were also arrived by the special auditor and on the basis of seized documentary evidence and report of special auditor the AO found that huge amount of inadmissible expenses were also incurred during carried out of business of liquor trade through syndicates. The Ld. CIT(DR) also contended that the inadmissible expenses were incurred by the assessee during the course of business through syndicates and were recorded in the seized documents found and seized during the course of search and seizure operation in the Shri L.N Shivhare group therefore the AO was right in making addition of undisclosed income from liquor trading business and share of inadmissible expenses incurred by the assessee in the syndicates for earning said undisclosed income through syndicates. The Ld. CIT(DR) submitted that the Ld. CIT(A) has kept aside the sustainable, self speaking and voluminous documentary evidence found and seized during the course of search IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 10 of 28 operation and granted relief to the assessee without any justified reason and basis. Therefore the impugned first appellate order may kindly set aside by restoring that of the AO. 13. The ld. CIT-DR, supporting the assessment order, submitted that the AO, in para 11.6 and 11.7 rightly recorded a finding that the seized data and accounts clearly prove that the real transactions which were hidden by the assessee and not duly disclosed in his return of income. The ld. CIT-DR further submitted that the syndicates formed by the assessee along with other associates during AY 2010-11 to 2016-17 were not filing mandatory returns of income and they were not existing in the departmental database, thus, it was apparent that the formation of syndicates was resulting into unaccounted investment of assessee as the capital of syndicates resulting into generation of unaccounted income of the assessee. The ld. CIT-DR further submitted that the details of undisclosed capital investments made which resulted in undisclosed income earned and proportionate share of inadmissible expenses is clearly discernible from the seized documents pertaining to syndicate transactions along with corroborative evidences clearly show that the assessee have direct linkage in the liquor business of group/syndicates. Therefore, the AO was right in making addition in the hands of the assessee pertaining to share of profit received by the assessee from liquor trading business. Therefore, the AO was also correct and justified in making disallowance of share pertaining to the assessee with regard to the inadmissible expenses of syndicates. The ld. CIT-DR submitted that the ld.CIT(A) has ignored these facts and granted relief to the assessee without any basis. Hence, the impugned first appellate order may kindly be set aside by restoring that of the AO. IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 11 of 28 14. Replying to the above, the ld. AR, vehemently supporting the first appellate order, submitted that the issue is covered in favour of the assessee by the order of the ITAT Indore Bench dated 19.04.2022 in the case of associate member of some other syndicate Shri Ramswaroop Shivhare in IT(SS)A No.12 to 18/Ind./2021. He also took us through the relevant paras 8.3.7 at pages 63 and 64 of the said Tribunal order. The ld. AR submitted that the Tribunal has concurred with the findings recorded by the ld. First appellate authority that the share of profit received by the assessee from liquor business conducted through syndicates cannot be taxed again when the AO has already taxed the entire income in the hands of the syndicates and issue of inadmissible expenditure has also been considered in the assessment orders of syndicates, then, if any addition or disallowance is made in the hands of the assessee, that would amount to double taxation and would be against the provisions clause (a) of first provision of section 86 r.w. section 67A of the Income-tax Act, therefore, no addition could be made in the hands of the assessee on account of share of profit from liquor business conducted through syndicates and share of inadmissible expenses in syndicates. The ld. AR also drew our attention to para 4.3.2 of the first appellate order and submitted that the ld.CIT(A) has granted relief to the assessee after considering the very glaring fact that the AO while passing the impugned assessment order has elaborately dealt that there exists a syndicate and also dealt with the ingredients of syndicates. 15. The ld. AR further submitted that the AO has accepted the statements of key persons of syndicates wherein they had accepted the existence of syndicates and the AO of the syndicates in the other group concern has made addition of undisclosed income in the hands of the syndicate for the respective assessment years. The ld. AR submitted that the ld.CIT(A) has listed 11 syndicates whose income was assessed by the AO and recovered all due taxes, etc. IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 12 of 28 The ld. AR submitted that in view of the above as per the judgement of the Hon’ble Supreme Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 239 (SC) wherein it was held that the correct income should be taxed in the right hand in the right assessment year. The ld. AR submitted that in view of the above when the AO has taxed the income of liquor business earned by the assessee in the hands of the respective syndicate and has also made disallowance pertaining to the inadmissible expenses in the hands of the syndicates. The ld. AR further submitted that the assessee has received share of profit from the respective syndicates after adjustment and inadmissible expenses and due income-tax, etc., paid thereon then such share of profit cannot be taxed again in again the hands of the assessee and no further disallowance can be made on account of inadmissible expenses in the hands of the syndicates. The ld. AR submitted that therefore, the order of the ld.CIT(A) may kindly be upheld in view of the factual matrix of the issue as well as order of the Tribunal in the case of ITO vs. Ramswaroop Shivhare (supra). 16. On careful consideration of the above rival submissions, we note that the ld.CIT(A) has granted relief to the assessee with the following observations and findings:- IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 13 of 28 IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 14 of 28 IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 15 of 28 IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 16 of 28 17. Further, from the order of the Tribunal in the case of ITO vs. Ramswaroop Shivhare (supra), we observe that the Tribunal has upheld the order of the ld.CIT(A) confirming the deletion of addition made by the ld. First appellate authority on account of share of profit from liquor business through syndicates and share of inadmissible expenses in the syndicates with the following observations and findings:- “8.1 We have heard rival contentions, perused the records placed before us, duly considered the facts and circumstances, carefully gone through the orders of the authorities below, Special Auditors Report, written and oral submissions made from both the sides and also gone through the judgments and decisions referred to and relied upon by both the sides. 8.2 First we would take the assessee's grounds of Appeal challenging the action of the ld. CIT(A) confirming the AO's action of holding that the assessee had formed syndicates with various persons and had derived share of profit from such syndicates. In our view, considering the voluminous tally datas and as also, financial statements of the various syndicates as seized during the course of search u/s. 132 of the Act in the different premises of the liquor group, there is absolutely no infirmity in the AO's action in holding that the assessee had carried out liquor business with various other persons by forming group, under the garb of syndicates, for a definite share of profit. We find that the AO has rightly placed reliance on the statements of various members of the syndicates who have also admitted to have formed syndicates. We find that the Special Auditors appointed u/s. 142(2A) of the Act, have made a very detailed working in which they have determined the various inadmissible expenses incurred by such syndicates and have also worked out the assessee's share in profit as well as in inadmissible expenditure incurred by each of the syndicates. Before us, the counsel of the assessee could not establish that the seized material relied upon by the AO was not belonging to the syndicates in which he was clearly stated to be one of the members. In these circumstances, we do not find any substance in the assessee's ground that he had not formed any syndicate. We also do not find any merit in the assessee's ground to the effect that corresponding to the quantum of share of profit of the assessee in various syndicates, as determined by the AO, no corresponding asset or expenditure was found. We find that first of all, this assertion itself is factually incorrect and contrary to the assessee's own submissions before us IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 17 of 28 in respect of other grounds of appeals through which for explaining the sources of undisclosed investment/expenditure the assessee has claimed that these were the share of profit from the syndicates. Even otherwise, not finding of any corresponding asset/expenditure, ipso facto, cannot be a ground for presuming that the assessee had not derived undisclosed income, especially in a circumstance when such undisclosed income is evident from ample of documentary evidences found during the course of search. Accordingly, the Ground Nos. 6(a), 6(b), 7(a) & 7(b) of the Assessee for A.Ys. 2010-11, 2013-14, 2014-15 & 2015-16; Ground Nos. 5(a), 5(b), 6(a) & 6(b) of the Assessee for A.Ys. 2011-12 & 2012-13; and Ground Nos. 6(a) & 6(b) of the Assessee for A.Y. 2016-17, being without substance are dismissed. 8.3 Now, coming to the Revenue's Ground No. 1 for all the assessment years, through which the Revenue has agitated the action of the ld. CIT(A) in deleting the additions, for various assessment years, made by the AO in the assessee's income on account of undisclosed income from liquor trade business. Upon overall consideration, we find absolutely no infirmity in the findings given by the ld. CIT(A). We find that undisputedly, the assessee had formed various Association of Persons (AOP), in form of syndicates/cartels/groups, with various other persons to carry out the business of liquor trade which is evident from the seized material/data and as also, report given by the Special Auditors. We also find ourselves in agreement with the findings given by the AO that the assessee was having specified percentage of share of profit in all such syndicates. We find that the AO at para (15.7) at page no. 75 to 96, by way of drawing a table, has given the details of various syndicates and the assessee's share in such syndicates. Further, we find that in the same table, the ld. AO has also made a reference of the relevant seized documents. Thus, there cannot be two views that the assessee had formed the syndicates and had also derived share of profit from such syndicates. We find that while computing the income of the assessee from such syndicates, the AO at para (15.11) of his Assessment Order has taken into consideration the assessment year wise aggregate amount of share of profit/(loss) of the assessee from the syndicates and has also taken into consideration the assessee's share in inadmissible expenses found incurred by such syndicates. We find that while making the assessment year wise additions in the assessee's income, the AO has taken the sum of both the figures after giving set-off for share of loss in syndicates for each year. We are of the view that that having given a finding to the effect that the assessee had formed the syndicates and such syndicates had carried out the liquor business as separate entities there was absolutely no justification for the AO to subject the assessee in respect IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 18 of 28 of profit of such syndicates which in the legal phraseology are nothing but Association of Persons/Body of Individuals, a separate taxable legal entity. 8.3.1 We find that as per the provisions of section 86, as contained in Chapter VII of the Income-Tax Act, 1961, the entire share of an assessee in income of the Association of Persons or Body of Individuals, as computed in the manner provided in section 67A shall not be chargeable to income-tax. In our view, in the present case, the clause (a) of the first proviso to section 86 would apply, inasmuch, the syndicates are chargeable to tax at the maximum marginal rate and consequently, the share of any member in the syndicates as computed in the manner provided in section 67A shall not be included in the total income of the member i.e. the assessee in the present case. 8.3.2 We find as per the provisions of section 67A of the Act, in computing the total income of an assessee who is a member of an association of persons or a body of individuals wherein the shares of the members are determinate and known, after making certain adjustments share of each member is required to be computed. However, after making the computation of share of a member in AOP or BOI as per the provisions of section 67A, in view of the specific provisions of section 86, such share of income shall be excluded from the total income of the assessee. We find that there are only two exceptions to the applicability of the provisions of section 86 viz. (i) when the association or body is not chargeable to tax on its total income at the maximum marginal rate or any higher rate; and (ii) where no income-tax is chargeable on the total income of the association or body, but, for the reasons discussed hereinbelow, none of the exceptions to section 86 are applicable in the present case. 8.3.3 We further find that in the instant case, as per the findings given by the AO himself, the share of the assessee, as a member of the syndicates (AOPs), was determinate and therefore, the assessee’s case would not fall under the provisions of sub-section (1) to section 167B of the Act. On the other hand, the case of the assessee would fall under the provisions of sub-section (2) to section 167B of the Act. In such a situation, the entire income of the syndicates, of which the assessee was found to be a member, would be chargeable to maximum marginal rate in accordance with clause (i) of subsection (2) to section 167B of the Act in the hands of such syndicates only. 8.3.4 We find that since all the subject syndicates are liable for charge of tax at the maximum marginal rate and therefore, the first exclusion as contemplated in clause (b) of the first proviso to the section 86 read with IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 19 of 28 clause (a) of the first proviso thereof would have no application. For the second proviso to section 86, we find that the income of the syndicates are, undisputedly, chargeable to tax under section 167B of the Act and therefore, such proviso would also not apply in the instant case. In other words, by having a combined reading of section 167B, section 86 and section 67A, it can be safely concluded that the share of profit of the assessee in various syndicates, which in the eyes of the law are nothing but Association of Persons, would be completely entitled for exclusion from total income of the assessee. 8.3.5 In the light of the legal position, as enunciated hereinabove, in our considered view, income of all the syndicates, as determined by the AO, can be assessed in the hands of the respective syndicates only as these syndicates, being AOPs are classified as separate persons and tax entity u/s. 2(31) of the Act, but, in any circumstance, in the present case, any share of profit from such syndicates cannot be added as income chargeable to tax in the hands of any of its members. We find that, as per the findings given by the ld. CIT(A) at para (4.7.2) which remained uncontroverted by the Revenue, even in respect of one of the syndicates, separate assessments have already been framed by one assessing officer u/s. 144/153C of Act and while making assessments in the hands of such syndicate, the amount of undisclosed income earned by such syndicate, has already been determined. It is well known maxim of the law that same income cannot be taxed twice in the multiple hands unless otherwise so warranted by the specific provisions of the Act itself. 8.3.6 In the present case, we also find that the AO besides making addition on account of assessee’s having derived share of profit from various syndicates, has also made addition, to the extent of the assessee’s share in such syndicate, qua some alleged inadmissible expenses incurred by these syndicates. We find full substance in the assessee's contention that since none of these inadmissible expenditure was claimed by the assessee himself, and therefore, any disallowance for claim of any such expenses can only be made in the hands of the syndicates which have actually incurred such expenditure. In our view, after making such additions on account of disallowances of expenses, the income of the syndicates ought to have been computed in accordance with the various provisions of the Act and once such income of the syndicate was computed, for the purpose of section 67A, the resultant share of income of the assessee in the total income of the syndicates was required to be apportioned. Thus, any share of the assessee in the inadmissible expenses of the syndicates ought to have been taken as in the nature of share of profit and that was required to be added under IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 20 of 28 section 67A of the Act, but again, after making such addition, the necessary relief in accordance with the provisions of section 86 ought to have been granted by the AO to the assessee which has not been so done in the instant case. 8.3.7 In our view, even if for any reason the Revenue failed to make any assessment in the hands of the syndicates, then also the income, which is otherwise chargeable to tax in a different tax entity i.e. the syndicate, cannot be added to the income of the assessee. We find that unlike under section 3 of the Income-Tax Act, 1922, in the present Income Tax Act, 1961 there is no such discretion or option available to an assessing officer as regard to taxing of any income earned by an AOP either in the hands of AOP or its members. Now, the assessing officer, subject to the provisions contained in ss. 67A, 86 and 167B is statutorily bound to make the assessment only in the hands of AOP and no addition, on the count of share of profit of a member in the AOP, can be made in the hands of such member. For such proposition, we rely on the decision of the Hon’ble Apex Court in the case of ITO vs. Ch. Atchaiah (1996) 218 ITR 0239 (SC) in which their Lordships was pleased to hold that under the present Act there is no discretion available to an AO either to assess the income in the hands of AOP or its members, but the same has to be assessed only in the hands of the AOP. The Apex Court further held that right income must be assessed in the hands of the right person. We also respectfully follow the decision of the Hon’ble High Court of Karnataka in the case of Pr. CIT vs. Ind Sing Developers (P) Ltd. (2016) 288 CTR 0154 (Kar) in which the Lordships relying upon the decision of Hon’ble Supreme Court of Ch. Atchaiah held that merely because the right person could not be taxed it would not be open to the Revenue to tax a wrong person. We find that the similar view was expressed by the Coordinate Delhi ‘G’ Special Bench, in the case of Pradeep Agencies – Joint Venture vs. ITO (2007) 111 TTJ 0346 (SB) and as also, by the Bangalore Bench, in the case of K.S. Sathyanarayana vs. ACIT (2008) TTJ 0716. 9. In view of the above findings, we find no infirmity in the findings given by the ld. CIT(A) deleting the entire additions made by the AO in the hands of the assessee on account of assessee's share in profit and inadmissible expenses of various syndicates, for various assessment years in the appeal. Accordingly, Ground No. 1 of the Revenue for all the assessment years viz. A.Y. 2010-11 to A.Y. 2016-17, being devoid of any merit, are hereby Dismissed.” IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 21 of 28 18. First of all, we may point out that the ld.CIT-DR has not controverted or brought on record any distinct or different facts and circumstances of the present case from the case of ITO vs. Ramswaroop Shivhare (supra) on this issue, therefore, we safely presume that the facts and circumstances of both the cases are similar and identical on the issue of share of profit received by the assessee from trading of liquor through syndicates and on the issue of share of inadmissible expenses in syndicates. At the cost of repetition we note that the AO categorically noted that these syndicates were formed by the assessee and his associates during AYs 2010-11 to 2016-17 which were not filing various statutory returns and from income-tax database, no syndicate could be traced and found existing. Therefore, the AO noted that the syndicates do not have PAN and they did not file any return of income. Thus, it was apparent that the formation of syndicate was resulting into unaccounted investment of the assessee as the capital of syndicates can also result into diversion of unaccounted income of the assessee. The AO also noted that details of undisclosed capital investment resulted in undisclosed income and proportionate share of inadmissible expenses as per seized documents of syndicate transactions along with corroborative evidences clearly show that the assessee have direct linkage with the liquor business of the groups/syndicates. 19. In view of the above, it is clearly discernible that the assessee was a member of association of persons or body of individuals i.e., syndicates and share of members of such association of persons or body of individuals were determined and known and the income of such syndicates was chargeable to tax on their total income at the maximum marginal rate or at any higher rate and the AO after allotting PANs to the syndicates, framed assessment order and the syndicates paid due taxes thereon after consideration of all IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 22 of 28 inadmissible expenses, etc., pertaining to the liquor business of syndicates. 20. Thus, we are satisfied about the contention of the ld. AR that after consideration of all disallowances and additions including the disallowance of inadmissible expenses in the syndicates the respective syndicate paid all due taxes etc., thereon and after such adjustment and payment of taxes the assessee received the share of net profit from the syndicates. In such a situation, the case of the assessee would squarely fall under substantive provision of clause (a) of first provisio to section 86 r.w.s. 67A of the Act. From the relevant paras of the first appellate order, as has been reproduced hereinabove, it is amply clear that the ld.CIT(A) has granted relief to the assessee deleting the addition made by the AO on account of undisclosed income from liquor trading business and share of inadmissible expenses by observing that the assessee was a member of association of persons or body of individuals i.e., syndicates, the share of members of such association of persons or body of individuals were determined and known and such association of persons were chargeable to tax on their total income at the maximum marginal rate, therefore, no further addition or disallowance is required to be made in the hands of the assessee as the same would amount to double addition and taxation. As per the scheme of the Act, the issue is covered in favour of the assessee as per clause (a) of first provisio to section 86 r.w.s.67A of the Act as well as the findings recorded by the Tribunal in the case of ITO vs. Ramswaroop Shivhare (supra), the relevant paras of said order as has been reproduced hereinabove. 21. Besides the above findings, it is also pertinent to mention that it is a well settled legal position that as per clause (a) of first proviso to section 86 of the Act r.w.s 67A of the Act, if the assessee is a IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 23 of 28 member in AOP/BOI and income earned from such AOP/BOI have been offered to tax, then, the share received by the assessee from such AOP/BOI after payment of due taxes cannot be taxed again in the hands of the assessee. From the relevant part of the assessment order para 11.6 to 11.10, as has been discussed hereinabove, the AO recorded his observations and findings while making addition in the hands of the assessee on account of undisclosed income. At the same time, from relevant paras 4.2 to 4.2.9 of first appellate order, we further observe that the ld.CIT(A) in earlier paras noted the factual position, stand of the AO and submissions of the assessee. Thereafter, he considered the formation of syndicates by the assessee and his associates and in para 4.2.2 noted the contention of the assessee that if there exists any syndicate, then, the income earned by such syndicate from carrying out the business would be required to be assessed in the hands of receptive syndicates and such income cannot directly be assessed to tax in the hands of its members including the assessee being member of syndicate forming the syndicates. The ld.CIT(A) also noted that during the search and seizure operation, the Investigation Wing found that the assessee is doing liquor business along with their other associates by forming syndicates and the Wing has emphasized the formation of syndicates to carry out the liquor business. The emphasis was on the fact that there exist an entity i.e., syndicate which is carrying out business and, in this regard, submissions of key persons of syndicates were also recorded wherein they accepted the existence of syndicates. 22. The ld.CIT(A) further noted that the AO, during the course of assessment proceedings, referred the matter to special auditor u/s 142(2A) of the Act for a special auditor in the case of present assessee and the auditor also emphasized the formation of syndicate and given a finding that the syndicate is carrying out the IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 24 of 28 business independently functioning from separate offices and maintaining separate books of account. The ld.CIT(A) at pages 38 to 40 noted a table of 11 syndicates and also took cognizance of the fact that the AOs of the syndicates in all the group concerns has made addition of undisclosed incomes in the hands of the syndicates for respective assessment years. The ld.CIT(A) noted brief details of various assessment orders passed by ACIT-2(1), Indore/DCIT-3(1), Gwalior/ITO, Shivpuri in a tabular form wherein name of syndicate/AOP, section under which orders have been passed, assessment years and income assessed has been mentioned. We also note that the ld.CIT(A), after perusal of the relevant assessment orders noted that these AOPs being the liquor syndicates had carried out the business of liquor in various years and as per special auditor’s report given u/s 142(2A) of the Act in the case of Shivhare group, these syndicates have earned profit and had also incurred some expenses which were liable for disallowance. The ld.CIT(A) further noted another factual matrix that the amount of profit/inadmissible expenses considered by the AO for framing separate assessments of syndicates were the same as were considered while making assessments in the hands of the assessee and other members of Shivhare group. 23. Thereafter, the ld.CIT(A) referred to the legal position rendered by the Hon’ble Supreme Court in the case of ITO vs. Ch. Achataiya (supra) and took the view that the income derived by various syndicates in which the assessee was found one of the members, was required to be assessed in the hands of such syndicates only and a direct assessment in the hands of the assessee could not have been made in respect of such income derived by the syndicates. The ld.CIT(A) rightly noted that the question of admissibility or inadmissibility of any expenditure could have been raised only while making the assessment in the cases of such syndicates and the assessee at the best could have been assessed in IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 25 of 28 respect of his share in taxable income of such syndicate, but, as per provisions of clause (a) of first provisio to section 86 r.w.s. 67A of the Act, income-tax will not be payable by an assessee in respect of a share received by the assessee in the income of association of persons or body of individuals/syndicates. 24. In view of the foregoing discussion, we conclude that the present assessee was a member of an association of persons or body individuals, share of members of such association of persons or body individuals were determinate and known. Such association of persons or body individuals were chargeable to tax on their total income at the maximum marginal rate or any higher rate. In such a factual position and circumstances, the share of profit/income received by the assessee from association of persons or body individuals/syndicates fall under the first proviso to clause (a) of section 86 of the Act and, thus, the AO was not justified in making the addition in the hands of the assessee on account of his share in profits of syndicates and on account of his share of inadmissible expenses incurred by the syndicates. 25. On careful perusal of the chart/table, as has been reproduced hereinabove, it is clearly discernible that the income of syndicates/associate of persons or body individuals have been assessed to tax and respective AO have framed assessment orders u/s 153A r.w.s 143(3) of the Act by making certain additions and disallowances pertaining to the income earned by the syndicates and inadmissible expenditures incurred by them. In view of the above, we are in agreement with the conclusion drawn by the ld.CIT(A) that while framing the assessments in the case of such syndicates, the income of syndicates as worked out by the special auditors have duly been incorporated and have been subjected to maximum marginal rate of tax, such facts fortifies the claim of the IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 26 of 28 assessee that incomes of the syndicate were liable to be taxed separately in the hands of the respective syndicate in the status of AOP/BOI at the maximum marginal rate and the assessee’s share in the profit of such syndicates cannot be added as individual income of the assessee in view of specific provision of clause (a) of first provisio of section 86 r.w. section 67A of the Act. The above noted facts and findings have not been controverted by the ld.CIT-DR in any manner and these observations and allegations made by the AO in para 11.6 to 11.10 of the assessment order cannot be held as correct and sustainable being perverse and breft of merits. 26. Thus, we are inclined to hold that the AO made additions by taking a hyper technical approach whereas the ld.CIT(A), after considering the entire facts and circumstances of the case and factum of taxation of profit and disallowance of inadmissible expenses in the hands of syndicates/AOP or BOI, rightly held that the share of profit received by the assessee from such syndicates cannot be added to the individual income of the assessee in view of provision of clause (a) of first provisio to section 86 r.w.s. 67A of the Act. We are unable to see any ambiguity, perversity or any other valid reason to interfere with the findings arrived at by the ld.CIT(A). Therefore, we hold that the ld.CIT(A) was right in deleting the addition in the hands of the assessee and, consequently, the sole ground of the Revenue for AY 2011-12 being devoid of merits is dismissed. Revenue appeal IT(SS) No. 47 & 48 for A.Y. 2013-14 & 2014-15 27. Since facts and circumstances of sole issue raised by the revenue in these two appeals and similar and identical to the facts of A.Y. 2012-13. Therefore, our conclusion drawn, in the earlier IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 27 of 28 para of this order for sole issue of revenue for A.Y. 2012-13 would apply mutatis mutandis to other two appeals of revenue for A.Y. 2013-14 & 2014-15. Consequently, sole ground of revenue for said two assessment years are also dismissed. 28. In the result, appeals of assessee in ITA (SS) nos. 56 to 58/Ind/2021 as well as appeals of revenue in ITA (SS) nos. 31,47 & 48/Ind/2021 are dismissed. Order pronounced in under Rule 34(4) of the ITAT Rules, 1963 on 09.05.2023 Sd/- Sd/- (BHAGIRATH MAL BIYANI) (CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 9th May, 2023. NV/- Copy forwarded to : 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR // By Order // Asstt. Registrar, ITAT, Indore IT (SS) A Nos.31, 47, 48 & 56 to58 /Ind/2021 Assessment Years: 2012-13 to 2014-15 Page 28 of 28 Date 1. Draft dictated on .04.2023 2. Draft placed before the author .04.2023 3. Draft placed before the other Member .04.2023 4. Approved Draft comes to the Sr.PS/PS .04.2023 5. Order uploaded on .04.2023 6. File sent to the Bench Clerk .04.2023 7. Date on which file goes to the Head Clerk. 8. Date on which file goes to the AR 9. Date of dispatch of Order.