ACIT, New Delhi V. Sh. Kuldeep Sood, New Delhi

ITSSA 61/DEL/2009

• Counselvise Citation: [2012] 121 COUNSELVISE.COM (IT) 8171 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 15 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 28-05-2012
• Assessment Year: misc
• Appeal Filed On: 07-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DK MISHR A
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D NEW DELHI DELHI BENCH : D NEW DELHI DELHI BENCH : D NEW DELHI DELHI BENCH : D NEW DELHI BEFORE SHRI U.B. S. BEDI , JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A (SS) NO. 61/DEL/09 BLOCK PERIOD 1.4.89 TO 17.6.99 ACIT, CIRCLE-32(1), NEW DELHI. VS. SHRI KULDEEP SOOD 3, YASHWANT PLACE, CHANAKAYA PURI NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI D.K. MISHRA,, CIT-DR RESPONDENT BY: SHRI SATYEN SETHI, ADVOCATE DATE OF HEARING : 04-06-2012 DATE OF PRONOUNCEMENT : 22-06-2012 ORDER PER K.G. BANSAL, AM: THE ONLY GROUND TAKEN BY THE REVENUE IN THIS APPEAL IS THAT LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION O F ` 26,27,610/- BY HOLDING THAT I) HOUSE HOLD EXPENSES CANNOT BE ESTIMATED, (II) BUSINESS ITA (SS) NO.61//DEL/09 2 EXPENDITURE CANNOT BE CONSIDERED IN THE CASE EVEN W HEN THE ASSESSEE IS THE REAL PROPRIETOR OF M/S. TRANSWORLD INTERNATIONA L. 2. THIS CASE HAS COME UP BEFORE THE TRIBUNAL FOR TH E SECOND TIME. IN THE EARLIER ORDER DATED 7.8.2008 IN PARAGRAPH NOS. 5 & 6, IT WAS HELD THAT GROUND NO. 3 OF THE APPEAL OF THE ASSESSEE BEFORE T HE CIT(A) HAD NOT BEEN DECIDED BY HIM, THEREFORE, THIS GROUND IS RESTORED TO THIS FILE FOR DECIDING THE SAME ON MERITS AFTER AFFORDING REASONABLE OPPOR TUNITY OF BEING HEARD TO THE ASSESSEE. LD. CIT(A) PASSED HIS ORDER CONSEQ UENT TO THIS ORDER ON 23.6.2009. HE DELETED THE ADDITION MADE BY THE AO A ND, THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 3. THE FINDINGS OF THE AO IN THIS RESPECT ARE THAT THERE IS CONTRADICTION BETWEEN THE STATEMENT AND THE AFFIDAVIT FILED BY TH E ASSESEES WIFE, SMT. PALLAVI SOOD, IN RESPECT OF OWNERSHIP OF M/S TRANSW ORLD INTERNATIONAL. SHE HAD STATED AN OATH BEFORE THE DDIT (INVESTIGATION) ON 19.4.1999 THAT SHE HAS NOTHING TO DO WITH THIS BUSINESS EXCEPT LIMITED INVOLVEMENT IN THE CULTURAL AND EDUCATIONAL ACTIVITIES. IT WAS HER HUS BAND, SHIR KULDEEP SOOD, WHO IS THE PROPRIETOR OF THIS CONCERN EVEN AFTER 19 94, SHE ADMITTED TO ONLY LIMITED PROPRIETORSHIP IN RESPECT OF EDUCATIONAL BR ANCH. HOWEVER IN AFFIDAVIT DATED 4.6.2001, SHE STATED THAT SHE IS TH E PROPRIETOR OF M/S. TRANSWORLD INTERNATIONAL, SHE HAD TAKEN OVER THE BU SINESS SINCE 1994 FROM HER HUSBAND, AND HE WAS EARLIER CARRYING ON TH E BUSINESS OF THIS SOLE PROPRIETARY CONCERN. THE REASON FOR CHANGE OF OWNER SHIP WAS STATED TO BE OLD AGE AND ILLNESS OF THE HUSBAND. THEREFORE, IT HAS BEEN FURTHER HELD THAT THE ASSESSEE WAS EARLIER OWNER OF THIS CONCERN BUT INCOME FOR A PART ITA (SS) NO.61//DEL/09 3 PERIOD HAS BEEN SHOWN IN THE NAME OF HIS WIFE, WHIC H IS NOT OF MUCH SIGNIFICANCE. THEREFORE, THE RECEIPTS, FOUND OUT FR OM THE BANK ACCOUNT AND AGGREGATING TO ` 26,27,610/-, HAVE BEEN ADDED TO TH E INCOME OF THE ASSESSEE. FURTHER ADDITION OF ` 30,477/- HAS BEEN MADE IN RESPECT OF HOUSE HOLD EXPENSES. 4. THESE ADDITIONS HAVE BEEN DELETED BY THE LD. CIT (A). IN THIS CONNECTION, IT IS MENTIONED THAT IN THE CASE OF SMT . PALLAVI SOOD, IN APPEAL NO. 222/2001-02 DATED 22.1.2003, THE INCOME OF THIS CONCERN WAS HELD TO BE BELONGING THE ASSESSEE UP TO ASSESSMENT YEAR 199 6-97. THE INCOME FOR THE SUBSEQUENT PERIOD IS TO BE INCLUDED IN THE HANDS OF SMT. PALLAVI SOOD. IN VIEW OF THIS FINDING, THE ADDITION OF ` 26 ,27,610/- HAS BEEN DELETED AS IT IS TO BE CONSIDERED IN THE HANDS OF A SSESSEES WIFE. THE ADDITION ON ACCOUNT OF HOUSE HOLD EXPENSES HAS ALSO BEEN DELETED BY MENTIONING THAT ESTIMATED ADDITION CANNOT BE MADE I N ASSESSMENT OF A BLOCK PERIOD FOR DETERMINING UNDISCLOSED INCOME. 5. BEFORE US, LD. CIT DR SUBMITS THAT IF THERE IS A NY ERROR IN RECORDING THE FINDING IN THE CASE OF ASSESSEES WIFE, THE SAM E SHOULD NOT BE PERPETUATED IN THIS CASE. THE REAL QUESTION IS WH ETHER, THE INCOME FROM M/S. TRANSWORLD INTERNATIONAL BELONGS TO THE ASSESS EE OR HIS WIFE? IN THIS CONNECTION, OUR ATTENTION HAS BEEN DRAWN TOWARDS TH E STATEMENT OF FACTS FILED BEFORE THE LD. CIT(A), IT IS MENTIONED THAT T HE ASSESSEE IS AN INDIVIDUAL AND A SENIOR CITIZEN. HE HAS BEEN CARRYI NG THE BUSINESS OF LIAISONING AS PROPRIETOR OF M/S TRANSWORLD INTERNAT IONAL. HE DISCONTINUED THIS BUSINESS W.E.F 1.4.1996. HOWEVER HE CONTINUED TO CARRY ON HIS ITA (SS) NO.61//DEL/09 4 BUSINESS OF LIASONING WORK IN HIS PERSONAL NAME. IN THE COURSE OF SEARCH U/S 132 ON 4.3.99 THE BANK LOCKER WAS SEALED AND TH EREAFTER OPENED. THE ASSESSEE WAS REQUIRED TO FILE HIS RETURN OF INCOME U/S 158-BC, BUT NO SUCH RETURN WAS FILED. THE INCOME FOR THE BLOCK PERIOD W AS COMPUTED AT ` 3,01,73,459/- ON 27.6.2001. IN THIS HIGH PITCHED AS SESSMENT, THE AO INCLUDED THE INCOME OF HIS WIFE AND M/S. PALLAVI AR TS IN HIS UNDISCLOSED INCOME. THE FACT IS THAT SHE IS AN INDEPENDENT ASS ESSEE AND ASSESSMENT HAS BEEN COMPLETED IN HER CASE U/S 158-BD. THE GROU NDS INCLUDE A CHALLENGE TO ADDITION OF ` 26,27,610/-. FURTHER, IT IS SUBMITTED THAT THE UNDISCLOSED INCOME AROSE ON ACCOUNT OF NEGATIVE PEA K, WHICH SHOWED THAT UNACCOUNTED MONEY WAS INVESTED. LD. CIT(A) REC ORDED ON PAGE 10 OF THE IMPUGNED ORDER THAT THE BANK ACCOUNT OF M/S. TR ANSWORLD INTERNATIONAL WAS OPENED WITH PUNJAB & SINDH BANK SOMETIME IN MAY , 1994 AS PROPRIETORSHIP CONCERN OF SMT. PALLAVI SOOD. THE BA NK HAS FURNISHED NECESSARY CONFIRMATION IN THIS REGARD. ON THE BASIS OF THIS FACT, HE ALSO RECORDED A FINDING ON PAGE 14 THAT IT HAS BEEN HELD IN THE CASE OF MRS. PALLAVI SOOD THAT BUSINESS OF M/S. TRANSWORLD INTER NATIONAL IS TO BE CONSIDERED IN HER HAND FROM ASSESSMENT YEAR 1996-97 . THEREFORE, THE ADDITION MADE IN THIS YEAR HAS BEEN DELETED FROM TH E ASSESSMENT OF THE ASSESSEE. IT IS ALSO SUBMITTED THAT THE INCOME CAN BE TAXED ONLY IN ONE HAND. HOWEVER, THE CASES REQUIRE INTEGRATED APPROAC H RATHER THAN PIECEMEAL APPROACH SO AS TO DECIDE THE CASE IN WHIC H THE INCOME IS REALLY TAXABLE. IT IS ALSO SUBMITTED THAT ADDITION IN RESP ECT OF HOUSE HOLD ITA (SS) NO.61//DEL/09 5 EXPENSES CAN BE MADE EVEN IN ASSESSMENT U/S 158BC F OR COMPUTATION OF UNDISCLOSED INCOME IF ANY INCRIMINATING DOCUMENT IS FOUND. 6) IN REPLY THE LD. COUNSEL FOR THE ASSESSEE SUBMI TTED THAT THE REAL QUESTION IN THIS CASE IS WHETHER, THE ASSESSEE OR HIS WIFE WAS THE OWNER OF THE BUSINESS IN THE RELEVANT YEAR, I.E. ASSESSME NT YEAR 1998-99? THE CIT(A) HAD CONSIDERED THIS MATTER IN THE CASE OF TH E WIFE. HIS FINDING WAS THAT IT WOULD BE FAIR AND JUST TO HOLD THAT SMT. PA LLAVI SOOD BECAME A PROPRIETOR SINCE THE YEAR 1997-98 AND THEREAFTER T HE ASSESSEE WOULD HAVE NOTHING TO DO WITH THE INCOME OF M/S TRANSWORL D INTERNATIONAL. FURTHER THE ASSESSEE HAD SUB-LET A PORTION OF HIS O FFICE TO ANOTHER COMPANY FROM THE YEAR 1995-96. THE AFORESAID DECISI ON HAD BEEN ARRIVED AT BY TAKING INTO ACCOUNT THE STATEMENT OF SMT. PAL LAVI SOOD BEFORE THE DDIT (INVESTIGATION) AND HER SUBSEQUENT AFFIDAVIT. IN THE INSTANT ORDER, LD. CIT(A) HAS RECORDED THE FACT THAT SHE HAS BEEN FILI NG RETURN OF INCOME INDEPENDENTLY PRIOR TO THE DATE OF SEARCH DECLARING PROPRIETY INCOME FROM M/S. TRANSWORLD INTERNATIONAL. SHE ALSO OPENED BANK ACCOUNT IN THIS NAME AND ASSESSMENT HAS BEEN COMPLETED BY THE INCOME-TAX DEPARTMENT. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO HOLD THAT TH IS CONCERN IS NOT A PROPRIETARY CONCERN OF THE WIFE. SIMILAR INCOME HA S BEEN ADDED IN THE CASE OF THE HUSBAND AND THE WIFE. THUS, ON ONE HAND , THE AO HAS HELD THE ASSESSEE TO BE OWNER AND ON THE OTHER THE WIFE HAS ALSO BEEN HELD TO BE OWNER OF THIS BUSINESS. IN THE CASE OF THE WIFE IT HAS BEEN HELD THAT THE ASSESSEE WAS OWNER TILL ASSESSMENT YEAR 1996-97 AND THEREAFTER THE WIFE BECAME THE OWNER. THIS ORDER HAS BEEN ACCEPTED BY T HE AO. THIS ORDER ITA (SS) NO.61//DEL/09 6 HAS ALSO BEEN ACCEPTED BY THE LD. CIT(A) IN APPEAL NO. 222/2001-02 DATED 22.10.2003 IN THE CASE OF SMT. PALLAVI SOOD. THEREF ORE, THERE IS NO REASON TO HOLD TO THE CONTRARY. THEREFORE, THE INCOME CANN OT BE TAXED IN THE HANDS OF THE ASSESSEE. THE ORDER HAS BEEN ACCEPTED BY THE DEPARTMENT AND NO APPEAL HAS BEEN FILED. THEREFORE, THIS FINDI NG HAS BECOME FINAL. ACCORDINGLY, IT IS AGITATED THAT THE ORDER OF THE L D. CIT(A) MAY BE UPHELD IN THIS MATTER. 7. WE HAVE CONSIDERED THE FACTS OF THE CASE. WE FIN D THAT IDENTICAL ADDITIONS WERE MADE FOR THREE YEARS IN THE CASE OF THE WIFE AND THE ASSESSEE. THE APPEAL IN THE CASE OF WIFE WAS DISPOS ED OFF BY THE LD. CIT(A) ON 27.10.2003. IN THIS ORDER THE ASSESSEE IS HELD T O BE THE OWNER OF M/S TRANSWORLD INTERNATIONAL UPTO ASSESSMENT YEAR 1996- 97. SMT. PALLAVI SOOD HAS BEEN HELD TO BE OWNER OF THIS PROPRIETARY CONCE RN FROM ASSESSMENT YEAR 1997-98. THE ORDER IN THE CASE OF WIFE HAS BEC OME FINAL. IT MAY BE ADDED THAT THE ADDITION HAS BEEN DELETED IN HER CAS E ALSO ON THE GROUND THAT THE TRANSACTIONS OF M/S. TRANSAWORLD INTERNATI ONAL HAD BEEN TAKEN INTO ACCOUNT AND PROFIT FROM THIS CONCERN WAS DECLA RED BY HER AT ` 1,04,996/- THIS FINDING HAS NOT BEEN CHALLENGED BY THE REVENUE AS STATED BY THE LD. COUNSEL IN THE BRIEF-NOTE FILED BEFORE U S IN THE COURSE OF HEARING. THEREFORE, THIS FINDING HAS BECOME FINAL, WHICH MEANS THAT THE INCOME FROM THIS CONCERN FOR ASSESSMENT YEAR 1997-9 8 CANNOT INCLUDED IN THE HANDS OF THE ASSESSEE. FOLLOWING THE RULE OF CO NSISTENCY, IT IS HELD THAT LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION, REPR ESENTING INCOME FROM AFORESAID CONCERN, FROM THE ASSESSMENT OF THE ASSES SEE. ITA (SS) NO.61//DEL/09 7 7.1 THE REVENUE HAS ALSO CHALLENGED THE ADDITION MA DE ON ACCOUNT OF HOUSE HOLD EXPENSES IN THE APPEAL. A SEPARATE ADDIT ION WAS MADE ON THIS ISSUE, WHICH HAS BEEN DELETED BY THE LD. CIT(A) BY MENTIONING THAT HOUSE HOLD EXPENSES CANNOT BE ESTIMATED WHILE MAKING ASSE SSMENT OF UNDISCLOSED INCOME UNDER CHAPTER XIVB. THE LD. CIT (DR) HAS NOT BEEN ABLE TO SHOW THAT ANY MATERIAL WAS FOUND IN SEARCH IN RESPECT OF THIS ISSUE. THEREFORE, THIS GROUND CANNOT BE TAKEN UP FO R COMPUTING UNDISCLOSED INCOME. 8. IN THE RESULT THE APPEAL IS DISMISSED. SD/- SD/- [U.B.S BEDI] [K.G. BANSAL] JUDICIAL MEMBER ACCOUNTANT MEMBER VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT