Shri Buta Singh, New Delhi V. DCIT, New Delhi

ITSSA 9/DEL/2009

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9469 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 08-02-2010
• Assessment Year: misc
• Appeal Filed On: 02-02-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K
• Keywords: Unexplained cash credit; Additional evidence; Block assessment
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER IT(SS)A NO.09/DEL./2009 (BLOCK ASSESSMENT YEARS : 1987-88 TO 97-98) SHRI BUTA SINGH, VS. DCIT, CENTRAL CIR.10, K-33, JANGPURA EXTENSION, NEW DELHI. NEW DELHI. (PAN/GIR NO.AAWPS4954P) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. SINGHVI, AR REVENUE BY : SHRI A.K. PANDEY, DIT(DR) ORDER PER A.K. GARODIA, AM THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE B LOCK ASSESSMENT ORDER PASSED BY THE AO U/S 158BC OF THE I.T. ACT, 1961 ON 31.12.200 8. 2. THE ASSESSEE HAS RAISED AS MANY SEVEN GROUNDS. OUT OF WHICH, GROUND NO.7 IS GENERAL. GROUND NOS.1 TO 5 WERE NOT PRESSED ACCORD INGLY REJECTED AS NOT PRESSED. THE ONLY REMAINING GROUND I.E. GROUND NO.6 IS AS UNDER: 6. THE AO HAS ERRED IN INCLUDING RS.18,91,698/- (A Y 1992-93 RS.2,55,269), AY 1993-94 RS.2,88,700/-, AY 1994-95 RS.2,89,870/-, AY 1996-97 RS.20,000/- AND AY 1997-98 RS.2,04,000/-) AS UNDISC LOSED INCOMES; SUCH ADDITIONS ARE PERVERSE, NOT BASED ON EVIDENCES, OPP OSED TO EVIDENCES, BASED ON SURMISES AND CONJECTURES. 3. BRIEF FACTS ARE THAT IN THIS CASE, ORIGINAL ASSE SSMENT WAS COMPLETED BY THE AO U/S 158BC OF THE ACT ON 28.11.1997 AT UNDISCLOSED INCOM E OF RS.92,55,996/-. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE TRIBUNAL AND THE TRIBUNAL IN IT(SS)A NO.349/DEL./97 DATED 5.4.2007 ALLOWED VA RIOUS RELIEF TO THE ASSESSEE. IN ORDER U/S 254/158BC DATED 31.8.2007 WAS PASSED BY T HE AO FOR GIVING EFFECT TO THE TRIBUNAL ORDER, THE INCOME OF THE ASSESSEE AFTER AP PEAL EFFECT WAS DETERMINED AT RS.6,76,920/-. ON TWO ISSUES, THE TRIBUNAL HAD SET ASIDE THE MATTER TO THE FILE OF THE AO IT(SS)A NO.09/DEL./2009 (BLOCK AYS : 1987-88 TO 97-98) 2 FOR FRESH DECISION AFTER PROVIDING ADEQUATE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. OUT OF THESE TWO ISSUES, ONE ISSUE WAS REGARDING AD DITION OF RS.35,809/- MADE BY THE AO U/S 68 OF THE I.T. ACT ON ACCOUNT OF CASH FOUND IN COURSE OF SEARCH. THE SECOND ISSUE WAS REGARDING UNEXPLAINED CREDIT IN THE BANKS TO THE EX TENT OF RS.18,91,698/- IN BANK ACCOUNT OF TRUST. TO DECIDE THESE TWO ISSUES, THE AO ISSUE D NOTICES TO THE ASSESSEE U/S 143(2) ON 1.10.2008 ASKING THE ASSESSEE TO FURNISH INFORMATIO N. IT IS NOTED BY THE AO THAT SIX DATES WERE FIXED BY THE AO BETWEEN 20.10.2008 TO 10.12.20 08, OUT OF WHICH THERE WAS NO RESPONSE ON THE FIRST TWO DATES FIXED IN APRIL, 200 8 AND ON REMAINING 4 DATES IN NOVEMBER, 2008 AND DECEMBER, 2008, THE ASSESSEE SOU GHT ADJOURNMENTS AND THE AO REPEATED THOSE ADDITIONS IN THE ORDER PASSED BY HIM ON 31.12.2008 AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US. THE ISSUE ABOUT A DDITION OF RS.35,809/- IS NOT PRESSED BEFORE US AND ONLY SECOND ISSUE IS PRESSED. 4. IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE TH AT THE COPY OF TRIBUNAL ORDER DATED 5.4.2007 IS AVAILABLE ON RECORD. OUR ATTENTI ON WAS DRAWN TO PARA.41 TO 44 OF THE TRIBUNAL ORDER WHICH CONTAIN DECISION OF THE TRIBUN AL REGARDING ADDITION MADE BY THE AO IN THE ORIGINAL ASSESSMENT ORDER IN CONNECTION WITH BANK ACCOUNT OF THE TRUST. IT IS POINTED OUT THAT IT IS OBSERVED BY THE TRIBUNAL IN PARA.44 OF THE EARLIER TRIBUNAL ORDER THAT NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE TRUST HAD ANY INCOME ON ITS OWN OR SPENT ANY MONEY ON ANY OF THE CHARITABLE ACTIVIT IES BUT AT THE SAME TIME, IT IS ALSO POINTED OUT THAT THIS IS OBSERVED BY THE TRIBUNAL I N THE SAME PARA THAT THE FACT REMAINS THAT THE EVIDENCE FOUND AS A RESULT OF SEARCH OR MA TERIAL GATHERED SUBSEQUENTLY RELATABLE TO SUCH EVIDENCE DO NOT INDICATE THAT ALL THE CREDIT E NTRIES IN THE BANK ACCOUNT EMANATED FROM THE ASSESSEE AND ALL OUTGOINGS REPRESENTED THE PERSONAL EXPENDITURE OF THE ASSESSEE. OUR ATTENTION WAS ALSO DRAWN TO PARA.43 OF THE EARL IER TRIBUNAL ORDER, WHEREIN IT WAS SUBMITTED BY THE LD.DR OF THE REVENUE BEFORE THE TR IBUNAL IN COURSE OF EARLIER PROCEEDINGS THAT IN COURSE OF SEARCH, A REPAIR BILL OF VEHICLE DHM 3 WAS FOUND FROM THE RESIDENCE OF THE ASSESSEE AND SAID VEHICLE WAS REGI STERED IN THE NAME OF PARTY EKTA ANDOLAN. IT WAS SUBMITTED BY THE LD.AR OF THE ASSE SSEE THAT THIS IS A BLOCK ASSESSMENT AND HENCE THE ADDITION CAN BE MADE ON THE BASIS OF SEARCH MATERIAL OR FURTHER MATERIAL COLLECTED BY THE AO WHICH ARE RELATABLE TO THE SEAR CH MATERIAL AND SINCE NO MATERIAL WAS FOUND IN COURSE OF SEARCH OR THEREAFTER BY THE AO I N COURSE OF ASSESSMENT PROCEEDINGS TO IT(SS)A NO.09/DEL./2009 (BLOCK AYS : 1987-88 TO 97-98) 3 INDICATE ANY UNDISCLOSED INCOME OF THE ASSESSEE, TH E ADDITION MADE BY THE AO SHOULD BE DELETED. RELIANCE WAS PLACED BY HIM ON THE TRIBUNA L DECISION RENDERED IN THE CASE OF MORARJEE GOCULDAS SPG. & WVG. CO. LTD. VS. DCIT AS REPORTED IN 95 ITD 1 (TM). LD.DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER . IT WAS ALSO SUBMITTED THAT THERE WAS NO COOPERATION BY THE ASSESSEE IN THE IMPUGNED PROCEEDINGS UNDERTAKEN BY THE AO AND HENCE THE AO HAD NO OPTION, BUT TO REPEAT THE A DDITIONS. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BEL OW. FOR DECIDING THE ISSUE REGARDING ADDITION OF RS.18,91,698/- ON ACCOUNT OF DEPOSITS I N BANK ACCOUNT OF TRUST, WE FEEL THAT PARA.44 OF THE EARLIER TRIBUNAL ORDER DATED 5.4.200 7 IS VERY MUCH RELEVANT AND HENCE WE REPRODUCE THE SAME HEREIN BELOW: WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PERUS ED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT KNOWN WHETHER THE TRUST IS A RE GISTERED TRUST UNDER THE TRUST ACT. ADMITTEDLY THE ASSESSEE WAS CHAIRMAN OF THE TRUST A ND THOUGH HE DENIED IT COULD BE ASSUMED THAT HE WAS CONTROLLING THE AFFAIRS OF T HE TRUST AND ALSO INSTRUCTING THE BOARD OF TRUSTEES. NO MATERIAL HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE TRUST HAD ANY INCOME OF ITS OWN OR SPENT ANY MONEY ON ANY OF THE CHARITABLE ACTIVITIES. AT THE SAME TIME THE FACT REMAINS THAT THE EVIDENCE FOUND AS A RESULT OF THE SEARCH OR MATERIAL GATHERED SUBSEQUENTLY RELATABLE TO SUCH EVIDENCE DO NOT INDICATE THAT ALL THE CREDIT ENTRIES IN THE BANK ACCOUNT EMANATED FROM THE ASSESSEE AND ALL OUTGOINGS REPRESENTED THE PERSONAL EXPENDITURE OF T HE ASSESSEE. THE LD.AO HAS RELIED UPON THE DOCUMENTARY EVIDENCE FOUND DURING S EARCH AS RESPECTS CERTAIN CAR EXPENDITURE RELATED TO THE ASSESSEE BEING MET BY TH E TRUST. FROM A SINGLE INSTANCE IT IS NOT ESTABLISHED THAT THE FUNDS OF THE TRUST W ERE ENTIRELY USED TO MEET PERSONAL EXPENSES OF THE ASSESSEE. WE ARE THEREFORE OF THE VIEW THAT THE CONCLUSION THAT ALL CREDIT ENTRIES IN THE BACK ACCOUNT OF THE TRUST EMA NATED FROM THE UNDISCLOSED FUNDS OF THE ASSESSEE HAS BEEN DRAWN BY THE LD. AO ON THE BASIS OF INADEQUATE MATERIAL. IT IS POSSIBLE THAT THE PAPERS FOUND DUR ING THE SEARCH COULD GIVE RISE TO A SUSPICION THAT THE TRUST WAS A SHAM FOR UTILIZING A ND MEETING THE PERSONAL FINANCIAL OBLIGATION OF THE ASSESSEE. BUT THE SUSPICION HOWS OEVER STRONG CAN NOT BE A SUBSTITUTE FOR EVIDENCE OR MATERIAL REQUIRED TO ARR IVE AT A CONCLUSION IN A JUDICIAL OR QUASI JUDICIAL PROCEEDINGS. THE MATERIAL RELIED UPON BY THE LD.AO THAT IS SOME DOCUMENT RELATING TO CAR EXPENSES ALONE CANNOT BE H ELD TO BE ADEQUATE TO HOLD THAT THE TRUST WAS SHAM AND A RUSE TO FUND THE PERSONAL EXPENSES OF THE ASSESSEE UNLESS THERE IS FURTHER CORROBORATIVE EVIDENCE AND MATERIAL. WE ARE THEREFORE OF THE VIEW THAT THE MATTER REQUIRES REEXAMINATION BY THE AO AND ACCORDINGLY RESTORE THIS ISSUE TO HIM FOR DECISION AFRESH IN ACCORDANCE WITH LAW AFTER REASONABLE OPPORTUNITY TO THE ASSESSEE. IT(SS)A NO.09/DEL./2009 (BLOCK AYS : 1987-88 TO 97-98) 4 6. WE FIND THAT IT HAS BEEN OBSERVED BY THE TRIBUNA L IN THE ABOVE PARA THAT FROM THE SINGLE INSTANCE, IT IS NOT ESTABLISHED THAT THE FUN D OF THE TRUST WERE ENTIRELY USED TO MEET PERSONAL EXPENSES OF THE ASSESSEE. IT WAS ALSO OBS ERVED BY THE TRIBUNAL THAT IT IS POSSIBLE THAT THE PAPERS FOUND DURING THE SEARCH COULD CREAT E SUSPICION THAT THE TRUST WAS A SHAM FOR UTILIZING AND MEETING THE PERSONAL FINANCIAL OB LIGATION OF THE ASSESSEE, BUT THE SUSPICION HOWSOEVER STRONG CANNOT BE A SUBSTITUTE F OR EVIDENCE OR MATERIAL REQUIRED TO ARRIVE AT A CONCLUSION IN A JUDICIAL OR QUASI JUDIC IAL PROCEEDINGS. IT WAS ALSO HELD BY THE TRIBUNAL THAT THE MATERIAL RELIED UPON BY THE AO I. E. SOME DOCUMENTS RELATING TO CAR EXPENSES ALONE CANNOT BE HELD ADEQUATE TO HOLD THAT THE TRUST WAS SHAM AND THE RUSE TO FUND THE PERSONAL EXPENSES OF THE ASSESSEE UNLESS T HERE IS CORROBORATIVE EVIDENCE AND MATERIAL. THE MATTER WAS RESTORED BY THE TRIBUNAL TO THE FILE OF THE AO FOR REEXAMINATION BY THE AO. IN THE IMPUGNED ORDER DATED 31.12.2008, THE AO HAS REPEATED THE ADDITION WITHOUT BRINGING ANY MATERIAL ON RECORD WHICH CAN B E HELD TO BE ADEQUATE TO HOLD THAT THE TRUST WAS SHAM AND THE RUSE TO FUND THE PERSONAL EX PENSES OF THE ASSESSEE. AS DIRECTED BY THE TRIBUNAL, THE AO HAS NOT BROUGHT ON RECORD ANY FURTHER CORROBORATIVE EVIDENCE AND MATERIAL. THE AO STATED IN THE IMPUGNED ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT COOPERATED BUT WE FAIL TO UNDERSTAND THAT WHEN THE BURDEN IS ON THE AO TO BRING ON RECORD FURTHER CORROBORATIVE EVIDENCE AND MATERIAL, THE A.O. WOULD HAVE DONE THE SAME BY DIGGING INTO THE SEARCH MATERIAL OR OTHER INDEPE NDENT MATERIAL ALREADY BROUGHT ON RECORD BY THE AO AT THE TIME OF SEARCH OR AT THE TI ME OF ORIGINAL ASSESSMENT PROCEEDINGS. THE AO COULD HAVE BROUGHT ON RECORD FURTHER MATERIA L ON RECORD BY MAKING INDEPENDENT ENQUIRIES WITH THE CONCERNED BANK, BUT NOTHING HAS BEEN DONE BY THE AO IN THIS REGARD EXCEPT ISSUING SIX NOTICES TO THE ASSESSEE ONLY. I F THE AO WOULD HAVE BROUGHT ON RECORD, AT LEAST SOME EXTRA EVIDENCE OR MATERIAL AS DIRECTE D BY THE TRIBUNAL IN NEXT ROUND, WE MIGHT MAY HAVE DRAWN ADVERSE INFERENCE AGAINST THE ASSESSEE ON THE BASIS OF SUCH MATERIAL DUE TO NON-COOPERATION OF THE ASSESSEE BUT IN THE ABSENCE OF ANY EXTRA MATERIAL/EVIDENCE, IT IS NOT POSSIBLE TO DO SO. UN DER THESE FACTS, WE ARE OF THE CONSIDERED OPINION THAT SINCE THE AO HAS NOT BROUGHT ON RECORD ANY FURTHER CORROBORATIVE EVIDENCE AND MATERIAL, IT CANNOT BE HELD THAT THE TRUST WAS SHAM AND RUSE TO FUND THE PERSONAL EXPENSES OF THE ASSESSEE AND, THEREFORE, THE ADDITI ON MADE BY THE AO CANNOT BE SUSTAINED. WE, THEREFORE, DELETE THE SAME. THIS GROUND OF THE ASSESSEE IS ALLOWED. IT(SS)A NO.09/DEL./2009 (BLOCK AYS : 1987-88 TO 97-98) 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 8. ORDER PRONOUNCED IN OPEN COURT ON 19.03.2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH 19, 2010. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A). 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT