SALEK CHAND GARG,PITAMPURA V. ACIT, CENTRAL CIRCLE-05, DELHI, DELHI

ITA 288/DEL/2024

AI Insights

The case involves appeals by Salek Chand Garg against the orders of the Commissioner of Income Tax (Appeals) confirming additions made by the Assessing Officer regarding undisclosed investments in committees for the Assessment Years 2007-08 and 2008-09. These investments were initially discovered during a search and seizure operation and were later included in a settlement application with the Income Tax Settlement Commission for the Assessment Year 2010-11. The Tribunal had previously directed the Assessing Officer to verify if these investments were covered by the settlement, which the Assessing Officer failed to do in the subsequent rounds of assessment, leading to the current appeals.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 36838 (ITAT-DELHI)
• Duration Of Justice: 8 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 17-10-2024
• Assessment Year: 2008-2009
• Appeal Filed On: 27-01-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAYA CHAUDHARY
• Assessee Lawyers: VED JAIN
• Keywords: Unexplained investment; Search and seizure
• Section: 143(3); 142(1); 153A; 22

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI SUDHIR KUMAR, JUDICIAL MEMBER ITA Nos. 287 & 288/Del/2024 (Assessment Years: 2007-08 & 2008-09) Salek Chand Garg, DU-3, First Floor, Vishakha Enclave, New Delhi Vs. ACIT, Central Circle-05, Delhi (Appellant) (Respondent) PAN:AEXPG2248H Assessee by : Shri Ved Jain, Adv Ms. Uma Upadhayay, CA Revenue by: Ms. Jaya Chaudhary, CIT DR Date of Hearing 17/10/2024 Date of pronouncement 25/10/2024 O R D E R PER M. BALAGANESH, A. M.: 1. These are the appeals appeal in ITA Nos.287 & 288/Del/2024 for AY 2007-08 & 2008-09, arise out of the order of the Commissioner of Income Tax (Appeals)-XXXI, New Delhi dated 17.10.2023 for AY 2007-08 and CIT(A)-24, New Delhi dated 30.11.2023 [hereinafter referred to as ‘ld. CIT(A)’, in short] against the order of assessment passed u/s 143(3)/153A dated 28.12.2011 for AY 2007-08 by DCIT, Central Circle-05, New Delhi and passed u/s 143(3) u/s r.w.s. 254 dated 26.12.2019 for AY 2008-09 by ACIT, Central Ciecle-05, New Delhi (hereinafter referred to as ‘ld. AO’). ITA No. 287& 288/Del/2024 Salek Chand Garg Page | 2 2. Identical issues are involved in both these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. 3. Though the assessee had raised several grounds of appeal before us, the arguments were advanced only in respect of Ground Nos. 8 & 9 by the ld AR. Accordingly, the other grounds raised by the assessee are hereby treated as not pressed by the ld AR. The issue involved in Ground Nos. 8 & 9 is as to whether the ld CIT(A) was justified in confirming the addition on account of undisclosed investment in committees in the facts and circumstances of the instant case. 4. We have heard the rival submissions and perused the materials available on record. The assessee along with Mr Sawarmal Goyal were equal partners in the commission business. A search and seizure action u/s 132 of the Act was carried out on 7.1.2010 in M/s Gee Ispat Group of cases. Assessee, being part of that group was also roped in within the scope and ambit of provisions of section 153A of the Act. During the course of search, a diary was found at the residential premises of the assessee marked as Annexure -1 which contain certain transactions in respect of investment made in various committees. Consequent to the search, assessee along with his partner Mr Sawarmal Goyal filed application for Settlement before the Hon’ble Income Tax Settlement Commission (ITSC in short) on 28.12.2011, wherein both the partners offered the opening balance of Rs 1,07,61,930/- shown in their respective capital accounts as on 1.4.2009. The copy of the Trial Balance for the period 1.4.2009 to 8.1.2010 duly reflecting the opening balance of capital as on 1.4.2009 showing balance of Rs 1,07,61,930/- is enclosed in Pages 59 and 60 of the Paper Book. This opening balance of Rs 1,07,61,930/- was offered before the Hon’ble ITSC by the assessee which was the ITA No. 287& 288/Del/2024 Salek Chand Garg Page | 3 accumulated profit of the assessee as on 1.4.2009 and the same was duly accepted by Hon’ble ITSC. The order passed by the Hon’ble ITSC is enclosed in pages 3 to 22 of the Paper Book. The settlement applications were made for Asst Years 2009-10 to 2011-12. No search assessments were framed on Mr Sawarmal Goyal but search assessments for the Asst Years 2007-08 and 2008-09 were framed in the hands of the assessee. 5. After taking note of the search document which was incorporated in para 6 of the assessment order in the first round of proceedings, the ld. AO noted that assessee had made investment of Rs 5,00,000/- for making the payment to committee which was not disclosed in the books of account and due to lack of proper explanation by the assessee in that regard, the same stood added by the ld. AO in the first round. This action of the ld AO was upheld by the ld CIT(A) in the first round. Before the Tribunal in the first round, the ld AR stated that this sum of Rs 5,00,000/- is included in the settlement application made by the assessee and accordingly covered by the order of the Hon’ble ITSC dated 29.6.2013 passed u/s 245D(4) of the Act. The Tribunal while disposing of the appeal for the Asst Year 2007-08 in ITA No. 516/Del/2014 dated 8.5.2018 in para 4 of its order had reproduced the observations of Hon’ble ITSC as under:- “40. In his report dated 26.4.2013 (forwarded vide CIT’s letter dated 28.04.2013), the AO has referred to page 137 of a Note book marked as Annexure A-1 as per which amounts of Rs 5,00,000/- each stood invested by the applicant on 01.01.2007 and 16.12.2007 but, however, this aggregate amount of Rs 10,00,000/- is shown as investment on 01.04.2009. Based on these inputs, the AO proposed treatment of Rs 10,00,000/- in the applicant’s hands for AY 2010-11. 41. The applicant’s reaction on the afore-mentioned investment is on the same lines as in the case of investment in property at Rohini, Delhi (para 38). In other words, here again, the applicant has conceded this as undisclosed investment. 42. On a bare perusal of the factual position brought by the Assessing Officer, as in para 40, it is seen that the investment, in actuality, related to AYs 2007-08 and 2008-09 which are not subject matter of the present proceedings. Even if the AO’s proposal to tax the same in AY 2010-11 is conceded, still this quantum of Rs ITA No. 287& 288/Del/2024 Salek Chand Garg Page | 4 10,00,000/- is capable for being subsumed within the additional income adjudicated for AY 2010-11.” 6. The Tribunal in the first round vide order dated 8.5.2018 observed as under:- “7. After hearing the rival submissions and on perusal of the relevant material referred to before us at the time of hearing, we find that the main issue pertains to unexplained investment made in various committees which was found recorded in the seized diary. For the impugned years under appeals i.e. Assessment Years 2007-08 & 2008-09, pages 135 and 137 of seized diary records investment of Rs 5 lacs on 01.01.2007 and another Rs 5 lac on 16.12.2007. As noted above, the investment aggregating to Rs 10 lac (Rs 5 lac each) for the Assessment Years 2007-08 and 2008-09 has already been considered by the Settlement Commission and has been admitted to have subsumed within the additional income offered for the Assessment Year 2010-11. Thus, no separate addition for this unexplained investment could have been made. We accordingly, direct the Assessing Officer to verify if the amount of investment of Rs 5 lac is covered in the opening balance of Rs 1,07,61,930/- as shown in Annexure A-1 on which tax has already been paid as directed by the Settlement Commission. If that is so, then no separate addition should be made. Assessee should be called upon to explain the same. Thus, the appeal of the assessee is partly allowed.” 7. Similar observations were made by the Tribunal in the first round of proceedings for Asst Year 2008-09 also in ITA No. 517/Del/2014 dated 8.5.2018 in para 14 of its order. 8. Consequently, the ld AO issued notice u/s 142(1) r.w.s 254 of the Act requiring assessee to furnish documents in support of its claim in the second round of proceedings. The assessee filed reply dated 29.5.2019 furnishing the following documents:- a) Copy of Trial Balance from 01.04.2009 to 08.01.2010 submitted before the Hon’ble ITSC as well as Tribunal in first round. b) Copy of seized material page 131 of the diary. c) Copy of chart explaining the seized material by linking the same with trial balance submitted before Hon’ble ITSC as well as Tribunal. d) Copy of seized material page 132 of the diary. ITA No. 287& 288/Del/2024 Salek Chand Garg Page | 5 e) Copy of chart explaining the seized material by linking the same with trial balance submitted before Hon’ble ITSC as well as Tribunal. f) Copy of seized material page 137 of the diary. 9. The ld AO in the second round of proceedings completely ignored the aforesaid directions of Tribunal in first round and the documents together with explanation submitted by the assessee and proceeded to tax the undisclosed investment made in various committees by applying section 4 of the Act and by observing in para 7 of his order as under- 7. It would also be pertinent to revisit the charging section of income a provided in the Act. Section 4 of the Act provides that Charge of income-tax. 4 (1). ………………. A perusal of the above makes it abundantly clear that charge of income tax is year and assessee specific. Income of one assessment year cannot be subjected to income tax in any other assessment year. Therefore, contention of the assessee that undisclosed investment pertaining to AY 2007-08 and 2008-09 have already been offered to tax in AY 2010-11 is not acceptable as discussed above. Accordingly, the undersigned finds no reasons to interfere with the findings of the AO and the Ld. CIT(A). Since the assessee concealed particulars of his income, penalty proceedings u/s 271(1)(c ) of the Act are being initiated separately on the issue of undisclosed investment in committees. Accordingly, income is determined as under:- Returned income Rs 3,65,580/- Income assessed u/s 153A r.w.s. 143(3) Rs 35,56,300/- Income determined u/s 250/153A/143(3) Rs 64,15,450/- Income assessed u/s 254/153A/143(3) Rs 64,15,450/- 10. This action of the ld AO is upheld by the ld CIT(A) in the second round. Aggrieved, the assessee is in appeals before us. 11. The aforesaid action clearly establishes that the ld AO and ld CIT(A) have completely ignored the binding directions of this Tribunal in the first round of proceedings. The Tribunal had in the first round given specific directions to the ld AO to make verification of claim of the assessee with ITA No. 287& 288/Del/2024 Salek Chand Garg Page | 6 the relevant documents filed before the Hon’ble ITSC. The assessee on his part had duly submitted the said documents to substantiate his claim. The ld AO does not bother to look into the said documents and proceeds to tax the assessee for the second time on the same transaction which had already suffered tax before the Hon’ble ITSC. This illegal action of the ld AO is upheld by the ld CIT(A). Hence we have no hesitation to conclude that both the orders of the lower authorities are perverse and the revenue does not deserve another chance in these appeals. Hence we hereby delete the additions made by the ld AO towards undisclosed investment in committees for both the Asst Years 2007-08 and 2008-09 and accordingly the Ground Nos. 8 & 9 raised by the assessee are allowed. 12. In the result, both the appeals of the assessee are partly allowed. Order pronounced in the open court on 25/10/2024. -Sd/- -Sd/- (SUDHIR KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 25/10/2024 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "