TMI Blog2014 (9) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable limit of the previous year could not be included as undisclosed income for the block period – also in Chain Sukh Rathi Versus Commissioner Of Income Tax [2003 (9) TMI 12 - RAJASTHAN High Court] it has been held that income has been concealed and it should be computed in cases of search in accordance with the provisions of section 158BB and after computing the total concealed income, it should be taxed as per the rates specified for the concealed income, in each year - the AO is directed to allow appropriate relief to the assessee – Decided in favour of Assessee. Income earned during the year – Undisclosed income or not – Held that:- No disclosure in any other manner was made by the assessee - The assessee has not paid any advance tax or self- assessment tax - merely because some TDS was deducted by the payee, it cannot be presumed that the income is disclosed by the assessee so as to exclude the same from the undisclosed income under Chapter XIV-B - For AY 1997-98, the assessee had income of more than ₹ 10 lakhs, he did not file any return at all - The assessee has not paid any advance tax - there was no overt act on the part of the assessee which would indica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nk account of various family members is to be considered in their hands and if any part remains unexplained, then the addition, if any, can be made in their hands - The bank accounts of various family members cannot be added in the hands of the assessee unless the Revenue proves that these bank accounts were benami accounts of the assessee - the onus of establishing that the bank accounts in the name of family members are benami accounts of the assessee is upon the Revenue - Revenue has not brought on record an iota of evidence to establish that the bank accounts in the name of various family members were the bank accounts belonging to the assessee - the direction of the CIT(A) to the AO to exclude the cash and cheque deposited in the accounts of different members of the family cannot be said to be unjustified or incorrect – Decided against Revenue. - IT(SS) A.No.514/Del/2003, IT(SS) A.No.523/Del/2003 - - - Dated:- 8-8-2014 - SHRI D.K. TYAGI, J.M. AND SHRI ANIL CHATURVEDI, JJ. For the Appellant : Shri Gautam Jain, CA. For the Respondent : Ms. Sulekha Verma, CIT-DR ORDER Per: G D Agrawal: IT(SS) A.No.514/Del/2003 :- This appeal by the assessee is dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y considered the arguments of both the sides and perused relevant material placed before us. Before coming to the legal aspect of admission of the additional ground, let us first record the chronological sequence of events, which is as under:- Sr.No. Date Particulars i) 18.2.1997 Search u/s 132 of the Act at the residence of assessee Village Nathanpur, District Gurgaon ii) 10.10.1997 Notice u/s 158BC of the Act iii) 1.2.1999 Return of undisclosed income was filed by appellant declaring Nil income iv) 26.2.1999 Assessment framed u/s 158BC/143(3) of the Act at an undisclosed income at ₹ 3,88,26,942/- v) 29.10.1999 CIT(A) restored the aforesaid assessment to the file of AO vi) 28.3.2002 Assessment framed u/s 158BC/143(3) of the Act at an income of ₹ 5,31,41,480/- vii) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stipulated time. The Tribunal held that the assessee did not raise the plea earlier in spite of opportunity being available and on a question of fact, such a plea could not be allowed to be raised for the first time before the Tribunal. Reference was made to the judgments of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. v. CIT (1999) 157 CTR (SC) 249 : (1998) 229 ITR 383 (SC) and Jute Corporation of India Ltd. vs. CIT (1990) 88 CTR (SC) 66 : (1991) 187 ITR 688 (SC). 5. The appeal was admitted by this Court to consider the following substantial questions of law claimed by the assessee :- (i) Whether in facts and circumstances of the case the Tribunal had fallen in error in disallowing the appellant from raising an additional issue, contrary to ratio of the Supreme Court in National Thermal v. CIT (supra) when all evidence for adjudicating the same was placed before it ? (ii) Whether in facts and circumstances of the case the provisions of section 73 could be invoked against the assessee when the assessee was squarely covered by Explanation of section 73 vide which the sale and purchase of shares by a company would not be speculative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in the year 2002. In the said assessment order also, there is a mention about the service of notice under Section 143(2). The assessee filed the appeal before the CIT(A) but did not dispute the service of notice under Section 143(2). The assessee filed appeal before the ITAT in the year 2003. However, the assessee sought to raise this additional ground for the first time in 2009. Considering these facts, in our opinion, the above decision of Hon'ble Jurisdictional High Court in the case of Aravali Engineers P.Ltd. would be squarely applicable. We also find that in the aforesaid case, their Lordships have considered the decision of Hon ble Apex Court in the case of National Thermal Power Co.Ltd. (supra) relied upon by the learned counsel for admission of this additional ground. The learned counsel for the assessee has also relied upon the decision of Hon ble Apex Court in the case of Varas International P.Ltd. (supra). However, we find that the facts in the above case were also altogether different. In view of the totality of above facts, we are of the opinion that the decision of Hon'ble Jurisdictional High Court in the case of Aravali Engineers P.Ltd. (supra) would be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, relied upon the orders of authorities below and she submitted that the facts of the case relied upon by the learned counsel are not at all applicable to the assessee s case because the assessee has not filed the regular return of income. While, in the case cited by the learned counsel, the assessee had filed the regular returns. She, therefore, submitted that the order of learned CIT(A) in this regard may be sustained. 12. We have carefully considered the submissions of both the sides and perused relevant material placed before us. So far as ground No.1 is concerned, we find this issue to be squarely covered in favour of the assessee by the decision of Hon ble Calcutta High Court in the case of Ashim Krishna Mondal (supra), wherein their Lordships, after considering the amendment in Section 158BB, held that the income below the taxable limit of the previous year could not be included as undisclosed income for the block period. The relevant portion of the decision of their Lordships at page 162 of ITR 270 reads as under:- In the present case, when the learned Tribunal had given its decision, this amendment was not there. It seems that the learned Tribunal had correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Amendment has been made by inserting the following words in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence. When some material was seized connecting the concealed income, the Income-tax Officer can compute the income on that basis but that should be computed and taxed in accordance with the provisions of the Act, 1961, therefore, the tax exemption limit has to be kept in mind and to that extent, income not chargeable to tax, tax should not be charged on that part of the income. We agree with Mr. Jhanwar that concealed income should be computed in cases of search in accordance with the provisions of section 158BB and after computing the total concealed income, it should be taxed as per the rates specified for the concealed income, in each year. 15. No contrary decision has been brought to our knowledge but the learned DR objected to the application of this decision also on the ground that the facts of the assessee s case are different. However, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see s contention on the ground that the payment of advance tax can be considered the disclosure of income by the assessee. 19. We have carefully considered the arguments of both the sides and perused relevant material placed before us. Hon'ble Delhi High Court in the case of A.T. Invofin India P.Ltd. and others (supra) relied upon by the learned counsel held as under:- Held, allowing the appeal, that the search had taken place after the last date of filing the return under section 139(1) of the Act. There was no overt act on the part of the assessee which would indicate that the assessee had the intention to disclose the income. On the contrary, it was only after the documents relating to the sale of shares leading to income in the form of long-term capital gains were seized during the search on January 13, 2000, that the return was filed on March 31, 2000, disclosing this transaction. The provisional balance-sheet in the possession of the assessee at the time of search would not meet the test of disclosure . The overt act has to be of the nature from which it can be concluded that the assessee had disclosed the income to the Department before the date of search in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, learned CIT(A) has erred in law and on facts in sustaining the disallowance of ₹ 19,99,000/- out of commission paid to Mr. Tara Chand, Mr. Balbir and Mr. Sunder and their associates. 8. That having regard to the facts and circumstances of the case, learned CIT(A) has erred in law and on facts in not allowing the deduction of ₹ 12,00,000/- on account of miscellaneous expenses claimed by the assessee. 22. Though by these grounds of appeal the assessee has claimed substantial deductions from the profit from land deals, however, at the time of hearing before us, the learned counsel restricted the claim of deductions from all these grounds to ₹ 19,83,350/- only, the details of which are as under:- Sr.No. Nature Assessment Year 1996-97 (Page 161 of Paper Book-I) Assessment Year 1997-98 (Page 163 of Paper Book-I) Total 1. Commission paid to Northern India iron and Steel Co.Ltd. (hereinafter referred to NIISCO (B1) 10,83,350/- ---- 10,83,350/- 2. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction of ₹ 18 lakhs paid to Tara Chand, Balbir, Suresh and their associates by cheque. It may be clarified that the assessee and his associates had claimed the payment of commission of ₹ 60 lakhs + ₹ 42 lakhs by them to various persons. The Assessing Officer had allowed only ₹ 18 lakhs which was paid by cheque. The assessee had already disclosed the income of ₹ 17,16,650/- in the block assessment. In view of the above, the Assessing Officer made the addition of ₹ 69,02,285/- as profit from M/s Gopal Dass Estates Housing (P) Ltd. The assessee filed appeal before the CIT(A) who, vide order dated 29.10.1999, restored the assessment to the file of the Assessing Officer. The Assessing Officer made fresh assessment vide order dated 28th March, 2002. In this order, the Assessing Officer determined the profit from M/s Gopal Dass Estates Housing (P) Ltd. at ₹ 2,12,68,390/-. In the fresh assessment order, the Assessing Officer denied to allow the rebate for the income disclosed under the VDIS by the family members with the following finding:- Photocopies of the certificates under section 68(2) of the VDIS issued in favour of the above na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly members in cash and cheque as undisclosed income of the appellant. Under the circumstances the conclusion arrived at by the AO cannot be upheld and the AO is directed to recompute the income segregating and excluding the profits earned by the other family members from the income of the appellant. 27. The Revenue, aggrieved with the above finding of learned CIT(A), is in appeal before us vide ground No.1 of its appeal. 28. We have heard the arguments of both the parties and their arguments are carefully considered. It is not in dispute that various family members including the assessee had entered into an agreement for purchase of the land in Village Wazirabad and Bindapur. At page 3 of the assessment order, the Assessing Officer has given the details of the advance given by various family members which read as under:- The advance given by each of the persons to respective sellers is as under :- Sr.No. Name of Person Amount of advance 1. Sh. Raj Kumar S/o Sh. Nathan Singh 49,46,990/- 2. Sh. Vijay Pal S/o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he totality of above facts, we do not find any infirmity in the direction of learned CIT(A) for excluding the profit earned by other family members from the income of the appellant. Accordingly, we reject ground No.1 of the Revenue s appeal. 30. Now, we come to ground Nos.6 to 8 of the assessee s appeal wherein assessee has claimed the deduction for commission paid to various persons and also the miscellaneous expenses claimed to have been incurred in respect of land deals. As per grounds of appeal, the assessee has claimed the deduction of ₹ 60 lakhs + ₹ 9.99 lakhs + 12 lakhs. However, at the time of hearing before us, the assessee restricted its claim to the proportionate deduction in respect of commission paid/expenses incurred which in total amounted to ₹ 19,83,350/-. 31. We have heard the arguments of both the sides and perused relevant material placed before us. The assessee alongwith his family members entered into an agreement for purchase of some 80 acres of land at Village Wazirabad and Bindapur. However, before the assessee and family members got the land transferred in their names, they could find a buyer for a higher value and instead of getting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .3.1996 in account No.3233, Union Bank of India, Gurgaon which was closed on 23.07.1996. The AO vide its letter has also placed on record the letter of Corporation Bank, Gurgaon wherein it has been certified that a cheque of ₹ 4,02,800/- was returned unpaid on 15.06.2003. 34. After considering the arguments of both the sides and the facts of the case, we do not find any infirmity in the above direction of learned CIT(A). That the cash/cheque deposited in the bank account of various family members is to be considered in their hands and if any part remains unexplained, then the addition, if any, can be made in their hands. The bank accounts of various family members cannot be added in the hands of the assessee unless the Revenue proves that these bank accounts were benami accounts of the assessee. It is a settled law that the onus of establishing that the bank accounts in the name of family members are benami accounts of the assessee is upon the Revenue. The Revenue has not brought on record an iota of evidence to establish that these bank accounts in the name of various family members were the bank accounts belonging to the assessee. In view of the above, the direction of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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