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A.C.I.T., Central Circle-2, New Delhi Versus Punit Beriwala

2016 (10) TMI 254 - ITAT DELHI

Addition on account of undisclosed investment in Rolex Watch - Held that:- We find no justification to interfere with the order of the ld. CIT(A) on this issue. The clerical mistake is proved from the fact that as per Annexure A-3, the items Rolex Watch ( ₹ 4 lakhs) and Mont Blanc pen (Rs. 1 lakhs) were inventorised by the search party and surrender of additional income was made only to these items. On this Annexure, there is no mention of any purchase or conversion of jewellery. The ld. C .....

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nd for Mont Blanc pen for ₹ 1 lac (total ₹ 5 lacs) has been shown as part of the undisclosed income. There being no contrary material on record, we confirm the findings reached by the ld. CIT(A) on this issue. Accordingly, ground No. 1 of the appeal of the Revenue is dismissed. - Unaccounted cash payment to other family group - notings on different pages of memorandum of family settlement, sized from the residence of Sh.Vinit Beriwala, has made aforesaid addition - Held that:- No .....

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or a lesser amount found at any of the premises of Sh. Vineet Beriwala or Sh. SS Beriwala , nor any details of any investment/ expenditure having been made out of this supposed amount of ₹ 7,33,50,000/- were found in search on Sh. Vineet Beriwala or Sh. SS Beriwala. Thus there being no corroborative evidence found in search or post search investigation to substantiate the fact that the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS B .....

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courts. The Revenue has not brought any material on record contrary to the findings reached by the ld. CIT(A) on this aspect also. We accordingly, do not find any justification to interfere with the findings reached by the ld. CIT(A) on this issue - Decided against revenue - Addition on account of low house hold withdrawals - Held that:- The assessee’s wife has also apart from the cash drawings of ₹ 60,000/- made a separate withdrawal of ₹ 2,94,156/- as LIC premium ; ₹ 33, .....

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d in the search to support the view of the AO regarding low household withdrawals. However, no such material is brought by the Revenue to our notice. Therefore, in our considered opinion, no case is made out by the Revenue for making addition of ₹ 1,17,428/- on account of low withdrawals. There being no contrary material from the side of Revenue, we uphold the conclusion reached by the ld. CIT(A) on this count. - ITA No. 964/Del./2012 - Dated:- 24-8-2016 - SHRI I.C. SUDHIR, JUDICIAL MEMBER .....

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,000/- made by the Assessing Officer u/s 69B of the Income Tax Act, 1961 on account of unexplained investment. 2. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 7,33,50,000/- made by the Assessing Officer on account of undisclosed income. 3. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of ₹ 1,17,428/- made by the Assessing Officer on accou .....

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/s 153 A of the Act in respect of the assessment year 2001-02 to 2006-07 were issued and served on the assessee on 20.03.2007. The assessee in compliance thereto, furnished return of income on 26.07.2007 for each of the assessment year including the assessment year under consideration 2006-07. In respect of the assessment year 2006-07 the assessee furnished a return declaring his total income at ₹ 1,24,36,040/-. The learned A.O. however, framed an assessment at an income of ₹ 8,64,03 .....

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sessment order and the submissions made by the appellant the following finding is given with respect to each of the addition. A. Addition on account of undisclosed investment in Rolex Watch:- From the assessment order it is noted that the AO has made an addition of ₹ 5 lacs as unaccounted investment in Rolex Watch for the reason that while the assessee had in his original surrender made before party B-l accepted through Annexure A-3 to the panchnama that the investment of ₹ 5 lacs in .....

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the income of the assessee by the AO. As against this in his submission dated 09.05.11 the appellant has inter alia upon giving a bifurcation of the total surrendered undisclosed income for ₹ 1,01,05,976/- submitted that this entire surrender comprises of six different types of application of the undisclosed income of ₹ 1,01,05,976/-. That in the statement of affairs prepared on the basis of loose papers, as on 31.03.06( page 74 of the paper book) , the appellant has made the follow .....

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n the basis of Annexure A-3) Amount spent on traveling expenses ₹ 4,21,000/- Rs.3,461,000/- Rs.1,01,05,976/- The submission of the appellant is that therefore while there was an item of ₹ 5 lacs offered and included in the breakup of the additional income disclosed during the search proceedings for Rs, 1,01,05,976/- , which was on the basis of Annexure A-3, but while writing the narration in the addition to capital account as above instead of writing the description of Rolex watch an .....

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chnama dated have been gone through as also the copy of statement of affairs as on 31.03.06 filed through the paper book. It is seen from "Annexure -3" to the panchnama dated 01.06.06 prepared at the residence of the appellant at 15/10, Sarvpriya Vihar that there is a narration to the following effect: - "The Rolex watch detailed at S. No. 2 and the Mont Blanc pen at S.No. 3 have been bought by me during the FY 2005-06 cash and the same will be filed in my AY 2006-07 return." .....

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is also for the reason that in this very statement of affairs, drawings for undisclosed expenses (which have already been treated as income) has also been mentioned in the capital account and that under this head expense for conversion and purchase of jewellery for Sunita Beriwala at ₹ 5 lacs has separately been mentioned. While giving no finding on the correctness and truthfulness of the statement on ₹ 5 lakh spent on conversion of jewellery, the fact remains that from the above not .....

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f the AO's findings and the appellant submission thereon and the perusal of the copy of the seized documents the following notable points emerge:- i. It is a matter of record, as noted by the AO himself, that Annexure A-l pages 1 to 109, which mostly relate to narration regarding family settlement of Beriwala group has been found and seized from the residence of Sh. Vinit Beriwal the brother of the assessee, at 10/11, Sarvpriya Vihar, New Delhi. ii. It is also a matter of record that none of .....

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onsiderable force in the submission of the appellant that the presumption under law in section 132(4A) and 292C of the IT Act would only apply with respect to books of accounts /documents found in possession or control of any person. Now as the documents at pages 1 to 109 of A-l have not been found from the possession or control of Sh. Punit Beriwala therefore the presumption under these two sections cannot be raised against the appellant. v. Thus as there is no evidence to suggest that these se .....

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e decisions in Vijay Bhai N.Chandrani vs. ACIT 38 DTR 225; Saif Ali Khan in ITA No. 1091/ Mum /2009 ITAT Mumbai and Meghmani Organics Ltd. 36 DTR 187 which hold that it is a condition precedent for issuing notice u/s 153C that the document in question should "belong to the assessee". The relevant portion in finding in case of Vijay Bhai N.Chandrani vs. ACIT 38 DTR 225 (Gui. High Court) are as under:- 11. The controversy in issue pertains to the interpretation of the provisions of s. 15 .....

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the AO having jurisdiction over such other person and that AO shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person in accordance with the provisions of s. 153A." 12. On a plain reading of the aforesaid provisions it is apparent that ss. 153A, 153B and 153C lay down a scheme for assessment in case of search and requisition. Sec. 153A deals with procedure for issuance of notice and assessment or reassessment in case .....

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son other than the person referred to in s. 153A he shall proceed against each such other person and issue such other person notice and assess or reassess income of such other person. However, there is a distinction between the two provisions in as much as under s. 153C notice can be issued only where the money, bullion, jewellery or other valuable article or thing or books of account or documents seized or requisitioned belong to such other person, whereas under s. I58BD if the AO is satisfied .....

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eized or requisitioned should belong to such person. If the said requirement is not satisfied, resort cannot be had to the provisions of s. 153C of the Act. 14. Examining the facts of the present case in the light of the aforesaid statutory scheme, it is an admitted position as emerging from the record of the case, that the documents in question, namely the three loose papers recovered during the search proceedings do not belong to the petitioner. It may be that there is a reference to the petit .....

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lled any action taken under s. 153C of the Act stands vitiated. " The relevant portion in finding in the case of Meghmani Organics Ltd. 36 DTR 187 are as under:- "18. The Tribunal Bangalore Bench in the case of P. Srinivas Naik (140 TTJ 856) held that if any documents found though pertaining to the assessee, if not belonging to such assessee, the action under s. 153C r/w.s. 153A cannot be invoked. The Tribunal in this case held as under:- "7. We have heard both the parties. It is .....

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the idea of casual association. It involves the action of continuity and indicates one more or less intimate connection with the person over a period of time. The books of account or documents seized during the course of search have a close association with the group concern of Shri Reddy. It records the transaction carried out by that group. It does not record the transaction carried out by the assessee. Under the WT Act, assets belonging to assessee were taxable. The expression belonging to t .....

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e in such books of account or documents. The language used in s. I53C is materially different from the language used under s. 158BD. As per s. 158BD, if any undisclosed income relates to other person, then action against such other person can be taken provided such undisclosed income is referable to the document seized during the course of search. However, s. I53C says that if valuable or books of account or documents belonging to other persons are seized then action under s. I53C can be taken a .....

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was the person in whose case search was initiated under s. 132(1) of the Act. It is also found that the assessments were pending in those cases and it was also observed that "it is not the complaint of the assessee that any income which is already subjected to the assessment under s. 143(3)/148 of the Act which was completed prior to search has also been included in the assessments framed under s. I53A of the Act." Therefore, both the cases relied upon by the learned Departmental Repre .....

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he assessments." The word "belonging to" has also been seen in "Concise Law Dictionary" published by LexisNexis Butterworths ,Wadhwa ,Nagpur. From the third edition of this book it is seen that the word "belonging to" refers to ownership. Though capable of denoting an absolute title it can also signify even possession of an interest less than full ownership. It signifies something more than the idea of casual association and indicates a more or less intimate co .....

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nt had parted with the cash portion recorded in the seized document therefore the requirement under the law of the fact that the seized document should belong to the assessee for initiation of proceeding u/s 153C of the IT Act are not fulfilled in the case of the appellant. vi. Coming to the contents of the document referred to in Annexure A-l( Pages 1-109 ) the appellant in his submission has inter-alia stated that these pages mainly related to the deeds of family settlement of Beriwala group a .....

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her reason the settlement among the family members did not materialize. Referring to page 107 the appellant has submitted that this page is dated 12,09.06 and contains details of "pending portion arising from family settlement of 12.09.06". Referring to the last para on this page wherein notings of "payments till date PB-»SSB-1.25 and PB -»VB 6.0850 the argument being made by the appellant is that from the fact that this is written under the heading "pending porti .....

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e only draft papers where jottings have been made relating to steps to be implemented. Referring to page 104 the submission is that this page is regarding Division of assets Beriwala Group as on 31.03.05 and in the three columns the assets under the control of Sh./Shri SS Beriwala, Punit Beriwala and Vinit Beriwala have been mentioned. That the statement on this page reveals that there is no availability of funds because the asset allocation does not allocate any liquid funds in any of these gro .....

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e by the AO without any corroboration of the seized rough papers based on any direct/circumstantial evidence is not in accordance with law and therefore may be deleted. The contents of the documents have been gone through which are cryptic in nature . Even the deciphering of the figure of 1.25 and 6.0850 into ₹ 1.25 Crores and ₹ 6.0850 Crores is based on assumption. Moreover no dates are recorded against these narrative and that on the top of page 107 (which in my view should be corr .....

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person in whose possession / control these documents are found & seized and therefore the issue of confronting/cross examination to the appellant does not arise, which was a basic legal requirement. Moreover there has been no addition to income in hands of either Sh. Vineet Beriwala or Sh. SS Beriwala for A.Y.2006-07 (based on the above narrative), copy of assessment order for which has been enclosed. Further there is no record of any cash for ₹ 7,33,50,000/- or a lesser amount found .....

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the appellant has made unaccounted cash payment for ₹ 7,33,50,000/- to Sh. Vineet Beriwala or Sh. SS Beriwala during the year. vii. In view of the above discussion in totality and relying on the judicial principles in the decisions in cases referred above, I am of the considered view that the addition made for ₹ 7,33,50,000/-in case of the appellant, based on the papers seized from the residential premises of Sh. Vinit Beriwala, is not sustainable either in law or facts and is there .....

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eparate withdrawal of ₹ 2,94,156/- as LIC premium ; ₹ 33,677/- for school fees etc. That thus the consolidated drawings of the assessee and his spouse comes to ₹ 9,12,878/- . That apart from the above the assessee has also shown drawings for undisclosed expenses, which has been treated as income for the year amounting to ₹ 34,61,000/- and therefore there is no case for making an addition of ₹ 1,17,428/- as unexplained expenditure on house hold expenses. The other ar .....

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school fees are distinct from normal expenses incurred on electricity, vehicle, fooding, and the expensive life style) but then it is also a matter of record that there has been an substantial drawing for undisclosed investment for ₹ 34,61,000/- during the year which has been treated as income as per the disclosure made by the appellant. This includes miscellaneous expenses of ₹ 15.50 lacs and travelling expenses for ₹ 4.21 lacs. Thus taking a over view of the above facts the a .....

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in the statement of affairs prepared on the basis of loose papers seized, the assessee has given details of additional / undisclosed income & utilization of fund of ₹ 500000/-, as having been spent for conversion and purchase of jewellery for his wife Smt. Sunita Beriwala. Therefore, the assessee having not been adhered to the original surrender, the AO had rightly made addition of ₹ 5,00,000/-. 5. On the other hand, the ld. AR of the assessee relied on the order of the ld. CIT(A .....

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mention about any investment in conversion or purchase of jewellery. Therefore, the typographical error which crept in writing the narration against expenditure of ₹ 500000/- itself stands proved by Annexure A-3 itself. It was submitted that the ld. CIT(A) has made an elaborate discussion and has rightly deleted the addition considering the explanation of assessee given on this count as logical. 6. We have considered the rival submissions and have gone through the orders of the authoritie .....

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for undisclosed expenses already treated as income, have also been mentioned in the capital account and that under this head expense for conversion and purchase of jewellery for Sunita Beriwala at ₹ 5 lacs has separately been mentioned. We, therefore, find that the disclosure of income for ₹ 1,01,05,976/- made by the assessee at the time of search has been adhered to and the investment in Rolex Watch for ₹ 4 lacs and for Mont Blanc pen for ₹ 1 lac (total ₹ 5 lacs) .....

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with reference to details of shareholdings, valuation of various assets of the group and its division amongst the three family groups etc. It was submitted that the aforesaid amount was mentioned to have been paid by the assessee to Vinit Beriwala and Shyam Sunder Beriwala, which stood unexplained. Therefore, the ld. CIT(A) was not justified in deleting the addition. 8. The ld. AR of the assessee relied on the order of the ld. CIT(A) and submitted that the ld. CIT(A) has accepted the contention .....

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SS Beriwala are brought on record about receipt of such payments, if made by the assessee. It was also submitted that the narration the payment till date if read in the context of title to the documents could only mean that as on 12.04.2006 payment due to be received from Sh. Punit Beriwala was as a result of proposed family settlement initiated in F.Y. 2001- 02. The contention of the assessee has been that no payments either to Vinit Beriwala or Sh. SS Beriwala were made and negotiations were .....

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ded of the person (s) from whose possession these documents were found. The ld. CIT(A) has categorically mentioned that there has been no addition to income in hands of either Sh. Vineet Beriwala or Sh. SS Beriwala for A.Y.2006-07 based on the narration found made on the seized papers or that they have anywhere declared the receipt of payments from the assessee. There is nothing on record to contradict the findings of the ld. CIT(A) that no cash for ₹ 7,33,50,000/- or a lesser amount found .....

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the assumption of payment of cash derived from alleged paper seized cannot be supported. Therefore, ld. CIT(A) has rightly deleted the addition. The ld. CIT(A) has also recorded the findings on legal aspect of the case also, inasmuch as the alleged paper was not found from the possession of assessee and there was no corroborating evidence to show that the said papers seized from third party belong to the assessee. He has also relied on several decisions of Hon ble Higher courts. The Revenue has .....

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