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2016 (11) TMI 1032 - ITAT DELHI

2016 (11) TMI 1032 - ITAT DELHI - [2016] 50 ITR (Trib) 179 - Surrender made by the assessee in statement u/s 132(4) - Held that:- The Authorized Officer has referred to the two statements of Sh. Abhay Gupta recorded on 18.4.2006 and 3.5.2006, as statements u/s 132[4]. The ld. AR has placed on record a copy of panchnama drawn in the case of the assessee, which records the date of commencement of search as 22.3.2006 and the date of completion of search as 23.3.2006. It was submitted that this was .....

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isfied that the ld. CIT(A) was not justified in sustaining the addition of ₹ 10 lac by relying on his finding given in the case of M/s Assam Supari Traders and M/s Balaji Perfumes, the facts of which are entirely different from that of the assessee under consideration. It is further noticed that the other two brothers of the assessee, on whose behalf a similar surrender of ₹ 10.00 each was made, also did not offer such income in their respective returns of income. The AO made additio .....

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the assessee, is concerned. No finding given in this order in respect of the deletion of the addition has any significance or relevance with the additions made in the case of the above referred two concerns, whose appeals are pending before the tribunal. - Income arising from the estimation of household expenses - Held that:- It is observed that the AO for earlier years made an estimation of household expenses @ ₹ 20,000/- per month. The assessee appealed against such estimation of inc .....

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n is sustained pro tanto. This ground is partly allowed. - Penalty u/s 271(1)(c) - Held that:- It is observed that the bedrock for the imposition of the extant penalties on the additions of ₹ 10 lac and ₹ 15 lac, does not survive anymore as the additions have been deleted by us hereinabove. In that view of the matter, there remains no basis for the confirmation of the instant penalties. As regards the confirmation of additions towards the estimate of household expenses, we find t .....

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that no penalty can be levied on the basis of such an estimate of household expenses. - ITA Nos.4144 & 4145/Del/2010, ITA Nos.1259 & 1260/Del/2014 - Dated:- 1-8-2016 - SHRI R.S. SYAL, AM And MS SUCHITRA KAMBLE, JM Assessee By : Shri Anil Jain, Advocate Department By : Shri Ravi Jain, CIT-DR ORDER Per R. S. Syal, AM This batch of four appeals by the assessee comprises of two quantum appeals for the A.Ys. 2005-06 & 2006-07 and equal number of penalty appeals u/s 271(1)(c) for the similar year .....

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the decisions relied by the ld. AR. Though, there is no such practice of giving time to the other side for rebutting the case law relied by the other side, yet the Bench accepted the request of the ld. DR and adjourned the matter for 1.8.2016 as per the convenience of both the sides. It was made clear that the adjourned date of hearing was only for distinguishing the cases relied by the ld. AR or citing some new cases in the favour of the Revenue. Today on 1.8.2016, an adjournment application ha .....

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xcept for giving an opportunity to the ld. DR for distinguishing the cases relied by the ld. AR, inter alia, of the Hon ble jurisdictional High Court as referred to in the later part of this order or citing some new case, we cannot accept the request of the ld. DR at this stage for adjournment of the case. The Bench conveyed its opinion to the ld. DR of not proposing to adjourn the matter any further and asked him to distinguish the cases or cite some new cases, if he wanted to. The ld. DR did n .....

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on 22.3.2006 at the business premises of Balaji Perfumes group, which is engaged in the trade of manufacturing of Gutka under the brand names of Maruti , Ajeet and Kaveri . This group belongs to late Shri Bishan Sarup Gupta, who has three sons, namely, Shri Abhay Gupta, Shri Anoop Gupta and Shri Ajay Gupta (the assessee in question). The whole business of manufacturing of gutka and sale and purchase of Arcanut is looked after by three brothers through the concerns, namely, M/s Balaji Perfumes a .....

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, that all the three brothers were having unaccounted income from commission etc. @ ₹ 10 lac each for the assessment year under consideration and ₹ 20 lac for himself and ₹ 15 lac each for the other brothers for the assessment year 2006-07. These statements were signed by all the family members and were accompanied by an authority letter. The AO found that the surrendered income of ₹ 10 lac was not offered by the assessee in his return of income filed u/s 153A of the Act. .....

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7; 10 lac by relying on the order passed by him in the case of group concern, namely, M/s Balaji Perfumes for the assessment year 2006-07. In doing so, the ld. first appellate authority held that surrender was made by the assessee and not by a third party, namely, Shri Abhay Gupta and, secondly, the statement of Shri Abhay Gupta was not validly retracted. The assessee is aggrieved against the confirmation of addition. 4. We have heard the rival submissions and perused the relevant material on re .....

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n. In order to decide as to whether the surrender was validly made or not, it is relevant to see the background facts leading to the making of the surrender by Shri Abhay Gupta, which statements were duly signed by the assessee also. The ld. AR conceded that the statements of Sh. Abhay Gupta be accepted as genuinely made by the assessee as these were also duly counter signed by the assessee. 5. Now let us examine if the surrender of ₹ 10 lac was valid and deserves the sustenance of additio .....

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page 67 onwards of the paper book, Shri Abhay Gupta stated the modus operandi of recording transactions outside the books of account in the two concerns, namely, M/s Assam Supari Traders and M/s Balaji Perfumes. That is how, Shri Abhay Gupta surrendered a sum of ₹ 3.50 crore which also included surrender of income of ₹ 10 lac each in the hands of the three brothers for the assessment year 2005-06. Shri Abhay Gupta, after admitting that the supari business was carried on outside the b .....

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e in the earlier parts of his statement to the commission business carried on by the three brothers outside the books of account. The assessment order also does not refer to any incriminating material qua the commission business carried on by the assessee, except to the surrender of ₹ 10.00 lac. This divulges that the surrender of ₹ 10 lac made by Shri Abhay Gupta on behalf of the assessee was in respect of commission income for which, admittedly, no incriminating material was found .....

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assessment order of the assessee. This shows that the surrender made by Shri Abhay Gupta on behalf of the assessee on account of commission income was not backed by any material/evidence indicating the involvement of the assessee in the agency business. On a specific query, it was submitted by the ld. AR that the assessee never indulged in commission business and never offered any commission income in the past or in the future. This statement of the ld. AR was not controverted by the ld. DR with .....

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be substantiated with any other evidence. The contention is no doubt true, but, it should be understood in a proper context. One needs to draw a line of distinction between two situations, viz., first, where surrender is made pursuant to some incriminating material found during the course of search and, second, where surrender is made without discovery of any incriminating material. Whereas in the first situation, the surrender made in a statement under sub-section [4] of section 132 may be a g .....

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of search and survey. Thus, it becomes abundantly manifest that no addition can be made or sustained simply on the basis of statement recorded at the time of search, for which no corroborative material is found. In order to make a genuine and legally sustainable on the basis of surrender during search, it is sine qua non that some incriminating material must have been found to correlate the undisclosed income with such statement. 7. The Hon ble Delhi High Court in CIT vs. Harjeev Aggarwal (ITA N .....

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been taken by the Hon ble Delhi High Court in an earlier judgment in the case of CIT vs. Sunil Aggarwal (2015) 379 ITR367 (Del). To the similar effect is an earlier decision of the Hon ble Andhra Pradesh High Court in CIT VS. Shri Ramdas Motor Transport (1999) 238 ITR 177(AP), in which the Hon ble High Court refused to give any evidentiary value to the statement made by the assessee u/s 132(4) as the Department could not find any unaccounted money, article or thing or incriminating document eith .....

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course of search showing the involvement of the assessee in any sort of agency business, for which the surrender was made or obtained, we cannot sustain such an addition. 8. Be that as it may, let us examine if the surrender made by the assessee was, in fact, in the statements made under section 132(4) of the Act. This provision provides that the authorised officer may, during the course of the search or seizure, examine on oath any person who is found to be in possession or control of any book .....

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u/s 132(4), does not become so. There is hardly any need to accentuate that there can be no estoppel against the provisions of the Act. Adverting to the facts of the instant case, we find that the Authorized Officer has referred to the two statements of Sh. Abhay Gupta recorded on 18.4.2006 and 3.5.2006, as statements u/s 132[4]. The ld. AR has placed on record a copy of panchnama drawn in the case of the assessee, which records the date of commencement of search as 22.3.2006 and the date of co .....

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ary value. 9. In view of the foregoing discussion, we are satisfied that the ld. CIT(A) was not justified in sustaining the addition of ₹ 10 lac by relying on his finding given in the case of M/s Assam Supari Traders and M/s Balaji Perfumes, the facts of which are entirely different from that of the assessee under consideration. It is further noticed that the other two brothers of the assessee, on whose behalf a similar surrender of ₹ 10.00 each was made, also did not offer such inco .....

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ncerns, namely, M/s Assam Supari Traders and M/s Balaji Perfumes, which are, inter alia, also based on the statements of Sh. Abhay Gupta. We want to clarify beyond doubt that the validity or otherwise of the retraction of statements made by Sh. Abhay Gupta has neither been considered nor decided by us in this order, as the same is not relevant in so far as the instant addition of ₹ 10.00 lac, made in the hands of the assessee, is concerned. No finding given in this order in respect of the .....

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ustenance of the addition. 12. We have heard the rival submissions and perused the relevant material on record. It is observed that the AO for earlier years made an estimation of household expenses @ ₹ 20,000/- per month. The assessee appealed against such estimation of income before the CIT(A) and the tribunal, but without any success. A copy of such tribunal order upholding the addition made on the basis of estimation of household expenses at this level is available on record. Considerin .....

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of the assessment year 2005-06 except for the fact that surrender was made by the assessee for this year at ₹ 15 lac on account of commission income. Both the sides have also accepted that the facts and circumstances for both the years are identical except for the amount of addition. Following the view taken hereinabove for the immediately preceding year, we order for the deletion of the addition. 15. The other ground which survives in the instant appeal is against estimation of household .....

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years. The assessee appealed against such additions on the basis of estimation of household expenses before the CIT(A) and the tribunal for earlier years, but without any success, except that for the immediately preceding year, the estimate of household expenses has been sustained at ₹ 22,000 p.m. Considering the totality of the facts and circumstances of the instant case, we are satisfied that it would be in the fitness of things, if the estimation of household expenses for the instant y .....

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