TMI Blog2021 (1) TMI 994X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee are having the different facts and are not relevant to the present case. Therefore, the legal issue involved decided against the assessee and in favour of the Revenue . Unexplained investments - The assessee was the Director at that time as the audited balance sheet of M/s Esam Trading Company Ltd. as on 31.3.1993 filed with the Registrar of Companies, New Delhi. Therefore, keeping in view of the facts and circumstances as explained above, with the support of documentary evidences, we are of the view that investment of ₹ 37 lacs made by the assessee as per the documents seized from his residence during the search, hence, the addition in dispute has been rightly made by the AO as undisclosed income of the assessee which was also rightly upheld by the Ld. CIT(A). Hence, we uphold the order of the Ld. CIT(A) on this issue of undisclosed income amounting to ₹ 37 lacs on account of investments in M/s Esam India Ltd. Commission income unexplained - In response to the questionnaire dated 17.6.2001 the assessee recorded his statement dated 16.7.1999 by stating that the only investment in the share capital of M/s Esam India Ltd. has been made in 1991-92 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e as undisclosed income - On the basis of Annexure A-1 seized during the search operation in the case of the assessee on 23.3.1999 for the purchase of cell phones, after giving opportunity to the assessee. The assessee has not attended the AO and not filed any reply. Therefore, in our view this addition has rightly been made and upheld by the Ld. CIT(A). Hence, we uphold the order of the Ld. CIT(A) on this issue. Addition of investments in purchase of cars and treated the same as undisclosed - No doubt the assessee has denied the ownership of these vehicles, but has not substantiated his version with the support of any evidence. On the contrary, the Rolls Royce car no. DLIC1233 and Ferrari and Contessa were found and mentioned in the documents seized from the premises of the assessee owned by the assessee and the assessee has not able to explain the source of investments in these vehicles. Therefore, we uphold the impugned order on this issue. Unexplained expenditure - CIT-A unexplained expenditureheld that opportunity given by the AO was not availed by the assessee and due to lack of evidences supporting the claim of the assessee, the Ld. CIT(A) has given the relief of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has not brought on record any information showing that he in fact earned income out of India during the block period. The AO as well as Ld. CIT(A) has rightly made the additions. Undisclosed foreign exchange - AO has made the addition on the basis of seized material and after giving opportunity to the assessee, which the Assessee has not availed the same and the Ld. CIT(A) has rightly upheld this addition in dispute by dismissing the ground of the assessee. Undisclosed of payment made to Ms. Rita Luther - AO has made the addition on the basis of seized material mentioned in the assessment order and the impugned order. No contrary evidence has been filed by the assessee. Therefore, the AO has rightly made this addition and Ld. CIT(A) has rightly upheld the same. Addition on account of profit of M/s Delhi Exports - In reply to the question raised by the AO the asessee has not furnished any proof of having filed the income tax return of his concern M/s Delhi Exports, hence, Assessing Officer has made the addition in dispute. Ld. CIT(A) has also upheld the impugned addition on the basis of the finding given by the AO. We have gone through the orders passed by the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horities below. Therefore, no interference is called for in the well reasoned orders of the revenue authorities - Decided in favour of revenue. - IT(SS)A NO. 2/DEL/2011, IT(SS)A NO. 3/DEL/2011, C.O. NO. 189/DEL/2011 (IN IT(SS)A NO. 3/DEL/2011) - - - Dated:- 25-1-2021 - Shri H.S. Sidhu, Judicial Member And Shri Prashant Maharishi, Accountant Member For the Appellant : Sh. Himanshu Aggarwal And Sh. Lalit Mohan, CA For the Respondent : Sh. Satpal Gulati, CIT(DR) ORDER PER H.S. SIDHU, JM : The Cross Appeals have been filed by the Assessee and Revenue against the impugned order dated 29.10.20210 passed by the Ld. CIT(A)-I, New Delhi for the Block Period 01.04.1988 to 23.03.1999 and against the Revenue s appeal no. 03/Del/2011, the assessee has also filed the Cross Objection No. 189/Del/2011. 2. The assessee has filed the following grounds in IT(SS)A No. 02/Del/2011 :- 1. The Ld. CIT(A)-1, New Delhi did not provide proper opportunity of hearing to the appellant and order of the Ld. CIT(A) is a non-speaking order. 2. The ld. CIT(A) failed to consider and decide the grounds of appeal no. 35, i.e. all the receipts and payments have been considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,74,444 9 Deposits 7,24,71,120 10 Income as per diary 1,42,10,625 11 Investment in house hold and personal items. 79,68,269 12 Investment for purchase of foreign exchange. 1,27,688 13 Payment made to Rita Luther 2,00,000 14 Payment to Sh. Sandeep Puri 1,00,000 15 Profit of M/s Delhi Exports 2,77,00,000 16 Profit of M/s Globetrotters 3,34,00,000 17 Cash expenditure 1,05,250 18 Income received through M/s Vino Veritas 7,67,30,400 19 Income received through M/s European Capital Ltd. 1,33,00,000 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing tried in the Court of ACMM, Patiala House, New Delhi in the case titled Enforcement Directorate vs. Abhishek Verma, in which the question whether Sh. Abhishek Verma was NRI or not was pending consideration. It was claimed in this letter that since the residential status of Sh. Abhishek Verma was sub-judice, therefore, block return could not be filed by Sh. Abhishek Verma. 3.2 On 26.2.2001, assessee was requested to furnish proof in support of his claim that he was a Non- Resident Indian and not subject to tax laws of India and assessee was once again reminded to file block period return without delay. In response to the same, assessee filed his return on 01.03.2001 through his counsel, assessee took the same plea, but could not file any evidence supporting his version. 3.3 On 29.5.2001, the summons u/s. 131 of the Act were issued to the aassessee for compliance on 12.6.2001. In response to the same, the assessee did not respond and did not file any reply mentioning the reasons for his non-attendance. 3.4 In the absence of block period return filed by the assessee the proceedings were getting time barred. On 31.7.2001, the questionnaire alognwith notices u/s. 143(2) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el gave a list in respect of which photocopies was required by him and the photocopies of those documents were provided to the assessee on 20.7.2011. On 24.7.2001 assessee filed block return declaring undisclosed income NIL. Notice u/s. 143(2) and 142(1) of the Act was issued on 24.7.2001 requesting the assessee to reply the questionnaires issued and served earlier. Assessee through his counsel attended on 24.7.2001 filed a written reply to the questionnaires issued to the assessee. The block assessment return has been filed by the assessee under protest . Assessee has declared his status as Non Resident Indian. Assessee in his reply filed through his counsel on 24.07.2001 has stated that he was non-resident during the whole of the block period under consideration. It has been further stated that assessee had no income in India and being non-resident, assessee is not liable under the Income Tax Act, 1961 regarding income earned out of India/Foreign Countries. In support of this version, assessee has not filed any evidence regarding non-resident during the whole of the block period. In the absence of the evidences supporting this claim of the assessee, the AO treated the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xports 2,77,00,000 16 Undisclosed profits of M/s Globetrotters 3,34,00,000 17 Undisclosed cash expenditure 1,05,250 18 Undisclosed income received through M/s Vino Veritas 7,67,30,400 19 Undisclosed income received through M/s European Capital Ltd. 1,33,00,000 20 Undisclosed cash payments received 8,06,800 21 Undisclosed receipts from Sh. SC Bharjatia 75,00,000 22 Bogus purchases 17,39,40,857 23 Undisclosed deposits made in General Credits Finance Ltd. 54,00,000 24 Undisclosed income as per 24 above. 1,19,03,000 25 Undisclosed income on account of payment made to Sh. Arjun Amla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion towards Section 158BE(1) and the assessment order passed u/s. 158 BC of the Act and stated that in terms of this provision, AO is required to complete the assessment u/s. 158 BC of the Act within 02 years from the end of the month for which the last authorization for search u/s. 132 of the Act was executed. The explanation contained in the said section clarifies that the authorization for the search initiated u/s. 132 of the Act is considered to be executed when the search is recorded to be concluded by the search team in the panchnama drawn after such search. The word panchnama is not defined in the Act or Rules, even the Code of Criminal Procedure, 1973, the provisions of which relating to search and seizure are applicable to searches and seizure u/s. 132 of the Act, do not define the said word, however it prescribes the format in which the panchnama is required to be drawn. Ld. Counsel for the assessee stated that in the case of the assesse authorization / warrant of search was given on 22.3.1999, but in consequence thereof 03 panchnamas were drawn on three different dated at the same residential premises of the assessee i.e. dated 23.03.1999; 21.5.1999 and 16.7.1999. He s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ises of the assessee which the assessee has attached at pages 29-32 in the Assessee s Paper Book Volume- 1. According to the assessee no new document or any valuable material was found and seized from the searched premises of the assessee, nor any further restrained order u/s. 132(3) of the Act was passed. Lastly, on this legal issue of limitation, Ld. Counsel for the assessee stated that nothing further remained to be investigated at the search premises after 1st panchanama, the only reasons behind is not to conclude the search and keeping it pending for a long duration of approximately 4 months was, in only the gain time or, in other words, extend the period of limitation to complete the assessment upon the assessee, which is not permissible in law and therefore the assessment passed u/s. 158BC of the Act dated 25.7.2001 is time barred. In support of these arguments advanced by the Ld. Counsel for the assessee, he cited various judgments rendered by the Hon ble High Courts which includes CIT vs. Sandhya P. Naik : 253 ITR 534 (Hon ble Bombay High Court); CIT vs. Sarb Consultate Marine Products Pvt. Ltd. 294 ITR 444 (Hon ble Delhi High Court); CIT vs. SK Katyal reported in 221 CTR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contention raised by the assessee is not correct, because it can be seen from the copy of the 3rd and final panchnama dated 16.7.1999 placed by the assessee in his paper book volume no. 1 page 29-32 in where new valuable items were found and inventorized by the search team which had been found at the time of drawing the 1st and 2nd panchnama in the month of March, 1999 and May, 1999 respectively. According to the 3rd panchnama dated 16.7.1999 Column 5(b)(i) various items were found that are Ann-2, Inventory of Credit Cards; Ann-3, Inventory of Foreign Visits; Ann-4, Inventory of Mobile. 6.1 He submitted that assessee has not placed in the paper book these documents, the copies of the Annexures Ann-2 to Ann-4, prepared at the time of drawing the 3rd and final panchnama dated 16.7.1999. But the comparison of the names of these annexures with the annexures prepared at the time of drawing the 1st panchanama dated 23.3.1999 which has been placed by the AR at page 1-4, alongwith the annexure 1 to 14 in assessee s paper book page 5 to 22 will reveal that above stated Annexures Ann-2 to Ann- 4, prepared at the time of drawing of third and final panchnama dated 16.7.1999 were entirely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to the facts and circumstances of the case of the assessee and requested that the legal issues raised by the Ld. Counsel for the assessee may be decided in favour of the Revenue and against the Assessee and on the other legal issues, he relied upon the impugned order of the Ld. CIT(A). 7. No other legal issues have been argued by both the parties. 8. We have heard both the parties on the legal issue raised by the assessee by stating that assessment order dated 25.7.2001 in the case of the assessee was passed u/s. 158BC of the Income Tax Act, 1961 is barred by limitation. We have gone through the orders passed by the revenue authorities alongwith the relevant provisions of law i.e. section 158BE of the Act as well as documentary evidences filed by the assessee and the Revenue especially three panchnamas as referred by both the parties in their written submissions. We are of the view that as pointed out by both the parties that 1st panchnama in pursuance of section 132 of the I.T. Act was drawn on 23.03.1999 at the searched premises of the assessee. Assessee has enclosed the same at pages 1-4 of the Paper Book Volume I. As per the 1st panchnama various documents and books o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al items and other valuables are kept (pages 27 28); (7) panchnama dated Panchama dated 16.7.1999 (29-32); (8) order sheet of proceedings before the CIT(A) (pages 33-41); (9) written submissions dated 14.7.2009 filed before the CIT(A); (10) letter dated 12.10.1999 of the CIT(A) seeking comments and report of the AO and (11) letter dated 11.10.2010 of the AO. Assessee has also certified that all the documents at serial no. 1 to 7 were available before the AO and the CIT(A) and rest are part of proceedings / hearing before the CIT(A). 8.1 Keeping in view the aforesaid documentary evidences which the assessee has himself filed, we are of the view that as per the 3rd panchnama dated 16.7.1999 which the assessee has attached in the paper book at page no. 29, but at column no. 5(b)(i) following issues were found:- (i) Ann-2, Inventory of Credit Cards. (ii) Ann-2, Inventory of Foreign Visits. (iii) Ann-4, Inventory of Mobile. 8.2 At the time of drawing the 1st panchnama dated 23.3.1999 no inventory was prepared in respect of the mobile and foreign visits and such valuables were found only at the time of drawing of 3rd panchnama dated 16.7.1999. As the assessee himself adm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egards ground no. 2, 3, 5 6 are concerned, we note that these issues were not argued, at the time of hearing by both the parties, hence, the same need not be adjudicated. 9.2 As regards the ground no. 7 raised by the assessee in which the assessee has challenged the additions on merits which were upheld by the Ld. CIT(A) i.e. total 25 additions which the assessee has mentioned in ground no. 7 at page 3-4 of the grounds of appeal. After hearing both the parties and perusing the orders of the revenue authorities, we are of the view that as regards to addition of ₹ 37 lacs on account of investment of M/s Esam India Ltd. as undisclosed income of the assessee, we have perused the seized material which at page 8, 11, 12 to Annexure 4 seized from 4, Safdarjung Lane, New Delhi on 23.3.1999, mentioned by the AO. No doubt that assessee has denied these deposits, but as per the finding of the revenue authorities below supported by the seized material M/s Esam India Ltd. was incorporated on 10.1.1990.The assessee is No. 1 of the original subscriber to the Memorandum of Association of the company. The name of M/s Esam Trading Co. Ltd. was changed to M/s Esam India Ltd. and to M/s A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... view of the statement made by the assesee and non-furnishing of any evidence showing that assessee has not received this commission income. The AO has rightly made this addition and Ld. CIT(A) has also rightly upheld the same, hence, we uphold the order of the Ld. CIT(A) on this issue. 9.4 As regards the addition of ₹ 4,02,557/- on account of foreign travels expenditure. After hearing both the parties and perusing the documentary evidences filed by the assessee which is at Annexure A2 A-6. The assessee has not filed any evidence in support of his claim on this addition and by merely denying that assessee has not incurred any expenditure. Hence, this addition is liable to be made in the absence of any evidence filed by the assessee. We are of the view that amount of ₹ 16640 + 89465 + 226652 + 69800 totaling to ₹ 402557/- on account of foreign travel expense has rightly been made by the Assessing Officer and upheld by the Ld. CIT(A), because the assessee has not produced any documentary evidences supporting his claim. Hence, we uphold the impugned order on this issue. 9.5(i). As regards addition of ₹ 29,88,526/- on account of deposit in the bank. The A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence. On the contrary, the Rolls Royce car no. DLIC1233 and Ferrari and Contessa were found and mentioned in the documents seized from the premises of the assessee owned by the assessee and the assessee has not able to explain the source of investments in these vehicles. Therefore, we uphold the impugned order on this issue. 9.8. As regards the unexplained expenditure of ₹ 38,74,444/-, the AO treated the same as undisclosed income of the assessee and the AO has made the addition on the basis of the seized documents and after giving the opportunity to the assessee to explain the same. Assessee neither attended the AO in response to the summons to explain the seized documents nor filed any reply stating the reasons for non-attendance in spite of the fact that photocopies of the documents were given to the assessee at the time of seized of these documents. After giving opportunity to the assessee and on the basis of the documentary evidence filed by the assessee alongwith the explanation, the Ld. CIT(A) in para no. 12.3 at page no. 53-54 of the impugned order held that opportunity given by the AO was not availed by the assessee and due to lack of evidences supporting the cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 56 of the impugned order and held that all these firms were found to be non-existence at the given address and therefore, in our view the AO has rightly been made the addition which the Ld. CIT(A) has upheld. Hence, we uphold the impugned order on this issue. 9.10. The AO made the addition of ₹ 1,42,10,625/- on account of alleged transactions recorded in the diary alleged to be handed over by Ms. Asmita Aggarwal on 16.7.1999 and treated the same as undisclosed income of the assessee. Assessee has given the opportunity to the assessee to explain this amount and assessee has stated that Ms. Asmita Aggarwal having bitter relations with the assessee and finally resulted in legal divorce and there is no evidence or material to establish that the transactions recorded in the diary actually took place. After considering the reply filed by the assessee and detailed discussions, the AO has made the addition in dispute on the basis of documentary evidences as referred by the AO in the assessment order and the Ld. CIT(A) in the impugned order elaborately and finally upheld the addition on the ground that this addition has been made on the basis of the diary which was handed over to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 The AO has made the addition of ₹ 2 lacs on account of payment made to Ms. Rita Luther and treated the same as undisclosed income of the assessee. The AO has made the addition on the basis of seized material mentioned in the assessment order and the impugned order. No contrary evidence has been filed by the assessee. Therefore, the AO has rightly made this addition and Ld. CIT(A) has rightly upheld the same, which does not require any interference on our part, hence, we uphold the same. 9.14. As regards the addition of ₹ 1 lac on account of payment to Sh. Sandip Puri and treating the same as undisclosed income of the assessee. The revenue authorities has made this addition on the basis of seized material mentioned in the impugned order and assessee has failed to explain the same therefore, this addition is upheld. 9.15. The AO has made the addition of ₹ 2,77,00,000/- on account of profit of M/s Delhi Exports and treated the same as undisclosed income of the assessee. According to the assessee, the AO has failed to appreciate the provisions of Income Tax Act, 1961 and particularly of Section 2(31) which defines person and further failed to appreciate that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of this firm found and seized during the course of search. To negative the version of the revenue authorities assessee has not given any explanation whatsoever the amount of ₹ 3.34 crores is verifiable from the seized documents is held to be correctly added by the AO to the undisclosed income of the assessee, which was upheld by the Ld. CIT(A). Hence, we uphold the action of the Ld. CIT(A) which has been made on the basis of the seized material. Hence, we uphold the findings of the Ld. CIT(A) on this issue. 9.17. As regards addition of ₹ 1,05,200/- on account of cash expenditure incurred by M/s Delhi Exports. The Assessing Officer has disallowed the same by holding that the assessee is a real owner of M/s Delhi Exports and liable to pay the tax on income earned by M/s Delhi Exports and on the basis of page no. 5 Annexure A-28 seized from M/s Esam India Ltd. during the search operation on 23.3.1999 showing that the cash expenditure of ₹ 1,05,250/- was not booked in the books of M/s Delhi Exports. Assessee denied the same but without any evidence. Ld. CIT(A) has also upheld the same. After perusing the orders passed by the Revenue Authorities, we are of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of the Assessing Officer that does not mean that addition in dispute should be deleted without supporting the evidence. We are of the view that this money was transferred to M/s European Capital ltd., the assessee is holding the power of transfer of the bank account of European Capital ltd. and is a beneficiary of ₹ 1,33,00,000/- transferred during 1997 and 1998 by M/s Infocom Digital Systems Ltd. to M/s European Capital Ltd. Therefore, the amount of ₹ 1,33,00,000/- has rightly been treated as the undisclosed income of the assessee by the revenue authorities, because this addition has been made on the basis of the seized documents in Annexure A-43 found from the premises of M/s Esam India ltd. and assessee could not furnish any evidence to support his contention, hence, we uphold the finding of the Ld. CIT(A) on this issue. 9.20 As regards the addition of ₹ 8,06,800/- on account of cash payment received from M/s Infocom Digital Systems Ltd.. After going through the orders of the revenue authorities, we are of the view that this addition has been made on the basis of the seized material Annexure A-48 from M/s Esam India Ltd. on 23.3.1999. No expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. M/s Kudos Exports Pvt. Ltd., a company owned by M/s Esam India Ltd., shares of which are owned by the assessee substantially, has made imports from M/s Ganton Ltd. In response to the questionnaire dated 23.7.2001 assessee had not given any reply to the concern. The Assessing Officer has made the addition in dispute and Ld. CIT(A) has upheld the finding of the Assessing Officer. In appeal before us, we have no other alternative, except to uphold the impugned order on this addition because for lack of evidence on the issue in dispute filed by the assessee, therefore, the addition of ₹ 17,39,40,857/- made by the Assessing Officer and confirmed by the ld. CIT(A) is as per law and record, hence, we uphold the same. 9.23 The Assessing Officer had made the addition of ₹ 54,00,000/- on account of deposits made with General Credits Finance Ltd. as undisclosed income of the assessee. During the assessment proceedings Assessing Officer issued the questionnaire dated 7.6.2001 to the assessee asking him to explain the undisclosed deposits. Assesee has denied the same and has not filed any evidence supporting his denial, hence, the Assessing Officer has made the addition in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 07.06.2001 who asked the assessee to explain these deposits made by him as per page no. 24 of the Annexure A-1 seized from the residence of Mrs. Asmita Aggarwal during the search operation on 23.3.1999. Assessee has explained that the pages relied upon are the photocopies of some typed matter and even this does not bear the name and signatures of the assessee. He further submitted that the name of the bank into which the deposits has been made is not there and he denied these deposits. The Assessing Officer has supplied all the documentary evidences to the assesee and the statements recorded on 16.7.1999 of the assessee was also given to the assessee in which the assessee has admitted that he was having bank account in Liechtenstein. During March, 1995, US dollar 2,67,500/- equivalent to ₹ 93,62,500/- have been deposited by assessee, the source of which assessee has not explained and Assessing Officer has made this addition as undisclosed income of the assessee. Similarly, as per the question no. 39(c) of Questionnaire dated 7.6.2001 Assessing Officer asked the assessee to explain the transfer of money from account no. 520062 made by him as per pages 30 to 46 of An ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground no. 7 are dismissed by upholding the order of the ld. CIT(A) on these additions. 10. Keeping in view of the facts and circumstances of the present case and the issues involved in appeal filed by the assessee and after going through the arguments advanced by both the parties alongwith the documentary evidences filed by both the parties in the shape of papers books, we are of the considered view that Assessing Officer as well as Ld. CIT(A) has given full opportunity to the assessee for substantiating his claim on legal as well as on merits, but the assesee remained non-cooperative before the revenue authorities, hence, Assessing Officer has made the additions in dispute on the basis of the search material, after confronting the same to the assessee, but the assessee has not substantiated his claim by filing any evidence before the authorities below. Therefore, no interference is called for in the well reasoned orders of the revenue authorities, hence, we uphold the impugned order of the Ld. CIT(A) by dismissing the appeal filed by the Assessee. In the result, the IT(SS)A NO. 2/DEL/2011 filed by the assessee is dismissed. 11. The Revenue has raised the following grounds i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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