TMI Blog2023 (12) TMI 327X X X X Extracts X X X X X X X X Extracts X X X X ..... resumption but the issue under consideration is whether provisions of section 68 can be made applicable on such mentioning of Loan in the seized document. Then, in our considered opinion, even if the mention is of loan then also the assessee has to prove that it is a loan and, therefore, provisions of section 68 squarely apply on such notings and the onus is on the assessee to establish the identity, capacity of the lender and genuineness of the transaction as is applicable in normal assessment proceedings. Since the assessee has grossly failed in all the three counts, we decline to interfere with the findings of the ld. CIT(A). Accordingly, Ground No. 4 of the assessee s appeal and Ground No. 1 of Revenue s appeal are dismissed. Addition on account of undisclosed interest - We direct the Assessing Officer to allow expenditure relating to payment of interest and bad debts and allocate balance interest income, if any, in the ratio 60:40 as done in earlier years between the assessee and his brother Shri Vinod Gupta. Accordingly, Ground No. 5 of the assessee s appeal is allowed for statistical purposes. Investment in jewellery - addition are that on the basis of seize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition - HELD THAT:- The undisputed fact is that the entire addition is based upon the confession made by the assessee at the time of search. Other than this, there is no evidence brought on record to suggest that the assessee was doing some trading business from which he earned commission. It is also not in dispute that no excess cash or jewellery was found where this alleged unaccounted income must have been invested. Since the addition is not backed by any supporting evidences, the ld. CIT(A) has rightly deleted the said addition which calls for no interference. - SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER For the Appellant : Shri Anil Jain, Adv. and Shri Raj Kumar, CA For the Respondent : Shri H.K. Choudhary, CIT-DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- The above captioned cross appeals by two separate assessees are directed towards the order of the first appellate authority CIT[A] - 03, New Delhi pertaining to Assessment Years 2009-10 and 2010-11. 2. Since the underlying facts in the captioned appeals are identical, therefore, they were heard together and are disposed of by this common order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s held by the Commissioner of Income Tax (Appeals). So far as the issuance of the second notice is concerned it may be treated as having been issued by way of clerical mistake covered u/s 292B of the Act and it cannot discard the sanctity of the first notice. If the Assessing Officer had completed the assessment on the basis of the second notice then the position would have been different. Although there is no direct authority with regard to the issue involved in this case, we can take the shelter of the decisions, as relied upon by the learned DR, which have been pronounced in the cases of section 148 proceedings viz. KLM Royal Dutch Airlines v. Assistant Director of Income Tax: 292 ITR 49 and CIT vs. K.M. Ranchayappan; 304 ITR 264. The judgments relied upon by the learned AR are not applicable to the facts of the case. In these judgments only one notice was issued and the same also was not as per the procedure prescribed under the Act whereas in the present case there is no defect in the first notice and the assessment has been completed on the basis of the first notice. We, therefore, find no force in this legal ground of the assessee and accordingly reject the same. 8. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed before the Company Law Board vide order dated 13.1.2009 to divide the assets of the family and group companies in the ratio of 60:4 0 respectively among them. Hence, we decline to agree with the contention of the assessee that the entire income discernible from the consolidated balance sheets should be assessed in the hands o: late Shri Suraj Bhan Gupta. 22. So far as the alternative prayer of the assessee is concerned that the income should be assessed in the hands of AGP is concerned, we do not find any force in this contention as there was no AOP in existence during the relevant assessment years and it is also not clear as to which AOP the income should be assessed. At this juncture, we again point out that vide Company Law Board order dated 13.1.2009 both the assessees have agreed to divide the assets of the group which was headed by late Shri Suraj Bhan Gupta between them in the ratio of 60 : 40 and being a beneficiary of the assets in such ratio, the authorities below were right in taxing the income therefrom in the same ratio in the hands of respective assessee-appellant. Consequently ground No. 3 of the assessee is dismissed. 9. Respectfully following the fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it of rotation cannot be allowed to the assessee as the assessee could not establish the source of surplus amount of loans and advances which were given by the assessee. 17. The Assessing Officer also rubbished the explanation of the assessee that loans and advances have been given out of opening capital which was continuously coming as opening balance from earlier year and the income earned during the year. 18. When the addition was challenged before the ld. CIT(A), the assessee took same arguments which were taken before the Assessing Officer and the ld. CIT(A) was convinced with the contention of the assessee and allowed the benefit of rotation qua the opening capital continuously coming from earlier A.Y. However, at the same time, the ld. CIT(A) found that loan of Rs. 65 lakhs shown in the name of Shri Sanjay Gupta is the amount which is received by the assessee outside the books of account and not the amount paid. Since no documents have been placed on record to show the identity, credit worthiness of Shri Sanjay Gupta, Rs. 65 lakhs was upheld to be added as undisclosed income of the assessee. 19. Similarly, loan of Rs. 62 lakhs was shown in the name of Shri Rajesh Ae ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut there being demonstrative fund flow statement, benefit of rotation cannot be given to the assessee and this aspect has not been considered by the co-ordinate bench in the earlier A.Ys. 26. We have given thoughtful consideration to the rival submissions. It is an undisputed fact that in the Kaccha-Pucca Register, the assessee has meticulously maintained financial statements/financial transactions of the group members of the family and group companies wherein the capital is reflected continuously from the earlier years. Therefore, it can be safely concluded that there was continuous flow of repayment of loans and advances given in earlier years which benefit cannot be denied to the assessee and has been given rightly so by the first appellate authority. 27. However, in so far as additions sustained by the CIT(A) are concerned, we are a bit confused by the contention/submissions of the ld. counsel for the assessee vis a vis the decisions relied upon by him. It is true that presumption u/s 132(4A) /292C of the Act is that whatever is found and seized during the course of search proceedings has to be accepted as such but the contention of the ld. counsel for the assessee that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,333/- needs to be made and has been rightly deleted so by the ld. CIT(A) and, therefore, calls for no interference. 34. In so far as interest of Rs. 2,06,21,655/- is concerned, it would be pertinent to refer to the findings of the co-ordinate bench in ITA No. 2718/DEL/2014 and 2038/DEL/2014 for A.Y 2008-09 which read as under: 17. We have given thoughtful consideration to the orders of the authorities below and with the assistance of the ld. Counsel, we have carefully considered the relevant documentary evidences brought on record in the form of paper books in the light of Rule 18(6) of the ITAT Rules. There is no denying that voluminous documents were impounded during the search proceedings. It is equally true that the seized material contained financial statements of the assessee and its group members. As mentioned elsewhere, these financial statements were in the form of consolidated trading profit and loss account and balance sheet of the assessee and its family members. There is no denying that on the basis of notings found in these seized material, the Assessing Officer has made various additions. 18. The Hon'ble Jurisdictional High Court of Delhi in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the same document favouring the assessee. Therefore, we direct the Assessing Officer to recompute the amount of undisclosed interest income by giving credit of the amount of interest paid it State Bank of India and Allahabad Bank and the amount of bank debt shown in the consolidated balance sheet. After allowing credit of interest paid and bad debts, the remaining part of interest income should be allocated in the ratio of 60 : 40 between the present assessees, Shri S.K. Gupta and Shri Y.K. G pm Consequently, ground no. 4-of the assessee is partly allowed in the manner as indicated above and ground no. 2 of the revenue is dismissed. 21. Respectfully following the findings of the coordinate bench [supra] we direct the Assessing Officer to allow the expenditure relating to the payment of interest and bad debts, as per Annexure A-10 page 93 back [internal pg 180] Annex A-5 pg 14 [both party X-I]. The AO is further directed to allocate the balance interest income if any in the ratio of 60:40 as done in the earlier year between the assessee and his brother Shri V.K. Gupta. Thus, Ground No. 4 of assessee s appeal is treated as allowed for statistical purposes. 35. Resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as jewellery received on approval has not been substantiated by the assessee, therefore, the ld. CIT(A) erred in deleting the addition. 45. On the other hand, the ld. counsel for the assessee reiterated what has been stated before the ld. CIT(A). 46. We have carefully perused the orders of the authorities below. It is not in dispute that it is customary in affluent families to get jewellery on approval basis. All that we have to see is how much of the jewelry was purchased and whether the assessee has successfully demonstrated the source of investment. The seized document A-9 and A-13 contains the entries of payment made to the jewelers with reference to the entries made in Day Book and the same is as under: Date Amount Annex No. Page No Seized 25.09.2008 5,00,000 A-13 65 24.11.2008 15,00,000 A-9 47 24.11.2008 10,00,000 A-9 46 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dition, which calls for no interference. Accordingly, Ground No. 4 is dismissed. 54. Ground No. 5 relates to the deletion of addition of Rs. 1.50 crores on account of undisclosed investment. 55. This addition was made on the basis of seized document A-8 pages 42 to 66 from which it was found that one Shri V.K. Bansal of Sora Marketing Pvt Ltd had sold shares to the assessee for a consideration of Rs. 1.50 crores. 56. During the course of assessment proceedings, Shri V.K. Bansal was examined who admitted to have purchased shares of appellant group Standard Watch Company Pvt Ltd and intended to sell the same to the owner of Standard Watch Company as he was promised 10% return at the time of purchase of these shares by the owners of Standard Watch Company. 57. The assessee explained that this deal could not materialize and the assessee never purchased the shares. 58. The explanation of the assessee did not find any favour with the Assessing Officer who made addition of Rs. 1.50 crores on account of alleged undisclosed payment made to Sora Marketing Pvt Ltd. 59. Before the ld. CIT(A), the assessee submitted list of share holders as on 31.03.2009 and pointed out that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 65. Respectfully following the same, we direct accordingly. Ground No. 6 is accordingly dismissed. 66. In the result, appeal of the assessee is partly allowed for statistical purposes and that of the Revenue is dismissed. ITA No. 3887/DEL/2014 [A.Y. 2010-11] Assessee s appeal 67. The grievances of the assessee read as under: 1. That the Ld CIT Appeal has failed to appreciate that impugned assessment order passed by the learned assessing officer is against the principles of DInatural justice and has been passed without affording reasonable opportunity of being heard. 2. (i) That on the facts and circumstances of the case and the provision of law the Ld CIT Appeal has erred in ignoring the fact that the entire income belong to the father of the assessee Shri Suraj bhan Gupta Ji and the said fact is clearly mentioned in the Balance Sheet found and seized during the course of search on the basis of which additions have been made. (ii) Without prejudice to the above, the learned CIT Appeal has erred in sustaining the addition of income as per the seized documents in the form of the Balance Sheet in the individual capacity of the appellant along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deletion of addition of Rs. 1.02 crores made by the Assessing Officer on account of income from trading commission. 74. This addition has been made on the basis of Annexure A-8 Party X1 Page No. 133 of the seized document as in this seized document, the Assessing Officer found a note which reads as under: Current year income from trading and commission upto 31.07.209 Rs. 1,02,00,000/- . 75. When asked, the assessee explained that this entry was made forcibly by the search party on 01.08.2009 at 3.30 AM. It was strongly contended that nothing emerges out of the said sheet as to from which trading commission of Rs. 1.02 crores has been earned by the assessee. 76. The plea of the assessee was dismissed by the Assessing Officer who was of the firm belief that whatever is written on that piece of paper is sacrosanct and went on to make addition of Rs. 1.02 crores. 77. Before the ld. CIT(A), the contention was reiterated by the assessee. 78. The ld. CIT(A) found that addition of Rs. 1.02 crores is made entirely on the basis of confession and it is not based on any material having evidentiary value. In these circumstances, the ld. CIT(A) deleted the impugned ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6.2011 issued by ACIT, CC-17, New Delhi, after the jurisdiction stood t.f.d. and conferred on him vide order u/s. 127 dtd. 21.02.2011. B. That under the facts, findings of CIT (A) that issuance of second notice u/s 153 A is clerical mistake and curable u/s. 292 B are un- sustainable. Also, Sec. 292 B is not at all applicable to the facts of the case and does not cover such kind of situations and jurisdictional aspects 3. That the complete additions since made on the basis of seized material found and seized from Sh. S.K. Gupta, brother of the assessee and since, no satisfaction has been recorded us. 153 C (1) of the Act in the absence of which no cognize of seized material found from a 3 party can be taken and thereafter in the absence of complying with the mandatory requirements of Sec. 153 C, no cognize of said material could had been taken. Therefore, the use of said seized material for the impugned Asstt. is without jurisdiction and illegal and the addition made on the basis of such material needs to be deleted threshold. 4A. That under the facts and circumstances, Ld. CIT (A) erred in law as well as on merits in not altogether deleting the addition of Rs. 2, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given in the case of Sh. S.K. Gupta (brother of the assessee) on the basis of submissions made by Sh. S.K. Gupta in his own case and the way the same have been appreciated by the Ld. CIT (A) and stands imported and applied in the case of assessee without making assessee a party to the proceedings undertaken in the case of Sh. S.K. Gupta. C. That even on merits the relevant findings given in the case of Sh. S.K. Gupta, so far as and to the extent the same relates and affects the assessee are un-sustainable and erroneous. D. That without prejudice, under the facts and circumstances, no loan and no interest thereon belongs to and is related to assessee. E. That without prejudice, after making substantive addition in the hands of S.K. Gupta, there remains no occasion for making protective addition by the AO in the hands of assessee and in that case, there would not had been any occasion for this issue in appeal in the case of assessee. F. That without prejudice, in the absence of issuing any show cause notice and without giving any opportunity of hearing on this specific issue, the Ld. CIT (A) erred in transferring the protective addition into substantive addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 of that appeal. For our detailed discussion given therein, we decide accordingly. 95. Ground No. 3 relates to the deletion of addition of Rs. 89,95,500/- made by the Assessing Officer on account of undisclosed amount received on sale of property. 96. Similar issue raised vide Ground No. 4 in ITA No. 3201/DEL/2014 [supra] in Revenue s appeal has been considered by us. For our detailed discussion given therein, this ground is dismissed accordingly. 97. Ground No. 4 relates to the deletion of interest for the period from the date of handing over the seized material to the assessee. 98. Similar issue raised vide Ground No. 6 in ITA No. 3201/DEL/2014 [supra] has been considered and decided by us. For our detailed discussion given therein, this ground is dismissed accordingly. 99. In the result, the appeal of the Revenue is dismissed. ITA No. 6259/DEL/2014 [A.Y. 2010-11] Assessee s appeal 100. The grievances of the assessee read as under: 1. That the Asstt. Order passed u/s. 143(3) is un-sustainable in law as well as on merits. 2A. That under the facts and circumstances, Ld. CIT (A) erred in law as well as on merits in not altogether deleting the addi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nue read as under: 1. The Ld Commissioner of Income Tax (Appeals) has erred in law and on facts in deleting the addition of Rs 2,95,07,616/- out of total addition of Rs 3.07 28.994/-on account of undisclosed sources. 2. The Ld Commissioner of Income Tax (Appeals) has erred in law as well as on facts in holding that interest u/s 234A be charged from the date on which the appellant was provided the copy of the seized material. 2. (a) The order of the Ld. CIT (Appeals) is erroneous and not tenable in law and on facts. (b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal. 104. Similar issue raised vide Ground No. 4 in ITA No. 3107/DEL/2014 [supra] has been considered and decided by us. For our detailed discussion given therein, this ground is dismissed accordingly. 105. Ground No. 2 relates to the charging of interest excluding upto the period of handing over the seized material to the assessee. 106. Issue raised vide Ground No. 2 is identical to the issue considered by us vide Ground No. 6 in ITA No. 3201/DEL/2014 [supra]. For our detailed discussion given ther ..... X X X X Extracts X X X X X X X X Extracts X X X X
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