TaxTMI 
TaxTMI 
TaxTMI 
2018 (9) TMI 1301
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....total income of Rs. 20,94,725/-. Notice under section 148 was issued on 29.03.2012 after recording the following reasons: "A search, operation was carried out by the Punjab Vigilance Bureau on 17.05.2007 in the case of Sh. Chetan Gupta at his business premises situated at 118, Ansal Bhawan, K. G. Marg, New Delhi. During search, a Pen-drive was found from the possession of Sh. Chetan Gupta, who is one of the Directors of Assessee-Company. In the said pen-drive, ledger accounts of different parties were found to be maintained by Sh. Chetan Gupta. Printouts of the year-wise ledger accounts had been taken by the Punjab Vigilance Bureau from the Pen-drive and were sent to the Income Tax Department. It has been alleged by the Punjab Vigilance Bureau that Sh. Chetan Gupta was keeping the black money earned by Capt. Amrinder Singh, Ex. Chief Minister of Punjab and keeping the record in computerized data stored in Pendrive. 2. As per information available in this office, the assessee during the relevant previous year entered into financial transactions of expenditure and investments which were apparently not entered in the books of accounts of the assessee and are also not in commensur....
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....made basis for addition against the assessee-company. The A.O. considered the reply of the assessee-company and noted some entries relating to Shri Chetan Gupta's five companies/ firms were found on both the pen-drive and in the fair books of account of Shri Chetan Gupta. The accounts in the pen-drive were maintained like the normal books of account. Shri Chetan Gupta has given cheque of Rs. 2 crores to Shri Gurpal Singh, son-in-law of Capt. Amrinder Singh and it was found that these cheques had been issued from his companies RL Travel, Indo Arab Services and Trans Air in October, 2005. This money was subsequently returned by Shri Gurpal Singh to Shri Chetan Gupta in January, 2006. Assessee's denial is, therefore, not justified. The A.O. considered the issue in the light of provisions of Section 68 of the I.T. Act and noted that working of the peak credit prepared by the A.O. as per entries in the pen-drive comes to Rs. 2,21,00,788/-. It was added as unexplained credit in the hands of the assessee-company under section 68 of the I.T. Act. 3. The assessee-company challenged the initiation of re-assessment proceedings under section 148 and addition of Rs. 2,21,00,788/- before Ld. CI....
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....hat the amount clearly represents the expenses incurred by the assessee-company as recorded in the pendrive of its Director, therefore, addition is liable to be made under section 69C of the I.T. Act. No addition could be made under section 68 of the I.T. Act. He has also considered the decision of ITAT in the case of Shri Chetan Gupta for A.Ys.2002-2003, 2003-2004 and 2004-2005 and noted that there is a live nexus established between assessee-company and the contents of the pen-drive. Therefore, addition under section 69C was made by the Ld. CIT(A). As regards reopening of the assessment, Ld. CIT(A) noted that A.O. has to come to the prima facie conclusion that there was escapement of income, therefore, re-assessment is justified in the matter. Appeal of assessee-company was accordingly dismissed. 5. We have heard the Learned Representatives of both the parties and perused the material available on record. Learned Counsel for the Assessee reiterated the submissions made before the authorities below and submitted that the issue on merit is covered by the Order of ITAT, Delhi F-Bench, in the case of Shri Chetan Gupta in ITA.Nos.1788 & 2389/Del./2016 for the A.Y. 2005-2006 dated 07.....
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....of Shri Chetan Gupta by Punjab Vigilence Bureau on the reasons that Shri Chetan Gupta was keeping the black money earned by Capt. Amarinder Singh, Chief Minister of Punjab. The Department has also proceeded against Shri Chetan Gupta in various assessment years on the basis of the entries contained in the pen-drive recovered from him. The Tribunal decided several appeals of Shri Chetan Gupta and finally the appeal of Shri Chetan Gupta was decided by ITAT, Delhi F-Bench, in ITA.Nos.1788 & 2389/Del./2016 for the A.Y. 2005-2006 vide Order dated 07.06.2018 and in paras 3 to 16 it was held as under : "3. Brief facts of the case are that assessee is an individual filed his return of income u/s 139 of the Income Tax Act, 1961 (hereinafter for short called as the 'Act') on 29.10.2005 declaring total income of Rs. 3,41,612/-. The AO issued notice u/s 148 of the Act after recording the reasons. The reasons are reproduced in the assessment order in which it is noted that Punjab State Vigilance Bureau has conducted a search operation on 17.05.2007 at the business as well as the residential premises of the assessee. The Punjab Police Vigilance Bureau registered FIR No.5 dated 23.03.2007 in con....
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....edit and mentioned at pages 7 to 10 of the assessment order and the total of the same comes to Rs. 43,67,62,555/- which was treated as unexplained credit and addition was made to the income of the assessee. 4. The assessee challenged the addition before the Ld. CIT (A) as well as challenged the reopening of the assessment in the matter. The submissions of the assessee are reproduced in the appellate order in which the assessee explained that the ITAT had decided the case of the assessee for earlier assessment years i.e. 2001-02, 2002-03 & 2003-04, wherein the assessee has been granted the benefit of calculation of peak balance and telescoping thereof in the manner discussed above. Keeping the said decision in view, the addition, if any, at all has to be limited to the peak credit of Rs. 1,82,59,348/- as on 10.04.2004 as telescope for the maximum peak balance of earlier years i.e. Rs. 46,16,837/- for AY 2003- 04 resulting in net addition, if at all, of Rs. 1,36,42,861/-. The assessee also made submissions against reopening of the assessment. The assessee in the rejoinder also explained that the process and methodology adopted by the assessee in earlier years also has judicial san....
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..... 38,57,10,583/- on account of unexplained credit u/s 68 of the Act. 7. We have heard the Ld. Representatives of both the parties. 8. Ld. DR relied upon the order of the AO and submitted that pen-drive was seized by the Punjab Vigilance Bureau from the possession of the assessee on the basis of which AO made an addition of peak amount of credit u/s 68 of the Act. The CIT (A) directed the set off of opening balance of cash available against the said peak credit. The AO had worked out the peak of individual ledger account while the assessee consolidated all the accounts in the working of the peak. The ITAT decided the appeals for assessment years 2001-02 to 2004-05 in which the working of the peak as per assessee has been accepted and set off has been given of the opening balance. The orders of the Tribunal dated 21.06.2013 and 31.01.2014 are filed in the Paper Book. For AY 2005-06 the order of the CIT (A) is dated 23.02.2016 on the basis of the remand report dated 22.01.2016 and both the dates are subsequent to the order of the Tribunal in earlier years. The AO in the remand report mentioned that the assessee in his working of peak had also considered the application of income....
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....placed on paper book of respective year. (ii) From the details a summary of mistakes, opening balances (debit or credit as the case may be), contra entries etc is furnished to work out the correct amount of credits emerging from the print outs. (iii) These details are further supported by working of peak credit for each year from, which are filed by assessee. 6.14. Assessee claims to have submitted all these details before AO, who though gave some cursory interest adjustments but did not look into all other details refusing the assessee claims summarily. They were filed before CIT(A) again who called for remand report, however CIT(A) also did not deal with the core issue and gave some adjustments here and there. Thus assessment has not been framed in a reasonable and proper manner. To ensure high pitched assessments the huge additions have been made one way or other in a capricious manner. 6.15. Ld counsel took us through the relevant entries to demonstrate how the funds have been reutilized from one a/c to other, the effect of contra entries and mistakes committed by lower authorities. While working out the printouts it will be disastrous to add each and every entry wi....
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....le in this case as admittedly there was no search proceedings under income tax act on the assessee. A statutory presumption can be raised against assessee when the prescription of law warrants it. In the absence of enabling statutory provision such presumption can not be propped up against assessee. Since there was no search on assessee u/s 132 under income tax act, presumption u/s 292C can be applied to him. However the assessee case comes in the ken of sec 68 about giving reasonable explanation of cash credits found from his record. 6.21. This scenario does not alter the situation materially in as much as assessee has to discharged the burden cast by deeming fiction of sec. 68. The burden is by and large similar to sec 292C. 6.22. The department proceeds on premise that assessee manages funds for 148 person or so and keeps a record thereof. Assessee filed every detail in date wise and entry wise manner. AO does not consider it objectively and allows some cosmetic reduction of interest. Issue is carried in appeal, all the documents are filed again before CIT(A) who calls for a remand report from AO. The course of events reveals that assessees details are again not considered....
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....ournal/contra entries. In our view ratio of decisions in the cases of - Anantharam Veerasinghaiah & Co. (supra); K.S.M. Guruswamy Nadar & Sons (supra); Singhal Industrial Corpn. (supra); Kantilal & Bros. (supra); Sanjay Kumar Jain (supra); & Ishwardass Mutha (supra), support the assessee's case for peak credit and telescoping benefits. 6.25. In consideration of foregoings we have no hesitation to hold that assessee has discharged his primary burden in explaining the entries in terms of sec. 68 or any other presumption which may be raised in behalf of the entries in the print outs. Department in effective and convincing terms has failed to rebut the same except giving some general observations that the claims can not be considered. In our view we have to estimate the undisclosed income of the assessee for AYs2002-03 & 03-04 keeping in mind our observations and conclusions in this behalf. 6.26. In the wake of these observation we proceed to decide the quantum of undisclosed income of the assessee as under: (i) The reassessment for AY 2001-02 is quashed. (ii) For AY 2002-03 the credit for opening balance is not given as we have quashed the reassessment for AY 2001-02, ther....
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....n our view when a property is sold by a registered document, the addition cannot be made purely on the basis of a valuation report which is only in the nature of an opinion. CIT(A) while deleting the addition, has rightly relied on the Hon'ble Delhi High Court judgment in the case of CIT. In view thereof we do not find any infirmity in the order of CIT(A), which is upheld. 9.1. Since we have disposed of the assessee's appeals in above manner, there is no need to deal with the assessee's ground about additional evidence. 10. In the result, revenue's appeal is dismissed. 11. In the result, assessee's appeal for A.Y. 2001-02 is allowed; for A.Y. 2002-03 & 2003-04 are partly allowed. Revenue's appeal for AY 2002-03 is dismissed." 13. The ITAT 'B' Bench Delhi in the case of the same assessee for AY 2004-05, vide order dated 31.01.2014 following its earlier order dated 21.06.2013 (supra) allowed the appeal of the assessee partly. The findings of the Tribunal in para 6 to 8 of the order are reproduced as under: "6. We have duly considered the rival contention and gone through the record carefully. Both the Id. Representative have agreed that issue regarding reopening of the....
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...., thus his ostensible role will be to hold such funds in trust for others, receive or pay them on the instructions of principals and to earn some managerial remuneration thereon. On the other hand in the guise of a fiction of presumption u/s 292C all the funds are being treated as owned by the assessee and on top of that proper adjustments of peak credit emerging from the pen-drive is being refused to be worked by the department. That apart the other logical claims of set off role over, correction of mistakes and credit of opening balances which are emerging from the same contents i.e. print outs of pen-drive is not being allowed to assessee. The assessment of undisclosed income is thus arbitrary and patently against the settled judicial propositions and departments own way of working in other survey, search or reassessment cases in which such principles are routinely applied. " 7. As far as determination of total unexplained cash credits are concerned, the Tribunal has held that peak credit is to be worked out and income assessed in any earlier assessment year which is opening balance of the current AY is to be excluded. In the present AY the income of AY 2003-04 determined at ....
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....y the assessee deserves to be accepted. 6.16. After careful consideration of facts, circumstances and material available on record, case laws and rival contentions it will be desirable to dwell on the aspects of peak credit; telescoping, set off of entries, availability of opening balance and its effect in such print out; this is necessary for arriving at a fair estimate of the deemed income of the assessee for AY 2002-03 and 2003-04. 6.17. Such concepts are well known in the law with a rider of caution that they are question of facts and depend on case to case. Hon 'ble Supreme court and various other High Courts have laid down the propositions that such adjustments can be applied while making the assessments in the cases of working out of seized and incriminating documents in case of repetitive transactions. 6.18. We shall start with the theory) of the department that assessee is acting as a manager or administrator of funds for 148 other persons. Though some names are gjyen however no inference are drawn by authorities below. Therefore, we leave this issue here. More so they become third parties to the proceedings and any observations are undesirable and may impinge on ....
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....per these case laws and facts and circumstances of this case assessee will be entitled to work out a peak credit and avail the benefits of telescoping. We may hasten to add that it is not a proposition of law but the exercise is to be undertaken on the inferences based on normal preponderance of probabilities and based on normal human conduct. The department is entitled to displace such propositions advanced by the assessee on cogent reasons and not by summary) rejection of the explanation. In the next para we will be dealing with various case laws right upto Hon'ble Supreme Court where this factual preposition has been upheld subject to certain conditions. 6.24. The important question which arises is whether the assessee has discharged it's in explaining the entries contained in the pendrive and its print outs in terms of sec 68 or any other presumption statutory or otherwise which may be raised in the context of the facts of this case. In our considered view assessee has discharged it's onus in explaining these entries by filing the details before AO, CIT(A) and in remand proceedings. Assessee has pushed the ball in the court of department by demonstrating from the details of ....
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....Consequently, the taxable income for A.Y. 2003-04 is worked out as under: i) Peak credit for AY 2003-04 Rs. 46,16,387/- ii) Less: Peak credit for AY 02-03 Rs. 36,89,310/- Taxable income for AY 03-04 Rs. 9,27,077/- 7. Thus, the undisclosed income to be included in the assessee's income is determined at Rs. 36,89,310/- for A.Y. 2002- 03 and Rs. 9,27,077/- for A.Y. 2003-04. These grounds are accordingly partly allowed. 8. Apropos the remaining ground for AY 2002-03 in respect of addition of Rs. 9,21.200/- being alleged unaccounted payment of US $ 20,000 transferred to Park Young Tae, it is pleaded that his statement before Enforcement Directorate was taken behind his back. Assessee was neither a party to ED proceedings nor the statement was taken in his presence. Only on the basis of a third party statement before some other agency Assessing officer has made the addition without giving opportunity to cross examine Mr. Young. This clearly violates the principles of natural justice embodied in the maxim "audi alteram partem. We find merit in the argument of ld. Counsel. The impugned addition cannot be made in the hands of the assessee unless proper opportunity to defend hims....
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....fore, there was no justification for the AO to substitute the peak for assessment year under appeal from Rs. 1,82,59,248/- to Rs. 5,10,51,972/-. The assesse's counsel has also rightly contended that the Tribunal has given benefit of opening balance of the earlier years and that assessee had paid tax on the peak credit for AY 2003-04 of Rs. 46,16,387/-. Therefore, such amount shall have to be reduced from the peak calculated by the assessee and benefit of the same shall have to be granted to the assessee. Therefore, as per the decisions of the Tribunal in the case of the assessee reproduced above, the net addition shall have to be made against the assessee in a sum of Rs. 1,36,42,861. The issue of the peak is, therefore, fully covered by the earlier years orders of the Tribunal. In those orders also the Tribunal has dismissed the ground of appeal of the assessee as regards reopening of the assessment u/s 148 of the Act. Therefore, these grounds of appeal of the assessee are dismissed. 15. Considering the above discussion and following the reasons for decisions of ITAT in the case of the same assessee for assessment years 2001-02 to 2004-05, we set aside the orders of the authorit....
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....e print-out of the pendrive was brought on record which was unsigned. No name of the assessee-company is mentioned. Therefore, it was having no evidentiary value to make any addition against the assessee-company. The issue is, therefore, covered by the Order of the ITAT, Delhi Bench in the case of Shri Chetan Gupta (supra) and others. We, therefore, hold that no addition could be made against the assessee-company. We, accordingly, set aside the orders of the authorities below and delete the addition of Rs. 2,21,00,788/-. 7.2. The A.O. recorded reasons for reopening of the assessment on the basis of pen-drive found from the possession of Shri Chetan Gupta. Shri Chetan Gupta do not make any allegation against the assessee-company. The Tribunal has held that the pen-drive belongs to Shri Chetan Gupta. In the reasons for reopening of the assessment, no name of the assessee-company have been mentioned because it is mentioned as "RLTRV PVT EXP". The reasons for reopening of the assessment did not refer to any material to connect the assessee-company with escapement of income or incurring any unaccounted expenses. The A.O. did not verify the details contained in the pen-drive. The A.O. h....