TaxTMI 
TaxTMI 
2021 (11) TMI 521
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....ls en masse. 3.These four appeals filed by the assessee, contain common grounds of appeals. At the time of hearings, we have carefully perused all the grounds raised by the Assessee. To meet the end of justice, we confine ourselves to the core of the controversy and main grievances of the assessee, therefore with this background and for the sake of convenience, we concise the grounds raised by the assessee, in these four appeals, as follows: "(1) The Ld CIT(A) has erred in law and on facts in confirming the action of the AO wherein the AO has treated the sale of shares of Wipro Ltd., as business income instead of treating the capital gain, in absence of any incriminating material. (i) Assessment Year 2009-10, Rs. 3,94,66,218/-(unabated assessment) (ii)Assessment year 2011-12, Rs. 1,35,11,370/- (abated assessment) (2) The Ld. CIT(A) has erred in law and on facts in confirming addition under section 41(1) of the Act. (i) For A.Y. 2011-12: Addition of Rs. 41,25,000/- u/s 41(1) made by AO in absence of any incriminating material. Learned Counsel prays that Assessment Year 2011-12 is unabated assessment, therefore addition should not be made without incriminating material.(ab....
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....n case of abated assessment, the assessing officer has right to examine the incriminating material, as well as regular items of scrutiny assessment. Section 153A of the Act provides the procedure for completion of assessment where a search is initiated under section 132 or books of account, or other documents or any assets are requisitioned under section 132A after 31st May, 2003. In such cases, the Assessing Officer shall issue notice to such person requiring him to furnish, within such period as may be specified in the notice, return of income in respect of six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted under section 132 or requisition was made under section 132A of the Act. The Assessing Officer shall assess or reassess the total income of each of these six assessment years. Assessment or reassessment, if any, relating to any assessment year falling within the period of six assessment years pending on the date of initiation of the search under section 132 or requisition under section 132A, as the case may be, shall abate. We note that section 153A starts with a non-obstante clause relating to normal ....
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.... in share trading; Opening value of Shares held Rs. 3,85,03,334 Closing value of Shares held Rs. 4,69,16,053 Closing stock shown for earlier years is Rs. 3,83,89,634 Difference of opening stock Rs. 1,13,700 Purchase of shares Rs. 52,40,72,212 Sales of Shares Rs. 53,14,26,745 Loss on securities chargeable to STT (-) 1,56,13,207 Any other income Rs. 55,385 Gross Loss (-)6,30,660 P & L Account Gross Loss (-)6,30,660 Interest Expenses Claimed Rs. 63,43,408 Dividend Receipt from Shares : claimed exempt u/s 10(34) Rs. 24,73,689 Net Loss Shown by you Rs(-) 69,74,068 In addition to this, perusal of the balance sheet shows assessee showing a separate head in the balance sheet i.e. Investment & shown following entries under it; Investments ICICI Bonds 935 Investment in shares 6,03,002 UTI US-64 10,21,950 Investment in Kotak Mutual Fund 28,251 Investment Sold during the year (A.Y 2008-09) Investment in Kotak Mutual Fund(Lifestyle) 20,00,000 Investment changed from Investment to the Opening Business Stock during the ....
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....he share from one DMat a/c to others including the shares of Wipro Ltd with other shares, so unable to keep a trail &evidence of the purchase of the shares. v) The assessee has no records of maintaining distinction in shares which are as capitalinvestment &shares kept as business stock. No separate DMat a/c is maintained for distinction in shares which are as capital investment &shares kept as business stock. vi) Most of the shares in the DMat accounts of any & every period represented in the DMata/c are pledged to the bank to obtain loan for doing business in trading of shares, derivatives through professional managers. vii) The Wipro shares are also pledged with other share to take business loan for doing business in trading of shares, derivatives by professional managers. viii)The loans on these pledged share of business share stocks, including Wipro Ltd are bearing interest cost. All the cost of interest are booked as business expenses. ix) There is no differentiation in the Capital Stock &Business stock. x) Assessee has failed to submit any confirmation of accounts & details from any of the sundry creditors &debtors shown by him above. xi) Assessee has failed to ....
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.... To find out, what differentiation is maintained by the assessee between Business stock & Capital stock, Assessee was asked via Q 9 (a), (b) & (d) by questionnaire dated 13-02-2015 to file following details w.r.t this share trading activity: Q 9 (a) D Mat a/c wise statement of (i)Opening balance of share with rate assigned for stock opening value, (ii)Closing balance of shares with rate assigned for stock closing value, (iii)Details of purchase & sale done with rate, profit/loss w.r.t each D Mat a/c wise statement. Q 9 (b)Give separate consolidated portion of shares with showing D MAT wise position & give:- (i)Opening balance of share with rate assigned for stock opening value, (ii)Closing balance of shares with rate assigned for stock closing value, (iii)Details of purchase & sale done with rate, profit/loss with Consolidated statement. Q 9 (d) File details of Company from which you have earned Dividend income & give demat a/c wise holding details of such shares. Perusal of the details filed, with Mehul Shah brings forth following facts; a) The earlier records filed for showing the evidence of carry forward losses shows that assessee is in share trading busin....
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....Mat shows the details of Opening stock of share shown to be held as on 31-03- 2008. iii) None of the D Mat a/c presented shows the details of any of the purchases or sales of share through the Dmat a/c presented, which is stated to be sold during the year i.e A.Y 2008-2009, but these shares balances are not reflected in the DMat a/c submitted. iv)The opening stock, Purchases of shares shown in the profit working of share &closing stock shows multiplicity of shares purchased in F.Y 2004, 2005, 2006. v) The shares of WIPRO Ltd which is stated to have received as Gift is also not reflected in the DMat statement submitted, in spite of the fact that demat account pertains to period from 1997 & 2000. vi) The shares of WIPRO Ltd is seen to have pledged in the Dmat a/c for Loan but on cancellation of pledged Wipro Ltd, the share do not comes in the DMat statement. vii) There is existence of Joint a/c account in existence, which shows there is no demarcation of assets among individual & differentiation of stocks between individuals. viii) As per the Client Id 10061659 in Axis Bank held jointly in the name of Damini Amit Shah &Amit Vasant Shah, 2,500 share of WIPRO looks to be pl....
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....oncluded assessment years, the statute does not confer any power on the Assessing Officer to disturb the findings given thereon and income determined thereon, as finality had already been reached thereon, and such proceedings were not pending on the date of search to get itself abated. The provisions of section 153A of the Act are reproduced hereunder for the sake of convenience :- "[Assessment in case of search or requisition 153A. [(1)] Notwithstanding anything contained in section 139, section 147, section 148, section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May, 2003, the Assessing Officer shall- (a) issue notice to such person requiring him to furnish within such period, as may be specified in the notice, the return of income in respect of each assessment year falling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, ap....
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.... of abated assessments, the total income needs to be determined afresh in accordance with the provisions of section 153A and other provisions of the Act. 6.4.1 The concluded assessments for the purpose of section 153A of the Act shall be - (i) assessment years where assessments are already completed u/s 143(1) and time limit for issuance of notice u/s 143(2) of the Act has expired or; (ii) assessment years where assessments are already completed u/s 143(3) of the Act ; unless they are reopened u/s 147 of the Act for some other purpose in both the scenarios stated above. 6.4.2 The scheme of assessment proceedings contemplated u/s 153A of the Act are totally different and distinct from the proceedings contemplated u/s 147 of the Act and these procedures of assessment operate in different fields and have different purposes to be fulfilled altogether. 6.4.3 The expression 'assess or reassess' stated in section 153A(1)(b) has to be understood as below:- 'assess' means assessments to be framed in respect of abated assessment years irrespective of the fact whether there are any incriminating materials found during the course of search with respect to relevant....
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....inal assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the LD AO. (vii) Completed assessments can be interfered with by the LD AO while making the assessment under section 153A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment." 17. It is abundantly clear from the bare provisions of the Act and legal precedents cited above that assessing officer can make addition in case of unabated assessments provided there is an incriminating material unearthed by search team. We observe that assessing officer did not refer any incriminating material for the Assessment Years 2008-09 and 2009-10, and we note that these assessment years fall under concluded proceeding, that is, unabated assessments, as on the date of search on 27.12.2012, therefore the said assessments already stood complete....
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....d. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already noted in our earlier para and is not being repeated for the sake of brevity. 21. We have considered the rival submissions and perused the relevant finding given in the impugned orders. We note that assessee submitted before us copy of the affidavit by Smt. Bindiben V. Shah, sister-in-law of the assessee substantiating the facts that shares of Wipro Limited were received by the assessee by way of gift in the year 1999 ( Vide Paper book page 21 to 23). Assessee submitted before us copy of the Demat Account of Smt. Bindiben V.Shah substantiating the facts that shares of Wipro Limited were transferred by her by way of gift in the year 1999 to the assessee( Vide Paper book page 24). Assessee submitted before us copy of the Demat Account of assessee(Vide Paper book page 25). Assessee submitted before us copy of the Demat Account of assessee substantiating the fact of transfer of shares of 1,49,000 of Wipro Limited, out of the gifted shares to Edelweiss Finance Ltd. (Vide Paper book page 31 to 34). Assessee submitted before us copy of transaction of the assessee with Edelweiss ....
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....ed to do so. It is a well settled Law that when an assessee has all the possible evidences and documents in support of its claim, they cannot be brushed aside based on surmises. Hence, we are not inclined to accept the contention of the Assessing Officer in any manner and hence the additions so made are hereby deleted. Therefore, we reverse the action of the assessing officer in assessment year 2012-13 at Rs. 2,76,89,895/- (abated assessment) and in assessment year 2013-14 at Rs. 6,20,56,548/-(abated assessment), in treating the capital gain as business income." 6.Since, the issue raised by the assessee in concise ground no. 1 is squarely covered by the case of his wife Smt. Daminiben Amitbhai Shah [In IT(SS)A No. 192 to 195/AHD/2017], order dated 31.08.2021, there is no change in facts and law. We find no reason to interfere in the said order of the Division Bench, therefore, respectfully following the judgment of the Coordinate Bench in assessee's wife case, we delete the addition made by assessing officer. We allow concise ground no. 1 raised by the assessee. 7.The summarized and concise Ground No.2 raised by the assessee, is reproduced below for ready reference: (2) The Ld.....
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....ance sheet and since when. Not filing the evidence has led to taxation of this bogus entry in guise of Unexplained Creditor, under section 41(1) of I.T. Act, treating this as income in the hands of assessee by cessation of liability in A.Y 2007-08.This addition on account of cessation of liability in A.Y. 2007-08 has balanced the wrong full balancing assets entry made in the balance sheets of earlier years i.e. 2005-06 or earlier, against the bogus entry in guise of Unexplained Creditor." Present status: In current year, repayment of Rs. 41,50,000/- was seen. Assessee was asked the address, PAN & details of M S Fabric for verification of repayment. Assessee is unable to provide any details w.r.t M S Fabric. Bank book also states that on a/c payment is made against M S Fabric, but no name or details are provided w.r.t to the party to whom these payments are done in the guise of Repayment to MS Fabric. Bank show withdrawals by name M.S. Fabric & bank account states on account payment. No details was been filed by assessee, 'for the reasons of payment made as "On a/c payments."The party to whom the payments are made are not reflected in the balance sheet. These payments made t....
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....ent on oath/solemn affirmation recorded of Shri Amit Vasantlal Shah, son of Shri Vasantbhai Shah, (PAN-APXPS3632JJ, recorded on 21.12.2016 at 11:30 AM at Room NO.216-A, Aayakar Bhavan, Majura Gate, Ghod Dod Road, Surat, during the course of Appellate proceedings in the case of the assesses, himself Shri Amit V. Shah. Oath taken by Oath administered by (Sd/- Amit Shah) (Sd/- Rajeev Agarwal) Q.No.3: You had claimed that there were amounts outstanding payable to LR. Finance and M.S. Fabrics since long. You did not give any details of the nature of the transactions claimed with them and their identi....
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....ding since 1998- 2000 in case of M.S. Fabrics? Ans.: The person who came to take the payments told me. Q.No. 11: Did not you ask him for what this payment were due? Ans.: I did not ask him. Q.No. 12 : You said that your cousin only dealt with accounts and you did the business. How you do not know why such huge amounts were outstanding and to whom? Ans.: I do not know. Q.No.13: According to you, you were just honouring the accounts maintained by your cousin. You are also saying that you are not medically well and are sick for last few years particularly the last 2 years. You said that you do not know how much amount is still outstanding. Please explain why did not you introduce the person claimed, to your family members? Ans.: I do not find it necessary. Q.No. 14: Why did not you make payments by account payee cheques to this party, when you are making payment to other parties by account payee cheques? Ans.: I do not remember. Q.No.15: I am showing you a copy of one of your cheques to M.S.Fabrics. Whose handwriting is there on the cheque and why is it not account payee? Ans.: The handwriting is of some staff and I do not know why it is not account payee. Q.No.16 ....
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....it believable that he will not even ask the name of the person concerned to whom such huge payments to be made. c) The person who is claimed to have known about the transaction is claimed to have died in 2005. The assessee was having Wipro Shares worth crores of rupees. Is it believable that claimed creditor did not introduce himself and took payment after decades without interest and only after 5 years after death of Shri Rasik Maganlal Shah. d) The assessee did not try to take the identity or phone number or address of the party (reply to Q. No. 4). He did not have even inkling or idea as to why the payment was pending (reply to Q. No. 9) and also did not ask the person why the payment was due (reply to Q. No. 11). All this does not fit the probabilities of human behavior. e) When asked to describe the person who is claimed to have taken payments, he gave only very sketchy details and said that he is not remembering the details as he is diabetic and is having treatment of heart disease. Clearly, he was avoiding and evading enquiry (reply to Q. No. 6). f) On one hand, it is claimed that the payments were made to a personally unknown person on the word of the person maintai....
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....ts are made to ensure that it is withdrawn himself shows that before the date of payments either the amounts due were not payable or the payments were already made. In the first scenario, if the amount was because of trading/business transaction and the expense was claimed; the credit on the date when the payment was shown had already ceased (definitely before the bogus/benami payment was claimed made) and therefore, the addition of the amounts made by the AO would be justified u/s. 41(1) of the Act. In case of amounts not being actually due, because of payment earlier (proved/found to be in the previous year in which bogus payments have been made) and in that case too, the addition of the amounts made by the AO are fully justified representing payments from undisclosed/unexplained sources made by the assessee. Therefore, the additions made by the AO are fully justified on the merits and facts of the case. The assessee has also pleaded that the additions could not be made in absence of incriminating evidences found during search. Firstly, as discussed in para 7.2 the return for A.Y. 2012-13 have not become final on the date of search and therefore there was no such limitation for....
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....this assessment year to examine the issue of incriminating material. In case of abated assessment, the AO can perform the scrutiny assessment and ask the assessee to furnish the documents and evidences to examine the items mentioned in the return of income. We have gone through the order of ld CIT(A) and assessing officer and noticed that assessee has not submitted the essential documents and evidences before the lower authorities, that is, bank statements, confirmation of creditors, PAN number of creditors, Address of creditors, and the proof whether payment has been made by account payee cheques or non-account payee cheques etc. Therefore, assessee has not discharged its onus to prove identity, creditworthiness, and genuineness of creditors. During the appellate proceedings, summons u/s131 were issued to the assessee and assessee`s statement was recorded on oath on 21.12.2016 by the ld CIT(A), vide para no.14.2 of order of ld CIT(A). The question No.3 and its answer by assessee is reproduced below: Q.No.3: You had claimed that there were amounts outstanding payable to LR. Finance and M.S.Fabrics since long. You did not give any details of the nature of the transactions claimed ....
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....oes not have evidentiary value, it may be simply cash withdrawn for personal use. The assessee did not file bank statement before the assessing officer. During the appellate proceedings also the assessee has not submitted bank statement before ld CIT(A). However, ld CIT(A) has made efforts to inquiry whether payment was made by account payee cheque or by non-account payee cheques. Vide para 14.3 (g), which is reproduced below: "14.3(g) Further, when the cheques which were issued claiming to make payments to M S Fabrics were enquired into further, and the details called from the issuing bank and the bank in which these were finally credited; it was found that these cheques were not account payee, these could have been endorsed to anybody else." This clearly shows that payment has been made by non-account payee cheques. This also shows that payment does not reach to M.S. Fabrics, as claimed by the ld Counsel. During the course of hearings, the Bench asked ld Counsel to submit the bank statement to verify the fact that whether payment has been made by account payee cheques or by non-account payee cheques to M.S. Fabrics. However, ld Counsel failed to submit the bank statement befor....
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.... supported with evidences. The expression 'burden of proof' really means two different things. It means sometimes that a party is required to prove an allegation before judgment can be given in his favour. It also means that on a contested issue, one of the two contending parties has to introduce evidence. In the first sense, if the burden is not discharged, the party must eventually fail. In the second case, where the parties have jointed issue and have led evidence and the conflicting evidence can be weighed to determine which way to issue can be decided, the question of burden of proof becomes an abstract question and is therefore academic. The section 101 to 114 of Indian Evidence Act, 1872 deals with burden of proof. The section 102 of the Evidence Act provides that the burden of proof lies on that party who would fail if no evidence at all were given on either side. For example, where the assessee claims exemption, the burden is on the assessee to prove it to be exempt. Same is the position in case of allowances, deductions, or claims of loss, etc. Similarly, where there is a statutory rebuttable presumption against the assessee, as in case of cash credits under section 68 o....
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....y him. Thus, Concise ground No.2 is allowed for statistical purposes. 19. The summarized and concise Ground No.3 raised by the assessee is reproduced below for ready reference: "(3) CIT(A) has not decided Ground No.5 raised by the assessee during appellate proceedings: Income disclosed during the course of search to the tune of Rs. 5,35,75,000/- should be treated as business income and not income from other sources. AO treated it as "income from other sources" whereas assessee claims that it is business income." 20. We have heard both the parties. We note that ld CIT(A), during the appellate proceedings, adjudicated the issue under consideration, as follows: "15. The ground no. 5 of appeal in A.Y. 2011-12 is against the AO treating the income of Rs. 5,35,75,000/- declared as income from business, to be actually taxable as income from other sources. I have found that this ground of appeal is only academic as it has got no bearing on the determination of total income and tax. The ground of appeal is therefore, not being decided." From the above, it is clear that ld CIT(A) has not adjudicated the issue raised by the assessee. 21. The crux of the controversy is that whether inc....
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....h is over and above his regular income & filed an affidavit dated 08.04.2013, in which he has confirmed the disclosure of Rs. 5,35,75,000/- made by him. Perusal of return of Income filed shows, that you have treated these unexplained investment which has been declared only after search & seizure proceedings u/s 132 of IT Act, as part of addition in business income u/s 28 to 44DA && claimed following deduction & adjustment against business losses for A.Y 2008-09 &A.Y 2009-10.Assessee was asked by Q.4 of annexure to summons u/s 131 dated 23/06/2014 question w.r.t this transaction related to seized papers found & seized during search & seizure action u/s 132 on 27/12/2012 at Pages 75 to 85, of Annexure BS-3. Since no reply was filed by the assesses, a show cause notice giving last & final opportunity was served on assessee by letter dated 15-09-2014. In spite of this, till today, assessee has not filed any details or assessee's say on this matter. By the evidence found & seized during proceedings u/s 132 of Income Tax. it is proved beyond doubt that, assessee have paid cash of Rs. 5,35,75,000/- which was neither part of his original books of account w.r.t to which original return ....
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....that a person would not acquire such big plot of land at the out skirt of the city i.e. at Bharthana for his personal purposes more so when the concerned person is carrying on the business of dealing real estates. (k) The English version of condition No. 3 in the agreement to purchase reads as under: "......... the party of the second part shall be given permission to commence the booking on the portion of land belonging to his part." The above condition also establishes that the concerned land was acquired by the assessee for the purpose of his real estate business. (I) From the questions and answers no. 9 and 10 of the statement of the assessee recorded u/s 131 of the Act on 02-04-2013 (copy whereof is available at pages no. 40 to 48 of the paper book). Your Honours' would find that the assessee admitted the undisclosed income of Rs. 5,35,75,000/- on account of on money paid by the assessee for acquisition of above land for real estate business for which the agreement to purchase dated 17-09-2010 was executed. Thus, it clearly emerges that for the purpose of acquisition of business assets the "on monies" were paid by the assessee for which the admission of undisclos....
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.... undisclosed income of Rs. 5,35,75,000/- which is reproduced below: "ADDITIONAL GROUNDS OF APPEALS BEFORE THE HON'BLE ITAT (1) The ld. A.O. has erred in law and on facts in treating the income disclosed during search of Rs. 5,35,75,000/- as income from other sources as against the business income treated by the assessee in absence of any incriminating material found during the course of search. (2) The ld. A.O. has erred in law and on facts in treating the income disclosed during search of Rs. 5,35,75,000/- as income from other sources as against business income treated by the assessee." 30.We note that in additional ground No.1, ld Counsel stated that without incriminating material the undisclosed income of Rs. 5,35,75,000/- cannot be treated under the head income from other sources. We note that on undisclosed income of Rs. 5,35,75,000/-, the assessee has paid the taxes. Now the crux of the controversy is that whether income disclosed during search of Rs. 5,35,75,000/-, falls under the head Income from other sources or under the head income from business, and the same should be decided by the assessing officer based on the purchase agreement of land, statement of asses....
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....xpense B= Average Investments C=Average Total Assets 72,80,513 1,72,49,731 13,60,45,828 9,23,122 3 Amount computed as per Rule 8D(2)(iii) (0.5% of average value of investment) 1,72,49,731 86,249 Total disallowance as per Rule 8D (1+2+3) Rs. 10,09,371 35. The assessing officer has gone through the above working of disallowance as per Rule 8D of the Rules read with section 14A of the Act and accepted the same and accordingly, made addition of Rs. 10,09,371/- u/s 14A of the I.T. Act. 36.On appeal, ld CIT(A) has confirmed the action of the assessing officer. 37. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 38.The Learned Counsel for the assessee has submitted before us that during the year under consideration, assessee has earned dividend income of Rs. 9,91,817/- which is claimed as exempt u/s 10(34) of the Act, but no expenditure has been incurred in relation to such investment in shares of Indian company, therefore entire addition made by the assessing officer may be deleted. 39.On the other hand, the Ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer, which we have already take....