TaxTMI 
TaxTMI 
2023 (12) TMI 327
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....rused and with the assistance of the ld. Counsel, we have considered the documentary evidences brought on record in the form of Paper Book in light of Rule 18(6) of ITAT Rules and have also perused the judicial decisions relied upon by both the sides 5. Briefly stated, the facts of the case are that a search and seizure operation u/s 132 of the Income-tax Act, 1961 [hereinafter referred to as 'the Act' for short] was conducted by the INV Wing of the department on 30.07.2009 in the case of Standard Watch Group. Search also included residential premises of the members of the group. During the course of search proceedings, various documents were impounded which included financial statements of the assessee group which were not fully incorporated in the regular books of account of the assessee group. Trading profit and loss account and balance sheet from 1.4.2001 to 30.9.2008 were found and the same are exhibited at pages 201 to 217 of the paper book. These financial statements are consolidated financial statements which contain details of the members of the group including their bank accounts. 6. In the above background, the assessee has raised five substantive grounds o....
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....areful perusal of the material available on record and on respectful consideration of the case laws cited at bar before us. we observe that the documents and consolidated balance sheet, as available in the assessee's paper book-1 from pages 196 to 22 1 it is vivid that these consolidated balance sheets reflect the assets in the shape of bank balance, investment in properties in the names of various group members and companies relating to the present assessees i.e. Shri S.K. Gupta and Shri Y.K. Gupta. We further observe that the debtors, stock, loans, advances and creditors of various group companies belonging to the present assessees and bank borrowings show that the loans have been taken in the names and Smt. Madhu Gupta wife of Shri S.K. Gupta and Smt. Meena Gupta, wife of Shri V.K. Gupta. Therefore, the income arising or, account of these assets cannot be exclusively attributed or held as belonging to late Shri Suraj Bhan Gupta only. The charging section 4 of the Income Tax Act provides that the tax is to be charged on the income of a person to the extent it belongs to him. In the present case, the income belongs to various individuals and group companies from the assets, invest....
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....und No. 1 in Revenue's appeal wherein the deletion of addition of Rs. 3,28,70,000/- has been challenged by the Revenue. 12. While scrutinizing the seized documents, the Assessing Officer formed a belief that the assessee has given loans and advances outside the books of account. Relevant seized papers on the basis of which addition is made are in the form of ledger seized as per Annexure A-28, A-10, A-30 & A-13, which are for the period 01.10.2007 to 30.09.2008. 13. Basis the notings in this seized ledger, the Assessing Officer made addition of Rs. 4,13,70,000/- for loans and advances given to the following persons outside the books of accounts: Sl. No. Name Amount (i) Anil Bhatti [Amit ji] Rs. 65,00,000 (ii) Anil Bhatti Rs. 50,00,000 (iii) Anil Bhatti Rs. 87,00,000 (iv) Binay Thottam Rs. 32,00,000 (v) Panwar [Satish] Rs. 2,70,000 (vi) Rajesh Aeran Rs. 62,00,000 (vii) Sanjay Gupta Rs. 65,00,000 (viii) Mahesh Panwar Rs. 35,00,000 (ix) Definite Technology [Amit ji] Rs. 15,00,000 Total Rs. 4,13,70,000 14. When the assessee was asked to explain the aforementioned transacti....
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....ated before the lower authorities. It is the say of the ld. counsel for the assessee that since presumption u/s 132(4A) /292C of the Act is that whatever is seized or found in the possession of a person searched, it is presumed that the same belongs to that person and the entries found to be recorded in the seized documents are presumed to be belonging to the searched person. 22. It is also the say of the ld. counsel for the assessee that since the entries mentioned in the seized documents show the amount as loans, therefore, the same cannot be treated as undisclosed income of the assessee as loan is a capital receipt. 23. Strong reliance was placed on the decision of the co-ordinate bench in the case of Vatika Greenfield Pvt Ltd 315 ITR 113 and also of the Pune Bench in 71 ITD 245. The ld. counsel for the assessee continued by saying that provisions of section 68 cannot be applied in the case of search assessment framed u/s 153A of the Act. 24. Continuing his arguments in reference to Revenue's appeal, the ld. counsel for the assessee stated that in the earlier years, the Tribunal has accepted and given benefit of rotation of loans and advances and have also given credit ....
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.... 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. 30. Ground No. 5 of assessee's appeal relates to addition of Rs. 57,90,944/- on account of undisclosed interest and the underlying facts being identical to deletion of addition of Rs. 1,09,70,081/- on account of undisclosed interest challenged vide Ground No. 2 of Revenue's appeal. 31. The underlying facts in the issue are that the Assessing Officer, after analyzing the documents seized from the assessee's premises, examined the aspect of undisclosed interest income from two counts: (i) Based on record in the Kaccha ledger for F.Y. 2007-08 (ii) Estimated interest for F.Y. 2007-08. 32. The Assessing Officer made addition of Rs. 6,14,57,988/- be....
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.... statements were made the basis for making additions, then the entries relating to expenditure in the form of interest payment and also bad debt written off cannot be ignored. The Revenue cannot add the credit side and ignore the debit side of the same document. 20. The coordinate bench in the previous assessment year i.e. 2006-07 and 2007-08 in ITA Nos 6764/DEL/2013 [supra] have taken a view which reads as under: "In our considered opinion for arriving at the net interest income, as discernible from the entries recorded in the consolidated balance sheet, the amount of interest paid to State Bank of India and Allahabad Bank amounting to Rs. 78,72,708/- should also have been deducted therefrom. At the same time we further observe that when the Assessing Officer wants to tax the amount of interest income earned by the assessor from loans and advances then the amount of bad debt of Rs. 30,79,835/- as appearing in the debit side of the P&L act aunt should also have been allowed to the assessee as deduction because the amount of bad debts pertain to the activity of financial business of the assessee wherein loans and advances are given b\ the assessee on which the impu....
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....he basis of seized documents, the Assessing Officer found that the assessee has purchased jewellery to the tune of Rs. 1.07 crores. 38. The assessee was asked to explain the source of payment and its accountability. 39. It was explained that the notings on these documents do not relate to the purchase of jewellery in its entirety. The said jewellery was received from jewellers on approval basis during the marriage preparation of his son. It was explained that the jewellery purchased was only to the tune of Rs. 67 lakhs and the same is reflected in the Day Book seized. 40. The Assessing Officer dismissed the contention of the assessee solely on the ground that no bills from jewelers were purchased and went on to make addition of Rs. 1,07,11,921/-. 41. Before the ld. CIT(A), the ld. counsel for the assessee reiterated what has been stated during the assessment proceedings. 42. After considering the facts and submissions, the ld. CIT(A) was of the opinion that the document seized from the premises of the assessee has to be read and analyzed in entirety and presumption drawn u/s132(4A) and 292C of the Act should be given to the entries recorded in the seized documents. ....
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....ration. 50. The addition was challenged before the ld. CIT(A). It was strongly contended that the impugned property belonged to M/s Standard Enterprises in which Smt. Madhu Gupta and Smt. Veena Gupta are partners. 51. After considering the facts and submissions and on going through the sale deed, the ld. CIT(A) found that the same was executed on 06.07.2007 and hence the property was sold in A.Y 2008-09. The ld. CIT(A) further found from the sale deed that the said property was owned by Standard Enterprises which is a partnership firm. On these facts, the ld. CIT(A) deleted the addition. 52. Before us, the ld. DR could not point out any factual error in the findings of the ld. CIT(A) nor could bring any evidence on record to show that the property was actually owned by the assessee. 53. We have carefully considered the orders of the authorities below. The undisputed fact is that the impugned property was owned by Standard Enterprises which is a partnership firm having two partners, namely, Smt Madhu Gupta and Smt. Veena Gupta. It is also an undisputed fact that sale deed was executed on 06.07.2007 falling in F.Y. 2007-08 pertaining to A.Y 2008-09. On these undisputed fa....
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....5 is accordingly dismissed. 63. Ground No. 6 relates to the deletion of interest u/s 234A of the Act for the period upto which the assessee was not provided copy of seized material. 64. An identical issue was considered by the coordinate bench in assessee's own case for assessment year 2006-07 and 2007-08 in ITA No. 6764/DEL/2013 and others [supra]. The relevant observation of the bench is as under: "Apropos this ground, on careful consideration of the rival submissions, we have no hesitation to hold that in view of the decision of the Hon'ble Supreme Court in the case of Anum M.H. Ghaswala vs. CIT; 252 ITE 01 (SC) charging of interest u/s 234 of the Act is mandatory and consequential to the . appeal effect order. However, in the present case, the Commissioner of Income Tax (Appeals) has held that the interest u/s 234A not to charged for the period upto which the assessee was not provided copy of the seized material and in our humble understanding of law, this conclusion of the Commissioner of Income Tax (Appeals) is in accordance with the provisions of the Act and, therefore, we are unable to see any valid reason to interfere with the same and hence, we uphold t....
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....No. 3991/DEL/2014 [A.Y. 2010-11] Revenue's appeal 71. The grievances of the Revenue read as under: "1. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 5,96,25,897/- out of total addition of Rs. 6,14,57.988/-made by the Assessing Officer on account of unexplained interest income.. 2. That the Commissioner of Income Tax (Appeal) erred in law and on facts of the case in deleting the addition of Rs. 1,02,00,000/- made by the Assessing Officer on account of income from trading commission. 3. That the Commissioner of Income Tax (Appeal) erred in law and on facts of the case in directing the AO to re-compute interest under section 234A of the Income Tax Act, 1961 from the date of handing over the seized material to the assessee. 4(a) The order of the CIT (A) 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." 72. Issue raised vide Ground No. 1 are identical to the issue considered by us in ITA No. 3991/DEL/2014 [supra]. For our de....
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....Ground No. 6 in ITA No. 3201/DEL/2014 [supra]. For our detailed discussion given therein, Ground No. 3 is dismissed. 84. In the result, the appeal of the Revenue is dismissed. SHRI VINOD KUMAR GUPTA 85. Before considering the merits of the impugned appeals, it would be pertinent to understand the underlying facts on the basis of which the additions have been made. The checkered history of the captioned two assessees is that right from A.Y 2006-07, additions have been split into the ratio 60:40 between Shri S.K. Gupta and Shri Vinod Kumar Gupta. 86. In the earlier part of this order, we considered the appeals of Shri S.K. Gupta which pertains to 60% of the additions and appeals of the assessee Shri Vinod Kumar Gupta pertain to remaining 40% of the impugned additions. 87. ITA No. 4055/DEL/2014 [A.Y. 2009-10] Assessee's appeal 88. The grievances of the assessee read as under: "1. That the Asstt. Order passed u's. 153 A/143 (3) is un- sustainable in law as well as on merits. 2A. That the impugned Asstt. is un-sustainable in law and without jurisdiction as it has been framed in pursuance to notice u/s. 153 A did. 21.04.2010 issued by ACIT. CC-3, N....
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....s and advances 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 addition. Further, to make substantive addition tentamounts to enhancement and in the absence of notice u/s, 251 (2), this transformation is illegal 5A. 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. 3,07,28,994/- made on protective basis as alleged interest income. B. That the Ld. CIT (A) further erred in sustaining addition of Rs. 38,60,630/- on substantive basis out of protective addition of Rs. 3,07,28,994/- and further erred in estimating alleged total such interest income at Rs 96,51,570/- and also err....
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....The grievances of the Revenue read as under: "1. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 1,72,85,000/- made by Assessing Officer on account of undisclosed loan and advances. 2. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 2,68,68,364/- made by the Assessing Officer on account of unexplained interest income. 3. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in deleting the addition of Rs. 89,95,500/- made by the Assessing Officer on account of undisclosed amount received on sale of property. 4. That the Commissioner of Income Tax (Appeals) erred in law and on facts of the case in directing the AO to recomputed interest under section 234A of the Income Tax Act, 1961 from the date of handing over the seized material to the assessee. 5. (a) The order of the CIT (A) 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 appe....
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....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 addition. Further, to make substantive addition tentamounts to enhancement and in the absence of notice u/s. 251(2), this transformation is illegal. 6. That under the facts and circumstances, no interest u/s. 234 B should have been charged. Without prejudice, in any case, the calculations are erroneous and excessive." 101. Issues raised vide Ground No. 2(a) and 2(b) have been considered by us in ITA No. 3107/DEL/2014 [supra] vide ground No. 5 of that appeal. For our detailed discussion given therein, these grounds are allowed for statistical purposes. 102. In the result....