Income Tax Appellate Tribunal - Hyderabad
Acit, Hyderabad vs Sri Harmahender Singh Bagga, Hyderabad on 28 June, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "B" : HYDERABAD
(THROUGH VIDEO CONFERENCE)
BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER
AND
SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER
IT(SS)A No. Block Period Appellant Respondent
Assistant Commissioner Sri Harmahender
of Income Tax, Singh Bagga,
69/Hyd/05 Central Circle-1, HYDERABAD
HYDERABAD [PAN: ABXPB9316L]
AYs.96-97 to
2001-2002
and from
1.4.2001 to Inderjeet Kaur Bagga, Deputy
3.1.2002 L/R. of Late Commissioner of
74/Hyd/05 Harmahender Singh Income Tax,
Bagga Central Circle-1,
HYDERABAD HYDERABAD
For Revenue : Shri Narayan Murthy Naik, DR
For Assessee : Shri P.Murali Mohana Rao, AR
Date of Hearing : 12-05-2021
Date of Pronouncement : 28-06-2021
ORDER
PER S.S.GODARA, J.M. :
These Revenue's and Assessee's cross appeals for block period AYs.1996-97 to 2001-02 and 01-04-2001 to 03-01- 2002, arise against the CIT(A)-1, Hyderabad's order dated 11-01-2005 passed in ITA No.029/CC-1, Hyd/CIT(A)-1/03-04 involving proceedings u/s.158BC of the Income Tax Act, 1961 [in short, 'the Act'].
Heard both the parties. Case files perused.
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IT(SS)A Nos. 69 & 74/Hyd/2005
2. We notice at the outset that this is the second round of proceedings between department and the assessee in the instant cross appeals. Learned co-ordinate bench's earlier common order dt.03-08-2012 had disposed-of a batch of 35 cases arising out of the very search dt.03-01-2002 at the office and factory premises of M/s.Gemini Distilleries (HYD) Pvt. Ltd. as well as assessee herein Sri Harmahender Singh Bagga and group concerns and individuals of 'Bagga Group' ; culminating in initiation of Section 158BC proceedings against them.
3. This assessee then moved his Miscellaneous Applications 109 and 110/Hyd/2013 which stood accepted by yet another co-ordinate bench in its order dt.30-10-2015 reading as under:
"Shri Harmahender Singh Bagga filed these two Miscellaneous Applications against the order of the ITAT in IT(SS)A Nos. 69/Hyd/2005 and 74/Hyd/2005 for the block period 1996-97 to 2001-02 and from 01-04-2001 to 03-01-2002 decided by the common order in the group of appeals dt. 03-08-2012.
2. It is the grievance of assessee that it has been argued at the time of hearing the appeal the fact that transactions entered in regular Books of Account of assessee and which is reflected in the Books cannot be subject matter for addition in block period assessments. It was contended that ITAT has not considered the established law that the transactions entered in the regular Books of Account have to be enquired into only in the regular assessment but not in the block assessment, unless there is something incriminating material found and seized during the search which has a bearing on the disclosed transactions. Assessee filed Miscellaneous Applications contending that the judgment of Delhi High Court in the case of CIT Vs. Ravikumar Jain [250 ITR 141] has not been considered even though relied upon.
3. Ld. Counsel submitted a chart in IT(SS)A No. 69/Hyd/2005 ground Nos. 8 to 13 containing the issues on which additions are made and adjudicated by the ITAT. Further, in IT(SS)A No. 74/Hyd/2005, the ground Nos. 4 to 10 are the issues in which various amounts have been adjudicated by the ITAT. In IT(SS)A No. 74/Hyd/2005, being assessee's appeal, detailed objections with reference to each of the issue are submitted as under:
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IT(SS)A Nos. 69 & 74/Hyd/2005 "1. In respect of addition of Rs. 22,04,746/-, in assessee's appeal in IT(SS)A No. 74/H/05, the order mentions as under at para no 36 of Page 23 of the order:
"Out of the above funds withdrawn, the assessee purchased drafts in favour of Mis. Sree Balaji Enterprises, Bangalore wherein he himself is a partner and these drafts were credited in his capital account in the books of the firm "
It is observed in Page No. 24 Para No. 39 of the ITAT Order that "In this case the impugned amount was deposited in the books of account of M/s. Sree Balaji Enterprises and the said amount had came from M/s. Golden Agencies. It is an admitted fact that M/s. Golden Agencies was not filing the return of income other than disclosing income under VDIS for Ays 1993-94 and 1994-95. Being so, we are inclined to hold that the capacity of MIs. Golden Agencies for giving this amount to the assessee is not explained. Hence the addition is made in the hands of the assessee on this count is justified. This ground of the assessee is dismissed." The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
2. Similarly, in IT(SS)A No.74/H/05, in respect of addition of Rs. 21,11,000/the order mentions as under at para no 14 of Page 12 of the order:
" ... Brief facts of the issue are that in the capital account for the assessment year 199798, following credit entries are appearing which have been treated as unexplained deposits, thereby treating the sum of Rs. 37,13,100/- as undisclosed income of the b lock period: .... "
It is observed in Page No. 11 Para No. 13 of the ITAT Order that "The assessee also raised a ground in IT(SS)A No. 74/H/05 with regard to addition of Rs. 21,11,000 out of Rs. 37,13,400 made towards unexplained credit in assessment year 1997-98. The CIT(A) deleted the addition of Rs. 16,02,400 on the reason that the credit is explained and sustained Rs. 21,11,000 out of Rs. 37,13,400. Before the CIT(A) the assessee also not pressed the addition made in respect of credit in his bank account no. 13953 with Union Bank of India. Similarly, the assessee not pressed the deposit of Rs. 14,000 through SB A/c No 624 with Syndicate Bank. The assessee has not furnished the satisfactory explanation to the balance sustained amount. Being so, the CIT (A) sustained the same. Before us the assessee has not furnished any further details substantiating the credit. Accordingly, the addition is sustained."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
3. Similarly, in IT(SS)A No. 74/H/05, in respect of addition of Rs. 11,29,453/the order mentions as under at para no 40 of Page 25 of the order:
:- 4 -:
IT(SS)A Nos. 69 & 74/Hyd/2005 " ... Brief facts of the issue are that in the capital account of the assessee for A. Y. 199899, the following credit entries have been treated as unexplained thereby treating them as undisclosed income of the assessee for the block period: .... "
The CIT(A) sustained the addition of Rs. 11,29,453 observing that the assessee has not pressed for the addition of Rs 11,29,453 (50,153 + 40,000 + 10,39,300).
It is observed in Page No. 25 Para No. 42 of the ITAT Order that "Even before us the assessee has not been able to lead any material evidence to explain the source. Being so, we are inclined to confirm the order of the CIT (A) on this issue."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
4. Similarly, in IT(SS)A No. 74/H/05, in respect of addition of Rs. 1,59,792/
- the same amount is reflected in books of account as can be seen from para 43 at page 26 of order and cannot be added in block assessment.
It is observed in Page No. 26 Para No. 43 of the ITAT Order that "Even before us no material was produced in order to substantiate the credit. Accordingly, we confirm the addition."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
5. Similarly, in IT(SS)A No. 74/H/05, in respect of addition of Rs. 7,43,750/- the same amount is reflected in books of account as can be seen from para 44-46 at page 26 of order and cannot be added in block assessment.
It is observed in Page No. 27 Para No. 46 of the ITAT Order that "no material was placed before us to substantiate the credits relating to Rs. 3,00,000. Being so, we are inclined to confirm the order of CIT(A) on this issue. Regarding the addition of Rs. 4,43,750, as this issue was not pressed before the CIT(A), before us the assessee cannot have grievance. Accordingly, the ground relating to sustaining addition of Rs. 7,43,750 by the assessee is dismissed."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
6. Similarly, in IT(SS)A No. 74/H/05, in respect of addition of Rs. 14,00,000/the same amount is reflected in books of account as can be seen from para 48 and 49 at page 28 of order and cannot be added in block assessment.
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IT(SS)A Nos. 69 & 74/Hyd/2005 It is observed in Page No. 28 Para No. 48 of the ITAT Order that "the addition relating to Rs. 1 lakh in the name of 1\1,Is. Kuldeep Chit was not pressed before the CIT(A). Hence the assessee cannot raise this ground before us. This ground is dismissed."
It is observed in Page No. 28 Para No. 49 of the ITAT Order that "the addition relating to Rs. 13 lakhs in the name of 1\1,Is. Ajit Enterprises, as the profits of the proprietary concern 1\1,Is Ajit Enterprises was not being shown in the regular return of income Sri Satpal Singh Bagga, being so the explanation offered by the assessee is not acceptable. This ground is dismissed."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition.
7. Similarly, in IT(SS)A No. 74/H/05, in respect of addition of Rs. 20,00,000/the same amount is reflected in books of account as can be seen from para 51 at page 29 of order and cannot be added in block assessment.
It is observed in Page No. 29 Para No. 52 of the ITAT Order that "As seen from the above, the assessee has not pressed the above issue before the CIT(A). Being so, the assessee cannot have any grievance before us. Accordingly this ground is dismissed."
The Hon'ble ITAT ought to have appreciated that once it is established that the entries are reflected in the books of account, the same cannot be added under Block Period and deleted the addition".
4. Ld. DR however, submitted that these issues were considered by the ITAT in the consolidated order in the group and since they were adjudicated after due deliberations, there is no need to entertain the Miscellaneous Applications.
5. Ld. Counsel in reply submitted that on similar facts, Miscellaneous Applications in the group cases numbered 111, 112, 113, 60, 114/Hyd/2013 arising in the cases of Shri Balwinder Singh Bagga, Smt Inderjeet Kaur Bagga and Shri Satpal Singh Bagga were allowed vide order dt. 30-07-2015.
6. We have considered the contentions of the rival parties. Neither of us are party to the hearings in the original appeals and to the order passed on 03-08- 12 and we are not in a position to consider whether the contentions were raised at that point of time. However, considering the detailed submissions made in MA in IT(SS)A No. 74/Hyd/2005 above and the order of coordinate bench dt 30- 07-2015 in other group cases wherein on similar applications some of the grounds were recalled, We in the interest of justice, recall these two appeals to consider afresh those grounds as stated above. We make it clear that we are not adjudicating the merits of the contentions raised by assessee. It is only for the purpose of re-examination on the basis of the documents placed on record and the provisions of law and to give an opportunity to assessee, we are inclined to recall the orders for the limited purpose of considering the contentions. Registry is directed to post these two appeals in course of time.
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IT(SS)A Nos. 69 & 74/Hyd/2005
7. In the result, both the Miscellaneous Applications are considered allowed".
It is in this backdrop of facts that we are taking up the instant twin appeals for adjudicating the Revenue's 8th to 13th and assessee's 4th to 10th substantive grounds in IT(SS)A Nos. 69 & 74/Hyd/2005; respectively.
4. We first come to the Revenue's 8 to 13 substantive grounds seeking to revive the Assessing Officer's action adding deposits of Rs.16,02,400/- (in M/s.Ajantha Chemicals involving twin components of Rs.9,01,300/- and 7,01,050/- in AY.1997-98), un-explained cash credits addition in AY.1999- 2000 of Rs.10.50 Lakhs in case of Shri Avinash Amarlal, un- explained cash credits for AY.2000-01 of Rs.13,45,211/-, un- explained cash credits of Rs.12,89,895/- in cases of M/s.C.D. Rerolling Mills and Synny Enterprises of Rs.6.32 lakhs and Rs.6,57,895/-, unexplained cash credits in the name of M/s.Tirupathi Enterprises of Rs.35,92,205/-, un-explained cash credits in AY.1999-2000 of Rs.1,85,000/- (involving M/s.Gemini Constructions); respectively.
5. The assessee's 4 to 10 substantive grounds in his appeal ITA No.74/Hyd/2005 plead that both the learned lower authorities have erred in law and on facts in making un- explained cash credits addition in capital account in AY.1996- 97 involving twin capital contributions (in case of M/s.Balaji Enterprises to the tune of Rs.4 Lakhs and Rs.8,15,000/-), Syndicate Bank-624 of Rs.8,532/-, Pearl Polymers of Rs.4 Lakhs, Aarem Engineering Rs.82,160/- Haldyn Glass Industires of Rs.4,51,152/-, Plastic International A/c. Rs.47,902/-, totalling to Rs.22,04,746/- un-explained credits :- 7 -:
IT(SS)A Nos. 69 & 74/Hyd/2005 in capital account for AY.1997-98 of Rs.21.11 lakhs involving M/s.Union Bank of India of Rs.10.47 lakhs, Pal Financiers for Rs.5.5 Lakhs and 5 Lakhs and Syndicate Bank Rs.14,000/-. Un-explained credits in capital account for AY.1998-99 in cases of M/s.Syndicate Bank-624 of Rs.50,153 and Rs.40,000/-, Sree Balaji Enterprises Rs.10,39,300/-, un- explained credits addition in capital account for AY.1999-2000 in case of M/s.Old Pal Wines of Rs.79,896/- (twice) un- explained credits addition in AY.1996-97 of Rs.7,43,750/- in cases of M/s.Golden Agencies and Gurvinderpal Singh of Rs.3 Lakhs and Rs.4,43,750/-, un-explained cash credits in AY.1997-98 of Rs.14 lakhs in case of Kuldeep Chits and Ajit Enterprises involving Rs.1 lakh and Rs.13 lakhs and un- explained cash credits addition in 1999-2000 of Rs.20 lakhs involving M/s.Seshadri Chit Funds, Sonu Wines and Wine Junction having respective sums of Rs.5 Lakhs, 3 Lakhs and Rs.12 Lakhs; respectively.
5.1. Case records further indicate that a remand report dt.02-
05-2018 has been submitted from Assessing Officer's end before us inter alia accepting the assessee's case (except) Sindicate Bank-624, involving Rs.8,532/- in ITA No.74/Hyd/2005 and therefore, all these additions are based on the entries made in the regular books of account only. This gives rise to the very precise sole question before us as to whether the impugned additions in Sec.158BC proceedings based on the entries made in assessee's regular books of account could be made.
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IT(SS)A Nos. 69 & 74/Hyd/2005 5.2. We notice in this factual backdrop that the foregoing issue is no more resjudicata. It is not in dispute that the impugned search had also covered the case of assessee's family/member Shri Kuldip Singh Bagga. This tribunal's co-
ordinate bench's earlier order dt.14-10-2011 for the very block period and search had held that the credits in issue cannot be gone into in block assessment proceedings as the same would only form subject matter of regular assessment proceedings. The Revenue appears to have filed ITTA No.693/Hyd/2014. Hon'ble jurisdictional high court's judgment dt.20-11-2014 has declined its arguments thereby affirming the tribunal's above order.
5.3. The factual position is no different in the instant remaining issues as well since the Assessing Officer's remand report dt.02-05-2018 (supra) itself verified that assessee's credits which are recorded in already maintained books of account which could form subject matter of regular and not block assessments as per hon'ble jurisdictional high court's decision in the very group of cases. We also wish to quote case law:
i. B.Jayalakshmi Vs. ACIT (2018) [96 taxmann.com 486] (Mad);
ii. CIT Vs. DM Purnesh (2020) (426 ITR 169) (Karnataka);
holding that the Revenue cannot be treated as an aggrieved party when the Assessing Officer's remand report agrees with an assessee's contentions. We thus go by the foregoing reasoning and hold that the Revenue's substantive ground Nos.8 to 13 seeking to revive the corresponding addition(s) :- 9 -:
IT(SS)A Nos. 69 & 74/Hyd/2005 deserve to be declined and assessee's ground Nos.4 to 10 (supra) succeed (except the amount of Rs.8,532/- pertaining to Syndicate Bank-624) in above terms. Ordered accordingly. The Revenue's appeal No.69/Hyd/2005 fails where as the assessee's cross appeal No.74/Hyd/2005 is partly accepted.
Necessary computation shall follow as per law.
6. To sum-up, Revenue's appeal No.69/Hyd/2005 is dismissed and the assessee's appeal No.74/Hyd/2005 is partly allowed in foregoing terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open court on 28 th June, 2021 Sd/- Sd/-
(LAXMI PRASAD SAHU) (S.S.GODARA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Hyderabad,
Dated: 28-06-2021
TNMM
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IT(SS)A Nos. 69 & 74/Hyd/2005
Copy to :
1.Inderjeet Kaur Bagga, L/R. of Late Harmahender Singh Bagga, C/o.P.Murali & Co., Chartered Accountants, 6-3-655/2/3, 1st Floor, Somajiguda, Hyderabad.
2.Deputy Commissioner of Income Tax, Central Circle-1, Hyderabad.
3.Asst.Commissioner of Income Tax, Central Circle-1, Hyderabad.
4.CIT(Appeals)-1, Hyderabad.
5.CIT(Central)-Hyderabad.
6.D.R. ITAT, Hyderabad.
7.Guard File.