Income Tax Appellate Tribunal - Delhi
Vijay Gupta , New Delhi vs Acit Central Circle 17, New Delhi on 25 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H': NEW DELHI
BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER
AND
SHRI SUDHIR KUMAR, JUDICIAL MEMBER
ITA No. 248/DEL/2023
(Assessment Year: 2017-18)
Vijay Gupta, vs. ACIT, Central Circle 17,
RZ-54/4, First Floor, Gali No. 5, Delhi.
Raj Nagar-II, Palam Colony,
New Delhi - 110 073
(PAN : AAPPG2701D)
ITA No. 249/DEL/2023
(Assessment Year: 2017-18)
Vikas Gupta, vs. ACIT, Central Circle 17,
RZ-54/4, Ground Floor, Gali No. 5, Delhi.
Raj Nagar-II, Palam Colony,
New Delhi - 110 073
(PAN : AEZPG8171K)
(APPELLANT) (RESPONDENT)
ASSESSEE BY : Shri Rajneesh Agarwal, CA
Shri Manoj Chopra, CA
REVENUE BY : Ms. Sapna Bhatia, CIT-DR
Date of Hearing : 03.09.2024
Date of Order : 25.09.2024
ORDER
PER S.RIFAUR RAHMAN,AM:
1. These appeals are filed by the different assessees against the respective orders of ld. Commissioner of Income-tax Appeals-27, New Delhi 2 ITA Nos.248 & 249/DEL/2023 (hereinafter referred to 'Ld. CIT (A)') both dated 12.12.2022 for AY 2017-18.
2. Since the issues are common and appeals are inter-connected, the same are being disposed off by this common order.
3. Brief facts of the case are, a search and seizure operation u/s. 132 of the Income-tax Act, 1961 (for short 'the Act') was conducted by the Investigation Wing of the Department on 14.12.2016 in Vinod K. Patel Group of cases alongwith other cases at various residential and business premises including the premises of Sh. Vijay Gupta and Sh. Vikas Gupta.
They are brothers staying in the same building sharing the floors at RZ-54/4, First Floor, Gali No. 5, Raj Nagar-II, Palam Colony, New Delhi - 110 073. Both the assessee had filed their return of income on 28.3.2018 declaring income. Notice u/s. 143(2) was issued on 26.09.2018 and was served accordingly. Later on, notice u/s. 142(1) issued on 28.09.2018 and hearing was fixed for 08.10.2018. In compliance to the said notice, assessee did not furnish any submission. Another notice u/s. 142(1) was issued on 27.11.2018 requiring the assessee to furnish information required for completion of assessment. AO noted that during the search proceedings of the assessee, the following were found :-
i) bunch of lose papers (numbered page 18, 19, 23, 29 of Annexure A-1);3
ITA Nos.248 & 249/DEL/2023
ii) cash amounting to Rs. 1,30,000/- was found at RZ 54/4 Raj Nagar-
2, Palam Colony, New Delhi - 110 073 and Rs. 14,31,500/- was found at F.59/3, Punjabi Bazaar, Kotla Mubarakpur, New Delhi;
iii) Jewellery of Rs. 28,22,906/- from RZ 54/4, Raj Nagar-2, Palam Colony, New Delhi - 110 073;
iv) Jewellery of Rs. 22,54,131/- from Bank Locker No. 87, State Bank of India, Palam Colony Branch, New Delhi - 110 077;
v) Stock of Rs. 14,57,900/- from F-59/3, Punjabi Bazar, Kotla Mubarakpur, New Delhi.
4. AO noted that assessee did not appear or submit any explanation with regard to loose papers before him. Considering the loose papers in the hands of the assessee and also due to non-furnishing of details of investment, source of payment and source of cash and jewellery found, AO made the following additions in the relevant assessment year in the case of Vijay Gupta and assessed the income at Rs.1,04,97,460/- :-
i) Rs.2,95,331/- on the basis of notings on page number 18 of Annexure A-1 towards Duster;
ii) Rs.4,95,267/- on the basis of notings on page number 19 of Annexure A-1;
iii) Rs.25,00,000/- on the basis of notings on page number 23 of Annexure A-1;
iv) Rs.9,00,000/- on the basis of notings on page number 29 of Annexure A-1;
v) Rs.15,61,500/- on the basis of cash found at RZ 54/4, Raj Nagar-2, Palam Colony, New Delhi - 110 073 and F.59/3, Punjabi Bazaar, Kotla Mubarakpur, New Delhi;4
ITA Nos.248 & 249/DEL/2023
vi) Rs. 28,22,906/- being the jewellery found at RZ 54/4, Raj Nagar-2, Palam Colony, New Delhi - 110 073; and
vii) Rs. 14,57,900/- being stock found at F.59/3 Punjabi Bazaar, Kotla Mubarakpur, New Delhi.
As regards Vikas Gupta, AO made the addition u/s 69A of the Act at Rs.14,31,500/- relating to the cash found at the residence of Mr. Vijay Gupta in the relevant assessment year and assessed the income at Rs.18,05,270/-.
5. Against the aforesaid action of the AO, both the assessee preferred an appeal before the ld. CIT(A), who vide his impugned order dated 12.12.2022 has confirmed the addition on the basis of jottings in loose papers (identified as A1) by holding that the family of his brother and that of the assessee as 'a joint family' and considered that the jewelleries belongs to the whole family was kept together without any segregation and accordingly gave relief but assumed that the loose papers found from the ground floor of the house (where his brother resides) belong to Mr. Vijay Gupta. Accordingly, Ld. CIT (A) confirmed the total additions in the hands of Vijay Gupta, as mentioned at sl.no. (i) to (iv) in para 4 above, of Rs.41,90,598/- (Rs.2,95,331/- + Rs.4,95,267/- + Rs.25,00,000/- + Rs.9,00,000/-) and deleted the additions i.e. Rs.15,61,500/-, Rs.28,22,906/- & Rs.14,57,900/- as mentioned at sl.no.(v) to (vii) in para 4 above and accordingly, allowed the part relief to Mr. Vijay Gupta. 5
ITA Nos.248 & 249/DEL/2023
6. Whereas in the case of Vikas Gupta, ld. CIT (A) sustained the addition made by the AO of Rs.14,31,500/- made under section 69A of the Act relating to the cash found at the premises of Mr. Vijay Gupta.
7. Aggrieved, the assessee, (Vijay Gupta) is in appeal before us raising following grounds of appeal :-
"1. The Ld. CIT(Appeals) has erred in law and on facts in confirming the arbitrary additions made by Assessing Officer on the basis of scribblings in loose/dumb papers, seized & marked as Annexure A-l page 1 to 47, which were not found from the appellant alleging it to be belonging to the appellant ignoring the well settled principle of law that addition can only be made in the hands of a person from whom the documents are seized. Therefore, the action of the Ld. CIT(Appeals) in confirming the additions is arbitrary, unjustified, illegal based upon mere conjecture & surmises and bad in law.
2. That the Ld. CIT(Appeals) erred in law and on facts in confirming the additions made on the basis of loose/dumb papers not found from the appellant ignoring the denial of the appellant in his statement recorded at the time of search that these papers do not belong to him, which is arbitrary, unjustified and against the provisions of law.
3. Without prejudice to above, The Ld. CIT(Appeals) has erred in law and on facts in confirming the arbitrary additions made by Assessing Officer on the basis of scribblings in loose/dumb papers, seized & marked as Annexure A-l page number 18, 19, 23 and 29 by the investigating team, which were not in possession of the appellant ignoring the well settled principle of law that no addition can be made on basis of dumb/loose papers without corroborating it with any independent evidence. Therefore, the action of the Ld. CIT(Appeals) in confirming the additions is arbitrary, unjustified illegal based upon mere conjecture & surmises and bad in law.
4. That the Ld. CIT(Appeals) erred in law and on facts in confirming the addition of Rs. 2,95,331/- made by Assessing Officer on account of unexplained investments from undisclosed sources of income in respect of vehicle (Duster) not belonging to the appellant by alleging it to be cash payments on the basis of scribblings in loose papers seized & marked as Page No. 18 of Annexuure-A-1, not found 6 ITA Nos.248 & 249/DEL/2023 from the appellant, which is arbitrary, unjustified and against the provisions of law.
5. The Ld. CIT(Appeals) erred in law and on facts in confirming the addition of Rs. 4,95,267/- made by Assessing Officer as unexplained investments from undisclosed sources of income by alleging it to be cash payments for CHATTARPUR on the basis of scribblings of loose papers seized & marked as Page No. 19 of Annexuure-A-1, not found from the appellant, which is arbitrary, unjustified and against the provisions of law.
6. The Ld. CIT(Appeals) erred in law and on facts in confirming the addition of Rs. 25,00,000/- (interpretating 3,8,7&7 as Rs. 3 lacs, Rs. 8 lacs, Rs. 7 lacs and Rs. 7 lacs respectively) made as unexplained investment from undisclosed sources of income by alleging it to be cash payments made to Nitin on the basis of scribblings in loose papers seized & marked as Page 23 of Annexure- A-1, not found from the appellant, which is arbitrary, unjustified and against the provisions of law.
7. The Ld. CIT(Appeals) erred in law and facts in confirming the addition made by Assessing Officer of Rs. 9,00,000/- (interpretating 2&7 as Rs. 2 lacs and Rs. 7 lacs respectively) on the basis of loose papers seized & marked as Page-29 of Annexure-A-1, not found from the appellant alleging it to be unaccounted receipts from DULIP and Radheshyam which is arbitrary, unjustified and against the provisions of law.
8. Without prejudice to above, the Ld. CIT(Appeals) has erred in law and on facts in not fully considering the submissions made by the appellant from time to time during the course of hearing.
9. The Ld. CIT(Appeals) has erred in law and on facts in ignoring the principles laid down in the judgments of various High-Court(s) /Apex Court denying natural justice to the appellant, which is arbitrary, unjustified, invalid and bad in law.
10. That the above grounds of appeal are without prejudice to one another.
11. That the appellant prays for the liberty to raise such further grounds of appeal arising from the facts of the case, as may enable the appellant to seek justice and to assist Your Honors' in upholding the majesty of law.
PRAYER It is prayed that all the additions confirmed by the Ld. Commissioner of Income Tax (Appeals) may kindly be deleted and full relief be allowed to the appellant."7
ITA Nos.248 & 249/DEL/2023
8. Aggrieved, the assessee (Vikas Gupta) also filed an appeal before us raising following grounds of appeal:
Reproduce the GOA
1. That, Ld. CIT(Appeals) has erred in law and on facts in upholding the assessment order passed u/s 143(3) of the Income Tax Act by the assessing officer at income of Rs.18,05,270/- after making addition of Rs.14,31,500/-
without service of jurisdictional notice mandatorily required vi] s 143(2) of the Income Tax Act, to be served on assessee on or before the statutory time limit of 30th September 2018. Therefore, the action of the Ld. CIT(Appeals) in confirming the addition is arbitrary, unjustified, illegal, bad in law and void- ab-initio.
2. That, Ld. CIT(Appeals) has erred in law and on facts in confirming the addition of Rs. 14,31,500/- u/s 69A ignoring the fact that the cash belongs to M/ s Virender Cigarette Store of which appellant is proprietor ignoring the fact that Ld. CIT(Appeal) has upheld in the case of Mr. Vijay Gupta vide order dated 12.12.2022 (Para number 11.4) that the appellant Vikas Gupta is the proprietor of M/ s Virender Cigarette Store. Therefore, the action of the Ld. CIT(Appeals) in confirming the addition is arbitrary, unjustified, illegal, bad in law and void-ab-initio.
3. Without prejudice the above, That, the Ld. CIT(Appeals) has erred in law and on facts in upholding the addition made by Assessing Officer in respect of cash belonging to M/s. Virender Cigarette Store of which the appellant is proprietor merely because the books of account could not be produced at the time of search, ignoring the fact that cash turnover of the appellant was admitting by the assessing as well as by the Lt CIT (Appeal) and the reasons for keeping cash in hand belonging to business at the residence was duly explained. Therefore, the action of the Ld. CIT(Appeals) in confirming the addition is arbitrary, unjustified, illegal, bad in law and void- ab-initio.
4. Without prejudice to above, the Ld. CIT(Appeals) has erred in law and on facts in not fully considering the submissions made by the appellant from time to time during the course of hearing.
5. The Ld. CIT(Appeals) has erred in law and on facts in ignoring the principles laid down in the judgments of various High-Court(s)j Apex Court denying the natural justice to the appellant, which is arbitrary, unjustified, invalid, and bad in law.
6. That the above grounds of appeal are without prejudice to one another. 8
ITA Nos.248 & 249/DEL/2023
7. That the appellant prays for the liberty to raise, such further grounds of appeal arising from the facts of the case, as may enable the appellant to seek justice and to assist Your Honors in upholding the majesty of law. PRAYER It is prayed that the addition on account of unexplained cash confirmed by the Ld. Commissioner of Income Tax (Appeals) may kindly be deleted, and full relief be allowed to the appellant.
Basically challenged the addition on account of cash found during the search at the premises of his brother of Rs.14,31,500/- u/s 69A of the Act.
9. At the time of hearing, ld. AR for the assessee made oral submissions as well as filed written submissions, which are reproduced below:- ITA No.248/Del/2023 in the case of Vijay Gupta
"A. General Background:
• Assessee, an individual, assisted his brother Vikas Gupta in supplying cigarettes to colony pan shops and roadside pan kiosks through latter's proprietary concern M/s Virender Cigarette Store (VCS).
• Being a person of modest means, assessee & his family lived on first floor while his brother and his family on ground floor of the same house situated in rural area of Delhi.
• Consequent to search in Vinod K. Patel Group of cases, a search operation was carried out at his residential premises by issuing search warrant in his name but since his brother along with his family lived on the ground floor of the same house, he was also subjected to the search operations.
• During the course of search certain loose papers titled as A1 were found from the ground floor of house.
B. The Issue involved :
• Whether loose papers not found from his possession or control
could be considered while framing his assessment? 9
ITA Nos.248 & 249/DEL/2023 • Whether loose papers, mostly incorporating rough jottings, be treated as incriminating material?
C. Facts on record :
• The finding of papers from ground floor (covering page of Annexure A1 Page 1 to 47 (Page 12 of PB).
• The assessee lived on the first floor (Finding of Ld. CIT(A) in the case of Kavita Gupta w/o Assessee in para 4.6 on page 28 of PB). • Assessee did not appear or submit any explanation with regard to loose papers before AO.
• AO considered the loose papers in the hands of assessee and made following additions on the basis there of :
i) Rs. 2,95,331 with regard to Duster Car jottings on Page No. 18
ii) Rs. 4,95,367 for Chattarpur Payments for jottings on Page No. 19
iii) Rs. 25 lakh as unexplained investment for jottings on Page No. 23
iv) Rs. 9 lakh as unexplained receipt for jottings on page no.29 D. Submissions before Ld. CIT(A):
• Documents not found from the possession and control of the assessee living on first floor of the house whereas the papers were found from the ground floor • The seized Documents contain only rough jottings • No corroborating evidence is there to support the conclusion drawn on the basis of rough jottings • Addition of Rs. 2,95,331 on account of Duster car on the basis of Page 18 is against the facts and documents of Hoover marketing on record by quoting the statement of Vikas Gupta recorded during the course of search operations E. Finding of Ld. CIT (A) Ld. CIT (A) has confirmed the additions ( Paras 8.1 to 8.10 on pages 35 to 40 of appeal order) on account of jottings in loose papers by wrongly holding the family of his brother and that of 10 ITA Nos.248 & 249/DEL/2023 assessee as 'a joint family' and by wrongly stating that even the jewellery of the whole family was kept together without any segregation and therefore by implication assumed that papers found from the ground floor of the house belonged to assessee (Para 8.3.4 on page 36 of Appeal Order).
The documents held to be belonging to assessee, presumption of section 292C invoked, assessee held to be responsible for explaining documents (Para 8.4 page 36 & 37 of appeal order) Documents held to be not dumb (Para 8.5 page 36 of appeal order)) Duster car addition finding in para 8.8.5 page 39. Finding on other additions on the basis of loose papers in paras 8.9 on page 40.
F. Written Submissions made:
• Ld. CIT (A) invoked presumption of Section 292 C on the basis of following wrong and incorrect facts :
i) The factum of separate residences of assessee and that of his brother Vikas Gupta is proved by maintenance of separate establishments including kitchens on ground floor and First floor of the house (finding of Ld. CIT (A) in para 4.6 on page 28 of PB in the case of Kavita Gupta, wife of assessee) .( Para 2 of WS)
ii) Similarly, the valuation reports of jewellery prepared separately during the course of search (Page 30 & 31 of Paper Book) clearly show that jewellery was being separately maintained by families of assessee and his brother (Para 5 of WS)
iii) The finding of business cash of proprietary firm VCS from assessee was just incidental to proactive participation in business of VCS by assessee as due to ill health Vikas Gupta was leaving the shop early as stated in para 5 of WS.
The fact of non-recovery of loose papers from the assessee remaining undisputed, the invocation of presumption of section 292C on the basis of incorrect premises was wrong on the part of Ld. CIT(A).
The addition of Rs.2.95 lakh on account of loose paper relating to Duster car is perverse (Para 8.8 on Page 38 to 40 of appeal order) as the assessee is neither the owner nor is using the same 11 ITA Nos.248 & 249/DEL/2023 (Q no 14 of Vikas statement recorded during search on page no.44 & 45 of PB & Page No. 51-59 of PB).
Without prejudice to the fact that Section 292 C cannot be invoked, the loose papers only contain jottings from which no definite conclusions can be drawn Moreover, in the absence of corroborating evidence, the dumb loose papers have no value in the eyes of law.
Reliance is placed on case laws mentioned in paras 14 to 17 of WS.
Also looking at the living standard and work profile (assisting his brother in business), the assessee cannot be expected to have such large amounts of transactions as alleged in the assessment order.
ITA No.249/Del/2023 in the case of Vikas Gupta
A. General Backgrounds • Assessee, a person of modest means, supplying cigarettes & pan masala to
colony pan shops and roadside pan kiosks mainly on cash basis through proprietary concern M/s Virender Cigarette Store (VCS) • Supplies were made after making purchases through banking channels from big entities like Dharmapal Satyapal Ltd, Archit Sales, & Surya Kiran Trading Corporation • Consequent to search in Vinod K. Patel Group of cases, a search was carried out at the residential premises of assessee situated in rural area of Delhi. • During search, the assessee informed that all vouchers lying with CA Mr. Bhardwaj but failed to produce books.
• During search cash of Rs. 14.31 lakh was found from the brother of assessee living on first floor of the house whereas assessee lived on the ground floor as assessee had to proactively participate in the business of VCS due to ill health of Mr. Vikas Gupta.
• Both assessee ( reply to question no.7 on page20 of PB) and his brother (reply to question no.6 on page 38 of PB) in their separately recorded statements u/s 132(4) stated the cash of Rs.14.311akh found during the search belonged to business of VCS, though assessee estimated the cash amount to be approximately around Rs.8 Lakh 12 ITA Nos.248 & 249/DEL/2023 B. Material submitted before AO :
• By reply dated 26.12.2018, assessee inter-alia submitted following documents:
i) The income tax return filed in Form 3 along with Trading & Profit & Loss Account and Tax Audit Report
ii) Copy of return of income along with P& L Account, Balance sheet & Tax Audit Report
iii) Details of Month wise sales & purchases made during the year
iv) Details of GP & NP rates for the year
v) Details of unsecured loan taken from Induslnd Bank
vi) Details of addition to Furniture & Fixture
vii) Details of Trade Creditors outstanding on 31.03.2017
viii) Details of Loans & Advances given
ix) Copies of bank statements
x) Details of expenses incurred • The details of month wise cash sales, VAT payment of Rs.29.03 Lakh against VAT Liability of Rs. 28.89 Lakh and reasons for keeping cash due to no locker at shop were furnished along with production of books of accounts including cash book in replies dated 16.12.2018 & 18.12.2018.
• The assessee in answer to question no 6 his statement recorded during the course of search has clearly stated that all purchase and sale bills etc. were lying with CA Shri Bhardwaj (Page 19 & 20 of PB) and the purpose can only be for writing of books.
• Therefore, the treatment of amount recorded as cash sales in books as unexplained money is against all principles of law and leads to double taxation also.
• The decisions of ACIT Vs Hirapanna Jewelers ( para 9 on page 73 of Paper Book) & ITO v. Rajeshkumar Chhanalal Patel ( Last Para on Page 81 of PB) lay down the law that once the amount in question is accepted as sales, the same cannot be treated as unexplained.
• The ratio of Hon'ble ITAT Delhi decision dated 13.02.2024 in Moolchand Aggarwal Vs ACIT Central Circle Delhi (ITA No. 1786/DEL/2022) that 13 ITA Nos.248 & 249/DEL/2023 explanation with regard to sources of amount recorded in books cannot be rejected without finding faults in books, squarely applies to the facts of the case. • In such circumstances, the treatment by AO of amount recorded as cash sales in books is based on surmises and not backed by any positive evidence.( Supreme Court decision dated 16.05.2023 in D N Singh Vs CIT (Cited in para 7 on page 6 of WS).
• The doubts, if any, rising in the mind of AO were duly answered with details and books of accounts produced during the course of assessment proceedings.
• The onus thus shifted to AO for bringing any evidence to support his view which he could have gathered by making further enquires which he failed to do. • The finding of unexplained money, not based on any relevant factor or evidence but from the hunch that books of accounts were not produced or maintained on the date of search, is therefore unsustainable. • The finding has led to double addition of the same amount- once as sales and again as unexplained income and the addition therefore deserves to be deleted on this ground also.
10. On the other hand, Ld DR brought to our notice page 38 of the First Appellate Order of Vijay Gupta, wherein Ld CIT(A) has discussed the issue of New Car in the possession of the assessee. At the same time, Ld DR agreed that the RC is not registered in the name of the assessee. She submitted that the assessee was in complete possession of the vehicle and information written in the loose paper found during the search shows that it is belongs to the assessee. She relied on the findings of the lower authorities.
11. With regard to other additions made on the basis of loose papers found during the search, she submitted that the assessee fails to explain the 14 ITA Nos.248 & 249/DEL/2023 details contained in the loose papers. These are financial transactions of the assessee and submitted that the additions sustained by the Ld CIT(A) are proper. Therefore, she relied on the findings of lower authorities.
12. With regard to the appeal filed by Mr. Vikas Gupta, she brought to our notice para 5.6 of Appellate Order and submitted that the cash found during the search belongs to the assessee and he failed to substantiate the same during the assessment as well as appellate proceedings. She submitted that the Ld CIT(A) has elaborately discussed this issue in his order and she relies on the same.
13. Considered the rival submissions and material placed on record. We observed that the search was conducted at the residence of Mr. Vijay Gupta and Vikas Gupta, where it was found certain cash, stock, jewellery and loose papers relating to certain transactions. With regard to jewellery and stock, the Ld CIT(A) has deleted the additions. The issues raised before us by Mr. Vijay Gupta relates to loose papers found at the premises of Mr. Vikas Gupta and additions were sustained in the hands of Mr. Vijay Gupta. All the notings recorded in the loose sheet of diary referred as "A1" should have some connection with the activities carried by the assessee. We observe that no activities or source of income was found as carried out by Mr.Vijay. All the notings which are found has to have some credibility with the presumptions applied by the AO. From the 15 ITA Nos.248 & 249/DEL/2023 first page ie., page 18 of A1 relating to noting of Duster Vehicle, which was presumed that this vehicle is owned by Mr. Vijay but the documents clearly shows that this is belongs to Hoover Marketing. Therefore, there is absolutely no link established with the assessee as the owner. This is only a calculation of purchase of vehicle through bank and the relevant payment scheme. This shows the application of mind of the AO. Further the other notings at pages 19, 23 and 29 show that certain expenses were written, the same was not correlated with the nature of income earned by the assessee. As per the records submitted before us, there is no regular income was found in the case of the assessee to relate the above said expenses. It is also relevant to note at this stage that this diary or loose paper was found at the possession or at the residence of Mr.Vikas. We know that Mr.Vikas is running the business in his proprietor concern VCS, where the book result and financial results were accepted. Whereas in the case of Mr. Vijay no such regular income was established to have earned. This evidence may have related to the business carried on by Mr. Vikas. There is no correlation to Mr.Vijay and there is no evidence to show that these are incurred by Mr.Vijay. Hence, this is nothing but dumb document found at the premises of Mr Vikas or it is related to business of VCS. Therefore, this addition also directed to deleted in the hands of Mr. Vijay.
16
ITA Nos.248 & 249/DEL/2023
14. At page 19, the information recorded are in thousands and in the page 23, the informations are jotted with certain amounts in numerical like 15, 3, 8 etc along with certain percentages. For this, AO has presumed that these are in lakhs. This is considered as undisclosed investments in the hands of Mr. Vijay but it is found at the residence place of Mr. Vikas. As discussed earlier, this could be transactions relating to proprietary concern VCS. The AO has wrongly considered as transactions belongs to Mr. Vijay. There is no means of income or business identified or carried by Mr.Vijay, it is not proper to presume that it is belongs to Mr. Vijay. Hence, this addition also directed to be deleted in the hands of Mr. Vijay.
15. Next addition relating to income earned of Rs. 9 lakhs, in our views this income also belongs to the business of Mr. Vikas and there is sufficient funds available and most of the transactions carried on by Mr. Vikas is in cash only, the payment by cash and sells the cigarettes by cash. Therefore, the information found in the loose paper found at the residence of Mr.Vikas, therefore this is also relating to his business only and the addition made in the hands of Mr.Vijay is not proper. Hence, this addition also deleted in the hands of Mr. Vijay.
16. In the result, appeal filed by Mr. Vijay is allowed.
17. Coming to the appeal filed by Mr. Vikas, we observed that the cash was found at the first floor where the assessee lives and the same was added 17 ITA Nos.248 & 249/DEL/2023 to the income of the assessee u/s 69A of the Act. We observed from the record and the submissions made before us that the assessee has a regular proprietary business where the assessee earned income by way of cash transactions/sales only. The financial results were also declared and accepted by the revenue. Once the business income is accepted which generates income only by way of cash transactions, the possession of cash at the residence of the assessee establishes that this is out of business income. The financial results also shows substantial cash transactions ie., cash sales of Rs. 2.13 crores and cash purchase of Rs. 2.14 crores therefore there is sufficient funds in the rotation/circulation. It cannot be ruled out that the cash found at the residence is from the business and excess circulation funds were kept at the residence. Therefore, we are inclined to allow the grounds raised by the assessee.
18. In the result, appeals filed by both the assessee are allowed. Order pronounced in the open court on this 25th day of September, 2024.
Sd/- sd/-
(SUDHIR KUMAR) (S.RIFAUR RAHMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 25.09.2024
TS
18
ITA Nos.248 & 249/DEL/2023
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)-27, New Delhi.
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI