Income Tax Appellate Tribunal - Delhi
Rabinder Kumar Dutta,, vs Department Of Income Tax on 25 March, 2003
IN THE INCOME TAX APPELLATE TRIBUNAL,
NEW DELHI, BENCH 'H'
BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND
SHRI R. C. SHARMA, ACCOUTANT MEMBER
ITA(SS) No. 302 /Del/2003
(Block period 01.04.1990 to 28.04.2000)
ACIT, CC-25, Janpath, Vs. Shri Rabindra Kr. Dutta,
New Delhi. R/o 353, Pocket-A, Sarita Vihar, New Delhi
(Appellant) (Respondent)
PAN / GIR No. AAVPD1383N
Co. No. 27/Del/08
(Block Period 01.4.90 to 28.4.2000)
Shri Rabindra Kr. Dutta, Vs. ACIT, CC-25,
R/o 353, Pocket-A, Janpath, New Delhi.
Sarita Vihar, New Delhi.
(Appellant) (Respondent)
Appellant by: Shri M.P. Rastogi, Smt. Lalitha Krishnamurthy, CA
Respondent by: Shri V K Tiwari, CIT DR
ORDER
PER RAJPAL YADAV, JM:
The revenue is in appeal before us against the order of Ld. CIT(A) dated 25.03.2003 passed for the block period starting from 01.04.1990 and ending on 28.04.2000. On receipt of the notice, the assessee has filed cross objection bearing No.27/Del/2008. In 2 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 the cross objection the assessee has pleaded that the assessment order dated 28.06.2002 passed by the Ld. ACIT is without jurisdiction and barred by limitation as provided u/s 158BE of the I. T. Act, 1961.
2. The registry has pointed out that the cross objection is time barred by 594 days. The assessee has filed application for condonation of delay. However, considering the grounds raised in the cross objection, we are of the opinion that such type of argument can be raised even without filing the cross objection. The assessee can always defend the order of the CIT(A) with the help of Rule 27 of the ITAT Rules on the ground which has been decided against him. The question whether the assessment order was passed within the limitation or not can be decided even on the oral arguments of the respondents with the help of the fact & circumstances available on the record. Considering these aspects we permit the Ld. counsel for the assessee to raise this argument even without the help of this cross objection.
3. The Ld. counsel for the assessee has contended that a search was carried out on 28.04.2000. The assessment has been completed on 28.06.2002. As per section 158BE the assessment was to be completed within two years from the end of the month from the execution of last authorization of search warrant. According to the Ld. Counsel for the assessee where search was carried on 28,4,2000, one cupboard and a locker were put under restraint order u/s 132(3) of the I. T. Act. The restraint order was 3 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 lifted on 20.06.2006 and the department is counting the limitation from June 2006 when this prohibition order was lifted. He took us through page 7 of the 2nd Paper Book wherein Annexure 3 is available. He pointed out that cupboard on which prohibition order was placed on 28.04.2000 was examined by the authorized officers and they found certain foreign currency as well as cheques. There was nothing, which requires to be investigated from this cupboard, which can authorize them to put prohibitory order. He further contended that on 20.6.2000, the panchnamas were drawn after executing the warrant in respect of the cupboard as well as the locker. The authorized officers in these panchnamas are Shri R P Meena, Shri Pankaj Saxcena. They were not the authorized persons when search warrant was issued. The Joint Director (Investigation) has authorized these person to carry out the investigation in respect of the cup board as well as the locker. Shri Rastogi Ld. counsel for the assessee contended that Section 132 contemplates carrying out of any search if the Director general or Director was satisfied on the basis of the information possessed by them that a search is required to be carried out on any person. The Joint Director has observed that this authorization is in continuation of the search proceedings carried out on 28.04.2000. According to the Ld./ counsel for the assessee, since authorization has been issued by a new officer, it should be his satisfaction before issuance of such authorization. On the basis of the reasons recorded and construed by the Director General while issuing the 1st authorization to carry out a 4 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 search should have not been made the basis by the Joint Director. Hence limitation from this authorization ought to be not taken because the cognizance to this authorization is not required to be. If that be so taken then search is to be construed as concluded on 28.04.2000 and assessment order is passed after expiry of the limitation of two years. In support of his contention, he relied upon 192 ITR 436, 292 ITR 444 and 175 Taxman 01. For this proposition the Joint director ought to have formed his opinion on the basis of information possessed by him and should have not authorized the officers on the basis of the opinion formed by the Director by issuing original authorization he relied upon the decision of Gujarat High Court reported in 307 ITR 115 and the decision of Hon'ble High Court of Calcutta reported in 226 CTR 84.
4. The Ld. D.R. on the other hand contended that vide Finance Act 2009, Additional Director and Additional Commissioner, Joint Director and Joint Commissioner have been authorized to issue such authorization. This amendment has come with retrospective effect from 01.06.1994. Hence, if authorization has been issued by the Joint Director then it is a valid authorization. The department is not supposed to disclose the information forming such a belief to issue the authorization to the assessee. He also pointed out that otherwise also there was sufficient information with the department as search has already been conducted. Prohibitory orders were put on a cupboard as well as locker. These were required to be operated. The Joint Director has been empowered 5 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 to issue such authorization. He has issued the same on the basis of such information. There is nothing unusual in his act and conduct. He further contended that such type of issuance cannot be challenged before the Tribunal and for buttressing his contention he relied upon the decision of ITAT in the case of Promain Vs DCIT 95 ITD 489. According to the Ld. D.R. the Tribunal has held that validity of the search cannot be decided by the Tribunal.
5. We have duly considered the rival contentions and gone through the records carefully. The search has been carried out at the premises of the assessee. About the validity of the authorization issued for the search carried out on 28.04.2000, assessee did not raise any dispute. The only argument the Ld. counsel for the assessee raised is that the Joint director is a new officer and unless some information was possessed by him, he could not issue the authorization for operating the locker and the cupboard on the basis of the information considered by the Director while issuing original authorization. We do not find any merit in this contention of the Ld. counsel for the assessee because after the retrospective amendment in the Act, a concurrent power has been infused between the Director as well as the Joint Director. The Joint Director can also exercise such a power. More so, the information was already on the record because in execution of earlier authorization prohibitory orders were put on the locker as well as cupboard were required to be inspected. To our mind, there was sufficient information for 6 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 exercising such a power. Otherwise also as per the decision of the Special Bench of the Tribunal in the case of Promain, the Tribunal is not empowered to go into all these issues. Therefore, the preliminary objection raised by the Ld. counsel for the assessee is rejected and the cross objection is dismissed.
6. In the appeal of the revenue the 1st grievance is that the Ld. CIT(A) has erred in deleting the addition of Rs.1.37,686/-. The brief facts of the case are that the addition was made by the A.O. on the ground that during the course of search loose papers were found which were inventoried as Annexure A-4. From the perusal of pages 12-13 of Annexure A-4 it revealed that the assessee has carried out certain repairs of house property at Pocket A-353 Sarita Vihar New Delhi. On the basis of such documents he made an addition of Rs.1,37,686/-. Before the Ld. CIT(A) it was contended by the assessee that he has never carried out any repairs. It was just a rough estimate taken from the contractor to carry out the repair. The assessee had obtained the report from the Government Approved Valuer who inspected the premises of the assessee and has given the certificate that no addition or alteration has been carried out in the said premises. This report was confronted to the A.O. and his comments were called for. The Ld. CIT(A) was satisfied with the explanation of the assessee that no repair has been carried out at the premises of the assessee and therefore, he deleted the addition.
7 IT(SS) No. 302/Del/03Block Period 1.4.1990 to 28.4.2000
7. On due consideration of the facts & circumstances of the case, we are of the opinion that he assessee has established on the record that he has not made any alteration/change in the flat allotted by DDA. There is no approval available on the record given by the DDA for carrying out the alteration in the flat. Moreover, the valuer has given a certificate that no change has been made. Thus, the facts persuade us to draw inference that narration at pages 12 - 13 may be in respect of the estimation of expenses required to be incurred for carrying out the actual repairs / change. The Ld. CIT(A) has rightly deleted the addition and no interference is called for.
8. In ground No.2, the grievance of the revenue is that the Ld CIT(A) has erred in deleting the addition ofrs.9,83,200/- made on account of interest and the brokerage.
9. The brief facts of the case are that on scrutiny of the seized material, page 38 of annexure A3 the A.O. found the following noting:-
Page No. 38 of Annexure A-3 contains certain entries which read as follows :-
"Interest from 01-01-1999 to 31-3-1999 Rs. 55,000 (Rs. 18,333 x 3) Brokerage @ 2% on Rs. 9,10,000 Rs. 18,200 Rs. 73,200 Less: Booking money with you Rs. 20,000 8 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 Sent in cash Rs. 53,200
10. There is a narration of Rs.9.10.000 on which brokerage @ 2% has been computed at Rs.18,200/-. The A.O. formed an opinion that the assessee had earned interest income and brokerage. He has formed the opinion that the assessee has failed to explain the source of Rs.9,10,000/- upon which he has charged brokerage @ 2%. According to the A.O., the assessee had earned interest and brokerage on account of certain funds made available to some parties. The case of the assessee is that these papers relate to the property of his Brother-in-law Shri Mitra. He sent these papers for taking the opinion of the assessee. Ultimately the property was sold in May 2001 for a consideration of Rs.9,60,000/-, the assessee has produced the sale deed of the property comprised at 33 Elliot Road, Calcutta. The Ld. CIT(A) was satisfied with the explanation of the assessee and held that these papers do not belong to the assessee.
11. With the assistance of Ld. representatives we have gone through the orders of the A.O. and as well as Ld. CIT(A). We have also perused the copy of the sale deed available at pages 23-28 of Paper Book wherein ½ undivided share was sold for a consideration of Rs.4,80,000/-. The memorandum of consideration has been placed at page 29. Taking into consideration these aspects coupled with the findings of Ld. CIT(A), we are of the opinion that the narration made in page 38 of Annexure A-3 does 9 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 not belong to the transactions of the assessee and the Ld. CIT(A) has rightly deleted the addition.
12. In ground 3 the grievance of the revenue is that the Ld. CIT(A) has erred in deleting the addition of Rs.45,600/-. The addition was made by the A.O. on the basis of noting available at page 44 of the Annexure A-3. According to the A.O. the noting on this page indicates that Rs.80,000/- was given as loan by the assessee on 22.12.1994 to M/s. Centex (India) Engineers Ltd. @ 15% p.a. On page 43 the calculation of interest @ 24% came to Rs.52,800/- till 1sst October 1997, whereas assessee has disclosed interest of Rs.32,.868/- till 31.03.1997. The A.O. also brought to tax the difference of interest @ 9% on Rs.80,000/-from 27/12/1994 to 28/04/2000 amounting to Rs.45,600/-. The case of the assessee is that nothing has been received from Centex India Engineers Ltd. They have confirmed that no interest has been paid to the assessee as concluded by the A.O., the Ld. CIT(A) has deleted the addition.
13. We have duly considered the rival contentions and gone through the records carefully. According to the A.O. assessee ought to have shown interest @ 24% p.a. on the sum of Rs.80,000/- whereas he has shown interest received @ 15% p.a. The assessee has proved on the record that interest was only @ 15% p.a. The interest receivable @ 24% was only a provision and he has not received it actually. The certificate of payer has been filed by the assessee and the A.O. did not enquire into the issue further except 10 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 relying upon the papers. We do not find any error in the order of Ld. CIT(A) and hence this ground is rejected.
14. In the next ground of appeal the grievance of the revenue is that Ld. CIT(A) has erred in deleting the addition of Rs.1,81,456/- made on account of unexplained investment in jewellery. With the assistance of Ld. representatives, we have gone through the orders of the A.O. as well as the CIT(A). The area of dispute between the assessee and the A.O. was in respect of jewellery possessed by the assessee and found during the course of search is that as per the assessee jewellery was received at the time of marriage and it was held by his wife for a long period. The A.O. was not satisfied with the explanation. The assessee has filed valuation certificate of a government-approved valuer who opined that jewellery found during the course of search was traditional jewellery and about 30 years old. The CIT(A) was satisfied with this explanation and held that the jewellery was received by the wife of the assessee at the time of marriage and other social occasions. Taking into consideration this finding of fact we do not see any reason to interfere in it. The explanation of the assessee in respect of the jewellery found during the course of search and treated by the A.O. as unexplained, is that it was received as a gift on the death of his grand parents as well as these were received on the occasion of marriage and government approved valuer has certified the age of jewellery as 30 years old. He termed them as traditional jewellery. In view of 11 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 the above facts, we are of the opinion that the assessee has explained source of jewellery. This ground of appeal is rejected.
15. In the next ground of appeal, the grievance of the revenue is that the CIT(A) has erred in deleting the addition of Rs.21,60,000/-.
16. The brief facts of the case are that assessee was executive Director of M/s. Toscana (Nepal) Pvt. Ltd. Katmandu for the period September 1994 till December, 96 his gross emoluments during the above said period were only Rs. 21,60,000/-. Out of the said amount a sum of Rs. 7,65,000/- was remitted to the bank account at ANZ Grindlays Bank, Bangalore. A sum of Rs. 80,000/- was stated to be given as loan to M/s. Centex (India) Engineers Pvt. Ltd. as discernable from pages No. 43 to 44 of annexure A found at the time of search. The Ld. AO directed the assessee to furnish the letter of appointment, passport showing Nepal visit, evidences for tax paid alongwith certificate from the Nepal tax authorities, total emoluments received and bank statement of Nepal ANZ Grindlays Bank . According to the AO the assessee had stated that he has lost papers relating to income tax filing in Nepal during its his transit to India from Neal. He has filed his affidavit. To 12 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 substantiate his employment abroad the assessee has filed documents like confirmation from the employer appointment letter, confirmation from the Labour Department of Nepal regarding his employment with M/s. Toscana (Nepal) Pvt. Limited and chart showing total receipt of salary and emoluments of Rs.
21,60,000/-. The AO has made the addition of this amount on the ground that assessee has filed his return of income with the Bangalore income tax authorities disclosing pension income, interest income and dividend income. He paid the tax thereon.
However the returns filed in India were filed by the assessee in the capacity of resident and there was no mention of income received in Nepal nor taxes paid in Nepal were shown. On account of this failure AO has made the addition.
17. Ld. CIT(A) has deleted the addition on the ground that assessee remained out of India from 23rd September 1994 to June 1996. Thus in F.Y. 1994-95 and 1995-96 the status of the assessee was non resident as he stayed outside India with more than 182 days in each year. Ld. CIT(A) has also found that TDS was deducted by M/s. Toscana (Nepal) Pvt. Ltd. And it was deposited 13 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 with the Nepal Govt. This has been discernable from the payslip issued by the employer. The finding of Ld. CIT(A) recorded in paragraph No. 8.3 read as under :-
"8.3 I have considered the facts of the case. The correct status of the assessee has to be looked into, even if no claim of non- resident was made at the time of filing of the return in view of the case law relied upon by the assessee. From the facts of the case it is noted that the assessee remained out of India from 23rd September, 1994 to June 1996 as stated in the written submission. Thus for financial years 1994-95 and 1995-96, the status of the assessee was non-resident as he stayed outside India for more than 182 days in each year for employment and for F.Y. 1996-97 as Resident but not ordinarily resident as he was non-resident for two successive years. Hence, there is no justification for bringing to tax the income earned from salary in Nepal in these two years. The addition of Rs. 21,60,000/- is deleted."
18. With the assistance of Ld. Representative we have gone through the record carefully. The assessee has established that a sum of Rs. 21,60,000/- was received by him as a salary in Nepal.
This amount was subject to TDS in Nepal. The only reason assigned by the AO in the asstt. Order for taxing this amount is that in the return filed by the assessee in India he failed to disclose the details of these amounts and also failed to disclose his status . Both these aspects have duly been considered by the Ld. CIT(A) in the 14 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 finding extracted supra. The AO has to first establish how this amount is taxable in the hands of assessee in India because it was not earned by assessee in India rather it was in Nepal and it has also been suffered tax in Nepal. The Ld. CIT(A) has rightly deleted the addition. This ground of appeal is also rejected.
19. Ground 6 in this ground of appeal grievance of revenue is that Ld. CIT(A) has erred in deleting the addition of Rs. 52,950/-.
The brief facts of the case are that during the course of search following was found at the residence of the assessee :-
a) US$ 550 As per Annexure 0-1
b) Pound Sterling dated 20.6.2000
c) US$ 900 Travellers Cheque As per Annexuer - 0-2
dated 20.6.2000
20. In order to explain availability of foreign exchange at the residential premises it was contended by the assessee that he went abroad in may 1994. The Travellers Cheque of Dollars 1600 was purchased by him on 4th May1994, for meeting his expenses, from the bank in Bangladesh. He has stayed there. One of his friend Mr. Mohd. Abdul Malique gifted US$1000 to his wife for incidental expenses, shopping etc. The foreign currency of Dollars 15 IT(SS) No. 302/Del/03 Block Period 1.4.1990 to 28.4.2000 515 and pounds 144 was balance out of the gifted amount. A copy of the certificate from the said donor was also filed. With regard to travellers cheque of US$ 900, it was stated that travelling cheque of US$900 found at the residence was out of the travelling cheque of 1600$ purchased by him. According to the assessee as per RBI guidelines, foreign exchange of US$2000 and or its equivalent currency can be retained by the assessee for personal use or for numismatics purposes. The enforcement Director has also accepted the explanation of the assessee and also admitted the source of foreign currency. The AO has held that assessee may be able to explain possession of foreign exchange legally. He failed to explain the source of investments. In this way he made an addition of Rs. 52,950/- as undisclosed income for F.Y. 1992-93.
The Ld. CIT(A) has deleted the addition on the ground that assessee must have spent the foreign exchange purchased during the abroad trips he has undertaken . The enforcement Director has considered the explanation of the assessee and has ordered for release of seized foreign currency.
16 IT(SS) No. 302/Del/03Block Period 1.4.1990 to 28.4.2000
21. With the assistance of Ld. Representative we have gone through the record carefully. It has emerges out from the record that foreign currency was purchased from the account after taking approval and the purchase of foreign currency found to be in order by the enforcement Director. Therefore such type of addition cannot be made in the block period. Bank accounts from where seized currencies were purchased were in the knowledge of the department. IT could have investigated these issues in the regular assessment proceedings. Ld. CIT(A) has appreciated the facts and circumstances in right perspective and we do not find any error in it.
22. In the result appeal of the revenue and cross objection of the assessee are rejected.
Order pronounced in the open court on 21.5.2010.
(R.C. SHARMA) (RAJPAL YADAV)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 21.5.2010
Veena
17 IT(SS) No. 302/Del/03
Block Period 1.4.1990 to 28.4.2000
Copy forwarded to
1. Appellant
2. Respondent
3. CIT True copy: By order
4. CIT(A)
5. DR Dy. Registrar, ITAT, New Delhi