Income Tax Appellate Tribunal - Delhi
Shilpi Securities Pvt. Ltd., Noida vs Assessee on 29 January, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH 'B', NEW DELHI
BEFORE SHRI G. D. AGARWAL, HON'BLE VICE PRESIDENT
AND SHRI KULDIP SINGH, JUDICIAL MEMBER
I.T.(SS) A. No.02/De4l/2012
(Assessment Year 01.04.1986 to 27.06.1996)
Shilpi Securities Pvt. Ltd., Vs. DCIT, Central Circle 23,
E-10, Sector 15, New Delhi
NOIDA
GIR / PAN :AABCS7011B
I.T.(SS) A No.05/Del/2012
(Assessment Year 01.04.1983 to 27.06.1996)
Vaidahi Lease and Finance Pvt. Ltd., Vs. DCIT, Central Circle 23,
E-10, Sector 15, New Delhi
NOIDA
GIR / PAN : AAACV4107E
(Appellant) (Respondent)
Appellant by : Shri Vinod Kr. Bindal
Ms. Sweety Kothari, CA
Respondent by : Sh. Ram Bilash Meena, CIT DR
Date of hearing: 04.01.2016
Date of Pronouncement: 29.01.2016
ORDER
PER KULDIP SINGH, JM:
Since common question for determination has been raised in both the aforesaid appeals, the same are being disposed of by way of consolidated order to avoid repetition of discussion.
2 I.T.(SS)A.No.02 & 05/Del/20122. The appellants, Shilpi Securities Pvt. Ltd., and Vaidahi Lease and Finance Pvt. Ltd., E-10, Sector 15, NOIDA (hereinafter referred to as 'the assessees') by filing the present appeals, sought to set aside the impugned orders both dated 12.12.2011 passed by the Assessing Officer, New Delhi for the block assessment period from 01.04.1986 to 27.06.1996 on the grounds inter alia that:
A. IT(SS)A No.02/Del/2012:
"1. The assessing officer erred in law and on facts in making an addition of Rs.8,93,034/- being interest on NCD with Citibank ignoring the facts and evidences placed on record that the transactions regarding NCD were duly recorded in the books of account and the said interest was duly declared as income in the regular return of income filed before the due date. Thus the addition so made should be deleted.
2. Without prejudice to the above submissions, if the addition of Rs.8,93,034/- is sustained in the block period, then directions should be issued to exclude the interest income of Rs.8,31,596/- (excluding TDS of Rs.61,438/-) offered for taxation in the regular assessment as the same income cannot be taxed twice.
3. The assessing officer has erred in law and on facts in not allowing credit of TDS certificate of Rs. 61,438/- issued by Citibank and submitted to the department though the said amount is included in the interest of Rs.8,93,034/-. Thus directions should be issued' to allow credit of the said amount against tax due to the assessee.
B. IT(SS)A No.05/Del/2012:
"1. The assessing officer erred in law and on facts in making an addition of Rs.8,96,459/- being interest on NCD with Citibank ignoring the facts and evidences placed on record that the transactions regarding NCD were duly recorded in the books of account and the said interest was duly declared as income in the 3 I.T.(SS)A.No.02 & 05/Del/2012 regular return of income filed before the due date. Thus the addition so made should be deleted.
2. Without prejudice to the above submissions, if the addition of Rs.8,96,459/- is sustained in the block period, then directions should be issued to exclude the interest income of Rs. 8,34,233/- (excluding TDS of Rs. 62,226/-) offered for taxation in the regular assessment as the same income cannot be taxed twice.
3. The assessing officer has erred in law and on facts in not allowing credit of TDS certificate of Rs. 62,226/- issued by Citibank and submitted to the department though the said amount is included in the interest of Rs.8,96,459/-. Thus directions should be issued to allow credit of the said amount against tax due to the assessee."
3. Briefly stated, the facts of these case are: the assessees, being related to Prakash Chand Yadav group of cases, one of the accused in Rs.133 crore urea import scam, were searched u/s 132(1) of the Act on 20.09.1996 regarding the bank account No.0-412419-006 in Citi Bank, Connaught Place, New Delhi, and thereafter, pursuant to notice u/s 158BC, the assessments were completed on 30.09.1997 at an undisclosed income of Rs.1,28,93,034/- and Rs.8,96,459/- respectively against the retuned undisclosed income of Rs. 'nil'.
4. The assessees challenged the orders of the Assessing Officer before ITAT, New Delhi, which has declared the assessment proceedings void ab- initio and consequently, the Revenue preferred an appeal before Hon'ble High Court, New Delhi and then, Hon'ble High Court, New Delhi vide order dated 31.10.2007, restored the appeals to ITAT, Delhi benches, New Delhi for deciding afresh. Then ITATA, New Delhi vide order dated 30.04.2008 held the block assessment invalid because of the illegality in the warrant issued u/s 132(1), which had again been challenged before 4 I.T.(SS)A.No.02 & 05/Del/2012 Hon'ble High Court, which has passed order dated 30.11.2009 reversing the decision of ITAT and restoring back the appeals to the ITAT, Delhi Benches, New Delhi for decision on merit. Then ITAT, New Delhi Bench 'A' vide order dated 23.07.2010 allowed the appeal and restored the file to the Assessing Officer with the direction to decide the same in the light of observations in case of M/s. Patliputra Credits and Securities Ltd. in IT(SS)A No.372/Del/97 dated 17.03.2006 as the order of the Tribunal squarely applied to the present case.
5. The Assessing Officer in compliance to the order passed by the Tribunal, served the notices u/s 143(2) and 142(1) of the Act along with questionnaire and in response thereof, Shri Anil Sanghi attended the proceedings, filed necessary details and has discussed the case. Perusal of record goes to show that the total amount of Rs.1,20,00,000/- credited in the accounts of the assessee has been received from Shri Anil Sanghi in account No. 0-412419-006 in Citi Bank, Connaught Place, New Delhi from his current account No.612 having been transferred out of the amount of Rs.27,64,93,670/- declared by Shri Anil Sanghi as his undisclosed income for the block period and offered for taxation by him. The said amount has already been taxed in the hands of Anil Sanghi. The amount of Rs.1,20,00,000/- credited in the accounts of the assessee and debited in the account of Anil Sanghi which is not treated as undisclosed income of the assessee for the Assessment Year 1996-97 in view of the directions of the Tribunal.
6. Regarding interest income of Rs.8,93,034/- on the FDRs maintained with Citi Bank in F.Y. 1996-97, the tribunal in view of clause (c) and (d) of section 158BB(1) of the Act, excluded the same from the Assessment 5 I.T.(SS)A.No.02 & 05/Del/2012 Years 1996-97 and 1997-98 and thus, the Assessing Officer excluded the income recorded in the books of accounts of the assessee after proper verification.
7. The assessee company having been incorporated on 29.01.1996, filed its first return for the Assessment Year 1996-97 and the block assessment u/s 158BC(c) of the Act was completed on 30.09.1997 at an undisclosed income of Rs.1,28,93,034/- against the returned undisclosed income of Rs. 'nil'. The claim of the assessee that he has already shown the interest income in its balance sheet as on 31.03.1997 as well as in the P & L account for the year ending 31.03.1997, and as such cannot be treated as undisclosed income, has not been accepted by the Assessing Officer. The assessee's claim that it had earned interest of only Rs.83,956/- on its investment in NCD of Rs.1,18,74,089/- on 27.03.1996 in Citi Bank, New Delhi as against 8,93,034/-/- added by the Assessing Officer and this contention has also not been accepted by the Assessing Officer and thereby assessed the undisclosed income of Rs.8,93,034/- qua the Assessment Year 1997-98.
8. Feeling aggrieved, the assessees have again come up before the Tribunal by way of filing the present appeals.
9. We have heard Authorized representatives of both the sides and perused the material placed on record in the light of orders of tax authorities below and facts and circumstances of the case.
10. Grounds No.1 and 2 of I.T.(SS) A. No.02 & 05/Del/2012:
Initially, notice u/s 158BC of the Act was issued on 07.04.1997 and assessment u/s 158BC(c) of the Act was completed on 30.09.1997 at 6 I.T.(SS)A.No.02 & 05/Del/2012 undisclosed income of Rs.1,28,93,034/- against retuned undisclosed income of Rs. 'nil'.
10.1 In the second round of litigation, amount of Rs.1,20,00,000/-
credited in the assessee's account No.0-412419-004 maintained with Citi Bank, Connaught Place, New Delhi from the current account No.612 of Shri, Anil Sanghi and Associates in J & K Bank, NOIDA out of the amount of Rs.27,64,93,670/- declared by Anil Sanghi as his undisclosed income for the block period offered for taxation by him, has not been declared as undisclosed income.
10.2 However, the Assessing Officer has assessed the total undisclosed income of the assessee at Rs.8,96,459/- in appeal No.05/Del/2012 and Rs.8,93,034/- in appeal No.02/Del/2012 received as interest by the assessee on FDRs with Citi Bank in financial year 1996-97 relevant to Assessment Year 1997-98.
10.3 Now, the only question arises for determination is, 'as to whether interest income received by the assessee on which tax has already been deducted at source, is to be treated as 'undisclosed income' in the block assessment'?
10. Identical issue has come up for determination before the Hon'ble Jurisdictional High Court in the judgement cited as Dr. (Mrs.) Surjit Tosaria Vs JCIT 92 TTJ 338, which has been answered in favour of the assessee. Operative part of the judgement cited as Dr. (Mrs.) Surjit Tosaria (supra) is reproduced as under for ready reference:
"Search and Seizure - Block assessment - computation of undisclosed income - tax at the appropriate rate has been deducted at source from the salary by the employer, and deposited with the Government - though the assessee has not filed returns for the 7 I.T.(SS)A.No.02 & 05/Del/2012 years falling in the block period, there is nothing on record to show that the TDS has been taken back as refund by her - salary income could not be treated as undisclosed income of the block period - CIT Vs Ashok Taksali (2002) 176 CTR (Raj.) 625: (2002) 257 ITSR 352 (Raj.) followed."
11. Similar issue has come up for consideration before Hon'ble Karnataka High Court in the case cited as CIT and Another Vs H. E. Mynuddin Pasha, 338 ITR 533 and the operative part of which is reproduced as under:
"SEARCH AND SEIZURE- BLOCK ASSESSMENT-
UNDISCLOSED INCOME- MEANING OF TAX DEDUCTED AT SOURCE FROM INCOME AND ADVANCE TAX PAID BY RECIPIENT - INCOME NOT UNDISCLOSED INCOME OF PARTNERS- FIRM DISCLOSING REMUNERATION TO PARTNERS AND DEDUCTING TAX AT SOURCE ON THEM -
NO UNDISCLOSED INCOME IN HANDS OF PARTNERS -I.T. ACT, 1961 S.158BC.
Undisclosed income for the purpose of block assessment has been defined under the I.T. Act, 1961. The proceedings under the regular assessment and the assessment for the block period stands to operate on different fields. Income in respect of which advance tax has been paid as well as tax deduction at source cannot be construed as undisclosed income at all. The moment advance tax is paid the taxable income at that point of time stands disclosed to the Revenue by the assessee. When the creditors pay interest and deduct tax at source and show the payment in their books of account as well as the returns filed the income due to the assessee stands disclosed to the Department. Similarly, when the firm pays remuneration in terms of the agreement to its partner and reflects in the books of account as well as in the return filed to the Department well in time, the income stands disclosed to the Department. Therefore, merely because the recipient of the income did not file the return and he filed only after the search makes no difference.8 I.T.(SS)A.No.02 & 05/Del/2012
12. The ratio of judgements cited as Dr. (Mrs.) Surjit Tosaria Vs. JCIT and CIT and Another Vs H. E. Mynuddin Pasha (supra) clearly establish that when admissible tax at source has already been deducted by the bank from the interest income, though the said interest income has not been shown by the assessee in the return filed for the year falling in the block period, the interest income cannot be treated as 'undisclosed income' of the block period. In the case at hand, when undisputedly, addition has been made by the Assessing Officer on the basis of entries in the books of accounts and not on the basis of any seized material tax on the interest income has been deducted by Citi Bank at source for which TDS certificate has been issued and the income declared by the assessee in its regular return of income has already been accepted u/s 143(1) and 143(3) of the Act, the question does not arise to declare the interest income as 'undisclosed income'. The said income cannot be treated as undisclosed income because when the advance tax / TDS has been deducted by the bank itself then the income becomes 'disclosed income' of the assessee. The Assessing Officer has erred in declaring the interest income of the assessee for the Assessment Year 1997-98 as undisclosed income.
13. When the TDS has already been deducted by the Citi Bank on the interest income in question as referred to by the Assessing Officer at page 8 of the assessment order, the same cannot be again put to tax by declaring undisclosed income, so it cannot be again subjected to tax. So, we are of the considered view that the Assessing Officer has erred in declaring the interest income of the assessee for the Assessment Year 9 I.T.(SS)A.No.02 & 05/Del/2012 1997-98 as undisclosed income on which TDS has already been deducted. Consequently, grounds No.1 and 2 of both the appeals are determined in favour of the assessee.
14. Ground No.3 of IT(SS)A No.02 & 05/Del/2012:
The assessee alleged that the Assessing Officer has arbitrarily not allowed the credit of TDS Certificate of Rs.62,226/- in IT(SS)A No.05/Del/2012 and Rs.61,438/- in appeal No.02/Del/2012 issued by Citi Bank despite the fact that the said amount is included in the total interest income. However, this contention is not tenable because it is settled principle of law that the benefit of TDS is to be claimed by the assessee in the normal assessment and not in case of block assessment made by the Revenue in the instant case. In case, the assessee has any such claim, he is at liberty to approach the appropriate authority to take benefit of any such TDS. So, we find no ground to interfere into the findings returned by the Assessing Officer. Hence, Ground No.3 of both the appeals is determined against the assessee.
15. In view of the discussion made in the preceding paras on the grounds raised by the assessees, we hereby partly allow both the appeals filed by the assessees.
16. Order pronounced in the open court on 29th Jan., 2016.
Sd./- Sd./-
(G. D. AGARWAL) (KULDIP SINGH)
VICE PRESIDENT JUDICIAL MEMBER
Date: 29.01. 2016
Sp.
10 I.T.(SS)A.No.02 & 05/Del/2012
Copy forwarded to:-
1. The appellant
2. The respondent
3. The CIT
4. The CIT (A)-, New Delhi.
5. The DR, ITAT, Loknayak Bhawan, Khan Market, New Delhi. True copy.
By Order
(ITAT, New Delhi)
S.No. Details Date Initials Designation
1 Draft dictated on 20/1 Sr. PS/PS
2 Draft placed before author 20,22,29,30,30/1 Sr. PS/PS
Draft proposed & placed before the Second
3 JM/AM
Member
4 Draft discussed/approved by Second Member AM/AM
5 Approved Draft comes to the Sr. PS/PS 29/1/16 Sr. PS/PS
6 Kept for pronouncement 29/1 Sr. PS/PS
7 File sent to Bench Clerk 29/1 Sr. PS/PS
8 Date on which the file goes to Head Clerk
9 Date on which file goes to A.R.
10 Date of Dispatch of order