Income Tax Appellate Tribunal - Delhi
Acit, New Delhi vs Sh. Rajiv Gupta, New Delhi on 31 July, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A', NEW DELHI
BEFORE SHRI R. K. PANDA, ACCOUNTANT MEMBER
AND MISS SUCHITRA KAMBLE, JUDICIAL MEMBER
ITA No. 1412/Del./2012 : Asstt. Year : 2009-10
ACIT Vs. Saket Appartment (P) Ltd.
Central Circle-2, Room No. 323 2nd Floor,
3rd Floor, ARA Centre, E-2, 22, Maharishi Debendra Road
Jhandewalan Extn. Kolkata
New Delhi PAN : AAJCS7575A
ITA NO. 1416/Del./2012 : Asstt. Year : 2009-10
ACIT Vs. Garhwal Properties (P) Ltd.
Central Circle-2, Room No. 323 264, Bharat Apartment
3rd Floor, ARA Centre, E-2, Sector-13, Rohini
Jhandewalan Extn. New Delhi
New Delhi PAN : AACCG6295L
ITA NO. 2313/Del/2012 : Asstt. Year : 2009-10
ACIT Vs. Shri Ram Hari Ram
Central Circle-2, Room No. 323 1658-59, Dariba Kalan,
3rd Floor, ARA Centre, E-2, Chandni Chowk
Jhandewalan Extn. New Delhi
New Delhi PAN : AADFS7036D
ITA NO. 2314/Del/2012 : Asstt. Year : 2009-10
ACIT Vs. Rajiv Gupta
Central Circle-2, Room No. 323 4-A,
3rd Floor, ARA Centre, E-2, Prithvi Raj Road
Jhandewalan Extn. New Delhi
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 2
New Delhi PAN : ACFPG9713R
Assessee by : Sh.Ashok Kumar Jain, Aashu Goel, CA
Revenue by : Smt. Aperwa Karan, CIT. D.R.
Date of Hearing: 27 07 2017
Date of Pronouncement: 07 2017
ORDER
PER R.K. PANDA, ACCOUNTANT MEMBER :
The above appeals filed by the revenue are directed against the separate orders of the CIT(A) - III, New Delhi relating to assessment year 2009-
10. Since common grounds have been taken by the revenue in all these appeals, therefore, these were heard together and are being disposed of by this common order for the same of convenience.
2. First we take up ITA No. 1416.Del.2012 as the lead case. Facts of the case, in brief, are that the assessee is a Private Limited Company engaged in the business of Real Estate. Original return of income was filed on 26th September, 2009 disclosing total income of Rs. 2,38,61,230/-. During the course of assessment proceedings, the AO noted that a search and seizure operation u/s 132 of the IT Act was conducted in the case of Shri Ram Hari Ram Group. During the course of search documents belonging to be assessee company were found and seized from the premises of Shri Bal Kishan Saraf as per Annexure A-1 pages 3 to 5 of party SOR -4. In response to notice u/s 143(2) and u/s 142(1) the assessee appeared before the AO and filed various details from time to time. The AO noted that during the course of search proceedings, statement of Shri Rajiv Gupta was recorded u/s 131(1A) of the IT Act, 1961. In the said statement while answering to question no. 21, he had admitted ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 3 unaccounted income of Rs. 50 crores. However, he had not given names of the persons in whose hands he had admitted the unaccounted income and requested that he will submit later the details of the persons in whose name the unaccounted income has been disclosed. He observed that Shri Rajiv Gupta and Shri Bal Kishan Saraf are the core persons of all the concerns of Shri Ram Hari Ram Group and Orchid Group of companies.
3. The AO referred to the reply given by Shri Rajiv Gupta in response to question no. 21 where he had disclosed additional income of Rs. 50 crores for the current assessment year 2009-10. He also noted that Mr. Rajiv Gupta vide letter dated 5th June, 2009 and 10th June, 2009 filed in the office of the ADIT (Inv.), Unit -III(2), New Delhi had submitted the names of the persons in whose name the disclosure of unaccounted income has been declared. As per the above letters Shri Rajiv Gupta had offered unaccounted income of Rs. 2.5 crore in the case of the assessee. However, the assessee in its return of income filed on 26th September, 2009 had declared income of Rs. 2,38,61,230/-. He, therefore, asked the assessee to explain the reasons for not showing the additional income for the year under consideration as admitted by Shri Rajiv Gupta in his statement recorded u/s 131(1A) of the IT Act. The assessee vide letter dated 16th December, 2010 submitted that Shri Rajiv Gupta had admitted income of Rs. 50 crores which includes normal income. The relevant para of the letter which has been reproduced by the AO at page 5 and 6 of the assessment order read as under :
"This is with reference to your query regarding explanation of disclosed income in statement recorded u/s 132(4) on 27/02/2009 in respect of word "additional it is over & above income of books of account". Please inform about such additional income of Rs. 50 crores declared in the statement as additional income of A. Y 2009-
10. How, it has been shown in return of income in whose name & ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 4 period. If the same has not been declared then explain why income should not be assessed as per statement of assessee in his case and group concerned. Sources, manner and investment of such additional income should be furnished. Details of seized material on the basis of which such additional income is arrived should be clearly identified. Its details person wise, tax wise and period wise should be submitted. "
In this regard, we most respectfully draw reference to the pertinent statement made by Sh. Rajive Gupta on the date of search on 26.02.2009 conducted u/s 132 of the Income Tax ACT' 1961, the statement given as per Question No. 21, the relevant text of same is as under:
" I hereby disclose additional income of Rs.50 crore for the current assessment year 2009-10, over and above normal income of the AY 2009-10. (bold and underlined portion was specifically written and deleted as evident from statement). This offer of additional income is given to cover all documents found at other premises of Orchid Group of companies, M/s Shri Ram Hariram Jewellers, Dariba Kalan, residence, and offices of my relatives and deficiency of stock/cash etc found at other premises. At present I am not in position to submit bifurcation of this additional income of Rs.50 crore after going through all the documents found at all the premises covered in search and survey operation , valuation of stock of jewellery at the premises of our partnership firm M/s Shriram Hari Ram Jewellers and in consultation of other partners/directors. "
As such, the statement of surrendered income was given before the team of Investigating officer of Mr. Paramjeet Singh, ADIT on 26.02.2009 in which the assessee has declared a sum of Rs. 50 crores which pertains to all the individuals and Group Companies i.e m/s Orchid Group of companies and individuals and the assessee's categorical stand that Rs.50 crore includes normal income for AY 2009-10 is clear from the fact that qualification intended to be attached to income of Rs.50 crore by ADIT i/e Rs.50 crore to be over and above normal income of the AY 2009- 10 was jointly deleted by ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 5 search team and this fact is undisputed on the face of statement itself which is also further clarified as it should be read with letter dated 05.06.2009 and 10.06.2009 addressed to ADIT, Investigation which are duly acknowledged by ADIT, lnvestigation copy enclosed at annesure-2) where the understanding of assessee with search party was reiterated and accepted by investigating officer Ld ADIT, Investigation (Unit III(2)), Delhi and correct status of Rs.50 crores is absolutely clear that it includes normal income rather than being over and above normal income for the AY 2009-10 relevant text reproduced as under:"
4. However, the AO was not satisfied with the above reply given by the assessee. According to the AO the assessee should have separately disclosed the additional income 2.5 crores. He further was of the opinion that the disclosure by way of admission during the course of search u/s 132 of the IT Act is not a mere statement but a statement which is given under oath. Further he had made the statement at his own will and not under any coercion. The assessee has never retracted such statement at any stage. Relying on various decisions, the AO held that the assessee can not backtrack from the said confession. He accordingly made addition of Rs. 2.5 crores in the hands of the assessee as unaccounted income. (Similar additions were made in the case of Saket Apartment (P) Ltd. Rs. 3.00 crores Shri Ram Hari Ram Rs. 2.00 crores and Mr. Rajiv Gupta Rs. 1.00 crore.)
5. Before CIT(A), the assessee reiterated the same arguments as made before the AO. It was submitted that the addition has been made based on the statement of Rajiv Gupta given during the course of search where he had offered an income of Rs. 50 crores for the group for the assessment year 2009-10. An amount of Rs. 2.5 crores is relatable to the assessee, M/s. Garhwal Properties Pvt. Ltd. for assessment year 2009-10. It was submitted that the offer of income of Rs. 2.5 crores has not been made by the assessee company ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 6 or any of its Directors but by Mr. Rajiv Gupta who is a different person and not linked with the assessee. It was further submitted that in the statement given by Shri Rajiv Gupta the words "over and above normal income for assessment year 2009-10" was deleted by the search party. This was also informed to the ADIT Mr. Paramjit Singh vide letter dated 5th June, 2009 which was accepted by him. Another letter dated 9th June, 2009 was also addressed to the ADIT. It was vehemently argued that the assessee has never offered additional income of Rs. 2.5 crores over and above the normal income. Without prejudice to the above, the assessee submitted that no incriminating material was found during the course of search. The CBDT instruction vide F. no. 286/2/2003 dated 10th March 2003 was brought to the notice of the CIT(A). It was argued that in spite of comprehensive search where investigation and verification of papers, records, assets were done and numerous statements were recorded and verified and after marathon assessment proceedings there is no material to suggest that addition of Rs. 2.5 crores is supported by any incriminating document or cogent material found and available on record.
6. Based on the arguments advanced by the assessee the Ld. CIT(A) deleted the addition of Rs. 2,50,00,000/- by observing as under :-
"The above grounds relate to the addition made for Rs. 2,50,00,000/-. The basis of this addition arises from the disclosure of concealed income for Rs. 50 Crores made by Sh. Rajeev Gupta for the entire group in his statement recorded on 26/27 02.2009 which also includes that of the assessee and which has subsequently been reiterated by Sh. Rajeev Gupta in the breakup provided in his letter to the ADIT dated 05.06.2009 & 10.06.09 wherein the amount of Rs. 2.5 Crores has been declared on behalf of the assessee. The AO is of the view that the assessee has backtracked from his disclosure of Rs. 2.5 Crores and consequently the same has been added to the income of the assessee.
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 7 As against this the substance of the assessee's argument is that the initial disclosure of Rs. 50 Crores made in various hands by Sh. Rajeev Gupta included the normal income of the group and was not over and above the normal income. In this connection attention has been invited to the statement of Sh. Rajeev Gupta dated 27.02.09 and his subsequent letter to the ADIT on 05.06.09. It has also been argued by the appellant that in the statement of Sh. Rajeev Gupta dated 27.02.09 in answer to question no. 21 the words "over and above normal income of the AY 2009-10" were specifically deleted after having been recorded. It has also been submitted that in the letter dated 05.06.09 addressed to ADIT concerned this purposeful deletion was pointed out to display the categorical stand of Sh. Rajeev Gupta that Rs. 50 Crore disclosure included normal income for AY 2009-10 of the various assesses whose names are written in this letter. Reference has also been made to the letter dated 09.06.09 written by Rajeev Gupta to ADIT Unit-Ill (2), New Delhi in which the bifurcation of 50 Crores income for AY2009-10 in hands of various assesses which included the appellant's income for Rs. 2.5 Crores together with the details of payment of advance tax and TDS has been filed.
From all these submissions the point being made by the appellant is that the consolidated disclosure of Rs. 50 Crore also included normal income for AY 2009-10. Thus the appellant has contended that there has been no backtracking from the surrender of income for Rs. 2.5 Crores in case of the appellant. It has also been submitted by the appellant that no part of income as per regular books of account maintained or document found and seized has been left out. Reliance has also been placed on the decision in case of Sarwan Singh Rattan Singh AIR 1957 SC 637 and of ITAT in Karam Chand 73 ITD 434 which is to the effect that it is open to the party to prove that the admission made by him is not correct and true. That the statement of Sh. Rajeev Gupta ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 8 has in any case not been retracted but has been erroneously interpreted by the AO. It has lastly been argued that as laid down in the case of Pullangode Rubber 91 ITR 18(0; Anoop Kumar 147 Taxman 26( ASR) the retraction for surrender of income made u/s 132(4) during search proceedings may be accepted in facts of case. Further that in the absence of any supportive material or evidence , addition could not be made merely on the basis of statement recorded us/ 132(4) as there is no incriminating material on record to justify the addition. It has additionally been argued that the admission on oath for income of Rs. 50 Crores (Rs. 2.5 Crores in case of the assessee) is that of Sh. Rajeev Gupta and not of the assessee and therefore retraction if any is that of Sh. Rajeev Gupta and not that of the assessee.
Considering the totality of the arguments it is observed that the disclosure statement made by Sh. Rajeev Gupta on 27.02.09 is somewhat ambiguous in nature and the issue whether this disclosure included the normal income of the group and was not over and above the normal income is not very clear. However at the same time it is also noted that in his subsequent letters written to the ADIT concerned on 05 06.09 and 10.06.09 Sh. Rajeev Gupta has clearly stated that the disclosure of Rs. 50 crores included normal income for AY 2009- 10 for all the assesses whose names are written on these communications. Moreover, alternatively even if the assessee goes back on his disclosure for a certain amount, the onus shifts on the AO to investigate and substantiate the difference between the disclosure made and the returned income and that the difference cannot straightaway be added to income. In such circumstance it was the duty of the AO to have investigated the matter further before making addition to income and not merely based the same on the disclosure. It is apparent from the assessment order that no such investigation has been made neither there is reference to any incriminating document found relating to the ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 9 appellant in the statement recorded of Sh. Rajeev Gupta on 27.02.09 or in the assessment order passed by the AO. Rather in the assessment order there is reference only to page no. 11 of Annexure A-l which is P & L A/c of the assessee for the period 01.04.08 to the contents of which have already been explained by the assessee to the AO and with reference to which no adverse inference has been drawn by the AO in the assessment order. In view of the above discussion the addition made for Rs. 2,50,00,000/- is directed to be deleted."
7. Aggrieved with such order of the CIT(A), the revenue is in appeal before us with the following ground :
"1. On the facts and in the circumstances of the case, the CIT(A) has erred in law and on facts in deleting the addition of Rs. 2.50 crore made by the Assessing Officer on account of undisclosed income surrendered during the course of search."
8. The Ld. DR strongly relied on the order of the Assessing Officer She submitted that assessee in his statement recorded u/s 131(1A), during the course of search had offered additional income Rs. 50 crores. He had not given the bifurcation of the amounts to be disclosed in the hands of various assesses of the group. Subsequently, he had offered additional income of Rs. 2.5 crores in the hands of the assessee. However, the same was not honoured in the return of income filed. By offering an additional income of 2.5 crores, the assessee has precluded the AO from making further inquiries. Further it is a usual practice that whenever any income is offered during the course of search, the same is always additional income over and above the normal income. Therefore, the AO under the facts and circumstances of the case, is fully justified in making addition of Rs. 2.50 crores to the return income. She accordingly submitted that the order of the CIT(A) be reversed and that of the AO be restored.
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 10
9. The Ld. Counsel for the assessee on the other hand heavily relied on the order of the CIT(A). Referring to page 45 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to the answer given by Shri Rajiv Gupta to question no. 21. He submitted that in the said reply the words "over and above normal income of the assessment year 2009-10" has been specifically struck off. Referring to the letter addressed to ADIT dated 9th June, 2009, copy of which is placed at Page 48 of the paper book, the ld. Counsel for the assessee drew the attention of the bench to the bifurcation of income of Rs. 50 crores in the hands of various persons of the group which includes normal income. Referring to the letter addressed to the ADIT received by his office on 5th June, 2009, a copy of which is placed at page 39 of the paper book, the Ld. Counsel for the assessee submitted that in the said letter it was clarified that the offer of Rs. 50 crores in the hands of different assesses included normal income for assessment year 2009-10. Referring to the letter addressed to the AO vide letter dated 16th December, 2010, copy of which is placed at page 50 to 55 of the paper book, the ld. Counsel for the assessee submitted that in the said letter the AO was again reminded of the statement given during the search as well as the various letters addressed to the ADIT stating that the offer of additional income of Rs. 50 crores was inclusive of income for assessment year 2009-10. Referring to the following chart the ld. Counsel for the Assessee drew the attention of the bench to the income declared by different persons which included the disclosure made by Shri Rajiv Gupta in his statement made during the course of search.
SR. Particulars A B C D
No. Rajiv Gupta Saket Garwal Shri Ram Hari
Apartments Properties Ram
Pvt. Ltd. Pvt. Ltd.
ITA No. 2314/DEL/12 1412/DEL/12 1416/DEL/12 2313/DEL/12
1 Total income asper
Return of Income
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 11 Taxable Income as 73,75,260 3,03,79,790 2,38,61,230 2,06,10,105 per Return u/s 139(1) Add:
a.Exempted 75,59,376 - - -
Income
b.Standard - 2,74,09,581 2,85,51,004 -
Deduction u/s
24(a)
c. Deduction u/s 80,170 1,00,000 1,00,000
80G/80C
Total Income 1,50,14,806 5,78,89,371 5,25,12,234 2,06,10,105
including Normal
Income
2. Disclosure Made by 1,00,00,000 3,00,00,000 2,50,00,000 2,00,00,000
Rajiv Gupta in his
statement u/s
132(4)
3 (Short)/Excess 50,14,806 2,78,89,371 2,75,12,234 6,10,105
4. Whether any Yes No No No
Search/Survey
Conducted
5. Whether any No No No No
Incriminating
Material found
during the course of
Search/Survey
suggesting Addition
6. Whether any No No No No
Undisclosed
Valuables like Cash,
jewellery, or other
articles has been
found during the
course of
search/survey
7. Whether addition No No No No
made by Ld. AO is
based on any
material found
during
search/survey
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 12
8. Whether Rajiv Gupta is NA No No Yes (Partner) Director/Partner/Employee
10. The ld. Counsel for the assessee submitted that the addition made by the AO of Rs. 2.5 crores is not based on any incriminating material. There is not a whisper in the body of the assessment order regarding any incriminating material that has been found during the course of search and which is the basis for addition. Further Mr. Rajiv Gupta is neither the Director nor an Employee of the assessee company who had made the surrender of additional income of Rs. 50 crores. Referring to the decision of Delhi Bench of the Tribunal in the case of DCIT vs. Ramprastha Builders Pvt. Ltd. vide ITA No. 3238/Del/2013 and bunch of other appeals order dated 16th Feb., 2016, he submitted that the Tribunal in the said decision has held that merely on the basis of statement recorded u/s 132(4), no addition can be made unless some corroborative evidence was found in support of such addition. Referring to CBDT instruction vide F. No. 286/2/2003 and IT (Inv. II) dated 10th March 2003, the Ld. Counsel for the assessee submitted that AO should rely upon the evidences / material gathered during the course of search operation while framing the relevant orders. Referring to various other decisions placed in the paper book, the ld. Counsel for the assessee submitted that it has been unanimously held in all these decisions that addition cannot be made merely on the basis of statement recorded u/s 132(4) in absence of any incriminating material found during the course of search. He accordingly submitted that the order of the CIT(A) being in consonance with law the same should be upheld and the ground raised by the revenue should be dismissed.
11. We have considered the rival arguments made by both the sides, perused the orders of the AO and CIT(A) and the paper book filed on behalf of the assessee. We have also considered the various decisions relied on by both ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 13 the sides. We find the AO on the basis of statement recorded of Shri Rajiv Gupta during the course of search made an addition of Rs. 2.5 crores in the hands of the assessee. According to the AO the above amount was declared as additional income over and above the normal income for the impugned assessment year in the hands of the assessee. While making the addition, the AO rejected the explanation of the assessee that the additional income so declared was inclusive of the normal income for the impugned assessment year and not over and above the normal income. We find the ld. CIT(A) relying on the decision of Hon'ble Supreme Court in the case of Swarn Singh Rattan Singh (Supra) and various other decisions deleted the addition made by the AO, the contents of which are already reproduced in the preceding paragraph. It is the submission of the Ld. DR that the offer of income of 2.5 crores should have been over and above the normal income. It is the submission of the Ld. Counsel for the Assessee that in view of the categorical assertion by Shri Rajiv Gupta as well as by the assessee the offer of income of 2.5 crores was inclusive of the normal income of the current year. It is also his submission that the addition was not based on any incriminating material found during the course of search. Further, Shri Rajiv Gupta was never confronted about such disclosure and he was not even an employee or Director of the assessee company.
12. We find merit in the above arguments of the ld. Counsel for the assessee. Admittedly, Mr. Rajiv Gupta in his answer to question no. 21 recorded during the course of search u/s 131(1A) had offered the additional income of Rs. 50 crores for the current assessment year 2009-10 and the words "over and above normal income of the assessment year 2009-10" are specifically struck off by the search party itself who had recorded the statement. This fact was also clarified before the ADIT vide letter dated 5th ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 14 June 2009 and 9th June, 2009 copies of which are placed in the paper book. The above letters addressed to ADIT which were also stated before the AO are not proved to be false or untrue. Neither the investigation wing nor the assessing officer at any point of time has confronted the assessee about such letters. Under these circumstances, it cannot be said that the offer of additional income of 2.5 crores in the hands of the assessee is over and above the normal income. Further the submission of Ld. Counsel for the assessee that the addition of 2.5. crores as undisclosed income in the hands of the assessee is not based on any incriminating material found during the course of search couldnot be controverted by the ld. DR. We also find there is nothing on record to show that Shri Rajiv Gupta was, at any point of time, confronted regarding the surrender made by him in the hands of the assessee. Since the assessee has stated that the additional income of 2.5 crores is inclusive of the normal income of the current year and since no incriminating material was found during the course of search and Shri Rajiv Gupta was never confronted regarding such surrender, therefore we do not find any merit in the addition made by the AO. Under these circumstances, the order of the CIT(A) deleting the addition made by the AO is fully justified. We, therefore, uphold the order of the CIT(A) and the ground raised by the revenue is dismissed.
In the result the appeal filed by the revenue is dismissed.
ITA No. 1412/Del/2012 ITA No. 2313/Del/2012 ITA No. 2314/Del/201213. After hearing both the sides, we find the grounds raised by the revenue in the above appeals are identical to the ground raised in ITA no. 1416/Del/2012. We have already decided the issue and the ground raised by ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 15 the revenue has been dismissed. Following the same reasoning the grounds raised by the revenue in all these appeals are dismissed.
14. In the result all the above four appeals filed by the revenue are dismissed.
Order Pronounced in the Open Court on /07/2017.
(Suchitra Kamble) (R.K. PANDA)
Judicial Member Accountant Member
DATED: .7.2017
*Binita*
Copy forwarded to:-
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
Assistant Registrar
ITA No. 1412, 1416,2313, 2314/Del/2012, A.Y. 2009-10 16 Date Initial
1. Draft dictated on 27/07/2017
2. Draft placed before author 28/07/2017
3. Draft proposed & placed before 28/07/2017 the second member
4. Draft discussed/approved by 28/07/2017 Second Member.
5. Approved Draft comes to the 28/07/2017 Sr.PS/PS
6. Kept for pronouncement on 31/07/2017
7. File sent to the Bench Clerk
8. Date on which file goes to the AR
9. Date on which file goes to the Head Clerk.
10. Date of dispatch of Order.