Income Tax Appellate Tribunal - Chandigarh
Sh. Rajesh Syal,, Chandigarh vs Department Of Income Tax on 23 July, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
CHANDIGARH BENCH "B" CHANDIGARH
BEFORE SHRI T.R. SOOD, AM AND Ms. SUSHMA CHOWLA, JM
ITA No. 129/Chd/2009
Assessment Year: 1998-99
A.C.I.T. Circle 3(1) V. Rajesh Syal
Chandigarh H No. 1285, Sector 42
Chandigarh
PAN:
(Appellant) (Respondent)
Appellant by: Shri S.K. Mittal
Respondent by: Shri S.K. Mukhi
Date of hearing: 23.07.2012
Date of Pronouncement: 27.07.2012
ORDER
PER T.R. SOOD, A.M
In this appeal the revenue has raised the following grounds:
"1 On the facts and in the circumstances of the case, the ld. CIT(A) in Appeal No. 133/P/06-07 vide order dated 5.12.2008 has erred in deleting:
i) The addition by holding that as the ownership of the deposits has not been proved in the hands of Shri Rajesh Syal due to lack of evidence, the deposits cannot be said to be belonging to the assessee.
2. It is prayed that the order of the ld. CIT(A) be cancelled and that of the Assessing Officer may be restored."
2. After hearing both the parties we find that during assessment proceedings the Assessing Officer received repot from the ITO, Ward 1, Panchkula that many accounts were opened in the name of Shr S.K. Sharma and Smt. Kiran Sharma at the behest of Shri Rajesh Syal, Director of Marigold Leasing India Ltd. In these accounts huge amounts totaling to Rs. 2,23,73,216/- were made. Various notices were sent to the assessee but nobody appeared before him. It was explained before us that the assessee was in the jail therefore, no representation could be made. During assessment proceedings it was further noticed that Shri S.K. Sharma was an employee of M/s Marigold Leasing (India) Pvt Ltd. and was getting salary of Rs, 3500/- and HRA of Rs. 1000/- per month and he was made to open these accounts in his name, the operation of which was under the control of his employer, Shri Rajesh Syal who 2 routed payments for purchase of land and land developments through these accounts. It was further noticed that the income of Smt. Kiran Sharma was assessed at Rs. 47,27,000/- on protective basis because the money belonged to the assessee i.e. Shri Rajesh Syal. Similarly in case of Shri S.K. Sharma income was assessed on protective basis at Rs. 2,03,87,061/-. In this background the Assessing Officer made an addition of Rs. 2,50,65,821/- (Rs. 2,03,38,821/- plus Rs. 47,27,000/-).
3. On appeal before the ld. CIT(A), it was mainly submitted that there was no justification on substantive assessment in the hands of the assessee without making proper enquiry. The addition has been made mainly on the basis of submissions of Shri S.K. Sharma and his wife Smt. Kiran Sharma without affording any particular cross examination. The assessee had nothing to do with the deposits made by Shri S.K. Sharma and his wife Smt. Kiran Sharma. It was stated that Shri S.K. Sharma has purchased land for the Golden Forest and was also earning income from commission. Further detailed submissions were made and few documents were filed. Accordingly the ld. CIT(A) sought the remand report from the Assessing Officer. After making few observations the assessee was allowed to cross examine Shri S.K. Sharma and his wife Smt. Kiran Sharma.
4. The ld. CIT(A) after examining the submissions and the remand report observed that the deposits were found in the name of Shri S.K. Sharma, therefore, the onus was on the revenue to prove that the deposits belonged to Shri Rajesh Syal and thus the assessee could not be saddled with a liability. Ultimately the issue was decided vide para 22 which is as under:-
"The assessee has placed on record that he has no link whatsoever with M/s Golden Forest Group. It was also stated that Shri S.K. Sharma was his employee only from 1991 to 1996 and thereafter Shri S.K. Sharma was associated with M/s Golden Forest Group. There is no material brought on record to prove that the assessee has been a beneficiary on account of deposits made in the accounts of Shri S.K. Sharma. The assessee has given sufficient material which has already been reproduced in Para 16 above to prove that the transactions have been done by Shri S.K. Sharma on behalf of M/s Golden Forest Group. The assessee has no connection whatsoever with M/s Golden Forest Group. If any action lies, it would be in the hands of Shri S.K. Sharma or Smt. Kiran Sharma as the deposits have been found in their bank account.3
However, the Assessing Officer has to make investigation on the material supplied by the assessee in regard to the transactions conducted by Shri S.K. Sharma whether these really belong to him or some other persons. On facts, it cannot be treated that the money is belonging to the assessee because no material has been brought on record to prove the ownership of the assessee."
5. Before us, the ld. DR for the revenue submitted that there is no merit in the observations of the ld. CIT(A) that the assessee has no link whatsoever with Golden Forest Group. M/s Golden Forest (India) Ltd. was owned by assessee's father and was being looked after by his brother and the assessee. Further Shri S.K. Sharma was an employee of the assessee till 1998. In this regard he placed on record a copy of statement of Shri S.K. Sharma dated 4.8.2003. In this statement he answered to question no. 2 in which it was specifically stated that Shri S.K. Sharma that he was an employee with Shri Rajesh Syal from 1991-92 to 31.3.1998. Apart from this he also referred to cross examination by the assessee of Shri S.K. Sharma which has been annexed at Annexure A to the impugned order. He particularly referred to page 7 of the statement wherein Shri S.K. Sharma in response to a question clearly stated that he was purchasing land under the direction and guidance of Shri Rajesh Syal i.e. the assessee. This itself shows that the money belonged to Shri Rajesh Syal, the assessee.
6. On the other hand, the ld. counsel of the assessee submitted that after the statement record on 4.8.2003 which was recorded behind the back of the assessee, another statement of Shri S.K. Sharma was recorded in which he stated that he worked with Shri Rajesh Syal till 31.3.1996. In fact the assessee i.e. Shri Rajesh Syal had nothing to do with M/s Golden Forest (India) Ltd. that company was being looked after by his brother. In fact assessee's group of business is known as M/s Marigold Leasing (India) Pvt Ltd. It is accepted fact that the money deposited in the account of Shri S.K. Sharma and his wife Smt. Kiran Sharma was mainly used for purchase of land by M/s Golden Forest (India) Ltd. therefore, it cannot said that the money deposited by Shri S.K. Sharma had any account with the assessee.
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7. We have heard the rival submissions carefully and find that though the ld. CIT(A) has made the following observations at para 22:
"However, the Assessing Officer has to make investigation on the material supplied by the assessee in regard to the transactions conducted by Shri S.K. Sharma whether these really belong to him or some other persons."
We find it strange that on the one hand, the ld. CIT(A) is of the view that more investigation is required and on the other hand, he is making observations that it cannot be said that the money belongs to the assessee. In fact real truth can be determined only after detailed enquiries and after the cross examination of Shri S.K. Sharma by the assessee, the ld. CIT(A) should have asked to make further enquiries and furnish remand report. Instead the ld. CIT(A) choose to delete the addition an at the same time made a comment that further enquiries are required. It is significant to note that during cross examination of Shri S.K. Sharma by the assessee, following questions and answers (at page 7 of annexure A) are given:-
"Q (RS) Please state the source of deposits sin your bank accounts i.e. A/C No. 362, 3955, 500, 100203 and 762 maintained with different banks and totaling to Rs. 2,23,73,216/-. Please state the utilization of this money (one bank account 762 belong to your wife, Mrs. Kiran Sharma?
Ans (SK) Such huge deposits were received from M/s Golden Forest Group and deposited with my accounts at the time of purchasing land for Golden Forest Group under the directions and guidance of Shri Rajesh Syal, Director M/s Marigold Leasing India Ltd. Manimajra. I was only an employee of Shri Rajesh Syal drawing a salary of Rs. 6000/- PM (inclusive of allowances). Out of these deposits reflecting in my accounts, various lands were purchased in the name of different companies - all pertaining to Golden Forest Group. I am also submitting details of land purchased - the details is Registrar executed."
The above answer clearly show that the money did not belong to Shri S.K. Sharma and it was deposited in his account for purchasing land. However, he has clearly stated that the land was being purchased for M/s Golden Forest (India) Ltd. under the directions and guidance of Shri Rajesh Syal, Director of M/s Marigold Leasing (India) Pvt Ltd. This shows that the assessee was also involved in the operation of M/s Golden Forest (India) Ltd. In our opinion, this needs further investigation and enquiries. Therefore, we set aside the order of 5 the ld. CIT(A) and remit the matter back to the file of Assessing Officer with a direction to re-examine the issue after making proper enquiries.
8. In the result, appeal filed by the revenue is allowed for statistical purposes.
Order pronounced on 27.07. 2012
Sd/- Sd/-
(SUSHMA CHOWLA) (T.R. SOOD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 27 .07.2012
SURESH
Copy to: The Appellant/The Respondent/The CIT/The CIT(A)/ The DR 6