Income Tax Appellate Tribunal - Delhi
Mahabir Prasad Gupta, New Delhi vs Department Of Income Tax on 3 February, 2011
IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH "E" NEW DELHI)
BEFORE SHRI RAJPAL YADAV AND SHRI A.N. PAHUJA
ITA Nos. 713 & 714/Del/2011
Assessment Years: 2000-01 & 2006-07
Deputy Commissioner of IT, vs. M/s. Mahabir Prasad Gupta,
Central Circle 15, Prop. Supariwala & Co,
New Delhi. 555-567, Katra Ishwar Bvn,
Khari Road, Delhi.
(PAN: AAEPG9144G)
(Appellant) (Respondent)
Appellant by: Shri Gunjan Prasad, CIT (DR)
Respondent by: Shri Sanjiv Jain, CA
ORDER
PER RAJPAL YADAV: JUDICIAL MEMBER The present two appeals are directed at the instance of revenue against the separate orders of even date i.e. 04.11.2010 passed by the Learned CIT(Appeals) for assessment years 2000-01 and 2006-07.
2. First, we take ITA No. 713/Del/2011 in assessment year 2000-01. The amounts mentioned in the ground of appeal are not similar as stated in the order dated 03.02.2011 passed by the Learned CIT whereby he has authorized to file the appeal against the order of Learned CIT(Appeals) dated 04.11.2010. The authorized grounds as per this order are as under:
"Grounds of appeal:
1. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in deleting the addition of Rs.1.04 crore 2 made by the A.O. on account of investment made outside books of account.
2. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in deleting the addition of Rs.65,446 made by the A.O. on account of interest earned on money advanced outside the books of account,
3. (a) The order of the CIT(A) is erroneous and not tenable in law and on facts.
(b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal".
3. Both the substantial grounds are inter-connected to each other. The brief facts of the case are that a search and seizure operation was carried out on 15.12.2004 at a premises of Shri Brij Mohan Gupta. A diary containing entries in the coded language was found from the premises of Shri Brij Mohan Gupta. It was inventorised as Annexure A-50. Statement of Shri Brij Mohan Gupta, his son Rajiv Gupta and his accountant Shri Ram Avtar Singhal were recorded. Shri Ram Avtar Singhal while disclosing the entries made in the diary in abbreviated form pointed out that 667 dated 31.3.2003 written on this pages means Rs.6,67,000. These were received from one person whose name in abbreviated form is noted on the diary and these were advanced as a loan. Shri Brij Mohan Gupta is charging commission for this 3 business. He used to take loan from ABC and further advanced it to XYZ, in a way he was working as a broker in arranging the finance. Learned Assessing Officer has noticed entries available on pave 34 of Annexure A- 50 as well as on page 25. According to the Assessing Officer, the assessee has advanced a sum of Rs.1,04,00,000 through Shri Brij Mohan Gupta. On the basis of that outcome, he made an addition of this amount under sec. 69 of the Income-tax Act, 1961 as undisclosed investment. Learned Assessing Officer further estimated the interest income on this investment and made an addition of Rs.65,446.
4. On appeal, Learned CIT(Appeals) deleted the addition on the ground that revenue could not collect sufficient evidence. The addition on the basis of narration made in the diary of a third person cannot be made. It is not ascertained whether MP Gupta means Mahabir Prasad Gupta i.e. assessee only. It can be some other person also. Accordingly, Learned CIT(Appeals) has deleted the addition.
5. The learned counsel for the assessee at the very outset submitted that in the diary, names of number of persons were mentioned. The additions made in the hands of all those persons. These additions were deleted by the 4 Learned CIT(Appeals). The appeals of the revenue were also dismissed. In the present case, Learned CIT(Appeals) has followed the orders of the ITAT. For buttressing his contentions, he placed on record copy of the ITAT's order in ITA Nos. 4417 to 4420/Del/2009 in the cases of Dev Dutt Prasad, Raj Kumar Garg vs. ITO, in the case of ITO vs. Pawan Kumar Gupta, Atul Gupta vs. DCIT in ITA No. 24/Del/2011 and Ors.
6. Learned DR on the other hand relied upon the order of the Assessing Officer. However, he could not controvert the availability of large number of ITAT's orders pertaining to similarly situated persons.
7. We have heard the rival contentions and gone through the record carefully. We find that similar issue was considered by the ITAT in a number of cases. The findings recoded in the case of Atul Gupta read as under:
"16. We have duly considered the rival contentions and gone through the record carefully. The issue for our adjudication is whether the narration found in the diary of Shri Brij Mohan Gupta recovered during the course of search carried out at his premises in 2004 is a conclusive evidence against the assessee to hold that assessee made investment in advancing the loan to certain parties through Shri Brij Mohan Gupta. The revenue in order to prove its case is harping upon 5 the narrations available in the diary, statement of Shri Ram Avtar Singla and Shri Brij Mohan Gupta. We have perused the seized material available on page 46 of the assessee's paper book. On this page, there are various entries against the names of various persons, they are in abbreviated form or in a coded form. At the bottom of the page against "Atul", there are certain entries, namely, 4, 4, 2, 1 & 1.5 totalling to 12.50 are available. No doubt, this is a narration made by Shri Ram Avtar Singla in his handwritings. Shri Ram Avtar Singla has explained what for the latter mentioned in abbreviated form stands for e.g. HD means Hanuman Dass. KMF, Krishan Kumar Manoj Kumar, Karol Bagh, New Delhi. Learned Investigating Offifer at the time of recording the statement of Shri Ram Avtar Singhla almost put every abbreviated letter to Shri Ram Avtar Singhla. He was able to give the complete form but not the address. With regard to the assessee, no question was put. The revenue failed to establish a live link between the information noted in abbreviated form by Shri Ram Avtar Singhla and the assessee. The revenue could not establish that Atul noted in this diary is as Atul Kumar Gupta i.e. the assessee. Thus, neither the diary was found from the premises of the assessee nor it is in the handwriting of the assessee, any third person may right the name of any person at his sweet will then an assessee cannot be burdened with liability on the basis of such writing. That can be starting point of investigation but revenue has to establish that it is the assessee who has paid the money to certain concerns without recording them in the books of account. Learned First Appellate Authority has discussed this aspect while deleting the addition and we do not see any reason to interfere in his findings. The findings in all 6 the other assessment years are almost similar except variation in the quantum of additions. Therefore, all the appeals of the revenue are de void of any merit and they are dismissed."
8. There is no disparity on facts. The revenue could only able to lay its hands on the diary of Shri Brij Mohan Gupta where names of persons were recorded in coded words e.f. 'HD' means Hamamm Dass, R.K. means Ram Kumar. The revenue could not establish that 'MPG' means Mahabir Prasad Gupta only i.e. 'assessee'. The revenue has not placed on record statements of Shri Brij Mohan Gupta or Ram Avtar Singal or Rajiv Gupta before us. Therefore, in our opinion, the issue in dispute is squarely covered in favour of the assessee by the orders of the ITAT passed in the case of other persons i.e. Ashok Prasad Gupta, Atul Gupta, Dev Dutt Prasad etc.
9. On due consideration of all these material, we do not find any merit in this appeal. It is dismissed.
10. In ITA No.714/Del/2011, the grounds of appeal taken by the revenue read as under:
"1. On the facts and in the circumstances of the case, Learned CIT(Appeals) has erred in deleting the addition of Rs.21,06,777 made by the A.O. holding that the assessee is a benami owner of M/s. Mount Fragrances.7
2. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in holding that the assessee is the owner of only 75% of the profits of M/s. Mount Fragrances.
3. On the facts and in the circumstances of the case, the Learned CIT(Appeals) has erred in clubbing the unaccounted income for A.Y. 2003-04 to A.Y. 2006-07 and allowing the adjustment of excess surrender of Rs.19.00 lakhs against this income.
4. a) The order of the CIT(A) erroneous and not tenable in law and on facts.
b) The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal".
11. The brief facts of the case are that a search and seizure operation was carried out at the premises of the assessee on 23.3.2006. The assessee has filed his return of income on 30th October 2006 declaring an income of Rs.541,95,570. Learned Assessing Officer has made an addition of Rs.21,06,777 in the income of the assessee by observing as under:
"3. it was found at the time of search that the assessee is a benami owner of M/s. Mount Fragrances whose proprietor on record was shown as Sh. Gaurav Mittal. While framing the assessment of Sh. Gaurav Mittal, so called proprietor of M/s. Mount Fragrances for A.Y. 2002-03, it was held that the firm M/s. Mount Fragrances is a benami concern of Sh. Mahabir Prasad Gupta. Similarly, it was held in the A.Y. 2003-04 to A.Y. 2006-07. Detailed facts are available in the 8 assessment record of Sh. Gaurav Mittal. Keeping those assessment orders in view, it is held that the assessee was a proprietor of above named firm. Income of the above firm has been worked out in that order as Rs.2106777. Keeping above order in view and benami nature of the firm, income of Rs.2106777 is added in the hands of the assessee as the real beneficiary. Penalty proceedings under sec. 271(1)© of the I.T. Act are initiated separately for concealing of income on this score".
12. On appeal, Learned CIT(Appeals) has deleted the addition by observing as under:
"2. The first issue raised in this appeal against addition of Rs.21,06,777 made to the taxable income of the assessee on account of income from M/s. Mount Fragrances. The Assessing Officer has made this addition on the basis of his findings in the case of Shri Gaurav Mittal in A.Y. 2003-04 in the case of the appellant for A.Y's 2003-04 to 2006-07. I have already dealt with this issue in detail in my order in A.No.125/09-09 in this appellant's own case appeal in A.Y. 2003-04. As has been held by me in the A.Y. 2003-04 in the case of the appellant, only an amount of Rs.1,41,500 is required to be added in the hands of the assessee for the instant year and accordingly balance amount of Rs.19,61,177 is deleted. In the result the addition is sustained to the extent of Rs.1,41,500 and the assessee gets a relief of Rs.19,61,177."9
13. Learned DR while impugning the order of the Learned CIT(Appeals) submitted that the basic issue involved with regard to this ground is whether assessee is to be treated as 100% owner of a firm, namely, Mount Fragrance or he be treated owner to the extent of 75%. Learned CIT(Appeals) has relied upon his order passed in assessment years 2003-04 to 2005-06. In assessment year 2003-04, this issue was agitated. Learned Assessing Officer has treated the assessee as benami owner of the firm Mount Fragrance to the extent of 100%. On appeal, assessee contended that Shri Gaurav Mittal is also a partner in the firm to the extent of 25%. In support of his contentions, assessee has filed sales-tax registration certificate showing Gaurav Mittal as proprietor, sales tax assessment order. Certificate of import/export code showing Gaurav Mittal as partner. Copy of the return of Gaurav Mittal wherein he has admitted to be owner of Mount Fragrances. Learned first appellate authority has gone through all these evidences and thereafter held that only evidence possessed by the Assessing Officer for treating the assessee as benami owner is the statement of Shri Ram Babu Mittal father of Shri Gaurav Mittal. In his statement, he has disclosed that Gaurav Mittal is a partner only for name sake. Learned CIT(Appeals) has held that this statement is not sufficient to treat the assessee as 100% owner of Mount Fragrances. Learned CIT(Appeals) has further held that profit to the extent 10 of 75% from this firm is to be assessed in the hands of the assessee. This order was not challenged by the revenue in further appeal.
14. Learned DR took us through the findings of the Learned CIT(Appeals) in assessment year 2003-04 available on page Nos. 93 to 106 of the paper book. He submitted that even if revenue has not challenged the order of the Learned CIT(Appeals) in assessment year 2003-04, it can challenge those findings which are still effective in the present assessment year. In this way, he submitted that no discussion is discernible in the impugned order and, therefore, for the purpose of the facts and reasoning, Tribunal is required to look into the order of the Learned CIT(Appeals) in assessment year 2003-04. Learned DR contended that Learned CIT(Appeals) in this year has erred in holding that the assessee is owner to the extent of 75% of Mount Fragrances. He further relied upon the findings of the Assessing Officer.
15. The learned counsel for the assessee while rebutting the statement of Learned DR submitted that orders of the Learned CIT(Appeals) in assessment year 2003-04 to 2005-06, treating the assessee at 75% owner of M/s. Mount Fragrance have been accepted. He further submitted that in this 11 year, Learned CIT(Appeals) has not granted any substantial relief to the assessee. The learned counsel for the assessee drew our attention towards page 87 of the paper book and submitted that assessee has surrendered an income of Rs.9 crores. The break up of income as to how it was allocated in different assessment years has been placed on page 87 of the paper book. On the strength of these details, he pointed out that a sum of Rs.19 lacs out of Rs. 9 crores surrendered income was remained to be allocated against stock or assets. Learned CIT(Appeals) has granted benefit of set of this amount. In the present assessment year, Assessing Officer has accepted that total sales of Rs. 4870,36,149 are recorded in the books. Assessee has shown profit @ 7.5%. On the other hand, assessee has shown unrecorded sales at cost price at Rs.5184,45,534. The profit at the rate of 7.5% comes out to Rs.388,82,965. As against this amount, assessee has disclosed Rs.5.40 crores. It can take care of all shortcomings, therefore, according to learned counsel for the assessee, Learned CIT(Appeals) has not deleted any addition, he just granted telescoping.
16. We have heard the rival contentions and gone through the record carefully. As far as second ground of appeal is concerned, the revenue has already accepted findings of the Learned CIT(Appeals) in assessment year 12 2003-04 that assessee is owner to the extent of 75% of the profits of M/s. Mount Fragrances. We have gone through the order of the Learned CIT(Appeals) in assessment year 2003-04 also, though it is not under challenge before us but, the reasoning are contained in that order. Learned CIT(Appeals) has treated the assessee as owner to the extent of 75% after examining the record. The revenue was only possessing the statement of Shri Ram Babu Mittal who has disclosed during the course of search that his son is a partner only for name sake. Learned CIT(Appeals) has observed that statement of Gaurav Mittal was never recorded. In his assessment order, it was observed by the Assessing Officer that it may be possible, therefore, may be drawing salary in the share of 25%. Learned CIT(Appeals) also considered sales-tax registration certificate, bank statement, return of Gautav Mittal etc., more so, this order was not challenged. Thus, we don't find any merit in ground No.2 of the revenue.
17. As far as ground No.1 is concerned, after looking into page 87 of the paper book, wherein details of surrender income of Rs. 9 crores, how it is allocated to the stock and assets and details of unrecorded sales, we are of the opinion that a sum of Rs.19 lacs was still available with the assessee for allocation. Benefit of set off of this amount has been given to the assessee by 13 the Learned CIT(Appeals), otherwise in principle Learned CIT(Appeals) has confirmed the addition of Rs.21,06,777 in the findings extracted supra. Taking into consideration the findings of the Learned CIT(Appeals), we are of the view that only telescoping benefit has been granted by the Learned CIT(Appeals) after treating the assessee as owner to the extent of 75% of the profit of Mount Fragrances. There is no error in the order of the Learned CIT(Appeals). Accordingly, the appeal of the revenue is dismissed.
18. In the result, both the appeals are dismissed.
Decision pronounced in the open court on 23.11.2012 Sd/- Sd/-
( A.N. PAHUJA ) ( RAJPAL YADAV )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 23/11/2012
Mohan Lal
Copy forwarded to:
1) Appellant
2) Respondent
3) CIT
4) CIT(Appeals)
5) DR:ITAT
ASSISTANT REGISTRAR