Income Tax Appellate Tribunal - Indore
Shri Ashok Gupta, Bhopal vs The Dcit (Central), Bhopal on 30 June, 2020
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
आयकर अपील य अ धकरण, इंदौर यायपीठ, इंदौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER
AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER
IT(SS) Nos.64 & 161/Ind/2017
Assessment Years 2011-12 & 2012-13
Dr. Ashok Gupta, DCIT (Central),
B-253, Shahpura Vs. Bhopal
Bhopal
(Appellant) (Respondent )
PAN No.AEKPG3970P
IT(SS) Nos.66, 67 & 162/Ind/2017
Assessment Years 2006-07, 2011-12 & 2012-13
Dr. Neeraj Kumar Gupta, DCIT (Central),
A-12, Subhash Nagar, Vs. Bhopal
Bhopal
(Appellant) (Respondent )
PAN No.AJRPK0363K
Revenue by Shri S.B. Prasad, CIT
Assessee by Shri S.S. Despande, CA
Date of Hearing 11.03.2020
Date of Pronouncement 30.06.2020
1
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
ORDER
PER MANISH BORAD, AM
The above captioned bunch of appeals filed at the instance of the assessee(s) pertaining to Assessment Years 2006-07, 2011-12 & 2012-13 are directed against the orders of Ld. Commissioner of Income Tax (Appeals)-3 (in short 'Ld.CIT(A)'], Bhopal dated 20.01.2017 & 19.01.2017 which are arising out of the order u/s 153A r.w.s 143(3) of the Income Tax Act 1961(In short the 'Act') dated 14.03.2014 framed by DCIT(Central), Bhopal.
2. Assessee(s) has raised following grounds of appeals;
(a) Dr. Ashok Gupta IT(SS) No.64/Ind/2017 Assessment Year 2011-12
1. That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.75.000/- on account of unexplained foreign expenditure u/s 69C as discussed by the learned DCIT in Para No.11.4 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3. That the addition of Rs.40,OO,OOO/- on account of voluntary disclosure u/s 132(4) against the cash received from Bansal Group for sale of shares of Ayushman Medical Diagnostic Pvt. Ltd. as discussed by the learned DCIT in Para No.20.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
2 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
4. That the addition of Rs.4,50,OOO/- on account of undisclosed cash investment u/s 69B as discussed by the learned DCIT in Para No.14.4 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
5. That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
6. The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case. IT(SS) No.161/Ind/2017 Assessment Year 2012-13
1. That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.16,26,897/- maintained and confirmed by CIT(A) on account of Cash and foreign currency found u/s 69 as discussed by the learned DCIT in Para No.10.5 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3. That the addition of Rs.1 ,40,914/- on account of voluntary disclosure u/s 132(4) as discussed by the learned DCIT in Para No.19.6 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
4. That the addition of Rs.1,75,00,000/- on account of voluntary disclosure u/s 132(4) against the cash received from Bansal Group for sale of Shares of Ayushman Medical Diagnostic Pvt Ltd. as discussed by the learned DCIT in Para No.20.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
5. That the addition of Rs.1,85,00,000/- on account of cash receivable from Bansal Group for sale of Shares of Ayushman Medical Diagnostic Pvt Ltd. as discussed by the learned DCIT in Para No.20.10 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
6. That the addition of Rs.13,00,000/- on account of unexplained expenditure u/s 69C as discussed by the learned DCIT in Para No.12.6 of the assessment order be held to be bad and unjustified on / the facts and in the circumstances of the case and be quashed and deleted.
7. That the addition of Rs.1 ,86,478/- maintained and confirmed by CIT(A) on account of short-term capital gain u/s 50C by adopting cost of acquisition at Rs.59,76,625/- in place of Rs.61,23,103/- as discussed by the learned DCIT in Para No.17.5 of the assessment 3 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
8. That the addition of Rs. 4,46,086/- on account of unexplained investment u/s 69B as discussed by the learned DC IT in Para No.18.11 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
9. The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case.
(b) Dr. Neeraj Gupta IT(SS) No.66/Ind/2017 Assessment Year 2006-07
1. That the assessment made u/s 153A r.w.s. 143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.13,OO,OOO/- maintained and confirmed by CIT(A) made on the basis of Page No.122 of LPS-3 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3.That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
4.The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case.
IT(SS) No.67/Ind/2017 Assessment Year 2011-12
1.That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.90,00,000/- made on the basis of Page No.30 of LPS-6 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3. That the addition of Rs.1 ,52,000/- made on the basis of Page No.61 of 4 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 BS-1 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
4. The appellant craves leave to add or amend any ground of appeal before or during the Course of hearing of the case. IT(SS) No.162/Ind/2017 Assessment Year 2012-13
1. That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.1,93,040/- maintained and confirmed by CIT(A) made as per Para NO.9.5 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3.That the addition of Rs.55,00,000/- made as per Para No.15.15 of . the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
4. That the addition of Rs.2,80,00,000/- made as per Para No.15.16 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
5. That the addition of Rs.15,00,000/- made as per Para No.1 0.6 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
6. That the addition of Rs.39,500/- made as per Para NO.11.4 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
7. That the addition of Rs.21, 16,800/- made as per Para No.12.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted. That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
5 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
8. The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case.
3. Since most of the issues raised and facts and circumstances raised are common, these appeals were heard together and are being disposed off by this common order for sake of convenience and brevity.
4. First we will take up IT(SS) No.64/Ind/2017 relating to the assessee namely Shri Ashok Gupta for Assessment Year 2011-12 and 2012-13.
5. Brief facts of the case as culled out from the records are that 3 Doctors namely Dr. Ashok Gupta, Dr. Neeraj Kumar Gupta and Dr. Gopal Batni were running hospital in the name of M/s. Ayushman Medical Diagnostic Pvt. Ltd (herein after called Ayushman). This hospital was sold to Bansal Group through its key person namely Shri Sunil Bansal. Search u/s 132 of the Act was conducted at the business and residential premises of Bansal Group on 02.06.2011. Since the appellant(s) were having business connection with the Bansal Group they were also subjected to search. Search action was carried out at the residential premises of all the 3 Doctors. During the course of search various documents and loose papers 6 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 were seized. Statement of the assessee namely Dr. Ashok Gupta were also recorded. In the statement income was surrendered. Subsequently notice u/s 153A of the Act were served upon to the assessee for filing of return of income. The assessee had been filing regular Income Tax Return in the past. Notices were issued for Assessment Year 2006-07 to Assessment Year 2012-13. The instant appeals relates to Assessment Years 2011-12 and 2012-13. Since the due date of filing of return of income for Assessment Year 2011- 12 did not expire as the date of search was 02.06.2011, assessee filed the Income Tax return for Assessment Years 2011-2 and 2012- 13 on 26.8.2013 declaring income of Rs.11,58,557/- and Rs. 54,04,161/-. For Assessment Year 2012-13 assessee has also offered additional income of Rs.13,07,502/-. During the course of assessment proceedings assessee was confronted with various incriminating materials, statement recorded during the course of search and various information received during search proceedings. After considering the submissions of the assessee assessment were completed after making various additions thereby assessing income at Rs.56,83,590/- and Rs.4,61,35,960/- for Assessment Year 2011- 12 and 2012-13 respectively.
7 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
6. Aggrieved with these additions assessee preferred appeal before Ld. CIT(A) but partly succeeded. Now the assessee is in appeal before the Tribunal raising various grounds of appeal.
7. Apropos to Ground No.1 commonly raised for Assessment Years 2011-12 and 2012-13 challenging the assessment made u/s 153A r.w.s. 143(3) of the Act being bad in law and on facts deserving to be quashed, Ld. Counsel for the assessee requested for not pressing this ground. Since common Ground No.1 challenging the validity of assessment proceedings u/s 153A r.w.s. 143(3) of the Act has not been pressed, we accordingly dismiss Ground No.1 raised in IT(SS) No. 64/Ind/2017 and IT(SS) No.161/Ind/2017.
8. Now we take up Ground No.2 for Assessment Year 2011-12 (IT (SS) No.64/Ind/2017) raised by the assessee which reads as follows:-
That the addition of Rs.75.000/- on account of unexplained foreign expenditure u/s 69C as discussed by the learned DCIT in Para No.11.4 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
9. In the above ground assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs.75,000/- on account of 8 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 unexplained foreign expenditure u/s 69C of the Act. Various incriminating material were found during the course of search showing that the assessee has carried out foreign travelling. After considering the submissions of the assessee, Ld. A.O made addition for unexplained expenditure at Rs. 75,000/- u/s 69C of the Act for the foreign travel to Thailand for two persons which took place on 30.11.2010 to 04.12.2010 observing as follows:-
II. Vide reply dated 21.02.2014 assessee has stated that the above expenditure was neither recorded in his books of accounts nor in the books accounts of his family members.
III. The assessee is also not having any confirmation regarding the claim of assessee that the above foreign trip was sponsored by other companies for attending medical conferences.
IV. The assessee has not offered the above expenditure for taxation, during the filing of return u/s 139(1) of the IT Act, nor in response to notice u/s 153A.
V. However, the assessee in his submission has admitted these amounts to be added as his undisclosed income.
11.4 In view of the above facts and circumstances of the case, it is established that the assessee has made above expenditure of Rs.75,000/- in AY. 2011-12 in foreign tours, which was not recorded in the books of accounts. Therefore, the amount of Rs. 75,000/- for A.Y. 2011-12 are hereby added to the total income of assessee on account of 9 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 unexplained expenditure u/s 69C.
10. Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed and the addition made by the Ld. A.O was confirmed as Ld. CIT(A) observed that no other details have been filed before Ld. A.O and during the appellate proceedings which could prove that foreign trips were sponsored by pharmaceutical companies for attending medical conferences.
11. Now the assessee is in appeal before the Tribunal.
12. Ld. Counsel for the assessee referred to the following written submissions;
Ground No. 2: Addition on account of foreign tours of Rs.75,OOO/- . The Ld. AO has made the additions on the basis of the estimates in Para 11.3 Pg.15 of the Assessment Order on the ground that this is an unexplained expenditure incurred by the assessee for the various foreign tours undertaken by him. It was submitted before the Ld. AO that the assessee is a doctor and running a reputed hospital. The pharmaceutical manufacturing companies sponsor such tours as advertisements and the expenditure has been incurred by them. However, the assessee could not file any certificates of the sponsorship of the tours and as such the additions have been made. The Ld. AO while estimating the expenses has taken the figures of 2014 on the basis of the packaged tours advertisements and has taken the rate of the dollar and pound as was existed in the year 2014. It is humbly submitted that it is a known fact 10 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 that the tours are normally sponsored by the pharma companies and as such the additions are uncalled for and deserve to be deleted.
13. Per contra Departmental Representative vehemently argued supporting the orders of both the lower authorities.
14. We have heard rival contentions and perused the records laced before us. Through Ground No.2 for Assessment Year2011- 12 assessee has challenged the finding of Ld. CIT(A) confirming the addition for unexplained expenditure for foreign travel at Rs.75,000/-. We find that similar addition were made in the hands of the assessee for unexplained foreign expenditure for Assessment Years 2007-08 to 2010-11 and that issue came before us for adjudication in appeal vide IT(SS) No.59 to 63/Ind/2017 and in the order dated 24.10.2019 we have decided this issue observing as follows:-
15. We have heard rival contentions and perused the records placed before us. The common issue raised for 2007-08, 2008-09, 2009-10 and 2010-11 relates to addition of foreign tours expenditure of following amounts;
Assessment Year Amount
2007-08 Rs. 68,763/-
2008-09 Rs.1,12,500/-
2009-10 Rs.1,50,000/-
2010-11 Rs. 72,737/-
11
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
16. The enquiry about the foreign tour expenses was initiated against the assessee during the course of search as foreign currency in US dollar and Thailand currency was found at the assessee's premises. Therefore this contention of the assessee that no incriminating material was found relating to this addition is uncalled for because possession of foreign currency itself shows that the assessee or his family members has undertaken some foreign tours and thus the nature and account of foreign tours needs to be explained by the assessee in case the same is not mentioned in the regular returns of income. Therefore the legal ground of the assessee does not stand and we proceed to deal with the merits of the case.
17. From going through the assessment order we observe that on page- 15 of the impugned assessment order it is mentioned that vide reply dated 21.2.2014 assessee stated that the alleged foreign expenditure was neither recorded in his books of accounts nor in the books of accounts against family members. He is also not having any confirmation regarding the claim that the foreign trip was sponsored by the companies. Such expenditure was also not offered for taxation in the return filed u/s 139(1) of the Act nor in response to notice u/s 153A of the Act. However the assessee in its submission has admitted this amount to be added as his undisclosed income therefore the A.O made the addition.
18. When the matter was taken up with Ld. CIT(A), in its written submission the assessee only claimed the relief of the following amounts;
Assessment Package Rate Total Relief
Year on expenditure requested
21.02.2014 at time of
visit
2007-08 68763 66000 2763
2008-09 112500 84000 28500
2009-10 150000 112000 38000
12
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
2010-11 72737 62400 10337
2011-12 75000 75000 NIL
19. The above stated relief was requested because the Ld. A.O applied the rates as of 21.02.2014 for all the years without considering the fact that the rates were lower in the previous years. Looking to these series of facts there is no dispute to the fact that the assessee has very much accepted to offer unaccounted foreign expenditure. He has also accepted that the amount of Rs.66,000/-, Rs.84,000/-, Rs.1,12,000/- and Rs.62,400/- was incurred on his foreign tour which is not recorded in the books of accounts nor offered as income in the returns filed. Relief has only been claimed for the package rates wrongly applied by the Ld. A.O for the preceding years. We find merits in the contention of the Ld. Counsel for the assessee that the Ld. A.O ought to have applied lower package rates for the preceding years and should not have uniformly applied the package rate as on 21.02.2014. Therefore the assessee deserves the relief requested by him before the first appellate authority. We accordingly delete the addition of Rs.2763/-, Rs.28,500/-, Rs.38,000/- and Rs.10,337/- for Assessment Years 2007-08, 2008-09, 2009-10 and 2010-
11. Thus this common issue is partly allowed. In the result the assessee's appeal for 2007-08, 2008-09 and 2009-10 is partly allowed.
15. After perusing the above finding we find that for Assessment Year 2011-12 assessee has not requested for any relief in the written submission filed before Ld. CIT(A). The relief claimed for other years was only regard to wrong application of package rates for preceding years. Since for Assessment Year 2011-12 no relief 13 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 has been requested by the assessee himself as there is no difference in the expenditure incurred at the time of visit and the package rates. We thus find no merit in Ground No.2 raised by the assessee and the same deserves to be dismissed. We accordingly dismiss Ground No.2 raised by the assessee in IT(SS) No.64/Ind/2017 relating to Assessment Year 2011-12.
16. Now we will take Ground No.4 of IT(SS) No.64/Ind/2017 for Assessment Year 2011-12 which reads as follows;
That the addition of Rs.4,50,OOO/- on account of undisclosed cash investment u/s 69B as discussed by the learned DCIT in Para No.14.4 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
17. Brief facts relating to this ground are that during the course of search carried out at the residential premises of the assessee loose paper No.1 and 1A as per Annexure A-I/5 were found and seized. These two loose papers were signed cheques of Standard Chartered Bank of Rs. 2,00,000/- and Rs. 2,50,000/- issued by M/s Universal Agro Farm in which name of the recipient is not written. The assessee was asked to explain and reconcile the transaction with regular books of accounts and why should not Rs. 14 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 4,50,000/- be treated as undisclosed income. The assessee vide reply dated 21.12.2014 stated that the documents mentioned in the questionnaire (LPS-3, A-1/5 Page No.I & lA) are two cheques (Ch.No. 862874 for Rs.2, 00,000/- and Ch. No. 862875 for Rs.2,50,000/-). Both the cheques are signed by Shardcndu Kumar Mishra Prop. M/s Universal Agro Farm and are drawn on Standard Chartered Bank. M. P. Nagar. Bhopal. Both these cheques do not bear any date nor the name of the person in whose favour the cheques have been drawn. Regarding the cheques having been found at the residence of the assessee, it is submitted that assessee's wife Smt. Alka Gupta had purchased a Plot situated at Gram Borda, Kolar Road, Bhopal vide registered deed dated 07-06- 2010 from Shardendu Kumar Mishra. The mutation of this plot in favour of Smt. Alka Gupta was due to be done. The aforesaid cheques were obtained as security till the completion of legal formalities of mutation. After the completion of mutation in favour of Smt. Alka Gupta the cheques were to be returned to Shri Shardendu Kumar Mishra.
15 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
18. Ld. A.O was not convinced with the submissions and he made the addition u/s 69B of the Act for unexplained cash investment of Rs. 4,50,000/-observing as follows:-
14.3 The submission of the assessee has been considered and examined but the same is not acceptable :-
I. The assessee has not submitted any material evidence to substantiate his claim.
II. The above loose papers shows that the assessee has made cash loan to M/5 Universal Agro Farm and taken cheque of Rs. 4,50,000/- form M/s Universal Agro Farm as security. The above cheques relevant for F. Y.201 0-11 relevant for A. Y 2011-12.
III. The above cheques have been received by the assessee against the cash loan, which was not recorded in the books of accounts.
IV. This cheques has been found and seized from the residence of the assessee. Therefore, in view of provisions of section 132(4A) of the Income tax Act, 1961, it is presumed that the transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true.
19. Aggrieved assessee preferred appeal before Ld. CIT(A) but could not succeed since the addition made by the Ld. A.O was confirmed by Ld. CIT(A) observing as follows:- 16
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 I have perused the submissions of the learned AR, the various decision cited, and the assessment order. The claim of the assessee cannot be accepted because no material evidence to substantiate it has been filed either before the A.O or at the appellate stage. The two cheques of Rs. 2,00,000/- and Rs. 2,50,000/- signed by Shri Shardendu Kumar Mishra (Prop M/s Universal Agro farms) and drawn on Standard Chartered Bank, MP Nagar, Bhopal. Both the cheques do not bear any date or name of the person in whose favour the cheques have been drawn. The appellant stated that his wife Smt Alka Gupta had purchawed a plot situated at Gram Borda, Kolar road, Bhopal from Shri Shardendu Mishra on 07.06.2010 and as the mutation of this plot was not done, these cheques were kept as a security till the legal formalities were completed. The plea of the appellant cannot be accepted because even if the cheques were kept as security at least the name of the purchaser i.e. Smt. Alka Gupta, wife of the appellant should have been mentioned which was not done n this case.
The finding of the A.O that the sum of Rs. 4,50,000/- is a cash loan made to M/s Universal Agro which is not recorded in the books of accounts is in order and calls for no interference.
20. Aggrieved assessee is now in appeal before the Tribunal.
21. Ld. Counsel for the assessee referred to following written submissions:-
Ground No. 4 (Page 19 and 20 of PB A-3): Addition of Rs.4,50,000/- on account of alleged cash investments - The Ld. AO has made the addition at Page 19, Para 14 on account of the loose paper A-1/5 Page 1 and lA. These two papers are the blank cheques signed by Universal Agro Farm drawn on Standard Chartered Bank for Rs.2,00,000/- and Rs.2,50,000/-. It 17 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 is humbly submitted that the assessee's wife and the assessee's father- in-law had purchased two plots from Universal Agro Farm Prop. Shri Shardendu Kumar Mishra vide registered deeds dated 7.6.2010. The mutation was to be done on the plots and as such as a security these two blank cheques were taken from him. No advance was given to him. On the contrary, the plots were purchased by making the payments by cheques. The copy of the registries clearly indicates this fact. The assumption of the Ld. AO that the cash loan was given to him against which the cheques are received is totally based on suspicion and surmises. It is therefore prayed that the additions may please be deleted.
22. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities.
23. We have heard rival contentions and perused the records placed before us and gone through the written submission made by the assessee. The issue relates to unexplained investment u/s 69B of Rs. 4,50,000/-. Two cheques bearing No. 862874 and 862875 issued by Shri Shardendu Kumar Mishra, Prop. M/s Universal Agro Farm drawn on Standard Chartered Bank, Bhopal for Rs. 2,00,000/- and Rs. 2,50,000/- respectively were issued in which the name of recipient was not mentioned. The allegation of the revenue authorities is that the assessee may have given cash loan 18 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 to Ms/ Universal Agro Farm and has kept the blank signed cheques as security. However there is no other material evidence on record which could prove that cash loan was given to Shri Shardendu Kumar Mishra. On the other hand the submissions made by the assessee has more strength since it is supported by documentary evidence. Two plots were purchased by the assessee's wife and his father in law by registered deed dated 13.6.2010. The mutation was pending for these two plots and the two cheques were kept as security from Universal Agro Farm. Apparently revenue authorities have failed to prove any live connection between the assessee and Universal Agro Farm relating to the two cheques found during the course of search. Whereas the documentary evidence filed by the assessee clarifies the transactions. No other efforts were made by the revenue authorities to confront Shri Shardendu Kumar Mishra.
24. In the given facts and circumstances of the case, we find no justification in the action of the Ld. A.O making the addition of unexplained cash investment of Rs.4,50,000/- since the addition made by the Ld. A.O seems to be made merely on the suspicion and surmises. We accordingly set aside the finding of Ld. CIT(A) and 19 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 delete the addition of Rs.4,50,000/- made u/s 69B of the Act and allow Ground No.4 of the assessee's appeal IT(SS) No. 64/Ind/2017 for Assessment Year 2011-12.
25. As far as Ground No.3 relating to addition of Rs.40,00,000/- on account of voluntary disclosure u/s 132(4) of the Act for the alleged cash receipt from Bansal Group for sale of shares of Ayushman Medical Diagnostic Pvt. Ltd the same can be dealt along with Ground No.4 & 5 raised by the same assessee in Assessment Year 2012-13 wherein the addition has also been made for the common issue.
26. Ground No. 5 & 6 of the appeal for Assessment Year 2011-12 are general in nature which needs no adjudication.
27. Now we take up Ground No.2 of IT(SS) No.161/Ind/2017 for Assessment Year 2012-13 in the case of Dr. Ashok Gupta and the same reads as follows:-
2.That the addition of Rs.16,26,897/- maintained and confirmed by CIT(A) on account of Cash and foreign currency found u/s 69 as discussed by the learned DCIT in Para No.10.5 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.20
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
28. Brief facts relating to this ground is that during the search and seizure action at various premises of lockers owned by the assessee following cash and foreign currency was seized:-
S. Place Found (In Seized (In
No. Rs.) Rs.)
1 H.No.B-253, Shahpura, Bhopal 2,65,030/- 2,01,000/-
2 5000 USD and Thai currency 2,62,000/- -
3 Locker No.2/23 State Bank of India, 2,00,000/- 2,00,000/-
PB Branch Area Colony, Bhopal in the
name of assessee
4 Locker No.10 Karnataka Bank, M.P 9,00,000/- 9,00,000/-
Nagar, Bhopal in the name of assessee
Total 16,27,030/- 13,01,000/-
29. When the assessee was directed to explain the source of cash and foreign currency, the assessee vide its reply dated 02.01.2014 stated that;
a. During the course of search the cash of Rs..2,65,030/- found at the residence of the assessee at B-253, Shahpura, Bhopal can be understood with reference to the cash professional receipts and the cosh received from Bansal Group before the date of search. The cash flow chart for all the relevant years are enclosed and the cash flow may be verified from the said statements. The assessee is not maintaining any personal books such as cash-book and ledger. The 5000 US Dollars found at the residence of the assessee belonged to his friend Dr. Akhil Kumar S/o Shri J.K Tiwari. This was explained by the assessee in his statement recorded during the course of search. The statement of. Dr: Akhil Kumar was also recorded by the authorised Officer was on 04-07--2011. Copy of this statement is with you. 1n his statement Dr. Akhil Kumar has admitted and has explained the circumstances under which the aforesaid dollars were kept at the residence of the assessee. Dr. Akhil K'umar has also explained his Sources of income and the fact that he is 21 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 employed in Saudi Arabia. He has also referred to AI-Raj hi Bank of Saudi Arabia from which he had withdrawn the dollars. Copy of Bank a/c of Dr. Akhil Kumar is enclosed. You may kindly appreciate the fact that at the time of search on 02-06-2011 the assessee was away in USA. If the dollars 'would have belonged to the assessee he would have taken the same along with him to USA.
b. The Cash Rs.2 Lacs found and seized from Locker No.S-2/23 at State Bank 0f India, Arera Colony, Bhopal belongs to the assessee and was received by him from the Bansal Group. The cash-flow statement for F.Y. 2011-12 covers this cash found and seized.
c. The Cash Rs.9 Lacs found and seized from Locker No. 143 at Kotak Mahindra Bank MP. Nagar, Bhopal belongs to the assessee and was received by him from the Bansal Group. The cash flow statement for F.Y 2011-12 covers this cash found and seized.
30. The explanation furnished by the assessee was not found acceptable to the Ld. A.O and the addition of Rs.16,27,030/- was made u/s 69A of the Act for unexplained cash and foreign currency observing as follows:-
10.3 The explanation furnished by the assessee has been considered.
The explanation of the assessee is not acceptable because at the time of search the assessee has not reconciled the cash and foreign currency found with the books of accounts. The explanation now given stating that the cash of Rs. 16,27,030/- is tallied with the books is self serving after thought because if there would have been cash balance in the' cash book as on date of search, the assessee could have explained the same at that time only. The argument of the assessee is therefore not 22 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 substantiated with supporting documents satisfactorily. 10.4 In sections 69A of the Income-tax Act, 1961, what is provided is that if an assessee is found to be the owner of any money, jewellery or any other valuable articles not recorded in the books of account and fails to offer any explanation about the 'nature and source thereof or in case any such explanation, if offered, is not satisfactory in the opinion of the Assessing Officer, then this may be deemed to be the income of the assessee for such financial year. Ultimately; therefore, it would be dependent on the nature of the explanation submitted by the assessee and the satisfaction of the Assessing Officer about the acceptability thereof, which is the sine qua non for invoking the provisions contained in sections 69A of the Act. It is in this context that the satisfaction of the Assessing Officer about the correctness and completeness of the books of account maintained by the assessee in accordance with the provisions contained in section 145 of the Act eo-relates with the satisfaction of the Assessing Officer arrived at under sections 69A of the Act. Considering the facts of the case, the correctness and completeness of the cash flow statement submitted by the assessee is held to be non-satisfactory and therefore the explanation of the assessee is liable to be rejected. In this connection reliance is placed on the decision of the Rajasthan High Court in the case of Rajendra Prasad Subhash Chand v. Union of India (344 ITR 533), wherein the cash found during a survey vas held to be unexplained money u/s 69A of the Act. Similarly the Kerala High Court in the case of CIT vs B Rajashekharan !lair (329 ITR 123) wherein the Hon'ble Court rejected the explanation on the source of cash and therefore held it to be unexplained money u/s 69A of the Act.
31. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded getting relief of Rs.133/- and the remaining 23 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 addition of Rs.16,26,897/- was confirmed observing as follows:-
I have perused the submissions of the learned AR, and the assessment order. The appellant assessee has not been able to explain source of cash and foreign currency found during the search.
The cash of Rs. 16,27,030/- could not be tallied with the books.
The cash amounting to Rs 2,00,000/- and Rs 9,00,000/- has been found from the two lockers. Cash kept in locker points to the fact that it is unaccounted and not recorded in the books. For safety reasons the cash can be deposited in bank account from where it can be utilized as and when needed. The plea taken by the assessee that cash of Rs. 2,00,000/- & Rs 9,OO,OOO/- for F Y 2011-12 was received from Bansal Group but has not been recorded in the books of account as it was kept in the lockers and could not be reconcile with the books of account. In view of the above the A.O has rightly held that the cash and foreign currency has not been satisfactorily explained. Besides, the appellant assessee has not been able to give the reasons for receiving such huge amounts in cash and keeping the same in locker where it is not readily available for use.
10.2 Regarding the foreign currency found during the search the plea taken by the appellant that US$ 5000 belongs to his friend Dr. Akhil Kumar S/o Shri J.K Tiwari is not reasonable. The appellant has not been able to explain the reason for keeping US$ 5000 at home as per RBI guidelines foreign exchange should have been deposited in the bank account or converted into Indian currency. In view of the above the addition amounting to US$ 5000 is confirmed.
Regarding 90 bhat amounting to Rs 133/- being a very small amount the addition on this account is deleted.
Therefore, the cash found in lockers and the balance foreign currency of 24 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 US-$ 5000 found during the course of search totalling to Rs. 16,26,897/- is unexplained cash and foreign currency and the addition of Rs. 16,26,897/- made by the A.O U/S 69A for A.Y 2012-13 is confirmed.
32. Now the assessee is in appeal before the Tribunal.
33. Ld. Counsel for the assessee referred to the following written submissions:-
Ground No. 2: Addition of Rs.16,26,897/- being cash found and the foreign currency found - The Ld. AO has made the addition at Page 12, Para 10. The cash was found at Rs.13,65,030/-- from the residence and bank locker along with the foreign currency in USD of Rs.2,62,000/-. It was explained to the Ld. AO that the assessee has received Rs.2.15 crore in April and May 2011. From the said amount the cash in hand was kept and was available. Regarding foreign currency, it was submitted that it belonged to the friend of the assessee Dr. Akhil Kumar from Saudi Arabia who had come to Bhopal for the marriage of his daughter to be performed on 24/6/2011. Dr. Akhil Kumar was staying with the assessee and was present during the course of the search. At the time of the search, the assessee had gone to the USA for a small course on Arthritis.
The amount brought by Dr. Akhil Kumar was found at the residence of the assessee. His statement was recorded and he clearly asserted that he had brought this amount from Saudi. The copy of the certificate from the bank was also filed. The son-in-law is settled in USA and the amount 25 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 of $5000 was kept to be paid to the daughter for taking the same to USA.
The Thailand Baht were worth Rs.133/- and were kept as a souvenir.
34. Ld. Counsel for the assessee also submitted that the Ld.AO did not accept the explanation of the assessee and has made the addition and even did not mention in the order that the statement of Dr. Akhil Kumar was taken in which he has clearly given all the facts (Page 44 to 49 of PB A-4). The additions made are unwarranted for and hence deserve to be deleted.
35. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities.
36. We have heard rival contentions and perused the records placed before us and gone through the submission made by the assessee.
37. Through this Ground No.2 assessee has challenged the finding of Ld. CIT(A) confirming the addition for unexplained cash and foreign currency at Rs.16,26,897/-. This addition made u/s 69A constitutes two amounts one is cash seized by the Income Tax Department at Rs. 13,65,030/- and the remaining amount is the Indian value of US $ 5000 found at the residential premises of the assessee. As regards the explanation given by the assessee for the 26 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 source of US $ 5000 it has been claimed that this foreign currency belongs to the assessee's friend Dr. Akhil Kumar who was in Saudi Arabia. Dr. Akhil Kumar came to Bhopal for performing the marriage of his daughter scheduled on 24.06.2011. In the statement recorded by the Income Tax authorities of Dr. Akhil Kumar placed at Page 44 to 48 of paper book, Dr. Akhil Kumar clearly stated that US $ 5000 belongs to him. He had withdrawn US $ 10000 on 29.01.2011 from Bank at Saudi Arabia for daughters marriage. US $ 5000 was spent for duty free shopping and remaining US $ 5000 was planed to spent in wedding. This statement of Dr. Akhil Kumar is self serving and explained the transaction as well as source of US $ 5000. Revenue authorities failed to take note of this statement in the finding given in their orders. Along with this statement given before Income Tax authorities bank certificate has also been filed placed at page 50 of the paper book paper book A-4 showing cash withdrawal of US $ 10000 from Al-Raj hi Bank. We are thus satisfied with the documentary evidence and facts before us and in our considered view both the lower authorities erred in making addition for 27 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 unexplained foreign currency of US $ 5000 and the same deserves to be deleted.
38. As regards remaining cash of Rs.13,65,030/- which was found in the house and locker, Ld. Counsel for the assessee has referred to the cash flow statement placed at Page 22 of the paper book. It is noteworthy that the assessee accepted to have received cash of Rs. 2,15,00,000/- from Bansal group as advance for sale of equity shares held in Ayushman Medical Diagnostic Pvt. Ltd. This cash amount of Rs. 2,15,00,000/- was received during April and May, 2011 i.e. just before a month of date of search. In the cash flow statement the assessee has shown the cash received from professional receipts, cash withdrawn from bank and cash received from Bansal Group and against the cash available various expenditure have been incurred including deposit of cash in the bank and cash seized by Income Tax Department at Rs. 13,65,030/-. Since the cash amount of Rs. 2,15,00,000/- has been accepted to have been received by the assessee cash found at the residential premises and locker of the assessee get duly explained and in the cash flow statement also the amount seized by the Income Tax Department has been considered. Since the revenue 28 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 authorities have failed to challenge the correctness of the cash flow statement and were merely questioning that why the cash was kept in locker and not deposited in bank are not good ground to make addition for unexplained cash in the hands of the assessee.
39. We therefore in the given facts and circumstances of the case are of considered view that since assessee has successfully explained the source of cash found during the course of search, addition for unexplained income u/s 69A at Rs. 13,65,030/- of the Act deserves to be deleted. We accordingly set aside the findings of Ld. CIT(A) and delete the addition of Rs. 16,26,827/- and allow Ground No.2 raised by the assessee in IT(SS) No.161/Ind/2017 for Assessment Year 2012-13.
40. Now we take up Ground No.3 for Assessment Year 2012-13 which reads as follows:-
3.That the addition of Rs.1 ,40,914/- on account of voluntary disclosure u/s 132(4) as discussed by the learned DCIT in Para No.19.6 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
41. Brief facts relating to this ground are that during the search proceedings assessee admitted to offer undisclosed income from 29 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 professional receipt and other sources at Rs.35,00,000/- but in the Income Tax Return filed in response to the notice u/s 153A of the Act the total additional income offered in various assessment years totaled to Rs. 33,39,086/- and the major amount was offered during the Assessment Year 2012-13 at Rs.30,07,502/-. The difference of amount admitted during the course of search i.e. Rs. 35,00,000/- and the actual amount offered in the Income Tax Return i.e. 33,39,086/- comes to Rs. 1,60,914/-. Ld. A.O however wrongly calculated the difference amount of Rs. 1,40,914/- and made the addition for the same while completing the assessment. Against the addition of Rs.1,40,914/- the ground raised by the assessee before Ld. CIT(A) did not get any relief and the addition was confirmed by him observing as follows:-
I have perused the submissions of the learned AR and the assessment order. The appellant assessee voluntarily declared u/s 132(4) to have professional receipts of Rs. 25,00,000/- and admitted to have received a sum of Rs. 10,00,000/- in the name of Dr Alka Gupta (Wife of the appellant) as income under the head income from other sources. However perusal of the return filed by the assessee for A.Y 2006-07 to 2012-13 it is seen that the assessee has offered following additional undisclosed income for taxation.
30
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
A.Y Returned income u/s Declared income Additional
in Return u/s income offered
193(1) (In Rs.)
153A Income (In by the assessee
Rs.) (In Rs.)
2006-07 3,64,253/- 3,69,380/- 5,127/-
2007-08 3,70,203/- 4,84,835/- 1,14,637/-
2008-09 3,77,220/- 4,33,749/- 56,530/-
2009-10 3,99,770/- ,23,443/- 23,670/-
2010-11 5,94,730/- 7,26,346/- 1,31,620/-
2011-12 - 11,58,587/- -
2012-13 - 54,04,161/- 30,07,502/-
Total 33,39,086/-
The appellant assessee was asked during the course of assessment proceedings to explain why Rs 1,40,914/- ( Rs. 35,00,000 - Rs. 33,39,086) should not be treated as undisclosed income from professional receipts and other sources. The appellant had voluntarily surrendered Rs. 35,00,000/- during the course of search and statement was recorded u/s 132(4). The appellant assesse has not been able to give any material evidences as to why only-Rs. 33,39,086/- has been offered as additional income in returns filed u/s 153A where as he had voluntarily admitted Rs. 35,00,000/- as undisclosed income. No evidence was filed either at assessment stage or at the appellate stage.
In view of the above discussion and lack of material evidences I do not find any reason to interfere with the A.Os order and addition of Rs. 1,40,914/- u/s 132(4) for A.Y 2012-13 is confirmed.
42. Now the assessee is in appeal before the Tribunal against the finding of Ld. CIT(A) confirming the addition of Rs.1,40,914/-. 31 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
43. Ld. Counsel for the assessee referred to the following written submission :-
Ground No. 3: Addition of Rs.1,40,914/- being the difference between the declared income of Rs. 35,00,000/- u/s 132(4) and the actual declaration
- The Ld. AO has made this addition at Page 28, Para 19.5 on the ground that the assessee has offered the income of Rs.35,00,000/- U/S 132(4). However, he has declared only Rs.33,39,086/- during the various years and as such this income is taxed on the basis of the declaration. It is humbly submitted that the total declaration out of the professional receipts and other sources were declared on an estimated basis. The additions made on hypothetical grounds purely on the basis of declaration without finding any paper deserve to be deleted.
44. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities.
45. We have heard rival contentions and perused the records placed before us.
46. Through this Ground No.3 for Assessment Year 2012-13 assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs. 1,40,914/- being the difference between the amount admitted to be offered during the course of search and the amount actually offered to tax in Income Tax return. Against the income admitted to be offered at Rs. 35,00,000/- assessee declared only 32 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Rs.33,39,086/- spread over various years. Though the difference works to Rs. 1,60,914/- the addition was made at Rs.1,40,914/- and even before Ld. CIT(A) finding was only relating to Rs.1,40,914/- .
47. We find that it is not the case that against undisclosed income surrendered during the course of search u/s 69B of the Act no actual income has been offered in the Income Tax Return for want of material evidence or not having any nexus with incriminating material. In this case statement of oath was recorded u/s 132(4) of the Act and a sum of Rs.35,00,000/- was admitted as undisclosed income to be surrendered. Against this admission income has been offered to tax at Rs.33,39,086/- so there is a short disclosure. The contention of the Ld. Counsel for the assessee is that the amount surrendered during the course of search was on estimated basis but when the return of income was filed the actual figures were disclosed. It is well admitted by the assessee that there was an undisclosed income which was not offered in the earlier years. Lump sum amount was surrendered and against the lump sum amount of Rs.35,00,000/- income has been offered. So the 33 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 statement given during the course of search has a clear nexus with the income offered to tax. It seems that the assessee while filing the return has taken telescoping benefit of various income which were not offered to tax in earlier years. For Assessment Year 2012-13 the amount of Rs.33,39,086/- has been offered to tax but that has been linked to the valuation of gold and diamond jewellery found at locker No.23 and the same has been mentioned in the computation of income at page 14-15 of paper book PB A-4. There is no evidence placed on record to show that unaccounted professional receipts which assessee failed to offer in the previous years has been offered to tax as surrendered amount so as to cover up the undisclosed gold and diamond jewellery and paid income from other source which the assessee failed to offer in the earlier years. In this situation the statement given under oath u/s 132(4) of the Act is a perfect documentary evidence because the amount surrendered is not linked to any material evidence found during the course of search on the basis of which the income could have been computed and the assessee has himself honoured the surrender made during search. We are thus of the considered view that the assessee was required to honour the surrendered income and offered it to tax in 34 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 the Income Tax return. Though the difference is of Rs. 1,69,014/- but since the addition in challenge is only Rs.1,40,914/- we confirm the same and dismiss assessee's Ground No.3. The finding of Ld. CIT(A) stands confirmed and Ground No.3 of the assessee is dismissed.
48. Now we take up Ground No.6 of IT(SS) No.161/Ind/2017 for Assessment Year 2012-13 which reads as under:-
6.That the addition of Rs.13,00,000/- on account of unexplained expenditure u/s 69C as discussed by the learned DCIT in Para No.12.6 of the assessment order be held to be bad and unjustified on / the facts and in the circumstances of the case and be quashed and deleted.
49. Brief facts relating to this ground are that During the course of search at the residential premise of assessee located at B-253, Shahpura Bhopal dairy as per annexure-A-11l Page No. 9-10 found and seized. These pages are related to cash expenses of Rs. 13,00,000/- for the month September, October, November, December. In the above paper various expenses were also shown i.e. land advance, house hold etc. Further calculation shows that 1 lakh has been advanced towards house, 2.00 lakhs for land, Rs 22,000/- for Kitchen, Rs 38,000/- for house hold items and other 35 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 calculation of Rs 800/- (means Rs 80,000/-), Rs 82500/-(means Rs 8.25 lakhs). The totalling of calculation was shown to Rs 13,00,000/- etc. Vide show cause notice u/s 142(1) dated 17/02/2014 the assessee was asked to furnish nature of above transaction and reconcile with his books of accounts. He was also show-cause as why the amount of Rs. 13,00,000/- should not be added as undisclosed cash receipt for relevant assessment year.
50. The assessee vide reply dated 04/12/2013 assessee has stated that :_ "These paper contained detail of an expenditure of Rs. 13 Lacs. The amount of Rs. 13 Lacs belongs to Mrs. Sudha Jain and Mr. Bharat Jain, who are the parents of my wife Mrs. Alka Gupta. Mrs. Sudha Jain, Mr. Bharat Jain received advance money from. the sale of their lands from time to time and they kept Rs. 13 lacs with my wife Mrs. Alka gupta for the purpose of buying some suitable property in Bhopal. The various amounts mention in these papers totaling to Rs. 13 lacs pertain to purchase of a house by Mrs. Sudha Jain and a plot by Mr. Bharat Join and other sundry expenses for the renovation of the house purchased by Mrs. Sudha Jain.
Smt. Sudha Jain, and Shri Bharat Jain sold immovable properties as under.-
a. Agricultural land at Delora, Raghuraj Nagar, Satna to Mr. Irfan Elahi for Rs. 5,00,000/- vide sale deed dated 29~'O1-2007. 36 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 b.Agricultural Land to Mrs. Charulata Soi for Rs. 9,87,200/- vide sale deed dated 02-12-2010:
c.Agricultural land at Dellora, Raghuraj Nagar, Satna to Mr. Rajiv Soi for Rs. 31,51,100/- vide sale deed dated 22-12-2010.
Out of the aforesaid sale consideration received by them they kept Rs. 13 lacs with Mrs. Allza Gupta to buy some suitable property for them in Bhopal. The amount of Rs. 13 lacs was utilized in the purchase of following properties for Smt. Sudha Jain and Shri Bharat Jain:- .
a.Duplex house Situated at Surva Dharma Colony, Bhopal from Mr. Sanjay Jain for total cost of Rs. 10,19,300/- vide registered deed dated 31-12-2009.
b.Plot at Gram Borda, Kolar Read, Bhopal from Mr. Shrdendu Kumar Mishra for total cost of Rs. 5,20,4251- vide registered deed dated 15-07- 2010.
Copy of aforesaid all purchase and sale deeds are enclosed.
51. The submission of the assessee were considered by the Ld. A.O but not acceptable to him and made addition of Rs.13,00,000/- as undisclosed income.
52. Against the addition of Rs.13,00,000/- assessee preferred appeal before Ld. CIT (A) but failed to succeed. Action of the Ld. A.O was confirmed by Ld. CIT(A) observing as follows:- 37
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 "The plea taken by the assessee that the sum Rs.13,00,000/- belongs to Smt. Sudha Jain and Shri Bharat Jain being sale consideration of different properties sold by them and was kept to buy a suitable property for them. The appellant failed to furnish any confirmation in this regard from Smt Sudha Jain and Shri Bharat Jain. The appellant assessee was also asked to produce Smt. Sudha Jain and Shri Bharat Jain however they were not produced before the A.O nor any inability in this regard was shown. No document or any material evidence was produced by the appellant assessee to prove his claim either at the assessment proceedings or at the appellate stage.
In view of the foregoing facts and circumstances, I do not find any reason to interfere with the order of the A.O and addition of Rs.13,00,000/- for A.Y 2012-13 on account of unexplained expenditure u/s 69C is confirmed.
53. Now the assessee is in appeal before the Tribunal.
54. Ld. Counsel for the assessee made following written submission:-
Ground No. 6 (Page 51 of PH A-4); Addition of Rs.13,OO,OOO/- on account of unexplained expenditure. The Ld. AO has made this addition at Page 16, Para 12 on the basis of loose paper A-I/1, Page 9 and 10 which is in the handwriting of Mrs. Alka Gupta w/o the assessee. This paper contains the receipt and payment of some amount. It was submitted before the Ld. AO that the assessee's father-in-law and mother-in-law had purchased a duplex house at Bhopal (Page 17 of PB A-2). For the purchase and renovation of this house, the amount has been received and spent on their behalf This is a rough account of receipt and payment for the said duplex house. The Ld. AO has made the addition on the 38 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 hypothesis that the assessee has invested this money from his undisclosed sources. The Ld. CIT(A) has upheld the addition.
From the said loose paper, it would be seen that the name of Shri B.K. Jain, the father-in-law of the assessee has been mentioned. The paper as a whole will have to be considered. The affidavit of the mother-in-law stating all the facts was filed before the Ld.CIT(A) which clearly stated that the family has advanced the money for the renovation of the house. The application u/s 46A was also made alongwith the details of the sale of the agriculture land which is the Source of these investments. Without considering all these papers, the addition has been made which deserves to be deleted.
55. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities.
56. We have heard rival contentions and perused the records placed before us. Through Ground No.6 assessee has challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O on making addition of Rs.13,00,000/- towards undisclosed income arising out of the loose paper bearing No. 9 & 10 of the seized diary as per Annexure A-I/1. We observe that in he seized loose paper No. 9 & 10 Annexure A-I/1 and page 151 of the paper book A-4 various types of figures are mentioned. Some are striked off and some are in the shape of account and it has some details of expenses. On the 39 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 sheet figure of Rs. 13,00,000/- which is appearing which the basis of the addition made by the Ld. A.O treating it as undisclosed income. Ld. Counsel for the assessee has submitted that this loose paper is not signed by anyone and not containing the name of the assessee. The transaction appearing in the loose paper are claimed to be some details of expenditure/investment made by assessee's wife Mrs. Alka Gupta on behalf of her parents i.e. Shri Bharat Jain and Smt. Sudha Jain. After going through the paper book and various documents including the affidavit of Smt. Sudha Jain placed at page 88-89 and copy of sale deed of agriculture land sold by Shri Bharat Jain and Smt. Sudha Jain placed at Page No. 62 to 87 of the paper book, we find that Shri Bharat Jain and Smt. Sudha Jain sold agriculture land on 29.01.2007, 02.12.2010 and 22.12.2010 for which an aggregate sale consideration of Rs. 46,38,300/- was received. Out of this sale consideration some amount was planned to be utilized for purchasing a duplex house at Bhopal and to purchase a plot at Gram Borda, Bhopal. The parents of Mrs. Alka Gupta were residing at Satna, Madhya Pradesh and since the daughter was living in Bhopal they gave her cash amount for doing necessary purchase of house/plot and to incur 40 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 certain expenses for up keep of the house. It was also placed on record that against the excess amount incurred, Smt. Alka Gupta was also reimbursed by her parents by depositing cash amount in her bank held with HDFC Bank on 10.12.2010 and 12.12.2010 of Rs.98,000/-. Shri Bharat Jain expired and all the facts mentioned above have been sworn in the affidavit signed by Smt. Sudha Jain.
57. As far as the loose paper is concerned undoubtedly it is rough sheet on which no proper account or detail have been mentioned. Most of the written figures has been striked off and at some place name of Shri Bharat Jain appeared but nowhere the name of assessee is mentioned. This paper also contained the detail of expenditure for house including kitchen accessories and household items. The submission made by the assessee to explain the transactions appearing in the loose sheets finds weightage since direct nexus has been brought on record by way of registered sale deed of the land sold by Shri Bharat Jain and Mrs. Suha .Jain, name of Shri Bharat Jain appearing in the loose sheet, amount mentioned towards advance paid for purchase of land/house and other paid expenditure. Though it is well settled that additions cannot be made on the basis of unsigned loose papers unless and 41 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 until any corroborative evidence is available which shows the nexus of the transaction appearing in such loose sheet. In the instant case also though there is no direct nexus of the assessee with this loose paper except that it was found at his residential premises. But only because the loose sheet is written in the handwriting of the assessee's wife and the incomplete transactions/entries appearing in this loose sheets are connected to assessee's fathere in law and mother in law prima facie no addition is called for in the hands of the assessee. Even otherwise sufficient material have been placed on record to explain the rough jottings in the loose sheet which are basically the cash amount advanced to assessee's wife from her parents to be spend for purchase/maintenance of duplex/house at Bhopal and Smt. Alka Gupta maintained the details on behalf of her parents. In this given facts and circumstances of the case no addition was called for by the Ld.A.O in the hands of the assessee for undisclosed income of Rs.13,00,000/- based on the loose paper appearing in page no.9 & 10 Annexure A-I/1 seized during the course of search. Thus we set aside the findings of Ld. CIT(A) and delete the addition of Rs.13,00,000/- and allow Ground No.6 raised in appeal No. IT(SS) 161/Ind/2017 for Assessment Year 2012-13. 42 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
58. Now we take up Ground No.7 of appeal No. IT(SS) 161/Ind/2017 for Assessment Year 2012-13 which reads as under:-
7.That the addition of Rs.1 ,86,478/- maintained and confirmed by CIT(A) on account of short-term capital gain u/s 50C by adopting cost of acquisition at Rs.59,76,625/- in place of RS.61 ,23,103/- as discussed by the learned DCIT in Para No.17.5 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
59. Brief facts relating to this ground are that assessee sold residential plot bearing Khasra No.85, 296, 85/2 measuring 2324 sq.ft at Ravishankar Nagar, Bhopal on 27.02.2012 to Shri Vinod Kumar Bhatia for consideration of Rs.86 lakhs. Assessee claimed deduction for cost of acquisition at Rs.61,23,103/- and expenditure on transfer at Rs.10,31,295/-. Short Term Capital Gain of Rs.14,45,602/- declared in the Income Tax Return. Ld. A.O after considering the details was not satisfied with the deduction claimed by the assessee and after disallowing certain deductions recomputed the Short Term Capital Gain and made addition of Rs.12,17,773/-. Against this addition on account of Short Term 43 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Capital Gain, assessee preferred appeal before CIT(A) and partly succeeded as Ld. CIT(A) allowed some claim towards deduction claimed by the assessee but still confirmed the addition of Rs.1,86,478/- observing as follows:-
I have .considered the submissions of the learned AR, the assessment order and also perused the case record.
Perusal of the copy of registry shows that as per the agreement between the appellant assessee who is the seller and the purchaser Shri Vinod Kumar Bhatiya slo Shri Charnan Lal Bhabya, the stamp duty charges and all other expenses relating to transfer of the property have to be paid by the seller. Page 3 of the sale deed clearly mentions that stamp duty charges, registration charge and other charges relating to the sale of said property have to be borne by the seller.
In view of the above, additions on account of Stamp duty charges of Rs. 6,30,000/-, Registration fees of Rs. 69,295/- and transfer fee payment to Awas Rahat Grah Nirman Sahakari Samiti of Rs. 1 ,72,000/- are hereby deleted.
13.2 Brokerage of Rs. 1,60,000/- has been paid to Shri. Ravi Manwani.
Brokerage is generally paid @ 1-2%. The total sale consideration of the property has been shown by the appellant as Rs. 86,00,000/- and brokerage charges of Rs. 1,60,000/- as claimed is falling in between 1-2% of the total sale consideration, therefore, the addition of Rs. 1,60,000/- on this account is deleted.
13.3 The cost of acquisition as taken by the A.O in the assessment order is Rs.59,76,625/- .
44 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 The appellant has shown cost of acquisition at Rs. 61,23,103/- whereas the A.O has taken cost of acquisition at Rs. 59,76,625/-. The cost of acquisition as taken by A.O at Rs. 59,76,625/-is confirmed. The ground of appeal is partly allowed.
60. Now the assessee is in appeal before the Tribunal.
61. Ld. Counsel for the assessee referred to the following written submissions:-
Ground No. 7 (Page 90 to 125 of PB A-4}: Addition of Rs.l,86,478/- on account of Short Term Capital Gains _ The Ld. AO has made this addition of Rs.12,17,773 at Page 22, Para 17 on the ground that the assessee has gained this income on account of sale of plot at Manipuram Colony, Bhopal. Complete details were filed before him. The Ld. AO did not consider the registration expenses and brokerage incurred by the assessee on purchase and sale of this plot. The Ld. CIT(A) has deleted the addition of Rs.l0,31 ,295/- at Page 71 of the order. However, the Ld. CIT(A) did not consider the transfer charges of Rs.l,08,073/- paid to the society and MC charges of Rs.11,030/- paid to the bank for drafts prepared and Rs.23,000/- paid to the advocates. The details have been given at Page 70 of the Ld. CIT(A)'s order. It is humbly submitted that all these payments are made which constitutes the cost of the plot. The difference of Rs.40,000/- between the valuation of the stamp duty authorities and actual consideration received is disallowable.
62. Ld. Departmental Representative vehemently argued supported the orders of Ld. CIT(A).
45 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
63. We have heard rival contentions and perused the records placed before us. The short facts of issue raised in Ground No.7 of the assessee's appeal for Assessment Year 2012-13 relates to addition of Rs.1,86,478/- on account of Short Term Capital Gain. From perusal of the submission made by the assessee as well as details placed before us, we observe that expenses, brokerage incurred by the assessee at the time of purchase of plot were not considered by Ld. CIT(A) which includes transfer charges of Rs.1,08,073/- paid to the society, bank charges for draft preparation of Rs. 11,030/- and legal fees of Rs.20,000/-. These expenses of Rs. 1,42,103/- have been incurred in connection with purchase of the property and this form the part of total cost of the land and same deserves to be allowed against the sale consideration received by the assessee. Revenue authorities have not challenged the genuineness of this expenditure, we therefore allow the deduction of Rs. 1,42,103/- and for the remaining amount of Rs.44,375/- the addition for Short Term Capital Gain stands confirmed. In the result Ground No.7 of the assessee's appeal is partly allowed.
46 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
64. Now we take Ground No.8 of IT(SS) No.161/Ind/2017 for Assessment Year 2012-13 which reads as under:-
8. That the addition of Rs. 4,46,086/- on account of unexplained investment u/s 69B as discussed by the learned DCIT in Para No.18.11 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
65. Brief facts relating to this ground are that during the course of assessment proceedings Ld. A.O observed that assessee had made some investment in the construction of house located at 253, Shahpura, Bhopal. Assessee declared sum of Rs.1,75,500/- being incurred for renovation of the clinic located in the house at Shahpura, Bhopal. Ld. A.O made reference to the Departmental Valuation Officer vide letter dated 6.8.2013 and reply of Departmental Valuation Officer was received on 4.3.2014 estimating valuation of construction at Rs.6,21,586/-. During the assessment Year 2012-13 difference of Rs.4,46,086/- was treated as unexplained investment and addition made u/s 69B of the Act. Against the addition made by the Ld. A.O at Rs.4,46,086/- u/s 69B of the Act, the appeal preferred by the assessee before Ld. CIT(A) did not brought any relief and addition was confirmed by the Ld. CIT(A) observing as follows:-
47
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 "1 have considered the facts of the case, submissions of the learned A.R., the assessment order and perused the case record. The submission of me appellant assessee that the investment in the renovation of clinic is only of Rs.l,75,500/· as against Rs 6,21,586/· estimated by the DVO has no merit. The plea taken that the clinic portion existed at the time of purchase of property from shri Devdendra kumar Singh who was a practicing surgeon and residing in the same house does not show that the investment as estimated by the D.V.O is incorrect. The copy of the map of the house med by the appellant only shows that the clinic portion existed at the time of purchase of the house, it does not give any detail as to the quality of construction and renovation done. The renovation was done later and the estimate made by the D.V.O is in order. No evidence regarding the same was filed either before the A.O or during the appellate proceedings, the investment in the renovation of the clinic relates to the period F .Y 2011- I 2.
In view of the above, the estimate taken by the A.O as per the valuation report calls for no interference and the addition of Rs. 4,46,086/- on account of unexplained investment in construction u/s 69B is upheld. Ground of appeal is dismissed".
66. Aggrieved assessee is in appeal before the Tribunal.
67. Ld. Counsel for the assessee referred to the following written submissions:-
Ground No. 8 (Page 140 to 186 of PB A-4}: Addition of Rs.4,46,086/- on account of valuation of renovation of house - The Ld. AO has made the addition in Page 24, Para 18.110f the assessment order. The assessee had purchased the house on 30.4.2003 of 300 sq meters. During the FY 48 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 2003-04, the assessee constructed about 191 sq. meters for his clinic and incurred an expenditure of about Rs.9.5 lacs. During the AY 2012- 13, the clinic portion was renovated by change of tiles and false ceiling. The matter was referred to the valuation cell and the Ld. Valuation Officer valued the renovated portion of the whole building of 191 sq. meters as on the date of inspection and bifurcated the enhanced valuation on the basis of the value declared by the assessee. The whole approach of the DVO was wrong. He should have valued only the renovated portion of the building for false ceiling and change of flooring. The addition made on the notional construction is bad in law and deserves to be deleted.
68. Per contra Departmental Representative vehemently argued supported the order of both the lower authorities.
69. We have heard rival contentions and perused the records placed before us. Through Ground No.8 assessee had challenged the finding of Ld. CIT(A) confirming the addition for unexplained investment of Rs.4,46,086/- in the renovation of house situated at Shahpura, Bhopal. Ld. Counsel for the assessee has challenged the correctness of the valuation report contending that during the assessment year 2012-13 only the clinic portion was renovated by changing the tiles and false ceiling for which an amount of Rs.1,75,500/- was incurred. The remaining construction in the house measuring 191 sq. Meters was incurred during financial year 49 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 2003-04 relevant to Assessment Year 2004-05 but the Departmental Valuation Officer (In short 'DVO') wrongly valued the renovated portion of the whole building of 191 Sq. Meter as on the date of inspection and enhanced the valuation. It was further claimed on behalf of the assessee that the DVO should have valued the renovated portion of the building for false ceiling and change of flooring. On the other hand Ld. CIT(A) has given in his finding that in the copy of map of the house only clinic portion existed at the time of purchase and assessee did not give any details of quality of construction and renovation.
70. We however on perusal of the purchase deed of the said house placed at Page 153 to 186 find that at the time of purchase of the property on 30.04.2003 there stood constructed house with ground floor measuring 204.46 sq.m, first floor 46.67 sq.m and second floor 49.72 sq.m. Page No.3 of the deed further reads that seller built the house on the said plot of land after taking permission from Bhopal Municipal Corporation on 13.7.88. So the finding of Ld. CIT(A) only clinic was constructed and there was no other construction at the time of purchase of the house do not have any 50 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 merit. The DVO has estimated the total valuation of the renovation of the house which is also not justified since only the renovation of the clinic was in question. However looking to the fact that details prepared by the assessee for the expenditure incurred on renovation is not fully documented, we therefore being fair to both the parties and looking to the smallness of the issue confirm the addition of Rs.1,00,000/- for the undisclosed investment and delete remaining amount of Rs.3,36086/-. Thus the assessee gets partial relief. Ground No.8 of the assessee's appeal is partly allowed.
71. Now we take up Ground No.3 for Assessment Year 2011-12 and Ground No.4 & 5 for Assessment Year 2012-13 of Appeal No. IT(SS) No.64/Ind/2017 & IT(SS) No.161/Ind/2017 of Shri Ashok Gupta which reads as follows:-
Assessment Year 2011-12 Ground No.3.
That the addition of Rs.40,OO,OOO/- on account of voluntary disclosure u/s 132(4) against the cash received from Bansal Group for sale of shares of Ayushman Medical Diagnostic Pvt. Ltd. as discussed by the learned DCIT in Para No.20.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.51
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Assessment Year 2012-13 Ground No.4 That the addition of Rs.1,75,00,000/- on account of voluntary disclosure u/s 132(4) against the cash received from Bansal Group for sale of Shares of Ayushman Medical Diagnostic Pvt Ltd. as discussed by the learned DCIT in Para No.20.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
Ground No.5:
That the addition of Rs.1,85,00,000/- on account of cash receivable from Bansal Group for sale of Shares of Ayushman Medical Diagnostic Pvt Ltd. as discussed by the learned DCIT in Para No.20.10 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
72. Since the additions challenged in the above referred grounds are based on the common issue they have been dealt together. Additions on similar issue have also been made in the case of other two Directors namely Dr. Neeraj Kumar and Dr. Gopal Batni. In this bunch of appeals we are dealing with the case of Shri Ashok Gupta and Dr. Neeraj Kumar. Grounds relates to the common issue of addition made on account of Memorandum of Understanding for the sale of shares of Ayushman Diagnostic Pvt. Ltd found during 52 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 the course of search and the cash sum received from the buyers and admitted during the course of search is being dealt here and the finding shall be applied while adjudicating the grounds raised on this common issue in the case of Dr. Neeraj Kumar in the Appeals No. IT(SS) No.67/Ind/2017 and IT(SS) No.162/Ind/2017 to be dealt in the subsequent paras.
73. Brief facts relating to Ground No.3 for Assessment Year 2011- 12, Ground No. 4 & 5 for Assessment Year 2012-13 are that during the course of search loose papers and documents were found and seized from the office premises at HIG-3, Lake View Apartment, Shahpura, Bhopal referred as Page No.30 of LPS-6 conducted on 2.6.2011. The said paper is the Memorandum of Understanding (In short MOU) entered into between the Directors of Ayushman Diagnostics Pvt. Ltd (AMDPL) and the representative of Bansal Group regarding transfer of 100% equity shares of the said company. This MOU was executed on 24.10.10 and referes to the gross consideration of Rs.26.75 crores from which the liabilities of the company were to be adjusted. In consequence of this MOU the share purchase agreements were later executed on 13.8.2012. Subsequent to entering into the MOU the share holders of AMDPL 53 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 namely Dr. Ashok Gupta, Mrs Alka Gupta, Dr. Gopal Batni , Dr. Neeraj Kumar and Smt. Charu Kumar received various consideration through cheques. Apart from consideration in cheque cash sum of Rs.2.15 crores was received by Dr. Ashok Gupta in April and May 2011, cash of Rs.90 lakhs and Rs.50 lakhs was received by Dr. Gopal Batni during 3rd quarter of2010-11 and April, May 2011. Dr. Neeraj Kumar also received cash of Rs.90 lakhs during 25.10.2011 to 31.3.2011 and Rs.55 lakhs during April and May, 2011. When the assessee was confronted with these documents it was submitted that there is no dispute with regard to the amount received in cash and cheque and the total consideration received has been offered to tax in the return of income filed for Financial Year 2012-13 relevant to assessment Year 2013-14 when the equity shares were transferred. It was further submitted that since against the said consideration assessee has duly claimed the indexed cost of acquisition and other incidental expenses and has paid due taxes, therefore no addition with respect to advance consideration received during the financial year 2010-11 and 2011- 12 should be made since equity shares were not transferred in these two years but they were transferred in Financial Year 2012- 54 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
13. Ld. A.O after considering the submission of the assessee was not convinced and he was of the view that the assessee should have offered the amounts to tax in the year when they were received. The submission of the assessee that advance tax has been paid for Assessment Year 2013-14 and income is to be offered in the return of income of Assessment Year 2013-14 did not find any merit by the Ld. A.O and he after giving a detailed finding and judicial precedence's completed the assessment after making addition for Rs.40,00,000/- and Rs.1,75,00,000/- received by the assessee in cash during Assessment Year 2011-12 and Assessment Year 2012- 13 as undisclosed income. Ld. A.O also made addition of Rs.1,85,00,000/- observing that the MOU was entered on 24.10.10 and the amount which was not received till the date of search i.e. 2.6.2011 calculated at Rs. 1,85,00,000/- which was not received by the assessee also needs to be added as income for Assessment Year 2012-13. While making addition for Rs. 1,85,00,000/- Ld. A.O further observed that the assessee has not offered any satisfactory explanation why the amount of Rs.1,85,00,000/- was not shown in the books of accounts. Similar type of addition were also made in the case of Dr. Neeraj Kumar at Rs.90 lakhs and Rs.55 lakhs for 55 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 cash received during Assessment Year 2011-12 and 2012-13 and also addition of Rs.2,80,00,000/- in Assessment Year 2012-13 for the amount receivable after the date of search i.e. 02.06.2011. Against the additions made in the hands of Dr. Ashok Gupta for Assessment Year 2011-12 and 2012-13 with regard to the amount received on account of MOU, assessee preferred appeal before Ld. CIT(A) but did not find any favour. Before Ld. CIT(A) it was submitted by the Ld. Counsel for the assessee that there is no dispute with regard to the consideration received in cash and cheque but since due to certain disputes with M/s Wockhard Hospital Ltd due to which the deal with Bansal Group came to a halt and finally after the arbitration award when the matter was settled, equity shares were transferred. In the submission before Ld. CIT(A) it was made clear that total consideration received in cash and cheque has been shown as sale consideration of the equity shares sold by the assessee and due taxes paid after claiming indexed cost of acquisition in the return of income filed for Assessment Year 2013-14 but this submissions of the assessee did not find any favour and the action of the Ld. A.O was confirmed by Ld. CIT(A) observing as follows:-
56
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 I have perused the submissions of the learned AR, the assessment order and case record. During the course of search at the office premises of Dr. Neeraj Kumar loose papers were found and seized, this document is MOU dated 24.10.2010 between Aushman Medical diagnostics Pvt. Ltd along with its 100 share holders namely Dr· Ashok Gupta, Dr Gopal Batani, Dr Neeraj Gupta and Mr Anil Bansal for transfer of shares (or a total consideration of Rs· 26.15 crores. All three directors of Ayushman hospital have admitted that the deal has been final with Bansal group for an amount 'of Rs.26.75 crores, they also admitted that they have received amount of Rs.5.00 crores cash and Rs.2.85 crores by cheque till the date of search. The balance amount of Rs.7.50 crores was receivable on the date of search. The AO has clearly worked out details of receivable as under:-
Name of Remaining amount not received till the Doctor/Director date of search i.e. 02.06.2011 Dr. Ashok Gupta Rs. 1.85 crores Dr. Goptal Batni Rs. 2.85 crores Dr. Neeraj Kumar Rs. 2.80 crores Total Rs. 7.5 crores Also, during the course of search at the office premises of 'Bansal Group' situated at 3rd floor Tawa complex, Bittan Market, Bhopal incriminating documents were found and seized which contain details of cash payment made to Dr. Ashok Gupta, Dr. Gopal Batni and Dr. Neeraj Kumar totalling to Rs. 5.00 crores [page no. 3 & 4 of LPS 4/2 (page no 1 to 9)] when confronted to this Shri Anil Bansal and Shri Sunil Bansal have admitted to payment of Rs.5.00 crores in cash to Dr. Ashok Gupta, Dr. Gopal Batni and Dr. Neeraj Kumar. Even the directors of Ayushman Diagnostics Pvt. Ltd Dr. Ashok Gupta, Dr. Gopal Batni and Dr. Neeraj Kumar admitted to 57 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 have received the advance in cash from Bansal Group and stated that it was their undisclosed income apart from regular income. The details of such undisclosed income is as under:
Dr. Gopal Batni - Rs. 1,40,00,000/-
Dr. Neeraj Kumar - Rs. 1,45,00,000/-
Dr. Ashok Gupta - Rs. 2,15,00,000/-
Total - Rs. 5,00,00,000/-
During the course of assessment proceedings Dr. Gopal Batni & Dr. Neeraj Kumar accepted as under:
S.No. Name of the Director A.Ys & period Amount 1 Dr. Gopal Batni A.Y. 2011-12 Rs. 90,00,000/-
(25/10/2010 to
31/12/2010)
A.Y. 2012-13
Rs. 50,00,000/-
(April &May 2011)
2 Dr. Neeraj Kumar A.Y. 2011-12 Rs. 90,00,000/-
(25/10/2010 to
31/12/2010)
A.Y. 2012-13
Rs. 55,00,000/-
(April &May 2011)
The above details show that Dr. Gopal batni and Dr. Neeraj Kumar have accepted to have received an amount totaling to Rs. I.8 crores for A.Y. 2011-12 and Rs· 1.05 crores for A.Y 2012 -13 respectively. Therefore, balance amount of Rs· 40,00,000/- for AY 2011-12 and Rs.1.75 crores for AY 2012-13 have been received by Dr. Ashok Gupta. 'Ihe above version has also been corroborated by the statement recorded u/s 132(4) 58 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 during search. The said amount totaling to Rs. 2.15 crores was also voluntarily disclosed u/s 132(4). l1owever, no tax have been paid on the said amount.
8.2 In view of the above, the submission of the appellant that the entire amount of Rs· 2.15 crores has been received in AY 2012-13 is not acceptable.
The addition of Rs. 40,00,000/- for AY 2011-12 and Rs· 1.75 crores .for AY 2012-13 have been made on the basis of loose paper found and seized from the residential and business premises of the directors of Ayushman Diagnostic Pvt. Ltd (sellers) and from the business premises of Bansal group.
The statements recorded during the course of search show that the above facts have been admitted by the directors of Ayushman Diagnostic Pvt. Ltd and also by Shri Anil Bansal. When the balance amount of Rs.5.00 crores have been paid to the two directors Dr. Gopal Batni and Dr. Neeeraj Kumar during A.Y 2011-12 and 2012-13, the plea of the appellant is not convincing that he would have received his share of Rs· 2.15 crores in A.Y 2012-13 only. When the two other directors as stated above have admitted have received their respective shares' during A.Y 2011-12 & 2012-13 the third director Dr. Ashok Gupta, the appellant would have received his entire share o( Rs. 2. I5 crores only in A.Y 2012-13 is not convincing. 8.3 The A.O has given clear cut finding in the assessment order as to the bifurcation of payments made to the directors. The appellant has simply retracted from the disclosure made u/s 132(4). The uncontroverted fact remains that the appellant assessee could not explain the availability of Rs. 50,00,000/- for AY 2011-12, Rs. 1,75,00,000/- & Rs. 1,85,00,000/- for A.Y. 2012-13 with him. The appellant owned up having received the said money in statement made u/s 132(4) at the time of search. His subsequent attempt to explain the above money by way of advance 59 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 received from Bansal Group has failed and found to be untenable. It is clear that the appellant was in receipt of Rs. 40,00,000/- for A.Y 2011-12, Rs. 1,75,00,000/- for A.Y 2012-13 &Rs. 1,85,00,000/- being the balance payment for A.Y 2012-13 from Bansal group which was not disclosed by him. The assessee having owned cash receipt at the time of search in his statement u/s 132(4) later retraction without any backing supported by evidence is of no avail.
8.4 In the case Dhunjibhoy stud & agricultural farm vs DCIT ITAT, Pune Third Member Bench (2002) 21 CCH 0059 Pune trib; (2002) 76 TTJ 0339 (TM) it has been held:
".. T had made a confessional statement before the search party of the department, who were not police officers. Therefore, the admission made by him of search was admissible against the assessee. Looking to the aspect of the matter from another angle, T was a famous doctor. While making a statement, it was not expected of a person highly educated and highly placed in the society to make a statement without realising its implications. It was also found that there was no allegation of coercion or pressure for making a statement by him at the time of search and this allegation had also not been made before the Assessing Officer".
The appellant assessee is 'highly educated' and 'highly placed in society'. Once the appellant assessee has accepted receipt of money at the time of search and the retraction is not based upon sound reasoning and corroborative evidence, mere denial is not enough. In retraction of surrender burden of proof is on the person retracting and hence, the onus is on him and not on the department.
In view of the above, the submission of the appellant that the entire amount of Rs. 2.15 crores having been received in A.Y. 2012-13 is not acceptable and the stand taken by A.O to hold the disclosure made by the appellant assessee as bona fide and addition of Rs. 40,00,000/- in A.Y. 2011-12 and Rs. 1,75,00,000/- & Rs. 1,85,00,000/- in A.Y 2012-13 are confirmed.
74. Aggrieved assessee is now in appeal before the Tribunal. 60 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
75. Ld. Counsel for the assessee made following written submissions:-
The above assessees with Dr. Gopal Patni jointly established the hospital in the name of M/s Ayushman Medical Diagnostic Private Limited (hereinafter called 'Ayushman') in the year 1995. Dr. Ashok Gupta, Dr. Gopal Batni and Dr. Neeraj Kumar are the directors of the company drawing the salary. Regular returns are being filed every year. The returns for AY 2011-12 were yet to be filed before the date of the search, since the due date was 31.7.2011.
2. A search was conducted on Bansal Group of Business and simultaneously on Ayushman and also the residential premises of the three doctors on 2.6.2011. Some loose papers were seized. In response to notices u/s. 153A of the LT. Act, the returns of income in the respective cases have been filed. During the course of the search, the respective assessees declared that he has received a specific amount in cash as an advance against the sale consideration of the shares in the hospital from Bansal Group, and this amount is offered as income. However, the amount was not declared in the returns for the A. Y. 2011-12 and 2012-
13, but the same was offered for the A. Y. 2013-14.
3. For the purposes of expansion, M/s Ayushman entered into an agreement with Wockhardt Hospitals Limited, Mumbai on 7.10.2006 wherein it was agreed that Wockhardt would conduct, manage and operate the hospital owned by Ayushman. The initial period as per clause 4 was for ten years which was renewable. An advance of Rs.50 lacs was given by Wockhardt during the Financial Year 2006-07. It was further agreed as per clause 5(A)(r) and 5(A)(s) that Ayushman shall construct the additional built up area of 25000 sq.ft. In clause 6, it is 61 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 stipulated that Ayushman will complete the entire civil construction work before the effective date. It was further agreed in clause 5(B)(h) that Wockhardt would initially invest about Rs.1200 lacs on equipments, utilities, etc and continue to make capital investment on a regular and need based basis. Ayushman initially invested about Rs.8.17 crores during the FY 2007-08 and 2008-09 for construction of building and acquisition of equipments and plants. Ayushman acquired huge loans from the banks and MPFC of approximately Rs.7 crores for the said investments. Wockhardt initially invested about Rs. 4 crores but subsequently, it backed out for any further investments because of their financial constraints and marketability. During this period Wockhardt sold nearly ten hospitals which were run by them. M/s Ayushman requested Wockhardt and tried to persuade them to takeover the management and further invest the money but M/s Wockhardt continuously avoided for making any investments. Since M/s Ayushman had obtained a huge loan, it was very difficult to manage the hospital with the interest burden thereon and the responsibility of repaying the loan. Up to 31 st of March 2011 the liability for paying interest rose up to 246 lacs and other expenses capitalized were up to 100 lacs. Because of financial stringency the hospital was practically closed in the beginning of the year 2010. M/s Wockhardt wanted to modify the original agreement and enter into a fresh agreement but the parties could not come to the consensus on any of the terms. On account of distress condition, M/s Ayushman decided to transfer the management and accordingly entered into an MOU with Bansal Group of Business. The MOU dated 24.10.2010 clearly provided that the payment to the erstwhile directors (Sellers) would be of Rs.13.50 crores against the sale of shares. When the news of transfer of the hospital came out in the market M/s Wockhardt filed a petition before the Additional District Judge, Bhopal for injunction which was dismissed vide order dated 14.2.2011. Against this order, a petition was filed by Wockhardt in the 62 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 High Court of Madhya Pradesh for cancelling the order of the District Judge and maintaining the status quo in the matter. The Hon'ble High Court vide order dated 28.6.2011 appointed an arbitrator Shri A.K. Mishra to resolve the disputes. Subsequently, Shri Vikas Jain was appointed as the sole arbitrator. This dispute was resolved by the arbitrator on 13.2.2012. In the meantime, the directors of Ayushman received the payment through three cheques totaling to Rs.1 crore. Rs. 50 lacs in the name of Ashok Gupta, RS.25 lacs in the name of Gopal Batni and RS.25 lacs in the name of Neeraj Kumar. Since the petition was filed in the High Court by Wockhardt, the assessee wanted to safeguard its interest and insisted for a further payment. The three directors received in cash the payment of Rs.5 crores. Dr. Ashok Gupta received Rs.2.15 crores, Dr. Gopal Batni received Rs.1.40 crores and Dr. Neeraj Kumar received RS.1.45 crores. Subsequently, after the arbitration award, the three directors received the balance payment by cheques. The total consideration received is Rs.12,28,37,8501-. The total consideration receivable was Rs. 13.5 crores. However, for some bank liabilities and interest, approximately, Rs.1.21 crores was deducted from the final payment. The shares were transferred after the receipt of the arbitration award and receipt of full payment. Here, it may be noted that after the arbitration award, all payments were received through cheques. The chronological dates of event are give here under:
CHRONOLOGICAL ORDER DATES i. 07/10/2006 - Agreement with Wockhardt for management for 10 years with their investment ofRs.12 crores (Para 6 pg.47 of PB).
ii. The assessee invested in building about 3.87crores from 01/04/2007 to 31/03/2008 (Pg.140 of PB) and Rs. 8.18 crores up to 31/03/2009 (Pg.155 of PB).63
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 iii. The assessee raised loans for construction of building and the position of loans are 96.50 lakhs on 31/03/2007; Rs. 475 lakhs on 31/03/2008 (Pg. 137 of PB) and Rs. 924 lakhs on 31/03/2009 (Pg. 152 of PB).
iv. The profit for the 5 financial years and interest capitalized is as under
2006-07 2007-08 2008 -09 2009 -10 2010-11 Profit 16.3Olakhs 22.491akhs 26.531akhs 30.821akhs 5.741akhs loss Pg.124 Pg.138 Pg.153 Pg.174 Pg.190 Interest 10.891akhs 76.731akhs 1591akhs 2461akhs
-
Capitalized Pg.143 Pg. 158 Pg.178 Pg. 195 v. 24/10/2010 - Memorandum of understanding with Bansal group regarding transfer of shares for a total consideration of Rs. 13.5 crores. Total amount of takeover including liabilities is Rs. 26.75 crores. (Pg. 1 of PB) vi. 01/12/2010 - The working of the hospital was practically stopped because of financial constrain, renovation of building and for changing the management.( Pg. 190 & 2010 of PB) vii. 03/01/2011 - The Wockhardt filed petition for possession of property and injunction before the District Judge. viii 14/02/2011 - The petition of Wockhardt was dismissed by the District Judge. (Pg. 76 of PB).
ix. 07/03/2011 - Wockhardt filed the appeal before the Hon'ble High Court for arbitration. (Pg. 86 of PB).
x. 28/06/2011 - The Hon'ble High Court appointed arbitrator (Pg. 1 04 64 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 of PB) and subsequently changed the arbitrator (Pg.109 0f PB). xi. 08/02/2012 - The consent arbitration award (Pg. 114 of PB) xii 14/08/2012 - Registration of transfer of shares (Pg.33 of PB)
4. While framing the assessment the Ld. AO observed that the directors have admitted the receipt of cash of Rs.5 crores and declared it as undisclosed income. The loose papers were found in the office premises of Bansal Group about payment of cash of Rs.5 crores. He, therefore, concluded that this is an undisclosed income of the assessee. The Ld. AO has hypothetically on surmises and conjectures arrived at the conclusion that the MOU for sale of shares mentions the total consideration ofRs.13.5 crores and as such, the balance must have been received by the directors. On this assumption, the Ld. AO further included an amount of Rs.7.5 crores (13.5crores - 6 crores) as income of the three directors. He, accordingly, included Rs.1.85 crores in the hands of Ashok Gupta, Rs.2.80 crores in the hands of Neeraj Kumar and Rs.2.85 crores in the hands of Gopal Batni. All these notional amounts have been included as undisclosed income for the AY 2012-13. In the case of Shri Ashok Gupta, he has bifurcated the amount in two years, RsAO lacs for AY 2011- 12 and the balance for the AY 2012-13. The Ld. AO at page 34 para 20.8(V) observed as under:
Regarding the MOU dated 24/10/2010 it can been seen that the amount of Rs. 7,50,00,000/- is receivable in the hands of Dr. Gopal Batni, Dr. Neeraj Kumar & Dr. Ashok Gupta till the date of search and the share of the assessee is Rs. 1,85,00,000/-. However, the assessee has not filed any satisfactory explanation, why the above amount has not been shown in the books of accounts. As per MOU dated 24/10/2010 all amount of Rs. 26,75,00,000/- is paid by Bansal group to Dr. Gopal Batni, Dr. 65 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Neeraj Kumar & Dr. Ashok Gupta. Therefore Rs. 1,85,00,000/- is required to be added in the hands of the assessee for A.Y. 2012-13.
He therefore made addition on the hypothetical ground that the assessee has received this amount.
In appeal, the Ld. CIT(A) has merely repeated the conclusions of the Ld. AO and without appreciating the arguments advanced has summarily dismissed the appeals. The Ld. CIT(A) merely stated that the appellant has simply retracted from the disclosure but the fact remains that the assessee has received these monies in cash and as such it is taxable.
Arguments It is humbly submitted that the additions made by the Ld. AO on hypothetical grounds and on pure surmises are totally illegal and bad in law. The MOU clearly demonstrates that an amount of Rs.13.5 crores would be paid as a consideration against the sale of shares. The said amount has been offered as a capital gain in the respective hands of the directors when the shares were actually transferred III the name of the Bansal Group. In the statements recorded u/ s 13 2( 4), all the directors have clearly stated that the amounts have been received in advance as a sale consideration. Under no circumstances the advance received can be taxed. The said amount is already offered and has been taxed for AY 2013-14 when the shares were actually transferred. It is a fact that during the course of the statement the assessee clearly stated that it is an advance received against the sale of shares, and they are declaring it as undisclosed income. The word 'undisclosed' was not correct. The directors meant that it is an 'undeclared' income and would be disclosed as income and accordingly after the transfer of shares the consideration has been shown as capital gains and has also been taxed treating the amount as a consideration received against the sale of shares. Thus, it is 66 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 submitted that it would amount to a double taxation once in the year in which the advance is received and secondly in the year in which the shares are transferred. The moot points for considerations are as under.
(i) The additions nave been made on the basis of loose paper in the shape of MOU. If this paper is analyzed then it would be seen that the consideration is paid against the sale of shares. Thus, the taxability would arise only on the transfer of the shares. The shares are transferred in the A.Y. 2013-14 and the gains have been offered and taxed in that year.
(ii) In the statements recorded u/ s 132(4), all the directors have clearly stated that the amounts have been received in advance as a sale consideration. Under no circumstances the advance received can be taxed. The taxability will arise only on the transfer of the shares which was done in the A.Y. 2013-14.
(iii) The income arising from the transfer of the shares has been offered in the A. Y. 2013-14. Taxing the advance in the A.Y. 2011-12 and 2012-13 would amount to a double taxation of same income, which is not permitted under the law.
(iv) The payer of the amount of Rs, 5 crores have admitted this amount as their income and have offered the same in the return and have paid taxes on the same. Thus, the amount received has already been subjected to tax which cannot be added as income in the hands of the assessee. A certificate from the payers is now attached and placed at page 255. This certificate is a statement of fact from the records. It is humbly prayed that the same may kindly be consider while passing the order.
(v) The papers all are disclosed to the various courts and has been 67 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 adhered to and as such no adverse view can be taken since it is not an incriminating document.
In view of this, it is humbly prayed that the additions made by the Ld. AO and sustained by the Ld. CIT(A) are bad in law and deserves to be deleted.
76. Ld. Counsel for the assessee further submitted that :-
This addition has been made as per Para No. 20.9 (Pg. No. 28-35) of the assessment order and is on account of cash received by the assessee as advance from Bansal Group against the sale of 71135 nos. equity shares held by the assessee in AMDPL. It is submitted that during the course of search a MOU dated 24-10-2010 was found and seized from the Office Premises of AMDPL situated at HIG-3, Lake View Apartment, Shahpura, Bhopal. This MOU was compiled by the Department as Pg. No. 30 of LPS-6 and copy of which is available on Pg, No, 29 of the assessment order. It was submitted by the assessee before the AO that this paper is MOU reached between the Directors of AMDPL and the representatives of Bansal Group regarding transfer of 100 equity shares of AMDPL. This MOU refers to the Gross Consideration of Rs.26.75 crores from which the liabilities of the said company were to be adjusted. In consequence of this MOU, the share purchase agreement was later executed on 13-08- 2012 and the equity shares were finally transferred to the Bansal Group on 14-08-2012. Copy of share purchase agreement dated 13-08- 2012 was placed by the assessee on record of the learned AD. This share purchase agreement refers to the MOU dated 24-10-2010 and accordingly the shareholders of AMOPL received following amounts against the transfer of their shares to the Bansal Group:
Name o0f Shareholder No. Of shares held Amount received Dr. Ashok Gupta 71135 4,05,46,950 68 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Mrs. Alka Gupta (w/o 700 3,99,000 Dr. Ashok Gupta) Dr. Gopal Batni 71835 4,09,45,950 Dr. Niraj Kumar 70640 4,02,64,800 Mrs. Charu Kumar (w/o 1195 6,81,150 Dr. Niraj Kumar) Total 215505 12.28,37,850 The amount of Rs.12,28,37,850/- was received by the shareholders as under:
Dr. Ashok Gupta
S.No. Particulars Amount
, (Rs.)
a. Chq No.851465 dated 15-11-2010 of Uco. 50,00,000 .
Bank
b. Cash received in April and May, 2011 2,15,00,000
T c. Chq NO.870089 dated 01-05-2012 of Uco 50,00,000
Bank
d. Chq NO.870189 dated 24-05-2012 of Uco 50,00,000
Bank
e. Chq NO.871131 dated 27-06-2012 of Uco 30,00,000
Bank
f. Chq No.863612 dated 13-08-2012 of Uco 10,46,950
Bank
Total 4,05,46,950
Mrs. Alka Gupta
S.No. Particulars Amount
(Rs.)
a. Chq NO.863613 dated 13-08-2012 of Uco 3,99,000
Bank
69
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
Total 3,99,OOO
Dr. Goptal Batni
S.No Particulars Amount
a Chq No. 852253 dated of Uco Bank 25,00,000
b Cash received from 25.10.2010 to 31.12.2010 90,00,000
c Cash received in April and May 2011 50,00,000
d Chq No.8070088 dated 01.05.2012 of Uco Bank 75,00,000
e Chq No.870132 dated 11.05.2012 of Uco Bank 50,00,000
f Chq No.871133 dated 27.06.2012 of Uco Bank 30,00,000
g Chq No.863608 dated 13.08.2012 of Uco Bank 25,00,000
h Chq No.863609 dated 13.08.2012 of Uco Bank 25,00,000
i Chq No.863610 dated 13.08.2012 of Uco Bank 25,00,000
j Chq No.863611 dated 13.08.2012 of Uco Bank 14,45,950
Total 4,09,45,950
Dr. Niraj Kumar
S.No Particulars Amount
a Chq No.852254 dated 01.12.2010 to Uco Bank 25,00,000
b Cash received from 25.10.2010 to 31.03.2011 90,00,000
c Cash received in April and May 2011 55,00,000
d Chq No.870087 dated 30.04.2012 of Uco Bank 75,00,000
e Chq No.870131 dated 11.05.2012 of Uco Bank 50,00,000
f Chq No.869612 dated 11.06.2012 of Uco Bank 35,00,000
g Chq No.871132 dated 27.06.2012 of Uco Bank 30,00,000
h Chq No.863606 ated 13.08.2012 of Uco Bank 20,00,000
i Chq No.863607 dated 13.08.2012 of Uco Bank 20,64,800
j Chq No.863615 datedf 13.08.2012 of Uco Bank 2,00,000
Total 4,02,64,800
Smt. Charu Kumar
S.No. Particulars Amount
70
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
(Rs.)
a Chq No.863614 dated 13.08.2012 of Uco Bank 6,81,150
Total 6,81,150
It may be seen that pursuant to the MOU dated 24.10.2010 and the subsequent share purchase agreement dated 13.08.2012 the shareholders received following amounts in cash Dr. Ashok Gupta Rs.2,15,00,000 Dr. Gopal Batni Rs.1,40,00,000 Dr. Niraj Kumar Rs.1,45,00,000 Total Rs.5,00,00,000 During the course of search Dr. Ashok Gupta, Dr. Gopal Batni and Dr. Niraj Kumar all accepted having received the aforesaid amounts in Cash from the Bansal Group as Advance against the sale of their respective shareholding in AMDPL. The Department also accepts this fact and there is no dispute that the cash was received as Advance against the transaction for transfer of equity shares in AMDPL to the Bansal Group members. The learned AO also does not disputes the fact that out of total RS.5 crores received by the aforesaid 3 persons, the cash amount received by the assessee was Rs.2,15,00,000/-. The learned AO has presumed that out of the total amount of Rs.2,15,00,000/- Dr. Ashok Gupta received Rs 4O,OO,OOO/- in FY 2010-11 and Rs.-1,75,OO,OOO/- in FY 2011-12. The learned AO has based his presumption on Pg. No. 3 & 4 of LPS-4/2 seized from the Business Premises of Bansal Group located at 3rd Floor, Tava Complex, Bittan Market, Bhopal. Copy of these seized documents were not provided to the assessee and no query regarding the same was put to the assessee for explanation. Scanned image of these seized papers are available on Pg. No. 32 of the assessment order. From these scanned image it can be seen that total Rs.5 crores were paid in cash by the Bansal Group to the aforesaid 3 doctors but the dates of 71 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 payment are not available on the scanned images. It cannot further be identified that which particular payment was made to which doctor.
Therefore there is no basis on which the learned AO could presume that out of Rs.5 orores the payment in FY 2010-11 was Rs.2:20 crores .and in 'F-Y- 2011-12 was Rs.2.80 crores. Even the Bansal Group has not verified or admitted to this presumption made by the learned AO. On the basis of the said presumption and on the basis of admission made by Dr. Gopal Batni and Dr. Niraj Kumar that they have both received Rs. 90 lakhs each in FY 2010-11 the learned AO concluded that out of Rs.215 lakhs the assessee must have received Rs 40 lakhs in FY 2010-11 and Rs.175 lakhs in FY 2011-12. Therefore these amounts have been added to the income of the appellant (Rs 4O lakhs in AY 2011-12 and Rs.175 lakhs in AY 2012- 13). But as already submitted by the appellant the entire cash received by him was an Advance against the proposed sale of his equity shareholding in AMOPL. Even the learned AO has accepted that the cash was against the sale of equity shares. Since no transfer of equity shares was made by the assessee either in FY 2010-11 or in FY 2011-12 hence all amounts received by the assessee from the Bansal Group either in cash or through cheques before the date of Transfer of equity shares on 14-08-2012 remained as Advance. The equity shares held by the assessee in AMDPL having finally been transferred to the Bansal Group on 14-08-2012 the entire cash/cheques received as consideration against such Transfer were includable for computation of Capital Gains in AY 2013-14. Any amount received against Transfer of a capital asset is not liable for tax before the Actual Transfer takes place. As already submitted, the assessee has shown the computation of Capital Gains on Transfer of his 71135 nos. equity shares for total consideration of Rs.4,05,46,950/- in AY 2013-14. The addition of Rs.40,00,OOO/-- and Rs.1,75,00,000/- in the relevant year is therefore totally unjustified and may please be deleted. 72 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Submission for Ground 4 for A. Y 2012-13 (Addition of Rs.1,85,00,000/- ): This addition has been made as per Para No. 20.10 (Pg. No. 28-35) of the assessment order and IS on account of cash presumably receivable by the assessee from Bansal Group against the sale of 71135 nos. equity shares held by the assessee in AMDPL. As already submitted by the assessee in Ground No. - 3 above the total sale consideration of 71135 nos. equity shares was Rs.4,05,46,950/- out of which only Rs.215 lakhs had been received by the assessee in cash. The remaining amount was received through cheques. No amount over and above the said amount of Rs.4,05,46,950/- was either received or was receivable. No evidence to support the presumption made by the learned AO was found during the course of search. The learned Aa has presumed that since the amount of Rs.5 crores had been received by the assessee, Dr. Gopal Batni and Dr. Niraj Kumar in cash therefore the remaining amount of Rs. 7.50 crores was also receivable by the said persons in cash out of which the share of the appellant was Rs.185 lakhs. On the basis of said presumption the learned AO has made the addition ofRs.185 lakhs in the income of the appellant for AY 2012-13. The cheque payments received against the sale of equity shares have totally been ignored. This addition being entirely based on presumptions and surmises and being devoid of any evidence is requested to be deleted.
73 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
77. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities and also filed written submission on 14.10.2019 which is drafted both in English and Hindi. Through this written submission Ld. Departmental Representative contended that the Memorandum of Understanding dated 24.10.2010 found during the course of search reads that the assessee and other share holders will get Rs. 13.50 crores after paying off all the liabilities standing in the books of Assessment Year in question. During the course of search all the Directors have stated to have received total sum of Rs. 5 crores in cash as part of the sale consideration which is included in the net consideration of Rs. 13.50 crores. This sum was partially received in Assessment Year 2011-12 and partly in Assessment Year 2012-
13. The amount received in cheque after the date of search is also not disputed and therefore they have been rightly taxed by the Ld. A.O in the year of receipt of the amount in cash/cheque. He thus supported the finding of Ld. CIT(A).
78. We have heard rival submissions and perused the records before us and carefully gone through the written submission filed 74 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 by both the parties. Through Ground No.3 for Assessment Year 2011-12 and Ground No. 4 & 5 for Assessment Year 2012-13 the assessee namely Dr. Ashok Gupta has challenged the finding of Ld. CIT(A) confirming the action of Ld. A.O making addition on account of voluntary disclosure made u/s 132(4) of the Act and also on account of amount receivable during post search period on account of the deal struck between the Ayushman Diagnostic Pvt. Ltd (In short 'AMDPL') and Bansal Group through Mr. Anil Bansal. Addition in similar facts and circumstances have also been made in the hands of other Directors. In these bunch of appeals we are also dealing with the appeals filed by Dr. Neeraj Kumar which will be dealt in the subsequent paras and our finding in the case of Dr. Ashok Gupta on this common issue on addition on account of voluntary disclosure made u/s 132(4) and the amount receivable on account of sale of shares shall be applied mutandis mutandis in the case of Dr. Neeraj Kumar also for Assessment Year 2011-12 and 2012-13.
79. We observe that the assessee along with D. Gopal Batni established the hospital under the name of M/s. Ayushman 75 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Diagnostic Pvt. Ltd in the year 1995. Dr. Neeraj Kumar further joined the company and three were running the company under the above name. During Financial Year 2006-07 AMDPL entered into an agreement with Wockhardt Hospital Ltd, Mumbai (In short 'WHL'), on 10.07.2006. As per the agreement against the consideration to be received from WHL, M/s AMDPL took up the work of civil construction of various parts of hospital. AMDPL invested the amount during the Financial Year 2007-08 and 2008- 09 for construction of building and acquisition of equipments. M/s WHL initially invested Rs. 4 crores subsequently backed out for any further investment. As stated by Ld. Counsel for the assessee M/s AMDPL after securing loans from Madhya Pradesh Financial Corporation invested approximately about 8.17 crores during Financial Year 2007-08 and 2008-09. When M/s AMDPL tried to persuade WHL to take up the management and further invest the money, some disputes arises between the two. Because of these financial stringencies the hospital was broadly closed in the beginning of Financial Year 2009-10. M/s WHL wanted to modify the agreement and enter into a fresh agreement but the parties could not came to the consensus on any of the terms. On account 76 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 of this distress conditions M/s. AMDPL decided to transfer the management and accordingly entered into an Memorandum of Understanding (In short 'MOU') with Bansal Group. As per this MOU dated 24.10.2010 entered between M/s AMDPL along with its 100% share holders through its Directors namely Dr. Ashok Gupta, Dr. Neeraj Kumar and Dr. Gopal Batni with Shri Anil Bansal S/o Shri K.C. Bansal agreed to take over the hospital with existing liabilities for total consideration of Rs.26.75 crores. The amount was to be adjusted in the following manner :-
i. Take over of liabilities of institutional liabilities and substitution of personal guarantees of Rs. 7.25 crores ii. Settlement of Worckhardt and other liabilities Rs.6.0 crores iii. Payment to share holders of Rs. 13.50 crores.
Further in the said agreement is also written payment term of Rs.13,50,00,000/- to the sellers.
25% on date of DEFINITIVE MOU on 26th October 25% on cut-off date/on possession i.e. 1st December 2010.77
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Balance 50% in five equal monthly instalments commencing on 1st June 2011.
80. After entering into this MOU during the period November, 2010 to May, 2011 Bansal Group paid some amount in cash as well as cheque to three Directors. The assessee in question received Rs.
50 lakhs by cheque on 15.11.10 and cash sum of Rs.2,15,00,000/-
up to May, 2011. A search u/s 132(4) of the Act was conducted on 02.06.2011 of Bansal Group. Since there were business connection between M/s AMDPL search was also conducted at the residential and business premises of all the share holders. During the search MOU was also found which appears at LPS-6 Page No.30 placed at Page No.1 of the common paper book dated 14.06.2017. When the statements were recorded u/s 132(4) of the Act the assessee as well as other Directors accepted to have received cash sum of Rs. 5 crores, the details of which is as under :-
(i) Dr. Ashok Gupta Rs.2.15 crores
(ii) Dr. Gopal Batni Rs. 1.14 crores
(iii) Dr. Neeraj Kumar Rs. 1.14 crores
78
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
81. As regards Dr. Ashok Gupta out of Rs.2,15,00,000/- Rs. 40,00,000/- was received during Assessment Year 2011-12 and Rs. 1,75,00,000/- during Assessment Year 2012-13. Further all the cash payment received by all the 3 Directors was accepted by Mr. Sunil Bansal during the course of search statement recorded u/s 132(4) of the Act dated 03.06.2011 and the unaccounted investment is claimed to have been offered to tax by the Bansal Group. During the course of assessment proceedings and subsequent to search carried out u/s 153A r.w.s. 143(3) of the Act (which was completed on 14.3.2014) when the Ld. A.O confronted the assessee with the MOU, complete details were filed by the assessee regarding the amount received from Bansal Group in cash as well as cheque which totalled to Rs. 12,28,37,850/- received by the share holders against the number of shares held in the following manner :-
Name of Shareholder No. Of shares held Amount received Dr. Ashok Gupta 71135 4,05,46,950 Mrs. Alka Gupta 700 3,99,000 (w/o Dr. Ashok Gupta) Dr. Gopal Batni 71835 4,09,45,950 Dr. Niraj Kumar 70640 4,02,64,800 79 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Mrs. Charu Kumar 1195 6,81,150 (w/o Dr. Niraj Kumar) Total 215505 12.28,37,850
82. The above sum of Rs.12,28,37,850/- includes the cash sum of Rs.5 crores received by the three Directors discussed above. The Ld. A.O was of the view that the amount should have been offered to tax as and when they have been received. In other words in the case of the assessee Rs. 40 lakhs and Rs. 1.85 crores should have been offered to tax during Assessment Year 2011-12 and Assessment Year 2012-13 respectively. Ld. A.O was also of the view that the amount as per the MOU dated 24.10.2010 which was not received on the date of search i.e. 02.06.2011 totalling to Rs. 7.5 crores should have been offered to tax. The share of the assessee in this Rs.7.5 crores was calculated at Rs. 1.85 crores by the Ld. A.O which was finally added to the income of the assessee for Assessment Year 2012-13. As regards the submissions and contention made by the assessee through its Ld. Counsel at various stages summaries that as per the MOU the amount was to be received by the share holders against the sale of shares in M/s 80 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 AMDPL to Bansal Group. Ld. Counsel for the assessee submitted that advance amounts in cash/cheque were received but due to the ongoing litigation with M/s WHL which delayed the completion of the transactions and finally on 8.02.2012 the arbitration award was issued as per the directions of Hon'ble High Court of Madhya Pradesh which brought an end to the litigation between the assessee and M/s WHL The copy of the arbitration award is placed at page 114 of the common paper book. It was on 08.02.2012 that the deal between M/s. AMDPL and Bansal Group got a clear way. Subsequent to it on 14.08.2012 the shares were transferred. The claim of the assessee is that the total consideration of Rs. 4,05,46,950/- received by him against the sale of 71135 equity shares held in M/s AMDPL have been shown as sale consideration in the return of income for Assessment Year 2013-14 as per the provisions of Section 45(1) of the Income Tax Act. It was also claimed that advance tax of Rs.37,11,100/- stood paid up to 01.03.2013 for the income to be shown under the head Long Term Capital Gain for Assessment Year 2013-14. This fact of paying advance tax for Assessment Year 2013-14 as well as the sale consideration from sale of shares have been offered to tax during 81 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Assessment Year 2013-14 was very much before Ld. CIT(A). On the basis of these facts Ld. Counsel for the assessee has contended that the action of Ld. A.O making addition during Assessment Years 2011-12 and 2012-13 tantamount to double addition since amount received towards sale of shares has been offered and assessed to tax in the Income Tax Return for Assessment Year 2013-14.
83. On examining all the facts and the view taken by both the lower authorities firstly there remains no dispute about the cash and cheque amount received by the assessee on account of the MOU entered into between M/s AMDPL and Bansal Group. However it seems that both the lower authorities have only taken note of the amount of cash or cheque received by the assessee as per MOU but they have not dealt the amounts received as part of the transaction of sale of equity shares. As per the audited Balance Sheet of Financial Year 2006-07 placed at Page 122 to 133 of M/s. AMDPL paid up capital was Rs.26,54,800/- against 126548 equity shares allotted. As on 31.03.2009 as per the audited Balance Sheet of M/s. AMDPL 213448 equity shares were issued for paid up capital of Rs.2,13,44,800/- against the authorised share capital of 82 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Rs. 2,25,00,000/-for 22500000 of equity shares of Rs.100/- each. When the deal was struck between M/s. AMDPL and Bansal Group 215505 equity shares were held by the Directors and their family members for which total consideration of Rs.12,28,37,850/- was received. Ld. A.O has only dealt with the amount of cash/cheque but has not dealt with the complete transaction with the sale of shares. The assessee is entitled to deduction of indexed cost of acquisition and other incidental expenses incurred against the sale consideration received from sale of shares.
84. There is no ambiguity in the MOU which clearly spelled out that the amount will be paid for paying all the liabilities relating to loans taken and other creditors as on the date of take over approximately calculated at Rs. 7.25 crores and the portion of Rs. 6 crores for settlement of M/s Wockhardt and other liabilities and remaining amount approximately Rs. 13.50 crores was to be given to the share holders. It was clearly a transaction of purchase of running business and paying the share holders for purchase of shares which needs to be taxed in the hands of the assessee. 83 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
85. Now the question comes here is when the assessee should have offered the amount to tax i.e. "whether the amount should have offered to tax as and when it was received by showing it as Long Term Capital Gain in the year when it was received" or "whether it is to be offered to tax when the agreement for sale of shares is entered into".
86. In the instant case the assessee before finalising the deal with Bsnsal Group had entered into an agreement with M/s WHL for take over of the hospital. But due to disputes arising between the two parties the dealt could not materialise and went into litigation. In the submissions made by the Counsel for the assessee chronology of the events occurred from 7.10.2006 to 14.08.2012 have been mentioned wherein after entering into agreement with M/s. WHL disputes arised between the two. M/s WHL filing petition for possession of property on 03.1.2011 which was dismissed on 14.02.2011. Thereafter M/s WHL filed an appeal before Hon'ble High Court of Madhya Pradesh on 07.03.2011 for arbitration and on 28.06.2011 Hon'ble High Court of Madhya Pradesh appointed the Arbitrator which was subsequently changed 84 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 and finally on 08.02.2012 arbitration award was issued and the disputes between M/s AMDPL and M/s Wockhardt came to an end. Finally equity shares were transferred to Bansal Group on 14.08.2012. The deal with M/s Bansal Group happened in between on 24.10.2010. Part of the consideration was received in cash and cheque by the Directors on various dates which is also mentioned in the preceding paras in the submission of the Ld. Counsel for the assessee. So the crux of the series of facts is that till 08.02.2012 there was no surety of honouring the MOU entered into between M/s. AMDPL and Bansal Group. Therefore all the amounts received by all the Directors or share holders were merely in the shape of an advance and in case of contrary outcome between M/s AMDPL and M/s WHL the sale of shares could not be completed. In the instant case transaction of sale of equity shares of M/s AMDPL held by assessee falls in the category of transfer provided in Section 45(1) of the Act which reads as follows:-
Any profits or gains arising from the transfer of a capital asset effected in the previous year shall, save as otherwise provided in sections 54, 54B, 54D, 54E, 54F, 54G and 54H, be chargeable to income- tax under the head" Capital gains", and shall be deemed to be the income of the previous year in which the transfer took place.85
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 The Exceptions provided in Sub Section 2 to (6) of Section 45 do not apply to the issued involved in case of assessee. Therefore since the transfer of equity shares was effected during Financial Year 2012-13 i.e. on 14.08.2012, the Long Term Capital Gain for sale of equity shares of M/s. AMDPL held by shareholder is taxable in Assessment Year 2013-14 only.
87. In our considered view all the amount received by the assessee or share holders till the commencement of arbitration award issued on 08.02.2012 were only the advances against the incomplete deal and liability to pay back was very much lying till 08.02.2012. Subsequent to the arbitration award and honouring the same it was finally on 14.08.2012 when the registration of transfer of shares completed and 215505 equity shares which included 71135 equity shares held by Dr. Ashok Gupta were transferred to Bansal Group for total consideration of Rs. 12,28,37,850/-. As regards the assessee's receiving total sale consideration of Rs.4,05,46,950/- from the transfer of equity shares held in AMDPL the same has been disclosed in the return of income filed for Assessment Year 2013-14 on 28.3.2014 and claiming the deductions the income has been offered to tax.
88. Now As far as the sale consideration of 4,05,56,950/- is concerned t he same has been disclosed in the return of income 86 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 against which the assessee has claimed index cost of 1,36,57,842/-
on the total cost of acquisition of Rs.71,64,500/-. The fact that the assessee has offered these share of sale consideration to tax during Assessment Year 2013-14 was brought on record before Ld. CIT(A) also and the submissions filed to Ld. CIT(A).
89. In the case of other share holders also sale consideration has been offered in Assessment Year 2013-14. The major amount was received by 3 Directors and the amount shown as sale consideration through which Income Tax Return filed for Assessment Year 2013-14 is as follows:-
Name Amount
Dr. Ashok Gupta Rs. 4,05,46,950/-
Dr. Neeraj Kumar Rs. 4,02,64,800/-
Dr. Gopal Batni Rs. 4,09,45,950/-
Total Rs.12,17,57,700/-
90. The remaining consideration i.e. total consideration of Rs. 12,28,37,850/- Less Rs,12,17,57,700/- comes to Rs.10,80,150/- 87 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 which constitutes two share holders namely Dr. Ashok Gupta at Rs.3,99,000/- and Smt. Charu Kumar at Rs.6,81,150/- and the same is claimed to have been offered to tax during Assessment Year 2013-14. It is further brought to our notice that the assessment for Assessment Year 2013-14 in the case of Dr. Ashok Gupta as well as Dr. Neeraj Kumar was completed u/s 143(3) of the Act vide order dated 31.03.2016 and the income under the head Long Term Capital Gain for sale of equity shares of AMDPL has been accepted by Ld. A.O. Thus there remains no dispute to the fact that total sale consideration of Rs.12,28,37,850/- towards sale of equity shares held in AMDPL by the three Directors including the assessee have been offered to tax and have been assessed u/s 143(3) of the Act.
91. One more fact brought to our notice that the alleged cash of Rs. 5 crores paid by Bansal Group to the 3 Directors have also been offered to tax during Assessment Years 2011-12 and 2012-13 by the Bansal family. Ld. Counsel for the assessee as Officer in Court has given this information in writing along with the certificate issued by Shri Anil Bansal wherein information about the name of the assessee, PAN Number, Assessment Year and the amount 88 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 surrendered and offered to tax has been mentioned. It specifically shows that tax and surrendered income of Rs.5 crores has been paid and the issue is not contested in appeal before CIT(A) and ITAT.
92. Therefore in the given facts and circumstances of the case we come to the conclusion that the amounts received for sale of equity shares by the share holders as per the MOU dated 24.10.2010 which was seized during the search appearing in page 30 of LPS-6 has been offered to tax by respective share holders in their regular Income Tax Return for Assessment Year 2013-14. The fact that the assessee has shown the income under the head Long Term Capital Gain for Assessment Year 2013-14 is correct and in our view since the delay in transferring the shares arised due to the dispute between M/s. AMDPL & M/s WHL which delayed to complete the deal as per MOU dated 24.10.2010 between M/s. AMDPL & M/s Bansal Group. The assessee received the value for the equity shares held. This amount was received in part of which some was in cash (which was duly accepted by the assessee during the course of search) and the remaining part in cheque. Since due 89 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 to ongoing litigation between assessee and WHL delayed the completion of deal between the Bansal Group and the assessee and it was only on 08.02.2012 that the litigation between AMDPL and WHL came to an end. The registration of transfer of shares took place on 14.8.2012 and on the basis of these documents transaction of sale of shares completed in financial year 2012-13. Thus the assesee and other Directors/share holders has rightly disclosed the Long Term Capital Gain from sale of shares in their regular return of income for Assessment Year 2013-14. Therefore the action of the Ld. A.O making the addition for advance cash received on sale of shares at Rs.40,00,000/- and Rs.1,75,00,000/- during Assessment Year 2011-12 and 2012-13 and addition of Rs.1,85,00,000/- for the amount receivable post search was not justified and is liable to be deleted. We accordingly order so and set aside the finding of Ld. CIT(A) and allow Ground No.3 for Assessment Year 2011-12 and Ground No. 4 & 5 for Assessment Year 2012-13 raised by the assessee namely Dr. Ashok Gupta Kumar in IT(SS) No.64 and 161/Ind/2017.
90 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
93. In the result appeal of the assessee Dr. Ashok Gupta for Assessment Years 2011-12 and 2012-13 are partly allowed.
94. Now we take up the case of Dr. Neeraj Kumar for Assessment Year 2006-07, 2011-12 and 2012-13 vide IT(SS) No.66,67 & 162/Ind/2017. Brief facts of the case are that Dr. Neeraj Kumar is also the Director and shareholder of M/s. AMDPL. Residential premises were also subjected to search along with the search conducted at Bansal Group and other Directors and share holders of M/s. AMDPL on 02.06.2011 and some loose papers were seized. In response to notice issued u/s 153A of the Act Income Tax Returns were filed for Assessment Years 2006-07 to 2011-12.
95. We will first take up the appeal for Assessment Year 2006-07 wherein four grounds of appeal have been raised which reads as follows:-
1.That the assessment made u/s 153A r.w.s. 143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.13,OO,OOO/- maintained and confirmed by CIT(A) made on the basis of Page No.122 of LPS-3 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.91
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
3.That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
4.The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case.
96. At the outset Ld. Counsel for the assessee requested for not pressing Ground No.1 challenging the validity of the assessment made u/s 153A r.w.s. 143(3) of the Act. Since Ground No.1 has not been pressed the same stands dismissed as not pressed.
97. Apropos Ground No.2 relating to the addition of Rs.13,00,000/- made on the basis of Page No.122 of LPS-3 found from the office premises of Ayushman College, as per Ld. A.O this page contains the details of payment made to assessee totaling to Rs.13,00,000/- and dividend of Rs.3,40,600/-. Though it was claimed by the assessee that all the payments were made before 31.3.2005 and are duly recorded in the books of accounts and no addition could be made for Assessment Year 2006-07. Ld. AO did not find any merit made the addition of Rs.16,40,600/- as unaccounted income not recorded in books of accounts. 92 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
98. Aggrieved assessee preferred appeal before Ld. CIT(A) and partly succeeded since the finding of Ld. A.O was partly confirmed by Ld. CIT(A) observing as follows:-
I have considered the facts of the case, the written submissions of the learned AR, the assessment order and also perused the case record. It is seen that the appellant assessee has filled regular return u/s 139 for AY 2005-06 on 23.03.2006.
The statement of total income and the details of account filed along with the regular return filed u/s 1 39 for A.Y 2005-06 clearly shows receipt of company dividend of Rs. 3,40,600/-. The same amount of Rs. 3,40,600/-is reflected in the loose paper (page No 122 of LPS-3) found during the course of search at the office premises of Ayushman College situated at lllG-3, Lake view society, Shahpura, Bhopal.
From the above it is clear that the sum of Rs 3,40,600/- is dividend received by the appellant for AY 2005-06 which is also shown in regular return of income filed u/s 139(1) on 23.03.2006.
In view of the above, it is clear that the sum of Rs. 3,40,600/- pertains to AY 2005-06 and is reflected in the return. u/s 139(1) and is therefore deleted.
4.2 Regarding the balance of Rs. 13,00,000/-, which is treated by the A.O as undisclosed cash receipt for A.Y 2006-07 is confirmed. The argument· taken by the appellant that the sum of Rs. 13,00,000/- relates to years prior to A.Y 2006-07 has no has no evidence regarding the same was filed either before the A.O or at the time of late proceedings and is therefore, rejected.93
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 The ground of appeal is partly allowed.
99. Now the assessee is in appeal before the Tribunal.
100. Ld. Counsel for the assessee referred to following written submission:-
AY 2006-07: Addition of Rs.13 lacs (Page 3 of PB B-l) The Ld. AO, in Para 13.4, Page 13 of the Assessment Order, has made the addition of Rs.16,40,600/-- on the basis of loose paper LPS-3 Page
122. The said paper is a calculation of investments made by the group directors in the case of the Company. It also indicates the dividends of Rs.3,40,600/- being declared to the director. The Ld. AO has remarked in Para 13.3 that the assessee has not submitted any evidence to substantiate its claims about the share investments and also the dividends received. He further observed that the assessee has received cash and dividend of Rs.16,40,600/- and would be added as the income of the assessee on account of undisclosed cash receipts for AY 2006-07.
The Ld. CIT(A) has deleted the addition of Rs.3,40,600/- after verification that the dividends have been declared and shown in the return for AY 2005-06.
It is humbly submitted that all the payments are entered in the books of M/s Ayushman and as such it cannot be treated as undisclosed income of the assessee. It is further submitted that the additions have been made on the basis of loose papers LPS 3 Page 122. The paper will have to be read as a whole and conclusions should be drawn on the basis of the entries on the paper. The paper clearly states the amounts prior to 31.3.2005 and as such they cannot be taxed for AY 2006-07 as income of this year. The addition made is bad in law and deserves to be deleted. 94 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
101. Per contra Ld. Departmental Representative vehemently argued supported the findings of Ld. CIT(A).
102. We have heard rival contentions and perused the records placed before us. Through Ground No.3 assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs.13,00,000/- made by Ld. A.O on the basis of loose sheet found during the course of search appearing in Page No.122 of LPS-3. Copy of this loose paper is placed at page-3 of PB/B-1 dated 14.06.2017. On going through this loose paper we find that assessee received various payments during the period 06.08.2003 to 14.03.2005 totalling to Rs.13,00,000/-. Ld. A.O has made addition during Assessment Year 2006-07. First and foremost when the addition has been made on the basis of loose sheet wherein date of payment is clearly mentioned there hardly remain any role of Ld. A.O to assess income in some other year which in this case is Assessment Year 2006-07. The contention of the assessee is that all the entries mentioned in this loose sheet No.122 of LPS-3 are through banking channel as evidenced by the copy of bank statements filed by the Ld. Counsel for the assessee on 17.03.2019.
95 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
103. In these given facts and circumstances of the case we are of the considered view that the transactions appearing in the alleged loose sheet No.122 of LPS-3 do not pertain to Assessment Year 2006-07 and thus no addition was called for in Assessment Year 2006-07 and further all the transactions appearing in this loose sheet are duly recorded in the in the books of accounts. We therefore set aside the finding of Ld. CIT(A) and delete the addition of Rs.13,00,000/- and allow Ground No.2 for Assessment Year 2006-07 in IT(SS) No.66/Ind/2017.
104. Ground No.3 & 4 are general in nature which needs no adjudication.
105. In the result appeal for Assessment Year 2006-07 is partly allowed.
106. Now we take up IT (SS) No. 67/Ind/2017 for Assessment Year 2011-12 in the case of Dr. Neeraj Kumar wherein following grounds are raised:-
1.That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.96
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
2. That the addition of Rs.90,00,000/- made on the basis of Page No.30 of LPS-6 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3. That the addition of Rs.1 ,52,000/- made on the basis of Page No.61 of BS-1 found from the office premises of Ayushman College be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
4. That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
5.The appellant craves leave to add or amend any ground of appeal before or during the Course of hearing of the case.
107. At the outset Ld. Counsel for the assessee requested for not pressing Ground No.1 challenging the validity of the assessment made u/s 153A r.w.s. 143(3) of the Act. Since Ground No.1 has not been pressed the same stands dismissed as not pressed.
108. Apropos Ground No.2 is addition of Rs.90,00,000/- on account of page-30 of LPS-6 relating to advance received from Bansal group as part of the deal mentioned in MOU dated 24.10.2010. This issue has already been decided by us in the preceding paras71-92 in the case of Dr. Ashok Gupta while deciding 97 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Ground No.3 for Assessment Year 2011-12 and Ground No. 4 & 5 for Assessment Year 2012-13 wherein we have held that addition made by the Ld. A.O for the advance sum received against sale of shares was to be taxed in the year when shares have been transferred i.e. in the Assessment Year 2013-14 and since total consideration received by the share holders/Directors in cash and cheque have been accounted for and offered to tax under the head Long Term Capital Gain in Return of income filed for Assessment Year 2013-14, no addition was called for during the Assessment Year 2011-12 and 2012-13. We therefore delete the addition of Rs.90,00,000/- made in the case of the assessee for advance cash received during the Assessment Year 2011-12 from Bansal Group. The finding of Ld. CIT(A) is set aside and Ground No.2 of the assessee's appeal is allowed.
109. Apropos Ground No.3 relating to addition of Rs. 1,52,000/- made on the basis of Page-61 of BS-1 found during the course of search shows some transaction of the cash received against Rs. 1,50,000/-. Inadvertently the total of four entries has been adopted at Rs. 1,52,000/- and the same figure has been carried till now. The actual position is that 10.09.2010, 18.09.2010, 21.09.2010 and 98 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 25.09.2010 an amount of Rs.30,000/-, Rs.30,000/-, Rs.50,000/- and Rs.40,000/- respectively are shown. Submissions made by the assessee before the Ld.A.O that these entries actually relates to transaction of purchase of 1000 equity shares of AMDPL from Smt. Bharti Patel through account payee cheque was not accepted by the Ld. A.O and he made the addition of Rs.1,52,000/- observing as follows:-
14.3 The submission of the assessee has been considered and examined but the same is not acceptable:-
i The above loose papers shows that the assessee has received cash of Rs. 1,52,000/- from Mr. Bharat Patel for share in the month of September 20 1 O. The above expenditure has not been entered in the books of accounts of assessee.
ii. The above loose papers shows that the assessee has received cash of Rs. 1,52,000/- from Mr. Bharat Patel for share in the month of September 2010. The above expenditure has not been entered in the books of accounts of assesee.
iii. On request of assessee summon u/s 131 has been issued to Shri. Bharat Patel on 26/12/20 13, however he has not attended the proceedings till date.
iv. This handwritten loose paper has been found and seized from the residence of the assessee. Therefore, in view of provisions of section 132( 4A) of the Income tax Act, 1961, it is presumed that the 99 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 transactions recorded in this loose paper pertain to the assessee and the content of these transactions is true.
v. The explanation offered by the assessee has not been supported with any documentary evidence.
14.4 In view of the above facts and circumstances of the case, it is established and held that the assessee has received cash of Rs. 1,52,000/- from Shri Bharat Patel, which was not recorded in the books of accounts. Therefore, the amount of Rs.1,52,000/- is added to the total income of assessee on account of unexplained cash received for A.Y 2011-12.
110. Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed since the finding of Ld. A.O was confirmed observing as follows :-
1 have considered the submissions of the learned AR, the assessment order and also perused the case record. The submissions of the learned AR that Rs .1,50,000/- have been paid to Smt Bbarti Patel through cheque Cb.No.0374599 drawn on his SB A/e No.00621000007489 with HDFC Bank for acquiring 1000 Nos. equity shares of Ayushman Medical Diagnostics Pvt Ltd which were held by her. To acquire the shares from Smt. Nharti Patel the appellant assessee had received a loan of Rs.1,50,000/- from Shri Avinash Galande. The learned AA contented that the narration "Cash" written on this paper is not correct. The loan from Shri Avinash Galande was received through two account payee cheques of Rs.l,25,000/- and Rs.25,000/- immediately before making payment to Smt. Bharti Patel. The appellant also stated that he did not receive any cash amount from Mr. Bharat Patel. The address of Mr. Bharat Patel was also 100 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 given by the appellant assessee and request was made to issue summons u/s 131 to him.
6.2 The plea taken by the appellant has no merit. The handwritten loose paper has been found and seized from the premises of the appellant assessee at the time of search. The said handwritten paper clearly mentions the name Mr. Bharat Patel The changing of name from Bharat Patel to Bharti Patel by the appellant is clearly an afterthought. The appellant has gone on to state further that the narration written as 'cash' on this paper is correct. This is a concocted story, as no evidence was filed in this regard either before the A.O or at the appellate stage. At the request of the appellant assessee when summons were issued to Shri Bharat Patel whose address was provided by the appellant himself, none attended.
In view of the foregoing discussion it is clear that the sum of Rs. 1,52,000/- clearly shows unexplained cash receipt for A.Y 2011-12 and the addition made by the A.O on this count is confirmed.
The ground of appeal is dismissed.
111. Ld. Counsel for the assessee challenged the finding of Ld. CIT(A) and referred following written submissions:-
Ground No. 3 (page 7 of PB B-2): Addition of Rs. 1,52,000/- on account of alleged cash investments.- The Ld. AO has made the addition at Page 14, Para 14.4 on account of entry in BS-l Page 61. The said writing states cash received paid to Bharat Patel for shares. It was explained to the Ld. AO that the assessee had made the payment of Rs.l,50,000/- to Smt. B.S. Patel for acquiring 1000 shares of Ayushman. The shares were transferred in the name of the assessee. The assessee has further made the payment of Rs.l,50,000/- to Bharat Patel which was received from 101 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Bansal Group. Since, in the paper it is mentioned about the receipt and payment, no income arises to the assessee and as such no addition can be made on this account. It is therefore prayed that the additions may please be deleted.
112. Per contra Ld. Departmental Representative vehemently argued supported the order of both the lower authorities.
113. We have heard rival contentions and perused the records placed before us. The addition of Rs. 1,52,000/- is challenged before us made by the Ld. A.O on the basis of Page No.61 of diary BS-1. The copy of the sheet is placed by the assessee at PB/B-2 of paper book dated 14.06.2017. On perusal of the sheet the details of the transaction which reads that the cash received against Rs. 1,50,000/- paid to Smt. Bharati Patel for share of AMDPL following amount on various dates have been paid :-
Date Amount
10.09.2010 Rs.30,000/-
18.09.2010 Rs.30,000/-
21.09.2010 Rs.50,000/-
25.09.2010 Rs.40,000/-
Total Rs.1,50,000/-
102
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
114. To explain the above entries assessee has made the
submission that the actual transaction do not took place with Mr. Bharat Patel but it was with Smt. Bharati Patel which was in connection with purchase of 1000 equity shares of AMDPL. Payment were made through cheques. It was also added in the assessee's submission that loan was received from Avinash Galande at Rs. 1,25,000/- and Rs.25,000/- . It was also submitted that the narration of cash was wrongly written. We however find no merit in the contention of the assessee and submission made before lower authorities. No documentary evidence filed to show that loan of Rs.1,25,000/- and Rs.25,000/- was received for purchase of equity shares from Smt. Bharti Patel and even the notice issued to Shri Bharat Patel at the address shown by the assessee was not served. In all the facts and circumstances of the case wherein the assessee has not denied that the transaction appearing in the loose sheet and explanation given is not sufficient to justify the submission made by the assessee, we find no reason to interfere in the finding of Ld. CIT(A) and thus confirm the addition of Rs. 1,50,000/- and dismiss the assessee's Ground No.3 for Assessment Year 2011-12 in IT(SS) No.67/Ind/2017.
103 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
115. Ground No. 4 & 5 are general in nature which needs no adjudication.
116. In the result appeal of the assessee for Assessment Year 2011- 12 is partly allowed.
117. Now we take up IT(SS) No.162/Ind/2017 for Assessment Year 2012-13 wherein following grounds of appeal were raised:-
1.That the assessment made u/s 153A r.w.s.143(3) of the Income-Tax Act be held to be bad in law and on facts and be quashed.
2. That the addition of Rs.1,93,040/- maintained and confirmed by CIT(A) made as per Para NO.9.5 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
3.That the addition of Rs.55,00,000/- made as per Para No.15.15 of . the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
4.That the addition of Rs.2,80,00,000/- made as per Para No.15.16 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
5. That the addition of Rs.15,00,000/- made as per Para No.1 0.6 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
6. That the addition of Rs.39,500/- made as per Para NO.11.4 of the 104 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
7.That the addition of Rs.21, 16,800/- made as per Para No.12.9 of the assessment order be held to be bad and unjustified on the facts and in the circumstances of the case and be quashed and deleted.
8. That in the alternative and without prejudice to the Grounds stated above the additions made be held to be highly unreasonable and excessive and be reduced.
9.The appellant craves leave to add or amend any ground of appeal before or during the course of hearing of the case.
118. At the outset Ld. Counsel for the assessee requested for not pressing Ground No.1 challenging the validity of the assessment made u/s 153A r.w.s. 143(3) of the Act. Since Ground No.1 has not been pressed the same stands dismissed as not pressed.
119. Apropos Ground No.2 for the addition of unexplained cash of Rs.1,93,040/- which was found at the assessee's residential premises the explanation given by the assessee were not accepted by the Ld. A.O and addition u/s 69A of the Act was made. Assessee's appeal against the addition ofRs.1,94,340/- was partly 105 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 allowed since Ld. CIT(A) deleted the addition of Rs.1300/- and confirmed the remaining addition observing as follows:-
I have perused the submissions of the learned AR and the assessment order. The appellant assessee has not been able to explain the source of cash found during the search.
The cash of Rs. 1,93,040/- could not be tallied with the books. The cash has been found from the residence and locker amounting to Rs 70,540/- and Rs 1,22,500/- respectively. Cash kept in locker points to the fact that it is unaccounted and not recorded in the books. For safety reasons the cash can be deposited in bank account from where it can be utilized as and when needed, as once the cash has been kept in locker it is not readily available for use. The plea taken by the assessee that cash of Rs. 1,22,500/- for F.Y 2011- 12 was received from bansal group cannot be accepted as it is not recorded in books of account. The cash found at the residence did not tally with the books of account. The A.O has rightly held that the cash amounting to Rs. 1,93,040/- has not been satisfactorily explained even though claimed by the appellant that the cash has been received from Bansal group the same could not be reconciled with the. books of accounts. Besides, the appellant assessee has not been able to give the reasons for receiving such huge amounts in cash and then keeping the same in bank locker.
Therefore, the cash found at residence and locker during the Course of search amounting to Rs. 1,93,040/- is unexplained cash.
The addition made by the A.O U/S 69A for A.Y 2012-13 is confirmed.
7.2 Regarding the foreign currency found during the search the plea taken by the appellant that US$ 24 belongs to his younger brother Shri Pankaj Gupta who is a US citizen is reasonable.106
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 In view of the status of the appellant and the amount being very small the addition on account of US$ 24 is deleted.
120. Aggrieved assessee is appeal before the Tribunal against the addition of Rs.1,93,040/-.
121. Ld. Counsel for the assessee referred to the written submissions filed before Ld. CIT(A) and also submitted that assessee received cash sum of Rs. 1,45,00,000/-before the date of search towards advance amount on account of deal for sale of equity shares held in AMDPL to Bansal Group. The source of cash in hand is from the advance so received.
122. Per contra Ld. Departmental Representative vehemently argued supported the order of Ld. CIT(A).
123. We have heard rival contentions and perused the records placed before us. The addition of Rs. 1,93,040/- is in dispute which relates to cash found at the residential premise and addition was made for not explaining the source of cash. We however in the instant case have discussed the facts in the preceding paras. The assessee had received cash of Rs.90,00,000/- and Rs.55,00,000/- from Bansal Group during Financial Year 2010-11 and during April 107 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 and May2011 i.e. before the date of search. Thus the source of cash is duly explained with the facts emerging from records. We therefore are of the considered view that addition of Rs.1,93,040/- needs to be deleted and we accordingly order so and set aside the finding of Ld. CIT(A) and allow Ground No.2 raised by the assessee in IT(SAS)No.162/Ind/2017.
124. Apropos Ground No.3 & 4 for the addition of Rs.55,00,000/- and Rs.2,80,00,000/- we find that this issue was common in the case of Dr. Ashok Gupta also which has been adjudicated in the preceding paras wherein we have decided that addition made by the Ld. A.O for the advance sum received against sale of shares was to be taxed in the year when shares have been transferred i.e. in the Assessment Year 2013-14 and since total consideration received by the share holders/Directors in cash and cheque have been accounted for and offered to tax under the head Long Term Capital Gain in Assessment Year 2013-14, no addition was called for in the Assessment Year 2011-12 and 2012-13. We therefore delete the alleged addition of Rs.55,00,000/- and Rs.2,80,00,000/- made by the Ld. A.O for the advances received in cash/cheque from Bansal 108 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 Group. The finding of Ld. CIT(A) is set aside and Ground No.3 & 4 of the assessee's appeal is allowed.
125. Now we take up Ground No.5 for Assessment Year 2012-13 which relates to addition of Rs.15,00,000/- for the alleged unexplained cash payments. The Ld. A.O on the basis of the seized document Annexure BS-3 page 14 to 17 made this addition for the alleged cash bribe given by the assessee. The submission of the assessee that these pages 14 to 17 are rough calculations for the projects to be undertaken in future and there is no actual transaction ever taken place was not accepted by the Ld. A.O and he made the addition for Rs.15,00,000/-.
126. Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed as the impugned addition was confirmed by Ld. CIT(A) observing as follows:-
I have perused the submissions of the learned AR, the assessment order and also perused the case record. The submission of the appellant that the loose paper page no 14 of annexure BS-3 found and seized from the premises from Ayushman college at HIG-3, Shahpura, Bhopal contains only rough calculations regarding proposed investment in nursing college has no merit. The paper was seized from the premises of the appellant whereby clear cut detail of expenses relating to bribes (local 5lakhs + 10 109 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 lakhs) to VVM nursing college has been mentioned. The said expenses has been made in cash. No evidence or details as to that the said loose paper contains only rough calculations has been produced either before the A.O or at the appellate stage. The paper is handwritten and the claim of the appellant that it is a 'rough working' is in afterthought. The findings of the A. 0 that it is a concocted story made by the appellant, calls for no interference and the addition of Rs. 15,00,000/- made by the A.O is confirmed.
The ground of appeal is dismissed.
127. Now the assessee is in appeal before the Tribunal.
128. Ld. Counsel for the assessee referred to the following written submissions placed on record.
Ground No. 5 (Page 12 to 15 of PB B-3): Addition of Rs.15,00,000/- being the unexplained cash payments - The Ld. AO has made this addition at Page 8, Para l0 on the basis of the loose paper Annexure BS- 3, Page 14 to 17 on the ground that the assessee has incurred the expenses for bribes, etc. It was submitted that these loose papers are probable estimates of the projects. This was a rough calculation in the shape of project reports. The Ld. AO concluded that the assessee has made the payments which are unexplained. He has relied on the judgment of the Calcutta High Court and The Madras High Court. Both the cases are in respect of the expenditure incurred by the assessee. In the instant case, no cash outflow is mentioned but they are the estimated projected amounts. The case laws are not applicable in the 110 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 assessee's case. The Ld. CIT(A) has upheld these additions in Para 8.1, Page 35 on the ground that it is a clear cut detail of expenses for bribe and no evidence is produced before the AO or at the appellate stage.
It is humbly submitted that on perusal of the said loose paper Page 14, it clearly indicates the rough calculations of the projects for starting up the nursing college. On this loose paper, the calculations are given including the requirement of land, equipments, etc and the salaries to the staffs and the calculations regarding salaries to the staff are given. The names of the existing other colleges have also been given which are VVM Nursing College, Prasham college, RKDF and Rani Dullaiya College have also been mentioned. The expected bribe of Rs.15,00,000/- is mentioned. Since all these papers are the estimated projected requirements, no addition can be made on this ground. This paper itself indicates that no expenditure is incurred but these are only projected estimates. In view of 'this, the additions made deserve to be deleted.
129. Per contra Ld. Departmental Representative vehemently argued supported the order of both the lower authorities.
130. We have heard rival contentions and perused the records placed before us. Through Ground No.5 assessee has challenged the finding of Ld. CIT(A) confirming the addition of Rs.15,00,000/- made by Ld. A.O for the alleged unexplained cash bribes given on the basis of seized document BS-3 Page 14 to 17. Ld. Counsel for the assessee has submitted that the alleged seized documents depicts rough calculation for the projections made by the assessee 111 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 for putting up colleges for Nursing/Pharmacy/Homeopathy and Ayurvedic. Both the lower authorities have not accepted this contention.
131. On perusal of the alleged seized document we find that at Page-14 there is some calculation about the nursing college. This calculation includes area of land, number of beds, area of building in sq.ft, period of course, fees for various terms. In the middle of the document it is mentioned that bribes to local Rs.5 lakhs plus Rs.10 lakhs. Below this fronts monthly salary of the staff and number of staffs is mentioned. Page 15 talks about Pharmacy college and the fees of the Principal and fees for B.Pharm and D. Pharm. Page 16 talks about Homeopathy college and the infrastructure to set up. Page 16 also talks about the Ayurvedic college and the infrastructure required for the Ayurvedic college. At Page 17 it summarises the investment so made in all the colleges Nursing, Pharmacy and Ayurvedic. If all the four pages are seen together it is clearly visible that these are the projections for the colleges which were planned or to be set up in future. The mentioning of bribe of Rs.15 lakhs is only on Page 14 of BS-3 but 112 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 there are other three pages also and list of figures are available on all the pages. Ld. A.O has choosen only two taking up two figures i.e. Rs.5 lakhs and Rs.10 lakhs mentioned against the assessee for making addition. No efforts were made to examine the other figures available on these four pages. The seized document do not reveal anything about these colleges being set up.
132. In these given facts and circumstances of the case where the alleged documents primarily seems to be projection for different type of colleges to be established in future and there is no iota of evidence to show that any such investment in colleges has been made, then in such situation no addition could be made for the proposed bribes mentioned in the document. Ld. CIT(A) erred in not taking note of these facts and was thus not justified in confirming the action of the Ld. A.O. We therefore set aside the finding of Ld. CIT(A) and delete the addition of Rs.15,00,000/- made by the Ld. A.O on the basis of seized document of page 14 to 17 of BS-1 and allow Ground No.5 raised by the assessee for Assessment Year 2012-13.
113 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
133. Now we take up Ground No.6 related to addition of Rs.39,500/- made by the Ld. A.O for unexplained expenditure calculated on the basis of seized document No.123 of LPS-3. This document shows some figure corresponding to bill Rs.5,000/- Stamp Rs.3,000/-, Notary Rs.1500/- and fees Rs.30,000/-. In the statement it was stated that element of these payments to a particular document as rough calculation. Ld. A.O is not satisfied with this submission and he made addition of Rs.39,500/- for unexplained expenditure. Assessee's appeal before Ld. CIT(A) did not bring any relief as the addition was confirmed by Ld. CIT(A) observing as follows:-
I have perused the submissions of the learned AA the assessment order and the various decisions cited and also perused the case record. It has been stated by the appellant that it is not in his memory as to which document these expenses relate to and the calculations o the paper may be rough working. The submissions of the appellant has no merit in view of the above reply which is unreliable and vague and he has no explanation to offer in this regard. The handwritten loose paper has been seized from the residence of the appellant assessee at the time of search. The said handwritten loose paper clearly shows that the expenditure amounting to Rs. 39,500/- has been incurred in cash by the appellant assessee and which is not been entered in the books of accounts. No evidence what so ever was filed either before the A.O or during appellate proceedings to substantiate the claim that the above handwritten jottings 114 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 relating to bill, stamp, notary and fees do not relate to the appellant.
The addition made by the A.O on account of unexplained expenditure u/s 69C for A.Y 2012-13 amounting to Rs. 39,500/- is confirmed.
134. Now the assessee is in appeal before the Tribunal.
135. Ld. Counsel for the assessee referred to the following written submissions:
Ground No. 6 (Page 16 of PB B-3): Addition of Rs.39,500/- on account of unexplained expenditure - The Ld. AO has made this addition at Page 9 and 10, Para 11 on the basis of loose paper LPS - 3, Page 123. This is a dumb document which does not speak about either the receipts or the payments. It contains the mention of some stamps and notary charges. No receipt or payment has been mentioned on this paper. It is a dumb document. The Ld. AO has treated it to be an unexplained expenditure. The Ld. CIT(A) has upheld the addition in Para 11.4, Page 38 on the ground that the assessee has not substantiated the claim before the AO or during the course of the appellate proceeding.
It is humbly submitted that this is a dumb document which does not contain any receipt or payment. No addition can be made on the basis of dumb document.
136. Per contra Ld. Departmental Representative vehemently argued supporting the orders of both the lower authorities. 115 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
137. We have heard rival contentions and perused the records placed before us. Assessee is aggrieved with the addition of Rs.39,500/- made by Ld. A.O and confirmed by ld. CIT(A). This addition is on the basis of seized document No.123 of LPS-3 showing the payment of Rs.39,500/- in total towards bill, stamp, notary and fees. The assessee has merely submitted that it is a dumb document. However looking to the seized document, we find that on this sheet there are other transactions also which have been striked off. There are figures mentioned relating to dividend which is also striked off. This document is certainly relating to the assessee. Since he has unable to give any explanation to it and the action of Ld. A.O needs to be confirmed. We thus find no reason to interfere in the finding of Ld. CIT(A) confirming the action of Ld. A.O for the addition of Rs.39,500/- towards unexplained expenditure. Ground No.6 of the assessee's appeal stands dismissed.
138. Now we take up Ground No.7 wherein the assessee has challenged the addition of Rs.21,16,800/- made by the Ld. A.O on the basis of loose paper page at 125 to 128 of Annexure LPS-3. Brief facts relating to this issue are that during the course of 116 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 search at the premise of Ayushman College situated at JlIG-3. Lake view society Shahpura, Bhopal handwritten loose papers page no. 125- 128 ofannexure-LPS-3 were found and seized These papers are the detail of purchase of property G-48., measuring 588 sq. ft. @ Rs, 9000/- per sq.ft. The total amount made is Rs 52,92,000/- out of which 31, 75,200/- (60%) has been paid by cheque and remaining Rs.21,16,800/- (40%) paid by cash. Vide show cause notice u/s 142(1) dated 17/02/2014 the assessee was required to explain the above cash payment for purchase of property and reconcile the above with his regular books of accounts. The assessee was also required to show cause why the amount of Rs. 21,16,800/- not be treated as undisclosed income and added to the income of assessee for A. Y 2012-13. The assessee vide reply dated 21/02/2014 stated that:-
"Regarding Page No. 125 to 128 of LP S-3 seized from the premises of Ayushman College at HIG- 3, Shahpura, Bhopal it is submitted that these papers relate to proposal for purchase of shop at Great India Place Mall, Koiar Road, Bhopal Some representative from the said Mall had visited the assessee and had explained the proposal on these papers. However, the assessee did not purchase any shop at the said Mall and no such investment as you have mentioned in this Para of your questionnaire was made by the assessee either through cheques or cash.117
Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
139. The submission of the assessee were not found acceptable and Ld. A.O completed the assessment making addition of the alleged cash payment of Rs.21,16,800/- for the purchase of some property.
Aggrieved assessee preferred appeal before Ld. CIT(A) but failed to succeed as Ld. CIT(A) confirmed the action of the Ld. A.O observing as follows:-
I have perused the submissions of the learned AR the assessment order and the various decisions cited and also perused the case record. The assessee 'has not submitted any material either before the A.O or during appellate proceedings to substantiate his claim that the loose papers (LPS- 3 page 125 to 128) relate only to the proposal for the purchase f hop at Great India Place mall, Kolar road, Bhopal . .The above loose papers clearly shows that the appellant assessee has made cash payment of Rs, 21,16,800/- and the balance of Rs. 31,75,200/- has been paid by cheque' and that the appellant assessee was required to make 40 of the payment in cash, out of the total cost of the property Rs. 52,92,000[-( 40% works out to Rs 21,16,800/-) .
LPS-3 page 125 to 128 gives me date of possession' of the above property as on 31.12.2013 and shows details of payment schedule by cash and by .cheque. The plea taken by_ the appellant has no merit because by stating that the loose papers seized (LPS-3 page 125 to 128) is only rough calculations or proposal where as it is seen that actual payment as per schedule has been made. Payment schedule clearly mentions that 40% of total cost of the property Rs. 52,92,000/- which works out to Rs. 21,16,800/- has to be made in cash. Under what circumstances 40% of the total cost was made in cash, when the same could have been paid through 118 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 cheque as the payment for 60% of the cost was to paid by cheque. This clearly shows that 40% of the payment amounting to Rs.21,16,800/- is paid in cash and not recorded in the books of account. In view of the above the order of the A.O calls for no interference.
The addition of Rs. 21,16,800/- u/s 69 for A.Y 2012-13 is confirmed.
140. Now assessee in appeal before the Tribunal.
141. Ld. Counsel for the assessee referred to the following written submission:-
Ground No. 7 (Page 17 to 20 of PB B-3): Addition of Rs.21,16,800/- on account of unexplained investments - The Ld. AO has made this addition of Rs.21,16,800 at Page 12, Para 12.9 on the basis of loose paper Page 125 to 128 of LPS - 3. The said papers are only jottings in respect of some shop of 588 sq. feet. It merely contains the proposal of estimated figures which mentions the figures of 15, 75 and 10. The assessee has neither purchased any shop nor has entered into any agreement. No paper was found which could show that the assessee has purchased or entered into the agreement or has paid any money. These are all estimated proposed offer. The assessee has neither made any payment nor entered into any agreement. The addition made on the hypothetical ground that the assessee has made cash payment is based on surmises and conjectures and no addition can be made on this ground. The addition deserves to be deleted.
142. Per contra Ld. Departmental Representative vehemently argued supported the orders of both the lower authorities. 119 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
143. We have heard rival contentions and perused the records placed before us. Through Ground No.7 assessee has challenged the finding of Ld. CIT(A) confirming the action of the Ld. A.O making addition for unexplained cash investment of Rs.21,16,800/-. This addition was made by the Ld. A.O on the basis of his interpretation of the seized document page 125 to 128 of LPS-3 which are placed at page 17 to 20 of the paper book PB/B-3 dated 14.06.2017. The assessee's contention is that the alleged pages are the calculation for the proposed purchase of immoveable property which finally did not materialized. Since there was no actual transaction so no addition should have been made for the alleged cash payments.
144. On perusal of the seized document (PB-3 Page 125 to 128) we find that on the top of the page 125 it is mentioned G-48-588 sq.ft below that there is a calculation of building, the rate of Rs.9000 per sq.ft to 588 sq.ft the resultant figure comes as Rs. 52,95,000/-. Thereafter there is a bifurcation of Rs.52,95,000/- in 60:40 ratio. 40% is referred to be cash. There are further calculation about the payments and deductions on this account. On Page 126 there is the calculation of construction, time and the theory of the 60:40 120 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17 continues. Page 127 to 128 also seems to be the further calculations for the same immoveable property, G-48 which seems to be an expanded form of page 126. The search took place on 2.6.2011. But in page 128 of LPS-3 in the lower part it mentions 3 years period from 2011 to 2013. In 2011, 2012 & 2013 talks about the cheque. In the last it says about the possession to be given in the year 2013. After going through all these aspects we are of the considered view that these 4 pages are rough calculation made for purchasing the immoveable property. In the seized document no such piece of paper has been unearthed about any transaction relating to purchase or paying advance for purchase of immoveable property measuring 588 sq.ft. When the addition was proposed to be made for cash element of 40% of Rs.21,16,800/- the Ld.A.O was unable to lay hands on any document showing payment by cheque of Rs.31,75,200/- has been made. It is the settled principle that one cannot pick or choose any figure from the seized document. To make the addition on the basis of seized document requires the overall analysis and transactions mentioned on that piece of paper needs to be dealt together and not in part.
121 Ashok Gupta & Neeraj Gupta IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
145. We therefore in the given facts and circumstances of the case are of the considered view that since page 125 to 128 of LPS-3 are rough calculation for proposed investment in immoveable property, Ld. A.O was not justified in making the addition since no actual transaction has taken place. We therefore set aside the finding of Ld. CIT(A) and delete the addition of Rs.21,16,800/- and allow Ground No.7 raised by the assessee in appeal for Assessment Year 2012-13.
146. Ground No. 8 & 9 are general in nature which does not require any adjudication.
147. Appeal of the assessee Dr. Neeraj Kumar for Assessment Year 2012-13 is partly allowed.
148. In the result Appeal No. IT(SS) Nos. 54 & 161/Ind/2017 for Assessment Years 2011-12 & 2012-13 of Dr. Ashok Gupta and IT(SS) No.66, 67 & 162/Ind/2017 for Assessment Years 2006-07, 2011-12 & 2012-13 of Dr. Neeraj Gupta are partly allowed.
The order pronounced in the open Court on 30 .06.2020 I agree Sd/- Sd/-
( KUL BHARAT) (MANISH BORAD)
JUDICIAL MEMBER ACCOUNTANT MEMBER
दनांक /Dated : 30th June, 2020
/Dev
122
Ashok Gupta & Neeraj Gupta
IT(SS)Nos.64, 66,67 & 161 & 162 /Ind/17
Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file.
By Order, Asstt.Registrar, I.T.A.T., Indore 123