KAMAL BATRA,ROORKEE vs. DCIT, CIRCLE HARIDWAR, HARIDWAR

We have heard the rival submissions and perused the materials on record. The assessee is engaged in trading of bidis under the name and style of ‘Ram Lal Batra& Sons’ having his shop at 66/2, Jamuna Bhawan, B T Ganj, Roorkee. The return of income for the assessment year 2010-11 was filed by the assessee on 18.09.2010 for the assessment year 2010-11 filed by the assessee on 18.09.2010 declaring total income of Rs.8,93,880/-. A survey operation was carried out under section 133A of the Act in the business premises of the assessee. During the course of survey, the survey team observed found that Smt. Sonia Batra, wife of the assessee was also carrying on trading business of bidis under the name and style of ‘Sonia Batra’ at 660, Ram Nagar, Roorkee, but in reality, she was not doing any such business and thus, the entire business was carried on only by her husband. A statement on oath was recorded by the survey team from her, wherein, she stated that she is not aware of any such business being done in her name and its her husband, Sh. Kamal Batra (assessee herein), who is aware of the business of trading of bidis. Accordingly, a notice under section 148 of the Act was issued to the assessee on 31.03.2017. In the reassessment proceedings, based on the survey statement, the learned Assessing Officer proceeded to club the business profit disclosed by Sh. Sonia Batra in her individual Income Tax Return filed on 18.09.2010 for assessment year 2010-11 in the sum of Rs.5,53,535/-, with the income of the assessee. This action of learned AO was upheld by learned CIT(A).

We find that both the assessee as well as his wife Smt. Sonia Batra were carrying on business of trading of bidis in their individual capacity at different addresses. Both the assessee as well as his wife are independently assessed to income tax having separate PAN and have been regularly filing their respective Income Tax Returns with the Income Tax Department.

The learned AR before us, argued that bidis brand traded by the assessee are as under:

The learned AR also submitted that bidis brand traded by assessee’s wife are as under:

Learned AR also submitted that sales tax registration (TIN) no. of assessee is 05004109042 and TIN of Sonia Batra is 05004165011. He pointed out that the assessee was only assisting his wife in the business of trading of bidis. The learned AR also placed on record the independent Income Tax Returns filed by the assessee’s wife offering business income in respect of trading in bidis from assessment year 2010-11 to assessment year 2022-23 as under:

We find that accounts of the assessee have been duly subjected to tax audit in terms of section 44AB of the Act, which is 5 to 20 of the paper-book. When the assessee’s wife is independently assessed to income tax, having separate sales tax registration number and conducting the trading of bidis business at totally different addresses with that of the assessee and more especially when she had offered the business income from trading of bidis in her individual capacity in her income tax returns, it would be unfair to club her income with that of the business income of the assessee. In any case, we find that the assessee is already in high tax bracket and there is no need for him to split the profits between him and his wife. Hence, there is absolutely mala fide on the part of assessee. No contrary evidence to this fact has been brought on record by the Revenue, except relying on statement recorded during survey proceedings. It is trite law that the statement recorded during survey proceedings does not have any evidentiary value. Reliance in this regard is placed on the decision of Hon’ble Supreme Court in case of CIT Vs. S. Khader Khan Sons, reported in 352 ITR 480 and decision of Hon’ble Kerala High Court in the case of Paul Mathew and Sons Vs. CIT, 263 ITR 101.

In view of the above observations and respectfully following the judicial precedents relied upon hereinabove, the action of the lower authorities in clubbing the business income of assessee’s wife with that of the assessee in the facts and circumstances of the instant case, is dismissed. Accordingly, the grounds raised by the assessee are allowed.

In the result, appeal of the assessee is allowed.