ACIT, JAIPUR vs. SHIV SHANKAR LAL GUPTA, JAIPUR

आयकर अपीलीय अधिकरण] जयपुर न्यायपीठ] जयपुर IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR Jh fot; iky jko] U;kf;d lnL; ,oa Jh Hkkxpan] ys[kk lnL; ds le{k BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM vk;dj vihy la-@ITA No. 10/JP/2017 fu/kZkj.k o"kZ@Assessment Year : 2009-10 cuke The ACIT, Shri Shiv Shankar Lal Gupta Vs. Central Circle-1, 4, Ganga Vihar, Sardar Patel Marg, Jaipur. C-Scheme, Jaipur. LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AADPG 3204 F vihykFkhZ@Appellant izR;FkhZ@Respondent jktLo dh vksj ls@ Revenue by : Shri Varinder Mehta (CIT) fu/kZkfjrh dh vksj ls@ Assessee by : Shri S.L. Poddar (Adv.) lquokbZ dh rkjh[k@ Date of Hearing : 05/06/2018 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 12/06/2018 vkns'k@ ORDER

PER: VIJAY PAL RAO, J.M. This appeal by the Revenue is directed against the order dated 28.10.2016 of CIT (A), Jaipur for the assessment year 2009-10.The Revenue has raised the following grounds:-

“ (1) Whether on the facts and in the circumstances of the case the CIT(A) was right in entertaining additional evidence U/s 46A of the Income Tax Rules, where in the fact is that during the Assessment proceedings sufficient opportunity was given to assessee.

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

(2) Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 2,00,00,000/- on account of receipt of amount not disclosed as per page No. 5 and 6 of Annexure A-3. (3) Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 3,35,00,000/- on account of amount receivable as per page No. 5 and 6 of Annexure A-3. (4) Whether on the facts and in the circumstances of the case the CIT(A) was right in deleting the addition of Rs. 1,50,000/- estimated interest on undisclosed investments. The appellant craves, leave or reserves the right to amend, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal.”

ld. CIT(A). There was a search and seizure operation U/s 132(1) of the

Act on 20.05.2009 at the residential and business premises of the

assessee group. During the course of search operation certain

incriminating documents were found and seized. The dispute is

regarding the documents at page No. 5 and 6 of Annexure A-3 of the

seized material which is letter dated 01.09.2008 between the

partners/family members of the assessee to settle their rights over a

property. In reply to question No. 19 to 23 the assessee in the

statement recorded U/s 132(4) stated that the copies of the agreement 2

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

dated 01.09.2006 and letter dated 06.02.2008 as referred in the seized

material would be furnished later with explanation of the nature of

transaction. During the assessment proceedings the AO observed that

the assessee has not furnished any explanation regarding the

documents referred in the seized material and consequently the AO has

made an addition of Rs. 2 Cores and Rs. 3.35 Crores respectively based

on the seized material. On appeal before the ld. CIT(A), the assessee

has furnished the details of the bank accounts and explained that the

amount of Rs. 2 Crores as mentioned in the seized material was

received through cheque and it was also shown in the books of

accounts of the assessee as advance received from M/s Tag

Enterprises. It was further explained that the remaining amount of Rs.

3.35 Crores was to be received only at the time of final settlement

arrived between the parties. Since, the alleged settlement could not

arrive between the parties, therefore, the said amount which was

receivable at the time of settlement cannot be treated as undisclosed

income of the assessee. The ld. CIT(A) called for a remand report and

after considering the remand report deleted addition made by the AO.

opportunities given by the AO did not explain the details of the 3

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

documents as well as the copies of the agreement and letter as referred

in the seized material. Therefore, the additional evidence cannot be

accepted when the assessee has failed to comply with the conditions as

provided Under Rule 46A of the Income Tax Rules. He has contended

that the AO has observed that the assessee has avoided to furnish the

details called for by the AO during the assessment proceeding and

therefore, the assessee cannot be allowed to produce the additional

evidence.

the assessee is an old person and has also explained during the

statement recorded U/s 132(4) that the details in the seized documents

were written by deceased employee and therefore, he was not able to

recollect the nature of transaction without referring to the record. He

has further submitted that the assessee has not produced any

additional evidence which cannot be verified independently but the

assessee produce the bank accounts statement and the explanation

regarding the settlement between the partners/family members as per

the seized material. Hence, the ld. AR has submitted that the alleged

additional evidence is not assessee’s own documents and further the

copies of confirmation of accounts from M/s Tag Enterprises Kolaba, 4

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

Mumbai were furnished during the assessment proceedings along with

his submissions dated 06.07.2011. Therefore, the said confirmation

produced before the ld. CIT(A) is not an additional evidence. Thus, the

ld. AR has submitted that once the additional evidence was referred to

the AO for his comments and remand report then there is no violation

of Rule 46A of the Income Tax Rules.

materials on record. Though the Assessing Officer has observed in the

assessment order that that assessee as failed to furnish the explanation

and other documents has referred in the seized material however, as

regards the confirmation of accounts from M/s Tag Enterprises the

assesee has clearly brought on record this fact that the copies of the

confirmation were furnished during the assessment proceedings and the

Assessing Officer has not denied this fact rather this was part of the

remand report of the AO. The ld. CIT(A) called for the comments of the

AO as well as remand report when the assessee produced the

confirmation of the accounts from M/s Tag Enterprises showing the

transaction of payment of Rs. 2 Crores on 01.09.2008. Thus, it is

evident from the record that what the ld. CIT(A) has referred to the AO

is the same confirmation of accounts of M/s Tag Enterprises which was 5

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

produced before the AO during the assessment proceedings. Since, the

AO did not consider the said confirmation in the assessment

proceeding, therefore, the AO was asked to consider the same in the

remand proceedings. Therefore, there is no violation of Rule 46A of the

Income Tax Rules when the alleged documents were referred to the AO

for his comments and report were already produced before theAo

during the assessment proceeding and further the Bank statement as

an evidence which can be verified from independent source. Hence, we

do not find any substance or merit on ground No. 1 of the Revenue’s

appeal.

on the basis of seized material. As regards the addition of Rs. 2 Crores

received by the assessee as per the seized material, we note that the

said amount was received by the assessee at the time of letter dated

01.09.2008 which is found and seized during the remand proceedings.

The AO has reproduced letter dated 01.09.2008 at page 7 as under:-

1st September 2008 “From Mr. Shive Shankar Lal Gupta Sunita Apartment, 7A, Malabar Hills, Mumbai- 400006 To, Atul Gupta, Akshat Gupta, Vikarm Gupta Mumbai Dear All, 6

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta This is with reference to our agreement dated 1st September 2006 and letter dated 6th February 2008 thereafter (which refers the first 19% of the 38% transferred to you) wherein you had an option to decide whether to proceed with the transaction by 30th December 2008. In the event that you decided to proceed you were to pay me a balance amount of Rs. 3,35,00,000/- in three instalments by March 30th 2009. In the event that you decided not to proceed, I was to return to you Rs. 4,15,00,000 plus interest. However, due to may immediate requirement of funds, I hereby confirm that as a settlement I have accepted Rs. 2,00,00,000/- ( 2 Crores) on 1st September, 2008 from you in full and final settlement of first 19%. With love and regards -Sd- Mr. Shiv Shankar Lal Gupta.”

Thus, assessee has received Rs. 2 crores as full and final settlement

against the transfer of first 19% share in favour of the other

partners/family members and the remanding 19% was to be transferred

against the balance payment of Rs. 3.35 crores. As per the seized

documents this amount of Rs. 2 crores was received only at the time of

this letter and subject to the final settlement of the distribution of

shares of the partners/family members. The ld CIT(A) has reproduced

the remand report dated 17.10.2016 in para 2.1.6.1 as under:-

“2.1.6.1 In compliance, AO through JCIT Central Range, Jaipur submitted his remand report on 17/10/2016. For the 7

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

sake of clarity, relevant extract of which are reproduced here as under: .... Kindly refer to your office letter no. CIT(A)-4/JPR/2016- 17/484 dated 22-08-2016 and no. Pr.CIT(C)/ ITO(Tech.)/JPR/MISC./2016-17/1623 dated 24-08-2016 office of the Pr.CIT(Central), Jaipur on the above mentioned subject. I have carefully gone through the contents of the letter of the A/R and also its enclosures. His contentions are not acceptable for the following reasons:-

(i) Inadmissibility of the evidence furnished during appellate proceedings u/r 46A It may be submitted that the copy of confirmation of accounts from M/s Tag enterprises, Colaba, Mumbai had already been furnished by the assessee during the assessment proceedings, in his submission dated 06-07- 2011. Therefore, the evidence furnished is not at all an additional evidence u/r 46A and may not be admitted. However, the assessee did not claim during the assessment proceedings that the Rs. 2 crore received from M/s Tag Enterprises are the same as that mentioned on the page no. 5 & 6 of Annex. A-3. Therefore, this claim being made by the assessee at this stage is only an afterthought and has no basis.

(ii) Submission on merits of the alleged additional evidences In the confirmations of the accounts from M/s Tag Enterprises submitted by the assessee he has claimed to have been received Rs. 2 crore in-two transactions of Rs. 1crore each on 03-09-2016. However, the page no. 5 & 6 of Annex. A-3 unambiguously state that a sum o Rs. 2 crores was received by the assessee on 01-09-2008. It has been 8

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

duly signed by the assessee. There is no mention of M/s Tag Enterprises appearing in any of the two letters, at page no. 5 & 6 of Annex. A-3. On 20-09-2016 vide order sheet entry, the assessee was asked to furnish evidence in support of his claim that M/s Tag Enterprises constitutes of the same three persons, Shri Atul Gupta, Shri Akshat Gupta and Shri Vikram Gupta, as partners, whose names are appearing in the seized records. Also, he was asked to verify his contention through the copies of bank statements of the assessee and M/s Tag Enterprises. On 06-10-2016, the assessee furnished his reply in which he furnished the copies of bank statements of the assessee and M/s Tag Enterprises. It was verified that both the transactions of Rs. 1 crore each on 03-09-2008 are appearing in the bank statements of the assessee and M/s Tag Enterprises and the reference nos. 414238 & 414237 are the same in both the bank statements on the same dates. Therefore, the transfer of funds of Rs. 2 crore from M/s Tag Enterprises to the assessee on 03-09-2008 is verified to have taken place. However, the assessee failed to furnish the partnership deed of M/s Tag Enterprises to support his claim about the constitution of M/s Tag Enterprises. Remand report is hereby submitted for you kind perusal…..” Thus, the AO has clearly accepted the fact that as per bank statement

of the assessee and M/s Tag Enterprises of Rs. 2 Crores were received

by the assessee through cheques of Rs. 1 Croes each from M/s Tag

enterprises. The only objection of the AO is that the assessee has not

furnished partnership deed of M/s Tag Enterprises. The said amount of

Rs. 2 crores has been shown by the assessee in the balance sheet as a 9

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

liability in the list of creditors in the name of M/s Tag Enterprises.

Therefore, till the dispute between the partners were settled the said

amount was only as an advance received by the assessee subject to the

final settlement between the partners. The AO has also not disputed

that the assessee did not receive balance amount of Rs. 3.35 crores.

The ld. CIT(A) after considering the remand report has decided this

issue in para 2.1.7 and 3.2.2 as under:-

“2.1.7 I have duly considered AO's reports, and assessee's rejoinder submitted before CIT(A) Ajmer and also before me. On careful perusal of assessee.'s application, it is seen that additional evidences submitted by the assessee are having direct bearing on this case. It is also • fact that before arriving at a conclusion, AO has neither examined the persons named in the seized documents nor carried out any fruitful investigation to support his contention. I also find that there are sufficient reasons which prevented the assessee from furnishing those evidences before the AO, in absence of which additions were made by the AO. The reports submitted by Sh G.R. Pareek the then DCII, CC 1, Jaipur to the CIT(A) Ajmer and written submissions made by the assessee have been ex mined. On their careful perusal, it is seen that no examination of persons mentioned therein the seized documents identified as A-3 Pg 5 & 6 has been done by the AO either during the assessment proceeding or remand proceeding.

The transaction of Rs. 2 cores reflected in aforementioned seize documents namely A-3 Pg 5 & 6 have been examined 10

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

and with respect to bank statement, balance Sheet as on 31.03.2008 & 31.03.2009 and Confirmation of Accounts with M/s Tag Enterprises. Further, in view of these facts and investigation carried out by the AO, I do not find any reason for invoking the provision of sec 251(1) of the Act for enhancement (i.e. further addition of Rs. 4.15 crores) as suggested by the AO(refer Pg, 13 Para 7) and CIT(A) Ajmer vide letter dt 04.03.2013 (refer Para 2.1.4). Further the notings of Pg 6 of A-3 referred kjto some proposal which did not materialized and infect this pertains to AY 2007-08 & 2008-09. Therefore, it cannot be a subject matter of additions in the current AY 2009- 10. The earlier reports submitted by Sh G.R. Pareek have not commented on this issue.

Now, in the remand proceeding, AO has duly examined these additional evidences and found to be in support of assessee's conteniion, a delailed discussion on issues are given with respect to grounds of appeal in para below. 3.2.2 I have duly considered assessee's submission and also carefully gone through the assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. AO in the remand proceeding has examined the issue pertaining to taxability of Rs. 2 crores pertaining to transaction with M/s Tag Enterprises and found that the assessee had infact received payment of Rs. 2 Crores (Rs. 1 crores each by two cheques) and these transactions are duly recorded assessee's books. Therefore, addition made by the AO of Es. 2 crores cannot be sustained, hence deleted. Assessee succeeds in Gr No. 2.

Further on perusal of confirmation of accounts duly signed by both assessee and M/s Tag Enterprises and Balance Sheet as on 31.03.2008 & 31.03.2009, it is seen that the balance of Rs. 3.75 11

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

crores is being brought forward from the previous FY 2007-08. Accordingly, the same cannot be added in the current AY 2009- 10. Accordingly, addition of Rs. 3.75 crores is hereby deleted. Therefore, assessee succeeds in Gr No. 3.”

Thus, the seized material is nothing but was a proposal between the

partners which was not materialized and therefore, there is no question

of any addition. Further the assessee has duly recorded the transaction

of payment of Rs. 2 crores from M/s Tag Enterprises as a liability and

the balance amount of Rs. 3.35 crores is nothing but only a part of the

proposal subject to the final settlement between the partners which

could not materialize till date. Hence, we do not find any error or

illegality in the impugned order of the ld. CIT(A) qua this issue.

estimated interest on undisclosed investment deleted by the ld. CIT(A).

This is a consequential addition made by the AO as an notional interest

on the undisclosed investment.

the relevant materials on record. The addition of Rs. 1.5 lacs was made

by the AO in respect of the said amount of Rs. 5.35 Crores being

addition made by the AO. Since, the said addition is deleted by the ld.

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta

CIT(A) and we have also concurred with the view of the ld. CIT(A) and further the amount of Rs. 2 crores was also reflected in the books of

accounts of the assessee then the same cannot be considered as

undisclosed investment. The remaining amount of Rs. 3.35 crores was

never received by the assessee and the Assessing Officer has also not

disputed this fact that this amount was only a proposal subject to the

final settlement between the partners. Hence, when the assessee has

not received any amount then, the question of undisclosed investment

and the notional interest does not arise. The ld. CIT(A) has deleted the

addition in para 3.3.2. as under:-

“3.3.2 I have duly considered assessee’s submission and also carefully gone through the assessment order. I have also taken a note of factual matrix of the case as well as applicable case laws relied upon. Here in this case, AO has made additions of interest on estimated basis without basing on any seized documents/incriminating materials. AO has estimated this addition basing on seized documents identified as A-1 & A-2 which do not pertain to this FY. In view of these facts, AO’s action cannot be justified. Accordingly addition made of Rs. 1.5 lakhs on estimated interest is hereby deleted. Assessee’s appeal in Gr No. 4 is allowed.” In view of the facts and circumstances of the case as discussed above,

we do not find any error or illegality in the impugned order qua this

issue.

ITA No.10/JP/2017 ACIT v Shri Shiv Shankar Lal Gupta In the result, the appeal filed by the Revenue is dismissed.

Order pronounced in the open court on 12/06/2018.

Sd/- Sd/- ¼Hkkxpan ½ ¼fot; iky jko½ (Bhagchand) (Vijay Pal Rao) ys[kk lnL;@Accountant Member U;kf;d lnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 12/06/2018. *Santosh. आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू 1. vihykFkhZ@The Appellant- ACIT, Central Circle-1, Jaipur. 2. izR;FkhZ@ The Respondent- Shri Shiv Shankar Lal Gupta, Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. विभागीय प्रतिनिधि] आयकर अपीलीय अधिकरण] जयपुर@क्त्ए प्ज्Aज्ए Jंपचनत. 6. xkMZ QkbZy@ Guard File {ITA No. 10/JP/2017} vkns'kkuqlkj@ By order,

सहायक पंजीकार@Aेेज. त्महपेजतंत