C.L. SHARMA,NEW DELHI vs. DCIT, NEW DELHI

Brief facts of the case are that there was search and seizure action under section 132 of the Income Tax Act, 1961 (for short “the Act”) in the Accurate group of cases on 26/7/2006. Assessee filed their return of income on 27/5/2008 declaring an income of Rs. 2,78,40,920/-. In such return the assessee had disclosed a sum of Rs. 2.70 crores as additional income surrendered in his statement recorded under section 132 (4) of the Act at the time of search. Such amount of Rs. 2.70 crores represent a sum of Rs. 1.94 crores kept in a secret place and a sum of Rs. 76 Lacs on account of sale of land at Loni, Ghaziabad.

Learned Assessing Officer sought the reconcile the surrendered amount viz a-vis the cash found at the time of search. While submitting the explanation relating to the cash found, assessee submitted that there was a cash balance as per cashbook of ATL and AML, and therefore, all the cash found at the time of search as well as amount of Rs. 1.94 crores kept in secret place is covered and no further adverse inference was required. Assessee further submitted that the above cases also include cash of Rs. 66 Lacs on account of sale of land.

On a consideration of the facts of the case, in the light of the explanation offered by the assessee, learned Assessing Officer observed that in so far as the cash related to M/s ATL and M/s AML are concerned, no documentary evidence was provided by the assessee and accordingly the cash balances if any in their hands cannot be considered; that in the absence of the specific date wise details of cash entries in the cash utilisation chart submitted by the assessee, the cash on hand as per the chart cannot be considered to be authentic; that the cash utilisation chart was not prepared on the basis of surrender of additional income made by the assessee and its group companies and is not on the basis of the income assessed by the learned Assessing Officer; that the total cash including the cash of Rs. 1.94 crores kept in secret place amounting to Rs.2,78,11,930/-out of which the assessee had surrendered only a sum of Rs. 2.70 crores; and that, therefore, the difference of Rs.8,11,920/- remained unverifiable and has to be added to the total income of the assessee. Learned Assessing Officer made certain other additions also and concluded the assessment proceedings by order dated 19/12/2008 under section 143(3) of the Act at a total income of Rs.3,23,35,250/-as against the returned income of Rs.2,78,40,920/-.

Aggrieved by such additions, assessee preferred appeal before the Ld. CIT(A). Insofar as the grounds raised in this appeal before us, the plea taken by the assessee before the Ld. CIT(A) was that, during the course of search the assessee group had offered / declared additional income of Rs. 10 crores by giving a tentative breakup there for year wise. According to the assessee the amount which could be attributable to any seized material on a particular issue was quantified and the balance amount which could not be so identified was declared as “others” to cover up the total declared surrendered amount; and that in that process for the assessment year 2007-08, the figure of “other” include Rs. 1.94 crores as the amount kept in a secret place. Assessee further pleaded that pursuant to the assessment made in the group cases, various additions/disallowances were made including an addition to the tune of Rs.1,60,77,374/-which was not disputed, and on the other hand admitted, by the group, and, therefore, in view of addition of such amount of Rs.1,60,77, 374/-out of Rs. 1.94 crores, the remaining amount of Rs.33,22,626/-alone has to be added and not the entire 1.94 crores. Assessee also claimed the set off because certain other additions are not resulting into the availability of funds/cash or because of the fact that the part of such amount was not accepted by the group by litigating before the Tribunal. For these reasons, the sum and substance of the contention of the assessee is that it’s not the entire amount of Rs. 1.94 crores that could be added but such an addition has to be restricted to Rs.33,22,626/-only.

Ld. CIT(A) considered the contentions raised by the assessee and observed that, the assessee, on behalf of Accurate group, had declared the additional income of Rs. 10 crores at the time of search; that the income declared, included the sum of Rs. 1.94 crores on account of cash kept in a secret place; that the amount was also returned by the assessee in his return of income; and that, therefore, the assessee is not having any basis to claim the exclusion of such amount from the income on the ground that actually there was no such cash kept at the secret place. Ld. CIT(A), therefore, opined that the claim of the assessee was merely an afterthought and untenable and, accordingly, upheld the addition. Aggrieved by such an order assessee preferred this appeal.

When the matter is called, neither the assessee nor any authorised representative entered appearance. It could be seen from the record that the notice issued on 18/11/2019 noting the date of hearing as 18/12/2019 was sent to the address given in form No. 36. If the assessee is available in such address, such notice should have been served on the assessee. If for any reason, the assessee is not available there, it is for the assessee to make arrangements for service of such notice by furnishing the address where the assessee would be available, or to deliver it to some authorised person, or by making request to the postal department to detain the mail till the assessee claims the same. Since the assessee does not seem to have adopted any of these methods, we are the considered opinion that no time could be granted. Basing on the record we proceed to hear the counsel for Revenue and decide the matter on merits.

It is the submission of the Ld. DR that the amount of Rs. 10 crores surrendered by the assessee on behalf of the Accurate group of companies included the sum of Rs. 1.94 crores as the amount that was kept it secret place and it is altogether a different amount. He further submitted that there is no point in the assessee stating that there is a segregation of the amounts which are attributable to the seized material and which could not be identified, and, therefore, it is the balance of the amount of the surrendered amount after deducting the identified amount with reference to the seized material, alone that has to be taxed is untenable.

We have gone through the record in the light of the submissions made by the Revenue. It is the factual finding of the Ld. CIT(A) that the disputed sum of Rs. 1.94 crores is a part of the declared amount of Rs. 10 crores and it is found place in the return of income filed by the assessee. We do not find any basis to countenance the contention of the assessee that the amount which could be attributable to the seized material was quantified and whatever the balance that is left out of the declared amount, that alone was shown as “others”. There is no material before us to conclude that the amount of Rs. 1.94 crores includes the amount of Rs.1,60,77,374/- added in the hands of the group company is also a part of the declared amount of Rs. 1.94 crores.

From the beginning the amount of Rs. 1.94 crores is maintained to be the amount kept at a secret place. In such an event it has got its own identity, and we do not find any plausible reason for the assessee now to contend that the amount which is attributable to the seized material has to be deducted from such declared amount of Rs. 1.94 crores. There is no factual basis for this submission made by the assessee before the Ld. CIT(A). Without any evidence touching this aspect or clear workout, it is not possible to accept the contention of the assessee.

We therefore find it difficult to subscribe to the contentions raised by the assessee before the Ld. CIT(A) and accordingly find that the order of the Ld. CIT(A) does not suffer any illegality or irregularity. We therefore while upholding the conclusions reached by the Ld. CIT(A), find the grounds of appeal of the assessee as devoid of merits and the appeal is liable to be dismissed. We accordingly do so.

In the result, appeal of the assessee is dismissed. Order pronounced in the Open Court on 6TH January, 2020.