VARUN GUPTA,NEW DELHI vs. ITO, WARD-47(4), NEW DELHI

Ground nos. 1 & 2 of the appeal are general in nature and, therefore, does not require separate adjudication by me.

In ground no. 3 of the appeal the grievance of the assessee is that the CIT(A) erred in sustaining the addition of Rs. 45,66,602/- relying on the order of the Tribunal in the case of M/s Balaji Perfumes and computing the income at Rs. 48,60,000/-, whereas the appeal of the Revenue in the assessee’s own case was dismissed by the Tribunal.

The brief facts of the case are that the AO observed as under: “The assessee has moved application u/s 154 of the Income Tax Act, 1961 on 19.09.2017 submitting as under: “While reviewing the order passed u/s 250 dated 16.05.2017 for AY 2006-07 which was received on 11.09.2017 we have observed that in the order u/s 250 erroneously addition of Rs. 45,66,602/- has been made whereas the departments appeal has been dismissed by the Hon’ble ITAT Delhi Bench. Accordingly, the above said addition should not have been made. Now your kind honour is requested to please rectify the same and reduce the demand. A copy of order passed u/s 250 and copy of ITAT order is enclosed for your kind consideration.” The application of the assessee has been considered in the light of facts of the case and finding of the Hon’ble ITAT given in the combine order in ITA Nos. 3655/Del/2011, 935/Del/2010 and 1013/Del/2010 passed on 10.06.2017. In the above cited common order while deciding the ITA No. 935/Del/2010 the Hon’ble ITAT has observed that: “Undisputedly, M/s Balaji Perfumes owned/run the business of about four months as per admission made by Abhay Gupta relied upon by the AO to complete assessment which has been further endorsed by Varun Gupta regarding turnover of Rs. 4,00,00,000/- approximately during the FY 2005-06. Admission made by Abhay Gupta and Varun Gupta relied upon by AO to complete the assessment makes it apparently clear that for remaining 8 months, the business was owned by Varun Gupta. When this fact has not been disputed by the Revenue, the CIT(A) has rightly accounted the turnover in the case of assessee firm for four months i.e. 1/3rd of Rs. 4,00,00,000/- and remaining unaccounted turnover of Rs. 2,70,00,000/- of M/s Balaji Perfumes has been accounted for in the hands of Shri Varun Gupta.” The order which assessee has sought to be rectified has been passed duly following the observation of the Hon’ble ITAT as cited above. Hence, the assessee’s application for rectification is found to be non tenable and being rejected.” 5. Being aggrieved, the assessee carried the matter in appeal before the CIT(A).

The CIT(A) has decided the issue as under: “Ground No. 3: I have carefully examined the submission of the appellant, observation of the AO made in order passed u/s 154 and the appeal effect order. I have also examined the order passed by the Hon’ble ITAT Delhi in the case of the appellant and also in the case of M/s Balaji Perfumes Partnership Firm. In appeal the Ld. AR argued that the AO has not correctly understood the order of the ITAT and also not given correct appeal effect to the ITAT order. I have perused the order of the Hon’ble ITAT. In this case there is no dispute that ITAT has confirmed the admission of unaccounted turnover of Rs. 4 crores for the year under consideration. Out of that Rs. 1.30 crores is confirmed in the hands of M/s Balaji Perfumes and the balance Rs. 2.70 corres for 8 months in the hands of Shri Varun Gupta. The ITAT has only confirmed the GP rate applied on this turnover to the extent of 18% not 25% which was adopted by the AO. I am of the considered view that the AO has correctly interpreted the ITAT order and he has added 18% of Rs. 2.70 crores in the hands of appellant while giving appeal effect which comes to Rs. 45,66,602/-. When the entire amount of unaccounted sale admitted during the course of search, has been upheld by the ITAT, then the AO has to give effect in the hands of Shri Varun Gupta by applying 18% of GP. The same has been done by the AO by applying 18% to 2.70 crores unaccounted turnover which comes to Rs.

Before us, the only argument of the AR of the assessee is that the AO as well as the CIT(A) erred in confirming the addition in the hands of the assessee when the Tribunal in the appeal filed by the Revenue has dismissed the appeal of the Revenue by giving following finding: “23. AO made addition by estimating the business income at Rs.1 crore on the basis of surrender. Ld. CIT(A) vide impugned order thrashed the issue threadbare and came to the conclusion that assessee has nowhere stated in his statement recorded on 12.03.2006 that entire amount of Rs. 1 crore belongs to him and the declaration was made by him on behalf of complete family. CIT(A) has also observed that apart from statement dated 22.03.2006 of the assessee, Varun Gupta, there is no document/material on record to corroborate the estimation of income of M/s Balaji Perfumes at Rs. 1 crore based on above surrender.

Furthermore, when this fact is examined in the light of the order dated 14.12.2009 passed by CIT(A) challenged vide decided by this Bench, the unaccounted turnover of Rs. 2,70,00,000/- of M/s Balaji Perfumes for the FY 2005-06 has already been treated in the hands of Varun Gupta, assessee of the present case. The order dated 14.12.2009 (supra) has already been confirmed by the Tribunal in to the extent that out of unaccounted turnover of Rs. 3,50,00,000/- to Rs. 4,00,00,000/- during FY 2005-06 in case of M/s Balaji Perfumes, the turnover of Rs. 1,30,00,000/- has been held to be in the hands of M/s Balaji Perfumes being owner of the same for four months and remaining unaccounted turnover of Rs. 2,70,00,000/- have been held to be in the hands of Varun Gupta, the assessee, who has admittedly taken over M/s Balaji Perfumes as a Proprietor for remaining eight months of FY 2005-06. Further addition of Rs. 1,00,000/- on the basis of solitary statement of Varun Gupta cannot be made.

So, we are of the considered view that when income of M/s Balaji Perfumes and Varun Gupta for FY 2005-06 has already been assessed on the basis of statement of Abhay Gupta recorded on his own behalf and on behalf of his other family members with their concurrence including Varun Gupta, as discussed in the preceding paras in ITA No. 935/Del/2010, on prorata basis i.e. fir first four months, the turnover to the tune of Rs. 1,30,00,000/- has been attributed to M/s Balaji Perfumes and for remaining eight months, the said turnover of Rs. 2,70,00,000/- has been attributed to Varun Gupta, the assessee, the addition again on the solitary statement of Varun Gupta cannot be made and CIT(A) has rightly deleted the same. So, we find no illegality or perversity in the findings returned by the Ld. CIT(A) so far as addition of Rs. 1 crore on the mere statement of Varun Gupta is concerned.”

It was, therefore, the prayer of the Ld. AR to remand the matter back to the file of AO for giving effect to the order of the Tribunal.

The DR had no objection to the above submission of the AR of the assessee.

In view of the above submissions made by the AR of the assessee, I set aside the orders of the lower authorities and restore the matter back to the file of the AO for giving effect to the order of the Tribunal dated 10.02.2017 passed in ITA No. 3655/Del/2011. Thus, this ground of appeal is allowed for statistical purposes.

At the time of hearing, no arguments were advanced by the AR of the assessee on this ground of appeal. Therefore, this is dismissed for want of prosecution.

In the result, the appeal of the assessee is partly allowed for statistical purposes.