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आदेश/Order
PER N.K. SAINI, VICE PRESIDENT
These two appeals by the assessee are directed against the common order of the Ld. CIT(A)-3, Gurgaon dt. 07/06/2019.
Since the issues involved are common and the appeals pertaining to the same assessee were heard together, so these are being diposed off by this consolidated order for the sake of convenience and brevity.
Grounds raised in ITA No. 1172/Chd/2019 for the A.Y. 2014-15 read as under:
1.That order passed u/s 250(6) of the Income Tax Act, 1961 by the Learned Commissioner of Income Tax (Appeals)-3, Gurgaon is against law and facts on the file in as much as he was not justified to uphold the addition of Rs. 21,93,371/- on account of long-term capital gain and Rs. 1,71,235/- on account of alleged expenditure in connection with long-term capital gain.
That the Ld. CIT(A) was not justified to uphold the addition particularly in view of the fact that no incriminating material was found during the course of search.
That the Ld. CIT(A) was further not justified to consider the revised return filed by the appellant after the search which was in fact an invalid return.
That the Ld. CIT(A) was not justified to uphold the impugned additions by relying on irrelevant material and ignoring the fact that no statement of the appellant was recorded u/s 132(4).
That the Ld. CIT(A) was not justified in not taking into account the offer of additional income by the group concerns before the Hon'ble Income Tax Settlement Commission during proceedings u/s 245D(4) in their cases.
From the aforesaid grounds it would be clear that the only grievance of the assessee relates to the sustenance of addition of Rs. 21,93,371/- on account of Long Term Capital Gain (LTCG) and Rs. 1,71,235/- on account of alleged expenditure in connection with the LTCG.
Facts of the case in brief are that a search and seizure operation under section 132(1) of the Income Tax Act, 1961 (hereinafter referred to as ‘Act’) was carried out on 10/03/2016 at the business and residential premises of M/s Om Sons Group of cases, which included the assessee also. Pursuant to the aforesaid search and seizure operation, proceedings under section 153A of the Act were initiated and notice under section 153A of the Act was issued and served upon the assessee. In response to the said notice, the assessee filed the return of income declaring total income of Rs. 12,46,260/- after claiming deduction of Rs. 1,17,695/-. The assessee repeated in income which was disclosed in the original return of income filed on 28/10/2014. The A.O. however framed the assessment at an income of Rs. 37,10,866/- by making the addition of Rs. 23,64,606 i.e; LTCG amounting to Rs. 21,93,371/- and Rs. 1,71,235/- on account of the expenses related to the aforesaid LTCG.
When the matter was taken to the Ld. CIT(A) the action of the A.O. was sustained.
Now the assessee is in appeal.
The Ld. Counsel for the Assessee at the very outset stated that an identical issue having similar facts has already been adjudicated by the ITAT Chandigarh Bench “A”, Chandigarh in the case of Anjula Goel Vs. DCIT in ITA No. 1174 & 1175/Chd/2019 for the A.Y. 2015-16 & 2016-17. It was pointed out that he said assessee also belongs to the same group i.e; M/s Om Sons and was coverd under the same search to which the present assessee is covered. He furnished the copy of the order dt. 12/03/2021 passed by the ITAT in the case of Anjula Goel Vs. DCIT (supra) and submitted that the firm M/s Rohit Traders made the surrender and settled the issue before the Settlement Commission, the assessee and Anjula Goel are partners in the said firm M/s Rohit Traders and that the amount surrendered therein was utilized by the partners to earn the LTCG. Therefore no separate addition is called for in the hands of the present assessee for the same reasoning as was held in the case of Anjula Goel Vs. DCIT(supra).
In his rival submissions the Ld. CIT DR strongly supported the orders of the authorities below and drew our attention towards page no. 40 of the impugned order wherein it is mentioned that the Income Tax Settlement Commission in their order made the following observations:
“ It is noted that in the cases of M/s Om Sons Steels Pvt. Ltd, M/s Om Sons Enterprises Pvt. Ltd Rahika Traders and Rohit Traders the applicants have claimed that the additional income offered to tax in these cases has been utilized for certain investment / expenditure by other entities. We refrain from making any comment in respect of such claim of utilization in the hands of entities who have not filed application u/s 245D(1) of the Act and not covered in this order”.
8.1 The Ld. CIT DR submitted that since the assessee had not filed any application under section 245D(1) of the Act before the Settlement Commission therefore it cannot be said that the amount which was disclosed by M/s Rohit Traders had been utilized for making the investment by the assessee.
We have considered the submissions of both the parties and perused the material available on the record, in the present case it is noticed that an identical issue having similar facts has already been adjudicated by ITAT Chandigarh Bench “A”, Chandigarh in the case of Anjuia Goel Vs. DCIT in ITA No. 1174 & 1175/Chd/2019 for the A.Y. 2015-16 & 2016-17 vide order dt. 12/03/2021 and the relevant observations alongwith the findings had been given in para 10 to 16 which read as under:
Before us, the Ld.Counsel for the assessee contended that the said amount had been disclosed in the hands of M/s Rohit Traders, a partnership firm of the group and in which the assessee was a partner , before the Settlement Commission and taxes duly paid thereon. Our attention was drawn to Paper Book page No.23-34 being the copy of statement of facts filed before the Hon'ble Income Tax Settlement Commission, New Delhi ,in the case of M/s Rohit Traders for assessment years 2010-11 to 2016-17 and the acceptance of the same by the Settlement commission vide its order u/s 245A(4) of the Act, relevant portion of which was placed before us at P.B 48-50. Our attention was specifically drawn to paper book page no 27,pointing out therefrom the specific surrender made on account of Long Term Capital Gains on shares, returned by the assessee M/s Anjula Goel, claiming the same as exempt u/s 10(38) of the Act. It was pointed out that it had been admitted before the Hon’ble Settlement Commission that the same represented only accommodation entry obtained by the assessee partner, but the funds had been provided by the firm out of its undisclosed income which was thus being surrendered. The contents of the same are reproduced hereunder: “1) AMOUNTS ADVANCED TO PARTNER During the course of A/Ys 2014-15, Ms.Anjila Goel, a Partner of the Appellant Firm, while filing her income tax return, declared exempt income u/s 10(38), on account of “Long Term Capital Gains” on shares in the following manner:- Assessment Year Amount (Rs) 2014-15 31,10,857/- 2015-16 17,89,989/- Total 47,70,846/-
Fact of the matter is that the above-mentioned income merely represents accommodation entries obtained by the said partner. However, all the funds required for obtaining these entries was provided by the applicant firm to its Partner and also represents undisclosed income earned by it. As such, the applicant firm is offering the above-mentioned amount of Rs.49,70,846/- as additional income vide the present St, of Facts. Also, an amount @ 2% of Rs.49,70,846/- i.e.. Rs.99,417/- towards facilitation charges is also being surrendered as additional income vide the present Statement of Facts.” 11. The Ld.Counsel for the assessee contended that application for settlement in the case of M/s Rohit Traders had been accepted by the Settlement Commission vide its order passed u/s 245A(4) of the Act, therefore, clearly the impugned Long Term Capital Gains allegedly relating to the assessee had already stood disclosed and taxed in the hands of M/s Rohit Traders and, therefore, the same could not be taxed again in the hands of the assessee. 12. The Ld. DR, on the other hand, relied upon the order of the Ld.CIT(A) stating that the Hon’ble Settlement commission had not accepted the plea in the case of M/s Rohit Traders that the source having been taxed in its hands, the partners be not taxed on the same again. Out attention was drawn to the findings of the Ld.CIT(A) as under: Further, the Hon'ble ITSC in their order in this group cases has made following observations at page 318 of the order.- "it is noted that in the cases of M/s Om Sons Steels Pvt Ltd, M/s Om Sons Enterprises Pvt Ltd Radhika Traders and Rohit Traders the applicants have claimed that the additional income offered to tax in these cases has been utilized for certain investment/expenditure by other entries. We refrain from making any comment in respire of such claim of utilization in the hands of entities who have not filed application u/s 245D(1) of the Act and not covered in this order.". Thus, the contention of the appellant that no amount can be added to income when source has already been taxed with regard to undisclosed income M/s Radhika Traders cannot be accepted in view of the Hon'ble ITSC's order discussed above. Further, the cognizance of revised return filed declaring LTG as its income and payment of taxes cannot be ignored. There is no provision of the Act which prohibits the AO from doing so. The second proviso to section 153A(l]of the Act only prohibits the AO to pass any assessment after search with respect to pending assessment and the AO is empowered to issue notice u/s 153A to assess or reassess the total income of six assessment year in which such search was conducted or requisition was made. Further, reliance is placed on the case of CIT vs Sun Engg Works Ltd 198 ITR 297(SC), wherein the Hon'ble Apex Court has held that the proceedings u/s 147 are for the benefit of the revenue and not for benefit of the assessee. Applying the same principle, proceedings u/s 153A cannot be construed to be for the benefit of assessee, so as to file a return on reduced income, by excluding income which has already been shown in the return filed suo moto and taxes paid on the said income, as in the case of the appellant.
The surrender offered on behalf of the appellant has in fact been incorporated in the return filed by the appellant after recording of statement. With regard to addition on account of bogus entries with regard to LTCG on penny stocks, the AO has discussed the issue in detail in the assessment order and hence not reiterated. In view of the above discussion, addition of Rs. 21,93,371/- on account of LTCG in the case of appellant is confirmed. As similar, issue is involved in the case of appellant for AY 2015-16 and Smt. Anjula Goel for AY 2015-16, the addition made in these cases is also confirmed. 13. We have heard both the parties. We have also perused the documents referred to before us. The contention of the Ld.Counsel for the assessee is that the impugned capital gains had already been surrendered in the hands of M/s Rohit Traders, a partnership firm of the assessee, before the Settlement Commission which stood accepted. That therefore there was no question of taxing it again in the hands of the assessee. 14. We have perused the contents of the statement of facts filed before the Settlement Commission in the case of M/s Rohit Traders and find merit in the contention of the Ld.Counsel for the assessee. Undoubtedly the impugned long term capital gain of the assessee of Rs.17,89,989/- alongwith the facilitation charges thereon, stand categorically surrendered as undisclosed income of M/s Rohit Traders ,before the Settlement Commission. The Revenue has not controverted the said fact. The impugned income having been categorically taxed as undisclosed income of the assessees firm, we fail to understand why it should be taxed in the hands of the assessee also, which would only result in taxing the same income twice. 15. The observation of the Hon’ble Settlement Commission on which the Revenue has relied for dismissing assessees claim, that they refrain from making any comment in respect of claim of utilization of additional income of M/s Rohit Traders in the hands of partners, in our view, only serves the limited purpose of the Commission refraining from commenting on assessees which were not there before them. This observation, we find, does not negate the admitted and undisputed fact of surrender of the impugned capital gains of the assessee in the hands of M/s Rohit Traders. 16. In view of the above, we direct the deletion of addition made on account of Long Term Capital Gains and expenditure incurred on account of the same in the hands of the assessee amounting to Rs.17,19,989/- and Rs.1,34,027/- respectively. Ground of appeal Nos.1 and 5 raised by the assessee, therefore, stand allowed”. 10. Since the facts in the present case are similar to the facts involved in the aforesaid referred to case, so, respectfully following the said order the impugned additions made by the A.O. and sustained by the Ld. CIT(A) in the hands of the present assessee are deleted.
In ITA No. 1173/Chd/2019 for the A.Y. 2015-16 the facts are identical as were involved in ITA No. 1172/Chd/2019 for the A.Y. 2014-15 the only difference is in the amount involved, therefore our findings given in the former part of this order shall apply mutatis mutandis.
In the result, appeals of the assessee are allowed.
(Order pronounced on 14/02/2022)
Sd/- Sd/-
सुधांशु �ीवा�तव एन.के.सैनी, (SUDHANSHU SRIVASTAVA) ( N.K. SAINI) �या�यक सद�य/ JUDICIAL MEMBER उपा�य� / VICE PRESIDENT AG Date: 14/02/2022
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to :
अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar