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Facts
During a search and seizure operation, loose sheets detailing marriage expenses of Rs. 7.16 Crores for Shri Vaibhav Tyagi were found at the assessee's premises. The assessee initially agreed to surrender income based on these documents but later retracted, arguing that no cash was found, the expenses should be set off against unrecorded receipts, and the surrender would lead to double taxation.
Held
The Tribunal held that since no actual cash was found during the search and the assessee company had already surrendered Rs. 13.45 Crores of income, it was logical to presume that the expenses of Rs. 7.16 Crores noted in the loose sheets were met out of the income surrendered by the assessee company, as no other evidence of investment was found. Thus, the expenses were directed to be considered against the surrendered income of the company.
Key Issues
Whether the expenses found in loose sheets during a search should be treated as undisclosed income of the assessee, especially when the assessee's company had surrendered a larger amount of income without actual cash being found, and if such expenses could be adjusted against the company's surrendered income.
Sections Cited
Section 132, Section 132(4)
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Income Tax Appellate Tribunal, DELHI ‘H’ BENCH,
Before: SHRI N.K. BILLAIYA, & MS ASTHA CHANDRA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the assessee is preferred against the order of the ld. CIT(A), Kanpur dated 14.06.2021 pertaining to A.Y. 2016-17.
The substantive ground argued before us reads as under:
“That on the facts and circumstances of the case and in law the CIT(A)/ AO failed to appreciate that no cash was found and seized during search though the appellant in its fiduciary capacity as director surrendered the undisclosed income amounting Rs. 13.45,00,379 in the hands of M/s Vaibhav Vibhor Infra Homes. Pvt. Ltd. Therefore the addition made is thus unjustified, unwarranted and bad in law and in any case very excessive.”
Briefly stated, the facts of the case are that a search and seizure operation was conducted u/s 132 of the Income-tax Act, 1961 [the Act, for short] on 03.11.2016 at various premises of VVIP Group alongwith residential premises of key management persons including the assessee and other family members.
The assessee was asked to explain the nature of seized documents and source of amount reflected in the loose sheets. One of such loose sheet is as under:
As can be seen from this loose sheet, it contains amounts spent on marriage ceremony of Shri Vaibhav Tyagi. The assessee was asked to explain the source of these expenses, admitted to have been incurred in the marriage of Shri Vaibhav Tyagi, as the assessee has not offered this amount in his return of income in spite of the fact that he had agreed to surrender the same.
Though the assessee may have surrendered the amount on 18.02.2017, the assessee retracted from his statement by filing detailed reply before the Deputy Director of Investigation, Ghaziabad.
Most relevant part of the retraction reads a under:
Before us also, the ld. counsel for the assessee vehemently contended that since no actual cash was found and since the explanation of the assessee has been accepted, benefit of set off of income surrendered in the hands of the company and matrimonial expenses incurred by the assessee should be given.
While deciding the appeal of the Revenue in in the case of Shri Vaibhav Infrahome Pvt Ltd in which the assessee is director, we have categorically held that since no actual cash was found, though the income in the loose sheet has been surrendered by the assessee company, the amount of Rs. 13,45,00,379/- must have been spent on some religious, matrimonial or other family functions.
Since no evidence of any investment whatsoever has been found, we are of the considered view that the income surrendered by the company for which no physical cash was available, it would be logical to presume that the said amount must have been spent in the marriage of son of Director Shri Praveen Tyagi, the assessee
Considering the facts in totality, the expenses found to be noted in the alleged loose sheet amounting to Rs. 7,16,65,220/- is directed to be considered in the income surrendered by the assessee company.
In the result, the appeal of the assessee in is allowed on the ground argued before us.
The order is pronounced in the open court on 21.02.2024.