CIT vs. KULWANT SINGH

+ + $-17 & 18 "IN THE HIGH COURT OF DELHI AT NEW DELHI tTA 538/2011 tTA 539/2011 CIT Through Ms. standing counsel versus KULWANT SINGH ..... Respondent Through Ms. P L Bansal, Sr. Adv. with Mr. R K Chauhan and Mr. Ruchir Bhatia, Advs. GORAM: HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE R.V.EASWAR ORDER 18.05.2012 We have heard counsel for the parties in these two appeals filed by the Revenue. The question raised is of perversity and whether the findings of fact of the Income Tax Appellate Tribunal ('Tribunal', for short) require interference. The respondent-assessee was subjected to search and thereafter block assessment proceedings for the period 1.4.1996 to 19.9.2002 were initiated. The respondent-assessee did not maintain any books of accounts and was conducting business of bill discounting and draft discounting on commission basis. The respondent-assessee had opened bank accounts and business entities in names of persons/relatives for the said purpose. There is no debate about the total quantum of transactions or turnover as these are recorded in the bank account statements. ..... Appellant Rashmi Chopra, sr. Yo Digitally Signed By:AMULYA Signature Not Verified

The dispute pertains to the quantum of commission or percentage of commission which the respondent-assessee had earned. 2. The Assessing Officer had computed the undisclosed commission income on the turnover relating to bill discounted at the rate of 4o/o on the basis of statement made by one Jagpreet Singh an associate of the respondent-assessee. We have examined the statement and the said statement was also noticed by the Tribunal. In the statement Jagpreet Singh had stated that the respondent-assessee used to charge 4o/o from the parties towards central sales tax when C-Form was issued. It is an accepted position that the respondent-assessee was filing returns with the sales tax department. 4% sales tax was charged when C-Form was issued. Therefore, in our opinion the Tribunal and the CIT(A) were right in holding that the Assessing Officer was not justified in computing the undisclosed commission income at the rate of 4o/o of the turnover. The said figure, it is apparent, was unsubstantiated and only a presumption. The percentage was also very high as commission draft discounting was computed/ assessed by the Assessing Officer at the rate of .50%. This substantial difference when the two business were interconnected and similar cannot be accepted. We also notice that Jagpreet Singh in his statement has stated that they used to earn commission at the rate of t50/- per t10,000/- on drafts which were discounted and paid in cash. The ClT(Appeals) had taken the commission at .75o/o which was reduced by the Tribunal to .650/o of the total turnover. The Tribunal while reducing the rate of commission

r-' / lt ./ l--/ of the took into consideration and accepted the contention respondent-assessee that he had incurred expenses also. 3. On the question of rate of commission on draft discounting, the rate of commission has been taken as .35% after accounting for expenses incurred. 4. We are informed that the additions on these two grounds would be about t17 to 18 lakhs each i.e. total of (34-35 lakhs. In addition to this, the Tribunal has sustained another addition of t11 lakhs on account of undisclosed/undeclared loan which was advanced to third parties. Interest earned on the loan is separately added. The Assessing Officer was made an addition of 1.75 lakhs for undisclosed property purchased. We may notice that at the time of search no gold or silver ornament or any other papers of immoveable property were found. Cash of <7500 was found at the time of search. 5. Ld. counsel for the appellant Revenue has submitted that papers were found with regard to loan of t51 lakhs. The Tribunal has examined the said aspect and has come to the conclusion that the respondent-assessee had earned commission at the rate of 1o/o per month on the loan by Sohan Lal to D K Goel. The respondent-assessee had acted as a middle man. While recording the aforesaid findings the Tribunal has dealt with the issue in depth and has reached a factual conclusion after recording cogent reasons. 6. Keeping in view the aforesaid facts and also noticing the total quantum of addition which has been made and sustained

by the order of the Tribunal is about t47 lakhs, we do not think any substantial question of law arises in these appeals and the same are dismissed. No costs. -4 tt /a'lL SANJIV KHANNA, J. lr t { t---t ' R.V.EASWAR, J. MAY 18,20',12 vld