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Case Law Details

Case Name : DCIT Vs Satya Prakash Gupta (ITAT Delhi)
Appeal Number : ITA Nos. 1277 to 1281/Del./2021
Date of Judgement/Order : 09/03/2022
Related Assessment Year : 2013-14 to 2017-18
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DCIT Vs Satya Prakash Gupta (ITAT Delhi)

We have heard the rival submissions, perused the relevant findings given in the impugned orders as well as material referred to before us during the course of hearing. We have already discussed the facts and material herein above, however in a succinct manner the facts and issues relevant for adjudication of additions made in the present appeals are that the assessee had entered into an agreement with a foreign entity, CMF on 25.03.2006 for rendering services for participation in the possible tenders for supplying currency notes to RBI and its subsidiaries. This agreement was valid up to 31.12.2007. Thereafter it was extended upto 31.12.2012. Till AY 2011-12, the assessee had shown its commission income received from Fedrigoni for carrying out operations in India, i.e. assisting CMF for supply of currency notes to RBI and its subsidiaries. The relevant figures of income shown by the assessee in various years starting from AYs 2008-09 to 2011-12 has already been incorporated above. From AY 2012-13, no income has been shown by the assessee for such activities. Admittedly, there was no agreement post 31.12.2012 and secondly, even after 01.04.2011 as discussed herein fore that there was no iota of evidence or any material information which could remotely prove that assessee received any money from CMF for any India operation. The entire premise of the AO is based on certain hypothetical presumption that even after the termination of the agreement or end of the agreement on 31.12.2012, assessee might have continued to render services for supply of currency notes which has not been shown in the return of income in India, albeit has diverted his income through certain alleged foreign entities abroad and now the income has been shown outside India. Even if such allegations are correct that assessee was having some kind of interest in these entities as discussed in the assessment order and appellate order, but there is not an iota of any evidence that these entities or the assessee had carried out any operation in India either for supply of currency notes or otherwise on or behalf of CMF or Fedrigoni. The Revenue has not brought anything on record that there was any business connection with assessee in India for carrying out such activities or either RBI or the CMF has stated that any payment for supply of currency notes or rendering of any services was made to assessee post 01.04.2011 to AY 2017-18. The allegations made by the AO and the interpretation on which he has drawn his presumption after referring to certain foreign entities, has been duly explained by the ld. counsel as stated above which has not been rebutted before us nor has been found favour by the ld. CIT (A). Ld. CIT (A) has given a very categorical finding that no evidence has been found in the form of seized material or statement to prove that agreement of 2006 between CMF and assessee was extended beyond 31.12.2012 and beyond this period, CMF was under any obligation to share the profits with the assessee. Even in various information received through FTTR, not single information has been received that either Fedrigoni or CMF has given any money for their India operation for supply of currency notes to Assessee. This finding of ld. CIT (A) without any rebuttal or material information on record cannot be tinkered with. Accordingly, the finding of the ld. CIT (A) that after the assessee had become NRI, no income has arisen or accrued in India, i.e. after 01.04.2015 and, therefore, even in terms of section 9(1)(i) no income is taxable in the hands of the assessee is upheld.

In fact, the ld. CIT (A) has held that post 31.12.2012, the assumption made by the AO after the period 01.01.2013 is purely based on presumption that there might be continuation of terms and conditions of this agreement which was without any basis or evidences albeit on conjectures and surmises. The alleged money received by the assessee through various dubious entities during FYs 2015-16 & 2016-17 as alleged by the AO that assessee might have received money on account of share of profit from CMF in connection of its Indian activities is wholly erroneous and none of these informations or material found which he has been referred to by the ld. CIT DR or by the AO even remotely point out that through these dubious entities, assessee had carried out any activities in India and accordingly, independently also, we find that no income has been taxed in India from AYs 2013-14 to 2017-18.

Now, coming to the additions sustained or enhanced by the ld.CIT (A) in AY 2012-13, first of all, even though ld. CIT (A) had admitted that there is no incriminating material or document or any evidence either found during the course of search or even after the post search in the year that post 2012, any payment received by the assessee from CMF or any of its entities. Once it is an admitted fact then in the case of unabated assessment where the assessment has attained finality at the time of search, no addition can be made on presumption or estimate basis without any reference to any seized material. Therefore, entire addition/ enhancement made by the ld. CIT (A) has no legs to stand and the same is directed to be deleted in view of the judgment of Hon’ble jurisdictional High Court in the cases of Kabul Chawla and Meeta Gutgutia (supra).

In fact, this proposition that no addition can be made without any incriminating material would be applicable for AYs 2013-14, 2014­15 & 2015-16 also, therefore, on legal ground also, no addition can be made for these years.

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