Vishnu Kumar Garg Vs DCIT (ITAT Delhi)
We find the A.O. in the instant case made an addition of Rs.12 lakhs to the total income of the assessee under section 69A of the I.T. Act, 1961 on the basis of entries dated 07.07.2010 and 07.08.2010 found as per Page-14 of Annexure-A1. We find the Ld. CIT(A) deleted the addition of Rs.2 lakhs and sustained the addition of Rs.10 lakhs the reasoning of which has already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that since the cash available with the assessee in various proprietorship concerns and companies in which he is a Director is Rs.12,80,198/-which is more than the figure of Rs.12 lakhs, therefore, no addition should be made. Alternatively, it is the contention of the Learned Counsel for the Assessee that addition on account of bogus purchases, if any, made in the hands of the assessee and other related concerns should be set-off against this amount.
We find some force in the arguments of the assessee. We find the assessee before the AO had categorically stated that Mamaji & Mataji were staying with the assessee and he used to handover business cash to them for safe custody whenever he used to go out of station for either business purposes or personal work. The assessee has also given the availability of cash on 07.07.2010 (the date of entry in the seized document) in the books of accounts of various proprietorship concerns and companies in which the assessee is a director at Rs.12,80,198.91/- which is more than the amount of Rs.10.00 lakhs. Therefore, merely stating that the explanation is not acceptable is not justified. Since, the availabilities of cash of Rs.12.80 lakhs on 07.07.2010 in the books of accounts of various concerns of the assessee is not doubted, therefore, we are of the considered opinion that the Ld. CIT(A) is not justified in sustaining the addition of Rs.10,00,000/-. The order of the Ld. CIT(A) on this issue is, therefore, set-aside and the AO is directed to delete the addition. The ground raised by the assessee is accordingly allowed.
FULL TEXT OF THE ORDER OF ITAT DELHI
ITA.No.9147/Del./2019 to ITA.No.9152/Del./ 2019 filed by the assessee are directed against the common order dated 30.09.2019 of the Ld. CIT(A)-23, New Delhi relating to A.Ys. 2011-12 to 2016-17 respectively. The Revenue has filed ITA.No.9448/Del./2019 for the A.Y. 201314 and ITA.No.9449/Del./2019 for the A.Y. 2014-15 against the relief granted by the Ld. CIT(A)-23, New Delhi in the order dated 30.9.2019. Since, common issues are involved in all these appeals, therefore, these were heard together and are being disposed of by this common order.
ITA.No.9147/Del./2019 – A.Y. 2011-12 [Assessee] :
2. Facts of the case, in brief are that the assessee is an individual and derived income from salary, house property, income from business and income from other sources. He filed his return of income on 15.09.2011 declaring total income of Rs.61,93,010/-. A search under section 132 of the I.T. Act was conducted on 28.02.2017 at the residential premises of the assessee at House No. 128, Sector-16, Faridabad, Haryana from where certain papers/documents belonging to the assessee were found and seized. The jurisdiction of the assessee was transferred from Pr.ClT-5, Delhi to PCIT, Central Circle-4, Delhi vide order under section 127(1) dated 30.11.2017. In response to notice under section 153A of the I.T. Act, the assessee filed return of income declaring total income of Rs.61,93,010/-. The A.O. issued notice under section 143(2) and subsequently notice under section 142(1) along with questionnaire. In response to the same, the assessee appeared before the A.O. and filed the requisite details from time to time. The A.O. thereafter completed the assessment under section 153A of the I.T. Act determining the total income of the assessee at Rs.1,64,54,330/-.
3. In appeal, the Ld. CIT(A) granted part relief to the assessee. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds of appeal :
1. Because the action for initiation, continuation and conclusion of assessment proceedings u/s 153A at an amount of Rs.1,64,54,331/- is being challenged on facts and law.
2. Because the action is being challenged on facts and law for making additions in assessment proceedings u/s 153A when there is no incriminating material/ document found during the course of search u/ s 132 of the Act for the impugned year.
3. Because the action is being challenged on facts and law for making an addition of Rs.10,00,000/- by invoking the provisions u/s. 69A, while the transaction is duly explained and accounted, recorded, disclosed and declared in books of account.
4. Because the action is being challenged on facts and law for making an addition of Rs.11,00,000/- by invoking the provisions u/s. 69A, however per assessee the same are rough notings.
5. Because the action is being challenged on facts and law for making an addition of Rs.14,00,000/- by invoking the provisions u/s. 69A, which is considering the explanation of assessee yet without assigning the reason to the basis of rejection of the explanation hence mechanically passing the assessment order.
6. Because the action is being challenged on facts and] law for making addition of Rs.11,25,000/- (@ 1.5%) given to Mishra ji which is unwarranted action by assuming the interest accrued of 1.5% which is a hypothetical income and against the principle of law (Godhara Electricity Co. Ltd., vs., CIT (1997) 225 ITR 746 (SC) further per assessee said loan of Rs.75,00,000/- is given to Abhay Salwan & not to Mishraji.
7. Because the action is being challenged on facts and law for making addition of Rs.11,25,000/-, wherein the evidence and the fact of the payee Abhay Salwan being a proclaimed offender and absconding is matter of Judicial Review before the Hon’ble Allahabad High Court, yet wrongly invoking the jurisdiction of presumption u/s. 132(4A). The prayer is to allow the claim/relief in accordance with the provision of section 58(2) r.w.s. 70, 71 of Income Tax Act, 1961.
8. Because the action is being challenged on facts and law for making an addition of Rs.40,00,000/- as unexplained money while treating the witness (assessee) u/s. 118 of Indian Evidence Act, 1872, as the assessee involved in the transaction resultingly an unreasonable finding without even calling and summoning the person involved namely RA Financial Services and Om Shanti Educational Society.
9. Because the action is being challenged on facts and law for making an addition of Rs.3,207/- by invoking the provisions u/s 69C by making presumption on presumption while law is settled that the presumption is supplied by Statute namely Income Tax Act, 1961, Schedule VII List 1 Entry 82 it is presumption of income and not presumption on presumption.
10. Alternatively and without prejudice to above, the action for not allowing telescoping of addition on account of u/s. 69A, u/s. 69C & commission expenses against addition on account of bogus purchases of group concerns is challenged on facts and law as both additions cannot be made simultaneously.
11. For any consequential relief and/or legal claim arising out of this appeal and for any addition, deletion, amendment and modification in the grounds of appeal before the disposal of the same in the interest of substantial justice to the assessee.”
3.1. The assessee has also raised the following additional ground:
i) Because the action is being challenged on facts & law for making additions in assessment proceedings u/s 153A wherein the seized documents Pg. 125 – 126 of Annexure A-5 relating to assessee were found from the premises of third parties i.e., LV Rustore Applications Pvt. Ltd., R R Carwell Pvt. Ltd., Blossom Landeal Pvt Ltd., & Elvi Bardahl India Pvt. Ltd., 17/6, Hanspal Industrial Complex, Mathura Road, Faridabad, therefore the additions on the basis of the said documents can only be made u/s 153C of the Act & not u/s 153A of the Act.
4. However, the Learned Counsel for the Assessee at the time of hearing did not press the additional ground, for which, the Ld. D.R. has no objection. Accordingly, the additional ground raised by the assessee is dismissed as not pressed.
5. Ground of appeal numbers.1 and 11 being general in nature are dismissed.
6. Learned Counsel for the Assessee did not press grounds of appeal numbers. 2 and 9, for which, the Ld. D.R. has no objection. Accordingly, the same are also dismissed as not pressed.
7. Grounds of appeal number. 3 relates to the order of the Ld. CIT(A) in confirming the addition of Rs.10 lakhs under section 69A of the I.T. Act, 1961.
8. Facts of the case, in brief, are that during the course of assessment proceedings, the A.O. noted that during the course of search operation at the residential premises of the assessee at House No. 128, Sector-16, Faridabad, Haryana, Page-14 of Annexure-A1 was seized wherein number of transactions were written. The A.O. asked the assessee to explain every transaction recorded on Page-14 of Annexure-A1 duly furnishing source of it and tallying with its regular books of account. The A.O. observed that there was an entry dated 07.07.10 against narration of ‘Mamaji ko 10,00,000/- diye, 1,00,000 ka Mataji ka hisab clear. One entry dated 07.08.2010, against narration of Mamaji ko diye Tagdi and Hath phool Gold ke layi Mamji ke of Rs.2,00,000/-.
8.1. It was explained by the assessee that Mamaji and Mataji were living with the assessee and assessee used to handover business cash to them for safe custody, whenever he used to go out of station for either business purpose or some personal purpose. So, Rs.10,00,000/- were given to Mamaji. Similarly an amount of Rs.1,00,000/- (i.e., 2 entries of Rs.50,000/- each were kept with Mamaji and Mataji) and the other entry relate to an amount of Rs.1,00,000/- received back by the assessee from Mataji. Therefore, the amount of Rs.1,00,000/- which assessee has given to them was received back. Alternatively, it was argued that if any addition on this account is to be made then assessee is entitled to telescoping against addition made on account of Bogus purchases which is treated as undisclosed income of assessee. It was further submitted that if telescoping of income is not allowed, it will amount to double addition.
8.2. However, the A.O. was not satisfied with the arguments advanced by the assessee and made addition of Rs.12 lakhs to the total income of the assessee.
8.3. In appeal, the Ld. CIT(A) deleted the addition of Rs.2 lakhs and sustained the addition of Rs.10 lakhs by observing as under :
“4.6. As far as amount of Rs.2,00,000/- given to ‘Mamaji’ on 07.08.2010 is concerned, it is clearly mentioned in the seized paper itself that it was given for purchasing gold jewellery. The AO has certainly not disputed cash in hand of Shri Vishnu Kumar Garg (Rs.1,75,446/-) and Smt. Lata Garg (Rs.1,63,557/-) as on 07.07.2010. It is noted that Shri Vishnu Kumar Garg has declared income of Rs.61,93,010/- for AY 2011-12 and Smt. Lata Garg has declared income of Rs.23,75,500/-. This shows that the appellant belong to a status family. Therefore, availability of cash of Rs.2,00,000/- in form of house hold cash,, in case of an Indian family of such status cannot be taken as abnormal. I am of a considered opinion that source of the cash of Rs.2,00,000/- given to ‘Mamaji’ on 07.08.2010 are explained. As far as ground of telescoping is concerned, I have noted that the AO, in the assessment orders for AYs 2013-14 and 2014-15, calculated cash availability on particular dates, by considering transactions which were outside books but were generating/consuming cash. Such availability of cash was considered and additions which were otherwise made out, were not made up to such extent. This action of the AO is based upon sound logic and is acceptable. The AR’s argument that the cash generated due to out of books transactions of bogus purchases is to be treated at par with other out of books cash generating/consuming transactions, is in line of the same logic and hence, cannot be brushed aside. Also, the argument of the AR that such case generation even in other cases [Smt. Lata Garg (wife of the appellant), and M/s. RR Carwell Pvt. Ltd. / M/s. L. V. Rustore Applications Pvt. Ltd. where the appellant is director] would be available in hands of the appellant because he is the person controlling affairs of these entities, cannot be brushed aside as he is the main decision maker of the group. However, one has to keep in mind the aspect that if any addition is made under any section which requires separate treatment, including special rates, provisions of such section would have over-riding effect. Secondly, requirement of consumption of cash in particular case, as per telescoping requirements in that case would get preference. Therefore, this ground (No.2) of appeal is partly allowed and as a consequence, the addition to the extent of Rs.2,00,000/- is deleted and balance addition to the extent of Rs.10,00,000/- is confirmed, subject to the above mentioned remarks.”
8.4. Aggrieved with such order of the Ld. CIT(A), the assessee is in appeal before the Tribunal.
8.5. The Learned Counsel for the Assessee reiterated the same arguments as made before the AO and Ld. CIT(A). He submitted that Mamaji and Mataji were living with the assessee and assessee used to handover business cash to them for safe custody, whenever he used to go out of station for either business purpose or some personal purpose. Referring to Page-267 of the PB, Learned Counsel for the Assessee drew the attention of the Bench to the details of cash in hand as on 07.07.2010 in various proprietorship firms and companies which are as under :
