Khem Chand Gupta, Ambala v. ACIT, Ambala

ITA 492/CHANDI/2012 | misc
Pronouncement Date: 31-07-2012 | Result: Allowed

Appeal Details

RSA Number 49221514 RSA 2012
Assessee PAN ACIPG9462E
Bench Chandigarh
Appeal Number ITA 492/CHANDI/2012
Duration Of Justice 2 month(s) 28 day(s)
Appellant Khem Chand Gupta, Ambala
Respondent ACIT, Ambala
Appeal Type Income Tax Appeal
Pronouncement Date 31-07-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted SMC
Tribunal Order Date 31-07-2012
Date Of Final Hearing 26-07-2012
Next Hearing Date 26-07-2012
Assessment Year misc
Appeal Filed On 03-05-2012
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH SMC CHANDIGARH BEFORE SHRI T.R. SOOD AM AND MS. SUSHMA CHOWLA JM ITAS NO. 492 & 493/CHD/2012 ASSESSMENT YEAR: 1980-81 AND 1981-82 KHEM CHAND GUPTA V A.C.I.T. INVESTIGATION CIRCLE BABYAL AMBALA AMBALA ACIPG 9462 E (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ROHIT BECTOR RESPONDENT BY: SHRI AKHILESH GUPTA DATE OF HEARING: 26.07.2012 DATE OF PRONOUNCEMENT: 31.07.2012 ORDER PER T.R. SOOD A.M IN BOTH THESE APPEALS VARIOUS GROUNDS HAVE BEEN RA ISED BUT AT THE TIME OF HEARING THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT ONLY DISPUTE IS REGARDING TAXABILITY OF THE INCOME BY M/S JYOTI STE EL INDUSTRIES IN THE HANDS OF THE ASSESSEE. 2. AFTER HEARING BOTH THE PARTIES WE FIND THAT SURV EY PROCEEDINGS WERE CONDUCTED IN THE PREMISES OF THE ASSESSEE AND IT WA S NOTICED THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS AS PROPRIETOR OF JYOTI STEEL INDUSTRIES. STATEMENT OF SHRI KHEM CHAND GUPTA WAS RECORDED. I N THE STATEMENT IT WAS STATED THAT ENTIRE BUSINESS IN THE NAME OF JYOTI ST EEL INDUSTRIES BELONGED TO SHRI SURESH KUMAR JINDAL AND HE (THE ASSESSEE) WAS ONLY AN EMPLOYEE OF SHRI S.K. JINDAL AND GETTING A SALARY OF RS. 700 PER MON TH. IT WAS ALSO STATED THAT ENTIRE INVESTMENT IN THE BUSINESS ALSO BELONGED TO SHRI S.K. JINDAL. ON THE BASIS OF STATEMENT SUBSTANTIVE ASSESSMENT WAS MADE IN THE HANDS OF SHRI S.K. JINDAL. HOWEVER PROTECTIVE ASSESSMENT WAS FRAMED IN THE HANDS OF THE SHRI KHEM CHAND GUPTA I.E. THE ASSESSEE THROUGH WHICH A SUM OF RS. 35 500/- ON ACCOUNT OF UNDISCLOSED INVESTMENT CREDIT AND SOME UNDISCLOSED INCOME WAS MADE IN ASSESSMENT YEAR 1980-81. A SUM OF RS. 78 4 40/- WAS ADDED IN 2 ASSESSMENT YEAR 1981-82. IN THE MEANTIME SHRI SURE SH KUMAR JINDAL APPROACHED SETTLEMENT COMMISSION. IN THE PROCEEDIN GS BEFORE THE SETTLEMENT COMMISSION THE ASSESSEE OWNED MANY BENAMI BUSINESSE S BUT IT WAS STATED THAT SHRI SURESH KUMAR JINDAL HAD NOTHING TO DO WIT H BUSINESS OF JYOTI STEEL INDUSTRIES ARYAN STEEL PCIS LTD. ARYAN STEELS AND AMAR STEELS PCIS LTD. LATER ON THE BASIS OF CERTAIN DOCUMENTS SHRI S.K. JINDAL OWNED UP THE INCOME OF EVEN OF ARYAN STEEL WHICH WAS ALSO BEING RUN BY SHRI KHEM CHAND GUPTA. IN THIS REGARD PARA 3.01 OF THE ORDER OF SETTLEMENT COMMISSION READS AS UNDER:- WITH REGARD TO M/S ARYAN STEEL PCIS/M/S ARYAN STEE LS THE CIT (DR) REFERRED TO PARAGRAPHS 12 13 AND 23 OF THE 132(5) O RDER. IT WAS SPECIFICALLY POINTED OUT THAT WHEREAS SHRI KHEM CHA ND GUPTA WAS SHOWN AS THE CHAIRMAN OF M/S ARYA STEEL PCIS LTD TH E APPLICANT WAS SHOWN AS THE PROPRIETOR OF M/S ARYAN STEELS. ON BE ING CONFRONTED WITH THE FACTS MENTIONED IN THE RELEVANT PARAGRAPHS IN T HE 132(5) ORDER AS REFERRED TO EARLIER THE A/R AGREED TO SURRENDER TH E INCOME FROM M/S ARYAN STEELS AS THE INCOME OF THE APPLICANT FOR THE ASSESSMENT YEAR 1981-82 TO 1985-86. ON A TOTAL TURNOVER OF RS. 6 0 0 934/- COVERING THE PERIOD FROM 1981 TO 1985 A FLAT RATE OF 5% NET PRO FIT WAS APPLIED FOR WORKING OUT THE TAXABLE INCOME WHICH WAS FOUND TO B E REASONABLE BY THE BENCH. ACCORDINGLY A SUM OF RS. 30 050/- WAS OFFERE D AS ADDITIONAL INCOME ON ACCOUNT OF M/S ARYAN STEELS AND A REVISE D SOF TO THIS EFFECT WAS FILED. BUT THE INCOME OF JYOTI STEEL INDUSTRIES WAS NEVER OWNED UP BY SHRI SURESH KUMAR JINDAL. 3 ON APPEAL BEFORE THE LD. CIT(A) IT WAS STATED TH AT THE ASSESSEE WAS AN EMPLOYEE OF SHRI S.K. JINDAL DRAWING A MONTHLY SALA RY OF RS. 700 AND ASSESSMENT WERE COMPLETED U/S 144 WITHOUT GIVING AN Y ADEQUATE OPPORTUNITY. IT WAS ALSO STATED THAT NO INDEPENDENT ORDER HAS BEEN PASSED CONVERTING PROTECTIVE ASSESSMENT INTO SUBSTANTIVE ASSESSMENTS. THE LD. CIT(A) DID NOT FIND ANY FORCE IN THE SUBMISSIONS AND DISMISSED THE APPEAL. 4. BEFORE US THE LD. COUNSEL OF THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE FIRST APPELLATE AUTHORITY. HE REFER RED TO ORDER OF SETTLEMENT COMMISSION AND CONTENDED THAT ALL THROUGH REVENUE C ONTENDED BEFORE THE SETTLEMENT COMMISSION THAT JYOTI STEEL INDUSTRIES A ND ARYAN STEEL WERE BENAMI BUSINESS OF THE APPLICANT I.E. SHRI SURESH K UMAR JINDAL. IN THIS REGARD HE PARTICULARLY INVITED OUR ATTENTION TO PARA 3 OF THE ORDER OF THE SETTLEMENT COMMISSION. HE CONTENDED THAT AFTER BEING CONFRONTE D BY CERTAIN DOCUMENTS 3 THE LD. COUNSEL OF SHRI SURESH KUMAR JINDAL OWNED U P THE BUSINESS OF M/S ARYAN STEEL PCIS WHERE SHRI KHEM CHAND GUPTA I.E. T HE ASSESSEE WAS BEING SHOWN AS CHAIRMAN OF THE COMPANY. HOWEVER SHRI SU RESH KUMAR JINDAL ULTIMATELY DID NOT OWN UP THE BUSINESS OF JYOTI STE EL INDUSTRIES BUT THAT WILL NOT AUTOMATICALLY MEAN THAT THE ASSESSEE WAS OWNING THA T BUSINESS BECAUSE THE DEPARTMENT HAS NO EVIDENCE TO PROVE THAT THE ASSESS EE WAS CARRYING ON THE BUSINESS. IN ANY CASE THE DEPARTMENT HAS NOT PASS ED ANY ORDER CONVERTING THE PROTECTIVE ASSESSMENT INTO SUBSTANTIVE ASSESSME NT. 5 ON THE OTHER HAND THE LD. DR FOR THE REVENUE RE LIED ON THE ORDERS OF ASSESSING OFFICER AND THE LD. CIT(A). 6 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND THAT PARA 3 AND 3.01 OF THE ORDER OF SETTLEMENT COMMISSION READ AS UNDER:- 3. OPENING HIS ARGUMENTS ON BEHALF OF THE DEPARTME NT THE CIT(D.R) CONFINED HIS SUBMISSIONS TO THE FOLLOWING ISSUES ON LY: M/S JYOTI STEEL INDUSTRIES AND M/S ARYAN STEELS WER E THE BENAMI BUSINESSES OF THE APPLICANT AND THEREFORE THE INC OME EARNED BY BOTH THESE CONCERNS SHOULD BE OFFERED BY THE APPLICANT A S HIS INCOME. WITH REGARD TO M/S JYOTI STEEL INDUSTRIES THE LD. DR FO R THE REVENUE REFERRED TO PARA 8 (PAGES 16 TO 21 OF 132(5) ORDER) WHEREIN IT WAS POINTED OUT THAT AS PER REASONS MENTIONED IN THE RELEVANT PORTION OF THE 132(5) ORDER SHRI KHEM CHAND GUPTA SHOWN AS THE PROPRIETOR OF M/S JYO TI STEEL INDUSTRIES WAS THE BENAMDAR OF THE APPLICANT. HOWEVER ON BEI NG QUESTIONED BY THE BENCH WHETHER THE DEPARTMENT POSSESSED ANY MATE RIAL/EVIDENCE TO PROVE THAT CASH/MONEY FLOWED BACK FROM SHRI KHEM CH AND GUPTA IN THE APPLICANT THE CIT(D.R)S REPLY WAS IN THE NEGATIVE . THE BENCH ALSO NOTED THAT THE APPLICANTS REQUESTS FOR CROSS EXAMI NATION OF SHRI KHEM CHAND GUPTA DID NOT COME THROUGH (PARA 11 OF THE OR DER U/S 132(5)). FINALLY ON 19.1.1987 THE APPLICANT ONCE AGAIN REIT ERATED THAT SHRI KHEM CHAND GUPTA WAS THE SOLE PROPRIETOR OF M/S JYOTI ST EEL INDUSTRIES BABYAL. 3.01 WITH REGARD TO M/S ARYAN STEEL PCIS/M/S ARYAN STEELS THE CIT (DR) REFERRED TO PARAGRAPHS 12 13 AND 23 OF THE 132 (5) ORDER. IT WAS SPECIFICALLY POINTED OUT THAT WHEREAS SHRI KHEM CHA ND GUPTA WAS SHOWN AS THE CHAIRMAN OF M/S ARYA STEEL PCIS LTD TH E APPLICANT WAS SHOWN AS THE PROPRIETOR OF M/S ARYAN STEELS. ON BE ING CONFRONTED WITH THE FACTS MENTIONED IN THE RELEVANT PARAGRAPHS IN T HE 132(5) ORDER AS REFERRED TO EARLIER THE A/R AGREED TO SURRENDER TH E INCOME FROM M/S ARYAN STEELS AS THE INCOME OF THE APPLICANT FOR THE ASSESSMENT YEAR 1981-82 TO 1985-86. ON A TOTAL TURNOVER OF RS. 6 0 0 934/- COVERING THE PERIOD FROM 1981 TO 1985 A FLAT RATE OF 5% NET PRO FIT WAS APPLIED FOR WORKING OUT THE TAXABLE INCOME WHICH WAS FOUND TO B E REASONABLE BY THE BENCH. ACCORDINGLY A SUM OF RS. 30 050/- WAS OFFERE D AS ADDITIONAL INCOME ON ACCOUNT OF M/S ARYAN STEELS AND A REVISE D SOF TO THIS EFFECT WAS FILED. 4 FROM ABOVE IT IS CLEAR THAT ALL ALONG WITH THE CASE OF DEPARTMENT WAS THAT SHRI SURESH KUMAR JINDAL WAS OWNER OF M/S JYOTI STEEL IN DUSTRIES. THERE WAS ANOTHER BUSINESS IN THE NAME OF ARYAN STEEL PCIS LT D WHERE ALSO THE ASSESSEE WAS SHOWN AS CHAIRMAN BUT THAT BUSINESS WAS ALSO OW NED UP BY SHRI SURESH KUMAR JINDAL BECAUSE SOME DOCUMENTS WERE AVAILABLE BUT AT THE SAME TIME IF SOME DOCUMENTS ARE NOT AVAILABLE WITH THE DEPARTMEN T TO PROVE THAT BUSINESS OF JYOTI STEEL INDUSTRIES WAS ALSO BELONGING TO SHR I SURESH KUMAR JINDAL IT DOES NOT MEAN THAT THE ASSESSEE WAS OWNER OF THE BU SINESS BECAUSE BEFORE THE SETTLEMENT COMMISSION THE REVENUE HAD ARGUED TH AT BUSINESS DO BELONG TO SHRI SURESH KUMAR JINDAL. EVEN IN THE INITIAL S TATEMENT GIVEN BY THE ASSESSEE AT THE TIME OF SURVEY IT WAS STATED THAT BUSINESS OF JYOTI STEEL INDUSTRIES BELONGED TO SHRI SURESH KUMAR JINDAL AND HE WAS ONLY AN EMPLOYEE AND GETTING SALARY OF RS. 700/- PER MONTH. FURTHER WE FIND THAT IF FURTHER INVESTIGATION IS CONDUCTED IN THIS CASE TO BRING SO ME CONCLUSIVE EVIDENCE ON RECORD SAME MAY NOT BE POSSIBLE BECAUSE THE ASSESSM ENT YEARS INVOLVE 1980- 81 AND 1981-82 AND THE MATTER IS 30 YEARS OLD AND I T MAY NOT BE POSSIBLE TO FIND OUT ANYTHING AT THIS STAGE. THEREFORE LOOKI NG AT OVERALL CIRCUMSTANCES AND SMALLNESS OF AMOUNTS INVOLVED WE ARE OF THE OP INION THAT IT CANNOT BE SAID THAT THE BUSINESS OF JYOTI STEEL INDUSTRIES BELONG TO THE ASSESSEE AND THEREFORE THE SAME COULD NOT HAVE BEEN ASSESSED IN THE HANDS OF THE ASSESSEE. THEREFORE WE SET ASIDE THE ORDER OF THE LD. CIT( A) AND HOLD THE INCOME FROM JYOTI STEEL INDUSTRIES CAN NOT BE ASSESSED IN THE H ANDS OF THE ASSESSEE. 7. IN THE RESULT APPEALS FILED BY THE ASSESSEE AR E ALLOWED. ORDER PRONOUNCED ON 31.07. 2012 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 .07.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/ THE DR 5 6