ACIT, Central Circle,, v. Omwati Singhal,,

ITSSA 275/DEL/2005 | misc
Pronouncement Date: 30-07-2010 | Result: Dismissed

Appeal Details

RSA Number 27520116 RSA 2005
Bench Delhi
Appeal Number ITSSA 275/DEL/2005
Duration Of Justice 5 year(s) 1 month(s) 26 day(s)
Appellant ACIT, Central Circle,,
Respondent Omwati Singhal,,
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 30-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 30-07-2010
Date Of Final Hearing 21-07-2010
Next Hearing Date 21-07-2010
Assessment Year misc
Appeal Filed On 03-06-2005
Judgment Text
I.T.A. NO.274 275&276 /DEL/05 1/6 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH I NEW DELHI) BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.(SS).A. NO.274 275 & 276 /DEL/2005 BLOCK PERIOD FROM 1.4.1996 TO 23.8.2002 ACIT SHRI RAVINDER SINGHAL CENTRAL CIRCLE SMT.OMBATI SINGHAL & FARIDABAD. V. SHRI OM PARKASHSINGHAL H/ NO/86 SECTOR-16A FARIDABAD. AND CROSS OBJECTION NO.21 22 & 23/DEL/2007 IN I.T.A.NO.276 275 & 274/DEL/2005 BLOCK PERIOD FROM 1.4.1996 TO 23.8.2002. SH. OM PARKASH SINGHAL ACIT SMT. OMBATI SINGHAL & CENTRAL CIRCLE SHRI RAVINDER SINGHAL FARIDABAD. FARIDABAD. V. (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA ADVOCATE. RESPONDENT BY : SHRI MOHAN VERMA DR. ORDER PER BENCH: THESE ARE THREE APPEALS BY THE REVENUE AND THERE AR E THREE CROSS OBJECTIONS FILED BY THE ASSESSEE AND DIRECTED AGAIN ST SEPARATE ORDERS OF LD CIT(A)-I LUCHIANA DATED 1.2.2005 FOR THE BLOCK PER IOD FROM 1.4.1996 TO . I.T.A. NO2274 275&276/DEL/05 2/6 23.8.2002 IN THE CASES OF THREE DIFFERENT ASSESSEES SHRI OM PARKASH SINGHAL SMT. OMBATI SINGHAL AND SHRI RAVINDER SINGHAL. SIN CE IDENTICAL ISSUE IS INVOLVED ALL THESE APPEALS AND CROSS OBJECTIONS AR E BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN THE APPEALS OF THE REVENUE ONLY ONE GROUND I S RAISED WHICH IS IDENTICAL IN ALL THE THREE APPEALS EXCEPT THE DIFFERENCE IN A MOUNT AND HENCE WE REPRODUCE THE GROUND RAISED BY THE REVENUE IN THE CASE OF SHR I OM PASKASH SINGHAL I.E. IN I.T.(SS). NO.276/DEL/.2005:- THE LD CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS O F THE CASE IN DELETING THE ADDITION OF RS.48 21 891/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF LONG TERM CAPITAL GAIN ALLEGEDLY ARISING OUT OF BOGUS SALE OF SHARES. 3. BRIEF FACTS OF THE CASE ARE THAT IN THE COURSE O F SEARCH PROCEEDINGS CERTAIN DOCUMENTS WERE SEIZED FROM THE RESIDENCE OF THE ASS ESSEE AND FROM OM MEDICAL CENTRE RELATING TO LONG TERM CAPITAL GAINS DECLARED BY THESE THREE ASSESSEES IN THE REGULAR RETURN OF INCOME. DURING T HE SEARCH PROCEEDINGS STATEMENTS OF THESE ASSESSEES WERE RECORDED IN RESP ECT OF LONG TERM CAPITAL GAIN ON SALE OF SHARES. IT WAS SUBMITTED BY THEM THAT TH EY HAD NEVER PURCHASED/SOLD ANY SHARES AND THEY HAD NO KNOWLEDGE ABOUT THE SHAR E BUSINESS AND THEY DID NOT KNOW ANY SHARE BROKER. ON THE BASIS OF THIS ST ATEMENTS OF THESE ASSESSEES THE ASSESSING OFFICER MADE CERTAIN ENQUIRIES FROM T HE SHARE BROKERS AND INSTEAD OF CAPITAL GAINS TO THE EXTENT OF DIFFERENCE IN SAL E PRICE AND PURCHASE PRICE IT WAS HELD BY THE ASSESSING OFFICER THAT ENTIRE SALE CONS IDERATION IS UNDISCLOSED INCOME OF THESE ASSESSEE AND THE SAME IS ASSESSABLE IN THE BLOCK ASSESSMENT. IN THIS MANNER HE HAS ASSESSED THE ENTIRE AMOUNT O F SALE CONSIDERATION OF SHARES AS UNDISCLOSED INCOME OF THESE ASSESSEES IN ALL THE THREE CASES. THE AMOUNT OF INCOME ASSESSED IN THE HANDS OF SHRI OM P ARKASH SINGHAL WAS RS.48.21 LAKHS AS AGAINST CAPITAL GAIN OF LESSER AM OUNT DECLARED BY THE ASSESSEE IN REGULAR RETURN OF INCOME. BEING AGGRIE VED THESE ASSESSEES CARRIED . I.T.A. NO2274 275&276/DEL/05 3/6 THE MATTER IN APPEALS BEFORE LD CIT(A) WHO HAS DELE TED THIS ADDITION IN ALL THE THREE CASES ON THE BASIS THAT SINCE THESE TRANSACTI ONS OF PURCHASE AND SALE OF SHARES AND CONSEQUENT PROFIT EARNED WERE DISCLOSED IN THE REGULAR RETURNS FILED WITH THE DEPARTMENT THERE WAS NO QUESTION OF TREAT ING THE SAID SALE TRANSACTION OF DISCLOSED SHARES AS UNDISCLOSED INCOME IN THE CO URSE OF BLOCK ASSESSMENT . NOW THE REVENUE IS IN APPEAL BEFORE US. 4. LD DR OF THE REVENUE SUPPORTED THE ASSESSMENT OR DER. IT IS POINTED OUT BY HIM THAT IN THE COURSE OF STATEMENT THESE THREE AS SESSEES HAD CLEARLY ADMITTED THAT THEY HAVE NOT EFFECTED ANY ACTUAL PURCHASE/SAL E OF SHARES AND HENCE THE ASSESSING OFFICER HAS RIGHTLY ASSESSED THE ENTIRE S ALE CONSIDERATION AS UNDISCLOSED INCOME OF THE BLOCK PERIOD AND IT IS IN LINE WITH THE PROVISIONS OF SECTION 158B(B) OF THE ACT. AS AGAINST THIS LD AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD CIT(A) AND RELIANCE WAS PLACED BY HIM O N THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF RAVI KANT JAIN REPORTED IN 250 ITR 141. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENT CITED BY THE L D AR OF THE ASSESSEE. WE FIND THAT THERE IS NO ALLEGATION OF THE ASSESSING O FFICER IN THE ASSESSMENT ORDER OF ANY OF THESE ASSESSEES THAT THERE WAS ANY ADVERSE M ATERIAL FOUND IN THE COURSE OF SEARCH SUGGESTING THAT ALL THESE TRANSACTIONS OF PURCHASE AND SALE OF SHARES ARE BOGUS. ADMITTEDLY IN THE STATEMENT RECORDED O F THESE ASSESSEES THEY HAD ADMITTED THAT THEY HAD NOT CARRIED OUT ANY ACTUAL P URCHASE/SALE OF SHARES BUT THIS IS AN ADMITTED POSITION THAT ALL THESE TRANSACTIONS WERE DULY REPORTED IN THE REGULAR RETURN OF INCOME FILED BY THESE ASSESSEES B EFORE THE DATE OF SEARCH. AS PER THE PROVISIONS OF SECTION 158BB (1) THE UNDISC LOSED INCOME OF THE BLOCK PERIOD HAS TO BE ASSESSED ON THE BASIS OF EVIDENCE FOUND AS A RESULT OF SEARCH OR REQUISITION OF BOOKS OF ACCOUNTS OR OTHER DOCUMENTS AND OTHER MATERIAL OR INFORMATION MAY ALSO BE CONSIDERED IF THE SAME ARE RELATABLE TO SUCH EVIDENCE FOUND IN THE COURSE OF SEARCH. IN THE PRESENT CASE S THERE IS NO MENTION OF ANY ADVERSE MATERIAL HAVING BEEN FOUND IN THE COURSE OF SEARCH AND THE ADDITION HAS . I.T.A. NO2274 275&276/DEL/05 4/6 BEEN MADE ON THE BASIS OF STATEMENT OF THESE ASSESS EES AND SUBSEQUENT STATEMENTS OF THE BROKERS. WE ARE OF THE CONSIDERED OPINION THAT UNDER THESE FACTS NO ADDITION CAN BE MADE IN THE COURSE OF BLO CK ASSESSMENT ALTHOUGH IN THE COURSE OF REGULAR ASSESSMENT THE ASSESSING OFFICER COULD HAVE MADE ADDITIONS ON THE BASIS OF STATEMENTS OF THE ASSESSEES AND THE SUBSEQUENT ENQUIRIES AND STATEMENTS OF THE BROKERS. THE JUDGMENT OF HON'BLE DELHI HIGH COURT RENDERED IN THE CASE OF RAVI KANT JAIN (SUPRA) IS SQUARELY IN F AVOUR OF THE ASSESSEE AND IT WAS HELD BY THE HON'BLE DELHI HIGH COURT IN THAT CA SE THAT THE ASSESSMENT OF UNDISCLOSED INCOME AS DEFINED IN SECTION 158B(B) IS ONLY RELATABLE TO MATERIAL FOUND AS A RESULT OF SEARCH. IT IS ALSO HELD THAT U NLESS THE MATERIALS ARE UN- EARTHED AS A RESULT OF SEARCH THERE IS NO QUESTION OF ASSESSMENT OF UNDISCLOSED INCOME IN TERMS OF SECTION 158BA IN CHAPTER-XIVB. IT IS ALSO OBSERVED BY HON'BLE DELHI HIGH COURT IN THAT CASE THAT SPECIAL PROCEDURE OF CHAPTER-XIVB INTENDED TO PROVIDE A MODE OF ASSESSMENT OF UNDISC LOSED INCOME WHICH HAS BEEN DETECTED AS A RESULT OF SEARCH. IT IS ALSO HE LD THAT AS PER THE PROVISIONS OF THIS CHAPTER IT IS NOT INTENDED TO BE A SUBSTITUT E FOR REGULAR ASSESSMENT AND THIS IS IN ADDITION TO REGULAR ASSESSMENT ALREADY DONE OR TO BE DONE. HENCE IN THE PRESENT CASE THIS JUDGMENT OF HON'BLE DELHI HIGH COURT IS SQUARELY APPLICABLE BECAUSE IN THE PRESENT CASE INCOME ASSESSED BY THE ASSESSING OFFICER IN ALL THESE THREE CASES IS NOT ON THE BASIS OF ANY MATERI AL FOUND IN THE COURSE OF SEARCH BECAUSE THERE IS NO REFERENCE BY THE ASSESSI NG OFFICER IN THE ASSESSMENT ORDER OF ANY ADVERSE MATERIAL HAVING BEEN FOUND IN THE COURSE OF SEARCH. THE WHOLE ASSESSMENT IN ALL THE THREE CASES IS BASED O N THE STATEMENT OF THE ASSESSEE AS WELL AS SUBSEQUENT ENQUIRY FROM THE BRO KERS AND HENCE AS PER THIS JUDGMENT OF HON'BLE DELHI HIGH COURT THE PROVISION OF CHAPTER-XIVB CANNOT BE INVOKED BECAUSE THERE WAS NO MATERIAL UN-EARTHED AS A RESULT OF SEARCH SUGGESTING ANY UNDISCLOSED INCOME OF THE ASSESSEE. THE CAPITAL GAIN IN QUESTION WAS ALREADY DISCLOSED BY THE ASSESSEE IN REGULAR RE TURN OF INCOME FILED BY THEM BEFORE THE DATE OF SEARCH AND HENCE THIS INCOME IS NOT A DISCOVERY OF SEARCH. THE QUESTION AS TO WHETHER THE IMPUGNED RECEIPTS AR E ON ACCOUNT OF SALE OF . I.T.A. NO2274 275&276/DEL/05 5/6 SHARES OR NOT CAN BE DECIDED IN THE REGULAR ASSESSM ENT BUT THE SAME CANNOT BE QUESTIONED IN THE BLOCK ASSESSMENT PROCEEDINGS. 6. RESPECTFULLY FOLLOWING THIS JUDGMENT OF HON'BLE DELHI HIGH COURT WE HOLD THAT THE ADDITIONS MADE BY THE ASSESSING OFFICER IN THE BLOCK ASSESSMENT OF THESE THREE ASSESSEES IS NOT SUSTAINABLE IN VIEW OF THE FACTS OF THE PRESENT CASES AS DISCUSSED ABOVE. WE THEREFORE DECLINE TO INTER FERE IN THE ORDER OF LD CIT(A) IN ALL THESE THREE CASES. 7. IN THE RESULT ALL THE THREE APPEALS OF THE REVE NUE ARE DISMISSED. 8. NOW WE TAKE UP THE CROSS OBJECTIONS FILED BY TH E ASSESSEE IN ALL THESE THREE CASES. THE GROUNDS RAISED BY THE ASSESSEE IN THESE CROSS OBJECTIONS ARE IDENTICAL AND HENCE WE REPRODUCE THE GROUNDS FROM C ROSS OBJECTION FILED BY THE ASSESSEE IN C.O. NO. 23/DEL/07:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE A DDITION MADE BY LD ASSESSING OFFICER AS UNDISCLOSED INCOME DESPITE THE FACT THAT ADDITION COULD NOT BE MADE UNDER ANY CIRCUMSTANCE EVEN ON ME RIT. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE I NTEREST U/S 158BFA. 9. IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE TH AT GROUND NO.1 IS ONLY FOR SUPPORTING ORDER OF LD CIT(A). REGARDING GROUND NO .2 IN CONNECTION WITH CHARGING OF INTEREST ALSO IT WAS FAIRLY CONCEDED B Y HIM THAT CHARGING OF INTEREST IS CONSEQUENTIAL. OTHERWISE ALSO THE ADDITIONS MADE BY THE ASSESSING OFFICER IN ALL THE THREE CASES WERE ALREADY DELETED BY LD CIT( A) AND WE HAVE CONFIRMED THE ORDERS OF LD CIT(A) IN ALL THE THREE CASES BY DISMI SSING THE APPEALS OF THE REVENUE IN ALL THE THREE CASES AND HENCE THERE IS NO QUESTION OF CHARGING OF ANY . I.T.A. NO2274 275&276/DEL/05 6/6 INTEREST U/S 158BFA(1) OF THE ACT. HENCE THE CROS S OBJECTIONS FILED BY THE ASSESSEE IN ALL THE THREE CASES ARE OF ACADEMIC INT EREST ONLY AND NO ADJUDICATION IS CALLED FOR. 10. IN THE RESULT ALL THE CROSS OBJECTIONS FILED B Y THE ASSESSEE ARE DISMISSED 11. IN THE COMBINED RESULT ALL THE THREE APPEALS O F THE REVENUE ARE DISMISSED AND ALL THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE ALSO DISMISSED. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 30TH JU LY 2010. SD/- SD/- (RAJPAL YADAV) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 30..7.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).