2015 (3) TMI 544 - HC - Income Tax

Addition pertaining to the profit - unaccounted sales - addition made on the basis of diary found found from the almirah of Shri Dinesh Kumar, disgruntled employee - A.O. estimated income by applying n.p. @12% restricted to @ 6.5% by ITAT - Held that - key of the almirah was provided at the time of search by Sri Rakesh Goyal and the same was seized. Later, the almirah was opened and incriminating material was found therein. The entry made in the seized document was already reflected in the books of account. The said slip can be treated as 'Yaaddast Parcha' i.e. memory slip. There was no sale out side the books so, there was no occasion to estimate the turnover or n.p., hence, the Tribunal has rightly applied the n.p. rate @ 6.5% which was accepted by the Department in the earlier years and the same appears reasonable in the peculiar facts and circumstances of the case. Moreover, estimation of n.p. rate is a question of fact, which was rightly decided by the Tribunal, being a final fact finding authority. - Decided against revenue. Unexplained deposit on various dates in the current account No.4515 in the Oriental Bank of Commerce - Tribunal deleted the addition by observing that the said entry pertaining to the deposit were duly reflected in the books of account - Held that - The books of account were seized during the course of search and entries were duly reflected at that time. The entries were also reflected in the excise record pertaining to the sale in-cash and the availability of cash with the assessee on the date of cash deposit in the bank. When it is so, then we find no reason to interfere with the impugned order passed by the Tribunal and the same is hereby sustained along-with the reasons mentioned therein. - Decided in favour of assessee. Unexplained deposit in the form of bid money - Held that - addition of ₹ 4 lacs was made by the A.O. pertaining to the payment through Shri Umesh Gupta. The Tribunal has confirmed the addition of ₹ 4 lacs. When it is so, then there is no occasion for the department to have any grievance by taking this ground in the appeal. The ground was decided by the Tribunal in favour of the Department and it shows that the substantial questions of law have been framed in a casual manner by the department. Therefore, this question neither adjudicated nor any answer is provided. - Decided against assessee. Unexplained investment in Saharanpur Associates u/s 69 - Tribunal given the entire relief to the assessee - Held that - Neither the copies of the documents on which basis the addition was made for ₹ 15,25,000/- confronted to the assessee nor any other material was brought on record, which will justify the addition. So, no adverse inference can be drawn with regard to entry of ₹ 15,25,000/- wrongly shown pertaining to the assessee. It is a finding of fact that no name of the assessee was mentioned in the documents on which basis the addition was made. Moreover, it is a question of fact and in the absence of material evidence, we find no reason to interfere with the impugned order and the same is hereby sustained along-with the reasons mentioned here - Decided against revenue. Capital gain on sale of share - Tribunal deleted the addition holding that the capital gain arising out of sale of share was duly shown during the year 1992-93, while filing regular return - Held that - when the capital gain on sale of share was duly shown in the assessment year 1992-93, then there is no question to make addition, hence the order passed by the Tribunal is hereby sustained along-with the reasons mentioned herein. - Decided against revenue. Addition on bogus declaration in VDIS in the name of assessee's wife namely Smt. Parul Goyal - Held that - wife of the assessee namely Smt. Parul Goyal had availed the benefit of VDIS Scheme, 1997 and disclosed jewellery of ₹ 18,57,384/-. The A.O. observed that the declaration of VDIS was not genuine. But the CIT(A) as well as the Tribunal held that the VDIS declared in the name of the wife of the assessee was duly accepted by the department. When it is so, then there is no question for making the addition again. When the amount was bogus in the VDIS then there is no occasion to make any addition, specially when declaration was accepted by the Department. - Decided against revenue. Investment and income from the money lending business - addition on the basis of loose papers marked as pages 22 and 25 found during the course of search - Tribunal upheld CIT(A)'s order to delete the addition by observing that the said papers were deaf and dumb documents as no details were mentioned except amount and also no name was mentioned - Held that - As the Tribunal observed that these documents are simple deaf and dumb documents, which cannot be considered for making any addition, specially, when no incriminating evidence was produced. When it is so, then we find no reason to interfere with the order passed by the Tribunal and the same is hereby sustained along-with the reasons mentioned herein. - Decided against revenue. Addition on account of diversion of income in the name of wife of the assessee - grant of relief - Held that - y considering the rival submission, we are of the opinion that the assessee and Smt. Payal Goyal are the husband and wife in the bedroom, but for the purpose of income tax they are separate and they have filed their separate return since long, which were accepted by the department. When it is so, then there is no justification to make addition. - Decided against revenue.

Summary

Issues Involved:
1. Deletion of Rs. 48 lacs addition by ITAT.
2. Deletion of Rs. 28,73,759/- addition by ITAT.
3. Deletion of Rs. 42,15,000/- addition by ITAT.
4. Deletion of Rs. 4 lacs addition by ITAT.
5. Deletion of Rs. 23,75,000/- addition by ITAT.
6. Deletion of Rs. 20 lacs addition by ITAT.
7. Deletion of Rs. 10,11,885/- addition by ITAT.
8. Deletion of Rs. 18,57,038/- addition by ITAT.
9. Deletion of Rs. 1,47,000/- addition by ITAT.
10. Deletion of Rs. 2,75,000/- addition by ITAT.
11. Deletion of Rs. 67,50,000/- addition by ITAT.
12. Deletion of Rs. 4,37,569/- addition by ITAT.
13. Quashing of notices under Section 148/147.

Detailed Analysis:

1. Deletion of Rs. 48 lacs Addition by ITAT:
The ITAT deleted the addition of Rs. 48 lacs made by the A.O. based on a diary found during a search operation. The A.O. had estimated the turnover and applied a net profit rate of 12%. However, the ITAT, as the final fact-finding authority, observed that the A.O.'s estimation was not in accordance with the principles of business income computation. The ITAT applied a net profit rate of 6.5%, which was consistent with previous years and accepted by the department. The court upheld this decision, noting that the key of the almirah was provided by the director, and the incriminating material was already reflected in the books of account.

2. Deletion of Rs. 28,73,759/- Addition by ITAT:
The A.O. made an addition based on a balance shown in a seized document. The ITAT deleted the addition, noting that the balance shown in loose papers could not be considered in block assessment, especially when the return was already on record for the block period. The court upheld this decision, stating that the books of account were not rejected under Section 145 of the Act.

3. Deletion of Rs. 42,15,000/- Addition by ITAT:
The A.O. added Rs. 42,15,000/- based on unexplained deposits in a bank account. The ITAT deleted the addition, observing that the entries were duly reflected in the books of account and excise records. The court upheld this decision, finding no reason to interfere.

4. Deletion of Rs. 4 lacs Addition by ITAT:
The A.O. added Rs. 4 lacs on account of unexplained deposit in the form of bid money. The ITAT confirmed the addition, and the court noted that the department had no grievance as the ground was decided in favor of the department.

5. Deletion of Rs. 23,75,000/- Addition by ITAT:
The A.O. made an addition of Rs. 23,75,000/- based on a diary entry related to M/s Saharanpur Associates. The ITAT deleted the addition, noting that the details were not confronted to the assessee, and no material evidence justified the addition. The court upheld this decision.

6. Deletion of Rs. 20 lacs Addition by ITAT:
The A.O. added Rs. 20 lacs on account of a gift. The ITAT deleted the addition, noting that the gift was disclosed in regular assessment. The court upheld this decision, stating that the gift tax return and regular return were duly filed.

7. Deletion of Rs. 10,11,885/- Addition by ITAT:
The A.O. added Rs. 10,11,885/- on account of capital gain. The ITAT deleted the addition, noting that the capital gain was shown in the assessment year 1992-93. The court upheld this decision.

8. Deletion of Rs. 18,57,038/- Addition by ITAT:
The A.O. added Rs. 18,57,038/- on account of a bogus VDIS declaration. The ITAT deleted the addition, noting that the VDIS declaration was accepted by the department. The court upheld this decision.

9. Deletion of Rs. 1,47,000/- Addition by ITAT:
The A.O. added Rs. 1,47,000/- on account of gifts received by minor children. The ITAT deleted the addition, noting that gift tax returns were filed. The court upheld this decision.

10. Deletion of Rs. 2,75,000/- Addition by ITAT:
The A.O. added Rs. 2,75,000/- based on loose papers found during a search. The ITAT deleted the addition, noting that the documents were "deaf and dumb" with no details. The court upheld this decision.

11. Deletion of Rs. 67,50,000/- Addition by ITAT:
The A.O. added Rs. 67,50,000/- based on an investment in Thrill Hotel Pvt. Ltd. The ITAT deleted the addition, noting that the addition should be in the hands of Shri Nand Kishore Goyal, not the assessee. The court upheld this decision.

12. Deletion of Rs. 4,37,569/- Addition by ITAT:
The A.O. added Rs. 4,37,569/- on account of income diversion in the name of the assessee's wife. The ITAT deleted the addition, noting that the wife had filed regular returns. The court upheld this decision.

13. Quashing of Notices under Section 148/147:
The court quashed the notices under Section 148/147, noting that when the addition is deleted on merit, there is no question to issue further notice for reopening the assessment.

Conclusion:
The court answered all substantial questions of law in favor of the assessee and against the department, dismissing the department's appeals and allowing the writ petitions.