9911796707
TMI Blog2022 (2) TMI 1188X X X X Extracts X X X X X X X X Extracts X X X X ..... EL/2021: 1. "That the order passed by the Ld. Commissioner of Income Tax (Appeals) (herein after referred to as "the Ld. CIT (A)") dated 09.06.2021 is erroneous and bad in law and on facts. 2. That the Ld. Assessing Officer (herein after referred to as "the Ld. AO") as well as Ld. CIT (A) have failed to appreciate the legal position that where the assessee had failed to file any return of income under any of the provisions of section 139 of the Income Tax Act, 1961 (here in after referred to as "the Act") and had also failed even in terms of the notice issued under section 142(1), then the provisions of section 144 are attracted and the Ld. AO has the power to pass an order to the best of his judgment. In such scenario, the assessment order passed under section 143(3) of the Act is illegal and void ab initio. 3. The Ld. CIT (A) has erred in rejecting the retraction filed by the assessee vide affidavit dated 29.10.2013 in respect of the disclosure of Rs. 21.50 crores purportedly made by him without appreciating the fact that, inter alia, the disclosure made was not voluntary; the assessee was not carrying out any business activity in his individual name and therefore, the disc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in law and on facts in sustaining the addition of Rs. 35,59,500/- on account of cash found during the course of search. 6. That the Ld. CIT (A) has erred in law and on facts in sustaining the addition of Rs. 56,43,300/- made by the ld. AO on account of investment made in immovable property on the basis of AIR details inspite of the fact that the Form 26AS was filed by the assessee for the impugned assessment year wherein the AIR information column was blank and it did not have any information relating to the alleged immovable property. 7. That the Ld. CIT (A) has erred in law and on facts in sustaining the addition of Rs. 13,17,000/- made by the Ld. AO on account of cash deposited in the saving bank account on the basis of AIR details inspite of the fact that the Form 26AS was filed by the assessee for the impugned assessment year wherein the AIR information column was blank and it did not have any information relating to alleged cash deposited in any saving bank account of the assessee. 8. That the penalty proceedings initiated by the Ld. AO under section 271AAA and 271F of the Act were invalid and bad in law and thus ought to have been dropped. 9. That the interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aining the addition of Rs. 4,92,00,000/- being share capital and share premium invested by Varad Vinayak Properties Private Limited into the Jakhotia Plastics Private Limited, in the hands of the assessee as his unexplained income or cash. 5.1 That the Ld. CIT (A) has failed to appreciate that there was no incriminating material found during the course of search which suggested that Rs. 4.92 crores was unaccounted income of the assessee. He has also failed to appreciate that the statements recorded during search do not themselves constitute incriminating material and no addition can solely be made on the basis of retracted statement unless there is some incriminating material. 6. That the Ld. CIT (A) has erred in law in sustaining the addition of opening credit balance of Rs. 11,96,75,000/- as on 01.04.2011 mentioned in the seized dairy A/OPJ/03 made by the Ld. AO under section 69A of the Act, inspite of the fact that no document or diary was seized in respect of the impugned assessment year and merely the opening credit balances as on 01.04.2011 were presumed to be loans received during the impugned year and taxed; the presumption under section 132(4A) read with section 292C t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plication. 11. The appellant craves leave to alter, amend or any other grounds of appeal either before or during the course of hearing." A.Y: 2010-11-ITA No. 969/DEL/2021: 1. "That the order passed by the Ld. Commissioner of Income Tax (Appeals) (herein after referred to as "the CIT(A)") dated 09.06.2021 is erroneous and bad in law and on facts. 2. That the search conducted u/s 132 of the Act on the assessee was not a valid search since none of the circumstances provided under clauses (a) to (c) of subsection (1) of section 132 is fulfilled in the case of the assessee. 3. That the ld. CIT(A) has erred in law and on facts in rejecting the ground of the assessee that the notice issued u/s 153A dated 30.04.2013 is defective, incorrect and shows lack of application of mind and since this a jurisdictional defect, the proceedings initiated and the assessment order passed u/s 153A are invalid and void ab initio. 4. That the ld. CIT(A) has erred in rejecting the retraction filed by the assessee vide his affidavit dated 29.10.2013 in respect of disclosure of Rs. 21.50 crores made by him through his statements recorded u/s 132(4) dated 20.01.2012 and u/s 131(1) of the Act dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the impugned assessment year. 5.3 That the ld. AO failed to raise any query or examine the opening credit balances (loans) even though the assessee repeatedly offered to provide the same by way of written submissions. 5.4 That the ld. CIT(A) has also failed to appreciate that the seized diary, A/OPJ/03 did not contain any money, bullion, jewellery or other valuable article or thing therefore the provisions of section 69A of the Act cannot be applied to the impugned addition. 5.5 That the ld. CIT(A) as well as the ld. AO have failed to appreciate the fact that the assessee, Shri Om Prakash Jakhotia was not carrying out any business activity in his individual name and has never shown any business income in his return of income. There was no evidence found during search that the assessee had himself in his individual capacity taken any loans or carried out any business activity. 6. That the ld. CIT(A) has erred in law in sustaining the addition of Rs. 25,20,000/- on account of kickbacks paid to Dalmia Cement, in the hands of the assessee. 6.1 That the ld. CIT(A) has failed to appreciate that there was no incriminating material found during the course of search which sugges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made by him through his statements recorded u/s 132(4) dated 20.01.2012 and u/s 131(1) of the Act dated 08.05.2012. 4.1 That the ld. CIT(A) has failed to appreciate that disclosure made was not voluntary and was incorrect as it was obtained forcefully under coercion and without referring to the assessee the seized documents and without allowing him to consult his tax consultant. The disclosure was not voluntary and was incorrect, can be evident from the fact that the assessee was not carrying any business activity in his individual name and Rs. 5 crores was surrendered to make up for other irregularities which cannot be termed as income under real income concept. 4.2 That the ld. CIT(A) has erred in placing reliance on the order of the Hon'ble Delhi High Court dated 15.04.2019 without appreciating the facts and the ratio decidendi therein. Also the Hon'ble Delhi High Court directed the Assessing Officer to make the assessments afresh in accordance with law. 4.3 That the ld. AO as well as the ld. CIT(A) have failed to appreciate that the disclosure obtained was in contravention of the CBDT Circular dated 10.03.2003 which prohibited the officers from seeking any admission of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding interest under section 234A and 234B had been raised amounting to Rs. 557080. The ld. AO did give credit for tax and interest paid on the income disclosed before the Settlement Commission. Interest charged under section 234B was not correct. The same should have been charged only upto the date of filing the settlement application in view of sub section 2A of section 234B of the Act. 8. That the interest under section 234A had been charged at Rs. 201623 stating that no return was filed in response to the notice under section 153A of the Act dated 21.04.2013. It may be mentioned that for filing settlement application under section 245C 1 of the Act, there was no requirement to file the return of income for A.Y. 2009 10. The settlement application filed on 31.10.2013 disclosing income of Rs. 4,07,600 for A.Y. 2009 10 should have been treated as the date of filing of return of income and the interest, if any, should have been charged accordingly. 9. The appellant craves leave to alter, amend or any other grounds of appeal either before or during the course of hearing 3. The ld. counsel, Mr. Ajay Wadhwa, Advocate on behalf of the assessee also filed an application dated 15.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income under any of the provisions of section 139 and also failed to file the return under section 153A, then the provisions of section 144 are to be invoked and the Assessing Officer has to proceed in accordance with the procedure as per section 144 of the Act and to pass the assessment order to the best of his judgment. In such a case, the assessment order passed under section 153A read with section 143(3) of the Act suffers from incurable jurisdictional infirmity particularly when the Act itself provides for completion of assessment under section 153A read with section 144 of the Act." It is humbly prayed that the above-stated additional ground of appeal be admitted and adjudicated upon by the Hon'ble Tribunal." 4. Similar additional ground has been raised by the assessee for the A.Y 2011-12 vide an application for additional ground dated 15.11.2021 which is not reproduced here for the sake of brevity. Brief Facts of the case: 5. A search and seizure operation u/s 132(1) of the Income tax Act, 1961 (here in after referred to as "the Act") was carried out on 20.01.2012 at the residential premises of the assessee at 3-6-323, Jakhotia House, Basheerbagh Hyderabad-500029 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rein, he made a disclosure of income of Rs. 21.50 crores. He also confirmed the said disclosure in his post search statement recorded u/s 131 of the Act dated 08.05.2012. The break -up of the said disclosure is as under: (Amt. in Rs. lacs) Particulars F.Y. 2010-11 F.Y. 2011-12 Total Cash credits 708.00 700.00 1,408.00 GP earned on sale of raw material, bags & waste - 8.00 8.00 Other income (from plastic business) (balancing figure) - 234.00 234.00 Total 708.00 942.00 1,650.00 Other irregularities (Adhoc) 500.00 Total 2150.00 9 The above disclosure was retracted by the assessee on 29.10.2013 after 1 year 9 months by filing an affidavit. The reason for such delay in retraction was explained by the Ld. AR to be the fact that the assessee repeatedly requested the Assessing Officer to provide him the seized documents vide letters dated 10.05.2013, 22.08.2013 and 24.09.2013 but the Assessing Officer provided the seized documents only on 04.10.2013 and soon after the receipt and perusal of the seized documents, the assessee filed an retraction affidavit on 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 Substantive Addition of cash paid in lieu of accommodation entry of Share Capital and Share Premium as unexplained cash 49200000 49200000 5 Unaccounted cash seized during search 3549500 3549500 6 Unexplained Investment in immovable property (on the basis of AIR details) 5643300 5643300 7 Unaccounted cash deposits in saving bank account (On the basis of AIR details) 1317000 1317000 8 Allegation that No ROI was filed No ROI was filed No ROI was filed No ROI was filed Total Amount of additions 800000 13520000 171395000 68570769 254285769 Break up of Cash Receipts upheld by CIT(A) 58060969 & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s matter is transferred. It was further stated that the assessee's counsel is based in Delhi who has assisted him both in the assessments and in appeal proceedings before the authorities below and, therefore, any dislocation of the matter will also be prejudicial to his interest. The ld. AR also stated that in this matter there has been adjudication by the Income Tax Settlement Commission which was set-aside by the jurisdictional Hon'ble High Court of Delhi and, therefore, in all fairness the matters must be heard by the Tribunal based at Delhi. The assessee also brought to our knowledge the decision of the Hon'ble Bombay High Court in the case of MSPL Ltd. v. PCIT [2021] 436 ITR 199 [21-05-2021] wherein the Hon'ble Court has, inter-alia, held that the Hon'ble President of the Tribunal does not have the power to transfer an appeal from bench in one State/Zone to bench in another State/Zone as no such power is discernible in section 255 of the Act and only if there are multiple benches in one State, the transfer of appeals can take place inter se the benches. The ld. AR further stated that the Hon'ble High Court has held that the bench hearing the matter also does not have the power ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Benches shall hold their sittings. To complete the narrative, we may also refer to sub section (6) of section 255 which clearly says that a proceeding before the Appellate Tribunal shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 and for the purpose of section 196 of the Indian Penal Code. It also says that the Appellate Tribunal shall be deemed to be a civil court for all the purposes of section 195 and Chapter XXXV of the Code of Criminal Procedure, 1898. 37. From a careful analysis of section 255, more particularly sub section (5) thereof, it is not discernible as to how power of the President to transfer a pending appeal from one Bench to another Bench outside the headquarters in a different State can be said to be traceable to this provision.What sub section (5) says is that the Tribunal shall have power to regular its own procedure and that of its various Benches while exercising its powers or in the discharge of its functions. This includes notifying the places at which the Benches shall hold their sittings e.g., a particular Bench at Mumbai may hold its sittings at, say, Thane for a particular period for administrative reasons. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident may by general or special order direct. Sub rule (2) says that where there are two or more Benches of the Tribunal working at any headquarters, the President or, in his absence, the senior Vice President or Vice President of the concerned zone or in his absence the senior most member of the station present at the headquarters may transfer an appeal or an application from any one of such Benches to any other. While sub rule (1) empowers the President to direct hearing of appeals by a Bench by a general or special order, sub rule (2) is more specific. It deals with a situation where there are more than two Benches of the Tribunal at any headquarter; when there are multiple Benches in a headquarter, the President or, in his absence the senior Vice President etc. may transfer an appeal or an application from one of such Benches to any other. Meaning thereby that it is a transfer of an appeal or an application from one Bench to another Bench within the same headquarters. For example, in Mumbai the number of Benches is twelve and in Bangalore, the number of Benches is three. Thus, this provision can be invoked to transfer an appeal from one Bench in Mumbai to another Bench in Mumba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. This, he stated, is evident from the portal of the ITAT, Delhi as well as the ITAT, Hyderabad. The appeals that have been filed by the companies are in respect of the AYs 2010-11 to 2012-13 by M/s Jakhotia Plastics Pvt. Ltd. vide ITA nos. 963, 964 and 965/Del/2021 and in respect of the A.Y 2011-12 and A.Y 2012-13 by M/s Jakhotia Polymers Pvt. Ltd. vide ITA nos. 967 and 979/Del/2021. According to the ld. Counsel, vide these appeals only a single ground has been taken up wherein additions of Rs. 10,90,000/- for the A.Y 2011-12 and Rs. 20,50,000/- for the A.Y 2012-13 in the case of M/s Jakhotia Polymers Pvt. Ltd. and additions of Rs. 55,000/- for the A.Y 2010-11, Rs. 18,00,000/- for the A.Y 2011-12 and Rs. 18,45,000/- for the A.Y 2012-13 in the case of M/s Jakhotia Plastics Pvt. Ltd., have been challenged on the ground that these ad-hoc amounts of income were offered by these companies before the Income Tax Settlement Commission in order to qualify for settlement and as such no real income of the said amounts was earned. According to the ld. Counsel, there was no evidence found in respect of these incomes during the course of search and the income was offered only to qualify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly this is not a connected issue with any of the issues being challenged by the assessee before us. Therefore, there is no need for consolidation of the appeals particularly since no appeal has been filed by the department in respect of the companies or in respect of the assessee till date. 26 We now proceed to decide the issue on merits in respect of the captioned appeals. The ld. counsel of the assessee after narrating the relevant facts and the background of the case, requested that if the appeal for the Assessment Year 2012-13 is taken into consideration, i.e., ITA No.971/DEL/2021, the same will cover most of the issues in all the appeals. The ld. CIT-DR did not raise any objection to the same. We will first take up the legal issue that the assessment orders passed under section 153A/143(3) and 143(3) are bad in law and illegal. 27 The ld. AR pressed into service a legal and jurisdictional issue raised in his ground no. 2 permeating into the AY 2012-13. He challenged the validity of the assessment order passed u/s 143(3) of the Act for the said assessment year in absence of any return of income having been filed u/s 139(1) or in response to notice u/s 142(1) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of search and for which assessment was to be completed as per the normal provisions u/s 143(3) or 144 of the Act. 30.3 For making an assessment under section 143(3), the filing of a return and issuance of notice u/s 143(2) are mandatory as is manifest in the section 143(3) of the Act. 30.4 The Income Tax Act, 1961 provides a separate section 144, which mandates a best judgement assessment or Ex parte assessment. As per section 144 a best judgment assessment has to be made if no return of income has been filed under section 139(1), 139(4) and 139(5) or no return of income is filed in pursuance to notice under section 142(1) or directions issued under section 142(2A) are not complied with or the information asked for under section 143(2) or under section 142(1) is not furnished to the Assessing Officer. If any of the aforesaid conditions are not fulfilled, the assessment has to be made under section 144 as the word used in the said section is 'Shall' for completing the assessment. 30.5 Section 292B of the Act, does not come to the aid of the Assessing Officer since the mistake, defect or omission is not purely technical but is substantive and affects the validity of the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sments are distinct in nature and have distinct consequences which are briefly discussed below: i. Section 144 results in a best judgment assessment which is distinct from an assessment under section 143(3) which is after perusal of return of income and seeking evidences in respect of the incomes and expenditure disclosed in such return of income. A best judgment assessment is made without the benefit of return of income and the Assessing Officer can resort to a rejection of books of account and estimation of income. ii. In a best judgment assessment, the interest is calculated under section 234A of the Act till the date of completion of the assessment whereas in assessment under section 143(3), the terminal date of calculating interest is the date of filing of return. Hence the consequence of a best judgment assessment is pecuniary in nature and in a penal as well. iii. Non-filing of return of income results in penalty u/s 271F and prosecution/s 276CC of the Act. iv. In the case of a best judgment assessment, as per the provision of section 142(3), there is no requirement of any opportunity of being heard to the assessee in respect of the material gathered by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gra/2005; order dated 28.02.2005; g. The Hon'ble Chandigarh ITAT in the case of LAL CHAND & CO. [1986] 24 Taxman 228 (Chandigarh) (Mag.)[31-08- 1985]; h. The Hon'ble Delhi ITAT in the case of Flovel Energy Pvt. Ltd. v. ACIT Devi v. Asstt. CIT in ITA No 6485/DEL/2019; order dated 29.11.2019. 31.2 The Ld. AR further stated that in respect of the A.Y 2009-10 and the A.Y 2011-12, the assessment orders have been passed u/s 153A read with section 143(3) even though undisputedly no returns of income originally u/s 139 as well as u/s 153A were filed in these A.Ys. Therefore, the assessments should have been made u/s 153A read with section 144. The ld. AR placed reliance on the decisions quoted above as well the following decisions wherein it has been held that the section 144 is the only provision where the Assessing Officer could make proceeded to have a best judgment assessment upon the failure of the assessee to file a return even in the case of the search assessments u/s 153A. a. Commissioner of Income-tax, Chennai v. T. Rangroopchand Chordia [2016] 241 Taxman 221 (Madras HC); b. Dr. K.M. Mehaboob v. DCIT [2012] 26 taxmann.com 54 (Kerala HC); c. Ashokji Chanduji Thakor v. PC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of his order has stated that no return of income has been filed by the assessee till the date of the assessment order and has proceeded to assess him under section 143(3) of the Act. Thus, the legal grounds do not require any investigation and the same are being admitted for the purpose of our adjudication. 38 The relevant facts qua this legal and jurisdictional issue raised have already been discussed in detail in the earlier paras and also the detailed submissions made by the parties and the judgments relied upon during the course of hearing have been considered by us. 39 The main argument of the assessee is that the assessment made by the Assessing Officer under section 153A r.w.s. 143(3) ought to be quashed since no return of income under section 139(1)/ 153A was filed by the assessee and, therefore, the assessment could only be made under section 144 of the Act. 40 The Ld. CIT-DR vehemently argued that this is merely a technical defect and is protected by the provisions of section 292B of the Act. According to her, this could be a typographical error or an inadvertent error and no cognizance of the same should be given. The essence of the order needs to be seen which very ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is bound to make the assessment to the best of his judgment. In other words, if a person fails to make the return required by a notice under section 22(2) and he has further not made a return or a revised return under sub-section (3) of the same section, the Income-tax Officer must make an assessment under this provision." 44 The same view has been expressed by the various High Courts and Tribunals relied upon by the ld. Counsel in the following decisions: a. Maya Debi Bansal v. CIT [1979] 117 ITR 125 (Calcutta HC); b. Prabhat Mills Stores Co. Ltd. [1966] 59 ITR 197 (Calcutta)[21-01-1964]; c. CIT v Laxminarain Badridas [1937] 5 ITR 170 (Privy Council)[19-02-1937] d. Gulab Badgujar (HUF) v. Income Tax Officer [2019] 179 ITD 807 (Pune - Trib.) e. Commissioner of Income-tax, Chennai v. T. Rangroopchand Chordia [2016] 241 Taxman 221 (Madras HC) f. Dr. K.M. Mehaboob v. DCIT [2012] 26 taxmann.com 54 (Kerala HC) g. S. Kumar Enterprises (Synfabs) Ltd. v. JCIT [2005] 4 SOT 412 (MUM) h. Des Raj Nagpal [2015] 170 TTJ 37 (Amritsar - Trib.) (UO)[23-03-2015] i. Meenakshi Devi v. Asstt. CIT in ITA Nos. 96/Agra/2004 & 29/Agra/2005; order dated 28.02.2005 (Agra ITAT) j. Mohan L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lone the assessment orders in respect of A.Ys 2012-13, 2011-12 and 2009-10 do not survive and are liable to be quashed. 47 Though we are of the opinion that the assessment orders for the AY's 2009-10, 2011-12 and 2012-13 are invalid and we are not required to go into the merits of the case. However, in respect of the AY 2010-11, the return of income was filed and the assessment was correctly framed under section 153A read with section 143(3) of the Act. Therefore, we are proceeding to adjudicate the other issue raised by the assessee which is common to all the assessment years and will have a bearing on the AY 2010-11. The seized diaries and the income arising therefrom do not belong to the assessee. 48 Another legal issue argued before us is that the seized material A/OPJ/03 and A/OPJ/01 on the basis of which additions have been made in the hands of the assessee does not belong to him and the entries therein do not pertain to him and therefore, the income if at all, cannot be assessed in his hands. This legal issue is common for all the appeals for the A.Ys 2009-10 to 2012-13 and has been raised by the assessee vide ground no. 4.3 for the AY 2012-13, ground nos. 6.2 & 7.1 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not to the assessee. 52 Ld. AR took us through various pages of the seized diary A/OPJ/03 which is enclosed at 1-347 pages of the common PB in order to establish that the income appearing in the seized diaries i.e. A/OPJ/03 and A/OPJ/01, if at all belonged to the various group companies discussed above. i. The assessee in his statement recorded u/s 132(4) dated 20.01.2012 at page 349 of the common PB, clearly stated that he has five companies namely, Jakhotia Polymers Pvt. Ltd., Jakhotia Polysacks Pvt. Ltd., Jakhotia Polyfibres Pvt. Ltd., Raghuram Synthetics Pvt. Ltd. and Jakhotia Plastics Pvt. Ltd. which manufacture Polymers and at page 350 of the common PB, he stated the names of the main clients. It is submitted that the main clients are the clients of the companies and not of the assessee. ii. The assessee further in his statement recorded u/s 131 of the Act on 08.05.2012 at page 357 of the common PB claimed that he is a director in the following group companies: 1. Jakhotia Plastics Pvt. Ltd. 2. Jakhotia Polymers Pvt. Ltd. 3. Vardivinayak Properties Pvt. Ltd. 4. Revathi Synthetics Pvt. Ltd. He, on the same page in response to the question no. 2 stated that Jakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received. These are purchase bills booked in the company against which cash was received. viii. Seized Ledger of Servo enclosed at page no. 173 to 174 of the common PB: Rs. 1,05,60,000/- is a raw material added with PPE Granules for making PPE bags. This is a master batch part of the raw material and clearly belongs to the company. ix. Waste sales ledger enclosed at page no. 190 of the common PB shows the names of Jakhotia Plastics and Jakhotia Polymers. x. On the expenditure side of the amounts i.e. factory wages, office salary, interest on raw material, commission on sales, sales expenses etc. are related to the businesses of the group companies and not the individual assessee. Similarly at page 207 of the common PB, the donation has been paid in cash which clearly shows payment made by Jakhotia Plastics and Jakhotia Polymers. xi. Similarly on page 221 of the common PB is an advertisement ledger which shows the name of the Raghuram, Polyfibre and Jakhotia Polysacks. Seized Ledger of consultancy charges at page no. 227 of the common PB also shows names of Raghuram, Polyfibre and Polysacks. Ledger of Rates & Taxes at page 245 of the common PB shows the names of RSPL (i.e. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks of Shri Om Prakash Jakhotia, how could he give loan to himself and then charge interest. The loan account of Om Prakash Jakhotia is at page 38 of the common paperbook and interest paid to him of Rs. 1,80,000/- is reflected at page 235 of the common paperbook in the Interest Ledger Account . This very clearly shows that these were the books of the companies or other entities and not of Shri Om Prakash Jakhotia. 54 The ld. AR also placed a heavy reliance on the judgement of the Hon'ble Supreme Court in the case of Income Tax Officer v. Ch. Atchaiah [1996] 218 ITR 239 (SC) wherein the Hon'ble Court has unequivocally held the following proposition of law: i. The Assessing Officer can and he must tax the right person and the right person alone. Right person is the person who is liable to be taxed according to law; ii. Section 4(1) of the Income-tax Act, 1961 speaks of levy of Income-tax on total income of every person which necessarily means a person who is liable to pay Income-tax in accordance with law; iii. Where parliament wanted to provide an option or a discretion to the Assessing Officer to assess the person of its choice, it has provided so expressly. Section 183 pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 20.01.2012 and also in his post search statement u/s 131 of the Act dated 08.05.2012 made a voluntary disclosure of undisclosed income of Rs. 21.50 crores on the basis of the seized documents. She also stated that retraction was filed by the assessee after 1 year and 9 months which clearly indicates that it was an afterthought and the same was also rejected by the Hon'ble Delhi High Court in the assessee's own case while disposing off the W.P (C) 11859/2016 dated 15.04.2019. 58 The ld. CIT-DR relied upon the order of the Ld. CIT (Appeals) and stated that the Ld. CIT (Appeals) has passed the order and upheld the additions in the hands of the assessee after verifying the seized documents. 59 We have heard the rival submissions and also perused the relevant findings given in the order of the CIT (Appeals) and the Assessing Officer and the relevant facts placed on record. By way of aforesaid grounds the assessee has stated that the income that has been assessed in the hands of the assessee does not belong to him. The assessee had vide his statement under section 132(4) of the Act dated 20.01.2012 offered to pay tax on undisclosed income of Rs. 21.50 crores. The disclosure was essent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on like the one he had under the 1922 Act. He can, and he must, tax the right person and the right person alone. By 'right person', we mean the person who is liable to be taxed, according to law, with respect to a particular income. The expression 'wrong person' is obviously used as the opposite of the expression 'right person'. Merely because a wrong person is taxed with respect to a particular income, the Assessing Officer is not precluded from taxing the right person with respect to that income. This is so irrespective of the fact which course is more beneficial to the revenue. In our opinion, the language of the relevant provisions of the present Act is quite clear and unambiguous. Section 183 of the Act shows that where the Parliament intended to provide an option, it provided so expressly. Where a person is taxed wrongfully, he is, no doubt, entitled to be relieved of it in accordance with law* but that is a different matter altogether. The person lawfully liable to be taxed can claim no immunity because the Assessing Officer [Income Tax Officer] has taxed the said income in the hands of another person contrary to law. We may proceed to elaborate. 8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth enactments immediately bring out the difference between them. Section 3 of the 1922 Act provided that in respect of the total income of a firm or an AOP, the income-tax shall be charged either on the firm or the AOP or on the partners of the firm or on the members of the AOP individually. It is evident that this option was to be exercised by him keeping in view of the interest of revenue. Whichever course was more advantageous to revenue, he was entitled to follow it. In such a situation, it was generally held that once the ITO opted for one course, the other course was barred to him. But no such option is provided to him under the present Act. Section 4 extracted hereinabove says that income-tax shall be charged on the total income 'of every person' and the expression 'person' is defined in clause (31 )of section 2. The definition merely says that expression 'person' includes, inter alia, a firm and an AOP or a body of individuals whether incorporated or not. There are no words in the present Act which empower the ITO or give him an option to tax either the AOP or its members individually or for that matter to tax the firm or its partners individually. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Jakhotia Spinning Mills Pvt. Ltd. and Revathi Synthetics Pvt. Ltd. who had their registered office in the same building. The assessee is promoter, director or partner in these companies and in his individual capacity has income from salary, rental income and income from other sources only. This fact has been acknowledged by the Assessing Officer at page 3 of his assessment order. According to the assessee the seized diary A/OPJ/03 which contains cash credits, transactions and record of various business transactions does not belong to him in as much as he does not derive any income from business and it is the companies that carry out business. The fact that the companies of the assessee are carrying out business of manufacturing of polymers is also manifest from para 6.1 of the assessment order wherein the AO has mentioned the factum of the companies carrying out business. The turnover of the companies, i.e., Jakhotia Plastics, Pvt. Ltd and Jakhotia Polymers Pvt. Ltd. as per their audited books of account was Rs. 47,45,80,079/- and Rs. 13,97,74,815/- respectively for the year ending 31st March, 2012. Even during the course of examination under section 132(4) of the Act, the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, water charges transport outward etc. There is a statement of affairs drawn as on 20.01.2012 at page 92 of his order shows unsecured loans and its utilization on the asset side. Quite clearly the unsecured loans that have been taken have been used for building construction, land purchase and to fund the business activities as stated in the seized diary A/OPJ/03. The names of J Polysacks, J Polyfibre, Chinnaswami Godown, G Prakash and chit funds as current assets, loans and advances and investment also feature in the said statement of affairs. The CIT(Appeals) besides computing gross profit of Rs. 1,70,02,461/- on undisclosed trading receipts has also computed undisclosed income of Rs. 4,10,58,508/- on account of cash receipts from debtors and other advances, chit funds and cash loans as per the seized diary in the A.Y 2012-13. Then facts are clearly indicatives of business activities of the companies and not the assessee. 67 We have also perused the seized diary A/OPJ/03 enclosed at page nos. 1-347 of the common paper book Page 82 contains the ledger account of J Polyfibre wherein it comes out that cheques have been issued by J Polyfibre against which cash has been received out ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the companies/firm itself. 68 There is another very important observation at page 38 of the common paper book which contains an entry of a cash loan in the diary. There is a sum of Rs. 15 lakhs as cash loan given by Om Prakash Jakhotia. This shows that Om Prakash Jakhotia had given a loan of Rs. 15 lakhs which also is indicative of the fact that all the entries contained in the seized diary A/OPJ/03 do not belong to him. Why would Om Prakash Jakhotia give loan to himself and record the same. This is also a reflection that the books do not pertain to Om Prakash Jakhotia but perhaps belong to the companies. It is reiterated that the books of account that has been found are for the financial year 2011-12 (A.Y 2012-13) up to the date of search i.e. on 20.01.2012 only and it also contains the opening balances of cash credits and debtors/loans and advances as on 01.04.2011. Books for the earlier period were not found during the course of search. However from the statement of affairs drawn by the assessee on the basis of seized diary A/OPJ/03, it clearly comes out that the money was used for the business of the companies and the land and other investments were made also for the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diary A/OPJ/03 and also from the orders of the authorities below i.e. Assessing Officer and the Ld. CIT (Appeals), it clearly comes out that the diary does not pertain to the assessee and income does not belong to him in his individual capacity. Since it does not belong to him, it cannot be taxed in his hands. Therefore, the income confirmed by the CIT (Appeals) in the hands of the assessee based on the seized diary A/OPJ/03 in the AY2009-10 to AY 2012-13 cannot be upheld. The amounts of Rs. 1,10,00,000/- on account of addition of cash receipts from undisclosed sources u/s 69A and addition of Rs. 25,20,000/- on account of kick-backs paid to Dalmia Cement made in the AY 2010-11 also arise from the seized diary A/OPJ/03 and since the entries in the seized diary do not belong to the assessee, the said additions stands deleted. Therefore, the income confirmed by the CIT (Appeals) in the hands of the assessee based on the seized diary A/OPJ/03 in the AY2009-10 to AY 2012-13 cannot be upheld. The assessee thus gets relief of Rs. 5,80,60,969/-, Rs. 11,96,75,00/-, Rs. 1,10,00,000/- and Rs. 8,00,000/- for AYs 2012-13, 2011-12, 2010-11 and 2009-10 respectively. AY 2012-13: 72 Ground no. 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iples of natural justice. 77 The ld. AR also showed us the Form 26AS of the assessee for the impugned A.Y which contained a column titled 'AIR information' which shows that there is no transaction of Rs. 56,43,300/- reflecting on account of unexplained investment in immovable property and Rs. 13,17,000/- on account of cash deposit in saving bank account. Thus, the ld. AR contended that these additions are baseless and are made without application of mind and therefore, deserve to be deleted. He also stated that the Form 26AS was also filed before the CIT(A) who chose to remain silent on the same. 78 The ld. CIT-DR relied upon the findings of the CIT(Appeals) on the impugned additions. 79 We find that these two additions were made by the Assessing Officer on the basis of AIR information which was not confronted to the assessee at the stage of assessment proceedings and also at the first appeal stage. Also, as per the Form 26AS enclosed as Annexure-I to the synopsis, the Form does not contain any such information. Hence, the additions of Rs. 56,43,300/- and Rs. 13,17,000/-deserve to be deleted. A.Y 2011-12: 80 Ground no. 5 relates to the addition on account of unexplained invest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Assessing Officer has added this amount based on the statement given by the assessee during the course of search u/s 132(4) of the Act on 20.01.2012. 87 The assessee has already retracted from the statement made during the course of search giving cogent reasons for the same vide his affidavit dated 29.10.2013. Besides, there is nothing to show that it is the assessee's money which has come in by way of the share capital in M/s Jakhotia Plastics Private Limited which is a separate legal entity and has robust business activities. The share capital was received by M/s Jakhotia Plastics Pvt. Ltd. from M/s Varad Vinayak Properties Pvt. Ltd through account payee cheques and the seized documents do not contain anything that suggest that any cash was given by the assessee in lieu of the share capital. We fail to understand how addition of the share capital and share premium can be made in the hands of the assessee especially when there is no evidence of any unexplained investment having been made by the assessee or any credit having been received by the assessee in his books of account. The cash credit has been received by M/s Jakhotia Plastics Pvt. Ltd. from a source which is compl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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