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Shri Pawan Kumar Bansal,A-156, First Floor, Friends Colony,New Friends Vs. Deputy Commissioner of Income Tax,
October, 09th 2014
               IN THE INCOME TAX APPELLATE TRIBUNAL
                                 `E' : NEW DELHI
                     DELHI BENCH `E

          BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND
                               GARG, JUDICIAL MEMBER
           SHRI CHANDRA MOHAN GARG,

                            No.5201/Del/2010
                        ITA No.
                                        2007-08
                      Assessment Year : 2007-

Shri Pawan Kumar Bansal,       Vs.    Deputy Commissioner of
A-156, First Floor,                   Income Tax,
      Friends Colony,
New Friends                           Circle-16,
                                      Circle-
New Delhi ­ 110 019.                  New Delhi.
PAN : AAMPB1879C.
     (Appellant)                          (Respondent)

                            No.5375/Del/2010
                        ITA No.5375/Del/2010
                                        2007-08
                      Assessment Year : 2007-

Assistant Commissioner of      Vs.    Shri Pawan Kumar Bansal,
Income Tax,                           A-156, First Floor,
        Circle-
          rcle-16,
Central Circle                        New Friends Colony,
New Delhi.                            New Delhi ­ 110 019.
                                      PAN : AAMPB1879C.
    (Appellant)                           (Respondent)

                            No.5374/Del/2010
                        ITA No.5374/Del/2010
                                        2007-08
                      Assessment Year : 2007-

Assistant Commissioner of      Vs.    Shri Mahesh Kumar Gupta,
        Tax,
Income Tax,                           85, Rajdhani Enclave,
        Circle-16,
Central Circle-                       Delhi ­ 110 092.
New Delhi.                            PAN : AAAPG8231D.
     (Appellant)                          (Respondent)

            Assessees by        :    Dr. Ram Samujh, Advocate.
            Revenue by          :    Shri Gunjan Prashad, CIT-DR.

                                ORDER

PER G.D. AGRAWAL, VP :
ITA Nos.5201/Del/2010 & 5375/Del/2010 ­ Cross appeals in the case of
Shri Pawan Kumar Bansal :-

     These cross appeals are directed against the order of learned
CIT(A)-II, Delhi dated 23rd September, 2010 for the AY 2007-08.
                                       2                       ITA-5201/Del/2010 &
                                                                           2 others




2.   In   assessee's   appeal   i.e.       ITA   No.5201/Del/2010,   following
grounds have been raised:-


      "1. That on the facts and circumstances of the case,
      the ld.CIT(Appeals) had erred in law and on facts by not
      allowing the full relief for which appellant was legally
      entitled.

      2. That on the facts and circumstances of the case,
      the ld.CIT(Appeals) had erred in law and on facts by
      upholding the addition of Rs.27.58 lacs (47.58-20 lacs
      disclosed) on adhoc basis by ignoring the fact that it
      was proved before him that in loose papers Annexures
      A-6 and 16 totaling to Rs.47.58 lacs no nature of
      payment and relation with appellant was mentioned.

      3. That on the facts and circumstances of the case,
      the ld.CIT(Appeals) had erred in law as well as on facts
      by upholding the addition of Rs.27.58 lacs by ignoring
      the facts that it was proved before him that the dates of
      payments mentioned in loose papers of Annexures 6
      and 16 were 13.5.2005, 12.5.2005, 10.5.2005 and
      14.5.2005 which pertained to A.Y. 2006-07. Hence, the
      ld.CIT(Appeals) decision for upholding the addition of
      Rs.27.58 lacs based on such loose papers in A.Y. 2007-
      08 is totally illegal.

      4. The assessee prays leave to add, alter, amend,
      modify or delete all or any of the grounds of appeal on
      or before the date of hearing of appeal."

3.   In the Revenue's appeal, i.e. ITA No.5375/Del/2010, following
grounds have been raised:-


      "1. On the facts and in the circumstances of the case,
      the ld.CIT(A) has erred in deleting the addition of
      Rs.3,07,00,000/- on account of undisclosed income
      admitted by Shri Pawan Kumar Bansal in his statement
      recorded during the course of search.

      2. The CIT(A) has erred in law in deleting the addition
      of Rs.3,45,00,000/- made on protective basis in his hand
      on account of Shri Mahesh Kumar Gupta and also
                                    3                     ITA-5201/Del/2010 &
                                                                      2 others


         deleted the addition of Rs.3,45,00,000/- made
         substantive in the hands of Shri Mahesh Kumar Gupta.

         3. The CIT(A) has erred in law in not confirming the
         addition in any hands.

         4. (a)     The order of the CIT(A) is erroneous and not
         tenable in law and on facts.

         (b) The appellant craves to add, alter or amend any/all
         of the grounds of appeal before or during the course of
         the hearing of the appeal."

4.   At the time of hearing before us, it is submitted by the learned
CIT-DR that there was search and seizure operation under Section 132
of the Income-tax Act, 1961 in the case of M/s Capital Meter group of
cases.    The assessee belonged to the said group.      The search had
taken place at the assessee's premises on 26th June, 2006. That on 1st
September, 2006, a letter was filed duly signed by the assessee in
which an income of `7 crores was disclosed. Such letter is at page 59
of the paper book. The letter is on the letter head of the company in
which assessee is a director.     The letter filed by the assessee is a
voluntary act by which the additional income of `7 crores was
disclosed by the assessee. That in the case of a surrender by way of
filing the letter, it cannot be claimed by the assessee that the
surrender was obtained under coercion, pressure or inducement
because the submission of the letter is purely a voluntary act of the
assessee. That on 8th September, 2006, the statement of the assessee
was recorded in which he reiterated the surrender made vide letter
dated 1st September, 2006. Again, the statement was recorded on 12th
September, 2006 in which again the assessee reiterated and affirmed
the voluntary disclosure and also furnished the breakup of the
disclosure in two names partly in the name of the assessee and partly
in the case of Mahesh Kumar Gupta. Thus, the surrender of income
was by voluntary filing of a letter and which was reaffirmed in two
consecutive statements. The assessee and Shri Mahesh Kumar Gupta
                                   4                      ITA-5201/Del/2010 &
                                                                      2 others


filed the return of income.    In the return of income, the assessee
disclosed an additional income of only `20 lakhs which was in fact for
unexplained cash. No additional income was disclosed by Shri Mahesh
Kumar Gupta. No satisfactory explanation was given by the assessee
for non-disclosure of the income as per surrender made.       Therefore,
the Assessing Officer made an addition of `3,35,00,000/-(`3,55,00,000
disclosed as per statement dated 12th September, 2006 minus
`20,00,000/- disclosed in the return of income). The Assessing Officer
also added `3,45,00,000/- on protective basis in the hands of the
assessee for the income of `3,45,00,000/- disclosed by the assessee in
the statement dated 12th September, 2006 in the name of Shri Mahesh
Kumar Gupta.     In the assessment of Shri Mahesh Kumar Gupta, the
sum of `3,45,00,000/- was added on substantive basis. He submitted
that the CIT(A), without properly considering the facts of the case and
the legal position, sustained the addition at `27.58 lakhs being the
income as per Annexure A-6 to A-16 found and seized at the time of
search.   Accordingly, he allowed the relief of `3,07,42,000/- to the
assessee. He also deleted the addition of `3,45,00,000/- made in the
hands of the assessee on protective basis. The addition made in the
case of Shri Mahesh Kumar Gupta on substantive basis was also
deleted by the CIT(A).


5.    It is submitted by the learned CIT-DR that there was no formal
retraction of the disclosure of the income by the assessee but
impliedly, by not disclosing the income in the return of income, the
disclosure was retracted. He submitted that the filing of the return was
almost after two years of the surrender made by the assessee and,
therefore, the retraction after such a huge time gap cannot be and
should not be accepted as a proper retraction of the statement given
at the time of search. In support of this contention, he relied upon the
following decisions:-
                                  5                      ITA-5201/Del/2010 &
                                                                     2 others


1.   Carpenters Classics (Exim) (P.) Ltd. Vs. DCIT ­ [2007] 108 ITD
     142 (Bang.).
2.   DCIT, Circle-2(1) Vs. Bhogilal Mulchand ­ [2005] 96 ITD 344
     (Ahd.).
3.   Hiralal Maganlal & Co. Vs. DCIT ­ [2005] 96 ITD 113 (Mum.).
4.   Greenview Restaurant Vs. ACIT ­ [2003] 263 ITR 169 (Gauhati).
5.   V. Kunhambu and Sons Vs. CIT ­ [1996] 219 ITR 235 (Kerala).
6.   MDLR Resorts (P) Ltd. & Ors. Vs. CIT & Ors. ­ [2014] 265 CTR
     (Del) 356.


6.   He further submitted that the Revenue is not required to bring
the evidence for corroborating the income surrendered by the
assessee in the statement recorded at the time of search.               He,
therefore, submitted that the order of learned CIT(A) should be
reversed and that of the Assessing Officer may be restored.


7.   Learned counsel for the assessee, on the other hand, stated that
the search had taken place at the assessee's premises on 26.07.2006
and the panchnama was drawn.          However, the search was not
completed and one bank locker was sealed. The department was not
concluding the search and was pressurizing the assessee company to
disclose huge income. That Shri Pawan Kumar Bansal in his capacity
as CEO of Capital Power Systems Ltd. filed a letter dated 1st
September, 2006 surrendering the additional income of `7 crores to
avoid litigation and buy peace of mind subject to non-initiation of
penalty proceedings or prosecution.    Thereafter, the statement was
recorded in which also, the assessee clarified that the income is being
surrendered on behalf of Capital group of companies.          In the final
statement dated 12th September, 2006, the bifurcation of the income
was given as Shri Pawan Kumar Bansal - `3,55,00,000/- and Shri
Mahesh Kumar Gupta - `3,45,00,000/-.      Thereafter, immediately on
next day, the bank locker was opened and the search was formally
                                   6                     ITA-5201/Del/2010 &
                                                                     2 others


concluded.   That though the assessee does not have any direct
evidence of coercion or pressure for disclosure of income but the fact
that the initial search took place on 26th July, 2006 and the same was
not concluded till the assessee made the surrender of the income, it
gives sufficient circumstantial evidence that there was pressure on the
assessee to disclose the income. He further submitted that when the
assessee consulted his counsel while filing the return of income, it
came to the knowledge of the assessee that the surrender made by
him on behalf of the company is not binding on him because it was
neither a voluntary surrender of income by the assessee nor it was
during the course of statement recorded under Section 132(4).
Moreover, since the assessee was not carrying on any business in his
individual capacity, there was no income belonging to the assessee.
He, therefore, did not disclose any additional income in his return of
income except the sum of `20 lakhs which was on account of cash
found at the residence of Vikram Bansal amounting to `20 lakhs. He,
therefore, submitted that the addition made by the Assessing Officer
on the basis of statement dated 12th September, 2006 was rightly
deleted by the CIT(A).   To that extent, the order of learned CIT(A)
should be sustained.





8.   We have carefully considered the submissions of both the sides
and perused relevant material placed before us. The undisputed facts
are that there was search and seizure operation under Section 132 of
the Act in the case of Capital Meter group. The assessee is a director
and CEO of Capital Power Systems Ltd., one of the companies in
Capital Meter group.     It is stated by the learned counsel that
substantially, the search was concluded the very day and panchnama
was also drawn. That a restraint order was issued on the said day i.e.
26th July, 2006 in respect of locker No.133 maintained with State Bank
of Patiala, New Friends Colony, New Delhi in the name of Smt. Madhuri
Bansal. The said locker was opened on 13th September, 2006 and the
                                         7                         ITA-5201/Del/2010 &
                                                                               2 others


panchnama was drawn and restraint order was also vacated. That the
surrender of `7 crores was made by a letter dated 1st September, 2006,
copy of which is placed at page 59 of the assessee's paper book. Since
the entire basis of the disputed addition before us is this letter dated
1st September, 2006, the same is reproduced below for ready
reference:-


       "Capital Power Systems Ltd.
       Corporate Office & Works :
       B-40, Sector-IV, Noida ­ 201301 (U.P.) India, Ph : 0120-
       2542904/5/6/7 Fax : 0120-2520708

       CPS/IT/General/2006-07
                                                      1st September, 2006

       The Additional Director of Income Tax (Investigation),
       Unit-II,
       ARA Centre,
       Jhandewalan,
       New Delhi.

       Sub : Surrender of Income.

       Dear Sir,

       With reference to search on 26th & 27th July which is yet to be
       concluded at our various premises, we Capital Power Systems
       Limited hereby agree to voluntarily surrender Additional Income of
       Rs.7,00,00,000.00 (Rs. Seven Crores Only) to avoid litigation and
       buy peace of mind subject to non-initiation of penalty or
       prosecution or other coercive actions as per provisions of law, on
       behalf of the company, its Directors, Senior Executives, their
       spouse, family members and relatives including other companies,
       firms in which such persons are partners, directors or interested.
       The detailed letter and specific assessee-wise details shall be
       submitted to your goodself after going through seized material.

       Thanking you,
       Yours truly,
       for Capital Power Systems Ltd.
       Sd/-
       (Pawan Kumar Bansal)
       C.E.O."

9.   From the above letter, it is evident that the letter was written on
the letter head of Capital Power Systems Ltd. In the body of the letter,
it is mentioned "we Capital Power Systems Limited hereby agree to
voluntarily surrender additional income of Rs.7,00,00,000/-". The letter
                                    8                      ITA-5201/Del/2010 &
                                                                       2 others


is signed by Shri Pawan Kumar Bansal as CEO of Capital Power
Systems Ltd. Thus, the disclosure of `7 crores was by Capital Power
Systems Ltd. and not by Shri Pawan Kumar Bansal in his individual
capacity. That on 8th September, 2006, the statement of Shri Pawan
Kumar Bansal was recorded.      The entire statement is related to the
disclosure of `7 crores, therefore, the same is reproduced below:-


       "Q-1:      Please identify yourself?
       Ans. I Pawan Kumar Bansal S/o Sh. Nihal Chand Kejriwal
       R/o A-156, New Friends Colony, New Delhi.

       Q-2: During the course of search proceedings in the
       Capital Group of cases on 26-7-2006, a number of
       incriminating documents/diaries/papers have been
       found and seized, which indicate that you have
       undisclosed income, which is not recorded in the
       regular book of a/cs.       Do you want to offer any
       explanation regarding these documents and the
       transactions enumerated therein?
       Ans. I have already filed a letter dated 1-9-06 vide,
       which I on behalf of the Capital Group of companies has
       voluntarily offered an additional income of Rs.7 (seven)
       crores. As the search proceedings in our group of cases
       are yet to be concluded as a number of restraints are
       yet to be lifted and this statement being recorded u/s
       132(4) of the I.T. Act 1961, I would like to take the
       benefit of explanation 5 to section 271C and I once
       again reiterate my earlier statement made vide letter
       dated 1-9-06 and voluntarily offered an additional
       income of Rs.7 crore (seven crores) to avoid litigation
       and buy peace of mind subject to non initiation of
       penalty or prosecution or other coercive actions as per
       provision of law, on behalf of the company, its directors,
       senior executives, their spouse, family members and
       relatives including other companies, firm in which such
       persons are partners, directors or interested.

       Q-3: Kindly give the assessee wise details of this
       disclosure?
       Ans:       The same will be provided after go through
       the seized material.

       Q-4: Kindly give the source of generation of this Rs.7
       crores of additional income?
                                       9                         ITA-5201/Del/2010 &
                                                                             2 others


        Ans: The detailed explanation regarding the source of
        this additional income of Rs.7 crore will be submitted
        later on after going through the seized material. In
        general this additional income of Rs.7 crores have been
        generated through different transactions conducted
        outside the regular books of accounts.

        Q-5: Do you want to say anything else?
        Ans: No.
        The above statement has been given by me voluntarily
        out of my free will without any pressure, force,
        coercion, undue influence. I have read over the above
        statement and found that it is correctly recorded and I
        stand by the above statement."

10.    From the above, it is evident that in response to question No.2, it
has been stated by the assessee that Shri Pawan Kumar Bansal
disclosed the income on behalf of Capital Group of companies.                     In
response to question No.8, it was also mentioned that the details of the
disclosure can be given by the assessee only after going through the
seized material. The same was reiterated in response to question No.4
also. Thus, from the entire statement, it is evident that the disclosure
was made by Shri Pawan Kumar Bansal for an on behalf of the Capital
Group of companies due to undisclosed income as may be represented
by the seized material. As per this statement also, the disclosure is not
in the individual capacity of Shri Pawan Kumar Bansal.               Again, the
statement of Shri Pawan Kumar Bansal was recorded on 12th
September, 2006. This statement is also reproduced below for ready
reference:-


      "Q-1: Please identify yourself?
      Ans:   I Pawan Kumar Bansal S/o Sh. Nihal Chand Kejriwal aged
      about 45 years and r/o A-156, New Friends Colony, New Delhi.

      Q-2:    During the course of search action u/s 132(1) of the I.T. Act
      1961, on 26-7-2006, at your business as well as residential
      premises, a number of documents/loose papers etc. have been
      seized. These documents are being duly perused by you. You are
      hereby given an opportunity to describe and explain the contents
      pertaining to the undisclosed income of the group?
                                          10                                    ITA-5201/Del/2010 &
                                                                                            2 others


     Ans:    Yes, I have gone through very carefully all the seized
     papers and documents. I reiterate my earlier submission stated
     vide letter dated 1.9.2006 and the statement subsequently given
     u/s 132(4) on 8.9.06 and voluntarily after an additional income of
     Rs.7,00,00,000/- (Rs. Seven crores).

     Q-3:    Give the details of these additional income of
     Rs.7,00,00,000/- (Rs. Seven crores), i.e. the details of the source of
     this money and the details of its investment?
     Ans:    This additional income of Rs.7 crores was generated in
     different years during the block period from undisclosed/or
     unaccounted dealings in various property transactions and the said
     income of Rs.7 crores has been earned by me and Sh. Mahesh
     Kumar Gupta (Director-Capital Power Systems Ltd.).                The
     bifurcation is as under:-

             Name                                   Undisclosed income
     1.      Sh. Pawan Kumar Bansal                 Rs.3,55,000,00/-
     2.      Sh. Mahesh Kumar Gupta                 Rs.3,45,000,00/-
                         Total                      Rs.7,00,000,00/-

     The above money of Rs.7 crores, received on account of
     undisclosed income from unaccounted property dealings have been
     invested in share capital/cash found. The investment have been
     made by me and Sh. Mahesh Kumar Gupta and the details are as
     follows:-

      Name                                 Undisclosed investment
1.    Sh. Pawan Kumar Bansal               A. Cash found at the residence of
                                           Sh. Vikram Bansal amounting to
                                           Rs.20,000,00/-.
                                           B. Investment in share capital of
                                           various companies amounting to
                                           Rs.3,35,000,00/-
                                           -----------------------------------------------
                                           Rs.3,55,000,00/-

2.    Sh. Mahesh Kumar Gupta             Investment in share capital of
                                         various companies amounting to
                                         Rs.3,45,000,00/-
                                                -------------------------------------------------
                                 Total          Rs.3,45,000,00/-
                          Total of 1 and 2 = Rs.7,00,000,00/-

     Q-4:    Do you want to say anything else?
     Ans:    This statement given by me is final and I understand that
     no penalty or prosecution proceedings against me and the group
     will be initiated in relation to the afore stated voluntarily
     disclosure of additional income of Rs.7 crores.

     The above statement has been given by me voluntarily out of my
     free will without any pressure, force, coercion, undue influence. I
     have read over the above statement and found that it is correctly
     recorded and I stand by the above statement."
                                   11                      ITA-5201/Del/2010 &
                                                                       2 others




11.   In response to question No.2, Shri Pawan Kumar Bansal stated "I
reiterate my earlier submission stated vide letter dated 1.9.2006 and
the statement subsequently given u/s 132(4) on 8.9.06". In response
to question No.3, he submitted that the additional income of several
years was generated in different years in various property transactions
and the said income of `7 crores has been earned by him and Shri
Mahesh Kumar Gupta. The bifurcation is given at `3,55,00,000/- in the
name of Shri Pawan Kumar Bansal and `3,45,00,000/- in the name of
Shri Mahesh Kumar Gupta. Thus, the income in the individual capacity
of Shri Pawan Kumar Bansal is disclosed for the first time by the
statement dated 12th September, 2006. In this statement also, he does
not say that the income of `3,55,00,000/- is the income of AY 2007-08
but says that it is the additional income of different years during the
block period. Further, in paragraph 2, he had stated that he reiterated
his earlier statement stated vide letter dated 1st September, 2006 and
statement given on 8th September, 2006.      Therefore, the cumulative
effect of the letter dated 1.9.2006 and statements dated 8.9.2006 and
12.9.2006 is to be seen and whether as per the cumulative effect of all
the above three documents can it be said that the undisclosed income
of `7 crores is required to be assessed in the hands of the assessee i.e.
Shri Pawan Kumar Bansal for AY 2007-08. As we have already stated
that the original disclosure of income was by letter dated 1st
September, 2006.      From a perusal of the above letter, the only
inference that can be drawn is that the income of `7 crores was
disclosed by Capital Power Systems Ltd. In the first statement dated
8th September, 2006, Shri Pawan Kumar Bansal affirmed his letter
dated 1st September, 2006 with the little modification that instead of
declaring the entire income of `7 crores in the hands of Capital Power
Systems Ltd., he stated that the disclosure of `7 crores was on behalf
of Capital Group of companies.       In another statement dated 12th
September, 2006, he reiterated his letter dated 1st September, 2006.
                                   12                      ITA-5201/Del/2010 &
                                                                       2 others


However, while giving bifurcation, he disclosed the income partly in his
hands and partly in the hands of Shri Mahesh Kumar Gupta.            In our
                                                     st
opinion, after taking into account the letter dated 1 September, 2006
and the two statements recorded by the Revenue, it cannot be said
that the income of `7 crores is liable to be assessed in the hands of the
assessee for the assessment year under appeal. On these facts, in our
opinion, learned CIT(A) adopted the right course of action i.e., to
determine the undisclosed income on the basis of loose papers found
and seized from the assessee's premises.       When the income of `7
crores was not disclosed by the assessee in his individual capacity in
the year under appeal, therefore, in our opinion, the Assessing Officer
was wholly unjustified in relying upon only the last portion of the
second statement i.e. 12th September, 2006 ignoring the letter dated
1st September, 2006, first statement dated 8th September, 2006 and
reply to question No.2 of the statement dated 12th September, 2006
and even the first portion of the reply of question No.3 in the
statement dated 12th September, 2006. When we see the cumulative
effect of all the facts as well as the statements, following position
emerges:-


12.   Shri Pawan Kumar Bansal is an individual who is not carrying on
any business in his individual capacity. The business is carried on by
Capital Group of Companies including Capital Power Systems Ltd.
whose CEO is Shri Pawan Kumar Bansal, i.e., the assessee.                The
original disclosure made vide letter dated 1st September, 2006 was for
and on behalf of Capital Power Sytems Ltd. The assessee signed the
above letter in his capacity as CEO of the said company.             In the
statement dated 8th September, 2006, he deposed before the Revenue
authorities in which he affirmed the voluntary disclosure of additional
income of `7 crores on behalf of Capital Group of companies. Thus,
even in the statement dated 8th September, 2006, there was no
disclosure in the individual capacity of Shri Pawan Kumar Bansal. In
                                      13                          ITA-5201/Del/2010 &
                                                                              2 others


another statement dated 12th September, 2006, he reiterated his
earlier statement vide letter dated 1st September, 2006 and statement
dated 8th September, 2006.        Thus, the disclosure of income was by
Capital Group of companies. However, in reply to another question in
his statement dated 12th September, 2006, he disclosed the income of
`3,55,00,000/-   in    his   individual    capacity   and   the     income         of
`3,45,00,000/- in the name of Shri Mahesh Kumar Gupta. The Revenue
authorities who recorded the statement did not bother to point out the
contradiction between the reply to question No.2 and question No.4. In
reply to question No.2, he reiterated his letter dated 1st September,
2006 and statement dated 8th September, 2006 wherein no income
was disclosed in the individual names of Shri Pawan Kumar Bansal and
Shri Mahesh Kumar Gupta. But, in reply to question No.3, the income
was disclosed in the individual names.         It is a settled law that the
statement has to be considered as a whole and Revenue cannot chose
to rely upon only one part of the statement ignoring the other
statements. Moreover, statement dated 12th September, 2006 is not
the only statement but it is only one part of the series of
letter/statements.    In the statement dated 8th September, 2006, Shri
Pawan Kumar Bansal has stated that the details of the disclosure would
be given after going through the seized material.            Therefore, the
statement has a relevance with the seized material and statement is
made by him to disclose the income as represented by the seized
material. No other corroborative evidence to support the income of `7
crores in the hands of the assessee and Shri Mahesh Kumar Gupta is
found. In the above circumstances, after considering the cumulative
effect of the letter dated 1st September, 2006 and both the statements,
the proper course would be to determine the undisclosed income on
the basis of loose papers found and seized at the time of search. The
CIT(A) did the same.
                                  14                      ITA-5201/Del/2010 &
                                                                      2 others


13.   We, therefore, uphold the order of learned CIT(A) to the extent
wherein he held that the income of the assessee i.e. Shri Pawan Kumar
Bansal is to be determined on the basis of undisclosed income as per
the noting on the loose papers.        With this remark, the Revenue's
appeal vide ITA No.5375/Del/2010 is dismissed.           However, the
assessee in his appeal vide ITA No.5201/Del/2010 has also disputed
the correctness of the income determined on the basis of the loose
papers. The brief description of the transactions of various pages of
seized material is given by the Assessing Officer at page 4 of the
assessment order which reads as under:-


       "Annexure A-6:
       Page 77 details of different figures in different names
       showing Rs.7.90 lacs, and the back side is share
       transaction details of G.S. Control Pvt.Ltd.

       Page 80 slip contains the details of names and
       payments of Rs.7 lacs made on 12.05.05.

       Page 81 slip contains the details of names and
       payments of Rs.9 lacs made on 10.12.05.

       Page 82 slip contains the details of names and
       payments of Rs.8.40 lacs made on 14.05.05.

       Annexure A-16
       Page 143 details of Indore & Jabalpur regarding cash
       security deposit of Rs.8,78,000/- and other monetary
       details and back side is name and address."

14.   From the above, it is evident that pages 80, 81 & 82 do not
belong to the year under appeal. The accounting year relevant to the
assessment year under consideration is 1.4.2006 to 31.3.2007 while all
the three documents i.e., pages 80, 81 & 82 pertain to the accounting
year 1.4.2005 to 31.3.2006. Therefore, the addition sustained by the
learned CIT(A) vide pages 80, 81 & 82 is directed to be deleted.
                                  15                     ITA-5201/Del/2010 &
                                                                     2 others


15.   So far as page 77 is concerned, the Assessing Officer has not
given the date of the said transaction. However, the copy of the loose
paper is given at page 46 of the assessee's paper book from which we
find that various names are written, amount is written and no date is
given on any of the transactions. The total of such transactions was
`7,90,000/-. No explanation relating to nature of those transactions is
given by the assessee's counsel at the time of hearing before us.
Therefore, in our opinion, the addition of `7,90,000/- in the hands of
assessee due to various transactions recorded at page 77 of Annexure
A-6 is required to be made.


16.   Page 143 of Annexure A-16 is given at page 52 of the assessee's
paper book.    The relevant portion of the page where the sum of
`8,78,000/- is mentioned reads as under:-


       "I   Jabalpur (EZ)
       (1) PO No :-       CMD/EZ/P-II/39 dtd 24/12/03     PO
       completed
       Rs.8,78,000 = Recd. towards security deposit in cash ­
       Release of this amount to be pursued."

17.   From the above, it is evident that the above entry relates to
some transaction dated 24th December, 2003.            Therefore, this
transaction cannot be said to be pertaining to the accounting year
relevant to the assessment year under consideration. In view of the
above, in our opinion, the only addition which can be sustained on the
basis of loose papers found and seized during the course of search is
`7,90,000/-. We, therefore, sustain the addition of `7,90,000/- in the
case of the assessee i.e. Shri Pawan Kumar Bansal and partly allow the
assessee's appeal.


ITA No.5374/Del/2010 ­ Revenue's appeal in the case of Shri Mahesh
Kumar Gupta:-
                                     16                     ITA-5201/Del/2010 &
                                                                        2 others





18.      In this appeal by the Revenue, following grounds have been
raised:-


          "1. On the facts and in the circumstances of the case,
          the ld.CIT(A) has erred in deleting the addition of
          Rs.3,07,00,000/- on account of undisclosed income
          admitted by Shri Pawan Kumar Bansal in his statement
          recorded during the course of search.

          2. The CIT(A) has erred in law in deleting the addition
          of Rs.3,45,00,000/- made on protective basis in his hand
          on account of Shri Mahesh Kumar Gupta and also
          deleted the addition of Rs.3,45,00,000/- made
          substantive in the hands of Shri Mahesh Kumar Gupta."

19.      So far as ground No.1 is concerned, the same is misconceived
because the only addition made by the Assessing Officer in the case of
the assessee was the addition of `3,45,00,000/-.          No addition of
`3,07,00,000/- was made in the hands of the assessee and therefore,
the question of any deletion of such addition by the CIT(A) does not
arise.     Accordingly, ground No.1 of the Revenue's appeal is rejected
being conceived.


20.      So far as ground No.2 is concerned, we have already discussed
this issue at length while deciding the similar addition in the case of
Shri Pawan Kumar Bansal and have arrived at the conclusion that from
the cumulative effect of the letter dated 1st September, 2006 and two
statements of Shri Pawan Kumar Bansal, it cannot be accepted that the
income of `7 crores has been disclosed in the individual name of Shri
Pawan Kumar Bansal and Shri Mahesh Kumar Gupta for AY 2007-08.
We have further held that on the facts of the assessee's case, the right
course is to make the addition as per the transactions recorded in the
loose papers found and seized at the time of search and we have
already made the addition in respect of the loose paper in the hands of
Shri Pawan Kumar Bansal.        So far as Shri Mahesh Kumar Gupta is
concerned, admittedly, there is no statement by him or there is no
                                   17                          ITA-5201/Del/2010 &
                                                                           2 others


loose paper found or seized from his premises. Therefore, in addition
to whatever has been discussed in paragraph Nos.8 to 14 while
deciding the appeal of Shri Pawan Kumar Bansal, Shri Mahesh Kumar
Gupta is not bound by any statement given by Shri Pawan Kumar
Bansal. Therefore, even if while giving bifurcation, Shri Pawan Kumar
Bansal has bifurcated the income of `3,45,00,000/- in the name of Shri
Mahesh Kumar Gupta, Shri Mahesh Kumar Gupta cannot be made
liable to pay the tax thereon. Admittedly, at the time of search and
during post-search enquiry, no statement of Shri Mahesh Kumar Gupta
was recorded. In view of the above, we do not find any infirmity in the
order of learned CIT(A) wherein he has deleted the addition of
`3,45,00,000/- made by the Assessing Officer on account of alleged
disclosure of income in his name by Shri Pawan Kumar Bansal.


21.    In the result, the appeals of the Revenue are dismissed while the
appeal of the assessee in the case of Shri Pawan Kumar Bansal is
partly allowed.
       Decision pronounced in the open Court on 30th September, 2014.


                   Sd/-                                Sd/-
                      GARG)
      (CHANDRA MOHAN GARG)                           AGRAWAL)
                                               (G.D. AGRAWAL)
         JUDICIAL MEMBER                       VICE PRESIDENT

Dated : 30.09.2014
VK.


Copy forwarded to: -

1.     Appellant   : Shri Pawan Kumar Bansal,
                     A-156, First Floor, New Friends Colony,
                     New Delhi ­ 110 019. And
                     Shri Mahesh Kumar Gupta,
                     85, Rajdhani Enclave, Delhi ­ 110 092.


2.     Revenue     : Assistant Commissioner of Income Tax,
                             Circle-16, New Delhi.
                     Central Circle-
                     18               ITA-5201/Del/2010 &
                                                  2 others


3.   CIT
4.   CIT(A)
5.   DR, ITAT

                Assistant Registrar

 
 
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