THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 19.05.2014
+ ITA 606/2010
THE COMMISSIONER OF INCOME TAX
(CENTRAL-1) ..... Appellant
versus
V.K. BHATNAGAR ..... Respondent
AND
+ ITA 1893/2010
THE COMMISSIONER OF INCOME TAX
DELHI - III ..... Appellant
versus
V.K.BHATNAGAR ..... Respondent
Advocates who appeared in this case:
For the Revenue : Mr Rohit Madan, Sr. Standing Counsel with
Mr P. Roy Chaudhry and Mr Akash Vajpai
in both cases.
For the Assessee : Ms Kavita Jha with Ms Bhoomika Chaudhary
in both cases.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE VIBHU BAKHRU
JUDGMENT
VIBHU BAKHRU, J (ORAL)
1. The present appeals have been preferred by the Revenue under
Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the
`Act') impugning the common order dated 08.04.2008 passed by the
Income Tax Appellate Tribunal ("the Tribunal") in IT(SS)No.
ITA Nos. 606/2010 & 1893/2010 Page 1 of 7
141/Del/2005 and IT(SS) No. 175/Del/2005. Whereas IT(SS)No.
141/Del/2005 was preferred by the assessee against the order dated
23.01.2007 of CIT(Appeals), IT(SS)No. 175/Del/2005 was a cross appeal
filed by the Revenue impugning the same order.
2. The present appeal emanates from proceedings initiated under
Chapter XIV-B of the Act. Search and seizure operations were conducted
at the residence of the assessee and at the school premises belonging to the
Bhatnagar School, on 15.01.1999. During the said search and seizure
operations, certain cash and incriminating documents were seized.
Thereafter, pursuant to a notice under Section 158BC of the Act, the
assessee filed its return for the block period, 01.04.1989 to 15.01.1999,
returning an undisclosed income of `50 lacs.
3. The Assessing Officer computed the assessee's undisclosed income
at `1,64,75,600/-, which was in addition to the sum of `50 lacs declared by
the assessee in its return. Aggrieved by the said assessment order, the
assessee filed an appeal before the CIT (Appeals). The appeal of the
assessee was partly allowed and certain additions made by the Assessing
Officer were deleted. Aggrieved by the same, both the assessee and the
Revenue preferred appeals before the Tribunal which were disposed of by
the common order dated 08.04.2008 (impugned order).
4. The Revenue has submitted that the following questions of law arise
from the decision of the Tribunal in ITA No. 175/Del/2005:-
"(a) Whether on the facts and in the circumstances of the
case, the Ld ITAT erred in remanding the claim of
Rs.28,44,500/- being payment made to various parties
ITA Nos. 606/2010 & 1893/2010 Page 2 of 7
(Virendragram) even though seized material in relation
thereto did not have any particulars of these parties?
(b) Whether the Ld. ITAT erred in law and on merits in
upholding the order of CIT(A) with respect to addition of
Rs.4 lakhs on the ground of telescoping?
(c) Whether the order of the Ld. ITAT erred in deleting the
various additions made by the AO by not appreciating the
evidence on record?
(d) Whether the order of the Ld. ITAT is perverse in law and
on merits in setting aside additions for fresh
consideration to the AO thereby granting fresh
opportunity to the assessee despite being granted
adequate opportunity?
(e) Whether on the facts and in the circumstances of the
case, the Ld. ITAT erred in deleting the amount of
Rs.9,300/- as the same representing the undisclosed
income of the assessee?
(f) Whether order passed by the Ld. ITAT is perverse in law
and on merits?"
5. And, the following questions of law arise from the decision of the
Tribunal in ITA 141/Del/2005:-
"(a) Whether the Ld. ITAT was correct in law and on merits
in deleting the addition of Rs.2.50 lakhs on account of
household assets made by the AO on the ground that it
was covered by the undisclosed income of the assessee
on account of telescoping?
(b) Whether the Ld. ITAT was correct in law and on merits
in deleting the addition of Rs.1,40,400/- on the ground
that it was covered by the undisclosed income of the
assessee on account of telescoping?
(c) Whether the Ld. ITAT erred in law and on merits in
holding that the additions are adjustable on account of
telescoping?
ITA Nos. 606/2010 & 1893/2010 Page 3 of 7
(d) Whether order passed by the Ld. ITAT is perverse in law
and on merits?"
6. It is submitted by the learned counsel for the Revenue that the
Tribunal erred in remanding the claim of the assessee with respect to sums
aggregating `28,44,500/-, to the Assessing Officer. It is submitted that the
said amount was added as undisclosed income by the Assessing Officer as
various seized documents indicated that payments aggregating `28,44,500/-
were made by the assessee to various persons. The Assessing Officer held
that the assessee could not explain the said payments and, accordingly,
added the same as undisclosed income. The petitioner had explained that
the said payments had been made in relation to construction carried out at
"Virendragram" and various schools had contributed to the said project.
The total investment in the said project was stated to be `9.5 crores. The
assessee claimed that the accounts found were only intermediary accounts
and therefore, no addition could be made. The CIT (Appeals) had accepted
the explanation of the assessee and deleted the addition. It was contended
by the Revenue that since the seized documents did not contain any
particulars, the explanation given by the assessee could not be accepted.
The Tribunal considered the matter and observed that payments had been
made to different persons and their names were also mentioned; however,
the name of "Virendragram project" did not appear on the documents.
Accordingly, the Tribunal remanded the matter to the Assessing Officer to
examine whether the said payments were reflected in the accounts of the
Virendragram project. The Tribunal also observed that in the event the
amounts were not reflected in the accounts of the Virendragram project, the
addition in the case of the assessee would be justified. We are unable to
ITA Nos. 606/2010 & 1893/2010 Page 4 of 7
accept the view that the decision of the Tribunal in remanding the matter to
the Assessing Officer is in any manner perverse or raises a question of law.
The contention of the assessee that the amounts noted on the documents
reflected contributions to Virendragram project was required to be verified
and the same could be done by examining the entries in relation to the
Virendragram project. We find no infirmity with this reasoning.
7. The second question of law proposed by the Revenue is with respect
to deletion of certain additions made by the Assessing Officer on account of
unexplained expenditure. The CIT (Appeals) had deleted the additions on
the ground that the adhoc addition of `10 lacs and the declared undisclosed
income of `50 lacs would cover the additions on account of undisclosed
expenditure. While additions aggregating `41,62,747/- were liable to be
made on account of the documents found during the search, the assessee
had filed a return declaring a larger sum of `50 lacs as undisclosed income.
Thus, the assessee had accepted an additional undisclosed income of
`8,37,253/-. Apart from other additions, the Assessing Officer had also
made an addition of `10 lacs on account of bogus expenses. The CIT
(Appeals) and the Tribunal concluded that the additions proposed would be
covered by the disclosure and the additions already made. The learned
counsel for the Revenue is unable to point out any flaw in this reasoning.
8. The Assessing Officer had taken note of certain documents that
evidenced receipt of donations by the assessee. The Assessing Officer had
accordingly added a sum of `29.75 lacs received as donations as
undisclosed income. The assessee contended before CIT (Appeals) that the
documents (specifically a diary), on the basis of which additions were
ITA Nos. 606/2010 & 1893/2010 Page 5 of 7
made, contained only figures without any narration. It was, thus, contended
by the assessee that the additions made by the Assessing Officer were
merely on basis of surmises. The assessee also made a grievance that it was
not known as to how the Assessing Officer had deciphered the entries in the
documents. The CIT (Appeals) had accepted the assessee's contention and
deleted the additions made by the Assessing Officer. The Tribunal
considered the controversy and held that certain documents were clear and
had expressly mentioned receipts of money. Accordingly, the Tribunal set
aside the deletion made by the CIT (Appeals) and remanded the matter to
the Assessing Officer to consider it afresh after hearing the assessee.
Indisputably, it was necessary to hear the assessee while examining the
manner in which the entries were to be read. We are unable to find any flaw
in the decision of the Tribunal.
9. The learned counsel for the Revenue has submitted that the Tribunal
had deleted various deletions made by the Assessing Officer without
appreciating the evidence on record. However, the counsel has been unable
to point out any specific instance which indicates that the decision of the
Tribunal is perverse or not informed by reason. In this view, we are unable
to appreciate as to how a question of law arises from the findings arrived at
by the Tribunal.
10. In ITA No. 1893/2010, the Revenue is aggrieved by the decision of
the Tribunal in deleting the addition of `2.5 lacs made by the Assessing
Officer on account of household assets and an unexplained sum of
`1,40,440/- as unexplained bank deposits. The sum of `2.5 lacs was added
by the Assessing Officer as undisclosed income of the assessee on account
ITA Nos. 606/2010 & 1893/2010 Page 6 of 7
of electronic and other items found at the residence of the assessee. The
Assessing Officer had concluded that such items were acquired during the
block period. A sum of `1,40,440/- was added by the Assessing Officer on
account of deposits made in the bank account of M/s Bhatnagar Design.
The assessee had explained the deposits to be on account of sample exports;
however, the same was disbelieved by the Assessing Officer.
11. The assessee had carried the said issues in appeal. The Tribunal
found that the explanation given by the assessee with regard to the
household items as well as with respect to the bank deposits in the account
of M/s Bhatnagar Design were not satisfactory. However, the Tribunal
concluded that the ad hoc addition of `10 lacs made on account of bogus
expenses as well as the amount accepted by the assessee as undisclosed
income were sufficient to include the said additions. In the given
circumstances, the finding of the Tribunal cannot be stated to be perverse.
The learned counsel for the Revenue has also been unable to point out any
reason as to why the said additions ought not to be included in the ad hoc
additions made by the Assessing Officer.
12. We have examined the matter at some length and find that the
present appeal does not raise any questions of law for our consideration.
Accordingly, the present appeals are dismissed.
VIBHU BAKHRU, J
S. RAVINDRA BHAT, J
MAY 19, 2014/RK
ITA Nos. 606/2010 & 1893/2010 Page 7 of 7
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