Commissioner Of Income Tax-X vs Amar Nath Virender Kumar
2014 Latest Caselaw 6695 Del

$~9 to 11
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+       INCOME TAX APPEAL NOS. 122/2014, 123/2014 & 126/2014

                                             Date of decision: 11th December, 2014

        COMMISSIONER OF INCOME TAX-X                            ..... Appellant
                                   Through Ms. Suruchi Aggarwal, Sr. Standing
                                   Counsel.

                                   versus

        AMAR NATH VIRENDER KUMAR                 ..... Respondent

Through Mr. Rajat Navet & Mr. Kushagra Pandit, Advocates.

CORAM:

HON'BLE MR. JUSTICE SANJIV KHANNA HON'BLE MR. JUSTICE V. KAMESWAR RAO

SANJIV KHANNA, J. (ORAL):

These three appeals by the Revenue, relating to Assessment Years

2001-02, 2002-03 and 2005-06, arise from the order dated 19th July, 2013,

passed by the Income Tax Appellate Tribunal (Tribunal, for short).

2. On 15th December, 2004, search and seizure operations under

Section 132 of the Income Tax Act, 1961 (Act, for short) were conducted

in the case of Brij Mohan Gupta, Gali Hinga Beg, Tilak Bazar, Delhi.

Incriminating documents, diaries and loose papers were found and seized.

Brij Mohan Gupta was apparently involved in clandestine money lending

business of undeclared or black money and was acting as a broker or

middleman in cash loan transactions.

3. Brij Mohan Gupta, revenue claims, for record had maintained coded

entries. These diaries/papers were seized and investigation revealed that

they were written by Ram Avtar Singhal, accountant of Brij Mohan Gupta

in the cryptic or coded form. It is stated that Amar Avtar Singhal had

decoded the entries and had implicated the respondent assessee.

4. A list of individual firms, HUFs etc., who were either lenders or

borrowers, was forwarded to the Assessing Officers of the persons

identified. Along with the list, the Deputy Commissioner of Income Tax,

Central Circle-19 had enclosed a satisfaction note recording that Ram

Avtar Singhal in his statement dated 15 th December, 2004, had decoded the

entries in respect of the amount received/advanced by the veiled

borrowers/lenders. The respondent-assessee, a partnership firm, finds

mention in one such list. The said list gives the address of the respondent-

assessee and the months in which the entries were made. The list indicates

that the alphabets „AV‟ had been decoded and would read „M/s Amar Nath

Virender Kumar, Khari Baoli, Delhi‟.

5. In the first round, the Assessing Officer by the assessment order dated

30th December, 2008 made additions of Rs.1,56,25,000/-, Rs.61,25,000/- and

Rs.60,00,000/- in respect of Assessment Years 2001-02, 2002-03 and 2005-06

relying upon Section 69A of the Act. The said additions were deleted in the

first appeal, inter alia, recording that the respondent-assessee had made a

specific request for furnishing of complete statements of Brij

Mohan Gupta, his son Rajeev Gupta and his accountant Ram Avtar Singhal

and had sought cross-examination. The Assessing Officer had failed to

provide the said statements and afford opportunity of cross-examination.

The Commissioner of Income Tax (Appeals) observed that the Assessing

Officer should have conducted further enquiries after receiving information

from the Deputy Commissioner of Income Tax, Central Circle-19, but had

failed to proceed and collect relevant evidence or material to implicate the

respondent-assessee.

6. Revenue preferred an appeal before the Tribunal. By order dated 29th

October, 2010, an order of remand was passed setting out that the

Assessing Officer had failed to provide adequate and fair opportunity to the

assessee but directed that copy of the statements should be provided and

the assessee should be granted opportunity to cross-examine. It was open

to the Assessing Officer to carry out further enquiry and investigation. The

said order of the Tribunal has attained finality and was not challenged by

the revenue or the assessee.

7. In the remand proceedings, the Assessing Officer made additions of

Rs.1,56,25,000/-, Rs.61,25,000/- and Rs.60,00,000/- for the Assessment

Years 2001-02, 2002-03 and 2005-06, respectively, recording that the

respondent-assesseee had not disclosed the said transactions in the returns of

income. Brij Mohan Gupta did not appear as he had died in July, 2011. On

21st December, 2011, Ram Avtar Singhal and Rajiv Gupta had appeared and

deposed that they had not known any party by the name of M/s Amar Nath

Virender Kumar. They also failed to identify the assessee. The Assessing

Officer held that Rajiv Gupta and Ram Avtar Singhal were trying to evade

direct replies to protect the assessee and their statements dated 21st

December, 2011 cannot be relied upon. He preferred to rely upon the

seized documents and the statements made by Ram Avtar Singhal, Brij

Mohan Gupta and Rajiv Gupta at the time of the search. He held that the

onus was on M/s Amar Nath Virender Kumar to produce positive evidence

that the entries as decoded did not relate to them and they were not

involved in the aforesaid unaccounted /black money lending business.

Late Brij Mohan Gupta, it was observed, had admitted his involvement as a

broker in advancing unaccounted cash loan/hundi transactions.

8. The respondent-assessee succeeded in the first appeal with the

Commissioner of Income Tax (Appeals) deleting the aforesaid additions

holding that there was no material or evidence to show that the respondents

were involved in money lending business or had engaged services of Brij

Mohan Gupta as a broker. In absence of any cogent and reliable material,

the additions were deleted.

9. The said view has been affirmed by the Tribunal in the impugned

order dated 19th July, 2013.

10. In order to ascertain and verify whether the respondent-assessee had

been named in any of the statements which were recorded during the

course of search or thereafter, we had adjourned the appeals.

11. In our order dated 12th September, 2014, we had recorded that the

issue raised was factual as the findings recorded by the Tribunal were

under challenge on the ground of perversity. The Revenue, it is apparent

had relied on the statements made by late Brij Mohan Gupta and Ram

Avtar Singhal, his accountant. The said statements had not been placed on

record.

12. On 25th November, 2014, again at the request of the counsel for the

revenue the appeals were adjourned after recording that the Senior

Standing Counsel had received the statements in the morning. On 3rd

December, 2014, an adjournment slip was moved and the appeals were

adjourned for today.

13. Learned counsel for the revenue has produced before us statement of

Ram Avtar Singhal and Rajeev Gupta recorded on 15th December, 2004.

Ram Avtar Singhal, it is apparent, was shown a bunch of loose papers

(Annexure A-1) and asked to decipher the entries. In response to question

No. 6, Ram Avtar Singhal deposed that the word „Amar‟ referred to „Amar

Nath, Naya Bazar‟. The second statement relied is again of Ram Avtar

Singhal recorded on 22nd March, 2005. In response to one of the questions,

Ram Avtar Singhal had affirmed that he had noted down names of the

companies and would provide complete addresses on the next date, i.e. on

23rd March, 2005. The details, names and addresses provided on 23 rd

March, 2005 have not been placed on record or produced before us at the

time of hearing. On the basis of the said statements, it is not possible to

hold that the word „Amar‟ refers to „Amar Nath Virender Kumar, Khari

Baoli, Delhi‟. The diary with the alphabets "AV" and the statement

identifying or decoding that the alphabets "AV" refer to „M/s Amar Nath

Virender Kumar‟ have not been produced before us. Without any

implicating material, it is difficult to hold or draw the assumption or

presumption, which the revenue wants us to accept.

14. Learned counsel for the Revenue has drawn our attention to the list

forwarded by the Deputy Commissioner of Income Tax, Central Circle 19

along with his satisfaction note dated 10th April, 2007. The said letter

mentions that most of the parties involved were located at Khari Baoli,

Tilak Bazar; Naya Bans; Lal Katra; Gadodia Market; Lahori Gate; Katra

Ghee, Tilak Bazar; Ansari Road; Gali Hinga Beg, Chandni Chowk, etc. A

close scrutiny of the aforesaid list would indicate that both coded and

decoded names were mentioned. Three codes „AV‟, „AV-Amar‟ and „AV-

RFM‟ were decoded by the Investigation Wing as „M/s Amar Nath

Virender Kumar, Khari Baoli‟; „M/s Amar Nath Virender Kumar, Amar

Lal Mill, 2647, Naya Bazar, New Delhi‟; and, „M/s Amar Nath, Khari

Baoli Rajdhani Floor Mills, Lahori Gate‟. The code „AV‟ as per the

revenue, implicates the respondent-assessee. However, there is no evidence

or material to show that Brij Mohan Gupta or Ram Avtar Singhal during

the search had identified and decoded the alphabets „AV‟ to stand for „M/s

Amar Nath Virender Kumar, Khari Baoli‟. As already noted above, Ram

Avtar Singhal and Rajeev Gupta had refused to identify the respondent and

had stated that they did not know the said parties. Revenue has not

produced before us any statement of Ram Avtar Singhal, Rajeev Gupta or

(Late) Brij Mohan Gupta implicating the respondent assessee or

corroborating that the code „AV‟ stands for „M/s Amar Nath Virender

Kumar‟. Even the relevant diary or papers seized with the code „AV‟ have

not been produced. The assertion made in the letter written by the Deputy

Commissioner of Income Tax, Central Circle-19, is not sufficient and a

good ground to uphold the addition. The said assertion is a finding or an

inference. The basis or the foundation of the said finding was the alleged

diaries/statements. Failure to produce the said diaries/statements and the

relevant statement decoding the entries is fatal for the case of the revenue.

15. In these circumstances, we do not think that the decision of the

Tribunal is perverse and on facts can be interfered with in these appeals.

The appeals are accordingly dismissed.

SANJIV KHANNA, J.

V. KAMESWAR RAO, J.

DECEMBER 11, 2014 VKR/NA