IN THE HIGH COURT OF DELHI AT NEW DELHI
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ITA 361/2012 and CM 9519/2012
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CIT ..... Appellant
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Through: Mr. Deepak Chopra, Advocate
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versus
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SUPER STAR INNOVATION LTD ..... Respondent
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Through
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CORAM:
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HON'BLE MR. JUSTICE SANJIV KHANNA
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HON'BLE MR. JUSTICE R.V.EASWAR
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O R D E R
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23.05.2012
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This is an appeal under Section 260A of the Income Tax Act, 1961
(in short, ?the Act?) filed by the revenue impugning the order dated
4.11.2011 passed by the Tribunal. It is averred and stated in the grounds
of appeal that the order passed by CIT (A) is cryptic and is a non-
speaking/ non-reasoned order.
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The two additions made by the Assessing Officer which are the
subject matter in the instant appeal have been dealt with in the block
assessment order as under:
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?During the course of search and seizure action incriminating documents
were seized as per Annexures A-108 from A-99, New Palam Vihar, Gurgaon.
Page 59, 70 to 72, 60 to 69 and 75 to 75 are the blank share transfer
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forms, blank power of attorney, forms of renunciation signed by the directors of M/s Sara Overseas Pvt. Ltd., and M/s Inspiration Securities
Pvt. Ltd. It was also seen that these two companies have subscribed Rs.5
lac each to the share capital of M/s Super Star Innovations Pvt. Ltd. No
books of account or any kind of material substantiating the existence of
M/s Super Star Innovations Pvt. Ltd., was found. A question being
question no.17 of questionnaire dated 23.09.2002 was put to the assessee
to explain why the subscription of Rs.5 lac each by these two companies
should not be taken as bogus. The A.R. of the assessee has furnished copy
of affidavit of Shri M.K. Jha, the director of M/s inspiration Security
Pvt. Ltd. The address of director of M/s Inspiration Security Pvt. Ltd.,
as given in copy of the affidavit is A-115, Vakil Chambers, Shakarpur,
New Delhi. Summons under Section 131 was issued at the above address to
the director of the Inspiration Security Pvt. Ltd. The director of Shri
Rajesh Rastogi attended on 25.10.2002 and his statement was recorded. As
per his statement his company M/s Inspiration Security Pvt. Ltd. has not
invested any sum in M/s Super Star Innovations Pvt. Ltd. In views of
this, the subscription of share capital of Rs.5 lac from the director of
M/s Inspiration Security Pvt. Ltd., is taken as bogus and is treated as
undisclosed income of the company.
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Similarly, summons under Section 131 issued to director of M/s Sara
Overseas Pvt. Ltd. 7530, Galaxy Apartment, Paharganj, New Delhi was sent
through Inspector attached to this Circle. The inspector has reported
that the company is not traceable at the given address. He requested for
Gali No. to trace out the company. The AR of the assessee was confronted
with the Inspector?s report but did not furnish the Gali No. thus the
assessee company has failed to discharge its onus. As such the
subscription of Rs.5 lac from M/s Sara Overseas Pvt. Ltd to share capital
of M/s Super Star Innovations Pvt. Ltd. is treated as bogus and is
included in the undisclosed income of the assessee.
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From the perusal of the bank accounts No.27765 of Mrs. Radha Aggarwal, an
entry of Rs.75,000/- just before the amount given as share capital to M/s
Super Star Innovations Pvt. Ltd. Therefore, the above subscription to
share capital of Super Star Innovations Pvt. Ltd. is treated as not
genuine and is treated as undisclosed income and added to the income of
the assessee for F.Y. 1996-97 i.e. A.Y. 1997-98.
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From the seized material it was found that the assessee company has
purchased following plots of land:-
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Annexure No. Page No.
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Plot No.
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Date
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Name of seller
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Area of plot in sq. yards
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Consideration (in Rs.)
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Remarks
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A-52
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58-60
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C-174
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02.11.1995
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Kapil Mehta s/o R.L. Mehta
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160
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60000
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Agreement
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A-111
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33-35
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7.10.1999
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Nand Kishore s/o Ram Kala
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16K
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1400000
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Agreement
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A-112
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36-38
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5.10.1999
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Nand Kishore
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s/o Ram Kala
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16K
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140000
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Agreement
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A-112
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1-5
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F-95
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4.1.2000
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Savtri Devi Gupta w/o J.P. Gupta
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479
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179625
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Agreement
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A-112
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6-10
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B-183
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22.11.99
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Rakesh Bajaj s/o M.L. Bajaj
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200
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75000
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Agreement
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A-112
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11 to 15
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C-174
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6.2.2000
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Nisha Mehta w/o R.L. Mehta
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160
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60000
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Agreement
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A-112
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16-22
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C-174
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6.2.2000
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Kapil Mehta and Vikas Mehta
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160
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60000
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Agreement
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A-112
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23 to 26
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F-385
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19.1.2000
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Dinesh Man s/o V.P. Man
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200
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75000
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Agreement
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The assessee vide question No.1 of questionnaire dated 11.10.2002 was
requested to explain the source of purchase was disclosure or not. The
assessee vide its letter dated 25.10.2002 has explained that purchase of
these plots have been recorded in the regular books of accounts. However,
he has not explained the source of income. As such addition of
Rs.33,09,625/- on this account is made to the undisclosed income of the
assessee.?
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The respondent was incorporated on 25th July, 1995. For the period
relevant to the assessment year, the share capital of the respondent
assessee was enhanced by subscription of Rs.5 lakh each by Sara Overseas
Pvt. Ltd. and Inspirational Securities Pvt. Ltd. Rs.75,000/- towards
share subscription was also paid by Ms. Radha Aggarwal. The original
return for the assessment year 1998-99 was taken up for scrutiny and no
addition on this account was made by the Assessing Officer. He accepted
increase/enhancement of share capital after verification.
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Subsequently, there was a search at the premises of the assessee
respondent on 17th October, 2010 and block assessment proceedings for the
period 1.4.1990 to 17.10.2000 were initiated. The present appeal arises
from the said block assessment proceedings.
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The CIT(Appeals) deleted the said two additions. The tribunal has
confirmed the said order.
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We examined the reasons given by the CIT (Appeals) and the tribunal
under challenge. Merely three questions were put to Mr. Rajesh Rastogi
during his statement under Section 131 of the Act, recorded on 25th
October, 2002. He had stated on oath that he was a director for roughly
four or five months in 1995 and he (i.e. I) had not invested any money in
the respondent assessee. He had also stated that he did not remember
having opened any bank account in the name of the company Inspiration
Securities Pvt. Ltd. The investment in the respondent company by the
Inspiration Securities Pvt. Ltd. were made on 12th December, 1995. The
share application form, confirmation issued by Kapil Bhalla director of
Inspiration Securities Pvt. Ltd. and statement of bank account of
Inspiration Securities Pvt. Ltd., was not put to and confronted to Rajesh
Rastogi. He was not asked to admit or deny the said documents. Case of
the respondent assessee is that this statement was recorded behind their
back and relevant questions were not put to Mr. Rajesh Rastogi.
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Similarly with regard to Sara Overseas Pvt. Ltd., it has been
observed that the enquiries conducted by the Assessing Officer were
incomplete. Assessee has furnished confirmation given by Arjun Mishra
and copy of the bank account of the said company. Payment was made by
account payee instrument. Details of the Assessing Officer of Sara
Overseas Pvt. Ltd., i.e. Ward No. etc. were furnished. The Assessing
Officer had relied upon report of the Inspector who could not trace out
the property. No further enquiries were made by the Assessing Officer.
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Radha Aggarwal had made subscription by making payment by account
payee instrument. Copy of bank account was furnished. She was also
assessed to income tax.
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There is no allegation or averment and no evidence or material to
show and establish that the said persons were accommodation entry
providers and the assessee had circulated his unaccounted for money
through them.
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With regard to additions on account of purchase of land, the
Assessing Officer did not dispute that the purchases were recorded in the
regular books of accounts. In these circumstances, the Assessing
Officer was required to examine whether the assessee had sufficient funds
to purchase the said plots. A reading of the assessment order shows
that this exercise was not conducted. The Assessing Officer has merely
recorded that the assessee was not able to explain the source. He has,
however, not referred to the entries in the books of accounts which he
doubted and felt as cannot be explained. It is not the case of the
Revenue that payments were made in cash. Payments made through bank
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accounts can be verified and collated with the credit entries in the bank account. There is no discussion on the said aspect. The CIT (Appeals)
and the tribunal have deleted the said additions after observing that the
Assessing Officer has ignored the evidence which was produced by the
assessee. They have also recorded that the Assessing Officer has taken
the investment in one plot twice, thus a double addition was made.
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Findings recorded by the CIT(Appeals) and the tribunal were
findings of fact and are not perverse. We do not find any merit in the
appeal. The same is accordingly dismissed. There will be no order as
to costs.
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SANJIV KHANNA, J
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R.V.EASWAR, J
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MAY 23, 2012/kkb
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26
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