Pr. Commissioner of Income Tax-1, Kanpur vs Pawan Kumar Gupta

Vinod Kumar Misra, J.—1. The Principal Commissioner of Income Tax-1, Kanpur has preferred Appeal No. 16 of 2016 under Section 260-A of the Income Tax Act, 1961 against the judgment and order dated 20.8.2015 passed in I.T.A. No. 86/LKW/2012 (Assessment Year 2006-07) and Appeal No. 15 of 2016 under Section 260-A of the Income Tax Act, 1961 against the judgment and order dated 20.8.2015 passed in I.T.A. No. 54/LKW/2012 (Assessment Year 2005-06) passed by Income Tax Appellate Tribunal, Lucknow Bench "B", Lucknow.

Heard learned counsel for the appellants and perused the impugned judgment dated 20.8.2015 passed by the Income Tax Appellate Tribunal, Lucknow Bench "B", Lucknow.

The common facts of these two appeals are that Rs. 36 lacs were added in the assessment year 2005-06 while Rs. 55,83,300/- were added in the assessment year 2006-07 on the basis of the statement of Prakash Chandra Bhutoria and computer printouts (three in number) found during the course of search and seizure operation taken place on 6.5.2005 at Kolkata on Bhutoria Group premises.

On 6.12.2005, search and seizure action under Section 132 Income Act was taken place in the case of Sri Prakash Chandra Bhutoria at Kolkata, a person belonging to Bhutoria Group which was engaged in coal business. During the course of search and seizure operation, some computer printouts (three in number) from the business premises of this group was seized and with respect to the seized documents statement of Sri Prakash Chandra Bhutoria was recorded under Section 132(4) of the Act and Sri Prakash Chandra Bhutoria has deposed that there was a syndicate consisting of 10 persons identified through codes which were decoded as under:-

(i) PB: decoded as Prakash Chandra Bhutoria

(ii) IB: decoded as Indaraj Mull Bhutoria

(iii) LP: decoded as Laxrhan Poddar,

(iv) MP: decoded as Mahendra Bhutoria,

(v) LCS: decoded as Labh Chandra Surana

(vi) PG: decoded as Pawan Gupta

(vii) LKM: decoded as LK. Mukherjee

(viii) BNM: decoded as B.N. Mishra

(ix) MA: decoded as Mohan Agarwal

(x) BK: decoded as Vickery Khanna

It transpires that a search and seizure operation under section 132 of Income Tax Act was carried out on 13.3.2006 in the business-cum-commercial premises of the assessee at 15/86, Lathawali Khothi, Civil Lines, Kanpur. During the course of search and seizure operation various books of account, documents and loose papers were found and seized.

Notice was issued to the assessee under Section 142(1). In compliance of the notice, assessee filed return on 11.10.2007 declaring total income as Rs. 39,62,285/- for Assessment Year 2006-07. The assessment was completed under Section 143(3) on 31.12.2007, assessing the total income at Rs. 2,58,03,100/-. While passing the assessment order assessing officer made the following additions:-

Assessee preferred appeal against the assessment order dated 31.12.2007 before learned Commission of Income(A)-I, Kanpur, who vide his order dated 21.11.2011 allowed the appeal of the assessee by deleting the above additions. Department assailed the order of learned Commissioner of Income Tax, Kanpur dated 21.11.2011 by filing an appeal before learned ITAT, Lucknow Learned ITAT vide its order date 20.8.2015 dismissed the appeal.

According to the learned counsel for the appellants, ITAT has erred in law and on facts in deleting the addition of Rs. 55,83,300/- made by the Assessing Officer on protective basis on account of coal business carried out by the assessee through the syndicate of Bhutoria Group, without appreciating the fact that the Assessing Officer had given his finding on the basis of seized documents found during the course of search at the premises of Mr. Bhutoria and that on the basis of document PB-20, PB-17, the assessee received an amount of Rs. 55,83,300/-. Learned counsel also submitted that statement of Sri Bhutoria recorded at the time of search also corroborated the fact of receiving of Rs. 55,83,300/- by the assessee. Learned counsel for the ITAT has erred in law and on facts in deleting the additions made by the Assessment Officers as mentioned earlier in the chart.

We found that the Tribunal has returned the finding that the additions earlier made by the Assessing Officer on the basis of material seized during the course of search and seizure from Sri Prakash Bhutoria and on the basis of his statement, Sri Bhutoria was not allowed to be cross examined by the assessee, so learned Tribunal did not rely on his statement as the statement was not tested on cross examination. Furthermore, learned Tribunal did not deem it proper to rely on the statement of Sri Bhutani because the assessee was not allowed to cross examine him. The view of the Tribunal is supported by the following case laws:-

CBI Vs. V.C. Shukla and others, , AIR (1998) (SC) 1406.

Malwa Vanaspati and Chemicals Co. Ltd. Vs. CST (1995) UPTC 987.

State of Kerala Vs. K.T. Shaduli, , AIR (1977) (SC) 1627.

Amarjit Singh Bakshi, HUF Vs. ACIT, , 86 ITD 13.

Prarthana Construction (P) Ltd. Vs. DCIT, , 118 Taxman 112.

S.P. Goyal Vs. DCIT, , 82 ITD 85.

Furthermore Assessing Officer himself was of the view that the income on account of purchase and sale of coal for March, 05 and April, 05 quota (as per computerized sheet at Kolkata) belong to the Syndicate (AOP) as it was the departments stand that such income belong to the syndicate (AOP). Rs. 36 lacs was added in the hands assessee in the assessment year 2005-2006 who was eligible member of the syndicate AOP mainly on protective basis. On perusal of the records, statement recorded during the course of search at Kolkata and also the impugned seized computer sheets, it is seen that the said transactions as embodied in these seized document, actually represent the trading transactions of the "syndicate working as a unit and, therefore, the assessment of such income can be done only in the hands of the said "syndicate". So addition made on protective basis cannot survive. This view is find support from the case of CIT Vs. Smt. Saraswati Devi, reported in , 212 ITR, Page 445, (Rajasthan).

So in the above facts and circumstances of the case, finding of the Income Tax Appellate Tribunal does not suffer from any illegality. No substantial question of law in involved in the present appeals. Consequently both the appeals are dismissed at the admission stage itself.