Case Number: ITA 1280/DEL/2021
Appellant: DCIT, CC-19, New Delhi
Respondent: Satya Prakash Gupta, New Delhi
Assessment Year: 2016-17
Case Filed on: 2021-09-29
Order Type: Final Tribunal Order
Date of Order: 2022-03-09
Pronounced on: 2022-03-09
The case involves the assessment year 2016-17, where the Deputy Commissioner of Income Tax (DCIT) appealed against Satya Prakash Gupta in the Income Tax Appellate Tribunal, Delhi Bench ‘G’, New Delhi. The case was heard through video conference before Shri N.K. Billaiya, Accountant Member, and Shri Amit Shukla, Judicial Member.
The appeals and cross-objections cover multiple assessment years, focusing on the quantum of assessments passed under section 153A/143(3) of the Income-tax Act, 1961.
Satya Prakash Gupta, through his sole proprietary concern, Sterling Security System, entered into a contract with an Italy-based non-resident entity, Cartiere Milani Fabriano (CMF), part of the Fedrigoni SPA International Group, specialized in the production of banknote paper. The agreement, initially valid until 31.12.2007 and later extended to 31.12.2012, involved sharing profits from CMF’s supplies to the Reserve Bank of India (RBI) and its subsidiaries.
The Assessing Officer (AO) noted the turnover, net profit, and exemptions claimed by Gupta from FY 2008-09 to 2016-17, with significant fluctuations in profits. A search and seizure action conducted on 26.12.2016 revealed no evidence of income accruing in India post-01.04.2015, when Gupta became a non-resident. However, post-search inquiries indicated possible undisclosed income in foreign accounts.
The AO’s assessment involved estimating Gupta’s income based on the percentage of profits accrued from CMF’s operations in India. The AO applied an average net profit rate of 9.72% to the payments made by RBI to Fedrigoni, estimating the income from FY 2012-13 to 2017-18.
For AY 2012-13 to 2017-18, the AO estimated Gupta’s undisclosed income as follows:
Assessment Year | Amount Paid by RBI to Fedrigoni (Rs. in Crores) | Estimated Revenue of Gupta – 9.72% of (B) (Rs. in Crores) |
---|---|---|
2012-13 | 226.68 | 22.03 |
2013-14 | 53.33 | 5.18 |
2014-15 | 304.32 | 29.58 |
2015-16 | 517.48 | 50.23 |
2016-17 | 231.18 | 22.47 |
2017-18 | 289.71 | 28.16 |
Total | 157.65 |
The CIT(A) analyzed the AO’s observations and the submissions made by Gupta. It was concluded that:
Ultimately, the CIT(A) ruled in favor of Gupta, dismissing the AO’s additions to his income for the relevant assessment years.
The case highlights the complexities involved in assessing income, especially when dealing with international transactions and non-resident statuses. The tribunal’s order underscores the importance of concrete evidence in substantiating claims of undisclosed income.
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