DEVJI PREMJI PUJARA & SONS, MUMBAI V. ITO 13(2)(2), MUMBAI

CO 48/MUM/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8387 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 13-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRS RUPINDER BRAR
• Keywords: Search and seizure; Loose papers; Retraction
• Section: 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D, MUMBAI BEFORE SHRI D. MANMOHAN, V. P. AND SHRI SANJAY AROR A, A. M. ITA NO. 3720/MUM/2011 ASSESSMENT YEAR: 2007-08 INCOME TAX OFFICER, WARD 13(2)(2), R. NO. 412, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 VS. DEVJI PREMJI PUJARA & SONS 113, NEW CHINCH BUNDER ROAD, R. NO.50, MUMBAI-400 009 [ PAN: AACFD 5693 G ] (APPELLANT) (RESPONDENT) & C.O. NO. 48/MUM/2012 ASSESSMENT YEAR: 2007-08 DEVJI PREMJI PUJARA & SONS 113, NEW CHINCH BUNDER ROAD, R. NO.50, MUMBAI-400 009 [ PAN: AACFD 5693 G ] VS. INCOME TAX OFFICER, WARD 13(2)(2), R. NO. 412, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY : MRS. RUPINDER BRAR RESPONDENT BY : SHRI VIJAY MEHTA & SHRI GOVIND JAVERI DATE OF HEARING : 18.12.2012 DATE OF PRONOUNCEMENT : 15.03.2013 ORDER PER SANJAY ARORA, A.M.: THIS IS AN APPEAL BY THE REVENUE AND CROSS OBJECTIO N BY THE ASSESSEE ARISING OUT OF THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)24, MU MBAI (CIT(A) FOR SHORT) DATED 28.02.2011, PARTLY ALLOWING THE ASSESS EES APPEAL CONTESTING ITS ASSESSMENT FOR THE ASSESSMENT YEAR (A.Y.) 2007-08 U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) VIDE ORDER DATED 29.12.2009. ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 2 2. THE ASSESSEES CROSS OBJECTION (C.O.), WHICH RAI SES AN ASPECT OF THE ISSUE, I.E., QUA WHICH IT DID NOT FIND FAVOUR WITH THE FIRST APPELLA TE AUTHORITY, BEING DELAYED BY A PERIOD OF 140 DAYS, THE SAME WAS TAKEN UP FOR ADMISSION. THE ACCOMPANYING AFFIDAVIT DATED 18.05.2011 BY SHRI BHAVIN V. PUJARA, PARTNER, EXPLA INS IN DETAIL THE FACTUAL CIRCUMSTANCES LEADING TO THE INORDINATE DELAY ATTENDING THE DELAY ED FILING OF THE C.O. BY THE ASSESSEE. IN SUPPORT TWO DEATH CERTIFICATES, I.E., OF SHRI LALIT (ON 26.11.2011) AND SHRI HARSHAD DEVJI PUJARA, PARTNER (ON 28.02.2012), EVIDENCING THE TWO DEATHS IN THE FAMILY IN SUCCESSION SUBSEQUENT TO THE RECEIPT OF THE COPY OF THE APPEAL FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER BEFORE THE TRIBUNAL ON 25.11.2011, A S WELL AS A MEDICAL CERTIFICATE DATED 16.05.2012 IN RESPECT OF SHRI HARSHAD DEVJI PUJARA BEING ON COMPLETE BED REST SINCE 13.12.2012. THE FACTS BEING NOT IN DISPUTE, WE FIN D SUFFICIENT REASONS FOR THE DELAY. THE ASSESSEES CONDONATION APPLICATION WAS, ACCORDINGLY , ACCEPTED AND THE HEARING PROCEEDED WITH AFTER ADMITTING ITS C.O. 3.1 THE FACTS OF THE CASE ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM IN THE BUSINESS OF C & F AGENTS AS CUSTOM HOUSE AGENT WAS SUBJECT TO SUR VEY AGAIN U/S.133A OF THE ACT ON 14.02.2007 . TWO LOOSE PAPERS (PB PGS. 1-2) AND A SCRAP NOTE BOOK (PB PGS. 3-20), CONTAINING 2 AND 18 PAGES RESPECTIVELY, WERE FOUND. SEVERAL AMOUNTS WERE WRITTEN THEREON. THE ASSESSEE COULD NOT EXPLAIN THE SAID R ECEIPTS AND, ACCORDINGLY, A SUM OF RS.2.3 CRORES WAS ADMITTED AS INCOME FOR THE RELEVA NT YEAR, I.E., A.Y. 2007-08. THE SAME WAS RETRACTED SUBSEQUENTLY VIDE LETTER DATED 22.02. 2007 ADDRESSED TO THE ADDL. CIT, RANGE 13(2), MUMBAI WITH A COPY TO THE DY. CIT-13(2 ), MUMBAI, STATING THAT THE DISCLOSURE WAS UNDER DURESS, AND THAT THE ASSESSEE HAD MAINTAINED ALL THE BOOKS, WHICH REFLECTED ITS TRUE INCOME AND, FURTHER, ARE SUPPORT ED BY VOUCHERS. THE DISCLOSURE BEING NOT REFLECTED IN THE RETURN OF INCOME FILED SUBSEQUENTL Y ON 19.11.2007 (AT AN INCOME OF RS.8.94 LAKHS), THE SAME WAS SELECTED FOR BEING SUB JECT TO THE VERIFICATION PROCEDURE UNDER THE ACT. SHRI BIPIN D. PUJARA, PARTNER, WHO HAD DEPOSED DURING THE SURVEY, WAS AGAIN QUESTIONED DURING THE ASSESSMENT PROCEEDINGS ON 29.12.2009 BY THE ASSESSING OFFICER (A.O.) IN RESPECT OF THE ENTRIES IN THE LOO SE PAPERS AND THE NOTE PAD; THE ASSESSE ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 3 FAILING TO RESPOND TO THE SEVERAL OPPORTUNITIES PRO VIDED EARLIER BY THE AO FOR THE PURPOSE. THE SAID ENTRIES WERE EXPLAINED BY HIM TO BE RECEIP TS FROM THE SUNDRY DEBTORS, WHICH HAD BEEN WRITTEN FOR FOLLOWING UP ON THE CUSTOMERS. HOWEVER, THE NAMES OF THE CUSTOMERS, I.E., THE STATED SOURCE OF THE RECEIPTS, OR IF THE MONEY HAD ACTUALLY BEEN RECEIVED SUBSEQUENTLY FROM THEM, AND IF SO, HOW ACCOUNTED FO R, WAS NOT REVEALED . WITH NO OTHER INFORMATION FLOWING FROM THE ASSESSEE, DESPITE REPE ATED REQUESTS AND QUESTIONING IN THE MATTER, THE A.O. PROCEEDED ON THE BASIS OF THE MATE RIAL BEFORE HIM. THE ONUS TO EXPLAIN THE ENTRIES WAS ONLY ON THE ASSESSEE, AND IT HAD AB YSMALLY FAILED TO DISCHARGE THE SAME. THE ASSESSEE BEING A CUSTOM HOUSE AGENT, THE NATURA L CONCLUSION WOULD BE WITH REGARD TO THE SAID AMOUNTS BEING RECEIPTS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. THE STRICT RULES OF EVIDENCE LAW WERE NOT APPLICABLE TO THE PR OCEEDINGS UNDER THE ACT, AND THE ASSESSING AUTHORITY WAS ENTITLED TO TAKE THE SURROU NDING CIRCUMSTANCES INTO ACCOUNT, APPLYING THE TEST OF HUMAN PROBABILITIES. THE AGGRE GATE OF THE AMOUNTS IN THE TWO SETS OF PAPERS WORKED TO RS.214.28 LAKHS, WHICH WAS, THUS, INFERRED AS SUPPRESSED INCOME. THE SUBSEQUENT RETRACTION WAS NOT APPLICABLE. THERE WAS NOTHING TO SHOW ANY COERCION INFLICTING THE ADMISSION, WHICH EFFECTIVELY BINDS T HE DEPONENT, REFERRING TO SECTION 11 OF THE OATH ACT, 1969. REFERENCE WAS MADE IN THE DECIS ION OF DR . S.C. GUPTA V. CIT [2001] 248 ITR 782 (ALL ) TO THE EFFECT THAT STATEMENT DURING SEARCH WAS VA LID, AND COULD FORM THE BASIS OF ASSESSMENT, DRAWING ON THE DECISION BY THE HON'BLE APEX COURT IN THE CASE OF PULLANGODE RUBBER & PRODUCE COMPANY LTD. VS. STATE OF KERALA & ANR. [1973] 91 ITR 18 (SC). THE ASSESSEE HAD ALSO CLAIMED EXPENSES AT RS.113.37 LAKHS BY WAY OF EXPENDITURE UNDER DIFFERENT HEADS OF ACCOUNT. AS TH E SAME WERE NOT VERIFIABLE, THE A.O. EFFECTED A DISALLOWANCE FOR 10% THEREOF AT RS.11.34 LAKHS. THE ASSESSMENT WAS, ACCORDINGLY, FRAMED AT RS.234.56 LAKHS , ENHANCING THE RETURNED INCOME BY THE AGGREGATE OF RS.214.28 LAKHS, AS SUPPRESSED INCOME AND DISALL OWED EXPENSES OF RS.11.34 LAKHS. 3.2 IN APPEAL, THE ASSESSEE MADE COMPREHENSIVE SUBM ISSIONS, WHICH STAND REPRODUCED BY THE LD. CIT(A) IN FULL. WITH REGARD TO THE PRINC IPAL ADDITION QUA SUPPRESSION OF INCOME, THOUGH HE AGREED WITH THE A.O.S FINDING IN PRINCIPLE, HE RESTRICTED THE INCOME TO ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 4 RS.21,42,795/-, I.E., AT 10% OF THE AGGREGATE AMOUN T, ON THE BASIS THAT THE ENTIRE OF IT COULD NOT REPRESENT INCOME, BEING DECIDEDLY ONLY GR OSS RECEIPTS. WITH RESPECT TO DISALLOWANCE OF EXPENDITURE, HE FOUND THAT THE ASSE SSEE HAD IN FACT RECOVERED THE SAID EXPENSES, INCURRED FOR AND ONLY ON BEHALF OF ITS CU STOMERS; RATHER EXHIBITING AN EXCESS RECOVERY BY RS.6.11 LAKHS, WHICH WAS OFFERED AS INC OME. THE SAME WAS, ACCORDINGLY, DELETED. WHILE THE REVENUE CONTESTS THE RELIEFS ALL OWED, THE ASSESSEE IMPUGNS THE PART ADDITION SUSTAINED, I.E., FOR RS.21.43 LAKHS. 4.1 BEFORE US, LENGTHY ARGUMENTS WERE ADVANCED BY B OTH THE SIDES. THE LD. DR WOULD SUBMIT THAT THE PRIMARY ONUS OF EXPLAINING THE ENTR IES IN THE LOOSE SHEETS/SCRAP NOTE BOOK BEING NOT DISCHARGED, THE REVENUE WAS FULLY ENTITLE D TO DRAW ALL REASONABLE INFERENCES FROM THE MATERIAL GATHERED DURING THE SURVEY. THE RETRACTION WAS NOT VALID INASMUCH AS THERE IS NO MATERIAL TO SHOW OF ANY INFLUENCE OR CO ERCION BEING EXERCISED. RELIANCE WAS PLACED BY HIM ON THE DECISIONS IN THE CASE OF HIRA SINGH & CO. V. CIT [1998] 230 ITR 791 (HP); PARAM ANAND BUILDERS V. ITO [1996] 59 ITD 29 (MUM); AND HIRALAL MANGALAL V. DY. CIT [ 2005] 96 ITD 113 ( MUM ) . 4.2 THE LD. AR, ON THE OTHER HAND, WOULD SUBMIT TH AT THE REVENUES CASE RESTS ON TWO LIMBS, BOTH OF WHICH DO NOT SURVIVE IN THE INSTANT CASE. WITH REGARD TO THE MATERIAL FOUND, THE SAME IS ONLY NUMBERS, WITHOUT ANYTHING MORE. HOW COULD THEN THESE BE INFERRED AS BEING AMOUNTS, MUCH LESS RECEIPTS ? FURTHER, HOW COULD THESE REPRESENT THE RECEIPTS FOR THE CURRENT YEAR ? ON BEING QUERIED BY THE BENCH THAT THE TWO LOOSE SH EETS BEAR DATES FOR THE CURRENT YEAR, HE WOULD SUBMIT THAT THE SAME, FI RSTLY, IS ONLY QUA RS.18.88 LAKHS AND, SECONDLY, WERE NOT IN THE HAND OF ANY PARTNER OR AN Y PERSON KNOWN TO THEM. THE SAME WERE, THUS, DUMB DOCUMENTS. HE WAS FURTHER QUESTION ED AS TO HOW COULD ONE HAVE WRITTEN FIGURES, AND NOT ONE OR TWO, BUT IN A SERIES, ONE I N EACH ROW, OVER AS MANY AS 18 PAGES, AND YET CLAIM THEM TO BE WITHOUT ANY MEANING OR PUR POSE, I.E., OF HAVING MADE BASELESS AND USELESS JOTTINGS, HE COULD NOT FURNISH ANY SATI SFACTORY ANSWER. THE ASSESSEES CLAIM OF THE SAME BEING DUMB DOCUMENTS, THUS, DOES NOT RING TRUE, BESIDES ATTRACTS THE STATUTORY ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 5 PRESUMPTION OF SECTION 292C, WHICH WOULD OPERATE TO DEEM THE DOCUMENT AS TRUE AND, THUS, A VALID DOCUMENT. IT WAS SUBMITTED BY THE LD. AR THAT SEC. 292C WOULD NOT HAVE THE EFFECT OF EXTENDING THE SCOPE OF THE STATUTORY PRES UMPTION TO THE CONTENTS OF THE DOCUMENTS BEING PROVED AND CORRECT BY SUPPLYING MEA NING THERETO. AS SUCH, WHEN THE FIGURES DID NOT CONVEY ANYTHING, THE SAME ARE TO BE DISCARDED. FURTHER, IT IS NOT THE CASE THAT THE ASSESSEE HAS NOT EXPLAINED THE JOTTINGS, T AKING US TO PARA 2.1 OF THE APPELLATE ORDER. IT STANDS EXPLAINED BEFORE THE LD. CIT(A) TH AT THE SAME REPRESENTS THE ESTIMATED AMOUNT OF EXPENDITURE REQUIRED TO BE INCURRED FOR G ETTING THE WORK DONE BY THE STAFF ON A PARTICULAR DAY. THESE WERE WRITTEN AS THE APPELLAN T HAD TO ESTIMATE THE EXPENDITURE THAT WOULD BE REQUIRED IN RESPECT OF EACH CONSIGNMENT, A ND ARRANGE FOR ADVANCE FROM THE CONCERNED CUSTOMER TO MEET THE SAME. MOREOVER, FUND S WERE ALSO REQUIRED TO BE TRANSFERRED TO THE BRANCH OFFICE. NONE OF THESE AM OUNTS REPRESENTS ANY INCOME. IN FACT, THERE WERE NOTINGS IN THE TWO COLUMNS AT PB PG. 17, WHICH COULD ONLY MEAN OR SIGNIFY SOME DIFFERENCE. IF THE LEFT SIDE IS TAKEN AS OF R ECEIPTS, THAT ON THE RIGHT OUGHT TO BE TAKEN AS EXPENSES, WHILE THE REVENUE HAD ADDED BO TH OF THEM, INSTEAD OF ALLOWING DEDUCTION IN RESPECT OF THE SAME. AS REGARDS THE ADMISSION, THE SAME STOOD RETRACT ED SOON AFTERWARDS, I.E., AFTER EIGHT DAYS; THE ASSESSEE REALIZING HIS STATEMENT TO BE INCORRECT, HAVING BEEN MADE UNDER DURESS. THE STATEMENT U/S.133A HAS NO EVIDENTIARY V ALUE, AS STANDS HELD BY THE COURTS TIME AND AGAIN, AND FOR WHICH RELIANCE WAS PLACED B Y HIM ON THE DECISION IN THE CASE OF CIT VS. S. KHADER KHAN SON [2008] 300 ITR 157 (MAD.), AGAINST WHICH SLP HAS SI NCE BEEN DISMISSED BY THE APEX COURT (REPORTED AT [2012 ] 254 CTR SC 228)). IN FACT, THE BOARD HAS ITSELF ISSUED AN INSTRUCTION (F.NO.286/20 03 IT(INV)-II) DATED 10.03.2003 / COPY ON RECORD), ADVISING ITS OFFICERS THAT THE FOCUS AN D CONCENTRATION IN SEARCH AND SEIZURE OPERATIONS SHOULD BE ON COLLECTING EVIDENCE AS TO T HE UNDISCLOSED INCOME, AND NO ATTEMPT SHOULD BE MADE WHILE RECORDING STATEMENTS TO OBTAIN CONFESSION AS TO UNDISCLOSED INCOME. THE ENTIRE INCOME STANDS ASSESSED ON THE BA SIS OF SURMISES AND CONJECTURES, WHICH IS NOT PERMISSIBLE IN LAW, AND FOR WHICH RELI ANCE WAS PLACED BY HIM ON THE DECISION ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 6 IN THE CASE OF DHAKESWARI COTTON MILLS LTD. V. CIT [1954] 26 ITR 775 (SC). WITHOUT PREJUDICE, IT WAS SUBMITTED THAT IF AT ALL ANY ADDI TION IS TO BE MADE, THE SAME SHOULD BE RESTRICTED TO 3% OF THE TOTAL GROSS AMOUNT OF RS.21 4.28 LAKHS, BEING THE RATIO OF THE NET PROFIT DISCLOSED BY THE ASSESSEE (AND ACCEPTED BY T HE REVENUE FROM YEAR TO YEAR), AS AGAINST 10%, AS ASSESSED BY THE FIRST APPELLATE AUT HORITY. THIS IS AS, EVEN ASSUMING THE SAME TO BE GROSS RECEIPTS, IT IS THE ONLY THE PROFI T ELEMENT EMBEDDED THEREIN, THAT COULD BE THE SUPPRESSED INCOME, AND FOR WHICH THE PROFIT RAT E DISCLOSED BY THE ASSESSEES REGULAR BOOKS OF ACCOUNT FOR THE YEAR, AS WELL AS IN THE PA ST, IS A RELIABLE GUIDE. 5. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD AS WELL AS THE CASE LAW CITED. 5.1 WE MAY, FIRSTLY, DETERMINE THE NATURE OF THE DOCUMENTS FOUND DURING THE SURVEY; THE SAME BEING CLAIMED BY THE ASSESSEE TO BE DUMB DOCUM ENTS AND, THEREFORE, OF NO VALUE. ALSO, THE STATEMENT U/S.133A IS BY ITSELF OF NO EVI DENTIARY VALUE, AND IT IS VALIDITY, IF SO, WOULD ONLY BE WITH REFERENCE THERETO, I.E., TO THE EXTENT IT EXPLAINS OR CORROBORATES AND/OR SUPPORTS THE MATERIAL/EVIDENCE FOUND THE DOCUMENT S UNDER REFERENCE, SO THAT DETERMINATION OF THEIR NATURE ASSUMES CRUCIALITY. 5.2 TOWARD THIS, WE FIRSTLY EXAMINE THE ENTRIES IN THE TWO SETS OF DOCUMENTS FOUND, BEING LOOSE SHEETS AND SCRAP NOTE BOOK (RUNNING INT O 18 PAGES/PB PG.1-18), REPRODUCING, FOR EXHIBITION, ENTRIES ON SOME OF THE PAGES AS SAM PLE, AS UNDER: PAGE 1 13.04.06 65,000=00 24.06.06 30,000=00 02.05.06 1,35,000=00 11.07.06 50,000=00 08.05.06 65,000=00 12.07.06 90,000=00 06.06.06 40,000=00 14.07.06 55,000=00 15.06.06 50,000=00 29.07.06 1,25,000=00 23.06.06 80,000=00 29.07.06 5,65,000=00 23.06.06 60,000=00 29.07.06 2900=00 28.06.06 50,000=00 - 4050=00 30.06.06 90,000=00 - 10375=00 6,55,000=00 - 8750=00 ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 7 PAGE 5 1500000/- 30000/- 14000/- 45000/- 12000/- 31500/- 24750/- 35000/- 45000/- 50000/- 2000/- 3800/- 31500/- PAGE 6 1270000/- 24000/- 12000/- 32000/- 47000/- 24500/- 38600/- 19000/- 11000/- 49000/- 160000/- 122410/- 114000/- PAGE 17 1.21 L 1.83 L 2.40 L .53 T .47 T 1.65 L 1.72 ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 8 1.33 .10 .33 1.11 2.23 EVEN AS OBSERVED DURING THE HEARING, WE ARE UNABLE TO PERSUADE OURSELVES TO AGREE THAT THE SAID FIGURES ARE WRITTEN WITHOUT ANY PURPO SE OR END. THE ENTRIES, NEATLY MADE, ONE FOR EACH DATE, FOR DIFFERENT DATES, IN A CHRONOLOGI CAL ORDER, BY A PARTNER MANAGING THE AFFAIRS OF THE FIRM (I.E., FOR MOST PART), CANNOT B E A SCRAWL, WITHOUT ANY MEANING. FURTHER, THE FIRST TWO SHEETS (PGS. 1-2), BEARING A DATE I N THE FIRST COLUMN OF EACH ROW, IMPARTS MEANING TO THE SAME AS BEING IN RESPECT OF A PARTIC ULAR DATE, I.E., TO WHICH THE CORRESPONDING ENTRY PERTAINS. IN FACT, THE ASSESSE ES EXPLANATION/S, I.E., OF THE SAME BEING WITH REGARD TO SUMS RECOVERABLE FROM THE DEBTORS OR FOR EXPENSES BEING REQUIRED TO BE INCURRED, ARE ALSO WITH REFERENCE TO A DATE/S, SO T HAT CLEARLY THE ENTRY CORRESPONDS TO A PARTICULAR DATE, ITSELF SIGNIFYING IT TO BE WITH RE FERENCE TO SOME PURPOSE. FURTHER, THAT THESE ARE IN SUMS OF MONEY IS AMPLY BORNE OUT BY TH E ENTRIES THEMSELVES; THE FIGURES IN THE LATER PAGES (PB PGS. 14 -17) BEING SUFFIXED BY LETTERS L AND T, REPRESENTING LAKHS AND THOUSANDS RESPECTIVELY. BESIDES, THE ASSESSEE S EXPLANATION, LEAVES ONE IN NO MANNER OF ANY DOUBT IN THIS RESPECT. THIS IS AS EAC H OF THE THREE VERSIONS BY THE ASSESSEE IN EXPLAINING THESE ENTRIES ARE ONLY IN TERMS OF MO NEY. DOES, ONE MAY ASK, THE ASSESSEE CLAIM OF IT BEING IN TERMS OF QUANTITY, FOR IT TO C ONTEND OF THE SAME AS REPRESENTING A QUANTITY ? RATHER, THE ASSESSEES EXPLANATION FURTHER REINFORC ES THE INFERENCE OF THE DOCUMENTS BEING NOT DUMB DOCUMENTS, BEING ONLY QUA SUMS OF MONEY HAVING A RELATION WITH ITS BUSINESS. 5.3 THE NEXT QUESTION IS: WHAT DO THE SUMS OF MONEY SIGNIFY ? THE ASSESSEE EXPLAINS THEM TO BE RECEIPTS OF ITS BUSINESS DURING THE COUR SE OF THE SURVEY PROCEEDINGS, AGREEING FOR THE DISCLOSURE, BEING ADMITTEDLY NOT RECORDED I N ITS REGULAR BOOKS OF ACCOUNT. DURING THE ASSESSMENT PROCEEDINGS, THE STAND TAKEN WAS THA T, THOUGH RECEIPTS, THE SAME ARE ONLY THOSE RECOVERABLE FROM ITS CUSTOMERS, WRITTEN TO EN ABLE THEIR FOLLOW UP WITH THEM. BEFORE ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 9 THE FIRST APPELLATE AUTHORITY, THE ASSESSEES STAND WAS THAT THESE REPRESENTED ESTIMATED EXPENSES ON WORK TO BE UNDERTAKEN FOR THE RELEVANT DAY, WHICH HAD THEREFORE TO BE ARRANGED FOR THROUGH RECOVERY FROM THE CUSTOMER/S. IF ANYTHING, THE ASSESSEES EXPLANATIONS, THEIR MERITS APART, UNMISTAKABLY SHOW THAT THE DOCUMENTS ARE NOT DUMB DOCUMENTS. REFERENCE IN THIS CONTEXT IS MADE TO THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF SURENDRA M. KHANDHAR V. ASST. CIT [2010] 321 ITR 254 (BOM.), WHEREIN THE HONBLE COURT HAS CLARIFIED THAT THE DO CUMENT FOUND DURING SURVEY IS, UNLESS SUCCESSFULLY REBUTTED BY THE ASSESSEE, PRESUMED TO BE TRUE. QUA THE MERITS OF THE EXPLANATION, THE SECOND AND THIR D EXPLANATIONS, I.E., GIVEN IN THE ASSESSMENT AND THE APPELLATE PROCEEDINGS RESPEC TIVELY, DO NOT PASS MUSTER. THE AMOUNTS RECOVERABLE FROM CUSTOMERS ARE ONLY RECORDE D IN THE ASSESSEES BOOKS. BESIDES, THEY DO NOT BEAR THE NAME OF ANY CUSTOMER, WHICH WO ULD HAVE TO BE NECESSARILY WRITTEN IF THE AMOUNT REPRESENTS A RECEIVABLE THERE-FROM, WRIT TEN FOR BEING FOLLOWED UP WITH A CUSTOMER/S. RATHER, THE FOLLOW UP COULD BE WITH MO RE THAN ONE CUSTOMER ON ANY DAY; SO THAT THEIR SEPARATE NAMES, AND THE CORRESPONDING AM OUNTS, WOULD HAVE TO BE NECESSARILY WRITTEN, WHILE THERE IS A SINGLE ENTRY DAY AFTER DA Y. IN ANY CASE, THE AMOUNT COLLECTED WOULD AGAIN FIND REFLECTION IN THE SAID STATEMENT O R THE ASSESSEES ACCOUNTS, I.E., SUBSEQUENTLY, IF NOT ON THE SAME DAY, WHILE NO SUCH CORRESPONDENCE OR REFLECTION HAS BEEN EVEN ATTEMPTED, MUCH LESS SHOWN. SIMILARLY, FO R THE SAME TO REPRESENT AN EXPENSE, IT MUST BE QUA DIFFERENT WORKS; DIFFERENT STAFF MEMBERS; AND ALSO QUA DIFFERENT CUSTOMERS, IF THE EXPLANATION IS TO BE MEANINGFULLY APPLIED. THE SAID TWO EXPLANATIONS ARE MERELY AN AFTER-THOUGHT, WHICH REMAIN UN-CORROBORATED WITH EI THER THE DOCUMENT OR THE ENTRIES MADE THEREIN, WHICH IT SEEKS TO EXPLAIN, LEAVE ALONE THE ASSESSEES ACCOUNTS. THE SAME IN FACT ONLY NEED TO BE STATED TO BE REJECTED. 5.4 COMING TO THE ASSESSEES FIRST AND THE ONLY SUR VIVING EXPLANATION, I.E., OF THE SAME BEING OF THE RECEIPTS OF ITS BUSINESS, THE SAME STA NDS ACCEPTED BY THE REVENUE, ADDING THE SAME ON THE BASIS OF IT REPRESENTING THE ASSESSEES UNDISCLOSED INCOME, BEING NOT REFLECTED IN THE REGULAR BOOKS OF ACCOUNT. EXAMININ G THE SAME, WE OBSERVE THAT, FIRSTLY, ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 10 BEING THE COLLECTION FOR THE DAY, IT NEED NOT OCCUR ON A DAILY BASIS, AS WE OBSERVE A TIME LAPSE BETWEEN DIFFERENT DATES. SECONDLY, IT MAY BE ACROSS ALL CUSTOMERS, SO THAT THERE IS NO NECESSITY OF WRITING THE INDIVIDUAL NAMES OF THE CUSTOMERS FROM WHOM THE SAME STAND RECEIVED. THIRDLY, THE AMOUNT IS IN ROUND FIGURES, WHICH ONE TENDS TO DEAL IN, WHILE COLLECTING OR OTHERWISE DEALING IN UNACCOUNTED MONE Y. THE SAID EXPLANATION IS, THUS, PLAUSIBLE. AT THIS JUNCTURE, WE MAY CLARIFY THAT THE DECISION BY THE HON'BLE HIGH COURT IN THE CASE OF CIT VS. S. KHADER KHAN SON (SUPRA) ONLY STATES OF THE STATEMENT RECORDED AT TH E TIME OF THE SURVEY BEING NOT A CONCLUSIVE PIECE OF EVIDENCE. IT DOES NOT, AND CANNOT; THE SAME BEING ESSENTIALLY A MATTER AND, CONSEQUENTLY, OF A FINDING OF FACT, STATE THAT A STATEMENT, WHERE CORROBORATIVE OF THE MATERIAL FOUN D, YET COULD OR IS NOT TO BE RELIED UPON. THIS IS MORE SO AS NO CONTRARY MATERIAL OR E XPLANATION IS BROUGHT ON RECORD. THE TWO SUBSEQUENT EXPLANATIONS FURNISHED HAVING BEIN G FOUND TO BE WITHOUT MERIT OR SUBSTANCE, BEING RATHER NOT EVEN IN CONFORMITY OR A GREEMENT WITH THE FORM IN WHICH THE ENTRIES WERE MADE. WE ARE NOT HEREBY STATING OR IM PLYING TO MEAN THAT THIS IS THE ONLY EXPLANATION THAT IS POSSIBLE, BUT ONLY THAT THE DOC UMENT IS NOT A DUMB DOCUMENT, AND THAT OF THE THREE EXPLANATIONS FURNISHED BY THE ASSESSEE , THE FIRST IS THE MOST PLAUSIBLE IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE. THE ONUS TO EXPLAIN THE ENTRIES IS SQUARELY ON THE ASSESSEE; ONE OF THE PARTNERS HAVING ADMITTEDLY WRITTEN THE DOCUMENT, AND WHEN IT CHOOSES NOT TO DIVULGE MORE, OR THE EXPLANATION/S O FFERED IS FOUND NOT SATISFACTORY, WE SEE NO REASON NOT TO ADMIT AND ACCORD CREDENCE TO THE A SSESSEES FIRST EXPLANATION. ADMISSION, IT MAY BE NOTED, IS AN EXTREMELY IMPORTA NT PIECE OF EVIDENCE AND, FURTHER, IT HAS TO BE BORNE IN MIND, IS NOT SANS ANY MATERIAL; RATHER, ON THE CONTRARY, EMANATES IN EXPLANATION OF THAT FOUND, AND WHICH WE HAVE FOUND PLAUSIBLE (REFER: PULLANGODE RUBBER & PRODUCE COMPANY LTD. VS. STATE OF KERALA & ANR. (SUPRA)). CONTINUING FURTHER, THE STATEMENT IS STATED TO HAVE BEEN SINCE RETRACTED. BUT A MERE DENIAL, WITHOUT ANYTHING MORE, WOULD BY ITSELF NOT LEAD TO A VALID RETRACTION IN LAW. THE ONUS UNDER THE CIRCUMSTANCES ON THE ASSESSEE WAS HE AVY, TO SHOW AS TO WHAT MISTAKE OF FACT RESULTED IN ADMISSION, AND WHICH IT IS ABYSMAL LY FAILED TO. THE TWO ALTERNATE ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 11 EXPLANATIONS, RENDERED SUBSEQUENTLY, HAVE ALSO BE EN FOUND TO BE AS OF NO MERIT. THE SAID MATERIAL, COUPLED WITH THE ASSESSEES STATEMEN T, AS WELL AS THE SUBSEQUENT EXPLANATIONS JUSTIFYING THE ENTRIES, LEADS US TO ST ATE THAT THE SAME CONSTITUTES VALID MATERIAL ON WHICH AN INFERENCE COULD BE BASED, AND CANNOT BE SAID TO BE A CONJECTURE, AS CLAIMED BY THE ASSESSEE. 5.5 WE, NEXT, PROCEED TO EXAMINE THE ASSESSEES OBJ ECTION QUA ESTIMATION OF SUPPRESSION OF INCOME. WE FIND MUCH MERIT IN ITS AR GUMENT THAT THE REVENUE HAVING ACCEPTED AND PROCEEDED ON THE BASIS THAT THE ENTRIE S REPRESENTS THE GROSS RECEIPTS OF ITS BUSINESS, COULD NOT HAVE WITHOUT ANY SUPPORTING OR CORROBORATIVE MATERIAL, INFERRED THE ENTIRE AMOUNT AS ITS SUPPRESSED INCOME. NO DOUBT, IT MAY WELL BE THAT THE SAME REPRESENT THE SUMS BILLED TO THE CUSTOMERS IN RESPECT OF SERV ICES RENDERED, WHICH ARE ALSO A SUBJECT MATTER OF REGULAR BOOKING IN ACCOUNTS, I.E., REPRES ENTS THE EXCESS AMOUNT CHARGED THERE- FROM, SO THAT THE ENTIRE OF IT MAY BE INCOME, WITH THE ENTIRE EXPENDITURE IN RELATION TO THOSE SERVICES HAVING BEEN ALREADY BOOKED IN THE AC COUNTS. HOWEVER, IN THE ABSENCE OF ANY MATERIAL TO SUPPORT SUCH HYPOTHESIS, THE SAME W OULD ONLY BE A CONJECTURE, AND NOTHING MORE. THE ARGUMENT BY THE LD. AR OF NO EXPE NDITURE OR ASSETS HAVING BEING FOUND DURING SURVEY ASSUMES RELEVANCE AND SIGNIFICA NCE IN THIS REGARD. IN OTHER WORDS, THE ONUS TO EXHIBIT THAT THE ENTIRE OF IT REPRESENT S SUPPRESSED INCOME WAS ON THE REVENUE, WHICH IT HAS FAILED TO DISCHARGE. THE SUPPRESSION O F INCOME COULD, THUS, ONLY BE REASONABLY ESTIMATED. TOWARD THIS, WE FIND THAT TH E ESTIMATION OF 10% BY THE LD. CIT(A) AS REASONABLE. THE ASSESSEE HAS ITSELF, THROUGH ITS ACCOUNTS, ADMITTED TO CHARGING EXCESS OF THE EXPENDITURE INCURRED, I.E., FOR AND ON BEHAL F OF ITS CUSTOMERS. IN FACT, THE DELETION OF DISALLOWANCE OF RS.11.34 LAKHS BY THE LD. CIT(A) ON THIS GROUND CANNOT BE CONSIDERED AS VALID. THIS IS AS ONCE THE ASSESSEE HIMSELF ADM ITS TO HAVING CHARGED IN EXCESS, THE QUESTION THAT WOULD ARISE IS AS TO THE EXTENT OF SU CH EXCESS, AND FOR WHICH THE ASSESSEES ACCOUNTS WOULD HAVE TO BE RELIED UPON. THE SAME HA VING BEEN FOUND WANTING INASMUCH AS THE ASSESSEE COULD NOT SUBSTANTIATE THE EXPENDIT URE CLAIMED AND STATED TO BE INCURRED, FOR WHICH THE RECOVERY IS OSTENSIBLY MADE, THE A.O. CANNOT FAULTED WITH IN MAKING ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 12 ESTIMATION OF THE INFLATION ATTENDING THE CLAIM OF EXPENDITURE. IN FACT, THE ASSESSEE HAS DISCLOSED AN INCOME OF RS.8.94 LAKHS FOR THE RELEVANT YEAR, SO THAT REDUCING THE EXCESS RECOVERY (OF EXPENDITURE) OF RS.6.11 LAKHS THERE-FR OM, IMPLIES THE ASSESSEE TO HAVE DISCLOSED OR RETURNED AN INCOME OF ONLY RS.2.83 LAK HS AS AGAINST A GROSS RECEIPT OF NEARLY RS.3 CRORES (THE ASSESSEE STATING TO HAVE RETURNED A NET PROFIT OF ABOUT 3%), OR AT 1% OF ITS GROSS RECEIPTS. THAT IS, THE ALLEGED INFLATION IN T HE CLAIM OF THE EXPENSES GETS CORROBORATED, I.E., TO THAT EXTENT, BY THE DECLINE OF 2% IN THE NORMATIVE PROFIT RATE OF 3% (REFER PARA 4.2). HOWEVER, AS THE LD. CIT(A) HAS NO T ISSUED ANY DEFINITE FINDINGS WITH REGARD TO THE UN-VERIFIABILITY OF THE RELEVANT EXPE NSES, ON WHICH PREMISE THE IMPUGNED DISALLOWANCE STANDS MADE BY THE A.O., WE ONLY CONS IDER IT PROPER TO RESTORE THE MATTER BACK TO HIS FILE FOR A DECISION ON MERITS, INCLUDIN G AS TO THE EXTENT OF DISALLOWANCE, AND DECIDE THE SAME PER A SPEAKING ORDER AFTER HEARING BOTH THE SIDES. THIS ISSUE, RAISED PER THE REVENUES GROUND # 2, GETS DECIDED ACCORDINGLY. COMING BACK TO THE ADDITION ON ACCOUN T OF SUPPRESSION OF INCOME, ESTIMATED BY THE LD. CIT(A) AT RS.21,42,759/-, WE FIND THE SAME AS REASONABLE, MERITING CONFIRMATION; THE ASSESSEE HAVING ITSELF DISCLOSED AN EXCESS OF A ROUND 6% ON EVEN THE EXPENSES RECOVERABLE FROM ITS CLIENTS. IN DECIDING THIS ISSU E, APART FROM OUR FINDINGS AT PARA 5.1 THROUGH 5.4 OF THIS ORDER, WE HAVE ALSO CONSIDERED THE ASSESSEES ARGUMENT OF NETTING THE AMOUNT WRITTEN ON THE RIGHT SIDE, SO THAT ITS NATUR E COULD ONLY BE A DIFFERENT, I.E., REPRESENTING OUT-LAYS, ONLY TO FIND THE SAME AS NOT ACCEPTABLE. THIS IS FOR THE REASON THAT IT IS NOT POSSIBLE THAT SUCH EXPENDITURE IS INCURRED O NLY ON FEW (SIXTEEN) DAYS IN A YEAR, OR EVEN MORE IMPORTANTLY, NOT IN THE REGULAR COURSE; T HE ENTRIES APPEARING ON ONLY TWO PAGES, I.E., PG. NOS. 11 AND 17 OF THE NOTE-BOOK RUNNING T O 16 PAGES. FURTHER-MORE, THE ASSESSEE SURPRISINGLY DOES NOT RECEIVE ANY AMOUNT ON THE SAI D DATES, SO THAT IT MAY REPRESENT AN EITHER OR SITUATION. RATHER, THE EXPENDITURE WOULD NOT ONLY BE INCURRED ON THE BASIS OF WHICH THE AMOUNT STANDS RECEIVED, BUT ALSO, WHERE I T IS NOT SO, THERE BEING AS AFORE-NOTED A TIME GAP BETWEEN THE ENTRIES IN EACH ROW, SO THAT THERE IS NO EXPENDITURE ON ALL BUT 16 DAYS DURING THE RELEVANT PREVIOUS YEAR. THIS DISPOS ES THE REVENUES GROUND # 1; ITS ITA NO.3720/MUM/2011 & CO NO.48/MUM/2012 DEVJI PREMJI PUJARA & SONS (A.Y. 2007-08) 13 GROUNDS 3 & 4 BEING GENERAL IN NATURE, WARRANTING N O ADJUDICATION, AS WELL AS THE ASSESSEES C.O. 6. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES, WHILE THE ASSESSEES C.O. IS DISMISSED. ORDER PRONOUNCED ON THIS 15 TH DAY OF MARCH, 2013 SD/- - SD/- ( D. MANMOHAN ) ( SANJAY ARORA) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED: 15.03.2013 COPY FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. 4. CIT (A) 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI ROSHANI