Shri Shanti Chand Bhansali Prop. M/s. Rajendra Kumar, JODHPUR V. DCIT, JODHPUR

ITA 1/JODH/2010

• Counselvise Citation: 123314 RSA 2010
• Duration Of Justice: 3 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 21-11-2013
• Assessment Year: 2002-2003
• Appeal Filed On: 01-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: N R MERTIA
• Keywords: Rejection of books of accounts; Depreciation; Loose papers; Opportunity of being heard
• Section: 133A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER ITA NO.01/JU/2010 ASST. YEAR: 2002-03 SHRI SHANTI CHAND BHANSALI, VS. DY. COMMISSIONER OF INCOME TAX, PROP. M/S RAJENDRA KUMAR ASHOK KUMAR, CICLE-3, JODH PUR. C/O. M/S. MERTIA & COMPANY, CHARTERED ACCOUNTANTS, VATSALYA, 244, KAMALA NEHRU NAGAR, PRAKARTIC CHIKITSA KENDRA, CHOPASANI ROAD, JODHPUR. (PAN: AAQPB 5266 P) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.R. MERTIA, RESPONDENT BY : SHRI N.A. JOSHI, D.R. DATE OF HEARING : 21.11.2013 DATE OF PRONOUNCEMENT : 28.11.2013 ORDER PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE FOR A.Y. 2002-03 IS DI RECTED AGAINST THE ORDER OF LD. CIT(A), JODHPUR DATED 24.11.2009. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE HAS BEEN CARRYING ON BUSINESS OF DRY FRUITS AND KIRANA MECHANT. FOR A.Y . 2002-03 THE ASSESSEE FILED HIS RETURN OF INCOME BY DECLARING TOTAL INCOME OF RS.7, 97,260. A SURVEY UNDER SECTION 2 ITA NO.01/JU/2010 A.Y. 2002-03 133A OF THE INCOME TAX ACT, 1961 (THE ACT FOR SHO RT) WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 13.02.2002 IN RESPECT OF ITS TWO CONCERNS NAMELY M/S RAJENDRA KUMAR ASHOK KUMAR WHICH IS A PR OPRIETORSHIP CONCERN AND IN PARTNERSHIP FIRM NAMELY M/S. SHANTICHAND SUNIL B HANSALI AND ITS SISTER CONCERNS NAMELY M/S SUMER TRADING CO. (DELHI), M/S. RADHEYSH YAM RAMESH KUMAR (DELHI ) & M/S. ASHOK KUMAR ANIL KUMAR (DELHI) ETC. DURI NG THE SURVEY PROCEEDINGS, INVENTORIES ON THE BASIS OF PHYSICAL VERIFICATION O F RECORDS, CASH AND GOODS, IT WAS NOTICED THAT THERE WAS DIFFERENCE OF RS.5,18,788/- IN THE STOCK AND SHORTAGE OF CASH OF RS.1,89,112/-. DURING THE SURVEY, THE ASSESSEE MADE SURRENDER OF RS.8,00,000/- ON ACCOUNT OF DISCREPANCIES FOUND IN THE STOCK POS ITION, CASH AND ON THE BASIS OF LOOSE PAPERS FROM WHICH SALE/PURCHASES OUT OF BOOKS WERE NOTICED. RETURN OF INCOME SO FILED ALSO INCLUDED SURRENDERED AMOUNT OF RS.8,00,000/-. THIS RETURN WAS ASSESSED AT A TOTAL INCOME OF RS.92,34,180/-. AGGRIEVED, THE ASSESSEE WENT BEFORE THE LD. CIT(A) WHO GAVE A PART RELIEF TO THE ASSESSEE. FROM THAT ORDER, BOTH THE PARTIES WERE AGGRIEVED AND THEY WENT BEFORE THE APPELLATE TRIBUNAL. THE APPELLATE TRIBUNAL WHILE DECIDING THESE MATTERS VID E ORDER DATED 04.10.2007, RESTORED THE ISSUES TO THE FILE OF A.O. WITH THE DI RECTION TO MAKE FRESH ASSESSMENT AFTER AFFORDING REASONABLE OPPORTUNITY OF HEARING T O THE ASSESSEE. WHILE FRAMING THE FRESH ASSESSMENT ORDER, THE A.O. COMPLIED THE D IRECTION OF THE APPELLATE TRIBUNAL AND MADE THE COMPUTATION OF INCOME AS UNDE R :- 3 ITA NO.01/JU/2010 A.Y. 2002-03 INCOME FROM HOUSE PROPERTY (AS DECLARED) 25,200 INCOME FROM BUSINESS 44,95,216 INCOME FROM BUSINESS (AS DECLARED) 7,72,059 ADD (I) ON A/C OF SALE OF SHORT STOCK 91,551 (II) ON A/C OF PROFIT FROM SALE OF UNRECORDED PURCHASE 17,39,019 (III) ON A/C OF UNDISCLOSED INVESTMENT 18,79,174 (III) ON A/C OF DISALLOWANCE OF DEPN. 13,413 GROSS TOTAL INCOME 45,20,416 TOTAL INCOME 45,20,416 3. AGAINST THIS ORDER, THE ASSESSEE FILED APPEAL AN D THE LD. CIT(A) HAS AGAIN GIVEN PART RELIEF, BUT THIS TIME, AS STATED BY THE LD. DEPARTMENTAL REPRESENTATIVE, THE REVENUE HAS NOT PREFERRED ANY APPEAL AND ONLY THE A SSESSEE HAS COME IN APPEAL BEFORE US. FOLLOWING GROUNDS HAVE BEEN RAISED IN T HIS APPEAL 1. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE ID. CIT(A) HAS ERRED AND WAS NOT JUSTIFIED IN DISMISSING ALL THE L EGAL GROUNDS NO. 1 TO 6 (REPRODUCED IN THE IMPUGNED ORDER) OF APPEAL BEFORE HIM, WHICH HE OUGHT TO HAVE CONSIDERED AND GIVEN HIS VERDICT. 2. THAT THE ID. CIT(A) HAS ERRED IN LAW AND IN FAC TS IN HOLDING THAT THE GROUND NO.7, 8 AND 9 WERE OF GENERAL BUT, AS A MATT ER OF FACT AND LAW, IN THESE GROUNDS SPECIFIC ISSUES WERE RAISED, PARTICUL ARLY - A. IN GROUND NO. 8 IT WAS URGED THAT ID. A.O. HAS ERRED IN MAKING VARIOUS ADDITIONS AND ALSO IN INITIATING PENALTY PR OCEEDINGS BY IGNORING THE COMMITMENT OF SURRENDER MADE BY THE APP ELLANT WHEREBY THE APPELLANT SURRENDERED TOTAL INCOME OF RS. 25 LACS ( RS. 8 LACS IN INDIVIDUALCAPACITY AND RS. 17 LACS AS A PARTNER IN ANOTHER FIRM) ON 4 ITA NO.01/JU/2010 A.Y. 2002-03 ACCOUNT OF ALL DEFECTS LIKE SHORT STOCK, SHORT CASH , LOOSE PAPERS FOUND OR OTHER DEFICIENCIES/LAPSES AND ALSO WITH A CONDITION THAT NO PENALTY ETC., WOULD BE INITIATED/LEVIED. B. IN GROUND NO. 9 A SPECIFIC ISSUE WAS RAISED F OR ADJUDICATING THAT SINCE THE ISSUE INVOLVED WAS REJECTION OF BOOKS OF ACCOUNTS, THEREFORE, IN SUCH SITUATION IT IS THE PAST HISTORY OF THE CASE W HICH, IN THE ABSENCE OF OTHER COMPARABLE CASES, IS ONLY PROPER AND JUDICIAL BASIS AND APPROACH TO MAKE ASSESSMENT. HE HAS, THUS, ERRED IN NOT ACCE PTING THE SAME 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ID. CIT(A), EVEN ON THE MERITS OF THE CASE, ERRED IN MAINTAINING THE ADDITION OF RS.91,551/- ON ACCOUNT OF ASSUMED PROFIT ON SALE OF SHORT STOCK FOUND DURING SURVEY. THE ID. CIT(A) FURTHER ERRED AND WAS UNJUST IN INFERRING THAT THE APPELLANT HAD NOT DISPUTED THE APPLICATION OF G.P. RATE OF 15% WHEREAS THE APPELLANT WAS DIRECTLY DISPUTING THE AC TION, MANNER AND BASIS OF THE ID. AO IN MAKING ADDITIONS ON ERRONEOU S LINES AND BASIS. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE ID. CIT(A) ERRED IN UPHOLDING THE ASSUMPTION OF UNRECORDED PURCHASES FOR THE OVERALL PERIOD OF 5.5 MONTHS AT RS.1,43,87,776/- ESTIMATING IT ON THE BASIS OF PAPERS(FOUND DURING THE COURSE OF SURVEY) OF UNRECO RDED PURCHASES OF RS.39,23,939/-WHICH RELATES TO 1.5 MONTHS I.E. FROM JAN., 2002 TO 13TH FEB., 2002. THEREBY HE HAD FURTHER ERRED IN MAINTAI NING THE ADDITION OF RS.17,39,019/- WHICH WAS WORKED OUT BY THE ID. AO A PPLYING AN EXORBITANT G.P. RATE OF 15% AND AFTER GIVING SET OF F OF RS. 8 LACS WHICH WERE SURRENDERED. 5. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND EVEN ON THE MERITS OF THE CASE, AND ALSO IN VIEW OF THE MATERIAL AVAIL ABLE ON RECORD AND THE PLEADINGS/SUBMISSIONS MADE, THE ID. CIT(A) ERRED A ND WAS UNJUST IN MAINTAINING THE ADDITION OF RS.18,89,1747- ON ACCOU NT OF UNDISCLOSED INVESTMENT BY HOLDING THAT THE USE OF BUSINESS FUND S AND ITS RECYCLING WAS NOT ESTABLISHED IN THE UNRECORDED TRANSACTIONS. 6. THAT, IN THE FACTS AND CIRCUMSTANCES OF THE CAS E ID. CIT(A) ERRED IN MAINTAINING OF THE RESTRICTION OF DEPRECIATION ALLO WANCE OF RS.13413/-. 7. THAT, THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER, MODIFY, SUBSTITUTE OR DELETE ANY OF THE GROUNDS OF APPEAL, MENTIONED HEREIN 5 ITA NO.01/JU/2010 A.Y. 2002-03 ABOVE, TAKEN ON OR BEFORE THE APPELLATE HEARING. 8. THE APPELLANT PRAYS THAT THE APPEAL MAY VERY KI NDLY BE ALLOWED. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE RECORDS INCLUDING THE CHART PREPARED BY THE LD. AUT HORIZED REPRESENTATIVE TO UNDERSTAND SPECIFICALLY THE GROUNDS RAISED, RELEVAN T PORTION OF EACH GROUND IN THE ASSESSMENT ORDER AND CIT(A)S ORDER ALONG WITH ASSE SSEES SUBMISSION WITH THE SUPPORT OF RELEVANT PRECEDENTS. THE ASSESSEE HAS R AISED TWO LEGAL ISSUES (1) REGARDING VALIDITY OF NOTICE ISSUED UNDER SECTION 1 43(2) OF THE ACT AND (2) ON THE JURISDICTION OF THE A.O./ITO. THESE ISSUES WERE NO T DECIDED BY THE LD. CIT(A) ON THE PREMISE THAT IN THE FIRST ROUND THESE LEGAL ISS UES WERE NOT RAISED. THIS FINDING OF LD. CIT(A) REGARDING THESE TWO LEGAL ISSUES IS N OT CORRECT ON TWO COUNTS (1) WHEN DENOVO ASSESSMENT IS FRAMED EARLIER ASSESSMENT ORDER GETS ERASED AND DEFACED AND IT IS TREATED AS IF IT DID NOT EXIST AT ALL, THEREFORE, THE ASSESSEE BECOME FREE TO TAKE ANY GROUND ARISING OUT OF THIS DENOVO ASSESSMENT ORDER, AND (2) THE ASSESSEE, AS PER THE SETTLED LAW IS PERMITTED TO RA ISE ANY LEGAL ISSUE FOR WHICH NO FURTHER INVESTIGATION OF FACTS IS REQUIRED TO BE DO NE BY THE A.O., AT ANY STAGE AND EVEN FOR THE FIRST TIME BEFORE THE APPELLATE TRIBUN AL AND EVEN BEFORE THE LD. CIT(A). THESE TWO ISSUES GO TO THE VERY ROOT OF TH E MATTER AND REQUIRED TO BE DECIDED AS THESE WERE RAISED BEFORE THE LD. CIT(A) . IN THESE CIRCUMSTANCES, WE CAN EITHER DECIDE THESE TWO LEGAL ISSUES OR WE CAN RESTORE THESE TWO ISSUES TO THE 6 ITA NO.01/JU/2010 A.Y. 2002-03 FILE OF LD. CIT(A) WITH THE DIRECTION THAT HE SHALL DECIDE THEM AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. ON MERITS ALSO, THE GROUND RAISED BY THE APPELLA NT SEEMS TO BE MERITORIOUS. IN CASE OF REJECTION OF BOOKS OF ACCOUNT, AGAIN THE LAW IS SETTLED THAT THE PAST HISTORY OF THE ASSESSEE, IF AVAILABLE, IS THE BEST GUIDE TO PICK UP THE MAGIC FIGURE FROM THE PAST HISTORY FOR INVOKING PROVISIONS OF SE CTION 145(3) OF THE ACT. THE SUBMISSIONS MADE THROUGH THIS CHART AND BEFORE THE LD. CIT(A) THE EXPLANATION THAT THE G.P. RATE DECLARED BY THE ASSESSEE IN THIS YEAR IS BETTER THAN THAT PREVAILED IN THE IMMEDIATELY PASSED A.Y. AFTER GIVING CREDIT TO THE SURRENDERED INCOME ETC. HAS TO BE CONSIDERED BY THE LD. CIT(A). SINCE HE HAS REF RAINED FROM DOING THE SAME, WITH THE CONCURRENCE OF BOTH THE LD. REPRESENTATIVES, WE RESTORE THIS ISSUE ALSO TO THE FILE OF LD. CIT(A) WITH SIMILAR DIRECTIONS. ACCORDINGLY , ENTIRE GROUNDS RAISED BEFORE US ARE BEING SET ASIDE TO THE FILE OF LD. CIT(A) WITH THE DIRECTION THAT HE SHALL GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. IN THE RESULT, APPEAL STANDS ALLOWED FOR STATIST ICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 28.11.2013) SD/- SD/- (N.K. SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 28 TH NOVEMBER, 2013 7 ITA NO.01/JU/2010 A.Y. 2002-03 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, JODHPUR BENCH, JODHPUR 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME-TAX APPELLATE T RIBUNAL, JODHPUR