Savanta Shivappa Mali, Sangli V. Income-tax Officer, Ward - 1(4), Sangli

ITA 1213/PUN/2018

• Counselvise Citation: [2019] 111 COUNSELVISE.COM (IT) 9519 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 06-11-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 13-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S P WALIMBE
• Keywords: Principle of natural justice; Retraction
• Section: 133A

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE . , BEFORE SHRI D. KARUNAKARA RAO, AM . / ITA NO.1212/PUN/2018 / ASSESSMENT YEAR : 2008-09 SACHIN SAVANTA MALI, C/O SHIVKRUPA TRADERS, VITA ROAD, TASGAON, DIST. SANGLI-416312. PAN : APVPM6760K . /APPELLANT VS. ITO, WARD-1(4), SANGLI. . / RESPONDENT . / ITA NO.1213/PUN/2018 / ASSESSMENT YEAR : 2008-09 SAVANTA SHIVAPPA MALI C/O SANTOSH VIJAY SAW MILLS, VITA ROAD, TASGAON, DIST. SANGLI-416312. PAN : ABLPM0091M . /APPELLANT VS. ITO, WARD-1(4), SANGLI. . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGATE / RESPONDENT BY : SHRI S. P. WALIMBE / DATE OF HEARING : 19.12.2019 / DATE OF PRONOUNCEMENT: 31.12.2019 / ORDER PER D. KARUNAKARA RAO, AM : BOTH THE APPEALS ARE FILED BY THE TWO DIFFERENT ASSESSEES AGAINST THE COMMON ORDERS OF CIT(A)-1, KOLHAPUR DATED 04.05.2018 FOR THE ASSESSMENT YEAR 2008-09. ITA NOS.1212 & 1213/PUN/2018 - 2 - ITA NO.1212/PUN/2018 (SACHIN SAVANTA MALI) 2. FIRST, WE SHALL TAKE UP THE APPEAL IN ITA NO.1212/PUN/2018 FOR ADJUDICATION IN THE FOLLOWING PARAGRAPHS. 3. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN MAKING AN ADDITION OF RS.1,51,800/- ON ACCOUNT OF DIFFERENCE IN STOCK FIGURE BY DISREGARDING THE APPELLANTS CONTENTION AND SUBMISSIONS. YOUR APPELLANT PRAYS FOR THE DELETION OF ENTIRE ADDITION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LOWER AUTHORITIES HAVE ERRED IN MAKING AN ADDITION OF RS.25,200/- ON ACCOUNT OF ALLEGED LOW HOUSEHOLD WITHDRAWALS BY DISREGARDING THE APPELLANTS CONTENTION. YOUR APPELLANT PRAYS FOR THE DELETION OF ENTIRE ADDITION. THE APPELLANT CRAVES FOR TO LEAVE, ADD, ALTER, MODIFY, DELETE ABOVE GROUND OF APPEAL BEFORE OR AT THE TIME OF HEARING, IN THE INTEREST OF NATURAL JUSTICE. 4. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF RETAIL TRADE IN BUILDING MATERIAL SUCH AS TILES FITTINGS ETC. THE ASSESSEE WAS SURVEYED U/S 133A OF THE ACT ON 21.02.2008. DURING THE SURVEY ACTION, THERE WAS PREPARATION OF A TENTATIVE TRADING ACCOUNT AS PER WHICH THE ACTUAL STOCK INVENTORIED WAS VALUED AT RS.3,40,212/-. AGAINST THE SAME, CONSIDERING THE DIFFERENCE OF RS.5,01,918/- IN STOCK, THE SAME WAS OFFERED BY THE ASSESSEE FOR TAXATION. HOWEVER, DURING THE FILING OF RETURN OF INCOME BY THE SAID YEAR, THE ASSESSEE INFORMED THE ASSESSING OFFICER ABOUT THE FACTS RELATING TO THE TAKEOVER OF THE BUSINESS FROM THE ASSESSEES BROTHER AND FILED COPY OF THE AGREEMENT. AS PER THE AGREEMENT AND ATTACHED FINANCIAL STATEMENTS, THE STOCK POSITION IS RS.5,62,300/-. IF THE SAID FIGURES ARE CONSIDERED, THERE IS NO NEED FOR ANY ADDITION ON ITA NOS.1212 & 1213/PUN/2018 - 3 - ACCOUNT OF STOCK DISCREPANCIES. CONSIDERING THE DELAY IN BRINGING THE DETAILS TO THE NOTICE OF THE ASSESSING OFFICER, THE SAID AGREEMENT DATED 18.06.2007 OF TAKEOVER OF THE BUSINESS FROM THE ASSESSEES BROTHER WAS REJECTED BY THE ASSESSING OFFICER AS AN AFTERTHOUGHT. THE LD. COUNSEL BROUGHT MY ATTENTION TO THE CONTENTS OF PAGE 2 TO 54 OF THE PAPER BOOK IN SUPPORT OF THE SAME. THE CIT(A) CONFIRMED THE ADDITION OF RS.1,51,800/-. 5. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A FACT THAT THE ASSESSEE TOOK OVER THE BUSINESS FROM HIS BROTHER AND THE SAME IS SUPPORTED BY THE AGREEMENT SIGNED BY BOTH THE PARTIES. REJECTION OF THE SAID AGREEMENT BY THE ASSESSING OFFICER AS A PRODUCT OF AN AFTERTHOUGHT IS NOT SUSTAINABLE IN VIEW OF THE ENFORCEABLE AGREEMENT BETWEEN THE PARTIES. THE ASSESSING OFFICER MADE ADDITION OF RS.1,51,800/- (RS.5,62,300/- MINUS RS.4,10,500/-) WHICH IS NOT OFFERED TO TAX BY THE ASSESSEE IN THE RETURN OF INCOME. 6. ON HEARING BOTH THE SIDES ON THE FACTS RELATING TO THE TAKE OVER THE BUSINESS BY THE ASSESSEE FROM HIS BROTHER, I FIND THE AGREEMENT IS IN ORDER. THERE IS NO REASON FOR THE ASSESSING OFFICER TO SUSPECT THE SAME. MERE FAILURE TO FILE A LETTER OF RETRACTION TILL THE TIME, THE RETURN IS FILED INCORPORATING THE CONTENTS OF AGREEMENT, THE SAME WOULD NOT BE INTERPRETED AGAINST THE ASSESSEE AND REJECTED THE SAME AS A CASE OF AN AFTERTHOUGHT. THE ASSESSING OFFICER HAS NOT GATHERED ANYTHING EXCEPT SUSPECTING THE GENUINENESS OF THE AGREEMENT. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE SUBMISSIONS OF ASSESSEE ABOUT THE SALE OF THE BUSINESS AS ONGOING CONCERNED, IS FALSE. CONSIDERING THE SAME, I FIND THE ADDITION MADE BY THE ITA NOS.1212 & 1213/PUN/2018 - 4 - ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS NOT SUSTAINABLE. ACCORDINGLY, RELYING ON THE ONUS ISSUES, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO.1212/PUN/2018 IS ALLOWED. ITA NO.1213/PUN/2018 (SAVANTA SHIVAPPA MALI) 8. FACTS OF THE PRESENT CASE IS ALSO SAME AS THAT OF THE APPEAL IN ITA NO.1212/PUN/2018. THE ASSESSEE IS FATHER OF SACHIN SAVANTA MALI (ASSESSEE IN ITA NO.1212/PUN/2018). HERE ALSO, THE ASSESSEE HAS A PROPRIETORSHIP CONCERN AND ADEQUATE CASH FLOW TO EXPLAIN THE ASSETS DISCOVERED DURING THE SURVEY ACTION U/S 133A OF THE ACT. THE ASSESSEE MADE A STATEMENT OFFERING ADDITIONAL INCOME RELATED TO THE DISCOVERED ASSETS IGNORING THE FACT THAT THEY HAVE SUFFICIENT CASH BALANCE IN THE PROPRIETORSHIP CONCERNS TO EXPLAIN THE SAME. THE ASSESSEE DID NOT HAVE ASSISTANCE OF THE ACCOUNTANT AT THE RELEVANT POINT OF TIME IN SURVEY ACTION. AT THE TIME OF FILING OF THE RETURN, CONSIDERING THE SAID CASH BALANCES, THE ASSESSEE DID NOT COMPLY WITH THE STATEMENT OF OFFER OF ADDITIONAL INCOME. 9. BEFORE ME, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE FILED THE RELEVANT PAPERS TO DEMONSTRATE THE EXISTENCE OF CASH FLOW WITH THE SAID PROPRIETORSHIP CONCERN OF THE ASSESSEE WHICH WILL EASILY EXPLAIN THE DISCREPANCIES WITH REFERENCE TO THE SOURCES OF THE ASSETS AMOUNTING TO RS.4,55,000/- ITA NOS.1212 & 1213/PUN/2018 - 5 - 10. ON HEARING BOTH THE SIDES AND CONSIDERING THE FACT OF THE PRESENT CASE, WHICH IS COMMON TO THE FACT IN ITA NO.1212/PUN/2018, I FIND MY DECISION IN ITA NO.1212/PUN/2018 IS FULLY APPLICABLE TO THIS APPEAL. ASSESSEE HAS ADEQUATE CASH BALANCE TO EXPLAIN THE DISCREPANCIES NOTED DURING THE SURVEY ACTION. ON MERITS, THE CASH BALANCES OF THIS PROPRIETORSHIP CONCERNS SHALL HELP THE ASSESSEE. THEREFORE, DECISION IN CASE OF ITA NO.1212/PUN/2018 IS APPLIED MUTATIS MUTANDIS TO THIS APPEAL IN ITA NO.1213/PUN/2018. THUS, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED. 11. RESULTANTLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED ON THIS 31 ST DAY OF DECEMBER, 2019. SD/- (D. KARUNAKARA RAO) / ACCOUNTANT MEMBER / PUNE; DATED : 31 ST DECEMBER, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, KOLHAPUR; 4. THE PR. CIT-1, KOLHAPUR; 5. , , - / DR SMC, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE