M/s Aggarwal Sales, Zirakpur V. DCIT, Patiala

ITA 1227/CHANDI/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0098 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 26-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Opportunity of being heard; Additional evidence; Documents seized

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS.ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1227/CHD/2012 ASSESSMENT YEAR: 2007-08 M/S AGGARWAL SALES, VS THE DCIT, C/O ROYALE ESTATE, CENTRAL CIRCLE, CHANDIGARH AMBALA HIGHWAY, PATIALA. NAC, ZIRAKPUR. PAN: AAJFA5732C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI SUSHIL KUMAR,CIT-DR DATE OF HEARING : 11.04.2016 DATE OF PRONOUNCEMENT : 22.04.2016 O R D E R PER BHAVNESH SAINI,JM THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I LUDHIANA DATED 12.09.20 12 FOR ASSESSMENT YEAR 2007-08. 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. 3. THE LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 2 OF THE APPEAL, SAME IS THEREFORE, DISMISSING BEING NOT PRESSED. 2 4. ON GROUND NO. 1, ASSESSEE CHALLENGED THE ADDITIO N OF RS. 95,89,752/- AS UNEXPLAINED INCOME. 5. THE ASSESSING OFFICER, ON THIS ISSUE HAS OBSERVE D THAT THE ASSESSEE WAS ASKED TO EXPLAIN AND VERIFY W ITH THE REGULAR BOOKS OF ACCOUNT, THE DOCUMENTS SEIZED AND IDENTIFIED DURING THE SEARCH AS PAGE NO. 67, 68 AND BACKSIDE OF 69 OF ANNEXURE A-28 SEIZED FROM THE OFF ICE OF THE ASSESSEE, WHICH WAS EXPLAINED BY REPLYING AS FOLLOWS, NOTHING MADE ON THESE PAPERS HAVE BEEN MADE FROM THE FIGURES OF CAPITAL ACCOUNTS OF PARTNERS AN D UNSECURED LOANS AS APPEARING IN THE BOOKS OF ACCOUN T OF THE FIRM AND SAME ARE VERIFIABLE. 6. THE ASSESSEE, THEREAFTER, SUCCESSFULLY EXPLAINED THE CONTENTS OF SEIZED PAPERS AND GOT THEM VERIFIED WITH REGULAR BOOKS OF ACCOUNT. FURTHER THE HAND WRITTEN NOTINGS APPEARING ON THE BACKSIDE OF PAGE NO. 69 OF ANNEXURE A-28, THE ENTRIES APPEARING ON THE RIGHT H AND SIDE OF THE SAID PAPER HAD ALSO BEEN EXPLAINED. TH E ASSESSING OFFICER, THEREFORE, OBSERVED THAT ASSESSE E COULD NOT EXPLAIN ONE ENTRY OF RS. 95,89,752/- ON T HE LEFT SIDE OF THE SAID PAGE. THE ASSESSEE EXPLAINED BEFORE ASSESSING OFFICER THAT THE DOCUMENT HAD BEEN PREPAR ED BY SHRI PAWAN BANSAL, THE ERSTWHILE PARTNER OF M/S AGGARWAL SALES (ASSESSEE) AND IT MIGHT RELATE TO PE RSONAL AFFAIRS. SHRI PAWAN BANSAL, HOWEVER, IN HIS STATEME NT RECORDED BY THE ASSESSING OFFICER DENIED HAVING WRI TTEN THE PAPER. THE ASSESSING OFFICER, THEREFORE, PRESU MED 3 THAT SINCE OTHER ENTRIES ON THE IMPUGNED DOCUMENT PERTAIN TO THE ASSESSEE, THEREFORE, IT WAS PRESUMED THAT IT IS UNEXPLAINED ENTRY AND BELONGED TO THE ASSESSE E ONLY. THE ASSESSING OFFICER, THEREFORE, MADE ADDIT ION OF RS. 95,89,752/-. 7. THE LD. CIT(APPEALS), CONSIDERING EXPLANATION OF THE ASSESSEE CONFIRMED THE ADDITION. HIS FINDING I N PARA 6 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER : 6. DURING THE COURSE OF APPELLATE PROCEEDINGS THE AR OF THE APPELLANT REITERATED THE ARGUMENTS SUBMITTED BE FORE THE ASSESSING OFFICER. I HAVE CONSIDERED THE BASIS OF A DDITION MADE BY THE ASSESSING OFFICER AND ARGUMENTS OF THE AR DURIN G ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS. I HAV E ALSO EXAMINED THE DOCUMENT AS CONTAINED IN THE ASSESSMENT AND IT IS SEEN THAT THE ASSESSEE EXPLAINED THE ENTRIES CONTAINED THEREIN AN D GOT THEM VERIFIED WITH THE REGULAR BOOKS OF ACCOUNTS EXCEPT FOR ONE ENTRY OF RS. 95,89,752/- APPEARING ON THE LEFT HAND SIDE UND ER THE HEAD RECEIVABLES, THE CLAIM OF THE ASSESSEE THAT THIS PA RTICULAR ENTRY COULD BE PERTAINING TO SH. PAWAN BANSAL THE ERSTWHI LE PARTNER OF THE FIRM HAS NOT BEEN SUBSTANTIATED ON THE BASIS OF ANY EVIDENCE OR AN ACCEPTABLE LOGIC. SINCE THE DOCUMENT HAS BEEN FO UND FROM THE PREMISES OF THE APPELLATE FIRM, AS PER SECTION 292C IT IS PRESUMED THAT THE SAME PERTAINS TO THE AFFAIRS OF THE FIRM O NLY. THE SAID PRESUMPTION FURTHER GETS FORTIFIED AS THE APPELLANT HAS OWNED UP ALL THE ENTRIES ON THE IMPUGNED PAPER AND GOT THEM VERI FIED WITH REGULAR BOOKS OF ACCOUNTS. IT IS ONLY WHEN A SPECIF IC ENTRY WHICH DID NOT FIND PLACE IN THE REGULAR BOCKS OF ACCOUNTS BECAUSE OF ITS PECULIAR NATURE OF BEING REPRESENTATIVE OF UNACCOUN TED INCOME EARNED ASSESSEE, THE ARGUMENT HAS BEEN TAKEN THAT T HE SAME MIGHT BE PERTAINING TO THE PERSONAL AFFAIRS OF SH, PAWAN BANSAI. IT IS TO APPRECIATE THAT THE ASSESSING OFFICER ALLOWED AN OPPORTUNITY TO THE TO APPELLANT TO CROSS EXAMINE SH . PAWAN BANSAL ON THE ISSUE BUT THE SAME WAS DULY DECLINED. IN THE 4 CIRCUMSTANCES IT BECOMES ABUNDANTLY CLEAR THAT THE IMPUGNED ENTRY ON THE SEIZED DOCUMENT IS UNACCOUNTED REPRESENTATIV E OF INCOME OF THE SAME AMOUNT. THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. 8. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES. THE LD. COUNSEL FOR THE ASSESSEE REITERAT ED THE SUBMISSIONS MADE BEFORE AUTHORITIES BELOW AND SUBMI TTED THAT ALL FIGURES GOT TALLIED BY THE ASSESSEE, THERE FORE, IT IS IMPOSSIBLE TO BELIEVE THAT BALANCE FIGURE WOULD BE UNDISCLOSED INCOME OF THE ASSESSEE. HE HAS FILED T RADING AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31.03 .2005 ALONGWITH BALANCE SHEET AND SUBMITTED THAT THE FIGU RES ARE NOW GOT TALLIED FROM THE DOCUMENTS ALREADY AVAI LABLE ON RECORD. THE ASSESSEE ALSO MOVED APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF T HE ITAT RULES AND IT IS SUBMITTED THAT THE TRADING AND PROF IT & LOSS ACCOUNT AND BALANCE SHEET IS RELEVANT DOCUMENT TO EXPLAINE THE FIGURE OF WHICH ASSESSING OFFICER HAS MADE THE ADDITION. THE LD. COUNSEL FOR THE ASSESSEE, TH EREFORE, SUBMITTED THAT THE SAME MAY BE ADMITTED IN EVIDENCE . HE HAS FURTHER SUBMITTED THAT THERE IS NO EVIDENCE ON RECORD TO PROVE THAT ASSESSEE EARNED UNACCOUNTED INCOME AN D THERE IS NO CORROBORATIVE EVIDENCE ON RECORD TO SUS TAIN THE ADDITION. HE HAS ALSO RELIED UPON DECISION OF HON' BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS RAVI 5 KUMAR 294 ITR 78 IN WHICH IT WAS HELD AS UNDER : THE PROVISIONS OF SECTION 69A OF THE INCOME-TAX AC T, 1961, CAN BE APPLIED IF(I) THE ASSESSEE IS FOUND T O BE OWNER OF ANY MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE, AND. (II) THE SAME HAD NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINE D BY HIM. DURING THE SEARCH CARRIED OUT AT THE PREMISES OF TH E JEWELLERY SHOP OWNED BY THE ASSESSEE, THE ASSESSEE WAS FOUND IN POSSESSION OF 1470 GRAMS OF GOLD AND RS. 50,750 IN CASH AND SOME LOOSE SLIPS CONTAINING SOME CALCULATIONS WRITTEN. THE ASSESSEE SURRENDERED A SU M OF RS. 5 LAKHS FOR TAX ON ACCOUNT OF THE UNEXPLAINED C ASH AND JEWELLERY AND THE RETURN WAS FILED DECLARING AN INCOME OF RS.4,79,800. THE ASSESSING OFFICER INCLUD ED THE AMOUNTS WRITTEN ON THE LOOSE SLIPS. THE COMMISSIONER (APPEALS) UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER OBSERVING THAT THE ASSESSEE F AILED TO EXPLAIN THE CONTENTS OF THE DOCUMENTS. THE TRIBU NAL ALLOWED THE APPEAL FILED BY THE ASSESSEE. ON A REFERENCE : HELD, THAT THE ASSESSEE WAS FOUND TO BE IN POSSESSION OF LOOSE SLIPS AND NOT OF ANY VALUABLE ARTICLES OR THINGS. NEITHER THE POSSESSION NOR THE OWNERSHIP OF ANY JEWELLERY MENTIONED IN THE SLIPS W AS PROVED. THEREFORE, THE TRIBUNAL HAD RIGHTLY HELD TH AT THE PROVISIONS OF SECTION 69 A OF THE ACT WERE NOT APPLICABLE. THE TRIBUNAL ALSO HELD THAT IF THE ASSE SSEE FAILED TO EXPLAIN THE CONTENTS OF THE SLIP, IT WAS FOR THE REVENUE TO PROVE ON THE BASIS OF MATERIAL ON RECOR D THAT THEY REPRESENTED TRANSACTIONS OF SALES OR STO CK-IN- HAND BEFORE MAKING ANY ADDITION ON THIS SCORE. THE ASSESSEE HAD DULY EXPLAINED THAT THESE WERE ROUGH CALCULATIONS AND THE ASSESSEE'S EXPLANATION HAD NOT 6 BEEN REBUTTED BY ANY MATERIAL EVIDENCE. THEREFORE, THE ORDER OF THE TRIBUNAL COULD NOT BE SAID TO BE PERVE RSE. 9. THE LD. DR RELIED UPON ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT BACKSIDE OF THE SEIZED PAP ER IS NOT EXPLAINED. WHATEVER EXPLANATION WAS FILED BEFO RE AUTHORITIES BELOW WAS NOT PROVED AND ASSESSEE HAS N OW RAISED THE NEW POINT, THEREFORE, THE SAME MAY NOT B E ADMITTED FOR HEARING. HE HAS ALSO RELIED UPON DECI SION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF RS.P.VASHISHT V DCIT 301 ITR 37 AND DECISION OF KER ALA HIGH COURT IN THE CASE OF C.K.GOPINATHAN V CIT 260 ITR 213. THE LD. DR ALSO SUBMITTEDN THAT SINCE SEIZED DOCUMENT WAS FOUND FROM THE POSSESSION OF THE ASSESSEE, THEREFORE, AUTHORITIES BELOW HAD RIGHTLY DRAWN PRESUMPTION AGAINST THE ASSESSEE IN TERMS OF SECTIO N 292C OF THE INCOME TAX ACT AND RELIED UPON DECISION OF THE GUJRAT HIGH COURT IN THE CASE OF HIREN VASANTIL AL SHAH VS ACIT 19 TAXMAN.COM 241. 10. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND MATERI AL ON RECORD. THE CONTENTS OF THE SEIZED PAPER IS NOT ED AT PAGE 6 OF THE ASSESSMENT ORDER WHICH ARE THE FIGURE S ONLY WITHOUT MENTIONING ANYTHING WHETHER THESE ARE AMOUNTS, MONEY OR ANY OTHER VALUABLE ARTICLE ETC. THERE IS NO NAME ETC. MENTIONED AGAINST THE FIGURES. THE AUTHORITIES BELOW HAVE NOT MADE ANY ADDITION OF OTH ER FIGURES NOTED IN THE SEIZED PAPER EXCEPT ADDITION M ADE OF THE FIGURE 9589752. THIS FIGURE DID NOT LEAD TO 7 ANYWHERE WHETHER IT IS AMOUNT, SALE OR ANY VALUABLE ARTICLE ETC. OTHER ITEM CONNECTED WITH THE ASSESSEE THE ASSESSING OFFICER DID NOT MENTION IN THE ASSESSMENT ORDER UNDER WHICH PROVISION THE ADDITION HAVE BEEN MADE AGAINST THE ASSESSEE. THE ASSESSING OFFICER N OTED THAT DESPITE OPPORTUNITY PROVIDED TO THE ASSESSEE, NO EXPLANATION HAVE BEEN OFFERED, THEREFORE, ASSESSING OFFICER DRAWN THE PRESUMPTION THAT HE IS CONSTRAINE D TO DEEM THIS AMOUNT OF RS. 95,89,752/- AS UNEXPLAINED INCOME OF THE ASSESSEE. IT IS NOT CLARIFIED HOW THE ASSESSING OFFICER HAS DRAWN THE PRESUMPTION THAT TH E FIGURE AS NOTED ABOVE, WAS IN RUPEES DESPITE THERE IS NO SUCH FACT MENTIONED IN THE SEIZED PAPER. THE JUDGE MENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF RAVI KUMAR KUMAR (SUPRA) SQUARELY APPLY IN FAVOU R OF THE ASSESSEE SINCE THE ASSESSING OFFICER HAS NOT MENTIONED ANY PROVISION FOR MAKING ADDITION AGAINST THE ASSESSEE, BUT THE JUDGEMENT CLEARLY SUPPORT THE CAS E OF THE ASSESSEE THAT EVEN IF PROVISION OF SECTION 69A OF THE INCOME TAX ACT ARE CONSIDERED AGAINST THE ASSESSEE, THE SAME WOULD NOT APPLY AGAINST THE ASSESSEE BECAUSE N O EVIDENCE HAS BEEN BROUGHT ON RECORD TO PROVE WHETHE R FIGURE PERTAIN TO MONEY, BULLION OR VALUABLE ARTICL E ETC. OTHER RELATED PROVISIONS ARE NOT APPLICABLE. 10(I) WE MAY ALSO NOTE HERE THAT EVEN IF ASSESSEE H AD FAILED TO EXPLAIN THE CONTENTS OF THE LOOSE SLIP, I T WAS FOR THE REVENUE TO PROVE ON THE BASIS OF MATERIAL ON RE CORD 8 THAT THE SAME REPRESENTED TRANSACTION OF UNACCOUNTE D INCOME BEFORE MAKING ANY ADDITION ON THIS POINT. NO CORROBORATIVE EVIDENCE HAS BEEN BROUGHT ON RECORD. 11. APART FROM ABOVE FINDINGS, WE MAY NOTE THAT ASS ESSEE HAS FILED TRADING AND PROFIT & LOSS ACCOUNT AND BAL ANCE SHEET AS ON 31.03.2005 TO EXPLAIN THE FIGURE OF SEI ZED PAPER. THE ASSESSEE HAS FILED EXPLANATION OF THE SEIZED PA PER BY MENTIONING THAT WORK IN PROGRESS OF SHOPS AS ON 31. 03.2005 IS TAKEN AT RS.1,98,53,745/- AND IF BILL OF M/S MOT IA CONSTRUCTION LTD. FOR RS. 1,04,31,298/- IS REDUCED, THE BALANCE WOULD COME TO RS. 94,22,447/-. THE ASSESSE E ADDED BANK BALANCE OF RS. 1,61,168/- AND STATED THAT THE FIGURE WOULD COME TO RS. 95,83,615/- WHICH IS NEAR TO FIGU RE OF THE ADDITION MADE BY THE ASSESSING OFFICER. ALL THESE FIGURES ARE APPEARING IN THE TRADING AND PROFIT & LOSS ACCO UNT AND BALANCE SHEET OF THE ASSESSEE. THE LD. COUNSEL FOR THE ASSESSEE, THEREFORE, TRIED TO EXPLAIN THAT EVEN WHE N NO ADDITION COULD BE MADE AGAINST ASSESSEE BUT THESE F IGURES ARE MOSTLY RECONCILED BY THE ASSESSEE, WHICH ASSESS EE FAILED TO EXPLAIN BEFORE AUTHORITIES BELOW. HON'BLE SUPRE ME COURT IN THE CASE OF TEK RAM 262 CTR 118 HELD THAT ADDITI ONAL EVIDENCE BE ADMITTED BEING RELEVANT AND REQUIRED TO BE LOOKED INTO. SAME VIEW TAKEN BY HON'BLE PUNJAB & H ARYANA HIGH COURT IN THE CASE OF MUKTA METAL WORKS 336 ITR 555. 12. CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF THE ABOVE DECISION AND PARTICULARLY WHEN BALANCE SHEET OF 31.03.2005 IS PART OF THE RECORD OF THE REVENUE AND IS 9 RELEVANT DOCUMENT, WE ADMIT THE SAME FOR THE PURPOS E OF DECIDING THE ISSUE. WE FIND THAT THE ASSESSEE FROM THIS FIGURE HAS PRIMA-FACIE BEEN ABLE TO EXPLAIN THE ADD ITION MADE BY THE ASSESSING OFFICER. THE LD. DR ALSO CONT ENDED THAT SINCE THESE DOCUMENTS ARE FILED FOR THE FIRST TIME, THEREFORE, MATTER SHOULD BE REMANDED TO THE ASSESSI NG OFFICER FOR VERIFICATION. IN VIEW OF FACTS, CIRCUMS TANCES AND DISCUSSION ABOVE AND IN THE LIGHT OF ADDITIONAL EVI DENCE ADMITTED BY US, IT WOULD BE APPROPRIATE TO REMAND T HE MATTER IN ISSUE TO FILE OF ASSESSING OFFICER FOR RE -DECIDING THE ISSUE. WE, ACCORDINGLY, SET ASIDE THE ORDERS O F AUTHORITIES BELOW AND RESTORE THE MATTER IN ISSUE T O FILE OF ASSESSING OFFICER WITH DIRECTION TO RE-DECIDE ISSUE AFRESH IN THE LIGHT OF ADDL EVIDENCE ADMITTED ABOVE AND FINDI NGS IN THIS ORDER BY FOLLOWING THE JUDGEMENT OF HON'BLE PU NJAB & HARYANA HIGH COURT IN THE CASE OF RAVI KUMAR (SUPRA ). NEEDLESS TO MENTION, ASSESSING OFFICER SHALL GIVE OPPORTUNITY OF BEING HEARD TO ASSESSEE. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (ANNAPURNA GUPTA) (BHAVNESH SAIN I) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND APRIL, 2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD