Uttam Kumar Agarwal, Kanpur V. Asstt. Commissioner of Income Tax, Kanpur

ITA 129/LKW/2014

• Counselvise Citation: 12923714 RSA 2014
• Duration Of Justice: 1 year(s) 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 05-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 28-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUDHINDRA JAIN; SWARAN SINGH CAS
• Keywords: Depreciation; Document seized; Opportunity of being heard; Principle of natural justice; Documents seized

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NOS.203/LKW/2014 ASSESSMENT YEAR 2004-05 SHRI UTTAM KUMAR AGARWAL L/H SMT. NEELU AGARWAL, 127/433-S BLOCK, VINOBA NAGAR, KANPUR 208014 PAN AAPPA 2100 G VS ACIT, CENTRAL CIRCLE-II, KANPUR ITA NOS.129/LKW/2014 ASSESSMENT YEAR 2004-05 ACIT, CENTRAL CIRCLE-II, KANPUR VS SHRI UTTAM KUMAR AGARWAL L/H SMT. NEELU AGARWAL, 127/433-S BLOCK, VINOBA NAGAR, KANPUR 208014 PAN AAPPA 2100 G (RESPONDENT) (APPELLANT) SHRI A.K. SINGH CIT, DR APPELLANT BY SHRI SUDHINDRA JAIN AND, SHRI SWARAN SINGH, CAS. RESPONDENT BY 05/10/2015 DATE OF HEARING 16 / 10 /2015 DATE OF PRONOUNCEMENT O R D E R PER SUNIL KUMAR YADAV, JM. 1. THESE CROSS APPEALS ARE PREFERRED BY THE ASSESSE E AS WELL AS REVENUE AGAINST THE ORDER OF THE LD. CIT(A)-I, KANPUR FOR A Y 2004-05. 2 2. THE GROUNDS RAISED IN THESE APPEALS ARE REPRODUC ED HEREINUDNER:- ITA NO. 203/LKW/2014 (AY 2004-05) 1. THE CIT)(A) HAS ERRED IN LAW AND ON FACTS IN DELETI NG ADDITIONS OF RS.,8,94,345/- OUT OF ADDITION MADE BY THE AO ON AC COUNT OF UNDISCLOSED PROFIT AND INVESTMENT PERTAINING TO THE CONTRACT WO RK OF COD AT RS.14,91,701/- WITHOUT GOING THROUGH THE FACTS OF T HE CASE AS WELL AS DETAILED DISCUSSION MADE IN THE ASSESSMENT ORDER AN D MATERIALS BROUGHT ON RECORD BY THE AO. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DEL ETING ADDITION OF RS.2,22,660/- OUT OF ADDITION MADE BY THE AO ON ACC OUNT OF UNDISCLOSED PROFIT FROM SCRAP SALE OF LAL IMLI AT RS.10,79,660/- WITHOUT GOING THROUGH THE FACTS OF THE CASE AS WELL AS DETAILED DISCUSSIO NS MADE IN THE ASSESSMENT ORDER AND RELYING FULLY ON THE SUBMISSIO NS MADE BY THE ASSESSEE AND IGNORING THE SEIZED DOCUMENTS ON THE B ASIS OF WHICH ADDITION WAS MADE BY THE AO. 3. THAT THE ORDER OF THE LD. CIT(A) BEING ERRONEOUS IN LAW AND ON FACTS WHICH NEEDS TO BE VACATED AND THE ORDER OF THE AO BE REST ORED. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY ONE OR MORE OF THE GROUND OF THE APPEAL AS STATED ABOVE AS AND WHEN NE ED FOR DOING SO MAY ARISE. ITA NO. 129LKW/2014 (AY 2004-05) 1. THAT THE LD. C.I.T(A)-II, HAS ERRED IN LAW IN SUST AINING AN ADDITION OF RS.5,97,356/- COMPRISING RS.3,62,3567- AS UNEXPLAIN ED INVESTMENT AND RS.2,35,0007- AS UNDISCLOSED INCOME, FROM THE VENTU RE OF FELLING OF C.O.D. TREES. 2. THAT THE LD. C.I.T(A)-II, HAS ERRED IN LAW IN SUSTA INING THE ADDITION OF RS.8,57,000/- ON ACCOUNT OF UNDISCLOSED PROFIT ON S ALE OF SCRAP OF LAL IMLI, WITHOUT APPRECIATING THAT THE APPELLANT HAD NO RELA TION WITH THE PURCHASE OF LAL IMLI SCRAP AND THAT THE APPELLANT DID NOT MAK E ANY INVESTMENT IN PURCHASE OF SCRAP OF LAL IMLI. 3. THAT THE LD. C.I.T(A)-II, HAS ERRED IN LAW IN SU STAINING AN ADDITION OF RS.9,393/-BEING TELEPHONE EXPENSES AND RS. 13,713/- ON ACCOUNT OF DEPRECIATION ON CAR WITHOUT CONSIDERING THAT THESE EXPENSES WERE INCIDENTAL TO THE CONDUCT OF BUSINESS. 3 4. THAT THE ADDITIONS SUSTAINED BY THE LD. C.I.T (A) ARE UNSUSTAINABLE IN LAW AND ORDER OF LD. C.I.T.(A)-II KANPUR IS AGAINST THE PR INCIPLES OF NATURAL JUSTICE AND EQUITY. 5. THAT ANY OTHER RELIEF OR RELIEFS AS YOUR HONOU R MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE GRANTED. 3. THE ASSESSEE HAS MOVED AN APPLICATION FOR ADMISS ION OF ADDITIONAL GROUNDS, WHICH ARE AS UNDER:- 6. THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRE CIATE THAT NO PART OF INCOME FROM COD WORK IS ASSESSABLE IN THE HANDS OF ASSESSE E AND INSTEAD IT IS ASSESSABLE IN THE HANDS OF AOP/BOI COMPRISING OF LAT E SHRI UTTAM KUMAR AGARWAL (ASSESSEE), SHRI B.L. JAIN AND SHRI SHER BA HADUR SINGH CHANDEL, THEREFORE NO ADDITION IS SUSTAINABLE IN THE HANDS O F THE ASSESSEE ON THIS ACCOUNT. 7. THAT THE LD. CIT(A)-I, KANPUR HAS ERRED IN LAW A ND ON FACTS IN SUSTAINING THE ADDITION OF RS. 2,35,0007- AS UNDISCLOSED INCOM E PERTAINING TO COD WORK IN THE HANDS OF ASSESSEE WITHOUT APPRECIATING THAT THE INCOME WAS ASSESSABLE IN THE HANDS OF AOP/BOI COMPRISING OF SHR I UTTAM KUMAR AGARWAL (ASSESSEE), SHRI B.L. JAIN AND SHRI SHER BA HADUR SINGH CHANDEL, THEREFORE THE ADDITION SUSTAINED IS LIABLE TO BE DE LETED. 8. THAT THE AUTHORITIES BELOW HAVE FAILED TO APPRE CIATE THAT NO PART OF INCOME FROM SCRAP SALE OF LAL IMLI IS ASSESSABLE IN THE HAN DS OF ASSESSEE AND INSTEAD IT IS ASSESSABLE IN THE HANDS OF AOP/BOI COM PRISING OF LATE SHRI UTTAM KUMAR AGARWAL(ASSESSEE), SHRI B.L. JAIN AND S HRI VINAY KURELE, THEREFORE NO ADDITION IS SUSTAINABLE IN THE HANDS O F THE ASSESSEE ON THIS ACCOUNT. 9. THAT THE LD. CIT(A)-1, KANPUR HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION OF RS. 8,57,000/- AS UNDISCLOSED INCOM E FROM SCRAP SALE OF LAL JMLI IN THE HANDS OF ASSESSEE WITHOUT APPRECIATING THAT THE INCOME WAS ASSESSABLE IN THE HANDS OF AOP/BOI COMPRISING OF SHR I UTTAM KUMAR AGARWAL (ASSESSEE), SHRI B.L. JAIN AND SHRI VINAY K URELE, THEREFORE THE ADDITION SUSTAINED IS LIABLE TO BE DELETED. 4. DURING THE COURSE OF HEARING, THE LD. COUNSEL FO R THE ASSESSEE HAS INVITED OUR ATTENTION TO THE ADDITIONS WHICH WERE MADE IN T HE HANDS OF THE ASSESSEE ON THE BASIS OF SEIZED DOCUMENTS I.E. ONE PARTNERSHIP DEED AND OTHERS. AS PER SEIZED DOCUMENTS THE PARTNERS HAVE AGREED TO UNDERT AKE THE FELLING OF TREES IN CENTRAL ORDINANCE DEPOT (COD) FOR WHICH THE CONTRAC T OF RS.17,20,000/- HAD 4 ALREADY BEEN GRANTED TO SRI SHER BAHADUR SINGH CHAN DEL BY THE DEFENCE ESTATE OFFICE (DEO). THE AO HAS RECORDED THE STATEMENT OF SRI SHER BAHADUR SINGH CHANDEL ONE OF THE PARTNER AS PER THE SEIZED DOCUME NTS AND OTHER PARTNERS. THE AO HAS ALSO WORKED OUT THE INVESTMENT MADE IN THE B USINESS. ACCORDINGLY, HE MADE CERTAIN ADDITIONS IN THE HANDS OF THE ASSESSEE . LD. COUNSEL FOR THE ASSESSEE HAS INVITED OUR ATTENTION TO THE FACT THAT IF THE C ONTENTIONS OF THE ASSESSEE WITH RESPECT TO SEIZED DOCUMENTS WAS ACCEPTED, ASSESSMEN T IS TO BE FRAMED IN THE HANDS OF AOP WITH RESPECT TO THE INCOME EARNED FROM THE SAID BUSINESS. BUT THE ASSESSING OFFICER HAS MADE THE ADDITION IN THE HAND S OF THE ASSESSEE. IT WAS FURTHER CONTENDED THAT AS PER THE SEIZED DOCUMENT, THE INVESTMENT WAS MADE BY THE ASSESSEE TO THE EXTENT OF RS.13,54,356/- IN THE BUSINESS TO BE CARRIED ON BY THE AOP. THE ASSESSING OFFICER HIMSELF HAS RECORDED THAT THE ASSESSEE HAS OFFERED AN AMOUNT OF RS.7,65,011/- INCLUDING PROFIT OF RS.2,65,011/-. SINCE THE DOCUMENTS FOUND DURING THE COURSE OF SEARCH ARE NOT PROPERLY EXAMINED BY THE ASSESSING OFFICER AND THERE IS A CONFUSION WITH REG ARD TO SURRENDER AMOUNT, THE ENTIRE ISSUE REQUIRES A FRESH ADJUDICATION BY THE A SSESSING OFFICER. THE LD. DR DID NOT OBJECT TO THIS PROPOSITION. 5. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWE R AUTHORITIES AND IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT IN THE ASSESSMENT ORDER IN FIRST PARA, THE AO HAS RECORDED THAT ASSESSEE HAS FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.21,71,700/-INCLUDING RS.20,60,228/-AS AMOUNT OFFERED FOR TAXATION AS PER SEIZED RECORDS. BUT IN FIRST PARA AT PAGE 5 OF HIS ORDER THE AO HAS RECORDED THAT IN CASH FLOW STATEMENT, THE ASSESSEE HAS OFFERED FOR TAXATION RS.7,65,011/- INCLUDING PROFIT OF RS.2,65,011/-. TH EREFORE, FROM THE ORDERS, IT IS NOT CLEAR AS TO HOW MUCH AMOUNT WAS OFFERED BY THE ASSESSEE AND UNDER WHICH ACCOUNT. IT IS ALSO EVIDENT FROM THE ASSESSMENT ORD ER THAT THE SEARCHED TEAM HAS SEIZED THE DOCUMENT RELATING TO INCOME FROM BUSINES S CONDUCTED BY THE AOP. THE ASSESSING OFFICER HAS ALSO ACCEPTED THAT THERE IS PARTNERSHIP DEED EXECUTED 5 BETWEEN PARTIES, DETERMINING THEIR VARIOUS PERCENTA GE OF SHARES IN THE PROFIT FROM THE BUSINESS, BUT THE INCOME WAS NOT ASSESSED IN THE HANDS OF THE AOP. IT WAS ASSESSED IN THE INDIVIDUALS HANDS OF THE ASSESS EE. ALL THESE ASPECTS WERE NOT EXAMINED BY THE ASSESSING OFFICER. IN THE LIGHT OF ALL THESE FACTS, WE ARE OF THE VIEW THAT SINCE THE ENTIRE MATTER WAS NOT PROPERLY EXAMINED BY THE LOWER AUTHORITIES, IT REQUIRES FRESH ADJUDICATION BY THE AO AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ACCORDINGLY SET ASI DE THE ORDER OF LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH D IRECTION TO READJUDICATE ALL ISSUES AFRESH IN THE LIGHT OF SEIZED MATERIAL AFTER AFFORDING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEALS OF THE ASSESSEE AND REVEN UE ARE ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/- SD/- (A.K. GARODIA ) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16/10/2015 AKS COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASST T. REGISTRAR