M/s Ajay Trade link (P) Ltd., Gwalior V. C.I.T., Gwalior

ITA 134/AGR/2010

• Counselvise Citation: 13420314 RSA 2010
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 29-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 06-05-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Keywords: Unexplained expenditure; Gift; Retraction; Revised return
• Section: 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 134/AGRA/2010 ASST. YEAR : 2006-07 M/S. AJAY TRADE LINK (P) LTD., VS. A.C.I.T., CIR CLE-1, TOPI BAZAR, LASHKAR, GWALIOR. GWALIOR. (PAN : AAECA 1070 D) ITA NO. 268/AGRA/2010 ASST. YEAR : 2006-07 A.C.I.T., CIRCLE-1, VS. M/S. AJAY TRADE LINK (P ) LTD., GWALIOR. TOPI BAZAR, LASHKAR, GWALIOR. (APPELLANT) (RESPONDENT) FOR ASSESSEE : NONE FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 29.02.2012 DATE OF PRONOUNCEMENT : 02.03.2012 ORDER PER BHAVNESH SAINI, J.M. : BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE OR DER OF LD. CIT(A), GWALIOR DATED 03.03.2010 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE IS SERVED OF THE NOTICE OF HEARING. THE AD CARD DULY SERVED ON THE ASSESSEE IS AVAILABLE ON RECORD. DESPITE SERVIC E UPON THE ASSESSEE, NONE APPEARED ON HIS BEHALF AT THE TIME OF HEARING OF AP PEAL. THE APPEAL IS, THEREFORE, ITA NO. 134 & 268/AGRA/2010 2 HEARD IN THE ABSENCE OF ASSESSEE. THE ASSESSEES WR ITTEN SUBMISSION IS AVAILABLE ON RECORD, WHICH IS TAKEN INTO CONSIDERATION. 3. WE HAVE HEARD THE LD. DR AND PERUSED THE FINDING S OF AUTHORITIES BELOW. 4. THE ASSESSEE IN ITS APPEAL CHALLENGED THE ADDITI ON OF RS.8,00,000/- ON ACCOUNT OF UNEXPLAINED CASH ENTRY. THE REVENUE IN I TS APPEAL CHALLENGED THE DELETION OF ADDITION OF RS.12,75,000/- ON ACCOUNT O F INCREASE IN UNSECURED LOAN FROM FAMILY MEMBERS AND OTHERS. 5. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE COMPANY DEALS IN THE WHOLESALE TRADING OF FOOTWEAR, SOAP, DETERGENT ETC. SURVEY U/S. 133A OF THE INCOME-TAX ACT WAS CONDUCTED BY THE ADIT (INV.)-I, BHOPAL ON 01.06.2005 AT THE BUSINESS PREMISES OF THE ASSESSEE. AS PER SURVEY RE PORT, WHICH HAS BEEN FORWARDED TO THE CONCERNED AO, DISCLOSURE OF RS.25,00,000/- H AS BEEN MADE BY THE ASSESSEE UNDER THE FOLLOWING HEADS : (I). DIFFERENCE IN STOCK RS.3,00,000/- (II). CASH ENTRY DATED 02.04.2005 RS.8,00,000/- (III). DIFFERENCE IN CASH RS.1,25,000/- (IV). UNACCOUNTED EXPENDITURE IN THE HANDS OF DIRECTORS AND FAMILY MEMBERS RS.12,75,000/- ITA NO. 134 & 268/AGRA/2010 3 SINCE THE ASSESSEE HAD NOT DECLARED THE SURRENDER OF RS.25,00,000/- IN THE RETURN, EXPLANATION OF THE ASSESSEE WAS CALLED FOR. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS ACCEPTED THE DIFFEREN CE OF RS.3,00,000/- IN STOCK AND DIFFERENCE IN CASH IN A SUM OF RS.1,25,000/- AND AD DITIONAL INCOME WAS DECLARED BY FILING THE REVISED RETURN. ADDITION OF RS.4,25,000/ - WAS, ACCORDINGLY, CONFIRMED. 6. AS REGARDS THE REMAINING AMOUNTS, RS.12,75,000/- WAS CONSIDERED AS UNDISCLOSED EXPENDITURE IN THE NAME OF DIRECTORS AN D THEIR FAMILY MEMBERS. THE ASSESSING OFFICER NOTED THAT THE SHARE CAPITAL OF T HE COMPANY AND UNSECURED LOANS GIVEN BY THE DIRECTORS AND THEIR FAMILY MEMBERS WER E ALSO CHECKED AND A CHART SHOWING ADDITION TO THE SAME FROM LAST THREE YEARS WAS VERIFIED FROM THE BOOKS OF ACCOUNT AND DETAILS MAINTAINED BY THE ASSESSEE. THE SOURCE OF THE SAME WAS EXPLAINED. THE ASSESSEE WAS ALSO ASKED TO EXPLAIN F OREIGN GIFT, IF ANY, RECEIVED BY THE DIRECTORS AND THEIR FAMILY MEMBERS DURING THIS PERIOD. DETAILS WERE FURNISHED. IT WAS FURTHER NOTED THAT THE ASSESSEE SHOULD SURRE NDER RS.25,00,000/- AS PER STATEMENT AND SHOULD NOT HAVE RETRACTED THE SAME. T HE VERSION OF THE ASSESSEE WITH REGARD TO CASH ENTRY OF RS.8,00,000/- IN THE NAME O F SHRI PANKAJ ARORA, DIRECTOR AND ADDITION TO UNSECURED LOANS IN THE NAME OF DIRE CTORS AND THEIR FAMILY MEMBERS OF RS.12,75,000/- WAS EXAMINED AND IT WAS FOUND THA T THE ASSESSEE MAINTAINED ITS BOOKS OF ACCOUNT ON COMPUTER AND THERE IS A POSSIBI LITY OF MAKING MANIPULATION IN ITA NO. 134 & 268/AGRA/2010 4 THE SAME. CASH ENTRY OF RS.8,00,000/- WAS FOUND BY THE SURVEY PARTY AND CONFRONTED THE MATERIAL AVAILABLE AT THE TIME OF SU RVEY, FOR WHICH THE ASSESSEE SPECIFICALLY SURRENDERED THE INCOME. THE ASSESSEES CONTENTION THAT THERE WAS NO SUCH ENTRY, WAS NOT ACCEPTED IN THE LIGHT OF MAINTE NANCE OF BOOKS OF ACCOUNT IN SOFTWARE. THE ASSESSEES CONTENTION REGARDING ADDIT ION TO UNSECURED LOAN TO THE TUNE OF RS.12,75,000/- THAT IT WAS MADE FROM ASSES SEES KNOWN SOURCE OF INCOME AND PERSONAL LOAN FROM THE BANK, WAS NOT ACCEPTED A S THERE WAS SPECIFIC ACCEPTANCE OF THE ASSESSEE IN THIS REGARD AND RETRACTION WAS N OT ACCEPTED. BOTH THE ADDITIONS WERE CHALLENGED BEFORE THE LD. CIT(A). THE ASSESSEE REITERATED THE SUBMISSIONS MADE EARLIER BEFORE THE ASSESSING OFFICER AND IT WA S SUBMITTED THAT THE AO WAS SATISFIED WITH REGARD TO SHARE CAPITAL OF THE COMPA NY AND LOANS GIVEN BY THE DIRECTORS AND THEIR FAMILY MEMBERS ON THE BASIS OF DETAILS PROVIDED FOR LAST THREE YEARS. THE AO MADE THE ADDITION JUST TO MAKE HIGH-P ITCH ASSESSMENT. 7. AS REGARDS ADDITION OF RS.8,00,000/- IT WAS EXPL AINED THAT THERE WERE NO CASH ENTRY FOUND IN THE BOOKS OF ACCOUNT IN THE NAME OF DIRECTOR, SHRI PANKAJ ARORA. THEREFORE, THE ADDITION IS UNJUSTIFIED. NO MATERIAL WAS FOUND FOR MAKING ANY SURRENDER OF RS.8,00,000/-. IT WAS FURTHER SUBMITTE D THAT IF CASH ENTRY OF RS.8,00,000/- WOULD BE DELETED, THEN IT WILL BRING CASH IN NEGATIVE. IT WAS, THEREFORE, SUBMITTED THAT BOTH THE ADDITIONS MAY BE DELETED. THE ASSESSEE ALSO ITA NO. 134 & 268/AGRA/2010 5 PLEADED THAT A STATEMENT MADE ON THE BASIS OF MISTA KEN BELIEF AND MISUNDERSTANDING OF LAW AND FACTS WOULD NOT PROVIDE FOR MAKING ANY ADDITION AGAINST THE ASSESSEE. IT WAS ALSO SUBMITTED IF STAT EMENT IS RECORDED ON CONFUSION, DURESS ETC., THEN SUCH STATEMENT SHOULD NOT BE ADMI SSIBLE AND BOARDS CIRCULAR IN THIS REGARD WAS ALSO RELIED UPON. 8. THE LD. CIT(A) CONSIDERING THE MATERIAL AND THE SURVEY RECORDS FOUND THAT THE SURVEY REPORT CATEGORICALLY MENTIONED THAT CASH BOOK OF THE CURRENT YEAR WAS SCREENED ON THE COMPUTER AND IT WAS FOUND THAT IN C ASH BOOK DATED 02.04.2005, A DEPOSIT OF RS.8,00,000/- IN THE NAME OF SHRI PANKAJ ARORA, DIRECTOR, WAS MADE. SHRI RAM SWAROOP KUKREJA, THE OTHER DIRECTOR, IN STATEME NT RECORDED AT THE TIME OF SURVEY ACCEPTED THAT THEY HAVE INTRODUCED UNACCOUNT ED CASH IN THE NAME OF SHRI PANKAJ ARORA AND SHOULD BE TREATED AS UNDISCLOSED I NCOME OF SHRI PANKAJ ARORA FOR THE ASSESSMENT YEAR 2006-07. SHRI RAM SWAROOP KUREJ A IN CONSULTATION WITH OTHER DIRECTORS OF THE COMPANY HAS DECLARED RS.25,00,000/ - AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL AND THEY OFFERED T O PAY TAX THEREON. THE LD. CIT(A) DID NOT ACCEPT THE CONTENTION OF THE ASSESSE E THAT NO SUCH CASH ENTRY WAS FOUND IN THE BOOKS OF ACCOUNT BECAUSE THE SURVEY RE PORT HAS SPECIFICALLY MENTIONED THIS FACT OF RECORDING OF THE UNEXPLAINED ENTRY OF RS.8,00,000/- IN THE NAME OF SHRI PANKAJ ARORA, THE DIRECTOR AND THE STATEMENT OF DIR ECTOR WAS RECORDED ON THE BASIS ITA NO. 134 & 268/AGRA/2010 6 OF SURVEY REPORT WHEN THE DIRECTOR WAS UNABLE TO EX PLAIN THE DEPOSIT. THEREFORE, ADDITION TO THAT EXTENT WAS MAINTAINED IN A SUM OF RS.8,00,000/-. THE LD. CIT(A) FURTHER NOTED THAT THOUGH THE STATEMENT MADE IN SUR VEY IS NOT CONCLUSIVE, BUT ADMISSION IS THE BEST EVIDENCE ON THE ISSUE BECAUSE THE SURRENDER OF RS.8,00,000/- WAS NOT MADE IN DURESS, PRESSURE OR CONFUSION. RETR ACTION IS AFTERTHOUGHT AND MADE AFTER A GAP OF MORE THAN ONE YEAR. ADDITION OF RS.8 ,00,000/- WAS, ACCORDINGLY, CONFIRMED. 9. AS REGARDS ADDITION OF RS.12,75,000/-, AS PER SU RVEY REPORT SAID DISCLOSURE WAS MADE ON ACCOUNT OF UNDISCLOSED EXPENDITURE. HOW EVER, THE AO HAS MADE SAID ADDITION IN UNSECURED LOANS IN THE NAMES OF DIRECTO RS AND THEIR FAMILY MEMBERS. THE DETAILS OF SHARE CAPITAL OF THE COMPANY AND UNS ECURED LOANS OF THE DIRECTORS AND THEIR FAMILY MEMBERS WERE GIVEN AT THE TIME OF ASSESSMENT AND THE AO WAS SATISFIED WITH THE EXPLANATION OF THE ASSESSEE ON T EST CHECK. THE LD. CIT(A) FURTHER FOUND THAT THE SURVEY REPORT ALSO MENTIONED THE FAC T THAT THE AO MAY ANALYZE THE AVAILABILITY OF CAPITAL IN THE HANDS OF INDIVIDUAL FAMILY MEMBERS KEEPING IN VIEW THEIR INCOME RETURNED AND SOURCE THEREOF AND DECIDE THE MATTER ACCORDINGLY. THE LD. CIT(A), THEREFORE, FOUND THAT THERE WAS NO JUSTIFIC ATION TO MAKE ADDITION OF RS.12,75,000/- IN THIS REGARD. ADDITION OF RS.12,75 ,000/- WAS, ACCORDINGLY, DELETED. ITA NO. 134 & 268/AGRA/2010 7 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D R AND PERUSED THE MATERIAL ON RECORD. AS REGARDS THE ADDITION OF RS.8,00,000/- MAINTAINED BY THE LD. CIT(A), IT IS NOT IN DISPUTE THAT THE SURVEY WAS CONDUCTED AT THE PREMISES OF THE ASSESSEE ON 01.06.2005. SECTION 292C OF THE INCOME-TAX ACT PROV IDES AS UNDER : 292C (1) WHERE ANY BOOKS OF ACCOUNT, OTHER DOCUMENTS, M ONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLE OR THING ARE OR IS FOUND IN THE POSSESSION OR CONTROL OF ANY PERSON IN THE COURSE OF A SEARCH UNDER SECTION 132 OR SURVEY UNDER SECTION 133A, IT MAY, IN ANY PROCEEDIN G UNDER THIS ACT, BE PRESUMED (I) THAT SUCH BOOKS OF ACCOUNT, OTHER DOCUMENTS, MONEY, BULLION, JEWELLERY OR OTHER VALUABLE ARTICLES OR THING BELON G OR BELONGS TO SUCH PERSON; (II) THAT THE CONTENTS OF SUCH BOOKS OF ACCOUNT AND OTHE R DOCUMENTS ARE TRUE; AND (III) THAT THE SIGNATURE AND EVERY OTHER PART OF SUCH BOO KS OF ACCOUNT AND OTHER DOCUMENTS WHICH PURPORT TO BE IN THE HAND WRITING OF ANY PARTICULAR PERSON OR WHICH MAY REASONABLY BE AS SUMED TO HAVE BEEN SIGNED BY, OR TO BE IN THE HANDWRITING OF , ANY PARTICULAR PERSON, ARE IN THAT PERSONS HANDWRITING , AND IN THE CASE OF A DOCUMENT STAMPED, EXECUTED OR ATTESTED, T HAT IT WAS DULY STAMPED AND EXECUTED OR ATTESTED BY THE PERSON BY WHOM IT PURPORTS TO HAVE BEEN SO EXECUTED OR ATTESTED. 11. THE PROVISIONS OF SECTION 292C ARE MADE APPLICA BLE TO THE SURVEY CONDUCTED U/S. 133A OF THE IT ACT BY MAKING AMENDMENT THEREIN W.E.F. 01.06.2002. THEREFORE, THE PROVISIONS OF SECTION 292C WOULD APP LY TO THE SURVEY CONDUCTED IN THIS CASE ON 01.06.2005. AS PER FINDING OF THE LD. CIT(A), THE SURVEY REPORT SPECIFICALLY MENTIONED THE FACT THAT DURING THE COU RSE OF SURVEY CASH BOOK OF THE CURRENT YEAR UNDER APPEAL WAS SCREENED ON THE COMPU TER AND IT WAS FOUND THAT IN ITA NO. 134 & 268/AGRA/2010 8 THE CASH BOOK DATED 02.04.2005, THERE IS A DEPOSIT OF RS.8,00,000/- IN THE NAME OF SHRI PANKAJ ARORA, DIRECTOR. SUCH MATERIAL IN THE B OOKS OF ACCOUNT ON COMPUTER WAS CONFRONTED TO SHRI RAM SWAROOP KUKREJA, ONE OF THE DIRECTORS OF THE ASSESSEE, WHO IN STATEMENT ADMITTED THAT THEY HAVE INTRODUCED UNACCOUNTED CASH IN THE NAME OF SHRI PANKAJ ARORA. SINCE THERE IS NO DENIAL OF M AINTENANCE OF BOOKS OF ACCOUNT ON COMPUTER, WHICH WAS FOUND DURING THE COURSE OF S URVEY AND THERE WAS UNACCOUNTED ENTRY OF RS.8,00,000/- MADE IN THE BOOK S OF ACCOUNT ON COMPUTER OF THE ASSESSEE COMPANY WHICH WAS ALSO NOT EXPLAINED, THE PRESUMPTION U/S. 292C WOULD BE THAT THE BOOKS OF ACCOUNT AND OTHER DOCUME NTS BELONG TO THE ASSESSEE AND THE SAME BELONG TO THE ASSESSEE ONLY AND THAT THE C ONTENTS OF THE BOOKS OF ACCOUNT AND DOCUMENTS ARE TRUE. IN THAT EVENT, BURDEN WOULD BE UPON THE ASSESSEE TO EXPLAIN THAT THE REPORT OF THE SURVEY PARTY WAS INC ORRECT. SINCE RAM SWAROOP KUKREJA, ONE OF THE DIRECTORS ADMITTED UNACCOUNTED CASH INTRODUCED IN THE CASH BOOK OF ASSESSEE COMPANY ON COMPUTER WOULD FURTHER STRENGTHEN THE REPORT OF THE SURVEY PARTY. IN THAT EVENT, IT IS FOR THE ASSESSEE TO EXPLAIN THAT THE REPORT OF THE SURVEY WAS INCORRECT. HOWEVER, NO ATTEMPT HAS BEEN MADE IN THIS REGARD AND NOTHING IS PRODUCED DURING THE COURSE OF PROCEEDING S BEFORE US OR BEFORE LD. CIT(A) IN THIS REGARD. THEREFORE, MERE DENIAL OF TH E ENTRY IN THE BOOKS OF ACCOUNT LATER ON WOULD NOT SERVE ANY PURPOSE. THE LD. CIT(A ) WAS, THEREFORE, JUSTIFIED IN ITA NO. 134 & 268/AGRA/2010 9 MAINTAINING ADDITION OF RS.8,00,000/- AGAINST THE A SSESSEE. IN THE RESULT, APPEAL OF THE ASSESSEE HAS NO MERIT AND IS, ACCORDINGLY, DISM ISSED. 12. WE HAVE ALSO EXAMINED THE ORDER OF THE LD. CIT( A) WITH REGARD TO DELETION OF ADDITION OF RS.12,75,000/-. THE LD. CIT(A) FOUND TH AT THERE IS NO CONCRETE REPORT OF THE SURVEY PARTY FOR MAKING ADDITION OF THE AFORESA ID AMOUNT. THE SURVEY REPORT MERELY MENTIONED THAT THE AO MAY ANALYZE THE AVAILA BILITY OF CAPITAL IN THE HANDS OF FAMILY MEMBERS KEEPING IN VIEW THEIR RETURNED IN COME AND SOURCE THEREOF. IT WOULD, THEREFORE, PROVE THAT NO INCRIMINATING MATER IAL WAS FOUND DURING THE COURSE OF SURVEY AGAINST THE ASSESSEE ON THIS ISSUE. WHATE VER QUERY WAS RAISED BY THE ASSESSING OFFICER WITH REGARD TO SHARE CAPITAL AND UNSECURED LOANS GIVEN BY THE DIRECTORS AND THEIR FAMILY MEMBERS, THE AO VERIFIED THE SAME AND DID NOT FIND ANY SPECIFIC INCREASE IN LOANS AND ADVANCES. THEREFORE, ON MERE ADMISSION OF THE DIRECTOR, THE ADDITION SHOULD NOT HAVE BEEN MADE BY THE AO. IT IS TRITE LAW THAT ADMISSIONS ARE NOT CONCLUSIVE PROOF OF THE MATTER. THEY MAY BE SHOWN TO BE UNTRUE OR HAVING MADE UNDER MISTAKEN FACTS OR LAW. CIRCUMS TANCES HAVE TO BE SEEN UNDER WHICH SAME ARE MADE. IT CAN BE WITHDRAWN UNLESS IT IS ESTOPPEL AND CONCLUSIVE. HONBLE SUPREME COURT IN THE CASE OF PULLANGODE RU BBER PRODUCE CO. LTD. VS. STATE OF KERALA, 91 ITR 18 (SC) HELD THAT ASSESSEE SHOULD BE GIVEN OPPORTUNITY TO SHOW THAT ADMISSION IS INCORRECT OR DOES NOT SHOW C ORRECT STATE OF FACTS. THE LD. ITA NO. 134 & 268/AGRA/2010 10 CIT(A) ON PROPER APPRECIATION OF SURVEY REPORT AND FINDING OF THE AO IN THE ASSESSMENT ORDER ITSELF ON THE ISSUE, RIGHTLY CAME TO THE CONCLUSION THAT THE ADDITION OF RS.12,75,000/- IS MADE WITHOUT ANY BASIS. IN THE RESULT, DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE AS WE LL AS DEPARTMENTAL APPEAL ARE DISMISSED. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND MARCH, 2012 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY