Sandeep Madanlal Agrawal, Jalgaon V. ITO, Jalgaon

ITA 1418/PUN/2009

• Counselvise Citation: 141824514 RSA 2009
• Duration Of Justice: 2 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 07-12-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ALOK MISHRA
• Keywords: Unexplained investment
• Section: 133A; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE SHRI G.S. PANNU ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 1418/PN/2009 (ASSTT. YEAR : 2005-06) SANDEEP MADANLAL AGRAWAL , ... APPELLANT PROP. ROOPAM VASTRALAYA BHADGAON, DIST. JALGAON PAN : AATPA2921P V. INCOME TAX OFFICER RESPONDENT WARD 2(4), JALGAON ASSESSEE BY : SMT. DEEPA KHARE DEPARTMENT BY : SHRI ALOK MISHRA DATE OF HEARING : 19/7/12 DATE OF PRONOUNCEMENT : 27-7-12 ORDER PER R.S. PADVEKAR, JM IN THIS APPEAL, THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER OF THE LD CIT(A)-II, NASHIK DATED 22/9/2009 FOR THE A.Y. 2005-06. 2. GROUND NO. 1 IS IN RESPECT OF ADDITION OF RS. 3,54,824/- ON ACCOUNT OF EXCESS STOCK. 3. THE FACTS REVEAL FROM THE RECORD ARE AS UNDER. THE A SSESSEE IS IN THE RETAIL BUSINESS OF CLOTHES. THERE WAS A SURVEY ACTION U/S . 133A IN THE BUSINESS PREMISES OF THE ASSESSEE ON 14.12.2004. AS OBSER VED BY THE A.O. IN THE COURSE OF THE SURVEY ACTION, INVENTORY OF STOCK WAS TAKEN WHICH WAS TO THE EXTENT OF RS. 24,33,837/-. DURING THE COURSE O F THE SURVEY ACTION, TENTATIVE TRADING A/C. WAS PREPARED BY THE ASSESSEE AN D THE SAME WAS GIVEN, IN WHICH, THE CLOSING STOCK WAS DECLARED AT RS. 20,79, 013/-. THE A.O HAS OBSERVED THAT AS PER TENTATIVE TRADING A/C. AND THE ACTUAL VERIFICATION OF THE STOCK , EXCESS STOCK WAS FOUND TO THE EXTENT O F RS.3,54,824/-. IN THE COURSE OF THE SURVEY ACTION, ASSESSEES STATEMENT WAS RECORDED, IN WHICH, HE ADMITTED THE DIFFERENCE AND OFFERED THE SAME AS ADDITIONAL INCOME FOR THE YEAR UNDER CONSIDERATION. THE A.O TREATED THE SAID DIFFERE NCE OF ITA . NO.1418//PN/2010 SANDEEP MADANLAL AGRAWAL A.Y. 2005-06 PAGE OF 5 2 RS.3,54,824/- AS THE ADDITIONAL INCOME OF THE ASSESSEE TREA TING THE SAME AS UNACCOUNTED INVESTMENT. THE A.O ASSESSED THE SAID INCO ME UNDER THE HEAD HOUSE PROPERTY. THE ASSESSEE IS NOT MAINTAINING THE BOOKS OF ACCOUNT. THE ASSESSEE HAS DECLARED THE INCOME OF RS. 1 ,95,437/- IN THE RETURN. IN ADDITION TO THE SAID INCOME, THE A.O MADE THE FURTHER ADDITION OF RS.3,54,824/-. THE ASSESSEE CHALLENGED THE ADDITION BEFORE THE LD CIT(A) BUT WITHOUT SUCCESS. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTIES AND PERUSED THE RECORD. THE LD. COUNSEL VEHEMENTLY ARGUED THAT THE A SSESSEE IS RETAIL TRADER AND HIS INCOME IS DECLARED AS PER PROVISIONS OF SE C. 44AF OF THE ACT. SHE FURTHER SUBMITS THAT ONCE THE INCOME IS ACCEPTED ON THE PRESUMPTIVE BASIS, NO FURTHER ADDITION CAN BE MADE. LD. COUNSEL REFERR ED TO THE PAPER BOOK WHERE THE COPIES OF THE TENTATIVE TRADING A/C GIVE N TO THE A.O ARE FILED (PAGE NO.2 OF THE COMPILATION). SHE SUBMITS THAT TENTATIVE TRADING A/C. WAS PREPARED ADOPTING THE G.P. AT 12.48%. SHE FURTHER S UBMITS THAT TENTATIVE TRADING A/C. CANNOT BE CONSIDERED FOR DETERMININ G WHETHER THERE IS A FACTUAL DIFFERENCE IN THE STOCK-IN-TRADE ON THE PHYSIC AL VERIFICATION. ALTERNATIVELY, THE LD COUNSEL SUBMITS THAT INCOME OFFERED IN THE STATEMENT RECORDED DURING THE COURSE OF THE SURVEY ACTION IS NOT BINDING ON THE ASSESSEE UNLESS THE SAME IS CORROBORATED BY SOME INDEP ENDENT EVIDENCE. THE LD. COUNSEL RELIED ON THE FOLLOWING DECISIONS : 1) CIT VS. DHINGRA METAL WORKS, 328 ITR 384 (DELHI) 2) CIT VS. S. KHADER KHAN SON, 300 ITR 157 (MAD.) WE HAVE ALSO HEARD THE LD. D.R.. 5. AS PER THE FACTS ON RECORD, THE ASSESSEE IS A RETAIL T RADER IN THE CLOTHS. WE FURTHER FIND THAT THE TURNOVER OF THE ASSESSEE IS BELO W RS. 40 LAKHS WHICH IS NOT BEING DISPUTED BY BOTH THE AUTHORITIES BELOW . AS SUBMITTED BY THE LD. COUNSEL, THE ASSESSEE IS NOT MAINTAINING THE BOOKS OF ACCOUNT AND DECLARING THE INCOME ON THE PRESUMPTIVE BASIS AS PER T HE PROVISIONS OF SEC. 44AF OF THE ACT. ITA . NO.1418//PN/2010 SANDEEP MADANLAL AGRAWAL A.Y. 2005-06 PAGE OF 5 3 6. LET US DEAL WITH THE FIRST LIMB OF THE ARGUMENT OF THE L D COUNSEL THAT NO ADDITION CAN BE PASSED MERELY ON THE BASIS OF STATEM ENT RECORDED DURING THE COURSE OF THE SURVEY ACTION. IN THE CASE OF DHING RA METAL WORKS (SUPRA), THE SURVEY ACTION U/S. 133A WAS CONDUCTED ON TH E RESPONDENT ASSESSEES PREMISES. DURING THE COURSE OF THE SURVEY, ONE OF THE PARTNER OF RESPONDENT ASSESSEE HAD OFFERED AN AMOUNT OF RS. 45 LAK HS ON ACCOUNT OF EXCESS STOCK. IN THE SAID CASE, IT WAS STATED THAT TH E INCOME WAS OFFERED FOR BUYING THE PEACE OF MIND. BUT, SUBSEQUENTLY, THE RESPO NDENT-ASSESSEE STATED THAT THE STATEMENT ABOUT EXCESS STOCK WAS INCORRECT AND THAT IMPUGNED DISCREPANCY HAD BEEN RECONCILED AS IT WAS ONLY A MISTAKE. IN THE BACKGROUND OF THESE FACTS, THEIR LORDSHIPS HELD THAT THE ADDITION WAS NOT SUSTAINABLE IN THAT CASE. 7. IN THE CASE OF S. KHADER KHAN SONS (SUPRA), DURING T HE COURSE OF SURVEY ACTION U/S. 133A IN THE BUSINESS PREMISES OF THE ASSESSEE, TH E SWORN STATEMENT OF PARTNER OF ASSESSEE FIRM WAS RECORDED WHO OFFERED THE ADDITIONAL INCOME OF RS. 20,00,000/- FOR THE A.Y. 2001-02 AND RS. 30,00,000/- FOR THE A.Y. 2002-03. SUBSEQUENTLY, THE SAID ST ATEMENT WAS RETRACTED AND IN THAT CASE, THE OFFER WAS MADE ON THE A DHOC BASIS AND THERE WAS NO CORROBORATIVE EVIDENCE. IN THE CASE OF THE ASS ESSEE, WHAT WE FIND IS THAT THE ASSESSEE PREPARED TENTATIVE TRADING A/C. FROM 1.4.2003 TO 15.12.2004 AND WORKED OUT CLOSING STOCK AT RS.2,07,903/- B Y ADOPTING THE G.P. RATE OF 12.48 %. IT IS TRUE THAT THE EXCESS DISCREPA NCY MAY NOT BE AS WORKED OUT BY THE A.O BUT IT IS ALSO TRUE THAT EXACT QU ANTUM OF EXCESS STOCK WORKED OUT BY THE A.O IS NOT CORRECT BUT, AT THE SAME TIME, IT CAN NOT BE SAID THAT THE OFFER MADE BY THE ASSESSEE WAS NOT BASE D ON ANY EVIDENCE. WE, THEREFORE, HOLD THAT BOTH THE DECISIONS RELIED ON BY TH E LD. COUNSEL ARE DISTINGUISHABLE ON FACTS. 8. NOW THE NEXT LIMB OF THE ARGUMENT IS THAT THE ASSESS EES INCOME IS ASSED FROM THE CLOTH TRADING ON THE PRESUMPTIVE BASIS U /S. 44AF OF THE ACT. WE FIND FORCE IN THE ARGUMENT OF THE LD. COUNSEL. ONCE THE INCOME IS ITA . NO.1418//PN/2010 SANDEEP MADANLAL AGRAWAL A.Y. 2005-06 PAGE OF 5 4 ASSESSED U/S. 44AF ON THE PRESUMPTIVE BASIS, THERE IS A PRESUMPTION THAT ALL THE ASPECTS HAVE BEEN CONSIDERED AS PER THE LANGUA GE USED IN THE SAID PROVISION. IN THIS CASE, THE A.O. HAS ASSESSED THE DISCRE PANCY FOUND IN THE STOCK AS AN INCOME FROM OTHER SOURCES. IN OUR OPINION, T HE EXCESS STOCK HAS DIRECT NEXUS WITH THE BUSINESS OF THE ASSESSEE AND IT IS TO BE ASSESSED UNDER THE HEAD INCOME FROM BUSINESS ONLY. AS IN THE P RESENT CASE, THE INCOME IS ASSESSED U/S 44AF, NO FURTHER ADDITION ON ACCOU NT OF EXCESS STOCK IS WARRANTED. WE, ACCORDINGLY, DELETE THE ADDITION O F RS. 3,58,824/- AND ALLOW GROUND NO. 1. 9. THE GROUND NO.2 IS IN RESPECT OF THE ADDITION OF RS. 33 00/- ON ACCOUNT OF EXCESS CASH FOUND DURING THE COURSE OF SURV EY. THE A.O. HAS OBSERVED THAT CASH BALANCE ON THE DATE OF SURVEY I.E. 1 4.12.2004 WAS ACTUALLY COUNTED AND FOUND TO THE EXTENT OF RS. 8,800/- WHEREAS AS PER THE WORK SHEET FILED BY THE ASSESSEE, THE CASH BALANCE WAS SHOWN AT RS. 5 000/-. THE A.O, THEREFORE, TREATED THE DIFFERENCE AS EXCESS CASH AND MADE THE ADDITION TO THE INCOME OF THE ASSESSEE. THE LD CIT(A) CON FIRMED THE SAME. ADMITTEDLY, IN THE PRESENT CASE, THE ASSESSEE IS NOT MAIN TAINING ANY BOOKS OF ACCOUNT. THE ASSESSEE PREPARED THE TENTATIVE BALANC E SHEET ON THE DATE OF THE SURVEY ACTION, AND AS PER THE SAID BALANCE SHEE T, THE CASH IN HAND WAS SHOWN AT RS. 5000/-. ON THE PERUSAL OF THE PAPER B OOK FILED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD FILED THE CASH FLOW STATEMENT BEFORE THE A.O AND AS PER CASH FLOW STATEMENT, THE CLOSING STOCK IN HAND AS O N 14- 12-2004 IS SHOWN AT RS. 5000/-. IN OUR OPINION, AS ASSES SEE HIMSELF HAS DECLARED CASH IN HAND ON 14-12-2004, THE A.O HAS RIGHTL Y MADE THE ADDITION OF RS. 3800/-. WE FIND NO REASON TO INTERFERE WITH THE ORDER OF THE A.O ON THIS ISSUE. ACCORDINGLY, GROUND NO. 2 IS DISMISSED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED. ITA . NO.1418//PN/2010 SANDEEP MADANLAL AGRAWAL A.Y. 2005-06 PAGE OF 5 5 THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH JULY 2012. SD/- SD/- (G.S. PANNU) ACCOUNTANT MEMBER (R.S.PADVEKAR ) JUDICIAL MEMBER PUNE, DATED THE 27TH JULY, 2012 US COPY OF THE ORDER IS FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT II, NASHIK 4. THE CIT(A)-II, NASHIK 4. THE D.R. B BENCH, PUNE 5. GUARD FILE /- TRUE COPY-/ BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL PUNE