NAVIN RATILAL PATEL, V. DCIT, Sangli

ITA 1421/PUN/2013

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8741 (ITAT-PUNE)
• Duration Of Justice: 6 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 10-05-2018
• Assessment Year: 2009-2010
• Appeal Filed On: 05-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: IS DIRECTED AGAINS T PASSED
• Keywords: Unexplained investment; Retraction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH C, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER . / ITA NO.1421/PUN/2013 / ASSESSMENT YEAR : 2009-10 NAVIN RATILAL PATEL, NEAR BOMBAY STEEL, KARAD-TASGAON ROAD, PALUS 416310 MAHARASHTRA PAN : AMCPP7277J VS. DCIT, CIRCLE-1, SANGLI (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A), KOLHAPUR ON 30-04-2013 IN RELATION TO THE ASSESSMENT YEAR 2009-10. 2. THE FIRST ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMA TION OF ADDITION OF RS.34,51,951/-. APPELLANT BY SHRI SUNIL GANOO RESPONDENT BY SHRI VISHWAS MUNDE DATE OF HEARING 11-07-2019 DATE OF PRONOUNCEMENT 12-07-2019 ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A RETAIL TRADER ENGAGED IN HARDWARE, PAINTS, SANITARY WARE AND PVC PIPES. SURVEY ACTION U/S.133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) WAS CARRIED OUT AT THE BUSINES S PREMISES OF THE ASSESSEE ON 12/13-02-2009. DURING THE COURSE OF SURVEY, THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.78,2 2,148/-, OVER AND ABOVE HIS REGULAR INCOME, COMPRISING OF THE FOLLOW ING ITEMS: (I) UNEXPLAINED INVESTMENT IN STOCK : RS.34,51,951/- (II) EXCESS CASH FOUND IN PREMISES : RS. 1,20,197/- (III) UNACCOUNTED INVESTMENT IN BUILDING, FURNITURE, LAND ETC. : RS.41,00,000/- (IV) ON ACCOUNT OF LOW HOUSEHOLD : RS. 1,50,000/- -------------------- : RS.78,22,148/- -------------------- 4. HOWEVER, RETURN WAS FILED WITH TOTAL INCOME OF RS.6,3 1,060/-, NOT INCLUDING ANY OF THE AMOUNTS OFFERED DURING THE COURS E OF SURVEY. THE FIRST ISSUE IS AGAINST THE CONFIRMATION OF ADDITION OF UNEXPLAINED INVESTMENT IN STOCK AMOUNTING TO RS.34,51,951/-. THE AO RECORDED THAT THE ASSESSEE, DURING THE COURSE OF SURV EY, ACCEPTED THAT HE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNT A ND NEVER MAINTAINED ANY BOOKS OF ACCOUNT EVEN FOR EARLIER YE ARS. IT HAS FURTHER BEEN RECORDED THAT THE ASSESSEE ADMITTED THAT HIS ACCOUNTS FOR EARLIER YEARS WERE MADE ON ESTIMATE BASIS. NO SALE ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 3 BILLS WERE ISSUED ON REGULAR BASIS EXCEPT WHERE CUSTOMERS SPECIFICALLY REQUIRED SO. A STOCK INVENTORY WAS PREPARED A S ON THE DATE OF SURVEY, NAMELY, 12-02-2009 COMPUTING TOTAL VALUE O F STOCK AT RS.34,51,951/-. THE AO TREATED THE ENTIRE SUCH AMOUNT OF INVENTORY AS UNEXPLAINED INVESTMENT FOR WHICH DECLARATION WAS ALSO MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY. THE LD. CIT(A) SUSTAINED THE ADDITION, AGAINST WHICH THE ASSESSEE HA S COME UP IN APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE RELE VANT MATERIAL ON RECORD. THE ASSESSEES STATEMENT WAS RECORDE D DURING THE COURSE OF SURVEY, FIRSTLY, ON 12-02-2009 AND THEN O N 13-02-2009, COPIES OF WHICH HAVE BEEN PLACED AT PAGES 2 7 ONWARDS OF THE PAPER BOOK. IN THE INITIAL STATEMENT ON 12.2.2009, THE ASSESSEE RESPONDED TO QUESTION NO. 4 BY SUBMITTING THAT NO BOOKS OF ACCOUNT WERE MAINTAINED OF JALARAM TRADE CENTRE, BEING THE CONCERN OF THE ASSESSEE, BUT ALL THE PURCHASE BILLS WERE A VAILABLE AND KEPT. HOWEVER, IN RESPONSE TO QUESTION NO.8, THE ASSESSEE SUBMITTED THAT: I HAVE PREPARED/KEPT PURCHASE REGISTERS, S ALES REGISTERS, DAY BOOK AND CASH BOOK, LEDGER ETC., OF JALAR AM TRADE CENTRE IN COMPUTER. IN THE FINAL STATEMENT ON 13-02-2009, THE ASSESSEE AGAIN STATED THAT THE BOOKS OF ACCOUNT WERE NOT ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 4 MAINTAINED ON REGULAR BASIS ALTHOUGH PURCHASE REGISTERS FOR EARLIER YEARS AND CURRENT YEAR WERE MAINTAINED. IT IS A MATTER OF RECORD THAT THE ASSESSEE IS REGULAR INCOME-TAX RETURN FILER. RETU RN FOR THE A.Y. 2006-07 WAS FILED BY THE ASSESSEE DECLARING TOTAL INCOM E OF RS.74,520/-. A COPY OF SUCH RETURN HAS BEEN PLACED A T PAGE 780 OF THE PAPER BOOK. THIS RETURN WAS ACCOMPANIED BY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET OF THE ASSESSEE. FROM SUCH B ALANCE SHEET, WHOSE COPY IS AVAILABLE AT PAGE 781 OF THE PAPER B OOK, IT CAN BE SEEN THAT THE ASSESSEE HAD SHOWN CLOSING STOCK AS ON 31-03- 2006 AT RS.4,83,243/-. FOR THE A.Y. 2007-08, THE ASSES SEE FILED A RETURN DECLARING TOTAL INCOME OF RS.98,229/-, A COPY OF WH ICH IS AVAILABLE AT PAGE 783 OF THE PAPER BOOK. THIS RETURN WAS AGAIN ACCOMPANIED BY PROFIT AND LOSS ACCOUNT AND BALANCE SHEET. THE FIGURE OF STOCK AS ON 31-03-2007 WAS DECLARED AT RS.8, 86,085/-. FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, NAMELY, 2 008-09, THE ASSESSEE FILED HIS RETURN ACCOMPANIED BY BALANCE SHEET AND PROFIT AND LOSS ACCOUNT. FROM THE BALANCE SHEET, WHOSE CO PY IS AVAILABLE AT PAGE 15 OF THE PAPER BOOK, IT IS DISCERNIBLE THAT THE DECLARED CLOSING STOCK TO THE TUNE OF RS.12,79,733/-. 6. IT CAN BE SEEN FROM THE STATEMENTS OF THE ASSESSEE RE CORDED DURING THE COURSE OF SURVEY THAT A TOTAL SURRENDER FOR RS. 78.22 LAKH ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 5 WAS MADE ON 12/13-02-2009. HOWEVER, IT IS PERTINENT TO NOTE THAT SUCH SURRENDER WAS IMMEDIATELY RETRACTED BY MEANS OF A LETTER WRITTEN TO THE AO, WHOSE COPY HAS BEEN ALSO BEEN PLACED ON RECORD. IT CAN BE SEEN FROM THE ASSESSMENT ORDER THAT TH E AO TREATED THE ENTIRE AMOUNT OF STOCK AVAILABLE AT THE TIME OF SUR VEY AS UNEXPLAINED ON THE PREMISE THAT THE ASSESSEE WAS NOT MAINTAININ G BOOKS OF ACCOUNT. HOWEVER, IT HAS COME UP FROM QUESTION NO. 8 OF THE ASSESSEES INITIAL STATEMENT THAT HE WAS MAINTAINING BOOKS OF ACCOUNT ON COMPUTER. IN SUCH CIRCUMSTANCES, IT CANNOT BE SAID THAT THE ENTIRE STOCK OF THE ASSESSEE WAS FROM UNDISCLOSED SOUR CES, MORE SO, WHEN THE ASSESSEE WAS REGULAR FILING INCOMETAX RETURNS . IN ANY CASE, THE AVAILABILITY OF STOCK AS ON 31-03-2008 AT RS.12,79,733/- CANNOT BE DISPUTED WHICH WAS DECLARED BY THE ASSESSEE IN HIS BALANCE SHEET AND THE SAME HAS NOT BEEN DOUBTED BY THE AO. THUS ON ONE HAND, THERE IS A FACT THAT THE ASSES SEE FILED RETURNS FOR THE EARLIER YEARS SHOWING THE AVAILABILITY OF STOCK COUPLED WITH STATEMENT OF THE ASSESSEE THAT HE WAS MAINTAINING ACCOUNTS ON COMPUTER, ON THE OTHER HAND, THERE IS ANOTHER VERSION OF THE ASSESSEE AS RECORDED IN THE STATEMENT THAT NO ACCOUN TS WERE MAINTAINED. IN ANY CASE, IT CANNOT BE SAID THAT THE ENTIRE INVEN TORY OF THE ASSESSEE WAS UNEXPLAINED. CONSIDERING THE CONFLICT IN THE ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 6 STATEMENTS AND FURTHER THE RETRACTION OF THE ASSESSEE, HE NEEDS TO BE GIVEN CREDIT FOR SOME AMOUNT OF INVENTORY. IN THE ABSENCE OF ANY MATERIAL TO JUSTIFY AVAILABILITY OF EXPLAINED STOCK AT A PARTICULAR FIGURE AT THE TIME OF SURVEY AND TAKING A HOLISTIC VIEW OF THE MATTER, WE ARE OF THE CONSIDERED OPINION THAT IT WOULD BE JUST AND FAIR TO ACCEPT THE AVAILABILITY OF EXPLAINED STOCK, AT LEAST, TO THE EXTEN T OF THE AMOUNT APPEARING IN THE LAST BALANCE SHEET, AT RS.12, 79,733/-. WE, THEREFORE, RESTRICT THE ADDITION TO RS.21,72,218/- (I.E.RS.34,51,951 RS.12,79,733). 7. THE SECOND ISSUE RAISED IN THIS APPEAL IS AGAINST THE ADDITIO N OF RS.1,20,197/- MADE ON ACCOUNT OF EXCESS CASH FOUN D IN THE PREMISES OF THE ASSESSEE AT THE TIME OF SURVEY. 8. HERE AGAIN, THE ASSESSEE WAS FOUND TO BE IN POSSESSI ON OF CASH AT THE TIME OF SURVEY TO THE TUNE OF RS.1,20,197/-. SURRENDER WAS MADE FOR THE ENTIRE CASH. IN VIEW OF THE RETRACTION MA DE BY THE ASSESSEE, THE SAID SURRENDER WAS NOT HONOURED. HOWEVE R, THE AO MADE ADDITION FOR THIS SUM WHICH CAME TO BE AFFIRMED IN THE F IRST APPEAL. 9. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEVA NT MATERIAL ON RECORD, HERE AGAIN, WE FIND THAT THE POSITION IS A LMOST ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 7 SIMILAR TO THAT OF THE FIRST ISSUE. THE LD. AR CLAIMED THAT THE ASSESSEE PRODUCED BOOKS OF ACCOUNT BEFORE THE AO DURIN G THE COURSE OF PROCEEDINGS DEPICTING AVAILABILITY OF CASH. HOWEVE R, SUCH BOOKS OF ACCOUNT, INDICATING AVAILABILITY OF CASH AS ON THE DATE OF SURVEY AT A PARTICULAR LEVEL, WERE NOT PRODUCED BEFORE US. THOUGH THERE IS NOTHING TO FULLY ACCEPT OR FULLY REJECT THE CONTENTION OF THE ASSESSEE, IT CANNOT BE PRESUMED THAT THE ENTIRE CASH WAS UNEXPLAINED, MORE PARTICULARLY, WHEN THE ASSESSE E WAS REGULARLY FILING RETURNS IN THE PAST. GOING BY OUR DECISION TA KEN FOR GROUND NO.1, WE ACCEPT THE AVAILABILITY OF DECLARED CASH IN TH E HANDS OF THE ASSESSEE AT THE TIME OF SURVEY AT RS.5,090. 89, BEING THE AMOUNT DECLARED IN HIS BALANCE SHEET AS ON 31-03-2008 . THE ADDITION IS, THEREFORE, RESTRICTED TO RS.1,15,106/- (I.E. RS .1,20,197 RS.5,091). 10. THE NEXT GROUND IS AGAINST THE CONFIRMATION OF ADDITION OF RS.41.00 LAKH TOWARDS UNACCOUNTED INVESTMENT IN BUILDING, FURNITURE AND LAND. 11. FACTS APROPOS THIS ISSUE ARE THAT DURING THE COURSE OF S URVEY, THE ASSESSEE WAS ASKED AS TO WHO WAS THE OWNER OF THE B USINESS PREMISES JALARAM TRADE CENTRE, RESIDENTIAL HOUSE AND CON STRUCTION ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 8 IN FRONT OF THE RESIDENTIAL HOUSE. IN HIS INITIAL STATEMENT, THE ASSESSEE SUBMITTED THAT THE OPEN PLOT WAS PURCHASED IN 199 6 BY HIS FATHER SH. RATILAL PATEL OUT OF SALE PROCEEDS RECEIVED FROM SALE OF ANOTHER ANCESTRAL HOUSE AT KACCH, GUJARAT. THE ASSESSEE FURTHER SUBMITTED THAT THE CONSTRUCTION WAS DONE BY HIS FATHER IN 1985 BUT FOR WHICH EVIDENCE WAS NOT AVAILABLE. IT WAS SUBMITTED THAT A SUM OF RS.17.00 LAKH WAS SPENT ON THE HOUSE OUT OF WHICH RS. 9.00 LAKH WAS PAID AND THE BALANCE AMOUNT WAS STILL PAYABLE. HOWEVER, IN THE SECOND STATEMENT, THE AO HAS RECORDED A VERSION OF THE ASSESSEE THAT THE ENTIRE CONSTRUCTION COST WAS INCURRED BY HI M AND SUCH AMOUNT STOOD AT RS.41.00 LAKH, WHICH WAS SURRENDERE D BY THE ASSESSEE. SINCE THE ASSESSEE MADE RETRACTION, NO SUCH INC OME WAS OFFERED FOR TAXATION. THE AO, HOWEVER, ON THE BASIS OF SURRENDER MADE DURING THE COURSE OF SURVEY, MADE SUCH ADDITION WH ICH CAME TO BE COUNTENANCED IN THE FIRST APPEAL. 12. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS FOUND AS AN ADMITTED POSITION THAT THE ASSESSEE CATEGORICALLY STATED IN HIS INITIAL STATEMENT RECORDED ON 12-02-2009 THAT THE HOUSE WAS IN THE NAME OF HIS FATHER AND EVEN WENT ON EXPLAIN THE SOURCE OF INVESTMENT IN THE HOUSE BY HIS FATHER. IT IS A MATTER OF RECORD THAT THE ASSESSEES FATHER FILED HIS RETURN FOR ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 9 THE ASSESSMENT YEAR UNDER CONSIDERATION, WHOSE COPY IS AV AILABLE IN THE PAPER BOOK. THIS RETURN WAS ACCOMPANIED BY THE B ALANCE SHEET IN WHICH THE ASSESSEES FATHER DECLARED INVESTMENT IN PROPERTY AT RS.23,20,900/-. COPIES OF THE BALANCE SHEE T OF THE ASSESSEES FATHER AND RETURN OF INCOME ARE AVAILABLE AT PA GES 60 AND 59 OF THE PAPER BOOK. THIS RETURN FOR THE A.Y. 2009-10 WAS FILED U/S.139(1) ON 15-05-2009. IN VIEW OF THESE FACTS, IT IS APPARENT THAT THE PROPERTY UNDER CHALLENGE WAS IN THE NAME OF ASSESS EES FATHER WHO DECLARED IT IN HIS INCOME-TAX RETURN AS WELL. IF THE AMOUNT OF CONSTRUCTION WAS MORE THAN THAT DECLARED BY HIS FA THER, THEN IT WAS FOR THE REVENUE TO MAKE AN ADDITION IN THE HANDS OF THE ASSESSEES FATHER. BY NO STANDARD, ANY ADDITION ON ACCOU NT OF PROPERTY PURCHASED AND CONSTRUCTED BY THE ASSESSEES F ATHER, CAN BE MADE IN THE HANDS OF THE ASSESSEE. WE, THEREFORE, ORD ER TO DELETE THE ADDITION OF RS.41.00 LAKH. 13. THE LAST GROUND IS AGAINST THE ADDITION OF RS.1,50,000/- MADE TOWARDS LOW HOUSEHOLD WITHDRAWALS. THIS AMOUNT WAS THOUGH SURRENDERED DURING THE COURSE OF SURVEY, BUT WAS NOT OF FERED BY THE ASSESSEE IN HIS RETURN OF INCOME BECAUSE OF RETRACTION. THE AO, ON THE BASIS OF SUCH SURRENDER, MADE ADDITION, WHICH CAME BE TO UPHELD IN THE FIRST APPEAL. ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 10 14. HAVING HEARD BOTH THE SIDES AND GONE THROUGH THE RELEV ANT MATERIAL ON RECORD, IT IS SEEN THAT THE ASSESSEE MADE WITHDRAW ALS FOR HOUSEHOLD EXPENSES TO THE TUNE OF RS.40,000/-. CON SIDERING THE TOTALITY OF THE FACTS OF THE INSTANT CASE, WE ARE OF THE CONSID ERED OPINION THAT SUCH WITHDRAWAL OF HOUSEHOLD EXPENSES ARE ON LO WER SIDE. AMOUNT OF HOUSEHOLD EXPENSES, IN THE PECULIAR FACTS OF THE INSTANT CASE, IS ENHANCED TO RS.1,00,000/- ON ESTIMATE BAS IS, THEREBY SUSTAINING ADDITION OF RS.60,000/-. AS A RESULT, THE ASSESSEE GETS RELIEF OF RS.90,000/- ON THIS SCORE. 15. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH JULY, 2019. SD/- SD/- (PARTHA SARATHI CHAUDHURY) (R.S.SYAL) JUDICIAL MEMBER VI CE PRESIDENT PUNE; DATED : 12 TH JULY, 2019 ITA NO.1421/PUN/2013 NAVIN RATILAL PATEL 11 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-KOLHAPUR 4. 5. 6. THE CIT, KOLHAPUR , , / DR C, ITAT, PUNE; / GUARD FILE. / BY ORDER, // TRUE COPY // SENIOR P RIVATE SECRETARY , / ITAT, PUNE DATE 1. DRAFT DICTATED ON 11-07-2019 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 12-07-2019 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. DATE OF UPLOADING ORDER SR.PS 8. FILE SENT TO THE BENCH CLERK SR.PS 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK 10. DATE ON WHICH FILE GOES TO THE A.R. 11. DATE OF DISPATCH OF ORDER. *