ITO, NAGAUR V. Shri Vijay Kumar Sethi, MERTA CITY

ITA 143/JODH/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4812 (ITAT-JODHPUR)
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 07-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources; Loose papers; Principle of natural justice
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, JODHPUR BEFORE SHRI B.P JAIN ACCOUNTANT MEMBER AND SHRI PARTHA SAR A THI CHAUDHURY JUDICIAL MEMBER ITA NO. 143/JODHPUR/2016 ASSESSMENT YEAR: 2006 - 07 THE ITO VS. SHRI. VIJAY KUMAR SETHI WARD - 3 PROP. M/S. MAHAVEER TRADING CO. NAGAUR KRUSHI UPAJ MANDI MERTA CITY PAN NO. ADKPS9079G (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AMIT KOTHARI DEPARTMENT BY : S H . RAVINDER MITTAL DATE OF HEARING : 24/11/2016 DATE OF PRONOUNCEM ENT : 28/11/2016 ORDER PER PARTHA SAR A THI CHAUDHURY , JM THIS APPEAL PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE LD. CIT(A) - 2, JODHPUR DT. 06/01/2016 ON THE FOLLOWING GROUNDS OF APPEAL : I) DELETING ADDITION OF RS. 44,50,000/ - WITHOUT APPRECIAT ING THE FACT THAT THE ASSESSEE HAD SURRENDERED RS. 48,00,000/ - ON THE BASIS OF UNEXPLAINED ENTRIES RECORDED IN THE DIARY FOUND DURING THE COURSE OF SURVEY AT HIS BUSINESS PREMISES . II) DELETING ADDITION OF RS. 44,50,000/ - WITHOUT APPRECIATING THE FACT TH AT THE ASSESSEE HAD PAID ADVANCE TAX OF RS. 14,40,000/ - ON THE SURRENDERED AMOUNT OF RS. 48,00,000/ - . 2 III) DELETING ADDITION OF RS. 44,50,000/ - WITHOUT APPRECIATING THE FACT THAT THE SURRENDERED AMOUNT OF RS. 48,00,000/ - WAS DULY BASED ON UNEXPLAINED TRAN SACTIONS RECORDED IN THE DIARY FOUND AT THE BUSINESS PREMISES. 2. THE MAIN GRIEVANCE OF THE REVENUE IS THE DELETION OF ADDITION OF RS. 44,50,000/ - BY THE LD. CIT(A) - 2, JODHPUR AND FOR WHICH THIS APPEAL HAS BEEN PREFERRED BEFORE US 3. THE BRIEF FACTS APPE ARING IN THIS CASE ARE THAT WHICH ARE ALSO EVIDENT FROM THE ASSESSMENT ORDER THAT A SURVEY UNDER SECTION 133A WAS CARRIED OUT AT ASSESSEES BUSINESS PREMISES ON 21/04/2006. BEFORE THE SURVEY PARTY, THE ASSESSEE SURRENDERED A SUM OF RS. 48,00,000/ - IN HIS S TATEMENT ON 21/04/2006 DUE TO HIS INABILITY TO EXPLAIN ENTRIES MADE IN A NOTE BOOK FOUND AT THE BUSINESS PREMISES OF THE ASSESSEE. ACCORDINGLY, THE ASSESSEE SURRENDERED A SUM OF RS. 47,15,825/ - AND CONSEQUENTLY DEPOSITED ADVANCE TAX AGGREGATING TO RS. 14,4 0,000/ - THROUGH 14 CHALLANS ON VARIOUS DATES TO THE FY 2006 - 07. SUBSEQUENTLY, IN THE RETURN OF INCOME FILED FOR THE A.Y. 2007 - 08, THE ASSESSEE INCLUDED RS. 3,50,000/ - IN HIS P&L ACCOUNT AGAINST SURRENDERED INCOME OF RS. 48,00,000/ - . WHILE COMPLETING THE AS SESSMENT FOR THE A.Y. 2007 - 08, THE ASSESSING OFFICER NOT BEING SATISFIED WITH THE ASSESSEES EXPLANATION, MADE AN ADDITION OF RS. 44,50,000/ - BEING THE DIFFERENCE BETWEEN SURRENDERED AMOUNT OF RS. 48,00,000/ - AND THE AMOUNT SHOWN AS SURRENDERED INCOME IN T HE RETURN OF INCOME BEING RS. 3,50,000/ - . HOWEVER, THE CIT(A) WHILE DEALING WITH THE ISSUE OBSERVED THAT THE ENTRIES IN THE IMPOUNDED DOCUMENT NAMED KHANDELWAL SUPER FINE NOTE BOOK, ON THE BASIS OF WHICH THE AMOUNT OF SURRENDERED INCOME 3 WAS DETERMINED, P ERTAINED TO THE FINANCIAL YEAR 2005 - 06 AND NOT TO THE FINANCIAL YEAR 2006 - 07, ACCORDINGLY, HE DELETED THE ADDITION OF RS. 44,50,000/ - . THE VIEW OF THE CIT(A)WAS FURTHER CONFIRMED BY THE HONBLE ITAT VIDE ORDER DATED 22/08/2012. CONSIDERING THESE FACTS, THE ASSESSING OFFICER REOPENED THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION I.E. A.Y. 2006 - 07 AND AFTER HEARING THE ASSESSEE, HE ADDED RS. 44,50,000/ - TO THE TOTAL INCOME OF THE ASSESSEE FOR A.Y. 2006 - 07. 4. THAT, AGAINST THIS ADDITION THE ASSESSEE HA D PR EFERRED A N APPEAL BEFORE THE LD. CIT(A) - 2, JODHPUR. 5. THAT, IN THE ORDER OF THE LD. CIT(A) - 2, JODHPUR HE HAS CONSIDERED THE SUBMISSION OF THE ASSESSEE AND THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARRIVED AT HIS DECISION WHEREIN HE FINDS THAT AFTER GOING THROUGH THE DETAILED ORDER OF LD. CIT(A) GIVEN IN ASSESSEES OWN CASE FOR A.Y. 2007 - 08 WHICH IS IN RECORD IT EMERGES THAT THE ADDITION OF RS. 44,50,000/ - WAS DELETED IN A.Y. 2007 - 08 FOR THE REASONS THAT THE ENTRIES IN THE IMPOUNDED DOCUMENTS NAMED K HANDELWAL SUPER FINE ON THE BASIS OF WHICH THE AMOUNT OF SURRENDERED INCOME WAS DETERMINED DID NOT PERTAIN TO A.Y. 2007 - 08. 6. THAT, IN THE ORDER OF THE LD. CIT(A) - 2 HE HAS ALSO EXTRACTED THE RELEVANT PORTION WHICH IS AS UNDER: I FIND THAT IN THE STATE MENT DATED 21/04/2006 IN WHICH A SURRENDER OF RS. 48,00,000/ - HAD BEEN MADE (IN ANSWER TO Q.NO.10), THERE WAS NO SPECIFIC REFERENCE TO THE DOCUMENT / DIARY/BOOKS OF ACCOUNTS ON THE BASIS OF WHICH THE AMOUNT OF RS. 48,00,000/ - WAS DETERMINED, THERE BEING GE NERAL REFERENCE TO VARIOUS COPIES/LOOSE PAPERS ETC. FOUND DURING THE SURVEY IN THE QUESTION AS WELL AS IN THE ASSESSEES ANSWER. FURTHER, THERE IS NO REFERENCE TO THE PERIOD FOR WHICH 4 THE INCOME OF RS. 48,00,000/ - HAD BEEN SURRENDERED IN THE STATEMENT DATE D 21/04/2006. 7. THAT, THERE AFTER THE LD. CIT(A) - 2 IN HIS ORDER GOES ON TO OPINE THAT THE ENTIRE ADDITION HAS BEEN MADE ON BASIS OF STATEMENT RECORDED ON 21/04/2006 DURING THE COURSE OF SURVEY. IT IS SETTLED LAW THAT SUCH STATEMENT LOOSES EVIDENTIARY V ALUE REGARDING UNACCOUNTED INCOME HAVING BEEN SURRENDERED BY THE ASSESSEE IF THERE EVIDENCE ESTABLISHING THE FALSITY OF SUCH STATEMENT. 8. THAT, MOREOVER IN THE INSTANT CASE THERE WAS NO SUBSEQUENT REFERENCE TO THE DOCUMENT / DIARY/ BOOKS OF ACCOUNT ON TH E BASIS OF WHICH THE AMOUNT OF RS. 48,00,000/ - LACS WAS DETERMINED THERE BEING GENERAL REFERENCE TO VARIOUS COPIES/ LOOSE PAPERS ETC. FOUND DURING THE SURVEY IN QUESTION AS WELL AS IN THE ASSESSEES ANSWER. THE LD. CIT(A) - 2 IN HIS ORDER ALSO OBSERVED THAT EVEN THE REPLY OF THE ASSESSEE EXPLAINING THE ENTRIES FOUND IN THE IMPOUNDED DIARY WAS NOT CONSIDERED BY THE AO WHILE ADDING RS. 44,50,000/ - . THE ENTIRE ADDITION HAS BEEN MADE WITHOUT CONSIDERING ASSESSEES EXPLANATION ON THE DIARY IMPOUNDED. 9. THAT, IN T HE ORDER THE LD. CIT(A) - 2 MENTIONED SECTION 34 OF EVIDENCE ACT, 1881 ENVISGED THAT THE ENTRIES IN BOOKS OF ACCOUNTS ARE PRESUMED TO BE TRUE AND CORRECT UNLESS PROVED OTHERWISE. THAT IN THIS CASE THE AO PROCEEDED TO MAKE THE ADDITION WITH PRECONCEIVED MIND IGNORING THIS LEGAL PROPOSITION. THE LD. CIT(A) - 2 OBSERVED THAT THE ADDITION OF RS. 44,50,000/ - WAS MADE SIMPLY ON THE BASIS OF SURRENDER MADE BY THE ASSESSEE WITHOUT THE STRENGTH OF ANY SUPPORTING MATERIAL. 5 10. THAT , ON THE OTHER HAND ASSESSEE HAS FROM TIME TO TIME FURNISHED THE BOOKS OF ACCOUNT AND HAS EXPLAINED BEFORE THE ASSESSING OFFICER ALL ENTRIES THEREIN. 11. THAT, THE LD. CIT(A) - 2 FINDS RECOURS E TO VARIOUS JUDICIAL DECISIONS: 1. DECISION OF HONBLE ITAT, JODHPUR IN CASE OF SMT. CHITRA DEVI VS. DCIT, 77 TTJ 646 2. DECISION OF HONBLE MADRAS HIGH COURT IN CASE OF CIT VS. S. KHADER KHAN SON (2008) 300 ITR 157 3. DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. DR. RAJ DHARIWAL ,63 DTR 83. AND ON THE BASIS OF THESE JUDICIAL DECISIO NS THE LD. CIT(A) - 2 FURTHER HELD THAT WITHOUT ANY MATERIAL EVIDENCE THE STATEMENT OF ADDITION OBTAINED ON OATH FROM THE ASSESSEE WOULD NOT AFFECT OR WOULD MADE NO BASIS FOR ADDITION EVEN IF ADMISSION WAS MADE IN THOSE STATEMENT . T HAT THE ASSESSEE MADE SURR ENDER OF INCOME IN THE INSTANT CASE THERE WAS NO MATERIAL FOUND EITHER AT THE TIME OF SURVEY OR DURING ASSESSMENT PROCEEDING TO ESTABLISH THAT THE ASSESSEE EARNED SUCH INCOME OUTSIDE THE BOOKS OF ACCOUNT. THEREFORE THE LD. CIT(A) - 2 HELD THAT IN THESE CIRCU MSTANCES THE ADDITION MADE SIMPLY ON THE BASIS OF STATEMENT RECORDED DURING SURVEY PROCEEDING CANNOT BE SUSTAINED AND THE ADDITION OF RS. 44,50,000/ - WAS ACCORDINGLY DELETED. 12. THAT BEING FURTHER AGGRIEVED THE REVENUE PREFERRED AN APPEAL BEFORE US. 13. THE LD. DR RELIED ON THE ORDER OF THE AO. 6 14. LD. AR SUBMITTED BEFORE US THAT THE SOLE GROUND OF LD. AO FOR MAKING THE ADDITION WAS THAT THE ASSESSEE HAD SURRENDERED THIS AMOUNT DURING SURVEY AND COULD NOT GIVE SATISFACTORY REPLY HE MADE ADDITION OF RS. 44,50,000/ - AS MADE IN A.Y. 2007 - 08 . LD. AR FURTHER STATED THAT THE MERE PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE LD. AO HAS NOT GIVEN ANY REASON FOR REJECTING THE CONTENTION OF THE ASSESSEE WHO HAD MADE THE ADDITION SIMPLY ON THE GROUND THAT THIS WAS MADE IN A.Y. 2007 - 08. LD. AR FURTHER SUBMITTED BEFORE US THAT THE KHANDELWAL SUPER FIN E DIARY WAS A MEMORANDUM RECORD CONTAINING DETAILS OF THE TRANSACTION AND IS PART OF THE REGULAR BOOKS OF ACCOUNT ON BASIS OF WHICH THE FINANCIAL BOOKS OF ACCOUNT A RE BEING MAINTAINED. THEREFORE THERE IS NOTHING INCRIMINATING MATERIAL WHICH HAS BEEN FOUND DURING THE SURVEY. THE LD. AR SUBMITTED THAT A CHART WAS PRODUCED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDING EXPLAINING THE ENTRIES IN THE IMPOUNDED B OOKS. IN THE CHART THE ASSESSEE GIVEN REFERENCE TO THE PAGE S OF IMPOUNDED DIARY AND ENTRIES THEREOF IN THE BOOKS OF ACCOUNT. 15. THAT, EACH AND EVERY ENTRIES IN THE SAID DIARY WAS VERIFIABLE WITH REFERENCE TO REGULAR BOOKS OF ACCOUNT ON THE BASIS OF WHICH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION HAS BEEN SUBMITTED. THE LD. AR FURTHER TOOK US TO THE PAPER BOOK FILED AT PAGE 130 ONWARD TO 134 WHERE RELEVANT DOCUMENTS WERE DULY EXAMINED BY THE AO IN RESPECT OF SEIZED DIARY, PAGE 137 OF THE PAPER B OOK CONTAINS CROSS VERIFICATION MADE BY THE DEPARTMENT IN RESPECT OF TEXT CHECK WITH REGARD TO THE SEIZED DOCUMENT. LD. AR FURTHER CONTENDED THAT AO 7 WAS COMPLETELY SILENT AND NOTHING HAS BEEN SAID REGARDING THE ENTRIES IN THE BOOKS OF ACCOUNT AND THE CORRE CTNESS OF SUCH DETAILS AND THE REGULAR BOOKS OF ACCOUNT HAS NOT BEEN REJECTED BY THE AO. THE EXPLANATION SUBMITTED BY THE ASSESSEE HAS NEITHER BEEN FOUND INCORRECT. 16. WE HAVE HEARD THE RIVAL CONTENTION AND PERUSED THE CASE RECORDS AND FACTS AND CIRCUMST ANCES OF THE CASE AND WE ARRIVE AT OUR CONSIDERED VIEW THAT THERE IS A DETAILED ORDER OF THE LD. CIT (A) - 2 WHEREIN VARIOUS ASPECT AND LEGAL POSITION OF THIS CASE IS ANALYZED AND IT IS VERY MUCH CLEAR THAT THE AO WHILE MAKING THE ADDITION HAS NOT BROUGHT OUT ANY SPECIFIC MATERIAL AND REASON FOR THE SAID ADDITION. THE ASSESSEE HAS SUBMITTED VARIOUS EXPLANATION AND HAS ESTABLISHED THE ENTRIES IN THE BOOKS OF ACCOUNT AND VIS - - VIS THE SEIZED DOCUMENT BEFORE THE AO AS AND WHEN CALLED FOR. THE ESSENTIAL ASPECT IN THIS CASE IS THAT NO MATERIAL IS FOUND EITHER AT THE TIME OF SURVEY OR DURING THE ASSESSMENT PROCEEDING TO ESTABLISH THAT THE ASSESSEE HAS EARNED THE INCOME OUTSIDE THE BOOKS OF ACCOUNT AND THAT A PERTINENT POINT WHICH EMERGES FROM THE LD. CIT(A) - 2 ORDER A ND AS ON RECORD THAT THERE WAS NO SPECIFIC REFERENCE OF DOCUMENT / DIARY OR BOOKS OF ACCOUNT ON BASIS OF WHICH THE AMOUNT OF RS. 48,00,000/ - WAS DETERMINED THERE BEING GENERAL REFERENCE TO VARIOUS COPIES / LOOSE PAPERS ETC. FOUND DURING SURVEY IN QUESTION AS WELL AS IN ASSESSEES ANSWER AND THAT THE AO WHILE ADDING RS. 44,50,000/ - DID NOT CONSIDER THE REPLY OF THE ASSESSEE EXPLAINING THE ENTRIES FOUND IN THE IMPOUNDED DIARY THAT THE PAPER BOOK CONTAINS ALL THE VARIOUS EVIDENCES OF THE VARIOUS DOCUMENT DULY 8 EXAMINED BUT THE AO WITHOUT CONSIDERING PRINCIPLE OF NATURAL JUSTICE AND ASSESSEES EXPLANATION ON THE DIARY IMPOUNDED MADE THE ADDITION THEREFORE THE PARAMETER OF JUSTICE DEMANDS THAT THE ORDER OF THE LD. CIT(A) - 2 SHOULD BE SUSTAINED AND WE ACCORDINGLY U PHELD THE SAID ORDER OF THE LD. CIT(A) - 2 AND DISMISS THE APPEAL FILED BY THE REVENUE. 17. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/ - SD/ - (B.P. JAIN) ( PARTHA SARATHI CH AUDHURY ) ACCOU NTANT MEMBER JUDICIAL MEMBER DATED : 28/11/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT(A), THE DR