Shri Jain Mahavirkumar M., V. The Income tax Officer, Ward-3, Nadiad

ITA 1477/AHD/2006

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 7756 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 06-06-2006
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: D S CHAUDHARY
• Assessee Lawyers: K I THAKKAR
• Keywords: Unexplained investment; Search and seizure; Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD B BENCH (BEFORE S/SHRI T.K. SHARMA, JUDICIAL MEMBER AND D.C.AGRAWAL, ACCOUNTANT MEMBER ) ITA.NO.1477/AHD/2006 [ASSTT.YEAR : 2003-2004] JAIN MAHAVIR KUMAR M. M/S.ARIHANT MARBLES NADIAD ROAD, KAPADWANJ. VS. ITO, WARD-3 NADIAD. ASSESSEE BY : SHRI K.I.THAKKAR REVENUE BY : SHRI D.S.CHAUDHARY O R D E R PER D.C.AGRAWAL, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF I NCOME-TAX(APPEALS)-IV, BARODA DATED 31-3-2006. IN THE APPEAL, THE ASSESSE E HAS RAISED MAINLY THREE ISSUES WHICH ARE AS UNDER: 1. SUSTENANCE OF ADDITION OF RS.2,75,220/- ON ACCO UNT OF DIFFERENCE IN THE STOCK; 2. SUSTENANCE OF ADDITION OF RS.1,00,000 OUT RS.1,2 0,000/- ADDED BY THE AO; 3. SUSTENANCE OF ADDITION OF RS.3,20,000/- MADE ON ACCOUNT OF ALLEGED UNACCOUNTED INVESTMENT IN LAND AND BUILDING . 2. FACTS OF THE CASE ARE THAT THE ASSESSE IS A DEAL ER IN MARBLES, KOTA STONES AND SANITARY WARES USED IN THE BUILDING. SURVEY W AS CARRIED OUT UNDER SECTION 133 OF THE ACT. DURING THE COURSE OF SURVEY, OFFIC ERS OF THE DEPARTMENT INVENTORISED THE STOCK AND WORKED OUT VALUE OF STOC K AT RS.15,18,801/-. THEY ALSO RECORDED THE STATEMENT OF THE ASSESSEE ON 4-9- 2002 DURING THE COURSE OF SURVEY IN WHICH SHRI BABULAL M. SHAH, PARTNER OF TH E FIRM ADMITTED TO HAVE INVESTED RS.6,87,281/- IN STOCK OUT OF INCOME OF TH E CURRENT YEAR AND ALSO INVESTED A SUM OF RS.3.25 LAKHS BEING UNACCOUNTED M ONEY IN LAND AND CONSTRUCTION THEREON. HOWEVER, AFTER FOUR DAYS I. E. ON 9-9-2002, THE ASSESSEE RETRACTED STATEMENT BY FILING AN AFFIDAVIT WHEREIN HE HAS STATED THAT STOCK WAS ITA.NO.1477/AHD/2006 -2- CALCULATED IN HIS ABSENCE; THAT STOCK WAS VALUED AT SALE PRICE AND NOT AT COST PRICE; THAT DECLARATION OF RS.6.7 LAKHS WAS UNDER T HREAT AND COERCION; THAT THE PARTNER WHO GAVE STATEMENT WAS EDUCATED ONLY UPTO 5 TH STANDARD AND WAS AFRAID OF THE SITUATION; THAT HE SIGNED ON THE STOCK INVEN TORY PREPARED BY THE ITO WITHOUT UNDERSTANDING THE WRITING AND THINKING ABOU T ITS EFFECT; THAT SURVEY WAS CARRIED OUT TILL 9:00PM AND SIGNATURES WERE MADE IN DISTURBING MIND; THAT THE VALUE OF STOCK AT SR.148 TO 151 WAS TAKEN AT RS.2.7 5 LAKHS, WHEN THERE WAS NO STOCK AT ALL; THAT THE VALUE OF LAND AND BUILDING W AS TAKEN AT RS.4.50 LAKHS AGAINST THE INVESTMENT OF RS.1,15,000/- AS PER THE WISHES OF THE OFFICERS. BOOKS WERE TAKEN INTO POSSESSION BY THE OFFICERS WITHOUT GIVING RECEIPTS ETC. IT APPEARS THAT NO FURTHER ACTION WAS TAKEN BY THE AO AGAINST THIS RETRACTION, THOUGH HE HAS MENTIONED THE FACTS OF RETRACTION IN HIS ASSESSMENT ORDER. THE AO SIMPLY REJECTED THE RETRACTION AND RELIED ON THE STATEMENT GIVEN UNDER SECTION 133A AND MADE ADDITION OF RS.6,87,281/- BEI NG ADDITIONAL STOCK; ADDITION OF RS.3.25 LAKHS ON ACCOUNT OF INVESTMENT IN LAND & BUILDING AND ADDED ANOTHER SUM OF RS.1.20 LAKH BEING UNACCOUNTED RECEIPTS IN JOB WORK. IN RESPECT OF THE LAST ITEM, THE AO NOTED THAT THE ASS ESSEE HAS SHOWN JOB WORK OF RS.93,327/- WHEREAS THE ELECTRICITY CONSUMPTION WAS RS.53,614/-, AS AGAINST, IN THE IMMEDIATELY PRECEDING YEAR, ELECTRICITY CONSUMP TION OF RS.47,607/- AND JOB RECEIPT OF RS.2,13,966/-. THE AO REJECTED THE EXPL ANATION OF THE ASSESSEE THAT ITS SALES HAVE INCREASED ON ACCOUNT OF HIGHER CONSU MPTION OF ELECTRICITY IN CUTTING THE MARBLES. 3. BEFORE THE LEARNED CIT(A), NONE APPEARED AND THE APPEAL WAS DECIDED EXPARTE , BUT ON MERIT. NO EFFECTIVE GROUND HAS BEEN TAKEN BEFORE US AGAINST THE APPEAL HAVING BEEN DECIDED EXPARTE BY LEARNED CIT(A). 4. REGARDING ADDITION ON ACCOUNT OF EXCESS STOCK, L EARNED CIT(A) TOOK NOTE OF DECLARATION OF A SUM OF RS.3.20 LAKHS BY TH E ASSESSEE IN THE RETURN OF ITA.NO.1477/AHD/2006 -3- INCOME AND ACCORDINGLY ALLOWED RELIEF TO THIS EXTEN T AND CONFIRMED THE REST OF THE ADDITION AS PER THE DIRECTIONS GIVEN BY HIM. 5. AGAINST THIS LEARNED AR SUBMITTED THAT NO RELIAN CE CAN BE PLACED ON THE STATEMENT GIVEN UNDER SECTION 133A OF THE ACT, AS I T IS NOT ON OATH. FURTHER, THE AO HAS NO AUTHORITY TO RECORD THE STATEMENT ON OATH AS HE IS NOT EMPOWERED TO DO SO. THEREFORE, ANY STATEMENT RECORDED UNDER SECTION 133A HAS NO EVIDENTIARY VALUE. FURTHER, THIS STATEMENT WAS IMM EDIATELY RETRACTED BY FILING AN AFFIDAVIT WHICH REMAINED UNCONTROVERTED SO FAR. HE SUBMITTED THAT THE ASSESSEE HIMSELF CONSIDERED UNACCOUNTED INVESTMENT IN STOCK AT RS.3.20 LAKHS AND DISCLOSED THE SAME IN THE RETURN OF INCOME FILE D. THE AO HAS NOT TAKEN INTO ACCOUNT THE EFFECT THAT THERE WAS NO STOCK AT ITEM NOS.148 TO 151, EVEN THOUGH THEY HAVE TAKEN THE VALUE THEREOF AT RS.2,75 ,220/- IN THE INVENTORY PREPARED AT THE TIME OF SURVEY. THIS WAS CLEARLY M ENTIONED IN THE AFFIDAVIT. AS THE AO DID NOT CONTROVERT THE SAME, THE VERSION OF THE ASSESSEE SHOULD BE ACCEPTED. FURTHER, THE LEARNED AR SUBMITTED THAT T HE AO HAD TAKEN THE VALUE OF STOCK AT MARKET PRICE WHEREAS FOR THE PURPOSE OF VA LUATION OF STOCK, HE SHOULD HAVE TAKEN THE COST OR MARKET PRICE, WHICHEVER IS L OW. AGAINST THIS, LEARNED DR SUBMITTED THAT THE ASSESSEE SHOULD HAVE DECLARED RS.3.20 LAKHS SEPARATELY AND SHOULD HAVE NOT MERGED IT IN THE TRADING ACCOUN T. THE PROFIT SHOULD BE ESTIMATED SEPARATELY AND ADDITION OF RS.3.20 LAKH S HOULD BE DONE SEPARATELY. IN FACT THE ASSESSEE DID NOT APPEAR BEFORE THE LEARNED CIT(A) AND THIS ISSUE WAS NOT CONSIDERED AT THAT STAGE. HE FURTHER SUBMITTED THAT THE ASSESSEE OUGHT TO HAVE SUBMITTED EVIDENCE IN SUPPORT OF THE CLAIM THA T THERE WAS NO STOCK ITEM NOS.148 TO 151 OR THAT THE SURVEY PARTY HAS VALUED THE STOCK AT MARKET PRICE AS AGAINST THE COST PRICE OR MARKET PRICE WHICHEVER IS LESS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED MATERIAL ON RECORD. IN OUR CONSIDERED VIEW, THE MATTER IS REQU IRED TO BE RESTORED TO THE FILE OF LEARNED CIT(A). HE WOULD EXAMINE WHETHER THE ST OCK INVENTORY IS PREPARED ITA.NO.1477/AHD/2006 -4- AT COST PRICE OR MARKET PRICE WHICHEVER IS LESS OR AT MARKET PRICE. HE SHOULD ALSO GIVE A FINDING WHETHER THERE WAS NO STOCK AGAI NST ITEM NO.148 TO 151 AS CLAIMED BY THE ASSESEEE. HE WILL FURTHER GIVE A FI NDING WHETHER A SUM OF RS.3.20 LAKHS SHOULD BE ADDED SEPARATELY IN ADDITIO N TO PROFIT ON SALES DECLARED NORMALLY AS PER THE BOOKS OF ACCOUNTS. ACCORDINGLY , HE WILL WORK OUT THE ADDITION, IF ANY. THIS ISSUE IS ALLOWED BUT FOR ST ATISTICAL PURPOSE. 7. REGARDING INVESTMENT IN LAND AND BUILDING, WE FI ND THAT THE ONLY BASIS FOR MAKING THE ADDITION IS THE STATEMENT OF ASSESSE E UNDER SECTION 133A. THERE IS NO REFERENCE TO ANY DOCUMENTS FOUND DURING THE S URVEY. SINCE THIS STATEMENT WAS RETRACTED AND RETRACTION HAS NOT BEEN CONTROVER TED BY THE AO, NO COGNIZANCE OF ANY DECLARATION OF RS.3.25 LAKHS IN T HE STATEMENT CAN BE TAKEN. SINCE THERE IS NO OTHER MATERIAL TO SUPPORT THE ADD ITION AGAINST THE STATEMENT UNDER SECTION 133A, WHICH IS RETRACTED, AND SUCH RE TRACTION REMAINED UNCONTROVERTED, THE ADDITION IS DELETED. THIS GROU ND OF THE ASSESSEE IS ALLOWED. 8. REGARDING SUSTENANCE OF ADDITION OF RS.1,00,000/ -, IN RESPECT OF JOB WORK, WE FIND THAT THE ADDITION IS PURELY ON ESTIMA TE BASIS AND NO MATERIAL IS REFERRED TO IN SUPPORT OF THE SAME. THE AO HAS REJ ECTED THE EXPLANATION OF THE ASSESSEE THAT CONSUMPTION OF ELECTRICITY HAS BEEN O N ACCOUNT OF HIGHER CUTTING OF THE MARBLES IN WHICH ELECTRICITY IS CONSUMED. S INCE THERE IS NO MATERIAL TO ESTIMATE THE JOB WORK RECEIPTS, IT NOT NECESSARY TO MAKE ANY ADDITION THEREON, THE SAME IS DELETED. ACCORDINGLY, THIS GROUND IS A LLOWED. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 24 TH JULY, 2009. SD/- SD/- (T.K. SHARMA) JUDICIAL MEMBER (D.C. AGRAWAL) ACCOUNTANT MEMBER ITA.NO.1477/AHD/2006 -5- PLACE : AHMEDABAD DATE : 24-07-2009 COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD