Shri. Ravindra Choitram Keshwani, Akola V. Income Tax Officer, Ward-2, Akola, Akola

ITA 149/NAG/2015

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 4524 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AGNES P THOMAS
• Keywords: Income from undisclosed sources

Judgement Text

ITA NO. 149/NAG/2015 1 , INCOME TAX APPELLATE TRIBUNAL,NAGPUR BENCH . . , BEFORE S/SH. D T GARASIYA,JUDICIAL MEMBER & RAJENDRA,ACCOUNTANT MEMBER ./ ITA/149/NGP/2015 , / ASSESSMENT YEAR:2008 - 09 RAVINDRA CHOITRAM KESWANI, C/O RAVINDRA K. AGRAWAL, ADVOCATE, JAYANTI COMPLEX, DAMLE CHOWK, AKOLA - 444001. VS. THE INCOME - TAX OFFICER, WARD - 2, AKOLA. ( / APPELLANT ) ( / RESPONDENT ) ASSESSEE BY: SHRI ABHAY AGRAWAL . REVENUE BY: S MT. AGNES P. THOMAS . / DATE OF HEARING: 29.08.2016 / DATE OF PRONOUNCEMENT: 29.08.2016 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA A.M. - CHALLENGING THE ORDER DT.27.01.2015 OF CIT(A) - I,NAGPUR,THE ASSESSEE HAS FILED THE PRESENT APPEAL. ASSESSEE, AN INDIVIDUAL,FILED HIS RETURN OF INCOME ON, 31/07/200,IN RESPONSE TO THE NOTICE ISSUED U/S.142 (1) OF THE ACT ON 29/01/2009, DECLARING TOTAL INCOME AT RS. 4.82 LAKHS. THE ASSESSING OFFIC ER(AO)COMPLETED THE ASSESSMENT U/S.143 (3) OF THE ACT, 31/03/2008, DETERMINING THE INCOME OF THE ASSESSEE AT RS. 24.67 LAKHS. THE EFFECTIVE GROUND OF APPEAL IS ABOUT SUSTAINING THE ADDITION OF RS. 2.08 LAKHS ON ACCOUNT OF PROFIT OF UNRECORDED SALES. BRIEF FACTS:. 2. AN ACTION,U/S.133A OF THE ACT,WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 10/01/2008 WHICH RESULTED INTO DETECTION OF SOME INCRIMINATING PAPERS AND DOCUMENTS.THE ITA NO. 149/NAG/2015 2 DOCUMENTS REVEALED UNRECORDED SALES TO THE TUNE OF RS. 12.85 LAKHS.A S PER THE AO FOLLOWING UNRECORDED SALES WERE FOUND: 1. AS PER KHATA VASULI BAHI 12.85 LAKHS 2. DIPU HESHWANI - RS.55,649/ - 3. GHANSHYAM SETH - RS.12,219/ - THE IMPOUNDED MATERIAL FURTHER REVEALED THAT THERE HAD BEEN UNRECORDED PURCHASE OF R S. 11. 33 LAKHS.THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE ASKING AS TO WHY UNRECORDED SALES AND UNACCOUNTED PURCHASE SHOULD NOT BE ADDED TO HIS TOTAL INCOME.VIDE ITS REPLY,DATED 23/12/2010, THE ASSESSEE STATED THAT ENTIRE ADDITION OF UNRECORDED PUR CHASE AND UNRECORDED SALES COULD NOT BE MADE, THAT ONLY THE PROFIT ELEMENT EMBEDDED IN THE UNRECORDED SALES COULD BE BROUGHT TO TAX,THAT THE UNRECORDED PURCHASES WERE UTILISED FOR UNRECORDED SALES,THAT THE WHOLE OF THE UNACCOUNTED SALES COULD NOT BE TREATE D AS INCOME AND ONLY THE NET PROFIT COULD BE ADDED,THAT HE HAD ALREADY OFFERED THE EXCESSES STOCK OF RS. 2.97 LAKHS FOR TAXATION, THAT EXCESS CASH OF RS. 1.05 LAKHS WAS ALSO OFFERED WHILE FILING THE RETURN OF INCOME,THAT THE DECLARATION HAD COVERED THE INI TIAL INVEST - MENT AND THE PROFIT ELEMENT FROM THE UNRECORDED TURNOVER FOUND DURING THE COURSE OF SURVEY. HOWEVER, THE AO DECLINED TO AGREE WITH THE CONTENTIONS RAISED BY THE ASSESSEE AND HELD THAT THE HE HAD FILED THE RETURN OF INCOME AFTER THE DUE DATE IN RESPONSE TO THE NOTICE ISSUED U/S.142 (1), THAT DECLARATION OF STOCK AND CASH TO THE TUNE OF RS. 4.02 LAKHS HAD ALREADY BEEN INCORPORATED IN THE REGULAR BOOKS OF THE ASSESSEE, THAT HE HAD CLAIMED DOUBLE BENEFIT, THAT THE ASSESSEE HAD NOT PRODUCED THE KHAT A VASULI BAHI FOR THE PERIOD 01/04/2007 - 08/11/2007.HE ESTIMATED THE SALE FOR THE REMAINING PERIOD AT RS. 12.85 LAKHS.HE ADOPTED THE AVERAGE SALE FIGURE OF RS. 2.57 LAKHS FOR THE REMAINING SEVEN MONTHS AND ESTIMATED THE SALE AT RS. 18,00,043/ - AND ARRIVED AT THE TOTAL SALE OF RS.30.85 LAKHS (RS.12.85 LAKHS+ RS.18,00,043/ - ) AFTER APPLYING THE NP RATIO OF 27.62%. FINALLY,AN ADDITION OF RS. 8.25 LAKHS WAS MADE. ITA NO. 149/NAG/2015 3 3. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY(FAA).BEFORE HIM THE ASSESSEE ARGUED THAT SOURCE OF INVESTMENT IN UNRECORDED PURCHASE WAS OUT OF UNRECORDED SALES, THAT BENEFIT OF TELESCOPING SHOULD BE ALLOWED,THAT AS PER THE REGULAR BOOKS OF ACCOUNTS NET PROFIT RATIO,EXCLUDING THE SURVEY DECLARATION,W AS 6.07%, THAT THE AO HAD WRONGLY APPLIED THE NET PROFIT RATIO OF 27.673% ON THE UNRECORDED SALES, THAT ADDITION ON ACCOUNT OF UNRECORDED SALES SHOULD BE RESTRICTED TO RS. 2.08 LAKHS, THAT DUE TO THE DISCLOSURE OF EXCESS STOCK AND CASH THE NET PROFIT RATIO OF THE ASSESSEE HAD INCREASED TO THAT EXTENT,THAT UNLESS AND UNTIL THERE WERE PURCHASES THERE COULD NOT BE SALES, THAT ONCE UNRECORDED SALES HAD BEEN SUBJECTED TO TAX AGAIN TAXING THE UNRECORDED PURCHASE WOULD AMOUNT TO DOUBLE TAXATION. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER, THE FAA HELD THAT EXCESS STOCK AND CASH AMOUNTING TO RS. 4.02 LAKHS WAS FOUNDED IN THE COURSE OF SURVEY AND THAT SAME WAS DECLARED BY THE ASSESSEE IN HIS RETURN OF INCOME,THAT THE REGULAR NP RATIO OF THE ASSESSEE WAS 6.77%, THAT THE UNRECORDED SALES AMOUNTING TO RS.30.85 LAKHS DEDUCED BY THE AO WAS BASED ON THE INCRIMINATING MATERIAL FOR THE FIVE MONTHS AND FURTHER ESTIMATION FOR THE REMAINING SEVEN MONTHS IN ABSENCE OF KHATA VASULI BAHI, THAT THE ASS ESSEE HAD NOT DISPUTED THE ABSENCE OF THE BAHI,THAT THE ONLY ISSUE WAS TO APPLY THE NET PROFIT RATIO TO THE UNRECORDED SALES, THAT THE AO WAS NOT JUSTIFIED IN ADOPTING THE NP AT THE RATE OF 27.60% AS AGAINST THE ACTUAL NP AT THE RATE OF 6.77 EMANATED FROM THE REGULAR BOOKS OF ACCOUNTS,THAT BOTH ITEMS OF STOCK AND CASH WERE NOT FOUND RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE, THAT HE HAD DECLARED THE SAME AS ADDITIONAL UNACCOUNTED INCOME OVER AND ABOVE THE REGULAR INCOME EMBEDDED IN THE REGULAR BOOKS OF ACCOUNTS,THAT INCLUSION OF ADDITIONAL INCOME DECLARED DURING THE SURVEY FOR THE PURPOSE OF DERIVING THE TAXABLE PROFITS FROM ESTIMATED UNRECORDED SALES CAUSED A DOUBLE JEOPARDY TO THE ASSESSEE,THAT THE NP DECLARED BY THE ASSESSEE AS PER THE REGULAR BOO KS OF ACCOUNTS IN EXCLUSION TO THE ADDITIONAL INCOME DECLARED AT 6.77% WAS ITA NO. 149/NAG/2015 4 REQUIRED TO BE ADOPTED TO ARRIVE AT THE TAXABLE INCOME ATTRIBUTABLE TO THE UNRECORDED SALES OF RS. 30.85 LAKHS,THAT IT WOULD RESULT IN TO ADDITIONAL UNACCOUNTED INCOME OF RS. 2.08 L AKHS.ACCORDINGLY BALANCE ADDITION OF RS. 6.43 LAKHS (8.52 LAKHS - 2.08 LAKHS) WAS DELETED BY THE FAA. 4. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORISED REPRESENTATIVE(AR) STATED THAT ASSESSEE HAD MADE THE DISCLOSURE DURING THE SURVEY,THAT THE NP ADOPT ED BY THE FAA ON WAS HIGHER SIDE, THAT THE ADMISSION MADE BY THE ASSESSEE COVERED ALL THE DISCREPANCIES,THAT FAA WAS NOT JUSTIFIED IN PARTIALLY ALLOWING THE APPEAL. THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RI VAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT AN ACTION U/S.133A WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE, THAT EXCESS STOCK AND CASH OF RS. 4.05 LAKHS WAS FOUNDED IN THE SURVEY, THAT THE ASSESSEE HAD MADE DISCLOSURE OF T HE UNACCOUNT - ED ASSETS,THAT THE KHATA VASULI BAHI FOR A PERIOD OF SEVEN MONTHS WAS NOT MADE AVAILABLE, THAT THE AO HAD ESTIMATED THE SALE FIGURE FOR THE YEAR UNDER CONSIDERATION AT RS. 30.85 LAKHS, THAT THE ASSESSEE DID NOT OBJECT TO THE SALES FIGURE TAKE N BY THE AO, THAT THE NP RATE AS PER THE REGULAR BOOKS OF ACCOUNTS OF THE ASSESSEE WAS 6.77% AS AGAINST THE RATE OF 27.60% ADOPTED BY THE AO, THAT THE ASSESSEE HIMSELF SUGGESTED THAT ADDITION MADE BY THE AO SHOULD BE RESTRICTED TO RS. 2.08 LAKHS,THAT THE F AA DELETED THE ADDITION OF RS. 6.43 LAKHS OUT OF THE TOTAL ADDITION MADE BY THE AO,AMOUNTING TO RS. 8.52 LAKHS. IN OUR OPINION, THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THE ASSESSEE HIMSELF HAD STATED THAT THE ADDITION SHOULD BE RESTR ICTED TO RS. 2.08 LAKHS.THEREFORE,CONFIRMING THE ORDER OF THE FAA,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. . ITA NO. 149/NAG/2015 5 ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH , AUGUST, 2016. , 2016 SD / - SD / - ( . . / D T GARASIYA ) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER NAGPUR ; DATED :29 . 0 8 . 2016. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR NAGPUR BENCH, ITAT, / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT,NAGPUR.