M/s G J Pawar & Sons , Hubballi V. The Income TAx Officer Ward-3(2), Hubballi

ITA 1626/BANG/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7153 (ITAT-BANGALORE)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 01-08-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PALANI KUMAR
• Assessee Lawyers: TULAJAPPA KALBURGI
• Keywords: Unexplained expenditure; Revised return
• Section: 69C; 69; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH B, BANGALORE BEFORE SHRI AK GARODIA, ACCOUNTANT MEMBER & ITA NO.1626/BANG/2017 - ASST. YEAR 2009-10 ITA NO.1627/BANG/2017 - ASST. YEAR 2011-12 ITA NO.1628/BANG/2017 - ASST. YEAR 2012-13 M/S G.J PAWAR & SONS, JAVALI SAL, HUBBALLI-580 028. . APPELLANT PAN NO. AAABFG2995F . VS. THE INCOME-TAX OFFICER, WARAD-2(2), HUBBALLI. . RESPONDENT APPELLANT BY : SHRI TULAJAPPA KALBURGI, ADVOCA TE RESPONDENT BY : SHRI PALANI KUMAR, ADDL. CIT DATE OF HEARING : 20-11-2017 DATE OF PRONOUNCEMENT : 24-11-2017 O R D E R ER SHRI AK GARODIA, ACCOUNTANT MEMBER : ALL THESE THREE APPEALS ARE FILED BY THE ASSESSEE W HICH ARE DIRECTED AGAINST THREE SEPARATE ORDERS OF CIT (A) HUBLI DATED 03.04.2017 FOR A. Y. 2012 13 AND DATED 05.05.2017 FOR A. Y. 2009 10 & 2011 12. ALL THESE APPEALS WERE HEA RD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. THIS IS WORTH NOTING THAT A DEFECT MEM O WAS ISSUED POINTING OUT THAT RESPONDENTS NAME MENTIONE D IN FORM 36 IS INCORRECT. THE NAME OF RESPONDENT MENTIONED IN THE APPEAL MEMO IS CIT (A), HUBBALLI. IN SPITE OF THIS, AMENDED FORM 36 WITH CORRECT NAME OF RESPONDENT WAS NOT FILED TI LL THE DATE OF HEARING ON 20.11.2017. THE APPEALS WERE HEARD AND A RE BEING ITA NOS.1626 1628/B/17 2 DISPOSED OF BY THIS COMMON ORDER AND I HAVE NOTED B OTH NAMES AS OF RESPONDENT I.E. THE NAME OF CIT (A) AS PER FO RM 36 AND OF THE A.O. AS PER THE ASSESSMENT ORDERS. 2. FIRST I TAKE UP THE APPEAL FOR A. Y. 2009 10 I N ITA NO. 1626/BANG/2017. ALTHOUGH THE ASSESSEE HAS RAISED 7 GROUNDS BUT AT THE TIME OF HEARING, ONLY GROUND NO. 3 WAS A RGUED AND HENCE, REMAINING GROUNDS ARE REJECTED AS NOT PRESSE D. IN THIS REGARD, IT IS ALSO NOTED THAT ON PAGES 23 TO 37 OF THE APPEAL MEMO, POINTS URGED ARE APPEARING AND IN THAT ALSO , THERE IS NO ARGUMENT IN RESPECT OF ANY OTHER GROUND. GROUND NO. 3 READS AS UNDER:- (3) THAT THE LEARNED RESPONDENT OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT ASSESSE HAS ALREADY TAKEN INTO ACCOUNT THE GROSS PROFIT ON UNDISCLOSED SALES HIS REVISED RETURN FILED IN RESPONSE TO NOTICE UNDER SECTION 14 8 OF THE IT ACT AND AN ADDITIONAL INCOME OF RS. 92,303/- HAS ALREAD Y BEEN OFFERED IN THE REVISED RETURN AND AS SUCH THERE IS NO SCOPE OF MAKING ADDITION AGAIN. THUS, CONFIRMING OF ENTIRE U NACCOUNTED SALES AS INCOME OF THE APPELLANT-ASSESSEE IS ERRONE OUS. 3. LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAG ES 23 TO 37 OF THE APPEAL MEMO, POINTS URGED ARE APPEARING AND THE SAME SHOULD BE CONSIDERED PARTICULARLY PARA 10 OF I T. 4. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. I FIND THAT THE AO HS STARTED WITH THE FIGURE OF INCOME S. 172,691/- A S PER REVISED RETURN OF INCOME. ON PAGE 58, THE SALES AS PER ORIG INAL RETURN IS NOTED AT RS. 19,94,257/- AND AS PER REVISED RETURN, IT HAS INCREASED TO RS. 23,31,841/- AFTER CONSIDERING UNDI SCLOSED SALES OF RS. 337,584/-. AS PER PARA 10 OF THE POINTS UR GED, IT IS SUBMITTED THAT THE ASSESSEE IS COVERED BY SECTION 4 4AF AND THEREFORE, THE TAXABLE INCOME CANNOT GO BEYOND 5% O F THE TURNOVER. THIS IS TRUE THAT SECTION 44AF IS APPLICA BLE IN THIS YEAR OF THE ASSESSEES ASSESSMENT BECAUSE AS PER TH E AO ALSO, THE ASSESSEE IS A RETAILER AND THE TURNOVER IS BELO W RS. 40 LACS EVEN AFTER INCLUDING UNACCOUNTED SALES. THE INCOME DECLARED BY THE ASSESSEE IS RIGHTLY TAXED BY THE AO AND THE SAM E IS MORE ITA NOS.1626 1628/B/17 3 THAN 5% OF THE TURNOVER OF RS. 23,31,841/- AFTER CO NSIDERING UNDISCLOSED SALES OF RS. 337,584/-. HENCE, IN MY CO NSIDERED OPINION, NO FURTHER ADDITION ON THIS ISSUE IS JUSTI FIED. I DELETE THE SAME. THIS GROUND IS ALLOWED. 6. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. 7. NOW I TAKE UP THE APPEAL FOR A. Y. 2011 12 IN ITA NO. 1627/BANG/2017. ALTHOUGH THE ASSESSEE HAS RAISED 7 GROUNDS IN THIS YEAR ALSO BUT AT THE TIME OF HEARING, ONLY GROUND NOS. 4 & 5 WERE ARGUED AND HENCE, REMAINING GROUNDS ARE RE JECTED AS NOT PRESSED. IN THIS REGARD, IT IS ALSO NOTED THAT ON PAGES 22 TO 36 OF THE APPEAL MEMO, POINTS URGED ARE APPEARING AND IN THAT ALSO, THERE IS NO ARGUMENT IN RESPECT OF ANY O THER GROUND. GROUND NO. 4 & 5 READ AS UNDER:- (4) THAT THE LEARNED RESPONDENT FAILS TO APPRECIAT E THE FACT THAT SECTION 69C ESSENTIALLY DEALS WITH EXPENDITURE ACCOUNTED AS SUCH AND THEREFORE, THE ADDITION UNDER SECTION 69C IS ERRONEOUS SINCE IN APPELLANT-ASSESEE CASE THE ADDITION IS NOT ON AN ACCOUNT OF FAILURE TO EXPLAIN THE EXPENDITURE. (5) THAT THE LEARNED RESPONDENT FAILS TO CONSIDER T HE FINDING IN CASE OF CIT V. P.D. ABRAHRN IN ITA NO. 3 23 OF 2002 (KERALA HC) AND VIVEK KUMAR THAT WHEN SEIZED DOCUMENT EXPLAINS UNEXPLAINED EXPENDITURE NO ADDITION IS WARRANTED. 8. LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PAG E 2 OF THE ASSESSMENT ORDER, IT IS NOTED THAT UNACCOUNTED SALES OF RS. 69,72,342/- WAS FOUND NOTED ON THE MATERIAL IMPOUND ED IN SURVEY AND IN THE SAME DOCUMENT, UNACCOUNTED PURCHA SE IS ALSO NOTED AT RS. 71,90,401/- INCLUDING ACCOUNTED P URCHASE OF RS. 27,48,718/-. HE SUBMITTED THAT IN RESPECT OF UN ACCOUNTED SALES, SEPARATE ADDITION OF RS. 10,24,270/- IS MADE BY THE AO AND THE ASSESSEE IS NOT DISPUTING THE SAME BUT A SE PARATE ADDITION OF RS. 38,84,131/- IS MADE U/S 69C IN RESP ECT OF UNACCOUNTED PURCHASES. HE SUBMITTED THAT SECTION 69 C IS APPLICABLE IN A CASE WHERE THE ASSESSEE HAS INCURRE D ITA NOS.1626 1628/B/17 4 EXPENDITURE BUT COULD NOT EXPLAIN THE SOURCE OF IT. HE SUBMITTED THAT IN THE PRESENT CASE, UNACCOUNTED SALES ARE MOR E THAN UNACCOUNTED PURCHASES AND THEREFORE, THE SOURCE OF IT IS EXPLAINED AND THEREFORE, SECTION 69C IS NOT APPLICA BLE. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW. 9. I FIND FORCE IN THE SUBMISSIONS OF THE LEARNED A R OF THE ASSESSEE BECAUSE IN THE PRESENT CASE, UNACCOUNTED S ALES IS MORE THAN UNACCOUNTED PURCHASE AND THEREFORE, THE S OURCE OF IT IS EXPLAINED AND THEREFORE, SECTION 69C IS NOT APPL ICABLE. HENCE, I DELETE THIS ADDITION. THIS GROUND IS ALLOWED. 10. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. 11. NOW I TAKE UP THE APPEAL FOR A. Y. 2012 13 IN ITA NO. 1628/BANG/2017. ALTHOUGH THE ASSESSEE HAS RAISED 7 GROUNDS IN THIS YEAR ALSO BUT AT THE TIME OF HEARING, ONLY GROUND NOS. 4 & 5 WERE ARGUED AND HENCE, REMAINING GROUNDS ARE RE JECTED AS NOT PRESSED. IN THIS REGARD, IT IS ALSO NOTED THAT ON PAGES 21 TO 35 OF THE APPEAL MEMO, POINTS URGED ARE APPEARING AND IN THAT ALSO, THERE IS NO ARGUMENT IN RESPECT OF ANY O THER GROUND. GROUND NOS. 4 & 5 READ AS UNDER:- (4) THAT THE LEARNED RESPONDENT FAILS TO APPRECIAT E THE FACT THAT SECTION 69C ESSENTIALLY DEALS WITH EXPENDITURE ACCOUNTED AS SUCH AND THEREFORE, THE ADDITION UNDER SECTION 69C IS ERRONEOUS SINCE IN APPELLANT-ASSESEE CASE THE ADDITION IS NOT ON AN ACCOUNT OF FAILURE TO EXPLAIN THE EXPENDITURE. (5) THAT THE LEARNED RESPONDENT FAILS TO CONSIDER T HE FINDING IN CASE OF CIT V. P.D. ABRAHRN IN ITA NO. 3 23 OF 2002 (KERALA HC) AND VIVEK KUMAR THAT WHEN SEIZED DOCUMENT EXPLAINS UNEXPLAINED EXPENDITURE NO ADDITION IS WARRANTED. 12. LEARNED AR OF THE ASSESSEE SUBMITTED THAT ON PA GE 2 OF THE ASSESSMENT ORDER, IT IS NOTED THAT UNACCOUNTED SALES OF RS. 14,48,593/- WAS FOUND NOTED ON THE MATERIAL IMPOUND ED IN SURVEY AND IN THE SAME DOCUMENT, UNACCOUNTED PURCHA SE IS ALSO NOTED AT RS. 45,83,273/-. HE SUBMITTED THAT TH E SOURCE OF ITA NOS.1626 1628/B/17 5 UNACCOUNTED PURCHASE WAS EXPLAINED AS NOTED BY THE AO ON PAGE 3 OF THE ASSESSMENT ORDER BY STATING THAT UNAC COUNTED SALES OF RS. 14,48,593/-, RECEIPT OF RS. 872,400/- BEING REFUND OF MONEY LENDING ADVANCES AND RS. 22,69,810/- RECEI VED AS ADVANCE FROM CUSTOMERS TOTAL RS. 45,90,803/- AS AGA INST UNACCOUNTED PURCHASE OF RS. 45,83,273/-. HE SUBMIT TED THAT IN RESPECT OF UNACCOUNTED SALES, SEPARATE ADDITION OF RS. 383,877/- IS MADE BY THE AO AND THE ASSESSEE IS NOT DISPUTING THE SAME BUT A SEPARATE ADDITION OF RS. 33,83,277/- IS MADE U/S 69C IN RESPECT OF UNACCOUNTED PURCHASES. HE SUB MITTED THAT SECTION 69C IS APPLICABLE IN A CASE WHERE THE ASSESSEE HAS INCURRED EXPENDITURE BUT COULD NOT EXPLAIN THE SOUR CE OF IT. HE SUBMITTED THAT IN THE PRESENT CASE, THE SOURCE IS E XPLAINED BEING UNACCOUNTED SALES RS. 14,48,593/-, RECEIPT OF RS. 872,400/- BEING REFUND OF MONEY LENDING ADVANCES AN D RS. 22,69,810/- RECEIVED AS ADVANCE FROM CUSTOMERS TOTA L RS. 45,90,803/- AS AGAINST UNACCOUNTED PURCHASE OF RS. 45,83,273/-. AND THEREFORE, SECTION 69C IS NOT APP LICABLE. LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF T HE AUTHORITIES BELOW. 13. I FIND FORCE IN THE SUBMISSIONS OF THE LEARNED AR OF THE ASSESSEE BECAUSE IN THE PRESENT CASE, THE SOURCE IS EXPLAINED BEING UNACCOUNTED SALES RS. 14,48,593/-, RECEIPT OF RS. 872,400/- BEING REFUND OF MONEY LENDING ADVANCES AN D RS. 22,69,810/- RECEIVED AS ADVANCE FROM CUSTOMERS TOTA L RS. 45,90,803/- AS AGAINST UNACCOUNTED PURCHASE OF RS. 45,83,273/-. THE AO HAS NOT POINTED OUT ANY MIST AKE IN THESE CONTENTIONS. HE HAS STATED ON PAGE 5 OF THE ASSESSM ENT ORDER THAT THERE IS DEPOSIT OF RS. 12.75 LACS IN THE CURR ENT ACCOUNT IN KVG BANK AND THEREFORE, UNACCOUNTED SALES STANDS UT ILIZED IN THAT BANK DEPOSIT BUT ON THE SAME PAGE, HE HAS NOTE D THAT IT WAS EXPLAINED BEFORE HIM THAT THIS DEPOSIT OF RS. 1 2.75 LACS IN THE CURRENT ACCOUNT IN KVG BANK IS ALREADY ACCOUNTE D IN THE BOOKS OF ACCOUNT AND THERE IS NO COMMENT OF THE AO IN THIS ITA NOS.1626 1628/B/17 6 REGARD. HENCE, I ACCEPT THAT THE SOURCE OF UNACCOUN TED PURCHASES IS EXPLAINED AND THEREFORE, SECTION 69C I S NOT APPLICABLE. HENCE, I DELETE THIS ADDITION. THIS GRO UND IS ALLOWED. 14. IN THE RESULT, THIS APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. 15. IN THE COMBINED RESULT, ALL THREE APPEALS OF TH E ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH NOVEMBER, 2017. SD/- (AK GARODIA) ACCOUNTANT MEMBER VMS. BANGALORE DATED : 24/11/2017 COPY TO : 1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETA RY, ITAT, BANGALORE. ITA NOS.1626 1628/B/17 7 1. DATE OF DICTATION .. 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P. S. .. 4 DATE ON WHICH THE ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT .. 5. DATE ON WHICH THE ORDER COMES BACK TO THE SR. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE .. 7. IF NOT UPLOADED, FURNISH THE REASON FO R DOING SO. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER DOES FOR XEROX & ENDORSEMENT . 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK. 11 THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER. 12 THE DATE ON WHICH THE FILE GOES TO THE DISPATCH SECT ION FOR DISPATCH OF THE TRIBUNAL ORDER 13 DATE OF DISPATCH OF ORDER