MADANLAL M JAIN, MUMBAI V. ITO WD 14(2)(2), MUMBAI

ITA 1651/MUM/2014

• Counselvise Citation: [2022] 106 COUNSELVISE.COM (IT) 0107 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 09-03-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “D” MUMBAI BEFORE SHRI G.S. PANNU (PRESIDENT) AND SHRI SAKTIJIT DEY (JUDICIAL MEMBER) ITA No. 1651/MUM/2014 Assessment Year: 2009-10 Shri Madanlal M. Jain (Prop. of M/s Indrani Silk), Ground floor, 182/186, Kalbadevi Road, Mumbai-400 002. Vs. ITO Ward 14(2)(2), Earnest House, 3 rd floor, Nariman Point, Mumbai. PAN No. ABOPJ 3988 K Appellant Respondent Assessee by : Mr. Rajeev Khandelwal, AR Revenue by : Mr. Bharat Andhle, DR Date of Hearing : 20/10/2021 Date of order : 17/01/2022 ORDER PER BENCH: This is an appeal by the assessee against order dated 31.12.2013, of learned Commissioner of Income Tax (Appeals)-25, Mumbai [in short ‘CIT(A)] for the assessment year 2009-10. 2. The grounds raised by the assessee are as under : 1. On the facts and in the circumstances of the case and in law, the learnedCIT (Appeal) has erred in confirming an addition of Rs. 9,50,389/- made bythe AO on account of additional income declared during the course ofsurvey. Shri Madanlal M. Jain ITA No. 1651/Mum/2014 2 2. The lamed CIT (A) has erred in rejecting the claim that the additionalincome declared during the course of survey was accounted for in the booksof accounts. He upheld the addition just on the ground that the same wasnot disclosed separately in the Profit & Loss account. 3. The learned CIT (A) has failed to appreciate that the Tax Auditor hasreported that the additional income declared during the course of survey hasbeen accounted for in the books of accounts. 4. The learned CIT (Appeal) was wrong in holding that the sale in a stockcredited to the Profit & Loss account did not represent income of theassessee. 5. The appellant craves leave to add, alter and/or modify the grounds ofappeal. 3. As can be seen from the grounds raised, the dispute in the present appeal is relating to addition of ₹9,50,389/-. Briefly the facts are, the assessee is an individual engaged in the business of trading in sarees through his proprietary concern M/s Indrani Silk. A survey operation under section 133A of the Act was carried out in the business premises of the assessee on 20.01.2009. In course of survey certain discrepancies with regard to stock and cash physically available were found. Based on these facts a statement was recorded from assessee’s son who was managing the business. In the statement the discrepancies were accepted and additional income of ₹20.95 lakhs was declared. However, in the return of income filed for the impugned assessment year on 30.09.2009, the assessee declared total income of ₹16,62,258/- without offering the additional income of ₹20.95 lakhs. Noticing this fact in course of assessment proceedings, the Assessing Officer called Shri Madanlal M. Jain ITA No. 1651/Mum/2014 3 upon the assessee to explain the reason for not offering the additional income of ₹20.95 lakhs. In response, it was submitted by the assessee that the value of stock found at the time of survey has already been considered while valuing the closing stock as on 31.03.2009. As regards the cash found, it was submitted that the entry for cash sales of ₹8.95 lakhs was subsequently passed in the books of account and has been included in the value of sales reflected in the trading and profit and loss account. Thus, the assessee submitted that the statement offering additional income at the time of survey was retracted for an amount of ₹9,95,389/-. The Assessing Officer, however, was not convinced with the explanation of the assessee and after rejecting the books of account and relying upon the statement made at the time of survey, he added back the retracted amount of ₹9,50,389/- to the income of the assessee. The aforesaid addition made by the Assessing Officer was also sustained by learned CIT(A). 4. Reiterating the stand taken before the departmental authorities learned counsel appearing for the assessee submitted, at the time of recording of statement during survey operation the assessee had not passed the accounting entries, hence, the assessee was unable to reconcile the discrepancies. He submitted, after the survey operation the assessee passed Shri Madanlal M. Jain ITA No. 1651/Mum/2014 4 appropriate accounting entries reconciling the discrepancy in stock as well as cash at hand. Thus, he submitted, return of income was filed offering the correct income. Hence, no further addition is to be made. More so, when the Assessing Officer has not found any discrepancy in the books of account. 5. Strongly relying upon the observations of the departmental authorities submitted, the assessee at the time of survey having offered additional income over and above the normal income, should have shown it in the return of income in addition to the income offered by it. He submitted, the assessee having failed to do so, the Assessing Officer was justified in making the addition. 6. We have considered rival submissions and perused the material on record. Undisputedly, in course of survey conducted in the business premises of the assessee on 21.02.2009 discrepancies were found between the physical stock and stock as recorded in the books. Further, the cash available physically did not tally with the cash as per the books. In the statement recorded on the date of survey assessee’s son managing the business, being unable to explain and reconcile the discrepancies, had clearly and categorically accepted the discrepancies and had offered additional income of ₹12 lakhs on account of excess stock and ₹8.95 lakhs on account of cash found. Shri Madanlal M. Jain ITA No. 1651/Mum/2014 5 Thus, in total, the assessee had offered additional income of ₹20.95 lakhs. However, in the return of income filed for the impugned assessment year, much after the date of survey, the assessee did not offer the additional income by explaining that necessary accounting entries in the books reconciling the differences were passed after the survey. When the assessee in course of survey was unable to explain/reconcile the excess stock and cash found and offered additional income of ₹20.95 lakhs over and above his normal income, the subsequent explanation of the assessee at a belated stage for not offering the additional income is clearly an afterthought, hence, unacceptable. Though, before us, the learned counsel for the assessee has submitted that no adverse interference has been drawn on the books of account maintained by the assessee, however, it is fact on record that books of account were found to be unreliable, hence, the Assessing Officer has rejected them. In our view, the Assessing Officer is more than liberal in restricting the addition to ₹9,50,389/- instead of the additional income offered at ₹20.95 lakhs. In the aforesaid view of the matter, we do not see any merit in the grounds raised by the assessee. Shri Madanlal M. Jain ITA No. 1651/Mum/2014 6 7. In the result, the appeal filed by the assessee is dismissed. . Sd/- Sd/- (G.S. PANNU) (SAKTIJIT DEY) PRESIDENT JUDICIAL MEMBER Mumbai; Dated: 17/01/2022 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. The CIT(A)- 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. BY ORDER, //True Copy// (Dy./Assistant Registrar) ITAT, Mumbai