DCIT, CHENNAI V. M.Kamlesh Kumar, CHENNAI

ITA 1675/CHNY/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 7909 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 29-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 21-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R DUARI PANDIAN
• Assessee Lawyers: D ANAND
• Keywords: Unexplained investment; Income from undisclosed sources; Revised return
• Section: 143(3); 142(1); 133A; 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ./ ././ ./ I.T.A.NO.1675/MDS/2015 / // / ASSESSMENT YEAR : 2011-12 THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1(3), 46, NUNGAMBAKKAM HIGH ROAD, CHENNAI - 600 034. VS. SHRI M. KAMLESH KUMAR, 130/68, DHANALAKSHMI COMPLEX, NSC BOSE ROAD, CHENNAI - 600 079. [PAN: AAOPK 0619B] ( / // / APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI R. DUARI PANDIAN, JCIT / RESPONDENT BY : SHRI D. ANAND, ADVOCATE /DATE OF HEARING : 29.09.2016 /DATE OF PRONOUNCEMENT : 28.11.2016 /O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE REVENUE HAS FILED APPEAL AGAINST THE ORDER OF C IT(A) -18, CHENNAI, ITA NO. 105/2013-14 DATED 27.02.2015. THE REVENUE HAS RAISED THE GROUNDS THAT THE LD. CIT(A) HAS ERRED IN DELETING ADDITION OF RS. 46,82,685/- IRRESPECTIVE OF THE FACT THAT EVIDENCE WAS NOT AVAILABLE ON RECO RD TREATED AS DOUBLE ADDITION. THE LD. CIT(A) FURTHER ERRED THAT THE ASSESSEE HAS MADE INVESTMENT IN SILVER :-2-: I.T.A. NO. 1675/MDS/2015 ARTICLES AND THE ADDITION OF RS. 46,82,685/-TOWARDS PROFIT EARNED BY THE ASSESSEE BASED ON THE IMPOUNDED DOCUMENTS. FURTHER, THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACTS THAT THE STOCK ACCEPTED BY TH E ASSESSEE IS PAYABLE TO ACHARIS WAS NOT AVAILABLE DURING THE SURVEY OPERATI ONS AND THE LD. AO TREATED SUCH STOCK AS SOLD AND ARRIVED AT PROFIT AND PRAYED FOR ALLOWING THE APPEAL. 2. THE BRIEF FACTS OF THE CASE IS THE ASSESSEE IS I N BUSINESS OF TRADING IN SILVER ARTICLES AND THERE WAS A SURVEY U/S. 133A OF THE ACT ON THE BUSINESS PREMISES OF THE ASSESSEE ON 06.01.2011 AND THE ASSE SSEE IS THE PROPRIETOR OF MS/. BHARAT SILVER MART AND PARTNER IN M/S. SWARNA SHILPI (PARTNERSHIP FIRM). DURING THE COURSE OF SURVEY, INVENTORY STOCK OF SIL VER WAS OBTAINED AND FOUND EXCESS AND IMPOUNDED LOOSE SHEETS OF PAPERS WITH IN FORMATION OF VARIOUS ENTITIES DEALT BY THE ASSESSEE WITH DETAILS OF ISSUES AND PU RCHASES OF SILVER AND THE ASSESSEE HAS ADMITTED RS. 1.5 CRORES IN THE STATEME NT RECORDED AS INCOME. SUBSEQUENTLY, NOTICE U/S. 153(C) AND 142(1) OF THE ACT WAS ISSUED ON 15.10.2012. IN COMPLIANCE TO NOTICE THE ASSESSEE H AS FILED RETURN OF INCOME ON 26.10.2012 WITH TOTAL INCOME OF RS. 1,17,17,216/- A ND SUBSEQUENTLY, NOTICE UNDER 143(2) OF THE ACT WAS ISSUED ALONG WITH A QUE STIONNAIRE ON 05.03.2013 AND THE ASSESSEE FILED REVISED RETURN OF INCOME DEC LARING THE TOTAL INCOME OF RS. 2,31,92,957/- THE LD. AR FILED DETAILS AND EXPLAINE D THE INCOME TRANSACTIONS AND THE LD. AO HAS WORKED OUT IN THE ASSESSMENT ORDER E XPLAINING THAT THE EXCESS STOCK OF SILVER AMOUNTED TO RS. 2,05,37,751/-. THE LD. AO MADE MATHEMATICAL CALCULATIONS AND ESTIMATED THE PROFIT ON THE SALE B ASED ON THE MATERIAL IN SURVEY :-3-: I.T.A. NO. 1675/MDS/2015 OPERATION AS SILVER PURCHASES WERE NOT AVAILABLE AN D CALCULATED THE AVERAGE PRICE WITH PROFIT COMPONENT ON SILVER ARTICLES AND WORKED OUT THE TOTAL UNDISCLOSED INCOME OF RS. 2,05,37,751/- AND THE PROFIT ON SALE OF THE SILVER ARTICLES AT RS. 46,82,685/- THE ASSESSEE EXPLAINED THAT HE HAS OFFE RED RS. 1.5 CRORES AS INCOME INCLUDING THE PROFIT IN RESPECT OF ISSUES MADE TO T HE JEWELLERS AND WERE TELESCOPED IN THE DISCLOSURE. THE LD. AO APPLIED T HE SALE PRICE, PURCHASE PRICE, PROFIT MARGIN ON ARTICLES BASED ON THE LOG BOOKS MA INTAINED BY THE ASSESSEE AND THE CALCULATED BASED ON THE RATIOS AND RATES APPLIC ABLE TO THE ASSESSEE AND MADE AN ADDITION ON ACCOUNT OF UNACCOUNTED INCOME ON SIL VER ARTICLES TRADING AND ASSESSED TOTAL INCOME OF RS. 2,87,30,710/- U/S. 143 (3) OF THE ACT DATED 22.03.2013. 3. AGGRIEVED BY THE AO'S ORDER, THE ASSESSEE HAS FI LED AN APPEAL BEFORE THE CIT(A). IN THE APPELLANT PROCEEDING THE LD. AR OF THE ASSESSEE ARGUED THE GROUNDS AND REITERATED THE SUBMISSIONS MADE IN THE SURVEY OPERATIONS U/S. 133A OF THE ACT AND ASSESSMENT PROCEEDINGS U/S. 143(3) O F THE ACT, WHERE THE ASSESSING OFFICER HAS OVERLOOKED VARIOUS FACTS AND MADE THE DOUBLE ADDITION AND WORKED OUT PROFIT ON SILVER STOCK. THE LD. CIT(A) OBSERVED THE FINDINGS OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE A SSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS AND ELABORATELY DISCUSSED AT PAGE 3 TO 6 OF HIS ORDER. THE CONTENTIONS OF THE LD. AR THAT THE ABOVE RS. 1. 5 CRORES INCLUDES PROFIT ELEMENT IN RESPECT OF OTHER STOCKS TO BE RECEIVABLE FROM VARIOUS PARTIES AND TRADING TRANSACTIONS IN THE LOOSE SHEET AND THE INC OME ADMITTED BY THE ASSESSEE :-4-: I.T.A. NO. 1675/MDS/2015 RS. 1.5 CRORES INCLUDE THE PROFIT, OTHERWISE IT WIL L LEAD TO DOUBLE TAXATION OF SAME INCOME AND SUPPORTED THE CASE WITH THE JUDICIAL DEC ISIONS. THE LD. CIT(A) CONSIDERED THE FACTS OF SURVEY OPERATIONS AND ASSES SEE SUBMISSIONS ON DISCLOSURE OF RS. 1.5 CRORES ON ACCOUNT OF EXCESS STOCK OF SIL VER AND RECEIVABLES AS PER LOOSE SHEET NO. 4 IN ANN/VJ/LS/IMP WHERE AS THE LD. ASSES SING OFFICER HAS SEPARATELY MADE THE ARITHMETICAL CALCULATIONS AND ARRIVED AT G ROSS PROFIT ON THE RECEIVABLES TRANSACTION BEING AT RS. 46,82,685/-. THE GROSS PR OFIT ADDITION MADE BY THE ASSESSING OFFICER IS ALREADY EMBEDDED IN THE EXCESS STOCK AND RECEIVABLES WERE ADMITTED IN THE ASSESSEE'S INCOME. FURTHER, THE LD . CIT(A) FOUND THAT THE FIGURES CONTAINED IN THE LOOSE SHEET INCLUDES QUANTITY AND DELETED RS. 46,82,685/-AND PARTLY ALLOWED THE APPEAL. 4. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE HAS FI LED AN APPEAL WITH THE TRIBUNAL. THE LD. DR ARGUED THE GROUNDS AND CONTES TED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 46,82,685/-. THE ASSESSING OFFICER HAS MADE MATHEMATICAL CALCULATIONS AND THE ADDITION OF GROSS PROFIT IS BASED ON IMPOUNDED DOCUMENTS. THE ASSESSEE HAS DISCLOSED RS . 1.5 CRORES AS UNEXPLAINED INVESTMENT IN SILVER ARTICLES AND THE A DDITION MADE BY THE ASSESSING OFFICER IS TOWARDS THE GROSS PROFIT ON THE ARTICLES AND PRAYED FOR SETTING ASIDE THE ORDER OF CIT(A) AND ALLOW THE GROUNDS. CONTRA, THE LD. AR OF THE ASSESSEE RELIED ON THE ORDER OF THE CIT(A) AND PRODUCED THE COPY OF THE SWORN STATEMENT AND FILED THE COPIES OF LETTERS FILED WITH INCOME TAX D EPARTMENT. :-5-: I.T.A. NO. 1675/MDS/2015 5. WE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATE RIAL ON RECORD AND THE STATEMENT RECORDED BY THE REVENUE AND THE LD. D R ARGUED THAT THE ACTION OF LD. CIT(A) IN DELETING THE ADDITION OF GROSS PROFIT CANNOT BE SUSTAINABLE. THE ASSESSEE BEING A DEALER IN SILVER ARTICLES AND DUE TO SURVEY OPERATIONS HAS OFFERED RS. 1.5 CRORES AS UNACCOUNTED TRANSACTIONS RECORDED IN THE LOOSE SHEET. SUBSEQUENTLY, FILED REVISED RETURN OF INCOME WITH U NDISCLOSED INCOME WHICH WAS CONSIDERED BY THE ASSESSING OFFICER FOR THE PURPOSE OF ASSESSMENT. WHEREAS, THE LD. ASSESSING OFFICER MADE CALCULATIONS AND WORKED OUT GROSS PROFIT ON SILVER ARTICLES TRANSACTIONS IN LOOSE SHEET AT RS. 46,82,6 85/-. WE ON PERUSAL OF THE ASSESSMENT ORDER WERE THE LD. ASSESSING OFFICER FOU ND THAT THE ASSESSEE HAS EARNED PROFIT IN RESPECT OF SILVER ARTICLES AND COM PUTED PROFIT PER GRAM AS THE ASSESSEE IS IN THE WHOLESALE BUSINESS AND RELIED ON THE ASSESSEE'S BOOKS OF ACCOUNTS. WHEREAS THE LD. AR SUBMITTED THAT THE CAL CULATIONS OF THE ASSESSING OFFICER ARE ONE SIDED AND OVERLOOKED THE FACTS THAT THERE WAS PHYSICAL STOCK AND THE ASSESSEE HAS SOLD THE SILVER ARTICLES PRIOR TO SURVEY U/S. 133A OF THE ACT AND THE PROFIT COMPUTED ON THE SILVER ARTICLES IS WITHO UT ANY QUANTIFIED BASIS. BUT THE ASSESSING OFFICER RELIED ON THE STATEMENT RECORDED U/S. 131 OF THE ACT AND SUBSTANTIATE HIS WORKING AT PAGE 5 & 6 OF THE ORDER WITH QUANTITY AND VALUE AND CALCULATED UNDISCLOSED INCOME AT RS. 2,05,37,751/-. THE LD. AR PRODUCED THE COPY OF THE ASSESSEE'S SWORN STATEMENT RECORDED ON 11.03.2013 IN THE ASSESSMENT PROCEEDING WHERE THE ASSESSEE HAS MENTIO NED THAT IN THE COURSE OF SURVEY U/S. 133A OF THE ACT TO BUY PEACE WITH THE D EPARTMENT AND TO AVOID LITIGATION AND PENALTY PROCEEDINGS HAS MADE A VOLUN TARY DISCLOSURE OF RS. 1.5 :-6-: I.T.A. NO. 1675/MDS/2015 CRORES. BUT THE ASSESSEE COULD NOT CONTROVERT WITH SUBMISSIONS ON PROFIT ON SILVER ARTICLES AND HAS NOT PRODUCED SPECIFIC DETAI LS IN THE LOOSE SHEETS AND DUE TO NON-SATISFYING EXPLANATIONS AND THE LD. AO ADOPTED OPTIONS CONSIDERING THE SALE PRICE, PURCHASE PRICE AND PROFIT MARGIN AND CALCULA TED UNDISCLOSED INCOME IN SILVER TRADING. WE CONSIDERED THE APPARENT FACTS, M ATERIAL ON RECORD AND EVIDENCE AND ARE OF THE OPINION THAT THE ASSESSEE HAS MADE D ISCLOSURE IN SURVEY OPERATIONS BUT LD. CIT(A) HAS NOT CONSIDERED THE WO RKINGS OF THE ASSESSING OFFICER ESTABLISHING THAT THE ASSESSEE HAS MADE PR OFIT ON THE TRANSACTIONS OF SILVER IN THE LOOSE SHEETS AND THE ASSESSEE HAS NOT DISCLOSED PROFIT IN HIS DISCLOSURE OF RS. 1.5 CRORES AND THEREFORE WE SET A SIDE THE ORDER OF CIT(A) AND RESTORE THE ORDER OF ASSESSING OFFICER AND ALLOW TH E GROUNDS OF THE REVENUE 6. IN THE RESULT, THE REVENUE APPEAL IS ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 28TH DAY OF NOVEMBE R, 2016 AT CHENNAI. SD/ SD/ SD/ SD/ - -- - ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER SD/ SD/ SD/ SD/ - -- - ( (( ( . ) )) ) (G. PAVAN KUMAR) /JUDICIAL MEMBER /CHENNAI, /DATED: 28TH NOVEMBER, 2016 JPV /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ( )/CIT(A) 4. /CIT 5. /DR 6. /GF.