Shri Sampatlal Hagamilal Jain, Ahmedabad V. The Income tax Officer,Ward-6(5), Ahmedabad

ITA 1693/AHD/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80442 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 18-09-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Unexplained investment; Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD (BEFORE SHRI G.C.GUPTA VICE PRESIDENT & SHRI ANIL CHATURVEDI , A.M.) I. T. A. NO: 1693 / AHD/ 20 1 0 (A SSESSMENT YEAR: 2005 - 06) SAMPATLAL HAGAMILAL JAIN 30, DHARAMRAJ SOCIETY, R.C. TECHNICAL ROAD, GHATLODIA, AHMEDABAD V/S THE INCOME TAX OFFICER WARD - 6(5), A HMEDABAD (APPELLANT) (RESPONDENT) PAN: AEMPJ 5858B APPELLANT BY : SHRI S.N. DIVETIA, A.R. RESPONDENT BY : SHRI NIMESH YADAV, SR. D.R. ( )/ ORDER DATE OF HEARING : 18 - 09 - 2014 DATE OF PRONOUNCEMENT : 17 - 10 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - XVI, AHMADABAD DATED 17.03.2010 FOR A.Y. 2005 - 06. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS AN INDIVIDUAL STATED TO BE ENGAGED IN THE BUSINESS OF TRADING OF PASTI CLOTH AND JOB WORK. IN THIS CASE SURVEY U/S 133A OF THE ACT WAS CONDUCTED ON 4.11.2004 AT THE PREMISES OF ASSESSEE WHEREIN HE ADMITTED TO TOTAL UNDISCLOSED INCOME OF RS. 23 ,28,100/ - . ASSESSEE THEREAFT ER FILED HIS RETURN OF IT A NO 1693/AHD/2010 . A.Y. 2005 - 06 2 INCOME FOR A.Y. 0 5 - 06 ON 8.6.2006 WHEREIN HE DECLAR ED TOTAL INCOME OF RS. 2,26,250/ - WHICH INCLUDED UNDISCLOSED INCOME OF RS. 2 , 05 , 000/. THE CASE WAS TAKEN UP FOR SCRUTINY AND T HEREAFTER ASSESSMENT WA S FR AMED U/S 143(3) VIDE O R DER DATED 14.12.2007 AND THE TOTAL INCOME WAS DETERMINED AT RS. 23,49,350/ - . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 17.03.2010 GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEV ED BY THE AFORESAID ORDER OF LD CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUNDS: - 1. THE C.I.T (APPEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ASSESSMENT ORDER PASSED BY LD. A.O. AS SURVEY WAS CONDUCTED WITHOUT P ROPER AUTHORIZATION AND ON APPELLANT HOUSE AND HIS SON'S BUSINESS PREMISES AND THE STATEMENT RECORDED WAS NOT RELEVANT FOR ASSESSMENT OF APPELLANT AS STATEMENT RECORDED FOR ALL FAMILY MEMBER'S BUSINESS AND ASSETS AND NOT ONLY FOR APPELLANT BUSINESS. THE ST ATEMENT RECORDED DOES NOT HAVE SUBSTANCE AS THE SAME IS NOT SIGNED BY SURVEY AUTHORITIES. HENCE, ON THE BASIS OF FACTS AND CIRCUMSTANCES OF CASE THE ASSESSMENT BASED ON ILLEGAL SURVEY, THE SAME IS OUGHT TO BE QUASHED. 2. THE CIT (APPEAL) HAS ERRED IN LAW AND FACTS WHILE PASSING HIS APPELLATE ORDER. IN HIS ORDER HE HAS NOT CONSIDERED ALL THE DETAILS AND SUBMISSION MADE TO HIM AND HE HAD NOT PASSED A SPEAKING ORDER AGAINST APPELLANT CONTENTION AND SUBMISSION IN APPELLATE PROCEEDING AND EVEN HE HAS NOT CONSIDERE D AND VERIFIED THE FACTS BROUGHT TO HIS NOTICE IN APPELLATE PROCEEDING AND PASSED ORDER WITHOUT PROPER JUSTIFICATION FOR CONFIRMING THE A.O. ADDITION AND SURVEY PROCEEDING. 3. THE C.I.T (APPEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ADDITION ON ACCOUNT OF UNACCOUNTED STOCK OF RS. 11,65,221/ - IN THE SHOP OF APPELLANT'S SONS AND ON THE BASIS OF FACTS AND LAW THE SAME IS OUGHT TO BE DELETED. 4. THE C.I.T (APPEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ADDITION ON UNACCOUNTED INVESTMENT IN SHOP AMOUNTING RS. 1 ,50,000/ - AND ON THE BASIS OF FACTS AND LAW THE SAME IS OUGHT TO BE DELETED. 5. THE C.I.T (APPEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ADDITION ON UNACCOUNTED INVESTMENT IN FURNITURE OF RS. 1,40,000/ - IN THE SHOP OF APPELLANT'S SON AND ON THE BASIS OF F ACTS AND LAW THE SAME IS OUGHT TO BE DELETED. 6. THE C.I.T (APPEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ADDITION ON UNACCOUNTED INVESTMENT IN HOUSE AMOUNTING RS. 2,25,000/ - AND ON THE BASIS OF FACTS AND LAW THE SAME IS OUGHT TO BE DELETED. 7. THE C.I.T (AP PEAL) ERRED IN LAW AND ON FACT WHILE CONFIRMING ADDITION ON UNACCOUNTED INVESTMENT IN SIGN - BOARD OF RS. 8,100/ - IN THE SHOP OF APPELLANT'S SON WAS WRONGLY TREATED AS APPELLANT'S INCOME AND ON THE BASIS OF FACTS AND LAW THE SAME IS OUGHT TO BE DELETED. 4. B EFORE US LD A.R. SUBMITTED THAT HE DID NOT WISH TO PRESS GROUND NO. 1 AN D 2 AND THEREFORE BOTH THE GROUNDS ARE DISMISSED AS NOT PRESSED. GROUND NO. 3 IS WITH RESPECT TO ADDITION ON ACCOUNT OF UNACCOUNTED STOCK OF RS. 11,65,221/ - . 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A.O NOTICED THAT AT THE TIME OF SURVEY , ASSESSEE HAD STATED THAT THERE WOULD BE STOCK OF APPROXIMATELY RS. 4 IT A NO 1693/AHD/2010 . A.Y. 2005 - 06 3 LAC S IN SHOP NO. 1 AND IN SHOP NO. 2 THE APPROXIMATE STOCK WOULD BE AROUND RS. 12 LACS BUT IN THE RETURN OF INCOME FILED B Y THE ASSESSEE , THE UNACCOUNTED STOCK DECLARED DURING THE SURVEY WAS NOT OFFERED TO TAX. HE ACCORDINGLY MADE ADDITION OF RS. 16 LACS ON ACCOUNT OF UNACCOUNTED STOCK. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) AFTER CON SIDERING THE SUBMISSIONS OF THE ASSESSEE GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: - 6.3 THE CONTENTION OF THE APPELLANT THAT THE SHOPS ARE BELONGING TO THE SONS AND NOT TO THE APPELLANT IS ALSO INCORRECT BECAUSE THE INVESTMENT IN SHOP HAS BE EN MADE BY THE APPELLANT. AS MENTIONED IN THE ASSESSMENT ORDER THE APPELLANT HAS ALSO BEEN SHOWING TRADING IN READYMADE GARMENTS, AS HIS BUSINESS ACTIVITY IN EARLIER YEAR. THE SONS HAVE CONTINUED THE SAME BUSINESS WHICH WAS BEING DONE BY THE APPELLANT IN E ARLIER YEAR. EVEN THOUGH SOME OF THE SHOPS ARE RUN BY HIS SONS THAT DOES NOT MEAN THAT THE INVESTMENT IN THE STOCK WAS NOT MADE BY THE APPELLANT. THE APPELLANT HAS CATEGORICALLY MENTIONED THAT HE HAS INVESTED RS. 4 LAC IN THE UNACCOUNTED STOCK IN ONE SHOP AND APPROX RS. 12 LACS IN THE STOCK OF SECOND SHOP. THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE THAT THE BANK ACCOUNT OF THE SHOPS ARE IN THE NAME OF THE SONS OF THE APPELLANT DOES, NOT CARRY ANY WEIGHT BECAUSE NOWHERE THE SONS HAVE ADMITTED DURING THE COURSE OF SURVEY THAT THE STOCK BELONGS TO THEM AND NOT TO HIS FATHER, EVEN THOUGH ONE OF HIS SON SHRI RAKESH KOTHARI WAS PRESENT AT THE TIME OF SURVEY. FURTHER IF THE SONS WERE DOING THE BUSINESS SINCE A Y 2003 - 04 ONWARDS THEN HOW THEIR BANK ACCOUNTS WER E OPENED ONLY DURING. F Y 2004 - 05, IE. ON OR AROUND THE DATE OF SURVEY AND NOT BEFORE. ALL THESE FACTS GOES TO SHOW THAT THE INVESTMENT IN STOCK IS UNACCOUNTED INVESTMENT BY THE APPELLANT. HOWEVER MY ATTENTION WAS DRAWN BY THE AUTHORIZED REPRESENTATIVE TO THE INVENTORY OF THE STOCK TAKEN AS ON 4 - 11 - 2004. AS PER PAGE NO.4 OF THE INVENTORY THE STOCK OF FAMILY SHOP IS CALCULATED AS UNDER : - 4,48,576 +3,16,645 = 7,65,221/ - 6.4 IT WAS STATED THAT IF AS PER PHYSICAL VERIFICATION THE TOTAL STOCK OF SHOP NO. 2 COMES T O RS, 7,65,221/ - , THEN THERE WAS NO REASON FOR DISCLOSING RS. 12 LAC AS UNACCOUNTED STOCK IN THE SHOP NO.2. I AGREE WITH THE CONTENTION OF THE AUTHORIZED REPRESENTATIVE ON THIS POINT, THE ASSESSING OFFICER WILL VERIFY THE POSITION OF TOTAL STOCK FOUND AT T HE TIME OF SURVEY IN RESPECT OF SHOP NO. 2 IF THE TOTAL STOCK FOUND IS ONLY RS. 7,65,221/ - THEN HE IS DIRECTED TO RESTRICT THE ADDITION IN RESPECT OF UNACCOUNTED STOCK OF SHOP NO. 2 AT RS. 7,65,221/ - AS AGAINST RS. 12 LAC. 6. AGGRIEVED BY THE ORDER OF LD C IT(A) , ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD A.R. SUBMITTED THAT THE A.O HAD MADE THE ADDITION SOLELY ON THE BASIS OF DISCLOSURE MADE BY THE ASSESSEE IN THE STATEMENT RECORDED DURING THE COURSE OF SURVEY. HE SUBMITTED THAT THE ADMISSION OF U NDISCLOSED INCOME MADE BY THE ASSESSEE WAS SUBSEQUENTLY RETRACTED BUT A.O DID NOT PAY COGNIZANCE OF THE RETRACTION MADE BY THE ASSESSEE. HE FURTHER SUBMITTED THAT ASSESSEE S SON MR. MANEK KOTHARI WAS DOING TH E BUSINESS OF SARI AND DRESS MATERIAL SINCE 2003 IN PROPRIETORSHIP CONCERN NAMELY VARDHMAN SAREE. HE FURTHER SUBMITTED THAT IT A NO 1693/AHD/2010 . A.Y. 2005 - 06 4 ASSESSEE S SECOND SON MR. RAKESH KOTHARI WAS CARRYING ON THE BUSINESS OF READYMADE GARMENTS IN THE NAME OF VARDHMAN SE LECTION SINCE 2003. THE BUSINES SES OF BOTH HIS SON S WERE INDEP ENDENT AND ASSESSEE HAD NOT INVESTED ANY MONEY IN THEIR BUSINESSES. LD A.R FURTHER SUBMITTED THAT RAKESH KOTHARI WAS FILING HIS RETURN OF INCOME A.Y. SINCE 2003 - 04. LD A.R. FURTHER SUBMITTED THAT AT THE TIME OF SURVEY , NO PROPER INVENTORY WAS TAKEN BY THE SURVEY PARTY AND FURTHER SUBMITTED THAT EVEN AS PER THE SURVEY PARTY THE STOCK OF GOODS AT THE SHOP WAS FOUND TO BE OF RS. 7,65,221/ - . HE PO INTED TO THE LIST OF INVENTORY PLACED AT PAGE NO. 43 ,44 TO DEMONSTRATE THAT NO DETAILS OF THE ITEMS OF STOCK FOUND WAS INVENTORIED . HE FURTHER POINTED TO THE RETURN OF INCOME OF MANEK KOTHARI PLACED AT PAPER BOOK NO. 68. HE THEREFORE SUBMITTED THAT THE ADDITION MADE ON THE BASIS OF STATEMENT AND INCOMPLETE INVENTORY BE DELETED. THE LD D.R. ON THE OTHER HAND SUBMITTED T HAT THE RETURN OF INCOME BY HIS TWO SONS WERE FILED AFTER THE DATE OF SURVEY AND PROPER INVENTORY WAS TAKEN AT THE TIME OF SURVEY AND THE ASSESSEE HIMSELF HAD ADMITTED TO THE VALUE OF STOCK. HE THUS SUPPORTED THE ORDER OF A.O. 8. WE HAVE HEARD THE RIVAL SUB MISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS ABOUT THE ADDITION ON ACCOUNT OF UNACCOUNTED STOCK. BEFORE US, IT IS ASSESSES SUBMISSION THAT THE ADDITION IS BASED ON THE DISCLOSURE MADE AT THE TIME OF SURVEY AND AT THE TIME OF SURVEY NO PROPER INVENTORY WAS PREPARED. FURTHER THE ASSESSEE S SUBMISSION THAT THE STOCK WAS ALSO NOT INVENTORISED AND FOR WHICH HE POINTED TO PAGE 43 AND 44 OF THE PAPER BOOK. THESE SUBMISSIONS OF THE ASSESSEE COULD NOT BE CONTROVERTED BY REVENUE BY PLACING ANY MATERIAL ON RECORD. ON THE OTHER HAND I T IS REVENUE S CONTENTION THAT THE SON OF ASSESSEE THOUGH HAVE BEEN STATED TO BE HAVING INDEPENDENT BUSINESSE S BUT HAD N OT FILED THE RETURN OF INCOME TILL T HE TIME OF SURVEY WAS CONDUCTED AND THEREFORE ASS ESSEE S SUBMISSION OF HIS SONS FILING THE RETURN OF INCOME CANNOT BE ACCEPTED. THIS SUBMISSION OF THE REVENUE HAS NOT BEEN CONTROVERTED BY PLACING ANY MATERIAL ON RECORD. CONSIDERING THE TOTALITY OF THE FACTS, WE ARE OF THE VIEW THAT IN THE PRESENT CASE A DDITION CANNOT BE MADE OF RS. 11,65,221/ - BUT THE ENDS OF JUSTICE SHALL BE MET IF ADDITION IS RESTRICTED TO RS . 5 IT A NO 1693/AHD/2010 . A.Y. 2005 - 06 5 LACS ON ESTIMATED BASIS. WE THUS DIRECT ACCORDINGLY. THUS THIS GROUND OF ASSESSEE IS PARTLY ALLOWED. 9. GROUND NO. 4 TO 7 ARE CONSIDERED TOGETH ER. 10. A.O NOTICED THAT AT THE TIME OF SURVEY ASSESSEE HAD DISCLOSED UNACCOUNTED INVESTMENT IN SHOP NO. 1 AND 2 FOR RS. 3 LACS, UNACCOUNTED INVESTMENT IN FURNITURE IN SHOPS AT RS. 1,70,000, UNACCOUNTED INVESTMENT IN INVESTMENT OF SIGNBOARD OF SHOP AT RS. 8,1 00/ - AND UNACCOUNTED INVESTMENT AT RESIDENTIAL HOUSE OF RS. 2,50,000/ - HOWEVER IN THE RETURN OF INCOME ASSESSEE HAD DISCLOSED UNDISCLOSED INCOME OF RS. 2,05 , 000/ - COMPRISING OF FURNITURE AND FIXTURE RS. 30,000, HOUSE PROPERTY INVESTMENT RS. 25,000/ - AND IN VESTMENT IN SHOP AT RS. 1,50,000/ - . HE THEREFORE CONSIDERED THAT DIFFERENCE BETWEEN THE AMOUNTS DISCLOSED AT THE TIME OF SURVEY AND THAT DISCLOSED IN THE RETURN OF INCOME AS INCOME OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) UPHELD THE ORDER BY HOLDING AS UNDER: - 6.5 THE AFFIDAVIT FILED BY APPELLANT AND HIS TWO SONS ARE SELF SERVING DOCUMENTS AS THEY HAVE BEEN TILED ALMOST AFTER 1.1/2 YEAR BY THE APPELLANT AND ALMOST AFTER THREE YEARS BY THE SONS. FURTHE R THE FACTS STATED IN THE AFFIDAVIT ARE NOT SUPPORTED BY EVIDENCE. I THEREFORE HOLD THAT THE STATEMENT GIVEN AT THE TIME OF SURVEY IS CORRECT STATEMENT (SUBJECT TO THE TOTALING ERROR, IF ANY, IN THE STOCK INVENTORY PREPARED AT THE TIME OF SURVEY), THE OT HER ADDITIONS NAMELY UNACCOUNTED INVESTMENT IN SHOP OF RS, 1,50,000/ - , UNACCOUNTED INVESTMENT IN FURNITURE OF RS, 1,40,000/ - , UNACCOUNTED INVESTMENT IN HOUSE OF RS. 2,25,000/ - AND UNACCOUNTED INVESTMENT IN SIGNBOARD OF RS. 8100/ - IS CONFIRMED, I N SHORT THE ASSESSING OFFICER WILL VERIFY THE TOTAL OF STOCK INVENTORY AND SHOP: NO.2 AND THE FIGURE WILL BE REPLACED FOR RS, 12 LACS AS MENTIONED ABOVE. ON ALL OTHER GROUNDS, THE ADDITION MADE BY THE ASSESSING OFFICER IS CONFIRMED. 11. AGGRIEVED BY THE ORDER OF LD CIT(A) , ASSESSEE IS NOW IN APPEAL BEFORE US. 12. BEFORE US. LD A.R. SUBMITTED THAT THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF DISCLOSURE MADE AT THE TIME OF SURVEY AND NO MATERIAL WAS FOUND TO SUPPORT THE ADDITION. WITH RESPECT TO UNACCOUN TED INVESTMENT IN SHOPS HE POINTED AT PAGE3 OF THE ASSESSMENT ORDER WHEREIN IT WAS SUBMITTED BY THE ASSESSEE THAT THE SHOPS WERE PURCHASED IN OCTOBER 2003 AND JANUARY 2004 IN THE NAME OF ASSESSEE S WIFE. HE THEREFORE SUBMITTED THAT NO ADDITION ON ACCOUNT O F SHOPS CAN IT A NO 1693/AHD/2010 . A.Y. 2005 - 06 6 BE MADE IN THE YEAR UNDER CONSIDERATION. THE LD. D.R. ON THE OTHER HAND SUPPORTED THE ORDER OF A.O. 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ADDITION HAS BEEN MADE ONLY ON THE BASIS OF DISCLOSUR E AT THE TIME OF SURVEY. NO OTHER INCRIMINATING MATERIAL WAS FOUND TO SUPPORT THE ADDITION. FURTHER WITH RESPECT TO INVESTMENT IN SHOP , ASSESSEE HAD SUBMITTED EVEN AT THE TIME OF SURVEY THAT THE SHOPS WERE PURCHASED I N OCTOBER 2003 AND JANUARY 2004 AND THE REFORE THE PERIOD OF PURCHASE DOES NOT FALL IN THE YEAR UNDER CONSIDERATION. WITH RESPECT TO THE ADDITIONS OTHER THAN SHOPS , WE FIND THAT REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUPPORT THE ADDITION. FURTHER, B EFORE US REVENUE HAS NOT BROUGHT ANY MATERIAL ON RECO RD TO CONTROVERT THE SUBMISSIONS OF THE ASSESSEE. IN VIEW OF THESE FACTS, WE FIND THAT THE ADDITION MADE BY THE A.O IS UNCALLED FO R. WE THUS DIRECT ITS DELETION. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN OPEN CO URT ON 17 - 10 - 201 4 . SD/ - SD/ - (G.C.GUPTA) (ANIL CHATURVEDI) VICE PRESIDENT ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT, AHMEDABAD