ITO, New Delhi V. Shri Inder Singh Arora, Gurgaon

ITA 1710/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3497 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-07-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 27-04-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SANJAY AWASTHI SENIOR
• Assessee Lawyers: B D SHARMA
• Keywords: Unexplained investment; Additional evidence; Set aside
• Section: 133A; 143(2); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : C, NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.1710/DEL/2009 (ASSESSMENT YEAR : 2004-05) ITO, WARD 26 (1), VS. SHRI INDER SINGH ARORA, NEW DELHI. PROP. M/S. S.K. MARBLES & GRANITES, VILLAGE SIKANDERPUR, GURGAON (HARYANA) (PAN : ASAPS2847M) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.D. SHARMA, ADVOCATE REVENUE BY : SHRI SANJAY AWASTHI, SENIOR DR O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE ARISES OUT OF THE ORDER OF THE CIT (APPEALS)-XXIV, NEW DELHI DATED 8.12.2008 FOR THE A SSESSMENT YEAR 2004- 05. THE FOLLOWING GROUND OF APPEAL IS TAKEN BY TH E REVENUE : ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT (A) ERRED IN RESTRICTING THE ADDITION OF RS.32,00,000/- TO RS.10,76,017/- MADE BY THE A.O. ON ACCOUNT OF UNEXP LAINED INVESTMENT IN STOCK AS THE ASSESSEE HIMSELF OFFERED THE SAID AMOUNT FOR TAXATION DURING THE COURSE OF SURVEY OPE RATION U/S 133A OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- ITA NO.1710/DEL/2009 2 2.1 THE ASSESSEE IS A PROPRIETOR OF M/S. S.K. MARBL ES & GRANITE ENGAGED IN THE BUSINESS OF TRADING IN MARBLE AND GRANITE ST ONE. A SURVEY OPERATION U/S 133A OF INCOME-TAX ACT WAS CONDUCTED ON 27.2.20 04 AT THE BUSINESS PREMISES LOCATED AT SIKANDERPUR MARBLE MARKET, MEHR AULI ROAD, SIKANDERPUR, GURGAON (HARYANA). AN INVENTORY OF ST OCK WAS PREPARED. ACCORDING TO THE INVENTORY PREPARED, THE STOCK FOUN D WAS VALUED AT RS.41,93,000/-. THE TRADING ACCOUNT OF M/S. S.K. M ARBLES & GRANITE, AS ON 27.2.2004, WAS SHOWING A CLOSING STOCK OF RS.9,93,2 30/-. ON THAT BASIS, A DIFFERENCE OF RS.32 LACS WAS CALCULATED. DURING TH E SURVEY OPERATION, THIS DISCREPANCY WAS BROUGHT TO THE NOTICE OF SHRI INDER SINGH ARORA, PROPRIETOR OF THE FIRM AND HIS STATEMENT WAS ALSO RECORDED. I N HIS STATEMENT, HE HAS REPLIED AS UNDER : I AM NOT UNABLE TO EXPLAIN THE DIFFERENCE HENCE I SURRENDER RS.32 LAKHS ON ACCOUNT OF ACCESS STOCK FOUND DURING THE COURSE OF SURVEY ACTION. FOR THE PURPOSE OF TAXATION WITH THE REQUEST THAT NO PENALTY & PROSECUTION SHALL BE INITIATED AG AINST ME. I AM ISSUING FOLLOWING CHEQUES :- S.NO. CHEQUE NO. AMOUNT BANK DATE 1. 992119 3,50,000/- SYNDICATE BANK 19.03.04 2. 992120 3,50,000/- SYNDICATE BANK 24.03.04 3. 992121 3,05,000/- SYNDICATE BANK 28.03.04 THESE CHEQUES WERE PRESENTED FOR PAYMENT IN THE BAN K BUT ALL THREE CHEQUES WERE RETURNED BACK WITH THE REMARK PAYMENT STOPPED BY DRAWER. ITA NO.1710/DEL/2009 3 THE ASSESSEE HAS ALSO NOT DECLARED THE SURRENDERED AMOUNT OF RS.32 LAKHS I.E. UNACCOUNTED INVESTMENT IN THE STOCK ALONG WITH NORMAL INCOME OF F.Y. 2003-04 WHILE FILING RETURN FOR A.Y. 2004-05. 2.2 THIS CASE WAS SELECTED FOR COMPULSORY SCRUTINY AND ASSESSING OFFICER ISSUED NOTICES U/S 143(2) ALONG WITH CERTAIN QUESTI ONNAIRES. THE DETAILS OF THE NOTICES ISSUED ARE NOTED BY THE ASSESSING OFFIC ER AS UNDER :- S.NO. DATE OF NOTICE FIXED FOR / DATE OF HEARING REMARKS 1. 11.02.05 24.02.05 NOTICE RETURNED BACK WITH REMARK LEFT FROM POSTAL DEPARTMENT 2. 15.02.05 28.02.05 ISSUED & SERVED BY SPEED POST 3. 06.11.06 13.11.06 NOTICE ALONG WITH QUESTIONNAIRE ISSUED & SERVED BY SPEED POST 4. 18.12.06 22.12.06 NOTICE ALONG WITH A LETTER ISSUED GIVING FINAL OPPORTUNITY TO THE A. THIS NOTICE WAS RETURNED BACK BY THE POSTAL DEPTT. WITH THE REMARK THAT REFUSE TO RECEIVE THE NOTICE. 5. 22.12.06 26.12.06 NOTICE ALONG WITH A LETTER & A QUESTIONNAIRE WAS ISSUED & SERVED UPON MR. VIKAS GOEL, ACCOUNTANT OF THE FIRM. 6. 26.12.06 SH. VIKAS GOEL, ACCOUNTANT OF THE FIRM ATTENDED AND CASE ADJOURNED FOR 27.12.06. 7. THE CASE WAS ADJOURNED FOR 27.12.06. NONE ATTEN DED ON THIS DATE ITA NO.1710/DEL/2009 4 2.3 THE ASSESSING OFFICER MADE AN ORDER U/S 144 OF THE INCOME-TAX ACT BY ADDING THE SURRENDERED AMOUNT AS UNDISCLOSED INV ESTMENT IN STOCK. 3. THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT (A) . ASSESSEE ALSO TOOK THE GROUND THAT NOTICES WERE NOT SERVED ON THE ASSE SSEE AND NO REASONABLE OPPORTUNITY WAS PROVIDED. THE CIT (A) DISMISSED T HE ASSESSEES CLAIM THAT NOTICES WERE NOT RECEIVED BY HIM AND HE HAS HELD TH AT NOTICES SENT AT THE OLD ADDRESS WERE SERVED UPON THE ASSESSEE BUT BEYOND TH E STIPULATED DATE. 3.1 REGARDING THE EXCESS STOCK, THE CIT (A) DELETED THE ADDITION BY HOLDING AS UNDER :- APPLYING THE ABOVE COSTING METHODOLOGY, THE COST OF STOCK OF 99,006 SQ.FT. OF COMMODITY STOCK COMES TO RS.20,69,225/-. THEREFORE, THE STOCK FOUND AT THE B USINESS PREMISES OF THE ASSESSEE IS HELD TO BE COSTING RS.2 0,69,225/- ON THE DATE OF SURVEY AS AGAINST THE VALUATION OF RS.4 1,92,980/- MADE ARBITRARILY BY THE SURVEY PARTY BY APPLYING TH E EXCESSIVE RATE OF THE COMMODITIES. ACCORDING TO THE TRADING ACCOUNT AS ON THE DATE OF SURVEY THE STOCK WAS SHOWN AT RS.9,9 3,208/- WHEREAS THE ACTUAL STOCK LYING AT THE BUSINESS PREM ISES WAS SHOWN TO THE TUNE OF RS.20,69,225/- AS DISCUSSED AB OVE. THEREFORE THE ADDITION MADE BY THE ASSESSING OFFICE R ON ACCOUNT OF UNEXPLAINED INVESTMENT IN STOCK IS RESTR ICTED AT RS.10,76,017/-. THE APPELLANT GETS A RELIEF OF RS. 21,23,983/-. CIT (A) HAS ALSO HELD THAT THE ASSESSING OFFICER DI D NOT CARE TO CONCLUDE THE PROCEEDINGS IN A LOGICAL AND JUDICIOUS MANNER THERE BY MAKING AN ABSOLUTELY ARBITRARY ASSESSMENT AND MAKING AN ADDITION OF RS.3 2 LACS WITHOUT APPLYING EVEN AN IOTA OF FAIRNESS. ITA NO.1710/DEL/2009 5 4. LEARNED DR SUBMITTED THAT SUCH OBSERVATIONS OF T HE CIT (A) ARE UNWARRANTED AND CONTRARY TO THE FACTS OF THE CASE. THE ASSESSING OFFICER GRANTED SIX OPPORTUNITIES TO THE ASSESSEE AND NOTIC ES WERE SERVED. THE REPRESENTATIVE OF THE ASSESSEE ALSO ATTENDED THE HE ARING BUT ONLY FOR ADJOURNMENT. THE ASSESSEE HIMSELF SURRENDERED THE EXCESS STOCK OF RS.32 LACS FOR TAXATION. IT IS ALSO A FACT THAT HE HAS ALREADY GIVEN THE CHEQUES AGAINST THE PAYMENT OF THE TAX, AS THE UNACCOUNTED INVESTMENT IN STOCK. HE HAS LATER ON STOPPED THE PAYMENTS OF THESE CHEQUES. THUS, THE ASSESSEES WHOLE STORY IS AN AFTER-THOUGHT AND IT DESERVES TO BE REJECTED. CIT (A) HAS ALSO ADMITTED THE ADDITIONAL EVIDENCES EVEN WHEN TH E ASSESSING OFFICER HAD OBJECTED TO THE SAME. THE ASSESSEE HAS ALSO NOT S UBMITTED THE BILLS, VOUCHERS AND STOCK REGISTERS FOR VERIFICATION. THE REFORE, THE CIT (A)S ADMISSION OF ADDITIONAL EVIDENCE AND GRANTING THE R ELIEF ON THAT BASIS IS NOT JUSTIFIED. RULE 46A CLEARLY PROVIDES THAT THE APP ELLANT SHALL NOT BE ENTITLED TO PRODUCE ANY EVIDENCE, WHETHER ORAL OR DOCUMENTAR Y, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF ASSES SMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER. HE CAN PRODUCE THE ADDITIONAL EVIDENCES ONLY WHERE THE ASSESSING OFFICER HAS REFUSED TO ADM IT EVIDENCE WHICH HE OUGHT TO HAVE BEEN ADMITTED OR APPELLANT WAS PREVEN TED BY SUFFICIENT CAUSE FROM PRODUCING THE SAME OR THE ASSESSING OFFICER CA LLED UPON TO PRODUCE AND THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE SAME ITA NO.1710/DEL/2009 6 BEFORE THE ASSESSING OFFICER WHICH IS RELEVANT TO A NY GROUND OF APPEAL OR WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPE ALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT TO A DDUCE THE ADDITIONAL EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. IN AS SESSEES APPEAL, NONE OF THE CONDITIONS IS FULFILLED. THE ASSESSING OFFICER HAS NOT REFUSED TO ADMIT ANY EVIDENCE. THERE IS NO SUFFICIENT CAUSE FOR NOT PRODUCING THE EVIDENCE AS CALLED FOR BY THE ASSESSING OFFICER DURING THE ASSE SSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS ALSO PROVIDED SUFFICIENT OPPO RTUNITY, WHICH IS ALSO EVIDENT FROM THE FACT THAT THE CIT (A) HIMSELF HAS DECIDED THIS IN FAVOUR OF THE REVENUE. HE FINALLY PLEADED THAT IN SUCH SITUA TION, THE ORDER OF THE CIT (A) DESERVES TO BE SET ASIDE. AT THE MOST, THE MAT TER MAY BE RESTORED TO THE FILE OF THE ASSESSING OFFICER FOR PROPER VERIFICATI ON. 4. LEARNED AR FOR THE ASSESSEE RELIED ON THE ORDER OF CIT (A) AND SUBMITTED THAT THE CIT (A) HAS GRANTED THE RELIEF A FTER CONSIDERING THE EVIDENCES SUBMITTED BEFORE HIM AFTER CALLING THE RE MAND REPORT. HE PLEADED TO DISMISS THE REVENUES APPEAL. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A SSESSING OFFICER GRANTED OPPORTUNITIES TO THE ASSESSEE AND THE ASSES SEE DID NOT AVAIL THESE OPPORTUNITIES. THE EXCESS STOCK WAS CALCULATED DUR ING THE SURVEY OPERATION. THE FACT WAS ADMITTED BY THE ASSESSEE. THE ASSESSE E HAS ALSO SURRENDERED RS.32 LACS DURING THE OPERATION U/S 133A OF INCOME- TAX ACT. THE CHEQUES ITA NO.1710/DEL/2009 7 WERE ALSO GIVEN FOR THE PAYMENT OF TAXES ON THIS UN ACCOUNTED INVESTMENT IN THE STOCK SO ADMITTED. AT A LATER DATE, THE ASSESS EE OBJECTED THE VALUATION OF THE CLOSING STOCK. HE HAD ALSO STOPPED THE PAYMENT OF CHEQUES GIVEN TO THE SURVEY TEAM TOWARDS TAX LIABILITY SO ADMITTED. ASS ESSING OFFICER GRANTED MANY OPPORTUNITIES PRIOR TO FINALIZATION OF ASSESSM ENT U/S 144 OF INCOME-TAX ACT. ASSESSEE FAILED TO COMPLY WITH THE NOTICES IS SUED DURING THE ASSESSMENT PROCEEDINGS. IT WAS ASSESSEE TO ESTABLI SH OR SAY REBUT THE CALCULATIONS OF STOCK ON THE DATE OF SURVEY WITH PR OPER EVIDENCES BEFORE THE ASSESSING OFFICER. HE FAILED TO DO SO. ASSESSEE F ILED APPEAL AGAINST THE ORDER OF ASSESSING OFFICER PASSED U/S 144 OF THE I. T. ACT AND THE CIT (A) GRANTED THE RELIEF ON THE BASIS OF ADDITIONAL DOCUM ENTS FILED BEFORE HIM. THE CIT (A) CALLED THE REMAND REPORT. THE REMAND REPO RT READ AS UNDER :- ' ASSESSMENT IN THIS CASE WAS COMPLETED U/S 144 OF THE IT ACT ON 28/12/2006 AFTER AFFORDING AMPLE OPPORTUNITI ES TO THE ASSESSEE BY THE A.O. TO COMPLY WITH THE VARIOUS NOT ICES ISSUED FROM TIME TO TIME. AN ADDITION OF RS.32,00,000/- W AS MADE AS THE ASSESSEE HAD SURRENDERED THE SAID AMOUNT AS UND ISCLOSED INVESTMENT IN STOCK DURING THE COURSE OF SURVEY OPE RATION CONDUCTED U/S.133A OF I.T. ACT ON 27.02.2004. NOW THE A.R. OF THE ASSESSEE HAS POINTED OUT BEFORE YOUR GOOD-SE LF THAT WHILE CALCULATING THE VALUE OF STOCK THE DEPTT. HAS ADOPT ED THE RATE @ RS.40/-, RS.42/- & RS.82/- PER SQ.FEET., WHICH ARE ON A VERY HIGHER SIDE. AS PER THE CALCULATION OF ASSESSEE TH E RATE PER SQ.FEET COMES NOT MORE THAN RS.20/- WHICH MAY HANGS UPTO RS.26/- AFTER ADDING ALL THE INWARD AND DIRECT EXPE NSES. I HAVE GONE THROUGH THE STOCK INVENTORY, THE STATE MENT RECORDED DURING THE COURSE OF SURVEY OPERATION AND THE THEN ASSESSING OFFICERS REPLY DATED 15.04.2004 SENT TO THE ASSESSEE ITA NO.1710/DEL/2009 8 (REJECTING THE SIMILAR NATURE OF APPLICATION DATED 12.03.2004 FILED BY THE ASSESSEE) WHICH ARE IN ORDER AND AS SU CH THE ASSESSEES SUBMISSION IN REGARD TO VALUATION OF STO CK WHICH IS AFTER THOUGHT SHOULD BE REJECTED. CIT (A) GRANTED THE RELIEF ON THE BASIS OF THESE EV IDENCES/DOCUMENTS, WHICH REMAINED UNVERIFIED AT THE LEVEL OF THE ASSESSING O FFICER. ASSESSEES NON- COOPERATION ATTITUDE BEFORE ASSESSING OFFICER HAD P REVENTED THE ASSESSING OFFICER FROM PROPER AND LOGICAL VERIFICATION OF FAC TS RELEVANT IN THE PLEADINGS OF ASSESSEE. THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, WE SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH A DIREC TION TO THE ASSESSEE THAT HE WILL PRODUCE ALL THE NECESSARY DOCUMENTS IN SUPPORT OF HIS CLAIM BEFORE THE ASSESSING OFFICER FOR VERIFICATION. ASSESSING OFFI CER WILL DECIDE THE ISSUE AFRESH NO DOUBT AFTER PROVIDING OPPORTUNITY TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THE 23 RD DAY OF JULY 2010. SD/- SD/- (I.P. BANSAL) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 23 RD DAY OF JULY, 2010 TS ITA NO.1710/DEL/2009 9 COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. CIT 4. CIT(A)-XXIV, NEW DELHI. 5. DR, ITAT. ASSTT.REGISTRAR ITAT, NEW DELHI.