ACIT, Varanasi V. Smt. Malti Devi Baranwal, Bhadohi

ITA 181/ALLD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63352 (ITAT-ALLAHABAD)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY KR THAKUR SR DR SHRI S K
• Assessee Lawyers: EPASS BHADOHI PAN ACPPD F
• Keywords: Gift; Loose papers; Period of limitation; Time period of passing order

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ALLAHABAD BENCH, ALLAHABAD BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 181/ALLD./2012 ASSTT. YEAR : 2009-10 A.C.I.T., CENTRAL CIRCLE, VS. SMT. MALTI DEVI BA RANWAL, VARANASI. C/O M/S. CARPET INTERNATIONAL, HARIAUN BYE-PASS, BHADOHI. (PAN : ACPPD 3633 F) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ABHAY KR. THAKUR, SR. DR RESPONDENT BY : SHRI S.K. GARG, ADVOCATE DATE OF HEARING : 05.11.2012 DATE OF PRONOUNCEMENT OF ORDER : 08.11.2012 ORDER PER BHAVNESH SAINI, J.M.: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), VARANASI DATED 21.03.2012 FOR THE ASSESSMENT YEAR 2 009-10. IN THE DEPARTMENTAL APPEAL, THE REVENUE CHALLENGED THE DELETION OF ADDI TION OF RS.23,15,925/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADHOC DISALLOWA NCE OF VARIOUS EXPENSES AND IN DELETING THE ADDITION OF RS.3,90,753/- MADE BY THE ASSESSING OFFICER U/S. 69A OF THE IT ACT ON ACCOUNT OF UNDISCLOSED INVESTMENT IN JEWELLERY. ITA NO. 181/ALLD./2012 2 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT SEARCH A ND SEIZURE OPERATION WAS CONDUCTED IN THE RESIDENTIAL AND BUSINESS PREMISES OF M/S. CARPET INTERNATIONAL AND M/S. CARPET INTERNATIONAL PVT. LTD. BHADOHI, ITS DI RECTORS, ITS PARTNERS, ITS SISTER CONCERNS AND OTHER GROUP CASES ON 11.02.2009. DURIN G THE SEARCH, LOOSE PAPERS, DOCUMENTS, FDRS, COMPUTER ETC. AS PER ANNEXURES TO VARIOUS PUNCHNAMAS DRAWN, WERE FOUND AND SEIZED. THE ASSESSEE FILED RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER APPEAL, I.E., 2009-10 ON 30.09.2009 DISCLOSIN G INCOME OF RS.25,74,000/-. THE CASE WAS FIXED FOR REGULAR SCRUTINY PROCEEDINGS . IT IS STATED THAT THE ASSESSEE RUNS BUSINESS OF JOB WORK OF WEAVING CARPET AND INC OME FROM OTHER SOURCES. FOR THE ENTIRE YEAR, THE ASSESSEE HAS WORKED ONLY FOR O NE FIRM, NAMELY, M/S. CARPET INTERNATIONAL, WHICH IS AN ENTITY OF THE SAME GROUP . THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT DEBITED MAJOR EXPENSES AS UNDER : (I). WAGES AND SALARY RS.88,50,480/- (II). TRAVELING EXPENSES RS. 6,96,362/- (III). REPAIR & MAINTENANCE RS. 76,240/- (IV) OTHER EXPENSES RS.18,90,243/- (V). STAFF WELFARE RS. 66,301/- THE ASSESSEE PRODUCED WEAVERS REGISTER FOR PAYMENT OF WEAVING CHARGES. THE ASSESSEE EXPLAINED THAT THE ASSESSEE MAINTAINED COM PLETE BOOKS OF ACCOUNT AS PER ACT AND SAME WERE PRODUCED BEFORE THE ASSESSING OFF ICER. THE ASSESSING OFFICER WAS OF THE VIEW THAT ALTHOUGH BOOKS OF ACCOUNT WERE PRODUCED, BUT THE SAME WERE NOT SUPPORTED BY BASIC DOCUMENTS AND THAT NO COMPLE TE SET OF BOOKS WERE FOUND ITA NO. 181/ALLD./2012 3 DURING THE COURSE OF SEARCH. IN THE WAGES AND SALAR Y REGISTER, IT WAS FOUND TO BE COMPUTERIZED AND BEARS NO SIGNATURE OF THE PARTIES TO WHOM PAYMENTS HAVE BEEN MADE. THE ASSESSING OFFICER, THEREFORE, DOUBTED AND DISALLOWED 20% OUT OF THE ABOVE EXPENSES AND MADE THE ADDITION OF RS.23,15,92 5/-. THE ASSESSING OFFICER FURTHER FOUND THAT DURING THE COURSE OF SEARCH, SIL VER AND GOLD JEWELLERY WERE FOUND, IN WHICH THE ASSESSEE CLAIMED PART OF THE SI LVER AND GOLD JEWELLERY BELONGING TO SMT. REETA BARANWAL IN A SUM OF RS.1,3 0,376/- AND REMAINING OF ASSESSEE IN A SUM OF RS.5,93,528/-. THE ASSESSEE EX PLAINED THAT JEWELLERY OF REETA BARANWAL WAS HELD BY THE ASSESSEE AND FURTHER JEWEL LERY OF ASSESSEE WAS SHOWN IN NET WEALTH STATEMENT. THE ASSESSING OFFICER, HOWEVE R, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND OUT OF THE GOLD, SIL VER AND DIAMOND, ADDITION WAS MADE U/S. 68 OF THE IT ACT OF RS.3,90,753/- AND EXP LANATION OF THE ASSESSEE WAS REJECTED. 2.1 THE ASSESSEE CHALLENGED BOTH THE ADDITIONS BEFO RE THE LD. CIT(A) AND DETAILED SUBMISSIONS WERE MADE WHICH HAVE BEEN INCO RPORATED IN THE IMPUGNED ORDER, ON WHICH REMAND REPORT OF THE ASSESSING OFFI CER WAS CALLED FOR IN WHICH THE ASSESSING OFFICER REITERATED THE FINDINGS GIVEN IN THE ASSESSMENT ORDER. THE ASSESSEE IN THE WRITTEN SUBMISSIONS, BRIEFLY, CONTE NDED THAT THE ASSESSMENT PROCEEDINGS WERE TAKEN AT THE FAG END OF THE LIMITA TION EXPIRING TO COMPLETE THE ITA NO. 181/ALLD./2012 4 ASSESSMENT ORDER AND FIRST STATUTORY NOTICE U/S. 14 2(1) WAS ISSUED FOR THE FIRST TIME ON 14.10.2010 WHEN THE LIMITATION PERIOD FOR MAKING ASSESSMENT WAS DUE TO EXPIRE ON 31 ST DECEMBER. THE ASSESSING OFFICER MADE ADHOC DISALLO WANCE OUT OF EXPENSES. THE ASSESSEE MAINTAINED PROPER BOOKS OF A CCOUNT, WHICH ARE AUDITED AND ARE SUPPORTED BY THE BILLS/INVOICES ETC. SOME MANUA L REGISTERS ARE ALSO MAINTAINED BY THE ASSESSEE TO REGULARIZE THE PAYMENTS OF EXPEN SES IN QUESTION. THE ASSESSEE HAS BEEN CARRYING ON THE JOB WORK THROUGH KARIGARS EXCLUSIVELY FOR CARPET INTERNATIONAL. RELIANCE WAS PLACED ON THE DECISION OF DELHI HIGH COURT IN THE CASE OF JAI ENGINEERING WORKS LTD., 133 ITR 389, IN WHIC H IT WAS FOUND THAT THE TRIBUNAL HAS PROPERLY RELIED UPON THE AUDITORS REP ORT TO DRAW PROPER INFERENCES FROM THE SAME. IT WAS SUBMITTED THAT SINCE THE ASSE SSEE WORKED ONLY FOR ONE PARTY, M/S. CARPET INTERNATIONAL, THEREFORE, THERE IS NO Q UESTION OF INFLATION OF EXPENSES. THE ASSESSEE PRODUCED ALL THE DETAILS BEFORE THE AS SESSING OFFICER. THEREFORE, ADHOC DISALLOWANCE OF 20% EXPENSES IS HIGHLY UNJUST IFIED. THE ASSESSEE NOT ONLY MAINTAINED MAIN BOOKS OF ACCOUNT, BUT ALSO MAINTAIN ED SUBSIDIARY BOOKS OF ACCOUNT TO PROVE THE GENUINENESS OF THE EXPENSES. T HE ASSESSEE HAS SHOWN NET PROFIT RATE OF 14.36%, THEREFORE, ADHOC DISALLOWANC E OF 20% EXPENSES IS HIGHLY UNJUSTIFIED. THE ASSESSEE RELIED UPON SEVERAL DECIS IONS OF THE TRIBUNAL AND THE HIGH COURT AND ALSO RELIED UPON THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. GOTAN LIME KHANIJ UDYOG, 256 ITR 24 5, IN WHICH IT WAS HELD THAT ITA NO. 181/ALLD./2012 5 EVEN IF THE BOOKS OF ACCOUNT ARE REJECTED, IT IS AL WAYS NOT NECESSARY TO MAKE ADDITIONS TO THE RETURNED INCOME. DURING THE COURSE OF SEARCH, NO INCRIMINATING MATERIAL WAS FOUND AGAINST THE ASSESSEE. AS REGARDS , THE ADDITION ON ACCOUNT OF UNDISCLOSED JEWELLERY, THE ASSESSEE REITERATED THE SAME SUBMISSIONS THAT PART OF THE JEWELLERY BELONGED TO SMT. REETA BARANWAL AND THE A SSESSEE BELONGS TO A REPUTED FAMILY AND FILED THE RETURN OF INCOME FOR SEVERAL Y EARS AND ALSO FILED W.T. RETURN IN WHICH THE JEWELLERY HAS BEEN DECLARED AND FURTHER T HE ASSESSING OFFICER HAS NOT GIVEN BENEFIT OF JEWELLERY UPTO 500 GMS. AND 250 GM S. PER MARRIED LADY AND UNMARRIED LADY RESPECTIVELY AS PER INSTRUCTION NO. 1916 DATED 11.05.1994 OF CBDT. THE JEWELLERY OWNED BY THE ASSESSEE IS 473 GM S., ON WHICH NO ADDITION COULD BE MADE IN VIEW OF THE ABOVE CBDT CIRCULAR. E VEN DURING THE COURSE OF SEARCH, A SLIP ALONGWITH JEWELLERY OF 48 GMS. WAS F OUND MENTIONING THAT IT BELONGS TO REETA BARANWAL, THE DAUGHTER OF THE ASSESSEE, WH ICH WAS KEPT BY THE ASSESSEE FOR SAFE CUSTODY. THE PANCHNAMA ALSO SUPPORTS THE S AME. SINCE THE VALUE HAS ALSO BEEN DECLARED IN THE WEALTH TAX RETURN, THEREFORE, THE ADDITION IS UNJUSTIFIED. IT WAS SUBMITTED THAT HONBLE GUJRAT HIGH COURT IN THE CAS E OF CIT VS. RATAN LAL VYAPARI LAL JAIN, 45 DTR 290 (339 ITR 351), CONSIDERING THE BOARDS CIRCULAR NO. 1916 GRANTED BENEFIT TO THE ASSESSEE. IT WAS, THEREFORE, SUBMITTED THAT THE ISSUE IS COVERED BY THE ABOVE DECISION OF HONBLE HIGH COURT. ITA NO. 181/ALLD./2012 6 2.2 THE LD. CIT(A), CONSIDERING THE EXPLANATION OF THE ASSESSEE DELETED BOTH THE ADDITIONS. THE LD. CIT(A) FOUND THAT THE ASSESSEE E XCLUSIVELY WORKED FOR M/S. CARPET INTERNATIONAL AND RECEIVED JOB CHARGES AND W ORK WAS ALSO DONE THROUGH KARIGARS ON JOB WORK BASIS AND ALL THE EXPENSES HAV E BEEN RECORDED IN THE BOOKS OF ACCOUNT, WHICH TALLY WITH THE AUDIT REPORT, THEREFO RE, THERE IS NO QUESTION OF INFLATION OF EXPENSES. THE LD. CIT(A) FOUND THAT TH E ASSESSEE NOT ONLY MAINTAINED MAIN BOOKS OF ACCOUNTS, BUT ALSO SUBSIDIARY RECORD, WHICH WERE PRODUCED BEFORE THE ASSESSING OFFICER. AFFIDAVIT OF SHRI PANNALAL Y ADAV WAS NOT SUBJECTED TO CROSS EXAMINATION. THEREFORE, ADHOC DISALLOWANCE IS UNJUS TIFIED. THE ADDITION OF RS.23,15,925/- WAS, ACCORDINGLY, DELETED. AS REGARD S UNEXPLAINED GOLD JEWELLERY, THE LD. CIT(A) FOUND THAT THE ASSESSEE HAILS FROM R EPUTED BUSINESS FAMILY AND REGULARLY ASSESSED TO WEALTH TAX. AUTHORIZED OFFICE R HAS PREPARED THE PANCHNAMA ONE IN THE NAME OF ASSESSEE (473 GMS. AS PER ANNEXU RE J3) AND ANOTHER IN THE NAME OF SMT. REETA BARANWAL, DAUGHTER OF THE ASSESSEE ( 48 GMS. AS PER ANNEXURE J2). THE LD. CIT(A) FOUND THAT AS PER CBDT INSTRUCTION N O. 1916, THE ASSESSEE IS ENTITLED FOR BENEFIT OF JEWELLERY FOR 500 GMS. FOR MARRIED LADY AND 250 GMS. FOR UNMARRIED LADY. SINCE, NO EXCESS JEWELLERY WAS FOUN D, THEREFORE, ENTIRE ADDITION HAS BEEN DELETED. THE LD. CIT(A) ACCORDINGLY ALLOWE D THE APPEAL OF THE ASSESSEE ON BOTH THESE GROUNDS. ITA NO. 181/ALLD./2012 7 3. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSIN G OFFICER AND SUBMITTED THAT COMPLETE ENTRIES WERE NOT PRODUCED BEFORE THE ASSES SING OFFICER TO SUPPORT THE EXPENSES. ON THE OTHER HAND, THE LD. COUNSEL FOR TH E ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S UBMITTED THAT THE ASSESSEE HAS PRODUCED COMPLETE DETAILS BEFORE THE ASSESSING OFFI CER AND THE LD. CIT(A) ON PROPER APPRECIATION OF MATERIAL RIGHTLY DELETED THE ADDITION. THE LD. REPRESENTATIVES OF BOTH THE PARTIES STATED THAT THE PRESENT APPEAL IS NOT CONNECTED WITH THE SEARCH APPEAL AND IS REGULAR ASSESSMENT AND THUS, REGULAR APPEAL FOR THE ASSESSMENT YEAR 2009-10. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE AR E OF THE VIEW THAT NO INTERFERENCE IS CALLED FOR IN THE MATTER. THE LD. C IT(A) FOUND THAT THE ASSESSEE WAS WORKING ON JOB WORK BASIS FOR ONE PARTY EXCLUSIVELY AND THE WORK WAS GOT DONE ON JOB WORK BASIS THROUGH KARIGARS. THE ASSESSEE HAS A LREADY SHOWN PROFIT RATE OF 14.36% AND MAINTAINED COMPLETE RECORDS OF THE PRODU CTION AS WELL AS THE EXPENSES, WHICH IS SUPPORTED BY THE AUDIT REPORT AS WELL. NO ADVERSE MATERIAL WAS FOUND AGAINST THE ASSESSEE DURING THE COURSE OF SEA RCH. THE LD. CIT(A) ON THE BASIS OF THE MATERIAL BEFORE HIM WAS SATISFIED WITH THE A SSESSEES CLAIM OF DEDUCTION OF EXPENSES GENUINELY INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. HONBLE RAJASTHAN HIGH COURT IN THE CASE OF GOTAN L IME KHANIJ UDYOG (SUPRA) HAS ITA NO. 181/ALLD./2012 8 HELD THAT MERE REJECTION OF ACCOUNT BOOKS OR SOME D EFICIENCY IN THE BOOKS OF ACCOUNT, WOULD NOT MEAN THAT IT WOULD NECESSARILY L EAD TO ADDITION TO THE RETURNED INCOME OF THE ASSESSEE. THE EXPENSES HAVE BEEN SUPP ORTED BY COMPLETE RECORD MAINTAINED BY THE ASSESSEE. THEREFORE, IT APPEARS T HAT ADHOC DISALLOWANCE OF 20% EXPENSES WERE MADE OUT OF THE EXPENSES UNDER FIVE D IFFERENT HEAD WHICH IS WHOLLY UNJUSTIFIED AND THE LD. CIT(A), CONSIDERING THE TOT ALITY OF FACTS AND CIRCUMSTANCES, RIGHTLY DELETED THE ADDITION. THEREFORE, THERE IS N O MERIT IN THE GROUND NO. 1, 2 & 3 OF APPEAL OF THE REVENUE. THE SAME ARE, ACCORDINGLY DISMISSED. 4.1 AS REGARDS UNEXPLAINED JEWELLERY, THE ASSESSEE EXPLAINED THAT ONE PANCHNAMA WAS PREPARED IN THE NAME OF ASSESSEE WHIC H CONTAINED 473 GMS. OF JEWELLERY AND ANOTHER PANCHNAMA WAS PREPARED IN THE NAME OF REETA BARANWAL HAVING 48 GMS. OF JEWELLERY. ACCORDING TO THE CBDT CIRCULAR NO. 1916 DATED 11.05.1994, GUIDELINES HAVE BEEN ISSUED FOR SEIZURE OF THE JEWELLERY IN THE COURSE OF SEARCH AND IT WAS CONSIDERED AS GENERALLY THE JE WELLERY IS POSSESSED BY THE FAMILY, FOR WHICH NO EXPLANATION BE CALLED FOR IN T HE CASE OF MARRIED LADY HAVING JEWELLERY UPTO 500 GMS. AND UNMARRIED LADY UPTO 250 GMS. HONBLE GUJRAT HIGH COURT IN THE CASE OF RATAN LAL VYAPARI LAL JAIN (SU PRA) HAS HELD HELD, DISMISSING THE APPEALS, (I) THAT THE APPROACH ADOPT ED BY THE TRIBUNAL IN FOLLOWING THE CBDT CIRCULAR NO. 191 6, DATED MAY 11, 1994, AND GIVING BENEFIT TO THE ASSESSEE, EVEN FOR EXPLAINING THE SOURCE IN RESPECT OF THE JEWELLERY BEING HELD BY TH E FAMILY WAS IN ITA NO. 181/ALLD./2012 9 CONSONANCE WITH THE GENERAL PRACTICE IN HINDU FAMIL IES WHEREBY JEWELLERY WAS GIFTED BY THE RELATIVES AND FRIENDS A T THE TIME OF SOCIAL FUNCTIONS, VIZ., MARRIAGES, BIRTHDAYS, MARRIAGE ANN IVERSARY AND OTHER FESTIVALS. IN THE CIRCUMSTANCES, UNLESS THE REVENUE SHOWED ANYTHING TO THE CONTRARY, IT COULD SAFELY BE PRESUMED THAT THE SOURCE TO THE EXTENT OF THE JEWELLERY STATED IN THE CIRCULAR STOOD EXPLA INED. THUS, THE APPROACH ADOPTED BY THE TRIBUNAL IN CONSIDERING THE EXTENT OF JEWELLERY SPECIFIED UNDER THE CIRCULAR TO BE A REAS ONABLE QUANTITY, COULD NOT BE FAULTED. APART FROM THE ABOVE EXPLANATION, THE ASSESSEE ALSO EXPLAINED THAT SMALL JEWELLERY BELONG TO HER DAUGHTER, WHICH IS SUPPORTED BY THE S LIP FOUND ALONG WITH THE JEWELLERY AND IN CASE OF THE ASSESSEE, THE GOLD JEW ELLERY HAS BEEN DECLARED IN THE WEALTH TAX. THEREFORE, CONSIDERING THE TOTALITY OF FACTS AND CIRCUMSTANCES, THE LD. CIT(A) RIGHTLY HELD THAT THE JEWELLERY FOUND DURING THE COURSE OF SEARCH IS EXPLAINED AND THE ADDITION HAS BEEN RIGHTLY DELETED . GROUNDS NOS. 4 & 5 OF THE REVENUES APPEAL HAVE NO MERIT AND ARE ACCORDINGLY DISMISSED. 5. IN THE RESULT, THE DEPARTMENTAL APPEAL FAILS AND IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER *AKS/- ITA NO. 181/ALLD./2012 10 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, ALLAHABAD 6. GUARD FILE ASSTT. REGISTRAR TRUE COPY