VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 186/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2010-11 SHRI JOHRI LAL SODHANI, D-105, SIWAR AREA, BAPU NAGAR, JAIPUR. CUKE VS. THE COMMISSIONER OF INCOME TAX (CENTRAL), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AGWPS 7021 B VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SMT. ROLEE AGARWAL (CIT). LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/12/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/01/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 21/2/2014 PASSED BY THE LEARNED CIT (CENTRAL), JAIP UR FOR A.Y. 2010-11. THE EFFECTIVE GROUNDS OF APPEAL ARE AS UNDER:- 1 UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ORDER PASSED BY THE LEARNED CIT HOLDING THE ORDER PASSED BY THE A.O. U/S 143(3) DATED 29/12/2011 AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE IS ILLEGAL AND BAD IN LAW AND BE QUASHED. ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 2 2 THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED ON FACTS AND IN LAW IN DIRECTING THE A.O. FOR DOING VERIFICATIONS BEFORE CONSIDERING THE ALLEGED SHORT SURRENDER OF CASH OF RS. 76,76,080/- BY MAKING IRRELEVANT OBJECTIONS IGNORING THAT AFTER MAKING SU CH VERIFICATIONS ONLY, THE A.O. HAS FRAMED THE ASSESSMENT ORDER U/S 143(3) BY ACCEPTING THE EXPLANATION OF THE ASSESSEE. 2. IN THIS CASE, ORDER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS THE ACT) WAS COMPLETED BY T HE LEARNED ASSESSING OFFICER ON 29/12/2011 AT RS. 1,39,22,987/ -. THE ASSESSING OFFICER OBSERVED THAT THERE WAS A SEARCH/SEIZURE OPE RATION IN THIS GROUP ON 20/10/2009. DURING THE COURSE OF SEARCH, CASH/JE WELLERY, STOCK IN TRADE, VALUABLES, DOCUMENTS, BOOKS OF ACCOUNT AND/O R LOOSE PAPERS WERE FOUND AND/OR SEIZED FROM THE PREMISES OF THE M EMBERS OF THE SODHANI SWEETS GROUP OF WHICH ONE SUCH MEMBER HAPPENS TO BE THE ASSESSEE. THE ASSESSEE FILED RETURN FOR A.Y. 2010-1 1 ON 27/10/2010 AT TOTAL INCOME OF RS. 1,09,99,050/-. THE CASE WAS SCRUT INIZED U/S 143(3) OF THE ACT. DURING THE COURSE OF SEARCH, THE ASSESS EE IN HIS STATEMENT RECORDED ON OATH U/S 132(4) OF THE ACT ON 20/10/200 9 ADMITTED TO AN UNDISCLOSED INCOME, WHICH WAS ADVANCED BY HIM AS LOAN THROUGH HIS RELATIVE AND ACQUAINTANCES. IN REPLY TO QUESTION NO . 18, THE ASSESSEE STATED THAT HE HAD NO ACCOUNT OF THE AMOUNTS OF LOA NS ADVANCED TO PERSONS WHICH ACCORDING TO HIM WAS DONE PURELY ON TH E BASIS OF FAITH ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 3 AND CONFIDENCE OF HIS CLOSE RELATIVES AS WELL AS FRI ENDS. THIS FACT WAS AGAIN ADMITTED BY THE ASSESSEE IN REPLY TO QUESTION NO. 19 IN WHICH HE ADDITIONALLY STATED THAT HE HAS DISCUSSED THE MATTE R OF SURRENDER WITH HIS WIFE. THE ASSESSEE FILED DETAIL OF SURRENDER VID E LETTER DATED 10/11/2009 UNDER THE VARIOUS HEADS AND REITERATED T HE SURRENDER MADE BY HIM IN HIS ABOVE REFERRED STATEMENT. THE ASSESSEE SURRENDERED AN AMOUNT OF RS. 34,60,400/- ON ACCOUNT OF LOAN ADVANC ED TO PEOPLE AS WELL AS TO COVER UP DISCREPANCIES FOUND DURING THE C OURSE OF SEARCH. WHILE EXAMINING THE RETURN OF INCOME FOR THE YEAR U NDER CONSIDERATION, IT WAS NOTICED THAT THE ASSESSEE HAD DISCLOSED ONLY AN AMOUNT OF RS. 5,36,063/- OUT OF RS. 34,60,400/-. THE LEARNED ASSES SING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON THIS ISSUE , WHICH WAS RESPONDED BY THE ASSESSEE VIDE LETTER DATED 27/12/2 011, WHICH IS REPRODUCED AS UNDER:- .IT IS WITH REFERENCE TO YOUR ORDER SHEET QUERY WH EREBY IT IS REQUIRED TO EXPLAIN WHY THE ASSESSEE HAS NOT O FFERED THE AMOUNT OF RS. 34,60,400/- IN THE RETURN, WHICH WAS SU RRENDERED BY HIM IN HIS STATEMENT RECORDED U/S 132(4) AS A PA RT OF THE TOTAL SURRENDER OF RS. 2 CRORES. IN THIS CONNECTION WE ARE TO SUBMIT AS UNDER:- 1. IN LETTER DATED 24/11/2011 WE HAVE FURNISHED A CH ART EXPLAINING THE INCOME OFFERED BY THE ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 4 ASSESSEE/COMPANY IN WHICH HE IS DIRECTOR VIS A VIS THE AMOUNT SURRENDERED AT RS. 2 CRORE IN STATEMENT U/S 132(4). 2. FROM THAT STATEMENT IT CAN BE NOTED THAT AMOUNT OFFERED IN THE RETURN IS RS. 1,10,40,000/- AS AGAIN ST RS. 2 CRORES STATED IN STATEMENT U/S 132(4). THE DIFFERENCE IS OF RS. 89,60,000/-. THIS DIFFERENCE I S ON TWO COUNTS. ONE IS ON ACCOUNT OF CASH WHERE INSTEAD OF RS. 98,39,600/- SURRENDERED U/S 132(4), THE AMOUNT OFFERED IN THE RETURN IS RS. 21,63,520/-. THE DIFFERENCE IS RS. 76,76,080/-. THIS DIFFERENCE IS MAINLY ON ACCOUNT OF THE NOT RECORDING OF SALES OF FEW DAYS BEFORE THE DATE OF SEARCH IN THE BOOKS OF SODHANI SWEETS PVT. LTD.. TO THIS EFFECT ASSESSEE HAS ALSO CLARIFIED THE POSITION BEFORE THE ADIT(INV.) VI DE LETTER DATED 15/12/2009. AFTER INCLUDING SUCH SALES MADE IN REGULAR COURSE OF BUSINESS, THE DIFFERENCE IN THE CASH FOUND AND THAT AS PER THE BOOKS OF ACCOUNT S HAS REDUCED TO RS. 21,63,520/-, WHICH IS OFFERED IN THE RETURN BY THE ASSESSEE. THUS THE CASH REPRESENTING THE SALE IS OTHERWISE CONSIDERED IN THE INCOME. 3. IT MAY BE NOTED THAT IN STATEMENT U/S 132(4) TO MAKE THE TOTAL SURRENDER AT RS. 2 CRORES, ASSESSEE OFFERED RS. 34,60,400/- AS UNDISCLOSED ADVANCES ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 5 GIVEN THROUGH THE RELATIVES. AGAINST THIS, ASSESSEE HAS OFFERED RS. 8.40 LACS AS OTHER INCOME IN SODHAN I SWEETS PVT. LTD. WHICH WAS NOT SURRENDERED IN STATEMENTS, RS. 8,00,417/- (40,00,417 32,00,000) EXTRA AMOUNT OFFERED TOWARDS INVESTMENT IN CONSTRUCTION OF WORKSHOP AND SHOP AT AJMER ROAD AND RS. 5,36,063/- TO COVER ANY OTHER DISCREPANCIES . THUS, AGAINST RS. 34,60,400/- ASSESSEE HAS OFFERED AN AMOUNT OF RS. 21,76,480/- (8,40,000 + 800,417 + 5,36,063) LEAVING A DIFFERENCE OF RS. 12,83,920/- (34,60,400 21,76,480). 4. IN SEARCH NO EVIDENCE IS FOUND THAT ASSESSEE HAS ADVANCED ANY OTHER AMOUNT OTHER THAN THOSE SPECIFICALLY MENTIONED IN THE STATEMENT THROUGH HIS RELATIVES. THE SURRENDER WAS MADE TO MAKE THE AMOUNT ROUND ABOUT TO RS. 2 CRORES. THIS FACT WAS SPECIFIED IN LETTER FILED BEFORE THE ADDL.DIT/DDIT O N 15/12/2009. IN VIEW OF ABOVE FACTS NO SEPARATE ADDITION FOR RS. 34,60,400/- OR FOR THAT MATTER OF RS. 12,83,520/- BE MADE IN TH E INCOME OF THE ASSESSEE.. THE LEARNED ASSESSING OFFICER CONSIDERED THE SUBMISS IONS OF THE ASSESSEE CAREFULLY AND HELD THAT THE APPELLANT REAF FIRMED THE FACT OF SURRENDER OF RS. 34,60,000/- IN HIS STATEMENT AND A LSO CONFIRMED THAT ADVANCE OF LOAN TO PEOPLE MORE THAN ONE OCCASION IN CLUDING ADMITTING ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 6 THE SAME IN HIS STATEMENT RECORDED ON OATH U/S 132( 4) OF THE ACT. HE FURTHER RELIED UPON THE DECISION IN THE CASE HOTEL KIRAN VS. CIT 82 ITD 453 (PUNE) AND IN THE CASE OF PRASANCHAND SURANA VS . ACIT 71 TTJ 466 AND MADE ADDITION OF RS. 29,23,937/- IN THE INCOME OF THE ASSESSEE. 3. THE LEARNED CIT (CENTRAL) FOUND THE ORDER OF THE ASSESSING OFFICER ERRONEOUS AND PREJUDICIAL TO THE INTEREST O F THE REVENUE. THE LEARNED CIT OBSERVED THAT DURING SEARCH, RS. 2 CROR ES WAS SURRENDERED BY SHRI JOHARI LAL SODHANI, HOWEVER, ONLY RS. 1,02,0 0,000/- WAS DECLARED BY HIM IN HIS RETURN OF A.Y. 2010-11 AS PE R LETTER DATED 24/11/2011 OF THE AR FILED DURING ASSESSMENT PROCEE DINGS. THE DETAILS GIVEN BELOW CLARIFY: SURRENDER DECLARED IN RETURN * CASH FOUND RS. 98,39,600 RS. 21,63,520 * ADVANCES AGAINST PURCHASE OF PLOTS RS. 30,00,000 RS. 30,00,000 * CONSTRUCTION OF WORKSHOP AT KARTARPURA IND. AREA RS. 22,00,000 RS. 29,62, 461 * CONSTRUCTION OF SHOP OF SODHANI SWEETS AJMER ROAD RS. 10,00,000 RS. 10,37, 956 * INVESTMENT IN JEWELLERY RS. 5,00,000 RS. 5,00, 000 * ADVANCES TO CLOSE RELATIVES RS. 34,60,400 RS. 5 ,36,063 RS. 2,00,00,000 RS. 1,02,00,000 AS AGAINST SURRENDER OF RS. 2,00,00,000/- ONLY RS. 1,02,00,000 WERE DECLARED IN THE RETURN BY THE ASSESSEE. THE COMPUTAT ION FILED WITH RETURN IS GIVEN BELOW: INCOME FROM SALARY RS. 8,80,000 INCOME FROM HOUSE PROPERTY AT ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 7 VASUNDHARA COLONY RS. 1,08,262 INCOME FROM OTHER SOURCES INTEREST FROM BANK RS. 7,853 INTEREST FROM PARTIES RS. 4,32,600 INCOME OFFERED FOR TAX RS. 1,02,00,000 RS. 1,06,31,453 LESS INTEREST PAID TO PARTIES RS. 2,69,966 BROKERAGE FOR FUND BORROW RS. 34,068 BANK CHARGES RS. 112 RS. 3,04,146 GROSS TOTAL INCOME RS. 1,10,99,045 LESS CHAPTER VI A DEDUCTION RS. 1,00,000 TOTAL INCOME RS. 1,09,99,045 THE LEARNED CIT AGAIN REITERATED THE FACTS OF LETTER DATED 24/11/2011 FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. IT HAS BEEN HELD THAT OUT OF SURRENDER OF RS. 2 CRORES, SURREND ERED TO THE EXTENT OF RS. 1,02,00,000/- HAD BEEN OFFERED IN THE RETURN OF THE ASSESSEE IN A.Y. 2010-11 AND RS. 8,40,000/- IS CLAIMED TO HAVE BEEN OFFERED IN THE RETURN OF INCOME TO M/S SODHANI SWEETS PVT. LTD. FOR A.Y. 2010-11 AS OTHER INCOME (FROM SALE OF SCRAP). THUS, SURRENDERED TO THE EXTENT OF RS. 1,10,40,000/- IS CLAIMED TO HAVE BEEN HONOURED. THE LEARNED CIT HAS REFERRED THE CONTENTS OF LETTER DATED 27/12/201 1 SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PAGE NOS. 3 AND 4 OF HER ORDER AND ALSO REPRODUCED THE FINDING GIVEN BY THE ASSESSING OFFICER IN ASSESSMENT ORDER. SHE HELD THAT THE LEARNED ASSESSI NG OFFICER ONLY ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 8 MADE ADDITION OF RS. 29,23,937/- AS ADVANCE TO RELA TIVE SURRENDERED BUT NOT DISCLOSED IN THE RETURN. THE LEARNED ASSES SING OFFICER FINALIZED THE ASSESSMENT WITHOUT GIVING ANY FINDING WITH RESPEC T TO SHORT DISCLOSURE OF CASH TO THE EXTENT OF RS. 76,76,080/- . THE LEARNED ASSESSING OFFICER FINALIZED THE ASSESSMENT WITHOUT G IVING ANY COMMENT ON THE REPLY OF THE ASSESSEE, QUOTED IN THE ASSESSM ENT ORDER, THUS LEAVING IT VAGUE WHETHER RS. 76,76,080 HAD BEEN OVER LOOKED TO BE ADDED OR HAD BEEN OMITTED TO BE ADDED BACK AFTER PR OPER APPLICATION OF MIND. THEREFORE, IT HAS BEEN HELD THAT THE ASSESSING OFFICERS ORDER DATED 29/12/2011 IS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF THE REVENUE BECAUSE, SURRENDER ON ACCOUNT OF THE UNDISC LOSED CASH TO THE EXTENT OF RS. 76,76,080/- WAS NOT DISCLOSED IN THE R ETURN AND WAS NOT ADDED TO THE INCOME IN THE ASSESSMENT ORDER DATED 2 9/12/2011 PASSED U/S 143(3) FOR A.Y. 2010-11 WITHOUT SPECIFYING THE R EASONS, WITHOUT GIVING ANY FINDING. THE LEARNED CIT GAVE A SHOW CAUS E NOTICE ON THE ABOVE FACT, WHICH WAS REPLIED BY THE LEARNED AR ON 08/1/2014, WHICH HAS BEEN REPRODUCED BY THE CIT ON PAGE NOS. 6-7 OF H ER ORDER, IT HAS BEEN FOUND THAT SURRENDER WAS REVISED BY THE ASSESSE E THROUGH LETTER ADDRESSED TO THE ADIT, CASH SALES, WHICH WERE NOT POST ED ON THE DATE OF SEARCH IN THE CASH BOOKS HAVE SINCE BEEN POSTED IN THE CASH BOOK OF ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 9 THE COMPANY AND HAVE BEEN ACCEPTED IN THE SCRUTINY ASSESSMENT OF THE COMPANY (SODHANI SWEETS PVT. LTD) FOR A.Y. 2010-11. AFTER CONSIDERING THE ASSESSEES REPLY, IT HAS BEEN HELD THAT THE LEA RNED ASSESSING OFFICER HAS NOT VERIFIED THE CASH SALES MADE AS PER ANNEXUR E-1 ANNEXED WITH THE ORDER U/S 263 OF THE ACT. THE CASH BOOK BALANCE AT RS. 83,86,096/- SHOWING BALANCE OF COMPANY AS ON DATE OF SEARCH, THE ASSESSEE WAS WASHING HIS HAND OFF FROM HONOURING THE DISCLOSURE M ADE DURING SEARCH ON ACCOUNT OF CASH SEIZED OF RS. 98,39,600/- AS SAL ES NOT ACCOUNTED. NO PROOFS WHATSOEVER HAVE BEEN FILED AT ANY STAGE FOR CLAIMING THE ABOVE SALES/RECEIPTS NOR FOR ANY PAYMENTS. THROUGH REPLY DATED 24/11/2011 CERTAIN LISTS HAVE BEEN FURNISHED TO THE A.O. OF TH E COMPANY IN SUPPORT OF SALES AND EXPENSES. AS SAMPLE COPY OF PAGE 8 OF THE LIST IN SUPPORT OF SALES, GIVEN WITH REPLY DATED 24/11/2011 OF THE A .R. DURING ASSESSMENT PROCEEDINGS HAS BEEN ENCLOSED AS ANNEUXR E-3 ALONGWITH HER ORDER. THIS PAGE SHOWS BILL NUMBER AND DURING THE COURSE OF SEARCH AT THE TIME OF RECORDING STATEMENT, THE ASSESSEE NE VER STATED THAT THE CASH FOUND AT RESIDENCE WAS RECORDED IN THE BILL BOO KS. THE SURRENDER WAS CATEGORICALLY THAT THE SALES WERE NOT RECORDED. S UCH BILL BOOKS WERE NOT FOUND NOR SEIZED, AND THE CLAIM OF BILL NUMBERS IS ONLY AN AFTERTHOUGHT. SHE AGAIN REFERRED THE ANNEXURE-4 ENC LOSED WITH HER ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 10 ORDER, SHOWS THE NARRATION OF CASH PURCHASE OF GHEE, PACKING MATERIAL AND SO ON THE SO FORTH. THIS PROVES THE POINT THAT P ROPER PROOFS THAT CAN INSPIRE CONFIDENCE WERE NOT FURNISHED. SHE FURTH ER HELD THAT SUCH SALES ACCEPTANCE BY THE A.O. OF THE COMPANY (M/S SO DHANI SWEETS P LTD) DOES NOT ABSOLVE THE ASSESSEE FROM PAYING TAXE S ON THE AMOUNT SURRENDERED OF CASH OF RS. 98,39,600, AS THE SAME T ABLE IS BEING RELIED UPON BY THE ASSESSEE FOR CLAIMING LIBERATION FROM P AYMENT OF TAXES. IN THE SCRUTINY ASSESSMENT OF THE COMPANY EVEN IF RS. 83,86,096 IS ACCEPTED AS PART OF SALES (OF RS. 10,90,46,258 AS P ER P&L ACCOUNT), THEN THE POINT TO TAKE COGNIZANCE OF IS THAT THE CO MPANY HAS OFFERED ONLY 6.43% OF SALES OF RS. 10,90,46,258 (AS PER P& L ACCOUNT OF THE COMPANY) AS NET PROFIT FOR TAXATION, WHICH MEANS ONL Y 6.43% OF SO CALLED SALES DECLARED OF RS. 53,18,872 + RS. 8,40,0 00 HAS BEEN OFFERED FOR TAXATION. THAT MEANS ONLY RS. 3,96,015 (RS. 61,5 8,872/6.43%) HAS BEEN OFFERED FOR TAXATION IN THE RETURN OF THE COMP ANY. HERE MOST IMPORTANT POINT TO MENTION IS THAT DURING SEARCH IN THE STATEMENT RECORDED U/S 132(4) ON 20/10/2009 IN RESPONSE TO QU ESTION 16, THE ASSESSEE STATED THAT CASH IN HAND OF THE COMPANY (E VEN IF ALL SALES AND EXPENSES NOT POSTED IN BOOKS ARE TAKEN INTO ACCOUNT ), THEN TOO CASH IN HAND OF M/S SODHANI SWEETS P LTD. WILL COME TO RS. 6, 44,200 ONLY. THE ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 11 ASSESSEE CONFIRMED IN REPLY TO QUESTION 17 THAT THE AMOUNT OF RS. 98,39,600 IS RELATED TO HIM AND IS NOT ENTERED IN R EGULAR BOOKS OF ACCOUNTS OF THE COMPANY AND SURRENDERED THIS AMOUNT WILLINGLY FOR TAXATION. THE CONTENTION THAT CASH BALANCE AS ON 20 /10/2009 IN THE CASH BOOK OF THE COMPANY IS RS. 83,86,096/- IS ONLY AN AFTERTHOUGHT AND ALSO AN EYEWASH, WHICH IS IN TOTAL NEGATION OF T HE ACCEPTANCE IN STATEMENT U/S 132(4) BY THE ASSESSEE THAT EVEN IF A LL ENTRIES WERE INCORPORATED TILL 20/10/2010 (DATE OF SEARCH) IN TH E BOOKS OF SODHANI SWEETS P LTD., THEN TOO CASH BALANCE IN THE COMPANY S BOOKS WOULD BE AT RS. 6,44,200 ONLY. MOREOVER, CASH BALANCE IN COM PANYS BOOKS IRRESPECTIVE OF THE AMOUNT, DOES NOT OBLITERATE THE PRESENCE OF HUGE CASH AT RESIDENCE WHICH WAS ACCEPTED BY THE ASSESSEE AS HIS OWN INCOME U/S 132(4). IT IS SEEN THAT THE A.O. HAS NOT VERIFIED THE CONT ENTION OF THE ASSESSEE WITH RESPECT TO CASH FOUND AT RESIDENCE (AS CASH SALES OF SEVEN DAYS PRIOR TO THE DATE OF SEARCH) VIS A VIS C ASH DEPOSITS MADE IN THE BANK ACCOUNTS OF THE COMPANY AND OF SHRI JOHARI LAL SODHANI. THE BANK ACCOUNT OF THE COMPANY (M/S SODHANI SWEETS P LTD.) MAINTAINED AT THE URBAN CO-OPERATIVE BANK LTD., BAP U NAGAR, JAIPUR SHOWS FOLLOWING CASH DEPOSITS: ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 12 DATE AMOUNT IN RS. 10/10/2009 4,00,000 12/10/2009 2,00,000 13/10/2009 2,00,000 15/10/2009 4,00,000 SEARCH TOOK PLACE ON 20/10/2009, THEREFORE, THE ARG UMENT THAT CASH SALES OF SEVEN DAYS PRIOR TO THE DATE OF SEARCH WERE LYING AT RESIDENCE IS NOT TENABLE. ANOTHER BANK ACCOUNT OF THE COMPANY MAINTAINED AT PUNJAB NATIONAL BANK, TONK ROAD, JAIPUR SHOWS FOLLOWING CASH DEPOSITS IN OCTOBER. FROM THE BANK STATEMENT ON RECORD DATES AR E NOT CLEAR: RS. 4,00,000 RS. 1,00,000 RS. 1,00,000 RS. 4,00,000 RS. 7,50,000 NO EFFORT HAS BEEN MADE BY THE ASSESSING OFFICER TO OBTAIN CLEAR DATES OF OCTOBER. THE COMPANY HAS BANK ACCOUNT IN PNB, JOH ARI BAZAAR, JAIPUR AND AT PANCH BATTI, JAIPUR AS WELL, WHICH ARE NOT AVAILABLE ON RECORD. EXTRACTS OF ALL BANK ACCOUNTS OF SHRI JOHAR I LAL SODHANI ARE NOT AVAILABLE ON RECORD. IF THE ASSESSEE HAS BEEN REGU LARLY DEPOSITING CASH IN THE BANK ACCOUNTS THEN THE AVAILABILITY OF HUGE VOLUME OF CASH AT RESIDENCE IS NOT FULLY EXPLAINED. THE A.O. SHOULD HAVE BEEN SEEN THE CORRESPONDING BA NK ACCOUNTS OF THE EARLIER ASSESSMENT YEAR A.Y. 2009-1 0 OF THE COMPANY ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 13 AS WELL AS ALL CONCERNED AT LEAST OF THE PERIOD CORR ESPONDING TO THE FESTIVAL OF DIWALI, TO SEE THE PATTERN OF CASH DEPOS ITS. AS THE ASSESSEE IS REGULARLY DEPOSITING IN THE BAN K ACCOUNTS THE CASH SALES, SO THE AVAILABILITY OF SUCH HUGE VOLUME OF CASH AT THE RESIDENCE OF THE ASSESSEE AND ALSO FROM THE RESIDEN CE OF THE BROTHER WHO IS NOT A DIRECTOR IN THE PRIVATE LIMITED COMPANY WHICH SELLS SWEETS, IS NOT EXPLAINED. SHE FURTHER RELIED UPON THE DECIS IONS IN THE CASE OF CHUHARMAL V. CIT (1988) 172 ITR 250 (SC) AND SURJEET SINGH CHHABRA VS. UNION OF INDIA 1997 (89) ELT 646 (SC) AND HELD T HAT THE ORDER PASSED BY THE LEARNED ASSESSING OFFICER IS ERRONEO US AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. THE LEARN ED AR FOR THE ASSESSEE SUPPORTED THE ORDER OF THE ASSESSING OFFIC ER AND REITERATED THE ARGUMENTS SUBMITTED BEFORE THE LEARNED CIT. HE FURT HER SUBMITTED THAT FROM THE FACTS STATED, IT CAN BE NOTED THAT IMMEDIA TELY AFTER SEARCH, ASSESSEE VIDE LETTER DATED 01/12/2009 TO DDIT (INV.3 ) INTIMATED THE POSITION OF CASH AS PER BOOKS AS ON THE DATE OF SEA RCH. THEREAFTER, IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE EXPLAINE D THE POSITION OF CASH AVAILABILITY AS PER THE BOOKS OF ACCOUNTS VIDE LETTER DATED 24/11/2011 AND 27/11/2011 ACCORDING TO WHICH THE CAS H AVAILABILITY AS ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 14 PER THE BOOKS OF ACCOUNTS ON THE DATE OF SEARCH WORK ED OUT AT RS. 83,86,096/- AFTER INCORPORATING THE CASH SALES AND THE CASH PAYMENT NOT RECORDED IN THE BOOKS. THE CASH RECEIPT AND THE CASH PAYMENT WAS FURTHER SUPPORTED BY THE DETAILED WORKING OF DATE WIS E CASH SALES AND CASH PAYMENT. THE ASSESSING OFFICER AFTER EXAMINING THE SAME HAS ACCEPTED THE CASH POSITIONS AS ON THE DATE OF SEARC H AT RS. 83,86,097/-. THEREFORE, THE ORDER PASSED BY THE ASSESSING OFFICER ACCEPTING THE ABOVE CASH AS PER THE BOOKS OF ACCOUNTS CANNOT BE H ELD TO BE ERRONEOUS. ONLY BECAUSE THE ASSESSING OFFICER HAS N OT DISCUSSED THIS ISSUE IN THE ASSESSMENT ORDER, HIS ORDER, WHICH IS M ADE AFTER DETAILED INQUIRY CANNOT BE HELD TO BE ERRONEOUS. TO WHAT EXTEN T, THE ASSESSING OFFICER SHOULD MADE INVESTIGATION OR DISCUSS THE IS SUE IN THE ASSESSMENT ORDER IS A MATTER LEFT TO BE WISDOM OF THE ASSESSING OFFICER U/S 143(3). THEREFORE, THE ORDER PASSED BY THE LEARNED U/S 263 I S NOT VALID IN LAW, HENCE HE PRAYED TO QUASH THE ORDER OF THE LEARNED C IT. HE RELIED UPON THE FOLLOWING CASE LAWS:- (I) CIT VS. VODAFONE ESSAR SOUTH LTD. (2013) 212 TAX MAN 184 (DEL.)(HC). (II) CIT VS. GANPAT RAM BISHNOI (2008) 296 ITR 292 (RAJ.) (HC). (III) CIT VS. NEW DELHI TELEVISION LTD. (2013) 360 I TR 44/94 DTR 21 (DEL.) (HC). ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 15 (IV) CIT VS. SUNBEAM AUTO LTD. (2011) 332 ITR 167 ( DELHI) (HC). (V) MAHISH KUMAR VS. CIT (2012) 134 ITD 27/17 ITR (TR IB.) 324 (INDORE)(TRIB). (VI) CIT VS. GABERIL INDIA LTD. 203 ITR 108, 113, 11 4 (BOM) (HC). (VII) CIT VS. AMIT CORPN. (2012) 213 TAXMAN 19 (GUJ) (HC). (MAG.) (VIII) CIT VS. LEISURE WEAR EXPORTS LTD. (2011 341 ITR 166/202 TAXMAN 130 (MAGZ) (DELHI) (HC). (IX) PRADEEP BANDHU VS. CIT (2013) 81 DTR 289 (JD) ( TRIB.) THE LEARNED AR FURTHER EXPLAINED THE SHORT SURRENDER OF CASH OF RS. 76,76,080 BEFORE THE LEARNED CIT IN TABULATION FORM. THE LEARNED AR ARGUED THAT DURING THE SEARCH PROCEEDING/ASSESSMENT PROCEEDINGS EVEN BEFORE THE LEARNED CIT, THE APPELLANT HAD EXPLAINED THE LOWER DISCLOSURE WITH EVIDENCE. THE ASSESSING OFFICER AFTER DUE VERIFI CATION AND INQUIRY HAD ACCEPTED THE CASH AVAILABLE OF RS. 83,86,097/- IN CASE OF SODHANI SWEETS P. LTD. AND ACCORDINGLY THE UNEXPLAINED CASH OF RS. 21,63,520/- OFFERED BY THE ASSESSEE IN THE RETURN OF TAX. THEREF ORE, THE ORDER OF THE ASSESSING OFFICER IS NOT ERRONEOUS AND DIRECTION GI VEN TO THE ASSESSING OFFICER FOR DOING VERIFICATION KEEPING IN MIND THAT SURRENDER WAS MADE BY ASSESSEE WHILE ASSESSMENT OF COMPANY IS BEING COM PLETED AS ESCAPED GOAT FOR ESCAPING TAX, IS ILLEGAL AND BAD I N LAW. HENCE ORDER PASSED BY THE LEARNED CIT U/S 263 BE QUASHED. ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 16 5. AT THE OUTSET, THE SR. D.R. VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(CENTRAL), JAIPUR AND ARGUED THAT THE ST ATEMENT RECORDED U/S 132(4) DURING THE COURSE OF SEARCH PROCEEDINGS IS BINDING. THE APPELLANT HAS NOT PIN POINTED DURING THE COURSE OF RECORDING OF STATEMENT AT THE TIME OF SEARCH THAT CERTAIN CASH B ILL BOOK HAD BEEN LEFT TO BE RECORDED AND ALSO NOT FOUND AND SEIZED DURING THE COURSE OF SEARCH. THEREFORE, SHE REQUESTED TO CONFIRM THE ORDE R OF THE LEARNED CIT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE ASSESSING OFFICE R GAVE THE REASONABLE OPPORTUNITY OF BEING HEARD ON SHORT DISC LOSURE OF INCOME IN THE RETURN ON ACCOUNT OF CASH, WHICH HAS BEEN REPLIE D BY THE ASSESSEE AND CONSIDERED BY THE ASSESSING OFFICER WITH DETAILE D EVIDENCES. IT IS TRUE THAT HE HAS NOT GIVEN DETAIL FINDINGS IN HIS O RDER BUT DOES NOT MEAN, HAS NOT CONSIDERED THE ASSESSEES REPLY ON TH IS COUNT. THE APPELLANT ALSO EXPLAINED THIS DIFFERENCE BEFORE THE DDIT AT THE TIME OF SEARCH, WHICH HAS BEEN AGAIN REITERATED BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT AND ALSO DURING THE COURSE O F 263 PROCEEDINGS. THE STATEMENT RECORDED U/S 132(4) OF THE ACT IS AN E VIDENCE UNDER THE INCOME TAX PROCEEDINGS BUT IS REBUTTABLE. THE APPELL ANT HAD CALCULATED ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 17 THE DIFFERENCE OF CASH ON THE BASIS OF CASH SALES B ILL BOOK WHICH HAD NOT BEEN CONSIDERED DURING THE SEARCH PROCEEDINGS. THE L EARNED CIT DR HAD NOT FOUND ANY DEFECT IN THE COMPUTATION MADE BY THE APPELLANT REGARDING CASH SALES AND RECEIPTS NOT POSTED UP TO 20/10/2009, PAYMENT REMAINED/POSTED UP TO 20/10/2009. MAINLY CA SH SALES AT LALKOTHI BRANCH, CASH SALES AS PER MACHINE AT LALKO HTI SHOP, MAINLY CASH SALES AT AJMER ROAD BRANCH, CASH SALES AS MACHINE A T AJMER ROAD SHOP, SALES WORKED OUT FROM SEIZED MATERIAL, CASH SALES AS PER BILL BOOK NO. 3101 TO 3200, RECOVERY FROM DEBTORS, PAYMENT FOR EX PENSES AND PAYMENT FOR PURCHASES, THEREFORE, WE DO NOT FIND ASS ESSING OFFICERS ORDER ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. ACCORDINGLY, THE ORDER OF THE LEARNED CIT PASSED U/ S 263 OF THE ACT IS SET ASIDE. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH JANUARY, 2015 *RANJAN ITA 186/JP/2014_ JOHARI LAL SODHANI VS. CIT 18 VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI JOHRI LAL SODHANI, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- THE CIT (CENTRAL), JAIPUR.. 3. VK;DJ VK;QDR @ CIT, JAIPUR 4. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 5. XKMZ QKBZY @ GUARD FILE (ITA NO. 186/JP/2014) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR