Kishor Bankatlal Bhattad, Solapur V. Assistant Commissioner of Income-tax,

ITA 1878/PUN/2013

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5237 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 19-07-2018
• Assessment Year: 2007-2008
• Appeal Filed On: 18-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH JHA
• Assessee Lawyers: HARI KRISHAN
• Keywords: Loose papers; Document seized; Bogus loan; Documents seized
• Section: 143(3); 133A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1878 /P U N/201 3 / ASSESSMENT YEAR : 20 07 - 08 KISHOR BANKATLAL BHATTAD, M/S. SAINATH TRADING CO., 39, JODHBHAVI PETH, SOLAPUR - 413002 PAN : AATPB9444N ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(1), PUNE / RESPONDENT ASSESSEE BY : S HRI HARIKRISHAN REVENUE BY : SHRI MUKESH JHA / DATE OF HEARING : 19 - 07 - 201 8 / DATE OF PRONOUNCEMENT : 26 - 0 7 - 201 8 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMI SSIONER OF INCOME TAX (APPEALS) - CENTRAL, PUNE DATED 29 - 07 - 2013 FOR THE ASSESSMENT YEAR 2007 - 08. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE : A S EARCH, SEIZURE AND SURVEY ACTIONS U/S. 132 AND 133A O F THE INCOME TAX ACT, 1961 2 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT AT RESIDENTIAL AND BUSINESS PREMISES OF THE BHATTAD GROUP ON 16 - 11 - 2006. DURING THE COURSE OF SEARCH LOOSE PAPERS WERE F OND AND SEIZED. STATEMENT OF THE ASSESSEE WAS RECORDED. THE ASSESSEE PURPORTEDLY MADE DECLARATION OF RS.27,00,000/ - . HOWEVER, IN THE RETURN OF INCOME THE ASSESSEE OFFERED RS.16,70,000/ - AS UNDISCLOSED INCOME. THE ASSESSEE FILED RETURN OF INCOME ON 02 - 1 1 - 2007 DECLARING TOTAL INCOME OF RS.37,09,792/ - . THE ASSESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS.57,73,260/ - . THE ASSESSING OFFICER MADE SEVERAL ADDITIONS IN THE INCOME RETURNED BY THE ASSESS EE ON THE BASIS OF LOOSE PAPERS SEIZED DURING THE COURSE OF SEARCH ACTION. AGGRIEVED BY THE ASSESSMENT ORDER DATED 31 - 12 - 2008, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE ASSESSMENT ORDER AND DISMISSED THE APPEAL OF ASSESSEE IN TOTO. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL AND HAS RAISED FOLLOWING GROUNDS/ADDITIONAL GROUNDS ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T. [A] HAS ERRED IN CONFIRMING THE ADDITION OF RS .7,20,000.00 MADE BY THE LEARNED ASSESSING OFFICER EXCLUSIVELY ON ASSUMPTION / PRESUMPTION BASIS AND IGNORING THE FACT THAT, THE LOANS OF RS.4,20,000.00 & RS.3,00,000/ - HAS ALREADY DECLARED IN A.Y.2006 / 07 AND SUBSEQUENTLY RECEIVED BACK AND REINVESTED / RE - UTILIZED FOR FURTHER LOANS DURING THE PRESENT A.Y. THE AFORESAID ADDITION BEING ARBITRARY, PERVERSE, BASED ON SURMISES AND CONJECTURE THE L EARNED C.I.T. [A] OUGHT TO HAVE DELETED THE S AID ADDITION. THE IMPUGNED ADDITION MAY PLEASE BE DELETED. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T. [A] HAS ERRED IN CONFIRMING THE ADDITIONS OF RS .8,50,000.00 & RS.3,20,00 0.00 MADE BY THE LEARNED ASSESSING OFFICER MERELY ON THE BASIS OF STATEMENT TAKEN DURING THE SEARCH WITHOUT ANY CORROBORATIVE EVIDENCE. THE AFORESAID ADDITIONS BEING ARBITRARY, PERVERSE, BASED ON SURMISES AND CONJECTURE THE LEARNED C.I.T. [A] OUGHT TO H AVE DELETED THE SAID ADDITIONS. THE IMPUGNED ADDITIONS MAY PLEASE BE DELETED. 3. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I.T [A] HAS ERRED IN CONFIRMING THE ADDITION OF RS .35,302.00 MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF DRAWING MERELY ON THE 3 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 BASIS OF STATEMENT AND IGNORING THE FACT THAT, THE APPELLANT ASSESSEE HAS ALREADY DECLARED THE AGGREGATE DRAWINGS OF RS .1,06,698/ - FOR THE A.Y.2006 / 07 & 2007 / 08. THE AFORESAID ADDITION BEIN G ARBITRARY, PERVERSE, BASED ON SURMISES AND CONJECTURE THE LEARNED C.I.T. [A] OUGHT TO HAVE DELETED THE SAID ADDITION. THE IMPUGNED ADDITIONS MAY PLEASE BE DELETED. 4. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C. I. T.[A] HAS E RRED IN CONFIRMING THE ADDITION OF RS .74,644.00 MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF STOCK FOUND DURING THE IT SURVEY, FOR WHICH PURCHASE BILLS WERE RECEIVED AND ACCOUNTED AFTER IT SURVEY. THE AFORESAID ADDITION BEING ARBITRARY, PERVERSE, BASED ON SURMISES AND CONJECTURE THE LEARNED C. I. T. [A] OUGHT TO HAVE DELETED THE SAID ADDITION. THE IMPUGNED ADDITIONS MAY PLEASE BE DELETED. 5. THE APPELLANT DENIES HIS LIABILITY TO PAY ANY INTEREST U / S 234 B AND 234 C OF THE I. T. ACT 1961 AND HENCE THE SAME MAY PLEASE BE DELETED. 6. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEND, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. ADDITIONAL GROUND SINCE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED C.I. T. [ A ] HAS ERRED IN CONF I RMING THE ADDITION OF RS.3,20,000.00 MADE BY THE L EARNED ASSESSING OFFICER IN RES PECT OF AD - HOC DISCLOSURE OF SUND RY DEBTORS MERELY ON THE BASIS OF STATEMENT AND IGNORING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE AFORESAID ADDITION BEING ARBITRARY, PERVERSE, BASED ON SURMISES AND CONJECTURE THE LEARNED C.I.T. [A] OUGHT TO HAVE DELETED THE ADDITION. THE IMPUGNED ADDITIONS MAY PLEASE BE DELETED. 3. SHRI HARIKRISHAN APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT DURING THE COURSE OF SEARCH SOME LOOSE PAPERS AND DIARIES WERE IMPOUNDED BY THE DEPARTMENT. IN THE LOOSE PAPERS THERE WERE SOME ROUNDED MARKED ENTRIES. THE ROUNDED ENTR IES INDICATE THAT THE AMOUNT S HAVE BEEN RECEIVED BACK FROM THE PARTIES TO WHOM ADVANCES/LOANS WERE GIVEN. WHEREAS, THE UNMARKED/UNROUNDED ENTRIES INDICATE THAT THE AMOUNTS GIVEN AS ADVANCES/LOANS ARE YET TO BE RECEIVED BACK. IN THE DISCLOSURE STATEMENT T HE ASSESSEE WRONGLY INCLUDED SOME OF THE ROUNDED ENTRIES. THUS, THERE WERE DISCREPANCIES IN THE FIGURES AT THE TIME OF FILING RETURN OF INCOME AND THE DISCLOSURE MADE DURING SEARCH ACTION. THE LD. 4 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 AR SUBMITTED THAT THE PRAYER WAS MADE BEFORE THE COMMISSI ONER OF INCOME TAX (APPEALS) TO ALLOW RECONCILIATION OF THE ENTRIES RECORDED IN THE BOOKS AND THE DISCLOSURE MADE. HOWEVER, THE PRAYER OF THE ASSESSEE WAS DECLINED. THE LD. AR SUBMITTED THAT IF AN OPPORTUNITY IS GRANTED TO THE ASSESSEE, THE ASSESSEE WOUL D RECONCILE THE MISMATCH OF FIGURES IN THE STATEMENT RECORDED DURING SEARCH PROCEEDINGS AND THE FIGURES APPEARING IN THE BOOKS OF ASSESSEE. THE LD. AR FURTHER POINTED THAT A PERUSAL OF THE IMPUGNED ORDER WOULD SHOW THAT THERE IS CONFUSION REGARDING THE EN TRIES IN THE DIARIES SEIZED DURING THE SEARCH/SURVEY ACTION. IN FACT, THERE WERE TWO DIARIES WHICH WERE IMPOUNDED , WHEREAS IN THE ORDERS OF THE AUTHORITIES BELOW THERE IS REFERENCE OF ONLY ONE DIARY. THERE ARE FACTUAL DISCREPANCIES IN THE ORDERS OF THE A UTHORITIES BELOW. THE DISCREPANCIES AND THE ERRORS CAN BE IRONED OUT ONLY IF AN OPPORTUNITY IS GRANTED TO THE ASSESSEE TO RECONCILE THE STATEMENT AND EXPLAIN THE VARIOUS ENTRIES. 4. ON THE OTHER HAND SHRI MUKESH JHA REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) IN UPHOLDING THE ADDITIONS. HOWEVER, THE LD. DR E NDORSED THAT THERE ARE DISCREPANCIES IN THE AMOUNTS DECLARED BY THE ASSESSEE IN THE STATEMENT RECORDED DURING SURVEY ACTION AND VARIOUS FIGURES SUBMITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW . A PERUSAL OF ASSESSMENT ORDER SHOWS THAT DURING AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER MADE ADDITIONS ON VARIOUS COUNTS. PRIMARILY ADDITIONS HAVE BEEN MADE ON THE BASIS OF MATERIAL SEIZED DURING SEARCH AND THE DISCLOSURE MADE BY THE ASSESSEE. THE LD. AR POINTED THAT DURING ASSESSMENT PROCEEDINGS A ND IN PROCEEDINGS BEFORE FIRST APPELLATE AUTHORITY SOME VITAL 5 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 FACTUAL ASPECTS HAVE BEEN OVERLOOKED. THE LD. AR HAS FURNISHED A CHART GIVING DETAILS OF THE DISCREPANCIES. THE RELEVANT EXTRACT OF THE CHART INDICATING ADDITIONS MADE AND THE DISCREPANCIES HI GHLIGHTED BY LD. AR IS REPRODUCED HERE - IN - BELOW : ADDITION/DISALLOWANCE REMARKS 7,20,000/ - UNACCOUNTED LOANS AND ADVANCES ADDED TO THE RETURNED INCOME AS PER SEIZED DIARY NO. 8. A] 4,20,000/ - AMOUNT ADDED BY ASSESSING OFFICER IN A.Y. 2007 - 08, EVEN THOUGH THE LOAN WERE ADVANCED IN A.Y. 2006 - 07 B] 3,00,000/ - THE ASSESSING OFFICER HAS NOT GIVEN CREDIT FOR THE AMOUNTS RECEIVED BACK OUT OF THE LOANS ADVANCED IN THE PRECEDING A.Y. A] 8,50,000/ - AMOUNTS GIVEN BY THE ASSESSEE TO HIS BROTHER AS PER SEIZED DOCUMENTS, ADDED TO THE RETURNED INCOME. ASSESSING OFFICER HAS NOT CONSIDERED THAT THE AMOUNT WAS RECEIVED BACK IN THIS A.Y. ITSELF. THE ASSESSING OFFICER SHOULD NOT HAVE ADDED THIS AMOUNT. IN THE ALTERNATIVE, THE ASSESSING OFFICER SHOULD HAVE ALLOWED CREDIT FOR THIS AMOUNT AGAINST ADDITION OF RS.12,19,169/ - MADE FOR THE UNACCOUNTED CASH FOUND DURING THE SEARCH. B] 3,19,062 ASSESSING OFFICER HAS ADDED 4,50,000/ - TO THE RETURNED INCOME ON ACCOUNT OF DEBTORS (RECEIVABLE) IN RESPECT OF THE UNDISCLOSED BUSINESS OF TRADING AS PER THE SEIZED DOCUMENTS. THE ACTUAL TOTAL AMOUNT OF THE DEBTORS (RECEIVABLE) IN RESPECT OF THE UNDISCLO SED BUSINESS OF TRADING AS PER SEIZED DOCUMENTS COMES TO ONLY 1,30,938/ - . 35,302/ - THE ASSESSING OFFICER HAS ASSESSED AN AMOUNT OF 1,00,000/ - ON ACCOUNT OF HOUSE - HOLD WITHDRAWALS. THE ASSESSING OFFICER HAS NOT GIVEN CREDIT OF 40,300/ - ON ACCOUNT OF WITHDR AWALS SURRENDERED FOR A.Y. 2006 - 07. 74,644/ - THE ASSESSING OFFICER HAS MADE THE THE ASSESSING OFFICER HAS NOT GIVEN CREDIT FOR THE STOCK THAT HAS BEEN 6 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 ADDITION ON ACCOUNT OF EXCESS STOCK FOUND DURING SEARCH. RECEIVED BEFORE THE SEARCH, BUT THE BILL FOR THE SAME WAS RECEIVED AFTER THE SEARCH. 3,20,000 ASSESSING OFFICER HAS ADDED 4,50,000/ - ON ACCOUNT OF DEBTORS (RECEIVABLE) IN RESPECT OF THE UNDISCLOSED BUSINESS OF TRADING AS PER THE SEIZED DOCUMENTS. THE ACTUAL TOTAL AMOUNT OF THE DEBTORS (RECEIVABLE) IN RESPECT OF THE UNDISCLOSED BUSINESS OF TRADING WAS ONLY 1,30,000/ - . IN VIEW OF ALLEGED DISCREPANCIES THE LD. AR HAS PRAYED FOR RESTORING THE ISSUES BACK TO ASSESSING OFFICER SO THAT THE SAME CAN BE EXPLAINED TO HIM. 6. THE ALLEGED DIVERGENCES POINTED BY THE LD. AR REQUIRE EXAMINATION OF RECORDS FOR WHICH THE MATER NEEDS REVISIT TO ASSESSING OFFICER. ACCORDINGLY, WE RESTORE THIS APPEAL TO THE FILE OF ASSESSING OFFICER FOR RE - ADJUDICATION AFTER RE - A PPRECIATION OF RECORDS. THE ASSESSING OFFICER SHALL GRANT REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE DECIDING THE ISSUES AFRESH. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THURS DAY, THE 26 TH DAY OF JU LY , 201 8 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 26 TH JU LY , 2018 RK 7 ITA NO . 1878/PUN/2013, A.Y. 2007 - 08 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CENTRAL, PUNE 4. / THE CIT - CENTRAL, PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE