M/s. Shree Mukt Jewellers, Baroda V. The ACIT.,Circle-5, Baroda

ITA 1979/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9332 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-01-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 05-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: M K PATEL
• Keywords: Business income; Income from undisclosed sources; Deemed to accrue or arise in india
• Section: 69C; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, A HMEDABAD , (BEFORE SHRI ANIL CHATURVEDI, A.M. & SHRI KUL BHARA T, J.M.) ( , !'# $ , ! %& ) ITA NO. 1979/AHD/2012 (ASSESSM ENT YEAR: 2008-09) SHREE MUKT JEWELLERS, OPP. STATE BANK OFSAURASTRA, GENGIGATE ROAD, BARODA 390017 VS. ACIT, CIRCLE 5, VADODARA PAN NO. AAFFS8286B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M. K. PATEL, A.R. RESPONDENT BY : SMT. SONIA KUMAR, SR. D.R. DATE OF HEARING : 21 -01-201 6 DATE OF PRONOUNCEMENT : 16 -02-2016 ( )/ ORDER PER ANIL CHATURVEDI, ACCOUNTANT MEMBER THIS APPEAL FILED BY ASSESSEE IS AGAINST THE ORDER OF CIT(A)-V, BARODA, DATED 04.06.2012 FOR THE ASSESSMENT YEAR 2008-09 . 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER: 3. THE ASSESSEE IS A PARTNERSHIP FIRM STATED TO BE ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURING OF GOLD ORNAMENTS. A SUR VEY OPERATION U/S.133A OF THE ACT WAS CARRIED OUT ON 29.12.2008 AT THE BUSINESS P REMISES OF ASSESSEE WHEREIN EXCESS STOCK TO THE EXTENT OF RS.25,10,132/- AND EX CESS OF RS.5,89,867/- WAS FOUND. THE STATEMENT OF SHRI RASHMIKANT B SONI, PA RTNER OF THE FIRM WAS RECORDED U/S.133A(3)(III) WHEREIN HE ADMITTED TO THE AFORES AID AMOUNTS AS UNDISCLOSED INCOME. THEREAFTER, ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 ON 27.09.2008 DECLARING TOTAL INCOME AT RS . 34,17,590/-. THE CASE WAS ITA NO.1979/AHD/12 A.Y. 2008-09 (SHREE MUK T JEWELLERS VS. ACIT) 2 SELECTED FOR SCRUTINY AND ASSESSMENT WAS FRAMED U/S .143(3) OF THE ACT VIDE ORDER DATED 21.12.2010 AND THE TOTAL INCOME WAS DETERMINE D AT RS. 45,68,660/-. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, ASSESS EE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO VIDE ORDER DATED 04.06.2012 CON FIRMED THE ORDER OF ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASS ESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED FOLLOWING GROUNDS: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCO ME TAX (APPEALS) IS AGAINST LAW AND FACTS OF THE CASE. 2. THE COMMISSIONER OF INCOME TAX (APPEALS)- V, BARODA ERRED IN CONFIRMING DISALLOWANCE OF RS.5,80,728/- MADE U/S 40 (B)(V) ON ACCOUNT OF R EMUNERATION TO PARTNERS INCURRED BY THE APPELLANT. 3. THE COMMISSIONER OF INCOME TAX (APPEALS)- V, ERRED IN NOT PROPERLY APPRECIATING THE SUBMISSIONS MADE BY THE APPELLANT AND CONSEQUENTLY ERRED IN UPHOLDING THE DISALLOWANCE OF RS.5,80,728/- MADE BY THE ASSESSING OFFICER. 4. BEFORE US, AT THE OUTSET, LD. A.R. SUBMITTED THA T THE SOLITARY ISSUE IS WITH RESPECT TO DISALLOWANCE OF PARTNERS REMUNERATION. 4.1 DURING COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER NOTICED THAT ADMISSION OF UNDISCLOSED INCOME IN THE FORM OF EXCE SS STOCK (RS.25,10,132/-) AND CASH (RS.5,89,867/-) WAS CONSIDERED UNDER THE PROVI SIONS OF SECTION 69A AND 69B OF THE ACT AND ADDITION WAS MADE UNDER THE AFORESAI D SECTIONS. HE ALSO NOTICED THAT ASSESSEE HAS CONSIDERED THE AFORESAID DISCLOSU RE AS INCOME FOR WORKING OUT THE REMUNERATION PAYABLE TO PARTNERS. ASSESSING OFFICE R WAS OF THE VIEW THAT THE AFORESAID AMOUNTS CANNOT BE CONSIDERED AS INCOME FO R THE PURPOSE OF CALCULATION OF REMUNERATION OF PARTNERS. HE, ACCORDINGLY, AS AGAI NST THE CLAIM OF REMUNERATION OF RS.12 LACS REWORKED THE REMUNERATION U/S.40(B)(V) A T RS.6,19,272/- AND DISALLOWED THE BALANCE AMOUNT OF RS.5,80,728/-. 5. AGGRIEVED BY THE ORDER OF ASSESSING OFFICER, AS SESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO UPHELD THE ACTION OF ASSE SSING OFFICER BY HOLDING AS UNDER: ITA NO.1979/AHD/12 A.Y. 2008-09 (SHREE MUK T JEWELLERS VS. ACIT) 3 14. I HAVE CONSIDERED THE SUBMISSION OF THE APPELL ANT AND REASONS RECORDED BY THE AO WHILE MAKING DISALLOWANCE. IT IS VERY CLEAR FROM THE ASS ESSMENT ORDER THAT THE AO HAS TAXED UNRECORDED CASH AND STOCK U/S 69A AND 69B OF THE IT ACT. THEREFORE, IN VIEW OF THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOH MED HAJI HASAN VS. CIT 247 ITR 290, THE APPELLANT IS NOT ENTITLED TO CLAIM REMUNERATION TO PARTNERS AGAINST INCOME TAXED U/S. 69A AND 69B OF THE IT ACT. DISALLOWANCE MADE BY THE AO IS HERE BY CONFIRMED. 6. AGGRIEVED BY THE ORDER OF LD. CIT(A), ASSESSEE I S NOW IN APPEAL BEFORE US. 6.1 BEFORE US, LD. A.R. REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND LD. CIT(A) AND SUPPORTED THE ORDER OF L D. CIT(A) AND FURTHER SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS DIRECTLY COVE RED BY THE DECISION OF THE CO- ORDINATE BENCH OF TRIBUNAL AND THE DECISIONS OF HON BLE GUJARAT HIGH COURT. HE PLACED ON RECORD THE COPY OF DECISIONS IN THE CASE OF ACIT VS. M/S. SALONI INDUSTRIES IN ITA NO.767/AHD/2011, ORDER DATED 21.1 0.2015, DCIT VS. PAPER SALES CORPORATION IN ITA NO.2816/AHD/2008, ORDER DATED 23 .01.2009 AND THE DECISION IN CASE OF DCIT VS. M/S. SHREE LABDHI PRINTS IN ITA NO .3258/AHD/2011, ORDER DATED 18.05.2012. HE FURTHER SUBMITTED THAT THE DECISION OF FAKIR MOHMED HAJI HASON, WHICH HAS BEEN RELIED UPON BY CIT(A) TO UPHOLD THE DISALLOWANCE MADE BY ASSESSING OFFICER HAS BEEN CONSIDERED BY THE HONB LE TRIBUNAL IN THE AFORESAID DECISION. HE, THEREFORE, SUBMITTED THAT SINCE VAR IOUS BENCHES OF THE TRIBUNAL HAVE TAKEN A CONSISTENT VIEW THAT THE INCOME DISCLOSED U /S.133A CAN BE CONSIDERED AS BUSINESS INCOME FOR THE PURPOSE OF COMPUTING REMUNE RATION U/S.40(B)(V) OF THE ACT THE ISSUE BE DECIDED IN FAVOUR OF ASSESSEE. LD. D. R. ON THE OTHER HAND SUPPORTED THE ORDER OF ASSESSING OFFICER AND LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH RESPECT TO AL LOWABILITY OF REMUNERATION ON THE INCOME DISCLOSED DURING SURVEY. WE FIND THAT THE C O-ORDINATE BENCH OF TRIBUNAL IN CASE OF ACIT VS. M/S. SALONI INDUSTRIES (SUPRA) ON IDENTICAL FACTS HAD DECIDED THE ISSUE IN FAVOUR OF ASSESSEE BY HOLDING AS UNDER : 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE CASE FILE. RELEVANT FACTS STATED IN THE PRECEDING PARAGRAPHS ARE NOT REPEATED FOR THE S AKE OF BREVITY. THE REVENUE SEEKS TO ASSESS ASSESSEE'S ADDITIONAL INCOME OF RS. 75,16,725/- AS DEEMED INCOME U/S. 69 TO 69C OF THE ACT NOT ITA NO.1979/AHD/12 A.Y. 2008-09 (SHREE MUK T JEWELLERS VS. ACIT) 4 ENTITLED FOR ANY DEDUCTION ALIKE THE ONES U/S 14 OF THE ACT. ITS CASE IS THAT THE SAME WAS UNEARTHED ONLY DURING SURVEY NOT STATED IN ANY OF THE BOOKS. IT PLEADS THAT THIS ADDITIONAL INCOME IS NOT ENTITLED FOR ANY DEDUCTION PRESCRIBED U/S. 14 OF TH E ACT. THE ASSESSEE STRONGLY SUPPORTS LOWER APPELLATE FINDINGS UNDER CHALLENGE. THE DISPUTE BET WEEN THE PARTIES IS QUA TREATMENT OF ASSESSEE'S ADDITIONAL UNACCOUNTED INCOME DISCLOSED DURING SURV EY HEREINABOVE. IN OTHER WORDS, WHETHER THIS INCOME IS TO BE TREATED UNDER THE HEADS PRESCR IBED IN SECTION 14 SO AS TO BE ELIGIBLE PARTNERS' REMUNERATION U/S. 40B(V) OF THE ACT. THE HON'BLE JU RISDICTIONAL HIGH COURT IN (2010) 329 ITR 01 (GUJ) CIT VS. M/S RADHE DEVELOPERS CONSIDER THE EAR LIER CASE LAW OF FAKIR MOHD (SUPRA) AND HOLD THAT PROVISIONS OF THE ACT DO NOT ENVISAGE ANY INCOME NOT FALLING UNDER VARIOUS HEADS PRESCRIBED U/S. 14 OF THE ACT. THE VERY VIEW IS REI TERATED IN (2013) 219 TAXMANN 279 (GUJ) CIT VS. SHILPA DYING AND PRINTING PVT. LTD. A CO-ORDINA TE BENCH OF THE TRIBUNAL IN DCIT VS. M/S NEW UMIYA VIJAY SAW MILL (2012) 40 CCH 413 HOLDS THAT S UCH A BIFURCATION OF AN ADDITIONAL INCOME DISCLOSED IN SURVEY IS NOT PERMISSIBLE. THE REVENUE FAILS TO POINT OUT ANY DISTINCTION ON FACTS OR LAW. WE THEREFORE FOLLOW THE ABOVE STATED JUDICIAL PRECEDENCE AND UPHOLD THE CIT(A)'S FINDINGS UNDER CHALLENGE. THE REVENUE'S ARGUMENTS ON ITS BOT H SUBSTANTIVE GROUNDS FAIL. BEFORE US, REVENUE HAS NOT POINTED OUT ANY DISTINGU ISHING FEATURE OF THE PRESENT CASE WITH THAT OF ACIT VS. M/S. SALONI INDUSTRIES ( SUPRA). IN VIEW OF THE AFORESAID FACTS, WE RESPECTFULLY FOLLOWING THE DECISION OF TH E CO-ORDINATE BENCH IN CASE OF ACIT VS. M/S. SALONI INDUSTRIES (SUPRA) ALLOW THE A SSESSEES GROUND. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN OPEN COURT ON 16 - 02 - 2016. SD/- SD/- (KUL BHARAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 16/02/2016 TRUE COPY S K SINHA 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