Loon Karan Jhanwar, Kolkata V. ACIT, CC-IV, Kolkata, Kolkata

ITA 1995/KOL/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1664 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2017
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 24-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 28-10-2014
• Court: TRIBUNAL
• Department Lawyers: RAJAT SUBHRA BISWAS
• Assessee Lawyers: B C JAIN
• Keywords: Gift; Search and seizure; Loose papers

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM & SHRI M.BA LAGANESH, AM] I.T.A NO. 1995/KOL/20 14 ASSESSMENT YEAR : 2010-1 1 LOON KARAN JHANWAR -VS.- A.C.I.T., CENTRA L CIRCLE-IV, KOLKATA KOLKATA [PAN : ACPPJ 8884 L] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI B.C. JAIN, FCA FOR THE RESPONDENT : SHRI RAJAT SUBHRA BISWAS , CIT(DR) DATE OF HEARING : 30.05.2017. DATE OF PRONOUNCEMENT : 02.06.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 16.07.2014 OF C.I.T.(A)-CENTRAL-I, KOLKATA RELATING TO A.Y.2010- 11. 2. THERE WAS A DELAY OF ABOUT 18 DAYS IN FILING THE APPEAL BY THE ASSESSEE. THE DELAY HAS BEEN EXPLAINED BY THE CHARTERED ACCOUNTANT OF THE ASSESSEE AS OWING TO HIS BUSY PROFESSIONAL COMMITMENT AND INABILITY TO PREPARE TH E CASE OF THE ASSESSEE WITHIN THE TIME PRESCRIBED. WE HAVE PERUSED THE REASONS GIVEN IN THE AFFIDAVIT BY SHRI B.C.JAIN, AR OF THE ASSESSEE. WE ARE SATISFIED THAT THE DELAY IN FILING THE APPEAL WAS OWING TO A REASONABLE AND SUFFICIENT CAUSE. THE DELAY IN FILIN G THE APPEAL BY THE ASSESSEE IS CONDONED. 3. GROUND NO.1 RAISED BY THE ASSESEE READS AS FOL LOWS :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING ADDITION O F RS.1 ,08,895/ - IN RESPECT OF JEWELLERY. 4. THE ASSESSEE IS AN INDIVIDUAL. THERE WAS A SEA RCH AND SEIZURE OPERATION CARRIED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE. THE ASSE SSEE BELONG TO THE INLAND GROUP OF 2 ITA NO.1995/KOL/2014 LOON KARAN JHANWAR A.YR.2010-11 2 CASES WHICH IS ENGAGED IN INLAND TRANSPORT AND COUR IER SERVICES BUSINESS ETC. A SEARCH AND SEIZURE OPERATION U/S 132(1) OF THE INCOME TAX ACT, 1961 (ACT) WAS CONDUCTED IN THE BUSINESS AND RESIDENTIAL PREMISES OF THE ASSESSEE O N 05.11.2009. IN THE COURSE OF SEARCH JEWELLERY VALUED AT RS.9,11,895/- WAS FOUND. THE JE WELLERY FOUND WEIGHED 579 GMS AND IT WAS CLAIMED BY THE ASSESSEE THAT IT BELONGS TO T HE ASSESSEES WIFE SMT. SITA DEVI JHANWAR AND AN AFFIDAVIT DATED 15.09.2011 WAS FILED BY HER IN THIS REGARD. IT WAS EXPLAINED IN THE AFFIDAVIT THAT SHE BELONGS TO THE MARWARI COMMUNITY AND AS PER THE CUSTOM IN THE COMMUNITY GIFTS WERE RECEIVED ON SOCI AL FUNCTIONS FROM RELATIVES AND THAT WAS THE SOURCE OF ACQUISITION OF JEWELLERY BY HE R. 5. THE AO WAS OF THE VIEW THAT THE CLAIM OF THE ASSESSEES WIFE TO THE EXTENT OF 500 GMS IS ACCEPTABLE AND WITH REGARD TO THE REMAINING 79 GMS THE EXPLANATION HAS TO BE REGARDED AS NOT PROPER. ACCORDINGLY THE ADDITION OF RS.1,08,895/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. THE FOLLOWING WERE THE RELE VANT OBSERVATIONS OF THE AO :- VALUATION OF JEWELRY & ORNAMENTS MADE BY THE REGI STERED VALUER ON THE DAY OF SEARCH INDICATE THAT ALL ORNAMENTS ARE LADIES ORNAM ENTS AND WIFE OF ASSESSEE IS ENTITLED TO KEEP ONLY 500 GM OF JEWELLERY TAX FREE, AS SHE IS A MARRIED LADY. THE VALUE OF REMAINING JEWELLERY IS TAXABLE. HENCE VALU E OF REMAINING ORNAMENTS IS CALCULATED AS UNDER @ RS.1606 PER KT. (22 KT.) ADOP TED BY REGISTERED VALUER, AS MOST OF THE ORNAMENTS ARE OF 22 KT.:- VALUE AS PER REGISTERED VALUER = RS/.9,11,895/- LESS : VALUE OF 500 GMS OF ORNAMENTS = RS.8,03,000 /- RS.1,08,895/- RS.1,08,895/- IS, THEREFORE, TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE AND IT IS ADDED TO HIS TOTAL INCOME. 6. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRME D THE ORDER OF AO. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. IN THE LI GHT OF THE ADMITTED FACT THAT THE ASSESSEES WIFE OWNED UP THE JEWELLERY, THE ASSESS MENT OF THE SAME IN THE HANDS OF THE ASSESSEE WAS NOT PERMISSIBLE. THE ASSESSEES WIFE I S ASSESSED TO TAX BY ACIT, CENTRAL 3 ITA NO.1995/KOL/2014 LOON KARAN JHANWAR A.YR.2010-11 3 CIRCLE-1, KOLKATA. THERE IS NO REASON WHY THE ADDIT ION SHOULD BE MADE IN THE HANDS OF THE ASSESSEE. THE ADDITION IS ACCORDINGLY DIRECTED TO BE DELETED. 8. GROUND NO.2 RAISED BY THE ASSESSEE READS AS F OLLOWS :- 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE , THE LD. C.I.T.(A) ERRED IN NOT ALLOWING EXPENSES IN RESPECT OF COURIER BUSINESS AS REFLECTED IN THE STATEMENT OF ACCOUNTS FILED BEFORE THE LD ASSESSING OFFICER AND DETERMINING THE ENTIRE GROSS RECEIPTS OF RS.2,38,994/- AS INCOME. 9. AS WE HAVE ALREADY SEEN THE ASSESSEE IS ALSO IN THE BUSINESS OF COURIER SERVICES. IN THE COURSE OF SEARCH LOOSE SHEETS WERE FOUND WHICH EVIDENCED THAT FOR A PERIOD OF THREE MONTHS DURING THE PREVIOUS YEAR, THE ASSESSEE HAD MADE BOOKINGS OF ARTICLES FOR DELIVERY AS A COURIER AND THE RECEIPTS EVIDENCED BY THE LOOSE PAPERS WAS TO THE EXTENT OF RS.2,38,995/-. ADMITTEDLY THESE RECEIPTS HAD NOT BE EN SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE AO WAS OF THE VIEW THAT SINCE THERE WAS EVIDENCE FOR SUPPRESSED RECEIPTS FROM COURIER SERVICES FOR THREE MONTHS, S IMILAR PATTERN OF SUPPRESSED RECEIPTS WOULD EXIT FOR THE REMAINING PERIOD ALSO. THE AO AR RIVED AT THE SUPPRESSED RECEIPTS FROM RENDERING COURIER SERVICES ON SUCH A PREMISE A S FOLLOWS :- HENCE HIS INCOME FROM DOCUMENT BOOKING IS ESTIMAT ED AS UNDER :- INCOME FROM DOCUMENT BOOKING FOR THREE MONTHS = 2 38995 AVERAGE OF 3 MONTHS = 238995 = 79665 3 INCOME OF WHOLE YEAR I.E. 12 MONTHS = 79665 X 12 = 955980 INCOME ALREADY SHOWN (-) 238995 INCOME NOT DISCLOSED = 716985 HENCE RS.716985/- IS TREATED AS INCOME EARNED BUT N OT DISCLOSED BY THE ASSESEE DURING F.Y. 2009-10. HENCE IT IS ADDED TO HIS TOTAL INCOME. ON THE ABOVE BASIS AN ADDITION OF RS.7,16,985/- WAS MADE TO THE TOTAL INCOME OF THE ASSESSEE. 4 ITA NO.1995/KOL/2014 LOON KARAN JHANWAR A.YR.2010-11 4 10. ON APPEAL BY THE ASSESSEE, THE CIT(A) DELET ED THE AFORESAID ADDITION. ACCORDING TO THE CIT(A) SINCE THERE WAS NO EVIDENCE OF ANY SU PPRESSED RECEIPTS FOR THE PERIOD OVER AND ABOVE THREE MONTHS, NO PRESUMPTION CAN BE DRAWN THAT THERE WOULD EXIST SUPPRESSED SALES FOR THE REMAINING NINE MONTHS OF T HE PREVIOUS YEAR ALSO. THE CIT(A) HOWEVER WAS OF THE VIEW THAT TO THE EXTENT EVIDENC E WAS FOUND OF SUPPRESSED RECEIPTS FROM RENDERING COURIER SERVICES NO EXPENSES SHOULD BE TAKEN FOR CONSIDERATION FOR DETERMINING SUCH INCOME OF THE ASSESSEE. THE FOLLOW ING WERE THE CONCLUSIONS OF THE CIT(A) : IN VIEW OF THE ABOVE, THE AO IS DIRECTED TO RESTRI CT THE ASSESSMENT OF UNDISCLOSED INCOME TO THE RECEIPTS OF RS.2,38,995/- AS FOUND RE CORDED IN THE SEIZED MATERIAL. HOWEVER, NO EXPENSES CAN BE ALLOWED AS THE SAME ARE NOT FOUND RECORDED IN THE SEIZED MATERIAL. GROUND NO.3 AND 4 ARE PARTLY ALLOW ED. GROUND NO.5 AND 6 ARE GENERAL IN NATURE. 11. IN GROUND NO.,2 THE ASSESSEE IS AGGRIEVED BY THE ACTION OF CIT(A) IN NOT ALLOWING EXPENSE AGAINST THE SUPPRESSED RECEIPTS FROM RENDER ING COURIER SERVICES. 12. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE ARE O F THE VIEW THAT THERE IS NO MERIT IN GROUND NO.2 RAISED BY THE ASSESSEE. A COPY OF THE I NCOME AND EXPENDITURE ACCOUNT FOR A.Y.2010-11 IS AT PAGE 2 OF THE ASSESSEES PAPER BO OK. A PERUSAL OF THE SAME SHOWS THAT THE SUPPRESSED BOOKING RECEIPTS HAS BEEN SHOWN IN THE CREDIT SIDE IN THE INCOME AND EXPENDITURE ACCOUNT. THE INCOME AS PER THE INCO ME AND EXPENDITURE ACCOUNT IS A SUM OF RS.2,63,358/-. IN THE COMPUTATION OF TOTAL I NCOME FOR A.Y.2010-11, THE AO HAS ADOPTED THIS INCOME AS THE STARTING POINT OF COMPUT ATION OF INCOME UNDER THE HEAD PROFITS AND GAINS OF BUSINESS. THUS THE INCOME OF R S.2,63,357/- INCLUDES ALL EXPENSES DEBITED IN THE INCOME AND EXPENDITURE ACCOUNT. THE DIRECTION OF CIT(A) HAS TO BE UNDERSTOOD AS MAKING A REFERENCE TO NO FURTHER EXP ENSES ARE TO BE ALLOWED OVER AND ABOVE WHAT IS DEBITED IN THE INCOME AND EXPENDITURE ACCOUNT. THIS DIRECTION IN OUR VIEW IS PROPER AND APPROPRIATE BECAUSE THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ANY OTHER EXPENSES OVER AND ABOVE THE EXPENDITURE D EBITED IN THE PROFIT AND LOSS 5 ITA NO.1995/KOL/2014 LOON KARAN JHANWAR A.YR.2010-11 5 ACCOUNT. IN VIEW OF THE ABOVE CIRCUMSTANCES OF THE CASE WE HOLD THAT THERE IS NO MERIT N GROUND NO.2 RAISED BY THE ASSESSEE. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE C OURT ON 02.06.2017. SD/- SD/- [M.BALAGANESH] [ N.V.VAS UDEVAN ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 02.06.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. LOON KARAN JHANWAR, 143/1/1, COTTON STREET, KOLK ATA-700007. 2. A.C.I.T., CENTRAL CIRCLE-IV, KOLKATA. 3. CIT(A)-CENTRAL-I, KOLKATA 4. C.I.T.- CENTRAL-I, KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECR ETARY HEAD OF OFFICE/ D.D.O., ITAT KOLKATA BENCHES