Roopchand Parmanand Godheja, Kolhapur V. Income-tax Officer,

ITA 2061/PUN/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2707 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 15-02-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 17-11-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Unexplained investment
• Section: 143(3); 133A; 234B; 69

Judgement Text

] ]] ] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , !, # $ BEFORE MS. SUSHMA CHOWLA, JM AND SHRI PRADIP KUMAR KEDIA, AM ITA NO.2061/PN/2014 ASSESSMENT YEAR : 2006-07 ROOPCHAND PARMANAND GODHEJA, BK NO.131/5, GANDHINAGAR, DIST. KOLHAPUR. PAN : ACFPG0994C . APPELLANT VS. THE INCOME TAX OFFICER, (CENTRAL), KOLHAPUR. . RESPONDENT / APPELLANT BY : NONE / RESPONDENT BY : SHRI M. K. SINGH / DATE OF HEARING : 15.02.2016 / DATE OF PRONOUNCEMENT: 19.02.2016 % / ORDER PER PRADIP KUMAR KEDIA, AM : THE PRESENT APPEAL PREFERRED BY THE ASSESSEE IS AGA INST THE ORDER OF CIT(A), KOLHAPUR DATED 23.07.2014 RELATING TO ASSES SMENT YEAR 2006-07 PASSED UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL :- 1) ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE L EARNED CIT (APPEALS) HAS ERRED IN LAW AND ON MERIT IN CONFIRMING ADDITIONS M ADE BY THE A.O. ON ACCOUNT OF INITIAL INVESTMENTS WHEN THE DETAILS OF THE INITIAL INVESTMENTS WERE CLEARLY GIVEN IN PAGES 47 TO 146 OF THE PAPER BOOK FILED BEFORE THE CIT (APPEALS) ON 29/12/2009. 2) ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LE ARNED CIT (APPEALS) HAS ERRED IN LAW AND ON MERIT IN CONFIRMING ADDITIONS M ADE BY THE A.O. AT RS.1,10,000/- ON ACCOUNT OF EXCESS STOCK WHEN SUCH ADDITIONS AMOU NTED TO DOUBLE ADDITIONS. 2 ITA NO.2061/PN/2014 3) ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LE ARNED A.O. HAS ERRED IN LAW AND ON MERIT IN LEVYING INTEREST UNDER SECTION 234A, 234B & 234C OF THE ACT. 4) ON FACTS AND IN CIRCUMSTANCES OF THE CASE THE LE ARNED A.O. HAS ERRED IN LAW AND ON MERIT IN INITIATING PENAL PROCEEDING UND ER SECTION 271(1)(C) OF THE ACT. 5) THE APPELLANT CRAVES FOR LEAVE TO AMEND, MODIFY OR ADD TO ANY OF THE ABOVE GROUNDS OF APPEAL AND / OR TAKE ANY ADDITIONA L GROUND OF APPEAL, IF NECESSARY. 3. GROUND NO.1 RELATES TO ADDITION TOWARDS UNEXPLAI NED INITIAL INVESTMENTS OF RS.3,70,000/- MADE IN THE FOODGRAINS BUSINESS. 4. THE ASSESSEE IS AN INDIVIDUAL AND INTER-ALIA DERIVES INCOME FROM PROPRIETORY BUSINESS UNDER THE NAME AND STYLE SATG URU TRADERS ENGAGED IN TRADING OF FOODGRAINS AND PULSES. THE RETURN FOR T HE YEAR UNDER CONSIDERATION WAS FILED ON 30.03.2007 DECLARING A TOTAL INCOME OF RS.3,14,080/-. A SURVEY UNDER SECTION 133A OF THE ACT IN THIS CASE WAS CARR IED ON 15.02.2006. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SPECIFICALLY ASKED TO FURNISH THE INFORMATION REGARDING INITIAL INVESTMEN TS OF RS.3,70,000/- MADE IN THE FOODGRAINS BUSINESS, AS CONFESSED BY THE ASSESS EE IN THE STATEMENT RECORDED IN THE COURSE OF SURVEY ACTION. THE ASSESSING OFFI CER ALLEGED THAT INSPITE OF REPEATED OPPORTUNITIES, THE ASSESSEE FAILED TO RESP OND TO THE QUERY IN RELATION TO SOURCES OF IMPUGNED INITIAL INVESTMENTS TOWARDS STA RTING OF THE FOODGRAINS BUSINESS. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNT. THE ASSESSING OFFICER FURTHE R OBSERVED THAT THE ASSESSEE IN THE STATEMENT RECORDED IN THE COURSE OF SURVEY UNDER SECTION 133A OF THE ACT AS WELL AS DURING THE STATEMENT RECORDED IN THE POST-SEARCH ENQUIRY ON 14.04.2006 HAS ADMITTED THE FACTUM OF INITIAL IN VESTMENTS OF RS.3,70,000/- MADE IN THE FOODGRAINS BUSINESS. IN THE ABSENCE OF ANY EXPLANATION OF THE SOURCE OF INITIAL INVESTMENTS, THE ASSESSING OFFICE R ADDED THE AFORESAID AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE ACT. 3 ITA NO.2061/PN/2014 5. THE SECOND GROUND OF APPEAL OF THE ASSESSEE RELA TES TO ADDITION OF RS.1,10,000/- ON ACCOUNT OF EXCESS STOCK. AS PER T HE ASSESSMENT ORDER, THE ASSESSING OFFICER OBSERVED THAT DURING THE COURSE O F SURVEY, THE STOCK OF RS.4,07,392/- WAS FOUND IN THE SHOP PREMISES. SINC E THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS, THE ASSESSEE WAS ASKED TO EXPLAIN THE STOCK FOUND. THE ASSESSEE IN THE STATEMENT RECORDED ON 1 4.04.2006 STATED THAT THE STOCK FOUND IS VALUED AT SALE PRICE AND VALUE AT CO ST PRICE IS ABOUT RS.3,60,000/- APPROXIMATELY. HE FURTHER STATED THA T PURCHASES WORTH RS.2,50,000/- ARE CREDIT PURCHASES FROM BABABHAI CO . PRODUCTS AND FROM OTHER TRADERS. THE ASSESSEE SUBMITTED THAT THE BALANCE P URCHASES OF RS.1,10,000/- ARE NOT HIS PURCHASES BUT THE STOCK BELONGS TO THE FARM ERS WHO HAVE KEPT THE STOCK WITH HIM FOR SALE ON COMMISSION BASIS. THE ASSESSI NG OFFICER OBSERVED THAT ASSESSEE HAS NOT PRODUCED ANY EVIDENCE IN THIS REGA RD. HE ACCORDINGLY MADE ANOTHER ADDITION OF RS.1,10,000/- TOWARDS UNEXPLAIN ED INVESTMENT IN STOCK. 6. THE CIT(A) ENDORSED THE ACTION OF THE ASSESSING OFFICER ON BOTH THESE COUNTS. AS REGARDS THE ADDITION TOWARDS UNEXPLAINE D INITIAL INVESTMENTS, THE CIT(A) INTER-ALIA OBSERVED THAT NO DETAILS OF CHEQUES AND DATE-WISE TRANSACTIONS REGARDING SOURCE OF RECEIPT OF INITIAL INVESTMENTS ARE AVAILABLE ON RECORD AND THE INITIAL INVESTMENT REMAINS UNEXPLAIN ED. THE RELEVANT OBSERVATIONS OF THE CIT(A) IN THIS CONNECTION IS RE PRODUCED HEREUNDER :- 6. FROM THE ABOVE IT WAS THAT APPELLANT HAD GIVEN DETAILS OF INITIAL INVESTMENT OF RS.3,70,000/-. AS PER DETAILS ON PAGE 147 OF TH E PAPER BOOK FILED DURING APPELLATE PROCEEDINGS, RS.2,42,469/- WAS RECEIVED FROM M/S RA DHESHAM BUILDERS AND DEVELOPERS WHICH IS ASSESSEES ANOTHER BUSINESS AND THERE WERE CREDITORS FOR RS.1,14,959/-. THIS TOTALS TO RS.3,57,428/-. ON G OING THROUGH THE BALANCE SHEET AS ON 31/03/2006 IT IS FOUND THAT CAPITAL OF ASSESSEE SHRI ROOPCHAND P. GODHEJA IS RS.2,42,469/-. FURTHER, THERE ARE UNSECURED LOANS FOR RS.70,000/-, CURRENT LIABILITIES FOR RS.4,768/- AND SUNDRY CREDITORS FOR RS.40,191/- . THESE TOTAL TO RS.1,14,959/-. THIS AMOUNT WAS INVESTED IN CLOSING STOCK RS.1,49,2 76/- CASH AND BANK BALANCE OF RS.1,71,800/-, FIXED ASSETS RS.7,875/- AND DEBTORS RS.28,477/-. FROM THE ABOVE FACTS IT IS SEEN THAT SURVEY OPERATION HAD TAKEN PLACED O N 15/02/2006 WHEREAS THE BALANCE SHEET IS AS ON 31/03/2006. SINCE THE BALANCE SHEET SHOWN IS OF A LATER DATE, NATURALLY WHAT WAS SAID BY THE ASSESSEE IN HIS STATEMENT HAS BEEN INCORPORATED IN THE BALANCE SHEET. THEREFORE, THE BALANCE SHEET HAS NO EVIDENT IARY VALUE. IT HAS BEEN STATED BY THE APPELLANT THAT RS.2,42,469/- WAS RECEIVED FROM M/S RADHESHAM BUILDERS AND DEVELOPERS, PROP. SHRI ROOPCHAND PARMANAND GODHEJA. NO DETAILS OF CHEQUES AND DATE WISE TRANSACTIONS REGARDING RECEIPT FROM M/S R ADHESHAM BUILDERS AND DEVELOPERS HAVE BEEN FURNISHED. THEREFORE, THE BAL ANCE SHEET PREPARED AFTER SURVEY 4 ITA NO.2061/PN/2014 HAS NOT BEEN SUBSTANTIATED BY ANY INDEPENDENT EVIDE NCE SUCH AS BANK STATEMENT. APPELLANT HAS ALSO FURNISHED COPY OF BALANCE SHEET OF SADGURU TRADERS WHICH IS ALSO AS ON 31/03/2006. CREDITORS OF RS.1,14,959/- INCLU DE RS.70,000/- JHAVANDAS P. GODHEJA AND RS.40,191/- VARIOUS SUNDRY CREDITORS. AGAIN, NO LEDGER AND BANK STATEMENTS HAVE BEEN FURNISHED AS EVIDENCE OF THESE CREDITORS. APPELLANT HAS TAKEN THE PLEA THAT NO BOOKS OF ACCOUNT WERE MAINTAINED S INCE RETURN WAS FILED U/S 44AE. BALANCE SHEET WAS PREPARED AFTER THE SURVEY. THE A SSESSEE HAS FAILED TO FURNISH DATE WISE DETAILS OF TRANSACTIONS OF RECEIPT FROM M/S RA DHESHAM BUILDERS AND DEVELOPERS AND VARIOUS CREDITORS ALONG WITH COPY OF BANK STATE MENT. IN ABSENCE OF THE SAME, THE INITIAL INVESTMENT OF RS.3,70,000/- REMAINS UNE XPLAINED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER IS SUSTAINED AND GROUND TAKEN BY THE APPELLANT IS REJECTED. 7. WITH REGARD TO THE SECOND ISSUE TOWARDS ADDITION OF RS.1,10,000/- ON ACCOUNT OF EXCESS STOCK, THE CIT(A) NOTED THE CONTE NTION OF THE ASSESSEE THAT OUT OF TOTAL STOCK FOUND, 64 BAGS WORTH RS.1,10,000 /- BELONGS TO THE FARMERS WHICH WERE KEPT IN THE CUSTODY OF THE ASSESSEE TO B E SOLD ON COMMISSION BASIS. THE CIT(A) DENIED THE CLAIM OF THE ASSESSEE FOR WAN T OF ANY EVIDENCE IN THIS REGARD. HE ALSO DENIED THE BENEFIT OF AVAILABILITY OF UNEXPLAINED INITIAL INVESTMENTS OF RS.3,70,000/- IN THE HANDS OF THE AS SESSEE TO ACCOUNT FOR THE IMPUGNED UNEXPLAINED EXCESS STOCK. 8. AGGRIEVED BY THE ORDERS OF THE AUTHORITIES BELOW , THE ASSESSEE IS IN APPEAL. 9. NONE APPEARED FOR THE ASSESSEE ON THE APPOINTED DATE OF HEARING. THE HEARING WAS INITIALLY FIXED ON 08.12.2015 WHICH WAS ADJOURNED TO 11.01.2016 AT THE REQUEST OF THE ASSESSEE. ON THE NEXT APPOIN TED DATE OF HEARING, THE MATTER WAS AGAIN ADJOURNED TO 15.02.2016 AT THE REQ UEST OF THE ASSESSEE. ON THE APPOINTED DATE OF HEARING ON 15.02.2016, THE AS SESSEE NEITHER APPEARED IN PERSON NOR THROUGH HIS AUTHORIZED REPRESENTATIVE. NO REQUEST FOR ADJOURNMENT HAS BEEN SOUGHT EITHER. ACCORDINGLY, WE ARE CONSTR AINT TO PRESUME THAT THE ASSESSEE IS NOT SERIOUS IN PURSUING HIS APPEAL. AC CORDINGLY, THE MATTER IS PROCEEDED EX PARTE IN THE ABSENCE OF ASSESSEE AND ON THE BASIS OF MAT ERIAL PLACED ON RECORD IN TERMS OF RULE 24 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963. 5 ITA NO.2061/PN/2014 10. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REV ENUE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT IN VIEW OF CONCURRENT ORDERS OF THE AUTHORITIES BELOW, NO INTERFERENCE IS CALLED FOR. 11. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMISSIONS MADE BY THE REVENUE. AS REGARDS THE FI RST ISSUE TOWARDS ADDITION OF RS.3,70,000/- TOWARDS UNEXPLAINED INITIAL INVEST MENTS IN NEWLY STARTED FOODGRAINS BUSINESS OF THE ASSESSEE, WE FIND THAT T HE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS GIVEN CONCURRENT FINDING THAT NO PLAUSIBLE EXPLANATION HAS BEEN GIVEN BY THE ASSESSEE TO ESTABLISH THE SOURCE OF INITIAL INVESTMENTS DETECTED IN THE COURSE OF SURVEY. THERE IS NO MATE RIAL BEFORE US TO ENABLE US TO TAKE A DIFFERENT VIEW IN THE MATTER. WE ACCORDINGL Y ENDORSE THE FINDINGS GIVEN BY THE CIT(A) ON THE ISSUE AS NOTED ABOVE. IN THE RESULT, THE GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 12. AS REGARDS THE ADDITION OF RS.1,10,000/- TOWARD S EXCESS STOCK AGITATED AS PER GROUND NO.2 OF THE ASSESSEES APPEAL. WE FIND THAT THE AUTHORITIES BELOW HAVE TAKEN ADVERSE VIEW IN THE MATTER IN THE ABSENC E OF ANY TANGIBLE EVIDENCE TO SUPPORT THE CONTENTION OF THE ASSESSEE THAT IT I S MERELY HOLDING THE STOCK ON BEHALF OF THE FARMERS. AS NOTED ABOVE, AN INITIAL INVESTMENT OF RS.3,70,000/- IN THE FOODGRAINS BUSINESS HAS BEEN TREATED AS UNEXPLA INED BY THE REVENUE. THE REVENUE ALSO SEEKS TO MAKE ANOTHER ADDITION OF RS.1 ,10,000/- IN THE SAME LINE OF BUSINESS TOWARDS EXCESS STOCK. ONCE, THE INITIA L INVESTMENTS OF RS.3,70,000/- IS ASSUMED TO HAVE BEEN DEPLOYED IN T HE BUSINESS OUT OF UNEXPLAINED SOURCES, THE SAME, IN OUR VIEW, WILL AC COUNT FOR TOWARDS THE CORRESPONDING EXCESS STOCK FOUND WHICH IS LESSER IN VALUE THAN THE UNEXPLAINED INITIAL INVESTMENTS. THEREFORE, BOTH THE ADDITIONS CANNOT GO HAND IN HAND. IT WOULD BE LOGICAL TO ASSUME THAT THE REMAINING EXCES S STOCK OF RS.1,10,000/- IS SOURCED OUT OF INITIAL UNEXPLAINED INVESTMENTS. TH EREFORE, WE DO NOT FIND OURSELVES IN AGREEMENT WITH THE CONCLUSION OF THE C IT(A) IN SUSTAINING THE IMPUGNED ADDITION TOWARD EXCESS STOCK. ACCORDINGLY , THE ASSESSING OFFICER IS 6 ITA NO.2061/PN/2014 DIRECTED TO DELETE THE ADDITION ON THIS SCORE. IN THE RESULT, THE GROUND NO.2 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 13. RESULTANTLY, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. ORDER PRONOUNCED ON THIS 19 TH DAY OF FEBRUARY, 2016. SD/- SD/- ( SUSHMA CHOWLA ) ( PRADIP KUMAR KEDIA ) / JUDICIAL MEMBER # / ACCOUNTANT MEMBER PUNE ; DATED : 19 TH FEBRUARY, 2016. % & '() *)' / COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A), KOLHAPUR; 4) THE CIT-II, KOLHAPUR; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. %+ / BY ORDER , ' # //TRUE COPY// $ %& # '( / SR. PRIVATE SECRETARY ) '* , / ITAT, PUNE