Vimla Dadliya, UDAIPUR V. ITO, UDAIPUR

ITA 21/JODH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3029 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2013
• Assessment Year: 2003-2004
• Appeal Filed On: 27-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Loose papers
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 21/JODH/2011 (A.Y. 2003-04) SHRI VIMAL DAGLIYA VS ITO, WARD-1(4), C/O.KUNAWAT & ASSOCIATES, UDAIPUR 65, PANCHSHEEL MARG, UDAIPUR. PAN NO. ACZPJ6600J (APPELLANT ) (RESPONDENT) ASSESSEE BY : SHRI MAHESH GEHLOT DEPARTMENT BY : SHRI MAHESH KUMAR (DR) DATE OF HEARING : 26/02/2013. DATE OF PRONOUNCEMENT: 30/04/2013. PER HARI OM MARATHA, J.M.: THIS APPEAL OF THE ASSESSEE FOR A.Y. 2003-04 IS D IRECTED AGAINST THE ORDER OF LD. CIT(A), AJMER, DATED 15/12/2010. 2. THE ASSESSEE CARRIES ON JEWELLERY-BUSINESS AS A PROPRIETOR OF M/S. VIMAL JEWELLERS, UDAIPUR, FOR A.Y. 2003-04 HE FILED HIS RETURN OF INCOME (ROI) ON 19/05/2003 DECLARING TOTAL INCOME O F RS. 1,17,610/-. 2 SHE HAS SHOWN TOTAL SALES OF THIS YEAR AT RS. 23,44 ,293/- AND GROSS PROFIT OF RS. 4,26,012/- GIVING G.P. RATE OF 18.17% . A SURVEY US/ 133A OF THE I.T. ACT, 1961 (THE ACT FOR SHORT) WAS CAR RIED OUT AT THE BUSINESS PREMISES ON 30.09.2012. DURING THIS SURVEY EXCESS CASH OF RS. 83,606/- EXCESS STOCK OF SILVER OF 4.233 KG VALUING AT RS. 17,693/-; SHORTAGE OF 251.504 GRAMS OF GOLD AND OTHER INCRIMI NATING LOOSE PAPERS REGARDING UNACCOUNTED SALES/PURCHASE AND INVESTMENT IN UNACCOUNTED STOCK, WERE FOUND. A STATEMENT OF SHRI VIMAL JAIN, PROPRIETOR, THE ASSESSEE BEFORE US, WAS RECORDED IN WHICH HE VOLUNT ARILY SURRENDERED THE UNACCOUNTED INCOME OF RS. 6,64,881/- ON ACCOUNT OF EXCESS CASH AND STOCK OF SILVER FOUND, PROFIT ON UNACCOUNTED SA LE OF GOLD, UNACCOUNTED TRANSACTIONS OF SALE/PURCHASE AND STOCK CONTAINED IN THE LOOSE PAPERS AND ALSO PAID ADVANCE TAX. BUT IN THE ROI HE HAS NOT DISCLOSED SURRENDERED INCOME BUT ON THE CONTRARY HA S CLAIMED REFUND OF RS. 1,96,732/-. IN FACT THE ASSESSEE HAS RETRACT ED HIS STATEMENT OF SURRENDER. HOWEVER, THE A.O. HAS COMPLETED THE ASSE SSMENT DATED 30.12.2005 BY MAKING VARIOUS ADDITIONS INCLUDING TH OSE OF RS. 83,606/- ON ACCOUNT OF UNACCOUNTED CASH; OF RS. 17,693/- ON ACCOUNT OF PROFIT ON UNACCOUNTED SALE OF GOLD, AND OF RS. 5,47,617/- ON ACCOUNT OF PROFIT ON UNACCOUNTED TRANSACTIONS RECORDED IN THE LOOSE P APERS. IN FACT, THE 3 ABOVE ADDITIONS HAVE BEEN SUSTAINED BY LD. CIT(A) A ND ARE THE SUBJECT MATTER OF THIS APPEAL. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE CAREFUL LY UNDERSTOOD THE ISSUES IN QUESTION. BEFORE, WE PROCEED FURTHER WE MAY MENTION THAT THE AO OR ANY REVENUE AUTHORITY FOR THAT MATTE R HAS GOT NO POWER UNDER THE ACT, TO RECORD A STATEMENT OF THE ASSESSE E OR ANY OTHER PERSON WHILE CONDUCTING SURVEY PROCEEDINGS U/S 133A OF THE ACT. THE CIRCULAR OF THE CBDT, I.T. AUTHORITIES ARE ADVISED NOT TO EXTRACT ANY SURRENDER, ESPECIALLY, DURING SURVEY PROCEEDINGS. T HE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS S. KHADER KHAN SON REPORTED IN (2008) 300 ITR 157 MADRAS, WHICH HAS BE EN CONFIRMED BY HONBLE APEX COURT IN THIS CASE AND THE JUDGMENT IS REPORTED IN (2012) 254 CTR 229 (SC). SIMILARLY HONBLE SUPREME COURT H AS CONFIRMED SAME VIEW TAKEN BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS VIJAY NAGINDAS MEHTA. THE DECISION OF HONBLE APEX COURT IS REPORTED AS (2011) 335 ITR (ST) 5 (SC). THEREFORE, WE AGREE WITH LD. A.R. REGARDING HIS CONTENTION THAT THE STATEMENT OF HIS ASSESSEE CANNOT BE MADE A BASIS FOR MAKING ANY ADDITIONS IN HIS HANDS. NOW WE WILL DEAL EACH ISSUE GROUND-WISE. 4 4. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEA L: 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. HAS GROSSLY ERRED IN MAKING ADDITION AND SUSTA INED BY THE LD. CIT(A) ON ACCOUNT OF UNACCOUNTED CASH OF RS. 83 ,606/-. 2. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. HAS GROSSLY ERRED IN MAKING ADDITION AND SUSTA INED BY THE LD. CIT(A) ON ACCOUNT OF UNACCOUNTED INVESTMENT IN STOCK OF SILVER OF RS. 17,693/-. 3. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. HAS GROSSLY ERRED IN MAKING ADDITION AND SUSTA INED BY THE LD. CIT(A) ON ACCOUNT OF PROFIT ON UNACCOUNTED SALE OF GOLD OF RS. 11,865/-. 4. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE A.O. HAS GROSSLY ERRED IN MAKING ADDITION AND SUSTA INED BY THE LD. CIT(A) ON ACCOUNT OF PROFIT ON UNACCOUNTED TRAN SACTIONS IN LOOSE PAPER OF RS. 5,47,617/-. 5. GROUND NO. 1, 2 AND 3 ARE INTERLINKED AND CIT(A) HAS ALSO DECIDED THEM SIMULTANEOUSLY. THE FACTS COMMON IN ALL THESE GROUNDS, ARE THAT EXCESS CASH OF RS. 83,606/- EXCESS SILVER STOCK OF RS. 17,693/- AND UNDISCLOSED SALES OF RS. 11,865/- WERE NOTICED DURI NG THE SURVEY. THE 5 CASE OF THE ASSESSEE AS PUT FORTH BY LD. AR IS THAT THESE ADDITIONS ARE BASED ON THE STATEMENT OF THE ASSESSEE AND THE G.P. RATE OF 18.17% DISCLOSED IN THIS BUSINESS HAS BEEN ACCEPTED. THE A SSESSEE HAD RERACTED HIS ADMISSION IMMEDIATELY ON 30.09.2002. T HE LD. D.R. HAS SUPPORTED THE REASONINGS GIVEN BY LD.CIT(A) TO SUPP ORT THE ADDITIONS. 6. AFTER CONSIDERING RIVAL SUBMISSIONS, ON MERITS, WE HOLD THAT DE HORS THE RETRACTED ADMISSION MADE BY THE ASSESSEE I N HIS STATEMENT RECORDED DURING SURVEY U/S 133A, THERE ARE NO MATER IAL EVIDENCE ON RECORD. THE AO HAS NOT REJECTED THE BOOKS AND HAS A CCEPTED THE G.P. RATE OF 18.17% DISCLOSED BY THE ASSESSEE. THE PROFI T ON THE UNDISCLOSED SALES CAN BE CALCULATED BY APPLYING G.P. RATE OF 18 .17% AND ONLY TO THAT EXTENT ADDITION CAN BE MADE. BUT WE HAVE FOUND FORCE IN THE SUBMISSIONS OF LD. AR SHRI GEHLOT THAT STOCK OF GOL D FOUND SHORT HAS DEFINITELY RESULTED IN EXCESS CASH OF RS. 83,606/- AND EXCESS STOCK OF SILVER OF RS. 17,693/-. THIS IS A VALID ARGUMENTS O F LD. AR. THEREFORE, WE HOLD THAT NO SEPARATE ADDITION OF RS.83,606/-ON ACCOUNT OF EXCESS CASH AND OF RS. 17,693/- ON ACCOUNT OF EXCESS TOCK OF SILVER CAN BE SEPARATELY MADE. ONLY PROFIT ON ACCOUNT OF SHORT ST OCK OF GOLD CAN BE ADDED. THUS, WE ALLOW GROUND NO. (1) AND (2) BUT PA RTLY ALLOW GROUND NO. (3). 6 7. THE FACTS APROPOS GROUND NO. (4) ARE THAT DURING SURVEY LOOSE PAPERS SR. NO. 1 TO 25 WERE FOUND AND SEIZED AS PER EXHIBIT 15. IN HIS STATEMENT THE ASSESSEE STATED THAT THOSE PAPERS BEL ONGED TO HIS BUSINESS TRANSACTION AND MAKE A SURRENDER OF RS. 5, 47,617/-. THE REPLY OF THE ASSESSEE AGAINST THIS FINDING OF THE A.O. IS AS UNDER :- THAT DURING THE COURSE OF SURVEY SOME LOOSE PAPERS WERE FOUND IN THE POCKET OF SHRI MAHENDRA JAIN. THE PAPER FOU ND WITH SHRI MAHENDRA JAIN IN HIS POCKET HAS NO CONCERN WITH HIS BUSINESS. THE HANDWRITING OF PAPERS ARE ALSO MAHENDRA KUMAR J AIN. MOREOVER, HE IS I.T. PAYER AND HIS P.A. NO. IS AFKP 6498 N AND HE HAS ALSO SUBMITTED AFFIDAVIT ON 10.10.2002 AT THE T IME OF SURVEY DECLARING THAT PAPERS FOUND AT THE TIME OF SURVEY O F A M/S VIMAL JEWELLERS ARE PAPER RELEVANT OF MAHENDRA KUMAR JAIN . 8. AFTER SURVEY, ON 10.10.2002 THE ASSESSEE FILED A LETTER DATED 10.10.2002 ENCLOSING THEREWITH TWO AFFIDAVITS ONE F ROM SHRI MAHENDRA JAIN AND THE OTHER FROM THE ASSESSEE HIMSELF. SHRI MAHENDRA JAIN IN THE AFFIDAVIT DATED 01.10.2002 HAS STATED HE WAS ONLY S ITTING IN THE SHOP OF SHRI VIMAL JAIN, THE ASSESSEE, AND DOES BUSINESS OF BROKERAGE OF GOLD IN THE MARKET. ALL THE LOOSE PAPERS SLIPS WERE FROM HI S POCKET. IN CASE WE IGNORE THE STATEMENT, THERE IS NO EVIDENCE TO SUSTA IN THIS ADDITION. ACCORDINGLY, THIS ADDITION IS DELETED. GROUND NO. ( 4) IS ALLOWED. 7 9. IN THE RESULT, THIS APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.2013 . SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30/04/2013 VL COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR