THE ITO, 1(1), Bhopal V. M/s. Maheshwari Advertising, Bhopal

ITA 218/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5775 (ITAT-INDORE)
• Duration Of Justice: 1 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 14-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: S S DESH
• Keywords: Retraction
• Section: 133A

Judgement Text

ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NO. 218/IND/2016 / ASSESSMENT YEAR: 2010-11 INCOME TAX OFFICER 1(1) BHOPAL :: / APPELLANT VS M/S MAHESHWARI ADVERTISING BHOPAL PAN AAHFM 9895J :: / RESPONDENT ! ' # $ / REVENUE BY SHRI MOHD. JAVED - DR %& ' # $ / ASSESSEE BY SHRI S.S. DESHPANDE ' ( ' &) DATE OF HEARING 2 2 .2.2017 *+,- ' &) DATE OF PRONOUNCEMENT 1 4 . 3 .2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST T HE ORDER OF THE LEARNED CIT(A)-31, NEW DELHI, HAVING CONCURRENT JURISDICTION OVER THE CIT(A)-1, BHOPAL, DATED 23.12.2015 IN FIRS T APPEAL NO. 31/13-14 FOR THE ASSESSMENT YEAR 2010-11. ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 2 2. THE SOLE EFFECTIVE GROUND RAISED BY THE REVENUEAPP ELLANT READS AS FOLLOWS :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A)-31, NEW DELHI, CAMP AT BHOPAL HAS ERRED IN DELETING THE ADDITION OF RS.45,18,389/- MADE BY A. O. ON ACCOUNT OF UNACCOUNTED SALE/RECEIPTS WHICH WAS VOLUNTARILY SURRENDERED BY THE ASSESSEE DURING THE COURSE OF SURVEY CONDUCTED ON 24.02.2010 3. THE FACTS, IN NUTSHELL, ARE THAT THE ASSESSEE FIRM IS ENGAGED IN THE BUSINESS OF ADVERTISING AGENCY. THE FILED THE E -RETURN OF INCOME ON 29.9.2010 SHOWING TOTAL INCOME OF RS. 1,11,60,22 0/-. NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 7.9.2011 WHICH WAS DULY SERVED UPON THE ASSESSEE. THE ASSESSING OFFICER OBS ERVED THAT A SURVEY U/S 133 OF THE ACT WAS CONDUCTED ON 24.2.201 0 AT THE BUSINESS PREMISES OF THE ASSESSEE FIRM. DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE FIRM SURRENDERED T HE FOLLOWING SUMS AS ITS UNDISCLOSED INCOME :- (I) EXCESS CASH FOUND RS. 39,22,821/- (II) UNACCOUNTED SALE/RECEIPTS AS PER LPS- 2 RS.45,18,389/- TOTAL - RS.84,41,210/- HOWEVER, VIDE ITS REPLY DATED 8.1.2013, THE ASSESS EE FIRM RETRACTED FROM THE SURRENDER OF UNACCOUNTED SALE/RECEIPTS AMOUNTING TO ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 3 RS.45,18,389/- ON THE GROUND THAT AFTER THE CONCLUS ION OF SURVEY, SALE BILLS IN RESPECT OF ESTIMATED WORK ORDERS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS, WERE ISSUE AND ACCOUN TED FOR IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE FIRM. THE ASSESSI NG OFFICER, ON CONSIDERATION OF THE REPLY OF THE ASSESSEE, OBSERVE D AS UNDER :-- (I) DURING THE COURSE OF SURVEY PROCEEDINGS, STATEMENT OF SHRI SUNIL MAHESHWARI, PARTNER OF THE ASSESSEE FIRM, WAS RECORDED ON OATH ON 24.2.2010. IN THE ABOVE STATEME NT, SHRI MAHESHWARI HAS ACCEPTED THE FACT THAT THE WORK ORDE RS FOUND DURING THE COURSE OF SURVEY WERE NOT ENTERED IN THE ACCOUNT BOOKS OF THE FIRM. FURTHER, SHRI MAHESHWAR I HAS UNCONDITIONALLY ACCEPTED THE AMOUNT INVOLVED IN THE ABOVE WORK ORDERS AT RS.45,18,389/- AS THE UNDISCLOSED IN COME OF THE FIRM. (II) ALL SALE BILLS PERTAINING TO SEIZED WORK ORDERS WER E PREPARED ON 25.2.2010 I.E. IMMEDIATELY AFTER THE CONCLUSION OF THE SURVEY. NO PLAUSIBLE REASON FOR THE SAME WAS FURNIS HED BY THE ASSESSEE. ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 4 (III) AS CLAIMED BY THE ASSESSEE, IT IS MAINTAINING REGUL AR BOOKS OF ACCOUNTS ON MERCANTILE SYSTEM OF ACCOUNTING. FUR THER, IT IS SEEN THAT SEIZED WORK ORDERS RELATE TO PERIOD MUCH OLDER THAN THE DATE OF SURVEY. NON-INCLUSION/DELAYED INCLUSION OF THE HUGE SALES/RECEIPTS IN ACCOUNT BOOKS FOR A LONG PER IOD MAKES IT CLEAR THAT THE PREPARATION OF SALE BILLS/THEIR A CCOUNTING IN THE BOOKS OF ACCOUNTS IMMEDIATELY AFTER THE CONCLUI ON OF SURVEY IS ONLY AN AFTERTHOUGHT. HAD THE SURVEY BEEN NOT CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE FIRM, THE HUGE SALE/RECEIPTS OF RS.45,18,389/- MIGHT NEVER HA VE BEEN ACCOUNTED FOR. (IV) DURING THE COURSE OF SURVEY, EXCESS CASH AMOUNTING TO RS.39,22,821/- WAS FOUND WHICH WAS UNCONDITIONALLY ACCEPTED AND OFFERED FOR TAXATION. FINDING OF SUCH HUGE EXCESS/UNACCOUNTED CASH INDICATES THAT THE ASSESSEE FIRM IS INDULGED IN THE PRACTICE OF NOT ACCOUNTING ALL ITS SALES/RECEIPTS IN ITS BOOKS OF ACCOUNTS. THUS, IT I S APPARENT THAT THE ASSESSEE FIRM HAS UNACCOUNTED SALES/RECEIP TS. ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 5 (V) IT IS ALSO SEEN THAT THE ASSESSEE HAS NOT FURNISHED THE PROFIT AND LOSS ACCOUNT FOR THE PERIOD BEFORE THE DATE OF SURVEY AND AFTER THE DATE OF SURVEY. FURTHER, NO RECONCILIATIO N OF THE SALE/RECEIPTS INCORPORATING THE WORK ORDERS FOUND D URING THE COURSE OF SURVEY PROCEEDINGS WAS FURNISHED. (VI) THE ASSESSEE HAS ALSO NOT FURNISHED THE HOARDING-WI SE RECEIPTS AND THE PERIOD DISPLAYED THEREOF. ON THE BASIS OF THE ABOVE OBSERVATION, THE ASSESSIN G OFFICER ADDED THE AMOUNT OF RS. 45,18,389/- TO THE TOTAL INCOME O F THE ASSESSEE BY TREATING THE SAME AS UNDISCLOSED INCOME OF THE A SSESSEE. 4. AGAINST THE ABOVE ACTION OF THE ASSESSING OFFICE R, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LEARNED CIT(A). O N CONSIDERATION OF THE FACTS OF THE CASE IN THE LIGHT OF THE SUBMISSIO NS OF THE LEARNED COUNSEL FOR THE ASSESSEE, THE LEARNED CIT(A) DELETE D THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 4.3 I HAVE CONSIDERED THE FINDINGS RECORDED BY THE LD. A.O. AS PER THE ASSESSMENT ORDER, THE SUBMISSIONS M ADE BY THE LD. AR AND THE FACTS OF THE CASE ON RECORD. IT IS S EEN THAT IN THIS CASE A SURVEY UNDER SECTION 133A WAS CONDUC TED WHEREBY ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 6 UNACCOUNTED SALE/RECEIPTS OF THE ORDER OF RS.45,18, 389/- WERE DETECTED AND INCOME TO THAT EXTENT WAS SURRENDERED BY THE APPELLANT. AS PER THE ASSESSMENT ORDER THE LD. ASS ESSING OFFICER MADE AN ADDITION OF THE SAME AMOUNT STATING THAT THE ASSESSEE HAS RETRACTED THE SAID SURRENDER. THE AR B EFORE ME HAS SUBMITTED THAT ALL THE SALES BILL WERE PREPARED ON 25.02.2010 IMMEDIATELY AFTER THE DATE OF SURVEY TO AVOID ANY FUTURE CONFUSION TO ENSURE THAT SUCH PAPERS HAVE BE EN INCLUDED IN THE INCOME. THIS ALSO CATEGORICALLY ESTABLISHES THAT THE RECEIPTS COMPRISED IN THE SEIZED PAPERS HAVE BEEN D ULY CONSIDERED AS INCOME BY THE ASSESSEE. THUS, NO ADVE RSE INFERENCE COULD HAVE BEEN DRAWN FROM SUCH FACT. THE APPELLANT HAS ALSO SUBMITTED VARIOUS DOCUMENTS IN THE FORM OF LEDGER ACCOUNT, COPIES OF BILLS AND VOUCHERS ETC. IN SUPPO RT OF THE CLAIM THAT THE RECEIPTS TO THE EXTENT OF RS.45,18,389/- W ERE ACTUALLY INCLUDED IN THE TOTAL TURNOVER WHICH WAS OFFERED TO TAX. IN VIEW OF THE ABOVE, THE ACTION OF THE LD. A.O. IN MAKING THE ADDITION ON THE GROUND OF RETRACTION BY THE ASSESSEE IS CLEARLY ON THE WRONG FOOTING AND AMOUNTS TO DOUBLE TAXATION. SUCH ACTION CANNOT BE ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 7 UPHELD. I, THEREFORE, DIRECT THE LD. A.O. TO DELETE THE ADDITION MADE. ACCORDINGLY, THE GROUND NO. 2 IS ALLOWED TO T HE APPELLANT. 5. AGAINST THE DELETION OF ADDITION BY THE LEARNED CIT(A), THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. WE HAVE HEARD ARGUMENTS OF BOTH THE SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD OF T HE TRIBUNAL, INTER-ALIA, IMPUGNED ASSESSMENT ORDER AND THE FIRST APPELLATE ORDER. 7. THE LEARNED DR SUPPORTING THE ACTION OF THE ASSE SSING OFFICER SUBMITTED THAT THE SURRENDERED AMOUNT OF RS.45,18,3 89/- ON ACCOUNT OF UNACCOUNTED SALES/RECEIPTS WAS CORRECTLY TREATED AS UNDISCLOSED INCOME OF THE ASSESSEE AND THE SAME WAS CORRECTLY ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LEAR NED DR SUBMITTED THAT DURING THE COURSE OF SURVEY PROCEEDI NGS, STATEMENT OF SHRI SUNIL MAHESHWARI, A PARTNER OF THE FIRM, WA S RECORDED ON 24.2.2010 WHEREIN HE HAS ACCEPTED THE FACT THAT THE WORK ORDERS FOUND DURING THE COURSE OF SURVEY WERE NOT ENTERED IN THE BOOKS OF ACCOUNTS OF THE FIRM AND HE UNCONDITIONALLY ACCEPTE D THE AMOUNT ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 8 INVOLVED IN THE ABOVE WORKS ORDER AS UNDISCLOSED IN COME OF THE ASSESSEE. 8. THE LEARNED DR CHALLENGING THE FIRST APPELLATE O RDER POINTED OUT THAT THE LEARNED CIT(A) IN PARA 4.3 WENT WRONG IN APPRECIATING THE FACTS OF THE CASE TO HOLD THAT THE ACTION OF TH E ASSESSING OFFICER IN MAKING THE ADDITION WAS ON THE WRONG FOOTING AND AMOUNTS TO DOUBLE TAXATION. THE LEARNED DR ALSO POINTED OUT T HAT THE LEARNED CIT(A) WAS NOT CORRECT IN DELETING THE ADDITION MAD E BY THE ASSESSING OFFICER ON THE BASIS OF VOLUNTARY SURREND ER MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY. THEREFORE, TH E IMPUGNED ORDER MAY BE SET ASIDE BY RESTORING THAT OF THE ASS ESSING OFFICER. 9. REPLYING TO THE ABOVE, THE LEARNED COUNSEL FOR T HE ASSESSEE SUBMITTED THAT THE PARTNER OF THE ASSESSEE FIRM PRE PARED BILLS ON 25.2.2010 IMMEDIATELY AFTER THE DATE OF SURVEY TO A VOID ANY CONFUSION TO ENSURE THAT SUCH AMOUNTS/RECEIPTS SHOU LD BE INCLUDED IN THE TRADING RECEIPTS OF THE ASSESSEE. T HE LEARNED COUNSEL FOR THE ASSESSEE VEHEMTNLY POINTED OUT THAT THESE RECEIPTS HAVE BEEN DULY CONSIDERED AS INCOME OF THE ASSESSEE IN THE FINAL BOOKS OF ACCOUNTS WHICH WERE SUBMITTED ALONG WITH T HE RETURN ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 9 BEFORE THE ASSESSING OFFICER. THE LEARNED COUNSEL FOR THE ASSESSEE STRENUOUSLY CONTENDED THAT THE ASSESSEE SUBMITTED V ARIOUS DOCUMENTS IN THE FORM OF LEDGER ACCOUNT, COPIES OF SALES BILLS AND VOUCHERS, ETC. IN SUPPORT OF THE FACT THAT THE RECE IPTS TO THE EXTENT OF RS. 45,18,389/- WERE ACTUALLY INCLUDED IN THE TO TAL TURNOVER SHOWN BY THE ASSESSEE IN THE TRADING RESULTS OF THE ASSESSEE WHICH WERE ALSO OFFERED TO TAX. THEREFORE, IF ANY FURTHER ADDITION IS MADE, IT WOULD AMOUNT TO DOUBLE TAXATION AND THE LEARNED CIT (A) AFTER CORRECTLY APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE, HAS GRANTED RELIEF TO THE ASSESSEE WHICH CANNOT BE DISM ISSED. 10. ON CAREFUL CONSIDERATION OF THE ABOVE SUBMISSIO NS, FIRST OF ALL WE OBSERVE THAT THE LEARNED CIT(A) HAS DELETED THE ADDITION WITH CONFUSION RECORDED IN PARA 4.3 OF THE FIRST APPELLA TE ORDER WHICH HAS BEEN REPRODUCED HEREINABOVE IN PARA 4 OF HIS ORDER. 11. UNDISPUTEDLY, SURVEY U/S 133A OF THE ACT WAS CO NDUCTED ON 24.2.2010 WHEREIN UNACCOUNTED SALE RECEIPTS OR BILL S OF RS.45,18,389/- WERE DETECTED AND THIS AMOUNT WAS SU RRENDERED BY SHRI SUNIL MAHESHWARI, PARTNER OF THE ASSESSEE FIRM . ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 10 11. THE ASSESSING OFFICER MADE THE ADDITION OF THE SAME AMOUNT ON THE ALLEGATION THAT THE ASSESSEE HAS RETRACTED F ROM THE SURRENDER MADE DURING THE COURSE OF SURVEY PROCEEDINGS. THIS FACT HAS NOT BEEN CONTROVERTED BY THE LEARNED DR THAT THE ASSESS EE SUBMITTED ALL THE SALE BILLS WHICH WERE PREPARED ON VERY NEXT DATE OF SURVEY I.E. 25.2.2010 TO ENSURE THAT THE IMPUGNED AMOUNT SHOULD BE INCLUDED IN THE TRADING RESULTS/INCOME OF THE ASSESSEE. WHEN THE IMPUGNED AMOUNT WHICH WAS PICKED UP BY THE ASSESSING OFFICER FOR MAKING THE ADDITION, HAS BEEN SHOWN AS RECEIPT IN THE ACCO UNTS OF THE ASSESSEE AND SUCH RECEIPTS OF RS.45,18,389/- WERE A CTUALLY INCLUDED IN THE TOTAL TURNOVER SHOWN BY THE ASSESSE E IN THE BOOKS OF ACCOUNTS AND THE SAME WERE ALSO OFFERED TO TAX THEN IN OUR OPINION THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING T HE ADDITION OF THE SAME AMOUNT ON THE GROUND OF RETRACTION BY THE ASSE SSEE. ON THE BASIS OF THE ABOVE NOTED FACTUAL MATRIX, WE ARE INC LINED TO HOLD THAT THE ASSESSING OFFICER HAS PROMPTED TO MAKE DOUBLE A DDITION BY IGNORING THE FACT THAT THE AMOUNTS SURRENDERED DURI NG THE COURSE OF SURVEY HAVE BEEN INCLUDED BY THE ASSESSEE IN THE BO OKS OF ACCOUNTS AND FINANCIAL RESULTS OF THE ASSESSEE WHICH OBVIOUS LY AMOUNTS TO ITO VS. M/S MAHESHWARI ADVERTISING ITA NO. 218/IND/2016 11 DOUBLE ADDITION WHICH IS NOT PERMITTED AS PER THE P ROVISIONS OF THE ACT. IN THIS SITUATION, THE LEARNED CIT(A) WAS QUIT E CORRECT IN DELETING THE IMPUGNED BASELESS ADDITION AND WE ARE NOT ABLE TO SEE ANY VALID REASON TO INTERFERE WITH THE ORDER OF THE LEARNED CIT(A) IN THIS REGARD AND, HENCE, WE UPHOLD THE SAME. ACCORDI NGLY, THE SOLE GROUND OF THE REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 14 TH MARCH, 2017. SD/- SD/- $) ! ! (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MARCH 14 TH , 2017. DN/