SHRI Vishnuprasad Umanshankar, Shujalpur V. THE ITO, Shajapur

ITA 221/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5838 (ITAT-INDORE)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 15-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJEEV JAIN
• Assessee Lawyers: PULKIT TARE; SHERI JATIN SEHGAL
• Keywords: Income from undisclosed sources; Loose papers; Retraction
• Section: 143(3); 133A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .., .., % BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER SHRI VISHNUPRASAD UMASHANKAR, PROP. VISHNUPRASAD SINGHAL, SHUJALPUR. .. ./ PAN: AHMPS9688P VS. ITO, SHAJAPUR / APPELLANT / RESPONDENT / APPELLANT BY SHRI PULKIT TARE AND SHERI JATIN SEHGAL, ADV. / RESPONDENT BY SHRI RAJEEV JAIN, DR DATE OF HEARING 04.01.2017 DATE OF PRONOUNCEMENT 16.01.2017 / O R D E R PER O.P. MEENA, ACCOUTANT MEMEBR. THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS), UJJAIN [H EREINAFTER .. . / I.T.A. NO.221/IND/2016 %' ' / ASSESSMENT YEAR: 2002-03 I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 2 OF 13 REFERRED TO AS THE CIT(A)] DATED 23.07.2014 AND PER TAINS TO ASSESSMENT YEAR 2002-03 AS AGAINST APPEAL DECIDED I N ASSESSMENT ORDER PASSED U/S 143(3) OF THE ACT DATE D 23.03.2004 OF ITO WARD 2(1), UJJAIN [HEREINAFTER RE FERRED TO AS THE AO]. 2. THE FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED BY THE ASSESSEE :- 1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF INCOME OF RS. 7,50,000/- ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES U/S 68. 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN UPHOLDING THE ADDITION OF INCOME OF RS.1,50,000/- ON THE BASIS OF ESTIMATION OF 5.01 % AS BOGUS DEPOSITS OF THE TOTAL CREDIT DEPOSITS. 3. THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THE EVIDENCE ON RECORD AND MERELY AFFIRMING THE ORDER O F I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 3 OF 13 THE AO WITHOUT GIVING ANY SUBSTANTIAL REASONING TO THE ISSUES FRAMED. 4. THAT THE LD. CIT(A) WAS NOT CORRECT IN MAKING THE ADDITION OF RS. 7,50,000/- BY IGNORING THE FACT THAT THE AFFIDAVITS WERE SUBMITTED BEFORE THE AUTHORITIES AND AFFIDAVIT ARE SUFFICIENT PROOF OF T HE TESTIMONY AND PERSONAL PRESENCE IS NOT MANDATORY THEREBY CREATING AN EXTRA BURDEN ON THE ASSESSEE. 5. THAT THE LD. CIT(A) IGNORED THAT THE ASSESSEE IS HELD LIABLE FOR PAYING TAX FOR THE WHOLE OF THE 182 FARMERS WHEN VERIFICATION IS ONLY OF 16 FARMERS AND OUT OF WHICH ONLY TWO HAVE DEPOSED IT TO THE CONTRARY WHICH IS CONTRARY TO THE GENERAL PRINCIPLES OF LAW. 3. GROUND NOS. 1, 3 4 & 5 ARE INTER-CONNECTED, HENCE THEY ARE BEING CONSIDERED AND DECIDED TOGETHER. 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A WHOLE SALE TRADER IN GRAINS, PULSES, O ILSEEDS, TRUCK PLYING ETC. HE HAS FILED THE RETURN OF INCOME ON I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 4 OF 13 31.10.2002 DISCLOSING A LOSS OF RS. 6,07,073/-. A S URVEY U/S 133A OF THE ACT WAS CARRIED OUT IN THE CASE OF THE A SSESSEE ON 19.12.2001. DURING THE COURSE OF SURVEY, A STATEMEN T WAS RECORDED FROM SHRI VISHNU PRASAD S/O SHERI HARISHAN KAR ON 19.12.2001, WHEREIN IN REPLY TO QUESTION NO.15 OF HI S STATEMENT, THE ASSESSEE HAS STATED THAT IT IS COR RECT TO SAY THAT THE LOOSE PAPERS ARE FOUND FROM THE BUSINESS P REMISES IN RESPECT OF BOTH THE BUSINESS CONCERNS. THESE PAPERS CONTAIN DEPOSITS IN THE NAME OF FARMERS, BUT IN REAL WE HAV E NOT RECEIVED ANY SUCH DEPOSITS FROM THE FARMERS AND THE DEPOSITS ARE RELATED TO OUR UNDISCLOSED INCOME. HENCE, I AM DISCLOSING A SUM OF RS. 7,50,000/- IN THE NAME OF M/S. VISHNU PRASAD UMASHANKAR AND RS. 7.50 LAKHS IN THE NAME OF M/S. SINGHAL TRADERS FOR THE FINANCIAL YEAR 2001-02 AND AGREED T O PAY TAX IN ACCORDANCE WITH THE INCOME-TAX ACT AND WOULD DISCLOS E THE SAME FOR THE RETURN OF INCOME FOR ASSESSMENT YEAR 2 002-03. HOWEVER, WHILE FILING THE RETURN OF INCOME, THE ASS ESSEE HAS RETRACTED FROM THE SAID DISCLOSURE SUBMITTING CONTA INING THAT THE CREDITS ARE ROUTINE CREDITS IN THE COURSE OF RO UTINE I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 5 OF 13 BUSINESS AND RELATES TO FARMERS, WHO HAD DEALT WITH T HE ASSESSEE AND PERSONS OF GENUINE FARMING COMMUNITY, WHO HAD SUPPLIED VARIOUS COMMODITIES AT VARIOUS POINT OF TI ME TO THE ASSESSEE AND THE ASSESSEE HAS ALSO FILED AFFIDAVITS IN SUPPORT OF HIS CONTENTION. THEREFORE, THE AO REQUIRED THE A SSESSEE TO PRODUCE THE FARMERS FOR VERIFICATION. HOWEVER, THE ASSESSEE HAS FAILED TO PRODUCE FARMERS BEFORE THE AO. HENCE, THE AO HAS ADDED THE INCOME FROM UNDISCLOSED SOURCES. IN A PPEAL BEFORE THE CIT(A), THE ASSESSEE HAS FILED SUBMISSIO NS ON WHICH A REMAND REPORT WAS CALLED FOR FROM THE AO. IN THE R EMAND REPORT, THE ASSESSEE WAS AGAIN GIVEN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE FARMERS FOR VERIFICATION. H OWEVER, THE ASSESSEE HAS FAILED TO PRODUCE THE FARMERS EVEN DUR ING REMAND PROCEEDINGS. THE LD. CIT(A) OBSERVED THAT TH E ASSESSEE HAS PRODUCED CHUKARA REGISTERS, CASH BOOK ETC. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS. THEREFORE, IF THE TRANSACTION FROM THE FARMERS ARE ENTERED IN THESE R EGISTERS, THEN THE ASSESSEE SHOULD HAVE BROUGHT THIS TO THE KNOWLEDGE OF SURVEY PARTY DURING SURVEY PROCEEDINGS. IN VIEW O F THE ABOVE I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 6 OF 13 REASONS, IT APPEARS THAT THE ASSESSEE HAS DONE BACK DATED ENTRIES IN HIS BOOKS OF ACCOUNTS. THE AFFIDAVITS SU BMITTED DURING THE APPELLATE PROCEEDINGS WERE ALSO FORWARDED TO THE AO FOR VERIFICATION AND THE AO HAS ALLOWED AN OPPOR TUNITY VIDE LETTER DATED 7.5.2012 TO FURNISH THE SUPPORTING EVI DENCE IN RESPECT OF THE INCOME FROM UNDISCLOSED SOURCES. THE ASSESSEE FILED HIS REPLY ON 27.08.2012 STATING THAT SINCE TH E MATTER IS VERY OLD AND MORE THAN TEN YEARS HAS LAPSED AND THE Y ARE NOT HAVING ANY DEALING WITH THE FARMERS. IN VIEW OF THESE FACTS, THE LD. CIT(A) HAS OBSERVED THAT WHETHER THE ALLEGED CRE DIT TAKEN BY THE ASSESSEE WAS GENUINE TRANSACTION, INITIAL ON US IS ALWAYS UPON THE ASSESSEE AND IF NO EXPLANATION IS GIVEN BY THE ASSESSEE OR THE EXPLANATION GIVEN BY THE ASSESSEE I S NOT FOUND SATISFACTORY, THEN THE AO CAN DISBELIEVE THE ALLEGE D TRANSACTION OF CREDIT. SINCE THE ASSESSEE HAS FAILED TO ESTABLI SH THE IDENTITY OF THE CREDITORS INSPITE OF REPEATED OPPORTUNITIES FROM THE AO, THE ADDITION MADE BY THE AO AMOUNTING TO RS. 7.50 L AKHS WAS CONFIRMED. I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 7 OF 13 5. BEING AGGRIEVED, THE ASSESSEE HAS FILED THE APPEAL BEFORE US. 6. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LD. CIT(A) WAS NOT CORRECT IN CONFIRMING THE ADDITIO N OF RS. 7.50 LAKHS BY IGNORING THE FACTS THAT THE AFFIDAVIT S WERE SUBMITTED BEFORE THE AUTHORITIES AND THE AFFIDAVITS ARE SUFFICIENT PROOF OF TESTIMONY AND PERSONAL PRESENCE IS NOT MANDATORY THEREBY CREATING AN EXTRA BURDEN ON THE A SSESSEE. HENCE, THE LD. CIT(A) SHOULD HAVE APPRECIATED THAT THE AFFIDAVITS FILED FROM THE FARMERS ARE GENUINE. IT WA S FURTHER SUBMITTED THAT THE MATTER IS VERY OLD AND THE ASSES SEE HAS NOT BEEN ABLE TO PRODUCE FARMERS AS THE ASSESSEE IS NOT IN TOUCH WITH THEM. THEREFORE, THE ADDITION SHOULD BE DELETED . 7. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AU THORITIES AND SUBMITTED THAT THE ASSESSEE MADE DISCLOSURE DUR ING THE COURSE OF SEARCH, WHICH HAS NOT BEEN RETRACTED BY TH E ASSESSEE UP TO THE DATE OF FILING OF RETURN OF INCOME. THERE FORE, THE RETRACTION OF THE SURRENDER MADE DURING THE COURSE OF SURVEY I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 8 OF 13 IS NOT ALLOWABLE IN THE LIGHT OF VARIOUS CASE LAWS. FURTHER, THE ASSESSEE HAS FAILED TO PRODUCE THE FARMERS EVEN DUR ING THE COURSE OF APPELLATE PROCEEDINGS WHEN THE MATTER WAS REMANDED TO THE AO. THEREFORE, IT WAS URGED THAT THE FINDINGS OF THE LOWER AUTHORITIES SHOULD BE UPHELD. 8. WE HAVE CONSIDERED THE FACTS, RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING THE COURSE OF SURVEY, LOOSE PAPERS REFLECTED CREDIT S AMOUNTING TO RS. 7.50 LAKHS BEING THE SAME OF VARIOUS CREDITS IN THE NAME OF VARIOUS FARMERS WERE FOUND. WHEN ASKED TO E XPLAIN ENTRIES APPEARING IN THESE PAPERS, THE ASSESSEE HAS SURRENDERED A SUM OF RS. 7.50 LAKHS BY STATING THAT THESE ARE, IN FACT, UNDISCLOSED INCOME FOR THE FINANCIAL YEAR 2001-02 RELEVANT TO ASSESSMENT YEAR 2002-03. WE ALSO FIND T HAT THE ASSESSEE HAS NOT RETRACTED FROM HIS STATEMENT UP TO THE DATE OF FILING OF RETURN OF INCOME ON 31.10.2002, WHEREAS THE SURVEY PROCEEDINGS ARE CARRIED OUT ON 19.12.2001. DURING T HE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE HAS PRODUCED THE AFFIDAVITS FROM THE FARMERS BUT FAILED TO PRODUCE T HE FARMERS I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 9 OF 13 BEFORE THE AO FOR VERIFICATION IN THE REMAND REPORT . THEREFORE, SUCH RETRACTION IS NOT ALLOWABLE AND THE GENUINENESS OF THE CREDIT APPEARING IN THE BOOKS OF ACCOUNTS OF THE AS SESSEE IS NOT ESTABLISHED. WE ALSO FIND SUPPORT FROM THE DECI SION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF GURDEV AGRO ENGINEERS VS. CIT, (2016) 387 ITR 218 (P&H), WH EREIN IT IS HELD HAS UNDER :- THAT STATEMENT UNDER SECTION 133A RECORDED IN SURVEY ON SEPTEMBER 27,2005, WERE LATER RETRACTED AFTER MORE THAN 3 MONTHS. THE ASSESSING OFFICER DISREGARDED THE RETRACTION AND COMPLETED THE ASSESSMENT BASED ON CONFESSIONAL STATEMENTS. THE HIGH COURT AFFIRMED THE CONCURRENT FINDING IN FIRST APPEAL AND THE TRIBUNAL IN HOLDING THAT THE ASSESSE E HAS NOT BEEN ABLE TO OFFER ANY EXPLANATION ON THE SURRENDER OF RS. 20 LAKHS MADE DURING THE SURVEY AND IN ANY CASE, RETRACTION OF CONFESSIONAL STATEMENTS, EVEN IF IT BE CONSIDERED, SHOULD BE DON E AT THE EARLIEST INSTANCE, WHEN THE PRESSURE OR COERCION OR UNDUE INFLUENCE ON THE PERSON MAKING TH E CONFESSION CEASES TO BE OPERATIVE. MERE RETRACTION CANNOT ABSOLVE THE ASSESSEE OF HIS LIABILITY. 9. SINCE THE ASSESSEE HAS FAILED TO PRODUCE THE FARME RS FOR VERIFICATION, THEREFORE, THE STATEMENT RECORDED BY THE AO DURING THE COURSE OF SURVEY PROCEEDINGS, CANNOT BE DISBELIEVED. HENCE, WE FIND NO INFIRMITY IN THE OR DERS OF LOWER I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 10 OF 13 AUTHORITIES AND ,ACCORDINGLY, THE ADDITION IS CONFI RMED. GROUND NOS. 1, 3, 4 & 5 ARE DISPOSED OF AS ABOVE. 10. GROUND NO. 2 RELATES TO UPHOLDING THE ADDITION OF INCOME OF RS. 1,50,000/- ON THE BASIS OF ESTIMATION OF 5.01 % AS BOGUS DEPOSITS OF THE TOTAL CREDIT DEPOSITS. 11. FACTS OF THIS GROUND ARE THAT THE ASSESSEE IS PURCHASING AGRICULTURAL PRODUCE FROM THE FARMERS AN D PART PAYMENT HAS BEEN MADE IMMEDIATELY AND THE REMAINING PART PAYMENT IS MADE IN CASH SUBSEQUENTLY. THE ASSESSEE HAS SUBMITTED A LIST OF 182 FARMERS DURING THE COURSE O F ASSESSMENT PROCEEDINGS IN WHOSE NAME CREDIT IS OUTST ANDING. THE AO GOT THE SAME VERIFIED FROM THE INSPECTOR, WHE REIN IT WAS REVEALED THAT THESE ARE BOGUS CREDIT DEPOSITS. O N THE BASIS OF ENQUIRY, OUT OF RS. 26,07,700/- WERE NOTIC ED ON WHICH THE AO ESTIMATED 5.01 % AS BOGUS CREDIT AND ADDED R S. 1.50 LAKHS AS INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS ALSO UPHELD THE ADDITION OF THE AO BY OBSERVING THAT THE AO WAS FULLY JUSTIFIED IN ESTIMATING 5% ON BOGUS CREDIT FO R MAKING ADDITION OF RS. 1.50 LAKHS. THE LD. CIT(A) ALSO OBS ERVED THAT I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 11 OF 13 DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAS NOT FILED ANY DOCUMENTARY EVIDENCE AND WRITTEN SUBMISSION IN T HIS REGARD AFTER RAISING THE GROUNDS OF APPEAL. 12. AGGRIEVED WITH THIS ORDER, THE ASSESSEE HAS FILED TH IS APPEAL BEFORE US. 13. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS PRODUCED THE LIST OF 182 FARMERS AGAINST WHICH TOTAL DEPOSITS OF RS. 26,07,700/- IS APPEARING. INCOME TAX INSPECTOR HAS VERIFIED AND EXAMINED THE 16 FARMERS AGAINST WHICH ONLY TWO FA RMERS, NAMELY, SHRI NARAYAN S/O SHRI BALWANT SINGH (RS. 7, 000/-) AND SHRI ANAND SINGH S/O SHRI MADHAV SINGH ( RS. 5, 000/-) AND DEPOSED THAT THEY HAVE NOT DEPOSITED ANY AMOUNT WITH THE ASSESSEE, WHEREAS OTHER FARMERS HAVE ACCEPTED AN D GIVEN THE STATEMENT IN FAVOUR OF THE ASSESSEE. THEREFORE, THE AO SHOULD HAVE ACCEPTED THE GENUINENESS OF THE DEPOSIT S MADE BY OTHER FARMERS. HENCE, THE ADDITION SO MADE MAY BE D ELETED. 14. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE AO HAS ALREADY CONSIDERED THAT OUT OF 16 FARMER S, IN I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 12 OF 13 WHOSE NAMES CREDIT OF RS. 2,39,400/- IS APPEARING, T WO FARMERS IN WHOSE NAMES CREDIT OF RS. 12,000/- IS APP EARING HAVE DENIED TO HAVE ANY DEPOSITS MADE WITH THE ASSES SEE. THEREFORE, THE AO CONSIDERED 5.01 % AS THE BASIS FO R ESTIMATING BOGUS PERCENTAGE AT 5.0 %, OUT OF TOTAL CREDITS OF RS. 26,07,700/-. THEREFORE, THE LD. CIT(A) IS JUSTI FIED IN SUSTAINING THE ADDITION MADE BY THE AO. 15. WE HAVE CONSIDERED THE FACTS, RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE INSPECTOR OF THE AO HAS EXAMINED 16 FARMERS IN WHOSE NAME THE AMOUNT OF RS. 2,39,400/- IS APPEARING OUT OF WHI CH TWO FARMERS HAVE DENIED TO HAVE GIVEN ANY AMOUNT TO THE ASSESSEE IN WHOSE NAME THE AMOUNT OF RS. 12,000/- IS APPEARIN G. THUS, THE AO HAS WORKED OUT THE RATIO OF RS. 12,000/ - DIVIDED BY 2,39,400/-, WHICH COMES TO 5.01 %. ACCORDINGLY, T HE AMOUNT OF BOGUS DEPOSITS @ 5.0 % ON TOTAL RS. 26,07 ,700/- WAS WORKED OUT AT RS. 1,30,645/- AS AGAINST WHICH THE AO HAS MADE THE ADDITION OF RS. 1.50 LAKHS. CONSIDERING TH E FACTS THAT ONLY TWO FARMERS HAVE DENIED AND AS PER THE WORKING O F THE I.T.A.NO. 221/IND/2016-A.Y.2002-03 A.Y. 2002-03 VISHNUPRASAD UMASHANKAR, SHUJALPUR. PAGE 13 OF 13 AO, ON WHICH THE ADDITION COMES TO RS. 1,30,645/-, H ENCE, THE ADDITION TO THIS EXTENT IS CONFIRMED AND BALANCE AD DITION OF RS. 19,355/- OUT OF RS. 1.50 LAKH IS DELETED. THIS GROU ND IS PARTLY ALLOWED. 16. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON THE 16 TH JANUARY, 2017. SD/- (..) (D.T.GARASIA) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER * / DATED : 16 TH JANUARY, 2017. CPU*