The ACIT, Circle-1(1), Surat V. Shri Rajendra Prasad Goyal, Surat

ITA 2228/AHD/2005

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1748 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-12-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 21-10-2005
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: MANISH MAL
• Keywords: Retraction
• Section: 143(3); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE DR.O.K. NARAYANAN, VICE-PRESIDENT AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER) ITA NO.2228/AHD/2005 [ASSTT.YEAR: 2002-2003] ACIT, CIR.1(1) SURAT. VS. SHRI RAJENDRA PRASAD GOYAL SHRI PRAMESH GOYAL, L/H OF LATE RAJENDRA PRASAD GOYAL 701, TRIVIDH CHAMBERS, RING ROAD SURAT. REVENUE BY : SMT. NEETA SHAH ASSESSEE BY : SHRI MANISH MALPANI DATE OF ORDER RESERVED : 14-12-2009 O R D E R PER DR.O.K. NARAYANAN, VICE-PRESIDENT : THIS IS AN APPEAL FILED BY THE REVENUE FOR THE ASSESSMENT YEAR 2002-2 003. THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-IV, SURAT DATED 27-7-2005. THE APPEAL ARISES OUT OF THE ASSESSMENT COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961. 2. THE ASSESSEE IS A DIRECTOR OF M/S.GOYAL INDUSTRI ES LTD. THERE WAS A SURVEY ACTION CARRIED OUT UNDER SECTION 133A IN THE BUSINESS PREMISES OF THE ASSESSEE ON 7-1-2002. ON THE BASIS OF THE DETA ILS COLLECTED IN THE COURSE OF SURVEY, THE ASSESSEE WAS CONFRONTED AND F INALLY AN ADDITIONAL INCOME OF RS.40 LAKHS WAS OFFERED BY THE ASSESSEE. ON THE BASIS OF THE ADMISSION, THE SURVEY WAS CONCLUDED AND THE MATTER CAME TO AN END. PAGE - 2 ITA NO.2228/AHD/2005 -2- 3. BUT WHEN THE RETURN OF INCOME WAS FILED BY THE A SSESSEE FOR THE ASSESSMENT YEAR 2002-2003, THE ADDITIONAL INCOME OF FERED AT RS.40 LAKHS WAS REDUCED TO A DISCLOSURE OF RS.20 LAKHS. THE AS SESSEE EXPLAINED THAT THE EARLIER ADMISSION OF RS.40 LAKHS WAS AN EXTEMPO RE ADMISSION WITHOUT LOOKING INTO THE MATERIALS IN DETAIL AND NOW AFTER CONSIDERING ALL THE MATERIALS AND RECONCILING THE FIGURES, THE ACTUAL A MOUNT OF INCOME LIABLE TO BE OFFERED WAS ONLY RS.20 LAKHS. THIS EXPLANATI ON WAS NOT ACCEPTED BY THE AO. HE MADE, THEREFORE, AN ADDITION OF RS.20 L AKHS. THIS ADDITION WAS DELETED BY THE CIT(A) IN FIRST APPEAL. THE REV ENUE IS AGGRIEVED AND THEREFORE PRESENT APPEAL FILED BEFORE US. 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS BEF ORE US. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A)-I, SURAT HAS ERRED IN DIRECTING TO DE LETE THE ADDITION OF RS.20,00,000/- MADE ON ACCOUNT OF FAILURE OF THE ASSESSEE TO OFFER FULL AMOUNT OF DISCLOSURE FOR TAXATION AS PER STATEMENT ON OATH GIVEN U/S.133A(3)(III). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD.CIT(A)-I, SURAT HAS ERRED IN IGNORING THE FA CT THAT THE RETRACTION MADE WAS CONTRADICTORY TO THE STATEMENT RECORDED ON OATH DURING THE COURSE OF SURVEY PROCEEDINGS AND, T HEREFORE, UNACCEPTABLE. 5. WE HEARD SMT.NEETA SHAH, THE LEARNED ADDITIONAL COMMISSIONER OF INCOME-TAX APPEARING FOR THE REVENUE AND SHRI MA NISH MALPANI, THE CHARTERED ACCOUNTANT APPEARING FOR THE RESPONDENT-A SSESSEE. 6. THE LEARNED ADDITIONAL COMMISSIONER CONTENDED TH AT THE ASSESSEE HAS OFFERED AN ADDITIONAL INCOME OF RS.40 LAKHS IN THE COURSE OF SURVEY, VERY MUCH ON THE BASIS OF MATERIALS CONFRONTED IN T HE COURSE OF SURVEY PAGE - 3 ITA NO.2228/AHD/2005 -3- AND OFFERING OF RS.40 LAKHS WAS NOT AN EMPTY PROMIS E. IF THE ASSESSEE WANTED TO REDUCE THE QUANTUM OF ADDITIONAL INCOME, THE ASSESSEE SHOULD HAVE EXPLAINED BEFORE THE ASSESSING AUTHORITY THE M ANNER IN WHICH HE HAS MADE THE COMPUTATION AND HOW THE ADDITIONAL INCOME HAS COME DOWN FROM RS.40 LAKHS TO RS.20 LAKHS. THE ASSESSEE HAS NOT DONE ANY OF THESE EXERCISES BEFORE THE ASSESSING AUTHORITY. IN SUCH CIRCUMSTANCES, THE CIT(A) HAS GONE WRONG IN DELETING THE ENTIRE ADDITI ONAL INCOME ONLY ON THE BASIS OF LEGAL PROPOSITIONS THAT THE ADMISSIONS MADE IN THE COURSE OF SURVEY IS NOT A BINDING EVIDENCE AND THE ADMISSIONS ARE REBUTTABLE. 7. THE LEARNED ADDL. COMMISSIONER FURTHER EXPLAINED THAT AS A MATTER OF FACT, THE ASSESSEE HAS NEVER REBUTTED THE ADMISS ION OF ADDITIONAL INCOME OF RS.40 LAKHS AND WHEN THERE WAS NO ATTEMPT TO REBUT THE EARLIER ADMISSION, THE CIT(A) OUGHT TO HAVE FOUND THAT THE ADMISSION MADE IN THE COURSE OF SURVEY STANDS GOOD AND BINDING ON THE ASSESSEE. 8. THE CHARTERED ACCOUNTANT APPEARING FOR THE ASSES SEE, ON THE OTHER HAND, EXPLAINED THAT THE EARLIER ADMISSION OF RS.40 LAKHS WAS MADE ON ROUGH ESTIMATE BASIS. THEREAFTER, AT THE TIME OF F ILING OF RETURN OF INCOME, THE DETAILS WERE THOROUGHLY SCRUTINIZED AND IT WAS FOUND THAT THE INCOME OF RS.40 LAKHS INITIALLY OFFERED BY THE ASSESSEE WA S ON THE HIGHER SIDE. THE CHARTERED ACCOUNTANT EXPLAINED THAT THIS HAS BE EN HAPPENED BECAUSE THE TOTAL DECLARATION OF ADDITIONAL INCOME WAS MADE NOT ONLY IN THE NAME OF THE ASSESSEE, BUT ALSO IN THE NAME OF THE COMPAN Y AND ANOTHER DIRECTOR. EVEN THOUGH A TOTAL AMOUNT WAS DECLARED AGAINST ALL THESE ASSESSEES, THE INDIVIDUAL SHARE OF THE DECLARED AMOUNT WAS NOT COR RECTLY WORKED AT THE TIME OF SURVEY. THE CORRECT COMPUTATION OF THE INC OME ATTRIBUTABLE TO DIFFERENT ASSESSEES WAS RECONCILED LATER AND IT WAS FOR THAT REASON THAT THE PAGE - 4 ITA NO.2228/AHD/2005 -4- ASSESSEE HAS REDUCED THE AMOUNT OF ADDITIONAL INCOM E FROM RS.40 LAKHS TO RS.20 LAKHS. 9. WE CONSIDERED THE MATTER IN DETAIL. THE ASSESSI NG AUTHORITY, CIT(A), THE ASSESSEE AND AGAIN THE REVENUE, ALL HAV E RELIED ON SO MANY JUDICIAL PRONOUNCEMENTS TO HARNESS THEIR RESPECTIVE ARGUMENTS AND FINDINGS. WE DO NOT HAVE ANY QUARREL WITH ANY OF T HE LEGAL PROPOSITIONS REFLECTED IN THOSE JUDICIAL PRONOUNCEMENTS. 10. IN THE PRESENT CASE, THE ADDITIONAL INCOME WAS OFFERED IN THE COURSE OF SURVEY. THE SURVEY DOES NOT PROVIDE ANY FOOL PR OOF AND UNIMPEACHABLE EVIDENCE AGAINST THE ASSESSEE. THE D ETAILS AND ADMISSIONS COLLECTED AND OBTAINED IN THE COURSE OF SURVEY ARE REBUTTABLE BY THE AGGRIEVED PARTY. THE REBUTTABLE COULD BE EVEN BY P LAUSIBLE EXPLANATIONS. IT IS ALSO TO BE SEEN THAT THE ADMISSIONS AND STATE MENTS MADE IN THE COURSE OF SURVEY PROCEEDINGS ARE NOT SWORN STATEMENTS AND THE DEGREE OF EVIDENTIARY VALUE IN RESPECT OF MATERIALS COLLECTED IN THE COURSE OF SURVEY ARE MUCH LIGHTER THAN THE MATERIALS COLLECTED IN TH E COURSE OF SEARCH UNDER SECTION 132. 11. BUT THE ABOVE LEGAL PROPOSITIONS NOWHERE SUGGES T THAT THE ACTION TAKEN UNDER SECTION 133A IS JUST AN EMPTY FORMALITY . THOSE JUDICIAL PRONOUNCEMENTS DO NOT STATE THAT SECTION 133A IS OF NO USE FOR THE REASON THAT MATERIALS AND INFORMATION COLLECTED IN THE COU RSE OF SURVEY ARE OF NO VALUE. THERE IS NO SUCH EXTREME VIEW POSSIBLE. 12. THEREFORE, THE MAIN QUESTION IS TO BE EXAMINED IS WHETHER THE EARLIER ADMISSION OF RS.40 LAKHS MADE BY THE ASSESS EE WAS EVER REBUTTED BY HIM OR EVER RECONCILED AND EXPLAINED SO THAT THE LESSER AMOUNT ACTUALLY PAGE - 5 ITA NO.2228/AHD/2005 -5- RETURNED BY THE ASSESSEE IS JUSTIFIED ? IN THE PR ESENT CASE, THE SURVEY ACTION WAS ON 7-1-2002. THE PREVIOUS YEAR ENDED ON 31-3-2002. THE ASSESSEE FILED THE RETURN ON 21-3-2003. THE RETURN WAS FILED AFTER ONE YEAR OF SURVEY. IN SPITE OF SUCH A LONG SPAN OF TI ME AVAILABLE WITH THE ASSESSEE, THE ASSESSEE HAS NOT REBUTTED THE EARLIER ADMISSION MADE IN THE COURSE OF SURVEY. THEREFORE, IT IS NOT PROPER ON T HE PART OF THE ASSESSEE TO ARGUE THAT THE EARLIER ADMISSION WAS NOT BINDING ON THE ASSESSEE. REGARDING THE FACT OF RECONCILIATION STATED TO BE M ADE BY THE ASSESSEE IN BRINGING DOWN THE ADDITIONAL INCOME FROM RS.40 LAKH S TO RS.20 LAKHS, WHAT WE FIND IS THAT THE ASSESSEE HAS GIVEN ONLY CE RTAIN NON-EXPLANATIONS AND THE DIFFERENCE HAS NOT BEEN PROPERLY EXPLAINED WITH THE HELP OF CONVINCING FIGURES. THEREFORE, IT IS NOT PROPER TO GIVE A CONCLUSION THAT THE ASSESSEE IS FULLY JUSTIFIED IN BRINGING DOWN QU ANTUM OF ADDITIONAL INCOME FROM RS.40 LAKHS TO RS.20 LAKHS. 13. IN A WAY, THE OFFER MADE BY THE ASSESSEE HAS PR E-EMPTED THE SURVEY OFFICER FROM GOING FURTHER AND EXAMINING THE LAPSES , IF ANY, AGAINST THE ASSESSEE. AS THE PROMISES MADE BY THE ASSESSEE HAS PRE-EMPTED THE SURVEY OFFICERS, THE EFFECT OF THE ADMISSION MADE B Y THE ASSESSEE IN THE COURSE OF SURVEY CANNOT BE DILUTED ONLY FOR THE REA SON THAT THE DETAILS COLLECTED IN THE COURSE OF SURVEY ARE ALWAYS REBUTT ABLE. 14. NOW, COMING TO THE ARGUMENTS OF THE ASSESSEE, W E ARE EQUALLY MAKING A FINDING THAT THE SURVEY OFFICERS ALSO HAVE NOT MADE FOOL-PROOF CASE AGAINST THE ASSESSEE, INVOLVING AN ADDITIONAL INCOME TO THE EXTENT OF RS.40 LAKHS. AS ARGUED BY THE ASSESSEE, DEFINITELY , THERE IS AN ELEMENT OF ESTIMATION WHILE FIXING THE QUANTUM OF ADDITIONAL I NCOME ON A PRIMA FACIE FIGURE OF RS.40 LAKHS. THE RESULT IS THAT, THE RE VENUE IS NOT JUSTIFIED PAGE - 6 ITA NO.2228/AHD/2005 -6- IN INSISTING THAT THE ASSESSEE IS INVARIABLY BOUND BY THE QUANTUM OF ADDITIONAL INCOME AT RS.40 LAKHS AND THAT THE AMOUN T IS UNCHANGEABLE. 15. THEREFORE, WE FIND THAT THE ASSESSEE ON THE ONE HAND AND THE REVENUE ON THE OTHER HAND, HAVE ADOPTED EXTREME VIE WS AT THE COST OF REASONING AND JUSTICE. THE CIT(A) HAS ACCEPTED THE EXTREME VIEW OF THE ASSESSEE WITHOUT SERIOUSLY CONSIDERING THE VALID FI NDINGS ARRIVED AT BY THE ASSESSING AUTHORITY. 16. NOW THE LINE OF OUR THINKING IS VERY CLEAR. NE ITHER WE DO APPROVE A TECHNICAL ADDITION OF RS.20 LAKHS MADE BY THE ASS ESSING AUTHORITY NOR WE DO APPROVE THE WHOLESOME DELETION OF RS.20 LAKHS AS MADE BY THE CIT(A). THE TRUTH AND JUSTICE LIE IN BETWEEN THE T WO EXTREME POLES. 17. ONE CANNOT ACCEPT THE CONTENTION OF THE REVENUE THAT THE ENTIRE DIFFERENTIAL AMOUNT OF RS.20 LAKHS MUST BE RESTORED . WE HAVE TO GIVE ROOM FOR ESTIMATION ELEMENT AND OTHER PROBABLE RECO NCILIATION FACTORS ATTEMPTED BY THE ASSESSEE. SO ALSO, WE CANNOT ACCE PT THE CONTENTION OF THE ASSESSEE THAT PROPER RECONCILIATION HAS CONVINC INGLY BEEN MADE IN RESPECT OF THE DIFFERENTIAL INCOME OF RS.20 LAKHS. 18. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, TO BE FAIR AND REASONABLE, WE MODIFY THE ADDITIONAL INCOME TO BE A DDED IN THE HANDS OF THE ASSESSEE AT RS.25 LAKHS. OUT OF THIS, THE ASSE SSEE HAS ALREADY OFFERED RS.20 LAKHS. THEREFORE, THE ASSESSING AUTHORITY IS DIRECTED TO MAKE A FURTHER ADDITION OF RS.5 LAKHS. 19. WITH THIS MODIFICATION, THIS APPEAL IS DISPOSED OF. PAGE - 7 ITA NO.2228/AHD/2005 -7- 20. IN THE COURSE OF HEARING, THE CHARTERED ACCOUNT ANT, APPEARING FOR THE ASSESSEE HAS ARGUED THAT THE ADMISSION OF ADDIT IONAL INCOME IS NOT MADE BY THE ASSESSEE HIMSELF AND IT WAS MADE BY ONE OF THE DIRECTORS OF THE GROUP COMPANIES, SHRI RANBIRSAIN AND THEREFORE, THE ASSESSEE IS NOT BOUND BY THE OFFER OF ADDITIONAL INCOME MADE IN THE COURSE OF SURVEY. WE ARE NOT ABLE TO AGREE WITH THE ABOVE ARGUMENT. THE ADMISSION MADE BY SHRI RANBBIRSAIN HAS SUBSEQUENTLY BEEN ACTED UPO N BY THE ASSESSEE AND THE GROUP COMPANIES BY OFFERING ADDITIONAL INCO ME, EVEN THOUGH NOT TO THE EXTENT OF THE ORIGINAL ADMISSION MADE DURING THE COURSE OF SURVEY. THEREFORE, BY WAY OF CONDUCT, THE ASSESSEE HAS RATI FIED THE ADMISSION MADE BY SHRI RANBIRSAIN WHICH IN TURN MAKES THE ADM ISSION AS THE ADMISSION OF THE ASSESSEE HIMSELF. WE DO NOT FIND ANY FORCE IN SIMILAR ARGUMENTS ADVANCED BY THE CHARTERED ACCOUNTANTS IN THE COURSE OF HEARING. 21. IN THE FACTS AND CIRCUMSTANCES, THIS APPEAL FIL ED BY THE REVENUE IS PARTLY ALLOWED. ORDER PRONOUNCED ON WEDNESDAY, THIS 16 TH DAY OF DECEMBER, 2009. SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (DR.O.K. NARAYANAN) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 16-12-2009 PAGE - 8 ITA NO.2228/AHD/2005 -8- COPY OF THE ORDER FORWARDED TO: 1) : ASSESSEE 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR, ITAT, AHMEDABAD