The DCIT, Circle-6, Surat V. Shri Nileshkumar H.Laheri, Surat

ITA 2254/AHD/2010

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9706 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 11-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PANDAY
• Assessee Lawyers: M K PATEL
• Keywords: Unexplained expenditure
• Section: 69C; 143(3); 131; 69

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ./ ITA NO. 2254/AHD/2010 / ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME-TAX, CIRCLE-6, SURAT .. APPELLANT VS SHRI NILESHKUMAR H. LAHERI, 5/823-24, AMBICA NIWAS, GHIYA SHERI, MAHIDHARPURA, SURAT .. RESPONDEN T PAN : AAJPL 1371 N REVENUE BY : SHRI A. K. PANDAY , SR - DR ASSESSEE(S) BY : SHRI M.K. PATEL , AR / DATE OF HEARING 11/12/2015 /DATE OF PRONOUNCEMENT 01/02/2016 / O R D E R PER SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT DATED 23.04.2010 FOR ASSESSMENT YEAR 2007-08, ON THE FOLL OWING GROUNDS:- 1. IN THE FACTS AND CIRCUMSTANCE OF THE CASE, THE HON BLE CIT(A) HAS ERRED IN ADDITION OF RS.62,76,086/- U/S 69C OF THE I.T. ACT, 1961 ON ACCOUNT OF UNEXPLAINED EXPENDITURES IN ACQUISITION OF VALUABLES IN FORM OF ROUGH DIAMONDS. ITA NO. 2254/AHD /2010 DCIT VS. SHRI NILESHKUMAR H LAHERI AY 2007-08 - 2 - 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A) HAS WRONGLY GIVEN RELIEF BY TAKI NG INTO COGNIZANCE AN IRRELEVANT ISSUES, WHICH ARE CONTRARY TO THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE HONBLE CIT(A) HAS ADOPTED AN ERRONEOUS INTERPRETATION OF SECTION 69C OF THE IT ACT, 1961. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS OF TRADING A ND JOB WORK OF DIAMOND/JEWELLERY. THE ASSESSEE HAS FILED RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 28.02.2008 DECL ARING TOTAL INCOME AT RS.4,36,290/-. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 31.12.2009, DETERMINING THE TO TAL INCOME OF THE ASSESSEE AT RS.73,78,736/-, INTER ALI A, DISALLOWING RS.62,76,086/- U/S. 69C OF THE ACT ON A CCOUNT OF PURCHASE OF ROUGH DIAMOND. 2.1 AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETE D THE ADDITION IN QUESTION. THUS, THE REVENUE IS IN APPE AL BEFORE US AGAINST THE ORDER OF THE CIT(A), INTER ALIA, SUBMIT TING THAT THE CIT(A) ERRED IN DELETING THE ADDITION OF RS.62,76,0 86/- MADE BY THE ASSESSING OFFICER U/S 69C OF THE ACT ON ACCOUNT OF UNEXPLAINED EXPENDITURES IN ACQUISITION OF VALUABLE S IN THE ITA NO. 2254/AHD /2010 DCIT VS. SHRI NILESHKUMAR H LAHERI AY 2007-08 - 3 - FORM OF ROUGH DIAMONDS. THE LD. DEPARTMENTAL REPRE SENTATIVE ON BEHALF OF REVENUE SUBMITTED THAT THE CIT(A) HAS WRONGLY GIVEN RELIEF BY TAKING INTO COGNIZANCE IRRELEVANT I SSUES WHICH ARE CONTRARY TO THE FACTS AND CIRCUMSTANCE OF THE C ASE AND FURTHER SUBMITTED THAT THEREFORE, THE ORDER OF THE CIT(A) MAY BE SET ASIDE AND THAT OF ASSESSING OFFICER MAY BE UPHE LD. ON THE CONTRARY, LD. AUTHORIZED REPRESENTATIVE FOR THE ASS ESSEE SUPPORTED THE ORDER OF THE CIT(A). 2.2 AFTER GOING THROUGH THE RIVAL CONTENTIONS AND M ATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS DISCLOSED RS. 10,00,000/- AS UNDISCLOSED INCOME IN HIS HANDS AS WELL AS HIS T WO BROTHERS FOR THE IRREGULARITIES AS FOUND DURING THE COURSE O F SURVEY. ON THE BACK DROP OF THIS AND BASED ON THE COPY OF SEIZ ED MATERIAL AS PRODUCED BEFORE THE CIT(A), HE CONCLUDED THAT TH OUGH THE ASSESSEE WAS IN THE BUSINESS OF CONSIGNMENT SALE, H E ACTED MORE LIKE A CONSIGNMENT AGENT. THE CIT(A) FURTHER O BSERVED THAT THE ASSESSING OFFICER WAS RIGHT IN ASSUMING TH AT THE PURCHASES OF THE ASSESSEE WERE UNVERIFIABLE, BUT IT WAS EQUALLY CORRECT THAT SEC 69C WOULD NOT BE APPLICABLE. HE OB SERVED THAT REGARDING THE SCOPE OF SEC 69C, ESTABLISHING NECESS ARY INGREDIENTS FOR APPLICABILITY OF SEC 69C LIED ON TH E ASSESSING OFFICER. THE ASSESSING OFFICER HAS HELD THAT THE PU RCHASES WERE ITA NO. 2254/AHD /2010 DCIT VS. SHRI NILESHKUMAR H LAHERI AY 2007-08 - 4 - DONE OUTSIDE THE BOOKS OF ACCOUNTS AS PER THE MATER IAL SEIZED DURING THE COURSE OF SURVEY. THEREFORE, PURCHASES COULD NOT BE TERMED AS UNVERIFIABLE ONCE THE ASSESSING OFFICER A CCEPTED THE SAME AS PURCHASES AS PER MATERIAL SEIZED DURING COU RSE OF SURVEY. IN RESPECT OF QUANTUM OF ADDITION, THE CIT( A) OBSERVED THAT THE ASSESSEE HAD ALREADY MENTIONED IN THE STAT EMENT RECORDED U/S 131 THAT THE PURCHASES AND SALES WERE DONE ON CONSIGNMENT BASIS. THUS, IT DOES NOT SEEM ANY SCOPE TO HOLD A CONTRARY VIEW DISBELIEVING A STATEMENT GIVEN ON OAT H. NO INCRIMINATING MATERIAL OR DOCUMENTS WERE FOUND DURI NG SURVEY PROCEEDINGS EVIDENCING PAYMENT OF SUCH PURCHASES AT THE TIME OF PURCHASE. THUS, THE CIT(A) RIGHTLY CONCLUDED THA T THE ASSESSEE WAS IN THE BUSINESS OF TRADE ON CONSIGNMEN T BASIS. DURING THE COURSE OF SURVEY NO DOCUMENT RELATED TO PAYMENT OF SUCH PURCHASES WERE FOUND COUPLED WITH THE FACT THA T THERE EXISTS NO DIRECT EVIDENCE TO PROVE THAT THE ASSESSE E ACTUALLY PAID FOR THE PURCHASES BEFORE GETTING THE SALES PRO CEED. IN THIS BACKGROUND, THE CIT(A) WAS OF THE VIEW THAT ASSESSE E SHOULD BE TAXED FOR THE TRADE HE INCURRED. ON A TOTAL UNACCOU NTED CONSIGNMENT TURNOVER OF RS.62,76,086, THE ASSESSEE HAD DISCLOSED RS.10,00,000/- AS INCOME DURING THE COURS E OF SURVEY. FURTHER, THE CIT(A) OBSERVED THAT ANY ESTI MATE OF ITA NO. 2254/AHD /2010 DCIT VS. SHRI NILESHKUMAR H LAHERI AY 2007-08 - 5 - INCOME IN THIS TYPE OF BUSINESS WOULD HAVE NO BASIS AND WOULD BE ONE MORE ESTIMATE NOTHING MORE AND NOTHING LESS . IN VIEW OF ABOVE, THE CIT(A) RIGHTLY HELD THAT THE DISCLOSU RE MADE BY THE ASSESSEE REASONABLY COVERED THE INCOME EARNED F ROM SUCH TURNOVER AND ACCORDINGLY DELETED THE ADDITION OF RS.62,76,086/- MADE BY THE ASSESSING OFFICER U/S 69 C OF THE ACT. THEREFORE, THIS REASONED FINDING OF THE CIT(A ) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. 3. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 1 ST FEBRUARY, 2016 AT AHMEDABAD. SD/- SD/- ( RAJESH KUMAR ) ACCOUNTANT MEMBER ( SHAILENDRA KUMAR YADAV ) JUDICIAL MEMBER AHMEDABAD; DATED 01/02/2016 *BT !'# $#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A), 5. !'# $$ , , / DR, ITAT, AHMEDABAD 6. #() / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD