ACIT Circle 35 (1), New Delhi V. Geeta Gupta Prop., Delhi

ITA 2543/DEL/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0883 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 14-09-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 22-07-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHU KHURANA
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `C : NEW DELHI) BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.2543/DEL./2008 (ASSESSMENT YEAR : 2004-05) ACIT, CIRCLE 35(1), VS. SMT. GEETA GUPTA, PROP., NEW DELHI. M/S SAKSHI ENTERPRISES, 352A, GALI NO.11. BHOLA NATH NAGAR, SHAHDARA. (PAN/GIR NO.ABXPG2356D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. ANAND, ADV. REVENUE BY : SMT. ANSHU KHURANA, DR ORDER PER A.K. GARODIA: AM THIS IS A REVENUES APPEAL DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-XXVII, NEW DELHI DATED 29.2.20 08 FOR ASSESSMENT YEAR 2004-05. THE GROUNDS RAISED IN THIS APPEAL BY THE REVENUE RE AD AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN DRAWING A A DISTINCTION BETWEEN STATEMENT RECORD ED U/S 133A AND STATEMENT RECORDED U/S 132(4), WHICH IS NOT TENABLE IN LAW AS STATEMENT UNDER BOTH THE SECTIONS IS A VALID CONFESSION AS PE R THE ACT. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.12,28,053 WHICH WAS MADE BY THE A.O. ON ACCOUNT OF DISCREPANCY IN STOCK DETECTED DURING THE SURVEY OPERATION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE L.D.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.4,51,936 WHICH WAS M ADE BY THE A.O. ON ACCOUNT OF UNCONFIRMED AND UNSUBSTANTIATED CLAIM OF SECURITY FROM CUSTOMERS WHICH IS IN THE NATURE OF UNEXPLAINED CA SH CREDIT U/S 68 OF I.T. ACT. 2. BRIEFLY STATED, THE FACTS ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER ON PAGE 2 OF THE ASSESSMENT ORDER THAT DURING THIS YEAR, SURVEY U/S 133A OF THE I.T. ACT WAS CONDUCTED ON THE ASSESSEES BUSINESS PREMISES ON 03.9.03. IT IS ALSO NOTED THAT DURING THE COURSE OF I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 2 SURVEY, THE STATEMENT ON OATH OF THE ASSESSEE WAS R ECORDED AND SHE WAS CONFRONTED WITH THE DISCREPANCIES FOUND IN THE VALUE OF STOCK, CASH BALANCE AND INVESTMENT IN CONSTRUCTION OF BUILDING IN GHAZIABAD, U.P. IT IS FURTHER NOTED BY THE ASSESSING OFFICER THAT IN REPLY TO QUESTION NOS.15 TO 17 OF THIS STATEMENT, THE ASSESS EE HAD SURRENDERED AN INCOME OF RS.53 LAKHS FOR THE FINANCIAL YEAR 2003-04 RELEVANT TO TH E ASSESSMENT YEAR 2004-05. THIS INCOME WAS SURRENDERED ON THREE ACCOUNTS. RS.34280 53 WAS SURRENDERED ON ACCOUNT OF DISCREPANCIES IN THE STOCK, RS.434532 WAS SURRENDER ED ON ACCOUNT OF EXCESS CASH AND RS.1437415 WAS SURRENDERED ON ACCOUNT OF UNEXPLAINE D INVESTMENT IN CONSTRUCTION OF THE BUILDING. THEREAFTER, IT IS NOTED BY THE ASSES SING OFFICER THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE ASSESSEE HAS NOT INCLUDE D THE INCOME SURRENDERED BY HER IN COURSE OF SURVEY. THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE REASONS FOR FURNISHING INACCURATE PARTICULARS OF HER INCOME FOR THIS YEAR. IN REPLY, THE ASSESSEE HAS EXPLAINED THAT THE FIGURES OF RS.3808142 REPRESENTI NG THE STOCK VALUE AS ON THE DATE OF SURVEY I.E. 3.9.03 IS HYPOTHETICAL FIGURE DRAWN ON THE BASIS OF ESTIMATION DONE BY THE SURVEY TEAM DURING THE COURSE OF SURVEY. LD.AR OF THE ASSESSEE ALSO SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE VALUATION OF STOCK H AS BEEN TAKEN ON WHOLE SALE PRICE INSTEAD OF COST PRICE. IT IS ALSO NOTED BY THE ASS ESSING OFFICER THAT LD.AR OF THE ASSESSEE HAS REFERRED TO SOME TOTALING MISTAKES AND WITH REG ARD TO THIS, IT IS OBSERVED BY THE ASSESSING OFFICER THAT THE LD.AR OF THE ASSESSEE H AS FAILED TO CITE EVEN A SINGLE SPECIFIC INSTANCE IN SUPPORT OF HIS CONTENTIONS REGARDING TO TALING MISTAKES AND ADOPTING OF WHOLE SALE PRICE INSTEAD OF COST PRICE. THE ASSESSING OF FICER DID NOT FIND THE EXPLANATION SATISFACTORY. THEREAFTER, IT IS NOTED BY THE ASSES SING OFFICER ON PAGE 3 OF THE ASSESSMENT ORDER THAT THE SURVEY TEAM HAS COMMITTED A MISTAKE IN TAKING OPENING STOCK AT RS.5867970 WHEREAS THE SAME SHOULD BE TAKEN AS RS.8 067970 AND IN THIS MANNER THE DIFFERENCE WORKED OUT BY THE SURVEY TEAM IN THE STO CK VALUE SHOULD BE LESSER BY RS.22 LAKH. THE ASSESSING OFFICER REDUCED THIS AMOUNT OF RS.22 LAKH FOR THE DIFFERENCE IN STOCK WORKED OUT BY THE SURVEY TEAM AND ADDED THE BALANCE AMOUNT OF RS.1228053. WITH REGARD TO OTHER TWO ITEMS, THE ASSESSING OFFICER M ADE ADDITION OF RS.434532 ON ACCOUNT OF EXCESS CASH, BEING THE SAME AMOUNT AS POINTED OU T BY THE SURVEY TEAM, BUT REGARDING THE THIRD ITEM I.E. UNEXPLAINED INVESTMENT IN THE C ONSTRUCTION OF THE BUILDING, THE ASSESSING OFFICER MADE ADDITION OF RS.2113120 AS AG AINST RS.1437415 DECLARED BY THE I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 3 ASSESSEE IN THE STATEMENT, RECORDED BY THE SURVEY T EAM. BOTH THESE TWO ADDITIONS ON ACCOUNT OF EXCESS CASH AND UNEXPLAINED INVESTMENT I N CONSTRUCTION OF THE BUILDING WERE DELETED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) AND THE REVENUE IS NOT IN APPEAL ON THESE ISSUES AND THE APPEAL OF THE REVENUE IS ONLY AGAINST DELETION OF RS.1228053, SO FAR AS THE ADDITIONS MADE BY THE ASSESSING OFFICER ON T HE BASIS OF STATEMENT IN COURSE OF SURVEY IS CONCERNED. IN ADDITION TO THIS, THE ASSE SSING OFFICER HAS MADE AN ADDITION OF RS.451936 ON ACCOUNT OF SECURITY DEPOSITS FROM THE CUSTOMERS. IT IS ALSO NOTED BY THE ASSESSING OFFICER ON PAGE 4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS SHOWN A SUM OF RS.638549 UNDER THE HEAD OTHER ADVANCES AND IT I S NOTED BY THE ASSESSING OFFICER THAT THIS INCLUDE AN AMOUNT OF RS.451936 CLAIMED TO HAVE BEEN RECEIVED AS SECURITIES FROM CUSTOMERS. IT IS ALSO NOTED BY THE ASSESSING OFFIC ER THAT THE ASSESSEE WAS ASKED TO FURNISH THE NAMES AND ADDRESSES OF THESE CUSTOMERS AND IN REPLY, THE ASSESSEE HAS FILED THE CONFIRMATIONS FROM THE CUSTOMERS. IT IS ALSO O BSERVED BY THE ASSESSING OFFICER THAT ON PERUSING THESE CONFIRMATIONS CAREFULLY, IT IS NO TICED THAT THESE ARE PHOTOCOPIES OF CONFIRMATIONS PURPORTED TO HAVE BEEN OBTAINED FROM THESE CUSTOMERS DURING FINANCIAL YEARS 1995-96 AND 96-97. IT IS ALSO NOTED THAT ALL THESE SECURITY DEPOSITS WERE SHOWN TO HAVE BEEN RECEIVED IN CASH. IT IS ALSO NOTED THAT NONE OF THE CONFIRMATIONS CONTAINED THE ADDRESSES OF THE CUSTOMERS AND PAN OF THESE PERSONS HAVE ALSO NOT BEEN QUOTED. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT NO TRANSAC TION HAS BEEN CARRIED OUT WITH ANY ONE OF THESE PERSONS DURING THIS YEAR I.E. ASSESSMENT YEAR 2004-05 OR EVEN IN THE EARLIER TWO YEARS BECAUSE IN THOSE TWO YEARS ALSO, SAME AMOUNT WAS SHOWN IN THE BALANCE SHEET. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 41(1) AND MADE ADDITION OF RS.451936 BY HOLDING THAT THE LIABILITY ON THESE AC COUNT HAS CEASED TO EXIST. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE ENTIRE MATTER IN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) AND HE DELETED ALL THE ADDITIONS MADE BY THE ASSESSING OFFICER THAT OF STOCK DIFFERENCE, EXCESS CASH, UNEXPLAINED INVESTMENT AND ALSO ON ACCOUNT OF ADDITION MADE BY THE ASSESSING OFFICE R U/S 41(1) OF THE ACT. AS PER THIS APPEAL, THE REVENUE IS DISPUTING REGARDING DELETION OF ADDITION OF RS.1228053 WHICH WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DISCREP ANCY IN STOCK DETECTED DURING THE SURVEY AND ALSO THE DELETION OF RS.451936 WHICH WAS MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LIABILITIES ALLEGED TO HAVE CEASED TO EX IST. ONE MORE GROUND IS RAISED BY THE I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 4 REVENUE TO THE EFFECT THAT COMMISSIONER OF INCOME-T AX (APPEALS) HAS ERRED IN DRAWING THE DISTINCTION BETWEEN THE STATEMENT RECORDED U/S 133A AND THE STATEMENT RECORDED U/S 132(4) OF THE ACT. 4. LD.DR OF THE REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS LD.AR OF THE ASSESSEE SUPPORTED THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSE D THE MATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. REGARDING GROUND NO.1 OF THE REVENUE, WE FIND THAT ALTHOUGH THE ASSESSEE HAS DECLARED AN AMOUNT OF RS.53 LAKH IN COURSE OF SURVEY BUT EVEN THE ASSESSING OFFICER HAS NOT MADE ADDITION ON THE BASIS OF STATEMENT. AGAINST AN AMOUNT OF RS.3428053 SURRENDERED BY THE ASSESSEE IN THE STATEMENT ON ACCOUNT OF DISCREPANCY IN THE STOCK, THE ADDITION W AS MADE BY THE ASSESSING OFFICER OF RS.1228053 ONLY BECAUSE IT IS FOUND BY THE ASSESSIN G OFFICER HIMSELF THAT THE SURVEY TEAM HAS COMMITTED A MISTAKE IN TAKING THE OPENING STOCK OF A LESSER AMOUNT AS COMPARED TO THE CLOSING STOCK IN THE BALANCE SHEET AS ON 31.3.03. REGARDING THE OTHER TWO ITEMS ALSO, I.E., REGARDING EXCESS CASH AND UNE XPLAINED INVESTMENT ALTHOUGH ADDITION WAS MADE BY THE ASSESSING OFFICER WHICH WAS DELETED BY THE COMMISSIONER OF INCOME- TAX (APPEALS), BUT NO GROUND HAS BEEN RAISED BY THE REVENUE BEFORE US WITH REGARD TO THOSE TWO ADDITIONS WHICH WERE DELETED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS). CONSIDERING ALL THESE FACTS, WE ARE OF THE CONSIDER ED OPINION THAT THE STATEMENT RECORDED BY THE SURVEY TEAM U/S 133A IN THE PRESENT CASE HAS NO RELEVANCE FOR DECIDING THE DISPUTES BEFORE US BECAUSE EVEN THE ASSESSING OFFIC ER HAS NOT MADE ADDITIONS ON THE BASIS OF THIS STATEMENT ONLY SINCE FOR ONE ITEM, TH E ADDITION IS MADE BY HIM FOR A LESSER AMOUNT AND FOR ONE ITEM, THE ADDITION IS MADE FOR A HIGHER AMOUNT AND ON MERIT, THERE IS NO GROUND RAISED FOR DELETION OF TWO ADDITIONS OUT OF 3 SUCH ADDITIONS. HENCE, WE REJECT THIS GROUND OF THE REVENUE. 6. REGARDING GROUND NO.2 OF THE REVENUE, WE FIND TH AT IT IS NOTED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) IN PARA.9.4 O F HIS ORDER THAT AS PER THE LD.AR OF THE ASSESSEE, THE SURVEY TEAM HAS WORKED OUT THE CL OSING STOCK ON 3.9.03 AT RS.72.36 LAKH BY MAKING TOTALING MISTAKES, CALCULATION MISTAKES A ND APPLYING MRP (INSTEAD OF COST PRICES). IN THE ASSESSMENT PROCEEDINGS ALSO, THES E OBJECTIONS WERE RAISED BY THE LD.AR OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, BUT THE SAME WERE REJECTED BY THE ASSESSING I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 5 OFFICER ON THE BASIS THAT NO SPECIFIC INSTANCES HAS BEEN POINTED OUT BY THE LD.AR OF THE ASSESSEE. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS NOTED DOWN SEVERAL SPECIFIC INSTANCES OF SUCH MISTAKES. AS PER FIRST OF SUCH I NSTANCE, AGAINST THE CORRECT FIGURE OF RS.25,568, THE SURVEY TEAM HAS TAKEN A FIGURE OF RS .255668 AND IN THIS MANNER, THE VALUE OF CLOSING STOCK WORKED OUT BY THE SURVEY TEAM WAS INCREASED BY RS.2.30 LAKH. THEREAFTER, THE COMMISSIONER OF INCOME-TAX (APPEALS ) HAS NOTED DOWN TWO SMALL MISTAKES AND THE 4 TH MISTAKE IS THAT AS AGAINST CORRECT FIGURE OF RS.52 00, THE SURVEY TEAM HAS CONSIDERED RS.52,000 AND IT RESULTED INTO INCRE ASE IN INVENTORY AMOUNT BY RS.46,800. ONE MORE MISTAKE IS NOTED BY THE COMMISSIONER OF IN COME-TAX (APPEALS) THAT AS AGAINST THE CORRECT AMOUNT OF RS.4709.07, THE SURVEY TEAM H AS CONSIDERED A FIGURE OF RS.47097 RESULTING INTO INCREASE OF STOCK VALUE BY ABOUT RS. 0.42 LAKH. CONSIDERING ALL THESE FACTS AS PER WHICH MISTAKES WERE FOUND IN THE WORKING OF THE SURVEY TEAM BY THE COMMISSIONER OF INCOME-TAX (APPEALS), WE FIND NO RE ASON TO INTERFERE IN THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE BECAUSE THE LD.DR OF THE REVENUE COULD NOT POINT OUT ANY DEFECT IN THE FINDING OF LD .CIT(A) WITH REGARD TO VARIOUS MISTAKES COMMITTED BY THE SURVEY TEAM. WE ALSO FIN D THAT REGARDING THE CLAIM OF THE ASSESSEE THAT THE SURVEY TEAM HAS APPLIED MRP AND N OT COST PRICE, WE FIND THAT ALTHOUGH NO SUCH SPECIFIC INSTANCE HAS BEEN NOTED BY THE COM MISSIONER OF INCOME-TAX (APPEALS) IN HIS ORDER BUT IT IS OBSERVED BY HIM IN PARA.9.4 OF HIS ORDER THAT EVIDENCES WERE FILED BY THE ASSESSEE BEFORE HIM ALONG WITH THE COPY OF RATE LIST WHICH ARE SELF-EXPLANATORY AND ONLY SOME OF THE EXAMPLES REGARDING TOTALING MISTAK ES ONLY ARE NOTED BY HIM. WE, THEREFORE, CONFIRM THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS) ON THIS ISSUE. 7. REGARDING THE NEXT ISSUE, WE FIND THAT THE ADDIT ION WAS MADE BY THE ASSESSING OFFICER BY INVOKING THE PROVISIONS OF SECTION 41(1) ON THE BASIS THAT LIABILITY OF THE ASSESSEE HAS CEASED TO EXIST. THE ASSESSING OFFICE R HAS INVOKED THE PROVISIONS OF SECTION 41(1), BUT IN OUR CONSIDERED OPINION, IN THE FACTS OF THE PRESENT CASE, THIS SECTION IS NOT APPLICABLE. AS PER EXPLANATION 1 TO SECTION 41(1), INSERTED FROM 1.4.97, IF THE ASSESSEE WRITES BACK THE LIABILITY IN HIS ACCOUNTS THEN SUCH UNILATERAL ACTION OF THE ASSESSEE WILL ALSO RESULT INTO THE REMISSION OR CESSATION OF SUCH LIABILITY. IN THE PRESENT CASE, THIS IS NOT THE CASE OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS WRITTEN BACK THE LIABILITY IN THE BOOKS OF ACCOUNT. IN THE ABSENCE OF THAT, WE FEEL THAT THE JUDGMENT OF HON'BLE APEX I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 6 COURT RENDERED IN THE CASE OF KESARIA TEA CO. LTD. AS REPORTED IN 254 ITR 434 IS SQUARELY APPLICABLE WHEREIN IT WAS HELD BY THE HON'BLE APEX COURT THAT UNILATERAL ACTION ON THE PART OF THE ASSESSEE IN WRITING BACK THE AMOUNTS CO ULD NOT HAVE THE EFFECT OF CESSATION OF THE STATUTORY LIABILITY. SIMILARLY, IN THE CASE OF CIT VS. SUGAULI SUGAR WORKS PVT. LTD. AS REPORTED IN 236 ITR 518 ALSO, IT WAS HELD BY THE HO N'BLE APEX COURT THAT MERE ENTRY IN THE BOOKS OF ACCOUNT OF THE DEBTOR MADE UNILATERALL Y WITHOUT ANY ACTION ON THE PART OF THE CREDITOR COULD NOT ENABLE DEBTOR TO SAY THAT THE LI ABILITY HAD COME TO AN END. IN THE PRESENT CASE, THERE IS NOTHING ON RECORD TO SHOW TH AT LIABILITY HAS CEASED TO EXIST. THE ASSESSEE HAS FURNISHED CONFIRMATION OF THE CREDITO RS SAID TO BE OBTAINED BY THE ASSESSEE FROM THEM DURING FINANCIAL YEARS 1995-96 AND 96-97. IN THOSE YEARS, WHEN THE SECURITY DEPOSIT WAS SHOWN AS RECEIVED BY THE ASSESSEE, IT W AS NOT ADDED AS UNEXPLAINED CASH CREDIT AND HENCE IN THE PRESENT YEAR, IT CANNOT BE ADDED ON THE BASIS THAT THE CREDIT IS UNEXPLAINED BECAUSE THE CREDIT IS NOT IN THE PRESEN T YEAR BUT IT IS IN THE EARLIER YEAR. HENCE, SECTION 68 IS NOT APPLICABLE IN THE PRESENT CASE AND SECTION 41(1) IS NOT APPLICABLE BECAUSE WE HAVE SEEN THAT THE LIABILITY IN QUESTION HAS NOT CEASED TO EXIST. IN VIEW OF THIS DISCUSSION, WE HAVE NO REASON TO INTERFERE IN THE O RDER OF THE COMMISSIONER OF INCOME- TAX (APPEALS) ON THIS ISSUE ALSO. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 9. ORDER PRONOUNCED IN OPEN COURT ON 09.10.2009. (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: OCT. 10, 2009. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A)-XXVII, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT I.T.A. NO.2543/DEL./2008 (A.Y. : 2004-05) 7