ITO, NAGAUR V. Shri Vijay Kumar Sethi, MERTA CITY

ITA 257/JODH/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7893 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 22-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Income from undisclosed sources
• Section: 133A; 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.K. SAINI ) ITA NO. 257/JU/2010 ASSESSMENT YEAR : 2007-08 PAN: ADKPS 9079 G THE ITO VS. SHRI VIJAY KUMAR SETHI WARD- 1 P/O M/S. MAHAVEER TRADING CO. NAGAUR MERTA CITY, DISTT. NAGAUR (APPELLANT) (RESPONDENT) C.O. NO.07/JU/2010 (ARISING OUT O F ITA NO. 257/JU/2010) ASSESSMENT YEAR : 2007-08 PAN: ADKPS 9079 G SHRI VIJAY KUMAR SETHI VS. THE ITO P/O M/S. MAHAVEER TRADING CO. WARD- 1 MERTA CITY, DISTT. NAGAUR NAGAUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 25.07.2012. DATE OF PRONOUNCEMENT : 22.08.2012 ORDER PER N.K. SAINI, A.M. THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LD. CIT(A), JODHPUR DATED 23-02-2010. 2 2. THE SOLE GRIEVANCE RAISED BY BOTH THE PARTIES IN THEIR RESPECTIVE APPEAL/ CROSS OBJECTION RELATES TO THE DELETION OF ADDITION MADE BY THE AO ON THE BASIS OF THE OUTCOME OF SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HER EINAFTER TO AS THE ACT). 3. FACTS, IN BRIEF, ARE THAT THE ASSESSEE FILED RET URN OF INCOME ON 31-10-2007 DECLARING TOTAL INCOME OF RS. 3,99,210/- WHICH WAS PROCESSED U/S 143(1) OF THE ACT. IN THIS CASE, SURVEY WAS CONDUCTED U/S 133A OF THE ACT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 21-04-2006. SINCE IT WAS A SURVEY CASE, IT WAS PICKED FOR SCRUTINY. DURING THE COURSE OF SURVEY, CASH IN HAND WAS FOUND SHORT OF R S. 42,998/- AND STOCK OF SOME COMMODITIES WAS FOUND EXCESS BY RS. 51,493/- AND IN SOME COMMODITIES IT WAS FOUND SHORT BY RS. 22,044/-. APART FROM THE ABOVE, THE AS SESSEE WAS ASKED TO EXPLAIN THE ENTRIES MADE IN THE NOTE BOOK FOUND AT THE BUSINESS PREMISE S BELONGING TO THE ASSESSEE. THE ASSESSEE, VIDE HIS STATEMENT GIVEN DURING THE COURS E OF SURVEY ON 21-04-2006 HAD SHOWN HIS UNABLENESS TO EXPLAIN THE ENTRIES MADE THEREIN AND ULTIMATELY SURRENDERED RS. 40 LACS AS UNDISCLOSED INCOME AND AGREED TO PAY TAX ON THE SAID SURRENDERED INCOME. THE ASSESSEE WAS AGAIN EXAMINED ON 4-05-2006 ON THIS IS SUE. AT THAT TIME ALSO, THE ASSESSEE FAILED TO EXPLAIN THE ENTRIES AND PREFERRED TO SURR ENDER RS. 47,15,825/-. THE ASSESSEE ALSO DEPOSITED ADVANCE TAX AGGREGATING TO RS. 14,40,000/ - , IN ADDITION TO HIS TDS OF RS. 38,471/-. THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS NOTICED THAT THE ASSESSEE INCLUDED RS. 3,50,000/- IN HIS PROFIT AND LOSS ACCO UNT AGAINST SURRENDERED INCOME OF RS. 48 LAKHS. HE, THEREFORE, ASKED THE ASSESSEE TO EXPL AIN THE ABOVE DISCREPANCY. THE ASSESSEE, IN HIS STATEMENT RECORDED ON 18-07-2009, STATED THAT AFTER GETTING CERTIFIED COPY OF THE IMPOUNDED RECORD, HE EXAMINED HIS REGULAR B OOKS OF ACCOUNT AND ACCORDINGLY INCLUDED RS. 3,50,000/- IN HIS PROFIT AND LOSS ACCO UNT TOWARDS SURRENDERED INCOME. THE 3 AO WAS NOT SATISFIED WITH THE EXPLANATION OF THE AS SESSEE AND ADDED RS. 44,50,000/- (RS. 48 LAKHS MINUS RS. 3,50,000/-). AGGRIEVED, THE ASSE SSEE CARRIED THE MATTER TO THE LD. CIT(A) AND REITERATED HIS SUBMISSIONS MADE BEFORE T HE AO. 4. THE ASSESSEE FURTHER SUBMITTED BEFORE THE LD. CI T(A) THAT THE ADHOC ADDITION WAS MADE BY THE AO ON THE BASIS OF THE STATEMENT OF THE ASSESSEE ONLY, BUT WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE ON RECORD, SO IT WAS NOT SUSTAINABLE. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE, IN HIS WRITTEN EXPLANATION DATED 15-07-2009 HAD EXPLAINED EACH AND EVERY ENTRY MADE IN THE IMPOUNDED RECORD. THEREFORE , THE ADDITION MADE SOLELY ON THE BASIS OF THE SURRENDER, WITHOUT RELYING ON THE MATE RIAL GATHERED AS A RESULT OF SURVEY OPERATION, WAS NOT JUSTIFIED. RELIANCE WAS PLACED O N THE DECISION OF ITAT JODHPUR BENCH IN THE CASE OF ACIT VS. SAMPAT RAJ RANKA REPORTED I N 73 TTJ 642. IT WAS CONTENDED THAT THE ENTRIES REPORTED IN KHANDELWAL SUPER FINE DIAR Y FOUND AND IMPOUNDED DURING THE COURSE OF SURVEY ON THE BASIS OF WHICH THE STATEMEN T DATED 21-04-2006 AND SUBSEQUENTLY DATED 2-05-2006 HAD BEEN RECORDED ON THE BASIS OF W HICH THE ADDITION OF RS. 44,50,000/- HAD BEEN MADE, CONTAINED ENTRIES OF FINANCIAL YEAR 2005-06 I.E. FROM 1-04-2005 TO 31-03- 2006 WHICH CAME TO THE KNOWLEDGE OF THE AO ALSO WHI LE RECORDING STATEMENT OF THE ASSESSEE ON 8 TH AND 9 TH JULY, 2009. IT WAS FURTHER CONTENDED THAT THOSE EN TRIES WERE RECONCILED AND BROUGHT TO THE KNOWLEDGE OF THE AO V IDE LETTER DATED 15-07-2009, AS SUCH, ADMISSION MADE DURING THE COURSE OF SURVEY PROCEEDI NGS WAS INCORRECT. HE RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERALA REPORTED IN 91 ITR 18 (SC) . IT WAS ALSO CONTENDED THAT WHERE NECESSARILY EVIDENCE WAS LAID CONTRARY TO THE ADMIS SION, THE CONFESSION IS LIABLE TO BE EXCLUDED FROM EVIDENCE. RELIANCE WAS PLACED ON THE DECISION OF HON'BLE GUJARAT HIGH 4 COURT IN THE CASE OF KAILASHBEN MANHARLAL CHOKSI V S. CIT REPORTED IN 220 CTR (GUJ.) 138 AND ON THE DECISION OF THE HON'BLE SUPREME COU RT IN THE CASE OF STATE OF DELHI VS. NAVJOOT SANDHU ALIAS AFSAN GURU REPORTED IN 11 SCC 600. THE THE LD. COUNSEL FOR THE ASSESSEE FURTHER CONTENDED THAT THE ADDITION MADE B Y THE AO DESERVES TO BE DELETED AS ENTRIES MADE IN THE IMPOUNDED DIARY DID NOT PERTAIN TO THE CURRENT ASSESSMENT YEAR. 5. THE LD. CIT(A), AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE OBSERVED THAT IN THE STATEMENT DATED 8-07-2009 RECORDED U/S 131 OF T HE ACT, THE AO HAD OPENLY EXAMINED THE KHANDELWAL SUPER FINE DIARY WHICH WAS IMPOUND ED DURING THE COURSE OF SURVEY AND ALSO NOTED THE DESCRIPTION OF THOSE ENTRIES ALO NGWITH DATE OF TRANSACTIONS. THE LD. CIT(A) FOUND FROM THE RECORDING IN THE AFORESAID ST ATEMENT THAT ALL ENTRIES PERTAINED TO ASSESSMENT YEAR 2005-06 AND NONE OF THE ENTRIES HAD BEEN MADE ON OR AFTER 1-04-2006. HE WAS OF THE VIEW THAT THE ENTRIES WERE RELEVANT T O FINANCIAL YEAR 2005-06 I.E. ASSESSMENT YEAR 2006-07 AND NOT FOR FINANCIAL YEAR 2006-07 I.E. ASSESSMENT YEAR 2007-08. HE, THEREFORE, ACCEPTED THE CONTENTION OF THE ASSES SEE THAT THE ENTRIES MADE IN THE IMPOUNDED DIARY DID NOT PERTAIN TO THE CURRENT ASSE SSMENT YEAR DUE TO WHICH ADDITION MADE BY THE AO DESERVES TO BE DELETED. 6. THE LD. CIT(A) FURTHER OBSERVED THAT IT WAS SURP RISING THAT THE AO HAD MADE ADDITION ON THE BASIS OF ASSESSEE'S STATEMENT DATED 21-04-2006 AND 2-05-2006 IN WHICH THE ASSESSEE HAD SURRENDERED THE AMOUNT ON THE BASI S OF THIS DOCUMENT, THEREFORE, THERE WAS NO JUSTIFICATION FOR ADDITION, SINCE THE SURREN DERED INCOME WAS RECORDED TO BE CONSIDERED FOR FINANCIAL YEAR 2005-06 AND NOT FOR T HE FINANCIAL YEAR 2006-07. AS REGARDS TO THE ISSUE WHETHER THE ADDITION WAS SOLELY ON THE BASIS OF INCOME SURRENDERED IN HIS STATEMENT WAS JUSTIFIED, THE LD. CIT(A) WAS OF THE VIEW THAT THE STATEMENT LOSES 5 EVIDENTIARY VALUE REGARDING UNACCOUNTED INCOME HAVI NG BEEN SURRENDERED BY THE ASSESSEE IF THERE WAS EVIDENCE ESTABLISHING THE FALSITY OF S UCH STATEMENT. RELIANCE WAS PLACED ON THE DECISION OF THE ITAT, JAIPUR BENCH IN THE CASE OF ITO VS. B.D. DAL & OIL INDUSTRIES REPORTED IN 40 ITD 180 JP. THE LD. CIT(A), ACCORDIN GLY, HELD THAT THE ENTRIES IN THE IMPOUNDED DOCUMENT KHANDELWAL SUPER FINE DIARY ON THE BASIS OF WHICH SURRENDRED INCOME WAS DETERMINED, PERTAINED TO THE FINANCIAL Y EAR 2005-06 (FROM 1-04-2005 TO 31- 03-2006) AND NOT TO FINANCIAL YEAR 2006-07. ACCORDI NGLY, ADDITION OF RS. 44,50,000/- WAS DELETED. AGGRIEVED BOTH THE PARTIES ARE IN APPEAL B EFORE THE TRIBUNAL I.E. THE DEPARTMENT HAS FILED THE APPEAL FOR DELETION OF ADDITION WHILE THE ASSESSEE HAS FILED THE CROSS OBJECTION. 7. THE LD. DR STRONGLY SUPPORTED THE ORDER OF THE A O AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER. HE FURTHER SUBMITTED THAT THE ASSESSEE HIMSELF MADE THE SURRENDER, THEREFORE, THE ADDITION WAS RIGHTLY MADE BY THE AO AND THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. 8. IN HIS RIVAL SUBMISSIONS, THE LD. COUNSEL FOR T HE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND S TRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). HE FURTHER CONTENDE D THAT ALL ENTRIES FOUND DURING THE COURSE OF SURVEY RECORDED IN KHANDELWAL SUPER FINE DIARY PERTAINED TO THE FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07. T HEREFORE, THERE WAS NO BASIS FOR MAKING ADDITION IN ASSESSMENT YEAR 2007-08. REFEREN CE WAS MADE TO PAGES 57 TO 102 OF THE ASSESSEE'S PAPER BOOK WHICH ARE COPIES OF THE A FORESAID DIARY I.E. KHANDELWAL SUPER FINE DIARY. RELIANCE WAS PLACED ON THE FOLLOWING C ASE LAWS:- 1. CIT VS. M/S. DHINGRA MATTLE WORKS (2010) 328 ITR 38 4 (DEL.) 6 2. PAUL MATHEWS & SONS VS. CIT(2003) 263 ITR 101 (KER. ) 3. CIT VS. KHADAR KHAN SON (2008) 300 ITR 157 (MAD.) 4. B. RAMAKRISHNAIAH VS. ITO (2010) 46 DTR 406 (HYD. T RIB) 5. DCIT VS. PREMSONS (2010) 37 DTR 150 (MUM. TRIB) 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IN THE PRESENT CASE, IT IS A FACT THAT THE AO MADE ADDITION OF RS. 44,50,000/- ONLY ON THE BASIS OF THE IMPUGNED DOCUMENT KHANDELWAL SUPER FI NE DIARY WHEREIN CERTAIN ENTRIES WERE RECORDED. ANOTHER REASON GIVEN BY THE AO FOR M AKING ADDITION WAS THAT THE ASSESSEE HIMSELF SURRENDERED THE INCOME AT THE TIME OF STATEMENT RECORDED ON 21-04-2006 AND 2-05-2006. THE ASSESSEE, HOWEVER, RETRACTED FRO M THE ABOVE STATEMENT AND STATED TO THE AO THAT THE TRANSACTIONS IN THE AFORESAID DIAR Y PERTAINED TO THE FINANCIAL YEAR 2005-06 I.E. ASSESSMENT YEAR 2006-07 AND NOT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE LD. CIT(A) VERIFIED FROM THE RECORD AND FOUND MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE ENTRIES IN THE SAID DOCUMENT KHANDELWAL SUPER FINE DIARY WERE PERTAINING TO FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07 AN D NOT TO THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION I.E . 2007-08. WE, THEREFORE, DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) WHO RI GHTLY DELETED THE ADDITION MADE BY THE AO SINCE THE ENTRIES IN QUESTION ON THE BASIS OF WH ICH SAID ADDITION WAS MADE DID NOT PERTAIN TO THE PERIOD RELEVANT TO THE ASSESSMENT YE AR UNDER CONSIDERATION, RATHER, THOSE PERTAINED TO THE PRECEDING ASSESSMENT YEAR. ACCORDI NGLY, WE DO NOT SEE ANY MERIT IN THE GROUND RAISED BY THE REVENUE AND DISMISS THE SAME. 7 10. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORT OF THE ORDER OF THE LD. CIT(A) AND NO RELIEF HAS BEEN SOUGHT FOR. SINCE WE HAVE ALREADY DISMISSED THE GROUND OF APPEAL RAISED BY THE DEPARTMENT IN THE FORMER PART OF THIS ORDER, THE CROSS OBJECTION FILED BY THE ASSESSEE BECOMES INFRUCTUOUS AND DESERVES TO BE DISMISSED. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED ON 22-08-2012 ) SD/- SD/- ( R.K. GUPTA ) ( N.K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER JODHPUR, *MISHRA COPY FORWARDED TO :- 1. THE ITO, WARD- NAGAUR 2. SHRI VIJAY KUMAR SETHI, NAGAUR BY ORDER 3. THE LD CIT (A) 4. THE LD. CIT 5. THE D/R 6. GUARD FILE (ITA NOS.257/JU/2010) AR ITAT JODHPUR.