A.C.I.T.,Circle-44, Kolkata V. Shri Goutam Chamraborty, Kolkata

ITA 2613/KOL/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2439 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-05-2021
• Assessment Year: 2017-2018
• Appeal Filed On: 19-12-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Document seized; Documents seized
• Section: 143(3); 250; 69A; 13; 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA A BENCH, KOLKATA (BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER & SRI ABY T. VARKEY, JUDICIAL MEMBER) I.T.A. NO. 2613/KOL/2019 ASSESSMENT YEAR: 2017-18 ACIT, CIRCLE-44, KOLKATA....................................................................................................APPELLANT VS. SHRI GOUTAM CHAKRABORTY............................................................................................RESPONDENT [PAN: ADJPC 0018 N] APPEARANCES BY: SH. JOHN VINCENT D. LONGSTICH, CIT, APPEARED ON BEHALF OF THE REVENUE. SH. MIRAJ D. SHAH, ADV., APPEARED ON BEHALF OF THE ASSESSEE. DATE OF CONCLUDING THE HEARING : MAY 06 TH , 2021 DATE OF PRONOUNCING THE ORDER : JUNE 23 RD , 2021 ORDER PER J. SUDHAKAR REDDY, AM : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-13, KOLKATA [HEREINAFTER THE CIT(A)], PASSED U/S 250 OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT), DATED 30.10.2019 FOR THE ASSESSMENT YEAR 2017-18. 2. FACTS IN BRIEF AS STATED IN COLUMN 11 OF FORM NO. 35 UNDER RULE 45 OF THE INCOME TAX RULES, 1962. 1) YOUR ASSESSEE WAS CARRYING THE 18,043.960 GMS. GOLD BARS AND 1765.450 GMS GOLD ORNAMENTS FOR MANUFACTURING AND REPOLISHING JOB RESPECTIVELY ON BEHALF OF M/S CHAKARBAORTY JEWELLERS, IN WHICH HE IS A PARTNER. 2) THE ENTIRE GOLD BARS AND ORNAMENTS WERE HANDED OVER BY M/S B.B JEWELLERS AND MANUFACTURERS FOR MANUFACTURING OF ORNAMENTS AND REPOLISHING OF ORNAMENTS RESPECTIVELY, YOUR ASSESSEE HAS LONG BUSINESS RELATION WITH M/S B.B JEWELLERS AND MANUFACTURERS AND IT IS VERY COMMON PRACTICE TO CARRY THE GOLD FROM CHENNAI TO KOLKATA FOR THE MANUFACTURING OR REPAIRING PURPOSE. 3) DURING THE SCRUTINY PROCEDURE THE REPRESENTATIVE OF M/S B.B JEWELLERS AND MANUFACTURERS CLEARLY STATED THAT THEY HAVE HANDED OVER THE SAID GOLD BARS AND ORNAMENTS TO GOUTAM CHAKRABORTY AS A PARTNER OF M/S CHAKARBAORTY JEWELLERS FOR MANUFACTURING AND REPAIRING OF ORNAMENTS. THE LD A C I T MENTIONED THAT IN THE ORDER 4) M/S B.B JEWELLERS AND MANUFACTURERS ALSO STATED THAT THEY HAVE RECEIVED THE GOLD BARS FROM M/S LALITHAA JEWELLERY MART PVT. LTD, FOR MANUFACTURING OF GOLD ORNAMENTS. T HE LD. A.C.I.T MENTIONED THAT IN THE ORDER. 5) M/S LALITHAA JEWELLERY MART PVT. LTD. ALSO STATED THAT THEY HAVE PURCHASED 9KGS OF GOLD BAR S FROM M/S MOHANLAL JEWELLERS PVT. LTD. ANOTHER 10 KGS OF GOLD BARS WERE HANDED OVER TO THEM BY M/S MOHANLAL JEWELLERS PVT. LTD. FOR MANUFACTURING OF 2 I.T.A. NO. 2613/KOL/2019 ASSESSMENT YEAR: 2017-18 SHRI GOUTAM CHAKRABORTY. ORNAMENTS. THEY ALSO STATED THAT THEY HANDED OVER THE SAID GOLD TO M/S B B JEWELLERS AND MANUFACTURERS FOR MANUFACTURING OF GOLD ORNAMENTS. THE LD. A.C.I.T MENTIONED THAT IN THE ORDER 6) M/S MOHANLAL JEWELLERS PVT. LTD. ALSO STATED THAT THEY HAVE PURCHASED 10KGS. OF GOLD BARS FROM M/S SURESH JEWELLERY AND 10 KGS OF GOLD BARS FROM NOVA SCTOIA BANK THEY ALSO STATED THAT THEY SOLD 10 KGS OF SAID GOLD TO M/S LALITA JEWELLERS AND HANDED OVER REMAINING 10 KGS OF SAID GOLD FOR MANUFACTURING OF GOLD ORNAMENTS TO M/S LALITA JEWELLERS. THE LD. A.C.I.T MENTIONED THAT IN THE ORDER 7) M/S SURESH JEWELLERY ALSO MADE COMPLIANCE TO THE NOTICE OF LD. A.C.I.T WITHIN ONE DAY MENTIONING THEIR SOURCE OF PURCHASE BUT NO PROPER OPPORTUNITY WAS GIVEN TO SUBMIT THE RELEVANT DOCUMENTS 8) ALL OTHER SUPPORTING DOCUMENTS WERE PRODUCED BEFORE THE LD. A.C.I.T 9) THE LD. A. C.I.T OBJECTED ON THE POINT THAT SEARCH ACTION TOOK PLACE ON 30.06.20 16 BUT THE RECEIPT DATE ON THE BILL WAS MENTIONED AS 04.07.2016 AND RAISED QUERY ABOUT THE MATTER. IT WAS CLARIFIED THAT THE GOLD WAS PURCHASED BY M/S MOHANLAL JEWELLERS ON 30.06.2016 AND THE SAME WAS DELIVERED BY THE SEQUEL LOGISTICS ON THE SAME DAY AND BILL WAS RECEIVED BY THEM ON 04.07.2016. THE LD A.C.I.T MENTIONED THAT IN THE ORDER 10) ON THE BASIS OF THE ABOVE FACT IT IS CLEAR THAT THE ONUS OF THE SAID GOLD BARS AND ORNAMENTS DOES NOT FALL ON THE ASSESSEE 11) THE LD A.C.I.T OBJECTED REGARDING THE NOT MENTIONING OF IDENTIFICATION NO. OF G OLD BULLIONS IN THE BILL BUT IT WAS CLEARLY STATED BY ALL THE PARTIES THAT IT IS COMMON PRACTICE TO NOT MENTIONING THE IDENTIFICATION NO OF BULLIONS IN THE BILLS. 12) THE ASSESSEE MADE AN ADVANCE OF RS. 30,00,000/-FOR PURCHASE OF FLAT IN TWO INSTALMENTS, WHICH COULD NOT BE PRODUCED DUE TO LACK OF TIME. 3. THE AO COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT 6,64,71,382/- INTER ALIA MAKING AN ADDITION OF 6,41,92,737/- U/S 69A OF THE ACT AS UNDISCLOSED AND UNEXPLAINED INCOME OF THE ASSESSEE BEING GOLD AND JEWELLERY SEIZED. 3.1. AGGRIEVED, THE ASSESSEE IS IN APPEAL. THE FIRST APPELLATE AUTHORITY DELETED THE ADDITION BY GIVING VARIOUS REASONS IN HIS ORDER. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. D/R RELIED ON THE ORDER OF THE AO AND SUBMITTED THAT, THE ASSESSEE HAS NO IDENTIFICATION NUMBER FOR THE GOLD BULLION AND ORNAMENTS WERE NOT MAINTAINED IN THE BILLS AND HENCE THE EXPLANATION GIVEN BY VARIOUS PARTIES ALONG WITH THE EVIDENCES COULD NOT BE ACCEPTED. HE SUBMITTED THAT THE PRESUMPTION U/S 132(4A) OF THE ACT R.W.S. 292C OF THE ACT TAKES THE AO TO A CONCLUSION THAT THE GOLD IN QUESTION BELONGS TO THE ASSESSEE, AS IT WAS SEIZED FROM THE ASSESSEE AND AS THE ASSESSEE COULD NOT PRODUCE COGENT MATERIAL TO REBUT THE AFORESAID PRESUMPTION THE ADDITIONS HAVE BEEN MADE. HE PRAYED THAT THE ADDITION BE UPHELD. 5. THE LD. COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUBMITTED THAT ON THE DATE OF SEARCH AND SEIZURE OF THE GOLD AND ORNAMENTS, THE ASSESSEE EXPLAINED THE SOURCE OF THE SAME AND HAD SUBMITTED THAT THESE GOLD AND JEWELLERY WERE BEING BROUGHT FROM CHENNAI TO KOLKATA FOR MANUFACTURING OF ORNAMENTS AND FOR POLISHING OF SOME OF THE 3 I.T.A. NO. 2613/KOL/2019 ASSESSMENT YEAR: 2017-18 SHRI GOUTAM CHAKRABORTY. ORNAMENTS. HE SUBMITTED THAT THE INITIAL STATEMENT GIVEN BY THE ASSESSEE WAS COLLABORATED BY EACH OF THE PARTIES WHO HAD GIVEN THIS GOLD AND JEWELLERY TO THE ASSESSEE FOR MANUFACTURING OF JEWELLERY OR FOR RE-POLISHING OF JEWELLERY ETC. HE SUBMITTED THAT NOTICES U/S 131 OF THE ACT WERE ISSUED BY THE DEPARTMENT TO EACH OF THE PARTIES AND IN RESPONSE EACH OF THESE PARTIES HAD CONFIRMED THE STATEMENT GIVEN BY THE ASSESSEE. HE SUBMITTED THAT THE AO HAD NO ADVERSE MATERIAL WHATSOEVER IN HIS POSSESSION TO DISPROVE THE CLAIM/EXPLANATION OF THE ASSESSEE. HE ARGUED THAT ONLY BECAUSE IDENTIFICATION NUMBERS OF GOLD AND JEWELLERY WERE NOT MENTIONED IN THE BILLS THE AO MADE THE ADDITION. HE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT IN VIEW OF THE EVIDENCE PRODUCED BY THE ASSESSEE, THE PRESUMPTION U/S 132(4A) R.W.S. 292C OF THE ACT STANDS REBUTTED. HE PRAYED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD. 6. RIVAL CONTENTIONS HEARD. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED, WE HOLD AS FOLLOWS. 7. MR. GOUTAM CHAKRABORTY WAS ON THE JOURNEY FROM CHENNAI TO KOLKATA BY AIR AND WAS FOUND IN POSSESSION BY GOLD AND JEWELLERY AT THE DESTINATION AIRPORT TO KOLKATA. THE ASSESSEE CLAIMED THAT HE, AS A PARTNER OF HIS PARTNERSHIP FIRM, CARRIED ON THE REGULAR BASIS GOLD AND ORNAMENTS FROM M/S. B.B. JEWELLERS, CHENNAI AND OTHERS AND THAT THE ASSETS I.E. GOLD BULLION AND GOLD JEWELLERY HAVE BEEN HANDED OVER TO THE ASSESSEE BY M/S. B.B. JEWELLERS, CHENNAI AND OTHERS. HE SUBMITTED THAT ALONG WITH THE GOLD BULLION AND GOLD JEWELLERY, SUPPORTING CHALLANS WERE ALSO SEIZED BY THE REVENUE AT THE TIME OF SEARCH. 7.1. THE ORIGINAL CHALLANS SEIZED WITH THE GOLD BULLION AND GOLD JEWELLERY SUPPORTED THE CLAIM OF THE ASSESSEE. IN THE STATEMENT RECORDED U/S 131 OF THE ACT THE ASSESSEE REITERATED THIS CONTENTION. THE DDIT (INV.), KOLKATA AND INVESTIGATION WING AT CHENNAI CONDUCTED VERIFICATION WITH M/S. B.B. JEWELLERS AND M/S LALITHAA JEWELLERY MART PVT. LTD. IN OTHER WORDS, THE CLAIM OF THE ASSESSEE HAS BEEN SUPPORTED AND PROVED BY THE INDEPENDENT VERIFICATION DONE BY THE INVESTIGATION WING WITH THE THIRD PARTY JEWELLERS IN CHENNAI. LACK OF DISTINCTIVE IDENTIFICATION NUMBERS OF THE GOLD BULLION ON THE CHALLANS SEIZED, ALONG WITH THE GOLD FROM THE ASSESSEE, WAS THE GROUNDS ON WHICH THE AO MADE 4 I.T.A. NO. 2613/KOL/2019 ASSESSMENT YEAR: 2017-18 SHRI GOUTAM CHAKRABORTY. THE ADDITION. IN OUR VIEW, THE LD. CIT(A) HAS RIGHTLY STATED THAT THIS CANNOT BE A BASIS OF MAKING THIS ADDITION. THE LD. CIT(A) AT PAGE-4 TO 6 HELD AS FOLLOWS: THE AO HAS POINTED OUT LACK OF MENTION OF DISTINCTIVE NOS. IN GOLD BULLION. OMISSION OF THE SAID NO. FROM VARIOUS OR SOME CONNECTED DOCUMENTS IN THE RECORDS OF THE RELEVANT PARTIES FORMING THE ASSET MOVEMENT HAS BEEN DISCUSSED AT LENGTH IN THE ASSTT. ORDER. I GET THE IMPRESSION THAT THIS PART OF DOCUMENTATION SKIPPING THE DISTINCTIVE NO. HAS WEIGHED HEAVILY ON THE AO'S MIND. IN OTHER WORDS, THE OMISSION OF SAID NO. FROM CHALLAN, FOUND IN POSSESSION OF THE APPELLANT WHEN THE ASSET WAS FOUND IN HIS POSSESSION AND SEIZED, HAS BEEN TREATED AS INCRIMINATING AGAINST THE APPELLANT. ONCE IT IS USED AGAINST THE APPELLANT, HE HAS PROCEEDED TO TREAT THE ASSET AS ONE OF THE APPELLANT EVEN THOUGH B.B. JEWELLERS HAVE CONFIRMED IN ENQUIRIES THAT THE CHALLAN WAS ISSUED BY IT AND THE GOLD ASSET WAS GIVEN TO THE APPELLANT FOR JOB WORK AND THAT THE APPELLANT WAS REGULARLY DOING JOB WORK FOR THEM. IRRESPECTIVE OF THE LEGALITY OR OTHERWISE OF OMISSION TO MENTION DISTINCTIVE NOS. IN CHALLAN, I FIND THE AO'S ACTION ABSURD AS IT AMOUNTS TO THE AO'S DECLARATION THAT THE ASSET IS OWNED BY THE APPELLANT EVEN WHEN EVIDENCES DO NOT SUPPORT SUCH INFERENCE OR DECISION. IN THE END THE ASSET DID NOT BELONG TO THE APPELLANT. HE (APPELLANT) ONLY HAD THE PHYSICAL POSSESSION FOR PROCESSING PURPOSES AND OTHER PARTY HAD TO BE RETURNED BACK THE SAID ASSET. WHAT BELONGED TO THE APPELLANT IS ONLY THE REMUNERATION THAT WOULD ACCRUE TO HIM ON SUCCESSFUL COMPLETION OF PROCESSING OF THE SAID BULLION/JEWELLERY. THE AO HAS APPARENTLY APPLIED SECTION 292C(L)(I) OF THE LT. ACT, WHICH RAISES THE PRESUMPTION THAT THE ASSET BELONGS TO THE PERSON, IN POSSESSION OF WHICH IT IS FOUND IN THE COURSE OF SEARCH. BUT HE OMITS TO REFER TO CLAUSE (II) OF THE SAID SECTION 292C(I), WHICH RAISES THE OTHER PRESUMPTION THAT THE CONTENT OF THE DOCUMENT SEIZED HAS TO BE PRESUMED CORRECT. FURTHER, THE SAID SECTION 292C OR 132(4A) ONLY RAISES THE LEGAL PRESUMPTION, WHICH IS OPEN TO REBUTTAL IN THE FACTS AND CIRCUMSTANCES OF A CASE. IN THE PRESENT CASE, THE AO HAS NOT DISPROVED THE APPELLANT'S CLAIM (RIGHT FROM THE BEGINNING TILL END OF THE PROCEEDINGS WITH THE AO) THAT THE SEIZED ASSET BELONGED TO B.B. JEWELLERS, AND SUBSEQUENT ENQUIRIES CONDUCTED BY VARIOUS OFFICERS HAS SUPPORTED THE APPELLANT'S CASE THAT THE ASSETS BELONG TO B.B. JEWELLERS. IN VIEW OF THE ABOVE, THE CHALLAN AND THE AO'S FAILURE TO COLLECT ANY MATERIAL AGAINST THE APPELLANT, THE ABOVE PRESUMPTION OF LAW AS TO THE APPELLANT'S TREATMENT AS OWNER OF THE ASSET COMPLETELY FALLS. MOREOVER, CLAUSE (II) OF SECTION 292C(1) RAISES THE PRESUMPTION ABOUT THE CORRECTNESS OF ENTRIES IN THE DOCUMENTS SEIZED. THIS IS ALSO A PRESUMPTION UNDER 292C(I) AND HAS TO BE GIVEN THE SAME PLACE AS THE PRESUMPTION UNDER CLAUSE (I) SECTION 292C(1). THE AO'S ACTION TO RELY SOLELY ON THE FIRST PRESUMPTION AND COMPLETELY IGNORE THE 2ND PRESUMPTION IS ARBITRARY. IN FACT, THE 2ND PRESUMPTION AS TO THE CORRECTNESS OF THE CONTENT OF THE DOCUMENTS SEIZED, DEMOLISHES PRESUMPTION RELIED UPON BY THE AO. THUS, THOUGH THE AO HAS APPLIED SECTION 292C(1), I HOLD THAT HE HAS INCORRECTLY APPLIED THE SAME. IN OTHER WORDS, SECTION 292C(1) DOES NOT ENTITLE THE AO TO TREAT THE SEIZED ASSET AS THAT OF THE APPELLANT IN THE FACTS AND CIRCUMSTANCES OF THE CASE. HIS ACTION, THEREFORE, CANNOT BE UPHELD. THE ASSET CANNOT BE TERMED AS UNDISCLOSED IN THE HANDS OF THE APPELLANT. THIS CAN BE FOUND, AS A RESULT OF ENQUIRY, AS AN UNEXPLAINED ASSET IN THE HAND OF B.B. JEWELLERS OR OTHERS CONSTITUTING THE MOVEMENT OF THE SAID ASSET FROM SOME DISTANT SUPPLIERS TO THE APPELLANT. BUT THAT IS A DIFFERENT QUESTION TO BE FINALLY HANDLED AND ANSWERED BY SOME OTHER AUTHORITIES IN CHENNAI HAVING THE JURISDICTION IN THE MATTER ON B.B. JEWELLERS, LALIT JEWELLERY, MOHANLAL JEWELLERS AND OTHERS. AS. FAR AS THE APPELLANT IS CONCERNED, HE HAS DISCHARGED HIS ONUS/BURDEN BY PRESENTING CHALLAN AND DEPOSING THE ABOVE FACT U/S.131 AND BY HAVING OTHER PARTIES SUPPORT HIS VERSION OF CLAIM ON THE ASSET. 10. WHILE ON SEIZED ASSETS, MY ATTENTION GOES TO SECTION 132(L)(III) & [READ WITH SECTION 132(1)(C)] AUTHORISING SEIZURE. BY WAY OF PROVISO TO CLAUSE (III) OF SECTION 132(1), STOCK-IN-TRADE OF THE BUSINESS HAS BEEN PRECLUDED FROM SEIZURE BY THE AUTHORISED OFFICER, WHO SHALL MAKE A NOTE OF SUCH STOCK-IN-TRADE OF THE BUSINESS. I WONDER WHETHER THE SEIZURE ITSELF WAS LEGAL, AS THE ASSET SEIZED HAS BEEN CLAIMED AS STOCK-IN-TRADE OF THE BUSINESS. 8. THESE FACTUAL FINDINGS WERE NOT CONTROVERTED BY THE LD. D/R. WE AGREE WITH THESE FINDINGS. HENCE WE UPHOLD THE SAME AND DISMISS THIS GROUND OF THE REVENUE. 5 I.T.A. NO. 2613/KOL/2019 ASSESSMENT YEAR: 2017-18 SHRI GOUTAM CHAKRABORTY. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. KOLKATA, THE 23 RD JUNE, 2021. SD/- SD/- [ABY T. VARKEY] [J. SUDHAKAR REDDY] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23.06.2021 BIDHAN (P.S.) COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-44, KOLKATA. 2. SHRI GOUTAM CHAKRABORTY, 6G/1A/5, GOPAL CHANDRA BOSE LANE, SINTHEE, KOLKATA-700 050. 3. CIT(A)- 13 , KOLKATA (SENT THROUGH MAIL) 4. CIT- 5. CIT(DR), KOLKATA BENCHES, KOLKATA. (SENT THROUGH MAIL) TRUE COPY BY ORDER ASSISTANT REGISTRAR/DDO ITAT, KOLKATA BENCHES