Shri Jayanti N.Chokshi, Umreth V. The Income tax Officer, Ward-3, Anand

ITA 2628/AHD/2007

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8796 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-03-2010
• Assessment Year: 2001-2002
• Appeal Filed On: 13-06-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Keywords: Unexplained investment; Initiation of penalty proceedings
• Section: 271(1)(c); 244A; 133A; 234B; 143(2); 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'B' (BEFORE S/SHRI MAHAVIR SINGH,JM AND A N PAHUJA,AM) ITA NO.2628/AHD/2007 (ASSESSMENT YEAR:- 2001-02) SHRI JAYANTI N CHOKSHI PROP. AMI JEWELLERS, CHOKSHI BAJAR, UMRETH. [PAN:AAAHV4864Q] V/S THE INCOME-TAX OFFICER, WARD-3, ANAND [APPELLANT] [RESPONDENT] ASSESSEE BY :- SHRI MILIN MEHTA ,AR REVENUE BY:- SMT. NEETA SHAH, DR O R D E R A N PAHUJA : THIS APPEAL BY THE ASSESSEE AGAINST AN ORDER DATED 26-03-2007 OF THE LD. CIT (APPEALS)-IV, BARODA ,RAI SES THE FOLLOWING GROUNDS: 1 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE AO OF RS .8,48,800/-, BY DENYING THE CREDIT OF STOCK DECLARED UNDER THE VOLU NTARY DISCLOSURE OF INCOME SCHEME, 1997. 2 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ADDITION MADE BY THE AO OF RS .56,726/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN SILVER. 3 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN CHARGING INTEREST U/S 234B AND 234C OF THE ACT. 4 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN WITHDRAWI NG INTEREST U/S 244A OF THE ACT. 5 THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE AO IN INITIATIN G PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. ITA NO.2628/AHD/2007 2 6 YOUR APPELLANT CRAVES A RIGHT TO ADD TO OR AMEND, ALTER, SUBSTITUTE, DELETE OR WITHDRAW ALL OR ANY OF THE GROUNDS OF APP EAL. 2 AT THE OUTSET, THE LEARNED COUNSEL FOR THE ASSES SEE DID NOT PRESS GROUND NO.2 IN THE APPEAL. ACCORDINGLY, T HE SAID GROUND IS DISMISSED. 3 ADVERTING NOW TO GROUND NO.1, FACTS, IN BRIEF, AS PER RELEVANT ORDERS ARE THAT RETURN DECLARING INCOME OF RS.1,62 ,790/- FILED ON 25.10.2001 BY THE ASSESSEE, TRADING IN GOLD AND SIL VER ORNAMENTS WAS TAKEN UP FOR SCRUTINY WITH THE ISSUE OF NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 [HEREINAFTER REFERRED TO AS TH E ACT] ON 13.8.2002.IN THIS CASE A SURVEY U/S. 133A OF THE AC T WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 20.10.2 000, WHEN GOLD ORNAMENTS-4917.815GMS.,SILVERORNAMENTS-84.038 KGS A ND PRECIOUS STONES RS. 13,000 WERE FOUND AND INVENTORISED. IN HIS STATEMENTS, THE ASSESSEE ACCEPTED UNEXPLAINED INVESTMENT IN - (I) EXCESS STOCK OF GOLD ORNAMENTS WEIGHING 1167.665 GMS. ... RS. 4, 49,551 (II) EXCESS STOCK OF SILVER ORNAMENTS WEIGHING 3.838 KGS. .. RS. 27,826 (III) EXCESS STOCK OF PRECIOUS STONES. .. RS. 13,000 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE ACCEPTED THAT THE ENTRIES IN THE INWARD-OUTWARD ST OCK REGISTER[X-10] FOR THE PERIOD 23.6.2000 TO12.10.2000 DID NOT MATCH WITH THE ENTRIES IN THE BOOKS OF ACCOUNTS. ACCORDINGLY, THE ASSESSI NG OFFICER[AO IN SHORT] WORKED OUT THE PEAK STOCK OF 3468.570 GMS., BASED ON THE HIGHEST STOCK DIFFERENCE BETWEEN ACTUAL STOCK AND I NWARD OUTWARD STOCK REGISTER FOR THE PERIOD 23.6.2000 TO12.10.200 0. AFTER ALLOWING CREDIT FOR STOCK OF GOLD ORNAMENTS WEIGHING 327.150 GMS BELONGING TO OTHER PERSONS, THE DIFFERENCE WORKED OUT TO 3141 .420 GMS. THE ASSESSEE HAVING ALREADY OFFERED TO TAX EXCESS STOCK OF 1167.665 ITA NO.2628/AHD/2007 3 GMS.[RS.4,49,551] DURING THE SURVEY , ADOPTING TH E PRICE OF GOLD @ RS.413.30 PER GM. ON THE BASIS OF PURCHASE BILLS OF GOLD ORNAMENTS, THE AO MADE AN ADDITION OF RS.8,48,800/-[12,98,351- 4,49,551] TO THE TOTAL INCOME OF THE ASSESSEE U/S.69 OF THE ACT. INT ER ALIA, THE AO REJECTED THE CONTENTIONS OF THE ASSESSEE, SEEKING C REDIT FOR 1128.500GMS OF STOCK DECLARED UNDER VDIS ON THE GRO UND THAT THE ASSESSEE DID NOT FURNISH THE REQUISITE CERTIFICATE ISSUED BY THE CIT IN TERMS OF THE VDIS. 4 ON APPEAL, THE ASSESSEE REITERATED THEIR CONTENTI ONS SEEKING CREDIT FOR STOCK DECLARED UNDER VDIS, 1997. THE ASS ESSEE ALSO FURNISHED THE REQUISITE VDIS CERTIFICATE FROM THE C OMMISSIONER OF INCOME-TAX. HOWEVER,THE LD. CIT(A) CONFIRMED THE AD DITION OF RS.8,48,800/- HOLDING AS UNDER:- 2.4. IN APPEAL, THE APPELLANT HAS NOW FURNISHED THE VDIS CERTIFICATE FROM THE COMMISSIONER OF INCOME TAX. THE AUTHORIZED REPR ESENTATIVE THEREFORE, SOUGHT CREDIT OF STOCK DECLARED UNDER VO LUNTARY DISCLOSURE OF INCOME SCHEME, 1997. 2.5. I HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AUTHORIZED REPRESENTATIVE OF THE APPELLANT AND THE ASSESSMENT ORDER. THE VDIS SCHEME ENVISAGED THAT WHATEVER HAD BEEN DECLARED BY THE ASSESSEE HAS TO BE BROUGHT INTO THE BOOKS OF ACCOUNTS. THE DECLA RATION WAS MADE BY THE APPELLANT ON 20.12.1997 IN THE FORM OF JEWELLERY WO RTH RS.4,77,653/-. THE APPELLANT HAD PAID THE TAX ON THE SAID AMOUNT AND H AS INCLUDED THIS AMOUNT IN HIS BOOKS OF ACCOUNTS FOR THE PERIOD ENDI NG 31.3.1998. IN FACT, THE SPECIFIC ENTRY HAS BEEN MADE ON 26.12.1997 AS P ER THE DETAILS FILED BY THE APPELLANT. ONCE, THE AMOUNT HAS BEEN INCLUDED I N THE STOCK OF THE ASSESSEE FOR THE PERIOD ENDING 31-3-1998, IT WOULD FORM THE OPENING STOCK FOR THE FY 1999-2000 AND ALSO BE CARRIED FORWARD TO THE FY 2000-01, I.E. THE YEAR UNDER CONSIDERATION. GOLD IS A FUNGIBLE IT EM AND CANNOT BE SEGREGATED FROM THE STOCK OF THE JEWELLERY ONCE IT FORMS PART OF THE CLOSING STOCK. SINCE IT IS ALREADY INCLUDED IN THE STOCK FO UND IN THE BOOKS OF ACCOUNTS, GIVING THE APPELLANT CREDIT FOR THE STOCK DECLARED BY HIM UNDER VDIS SCHEME WOULD AMOUNT TO DOUBLE CREDIT. IN VIEW OF THE FACT THAT THE ASSESSING OFFICER HAS ALREADY GIVEN CREDIT FOR THE STOCK AS PER THE BOOKS OF ACCOUNTS, THERE IS NO MERIT IN THE APPELLANT'S SUBM ISSION THAT FURTHER CREDIT SHOULD BE GIVEN OF THE STOCK DECLARED UNDER THE VDI S SCHEME. THEREFORE, ADDITION OF RS.8,48,800/- MADE BY THE ASSESSING OFF ICER IS CONFIRMED . ITA NO.2628/AHD/2007 4 5. THE ASSESSEE IS NOW IN APPEAL BEFORE US AGA INST THE AFORESAID FINDINGS OF THE LD. CIT(A). THE LD. AR WHILE REFER RING TO PAGE 108 AND 34 OF THE PAPERBOOK CONTENDED THAT THOUGH THE NECESSARY ENTRIES IN RESPECT OF STOCK DECLARED UNDER VDIS,19 97 WERE INCORPORATED IN THE FINANCIAL BOOKS OF ACCOUNTS, C ORRESPONDING STOCK WAS NOT ADJUSTED. ON THE OTHER HAND, WHILE SUPPORTI NG THE IMPUGNED ORDER THE LD. DR VEHMENTLY ARGUED THAT THE CREDIT FOR STOCK DECLARED IN THE BOOKS ,INCLUDING THE STOCK DECLARED UNDER VDIS, HAVING ALREADY BEEN GIVEN, NO FURTHER RELIEF IS AD MISSIBLE TO THE ASSESSEE. 6 WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE. UNDISPUTEDLY, THE ENTRIES IN THE INWARD-OUTWARD STOCK REGISTER[X-10] OF THE GOLD/GOLD ORNAMENTS FOR THE PERIOD 23.6.2000 TO12.10.2000 DID NOT MATCH WITH THE ENTRI ES IN THE REGULAR BOOKS OF ACCOUNTS. ACCORDINGLY, THE AO WORKED OU T THE PEAK STOCK OF 3468.570 GMS AS PER THE AFORESAID REGISTER X-10 . THE WORKING OF THIS PEAK STOCK IS NOT IN DISPUTE. AGAINST THIS PEA K STOCK , THE ASSESSEE SOUGHT CREDIT FOR STOCK DECLARED UNDER VDI S-1128.500 GMS, STOCK ALREADY DISCLOSED DURING SURVEY-1167.665 GMS AND STOCK BELONGING TO OTHERS-327.160 GMS. THE AO ,HOWEVER, D ID NOT ALLOW CREDIT FOR STOCK DECLARED UNDER VDIS FOR WANT OF R EQUISITE CERTIFICATE WHILE THE LD. CIT(A) CONCLUDED THAT STOCK DECLARED VDIS HAVING ALREADY BEEN ACCOUNTED FOR IN THE BOOKS AS PER ENTR Y MADE ON 26.12.1997, NO FURTHER CREDIT CAN BE ALLOWED . THE LD. AR CONTENDED BEFORE US THAT THOUGH RELEVANT ENTRIES WERE MADE IN FINANCIAL BOOKS, CORRESPONDING STOCK WAS NOT ADJUSTED IN THE STOCK R ECORDS. SINCE THIS NEW PLEA HAS BEEN MADE BEFORE US FOR THE FIRS T TIME WHILE THE RELEVANT STOCK RECORDS ARE NOT BEFORE US, WE HAVE N O ALTERNATIVE BUT TO RESTORE THE MATTER TO THE FILE OF THE AO WITH T HE DIRECTIONS TO VERIFY THIS FACTUAL ASPECT FROM THE RELEVANT STOCK RECORDS. IN THE EVENT ,STOCK DECLARED UNDER VDIS-1997 IS NOT FOUND TO BE ENTERED IN ITA NO.2628/AHD/2007 5 THE RELEVANT STOCK RECORDS FOR THE PERIOD 1997-98 ONWARDS, THE AO SHALL ALLOW NECESSARY CREDIT AND RECOMPUTE THE ADDI TION ACCORDINGLY. IF THE STOCK DECLARED UNDER VDIS IS ALREADY ACCOUNT ED FOR IN THE STOCK RECORDS, NO FURTHER CREDIT SHALL BE ALLOWED A ND ADDITION OF RS. 8,48,000 CONFIRMED BY THE LD. CIT(A) SHALL BE SUST AINED. SUBJECT TO THESE OBSERVATIONS, GROUND NO.1 IN THE APPEAL IS DI SPOSED OF. 7 AS REGARDS GROUND NO.3 RELATING TO LEVY OF INTER EST U/S 234B AND 234C OF THE ACT AND GROUND NO.4 RELATING T O WITHDRAWAL OF INTEREST U/S 244A OF THE ACT , THE LD. AR ON BEHALF OF THE ASSESSEE ADMITTED THAT THESE ARE CONSEQUENTIAL IN NATURE. THE LEVY O F INTEREST U/S 234B & 234C OF THE ACT BEING MANDATORY [COMMISSIONER OF INCOME TAX . VS ANJUM M. H. GHASWALA AND OTHERS,252 ITR 1(SC), AFFIRMED BY HON' BLE APEX COURT IN THE CASE OF CIT V. HINDUSTAN BULK CARRIERS [2003] 259 ITR 449 (SC) AND IN THE CASE OF CIT V. SANT RAM MANGAT RAM JEWELLERS [2003] 264 ITR 564 (SC) ], THESE GROUNDS ARES DISMISSED. HOWEVER, THE AO MAY ALLOW CONSEQUEN TIAL RELIEF ,IF ANY, WHILE GIVING EFFECT TO THIS ORDER. 8. GROUND NO.5 PERTAINS TO INITIATION OF PENALTY PROCEEDINGS U/S 271(1)(C) OF THE ACT. SINCE NO APPEAL LIES AGAINST MERE INITIATI ON OF PENALTY PROCEEDINGS NOR ANY SUBMISSIONS HAVING BEEN MADE BEFORE US , THIS G ROUND IS DISMISSED. 9. NO ADDITIONAL GROUND HAVING BEEN RAISED IN TER MS OF THE RESIDUARY GROUND NO. 6 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS ALSO D ISMISSED. ITA NO.2628/AHD/2007 6 10 IN THE RESULT, APPEAL IS PARTLY ALLOWED, BUT F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY ON 19-03-2 010 SD/- SD/- (MAHAVIR SINGH) JUDICIAL MEMBER (A N PAHUJA) ACCOUNTANT MEMBER DATE : 19-03-2010 COPY OF THE ORDER FORWARDED TO : 1. SHRI JAYANTI N CHOKSHI, PROP. AMI JEWELLERS, CHO KSHI BAJAR, UMRETH. 2. THE ITO, WARD-3, ANAND 3. CIT CONCERNED 4. CIT(A)-IV, BARODA 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD