DCIT 14(3), MUMBAI V. SUBHASH GENESHMAL JAIN, MUMBAI

ITA 2655/MUM/2009

• Counselvise Citation: 265519914 RSA 2009
• Duration Of Justice: 2 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 01-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: DEVENDRA A MEHTA
• Keywords: Search and seizure
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I, MUMBAI. BEFORE B.R. MITTAL, JUDICIAL MEMBER AND SHRI P.M. JAGTAP, ACCOUNTANT MEMBER 1. I.T.A. NO. 2655/MUM/2009. ASSESSMENT YEAR : 2006-07 2. ITA NO. 2656/MUM/2009 ASSESSMENT YEAR : 2006-07. 3. ITA NO. 2730/MUM/2009 ASSESSMENT YEAR : 2006-07. DY. COMMISSIONER OF INCOME-TAX, 14(3), MUMBAI. : APPELLANT. VS. 1. SHRI SUBHASH GANESHMAL JAIN, : C/O POOJA JEWELLERS, : 90, L.K. MARKET, ZAVERI BAAQR, : MUMBAI. : PAN AHFPJ7346G : RESPONDENTS. 2. SHRI PRAVEEN BABULAL TRIVEDI, : MUMBAI. : 3. M/S POOJA JEWELLERS, : MUMBAI. : PAN AABFP1418L : APPELLANT BY : SHRI C.G.K. NAIR. RESPONDENT BY: SHRI DEVENDRA A. MEHTA. DATE OF HEARING : 01-11-2011. DATE OF PRONOUNCEMENT : 04-11-2011 O R D E R. PER P.M. JAGTAP, A.M. : THESE THREE APPEALS ARE PREFERRED BY THE REVENUE A GAINST THREE SEPARATE ORDERS PASSED BY THE LEARNED CIT(APPEALS)-XV, MUMBA I IN THE CASE OF THREE ASSESSEES. AS THE COMMON ISSUE INVOLVED IN THESE AP PEALS RELATING TO ADDITION MADE 2 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. ON ACCOUNT OF UNEXPLAINED JEWELLERY IS INTER-LINKED AND INTER-DEPENDENT, THE SAME HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH ESE APPEALS ARE AS FOLLOWS: SHRI PRAVEEN BABULAL TRIVEDI AND SHRI SUBHASH GANE SHMAL JAIN, TWO ASSESSEES IN THE PRESENT CASE ARE EMPLOYEES OF THE THIRD ASSESSEE M/S POOJA JEWELLERS. THEY WERE SEARCHED ON 29-06-2005 AT HYDE RABAD IN THE PREMISES OF M/S SANJAY JEWELLERS AND FOUND TO BE IN POSSESSION OF G OLD ORNAMENTS WEIGHING 8477.200 GRAMS. THEY EXPLAINED THE SAID GOLD ORNAME NTS AS BELONGING TO THEIR EMPLOYER M/S POOJA JEWELLERS. IT WAS ALSO EXPLAINED BY THEM THAT THE SAID GOLD ORNAMENTS WERE FORMING PART OF STOCK IN TRADE OF M/ S POOJA JEWELLERS AND THE SAME WERE ISSUED TO THEM BY M/S POOJA JEWELLERS UNDER GO LD ISSUE VOUCHER NOS. 50, 51 AND 52 DATED 26-06-2005. A SURVEY U/S 133A WAS CARR IED OUT AT THE PREMISES OF M/S POOJA JEWELLERS AND IN THE STATEMENT RECORDED D URING THE COURSE OF SURVEY, PARTNER OF M/S POOJA JEWELLERS ACCEPTED THE OWNERSH IP OF GOLD ORNAMENTS FOUND IN THE POSSESSION OF SHRI PRAVEEN BABULAL TRIVEDI AND SHRI SUBHASH GANESHMAL JAIN. HE ALSO CONFIRMED THAT THE SAID JEWELLERY REPRESENT ED BUSINESS STOCK OF M/S POOJA JEWELLERS AND THE SAME WERE ISSUED TO SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI, SALESMAN OF THE FIRM WHO WERE ENGAGED IN MARKETING OF GOLD ORNAMENTS, COLLECTION FROM DEBTORS ETC. THIS EXPLANATION OFFERED BY SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI AND RATIFIED BY THEIR EMPLOYER M/S POOJA J EWELLERS WAS NOT FOUND ACCEPTABLE BY THE AO MAINLY FOR THE FOLLOWING REASO NS GIVEN IN THE ASSESSMENT ORDER : A) ALTHOUGH VOUCHER NO. 50, 51 AND 52 WERE ISSUED O N 26.06.2005, THEY WERE ENTERED INTO STOCK REGISTER AT A LATER DATE. W HILE VOUCHER NO. 50 AND 51 WAS ENTERED ON 26.06.2005, VOUCHER NO. 52 WA S ENTERED ON 3 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. 27.06.2005. IT WAS ENTERED SUBSEQUENTLY TO MAKE UP THE DIFFERENCE DETECTED AT THE TIME OF SEARCH. B) THE ASSESSEE ADMITTED EXISTENCE OF MORE THAN ONE GOLD ISSUE VOUCHER BOOK AND IT HAS MISUSED THE SAME TO ITS ADVANTAGE I N RESPECT OF GOLD JEWELLERY WHICH IS UNACCOUNTED AND OUT OF BOOKS. SI MILAR MECHANISM WAS ADOPTED BY ASSESSEE WHILE ISSUING GOLD JEWELLER Y AND ISSUE VOUCHERS TO MR. SUBHASH JAIN AND MR. PRAVEEN TRIVED I. C) THE CONTENTION OF SHRI INDERAJEET SURANA, PARTNE R OF THE ASSESSEE FIRM THAT DUE TO MIX-UP, VOUCHER NO. 51 INADVERTENTLY RE MAINED WITH HIM IS AN AFTER THOUGHT TO COVER UP JEWELLERY FOUND AND SE IZED AT HYDERABAD WITH HIS SALESMEN, PARTICULARLY WHEN IN HIS LINE OF BUSINESS, CARRYING OF SUCH EVIDENCE IS ESSENTIAL. D) THE ISSUANCE OF GOLD ISSUE VOUCHER IN DUPLICATE AND ITS MANUAL NUMBERING IS AGAINST THE VAT NORMS, WHICH PROVIDES ISSUANCE OF SUCH VOUCHERS IN TRIPLICATE WITH MECHANICAL NUMBERI NG. E) DUE TO CONTRADICTORY AND INCONSISTENT STATEMENTS GIVEN BY THE ASSESSEE, THE JEWELLERY FOUND IN POSSESSION OF SHRI PRAVEEN TRIVEDI AND SHRI SUBHASH JAIN REMAINED UNEXPLAINED AND UN-E STABLISHED. THE ASSESSEE COULD NOT ESTABLISH BYOND DOUBT HAT GOLD S EIZED IN THE HANDS OF MR. PRAVEEN TRIVEDI AND MR. SUBHASH JAIN IS THE SAME AS ISSUED UNDER GOLD ISSUE VOUCHER NO. 50, 51 AND 52 DT. 26.0 6.2005. F) THE JEWELLERY WEIGHING 8417.200 GMS., VALUED AT RS.41,53,820/- IS ASSESSED IN THE HANDS OF THE ASSESSEE ON PROTECTIVE BASIS. FOR THE ABOVE REASONS, THE AO TREATED THE GOLD ORNA MENTS FOUND AND SEIZED FROM THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEE N TRIVEDI AS UNEXPLAINED AND ADDITION OF RS.23,05,600/- AND RS.18,48,220/- WAS M ADE BY HIM TO THEIR TOTAL INCOME ON SUBSTANTIVE BASIS. THE SAID AMOUNTS AGGRE GATING TO RS.41,53,820/- WAS ALSO ADDED BY HIM IN THE HANDS OF M/S POOJA JEWELLE RS ON PROTECTIVE BASIS. 3. THE ADDITION MADE BY THE AO ON ACCOUNT OF UNEXPL AINED GOLD ORNAMENTS ON SUBSTANTIVE BASIS AS WELL AS ON PROTECTIVE BASIS WA S CHALLENGED BY ALL THE THREE ASSESSEES IN THE APPEALS FILED BEFORE THE LEARNED C IT(APPEALS). DURING THE COURSE 4 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(APP EALS), ELABORATE SUBMISSIONS WERE MADE ON BEHALF OF THE ASSESSEE OFFERING THEIR EXPLANATION TO MEET EACH AND EVERY OBJECTION RAISED BY THE AO. 4. AFTER NARRATING THE SAID SUBMISSIONS IN DETAIL I N HIS IMPUGNED ORDER, THE LEARNED CIT(APPEALS) FOUND THE FOLLOWING FACTS EMER GING FROM THE EVIDENCE PLACED ON RECORD: A) SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI, BOTH WERE EMPLOYEES OF THE APPELLANT. THEY WERE ITS SALESMAN, ENGAGED IN M ARKETING OF GOLD ORNAMENTS, COLLECTION FROM DEBTORS AND MONITORING G OLD ORNAMENTS BEING MANUFACTURED ON LABOUR JOB BASIS. B) GOLD ISSUE VOUCHERS NO. 50, 51 AND 52 DATED 26.0 6.2005 WERE ISSUED BY THE APPELLANT AND WERE SIGNED BY ITS PARTNER, SH RI INDRAJEET SURANA. C) THE GOLD ISSUED ON APPROVAL AND / OR SOLD BY SHR I SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI, UNDER APPROVAL MEMO NO. 27, 2 8 AND 29, THE COPIES OF WHICH WERE FOUND AND SEIZED BY THE INCOME -TAX DEPARTMENT, HYDERABAD EVIDENTLY BELONGED TO M/S. PO ONA JEWELLERS. D) GOLD ISSUE VOUCHER NO. 50 DATED 26.06.2005 IN TH E NAME OF SHRI INDRAJEET SURANA AND GOLD ISSUE VOUCHER NO. 52 DATE D 26.06.2005 IN THE NAME OF SHRI PRAVEEN TRIVEDI, SHOWING GOLD ORN AMENTS OF 4,335.100 GRAMS AND 1,480.960 GRAMS RESPECTIVELY, W ERE FOUND IN THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEEN TR IVEDI DURING SEARCH AND SEIZURE PROCEEDINGS AT HYDERABAD. E) THE GOLD ISSUE VOUCHER NO. 51 DT. 26.06.2005 SHO WING ISSUE OF GOLD ORNAMENTS WEIGHING 2,810.500 GRAMS WAS ISSUED IN FA VOUR OF SHRI SUBHASH JAIN. F) SHRI INDRAJEET SURANA AND SHRI PRAVEEN TRIVEDI L EFT FOR THEIR ANDHRA TOUR ON 26.06.2005 BY NAGARCOIL EXPRESS AT 12.15 P. M. THEREFORE, SHRI INDRAJEET SURANA WAS NOT PRESENT IN BOMBAY AT 6.00 P.M. ON 26.06.2005 AND SUBSEQUENTLY TILL 30.06.2005. G) WHILE GOLD ISSUE VOUCHERS NO. 50 AND 51 WERE ENT ERED IN THE STOCK REGISTER ON 26.06.2005 GOLD ISSUE VOUCHER NO. 52 DA TED 26.06.2005 5 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. WAS ENTERED ON 27.06.2005 I.E. MUCH BEFORE THE DATE OF SEARCH I.E. 29.06.2005 AND DATE OF SURVEY I.E. 30.06.2005. HE THEN PROCEEDED TO DISCUSS THE ELABORATE SUBMISSI ON MADE BY THE ASSESSEE IN ORDER TO SUPPORT AND SUBSTANTIATE THEIR EXPLANATION IN RESPECT OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SEARCH AND FINALLY SUMMA RIZED HIS FINDINGS/OBSERVATIONS IN PARAGRAPH NO. 3.17 OF HIS IMPUGNED ORDER AS FOLL OWS: A) THE JEWELLERY FOUND IN THE POSSESSION OF SHRI SU BHASH JAIN AND SHRI PRAVEEN TRIVEDI, REPRESENTED BUSINESS STOCK OF M/S POOJA JEWELLERS. B) THE IMPUGNED JEWELLERY, WHICH FORMED PART OF JEW ELLERY ISSUED UNDER GOLD ISSUE VOUCHER NO. 50, 51 AND 52 DT. 26.06.2005 WAS DULY RECORDED IN ITS BOOKS OF ACCOUNTS. C) THE DISCREPANCIES POINTED OUT BY THE ASSESSING O FFICER IN THE STOCK REGISTER AND GOLD ISSUE VOUCHER NO. 52 AND HEAVILY RELIED UPON FOR THE PURPOSE OF MAKING HUGE ADDITION, WERE GENUINE CLERI CAL MISTAKES, WITH NO MALAFIDE INTENTION. IF THE APPELLANT HAD AN Y INTENTION OF MANIPULATION OF STOCK RECORDS AND BOOKS OF ACCOUNTS , IT COULD HAVE VERY WELL ENTERED THE VOUCHER NO. 52 ON 26.06.2005 AND GIVEN NEXT VOUCHER NUMBER TO THE GOLD ISSUED TO SHRI TAPAN MAZ I. D) THE DISCREPANCIES WITH REGARDS TO HE TIMING OF D EPARTURE POINTED OUT BY THE ASSESSING OFFICER IN THE STATEMENTS OF THE E MPLOYEES AND SHRI TARACHAND JAIN AND HEAVILY RELIED UPON FOR THE PURP OSE OF MAKING HUGE ADDITION, WERE DUE TO CONFUSION AND STRESS CAU SED BY SEARCH AND WERE EFFECTIVELY REBUTTED BY THE APPELLANT BY PRODU CING EVIDENCE LIKE TRAVELLING VOUCHERS, PNR NO. OF THE TRAIN, GOLD CAR RIED BY THEM, GOLD ISSUE VOUCHERS DULY RECORDED IN THE STOCK REGISTER PRIOR TO THE DATE OF SEARCH AND SURVEY ETC. E) THE STATEMENTS OF SHRI SUBHASH JAIN, SHRI PRAVE EN TRIVEDI, SHRI TARACHAND JAIN AND SHRI INDRAJEET SURANA RECORDED D URING SEARCH , POST SUCH ENQUIRIES AND ASSESSMENT PROCEEDINGS SUBS TANTIALLY MATCHED WITH THE FACTS BROUGHT ON RECORD. F) THE ASSESSING OFFICER FAILED TO BRING ANY EVIDEN CE ON RECORD TO SHOW THAT THE JEWELLERY FOUND AND SEIZED IN THE HANDS OF SHRI SUBHASH JAIN 6 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. AND SHRI PRAVEEN TRIVEDI WERE UNACCOUNTED STOCK OF OLD JEWELLERY OF THE APPELLANT. 5. KEEPING IN VIEW THE ABOVE FINDINGS/OBSERVATIONS RECORDED BY HIM, THE LEARNED CIT(APPEALS) HELD THAT THE GOLD ORNAMENTS F OUND FROM THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI REPRESEN T BUSINESS STOCK OF M/S POOJA JEWELLERS AND THE SAME WAS DULY REFLECTED IN THE BO OKS OF THE SAID CONCERN. HE, THEREFORE, DELETED THE ADDITION MADE BY THE AO ON A CCOUNT OF UNEXPLAINED JEWELLERY IN THE HANDS OF THE SAID CONCERN ON PROT ECTIVE BASIS. HE ALSO DELETED THE SAME ADDITION MADE BY THE AO IN THE HANDS OF SHRI S UBHASH JAIN AND SHRI PRAVEEN TRIVEDI ON SUBSTANTIVE BASIS. AGGRIEVED BY THE ORDE RS OF THE LEARNED CIT(APPEALS), THE REVENUE HAS PREFERRED THESE APPEALS BEFORE THE TRIBUNAL. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. THE LEARNED DR HAS CONTENDED TH AT GOLD ORNAMENTS FOUND DURING THE COURSE OF SEARCH FROM THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI WERE WEIGHING 8417.200 GMS. WHEREAS THE WEIGHT OF GOLD ORNAMENTS ISSUED AS PER GOLD ISSUE VOUCHERS NO. 50, 51 AND 52 BY M/S POOJA JEWELLERS WAS 8626.560 GMS. HE HAS CONTENDED THAT T HE GOLD ORNAMENTS FOUND DURING THE COURSE OF SEARCH THUS WERE NOT THE SAME AS CLAIMED TO BE ISSUED BY M/S POOJA JEWELLERS AS PER RELEVANT GOLD ISSUE VOUCHERS . HOWEVER, AS POINTED OUT BY THE LEARNED COUNSEL FOR THE ASSESSEE FROM PARAGRAPH NO. 3.9 OF THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) PASSED IN THE CASE OF M /S POOJA JEWELLERS, THE DIFFERENCE IN THE WEIGHT OF GOLD ORNAMENTS WAS DULY EXPLAINED AND RECONCILED BY THE ASSESSEE FINALLY LEAVING THE UNEXPLAINED DIFFER ENCE IN WEIGHT ONLY TO THE EXTENT OF 11.300 GRAMS. THE SAID DIFFERENCE AS REMAINED UN EXPLAINED WAS THUS VERY MARGINAL ONLY TO THE EXTENT OF 0.13% OF THE TOTAL W EIGHT OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SEARCH AND THE SAME, IN OUR OP INION, CANNOT BE THE BASIS TO SAY THAT GOLD ORNAMENTS FOUND DURING THE COURSE OF SEAR CH FROM THE POSSESSION OF SHRI 7 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI WERE DIFFEREN T FROM THE GOLD ORNAMENTS ISSUED BY M/S POOJA JEWELLERS AS PER GOLD ISSUE VOU CHER NO. 50, 51 AND 52. THE LEARNED DR HAS ALSO INVITED OUR ATTENTION TO THE AN OMALIES AND CONTRADICTIONS POINTED OUT BY THE AO IN THE EXPLANATION OFFERED BY THE ASSESSEES IN RESPECT OF GOLD ORNAMENTS FOUND DURING THE COURSE OF SEARCH. IT IS, HOWEVER, OBSERVED THAT EACH AND EVERY OBJECTION RAISED BY THE ASSESSEE IN THIS CONTEXT WAS PROPERLY MET BY THE ASSESSEE BY OFFERING SUITABLE AND CONVINCING EXPLAN ATION DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LEARNED CIT(APPEAL S) AND AFTER HAVING EXAMINED THE SAME IN THE LIGHT OF MATERIAL AVAILABLE ON RECO RD, THE LEARNED CIT(APPEALS) FOUND THAT THE GOLD ORNAMENTS FOUND DURING THE COUR SE OF SEARCH FROM THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEEN TR IVEDI REPRESENTED BUSINESS STOCK OF M/S POOJA JEWELLERS AND THE SAME WAS SATIS FACTORILY EXPLAINED FROM THE ENTRIES FOUND RECORDED IN THE BOOKS OF THE SAID CON CERN. AT THE TIME OF HEARING BEFORE US, THE LEARNED DR HAS NOT BEEN ABLE TO CONT ROVERT OR REBUT THESE FINDINGS RECORDED BY THE LEARNED CIT(APPEALS). WE, THEREFORE , FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE IMPUGNED ORDERS OF THE LEARNED C IT(APPEALS) TREATING THE GOLD ORNAMENTS FOUND FROM THE POSSESSION OF SHRI SUBHASH JAIN AND SHRI PRAVEEN TRIVEDI AS EXPLAINED AND DELETING THE ADDITION MADE BY THE AO ON THIS ISSUE IN THE HANDS OF THE ASSESSEES ON PROTECTIVE AND SUBSTANTIV E BASIS. THE SAME ARE, THEREFORE, UPHELD AND THESE APPEALS OF THE REVENUE ARE DISMISS ED. 7. IN THE RESULT, THE APPEALS OF THE REVENUE ARE DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THI S 4 TH DAY OF NOV., 2011. SD/- SD/- (B.R. MITTAL) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 4 TH NOV., 2011. 8 ITA NOS.2655, 2656 &2730/MUM/2009. ASSESSMENT YEAR : 2006-07. COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, I-BENCH. 6. GUARD FILE. (TRUE COPY ) BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI. WAKODE