The DCIT,S.K. Circle, Himatanagar V. Shri Subhashchandra Dwarkadas Soni, Dist.Sabarkanta

ITA 2671/AHD/2008

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9190 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 02-12-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 25-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: N O N E
• Keywords: Bogus purchase; Unexplained cash credit; Loose papers; Set aside
• Section: 133A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : AHMEDABA D (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HON' BLE SHRI A.N. PAHUJA, A.M. ) I.T.A. NO. 2671/AHD./2008 ASSESSMENT YEAR : 2005-2006 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- SHRI S UBHASCHANDRA D. SONI, SABARKANTHA CIRCLE, HIMATNAGAR MODASA (PAN : AV MPS 1522 Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ROHIT MEHRA, S R. D.R. RESPONDENT BY : N O N E O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER DATED 08.05.2008 OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-X, AHMEDABAD F OR THE ASSESSMENT YEAR 2005-06. 2. DESPITE THE SERVICE OF NOTICE FIXING THE DATE OF HEARING ON 02.12.2010, NEITHER ANYBODY APPEARED FROM THE SIDE OF THE ASSESSEE NOR AN APPLI CATION FOR ADJOURNMENT RECEIVED. THE ACKNOWLEDGMENT BY THE POSTAL AUTHORITY IS RECEIVED AND THE SAME IS PLACED ON RECORD. IN THESE CIRCUMSTANCES, WE PROCEED TO DISPOSE OF THIS APPEAL AFTER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AVAILABLE ON RECORD . 3. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE TRADING OF GOLD AND SILVER ORNAMENTS. FOR THE ASSESSMENT YEAR UNDER APPEAL, HE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.6,37,348/-. A SURVEY U NDER SECTION 133A OF THE INCOME TAX ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASS ESSEE ON 25.11.2004. AT THE TIME OF SURVEY, THE ASSESSEE AGREED TO DECLARE OF RS.33,55,807/- VOLUNT ARILY WHILE FILING THE RETURN OF INCOME. IN THE RETURN OF INCOME, THE ASSESSEE HAD NOT SHOWN THE IN COME OF RS.33,55,907/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE STATED THAT TH IS STOCK PERTAINED TO SUBHASCHANDRA D. SONI. ON VERIFICATION OF BOOKS OF ACCOUNTS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD SHOWN LIABILITY FOR URD PURCHASED AND ADVANCE RECEIVED FR OM THE CUSTOMERS FOR PURCHASE OF GOLD. THE ASSESSEE WAS AGREED TO FURNISH THE DETAILS OF SOME OF THE PARTIES CONFIRMATION FOR SALES OF THEIR GOLD ORNAMENTS AND ADVANCE GIVEN BY THE CUSTOMERS. SUBSEQUENTLY THE ASSESSING OFFICER ASKED 2 ITA NO. 2671/AHD/2008 THE ASSESSEE TO PRODUCE THE PARTIES FROM WHOM THE U RD PURCHASED. INSTEAD OF PRODUCING THE PARTIES, THE ASSESSEE FILED AFFIDAVIT FROM THEM. TH E ASSESSING OFFICER ISSUED SUMMONS TO THE SAID PARTIES BUT THE PARTIES DID NOT RESPOND. THE ASSESS ING OFFICER ALSO NOTED THAT THE ASSESSEE HAS NOT PAID ANY AMOUNT TO THEM FOR URD (UN-REGISTERED DEAL ER) PURCHASED. IT WAS ALSO NOTED THAT THE ASSESSEE PURCHASED OLD GOLD ORNAMENTS AND HAS NOT P AID ANY MONEY. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAS NOT RECORDED IN THE BOO KS OF ACCOUNTS THE URD PURCHASED TO THE TUNE OF RS.12,94,697/-. IN THE ASSESSMENT ORDER, THE ASS ESSING OFFICER OBSERVED THAT REPLIES IN ALL THE AFFIDAVITS WERE COMMON AND THE AFFIDAVITS WERE INTR ODUCED BY THE ASSESSEES SON BEFORE THE NOTARY. THEREFORE, THE ASSESSING OFFICER MADE THE A DDITION OF RS.12,94,697/-. 4. ON APPEAL, IN THE IMPUGNED ORDER, THE LEARNED CO MMISSIONER OF INCOME TAX(APPEALS) DELETED THE ADDITION OF RS.12,94,697/- FOR THE DETA ILED REASONS GIVEN IN PARA 4.3, WHICH READS AS UNDER :- 4.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R . CAREFULLY. IT IS SEEN THAT THE A.O. HAS VERIFIED THE BOOKS OF ACCOUNTS IMPOUNDED A T THE TIME OF SURVEY AND WHATEVER PURCHASES WERE RECORDED IN THE BOOKS IMPOU NDED HE HAS ACCEPTED THE SAME AS EXPLAINED PURCHASES AND THE BALANCE PURCHAS ES HE HAS ADDED AS UNEXPLAINED PURCHASES. I3UT IT IS THE CONTENTION OF THE A,R. THAT PURCHASES AS NOTED IN THE LOOSE SLIPS HAVE BEEN INCORPORATED IN THE ACCOUNTS FINALIZED AFTER THE SURVEY AND AUDITED FOR THE YEAR UNDER CONSIDERATION AS THE IMPOUNDED BOOKS WERE INCOMPLETE AS ON 25.11.2004 I.E. THE DATE OF SURVEY . THE ABOVE PURCHASES OF RS.12.94,697/- HAVE BEEN ACCOUNTED IN THE BOOKS IN THE PERIOD AFTER THE SURVEY. THE A.R. WAS ASKED TO GIVE DETAILS OF PURCHASES AS PER THE PURCHASE REGISTER .FROM THE SAME IT WAS VERIFIED THAT THE ABOVE PURCH ASES HAVE BEEN ACCOUNTED IN THE SAME. THE APPELLANT HAD PURCHASED OLD GOLD ORNA MENTS FROM VARIOUS PARTIES IN THE REGULAR COURSE OF BUSINESS. THE APPELLANT HA S FURNISHED AFFIDAVITS OF ALL SUCH PERSONS FROM WHOM OLD GOLD ORNAMENTS WERE PURC HASED WHEREIN THE PARTIES HAVE CONFIRMED HAVING SOLD THEIR ORNAMENTS LO THE A PPELLANT DURING THE YEAR UNDER CONSIDERATION. AS REGARDS THE OBSERVATION OF THE A.O. THAT PAYMENTS HAVE NUT BEEN MADE TO THE SELLERS THE A,R. HAS FURNISHED THE ACCOUNT COPIES OF THE SELLERS SHOWING THE PAYMENTS MADE TO THEM OR ADJUST MENTS MADE AGAINST THE SALES EFFECTED TO THEM. THE SAID FACTS HAVE BEEN CONFIRME D BY THE SELLERS IN THEIR AFFIDAVITS. THE PARTIES ARE GENUINE AND IDENTIFIED AS THEY HAVE FILED AFFIDAVITS. IT HAS BEEN SUBMITTED BY THE APPELLANT THAT IF FURTHER OPPORTUNITY HAD BEEN GIVEN BY THE A.O. THE APPELLANT COULD HAVE PRODUCED THESE PA RTIES BEFORE THE A,O. THE A.O. SHOULD HAVE ACCEPTED THE AFFIDAVITS WHEN THERE ARE NO ADVERSE MATERIALS ON RECORD. AS THE PARTIES ARE IN EXISTENCE AND HAD SIG NED BEFORE THE NOTARY AND THEY HAVE CONFIRMED THE TRANSACTIONS AND THE TRANSACTION S ARE GENUINE, NO DISALLOWANCE IS CALLED FOR. CONSIDERING THE ABOVE F ACTS, THE DISALLOWANCE OUT OF PURCHASES MADE BY THE A.O. AMOUNTING TO RS.12,94,69 7/- IS HELD TO BE NOT JUSTIFIED AND THE SAME IS DELETED. 3 ITA NO. 2671/AHD/2008 5. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER A LSO MADE THE ADDITION OF RS.5,44,500/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THIS ADDITION W AS MADE BECAUSE THE ASSESSEE HAD SHOWN ADVANCE AMOUNT RECEIVED IN CASH FROM VARIOUS CUSTOM ERS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION, B UT THE ASSESSEE FAILED TO PRODUCE THE PARTIES. THE ASSESSING OFFICER TREATED THE SAID ADVANCES AS UNEX PLAINED AND MADE THE ADDITION UNDER SECTION 68 OF THE INCOME TAX ACT, 1961. THIS ADDITION IS AL SO DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR THE DETAILED REASONS GIVEN IN PARA 5.3, WHICH IS REPRODUCED HEREUNDER :- 5.3. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R . CAREFULLY. ACCORDING TO THE A.O, THE ABOVE CASH ADVANCES WERE NOT REFLECTED IN THE IMPOUNDED CASH BOOK. THE APPELLANT HOWEVER HAS PREPARED CASH HOOK AND BOOKS OF ACCOUNTS INCORPORATING THE TRANSACTIONS CONTAINED IN THE LOOSE PAPERS , TH EREFORE, THE A.O. IS NOT JUSTIFIED TO HAVE RELIED UPON THE IMPOUNDED CASH BOOK AND NOT TO HAVE CONSIDERED THE BOOKS OF ACCOUNTS WHICH WERE AUDITED AND BASED ON W HICH THE APPELLANT HAS FILED THE RETURN OF INCOME . ACCORDING TO THE APPELLANT C ASH ADVANCES RECEIVED FROM CUSTOMERS WERE ALREADY FOUND NOTED IN THE LOOSE PAP ERS/COLLECTION BOOK. THE APPELLANT HAS ACCOUNTED FOR ALL THE ENTRIES TO ARRI VE AT THE CORRECT PROFIT FROM ALL TRANSACTIONS. AS THE APPELLANT HAS EXPLAINED THE CA SH ADVANCES FROM THE CUSTOMERS , THE ADDITION OF THE SAME IS HELD TO BE NOT JUSTIFIED AND THE ADDITION IS DELETED. 6. AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) FOR DELETING BOTH THE AFORESAID ADDITIONS, THE REVENUE IS IN APP EAL BEFORE US ON THE FOLLOWING GROUNDS :- (1) THE LD. CIT(A.) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DELETING THE DISALLOWANCE OF RS.12,94,697/- ON ACCOUNT OF BOGUS PURCHASES. (2) THE LD. CIT(A.) HAS ERRED IN LAW AND ON THE FAC TS OF THE CASE IN DELETING THE ADDITION OF RS.5,44,500/- MADE U/S. 68 ON ACCOUNT O F UNEXPLAINED CASH ADVANCE. 7. AT THE TIME OF HEARING BEFORE US, SHRI ROHIT MEH RA, LD. D.R. APPEARING ON BEHALF OF THE REVENUE POINTED OUT THAT THE ASSESSEE HAS MERELY FU RNISHED THE AFFIDAVITS AND NOT PRODUCED THE PARTIES FROM WHOM THE ALLEGED URD PURCHASES WERE MA DE. THE LD. D.R. ALSO POINTED OUT THAT AT THE TIME OF SURVEY, THE ASSESSEE HAS NOT POINTED OU T THAT THERE ARE SOME UNRECORDED PURCHASES. BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAS NOT FURNISHED THE DETAILS OF PAYMENTS MADE TO THE SELLERS. THIS WAS FURNISHED FOR THE FIRST TIME BEFO RE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). HE FURTHER POINTED OUT THAT ALL THE A FFIDAVITS ARE VERIFIED BY THE SON OF THE ASSESSEE, THEREFORE, GENUINENESS OF THE PARTIES IS ALSO NOT V ERIFIABLE BECAUSE THE ASSESSEE HAS NOT FURNISHED ANY INDEPENDENT EVIDENCE OF IDENTITY OF SELLERS, I. E. PAN, PASSPORT, ETC. OR ASSESSMENT PARTICULARS. 4 ITA NO. 2671/AHD/2008 WITH REGARD TO DELETION OF ADDITION OF RS.5,44,500/ - MADE BY THE ASSESSING OFFICER UNDER SECTION 68, THE LD. D.R. POINTED OUT THAT NEITHER BEFORE TH E ASSESSING OFFICER NOR BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE ASSESSEE H AS PRODUCED THE PARTIES FOR VERIFICATION, THEREFORE, THE ADDITION WAS RIGHTLY MADE. 8. HAVING HEARD THE LD. DEPARTMENTAL REPRESENTATIVE , WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOT E THAT DESPITE THE SERVICE OF NOTICE, IT APPEARS TH AT THE ASSESSEE IS NOT INTERESTED TO DEFEND THIS CASE. BE THAT IT MAY BE, THE POWER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS CO-TERMINUS WITH THAT OF ASSESSING OFFICER. IN ORDER TO VERIFY THE PURCHASES MADE TO THE TUNE OF RS.12,94,6 97/-, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTIES. SIMILARLY, FOR VERIFYING TH E UNEXPLAINED CASH ADVANCE ALLEGED TO BE RECEIVED AMOUNTING TO RS.5,44,500/-, THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION. THE PARTIES WERE NEVER PR ODUCED BEFORE THE ASSESSING OFFICER AND LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WITHOU T INSISTING FOR PRODUCTION OF THE PARTIES DELETED THE ADDITION. LOOKING TO THE PECULIAR FACTS OF THE CASE, THE DECLARATION MADE AT THE TIME OF SURVEY, WE ARE OF THE VIEW THAT THE ASSESSING OFFIC ER WAS JUSTIFIED IN INSISTING THE ASSESSEE TO PRODUCE THE PARTIES. SINCE THE PARTIES WERE NOT PRO DUCED BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IN OUR OPINION, IT WILL MEET T HE END OF JUSTICE IF THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IN BOTH THE ISS UES IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT EITHER THE ASSESSEE SHOULD PRODUCE ALL THE PARTIES OR PRODUCE COMPLETE DETAILS OF THE PARTIES, VIZ. NAME, POSTAL ADDRESS, PAN, ETC. SO THAT ASSESSING OFFICER CAN ISSUE SUMMONS TO THOSE PARTIE S. THE ASSESSING OFFICER WILL EXAMINE THE PARTIES AND RE-ADJUDICATE BOTH THE ADDITIONS AFRESH IN ACCORDANCE WITH LAW. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APP EAL FILED BY THE DEPARTMENT IS TREATED AS ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 10.12.20 10 SD/- SD/- (A.N. PAHUJA) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10/ 12 / 2010 5 ITA NO. 2671/AHD/2008 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A.) CONCERNED, (4) CIT CONCERNED, (5) D.R. , ITAT, AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGI STRAR, ITAT, AHMEDABAD LAHA/SR.P.S.