Shri Subhash Chand Chauhan, Ratlam V. The ACIT, Ratlam

ITA 268/IND/2013

• Counselvise Citation: 26822714 RSA 2013
• Duration Of Justice: 2 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2005-2006
• Appeal Filed On: 06-05-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained investment; Corroborative evidences; Condonation of delay
• Section: 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 268/IND/2013 A.Y. 2005-06 SHRI SUBHASH CHAND CHOUHAN RATLAM PAN AAVPC 2562Q ::: APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX OFFICER RANGE RATLAM ::: RESPONDENT ` APPELLANT BY SHRI SHARAD JAIN RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 6.5 .2015 DATE OF PRONOUNCEMENT 1 4 . 5 .2015 O R D E R THIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LEARNED CIT(A)-I, DATED 18.1.2013. 2 2. THERE IS A DELAY OF 17 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE SUBMITTED AN APPLICATI ON FOR CONDONATION OF DELAY ALONG WITH MEDICAL CERTIFICATE WITH REGARD TO HEALTH PROBLEM OF COUNSEL FOR THE ASSESSEE DURING THE RELEVANT PERIOD. THE LEARNED AR ALSO EXPLAINED THE CIRCUMSTANCES WHICH LEAD TO DELAY IN FILING THE APPEAL. 3. WE HAVE HEARD BOTH THE SIDES ON THIS ISSUE. WE FIND THAT THE DELAY WAS DUE TO CIRCUMSTANCES BEYOND TH E CONTROL OF THE ASSESSE. IN OUR CONSIDERED VIEW, THER E WAS SUFFICIENT CAUSE DUE TO WHICH THE ASSESSEE COULD NOT PRESENT THE APPEAL WITHIN THE PRESCRIBED PERIOD. AF TER HEARING THE LD. AR AND CONSIDERING THE REASONS MENTION ED IN THE CONDONATION APPLICATION, WE CONDONE THE DELAY AND ADMIT THE APPEAL. WE HAVE HEARD THE APPEAL ON MERITS. TH E ASSESSEE HAS ALSO TAKEN ADDITIONAL GROUNDS IN ADDITION TO 3 THE ORIGINAL GROUNDS. THE ORIGINAL GROUNDS AND THE ADDITIONAL GROUNDS READ AS UNDER :- GROUNDS (I) THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.49,50,000/- ON ACCOUNT OF INVESTMENT IN HUNDIS MADE BY THE LEARNED ACIT RATLAM WITHOUT CONSIDERATION OF REPLIES MADE BY THE ASSESSE. (II) THAT THE LEARNED CIT(A) HAS ERRED IN SUSTAINING THE ADDITION OF RS.1,20,690/- ON ACCOUNT OF GROSS PROFI T OUT OF TOTAL ADDITION MADE BY THE LEARNED ACIT, RATLAM WITHOUT APPRECIATING THE FACTS AND SUBMISSIONS GIVEN BY THE ASSESSE. ADDITIONAL GROUNDS (I) THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIO N OF RS. 49,50,000/- MADE BY THE LD. A.O. FOR ALLEGED UNACCOUNTED INVESTMENT IN HUNDIES FOUND IN SURVEY U/S 133A, ON THE BASIS OF ESTIMATED PEAK AMOUNT OF RS. 66,00,000/- (Q. NO. 2 OF SURVEY STATEMENT), INSTEAD OF ACCEPTING THE PEAK AMOUNT RECOMPUTED BY THE APPELLANT ON THE LOGICAL BASIS OF 3 TO 4 TIMES ROTATION OF HUNDIES DURING THE YEAR AT RS.42,18,550/- (CONSIDERING 4 TIMES ROTATION) OR RS. 37,50,950/- (CONSIDERING 3 TIMES ROTATION) 4 (II) THAT THE APPELLANT IS ENTITLED FOR SET OFF OF CASH SHORTAGE OF RS. 16,08,727/- FOUND IN SURVEY U/S 133A AGAINST THE ADDITION FOR ALLEGED UNACCOUNTED INVESTMENT IN HUNDIES FOUND IN THE SAME SURVEY U/S 133A AS IN REPLY TO QUESTION NO. 5 OF SURVEY STATEMENT ITSELF, IT WAS EXPLAINED THAT THE ABOVE CASH SHORTAGE HAS OCCURRED DUE TO UTILIZATION OF ACCOUNTED CASH FOR MAKING INVESTMENT IN THE ABOVE UNACCOUNTED HUNDIES FOUND IN SURVEY. 4. AFTER HEARING, WE HAVE ADMITTED THESE ADDITIONAL GROUNDS FOR HEARING. 5. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING IN GRAIN ITEMS AND KIRANA, ETC. THE RETURN OF INCOME WAS FILED DECLARING INCOME AT RS. 14,61,353/- ON 31.10.2005. DURING THE COURSE OF SURVEY OPERATION, PROMISSORY NOTES/HUNDIES WERE FOUND. THE ASSESSEE MADE A DISCLOSURE OF RS. 86,79,000/- WHICH INCLUDED RS. 66,00,000/- ON ACCOU NT OF UNACCOUNTED INVESTMENT IN HUNDIES. THE CIT(A) CONFI RMED THE ADDITION OF RS. 49,50,000/- MADE BY THE ASSESSIN G OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT FOUND DU RING 5 SURVEY OPERATION U/S 133A OF THE ACT. IN THE ADDITIO NAL GROUNDS, THE ASSESSEE HAS PLEADED THAT THERE WAS A CASH SHORTAGE OF RS. 16,08,727/- AT THE TIME OF SURVEY AND THIS SHORTAGE OF CASH HAS OCCURRED DUE TO UTILIZATION OF ACCOUNTED CASH FOR MAKING INVESTMENT IN THE UNACCOUNTE D HUNDIES FOUND DURING THE COURSE OF SURVEY. SINCE B OTH THESE GROUNDS ARE INTER-CONNECTED, THEREFORE, THEY A RE BEING DISPOSED OF IN THE FOLLOWING MANNER. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD. DURING THE SURVEY OPERATION, THE ASSESSEE DISCLOSED UNACCOUNTED INVESTMENT IN HUNDIES OF RS. 66 LACS AND IT WAS TAKEN AS PEAK INVESTMENT IN THESE UNACCOUNTED HUNDIES. THE ASSESSE SUBMITS THAT OUT OF THIS AMOUNT, RS.16,50,000/- WAS DISCLOSED AS INCOME I N THE RETURN OF INCOME. THE ASSESSEE DID NOT DISCLOSE PEAK UNEXPLAINED INVESTMENT IN HUNDIES IN THE RETURN OF 6 INCOME. THE ASSESSING OFFICER MADE ADDITION OF RS. 49,50,000/- IN HIS ORDER FOR UNACCOUNTED INVESTMENT IN HUNDIES. THE CIT(A) HAD CONFIRMED THIS ADDITION. NOW THE ASSESSEE PRAYS THAT SINCE THE ASSESSEE HAS PAID TAX ON RS.16,50,000/- BY WAY OF DECLARING THE SAME AS INCOME FOR THE YEAR IN THE RETURN OF INCOME, THEREFORE, IT WAS R IGHTLY REDUCED FROM PEAK DISCLOSURE OF RS. 66 LACS. HOWEVE R, THE LEARNED AR SUBMITTED THAT THE ASSESSEE HAS NOT BEEN GIV EN CREDIT OF RS.16,08,727/- WHICH WAS A SHORTAGE OF CASH DURING SURVEY OPERATIONS. THE LEARNED AR SUBMITTED TH AT THERE WAS DOUBLE ADDITION ON THIS ACCOUNT. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT PEAK INVESTMENTS IN UNACCOUNTED HUNDIES MAY BE ADDED TO T HE INCOME OF THE ASSESSE. HE PLEADED THAT HUNDIES ROTATE IN 3 TO 4 MONTHS. HENCE, PEAK SHOULD BE WORKED OUT ACCORDINGLY. WHEN HE WAS ASKED AS TO WHETHER THE DATE O F 7 DISCHARGE OF HUNDIES AVAILABLE ON THE INSTRUMENT, HE REPLIED NEGATIVE. AS PER HIS STATEMENT IN COURT, NONE OF THESE HUNDIES WERE HAVING ANY DISCHARGE DATE ON IT. TH E LEARNED AR WAS MADE AWARE THAT WHEN THE HUNDIES WERE NOT DISCHARGED THEN HOW THE PEAK INVESTMENT IN THE UNACCOUNTED HUNDIES CAN BE REDUCED. HE HAS SHOWN HIS INABILITY IN THIS REGARD. THERE WAS NO EVIDENCE REGARD ING DISCHARGE OF HUNDIES HENCE THERE IS NO SCOPE FOR ANY REDUCTION OF PEAK. LEARNED AR HAS SIMPLY STATED THAT AS PER THE MARKET PRACTICE, THE HUNDIES ARE NORMALLY DISCHARGED WITHIN 3 TO 4 MONTHS, HOWEVER, THERE IS N O SUPPORTING EVIDENCE IN SUPPORT OF THIS. THE PEAK OF UNACCOUNTED INVESTMENT IN HUNDIES FOUND AT THE TIME O F SURVEY WORKED OUT AT RS. 66 LACS. THERE IS NO FURTHE R SCOPE FOR ANY REDUCTION IN ABSENCE OF ANY EVIDENCE OF MATURI TY OR DISCHARGE OF HUNDIES DURING THE PERIOD. THEREFORE, W E HOLD 8 THAT THERE IS NO FURTHER SCOPE FOR ANY REDUCTION IN P EAK OF THE UNACCOUNTED INVESTMENT IN HUNDIES. IN VIEW OF TH ESE FACTS, WE SUSTAIN THE PEAK OF RS.66,00,000/- AND ADDITI ON ON ACCOUNT OF UNACCOUNTED INVESTMENT IN HUNDIES FOUN D DURING THE COURSE OF SURVEY U/S 133A OF THE ACT WHI CH THE ASSESSEE HAS INITIALLY CORRECTLY ADMITTED TO BE UNEXPLAI NED. HOWEVER, THERE WAS A SHORTAGE OF CASH OF RS.16,08,727/- AT THE TIME OF SURVEY. REVENUE HAS NOT ESTABLISHED ANYTHING ABOUT THE USE OF THIS SHORTAGE OF CASH ANYWHER E. NO MATERIAL FOUND OR ESTABLISHED FOR ANY OTHER USE OR INVESTMENT IN ANY ASSETS OF THIS SHORTAGE OF CASH. THIS SHORTAGE OF CASH WAS AVAILABLE FOR EXPLAINING INVESTMENT IN THESE UNACCOUNTED HUNDIES. THE ASSESSEE HAS PLEADED FOR GIVING CREDIT FOR THIS ACCOUNTED CASH SHORTAGE FOR MAKI NG THE INVESTMENT IN UNACCOUNTED HUNDIES FOUND DURING SURVEY. IN THIS PLEADING OF THE ASSESSE, WE FIND SOME FORCE. THE CONTENTION OF THE ASSESSEE FOR GIVING CREDIT FOR 9 SHORTAGE OF CASH FOR UNACCOUNTED INVESTMENT IN HUNDIE S IS ACCEPTABLE PLEA, THEREFORE, WE DIRECT TO GIVE RELIEF T O THE ASSESSEE TO THAT EXTENT AND BALANCE ADDITION FOR INVESTMENT IN UNACCOUNTED HUNDIES IS SUSTAINED. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. PRONOUNCED IN OPEN COURT ON 14TH MAY, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER MAY 14 ,2015