M/s sharma Marble Industries, Agra V. A.C.I.T.-2, Agra

ITA 272/AGR/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67487 (ITAT-AGRA)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-12-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 26-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: WASEEM ARSHAD
• Assessee Lawyers: NAVIN GARGH
• Keywords: Unexplained investment; Business income; Income from undisclosed sources; Loose papers; Opportunity of being heard; Condonation of delay
• Section: 144; 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMMBER AND SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER ITA NO. 272/AGRA/ 2013 ASSESSMENT YEAR 2007-08 M/S SHARMA MARBLE INDUSTRIES VS. ASSTT. COMMISSION ER OF INCOME-TAX-2 28/508 GOKULPURA. AAYAKAR BHAWAN, SANJAY PLACE, AGRA. (PAN AAKFS 7824C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVIN G ARGH, ADVOCATE RESPONDENT BY : SHRI WASEEM ARSHAD, SR. D.R. DATE OF HEARING : 18.12.2013 DATE OF PRONOUNCEMENT : 20.12.2013 ORDER PER BHAVNESH SAINI, JUDICIAL MEMMBER: 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-1, AGRA DATED 26.02.2013 FOR A.Y. 2007-08, CHALLENGING THE ADDITION OF RS.17,00,000/- AND INTEREST UNDER SECTION 234A OF THE I.T. ACT. LD. COUNSEL FOR THE ASSESSEE DID NOT PRESS THE CHARGING OF INTEREST UNDER SECTION 234B & 234C. ITA NO.272/AGRA/2013 A.YS.2007-08 2 2. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PA RTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. 3. ACCORDING TO OFFICE, APPEAL IS TIME BARRED BY 25 DAYS. THE ASSESSEE FILED APPLICATION FOR CONDONATION OF DELAY EXPLAINING THE REIN THAT SRI MOOL CHAND SHARMA PARTNER OF THE ASSESSEE-FIRM, WHO WAS LOOKIN G AFTER THE INCOME TAX MATTERS IS AGED ABOUT 85 YEARS AND HAS SUFFERED HEA RT ATTACK AND ALSO SUFFERING FROM OTHER ILLNESS AND HE REMAINED UNDER THE TREATMENT. IT WAS, THEREFORE, PRAYED THAT DELAY MAY BE CONDONED AND CONTENTION OF THE ASSESSE E IS SUPPORTED BY AFFIDAVIT OF SRI MOOL CHAND SHARMA AND MEDICAL CERTIFICATES. LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION FOR CONDONATION OF DELAY. CONSIDER ING THE EXPLANATION OF THE ASSESSEE AND MATERIAL AVAILABLE ON RECORD, WE ARE S ATISFIED THAT DELAY WAS DUE TO THE ABOVE REASON, WHICH WAS BEYOND THE CONTROL OF THE P ARTNER OF THE ASSESSEE-FIRM, THEREFORE, EXPLANATION OF THE ASSESSEE IS ACCEPTED AND DELAY IN FILING THE APPEAL IS CONDONED. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF MANUFACTURING AND DEALING IN MAR BLE GOODS. THE FIRM BELONGS TO SHARMA GROUP IN WHICH, A SURVEY WAS CARRIED OUT ON 21.02.2007 AND SUCH SURVEY WAS CARRIED OUT AT VARIOUS PREMISES AS MENTIONED IN THE IMPUGNED ORDERS. DURING ITA NO.272/AGRA/2013 A.YS.2007-08 3 THE SURVEY, SPECIFICALLY IN THE CASE OF THE ASSESSE E-FIRM, ITS ONE OF THE PARTNER, SHRI RAMESH CHAND SHARMA WAS EXAMINED AND STATEMENT WAS RECORDED. HE WAS CONFRONTED WITH THE STOCK TAKING DONE DURING THE SU RVEY OPERATION AND ALSO THE VARIOUS PAPERS AND BOOKS FOUND AND IMPOUNDED DURING THE SURVEY. THE PARTNER WAS NOT ABLE TO BIFURCATE THE STOCK FOUND IN THE COMMON GODOWN BUT AS PER ESTIMATE, THE STOCK OF ABOUT RS.20,00,000/- WOULD HAVE BEEN O UT OF RECORD. THEREFORE, VOLUNTARY SURRENDER OF RS.20,00,000/- WAS MADE AS U NDISCLOSED INVESTMENT IN THE STOCK. APART FROM UNDISCLOSED INVESTMENT IN STOCK, SRI RAMESH CHAND SHARMA SUBMITTED ON BEING CONFRONTED WITH THE IMPOUNDED DO CUMENTS THAT IT IS NOT POSSIBLE FOR HIM TO GET THESE PAPERS AND DOCUMENT V ERIFIED WITH THE BOOKS OF ACCOUNT AND, THEREFORE, CONSIDERING THE POSSIBLE LE AKAGES ON ACCOUNT OF THESE DOCUMENTS, HE DECLARED RS.17,00,000/- AS UNACCOUNTE D INCOME EARNED BY THE ASSESSEE-FIRM DURING THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. WHEN THE RETURN OF INCOME WAS FILED BY THE ASSESSEE-FIRM, INCOME OF RS.20,00,000/- WAS DECLARED AS INCOME FROM OTHER SO URCES AND NIL INCOME HAS BEEN DECLARED AS BUSINESS INCOME AND NOTING WAS MAD E TO THE SAME AND IT WAS EXPLAINED THAT UNDER MISCONCEPTION AND INADVERTENTL Y THE INVESTMENT IN STOCK WAS SEPARATELY DECLARED DURING SURVEY, HENCE, INCOME AS INVESTMENT IN STOCK IS NOT BEING SHOWN SEPARATELY. THE DECLARATION WILL COVER IMPOUNDED MATERIAL AND ITA NO.272/AGRA/2013 A.YS.2007-08 4 INCOME. IT WAS SUBMITTED THAT DUE TO SOME DISTURBAN CE IN THE FAMILY RETURNED INCOME WAS SHOWN ONLY ON ESTIMATE BASIS. THE A.O. C OMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT. THE ASSESSEE HAS DECL ARED SALE/TURNOVER OF RS.1,63,64,014/- AND IT HAS BEEN SHOWN THAT 90% OF THE SAME WERE MADE TO SISTER CONCERN, M/S SHARMA INDUSTRIES PVT. LTD. IT HAS ALS O BEEN SHOWN THAT SAME SALE WAS DECLARED IN THE RETURN FILED TO THE COMMERCIAL TAX DEPARTMENT. THE A.O. HOWEVER, DID NOT ACCEPT THE TURNOVER DECLARED BY THE ASSESSE E. THE A.O. CONSIDERING THE DEPOSITS WAS MADE IN THE BANK ACCOUNT OF THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION, ESTIMATED THE SALE TURNOVER AT RS.1, 88,82,527/- AND APPLIED NET PROFIT RATE OF 10% AND COMPUTED THE NET PROFIT OF THE ASSE SSEE AT RS.18,88,253/-. 5. THE A.O. ALSO EXAMINED IMPOUNDED DOCUMENT IN DET AIL I.E. PAGE 8 OF ANNEXURE A-31 IMPOUNDED FROM THE PREMISES NO.5/89 A -4 VIJAY KUNJ, SONTH KI MANDI, MATHURA ROAD, AGRA AND AFTER CONSIDERING THE ISSUE IN DETAIL MADE THE ADDITION OF RS.58,97,197/-. 6. AS REGARDS RS.17,00,000/- DECLARED BY THE PARTNE R OF THE ASSESSEE-FIRM DURING THE COURSE OF SURVEY AFTER FINDING THAT IT D ID NOT DECLARE THIS AMOUNT IN THE RETURN, THE A.O. HAS COMPUTED PROFIT OF THE FIRM AT RS.18,88,253/-, THEREFORE, THE AMOUNT OF RS.17,00,000/-WAS UNDISCLOSED PROFIT EARN ED BY THE ASSESSEE BUT NO ITA NO.272/AGRA/2013 A.YS.2007-08 5 SEPARATE ADDITION OF RS.17,00,000/- WAS MADE BECAUS E THE SAME WAS TELESCOPED WITH THE NET PROFIT OF RS.18,88,253/- COMPUTED BY T HE A.O. THE TOTAL INCOME OF THE ASSESSEE WAS THUS COMPUTED AT RS.97,85,450/-. 7. BOTH ADDITION WERE CHALLENGED BEFORE THE LD. CIT (A) AND LD. CIT(A) AFTER DISCUSSING THE ADDITION OF RS.58,97,197/- IN DETAIL DELETED THE SAME FOR WHICH NO DEPARTMENTAL APPEAL IS STATED TO HAVE BEEN PREFERRE D. 8. THE LD. CIT(A) ON THE ISSUE OF ESTIMATE OF BUSIN ESS PROFIT FOUND THAT A.O. HAS COMPUTED UNDISCLOSED PROFIT BY ESTIMATING THE T URNOVER AND APPLYING RATE OF 10%, ON THE BASIS OF DECLARATION OF RS.17,00,000/- MADE BY THE ASSESSEE-FIRM DURING THE COURSE OF SURVEY. THE ASSESSEE DISPUTED THE ESTIMATION OF TURNOVER CONTENDED THAT ALL THE DEPOSITS IN THE BANK ACCOUNT CANNOT BE THE TREATED AS TURNOVER OF THE ASSESSEE BECAUSE MANY PAYMENTS HAVE BEEN RECEIVED PERTAINING TO THE SALE MADE IN THE EARLIER YEAR. WITH REGARD TO T HE AMOUNT OF RS.17,00,000/- DECLARED DURING SURVEY, IT WAS CONTENDED THAT SUCH DECLARATION WAS MADE SEPARATELY UNDER MISCONCEPTION BECAUSE WHATEVER PRO FIT WAS EARNED BY THE ASSESSEE-FIRM WAS INVESTED IN STOCK. THE LD. CIT(A) CONSIDERING THE ISSUE DID NOT APPROVE ORDER OF THE A.O. IN ESTIMATING THE PROFIT AT RS.18,88,253/- AND RESTRICTED ITA NO.272/AGRA/2013 A.YS.2007-08 6 ESTIMATED BUSINESS INCOME AT RS.17,00,000/-. THE FI NDINGS OF LD. CIT(A) IN PARA 6.2 OF THE APPELLATE ORDER ARE REPRODUCED AS UNDER: - I HAVE CONSIDERED THE ENTIRE FACTS OF THE CASE IN TOTALITY AND AFTER CONSIDERING THE FACTS OF THE CASE THAT A SURVEY WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE (APPELLANT) AND DURING SURVEY, A HUGE AMOUNT OF UNACOUNTED INCOME WAS DECLARED BY MOST OF THE CONCERNS BELONGING TO SHARMA GROUP, EARNING OF UNAC COUNTED INCOME BY VARIOUS CONCERNS OF SHARMA GROUP CANNOT B E RULED OUT. THEREFORE, WHEN PARTNER, SHRI RAMESH CHAND SHARMA O F THE ASSESSEE(APPELLANT) FIRM WAS EXAMINED DURING SURVEY , HE MUST BE AWARE ABOUT THE AFFAIRS OF HIS BUSINESS CONCERNS. L OOKING TO THE PAST HISTORY OF THE ASSESSEE(APPELLANT) FIRM, I FIN D THAT VERY NOMINAL PROFITS WERE DISCLOSED IN EARLIER YEARS. HOWEVER, I F DURING THE YEAR UNDER CONSIDERATION AS PER THEIR OWN ADMISSION, THE Y HAVE INVESTED RS.20 LAC IN STOCK WHICH IS NOT RECORDED IN THE BOO KS OF ACCOUNT, SUCH INVESTMENT IN STOCK CAN BE MADE ONLY WHEN THEY WOULD HAVE EARNED SUBSTANTIAL PROFIT IN EARLIER YEARS. I FIND THAT THE AO WAS QUITE CORRECT IN HIS ARGUMENT THAT ENTIRE PROFIT EA RNED DURING THE YEAR UNDER CONSIDERATION CANNOT BE INVESTED IN THE STOCK. THEREFORE, WHEN SHRI RAMESH CHAND SHARMA DECLARED A DDITIONAL AMOUNT OF RS.17 LAC ON THE BASIS OF LOOSE PAPERS AN D OTHER DOCUMENTS FOUND IN WHICH, VARIOUS UNVERIFIABLE ENTR IES WERE MADE RELATING TO EXPENSES AND INVESTMENT, HE WAS VERY MU CH IN THE KNOWLEDGE OF THE UNACCOUNTED INCOME BEING EARNED BY THE ASSESSEE(APPELLANT) FIRM. CONSDIERING THESE OVER AL L FACTS OF THE OF THE CASE, IT IS QUITE CLEAR THAT EITHER THE ASSESSE E(APPELLANT) FIRM WAS SUPPRESSING ITS TURNOVER OR RATE OF PROFIT BEIN G SHOWN BY IT. THEREFORE, I DO NOT FIND THAT THE AO HAS COMMITTED ANY ERROR IN ESTIMATING THE PROFIT OF THE ASSESSEE(APPELLANT) FI RM BY ESTIMATING THE TURN OVER AND THE RATE OF PROFIT. HOWEVER, LOOK ING TO THE AMOUNT DECLARED BY THE ASSESSEE(APPELLANT), SUCH ESTIMATED BUSINESS INCOME SHOULD BE RESTRICTED TO RS.17 LAC AS IT WAS DECLARED BY THE PARTNER OF THE ASSESSEE(APPELLANT) FIRM DURING SURV EY WHICH, IN MY OPINION, THE ASSESSEE(APPELLANT) FIRM HAS RESTRICTE D BY PUTTING UP ILLOGICAL ARGUMENT SAYING THAT THE INCOME EARNED DU RING THE YEAR WAS ALSO INVESTED IN THE STOCK DECLARED DURING THE SURVEY. ITA NO.272/AGRA/2013 A.YS.2007-08 7 THEREFORE, I HOLD THAT THE ASSESSEE(APPELLANT) FIRM SHOULD BE ASSESSED FOR THE ENTIRE AMOUNT OF DECLARATION MADE DURING THE SURVEY WHICH CONSISTED OF THE UNACCOUNTED INVESTMEN T MADE IN STOCK OF RS.20 LAC AND UNACCOUNTED INCOME EARNED BY IT AT RS.17 LAC. DECLARATION OF THE INCOME IN THE RETURN OF INC OME MADE BY THE ASSESSEE SHOWING INCOME OF RS.20 LAC UNDER THE HEAD INCOME FROM OTHER SOURCES, HAS ALSO NOT BEEN FOUND TO BE CORREC T BECAUSE I HAVE FOUND THAT THE ASSESSEE(APPELLANT) FIRM HAS ONLY ON E SOURCE OF INCOME WHICH IS MANUFACTURING AND DEALING IN MARBLE GOODS, SOAP STONE GOODS ETC. NO OTHER SOURCE OF INCOME OF THE ASSESSEE(APPELLANT) FIRM HAS BEEN EXPLAINED TO ME B Y THE LD. AR. THEREFORE, DECLARATION OF INCOME OF RS.20 LAC UNDER THE HEAD INCOME FROM OTHER SOURCES IS QUITE MISLEADING AND HENCE, INCOME OF THE ASSESSEE(APPELLANT) SHOULD BE ASSESSE D AS DECLARED BY THE PARTNER, SHRI RAMESH CHAND SHARMA CONSISTING OF RS.20 LAC BEING UNEXPLAINED INVESTMENT IN STOCK AND RS.17 LAC EARNED FROM BUSINESS. THEREFORE, THE AO IS DIRECTED TO ASSESSEE THE INCOME OF THE ASSESSEE(APPELLANT) FIRM AS UNDER:- INCOME UNDER THE HEAD BUSINESS RS.17,00,000/- UNEXPLAINED INVESTMENT IN STOCK U/S. 69 RS.20,00, 000/- ------------------------ TOTAL RS.37,00,000/- IN VIEW OF MY ABOVE DECISION, GROUND NO.2,3 & 4 ARE PARTLY ALLOWED. 9. WITH REGARD TO THE CHARGING OF INTEREST UNDER SE CTION 234A LD. CIT(A) HELD THAT CHARGING OF INTEREST IS CONSEQUENTIAL IN NATUR E AND INTEREST IS CHARGED ON ASSESSED INCOME, WHICH IS MANDATORY. ACCORDINGLY, T HIS GROUND WAS DISMISSED. ITA NO.272/AGRA/2013 A.YS.2007-08 8 10. LD. COUNSEL FOR THE ASSESSEE WITH REGARD TO ADD ITION OF RS.17,00,000/- REITERATED THE SUBMISSION MADE BEFORE LD. CIT(A) AN D IT WAS CONTENDED THAT IN RETURN OF INCOME WAS FILED, ASSESSEE APPENDED A NOT E IN THE COMPUTATION OF INCOME THAT INCOME IS BEING SHOWN AT RS.20,00,000/- INCLUD ING NET BUSINESS INCOME TO PURCHASE PEACE AND TO AVOID LITIGATION/INCOME FROM IMPOUNDED MATERIAL ETC., IF ANY, AND TO COVER UP THE INCOME DECLARED IN THE STA TEMENT FROM IMPOUNDED MATERIAL. THE STOCK FOUND DURING SURVEY IS COVERED, EVEN OTHERWISE BY THE INCOME DECLARED FROM IMPOUNDED MATERIAL, HOWEVER UNDER MIS CONCEPTION, AND INADVERTENTLY THE INVESTMENT IN STOCK WAS SEPARATEL Y DECLARED DURING SURVEY, HENCE INCOME AS INVESTMENT IN STOCK IS NOT BEING SHOWN SE PARATELY. HE HAS SUBMITTED THAT NO EVIDENCE OF EXCESS INVESTMENT IN STOCK WAS FOUND DURING THE COURSE OF SURVEY AND ADDITION IS WHOLLY MADE ON THE BASIS OF STATEME NT MADE BY THE PARTNER, WHICH IS NOT ADMISSIBLE IN EVIDENCE IN VIEW OF THE JUDGME NT OF HONBLE KERLA HIGH COURT IN THE CASE OF PAUL MATHEWS AND SONS VS. COMMISSION ER OF INCOME TAX, 263 ITR 101. HE HAS ALSO REFERRED TO STATEMENT OF SRI RAMES H CHAND SHARMA RECORDED DURING THE COURSE OF SURVEY IN WHICH HE HAS DECLARE D ESTIMATE OF UNDISCLOSED STOCK AT RS.20,00,000/- MEANING THEREBY THERE WAS NO DEFI NITE INFORMATION AVAILABLE AT THE TIME OF SURVEY AND NO RECORDS WERE AVAILABLE, T HEREFORE, IT WAS NOT VOLUNTARY STATEMENT OF THE PARTNER. SIMILARLY RS.17,00,000/- WAS DISCLOSED FOR POSSIBLE ITA NO.272/AGRA/2013 A.YS.2007-08 9 LEAKAGES IN STATEMENT IT WAS NOT BASED ON ANY MATER IAL. HE HAS SUBMITTED THAT IN THE ABSENCE OF ANY INDEPENDENT CORROBORATIVE EVIDENCE A DDITION OF UNDISCLOSED STOCK OR INCOME WAS NOT WARRANTED AND SINCE ASSESSEE HAS ALREADY DECLARED RS.20,00,000/- IN THE RETURN OF INCOME, THEREFORE, IT WAS SUFFICIENT TO COVER UP ALL MATERIAL. SEPARATE ADDITION OF RS.17,00,000/- IS, T HEREFORE, WHOLLY UNJUSTIFIED. HE HAS RELIED UPON THE ORDER OF THE ITAT AMRITSAR BENC H IN THE CASE OF INCOME TAX OFFICER VS. BUA DASS, 97 TTJ 650 IN WHICH IT WAS HE LD AS UNDER:- CONCLUSION : IN THE ABSENCE OF ANY INDEPENDENT AND CORROBORATIVE EVIDENCE ADDITION UNDER S. 69 COULD NOT BE MADE SIM PLY ON THE BASIS OF INCOME SURRENDERED BY ASSESSEE IN HIS CONFESSION AL STATEMENT WHICH IS SHOWN TO HAVE BEEN MADE IN A CONFUSED STAT E OF MIND. 10.1 HE HAS ALSO RELIED UPON THE ORDER OF ITAT, JOD HPUR BENCH IN THE CASE OF MAHESWARI INDUSTRIES VS. ASSISTANT COMMISSIONER OF INCOME TAX, 81 TTJ 914, ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF KARAM CHAND VS. ASSISTANT COMMISSIONER OF INCOME TAX, 68 TTJ 789 AND ORDER OF THE ITAT DELHI BENCH IN THE CASE OF R.P. LOCKS COMPANY VS. DEPUTY COMMISSIO NER OF INCOME TAX, 67 TTJ 588. HE HAS ALSO REFERRED TO HISTORY OF THE ASS ESSEE (P.B.21) TO SHOW THAT IN PRECEDING ASSESSMENT YEAR THE INCOME OF THE ASSESSE E WAS ASSESSED UNDER SECTION 143(3) AND 143(1) OF THE ACT. THE INCOME HAS BEEN A CCEPTED AT RS.2,04,740/-, RS.77,433/-, RS.1,40,180/- AND RS.2,62,069/- IN A.Y S. 2006-07, 2005-06, 2004-05 ITA NO.272/AGRA/2013 A.YS.2007-08 10 AND 2003-04 RESPECTIVELY. HE HAS, THEREFORE, SUBMIT TED THAT SEPARATE ADDITION OF RS.17,00,000/- WAS WHOLLY UNJUSTIFIED. 11. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT WHEN THE A SSESSEE PARTNER MADE VOLUNTARY STATEMENT DECLARING RS.17,00,000/- IN SURVEY, ADDIT ION IS WHOLLY JUSTIFIED APART FROM SURRENDER OF RS.20,00,000/-. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSION AND DO NOT FIND ANY JUSTIFICATION TO SUSTAIN THE ADDITION OF RS.17,00,000/- SEPARATELY. THE SOLE BASIS OF MAKING ADDITION OF RS.17,00,000/- IS THE STATEMENT OF THE PARTNER O F ASSESSEE FIRM RECORDED DURING SURVEY. THE QUESTION NO.3 IS REPRODUCED IN THE ASSE SSMENT ORDER IN WHICH THE PARTNER OF THE FIRM RAMESH CHAND SHARMA ON OATH STA TED DURING THE SURVEY OPERATION THAT BOOKS OF ACCOUNT AND VOUCHERS ARE NO T AVAILABLE, THEREFORE, VERIFICATION OF STOCK IS NOT POSSIBLE. HE WAS SATIS FIED WITH THE INVENTORY PREPARED BY THE REVENUE DEPARTMENT AND EXPLAINED THAT HE WOU LD MAKE THE VALUATION LATER ON AND PRODUCE IN THE INCOME TAX DEPARTMENT AND STA TED IN HIS STATEMENT THAT IN HIS ESTIMATION THE ASSESSEE-FIRM HAS EXCESS STOCK O F RS.20,00,000/-. THIS STATEMENT WAS MADE IN ANSWER TO THE QUESTION WHEN THE AUTHORI ZED OFFICER FOUND THAT THE STOCK OF THREE FIRMS I.E. SHARMA MARBLE INDUSTRIES (ASSESSEE), M/S SHARMA ITA NO.272/AGRA/2013 A.YS.2007-08 11 INDUSTRIES PVT. LTD. AND SHARMA INTERNATIONAL WERE FOUND AT ONE PLACE FOR WHICH INVENTORY WAS PREPARED. IT IS NOT EXPLAINED HOW THE INVENTORY OF STOCK WAS PREPARED IN THE ABSENCE OF ANY MATERIAL ON RECORD P ARTICULARLY WHEN PARTNER WAS NOT ABLE TO POINT OUT AND BIFURCATE STOCK OF THE TH REE FIRMS. WHEN BOOKS ACCOUNT AND VOUCHERS OF THE STOCK WAS NOT AVAILABLE AT THE TIME OF SURVEY AND THE PARTNER IN HIS STATEMENT SHOWED HIS ABILITY TO VERIFY THE VALU ATION OF STOCK, THERE WAS NO OCCASION FOR THE PARTNER TO MAKE SURRENDER AT RS.20 ,00,000/- ON ACCOUNT OF EXCESS STOCK. SUCH STATEMENT COULD NOT BE TREATED AS VOLUN TARY STATEMENT BASED ON ANY INCRIMINATING MATERIAL AGAINST THE ASSESSEE. FURTHE R THE SAID PARTNER, IN ANSWER TO THE QUESTION NO.6, ON GOING THROUGH CERTAIN IMPOUND ED PAPERS STATED IN HIS ANSWER THAT HE COULD GET THE PAPERS COMPARED WITH BOOKS AC COUNT, BUT IT IS POSSIBLE THAT SOME OF THE PAPERS MAY NOT BE COMPARED WITH THE BOO KS ACCOUNT, THEREFORE, CONSIDERING POSSIBLE LEAKAGES IN THOSE PAPERS HE HA S SURRENDERED RS.17,00,000/-. AGAIN IT WAS MISLEADING STATEMENT AND WOULD NOT LEA D TO ANY WHERE BECAUSE IN HIS ANSWER TO THIS QUESTION THE PARTNER WAS NOT DEFINIT E TO DISCLOSE UNACCOUNTED INCOME EARNED OUT OF UNDISCLOSED INVESTMENT IN STOCK AND I T WAS ONLY POSSIBLE LEAKAGES WHICH WAS BASIS TO WORKOUT ADDITIONAL INCOME OF RS. 17,00,000/-. IT APPEARS THAT STATEMENT OF PARTNER WAS EITHER RECORDED IN PRESSUR E OR CONFUSED STATE OF MIND. THUS, NONE OF THE ABOVE SURRENDERS WAS BASED ON ANY EVIDENCE AND SUFFICIENT ITA NO.272/AGRA/2013 A.YS.2007-08 12 INCRIMINATING MATERIAL TO JUSTIFY THE ADDITION OF T HE NATURE. THUS, IT IS CLEAR THAT NO INDEPENDENT CORROBORATIVE EVIDENCE WERE BROUGHT ON RECORD TO JUSTIFY THE ADDITION OF ADDITIONAL INCOME. MERELY ON THE BASIS OF CONFES SIONAL STATEMENT, ADDITION WOULD NOT BE JUSTIFIED AS IS HELD IN VARIOUS DECISI ON NOTED ABOVE. IT MAY ALSO BE NOTED HERE THAT IN EARLIER YEARS THE INCOME OF THE ASSESSEE AS WAS ACCEPTED BY THE REVENUE DEPARTMENT WAS VERY MEAGER AS COMPARED TO T HE INCOME SURRENDERED IN ASSESSMENT YEAR UNDER APPEAL. THEREFORE, THE HISTOR Y OF THE ASSESSEE WOULD ALSO SUGGEST THAT THE ADDITION MADE BY THE A.O. OF RS.17 ,00,000/- SEPARATELY IS WHOLLY UNJUSTIFIED. SINCE NO EVIDENCE OF EXCESS STOCK OR E ARNING EXCESS INCOME WAS FOUND, THEREFORE, LD. COUNSEL FOR THE ASSESSEE WAS JUSTIFI ED IN CONTENDING THAT ASSESSEE MADE PROPER AND REASONABLE SURRENDER IN THE RETURN OF INCOME SHOWING NET BUSINESS INCOME TO COVER UP ALL THE IMPOUNDED MATER IAL. THE ASSESSEE WAS THEREFORE, JUSTIFIED IN NOT DECLARING INVESTMENT IN STOCK ON ACCOUNT OF CONFESSIONAL STATEMENT MADE ABOVE. IN VIEW OF THE ABOVE FACTS AN D CIRCUMSTANCES, WE ARE OF THE VIEW, THE ASSESSEE HAS CORRECTLY MADE SURRENDERED O F RS.20,00,000/- IN THE RETURN OF INCOME TO COVER UP ALL THE MATERIAL FOUND DURING THE COURSE OF SURVEY, THEREFORE, THERE WAS NO JUSTIFICATION TO MAKE SEPARATE ADDITIO N OF RS.17,00,000/-. WE ACCORDINGLY SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION OF RS.17,00,000/-. THE A.O. SHALL RESTRICT THE ASSESSE D INCOME AT RS.20,00,000/- AS ITA NO.272/AGRA/2013 A.YS.2007-08 13 WAS FILED IN THE RETURN OF INCOME. GROUND NO.1 IS A PPEAL OF THE ASSESSEE IS ACCORDINGLY ALLOWED. 13. ON THE GROUND NO.2, ASSESSEE HAS CHALLENGED THE CHARGING OF INTEREST UNDER SECTION 234A OF THE I.T. ACT ONLY. THE ASSESSEE FIL ED RETURN OF INCOME ON 30.03.2009 FOR ASSESSMENT YEAR UNDER APPEAL I.E. 20 07-08. LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE ASSESSEE HAS PAID THE T AXES BEFORE DUE DATE. DETAILS OF THE SAME ARE FILED AT PAGE NO.47 (P.B.) ON WHICH TH E CHALLANS OF TAXES PAID ARE AS UNDER:- RS.15,000/- PAID ON 15.09.2006, RS.15,000/- PAID ON 13.01.2007 RS.5,00,000/- PAID ON 13.03.2007 14. LD. COUNSEL FOR THE ASSESSEE RELIED UPON THE DE CISION OF HONBLE DELHI HIGH COURT IN THE CASE OF DR. PRANNOY ROY VS. COMMISSION ER OF INCOME-TAX, [2002] 121 TAXMAN 314 (DELHI) IN WHICH IT WAS HELD AS UNDER:- SECTION 234A, READ WITH SECTION 234B AND 234C, OF THE INCOME-TAX ACT, 1961-INTEREST CHARGEABLE FOR ASSE SSMENT YEAR 1995-96, RETURN WAS DUE TO BE FILED ON 31.10.1995 TAXES DUE WERE PAID ON 25.09.1995, I.E., BEFORE DUE DATE OF F ILING OF RETURN, BUT RETURN WAS FILED ON 29.09.1996, I.E. AFTER A DE LAY OF ABOUT 11 MONTHS THOUGH RETURNED INCOME WAS ACCEPTED ON 29 .1.1998, YET INTEREST HAD BEEN CHARGED UNDER PROVISIONS OF SECTI ON 234A ON GROUND THAT TAX PAID ON 25.09.1995 COULD NOT BE RED UCED FROM TAX DUE ON ASSESSMENT. ASSESSEE CONTENDED THAT WHERE AS SESSEE COULD NOT FILE A RETURN FOR REASONS BEYOND HIS CONTROL HE IS NOT LIABLE TO ITA NO.272/AGRA/2013 A.YS.2007-08 14 PAY INTEREST AS THEREBY REVENUE DOES NOT SUFFER ANY LOSS WHETHER ONE CAN READ A PENAL PROVISION IN SECTION 234A HE LD, NO WHETHER INTEREST WOULD BE PAYABLE ONLY IN A CASE WH ERE TAX NOT BEEN DEPOSITED PRIOR TO DUE DATE OF FILING OF INCOM E-TAX RETURN HELD, YES 15. LD. COUNSEL FOR THE ASSESSEE, THEREFORE, CONTEN DED THAT INTEREST UNDER SECTION 234A IS, THEREFORE, NOT CHARGEABLE. LD. DEPARTMENTA L REPRESENTATIVE CONTENDED THAT CHARGING OF INTEREST IS MANDATORY AND CONSEQUE NTIAL. 16. ON CONSIDERATION OF THE SUBMISSION OF THE PARTI ES, WE ARE OF THE VIEW THE MATTER REQUIRES CONSIDERATION AT THE LEVEL OF THE A .O. WHATEVER SUBMISSION ARE MADE BY ASSESSEE WERE NOT MADE BEFORE THE AUTHORITI ES BELOW. THUS, THE AUTHORITIES BELOW HAVE NO OCCASION TO DEAL WITH THE SUBMISSION OF THE ASSESSEE BASED UPON THE JUDGMENT OF THE HONBLE DELHI HIGH COURT. IT WOULD BE, THEREFORE, REASONABLE AND PROPER TO RESTORE THE ISSUE TO THE FILE OF THE A.O. WITH DIRECTION TO REDECIDE THE ISSUE IN THE LIGHT OF THE JUDGMENT OF HONBLE DELHI HIGH COURT. WE ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTO RE THE ISSUE OF CHARGING OF INTEREST UNDER SECTION 234A OF THE I.T. ACT TO THE FILE OF THE A.O. WITH DIRECTION TO REDECIDE THIS ISSUE IN ACCORDANCE WITH LAW. IN THE LIGHT OF THE SUBMISSION OF THE ASSESSEE AND JUDGMENT OF HONBLE DELHI HIGH COURT R EFERRED TO ABOVE. THE A.O. SHALL GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ITA NO.272/AGRA/2013 A.YS.2007-08 15 17. IN THE RESULT, THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D PARTLY. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (PRAMOD KUMAR) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER AMIT/ COPY OF THE ORDER FORWARDED TO:- APPELLANT, RESPONDENT, CIT (APPEALS) CONCERNED CIT CONCERNED, D.R., ITAT, AGRA BENCH, AGRA GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL, AGRA TRUE COPY