SMT. JYOTI BHATIA, Indore V. THE ITO 4(4), Indore

ITA 281/IND/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5641 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 29-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained investment; Principle of natural justice; Additional evidence; Retraction; Revised return
• Section: 143(3); 133A; 153A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE (SINGLE MEMBER CASE) BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER I.T.A.NO.281/IND/2015 A.Y. : 2004-05 SMT. JYOTI BHATIA ITO, INDORE. VS. 4(4), INDORE. APPELLANT RESPONDENT PAN NO. ABFPB5380A A PPELLANT S BY : SHRI RAM GILDA, ADV. RESPONDENT BY : SHRI R. A. VERMA, DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 31.12.2014 FOR THE ASSE SSMENT YEAR 2003-04. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND OF APPE AL :- DATE OF HEARING : 2 2 . 02 .201 6 DATE OF PRONOUNCEMENT : 30 .0 3 .2016 SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 2 2 THAT THE LEARNED AUTHORITIES BELOW HAVE GROSSLY ERRED IN NOT FOLLOWING THE INSTRUCTION OF THE HON'BLE I.T.A.T. TO REDUCE THE INCOME RETURNED BY THE AMOUNT OF SURRENDER OF RS. 12,00,000/- MADE DURING SURVEY AS THE EXCESS STOCK WAS DULY COVERED BY DEBIT BALANCE OF RS. 25,00,700/- IN THE BOOKS OF HYDERABAD PARTIES. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS FILED ITS RETURN OF INCOME ON 18.01.2006 DECLARING TOTAL INCOME OF RS. 10,47,424/-. THE ASSESSEE FIRM DERIVES INCOME F ROM TRADING OF ELECTRICAL GOODS. THE ORIGINAL ASSESSMEN T ORDER WAS PASSED ON 26.12.2006 U/S 143(3) OF THE INCOME-TAX A CT, 1961. THE CASE WAS SELECTED FOR SCRUTINY AND NOTICE U/S 1 43(2) WAS ISSUED. A SURVEY U/S 133A OF THE INCOME-TAX ACT, 19 61, WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON 28.08.2003, BY INVESTIGATION WING, INDORE, FOR VERI FICATION OF PURCHASE OF FANS MADE FROM M/S. YASH INTERNATIONALS AND ITS SISTER CONCERNS OF HYDERABAD, CONSEQUENT UPON SEARC H & SEIZURE OPERATIONS CONDUCTED ON 08.07.2003 BY THE SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 3 3 INVESTIGATION WING AT HYDERABAD IN NAREDI GROUP OF CASES. THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT, ON 26.12.2006 AT RS. 21,56,730/-. THE FOLLOWING ADDITI ONS AMOUNTING TO RS. 11,09,306/- WERE MADE BY THE AO :- 1. G.P. ADDITION ON RECORDED SALES RS. 31,388/- 2. A/C DIFFERENCE ON VALLABH ELECTRICALS & HARSH ELECTRICALS RS. 5,461/- 3. UNEXPLAINED CASH PAYMENT MADE TO DEEPAK ELECTRIC HOUSE RS. 48,000/- 4. PROFIT ON UNRECORDED PURCHASE AND SALES THEREON RS. 3,41,005/- 5. INVESTMENT IN UNRECORDED PURCHASES RS.6,19,175/- 6. EXCESS STOCK NOT SURRENDERED RS. 64,277/- THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT (A)-II, INDORE, WHO ALLOWED THE FOLLOWING RELIEF TO THE ASS ESSEE :- SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 4 4 1. ON ACCOUNT OF DIFFERENCE IN VALLABH ELECTRICALS & HARSH ELECTRICALS RS. 5,461/- 2. ON ACCOUNT OF UNEXPLAINED CASH PAYMENT RS.48,000/- 3. ON ACCOUNT OF INVESTMENT IN UNRECORDED PURCHASE RS. 3,16,069/- THUS TOTAL INCOME REVISED AFTER GIVING APPEAL EFFECT AT RS. 17,87,200/- THE ASSESSEE PREFERRED AN APPEAL AGAINST THE ORDER OF CIT(A) DATED 5.5.2008 BEFORE THE I.T.A.T., INDORE. THE I.T .A.T., CONSIDERED THE FACTS AND DIRECTED THE AO TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AND TO DECIDE THE SAME IN AC CORDANCE WITH LAW, THE AO PASSED THE ORDER BUT WITHOUT ALLOW ING THE RETRACTION OF SURRENDER OF RS. 12 LACS. THE RELEVAN T PART OF DISCUSSION AND FINDINGS OF I.T.A.T. AS REPRODUCED B Y THE LD. CIT(A) IN HIS ORDER IS REPRODUCED HEREUNDER :- THE ASSESSEE HAS ALSO FILED ADDITIONAL GROUND TO TH E EFFECT THAT ON THE FACTS AND CIRCUMSTANCES OF THE C ASE THE SURRENDER OF INCOME OF RS. 12 LACS MADE BY THE HUSBAND OF THE ASSESSEE ON 28.8.2003 AND CONSEQUENT ADDITION TO THE INCOME WHILE FILING THE SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 5 5 RETURN IS QUITE UNJUSTIFIED AND UNREASONABLE. IT WA S SUBMITTED BY THE LD. COUNSEL FOR ASSESSEE THAT SINC E RETRACTION WAS MADE FOR INCLUSION OF INCOME OF RS. 12 LACS, THEREFORE, IT IS A LEGAL QUESTION AND CAN BE ADMITTED BY THE TRIBUNAL ESPECIALLY WHEN THE STOCK WAS FULLY EXPLAINED BY DEBIT BALANCE OF RS.2500700/- IN THE NAME OF THE ASSESSEE IN THE BOOKS OF TWO PERSONS OF HYDERABAD WHERE SEARCH WAS CONDUCTED, THEREFORE, THE VALUE OF EXCESS STOCK WAS COVERED BY THE SAID DEBIT BALANCES, THEREFORE, IT WAS STRONGLY ARGUED THAT NO ADDITION FOR STOCK COUL D BE MADE IN THE HANDS OF THE ASSESSEE. ON THE OTHER HAND, THE LEARNED SENIOR DR STRONGLY PLEADED THAT THERE SHOULD BE END TO THE LITIGATION AND AT THIS S TAGE, THE ADDITIONAL GROUND SO RAISED SHOULD NOT BE ADMITTED AS FRESH FACTS CANNOT BE BROUGHT ON RECORD AT THE STAGE OF THE TRIBUNAL TO WHICH THE LD. COUNS EL FOR ASSESSEE STRONGLY CONTENDED THAT NO NEW FACT IS BEING BROUGHT ON RECORD, RATHER THESE FACTS HAVE ALREADY BEEN MENTIONED AT PAGE 3 (LAST PARA) OF THE SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 6 6 ASSESSMENT ORDER AND PAGE 8 OF THE IMPUGNED ORDER. ON PERUSAL, THIS FACTUAL MATRIX WAS NOT CONTROVERTE D BY THE REVENUE. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON FILE AND FIND THA T SINCE AND FACTUAL ISSUES ARE INVOLVED, THEREFORE, KEEPING IN VIEW THE PRINCIPLE OF NATURAL JUSTICE TH AT NO PREJUDICE IS CAUSED TO EITHER SIDE, THE ADDITIONAL GROUND SO RAISED IS ADMITTED. SINCE THE TRIBUNAL IS THE LAST FACT FINDING AUTHORI TY AND LEGAL ISSUE IS ALSO INVOLVED, THEREFORE, KEEPIN G IN VIEW THE PRINCIPLE OF NATURAL JUSTICE, WE ARE OF TH E CONSIDERED OPINION THAT NO PREJUDICE IS TO BE CAUSE D TO EITHER SIDE ESPECIALLY WHEN THE ADDITION OF RS.31,338/- WAS MADE ON DECLARED SALES OF RS.17,70,580/- AGAINST THE GP OF RS.10.23% SHOWN BY THE ASSESSEE. IT IS FURTHER FOUND THAT THE TRANSPORTATION EXPENSES WERE NOT DEBITED WHILE PREPARING THE TRADING ACCOUNT AND THE SAME WERE NOT SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 7 7 CONSIDERED DURING SURVEY. THESE REQUIRE FRESH CONSIDERATION. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ALSO DIRECTED THE ASSESSING OFFICER T O TAKE UNACCOUNTED PURCHASES AT RS. 12,12,423/- AND TO WORK OUT PROFIT AND INVESTMENT ON THESE FIGURES. THE ASSESSING OFFICER TOOK UNACCOUNTED PURCHASE OF FANS AT RS.25,00,700/- AND FURTHER DETERMINED CORRESPONDING SALES AT RS.28,41,705/- GIVING PROFIT OF RS.3,41,005/- BY APPLYING GP AT THE RATE OF 12% OF SALES. WE FURTHER FIND THAT IN LAST PARA OF THE ASSESSMENT ORDER, IT HAS BEEN SPECIFICALLY MENTIONE D THAT THE LIST OF SUNDRY DEBTORS INCLUDES THE NAME O F JYOTI ELECTRICALS, INDORE, AND DEEPAK ELECTRIC HOUS E, THEREFORE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, INFORMATION WAS REQUISITIONED FROM THE INVESTING WING. LIKEWISE, IDENTICALLY AT PAGE 8 (PA RA 1) IT HAS BEEN MENTIONED THAT THE ADIT (INV.), HYDERABAD, HELD THAT THE FIGURES REPRESENT UNACCOUNTED DEBIT BALANCES IN THE BOOKS OF M/S VISHESH APPLIANCES FOR THE RESPECTIVE PARTIES AND T HE SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 8 8 FIGURES WERE WRITTEN IN CODE OMITTING TWO ZEROES. THE ACIT, CIRCLE 2 COMPLETED THE SEARCH ASSESSMENT IN THE CASE OF M/S VISHESH APPLIANCES PROPRIETOR SHRI RAJESH NAREDI ON 29.3.2006 U/S 143(3) READ WITH SECTION 153A AND WHILE COMPLETING THE ASSESSMENT, QUANTIFICATION OF TURNOVER WAS ARRIVED AT ON THE BASIS OF UNACCOUNTED PRODUCTION OF FANS, QUANTIFIED BY THE INVESTING WING AND ULTIMATELY ACCEPTED BY THE ASSESSEE I.E. M/S VISHESH APPLIANCES. IN VIEW OF THESE FACTS, WE FIND THAT T HESE ARE NOT THE NEW FACTS AS HAS BEEN ALLEGED BY THE LEARNED SENIOR DR AS IT IS A FACTUAL POSITION AND T HE SAME HAS NOT BEEN CONSIDERED. THE LEARNED DR ALSO FAIRLY AGREED THAT THERE WAS A MISTAKE ON THE PART OF THE ASSESSEE AS WELL AS OF THE ASSESSING OFFICER. W E, THEREFORE, KEEPING IN VIEW THE TOTALITY OF FACTS, REMAND THIS APPEAL TO THE FILE OF THE ASSESSING OFF ICER WITH THE DIRECTION TO EXAMINE THE CLAIM OF THE ASSESSEE AFRESH AND TO DECIDE THE SAME IN ACCORDANCE WITH LAW FOR WHICH DUE OPPORTUNITY OF SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 9 9 BEING HEARD BE PROVIDED TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM. THE ASSESSING OFFICER IN COMPLIANCE TO THE ABOVE FI NDINGS, RE- INITIATED THE ASSESSMENT PROCEEDINGS U/S 143(3) AND ASSESSMENT ORDER HAS BEEN DULY PASSED REJECTING THE CLAIM OF RETRACTION OF SURRENDERED AMOUNT OF RS. 12 LACS AND REPEATING THE ADDITION OF RS. 64,277/- FOUND AS EXCESSIVE STO CK DURING THE SURVEY PROCEEDINGS AND ADDED IN THE ORIGINAL AS SESSMENT ORDER. 4. THE MATTER CARRIED TO THE LD. CIT(A) AND THE LD. C IT(A) DISMISSED THE APPEAL BY OBSERVING AS UNDER :- 3.3 . I HAVE GONE THROUGH THE REASONS BROUGHT OUT BY THE ASSESSMENT ORDER. I HAVE GONE THROUGH THE REASONS BROUGHT OUT BY THE AO WHICH ARE AT LAST PARA OF PAGE NO.2 OF THE ASSESSMENT ORDER. IT IS BROUGHT OUT THAT EVEN IF THE CONTENTION OF THE ASSESSEE IS ACCEPTED SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 10 10 AND RETRACTION OF SURRENDERED AMOUNT TO RS. 12 LACS IS ALLOWED, THE TOTAL INCOME OF THE ASSESSEE WILL GO BELOW THE TAXABLE INCOME WHICH IS NOT PERMISSIBLE IN THE LAW. HOWEVER, THE AO HAS INADVERTENTLY QUOTED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF GOETZE INDIA LTD. VS. CIT, 157 TAXMAN 1. WHEREAS THE RELEVANT DECISION HAS BEEN GIVEN BY HON'BLE SUPREME COURT IN THE CASE SHELLY PRODUCTS, (2003) 129 TAXMAN 271 (SC)/(2003) 261 ITR 367 (SC)/(2003) 181 CTR 564. 3.4 THE APPELLANT HAS FILED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED ABOVE. IT IS OBSERVED THAT THE APPELLANT HAS MAINLY CONTENDED THAT THE DECISION OF HON'BLE SUPREME COURT WAS NOT APPLICABLE IN THE INSTANT CASE AS THERE WAS NO ISSUE OF ANY FRESH CLAIM. FURTHER, THE APPELLANT HAS CITED SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 11 11 THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383(SC) AND HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. PYNGROPE, 200 ITR 106. I HAVE CLEARLY DISCUSSED ABOVE THE CORRECT CASE LAW APPLICABLE IN THE CASE UNDER CONSIDERATION AS AGAINST THE ONE CITED BY THE AO. IT HAS BEEN CLEARLY LAID DOWN BY HON'BLE APEX COURT THAT THE ADMITTED LIABILITY IN FORM OF ADVANCE TAX, TDS AND SELF ASSESSMENT AND DULY PAID IN ACCORDANCE WITH ROI FILED CANNOT BE REFUNDED. IN THE CASE UNDER CONSIDERATION, IF THE APPELLANT IS ALLOWED TO RETRACT THE SURRENDERED AMOUNT OF RS. 12 LACS, THE TOTAL INCOME WILL DRASTICALLY GO BELOW THE RETURNED INCOME EVEN AFTER CONSIDERING CERTAIN CONFIRMED ADDITIONS AS THE RETURNED INCOME IS AMOUNTING ONLY RS. 10,47,424/-. THEREFORE, THE REVENUE WILL HAVE TO PART WITH THE REFUND OF ADMITTED TAX SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 12 12 LIABILITY IN THE FORM OF SELF ASSESSMENT AND ADVANCE TAX WHICH AS DISCUSSED ABOVE IS NOT PERMISSIBLE IN LAW. THE CASE LAWS CITED BY THE APPELLANT WERE GONE THROUGH AND IT IS OBSERVED THAT THE FACTS AND CIRCUMSTANCES OF BOTH THE CASE LAWS ARE ENTIRELY DIFFERENT FROM THE CASE UNDER CONSIDERATION. THE CASE OF NATIONAL THERMAL POWER CO. LTD., HON'BLE SUPREME COURT HAS DEALT WITH THE ISSUE AND SCOPE OF ADMISSION OF ADDITIONAL GROUNDS BY ITAT WHEREAS IN THIS CASE, THE AO HAS REJECTED THE CLAIM ON THE GROUND THAT A TAXABLE TOTAL INCOME WILL FALL BELOW RETURNED INCOME. IN VIEW OF ABOVE DISCUSSION AND THE FACT THAT THE APPELLANT HAS NOT FILED ANY SUBMISSIONS IN SUPPORT OF THE GROUNDS RAISED THE AO WAS FOUND JUSTIFIED IN REJECTING THE RETRACTION OF SURRENDERED AMOUNT OF RS. 12 LACS. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 13 13 5. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED WRITTEN SUBMISSION, WHICH READS AS UNDER :- THE RELIANCE OF AO ON THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF GOETZE(INDIA) LIMITED VS. CIT, 204 CTR 0182 IS MISLEADING AND IRRELEVANT AS IT REFERS TO P OWER OF A.O. TO ENTERTAIN CLAIM FOR DEDUCTION OTHERWISE THA N BY FILING A REVISED RETURN. THIS IS ALSO CONFIRMED BY THE LD. CIT(A) IN HIS ORDER. THE CASE OF THE ASSESSEE IS TO DENY HER LIABILITY TO BE ASSESSED UNDER THE I. T. ACT BY FIL ING ADDITIONAL GROUND BEFORE THE HON'BLE TRIBUNAL ON TH E BASIS OF FACTS ALREADY ON RECORD. THE RELIANCE ON THE DECISION OF HON'BLE SUPREME COU RT BY THE LD. CIT(A) IN THE CASE OF SHELLY PRODUCTS & OTH ERS, 261 ITR 0367 IS ALSO MISLEADING AND IRRELEVANT AS THAT REFERS TO THE ADMITTED TAX LIABILITY AND NO REFUND CAN BE GRANTED EVEN IF RETURN/ASSESSMENT IS HELD TO BE VOID AB INI TIO ON TECHNICAL OR LEGAL GROUNDS. BUT THE CASE OF THE ASS ESSEE IS DIFFERENT AS SHE DENIES HER LIABILITY TO BE ASSESSE D UNDER THE ACT, BY FILING ADDITIONAL GROUND FIRST TIME BEF ORE THE HON'BLE TRIBUNAL ON THE BASIS OF COGENT FACTS ALREA DY ON SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 14 14 RECORD. THE HON'BLE TRIBUNAL ALLOWED THIS ADDITIONA L GROUND VIDE ITS ORDER DATED 28.06.2011 IN CONFORMIT Y WITH THE DECISIONS OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO.LTD. VS. CIT, 229 ITR 036 3, CIT VS. M. PYNGROPE (GAUHATI), 200 ITR 106 AND HON'BLE M.P. HIGH COURT IN THE CASE OF M.P. STATE ELECTRONICS DEVELOPMENT CORPN. LIMITED VS. DCIT, (2015) 25 ITJ 704 (MP). UNDER THE CIRCUMSTANCES AND IN VIEW OF THE CASE LA W, WE PRAY TO ALLOW THE RETRACTION OF RS. 12,00,000/- MISTAKENLY SURRENDERED AND RETURNED BY THE ASSESSEE AND ADMITTED BY THE REVENUE. 6. THE LD. AUTHORIZED REPRESENTATIVE HAS FURTHER SUBMI TTED THAT IN THIS CASE THE SURVEY U/S 133A WAS CONDUCTED ON 28.08.2003 FOR VERIFICATION OF PURCHASE OF FANS FRO M M/S. YASH INTERNATIONALS AND ITS SISTER CONCERNS OF HYDERABAD , CONSEQUENT TO SEARCH & SEIZURE OPERATIONS ON 8.7.20 03 BY THE INVESTIGATION WING AT HYDERABAD IN NAREDI GROUP OF CASES. THE SURRENDER WAS BY MR. JAGDISH, HUSBAND OF THE ASSESS EE FOR RS. SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 15 15 12 LACS FOR EXCESS STOCK OF RS. 12,64,277/-. THE RE TURN U/S 139 WAS FILED ON 18.1.2006 AT THE INCOME OF RS. 10, 47,424/-. THIS INCLUDED SURRENDER OF RS. 12,00,000/-. THE ASS ESSMENT U/S 143(3) WAS COMPLETED ON 26.12.2006 ON THE INCOM E ASSESSED AT RS. 21,56,730/-. THE HON'BLE TRIBUNAL R EMANDED THE APPEAL TO FILE OF THE AO WITH A DIRECTION TO EX AMINE THE CLAIM OF THE ASSESSEE AFRESH. THE LD. AO DID NOT AL LOW THE RETRACTION OF INCOME SURRENDERED OF RS. 12 LACS AS INCOME WOULD BE BELOW THE RETURNED INCOME, RELYING ON THE DECISION OF HON'BLE APEX COURT IN THE CASE OF GOETZE INDIA VS. CIT, 157 TAXMAN 1. THE LD. CIT(A) ALSO DID NOT ALLOW THE CLA IM OF RETRACTION OF RS. 12 LACS RELYING ON THE DECISION O F SHELLY INDIA PRODUCTS LIMITED, 261 ITR 367 (S.C.). THIS CASE IS ON DIFFERENT FACTS AND IRRELEVANT. IT IS UNDISPUTED FACTS THAT T HE BUSINESS STARTED FROM 1.4.2003, EXCESS STOCK U/S 133A WAS RS . 12,64,277/-. OFFICERS OF THE DEPARTMENT WERE ALREAD Y AWARE OF THE FACT OF DEBIT BALANCE IN THE BOOKS OF M/S. VISH ESH APPLIANCES, HYDERABAD APPEARING IN THE NAME OF THE ASSESSEE. THE DEBIT BALANCE WAS ULTIMATELY ACCEPTED BY THE H YDERABAD PARTY IN ITS ASSESSMENT. DEBIT BALANCES IN TWO CONC ERNS FROM SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 16 16 WHERE THE ASSESSEE PURCHASED FANS WERE, NAMELY, (I) VISHESH APPLIANCES, HYDERABAD FOR RS. 24,76,700/- AND (II) DEEPAK ELECTRIC HOUSE, INDORE FOR RS. 24,000/-. THE EXCESS STOCK OF RS. 12,64,277/- WAS ALREADY COVERED BY THE DEBIT BA LANCE OF HYDERABAD PARTY. THE LD. AUTHORIZED REPRESENTATIVE CONCLUDED AND PRAYED THAT THE RETRACTION OF RS. 12 LACS BE ALLOWED. 7. THE LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIE S. 8. I HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PART IES AND HAVE PERUSED THE CASE LAWS CITED BY THE ASSESSI NG OFFICER. I HAVE GONE THROUGH THE ORDER OF THE CIT(A). THE LD . CIT(A) HAS HELD THAT THE ASSESSEE HAS CLAIMED THAT HE HAS SURR ENDERED THE AMOUNT OF RS. 12 LAKHS AND NOW ASSESSEE WANTS T O RETRACT THE SURRENDERED AMOUNT OF RS. 12 LAKHS TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS HELD THAT IF THE A SSESSEE RETRACTS THE SURRENDERED AMOUNT OF RS. 12 LAKHS, TH E INCOME OF THE ASSESSEE WILL GO BELOW THE TAXABLE LIMIT, WH ICH IS NOT PERMISSIBLE IN LAW. THE LD. CIT(A) HAS HELD THAT HO N'BLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS, (2003 ) 261 ITR SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 17 17 367 ( S.C.) HAS DISCUSSED THE ISSUE IN DETAIL AND A S PER THE DECISION REFUND ENTITLEMENT ANNULMENT - - WHEN AN ORDE R OF ASSESSMENT IS SET ASIDE OR ANNULLED AND NO FURTHER ASSESSMENT CAN BE MADE, THE ASSESSEE WOULD BE ENTIT LED ONLY TO THE AMOUNT OF TAX PAID IN EXCESS OF THE LIA BILITY INCURRED BY HIM ON THE BASIS OF INCOME DISCLOSED AN D NOT THE TAX PAID BY HIM BY WAY OF ADVANCE TAX OR SELF- ASSESSMENT TAX IF THE TAX PAID IS FOUND TO BE LES S THAN THAT PAYABLE, NO FURTHER DEMAND CAN BE MADE FOR RECOVERY OF THE BALANCE AMOUNT SINCE A FRESH ASSESS MENT IS BARRED PROVISIONS OF THE ACT CAST AN OBLIGATIO N ON THE ASSESSEE TO PAY THE ADVANCE TAX, AND AFTER TAKING I NTO ACCOUNT THE TAX PAID IN ADVANCE, TO PAY THE BALANCE OF THE TAX AND INTEREST, IF ANY, WHILE FILING THE RETU RN IT CANNOT, THEREFORE BE CONTENDED THAT THE DEPOSIT OF ADVANCE TAX AND SELF-ASSESSMENT TAX IS NOT AUTHORIZ ED BY LAW LIABILITY TO PAY INCOME TAX CHARGEABLE U/S 4( 1) DOES NOT DEPEND ON THE ASSESSMENT BEING MADE FILING OF RETURN AND THE PAYMENT OF TAX THEREON COMPUTED AT T HE SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 18 18 PRESCRIBED RATES AMOUNTS TO AN ADMISSION OF TAX LIA BILITY WHICH THE ASSESSEE ADMITS TO HAVE INCURRED IN ACCORDANCE WITH THE PROVISIONS OF THE FINANCE ACT A ND THE INCOME-TAX ACT THERE IS NO SCOPE FOR CONTENDI NG THAT ART. 265 IS VIOLATED PROVISO (B) TO SECTION. 240 IS DECLARATORY AND, THEREFORE, RETROSPECTIVE. 9. THE LD. AUTHORIZED REPRESENTATIVE MAINLY CONTENDED THAT THE HON'BLE SUPREME COURTS CASE OF SHELLY PRO DUCTS IS NOT APPLICABLE IN THE INSTANT CASE AS THERE WAS NO ISSUE OF FRESH CLAIM. THE ASSESSEE HAS CITED THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF NATIONAL THERMAL POWER CO. LTD. VS. CIT 229 ITR 383(SC) AND HON'BLE GAUHATI HI GH COURT IN THE CASE OF IN THE CASE OF CIT VS. PYNGROP E, 200 ITR 106. THE HON'BLE SUPREME COURT IN THE CASE OF SHELLY PRODUCTS HAS HELD THAT WHEN THERE IS AN ADM ITTED LIABILITY IN THE FORM OF ADVANCE TAX, TDS AND SELF- ASSESSMENT AND DULY PAID IN ACCORDANCE WITH ROI FIL ED WITH THE RETURN OF INCOME CANNOT BE REFUNDED. IN THE CASE UNDER CONSIDERATION, IF THE ASSESSEE IS ALLOWE D TO RETRACT THE SURRENDERED AMOUNT OF RS. 12 LACS, THE TOTAL SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 19 19 INCOME WILL DRASTICALLY GO BELOW THE RETURNED INCOM E. THEREFORE, THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE. THE AO HAS REJECTED THE CLAIM THAT SURREN DERED AMOUNT OF RS. 12 LAKHS CANNOT BE ALLOWED TO BE RETR ACTED AND HE HAS REJECTED THE CLAIM. 10. THE LD. AUTHORIZED REPRESENTATIVE HAS RELIED UPON THE ASSESSMENT ORDER IN THE CASE OF THE ASSESSEE, WHEREIN THE LD. AUTHORIZED REPRESENTATIVE HAS DRAWN OUR ATTENTION TO THE ASSESSMENT ORDER, WHEREIN IT IS HE LD THAT DURING THE COURSE OF PHYSICAL VERIFICATION OF THE S TOCK, WHICH WAS VALUED AT RS. 17,03,646/-. THE STOCK AS PER BOOKS OF ACCOUNT WAS RS. 4,39,369/-. THUS, THERE WA S EXCESS STOCK OF RS. 12,64,277/- FOR WHICH NO SATISF ACTORY AND REASONABLE EXPLANATION WAS OFFERED. THE ASSESSE E HAS OFFERED AN AMOUNT OF RS. 12,00,000/- AS UNDISCL OSED INCOME OF THE CURRENT YEAR. THE AO IN HIS ASSESSMEN T ORDER HAS ALSO HELD THAT HE HAS CALLED FOR THE INFO RMATION FROM ADIT HYDERABAD AND IT WAS CLEAR THAT THE ASSES SEE HAS PURCHASED THESE FANS OF RS. 24,76,700/- FROM M/ S. VISHESH APPLIANCES, HYDERABAD, WHICH WERE NOT SHOWN IN THE BOOKS OF ACCOUNT. THEREFORE, THE EXPLANATION SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 20 20 OFFERED BY THE ASSESSEE IN THIS REGARD HAS NO FORCE AND CANNOT BE ACCEPTED AND TREATED AS UNRECORDED PURCHA SE OF THE ASSESSEE. AGAINST THIS FINDING, THE ASSESSEE HAS GONE BEFORE THE CIT(A) AND THE LD. CIT(A) HAS ALSO CONFIRMED THE ORDER OF THE AO AND, MOREOVER, THE MA TTER WENT BEFORE THE TRIBUNAL AND THE TRIBUNAL HAS RESTO RED THIS MATTER BACK TO THE FILE OF AO AND DURING THE C OURSE OF HEARING BEFORE THE AO, NO ADDITIONAL EVIDENCE HA S BEEN SUBMITTED BY THE ASSESSEE. THEREFORE, WHEN THE ASSESSEE COULD NOT BRING ANY EVIDENCE THAT THE SURRENDERED AMOUNT IS THE SAME, WHICH AMOUNT HAS BEEN DECLARED AS UNEXPLAINED INVESTMENT IN STOCK. THEREFORE, I AM NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HENCE, I CONFIRM THE ORDER OF THE AO AND THE LD. CIT(A). HON'BLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS & ANOTHER (SUPRA) HAS HELD AS UNDER :- PROVISO (B) TO S. 240 IS DECLARATORY. ?EVEN UNDER T HE UNAMENDED S. 240, THE ASSESSEE WAS ONLY ENTITLED TO T HE REFUND OF TAX PAID IN EXCESS OF THE TAX CHARGEABLE O N THE TOTAL INCOME RETURNED BY THE ASSESSEE. IT IS SO HELD WITHOUT TAKING THE AID OF THE AMENDED PROVISION. IT, SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 21 21 THEREFORE, FOLLOWS THAT PROVISO (B) TO S. 240 IS D ECLARATORY. IT SEEKS TO CLARIFY THE LAW SO AS TO REMOVE DOUBTS L EADING TO THE COURTS GIVING CONFLICTING DECISIONS, AND IN SE VERAL CASES DIRECTING THE REVENUE TO REFUND THE ENTIRE AM OUNT OF INCOME-TAX PAID BY THE ASSESSEE WHERE THE REVENU E WAS NOT IN A POSITION TO FRAME A FRESH ASSESSMENT. BEING CLARIFICATORY IN NATURE IT MUST BE HELD TO BE RETRO SPECTIVE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. IT IS WELL SETTLED THAT THE LEGISLATURE MAY PASS A DECLARATORY A CT TO SET-ASIDE WHAT THE LEGISLATURE DEEMS TO HAVE BEEN A JUDICIAL ERROR IN THE INTERPRETATION OF STATUTE. IT ONLY SEEKS TO CLEAR A MEANING OF A PROVISION OF THE PRINCIPAL ACT AND MAKE EXPLICIT THAT WHICH WAS ALREADY IMPLICIT. THE STATUTORY PROVISION HAS TO BE EXAMINED FOR ITS TRUE EFFECT AND THE CIRCULAR NO. 551 DATED 23 RD JANUARY, 1990, IN THE INSTANT CASE, IS NOT RELEVANT. WHEN AN ORDER OF ASSESSMENT IS SET-ASIDE OR ANNULLE D AND NO FURTHER ASSESSMENT CAN BE MADE, THE ASSESSEE WOULD BE ENTITLED ONLY TO THE AMOUNT OF TAX PAID IN EXCESS OF THE LIABILITY INCURRED BY HIM ON THE BASIS OF INC OME SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 22 22 DISCLOSED AND NOT THE TAX PAID BY HIM BY WAY OF ADVA NCE TAX OR SELF-ASSESSMENT TAX; AMENDMENT OF S. 240 W.E .F. 1 ST APRIL, 1989, BY ADDITION OF PROVISO (B) IS DECLARAT ORY OF THE LAW AND THEREFORE RETROSPECTIVE. 11. RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE SUPR EME COURT, I AM OF THE VIEW THAT THE ASSESSEE HAS NOT B EEN ABLE TO PROVE THE CLAIM THAT THE AMOUNT OF RS. 12 LAKHS, WH ICH BELONGED TO HYDERABAD PARTY IS THE PURCHASES MADE B Y THE ASSESSEE HERSELF. THEREFORE, I DISMISS THE APPEAL O F THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OP EN COURT ON 30 TH MARCH, 2016, SD/- ( D.T.GARASIA) JUDICIAL MEMBER DATED : 30 TH MARCH, 2016. CPU* SMT. JYOTI BHATIA, INDORE VS. ITO, 4(4), INDORE, I. T.A.NO. 281/IND/2015 A.Y. 2004-05 23 23 22.2