Shri Anil Mahajan, Indore V. The ACIT 1(2), Indore

ITA 290/IND/2011

• Counselvise Citation: 29022714 RSA 2011
• Duration Of Justice: 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 13-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Keywords: Income from undisclosed sources; Loose papers; Retraction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABOPM6490R I.T.A.NO. 290/IND/2011 A.Y. : 2002 - 03 SHRI ANIL MAHAJAN, ACIT, INDORE. VS 1(2), INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI MANJEET SACHDEVA, ADV. RESPONDENT BY : SHRI ARUN DEWAN, SR. DR DATE OF HEARING : 22 . 02 .201 2 DATE OF PRONOUNCEMENT : 23. 0 3 .201 2 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, INDORE, DATED 15.7.2011 FOR THE ASSES SMENT YEAR 2002-03. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN :- -: 2: - 2 1. THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITIO N MADE BY THE ASSESSING OFFICER OF RS. 4,00,000/- AS ADDITIONAL INCOME FROM UNDISCLOSED SOURCES. 2. THAT THE LD. CIT(A) AND ASSESSING OFFICER ERRED IN NOT ACCEPTING THE CLAIM OF THE ASSESSEE FOR REDUCIN G THE AMOUNT OF RS. 4,00,000/- FROM THE SURRENDERED INCOME, WHICH WAS BASED ON THE FACTS OF THE CASE. 3. THAT THE LD. CIT(A) AND ASSESSING OFFICER ERRED IN MAKING THE ADDITION OF THE SAME AMOUNT OF RS. 4,00,000/- BOTH IN THE HANDS OF THE ASSESSEE AND COMPANY M/S. STALLION FOODS PVT.LTD. 4. THAT THE LD. CIT(A) AND ASSESSING OFFICER FAILED TO APPRECIATE AND/OR OVERLOOKED THE SUBMISSION MADE BY THE ASSESSEE. 5. THAT THE ADDITION OF RS. 4,00,000/-IS NOT BASED ON THE FACTS OF THE CASE AND IS UNWARRANTED AND BAD IN LAW. 3. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A DIRECTOR IN M/S. STALLION FOODS PRIVATE LIMITED DERIVING DIRECT ORS -: 3: - 3 REMUNERATION FROM THE COMPANY. THERE WAS A SURVEY A T THE BUSINESS PREMISES OF M/S. STALLION FOODS PRIVATE LI MITED, ON 20 TH DECEMBER, 2001. AT THE BUSINESS PREMISES OF M/S. STALLION FOODS PRIVATE LIMITED, SOME LOOSE PAPERS A ND FDRS WERE FOUND. 4. DURING SURVEY THE RELEVANT QUESTION ASKED FROM THE ASSESSEE AND THE LETTERS REPLY THERETO WERE AS UND ER :- Q. DURING SURVEY LOOSE PAPERS FROM SR.NO. 1 TO 97 FOUND, PLEASE GIVE YOUR EXPLANATION ? ANS. I HAVE PERUSED LOOSE PAPERS 1 TO 97, WHICH ARE ON LETTER HEAD OF M/S. STALLION FOODS PRIVATE LIMITED ON WHICH DETAILS OF PURCHASES AND PAYMENTS DATE WISE HAVE BEEN GIVEN, WHICH IS APPROXIMATELY AMOUNTED TO RS. 3 LACS WHICH I DECLARE AS MY ADDITIONAL INCOME FOR THE PRESENT YEAR 2001-02 AND LOOSE PAPER NO.4, WHICH IS LETTER HEAD OF SUMMER SALES CORPORATION, THE SAME IS CASH BILL APART FROM THE INCOME OF RS. 61,250/- I DECLARE ADDITIONAL INCOME OF RS. 4,00,000/-. -: 4: - 4 5. HOWEVER, WHILE FILING RETURN OF INCOME, THE ASSESSE E HAS OFFERED ONLY RS. 1 LAKH IN HIS RETURN OF INCOME AND STATED THAT RS. 4 LAKHS SURRENDERED WAS WITH RESPECT TO TH E INCOME OF M/S. STALLION FOODS PRIVATE LIMITED. IT WAS ALSO ST ATED THAT AS THE AMOUNT WAS BELONGING TO THE COMPANY WHEREIN SEA RCH WAS CARRIED ON, THE SAME WAS OFFERED IN THE RETURN OF I NCOME OF THE COMPANY. THE ASSESSING OFFICER DID NOT ACCEPT ASSES SEES EXPLANATION AND ADDED THE SAME IN ASSESSEES INCOME AND THE ACTION OF THE ASSESSING OFFICER WAS CONFIRMED BY TH E LD.CIT(A). THE ASSESSEE IS IN FURTHER APPEAL BEFORE US AGAINST THE ABOVE ORDER OF CIT(A) CONFIRMING THE ADDITION OF RS. 4 LA KHS. 6. IT WAS CONTENDED BY LD. AUTHORIZED REPRESENTATIVE THAT THE ASSESSEE WAS ONLY DIRECTOR OF THE COMPANY M/S. STALLION FOODS PRIVATE LIMITED. DURING THE COURSE O F SURVEY AT BUSINESS PREMISES OF M/S. STALLION FOODS PRIVATE LI MITED, THE MANAGING DIRECTOR OF THE COMPANY WAS NOT AVAILABLE, THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN THE LO OSE PAPERS FOUND AT THE BUSINESS PREMISES. WITHOUT UNDERSTANDI NG THE IMPLICATION, HE SURRENDERED RS. 10 LAKHS IN COMPANY S HANDS AND ALSO SURRENDERED RS. 5 LAKHS IN HIS OWN HAND. A S THE -: 5: - 5 ASSESSEE WAS NOT ABLE TO FULLY EXPLAIN REGARDING TH E FDR OF RS. 1 LAKH, THEREFORE, SAME WAS OFFERED TO BE INCLUDED IN THE SURRENDERED INCOME. IN THE SURRENDERED AMOUNT OF RS . 4 LAKHS, RS. 38,758 WAS RELATED TO THE PAYMENT OF ALU MINUM STRUCTURE WORK AT THE RESIDENCE OF THE ASSESSEE. HE FURTHER SUBMITTED THAT WIFE OF THE ASSESSEE, WHO WAS AN EXE CUTIVE ENGINEER HAS TAKEN THIS LOAN FROM M/S. TECHNIQUE SA HKARI SANSTHA MARYADIT. CERTIFICATE REGARDING LOAN WAS OB TAINED AND ALSO SUBMITTED BEFORE THE ASSESSING OFFICER. HE FUR THER SUBMITTED THAT AFTER THE SURVEY, ALL THE PAPERS WER E EXAMINED AND WHEN IT WAS FOUND THAT LOOSE PAPERS PERTAINED T O THE COMPANY, THE IMPUGNED AMOUNT OF RS. 4 LAKHS WAS OFF ERED IN THE HANDS OF THE COMPANY. OUR ATTENTION WAS ALSO IN VITED TO THE COMPUTATION OF INCOME OF THE COMPANY PLACED IN PAPER BOOK WHICH INDICATED THAT AN INCOME OF RS. 3,61,250 /- WAS OFFERED IN ADDITION TO THE INCOME OF RS. 10 LAKHS, WHICH WAS SURRENDERED IN THE HANDS OF THE COMPANY. A NOTE WAS ALSO AFFIXED TO THE COMPUTATION OF INCOME STATING THAT R S. 13,61,250/- ( RS. 10,00,000/- + RS. 3,61,250/-) PER TAINS TO THE COMPANY, WHEREIN SURVEY WAS CARRIED OUT AND THE AMOUNT -: 6: - 6 WAS, THEREFORE, OFFERED IN THE HANDS OF THE COMPANY . AS PER THE LD. AUTHORIZED REPRESENTATIVE, MAKING ADDITION IN T HE HANDS OF THE ASSESSEE AMOUNTS TO DOUBLE ADDITION OF THE SAME AMOUNT IN RESPECT OF THE LOOSE PAPERS FOUND AT BUSINESS PR EMISES OF THE COMPANY, WHERE HE WAS WORKING AND SAME WAS OFFE RED IN THE HANDS OF THE COMPANY. 7. ON THE OTHER HAND, THE LD. SENIOR DR RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND CONTENDED THAT O NCE THE ASSESSEE HAS OFFERED THE AMOUNT IN HIS OWN HANDS, T HERE WAS NO REASON FOR RETRACTION FROM THE STATEMENT AND NOT OFFERING THE SAME IN HIS RETURN OF INCOME. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D RELEVANT DOCUMENTS PLACED IN THE PAPER BOOK TOWARDS WHICH OU R ATTENTION WAS INVITED. WE HAD ALSO PERUSED THE STAT EMENT RECORDED DURING THE COURSE OF SURVEY. FROM THE RECO RD WE FOUND THAT THERE WAS SURVEY AT BUSINESS PREMISES OF M/S. STALLION FOODS PRIVATE LIMITED ON 20 TH DECEMBER, 2001. CERTAIN LOOSE PAPERS WERE FOUND AT THE BUSINESS PRE MISES, WHICH WERE ON LETTER HEAD OF COMPANY INDICATING DET AILS OF -: 7: - 7 PURCHASES AND PAYMENTS. SINCE THE MANAGING DIRECTOR OF THE COMPANY WAS NOT PRESENT IN INDORE AND WAS AWAY TO M UMBAI, IN HIS ABSENCES STATEMENT OF THE ASSESSEE WAS RECOR DED, WHEREIN HE SURRENDERED RS. 10 LAKHS IN THE HANDS OF THE COMPANY AND RS. 5 LAKHS IN HIS INDIVIDUAL HANDS. TH E STATEMENT SO RECORDED DURING THE COURSE OF SURVEY A T THE BUSINESS PREMISES OF M/S. STALLION FOODS PRIVATE LI MITED READS AS UNDER :- I HAVE PERUSED LOOSE PAPERS 1 TO 97, WHICH ARE ON LETTER HEAD OF M/S. STALLION FOODS PRIVATE LIMITED ON WHICH DETAILS OF PURCHASES AND PAYMENTS DATE WISE HAVE BEEN GIVEN, WHICH IS APPROXIMATELY AMOUNTED TO RS. 3 LACS WHICH I DECLARE AS MY ADDITIONAL INCOME FOR THE PRESENT YEAR 2001-02 AND LOOSE PAPER NO.4, WHICH IS LETTER HEAD OF SUMMER SALES CORPORATION, THE SAME IS CASH BILL APART FROM THE INCOME OF RS. 61,250/- I DECLARE ADDITIONAL INCOME OF RS. 4,00,000/-. -: 8: - 8 9. AFTER THE RETURN OF THE MANAGING DIRECTOR OF THE COMPANY, THE LOOSE PAPERS WERE ANALYZED AND IT WAS FOUND THAT THE LOOSE PAPERS PERTAINED TO THE COMPANY ONLY AND NOT TO THE ASSESSEE, THEREFORE, THE AMOUNT WAS FOUND TO BE WRONGLY OFFERED IN THE HANDS OF THE ASSESSEE RATHER THAN THE COMPANY TO WHOM SUCH LOOSE PAPERS PERTAINED. THEREF ORE, WHILE FILING THE RETURN OF THE COMPANY, THIS WAS OF FERED IN THE HANDS OF THE COMPANY IN THE COMPUTATION OF INCOME F ILED ALONGWITH THE RETURN. IN THE INDIVIDUAL RETURN OF T HE ASSESSEE, OUT OF RS. 5 LAKHS, HE OFFERED ONLY RS. 1 LAKH. WE ALSO FOUND THAT THE INCOME SO OFFERED IN THE HANDS OF THE COMP ANY HAS BEEN SUBSTANTIVELY ASSESSED IN THE HANDS OF THE COM PANY. A CORROBORATIVE FINDING HAS ALSO BEEN RECORDED BY THE LD.CIT(A) TO THIS EFFECT. AS THE LOOSE PAPERS WERE NOT ONLY F OUND AT THE BUSINESS PREMISES OF THE COMPANY BUT THE SAME WERE ON LETTER HEADS OF COMPANY INDICATING COMPANYS TRANSACTION O F PURCHASE AND PAYMENT. THEREFORE, CORRECT COURSE OF ACTION WAS TO OFFER THE SAME IN THE HANDS OF THE COMPANY RATHE R THAN IN THE HANDS OF THE EMPLOYEE OF THE COMPANY WHOSE STAT EMENT WAS RECORDED DURING SURVEY. IN THE RETURN FILED BY THE -: 9: - 9 ASSESSEE, A NOTE WAS APPENDED TO THE COMPUTATION OF INCOME, WHICH READS AS UNDER :- OUT OF RS. 5 LAKHS DECLARED IN HIS INDIVIDUAL CAPACITY THE ASSESSEE HAS INCLUDED RS. 1.00 LAC ( 2 FDRS OF RS. 50000/- EACH) OF IDBI BANK IN HIS INDIVIDUAL RETURN IN FOREGOING COMPUTATION OF INCOME AND THE BALANCE RS. 4.00 LACS IS EXPLAINED BELOW : A- RELATING TO LOOSE PAPERS ON BEHALF OF COMPANY(DECLARED IN THE HANDS OF COMPANY AS RELATED TO LOOSE PAPERS 3,61,250 B-RETRACTED FROM SURRENDERED AS INCOME (BILL OF SUMMER SALES CORPORATION FOR ALUMINIUM STRUCTURE WORK AT RESIDENCE PAID OUT OF P. F. LOAN OF WIFE, 38,750 STANDS EXPLAINED) 4,00,000 10. THE SCRUTINY OF THE LOOSE PAPERS INDICATE THA T A SUM OF RS.38,750/- PERTAINED TO BILL OF SUMMER SALE S CORPORATION FOR ALUMINIUM STRUCTURE WORK AT THE RES IDENCE OF THE ASSESSEE. SINCE THIS AMOUNT PERTAINS TO THE WOR K CARRIED OUT AT RESIDENCE OF THE ASSESSEE, IT IS LIABLE TO B E INCLUDED IN -: 10: - 10 THE INCOME OF THE ASSESSEE UNLESS THE SOURCE OF SUC H INVESTMENT IS BEING EXPLAINED. FROM THE RECORD, WE FOUND THAT WIFE OF THE ASSESSEE HAS ALLEGED TO HAVE TAKEN LOAN OF RS. 38,750/- FROM M/S. TECHNIQUE SAHKARI SANSTHA MARYA DIT AND A CERTIFICATE OF THIS WAS LOAN FILED BEFORE THE ASS ESSING OFFICER DURING THE COURSE OF SCRUTINY ASSESSMENT. IN THE IN TEREST OF JUSTICE, WE RESTORE THE ADDITION OF RS. 38750/- TO THE FILE OF THE ASSESSING OFFICER FOR REVERIFYING THE FACT AND IF IT IS FOUND THAT THE SAID AMOUNT WAS TAKEN AS A LOAN, NO ADDITION IS WARRANTED IN THE HANDS OF THE ASSESSEE. WE DIRECT ACCORDINGLY . 11. WITH REGARD TO THE AMOUNT OF RS. 3,61,250/- AS CONTAINED IN THE LOOSE PAPERS, UNDISPUTEDLY ALL THE SE LOOSE PAPERS WERE ON THE LETTER HEADS OF THE COMPANY, THE REFORE, WHATEVER WAS MENTIONED IN THE LOOSE PAPERS PERTAINE D TO THE COMPANY ITSELF. THEREFORE, THE SAME WAS LIABLE TO B E OFFERED AND ADDED IN THE HANDS OF THE COMPANY. AS THE COMPA NY HAVE ALREADY INCORPORATED THIS AMOUNT IN THE COMPUTATION OF ITS INCOME AND WHICH WAS ALSO ASSESSED BY THE ASSESSING OFFICER, WE DO NOT FIND ANY JUSTIFICATION FOR MAKING ADDITIO N OF THIS AMOUNT AGAIN IN THE HANDS OF THE ASSESSEE, WHO WAS MERELY -: 11: - 11 AN EMPLOYEE OF THE COMPANY AND DRAWING SALARY FOR L OOKING AFTER THE AFFAIRS OF THE COMPANY. WE ACCORDINGLY DI RECT THE ASSESSING OFFICER TO EXCLUDE THE SAME FROM THE HAND S OF THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D IN PART. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2012. SD/ - SD/ - (JOGINDE R SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23 RD MARCH, 2012. CPU* 6719