Sajjan Bajaj, Bhagalpur V. ITO, Ward-1(3), Bhagalpur

ITA 292/PAT/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6283 (ITAT-PATNA)
• Duration Of Justice: 1 year(s) 9 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 16-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AJAY KUMAAR CITSRDR
• Assessee Lawyers: K N PRAASAD
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH E COURT AT KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR.A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 292 / PAT / 2018 ASSESSMENT YEAR :2011-12 SAJJAN BAJAJ S/O LT. NARSINGH DAS BAJAJ, PROP: DILIP TRADERS, SKHICHAND KATRA, SUJAGANJ, BHAGALPUR- 812001 [ PAN NO. AGKPB 7332 E ] V/S . INCOME TAX OFFICER, WARD-1(3), BHAGALPUR /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI K.N. PRAASAD, ADVOCATE /BY RESPONDENT SHRI AJAY KUMAAR, ADDL. CIT-SR-DR /DATE OF HEARING 15-09-09-2020 /DATE OF PRONOUNCEMENT 15-09-2020 / O R D E R PER BENCH (ORAL):- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2011-12 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-BHAGALPURS OR DER DATED 10.01.2014 PASSED INVOLVING PROCEEDINGS U/S 143(3) OF THE INCO ME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. COMING TO THE ASSESSEES SOLE SUBSTANTIVE GRIEVA NCE SEEKING TO DELETE ALLEGED EXCESS STOCK ADDITION OF RS.16.75 LAKHS; LE ARNED COUNSEL IS VERY FAIR AT THE OUTSET THAT HIS ONLY CASE IS THAT THE SAME SHOU LD HAVE BEEN RESTRICTED TO ITA NO.292/PAT/2018 A.Y. 2011-12 SAJJAN BAJAJ VS. ITO WD-1(3) BHAGALPUR PAGE 2 THE PROFIT ELEMENT THAN ADDING THE ENTIRE SUM IN QU ESTION. HE QUOTES HONBLE CALCUTTA HIGH COURTS DECISION IN ITAT NO. 196 OF 2 015 GA NO.4047 OF 2015. THEIR LORDSHIP DETAILED DISCUSSION READS AS FOLLOW S:- THE COURT: THE LEGAL ISSUE THAT THE REVENUE HAS RAI SED IN THIS APPEAL IS WHETHER THE APPELLATE TRIBUNAL COULD HAVE DISREGARD ED THE VALUE OF THE UNACCOUNTED PURCHASES MADE BY THE ASSESSEE AND REQU IRED ADDITIONAL TAX TO BE IMPOSED BY TAKING INTO ACCOUNT NOTIONAL SALES WH EN NO CORRESPONDING SALES HAD TAKEN PLACE DURING THE RELEVANT ASSESSMEN T YEAR. IN COURSE OF SURVEY OPERATIONS CONDUCTED ON MARCH 2 4, 2010 AT THE RICE MILL OF THE ASSESSEE, IT WAS DISCOVERED THAT THERE WERE LAR GE QUANTITIES OF UNDISCLOSED STOCKS THE ASSESSING OFFICER DID NOT WE IGH THE ADDITIONAL STOCKS BUT WENT BY THE NUMBER OF BAGS SINCE THE BAGS, PRES UMABLY, WERE OF UNIFORM OR STANDARD WEIGHT. THE ASSESSING OFFICER DISCOVERED THE UNDISCLOSED QU ANTUM OF PADDY TO BE TO THE EXTENT OF 37647 QUINTAL. THE EXCESS STOCK OF RI CE WAS TO THE EXTENT OF 581 QUINTAL AND THE EXCESS STOCK OF BRAND WAS TO THE EX TENT OF 45 QUINTAL. IT ALSO APPEARS THAT THE UNDISCLOSED, EXCESS STOCKS WERE CO RROBORATED BY THE ENTRIES IN CERTAIN REGISTERS MAINTAINED AT THE RELEVANT POI NT OF TIME AT THE RICE MILL AND CERTAIN CONFESSIONAL STATEMENTS WERE MADE BY OR ON BEHALF OF THE ASSESSEE. ON THE BASIS OF THE ADDITIONAL STOCKS FOUND, THE AS SESSING OFFICER ASSESSED THE TOTAL TAXABLE INCOME TO BE TO THE EXTENT OF RS. 3.92 CRORE AND A TAX DEMAND IN EXCESS OF RS.1.61 CRORE WAS MADE ON THE ASSESSEE . THE ASSESSEES APPEAL BEFORE THE COMMISSIONER (APPE ALS) FAILED AND BY AN ORDER OF AUGUST, 25, 2014, THE ASSESSMENT ORDER OF MARCH, 28, 2013 WAS UPHELD. THE COMMISSIONER LOOKED INTO THE FACTS, THE STATEMENTS MADE BY OR ON BEHALF OF THE ASSESSEE AND THE BOOKS OF THE ASSE SSEE THAT HAD BEEN LOOKED INTO AT THE TIME OF SURVEY WHICH THE ASSESSE E SUBSEQUENTLY CLAIMED HAD BEEN LOST OR DESTROYED AND, IN RESPECT WHEREOF, NO COMPLAINT HAD BEEN LODGED BY THE ASSESSEE. ON FACTS, THE COMMISSIONER (APPEALS) FOUND NO GROUNDS TO INTERFERE WITH THE QUANTUM OF EXCESS STO CKS DISCOVERED BY THE ASSESSING OFFICER IN COURSE OF THE SURVEY. THE COMM ISSIONER ALSO AGREED WITH THE ASSESSING OFFICER AS TO THE QUANTUM OF INCOME W HICH HAD ESCAPED ASSESSMENT. THERE ARE TWO ASPECTS TO THE ORDER IMPUGNED DATED J UNE, 230,2015 PASSED BY THE APPELLATE TRIBUNAL: THE FACTUAL FINDINGS OF THE COMMISSIONER (APPEALS) AS APPEAR TO HAVE BEEN INTERFERED WITH BY THE APPEL LATE TRIBUNAL; AND, THE DIRECTION GIVEN FOR TAKING SALES OF RICE AND BRAN I NTO ACCOUNT BEFORE ARRIVING AT THE ADDITIONAL INCOME WHICH COULD BE SAID TO HAVE E SCAPED ASSESSMENT. BEFORE THE COMMISSIONER (APPEALS), THE ASSESSEE HAD RELIED ON A DOCUMENT SIGNED BY AN OFFICIAL OF THE FOOD CORPORATION OF IN DIA THAT EVIDENCED THE STOCK FIGURES AT THE RELEVANT POINT OF TIME. THE COMMISSI ONER (APPEALS) DEALT WITH SUCH ASPECT OF THE MATER IN GREAT DETAIL AND BY REF ERRING TO THE ADMITTED STATEMENTS OF THE REPRESENTATIVES OF THE ASSESSEE, WHICH WERE NOT SOUGHT TO BE CONTROVERTED AT ANY POINT OF TIME ON BEHALF OF T HE ASSESSEE CONCLUDED THAT ITA NO.292/PAT/2018 A.Y. 2011-12 SAJJAN BAJAJ VS. ITO WD-1(3) BHAGALPUR PAGE 3 IT WAS THE PHYSICAL VERIFICATION OF THE STOCKS UNDE RTAKEN BY THE ASSESSING OFFICER IN COURSE OF THE SURVEY OPERATION THAT WAS TO BE GIVEN PRIMACY. INDEED, THE COMMISSIONER (APPEALS) FOUND THAT THERE WAS NO EVIDENCE THAT THE FI OFFICIAL WHO HAD ISSUED THE CERTIFICATE HAD UNDERTA KEN ANY PHYSICAL VERIFICATION OF THE STOCK T THE RICE MILL OF THE ASSESSEE AND TH E DOCUMENT APPEARED TO HAVE BEEN FILLED UP BY THE ASSESSEE AND MERELY SIGN ED BY THE FCI OFFICIAL. SUCH PART OF THE ORDER OF THE COMMISSIONER (APPEALS ) WAS UNEXCEPTIONABLE AND COULD NOT HAVE BEEN INTERFERED WITH BY THE APPE LLATE TRIBUNAL. INDEED, NO REASONS HAVE BEEN FURNISHED BY THE APPELLATE TRIBUN AL IN DISREGARDING THE PHYSICAL VERIFICATION OF THE STOCKS CARRIED OUT BY THE ASSESSING OFFICER. FURTHER, THE AREA OF THE GODOWN AS INDICATE DIN THE FCI CERTIFICATE WAS OF NO CONSEQUENCE SINCE THE ASSESSING OFFICER FOUND STOCK S PILED OUTSIDE THE GODOWN AT THE TIME OF THE SURVEY. ACCORDINGLY, TO THE EXTENT THAT THE APPELLATE TRIBU NAL ACCEPTED THE QUANTUM OF ADDITIONAL STOCKS ON THE BASIS OF THE CERTIFICATE I SSUED BY THE CONCERNED FCI OFFICIAL, SUCH ORDER IS UNACCEPTABLE AND IS SET ASI DE. THE ORDER OF THE COMMISSIONER (APPEALS) IN SUCH REGARD IN RESTORED. THE ADDITIONAL QUANTUM AS DISCOVERED DURING THE COURSE OF THE SURVEY OPERA TION WILL FASTEN TO THE ASSESSEE. HOWEVER, THE OTHER ASPECT OF THE MATTER WAS DEALT W ITH BY THE APPELLATE TRIBUNAL ON A POINT OF PRINCIPLE AND SUCH MATER DOE S NOT CALL FOR ANY INTERFERENCE. ACCORDING TO THE APPELLATE TRIBUNAL THE VALUE OF TH E ENTIRE QUANTITY OF ADDITIONAL STOCKS THAT WERE DISCOVERED IN COURSE OF THE SURVEY OPERATION COULD NOT BE REGARDED AS THE ADDITIONAL INCOME OF THE ASS ESSEE AND AMENABLE TO TAX. THERE WAS A SPECIFIC GROUND TAKEN BEFORE THE A PPELLATE TRIBUNAL, WHICH WAS A LEGAL QUESTION, AS TO WHETHER THE UNDISCLOSED PURCHASE COULD BE TAKEN AT THE ADDITIONAL INCOME WITHOUT REFERENCE TO THE P OSSIBLE SALE OF THE PADDY WHEN CONVERTED. THE ASSESSEE REFERS TO A JUDGMENT OF THE GUJARAT HI GH COURT REPORTED AT 388 ITR 377. THE PRINCIPLE ENUNCIATED IN SUCH JUDGMENT IS THAT WHEN UNDISCLOSED PURCHASES OF SUCH NATURE ARE DISCOVERED, IT IS ONLY THE PROFIT EMBEDDED IN THE TRANSACTIONS WHICH CAN BE ADDED TO THE TOTAL INCOME . THE GUJARAT HIGH COURT RELIED ON SOME OF THIS PREVIOUS JUDGMENTS TO HOLD T HAT NOT THE ENTIRE PURCHASE PRICE BUT ONLY THE PROFIT ELEMENT EMBEDDED IN SUCH PURCHASES CAN BE ADDED TO THE INCOME OF THE ASSESSEE . IN THE CIRCUMSTANCES AND PARTICULARLY SINCE THE FAC TUAL FINDINGS RENDERED BY THE COMMISSIONER (APPEALS) AS TO THE QUANTUM OF ADD ITIONAL STOCKS HAVE NOW BEEN RESTORED, THE ORDER IMPUGNED ON THE METHODOLOG Y FOR THE ASCRTAINMENT OF THE INCOME WHICH ESCAPED ASSESSMENT WOULD PASS M USTER. THE APPELLATE TRIBUNAL MERELY DIRECTED THE GROSS PROFIT THAT THE ADDITIONAL PURCHASE WAS CAPABLE OF GENERATING TO BE REGARDED AS THE ADDITIO NAL INCOME FOR TAX TO BE ASSESSED ON SUCH BASIS. SUCH VIEW OF THE APPELLATE TRIBUNAL DOES NOT CALL FOR ANY INTERFERENCE. ITA NO.292/PAT/2018 A.Y. 2011-12 SAJJAN BAJAJ VS. ITO WD-1(3) BHAGALPUR PAGE 4 ACCORDINGLY, ITAT NO. 196 OF 2015 AND GA NO.4047 OF 2015 ARE DISPOSED OF BY MODIFYING THE JUDGMENT AND ORDER OF THE APPELLAT E TRIBUNAL DATED JUNE 30,2015 AS INDICATED. MR. AJAY KUMAR HAS DRAWN STRONG SUPPORT FROM THE LO WER AUTHORITIES ACTION ADDING THE ENTIRE ALLEGED EXCESS STOCK DEDUCTED DUR ING THE COURSE SURVEY. FACED WITH THIS SITUATION & GUIDED BY FOREGOING CAS E LAW, WE OBSERVE THAT BOTH THE LOWER AUTHORITIES OUGHT NOT TO HAVE ADDED THE E NTIRE ALLEGED EXCESS STOCK. MR.PASAD AT THIS STATE AT THE BAR THAT THE ASSESSEE IS VERY MUCH READY AND WILLING TO GET 2.50 LAKHS AMOUNT ASSESSED AS PROFIT QUA THE IMPUGNED SUM. WE THEREFORE DIRECT THE ASSESSING OFFICER TO ASSESS THE FOREGOING SUM OF RS.2.50 LAKH INSTEAD OF RS.16.20 LAKH IN CONSEQUENT IAL PROCEEDINGS AS PER LAW. 3. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN OPEN COURT AT THE CLOSE OF HEAR ING ON TUESDAY 15 TH SEPTEMBER, 2020 SD/- SD/- ( ') ($% ') (A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) *DKP SR.P.S. &- 15 / 09 /20 20 / / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-SAJJAN BAJAJ S/O LT. NARSINGH DAS BAJAJ, PROP. DILIP TRADERS, SAKHICHAND KATRA, SUJAGANJ, BHAGALPUR-812001 2. /RESPONDENT-ITO, WARD-1(3), BHAGALPUR 3. 0 3 / CONCERNED CIT PATNA 4. 3- / CIT (A) PATNA 5. 7 %%0, 0 , / DR, ITAT, PATNA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 0,