Mahesh Chand Singhal, Agra V. Dy. C.I.T., Circle-4(1), Agra

ITA 30/AGR/2012

• Counselvise Citation: 3020314 RSA 2012
• Duration Of Justice: 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-07-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 16-07-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 24-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: P N AGARWAL
• Keywords: Unexplained investment; Business income
• Section: 143(3); 133A; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER ITA NO.30/AGR/2012 ASSESSMENT YEAR: 2008-09 SHRI MAHESH CHAND SINGHAL, VS. DY. COMMISSIONER O F INCOME, PROP. M/S. SINGHAL AGRICULTURE PRODUCTS, CIRCLE 4 (1), AGRA. 28/130, MASTA KI BAGHICHI, AGRA. (PAN: ANEPS 5123 P). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.N. AGARWAL, ADVOCATE RESPONDENT BY : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 16.07.2012 DATE OF PRONOUNCEMENT OF ORDER : 20.07.2012 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 15.11.2011 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE ASSESSMEN T YEAR 2008-09 ON THE FOLLOWING GROUNDS :- 1. THAT THE LEARNED AUTHORITIES BELOW HAVE ERRED O N FACTS AND IN LAW IN SUSTAINING THE UNDER MENTIONED ADDITIONS :- (I) UNEXPLAINED INVESTMENT IN BUSINESS OUTSIDE THE BOOKS RS.3,14,250/- (II) AMOUNT OF EXTRA PROFIT ON TURNOVER RECORDED IN REGULAR BOOKS OF ACCOUNTS RS.11,58,795/- ITA NO.30/AGR/2012 A.Y. 2008-09 . 2 2. THAT, IN ANY VIEW OF THE CASE, THE ADDITIONS MAD E/SUSTAINED ARE HIGHLY EXCESSIVE AND ARE LIABLE TO BE REDUCED. 3. THAT THE ASSESSEE MAY BE ALLOWED APPROPRIATE REL IEF HAVING LOOKING TO THE OVERALL FACTS AND CIRCUMSTANCES OF T HE CASE. 4. THAT THE ASSESSMENT ORDER UNDER SECTION 143(3) D ATED 02.12.2010 IS BAD IN LAW. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SURVEY UN DER SECTION 133A OF THE INCOME TAX ACT, 1961(THE ACT HEREINAFTER) WAS CAR RIED OUT ON 28.09.2007. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF MACHINING OF CASTING AND MANUFACTURING OF ADV HUBS. DURING THE COURSE O F SURVEY, CERTAIN DOCUMENTS/ PAPERS WERE IMPOUNDED, FROM WHERE IT CAME TO THE NO TICE OF THE DEPARTMENT THAT THE ASSESSEE WAS INDULGING IN UNACCOUNTED SALE AND PURCHASE OUTSIDE THE BOOKS OF ACCOUNT. DURING THE COURSE OF SURVEY, THE ASSESSEE HAS SURRENDERED ADDITIONAL INCOME OF RS.14,00,000/-. HOWEVER, THE A.O. NOTICE D THAT THE ASSESSEE HAS SURRENDERED INCOME ONLY TO THE EXTENT OF RS.11,50,0 00/-. DURING THE COURSE OF SURVEY, TOTAL SALES OUTSIDE THE BOOKS OF ACCOUNT QU ANTIFIED AT RS.57,13,791/- AGAINST THE PURCHASES OF RS.44,48,400/-. THE A.O. ON THE B ASIS OF UNACCOUNTED PURCHASE AND SALE, FOUND THAT THERE WAS UNEXPLAINED INVESTME NT FOR EFFECTING SALE OF RS.57,13,791/-. THE A.O. APPLIED G.P. RATE OF 18.6 7% AND ACCORDINGLY CALCULATED UNEXPLAINED AMOUNT OF INVESTMENT OF RS.10,66,764/-. THE A.O. ALSO NOTICED THAT DIFFERENCE IN BETWEEN UNACCOUNTED SALE AND PURCHASE OF WHICH CALCULATION COMES TO RS.12,65,391/- (57,13,791.00 44,48,400), THERE FORE, HE TREATED THE SAID ITA NO.30/AGR/2012 A.Y. 2008-09 . 3 DIFFERENCE AS G.P. AND MADE ADDITION OF RS.12,65,39 1/-. IT HAS ALSO BEEN NOTED BY THE A.O. THAT THE ASSESSEE HAS DECLARED LOWER G.P. WHEREAS AS PER CALCULATION OF G.P. ON THE BASIS OF PAPER FOUND AT THE TIME OF SUR VEY WHICH COMES TO 22.14%. THE A.O. APPLIED THE SAID G.P. OF 21.14% ON DECLARE D TURNOVER OF RS.1,00,98,920/ OF WHICH CALCULATION COMES TO RS.22,35,900/- AGAINS T THE G.P. DECLARED BY THE ASSESSEE OF RS.10,77,105/. THE A.O. CALCULATED THE DIFFERENCE OF AMOUNT OF RS.11,58,795/-. THUS, THE A.O. DETERMINED TOTAL IN COME AS UNDER :- IN VIEW OF THE ABOVE DISCUSSION THE INCOME OF THE ASSESSEE IS COMPUTED AS UNDER:- RETURNED INCOME AS SHOWN BY THE ASSESSEE RS.11.56 ,460/- ADD: (I) ADDITION ON ACCOUNT OF UNEXPLAINED RS.10,66,76 4/- INVESTMENT AS DISCUSSED ABOVE. (II) ADDITION ON ACCOUNT OF GROSS PROFIT RS.12,65, 391/- WORKED OUT ON SALES NOT RECORDED IN BOOKS OF A/C AS DISCUSSED ABOVE. (III) ADDITION ON ACCOUNT OF EXTRA PROFIT RS.11,58, 795 WORKED OUT ON TURNOVER SHOWN IN THE RETURN OF INCOME AS DISCUSSED ABOVE ---------------- RS.34,90,950 LESS: AMOUNT ALREADY SURRENDERED RS.11,50, 000 RS.23,40,650 TOTAL INCOME RS.34,97,410 3. THE CIT(A) AFTER CONSIDERING THE ASSESSEES SUBM ISSION FOUND THAT THE ADDITION TOWARDS INVESTMENT FOR MAKING SALES OUTSID E BOOKS OF ACCOUNTS SHOULD BE ITA NO.30/AGR/2012 A.Y. 2008-09 . 4 THE PEAK AMOUNT FOR PURCHASES MADE OUTSIDE THE BOOK S OF ACCOUNT OF WHICH CALCULATION COMES TO RS.3,14,250/-. THE CIT(A) ACC ORDINGLY SUSTAINED THE ADDITION OF RS.3,14,250/- AS AGAINST ADDITION OF RS.10,66,76 4/- MADE BY THE A.O. 4. THE CIT(A) CONFIRMED THE ADDITION OF RS.11,58,79 5/- ON ACCOUNT OF EXTRA PROFIT. THE CIT(A) RESTRICTED ADDITION TO THE EXTE NT OF RS.1,15,391/- ON ACCOUNT OF DIFFERENCE AMOUNT OF SALE AND PURCHASE AS AGAINST A DDITION OF RS.12,65,391/- MADE BY THE A.O. ON THE GROUND THAT THE A.O. HIMSELF ADM ITTED THAT IN THE RETURN OF INCOME THE ASSESSEE OFFERED AN AMOUNT OF RS.11,50,0 00/-. THE CIT(A) WAS OF THE VIEW THAT THE ADDITION TO THE EXTENT OF RS.11.50,0 00/- IS A DOUBLE ADDITION. 5. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND PERUSED THE RECORDS. ADMITTED FACTS OF THE CASE ARE THAT A SURVEY OPERAT ION WAS CONDUCTED UNDER SECTION 133A OF THE ACT ON 28.09.2007. DURING THE COURSE O F SURVEY, CERTAIN DOCUMENTS/PAPERS WERE FOUND AND THE SAME WERE IMPOU NDED. IT WAS NOTICED FROM THE DOCUMENTS/PAPERS FOUND AT THE TIME OF SEARCH TH AT THE ASSESSEE CARRIED OUT BUSINESS OUT SIDE BOOKS OF ACCOUNT. DURING THE COU RSE OF SURVEY, THE ASSESSEE HAS SURRENDERED ADDITIONAL INCOME OF RS.14,00,000/- BUT THE A.O. NOTICED THAT THE ASSESSEE HAS SURRENDERED RS.11,50,000/- IN THE RETU RN OF INCOME. THE A.O. CALCULATED INDEPENDENT ADDITIONS ON ACCOUNT OF INVE STMENT IN PURCHASES, DIFFERENCE IN SALE AND PROFIT AND EXTRA PROFIT BY APPLYING HIG HER G.P. RATE OF 22.14%. THE ITA NO.30/AGR/2012 A.Y. 2008-09 . 5 A.O. AFTER ALLOWING SURRENDER AMOUNT OF RS.11,50,00 0/- MADE NET ADDITION OF RS.23,40,650/-. THE CIT(A) CONFIRMED THE ACTION OF THE A.O. EXCEPT ALLOWING BENEFIT OF SURRENDERED AMOUNT AND PEAK AMOUNT. AT THE TIME OF HEARING, THE LD. AUTHORISED REPRESENTATIVE DREW OUR ATTENTION TO PAR AGRAPH NO.8.2 OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE A.O. HAS WR ONGLY MADE ADDITION OF RS.10,66,764/- BY APPLYING GROSS TURNOVER RATIO ON ENTIRE SALE. FROM THE SAID PARAGRAPH NO.8.2 OF A.O.S ORDER, WE NOTICE THAT TH E A.O. RECORDED THE FACT THAT THE ASSESSEE WAS WILLING TO SURRENDER RS.2.50 LACS DURI NG THE ASSESSMENT PROCEEDINGS, BUT THE SAME WAS RETRACTED. HOWEVER, WE FIND THAT THE ASSESSEE WAS DOING BUSINESS OUT OF BOOKS OF ACCOUNT. WE FIND THAT THE A.O. HAS CALCULATED MULTIPLE ADDITIONS ON SAME SET OF FACTS. ONE ADDITION HAS BEEN MADE O F RS.12,65,391/-FOR THE DIFFERENCE IN PURCHASE AND SALE. ANOTHER ADDITION HAS BEEN CALCULATED BY THE A.O. BY APPLYING GROSS RATIO ON ADDITION OF RS.10,66,764 /-. IN ADDITION TO ABOVE, THE A.O. APPLIED A G.P. RATE OF 22.14% ON ENTIRE DECLAR ED TURNOVER WHICH WAS RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. AS NOTED IN PARAGRAPH NO.2 OF HIS ORDER THAT THE ASSESSEE HIMSELF HAS SURRENDERED RS.14,00, 000/-, HOWEVER, RS.11,50,000/- WAS OFFERED IN THE RETURN OF INCOME. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WANT TO SURRENDER RS.2,50,000/- AS NOT ED BY THE A.O. IN PARAGRAPH NO.8.2. THE SAME WAS STATED TO BE RETRACED DURING THE ASSESSMENT PROCEEDINGS BUT NO MATERIAL AND DETAILS WERE FOUND ON RECORD ON WHA T BASIS THIS 2.5 LAKHS WAS RETRACTED. IN ABSENCE OF SUCH MATERIAL, ADDITION T O THAT EXTENT IS SUSTAINABLE IN THE ITA NO.30/AGR/2012 A.Y. 2008-09 . 6 LIGHT OF SECTION 292C OF THE ACT. THE A.O. MADE MU LTIPLE ADDITIONS, HOWEVER, SOME OF THE ADDITIONS BASED ON MATERIAL ARE SUSTAIN ABLE. THE CIT(A) HAS PARTLY CONFIRMED THE SAME. THE ASSESSEE WANTS TO SURRENDE R RS.2,50,000/-. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE A.O. IS PARTLY CORRECT IN MAKING ADDITION AND SOME OF THE ADDITIONS ARE NOT CORRECT LIKE THE ADDITION ON ACCOUNT OF INVESTMENT ITEM WHICH IS MUL TIPLE ADDITION ON SAME MATERIALS. HOWEVER, SOME ADDITION IS WARRANTED. U NDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION MADE BY THE A.O., ADDITION SUSTAINED BY THE CIT(A) AND ADDITION DELETED ON THE BASIS OF PEEK TH EORY CANNOT BE UPHELD IN TOTO. WE FIND THAT AT THE TIME OF SURVEY THE ASSESSEE HIM SELF ADMITTED ADDITIONAL INCOME OF RS.14,00,000/- AND WHILE FILING RETURN OF INCOME THE ASSESSEE HAS SURRENDERED ONLY RS.11,50,000/-. THERE ARE NO CONVINCING REASO NS FOR REDUCING THE DECLARATION MADE AT THE TIME OF SURVEY. WE FIND WHATEVER THE I TEMS OF ADDITIONS WHICH ARE ESTIMATED BY THE A.O. ARE COVERED BY DISCLOSURE MAD E AT THE TIME OF SURVEY FOR RS.14,00,000/-. WE, THEREFORE, FIND THAT IT WILL B E FAIR AND JUSTICE TO BOTH SIDES AND TO COVER ALL LAPSES AND DEFICIENCY WHICH HAVE BEEN POINTED BY REVENUE AUTHORITIES IF ADDITION TO THE EXTENT OF RS.2,50,000/- IS SUSTA INED OUT OF THE TOTAL ADDITION OF RS.23,40,650/- MADE BY THE A.O. WE ACCORDINGLY SUS TAIN ADDITION TO THE EXTENT OF RS.2,50,000/- AND BALANCE AMOUNT OF ADDITION IS DEL ETED. ITA NO.30/AGR/2012 A.Y. 2008-09 . 7 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY