DCIT-WARDHA-CIRCLE, Wardha V. SHRI IMRAN SHABBIR LAMBA, Wardha

ITA 306/NAG/2014

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1602 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 11-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALLIK
• Assessee Lawyers: S C THAKKAR
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 69C; 143(3); 133A; 131; 69

Judgement Text

1 I TA NO. 3 06 /NA G/2014 IN TH E INCOME TAX APPELLATE TRIBUNAL: NAGPUR BENCH: NAGPUR BEFORE SHRI MUKUL K. SHRAWAT, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. I .T.A. NO. 3 06/NAG/2014 ASSESSMENT YEAR: 2009 - 10 THE DY. COMMISSIONER OF INCOME TAX, WARDHA CIRCLE, WARDH A VS SHRI IMRAN SHABBIR LAMBA, P ROP. OF ABDUL KADARBHAI AND SON S, PATEL CHOWK, WARDHA 44200. P AN: AAXPL9056A (APPELLANT) (RESPONDENT) APPELLANT BY SMT. SUMAN MALLIK, (JCIT) RESPONDENT BY SHRI S. C. THAKKAR, ADVOCATE DATE OF HEARING: 17 - 11 - 2015 DA TE OF PRONOUNCEMENT: 24 - 11 - 2015 O R D E R PER MUKUL K. SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE BY THE REVENUE ARISING OUT OF THE ORDER OF THE LEARNED CIT(A) - I, NAGPUR DATED 26 - 03 - 2014 FOR ASSESSMENT YEAR 2009 - 10. 2. GROUND NO.1 RAISED BY THE REVENUE IS REPRODUCED HEREIN BELOW: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - I, NAGPUR HAS ERRED IN DELETING THE ADDITION OF RS.6,19,211/ - IN RESPECT OF VARIATION OF CLOSING STOCK FOUND DURING THE SURVEY U/S 133 A AND ACCEPTED BY THE ASSESSEE. 3 . THE F ACTS IN BRIEF , AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S 143(3) OF THE IT ACT DATED 22 - 12 - 2011 WERE THAT THE ASSESSEE IS IN THE BUSINESS OF WHOLESALE TRADING IN GRAIN. A RETURN OF INCOME WAS FILE D DECLARING INCOME OF RS.8,51,658/ - . A SURVEY U/S 133A OF THE IT ACT WAS CONDUCTED. IN RESPECT OF THE ABOVE GROUND, THE OBSERVATION OF THE AO WAS AS UNDER: - 2 I TA NO. 3 06 /NA G/2014 I. ADDITION ON ACCOUNT OF STOCK: 3. IT IS NOTICED THAT DURING THE COURSE OF SURVEY, STOCK OF R S.12,71,100/ - FOUND WHICH WAS ADMITTED BY THE ASSESSEE. FURTHER, IT IS NOTICED THAT THE STOCK AS PER BOOKS OF RS.NIL. THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS.6,52,000/ - . HOWEVER, THE DIFFERENCE OF RS.6,19,211/ - HAS NOT BEEN OFFERED. THE AR WAS AS KED WHY THE DIFFERENCE OF STOCK OF RS.6,19,211/ - SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S. 69C OF THE I. T. ACT, 1961. IN RESPONSE TO THIS QUERY, THE AR ATTENDED ON 24.11.2011 AND DISCUSSED THE CASE IN DETAILS. HE AGREED FOR PROPOSED ADD ITION. THEREFORE, I, ADD AN AMOUNT OF RS.6,19,211/ - U/S. 69C OF THE I. T. ACT AND ADD TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1) (C) OF THE I. T. ACT, 1961 READ WITH EXPLANATION 1 INITIATED SEPARATELY FOR FURNISHING INACCURATE PAR TICULARS OF INCOME AND CONCEALMENT. (RS.6,19,211/ - ) . 4 . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LEARNED CIT (A) HAS GRANTED RELIEF BY OBSERVING AS FOLLOWS: - 5 .2 ON CAREFUL CONSIDERATION OF THE FACTS, IT IS SEEN THAT THE ASS ESSEE DURING THE APPELLATE PROCEEDINGS HAS FILED DETAILS OF STOCK FOUND TO THE TUNE OF RS.12,71,000/ - . THE ASSESSEE HAS ALSO FILED THE DETAILS OF THE STOCK BEING RS.6,52,000/ - WHICH WAS DECLARED BY THE ASSESSEE AS AN ADDITIONAL UNACCOUNTED INCOME ON ACCOUN T OF UNEXPLAINED INVESTMENT IN THE EXCESS STOCK FOUND AT THE TIME OF SURVEY. THE ASSESSEE HAS ALREADY EXPLAINED THAT THERE WERE VARIOUS ITEMS OF STOCK FOUND WHICH PERTAINED TO POPULAR TRADES AND ABDUL KADARBHAI & SONS FOR WHICH NECESSARY RECONCILIATION HAS BEEN FILED. THUS, THE AR OF THE APPELLANT HAS CONTENDED THAT THE EXCESS STOCK FOUND AT THE TIME OF SURVEY WAS TO THE TUNE OF RS.6,51,253/ - ONLY, WHICH HAS ALREADY BEEN OFFERED FOR TAXATION. THE LD. AO IN HIS ORDER HAS MERELY STATED THAT THE ASSESSEE HAS A GREED TO THE ADDITION WITHOUT BRINGING ANY MATERIAL ON RECORD TO SHOW THAT ACTUALLY THERE EXISTS DIFFERENCE IN STOCK. THEREFORE, THE ADDITION MADE BY T HE AO IS DIRECTED TO BE DELETED. HENCE, THE GROUND IS ALLOWED . 5 . WE HAVE HEARD BOTH THE SIDES. ON THIS SHORT ISSUE, WE HAVE NOTED THAT THE ORDER OF THE AO IS VERY CRYPTIC WITHOUT MENTIONING THE DISCREPANCIES FOUND AT THE TIME OF SURVEY IN RESPECT OF THE STOCK IN QUESTION. ON THE OTHER HAND, THE LEARNED CIT (A) HAS GIVEN A FINDING THAT RECONCILIATION WAS FU RNISHED. UNDER THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO FALLACY IN THE RELIEF GRANTED BY THE LEARNED CIT (A). THE SAME IS HEREBY CONFIRMED AND THE GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 3 I TA NO. 3 06 /NA G/2014 6. GROUND NO.2 OF THE APPEAL READS AS FOLLOWS: - 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - I, NAGPUR HAS ERRED IN DELETING THE ADDITION OF RS.1,30,135/ - ON ACCOUNT OF LOW HOUSEHOLD EXPENSES WITHOUT CONSIDERING THE SIZE OF FAMILY, INFLATION OF RUPEE AND STANDARD OF LIVING. 7 . IN RESPECT OF THE ABOVE GROUND, THE AO HAS MADE THE ADDITION IN THE FOLLOWING MANNER: - II . ADDITION ON ACCOUNT OF DRAWINGS 4. IT IS NOTICED THAT THE ASSESSEE HAS CLAIMED HOUSE HOLD WITHDRAWAL AMOUNTING TO RS.73,865/ - . HE ALSO FIL ED CAPITAL ACCOUNT WHICH IS PLACED ON RECORD. THE COUNSEL WAS ASKED TO JUSTIFY THE WITHDRAWAL FOR HOUSE HOLD EXPENSES CLAIMED VIZ. STANDARD OF LIVING AND SIZE OF FAMILY. IT APPEARED THAT THE DRAWING FOR HOUSE HOLD ARE VERY LOW HENCE, IT WAS ASKED WHY IT SH OULD NOT BE ESTIMATED PROPORTIONATE TO THE LIVING STANDARD AND INFLATION IN INDIAN ECONOMY. IN RESPONSE TO THE QUERY, THE COUNSEL APPEARED ON 13.12.2011 AND CONFRONTED THAT HE IS READY TO GET ESTIMATED HOUSEHOLD EXPENSES AS PER FAMILY STRENGTH AND INFLATIO N. I AM OF THE VIEW THAT THE ASSESSEE HAS MADE DRAWINGS WHICH IS NOT SUFFICIENT ENOUGH AND AS SUCH HOUSE HOLD EXPENSES OF WHOLE FAMILY WERE ESTIMATED AT RS.17,000/ - WHICH COMES TO RS.2,04,000/ - . THE DIFFERENCE OF RS.1,30,135/ - ESTIMATED AS ADDITIONAL DRA WING IS BEING ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED INVESTMENT U/S. 69 OF THE I. T. ACT, 1961. PENALTY PROCEEDINGS U/S. 271 (1) (C) OF THE I. T. ACT, 1961 READ WITH EXPLANATION 1 INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT. 8 . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LEARNED CIT(A) HAS GRANTED RELIEF AS UNDER: - 6.3 ON CAREFUL EXAMINATION OF THE FACTS, IT IS SEEN THAT THE LD. AO HAS CONSIDERED ON LY THE WITHDRAWALS MADE BY THE APPELLANT ALONE AND THE WITHDRAWALS MADE BY OTHER FAMILY MEMBERS HAVE NOT BEEN CONSIDERED. THE CONTENTION OF THE AR OF THE APPELLANT IS THAT THE APPELLANT LIVES IN A JOINT FAMILY, THEREFORE, THE AGGREGATE WITHDRAWALS OF ALL T HE FAMILY MEMBERS OUGHT TO HAVE BEEN CONSIDERED. I FIND SUBSTANTIAL FORCE IN THE CONTENTION OF THE AR AND THE ESTIMATED ADDITION MADE ON AD - HOC BASIS IS DIRECTED TO BE DELETED AS NO MATERIAL EVIDENCE IS BROUGHT ON RECORD TO JUSTIFY THE ADDITION ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS BY THE LD. AO. HENCE, THIS GROUND IS ALLOWED. 4 I TA NO. 3 06 /NA G/2014 9 . HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES WE ARE OF THE VIEW THAT IN THE ABSENCE OF ANY INCRIMINATING MATERIAL , ALTHOUGH, A SURVEY U/S 133A OF T HE IT ACT WAS CONDUCTED, TH ERE WAS NO COGENT REASON TO ESTIMATE THE HOUSEHOLD EXPENDITURE OF THE FAMILY. AS A RESULT, WE ARE NOT INCLINED TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT (A). THE SAME ARE HEREBY CONFIRMED AND THE GROUND OF REVENUES APPEAL IS REJECTED. 10 . GROUND NO.3 OF THE REVENUES APPEAL READS AS UNDER: - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) - I, NAGPUR HAS ERRED IN DELETING THE ADDITION OF RS.2,61,500/ - AS UNEXPLAINED INVESTMENT IN PROPERTIES U/S 69 OF THE I. T. ACT, 19 61 WITHOUT CONSIDERING THE FACTS THAT THE ASSESSEE HAS HIMSELF ACCEPTED IT DURING THE SURVEY U/S 133A OF THE I. T. ACT,1961. 11 . IN RESPECT OF THE ABOVE GROUND, THE AO HAS HELD THAT THERE WAS AN UNEXPLAINED INVESTMENT AND MADE THE ADDITION AS UNDER: - IV. ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PROPERTIES 6 . IT IS NOTICED THAT THE ASSESSEE HAS INVESTED RS.2,61,500/ - AND HE HAS DECLARED THE SAME AS ADDITIONAL INCOME FOR A.Y.2009 - 10 IN THE STATEMENT RECORDED U/S 131 OF IT ACT, 1961. THE AR WAS ASKED AS TO WHY IT SHOULD NOT BE ADDED U/S. 69 OF THE I. T. ACT, 1961. IN RESPONSE TO THIS QUERY, THE AR ATTENDED ON 20.12.2011 AND DISCUSSED THE CASE IN DETAILS. HOWEVER, HE FAILED TO OFFER ANY SATISFACTORY EXPLANATION. THEREFORE, I ADD AN AMOUNT OF RS.2,61,50 0/ - U/S. 69 OF THE I. T. ACT, 1961 AND ADD TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S 271(1) (C) OF THE I. T. ACT, 1961 READ WITH EXPLANATION 1 INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND CONCEALMENT. (RS.2,61 ,500/ - ) 12 . WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY, THE LEARNED CIT (A) HAS GRANTED RELIEF AS UNDER: - 8.3 I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE APPELLANT. THE AR HAS EXPLAINED THE INVESTMENT WITH REFERENCE TO THE BIL LS AND VOUCHERS. THE AO THOUGH HAS MADE THE ADDITION, BUT THE REASONS ASSIGNED FOR SUCH ADDITIONS ARE QUITE INSUFFICIENT. THE LD. AO IN HIS ORDER HAS NOT EVEN POINTED OUT THE NATURE 5 I TA NO. 3 06 /NA G/2014 OF PROPERTIES IN RESPECT OF WHICH THE INVESTMENTS HAVE BEEN MADE. THERE BE ING NO CONTRARY EVIDENCE ON RECORD, THE ADDITION MADE BY THE AO IS DIRECTED TO BE DELETED. HENCE, THIS GROUND IS ALLOWED . 13 . HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE HAVE NOTED THAT THE AO HAS NOT MENTIONED THE NATURE OF THE INVESTMENT AND THE DESCRIPTION OF THE PROPERTY FOR WHICH HE HAS ALLEGEDLY INVOKED THE PROVISIONS OF SECTION 69 OF THE IT ACT. AS A RESULT, WE FIND NO REASON TO INTERFERE WITH THE FINDINGS OF THE LEARNED CIT (A). HENCE , THE SAME ARE HEREBY CONFIRMED. THIS GROUND OF THE REVENU ES APPEAL IS DISMISSED. 14 . IN THE RESULT, THE REVENUES APPEAL IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2015. SD/ - SD/ - (SHAMIM YAHYA) (MUKUL K. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER NAGPUR, DATED: 24 TH NOV., 2015. LAKSHMIKANT DEKA/SR. PS COPY FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T., CONCE RNED 4. CIT ( APPEALS) - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NA GPUR BENCH, NAGPUR. 6 I TA NO. 3 06 /NA G/2014 DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 1 7 .11.2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 18 .11.2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS 6. DATE OF PRONOUNCEMENT SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK