Sh. Ghanshyam Sharma, New Delhi V. DCIT, New Delhi

ITA 317/DEL/2015

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8149 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2021
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 15-01-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AGAINST DATED PASSED
• Keywords: Rejection of books of accounts; Principle of natural justice
• Section: 143(3); 133(6); 143(2); 145(3); 153C; 132

Judgement Text

1 ITA NO. 317/DEL/2015 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: C NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER I.T.A. NO.317/DEL/2015 (A.Y 2009-10) (THROUGH VIDEO CON FERENCING) GHANSHYAM SHARMA C/O. AGARWAL KAMAL KUMAR & ASSOCIATES, 13-B, 2 ND FLOOR NETAJI SUBHASH MARG, DARYAGANJ, NEW DELHI AVOPS2472H (APPELLANT) VS DCIT CENTRAL CIRCLE-05 NEW DELHI (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST ORDER DATED 29/03/2013 PASSED BY CIT(A)-XXXI, NEW DELHI FOR ASSESSMENT YEA R 2009-10. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT ON THE FACT AND CIRCUMSTANCES OF THE CASE THE ORDER PASSED BY LD. CIT(A)-XXXI IS BAD IN LAW AND NATURE BECAUSE THE LD .CIT (APPEAL) HAS IGNORED THE FOLLOWING PREMISES ON WHICH THE ASSESSM ENT WAS FRAMED: A) THE AO HAS REJECTED THE BOOKS OF ACCOUNTS UNDER SE C. 145(3) AND AFTER THE REJECTION ALSO THE AO HAS FRAMED THE ASSESSMENT UND ER SECTION 143(3) INSTEAD OF SECTION 144. APPELLANT BY SH. RAJEEV SAXENA, ADV RESPONDENT BY SH. S. N. A JAJMI, CIT DR DATE OF HEARING 25.03.2021 DATE OF PRONOUNCEMENT 25.03.2021 2 ITA NO. 317/DEL/2015 B) AFTER THE SEARCH ACTION UNDER SECTION 132 AND CONS EQUENT UPON THE SEARCH, THE ASSESSMENT HAS TO BE FRAMED ON THE BASI S OF THE INFORMATION AVAILABLE AFTER THE SEARCH, NOT UPON THE REJECTION OF BOOKS OF ACCOUNTS. 2. THAT THE LD.CIT (APPEALS) HAS ERRED IN CONFIRMING THE ADDITIONS OF RS.72,08,460/- MADE ON ACCOUNT OF THE DIFFERENCE IN WHEREAS THE PURCHASES HAVE BEEN DULY ACCOUNTS FOR IN THE BOOKS OF ACCOUNT S AND PROFIT & LOSS ACCOUNTS WERE PREPARED FROM THESE BOOKS OF THE ACCO UNTS. THEREFORE THE REJECTION OF BOOKS OF ACCOUNTS AND FRAMING THE ASSE SSMENT ORDER U/S 1530/143(3) IS UNCALLED FOR AND IS ILLEGAL. 3. A SEARCH U/S 132 OF THE ACT WAS CONDUCTED IN CAS E OF M/S RADHARANI TRADING COMPANY (RAJ DARBAR GROUP) ON 31/07/2008 DU RING THIS ACTION CERTAIN DOCUMENTS AND STOCK BELONGINGS TO SHRI GHAN SHYAM SHARMA, PROPRIETOR OF M/S A. K. TRADERS WERE FOUND. CERTAI N OTHER DOCUMENTS WERE ALSO SEIZED FROM OTHER PREMISES AND ACCORDINGLY PROCEEDI NGS U/S 1543C OF THE INCOME TAX ACT, WERE INITIATED IN THE CASE OF THE A SSESSEE. FOR ASSESSMENT YEAR 209-10, THE ASSESSEE FILED RETURN OF INCOME ON 30/09/2009 DECLARING AN INCOME OF RS.46,15,830/-. NOTICE U/S 143(2) WAS IS SUED ON 6/9/2010 AND WAS DULY SERVED UPON THE ASSESSEE. THE ASSESSEE FILED NECESSARY RESPONSES BEFORE THE ASSESSING OFFICER. THE ASSESSEE IS CARRYING THE BUSINESS OF MANUFACTURING OF PAN MASALA/GUTKA OF RAJ DARBAR BRAND. DURING THE SEARCH PROCEEDINGS CERTAIN DISCREPANCIES WITH REFERENCE TO STOCK PHYSI CALLY FOUND AT THE FACTORY OF THE ASSESSEE VIS--VIS THE STOCK AS PER STOCK REGIS TER WAS FOUND. THEREFORE, DURING THE POST SEARCH PROCEEDINGS, THE ASSESSEE MA DE A SURRENDER OF RS.25 LAC AS UNDISCLOSED INCOME FOR THE ASSESSMENT YEAR 2 009-10. THOUGH THE AMOUNT SURRENDERED AS UNDISCLOSED IN THE RETURN BY THE ASSESSEE IS RS. 25 LACS BUT SINCE THE HEAD UNDER WHICH THE SURRENDER HAS BE EN MADE ARE DIFFERENT THAN THOSE OF DECLARED IN THE RETURN OF INCOME. TH E ASSESSEE WAS ASKED TO FILE EXPLANATION BY THE ASSESSING OFFICER. IN RESPONSE TO THIS, THE ASSESSEE SUBMITTED THAT THE SURRENDER WAS MADE IN THE HEADS AS SHOWN IN THE RETURN. 3 ITA NO. 317/DEL/2015 THE ASSESSING OFFICER OBSERVED THAT CONFIRMATIONS FROM BUYER M/S VISHAL TRADERS AND M/S SANJAY TRADERS WERE NOT FIELD AND E VEN THE ORIGINAL BILLS OF THESE PARTIES WERE NOT PRODUCED BY THE ASSESSEE. T HE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE FAIL TO FILE OR FURNISH ANY TRANSPORT BILLS FOR THE GOODS WHICH ARE CLAIM TO BE PURCHASED FROM M/S VISH AL TRADERS AND M/S SANJAY TRADERS. THE ASSESSING OFFICER FURTHER OBS ERVED THAT THE COPY OF ACCOUNTS OF M/S VISHAL TRADERS SHOWS THAT NO PAYMEN T WAS MADE TO THE SAID PARTY DURING THE YEAR AND WHOLE AMOUNT OF RS. 53,41 ,440/- WAS SHOWN OUTSTANDING. IN RESPONSE TO NOTICE U/S 133(6) ISSU ED TO M/S VISHAL TRADERS, THE PROPRIETOR OF THE VISHAL TRADERS STATES THAT HE HAS NEVER DEALT WITH MR. GHANSHYAM SHARMA, PROPRIETOR OF M/S A. K. TRADERS I N CONNECTION OF HIS BUSINESS AT ANY POINT OF TIME. NOTICE U/S 133(6) W AS LACS ISSUED TO M/S SANJAY TRADERS BUT NO REPLY CONFIRMING THE TRANSACTION WAS RECEIVED BY THE ASSESSING OFFICER. THEREFORE, THE ASSESSING OFFICER MADE ADD ITION OF RS.72,08,416/- TOWARDS THE DIFFERENCE IN STOCK AND ALSO REJECTED T HE BOOKS OF ACCOUNT OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL OF TH E ASSESSEE. 5. THE LD. AR SUBMITTED AS UNDER:- 3. IT IS SUBMITTED THAT DURING THE COURSE OF ASSES SMENT EXPLANATION WAS SUBMITTED AND EVEN DURING STATEMENT RECORDED, DIFFE RENCE WAS EXPLAINED (PB 60 & ALSO 23 IN PB 2). IT WAS EXPLAINED THAT BILLS OF SANJAY TRADERS AND VISHAL TRADERS RELATING TO KATHTHA AND SUPARI RESPE CTIVELY WERE SUPPORTED BY TRANSPORT RECEIPT AS MENTIONED IN ABOVE CHART AND A O HAS WRONGLY STATED IN THE ASSESSMENT ORDER THAT TRANSPORT BILLS WERE NOT FURNISHED AT PARA -9. THE AO ALSO STATED THAT CONFIRMATION FROM BUYERS M/S VI SHAL TRADERS AND SANJAY TRADERS WERE NOT FILED BUT IT IS INCORRECT AS BILLS WERE FILED WHICH ITSELF IS CONFIRMATION. FURTHER THE BILLS WERE SUPPORTED BY T RANSPORT RECEIPT AND TAX WAS CHARGED IN ALL THE BILLS AS MAY BE SEEN FROM TH E BILLS ENCLOSED IN PAPER 4 ITA NO. 317/DEL/2015 BOOK AS MENTIONED IN THE CHART ALSO. AFTER GIVING E FFECT TO SALE BILLS THERE WAS NO DIFFERENCE IN STOCK AS EXPLAINED BEFORE THE AO A S WELL AS DURING STATEMENT RECORDED ON 02.12.2008 ITSELF. FURTHER SUBMISSION D ATED 13.10.2008 AND 20.12.2010 (PB 22-23 AND 57-59) ALSO FILED FROM PAG ES 18 TO 23 IN PB - 2. THE LEDGER ACCOUNT OF THE PARTIES WERE ALSO PLACED AT P B - 361 AND 362 ALSO FILED AT PAGE 24 AND 25 OF PB - 2. 4. IT IS SUBMITTED THAT THE ASSESSEE BY LETTER DAT ED 13.10.2008 BEFORE FILING ANY INCOME TAX RETURN MADE AN OFFER OF SURRENDER OF RS. 25,00,000/- TOWARDS THE VALUE OF STOCK THAT WAS FOUND IN EXCESS OF THE STOCK SHOWN IN THE BOOKS OF ACCOUNT TO COVER-UP ANY OF THE DISCREPANCY FOUND IN PAPERS AND MATERIALS SEIZED BY THE DEPARTMENT. (PB 22-23 AND ALSO 18-19 IN PB - 2). IT WOULD BE SEEN THAT A RETURN OF INCOME WAS DUE ON 30 TH SEPTEMBER 2009 AND THE SAME WAS FILED ON THAT DAY I.E. MUCH AFTER DECLARATION W AS MADE. COPY OF ITR IS PLACE AT PB 1 TO 21. IT IS NECESSARY TO SUBMIT THAT DIFFERENCE IN STOCK WAS BELOW RS. 5 LAKHS AS EXPLAINED ON 02.12.2008 DURING THE COURSE OF STATEMENT RECORDED, HOWEVER, THE APPELLANT HAS ALREADY DECLAR ED RS. 25 LAKHS AS INCOME AND DOES NOT WANT TO RETRACT AND PAID TAXES THEREON. AT THE TIME OF THE FILING OF THE RETURN THE CONSULTANT DECLARED THE SA ME IN TWO PARTS RS. 5 LAKHS AGAINST STOCK AND 20 LAKHS AS CASH IN HANDS IN THE BOOKS OF ACCOUNTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS EXPLAIN ED ACCORDINGLY VIDE LETTER DATED 20.12.2010 PB - 57-59 AND 20-22 IN PB -2. 5. IT IS SUBMITTED THAT THE AO HAS WRONGLY CALCULA TED THE DIFFERENCE AT RS. 72,08,460/- WITHOUT GIVING EFFECT TO THE PURCHASES MADE BY THE APPELLANT SUPPORTED BY THE BILLS AS WELL AS TRANSPORT RECEIPT S AS DIFFERENCE IN STOCK WAS ONLY 4,71,139.60 AS EXPLAINED AT PB 60 AND PAGE 23 OF PB - 2. THE AO HAS NOTICED THAT THIS EXPLANATION WAS GIVEN MUCH BEFORE FILING ITR AND STOCK REGISTER SHOWING OPENING FIGURES OF 24.07.2008 WAS NOT COMPLETE AND AFTER GIVING EFFECT TO THE PURCHASE BILLS WHICH WAS SUBMI TTED AT THE TIME OF SEARCH OR THEREAFTER AS DURING THE COURSE OF SEARCH IT COU LD NOT BE ENTERED INTO STOCK REGISTER. FURTHER THESE BILLS WERE SUPPORTED BY TRA NSPORT RECEIPTS AND TAXES HAVE BEEN PAID AS SHOWN IN THE BILLS. 5 ITA NO. 317/DEL/2015 6. IT IS SUBMITTED THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS VARIOUS LEDGER ACCOUNTS, CASH BOOK, BANK STATEMENT, SALES A CCOUNT OF THE VARIOUS ITEMS, ALL THE BANK ACCOUNTS OF THE RELATED PARTIES WERE FILED AND THE AO DID NOT FIND ANY DISCREPANCY IN THE ACCOUNT AFTER NOTIC ING VARIOUS TRANSACTIONS OF PURCHASE AND SALES THROUGH THE BANK ACCOUNT. 7. IT IS SUBMITTED THAT THERE CANNOT BE ADDITION T WICE BY THE AO FOR THE SAME CAUSE UNLESS THE AO BRING SOME MATERIAL ON ITS OWN AS THE MATERIAL PLACED BY THE APPELLANT WAS SUPPORTED BY THE EVIDENCE AND THE AO CANNOT REJECT THE SAME MERELY ON DOUBTS. THE INCOME DECLARED BY THE A PPELLANT WAS ALREADY MUCH MORE THAN HE HAS TO DECLARE BUT IN ORDER TO CO VER UP ALL THE DISCREPANCY, ADDITIONAL INCOME WAS DECLARED OF RS. 25 LAKHS INST EAD OF 5 LAKHS DUE TO DIFFERENCES IN STOCK. 8. IT IS SUBMITTED THAT BOTH THE LOWER AUTHORITIES HAVE NOTICED THE FACTS AND MERELY ON DOUBTS MADE THE ADDITION WHICH WAS CONFIR MED BY THE FIRST APPELLATE AUTHORITY. 9. IT IS SUBMITTED THAT THIS ASSESSMENT WAS MADE U /S 143(3) ON THE BASIS OF SEARCH MATERIAL FOUND DURING THE SEARCH OF RAJDARBA R GROUP AT THE PREMISES BELONGING TO RAJDARBAR GROUP OF COMPANIES. THE AO D ID NOT REFER TO ANY SATISFACTION NOTE OF THE ASSESSING OFFICER THAT THE SE DOCUMENTS BELONG TO THE APPELLANTS UNDISCLOSED INCOME. FURTHER ASSESSMENT WAS ALSO NOT MADE U/S 153C AS REQUIRED UNDER THE RELEVANT PROVISIONS AND THERE IS NOTHING ON RECORD TO SHOW THAT ASSESSMENT WAS TAKEN UP FOR SCRUTINY O N THE GROUND OF MATERIAL FOUND DURING SEARCH. AO HAS MERELY REFERRED TO NOTI CE U/S 153C BUT NO SATISFACTION NOTE WAS MENTIONED IN THE ASSESSMENT O RDER. THE ASSESSEE IN ORDER TO BUY PEACE DID NOT CHALLENGE THESE LEGAL IS SUES BEFORE THE LOWER AUTHORITIES AS WELL AS BEFORE THE APPELLATE TRIBUNA L. THIS WAS ALSO BECAUSE BUSINESS OF THE ASSESSEE WAS CLOSED IN JUNE 2009 AN D PREMISES BELONGING TO RAJDARBAR GROUP OF COMPANIES HAD NOT ALLOWED TO CON TINUE FROM THOSE PREMISES. THE APPELLANT WAS TOTALLY DEPENDENT ON TH EM AS GOODS WERE MANUFACTURED ONLY FOR THEM. HE HAS TO STOP THE BUSI NESS AND SHIFTED TO HIS VILLAGE SARENDHI TEHSIL, KHERAGARDH, DIST- AGRA FOR LOOKING AFTER FARMING ON 6 ITA NO. 317/DEL/2015 SMALL PIECE OF LAND FOR HIS LIVELIHOOD. 6. THE LD. DR RELIED UPON THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER AS WELL AS THE CIT(A) HAS GIVEN A CLEAR FINDING THAT NO EVIDENTIAL MATERI AL RELATED TO THE ORIGINAL BILLS WERE PROPERLY FIELD BEFORE THE ASSESSING OFFICER A S WELL AS CIT(A). THE SO CALLED CONFIRMATIONS AND THE RESPONSE TO SECTION 133(6) NO TICES WERE ALSO NOT ON RECORD. FROM THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A), IT EMERGES THAT THE ASSESSEE HAS NOT FILED ORIGINAL BILLS BEFORE TH E ASSESSING OFFICER AS WELL AS CIT(A). THEREFORE, IT WILL BE APPROPRIATE TO REMAN D BACK THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE ORIGINAL BILLS AND VOUCHERS ALONG WITH THE PROPER CONFIRMATIONS FROM THE RESPECTIVE PARTIES AN D THEREAFTER MAKE THE ADJUDICATION. NEEDLESS TO SAY, THE ASSESSEE BE GIV EN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPLES OF NATURAL JUSTICE. 8. IN RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT IN PRESENCE OF B OTH THE PARTIES ON THIS 25 TH DAY OF MARCH, 2021 SD/- SD/- (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 25 /03/2021 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT 7 ITA NO. 317/DEL/2015 ASSISTANT REGISTRAR ITAT NEW DELHI