M/s Jain Brothers, Chandigarh V. ACIT, Chandigarh

ITA 319/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8918 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 09-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 30-03-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.319/CHD/2015 (ASSESSMENT YEAR : 2008-09) M/S JAIN BROTHERS, VS. THE A.C.I.T., SCO 8, SECTOR 17-E, CENTRAL CIRCLE-1, CHANDIGARH. CHANDIGARH. PAN: AAAFJ8480B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VINEET KRISHAN RESPONDENT BY : SHRI SUSHIL KUMAR, CIT DR DATE OF HEARING : 27.09.2016 DATE OF PRONOUNCEMENT : 16.12.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-3, GURGAON DATED 27.01.2015, RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL : 2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN SUSTAINING THE ADDITION OF RS.3,27,711/- OUT OF THE TOTAL ADDITION OF RS.11,00,284 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ALLEGED EXCESS STOCKS. 2 3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE TH E LD COMMISSIONER OF INCOME TAX APPEALS GRAVELY ERRED IN NOT TAKING CORRECT CALCULATION OF CLOSING STOCK AS ON DAT E OF SEARCH INSTEAD OF WRONG CALCULATION OF CLOSING STO CK MADE AT THE TIME OF SEARCH AND BY THE LD. ASSESSING OFFICER. 4. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ID. COMMISSIONER OF INCOME TAX (APPEALS) GRAVELLY ERRED IN SUSTAINING THE ADDITION OF RS. 599,591/- MADE BY THE ID. ASSESSING OFFICER IN RESPECT OF CASH FOUND F ROM THE RESIDENTIAL PREMISES OF THE PARTNERS. 3. AT THE OUTSET, IT IS STATED THAT THE GROUND NOS .2 AND 3 RAISED WERE NOT PRESSED BY THE ASSESSEE AND T HE SAME WERE TREATED AS DISMISSED. 4. THE ONLY EFFECTIVE GROUND IN THE PRESENT APPEAL RELATES TO ADDITION UPHELD BY THE LD. CIT (APPEALS) OF RS.5,99,591/- MADE BY THE ASSESSING OFFICER IN RESP ECT OF CASH FOUND FROM THE RESIDENTIAL PREMISES OF THE PAR TNERS. 5. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURI NG THE COURSE OF SEARCH OPERATION CONDUCTED ON 28.11.2 007, CASH AMOUNTING TO RS.15,97,564/- WAS FOUND FROM THE RESIDENTIAL PREMISES OF THE PARTNER OF THE ASSESSEE FIRM SHRI RAJINDER JAIN AND RS.33,260/- FROM THE BUSINES S PREMISES OF M/S JAIN BROTHERS. THE CASH IN HAND AS PER BOOKS WAS RS.3,87,800/-. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE EXPLAINED THAT THE ACTUAL CASH IN HAND AS PER BOOKS AS ON THE DATE OF SEARCH I.E. 28.11.2007 WAS RS.6,32,851/- AND NOT RS.3,87,800/- AND THE MISTAKE HAD OCCURRED ON ACCOUNT OF A CLERICAL M ISTAKE 3 ON THE PART OF THE ACCOUNTANT IN CORRECTLY BRINGING FORWARD THE CASH BALANCE OF THE PREVIOUS YEAR. THE ASSESSI NG OFFICER ACCEPTED THIS FIGURE OF CASH IN HAND AND TR EATED THE DIFFERENCE BETWEEN THE SAME AND CASH FOUND IN T HE BUSINESS PREMISES AS ON ACCOUNT OF CASH USED BY THE ASSESSEE FOR PERSONAL PURPOSES BUT NOT REFLECTED IN ITS BOOKS. THE ASSESSING OFFICER FURTHER HELD THAT THE ASSESSEE HAD SOME MORE CASH AVAILABLE WITH IT OR UNDISCLOSED INCOME WHICH HAD BEEN AGAIN INTRODUCED TOWARDS CASH IN HAND AND THEREFORE TREATED THE DIF FERENCE AS UN-DISCLOSED INCOME OF THE ASSESSEE AMOUNTING TO RS.5,99,591/- AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. THE LD. CIT (APPEALS) UPHELD THE AD DITION. 6. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE ARGUED THAT THERE IS NO CASE FOR MAKING ANY ADDITIO N AT ALL SINCE THE ACTUAL CASH FOUND WAS LESS THAN THAT SHOW N IN THE BOOKS AND IN SUCH CIRCUMSTANCES, IT CANNOT BE S AID THAT THE ASSESSEE HAD EARNED ANY INCOME. 7. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE ORDER OF THE LD. CIT (APPEALS). 8. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD.WE FIND MERIT IN THE CONTENTIONS OF THE LD.COUNSEL FOR THE ASSESSEE. IT IS NOT DISPUTED THAT THE CASH FOUND A S ON THE DATE OF SEARCH WAS RS.33,260/- WHILE AS PER BOOKS O F 4 ACCOUNT THE CASH WAS RS.6,32,851/-. THUS THE ACTUA L CASH FOUND WITH THE ASSESSEE AS ON THE DATE OF SEAR CH WAS LESS AS COMPARED TO THAT SHOWN IN THE BOOKS, WHICH MEANS THAT THE ASSESSEE MAY HAVE UTILIZED THE CASH AVAILA BLE WITH IT IN SOME MANNER WHICH HAS NOT BEEN REFLECTED IN THE BOOKS OF ACCOUNT. IT CANNOT, BY ANY STRETCH OF LOGIC, MEAN THAT THE ASSESSEE HAS EARNED ANY INCOME. EVEN IF THE CASH HAS BEEN WITHDRAWN BY THE PARTNERS FOR THE IR PERSONAL USE ,AS ALLEGED BY THE LD.DR, IT DOES NOT BECOME THE UNACCOUNTED INCOME OF THE ASSESSEE. IT IS ONLY A UTILIZATION OF CASH WHICH HAS NOT BEEN ACCOUNTED FO R IN THE BOOKS OF THE ASSESSEE. WE HAVE NOT BEEN ENLIGH TENED AS TO UNDER WHICH SECTION SUCH SHORTAGE OF CASH FOU ND DURING SEARCH WOULD BE BROUGHT TO TAX UNDER THE INC OME TAX ACT,1961. THE ARGUMENT OF THE LD.DR THAT THE ASSESSEE FIRST WITHDREW CASH WHICH RESULTED IN ACTU AL CASH IN HAND GETTING REDUCED AND THEREAFTER REINTRODUCED THE SAME IN THE BOOKS ONLY, FROM INCOME EARNED FROM UNDISCLOSED SOURCES, APPEARS TO BE A VERY FARFETCHE D AND ILLOGICAL ARGUMENT, WITH NO BASIS AT ALL. EXCEPT F OR THE CASH FOUND SHORT, NO OTHER INCRIMINATING MATERIAL H AS BEEN BROUGHT TO OUR NOTICE WHICH COULD LEND CREDENC E TO SUCH INFERENCES. MOREOVER, IF AS PER THE DR, THE C ASH WAS REINTRODUCED IN THE BOOKS, THE INCOME WHEREFROM IT WAS EARNED, MUST HAVE ALSO BEEN ACCOUNTED FOR. THEREFOR E WE FIND THAT THERE IS NO BASIS FOR MAKING THE ADDITION IN THE PRESENT CASE, WHICH APPEARS TO BE BASED ON MERE PRESUMPTIONS. 5 IN VIEW OF THE ABOVE ,THE ORDER OF THE CIT(A) ,UPHO LDING THE ADDITION OF RS.5,99,591/- IS SET ASIDE. 9. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS, THEREFORE, ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16 TH DECEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH