HEERA CHAND JAIN, Jaipur V. ITO, Jaipur

ITA 322/JPR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5505 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 9 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2003-2004
• Appeal Filed On: 29-04-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DR DHK
• Assessee Lawyers: G G MUNDRA
• Keywords: Unexplained investment; Loose papers; Tax effect; Reassessment proceedings
• Section: 69C; 133A; 68; 6

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JUDICIAL MEMBER VK;DJ VIHY LA-@ ITA NO. 322/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2003-04 SHRI HEERA CHAND JAIN C/O M/S. GAURAV JAIN STEEL CENTRE 113, TRIPOLIA BAZAR, JAIPUR CUKE VS. THE ITO WARD- 1 (3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABXPJ 6901 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.G. MUNDRA, CA JKTLO DH VKSJ LS@ REVENUE BY :SHRI RAJ MEHRA, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08/01/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 19 /02/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A)- I, JAIPUR DATED 06-03-2014 FOR THE ASSESS MENT YEAR 2003-04 RAISING THEREIN MAINLY FOLLOWING GROUNDS:- (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION OF RS. 3.00 LACS MADE TO THE INCOME OF THE ASSESSEE BY THE AO ON ACCOUNT OF ALLEGED STATEMENT RECORDED AT THE TI ME OF SURVEY U/S 133A OF I.T. ACT, 1961 WITHOUT APPRECIAT ING THE TOTALITY OF THE FACTS PLACED BEFORE HIM. (II) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE FIN DING RECORDED BY THE AO THAT ASSESSEE HAS MADE UNEXPLAIN ED PURCHASES OF RS. 17,764/- AND THEREBY SUSTAINING AD DITION OF SAID AMOUNT OF RS. 17,764/- MADE U/S 69C OF THE I. T. ACT. ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 2 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A RETAILER CARRYING BUSINESS OF PURCHASE AND SALE OF UTENSILS UNDER THE NAME AND STYLE OF M/S. GAURAV JAIN STEEL CENTRE. THE RETURNS OF INCOM E WERE NOT BEING BY THE ASSESSEE IN REGULAR COURSE. SURVEY OPERATION U/ S 133A OF THE ACT WAS CARRIED OUT ON THE ASSESSEE'S PREMISES ON 13-02-200 8. DURING THE COURSE THEREOF, VARIOUS LOOSE PAPERS, PURCHASE AND SALE BI LLS FROM THE FINANCIAL YEAR 203-04 ONWARDS WERE FOUND AND IMPOUNDED. THE A SSESSEE NEVER MAINTAINED ANY BOOKS OF ACCOUNT; THE STOCK ON THE D ATE OF SURVEY WAS VALUED AT RS. 12,78,794/- AND IT WAS ALSO FOUND THA T ASSESSEE HAD COMMENCED CONSTRUCTION OF A HOUSE ABOUT 06 MONTHS BACK FROM THE DATE OF SURVEY WHEREIN ESTIMATED INVESTMENT OF RS. 15.00 LACS WAS MADE. IN VIEW OF ALL THIS ASSESSEE, IN THE STATEMENT RECORDE D DURING THE COURSE OF SURVEY ADMITTED TO OFFER FOLLOWING INCOME FOR TAXAT ION IN VARIOUS YEAR AS UNDER:- ASSESSMENT YEAR 2005-06 RS. 6.00 LACS ASSESSMENT YEAR 2006-07 RS. 8.00 LACS ASSESSMENT YEAR 2007-08 RS. 8.00 LACS THE ASSESSEE WHILE FILING THE RETURN OF INCOME OF A SSESSMENT YEAR 2003- 04 CONSEQUENT TO NOTICE U/S 148, DECLARED AN INCOME OF RS.1,14,913/- COMPRISING OF RS. 22,613/- FROM HIS UTENSIL BUSINES S AND RS. 92,300/- AS ADDITIONAL INCOME FROM BUSINESS ON ACCOUNT OF NEGA TIVE CASH AS PER ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 3 IMPOUNDED PAPERS/ DOCUMENTS. THE AO ACCEPTED THE SA ID DECLARED INCOME FROM BUSINESS AT RS. 22,613/- BUT ADDITIONAL INCOME OF RS. 92,300/- DECLARED BY THE ASSESSEE AS ADDITION U/S 6 8 AND AS PER CALCULATION MADE ON PAGE 3 OF ASSESSMENT ORDER THE AO WORKED OU T UNEXPLAINED PURCHASES OF RS. 17,664/- WHICH WAS ASSESSED AS UNE XPLAINED EXPENDITURE U/S 69C AND FURTHER MADE DISALLOWANCE OF RS. 17,664 /- UNDER PROVISO TO SECTION 69C AND BESIDES THESE THE AO ALSO ADDED THE AMOUNT OF RS. 3.00 LACS ON ACCOUNT OF INCOME SURRENDERED BY THE ASSES SEE IN HIS STATEMENT RECORDED U/S 133A. THE AO THUS COMPLETED STATEMENT AT AN INCOME OF RS. 4,50,240/- 2.2 IN FIRST APPEAL, THE LD. CIT(A) DISMISSED ASSES SEE'S APPEAL CONFIRMING THE ORDER OF THE AO. 2.3 AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL WHE REIN THE LD. AR OF THE ASSESSEE CONTENDS THAT AFTER SURVEY AND DURING REASSESSMENT PROCEEDINGS THE ASSESSEE HAD PREPARED BOOKS OF ACCO UNT WHICH ARE ACCEPTED BY THE AO. HOWEVER, THE AO ADDED BOOK INCO ME AS WELL AS SURRENDERED INCOME. THE LD. AR OF THE ASSESSEE FURT HER CONTENDS THAT THE AO IN ASSESSMENT ORDER FOR 2003-04 AND 2004-05 MADE ADDITION OF RS. 3.00 LACS ON THE BASIS OF STATEMENT OF SURVEY WITHO UT GIVING ANY DEDUCTION FOR INCOME SURRENDERED BY ASSESSEE IN RETURN WHILE IN A.Y. 2005-06, 2006-07 & 2007-08 THE AO MADE ADDITION OF RS. 6.00 LACS, RS. 8.00 LACS ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 4 AND RS. 8.00 LACS RESPECTIVELY BUT ALLOWED DEDUCTIO N OF INCOME SURRENDERED BY ASSESSEE IN RETURN MAKING ADDITION O F RS. 4.50 LACS, RS. 5.09 LACS AND RS. 5.00 LACS RESPECTIVELY. LD. COUNS EL CONTENDS THAT SIMILAR ADDITIONS WERE MADE IN AYS. 2004-05 TO 2007-08, IN FIRST APPEALS LD. CIT(A) WAS PLEASED TO DELETE ALL THE ADDITIONS COPY OF THE ORDERS ARE PLACED ON PB PAGE 14 TO 32, HOLDING THAT THE ADDIT ION SOLELY BASED ON STATEMENT TAKEN IN THE COURSE OF SURVEY CANNOT BE SUSTAINED AND REVENUE HAS NOT FILED ANY APPEAL BEFORE ITAT FOR A.YS. 2004 -05 TO 2007-08. IN ASSESSMENT FOR A.Y. 2008-09, THE AO HIMSELF ACCEPT ED THAT STOCK FOUND IN COURSE OF SURVEY AMOUNTING TO RS. 12,78,794/- AN D INVESTMENT IN CONSTRUCTION OF HOUSE AMOUNTING TO RS. 15.00 LACS G OT EXPLAINED FROM THE ACCOUNTS PREPARED AND RETURNS FILED BY ASSESSEE FOR A.Y. 2003-04 TO 2008- 09. THE ADDITION OF RS. 15,69,673/- IN A.Y. 2008-0 9 MADE BY AO IS ON ACCOUNT OF UNEXPLAINED INVESTMENT IN HOUSE OVER AN D ABOVE RS. 15.00 LACS WHICH HAS BEEN MADE ON THE BASIS OF REPORT OF VALUATION OFFICER, AGAINST WHICH APPEAL HAS BEEN FILED BY ASSESSEE WHI CH IS PENDING BEFORE LD. CIT(A)-1, JAIPUR. IT IS FURTHER CONTENDED THAT WHEN THE ADDITIONS IN SUBSEQUENT YEAR HAVE BEEN DELETED BY THE LD. CIT(A) THEN THERE WAS NO JUSTIFICATION TO SUSTAIN THE ADDITIONS IN THIS YEAR . 2.4 THE LD. DR ON THE OTHER HAND CONTENDS THAT ENTI RE CASE IS BASED ON REPRESENTATION OF FACTS BY THE ASSESSEE, THE IMPUGN ED ORDER OF THE LD. ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 5 CIT(A) IS DATED 6-03-2014 WHEREAS THE ORDER OF THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2004-05 TO 2007-08 WERE PASSED SUBS EQUENTLY ON 28-05- 2014 DUE TO CHANGE OF INCUMBENT. THE ASSESSEE WANTO NLY DID NOT PRODUCE THE EARLIER ORDER FOR THE ASSESSMENT YEAR 2003-04 P ASSED BY LD. CIT(A) BEFORE HIS SUCCESSORS IN APPEAL PROCEEDINGS FOR AY 2004-05 TO 2007-08. THUS THE FACTS ABOUT BY THE CONFIRMATION OF ADDITIO NS BY LD. CIT(A) FOR 2003-04 WERE NOT DISCLOSED BEFORE THE SUCCESSOR LD. CIT(A). THUS DUE TO NON DISCLOSURE OF PROPER FACTS SUCCESSOR CIT(A) MIS DIRECTED HIMSELF IN DELETING THE ADDITIONS. AS A CONSEQUENCE OF DISTORT ED FACTS NOW THERE EXIST TWO CONTRARY APPELLATE ORDERS ON THE SAME SET OF FA CTS AND DESPITE ALL THE IRREGULARITIES AND SURVEY PROCEEDINGS ASSESSEE IS G ETTING SCOTT FREE BY AN INGENIOUS DESIGN. THE DEPARTMENT HAS NOT PREFERRED SECOND APPEALS AGAINST THE ORDERS OF LD. CIT(A) FOR AYS 2004-05 TO 2007-08 BECAUSE OF THE LOW TAX EFFECT WHICH CANNOT BE HELD AS ADJUDIC ATION OF MERITS AGAINST THE DEPARTMENT. IT IS NOT DISPUTED THAT IN ASSESSME NT YEAR 2003-04, THE ASSESSEE WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS WHATSOEVER AND FINDING THE INCONSISTENCIES HIS TAX EVASION WAS CAU GHT AND TO AVOID THE TAX EVASION CONSEQUENCES, HE VOLUNTARILY OFFERED TH E INCOME OF RS. 3.00 LACS ON ESTIMATE BUSINESS IN THIS YEAR AND SUBSEQUE NT YEARS AS MENTIONED ABOVE. THE ASSESSEE WAS FOUND TO BE OWNER OF FLOU RISHING UTENSILS BUSINESS AND CONSTRUCTION OF HOUSE WAS ALSO MADE WI THOUT DISCLOSING THE ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 6 SOURCES. DUE TO ASSESSEE'S VOLUNTARY ADMISSION, THE DEPARTMENT DID NOT CONDUCT FURTHER ENQUIRIES OR INVOKE THE RIGOR OF CO NSERVATIVE TAX PROCEEDINGS AS A GESTURE OF GOODWILL WHICH HAS BEEN MISUSED BY THE ASSESSEE BY MANIPULATIVE DISTORTION OF BOOKS. THUS THE RELIEF GRANTED IN SUBSEQUENT YEARS IS BASED ON MISREPRESENTATION OF F ACTS AND CANNOT APPLY AS AN ESTOPPELS FOR YEAR IN QUESTION. IT IS SETTLED LAW THAT EVERY YEAR IS A SEPARATE UNIT OF ASSESSMENT AND PRINCIPLES OF RES J UDICATA ARE NOT APPLICABLE TO INCOME TAX PROCEEDINGS. THEREFORE, NO INFERENCE IS CALLED FOR IN THE ORDER OF THE LD. CIT(A). THE NON-FILING OF APPEALS AGAINST SUBSEQUENT ORDERS BEING BELOW TAX EFFECT CANNOT BE HELD AS BAR AGAINST THE DEPARTMENT. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. I FIND MERIT IN THE CONTENTION S OF THE LD. DR AND FIND THAT THESE DELIBERATE LAPSES ARE ATTRIBUTABLE TO AS SESSEE DUE TO DISTORTION OF FACTS AS HE FAILED TO INTIMATE THE ADVERSE ORDER F OR THE ASSESSMENT YEAR 2003-04 TO SUCCESSOR CIT(A). SUCH NON-DISCLOSURE MA Y HAVE BEEN ONE OF THE REASON FOR THE SUCCESSOR CIT(A) TO DELETE THE A DDITIONS. SIMILARLY NON- FILING OF APPEAL BY THE DEPARTMENT BEING ATTRIBUTAB LE TO LOW TAX EFFECT CANNOT BE HELD AS A FINALITY OF THE MERITS OF THE C ASE. IN VIEW THEREOF, I FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN DISMISSING THE APPEAL OF THE ASSESSEE. ITA NO. 322/JP/2014 SHRI HEERA CHAND JAIN VS. ITO, WARD- 1(2), JAIPUR . 7 3.0 IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/ 02/2 016 SD/- VKJ-IH-RKSYKUH (R.P.TOLANI) U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 19 /02/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HEERA CHAND JAIN, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 1 (3), JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 322/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR