KAMAKSHI INTERNATIONAL, Jaipur V. DCIT, Jaipur

ITA 327/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1866 (ITAT-JAIPUR)
• Duration Of Justice: 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 01-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA CIT DR DHK
• Keywords: Loose papers; Peak credit; Corroborative evidences
• Section: 69C; 68; 132; 69

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES , JAIPUR JH HKKXPUN] YS[KK LNL; ,O JH DQY HKKJR] U;KF;D L NL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHAR AT, JM VK;DJ VIHY LA-@ ITA NO. 327/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2010-11 M/S. KAMAKSHI INTERNATIONAL A-3, MOTI LAL ATAL ROAD, JAIPUR CUKE VS. THE DCIT CENTRAL CIRCLE 1 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAJFK 5791 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI RAJEEV SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI VARINDER MEHTA, CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 07/09/2017 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 1/12/2017 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDE R OF THE LD. CIT(A)-4, JAIPUR DATED 14-02-2017 FOR THE ASSESSMEN T YEAR 2010-11 RAISING FOLLOWING GROUND OF APPEAL:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 5,79 ,335/- U/S 69 OF THE I.T. ACT, 1961, MADE BY AO. THE ACTION OF LD. CIT(A ) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY DELETING THE SAID ADDITION OF RS. 5,79,335/- ITA NO. 327/JP/2017 M/S. KAMAKSHI INTERNATIONAL VS DCIT, CE NTRAL CIRCLE-1, JAIPUR 2 2.1 APROPOS SOLITARY GROUND OF THE ASSESSEE, THE FA CTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) IS AS UNDER 3.1.3 I HAVE DULY CONSIDERED ASSESSED SUBMISSIO N AND CAREFULLY GONE THROUGH ASSESSMENT ORDER PASSED BY THE AO. I HAVE A LSO TAKEN A NOTE OF FACTUAL MATRIX OF THE CASE AS WELL AS APPLICABLE CASE LAWS RELIED UPON. FACT OF THE CASE IS THAT THE A.O. HAS MADE ADDITION OF RS.5,79,335/- U/S 69 OF THE ACT IN THE HANDS OF ASSESSEE ON THE BASIS OF A LEDGER, SEIZED FROM THE POSSESSION OF SHRI MANISH TAMBI WHOSE PREMISES WERE COVERED UNDER SEAR CH OPERATION U/S 132 OF THE ACT. IT IS PERTINENT TO MENTION HERE THAT OT HER PERSONS NAMELY SHRI BADRI NARAYAN SODHANI AND SHRI BIMAL KUMAR JAIN HAVE DECL ARED INCOME/INVESTMENT ON THE BASIS OF LOOSE PAPERS FOUN D FROM THE POSSESSION OF SHRI MANISH TAMBI. RECENTLY, HON'BLE ITAT BENCH JAI PUR IN THE CASE OF SHRI MANISH TAMBI FOR THE A.Y. 2010-11 HAS PASSED ORDER ON 07-03-2014 WHEREIN IT HAS DIRECTED THE AO TO COMPUTE THE INCOME OF SHR I MONISH TAMBI FOR THE YEAR ON FHE BASIS OF HIS BROKERAGE INCOME AT THE RA TE OF 0.10%. FURTHER, THE FACT THAT SH MANISH TAMBI IS MONEY LENDER HAS ALSO BEEN ACKNOWLEDGED BY THE HONBLE ITAT IN THE SAID ORDER. THEREFORE, ON THE B ASIS OF ENTRIES OF SMT ARUNA SANKHALA, SH VISHNU MAHARWAL, HOTEL NEELAM AN D THE ASSESSEE M/S KAMAKSHI INTERNATIONAL, AOS ACTION IS QUITE JUSTIF IABLE AND JUDICIALLY SOUND TO TREAT THE AMOUNT OF RS.5,79,335/- AS UNDISCLOSED IN VESTMENT U/S 69 OF THE ACT IN ASSESSEES HAND WHICH IS ALSO A CORRECT INFERENC E FROM THE LOOSE PAPERS FOUND FROM THE PREMISES OF SH MANISH TAMBI, HAVING REGULAR DEALINGS OF FINANCE WITH VARIOUS PERSON OF THIS MAHAVEER SING S ANKHALA GROUP INCLUDING ASSESSEE FIRM AND ITS PARTNERS. THIS FACT HAS NOT C ONTROVERTED BY THE ASSESSEE BEFORE THE AO AND EVEN AT THIS APPELLATE STAGE. FOR THE SAKE OF CONVENIENCE, SEC 69 OF THE ACT IS REPRODUCED AS UNDER: THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT REC ORDED IN THE BOOKS OF ACCOUNT IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION OF THE AO, SATISFACTORY, THE VALUE OF T HE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. ( STRESS SUPPLIED BY ME) THE ABOVE SECTION INDICATES THAT IN ORDER TO BE AN INCOME, THERE MUST BE FULFILLMENT OF TWO CONDITIONS SINCE THE WORD AN D HAS BEEN USED IN THE SECTION. THE INVESTMENTS MADE IN THE CURRENT YEAR M UST NOT BE RECORDED IN ITA NO. 327/JP/2017 M/S. KAMAKSHI INTERNATIONAL VS DCIT, CE NTRAL CIRCLE-1, JAIPUR 3 THE BOOKS OF ACCOUNTS AND THE EXPLANATION NOT OFFER ED OR NOT SATISFACTORILY OFFERED. IN ADDITION TO THE SAME, IT MAY BE NOTED T HAT THIS IS A DEEMING PROVISION WHICH MEANS THAT EVEN THOUGH THE ASSESSEE HAS NO REAL INCOME IT MAY BE DEEMED TO BE HIS INCOME. THE PROVISION WHICH IS DEEMING IS ALWAYS REBUTTABLE. THE USE OF THE WORDS IF ANY IN THE SE CTION INDICATES THAT IT IS NOT COMPULSORY THAT THE ASSESSEE MUST HAVE MAINTAINED T HE BOOKS OF ACCOUNTS. ASSESSEE CAN PROVE THE GENUINENESS OF THE INVESTMEN TS BY SOME OTHER EVIDENCE WHICH PROVES INVESTMENT OUT OF DISCLOSED S OURCE. THE WORD EXPLANATION INDICATES THAT THE OPPORTUNI TY OF BEING HEARD MUST BE GIVEN TO THE ASSESSEE TO PROVE THE NATURE A ND SOURCE OF INVESTMENTS. THE USE OF WORD MAY AND ABSENCE OF THE WORD SHAL L IN THE SECTION INDICATES THAT THE AO HAS DISCRETION TO TREAT THE P ARTICULAR INVESTMENT AS THE INCOME OF THE INVESTOR-ASSESSEE DEPENDING OF THE FA CTS AND CIRCUMSTANCES OF EACH CASE AT A PARTICULAR SITUATION OF TIME. IT MAY BE NOTED THAT THE AO IS UNDER OBLIGATION TO GIVE REASONS FOR NOT ACCEPTING THE EXPLANATION OFFERED BY THE ASSESSEE. IT IS ALSO TO BE NOTED THAT THE REVENUE CANNOT RELY ON ASSESSEES STATEMENTS TO THI RD PARTIES. IT IS WORTH NOTING THAT THE WORD INVESTMENT HAS NOT BEEN DEFINED IN SECTION 69 ITSELF. THEREFORE, SECTION 69 ALSO GIVES POWER TO AO TO TRE AT THE VALUE OF INVESTMENTS AS THE INCOME OF THE ASSESSEE IF THE A SSESSEE DOES NOT OFFER ANY EXPLANATION OR THE EXPLANATION OFFERED BY HIM I S NOT SATISFACTORY. THIS IS A VERY WIDE POWER GIVEN TO ASSESSING OFFICER. THE INITIAL BURDEN LIES ON THE ASSESSEE TO OFFER TH E EXPLANATION IN RESPECT OF THE CONCERNED INVESTMENT. THEREFORE, IT IS THE DUTY OF THE ASSESSEE TO OFFER THE RELEVANT EXPLANATION (WITH SU ITABLE PROOF) AS REGARDS THE INVESTMENT IN QUESTION. IT IS THE RIGHT OF THE AO TO FRAME THE OPINION WHETHER THE EXPLANATION OFFERED BY THE ASSESSEE IS ACCEPTABLE OR OTHERWISE. HERE IN THIS CASE, AO HAS FOUND THAT ASSESSEE HAS N OT PROVIDED THE REASONABLE EXPLANATION OFFERED TO HIM, THE EVIDENCE S PRODUCED BEFORE HIM ABOUT THE NATURE AND SOURCE OF INVESTMENT, ACCORDIN GLY, IT IS NOT A CASE OF ADDITION MADE MERELY ON SURMISES, CONJECTURES AS WE LL AS WITHOUT ANY SUPPORTING EVIDENCES. THEREFORE, IN VIEW OF FACTS AND CIRCUMSTANCES OF TH E CASE, ADDITION MADE BY THE AO IS HEREBY SUSTAINED AND ASSESSEES A PPEAL IS HEREBY DISMISSED. ITA NO. 327/JP/2017 M/S. KAMAKSHI INTERNATIONAL VS DCIT, CE NTRAL CIRCLE-1, JAIPUR 4 2.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSE SSEE PRAYED FOR DELETION OF ADDITION OF RS. 5,79,335/- CONFIRME D BY THE LD. CIT(A) U/S 69B OF THE ACT. 2.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ER OF THE LOWER AUTHORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT A SEARCH U/S 132 OF THE ACT WAS CONDUCTED AT BUSINESS CUM RESIDENTIAL P REMISES, C-33, SIKAR HOUSE, OUTSIDE CHANDPOLE GATE, JAIPUR OF SHRI MANISH TAMBI AND HIS FAMILY MEMBERS ON 23-7-2009. SHRI MANISH TA MBI AND HIS FAMILY MEMBERS ARE ENGAGED IN THE FIELD OF FINANCE AS BROKER. DURING THE COURSE OF SEARCH PROCEEDINGS, BOOKS OF ACCOUNTS OF SHRI MANISH TAMBI WERE FOUND AND SEIZED WHEREIN CASH TRANSACTIO NS WERE REFLECTING. IN THIS CASE, IT IS NOTED THAT THE AO M ADE THE ADDITION OF RS. 5,79,335/- U/S 69C OF THE ACT IN THE HANDS OF THE A SSESSEE FIRM ON THE BASIS OF A LEDGER, SEIZED FROM THE POSSESSION OF SH RI MANISH TAMBI. IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE ACTI ON OF THE AO. IT IS FURTHER NOTED THAT THE ISSUE IN QUESTION IS COVERED BY THE DECISION DATED 07-03-2014 OF ITAT COORDINATE, JAIPUR BENCH IN I TA ITA NO. 327/JP/2017 M/S. KAMAKSHI INTERNATIONAL VS DCIT, CE NTRAL CIRCLE-1, JAIPUR 5 NO.737/JP/013 FOR THE ASSESSMENT YEAR 2010-11. THE RELEVANT OBSERVATION OF THE HON'BLE BENCH IS AS UNDER:- 7.4 AFTER CONSIDERING THE RIVAL SUBMISSIONS AND THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE CONSIDERED OPINI ON THAT THE SEIZED PAPERS CANNOT TREATED AS BOOKS OF ACCOUNT. FURTHERMORE, ON LY THE COMMISSION INCOME CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE @ 0.10 % ON A TOTAL OF THE CREDITS OF RS. 91,67,81,272/-. THE ADDITION U/S 68 OF THE A CT CAN BE MADE ONLY IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE. A BOOK MEANS A COLLECTION OF SHEETS OF PAPERS BOUND TOGETHER WITH THE INTENTI ON THAT SUCH BINDING SHALL BE PERMANENT AND PAPERS USED ARE KEPT COLLECTIVELY IN ONE VOLUME. A BOOK WHICH CONTAINS SUCCESSIVE ENTRIES OF ITEMS MAYBE A GOOD M EMORANDUM BOOK BUT UNTIL THOSE ENTRIES ARE TOTALED OR BALANCED OR BOTH AS THE CASE MAY BE, THERE IS NO RECKONING AND NO ACCOUNTS. A BOOK WHICH MERELY C ONTAINS ENTRIES OF ITEMS OF WHICH NO ACCOUNT IS MADE AT ANY TIME, IS NOT A BOOK OF ACCOUNT IN A COMMERCIAL SENSE. THUS THE ADDITION MADE U/S 68 IS NOT JUSTIFIED. IT IS NOTICED THAT OVER AND ABOVE THE PEAK CREDIT, THE A.O. HAS F URTHER MADE AN ADDITION OF RS. 52,40,137/- ON ACCOUNT OF DEBTORS EXCEEDING THE CREDITORS. WE HAVE FOUND THAT THE PEAK DETERMINED BY THE A.O. IS NOT CORRECT , OTHERWISE ALSO, WHEN ONCE PEAK AMOUNT HAS BEEN ADDED THEN NO SEPARATE ADDITIO N IS REQUIRED. IT SEEMS THAT THE A.O. HAS NOT PROPERLY PREPARED THE LIST OF DEBTORS AND CREDITORS BASED ON ANY LOGIC. THE LD CIT(A) HAS CONFIRMED THE ADDIT ION OF RS. 52,40,137/- UNDER THE PROVISIONS OF SECTION 69B OF THE ACT. THI S SECTION RELATES TO INVESTMENT MADE BY THE ASSESSEE IN THE ACQUISITION OF BULLION/JEWELLERY OR OTHER VALUABLE ARTICLES BUT IT DOES NOT SPEAK ABOUT ANY INVESTMENT IN DEBTORS. MOREOVER, SECTION 69B ALSO STIPULATES THE POSITION WHERE THE INVESTMENT EXCEEDS THE AMOUNT SHOWN IN THE BOOKS OF ACCOUNT. S INCE THE ASSESSEE DOES NOT MAINTAIN ANY BOOKS OF ACCOUNT WHEREIN THE DEBTO RS AND CREDITORS ARE REFLECTED , THEREFORE, THIS ADDITION HAS ALSO BEEN WRONGLY MADE AND UPHELD U/S 69B OF THE ACT. HENCE, IN OUR CONSIDERED OPINION, ONLY COMMISSION I NCOME HAS TO BE DETERMINED IN THIS CASE AND NOTHING MORE . ACCORDINGLY, WE REVERSE THE FINDINGS OF THE LD CIT(A) AND ORDER TO DELETE THE ENTIRE ADDITION SO MADE. THUS GROUND NOS. 3 AND 4 OF THE ASSESSEE ARE ALLOWED. IN VIEW OF THE ABOVE FACTS, CIRCUMSTANCES OF THE CA SE AND ALSO THE ORDER OF THE HON'BLE ITAT JAIPUR BENCH (SUPRA), WE FIND NO R EASON TO INTERFERE ITA NO. 327/JP/2017 M/S. KAMAKSHI INTERNATIONAL VS DCIT, CE NTRAL CIRCLE-1, JAIPUR 6 WITH THE ORDER OF THE LD. CIT(A) ON THE ISSUE IN QU ESTION. THUS THE SOLITARY GROUND OF THE ASSESSEE IS DISMISSED. 3.0 IN THE RESULT, THE APPEAL FILED BY THE ASSESSE E IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 -12-201 7. SD/- SD/- DQY HKKJR HKKXPUN (KUL BHARAT) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 1 /12/ 2017 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. KAMAKSHI INTERNATIONAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE DCIT, CENTRAL CIRCLE-1 , JAIPU R 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. 327/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR