Ashok Kumar jain, Bangalore V. ACIT, Bangalore

ITA 329/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63831 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K AMBUSTHA CITI
• Assessee Lawyers: H N KHINCHA
• Keywords: Document seized; Documents seized
• Section: 142(1); 153A

Judgement Text

ITA.329 TO 331/BANG/2011 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'A', BANGALORE BEFORE SHRI. N. BARATHVAJA SANKAR, VICE PRESIDENT AND SHRI. GEORGE GEORGE K. JUDICIAL MEMBER I.T.A NOS.329 TO 331/BANG/2011 (ASSESSMENT YEAR : 2006-07; 2007-08 & 2008-09) SHRI. ASHOK KUMAR JAIN, NO.30/31, 1 FLOOR, M. M. LANE, J. M. ROAD CROSS, BANGALORE .. APPELLANT PAN : AGPPJ6030L V. ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 21(1), BANGALORE .. RESPONDENT APPELLANT BY : SHRI. H. N. KHINCHA, CA RESPONDENT BY : SHRI. S. K. AMBUSTHA, CIT-I, DR DATE OF HEARING : 05.12.2012 DATE OF PRONOUNCEMENT : O R D E R PER BENCH : THESE THREE APPEALS FOR THE THREE CONSECUTIVE YEAR S, NAMELY, 2006-07, 2007-08 AND 2008-09, ARE FILED BY THE ASSE SSEE SHRI. ASHOK KUMAR JAIN OF BANGALORE, AGAINST THE COMMON APPELLA TE ORDER DATED.15.03.2011 OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-VI, BANGALORE. ITA.329 TO 331/BANG/2011 PAGE - 2 02. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS AN INDIVIDUAL DOING BUSINESS OF CHEQUE DISCOUNTING, CHEQUES COLLE CTION AND SIMILAR OTHER ACTIVITIES. THERE WAS A SEARCH U/S. 132 OF T HE IT ACT CONDUCTED ON 11.10.2007. DURING THE COURSE OF SEARCH VARIOUS BOOKS OF ACCOUNTS AND DOCUMENTS WERE SEIZED FROM THE PREMISES OF THE ASSESSEE. ON ISSUE OF NOTICE U/S. 153A OF THE ACT CALLING FOR TH E RETURN OF INCOME, THE ASSESSEE FILED RETURN FOR ALL THE THREE YEARS O N 31.3.2009 DECLARING A TOTAL INCOME OF RS.15,56,687/- ; RS,29,42,100/-; AND RS.48,09,920/- RESPECTIVELY. NOTICES U/S.143(2) AND 142(1) WERE I SSUED FOR ALL THE YEARS. THE ASSESSEE AND HIS REPRESENTATIVE WERE HE ARD BY THE ASSESSING OFFICER. THE ASSESSING OFFICER, ON PERUS AL OF THE SEIZED MATERIALS FOUND THAT THE ASSESSEE HAD BEEN CHARGING COMMISSION AT DIFFERENT RATES VARYING FROM 0.1% TO 0.5%. THE ASS ESSING OFFICER WAS OF THE VIEW THAT ADOPTING THE AVERAGE COMMISSION OF 0.25%, THE ADDITIONAL INCOME FOR THE THREE ASSESSMENT YEARS IN QUESTION WORKED OUT TO RS.22,43,644/-; RS.50,88,839/-; AND RS.36,7 1,391/- RESPECTIVELY. HOWEVER, THE ASSESSING OFFICER NOTIC ED THAT IN THE RETURNS FILED BY THE ASSESSEE IN RESPONSE TO NOTICE U/S.153A OF THE ACT, THE ASSESSEE HAS OFFERED TO TAX ADDITIONAL INCOME O F ONLY RS.12,60,000/-; RS.41,71,072/- AND RS.29,37,112/- F OR THE THREE YEARS RESPECTIVELY. HENCE, THE ASSESSING OFFICER REQUIRE D THE ASSESSEE TO SHOW CAUSE WHY THE AMOUNTS OF RS.9,83,644/-; RS.50, 88,839/-; AND ITA.329 TO 331/BANG/2011 PAGE - 3 RS.50,00,000/- RESPECTIVELY SHOULD NOT BE BROUGHT T O TAX AS UNDISCLOSED COMMISSION FROM CHEQUE DISCOUNTING BUSI NESS. THE ASSESSEE REPLIED AS UNDER : 'THE COMMISSION RECEIVED BY ME ON CHEQUE DISCOUNTIN G VARIES FROM 0.075% TO 0.10% AND 0.15% TO 0,20% FOR POST DA TED CHEQUES WHICH I HAVE ALSO AFFIRMED IN MY LETTER DATED.05.11.2007 TO THE ASSISTANT DIRECTOR OF INCOM E TAX (INV). HENCE THE INCOME OFFERED BY ME US CORRECT AND IN NO CASE COULD EXCEED THE INCOME ALREADY OFFERED BY ME. HENCE THE INCOME OFFERED MAY BE ACCEPTED.' 03. THE ASSESSING OFFICER DID NOT ACCEPT THE EXPLAN ATION OF THE ASSESSEE. AFTER VERIFYING THE SEIZED DOCUMENTS, HE NOTICED THAT THE ASSESSEE DID NOT CHARGE A FIXED RATE. ACCORDING TO HIM, FROM MARKET ENQUIRIES, IT WAS FOUND OUT THAT THE PREVAILING RAT E FOR CHEQUE COLLECTION WAS BETWEEN 0.1% AND 0.5% AND THAT IN TH E CASE OF CHEQUE DISCOUNTING 18% IS CHARGED. HENCE IN THESE CIRCUMS TANCES, THE ASSESSING OFFICER THOUGHT IT FIT TO ADOPT 0.25% ON THE TURNOVER, TAKING INTO ACCOUNT THE AVERAGE OF COMMISSION BEING CHARGE D BY THE ASSESSEE. THUS THE DIFFERENCE OF RS.4,48,731/-; RS.10,17,768/ - AND RS.7,34,279/- RESPECTIVELY, WERE BROUGHT TO TAX AS SUPPRESSED COM MISSION OF THE ASSESSEE. AGGRIEVED BY THESE ORDERS OF THE ASSESSI NG OFFICER, THE ASSESSEE MOVED THE MATTER IN APPEAL BEFORE THE FIRS T APPELLATE ITA.329 TO 331/BANG/2011 PAGE - 4 AUTHORITY, BEFORE WHOM THE FOLLOWING SUBMISSIONS WE RE MADE BY THE ASSESSEE : '2. INTER ALIA, THE APPELLANT IS ENGAGED IN THE BUS INESS OF CHEQUE DISCOUNTING AND CHEQUE FACILITIES. 3. THE NORMAL SERVICE CHARGES LEVIED FOR ABOVE ACTI VITIES VARY FROM 0.75% TO 0.1% FOR DISCOUNTING CURRENT CHEQUES AND 0.15% TO 0.2% FOR DISCOUNTING POST DATED CHEQUES. 4. A SEARCH U/S,132 OF INCOME-TAX ACT, 1961 WAS CON DUCTED IN THE PREMISES OF THE APPELLANT ON 11.10.2007. 5. IN RESPONSE TO THE NOTICES U/S.153A OF THE ACT, THE FOLLOWING RETURNS WERE FILED. ASST.YEAR INCOME RETURNED EXTRA INCOME INCLUDED IN NO.2 2006-07 15,56,690 12,60,000 2007-08 29,42,100 1ST TIME RETURN 2008-09 48,07,920 -DO- 6. IN ASSESSMENT ORDERS FOR THE ABOVE REFERRED YEAR S, THE FOLLOWING ADDITIONS HAD BEEN MADE : ASST.YEAR AMOUNT (RS.) 2006-07 4,48,731 2007-08 10,17,768 2008-09 7,34,279 7. THE ABOVE ADDITIONS HAVE BEEN MADE BY INCREASING THE RECEIPTS BY ADOPTING AVERAGE COMMISSION AT 0.25%. 8. THE APPELLANT HAS OFFERED THE CORRECT INTEREST R ECEIVED BY HIM. THERE IS NO EXTRA INCOME RECEIVED. 9. THE ASSESSING OFFICER HAS IN THE ORDER RELIED ON CERTAIN MARKET ENQUIRIES. IT IS NOT KNOWN AS TO WHAT TYPE OF ENQUIRIES WERE MADE, WHO WERE CONTACTED AND WHETHER CASES WHE RE ENQUIRY WAS DONE ARE COMPARABLE TO THE CASE OF THE APPELLANT. ITA.329 TO 331/BANG/2011 PAGE - 5 FURTHER, NO OPPORTUNITY WAS GIVEN BY ASSESSING OFFI CER TO THE APPELLANT TO EITHER EXAMINE THE ENQUIRY REPORT OR T O CROSS EXAMINE THE PARTIES CONCERNED. 10. THREE OR FOUR EXAMPLES QUOTED IN THE ORDER ARE OF SMALL AMOUNTS AND THAT TOO OF SPECIAL CASES. ON AN AVERA GE THE APPELLANT CHARGES MUCH LESS COMMISSION THAN STATED. 11. EVEN IN THE COURSE OF SEARCH, NO EVIDENCE WAS F OUND IN RESPECT OF ADDITIONAL INVESTMENTS/ASSETS, TO COVER THE EXTRA INCOME SOUGHT TO BE ASSESSED/TAXED BY THE ASSESSING OFFICER. 12. THE ADDITIONS TO INCOME FOR ALL THE YEARS HAVE BEEN MADE WITHOUT BASIS AND ONLY IN ADHOC MANNER. NO BASIS I S SHOWN TO ARRIVE AT THE FIGURE OF 0.25% AND EVEN THE CALCULAT ION IS NOT CORRECT. 13. IN RAVINDER KUMAR V. DCIT (33 SOT 251) DELHI, I T WAS HELD THAT ANY ADDITION SOUGHT TO BE MADE BY ASSESSI NG OFFICER MUST BE CORROBORATED EITHER BY MATERIAL FOUND DURIN G ACTION OR BY MATERIAL SUBSEQUENTLY BROUGHT ON RECORD BY THE A SSESSING OFFICER. 14. IN VIEW OF THE ABOVE, THE APPELLANT SUBMITS THA T THE ADDITIONS MADE BY ASSESSING OFFICER ON ACCOUNT OF T HE COMMISSION/RECEIPTS BE DELETED AND THE INCOME AS PE R RETURN FILED BY THE APPELLANT BE ACCEPTED.' 04. ON PERUSAL OF THE ASSESSMENT ORDER AND ARGUMENT S TAKEN BY THE ASSESSEE, THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND THAT IT WAS EVIDENT THAT THE ESTIMATION OF COMMISSION ON DISCOU NTING OF CHQEUES MADE BY THE ASSESSEE WAS ON THE LOWER SIDE. THE AS SESSING OFFICER IN PARA 5 OF HIS ORDERS QUOTED CERTAIN INSTANCES ACCOR DING TO WHICH THE ITA.329 TO 331/BANG/2011 PAGE - 6 COMMISSION RANGED FROM 0.2% TO 2.3%, WHEREAS ACCORD ING TO THE ASSESSEE, THE COMMISSION RANGED FROM 0.75% TO 0.1% FOR DISCOUNT OF CURRENT CHEQUES AND 0.15% TO 0.2% FOR DISCOUNTING O F POST DATED CHEQUES. ACCORDING TO THE COMMISSIONER OF INCOME-T AX (APPEALS), ONCE IT WAS CLAIMED BY THE ASSESSEE THAT THE COMMIS SION WAS CLAIMED AT DIFFERENT RATES FOR DIFFERENT SERVICES, THE ASS ESSEE INSTEAD OF TAKING THE GENERAL ARGUMENT SHOULD HAVE SUPPORTED THE SAME WITH THE WORKING OF COMMISSION BASED ON THE TRANSACTIONS CAR RIED OUT DURING THE RELEVANT ASSESSMENT YEARS. WHEN THE ASSESSEE F AILED TO FURNISH SUCH WORKING TO PROVE THE COMMISSION EARNED WAS LES S THAN THE COMMISSION ESTIMATED BY THE ASSESSING OFFICER, THE ESTIMATION MADE BY THE ASSESSING OFFICER WAS FOUND REASONABLE BY TH E COMMISSIONER OF INCOME-TAX (APPEALS). ACCORDINGLY THE ADDITIONS MADE BY THE ASSESSING OFFICER FOR ALL THE THREE YEARS WERE CONF IRMED BY THE COMMISSIONER OF INCOME-TAX (APPEALS). STILL AGGRIE VED, THE ASSESSEE IS ON APPEAL BEFORE US WITH THIS ISSUE FOR ALL THE THREE YEARS. THE EFFECTIVE GROUNDS OF APPEAL RAISED BEFORE US BY THE ASSESSEE ARE AS UNDER : I) IN ANY CASE AND WITHOUT PREJUDICE, THE ORDER PAS SED IN THE ABSENCE OF CROSS EXAMINATION OF PARTIES/REPORTS BAS ED ON WHICH ASSESSMENT WAS DONE MAKES THE ORDER TOTALLY B AD IN LAW AND IS LIABLE TO BE QUASHED. THE LEARNED COMMISSIO NER OF ITA.329 TO 331/BANG/2011 PAGE - 7 INCOME-TAX (APPEALS) INSTEAD OF QUASHING THE ORDER HAS ERRED IN CONFIRMING THE SAME. II) WITHOUT PREJUDICE, THE APPELLANT SUBMITS THAT T HE LOWER AUTHORITY HAVE ERRED IN NOT ACCEPTING THE INCOME DE CLARED BY THE APPELLANT. ON PROPER APPRECIATION OF FACTS OF THE CASE, THE INCOME OFFERED BY THE APPELLANT BEING CORRECT IS TO BE ACCEPTED. III) THE LEARNED ASSESSING OFFICER HAS ERRED IN ASS ESSING THE INCOME AT RS.20,05,420/RS.39,59,871/55,42,190, ADOP TING 0.25% AS APPROPRIATE RATE AND THE LEARNED COMMISSIO NER OF INCOME-TAX (APPEALS) HAS ERRED IN CONFIRMING THE SA ME. SUCH A CONCLUSION IS DRAWN WITHOUT ANY BASIS. SUCH ADHO C ADDITION IS NOT SUPPORTED BY BOTH FACTS AND LAW AND IS TO BE DELETED. IV) THE LOWER AUTHORITIES HAVE ERRED IN ARRIVING AT A CONCLUSION THAT 0.25% SHOULD BE THE APPROPRIATE RAT E AS AGAINST 0.2% WHICH WAS OFFERED BY THE APPELLANT. T HE CONCLUSION DRAWN ON SURMISES AND CONJECTURES ARE TO BE DISREGARDED. 05. BEFORE US, THE LEARNED CHARTERED ACCOUNTANT APP EARING FOR THE ASSESSEE REITERATED THE VERY SAME SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. HE ALSO PLACED ON RECORD A RECORD OF THE ASSESSMENT ORDER FOR THE ASSESSMENT YEAR 2002-03 IN THE CASE OF SHRI . JITESH JAIN, SON OF THE ASSESSEE, WHO WAS ALSO DOING IDENTICAL BUSINESS AND SUBMITTED THAT, IN THAT CASE 0.1% WAS ACCEPTED BY THE DEPARTM ENT. ITA.329 TO 331/BANG/2011 PAGE - 8 06. PER CONTRA, THE LEARNED DR SUBMITTED THAT THE A SSESSEE'S RELIANCE ON THE ASSESSMENT ORDER FOR 2002-03 IN THE CASE OF ASSESSEE'S SON CANNOT SUPPORT THE ASSESSEE'S CASE, AS THE ASSESSME NT YEARS UNDER CONSIDERATION NOW ARE 2006-07, 2007-08 AND 2008-09, WHICH ARE MORE THAN FOUR YEARS LATER TO 2002-03 AND FURTHER THERE WAS NO SEIZED MATERIAL IN THAT CASE. HE ALSO SUBMITTED THAT THE ASSESSEE HAS NOT MADE HIS CASE BEFORE THE TRIBUNAL BY BRINGING ANY MATERI ALS ON RECORD TO SUPPORT THE PERCENTAGE CLAIMED BY HIM AND HENCE, TH E APPELLATE ORDERS NEED NOT BE DISTURBED. 07. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CONSIDE RED THE FACTS AND MATERIALS ON RECORD INCLUDING COPY OF THE ASSES SMENT ORDER IN THE CASE OF ASSESSEE'S SON FOR THE ASSESSMENT YEAR 2002 -03. AS RIGHTLY CONTENDED BY THE LEARNED DR AND ALSO BY THE COMMISS IONER OF INCOME-TAX (APPEALS) IN HIS ORDER, THE ASSESSEE HAS NOT BROUGHT ANY MATERIAL TO SUBSTANTIATE HIS CLAIM AND THUS HE HAS NOT MADE A CASE BEFORE US. IN SUCH FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE FIRST APPELLATE AUTHO RITY AND AS SUCH WE UPHOLD THE SAME BY REJECTING THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. ITA.329 TO 331/BANG/2011 PAGE - 9 08. IN THE RESULT, THE ASSESSEE'S APPEALS FOR ALL T HE THREE YEARS ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 18/12/2012. SD/- SD/- (GEORGE GEORGE K) (N. BARATHVAJA SANKAR) JUDICIAL MEMBER VICE PRESIDENT