S.Gopal, Prop: M/s.S.S.Jewellery, Salem V. DCIT, Salem

ITA 3363/CHNY/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4208 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 19-06-2017
• Assessment Year: 2013-2014
• Appeal Filed On: 15-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: T S LAKSHMI VENKATRAMAN
• Keywords: Unexplained expenditure; Revised return
• Section: 234B; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 3362 & 3363/MDS/2016 / ASSESSMENT YEAR : 2010-11 & 2013-14 MR. S. GOPI, PROP; M/S. S.S. JEWELLERY, 38/118, DURAISAMY NAIDU STREET, DHARMAPURI 636 701. [PAN: ACDPG 9303M] VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, SALEM. ( / APPELLANT) ( / RESPONDENT) & ' / APPELLANT BY : SHRI T .S. LAKSHMI VENKATRAMAN, CA *+& ' / RESPONDENT BY : SHRI NARENDRA KUMAR NAIK, JCIT ' /DATE OF HEARING : 20.06.2017 ' /DATE OF PRONOUNCEMENT : 20.06.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-18, CHENNAI, I N ITA NO. 10 & 11/15- 16 DATED 30.09.2016 FOR ASSESSMENT YEARS 2010-11 & 2013-14, RESPECTIVELY. :-2-: ITA NO. 3362&3363/MDS/2016 2. SHRI S. GOPI, THE ASSESSEE, AN INDIVIDUAL AND PR OPRIETOR OF M/S. S.S. JEWELLERY AT DHARMAPURI, IS A GOLDSMITH BY PROFESSI ON AND HAS A SHOP IN FRONT OF HIS RESIDENCE. HE PURCHASES GOLD BARS/BULLION F ROM RECOGNISED BULLION MERCHANTS ON A SMALL SCALE, MANUFACTURES GOLD JEWEL LERY AND SELLS THEM TO CUSTOMERS IN AND AROUND HIS RESIDENCE IN DHARMAPURI AND SURROUNDING AREAS. IN THE ASSESSMENT MADE FOR ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER HELD THAT FROM THE BILLS AND VOUCHERS, THE SALES TA X RETURNS AND OTHER DETAILS PRODUCED, BILLS AMOUNTING TO RS. 12 LAKHS IS UNACCO UNTED. THE ASSESSEE EXPLAINED THAT THE DIFFERENCE BETWEEN PURCHASES AND SALES AS PER SALES TAX RETURNS AND THE IT RETURN WAS DUE TO THE FACT THAT CERTAIN SALES, WHICH WERE NOT SUFFERING VAT WERE NOT INCLUDED IN ST RETURNS. HOWEVER, HE ADMITTED SUCH SALES IN THE IT RETURNS WHICH RESULTED IN OFFE RING OF THE EXTRA INCOME FOR INCOME TAX PURPOSE. WHEN THE AO INSISTED FOR BILLS FOR RS. 12 LAKHS, THE ASSESSEE SUBMITTED THAT EVEN IF IT HAS MADE A PURCH ASE FOR RS. 12LAKHS, ONLY GP OF IT SHOULD BE BROUGHT TO TAX. SINCE THE ASSES SEE HAS BOOKED ALL THE EXPENSES, THE AO HELD THAT THE UNACCOUNTED PURCHASE S TO THE EXTENT OF RS. 12 LAKHS TO BE ADDED TO THE INCOME AND MADE AN ADDITIO N ACCORDINGLY. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS DISMISSED THE APPEAL. 3. FOR ASSESSING OFFICER 2013-14, THE RAILWAY POLIC E, COIMBATORE, INTERCEPTED SHRI ANANDAN, WHO WAS CARRYING BAG CONT AINING CASH OF RS. :-3-: ITA NO. 3362&3363/MDS/2016 89,12,500/- AND SHRI ANANDAN STATED THAT THE CASH B ELONGED TO SHRI S. GOPI, THE ASSESSEE. THE ASSESSEE DID NOT OFFER PROPER EX PLANATION WITH DOCUMENTARY EVIDENCE FOR THE ORIGIN OF THE CASH AND HENCE, THE RAILWAY POLICE TOOK THE CASH INTO CUSTODY AND INTIMATED THE INVEST IGATION WING, COIMBATORE ON 13.12.2012. THE CASH WAS REQUISITIONED U/S. 132 A FROM THE RAILWAY POLICE BY WARRANT OF AUTHORIZATION DATED 13.12.2012 AND RS . 89,12,500/- WAS SEIZED. THE AO COMPLETED THE ASSESSMENT ON 16.03.2015. WHI LE DOING SO, THE ASSESSING OFFICER LEVIED INTEREST UNDER SECTIONS 23 4B & C OF THE INCOME TAX ACT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEAL IN THE CONSOLIDATED ORDER FOR THE ASSESSMENT YEARS 2010-11 AND 2013-14. AGGRIEVED ON SUCH ORDER, THE ASSESSEE FILED AN APPEAL AGAINST CHARGING OF INTEREST UNDER SECTIONS 234B & C, RELYING ON THE DECISION OF ITAT RAJKOT BENCH IN ITA NO. 1172 OF 2010 AND IT AT KOLKATA IN ITA NO. 1956/KOL/2009. 4. SINCE, BOTH THE APPEALS ARE FILED BY THE SAME AS SESSEE, THEY ARE HEARD TOGETHER AND DISPOSED OFF TOGETHER FOR THE SAKE OF CONVENIENCE. 5. THE AR INVITED OUR ATTENTION TO THE LETTERS ADDR ESSED TO THE AO DATED 23.01.2015 AND 20.02.2015. WITH REGARD TO THE DIFF ERENCE BETWEEN THE IT RETURNS AND THE RETURNS SUBMITTED TO THE SALES TAX AUTHORITIES, THE AR INVITED OUR ATTENTION TO THE FOLLOWING PORTION OF THE LETTE R DATED 23.01.2015. :-4-: ITA NO. 3362&3363/MDS/2016 B) YEAR ENDED 31.03.2010 NO DIFFERENCE N PURCHA SES FIGURES. SALES AS PER IT RETURN RS. 2,04,79,743/- AND A PER SALES TAX RETURNS RS. 2,30,69,011/-. EXCESS SALES REPORTED I N IT RETURNS IS RS. 10,10,732/- AND HENCE NO EFFECT ON INCOME RETURNED. 5.1 THEREAFTER, THE AR TOOK OUR ATTENTION TO THE LE TTER DATED 20.02.2015, WHEREIN, THE ASSESSEE REPLIED THAT TO HIS KNOWLEDGE THERE IS NO DISCREPANCY OF RS. 12 LAKHS TOWARDS PURCHASE AND BILLS UNACCOUNTED . THE AR, FURTHER INVITED OUR ATTENTION TO THE WRITTEN SUBMISSIONS TO THE CIT (A) WHICH IS EXTRACTED AS UNDER: 1. THE ONLY ISSUE INVOLVED IN THE ABOVE APPEAL IS ADDITION OF RS. 12. LACS TO THE INCOME RETURNED AS UNACCOUNTED PURC HASES BY THE APPELLANT. 2. QUERY RAISED BY AO IN THE LETTER DT: 12.02.2015 REGARDING THE ABOVE ISSUE ' FURTHER, ON EXAMINATION OF THE DETAIL S 1 PURCHASE BILLS FILED BY YOU, IT WAS SEEN THAT BILLS AMOUNTING TO RS. 12, 00,000/- IS NOT ACCOUNTED. YOU ARE CAUSED TO SHOW WHY THE SAME SHOU LD NOT BE ASSESSED TO TAX AS YOUR UNACCOUNTED EXPENDITURE'. 3. COPY OF REPLY DT: 23.012015 FILED BY THE APPELLA NT WITH AO IS ENCLOSED. IN PAGE NO -3 OF THE ABOVE LETTER THE APP ELLANT HAS CLEARLY STATED THAT THERE IS NO DIFFERENCE IN PURCHASE FIGU RES. SALES AS PER INCOME - TAX RETURN IS RS. 2,40,79,743/- AND SALES REPORTED IN SALES TAX RETURNS IS RS. 2,30,69,011/-. EXCESS SALES REPORTED IN INCOME - TAX RETURNS IS RS. 10,10,732/- AND HENCE NO EFFECT ON I NCOME RETURNED. 4. COPY OF LETTER DT: 20.02.2015, WHICH LETTER HAS BEEN REFERRED TO IN THE ASSESSMENT ORDER IS ENCLOSED. IN THE ABOVE L ETTER, IN PARA 4 , THE APPELLANT SPECIFICALLY STATED THAT THERE IS NO UNAC COUNTED PURCHASE BILLS. 5. ON A TURNOVER OF RS. 2,40,79,743/-, GROSS PROFIT IS RS. 12,06,428/- GIVING A RATE OF 5.01%. IF THE ABOVE AD DITION OF RS. 12,00,000 IS TELESCOPED INTO THE GROSS PROFIT, THE GROSS PROFIT COMES TO :-5-: ITA NO. 3362&3363/MDS/2016 RS. 24,06,428/- GIVING A RATE OF 9.99%. THE AO HAS NOT BROUGHT IN ANY MATERIALS ON RECORD TO SUBSTANTIATE THAT THE ABOVE RATE OF GROSS PROFIT IS ACHIEVABLE IN THE LINE OF BUSINESS OF THE APPELLANT . 6. A COPY OF WRITTEN SUBMISSIONS FILED WITH CIT(A) ON 22.09.2016 IS ENCLOSED. FROM THE ABOVE DETAILS IT COULD BE SEE N THAT THE PURCHASE DETAILS FOR THE PERIOD 01.04.2009 TO 31.03.2010 EXA CTLY TALLIES WITH THE TRADING ACCOUNT FIGURE OF RS. 2,58,60,005/- THE ABO VE FACTS HAVE NOT BEEN MET BY THE LOWER AUTHORITIES IN THEIR ORDERS. 7. THIS IS TO CERTIFY THAT THE ENCLOSURES TO THIS W RITTEN SUBMISSION FINDS A PLACE IN THE RECORDS OF THE LOWER AUTHORITI ES. 5.2 THEN THE AR SUBMITTED THAT DURING THE YEAR THE ASSESSEE PURCHASED FOR RS. 2,58,60,005/- ONLY AND ALL THE ENTRIES ARE ACCO UNTED IN THE P & L ACCOUNT AND THE ASSESSING OFFICER HAS NOT FOUND ANY PURCHAS E OMISSION SPECIFICALLY. THERE WAS A DIFFERENCE ONLY IN THE SALES BETWEEN TH E IT RETURN AND THE SALES TAX RETURNS AT RS. 2,40,79,743/- AND RS. 2,30,69,01 1/-, RESPECTIVELY. THE ASSESSEE HAS REPORTED EXCESS SALES IN THE IT RETURN AT RS. 10,10,732/- FOR THE REASON THAT IN THE IT RETURN, THE SALES MADE WHICH WERE NOT SUFFERING VAT WERE INCLUDING WHILE IN THE SALES TAX RETURNS, SUCH SALES WERE NOT INCLUDED. PER CONTRA, THE DR RELIED ON THE ASSESSMENT ORDER A ND THE ORDER OF THE CIT(A). 6. WE HEARD THE RIVAL SUBMISSIONS AND FOUND MERITS IN THE AR SUBMISSIONS. IN THE ASSESSMENT MADE FOR ASSESSMENT YEAR 2010-11, THE ASSESSING OFFICER HAS NOT POINTED OUT SPECIFICALLY WHICH PURCHASE HAS NOT BEEN ACCOUNTED AND :-6-: ITA NO. 3362&3363/MDS/2016 HENCE, THE ADDITION MADE IS UNWARRANTED. THE ASSES SEES ABOVE EXPLANATION HAS NOT BEEN DISPUTED BY THE AO & THE CIT(A). ON T HE ABOVE FACTS AND CIRCUMSTANCES, THE ABOVE EXPLANATION APPEARS REASON ABLE AND HENCE THE ADDITION IS DELETED. 7. FOR THE ASSESSMENT YEAR 2013-14, THE AR SUBMITTE D THAT CASH WAS SEIZED ON 12.12.2012, THE ASSESSEE FILED HIS ORIGIN AL RETURN ON 08.01.2014 SHOWING THE AMOUNT SEIZED AS ADVANCE TAX AT RS. 89, 32,500/-. FURTHER, HE SUBMITTED THAT THE ASSESSEE FILED A REVISED RETURN ON 12.11.2014 ADMITTING A GROSS TOTAL INCOME OF RS. 1,12,50,206/- (INCLUDING THE SEIZED SUM) AND AFTER ADJUSTING THE SEIZED SUM OF RS. 89,32,500/- UNDER T HE HEAD ADVANCE TAX, HE SOUGHT THE REFUND OF RS. 56,35,750/-. THE AR MADE A PLEA THAT ONCE A REVISED RETURN IS FILED AND THE ASSESSEE SOUGHT ADJ USTMENT OF SEIZED SUM TOWARDS THE TAX AND SOUGHT THE BALANCE SUM AS A REF UND, THE ASSESSING OFFICER SHOULD HAVE ADJUSTED THE SEIZED CASH TOWARD S TAX. ON SUCH FACTS AND CIRCUMSTANCES, THE AO SHOULD NOT HAVE LEVIED INTERE ST UNDER SECTIONS 234B&C W.E.F. 12.11.2014. PER CONTRA, THE DR SUPPORTED TH E ORDER OF THE AO AND CIT(A). 8. WE HEARD THE RIVAL SUBMISSIONS AND FOUND MERITS IN THE ARS SUBMISSIONS. WHEN THE ASSESSEE HAS FILED REVISED R ETURN ADMITTING RS. 1,42,50,206/- WHICH INCLUDED THE SEIZED CASH AND SO UGHT REFUND OF RS. :-7-: ITA NO. 3362&3363/MDS/2016 56,35,750/-, THE AO SHOULD HAVE ADJUSTED TO THE SEI ZED SUM TOWARDS THE ADMITTED TAX. HENCE, LEVY OF INTEREST UNDER SECTIO NS 234B&C BEYOND 12.11.2014 ON THE ADMITTED INCOME IS UNTENABLE AND HENCE, LEVY OF INTEREST UNDER SECTIONS 234B & C ON THE ADMITTED INCOME BEYO ND 12.11.2014 ARE DELETED. TO THIS EXTENT, THE APPEAL IS ALLOWED. 9. IN THE RESULT, THE ASSESSEES APPEAL FOR THE ASS ESSMENT YEAR 2010-11 IS ALLOWED AND FOR THE ASSESSMENT YEAR 2013-14 IS PART LY ALLOWED. ORDER PRONOUNCED ON MONDAY, THE 20 TH DAY OF JUNE, 2017 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) ' # /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) # /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 20 TH JUNE, 2017 JPV ' *34 54 /COPY TO: 1. &/ APPELLANT 2. *+& /RESPONDENT 3. 6 ( )/CIT(A) 4. 6 /CIT 5. 4 * /DR 6. /GF