Sachin Prabhakar Bagad, Nashik V. Assistant Commissioner of Income tax,

ITA 34/PUN/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6578 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 02-09-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 05-01-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MALVIYA
• Keywords: Search and seizure; Loose papers; Retraction
• Section: 143(3); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE BEFORE SHRI P.M. JAGTAP, VICE PRESIDENT AND SHRI S.S. VISWANETHRA RAVI, J UDICIAL MEMBER . / ITA NO . 34 /PUN/2017 / ASSESSMENT YEAR : 20 1 3 - 14 S ACHIN PRABHAKAR BAGAD, 1 ST FLOOR, VATSAL VIHAR APPT., BALAJI NAGAR, UNTAWADI, NASHIK 422008 PAN : ABRPB9470H ....... / APPELLANT / V/S. ASSISTANT COMMISSIONER OF INCOME TAX , CIRCLE 1, NASHIK / RESPONDENT ASSESSEE BY : SHRI S ANKET JOSHI REVENUE BY : SHRI A LOK MALVIYA / DATE OF HEARING : 02 - 09 - 2020 / DATE OF PRONOUNCEMENT : 16 - 0 9 - 2020 / ORDER PER S.S. VISWANETHRA RAVI, JM : THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17 - 11 - 2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 1, NASHIK [CIT(A)] FOR ASSESSMENT YEAR 2013 - 14. 2 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 2. THE ASSESSEE RAISED GROUND NOS. 1 TO 4 QUESTIONING THE ACTION OF CIT(A) IN CONFIRMING THE ADDITION OF RS.65,00,000/ - ON THE ACCOUNT OF ERRORS AND OMISSIONS IN THE FACTS THE CIRCUMSTANCES OF THE CASE. 3. THE BRIEF FACTS RELATING TO THE CASE ON HAND ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. A SURVEY ACTION WAS CONDUCTED IN THE BUSINESS PREMISES OF ASSESSEE ON 15 - 02 - 2013. THE ORIGINAL RETURN OF INCOME WAS FILED DECLARING A TOTAL INCOME OF RS.1,25,77,230/ - ON 30 - 09 - 2013. ACCORDING TO THE AO, THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.1,07,67,799/ - ON THE BASIS OF NOTINGS MADE ON LOOSE PAPERS DURING THE SURVEY ACTION . THE AO WAS OF THE OPINION THAT THE ASSESSEE IS NOT JUSTIFIED IN OFFERING AN AMOUNT OF RS.7,23,201/ - TOWARDS ERRORS AND OMISSIONS AND BALANCE AMOUNT OF RS.65,00,000/ - (RS. 72,32,201/ - - RS.7,32,201/ - ) SHOULD ALSO BEEN OFFERED TO TAX IN THE RETURN . ACCORDINGLY, THE AO DETERMINED TOTAL INCOME OF RS.1,91,30,536/ - VIDE ITS ORDER DATED 12 - 02 - 2016 PASSED U/S. 143(3) OF THE ACT. THE CIT(A) CONFIRMED THE ORDER OF AO. THE RELEVANT PORTION OF CIT(A) IS REPRODUCED HERE - IN - BELOW FOR READY REFERENCE : 6.9 THE HONBLE COURT FURTHER CAUTIONS US THAT CIRC UMSTANTIAL FLEXIBILITY, ONE ADDITIONAL OR DIFFERENT FACT MAY MAKE A WORLD OF DIFFERENCE BETWEEN CONCLUSIONS IN TWO CASES. IN THE PRESENT CASE, THE LEARNED AR FOR THE ASSESSEE DID NOT EVEN MAKE ANY ATTEMPT TO SHOW AS TO HOW THE FACT SITUATION IN S KADHIR KHAN (SUPRA) FITTED IN WITH THE FACT SITUATION OF THE CASE UNDER CONSIDERATION. THE APPELLANT DID NOT DEMONSTRATE IN RESPECT OF OTHER DECISIONS RELIED ON AS TO HOW THESE DECISIONS ARE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE BEFORE US. AFTER P ERUSING THE DECISIONS RELIED UPON AND WITH RESPECTS, I AM OF THE OPINION THAT THE DECISIONS RELIED UPON ARE RENDERED IN THE FACTS OF THEIR OWN AND THE RATIO LAID DOWN IN THESE DECISIONS IS NOT GERMANE TO THE ISSUE BEFORE ME. THEREFORE, I AM OF THE OPINION THAT THE RELIANCE ON THESE DECISIONS BY THE APPELLANT IS TOTALLY MISPLACED. HENCE , DISMISSED . 6.10 I HAVE GIVEN SERIOUS CONSIDERATION TO ALL THE FACTS AND CIRCUMSTANCES OF THE CASE IN THE LIGHT OF THE MATERIALS AND ARGUMENTS PLACED BEFORE ME. AS OBSERVED BY LORD TEMPLEMAN IN R. V. IRC (1994) 1 WLR 334 (HL), EVERY TAX AVOIDANCE SCHEME INVOLVES A TRICK AND A 3 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 PRETENCE. IT IS THE TASK OF THE ASSESSING OFFICER TO UNRAVEL THE TRICK AND THE DUTY OF THE COURT TO IGNORE THE PRETENCE. IN THE CASE BEFORE ME, THE AO HAS UNRAVELED THE TRICK THAT WAS PLAYED BY THE ASSESSEE BY REMOVING ONE ZERO FOR THE DECLARATION MADE ON ACCOUNT OF ERROR AND OMISSION BY SIMPLY STATING THAT NO EVIDENCE WAS FOUND. IT IS NOT A CASE OF MERE REJECTION OF THE EXPLANATION GIVEN BY THE ASSESSEE BUT A CASE WHERE THE ANTECEDENTS OF THE ASSESSEE HIS CONDUCT IN DOING BUSINESS IN PAST AND PRESENT YEARS HAS BEEN BROUGHT ON RECORD THROUGH POSITIVE MATERIALS, WHICH HAS NOT BEEN SATISFACTORILY REBUTTED BY THE ASSESSEE, TO UNRAVEL THE TRICK PLAYED TO STOP THE DIGGING AND PROBING OF FACTS BY THE SURVEY PARTY BY MAKING SUBSTANTIAL DECLARATION ON ERROR AND OMISSIONS. TAKING INTO ACCOUNT THE TOTALITY OF ALL THE FACTS AND CIRCUMSTANCES OF THE CASE, I HOLD THAT THE AO HAS CORRECTLY EXERCISED HIS DISCRETION AND J URISDICTION IN DISMISSING THE ASSESSEE'S CONTENTION I FIND NO ILLEGALITY, IRREGULARITY OR IRRATIONALITY IN HIS ORDER AND HENCE I CONFIRM THE SAME. 6.11 IN VIEW OF THE AFORESAID DISCUSSION, THE FACTUAL AND LEGAL MATRIX OF THE CASE, IN MY CONSIDERED OPINION , THE ACTION OF THE AO IN MAKING ADDITION OF RS.65,00,000 IS UPHELD. 4. BEFORE US, THE LD. AR , SHRI SANKET JOSHI SUBMITS THAT THE ADDITION OF RS.65,00,000/ - MADE BY THE AO IS NOT JUSTIFIED AT ALL AND THE SAID ADDITION HAS BEEN MADE SOLELY ON THE BASIS OF THE STATEMENT OF ASSESSEE RECORDED IN THE COURSE OF SURVEY ACTION WITHOUT BRINGING ANY CORROBORATIVE MATERIAL ON RECORD TO PROVE THE SAID AMOUNT EARNED BY THE ASSESSEE. HE SUBMITS THAT THAT THE ASSESSEE DECLARED ADDITIONAL INCOME OF RS.72,32,201/ - TOWARDS ERRORS AND OMISSIONS. THE ABOVE SAID AMOUNT DECLARED ON PURELY AD - HOC BASIS TO COVER UP THE ERRORS AND OMISSIONS AND THE SAID DECLARATION WAS NOT MADE TOWARDS ANY SPECIFIC EVIDENCE FOUND IN SURVEY. HE ARGUED THAT THE SAID DECLARATION WAS MADE O N PURELY AD - HOC BASIS WITHOUT ANY ADVERSE MATERIAL FOUND IN THE COURSE OF SURVEY. HE REFERRED TO Q. NO. 11 OF THE STATEMENT RECORDED ON OATH AND SUBMITTED THAT THE ASSESSEE OFFERED RS.72,32,201/ - TO COVER UP ALL THE NOTINGS/JOTTINGS/DISCREPANCIES ETC. APA RT FROM RS.1,07,67,799/ - . FURTHER, HE REFERRED TO Q. NO. 10 AND SUBMITTED THAT FOR A.Y. 2012 - 13 ALSO THE ASSESSEE OFFERED RS.50 LACS AS ADDITIONAL INCOME BASING ON THE SAME NOTINGS/JOTTINGS AS REFERRED IN THE 4 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 YEAR UNDER CONSIDERATION. HE ARGUED THAT THE ENTIRE MONEY DISCLOSED IN TERMS OF IMPOUNDED DOCUMENTS WERE OFFERED IN THE RETURN OF INCOME. HE REFERRED TO AN ORDER DATED 28 - 08 - 2019 OF KOLKATA BENCH TRIBUNAL AND SUBMITTED THAT ON SIMILAR FACTS , THE KOLKATA BENCH TRIBUNAL DELETED THE ADDITION MADE THERE ON. FURTHER, HE REFERRED TO PAGE NO. 59 OF THE PAPER BOOK AND ARGUED THE C BDT INSTRUCTIONS NO. 286/2/2003 DATED 10 - 03 - 2003 AND SUBMITTED THAT THE CBDT ADVISED ALL THE CCIT AND DGIT TH ERE SHOULD BE FOCUS AND CONCENTRATION ON COLLECTION OF EVIDENCE OF INCOM E WHICH LEADS TO INFORMATION ON WHAT HAS NOT BEEN DISCLOSED OR IS NOT LIKELY TO BE DISCLOSED BEFORE THE INCOME TAX DEPARTMENT AND NO ATTEMPT SHOULD BE MADE TO OBTAIN CONFESSION AS TO THE UNDISCLOSED INCOME DURING THE COURSE OF SEARCH AND SEIZURE AND SURVEY OPERATION AND PRAYED TO DELETE THE ADDITION MADE BY THE AO AS CONFIRMED BY THE CIT(A) IN THE IMPUGNED ORDER. 5. THE LD. DR, SHRI ALOK MALVIYA SUBMITS THAT THE CIT(A) PASSED DETAILED ORDER AND REFERRED TO PARA 5.3 OF THE IMPUGNED ORDER. THE ASSESSEE FI LED RETURN OF INCOME AFTER SEVEN AND HALF MONTHS OF CONCERNED FINANCIAL YEAR AND THE ASSESSEE IS NOT HONEST TAX PAYER . THE CIT(A) IN ITS ORDER DISCUSSED ABOUT THE NOTINGS/JOTTINGS FOUND ON LOOSE PAPERS IMPOUNDED DURING THE SURVEY PROCEEDINGS AND HELD THE AO RIGHTLY ADDED AN AMOUNT OF RS.65 LACS TO THE INCOME OF THE ASSESSEE DECLARED DURING THE COURSE OF SURVEY IN TERMS OF ERRORS AND OMISSIONS. THE AO ALSO DISCUSSED ABOUT THE LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY IN PAGE 3 OF AOS ORDER. THE CIT( A) CONSIDERED ALL THE SUBMISSIONS MADE BY THE ASSESSEE IN ITS ORDER AT PARAS 6 AND 6.10 AND PASSED WELL CONSIDERED ORDER CONFIRMING THE ADDITION MADE BY THE AO. HE SUBMITS REGARDING THE ORDER OF KOLKATA 5 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 BENCH OF TRIBUNAL IN ITA NO. 1949/KOL/2017 THAT THE TRIBUNAL IN THE SAID CASE DELETED THE ADDITION BY GIVING BENEFIT OF DOUBT AND THE FACTS AND CIRCUMSTANCES IN THE SAID CASE ARE ENTIRELY DIFFERENT FROM THE CASE OF ASSESSEE AND PRAYED TO UPHOLD THE ORDER OF CIT(A). 6. HEARD BOTH PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE DECLARED TOTAL INCOME IN RETURN OF INCOME AT RS.1,25,77,230/ - AMONGST WHICH ACCORDING TO AO ADDITIONAL INCOME IS RS.1,07,67,799/ - . THE CONTENTION OF AO WAS THAT THE ASSESSEE OFFERED RS.72,32,301/ - TO COVER UP THE ERRORS AND OMISSIONS BUT HOWEVER DECLARED THE SAME AS RS.7,32,201/ - IN THE RETURN OF INCOME. THE CONTENTION OF LD. AR IS THAT THE SAID RS.72,32,301/ - WAS DECLARED ONLY ON AD - HOC BASIS TO COVER UP ERRORS AND OMISSIONS AND AFTER VERIFICATION AND RECONSIDERATION THE ACTUAL AMOUNT IS ONLY RS.7,32,201/ - WHICH IS OFFERED IN THE RETURN OF INCOME. 7. WE NOTE THAT A STATEMENT OF ASSESSEE WAS RECORDED ON OATH ON THE DAY OF SURVEY WHEREIN THE AO REPRODUCED Q. NO. 11 IN ITS ORDER IN PAGE NO. 2. ON PE RUSAL OF SAME WE NOTE THAT THE ASSESSEE CONCEDED THAT THERE IS AN ELEMENT OF CASH RECEIPT WHICH IS NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND NOT DECLARED TO THE INCOME TAX DEPARTMENT. AS PER REQUEST OF FLAT/SHOP OWNER HE HAS TO PROVIDE CERTAIN EXTR A AMENITIES WHICH ARE ABOVE AGREEMENT TO SALE CONSIDERATION AND SAID RECEIPTS ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT. AN AMOUNT OF RS.1,07,67,799/ - WAS OFFERED AS ADDITIONAL INCOME AND TO COVER UP ALL THE NOTINGS/JOTTINGS AND DISCREPANCIES , ANOT HER AMOUNT OF RS.72,32,201/ - DISCLOSED ON ACCOUNT OF ERRORS AND OMISSIONS. THEREFORE, IT IS CLEAR IN THE CERTAIN PROCEEDINGS THE 6 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 SURVEY TEAM IMPOUNDED EVIDENCE AGAINST THE ASSESSEE AND ON SUCH CONFRONTATION THE ASSESSEE HIMSELF ON OATH CONCEDED THAT THE A BOVE SAID AMOUNTS ARE NOT RECORDED IN THE REGULAR BOOKS OF ACCOUNT AND NOT DECLARED BY THE INCOME TAX DEPARTMENT WHICH IN OUR OPINION CONSTITUTES ON ADDITIONAL INCOME. 8. THE ONLY CONTENTION RAISED BEFORE THE LOWER AUTHORITIES BELOW BY THE ASSESSEE THAT T HE SAID AMOUNT WAS DECLARED ON AD - HOC BASIS , IN OUR OPINION IT IS AWAY FROM TRUTH BECAUSE THERE WAS NO RETRACTION BY THE ASSESSEE FROM THE DATE OF SURVEY TO THE FILING OF RETURN OF INCOME TO TH AT EFFECT. THEREFORE, THE AO HAS NOT MERELY RELIED UPON DECLAR ATION MADE BY THE ASSESSEE IN HIS STATEMENT RECORDED IN THE COURSE OF SURVEY ACTION WHEREAS THE ASSESSEE HIMSELF CLARIF IED THE REASONS DUE TO WHICH THE ADDITIONAL INCOME EARNED IN THE ANSWER TO Q. NO. 11 WHICH IS REFLECTING IN PAGE 2 OF THE AO. 9. FURTHER , THE ASSESSEE PLACED RELIANCE IN THE INSTRUCTIONS DATED 10 - 03 - 2003 ISSUED BY THE CBDT WHEREIN WE NOTE THAT IN THE SAID INSTRUCTIONS THE CBDT HAS ADVISED CCIT AND DGIT THAT NO ADDITION SHOULD BE MADE SOLELY ON THE BASIS OF DECLARATION MADE BY THE ASSESSEE IN THE STATEMENTS RECORDED DURING THE COURSE OF SURVEY. WE FIND THAT THE ASSESSEE HIMSELF EXPLAINED HOW HE EARNED THE ADDITIONAL INCOME OF RS.1,07, 67,799/ - AND TO COVER UP SUCH ERRORS AND OMISSIONS THE ASSESSEE HIMSELF OFFERED RS.72,32,201/ - . IT IS NOTED THERE WAS EVIDENCE AGAINST THE ASSESSEE IN EARNING THE SAID ADDITIONAL INCOME AND THE ARGUMENTS OF THAT WITHOUT THERE BEING ANY ADVERSE MATERIAL THE ADDITION MADE BY THE AO IS INVALID, IN OUR VIEW IS NOT ACCEPTABLE. THUS, THE INSTRUCTIONS OF CBDT AS PLAC ED 7 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 RELIANCE BY THE ASSESSEE IS NOT APPLICABLE TO THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. 10. FURTHER, THE ASSESSEE PLACED RELIANCE ON THE ORDER OF KOLKATA BENCH OF TRIBUNAL IN THE CASE OF ROHITASWA DAS VS. ACIT, THE CONTENTION OF LD. AR IS THAT ON IDENTICAL FACTS THE KOLKATA BENCH OF TRIBUNAL DELETED THE ADDITION MADE THEREON. IN REPLY THE LD. DR SUBMITTED THAT THE TRIBUNAL HAS GIVEN A BENEFIT OF DOUBT AND DELETED THE ADDITION AND SAID DECISION IS NOT APPLICABLE TO THE PRESENT FACTS OF THE CASE . WE NOTE IN THE SAID CASE STOCK AND CASH DISCREPANCIES WAS FOUND DURING THE COURSE OF SURVEY WHICH HAS BEEN CONFIRMED BY THE ASSESSEE ON THE DAY OF SURVEY. ACCORDING TO THE AO, THE ASSESSEE HAS SUPPRESSED STOCK AND CASH DISCREPANCIES WHILE SUBMITTING TH E RETURN OF INCOME AND ADDED THE DISCREPANCIES MENTIONED ABOVE TO THE TOTAL INCOME OF ASSESSEE IN THE ASSESSMENT PROCEEDINGS. A CONTENTION WAS RAISED BEFORE THE CIT(A) THAT THE PART OF STOCK FOUND ON THE DAY OF SURVEY DOES NOT BELONG TO ASSESSEE WHICH ACT UALLY BELONG TO ANOTHER ENTITY, ON THIS SITUATION THE KOLKATA BENCH OF TRIBUNAL HAS GIVEN BENEFIT OF DOUBT AS RIGHTLY POINTED OUT BY THE LD. DR. FURTHER, THE KOLKATA BENCH OF TRIBUNAL DISCUSSED THE INSTRUCTIONS DATED 10 - 03 - 2003 ISSUED BY THE CBDT AS RELIE D UPON BY THE LD. AR BEFORE US WHEREIN WE NOTE THAT THE ASSESSEE IN THE SAID CASE RETRACTED FROM THE STATEMENTS MADE DURING THE SURVEY AND ADMITTEDLY, THERE WAS NO RETRACTION IN THE PRESENT CASE. THEREFORE, THE FACTS AND CIRCUMSTANCES IN THE CASE OF ROHIT ASWA DAS ARE ENTIRELY DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE. THEREBY, WE HOLD THE BENEFIT OF DOUBT AS GIVEN IN THE SAID CASE CANNOT BE EXTENDED TO THE PRESENT CASE. IN VIEW OF THE DISCUSSION MADE BY US HERE - IN - ABOVE, WE FIND 8 ITA NO . 34/PUN/2017, A.Y. 2013 - 14 THE CIT(A) IS JUSTIFIED IN CONFIRMING THE ORDER OF AO AND GROUND NOS. 1 TO 4 RAISED BY THE ASSESSEE ARE DISMISSED. 11. GROUND NO. 5 RAISED BY THE ASSESSEE IS CONSEQUENTIAL TO THE GROUND NOS. 1 TO 4. SINCE, WE DISMISS GROUND NOS. 1 TO 4, THEREFORE, NO ADJUD ICATION IS REQUIRED FOR GROUND NO. 5 AND IT IS ALSO DISMISSED. 12. IN THE RESULT, THE APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH SEPTEMBER, 2020 . SD/ - SD/ - ( P.M. JAGTAP ) ( S.S. VISWANETHRA RAVI ) VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 16 TH SEPTEMBER, 2020. RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A) - 1, NASHIK 4. THE PR. CIT - 1, NASHIK 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE