ITO, Gwalior V. Sh. Havilas Sharma, Bhind

ITA 374/AGR/2009

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 2495 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K SRIVASTAVA
• Keywords: Unexplained investment
• Section: 40A(3); 143(3); 133A; 143(2); 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO.374/AGR/2009 ASST. YEAR: 2006-07 INCOME TAX OFFICER 2(1) VS. SHRI HARVILAS SHA RMA, GWALIOR. PROP. PT. RAMDAYAL & SONS, GALL MANDI, BHIND (M.P.). (PAN : ADIPS 4860 R). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.K. SRIVASTAVA, SR. D.R. RESPONDENT BY : SHRI RAJENDRA SHARMA, ADVOCATE ORDER PER H.S. SIDHU, J.M. : THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST TH E ORDER DATED 04.05.2009 PASSED BY THE CIT(A) ON THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.40,39,423/- ON ACCOUNT OF DIFFERENCE IN G.P. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED FOR NON INCLUSION OF CLOSING STOCK IN THE ASSESSMENT OR DER ACCORDINGLY IN THE APPEAL ORDER TOO. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.14,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT FOR UNRECORDED PURCHASES. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE CIT(A) HAS ERRED FOR NOT EXERCISED HER POWER FOR TAKING UNEXPLAINED INVE STMENT FOR UNRECORDED PURCHASES AMOUNTING TO RS.83,64,120/- INSTEAD OF RS .14,00,000/- TAKEN BY THE A.O. 2 2. THE BRIEF FACTS RELATING TO THE ISSUE IN DISPUTE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF KHAD, BEEJ AND CEMENT. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR IN DISPUTE ON 31.10.2006 DISCLOSING TOTAL INCOME OF RS.1,21,440/-. A SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (TH E ACT HEREINAFTER) WAS CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE ON 18.01.2007. D URING THE SURVEY, BOOKS OF ACCOUNTS, BILLS, GATE-PASSES, DOCUMENTS AND REGISTERS RELATING TO TH E BUSINESS OF THE ASSESSEE WAS IMPOUNDED. ON VERIFICATION OF THE AFORESAID DOCUMENTS, THE ASSESS ING OFFICER NOTED THAT THE ASSESSEE HAS MADE SUBSTANTIAL PURCHASES OUT OF BOOKS AND HE SELECTED THE CASE FOR SCRUTINY AND ISSUED NOTICES UNDER SECTION 143(2) FIXING THE CASE FOR HEARING AND 142( 1) ALONG WITH QUESTIONNAIRE REQUIRING THE ASSESSEE TO PRODUCE SOME DOCUMENTS/INFORMATION WHIC H THE ASSESSING OFFICER HAS MENTIONED AT PAGE NOS. 1 & 2 OF HIS ORDER. IN RESPONSE TO THE S AME, THE LD. AUTHORIZED REPRESENTATIVE (A.R.) OF THE ASSESSEE APPEARED BEFORE THE ASSESSING OFFIC ER FROM TIME TO TIME AND FILED HIS REPLY AND OTHER DOCUMENTARY EVIDENCES. THE ASSESSING OFFICER ALSO RECORDED THE STATEMENT OF SHRI MAHENDRA SHARMA, ACCOUNTANT OF THE ASSESSEE TO PROV E THAT THE ASSESSEE HAS MAINTAINED ACCOUNTS IN RESPECT OF PART OF HIS BUSINESS AND PART OF HIS BUSINESS WAS CARRIED ON BY THE ASSESSEE OUTSIDE THE BOOKS OF ACCOUNTS MAINTAINED FOR INCOME TAX PUR POSE WHICH WAS RECORDED IN COMPUTER OF WHICH EXTRACT WAS TAKEN DURING ASSESSMENT PROCEEDIN GS. FEELING DISSATISFIED WITH THE PROPER MAINTENANCE OF BOOKS OF ACCOUNTS BY THE ASSESSEE, T HE ASSESSING OFFICER APPLIED PROVISIONS OF SECTION 145(3) OF THE ACT AND FINALLY MADE THE ADDI TION OF RS.40,39,423/- ON ACCOUNT OF DIFFERENCE IN G.P. AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE TREATING IT AS UNDISCLOSED INCOME. SECONDLY, ADDITION OF RS.14,00,000/- WAS MADE ON AC COUNT OF UNEXPLAINED INVESTMENT TO THE TOTAL INCOME OF THE ASSESSEE AS INITIAL INVESTMENT IN UNA CCOUNTED PURCHASES AS PER PROVISIONS OF SECTION 69 OF THE ACT AND RS.16,72,824/- HE ADDED U NDER SECTION 40A(3) AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE BEING 20% OF THE AMOUNT OF UNACCOUNTED PURCHASES IN CASH AT 3 RS.83,64,120/- I.E. RS.16,72,824/- AND ASSESSED THE TOTAL INCOME OF RS.72,72,540/- VIDE HIS ORDER DATED 31.12.2008 PASSED UNDER SECTION 143(3) OF THE ACT. AGGRIEVED BY THE SAME, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. FIRST APPELLATE AUTH ORITY WHO VIDE THE IMPUGNED ORDER DATED 04.05.2009 PARTLY ALLOWED THE APPEAL OF THE ASSESSE E AND DELETED THE ADDITION IN DISPUTE ON THE BASIS OF THE REMAND REPORT FILED BY THE ASSESSING O FFICER. NOW THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE IMPUGNED ORDER DATED 04.05.2009. 3. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE (D.R.) RELIED UPON THE ORDER PASSED BY THE ASSESSING OFFICER AND SATED THAT THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DISPUTE ON THE BASIS OF ARGUMENTS ADVAN CED BY THE LD. COUNSEL FOR THE ASSESSEE AND WITHOUT APPRECIATING THE RELEVANT RECORDS AVAILABLE WITH THE LD. FIRST APPELLATE AUTHORITY. 4. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSESSE E RELIED UPON THE ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY AND STATED THAT THE LD. F IRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DISPUTE ON THE BASIS OF DOCUMENTARY EVIDENCES FI LED BY THE ASSESSEE AS WELL AS ON THE BASIS OF THE REMAND REPORT FILED BY THE ASSESSING OFFICER. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT RECORDS AVAILABLE WIT US. AFTER GOING THROUGH THE IMPUGNED ORDER, WE ARE OF THE CON SIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS APPRECIATED THE EVIDENCES FILED BY TH E ASSESSEE AND SHE HAS ALSO CALLED FOR REMAND REPORT FROM THE ASSESSING OFFICER. THE LD. FIRST A PPELLATE AUTHORITY HAS DELETED THE ADDITION IN DISPUTE BY BELIEVING THE REMAND REPORT IN WHICH THE ASSESSING OFFICER, AFTER SCRUTINIZING THE RECORD OF THE ASSESSEE, CLEARLY ADMITTED THAT NO UN ACCOUNTED CASH/STOCK WAS DETECTED, NO DISCREPANCIES IN THE BOOKS OF ACCOUNTS, LOANS AND A DVANCES WERE FOUND. THE LD. FIRST APPELLATE 4 AUTHORITY HAS ALSO APPRECIATED THE REMAND REPORT FU RNISHED BY THE ASSESSING OFFICER AND HELD THAT BOTH SETS OF BOOKS OF ACCOUNTS VIZ. LEDGER-II AND CASHBOOK-II WHICH WERE TAKEN POSSESSION OF DURING THE SURVEY OPERATIONS WERE INCOMPLETE WHI CH DID NOT HAVE OPENING BALANCES, CLOSING BALANCES, PURCHASES AND TRANSACTION RELATING TO PUR CHASES. FURTHER THE DATE OF TRANSACTIONS, NAMES OF PARTIES, MATERIAL SOLD, AMOUNTS ETC. ARE EITHER SAME OR HAVING NEGLIGIBLE VARIATION BETWEEN LEDGER-II ETC. AND REGULAR BOOKS OF ACCOUNTS AS WOR KED OUT IN ANNEXURE-L OF THE PAPER BOOK DATED 16.04.2009 AND FOUND VERIFIABLE BY THE ASSESS ING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS. THE LD. FIRST APPELLATE AUTHORITY HAS DELETED THE ADDITION IN DISPUTE ON THE BASIS OF VERIFICATION OF SALES BY THE ASSESSING OFFICER IN T HE REMAND PROCEEDINGS AND HELD THAT THERE WAS NO SALES OUTSIDE BOOKS. SHE ALSO HELD THAT THE ASS ESSING OFFICER VERIFIED THE SALES OF RS.67,86,360/- WHICH GAVE A GROSS LOSS INSTEAD OF G ROSS PROFIT AND HENCE THERE IS NO JUSTIFICATION FOR ONLY ADDITION ON THIS SCORE. 6. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO ESTIM ATED THE GROSS PROFIT IN THE CASE OF THE ASSESSEE ON THE BASIS OF GROSS PROFIT OF PREVIOUS Y EARS SHOWN BY THE ASSESSEE AND ACCEPTED BY THE REVENUE AUTHORITIES AND HAS REASONABLY ESTIMATED ON THE BASIS OF PREVIOUS YEAR AT 1.78% WHICH IS ALSO THE GROSS PROFIT SHOWN BY THE ASSESSEE IN T HE IMMEDIATELY PRECEDING YEAR AND DIRECTED THE ASSESSING OFFICER TO WORK OUT THE DIFFERENCE IN GRO SS PROFIT ON THE BASIS OF THE ABOVE SALES AND GROSS PROFIT RATE BY PARTLY GIVING THE BENEFIT TO T HE ASSESSEE. THE LD. FIRST APPELLATE AUTHORITY HAS ALSO HELD THAT THERE WAS NO UNEXPLAINED INVESTM ENT AS SUCH WAS NOTED BY THE ASSESSING OFFICER BEFORE MAKING THE ADDITION OF RS.14,00,000/ - AND DELETED THE SAME FOR WANT OF EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER. AFTER GOING THROUGH THE IMPUGNED ORDER ON THE ISSUE IN DISPUTE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. FIRST APPELLATE AUTHORITY HAS PASSED A WELL REASONED ORDER ON THE BASIS OF THE REMAND REPORT CA LLED FOR BY HER FROM THE ASSESSING OFFICER 5 DURING THE COURSE OF PROCEEDINGS WHO HAS VERIFIED A LL CONTENTION OF THE ASSESSEE AND FOUND CORRECT. THE LD. FIRST APPELLATE AUTHORITY HAS PAS SED A VERY DETAILED ORDER WITH THE SUPPORT OF VARIOUS DECISIONS RENDERED BY THE I.T.A.T. AS WELL AS THE HIGH COURTS. THEREFORE, NO INTERFERENCE IS CALLED FOR IN THE WELL REASONED ORDER PASSED BY THE LD. FIRST APPELLATE AUTHORITY. WE ARE UPHOLDING THE SAME BY DISMISSING THE APPEAL FILED B Y THE REVENUE. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT ON 10.03.2011) SD/- SD/- (P.K. BANSAL) (H.S. SIDHU) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE: AGRA DATE: 10 TH MARCH, 2011 PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY