LAXMI SAREE BHANDAR, BHARATPUR V. ITO, BHARATPUR

ITA 389/JPR/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54134 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 29-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K MEENA
• Assessee Lawyers: K L MOOLCHANDAN I
• Keywords: Retraction
• Section: 133A; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L. KALRA) ITA NO.389/JP/2011 ASSESSMENT YEAR : 2006-07 M/S. LAXMI SAREE BHANDAR, VS. INCOME TAX OFFICE R NEAR CITY AUSHODHALYA, WARD-1, JAMA MASJID, BHARATPUR. BHARATPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.L. MOOLCHANDANI RESPONDENT BY : SHRI D.K. MEENA ORDER PER SHRI N.L. KALRA, A.M. 1. THE ASSESSEE HAS FILED AN APPEAL AGAINST ORDER O F LD. CIT (A) ALWAR DATED 01.03.2011. THE GROUND OF APPEAL RAISED BY THE ASSE SSEE IS AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LEARNED CIT (APPEAL) HAS FACTUALLY AND LEGALLY ERRED IN CONFIRMING ADDIT ION OF RS.2,00,000/- MADE BY THE A.O. ON ACCOUNT OF ALLEGED EXCESS CASH FOUND DURING THE COURSE OF SURVEY OPERATIONS WITHOUT APPRECIATING TH E FACTS AND CIRCUMSTANCES OF THE CASE IN RIGHT PERSPECTIVE. 2. SURVEY U/S 133A WAS CONDUCTED ON 15.2.2006 AT TH E BUSINESS PREMISES AND DISCREPANCIES WERE NOTICED AND THESE HAVE BEEN MENT IONED AT PAGE 2 OF THE ASSESSMENT ORDER. THE DISCREPANCY IN RESPECT OF ISSUE BEFORE U S IS UNDER: CASH OF RS.7 LACS WAS FOUND WHICH WAS BELONGING TO ITS 4 FIRMS NAMELY, M/S HARISH & BROTHERS, M/S BHAGWAN DAS JETHA NAND, M/S LAXMI SAREE BHANDAR AND M/S KISHAN CHAND NARENDRA KUMAR. THESE ALL 4 FIRMS ARE RUNNING AT ONE PLACE. THE ASSESSEE COULD NOT SEGREG ATE THIS CASH FIRM WISE 2 AND AS SUCH A SUM OF RS.200000/- WAS SURRENDERED IN THE HANDS OF M/S LAXMI SAREE BHANDAR AS UNACCOUNTED CASH AT THE TIME OF SURVEY. 3. CASH FOUND DURING SURVEY TO THE EXTENT OF RS.2 L AKH WAS SURRENDERED IN THE CASE OF THE ASSESSEE. THE ASSESSEE VIDE LETTER DATED 30.5.2 008 STATED THAT THE SURRENDER OF RS.2 LAKH WAS UNDER PRESSURE FROM DEPARTMENT AUTHORITIES . AS PER THE CASH BOOK OF ALL THE CONCERNS, THE CASH AVAILABLE ON THE DATE OF SURVEY WAS RS.7,00,080/-. CASH BOOK WAS NOT WRITTEN UPTO THE DATE OF SURVEY. ENTRIES IN CASH BO OK FROM 11.02.2006 TO 15.02.2006 WERE MADE AFTER THE SURVEY AND HENCE A.O. SCRUTINIZED CA SH SALES FROM 11.02.2006 TO 15.02.2006 AND NOTICED THE CASH SALES AS UNDER: SL.NO. NAME OF THE FIRM BILL NO. DATE AMOUNT OF S ALE 1 M/S LAXMI SAREE BHANDAR 1952 13.02.2006 37742/- 2 M/S LAXMI SAREE BHANDAR 26 13.02.2006 36148/- 3 M/S BHAGWAN DAS JETHA NAND 872 13.02.2006 40175/- 4 M/S BHAGWAN DAS JETHA NAND 875 13.02.2006 39885/- 5 M/S HARISH & BROTHERS 594 12.02.2006 23416/- 6 M/S HARISH & BROTHERS 591 11.02.2006 42125/- 7 M/S KISHAN CHAND NARENDRA KUMAR 1944 13.02.2006 36155/- 8 M/S KISHAN CHAND NARENDRA KUMAR 1758 13.02.2006 35520/- TOTAL:-291166/- 4. THE A.O. OBSERVED THAT SUCH SALES ARE ABNORMAL. THE CONTENTION OF THE A/R OF THE ASSESSEE WAS THAT SUCH SALES WERE MADE TO HAWKERS. THE A.O. WAS NOT SATISFIED WITH THE CONTENTION OF THE ASSESSEE AND ACCORDINGLY MADE ARE ADDITION OF RS.2 LAKH AFTER OBSERVING AS UNDER: 3 THE A/RS CONTENTION IS NOT AT ALL SATISFACTORY. HA D SUCH SALES BEEN EFFECTED BETWEEN THE PERIODS 11.02.2006 TO 15.02.20 06, IT WOULD HAVE BEEN IN THE MIND OF SH. SUNDAR LAL WHO IS MAIN EXECUTIVE OF ALL THE FIRMS MENTIONED ABOVE AND THESE FACTS WOULD HAVE BEEN EXP LAINED AT THE TIME OF RECORDING STATEMENT DURING COURSE OF SURVEY U/S 133 A BUT HE COULD NOT DO SO. THIS CLEARLY SHOWS THAT THE ABOVE ABNORMAL SALE S ARE NOTHING BUT JUST TO ADJUST THE CASH FOUND DURING THE COURSE OF SURVE Y. THIS ALL TACTICS ADOPTED BY THE ASSESSEE IS NOT AT ALL CONVINCING. I F THE AFORESAID SALES WERE GENUINE AND THERE WAS NO DIFFERENCE IN CASH BETWEEN PHYSICALLY FOUND AND AS PER BOOKS, THE ASSESSEE SHOULD HAVE RETRACTED TH E SAID SURRENDER MADE DURING THE COURSE OF SURVEY WITH IN REASONABLE TIME WHICH MAY BE A DAY OR TWO. IN VIEW OF THIS, I FIRMLY HELD THAT THE RETRACTION MADE BY THE ASSESSEE AT THE ASSESSMENT STAGE IS AN AFTER THOUGHT AND WITH PROPE R PLANNING WHICH IS NOT AT ALL ACCEPTABLE. IN FACT, THE CASH OF RS.7 LA CS FOUND AT THE TIME OF SURVEY INCLUDES UNACCOUNTED CASH OF RS.2 LACS WHICH HAS BEEN RIGHTLY SURRENDERED BY SH. SUNDAR LAL MAIN EXECUTIVE OF THE FIRMS, IN THE HANDS OF M/S LAXMI SAREE BHANDAR. ACCORDINGLY, A SUM OF RS.2 LACS IS TREATED AS UNEXPLAINED INCOME OF THE ASSESSEE FIRM AND THE SAM E IS ADDED IN THE TOTAL INCOME OF THE ASSESSEE M/S. LAXMI SAREE BHANDAR. 5. BEFORE THE LD. CIT (A), THE ASSESSEE MADE THE FO LLOWING SUBMISSIONS: THE AR CONTENDED THAT THE LD. AO HAS MADE ADDITION OF RS.2 LAC ON ACCOUNT OF UNEXPLAINED INCOME FOR THE CASH AS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS. THE LD. AO HAS DISCUSSED FACTS REGARDING SUCH ADDITION AT PAGE NO.2 TO 4 THE ASSESSMENT ORDER AND OPINED THAT THE CASH BALANCES AS FOUND RECORDED IN THE CASH BOOKS UPDATE D SUBSEQUENTLY WAS A RESULT OF AN AFTER THOUGHT BY SHOWING BOGUS SALES I N THE RECENT DAYS OF SURVEY OPERATIONS. THUS THE CASH BALANCES AS WORKED OUT IN SUCH CASH BOOKS PREPARED SUBSEQUENTLY COULD NOT BE RELIED UPO N AND ACCORDINGLY THE SALES AS FOUND RECORDED IN THE CASH BOOKS WERE TREA TED AS BOGUS SALES AND ADDITIONS WERE MADE AS UNEXPLAINED INCOME. ON READI NG OF THE RELEVANT EXTRACTS OF THE ORDER, YOUR HONOR WOULD APPRECIATE THAT AT THE TIME OF SURVEY PROCEEDINGS, CASH BOOKS OF ALL THE CONCERNS AND FIRMS WERE NOT COMPLETE, IN ABSENCE OF COMPLETE BOOKS OF ACCOUNT, SHRI SUNDER LAL, THE HEAD OF THE GROUP COULD NOT FURNISH ANY SATISFACTOR Y EXPLANATION REGARDING CASH FUNDS OF RS.7 LAC AS FOUND BY THE SURVEY TEAM. AS HE WAS A SHAKEN PERSON AND WANTED TO GET RID OF THE RIGORS OF THE S URVEY PROCEEDINGS, SO HE HAD VAGUELY ADMITTED ADDITIONAL INCOME OF RS.2 LAC, IN ABSENCE OF UPDATED CASH BOOKS OF VARIOUS FIRMS AND CONCERNS. HOWEVER O N COMPLETION OF THE CASH BOOKS OF ALL THE CONCERNS AND FIRMS, IT WAS NO TICED THAT THE CASH FUNDS OF RS.7 LAC TALLIED WITH THE CASH BALANCES AS WORKE D OUT ON COMPLETION OF THESE BOOKS THUS AS PER DOCUMENTARY EVIDENCE IN THE FORM OF REGULAR BOOKS 4 OF ACCOUNT, THE CASH AS FOUND AT THE TIME OF SURVEY OPERATION WAS SATISFACTORILY EXPLAINED AND CALLED FOR NO VALID AD DITION AS SOUGHT TO BE ADMITTED BY THE APPELLANT AT THE TIME OF SURVEY. IN THE CIRCUMSTANCES, THERE WAS NO LOGIC OR VALID REASON TO DECLARE ANY ADDITIO NAL INCOME ON ACCOUNT OF SUCH CASH FUNDS. IN THE BODY OF ASSESSMENT ORDER , THE LD. AO HAD DISCUSSED ALL THESE FACTS AND HAS ALSO ACCEPTED THE FACT OF THE CASH BALANCES AS WORKED OUT ON THE COMPLETION OF THE BOO KS, BUT HE WAS OF THE VIEW THAT SUCH CASH BALANCES COULD BE MANIPULATED B Y SHOWING BOGUS SALES AS NEVER BEFORE THESE CONCERNS COULD BOOK SAL ES OF SUCH MAGNITUDE. ACCORDINGLY THE LD. AO PROCEEDED TO TREAT SUCH SALE S AS BOGUS SALES AND TREATED THE CASH FUNDS TO THE TUNE OF RS.2 LAC AS U NEXPLAINED INCOME OF THE APPELLANT FIRM. APPARENTLY THE CONCLUSION SO ARRIVE D AT BY THE LD AO IS CONTRARY TO THE LEGAL PROVISIONS. NO ADDITION CAN B E MADE U/S. 69 OF THE ACT ON ACCOUNT OF RECORDED TRANSACTIONS. PROVISIONS OF SECTION 69 COME INTO PLAY ONLY IN RESPECT OF MONEY, BULLION, JEWELL ERY OR OTHER VALUABLE ARTICLE ETC WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE APPELLANT. MORE OVER, THE LD. AO HIMSELF IN THE BODY OF THE ASSESSMENT ORDER HAS OPINED THAT THE SALES RECORDED IN THE REG ULAR BOOKS OF ACCOUNT ARE BOGUS SALES, MEANING THEREBY THE INCREASED TURN OVER SHOWN THROUGH SUCH ALLEGED BOGUS SALES STAND ALREADY CANALIZED IN THE TRADING RESULTS OF THE APPELLANT FIRMS AND CONCERNS. ACCORDINGLY AS PE R FINDINGS OF THE LD. AO HIMSELF, AT THE MOST BOOKS RESULTS COULD BE REJE CTED AND TRADING ADDITIONS CO9ULD BE MADE ON THE BASIS OF THE PAST H ISTORY OF THE CASE. THE LD. AO HAD UNDERTAKEN SUCH EXERCISE BY ESTIMATING B USINESS INCOME OF THESE PERSONS WHILE DETERMINING INCOME OF THE APPEL LANTS ON THE BASIS OF INVESTMENT THEORY UNDER NO CIRCUMSTANCES, FURTHER ADDITIONS COULD BE MADE ON ACCOUNT OF SUCH BOGUS SALES AS UN-EXPLAINED INCOME FOR SUCH RECORDED TURN OVER. THE PROVISIONS IF LAW ARE VERY CLEAR ON THIS POINT AND NEED NO FURTHER REINTERPRETATION. AS THE LD. AO HAS ALREADY REJECTED THE BOOKS RESULTS AND ALSO IN VIEW OF CERTAIN DOCUMENTS AS FOUND DURING THE COURSE OF SURVEY PROCEEDINGS, AND WORKED OUT THE TR ADING ADDITIONS WITHIN THE OUTER LIMITS OF THE INVESTMENT THEORY BY WAY OF INVESTMENT IN THE FDRS AS PER DETAILED DISCUSSIONS MADE IN THE BODY O F THE ASSESSMENT ORDER, SO NO FURTHER ADDITIONS IS CALLED FOR ON ACC OUNT O SUCH ALLEGED BOGUS SALES AS OPINED BY THE LD AO IN THE BODY OF T HE ORDER. THUS THE ADDITIONS SO MADE IS BAD IN LAW AND DESERVED TO BE QUASHED. 6. THE LD. CIT (A) AFTER CONSIDERING THE CONTENTION S OF THE ASSESSEE CONFIRMED THE ADDITION AFTER OBSERVING AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER AS WELL AS SUBMISSION OF THE ASSESSEE, THE ASSESSEE HAS EXPLAINED THAT CASH SALE OF FOUR FIRMS FOR 11.02.2006, 12.02.2006 AND 13.02.2006 HAD NOT BEEN CONSIDERED AT THE TIME OF SURVEY. ON VERIFICATION OF THESE CASH SALE BILLS IT IS FOUND THAT THERE 5 IS NO NAME OF THE PARTY ON THESE BILLS BUT IN PAST MOSTLY BILLS WERE ISSUED IN THE NAME OF PURCHASER. THE AVERAGE SALE OF PER DAY ALSO DOES NOT MATCH WITH THE SALE SHOWN IN TWO DAYS. IN CASE OF LAXMI S AREE BHANDAR THE ASSESSEE FIRM HAD SHOWN CASH SALE ON 13.02.2006 AT RS.73,890/- ON THIS BASIS TURNOVER FOR WHOLE YEAR IS WORKED OUT ABOUT 2 .92 CRORE AND IN CASE OF KISHAN CHAND NARENDRA KUMAR THE CASH SALE ON 13. 02.2006 WAS SHOWN AT RS.71,675/- ON THIS BASIS TOTAL TURNOVER FOR WHO LE YEAR IS WORKED OUT AT RS.2.61 CRORE BUT ON VERIFICATION OF THE P&L A/C OF THESE FIRMS; THEY NEVER HAD BEEN SHOWN ANY SUCH SALE IN REGULAR BOOKS OF AC COUNT. THEREFORE, ADDITION OF RS.2 LAC IS CONFIRMED. 7. WE HAVE HEARD BOTH THE PARTIES. ONCE THE SALES A RE SHOWN THAN SUCH SALES ARE CREDITED IN THE SALES ACCOUNT. IN CASE SUCH SALES A RE ABNORMAL OR ARE NOT CONSIDERED GENUINE THAN SUCH AMOUNT SHOULD HAVE BEEN REDUCED F ROM SALE. 8. THE JAIPUR BENCH IN THE CASE OF SMT. PRATBHA GOY AL IN ITA NO.705/JP/2009 AFTER CONSIDERING THE VARIOUS CASE LAWS HAS HELD THAT STA TEMENT U/S 133A CAN NOT BE MADE A SOLE BASIS FOR ADDITION. 9. SINCE THE SALES HAVE BEEN CREDITED AND HAS BEEN CONSIDERED PART OF TRADING ACCOUNT THEN NO ADDITION ON ACCOUNT OF SURRENDER OF RS.2 LA KH AS CASH FOUND CAN BE MADE. RETRACTION IS AFTER A LONG GAP AND WE DO NOT FEEL T HAT ADDITION IS TO BE DELETED ON THE BASIS OF RETRACTION. HOWEVER ADDITION COULD NOT HAVE BEEN MADE ONLY ON THE BASIS OF STATEMENT WHEN THE ASSESSEE HAS MADE THE ENTRIES OF SALES IN THE CASH BOOK. HENCE THE LD. CIT (A) WAS NOT JUSTIFIED IN CONFIRMING ADDITION OF RS.2 LA KH. IN THE RESULT THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 26.08.2011. SD/- SD/- (R.K.GUPTA) (N.L.KALRA) JUDICIAL MEMBER ACCOU NTANT MEMBER 6 DATED : *S.KUMAR* COPY FORWARDED TO:- 1. M/S. LAXMI SAREE BHANDAR, NEAR CITY AUSHODHALYA, BHARATPUR. 2. THE INCOME TAX OFFICER, WARD-1, BHARATPUR. 3. THE CIT 4. THE CIT(A), 5. THE D/R, ITAT, JAIPUR 6. THE GUARD FILE IN ITA NO.389/JP/2011 BY ORDER A.R.,I.T.A.T., JAIPUR