M/s. Hansraj Jewellers, Bhavnagar V. The Income Tax Officer, Ward-2(1), Bhavnagar

ITA 39/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1709 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 05-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Income from undisclosed sources
• Section: 143(3); 133A

Judgement Text

SMC-ITA NO. 39/AHD/2017 HANSRAJ JEWELLERS VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD [ BEFORE SHRI PRAMOD KUMAR, VICE PRESIDENT ] ITA NO. 39/AHD/2017 ASSESSMENT YEAR : 2012-13 HANSRAJ JEWELLERS ............APPEL LANT VORA BAZAR, BHAVNAGAR-364001 [PAN: AABFH 2025 B] VS. INCOME TAX OFFICER .......................RESPONDENT WARD 2(1), BHAVNAGAR APPEARANCES BY: TUSHAR P HEMANI FOR THE APPELLANT JAYANT JHAVERI FOR THE RESPONDENT DATE OF CONCLUDING THE HEARING : 27.02.2019 DATE OF PRONOUNCING THE ORDER : 24.05.2019 O R D E R 1. THIS APPEAL IS FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER DATED 27 TH OCTOBER 2016, PASSED BY THE CIT(A) IN THE MATTER O F ASSESSMENT UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961, FOR THE ASSESSM ENT YEAR 2012-13. 2. IN GROUND NOS. 1 & 2, WHICH WILL BE TAKEN UP TOG ETHER, THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCES:- 1. THE LEARNED CIT(A) HAS ERRED BOTH IN LAW AND ON THE FACTS OF THE CASE IN CONFIRMING THE ACTION OF AO IN MAKING AN ADDITION O F RS.11,24,971/- U/S.69C OF THE ACT. 2. BOTH THE LOWER AUTHORITIES HAVE ERRED IN NOT AP PRECIATING THAT ONCE THE CLOSING STOCK IS INCREASED BY RS.11,24,971/- AS HAS BEEN DONE BY THE APPELLANT, A FURTHER ADDITION OF THE VERY SAME AMOU NT WILL LEAD TO DOUBLE TAXATION. 3. BRIEFLY STATED, THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN BUSINESS AS GOLDSMITH. A SURVEY UNDER S ECTION 133A WAS CONDUCTED, ON ASSESSEES PREMISES, ON 13.10.2011. DURING THE COU RSE OF SURVEY PROCEEDINGS, UNACCOUNTED STOCK OF RS.11,24,971/- (GOLD RS.3,31,1 60/- AND SILVER RS.7,93,811/-) WAS FOUND. THE ASSESSING OFFICER, DURING THE SCRUT INY ASSESSMENT PROCEEDINGS, NOTED THAT THE ASSESSEE HAS NOT OFFERED EXCESS STOC K OF RS.11,24,971/- SEPARATELY BUT THE CLOSING STOCK IS INCREASED BY THE VALUE OF RS.11,24,971/- WHICH HAS RESULTED SMC-ITA NO. 39/AHD/2017 HANSRAJ JEWELLERS VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 2 OF 4 IN SHOWING VERY LESS INCOME WHILE FILING RETURN OF INCOME RESULTING IN THE CLAIM OF REFUND OF RS.1,91,770..... . THE ASSESSING OFFICER WAS OF THE VIEW THAT TO DETERMINE THE REASON OF LOSS FROM NORMAL BUSINESS ACTIVITY, T HE ASSESSEE WAS REQUIRED TO PRODUCE THE DETAILS, NATURE AND AMOUNT OF LOSS TO J USTIFY HIS CLAIM . HE THUS CONCLUDED THAT IN VIEW OF THE ABOVE DISCUSSION, RS.11,24,971/- IS ADDED ON ACCOUNT OF UNACCOUNTED INCOME BEING VALUE OF UNACCOUNTED ST OCK ADMITTED DURING SURVEY U/S 133A OF THE ACT, TO TAXABLE INCOME FOR THE YEAR UND ER CONSIDERATION. AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A) BUT WITHOUT ANY SUCCESS. LEARNED CIT(A), WHILE CONFIRMING THE ACTION OF THE ASSESSING OFFICER, REASONED AS FOLLOWS:- 7. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE SUBMISSION OF THE APPELLANT. THE BRIEF FACT OF THE CASE IS THAT A SURVEY U/S. 133A OF THE ACT WAS CONDUCTED IN THE CASE OF THE APPELLANT ON 13-10 -2011 AND DURING THE SURVEY UNACCOUNTED STOCK OF RS. 11,24,971/- WAS FOU ND. THE STATEMENT OF THE PARTNER OF THE FIRM SHRI NATVARLAL H. VAITHA WAS RE CORDED AND IN REPLY OF QUESTION NO. 12, 13 & 14, THE PARTNER VOLUNTARILY A DMITTED THE VALUE OF THE UNACCOUNTED STOCK FOUND DURING SURVEY AS UNACCOUNTE D INCOME AND OFFERED THE SAME FOR TAXATION OVER AND ABOVE THE REGULAR IN COME. HOWEVER WHILE FILING THE RETURN OF INCOME THE APPELLANT HAS INCLUDED THE UNACCOUNTED STOCK OF RS.11,24,971/- FOUND DURING SURVEY IN THE CLOSING S TOCK AND DISCLOSED THE NP OF RS. 8,96,261/- ONLY. THUS IF THE VALUE OF UNDISC LOSED STOCK IS REDUCED FROM THE FINAL NP DECLARED BY THE APPELLANT THEN THERE W OULD BE LOSS OF RS.2,28,710/- . THUS IT APPEARS THAT THE APPELLANT HAS REDUCED GP & NP OF THE CURRENT YEAR AND TAKEN BENEFIT OF UNDISCLOSED STOCK FOUND DURING THE SURVEY AND ADJUSTED THE SAME AGAINST GP & NP. SINCE THERE IS NO JUSTIFICATION OF ABNORMAL DECREASE IN THE GP & NP IN THE CURRENT YEA R THEREFORE THE AO IS JUSTIFIED IN TREATING THE UNEXPLAINED STOCK FOUND D URING THE SURVEY, WHICH WAS ALSO ADMITTED BY THE PARTNER AS UNDISCLOSED UNACCOU NTED INCOME OUT OF UNACCOUNTED STOCK, AS UNACCOUNTED INCOME OVER AND A BOVE THE TOTAL INCOME IS JUSTIFIED. THE GROUND IS DISMISSED. 4. THE ASSESSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 5. I HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE AP PLICABLE LEGAL POSITION. 6. I FIND THAT THE IMPUGNED ADDITION IS SOLELY ON T HE BASIS OF STATEMENT RECORDED DURING SURVEY PROCEEDINGS BUT IT IS WELL SETTLED LE GAL POSITION THAT STATEMENT RECORDED DURING SURVEY PROCEEDINGS HAS NO EVIDENTIARY VALUE. IN ANY CASE, IT IS NOT EVEN IN DISPUTE THAT UNACCOUNTED STOCK IS DULY INCLUDED IN THE CLOSING STOCK. WHILE THE ASSESSING OFFICER HAS DOUBTED THE CLAIM OF LOSS ON CERTAIN TRANSACTIONS, NO DISALLOWANCE IS MADE IN RESPECT OF SUCH LOSSES WHIC H ARE NOT EVEN QUANTIFIED. THE ADDITION IS MADE ONLY ON THE BASIS OF THE STATEMENT RECORDED DURING SURVEY. I HAVE ALSO NOTED THAT PROFITABILITY IN THE CURRENT YEAR I S 33.19% WHICH IS AN IMPROVEMENT OVER PROFITABILITY OF 27.25% SHOWN IN IMMEDIATELY P RECEDING YEAR. IN THE LIGHT OF SMC-ITA NO. 39/AHD/2017 HANSRAJ JEWELLERS VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 3 OF 4 THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I DELETE THE IMPUGNED ADDITION OF RS.11,24,971/-. THE ASSESSEE GETS THE RELIEF ACCORDINGLY. 7. GROUND NOS. 1 & 2 ARE THUS ALLOWED. 8. IN GROUND NOS. 3 & 4, THE ASSESSEE IS AGGRIEVED OF THE DISALLOWANCE OF RS.2,28,000/- OUT OF RENT PAID BY THE ASSESSEE. 9. THE IMPUGNED DISALLOWANCE HAS BEEN MADE FOR THE SHORT REASON THAT THE ASSESSEE HAS NOT FURNISHED EVIDENCE TO PROVE GENUINENESS AND QUANTUM OF SUCH EXPENSES . LEARNED COUNSEL NOW SUBMITS THAT AT NO STAGE OF PROCEEDINGS, BEFORE THE ASSESSING OFFICER OR BEFORE THE CIT(A), NO SUCH DETAILS WERE REQUISITIONED. WHEN WE PUT IT TO THE LEARNED DEPARTMENTAL REPRESEN TATIVE, HE COULD NOT CONTROVERT THIS STAND. IN VIEW OF THESE DISCUSSIONS, AS ALSO BEARING IN MIND ENTIRETY OF THE CASE, I DEEM IT FIT AND PROPER TO REMIT THE MATTER TO THE FILE OF THE CIT(A) TO DECIDE THE MATTER AFRESH BY GIVING THE ASSESSEE ONE MORE OPPOR TUNITY TO PRESENT HIS CASE. ORDERED, ACCORDINGLY. 10. GROUND NOS. 3 & 4 ARE THUS ALLOWED FOR STATISTI CAL PURPOSES. 11. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED IN THE TERMS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT TODAY ON THE 24 TH MAY, 2019. SD/- PRAMOD KUMAR (VICE PRES IDENT) AHMEDABAD, THE ______ DAY OF MAY, 2019 **BT COPIES TO: (1) THE APPELLANT (2) THE RESPOND ENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER TRUE COPY ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD 1. DATE OF DICTATION: .....ORDER PREPARED AS PER 6 PAGES MANUSCRIPTS OF HONBLE VP-ATTACHED.......... 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: .... 24.05.2019..... 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR . P.S./P.S.: .... 24.05.2019...... . 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: 24.05.2019... 5. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK : ............ 6. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK : . 7. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER: 8. DATE OF DESPATCH OF THE ORDER: ...... SMC-ITA NO. 39/AHD/2017 HANSRAJ JEWELLERS VS. ITO ASSESSMENT YEAR: 2012-13 PAGE 4 OF 4 9.