M/s Soni Lallubhai Motichand, Mehsana V. ITO, Patan Ward-5, Mehsana

ITA 404/AHD/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8412 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 11-03-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: AMAN SHAH
• Section: 144; 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD (CONDUCTED THROUGH VIRTUAL COURT) BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ I.T.A. NO.404/AHD/2019 ( / ASSESSMENT YEAR : 2015-16) M/S.SONI LALLUBHAI MOTICHAND CHOKSI BAZAR KUKARWADA TALUKA VIJAPUR, MEHSANA- 382 830 / VS. THE ITO WARD-5 PATAN ./ ./ PAN/GIR NO. : AAFFS 5410 F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI KETAN SHAH & SHRI AMAN SHAH, ARS / RESPONDENT BY : SHRI RAJDEEP SINGH, SR.DR / DATE OF HEARING 18/03/2021 !'# / DATE OF PRONOUNCEMENT 24/03/2021 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTAN CE OF THE ASSESSEE AGAINST THE APPELLATE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)- GANDHINAGAR, AHMEDABAD [CIT(A) IN SHORT] DATED 08/02/2019 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOM E TAX ACT, 1961 (HEREINAFTER REFERRED TO AS 'THE ACT') DATED 29/12 /2017 RELEVANT TO ASSESSMENT YEAR (AY) 2015-16. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE READ AS UNDER:- ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -2- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASES AS WELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) HAS ERRED IN CONFIRMING ADDITION OF RS.1,27,70,341/- ON ACCOUNT OF UNDISCLOSED STOCK. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASES AS W ELL AS LAW ON THE SUBJECT, THE LEARNED COMMISSIONER OF INCOME-TAX (AP PEALS) AHS ERRED IN MAKING DISALLOWANCE OF RS.1,96,677/- IN RESPECT OF UNACCOUNTED PURCHASES. 3. FACTS OF THE CASE ARE THAT A SURVEY U/S.133A OF THE ACT HAD BEEN CONDUCTED IN THE CASE OF ASSESSEE ON 19/11/2014 DUR ING WHICH THE SUMMONS U/S.131 OF THE ACT HAD BEEN ISSUED TO THE TWO PARTN ERS; NAMELY, (I) GHANSHYAM BHOGILAL SONI & VINOD BHOGILAL SONI, WHEREIN ACCORD ING TO ASSESSING OFFICER PHYSICAL STOCK POSITION AS PER BOOKS GOLD AND SILV ER JEWELLERY AS ON 19/11/2014 WAS FOUND. SILVER JEWELLERY OF 159.259 KGS. AND G OLD OF JEWELLERY 7921.442 GRAM WAS FOUND AND PHYSICAL STOCK AS PER AS PER VA LUATION WAS 12031.21GRAM AND 217.992KGS. SO, THERE WAS VALUATION DIFFERENC E OF QUANTITY 4109.769GRAM AND 58.733KGS OF SILVER. THEREFORE, IN TERMS OF VA LUATION DIFFERENCE IN AMOUNT WAS WITH REGARD TO GOLD WAS 10890885 AND SILVER WAS 1879456. THUS, TOTAL DIFFERENCE IN VALUATION AS ON 19/11/2014 WAS AT RS. 1,27,70,314/- AND THE MANAGING PARTNER SHRI GHANSHYAM BOGILAL SONI ADMITT ED THE DIFFERENCE AND DISCLOSED VALUATION AMOUNT OF RS.1,27,70,341/-. TH EREAFTER, AFTER 15 DAYS HE REITERATED FROM THE STATEMENT MADE DURING THE SURVE Y AND PROVIDED CLARIFICATION THAT THE DIFFERENCE OF QUANTITY IN GOLD NOTICED FOR 4109.768GRAMS WAS NOT IN RESPECT OF ASSESSEE-FIRM ALONE AND IT HAS BEEN ATTE MPTED TO EXPLAIN THAT THE FAMILY MEMBERS OF THE PARTNERS OF THE ASSESSEE-FIRM WERE ALSO DOING JOB-WORK BY USING PREMISES OF THE ASSESSEE-FIRM AND THE QUAN TITY OF GOLD OR GOLD ORNAMENTS RECEIVED BY THEM IN THEIR INDIVIDUAL CAPA CITY WAS ALSO LYING IN THE PREMISES OF ASSESSEE-FIRM FOR WHICH DETAILS IN THE TABULAR FORM HAD BEEN GIVEN IN THE SAID SUBMISSION. IT HAD ALSO BEEN CONTENDED THAT OUT OF 4109.768GRAMS OF EXCESS JEWELLERY FOUND, JEWELLERY WEIGHING 3805.770 GRAMS WAS BELONGING TO ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -3- THE PERSONS, I.E. SMT. BHAVANABEN S. SONI (WIFE OF SON OF PARTNER SHRI KRISHNALAL B.SONI), SMT. PURNIMABEN G.SONI AND SMT. SANGITABEN V.SONI, THE WIVES OF TWO PARTNERS. IT HAS ALSO BEEN CONTENDED IN THE LETTER DATED 26/12/2014 THAT 14 PERSONS HAVE GIVEN THE GOLD TO THREE LADY M EMBERS WHO ARE ALSO ENGAGED IN THE SAME LINE OF BUSINESS, I.E. REPAIRING OF GOL D JEWELLERY, MANUFACTURING THE JEWELLERY OR TO MAKE JEWELLERY FROM RAW GOLD AS PER ORDERS OF THE CUSTOMERS AND THE BUSINESS ACTIVITIES HAVE BEEN CARRIED OUT AT TH E BUSINESS PREMISES OF THE ASSESSEE-FIRM. THE LD.AO DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND STATED THAT DURING THE SURVEY MANAGING PARTNER OF THE FIRM M/S. SONI LALLUBHAI MOTICHAND WAS GIVEN A WILLFUL AND THE SA ME AMOUNTS TO AN AFTER- THOUGHT STATEMENT AND OTHER DOCUMENTS WERE PRODUCED BY THE ASSESSEE WERE CONSIDERED BY THE LD.AO AS SELF-SERVING AND MADE AD DITION OF RS.1,38,74,558/- AS AGAINST THE TOTAL INCOME AT RS.9,07,540/- DECLAR ED BY THE ASSESSEE. 4. THEREAFTER, ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD.CIT(A) WHO CONFIRMED THE ORDER OF THE LD.AO WITH THE REASO N THAT IT IS A FACT THAT STOCK WAS PHYSICALLY VERIFIED IN THE PRESENCE OF THE PART NERS AND GOT VALUED THROUGH A REGISTERED VALUER BEING PRECIOUS METAL LIKE GOLD AN D SILVER BY APPLYING THE PREVAILING MARKET RATE AS ON DATE OF SURVEY FOR WHI CH NO EXPLANATION WAS PUT FORTH ON THE DATE OF SURVEY AND WHICH WAS OFFERED B UT THROUGH A WELL DEVISED STORY OF OBTAINING THE GOLD ON JOB-WORK FROM FOURTE EN PERSONS. 5. NOW THE ASSESSEE IS IN APPEAL BEFORE US BY WAY O F SECOND STATUTORY APPEAL. 6. THE LD.ARS CONTENTION WAS THAT STATEMENT WHICH WAS GIVEN DURING THE SURVEY WAS RETRACTED BY THE MANAGING PARNTER OF M/S .SONI LALLUBHAI MOTICHAND ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -4- AND THE SAME WAS SUPPORTED BY DOCUMENTS AND AFFIDAV IT OF PERSONS WHO HAD GIVEN THEIR JEWELLERY FOR REPAIR OR FOR EXCHANGE AN D ALSO SUPPLIED THE LIST OF INDIVIDUAL LABOUR CHARGE RECEIVED FROM FOUR PARTIES AS PER PAGE NO.112 OF THE PAPER-BOOK AND SIMILARLY AMOUNT HAS BEEN RECEIVED F ROM VARIOUS PARTIES IN FINANCIAL YEARS 2006-07, 2008-09 AND 2011-12 ARE AT PAGE NO.104 OF THE PAPER- BOOK AND COPY OF THE INVOICES ISSUED IN PAST YEARS ARE AT PAGE NOS.115 TO 117. 6.1. SO FAR AS SANGITABEN VINDKUMAR SONI IS CONC ERNED, HER COPY OF THE INCOME TAX RETURN AND BOOKS OF ACCOUNTS ARE AT PAGE NOS.121 TO 126 AND GOLD REGISTER IN REFERENCE TO THE GOLD RECEIVED FROM TWO PARTIES IS AT PAGE NO.127 AS WELL AS INVOICES ISSUED ARE AT PAGE NOS.128 & 129 A ND LABOUR CHARGE RECEIPT FROM LIST AT PAGE NO.130. 6.2. SO FAR AS BHAVNABEN SANJAYKUMAR SONI IS CONCE RNED, WHEREIN THE LABOUR CHARGE INCOME IS RS.3,40,114/- AND THE REGISTER MA INTAINED FOR THREE PERSONS IS AT PAGE NO.140 AND THE INVOICES ISSUED IS AT PAGE N OS.141 TO 143 AS WELL AS INDIVIDUAL LABOUR CHARGE INCOME IS AS PER PAGE NO.1 44 AND PAST YEAR FINANCIAL YEAR 2010-11 SIMILARLY LABOUR CHARGE RECEIPT IS AS PER PAGE NO.146 OF THE PAPER-BOOK AND THE INVOICES ISSUED IN PAST YEAR IS AS PER PAGE NO.147 OF THE PAPER-BOOK. 6.3. SO FAR AS KRUSHNALAL BHOGILAL SONI IS CONCERNE D, LABOUR CHARGES OF THREE PARTIES IS AT PAGE NO.158 AND VARIOUS INVOICES ISSU ED AT PAGE NOS.159 TO 161 AS WELL AS TABULAR CHART IN REFERENCE TO THE LABOUR CH ARGE INCOME FROM THREE PARTIES IS AT PAGE NO.162 OF THE PAPER-BOOK. 6.4. SO FAR AS GHANSHYAM BHOGILAL SONI IS CONCERNED , WHEREIN IT IS FOUND THAT THERE WAS LABOUR INCOME OF RS.3,45,571/- RECEIVED F ROM VARIOUS PARTIES. SHRI ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -5- GHANSHYAMBHAI HAS RECEIVED GOLD ORNAMENTS FROM TWO PARTIES AND, THEREFORE, THE FORM NO.GS 30 REGISTERED IS AS PER PAPER BOOK A T PAGE NO.173 AND INVOICES ISSUED BY GHANSHYAMBHAI IS AS PER PAGE NOS.174 & 17 5 AS WELL AS THE LABOUR INCOME CHARGED FROM TWO PARTIES DURING FY 2014-15 IS AS PER PAGE NO.174 OF THE PAPER-BOOK AND AFFIDAVIT OF SEVERAL PERSONS HAD SUBMITTED BEFORE THE LD.AO, WHEREIN THEY STATED THAT THEY HAVE GIVEN OL D GOLD ORNAMENTS FOR MAKING OF NEW JEREWLLERY BUT THEIR STATEMENTS WERE NOT ACCEPTED BY THE LD.AO FOR THE REASON THAT THEY FAILED TO PROVIDE PROOF OF OLD JEWELLERY PURCHASED AND ALL PAYMENTS WERE MADE IN CASH BY THE PERSONS WHO H AVE GIVEN AFFIDAVIT SUPPORTING THE CONTENTION OF THE ASSESSEE. IT IS FOUND THAT FINDING OF LD.AO IS FACTUALLY INCORRECT SINCE ASSESSEE HAS DULY DEMONST RATED THAT GOLD JEWELLERY RECEIVED BY 8 FAMILY MEMBERS HAS BEEN REFLECTED IN REGISTER MAINTAINED BY THEM. 6.5. WE HAVE NOTICED THAT LD.AO EXAMINED 12 PERSONS OUT OF 14 PERSONS WHO FILED THEIR AFFIDAVIT AND WHEN LD.AO EXAMINED THEM AND IT WAS FOUND THAT THEY MADE CERTAIN REFERENCES AGAINST THE ASSESSEE IN THA T CASE, ASSESSEE SHOULD HAVE BEEN GIVEN CHANCE TO CROSS-EXAMINE THEM AS HELD IN THE CASE OF ANDAMAN TIMBER INDUSTRIES (SC). 6.6. IT IS NOTICED THAT LD.AO ASKED ASSESSEE TO F ILE BOOKS OF ACCOUNTS, I.E. PRE AND POST SURVEY AND SEVERAL ENQUIRIES WERE MADE PER TAINING TO BOOKS OF ACCOUNTS AND SAME WERE DULY COMPLIED WITH BUT BOOK S OF ACCOUNTS WERE NOT REJECTED BY THE ASSESSING OFFICER AS HELD IN THE CA SE OF SAYQUL ISLAM VS. ITO (2020) 118 TAXMANN.COM 347 (GAUHATI TRIBUNAL) WHERE ASSESSEES TURNOVER EXCEEDED RS.1 CRORE BUT IT FAILED TO GET ACCOUNTS AUDITED UNDER SECTION 44AB, ASSESSING OFFICER COULD MAKE ADDITION TO ASSESSEES INCOME ON ESTIMATION BASIS UNDER SECTION 44AD ONLY AFTER REJECTING BOOKS OF AC COUNT AND THEREAFTER PASSING ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -6- A BEST JUDGMENT ASSESSMENT ORDER UNDER SECTION 144 AND THE HONBLE DELHI HIGH COURT IN THE MATTER OF CIT VS. ANAND KUMAR DEE PAK KUMAR 294 ITR 497 HELD THAT IT IS MANDATORY FOR THE ASSESSING OFFICER TO REJECT THE BOOKS OF ACCOUNTS BEFORE MAKING ANY ADDITION IN SUCH CASES. 6.7. THE LD.AR RELIED ON THE DECISION OF CIT VS. S. KHADER KHAN REPORTED IN 300 ITR 157 (MAD) AND HE CONTENDED THAT THE ASSESSI NG OFFICER WAS NOT EMPOWERED TO EXAMINE ANY PERSON ON OATH IN AN ABSEN CE OF ASSESSEE AND THE STATEMENT RECORDED U/S.133A OF THE ACT HAS NO EVID ENTIAL VALUE AND THEREFORE, THE ADMISSION MADE BY THE PARTNER THROUGH SUCH STAT EMENT CANNOT BE MADE BASIS FOR MAKING ADDITION TO THE INCOME. MOREOVER, BOOKS OF ACCOUNTS OF THE ASSESSEE-FIRM WERE NOT REJECTED AND WITHOUT REJECTI NG THE BOOKS OF ACCOUNTS, THE LD.AO IS NOT JUSTIFIED IN MAKING THE ADDITION IN TH E HANDS OF THE ASSESSEE. 6.8. THE LD.AR HAS ALSO CITED AN ORDER OF ITAT JAIP UR BENCH IN THE MATTER OF STONE AGE (P.) LTD. VS. DCIT [2020] 116 TAXMANN.COM 930], WHEREIN IT IS HELD THAT WHERE THERE WAS PRACTICALLY NO DIFFERENCE IN P HYSICAL INVENTORY TAKEN BY SURVEY TEAM VIZ-A-VIZ INVENTORY AS PER BOOKS OF ACC OUNT, IMPUGNED ADDITION MADE ON ACCOUNT OF DIFFERENCE IN VALUE OF STOCK WAS TO BE DELETED AND MERELY ON THE BASIS OF STATEMENT RECORDED OF THE DIRECTOR OF THE ASSESSEE-COMPANY WITH NO CORROBORATIVE MATERIAL ON RECORD, HAD NO LEGAL FORC E AND THUS SAME DESERVED TO BE DELETED. 6.9. THE AFFIDAVITS OF THE PARTIES WERE REJECTED BY THE LOWER AUTHORITIES ON THE BASIS OF TREATING THOSE AFFIDAVITS AS SELF-SERVING DOCUMENTS BUT DOCUMENTS SUBMITTED BY THE PERSONS WHO WERE DOING BUSINESS FR OM THE SAME PREMISES WERE NOT THOROUGHLY EXAMINED AND THEIR INCOME TAX R ETURNS WERE NOT ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -7- CONSIDERED BY THE LOWER AUTHORITIES, WHEREIN ALL TH E DETAILS WITH REGARD TO THEIR INCOME WERE MENTIONED AND NO MATERIAL WAS PROVIDED, ON THAT BASIS ADDITION WAS MADE AND ASSESSEE WAS NOT ALLOWED TO CROSS-EXAM INE WHOSE STATEMENTS WERE RELIED FOR MAKING ADDITION IN THE HANDS OF THE ASSESSEE. IN OUR CONSIDERED OPINION, WHATEVER MATERIAL OR STATEMENT HAD BEEN BA SIS OF THE ADDITION THAT SHOULD HAVE BEEN MADE AVAILABLE TO THE ASSESSEE AND OUGHT TO HAVE GIVEN OPPORTUNITY TO CROSS-EXAMINE THE PERSON AND INSPECT THE DOCUMENT, BUT IN THIS CASE, SUCH EXERCISE WAS NOT CARRIED OUT BY THE DEP ARTMENT TO THE ASSESSEE AND SAME AMOUNTS TO MISCARRIAGE OF JUSTICE. 7. LD.DR HEAVILY RELIED ON THE ORDERS OF LD.AO & LD .CIT(A). 8. SINCE BOOKS OF ACCOUNTS WERE NOT REJECTED AND NO OPPORTUNITY WAS PROVIDED TO THE ASSESSEE FOR CROSS-EXAMINATION OF P ERSONS WHO HAVE GIVEN THEIR STATEMENTS AGAINST THE ASSESSEE, SO WE HAVE TO GIVE BENEFIT OF DOUBT TO THE ASSESSEE. IN VIEW OF THE FOREGOING DISCUSSION AND RESPECTFULLY FOLLOWING AFORESAID JUDGMENTS, WE ALLOW APPEAL OF THE ASSESSE E. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 24/ 03/2021 SD/- SD/ ( WASEEM AHMED ) ( MAHAVIR PRA SAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 24/ 03 /2021 &.. , .'../ T.C. NAIR, SR. PS ITA NO.404/AHD/2019 M/S.SONI LALLUBHAI MOTICHAND VS. ITO ASST.YEAR: 2015-16 -8- !'#$#! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ()* + / CONCERNED CIT 4. + ( ) / THE CIT(A)-GANDHINAGAR 5. ./0 '')* , )*# , ( / DR, ITAT, AHMEDABAD 6. 034 5 / GUARD FILE. / BY ORDER, . ' //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 19.3.21 (DICTATION-PAD 19- PAGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.3.21/23.3.21 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.25.3.21 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25.3.21 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER