The ACIT, Indore V. Shri Mahesh Agrawal, Indore

ITA 41/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2767 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-06-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 25-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P K MITRA
• Assessee Lawyers: S T JETHANI
• Keywords: Unexplained investment; Unexplained expenditure; Income from undisclosed sources

Judgement Text

PAGE 1 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER PAN NO. : ABCPA4233E I.T.A.NO. 41/IND/2010 A.Y. : 2004-05 ACIT, SHRI MAHESH AGRAWAL, 4(1), VS 160-161, BHAKT PRAHLAD NAGAR, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI P.K.MITRA, SR. DR RESPONDENT BY : SHRI S. T. JETHANI, C. A. DATE OF HEARING : 30.6.2010 O R D E R PER V.K. GUPTA, A.M. THIS APPEAL FILED BY THE REVENUE ARISES OUT OF ORDE R OF THE LD. CIT(A)-II, INDORE, DATED 28.10.2009, FOR THE ASSESS MENT YEAR 2004-05. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. IN THIS APPEAL, THE REVENUE IS AGGRIEVED BY THE DE CISION OF THE LD.CIT(A) IN ALLOWING RELIEF OF RS. 19,04,430/- BY ALLOWING SET OFF OUT OF CASH AND INVESTMENT OUT OF CURRENT YEARS INCOME. PAGE 2 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. 4. THE FACTS, IN BRIEF, ARE THAT THERE WAS A SURVEY AC TION AT THE BUSINESS PREMISES OF THE ASSESSEE ON 3 RD AND 4 TH FEBRUARY, 2004, WHEREIN IT WAS REVEALED THAT THE ASSESSEE WAS ALSO DEALING IN PROPERTY BUSINESS APART FORM HIS REGULAR BUSINESS OF KIRANA TRADING. THE CASH IN HAND FOUND WAS RS. 5,37,470/-. APART FORM THIS, VARIOUS INVEST MENTS IN THE PROPERTY AS WELL AS EXPENDITURE IN THE DAUGHTERS MARRIAGE, FOREIGN TOUR ETC. WERE ALSO FOUND. THE TOTAL OF UNEXPLAINED EXPENDITURE/IN VESTMENT WAS WORKED OUT AT RS. 31,12,300/-. THE ASSESSEE SURRENDERED TH E IMPUGNED SUM AS ITS ADDITIONAL INCOME FROM UNDISCLOSED SOURCES. HOWEVER , IN THE RETURN FILED SUBSEQUENTLY, THE ASSESSEE DID NOT OFFER THE IMPUGN ED AMOUNT FOR THE REASON THAT AS PER THE BALANCE SHEET DATED 31.3.200 3, A SUM OF RS. 19,04,430/- WAS AVAILABLE AS CASH IN HAND. THE AO R EQUIRED THE ASSESSEE TO EXPLAIN THE SAME. THE ASSESSEE SUBMITTED REPLIES VIDE ITS LETTERS DATED 13.11.2006 AND 17.11.2006, WHEREIN IT WAS STATED TH AT STATEMENT OF AFFAIRS FOR ASSESSMENT YEAR 2003-04 FILED PRIOR TO DATE OF SURVEY HAD DISCLOSED CASH BALANCE AND IN THE COURSE OF SURVEY, CASH IN H AND IN THE COURSE OF SURVEY WAS FOUND TO THE EXTENT OF RS. 5,37,470/-. H ENCE, IN THE ABSENCE OF REGULAR BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE , THE ONLY RECOURSE TO WORK OUT THE UNEXPLAINED INVESTMENT WAS TO ANALYZE THE INCREASE IN ASSETS/LIABILITY IN BETWEEN TWO BALANCE SHEET DATES AND IF THAT EXERCISE WAS DONE THEN IT WAS ABUNDANTLY CLEAR THAT THE CASH BAL ANCE SHOWN IN THE PAGE 3 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. BALANCE SHEET FOR THE ASSESSMENT YEAR 2003-04 HAD B EEN UTILIZED IN INVESTMENTS AND EXPENDITURE INCURRED SUBSEQUENTLY. THE AO, HOWEVER, HELD THAT ADDITIONAL AMOUNT SURRENDERED DURING THE COURSE OF SURVEY WAS AFTER CONSIDERING OF PREVIOUS ASSETS AND THE LIABIL ITIES OF THE ASSESSEE AND THE ASSESSEES PLEA TO AVAIL SET OFF OF CASH IN HAN D AS ON 31.3.2003 WAS NOTHING BUT AN AFTER THOUGHT TO REDUCE THE TAX LIAB ILITY. THE AO, ACCORDINGLY, REJECTED THIS EXPLANATION OF THE ASSES SEE AND ADDED THE IMPUGNED SUM TO THE TOTAL INCOME OF THE ASSESSEE. A GGRIEVED BY THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHEREIN IT WAS CONTENDED THAT THE BOOKS OF ACCOUNT HAD NOT BEEN MA INTAINED AND IF THE STATEMENT OF THE ASSESSEE GIVEN IN THE COURSE OF SU RVEY WAS READ IN ITS ENTIRETY, THEN IT WAS ABUNDANTLY CLEAR THAT THE SAM E COULD NOT BE READ IN THE MANNER ONLY TO THE ADVANTAGE OF REVENUE. IT WAS ALSO PLEADED THAT IF SUBSEQUENTLY A PLAUSIBLE EXPLANATION ALONGWITH THE DOCUMENTARY EVIDENCES COULD BE SUBMITTED, THEN, THE STATEMENT G IVEN IN THE COURSE OF SURVEY, COULD NOT BE SAID TO BE SO SACROSANCT AS TO IGNORE SUBSEQUENT PLEA. IT WAS ALSO SUBMITTED THAT THE AOS OBSERVATION THA T INCOME SURRENDERED WAS ADDITIONAL INCOME AFTER CONSIDERING THE SAID CA SH/BANK BALANCES WAS WITHOUT ANY DEFINITE BASIS AS IN THE COURSE OF SURV EY, NO SUCH STATEMENT HAD BEEN GIVEN. THE ASSESSEE ALSO SUBMITTED THAT IN RESPECT OF SOME SPECIFIC QUERY, REFERENCE TO OPENING BALANCE HAD AL SO BEEN MADE. THE PAGE 4 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. LD.CIT(A) FOUND THAT THE OPENING CASH BALANCE HAD A LSO BEEN REFERRED. THE LD.CIT(A) ALSO FOUND THAT THE OPENING CASH BALA NCE AS PER STATEMENT OF AFFAIRS FILED BEFORE THE DATE OF SURVEY WAS NOT IN DISPUTE AND IT WAS ALSO NOT IN DISPUTE THAT IN SUBSEQUENT ASSESSMENT YEARS, THE CASH BALANCE SHOWN BY THE ASSESSEE WAS SHOWN AFTER CLAIMING THE UTILIZATION OF OPENING BALANCE. THE LD.CIT(A) ALSO HELD THAT THE O VER ALL IMPRESSION WHICH EMERGED FROM THE REPLIES GIVEN BY THE ASSESSE E WAS THAT THE ASSESSEE WAS NOT ABLE TO CORRELATE THE SAME TO THE VARIOUS INVESTMENTS MADE BY HIM/EXPENSES INCURRED, DURING THE COURSE OF SURVEY AND, THUS, HE HAD SURRENDERED THE SAME AS UNDISCLOSED INCOME/EXPE NDITURE. THE LD.CIT(A) THEREAFTER HELD THAT THERE WAS NO DISPUTE AS REGARD TO THE QUANTUM OF INVESTMENT IN EXPENDITURE IN ANY MANNER. THUS, TAKING INTO CONSIDERATION THESE FACTS, THE LD.CIT(A) DIRECTED T HE AO TO GIVE TELESCOPIC/SET OFF OF OPENING CASH IN HAND FOR THE PURPOSE EXPLAINING THE INVESTMENT AND EXPENDITURE INCLUDING THE CASH BALAN CE FOUND IN THE COURSE OF SURVEY OPERATIONS. AGGRIEVED BY THIS, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. SR. DR PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. THE LD.COUNSEL FOR THE ASSESSEE ,ON THE OTHER HAND, NARRATED THE FACTS, REITERATED THE SUBMISSIONS MADE BEFORE THE REVENUE AUTHORITIES, BESIDES PLACING RELIANCE ON THE ORDER OF THE LD.CIT(A). HE ALSO DREW OUR ATTENTION PAGE 5 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. TO PAGE NOS. 35 TO 42 OF THE PAPER BOOK CONTAINING REPLIES OF THE ASSESSEE AS REGARD TO EXPLANATIONS GIVEN BY THE ASSESSEE TO THE AO. 6. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES, MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 7. IT IS NOTED THAT THE ASSESSEE HAS SURRENDERED THE S UM OF RS. 31 LAKHS APPROXIMATELY DURING THE COURSE OF SURVEY ON ACCOUNT OF INVESTMENT IN ASSETS AND EXPENDITURE INCURRED. SUBS EQUENTLY, THE ASSESSEE HAS CLAIMED SET OFF OF OPENING CASH BALANCE EXISTIN G AS ON 31.3.2003, IN THE STATEMENT OF AFFAIRS FILED ALONG WITH THE RETUR N FOR ASSESSMENT YEAR 2003-04 PRIOR TO THE DATE OF SURVEY. IT IS ALSO NOT ED THAT REGULAR BOOKS OF ACCOUNT ARE NOT MAINTAINED. THE AO HAS REJECTED THI S EXPLANATION OF THE ASSESSEE, MERELY FOR THE REASON THAT AS PER AO, THE SURRENDER MADE DURING THE COURSE OF SURVEY WAS AFTER CONSIDERING SUCH OPE NING CASH IN HAND. HOWEVER, FROM THE PERUSAL OF STATEMENTS RECORDED DU RING THE COURSE OF SURVEY, NO SUCH FACT EMERGES. IT IS ALSO WORTHWHILE TO MENTION THAT IN THE COURSE OF SURVEY, GENERALLY THE ASSESSEE IS NOT IN A POSITION TO EXPLAIN EVERYTHING IN A SCIENTIFIC MANNER AND, THEREFORE, I T HAS BEEN JUDICIALLY HELD THAT IF SUBSEQUENTLY THE ASSESSEE IS ABLE TO P ROVE THAT ANY SURRENDER MADE DURING THE COURSE OF SURVEY WAS NOT BASED ON E VIDENCE OR WAS NOT CORRECT ON THE BASIS OF EVIDENCES, THEN SUCH CLAIM OF THE ASSESSEE CAN BE ENTERTAINED AND, IN THE PRESENT CASE, IT IS SO. THU S, TAKING INTO PAGE 6 OF 6 - I.T.A.NO. 41/IND/2010 SHRI MAHESH AGRAWAL, INDORE. CONSIDERATION THE ENTIRE FACTS, WE HOLD THAT THE LD .CIT(A) HAS RIGHTLY DIRECTED THE AO TO GIVE CREDIT OF OPENING CASH BALA NCE WHILE MAKING THE ASSESSMENT. THUS, WE DISMISS THIS GROUND OF THE REV ENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JUNE, 2010. CPU*