Sh. Sanjay Jain, Agra V. A.C.I.T., Central Circle, Agra

ITA 422/AGR/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94115 (ITAT-AGRA)
• Duration Of Justice: 2 year(s) 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-08-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH KUMAR
• Assessee Lawyers: NAVEEN GARG
• Keywords: Unexplained investment; Search and seizure
• Section: 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SH RI G.C. GUPTA, VICE PRES ID ENT AND SHRI INTURI RAMA RAO , ACCOUNTANT MEMBER ITA NO. 422 / AG RA / 20 12 ASSESSMENT YEAR : 200 6 - 07 S HRI SANJAY JAIN, VS. ASSTT. COMMISSIONER OF INCOME TAX 86, NEH RU NAGAR, CENTRAL CIRCLE, AGRA. AGRA. (PAN A B Z P J 0653 N) . (APPELLANT) (RESPONDENT) A PPELLANT BY : SHRI NAVEEN G A RG, ADVOCATE RE SPONDENT BY : S HRI ANIRUDH KUMAR , CIT (D.R.) DATE OF HEARING : 2 2 .07. 201 5 DATE OF PRONOUNCEMENT : 12.08.2015 ORDER PER INTURI RAMA RAO , ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - I , AGR A DATED 14.03.2012 FOR THE A.Y. 200 6 - 07 RAISING THE FOLLOWING CONCISE G ROUNDS OF APPE AL: - 1. BECAUSE IN ANY VIEW, THE ADDITION CONFIRMED BY LD . CIT(A) OF RS.29,250/ - OUT OF ADDITION OF RS.1,12,500/ - MADE ON ESTIMATED BASIS AS INCOME FROM JOB WORK OF SILVER CHAINS, IS ARBITRARY, WRONG, ILLEGAL AND UNJUST. 2. BECAUSE IN ANY VIEW , THE ADDITION CONFIRMED BY LD. CIT(A) OF RS.2,97,590/ - OUT OF ADDITION OF RS.3,16,824/ - UNDER SECTION 69 FOR SO CALLED UNEXPLAINED INVESTMENT IN SILVER BULLION IS PERVERSE, UNJUST, WRONG, ILLEGAL AND AGAINST THE FACTS AND LAW OF THE CASE. ITA NO.422/AGRA/2012 A.Y. 2006 - 07 2 3. BECAUSE IN ANY V IEW, AND WITHOUT PREJUDICE TO THE ABOVE GROUNDS, ADDITIONS MADE, INTEREST CHARGED U/S 234B, AND THE ASSESSMENT ORDER PASSED IS WRONG, ILLEGAL, WI THOUT PROPER OPPORTUNITY, BAD I N LAW AND AGAINST THE FACTS AND LAW OF THE CASE . 2. BRIEFLY THE FACTS OF THE C ASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF JOB WORK OF SILVER CHAINS. THE RETURN OF INCOME FOR A.Y. 2006 - 07 WAS FILED ON 02.08.2007 DECLARING INCOME OF RS.16,30,664/ - . SUBSEQUENTLY , SEARCH AND SEIZURE OPERATION S WERE CONDUCTED UNDER SECTION 132 OF THE INCOME TAX ACT, 1961 ( THE ACT HEREINAFTER) IN THE BUSINESS PREMISES OF THE APPELLANT ON 13.01.2006. AS AGAINST THE SAID RETURN OF INCOME , ASSESSMENT WAS COMPLETED BY THE A . O . AT A TOTAL INCOME OF RS.20,59,964/ - . WHILE DOING SO, THE A . O . BASED ON INFORMATION SEIZED AS A RESULT OF SEARCH AND SEIZURE OPERATION HAD COME TO THE CONCLUSION THAT THE INCOME RETURNED FROM JOB WORK CHARGES WERE LOW , THEREFORE , ADDITION OF RS.1,12,500/ - WAS MADE. A N ADDITION OF RS.3,16,824/ - WAS ALSO MADE AS UNEXPLAINED INVESTMENT IN SILVER. BEING AGGRIEVED , APPEAL WAS FILED BEFORE THE LD . C IT(A) WHO VIDE ORDER DATED 14.03.2012 GRANTED A PART RELIEF. IN RESPECT OF ADDITION ON ACCOUNT OF JOB WORK CHARGES, THE LD . CIT ( A ) , ELABORATELY DEALING WITH THE ISSUE , HELD AS UNDER AND THEREBY GRANTED RELIEF OF RS.83,250/ - (PAGE NOS.18 & 19) : - ON THE BASIS OF RATE OF MAKING CHARGES (JOB CHARGES) AS DETERMINED BY ME AT RS.78/ - PER KG, THE INCOME OF THE ASSESSEE (APPELLANT) FOR THREE MONTHS IS COMPUTED AS 250 KG X RS .78/ - PER KG X 3 MONTHS = RS.58,500/ - . WITH REGARD TO THE ESTIMATION OF INCOME OF THE ASSESSEE (APPELLANT) FOR THREE MONTHS, IT HAS BEEN ARGUED BY THE LD. AR THAT DURING THE POST SEARCH PERIOD (JAN 2006 TO MARCH 2006), THE APPELLANT WAS RUNNING FROM PILLA R TO POST FOR RELEASE OF SEIZED 100% STOCK AND ULTIMATELY HE PURCHASED 44 KG. SILVER IN SUBSEQUENT ASSESSMENT YEAR BY TAKING LOAN AND THE LITTLE BUSINESS WAS RESTARTED IN SUBSEQUENT ITA NO.422/AGRA/2012 A.Y. 2006 - 07 3 YEAR. THEREFORE, IN VIEW OF THE LD. AR, THE QUESTION OF ESTIMATION OF ANY INCOME FOR THE POST SEARCH PERIOD I.E. JANUARY TO MARCH 2006 (AFTER SEIZURE OF COMPLETE STOCK) DOES NOT ARISE AS IT WAS MADE ON REGULAR BASIS PRIOR TO SEIZURE OF STOCK. HE FURTHER CONTENDED THAT THE HYPOTHETICAL ADDITION MADE IS TOTALLY ILLOGICAL AND UNPR ACTICAL IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND THEN HE ALSO CONTENDED THAT IN ANY WAY, ESTIMATION MADE BY THE AO IS HIGHLY EXCESSIVE. WITH REGARD TO ADDITION OF INCOME FOR THREE MONTHS, THE AO CONTENDED IN THE REMAND REPORT THAT THIS ADDITION HAS R IGHTLY BEEN MADE AS THE ELEMENT OF CASH IS ALWAYS THERE IN EVERY BUSINESS AND MOREOVER, ONLY THE SILVER AVAILABLE IN TOCK WAS SEIZED, THE SILVER GIVEN TO KARIGARS FOR PROCESSING BEFORE THE SEARCH WAS AVAILABLE WITH THE ASSESSEE FOR BUSINESS. ON THIS CONTEN TION RAISED IN THE REMAND REPORT OF THE AO, NO COMMENTS HAVE BEEN OFFERED BY THE LD. AR IN HIS REMAND REPORT. I FIND FORCE IN THE ARGUMENT OF AO THAT IN POST SEARCH PERIOD, THE COMPLETE STOPPAGE OF BUSINESS IS NOT ACCEPTABLE BECAUSE SILVER GIVEN TO KARIGA RS FOR MAKING CHAIN BEFORE THE SEARCH WAS AVAILABLE WITH THE ASSESSEE (APPELLANT) WITH WHICH, HE WAS ABLE TO CONTINUE HIS BUSINESS THOUGH AT REDUCED LEVEL. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES, IN MY CONSIDERED OPINION, 50% OF THE INCOME COMPUTED ON THE BASIS ESTIMATED RATE OF MAKING CHARGES OF RS.78/ - PER KG. AND 250 KG. PER MONTH OF PRODUCTION WOULD BE QUITE REASONABLE FOR THE INCOME OF THE ASSESSEE (APPELLANT) ESTIMATED FOR THREE MONTHS. ON THE BASIS OF ABOVE RATE AND QUANTUM OF SILVER CHAIN, I HAVE ALREADY ESTIMATED AN INCOME OF RS.58,500/ - AND THEREFORE, THE SCALED DOWN FIGURE AT 50% CONSIDERING THE DISTURBANCE IN BUSINESS WOULD COME O RS.29,250/ - . THEREFORE, EXTRA JOB WORK CHARGES FOR THREE MONTHS IS CONFIRMED TO THE EXTENT OF RS.29,250/ - AND THE APPELLANT GETS A RELIEF OF RS.83,250/ - (1,12,500 29,250) AND ACCORDINGLY GROUND NO.1 IS PARTLY ALLOWED. 3. ORDER OF LD. CIT(A) ON THIS ISSUE IS WELL REASONED AND WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT(A). ACCORDING LY, GROUND NO.1 RAISED BY THE APPELLANT IS DISMISSED . 4. COMING TO THE ISSUE OF ADDITION ON ACCOUNT OF CLOSING STOCK, THE LD. CIT(A) HAS DECIDED THE ISSUE AS UNDER (PAGE NOS.27 & 28) : - AS REGARDS TO THE QUANTITY OF THE UNEXPLAINED SILVER BULLION, THE A SSESSEE (APPELLANT) HAS ALREADY SURRENDERED THE AMOUNT OF 140 KG OF SILVER BULLION AND AFTER CONSIDERING THIS AMOUNT OF SILVER BULLION, HE HAS MADE THE DISCLOSURE OF HIS INCOME OF RS.16,00,000/ - IN THE RETURN OF ITA NO.422/AGRA/2012 A.Y. 2006 - 07 4 INCOME AND IN THE WRITTEN SUBMISSION ALSO AF TER ARGUING ABOUT PROVIDING ALL THE DEDUCTION OF THE SILVER PROVIDED TO HIM BY HIS WIFE AND MOTHER, HE HAS FINALLY SUBMITTED THAT IN ANY WAY THE ASSESSEE (APPELLANT) HAS SURRENDERED THE UNEXPLAINED SILVER OF 140 KG AND ON THE BASIS OF THIS SURRENDERED SILV ER BULLION, THE INCOME HAS BEEN DISCLOSED IN THE RETURN. IN THE ASSESSMENT ORDER, THE AO HAS PROVIDED THE DEDUCTION FOR VARIOUS QUANTITIES OF SILVER CLAIMED TO HAVE BEEN PROVIDED TO HIM BY HIS MOTHER AND WIFE AS 38.756 KG FROM MOTHER AND 19.155 KG FROM WI FE AND 8.792 KG WAS DECLARED BY HIMSELF AND THUS, AFTER PROVIDING DEDUCTION OF THESE THREE QUANTITIES FROM THE TOTAL AMOUNT OF SILVER BULLION FOUND AND SEIZED DURING SEARCH OF THE QUANTITY 215.294 KG, THE EXCESS AMOUNT OF SILVER COMPUTED BY THE AO IS COMIN G TO 148.591 KG. [215.294 - 8.792 - 38.756 - 19.155]. IN VIEW OF THE ABOVE POSITION. I FIND THAT ONLY 8.59 KG HAS BEEN COMPUTED BY THE AO IN EXCESS THAN THE QUANTITY WHAT WAS DECLARED BY THE APPELLANT DURING THE COURSE OF SEARCH AND SEIZURE OPERATION. THE DISPUTE IS REGARDING PROVIDING DEDUCTION FOR 24.277 KG OF SILVER BULLION CLAIMED TO HAVE BEEN PROVIDED BY THE MOTHER OF THE ASSESSEE (APPELLANT). IN THIS REGARD, IT HAS BEEN CLAIMED THAT THIS DECLARATION WAS MADE WHILE FILING THE RETURN OF INCOME FOR AY. 2 004 - 05 WHICH WAS FILED ON 26.04.2005 BEFORE THE DATE OF SEARCH. THE LD. AR HAS CLAIMED THAT ALONG WITH THIS RETURN, A LIST OF INVESTMENT WAS ALSO FILED IN WHICH, IT WAS DECLARED THAT THE SILVER BULLION 63.033 KG OF SMT. KUSUM LATA JAIN (MOTHER) AS PER HER RETURN OF INCOME IS BEING USED IN BUSINESS. WITH REGARD TO THIS CLAIM OF THE ASSESSEE (APPELLANT), THE AO HAS DISCUSSED IN THE ASSESSMENT ORDER THAT NO SUCH LIST OF INVESTMENT WAS FOUND IN THE RETURN FOR AY. 2004 - 05 BUT SUCH LIST WAS ENCLOSED WITH THE RETU RN OF A.Y. 2005 - 06 WHICH WAS FILED AFTER THE DATE OF SEARCH. THEREFORE, HE HAS NOT GIVEN ANY CREDIT FOR THE DEDUCTION OF THIS AMOUNT FROM THE TOTAL QUANTITY OF SLIVER BULLION SEIZED DURING THE SEARCH AND SEIZURE OPERATION. EVEN AFTER GOING THROUGH THE ASS ESSMENT ORDER OF SMT. KUSUM LATA JAIN FOR AY. 2005 - 06 ENCLOSED BY THE LD. AR ALONG WITH HIS WRITTEN SUBMISSION, THE SILVER BULLION OF ONLY 38.756 KG HAS BEEN MENTIONED AND THERE IS NO REFERENCE OF ANY SILVER BULLION OF 24.277 KG DECLARED BY HER IN HER RETU RN OF INCOME. HOWEVER, THE FACTS OF THE CASE IS THAT THE BILL FOR 24.277 KG OF SILVER BULLION IS IN THE NAME OF ASSESSEE (APPELLANT) AND THE SAME HAS NOT BEEN DECLARED BY HIM IN HIS RETURN OF INCOME CLAIMING THAT THIS SILVER BULLION BELONGED TO HIS MOTHER. AS THE FACT OF THIS SILVER BULLION BEING OWNED BY THE MOTHER OF THE ASSESSEE (APPELLANT) MT. KUSUM LATA JAIN IS NOT VERIFIABLE FROM THE RECORD AVAILABLE, I FIND THAT THE AO HAS CORRECTLY NOT ALLOWED THE DEDUCTION FOR SILVER BULLION OF 24.277 KG BECAUSE TH E BILL FOR THIS SILVER BULLION IS IN THE NAME OF THE ASSESSEE HIMSELF AND IT HAS NOT BEEN ITA NO.422/AGRA/2012 A.Y. 2006 - 07 5 DISCLOSED BY HIM IN HIS LIST OF INVESTMENT THEREFORE, I CONFIRM THE DECISION OF THE AO FOR NOT PROVIDING DEDUCTION FOR SILVER BULLION OF 24.277 KG OUT OF TOTAL QUANTI TY OF SILVER SEIZED DURING SEARCH. INITIALLY, I HAVE ALREADY POINTED OUT THAT EVEN AFTER NOT PROVIDING DEDUCTION FOR THIS QUANTITY OF SILVER BULLION, THE TOTAL UNEXPLAINED QUANTITY OF SILVER BULLION IS COMING TO RS.148.591 KG WHICH IS IN EXCESS OF ONLY 8.5 91 KG FROM THE QUANTITY OF UNEXPLAINED SILVER BULLION DECLARED BY THE ASSESSEE (APPELLANT) DURING SEARCH AND THEREFORE, BY NOT PROVIDING DEDUCTION FOR 24.277 KG OF SILVER BULLION, THE AO HAS ONLY COMPUTED EXCESS AMOUNT OF SILVER BULLION OF 8.591 KG FROM TH E QUANTITY DECLARED BY THE ASSESSEE (APPELLANT) DURING SEARCH AND HENCE, HE CAN BE SAID TO BE AGGRIEVED ONLY FOR EXCESS AMOUNT OF 8.591 KG RATHER THAN SAYING THAT HIS UNEXPLAINED SILVER BULLION HAS BEEN COMPUTED IN EXCESS OF 24.2TL KG. AS THE UNEXPLAINED S ILVER BULLION OF 140 KG DECLARED BY THE ASSESSEE (APPELLANT) DURING SEARCH AND SEIZURE OPERATION IS QUITE NEAR TO THE ACTUAL VALUE DETERMINED BY THE AO DURING ASSESSMENT PROCEEDING AT 148.591 KG, I CONFIRM THE DECISION OF THE AO OF TREATING 148.591 KG OF S ILVER BULLION AS UNEXPLAINED SILVER BULLION FOUND IN POSSESSION OF THE ASSESSEE (APPELLANT). CONSIDERING THESE FACTS AND CIRCUMSTANCES, THE AO IS DIRECTED TO COMPUTE THE VALUE OF UNEXPLAINED SILVER BULLION AS UNDER: - UNEXPLAINED SILVER BULLION PURITY % PURE SILVER RATE OF PURE SILVER AS ON 13.01.2006 VALUE IN RS. 148.591 99% 147.1 12,900/ - 18,97,590/ - AS AGAINST THE ABOVE VALUE OF RS.18,97,590/ - , THE ASSESSEE (APPELLANT) HAS ALREADY DECLARED RS.16,00,000/ - IN THE RETURN OF INCOME ON ACCOUNT OF UNEXPLA INED SILVER BULLION AND THEREFORE, THE BALANCE AMOUNT OF RS.2,97,590/ - IS REQUIRED TO BE FURTHER ADDED IN THE INCOME OF THE ASSESSEE (APPELLANT) INSTEAD OF RS.3,16,824/ - COMPUTED BY THE AO. THEREFORE, I CONFIRM THE ADDITION U/S 69 TO THE EXTENT OF RS.2,97, 590/ - AND THE ASSESSEE (APPELLANT) GETS A RELIEF OF RS.19,234/ - . ACCORDINGLY GROUND NO.2 IS PARTLY ALLOWED. 5. IN OUR CONSIDERED OPINION , THE EXPLANATION OFFERED BY THE APPELLANT THAT SILVER PROVIDED BY THE MOTHER OF THE APPELLANT OF 24.277 KGS. S HOULD HAVE BEEN GIVEN CREDIT AS THIS QUANTITY OF SILVER DULY REFLECTED IN THE HANDS OF THE MOTHER OF THE ASSESSEE AND IT IS QUITE POSSIBLE THAT SILVER OF THE MOTHER LIES WITH THE SON. THEREFORE , GIVING DUE ITA NO.422/AGRA/2012 A.Y. 2006 - 07 6 WEIGHTAGE TO THE HUMAN PROBABILITIES, WE DIRECT THE A. O . TO GIVE CREDIT FOR THE SILVER WEIGHING 24.277 KGS . AND ACCORDINGLY COMPUTE THE DISALLOWANCES. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 12.08.2015 ) SD / - SD/ - ( G.C. GUPTA ) ( INTURI RAMA RAO ) VICE PRESIDENT ACC OUNTANT MEMBER DATE: 12 TH AUGUST , 201 5 PBN/* COPY OF THE ORDER FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNE D 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA