ACIT, Jaipur V. MAHENDRA KUMAR AGARWAL, Jaipur

ITA 423/JPR/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5205 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 29-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVIR SINGH DUGAR
• Assessee Lawyers: VIJAY GOYAL C A DHK
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 133A; 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 423/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11. ASSTT COMMISSIONER OF INCOME - TAX, CENTRAL CIRCLE-1, JAIPUR. CUKE VS. SHRI MAHENDRA KUMAR AGARWAL, PROP. M/S. MOHAN LAL MAHENDRA KUMAR JEWELLERS, JOHARI BAZAR, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ABUPK 2500 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAGHUVIR SINGH DUGAR (ADDL.CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.06.2016. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13/06/2016. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT (APPEALS)- I, JAIPUR DATED 24.02.2015 PERTAINING TO A.Y. 2010- 11. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION U/S 68 T OTALLING TO RS. 25,00,000/- ON ACCOUNT OF TWO UNSECURED LOANS, ADMI TTING THE ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE, IGNO RING THAT THE ASSESSEE HAD NOT FULFILLED ANY OF THE CIRCUMSTANCES PRESCRIBED IN RULE 46A OF THE INCOME TAX RULES FOR ADMISSIBILITY OF THE ADDITIONAL EVIDENCE. 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE EXCESS STOCK OF SILVER OF RS. 5,62,360/- FOUND DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSEE WAS FULLY COVERED BY SURRENDERED AMOUNT OF RS. 1,50,00,000/-. 2 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT (A) HAS ERRED IN HOLDING THAT THE EXCESS STOCK OF LOOSE DIAMONDS AND STONES OF RS. 2,41,600/- FOUND DURING THE COURSE OF SURVEY AT THE PREMISES OF THE ASSESSEE WAS FULLY CO VERED BY SURRENDERED AMOUNT OF RS. 1,50,00,000/-. 2. BRIEFLY STATED THE FACTS ARE THAT A SURVEY ACTIO N WAS CONDUCTED UNDER SECTION 133A OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) AT THE PREMISES OF THE ASSESSEE ON 02.09.2009. SUBSEQUENTLY, THE CASE WAS TAKEN UP FOR SCRUTINY ASSESSMENT AND ASSESSMENT UNDER SECTION 143(3) OF T HE ACT WAS FRAMED VIDE ORDER DATED 25 TH MARCH, 2013. WHILE FRAMING THE ASSESSMENT, THE AO MADE ADDITION OF RS. 25,00,000/- ON ACCOUNT OF UNSECURED LOANS, ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK OF SILVER OF RS. 5,62,360/-, ADDITION ON ACCO UNT OF LOOSE DIAMOND/STONES OF RS. 2,41,600/-, ADDITION ON ACCOUNT OF DISALLOWANCE OF DERIVATIVE LOSS OTHER THAN GOLD OF RS. 5,37,845/- AND OTHER ADHOC DISALLOWANCES OF DEP RECIATION AND OUT OF SALARY OF RS. 99,184/- AND RS. 1,00,000/- RESPECTIVELY. THE ASSESSEE AGGRIEVED BY THIS ORDER, PREFERRED AN APPEAL BEFORE LD. CIT (A), WHO AFTER C ONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL. WHILE ALLOWING THE APPEAL, THE LD. CIT (A) HAS DELETED THE ADDITION OF RS. 25,00,000/- MADE BY INVOKING THE PR OVISIONS OF SECTION 68 OF THE ACT, AND ALSO DELETED ADDITION OF RS. 5,62,360/- AND RS. 2,41,600/- MADE ON ACCOUNT OF EXCESS STOCK OF SILVER, LOOSE DIAMOND, STONES FOUND AT THE TIME OF SURVEY OPERATION. THE REVENUE AGGRIEVED BY THIS ORDER OF LD. CIT (A), PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. GROUND NO. 1 IS AGAINST DELETION OF ADDITION OF RS. 25,00,000/- BY ADMITTING THE ADDITIONAL EVIDENCE. 3 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL. 3.1. THE LD. D/R SUBMITTED THAT LD. CIT (A) HAS VIO LATED THE PROVISIONS OF RULE 46A OF THE IT RULES, 1962 (HEREINAFTER REFERRED TO AS T HE RULES). HE SUBMITTED THAT THE EVIDENCES WHICH WERE ADMITTED WERE NOT PLACED BEFOR E THE AO. 3.2. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE OPPOSED THE SUBMISSION OF THE LD. D/R AND POINTED OUT THAT THE CONFIRMATIONS OF THE PARTIES WERE DULY PLACED BEFORE THE AO. THEREFORE, THERE IS NO VIOLATION OF RULE 46A. 3.3. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE M ATERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE L D. CIT (A) IN PARA 3.1.2 OF HIS ORDER HAS RECORDED THE FINDINGS OF FACT AS UNDER :- 3.1.2. I HAVE DULY CONSIDERED APPELLANTS SUBMISS ION AND ALSO CAREFULLY GONE THROUGH THE ASSESSMENT ORDER, REMAND REPORT AND REJOINDER FILED BY THE AR. I HAVE ALSO PERUSED THE FACTUAL MATRIX AS AVAILABLE IN THE CASE RECORD. ON PERUSAL OF ASSESSMENT ORDER, IT IS SEEN THAT AO MADE ADDITION OF RS. 25,00,000/- U/S 68 OF THE ACT AS UNDER :- (I) UNEXPLAINED LOAN OF RS. 19,00,000/- RECEIVED FROM T ARA CHAND DANDIA HUF. (II) UNEXPLAINED LOAN OF RS. 6,00,000/- RECEIVED FROM SH ANTI LAL TAKSHALI & SONS HUF DURING THE ASSESSMENT PROCEEDING, AO ISSUED SUMMON U/S 131 TO ALL SUNDRY 11 LOAN CREDITORS, AND OUT OF WHICH ONLY 9 S UNDRY LOAN CREDITOR COMPLIED AND SUBMITTED THEIR BASIC DETAILS TO PROVE THEIR IDENTITY, GENUINENESS AND CREDITWORTHINESS EXCEPT AFOREMENTIO NED PERSON. CONSEQUENTLY, AO HELD THAT IN CASE OF M/S. TARA CHA ND DANDIA HUF AND M/S. SHANTI LAL TAKSALI & SONS HUF, THEIR IDENT ITY GENUINENESS OF TRANSACTIONS AND THEIR CREDITWORTHINESS COULD NOT B E ESTABLISHED, HENCE AO MADE ADDITIONS AS UNEXPLAINED CASH CREDIT U/S 68 . DURING THE APPELLATE PROCEEDING, SH. VIJAY GOEL AR OF THE ASS ESSEE SUBMITTED THAT CONFIRMATIONS FROM AFOREMENTIONED PARTIES WERE ALSO FILED BEFORE AO VIDE LETTER DT. 12/03/2013 (REFERENCE PB-PG-100- 101). ACCORDINGLY, MATTER WAS REFERRED TO THE AO UNDER RULE 46A VIDE L ETTER DT. 02.07.2014 ASKING AO TO EXAMINE ASSESSEES SUBMISSI ON AND SUBMIT THE REMAND REPORT ON MERIT. AO IN THE REMAND PROCEE DING, HAS EXAMINED THE ISSUE AND FORWARDED THE SAME AS VERIFI ABLE. FOR THE SAKE 4 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL. OF REPETITION & CLARITY, RELEVANT PARA 2 OF REMAND REPORT DT. 20/01/2015 IS REPRODUCED AS UNDER :- REPORT ON THE NEW ADDITIONAL EVIDENCE 2. NOW THE ASSESSEE HAS SUBMITTED FOLLOWING DOCUMEN TS BEFORE YOUR GOODSELF :- (A) TARA CHAND DANDIA HUF (I) CONFIRMATION OF A/C OF PARTY FOR AY 2011-12. (II) COPY OF RELEVANT PAGE OF BANK A/C OF PARTY SHOWING THE ENTRY OF PAYMENT OF RS. 19 LAC MADE TO THE ASSESSEE. (III) COPY OF RELEVANT PAGES OF BANK A/C OF THE PARTY OF AY 2011- 12 SHOWING THE CREDIT ENTRIES OF CHEQUES GIVEN BY A SSESSEE INTEREST. (B) SHANTI LAL TAKSALI & SONS HUF (I) COPY OF INCOME TAX RETURN AND COMPUTATION OF TOTAL INCOME OF PARTY OF AY 2010-11. (II) CONFIRMATION OF A/C OF PARTY FOR AY 2011-12. (III) COPY OF RELEVANT PAGE OF BANK A/C OF PARTY SHOWING THE DEBIT ENTRY OF CHEQUE GIVEN TO ASSESSEE AND CREDIT ENTRY OF CHEQUE RECEIVED FROM ASSESSEE AGAINST REPAYMENT OF LOAN. 3. THESE DOCUMENTS HAVE BEEN EXAMINED AND IF THESE ADDITIONAL EVIDENCES ARE ALLOWED UNDER RULE 46A OF INCOME TAX RULES, 1962 THEN THE GENUINENESS OF THESE TRANSACTIONS AND CRED ITWORTHINESS OF THESE 2 CREDITORS MAY BE CONSIDERED TO BE PROVED . AS ALREADY HELD IN ABOVE PARA, THAT ASSESSEES CASE IS COVERED UNDER EXCEPTION 1 TO RULE 46A BECAUSE LOAN CONFIRMATION S UBMITTED DURING ASSESSMENT PROCEEDING HAS NOT BEEN TAKEN IN TO COGN IZANCE AND AO HAS ADMITTED THIS FACT. NOW, THEY ARE FOUND VERIFIA BLE FROM DETAILS AVAILABLE ON RECORD. SINCE, CREDITWORTHINESS AND GENUINENESS OF LOAN CRE DITORS ARE ESTABLISHED, THEREFORE, NO ADDITION OF RS. 25,00,00 0/- ARE CALLED FOR, ACCORDINGLY THE SAME IS DELETED. ASSESSEES APPEAL IN GROUND NO. 1 STANDS ALLOWED. 5 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL. THE ABOVE FINDING OF FACT OF THE LD. CIT (A) IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THEREFORE , WE DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF LD. CIT (A) WHICH IS HE REBY CONFIRMED. MOREOVER, THE AO HAS NOT MADE ANY ENQUIRY ON THE EVIDENCES WHICH WER E PLACED BEFORE HIM BY THE ASSESSEE AND HE HAS ADMITTED IN THE REMAND REPORT T HAT THE GENUINENESS OF THE TRANSACTION AND CREDITWORTHINESS OF THE TWO CREDITO RS MAY BE CONSIDERED TO BE PROVED. 4. APROPOS GROUND NO. 2 & 3, THE LD. D/R SUPPORTED THE ORDER OF THE AO AND SUBMITTED THAT THE LD. CIT (A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCES. 4.1. ON THE CONTRARY, THE LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT THE ASSESSEE HAS DULY RECONCILED THE STOCK AND THE AMOUNT WAS PA RT OF THE SURRENDERED AMOUNT. 4.2. WE HAVE HEARD THE RIVAL CONTENTIONS. THE LD. C IT (A) IN PARA 3.2.2 OF HIS ORDER HAS OBSERVED AS UNDER :- 3.2.2. GROUND NO. 2 & 3 CHALLENGE THE ADDITION OF RS. 5,62,360/- AND RS. 2,41,600/- RESPECTIVELY ON ACCOUNT OF EXCES S STOCK OF SILVER ITEMS AND DIAMOND & PRECIOUS STONES FOUND AT THE TI ME OF SURVEY OPERATION. ON PERUSAL OF SUBMISSION AND RECONCILIATION OF STOC K FILED, IT IS SEEN THAT STOCK INVENTORY OF SILVER ITEMS PREPARED AND V ALUED AT THE TIME OF THE SURVEY BY THE DEPARTMENTAL VALUER AT RS. 5,20,9 02/-, WHEREAS ASSESSEE HAS ALSO SUBMITTED THAT STOCK OF SILVER BA R 46540.30 GRAM WAS APPEARING IN THE BOOKS OF M/S. AM EXPORTS, RESU LTING IN SHORT SILVER & UTENSILS [45385.30-30965]=14420 GRAM, BUT IN THE SURRENDERED AMOUNT, ASSESSEE IGNORED THE SET OFF OF SHORT STOCK OF SILVER BAR AGAINST THE EXCESS STOCK OF SILVER UTENSILS. NOW, A R EXPLAINS THAT IT HAS GIVEN SILVER BAR TO KARIGARS FOR MANUFACTURING. FRO M THE RECONCILIATION IT IS ALSO SEEN THAT ASSESSEE VALUED IT AT RS. 510,327 /- AND CONSIDERED IT PART OF SURRENDERED AMOUNT OF RS. 1,50,00,000/- IN RETURN ON ACCOUNT OF EXCESS STOCK. [REF:PB-PG 86-87 & 47]. SIMILARLY EXCESS STOCK OF DIAMONDS AND STONES VALUE AT RS. 2,41,600/- IS PART OF SURRENDERED AMOUNT. IT IS ALSO SEEN FROM THE WORKING GIVEN ABOV E, THE TOTAL EXCESS 6 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL. STOCK INCLUDING SILVER, DIAMONDS/STONES WAS OF RS. 1,47,69,155/- WHEREAS THE SURRENDERED AMOUNT WAS RS. 1,50,00,000/ -. THE ABOVE OBSERVATION OF THE LD. CIT (A) IS NOT REB UTTED BY THE REVENUE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THE LD. CIT (A) H AS CATEGORICALLY GIVEN A FINDING OF FACT THAT THIS AMOUNT WAS PART OF THE SURRENDERED A MOUNT AND REFLECTED IN THE RETURN OF INCOME ON ACCOUNT OF EXCESS STOCK. THEREFORE, W E DO NOT SEE ANY REASON TO INTERFERE INTO THE ORDER OF LD. CIT (A) WHICH IS HE REBY CONFIRMED. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 13/06/201 6. SD/- SD/- FOE FLAG ;KNO ( DQY HKKJR ) (VIKRAM SINGH YADAV) ( KUL BHART ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 13/06/2016. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CENTRAL CIRCLE-1, JAIP UR. 2. THE RESPONDENT- SHRI MAHENDRA KUMAR AGARWAL, JAI PUR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 423/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 7 ITA NO. 423/JP/2015 ACIT VS. SHRI MAHENDRA KUMAR AGARWAL.