SMT Hina Mudgal, Kanpur V. Income TAx Officer I (2), Kanpur

ITA 452/LKW/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70566 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 3 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-11-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 21-10-2013
• Assessment Year: misc
• Appeal Filed On: 22-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GARG SHRI AJAY KUMAR
• Keywords: Business income
• Section: 142(1); 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.164/LKW/2011 ASSESSMENT YEAR:2006 - 07 & ITA NO.452/LKW/2011 ASSESSMENT YEAR:2007 - 08 SMT. HINA MUDGAL, PROP. M/SFOOD BY ATTNIS, 24/31, BIRHANA ROAD, KANPUR. PAN:ABXPM1472A VS. INCOME TAX OFFICER - 1(2), KANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY SHRI RAKESH GARG, ADVOCATE RESPONDENT BY SHRI AJAY KUMAR, D.R. DATE OF HEARING 24/10/2013 DATE OF PRONOUNCEMENT 1 3 /1 1 /2013 O R D E R PER A. K. GARODIA, A.M. THESE TWO APPEALS, FILED BY THE ASSESSEE, ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LEARNED CIT(A) - II, KANPUR DATED 23/12/2010 FOR ASSESSMENT YEAR 2007 - 2007 AND 18/04/2011 FOR ASSESSMENT YEAR 2007 - 2008. SINCE COMMON ISSUE IS INVOLVED IN BOTH THESE APPEA LS, BOTH THESE 2 APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST WE WILL TAKE UP APPEAL IN I.T.A.NO.164/LKW/2011 FOR ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, THE ASSESSEE HAS RAISED THE FO LLOWING GROUNDS: 1. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING AN ADDITION OF RS.3,26,021/ - ON ACCOUNT OF SUPPRESSED SALES, WHICH ADDITION IS CONTRARY TO FACTS, BAD IN LAW AND BE DELETED. 2. BECAUSE THE CIT(A) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HELD THAT THE DIFFERENCE BETWEEN THE FIGURES OF SALES AS FOUND IN THE PREMISES OF J. S. TOWER AND AS RECORDED BY THE ASSESSEE ARE THE SUPPRESSED SALES OF THE ASSESSEE. 3. BECAUSE THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING AN ADDITION OF RS.1,20,000/ - BEING AMOUNT PAYABLE TOWARDS RENT. 4. BECAUSE THE ORDER PASSED BY THE CIT(A) IS BAD IN LAW AND BE SET ASIDE. 3. THE BRIEF FACTS, TILL THE ASSESSMENT STAGE REGARDING THE FIRST ISSUE RAIS ED BY THE ASSESSEE AS PER GROUND NO. 1 AND 2, ARE NOTED BY THE LEARNED CIT(A) IN PARA NO. 301 OF HIS ORDER, WHICH ARE REPRODUCED AS UNDER: '3.1 THE ASSESSING OFFICERS FINDING IN THIS REGARD IS AT PARA NO. 4 OF THE ASSESSMENT ORDER, WHICH IS AS FOLLOWS: 3 3. THE CASE OF THE ASSESSEE HAS BEEN SELECTED FOR SCRUTINY AS PER ACTION PLAN PRESCRIBED BY THE BOARD, NOTICE U/S 143(2) DATED 19.10.2007 ISSUED AND SERVED ON 19.10.07 FIXED FOR HEARING ON 29.10,2007. SUMMON U/S 131 DATED 22.10,2007 WAS ALSO ISSUED REQUIR ING THE ASSESSEE TO APPEAR IN PERSON AND TO FURNISH INFORMATION AND DOCUMENTS AS DESIRED THEREIN ON 24.10.2007. SUBSEQUENTLY, NOTICE U/S 142(1) DATED, 26.11.2008 GIVING DETAIL QUESTIONNAIRE WAS AGAIN ISSUED ALONG WITH SUMM ON DATED 10.12.2008. IN RESPONSE TO ABOVE NOTICES AND SUMMONS SHRI S. K. BAJPAI, FCA ATTENDED ALONG WITH SHRI MANOJ MUDGAL, MANAGER (HUSBAND OF THE ASSESSEE), STATEMENT OF SHRI MANOJ MUDGAL WAS RECORDED U/S 131 ON 22.12.2008 IN PRESENCE OF LEGAL REPRESENTATI VE OF M/S J.S. TOWER. THE COPY OF STATEMENT HAS BEEN GIVEN TO THE ASSESSEE AND ALSO TO THE LEGAL REPRESENTATIVE OF THE M/S J. S. TOWER. SINCE THE ASSESSEE ENTERED INTO JOINT VENTURE AGREEMENT WITH M/S J. S. TOWER AND AS PER THE JOINT AGREEMENT, THE ASSESSE E WAS RUNNING RESTAURANT AND ALSO ORGANIZING PARTY AT 8 TH FLOOR OF TOWER - A AT THE PREMISES OF M/S J. S. TOWER, 16/106, THE MALL, KANPUR . FURTHER AS PER THE TERMS OF JOINT VENTURE OF JOINT AGREEMENT, THE ASSESSEE HA S TO MAKE PAYMENT ON BASIS OF SALES APART FROM THE PAYMENT ON ACCOUNT OF ELECTRICITY CHARGES AND RUNNING AND MAINTENANCE OF AIR CONDITIONING FACILITY TO M/S J.S. TOWER. IN VIEW OF THIS THE ASSESSEE HAD TO FURNISH DETAILS OF ITS SALE TO M/S J.S. TOWER, DURING THE COURSE OF SURVEY CONDUCTED BY THE DEPARTMENT IN THE OFFICE OF M/S J.S. TOWER, THE DETAILS OF SALE SUBMITTED BY THE ASSESSEE TO M/S J.S, TOWER WERE FOUND RECORDED IN 23 PAGES OF THE ANNEXURE - B , WHICH WAS IMPOUNDED. THE CERTIFIED X E ROX COPY OF 23 PAGES WERE PROVIDED TO THE ASSESSEE AND HIS 4 E XPLANATION WAS SOUGHT DURING THE COURSE OF STATEMENT RECORDED ON 22.12.2008 . 3.1 THE IMPOUNDED DOCUMENTS CONTAIN THE DATE VISE CASH AND CREDIT COUNTER SALE AND ALSO SALE BY WAY OF BOOKING. THE TOTAL VALUE OF SALE MADE DURING THE F.Y. 05 - 06 , AS SHOWN IN TH E IMPOUNDED DOCUMENTS , WORK OUT TO RS. 57,53,536 / - AS AGAINST TOTAL SALES OF RS.51,01,494/ - DECLARED AFTER EXCLUDING THE LIABILITY ON ACCOUNT OF TRADE TAX. THUS, THE ASSESSEE HAS SUPPRESS ED SALES BY RS.6,52,042/ - . THE ASSESSEE COULD NOT RECONCILE THE DIFFERENCE IN THE SALE IN HIS STATEMENT GIVEN ON 22.12.2008. THE ASSESSEE HAS SUBMITTED HIS WRITTEN REPLY 24.12.2008. AS PER THE RECONCILIATION STATEMENT IT HAS BEEN SUBMITTED THAT THE NET DIFFERENCE COMES TO RS.6,90,7 28/ - AS PER ASSESSEE'S BOOKS OF ACCOUNTS. IT WAS ALSO CLAIM ED THAT AT THE EXCESS SALE SHOWN AS PER THE IMPOUNDED DOCUMENT DID NOT PERTAIN TO THE ASSESSEE. 3.2 THE FIGURES OF SALE WERE ALSO CONFRONTED WITH THE REPRESENTATIVE OF THE M/S J.S. TOWER WHO HAD G IVEN LETTER TO THE EFFECT THAT ENTIRE SALE PERTAINS TO THE SALE MADE BY M/S FOOD BY ATTINS WHO WERE GIVEN RIGHTS TO RUN THE DERBY RESTAURANT AND M/S J. S. TOWER HAD ONLY TO TAKE PAYMENT ON THE BASIS OF SALES MADE BY THE ASSESSEE. FURTHER ASSESSEE HAS HIMSE LF ADMITTED THAT IT HAD BEEN RUNNING DERBY RESTAURANT AND ALSO ORGANIZING PARTY AT 08 TH FLOOR OF T OWER - A OF M/S J. S. TOWER. APART FROM THE STATEMENT GIV EN BY SHRI MANOJ MUDGAL, THE DOCUMENTARY EVIDENCE THAT ASSESSEE HAD BEEN ORGANIZING PARTIES AT 08 TH FLOOR WAS FOUND IN THE SHAPE OF ELECTRICITY CONSUMPTION REGISTER WHICH WAS IMPOUNDED FROM THE BUSINESS PREMISES OF THE ASSESSES. IT GIVE N COMPLETE DAY TO DAY METER READING OF THE DERBY RESTAURANT AT 5 08 TH FLOOR ON THE BASIS OF WHICH ASSESSES HAD BEEN MAKING PAYMENT TO M/S J.S, TOWER FOR CONSUMPTION OF ELECTRICITY. IN VIEW OF THIS IT IS HELD THAT ENTIRE SALE MADE ON THE DERBY RESTAURANT AS WELL AS PAYMENT RECEIVED FR OM ORGANIZATION PARTY AT 8 TH FLOOR WERE MADE BY THE ASSESSES AND WAS NOT FULLY DECLARED IN HER INCOME TAX RETURN. 4. IN VIEW OF FORGOING FACTS, THE SALE OF RS.57,53,537/ - FOUND AS PER IMPOUNDED DOCUMENTS REPRESENTING CASH AND CREDIT COUNTER SALE AND RECEIPT BY BOOKING IS HELD TO BE THAT OF THE ASSESSED FOR THE YEAR UNDER CONSIDERATION AS AGAINST WHICH THE ASSESSEE HAS DECLARED THE SALE OF RS.51,01,494/ - . THUS , ASSESSEE HAS SUPPRESS ED SALES OF RS.6,52,042/ - WHICH IS BEING ADDED TO HER INCOME ON ACCOUNT OF SUPPRESSION OF SALE. THE ASSESSEE HAS ALSO FURNISHED INACCURATE PARTICULAR S OF HER INCOME , THER EFORE , PENALTY PROCEEDING U/S 271(1)(C) IS ALSO INITIATED.' 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED CIT(A) WHO HAS HELD THAT SALES OF RS.6,52,040/ - WAS LESS ACCOUNTED FOR BY THE ASSESSEE BUT HE ALLOWED THE RELIEF OF 50% ON THIS BASIS THAT ONLY PROFIT ELEMENT OF UNACCOUNTED SALES HAS TO BE ADDED. IN THIS MANNER , HE UPHELD THE ADDITION OF 50% OF THIS AMOUNT TO THE EXTENT OF RS.3,26,021/ - . NOW THE ASSESSEE IS FURTHER IN APP EAL BEFORE THE TRIBUNAL FOR THE PART ADDITION UPHELD BY LEARNED CIT(A). 5. IT IS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT AS PER THE STATEMENT MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER BY WAY OF LETTER DATED 24/12/2008, WHICH IS AVAILABLE AT PAGE NO. 62 AND 63 OF THE PAPER BOOK, IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE ASSESSING OFFICER 6 THAT ON DEMAND BY THE REPRESENTATIVE OF M/S J. S . TOWAR, THE SALES FIGURE HAS BEEN GIVEN TO THEM ON THE SAME DAY OR NEXT DAY DULY SIGNED BY THE ACCOUNTANT ON THE LAST PAGE, WHICH WAS GENERATED FROM THE COMPUTER. IT WAS FURTHER SUBMITTED THAT NO SUCH SIGNED COPY OF SALES STATEMENT GIVEN BY THE ASSESSEE TO M/S J. S . TOWAR WAS FOUND OR BROUGHT ON RECORD AND IN THAT SITUATION , IT IS NOT CLEAR AS TO ON WHAT BASI S , ENTRIES WERE MADE BY M/S J. S . TOWAR REGARDING THE SALES OF THE ASSESSEE. HE ALSO SUBMITTED THAT THE STATEMENT OF THE HUSBAND OF THE ASSESSEE SHRI MANOJ MUDGAL IS AVAILABLE ON PAGES 7 TO 11 OF THE PAPER BOOK, WHICH WAS RECORDED ON 22/12/2008. IN PARTI CULAR, OUR ATTENTION WAS DRAWN TO PAGE NO. 11 OF THE PAPER BOOK WHERE IT IS NOTED BY THE ASSESSING OFFICER THAT A COPY OF THE STATEMENT IS HANDED OVER TO M/S J. S . TOWAR AND DIRECTED TO SUBMIT THE EXPLANATION IN THE OFFICE OF DY. CIT, RANGE - 1 AND INCOME TA X OFFICER, WARD - 1(2), KANPUR. IT WAS NOTED THEREIN THAT THE COPY OF THE EXPLANATION SHOULD ALSO BE EXCHANGED BY THE ASSESSEE AND M/S J. S. TOWAR TO GIVE THEIR COMMENTS FOR THE CONTRARY STATEMENT GIVEN BY THEM. THE CASE WAS ADJOURNED FOR 24/12/1989. IT W AS SUBMITTED THAT INSPITE OF THIS, NO EXPLANATION WAS SUBMITTED BY M/S J. S .TOWAR AND ASSESSING OFFICER ALSO DID NOT MAKE ANY EFFORT TO OBTAIN EXPLANATION FROM M/S J. S .TOWAR AND SIMPLY MADE THE ADDITION ON THE BASIS OF FIGURES PROVIDED BY THEM BEING COMPU TER PRINT OUT. HE SUBMITTED THAT SUCH AN ADDITION, ON THE BASIS OF S O ME PAPERS FOUND FROM SOME OTHER OFFICE, IS NOT JUSTIFIED. 6. THE LEARNED D.R. SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND HAVE ALSO GONE THROUGH THE ORDERS OF THE 7 AUTHORITIES BELOW. WE FIND THAT THE COPY OF MATERIAL, ON THE BASIS OF WHICH THE ADDITION WAS MADE BY THE ASSESSING OFFICER, BEI NG THE SEIZED MATERIAL, IS AVAILABLE ON PAGE NO. 18 TO 36 OF THE PAPER BOOK. THESE ARE MONTH - WISE STATEMENT OF SALE OF THE ASSESSEE IN THE FORM OF COMPUTER PRINTOUT STATED TO BE PROVIDED BY M/S J. S . TOWAR AND PAPER SEIZED FROM THE PREMISES OF M/S J. S .TO WAR AND NOT FROM THE PREMISES OF THE ASSESSEE. AS PER THE NOTING OF THE ASSESSING OFFICER ON PAGE NO. 11 OF THE PAPER BOOK, THE ASSESSEE AS WELL AS M/S J. S.TOWAR WERE ASKED TO SUBMIT THEIR EXPLANATION AND ALSO COMMENTS REGARDING EXPLANATION OF THE OTHER S IDE. THE ASSESSING OFFICERS FINDING IN THE ASSESSMENT ORDER WERE REPRODUCED BY THE LEARNED CIT(A) IN HIS ORDER IN PARA 3.1, WHICH IS REPRODUCED BY US ABOVE ALSO AND IN THE SAME , IT IS STATED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS SUBMITTED WRITTE N REPLY BUT THERE IS NO MENTION REGARDING ANY REPLY SUBMITTED BY M/S J. S.TOWAR AS WAS REQUIRED AS PER THE NOTING OF THE ASSESSING OFFICER IN THE STATEMENT OF SHRI MANOJ MUDGAL RECORDED ON 22/12/2008 AND AS PER THIS NOTING OF THE ASSESSING OFFICER, M/S J. S.TOWAR WAS ALSO REQUIRED TO SUBMIT THE EXPLANATION ON 24/12/2008. IT APPEARS THAT NO SUCH REPLY WAS SUBMITTED BY M/S J. S.TOWAR AND NO EFFORTS WERE MADE BY THE ASSESSING OFFICER TO OBTAIN THE EXPLANATION REGARDING THE STATEMENT OF SALES OF THE ASSESSEE P ROVIDED BY THEM, WHICH IS NOT MATCHING WITH THE ASSESSEE. WITHOUT OBTAINING THE EXPLANATION OF THE PERSON FROM WHOSE PREMISES, THE MATERIAL WAS FOUND AND SEIZED, THE SAME CANNOT BE USED AGAINST THE PRESENT ASSESSEE PARTICULARLY WHEN THE ASSESSING OFFICER HIMSELF HAS ASKED THAT PARTY TO GIVE EXPLANATION AND THEREA FTER, NO EFFORTS WERE MADE BY THE ASSESSING OFFICER TO OBTAIN SUCH EXPLANATION FROM M/S J. S.TOWAR. UNDER THESE FACTS, WE ARE OF THE 8 CONSIDERED OPINION THAT THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT JUSTIFIED AND WE, THEREFORE, DELETE THE SAME. 8. REGARDING GROUND NO. 3 IN ASSESSMENT YEAR 2006 - 2007, IN REPLY TO THE QUERY OF THE BENCH, IT WAS CONCEDED BY THE LEARNED A.R. OF THE ASSESSEE THAT THIS ISSUE WAS NOT RAISED BEFORE THE CIT(A) AND THUS, THIS GROUND RAISED BEFORE US IS NOT MAINTAINABLE BECAUS E THIS ISSUE WAS NOT RAISED BEFORE LEARNED CIT(A) AND IT IS NOT A LEGAL ISSUE BUT FACTUAL ISSUE AND THEREFORE, IT CANNOT BE RAISED BY WAY OF ADDITIONAL GROUND. HENCE, GROUND NO. 3 IS REJECTED. IN THE RESULT, THE APPEAL FOR ASSESSMENT YEAR 2006 - 2007 STAN DS PARTLY ALLOWED. 9. NOW WE SHALL TAKE UP APPEAL IN I.T.A.NO.452/LKW/2011 FOR THE ASSESSMENT YEAR 2007 - 2008. IN THIS APPEAL , THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. BECAUSE THE CIT(APPEALS) HAS ERRED ON FACTS AND IN LAW IN UPHOLDING THE ADDI TION OF RS.2,38,990/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNACCOUNTED/UNDISCLOSED SALES NOT ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. 2. BECAUSE THE CIT(APPEALS) HAS FAILED TO APPRECIATE THE FACTS AND CIRCUMSTANCES OF THE CASE AND HAS ARBITRARILY HEL D THAT THE AMOUNT OF RS.2,38,990/ - IS UNDISCLOSED SALES OF THE APPELLANT AND HENCE UNDISCLOSED INCOME LIABLE TO TAX. 3. BECAUSE ON A PROPER CONSIDERATION OF FACTS AND CIRCUMSTANCES OF THE CASE, IT WOULD BE FOUND THAT THE ADDITION OF RS.2,38,990/ - MADE ON ACCOUNT OF UNDISCLOSED INCOME OF THE ASSESSEE IS BAD IN LAW AND BE DELETED. 9 10. BOTH THE SIDES AGREED THAT THE FACTS FOR BOTH THE YEARS ARE IDENTICAL AND HENCE, THIS ISSUE IN ASSESSMENT YEAR 2007 - 2008 SHOULD BE DECIDED ON SIMILAR LINES AS PER THE DECISION IN ASSESSMENT YEAR 2006 - 2007. IN THAT YEAR , WE HAVE DELETED THE ADDITION AS PER PARA 7 ABOVE . ACCORDINGLY , FOR THE PRESENT YEAR ALSO, THE ADDITION IS DELETED ON SIMILAR LINE. IN THE RESULT, THIS APPEAL IS ALLOWED. 11. IN THE RESULT, THE APPE AL FOR ASSESSMENT YEAR 2006 - 2007 IS PARTLY ALLOWED AND FOR ASSESSMENT YEAR 2007 - 2008 IS ALLOWED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) S D / . SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL ME MBER ACCOUNTANT MEMBER DATED: 1 3 / 1 1 / 2 0 1 3 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. DR, ITAT, LUCKNOW ASSTT. REGISTRAR