Dy. Commissioner Of Income Tax (Central)-1, Indore, Indore V. M/s Pumarth Commodities Pvt. Ltd. Indore, Indore

ITA 455/Ind/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7480 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 10-01-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 16-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASHIMA GUPTA
• Keywords: Income from undisclosed sources; Search and seizure; Document seized; Documents seized
• Section: 143(3); 142(1); 153A; 132; 2

Judgement Text

PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.455/IND/2017 ASSESSMENT YEAR 2013-14 REVENUE BY SMT. ASHIMA GUPTA, CIT ASSESSEE BY S/SHRI SUMIT NEMA, SR.ADV & GAGAN TIWARI, ADV. DATE OF HEARING 10.01.2019 DATE OF PRONOUNCEMENT 11 .01.2019 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2013-14 AND IS DIREC TED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- 3 (IN SHORT LD.CIT(A)], INDORE DATED 28.03.2017 WHICH IS ARIS ING OUT OF THE DE PUTY COMMISSIONER OF INCOME TAX (CENTRAL)-1 INDORE VS. M/S. PUMARTH COMMODITIES PVT. LTD, 5/5A, NAVRATAN BAGH, OPP. GEETA BHAWAN SQUARE, BEHIND VISHESH HOSPITAL, INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. AADCP5381K PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 2 ORDER U/S 143(3) OF THE INCOME TAX ACT 1961(IN SHOR T THE ACT) DATED 16.03.2014 FRAMED BY DCIT(CENTRAL)-I, INDORE. 3. REVENUE HAD RAISED FOLLOWING GROUNDS OF APPEAL; ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LEARNED CIT(APPEALS) ERRED IN DELETING THE ADDITION MADE BY THE A.O. OF RS.1,70,77,904/- ON ACCOUNT OF UNACCOUNTED INCOME FROM UNDISCLOSED SOUR CE WITHOUT APPRECIATING THE FACTS AND EVIDENCES BROUGHT INTO L IGHT BY THE A.O DURING ASSESSMENT PROCEEDINGS. 4. BRIEF FACTS OF THE CASE AS CULLED OUT FROM THE R ECORDS ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS AS COMMODIT Y BROKER. RETURN OF INCOME FOR ASSESSMENT YEAR 2013-14 WAS FI LED ON 30.09.2013 DECLARING INCOME OF RS.49,55,360/-. NOT ICES U/S 143(2) WAS ISSUED ON 30.06.2004. QUESTIONNAIRE ALONG WITH NOTICE U/S 142(1) WAS ALSO ISSUED ON 04.08.2014 AND SERVED UPO N THE ASSESSEE. SEARCH AND SEIZURE OPERATIONS U/S 132 WER E CARRIED OUT ON THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE APOLLO GROUP OF INDORE INCLUDING THE ASSESSEE ALONG WITH OTHER CONCERNS/BUSINESS ASSOCIATES ON 21.09.2012. SINCE THE SEARCH OPERATIONS WERE CARRIED OUT SIMULTANEOUSLY AND MOST OF THE CONCERNS AND INDIVIDUALS ARE INTERCONNECTED AND H AVE BUSINESS PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 3 CONNECTIONS, THEY HAVE BEEN CLUBBED UNDER THE OVERA LL NAME APOLLO (PUMARTH) GROUP OF INDORE. THE ASSESSEE COMPANY IS ONE OF THE COMPANIES OF PUMARTH GROUP OF INDORE. THE COMPANY W AS INCORPORATED ON 04.10.2004 AND AS PER MEMORANDUM OF ASSOCIATION, THE COMPANY IS A REGISTERED COMMODITY BROKER WITH MCX AND NCDEX. ASSESSMENT U/S 153A R.W.S. 143(3) WA S COMPLETED ON 16.03.2015 AFTER MAKING AN ADDITION OF RS.1,70,77,904/-. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND SUCCEEDED. 6. NOW THE REVENUE IS IN APPEAL AGAINST THE DELETIO N OF ADDITION MADE BY THE LD.A.O. 7. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUE D AND SUPPORTED THE ORDER OF LD. A.O. 8. THE LD. COUNSEL FOR THE ASSESSEE SUPPORTING THE FINDING OF LD. CIT(A) SUBMITTED THAT THE ALLEGED AMOUNT OF RS.1,70 ,77,904/- HAS BEEN DULY ACCOUNTED FOR IN THE REGULAR BOOKS OF ACC OUNTS AND THEY RELATES TO BANK FIXED DEPOSIT OF RS.1.70 CRORES AND ACCRUED INTEREST PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 4 ON FD AT RS.77,904/-. 9. WE HAVE HEARD RIVAL CONTENTIONS AND RECORDS PLAC ED BEFORE US. REVENUE IS AGGRIEVED WITH THE DELETION OF ADDITION OF RS.1,70,77,904/- WHICH WAS MADE BY LD. A.O TREATING THE SUM AS UNACCOUNTED INCOME FROM UNDISCLOSED SOURCES. THIS ADDITION MADE BY THE LD.A.O HAVE ITS NEXUS FROM PAGE NO.62 O F LPS-B1/5 FOUND DURING THE COURSE OF SEARCH IN WHICH AMOUNT O F RS.1,70,77,904/- WAS APPEARING. THESE DOCUMENTS WA S SEIZED FROM THE OFFICE PREMISES OF THE ASSESSEE AND IT WAS OBLIGATORY ON THE PART OF THE ASSESSEE TO EXPLAIN AT THE TIME OF SEA RCH BUT THE ASSESSEE FAILED AT THAT POINT OF TIME. EVEN THOUGH THE ASSESSEE CONTENDED BEFORE THE LD. A.O DURING THE COURSE OF A SSESSMENT PROCEEDINGS THAT THE ALLEGED AMOUNT RELATES TO THE FIXED DEPOSIT RECEIPTS OF CANARA BANK BUT THE SAME WERE NOT ACCEP TED BY THE LEARNED ASSESSING OFFICER WHICH LEAD TO THE ADDITIO N. 10. SUBSEQUENTLY WHEN THE ASSESSEE CAME IN APPEAL B EFORE THE LD. CIT(A) ALL THE RELATED DOCUMENTS ALONG WITH THE COP Y OF TWO FIXED DEPOSIT RECEIPTS OF RS.50,00,000/- EACH AND PREMATU RE REDEMPTION OF FDR OF RS.70,00,000/- AS WELL AS DETAILS OF ACC RUED INTEREST ON PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 5 FDR AT RS.77,904/- WERE PLACED BEFORE LD.CIT(A). T HE IMPUGNED ADDITION WAS DELETED BY LD.CIT(A) OBSERVING AS FOLL OWS; 4. DURING THE ASSESSMENT PROCEEDINGS THE APPELLAN T FILED THE FOLLOWING SUBMISSION:- 'B3.14 THE PAPER IN QUESTION IS A ROUGH DOCUMENT - WHICH WAS PROBABLY BEING USED FOR PREPARING A ROUGH STATEMENT OF CASH FLOW AVAILABLE WITH THE ASSESSEE GROUP, TO PAY TO THE BO OKS ON THE DEALERS MENTIONED ABOVE BY A JUNIOR ACCOUNTANT. THE_PAPER AS SUCH IS OF NO IMPORTANCE AS THE SAME I S MERELY FOCUSING ON THE AVAILABLE CASH RESERVES IN VARIOUS FLIES FOR MAKING THE NECESSARY PAYMENTS FOR EXCHANGE DEALINGS. IN FACT THE AMOUNT RS. 1,70,00,000/- MENTIONED AGAI NST THE ASSESSEE'S NAME IS THE AMOUNT OF FDR WITH CANARA BA NK, SIYAGANJ BR., INDORE HELD BY THE COMPANY IN WHICH THE ACCRUE D INTEREST AMOUNT OF RS. 77,904/ - IS FURTHER SHOWN. .. 4.1 THE ASSESSING OFFICER HELD THAT THE APPELLANT HAD FAILED TO EXPLAIN THE ENTRIES ON THE SAID DOCUMENT. HE ALSO D ID NOT ACCEPT THE APPELLANT'S CONTENTION THAT THE SAID ENTRY IS RELAT ED TO THE FDR WITH CANARA BANK AS NO DOCUMENTARY EVIDENCE WAS FILED TO JUSTIFY THE SAID CLAIM. 4.2 THE APPELLANT HAS SUBMITTED IN THE APPEAL PROCE EDINGS THAT THE SEIZED PAGE NO. 62 OF LPS-B 1 /5 IS A DUMB DOCUMENT AND NO COGNIZANCE CAN BE TAKEN UNLESS IT HAS CORRELATION O F THE UNDISCLOSED INCOME OF THE APPELLANT. FURTHER, NO QUESTIONS WERE ASKED DURING THE SEARCH REGARDING THE SAID PAGE. RELIANCE HAS BE EN PLACED ON THE PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 6 DECISIONS OF DELHI HIGH COURT IN CIT VS. S .M AGARW AL (293 ITR 43) AND BOMBAY HIGH COURT IN THE CASE OF CIT VS. LATA MANGESHWAR (96 ITR 696) (BORN.). 4.3 FIRST AND FOREMOST, THE ISSUE OF EVIDENTIARY VA LUE OF THE SEIZED PAGE NO.62 OF LPS-B1/5 IS BEING DEALT WITH. IT IS SEEN THAT ON THE SAID SEIZED DOCUMENTS DATES FROM 21/06/2012 TO 03/0 7/2012 ARE MENTIONED IN THE FIRST COLUMN. IN THE NEXT 10 COLUM NS 10 ENTITIES WITH INITIALS ARE MENTIONED. IN COLUMN 11 IT S WRIT TEN 'PCPL' WHICH STANDS FOR PUMARTH COMMODITIES PVT. LTD., THE APPEL LANT. FOR THESE 11I COLUMNS AMOUNTS ARE MENTIONED AGAINST TOTAL IN THE BOTTOM ROW. UNDER PCPL IS WRITTEN 17077904. IN THE 12TH COLUMN, TOTAL CASH RECEIVED IS MENTIONED AGAINST VARIOUS DATES (SHORT PERIOD OF 13 DAYS FROM 21/06/2012 TO 03/07/2012) AND THE TOTAL IS WRI TTEN AS RS 12,61,94,000. THIS FIGURE IS HOWEVER INCORRECT AND THE CORRECT TOTAL COMES TO RS 13,61;94,000. IN THE 13 TH COLUMN UNDER THE HEAD 'OTHER' AN AMOUNT OF RS 68,40,000 IS WRITTEN AGAINS T 28.6.2012. IN THE 14 TH ' COLUMN 'TOTAL RECD' IS SHOWN AND THE TOTAL IS RS 51,60,29,454. THIS IS THE CORRECT TOTAL OF ALL BOTT OM ROW ENTRIES OF COLS. 1 TO 13 (BY TAKING TOTAL OF COL. 12 AT CORREC T FIGURE OF RS 13,61,93,600). THE NEXT COL. 15 IS TITLED 'PAID' AN D MENTIONS TOTAL PAYMENT OF RS 51,87,06,923.01 TO 'DESAI (MUM) AND R AJESH (MUM) MUMBAI'. THE LAST COLUMN (COL.16) IS TITLED 'DIFF A ND MENTIONS:AMOUNT OF RS. 28,77,469.06. THE AMOUNTS RE CORDED ARE PRECISE TO THE LAST RUPEE. 4.3.1 IN THE WRITTEN SUBMISSIONS FILED BY THE GROUP BEFORE THE INVESTIGATION WING DURING POST SEARCH INQUIRIES AND IN THE REPLY GIVEN TO THE QUESTIONNAIRE ISSUED BY THE ASSESSING OFFICER, THIS SEIZED PAPER WAS EXPLAINED AS A 'ROUGH DOCUMENT' PR EPARED BY THE ACCOUNTANT TO WORK OUT CASH FLOW AVAILABLE WITH THE GROUP. PUMARTH COMMODITIES PVT.LTD ITA NO.455/IND/2017 7 4.3.2 THE APPELLANT AND THE OTHER GROUP MEMBERS SUB MITTED BEFORE THE HON'BLE SETTLEMENT COMMISSION IN THE SOF THAT T HE BOTTOM ROW ENTRIES AGAINST 10 'ENTITIES OF'