Sh. Gulzar Singh, Amritsar. V. The Income-tax Officer, Amritsar.

ITA 458/ASR/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8782 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 09-03-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 17-07-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SUBASH MAHAJAN
• Keywords: Retraction
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S. KAPOOR, HONBLE ACCOUNTANT MEMBER [ I.T.A NO.458(ASR)/2014 ASSESSMENT YEAR: 2011-12 GULZAR SINGH, PROP. GULZAR SINGH JEWELLERS 511, ANAND PLAZA MARKET, GURU KA MAHAL, AMRITSAR. PAN:AMZPS4997D VS. ITO, WARD 1 (1), AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. SUBASH MAHAJAN (ADV .) RESPONDENT BY: SH. TARSEM LAL ( DR.) DATE OF HEARING: 09.03. 2016 DATE OF PRONO UNCEMENT: 23.03.2016 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY ASSESSEE AGAINST THE ORD ER OF LEARNED CIT(A), AMRITSAR, DATED 09.07.2014 FOR ASST. YEAR. 2011-12. 2. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL, H OWEVER, THE CRUX OF GROUNDS OF APPEAL IS GRIEVANCE OF ASSESSEE WITH THE ACTION OF LEARNED CIT(A), WHEREBY HE HAS UPHELD THE ADDITION MADE BY ASSESSING OFFICER. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE ASSE SSMENT ORDER ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF GOL D JWELLERY AND DURING THE YEAR UNDER CONSIDERATION HE FILED A RETURN OF I NCOME DECLARING THE TOTAL INCOME OF RS.10,70,850/-. DURING THE ASSESSME NT YEAR AN ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 2 EMPLOYEE OF THE ASSESSEE WAS INTERCEPTED BY THE POL ICE AUTHORITIES WHILE CARRYINGS GOLD JWERELLY AND GOLD OF ABOUT 1.5 KG. F ROM THE EMPLOYEE ONE GOLD VOUCHER ISSUED BY THE ASSESSEE WAS FOUND ACCOR DING TO WHICH ORNAMENTS OF 1280 GMS WERE HANDED OVER TO SH. CHARA NJIT SINGH THE EMPLOYEE OF THE ASSESSEE FOR SALE. AFTER THE GOLD W AS RECOVERED BY THE POLICE AUTHORITIES THEY INFORMED INCOME TAX WING, L UDHIANA AND STATEMENT OF ASSESSEE WAS RECORDED U/S 132 OF THE A CT BY INCOME TAX AUTHORITIES AND IN THE STATEMENT RECORDED, THE ASSE SSEE STATED THAT GOLD INTERCEPTED BY POLICE AUTHORITIES INCLUDED 900 GMS OF GOLD WHICH WAS OUTSTANDING AS STOCK IN TRADE AS ON 31.03.2010 IN H IS BOOKS, HOWEVER, HE TO BUY PIECE OF MIND SURRENDERED THE FULL AMOUNT OF GOLD VALUING APP. RS.24 LACS. VIDE LETTER DATED 29 TH APRIL, 2010, THE ASSESSEE RETRACTED FROM THE SURRENDER AND FILED AFFIDAVIT STATING THEREIN T HAT HE WAS PRESSURIZED TO MAKE A SURRENDER FOR THE FULL VALUE OF GOLD, THE REFORE, IN THE RETURN OF INCOME HE DID NOT INCLUDE THE FULL AMOUNT OF SURREN DER OF 24 LAC BUT INCLUDED RS.9,46,708/- REPRESENTING VALUE OF GOLD I NTERCEPTED MINUS THE VALUE OF GOLD AS PER BOOKS OF ACCOUNT. THE ASSESSIN G OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT ASSE SSEE SHOULD HAVE INCLUDED THE TOTAL AMOUNT OF SURRENDER OF RS.24 LAC S, THEREFORE, HE WAS SHOW CAUSED AS TO WHY THE ADDITION SHOULD NOT BE MA DE FOR THE AMOUNT OF RS.24 LACS. THE ASSESSEE AGAIN SUBMITTED THAT HE HAD HANDED OVER ALL STOCK OF GOLD LAYING IN SHOP TO HIS EMPLOYEE AND NO THING WAS IN THE SHOP FOR SALE AND THEREFORE, OUT OF TOTAL VALUE OF GOLD INTERCEPTED BY POLICE, THE ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 3 VALUE OF STOCK LAYING AS 31.03.2010 HAS BEEN REDUCE D. THE ASSESSING OFFICER, HOWEVER DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE AND MADE AN ADDITION OF RS.24 LACS. 4. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LEARN ED CIT(A). AND THE LEARNED CIT(A) DID NOT BELIEVE THE CONTENTIONS OF T HE ASSESSEE, HOWEVER, HE REDUCED FROM THE ADDITION OF RS.24 LACS, THE AMO UNT OF RS.9,46,708/- WHICH THE ASSESSEE HAD ALREADY INCLUDED IN HIS RETU RN OF INCOME. 5. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 6. AT THE OUTSET, LEARNED AR EXPLAINING THE FACTS O F THE CASE SUBMITTED THAT ON 7 TH OF APRIL 2010 THE EMPLOYEES OF ASSESSEE WERE CARRYING CERTAIN GOLD JEWELLERY AND WHO WERE INTERC EPTED BY POLICE AND REVENUE AUTHORITIES ALSO ARRIVED AND THEREFORE THE STATEMENT OF ASSESSEE WAS RECORDED UNDER SECTION 132 OF THE ACT ON 08/04/ 2010. HE SUBMITTED THAT ASSESSEE SURRENDERED RS. 24 LACS BEING THE VAL UE OF JEWELLERY HOWEVER LATER ON VIDE LETTER DATED 29/04/2010 RETRA CTED WITH REGARD TO SAID SURRENDER. HE SUBMITTED THAT ASSESSEE ALSO FIL ED AN AFFIDAVIT EXPLAINING THAT THERE WAS PRESSURE ON HIM AND OUT O F CONFUSION HE HAD MADE A SURRENDER. HE SUBMITTED THAT OUT OF TOTAL GO LD BEING CARRIED OUT BY THE EMPLOYEES STOCK OF 900 GM OF GOLD WAS IN STO CK AS PER BOOKS OF ASSESSEE WHICH FACT WAS VERIFIABLE FROM THE TRADING ACCOUNT FOR THE YEAR ENDING 31 ST OF MARCH 2010 WHEREIN THE TOTAL VALUE OF CLOSING S TOCK OUTSTANDING WAS 941.326 GMS. INVITING OUR ATTENTION TO THE STATEMENT ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 4 RECORDED LD. AR TOOK US TO PAGE OF 5 OF THE STATEM ENT AND SUBMITTED THAT IN REPLY TO THE QUESTION REGARDING 900 G OF GO LD THE ASSESSEE HAD SUBMITTED THAT THIS WAS INCLUDED IN THE GOLD JEWELL ERY INTERCEPTED FROM HIS EMPLOYEES AND THEREFORE LD. AR ARGUED THAT ASSE SSEE IN THE VERY 1 ST STATEMENT HAD MADE IT CLEAR THAT GOLD INTERCEPTED I NCLUDED GOLD OF APPROXIMATELY 900 GM WHICH WAS APPEARING IN THE BOO KS OF ACCOUNTS THEREFORE ASSESSEE HAD RIGHTLY RETRACTED FROM THE S TATEMENT OF SURRENDER AND HAD RIGHTLY INCLUDED THE BALANCE AMOUNT OF SURR ENDER IN THE RETURN OF INCOME AFTER REDUCING THE STOCK IN HAND. INVITI NG OUR ATTENTION TO LETTER OF ASSESSEE DATED 29/04/2010 MAKING RETRACTI ON FROM THIS SURRENDER OUR ATTENTION WAS ALSO INVITED TO AN AFFI DAVIT FILED BY ASSESSEE WHEREIN THE ASSESSEE HAD STATED THAT REVENUE AUTHOR ITIES HAD THREATENED HIM AND HAD FORCED HIM TO MAKE FULL SURRENDER OF AM OUNT OF GOLD INTERCEPTED BY THE POLICE . THE LD. AR FURTHER SUBM ITTED THAT ASSESSEE WAS A SMALL-TIME TRADER AND HAD NO SHOWROOM OF HIS OWN AND HE USED TO SELL JEWELLERY LIKE THIS ONLY. INVITING OUR ATTENTI ON TO VARIOUS CIRCULARS ISSUED BY CBDT THE LD. AR SUBMITTED THAT CBDT HAS D IRECTED ITS OFFICERS TIME AND AGAIN THAT THEY SHOULD NOT TAKE A DVANTAGE OF IGNORANCE OF AN ASSESSEE AND IT WAS ONE OF THE DUTIES OF OFFI CERS TO ASSIST A TAXPAYER IN EVERY REASONABLE WAY TO PAY TAXES ON THE CORRECT INCOME LD. AR IN THIS RESPECT INVITED OUR ATTENTION TO CIRCULAR NO. 014 ( XL-35) THE LD. AR FURTHER ARGUED THAT ADDITION ON THE BASIS OF ADMISS ION IN THE STATEMENT CANNOT BE MADE AND RELIANCE IN THIS RESPECT WAS PLA CED ON THE CASE LAW ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 5 OF PULLANGODE RUBBER PRODUCE CO. LTD. VS. STATE OF KERLA 91 ITR 0018 WHEREIN THE HONBLE SUPREME COURT HELD THAT THOUGH ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE BUT IT CAN NOT BE SAID THAT IT IS CONCLUSIVE AND IT WAS OPEN TO A PERSON WHO MADE THE ADMISSION TO SHOW THAT IT WAS INCORRECT. THE LD. AR FURTHER PLACED RE LIANCE ON A NUMBER OF CASE LAWS FOR THE PROPSOTION THAT ADDITION CANNOT B E MADE ON THE BASIS OF STATEMENT RECORDED. 7. THE LD. DR ON THE OTHER HAND SUBMITTED THAT ASSE SSEE HIMSELF IN THE STATEMENT RECORDED HAD SURRENDERED THE AMOUNT O F JEWELLERY INTERCEPTED WHEN BEING TRANSPORTED AND THERE WAS NO PRESSURE APPLIED ON HIM AND HE HAD SURRENDERED AT HIS OWN. THE ARGU MENT OF LD. AR THAT THE STOCK LAYING IN THE BOOKS OF ACCOUNT HAS TO BE DEDUCTED FROM THE GOLD JEWELLERY INTERCEPTED IS NOT CORRECT AS IN ALL HUMA N PROBABILITY IT IS NOT POSSIBLE THAT A PERSON WILL CARRY HIS ENTIRE STOCK FOR SALE AND NOTHING WILL BE THERE IN THE SHOWROOM AND THEREFORE ASSESSING OF FICER AND LEARNED CIT(A) HAS RIGHTLY DEALT WITH THE ISSUE. 8. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ONLY DI SPUTE IN THIS CASE IS AS TO WHETHER THE JEWELLERY INTERCEPTED BY POLICE AUTH ORITIES INCLUDED THE CLOSING STOCK OF 900 GM WHICH WAS IN STOCK AS ON 31 /03/2010 AS PER BOOKS OF ACCOUNTS OF THE ASSESSEE OR NOT. IT IS AN UNDISPUTED FACT THAT 941 GM OF JEWELLERY WAS LAYING AS PER THE TRADING A CCOUNT AS ON ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 6 31/03/2010. IT IS ALSO AN UNDISPUTED FACT THAT ASSE SSEE DURING THE COURSE OF RECORDING OF 1 ST STATEMENT HAD SUBMITTED THAT THE 900 GM OF GOLD JEWELLERY WHICH WAS LAYING IN STOCK WAS INCLUD ED IN THE GOLD JEWELLERY INTERCEPTED. IN THIS RESPECT IT IS RELEV ANT TO REPRODUCE THE ANSWERS TO QUESTIONS AS RECORDED BY REVENUE AUTHORI TIES ON 08/04/2010. QUESTION:- WHAT IS STOCK-IN-HAND IN YOUR BOOK AS O N DATE? ANSWER:- 900 GRAM (NINE HUNDRED GRAMS.) QUESTION:- WHERE IS IT NOW ? ANSWER:- THIS IS INCLUDED IN THE GOLD JEWELLERY FOU ND FROM MY EMPLOYEE YESTERDAY AND IS THE SUBJECT MATTER OF THE IR PROCEEDINGS. 9. FROM THE ABOVE ANSWER TO QUESTIONS RAISED BY REV ENUE AUTHORITIES IT IS FOUND THAT ASSESSEE IN THE VERY 1 ST STATEMENT HAD PLEADED THAT THE JEWELLERY INTERCEPTED INCLUDED THE STOCK AS PER BOO KS OF ACCOUNTS. THOUGH IN THE SAME STATEMENT THE ASSESSEE SURRENDER ED THE TOTAL AMOUNT OF RS.24 LACS REPRESENTED BY THE TOTAL VALUE OF JEWELLERY, YET ON 29/04/2010 THE ASSESSEE FILED AN AFFIDAVIT ALONG WI TH THE LETTER TO COMMISSIONER OF INCOME TAX AMRITSAR STATING THEREIN THAT HE WAS FORCED TO SURRENDER THE ENTIRE AMOUNT. THE REVENUE AUTHORI TIES DID NOT FURTHER INVESTIGATE THE CLAIM OF ASSESSEE THAT 900 GM OF GO LD WHICH WAS STOCK IN TRADE AS PER BOOKS WAS INCLUDED IN THE INTERCEPTED GOLD. THE STATEMENT RECORDED ON 8 TH APRIL 2010 CANNOT BE SAID TO BE AN AFTERTHOUGHT AS IT IS THE 1 ST EVER STATEMENT WHEREIN THE ASSESSEE HAD SUBMITTED THAT GOLD INTERCEPTED INCLUDED THE GOLD WHICH WAS LAYING IN T HE BOOKS OF ACCOUNTS. ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 7 THEREFORE THE SURRENDER OF AMOUNT OF ENTIRE AMOUNT OF RS. 24 LAKH IS NOT JUSTIFIED AS ASSESSEE HAD ALREADY DECLARED AT THE 1 ST AVAILABLE MOMENT THAT THE GOLD INTERCEPTED INCLUDED THE GOLD AS PER BOOKS OF ACCOUNTS OF ASSESSEE AND REVENUE AUTHORITIES DID NOTHING TO COU NTER THE CLAIM OF ASSESSEE EITHER DURING RECORDING OF STATEMENT OR AF TER THE ASSESSEE FILED RETRACTION LETTER. 10. THE ADDITION MADE BY ASSESSING OFFICER AND FURT HER SUSTAINED BY LD. CIT(A) IS BASED UPON THE PRESUMPTIONS THAT IT I S NOT POSSIBLE FOR A PERSON TO CARRY HIS ENTIRE STOCK FOR SALE IN A DIFF ERENT DISTRICT. THE PRESUMPTION IS BASED UPON HUMAN PROBABILITY THAT IN THE ORDINARY COURSE OF BUSINESS NO BUSINESS MAN WILL CARRY HIS E NTIRE STOCK WITH HIM FOR SALE AND WE ARE IN AGREEMENT WITH THE ARGUMENTS OF LEARNED DR IN THIS RESPECT. THEREFORE, IN ALL FAIRNESS TO BOTH PA RTIES WE DEEM IT APPROPRIATE THAT 50% OF STOCK AS ON 31.03.2010 BE T REATED AS PART OF GOLD JEWELLERY INTERCEPTED BY THE POLICE AUTHORITIES AND ASSESSEE BE GIVEN THE BENEFIT ACCORDINGLY AND IN THIS WAY ASSESSEE IS ENT ITLED FOR RELIEF @ 50% OF THE ADDITION SUSTAINED BY LEARNED CIT(A). 11. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD MARCH, 2016. SD/- SD/- (A.D. JAIN) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED:23.03.2016. /PK/ PS. ITA NO.458 (ASR)/2014 ASST. YEAR:2010-11 8 COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.