Ambalal Jain, Dowlaiswaram V. THE ITO, WARD - 4, Rajahmundry

ITA 465/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6734 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-07-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D J P ANAND
• Keywords: Unexplained investment; Income from undisclosed sources
• Section: 142(1); 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM SMC BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO, HON'BLE JUDICIAL MEMBER ITA NO. 465 / VIZ /201 4 (ASST. YEAR : 20 06 - 07 ) AMBALAL JAIN, PROP. M/S. SETH AMBALAL BABOOTHMAL , D.NO. 13 - 93, BEHIND POLICE STATI O N, DOWLESWARAM. VS. IT O , WARD - 4, RAJAHMUNDRY. PAN NO. ABPPJ 6668 M (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI D.J.P. ANAND - SR. DR DATE OF HEARING : 10 / 0 8 /201 7 . DATE OF PRONOUNCEMENT : 31 / 0 8 /201 7 . O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), RAJAHMUNDRY , DATED 20 /0 6 /201 4 FOR THE ASSESSMENT YEAR 2006 - 07 . 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIVIDUAL , IN WHOS E CASE A SU RVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE 'ACT') WAS CONDUCTED BY THE DEPARTMENT ON 24/10/2005. DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE FOLLOWING DISCREPANCIES WERE NOTICED: - . 2 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) 1) PLEDGED ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT 8,55,275/ - 2) UNRECORDED GOLD JEWELLERY ITEMS WEIGHING 565.960 GRAMS 2,20,720/ - 3) DIFFERENT IN CASH FOUND 2,557/ - 4) UNRECORDED INVESTMENT IN SHARES 53,250/ - IN REGARD TO THE ABOVE DISCREPANCIES, THE ASSESSEE OFFERED AN ADDITIONAL INCOME OF 3,17,360/ - , HOWEVER, IN THE RETURN OF INCOME FILED, THE ASSESSEE DID NOT OFFER ANY ADDITIONAL INCOME. THE ASSESSING OFFICER HAS ISSUED A QUESTIONNAIRE ALONG WITH THE NOTICE UNDER SECTION 142(1) ON 02/06/2008 WHEREIN , ASSESSEE WAS A S KED TO SHOW - CAUSE AS TO WHY THE DISCREPANCIES POINTED OUT SHOULD NOT BE TREATED AS INCOME FROM UNDISCLOSED SOURCES . IN RESPONSE THERETO, THE ASSESSEE VIDE HIS REPLY DATED 28/10/2008 HAS SUBMITTED THAT IN HIS FATHERS CASE A SURVEY OPERATION WAS CONDUCTED ON 17/09/1999 . I N THE COURSE OF THOS E PROCEEDINGS, VOLUNTARILY CAME FORWARD AND OFFERED ADDITIONAL INCOME. THE ASSESSEE CL A IMED THAT THE ADDITIONAL INCOME WAS OFFERED IN THE YEAR 1999 , THE DISCREPANCIES POINTED OUT IN 2005 ARE ONE AND THE SAME AND NEED NOT BE TAXED AGAIN. THE ASSESSING OFFICER AFTER CONSIDERING THE ABOVE EXPLANATION, HE HAS NOTED THAT A PERU SAL OF THE FINANCIAL STATEMENTS FILED, IT IS CLEARLY EVIDENT THAT THE ASSESSEE BROUGHT THE PLEDGED ARTICLES HAS NOT BEEN RECORDED IN THE BOOKS OF ACCOUNT OF 8,55,275/ - AND UNRECORDED GOLD JEWELLERY WORTH 2,20,720/ - ONLY DURING THE FINANCIAL YEAR RELEVANT TO THE SUBJECT ASSESSMENT YEAR. AFTER A LAPSE OF 6 YEARS, THE ASSESSEE CLAIM ED ABOUT THE BENEFIT OF TELESCOPING BY RECORDING THE ABOVE INVESTMENTS IN THE BOOKS , 3 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) CONSEQUENT TO SURVEY OPERATION CONDUCTED ON 24/10/2005. FURTHER, AS PER THE STATUTE APPLICABLE TO THE PAWN BROKING BUSINESS, THE ASSESSEE IS NOT AUTHOR I ZED TO RETAIN THE PLEDGED ARTICLES FOR A PERIOD OF MORE THAN 3 YEARS. THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED FOR THE REASON THAT FIRST SURVEY TOOKPLACE IN THE YEAR 1999 AND LAT ER SURVEY TOOK PLACE IN THE YEAR 2005. TH E RE IS A GAP OF 6 YEARS. IF THE ASSESSEES CLAIM IS TO BE ACCEPTED, THE ASSESSEE OUGHT TO HAVE BROUGHT THE SAID INVESTMENTS INTO THE BOOKS SOON AFTER THE SURVEY CONDUCTED IN THE YEAR 1999 , WHICH THE ASSESSEE HAS NOT DONE SO. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF 3,17,360/ - IN THE COURSE OF SURVEY ON 24/10/2005 , AGAIN THE ABOVE DISCREPANCIES POINTED OUT AND PAID TAXES OF 75,000/ - , BUT THE ASSESSEE HAS NOT OFFERE D ANY ADDITIONAL INCOME AS SUCH IN THE RETURN FILED. THE ASSESSING OFFICER FURTHER OBSERVED THAT AFTER EXAMINING THE BOOKS OF ACCOUNT , CERTAIN INCRIMINATING MATERIAL AND FINANCIAL STATEMENTS WERE FOUND IN THE BUSINESS PREMISES ON THE DATE OF SURVEY, THE ASSESSEES CLAIM OF TELESCOPING CANNOT BE GIVEN. ACCORDINGLY, ASSESSMENT IS COMPLETED AND THE FO L L O WING AMOUNTS ARE TREATED AS INCOME FROM UNDISCLOSED SOURCE S AND THE SAME IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 1) PLEDGED ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT 8,55,275/ - 2) UNRECORDED GOLD JEWELLERY ITEMS WEIGHING 565.960 GRAMS 2,20,720/ - 3) DIFFERENT IN CASH FOUND 2,557/ - 4) UNRECORDED INVESTMENT IN SHARES 53,250/ - 11,31,802/ - 4 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) 3. ON BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A). IT WAS SUBMITTED THAT THERE WAS A SURVEY CONDUCTED ON 17/09/1999 . I N THE COURSE OF THOSE SURVEY PROCEEDINGS, ASSESSEE VOLUNTARILY C A ME FORWARD AND OFFERED ADDITIONAL INCOME. THE ADDITIONAL INCOME WAS OFFERED IN THE YEAR 1999 , THE DISCREPANCIES POINTED OUT IN SUBSEQUENT SURVEY ON 24/10/2005 ARE ONE AND THE SAME AND NEED NOT BE TAXED AGAIN. THE LD. CIT(A) AFTER CONSIDERING THE EXPLANATION OF THE ASSESSEE, CONFIRMED THE ORDER OF THE ASSESSING OFFICER BY OBSERVING AS UNDER: - 4.2 I HAVE CONSIDERED THE CONTENTIONS RAISED AND THE SUBMISSIONS MADE. AT THE OUTSET, IT IS AN ADMITTED POSITION THAT DISCREPANCIES TO THE TUNE OF 11,31,802/ - WAS NOTICED DURING THE SURVEY IN THE ASSESSEES CASE ON 24/10/2005. IT IS SEEN THAT TAKING INTO ACCOUNT THE ADDITIONAL INCOME OFFERED BY THE ASSESSEES FATHER FOR A.Y. 1999 - 2000 AND 2000 - 2001 , TO THE TUNE OF RS.7,63/792/ - THE ASSESSEE HAS OFFERED ADDITIONAL INCOME OF RS.3,17,360/ - IN THE SURVEY PROCEEDINGS. HOWEVER, THIS ADDITIONAL INCOME WAS NOT OFFERED IN THE RETURN FILED. THE BURDEN IS ON THE ASSESSEE TO PROVE THE SOURCES FOR THE ABOVE REFERRED INVESTMENTS NOTICED DURING THE SURVEY. THE ASSESSEE HAS CLAIMED THE SOURCE TO BE THE ADDITIONAL INCOME OFFERED BY THE ASSESSEE'S FATHER WITH REGARD TO THE UNACCOUNTED PLEDGED ARTICLES AND WHICH WERE NOT CREDITED IN THE BOOKS OF ACCOUNT SUBSEQUENTLY. IT WAS ALSO STATED THAT THEY WERE NOT CREDITED IN THE BOOKS OF ACCOUNT DUE TO FAMILY DISPUTE BUT SOME ARTICLES WERE RELEASED AND THE AMOUNTS CIRCULATED. THE ASSESSEE HAS NOT ADDUCED ANY EVIDENCE TO SHOW THAT THE SOURCE FOR THE INVESTMENTS/ADVANCES WERE OUT OF SUCH RELEASED ARTICLES/ADVANCES. NOT EVEN AN IOTA OF EVIDENCE WAS PRODUCED GIVING DETAILS OF REALIZATION OF UNACCOUNTED PLEDGED ARTICLES NOTICED EARLIER AND HOW THEY FORM PART OF THE PRESENT UNACCOUNTED ADVANCES/INVESTMENTS, EVEN AFTER LAPSE OF SIX YEARS. NO INFORMATION WAS GIVEN AS TO HOW THE ASSESSEE BECAME EXCLUSIVELY ENTITLED TO SUCH INVESTMENTS OF HIS FATHER WHEN THERE WAS SUBSISTING FAMILY DISPUTE. FURTHER, IT IS PERTINENT TO NOTE THAT 5 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) THE ASSESSEE IS SEPARATELY ASSESSED TO TAX, AND DURING THE SURVEY CONDUCTED ON 17.09.1999 UNEXPLAINED INVESTMENTS TO THE TUNE OF RS.3,78,984/ - INCLUDING PLEDGED ARTICLES OF RS.2,08,984/ - WAS EXPLAINED TO BE RELATED TO THE ASSESSEE. THUS IT CANNOT BE PRESUMED THAT THE VARIATION COULD BE EXPLAINED WITH REFERENCE TO EARLIER PLEDGED ARTI CLES OF FATHER'S BUSINESS. IN THESE FACTUAL SCENARIO, I DO NOT FIND ANY MERIT IN THE CONTENTIONS RAISED AND I AM OF THE VIEW THAT THE AO AS JUSTIFIED IN MAKING THE IMPUGNED ADDITION. 4 . ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN APPEAL BEFORE THE TRIBUNAL. 5 . LEARNED COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THERE WAS A SURVEY CONDUCTED IN THE YEAR 1999 AND SUBSEQUENTLY IN THE YEAR 2005 ALSO SURVEY CONDUCTED. THE ASSESSEE HAS OFF ERED ADDITIONAL INCOME FOR TAXATION AS PER THE DISCREPANCIES POINTED OUT IN 1999 AND AGAIN SAME DISCREPANCIES ARE POINTED OUT IN 2005 AND THEREFORE THE AMOUNT ALREADY OFFERED FOR TAXATION CA N NOT BE OFFERED AGAIN , IT AMOUNTS TO DOUBLE TAXATION. 6 . ON THE OTHER HAND, L EARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 7 . I HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW . 8 . THERE IS A SEARCH CONDUCTED IN THE CASE OF ASSESSEE ON 24/10/2005. THE SURVEY TEAM HAS POINTED OUT THE FOLLOWING DISCREPANCIES: - 1) PLEDGED ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNT 8,55,275/ - 2) UNRECORDED GOLD JEWELLERY ITEMS WEIGHING 565.960 G RAMS 2,20,720/ - 6 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) 3) DIFFERENT IN CASH FOUND 2,557/ - 4) UNRECORDED INVESTMENT IN SHARES 53,250/ - DURING THE COURSE OF SURVEY PROCEEDINGS, THE ASSESSEE VIDE HIS LETTER DATED 07/11/2005 VOLUNTARILY CAME FORWARD AND OFFERED ADDITIONAL INCOME OF 3,17,360/ - AND PAID AN ADVANCE TAX OF 70,000/ - FOR THE ASSESSMENT YEAR 2006 - 07. SUBSEQUENTLY, THE ASSESSEE HAS FILED A RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 ON 06/02/2007 ADMITTING TAXABLE INCOME OF 1,23,7 73/ - . THE ASSESSING OFFICER HAS ISSUED NOTICE UNDER SECTION 142(1) AND ASKED THE ASSESSEE TO EXPLAIN THE REASONS WHY THE INCOME ADMITTED DURING THE COURSE OF SURVEY IS NOT OFFERED FOR TAXATION. THE ASSESSEE HAS SUBMITTED THAT THERE WAS A SURVEY IN THE CAS E OF ASSESSEES FATHER IN THE YEAR 1999 AND OFFERED ADDITIONAL INCOME FOR TAXATION. S UBSEQUENTLY A SURVEY CONDUCTED IN 2005, HE SUBMITTED THAT THE DISCREPANCIES POINTED OUT ARE ONE AND THE SAME FOR THE YEAR 1999 AND THE YEAR 2005 , T HEREFORE, SAME SHOULD BE TAX ED AGAIN. THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SHOW THAT THE DISCREPANCIES POINTED OUT IN THE YEAR 1999 AND IN 2005 ARE ONE AND THE SAME. THE ASSESSING OFFICER BY CONSIDERING THE BOOKS OF ACCOUNT, FINANCIAL STATEMENTS AN D ADMISSION MADE BY THE ASSESSEE DURING THE COURSE OF SURVEY, ASSESSMENT IS COMPLETED. ON APPEAL LD. CIT(A) CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER BY OBSERVING THAT THE ASSESSEE HAS NOT FILED ANY EVIDENCE TO SHOW THAT THE DISCREPANCIES ARE PO INTED OUT IN THE YEAR 1999 AND 2005 ARE ONE AND THE SAME. EVEN 7 ITA NO. 465/VIZ/2014 (AMBALAL JAIN) BEFORE THE TRIBUNAL , THE ASSESSEE IS NOT FILE D ANY EVIDENCE TO SHOW THAT THE DISCREPANCIES ARE POINTED OUT IN THE YEAR 2005 AND ADMITTED BY THE ASSESSEE ARE SAME , AS SURVEY CONDUCTED ON 17/09/1999. IN THE ABSENCE OF EVIDENCE , I FIND THAT ASSESSEE HAVING ACCEPTED THE ADDITION DURING THE COURSE OF SURVEY AND PAID ADVANCE TAX BY SUBMI TTING THAT HE IS READY TO PAY THE TAX AS POINTED OUT BY THE DEPARTMENT , BUT FAILED T O OFFER THE SAME FOR TAXATION. I FIND TH A T THE ASSESSING OFFICER BY CONSIDERING THE BOOKS OF ACCOUNT, FINANCIAL STATEMENTS AND SURVEY REPORT, HAS COMPLETED THE ASSESSMENT, WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). IN VIEW OF THE ABOVE FACTS AND CIRCUMS TANCES OF THE CASE, I FIND NO INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THUS, THIS APPEAL FILED BY THE ASSESSEE IS DISMISSED. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF AUGUST , 201 7 . SD/ - ( V. DURGA RAO ) JUDICIAL MEMBER DATED : 31 ST AUGUST , 201 7 . VR/ - COPY TO: 1. THE ASSESSEE - AMBALAL JAIN, PROP. M/S. SETH AMBALAL BABOOTHMAL, D.NO. 13 - 93, BEHIND POLICE STATION, DOWLESWARAM. 2. THE REVENUE ITO, WARD - 4, RAJAHMUNDRY. 3. THE CIT, RAJAHMUNDRY. 4. THE CIT(A), VISAKHAPATNAM. 5. THE D.R. , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SENIOR PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.