Shri Narendra Kumar Simhal, Bhopal V. The ITO 1 (2), Bhopal

ITA 474/Ind/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 3178 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-09-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 22-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: N D PATWA ADVS
• Keywords: Set aside
• Section: 143(3); 142(1); 133A; 143(2); 207

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.474/IND/2018 ASSESSMENT YEAR: 2013-14 NARENDRA KUMAR SIMHAL (HUF) PROP:- M/S ALANKAR JEWELLERS, 30, ROSHANPURA, T.T. NAGAR, BHOPAL / VS. ITO-1(2) BHOPAL ( APPELLANT ) ( RE VENUE ) PAN: AACHN2629G APPELLANT BY SHRI ASHISH GOYAL & SHRI N.D. PATWA , ADVS RE VENUE BY SHRI K . G . GO YAL , SR. DR DATE OF HEARING: 25.11.2019 DATE OF PRONOUNCEMENT: 29.11.2019 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL AT THE INSTANCE OF ASSESSEE PERTAINING TO A.Y. 2013-14 IS DIRECTED AGAINST THE ORDER OF COMMISSION ER OF INCOME TAX(APPEALS), BHOPAL, (IN SHORT CIT), DATED 27.03 .2018 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME T AX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 25. 02.2016 BY ITO- 1(2), BHOPAL. NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 2 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL: 1.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING THE BILL FOR RS.12,23,675/- TOWARDS PURCHASE OF DIAMOND JEWELLER Y AND IN CONFIRMING THE DIFFERENCE AMOUNT OF RS.12,23,675/- AS WAS STATED BY ASSESSING OFFICER. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE DIFFEREN CE AMOUNT OF RS.12,23,675/- TOWARDS PURCHASES OF DIAMOND JEWELLE RY WHILE ACCEPTING THE GROSS PROFIT ON THE DIAMOND SALE. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER AND/ OR TO MODIFY THE GROUNDS OF APPEAL ON OR BEFORE THE DATE OF HEAR ING. 3. FROM PERUSAL OF THE ABOVE GROUNDS WE FIND THAT S OLE ISSUE RELATES TO ADDITION OF RS.12,23,675/- TOWARDS PURCHASE OF D IAMOND JEWELLERY. 4. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS AND CONFINED TO THE IMPUGNED ADDITION OF RS. 12,23,675/- ARE THAT T HE ASSESSEE IS A HINDU UNDIVIDED FAMILY(HUF) RUNNING SOLE PARTNERSHI P CONCERN TO M/S ALANKAR JEWELLERS ENGAGED IN JEWELLERY BUSINESS . SURVEY U/S 133A WAS CONDUCTED ON 23.01.2013. DURING THE COURSE OF SURVEY ASSESSEE SURRENDERED RS.6 CRORES TOWARDS UNDISCLOSE D INCOME AND AGREED TO OFFER IN THE INCOME TAX RETURN. SUBSEQUEN TLY, THE ASSESSEE FILED E-RETURN OF INCOME ON 27.09.2013 DEC LARING INCOME OF RS.8,01,66,140/-. NOTICES U/S 143(2) & 142(1) OF TH E ACT DULY SERVED UPON THE ASSESSEE. LD. AO WHILE EXAMINING TH E RECORDS VIZ- A-VIZ SURRENDER OFFERED IN THE RETURN OF INCOME OBS ERVED THAT DURING THE COURSE OF SURVEY ASSESSEE SURRENDERED RS.1,70,2 8,253/- ON ACCOUNT OF UNDISCLOSED DIAMOND JEWELLERY WHEREAS IN THE PROFIT AND NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 3 LOSS ACCOUNT SURRENDER HAS BEEN MADE ONLY FOR RS.1, 18,92,894/-. ASSESSEE WAS ASKED TO EXPLAIN ABOUT THE ALLEGED DIF FERENCE OF RS.51,35,359/-. IN REPLY ASSESSEE SUBMITTED THAT RS .38,14,359/- IS THE GROSS PROFIT ELEMENT WHICH WAS PART OF THE GOO DS VALUED AT MARKET PRICE AND THEREFORE, THE SAME NEEDS TO BE D EDUCTED TO ARRIVE AT THE CORRECT COST OF INVESTMENT IN UNDISCL OSED STOCK. REMAINING AMOUNT OF RS.12,23,675/- IS ON ACCOUNT OF PURCHASE BILL ISSUED BY LAXMI DIA JEWELS P. LTD. WHICH WAS NOT AC COUNTED FOR IN THE BOOKS. HOWEVER, LD. AO WAS NOT CONVINCED AND HE MADE AN ADDITION OF RS.51,35,359/- AND ASSESSED INCOME AT RS.8,53,01,499/-. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE LD . CIT(A) AND PARTLY SUCCEEDED AS THE PLEA OF THE ASSESSEE FOR GR OSS PROFIT ELEMENT OF RS.38,14,359/- IN THE UNDISCLOSED STOCK WAS ACCE PTED AND THE ADDITION WAS DELETED BUT ADDITIONS TOWARDS UNACCOUN TED PURCHASE OF RS.12,23,675/- WAS CONFIRMED. 6. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L AGAINST THE IMPUGNED ADDITION OF RS.12,23,675/-. 7. LD. COUNSEL FOR THE ASSESSEE MADE FOLLOWING WRIT TEN SUBMISSIONS: 1. THE PURCHASES CAN BE VERIFIED FROM FOLLOWING DOC UMENTARY EVIDENCES:- THE RETAIL INVOICE DATED 05.11.2012 AMOUNTING TO RS . 12/23/675/- (PB 67-68) THE LEDGER ACCOUNT OF LAXMI DIA JEWEL PVT LTD FROM NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 4 WHOM THE DIAMOND SETTED JEWELLERY (IMPUTED) WAS PURCHASED AMOUNTING TO RS. 12/23/675/- IS ON PB 70. THE LEDGER CONFIRMATION IN BOOKS OF LAXMI DIA JEWEL PVT LTD IS ALSO ON PB 72 SHOWING THE GENUINE PURCHA SES. THE ID LOWER AUTHORITIES CHOOSE NOT TO VERIFY THE F ACT FROM 'LAXMI DIA JEWEL PVT LTD. 2. THE WORKING OF JAWAHART ACCOUNT AS PER ASSESSEE IS ON PB 47. 3. ADDITION BASED ON SURRENDER DURING SURVEY IS UNJUST IFIED:- THE HON'BLE KERALA HIGH COURT IN PAUL MATHEWS & SONS V. CIT [2003J 181 CTR (KER.) 207 : [2003J 263 ITR 101 (KER.) HAS HELD THAT THE STATEMENT RECORDED UNDER S. 133A HAS NO EVIDENTIARY VALUE. THE SAME VIEW HAS BEEN REITERATED RECENTLY BY THE H ON'BLE MADRAS HIGH COURT IN THE CASE OF CIT V. S. KHADER K HAN SON [2008J 214 CTR (MAD.) 5~9 : [2008J 300 ITR 157 (MAD.) HOLDING THAT S. 133A DOES NOT EMPOWER ANY IT AUTHOR ITY TO EXAMINE ANY PERSON ON OATH AND HENCE SUCH STATEMENT HAS NO EVIDENTIARY VALUE AND ANY ADMISSION MADE IN SUCH STATEMENT CANNOT, BY ITSELF, BE MADE HE BASIS FOR A DDITION. IT IS PERTINENT TO NOTE THAT THE SLP AGAINST THE S. KADER KHAN'S CASE WAS DISMISSED BY SUPREME COURT VIDE ORD ER [2013] 352 ITR 480 (SC)/[2012] 254 CTR 228 (SC) 8. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE (DR) VEHEMENTLY ARGUED SUPPORTING THE ORDERS OF THE LOWER AUTHORITI ES AND ALSO SUBMITTED THAT THE ALLEGED PURCHASE OF RS.12,23,675 /- WAS DULY ENTERED IN THE BOOKS OF LAXMI DIA JEWELS P. LTD. ON 05.11.2012 WHEREAS IN THE ASSESSEES BOOKS IT WAS ENTERED AFTE R THE DATE OF SURVEY I.E. 24.1.2013. THE LD. DR CONTENDED THAT BO TH THESE ENTRIES NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 5 OUGHT TO HAVE BEEN ENTERED ON THE SAME DAY, THEREFO RE, THE FINDING OF BOTH LOWER AUTHORITIES ARE CORRECT THAT THE ASSE SSEE AS AN AFTERTHOUGHT INCREASED THE PURCHASE AMOUNT. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US AND CAREFULLY GONE THROUGH THE JUDGMENT R EFERRED AND RELIED BY THE LD. COUNSEL FOR THE ASSESSEE. THE ISS UE IS CONFINED TO THE ADDITION OF RS.12,23,675/- MADE BY THE LD. AO A ND CONFIRMED BY THE LD. CIT(A) FOR THE VERY REASON THAT THE PURC HASE BILL AMOUNTING TO RS.12,23,675/- WAS NOT FOUND AT THE BU SINESS PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVE Y. THE ASSESSEE HAS DID NOT GAVE ANY INFORMATION DURING SURVEY PROC EEDINGS ABOUT ANY SUCH PURCHASE NOT ENTERED IN THE REGULAR BOOKS OF ACCOUNTS. THE REVENUE HAS ALSO ALLEGED THAT IT WAS ONLY DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS THAT THE ASSESSEE CAME UP WI TH STORY ABOUT THE PURCHASE BILL OF RS.12,23,675/- WHICH SEEMS TO BE AN AFTERTHOUGHT AND SUCH CLAIM TO BE DENIED. 10. IT IS SETTLED POSITION OF LAW, AS HELD BY HON'B LE APEX COURT CONFIRMING THE VIEW TAKEN BY HON'BLE MADRAS HIGH CO URT IN THE CASE OF CIT VS. S. KHADER KHAN SON (SUPRA) THAT THE STATEMENT ON RECORDED U/S 133A OF THE ACT HAVE NO EVIDENTIARY VA LUE AND THE SAME CANNOT BE MADE AS A BASIS FOR ADDITION. IT IS ALSO SETTLED A LAW THAT SURRENDERED AMOUNT MADE BY AN ASSESSEE DURING THE COURSE OF SURVEY SHOULD BE CORRELATED WITH THE MATERIAL EVIDE NCE FOUND NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 6 DURING THE COURSE OF SURVEY AND NOT JUST THE STATEM ENT RECORD DURING THE COURSE OF SURVEY. 11. IN THE INSTANT CASE THE ISSUE RELATES TO PURCHA SE OF RS.12,23,675/-. THIS PURCHASE AMOUNT WAS NOT INCLUD ED IN THE PURCHASE BOOK AT THE TIME OF SURVEY. THE PURCHASE B ILL WAS ALSO NOT FOUND BY THE SURVEY TEAM AND ASSESSEE ALSO DID NOT GAVE ANY INFORMATION RELATING THERETO. THESE WERE THE REASON S FOR WHICH THE ADDITIONS HAVE BEEN CONFIRMED BY BOTH THE LOWER AUT HORITIES BUT THE QUESTION REMAINS THAT WHEN THE ASSESSEE HAS FILED T HE COPY OF PURCHASE BILL BEFORE THE LOWER AUTHORITIES WHICH IN THIS CASE IS BILL ISSUED BY THE LAXMI DIA JEWELS P. LTD., MUMBAI, INV OICE NO.1377/12-13 DATED 05.11.2012 HAVING COMPLETE DETA ILS ABOUT GROSS WEIGHT AND THE ITEMS BEING PART OF THE TOTAL GROSS WEIGHT OF 155.930 GMS, WHETHER BOTH THE LOWER AUTHORITIES WER E JUSTIFIED IN IGNORING SUCH EVIDENCE WITHOUT VERIFYING ITS GENUIN ENESS. 12. WE FIND THAT THE ASSESSEE HAS GIVEN DETAILS OF INVOICES, DEBIT NOTES, LEDGER ACCOUNT OF ASSESSEE IN THE BOOKS OF L AXMI DIA JEWELS P. LTD. THE ALLEGED ENTRIES OF RS.12,23,675/- DULY APPEARS IN THE LEDGER ACCOUNT OF LAXMI DIA JEWELS P. LTD. ENTERED ON 05.11.2012. HOWEVER, ASSESSEE MADE THE ENTRY IN ITS BOOKS OF AC COUNTS ON 24.01.2013 I.E. THE DAY AFTER THE SURVEY DATE. IT I S NOT SO THAT THE ASSESSEE MADE THE STORY OF THE ALLEGED PURCHASE AMO UNT OF RS.12,23,765/- ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. THE FACT IS THAT IN THE AUDITED FINANCIAL STATEMENT S THIS ENTRY HAS NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 7 BEEN DULY INCORPORATED SINCE THERE IS NO BALANCE OF LAXMI DIA JEWELS P. LTD. AT THE END OF THE YEAR AND THE AMOUN T HAS BEEN SQUARED OFF. THE PAYMENTS FOR THE PURCHASE FROM LAX MI DIA JEWELS P. LTD. ARE ALWAYS THROUGH ACCOUNT PAYEE CHEQUE AND THE LAST PAYMENT IS ON 24.03.2013 I.E. BEFORE THE END OF THE FINANCIAL YEAR 2012-13 WHICH IS MUCH BEFORE THE COMMENCEMENT OF AS SESSMENT PROCEEDINGS FROM 12.02.2014. THE ASSESSEE HAS ALSO FILED RECONCILIATION STATEMENT TO EXPLAIN THE DETAILS OF TOTAL DIFFERENCE OF RS.1,70,30,928/- WHICH IS PLACED AT PAGE 47 OF THE PAPER BOOK. BOTH THE LOWER AUTHORITIES OUGHT TO HAVE ALSO CONSI DERED THE ISSUE IN THE ENTIRETY OF THE CASE WHICH IN OUR VIEW IS TH AT THE ASSESSEE MADE A SURRENDER OF RS.6 CRORES DURING THE COURSE O F SURVEY AND EXCEPT FOR THE ALLEGED DIFFERENCE OF PURCHASE BILL OF RS.12,23,765/- AND THE GROSS PROFIT ELEMENT OF RS.39,14,359/-, THE REMAINING AMOUNT HAS BEEN DULY OFFERED TO TAX. ADDITION FOR G ROSS PROFIT AT RS.39,14,359/- ALREADY STANDS DELETED BY LD. CIT(A) . THERE SEEMS NO MENS REA ON THE PART OF THE ASSESSEE TO EVADE THE TAX BY TH E ALLEGED PURCHASE AMOUNT OF RS.12,23,675/- WHICH IS TOO SMALL IN COMPARISON TO THE TOTAL SURRENDER AMOUNT ACCEPTED D URING THE COURSE OF SURVEY AND SUBSEQUENTLY MAJOR AMOUNT OFFE RED TO TAX. 13. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTA NCES OF THE CASE AND AFTER EXAMINING THE PURCHASE BILL, LEDGER ACCOU NT OF THE SUPPLIER, ENTRIES OF THE ALLEGED PURCHASE IN THE BO OKS OF ACCOUNTS WHICH FINALLY COMES INTO SHAPE FORMING PART OF AUDI TED FINANCIAL STATEMENTS, ARE OF THE CONSIDERED VIEW THAT BOTH LO WER AUTHORITIES NARENDRA KUMAR SIMHAL (HUF) ITANO.474/IND/2018 8 SHOULD HAVE ACCEPTED THE ASSESSEEES CONTENTION FOR THE PURCHASE OF RS.12,23,675/- WHICH INADVERTENTLY REMAINED TO BE E NTERED IN THE BOOKS OF ACCOUNTS FOR BONA FIDE REASON. THE SAID PURCHASE SEEMS TO BE GENUINE PURCHASE AND THE CLAIM SHOULD BE ALLOWED BY THE AUTHORITIES BELOW. THUS, FINDING OF BOTH THE LOWER AUTHORITIES NEEDS TO BE SET ASIDE AND THE ADDITION OF RS.12,23,675/- IS DIRECTED TO BE DELETED. GROUND NO.1 & 2 OF THE ASSESSEES APPEAL A RE ALLOWED. GROUND NO.3 IS GENERAL IN NATURE WHICH NEEDS TO ADJ UDICATION. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29.11.2 019. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 29/11/2019 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR