ITO, Mathura V. Shri Madan Lal Agarwal, Mathura

ITA 476/AGR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7059 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 23-12-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: APPLICATION REJECTED
• Keywords: Business income; Income from undisclosed sources; Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE SHRI P.K. BANSAL, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 476/AGRA/2009 ASSTT. YEAR : 2005-06 INCOME-TAX OFFICER, VS. SHRI MADAN LAL AGARWAL, 3(2), MATHURA. PROP. M/S. BHAGWATI ABHUSHAN BH ANDAR, 520, CHATTA BAZAR, MATHURA. (PAN : AAWPA 0076C) (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI A.K. SHARMA, JR. D.R. FOR RESPONDENT : APPLICATION REJECTED ORDER PER P.K. BANSAL, A.M. : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER DATED 23.09.2009 OF CIT(A), AGRA BY TAKING FOLLOWING GROUNDS : 1. THAT THE CIT(APPEALS) -1, AGRA HAS ERRED IN LA W AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.4,58,758/- MADE ON ACCOUNT OF SALE OF 97.428 KGS SILVER ORNAMENTS THROUGH BILL NO. 1 TO 2 5, DATED 01.05.2004 TO 25.05.2004, IGNORING THE FAT THAT THE SILVER ORNAME NT SHOWN AS SOLD, WERE NOT IN POSSESSION OF THE ASSESSEE ON THE SAID DATES. 1(A). BY DOING SO, THE CIT(APPEALS)-I, AGRA HAS ER RED IN OBSERVING WHILE DELETING THE ABOVE ADDITION THAT THE AMOUNT SHOWN A S SALES, WERE ACTUALLY THE ADVANCE RECEIVED FROM THE CUSTOMERS, IGNORING THE F ACT THAT IT WAS CASH SALES SHOWN IN BILLS AS WELL IN THE CASH BOOK AND NO WHER E FACT WAS ADVANCE WAS MENTIONED IN THE BOOKS OF ACCOUNT, AS ALSO THE NAME S OF PARTIES TO WHOM THE SALES WERE MADE WERE MENTIONED ON THE BILLS OR IN THE CAS H BOOK. 1(B). BY DOING SO, THE CIT(APPEALS)-1, AGRA HAS ER RED IN OBSERVING THAT NO INQUIRIES WERE MADE WITH THE PURCHASERS IN ORDER TO ESTABLISH THAT THE ASSESSEE DID NOT MAKE THE IMPUGNED SALES TO THEM IGNORING TH E FAT THAT IT WAS THE CASE SALES AND PARTICULARS OF THE PURCHASERS WERE MENTIONED ON BILLS AS WELL AS IN THE CASH BOOKS. 2. THAT THE CIT(APPEALS)-1, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS. 1,95,284/- MADE ON ACCOUNT OF SALE OF 2 SILVER WEIGHING 97.482 KGS IGNORING THE FACTS MENTI ONED IN THE ASSESSMENT ORDER AND THE FACT THAT THIS SILVER WAS SOLD AFTER THE RE LEASE OF SILVER BY THE DEPARTMENT AND HAS NOT DISCLOSED THE GROSS PROFIT OF THE SALE OF THIS SILVER. 3. THAT THE CIT(A)-1, AGRA HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN DELETING THE ADDITION OF RS.65,123/- MADE O N ACCOUNT OF EXTRA PROFIT BY APPLYING GROSS PROFIT, IGNORING THE FACT THAT THE B OOKS OF ACCOUNTS OF THE ASSESSEE WERE NOT RELIABLE IN VIEW OF FACTS MENTIONED IN THE ASSESSMENT ORDER AND THE FACT THAT THE ASSESSEE HAS SHOWN BOGUS SALES OF SILVER O RNAMENTS WHICH WERE NOT IN POSSESSION. 2. BRIEF FACTS RELATING TO GROUND NO. 1 ARE THAT IN THE ASSESSMENT PROCEEDINGS, ON EXAMINATION OF SALE BILLS, SILVER SALES ACCOUNT AND CASH BOOK IN PERSONAL SET OF BOOKS OF ACCOUNT, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD MADE SALE OF 97.428 KG. SILVER ORNAMENTS FOR RS.4,58,758/- THROUGH BILL NO. 1 TO BILL NO. 25 ISS UED BETWEEN 01.05.2004 AND 25.05.2004. THESE SALES WERE SAID TO HAVE BEEN MADE OUT OF THE SILVER ORNAMENTS WEIGHING 920.350 KG. RELEASED TO HIM BY THE INCOME-TAX DEPARTMENT ON 25.05.2004, WHI CH WERE KEPT BY THE DEPARTMENT AS SEIZED MATERIAL DURING THE SEARCH AND SEIZURE OPERATION CO NDUCTED IN EARLIER YEARS. THE ASSESSING OFFICER OBSERVED THAT ONCE, THE ASSESSEE WAS NOT IN POSSESSION OF SILVER ORNAMENTS RELEASED BY DEPARTMENT BEFORE 25.05.2004, HE WAS NOT IN A POSIT ION TO MAKE SALE OF 97.428 KGS SILVER ORNAMENTS OUT OF SUCH SILVER ORNAMENTS BEFORE THE D ATE OF THEIR RELEASE. HE, THEREFORE, HELD THAT THE ASSESSEE HAS SHOWN BOGUS SALE OF SILVER ORNAMEN TS AMOUNTING TO RS.4,58,758/- AND HAS INTRODUCED HIS UNACCOUNTED MONEY IN THE GARB OF SAL E OF SUCH SILVER ORNAMENTS. THE ASSESSING OFFICER, THEREFORE, ADDED THE SUM OF RS.4,58,758/- AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES. 3. IN APPEAL BEFORE THE CIT(A), THE ASSESSEE DISPUT ED THE ADDITION STATING THAT THE ADVANCE IN CASH WAS RECEIVED FROM THE PURCHASERS ON THE SALE O F SILVER ORNAMENTS AGAINST DELIVERY GIVEN AFTER THE RELEASE OF THE ORNAMENTS BY THE DEPARTMEN T. IT WAS ALSO SUBMITTED THAT THE CASH SO 3 RECEIVED IN ADVANCE WAS NOT UTILIZED BY THE ASSESSE E IN ANY MANNER AND WAS KEPT ACCUMULATING IN THE CASH BOOK. THE CIT(A) DELETED THE ADDITION IN T HE FOLLOWING MANNER : I HAVE CONSIDERED THE RIVAL CONTENTIONS AND FIND T HE ADDITION TO BE UNTENABLE SINCE THE AO HAS NOT DOUBTED THE RELEASE OF THE SILVER JE WELLERY BY THE INCOME- TAX DEPARTMENT TO THE APPELLANT ON 25.05.2004, CORR ESPONDING VIRTUALLY TO THE PERIOD OF THE IMPUGNED SALES. NO ENQUIRIES WERE CARRIED OUT WITH THE PURCHASERS I N ORDER TO ESTABLISH THAT THE APPELLANT DID NOT MAKE THE IMPUGNED SALES TO THEM. THERE IS NO EVIDENCE ON RECORD TO PROVE THAT THE BU YERS HAD NOT GIVEN THE IMPUGNED CASH AS ADVANCE TOWARDS THE SALES. UNDER THESE CIRCUMSTANCES, THE INFERENCE OF ROUTING OF UNACCOUNTED MONEY IN THE GUISE OF SALE OF SILVER ORNAMENTS IS NOT JUSTIFIED AND HENCE, THE ADDITION OF RS.4,58,758/- IS HEREBY DELETED. 4. WE HAVE HEARD THE LD. DR AND PERUSED THE MATERIA L AVAILABLE ON RECORD. NONE IS PRESENT ON BEHALF OF THE ASSESSEE. THE ADJOURNMENT APPLICAT ION PLACED ON RECORD STANDS REJECTED BY THE BENCH. WE NOTED THAT THE CONTENTION OF THE ASSESSEE MADE BEFORE THE FIRST APPELLATE AUTHORITY THAT THE CASH WAS RECEIVED IN ADVANCE ON SALE OF SILVER ORNAMENTS AGAINST DELIVERY GIVEN AFTER THE RELEASE OF THE SILVER ORNAMENTS BY THE INCOME-TAX D EPARTMENT, DOES NOT STAND CONTROVERTED. NO ENQUIRIES, WHATSOEVER, HAVE BEEN MADE BY THE REVENU E FROM THE RESPECTIVE PURCHASERS EITHER WITH RESPECT TO THE AMOUNTS ADVANCED BY THEM TO THE ASSESSEE, ITS PURPOSE OR WITH RESPECT TO SALE AND DELIVERY OF GOODS. WE, THEREFORE, FIND NO INFIR MITY IN THE ORDER OF CIT(A) ON THIS COUNT. 5. THE FACTS RELATING TO GROUND NO. 2 ARE THAT THE ASSESSEE MADE SALES OF 92.369 KG. SILVER ORNAMENTS FOR RS.4,33,842/- THROUGH BILL NO. 26 TO 49 ISSUED BETWEEN 26.05.2004 AND 24.06.2004, I.E., THE PERIOD AFTER THE ASSESSEE TOO K POSSESSION OF SAID SILVER ORNAMENTS FROM THE INCOME-TAX DEPARTMENT. THE ASSESSING OFFICER OBSERV ED THAT THE PROFIT OF RS.2,25,697/- WAS, THEREFORE, MADE ON THE SALE OF 92.369 KG. SILVER OR NAMENTS FOR RS.4,33,842/-, AS THE SALES BEFORE 26.05.2004 WAS NOT POSSIBLE TO BE MADE. THE ASSESSI NG OFFICER, THEREAFTER CALCULATED AND ADDED 4 GROSS PROFIT OF RS.1,95,284/- IN RESPECT OF THE ALL EGED SALE OF SILVER ORNAMENTS WEIGHING 97.482 KG. MADE BEFORE RELEASE OF SILVER ORNAMENTS. 6. IN APPEAL BEFORE THE CIT(A), THE CIT(A) DELETED THE ADDITION OBSERVING AS UNDER : I HAVE CONSIDERED THE RIVAL CONTENTIONS. THE RELEV ANT TRADING ACCOUNT IN RESPECT OF SILVER ORNAMENTS IS AS UNDER : SILVER ORNAMENTS A/C ENDING 31 ST MARCH, 2005 PARTICULARS AMOUNT PARTICULARS AMOUNT OPENING BALANCE 24,71,693.64 SOLD 8,92,600.00 TRFD. TO PROFIT & LOSS A/C 2,25,697.36 TRFD. TO BU LLION A/C 3,86,720.00 26,97,391.00 26,97,391.00 THUS, APPARENTLY, THE APPELLANT HAS OFFERED GP OF RS.2,25,697.36 FOR TAX IN RESPECT OF TOTAL SALES OF RS.8,92,600/- WHICH CO MPRISES RS.4,58,758/- BEING SALE PROCEEDS OF 97.428 KG. VIDE BILL NOS. 1 25 AND RS .4,33,842/- BEING SALE PROCEEDS OF BALANCE 92.369 KG. OF SILVER ORNAMENTS VIDE BILL NO. 26 TO 49. THEREFORE, THERE IS NO BASIS FOR ADOPTING FURTHER GP ON SALES OF RS. 4,58,758/-. THE AO HAS TREATED THE SALES OF RS.4,58,758/- AS THE APPELLANTS UNACC OUNTED MONEY INSTEAD OF SALE PROCEEDS OF 97.428 KG. OF SILVER AS EVIDENT FROM PA RA 2.2 OF THE ASSESSMENT ORDER. HOWEVER, THE AO HAS NOT ESTABLISHED THAT THE APPELL ANT WAS IN RECEIPT OF RS.4,58,758/- ON SALE OF SILVER ORNAMENTS OF 97.428 KG. OVER AND ABOVE THE UNACCOUNTED CASH OF IDENTICAL AMOUNT OF RS.4,58,758 /-, ADDED SEPARATELY BY HIM. HENCE, THE ADDITION OF RS.1,95,284/- AS DEEMED GP O N DEEMED SALE CONSIDERATION OF RS.4,56,937/- IN RESPECT OF 97.428 KG. IS NOT SU STAINABLE AND HENCE, DELETED. 7. WE HAVE HEARD THE LEARNED DR AND HAVE PERUSED TH E MATERIAL ON RECORD. WE NOTED THAT NO CONTRARY EVIDENCE IS LAID ON RECORD ON BEHALF OF TH E REVENUE TO CONTROVERT THE FINDING REACHED BY THE CIT(A) THAT THE ASSESSING OFFICER HAS FAILED TO ESTABLISH THAT THE ASSESSEE WAS IN RECEIPT OF RS.4,58,758/- ON SALE OF SILVER ORNAMENTS WEIGHING 97.428 KG. OVER AND ABOVE THE UNACCOUNTED CASH OF IDENTICAL AMOUNT WHICH WAS ADDED BY AO SEPA RATELY. THERE BEING NO CONTRARY MATERIAL ON RECORD, WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A). 8. GROUND NO.3 RELATES TO DELETION OF TRADING ADDIT ION OF RS.65,123/-. BRIEF FACTS ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON E XAMINATION OF ACCOUNT BOOKS ASSESSEES 5 PROPRIETARY CONCERN, M/S. BHAGWATI ABHUSAN BHANDAR, OBSERVED THAT THE G.P. RATE DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION AT 9. 25% WAS LESS AS COMPARED TO THAT DECLARED AT 13.20% LAST YEAR. SOME INSTANCES OF SALE AMOUNTS BE ING MORE THAN THEIR CORRESPONDING PURCHASES MADE BY THE PURCHASERS WERE ALSO FOUND. ON THIS BAS IS, THE ACCOUNT BOOKS OF THE ASSESSEE WERE REJECTED U/S. 145 OF THE ACT AND AFTER APPLYING GP AT THE RATE OF 10% ON THE TOTAL SALES OF RS.92,78,513/-, THE ASSESSING OFFICER MADE TRADING ADDITION OF RS.65,123/- TO THE TOTAL INCOME OF ASSESSEE, WHICH WAS DELETED BY THE CIT(A). 9. WE HAVE HEARD THE LEARNED DR AND HAVE PERUSED TH E MATERIAL ON RECORD. WE NOTED THAT THE ASSESSEE HAD EXPLAINED THE DIFFERENCE IN THE AM OUNTS OF SALE AND THEIR CORRESPONDING PURCHASES STATING THAT THE AMOUNTS SHOWN IN THE ACC OUNT BOOKS REPRESENT CREDIT SALES AND THE CORRESPONDING AMOUNTS OF PURCHASES REPRESENT THE CA SH SALES. THE CIT(A) HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE HAS HIMSELF DISCLOSED HIG HER SALES THAN THE CORRESPONDING PURCHASES SHOWN BY THE PURCHASERS. THERE IS NO EVIDENCE ON RE CORD TO REBUT THIS FINDING AND THUS, WE ARE OF THE OPINION, THAT SUCH A DIFFERENCE DOES NOT WARRAN T REJECTION OF GP RATE DECLARED BY ASSESSEE. WE, THEREFORE, FOUND NO GROUND TO INTERFERE WITH TH E IMPUGNED ORDER. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 21.4.11. SD/- SD/- (H.S. SIDHU) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 21 ST APRIL, 2011 *AKS/- 6 COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY