Shri Babulal Vani , Jhabua V. ACIT , Ratlam

ITA 491/Ind/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 9059 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 28-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Keywords: Unexplained investment; Loose papers; Revised return; Set aside
• Section: 143(3); 133A; 192

Judgement Text

[ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] , , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.491/IND/2018 ASSESSMENT YEAR: 2005-06 SHRI BABULAL VANI PROP. M/S. BABULAL RAMLAL VANI 50, LAXMIGANJ, JOBAT, DIST. JHABUA / VS. ACIT RATLAM ( APPELLANT ) ( REVENUE ) P.A. NO. AAZPV7706M ITA NO.492/IND/2018 ASSESSMENT YEAR: 2005-06 SHRI GORDHANLAL VANI (DECEASED) PROP. M/S. GORDHANLAL RAMLAL VANI (THROUGH SON & LEGAL HEIR SHRI YOGENDRA VANI) 50, LAXMIGANJ, JOBAT, DIST. JHABHA / VS. ACIT RATLAM (APPELLANT) (REVENUE ) P.A. NO. AAZPV7706M [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 2 APPELLANT BY S/SHRI ANIL KAMAL GARG & SHRI ARPIT GAUR, A.RS RESPONDENT BY SHRI K.G. GOYAL, SR. D.R. DATE OF HEARING: 14.08.2019 DATE OF PRONOUNCEMENT: 27.09.2019 / O R D E R PER KUL BHARAT, J.M: THESE TWO APPEALS BY THE TWO DIFFERENT ASSESSEES ARE DIRECTED AGAINST TWO DIFFERENT ORDERS OF THE CIT(A), UJJAIN DATED 1.2.2018 FOR THE ASSESSMENT YEAR 2005-06. SINC E THE ISSUES ARE SAME AND GROUNDS ARE IDENTICAL, THE APPEALS WERE TAKEN UP TOGETHER AND ARE BEING DISPOSED OF BY WA Y OF THIS CONSOLIDATED ORDER. FIRST WE TAKE UP ITA NO.491/IND/2018. IN THIS APPEAL, THE ASSESSEE HAS RAISE D FOLLOWING GROUNDS OF APPEAL: [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 3 [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 4 2. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF GR AIN, COTTON, PULSE SEED MARKETING AND ALSO MONEY LENDING. A SURVEY U/S 133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER CALLED AS THE ACT) WAS CARRIED OUT AT THE BUSINESS PRE MISES AND ASSESSEE ON 3.5.2005 BY THE INCOME TAX OFFICER WAR D- 2, RATLAM. DURING THE COURSE OF SURVEY, CERTAIN BOOKS OF ACCOUNTS AND LOOSE PAPERS WERE FOUND AND SAME WERE IMPOUNDED BY THE SURVEY PARTY. IT WAS OBSERVED THAT ENTRIES IN THE BOOKS OF ACCOUNTS ON THE DATE OF SURVE Y WAS RECORDED TILL 15.1.2005. DURING THE COURSE OF SURV EY STATEMENT OF THE ASSESSEE WAS RECORDED. IN THE STATEME NT, THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS.32,28,920 /- FOR THE YEAR UNDER APPEAL. HOWEVER, WHILE FILING THE RETURN OF INCOME, THE ASSESSEE DECLARED TOTAL INCOME OF RS.10,63,748/- AND OUT OF THE INCOME DECLARED DURING THE SURVEY OF RS.32,48,920/-. THE ASSESSEE INCORPORATED ONLY [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 5 AN INCOME AN INCOME OF RS.9,56,331/-. CASE OF THE ASSESSEE WAS PICKED UP SCRUTINY ASSESSMENT AND ASSESSMENT U/S 143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 24.12.2017. WHILE FRAMING THE ASSESSMENT, THE A .O. MADE VARIOUS ADDITIONS ON ACCOUNT OF UNACCOUNTED CASH O F RS.2,730/-, UNACCOUNTED INVESTMENT IN STOCK OF RS.2,68,998/-, UNACCOUNTED INVESTMENTS/ADVANCES OF RS.12,35,990/-, ADVANCES TO SHRI KAMLESH VANI AND OTHERS RS.2,15,310/- AND ON ACCOUNT OF UNACCOUNTED PURCHASES OF RS.1,25,870/-. THUS, THE A.O. MADE TOTAL ADDITION OF RS.18,48,888/- AGAINST THE RETURNED INCOME OF RS.10,55,148/-. THE A.O. THUS ASSESSED INCOME AT RS.29,02,636/-. 3. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL, THEREBY, THE LD. CIT(A) SUSTAINED ADDITION OF RS.2,68,998/-, ADDITION O F [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 6 RS.2,730/-, ADDITION OF RS.12,35,990/- AND ADDITION OF RS.2,15,300/-. HOWEVER, THE LD. CIT(A) DELETED THE ADDITION OF RS.1,25,870/-. NOW THE ASSESSEE IS IN FU RTHER APPEAL BEFORE THIS TRIBUNAL. GROUND NO.1 IS AGAINST CONFIRMING THE ADDITION OF RS.2,68,998/-. LD. COUNS EL FOR THE ASSESSEE SUBMITTED THAT THE APPELLANT HAS BEEN CARRYING OUT BUSINESS OF GRAIN, COTTON, PULSE, SEED, ETC. FOR MANY YEARS. THE ASSESSEE HAS BEEN MAINTAINING RELEVANT BOOKS OF ACCOUNTS IN RESPECT OF HIS PROPRIETORSHIP B USINESS. LD. COUNSEL SUBMITTED THAT DURING THE COURSE OF SURV EY AN INVENTORY OF THE TOTAL STOCK ALLOWING WITH THE APPELLAN T WAS PREPARED BY THE SURVEY PARTY. HE DREW OUR ATTENTION P APER BOOK PAGE NO.24. AS PER THE SUCH INVENTORY THE VALU ATION OF TOTAL STOCK ALLOWANCE WITH THE ASSESSEE ON THE DATE O F SURVEY I.E. ON 3.3.2015 WAS WORKED OUT AT RS.7,12,71 0/-. AS AGAINST THE SAME STOCK OF VARIOUS ITEMS OF GOODS AS P ER TRADING ACCOUNT DRAWN ON THE BASIS OF INCOMPLETE BOOK S OF [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 7 ACCOUNTS WORKED OUT AT RS.29,400/-. THEREFORE, ALL ACCOUNTS WORKED OUT AT RS.29,400/-. THEREFORE, ON TH E BASIS OF THE VARIATION IN PHYSICAL STOCK AS ON 3.3.2005 AND AS PER BOOKS STOCK AS ON 15.1.2005 THE APPELLANT UNDER IGNORANCE DECLARED ADDITIONAL INCOME OF RS.6,83,710/- AS IS UNEXPALINED INVESTMENT IN STOCK FOR THE RELEVANT PREVIOUS YEAR. HE CONTENDED THAT WHILE DRAWING THE TRADING ACCOUNT OF UDAD ALTHOUGH BASED UPON THE SALES BILLS, SALES MADE AFTER 15.1.2005 WERE CONSIDERED BUT PURCHASES MADE AFTER 15.1.2005 WERE NOT SO TAKEN INTO ACCOUNT. HE CONTENDED THAT AGAINST THE ADDITIONAL INCOME OF RS.6,83,310/-SURRENDERED BY THE ASSESSEE IN HIS R ETURN HAD DECLARED ADDITIONAL INCOME TO THE EXTENT OF RS.4,14,312/- ONLY AS PER WORKING GIVEN IN A SEPARATE STATEMENT OF VARIOUS OF CLOSING STOCK DULY PREPARED AND SUBMITTED ALONG WITH THE RETURN OF INCOME. HE SUBMI TTED THAT A DIFFERENCE OF RS.2,68,998/- IN RESPECT OF VARIAT ION IN [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 8 CLOSING STOCK. IT MAY BE APPRECIATED THAT OUT OF 6 IT EMS OF GOODS, WHICH WERE PHYSICALLY FOUND IN THE BUSINESS PREMISES OF THE ASSESSEE DURING THE COURSE OF SURVEY EXCEPT ONE ITEM I.E. UDAD THE ASSESSEE HAS TAKEN THE SURPLUS QUANTITY OF THE STOCK AT THE SAME FIGURE, WHICH WERE DETERMINED BY THE SURVEY PARTY. THE ONLY POINT OF DIFFERENCE IN THE SURPLUS STOCK AS DETERMINED AT THE TIME OF SURVEY AND DETERMINED BY THE APPELLANT WHILE FURNISHIN G THE RETURN OF INCOME IS AS REGARD TO QUANTITY OF VALUAT ION OF UDAD AND THAT TOO IS A SOLELY ATTRIBUTABLE TO WORKING OF BOOKS STOCK AT TWO DIFFERENT POINTS OF TIME. HE CON TENDED THAT BOOKS STOCK OF UDAD AS ON 15.1.2005 WAS TAKEN AT RS.29,400/-. CORRECT BOOKS STOCK AS ON THE DATE OF S URVEY I.E. ON 3.3.2005 WAS OF RS.2,96,692/-. HE CONTENDED THAT AT THE TIME OF SURVEY, THE STOCK OF UDAD AS PER BOOKS OF ACCOUNTS WAS TAKEN AT 21.00 QTLS. ONLY OF A VALUE OF RS.29,400/-, WHEREAS AT THE TIME OF RETURN, THE BOOKS STOCK [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 9 OF UDAD AS ON 5.3.2005 I.E. THE DATE OF SURVEY WAS WO RKED OUT AT RS.213.370 QTLS. ON A VALUE OF RS.2,96,692/-. T HE LD. COUNSEL SUBMITTED THAT THE STOCK OF UDAD AS PER H IS BOOKS OF ACCOUNTS COMPLETED SUBSEQUENTLY WAS OF RS.213.370 QTLS. ON THE DATE OF SURVEY AND NOT 21.00 QT LS. AS ERRONEOUSLY CONSIDERED AT THE TIME OF SURVEY, THER EBY RESULTING IN REDUCTION OF QUANTITY OF SURPLUS STOCK OF UDAD BY 192.370 QTLS. ACCORDINGLY, THE ASSESSEE CORRECTL Y REWORKED OUT THE SURPLUS QUANTITY OF STOCK OF UDAD AT 202.63 QTLS. (416.000 QTLS. PHYSICAL STOCK (MINUS) 192 .370 BOOKS STOCK)AND BY MAKING THE VALUE OF SAID SURPLUS @ 1400 PER QTL., HE DECLARED A SUM OF RS.2,83,682/- AS ADDITIONAL INCOME IN THE RETURN OF INCOME. LD. COUNS EL FURTHER SUBMITTED THAT ON THE DATE OF SURVEY, IT IS UNDISPUTED FACT THAT BOOKS WERE WRITTEN TILL 15.1.200 5 AND ON THE BASIS OF SUCH INCOMPLETE BOOKS, SURRENDER WAS MADE DURING THE SURVEY. NO OPPORTUNITY WAS GRANTED TO [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 10 THE ASSESSEE TO RECAST ITS TRADING ACCOUNT. IT IS CONT ENDED THAT FROM 25.1.2005 TO 3.3.2005, THE ASSESSEE MADE PURCHASES OF UDAD OF 192.370 QTLS. VALUING AT RS.2,67,292/-. HAD THESE PURCHASES BEEN TAKEN INTO CONSIDERATION BY THE SURVEY PARTY, SURPLUS STOCK OF U DAD WOULD NOT HAVE BEEN WORKED AT 202.363 QTLS. WITH VALUE OF RS.2,83,682/- AS AGAINST THE SUM OF 416.000 QTLS. WITH VALUE OF RS.5,82,400/- WORKED OUT BY SURVEY PARTY. L D. COUNSEL SUBMITTED THAT STOCK IS DULY RECONCILED. AUTHORITIES BELOW OUGHT TO HAVE CONSIDERED THE RECON CILED STOCK AND OUGHT NOT TO HAVE MADE ADDITION. HE FURTHER CONTENDED THAT A STATEMENT WAS RECORDED U/S 133A OF THE ACT. FIRSTLY, IT CANNOT BE RECORDED ON OATH. SECOND LY, IT HAS NO EVIDENTIARY VALUE. FURTHER, HE CONTENDED THAT WHERE THE ASSESSEE COULD RECONCILE HIS STOCK, NO ADD ITION WOULD BE CALLED FOR. IN SUPPORT OF THE SUBMISSIONS, LD. COUNSEL FOR THE ASSESSEE HAS PLACED RELIANCE ON VARIOUS [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 11 CASE LAWS. MORE PARTICULARLY, DECISION OF THE HON'BLE HIGH COURT OF MADRAS RENDERED IN THE CASE OF CIT VS. M/S. S. KHADER KHAN SON (2008) 300 ITR 157 (MAD) AND ALSO THE DECISION OF THE HON'BLE SUPREME COURT RENDERED IN T HE CASE OF PILLANGODE RUBBER PRODUCE CO. VS. STATE OF KERALA AND ANOTHER (1973) 91 ITR 18 (SC). THEREFORE, HE SUBMIT TED THAT THE ADDITION SUSTAINED BY THE LD. CIT(A) OF RS.26,80,998/- MAY PLEASE BE DELETED. 4. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. L D. D.R. VEHEMENTLY ARGUED THAT THE ASSESSEE CANNOT GO BACK FRO M HIS STATEMENT. THE ASSESSEE HAD SUFFICIENT OPPORTUNIT Y DURING THE COURSE OF SURVEY TO RECONCILE HIS STOCK. BUT HE CHOSE NOT TO DO SO AND REMAINED SILENT FOR 7 MONTHS. IT WAS ONLY WHILE FILING THE RETURN OF INCOME, THE ASSES SEE RETRACTED FROM THE STATEMENT. THE CASE LAWS AS RELIED BY [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 12 THE LD. COUNSEL FOR THE ASSESSEE ARE NOT APPLICABLE U NDER THE FACTS OF THE PRESENT CASE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. UNDISPUTEDLY, THE BOOKS O F ACCOUNTS OF THE ASSESSEE AT THE TIME OF SURVEY ON 3.3. 2005 WERE FOUND TO BE RETURNED TILL 15.1.2005. IT IS TH E CONTENTION OF THE ASSESSEE THAT NO OPPORTUNITY TO REC AST ITS TRADING ACCOUNT WAS GIVEN. IT IS FURTHER CONTENDED TH AT THE DIFFERENCE WAS DUE TO NON RECORDING OF THE PURCHASES. IN FACT SALES OF THE UDAD HAS BEEN TAKEN INTO ACCOUNT BUT PURCHASES ARE NOT CONSIDERED WHICH WAS RECORDED SUBSEQUENTLY. IT IS FURTHER CONTENDED THAT THE SALES HAVE BEEN DETERMINED ON THE BASIS OF THE VOUCHERS. WE HAV E GIVEN OUR THOGHTFUL CONSIDERATION TO THESE SUBMISSIO NS OF THE ASSESSEE. DURING THE COURSE OF SURVEY STATEMENT RECORDED U/S 133A OF THE ACT WOULD NOT BE A STRONG P IECE OF [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 13 EVIDENCE. IN CASE THE ASSESSEE IS IN A POSITION TO RE CONCILE THE DISCREPANCY WITH POSITIVE MATERIAL, IN THAT EVENT, THE A.O. SHOULD GIVE RELIEF TO THE ASSESSEE. IN THE PRE SENT CASE, THE LD. COUNSEL FOR THE ASSESSEE HAS TAKEN US THROUGH THE VARIOUS PAGES OF PAPER BOOK TO SUPPORT HIS CONTENTION THAT THE STOCK IS DULY RECONCILED. WE FIND THAT THE A.O. HAS TAKEN INTO ACCOUNT SALES BUT THE PURCHASES OF UDAD WHI CH WAS NOT RECORDED IN THE BOOKS AND SUBSEQUENTLY RECORDE D AFTER DRAWING A FRESH TRADING ACCOUNT, NO SPECIFIC DEFE CT IN SUCH RECONCILIATION IS POINTED OUT BY THE A.O. UND ER THESE FACTS, WE ARE OF THE VIEW THAT THE A.O. IS NOT JUSTIFI ED IN MAKING THE ADDITION. THEREFORE, THE A.O. IS DIRECTED TO DELETE THIS ADDITION. 6. GROUND NO.2 IS AGAINST CONFIRMING THE ADDITION OF RS.2,730/-. APROPOS TO GROUND NO.2, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT DURING THE COURSE OF SURVEY, A CASH OF RS.2,730/- WAS FOUND ON THE BUSINESS PREMISES OF [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 14 THE ASSESSEE. HE CONTENDED THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACTS IN RIGHT PERSPECTIVE. H E SUBMITTED THAT AS PER THE CASH BOOK WRITTEN UP TO 15.1.2005, THE CASH APPEARING IN THE CASH BOOK WAS AT RS.11,965/-. EVEN IF IT IS ASSUMED THAT CASH BALANCE O F RS.11,965/- AS APPEARING IN THE CASH BOOK OF THE ASSESS EE WRITTEN UP TILL 15.1.2005 IS TAKEN AS CASH BALANCE OF T HE ASSESSEE ON THE DATE OF SURVEY, THEN THERE WOULD ON T HE CONTRARY RESULT A SHORTAGE OF CASH OF RS.9,235/- FOR WH ICH NO ADDITION CAN BE MADE UNDER ANY DEEMING PROVISIONS OF THE ACT. HE FURTHER CONTENDED THAT AFTER COMPLETING BOOKS CASH BALANCE AS ON 3.3.2005 WAS ARRIVED AT RS.34,012/-. THE LD. COUNSEL DREW OUR ATTENTION TO THE PAPER BOOK AT PAGE 66 TO SUPPORT HIS CONTENTION. 7. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSIO NS AND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. H E [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 15 CONTENDED THAT THE AVERMENTS SO MADE ARE AFTERTHOUGHT. AT THE TIME OF SURVEY HE DID NOT CLARIFY THIS POSITI ON. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE FACT THAT THE ASSESSEE H AS REFLECTED CASH BALANCE AS ON 15.1.2005 AT RS.11,965/- IS NOT CONTROVERTED BY THE REVENUE BY PLACING ANY CONTRAR Y MATERIAL, THEREFORE, THE ADDITION MADE IS NOT JUSTIFIE D. WE THEREFORE, DIRECT THE A.O. TO DELETE THIS ADDITION. 9. GROUND NO.3 IS AGAINST ADDITION OF RS.12,35,990/-. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE IN THE WRITTEN SYNOPSIS. IT IS CONTENDED THAT D URING THE SURVEY TWO UGAI BOOKS WERE FOUND AND IMPOUNDED. IN THE SAID BOOK, THE LEDGER ACCOUNT OF VARIOUS FARMERS AND VILLAGERS TO WHOM LOAN ON INTEREST BASIS WERE GIVEN BY THE SEPARATE ENTITY NAME AND STYLE OF M/S. RAMLAL BIRDICHAND [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 16 VANI HUF. IT IS CONTENDED THAT HUF DID NOT FURNISH R ETURN OF INCOME PRIOR TO ASSESSMENT YEAR 2004-05. THE HUF IS SEPARATELY ASSESSED TO INCOME TAX SINCE ASSESSMENT YEAR 2004-05. SINCE THE DOCUMENT RELATES TO THE OTHER INDEPENDENT ENTITY, THE AUTHORITIES BELOW WERE NOT J USTIFIED IN MAKING ADDITION AT THE HANDS OF THE ASSESSEE. 10. PER CONTRA, LD. D.R. OPPOSED THESE SUBMISSIONS AN D SUPPORTED THE ORDER OF THE LD. CIT(A). 11. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE ASSE SSEE IS THAT THE DOCUMENT RELATES TO A SEPARATE ENTITY WHO HAS FI LED ITS RETURN OF INCOME SINCE 2004-05. THE FACT THAT HU F NAMELY M/S. RAMLAL BIRDICHAND VANI HUF WAS ASSESSED TO TAX IS TO BE VERIFIED AT THE END OF THE ASSESSING OF FICER. THEREFORE, THIS ISSUE IS SET ASIDE TO THE FILE OF TH E A.O. TO [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 17 DECIDE IT AFRESH. THE GROUND OF THE ASSESSEES APPEAL I S ALLOWED FOR STATISTICAL PURPOSES. 12. GROUND NO.4 IS AGAINST ADDITION OF RS.2,15,560/- I N RESPECT OF THE ADVANCES MADE TO SHRI KAMLESH VANI AND OTHERS AS MADE IN THE WRITTEN SUBMISSIONS. HE SUBMIT TED THAT THE A.O. HAS OBSERVED THAT ASSESSEE MADE ADVANCES TO SHRI KAMLESH VANI AND OTHERS. THE TOTAL AMOUNT WAS AT RS.10,85,000/-. IN ADDITION TO THAT, INTEREST OF RS.96,019/- WAS ALSO CALCULATED ON THESE ADVANCES. LD. COUNSEL SUBMITTED THAT DURING THE COURSE OF SURVEY T WO BOOKS INVENTORIZED AS A/7 WAS FOUND FROM THEBUSINESS PREMISES OF THE APPELLANT. LIKEWISE, DURING THE COURS E OF SIMULTANEOUS SURVEY PROCEEDINGS, CARRIED ON IN THE PREMISES OF THE ANOTHER ASSESSEE NAMELY SHRI ASHOK S/O SHRI RAMLAL VANI, REAL BROTHER OF THE APPELLANT, CERTAIN LOOSE PAPERS INVENTORIZED AS LPS-A/3, BELONGING TO TH E APPELLANT WERE FOUND. BASED UPON ENTRIES MADE AT PAGES [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 18 NO.2, 10 & 12 OF LPS-A/7 AND PAGE NO.14 OF LPS-3, TH E APPELLANT CAME FORWARD TO SURRENDER AN ADDITIONAL INCOME OF RS.11,81,019/- FOR THE RELEVANT PREVIOUS YEAR I.E. THE PREVIOUS YEAR RELEVANT TO A.Y. 2005-06. SURRENDER OF 11,81,019/- CONSISTED OF LOAN OF RS.10,85,000/- GIVE N BY APPELLANT AND INTEREST INCOME OF RS.96,019/- EARNED BY THE APPELLANT. HE SUBMITTED THAT CERTAIN TRANSACTIONS WERE PERTAINING TO THE ASSESSMENT YEAR 2004-05. THE ASSESSE E REVISED HIS RETURN FOR A.Y. 2004-05 AND SHOWN ADDITIO NAL INCOME OF RS.4,39,379/-. HE DREW OUR ATTENTION TO P AGE NOS.99 TO 102. SUBSEQUENT TO DATE OF SURVEY BASED UPO N THE MATERIAL ON RECORD, THE ASSESSEE REALIZED THAT CERTAI N TRANSACTIONS OF THE LOANS, AS CONTAINED IN THE ABOVE STATE D LOOSE PAPERS, HAD TAKEN PLACE DURING THE PREVIOUS YEAR RELEVANT TO THE PRECEDING ASSESSMENT YEAR I.E. A.Y. 20 04- 05. AFTER REALIZING SUCH FACTUAL SITUATION, THE APPELLAN T FILED HIS REVISED RETURN OF INCOME FOR A.Y. 2004-05 . IN THE [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 19 REVISED RETURN OF INCOME THE APPELLANT HAD SHOWN TAXAB LE INCOME AT AN INCREASED AMOUNT OF RS.4,84,419/- AS AGAINST THE INCOME DECLARED IN ORIGINAL RETURN AT RS.45,040/-. HENCE, THE ASSESSEE HAD SHOWN ADDITIONAL INCOME OF RS.4,39,379/-. IN THE RETURN, THE ASSESSEE SHOWN IN TEREST INCOME OF RS.33,576/-. HE FURTHER CONTENDED THAT TH E ASSESSEE REALIZED THAT PEAK INVESTMENT MADE BY HIM IN GIVING LOAN TO THE SAID PERSONS WORKED OUT TO BE AT RS.8,45,000/- ONLY. CONSIDERING SUCH FACTUAL ERROR AN D FURTHER CONSIDERING THE FACT THAT PEAK AMOUNT OF INVESTMENT MADE BY THE ASSESSEE DURING THE PREVIOUS Y EAR RELEVANT TO THE ASSESSMENT YEAR 2004-05 WAS TO THE EXT ENT OF RS.4,15,000/- FOR WHICH HE HAS ALREADY REVISED HIS RETURN BY DECLARING ADDITIONAL INCOME OF RS.4,39,379/- . HE FURTHER SUBMITTED THAT INTEREST INCOME OF RS.1,22,01 9/- IS ALSO SHOWN IN THE RETURN FOR THE ASSESSMENT YEAR 2005- 06. [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 20 TOTAL ADDITIONAL INCOME DECLARED AT RS.9,82,398/- AS AGAINST TOTAL SURRENDER OF RS.11,81,019/-. 13. LD. D.R. OPPOSED THESE SUBMISSIONS. HE SUBMITT ED THAT THESE SUBMISSIONS WERE NOT MADE BEFORE THE A.O. AND THE FACTS WERE NOT EXPLAINED TO THE A.O. THEREFORE, AUTHORITIES BELOW WERE JUSTIFIED IN MAKING THE ADDITIO N. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE CONTENTION OF THE ASSE SSEE IS THAT THERE WAS A PEAK INVESTMENT WHICH IS LOWER. THEREFORE, NO ADDITION IS CALLED FOR. THIS FACT REQUIR ES VERIFICATION AND RECONSIDERATION BY THE A.O. WE THERE FORE, CONSIDERING THE FACT THAT BEFORE THE A.O., THE ASSESSE E HAD NOT MADE SUCH ARGUMENT, WE SET ASIDE THIS GROUND TO T HE FILE OF THE A.O. TO DECIDE IT AFRESH AFTER CONSIDERIN G THE [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 21 SUBMISSIONS OF THE ASSESSEE. THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 15. NOW WE TAKE UP ITA NO.492/IND/2018. LEGAL HEIR O F THE ASSESSEE HAVE RAISED FOLLOWING GROUNDS OF APPEAL: [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 22 16. GROUND NO.1 IS AGAINST CONFIRMING THE ADDITION OF RS.6,82,044/-. THE FACTS RELATED TO THIS ADDITION ARE THAT WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, T HE A.O. MADE ADDITION OF RS.6,82,244/- IN RESPECT OF TH E DIFFERENT IN STOCK. 17. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THIS ADDIT ION. LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIO NS AS MADE IN THE WRITTEN SYNOPSIS. LD. COUNSEL FOR THE AS SESSEE SUBMITTED THAT A SURVEY ACTION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 3.3.2005. DURI NG THE COURSE OF SURVEY, THE ASSESSEE HAD SURRENDERED TOTAL INCOME OF RS.17,71,680/-. WHILE FILING THE RETURN, THE ASSESSEE INCURRED THE ADDITIONAL INCOME TO THE EXTENT OF RS.9,63,438/-. THE A.O. DETERMINED TOTAL INCOME AT RS.18,20,385/-. LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT THE BOOKS WERE RETURNED UP TILL 7.12.2004 AND TH E [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 23 DIFFERENCE IN STOCK WAS DUE TO NON RECORDING OF PURC HASES DURING THE PERIOD 8.12.2004 TO 3.3.2005. HE CONTEN DED THAT ON PERUSAL OF THE STATEMENT SHOWING WORKING OF SURPLUS STOCK OF RS.8,88,836/- AS SUBMITTED BY THE ASSESSEE WITH THE RETURN OF INCOME, IT CAN BE OBSERVE D THAT ASSESSEE HAD CLAIMED THAT ON THE BASIS OF TRADING ACCOUNT PREPARED TILL 7.12.2004 I.E. TILL WHICH THE BOOKS OF ACCOUNT OF THE APPELLANT WERE WRITTEN, THE APPELLANT WAS HAVING STOCK OF 150 QTLS. OF URAD OF VALUE OF RS.1,44,802/-. FURTHER, THE APPELLANT HAD MADE TOTAL PURCHASES OF URAD, ARANDI, GROUND NUT, CHANA, MAKKA, TUAR, SOYABEAN AND COTTON DURING THE PERIOD FROM 8.12.2004 TO 3.3.2005 , I.E. THE DATE OF SURVEY, OF A SUM OF RS.68,272/-. HOWEVER , DURING THE ABOVE STATED PERIOD OF 8.12.2004 TO 3.3.20 05, THE APPELLANT HAD ALSO MADE SALES OF VARIOUS KIND OF GOODS TO THE EXTENT OF RS.2,69,960/-. ACCORDINGLY, THE V ALUE OF STOCK AS PER BOOKS AS ON THE DATE OF SURVEY WAS WORKED OUT [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 24 AT RS.47,524/-. BESIDES HOLDING THE STOCK OF HIS COMMERCIAL CONCERN I.E. M/S. GORDHANLAL RAMLAL VANI, THE APPELLANT WAS ALSO HAVING STOCK OF GOODS OF BUSINESS CARRIED ON IN HIS INDIVIDUAL NAME OF A SUM OF RS.6,34,720/- ON THE DATE OF SURVEY. ACCORDINGLY, AS PER THE APPELLANT, HE WAS HAVING EXPLAINED STOCK OF GOODS OF A SUM OF RS.6,82,244/- ON THE DATE OF SURVEY WHICH WAS DULY TAKEN INTO ACCOUNT BY HIM WHILE WORKING OUT ADDITIONAL INCOME. HE SUBMITTED THAT IT WAS DULY EXPLAINED TO TH E A.O. THAT AS ON 31.3.2004, THE APPELLANT WAS HAVING INVESTMENT OF RS.1,46,528/- AND RS.6,98,340/- RESPECTIVELY IN THE BUSINESS CARRIED OUT UNDER THE N AME AND STYLE OF GORDHANLAL RAMLAL VANI AND IN INDIVIDUAL NAME. IT WAS FURTHER SHOWN THAT OUT OF TOTAL INVESTMEN T TO THE EXTENT OF RS.6,98340/- WHICH THE APPELLANT WAS HAV ING IN HIS BUSINESS CARRIED ON IN THE INDIVIDUAL NAME, AS O N 31.3.2004, INVESTMENT TO THE TENT OF RS.6,48,650/- WAS [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 25 MADE IN FORM OF STOCK. IT WAS FURTHER EXPLAINED THAT O UT OF SUCH STOCK OF RS.6,48,650/-, THE APPELLANT WAS HAVING STOCK OF WORTH OF RS.6,34,720/- ON THE DATE OF SURVE Y I.E. ON 3.3.2005. HE FURTHER SUBMITTED BEFORE THE A.O. THAT UNDER THE PROVISIONS OF THE INCOME TAX ACT, 1961, O NLY THOSE INVESTMENTS CAN BE REGARDED AS UNEXPLAINED WHICH HAVE NOT BEEN FULLY RECORDED IN THE BOOKS OF ACCOUNT AND FOR WHICH AN ASSESSEE FAILS TO GIVE ANY EXPLANATION AND SINCE IN THE INSTANT CASE, OUT OF TOTAL STOCK OF RS.15,71,080/- FOUND PHYSICALLY AT THE TIME OF SURVE Y, THE APPELLANT HAD EXPLAINED THE INVESTMENT TO THE EXTENT OF RS.6,82,244/- AND, THEREFORE, ONLY REMAINING SUM OF RS.8,88,836/- CAN BE REGARDED AS UNEXPLAINED STOCK OF T HE APPELLANT. IT WAS FURTHER SUBMITTED THAT SINCE THE APPELLANT HIMSELF HAD SHOWN THE ABOVE SAID SUM OF RS.8,88,836/- WHILE FILING HIS RETURN OF INCOME AND, [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 26 THEREFORE, NO FURTHER ADDITION ON THIS ACCOUNT WAS WARRANTED. 18. LD. D.R. OPPOSED THESE SUBMISSIONS AND SUBMITTED THAT THE ASSESSEE HAS HOOKED UP A STORY WHEN IN SURVEY PROCEEDINGS CERTAIN EVIDENCES WERE RECOVERED. THE ASSESSEE HAS NOT EXPLAINED AS TO WHY HE IS CARRYING OUT TWO SEPARATE BUSINESSES OF THE SAME NATURE, ONE IN THE PROPRIETORSHIP CONCERN AND ANOTHER IN THE INDIVIDUAL N AME. THIS ENTIRE EXPLANATION GOES TO PROVE THAT THE ASSESSEE FAILED TO SUPPORT HIS CLAIM. 19. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ONLY EXPLANATION REGARDI NG DIFFERENCE IN STOCK IS THAT THE ASSESSEE WAS CARRYING O UT BUSINESS IN THE INDIVIDUAL AS WELL AS PROPRIETORSHIP CAPACITY. IT IS CONTENDED THAT REVENUE CANNOT DIRECT T HE ASSESSEE HOW HIS BUSINESS TO BE CONDUCTED. IT IS TR UE THAT [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 27 REVENUE CANNOT DIRECT THE ASSESSEE HOW HE SHOULD CARRY OUT HIS BUSINESS BUT WHERE THE ASSESSEE TRIES TO CRE ATE A COLOURABLE DEVICE SUCH ACT IS NOT PERMISSIBLE UNDER THE LAW. IN THE PRESENT CASE, THE ASSESSEE HAS CLAIMED THAT HE WAS RUNNING BUSINESS IN PROPRIETARY AND INDIVIDUAL CAPACITY. THEREFORE, THE STOCK RELATED TO PROPRIETARY AND INDIVIDUAL CAPACITY WAS AVAILABLE AT THE PREMISES. WE A RE UNABLE TO ACCEPT THIS CONTENTION OF THE ASSESSEE AS TH E ASSESSEE HAS NOT DISCLOSED IN HIS ACCOUNTS RELATED TO E ARLIER YEARS THAT HE WAS CARRYING OUT BUSINESS UNDER THE PROPRIETARY AND INDIVIDUAL CAPACITY. THE IGNORANCE OF L AW CANNOT BE AN EXCUSE TO AVOID TAX LIABILITY. THEREFORE , WE DO NOT SEE ANY REASON TO INTERFERE IN THE FINDING OF THE LD. CIT(A). THIS GROUND OF THE ASSESSEES APPEAL IS DISMI SSED. 20. GROUND NO.2 OF THE ASSESSEES APPEAL IS AGAINST CONFIRMING THE ADDITION OF RS.1,26,001/-. LD. COUNS EL FOR THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE IN THE [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 28 WRITTEN SYNOPSIS. HE CONTENDED THAT AS PER THE CASH B OOK, THE ASSESSEE WAS HAVING BALANCE OF RS.1,26,001/- AS ON THE DATE OF SURVEY AND 2 DAYS BEFORE THE SURVEY I.E. ON 1.3.2005, THE ASSESSEE HAD WITHDRAWN CASH OF RS.1,62,000/- FROM HIS CURRENT ACCOUNT MAINTAINED WIT H THE STATE BANK OF INDORE, JORBAT BRANCH, JORBAT. IT IS FURTHER CONTENDED THAT NO OPPORTUNITY WAS GIVEN TO RECONCILE THE DIFFERENCE IN THE CASH. 21. ON THE CONTRARY, LD. D.R. OPPOSED THESE SUBMISSI ONS AND SUPPORTED THE ORDER OF THE AUTHORITIES BELOW. 22. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE FIND THAT THE ASSESSEE H AS RECONCILED DIFFERENCE BY PLACING BANK STATEMENT AND CAS H BOOK. THERE IS NO CONTRARY MATERIAL BROUGHT BY THE REVENUE TO REBUT THIS. THEREFORE, WE DIRECT THE A. O. TO [ITA NOS.491&492/IND/2018] [SHRI BABULAL VANI, JHABUA] 29 DELETE THIS ADDITION. THIS GROUND OF THE ASSESSEES APPEAL IS ALLOWED. 23. GROUND NO.3 IS GENERAL IN NATURE NEEDS NO SEPARATE ADJUDICATION. 24. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.491/IND/2018 FOR THE A.Y. 2005-06 IS ALLOWED FOR STATISTICAL PURPOSES AND THE APPEAL FILED BY THE ASSESSEE IN ITA NO.492/IND/2018 FOR THE A.Y. 2005-06 IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 27.09.201 9. SD/ - (MANISH BORAD) SD/ - (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 27/09/2019 VG/SPS COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUAR D FILE. BY ORDER ASSISTANT REGISTRAR, INDORE