SHRI SUNIL LAL PROP. ANUPAM STORE, Alwar V. ITO, Alwar

ITA 515/JPR/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7820 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 30-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 25-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment; Income from undisclosed sources; Loose papers; Question of law; Tax effect

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JAIPUR BENCH JAIPUR BEFORE SHRI SHAILEND RA K UMAR YADAV, JUDICIAL MEMBER, AND SHRI B. C. MEENA , ACCOUNTANT MEMBER . ITA. NO. 515 /JP /20 1 1 (ASSESSMENT YEAR: 2006 - 07 ) SH. SUNIL LAL PROP. ANUPAM STORE, OPPOSITE GHA NTA GHAR, ALWAR (RAJ.) APPELLANT VS. ITO, WARD - 1(1), ALWAR RESPONDENT & ITA.NO. 520 /JP /201 1 ( ASSESSMENT YEAR: 2006 - 07 ) ITO, WARD - 1(1), ALWAR APPELLANT VS. SH. SUNIL LAL PROP. ANUPAM STORE, OPPOSITE GHANTA GHAR, ALWAR (RAJ.) RESPONDENT PAN: AARPL0661P I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 2 / BY REVENUE :SHRI RAJESH OJHA, D.R. / BY ASSESSEE : SHRI P. C. PARWAL , A.R. / DATE OF HEARING :2 6 .11.2014 / DATE OF PRONOUNCEME NT : 05 .1 2 .2014 ORDER PER SHAILENDRA KUMAR YADAV, J . M: THESE CROSS APPEALS ARE ARISING OUT FORM THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , ALWA R , DATED 2 3 . 0 3 .201 1 FOR A.Y. 2006 - 07 . SO , THEY ARE BEING DISPOSED OF BY WAY OF COMMON ORDER F OR SAKE OF CONVENIENCE. 2. IN ITA NO. 51 5 / JP /20 1 1 , ASSESSEE FILED APPEAL ON THE FOLLOWING GROUND S : 0 1 . THE LEARNED CIT APPEALS SERIOUSLY ERRED BY CONFIRMING THE ADDITION OF TWO CASH CREDITS OF RS.38000.00 EACH ON OF RS.19000.00(WHICH WERE ADDED BY THE LEARNED ASSESSING OFFICER WITHOUT PROVIDING ANY OPPORTUNITY IN THIS REGARD TO THE ASSESSEE) WITHOUT CONSIDERING THE FACT OF THE CASE AND THE PLEAS OF THE ASSESSEE. 02. THE LEARNED CIT APPEALS SERIOUSLY ERRED BY NOT CONSIDERING THE CONFIRMATIONS IN REGARD TO THE IDENTITY AND CREDITWORTHINESS OF BOTH THE CASH CREDITORS OF RS.38000.00 FURNISHED TO HIM AND WHICH WERE SENT BY HIM TO THE REMAND OFFICE FOR HIS EXPLANATION ALSO AND ALTERNATIVELY NOT COVERING THIS ADDITION AGAINST THE ADDITIONAL INCOME OF RS.39824 .00 ALREADY DECLARED BY THE ASSESSEE IN HIS I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 3 RETURN OF INCOME SOU - MOTO ON ACCOUNT OF LOOSE PAPERS DESPITE DISCUSSING IT BY HIM IN HIS APPEAL ORDER ALSO. 03. THE LEARNED CIT APPEALS SERIOUSLY ERRED BY CONFIRMING THE ADDITION OF RS.155297.00 TREATING IT EXCE SS STOCK WITHOUT CONSIDERING THE COPY OF INVENTORY OF PHYSICAL STOCK PREPARED BY THE ASSESSING OFFICER, COPY OF THE PURCHASE AND SALES VOUCHERS AND OUR BOOKS OF ACCOUNTS AND OTHER RECORDS AND COMPARABLE CHART OF MANY ITEMS SHOWING THE MRP VALUE AND THE ACT UAL PURCHASE PRICE BASED ON THE PURCHASE VOUCHERS SUBMITTED TO HIM AND WHICH WERE ALSO SEND BY HIM TO THE REMAND OFFICER FOR HIS EXPLANATION. 04. THE LEARNED CIT APPEALS SERIOUSLY ERRED BY NOT CONSIDERING THE SUBMISSION OF THE ASSESSEE SUBMITTED REGARDING ARRIVING AT THE EXCESS STOCK OF RS.155297.00 BY THE LEARNED ASSESSING OFFICER WRONGLY PARTICULARLY WHEN THE ASSESSING OFFICER FAILED TO PROVIDE ANY OPPORTUNITY TO THE ASSESSEE IN THIS REGARD. 2.1 IN ITA NO. 520 / JP /20 11 , REVENU E HAS FILED APPEAL ON THE F OLLOWING GROUND S : 1. THAT THE LD . CIT (A) HAS ERRED IN L AW AS WELL AS ON THE FACTS AND CIRCUMSTANCE OF THE CASE IN DELETING THE ADDITION OF RS.20,000/ - MADE TO TOTAL INCOME ON THE BASIS OF KACHI ROKAR 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS O N THE FACTS AND CIRCUMSTANCE OF THE CASE IN DELETING THE ADDITION OF RS.6,78,046/ - MADE TO TOTAL INCOME ON THE BASIS OF LOOSE PAPERS. 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS AND CIRCUMSTANCE OF THE CASE IN DELETING THE I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 4 ADDITION OF RS.2,76,000/ - IN RESPECT OF UNEXPLAINED INVESTMENT ON THE BASIS OF LOOSE PAPERS. 3 . FIRST ISSUE IN ASSESSEE S APPEAL IS WITH REGARD TO ADDITION ON ACCOUNT OF CASH CREDIT OF RS.38,000/ - . ASSESSING OFFICER MADE ADDITION BECAUSE WHILE GOING THROUGH KACHI R OAD, HE NOTICED THAT ON 06.04.2005, ASSESSEE HAS INTRODUCED CASH RS.19,000/ - + RS.19,000/ - = RS.38,000/ - FOR WHICH EXPLANATION WAS SOUGHT FROM THE ACCOUNTANT. THE ACCOUNTANT FAILED TO EXPLAIN THE SAME. T HEREFORE, THESE CASH CREDITS HAVE REMAINED UNEXPLAIN ED ABOUT THESE CASH DEPOSIT WHICH HAVE BEEN ENTERED IN TH E INVISIBLE NAME. THE AMOUNT O F RS.38,000/ - HAS BEEN ADDED TO THE INCOME OF ASSESSEE BEING HIS INCOME FROM UNDISCLOSED SOURCES. 3.1 ACCORDING TO LD. AUTHORIZED REPRESENTATIVE, THESE TWO CASH CREDI T EACH OF RS.19,000/ - WERE VERIFIABLE FROM BOOKS OF ACCOUNTS OF ASSESSEE. SAME WERE NOT VERIFIED BY ASSESSING OFFICER BECAUSE HE HAS NOT PROVIDED ANY OPPORTUNITY TO ASSESSEE WHILE SAME ARE EVEN TODAY VERIFIABLE. MOREOVER, ASSESSEE HAS FURNISHED CONFIRMAT ION OF BOTH CREDITORS AT APPELLATE STAGE TO ESTABLISH IDENTITY, C REDITWORTHINESS AND GENUINENESS, WHICH WERE GIVEN BY ASSESSEE IN REMAND PROCEEDING BUT SAME HAS NOT BEEN DULY APPRECIATED AND CIT(A) CONFIRMED ADDITION IN QUESTION. THERE IS NOTHING ON RECOR D TO SUGGEST THAT CONFIRMATION GIVEN BY ASSESSEE WITH REGARD TO IDENTITY, CREDITWORTHINESS AND GENUINENESS OF CREDITORS WAS FOUND FALSE. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ISSUE I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 5 TO ASSESSING OFFICER WITH DIRECTION TO DECIDE THE SAME AS PER F ACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 4. NEXT ISSUE IN ASSESSEE S APPEAL IS WITH REGARDS TO ADDITION OF RS.1,55,297/ - . ASSESSING OFFICER MADE THIS ADDITION OF RS.1,55,297/ - DUE TO DIFFERENCE IN STOCK BETWEEN INVENTORY TA KEN AT THE TIME OF SURVEY FROM BOOKS OF ACCOUNTS. ASSESSING OFFICER OBSERVED DURING COURSE OF SURVEY PROCEEDING, INVENTORY OF CLOSING STOCK WAS TAKEN AND VALUED AS PER DETAILS GIVEN BELOW BY APPLYING GROSS PROFIT RATE DECLARED BY ASSESSEE IN JUST PRECEDIN G YEAR. M/S. ANUPAM STORES RS.8,61,911/ - AS AGAINST RS.6,06,632/ - AS PER BOOKS OF ACCOUNTS. THUS STOCK OF RS.1,55,297/ - WAS FOUND TO BE IN EXCESS. IN RESPONSE TO THE QUERY BY THE ASSESSING OFFICER, ASSESSEE FURNISHED COPY OF TRADING ACCOUNT AS ON DATE O F SURVEY AND DECLARED CLOSING STOCK AS UNDER: 1.M/S ANUPAM STORES RS.6,04,945/ - 2.M/S ANUPAM COMMUNICATION RS.6,53,744/ - FROM ABOVE, ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS BEEN CONTINUOUSLY INDULGED IN MAKING PURCHASE AND SALES, WHICH WAS NOT R ECORDED IN REGULAR BOOKS OF ACCOUNTS. DAY TO DAY STOCK IS ALSO NOT MAINTAINED. ASSESSING OFFICER FOUND MANY DISCREPANCIES IN LOOSE PAPERS, WHICH HAS BEEN DISCUSSED SEPARATELY AND COULD NOT BE RECONCILED BY ASSESSEE DURING COURSE OF ASSESSMENT PROCEEDINGS . IN THESE CIRCUMSTANCES, ASSESSING OFFICER REJECTED BOOKS OF ASSESSEE AND APPLIED I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 6 PROVISION OF SECTION 145(3) OF THE ACT. AS THERE WAS NO JUSTIFICATION OF CLOSING STOCK BY ASSESSEE, ASSESSING OFFICER RELIED ON VALUE OF EXCESS CLOSING STOCK OF RS.1,55,29 7/ - AND AFTER APPLYING GROSS PROFIT AT 1.6%, WHICH WAS CONFIRMED BY CIT(A). 4.1 ASSESSEE DREW OUR ATTENTION ON PAGE 8 TO 18 AND RELEVANT PAGE IS 12. ASSESSING OFFICER HAS ARRIVED AT EXCESS STOCK OF RS.1,55,297/ - WITHOUT ANY QUERY AND WITHOUT GIVING ANY O PPORTUNITY TO ASSESSEE . ASSESSING OFFICER HAS TAKEN CLOSING STOCK OF RS.8,61,911/ - AGAINST CLOSING STOCK OF RS.6,04,945/ - . EVEN LIST OF INVENTORY PREPARED AT THE TIME OF SURVEY TEAM IN HEST WITHOUT GIVING OPPORTUNITY TO ASSESSEE TO EXPLAIN BEFORE HIM. I T WAS CONTENDED THAT ASSESSING OFFICER HAS MADE ADDITION TWICE ONCE BY ENHANCING SALE ON HIS ESTIMATION AND ADDITION ON ACCOUNT OF ALLEGED STOCK DIFFERENCE. HAVING CONSIDERED THE FACTS AND CIRCUMSTANCES AND SUBMISSION OF ASSESSEE BEFORE AUTHORITIES BELOW, WE SET ASIDE THE ORDER OF ASSESSING OFFICER ON THIS ISSUE AND RESTORE THE SAME WITH DIRECTION TO DECIDE THE SAME AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE, WE ARE RESTORING THIS ISSUE TO ASSESSING OFFICER, WE A RE REFRAINING TO COMMENT ON THE MERIT OF ISSUE AT HAND. 5. IN RESULT, ASSESSEE S APPEAL IS PARTLY ALLOWED. 6. NOW, WE TAKE REVENUE S APPEAL IN ITA NO. 520/JP/2011. I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 7 6.1 WE FIND THAT TAX EFFECT ON DELETED ADDITION IS LESS THAN THRESHOLD LIMIT. THUS, TAX EFFECT IS LESS THAN 4 LACS, AS PER RECENT CBDT NO. 5/2014 DATED 10.07.2014. REVENUE I S NOT PERMITTED TO FILE APPEAL BEFORE TRIBUNAL, IF TAX EFFECT IS LESS THAN 4 LACS. WE FIND SUPPORT FROM THE DECISION OF HON BLE SUPREME COURT DATED 25.03.2011 IN ITA NO S. 3 TO 5/2010. LD. DR FOR THE REVENUE SUBMITTED THAT INSTRUCTION NO. 5/2014 IS NOT APPLICABLE FOR THE APPEALS FILED PRIOR TO ISSUE OF THE SAID INSTRUCTIONS. IT IS ALSO SUBMITTED THAT THE FULL BENCH OF PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. VIRENDRA CONSTRUCTION CO., 239 CTR 1, HELD THAT REVISED MONETARY LIMITS ARE NOT APPLICABLE TO THE PENDING APPEALS, AND IT IS IN FAVOUR OF THE REVENUE. 6 . 2 WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECO RD. INSTRUCTION NO.5/2014 DATED 10.07.2014 HAS REVISED THE MONETARY LIMIT FOR FILING THE APPEAL BY THE DEPARTMENT BEFORE INCOME - TAX APPELLATE TRIBUNAL, HON BLE HIGH COURTS AND HON BLE SUPREME COURT. MONETARY LIMIT FOR FILING THE APPEAL BEF ORE THE TRIBUNAL IS RS.4.00 LAKH; BEFORE HON BLE HIGH COURT RS. 10.00 LAKH AND BEFORE HON BLE SUPREME COURT RS. 25.00 LAKH. HON BLE SUPREME COURT IN THE ORDER DATED 25.03.2011 REFERRED TO ABOVE HAS HELD AS UNDER: - IT IS STATED THAT THE TAX IMPA CT IN THE PRESENT CASES IS LESS THAN RS. 10.00 LACS. THE DEPARTMENT HAS RECENTLY ISSUED AN INSTRUCTION BEARING NO. 3/2011 DATED I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 8 09.02.2011, WHICH IS IDENTICAL TO ITS EARLIER INSTRUCTION BEARING NO. 5/2008 DATED 15.05.2008 EXCEPT THAT I N SO FAR AS THE HIGH COURT IS CONCERNED, THE MONETARY LIMIT IN RESPECT OF APPEALS WHERE THE QUESTIONS OF LAW RAISED NEED NOT TO BE ANSWERED, HAS BEEN RAISED FROM RS. 4.00 LACS TO RS. 10.00 LACS. THE DIVISION BENCH OF THIS COURT IN ITA NO. 89/1999 DECIDED ON 28.01.2011 HAS ALREADY HELD THAT THE INSTRUCTION BEARING NO. 5/2008 DATED 15.05.2008 WOULD APPLY EVEN TO THE OLD PENDING REFERENCES AND APPEALS. THIS PRINCIPLE WOULD THUS NATURALLY EQUALLY APPLY TO THE INSTANT INSTRUCT ION BEARING NO.3/2011 DATED 09.02.2011, AS WELL. THE TAX EFFECT BEING LESS THAN RS. 10.00 LACS, THE QUESTION OF LAW DOES NOT REQUIRE TO BE ANSWERED. THE APPEALS ARE DISPOSED OF ACCORDINGLY. 6.3 HON BLE DELHI HIGH COURT IN THE CASE OF CI T VS. DELHI RACE CLUB LTD. IN ITA NO. 128/2008 DATED 03.03.2011 HAS HELD AS UNDER: - THE TAX EFFECT INVOLVED IN THE PRESENT APPEAL IS RS. 4,65,860/ - . AS PER THE RECENT GUIDELINES OF THE CBDT, APPEAL IN THOSE CASES WHERE THE TAX EFFECT IS LESS THAN RS. 10.00 LACS, ARE NOT TO BE ENTERTAINED. THIS COURT IN THE CASE OF CIT, DELHI - III VS. M/S P.S. JAIN & CO., BEING ITA NO. 179/1991 DECIDED ON 2 ND AUGUST, 2010 HAS TAKEN A VIEW THAT SUCH CIRCULAR WOULD ALSO APPLY TO PENDING CASES. 6. 4 IN VIEW OF ABOVE INSTRUCTION NO. 5/2014 DATED 10.07.2014 WILL APPLY TO ALL PENDING APPEALS. FOLLOWING PRECEDENT, WE HOLD THAT APPEAL IS NOT MAINTAINABLE IN THE INSTANCE CASE AS TAX EFFECT IS LESS THAN 4 LACS. ACCORDINGLY, IT IS HELD THAT APPEAL FILED B Y REVENUE IS NOT MAINTAINABLE. SAME IS DISMISSED WITHOUT PREJUDICE TO THE MERIT OF SAME. I.T.A. NO S . 51 5 & 520 /JP /20 1 1 A .Y. 2006 - 07 ( SH. SUNIL LAL VS. ITO ) PAGE 9 7 . AS A RESULT, APPEAL FILED BY ASSESSEE IS PARTLY ALLOWED AND THAT OF REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 5 TH DAY OF DECEM BER, 2014. SD/ - SD/ - ( B. C. MEENA ) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER TRUE COPY S.K.SINHA COPY FORWARDED TO: 1. THE APPELLANT - SH. SUNIL LAL 2. THE RESPONDENT - ITO, WARD - 1(1), ALW AR 3. THE CIT 4. CIT(APPEALS) 5. THE DR 6. GUARD FILE (ITA NO S . 51 5 & 520 /JP/ 2011 ) BY ORDER A.R., JAIPUR.