ASSTT. CIT, CENTRAL CIRCLE - 20, MUMBAI V. AMARJIT D. NAGI, MUMBAI

ITA 546/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2671 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 21-10-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 23-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANUPAMA SHUKLA
• Assessee Lawyers: D A SHETTY
• Section: 143(3); 142(1); 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE HONBLE S/SHRI JOGINDER SINGH (JM), AND RAJESH KUMAR, ( AM ) ./ I.T.A. NO . 546 / MUM/20 1 4 ( / ASSESSMENT YEAR : 20 05 - 06 ) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE - 20, 401, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020. / VS. SHRI AMARJIT D NEGI, 5 - A, SANGAM BUILDING, NEAR HDFC BANK, JUHU VERSOVA LINK ROAD, ANDHERI (W), MUMBAI - 400053 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AA MPN1956A / APPELLANT BY: MS ANUPAMA SHUKLA / RESPONDENT BY SHRI D A SHETTY / DATE OF HEAR ING : 2 1 .7 .201 6 / DATE OF PRONOUNCEMENT : 6.10 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 9 , MUMB AI D A T ED 7.11.2013 PERTAINING TO A.Y. 20 05 - 06 . 2. THE ISSUE RAISED IN THE FIRST GROUNDS OF APPEAL IS AGAINST THE DELETION OF ADDITION BY THE LD. CIT(A) AS MADE BY THE AO ON ACCOUNT OF UNACCOUNTED ITA NO 546 /M/ 201 4 2 SALES WHICH WAS MADE BY THE AO ON THE BASIS OF ENTRIES I N THE DIARY SEIZED DURING THE SEARCH ACTION . 3 . FACTS OF THE CASE ARE THAT THERE WAS A SEARCH ACTION UNDER SECTION 132(1) OF THE INCOME TAX ACT, 1961 ON N A GI GROUP ON 30.5.2008 TO WHICH THE ASSESSEE WAS CONNECTED. A NOTICE UNDER SECTION 153A WAS ISSUED ON 5.9.2008 AND SERVED UPON THE ASSESSEE WHICH WAS COMPLIED BY HIM BY FILING THE RETURN OF INCOME ON 30.8.2010 DECLARING AN INCOME OF RS.1,30,774/ - WHICH WAS THE SAME AS DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN FILED ON 12.12.2005 . T HEREAFTE R STATUTORY NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. CERTAIN DOCUMENTS WERE SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS MARKED AS A - 2 AND A - 3 FROM THE RESIDENTIAL PREMISES OF THE MRS.CHANDRA A N A GI AND MR. AMARJET N A GI, 1001, A PATLIPUTRA, FOUR BANGALOW, ANDHERI (W), MUMBAI . V IDE ORDER SHEET ENTRY DATED 12.11.2010 , THE ASSESSEE WAS ASKED TO GIVE PAGE - WISE COMMENTS ON A - 2 AND A - 3 AND ALSO ASKED AS TO WHY THE AMOUNT OF ENTRIES AS CONTAINED IN THESE ANNEXURE SHOULD NOT BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE REPLIED TO THE SHOW CAUSE NOTICE WHICH WAS REJECTED BY THE AO AND AS A RESULT ADDED INTERALIA A SUM OF RS.61,58,704/ - ON ACCOUNT OF UNACCOUNTED SALES AS STATED IN PARA 4.1 TO 4.3 OF THE A SSESSMENT ORDER BY FRAMING THE ASSESSMENT UNDER SECTION 143(3) READ WITH SECTION 153A OF THE ACT VIDE ORDER DATED 30.12.2010 BY ASSESSING THE TOTAL INCOME AT RS.77,97,240/ - . AGGRIEVED BY THE ORDER OF AO, THE ITA NO 546 /M/ 201 4 3 ASSESSEE PREFERRED AN APPEAL BEFORE THE L D. CIT(A) WHO DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER : 5.2 I HAVE VERY CAREFULLY CONSIDERED THE MATTER. I HAVE EXAMINED THE ORDER OF THE A. O AND THE SUBMISSIONS OF THE APPELLANT. I HAVE ALSO SCRUTINIZED THE COPIES OF THE SEIZED MATERIAL AS ARE AVAILABLE ON RECORD AND ALSO CONSIDERED T HE PAPER BOOK SUBMITTED BY THE APPELLANT. THE A. O NOTICED THAT THERE ARE CERTAIN FINANCIAL ENTRIES IN THE DIARY SEIZED DURING THE SEARCH OPERATIONS AND ASSUM ING THE SAME AS UNACCOUNTED SALES IN THE BOOKS OF THE APPELLANT. THE APPELLANT, ON ITS PART HAS SUBMITTED DETAILED WORKING FOR THE PURPOSE OF EXPLAINING T HE ENTRIES, AND HAS EXPLAINED THAT THE ENTRIES ARE NOT ACTUAL SALES, BUT OR ESTIMATES MADE IN PURSUANT TO ENQUIRIES MADE BY ONE OF ITS CUSTOMERS. IT ALS O OBSERVED FROM THE ORDER OF ASSESSMENT THAT THE ENTRIES AS SEEN IN THE DIA RY HAVE ONLY BEEN ASSUMED BY THE A. O THAT IT REPRESENT SALES. THE APPELLANT IS THE BUSINESS OF DEALING IN PAINTINGS AND ARTS - ARID INTERIOR DECORATION ETC. IT QUITE PLAUSIBLE THAT T HE CUSTOMERS WOULD BE MAKING ENQUIRIES WITH REGARD RATES, ESTIMATED COST OF VARIOUS PROJECTS WITH DIFFERENT PERMUTATIONS AND COMBINATIONS WHICH NEED TO BE WORKED OUT. THEREFORE, EACH AND EVERY ENTRY THE PERSONAL DIARY OF THE APPELLANT CANNOT BE THE SALES O F THE APPELLA NT P ARTICULARLY WHEN THERE IS NO EVIDENCE OF ANY AMOUNT RECEIVED BY THE APPELLA NT WITH RESPECT TO SUCH ENTRIES. THE AO HAS SIMPLY RELIED ON THE ENTRIES MADE IN THE DIARY O F THE APPELLANT, PRESUMING THEM TO BE SALES, WITHOUT BRINGING ANY EVID ENCE ON RECORD . THERE IS NO CORROBORATIVE EVIDENCE WITH THE AO TO HOLD THAT SALES HAVE ACTUALLY TAKEN PLACE, OR THAT ANY AMOUNT IN RESPECT OF SUCH SALES HAS BEEN ACTUALLY RECEIVED BY THE APPELLANT EITHER THROUGH CHEQUE OR CASH THAT ANY EXPENDITURE HAS BE EN INCURRED BY THE APPELLANT IN THIS BEHALF. HENCE IT IS CLEAR THAT THE A O COULD NOT SUBSTANTIATE WITH CORROBORATIVE EVIDENCE THAT THE EVIDENCE THAT THE ENTRIES MADE IN THE DIARY ARE NOT MERELY ESTIMATES BUT ARE ACTUAL SAL ES. ON THE CONTRARY, THE APPELL ANT DURING THE COURSE OF APPELLATE PRO CEEDINGS HAS EXPLAINED THESE ENTRIES IN DETAIL. THE APPELLANT, WITH DETAILED WOR KING OF DIFFERENT PERMUTATIONS/ COMBINATIONS HAS BEEN ABLE TO EXPLAIN THAT THE ENTRIES ARE MERELY PROJECTIONS RELATED TO SALES ENQUIRY AN D NO ACTUAL SALE HAS TAKEN PLACE IN RESPECT OF SUCH ENTRIES. THERE IS NO EVIDENCE TO PROVE OTH ERWISE AND IN THE SAID EVENT IT IS HELD THAT THE ENTRIES AS OBSERVED IN A2 ARE BUT COST ESTIMATIONS FOR DIFFERENT PERMUTATIONS AND COMBINATIONS. HENCE THE ADDI TI ON AS MADE THE A.O ASSUMING THE FINANCIAL ENTRIES AS SALES NOT RECORDED IN THE BOOKS AND THEREBY MAKING ADDITIONS ON UNACCOUNTED SALES OF R S.1597,783, RS.13,12,877. RS.16,72,413/ AND RS.15,75,631/ - S TAND DELETED ITA NO 546 /M/ 201 4 4 AGGRIEVED BY THE ORDER OF AO, THE REVEN UE PREFERRED AN APPEAL BEFORE US. 4. THE LD. AR SUBMITTED BEFORE US THAT THE ENTRIES SEIZED DURING T HE COURSE OF SEARCH OPERATION DID NOT REPRESENT ANY UNACCOUNTED SALES AS ALLEGED BY THE AO BUT ONLY WERE ESTIMATE S MADE IN PU RSUANCE OF EN QU IRI ES BY THE CUSTOMERS WHICH WAS WRONGLY PRESUMED BY THE AO TO BE UNACCOUNTED SALES. SINCE THE ASSESSEE IS IN THE BUSINESS OF DEALING IN PAINTING , ARTS AND INTERIOR DECORATION ETC HE HAS TO WORK OUT THE ESTIMATES AS AND WHEN THERE ARE ENQUIRIES FROM THE CUSTO MERS. THE LD AR FURTHER SUBMITTED THAT NO FURTHER EVIDENCE WAS FOUND DURING THE COURSE SEARCH WHICH CORROBORATE THESE CALCULATION TO B E SALES OF T HE A S SE S SEE AND HEAVI L Y REL IED O N THE ORDER OF LD.CIT(A) WHO HAS TAKEN CORRECT VIEW IN THE MATTER BY REVER SING THE ORDER OF AO. 5 . PER CONTRA, THE LD. DR SUBMITTED BEFORE US THAT THE SALES ENTRIES FOUND IN THE DIARY DURING THE COU RSE OF SEARCH ACTION REPRESENT ED UNCOUNTED SALES AND RIGHTLY ADDED BY THE AO TO THE INCOME OF THE ASSESSEE. THE LD. DR PRAYED FO R THAT THE ORDER OF LD.CIT(A) BE SET ASIDE AND THAT OF AO BE RESTORED. 7 . WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF THE AUTHORITIES BELOW. THE MADE ADDITIONS FOR UNACCOUNTED SALES ON THE BAS IS OF ENTRIES IN THE DIARY FOUND DURING THE COURSE OF SEARCH WHICH WAS DELETED BY THE CIT(A) AS HAVING NO BASIS AND CORROBORATING MATERIALS AFTER GIVING DETAILED FINDINGS AS GIVEN ABOVE. WE ARE IN AGREEMENT OF THE OBSERVATIONS OF THE LD.CIT(A) THAT EACH ITA NO 546 /M/ 201 4 5 A ND EVERY ENTRY IN THE DIARY SEIZED DURING THE COURSE OF SEARCH PROCEEDINGS COULD NOT BE TREATED AS UNACCOUNTED SALES ESPECIALLY WHEN THE ASSESSEE HAS DULY EXPLAINED EACH AND EVERY ENTRY IN THE DIARY AS ESTIMATES WORKED OUT WITH RESPECT TO VARIOUS CUS TOMERS QUERIES BY THE ASSESSEE AS HE IS IN THE BUSINESS OF PAINTING , ART WORK AND INTERIOR DECORATION WORK. MOREOVER, THERE IS NO OTHER MATERIALS FOUND BY THE SEARCH TEAM WHICH CORROBORATE THE ENTRIES TO BE UNACCOUNTED SALES . T HEREFORE, WE ARE NOT IN CLINED TO INTERFERE WITH THE ORDER OF LD.CIT(A) AS IT DOES NOT CONTAIN ANY INFIRMITY OF LAW OR FACTS . ACCORDINGLY , WE UPHELD THE ORDER OF THE LD.CIT(A) BY DISMISS ING THE APPEAL OF THE REVENUE. 8 . IN THE RESULT , THE APPEAL OF THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH OCT , 2016 . 6 TH OCT , 2016 SD SD (JOGINDER SINGH ) ( RAJESH KUMAR ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 6 TH OCT , 2016 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDEN T. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI