Sh. Om Nath Sharma, Hamirpur V. ACIT, Mandi

ITA 599/CHANDI/2008

• Counselvise Citation: 59921514 RSA 2008
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 20-06-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MITTALDR
• Assessee Lawyers: ASHWANI KUMAR
• Keywords: Business income; Search and seizure; Loose papers; Document seized; Principle of natural justice; Source of fund; Documents seized
• Section: 133A; 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NOS.598 & 599/CHD/2008 (ASSESSMENT YEAR : 2003-04 & 2004-05) ONKAR NATH SHARMA, VS. THE A.C.I.T., PROP.SHARMA VISHVAKARMA FURNITURE MANDI (HP) HAMIRPUR (HP). PAN: AASPN 5390 A (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI S.K.MITTAL,DR DATE OF HEARING : 18.01.2012 DATE OF PRONOUNCEMENT : 30.01.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THESE TWO APPEALS FILED BY THE ASSESSEE ARE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), SHIMLA DATED 23.04.2008 RELATING TO ASSESSMENT YEARS 2003-04 AND 2004-05 AG AINST THE ORDER PASSED UNDER SECTION 143(3)/153A OF THE INCOME TAX ACT, 1961. 2. BOTH THESE APPEALS RELATING TO THE SAME ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS CONSOLI DATED ORDER FOR THE SAKE OF CONVENIENCE. 3. GROUND NO.1 RAISED IN BOTH THE APPEALS BEING GE NERAL IS DISMISSED. 4. GROUND NO.2 RAISED IN BOTH THE APPEALS IS AS UND ER: 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF ASSESSING OFFICER BY CLUBBING THE INCOME OF RUPEES 58,400 (RS.55,000/- IN ITA NO.599/CHD/2008) AND RS.82,000/- (RS.90,000/- IN ITA NO.599/CHD/2008) BELONGING TO WIFE AND MOTHER OF THE APPELLANT RESPECTABLY. THE 2 APPELLANTS WIFE AND MOTHER HAD DECLARED THIS INCOME IN THE ORIGINAL RETURN FILED BEFORE THE SEARCH AND SEIZURE. HOWEVER, THE WIFE AND MOTHER OF THE APPELLANT HAD DECLARED NIL INCOME IN THEIR RETURNS OF INCOME FILED IN RESPONSE TO NOTICE UNDER SECTION 153 OF THE INCOME TAX ACT, 1961 AFTER THE SEARCH AND SEIZURE, AS THIS INCOME STANDS COVERED IN THE NET INCOME DECLARED BY THE APPELLANT BY APPLYING A NP RATE OF 6.1 PERCENT ON THE TOTAL TURN OVER. THE ORDER CONFIRMING THE ADDITIONS OF RUPEES 58,400/- (RS.55,000/- IN ITA NO.599/CHD/2008) AND RUPEES 82,000/- (RS.90,000/- IN ITA NO.599/CHD/2008) IS ILLEGAL AND ARBITRARY THE SAME DESERVES TO BE QUASHED IN THE INTEREST OF JUSTICE. 5. THE LEARNED A.R. FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE RELATING TO ASSESSMENT YEARS 20 00-01 TO 2002-03. 6. THE ISSUE RAISED IN GROUND NO.2 BY THE ASSESSEE IS AGAINST THE ADDITION MADE BY CLUBBING THE INCOME OF THE WIFE AN D MOTHER OF THE ASSESSEE IN THE HANDS OF THE ASSESSEE, PURSUANT TO SEARCH AND SEIZURE OPERATION CARRIED OUT AT THE PREMISES OF THE ASSESS EE. THE AFORESAID INCOME BELONGING TO THE WIFE AND MOTHER OF THE ASSE SSEE WAS DECLARED IN THEIR RESPECTIVE RETURNS OF INCOME FILED, PRIOR TO THE DATE OF SEARCH. SIMILAR ISSUE AROSE BEFORE THE TRIBUNAL IN ASSESSEE S OWN CASE IN ITA NOS595 TO 597/CHD/2008 RELATING TO ASSESSMENT YEARS 2000-01 TO 2002- 03. THE TRIBUNAL VIDE ORDER DATED 28.10.2009 VIDE PARA 10AND 11 HELD AS UNDER: 10. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. THE ASSESSEE BEFORE US WAS FILING THE RETU RN OF INCOME SHOWING PENSION INCOME, PROFITS FROM HIS SOLE PROPR IETARY BUSINESS AND INTEREST INCOME IN THE ORIGINAL RETURN OF INCOME FILED. SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 16.6.2004. SURVEY OPER ATION WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSE E ON THE SAME DATE I.E. 16.6.2004. DURING THE COURSE OF SUR VEY PROCEEDINGS, IN ADDITION TO REGULAR BOOKS OF ACCOUN T MAINTAINED BY THE ASSESSEE, SEVERAL LOOSE PAPERS AS WELL AS KACCHI COPIES AS PER ANNEXURE-A WERE FOUND AND IMPO UNDED U/S 133A OF THE ACT. IN RESPONSE TO NOTICE U/S 153 A OF THE I.T. 3 ACT, THE ASSESSEE ADMITTED TO HAVE INCOME FROM BUSI NESS OUTSIDE ITS BOOKS OF ACCOUNT AND DECLARATION OF THE SAID INCOME WAS MADE IN EACH OF THE ASSESSMENT YEARS I.E. 2000- 01, 2001- 02 & 2002-03. THE ASSESSEE DECLARED ADDITIONAL INC OME OF RS. 4,13,767/- ON ACCOUNT OF INCOME FROM BUSINESS IN AS SESSMENT YEARS 2000-01, RS.53,66,593/- IN ASSESSMENT YEAR 20 01-02 AND RS. 5,39,376/- IN ASSESSMENT YEAR 2002-03. THE SAID ADDITIONAL INCOME WAS INCLUDED AS INCOME OF THE ASSESSEE. IN THE STATEMENT RECORDING DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS CONFRONTED WITH THE R ETURN OF INCOME FILED BY HIS WIFE SMT.BRAHMI DEVI AND HIS MO THER SMT.BISHAMBARI DEVI. IN THE RETURN OF INCOME FILED BY THE RESPECTIVE PARTIES, THE INCOME WAS SHOWN FROM SALE OF MILK, STITCHING AND OTHER SOURCES. IN RESPONSE TO THE QU ERY RAISED DURING THE COURSE OF RECORDING OF STATEMENT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE EXPLAINED THAT BOTH HIS W IFE AND MOTHER HAD NO SEPARATE SOURCES OF INCOME AND IN AN Y CASE THE INCOME EARNED BY HIM HAD BEEN DECLARED IN RESPONSE TO NOTICE U/S 153A OF THE ACT AND NO PART OF INCOME DECLARED IN THE HANDS OF WIFE AND MOTHER ARE INCLUDIBLE IN HIS HAND S. 11. THE ASSESSEE BEFORE US HAD DECLARED INCOME FRO M BUSINESS ON ESTIMATE BASIS ON ACCOUNT OF UNACCOUNTE D ENTRIES IN HIS BOOKS OF ACCOUNT. THE CLAIM OF THE ASSESSEE IS THAT THE INCOME EARNED IN TOTALITY HAS BEEN DECLARED BY HIM IN RESPONSE TO THE NOTICE ISSUED U/S 153A OF THE ACT AND ONCE T HE SAME HAS BEEN ADOPTED AS HIS INCOME, THERE IS NO MERIT IN IN CLUDING ANY OTHER INCOME IN HIS HANDS ON ACCOUNT OF INCOME DECL ARED BY HIS WIFE OR HIS MOTHER. THE DECLARATION OF ADDITIO NAL INCOME BY THE ASSESSEE HAS BEEN ACCEPTED IN TOTALITY BY TH E ASSESSING OFFICER. ONCE SUCH INCOME HAS BEEN ADOPTED AS INCOM E OF THE ASSESSEE IN THE RESPECTIVE YEARS AND IN THE ABSENCE OF ANY EVIDENCE FOUND DURING THE COURSE OF SEARCH THAT THE WIFE AND THE MOTHER OF THE ASSESSEE HAS INDEPENDENT SOURCES OF INCOME, THERE IS NO MERIT IN INCLUDING THE INCOME DECLARED BY THE SAID PERSONS IN THEIR ORIGINAL RETURN OF INCOME FILED BE FORE THE SEARCH PROCEEDINGS, AS INCOME OF THE ASSESSEE UNDER THE PROVISIONS OF SECTION 64 OF THE I.T. ACT. IN ANY C ASE, THE ASSESSEE IS ENTITLED TO THE BENEFIT OF TELESCOPING ON ACCOUNT OF HIS DECLARATION OF ADDITIONAL INCOME IN THE RESPECT IVE YEARS. IN THE AFORESAID FACTS AND CIRCUMSTANCES, WE FIND NO M ERIT IN INCLUDING ANY INCOME UNDER THE PROVISIONS OF SECTI ON 64 OF THE I.T. ACT IN THE HANDS OF THE ASSESSEE AS THE ASSESS EE HAD IN RESPONSE TO NOTICE U/S 153A OF THE ACT DECLARED THE ADDITIONAL INCOME ON ACCOUNT OF UNACCOUNTED BUSINESS RECEIPTS AND THE SAME HAVING BEEN ACCEPTED BY THE ASSESSING OFFICER IN TOTALITY, NO FURTHER ADDITION IS WARRANTED. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION MADE IN TH E HANDS OF THE ASSESSEE PRIOR ON ACCOUNT OF INCOME DECLARED BY THE WIFE AND MOTHER OF ASSESSEE, PRIOR TO THE SEARCH PROCEED INGS. THE GROUND NO. 2 RAISED BY THE ASSESSEE IN ALL THE YEAR S IS ALLOWED. 7. THE ISSUE RAISED IN THE PRESENT GROUND OF APPEAL IS IDENTICAL TO THE ISSUE RAISED BEFORE THE TRIBUNAL IN ASSESSMENT YEAR S 2000-01 TO 2002-03. 4 RESPECTIVELY FOLLOWING THE ABOVE SAID RATIO LAID DO WN BY THE TRIBUNAL (SUPRA) WE DIRECT THE ASSESSING OFFICER TO DELETE T HE ADDITION MADE IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF INCOME DECL ARED BY THE WIFE AND MOTHER OF THE ASSESSEE PRIOR TO SEARCH PROCEEDINGS. GROUND NO.2 RAISED BY THE ASSESSEE IN BOTH THE APPEALS IS THUS ALLOWED . 8. GROUND NO.3 RAISED BY THE ASSESSEE IN ITA NO.598 /CHD/20-08 IS AS UNDER : 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RUPEES 1,09,280/- ON ACCOUNT OF A NOTE BOOK FOUND IN THE PREMISES OF ASSESSEE WHICH DO NOT PERTAIN TO HIM. SUFFICIENT EVIDENCE WAS PRODUCED BEFORE THE CIT(A) TO THIS EFFECT. THE HAND WRITING AND NATURE OF GOODS WRITTEN IN THIS NOTE BOOK DO NOT RELATE TO THE BUSINESS OF THE APPELLANT, THEREFORE THIS ADDITION DESERVE TO BE QUASHED. 9. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT THE NOTE BOOK FOUND DURING THE COURSE OF SEARCH DID NOT BELONG TO THE ASSESSEE AND ALSO WAS NOT IN THE HANDWRITING OF THE ASSESSEE. FURTH ER AN ALTERNATE PLEA WAS RAISED BY THE LEARNED A.R. FOR THE ASSESSEE THA T DURING THE COURSE OF SEARCH, KACHI CASH BOOK WAS FOUND AND TOTAL OF ENTR IES IN THE SAID KACHI BOOK WERE INCLUDED IN THE HANDS OF THE ASSESSEE. A PRAYER WAS MADE TO SET OFF THE ABOVE SAID ADDITION AGAINST THE NOTINGS IN THE NOTE BOOK (SR.NO.55) FOUND. 10. THE LEARNED D.R. FOR THE REVENUE POINTED OUT TH AT THERE WAS NO MERIT IN THE ALTERNATE PLEA RAISED BY THE LEARNED A .R. FOR THE ASSESSEE AS THE ASSESSEE HAS TO ESTABLISH THAT THE TRANSACTIONS IN THE TWO NOTE BOOKS MATCHED. 5 11. THE LEARNED A.R. FOR THE ASSESSEE IN REJOINDER SUBMITTED THAT THE ISSUE MAY BE SENT BACK TO THE ASSESSING OFFICER FOR NECESSARY VERIFICATION. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. DURING THE COURSE OF SEARCH, A SMALL NOTE BOOK I.E. SR.55 OF ANNEXURE-A WAS FOUND. AS THE ASSESSEE HAD FAILED TO PROVE THA T THE SAID NOTE BOOK BELONGED TO SOMEONE ELSE, NET PROFIT WAS WORKED OUT BY APPLYING A RATE OF 6.1% TO THE SALES RECORDED IN THE SAID NOTE BOOK , RESULTING IN ADDITION OF RS.1,09,280/-. THE PLEA OF THE ASSESSEE BEFORE THE LOWER AUTHORITIES WAS THAT THE SAID NOTE BOOK DID NOT BELONG TO THE A SSESSEE. THE CIT (APPEALS) HAD COMPARED THE NOTINGS IN SEIZED NOTE B OOK WITH ANOTHER LEDGER MARKED AS A-33 AND FOUND SIMILARITY IN THE N ATURE OF ENTRIES OF CASH AND STYLE AS WELL AS IN WRITING. EVEN THE NAM ES OF THE PERSONS TO WHOM PAYMENTS WERE MADE WERE SAME. ACCORDINGLY, TH E ADDITION MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE CIT (APP EALS). 13. THE ASSESSEE BEFORE US HAS RAISED AN ALTERNATE PLEA UNDER WHICH IT HAS PLEADED THAT THE ENTRIES IN THE SEIZED NOTE BOO K I.E. SR.55 OF ANNEXURE-A MAY BE SET OFF AGAINST THE KACHI CASH BO OK FOUND I.E. A-31 TO A-35 OF SEIZED DOCUMENTS. THE ABOVE SAID PLEA O F THE ASSESSEE HAS NOT BEEN VERIFIED BY THE AUTHORITIES BELOW AND FOLL OWING THE PRINCIPLE OF NATURAL JUSTICE WE DEEM IF FIT TO RESTORE THIS ISSU E OF VERIFICATION OF THE ENTRIES IN THE TWO SEIZED DOCUMENTS, BACK TO THE FI LE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL DECIDE THE IS SUE AFTER NECESSARY VERIFICATION AND ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. GROUND NO.3 RAISED BY THE ASSESSEE IN AS SESSMENT YEAR 2003- 04 IS ALLOWED FOR STATISTICAL PURPOSES. 6 14. GROUND NO.3 RAISED BY THE ASSESSEE IN ITA NO.59 9/CHD/20-08 IS AS UNDER : 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN CONFIRMING OF ACTION OF ASSESSING OFFICER ON ACCOUNT OF ADDITION OF RUPEES 1,00,000/- DEPOSIT MADE BY THE APPELLANT IN HIS SAVING ACCOUNT. AS PER CASH FLOW STATEMENT THERE IS SUFFICIENT CASH AVAILABLE WITH THE APPELLANT TO MAKE SUCH DEPOSIT, THEREFORE THIS ADDITION OF RUPEES 1,00,000/- IS NOT TENABLE IN THE EYE OF LAW. 15. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT T HAT THE SAID GROUND OF APPEAL IS COVERED BY THE ORDER OF THE TRIBUNAL R ELATING TO ASSESSMENT YEAR 2000-01 TO 2002-03. 16. WE FIND THAT DURING THE YEAR UNDER CONSIDERATIO N, THE ADDITION OF RS.1 LAC WAS MADE ON ACCOUNT OF FAILURE OF THE ASSE SSEE TO PRODUCE WITH EVIDENCE THE SOURCE OF DEPOSIT IN ITS SAVING ACCOUN T. HOWEVER, THE ASSESSEE CLAIMED THE SAID DEPOSIT TO BE OUT OF ITS AVAILABLE CASH, WHICH IS BEING EXPLAINED FROM THE CASH FLOW STATEMENT. SIMI LAR ISSUE AROSE BEFORE THE TRIBUNAL (SUPRA) AND VIDE PARA 15 THE TR IBUNAL HELD AS UNDER : 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORDS. THE SOURCE OF DEPOSIT OF ANY AMOUNTS CREDI TED TO THE BANK ACCOUNT OF THE ASSESSEE ARE TO BE EXPLAINED WI TH EVIDENCE TO VERIFY THE NATURE OF RECEIPT. IN CASE OF FAILUR E ON THE PART OF THE ASSESSEE TO JUSTIFIABLY EXPLAIN THE SAME, IT IS TO BE INCLUDED AS HIS INCOME FROM OTHER SOURCES. THE ASSESSEE BEFO RE US HAD FILED NO EXPLANATION WITH THE ASSESSING OFFICER IN RESPECT OF DEPOSIT OF RS. 1,50,000/- IN CENTRAL BANK OF INDIA, HAMIRPUR. BEFORE THE CIT(A), THE EXPLANATION WAS FOUND TO BE NOT TALLYING WITH THE EVIDENCE. THE ASSESSEE BEFORE US TRIED TO EXPLAIN THE DEPOSIT OUT OF CASH FLOW STATEMENT. HOWEVER, WE FI ND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE ENTRIES BEFORE T HE ASSESSING OFFICER. IN THE INTEREST OF JUSTICE, WE DEEM IT FI T TO RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME DE NOVO. THE ASSESSING OFFICER SHALL ALLOW A R EASONABLE OPPORTUNITY OF HEARING. THE GROUND IS ALLOWED FOR S TATISTICAL PURPOSES. 17. FOLLOWING THE ABOVE SAID PRECEDENCE IN ASSESSEE S OWN CASE WE REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE 7 SAME IN LINE WITH OUR DIRECTIONS IN PARA 15 OF THE AFORESAID ORDER OF THE TRIBUNAL. 18. THE ADDITIONAL GROUND NO.4 IN ASSESSMENT YEAR 2 003-04 AND GROUND NO.4 AND ADDITIONAL GROUND NO.5 IN ASSESSMENT YEAR 2004-05 HAVE NOT BEEN PRESSED BY THE ASSESSEE AND HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 19. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH DAY OF JANUARY, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 30 TH JANUARY, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH