Vijay Kumar Jain, V. Income Tax Officer Ward 2(2),

ITA 62/JAB/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2262 (ITAT-JABALPUR)
• Duration Of Justice: 1 year(s) 11 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 12-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V B SARGAR
• Keywords: Rejection of books of accounts
• Section: 133A; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ./ ITA NO. 62/JAB/2016 / ASSESSMENT YEAR : 2010-11 VIJAY KUMAR JAIN, PROP. M/S. KIRAN SAREE CENTRE, GORAKHPUR, JABALPUR PAN : ADDPJ 1025 E VS INCOME TAX OFFICER, WARD 1(2), JABALPUR / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI SUMIT NEMA, ADV. REVENUE BY : SHRI V.B. SARGAR, DR / DATE OF HEARING : 15/03/2018 / DATE OF PRONOUNCEMENT: 16/03/2018 / O R D E R PER KUL BHARAT, JUDICIAL MEMBER:- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-I, JABALPUR DATED 2 ND DECEMBER 2015 PERTAINING TO ASSESSMENT YEAR 2010-11. 2. BRIEFLY STATED FACTS, AS CULLED OUT FROM THE RECORD, ARE THAT A SURVEY UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE BU SINESS PREMISES OF THE ASSESSEE ON 05.11.2009. CERTAIN DISCREPANCIES WERE NOTICE D. ASSESSEE OFFERED EXCESS CASH OF RS.3,24,753/- AND EXCESS STOCK OF RS .16,77,602/- AS UNDISCLOSED INCOME. IN TOTAL ASSESSEE MADE A DISCLOSUR E OF RS.20 LAKHS TOWARDS EXCESS CASH AND EXCESS STOCK. THEREAFTER, NOTI CE UNDER SECTION 148 OF THE ACT WAS ISSUED AS THE ASSESSEE HAD NOT FILED THE RETURN OF INCOME. IN COMPLIANCE THERETO, RETURN WAS FILED ON 09.11.2011. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, LEARNED ASSESSING OFFICER EXAM INED THE TRADING ACCOUNTS PREPARED BY THE ASSESSEE FOR PRE-SURVEY AND P OST-SURVEY PERIOD, PURCHASE AND SALES MADE THEREAFTER AND ALSO OBSERVED THAT ASSESSEE SOLD THE ENTIRE STOCK AND FURNITURE OF THE SHOP AT RS.16 LAKHS. F INANCIAL STATEMENTS ITA NO. 62/JAB/2016 VIJAY KUMAR JAIN VS. ITO AY : 2010-11 2 PREPARED BY THE ASSESSEE WERE NOT SUFFICIENT TO CONVI NCE THE ASSESSING OFFICER. SO HE RECOMPUTED THE INCOME AFTER REJECTIN G THE BOOKS OF ACCOUNTS AND ASSESSED THE INCOME AT RS.50,31,980/-, AFTER MAKING VARIOUS ADDITIONS. 3. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A) AND PARTLY SUCCEEDED. DURING THE COURSE OF APPELLATE PROC EEDINGS, ASSESSEE CONCEDED TO NOT TO CHALLENGE THE ADDITION OF RS.20 LAKHS MADE BY THE ASSESSING OFFICER TOWARDS EXCESS STOCK AND EXCESS CAS H FOUND DURING THE COURSE OF SURVEY. NOW, THE ASSESSEE IS IN APPEAL BEFO RE US BY RAISING FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A) HAS ERRED BOTH IN LAW AND ON FACTS I N CONFIRMING AND SUSTAINED THE ADDITIONS OF RS.7,69,072/- AS INCOME FROM SA LE OF STOCK AND FURNITURE. 2. THAT THE LD. CIT(A) HAS ERRED IN NOT CONSIDERING THE LOSS OF RS.761922/- INCURRED BY THE ASSESSEE ON SALE OF STOCK AND FURNITURE . 3. THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.20,00,000/- AS UNDISCLOSED INCOME BEING SURRENDERED STOCK AND CASH. AS P ER THE WORKING GIVEN BY THE APPELLANT THE TOTAL ASSESSED INCOME COULD ONLY BE RS.14,89,731/- . THERE IS NO JUSTIFICATION GIVEN BY THE LD. CIT(A) IN N OT ACCEPTING THIS INCOME WHICH WOULD HAVE TAKEN CARE OF ALL THE ISSUES. 4. FROM PERUSAL OF THE ABOVE GROUNDS, WE FIND THAT THE ASSESSEE IS AGGRIEVED WITH THE ADDITION ON ACCOUNT OF SALE OF STOCK AND FURNITURE AS WELL AS LD. CIT(A)S NOT CONSIDERING THE LOSS OF RS.7,61,922/- INCURRED BY THE ASSESSEE. ASSESSEE HAS ALSO CHALLENGED THE ADDITION OF RS.20 LAKHS IN THE PLACE OF THE WORKING GIVEN BY THE ASSESSEE CALCULATING INCOM E OF RS.14,89,731/-. LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMIS SION MADE BEFORE THE LOWER AUTHORITIES AND ALSO ADDED THAT THE ASSESSEE ACCEPTE D TO OFFER RS.20 LAKHS FOR TAX, BUT THIS AMOUNT INCLUDES THE EXCESS STO CK AS WELL AS EXCESS CASH. HOWEVER, THE ASSESSEE IN DUE COURSE OF BUSINES S SOLD THE TOTAL STOCK AND FURNITURE OF THE SHOP AND INCURRED A LOSS OF RS. 7,61,922/- WHICH BOTH ITA NO. 62/JAB/2016 VIJAY KUMAR JAIN VS. ITO AY : 2010-11 3 THE LOWER AUTHORITIES FAILED TO CONSIDER. ON THE OTHE R HAND, LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY ARGUED SUPPORTING THE ORDER S OF THE AUTHORITIES BELOW. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD AVAILABLE BEFORE US. WE FIND THAT DURING THE COURSE OF SURVEY OPERATION UNDER SECTION 133A OF THE ACT ASSESSEE SURRENDERED RS.20 LAKHS WHICH, IN TER ALIA, INCLUDED UNEXPLAINED CASH OF RS.3,24,753/- AND REMAINING AMOUNT RS.16,77,602/- FOR EXCESS STOCK. WE OBSERVE THAT ASSESSEE DID NOT FILE THE RETURN OF INCOME IN THE DUE COURSE AS REQUIRED UNDER SECTION 139 OF THE ACT . IT WAS ONLY AFTER THE ISSUANCE OF NOTICE U/S 148 OF THE ACT THAT THE ASSESS EE FILED THE RETURN AND PAID SELF ASSESSMENT TAX OF RS.52,340/-. IN THE RECORDS PLACED BEFORE US, NOT A SINGLE DOCUMENT SHOWS THE COMPUTATION OF INCOME AND FINANCIAL STATEMENTS PREPARED BY THE ASSESSEE. HOWEVER, OTHER RE LATED DETAILS OF THE TRANSACTIONS OF SALE OF STOCK AND FURNITURE AS WELL AS DE TAILS OF TRADING ACCOUNT OF PRE-SURVEY AND POST-SURVEY PERIOD ARE AVAILAB LE ON THE BASIS OF WHICH WE ARE ADJUDICATING THE ISSUES RAISED IN THIS APPE AL. 6. IT IS NOT DISPUTED AT THE END OF THE ASSESSEE, WHIC H IS DULY ACCEPTED BY THE LD. COUNSEL, THAT A SUM OF RS.20 LAKHS IS TO BE OFFE RED FOR TAX AND THE ASSESSEE IS READY TO PAY THE TAXES THEREON. THE POINT OF DISPUTE IS IN RELATION TO THE ESTIMATED PROFITS COMPUTED BY THE ASSESSING OFFICER ON THE SALE OF STOCK AND FURNITURE BY TAKING THE BASIS THAT A PRUDENT B USINESSMAN CANNOT SELL THE GOODS AT A LOSS OF RS.7,61,922/- . LEARNED ASSESSI NG OFFICER REJECTED THE BOOKS OF ACCOUNTS AND APPLIED THE NET PROFIT RATE DISCLOSED BY THE ASSESSEE IN THE PRE-SURVEY PERIOD ON THE ALLEGED SALES . WE FIND THAT THE ASSESSEE WHILE PREPARING THE RETURN, ON ONE HAND SURR ENDERED THE INCOME OF RS.20 LAKHS BY ADDING IT TO THE CLOSING STOCK AND ON THE OTHER HAND CLAIMED THE GROSS LOSS ON THE SALE OF TOTAL STOCK IN HAND. IT IS PERTINENT TO NOTE THAT ASSESSEE HAS HIMSELF ACCEPTED IN THE SUBMISSIONS MADE B EFORE BOTH THE ITA NO. 62/JAB/2016 VIJAY KUMAR JAIN VS. ITO AY : 2010-11 4 LOWER AUTHORITIES THAT IT EARNED A GROSS PROFIT OF RS.17, 08,525/- DURING THE PRE-SURVEY PERIOD OF 01.04.2009 TO 05.11.2009 AND SURPRISINGLY IT IN CURRED A GROSS LOSS OF RS.25,49,679/- DURING THE POST-SURVEY PERIO D OF 06.11.2009 31.03.2010. EVEN THOUGH ASSESSEE HAS FILED VARIOUS DOCUMENTS IN THE PAPER- BOOK TO SOMEHOW EXPLAIN THE HUGE LOSS INCURRED IN TH E POST SURVEY PERIOD, BUT THEY ARE NOT SUFFICIENT ENOUGH TO CONVINCE THE T OTAL CLAIM MADE BY THE ASSESSEE. HOWEVER, LOOKING TO THE MULTIPLE ADDITIONS MADE BY THE ASSESSING OFFICER AND THEN SOME OF THE ADDITIONS PARTLY DELETE D BY THE LD. CIT(A) AND ALSO THE ACCEPTANCE OF THE ASSESSEE TO PAY TAX ON THE SUR RENDERED INCOME OF RS.20 LAKHS, WE, IN ORDER TO BRING AN END THE VARIOUS I SSUES RAISED IN THIS APPEAL, DIRECT THE ASSESSING OFFICER TO RECOMPUTED TH E INCOME OF THE ASSESSEE BY ADDING RS.20 LAKHS TO THE INCOME DISCLOSED B Y THE ASSESSEE IN ITS RETURN OF INCOME FILED IN REPLY TO THE NOTICE U/S 148 OF THE ACT AND ALL OTHER ADDITIONS STAND DELETED. IN THE RESULT, GROUND NOS. 1, 2 AND 3 OF ASSESSEES APPEAL ARE PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED. ORDER PRONOUNCED IN THE COURT ON 16 TH MARCH, 2018 AT JABALPUR. SD/- SD/- (MANISH BORAD) ACCOUNTANT MEMBER (KUL BHARAT) JUDICIAL MEMBER JABALPUR; DATED 16/03/ 2018 *BIT / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, JABALPUR 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, JABALPUR