Sh. Bimal Jain, Ludhiana V. ACIT, Ludhiana

ITA 630/CHANDI/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9808 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 24-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: BIMAL JAIN IN PERSON
• Keywords: Loose papers
• Section: 69C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 630 & 631/CHD/2016 A.Y: 2006-07 & 2007-08 SHRI BIMAL JAIN, VS THE ACIT, SCO 6, INDRA MARKET , CENTRAL CIRCLE-1, GILL ROAD, LUDHIANA. LUDHIANA. PAN : AAZPJ9730H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BIMAL JAIN (IN PERSON) RESPONDENT BY : SHRI SUSHIL KUMAR,CIT-DR DATE OF HEARING : 05.07.2016 DATE OF PRONOUNCEMENT : 08.07.2016 O R D E R BOTH THE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF LD. CIT(APPEALS)-5, LUD HIANA DATED 16.03.2016 FOR ASSESSMENT YEARS 2006-07 AND 2007-08. 2. I HAVE HEARD THE ASSESSEE IN PERSON AND THE LD. DR FOR THE REVENUE AND GONE THROUGH THE MATERIAL ON RE CORD. BOTH THE APPEALS ARE DECIDED AS UNDER. ( ITA 630/2016 : A.Y : 2006-07) 3. IN THIS APPEAL, ASSESSEE CHALLENGED THE ADDITION OF RS. 1 LAC ON ACCOUNT OF UNEXPLAINED MARRIAGE EXPENS ES AND FURTHER IN NOT ALLOWING SET OFF OF ADDITION OF RS. 1 LAC 2 AGAINST SURRENDERED INCOME OF RS. 1 LAC MADE BY THE ASSESSEE. 4. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ADDIT ION OF RS. 1 LAC WAS MADE UNDER SECTION 69C OF THE INCOME TAX ACT IN RESPECT OF EXPENDITURE INCURRED ON THE MARRI AGE OF THE DAUGHTER OF THE ASSESSEE. THE ASSESSING OFFICE R HAS MENTIONED THAT THE MARRIAGE OF ASSESSEE'S SECOND DAUGHTER, DR. SAVITA JAIN WAS PERFORMED IN FEB.,200 6. THE ASSESSING OFFICER HAS MENTIONED THAT THERE WERE SOME LOOSE PAPERS FOUND AND SEIZED AS PER ANNEXURE A-24 INDICATING EXPENSES ON THE MARRIAGE. THEY WERE CONFRONTED TO THE ASSESSEE AND STATEMENT RECORDED. IN REPLY DURING ASSESSMENT, IT WAS SUBMITTED THAT ASSE SSEE AND HIS FAMILY MEMBERS CONTRIBUTED RS. 4,01,000/- O N THE MARRIAGE. IT WAS ALSO CLAIMED THAT SHAGUN GIVE N BY THE RELATIVES WAS ALSO SPENT ON THE MARRIAGE. THE ASSESSING OFFICER MENTIONED THAT AS PER DOCUMENT SE IZED AS ANNEXURE A-24, EXPENSES RELATING TO THE YEAR 200 5 WERE FOUND TO BE RS. 1,33,446/- WHILE THERE ARE SLI PS WHICH DID NOT CARRY DATE AND THE TOTAL OF THESE AMO UNTS WORKS OUT TO RS. 3,59,344/-. ACCORDINGLY, THE ASSE SSING OFFICER ESTIMATED EXPENSES ON THE MARRIAGE AS RS. 1 LAC MORE THAN THE AMOUNT ADMITTED TO HAVE BEEN CONTRIBU TED BY THE FAMILY. 4(I) THE LD. CIT(APPEALS), CONSIDERING THE SUBMISSI ON OF THE ASSESSEE NOTED THAT THE ASSESSING OFFICER HAS 3 MENTIONED THAT ON THE BASIS OF LOOSE SLIPS FOUND AN D SEIZED AT THE TIME OF SEARCH, TOTAL EXPENSES RELATI NG TO THIS MARRIAGE WORKS OUT TO RS. 4,92,790/- AS AGAINS T CONTRIBUTION OF RS. 4 LACS SHOWN BY THE ASSESSEE WH ICH INCLUDES RS. 1,50,000/- OF SHAGUN. THEREFORE, ESTI MATE BY THE ASSESSING OFFICER WAS CONFIRMED AND APPEAL O F THE ASSESSEE WAS DISMISSED. 5. AFTER CONSIDERING RIVAL CONTENTIONS, I DO NOT FI ND ANY JUSTIFICATION FOR MAKING ADDITION OF RS. 1 LAC IN THE HANDS OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED MARRIAGE EXPENSES. THE ASSESSING OFFICER HAS SPECIFICALLY MENTIONED THAT AS PER ANNEXURE A-24, MARRIAGE EXPENSES RELATING TO THE YEAR 2005 WERE FO UND TO BE RS. 1,33,446/- WHILE THERE ARE SLIPS WHICH DI D NOT CARRY THE DATE AND THE TOTAL OF THESE WORK OUT TO R S. 3,59,344/-. 6. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) T HAT MARRIAGES OF THE DAUGHTERS OF THE ASSESSEE WERE HEL D IN THE PREVIOUS YEAR RELATING TO ASSESSMENT YEAR 2003- 04 AND 2006-07. IT WAS ALSO PLEADED THAT ASSESSEE HAD ALREADY SHOWN TOTAL MARRIAGE EXPENSES OF RS. 7,27,0 00/- I.E. RS. 3,26,000/- IN ASSESSMENT YEAR 2003-04 AND RS. 4.01.000/- IN ASSESSMENT YEAR 2006-07. THEREFORE, THE MARRIAGE EXPENSES AS PER SEIZED DOCUMENT ARE LESS T HAN THE EXPENSES SHOWN BY THE ASSESSEE IN TWO YEARS ON THE MARRIAGE OF DAUGHTERS OF THE ASSESSEE. THE SUBMISS IONS 4 OF THE ASSESSEE HAVE NOT BEEN REBUTTED BY THE AUTHO RITIES BELOW IN ANY MANNER. THE CLAIM OF THE ASSESSEE WAS, THUS, SPECIFIC THAT WHEN ASSESSEE PERFORMED MARRIAG E OF HIS TWO DAUGHTERS IN TWO DIFFERENT YEARS, MARRIAGE EXPENSES OF RS. 7,27,000/- WERE SPENT IN TWO MARRIA GES, HOWEVER, AS PER SEIZED PAPERS, THE TOTAL OF THE SAM E MARRIAGE EXPENSES WERE CONSIDERED BY THE AUTHORITIE S BELOW IN A SUM OF RS. 4,92,790/-. THE CONTENTION O F THE ASSESSEE IS SUPPORTED BY THE FACT THAT IN SOME OF T HE SEIZED PAPERS, ASSESSMENT YEAR UNDER REFERENCE WAS MENTION ED BUT IN MAJORITY OF THE SEIZED PAPER, NO DATE WAS MENTIO NED. THEREFORE, EXPLANATION OF THE ASSESSEE IS ACCEPTABL E TO THE EXTENT THAT ADDITION IS WHOLLY UNJUSTIFIED. FURTHE R, THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS AS TO HOW HE HAS ESTIMATED RS. 1 LAC MORE EXPENSES ALLEGED TO HAVE B EEN SPENT BY ASSESSEE IN THE MARRIAGE OF HIS SECOND DAUGHTER. IT IS THE PRESUMPTION OF THE ASSESSING OFFICER THAT UNDATED S EIZED PAPER BELONGS TO MARRIAGE EXPENSES OF HIS SECOND DA UGHTER. THE TOTALITY OF THE MARRIAGE EXPENSES OF BOTH DAUGH TERS HAVE NOT BEEN CONSIDERED, SO ON PRESUMPTION, SUCH ADDITI ON COULD NOT BE MADE. 7. IN THE ABSENCE OF ANY SPECIFIC MATERIAL FOUND AGAINST THE ASSESSEE AND IN THE ABSENCE OF ANY BASI S FOR ESTIMATING ADDITION OF RS. 1 LAC, I AM OF THE VIEW THE ADDITION OF RS. 1 LAC IS WHOLLY UNJUSTIFIED. I, ACCORDINGLY, SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ADDITION OF RS. 1 LAC ON ACCOUNT OF 5 UNEXPLAINED MARRIAGE EXPENSES. FURTHER, THE ASSESS EE MADE ALTERNATE CLAIM THAT ADDITION OF RS. 1 LAC MAY BE SET OFF AGAINST ADDITIONAL INCOME SURRENDERED OF RS . 1 LAC IN THE RETURN OF INCOME. SINCE THE ADDITION ON ACC OUNT OF MARRIAGE EXPENSES HAS BEEN DELETED, THEREFORE, THE ALTERNATE CONTENTION OF THE ASSESSEE HAS BECOME INFRUCTUOUS AND NEED NO FURTHER ADJUDICATION. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ( ITA 631/2016 : A.Y. 2007-08) 9. IN THIS APPEAL, ASSESSEE CHALLENGED THE ADDITION OF RS. 1,24,214/- ON ACCOUNT OF GROSS PROFIT AND ALSO CHALLENGED THE ORDER OF LD. CIT(APPEALS) IN NOT ALL OWING SET OFF OF ADDITION TO THE EXTENT OF RS. 1 LAC AGAI NST SURRENDERED INCOME OF RS. 1 LAC MADE BY THE ASSESSE E. 10. THE LD. CIT(APPEALS) NOTED IN THE IMPUGNED ORDE R THAT ASSESSING OFFICER MADE ADDITION OF RS. 1,24,21 4/- BY ESTIMATING THE SALE AND APPLYING HIGHER GP THAN SHO WN BY THE ASSESSEE. THE ASSESSING OFFICER HAS MENTION ED THAT DURING THE SEARCH/SURVEY OPERATION, CERTAIN DOCUMENTS AND REGISTERS WERE FOUND, WHEN COMPARED W ITH THE REGULAR BOOKS OF ACCOUNT, IT WAS NOTICED THAT C ERTAIN TRANSACTIONS WERE NOT RECORDED AND ACCOUNTED FOR BY THE ASSESSEE IN THE REGULAR BOOKS OF ACCOUNT. THE ASSE SSING OFFICER MENTIONED THAT SUCH INSTANCES ARE FOR FINAN CIAL YEAR 2006-07 UNDER APPEAL AND REFLECTS THE MODUS- 6 OPERANDI OF THE ASSESSEE. THE ASSESSING OFFICER, T HEN APPLIED PROVISIONS OF SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT, ESTIMATED THE SALES AND APPLIED GP HIGHER THAN THAT DECLARED BY ASSESSEE AN D MADE ABOVE ADDITION. 10(I) THE LD. CIT(APPEALS) CONSIDERING SUBMISSION OF THE ASSESSEE AND MATERIAL ON RECORD, FOUND THAT THERE W ERE INSTANCES OF UNRECORDED SALES FOUND DURING THE COUR SE OF SEARCH/SURVEY. THE ASSESSING OFFICER HAS MENTIONED THAT BILLS ARE NOT RECORDED PERTAINING TO ASSESSMENT YEA R UNDER APPEAL, HENCE, ASSESSING OFFICER WAS JUSTIFIE D IN REJECTING BOOKS OF ACCOUNT. ONCE BOOKS OF ACCOUNT ARE NOT FOUND RELIABLE AND REJECTED UNDER SECTION 145(3 ) OF THE ACT, ASSESSING OFFICER SHALL HAVE TO MAKE ASSES SMENT TO THE BEST OF HIS JUDGEMENT BASED UPON MATERIAL ON RECORD. THE LD. CIT(APPEALS) DID NOT ACCEPT EXPLAN ATION OF THE ASSESSEE AND DISMISSED THIS GROUND OF APPEAL OF THE ASSESSEE. 11. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF TH E VIEW ASSESSEE IS ENTITLED FOR SET OFF OF RS. 1 LAC SURRENDERED AS ADDITIONAL INCOME IN THE RETURN OF I NCOME BY THE ASSESSEE. THE ASSESSEE ARGUED IN PERSON, HOWEVER, HE HAS NOT ARGUED ON THE FACTS RELATING TO ADDITION MADE OF RS. 1,24,214/- BY REJECTING THE BO OKS OF ACCOUNT AND APPLYING HIGHER PROFIT RATE. THEREFORE, IN THE ABSENCE OF ANY ARGUMENT TO CHALLENGE THE ADDITION O F RS. 7 1,24,214/- I DO NOT FIND ANY JUSTIFICATION TO INTER FERE WITH THE FINDINGS OF FACT RECORDED BY THE AUTHORITI ES BELOW. HOWEVER, THE ASSESSEE HAS SUBMITTED THAT SI NCE ASSESSEE HAS SURRENDERED RS. 1 LAC AS ADDITIONAL IN COME IN THE RETURN OF INCOME, THEREFORE, SET OFF OF THE SAME SHOULD BE GIVEN AGAINST THE ABOVE ADDITION OF RS. 1,24,214/-. THE ASSESSEE HAS POINTED OUT THE DECLARATION OF ADDITIONAL INCOME IN THE RETURN OF I NCOME, COPY OF THE RETURN OF INCOME IS FILED ON RECORD IN WHICH ASSESSEE SURRENDERED RS. 1 LAC AS ADDITIONAL INCOME AND ALSO MENTIONED IN THE RETURN OF INCOME THAT ACCOUNT S HAVE BEEN PREPARED ON THE BASIS OF INFORMATION AVAI LABLE. RS. 1 LAC HAS BEEN SURRENDERED ON ACCOUNT OF DISCREPANCIES IN THE ACCOUNTS OF THE ASSESSEE DURIN G THE COURSE OF SEARCH. IT IS, THEREFORE, CLEAR THAT ASS ESSEE SURRENDERED RS. 1 LAC ON ACCOUNT OF DISCREPANCIES I N THE BOOKS OF ACCOUNT, THEREFORE, WHEN AUTHORITIES BELOW HAVE MADE ADDITION OF RS. 1,24,214/- BY REJECTING THE BO OK RESULTS OF THE ASSESSEE, SET OFF OF RS. 1 LAC DECLA RED AS ADDITIONAL INCOME SHOULD BE GIVEN TO THE ASSESSEE. OTHERWISE, IT WOULD AMOUNT TO DOUBLE ADDITION. IN THIS VIEW OF THE MATTER, I SET ASIDE AND MODIFY THE ORDE RS OF AUTHORITIES BELOW AND DIRECT THE AUTHORITIES BELOW TO GIVE SET OFF OF RS. 1 LAC TO THE ASSESSEE ON ACCOUNT OF ADDITIONAL INCOME SURRENDERED IN THE RETURN OF INCO ME ON ACCOUNT OF DISCREPANCY IN THE BOOKS OF ACCOUNT. IT WOULD RESULT THAT ADDITION OF RS. 1,24,214/- WOULD BE RES TRICTED TO RS. 24,214/- ONLY. THE ASSESSING OFFICER IS, TH EREFORE, 8 DIRECTED TO MAKE ADDITION OF RS. 24,214/- ONLY AS A GAINST ADDITION OF RS. 1,24,214/-. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12. IN THE RESULT, ITA 630/2016 IS ALLOWED AND ITA 631/2016 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED: 8 TH JULY,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD