Shri Udai Chand Chaurasia, Lucknow V. Joint Commissioner of Income Tax, Lucknow

ITA 636/LKW/2014

• Counselvise Citation: 63623714 RSA 2014
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-03-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 06-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIVEK MISHRA
• Keywords: Unexplained investment; Revision of order; Condonation of delay
• Section: 263; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NOS.636 TO 642/LKW/2014 ASSESSMENT YEARS:2004-05 TO 2010-11 SHRI. UDAI CHAND CHAURASIA 67, RAM ROAD LUCKNOW V. JCIT CENTRAL CIRCLE-2 LUCKNOW TAN/PAN:ADCPC2461J (APPELLANT) (RESPONDENT) ITA NOS.643 TO 649/LKW/2014 ASSESSMENT YEARS:2004-05 TO 2010-11 SMT. ASHA CHAURASIA PROP. M/S DUGA TRADING CO. 14, DATIA HOUSE, KHURSHED BAGH LUCKNOW V. JCIT CENTRAL CIRCLE-2 LUCKNOW TAN/PAN:ABRPC4158M (APPELLANT) (RESPONDENT) ITA NOS.650 TO 656/LKW/2014 ASSESSMENT YEARS:2004-05 TO 2010-11 SHRI. RAJ KUMAR CHAURASIA PROP. M/S R. P. PRODUCT 25, DATIA HOUSE, KHURSHED BAGH LUCKNOW V. JCIT CENTRAL CIRCLE-2 LUCKNOW TAN/PAN:ABRPC4156F (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI. VIVEK MISHRA, CIT (DR) DATE OF HEARING: 20 03 2015 DATE OF PRONOUNCEMENT: 24 04 2015 O R D E R PER BENCH: THESE APPEALS ARE PREFERRED BY THREE DIFFERENT ASSESSEES AGAINST THE RESPECTIVE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX PASSED UNDER :- 2 -: SECTION 263 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT') DIRECTING THE ASSESSING OFFICER TO REFRAME THE ASSESSMENTS ON A PARTICULAR ISSUE AFTER PARTLY SETTING ASIDE THE ORDER. 2. DURING THE COURSE OF HEARING, IT HAS BEEN BROUGHT TO OUR NOTICE THAT THESE APPEALS ARE FILED LATE BY 70 DAYS, FOR WHICH APPLICATION FOR CONDONATION OF DELAY IS FILED ALONG WITH THE APPEAL MEMO IN WHICH REASON FOR DELAY HAS BEEN SHOWN THAT THE APPEAL COULD NOT BE FILED DUE TO THE TRAGEDY IN THE FAMILY OF THE ASSESSEE. HAVING GONE THROUGH THE CONTENTS OF THE APPLICATION FOR CONDONATION OF DELAY, WE FIND FORCE THEREIN AND WE ACCORDINGLY CONDONE THE DELAY AND ADMIT THESE APPEALS FOR HEARING. 3. THESE APPEALS WERE LISTED FOR HEARING ON 20.3.2015, BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. ON A CAREFUL PERUSAL OF RECORD, WE FIND THAT THESE APPEALS WERE LISTED FOR HEARING ALMOST 9 TIMES AND MOST OF THE TIME HEARINGS WERE ADJOURNED AT THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE, SHRI. ABHINAV MEHROTRA, ADVOCATE ON ONE PRETEXT OR THE OTHER. FOR THE LAST THREE DATES I.E. 3.12.2014, 8.1.2015 AND 19.2.2015, THE HEARINGS WERE ADJOURNED WITH LAST OPPORTUNITY. DESPITE GRANTING OF LAST OPPORTUNITY, NO EFFORT WAS MADE BY THE ASSESSEE EITHER TO FILE THE PAPER BOOK OR TO MAKE NECESSARY PREPARATION FOR PROSECUTING THE APPEALS. ACCORDINGLY, THESE APPEALS WERE LISTED FOR HEARING ON 20.3.2015 AND ON THIS VERY DAY, THE LD. COUNSEL FOR THE ASSESSEE HAS CHOSEN NOT TO APPEAR BEFORE THE TRIBUNAL. SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE HAVING KNOWLEDGE OF DATE OF HEARING, WE HAVE NO OPTION BUT TO HEAR THE APPEALS EX-PARTE IN THE LIGHT OF THE INSTRUCTION ISSUED BY THE HEAD OFFICE OF THE TRIBUNAL THAT APPEAL FILED AGAINST THE ORDER PASSED U/S. 263 OF THE ACT SHOULD BE HEARD ON PRIORITY BASIS. ACCORDINGLY, THE REVENUE WAS HEARD. 4. THERE ARE THREE BUNCHES OF APPEALS OF CHAURASIA GROUP ARISING OUT OF THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX PASSED UNDER SECTION 263 OF THE ACT. IN THESE CASES, ORIGINAL ASSESSMENTS WERE FRAMED UNDER SECTION 143(3)/153A OF THE ACT CONSEQUENT TO THE SEARCH CONDUCTED ON THIS GROUP. :- 3 -: DURING THE COURSE OF SEARCH, SURRENDER OF SUBSTANTIAL AMOUNT WAS MADE IN RESPECT OF INVESTMENT IN THE PROPERTIES AND WHILE COMPLETING THE ASSESSMENT, THE ASSESSING OFFICER HAS CORRESPONDINGLY MADE ADDITIONS AFTER TAKING INTO ACCOUNT THE SURRENDER AMOUNT IN DIFFERENT ASSESSMENT YEARS, AGAINST WHICH APPEALS WERE PREFERRED BEFORE THE LD. CIT(A) AND LATER ON BEFORE THE TRIBUNAL. 5. THE ASSESSING OFFICER HAS NOT EXAMINED THE ISSUE WITH REGARD TO THE GENERATION OF PROFITS ON ACCOUNT OF PRODUCTION OF PAN MASALA OUT OF THE BOOKS OF ACCOUNT. DURING THE COURSE OF SEARCH, A TEST RUN WAS CONDUCTED IN ORDER TO ASCERTAIN THE PRODUCTION OF POUCHES PACKAGING MACHINE PER MINUTE, AS THE ASSESSEE HAS SHOWN PRODUCTION OF POUCHES AT LESSER FIGURE. IT WAS ALSO NOTICED BY THE LD. COMMISSIONER OF INCOME-TAX THAT WHEN THE TEST RUN WAS CONDUCTED, THE POUCHES PACKING MACHINE SAID TO HAVE SHOWN SPEED OF 240 POUCHES PER MINUTE. THE PRODUCTION OF PAN MASALA WAS UNDERTAKEN BY M/S DURGA TRADING COMPANY, PROPRIETORSHIP CONCERN OF SMT. ASHA CHAURASIA AND PAN MASALA WAS SOLD THROUGH M/S UDAI TRADERS, PROPRIETORSHIP CONCERN OF SHRI. UDAI CHAND CHAURASIA AND M/S R. P. PRODUCTS, PROPRIETORSHIP CONCERN OF SHRI. RAJ KUMAR CHAURASIA. THE ASPECT OF EXCESS PRODUCTION OF PAN MASALA AND ITS SALE THROUGH THESE PROPRIETORSHIP CONCERNS WERE NOT EXAMINED BY THE ASSESSING OFFICER IN HIS ORDER. THE LD. COMMISSIONER OF INCOME-TAX ACCORDINGLY ISSUED A SHOW CAUSE NOTICE UNDER SECTION 263 OF THE ACT AND IN RESPONSE THERETO ASSESSEE HAS FILED WRITTEN SUBMISSIONS. THE LD. COMMISSIONER OF INCOME-TAX HAS TAKEN INTO ACCOUNT THE WRITTEN SUBMISSIONS AND WAS OF THE VIEW THAT WITH RESPECT TO THE UNEXPLAINED INVESTMENT IN PROPERTIES, THE ISSUE WAS DISCUSSED BY THE ASSESSING OFFICER, BUT SO FAR AS EXCESS PRODUCTION OF PAN MASALA POUCHES BY M/S DURGA TRADING COMPANY, PROPRIETORSHIP CONCERN OF SMT. ASHA CHAURASIA AND ITS SALE THROUGH M/S UDAI TRADERS, PROPRIETORSHIP CONCERN OF SHRI. UDAI CHAND CHAURASIA AND M/S R. P. PRODUCTS, PROPRIETORSHIP CONCERN OF SHRI. RAJ KUMAR CHAURASIA RESPECTIVELY WERE NOT :- 4 -: EXAMINED BY THE ASSESSING OFFICER AND HE ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO ADJUDICATE THIS ISSUE, AFTER PARTLY SETTING ASIDE THE ASSESSMENT ORDERS. THE RELEVANT OBSERVATIONS OF THE LD. COMMISSIONER OF INCOME-TAX IN THE CASE OF SHRI. UDAI CHAND CHAURASIA ARE EXTRACTED HEREUNDER FOR THE SAKE OF REFERENCE:- IN SHORT, THE FACTS OF THE CASE ARE THAT THE ASSESSEE INITIALLY SURRENDERED CERTAIN SUM U/S 132(4) OF THE IT ACT IN THE YEAR IN WHICH THE SURRENDER WAS CARRIED. THIS INCOME WAS SURRENDERED ON ACCOUNT OF SUM INVESTED IN THE VARIOUS PROPERTIES. HOWEVER, WHEN THE MATTER WAS REFERRED TO THE VALUATION OFFICER, THE VALUATION OFFICER WORKED OUT UNDISCLOSED INCOME IN THE COST OF CONSTRUCTION OVER PRECEDING ACCOUNTING YEAR. ACCORDINGLY, THE ASSESSING OFFICER ASSESSED THIS SURRENDERED AMOUNT IN VARIOUS YEARS ON THE BASIS OF THE INVESTMENT IN THE PROPERTIES. IN THE NET RESULT, THE SURRENDER WHICH WAS MADE IN THE CURRENT YEAR WAS TRANSFERRED BACK IN THE PRECEDING YEAR BY THE A.O. , RESULTING IN HIGHER TAX LIABILITY ON ACCOUNT OF INTEREST PAYABLE BY THE ASSESSEE THAN COULD HAVE BEEN INCURRED THAT THE ENTIRE SUM WAS ASSESSED IN THE CURRENT FINANCIAL YEAR. IT HAS FURTHER BEEN MENTIONED BY THE A.O. IS SEEN THAT ON THE DAY OF SEARCH WHEN TEST RUN WAS CONDUCTED, THAT TIME POUCHES PACKAGING MACHINE IS SAID TO HAVE SHOWN SPEED OF 240 POUCHES PER MINUTES. IT IS ALSO SAID THAT THE A.O. HAS NOT CONSIDERED UNDISCLOSED PRODUCTION BASED ON THE TEST RUN OF PACKAGING MACHINE CONDUCTED AT THE TIME OF SEARCH ON THE FACTORY PREMISES AND SUBSEQUENT STATEMENT RECORDED ON OATH OF LABORERS AND STATEMENT OF SHRI UDAI CHAND CHAURASIA IS SAID TO HAVE AGREED TO THE SPEED OF PACKAGING MACHINE AT THE TIME OF TEST RUN. THIS UNDISCLOSED PRODUCTION BY ASSESSEE'S CONCERN M/S DURGA TRADING COMPANY HAS LED TO THE GENERATION OF :- 5 -: UNDISCLOSED YEARLY GROSS PROFIT IN HAND OF ASSESSEE WHICH ERRONEOUSLY NOT CONSIDERED WHILE FORMULATING THE ASSESSMENT FOR A.Y. 2004-05 TO 2009-10. SINCE THE EXISTENCE OF UNDISCLOSED PRODUCTION OF PAN- MASALA/GUTKHA BY M/S DURGA TRADING COMPANY IS ESTABLISHED BEYOND DOUBT. THIS UNDISCLOSED PRODUCTION HAS BEEN ROUTED THROUGH M/S UDAI TRADERS , BEFORE REACHING THE END CONCERN, WHICH JS THE PROPRIETORSHIP CONCERN OF SHRI UDAI CHAND CHAURASIA . THIS UNDISCLOSED SALE BY CONCERN M/S UDAI TRADERS HAD LED TO THE GENERATION OF UNDISCLOSED WHILE FORMULATING THE ASSESSMENTS FOR A.Y. 2004-05 TO 2009-10. REGARDING UNDISCLOSED SALE, THE ASSESSEE HAS SUBMITTED THAT 'THAT AS REQUIRED THAT WE ARE TRADING CONCERN AND DEALS IN SALE AND PURCHASE OF KATHA, STTPAR, TOBACCO, ELAICHI, PUKAR GUTHA, PERFUME , ETC. AND WE ARE NOT SOLE PURCHASER OF PUKAR FROM DURGA TRADING CO. AND WE MAINTAIN PROPER BOOKS OF ACCOUNT WHICH ARE DULY AUDITED U/S 44 AB OF THE I.T. ACT 1961, WHICH CLEARLY PROVES THAT IT IS WRONG TO ASSUME THAT WHOLE PRODUCTION OF DURGA TRADING COMPANY IS ROUTED THROUGH US, HENCE, SALE PURCHASE SHOWN BY US IN A.Y.2004-05 TO 2009- LOARE GENUINE AND NO ADVERSE INFERENCE BE DRAWN IN OUR CASE. THE ABOVE SUBMISSIONS OF THE ASSESSEE HAVE BEEN CONSIDERED. THOUGH THIS IS A CASE FOR PAYMENT OF EXCESS EXCISE DUTY THERE IS NO EVIDENCE THAT THE POUCHES PACKING MACHINE HAD RUN IN THE SPEED OF 240 POUCHES PER MINUTE DURING THE ENTIRE PERIOD OF RELEVANT ASSESSMENT YEARS. HOWEVER, ON THE PAYMENT OF TEST RUN THE MACHINE IS SAID HAVE SHOWN TEST RUN OF 240 POUCHES PER MINUTES AS PER STATEMENT DATED 26.06.2009 OF SHRI UDAI CHAND CHAURASIA . THE RELEVANT PORTIONS OF STATEMENT ARE AS UNDER: :- 6 -: IT IS SEEN THAT THE STATEMENT THEREIN ITSELF DOES NOT LEAD TO AN INFERENCE THAT THE ASSESSEE ADMITTED ANYTHING OF THE KIND AS MENTIONED IN THE PROPOSAL OF THE ADDL. CIT (CENTRAL) RECOMMENDING ACTION U/S 263 OF THE I.T. ACT ON THIS POINT. NO SUPPORTING RECORDS, EVIDENCE OF ANY CONSUMPTION OF MATERIAL, EXCISE DUTY RECORDS OR ANY OTHER SIMILAR ASSET WHICH MIGHT HAVE BEEN GENERATED OUT OF THIS INCOME ( OTHER THAN THOSE SURRENDERED IN THE COURSE OF SEARCH ) HAVE BEEN INDICATED BY THE ADDL. CIT (CENTRAL). THE ASSESSEE ON THE OTHER HAND HAS PRODUCED EXCISE RECORDS AS WELL AS OF OPERATION OF MACHINE ON VARIOUS DATES. IT IS ALSO NOT MENTIONED THAT ALL THE MACHINES ARE CAPABLE OF OPERATING ON SUCH HIGHER SPEED FOR SUCH LONG TIME. IN ORDER TO COME TO A DEFINITE CONCLUSION THAT THERE HAS BEEN PRODUCTION OUTSIDE THE BOOKS BY RUNNING MACHINE AT HIGHER SPEED , THERE SHOULD :- 7 -: HAVE BEEN SOME CORROBORATIVE EVIDENCE TO SHOW HIGHER CONSUMPTION OF RAW MATERIAL, PACKAGING MATERIAL .NO SUCH CASE HAS BEEN MADE OUT BY THE ADDL. CIT (CENTRAL). SHRI UDAI CHAND CHAURASIA IS ENGAGED IN THE BUSINESS OF TRADING OF PAN MASALAUNDER BRAND NAME 'PUKAR' MANUFACTURED BY HIS WIFE SMT ASHA CHAURASIA. THE ASSESSMEN OF SMT. ASHA CHAURASIA HAS BEEN SET-ASIDE FOR LIMITED PURPOSE VIDE ORDER DATED 28.02.2014 TO BE REFRAMED AFTER TAKING INTO ACCOUNT MANUFACTURE OF PAN MASALA OUTSIDE BOOKS OF ACCOUNTS BY OPERATING THESE PACKAGING MACHINE A MUCH HIGHER SPEED THAN RECORDED IN THE BOOKS OF ACCOUNTS. IN CASE ON THE BASIS OF EVIDENCE THE A.O. FINDS THERE HAS BEEN EXCESS PRODUCTION BY SMT. ASHA CHAURASIA, THE ADDITIONAL PROFIT FROM THE SALE SAME WOULD HAVE BEEN ASSESSABLE IN THE HANDS OF SHRI UDAI CHAND CHAURASIAON ACCOUNT OF PROFIT COME FROM TRADING OF EXCESS PRODUCTION BY SMT. ASHA CHAURASIA . ACCORDING THESE ASSESSMENTS ALSO WOULD HAVE TO BE PARTIALLY SET-ASIDE TO BE FRAMED AFRESH AFTER TAKING INTO ACCOUNT THE EXCESS PRODUCTION MADE BY SMT. ASHA CHAURASIA. 6. SINCE THE FACTS IN ALL THESE APPEALS ARE ALMOST SIMILAR, WE FIND NO JUSTIFICATION TO REPRODUCE THE FINDINGS OF THE LD. COMMISSIONER OF INCOME- TAX IN OTHER CASES. 7. AGGRIEVED, THE ASSESSEES HAVE FILED APPEALS BEFORE THE TRIBUNAL, BUT NO EVIDENCE IN THE FORM OF PAPER BOOK HAS BEEN FILED IN SUPPORT OF THE GROUNDS RAISED BY THE ASSESSEE. WE, HOWEVER, HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND WE FIND THAT DURING THE COURSE OF SEARCH, THE SEARCH TEAM CONDUCTED TEST RUN OF POUCH PACKAGING MACHINE IN ORDER TO ASCERTAIN THE PRODUCTION OF POUCHES OF PAN MASALA AND ARRIVED AT A CONCLUSION THAT EXCESS PRODUCTION WAS MADE BY THE ASSESSEE I.E. M/S DURGA TRADING COMPANY, PROPRIETORSHIP CONCERN OF SMT. ASHA CHAURASIA AND THE :- 8 -: PRODUCTS WERE SOLD THROUGH OTHER PROPRIETORSHIP CONCERNS I.E. M/S UDAI TRADERS AND M/S R. P. PRODUCTS, PROPRIETORSHIP CONCERNS OF SHRI. UDAI CHAND CHAURASIA AND SHRI. RAJ KUMAR CHAURASIA RESPECTIVELY. IT WAS ALSO NOTICED BY THE SEARCH PARTY THAT THE ASSESSEE HAS MADE PAYMENT OF EXCESS EXCISE DUTY. ALL THESE FACTS WERE NOT EXAMINED BY THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT IN ORDER TO WORK OUT THE EXCESS PRODUCTION AND SALES OUT OF THE BOOKS OF ACCOUNT. THEREFORE, WE ARE OF THE VIEW THAT THE LD. COMMISSIONER OF INCOME-TAX HAS RIGHTLY HELD THAT THE ASSESSMENT ORDERS ARE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. WE ACCORDINGLY CONFIRM THE ORDERS OF THE LD. COMMISSIONER OF INCOME-TAX IN ALL THESE APPEALS. 8. IN THE RESULT, APPEALS OF THE ASSESSEES ARE DISMISSED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24 TH APRIL, 2015 JJ:2004 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR