ACIT, Thanjavur V. M/s. P.S.R.Thangamaligai, Karaikal

ITA 641/CHNY/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8461 (ITAT-CHENNAI)
• Duration Of Justice: 5 year(s) 5 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 15-09-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 11-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DURAI PANDIAN IRS
• Assessee Lawyers: S SRIDHAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : CHENNAI . . . , !' . #$#% , & '' ( [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER ] ./ I.T.A. NOS. 641/MDS/ 2011 & 1259/MDS/2012 / ASSESSMENT YEAR : 2006-2007 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE I, THANJAVUR VS. M/S. P.S.R. THANG A MALIGAI, NO.126,BHARATHIYAR ROAD, KARAIKAL. [PAN AAEFO 5763F ] ( )* / APPELLANT) ( +,)* /RESPONDENT) / APPELLANT BY : SHRI. DURAI PANDIAN, IRS, JCIT. /RESPONDENT BY : SHR I. S. SRIDHAR, ADVOCATE / DATE OF HEARING : 15 - 0 9 - 2016 ! / DATE OF PRONOUNCEMENT : 21 - 0 9 - 2016 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER THESE APPEALS FILED BY REVENUE ARE DIRECTED AGAIN ST THE ORDERS DATED 10.01.2011 AND 21.03.2012 OF THE LD. C OMMISSIONER OF INCOME TAX (APPEALS), TIRUCHIRAPALLI FOR THE IMPUGN ED ASSESSMENT YEAR. ITA NO.641/2011 & 1259/2012 :- 2 -: 2. ITA NO.641/MDS/2011 IS FIRST TAKEN :- THE SOLE GROUND TAKEN BY THE REVENUE IS ON THE DIRECTION OF THE LD . COMMISSIONER OF INCOME TAX (APPEALS) TO TREAT @65,00,000/- AS UNAC COUNTED SALES AGAINST ADDITION OF @50,00,000/- MADE BY THE LD. AS SESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECT ED ADOPTION OF 24% OF @65,00,000/- AS PROFITS FOR ADDITION. 3. FACTS APROPOS ARE THAT THE ASSESSEE, IS A DEALER IN GOLD AND SILVER JEWELLERY AT KARAIKAL. THERE WAS A SURV EY U/S.133A OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) ON 9.11.2006. DURING THE SURVEY PROCEEDINGS, IT WAS NO TICED THAT CHIT ACCOUNT OF THE ASSESSEE HAS OUTSTANDING BALANCE OF @1,34,28,750/- AGAINST BALANCE OF @2,06,00,549/- SHOWN BY THE ASSE SSEE IN ITS BALANCE SHEET AS ON 31.03.2006. WHEN THIS WAS POINTED OUT B Y THE SURVEY OFFICIALS, IT SEEMS ASSESSEE ACCEPTED EXCESS CHIT O UTSTANDING OF @50,00,000/- AND OFFERED TO SHOW IT AS INCOME AND P AY TAXES THEREON. IN OTHER WORDS AGAINST @65,00,000/- DIFFERENCE IN C HIT ACCOUNT THE ASSESSEE AGREED WITH THE SURVEY OFFICIALS TO OFFER @50,00,000/- AS INCOME. HOWEVER, DURING THE COURSE OF ASSESSMENT P ROCEEDINGS FOR THE IMPUGNED ASSESSMENT YEAR ASSESSEE EXPLAINED TO THE LD. ASSESSING OFFICER THAT THE DIFFERENCE COULD BE RECONCILED. NE VERTHELESS, THE LD. ITA NO.641/2011 & 1259/2012 :- 3 -: ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLAN ATION GIVEN BY THE ASSESSEE, THE ASSESSMENT WAS COMPLETED MAKING AN AD DITION OF @50,00,000/- AS AGREED BY THE PARTNER OF THE ASSESS EE AT THE TIME OF SURVEY. 4. AGGRIEVED, THE ASSESSEE MOVED AN APPEAL BEFORE THE CIT(A). AS PER THE ASSESSEE, IT HAD EXPLAINED BE FORE THE LD. ASSESSING OFFICER HOW THE DIFFERENCE CAME INTO THE BOOKS AND HAD RECONCILED SUCH DIFFERENCE. AS PER ASSESSEE DIFFERE NCE BETWEEN CHIT BALANCE AS PER BOOKS AND WHAT WAS NOTED BY THE SURV EY OFFICIALS WERE ON ACCOUNT OF THE FOLLOWING PERSONS:- A. BALANCES OUTSTANDING THE EARLIER SIX GROUPS OF THE CLOSED CHITS WERE NOT ACCOUNTED BY THE SURVEY PARTY. B. IN THE GROUPS SUBAMANGALA B & NEW KANAGATHARA A THE SURVEY PARTY HAD TAKEN WRONGLY THE GROSS AMOUNT AS THE SUM TO BE COLLECTED INSTEAD OF THE ACTUAL AMOUNT O F COLLECTION. C. THOUGH, NEW KANAGATHARA B COMMENCED IN MAY 2006 & THE ADVANCE COLLECTIONS MADE DURING THE YEAR WAS NO T ACCOUNTED BY THE SURVEY PARTY. D. THE COLLECTIONS MADE IN GROUPS OF VARIOUS DENOMINAT ION OF RS.150/-, RS.250/- & RS.500/- WERE NOT ACCOUNTED BY THE SURVEY PARTY. HOWEVER, THE ASSESSEE ALSO STATED BEFORE THE LD. CO MMISSIONER OF INCOME TAX (APPEALS) THAT YEARWISE AND GROUPWISE RE CONCILIATION OF ITA NO.641/2011 & 1259/2012 :- 4 -: EARLIER YEAR CHITS, WHICH WERE CLOSED, WAS NOT IMME DIATELY POSSIBLE. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE CAME TO AN OPINION THAT EXCESS IN CHIT FUND ACCOUNT HAD ACCUMULATED OVER YEARS AND ENTRIES IN FEW GROUPS OF THE CHIT FUND REMAINED OPEN DUE TO OMISSION IN POST ING OF SALES. HE HELD THAT THE AMOUNT SHOWN AS OUTSTANDING, IN THE CLOSED GROUPS OF CHIT FUNDS WERE NOTHING BUT UNACCOUNTED SALES OF TH E ASSESSEE. SINCE GROSS PROFIT RETURNED BY THE ASSESSEE CAME TO 24%, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DIRECTED THE LD. ASSESSING OFFICER TO CONSIDER 24% OF @65,00,000/- AS INCOME OF THE ASSESSEE FROM SUCH UNACCOUNTED SALES. 24% OF @65,00,000/- CAME TO @15,60,000/-. THUS THE ADDITION OF @50,00,000/- WAS SCALED DOWN TO @15,60,000/- BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 5. NOW BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY ASSAILING THE ORDER OF THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) SUBMITTED THAT DIFFERENCE IN CHIT ACCOUNT COULD NE VER BE LINKED TO THE SALES OF THE ASSESSEE. AS PER THE LD. DEPARTMENTA L REPRESENTATIVE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) MADE AN ER ROR IN CONSIDERING THE DIFFERENCE TO BE UNDISCLOSED TURNOV ER OF THE ASSESSEE. THE CONTENTION OF THE LD. DEPARTMENTAL REPRESENTAT IVE WAS THAT DIFFERENCE REPRESENTED UNDISCLOSED INCOME OF THE AS SESSEE. THUS, ITA NO.641/2011 & 1259/2012 :- 5 -: ACCORDING TO HIM THE LD. COMMISSIONER OF INCOME TAX (APPEALS) FELL IN ERROR IN SCALING DOWN THE ADDITION FROM @50,00,000/ - TO @15,60,000/-. 6. PER CONTRA, THE LD. AUTHORISED REPRESENTATIVE SUPPO RTED THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND THE OR DERS OF THE AUTHORITIES BELOW. IT IS NOT DISPUTED THAT CHI T DIFFERENCE AROSE ON ACCOUNT OF CLOSED CHITS BEING NOT PROPERLY ACCOUNTE D OVER A NUMBER OF YEARS. THE LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS GIVEN A CLEAR FINDING THAT CLOSED CHITS REMAINING OPEN IN T HE BOOKS COULD ONLY BE DUE TO OMISSION OF POSTING OF SALES. THE ASSESS EE WAS A TRADER OF GOLD JEWELLERY. THE ASSESSEE WAS NOT IN CHIT BUSIN ESS. HENCE PREPONDERANCE OF PROBABILITY WAS THAT DIFFERENCE AR OSE ONLY DUE TO UNACCOUNTED SALES, BEING NOT ENTERED IN THE BOOKS . OBVIOUSLY CHIT BALANCE STOOD AT A HIGHER AMOUNT THAN THE ACTUAL BA LANCE. IN SUCH A SITUATION, WE ARE OF THE OPINION THAT THE LD. COMMI SSIONER OF INCOME TAX (APPEALS) HAD RIGHTLY CONSIDERED THE SUM OF @65 ,00,000/- AS UNDISCLOSED TURNOVER OF THE ASSESSEE. THE LD. COMM ISSIONER OF INCOME TAX (APPEALS) HAD APPLIED 24% OF GP RATE WHICH WAS THE ADMITTED GP RATE AS PER THE BOOKS OF THE ASSESSEE. WE ARE O F THE OPINION THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS JU STIFIED IN TAKING THIS VIEW. WE DO NOT FIND ANY REASON TO INTERFERE W ITH THE ORDER OF THE ITA NO.641/2011 & 1259/2012 :- 6 -: COMMISSIONER OF INCOME TAX (APPEALS). THE APPEAL OF THE REVENUE STANDS DISMISSED. 8. REVENUE IN APPEAL NO.1259/MDS/2012 :- THE REVENUE IS AGGRIEVED ON DELETION OF ADDITION @15,00,000/- M ADE BY THE LD. ASSESSING OFFICER IN A RE-ASSESSMENT DONE FOR THE V ERY SAME ASSESSMENT YEAR, PURSUANT TO A REOPENING U/S.147 O F THE ACT. 9. THE LD. ASSESSING OFFICER ATTEMPTED REOPENING FOR A REASON THAT HE HAD ADDED ONLY @50,00,000/- IN THE ORIGINAL ASSESSMENT AGAINST THE DIFFERENCE OF @65,00,000/- IN THE CHIT FUND ACCOUNT. IN SUCH RE-ASSESSMENT AN ADDITIONAL SUM OF @15,00,000/ - WAS ALSO BROUGHT TO TAX. ASSESSEES APPEAL BEFORE LD. COMMI SSIONER OF INCOME TAX (APPEALS) WAS SUCCESSFUL. HE TOOK A VIEW THAT HE HAD ALREADY DIRECTED ADOPTION OF 24% OF PROFIT ON @65,00,000/- BEING THE DIFFERENCE CONSIDERING IT AS UNDISCLOSED TURNOVER. ACCORDING TO HIM, THERE WAS NO FURTHER SCOPE FOR AN ADDITION OF @15,0 0,000/-. 10. WE HAVE ALREADY HELD IN REVENUES APPEAL IN ITA NO.641/MDS/2011, WHICH EMANATED FROM THE ORIGINAL A SSESSMENT DONE ON THE ASSESSEE, THAT THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) WAS JUSTIFIED IN CONSIDERING THE DIFFERENCE OF CHIT FUND BALANCE OF @65,00,000/- AS UNDISCLOSED SALE OF THE ASSESSEE AN D APPLYING 24% GP ITA NO.641/2011 & 1259/2012 :- 7 -: RATE THEREON. CONSIDERING THIS, WE ARE OF THE OPIN ION THAT THERE WAS NO SCOPE FOR ANY FURTHER ADDITION OF @15,00,000/-. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS THEREFORE JUSTIFIED IN DELETING SUCH ADDITION MADE IN THE RE-ASSESSMENT PR OCEEDINGS. WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). THE APPEAL OF THE REVENUE STANDS DISMISSED. 11. IN THE RESULT, THE APPEALS FILED BY THE REVENUE IN ITA NO.641/MDS/2011 AND ITA NO.1259/MDS/2012 STAND DISM ISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 21ST DAY OF SE PTEMBER, 2016, AT CHENNAI. SD/- SD/- ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER ( !' . #$#% ) (ABRAHAM P. GEORGE) & / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:21ST SEPTEMBER, 2016 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,' / CIT(A) 5. )-. / / DR 2. / RESPONDENT 4. + / CIT 6. .01 / GF