Assistant Commissioner of Income-tax, V. Parag Kiran Gandhi, Solapur

ITA 659/PUN/2015

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1121 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-04-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 08-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SABHANA PARVEEN
• Keywords: Unexplained investment; Additional evidence; Retraction
• Section: 132; 143(3); 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO , AM . / ITA NO. 659 /P U N/201 5 / ASSESSMENT YEAR : 20 1 1 - 1 2 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE . / APPELLANT VS. PARAG KIRAN GANDHI, 1300, NORTH KASBA, TILAK CHOWK, SOLAPUR - 413002 . / RESPONDENT PAN: AAXPG4634K . /CO NO. 2 3 /PUN/201 7 / ASSESSMENT YEAR : 20 11 - 12 (OUT OF ITA NO. 659 /PUN/201 5 ) PARAG KIRAN GANDHI, 1300, NORTH KASBA, TILAK CHOWK, SOLAPUR - 413002 / CROSS OBJECT OR PAN: AAXPG4634K VS. THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE . / RESPONDENT ASSESSEE BY : S HRI KISHORE PHADKE REVENUE BY : MS. SABHANA PARVEEN / DATE OF HEARING : 05 . 0 7 . 201 9 / DATE OF PRONOUNCEMENT: 12 . 0 9 .201 9 ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 2 / ORDER PER SUSHMA CHOWLA, J M : THE APPEAL FILED BY REVENUE IS AGAINST THE ORDER OF CIT (A) - 12, PUNE , DATED 16 . 02 .201 5 RELATING TO ASSESSMENT YEAR 20 1 1 - 1 2 PASSED AGAINST THE ORDER UNDER SECTION 143(3) OF THE INCOM E - TAX ACT , 1961 (IN SHORT THE ACT) . THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST THE APPEAL OF REVENUE. 2. THE APPEAL FILED BY REVENUE AND CROSS OBJECTION FILED BY ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE REVENUE IN ITA NO.659/PUN/2015 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 01. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION AMOUNTING TO RS.39,54,920/ - ON ACCOUNT OF EXCESS GOLD FOUND AT THE TIME OF SEARCH WITHOUT APPRECIATING THE CIRCUMSTANTIAL EVIDENCE AND RELYING ON THE SUSPICIOUS DOCUMENTS PRODUCED BY THE ASSESSEE TO CLAIM THIS EXCESS GOLD AS ACCOUNTED FOR. 02. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION AMOUNTING TO RS.1,28,14,157 ON ACCOUNT OF EXCESS STOCK FOUND AT THE TIME OF SEARCH WITHOUT APPRECIATING THE CIRCUMSTANTIAL EVIDENCE AND SUSPICIOUS BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. THE LD. CIT (A) ALSO FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAD NOT MAINTAINED ANY QUANTITATIVE DETAILS OF THE STOCK. 03. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION AMOUNTING TO RS.9,65,000/ - ON ACCO UNT OF UNACCOUNTED INVESTMENT IN FARM HOUSE FOUND AT THE TIME OF SEARCH WITHOUT APPRECIATING THE CIRCUMSTANTIAL EVIDENCE AND SUSPICIOUS BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE. 04. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN N OT APPRECIATING THAT STATEMENT GIVEN U/S 132(4) IS IN ITSELF A GOOD PIECE OF EVIDENCE. THE LD. CIT(A) ALSO FAILED TO APPRECIATE THAT THE RETRACTION ON THE IMPUGNED ADDITIONS MADE BY THE A.O. IS MERELY AN AFTER - THOUGHT. FROM THE FACTS OF THE CASE IT IS CLEA RLY ESTABLISHED THAT THE DOCUMENTARY EVIDENCES PRODUCED BY ASSESSEE IN SUPPORT OF HIS RETRACTION FROM THE INCOME DISCLOSED EARLIER, WAS PRODUCED AFTER A LONG GAP OF TIME FROM THE SEARCH AND WERE SEEN TO BE CREATED. ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 3 05. THE ORDER OF LD. CIT(A) MAY BE VACATE D AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE ASSESSEE IN CO NO.23/PUN/2017 HAS RAISED THE FOLLOWING GROUNDS OF OBJECTIONS: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) WAS NOT JUSTIFIED IN MAKING ADDITION OF RS.37,51,290/ - ON ACCOUNT OF EXCESS CASH FOUND AT THE TIME OF SEARCH WITHOUT APPRECIATING THE CIRCUMSTANTIAL EVIDENCE. 2. THE ADDITION OF RS.37,51,290/ - MAY PLEASE BE DELETED. 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FROM BUS INESS AS JEWELER. SEARCH UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON GANDHI GROUP OF CASES AT SOLAPUR ON 08.03.2011. DURING THE COURSE OF SEARCH, THE ASSESSEE HAD OFFERED ADDITIONAL INCOME OF ABOUT 7 CRORES. HOWEVER, THE ASSESSEE FILED RETRACTION LE TTER DATED 14.06.2011 BEFORE JCIT RETRACTING DECLAR ATION TOTALING 2.69 CRORES. THE ASSESSING OFFICER DID NOT ACCEPT THE RETRACTION AND ADDED THE SAME TO TOTAL INCOME DECLARED IN RETURN OF INCOME AND ASSESSED THE INCOME IN THE HANDS OF ASSESSEE AT 7.94 CRORES AS AGAINST THE RETURNED INCOME OF 5.25 CRORES. 6. BEFORE THE CIT(A), THE ASSESSEE FILED EXPLANATION VIS - - VIS THE RETRACTION MADE BY HIM , ON ACCOUNT OF EXCESS DECLARATION MADE ON ACCOUNT OF EXCESS GOLD, EXCESS STOCK, CASH AND INVESTMENT IN FARMH OUSE . T HE ASSESSEE CLAIMED THAT INADVERTENTLY AND BECAUSE OF NON - AVAILABILITY OF DATA AT THE TIME OF SEARCH , EXCESS DECLARATION WAS MADE . HE PLACED RELIANCE ON THE DECISION OF HONBLE APEX COURT IN VINOD SOLANKI VS. UNION OF INDIA IN CIVIL APPEAL NO.7407 OF 2008 ARISING OUT OF SLP (C) NO.3537 OF 2008, DATED 18.12.2008 UOI 233, ELT 157 (SC) FOR THE PROPOSITION THAT RETRACTION CORROBORATED BY THE COGENT EVIDENCE IS LIABLE FOR ACCEPTANCE. THE DETAILED EXPLANATION WHICH WAS FILED BEFORE THE CIT(A) ALONG WI TH ADDITIONAL EVIDENCE IS INCORPORATED AT PAGES 5 TO 15 OF THE ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 4 APPELLATE ORDER. THE CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF EXCESS GOLD ORNAMENTS OF 39,54,920/ - VIDE PARAS 2.1.6 AND 2.1.7 AND OF 1,28,14,157/ - ON ACCOUNT OF RETRACTION OF EX CESS STOCK VIDE PARAS 2.1.8 TO 2.1.10 AND ALSO RETRACTION OF INVESTMENT IN CONSTRUCTION OF FARMHOUSE VIDE PARA 2.1.19 . HOWEVER, THE CIT(A) UPHELD THE ADDITION ON ACCOUNT OF EXCESS CASH OF 37,51,290/ - . 7. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CI T(A) IN ALLOWING THE CLAIMS. THE ASSESSEE HAS FILED CROSS OBJECTION AGAINST ADDITION UPHELD ON ACCOUNT OF EXCESS CASH OF 37,51,290/ - . 8. WE HAVE HEARD BOTH THE LEARNED AUTHORIZED REPRESENTATIVES AND PROCEED TO DECIDE THE APPEAL FILED BY REVENUE AND CRO SS OBJECTION FILED BY ASSESSEE. FIRST, WE TAKE UP CROSS OBJECTION FILED BY ASSESSEE, WHICH IS AGAINST ADDITION OF EXCESS CASH OF 37,51,290/ - . THE ASSESSEE HAD DECLARED CASH FOUND DURING THE COURSE OF SEARCH, WHICH WAS NOT MATCHING WITH THE CASH RECORDE D IN THE BOOKS OF ACCOUNT AS EXCESS CASH. THE SAME WAS OFFERED FOR TAXATION IN THE DECLARATION MADE DURING THE COURSE OF SEARCH. HOWEVER, SUBSEQUENTLY, THE SAME WAS RETRACTED. THE ASSESSEE CLAIMS THAT THE SAID CASH DO NOT BELONG TO HIM BUT BELONG TO VAR IOUS FAMILY MEMBERS. HOWEVER, THE ASSESSEE HAS FAILED TO ESTABLISH ITS CASE OF ODD AMOUNTS BEING DEPOSITED BY EACH OF THE FAMILY MEMBERS WITH THE ASSESSEE AND IN SUCH CIRCUMSTANCES, THERE IS NO MERIT IN RETRACTION MADE BY ASSESSEE. ACCORDINGLY, WE UPHOLD THE ADDITION OF 37,51,290/ - AND DISMISS THE CROSS OBJECTION FILED BY ASSESSEE. 9. NOW, COMING TO THE APPEAL FILED BY REVENUE. IN THIS REGARD, CERTAIN EVENTS NEED TO BE KEPT IN MIND . S EARCH ON GANDHI GROUP WAS CONDUCTED ON ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 5 08.03.2011. THE FIRST STATEMENT UNDER SECTIO N 132(4) OF THE ACT, IN WHICH DECLARATION WAS MADE BY ASSESSEE WAS RECORDED ON 09.03.2011 AND SECOND STATEMENT REGARDING SOME CLARIFICATION ON 15.04.2011 . ON 14.06.2011, THE ASSESSEE MADE RETRACTION ON ACCOUNT OF CERTAIN ERRORS BEFORE THE JCIT, KOLHAPUR, WHO PREPARED T HE APPRAISAL REPORT . THEREAFTER, THE ASSESSEE FILED AN AFFIDAVIT FOR PARTIAL RETRACTION OF DECLARATION ON 14.07.2011. IN THE RETURN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION ON 29.09.2011 THE ASSESSEE ONLY DECLARED INCOME OF 5.25 CRORES AS AGAINST INITIAL DECLARATION OF ABOUT 7 CRORES. THEREAFTER, ASSESSMENT PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THERE WAS PARTIAL CORRECTION OF RETRACTION OF DECLARATION BEFORE THE ASSESSING OFFICER. THE ASSESSEE BEFORE US HAS FILED TABULATED DETAILS IN THIS REGARD, WHICH SUMMARIZED THE INITIAL DECLARATION AND RETRACTION BEFORE THE AUTHORITIES BELOW. AFTER THE RETRACTION, NET DECLARATION WHICH HAS BEEN FINALLY MADE BEFORE THE ASSES SING OFFICER WAS TOTALING 4.78 CRORES. IT IS NOT THE CASE THAT THE ASSESSEE HAS RETRACTED INITIAL DECLARATION MADE BY HIM IN ENTIRETY ; AS AGAINST DECLARATION OF 6.93 CRORES, FINAL DECLARATION AFTER RETRACTION WAS 4.78 CRORES. THE ASSESSEE BEFORE US HAS FILED DETAILS IN RES PECT OF GOLD STOCK, AS PER SEARCH PARTY AND GOLD STOCK AS FINALLY DECLARED BY ASSESSEE AND HAS POINTED OUT THAT DIFFERENCE WAS ON ACCOUNT OF APPLICATION OF MARKET RATE AND ALSO IN SOME CASES , THE QUANTITY OF STOCK. SIMILAR EXPLANATION HAS BEEN FILED IN RE SPECT OF SILVER STOCK AND ALSO INVESTMENT IN GOLD ORNAMENTS FOUND, WHEREIN CERTAIN ORNAMENTS DO NOT BELONG TO THE ASSESSEE BUT BELONG TO HIS FAMILY MEMBERS. THE CIT(A) HAS CONSIDERED EACH OF THE PLEA OF ASSESSEE INCLUDING THE QUANTITY OF ITEMS IN QUESTION AND HAS DECIDED THE ISSUE. ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 6 10. THE FIRST ISSUE WHICH WAS DECIDED WAS IN RESPECT OF EXCESS GOLD DECLARED OF 39,54,920/ - AND IT HAS POINTED OUT THAT ENTIRE GOLD WEIGHING 2548.13 GRAMS WAS EXPLAINED, WHEREIN GOLD ORNAMENTS WEIGHING 261.970 GRAMS WERE PU RCHASED AND APPEARED IN THE BALANCE SHEET OF RESPECTIVE FAMILY MEMBERS . THE GOLD WEIGHING 673.570 GRAMS WAS PURCHASED DURING THE YEAR OUT OF BANK LOAN FACILITIES AVAILED BY FAMILY MEMBERS AND THE REMAINING PART OF GOLD WEIGHING 1232 GRAMS WAS ACQUIRED BY THREE LADY FAMILY MEMBERS AND MALE MEMBERS DURING THEIR LIFETIME. THE SAID OBSERVATIONS ARE IN PARAS 2.1.6 AND 2.1.7 OF ORDER OF CIT(A). IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE FIND THAT THE REVENUE HAS FAILED TO CONTROVERT THE FIND INGS OF CIT(A) AND WE UPHOLD THE DELETION OF ADDITION OF 39,54,920/ - . 1 1 . NOW, COMING TO THE NEXT ITEM I.E. EXCESS STOCK OF 1,28,14,157/ - . THE STOCK WAS OF GOLD ORNAMENTS AND SILVER . T HE ASSESSEE POINTED OUT THAT FIRST OF ALL, THE RATE APPLIED AS ON THE DATE OF SEARCH BY SEARCH TEAM WAS NOT CORRECT AND FURTHER GOLD ORNAMENTS OF CUSTOMERS WEIGHING 766.280 GRAMS DID NOT BELONG TO THE ASSESSEE. THE CIT(A) HAS HELD THAT STOCK IS TO BE VALUED EITHER AT THE COST PRICE OR MARKET PRICE, WHICHEVER WAS LOWER. THE SEARCH TEAM HAD VALUED THE GOLD AND SILVER ITEMS AT THE MARKET PRICE, HENCE THE VALUATION OF SAID ITEMS AT 4.12 CRORES WAS HELD TO BE JUSTIFIED BY CIT(A). 1 2 . THE ASSESSEE BEFORE US HAS ALSO EXPLAINED THE SAME AND HAS POINTED OUT THAT THE SAID EXP LANATION WAS EVEN GIVEN BEFORE THE ASSESSING OFFICER. WE FIND NO MERIT IN THE ORDER OF ASSESSING OFFICER IN THIS REGARD. FURTHER, THE ASSESSEE HAS ALSO FURNISHED EVIDENCES OF GOLD ORNAMENTS WEIGHING 766 GRAMS, WHICH BELONGS TO ITS CUSTOMERS AND NOT TO HI M , BUT WAS LYING WITH HIM . ITA NO. 659 /P U N/20 1 5 CO NO.23/PUN/2017 PARAG K. GANDHI 7 ACCORDINGLY, WE UPHOLD THE FINDINGS OF CIT(A) IN PARAS 2.1.8 TO 2.1.10 AND ALSO UPHOLD THE DELETION OF ADDITION OF 1,28,14,157/ - . 1 3 . IN RESPECT OF LAST ITEM I.E. INVESTMENT IN CONSTRUCTION OF FARMHOUSE, THE ASSESSEE CLAIMED THAT THE EXPENDITURE WAS RECORDED IN ITS BOOKS OF ACCOUNT. THE CIT(A) HAS DELETED THE SAID ADDITION. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS NOT CONTROVERTED THE FINDINGS OF CIT(A) IN THIS REGARD. ACCORDINGLY, WE FIND NO MERIT IN THE GROUNDS OF APPEAL RAISED BY REVENUE. THUS, THE GROUNDS OF APPEAL RAISED BY REVENUE ARE DISMISSED. 1 4 . IN THE RESULT, BOTH THE APPEAL OF REVENUE AND CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 12 TH DAY OF SEPTEMBER , 201 9 . SD/ - SD/ - ( D.KARUNAKARA RAO ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 12 TH SEPTEMBER , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 12, PUNE ; 4. THE CIT (CENTRAL), PUNE ; 5. 6. , , / DR A , ITAT, PUNE ; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUN E