Shri Ishakbhai Ibrahimbhai Vohra, Anand V. The Income Tax Officer, Ward-2, Anand

ITA 660/AHD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 9331 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 02-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 06-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Set aside
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 69C; 11; 15; 271(1)(b); 139; 143(3); 92; 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 658/AHD/2014 (ASSESSMENT YEAR: 2008-09) SHRI UVESHBHAI SHABBIRBHAI VOHRA, PROP. ALL GLASS TRADERS SAMARAKHA CROSSING BEHIND HOTEL KASHMIR ANAND-388001 PAN NO. ABBPV8876H V/S ACIT, ANAND CIRCLE, ANAND (APPELLANT) (RESPONDENT) ITA. NOS: 659 & 660/AHD/2014 (ASSESSMENT YEAR: 2008-09) SHRI SHABBIRBHAI I. VOHRA, PROP. LEEZA GLASS TRADERS, NEAR TEMPLE, PO. CHIKHODRA, DIST. ANAND- 388625 PAN NO. ABHPV2823N SHRI ISHAKBHAI I. VOHRA, PROP. AUTO TRADERS, NEAR TEMPLE, PO. CHIKHODRA, DIST. ANAND-388625 V/S V/S ITO, WARD-2, ANAND ITO, WARD-2, ANAND (APPELLANT) (RESPONDENT) ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 2 APPELLANT BY : SHRI B.T. THAKKAR, AR RESPONDENT BY : SHRI JAMES KURIAN, SR. D.R. ( )/ ORDER DATE OF HEARING : 02 -02-201 7 DATE OF PRONOUNCEMENT : 07 -02-2017 PER N.K. BILLAIYA, ACCOUNTANT MEMBER: 1. ITA NOS. 658, 659 & 660/AHD/2014 ARE THREE APPEALS BY THREE DIFFERENT ASSESSEES PREFERRED AGAINST THREE SEPARATE ORDERS OF THE LD. CIT(A)-IV, BARODA DATED 18.12.2013, 19,12,2013 & 19.12.2013 PE RTAINING TO A.Y. 2008- 09. 2. SINCE COMMON ISSUES ARE INVOLVED IN THE IMPUGNED AP PEALS THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 3. THE COMMON ISSUE IN ALL THESE APPEALS RELATE TO THE ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE, THOUGH THE QUANTUM MAY DIF FER. 4. RIVAL CONTENTIONS WERE HEARD AT LENGTH. HAVING HEAR D THE RIVAL CONTENTIONS, WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTHORI TIES BELOW AND THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD IN THE FORM OF A PAPER BOOK IN THE LIGHT OF RULE 18(6) OF THE ITAT RULES. ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 3 5. BRIEFLY STATED THE FACTS OF THE CASE THAT A SURVEY U/S. 133A OF THE ACT WAS CARRIED OUT ON 24.08.2007 AT THE BUSINESS PREMISES OF THE IMPUGNED ASSESSEES. IT WAS FOUND THAT THERE WERE THREE PROPR IETARY CONCERNS (1) M/S. ALL GLASS TRADERS, PROP. UVESH S. VOHRA (2) M/ S. AUTO GLASS TRADERS, PROP. ISHAQ I. VOHRA AND (3) M/S. LEEZA GLASS TRADE RS, PROP. SHHABIR I. VOHRA. ALL THESE PROPRIETARY CONCERNS WERE OPERATIN G FROM THE SAME PREMISES. THE PROPRIETORS OF ALL THREE CONCERNS ARE THE APPELLANTS BEFORE US. 6. DURING THE COURSE OF SURVEY OPERATION, COMMON INVEN TORY OF CASH PHYSICALLY FOUND WAS PREPARED. THE PHYSICAL CASH SO FOUND WAS TALLIED WITH THE CASH IN HAND SHOWN IN THE RESPECTIVE BOOKS OF A CCOUNTS. IT WAS NOTICED THAT THERE WERE NEGATIVE CASH BALANCE AS ON THE DAT E OF SURVEY AS PER THE BOOKS OF ACCOUNTS OF THE ASSESSEE. 7. SHRI UVESH S. VOHRA WAS SPECIFICALLY ASKED TO EXPLA IN THE DIFFERENCE. SHRI UVESH S. VOHRA EXPLAINED THAT THE NEGATIVE CASH BAL ANCE IS MAINLY DUE TO THE AMOUNT RECEIVED TOWARDS SALES YET TO BE CREDITE D IN THE ACCOUNT OF THE RESPECTIVE PARTIES WHICH IS PENDING FROM 16.07.2007 . IT WAS FURTHER EXPLAINED THAT THE CASH BOOKS WERE INCOMPLETE AND N EED TO BE UPDATED. 8. THE A.O. WAS OF THE OPINION THAT AS PER THE PRINT O UT OF CASH BOOK REGISTER OF THE ASSESSEE FOR THE PERIOD FROM 01.04.2007 TO 2 3.08.2007, THERE WAS NEGATIVE CASH BALANCE AND THE SAID PRINT OUT HAS BE EN SIGNED BY THE ASSESSEE. THE A.O., ACCORDINGLY, TREATED THE CASH D EFICIT SO FOUND AS THE ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 4 UNEXPLAINED EXPENDITURE OF THE ASSESSEES AND ADDED THE DEFICIT TO THE TOTAL INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE. 9. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT( A) BUT WITHOUT ANY SUCCESS. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE VEHEMEN TLY STATED THAT SINCE THE CASH BOOKS WAS NOT UP TO DATE AS ON THE DATE OF SUR VEY I.E. 24.08.2007, THE PAYMENTS RECEIVED FROM VARIOUS SALESMEN COULD NOT B E ENTERED IN THE CASH BOOK THOUGH THE RECEIVED CASH WAS DEPOSITED IN THE BANK. IT IS THE SAY OF THE LD. COUNSEL THAT THIS WAS EXPLAINED AT THE TIME OF RECORDING OF THE STATEMENT DURING THE COURSE OF THE SURVEY PROCEEDIN GS. THE LD. COUNSEL REFERRED TO THE VARIOUS COPY OF LEDGER ACCOUNTS OF THE DEBTORS FROM WHOM CASH HAS BEEN RECEIVED PENDING ENTRIES IN THE BOOKS OF ACCOUNTS. THE LD. COUNSEL ALSO REFERRED TO THE COMPLETED CASH BOOK FR OM 01.04.2007 TO 24.08.2007. THE LD. COUNSEL CONCLUDED BY SAYING THA T IF THE COMPLETED CASH BOOK IS CONSIDERED THEN THERE REMAINS NO DIFFERENCE IN THE PHYSICAL CASH FOUND AT THE TIME OF SURVEY AND THE CASH IN HAND AS PER THE BOOKS OF ACCOUNTS. 11. PER CONTRA, THE LD. D.R. STRONGLY SUPPORTED THE FI NDINGS OF THE A.O. 12. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORD ERS OF THE AUTHORITIES BELOW. THE CASH DEFICIT FOUND IN THE THREE PROPRIET ARY CONCERNS BELONGING ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 5 TO THREE DIFFERENT PERSONS (APPELLANTS BEFORE US ) CAN BE SUMMARIZED AS UNDER:- (1) ALL GLASS TRADERS RS. 18,70,494/- (2) AUTO TRADERS RS. 56,502/- (3) LEEZA TRADERS RS. 86,211/-. 13. IT IS AN UNDISPUTED FACT THAT THE CASH BOOK WAS FOU ND INCOMPLETE FROM 16.07.2007 TILL THE DATE OF SURVEY I.E. 24.08.2007. IT IS ALSO TRUE THAT THE ASSESSEE HAD EXPLAINED THIS IN HIS STATEMENT AT THE TIME OF SURVEY ITSELF. A PERUSAL OF THE RELEVANT DOCUMENTARY EVIDENCES BROUG HT ON RECORD SHOWS THAT ALL THE ENTRIES WERE SUBSEQUENTLY MADE IN THE BOOKS OF ACCOUNTS AND THE CASH IN HAND STANDS TALLIED. WE FAIL TO UNDERST AND WHY THE ASSESSING OFFICER DID NOT ALLOW ANY OPPORTUNITY TO THE ASSESS EE TO COMPLETE THE BOOKS OF ACCOUNTS WHEN THE SAME WAS MAINTAINED ON T HE HARD DISC OF A COMPUTER WHICH WAS IMPOUNDED BY THE REVENUE AUTHORI TIES AT THE TIME OF SURVEY PROCEEDINGS. WE EQUALLY FAIL TO UNDERSTAND W HEN THE CASH RECEIPT DETAILS WERE AVAILABLE THEN WHY THE SAME WAS NOT AL LOWED TO BE ENTERED IN THE NAME OF THE RESPECTIVE DEBTORS FROM WHOM THE AS SESSEE HAS RECEIVED THE CASH. MOST IMPORTANTLY, WHEN THE CASH WAS ALLEG ED TO HAVE BEEN DEPOSITED IN THE BANK THOUGH ENTRIES PENDING IN THE CASH BOOK, WHAT PROMPTED THE ASSESSING OFFICER TO TREAT THE DEFICIT AS UNEXPLAINED EXPENDITURE? THERE IS NOTHING ON RECORD TO SHOW TH AT THE ASSESSEE HAS MADE UNACCOUNTED PURCHASES/INCURRED EXPENDITURE/PUR CHASED ANY ASSET/SPENT MONEY ON CEREMONIAL FUNCTIONS. THE ENTI RE ADDITIONS HAVE BEEN MADE SOLELY ON THE BASIS OF PRESUMPTION AND SU RMISES. ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 6 14. U/S. 69C OF THE ACT, ADDITIONS CAN BE MADE ONLY WHE N THE ASSESSEE IS FOUND TO HAVE INCURRED ANY EXPENDITURE WHICH IS NOT RECOR DED IN HIS BOOKS OF ACCOUNTS. BUT IN THE CASES IN HAND, THERE IS NOTHIN G TO SHOW THAT THE ASSESSEE HAS ACTUALLY INCURRED EXPENDITURE WHICH IS NOT RECORDED IN THE BOOKS OF ACCOUNTS. THE ONLY BASIS IS THE DEFICIT WH ICH WAS DUE TO THE INCOMPLETENESS OF THE CASH BOOK WHICH WAS SUBSEQUEN TLY COMPLETED. THE ASSESSEES BOOKS OF ACCOUNTS ARE AUDITED AND THE AU DITED FINANCIAL STATEMENTS HAVE BEEN ACCEPTED BY THE A.O. WHILE COM PLETING THE ASSESSMENT MADE 143(3) OF THE ACT. WE, THEREFORE, D O NOT FIND ANY LOGIC/MERIT IN THE ADDITIONS MADE ON ACCOUNT OF UNE XPLAINED EXPENDITURE. WE, ACCORDINGLY, SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND DIRECT THE A.O. TO DELETE THE ADDITION MADE ON ACCOUNT OF UNEXPLAIN ED EXPENDITURE IN ALL THESE THREE APPEALS. GROUND NO. 1 IS ACCORDINGLY A LLOWED. ITA NO. 660/AHD/2014 FOR A.Y. 2008-09 15. THE OTHER GROUND RELATES TO THE ADDITION ON ACCOUNT OF DISCREPANCY FOUND IN THE STOCK AMOUNTING TO RS. 1,29,296/-. 16. DURING THE COURSE OF THE SURVEY OPERATION, COMMON I NVENTORY OF CASH PHYSICALLY FOUND WAS RS. 61,57,154/-. WHICH BELONG TO ALL THE THREE PROPRIETARY CONCERNS MENTIONED ELSEWHERE? SUBSEQUE NTLY, THE CONCERN- WISE BIFURCATION OF STOCK PHYSICALLY FOUND WAS FURN ISHED BY THE ASSESSEE WHICH WAS AS UNDER:- (1) ALL GLASS TRADERS RS. 35,99,786/- ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 7 (2) AUTO GLASS TRADERS RS. 22,57,390/- (3) LEEZA GLASS TRADERS RS. 3,52,979/-. 17. WHEN THIS PHYSICAL STOCK WAS COMPARED WITH THE BOOK STOCK, THE STOCK PHYSICALLY FOUND WAS IN EXCESS. WHEN THE ASSESSEE W AS ASKED TO EXPLAIN THE DISCREPANCY IN STOCK FOUND DURING THE COURSE OF SUR VEY, IT WAS EXPLAINED THAT SINCE THE BOOKS OF ACCOUNTS ARE INCOMPLETE, TH E SALES AND PURCHASES ARE PENDING TO BE ENTERED IN THE BOOKS OF ACCOUNTS. IT WAS FURTHER EXPLAINED THAT THERE WAS NOT SUBSTANTIAL DIFFERENCE IN THE BOOKS STOCK AND THE ACTUAL STOCK FOUND AND THE MARGINAL DIFFERENCE MAY BE DUE TO THE EFFECT OF G.P. RATIO. THIS EXPLANATION OF THE ASSESSEE DI D NOT FIND FAVOUR WITH THE A.O. WHO ADDED THE DIFFERENCE OF RS. 12,38,519/- TO THE TOTAL INCOME OF THE ASSESSEE. 18. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) A ND REITERATED THE CONTENTION. 19. AFTER CONSIDERING THE FACTS AND THE SUBMISSIONS, TH E LD. CIT(A) WAS OBSERVED THAT FOR ESTIMATING THE VALUE OF STOCK AS ON THE DA TE OF SURVEY, THE G.P. RATE OF PRECEDING YEAR IS TO BE CONSIDERED. THE LD. CIT( A) FURTHER FOUND THAT THE G.P. RATE OF EARLIER YEAR WAS 3.1% AS AGAINST THIS, THE ASSESSEE HAS ADOPTED THE G.P. RATE OF 4.47%. IF THE G.P. RATE OF 3.1% I S CONSIDERED THEN THE VALUE OF CLOSING STOCK AS ON THE DATE OF SURVEY COMES TO RS. 21,28,094/- AS AGAINST PHYSICAL STOCK OF RS. 22,57,390/-, LEAVING A DIFFER ENCE OF RS. 1,29,296/-. THE ITA NOS. 658 , 659 & 660/AHD/2014 . A.Y.2008-09 8 LD. CIT(A) ACCORDINGLY DIRECTED THE A.O. TO RESTRIC T THE ADDITION TO RS. 1,29,296/-. 20. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE COULD N OT POINT OUT ANY FACTUAL ERROR IN THE FINDINGS OF THE FIRST APPELLATE AUTHOR ITY. 21. WE HAVE CAREFULLY CONSIDERED THE AFORE-STATED FINDI NGS OF THE LD. CIT(A), WE FIND THAT THE FINDINGS OF THE FIRST APPELLATE AUTHO RITY ARE BASED ON FACTUAL FIGURES AND WELL ACCEPTED ACCOUNTING PRINCIPLE. THE REFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. C IT(A), WE DECLINE TO INTERFERE. GROUND NO. 2 IS ACCORDINGLY ALLOWED. 22. ITA NO. 660/AHD/2014 IS PARTLY ALLOWED AND ITA NOS. 658 & 659 ARE ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 07 - 02- 20 17 SD/- SD/- (MAHAVIR PRASAD) (N. K. BILLAIYA) JUDICIAL MEMBER TRUE COPY ACCOUNTANT MEMBER AHMEDABAD: DATED 07 /02/2017 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED.