SHRI UMAID SINGH LODHA, Jaipur V. ITO, Jaipur

ITA 679/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7834 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2000-2001
• Appeal Filed On: 18-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRS NEENA JEEPH
• Keywords: Rejection of books of accounts; Search and seizure; Block assessment
• Section: 143(3); 132

Judgement Text

ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 679/JP/2012 ASSESSMENT YEAR: 2000-01 PAN : AASPL 5594 Q SHRI UMAID SINGH LODHA VS. THE ITO A-100, ATREY MARG, WARD- 2 (3) SHYAM NAGAR, JAIPUR JAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MUKESH KHANDELWAL DEPARTMENT BY: MRS. NEENA JEEPH DATE OF HEARING: 27-10-2014 DATE OF PRONOUNCEMENT: 05-12-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT (A)-III, JAIPUR DATED 17-05-2012 WHEREIN THE ASSES SEE HAS RAISED FOLLOWING GROUNDS IN HIS APPEAL. 1. THAT THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE FACTS IN CONFIRMING THE ACTION OF THE LD. AO IN REJECTING THE BOOKS OF ACCOUNT U/S 145(3) OF THE I.T. ACT, 1961. 2. THAT THE LD. CIT(A) HAS ERRED SERIOUSLY ON THE F ACTS IN SUSTAINING THE ACTION OF THE LD. AO IN ENHANCING THE TURNOVER OF THE APPELLANT AND APPLYING AN NET PROFIT RATE OF 5% ON SUCH ENHANCED TURNOVER FOR THE ASSESSING THE INCOME OF THE APPELLANT. ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 2 2.1 DURING THE COURSE OF HEARING, THE LD. AR HAS NO T PRESSED THE GROUND NO. 1. HENCE, THE SAME IS DISMISSED BEING NOT PRESS ED. 3.1 APROPOS SECOND GROUND, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DEALS IN SALE, PURCHASE AND CONSTRUCTION OF REAL ES TATE. A SEARCH AND SEIZURE OPERATIONS WERE CARRIED OUT U/S 132 OF THE ACT ON 1 6-11-1999. THE ASSESSMENT WAS FRAMED ON 29-11-2001 WHICH RESULTED AN ADDITION OF RS. 5,58,915/-. 3.2 THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHERE RELIEF OF RS. 4.00 LACS WAS GRANTED. 3.3 ON SECOND APPEAL ITAT REMANDED THE MATTER BACK TO THE FILE OF THE AO. THE AO WHILE GIVING EFFECT TO THE ORDER OF THE ITAT FRAMED ASSESSMENT U/S 143(3) READ WITH SECTION 254 ASKED THE ASSESSEE TO AGAIN PRODUCE THE BOOKS OF ACCOUNT AND RECORDS WHICH WERE FILED, AO H OWEVER REJECTED ASSESSEESS EXPLANATION AND FRAMED THE ASSESSMENT R ESULTING INTO AN ADDITION OF RS. 5,58,915/- BY OBSERVING AS UNDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AND THE NA TURE OF ACCOUNTS. NO FRESH EVIDENCES MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE DURING THE COURSE OF SET ASIDE PROCEEDINGS. THE FACTS REMAINS SAME AS IN THE ORIGINAL ASSESSMENT. THE SEARCH HAS BROUGHT EVIDENCES WHIC H GO TO ESTABLISH BEYOND DOUBT THAT THE ASSESSEE WAS INDULGING IN SUPPRESSIO N OF PROFITS. IN THE TRANSACTION OF PROPERTIES, THE ASSESSEE WAS NOT DISCLOSING REAL FIGURES. IN VIEW OF THIS, I AM LEFT WITH NO OTHER ALTERNATIVE BUT TO ESTIMATE THE PROFI TS. SINCE THE BOOKS OF ACCOUNT OF THE ASSESSEE DO NOT REFLECT THE TRUE AND CORRE CT POSITION, RESORT IS TAKEN TO ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 3 SECTION 145(3). IN THE CASE OF THE ASSESSEE, IN THE SE TWO IMMOVABLE PROPERTIES , THE WORK DONE BY HIM IS OF RS. 71,49,505/- . FURTHE R, THERE IS OTHER WORK OF CONTRACT SHOWN BY THE ASSESSEE ON RECEIPT SIDE OF RS. 6,50,000/-. THUS, THE TOTAL WORK COMES TO RS. 77,99,505/- OR SAY RS. 80,00,000/ -. I ESTIMATE THE NET PROFIT @ 5% WHICH WAS UPHELD BY THE LD. CIT(A) AFTER CONSIDE RING THE SUBMISSION OF THE ASSESSEE FILED DURING THE COURSE OF ORIGINAL ASSESS MENT PROCEEDINGS AND APPELLATE PROCEEDINGS AS WELL AS OTHER RELEVANT MATERIAL EVID ENCES ON FILE. THE SAME WORKS OUT TO RS. 4,00,000/-. THUS, AGAINST CLAIM OF LOSS, THE INCOME ON ACCOUNT OF THESE PROPERTIES IS TAKEN AT RS.. 4,00,000/- 5. THE ASSESSEE HAS ALSO SOLD LAND AT AJMER ROAD AT RS. 1,60,0000/-, THE COST OF WHICH IS SHOWN AT RS.1,50,000/-. THIS RESUL TS IN PROFIT OF RS. 10,000/-. THE SAME SHALL BE TAKEN OVER AND ABOVE PROFIT OF RS.4,0 0,000/-. 6. THUS, INCOME ON ACCOUNT OF BUSINESS IN PROPERTY DEALINGS IS TAKEN AT RS. 4,10,000/- AS AGAINST LOSS CLAIMED BY THE ASSESSE E AT RS. 1,48,915/- WHICH MEANS AN ADDITION OF RS. 5,58,915/- TO THE BUSINES S INCOME OF THE ASSESSEE. WITH THESE REMARKS, TOTAL INCOME IS COMPUTED AS UND ER:- RETURNED INCOME RS. 6,54,150/- ADD: ADDITION IN TRADING ACCOUNT AS DISCUSSED ABOVE RS. 5,58,915/- TOTAL INCOME RS. 12,13,065/- ROUNDED OFF RS. 12,13,070/- 3.4 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL WHERE THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 5,48,915/- BY FOLLOWI NG OBSERVATIONS 3.3.1 REJECTION OF BOOKS OF ACCOUNTS: HERE, IT IS PERTINENT TO NOTE THAT THE PERIOD RELEVANT TO THE ASSESSMENT, UNDER CONSIDERAT ION, IS BROKER PERIOD OF THE BLOCK ASSESSMENT COMPLETED IN THE CASE OF THE ASSES SEE, VIZ, SEARCH CONDUCTED AT HIS PLACE ON 16.11.1999. DURING THE BLOCK PERIOD OF THE CURRENT F.Y., THE ASSESSEE HAD BEEN FOUND OF HAVING UNACCOUNTED SATE RECEIPTS I.R.O. THREE PROPERTIES TO EXTENT OF RS.71,49,505/- AND THE RELEVANT ADDITION WAS MADE IN THE BLOCK ASSESSMENT ITSELF. BASED ON THE ABOVE PRACTICE OF T HE ASSESSEE, THE AO IS OF OPINION THAT EVEN DURING THE BROKEN PERIOD OF THE C URRENT YEAR, RELEVANT SUBSEQUENT MONTHS TO THE DATE OF SEARCH, THE ASSESS EE MUST HAVE INVOLVED SIMILAR UNACCOUNTED ACTIVITIES; THUS, BOOKS ARE LIABLE TO B E REJECTED. AS FAR AS, THE REJECTION OF THE BOOKS OF ACCOUNTS U /S 145(3) OF THE ACT IS CONCERNED, IT IS FELT THAT SINCE, THIS IS THE YEAR IN WHICH SEARCH WAS CONDUCTED AND THE ASSESSEE WAS FOUND INVOLVED IN THE ACTIVITY OF SUPPRESSION OF PROFIT, THEREFORE, IT IS QUITE LOGICAL THAT IN THE BALANCE PERIOD OF T HE CURRENT YEAR (BROKEN PERIOD), THE SAME METHOD MIGHT HAVE ADOPTED IN THE SIMILAR P ROPERTY BUSINESS CARRIED OUT ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 4 BY THE ASSESSEE, AS SUCH. THE LD. AR RELIANCE ON SU BSEQUENT DECISIONS OF HON'BLE ITAT JAIPUR BENCH, GIVEN IN THE APPELLANT'S CASE FO R A.Y. 2003-04 & 2004-05, IS FOUND NOT RELEVANT AS IN SUCH YEARS , THE PERIOD UN DER CONSIDERATION, WERE NOT BROKEN PERIOD OF THE BLOCK ASSESSMENT, AS HAPPENED IN THE PRESENT PROCEEDING. ACCORDINGLY, REJECTION OF THE BOOKS OF THE ACCOUNT IS HEREBY CONFIRMED. 3.3.2 ESTIMATION OF INCOME : IN THIS REGARD, THE AO HAS OBSERVED THAT DURING THE SEARCH PROCEEDINGS, THE ASSESSEE IS FOUN D INVOLVED IN SUPPRESSION OF SALE PROCEEDS OF THE THREE PROPERTIES, PURCHASED FO R RS.71,49,505/-, AS AGAINST THE TOTAL RECEIPTS SHOWN AS RS. 37,22,320/- IN THIS REGARD. CONSIDERING THE FACT THAT THE ASSESSEE HAS ALSO SHOWN OTHER CONTRACT RECEIPTS OF RS. 6,50,000/- , THUS, HE ESTIMATED THE TOTAL RECEIPT AT RS. 80,00,000/-, AGA INST THE TURNOVER OF RS. 45,32,320/-, OFFERED BY THE ASSESSEE AND ESTIMATED THE NP @ 5%, THEREON. THE LD. AR, WHILE OBJECTING THE ABOVE ESTIMATION, SUBMI TTED THAT THE ENHANCEMENT OF TURNOVER AND APPLICATION OF NP RATE @5% HAS NO B ASIS AND TERMED THE AOS ACTION AS PURE GUESS WORK. HOWEVER, CONSIDERING TH E FACT THAT AS THE REJECTION OF THE BOOKS OF THE ACCOUNT U/S 145(3) OF THE ACT IS F OUND JUSTIFIED IN THE CURRENT YEAR, THEREFORE, I FIND THAT THE AO WAS WELL WITHIN HIS RIGHT TO ESTIMATE THE TURNOVER ON HIGHER SIDE THAN DECLARED AS THE ASS ESSEE IS FOUND INVOLVED IN SUPPRESSION OF SALES RECEIPT IN THE CURRENT YEAR ITSELF. SIMILARLY, CONSIDERING THE GENERAL PROFIT TREND IN THE REAL ESTATE BUSINESS, I ALSO FIND THAT THE AO HAS BEEN MORE THAN REASONABLE, WHILE ESTIMATING THE NP AT 5% ONLY, U/S 145(3) OF THE ACT. ACCORDINGLY, RS. 5,48,915/- MADE IN THIS REGARD, IS HEREBY CONFIRMED. 3.5 THE LD. AR REITERATED THE FACTS OF THE CASE AND PLEADED THAT THE ENTIRE BASIS OF AO IN MAKING ADDITION IS ONLY GUESS WORK. A FINDING HAS BEEN GIVEN THAT IN THE CASE OF SALE OF TWO PROPERTIES, T HE SALE CONSIDERATION WAS RECORDED MORE THAN THE BOOKS OF ACCOUNT. IF THIS OB SERVATION IS TAKEN TO A LOGICAL CONCLUSION WHICH MEANS THAT ASSESSEE'S EXPE NDITURE WAS MORE WHICH WOULD REDUCE THE PROFITABILITY, BESIDES THE EXTENT OF EXCESSIVE EXPENDITURE HAS NOT BEEN SPECIFIED. THE AO ESTIMATED THE TURNOV ER OF RS. 80.00 LACS AND APPLIED THE NET PROFIT RATE THEREON. THE COPIES OF THREE PLOTS SOLD BY THE ASSESSEE HAVE BEEN FILED ALONG WITH RETURN OF INCOM E. IT HAS BEEN ASSUMED ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 5 THAT THE ASSESSEE HAS SUPPRESSED THE SALE PROCEEDS IN ORDER TO ENHANCE THE TURNOVER. THERE SHOULD BE A POSITIVE EVIDENCE AND N OT MERE SUSPICION THAT THE SALE CONSIDERATION WAS MORE THAN THE STATED ONE . IT IS SETTLED LAW THAT SUSPICION HOWSOEVER STRONG CANNOT TAKE THE SHAPE OF REALITY WITHOUT PROPER CORROBORATIVE MATERIAL. RELIANCE IS PLACED IN THE C ASE OF GIRDHARI LAL GUPTA VS. ACIT, 23 TW 117 (ITAT JAIPUR). IT IS PLEADED TH AT THE ADDITION BEING THE RESULT OF PURE GUESSWORK SHOULD BE DELETED. 3.6 THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AU THORITIES AND CONTENDS THAT IT IS A PERIOD FROM THE DATE OF SEARCH TO THE END OF THE FINANCIAL YEAR. THE AMOUNT SURRENDERED DURING THE COURSE OF BLOCK PERIO D HAS BEEN FINALIZED BY THE SETTLEMENT COMMISSION, PRINCIPLE BENCH, NEW DEL HI AND THE DETAILS WHEREOF ARE GIVEN IN THE AOS ORDER. AT THIS JUNCTU RE, THE LD. COUNSEL FOR THE ASSESSEE WAS ASKED TO SUBSTANTIATE ASSESSEE'S CONTE NTION ABOUT THE SURRENDER OF THE INCOME QUA NEMI SAGAR AND VRINDAVAN VIHAR BE FORE THE SETTLEMENT COMMISSION IN ITS ORDER. THE LD. COUNSEL FOR THE AS SESSEE COULD NOT DEMONSTRATE OR ADVANCE ANY ARGUMENTS IN RESPONSE TO THIS SPECIFIC QUERY. THUS THE CONTENTIONS WHICH ARE BEING RELIED ON BY T HE ASSESSEE ARE WITHOUT ANY BASIS. SINCE THE ASSESSEE COULD NOT DEMONSTRATE THE DETAILS OF THE PROPERTIES NAMELY 32-33, NEMI SAGAR, 14 VRINDAVAN V IHAR AT AJMER ROAD ASSESSEES ARGUMENTS SHOULD NOT BE ACCEPTED. ITA NO. 679/JP/2012 UMAID SINGH LODHA VS. ITO WARD- 2 (3) , JAIPUR 6 3.7 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. FROM THE ORDERS OF THE LOWER A UTHORITIES AND THE ORDER OF THE SETTLEMENT COMMISSION, PRINCIPAL BENCH, NEW DE LHI, ASSESSES COULD NOT SUBSTANTIATE HIS CLAIM. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, WE SEE NO REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES WHICH HAVE BEEN PASSED AFTER TAKING INTO CONSIDERAT ION OF ITAT DIRECTION IN FIRST ROUND. THUS IN VIEW THEREOF, THE APPEAL OF TH E ASSESSEE IS DISMISSED. 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 05 -12-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 05 TH DEC. 2014 *MISHRA COPY FORWARDED TO:- 1.SHRI UMAID SINGH LODHA, JAIPUR 2. THE ITO, WED 2 (3), JAIPUR 3. THE LD. CIT(A) 4. THE LD. CIT BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO.679/JP/2012) AR ITAT, JAIPUR