Shrikant R. Agarwal, Pune V. Income-tax Officer, Ward - 8(3), Pune

ITA 69/PUN/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2162 (ITAT-PUNE)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 09-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: IS ARISING OUT OF PASSED
• Keywords: Unexplained investment

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI R.S. SYAL, VICE PRESIDENT . / ITA NO. 69/PUN/2018 / ASSESSMENT YEAR : 2007-08 SHRIKANT R. AGARWAL, SHAH KHANDELWAL JAIN & ASSOCIATES, CHARTERED ACCOUNTANT, LEVEL 3, RIVERSIDE BUSINESS BAY, PLOT NO.84, WELLESLEY ROAD, NEAR RTO, PUNE 411 001 PAN : ACLPA0438R VS. ITO, WARD-8(3), PUNE (APPELLANT) (RESPONDENT) / ORDER PER R.S.SYAL, VP : THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER PASSED BY THE CIT(A)-6, PUNE, ON 17-02-2017 IN RELATION TO THE A.Y. 2007-08. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF ADDITION OF RS.10,71,000/-. FACTUAL SCENAR IO OF THIS GROUND IS THAT THE ASSESSEE HAS A PROPRIETORSHIP CON CERN APPELLANT BY SHRI RAJIV THAKKUR RESPONDENT BY SHRI RAJESH GAWLI DATE OF HEARING 15-11-2018 DATE OF PRONOUNCEMENT 15-11-2018 ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 2 UNDER THE NAME AND STYLE OF M/S. MITTAL ASSOCIATES, WHICH IS ENGAGED IN THE BUSINESS OF CIVIL CONSTRUCTION. IN ADDITION, TH E ASSESSEE IS ALSO A PARTNER IN M/S. TRAVELLINE INTERNATIONAL, WHICH FIRM IS ENGAGED IN THE BUSINESS OF RUNNING HOTEL. A SURVEY ACTION U/S.133A OF THE INCOME-TAX ACT, 1961 (HEREINAFTER ALSO CALLED AS THE ACT) WAS CARRIED OUT ON 13 -03- 2007. IN THE COURSE OF SURVEY ACTION, THE ASSESSEES STATEMENT WAS RECORDED AT THE BUSINESS PREMISES OF M/S. TRAVELLINE INTERNATIONAL. IN REPLY TO QUESTION NO.6 OF THE STATEMENT, THE ASSESSEE ADMITTED THAT HE PURCHASED A FLAT FROM M/S. DARODE JOG FOR A TOTAL CONSIDERATION OF RS.55,71,000/- BUT THE AGREEMENT VALUE OF THE FLAT WAS RECORDED AT RS.45 LAKHS O NLY. REMAINING AMOUNT OF RS.10,71,000/-, OVER AND ABOVE THE AGREEMENT VALUE, WAS PAID IN CASH. THE ASSESSEE ADMITTE D HIS ADDITIONAL INCOME TO THE TUNE OF RS.10,71,000/- FOR THE YEAR UNDER CONSIDERATION. HOWEVER, AT THE TIME OF FILING THE RETU RN, SUCH INCOME WAS NOT OFFERED FOR TAXATION. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS SHOW-CAUS ED AS TO WHY SURRENDER OF RS.10,71,000/-, MADE DURING THE COUR SE OF SURVEY, WAS NOT HONOURED. IN REPLY, THE ASSESSEE SUB MITTED THAT A SUM OF RS.11 LAKHS WAS DEBITED TO THE ACCOUNT OF THE ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 3 FIRM IN THE BOOKS OF M/S. TRAVELLINE INTERNATIONAL. NOT CONVINCED WITH THE ASSESSEES SUBMISSIONS, THE AO NOTICED THAT THE WITHDRAWAL WAS SHOWN TO HAVE BEEN MADE FROM THE FIRM AFTER THE DATE OF SURVEY. HE, THEREFORE, MADE AN AD DITION OF RS.10,71,000/- IN THE HANDS OF THE ASSESSEE, WHICH W AS ACCORDED A STAMP OF APPROVAL BY THE LD. CIT(A). THE AS SESSEE IS AGGRIEVED BY THE SUSTENANCE OF THE ADDITION. 3. I HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVAN T MATERIAL ON RECORD. A COPY OF STATEMENT OF THE ASSESSEE RECORDED IN THE COURSE OF SURVEY OPERATION HAS BEEN PLAC ED AT PAGE 10 ONWARDS OF THE PAPER BOOK. IN REPLY TO QUESTION NO.6, THE ASSESSEE ADMITTED THAT THERE WAS PAYMENT OF RS.10,71,000/- IN CASH AGAINST THE PURCHASE OF PROPERTY FOR WHICH THE AGREEMENT SHOWED VALUE ONLY AT RS.45 LAKHS. HE RE, IT IS RELEVANT TO MENTION THAT APART FROM MAKING THIS SURRENDER OF RS.10,71,000/-, THE ASSESSEE ALSO ACCEPTED THAT HE INCURRED/PAID BUSINESS PROMOTION EXPENSES AS KICKBACKS AMOUNTING TO RS.26 LAKHS AND ALSO EARNED UNACCOUNTED RECEIPTS OF RS.25 LAKHS IN THE HANDS OF FIRM, M/S TRAVELLIN E INTERNATIONAL. IN ADDITION, THE ASSESSEE ALSO OFFERED AN IN COME ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 4 OF RS.5 LAKHS IN THE HANDS OF THE FIRM TO COVER OTHER OM ISSIONS AND COMMISSIONS. 4. THE CASE OF THE ASSESSEE IS THAT THE AMOUNT OF RS.10,71,000/- WAS OFFERED AS ADDITIONAL INCOME IN THE HAN DS OF PARTNERSHIP FIRM M/S. TRAVELLINE INTERNATIONAL. A COPY OF THE ASSESSMENT ORDER DATED 30-12-2009 PASSED IN THE CASE OF M/S. TRAVELLINE INTERNATIONAL FOR THE A.Y. 2007-08 HAS BEEN PLACED AT PAGE 27 OF THE PAPER BOOK. IN THE CASE OF FIR M, THE ASSESSEE OFFERED ADDITIONAL INCOME OF RS.17 LAKH, WITH THE FOLLOWING WORKING : UNACCOUNTED INVESTMENT IN RESIDENTIAL FLAT MADE OUT OF WITHDRAWALS FROM THE FIRM 1071000 UNEXPLAINED BUSINESS PROMOTION EXPENSES ADMITTED AT THE SURVEY 2600000 TOTAL 3671000 LESS : UNACCOUNTED RECEIPTS UTILIZED FOR AFORESAID PAYMENTS 2500000 BALANCE (SHORTFALL) 1171000 ADDITIONAL INCOME OFFERED TO COVER ALL OMISSIONS & COMMISSIONS TO AVOID ANY POSSIBLE LITIGATION & TO BUY PEACE OF MIN D 500000 TOTAL 1671000 INCOME OFFERED (ROUNDED OFF TO THE NEAREST RS.10000 0/-) 1700000 5. FROM THE ABOVE WORKING, IT IS APPARENT THAT THE ASSESSEE SURRENDERED A SUM OF RS.10,71,000/- IN THE HANDS OF F IRM IN ADDITION TO A SUM OF RS.5 LAKHS WHICH WERE OFFERED TO COV ER OTHER OMISSIONS AND COMMISSIONS AND A SUM OF RS.1 LAKH WHICH IS DIFFERENCE BETWEEN THE UNEXPLAINED BUSINESS PROMOTION EXPENSES ADMITTED AT THE TIME OF SURVEY OVER AND ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 5 ABOVE THE UNACCOUNTED RECEIPTS UTILISED FOR SUCH PAYMENT. T HE AO IN THE ASSESSMENT OF M/S. TRAVELLINE INTERNATIONAL MADE AN ADDITION OF RS.39 LAKHS BY REDUCING A SUM OF RS.17 LAKHS SURRENDERED BY THE ASSESSEE (INCLUSIVE OF UNACCOUNTED INVESTMENT IN RESIDENTIAL FLAT OF RS.10,71,000) FROM RS.56 LAKHS, BEING, A SUM TOTAL OF UNEXPLAINED BUSINESS PROMOTION EXPENSES OF RS.26 LAKHS; UNACCOUNTED RECEIPTS OF RS.25 LA KHS; AND ADDITIONAL INCOME OF RS.5 LAKH TO COVER ALL OMISSIONS AN D COMMISSIONS. M/S TRAVELLINE INTERNATIONAL PREFERRED AN APPEA L AGAINST THE ASSESSMENT ORDER BEFORE THE LD. CIT(A) CHALLENG ING THE ADDITION OF RS.39 LAKHS MADE BY THE AO OVER AND ABOVE THE SURRENDERED AMOUNT OF RS.17 LAKHS, WHICH IS INCLUSIVE O F RS.10,71,000/- TOWARDS UNEXPLAINED INVESTMENT IN FLAT. T HE LD. CIT(A) HAS REDUCED THE ADDITION TO RS.14 LAKHS OUT OF TOTAL ADDITION OF RS.39 LAKHS MADE BY THE AO. THE LD. AR CONTENDED THAT THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL CHALLENGING THE SUSTENANCE OF ADDITION TO THE TUNE OF RS.14 LAKHS. 6. THE FACTUAL PANORAMA GIVEN ABOVE IN THE CONTEXT OF M/S. TRAVELLINE INTERNATIONAL AMPLY MANIFESTS THAT THE ASSESSEE DID MAKE A SURRENDER OF RS.17 LAKHS IN THE HANDS OF THE FIRM WHICH ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 6 INCLUDES AN UNACCOUNTED INVESTMENT IN RESIDENTIAL FLAT MADE OUT OF WITHDRAWALS FROM THE FIRM AMOUNTING TO RS.10,71,000/- WHICH CONSTITUTES THE FILAMENT OF THE ADDITION MADE IN THE HANDS OF THE ASSESSEE. IT IS ABUNDANTLY CLEAR THAT THE ADD ITIONAL INCOME IN THE HANDS OF FIRM INCLUDES SURRENDER OF RS.10,71,000/- WHICH HAS NEVER BEEN CHALLENGED BY THE ASSESSEE IN THE APPEAL PROCEEDINGS. ONCE THE ADDITIONAL INCOME OF RS.10,71,000/- HAS BEEN OFFERED IN THE HAND S OF THE FIRM IN WHICH THE ASSESSEE IS A PARTNER AND THAT HAS BEEN SUBJECTED TO TAX @ 30%, THERE CAN BE NO RATIONALE IN REPEATING THE ADDITION OF RS.10,71,000/- IN THE HANDS OF THE ASSESSE E, FOR WHICH AGAIN THE MAXIMUM RATE OF TAX IS 30%. IF SUCH AN ADDITION IS MADE, IT WOULD AMOUNT TO DOUBLE ADDITION WHICH CAN ONLY BE SUSTAINED, IF SURRENDER OF RS.10,71,000/- IS NOT CONSIDERED IN THE HANDS OF M/S. TRAVELLINE INTERNATIONAL. AS THE ASSESSMENT IN THE HANDS OF M/S. TRAVELLINE INTERNATIONAL HAS BEEN FINALIZED CONSIDERING, INTER ALIA, THE SURRENDER OF RS.10,71,000/- TOWARDS UNACCOUNTED INVESTMENT IN RESIDENTIA L FLAT, I HOLD THAT THE SAME ADDITION CANNOT BE SUSTAINED IN THE HANDS OF THE ASSESSEE. THE REVENUE IS AT LIBERTY TO TAKE ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 7 APPROPRIATE VIEW QUA THE OTHER SURRENDERS MADE DURING THE COURSE OF SURVEY BY THE FIRM. 7. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH NOVEMBER, 2018. SD/- (R.S.SYAL) / VICE PRESIDENT PUNE; DATED : 15 TH NOVEMBER, 2018 / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. ( ) / THE CIT (APPEALS)-6, PUNE 4. / THE PR. CIT-5, PUNE 5. , , SMC / DR SMC, ITAT, PUNE; 6. / GUARD FILE. // TRUE COPY / / BY ORDER, // TRUE COPY // SENIOR PRIVATE SECRETARY , / ITAT, PUNE ITA NO.69/PUN/2018 SHRIKANT R. AGARWAL 8 DATE 1. DRAFT DICTATED ON 15-11-18 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 15.11.18 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER - 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. - 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. *