Shri Gopal Soni, Mandsaur V. Addll. CIT , Ratlam

ITA 714/Ind/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5687 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-04-2019
• Assessment Year: 2002-2003
• Appeal Filed On: 17-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: K G GOEL
• Assessee Lawyers: RAVI SHARDA
• Keywords: Unexplained investment; Presumptive income; Business income; Depreciation; Loose papers
• Section: 133A; 234B; 37

Judgement Text

GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.712 TO 714/IND/2017 ASSESSMENT YEAR 2000-01 TO 2002-03 REVENUE BY SHRI K.G. GOEL , SR.DR ASSESSEE BY S HRI RAVI SHARDA, ADV OCATE DATE OF HEARING 1 0 . 04 . 201 9 DATE OF PRONOUNCEMENT 14 .0 5 . 201 9 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED THREE APPEALS ARE FILED AT THE INSTANCE OF ASSESSEE PERTAINING TO ASSESSMENT YEAR 2000-01 TO 2002-03AND ARE DIRECTED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS) (IN SHORT LD.CIT(A)], UJJAIN DATED 01.08.2017, WHICH ARE ARISING OUT OF THE ORDER U/S 143(3)/148 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) SHRI GOPAL KRISHNA SONI, JEEVAGANJ, NEAR BHURIYA MAHADEV MANDIR, MANDSAUR VS. ACIT, RATLAM ( APPELLANT ) (RESPONDENT ) PAN A EM PS0957E GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 2 DATED 21.02.2006, 27.02.2004 AND 31.3.2005 FRAMED BY ACIT & ADDL. CIT, RATLAM RESPECTIVELY. 2. AS THESE APPEALS RELATES TO THE SAME ASSESSEE THES E WERE HEARD TOGETHER AND BEING DISPOSED OFF BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORD S ARE THAT THE ASSESSEE IS ENGAGED IN THE JEWELLERY BUSINESS IN TH E NAME OF POONAM JEWELLERS AT MANDSAUR. SURVEY U/S 133A OF THE ACT WAS CARRIED OUT AT THE ASSESSEES BUSINESS PREMISES ON 27.12.2001. VAR IOUS INCRIMINATING MATERIALS WERE FOUND. ASSESSEE OFFERED UNDISCLOSED INCOME OF RS.5,00,000/- AND RS.15,00,000/- FOR ASSESSMENT YEA R 2001-02 AND 2002-03. RETURN OF INCOME WERE FILED AND ASSESSMEN T PROCEEDINGS WERE CARRIED OUT AS PER THE PROVISIONS OF LAW AFTER SERV ING THE STATUTORY NOTICES AND VARIOUS ADDITIONS WERE MADE AGAINST WHICH ASSES SEE PREFERRED APPEAL BEFORE LD. CIT(A). 4. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING VARIOUS GROUNDS AGAINST SEPARATE ORDERS OF LD. CIT(A) CONFI RMING VARIOUS ADDITIONS FOR THE TREE ASSESSMENT YEARS AND THE SAM E ARE ADJUDICATED IN THE FORTHCOMING PARAGRAPHS:- GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 3 5. WE WILL FIRST TAKE UP ITA NO.712/IND/2017 FOR ASSE SSMENT YEAR 2000-2001. FOLLOWING APPEALS HAVE BEEN RAISED BY T HE ASSESSEE. GROUNDS OF APPEAL SET OUT BELOW ARE WITHOUT PREJUDI CE TO EACH OTHER:- GROUND NO.1: THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) (HERE IN AFTER REFERRED AS CIT(A) HAS ERRED IN CONFIRMING ALLEGED INCOME OF RS.11,10,000/- IN THE HANDS OF THE ASSESSEE, WHICH IN FACT DOES NOT BELON G TO THE ASSESSEE, ON CONJECTURE, SURMISES AND SUSPICION. GROUND NO.2: THE LD. CIT(A)HAS ERRED IN LEVY OF CHA RGING INTEREST U/S 234A AT RS.36,362/- U/S 234B AT RS. 2,94,591/- U/S 234C AT RS. 1,411/- AND U/S 220(2) AT RS. 4,61,846/-. THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR AME ND ANY GROUNDS OF APPEAL. 6. BRIEF FACTS RELATING TO IMPUGNED ADDITION RS.11,10 ,000/- MADE FOR 2000-01 ARE THAT DURING THE COURSE OF SURVEY U/S 13 3A OF THE ACT, SURVEY TEAM IMPOUNDED A DAIRY NAMELY NEELGAGANAT MAYUR N AGAR PREMISES FROM THE ALMIRAH OF THE KARIGAR NAMED SHEKH SULTA N. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS SUBMITTED T HAT THE ALLEGED DIARY BELONGS TO THE EMPLOYEE HAVING SOME TRANSACTION OF DODA CHOORA WHICH HAVE NO CONNECTION WITH THE ASSESSEE. THERE IS NO M ENTION OF ASSESSEES NAME, BUSINESS TRANSACTION IN THIS DIARY NOR ANY DA TE OR SIGNATURE ARE MENTIONED. IT WAS FURTHER CONTENDED THAT THE ALLEG ED DIARY IS MERELY A DUMB DOCUMENT FOR WHICH NO ADDITION SHOULD HAVE BEE N MADE. LD. A.O GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 4 HOWEVER WAS NOT SATISFIED AND AGAINST THE RETURNED INCOME OF RS.2,36,842/- DECLARED BY THE ASSESSEE MADE ADDITIO N OF RS.11,10,000/- FOR UNEXPLAINED INVESTMENTS AND ADDITION OF RS.1,13 ,158/- WAS MADE FOR NON PRODUCTION OF BOOKS ACCOUNTS. AGAINST THESE AD DITIONS APPEAL WAS PREFERRED BEFORE LD. CIT(A) AND ASSESSEE PARTLY SUC CEEDED IN GETTING THE RELIEF OF DELETING THE ADDITION OF RS.1,13,158/-, H OWEVER CIT(A) CONFIRMED THE ADDITION OF UNEXPLAINED INVESTMENT AT RS.11,10, 000/-. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL R AISING SOLE ISSUE CHALLENGING THE ADDITION OF RS.11,10,000/- CONFIRME D BY LD. CIT(A). 8. LD. COUNSEL FOR THE ASSESSEE REFERRED AND RELIED O N THE FOLLOWING WRITTEN SUBMISSIONS PLACED BEFORE US DURING THE COU RSE OF HEARING. GROUND NO. 1 : THE LD. COMMISSIONER OF INCOME TAX (APPEALS) {HER E IN AFTER REFERRED AS CIT(A)} HAS ERRED IN CONFIRMING ALLEGED INCOME OF RS.11,10,000 /- IN THE HANDS OF THE ASSESSEE, WHICH IN FACT DOES NOT B ELONG TO THE ASSESSEE, ON CONJECTURE, SURMISES AND SUSPICION. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN JEWELRY BUSINESS IN THE NAME OF M/S POONAM JEWELERS AT JEEVAGANJ, MANDSAUR. ASSESSEE HA S FILED HIS RETURN ON 28.03.2001 SHOWING INCOME AT RS.2,36,842/-, COPY IN PAPER BOOK AT PAGE 1-8 . THERE WAS A SURVEY CARRIED OUT U/S 133A ON 27112/2001, COPY OF S.A. RECORDED UNDER SURVEY PROCEEDINGS IS IN PAPER BOOK AT PAGE 9- 13. IN S.A. ASSESSEE STATED THAT THERE WAS A THEFT AT HIS BUSIN ESS PREMISES ON 20108/2001 IN WHICH JEWELRY AND BOOKS WERE TAKEN AWAY BY THIEF 'S FOR WHICH A POLICE FIR LONGED, COPY OF THE FIR IS AT PAGE 14 - 17 . AFTER THAT, SHOP WAS CLOSED FOR 2 GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 5 MONTHS FOR MAKING STRONG ROOM. IN SA, ASSESSEE ALSO STATED THAT SOME OF THE JEWELRY ARE ALSO MADE AT A HOUSE IN MAYUR NAGAR COL ONY BY OUR KARIGARS, THOSE KARIGARS RESIDED ALSO THERE, IN SURVEY PROCEEDINGS A SPIRAL DIARY NAMED AS NEELGAGAN FOUND AT MAYUR NAGAR PREMISES FROM THE AL MIRAH OF KARIGAR, SHEKH SULTAN IN WHICH THEIR CLOTHES ARE KEPT. SURVEY TEAM SEIZED THE DIARY AND GOT ITS PAGES SIGNED FROM SHEKH SULTAN, KARI :AR AND RECORD ED HIS SA, COPY OF SA AT PAGE 18-20 . YOUR HONOURS KIND ATTENTION IS DRAWN THAT THIS DIAR Y HAS NOT BEEN FOUND FROM OF THE POSSESSION OF THE ASSESSEE, IT HAS BEEN FOUN D FROM THE POSSESSION OF SHEKH SULTAN, AS ALSO EVIDENT FROM HIS STATEMENT. A O MADE AN ALLEGED ADDITION OF RS. 11,10,000 /- AS INVESTMENT FROM UNDISCLOSED SOURCES UNDER PRESUM PTIONS AND SURMISES AND WRONG NOTION, WITHOUT ANY CONCRETE CORRELATED EVIDENCE NARRATING THAT SOME TRANSACTIONS RELATES TO DODA CH URA BUSINESSL\AND THERE IS AN INVESTMENT IN THE NAME OF ASSESSEE, WHICH IS CON FIRMED BY CIT(A). IT IS ALSO STATED THAT THIS ADDITIONS OF RS. 11,10,000 /- IS MADE ON A DUMB DOCUMENT, COPY OF SAME IS IN P. BOOK AT PAGE 21 AND NO CORROBORATIVE EVIDENCE WAS FOUND TO SUPPORT THE FINDING OF A.O. AND NO PERSON IS EXAMIN ED : TO PROVE THE DOCUMENT. IT DOES NOT CARRY ANY DATE AS WELL AS SIGNATURE OF THE ASSESSEE, NO TRANSACTION OR SPECIFIED DETAILS ARE THERE IN THE SAID PAPER, IN T HAT PAPER, IT IS ONLY WRITTEN AS 'GOPALJI' WHICH IS NOT HAVING ANY DATE OR SIGNATURE OF THE ASSESSEE, NO TRANSACTION IS DISCLOSED IN THE SAID PAPER. IT IS A DOCUMENT WHICH HAS NOT BEEN FOUND FROM THE POSSESSION OF ASSESSEE, IT IS FOUND FROM THE SHEKH SULTAN WHICH HE HAS ALSO CONFIRMED THE SAME IN HIS S.A. RECORDED . CONSIDERING THE ABOVE FACTS NO ADDITION COULD BE MADE ON SUCH A DOCUMENT EVEN IF IT IS RECOVERED FROM THE OFFICE PREMISES OF THE ASSESSEE. DIARY NEITHER BELONGS TO ASSESSEE NOR SEIZED FROM THE ASSESSEE AND IT HAS NO CONNECTION WITH THE ASSESSEE. IT IS A SETTLED LAW THAT IF THE ASSESSEE DENIES THE INFORMATION COLLECT ED BY REVENUE., THEN THE REVENUE HAS TO SATISFY HIMSELF BY MAKING INDEPENDEN T ENQUIRY FROM THE SOURCES CONSIDERED RELIABLE BY IT AND DECIDE WHETHER INFORM ATION PASSED ON TO IT IS TRUE GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 6 OR NOT? IF HE REACHES TO THE CONCLUSION THAT THE IN FORMATION RECEIVED BY HIM IS TRUE, HE HAS TO PROVIDE REASONABLE OPPORTUNITY OF R EBUTTING IT BEFORE TO ACT THEREUPON. HE HAS NO RIGHT TO BURDEN THE ASSESSEE W ITH AN EXTRA AMOUNT OF TAX ON VAGUE INFORMATION WITHOUT VERIFYING ITS RELIABIL ITY. THE SAME CAN NOT BE FOISTED UPON THE OTHER PARTY IN THE ABSENCE OF SUFF ICIENT CORROBORATORY MATERIAL. UNDER THE ABOVE NARRATED FACTS THE ALLEGED ADDITION OF RS.11,1O,000 /- ARE LIABLE TO BE DELETED. RELIED ON :- (1) A.C.I.T. VS. RAJ HOMES PVT. LTD. - 13 ITJ 658 P.P. 704 IND. (2) A.C.I.T. VS. SHRI SHARAD DOSHI - ITA NO. 537/INDI 2015 DT. 23/12/16 ASSESSEE HAS CATEGORICALLY STATED AT EVERY STAGE TH AT SEIZED MATERIAL DOES NOT BELONG TO HIM. REVENUE IS NOT ABLE TO UNEARTH ANY B ACKGROUND WITH REGARD TO THE ALLEGED BUSINESS LIKE DODA CHURI ETC. OR ANY CO RROBORATIVE EVIDENCE THEREOF. DODA CHURI LICENSE IS IN THE NAME OF SOME 'GOVINDRA M GOPILAL JOSHI', COPY OF THE SAID LICENCE IS IN PB AT PAGE 22 - 24 . REVENUE HAS NOT TRACED AND EXAMINED ANY OF THE PERSON WHOSE NAMES WERE FOUND IN THE SEI ZED MATERIAL. AFORESAID NOTEBOOK HAS UNSIGNED DOCUMENTS. AO HAS NOT ESTABLI SHED ANY NEXUS BETWEEN THE NOTEBOOK I LOOSE DOCUMENTS AND BUSINESS OF THE ASSESSEE. THERE IS NO NARRATION REGARDING THE ADDRESS OF THE ASSESSEE. NO ADDITION CAN BE SOLELY MADE ON THE BASIS OF SEIZED MATERIAL IN ABSENCE OF ANY O THER CORROBORATIVE MATERIAL TO PROVE THAT ASSESSEE HAS CARRIED ON SUCH ALLEGED BUS INESS. BESIDES THAT ASSESSEE WAS NOT PROVIDED OPPORTUNITY TO CROSS EXAMINE THE P ARTIES WHOSE STATEMENT WERE RELIED UPON BY THE AO WHILE MAKING THE ASSESSM ENT. ASSESSEE APPREHENDS THAT SOMEBODY MIGHT HAVE PLANNED TO HARASS THE POOR ASSESSEE WITH AN INTENTION TO INVOLVE THE ASSESSEE TO LOOK VERY SUSP ICIOUS. IT IS CLEAR THAT ENTRIES MADE IN THE DIARY ARE IMAGINARY, CONCOCTED AND UNRE ALISTIC TRANSACTIONS WHICH NOT AT ALL RELATED TO THE ASSESSEE. ASSESSEE AFFIRM THAT DIARY DOES NOT BELONG TO HIM, THE PRESUMPTION CAN BE APPLIED ONLY AGAINST TH E PERSON IN WHOSE GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 7 POSSESSION THE SAID DIARY WAS FOUND. ADDITIONS MADE ON THE BASIS OF JOTTINGS IN THE DIARY ARE NEITHER LEGALLY SUSTAINABLE NOR FACTU ALLY MAINTAINABLE. AO & CIT(A) HAD FAILED TO CONSIDER LEGAL ASPECTS PROPERL Y AND MAKING INANITY ABOUT THE NAMES NOTED IN THE DIARY AND FAILED TO EXAMINE WHILE CONSIDERING EVIDENTIARY VALUE OF THE DIARY. NO SUCH ALLEGED ADD ITION CAN BE MADE ON THE BASIS OF SURMISES, CONJECTURE & SURMISES. R ELIED ON :- (1) DHAKESHWARI COTTON MILLS VS. CIT - 26 ITR 775 SC (2) UMACHARAN SHAW & BROS. VS. CIT - 37 ITR 271 SC (3) CBI VS. V. C. SHUKLA- 3 SCC 410 SC YOUR HONOURS FURTHER KIND ATTENTION IS ALSO DRAWN T OWARDS THE FACTS THAT ASSESSEE WAS GUNSHOT IN YEAR 2004 AND DUE TO THE SA ID INCIDENT HE WAS PARALYZED FROM 2004 AND CONFINED TO BED AND HIS JEW ELRY BUSINESS ALSO CLOSED AND IS SURVIVING ON GOD MERCY ONLY AND ON VERGE OF SO MANY NON CURABLE DECEASES AND NO ONE IS THERE TO SUCCEED AND HELP HI M AT THIS JUNCTURE BECAUSE OF ILLNESS AND ALSO NOT ABLE TO PAY ANY SUCH DEMAND ALLEGED / ARTIFICIALLY CREATED AGAINST HIM. ALL THESE FACTS WERE ALSO STATED IN RE MAND REPORT RECEIVED ALONG WITH S.A. OF THE ASSESSEE DATED 23/02116 CONFIRMING HIS STATUS. A CERTIFICATE OF 100 'VIKLANGTA' IS ALSO ATTACHED WITH REMAND REPOR T TO DEMONSTRATE THE SAME. COPY OF SAME AT P BOOK PAGE 32 - 36. 9. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY ARGUED SUPPORTING THE ORDERS OF BOTH THE LOWER AUTHORITIES . 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. THE ASSESSEE HAS CHALLENGED THE FINDING OF LD. CIT(A) CONFIRMING THE ADDITION FOR UNEXPLAINED INVESTMENT OF RS. 11,10,000/-. GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 8 WE OBSERVE THAT THE ASSESSEE IS IN THE BUSINESS OF JEWELLERY AND IS OFFERING PROFITS FROM THE BUSINESS OF SALE OF GOLD AND SILVE R JEWELLERY FROM PAST MANY YEARS. APART FROM RUNNING THE SHOP ASSESSEE A LSO CARRIES MANUFACTURING PROCESS AT HIS RESIDENTIAL PREMISES A T MAYUR NAGAR WHERE KARIGARS PERFORM MANUFACTURING PROCESS. DURING T HE COURSE OF SURVEY CONDUCTED U/S 133A OF THE ACT SPIRAL DIARY NAMED N EELGAGAN WAS FOUND IN THE ALMIRAH WHICH IS NORMALLY USED BY EMPLOYEES FOR KEEPING CLOTHES AS THE KARIGARS NORMALLY CHANGE THEIR DRESS WHILE WORKING. THIS DIARY WAS IMPOUNDED FROM SHEKH SULTAN AND HIS SIGNATURE W ERE TAKEN BY THE SURVEY TEAM. IN THE ALLEGED DIARY VARIOUS TRANSACT IONS RELATING TO DODA CHURA BUSINESS ARE MENTIONED. THERE WAS NO DETAIL S OF ANY TRANSACTION OF GOLD AND SILVERY JEWELLERY BUSINESS OR ANY REFER ENCE OF ASSESSEES PROPRIETORSHIP CONCERN OR ASSESSEES NAME OR HIS SI GNATURE. FURTHER INVESTIGATION REVEALS THAT DODA CHURA BUSINESS LI CENCE IS IN THE NAME OF ONE GOVINDRAM GOPILAL JOSHI WHICH IS PLACED AT PAGE 22 TO 24 OF THE PAPER BOOK. WE ALSO FIND THAT NO NEXUS HAVE BEEN E STABLISHED BY THE LD. A.O BETWEEN THE IMPOUNDED NOTE BOOK AND THE BOOKS O F ACCOUNTS MAINTAINED BY THE ASSESSEE. DURING THE COURSE OF A PPELLATE PROCEEDINGS REMAND REPORT WAS SOUGHT BY LD. CIT(A) ABOUT THE CU RRENT WHEREABOUTS OF MR. GOVINDRAM GOPILAL JOSHI WHO IS CLAIMED TO BE OWNER OF THE GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 9 IMPOUNDED DIARY. REPORT OF THE INSPECTOR WAS SUBMI TTED MENTIONING THAT MR. GOVINDRAM GOPILAL JOSHI EXPIRED ON 27.2.2005 AN D IN SUPPORT COPY OF THE DEATH CERTIFICATE WAS ALSO PLACED. 11. THESE SERIES OF FACTS CLEARLY PROVES THAT THE IMPO UNDED DAIRY NEELGAGAN FOUND FROM THE POSSESSION OF ASSESSEES EMPLOYEE HAS NO CORROBORATION WITH THE BUSINESS TRANSACTIONS OF TH E ASSESSEE AND FOR THE PURPOSE OF ASSESSING THE INCOME IN THE HANDS OF THE ASSESSEE THE ALLEGED DAIRY IS TO BE CATEGORISED AS DUMB DOCUMENT. 12. HONBLE APEX COURT IN THE CASE OF K.P. VERGHESE VS . ITO (1981) 131 ITR 597 HELD THAT MERE SEIZURE OF NOTE BOOKS OF DOCUMENTS AT THE PERS ONAL RESIDENCE OF AN EMPLOYEE WOULD NOT CONCLUDE THE ISS UE AGAINST THE EMPLOYER COMPANY THAT THE ON MONEY HAS BEEN RECEI VED BY THE EMPLOYER COMPANY . IN ANOTHER JUDGMENT OF HONBLE APEX COURT IN THE CASE OF DHAKESHWARI COTTON MILL PVT. LTD V/S CIT (1954) 26 ITR 775 IT WAS HELD THAT WHILE MAKING AN ASSESSMENT THERE MUST BE SOMETHING MORE THAN THE BARE SUSPICION TO SUPPORT THE ASSESSMENT. 13. WE, THEREFORE IN THE TOTALITY OF FACTS AND RESPECT FULLY FOLLOWING THE ABOVE JUDGMENTS ARE OF THE CONSIDERED VIEW THAT BOT H THE LOWER GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 10 AUTHORITIES WERE NOT JUSTIFIED IN CONFIRMING THE AD DITION OF RS.11,10,000/- FOR UNEXPLAINED INVESTMENT ON THE BASIS OF IMPOUNDE D DAIRY WHICH IN OUR VIEW IS MERELY A DUMB DOCUMENT AND SUCH ADDITION IS MADE MERELY ON PRESUMPTION AND SURMISES WITHOUT ESTABLISHING ANY C ONCRETE CORRELATION WITH THE REGULAR BUSINESS TRANSACTION CARRIED OUT B Y THE ASSESSEE. WE THEREFORE DELETE THE ADDITION OF RS.11,10,000/- AND ALLOW THE ASSESSEES GROUND NO.1. 14. GROUND NO.2 RELATING TO LEVYING OF INTEREST U/S 23 4A, 234B, 234C AND 220(2) OF THE ACT IS CONSEQUENTIAL AND GENERAL IN NATURE. 15. ACCORDINGLY APPEAL OF THE ASSESSEE FOR 2000-01 IS ALLOWED. 16. NOW WE TAKE UP APPEAL NO. 713 & 714/IND/2017 FOR A SSESSMENT YEARS 2001-02 & 2002-03 IN WHICH FOLLOWING GROUNDS OF APPEAL HAVE BEEN RAISED; ASSESSMENT YEAR 2001-02 GROUNDS OF APPEAL SET OUT BELOW ARE WITHOUT PREJUDI CE TO EACH OTHER:- GROUND NO.1: THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS U/S 145, ARBITRARIL Y ON PRESUMPTION WITHOUT PIN POINTING ANY SPECIFIC DISCREPANCY. GROUND NO.2: THE LD. CIT(A) (HERE IN AFTER REFERRED AS CIT(A) HAS ERRED IN CONFIRMING ALLEGED INCOME FROM BUSINESS OF RS.5,98, 905/- AS AGAINST ACTUAL GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 11 INCOME DECLARED INCOME AT RS. 1,095/- AFTER CONSIDE RING THE SURRENDERED INCOME OF RS.5,00,000/- DURING THE SURVEY CARRIED U/S 133- A ARBITRARILY. GROUND NO3: THE LD. CIT(A) HAS ERRED IN LEVY OF CHA RGING INTEREST U/S 234B AT RS. 82,517/- AND U/S 220(2) AT RS. 4,38,453/- THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR AME ND ANY GROUNDS OF APPEAL. ASSESSMENT YEAR 2002-03 GROUNDS OF APPEAL SET OUT BELOW ARE WITHOUT PREJUDI CE TO EACH OTHER:- GROUND NO.1: THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) HAS ERRED IN REJECTING THE BOOKS OF ACCOUNTS U/S 145, ARBITRARIL Y ON PRESUMPTION WITHOUT PIN POINTING ANY SPECIFIC DISCREPANCY. GROUND NO.2: THE LD. CIT(A) (HERE IN AFTER REFERRED AS CIT(A) HAS ERRED IN CONFIRMING ALLEGED INCOME FROM BUSINESS OF RS.17,71 ,151/- AS AGAINST ACTUAL INCOME DECLARED INCOME AT RS. 2,71,151/- AFTER CONS IDERING THE SURRENDERED INCOME OF RS.15,00,000/- DURING THE SURVEY CARRIED U/S 133-A ARBITRARILY. GROUND NO3: THE LD. CIT(A) HAS ERRED IN LEVY OF CHA RGING INTEREST U/S 234B AT RS. 1,63,598/-, U/S 234C AT RS.2,720/- AND U/S 220(2) AT RS. 8,51,886/- THE APPELLANT CRAVES LEAVE TO ADD, ALTER AND/OR AME ND ANY GROUNDS OF APPEAL. 17. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECORDS RELATING TO THESE TWO APPEALS ARE THAT POST SURVEY U/S 133A OF THE AC T, ASSESSEE FILED INCOME TAX RETURNS FOR ASSESSMENT YEAR 2001-02 & 20 02-03. THE UNDISCLOSED INCOME SURRENDERED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT AT RS.5,00,000/- AND RS.15,00,000/- WERE DU LY OFFERED TO TAX IN THE COMPUTATION OF INCOME BUT AS THE ASSESSEE CLAIM ED TO HAVE SUFFERED GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 12 LOSS IN THE BUSINESS SAME AND WAS SET IT OFF AGAINS T THE UNDISCLOSED INCOME, THE RESULTANT TOTAL INCOME WAS DISCLOSED AT RS. 1095/- AND RS.2,71,151/- FOR ASSESSMENT YEAR 2001-02 AND 2002- 03 RESPECTIVELY. LD. A.O WHILE CONDUCTING THE ASSESSMENT PROCEEDINGS MADE REFERENCE TO VARIOUS INCRIMINATING MATERIAL FOUND DURING THE COU RSE OF SURVEY WHICH INCLUDED THE DOCUMENTS RELATING TO PAYMENT FOR LABO UR CHARGES, PURCHASES AND OTHER SLIPS AND LOOSE PAPERS CONTAIN ING DETAILS OF THE TRANSACTIONS WHICH ASSESSEE WAS UNABLE TO CORRELATE WITH THE BOOKS OF ACCOUNTS. LD. A.O ON OBSERVING THAT AS THE DOCUMEN TS AND LOOSE PAPERS FOUND DURING THE COURSE OF SURVEY DID NOT FIND ANY NEXUS WITH BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE, THE SAME ARE L IABLE TO BE REJECTED U/S 145(2) OF THE ACT AND ACCORDINGLY ESTIMATED THE INCOME FOR ASSESSMENT YEAR 2001-02 AT RS.6,00,000/- INTER ALIA INCLUDING THE AMOUNT OFFERED DURING THE COURSE OF SURVEY OF RS.5, 00,000/- AND FOR ASSESSMENT YEAR 2002-03 AT RS.17,39,860/- INTER ALI A INCLUDING RS.15,00,000/- OFFERED BY THE ASSESSEE AS UNDISCLOS ED INCOME DURING THE COURSE OF SURVEY. 18. AGGRIEVED WITH THESE ADDITIONS ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) BUT FAILED IN GETTING ANY RELIEF FOR ASSESSM ENT YEAR 2001-02 AND PARTLY SUCCEEDED IN ASSESSMENT YEAR 2002-03. GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 13 19. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL FOR BOTH THE ASSESSMENT YEARS AGAINST THE ADDITION CONFIRMED FOR RS.5,97,000/- AND RS.15,00,000/- FOR ASSESSMENT YEAR 2001-02 AND 2002 -03 RESPECTIVELY. 20. LD. COUNSEL FOR THE ASSESSEE REFERRING TO THE WRIT TEN SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES SUBMITTED THAT TH E INCOME OF RS.5,00,000/- AND RS.15,00,000/- SURRENDERED DURING THE COURSE OF SURVEY U/S 133A OF THE ACT HAVE BEEN DULY OFFERED T O TAX IN THE COMPUTATION OF INCOME. GENUINE LOSS SUFFERED IN TH E BUSINESS HAVE BEEN SET OFF AGAINST THE SURRENDERED INCOME. REGULAR BO OKS AND ACCOUNTS ARE MAINTAINED FOR ASSESSMENT YEAR 2001-02 AND 2002-03 AND FINANCIAL STATEMENTS ARE DULY AUDITED U/S 44AB OF THE ACT. N O MAJOR DISCREPANCY HAVE BEEN NOTICED BY LD. A.O IN THE BOOKS OF ACCOUN TS NOR ANY CORROBORATIVE EVIDENCE HAVE BEEN BROUGHT ON RECORD CONFIRMING THE ADDITION AND PRAYED FOR DELETING THE ADDITION CONFI RMED BY LD. CIT(A). 21. PER CONTRA LD. DEPARTMENTAL REPRESENTATIVE VEHEMEN TLY ARGUED AND SUPPORTING THE ORDERS OF LOWER AUTHORITIES AND ALSO SUBMITTED THAT THE ASSESSEE WAS EARNING NORMAL BUSINESS PROFITS UP TO 2000-01 SHOWING GROSS PROFIT @24.54% FOR GOLD JEWELLERY TURNOVER AN D 15.5% FOR SILVER JEWELLERY TURNOVER BUT IN THE SUBSEQUENT ASSESSMENT YEARS THERE HAS GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 14 BEEN SHARP FALL IN THE GROSS PROFIT RATE FOR WHICH NO REASONS HAVE BEEN PROVIDED BY THE ASSESSEE DURING THE COURSE OF ASSES SMENT PROCEEDINGS, THEREFORE BOOKS HAVE BEEN RIGHTLY REJECTED AND PROF ITS HAVE BEEN ESTIMATED. 22. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RE CORDS PLACED BEFORE US. ASSESSEE IN THESE APPEALS FOR ASSESSMENT YEAR 2001-02AND 2002-03 HAS CHALLENGED THE FINDING OF LD. CIT(A) CO NFIRMING THE ADDITION OF RS.5,97,000/- AND RS.15,00,000/- TOWARDS ESTIMAT ION OF INCOME FROM BUSINESS AND UNDISCLOSED INCOME SURRENDERED DURING THE COURSE OF SURVEY. 23. WE OBSERVE THAT DURING THE COURSE OF SURVEY CARRIE D OUT U/S 133A OF THE ACT VARIOUS INCRIMINATING MATERIAL WERE FOUND W HICH THE ASSESSEE COULD NOT EXPLAIN DURING THE COURSE OF SURVEY PROCE EDINGS. HE THEREFORE ADMITTED THE UNDISCLOSED INCOME OF RS.5,00,000/- AN D RS.15,00,000/- FOR ASSESSMENT YEAR 2001-02 AND 2002-03 AND AGREED TO O FFER IT FOR TAX IN THE REGULAR RETURN OF INCOME TO BE FILED SUBSEQUENT TO THE SURVEY PROCEEDINGS. GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 15 24. SUBSEQUENTLY FOR ASSESSMENT YEAR 2001-02 RETURN OF INCOME FROM BUSINESS WAS SUBMITTED ON 31.03.2002 DECLARING TOTA L INCOME OF RS.1095/- AND AGRICULTURE INCOME OF RS.43,782/-. IN THE COMPUTATION OF INCOME UNDER THE HEAD BUSINESS INCOME WAS ALSO ME NTIONED THE SURRENDERED AMOUNT OF RS.5,00,000/- MADE DURING THE SURVEY U/S 133A OF THE ACT. FOR ASSESSMENT YEAR 2001-02 ASSESSEE H AS SHOWN NET LOSS OF RS.4,63,554/- BEFORE CLAIMING DEPRECIATION. 25. AS REGARDS ASSESSMENT YEAR 2002-03 TOTAL INCOME O F RS.2,71,151/- WAS DECLARED. LOSS FROM BUSINESS BEFORE CLAIMING D EPRECIATION HAS BEEN SHOWN AT RS.11,71,113/-. THIS LOSS HAS BEEN SET OF F AGAINST SURRENDERED AMOUNT AT RS.15,00,000/-. 26. COMMON FACTS ARISING OUT OF THE COMPUTATION OF INC OME AND FINANCIAL STATEMENT FOR ASSESSMENT YEAR 2001-02 AND 2002-03 ARE THAT ASSESSEE HAS SHOWN LOSS FROM BUSINESS AND THE SURRE NDERED INCOME HAS BEEN SET OFF AGAINST THE BUSINESS LOSS AND AFTER CL AIMING DEPRECIATION AT FIXED ASSETS TOTAL INCOME AT RS.1095/- AND RS.2,68, 498/- HAS BEEN OFFERED TO TAX FOR ASSESSMENT YEAR 2001-02 AND 2002 -03 RESPECTIVELY. LD. A.O WHILE CONDUCTING THE ASSESSMENT PROCEEDINGS MAD E SPECIFIC OBSERVATIONS THAT VARIOUS INCRIMINATING MATERIAL IN CLUDING LOOSE PAPERS GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 16 AND SLIPS CONTAINING TRANSACTIONS OF PURCHASES, SAL E, EXPENSES, DETAIL OF CREDITORS WERE FOUND BUT ASSESSEE FAILED TO CORROBO RATE THEM WITH THE REGULAR BOOKS OF ACCOUNTS. THESE REASONS WERE SUFF ICIENT FOR THE LD. A.O TO REJECT THE BOOKS OF ACCOUNTS U/S 145(2) OF THE ACT AND WE FIND NO INCONSISTENCY IN THIS VIEW TAKEN BY LD. A.O OF REJE CTING BOOKS OF ACCOUNTS. NOW WHEN THE BOOKS AND ACCOUNTS ARE REJECTED, PROFI T NEEDS TO BE ESTIMATED. REVENUE AUTHORITIES HAVE NOT DISPUTED G ROSS TURNOVER SHOWN BY THE ASSESSEE. LD. A.O WHILE EXAMINING THE COMPU TATION OF INCOME AND MAKING OTHER OBSERVATIONS AS MENTIONED ABOVE FOUND THAT TAXES HAVE NOT BEEN PAID ON THE SURRENDERED AMOUNT RATHER THE ASSE SSEE HAS SET OF THE BUSINESS LOSS AGAINST SURRENDERED INCOME. FOR THIS REASON PROFITS WERE ESTIMATED ALONG WITH MAKING ADDITION FOR THE SURREN DERED AMOUNT. 27. NOW AS FAR AS SURRENDERED AMOUNT OF RS.5,00,000/- AND RS.15,00,000/- ARE CONCERNED THERE REMAINS NO DISPU TE THAT THESE AMOUNTS ARE SHOWN IN THE COMPUTATION OF INCOME AND OFFERED TO TAX. IN THE BALANCE SHEET FILED BEFORE US UNDER HEAD LOANS AND ADVANCES AN AMOUNT OF RS.20,00,000/- HAS BEEN SHOWN AS AMOUNT DECLARED AT THE TIME OF SURVEY TO BE ADJUSTED AT THE TIME OF ASSESS MENT. THE REASON AND THE EXPLANATION FOR SHOWING THIS SURRENDERED AMOUNT UNDER THE HEAD GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 17 LOANS AND ADVANCES IS BEST KNOWN TO THE ASSESSEE BU T CERTAINLY LACKS THE DISPLAY AS PER THE PREVAILING ACCOUNTING METHODS. S INCE WE HAVE ALREADY HELD THAT THE BOOKS OF ACCOUNTS OF THE ASSESSEE WER E RIGHTLY REJECTED U/S 145(2) OF THE ACT THEN THE INCOME NEEDS TO BE ESTIM ATED FOR THE YEAR UNDER APPEAL. 28. FOR ASSESSMENT YEAR 2000-01 IN THE TRADING AND PRO FIT & LOSS ACCOUNT FILED BY THE ASSESSEE, GROSS PROFIT @ 24.54 % IS DECLARED ON THE GROSS TURNOVER OF GOLD JEWELLERY AT RS.20,81,766/- AND GROSS PROFIT RATE @15.56% HAS BEEN SHOWN ON THE TURN OVER OF SILVER J EWELLERY AT RS.1,60,442/-. LD. A.O HAS ACCEPTED THESE RESULTS. NOW WE MOVE TO ASSESSMENT YEAR 2001-02. WE FIND THAT THE GROSS P ROFIT RATE ON SALE OF GOLD JEWELLERY HAS COME DOWN TO 14.85% ON THE TURNO VER OF RS.30,79,211/- WHEREAS THE GROSS PROFIT RATE OF SIL VER JEWELLERY REMAINS ALMOST SAME AT 15.72% ON THE TURNOVER OF RS.3,51,17 7/-. THE GROSS TURN OVER FOR 2001-02 IS TOTALLING RS.31,14,388/-. ASSE SSEE IS IN THE RETAIL BUSINESS AND GROSS TURNOVER IS LESS THAN RS.40 LAK HS. THOUGH TAX AUDIT U/S 44AB OF THE ACT HAS BEEN CONDUCTED BUT SINCE SP ECIFIC DEFECTS HAVE ALREADY BEEN POINTED OUT IN THE BOOKS OF ACCOUNTS, IN THESE CIRCUMSTANCES WE IN VIEW OF THE PROVISIONS OF SECTI ON 44AF OF THE I.T. ACT GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 18 WHICH PROVIDES FOR PRESUMPTIVE TAXATION ON THE RETA IL TRADE BUSINESS @ 5% OF GROSS TURN OVER OR THE BOOKS PROFIT WHICHEVER IS HIGHER, INCLINED TO HOLD THAT THE NET PROFIT @5% OF THE TOTAL TURNOVER OF RS.31,14,388/- SHOULD BE TREATED AS THE NET PROFIT OF THE YEAR I.E . RS.1,55,720/-. AS THE ASSESSEE HAS SHOWN THE NET LOSS OF RS.2,44,123/-. T HE NET ADDITION TO BE CONFIRMED WILL STANDS AT RS.3,99,843/- AS AGAINST R S.5,98,905/- CONFIRMED BY LD. CIT(A). ASSESSEE GETS PART RELIEF AND ACCORDINGLY GROUND NO.1 OF THE ASSESSEES APPEAL STANDS DISMISS ED AND GROUND NO.2 IS PARTLY ALLOWED. GROUND NO.3 IS GENERAL AND CONS EQUENTIAL IN NATURE. 29. AS FAR AS ASSESSMENT YEAR 2002-03 IS CONCERNED FOR WHICH ADDITION OF RS.15,00,000/- HAVE BEEN CONFIRMED BY THE LD. CI T(A), WE FIND THAT THE GROSS TURNOVER OF GOLD JEWELLERY HAS INCREASED TO 49,24,657/-AND SALE OF SILVER JEWELLERY AT RS.1,70,996/- BUT THE GROSS PROFIT OF GOLD JEWELLERY HAS CRASHED DOWN TO 6.4% WHEREAS IN SILVER JEWELLE RY BUSINESS LOSS HAS BEEN CLAIMED. WE APPLYING THE VIEW AS TAKEN FOR A SSESSMENT YEAR 2001- 02 HOLD THAT THE BOOKS OF ACCOUNTS WERE RIGHTLY REJ ECTED U/S 145(2) OF THE ACT FOR THE DISCREPANCIES OBSERVED BY THE LOWER AUT HORITIES IN THE BOOKS OF ACCOUNTS AS DISCUSSED IN PRECEDING PARAS AND AS REG ARDS ESTIMATION OF PROFIT IS CONCERNED WE FIND THAT THE SALES OF GOLD JEWELLERY BUSINESS HAS GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 19 INCREASED FROM RS.20,81,766/- IN THE ASSESSMENT YEA R 2000-01 TO RS.49,24,657/- DURING ASSESSMENT YEAR 2002-03. AVE RAGE GROSS PROFIT RATE FOR ASSESSMENT YEAR 2000-01 TO 2002-2003 WILL COME TO 15%, I.E. THE AVERAGE OF GROSS PROFIT OF 3 YEARS I.E. 24.54%, 14 .85% AND 6.47% RESPECTIVELY. SO IN THE INTEREST OF JUSTICE AND IN THE TOTALITY OF FACTS 15% GROSS PROFIT RATE IF APPLIED ON THE TURNOVER OF THE GOLD JEWELLERY ITEMS WILL MEET THE ENDS OF JUSTICE FOR ESTIMATION OF PROFITS ON SALE OF GOLD JEWELLERY AND SAME WILL WORKS OUT TO BE RS.7,38,699/- AGAINST WHICH RS.3,18,703/- HAS BEEN SHOWN AS GROSS PROFIT BY THE ASSESSEE WH ICH WILL SUSTAIN THE ADDITION OF GROSS PROFIT AT RS.4,19,996/-APPROX. 30. HOWEVER AS REGARDS SILVER JEWELLERY ITEMS ASSESSEE HAD BEEN REGULARLY DECLARING AROUND 15% OF GROSS PROFIT RATE BUT FOR ASSESSMENT YEAR 2002-03 LOSS HAS BEEN DECLARED. THE RATE OF S ILVER PER KG HAS NOT INCREASED OR DECREASED DRASTICALLY. FROM THE INFORM ATION AVAILABLE ON INTERNET THE RATE OF SILVER PER KG AS ON 31.03.201 1 IS RS.7200 AND ON 31.03.2002 RS.7875 PER KG WHICH MEANS THERE IS INCR EASE IN THE RATE OF SILVER THEREFORE THE LOSS SHOWN BY THE ASSESSEE CAN NOT BE ATTRIBUTED TO THE FLUCTUATION IN PRICES. NO OTHER REASON HAS BEEN PL ACED BEFORE US FOR THIS DECLINE. THEREFORE WE ARE INCLINED TO APPLY GROSS PROFIT OF 15% ON THE GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 20 SALE OF SILVER JEWELLERY AT RS.1,70,996/- I.E. RS.2 5,650/-AGAINST THE LOSS SHOWN AT RS.2,34,441/-. 31. WITH THE APPLICATION OF GROSS PROFIT RATE AT 15% O N THE TURN OVER DISCLOSED BY THE ASSESSEE THE ADDITION IN GROSS PRO FIT WILL BE RS.6,80,087/- (RS.4,19,996 + RS. 2,60,091) AND NET LOSS SHOWN BY THE ASSESSEE IN THE PROFIT AND LOSS ACCOUNT AT RS.8,99, 870/- WILL THUS COME DOWN TO RS.2,19,783/-. THIS WILL REDUCE THE CLAIM OF LOSS BY THE ASSESSEE BY RS.6,80,087/- AND WILL INCREASE THE TOTAL INCOME OF THE ASSESSEE BY THIS AMOUNT. ACCORDINGLY AGAINST THE ADDITION OF RS .15,00,000/- CONFIRMED BY LD. CIT(A), WE SUSTAIN THE ADDITION T O RS.6,80,087/- AND DELETE THE REMAINING AMOUNT OF ADDITION AT RS.8,19, 913/- AND PARTLY ALLOW ASSESSEES GROUND NO.2. GROUND NO.1 OF THE AP PEAL RELATING TO THE REJECTION OF BOOKS ALREADY STANDS DISMISSED AND GRO UND NO.3 CONSEQUENTIAL AND GENERAL IN NATURE. 32. IN THE RESULT APPEAL OF THE ASSESSEE FOR ASSESSMEN T YEARS 2000-01 IS ALLOWED AND APPEAL FOR ASSESSMENT YEAR 2001-02 & AS SESSMENT YEAR 2002-03 ARE PARTLY ALLOWED. GOPALA KRISHNA SONI ITA NO.712 TO 714/IND/2017 21 THE ORDER PRONOUNCED IN THE OPEN COURT ON 14.05.201 9. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 14 MAY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE