The ACIT, 3(1), V. Shri Manoharlal Chhabaria,

ITA 74/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0025 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2009
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 27-08-2009
• Assessment Year: 2001-2002
• Appeal Filed On: 14-02-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K SINGH
• Assessee Lawyers: S S DESH
• Keywords: Loose papers; Block assessment
• Section: 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI M.L. GUSIA, ACCOUNTANT MEMBER PAN NO. :AANPC1899Q I.T.A.NO. 74/IND/2008 A.Y. : 2001-02 ACIT SHRI MANOHARLAL CHHABRIA, 3(1), VS 10, KALI PARADE, BHOPAL CHHOLA ROAD, BHOPAL. APPELLANT RESPONDENT C.O.NO.32/IND/2008 (ARISING OUT OF I.T.A.NO. 74/IND/2008) A.Y. : 2001-02 SHRI MANOHARLAL CHHABRIA, ACIT 10, KALI PARADE, VS 3(1), CHHOLA ROAD, BHOPAL. BHOPAL CROSS OBJECTOR RESPONDENT PAN NO. :ACZPA5027C I.T.A.NO. 198/IND/2005 A.Y. : 2001-02 SHRI RAM KUMAR ELANI, ACIT 10, KALI PARADE INDUSTRIAL AREA, VS 3(1), CHHOLA ROAD, BHOPAL BHOPAL -: 2: - 2 APPELLANT RESPONDENT I.T.A.NO. 36/IND/2005 A.Y. : 2001-02 ACIT SHRI RAM KUMAR ELANI, 3(1), VS 10, KALI PARADE INDUSTRIAL AREA, BHOPAL CHHOLA ROAD, BHOPAL APPELLANT RESPONDENT DEPARTMENT BY : SHRI K.K.SINGH, CIT DR ASSESSEE BY : SHRI S.S.DESHPANDE, C. A. O R D E R PER SAINI, J.M. THIS ORDER SHALL DISPOSE OF ALL THE ABOVE CROSS APP EALS, BECAUSE SAME ARE CONNECTED WITH EACH OTHER. I.T.A.NO. 198/IND/2005 AND I.T.A.NO.36/IND/2005 ( S HRI RAM KUMAR ELANI) : 2. BOTH THE CROSS APPEALS ARE DIRECTED AGAINST THE ORD ER OF CIT(A) II, BHOPAL DATED 25 TH OCTOBER,2004, FOR ASSESSMENT YEAR 2001-02. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROU ND NOS. 4 & 5. THESE ARE ACCORDINGLY DISMISSED. 3. ON GROUND NOS. 1 TO 3, THE ASSESSEE CHALLENGED THE REJECTION OF THE BOOKS OF ACCOUNT U/S 145 OF THE INCOME-TAX ACT, 1961, AND APPLYING -: 3: - 3 PROFIT RATE OF 10% ON THE SALES, THE REVENUE CHALLE NGED THE ORDER OF THE LD. CIT(A) IN ACCEPTING THE SALES DESPITE REJECTION OF THE BOOK RESULT AND INITIATION OF THE PENALTY PROCEEDINGS. 4. BRIEFLY FACTS OF THE CASE ARE THAT SEARCH & SEIZURE OPERATIONS U/S 132(1) OF THE ACT WAS CARRIED ON 16 TH MAY, 2000, TO 22ND JUNE, 2000, IN THE CASE OF THE ASSESSEE AT BUSINESS PREMISES IN TH E NAME OF KARISHMA ENTERPRISES. BLOCK ASSESSMENT ORDER WAS FRAMED IN T HE CASE OF THE ASSESSEE AND IT WAS HELD THAT THE BUSINESS IN THE N AME OF KARISHMA ENTERPRISES BELONGED TO MANOHARLAL CHHABRIA, WHO IS REAL OWNER OF THE BUSINESS. THE ASSESSEE WAS HELD TO BE NAME LENDER O F MANOHARLAL CHHABRIA AND WAS HELD TO BE BENAMI OWNER. DURING TH E COURSE OF SEARCH, LOOSE PAPERS CONTAINING 1 TO 131 FOUND AND SEIZED. THE A.O. ON THE BASIS OF THE ABOVE LOOSE PAPERS NOTED IN THE ASSESSMENT O RDER THAT CORRECT TRANSACTIONS ARE NOT RECORDED IN THE BOOKS OF ACCOU NT AND, THEREFORE, ESTIMATE OF THE SALES FOR THE REMAINING PART OF THE YEAR IS TO BE MADE ON AVERAGE BASIS. THE A.O., ACCORDINGLY, NOTED THAT IT WOULD BE REASONABLE TO MAKE THE ESTIMATE OF THE AVERAGE SALE AT RS. 4 LAKH S PER DAY AND SALES OF 330 DAYS WAS WORKED OUT TO RS. 13.20 CRORES. THE AS SESSEE HAS DISCLOSED SALES OF RS. 33,04,946/-. UNDISCLOSED SALES WAS, TH EREFORE, WORKED OUT TO -: 4: - 4 RS. 12,86,95,054/- AND NET PROFIT RATE OF 10% WAS A PPLIED AND ADDITION OF RS. 1,28,69,505/- WAS MADE ON ESTIMATE BASIS. THE A DDITION WAS MADE ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE BEING BENAMI OF MANOHARLAL CHHABARIA. THE LD. CIT(A) ON CONSIDERATION OF THE M ATERIAL ON RECORD NOTED THAT THE A.O. HAS ESTIMATED THE SALES WITHOUT ANY MATERIAL, BECAUSE THERE WAS NO SEIZED PAPER FOR ESTIMATING SALES FOR 330 DAYS. THE LD. CIT(A) ALSO NOTED THAT IT WAS JUST IMAGINATION OF T HE A.O. TO CALCULATE UNDISCLOSED SALES. THE LD. CIT(A) ALSO NOTED THAT T HERE WAS NO BASIS TO ESTIMATE THE SALES AT RS. 13.20 CRORES. THE ESTIMAT E OF SALES WAS, ACCORDINGLY, CANCELLED. THE SALES DECLARED BY THE A SSESSEE WERE ACCEPTED. HOWEVER, NET PROFIT RATE OF 10% WAS APPLIED AS APPL IED BY THE ASSESSING OFFICER. PART RELIEF WAS, ACCORDINGLY, GRANTED TO A SSESSEE. BOTH THE PARTIES ARE IN CROSS APPEALS ON THIS ISSUE IN ABOVE GROUND OF APPEAL . 5. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THA T THE ISSUE IS COVERED BY THE ORDER OF I.T.A.T., INDORE BENCH IN THE CASE OF RAM KUMAR ELANI VS. ACIT & OTHERS IN I.T(SS).A.NO. 63/IND/2004 DATE D 30 TH JANUARY,2009, IN WHICH THE CROSS APPEALS OF RAM KUM AR ELANI AND MANOHARLAL CHHABRIA HAVE BEEN DECIDED BY THE TRIBU NAL IN THE BLOCK -: 5: - 5 ASSESSMENT PERIOD. HE HAS REFERRED TO PARA 56 OF TH E ABOVE ORDER IN WHICH ADDITION WAS CONSIDERED IN RESPECT OF THE SEIZED MA TERIAL PAGE 1 TO 131, WHICH WAS THE BASIS FOR MAKING THE ESTIMATE IN THE PRESENT APPEALS. HE HAS SUBMITTED THAT THE TRIBUNAL HAS DELETED THE ENT IRE ADDITION EVEN IN THE BLOCK ASSESSMENT ON THIS ISSUE, BECAUSE THE SAME PA PERS WERE FOUND FROM THE RESIDENTIAL PREMISES OF SHRI HARISH CHAND CHHAB RIA, WHO HAS NO BUSINESS CONNECTION WITH KARISHMA ENTERPRISES OF TH E ASSESSEE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THA T THE TRIBUNAL IN THIS ORDER ALSO HELD THAT BUSINESS OF KARISHMA ENTERPRIZ ES BELONGED TO THE ASSESSEE RAMKUMAR ELANI AND, THEREFORE, HE IS NOT B ENAMI OWNER OF M/S. KARISHMA ENTERPRIZES OR THAT HE IS NOT BENAMI OF MA NOHARLAL CHHABRIA. THEREFORE, THE TRIBUNAL HELD THAT SUBSTANTIVE ADDIT ION WILL BE MADE IN THE CASE OF ASSESSEE RAM KUMAR ELANI. HE HAS SUBMITTED THAT THE ENTIRE ADDITION IS, THEREFORE, UNJUSTIFIED. 6. THE LD. DEPARTMENTAL REPRESENTATIVE DID NOT DISPUTE THE ABOVE CONTENTION OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE ISSUE IS COVERED BY THE EARLIER ORDER OF THE TRIBUNAL IN TH E CASE OF RAM KUMAR ELANI (SUPRA). -: 6: - 6 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE ARE O F THE VIEW THAT THE ISSUE INVOLVED IN THE CROSS APPEALS ARE SQ UARELY COVERED BY EARLIER ORDER OF THE TRIBUNAL IN THE CASE OF RAM KUMAR ELAN I ETC.(SUPRA) IN WHICH EVEN IN THE BLOCK ASSESSMENT, THE ADDITION ON THE B ASIS OF SEIZED MATERIAL AT PAGES 1 TO 131 HAVE BEEN DELETED, BECAUSE IT WAS FOUND THAT THE SAME DID NOT FIND AND RECOVERED FROM THE POSSESSION AND PREMISES OF THE ASSESSEE. IT WAS ALSO HELD THAT THE ASSESSEE IS NOT A BENAMI OF MANOHARLAL CHHABRIA AND THAT THE ASSESSEE RAM KUMAR ELANI IS P ROPRIETOR OF M/S. KARISHMA ENTERPRIZES. THUS, THERE WAS NO BASIS LEFT FOR ESTIMATING THE SALES OF THE ASSESSEE BY REJECTING BOOK RESULT OF T HE ASSESSEE. THE LD. CIT(A) ALSO CORRECTLY NOTED THAT THERE WAS NO MATER IAL OR EVIDENCE BEFORE THE A.O. TO REJECT THE BOOK RESULT OF THE ASSESSEE OR TO ESTIMATE THAT SALES ON IMAGINATION. WE, ACCORDINGLY, DO NOT JUSTIFY EVE N THE APPLICATION OF THE NET PROFIT RATE OF 10% ON THE ADMITTED SALES OF THE ASSESSEE. WE, ACCORDINGLY, SET-ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE ENTIRE ADDITION. 8. AS A RESULT, THE ASSESSEES APPEAL IN I.T.A.NO. 198 /IND/2005 IS PARTLY ALLOWED, WHEREAS DEPARTMENTAL APPEAL IN I.T. A.NO. 36/IND/2005 IS DISMISSED. -: 7: - 7 I.T.A.NO. 74/IND/2008 AND C.O.NO.32/IND/2008 ( SHRI MANOHARLAL CHHABRIA): 9. THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NOS. 1 & 2 IN THE CROSS OBJECTION OF THE ASSESSEE. THE S AME ARE DISMISSED 10. THE REVENUE CHALLENGED THE DELETION OF ADDITION ON ACCOUNT OF SUBSTANTIVE BASIS FROM RS. 1,29,980,932/- TO RS. 3, 30,494/-. THE ASSESSEE CHALLENGED THE CONFIRMATION OF THE ADDITION TO THE EXTENT OF RS.3,30,494/-. THE A.O. ON THE BASIS OF FINDING GIVEN IN THE CASE OF RAM KUMAR ELANI MADE THE SIMILAR ADDITION ON SUBSTANTIVE BASIS IN T HE HANDS OF THE PRESENT ASSESSEE. THE LD. CIT(A) FOLLOWING THE ORDER OF THE CIT(A) IN THE CASE OF RAM KUMAR ELANI PARTLY SUSTAINED THE ADDITION TO RS . 3,30,494/-. SINCE WE HAVE DELETED THE ENTIRE ADDITION IN THE CASE OF RAM KUMAR ELANI AND THE TRIBUNAL EARLIER HELD THAT KARISHMA ENTERPRIZES BELONGED TO RAM KUMAR ELANI AND THAT RAM KUMAR ELANI IS NOT BENAMID AR OF MANOHARLAL CHHABRIA, THEREFORE, THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN EVEN SUSTAINING PART ADDITION. WE, ACCORDINGLY, SET-ASID E THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ENTIRE ADDITION. 11. AS A RESULT, CROSS OBJECTION OF THE ASSESSEE ON THI S ISSUE IS ALLOWED AND THE DEPARTMENTAL APPEAL IS DISMISSED. -: 8: - 8 12. AS A RESULT DEPARTMENTAL IN I.T.A.NO. 74/IND/2008 I S DISMISSED AND CROSS OBJECTION OF THE ASSESSEE IN C.O. NO.32/I ND/2008 IS PARTLY ALLOWED. 13. AS A RESULT, BOTH THE DEPARTMENTAL APPEALS ARE DISM ISSED, THE APPEAL AND CROSS OBJECTION OF THE ASSESSEE ARE, HOW EVER, PARTLY ALLOWED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 27 TH AUGUST, 2009. SD/- SD/- M. L. GUSIA BHAVNESH SAINI ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH AUGUST, 2009. CPU* 2728.8