The ITO, Ward-1(4), Surat V. Shri Vimal Tormal Poddar, Surat

ITA 752/AHD/2009

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94200 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 22-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Income from undisclosed sources; Retraction

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR ACCOUNTANT MEMBER AND SHRI S.S. GODARA JUDICIAL MEMBER ITA NO .752/ AHD/ 20 09 A. Y .20 0 7 - 08 ITA WARD - 1(4), SURAT. VS SHRI VIMAL TORMAL PODDAR, 101, PODDAR AVENUE, GODH DOD ROAD, SURAT. PAN: ADLPP 7235J (APPELLANT) (RESPONDENT) REVENUE BY : S HRI KAMLESH MAKWANA, SR. D.R. , ASSESSEE(S) BY : SMT. URVASHI SODHAN, A.R. / DATE OF HEARING : 22/ 0 7 /201 5 / DATE OF PRONOUNCEMENT: 05 / 0 8 /201 5 / O R D E R PER S.S. GODARA , JUDICIAL MEMBER THIS REVENUE S APPEAL FOR A.Y . 2007 - 08, ARISE S FROM ORDER OF TH E CIT(A) - I , SURAT, DATED 22.12.2008 PASSED I N CASE NO .CAS - I/104/08 - 09, IN PROCEEDINGS UNDER SECTION 143(3 ) OF THE INCOME TAX ACT , IN SHORT THE ACT . 2. THE REVENUE S SOLE SUBSTANTIVE GROUND READS AS UNDER: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) - I, SURAT HAS ERRED IN DELETING THE ADDITION OF RS.1,71,92,996/ - MADE BY ASSESSING OFFICER BEING THE AMOUNT DIFFERENCE OF RS.3,12,00,000/ - AN UNDISCLOSED AMOUNT ADMITTED DURING ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 2 - THE COURSE OF SEARCH AND RS.1,43,68,982/ - CREDITED BY THE ASSESSEE AS UNDISCLOSED INCOME IN THE P&L A/C ATTACHED WITH THE RETURN OF INCOME HOLDING THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY MATERIAL EVIDENCES TO SHOW THAT THE SUBMISSION OF THE ASSESSEE OF HAVING UNDISCLOSED AMOUNT OF RS.143, 68,982/ - AS CREDITED BY THE ASSESSEE IN THE P&L A/C AS AGAINST RS.3.12 LACS ADMITTED DURING THE COURSE OF SEARCH PROCEEDINGS IS FACTUALLY INCORRECT. 3. THE ASSESSEE IS ASSESSED AS AN INDIVIDUAL. THE DEPARTMENT CONDUCTED A SURVEY ON 2.2.2007 IN HIS GROUP OF CONCERNS. IT RECORDED ASSESSEE S STATEMENT U/S.133A(3)(III) ALLEGEDLY ADMITT ING TOTAL UNACCOUNTED INCOME OF ALL GROUP CONCERNS AND FAMILY MEMBERS DURING THE RELEVANT FINANCIAL YEAR TO BE RS.3.12 CRORES AFTER ANALYZING BOOKS OF ACCOUNT AND CONSULTING HIS CHARTERED ACCOUNTANT. THE SAME INCLUDED CASH FOUND IN COURSE OF SURVEY OF RS.3,07,629/ - AS WELL. THE ASSESSEE THEREAFTER FILED RETURN ON 31.10.2007 ADMITTING INCOME OF RS.98,07,272/ - ALONG WITH PROFITS AND GAINS FROM BUSINESS OF RS.98,92,240/ - . 4. THE A SSESSING OFFICER TOOK UP SCRUTINY. HE SOUGHT FOR REASONS OF UNDERSTATEMENT OF INCOME OF RS.2,13,07,700/ - QUA THAT STATED AS AN UNACCOUNTED ONE DURING SURVEY AND PROFITS DECLARED WITH THE RETURN HEREINABOVE. THE ASSESSEE REPLIED THAT OUT OF THE SURVEY DISCL OSURE, HE ADMITTED A SUM OF RS.1,04,11,752/ - WHICH WAS REDUCED TO RS.98,92,240/ - AFTER CLAIMING DEPRECIATION. HE EMPHASIZED THAT THERE WAS NO BUSINESS ACTIVITY CARRIED ON IN THE LAST THREE YEARS AND THE INCOME IN QUESTION HAD BEEN DISCLOSED AS PER THE RELE VANT CASH BOOK AND GROSS RECEIPTS. ALL THIS FAIL ED TO CONVINCE THE ASSESSING OFFICER. HE FRAMED A REGULAR ASSESSMENT ON 27.6.2008 ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 3 - VERIFYING ASSESSEE S DETAILS WITH THE IMPOUNDED MATERIAL; PARTICULARLY ANNEXURE BF - 1 TO B - 10 AND DID NOT SPECIFICALLY REJECT H IS EXPLANATION . HE ALSO PLACED HEAVY RELIANCE ON THE ASSESSEE S SURVEY STATEMENT AND ADDED A SUM OF RS.2,75,89,768/ - . THIS AMOUNT WAS FURTHER REDUCED FROM THE DECLARED UNACCOUNTED INCOME OF RS.1,03,87,772/ - LEAVING BEHIND THE REMAINING SUM IN QUESTION OF R S.1,71,92,996/ - . 5. THE ASSESSEE PREFERRED AN APPEAL. THE CIT(A) HAS ACCEPTED HIS CONTENTIONS AS UNDER: 2.4.1 I HAVE CONSIDERED THE SUBMISSION MADE BY THE APPELLANT AND THE OBSERVATION OF THE A.O. FROM THE ABOVE, IT IS SEEN THAT THE A.O. HAS VERIFIED TH E IMPOUNDED ANNEXURE BF - 1 TO BF - 10 AND HAS BROUGHT NO MATERIAL ON RECORD TO COUNTER THE FACTUAL STATEMENTS MADE BY THE ASSESSEE THAT THE TOTAL RECEIPTS AS PER THE IMPOUNDED ANNEXURE BF - 1 TO BF - 10 IS ONLY RS. 1,43,68,982 / - . THE A.O. HAS STATED THAT THE ENTI RE SURRENDERED AMOUNT OF RS.3.12 CRORES IS ADDED ONLY BECAUSE THE ASSESSEE HAS ADMITTED TO THIS INCOME DURING THE COURSEOF SURVEY. IN THIS REGARD, THE A.O. RELIED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAZI HASSAN (SU PRA) AND THE DECISION OF THE HON'BLE I.T.A.T, AHMEDABAD IN THE CASE OF WHITELINE CHEMICALS (SUPRA). DURING THE COURSE OF APPELLATE PROCEEDINGS, IT WAS VERIFIED FROM THE A.O. THAT THE TOTAL OF RECEIPTS IN THE IMPOUNDED PAPERS IS ONLY RS.1,43,68,982/ - AND NO T RS.3.12 CRORES. FURTHER IT IS C L EAR THAT WHILE MAKING THE ABOVE ADDITION THE A.O. HAS PLACED RELIANCE ON THE JUDGMENT OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HAJI HASAN V/S CIT (2001) 247 ITR 290 (GUJ). HOWEVER, ON PERUSAL OF THE AB OVE JUDGMENT IT IS CLEAR THAT THE FACTS OF THE ABOVE CASE ARE TOTALLY DIFFERENT FROM THE FACTS OF THE APPELLANT'S CASE AND THAT THE ABOVE JUDGMENT DEALS WITH ALTOGETHER A DIFFERENT ISSUE THAN THE ONE UNDER CONSIDERATION. THE DECISION OF THE HON'BLE I.T.A.T , AHMEDABAD IN THE CASE OF WHITELINE CHEMICALS (SUPRA) IS ALSO NOT APPLICABLE ON FACTS. 2.4.2 FURTHER, THE ABOVE DISCUSSION CLEARLY BRINGS ABOUT THE FACT THAT ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 4 - THAT THE IMPOUNDED MATERIAL BEING ANNEXURE BF - 1 TO BF - 10 DO NOT INDICATE EARNING OF UNAC COUNTED INCOME BV THE APPELLANT OF RS.3.12.00,000/ - . THAT THE SAID IMPOUNDED MATERIAL ONLY INDICATED EARNING OF ADDITIONAL INCOME TO THE TUNE OF RS. 1 , 43 , 68 , 982 / - ONLY. THAT OUT OF SUCH INCOME OF RS.1.43.68.982 / - SHOWN BV THE IMPOUNDED MATERIALS, A S UM OF RS.42 , 15 ,000 / - HAS BEEN S HOWN AS INCOME IN VIMAL PODDAR ( HUF) AND THE BALANCE AMOUNT OF RS.1 , 04 , 11 , 752 / - HAS BEEN SHOWN BY THE APPELLANT IN HIS RETURN OF INCOME. THE APPELLANT HAS STATED THAT IT HAD DISCLOSED THE AMOUNT RS.3.12 CRORE UNDER THE IMPRE SSION AS DURING THE COURSE OF SURVEY PROCEEDINGS THE OFFICERS SHOWN THE SEIZED MATERIAL ON WHICH THE INCOME DISCLOSED IS SHOWN AS THE TRANSACTIONS ARE OF ABOUT 2.85 CRORES. UNDER THIS IMPRESSION THEY INSISTED TO ACCEPT THE TRANSACTION AS INCOME WHICH AT TH E TIME OF SURVEY COULD NOT BE ANALYSED PROPERLY AND ACCEPTED AS INCOME. AFTER RECEIPT OF XEROX AND MAKING ANALYSIS OF THEM IT IS FOUND THAT THE TOTAL RECEIPT IS ONLY RS.1.44 CRORES INCLUDING THE OPENING BALANCE AND THE PAYMENTS ARE APPROX 1.38 CRORES ONLY. THE INCOME SHOULD ONLY BE TAX OR THE EXPENSES (WHICH EVER IS HIGHER) THE RECEIPT AND PAYMENT BOTH CANNOT BE TAKEN AS INCOME AND CHARGED TO TAX. IN SUCH CASES WHAT CAN BE TAXED IS ALL RECEIPTS, OR ALL PAYMENTS, OR PEAK. THE APPELLANT HAS OFFERED FOR TAX TH E TOTAL RECEIPT WHICH IS THE HIGHEST AMONG ALL. THE COPY OF ALL TRANSACTION RECORDED IN THE FORM OF LEDGER WERE SUBMITTED TO THE A.O. DURING COURSE OF ASSESSMENT PROCEEDING WHICH COVERS ALL THE TRANSACTION SHOWN IN THE IMPOUNDED MATERIAL BF - 1 TO BF - 10 ON W HICH THE DISCLOSURE IS MADE. THESE HAVE BEEN VERIFIED BY THE A.O. AND HE HAS BROUGHT NO MATERIAL ON RECORD TO THE EFFECT THAT THE IMPOUNDED MATERIAL SHOW HIGHER INCOME. 2.4.3 IT IS CLEAR FROM THE CONTENTS OF THE ASSESSMENT ORDER THAT THE A.O. HAS NOT LED ANY COGENT MATERIAL/EVIDENCE ON RECORD OR EVEN THE IMPOUNDED MATERIAL TO CONTEND THAT THE ABOVE SUBMISSIONS OF THE APPELLANT ARE FACTUALLY INCORRECT. IF THE IMPOUNDED MATERIALS BEING ANNEXURE BF - 1 TO ANNEXURE BF - 10 INDICATE EARNING OF UNACCOUNTED INCOME TO THE TUNE OF RS.3 , 12 , 00 ,000 / - BY THE APPELLANT, THE A.O. SHOULD HAVE GIVEN THE WORKING OF SUCH FIGURE OF UNACCOUNTED INCOME EARNED BY THE APPELLANT TO THE TUNE OF RS.3 , 12 , 00 , 000 / - BV REFERRING TO THE SPECIFIC IMPOUNDED MATERIAL. AS CAN BE SEEN FROM THE CON TENTS OF THE ASSESSMENT ORDER, THE A.O. HAS NOT GIVEN ANV SUCH WORKING NEITHER HE HAS REFERRED TO ANY SPECIFIC IMPOUNDED MATERIAL TO CONTEND THAT THE APPELLANT IN FACT, EARNED SUCH UNACCOUNTED INCOME OF ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 5 - RS.3 , 12,00, 000 / - AND NOT OF RS.1 , 43 , 68,982 / - AS STATE D BY THE APPELLANT. THE CONTENTS OF THE ASSESSMENT ORDER THUS CLEARLY SHOW THAT THE A.O. HAS MADE THE IMPUGNED HUGE ADDITION ONLY BECAUSE THE APPELLANT ADMITTED EARNING OF SUCH UNACCOUNTED INCOME VIDE HIS STATEMENT RECORDED DURING THE COURSE OF SURVEY IN H IS CASE THOUGH THE IMPOUNDED MATERIALS DO NOT INDICATE SUCH EARNING OF UNACCOUNTED INCOME BV THE APPELLANT. 2.4.4 THE FOLLOWING CASE LAWS CLEARLY SHOW THAT THE A.O. COULD NOT MAKE ANY ADDITION BEYOND THE IMPOUNDED PAPERS; - IN A RECENT CASE OF ACIT VS. SAT YANARAYAN AGARWAL (255 - ITR - (AT)69), THE CALCUTTA ITAT HAS HELD THAT IN ABSENCE OF ANY CORROBORATIVE EVIDENCE THE STATEMENT RECORDED AT THE TIME OF SURVEY CANNOT BE MADE AS BASIS OF ASSESSMENT. WHILE TAKING THIS VIEW BY THE HON'BLE ITAT RELIED ON THE DECISI ON OF ALLAHABAD HIGH COURT IN THE CASE OF ABDUL QAUM (184 - ITR - 404). THE DECISION OF AHMEDABAD ITAT IN THE CASE OF DCIT, CIRCLE - 6, AHMEDBAD VS. PRAMUKH BUILDERS IN ITA NO.2170/AHD/1990 DATED 06.07.2007 WHEREIN THE HON'BLE ITAT HAS CLEARLY HELD THAT WHEN A STATEMENT RECORDED AND DECLARATION IS MADE IN THE COURSE OF SEARCH AND IF THAT IS RETRACTED THEN WHEN THERE IS NO CORROBORATIVE EVIDENCE TO SHOW THE ASSESSEE HAS EARNED ANY UNDISCLOSED INCOME OTHER THAN WHAT HAS BEEN STATED NO ADDITION CAN BE MADE. THE DE CISION OF THE HON'BLE SUPREME COURT IN THE CASE OF PULLANGODE RUBBER PRODUCE VS. STATE OF KERA L A (91 - ITR - 18) WHEREIN THE HON'BLE SUPREME COURT STATED THAT AN ADMISSION IS AN EXTREMELY IMPORTANT PIECE OF EVIDENCE THOUGH IT IS NOT CONCLUSIVE. THEREFORE, A ST ATEMENT MADE VOLUNTARILY BY THE ASSESSEE COULD FORM THE BASIS OF ASSESSMENT. HOWEVER, MERE FACT THAT THE ASSESSEE RETRACTED THE STATEMENT COULD NOT MAKE THE STATEMENT UNACCEPTABLE. THE BURDEN LAY ON THE ASSESSEE TO ESTABLISH THAT THE ADMISSION MADE IN THE STATEMENT AT THE TIME OF SURVEY, WAS WRONG AND IN FACTS, THERE WAS NO ADDITIONAL INCOME. THE VERDICT OF THE SUPREME COURT SHOULD SERVE TO CONCLUDE ALL ARGUMENTS REGARDING THE RETRACTION MADE BY THE ASSESSEE. IN THE CASE OF THE ASSESSEE, THE BURDEN WHICH TH E HON'BLE SUPREME COURT SPOKE OF, HAD BEEN DULY DISCHARGED. THE APPELLANT STATED THAT THE FACTS OF THE CASE AS DISCUSSED CLEARLY SHOW THAT THE ASSESSEE HAS BEEN ABLE TO ESTABLISH THAT THE DECLARATION MADE IN THE STATEMENT RECORDED AT THE TIME OF THE SURVEY , WAS WRONG AND THAT THE ADDITIONAL INCOME EARNED WAS LIMITED ONLY TO RS.1,43,68,982/ - AND NOT RS.3,12,00,000/ - WHICH WAS DECLARED BY THE ASSESSEE. THIS VIEW OF THE HON'BLE SUPREME COURT WAS FOLLOWED BY THE ALLAHABAD HIGH COURT IN THE CASE OF S.C. GUPTA VS . CIT 2001 ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 6 - 248 ITR 782, AS ALSO BY THE PUNE BENCH OF THE ITAT IN THE CASE OF HOTEL KIRAN VS. ACIT 2002 82 ITT 453. THE ITAT HELD THAT EVEN THOUGH THE ADMISSION BY A PERSON IS A GOOD PIECE OF EVIDENCE YET IT IS NOT CONCLUSIVE. THE ASSESSEE CAN RETRACT FROM THE ADMISSION MADE ONLY UNDER TWO CIRCUMSTANCES. ONE IS WHEN THE STATEMENT IS MADE INVOLUNTARILY, I.E. OBTAINED UNDER COERCION, THREAT, DURESS OR UNDUE INFLUENCE, WHICH IS NOT THE CASE HERE, NO SUCH CLAIM HAS BEEN MADE BY THE ASSESSEE. THE SECOND SITUATION IS WHERE THE STATEMENT IS GIVEN UNDER SOME MISTAKEN BELIEF, EITHER OF FACT OR LAW. 2.5 IN VIEW OF THE ABOVE, THE TRUE UNDISCLOSED INCOME OF THE ASSESSEE WHICH WAS EARNED DURING THE YEAR UNDER CONSIDERATION, AND UPTO THE DATE OF THE SURVEY, I.E. 02.02.200 7, WAS ONLY TO THE EXTENT OF RS.1,43,68,982/ - AND NOT RS.3,12,00,000/ - AS DECLARED BY THE ASSESSEE IN THE STATEMENT RECORDED DURING THE SURVEY. THE STATEMENT WAS RECORDED ON THE BASIS OF DOCUMENTS FOUND DURING THE SURVEY, AND THE DOCUMENTS CLEARLY SHOWED T HE TRUE EXTENT OF UNDISCLOSED INCOME AS RS.1,43,68,982/ - WHICH HAS BEEN DULY DISCLOSED BY THE ASSESSEE BOTH IN HIS INDIVIDUAL CAPACITY (RS.1,04,11,752) AND IN THE HANDS OF HIS HUF (RS.42,15,000). THEREFORE, NO ADDITION CAN BE MADE OF THE DIFFERENCE BETWEEN THE SUM DISCLOSED IN THE STATEMENT AND THE SUMS DECLARED IN THE RETURN OF INCOME. HENCE THE GROUNDS OF APPEAL ARE ALLOWED. 6. HEARD BOTH SIDES. RECORDS PERUSED. WE HAVE ALREADY NARRATED RELEVANT FACTS OF THE CASE IN PRECEDING PARAGRAPHS. THE REVENUE S S OLE ARGUMENT IS FOR RESTORING IMPUGNED UNACCOUNTED INCOME ADDITION OF RS.1,71,92,996/ - ADDED IN ASSESSMENT ORDER SOLELY BASED ON ASSESSEE S SURVEY STATEMENT. NO SPECIFIC EVIDENCE BY WAY OF BOOKS OF ACCOUNT OR ANY OTHER MATERIAL IS QUOTED IN SUPPORT. THE CI T(A) HAS GIVEN A FINDING OF FACT HOLDING ASSESSEE S UNACCOUNTED INCOME TO BE RS.1,43,68,982/ - DISCLOSED IN ITS INDIVIDUAL CAPACITY TO THE TUNE OF RS.1,04,11,752/ - AND THE BALANCE SUM OF RS.42,15,000/ - IN THE HUF S HANDS. THE REVENUE S RELIANCE IS ONLY UPON THE ASSESSEE S BALD STATEMENT. THE LOWER APPELLATE ORDER CONSIDERS A CATENA OF CASE LAW HOLDING THEREIN THAT SUCH A STATEMENT RECORDED IN ITA NO. 752 /AH D/ 2009 SHRI VIMAL TORMAL PODDAR FOR A.Y. 2007 - 08 - 7 - THE COURSE OF SURVEY DOES NOT FORM THE SOLE BASIS FOR MAKING ADDITIONS IN ABSENCE OF SUPPORTIVE EVIDENCE . A MORE RECE NT ONE WE FIND IS CIT VS. GOLDEN FINANCE, (2013) 40 TAXMANN.COM 329 (GUJARAT) ECHOING THE VERY PRINCIPLE. THE REVENUE FAIL S TO POINT OUT ANY EXCEPTION ON FACTS OR LAW TO THE CONTRARY. WE UPHOLD THE CIT(A) ORDER IN THESE CIRCUMSTANCES AND REJECT THE REVENUE S SOLE SUBSTANTIVE GROUND. 7. THIS REVENUE S APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON THIS DAY, THE 5TH AUGUST , 201 5 AT AHMEDABAD . SD/ - SD/ - ( PRAMOD KUMAR ) ( S.S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 05 / 0 8 / 20 1 5 PRABHAT KR. KESARWANI , SR. P . S . / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) - III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER , / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD