M/s. N.K. Mulla & Brothers, Sangli V. Income-tax Officer,

ITA 768/PUN/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7307 (ITAT-PUNE)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 16-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE , , , BEFORE SHRI ANIL CHATURVEDI, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 768 /PUN/201 4 / ASSESSMENT YEAR : 20 0 9 - 10 M/S. N.K. MULLA & BROTHERS, GURUWAR PETH, AT & POST : BATTIS SHIRALA, SANGLI 415408 PAN : AABFN1544K ....... / APPELLANT / V S. INCOME TAX OFFICER, WARD 2(1), SANGLI / RESPONDENT ASSESSEE BY : S HRI SUNIL GANOO REVENUE BY : S HRI AJAY MODI / DATE OF HEARING : 0 3 - 08 - 2017 / DATE OF PRONOUNCEMENT : 01 - 1 1 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), KOLHAPUR DATED 15 - 01 - 2014 FOR THE ASSESSMENT YEAR 2009 - 10. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORDS ARE : THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF TRADING IN 2 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 K IRANA AND B HUSAR ITEMS . THE PARTNERSHIP FIRM CONSISTS OF THREE PARTNERS VIZ. SHRI YUSUF NIJAMSAHEB MULLA, SHRI HIDAYAT YUSUF MULLA AND SHRI MEHBOOB YUSUF MULLA. A SURVEY ACTION U/S. 133A O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT AT THE BUSINESS PREMISES OF ASSESSEE ON 09 TH & 10 TH FEBRUARY, 2009. DURING THE COURSE OF SURVEY IT WAS FOUND THAT THE ASSESSEE IS NOT MAINTAINING STOCK REGISTER, DAILY WAGES REGISTER, ETC. DURING SURVEY EXCESS STOCK AND EXCESS CASH WAS FOUND. STATEMENT OF SHRI HIDAYAT YUSUF MULLA ONE OF THE PARTNERS WAS RECORDED ON 09 - 02 - 2009. SHRI HIDAYAT YUSUF MULLA IN HIS STATEMENT MADE DISCLOSURE ON ACCOUNT OF : I . DIFFERENCE IN CASH RS.6,77,780/ - . II . DIFFERENCE IN STOCK RS.16,49,960/ - . III . AMOUNT D EPOSITED IN THE SAVING BANK ACCOUNT O F NISAR Y. MULLA RS.5,55,549/ - . TOTAL RS.28,83,289/ - . SUBSEQUENTLY, THE ASSESSEE VIDE LETTER DATED 15 - 04 - 2009 I.E. AFTER PERIOD OF 64 DAYS FROM THE DATE OF SURVEY RETRACTED FROM THE DISCLOSURE MADE DURING SURVEY PROCEEDINGS. HOWEVER, THE ASSESSING OFFICER VIDE ORDER DATED 28 - 12 - 2011 MADE ADDITION IN RESPECT OF AFORESAID THREE ITEMS. AGGRIEVED BY THE ASSESSMENT ORDER DATED 28 - 12 - 2011, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER REJECTED THE CONTENTIONS OF THE ASSESSEE AND UPHELD THE ADDITIONS. NOW, THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL ASSAILING THE ADDITIONS CONFIRMED BY FIRST APPELLATE AUT HORITY. 3 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 3. SHRI SUNIL GANOO APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ADDITION S HAVE BEEN MADE MERELY ON THE BASIS OF DISCLOSURE STATEMENT RECORDED U/S. 133A OF THE ACT. IT IS A WELL SETTLED LAW THAT STATEMENT GIVEN U/S. 133A HAS NO EVIDENTIARY VALUE , THEREFORE, NO ADDITION CAN BE MADE ON THE BASIS OF STATEMENT ALONE . TO SUPPORT HIS CONTENTION THE LD. AR PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT OF INDIA RENDERED IN THE CASE OF COMMISSIONER OF INCOME TAX VS. S. KHADER KHAN SON REPORTED AS 352 ITR 480. THE LD. AR SUBMITTED THAT AT THE TIME OF SURVEY BOOKS OF ACCOUNT WERE NOT READY, THEREFORE, W ERE NOT AVAILABLE FOR INSPECTION . HOWEVER, THE BOOKS WERE PRODUCED AT THE TIME OF ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICE R NEITHER REJECTED THE BOOKS OF ASSESSEE NOR POINTED ANY DEFECT IN THE BOOKS. THE LD. AR REFERRING TO THE STATEMENT OF SHRI HIDAYAT YUSUF MULLA SUBMITTED THAT DECEPTIVE QUESTIONS WERE ASKED FROM THE PARTNER OF THE ASSESSEE FIRM. SOME OF THE QUESTIONS WER E FORMULATED IN SUCH A COMPLEX MANNER THAT SHRI HIDAYAT YUSUF MULLA GOT CONFUSED AND COULD NOT UNDERSTAND THE QUESTION ITSELF. HOWEVER, HE ANSWER ED THE QUESTION S TO THE BEST OF HIS ABILITY. DUE TO LACK OF UNDERSTAND ING OF THE QUESTIONS PUT TO HIM, HE GAV E SOME ERRONEOUS ANSWERS. THE LD. AR CONTENDED THAT SUBSEQUENTLY WHEN THE ASSESSEE RE ALIZED THAT WHILE RECORDING STATEMENTS HE HAS COMMITTED CERTAIN ERRORS UNDER CONFUSION , THE STATEMENT WAS RETRACTED. THE LD. AR FURTHER POINTED THAT THE HONBLE ALLAHABA D HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. RADHA KISHAN GOEL REPORTED AS 278 ITR 454 HAS ACKNOWLEDGED THE FACT THAT WHILE RECORDING STATEMENT DURING THE COURSE OF SEARCH , PERSON IS SO TORTURED, HARASSED AND PUT TO MENTAL AGONY THAT HE LOSES HIS NORMAL MENTAL STATE OF MIND AND G ETS CONFUSED. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS PRODUCED PURCHASE REGISTER BEFORE 4 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 ASSESSING OFFICER AND HAD GIVEN REASONS FOR DIFFERENCE IN STOCK. THE REASONS FOR DIFFERENCE IN SALES WERE ALSO GIVEN BEFORE A SSESSING OFFICER. THE LD. AR REFERRING TO SOME OF THE SAMPLE BILLS AT PAGES 54, 67 AND 68 SUBMITTED THAT THE BILLS ARE DISCLOSED IN PURCHASE REGISTER, PAYMENTS ARE MADE BY CHEQUE IN RESPECT OF BILLS AND IN VAT RETURNS ALL THE BILLS ARE SHOWN. THE LD. AR SUBMITTED THAT IN VIEW OF THE FACT THAT THE ASSESSEE HAS EXPLAINED THAT DIFFERENCE IN CASH AND STOCK , NO ADDITION IS WARRANTED. IN RESPECT OF CASH DEPOSITS IN THE ACCOUNT OF NISAR Y. MULLA, THE LD. AR SUBMITTED THAT NISAR Y. MULLA IS THE YOUNGER BROTHER O F SHRI HIDAYAT YUSUF MULLA. HE IS NOT PARTNER IN THE ASSESSEE FIRM. HE IS HAVING HIS OWN INDEPENDENT BUSINESS AND IS FILING HIS OWN RETURNS OF INCOME. 4. ON THE OTHER HAND SHRI AJAY MODI REPRESENTING THE DEPARTMENT VEHEMENTLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITION S . THE LD. DR SUBMITTED THAT THE ASSESSEE RETRACTED FROM THE STATEMENT AFTER TWO MONTHS. THE EXPLANATION FURNISHED BY THE ASSESSEE IN RECONCILIATION OF THE STOCK AND CASH IS NOTHING BUT AN AF TERTHOUGHT. THE ASSESSEE PRODUCED BOOKS FOR THE FIRST TIME BEFORE THE ASSESSING OFFICER ON 26 - 12 - 2011 I.E. JUST BEFORE THE TIME BARRING OF ASSESSMENT. THERE WAS NO OCCASION/TIME FOR THE ASSESSING OFFICER TO VERIFY THE BOOKS. THE LD. DR POINTED THAT THE ASSESSEE IN HIS BOOKS HAS DISCLOSED SALES OF RS.68,67,872/ - FROM 01 - 04 - 2008 TO 08 - 02 - 2009 AND THEREAFTER , FROM THE DATE OF SURVEY I.E. FROM 09 - 02 - 2009 TO 31 - 03 - 2009 THE ASSESSEE DISCLOSED SALES OF RS.44,50,843/ - . THE SALES OF THE ASSESSEE FOR THE LAST TW O MONTHS OF 5 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 FINANCIAL YEAR CONSTITUTE ALMOST 3/4 TH OF SALES OF FIRST 10 MONTHS. THIS SHOWS THAT TRADING ACCOUNT MAINTAINED BY ASSESSEE IS NOT PROPER. THE LD. DR FURTHER SUBMITTED THAT THE STATEMENT OF SHRI HIDAYAT YUSUF MULLA WAS RECORDED IN PRESENCE OF CHARTERED ACCOUNTANT SHRI S. D . VAIDYA. THE ASSESS EE WAS HAVING THE BENEFIT OF A PROFESSIONAL AT THE TIME OF SURVEY AND RECORDING OF STATEMENT. THEREFORE, THERE WAS NO QUESTION OF CONFUSION OR MAKING WRONG STATEMENT UNDER CONFUSION WHEN THE ASSESSEE WAS HAVING GUID ANCE OF A TAX CONSULTANT. THE LD. DR SU BMITTED THAT THE ASSESSEE CANNOT RETRACT FROM THE STATEMENT ON WHIMS AND FANCIES WITHOUT ANY REASON. IN SUPPORT OF HIS ARGUMENT THE LD. DR PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SANJEEV AGRAWAL VS. INCOME TAX SETTLE MENT COMMISSIONER REPORTED AS 231 TAXMAN 71. THE LD. DR PRAYED FOR UPHOLDING THE IMPUGNED ORDER AND DISMISSING THE APPEAL OF ASSESSEE. THE LD. DR CONTENDED THAT AS REGARDS AMOUNTS DEPOSITED IN THE SAVING BANK ACCOUNT OF NISAR Y. MULLA IS CONCERNED THE A MOUNT BELONGS TO ASSESSEE ONLY. ON VERIFICATION OF THE RETURNS OF NISAR Y. MULLA IT TRANSPIRED THAT RETURNS FOR THE ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 WERE FILED AFTER THE DATE OF SURVEY. EVEN PAN WAS ALLOTTED TO NISAR Y. MULLA MUCH AFTER THE DATE OF SURVEY. THE LD. DR CONTENDED THAT SHRI HIDAYAT YUSUF MULLA IN HIS STATEMENT ADMITTED THAT NISAR Y. MULLA IS WORKING WITH THE FIRM ON MONTHLY SALARY OF RS.1500/ - . IN HIS STATEMENT HE NEVER MENTIONED THAT NISAR Y. MULLA IS HAVING ANY INDEPENDENT BU SINESS. 5. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . THE 6 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 ADDITION S HAS BEEN MADE IN RESPECT OF AMOUNT DEPOSITED IN THE NAME OF NISAR Y. MULL A IN HIS SAVING BANK ACCOUN T RS.5,55,549/ - , EXCESS STOCK FOUND RS.16,49,960/ - AND EXCESS CASH FOUND RS.6,77,780/ - . 6. THE FIRST GROUND IN APPEAL IS IN RESPECT OF UNEXPLAINED CASH DEPOSITS TO THE TUNE OF RS.5,55,549/ - IN THE SAVING BANK ACCOUNT OF SHRI NISAR Y. MULLA. IT HAS BEEN CONTENDED THAT SHRI NISAR Y. MULLA IS HAVING HIS OWN INDEPENDENT BUSINESS , T HEREFORE, THE AMOUNT DEPOSITED IN HIS BANK ACCOUNT IS NOT RELATED TO THE ASSESSEES BUSINESS. A PERUSAL OF THE STATEMENT OF SHRI HIDAYAT YUSUF MULLA REVEAL THAT THERE IS NO MENTIO N OF INDEPENDENT BUSINESS OF SHRI NISAR Y. MULLA . R ATHER, HE ADMITTED THAT SHRI NISAR Y. MULLA IS HIS YOUNGER BROTHER AND WORKS FOR THE PARTNERSHIP FIRMS ON MONTHLY SALARY OF RS.1500/ - . HE FURTHER ADMITTED THAT THE AMOUNT DEPOSITED IN THE SAVING BANK ACC OUNT OF SHRI NISAR Y. MULLA IS FROM THE REGULAR TRADING TRANSACTION OF PARTNERSHIP FIRM. THE AUTHORITIES BELOW HAVE GIVEN A FINDING THAT SHRI NISAR Y. MULLA WAS NOT ASSESSED TO INCOME TAX TILL THE DATE OF SURVEY , PAN WAS ALLOTTED TO H IM ON 27 - 02 - 2009 I.E. AFTER 17 DAYS FROM THE DATE OF SURVEY. THE RETURNS OF INCOME IN RESPECT OF SHRI NISAR Y. MULLA FOR THE ASSESSMENT YEARS 2007 - 08, 2008 - 09 AND 2009 - 10 WERE FILED ON 24 - 03 - 2009 I.E. AFTER THE DATE OF SURVEY. THE LD. AR HAS NOT BEEN ABLE TO CONTROVERT TH ES E FINDING OF FACTS. THUS, THIS CLEARLY INDICATES THAT THE ASSESSEE HAS TRIED TO CREATE EVIDENCE TO ESCAPE FROM THE ADDITION OF AMOUNT DEPOSITED IN THE SAVING BANK ACCOUNT OF SHRI NISAR Y. MULLA. SINCE, THE ASSESSEE HAS FAILED TO EXPLAIN THE AMOUNT DEPOSI TED IN THE SAVING BANK ACCOUNT OF SHRI NISAR Y. MULLA , ADDITION OF RS.5,55,549/ - IS SUSTAINED. ACCORDINGLY, GROUND NO. 1 RAISED IN CONCISE GROUNDS OF APPEAL BY ASSESSEE IS DISMISSED. 7 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 7. GROUND NOS. 2 AND 3 ASSAILING ADDITION ON ACCOUNT OF EXCESS STOCK TO THE TUNE OF RS.16,49,960/ - AND EXCESS CASH FOUND DURING SURVEY RS.6,77,780/ - , RESPECTIVELY ARE TAKEN UP TOGETHER FOR ADJUDICATION. DURING THE COURSE OF SURVEY RS.7,39,741/ - CASH WAS FOUND , WHEREAS AS PER CASH BOOK , THE CASH BALANCE AS ON DATE OF SURVEY W AS RS.69,961/ - . EXCESS CASH RS.6,77,780/ - WAS ADDED. THE ASSESSEE EXPLAINED THAT AT THE TIME OF SURVEY THE BOOKS OF ACCOUNT WERE INCOMPLETE AND CERTAIN ENTRIES WERE YET TO BE MADE IN CASH BOOK . THE ASSESSEE UPDATED THE BOOKS AFTER SURVEY . A FTER COMPLETING THE BOOKS AND RECONCILIATION IT WAS FOUND THAT THERE IS NO DIFFERENCE IN CASH. IT IS AN UNDISPUTED FACT THAT THE ASSESSING OFFICER HA S NOT REJECTED BOOKS OF ASSESSEE BEFORE MAKING THE ADDITIONS. THE ASSESSEE PURPORTEDLY FURNISHED BILLS OF ALL THE PURCHASE S AND SALES . IT APPEARS THAT THE AUTHORITIES BELOW HAVE NOT MADE ANY EFFORT TO EXAMINE THE DOCUMENTS FURNISHED BY THE ASSESSEE . ADDITION IN RESPECT OF DIFFERENCE IN CASH HAS BEEN MADE MERELY ON THE BASIS OF STATEMENT OF ONE OF THE PARTNERS OF ASSESSEE FIRM. IN RESPECT OF DIFFERENCE IN STOCK , THE ASSESSING OFFICER HAS NOT EXAMINED THE STOCK REGISTER WHICH WAS PRODUCED BY THE ASSESSEE SUBSEQUENTLY. A PERUSAL OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) REVEAL S THAT THOUGH THE ISSUE R ELATING TO ADDITION OF RS. 16,49,960/ - ON ACCOUNT OF EXCESS STOCK WAS TAKEN UP FOR ADJUDICATION BUT THE COMMISSIONER OF INCOME TAX (APPEALS) LEFT THE ISSUE IN BETWEEN WITHOUT GIVING HIS FINDINGS. TAKING INTO CONSIDERATION THE ENTIRETY OF FACTS , WE ARE OF C ONSIDERED VIEW THAT NO ADDITION IN RESPECT OF DIFFERENCE IN STOCK AND CASH IS WARRANTED. ACCORDINGLY, GROUND NOS. 2 AND 3 RAISED IN CONCISE GROUNDS OF APPEAL ARE ALLOWED. 8 ITA NO . 768/PUN/2014, A.Y. 2009 - 10 8 . IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON WEDNESDAY, THE 01 ST DAY OF NOVEMBER, 201 7 . SD/ - SD/ - ( / ANIL CHATURVEDI ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 01 ST NOVEMBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) , KOLHAPUR 4. / THE CIT - I/II, KOLHAPUR/CIT(CENTRAL), PUNE 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE