The ACIT, Circle-2(1), Vijayawada V. Sri Chaganlal Sogmal, Vijayawada

ITA 773/VIZ/2004

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7044 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2000-2001
• Appeal Filed On: 13-12-2004
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G S S GOPINATH
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.773/VIZAG/2004 ASSESSMENT YEAR : 2000-01 THE ACIT, CIRCLE-2(1) VIJAYAWADA SRI CHAGANLAL SOGMAL VIJAYAWADA (APPELLANT) VS. (RESPONDENT) GIR NO.C-732 APPELLANT BY: SHRI G.S.S. GOPINATH, DR RESPONDENT BY: SHRI C. SUBRAHMANYAM, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST T HE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE CIT(A) IS ERRONEOUS ON THE FACTS A ND IN LAW. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT SMT. JANA KI GAVE DIFFERENT STATEMENT/VERSIONS ON 29.9.99, IN THE AFF IDAVIT DT.8.8.2003 AND IN THE LETTER DT.23.7.2004 ISSUED TO THE ITI OF THIS OFFICE. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE STATEMENTS COLLECTED AT RANDOM FROM DIFFERENT CUSTOMERS WHICH CLEARLY REVEALS THAT THE ASSESSEE HAS RESORTED TO CONCEALMENT OF ST OCK UNACCOUNTED FOR IN THE FORM OF CUSTOMERS GOLD. 4. THE CIT(A) OUGHT TO HAVE UPHELD THE ADDITION MADE C ONSIDERING THE FACT THAT SRI CHAGANLAL SOGMAL PROP: VARDHMAN J ESWELLERS HAD CATEGORICALLY STATED IN THE SWORN STATEMENT THAT DE TAILS LIKE NAMES, ADDRESSES AND CONFIRMATIONS FROM THE CUSTOMERS WHOS E GOLD IS FOUND AT THE TIME OF SURVEY CAN NOT BE PRODUCED. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF H EARING. 2. THROUGH THESE GROUNDS, THE REVENUE HAS CHALLENGE D THE ORDER OF THE CIT(A) DELETING THE ADDITIONS, WHICH WERE MADE ON T HE BASIS OF THE STATEMENTS OF SMT. JANAKI DEVI. THEY HAVE NOT RAIS ED A SPECIFIC GROUND WITH REGARD TO THE QUANTUM OF ADDITIONS WHICH WERE DELET ED BY THE CIT(A). WE HOWEVER IN THE INTEREST OF JUSTICE HAVE EXAMINED TH E ORDER OF THE CIT(A), TRIED TO UNDERSTAND THE CONTROVERSIES RAISED THEREI N. 2 3. THE ASSESSEE CARRIED ON BUSINESS IN GOLD, SILVER , PEARLS, CHEMICAL DIAMONDS AND MANUFACTURE AND TRADE IN GOLD AND SILV ERWARE. SURVEY OPERATION U/S 133A WAS CONDUCTED IN THE BUSINESS PR EMISE OF THE ASSESSEE ON 29.9.1999 IN ORDER TO VERIFY GENUINENESS OF THE LOWER INCOME TAX OFFERED BY THE ASSESSEE. DURING THE COURSE OF SURVEY OPERA TION GOLD JEWELLERY TO THE EXTENT OF 2.986 KGS. CLAIMED TO HAVE BEEN GIVEN BY THE CUSTOMERS WAS FOUND, TOWARDS WHICH THE ASSESSEE COULD NOT FURNISH COMPLETE DETAILS LIKE NAMES AND ADDRESSEES OF SUCH CUSTOMERS AND CONFIRMA TIONS FROM THEM. SUBSEQUENT TO THE SURVEY OPERATION, THE INSPECTORS FROM THE DEPARTMENT HAVE MADE A SUDDEN AND RANDOM ENQUIRIES WITH REGARD TO THE EXCESS GOLD THAT WAS IDENTIFIED IN THE PREMISES OF THE ASSESSEE . THE STATEMENTS WERE COLLECTED AT RANDOM FROM DIFFERENT CUSTOMERS WHICH CLEARLY REVEALED AND THE APPELLANT RESORTED TO CONCEALMENT OF HIS STOCK IN T HE FORM OF UNACCOUNTED FOR CUSTOMERS GOLD. ASSESSEE WAS ALSO ASKED TO FURNISH THE DETAILS OF THE CUSTOMERS FROM WHOM THE GOLDS WERE RECEIVED FOR REM AKING OF ORNAMENTS. SINCE HE COULD NOT FILE ANY EVIDENCE OR THE STATEME NT, THE ASSESSING OFFICER TREATED THE GOLD FOUND IN THE COURSE OF SURVEY AS U NACCOUNTED INVESTMENT OF THE ASSESSEES AND MADE AN ADDITION OF RS.11,94,400/ - TOWARDS THE VALUE OF 2986GMS OF GOLD @RS.400/- PER GM AND COMPLETED THE ASSESSMENT ACCORDINGLY. 4. THE ASSESSEE PREFERRED AN APPEAL WITH THE SUBMIS SIONS THAT THE GOLD ORNAMENTS WHICH WERE FOUND IN THE POSSESSION OF THE ASSESSEE DURING THE COURSE OF SURVEY REALLY BELONG TO THE CUSTOMERS AND THE EVIDENCE ON RECORD ESTABLISHED THAT THE APPELLANT WAS NOT THE OWNER OF THE GOLD ORNAMENTS. THE ASSESSING OFFICER ACTED MERELY ON THE BASIS OF PREJ UDICE, SURMISES AND FAILED TO GIVE OPPORTUNITY FOR CROSS EXAMINATION AND FAILE D TO GIVE COPY OF SWORN STATEMENT RELIED ON. THE ASSESSEE HAS ALSO OBTAINE D THE CONFIRMATION AND THE AFFIDAVITS OF THE CUSTOMERS IN ORDER TO SUPPORT THAT ORNAMENTS BELONG TO THEM AND NOT TO THE ASSESSEE. IT WAS FURTHER CONTE NDED THAT DURING THE COURSE OF SURVEY THE ALLEGED JEWELLERY TO THE EXTEN T OF 2.986 KGS. BELONGING TO THE CUSTOMERS, WAS FOUND IN A SEPARATE CUPBOARD AS THE CUSTOMERS GOLD WAS NOT DISPLAYED IN THE SHOWROOMS. THE CUSTOMERS GOLD WAS PACKED IN DIFFERENT BAGS AND TAGGED SEPARATELY FOR IDENTIFICA TION PURPOSE. ON THE TAGS 3 NAME OF THE CUSTOMER AND WEIGHT OF GOLD ORNAMENTS W ERE MENTIONED. THE CIT(A) RE-EXAMINED THE CLAIM OF THE ASSESSEES IN TH E LIGHT OF RELEVANT PROVISIONS OF ACT AND CAME TO THE CONCLUSION THAT T HE ASSESSEE HAS SUCCESSFULLY EXPLAINED THAT THE GOLD ORNAMENTS BELO NG TO THE CUSTOMERS AND NOT TO THE ASSESSEES. THE RELEVANT OBSERVATION OF THE CIT(A) IS EXTRACTED HEREUNDER: I HAVE HEARD THE AUTHORISED REPRESENTATIVES S/SHRI S.C. JAIN AND A. SIVA PRASAD, CHARTERED ACCOUNTANTS OF T HE APPELLANT AND GONE THROUGH THE WRITTEN SUBMISSIONS AND ALSO H EARD THE ASSISTANT COMMISSIONER OF INCOME-TAX SHRI ROY JOSE V AND GONE THROUGH THE ASSESSMENT ORDER AND THE REPORT SUBMITT ED. FIRST OF ALL, I FIND THAT THE ASSESSING OFFICER HAS HIMSELF ADMITTED IN PARAGRAPH 3 OF HIS ORDER THAT IN THIS LINE OF BUSIN ESS IT IS COMMON PRACTICE TO ACCEPT GOLD FROM CUSTOMERS FOR MAKING A ND REPAIRING TOWARDS WHICH AN ORDER FORM IS PREPARED CLEARLY IND ICATING THE DATE OF ACCEPTANCE, THE AMOUNT OF GOLD ACCEPTED ALONG WI TH DETAILED NAMES AND ADDRESSES OF THE CUSTOMERS FROM WHOM THE GOLD WAS ACCEPTED. SUCH DETAILS ARE NECESSARY IN ORDER TO E XACTLY LOCATE THE TYPE OF ARTICLE GIVEN BY A SPECIFIC CUSTOMER AND TH E ARTICLE IS GIVEN BACK TO THE SAME CUSTOMER AFTER REMAKING. AS PER T HE AUTHORISED REPRESENTATIVE OF THE APPELLANT, SIMILAR BUSINESS P RACTICE HAS BEEN MAINTAINED IN THE CASE OF APPELLANT ALSO. AS PER T HE AUTHORISED REPRESENTATIVE WHATEVER ADDRESS IS GIVEN BY THE CUS TOMER HAS BEEN RECORDED IN THE ORDER FORM AND THERE WAS NO NE CESSITY TO SUSPECT THE PERSON BECAUSE THE SURETY WAS THE OLD G OLD GIVEN BY THE CUSTOMER. THEREAFTER, WHEN THE CUSTOMERS GOLD IS GIVEN TO THE ARTISANS TO MAKE NEW ORNAMENTS THEIR RECEIPT IS ALS O KEPT IN THE APPELLANTS BUSINESS PREMISES. AFTER PREPARING THE NEW GOLD ARTICLE THE SAME IS ALSO ENTERED IN THE BOOKS OF ACCOUNT AN D THE DELIVERY OF THE ARTISANS IS ALSO RECORDED, MAKING CHARGES AL SO CHARGED FOR THE LABOUR DONE BY THE ARTISANS AND ONLY AFTER THAT FINAL BILL IS PREPARED AND THE CUSTOMER WITH HIS SIGNATURE RECEIV ES THE SAME AND MAKES EXTRA PAYMENT FOR ADDITIONAL GOLD IF ANY IS UTILIZED OR GETS RETURNED SOME OF THE OLD GOLD IF THE OLD GOLD IS EXCESS. FOR ESTABLISHING THIS, THE AUTHORISED REPRESENTATIVE OF THE APPELLANT HAD FILED TWO SETS OF ORDER FORMS, TWO SETS OF STOC K INVENTORY AND TWO SETS OF SALE BILLS WHICH WERE ALSO EXAMINED BY THE ASSESSING OFFICER ORIGINALLY AS WELL AS AT THE TIME OF REMAND REPORT PROCEEDINGS. AS PER THE REMAND REPORT THERE WAS NO MISTAKE FOUND IN THOSE BOOKS OF ACCOUNT AND WHATEVER THE MA KING CHARGES OFFERED BY THE APPELLANT HAVE BEEN ACCEPTED BY THE DEPARTMENT. IN SUCH VIEW OF THE MATTER IT CANNOT BE SAID THAT T HE ASSESSING OFFICER HAS FOUND OUT SOME CONCEALED GOLD IN THE PR EMISES OF THE APPELLANT. 4 SECONDLY, AT THE TIME OF SURVEY, IT HAS BEEN MENTIO NED IN THE ASSESSMENT ORDER, GOLD JEWELLERY TO THE EXTENT OF 2 .986 KGS. CLAIMED TO BE BELONGING TO THE CUSTOMERS WAS FOUND AND THE APPELLANT COULD NOT FURNISH COMPLETE DETAILS LIKE N AMES AND ADDRESSES OF SUCH CUSTOMERS AND CONFIRMATIONS FROM THEM. BUT, THERE IS NO MENTION IN THE ASSESSMENT ORDER WHETHER THE GOLD JEWELLERY FOUND WERE NEW GOLD JEWELLERY MEANT FOR S ALE AND WERE KEPT IN THE COUNTERS OR IT WAS OLD GOLD JEWELLERY A ND WAS MEANT FOR REMAKING AND WHETHER THERE WAS ANY DISCREPANCY IN T HE ORDER FORMS SHOWN BY THE APPELLANT DURING THE COURSE OF S URVEY. THE AUTHORISED REPRESENTATIVE OF THE APPELLANT SUBMITTE D THAT THOSE WERE OLD GOLD JEWELLERIES KEPT IN SEPARATE PACKETS HAVING SEPARATE TAGS AND WERE MEANT FOR NECESSARY REMAKING AND EVER YTHING WAS ENTERED IN THE BOOKS OF ACCOUNT MAINTAINED BY THE A PPELLANT. THIRDLY, THE ASSESSING OFFICER HAS SUMMONED SHRI CH AGANLAL SOGMAL WHO CATEGORICALLY MENTIONED THAT THE DETAILS LIKE N AMES AND ADDRESSES AND CONFIRMATION FROM THE CUSTOMER CANNOT BE PRODUCED AT THAT STAGE AND THE AUTHORISED REPRESENTATIVE OF THE APPELLANT ALSO STAT4ED SINCE THERE IS NO LAW TO MAKE IT MANDA TORY TO DESCRIBE COMPLETE ADDRESS OF THE CUSTOMERS AND IT IS ALSO NO T THE USUAL TRADE PRACTICE OF THE APPELLANT AND OTHER CO-BUSINE SSMEN IN THIS LINE OF BUSINESS ARE NOT DOING THE SAME FOR YEARS T OGETHER, THE ASSESSING OFFICER OUGHT TO HAVE ANALYSED AND EVALUA TED THE CONTEMPORARY EVIDENCES FOUND DURING THE TIME OF SUR VEY AND SHOULD HAVE COME TO PROPER CONCLUSION. FOURTHLY, THE AUTHORISED REPRESENTATIVE OF THE APPE LLANT ALSO STATED THAT FEW OF THE CUSTOMERS WERE QUESTIONED AT THE BA CK OF THE APPELLANT AND IF AT ALL THEY HAD GIVEN ANY ADVERSE OPINION OR COMMENTS AS REGARDS TO THEIR OLD GOLD THEN THE SAME SHOULD HAVE BEEN CONFRONTED TO THE APPELLANT BEFORE MAKING THE ADDITION. FIFTHLY, IN THE ASSESSMENT ORDER ONLY THE NAMES OF 2/3 CUSTOMERS MENTIONED ONE IS SMT. S. JANAKI WHO HAD FILED THE A FFIDAVIT CONFIRMING THE GIVING OF OLD GOLD AND HAS ALSO STAT ED AN OATH BEFORE THE ASSESSING OFFICER REGARDING THE GENUINENESS OF GIVING THE GOLD AND SUBSEQUENT RECEIPT AFTER REMAKING. THE OTHER P ERSON NAMELY SHRI M.S.R.K. SHARMA HAS ALSO FILED HIS AFFIDAVIT W HICH HAS NOT BEEN CONTRADICTED BY THE ASSESSING OFFICER SO FAR, OSTEN SIBLY FOR THE REASON THAT HE WAS NOT AVAILABLE AT VIJAYAWADA FOR EXAMINATION. SO LONG AS THE AFFIDAVIT IS NOT CONTRADICTED THE SA ME STANDS VALID IN THE EYES OF LAW. SIXTHLY, IT IS ALSO A VALID POINT RAISED BY THE AUT HORISED REPRESENTATIVE OF THE APPELLANT THAT ONLY BY CITING AN EXAMPLE OF 2 OR 3 PERSONS VIZ. SMT. S. JANAKI, HARISHCHANDRA BHA NDARI AND M.S.R.K. SHARMA THE ASSESSING OFFICER CANNOT MAKE A DDITION OF ENTIRE VALUE OF 2986 GRAMS OF GOLD FOUND AT THE TIM E OF SURVEY AND SUSPECT TO BE THE UNACCOUNTED GOLD OF THE APPELLANT . THE AUTHORISED REPRESENTATIVE OF THE APPELLANT STATED T HAT THE ACCOUNTS 5 OF THE APPELLANT WERE AUDITED BY THE TAX AUDITOR AN D NO MISTAKE WAS ALSO SHOWN AND THE APPELLANT HAS PRODUCED THE B OOKS OF ACCOUNT, THERE ALSO NO MISTAKE WAS FOUND AND THE BU SINESS PREMISES OF THE APPELLANT WAS ALSO SURVEYED WHERE A LSO NO DISCREPANCY WAS FOUND. FURTHER, HE ADDED THAT THE ORDER OF THE ASSESSING OFFICER WAS NOT CONVINCING AND SPEAKING A ND IN ANY CASE AFTER EXAMINING ONLY 3 PERSONS ENTIRE STOCK CANNOT BE ADDED IN THE HANDS OF THE APPELLANT WHEN THE ACCOUNTS ARE AUDITE D BY QUALIFIED CHARTERED ACCOUNTANTS. IN VIEW OF THESE THINGS AND THE REASONS GIVEN ABOVE AND GIVEN BY THE AUTHORISED REPRESENTATIVE IN HIS WRITTEN SUBMIS SIONS, I FIND THERE ARE ENOUGH REASONS AND SUBSTANCE IN THE PLEA OF THE APPELLANT AND THE ORDER OF THE ASSESSING OFFICER BE ING NOT THOROUGHLY SPEAKING ORDER AND BEING NOT BASED ON AD EQUATE FINDING OF FACTS AND BEING DONE ON PRESUMPTION AND SUSPICION I FIND THE ADDITION MADE BY THE ASSESSING OFFICER IS NOT S USTAINABLE IN THE EYES OF LAW. ACCORDINGLY, I ORDER FOR THE DELETION OF THE ADDITION MADE BY HIM AMOUNTING TO RS.11,94,400/-. 5. THOUGH THE REVENUE HAS FILED AN APPEAL AGAINST T HE ORDER OF THE CIT(A) BUT LD. D.R. COULD NOT POINT OUT ANY SPECIFI C DEFECT IN THE ORDER OF THE CIT(A). WE HOWEVER, CAREFULLY EXAMINED AND WE FIND THAT ASSESSEE HAS PLACED THE AMPLE EVIDENCE TO PROVE THAT THESE GOLD ORNAMENTS FOUND DURING THE COURSE OF SURVEY BELONG TO THE CUSTOMERS AND NO T THE ASSESSEES, AS SUCH WE FIND NO INFIRMITY IN THE ORDER OF THE CIT(A) WHO WAS RIGHTLY DELETED THE ADDITIONS. 6N. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. PRONO UNCED IN THE OPEN COURT ON 5-3-2010 SD/- SD/- (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 5 TH MARCH,, 2010 6 COPY TO 1 THE ACIT, CIRCLE-2(1), VIJAYAWADA 2 SRI CHAGANLAL SOGMAL, 27-14-22, RAJAGOPALACHARI S T., GOVERNORPET, VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM