The ACIT, Bhopal V. Shri Mohanlal Agarwal, Bhopal

ITA 79/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2804 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 16-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: P S KELKAR
• Keywords: Rejection of books of accounts; Loose papers
• Section: 143(3); 133A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI V.K. GUPTA, ACCOUNTANT MEMBER ITA NO.79/IND/2010 A.Y. - 2005-06 ASSISTANT COMMISSIONER OF INCOME TAX 1(1), BHOPAL APPELLANT VS MOHANLAL AGRAWAL, M/S. OMTEX FURNISHERS, DYNAMIC CENTRE, ZONE-1, M.P. NAGAR, BHOPAL PAN AAWPA 5831 D RESPONDENT APPELLANT BY : SMT. APARNA KARAN, SR. DR RESPONDENTS BY : SHRI P.S. KELKAR, ADVOCATE O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THIS APPEAL IS BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A)-I, BHOPAL, DATED 20.11.2009 ON THE FOLLOWING GROUNDS: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE ADDITION OF 2 RS.1,27,714/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN G.P. RATE SHOWN BY THE ASSESSEE FOR THE CURRENT YEAR AS COMPARED TO LAST YEAR, AND 2. IN DELETING THE ADDITION OF RS.18,05,486/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED PROFIT ON ESTIMATED UNACCOUNTED SALES FOR THE POST SURVEY PERIOD. 2. DURING THE HEARING OF THIS APPEAL, WE HAVE HEARD THE LD. SR. DR SMT. APARNA KARAN WHO DEFENDED THE ASSESSMENT ORDER WHEREAS LD. COUNSEL FOR THE ASSESSEE SHRI P.S. KELKAR SUPPORTED THE IMPUGNED ORDER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RE CORD. AS FAR AS GROUND NO.1 WITH REGARD TO DIFFERENCE IN G.P. RATE IS CONCERNED, BRIEF FACTS ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S. OMTEX F URNITURE AND IS DEALING IN INTERIOR FURNISHING SUCH AS CURTAIN CLOT H, CURTAIN RODS, UPHOLSTERY CLOTHES AND CARPET ETC. THE ASSESSEE IS DOING HIS BUSINESS IN BHOPAL AS WELL AS IN DELHI. THE ASSESSEE DECLARED I NCOME OF RS.55,45,522/- IN ITS RETURN FILED ON 31.10.2005. T HE ASSESSMENT WAS ULTIMATELY COMPLETED ON A TOTAL INCOME OF RS.75,46, 720/- THROUGH AN ORDER PASSED U/S 143(3) ON 24.12.2007. A SURVEY U/S 133A WAS CARRIED 3 OUT ON 18.10.2004 AT THE BUSINESS PREMISES OF THE A SSESSEE. DURING SURVEY, ON PHYSICAL VERIFICATION, THE STOCK WAS VAL UED AT RS.73,76,181/- WHEREAS AS PER BOOKS OF ACCOUNTS, IT WAS WORKED OUT AT RS.31,77,755/-. ON CONFRONTATION, IT WAS CLAIMED BY THE ASSESSEE TH AT THE STOCK WAS VALUED WHICH INCLUDES ENTRY TAX, COMMERCIAL TAX AND VAT ETC. ULTIMATELY, THE STOCK WAS WORKED OUT AT RS.65,75,349/-, CONSEQU ENTLY, THERE WAS A DIFFERENCE OF RS.33,97,594/-. THE ASSESSEE SURRENDE RED AN AMOUNT OF RS.35 LACS ON ACCOUNT OF EXCESS STOCK. AS PER THE R EVENUE, CERTAIN LOOSE PAPERS WERE ALSO FOUND INDICATING SALE OF GOODS AND CONSEQUENT RECEIPT OF UNVERIFIABLE CASH. THE ASSESSEE FURTHER SURRENDE RED AN AMOUNT OF RS.2.5 LACS ON THIS ACCOUNT. CERTAIN PAST BOOKS WER E ALSO FOUND IN THE NAMES OF FAMILY MEMBERS OF THE ASSESSEE WHEREIN SOM E CASH WAS FOUND TO BE DEPOSITED, CONSEQUENTLY, THE ASSESSEE S URRENDERED FURTHER AN AMOUNT OF RS.2,50,000/-. FINALLY, THE TOTAL CASH WHICH WAS SURRENDERED BY THE ASSESSEE IS RS.40 LACS, WHICH WA S DISCLOSED AS INCOME IN ITS RETURN. HOWEVER, THE ASSESSING OFFICE R REJECTED THE BOOKS OF ACCOUNTS ON THE PLEA THAT THE BOOKS ARE NOT COMP LETE AND CORRECT. IT WAS NOTICED BY THE ASSESSING OFFICER THAT IN PRE-SU RVEY PERIOD, THE G.P. WAS 19% WHEREAS THE TOTAL G.P. FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION WORKED OUT TO 21.27% WHEREAS IN THE I MMEDIATE PRECEDING ASSESSMENT YEAR I.E. 2004-05, IT WAS 22.1 0%. THE ASSESSEE EXPLAINED THE MARGINAL FALL DUE TO THE REASON THAT THERE WAS A INCREASE IN 4 THE SALE BY 65% AS COMPARED TO PRECEDING YEAR. HOWE VER, THE ASSESSING OFFICER APPLIED THE G.P. RATE OF 22.10% A GAINST THE G.P. OF 21.27% WHICH RESULTED INTO DIFFERENCE OF RS.1,27,71 4/-. ADMITTEDLY, THE ASSESSEE SHOWED G.P. RATE OF 19.57% IN ITS TRADING ACCOUNT DURING PRE- SURVEY PERIOD FROM 1.4.02 TO 18.10.04 AND DURING PO ST SURVEY PERIOD FROM 19.10.04 TO 31.3.2005, IT WAS SHOWED AT 22.69% AND OVERALL G.P. RATE OF 21.27% FOR THE PREVIOUS YEAR RELEVANT TO AS SESSMENT YEAR 2005- 06 (UNDER CONSIDERATION). THE ASSESSEE DISCLOSED TH E AMOUNT OF RS.2.5 LACS ON ACCOUNT OF UNRECORDED SALES IN THE PRE-SURV EY PERIOD, THEREFORE, NO FURTHER ADDITION WAS CALLED FOR, CONSEQUENTLY, W E FIND NO INFIRMITY IN DELETING THE ADDITION OF RS.1,27,714/-, ESPECIALLY WHEN NOTHING CONTRARY WAS BROUGHT TO OUR NOTICE BY THE REVENUE. 4. THE NEXT GROUND PERTAINS TO DELETING THE ADDITIO N OF RS.18,05,486/- MADE ON ACCOUNT OF UNDISCLOSED PROFIT ON ESTIMATED UNACCOUNTED SALES FOR THE POST-SURVEY PERIOD. THE LD. SR. DR SUPPORTE D THE ASSESSMENT ORDER WHEREAS THE LD. COUNSEL FOR THE ASSESSEE DEFE NDED THE IMPUGNED ORDER. AFTER HEARING THE RIVAL SUBMISSIONS, WE FIND THAT IN PARA 5.3 OF THE IMPUGNED ORDER (PAGE 7), THE LD. CIT(A) HAS REPRODU CED THE SUBMISSIONS OF THE ASSESSEE, THEREFORE, THESE ARE NOT REPEATED FOR THE SAKE OF BREVITY AND THE SAME MAY BE READ AS PART OF THIS ORDER. THE RE IS AN UNCONTROVERTED FACT THE BOOKS OF ACCOUNTS HAD ALREA DY BEEN CROSS- CHECKED BY THE COMMERCIAL TAX AUTHORITIES AND THE B OOK RESULTS WERE 5 ACCEPTED BY THE DEPARTMENT. THE AUTHORITIES NEVER F OUND ANY TYPE OF AMBIGUITY. THE LD. CIT(A) HAS ALREADY CONSIDERED TH E DECISION IN SURAT DISTRICT CO-OPERATIVE MILK PRODUCER UNION LTD. VS. JCIT [99 TTJ (2006) (AHD) 390] AND THE DECISION FROM HONBLE AP HIGH CO URT IN T.B. CH. V. RAMANAIAH & SONS VS. CCT (1994) (95 STC 296, 298) ( AP), WHEREIN IT WAS HELD THAT WHERE EXCESS STOCK WERE FOUND AT THE INSPECTION IN EARLIER PART OF THE ASSESSMENT YEAR AND THERE IS A FINDING THAT THERE WAS NO IRREGULARITY, SUBSEQUENT TO SUCH INSPECTION, ADDITI ON FOR THE PROBABLE SUPPRESSION OF TURNOVER FOR THE SUBSEQUENT PERIOD W AS NOT JUSTIFIED, SUPPORTS THE CASE OF THE ASSESSEE. IN THE PRESENT A PPEAL, THE ASSESSEE HAS ALREADY SURRENDERED RS.40 LACS AS ADDITIONAL IN COME FOR TAXATION FOR THE SURVEY CONDUCTED ON 18.10.2004 TO COVER UP THE DEFECTS AND INFIRMITY FOUND AT DATE OF SURVEY, THEREFORE, FURTH ER ADDITION ON ACCOUNT OF UNDISCLOSED PROFIT ON ESTIMATED UNRECORDED SALES FO R THE POST SURVEY PERIOD CANNOT BE SAID TO BE JUSTIFIED, THAT TOO WIT HOUT POINTING ANY DEFECT, DEFICIENCY OR INCORRECTNESS IN THE BOOKS OF POST SU RVEY PERIOD, ESPECIALLY WHEN NOTHING WAS FOUND SUGGESTING THAT ANY SALES OU TSIDE THE BOOKS OF ACCOUNTS DURING POST-SURVEY PERIOD WERE MADE BY THE ASSESSEE. EVEN OTHERWISE, THE ASSESSING OFFICER IS NOT EXPECTED TO ESTIMATE UNACCOUNTED SALES THAT TOO ON THE BASIS OF MATHEMAT ICAL CALCULATION AS THAT IT WAS PURELY BASED ON ASSUMPTION ON A GENERAL HYPOTHESIS THAT THE ASSESSEE MUST HAVE BEEN MAKING UNRECORDED SALES DUR ING POST-SURVEY 6 PERIOD ALSO. WE ARE OF THE CONSIDERED OPINION THAT SUSPICION CANNOT TAKE THE SHAPE OF EVIDENCE, HOWEVER STRONG IT MAY BE, TH AT TOO WITHOUT CORROBORATION WITH EVIDENCE. IN VIEW OF THESE FACTS , WE FIND NO INFIRMITY IN THE IMPUGNED ORDER ON THIS ISSUE ALSO, THEREFORE, D ISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT IN THE PRESENCE OF L EARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON 15 TH JUNE, 2010. (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15.6.2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE !VYAS!