M/s. veerumal Jewellers, Kolhapur V. ITO Central II, Kolhapur

ITA 906/PUN/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3178 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MITHALI
• Keywords: Income from undisclosed sources; Document seized; Documents seized
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 906/PN/09 (ASSTT. YEAR 2007-08) M/S. VEERUMAL JEWELLERS 152/12, SIRU CHOWK, GANDHINAGAR, KOLHAPUR PAN NO. AADFV8899H .... APPELLANT VS. ITO, CENTRAL-II, KOLHAPUR . RESPONDENT APPELLANT BY : SHRI M.K. KULKARNI RESPONDENT BY : MS.MITHALI ORDER PER D. KARUNAKARA RAO AM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), KOLHAPUR DATED 27/02/2009 FOR THE A.Y 2007-08. GROUND S READ AS UNDER:- 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. C.I.T(A) WAS NOT JUSTIFIED IN CONFIRMING THE A DDITION OF RS. 9 LAKHS MADE BY THE A.O BEING STOCK DIFFERENCE WORTH 1KG OF GOLD IN AN ASSESSMENT U/S. 153-A(B) OF THE ACT, AS UNDISCLOSED INCOME WHEN NOTHING WAS RECOVERED IN SEARCH ACTION U/S. 132 AND SIMPLY DISBELIEVING THE STATEMENT OF THE APPELLANT. THE ADDITION BEING UNWA RRANTED BE DELETED. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE ASSESSEE DENIES ITS LIABILITY TO PAY INTEREST U/S. 234-A, 234-B AND 234-C OF THE ACT AND THE SAME BE DELETED. 2. DURING THE PROCEEDINGS BEFORE US, LD. COUNSEL FOR T HE ASSESSEE READ OUT PARA 4 AND 5 OF THE IMPUGNED ORDER AND ARGUED STATING T HAT THE CIT(A) CONFIRMED THE ADDITION MERELY RELYING UPON THE STATEME NT GIVEN U/S 132(4) OF SRI ASHOK V RUPANI, A PARTNER IN THE ASSESSEE-FIRM AND ST ATED THAT THE ANSWERS TO QUESTION NO. 12 & 14 OF THE SAID STATEMENT ARE RELE VANT. FURTHER, HE ARGUED STATING THAT THE ANSWER TO QUESTION NO. 22 IS ALSO I MPORTANT AS THE ASSESSEE ITA NO. 906/PN/09 A.Y: 2007-08 PAGE 2 OF 5 DISCLOSED UNACCOUNTED INCOME OF RS. 1.87 CRORES AFTER CONSIDERING ALL THE DISCREPANCIES. ON THE OTHER HAND, SMT MITHALI MADHUSM ITHA, LD CIT DR FOR THE REVENUE ARGUED STATING THAT REPLY TO QUESTION NO. 12 IS GIVEN SUE MOTTO BY SHRI ASHOK V. RUPANI THOUGH IT WAS SUBSEQUENTLY CHANGED IN ANSWER TO QUESTION NO. 13 OF THE SAID STATEMENT. SHE FURTHER FAIRLY MENTION ED THAT THERE IS NO SEIZURE OF ANY DOCUMENT TO SUPPORT THAT THE SAID RS 9 LAKHS IS TO BE ADDED AS UNDISCLOSED INCOME OF THE ASSESSEE OVER AND ABOVE THE ADMITTED U NDISCLOSED INCOME OF RS. 1.87 CRORES. 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AND PAPER BOOK FILED BEFORE US, ALSO GONE THROUGH PARA 4 AND 5 OF THE CIT(A) WHICH ARE AS FOLLOWS:- 4. ADDITION ON ACCOUNT OF EXCESS STOCK OF RS. 9 LA CS. IT IS MENTIONED IN THE ASSESSMENT ORDER THAT STOCK AS PER PHYSICAL INVENTORY FOUND DURING THE SEARCH ON THE APPELLANT WAS RS. 3,84,06,102/- WHEREAS THE STOCK AS PER THE BOOKS WAS ONLY RS. 1,9 6,57,275/-. THE APPELLANT SURRENDERED THE EXCESS STOCK OF RS. 1,87, 48,827/-. SHRI ASHOK RUPANI, PARTNER, HOWEVER IN HIS STATEMENT RECORDED U/S. 132(4) HAD STATED THAT 1 KG OF GOLD WAS GIVEN TO SHRI HARILAL RUPANI FOR MANUFACTURING AND HAD NOT BE RECEIVED BACK. THE ISSUE VOUCHER FOR THE GOLD GIVEN TO SHRI HIRALAL RUPANI HAD NOT BEEN PREPARED AS THE TR ANSACTION WAS ONLY DONE 2 TO 3 DAYS EARLIER. THE RATE OF GOLD WAS ADOP TED AT RS. 9000/- PER 10 GM AND AN AMOUNT OF RS. 9 LAC WAS ADDED TO THE E XCESS STOCK FOUND IN THE ASSESSMENT U/S.153A. THE APPELLANT REITERATED TH E SUBMISSIONS MADE BEFORE THE AO STATING AS UNDER: IN THE NOTICE ISSUED U/S. 142(1) THE ASSESSEE WAS ASK ED TO EXPLAIN WHY THE EXCESS STOCK OF RS. 1,96,48,827/- SHOULD NOT BE TREATED AS UNDISCLOSED INCOME. THIS INCLUDED, ACCORDING TO THE AO THE 1 KG GOLD GIVEN TO SHRI HARILAL RUPANI FOR MAKING GOLD ORNAMENTS TWO-THREE DAYS BACK V ALUED OF RS. 9,00,000/- WHICH HAS NOT YET BEEN RECEIVED BACK. THE ASSESSEE HAD REPLIED THAT IN THE COURSE OF SEARCH ACTION SUCH EXCESS GOLD WAS NOT FOUND EVEN AT THE RESIDENCE AND BUSINESS PREMISES OF SHRI HARILAL RUPANI. THE ASSESSEE IN TURN ASKED THE LD. AO TO FURN ISH ANY INFORMATION IN HIS POSSESSION IN SUPPORT OF SUCH EXCESS GOLD STOCK FOUND AND/OR AVAILABLE. THE ASSESSEE STATED IT IS ONLY A PRESUMPTION. THE EXPLANATION OF THE ASSESSEE WAS NOT ACCEPTABLE TO THE A.O FOR THE REASONS MENTIONED IN THE ASSESSMENT ORDER. ACCORDING T O LD. AO(1) THE MANUFACTURING WAS DONE THROUGH UNCLE SHRI HARILAL RUPANI, (2) THE SEIZED PAPERS BEAR THE TESTIMONY THAT GOLD IS REGULARLY ISSUED TO SHRI H ARILAL RUPANI, (3) SHRI HARILAL IS LICENSED GOLDSMITH, (4) AND SEIZED PAPERS EVIDENCE THE GOLDSMITH VOUCHERS AND ALSO GOLD VOUCHERS INDICATING RECEIPT OF ORNAMENTS FROM SHRI HIRALAL A. RUPANI. 5. I HAVE CONSIDERED THE SUBMISSION. IN HIS STATEME NT DURING 132(4), SHRI RUPANI CLEARLY STATED THAT QUANTITY OF GOLD WA S GIVEN TO SHRI HARILAL RUPANI FOR WHICH THE ISSUE VOUCHER HAD NOT YET BEEN PREPARED. HE HAD ALSO STATED IN REPLY TO QUESTION NO. 8 THAT MANUFAC TURING OF JEWELLERY IS DONE ENTIRELY THROUGH HIS UNCLE SHRI HARILAL RUPANI FOR MANUFACTURING ITA NO. 906/PN/09 A.Y: 2007-08 PAGE 3 OF 5 JEWELLERY. THE APPELLANT HAS NOT GIVEN ANY CONVINCI NG REASON WHY THE STATEMENT OF THE PARTNER SHOULD NOT BE TAKEN AS TRU THFUL. THE ONLY CONTENTION OF THE APPELLANT APPEARS TO BE THAT THE GOLD GIVEN TO SHRI HARILAL RUPANI SHOULD HAVE BEEN FOUND IN HIS POSSES SION SINCE SHRI HARILAL RUPANI WHO ALSO RESIDED IN THE SAME PREMISES IN WHI CH THE SEARCH WAS CONDUCTED. 4. WE HAVE ALSO GONE THROUGH QUESTIONS AND ANSWERS AT THEIR SL. NO 12, 14 AND 22 OF THE STATEMENT OF SRI ASHOK V RUPANI PLACED AT PAGE 4 OF THE PAPER BOOK AND THE SAME ARE REPRODUCED BELOW:- Q12. PLEASE STATE THE QUANTITY OF GOLD GIVEN FOR MANUFACTURING AND NOT RECEIVED BY YOU AS ON DATE? ANS. NEARLY 1KG OF GOLD IS GIVEN FOR MANUFACTURING TO SHRI HIRALAL RUPANI WHICH IS NOT YET RECEIVED BACK IN THE FORM OF GOLD ORNAMENTS. ISSUE VOUCHER FOR THIS IS NOT PREPARED. THE SAME WAS GIVE N 2-3 DAYS BACK. . .. Q 14. PLEASE REFER TO YOUR REPLIES TO Q NOS. 8 AND 9 IN THE FOREGOING STATEMENT WHEREIN YOU HAVE STATED THAT THE GOLD JEW ELER IS BEING MANUFACTURED FROM SHRI HIRALAL A. RUPANI WHEREIN I INVITE YOUR ATTENTION TO THE REPLY TO Q NO. 11 OF THE STATEMENT OF SHRI HIRALAL A. RUPANI WHEREIN HE HAS STATED THAT HE IS NOT DOING A NY SORT OF MANUFACTURING ACTIVITY OF GOLD ORNAMENTS. HE DOES O NLY REPAIRING AND POLISH WORK. HE HAS ALSO STATED THAT HE DID NOT RECEIVED ANY GOLD BAR FOR MANUFACTURING OF GOLD ORNAMENTS FROM M /S. VEERUMAL JEWELLERS. IN THESE REGADS, WHAT YOU HAVE TO SAY? ANS. AFTER GOING THROUGH MY EARLIER REPLIES AND STA TEMENT OF SHRI HIRALAL RUPANI. I AGREE THAT I HAVE GIVEN INCORRECT STATEMENT. MY UNCLE, SHRI HIRALAL RUPANI DOES EXCLUSIVE REPAIRING AND PO LISHING WORK FOR M/S. VEERUMAL JEWELLERS. SOME MINOR JOBS ARE ALSO DO NE BY HIM. MOST OF THE ITEMS OF THE SHOP ARE PURCHASED FROM MA NUFACTURERS AND BUSINESSMAN FROM MUMBAI AND ULHASNAGAR. ABOUT T HINS, MY BROTHER SHRI JAYDEO RUPANI HAS ALREADY REPLIED IN H IS STATEMENT RECORDED ON 02-11-2006. .. .. . Q 22. DO YOU WANT TO SAY ANYTHING ON YOUR OWN? ANS. YES, I WISH TO MAKE FOLLOWING DECLARATION ON B EHALF OF M/S. VEERUMAL JEWELLERS IN THE CAPACITY OF PARTNER WHICH WILL BE BINDING ON AND WE WILL PAY DUE TAX WITHIN THE LIMITS PROVID ED BY THE INCOME-TAX ACT. 1. DIFFERENCE IN STOCK FOUND AT THE BUSINESS PREMI SES RS. 1,87,48,827/- ROUNDED TO RS. 1,88,00,000/- 2. CASH A. EXCESS CASH FOUND AT RESIDENCE RS. 4,00,000/ - B. EXCESS CASH FOUND AT THE BUSINESS PREMISES RS. 8,00,000/- ITA NO. 906/PN/09 A.Y: 2007-08 PAGE 4 OF 5 3. OTHER DISCREPANCY FOUND, IF ANY- RS. 1,60,000/ - TO SUM UP, THE DECLARATION IS MADE AS UNDER:- 1. SHRI JAYDEO V. RUPANI 2007-08 4,00,000/- CAS H 2. M/S. VEERUMAL JEWELLERS 8,00,000/- CASH 1,88,00,000/- EXCESS STOCK 1,60,000/- DISCREPANCY ______________ TOTAL 2,01,60,000/- _______________ WHATEVER STATED ABOVE IS TRUE AND CORRECT TO THE BE ST OF MY KNOWLEDGE AND BELIEF. I HAVE GONE THROUGH THE STATEMENT AND S TATE THAT IT IS RECORDED AS STATED BY ME. NO COERCION OR THREAT WAS INDUCED ON ME WHILE GIVING THE STATEMENT. I AGREE WITH THE STATEMENT GI VEN BY MY BROTHER SHRI ASHOK V. RUPANI WHICH WILL BE BINDING ON ME. 5. FROM THE ABOVE IT IS EVIDENT THAT ADMITTEDLY THERE NO SEIZED DOCUMENTS TO SUPPORT THE ADDITION OF RS 9 LAKHS OVER AND ABOVE TH E ADMITTED INCOME OF RS 1.87 CRORES(ROUNDED OFF). THE ASSERTIONS MADE IN THE AN SWER TO QUESTION NO 12 OF THE STATEMENT WAS SUBSEQUENTLY AMENDED AS AN INC ORRECT STATEMENT. THE AO DID NOT OBJECT TO THE CHANGE OF THE STATEMENT. IN F ACT SUMMARIZATION OF UNDISCLOSED INCOME AT RS. 1.87 CRORES U/S. 132(4) WAS ALLOWED BY THE OFFICER WHO HAS TAKEN THE DEPOSITION OF THE STATEMENT U/S 132(4 ) OF THE ACT. ON FACTUAL MATRIX OF (I) MERE A STATEMENT U/S 132(4) OF THE ACT AND (II) WHEN IT WAS AMENDED DURING THE MAKING OF THE STATEMENT ITSELF IE WITHIN THE SAME DAY, MAKING THE ADDITION OF RS. 9,00,000/- ON ACCOUNT OF EXCESS STOCK OVER AND ABOVE UNDISPUTED ADMISSION OF ADDITIONAL UNRECORDED INCOME RS. 1.87 CRORES ON ACCOUNT OF AGAIN EXCESS STOCK IS NOT A SUSTAINABLE BONA FIDE ADDITION. THEREFORE, WE ARE OF THE OPINION THAT ORDER OF THE CIT(A) HAS TO BE REVERSED AND THE GROUNDS IN THE ASSESSEES APPEAL ARE ALLOWED . 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 12 TH NOVEMBER, 2010. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 12 TH NOVEMBER, 2010 R ITA NO. 906/PN/09 A.Y: 2007-08 PAGE 5 OF 5 COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. ITO, CENTRAL-II, KOLHAPUR 3. CIT(A), KOLHAPUR 4. CIT-I, KOLHAPUR 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE