HARISH KUMAR HEDA, MUMBAI V. DCIT CIR 23(1), MUMBAI

ITA 965/MUM/2012

• Counselvise Citation: 96519914 RSA 2012
• Duration Of Justice: 3 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 22-12-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAKE OF CONVENIENCE; BREVITY GROUND NO
• Keywords: Wrong claim; Corroborative evidences
• Section: 153A; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H , MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO S . 965 , 967, 968 & 969 /M/2012 ASSESSMENT YEAR S : 2004 - 05 , 2006 - 07, 2007 - 08 & 2008 - 09 SHRI HARISH KUMAR HE DA, 2/A, VIVEK NIWAS, SAIBAUG SOCIETY, VILLAGE ROAD, BHANDUP (W), MUMBAI 400 078 PAN: AAAPH 3053Q VS. THE DY. COMMISSIONER OF INCOME TAX (DCIT), CIRCLE 23(1), MUMBAI (APPELLANT) (RESPONDENT) P RESENT FOR: ASSESSEE BY : SHRI VIJAY C. KOTHARI, A.R. REVENUE BY : SHRI SHASHI BHUSHAN PRASAD, D.R. DATE OF HEARING : 18.05. 201 5 DATE OF PRONOUNCEMENT : 14.08. 2015 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THESE FOUR APPEALS BY THE ASSESSEE ARISE OUT OF THE ORDERS OF THE EVEN DATE 14.12.2011 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A) ] PERTAINING TO A.YS. 2004 - 05, 2006 - 07, 2007 - 08 & 2008 - 09. AS COMMON ISSUES ARE INVOLVED IN THESE APPEALS, THE SAME WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE GROUND NO. 1 & 2 TAKEN BY THE ASSESSEE IN ALL THE APPEALS ARE AGAINST THE CONFIRMATION OF THE ADDITIONS ON ACCOUNT OF STOCK OF SILVER FOUND DURING THE SEARCH ACTION AND RECEIPT OF LABOUR CHARGES RESPECTIVELY . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DEALING IN BUSINESS OF MAKING/REPAIRING AND ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 2 POLISHING OF SILVER ORNAMENTS AND ARTICLE. HE VISITED RAIPUR AND DURING THAT PERIOD HE LOST HIS LUG GAGE C ONTAINING SOME DIARIES, WHICH WAS LATER RECOVERED BY THE RAILWAY POLICE FORCE, HOWEVER, THE SAME WAS NOT HANDED OVER TO THE ASSESSEE BUT INFO RMED TO THE DEPARTMENT. ON THAT BASIS, THE DEPARTMENT CONDUCTED A SEARCH ON THE ASSESSEE UNDER SECTION 132A. A LIST OF INVENTORY RECORDED IN DIARY WAS PREPARED. FROM THE CONTENTS OF THE DIARY, THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO) NOTED THAT THE ASSESSEE WAS INVOLVED IN THE BUSINESS OF SALE AND PURCHASE OF SILVER AND GOLD ARTICLES. THE CONTENT ION OF THE ASSESSEE THAT HE WAS NOT A TRADER OF BULLION BUT HE WAS RECEIVING THE GOODS ON BEHALF OF OTHERS FOR REPAIR AND ALSO TO MAKE JEWELLERY AND THER E BY WAS CHARGING ONLY THE LABOUR CHARGES, HOWEVER, WAS NOT ACCEPTED BY THE AO ON THE GROUND THAT THE AS SESSEE COULD NOT PRODUCE ANY EVIDENCE IN RESPECT OF THE SAME. THE AO, THEREFORE, MADE AN ADDITION OF RS.3 , 40 , 099/ - UN DER SECTION 69 OF THE ACT. AGGR I E VED BY THE SAID ADDITION, ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). 3 . THE LEARNED CIT(A), HOWEVE R, ALSO CONFIRMED THE ACTION OF THE AO IN MAKING THE ABOVE ADDITION. THE ASSESSEE HAS THUS COME IN APPEAL BEFORE US. 4. THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT ASSESSMENT FOR AY 2004 - 0 5 AND AY 2006 - 07 HAD ALREADY BEEN STOOD COMPLETED AS ON THE DATE OF SEARCH ON 13.5. 2008. HOWEVER, THE ASSESSMENTS IN RELATION TO AY 2007 - 08 AND AY 2008 - 09 STOOD ABATED ON THE DATE OF SEARCH . HE HAS FURTHER INVITED OUR ATTENTION TO THE SINGLE MEMBER BENCH DECISION OF THIS TRIBUNAL DATED 7.12.2012 IN ITA NO.S 964 AND 966 ? MUM/ 2012, VIDE WHICH THE ADDITIONS MADE PURSUANCE TO THE ABOVE STATED SEARCH ACTION IN RELATION TO AY 2003 - 04 AND AY 2005 - 06 HAS ALREADY BEEN DELETED BY THE TRIBUNAL. THE RELEVANT FINDINGS OF THE SMC BENCH OF THE TRIBUNAL ARE REPRODUCED AS UNDER: ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 3 A FTER CONSIDERING THE SUBMISSION AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE. I NOTED THAT FROM THE CONTENTS OF DIARY ITSELF, SHOWS THAT THE ASSESSEE HAS CHARGED LABOUR CHARGES AGAINST WEIGHT OF SILVER AND GOLD. LABOUR CHARGES RECEIVED BY THE ASSESSEE ARE MENTIONED IN THE LAST COLUMN BUT THIS FACT HAS BEEN IGNORED BY THE ASSESSING OFFICER. THE ASSESSEE HAS GIVEN EXPLANATION THAT HE IS NOT MAKING ANY SALE AND PURCHASE OF JEWELLERY BUT DURING THE BUSINESS OF MAKING JEWELLERY, HE MAKES AND REPAIRS THE SAME ON BEHALF OF THE OTHERS. THIS CONTENTION OF THE ASSESSEE WAS NOT FOUND FALSE, NEITHER ANY MATERIAL HAS BEEN BROUGHT ON RECORD THAT THE ASSESSEE IS INDULGED IN SALE AND PURCHASE OF GOLD AND SILVER JEWELLERY. W ITHOUT ANY MATERIAL, ANY ADVERSE INFERENCE DRAWN AGAINST THE ASSESSEE BY NOT ACCEPTING THE EXPLANATION GIVEN BY HIM BEFORE THE ASSESSING OFFICER, IN MY CONSIDERED VIEW, MAKING ADDITION ON ACCOUNT OF INVESTMENT IN JEWELLERY WORKS WAS NOT JUSTIFIED. THERE SH OULD BE SOME MATERIAL ON RECORD THAT THE ASSESSEE HAD INVOLVED IN SALE PURCHASE OF JEWELLERY EITHER OF SILVER OR GOLD. ACCORDINGLY, I DELETE THE ADDITION. 5 . THE L D. DR , BEFORE US , HAS NOT POINTED OUT ANY DISCREPANCY IN RELATION TO FACTUAL FINDINGS RECOR DED BY THE SMC BENCH OF THE TRIBUNAL. FACTS FOR AY 2004 - 05 AND AY 2006 - 07 ARE IDENTICAL, THE ASSESSMENT FOR THE ABOVE STATED ASSESSMENT YEARS HAD ALREADY BEEN COMPLETED, THE INCOME FROM LABOUR CHARGES HAD ALREADY BEEN DECLARED BY THE ASSESSEE IN HIS RETURN S OF INCOME FILED FOR THE RELEVANT ASSESSMENT YEARS. THERE BEING NO INCRIMINATING MATERIAL FOUND DURING THE SEARCH ACTION, ADDITION ON THE BASIS OF RE - APPRECIATION OF EVIDENCE, ESPECIALLY WHEN THERE IS NOTHING ON THE FILE TO DISPROVE THE SOURCE OF INCOME DECLARED IN THE ORIGINAL RETURNS OF INCOME MADE OF THE ASSESSEE, CAN NOT BE HELD TO BE JUSTIFIED. EVEN IN RELATION TO AY 2007 - 08 AND 2008 - 09, WE FIND THAT THE EXPLANATION OF THE ASSESSEE THA T HE WAS NOT A TRADER OF BULLION BUT HE WAS RECEIVING THE GOODS ON BEHALF OF OTHERS AND REPAIR TH OSE AND ALSO USED TO MAKE JEWELLERY AND ACCORDINGLY USED TO CHARGE LABOUR CHARGES APPEARS TO BE CORRECT. THERE IS NO EVIDENCE ON THE FILE TO PROVE THAT THE EXPLANATION OFFERED BY THE ASS E SSEE IS NOT CORRECT. THE ADDITIONS MADE ON THIS ISSUE ARE THEREFORE NOT SUSTAINABLE, THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 4 6 . GROUND NO.3 TAKEN IN THE APPEALS RELEVANT TO A.Y. 2004 - 05, 2006 - 07, 2007 - 08 AND GROUND NO.4 TAKEN IN THE APPEAL RELEVANT TO A.Y. 2008 - 09 ARE IN RELATION TO THE ADDITION OF AGRICULTUR AL INCOME. THE ASSESSEE IN ALL THE RELEVANT ASSESSMENT YEARS DECLARED THAT HE HAS A VERY SMALL AGRICULTURAL INCOME. IT HAD EXPLAINED BY THE ASSESSEE THAT THE AGRICULTURAL INCOME WAS EARNED FROM SALE OF AGRICULTURAL PRODUCE F ROM THE AGRICULTURAL LAND AT THE NATIVE PLACE OF THE ASSESSEE WHICH HAD BEEN CULTIVATED BY THE FATHER OF THE ASSESSEE. IT WAS ALSO EXPLAINED THAT THE SAID TRANSACTIONS WERE DONE IN RETAIL MARKET WHEREIN IT WAS NOT POSSIBLE TO PREPARE THE SALE OR PURCHASE INVOICE. 7 . WE MAY FIND THAT NO INCRIMINATING MATERIAL REGARDING BOGUS CLAIM AGRICULTURAL INCOME WAS FOUND DURING THE SEARCH ACTION. THE SMC BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION IN RESPECT OF AGRICULTURAL INCOME IN RESPECT OF A.Y. 2003 - 04 AND A.Y. 2005 - 06 OBSERVING AS UNDER: 3 . THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME AMOUNTING TO RS.33,122/ - AND RS.22,450/ - FOR THE ASSESSMENT YEARS 2003 - 04 & 2005 - 06, RESPECTIVELY. THE ASSESSING OFFICER TREATED THIS AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES FOR THE REASON THAT THE ASSESSEE COULD NOT FILE ANY SUPPORTING EVIDENCE . 4. THE LEARNED CIT(A) HAS ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. NOW, THE ASSESSEE IS IN APPEAL HERE BEFORE THE TRIBUNAL. 5. AFTER CONSIDERING THE SUBMISSI ON AND PERUSING THE MATERIAL ON RECORD, I FOUND THAT THE ASSESSEE DESERVES TO SUCCEED ON THE ISSUE FOR BOTH THE A SSESSMENT YEARS. IT IS NOTED THAT IN PAST ALSO THE AGRICULTURAL INCOME HAS BEEN SHOWN AND THE SAME HAS BEEN ACCEPTED BY THE DEPARTMENT ITSELF. IT IS FURTHER NOTED THAT THIS IS A CASE OF SEARCH UNDER SECTION 132A OF THE ACT, NO MATERIAL IN RESPECT OF AGRICULTURAL INCOME WAS FOUND. ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS, UNDER SECTION 143(3)/153A, THE ASSESSING OFFICER ENQUIRED ABOUT THE SOURCE OF AGRICULTURE INCOME AS EVIDENCE. THE ASSESSEE FILED REPLY, WHICH WAS NOT ACCEPTED. ON SIMILAR FACTS, THE AGRICULTURAL INCOME HAS BEEN ACCEPTED IN PAST. EVEN AND OTHERWISE WITHOUT ANY ADVERSE MATERIAL ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 5 IN CASE OF SEARCH, NO ADVERSE INFERENCE SHOULD HAVE BEEN DRAWN AGAINST THE ASSESSEE. THE ASSESSEE HAS SHOWN A PETTY AGRICULTURAL INCOME. THEREFORE, IT CANNOT BE SAID THAT ASSESSEE HAS BUILT UP CAPITAL UNDER THE GRAB OF AGRICULTURAL INCOME. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, I H OLD THAT THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE IS LIABLE TO BE ACCEPTED. ACCORDINGLY, I ALLOW THIS GROUND OF THE ASSESSEE FOR BOTH OF THE YEARS. 8. SINCE NO INCRIMINATING MATERIAL WAS FOUND DURING THE SEARCH ACTION, HENCE NO ADDITION ON TH IS ISSUE COULD HAVE BEEN MADE BY THE LOWER AUTHORITIES IN RESPECT OF ASSESSMENT YEARS IN WHICH THE ASSESS MENT HAD ALREADY STOOD COMPLETED I.E. A.Y. 2004 - 05 AND 2006 - 07 AND HENCE BEING IN AGREEMENT WITH THE FINDING OF THE SMC BENCH OF THE TRIBUNAL AS REPRO DUCED ABOVE, THE ADDITION ON THIS ISSUE IN RESPECT OF A.Y. 2004 - 05 AND 2006 - 07 IS ORDERED TO BE DELETED. HOWEVER, IN RESPECT OF ASSESSMENT YEAR 2007 - 08 AND 2008 - 09 WHERE THE ASSESSMENT STOOD ABATED, THE BURDEN WAS UPON THE ASSESSEE TO PRODUCE THE SOURCE OF AGRICULTURAL INCOME CLAIMED BY THE ASSESSEE. THOUGH THE AMOUNT OF AGRICULTURAL INCOME CLAIMED IS VERY SMALL, HOWEVER, THIS ALONE CANNOT BE AN EXCUSE FOR NON FURNISHING OF EVIDENCE IN THIS RESPECT. WE ACCORDINGLY CONFIRM THE ADDITION ON ACCOUNT OF DENI AL OF CLAIM OF EXEMPTION OF AGRICULTURAL INCOME IN RESPECT OF A.Y. 2007 - 08 & 2008 - 09. 9. GROUND NO.3 TAKEN IN THE APPEAL RELEVANT TO A.Y. 2008 - 09 IS RELATING TO THE ADDITION OF RS. 5,75,83 7 / - ON ACCOUNT OF VALUE OF THE SEIZED PROPERTY. THE ASSESSEE DURIN G THE SEARCH ACTION VIDE HIS STATEMENT DATED 23.06.08 HAD DECLARED AN INCOME OF RS.5 ,75,83 7 / - I.E. RS.2,84,237/ - BEING THE VALUE OF 13.792 KG OF SILVER AND RS.2,91,600/ - BEING CASH SEIZED. THE ASSESSEE, HOWEVER, IN HIS RETURN OF INCOME IN RESPONSE TO NOTI CE UNDER SECTION 153A OF THE ACT HAD NOT INCLUDED THE SAID AMOUNT OF RS .5,75,83 7 / - . ON BEING ASKED TO EXPLAIN, THE ASSESSEE SUBMITTED THAT THE VALUE OF STOCK HAD ALREADY BEEN ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 6 CONSIDERED IN THE P&L ACCOUNT OF THE ASSESSEE IN RESPECT OF CASH AMOUNT OF RS.2, 91,600/ - . THE SAME HAD BEEN ACCUMULATED ON ACCOUNT OF INCOME EARNED DURING THE PAST YEARS INCLUDING THE YEAR UNDER CONSIDERATION AND THE SAME WAS DULY DISCLOSED IN THE RETURN OF INCOME AS CASH IN HAND. THE AO, HOWEVER, OBSERVED THAT SUCH A PLEA WAS NOT R AISED BY THE ASSESSEE WHILE MAKING STATEMENT UNDER SECTION 131(1A) OF THE INCOME TAX ACT. HE OBSERVED THAT THE ASSESSEE HAD HIMSELF DECLARED THE ABOVE STATED INCOME, HENCE THE SAME WAS LIABLE TO BE INCLUDED AS UNDISCLOSED INCOME OF THE ASSESSEE. 10 . T H E LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE LETTER DATED 25.01.08 ADDRESSED TO ADDITIONAL DIRECTOR OF INVESTIGATION OF INCOME T AX WHEREIN THE ASSESSEE HAS EXPLAINED THE INCONVENIENCE FACED BY HIM DUE TO SEIZURE OF THE PROPERTY. THE ASSESSE ES BUSINESS/ PROFESSION WAS AT A STAKE. IT WAS UNDER SUCH CIRCUMSTANCES THAT THE ASSESSEE HAD MADE A STATEMENT TO DECLARE THE VALUE OF THE SILVER SEIZED AS HIS INCOME. THE SAID STATEMENT WAS RETRACTED BY THE ASSESSEE. THE CONTENTS OF THE LETTER DATED 25 .01.08 AND THE CIRCUMSTANCES UNDER WHICH THE BAG CONTAINING THE SILVER ARTICLES WAS SEIZED AND FURTHER TAKING INTO CONSIDERATION THE BUSINESS OF THE ASSESSEE BEING OF MAKING AND REPAIRING OF THE SILVER ITEMS OF THE CUSTOMERS ; T HE STATEMENT RECORDED BY THE ASSESSEE CANNOT BE SAID TO BE OUT OF HIS FREE WILL BUT UNDER THE COMPELLING CIRCUMSTANCES SO THAT THE ARTICLE SEIZED MAY BE REALIZED AND THE ASSESSEE MAY RETURN THE SAME TO HIS CUSTOMERS AND TO AVOID SERIOUS REPERCUSSIONS TO HIS BUSINESS. SINCE WE HAVE AL READY AGREED WITH THE FACTUAL FINDINGS OF THE SMC BENCH OF THE TRIBUNAL THAT THE ASSESSEE WAS IN THE BUSINESS OF REPAIRING AND MAKING OF SILVER ORNAMENTS, HENCE UNDER SUCH CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF THE SILVER FOUND DURING THE SEARCH ACTION ALSO NOT WARRANTED IN THIS CASE AND THE SAME ARE ACCORDINGLY ORDERED TO BE DELETED. ITA NOS.965, 967, 968 & 969/M/2012 SHRI HARISH KUMAR HEDA 7 11 . IN THE RESULT, THE APPEALS OF THE ASSESSEE RELEVANT TO A.Y. 2004 - 05, 2006 - 07 ARE ALLOWED AND THE APPEALS RELEVANT TO A. Y. 2007 - 08 & 2008 - 09 ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.08.2015 . SD / SD/ ( G.S. PANNU ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.08. 201 5 * KISHORE , SR. P.S. COPY TO: THE APPEL LANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.