Shri Harikrishna Rathi, V. The ITO,

ITA 97/IND/2008

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1527 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 20-10-2009
• Assessment Year: 2004-2005
• Appeal Filed On: 12-03-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: S S MUNDRA
• Keywords: Loose papers; Opportunity of being heard
• Section: 142(1); 133A; 143(2)

Judgement Text

PAGE 1 OF 7 IN THE INCOME TAX APPELATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI V.K. GUPTA, AM ITA NO.97/IND/2008 AY: 2004-05 HARIKRISHNA RATHI PROP. RATHI BROTHERS, SADAR BAZAR, MANASA, NEEMUCH, (MP) (PAN ACZPR 0147 A) ..APPELLANT V/S. ITO, NEEMUCH ..RESPONDENT ASSESSEE BY : SHRI S.S. MUNDRA, CA DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER PER JOGINDER SINGH, JM THIS APPEAL IS BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-UJJAIN, DATED 20.12.2007 FOR THE AY 2004-05 ON THE FOLLOWING GROU NDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) IS NOT JUSTIFIED IN: - A) CONFIRMING THE ADDITION OF RS.918800/- MADE BY INCO ME TAX OFFICER AS ALLEGED INVESTMENT OUT OF BOOKS; B) CONFIRMING THE ADDITION OF RS.469357/- MADE BY INCO ME TAX OFFICER AS ALLEGED DIFFERENCE IN STOCK; C) SUSTAINING G.P. ADDITION TO THE EXTENT OF RS.74400/ - (AGAINST RS.122800/- MADE BY INCOME TAX OFFICER) BY APPLYING G.P. RATE OF 1.86% ON SALES ESTIMATED AT RS.4000000/- (AGAINST RS.3512618/-) IS EXCESSIVE. FURTHER INSTEAD OF APPLICATION OF G.P. RATE, NET PR OFIT PAGE 2 OF 7 RATE SHOULD HAVE BEEN APPLIED ON ESCAPED SALES AS P ER M.P. HIGH COURT JUDGMENT IN CASE OF BALCHAND AJITKU MAR VS. CIT REPORTED AT (2003) 263 ITR 610; D) SUSTAINING G.P. ADDITION TO THE EXTENT OF RS.111865 /- PERTAINING TO POST SURVEY PERIOD BY REJECTING BOOK VERSION WHEN NO DISCREPANCY IN POST SURVEY PERIOD H AS BEEN FOUND; E) NOT ALLOWING CREDIT BY TELESCOPING THE ADDITIONS MA DE AS WELL AS OFFERED AS INCOME BY THE ASSESSEE IN THE FO RM OF EXCESS CASH FOUND AT THE TIME OF SURVEY AT RS.11564 3/- WHICH HAS NOT BEEN CREDITED IN ACCOUNT BOOKS. 2. MATERIAL ON RECORD HAS NOT PROPERLY BEEN APPRECI ATED. 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I S.S. MUNDRA, LD. COUNSEL FOR ASSESSEE AND SMT. APARNA KARAN, LD. SR. DR. THE CRUX OF ARGUMENTS ADVANCED ON BEHALF OF THE ASSESSEE IS THA T SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 13.8.2003, WHERE IN, AN AMOUNT OF RS.15,03,800/- (RS.9,18,800 FOR ALLEGED UNRECORDED PAYMENTS TO AGRICULTURISTS, RS.4,69,357 ON ACCOUNT OF ALLEGED E XCESS STOCK AND RS.1,15,643 ON ACCOUNT OF EXCESS CASH) WAS GOT SURRENDERED BY E XERCISING UNDUE/HEAVY PRESSURE UPON THE ASSESSEE. AS PER THE ASSESSEE, TH E SURVEY PARTY TOOK POST DATED CHEQUES FROM THE ASSESSEE FOR THE PAYMENT OF ADVANCE TAX. HOWEVER THE ASSESSEE VIDE LETTER DATED 16.1.2004 REQUESTED THE ASSESSING OFFICER NOT TO PRESENT THE POST DATED CHEQUE OBTAINED DURING SU RVEY ON THE PLEA THAT THERE IS NO LIABILITY UPON THE ASSESSEE TO PAY TAX. OUR ATTENTION WAS INVITED TO PAGE 11 OF THE PAPER BOOK. IT WAS PLEADED THAT COER CIVE METHOD WAS ADOPTED BY THE SURVEY PARTY BY NOT FOLLOWING THE NORMAL PRO CEDURE. MR. MUNDRA FURTHER CONTENDED THAT NO COGNIZANCE WAS TAKEN BY T HE SURVEY PARTY OF 82 LOOSE PAPERS FOUND AT THE PREMISES OF THE ASSESSEE AND EVEN THERE WAS NO PAGE 3 OF 7 MENTION OF THESE PAPERS IN THE STATEMENT. IT WAS ST RONGLY PLEADED THAT THE IMPUGNED PAYMENTS WERE APPEARING IN THE BOOKS OF AC COUNTS. OUR SPECIFIC ATTENTION WAS INVITED TO PAGES 12 TO 14 OF THE PAPE R BOOK CONTAINING THE STATEMENT RECORDED FROM THE ASSESSEE TO THE EFFECT THAT EVEN IT WAS NOT SIGNED BY THE OFFICER OF THE DEPARTMENT. RELIANCE W AS PLACED UPON THE DECISION OF THE TRIBUNAL IN ITO VS. ANAND CHHABRA ( 2007) (107 TTJ (JD) 831). ON THE OTHER HAND, THE LD. SR. DR MRS. APARNA KARAN STRONGLY DEFENDED THE IMPUGNED ORDER/ASSESSMENT ORDER BY CONTENDING THAT A MAKE BELIEVE STORY WAS CONCOCTED BY THE ASSESSEE, THE PAYMENTS WERE NO R RECORDED BY THE ASSESSEE, CONSEQUENTLY, THE IMPUGNED ORDER WAS STRO NGLY DEFENDED. IN REPLY, THE LD. COUNSEL FOR ASSESSEE STRONGLY CONTENDED THA T EVEN THE MATERIAL ON RECORD WAS NOT PROPERLY APPRECIATED BY THE ASSESSIN G OFFICER. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON THE FIL E. BRIEF FACTS ARE THAT THE ASSESSEE IS DOING SALE & PURCHASE OF AGRICULTURAL C OMMODITY. ON 13.8.2003, A SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE PRE MISES OF THE ASSESSEE. NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, CONSEQU ENTLY, NOTICE U/S 142(1) WAS ISSUED TO THE ASSESSEE WHICH REMAINED UNSERVED. AS PER THE REVENUE, A DETAILED QUESTIONNAIRE ALONG WITH NOTICE U/S 142(1) WAS DULY SERVED UPON THE ASSESSEE ON 5.8.2005 TO WHICH THE ASSESSEE DECLARED LOSS OF RS.2,85,720/- IN ITS RETURN ON 14.10.2005 WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT. THE ASSESSEE FILED TAX AUDIT REPORT ON 1.11.2004 IN FOR M 3CB & 3CD. SINCE THE PAGE 4 OF 7 CASE WAS SELECTED FOR SCRUTINY, THEREFORE, NOTICE U /S 143(2) AND 142(1) ALONG WITH DETAILED QUESTIONNAIRE WERE ISSUED TO THE ASSE SSEE. THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND PROD UCED BOOKS OF ACCOUNTS, BILLS AND VOUCHERS ETC. WHICH WERE TEST-CHECKED BY THE ASSESSING OFFICER. WHILE FILING THE RETURN, THE ASSESSEE RETRACTED THE SURRENDER MADE ON ALLEGED UNRECORDED PAYMENTS TO AGRICULTURISTS AND EXCESS ST OCK BY CLAIMING THAT FIRSTLY THERE WAS NO EXCESS STOCK AND SECONDLY THE PAYMENTS MADE TO AGRICULTURISTS WERE DULY RECORDED, CONSEQUENTLY, NO TAX LIABILITY AROSE TO THE ASSESSEE. DURING HEARING OF THIS APPEAL, THE LD. COUNSEL FOR ASSESSEE INVITED OUR ATTENTION TO PAGE 11 OF THE PAPER BOOK, WHEREIN, VI DE LETTER DATED 16.1.2004, THE ASSESSEE CLAIMED THAT FIRSTLY, NO TAX LIABILITY ARISES TO THE ASSESSEE AND SECONDLY, THE CHEQUES OF ADVANCE TAX MAY NOT BE DEP OSITED. AS FAR AS THE STATEMENT RECORDED ON 13.8.2003 IS CONCERNED, WE HA VE FOUND THAT THERE IS NO SIGNATURE OF THE CONCERNED OFFICER ON THE CONCLU DING PAGE. HOWEVER, ONLY OATH PORTION HAS BEEN DULY SIGNED BY THE ITO. AS PE R THE NORMAL PROCEDURE, THE CONCERNED OFFICER IS SUPPOSED TO PUT HIS/HER SI GNATURE ON THE CONCLUDING PAGE. EVEN IF THE STATEMENT IS ADMITTED TO BE CORRE CT STILL IN RESPONSE TO QUESTION NO.5, THE ASSESSEE EXPLAINED THAT THE LIST PREPARED FROM THE LOOSE PAPERS IS THE LIST OF THE AMOUNTS RECEIVED FROM FAR MERS. THE ASSESSEE VIDE LETTER DATED 8.8.2005 (DULY RECEIVED BY THE OFFICE OF THE ITO) HAS ASKED THE ASSESSING OFFICER TO PROVIDE THE CERTIFIED COPIES O F DOCUMENTS MENTIONED IN THE INVENTORY/BOOKS OF ACCOUNTS. THE ASSESSEE AGAIN VIDE LETTER DATED PAGE 5 OF 7 10.7.2009 (DULY RECEIVED IN THE OFFICE OF ITO ON 16 .7.2009) ASKED FOR SUPPLY OF DOCUMENTS. IN RESPONSE TO QUESTIONNAIRE DATED 16 .11.2006, THE ASSESSEE VIDE LETTER DATED 24.11.2006 EXPLAINED AS UNDER: (2) :- 918800/- DK FDLKUKSA DKS TKS HKQXRKU FD;K X;K GS OG MULS [KJHNH D`F'K MIT OLRQ DH CDK;K JDE DK HQXRKU GSA BL LACA/KH FOXR LAYXU IZLRQR I=D ESA NH XBZ GSA FGLKCH IQLRDSA VOYKSDUKFKZ IZLRQR GSA [KJHNH ,OA DKRDKJKSA DKS FD, X, HKQXRKU FGLKCH IQLRDKSA ESA NTZ GSA A LOSZ DS LE; UNDER PRESSURE ESJS C;KU NTZ FD, X, FKS ,OA NCKO NSDJ JDE SURRENDER DJKBZ XBZ FKHA 3 LOSZ DS LE; HKKSFRD LR;KIU IJ TKS LVKD EKY IK;K X;K FKK MLDK FEYKU YS[KK IQLRDKSA ESA NTZ LVKD LS GKS JGK GS A LOSZ FN- 13/08/03 DKS FGLKCH IQLRDKSA DS VUQLKJ TKS EKY CSYSUL FKK ML DK I=D LAYXU IZLRQR GSA BLDK FEYKU HKKSFRD LR;KIU IJ IK, X, LVKD LS CJK CJ GKSRK GS A M+JK /KEDKDJ ,OA NCKO M+KYDJ EQ>LS LVKD VARJ EN ESA :- 469357 @& DK SURRENDER DJK;K X;K FKKC;KU ESA :- 375000 @& EWY; DK EKY FGLKCH IQLRDKSA DS VUQLKJ LVKD GKSUK FY [KK GSA BLDH FOXR LS D`I;K VOXR DJKUS DK D'V DJSAA HKKSFRD LR;KIU IJ IK;K X;K LVKD FGLKCH IQLRDKSA LS MATCH GKSRK GSAA YS[KK IQLRDSA VKIDS VOYKSDUKFKZ ,OA RLNHD GSRQ IZLRQR GSA THE CONCLUSION DRAWN IN THE IMPUGNED ORDER IS AS U NDER: 1.2 THE A/R FOR THE APPELLANT IN HIS WRITTEN SUBMISSION HAS REPRODUCED THE SAME ARGUMENTS AS GIVEN BEFORE THE AO. I AGREE WITH THE AO THAT IT IS TOTALLY UNBELIEVABLE THAT THE APPELLANT HAS MADE TH ESE PAGE 6 OF 7 PAYMENTS TO 29 PARTIES ON 12.08.03 I.E. A DATE BEFO RE THE DATE OF SURVEY (13.08.03) AND HE WAS NOT REMEMBERING IT ON THE DATE OF SURVEY AND SURRENDERE D THESE PAYMENTS AS UNDISCLOSED INCOME. I AM CONVINCED THAT IT IS ONLY AN AFTER THOUGHT AND MADE UP STORY TO JUSTIFY THE PAYMENTS MADE OUT OF BOOKS. THEREFORE, THE ADDITION MADE BY AO AMOUNTING TO RS.9,18,800/- IS CONFIRMED. 4. IF THE AFORESAID EXPLANATION ALONG WITH PAGES 19 TO 22 OF THE PAPER BOOK AND THE CONCLUSION DRAWN IN THE IMPUGNED ORDER , IF ANALYSED, SOME CLEAR FACTS OOZING OUT ARE THAT FIRSTLY, AS CLAIMED BY TH E ASSESSEE, THE SURRENDER WAS NOT VOLUNTARY, 82 LOOSE PAPERS, FOUND DURING SURVEY , CONTAINING ENTRIES OF ALLEGED UNRECORDED TRANSACTIONS WERE NOT APPRECIATE D PROPERLY BY THE ASSESSING OFFICER AND THERE IS NO MENTION OF THESE PAPERS WHILE RECORDING THE STATEMENT. THE AMOUNT OF RS.9,18,800/-, PAYMENTS FR OM AGRICULTURISTS (LIST OF UGRANI), THOUGH NOT CREDIT IN THE BOOKS OF ACCOUNTS , AS CLAIMED BY THE ASSESSEE, IT WAS A SOYABEAN PURCHASE FROM VARIOUS A GRICULTURISTS AND THE AMOUNT WAS PART PAYMENT WHICH WAS OUTSTANDING AND P AID BEFORE THE SURVEY. EVEN THERE IS NO MENTION AS TO HOW THE AMOUNT OF RS .4,69,357/- WAS ARRIVED AT FOR EXCESS STOCK. DURING ARGUMENT OF THIS APPEAL , THE LD. COUNSEL FOR ASSESSEE CONTENDED THAT THE IMPUGNED SURRENDER OF R S.9,18,800/- AND RS.4,69,357/- WAS GOT DONE AGAINST THE CBDT INSTRUC TION (CIRCULAR NO.F286/2/2003-IT(INV.)DATED 10.3.2003) (PAPER BOOK PAGE 101). IT WAS ALSO PLEADED THAT WHEN THE ASSESSEE PROVED THE PAYMENT O F RS.9,18,800/- BY PRODUCING CASH BOOK ON THE DATE OF SURVEY AS WELL A S THE AFFIDAVITS OF AGRICULTURISTS (DURING ASSESSMENT PROCEEDINGS), THE ONUS WAS NOT DISCHARGED PAGE 7 OF 7 BY THE REVENUE. IN THE LIGHT OF THESE FACTS, AND TH E DECISION FROM THE HONBLE DELHI HIGH COURT IN CIT VS. ANAND KR. DEEPAK KUMAR (294 ITR 497), THE DEPARTMENT IS SUPPOSED TO CONSIDER THE AFORESTATED FACTS. EVEN IN THE IMPUGNED ORDER, THE LD. FIRST APPELLATE AUTHORITY M ERELY AGREED WITH THE LD. ASSESSING OFFICER AND CONCLUDED THAT IT WAS AN AFTE R-THOUGHT OF THE ASSESSEE THAT TOO WITHOUT ASSIGNING ANY REASON/INDEPENDENT F INDING, CONSEQUENTLY, WE HAVE NO OPTION BUT TO REMAND THIS APPEAL TO THE FIL E OF THE LD. ASSESSING OFFICER FOR FRESH ADJUDICATION IN ACCORDANCE WITH L AW. NEEDLESS TO MENTION HERE THAT DUE OPPORTUNITY OF BEING HEARD BE PROVIDE D TO THE ASSESSEE. THE ASSESSEE IS ALSO AT LIBERTY TO FURNISH EVIDENCE, IF ANY, TO SUBSTANTIATE ITS CLAIM. THIS APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTI CAL PURPOSES ONLY. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES ON 20.10.2009 AT THE CONCLUSION OF THE H EARING. SD/- SD/- (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20.10.2009 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR