Shri Mangilal Choudhary, Ujjain V. The I.T.O., Shajapur

ITA 97/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2806 (ITAT-INDORE)
• Duration Of Justice: 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 19-02-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Assessee Lawyers: SSH H P VERMA
• Keywords: Business income; Loose papers
• Section: 143(3); 133A; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE SMC BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NOS.96 & 97/IND/2010 AYS: 2005-06 & 2006-07 MANGILAL CHOUDHARY PROP. M/S. CHOUDHARY SHOPPING CENTRE PAN ACYPC 7821 P C/O. M/S. O.P. GARG & CO., 17-A, GUJARATI SAMAJ BHAWAN, NEW ROAD, UJJAIN ..APPELLANT V/S. ITO, SHAJAPUR ..RESPONDENT APPELLANT BY : S/SH. H.P. VERMA & ASHISH GOYAL DEPARTMENT BY : SMT. APARNA KARAN, SR. DR ORDER BOTH THESE APPEALS ARE BY THE SAME ASSESSEE AGAINS T THE DIFFERENT ORDERS OF THE LD. CIT(A)-UJJAIN, DATED 15 .12.2009 FOR THE AYS 2004-05 & 2005-06 WHEREIN FOLLOWING COMMON GROUNDS HAVE BEEN RAISED: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED I N MAINTAINING THE ADDITION OF RS.2,27,405/- AND RS.1,29,805/-, RESPECTIVELY, ON ACCOUNT OF G.P. 2 @10% ON ALLEGED UNRECORDED SALES OF RS.22,74,050/- AND RS.12,98,050/-, RESPECTIVELY. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY FURTHER ERRED IN NOT ACCEPTING THE ALTERNATE SUBMISSION OF THE ASSESSEE THAT INSTEAD OF G.P. RATE, ADDITION SHOULD BE APPLIED ON N.P. AS PER PROVISIONS OF SEC. 44AF OF THE ACT. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. FIRST APPELLATE AUTHORITY ERRED I N ENHANCING THE ADDITION BY RS.44,938/- AND RS.17,962/-, RESPECTIVELY, ON ACCOUNT OF LOOSE PAPERS. 2. DURING HEARING OF THIS APPEAL, I HAVE HEARD SHRI H.P. VERMA ALONG WITH ASHISH GOYAL, LD. COUNSEL FOR ASSESSEE AND SMT . APARNA KARAN, LD. SR. DR. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSE SSEE IS THAT THE ASSESSEE IS RETAIL DEALER IN TRADING OF CLOTH AND O THER HOUSE HOLD ITEMS. SURVEY WAS CONDUCTED ON 20.10.2004, AT THE BUSINESS PREMISES OF THE ASSESSEE, WHEREIN A DIARY AND CERTAIN LOOSE PAPERS WERE FOUND. THE TURNOVER WAS CLAIMED TO BE BELOW RS.40 LACS, THEREF ORE, SEC. 44AF WAS ARGUED TO BE APPLICABLE. ON THE OTHER HAND, THE LD. SR. DR STRONGLY DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSING OFFICER HAS TAKEN PROFIT/FIGURES FROM BOOKS OF ACCOUNT ONLY . IT WAS FURTHER ARGUED THAT THOUGH BOOKS OF ACCOUNT ARE NOT RELIABL E, STILL THE FIGURES TAKEN FROM THOSE BOOKS/LOOSE PAPERS CANNOT BE ALTOG ETHER DISCARDED. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERU SED THE MATERIAL AVAILABLE ON FILE. BRIEF FACTS ARE THAT THE ASSESSE E IS ENGAGED IN TRADING 3 OF CLOTHS/OTHER HOUSE HOLD ITEMS SHOWED INCOME OF R S.2,59,577/- IN ITS RETURN FILED ON 28.3.2005. ON 20.10.2004, SURVEY U/ S 133A WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE WHEREIN SMALL POCKET DIARY NAMED AS DONEAR DIARY WAS FOUND ALON G WITH CERTAIN OTHER LOOSE PAPERS. THIS DIARY RELATES TO AY 2004-0 5 (PAGES 1 TO 26) AND AY 2005-06 (PAGES 27 TO 42). BASED UPON THE NOTING IN THE DIARY, NOTICE U/S 148 WAS ISSUED. THE LD. ASSESSING OFFICER TREAT ED SUCH NOTINGS I.E. RS.22,74,050/- AS SALES OUTSIDE BOOKS OF ACCOUNT A ND BY APPLYING G.P. RATE AT 10% MADE ADDITION OF RS.2,27,405/-. IDENTIC ALLY, ADDITION OF RS.1,29,805/- WAS MADE ON THE SALES MADE FOR AY 200 5-06. THE ONLY PLEA RAISED BY THE ASSESSEE IS THAT SINCE THE TURNO VER IS BELOW RS.40 LACS, THEREFORE, SEC. 44AF IS APPLICABLE. HOWEVER, THE ASSESSEE DID NOT ADDUCE ANY EVIDENCE CONTRADICTING THAT THE IMPUGNED FIGURES ARE OF SALES. EVEN IN THE IMPUGNED ORDER, THE DATE-WISE CH ART PREPARED BY THE ASSESSEE HAS BEEN ANALYSED. ON 1.4.2003, THE AS SESSEE WAS HAVING OPENING CASH BALANCE OF RS.53,145/- AND THE TOTAL C ASH RECEIPT WAS RS.23,253/-. THUS, THE TOTAL CASH RECEIPT WAS RS.76 ,398/-. THE ASSESSEE KEPT HIGH DEMONITION NOTE OF RS.12,400/- I N HIS TIJORI AND REMAINING CASH OF RS.62,998/- WAS OF LOWER DEMONITI ON NOTES FOR THE NEXT DAY. NEXT DAY ALSO, THE CASH RECEIPT WAS RS.23 ,834/- AND OUT OF WHICH RS.7,200/- WAS IN HIGHER DEMONITION NOTES. ID ENTICAL WAS THE 4 SITUATION ON MOST OF THE DAYS. THERE IS A FINDING I N THE IMPUGNED ORDER THAT THE ASSESSEE COULD NOT EXPLAIN THE NOTINGS MAD E IN THE DIARY AND ADMITTEDLY, THESE ARE FIGURES OF SALES. AS FAR AS T HE APPLICATION OF PROFIT RATE AT 10% ON THE TOTAL SALES ON THE FIGURE S MENTIONED ABOVE, THERE IS NO EVIDENCE THAT THE PROFIT WAS BELOW EST IMATED RATE. AS FAR AS THE CONTENTION OF THE LD. COUNSEL FOR ASSESSEE T HAT THE RETURN WAS FILED AT NET PROFIT RATE OF 5% MAY NOT HELP THE ASS ESSEE BECAUSE NO ORDER FRAMED U/S 143(3) ACCEPTING THE FIGURE OF 5% WAS PRODUCED BEFORE ME. EVEN OTHERWISE, IN THE LINE OF BUSINESS, THE PROFIT IS EXPECTED TO BE AT-LEAST 10% OF THE TOTAL SALES. NO EVIDENCE WAS FURNISHED AT ANY STAGE TO THE EFFECT THAT THE PROFI T WAS BELOW THE ESTIMATED LIMIT OF 10%, CONSEQUENTLY, I HAVE NOT FO UND ANY INFIRMITY IN THE IMPUGNED ORDER. AS FAR AS CONTENTION OF THE LD. COUNSEL FOR ASSESSEE THAT SEC. 44AF IS APPLICABLE, SINCE IT IS A CASE OF SURVEY AND NOTHING WAS BROUGHT ON RECORD CONTRADICTING THE STA ND OF THE REVENUE AND ALSO ADMITTED FACT THAT THE FIGURES OF RS.22,74 ,050/- AND RS.12,98,050/- ARE FIGURES OF SALES, THEREFORE, THE CONTENTION OF THE ASSESSEE IS WITHOUT FORCE. IF THERE WOULD HAVE BEEN NO SURVEY THEN THERE WAS EVERY POSSIBILITY THAT THE AFORESAID FIGU RE OF SALES WOULD HAVE GONE UNTAXED/UNDETECTED, THEREFORE, THERE IS N O INFIRMITY IN THE 5 STAND OF THE LD. CIT(A), CONSEQUENTLY, GROUND NOS. 1 & 2 OF THE RESPECTIVE APPEAL, WHICH ARE INTERCONNECTED, ARE DI SMISSED. 4. THE LAST GROUND RAISED IN THE RESPECTIVE APPEAL PERTAINS TO ENHANCING THE ADDITION BY RS.44,938/- AND RS.17,962 /-, RESPECTIVELY, ON ACCOUNT OF LOOSE PAPERS. BROADLY, I AM OF THE VI EW THAT NO ENHANCEMENT SHOULD BE DONE ON THE BASIS OF LOOSE PA PERS ESPECIALLY WHEN NO DATE WAS MENTIONED ON THESE PAPERS. EVEN OT HERWISE, SINCE THE SMALL AMOUNT IS INVOLVED, A LENIENT VIEW IS DES IRED. EVEN OTHERWISE, THE ENHANCEMENT SEEMS TO BE MADE ON PRES UMPTION ONLY. I AM OF THE VIEW THAT PRESUMPTION CANNOT TAKE THE SHA PE OF EVIDENCE, HOWEVER STRONG IT MAY BE. IT IS MADE CLEAR THAT THE RELIEF GIVEN IN THIS GROUND MAY NOT BE QUOTED AS PRECEDENT AS IT HAS BEE N GIVEN ON THE BASIS OF PECULIAR FACTS OF THIS CASE ONLY. THIS GRO UND OF THE RESPECTIVE APPEAL IS ALLOWED. FINALLY, BOTH THESE APPEALS ARE PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES OF BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 19.5.2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER DATED: 1.6.2010 !VYAS! COPY TO: APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD F ILE