ACIT, Central Circle 2(2), Pune V. M/s. Kakade Jewellers, Pune

ITA 989/PUN/2012

• Counselvise Citation: 98924514 RSA 2012
• Duration Of Justice: 1 year(s) 7 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 16-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 16-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS M S VERMA
• Keywords: Search and seizure
• Section: 40A(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCHES A, PUNE BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NOS. 988 & 989/PN/2012 (ASSESSMENT YEARS : 2008-09 & 2009-10) ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 2(2), PUNE. . APPELLANT VS. M/S. KAKADE JEWELLERS, SHOP NO. 40, PUNE SATARA RAOD, DHANKAWADI, PUNE 411 043. PAN : AADFK8209Q . RESPONDENT DEPARTMENT BY : MRS. M. S. VERMA ASSESSEE BY : MR. SUNIL GANOO DATE OF HEARING : 16-12-2013 DATE OF PRONOUNCEMENT : 20-12-2013 ORDER PER G. S. PANNU, AM BOTH THE CAPTIONED APPEALS BY THE REVENUE ARE DIRE CTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-C ENTRAL, PUNE DATED 20.02.2012 WHICH, IN TURN, HAS ARISEN FROM THE RESP ECTIVE ORDERS DATED 31.12.2010 PASSED BY THE ASSESSING OFFICER, U/S 143 (3) R.W.S. 153A OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEARS 2008-09 AND 2009-10. 2. IN BOTH THE APPEALS, A COMMON ISSUE RAISED BY TH E REVENUE IS WITH REGARD TO THE ACTION OF THE CIT(A) IN DELETING THE ADDITIONS MADE BY THE ASSESSING OFFICER BY INVOKING SECTION 40A(3) OF THE ACT. IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE ISSUES IN BOTH T HE APPEAL STAND ON IDENTICAL FOOTING THEREFORE, WE MAY REFER TO THE APPEAL FOR A SSESSMENT YEAR 2008-09 IN ORDER TO APPRECIATE THE RELEVANT FACTS. ITA NOS. 988 & 989/PN/2012 A.YS. 2008-09 & 2 009-10 3. IN THE COURSE OF ASSESSMENT PROCEEDINGS, CONSEQU ENT TO SEARCH AND SEIZURE ACTION U/S 132 OF THE ACT ON 11.02.2009, TH E ASSESSING OFFICER NOTED THAT UNRECORDED SALES OF RS.11,13,238/- WERE FOUND PERTAINING TO THE ASSESSMENT YEAR 2008-09. THE CORRESPONDING PURCHAS ES WERE ALSO STATED TO BE UNRECORDED. ASSESSEE OFFERED 12% OF SALES AS PR OFIT FOR SUCH TRANSACTIONS. THE ASSESSING OFFICER COMPUTED THE CORRESPONDING PU RCHASES WITH REFERENCE TO SUCH SALES BASED ON THE PROFIT RATE OF 12% DECLA RED BY THE ASSESSEE AND DETERMINED SUCH PURCHASES AT RS.9,79,649/-. THE AS SESSING OFFICER WAS OF THE VIEW THAT PAYMENTS FOR THE AFORESAID PURCHASES WOULD HAVE BEEN EFFECTED BY THE ASSESSEE OTHERWISE THAN BY WAY OF ACCOUNT PA YEE CHEQUE OR BANK DRAFT AND THEREFORE, THE SAME WERE LIABLE FOR DISALLOWANC E U/S 40A(3) OF THE ACT. ACCORDINGLY, ASSESSING OFFICER MADE A DISALLOWANCE OF RS.9,79,649/-. THE CIT(A) HAS DELETED THE IMPUGNED ADDITION FOLLOWING HIS OWN ORDER FOR THE ASSESSMENT YEAR 2005-06 IN THE CASE OF ASSESSEE. A T THE TIME OF HEARING, A COPY OF THE SAID ORDER WAS PLACED ON RECORD WITH TH E PURPOSE OF APPRECIATING THE REASONING PREVAILING WITH THE CIT(A) TO DELETE THE IMPUGNED ADDITION. IT IS FOUND THAT THE CIT(A) DELETED THE ADDITION ON THE G ROUND THAT NO DISALLOWANCE U/S 40A(3) OF THE ACT WAS MERITED BECAUSE THE ASSES SEE HAD DECLARED PROFIT/INCOME ON SUCH UNRECORDED TRANSACTIONS ON AN ESTIMATE BASIS. IN COMING TO SUCH CONCLUSION, THE CIT(A) HAS FOLLOWED THE JUDGMENT OF THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. BANWARILAL BANSHIDHAR, (1998) 229 ITR 229 (ALL.). AGAINST THE AFORESAID D ECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LEARNED DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE HAS MERELY POINTED OUT THAT SINCE THE UNREC ORDED SALES WERE FOUND IN THE COURSE OF SURVEY/SEARCH ACTION, IT WAS IMPLI ED THAT PAYMENTS FOR THE CORRESPONDING PURCHASES WOULD HAVE BEEN EFFECTED BY THE ASSESSEE IN CASH AND THEREFORE, SECTION 40A(3) OF THE ACT WAS JUSTIF IABLY INVOKED BY THE ASSESSING OFFICER. ITA NOS. 988 & 989/PN/2012 A.YS. 2008-09 & 2 009-10 5. ON THE OTHER HAND, THE LEARNED COUNSEL FOR THE R ESPONDENT-ASSESSEE HAS DEFENDED THE ORDER OF THE CIT(A) AND HAS ALSO R ELIED UPON THE FOLLOWING DECISIONS : (I) HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SMT. SANTOSH JAIN, (2008) 296 ITR 324 (P&H); (II) H ONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. S. MOHAMMAD DHURABUDEEN, (20 08) 4 DTR 218 (MAD); AND, (III) HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN EQUIPMENT PVT. LTD., (2013) 84 CCH 285 (MPHC). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. UNDOUBTEDLY, INCOME FROM UNRECORDED TRANSACTIONS OF SALE HAS BEE N DECLARED BY THE ASSESSEE AND THEREAFTER ASSESSED BY THE ASSESSING O FFICER ON ESTIMATE BASIS. IT IS QUITE EVIDENT THAT NO SPECIFIC DEDUCTION IN R EGARD TO THE CORRESPONDING PURCHASES HAS BEEN ALLOWED OR CLAIMED BY THE ASSESS EE AND THUS THERE IS NO JUSTIFICATION FOR THE ASSESSING OFFICER TO LOOK INT O THE PROVISIONS OF SECTION 40A(3) OF THE ACT IN THE CONTEXT OF THE PRESENT POS ITION. AS PER THE HONBLE ALLAHABAD HIGH COURT IN THE CASE OF BANWARILAL BANS HIDHAR (SUPRA), WHERE INCOME HAS BEEN ASSESSED BY ESTIMATING THE PROFITS NO DISALLOWANCE CAN BE SEPARATELY MADE U/S 40A(3) OF THE ACT. SIMILAR IS THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SMT. SAN TOSH JAIN (SUPRA) WHEREIN IT HAS BEEN HELD THAT WHEN INCOME OF AN ASS ESSEE IS COMPUTED BY APPLYING GROSS PROFIT RATE THERE IS NO NEED TO INVO KE THE PROVISIONS OF SECTION 40A(3) OF THE ACT BECAUSE APPLICATION OF GROSS PROF IT RATE TAKES CARE OF THE EXPENDITURE PAID OTHERWISE BY WAY OF ACCOUNT PAYEE CHEQUES ALSO. 7. IN VIEW OF THE AFORESAID LEGAL POSITION, WHICH H AS NOT BEEN CONTROVERTED BY THE REVENUE, WE ARE OF THE VIEW THAT IN THE PRES ENT CASE, THE INCOME FROM UNRECORDED TRANSACTIONS HAS BEEN COMPUTED BY APPLYI NG A GROSS PROFIT RATE AND THUS THERE IS NO NEED TO INVOKE THE PROVISIONS OF SECTION 40A(3) OF THE ACT. THEREFORE, THE CIT(A) MADE NO MISTAKE IN DELETING T HE IMPUGNED ADDITION, WHICH WE HEREBY AFFIRM. ITA NOS. 988 & 989/PN/2012 A.YS. 2008-09 & 2 009-10 8. IN THE RESULT, APPEAL OF THE REVENUE VIDES ITA N O. 988/PN/2012 FOR ASSESSMENT YEAR 2008-09 IS DISMISSED. 9. IN SO FAR AS, APPEAL OF THE REVENUE IN ITA NO. 9 88/PN/2012 FOR THE ASSESSMENT YEAR 2008-09 WHEREIN THE ISSUE INVOLVED IS IDENTICAL AND OUR DECISION SHALL APPLY MUTATIS-MUTANDIS IN ITA NO.989/PN/2012 FOR ASSESSMENT YEAR 2009-10 ALSO. ACCORDINGLY, ITA NO. 989//PN/201 2 FOR ASSESSMENT YEAR 2009-10 IS HEREBY DISMISSED. 10. RESULTANTLY, BOTH THE APPEALS OF THE REVENUE AR E DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2013. SD/- SD/- (R.S. PADVEKAR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE, DATED: 20 TH DECEMBER, 2013 SUJEET COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-CENTRAL, PUNE; 4) THE CIT-CENTRAL, PUNE; 5) THE DR, A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY I.T.A.T., PUNE