ACIT, Agra V. M/s Bhajan Das Jewellers, Agra

ITSSA 1/AGR/2006

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 9253 (ITAT-AGRA)
• Duration Of Justice: 4 year(s) 5 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-05-2010
• Assessment Year: misc
• Appeal Filed On: 10-02-2006
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEFALI JUNEJA
• Assessee Lawyers: P N AGARWAL
• Keywords: Block assessment
• Section: 69C; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI R.K. GUPTA, JUDICIAL MEMBER AND SHRI P.K. BANSAL, ACCOUNTANT MEMBER IT(SS)A NO.20/AGR/2005 BLOCK PERIOD: 01.04.1996 TO 22.02.2003 M/S. BHAJAN DAS JEWELLERS, VS. ASSTT. C.I.T., 5-6, VYAS MARKET, CENTRAL CIRCLE, AGRA. HOSPITAL ROAD, AGRA. (PAN : AABFB 6636 Q). IT(SS)A NO.01/AGR/2006 BLOCK PERIOD: 01.04.1996 TO 22.02.2003 ASSTT. C.I.T., VS. M/S BHAJAN DAS JEWELLERS, CENTRAL CIRCLE, AGRA. 5-6, VYAS MARKET, HOSPITAL ROAD, AGRA. (PAN : AABFB 6636 Q). (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI P.N. AGARWAL, ADVOCATE REVENUE BY : SMT. SHEFALI JUNEJA, SR. D.R. ORDER PER P.K. BANSAL, A.M.: THESE CROSS APPEALS HAVE BEEN FIELD AGAINST THE ORD ER OF THE CIT(A) DATED 20.10.2005. 2. THE BRIEF FACTS OF THE CASE ARE THAT THERE HAD B EEN SEARCH IN THE CASE OF THE ASSESSEE AND ITS PARTNER ON 22.02.2003. DURING THE COURSE OF SEARCH , INCRIMINATING DOCUMENTS WERE FOUND. INVENTORY WAS ENLISTED. THE ASSESSMENT HAS BEEN CO MPLETED BY THE A.O. DETERMINING THE UNDISCLOSED INCOME DURING THE BLOCK PERIOD AT RS.17 ,15,938/-. IN ASSESSEES APPEAL THE ONLY ISSUE 2 RELATES TO THE ADDITION OF UNDISCLOSED INCOME AT RS .12,15,938/- DURING THE A.Y. 2003-04 WITHIN THE BLOCK PERIOD. 3. THE BRIEF FACTS RELATING TO THIS ADDITION ARE TH AT AT THE TIME OF SEARCH, GOLD JEWELLERY WAS FOUND AT 7794.48 GRAMS WHILE COMPARED WITH THE STOC K REGISTER MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAS EXPLAINED THE SHORTAGE OF STOCK AS UND ER :- A. GOLD JEWELLERY AS PER REGISTER GS-12 14872.5 0 B. GOLD JEWELLERY AS PER REGISTER GS-11 & AFTER ADJUSTMENTS 127.70 GMS TOTAL GOLD JEWELLERY 15000.20 GMS LESS: GOLD ORNAMENT RETURNED ON 21.2.2003 BUT NO ENTRY WAS MADE IN THE BOOKS (I) BHUPENDRA PARASWANI, PARTNER 1199.600 GMS (II) SMT. MAYA PARASWANI (W/O. NARENDRA KUMAR PARASWANI, PARTNER) 634.000 GMS (III) SMT. ANJILI PARASWANI (W/O BHUPENDRA PARASWANI) 360.000 GMS (IV) NARENDRA KUMAR PARASWANI, PARTNER 1496.900 GM S (V) NARENDRA KUMAR, HUF 85.550 GMS (VI) MAYANK KUMAR, S/O. NARENDRA KR. PARASWANI 4018.000 GMS 7794.05 GMS 7794.05 GMS BALANCE 7206.15 GMS JEWELLERY FOUND AT THE TIME OF SEARCH 7205.720 GMS JEWELLERY FOUND EXCESS (7206.15 720.720) 430 GMS 4. THE A.O. WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. HE ACCORDINGLY TREATED THE SHORTAGE OF THE JEWELLERY FOUND AT THE TIME OF SEAR CH AT 7794.48 AS BEING SOLD OUT SIDE THE BOOKS OF ACCOUNT @ RS.520/- PER GRAM. THE TOTAL SALE CONSID ERATION ESTIMATED WAS RS.4053130. HE ESTIMATED THE G.P. @ 30% ON THE BASIS OF THE A.Y. 2 002-03 AND MADE AN ADDITION OF 3 RS.12,15,938/-. WHEN THE MATTER WENT BEFORE THE CI T(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE CIT(A) ALSO CONFIRMED THE ORDER OF THE A.O. 5. BEFORE US, THE LD. A.R. REITERATED THE SUBMISSIO NS MADE BEFORE THE A.O. AND ALTERNATELY CONTENDED THAT DURING THE A.Y. 2003-04 THE G.P. WAS 22.8% AND THE A.O. WAS NOT CORRECT IN LAW BY ARBITRARILY APPLYING THE G.P. @ 30%. FOR THIS C OPY OF THE ASSESSMENT ORDER FOR THE A.Y. 1993- 94 AND COMPUTATION OF THE G.P. @ 22.8% WERE FILED A T PAGES 21 AND 22 OF THE PAPER BOOK. THE LD. D.R. ON THE OTHER HAND, RELIED ON THE ORDER OF THE CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT DURING THE COURSE OF SEARCH, JEWELLERY WAS FOUND IN SHORT BY 7794.48 GRAMS. THIS FACT IS NOT DISPUTED BY BOTH T HE PARTIES. THE ASSESSEE WAS MAINTAINING RECEIPT AS WELL AS ISSUE OF VOUCHER BOOK. DURING THE COURS E OF SEARCH LAST RUNNING ISSUE VOUCHER AT ANNEXURE A-106 FROM SL. NO.401 TO 500 WAS FOUND AND SEIZED. VOUCHER NO.401 TO 439 WERE WRITTEN AND ISSUE VOUCHER FROM SL. NO.440 TO 500 WE RE BLANK. THE LAST ISSUE VOUCHER WAS WRITTEN ON 20.02.2003. THE ASSESSEE CLAIMED ON 21.02.2003 JEWELLERY WEIGHING 7794.05 GRAMS ISSUED TO THE PARTNERS BUT NO ENTRY WAS PASSED IN THE BOOKS. THE ASSESSEE SUBSEQUENTLY FILED THE VOUCHERS FROM SL. NO.501 TO 507 ON 21.02.2003 WHICH WERE PRE PARED AFTER SEIZURE OF THE VOUCHER SL. NOS. 440 TO 500. HE COULD NOT EXPLAIN WHY SL. NOS.440 T O 500 WERE REMAINED BLANK AND THE ISSUED VOUCHERS WERE NOT MADE WHEN THE JEWELLERY WAS ISSUE D TO THE PARTNER. THERE HAD BEEN SEARCH CONDUCTED AT THE RESIDENTIAL PREMISES OF SHRI NAREN DRA KUMAR PARASWANI AND SHRI BHUPENDRA KUMAR PARASWANI AND OTHER PREMISES OF THE FAMILY ME MBERS. SMT. MAYA PARASWANI, SMT. ANJILI PARASWNI AND SHRI NARENDRA KUMAR PARASWANI WERE STA YING WITH SHRI BUPENDRA KUMAR PARASWANI 4 AND SRI NARENDRA KUMAR PARASWANI. DURING THE COURS E OF SEARCH AT THE RESIDENCE ONLY JEWELLERY WEIGHING 780.650 GMS. WAS FOUND. REGARDING REST OF THE JEWELLERY, THE ASSESSEE COULD NOT EXPLAIN WHERE THE SAME WAS KEPT. THE ASSESSEE ALTHOUGH CLA IMED THAT SHRI NARENDRA KUMAR PARASWANI HAD ALSO POSSESSING PORTION IN OLD RESIDENTIAL HOUS E AT BAGH FARJANA, AGRA WHICH WAS NOT SEARCHED BUT THIS FACT IS NOT CORRECT IN VIEW OF THE FACT TH AT SEARCH WAS ALSO CONDUCTED AT THE PREMISES NO.11 BAGH FARJANA AND NO SUCH JEWELLERY WAS FOUND. EVEN AT THE TIME OF SEARCH SHRI BHUPENDRA KUMAR PARASWANI DID NOT CLAIM THAT SOME PORTION OF THE PR EMISES WAS LEFT OUT. FROM THE PREMISES OF SHRI BHUPENDRA KUMAR PARASWANI, ONLY 90 GRAM OF JEWELLER Y WAS FOUND. THE ASSESSEE ALTHOUGH SUBSEQUENTLY CLAIMED THAT JEWELLERY WEIGHING 4018 G RAM WHICH WAS GIVEN TO SHRI MAYANK PARASWANI WAS WITH HIM AS HE LEFT AGRA IN THE MID N IGHT OF 21 ST OF FEB., 2003, IN OUR OPINION, THIS CLAIM OF THE ASSESSEE CAN ALSO NOT BE ACCEPTED AND THE EXPLANATION GIVEN BY THE ASSESSEE IS NOT PLAUSIBLE ONE. THE ASSESSEE WAS CARRYING ON THE JE WELLERY BUSINESS. THE ASSESSEE WAS MAKING ENTRY IN RESPECT OF THE JEWELLERY FOUND BEING RECEI VED THROUGH THE RECEIPT VOUCHER BOOK AND EACH ITEM OF JEWELLERY IS GIVEN TO KARIGAR/CUSTOMER THRO UGH ISSUE VOUCHER BOOK. NO PERSON ACCORDING TO HIS PRUDENCE WILL PRESUME THAT THE ASSESSEE SHOU LD HAVE GIVEN THE JEWELLERY WITHOUT PREPARING THE ISSUE VOUCHERS. THE CONTENTION OF THE ASSESSEE COULD NOT HAVE BEEN ACCEPTED AS NO JEWELLERY HAS BEEN FOUND DURING THE SEARCH AT THE RESIDENTIAL PREMISES OF SHRI BHUPENDRA KUMAR PARASWANI. UNDER THESE FACTS AND CIRCUMSTANCES, THE ONLY INFER ENCE WHICH CAN BE DRAWN IS THAT THE ASSESSEE HAS SOLD THE JEWELLERY OUT SIDE THE BOOKS OF ACCOUN TS. THE A.O. HAS APPLIED A RATE @ OF RS.520/- PER GRAM AND WORKED OUT THE SALE CONSIDERATION OF S UCH JEWELLERY. THE RATE ADOPTED BY THE A.O. WAS NOT CHALLENGED BY THE A.R. BEFORE US EVEN THOUG H THE G.P. RATE APPLIED BY THE A.O. WAS CHALLENGED. WE NOTED THAT THE A.O. HAS APPLIED A G .P. RATE @ OF 30% ON THE BASIS OF THE G.P. RATE SHOWN BY THE ASSESSEE @ OF 29.4% DURING THE A.Y. 20 03-04. WE HAVE GONE THROUGH PAGES 4, 21, 5 22 OF THE PAPER BOOK AND WE NOTED THAT DURING THE A .Y. 2003-04 THE G.P. RATE AS HAS BEEN WORKED OUT WAS 22.8% ONLY NOT 29.4%. THIS G.P. RATE HAS D ULY BEEN ACCEPTED BY THE A.O BY PASSING ASSESSMENT UNDER SECTION 143(3), COPY OF WHICH IS A VAILABLE AT PAGE 21. OUR AFORESAID VIEW IS DULY SUPPORTED BY THE DECISION OF THIRD MEMBER IN THE CA SE OF BHAJAN DAS & BROTHERS VS. ACIT IN IT(SS)A NO.18/AGR/2005 WHICH RELATES TO THE SEARCH CONDUCTED ON 22.02.2003, IN WHICH CASE ALSO, UNDER SIMILAR FACTS, ADDITION WAS SUSTAINED BY THE THIRD MEMBER BY AGREEING WITH THE VIEW OF THE ACCOUNTANT MEMBER VIDE ORDER DATED 23.12.2008. IN VIEW OF THIS FACT, WE REDUCE THE ADDITION WHICH MAY BE ARRIVED AT BY APPLYING A G.P. RATE @ 2 2.8% AND DIRECT THE A.O. ACCORDINGLY. THUS, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. 7. THE ONLY ISSUE IN REVENUES APPEAL RELATES TO TH E DELETION OF THE ADDITION OF RS.5,00,000/- MADE BY THE A.O. WHILE DETERMINING THE UNDISCLOSED INCOME OF THE ASSESSEE UNDER SECTION 69D OF THE I.T. ACT. 8. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT( A) DELETED THE ADDITION BY OBSERVING AS UNDER :- I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF T HE CASE AND THE ARGUMENTS OF THE LD. REPRESENTATIVE OF THE APPELLAN T. THE LD. REPRESENTATIVE OF THE APPELLANT HAS POINTED OUT THAT INVOCATION OF PROVIS IONS OF SECTION 69D WAS OUTSIDE THE SCOPE OF U/S 158BB(2). IT IS SEEN THAT AS PER THE PROVISIONS OF SECTION 158BB(2) IT HAS BEEN PROVIDED THAT IN COMPUTING THE UNDISCLO SED INCOME OF BLOCK PERIOD THE PROVISIONS OF SECTION 68, 69, 69A, 69B AND 69C SHAL L SO FAR AS MAY BE APPLIED AND REFERENCES TO FINANCIAL YEAR IN THOSE SECTIONS SH ALL BE CONSTRUED AS REFERENCES TO THE RELEVANT PREVIOUS YEAR FALLING IN THE BLOCK PER IOD INCLUDING THE PREVIOUS YEAR ENDING WITH THE DATE OF SEARCH OR OF THE REQUISITIO N. IT IS CLEAR THAT SECTION 69D DOES NOT FIND A PLACE IN SECTION 158BB(2). ALL THE SE SECTIONS ARE IN RESPECT OF INCOME WHICH ARE DEEMED TO BE INCOME OF THE APPELLA NT. SECTION 69D ALSO IS A DEEMING PROVISION. THIS SECTION HOWEVER DOES NOT F IND A MENTION IN SECTION 6 158BB(2). IF THERE WAS AN INTENTION TO INCLUDE SEC TION 69D ALSO THEN THE SAME SHOULD HAVE BEEN MENTIONED IN SECTION 158BB(2). SE CTION 158BB(2) IS A GENERAL SECTION, IF RECOURSE COULD BE TAKEN TO THE DEEMING PROVISIONS CONTAINED IN SECTIONS 68, 69, 69A, 69B, 69C AND 69D WITH THE HELP OF SECT ION 158BB THEN THERE WAS NO NEED TO PUT SEPARATE SUB-SECTION (2) TO SECTION 158 BB. IN VIEW OF THE FACT THERE IS NO MENTION OF SECTION 69D IN SECTION 158BB(2), THE AO CAN NOT TAKE RECOURSE TO SECTION 69D FOR THE PURPOSE OF MAKING ADDITION TO T HE UNDISCLOSED INCOME DURING THE COURSE OF BLOCK ASSESSMENT PROCEEDINGS. IT IS NOT THE CASE OF THE AO THAT THE APPELLANT HAD GIVEN CASH AND OBTAINED HUNDIS IN LIE U OF THE CASH GIVEN. THERE WAS NO SUCH ENTRY FOUND IN THE BOOKS OF ACCOUNT OF THE APPELLANT FIRM. THE LD. REPRESENTATIVE OF THE APPELLANT HAS ALSO PLACED REL IANCE ON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF CIT VS. DE XAN PHARMACEUTICALS PVT. LTD., 214 ITR 576 AND ARGUED THAT THE BASIC INGREDI ENTS OF HUNDI WAS NOT SATISFIED AS THESE WERE ONLY BILATERAL TRANSACTIONS. IT IS S EEN FROM THE PHOTOCOPIES OF THE HUNDIS SEIZED THAT THESE ARE WRITTEN IN HINDI AND T HE WORD HUNDI ON A STAMP PAPER OF 50 PAISE IS MENTIONED ON THIS PAPER. THUS TAKIN G INTO CONSIDERATION THE LOCAL CUSTOM, THESE PAPERS FOUND MAY BE TAKEN TO BE IN TH E NATURE OF HUNDI. HOWEVER, IN THE ABSENCE OF SECTION 69D BEING MENTIONED IN SECTI ON 158BB(2) NO ADDITION TO THE UNDISCLOSED INCOME CAN BE MADE IN RESPECT OF THESE HUNDIES UNLESS IT IS SHOWN THAT THE AMOUNT MENTIONED IN THESE HUNDIES REPRESENTED T HE UNDISCLOSED INCOME OF THE APPELLANT. IT IS NOT THE CASE OF THE AO THAT THE A MOUNTS MENTIONED IN THESE HUNDIES WERE REPRESENTING UNDISCLOSED INCOME OF THE APPELLA NT GIVEN TO THESE PERSONS FOR OBTAINING RURAL LOANS. UNDER THE FACTS AND CIRCUMS TANCES OF THE CASE AND THE LEGAL POSITION DISCUSSED ABOVE THE ADDITION MADE OF RS.5 LAKHS CAN NOT BE SUSTAINED AND IS DIRECTED TO BE DELETED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULL Y CONSIDERED THE SAME. WE DO AGREE WITH THE CIT(A) THAT INVOCATION OF THE PROVISIONS OF SEC TION 69D IS OUTSIDE THE COPE OF SECTION 158BB(2). SECTION 158BB(2) NO WHERE PROVIDES ABOUT THE APPLICATION OF THE PROVISIONS OF SECTION 69D, HAD THERE BEEN INTENTION OF THE LEGISLATOR THA T THE PROVISION OF SECTION 69D IS ALSO APPLICABLE WHILE COMPUTING THE UNDISCLOSED INCOME. THE LEGISL ATURE WOULD HAVE PROVIDED THE APPLICABILITY OF SECTION 69D WHILE MENTIONING SECTION 68, 69, 69A, 6 9B & 69C. WE, THEREFORE, DO NOT FIND ANY ILLEGALITY AND INFIRMITY IN THE ORDER OF THE CIT(A) AND ACCORDINGLY CONFIRM THE ORDER OF THE CIT(A). THUS, THE APPEAL FILED BY THE REVENUE STANDS DISMIS SED. 7 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED AND THAT OF THE REVENUE STANDS DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 23.07.2010) SD/- SD/- (R.K. GUPTA) (P.K. BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: AGRA DATE: 23 RD JULY, 2010. PBN/* COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT BY ORDER 3. CIT CONCERNED 4. CIT (APPEALS) CONCERNED 5. DR, ITAT, AGRA BENCH, AGRA 6. GUARD FILE ASSIST ANT REGISTRAR INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY