M/S. RAJMOHAN AGARWAL, Bhopal V. THE ACIT-2(1), Bhopal

ITSSA 1/IND/2016

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 3028 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 03-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 28-02-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 11-01-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: LALCHAND
• Assessee Lawyers: GIRISH AGARWAL
• Keywords: Search and seizure; Loose papers
• Section: 153A; 234B

Judgement Text

SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 1 OF 8 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE .. , .., % BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . . /. I.T.A. NO.(S.S.)01/IND/2016 / ASSESSMENT YEAR: 2008-09 SHRI RAJMOHAN AGARWAL, C/O M/S. AGARWAL JEWELLERS, JAWAHAR BHAWAN, T. T. NAGAR BHOPAL VS. ACIT 2(1), BHOPAL ) /APPELLANT *+) /RESPONDENT ... /PAN: AAXPA 4984 A ) , /APPELLANT BY SHRI GIRISH AGARWAL, CA *+) , /RESPONDENT BY SHRI LAL CHAND, CIT(DR) , / DATE OF HEARING 28.02.2017 0 , / DATE OF PRONOUNCEMENT 03.03.2017 /O R D E R PER O.P.MEENA, ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS, DIRECTED AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-31, CA MP- BHOPAL [IN SHORT CIT (A)] DATED 23.11.2015 FOR THE ASSESSMENT YEAR 2008-09 ON FOLLOWING GROUNDS: (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEARNED CIT (A) ERRED AND NOT JUSTI FIED IN SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 2 OF 8 SUSTAINING ADDITION OF RS.2 LACS MADE BY THE A.O. F OR THE CASH FOUND IN SEARCH. THE ASSESSEE SUBMITS THAT HAV ING REGARD TO EXPLANATION FURNISHED, IT MAY BE HELD MAY BE THAT CASH FOUND AT RESIDENCE IS NOT AN UNEXPLAINED CASH HENCE, THE ADDITION BE DELETED. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THAT THE LEARNED CIT(A) ERRED AND NOT JUSTIFIED IN SUSTAINING ADDITION OF RS.2 LACS BECAU SE A PROVISION OF SECTION 69A ARE NOT APPLICABLE. KINDLY DELETE THE SAID ADDITION. (3) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LEVY OF INTEREST U/S. 234A, U/S. 23 4B, U/S. 234C AND U/S. 234D ARE UNLAWFUL AND HENCE, BE CANCELLED. 1.0. GROUND NO. 1 &2 RELATES TO SUSTAINING OF ADDITION O F RS.2 LACS MADE BY THE AO ON ACCOUNT OF CASH FOUND A ND SEIZED DURING THE COURSE OF SEARCH, TREATING AS UNE XPLAINED CASH. 1.1. SUCCINCTLY, FACTS AS CULLED OUT FROM THE ORDERS OF LOWER AUTHORITIES ARE THAT THE ASSESSEE IS INDIVIDUAL, IS PARTNER IN M/S. AGARWAL JEWELLERS, WHICH IS ENGAGED IN TRADIN G IN GOLD AND DIAMOND JEWELLERY AND BELONGING TO AGARWAL GRO UP. A SEARCH AND SEIZURE OPERATION HAS BEEN CARRIED OUT O N 13.11.2007 AT THE RESIDENTIAL PREMISES OF THE ASSES SEE. CONSEQUENTLY, PROCEEDINGS U/S. 153A WERE, INITIATED AGAINST THE ASSESSEE. THE RETURN OF INCOME IS FILED ON 31.0 3.2009, DECLARING TOTAL INCOME OF RS.17,90,890/-. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO E XPLAIN THE SOURCE OF CASH OF RS. 2 SEIZED FROM HIS RESIDENCE D URING SEARCH. IT WAS EXPLAINED THAT THE CASH WAS MAINLY AVAILABLE OUT OF SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 3 OF 8 AGRICULTURAL INCOME OF SMT. BELA AGARWAL (WIFE OF T HE ASSESSEE). HOWEVER, THIS EXPLANATION WAS NOT FOUND ACCEPTABLE IN ABSENCE OF ANY DOCUMENTARY EVIDENCE. 1.2. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE TH E CIT (A). IT WAS EXPLAINED THAT DURING THE COURSE OF SEA RCH AND SEIZURE OPERATION AT THE RESIDENTIAL PREMISES OF TH E ASSESSEE, AGRICULTURAL INCOME AND EXPENDITURE STATEMENT WAS F OUND IN WHICH AGRICULTURAL INCOME OF RS. 3,34,576/- WAS REF LECTED (COPY WAS ATTACHED) IS PERTAINING TO M/S. AGARWAL NURSERY A PROPRIETARY CONCERN OF SMT. BELA AGRAWAL. IT WAS OU T OF ABOVE MENTIONED INCOME OF HIS WIFE THE CASH OF RS. 2 LACS WAS AVAILABLE AT THE TIME OF SEARCH AND ACCORDINGLY FOU ND. THE COPY OF SEIZED INCOME AND EXPENDITURE STATEMENT OF ALSO FURNISHED VIDE LETTER DTD. 30.11.2009 AS PER PAGE NOS. 225 TO 227 BEFORE THE AO. HOWEVER, THE LD. CIT (A) OPINIONED THAT CAS H OF RS. 2 LACS WAS OUT OF AGRICULTURAL INCOME OF HIS WIFE APP EARS TO BE AN AFTERTHOUGHT AS NO SUCH EXPLANATION WAS GIVEN BY HI S WIFE AT THE TIME OF SEARCH WHEN A QUESTION TO THIS EFFECT W AS PUT TO HER. MOREOVER, NO DOCUMENTARY EVIDENCE HAS BEEN SUBMITTE D TO LINK TO SOURCE OF AGRICULTURAL INCOME NOW CLAIMED. ACCOR DINGLY, ADDITION WAS CONFIRMED. 1.3. BEING, AGGRIEVED THE ASSESSEE FILED THIS APPEAL BEF ORE THE TRIBUNAL. THE LEARNED COUNSEL FOR THE ASSESSEE, SUB MITTED THAT SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 4 OF 8 A DIARY WAS SEIZED VIDE ANNEXURE LPS-1 CONTAINING 2 0 PAGES WHEREIN YEAR WISE DETAILS OF RECEIPTS AND EXPENSES OF AGRICULTURAL ACTIVITY WERE NOTED (PB-20-29). ONE SU CH PAGE OF THE SEIZED DIARY AT PB-28 RELATES TO IMPUGNED YEAR ON WHICH RIGHT SIDE, RECEIPTS/ INCOME FROM AGRICULTURAL PROD UCE AT RS. 3,89,194/- UP TO SEPTEMBER 2007 AND LEFT SIDE PAYMENTS/EXPENSES OF RS. 2,64,231/- ARE NOTED UP T O SEPTEMBER 2007. HOWEVER, CERTAIN ENTRIES UP TO DATE OF SEARCH I.E. 13.11.2007 WERE PENDING TO BE RECORDED. THE SA ME WERE COMPLETED BY MAKING A STATEMENT FOR THE FULL YEAR F ROM WHICH TOTAL RECEIPTS COMES TO RS.4,40,016/- AND EXPENSES COMES TO RS. 3, 11, 825/-. FURTHER, NET AGRICULTURAL INCOME OF RS. 3,34,576 (ROUNDED RS. 3,35,000) WAS OFFERED IN THE RETURN OF INCOME DULY SUPPORTED BY SEIZED PAPERS AND IT WAS A CCEPTED BY THE AO IN THE ASSESSMENT OF SMT. BELA AGARWAL. ALL THESE RECORDS WERE BEFORE THE AO, BUT HE FAILED TO CONSID ER THE SAME IN PROPER PERSPECTIVE. THEREFORE, IT WAS CONTENDED THAT SAID CASH FOUND DURING SEARCH IS OUT OF AGRICULTURAL INC OME OF SMT. BELA AGARWAL (WIFE OF ASSESSEE). DURING THE COURSE OF SEARCH, THE ASSESSEE WAS OUT STATION, AND ONLY STATEMENT OF SMT . BELA AGARWAL, WAS RECORDED UNDER SECTION 132(4) WHICH IS PLACED AT PB 31-37, WHEREIN, IN ANSWER TO QUESTION NO. 7, THE OFFICER NOTED THE EXISTENCE OF AGRICULTURE LAND IN THE PREL IMINARY SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 5 OF 8 STATEMENT OF SMT. BELA AGARWAL, AND, SOUGHT FURTHE R CLARIFICATION (PB-34) AND IN QUESTION NO. 8, EXPLAN ATION ON LOOSE PAPER LPS-1 WAS ASKED FOR WHICH IT WAS STATED THAT SAME WILL BE CLARIFIED BY HER HUSBAND. AT QUESTION 5, DETAILS OF CASH FOUND FOR RS.2,11,018/- WAS SOUGHT FOR WHICH IT WAS STATED THAT THERE IS NO DOCUMENTARY EVIDENCE AVAILABLE. IN VIEW OF ABOVE FACTS, IT WAS CONTENDED THAT ADVERSE VIEW TAKEN BY THE CIT (A) THAT EXPLANATION IS AFTERTHOUGHT AND NO EVIDENCE HA S BEEN LINKED TO IMPUGNED CASH IS NOT CORRECT AND WAS WITH OUT APPRECIATING FACTS AND EVIDENCE ON RECORD. THE AGRI CULTURAL INCOME AND EXPENDITURE STATEMENT FOUND DURING SEARC H ALONG WITH RETURN OF INCOME AND COMPUTATION OF TOTAL INCO ME STATEMENT FILED BY THE WIFE OF ASSESSEE STANDS DOCU MENTARY EVIDENCE LINKING THE SOURCE OF CASH. HENCE, IT WAS URGED US TO ALLOW THE APPEAL BY CONSIDERING THE SUBMISSIONS AND CIRCUMSTANCES AND DOCUMENT ON RECORD. 1.4. PER CONTRA, THE LD. CIT (DR) SUBMITTED THAT CIT (A) NEVER HELD THAT THERE WAS NO AGRICULTURAL INCOME, BUT EMP HASIS WAS GIVEN THAT THE ASSESSEE COULD NOT LINK THE CASH FOU ND DURING SEARCH WITH REFERENCE TO AGRICULTURAL INCOME. THE L D. CIT (DR) SUBMITTED THAT THE WIFE OF THE ASSESSEE HAS SHOWN A GRICULTURAL INCOME OF RS. 89,000/- IN ASSESSMENT YEAR 2007-08 A ND THERE WAS NO CLAIM THAT ANY AGRICULTURE LAND WAS ACQUIRED AFTER THAT SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 6 OF 8 YEAR AND UP TO DATE OF SEARCH. THEREFORE, AGRICULTU RAL INCOME SHOWN AT RS. 3,35,000/- ON THE BASIS OF LOOSE PAPER LPS-1 IS NOT RELIABLE. AS PER CLAIM OF THE ASSESSEE, THE AGR ICULTURAL INCOME COMES TO RS. 4,40,016/- AND EXPENSES COMES T O RS. 3,11,825/-, HENCE, THE AVAILABILITY OF CASH COMES T O RS. 1,28,191/- AS AGAINST THE CASH RS. 2,11,108/- FOUND DURING THE COURSE OF SEARCH. FURTHER, IN REPLY TO QUESTION NO. 8 OF HER STATEMENT, SHE COULD NOT EXPLAIN THE SOURCE OF CASH . IN VIEW OF THESE FACTS, THE LD. CIT (DR) SUPPORTED THE ORDERS OF LOWER AUTHORITIES. 1.5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PAR TIES AND HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT DURING THE COURSE OF SEARCH, LOOSE PAPER IN THE FOR M OF A DIARY WERE FOUND AND SEIZED AND INVENTORIED AS LPS-1. THI S DIARY CONTAINED THE ENTRIES OF RECEIPTS/INCOME OF AGRICU LTURAL PRODUCE AND AGRICULTURAL EXPENSES UP TO THE MONTH O F SEPTEMBER 2007. WE FIND THAT LOOSE PAPER OF SAID DI ARY APPEARING AT PAGE NO 28, CONTAINED THE RECEIPTS OF AGRICULTURAL PRODUCE OF RS. 3,89,194/- AS AGAINST AGRICULTURAL E XPENSES OF RS.2,64,231/- UP TO SEPTEMBER 2007 FALLING UNDER TH E ASSESSMENT YEAR UNDER CONSIDERATION. THUS, NET AGRI CULTURAL INCOME CAN BE COMPUTED AT RS. 1, 24,963/- [3, 89,1 94-2, 64,231] ON THE BASIS OF SEIZED PAPERS AS ON THE DAT E OF SEARCH. SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 7 OF 8 THERE IS PRESUMPTION U/S. 132(4A) OF THE ACT THE DO CUMENT FOUND DURING SEARCH ARE BELONGS TO A PERSON FROM W HOSE POSSESSION IT WAS FOUND DURING SEARCH. THEREFORE, I T IS A CREDIBLE EVIDENCES FOUND FROM THE POSSESSION OF THE ASSESSEE DURING SEARCH, HENCE, THERE CANNOT BE ANY DOUBT ON RELIABILITY. FURTHER, WE FIND THAT THE WIFE OF ASSESSEE HAS SHO WN HER AGRICULTURAL INCOME OF RS. 89,000/- DURING A.Y. 200 7-09 AND RS. 3,35,000/- FOR THE ASSESSMENT YEAR UNDER CONSID ERATION, WHICH HAS BEEN ACCEPTED BY THE REVENUE. IN THE BAC KDROP OF THESE FACTS AND CIRCUMSTANCES, THE CASH OF RS. 1,24 ,963/- ROUNDED TO RS. 1,25,000/- ON ACCOUNT OF AGRICULTURA L INCOME CAN BE CONSIDERED AS AVAILABLE ON THE DATE OF SEARC H AS IT IS DISCERNIBLE FROM THE SEIZED LOOSE PAPERS LPS-1. THE REFORE, IN OUR CONSIDERED VIEW, THE ASSESSEE, TO THIS EXTENT H AS ABLE TO LINK THE AVAILABILITY OF CASH WITH DOCUMENTARY EVID ENCE. WE FIND THAT THE ASSESSEE SUBMITTED A STATEMENT OF AVAILABI LITY OF AGRICULTURAL INCOME AT RS. 1,28,191/- ( 4,40,016- 3 ,11,825) PREPARED AFTER DATE OF SEARCH I.E. 13.11.2007, BY R ECORDING CERTAIN ENTRIES REMAINED TO BE RECORDED AFTER SEPTE MBER 2007. HOWEVER, THIS CANNOT BE RELIED AS NO EVIDENCE OF UN -RECORDED ENTRIES WAS FOUND DURING SEARCH. IN VIEW OF THIS MA TTER, WERE ARE OF THE CONSIDERED VIEW THAT CASH OF RS. 1,25,00 0/- CAN BE TREATED AS EXPLAINED OUT OF SEIZED CASH OF RS. 2 LA CS. SHRI RAJMOHAN AGARWAL/ I.T.A. NO. (S.S.)01/IND/2016 /A.Y.:08-09 PAGE 8 OF 8 ACCORDINGLY, THE ADDITION TO THAT EXTENT OF RS. 1,2 5,000/- IS DELETED AND BALANCE ADDITION OF RS. 75,000/- IS CON FIRMED. THUS, THE GROUND NO. 1 AND 2 OF APPEAL IS PARTLY AL LOWED IN FAVOUR OF THE ASSESSEE. 2. SO FAR GROUND NO. 3 RELATING TO CHARGING OF INTERES T UNDER SECTION 234A, 234B 234C AND 234D IS CONCERNED, WE A RE OF THE VIEW THAT CHARGING OF INTEREST IS MANDATORY AS HELD IN THE CASE OF ANJUM M. H. GHASWALA 252 ITR 1 (SC), THEREFORE , IT IS UPHELD. HOWEVER, THE ASSESSEE WILL BE ENTITLED OF C ONSEQUENTIAL RELIEF IF ANY AFTER GIVING EFFECT OF THIS ORDER. TH IS GROUND OF APPEAL IS THEREFORE, DISPOSED-OF ACCORDINGLY. 3. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 4. THE ORDER PRONOUNCED IN THE OPEN COURT ON 03.03. 20 17 SD/- ( .. ) (C.M. GARG) JUDICIAL MEMBER SD/- (..) (O.P.MEENA) ACCOUNTANT MEMBER 4 / DATED : 03 MARCH,2017/OPM