M/s. Kapadia Metalic (I) Ltd., Surat V. The ACIT.,Cent.Circle-4, Surat

ITSSA 160/AHD/2011

• Counselvise Citation: [2017] 122 COUNSELVISE.COM (IT) 2858 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 year(s) 10 month(s) 26 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-01-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 22-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Document seized; Revised return; Documents seized
• Section: 69C; 133A; 153A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.(SS)(A)NO.160/AHD/2011 FOR A.Y.2002-03 ./ I.T.(SS)(A)NO.161/AHD/2011 FOR A.Y.2006-07 M/S. KAPADIA METALIC (I) LTD. 3/1810, GHAMLAWAD, SHERI NO.1, SALABATPURA, SURAT. / VS. ASSTT. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-4, SURAT ./ ./ PAN/GIR NO. : AABCK 7071 R ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI S. SAMPATH, A.R. / RESPONDENT BY : SHRI SANJAY AGRAWAL, CIT, D.R. / DATE OF HEARING 09/01/2017 / DATE OF PRONOUNCEMENT 18/01/2017 / O R D E R PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER : THESE TWO APPEALS HAVE BEEN FILED BY THE ASSESSEE/APPELLANT AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX(APPEALS)-II, AHMEDABAD, DATED 13/12/2010 FOR THE ASSESSMENT YEAR (AY) 2002-03 & 2006-07. 2. FIRST WE TAKE UP THE ASSESSEES APPEAL IN IT(SS) APPEAL NO.160/AHD/2011 FOR THE A.Y.2002-03. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 2 - (I). THAT THE LD. CIT(A)-II HAS ERRED IN NOT DIRECTING THE AO TO DO TELESCOPING IN THE APPELLANTS CASE- - OF THE DISCREPANCY IF ANY REMAINING UNIDENTIFIED IN THE HANDS OF SHRI NAGINBHAI KAPADIA AND / OR SHRI ASHOKBHAI JARIWALA AS CATEGORICALLY MENTIONED BY THEM IN NOTES FILED WITH THEIR REVISED RETURN U/S. 153A STATING THAT THE CONDITIONAL DISCLOSURE MADE THEREIN IS A FIRST HAND APPROXIMATION WHICH MAY VARY WITHIN THE OVERALL AMOUNT DECLARED AT THE TIME OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS AND. - THE AMOUNT OF CONDITIONAL DISCLOSURE REMAINING SPECIFICALLY UNIDENTIFIED MAY BE TELESCOPED AGAINST ANY ADDITION OR DISALLOWANCES OF ANY EXPENSES OR DEDUCTION OR OTHERWISE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS IN THE HANDS OF FAMILY MEMBERS OR ANY GROUP CONCERNS FOR THE PERIOD COVERED UNDER THE NOTICE ISSUED U/S. 153A/153C OF THE ACT. 3. THE FACTS OF THE CASE ARE THE ASSESSEE FIRM IS ONE OF THE CONCERNS OF T.N. KAPADIA (TNK) GROUP COMPRISING OF TWO FAMILIES, VIZ. THE KAPADIA AND JARIWALAS, ENGAGED IN BUSINESS OF MANUFACTURE, TRADING AND ON 14/12/2005 AT THE RESIDENTIAL PREMISES OF THE SH. NAGINDAN T. KAPADIA AND SH. ASHOK H. JARIWALA OF TNK GROUP AND SURVEY ACTION U/S. 133A WERE CONDUCTED AT BUSINESS PREMISES OF THE ASSESSEE GROUP ON THE SAME DATE. DURING THE COURSE OF SEARCH AND SEIZURE OPERATION AT THE RESIDENTIAL PREMISES OF SH. NAGINDAS T. KAPADIA AND SH. ASHOK H. JARIWALA, BOOKS OF ACCOUNTS/DOCUMENTS BELONGING TO THE ASSESSEE WERE FOUND AND SEIZED AND THEREAFTER A NOTICE U/S.153C OF THE I.T. ACT, WAS ISSUED AND SAME WAS DULY SERVED UPON THE ASSESSEE AND IN RESPONSE TO NOTICE U/S. 153(C) DECLARING TOTAL INCOME AT RS.NIL/-, VIDE ACKNOWLEDGEMENT NO. 00142. THEREAFTER, CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE WERE DULY SERVED AND SAME WAS APPLIED BY THE ASSESSEE AND REPLY FILED BY THE ASSESSEE PURSUANT TO THE NOTICE WAS SENT BY THE A.O. AND LD. A.O STATED THAT SEVERAL PAPER PERTAINING TO SALE INVOICES TO THE TUNE OF RS1,120/- TO IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 3 - RANGOLI CREATIONS, SURAT, WERE SEIZED. FURTHER, THE PAGES IN LOOSE PAPER FILE SEIZED FROM PREMISES OF SHRI NAGINDAS TULSIDAD KAPADIA, GHAMLAWAD, SALABATPURA, SURAT, VIDE ANNEXURE BF 19/BS-2 PAGES 86- 104, EFFECT SALES OF RS.7,61,960/- MADE DURING A.Y. 2002-03 AND IT HAS ALSO BEEN DETECTED THAT AS PER THE PAGES IN LOOSE PAPER FILE SEIZED FROM PREMISES OF SHRI NAGINDAS TULSIDAS KAPADIA PERTAINING TO UNACCOUNTED SALES OF RS.15,08,801/- HAVE BEEN MADE DURING THE A.Y.2002-03 AND SEVERAL PARTIES INCLUDING Z.M. JARIWALA, SATYAM TEXTILES, HARI OM FABRICS, AND IT HAS BEEN ADMITTED BY SH. NAGINDAS T. KAPADIA THAT THESE SALES HAVE NOT BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNTS AND GROSS PROFIT ON UNACCOUNTED TURNOVER WAS ADOPTED BY THE LD. A.O. AT REASONABLE 5% RATE AND ADDITION OF RS.1,13,538/- 4. AGAINST THE SAID ORDER APPELLANT PREFERRED FIRST STATUTORY APPEAL BEFORE THE CIT(A), WHO DISMISSED THE APPEAL OF THE APPELLANT/ASSESSEE. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND PAPER BOOK FILED BY THE ASSESSEE AND SYNOPSIS FILED BY THE LD. D.R., THE TRANSACTION WERE MADE IN THE NAME OF THE FIRM, HENCE TO BE CONSIDERED IN THE HANDS OF THE FIRM ONLY THEREFORE, THE ADDITION WERE JUSTIFIED. THEN THERE REMAINS NO GROUND FOR MAKING ANY SET OFF OR TELESCOPING IT WITH THE INCOME OF OTHER ASSESSEES. EACH ASSESSEE IS DIFFERENT AND EACH ASSESSMENT YEAR IS DIFFERENT. HENCE, THE TELESCOPING CANNOT BE ALLOWED UNLESS A SPECIFIC NEXUS IS SHOWN. IN OUR CONSIDERED VIEW, LD.CIT(A) RIGHTLY IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 4 - DISMISSED THE APPEAL AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN IT(SS) APPEAL NO.160/AHD/2011 FOR THE A.Y.2002-03 IS DISMISSED. 7. IN IT(SS) APPEAL NO. 161/AHD/2011, THIS APPEAL IS DIRECTED AGAINST THE ORDER OF THE CIT-II, AHMEDABAD, DATED 13.12.2010 PASSED FOR THE ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- (I). THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A)-II HAS ERRED IN NOT DELETING THE ADDITION OF UN-RECONCILED PURCHASES OF RS.7,12,424/- AND NOT DIRECTING THE AO TO APPLY THE GROSS PROFIT RATE ON THE SAME. (II). THAT THE LD.CIT(A)-II HAS ERRED IN NOT DIRECTING THE AO TO DO TELESCOPING IN THE APPELLANTS CASE- - OF THE DISCREPANCY IF ANY REMAINING UNIDENTIFIED IN THE HANDS OF SHRI NAGINBHAI KAPADIA AND / OR SHRI ASHOKBHAI JARIWALA AS CATEGORICALLY MENTIONED BY THEM IN NOTES FILED WITH THEIR REVISED RETURN U/S. 153A STATING THAT THE CONDITIONAL DISCLOSER MADE THEREIN IS A FIRST HAND APPROXIMATION WHICH MAY VARY WITHIN THE OVERALL AMOUNT DECLARED AT THE TIME OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS AND - THE AMOUNT OF CONDITIONAL DISCLOSURE REMAINING SPECIFICALLY UNIDENTIFIED MAY BE TELESCOPED AGAINST ANY ADDITION OR DISALLOWANCE OF ANY EXPENSES OR DEDUCTION OR OTHERWISE MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR APPELLATE OR REVISION PROCEEDINGS IN THE HANDS OF FAMILY MEMBERS OR ANY GROUP CONCERNS FOR THE PERIOD COVERED UNDER THE NOTICE ISSUED U/S.153A/153C OF THE ACT. 8. SINCE THE FACTS ARE IDENTICAL TO THE FACTS IN IT(SS) NO.161/AHD/2011 FOR A.Y. 2006-07 IN ASSESSEES OWN CASE, FOR THE SAME REASONING, WE DISMISS THE APPEAL OF THE ASSESSEE IN THIS YEAR ALSO. IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 5 - 9. LD. A.R. STATED THAT APART FROM THE DETECTION, SOME EXPENDITURES HAVE BEEN ADMITTED TO HAVE BEEN MADE OUTSIDE THE BOOKS OF ACCOUNT AND FOR THESE NO ACCEPTABLE SOURCE HAS BEEN EXPLAINED AND SECTION 69C DEALS WITH UNEXPLAINED SOURCE OF EXPENDITURE AND SECTION 69C WAS INSERTED ON THE STATUE BOOK BY THE TAXATION LAWS (AMENDMENT) ACT, 1975 W.E.F. 1 ST APRIL, 1976. FROM SEIZED DOCUMENTS IT IS EVIDENT THAT THERE HAVE BEEN EXPENDITURE TO THE TUNE OF RS.7,12,424/-, FOR WHICH THE SOURCE HAVE NOT BEEN SATISFACTORILY EXPLAINED AND ASSESSEE HAS BEEN FAILED TO FURNISH THE EXACT DETAILS OF UNEXPLAINED PURCHASES AND THE SALES MADE FROM THESE PURCHASES, IN UNACCOUNTED MANNER TO EXPLAIN THE SOURCES OF THE UNACCOUNTED EXPENDITURE AND ADDITION OF RS.7,12,424/- WAS MADE AS UNEXPLAINED EXPENDITURE. 10. DURING THE COURSE OF SEARCH ASSESSMENT PROCEEDINGS, SOME SALES WERE DISCOVERED TO BE UNACCOUNTED AND MADE OUTSIDE THE REGULAR BOOKS OF ACCOUNTS. EXPLANATION ACCOUNTED IT IN NAME OF SISTER CONCERN IS NOT ACCEPTABLE TO THE A.O. AND G.P. RATE OF 5% WAS EVOKED AND FURTHER, AN ADDITION ON ACCOUNT OF RS.56/- WAS ADDED AND FINALLY TOTAL INCOME ROUNDED OFF WAS 7,12,480/- AGAINST WHICH ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE CIT(A), BUT WAS PARTLY ALLOWED. 11. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMPUGNED ORDER AND PAPER FILED BY THE ASSESSEE AND LD.D.R. THE TRANSACTION ARE IN THE NAME OF THE FIRM, HENCE TO BE CONSIDERED IN THE HANDS OF THE FIRM ONLY. AS THE APPELLANT HAS NOT EXPLAINED THE SOURCE OF THE EXPENDITURE, THE LOWER IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 6 - AUTHORITIES WERE JUSTIFIED IN MAKING THE ADDITION FOR UNEXPLAINED EXPENDITURE OF RS.7,12,424/-. 12. THE NEXT GROUND IS THAT TELESCOPING SHOULD BE ALLOWED WITH THE INCOME OF THE APPELLANT WITH SHRI NAGINBHAI KAPADIA AND /OR SHRI ASHOKBHAI JARIWALA OF THE CONDITIONAL DISCLOSURE FOR THE PERIOD COVERED UNDER SECTION 153A/153C OF THE ACT. THIS PLEA OF THE APPELLANT WAS RIGHTLY REJECTED BY THE LOWER AUTHORITIES THAT ASSESSEE IS DIFFERENT AND EACH ASSESSMENT YEAR IS DIFFERENT AND TELESCOPING CANNOT BE ALLOWED UNLESS SPECIFIC NEXUS WAS SHOWN. 13. IN OUR CONSIDERED OPINION, THERE IS NO INFIRMITY OR ILLEGALITY IN THE ORDER PASSED BY THE LD. CIT(A). AS A RESULT, THE APPEAL OF THE ASSESSEE IN IT(SS) APPEAL NO.161/AHD/2011 FOR THE A.Y.2006-07 IS ALSO DISMISSED. 14. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMISSED. THIS ORDER PRONOUNCED IN OPEN COURT ON 18/01/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 18/01/2017 IT(SS)APPEAL NO.160&161/AHD/2011 M/S. KAPADIA METALIC LTD. VS.ACIT ASST.YEAR 2002-03 & 2006-07 - 7 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-II, AHMEDABAD. 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY