ACIT Central, Ujjain V. Shri Ankit Kimtee, Indore

ITSSA 173/Ind/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 6637 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 11 month(s) 24 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 02-08-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 08-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S MANTRI
• Assessee Lawyers: MAHESH AGRAWAL A RS
• Keywords: Unexplained investment; Search and seizure; Loose papers; Corroborative evidences; Documents seized
• Section: 250; 191; 44AB; 43; 13; 153; 131; 69; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE RAJPAL YADAV HON'BLE VICE PRESIDENT AND SHRI MANISH BORAD, ACCOUNTANT MEMBER VIRTUAL HEARING IT(SS)A NO.173/IND/2019 ASSESSMENT YEAR:2014-15 ACIT, CENTRAL UJJAIN / VS. SHRI ANKIT KIMTEE 4/5, NEW PALASIA INDORE (APPELLANT) (RESPONDENT ) P .A. NO.ANEPK9721D REVENUE BY SHRI S.S. MANTRI, CIT-DR RESPONDENT BY S/SHRI KUNAL AGRAWAL & MAHESH AGRAWAL, ARS DATE OF HEARING: 25.05.2021 DATE OF PRONOUNCEMENT: 02.08.2021 / O R D E R PER MANISH BORAD: THE ABOVE CAPTIONED APPEAL AT THE INSTANCE OF REVE NUE IS DIRECTED AGAINST THE RESPECTIVE ORDERS OF LD. COMMI SSIONER OF INCOME TAX(APPEALS)-3, (IN SHORT CIT(A)), BHOPAL DATED 29.05.2019 FRAMED BY ACIT, CENTRAL UJJAIN. SHRI ANKIT KIMTEE 2 GROUNDS OF APPEAL IN IT(SS)ANO.173/IND/2019, 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.2,58,59,522/- MADE ON THE GROUND OF UNEXPLAINED INVESTMENT IN STOCK AND GROSS PROFIT THEREON RESPECTIVELY IN THE LIGHT OF THE FACT THAT THE LD. CIT(A) HAS ACCEPTED THE ASSESSEES CONTENTION THAT THE VALUE OF STOCK WAS I NFLATED FOR THE PURPOSE OF INSURANCE, WHICH SHOWS THAT THE ASSESSEE HAD OBTAINED INSURANCE COVER ON THE BASIS OF FORGED DOCUMENTS AN D FICTITIOUS FIGURES AND THAT THE LD. CIT(A) ERRED IN ALLOWING THIS ILLE GALITY AND FORGERY AS A DEFENSE OF THE ASSESSEE WHILE GIVING HIM THE RELIEF . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS OF RS.2,58,59,522/- MADE ON THE GROUND OF UNEXPLAINED INVESTMENT IN STOCK AND GROSS PROFIT THEREON RESPECTIVELY AND THAT THE LD. CIT(A) ERRED IN TERMI NG THE SEIZED PAPERS AS DUMB DOCUMENTS IN THE LIGHT OF THE FACT THAT THE ASSESSEE HAS HIMSELF CONFESSED THAT THE INSURANCE OF STOCK WAS INDEED MA DE, AND THE VERY FIGURE OF THE INSURED STOCK IS APPEARING IN THE SEI ZED PAPERS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE OF TRAVELLING EXPENSES @ 10% INSTEAD OF @ 25% BY OBSERVING THAT THE DISALLOWANCE WAS ON HIGHE R SIDE WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD CARRIED OUT VARIOUS PLEASURE TRIPS AND PERSONAL TRIPS TO FOREIGN DESTINATION WIT H HIS FAMILY MEMBERS, AND HAS ALSO MADE VARIOUS NOT FULLY EXPLAINED PURCH ASES ON PERSONAL COUNT; WHICH ARE APPARENT FROM THE DOCUMENTS SEIZED FROM THE ASSESSEES PREMISES. 2. FACTS, IN BRIEF, WITH REGARD TO GROUND NOS.1 & 2 ON THE ISSUE OF DELETION OF THE ADDITION OF RS.2,58,59,522/- MAD E BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTM ENT, ARE THAT SHRI ANKIT KIMTEE 3 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF JEWELLERY AND FOR PROMOTING THE SALES, THE ASSESSEE HAS BEEN DOING PRACTICE OF TAKING PART IN VARIOUS TRADE SHOWS, EXHIBITIONS AND FAIRS IN DIFFERENT CITIES. DURING SEARCH AND SEIZURE PROCEED INGS, CERTAIN LOOSE PAPERS IN THE FORM OF CONSIGNMENT MEMOS, ISSU ED FOR THE EXHIBITION PURPOSE WHICH WAS IN TURN FOR THE PURPOS E OF INSURANCE, WERE SEIZED BY THE REVENUE. THE AO HAD C OMPARED THESE CONSIGNMENT MEMOS WITH VALUE OF STOCK AS PER BOOKS. THE DIFFERENCE ARISING ON SUCH COMPARISON WAS THEN ADDE D AS UNEXPLAINED INVESTMENT IN STOCK U/S 69 OF THE ACT F OR THE A.Y. 2014-15 UNDER CONSIDERATION. THE BASIS OF ADDITION BY THE AO HAS BEEN REPRODUCED HEREWITH- DATE OF CONSIGNMENT MEMO AMOUNT AS PER CONSIGNMENT MEMOS FOR EXHIBITION PURPOSE AMOUNT AS PER BOOKS OF ACCOUNT ON THE DATE OF CONSIGNMENT MEMOS DIFFERENCE 17.02.2014 5,25,00,000/ - 2,66,40,478/ - 2,58,59,522/ - 3. BEING AGGRIEVED, THE ASSESSEE FILED AN APPEAL BE FORE THE LD. CIT(A) WHO ON CONSIDERATION OF FACTS AND CIRCUMSTAN CES IN THE SHRI ANKIT KIMTEE 4 LIGHT OF RELEVANT JUDICIAL PRONOUNCEMENTS DELETED T HE ADDITION. THUS, THE REVENUE IS IN APPEAL BEFORE US. 4. BEFORE US, LD. CIT/DR RELIED ON THE ORDER OF THE ASSESSING OFFICER AND SUBMITTED THAT THE ADDITION ON ACCOUNT OF DIFFERENCE IN STOCK VALUATION OBSERVED BY THE ASSESSING OFFICE R WAS RIGHTLY MADE ON THE BASIS OF RELEVANT DOCUMENTS SEIZED DURI NG SEARCH PROCEEDINGS. THEREFORE, THE ORDER OF THE LD. CIT(A) DESERVES TO BE REVERSED. ON THE OTHER HAND, THE LEARNED COUNSEL FO R THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THERE IS NO TANGIBLE EVIDENCE WHATSOEVER IN THE HANDS OF REVENU E TO PROVE ALLEGED UNACCOUNTED/UNEXPLAINED INVESTMENT IN STOCK DURING THE RELEVANT ASSESSMENT YEAR. EVEN THE STATEMENT OF THE ASSESSEE RECORDED U/S 131 PROVES THAT THAT THE AMOUNT MENTIO NED IN CONSIGNMENT MEMO FOR TAKING STOCK TO EXHIBITION WAS INFLATED FOR THE PURPOSE OF INSURANCE AS IN CASE OF THEFT/DAMAGE OF THE STOCK BUT THE ASSESSING OFFICER FAILED TO CONSIDER THE SA ME. THE BOOKS OF ACCOUNTS ARE DULY AUDITED U/S 44AB OF THE INCOME TAX ACT AND THE ASSESSING OFFICER DID NOT OBSERVE ANY ADVERSITY OR DEFECTS IN RELATION TO STOCK KEEPING. THUS, LEARNED COUNSEL FO R THE ASSESSEE SHRI ANKIT KIMTEE 5 RELYING ON CERTAIN RELEVANT JUDICIAL PRONOUNCEMENTS SUBMITTED THAT THE ORDER OF THE LD. CIT(A) IS JUSTIFIED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON THE FILE . WE FIND THAT THE ASSESSEE IS DERIVING INCOME FROM BUSINESS OF RE TAIL TRADING OF JEWELLERY AND IS THE PROPRIETOR OF M/S. INTERSTAR. A SEARCH AND SEIZURE ACTION U/S 132 WAS CARRIED OUT AT THE BUSIN ESS AS WELL AS RESIDENTIAL PREMISES OF THE INTERSTAR JEWELLERS GRO UP INCLUDING THE ASSESSEE ON 15.12.2016. ACCORDINGLY, NOTICE U/S 153 A WAS ISSUED AND IN RESPONSE, THE ASSESSEE FILED RETURN OF INCOM E AND FOR THE ASSESSMENT YEAR 2014-15 UNDER CONSIDERATION, THE AS SESSING OFFICER MADE ADDITION OF RS.2,58,59,522/- ON ACCOUN T OF UNEXPLAINED INVESTMENT IN STOCK U/S 69 OF THE INCOM E TAX ACT AS NARRATED ABOVE. WE FIND THAT FOR PROMOTING THE SALE S, THE ASSESSEE IS IN PRACTICE OF TAKING PART IN VARIOUS TRADE SHOW S, EXHIBITIONS AND FAIRS IN DIFFERENT CITIES AND DURING SEARCH AND SEIZURE PROCEEDINGS, CERTAIN LOOSE PAPERS IN THE FORM OF CO NSIGNMENT MEMOS, ISSUED FOR THE EXHIBITION PURPOSE WHICH WAS IN TURN FOR THE PURPOSE OF INSURANCE, WERE SEIZED BY THE REVENU E. THE AO HAD COMPARED THESE CONSIGNMENT MEMOS WITH VALUE OF STOCK AS SHRI ANKIT KIMTEE 6 PER BOOKS AND THE DIFFERENCE ARISING ON SUCH COMPAR ISON WAS THEN ADDED AS UNEXPLAINED INVESTMENT IN STOCK U/S 6 9 OF THE ACT FOR THE A.Y. 2014-15 UNDER CONSIDERATION. WE FIND T HAT IN THE POST SEARCH STATEMENTS U/S 131(1A) OF THE ACT, THE ASSES SEE WAS ASKED ABOUT THE DIFFERENCE. THE RELEVANT PORTION OF SUCH STATEMENTS IS REPRODUCED HEREUNDER: 7 15.12.2016 ! ( . 1 ANNEXURE-A 2 M/S INTERSTAR STOCK VALUATION (CLOSING BALANCE) 3 2,71,52,233 AS PER BOOKS 24.01.2014 2 8 9 , BANGLORE EXHIBITION 24.01.2014 3 5.25 STOCK M/S INTERSTAR STOCK VALUATION (CLOSING BALANCE) 3 2,66,40,478 AS PER BOOKS 17.02.2014 2 8 9 @, A, HYDERABAD EXHIBITION 17.02.2014 2. 5.25 STOCK M/S INTERSTAR STOCK VALUATION (CLOSING BALANCE) 3 2,84,38,761 AS PER BOOKS 24.07.2014 2 8 9 GRAND BHAGWATI , EXHIBITION 24.07.2014 3 5.25 STOCK 8 E ( M/S INTERSTAR G M/S INTERSTAR STOCK DIFFERENCE H@. SHRI ANKIT KIMTEE 7 I7 8 EXHIBITION ! K 8 E M/S INTERSTAR STOCK STOCK VALUATION VALUE INSURANCE M H 8 O . P E MP P( H INSURANCE TERMS AND CONDITIONS . . ! VALUATION HIGHER SIDE 8 FROM THE PERUSAL OF THE ABOVE, IT IS OBVIOUS THAT T HE AMOUNT MENTIONED IN CONSIGNMENT MEMO FOR TAKING STOCK TO E XHIBITION WAS INFLATED ALMOST 2 TIMES FOR THE PURPOSE OF INSU RANCE AS IN CASE OF THEFT/DAMAGE OF THE STOCK NORMALLY CLAIM IS MUCH LESS THAN THE INSURED AMOUNT. WE FURTHER FIND THAT ASSES SEE HAS BEEN KEEPING REGULAR BOOKS OF ACCOUNTS WELL SUPPORTED BY BILLS AND VOUCHERS AND THE BOOKS OF ACCOUNTS HAVE ALSO BEEN A UDITED U/S 44AB OF THE INCOME TAX ACT FOR THE RELEVANT ASSESSM ENT YEAR. THERE WAS NO ADVERSE OBSERVATION IN RELATION TO STO CK KEEPING MADE BY THE AUDITOR. DURING THE ASSESSMENT PROCEEDI NGS, THE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS WER E ALSO PRODUCED FOR VERIFICATION BEFORE THE AO IN WHICH NO DEFECT OF ANY KIND WAS FOUND. THEREFORE, THE COMPARISON BETWEEN T HE SHRI ANKIT KIMTEE 8 CONSIGNMENT MEMO AND BOOKS OF ACCOUNTS IS WRONG AS MEMO ISSUED WAS FOR THE PURPOSE OF INSURANCE AND CANNOT REPRESENT THE ACTUAL STOCK ON THAT PARTICULAR DATE. IT IS ALSO NO T IN DISPUTE THAT THE GOODS WERE SENT FOR EXHIBITION TO DIFFERENT CIT IES. THE FACTUM OF INSURANCE COVER IS ALSO A MATTER OF FACT AND BASED ON BUSINESS EXPEDIENCY. IT IS ALSO WELL KNOWN FACT THAT IN THEF T CASES, INSURANCE COMPANIES DO NOT PAY THE ENTIRE INSURED A MOUNT ON SOME TECHNICAL PRETEXT OR THE OTHER. IN THE UNEXPEC TED EVENT OF THEFT, THE PAYMENT BY INSURANCE COMPANIES COULD BE AS LOW AS 50% OF THE INSURED MONEY. ON THE DATE OF SEARCH, NO SIGNIFICANT STOCK DISCREPANCY WAS FOUND EXCEPT FOR A SHORTAGE O F RS.9,35,088/- ON WHICH 25% PROFIT WAS ALSO OFFERED TO TAX FOR THE ASSESSMENT YEAR 2017-18. LD. CIT(A) DELETED THE ADD ITION OBSERVING AS UNDER: FROM THE PERUSAL OF THE ABOVE, IT IS AMPLY CLEAR THAT THE AMOUNT MENTIONED IN CONSIGNMENT MEMO FOR TAKING STO CK TO EXHIBITION WAS INFLATED (ALMOST 2 TIMES) FOR THE PU RPOSE OF INSURANCE AS IN CASE OF THEFT/DAMAGE OF THE STOCK. THE APPELLANT HAS KEPT REGULAR BOOKS OF ACCOUNTS WE LL SUPPORTED BY BILLS AND VOUCHERS. THE BOOKS OF ACCOUNTS HAVE ALSO BEEN SUBJECTED TO AUDIT U/S 44AB OF THE INCOME TAX ACT F OR THE RELEVANT ASSESSMENT YEAR. THE RE WAS NO ADVERSE OBSERVATION SHRI ANKIT KIMTEE 9 IN RELATION TO STOCK KE EPING MADE BY THE AUDITOR. DURING THE ASSESSMENT PROCEEDINGS, THE BOOKS OF ACCOUNTS ALONG WITH BILLS AND VOUCHERS WERE ALSO PRODUCED FOR VERIFICATION BE FORE THE AO IN WHICH NO DEFECTS OF ANY KIND WAS FOUND . THE COMPARISON BETWEEN THE CONSIGNMENT MEMO AND BOO KS OF ACCOUNTS IS ITSELF ERRONEOUS AS MEMO ISSUED WAS FOR THE PURPOSE OF INSURANCE AND CANNOT REPRESENT THE ACTUA L STOCK ON THAT PARTICULAR DATE. THE GOODS WERE SENT FOR EX HIBITION TO DIFFERENT CITIES IS NOT IN DISPUTE. THE FACTUM OF I NSURANCE COVER IS ALSO A MATTER OF FACT AND BASED ON BUSINES S THE GOODS WERE SENT FOR EXHIBITION TO DIFFERENT CITIES IS NOT I.N DISPUTE. THE FACTUM OF INSURANCE COVER IS ALSO A MA TTER OF FACT AND BASED ON BUSINESS REQUIREMENT. IT IS ALSO WELL KNOWN THAT IN THEFT CASES, INSURANCE COMPANIES DO NOT PAY THE ENT IRE INSURED AMOUNT ON SOME TECHNICAL PRETEXT OR THE OTHER. IN T HE UNEXPECTED EVENT OF THEFT, THE PAYMENT BY INSURANCE COMPANIES COULD BE AS LOW AS 50% OF THE INSURED MON EY. ON THE DATE OF SEARCH NO SIGNIFICANT STOCK DISCREPANCY WAS FOUND EXCEPT FOR A SHORTAGE OF STOCK OFRS. 9,35,088/- FOR THE A.Y 2017- 18 ON WHICH 25% PROFIT HAS BEEN DULY OFFERED IN THE RETURN FILED U/S 139. FURTHER, THE ADDITION MADE IS NOT BASED ON ANY TANGIBLE EVIDENCE AND IS TOTALLY BASED ON LOOSE PAPER SEIZED BY THE DEPARTMENT IN THE FORM OF CONSIGNMENT MEMO FOR EXHI BITION PURPOSE. THE SAME IS EVIDENT FROM THE ASSESSMENT OR DER. THE RELEVANT PORTION IS REPRODUCED AS UNDER.- 'DURING THE SEARCH PROCEEDINGS, SOME LOOSE PAPERS W ERE FOUND AND SEIZED WHICH WERE RELATED TO MLS INTERSTAR WHERE THE STOCK OF RS. 5,25,00,000/- WAS DISPLAYED IN SOME EXHIBITION BY SHRI ANKIT KIMTEE 4.3.2 FURTHER, THERE ARE NO CORROBORATIVE EVIDENCE IN THE HANDS OF DEPARTMENT TO SUBSTANTIATE THE ALLEGATIONS OF UNACCOUNTED PURCHASE. DURING SEARCH PROCEEDINGS THERE WERE NO EVIDENCES FOUND IN THE FORM OF UNACCOUNTED PURCHASE BILLS OR UNACCOUNTED SALES OR LIST OF SUPPLIERS FROM WHOM UN ACCOUNTED PURCHASE MADE OR PAYMENTS MADE FOR SUCH ALLEGED UNACCOUNTED PURCHASE ETC. IN THE ABSENCE OF SUCH CORROBORATIVE EVIDENCE, THE LOOSE PAPER SEIZED (CON SIGNMENT MEMO) IS NOTHING BUT A DUMB DOCUMENT AND DO NOT POS SESS ANY EVIDENTIARY VALUE IN THE EYES OF LAW. SHRI ANKIT KIMTEE 10 FURTHER, IF THE APPELLANT WAS DOING TRANSACTIONS OF SUCH HIGH MAGNITUDE OF UNACCOUNTED PURCHASE/SALES, THE SAME W OULD HAVE BEEN EASILY CORROBORATED THROUGH ABOVE STATED TANGIBLE EVIDENCES. BUT THE DEPARTMENT COULDN'T UNEARTH SUCH EVIDENCES EVEN ON ACCOUNT OF EXTENSIVE SEARCH UNDERTAKEN BECA USE NO SUCH TRANSACTIONS WERE CONDUCTED BY THE APPELLANT. IT HAS BEEN LAID DOWN BY THE SUPREME COURT IN THE C ASE OF DHAKESWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775 (SE) THAT THE ITO CANNOT MAKE THE ASSESSMENT ON A PURE G UESS WITHOUT REFERENCE TO ANY EVIDENCE OR MATERIAL. FURT HER, IN THE CASE OF CIT V. KULWANT RAI, (2007) 291 RTR 36 DELHI HIGH COURT HAS HELD THAT N 0 ADDITION CAN BE MADE BASED ON SURMISES AND GUESS WORK. THE MADRAS HIGH COURT IN THE CASE OF EIT V. N. SWAM Y [2000] 241 ITR 363 HAS HELD THAT: 'THE APPELLANT'S INCOME IS TO BE ASSESSED BY THE IN COME TAX OFFICER ON THE BASIS OF THE MATERIAL WHICH IS REQUI RED TO BE CONSIDERED FOR THE PURPOSE OF ASSESSMENT AND ORDINA RILY NOT ON THE BASIS OF THE STATEMENT WHICH THE APPELLANT MAY HAVE GIVEN TO A THIRD PARTY UNLESS THERE IS MATERIAL TO CORROB ORATE THAT STATEMENT OF THE APPELLANT GIVEN TO A THIRD PARTY, EVEN IF IT BE A BANK. THE MERE FACT THAT THE APPELLANT HAD MADE SUC H A STATEMENT BY ITSELF CANNOT BE TREATED ,AS HAVING RESULTED IN AN IRREFUTABLE PRESUMPTION AGAINST THE APPELLANT. THE BURDEN OF SHOWING THAT THE APPELLANT HAD UNDISCLOSED INCOME I S ON THE REVENUE. THAT BURDEN CANNO T BE SAID TO BE DISCHARGED BY MERELY REFERRING TO THE STATEMENT GIVEN BY THE APPELLANT TO A THIRD PARTY IN CONNECTION WITH A TRANSACTION WHICH WAS NOT DIRECTLY RELATED TO THE ASSESSMENT AND MAKING THAT THE SOLE FOUNDATION FOR A FINDING THAT THE APPELLANT HAD DEL IBERATELY SUPPRESSED HIS INCOME. THAT THE BURDEN IS ON THE REVENUE TO PROVE THAT THE INCOME SOUGHT TO BE TAXED IS WITHIN THE TAXING PROVISIONS AND THERE WAS IN FACT INCOME, ARE PROPOSITIONS WHICH ARE WELL SET TLED BY THE SUPREME COURT IN THE CASE OF PARIMISETTI SEETHARAMA MMA V. CIT [1965) 57 LTR 532 WHICH REITERATES THESE PROPOSITIONS. SHRI ANKIT KIMTEE 11 HIGH COURT OF RAJAS THAN , JODHPUR BENCH IN CASE OF COMMISSIONER OF INCOME-TAX V. RELAXO FOOTWEAR [2002] 123 TAXMAN 322 (RAJ.) HEAD NOTE - SECTION J 43 OF THE INCOME-TAX ACT, 1961 - ASSESSMENT _ ADDITION TO INCOME - ASSESSMENT YEAR 1 992-93 .. TRIBUNAL ON. EXAMINATION OF BOOKS OF ACCOUNT FOUND THAT TRUE POSITION OF STOCK WAS RIGHTLY REFLECTED IN BOOKS OF ACCOUNT OF APPELLANT AND STOCK STATEMENT SUBMITTED TO BANK WAS DELIBERATELY INFLATED ONLY TO GET HIGHER LIMIT OF C REDIT FROM BANK - TRIBUNAL, THEREFORE. DELETED ADDITION MADE TO INCOM E ON BAS IS OF STOCK STATEMENT SUBMITTED TO BANK - WHETHER FINDING OF TRIBUNAL WAS A FINDING OF FACT AND REQUIRED NO INTERFERENCE - HELD, YES. HIGH COURT OF GUJRAT IN CIT V. ARROW EXIM (P.) LTD. [201 0] 2~ 0 CTP (GUJ.) 293 HAS HELD THAT WHERE THOUGH THERE WAS DISCREPANCY BETWEEN STOCK A S PER BOOKS OF ACCOUNT AND THAT SHOWN IN STATEMENT GIVEN TO BANK ALLEGEDLY TO OBTAIN HIGHER CREDIT FACILITIES, TRIBUNAL HAD ACCEPTED EXPLANATION GIVEN BY APPELLANT AND IN THAT CONTEXT HAD STATED THAT WHEN BOOKS OF ACCOUNT OR ACCOUNTING SYSTEM HAD BEEN FOUND TO BE GENUINE SUPPORTED BY VOUCHERS, ETC., AD DITION WAS NOT JUSTIFIED, TRIBUNAL'S FINDING NOT CALL FOR ANY INTERFERENCE. ITAT AMRITSAR BENCH IN ITO V. TILAK RICE MILLS [2002] 75 TT] HAS HELD THAT WHERE THERE WAS NOTHING TO SHOW THAT APPELLANT WAS HAVING HIGHER STOCK THEN DISCLOSED IN BOOKS OF ACCOUNT, ME RE DIFFERENCE IN STOCK STATEMENT FURNISHED BY APPELLAN T TO BANK, WHICH WAS ADMITTEDLY INFLATED TO OBTAIN HIGHER CASH CREDIT, AND APPELLANT'S BOOKS OF ACCOUNT COULD NOT JUSTIFY ADDI TION OF SUCH DIFFERENCE TOAPPELLANT'S INCOME. IN THE ITAT AHMEDABAD BENCH 'A' RIDDHI STEEL & TUBES (P.) LTD. V. ASSISTANT COMMISSIONER OF INCOME-TAX, RANGE -5, AHMEDABAD HEAD NOTE - IT WAS HELD THAT SECTION 69B, READ WITH SECTION 145, OF THE INCOME-TAX ACT, 1961 UNDISCLOSED INVESTMENTS [CLOSING STOCKJ - ASSESSMENT YEAR 2009-10 - WHETHER MERELY R ELYING UPON STATEMENT FURNISHED TO BANKING AUTHORITIES, AD DITIONS SHRI ANKIT KIMTEE 12 CANNOT BE MADE ON ACCOUNT OF DIFFERENCE ARIS ING IN QUANTITY AND VALUE OF STOCK SHOWN IN BOOKS OF ACCOUNT AND ST ATEMENT FURNISHED TO BANKING AUTHORITIES, ADMITTEDLY TO AVA IL HIGHER CREDIT FACILITIES - HELD, YES [PARA 16J [IN FAVOUR OF APPE LLANT). MORE JUDICIAL PRO OUNCEMENTS HIGHLIGHTING THE IMPORTANCE OF CORROBORATIVE EVIDENCES ABSENT IN THE INST ANT CASE - RELIANCE IS PLACED ON THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT V. D.K. GUPTA, (2008) 174 TAXMAN 476 WHEREIN, IT HAS BEEN HELD THAT SINCE THERE IS NO CORROBORATIVE OR DIRECT EVIDENCE TO PRESUME THAT NOTING/JOTTING HAD MATERIALIZED INTO TRANSACTIONS GIVING RISE TO INCOME NOT DISCLOSED IN THE BOOKS BY THE APPELLANT, THE PRESUMPTION MADE BY AO CANNOT BE TENABLE IN LAW. ASSISTANT COMMISSIONER OF INCOME-TAX V. SHARAD CHAUDHARY [2015] 55TAXMANN.COM 324 (DELHI - TRIB.) HELD THAT A LOOSE PAPER FOUND DURING SEARCH STANDAL ONE COULD NOT BE USED AS A BASIS FOR MAKING IMPUGNED ADDITION WITHOUT THE COMPANY OF ANY OTHER SUPPORTIVE MATERIAL AND EV IDENCE MORE SO WHEN CONTENTS OF MAIN THREE PARTS OF THE NOTINGS WERE NOT INTERLINKED AND THE ASSESSING OFFICER HAD DELETED DECIMAL FROM NOTING OF THE FIGURE OF RS. 4,47,000.00 FOR READING AND ACCEPTING THE SAME AS RS. 4,47,00,000 WHICH WAS NOT PERMISSIBLE IN ABSENCE OF OTHER SUPPORTIVE EVIDENCE. THE ADDITION WAS, THEREFORE, DELETED HON'BLE ITAT INDORE IN THE CASE OF ACIT VS M/S. FAIRDEAL MARWAR GARAGE LTD. (2019) 34 ITJ 521 (TRIB. - INDORE) HELD - THE ASSESSING OFFICER FAILED TO CORROBORATE THE MAT ERIAL FIND DURING THE COURSE OF SURVEY WITH THE TRANSACTIONS C ARRIED OUT BY THE APPELLANT. IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE) WE FIND NO INFIRMITY IN THE FINDING OF FACT GIVEN BY LD. CI T(A) AND THUS DISMISS GROUNDS NO. 1 TO 15 OF THE REVENUE'S APPEAL. IN CIT VS LALIT BHASIN [2007J 290 ITR 245 (DELHI) IT WAS HELD THAT 'THE ASSESSING OFFICER ARRIVED AT A CONCLUSION, PRI MARILY ON IMAGINATIVE BASIS AND CONJECTURE RATHER THAN ON THE BASIS OF ANY RECORD OR BOOKS OF ACCOUNT. THE TRIBUNAL HAD FOUND THAT HERE SHRI ANKIT KIMTEE 13 WAS NO EVIDENCE OF UNEXPLAINED INVESTMENT, THE DELE TION OF ADDITION WAS JUSTIFIED JJ NIRMAL FASHIONS (P) LTD. V. DCIT, (2008) 25 SOT 387 (KOL) WHEREIN IT WAS HELD - SINCE PAPERS/DOCUMENTS SEIZED ON SEARCH WERE FOUND TO BE, UNTENABLE AND CONTRARY TO OTHER E VIDENCE ON RECORD, IMPUGNED ADDITIONS MADE ON THE BASIS OF SAID PAPERS WAS NOT JUSTIFIED THE HON'BLE HIGH COURT OF DELHI IN THE CASE OF CL'T VS. ANIL BHALLA (2010) 322 ITR 191 (DEL.) OBSERVED THAT 'NO INDEPENDENT MATERIAL OR EVIDENCE HAD BEEN BROUGHT ON RECORD BY THE A 0 TO ESTABLISH THAT THE NOTING / JOTTINGS RECORDED ON THE LOOSE SH EET OR PAPER REPRESENTED AN UNACCOUNTED TRANSACTION THEN T HE EXPLANATION OF THE APPELLANT SHOULD BE ACCEPTED. IN THIS SITUATION, THE TRIBUNAL WAS RIGHT IN HOLDING THAT T HE LOOSE SHEET OR DOCUMENT DOES NOT REPRESENT ANY INVESTMENT OR EXPENDITURE OVER AND ABOVE THE BOOKS OF ACCOUNTS OF THE APPELLANT OUT OF INCOME ALLEGED TO BE EARNED F ROM UNACCOUNTED SOURCES. > CIT V. JAIPAL AGGARWAL [2013] 212 TAXMAN 1 (DELHI) WHEREIN HON'BLE HIGH COURT OF DELHI HELD THAT DUMB DOCUMENTS SEIZED, I. E. FROM WHICH NOTHING COULD BE CLEARLY UNDERSTOOD, CANNOT FORM A JUSTIFIED BASE FOR MAKING ADDITIONS TO INCOME OF THE APPELLANT. IN CIT VS LALIT BHASIN [2007] 290 ITR 245 (DELHI) IT WAS HELD THAT THE ASSESSING OFFICER ARRIVED AT A CONCLUSION, PRIM ARILY ON IMAGINATIVE BASIS AND CONJECTURE RATHER THAN ON THE BASIS OF ANY RECORD OR BOOKS OF ACCOUNT. THE TRIBUNAL HAD FO UND THAT HERE WAS NO EVIDENCE OF UNEXPLAINED INVESTMENT, THE DELETION OF ADDITION WAS JUSTIFIED. HON'BLE LTAT MUMBAI IN CASE OF S.P. GOYAL V. DCIT [ 2002] 82 LTD 85 HELD THAT ADDITION MADE WAS ON MERE SUSPICION WITHOUTANY CORROBORATIVE EVIDENCE AND HAD TO BE DEL ETED. ITAT MUMBAI IN THE CASE OF ACTT V. JP MORGAN INDIA (P.) LTD. 46 SOT 250 (MUMBAI) HELD THAT THE ADDITION MADE BY THE AO 0 BASED ON THE LOOSE PAPER, WHICH IS NOT A CONCLUSIVE EVIDENCE AND THEREFORE, THE SAME IS NOT SUFFICIENT FOR MAKING SHRI ANKIT KIMTEE 14 THE ADDITION. HONBLE ITAT AGRA TRIB. INTHE CASE OF ACIT V. RAVI AGRICULTURAL INDUSTRIES [2009] 117 LTD 338 HELD, SINCE LOOSE PAPERS IN QUESTION DID NOT CONCLUSIVELY ESTABLISH THAT THEY P ERTAINED TO BUSINESS TRANSACTIONS OF APPELLANT-FIRM, COMMISSIONER (APPEALS) WAS JUSTIFIED IN DELETING ADDITION MADE O N BASIS OF SAID PAPERS. THEREFORE, THE ADDITION MADE BY AO AMOUNTING TO RS. 2,58,59,522/- IN A.Y. 2014-15 AND RS. 46,41,784/- IN A.Y. 2015- 16 ARE DELETED. THEREFORE, THE APPEAL ON THESE GROU NDS IS ALLOWED . FROM THE PERUSAL OF THE ABOVE, WE FIND THAT THE LD. CIT(A), HAVING MADE DISCUSSION ON FACTS AND RELEVANT JUDICIAL PRON OUNCEMENTS THEREOF, NOTED THAT THE ADDITION MADE IS NOT BASED ON ANY TANGIBLE EVIDENCE AND IS TOTALLY BASED ON LOOSE PAPER SEIZED BY THE REVENUE IN THE FORM OF CONSIGNMENT MEMO FOR EXHIBIT ION PURPOSE. FURTHER, THERE ARE NO CORROBORATIVE EVIDEN CES IN THE HANDS OF REVENUE TO SUBSTANTIATE THE ALLEGATIONS OF UNACCOUNTED PURCHASE. DURING SEARCH PROCEEDINGS THERE WERE NO E VIDENCES FOUND IN THE FORM OF UNACCOUNTED PURCHASE BILLS OR UNACCOUNTED SALES OR LIST OF SUPPLIERS FROM WHOM UNACCOUNTED PU RCHASES MADE OR PAYMENTS MADE FOR SUCH ALLEGED UNACCOUNTED PURCHASE ETC. IN THE ABSENCE OF SUCH CORROBORATIVE EVIDENCE, THE LOOSE PAPER SEIZED (CONSIGNMENT MEMO) IS NOTHING BUT A DUMB DOC UMENT AND SHRI ANKIT KIMTEE 15 DO NOT POSSESS ANY EVIDENTIARY VALUE IN THE EYES OF LAW. IF THE ASSESSEE WOULD BE DOING TRANSACTIONS OF SUCH HIGH M AGNITUDE OF UNACCOUNTED PURCHASE/SALES, THE SAME WOULD HAVE BEE N EASILY CORROBORATED THROUGH AFORESAID TANGIBLE EVIDENCES. BUT THE REVENUE COULDN'T BRING SUCH EVIDENCES EVEN ON ACCOU NT OF EXTENSIVE SEARCH UNDERTAKEN BECAUSE NO SUCH TRANSAC TIONS WERE CONDUCTED BY THE ASSESSEE. THEREFORE, WE ARE OF THE VIEW THAT THE ADDITION MADE ON THE BASIS OF OVERVALUED STOCK IN CONSIGNMENT MEMOS PREPARED FOR GETTING INSURANCE CLAIMS REQUIRES TO BE DELETED AS BOOKS OF ACCOUNTS FOUND WERE FOUND GENUINE AND NO CORROBORATIVE EVIDENCE WE RE BROUGHT ON RECORD. 5.1 ON CONSIDERATION OF THE ABOVE FACTS IN THE LIGH T OF THE AFORESAID DISCUSSION AND JUDICIAL PRONOUNCEMENT S, WE ARE OF THE VIEW THAT THE LD. CIT(A) HAS RIGHTLY APP RECIATED THE FACTS AND REACHED TO THE JUSTIFIED CONCLUSION I N THE LIGHT OF THE RELEVANT JUDICIAL PRONOUNCEMENTS. EVEN BEFORE US, THE REVENUE COULD NOT CONTROVERT THE FIN DINGS OF THE LD. CIT(A) BY BRINGING ANY TANGIBLE OR CONTR ARY EVIDENCE ON RECORD. THEREFORE, WE CONFIRM THE FINDI NGS SHRI ANKIT KIMTEE 16 RECORDED BY THE LD. CIT(A) ON THIS ISSUE. ACCORDING LY, GROUND NOS. 1 & 2 RAISED BY THE REVENUE ARE DISMISS ED. 6. SO FAR AS GROUND NO.3 WITH REGARD TO ADDITION OF RS.1,11,990/- BEING @25% TRAVELLING EXPENSES & CONVEYANCE EXPENSES IS CONCERNED, WE FIND THAT THE ASSESSING OFFICER MADE THIS ADDITION @25% ON ACCOUN T OF PERSONAL USE AND LD. CIT(A) RESTRICTED THE SAME TO 10% ON THE GROUND THAT DISALLOWANCE OF EXPENSES IS ON HIGH ER SIDE. LD. CIT-DR RELIED ON THE ORDER OF THE ASSESSI NG OFFICER WHEREAS LEARNED COUNSEL FOR THE ASSESSEE RE LIED ON THE ORDER OF THE LD. CIT(A). ON CONSIDERATION OF FACTS, WE ARE OF THE VIEW THAT SUCH EXPENSES ARE INCURRED FOR THE BUSINESS PURPOSE. SINCE THE ADDITION IS MADE BY THE ASSESSING OFFICER ON ESTIMATION, THE LD. CIT(A) IS JUSTIFIED IN RESTRICTING THE SAME TO 10%. THUS, WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE FINDING OF THE LD. CIT (A) ON THIS ISSUE. ACCORDINGLY, GROUND NO.3 RAISED BY THE REVENUE IS ALSO DISMISSED. SHRI ANKIT KIMTEE 17 7. IN RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER WAS PRONOUNCED AS PER RULE 34 OF I.T.A.T., RU LES 1963 ON 02.08.2021. SD/- (RAJPAL YADAV) SD/- (MANISH BORAD) VICE-PRESIDENT ACCOUNTANT MEMBER INDORE; DATED : 02/08/2021 !VYAS! COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER ASSISTANT REGISTRAR, INDORE