I.T.O.-4(3), Agra V. Sh. Pankaj Garg, Agra

ITSSA 2/AGR/2010

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 0370 (ITAT-AGRA)
• Duration Of Justice: 8 year(s) 7 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 16-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 20-05-2013
• Assessment Year: misc
• Appeal Filed On: 22-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: R C TOMAR I T P
• Keywords: Search and seizure; Block assessment; Documents seized
• Section: 69C; 69B; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI A.L. GEHLOT, ACCOUNTANT MEMBER IT(SS)A NO.02/AGRA/2010 BLOCK PERIOD: 01.04.1996 TO 22.02.2003 INCOME TAX OFFICER 4(3), VS. SHRI PANKAJ GARG, AGRA. 5/65, MADIA KATRA. AGRA. (PAN : ABXPG 2562 K). (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI WASEEM ARSHAD, SR. D.R. RESPONDENT BY : SHRI R.C. TOMAR, I.T.P. DATE OF HEARING : 20.05.2013 DATE OF PRONOUNCEMENT : 31.05.2013 ORDER PER A.L. GEHLOT, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 31.05.2010 PASSED BY THE LD. CIT(A)-II, AGRA FOR THE BLOCK PER IOD 01.04.1996 TO 22.02.2003. 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE G ROUND OF APPEAL :- 1. THAT THE LD. CIT(A)II, AGRA HAS ERRED IN LAW A ND ON FACTS IN DELETING THE ADDITION OF RS.24,50,000/- MADE BY A.O . ON ACCOUNT OF 2 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 SALE, PURCHASE AND MANUFACTURE OF SILVER ORNAMENTS ETC. OUT SIDE THE BOOKS IGNORING THE FACT THAT THE ASSESSEE COULD NOT ESTABLISH THE JOB WORK DURING THE COURSE OF ASSESSMENT PROCEEDINGS WH EREAS OPPORTUNITIES WERE AFFORDED TO HIM. 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH UN DER SECTION 132 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) WAS CARRIED O UT ON 22.02.2003. THE ASSESSEE FIRM IS ENGAGED IN THE TRADING OF SILVER ORNAMENTS AND ARTIFICIAL JEWELLERY. DURING THE COURSE OF SEARCH SOME PAPERS WERE FOUND PERTAIN ING TO PROPRIETARY BUSINESS OF JOB WORK AND COMMISSION CARRIED ON BY SHRI PANKAJ G ARG, PARTNER. THE SEIZED BOOKS AND PAPERS SAID TO BE BELONGED TO SHRI PANKAJ GARG. CONSIDERING THESE FACTS, SECTION 158BC READ WITH SECTION 158BD OF THE ACT WAS CONSIDERED BY THE A.O. FOR THE BLOCK PERIOD 01.04.1996 TO 22.02.2003. THE ASSESSEE FILED RETURN OF INCOME ON 28.02.2005 DECLARING UNDISCLOSED INCOME O F RS.1,08,330/- FOR DIFFERENT YEARS WHICH WAS REPRODUCED BY THE A.O. AT PAGE NO.2 OF HIS ORDER. ON SCRUTINY OF THE SEIZED PAPERS, THE A.O. NOTICED THAT IN THESE S EIZED BOOKS OF ACCOUNT, INCOMING SILVER, WIRE ETC. NAME OF THE KARIGARS ETC. WERE ME NTIONED BUT NAME OF THE PERSONS FROM WHOM RAW MATERIALS WERE RECEIVED WERE NOT GIVE N. FURTHER, NAME OF PERSONS TO WHOM FINISHED GOODS WERE DELIVERED WERE NOT MENT IONED. RECEIPT BOOK REGARDING OBTAINING OF SILVER/RAW MATERIAL FOR JOB WORK WAS NOT FOUND AT THE TIME OF SEARCH. ON THE BASIS OF THESE FACTS, THE A.O. N OTICED THAT IT WAS NOT CLEAR FROM THE SEIZED PAPERS THAT HOW ALL THESE SEIZED PAPERS ARE RELEVANT TO ASSESSEES JOB 3 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 WORK. THE A.O. ON SCRUTINY PRIMA FACIE FOUND THAT THE ASSESSEE WAS ENGAGED IN SALE AND PURCHASE INCLUDING MANUFACTURING OF SILVER ORNAMENTS BUSINESS. THE SUBMISSION OF THE ASSESSEE BEFORE THE A.O. WAS THAT THE ASSESSEE WAS DOING ONLY JOB WORK. AS REGARDS THE ITEMS, IT WAS SUBMITTED B Y THE ASSESSEE BEFORE THE A.O. THAT THE ITEMS BELONGED TO PARTIES FROM WHO SILVER WAS RECEIVED FOR JOB WORK BUT TO AVOID LITIGATION AND TO PURCHASE PEACE HE HAS SURRE NDERED THE VALUE OF SILVER CHAINS AMOUNTING TO RS.1,08,300/- IN THE RETURN OF INCOME. 4. THE A.O. ASKED FOR EXPLANATION ABOUT THE LOOSE P APER. AS IT WAS NOTICED BY THE A.O. AT THE TIME OF BLOCK ASSESSMENT PROCEEDING IN CASE OF M/S N P JEWELLERS WHEREIN IT WAS CLAIMED BY FILING AN AFFIDAVIT THAT ALL SEIZED PAPERS BELONGING TO SHRI PANKAJ GARG WERE RELATED TO JOB WORK BUSINESS BUT NO SUCH EVIDENCES WAS FILED WHICH MAY SUBSTANTIATE THE CLAIM OF THE ASSES SEE. UNDER THESE CIRCUMSTANCES, THE A.O. NOTICED THAT THERE IS NO OPTION LEFT WITH HIM EXCEPT TO TREAT THE ENTIRE SEIZED PAPERS PERTAINING TO THE ASSESSEES SALE AND PURCHASE BUSINESS INCLUDING MANUFACTURING/PROCESSING OF SILVER ORNAMENTS ETC. ON THIS BASIS OF PRESUMPTION, THE A.O. PRESUMED THAT THE ASSESSEE MUST HAVE INVES TED RS.12,00,000/- IN PURCHASE OF SILVER OUTSIDE BOOKS, THEREAFTER SALE PROCEED AG AINST THIS INVESTMENT MUST HAVE ROUTED IN THE BUSINESS FOR SUBSEQUENT PERIOD. THE TOTAL DISCLOSED INCOME FOR A.Y. 2002-03 HAS BEEN CALCULATED BY THE A.O. AT RS.18,00 ,000/- (12,00,000/- 4 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 UNDISCLOSED INVESTMENT PLUS RS.6,00,000/- PROFIT). THE UNDISCLOSED INCOME FOR A.Y. 2003-04 HAS BEEN ESTIMATED BY THE A.O. AT RS.6 ,00,000/-. THE A.O. FURTHER NOTICED THAT IN ABSENCE OF ANY REPLY FROM THE ASSES SEE, PROFIT FROM IRON CHAINS/ITEMS BUSINESS WAS ESTIMATED AT RS.50,000 AN D THE SAME WAS TREATED AS UNDISCLOSED INCOME FOR A.Y. 2002-03. THE A.O. CALC ULATED THE UNDISCLOSED INCOME OF BLOCK PERIOD AS UNDER :- (PAGE NO.8) 8. HAVING REGARD TO THE ABOVE AND REPLY OF THE ASS ESSEE, UNDISCLOSED INCOME IS COMPUTED AS UNDER :- ASSESSMENT YEAR UNDISCLOSED INCOME 2002-03 18,50,000/- (1800000+50000) 2003-04 7,08,300/- (600000+1,08,300) 25,58,300/ - 5. THE CIT(A) HELD THAT THE ASSESSEE WAS ENGAGED IN JOB WORK BUSINESS AND NOT DOING PURCHASE AND SALE OF SILVER ORNAMENTS. THE R ELEVANT FINDING OF THE CIT(A) IS REPRODUCED AS BELOW :- (PAGE NO.11) EVEN AT THE TIME OF SEARCH UNDER SECTION 132, IN T HE COURSE OF RECORDING OF HIS STATEMENT UNDER SECTION 132(4) THE APPELLANT HAS CATEGORICALLY STATED THAT THE PAPERS RELATE TO THE BUSINESS OF JOB WORK DONE IN HIS INDIVIDUAL CAPACITY. THE FINDING OF TH E AO THAT ASSESSEE WAS DOING SALE AND PURCHASE BUSINESS OF SILVER ORNA MENTS OUTSIDE THE BOOKS IS HELD TO BE A MERE PRESUMPTION AS NO SUCH E VIDENCE WAS FOUND OR COLLECTED IN THE SEARCH PROCEEDINGS OR THERE AFT ER HAS BEEN BROUGHT ON RECORD. EVEN NO BOOKS OF ACCOUNTS FOR THE ALLEG ED PURCHASES AND SALES SUPPORTED BY BILLS AND VOUCHERS WERE FOUND. EVEN NO CREDITORS OR DEBTORS FOR THE GOODS PURCHASED AND SOLD ARE NOT ED NOR THERE IS ANY OPENING OR CLOSING STOCK IN ANY OF THE YEAR UND ER THE BLOCK 5 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 ASSESSMENT. ALSO IN THE ASSESSMENT ORDER PASSED UN DER SECTION 158BC IT HAS BEEN HELD IN THE CASE OF THE FIRM THAT THE PAPERS FOUND AND SEIZED MOSTLY RELATES TO JOB WORK DONE BY SHRI PANKAJ GARG, THE APPELLANT AND THE ASSESSMENT FRAMED IN THE CASE OF THE FIRM HAS ATTAINED FINALITY. ACCORDINGLY THE GROUND NO.1 TO 5 RAISED BY THE APPELLANT THAT HE WAS ENGAGED IN JOB WORK BUSINESS AND NOT PURCHASE AND SALE OF SILVER ORNAMENTS AND THAT THE RELEVANT ANNEXURES AND DIARIES RELATED TO THE JOB WORK DONE BY HIM IS ALLO WED. 6. IN RESPECT OF ESTIMATION OF INCOME, THE CIT(A) N OTED THAT THE A.O. HAS IGNORED THE SEIZED MATERIAL AND HAS APPLIED OWN PRE SUMPTION AND CALCULATED THE FIGURES AFTER REJECTING THE CLAIM OF THE ASSESSEE T HAT THE PAPERS SEIZED RELATED TO JOB WORK AND COMMISSION INCOME. THE CIT(A) NOTED THAT THE A.O. HAS MADE ESTIMATION ON PRESUMPTION WITHOUT BRINGING ANY SUPP ORTING MATERIAL ON RECORD. THE A.O. HAS ESTIMATED BY HIS OWN CALCULATION AND M ETHOD. THE CIT(A) NOTED THAT IT IS NOT CLEAR AS TO WHICH BOOKS THE A.O. HAS REFE RRED TO AS NO SUCH BOOKS OF ACCOUNT FOR THE ALLEGED PURCHASE OF AND SALE OF BUS INESS WERE FOUND AND SEIZED. THE CIT(A) WAS OF THE VIEW THAT IN SEARCH ASSESSMEN T UNDER SECTION 158BC/158BD THE INCOME FOR THE BLOCK ASSESSMENT UND ER SEARCH AND SEIZURE IS TO BE COMPARED STRICTLY ON THE BASIS OF DOCUMENTS SEIZ ED AND IT CANNOT PROCEED ON CONJECTURES AND SURMISES AND ARRIVE AT AN ESTIMATIO N OR APPRAISAL INSTEAD OF COMPUTATION. THE CIT(A) RELIED UPON VARIOUS ORDERS OF THE I.T.A.T. WHEREIN THE PRINCIPLE HAS BEEN LAID DOWN FOR THE PURPOSE OF MAK ING BLOCK ASSESSMENT THAT UNDER THE SEARCH AND SEIZURE PROCEDURE IT IS TO BE COMPUTED STRICTLY ON THE BASIS OF 6 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 THE DOCUMENTS SEIZED AND CANNOT BE PROCEEDED ON CON JECTURES AND/OR SURMISES AND ARRIVE AT AN ESTIMATION INSTEAD OF COMPUTATION. TH E CIT(A) REFERRED THE JUDGEMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF PUS HKAR NARAIN SARRAF VS. CIT, 183 ITR 388 (ALL) WHEREIN THE HIGH COURT LAID DOWN THE PRINCIPLE THAT UNDER THE DEEMING FICTION OF SECTIONS 68, 69, 69A, 69B & 69C BURDEN IS ON THE DEPARTMENT TO PROVE THAT THE ENTRIES REPRESENT UNDISCLOSED INC OME OF THE ASSESSEE. AFTER DETAILED DISCUSSIONS, THE CIT(A) FOUND THAT IN ABS ENCE OF ANY MATERIAL FROM WHICH THE PURCHASES, SALE AND NET PROFIT AS PRESUMED BY T HE A.O. COULD BE ARRIVED AT AS DONE BY THE A.O. EXCEPT THROUGH ESTIMATION, WHICH I S NOT PERMISSIBLE. THE CIT(A) ACCORDINGLY DIRECTED THE A.O. TO DELETE THE ADDITIO N AND INCOME RETUNED DIRECTED TO BE ACCEPTED. 7. WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PAR TIES AND RECORD PERUSED. THE CIT(A) AFTER A DETAILED DISCUSSION IN HIS ORDER FO UND THAT THE ASSESSEE IS ENGAGED IN JOB WORK BUSINESS AND NOT IN PURCHASE AND SALE O F SILVER ORNAMENTS. THE CIT(A) NOTICED THAT THE ASSESSEE WAS ABLE TO SHOW THAT THE CONTENTS OF THE DOCUMENTS SEIZED AS PER ANNEXURE-7 RELATED TO JOB WORK UNDERT AKEN BY THE ASSESSEE FOR VARIOUS CONSTITUENTS WHOSE NAME ALONG WITH QUANTITY OF ALLOY RECEIVED ON DIFFERENT DATES AND SUBSEQUENT RETURN OF PROCESSED GOODS AFTE R JOB WORK TO THEM IS WRITTEN. THE A.O. WAS NOT ABLE TO PLACE ON RECORD OR IDENTIF Y ANY BILLS EITHER FOUND IN THE 7 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 COURSE OF SEARCH PROCEEDINGS OR IN THE COURSE OF AS SESSMENT PROCEEDINGS TO SUPPORT THE STAND THAT HE ASSESSEE HAS MADE ALLEGED PURCHAS ES OF SILVER WEIGHING 2441 KGS. AND EFFECTED SALES OF RS.60,00,000/- EACH IN ASSESS MENT YEAR 2002-03 AND FOR THE PART PERIOD IN 2003-04. THE CIT(A) FOUND THAT THER E IS NO MATERIAL ON RECORD TO SUGGEST THAT THE DETAILS OF JOB WORK NOTED AGAINST THE NAMES OF THE PERSONS IN ANY WAY COULD BE PRESUMED OR INFERRED AS PURCHASE AND S ALE BUSINESS OF THE ASSESSEE AS HELD BY THE A.O. ON MERE PRESUMPTION. THE CIT(A) F URTHER NOTICED THAT EVEN AT THE TIME OF SEARCH UNDER SECTION 132 IN THE COURSE OF RECODING OF HIS STATEMENT UNDER SECTION 132(4) THE ASSESSEE HAS CATEGORICALLY STATED THAT THE PAPERS RELATE TO BUSINESS OF JOB WORK DONE IN HIS INDIVIDUAL CAPACIT Y. THE A.O. HAS CONVERTED THE JOB WORK INTO PURCHASE AND SALE ON THE BASIS OF PRE SUMPTION. IN THE LIGHT OF DETAILED REASONS GIVEN BY CIT(A) IN HIS ORDER, WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). ORDER OF CIT(A) IS ACCORDINGLY CO NFIRMED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. (ORDER PRONOUNCED IN THE OPEN COURT) SD/- SD/- (BHAVNESH SAINI) (A.L. GEHLOT) JUDICIAL MEMBER ACCOUNTANT MEMBER PBN/* 8 IT(SS)A NO.02/AGRA/2010 B.P. 01.04.1996 TO 22.02.2003 COPY OF THE ORDER FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT (APPEALS) CONCERNED 4. CIT CONCERNED 5. D.R., ITAT, AGRA BENCH, AGRA 6. GUARD FILE. BY ORDER SR. PRIVATE SECRETARY INCOME-TAX APPELLATE TRIBUNAL, AGRA TRUE COPY