Harish Chandra Jaiswal, Kanpur V. DY. Commissioner of Income Tax, Kanpur

ITSSA 272/LKW/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 3685 (ITAT-LUCKNOW)
• Duration Of Justice: 10 month(s) 27 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 22-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K SINGH
• Keywords: Unexplained expenditure; Loose papers; Corroborative evidences
• Section: 69C; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER IT (SS) A NO. 272/LKW/2017 ASSESSMENT YEAR: 2008 - 09 HARISH CHANDRA JAISWAL 8/276, OPPOSITE GA NGAGHAT THANA SHUKLAGANJ, UNNAO V. DY. CIT CENTRAL CIRCLE 1 KANPUR T AN /PAN : ADOPJ7810E (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI ASHISH JAISWAL, ADVOCATE RESPONDENT BY: DR. A. K. SINGH, CIT (DR) DATE OF HEARING: 20 0 3 201 8 DATE OF PRONOUNCEMEN T: 22 0 3 201 8 O R D E R PER P ARTHA SARATHI CHAUDHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - IV, KANPUR DATED 20/3/2017. 2 . THE GROUNDS OF APPEAL IN THIS CASE ARE AS APPEARING ON RECORD. THE ASSESSEE HAS RAIS ED BOTH LEGAL GROUNDS AND GROUNDS ON MERIT. AT THE TIME OF HEARING, THE LD. A.R. OF THE ASSESSEE PLEADED TO TAKE GROUNDS ON MERIT AND GRIEVANCE WITH REGARD TO MERIT IS THAT THE LD. CIT(A) HAS CONFIRM ED THE ADDITION OF RS.12,04,938/ - ON ACCOUNT OF UNEXPLAI NED INVESTMENT, THOUGH IT WAS CONFIRMED THAT THE AMOUNT BELONG ED TO M/S R. K. G. COLD STORAGE & ICE FACTORY. THE GRIEVANCE OF THE ASSESSEE IS ALSO THAT ADDITION WAS MADE WITHOUT ANY CORROBORATI NG EVIDENCE THAT THE EXPENDITURE BELONGS TO THE ASSESSEE AND W ITHOUT EXAMINING THE NATURE OF EXPENDITURE AS APPEARING AT PAGE 33 OF LP - 6. IT(SS)A NO.272/LKW/2017 PAGE 2 OF 7 3 . THE BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS E E WAS SPECIFICALLY ASKED TO EXPLAIN THE NATURE AND SOURCE OF THE AMOUNT OF RS. 12,04,938/ - MENTIONED ON PAGE NO. 33 OF LP - 6 SEIZED DURING THE COURSE OF SEARCH & SEIZURE OPERATION AND ALSO TO EXPLAIN AS TO HOW THE SAID TRANSACTION W AS ACCOUNTED FOR IN HIS BOOKS OF ACCOUNT. THE ASSESSEE IN HIS REPLY HAS ENCLOSED A LETTER DATED 01.01.2016 FROM MS R.K.G. COL D STORAGE & ICE FACTORY, HARDOI ROAD, SAFIPUR, UNNAO IN WHICH IT HAS BEEN STATED THAT THE PARTICULAR PA PER IS IN CONNECTION WITH CONSTRUCTION WORK CARRIED OUT IN THE COLD STORAGE AND THIS PAPER HA S NOTHING TO DO WITH SHRI HARISH CHAND JAISWAL IN HIS PERSON AL CAPACITY. HOWEVER, NO OTHER DOCUMENTARY EVIDENCES WERE FURNISHED BY THE ASSESSEE WHICH MAY PROVE THAT THE EXPENDITURE MENTIONED ON THE SEIZED PAPERS WERE ACTUALLY INCURRED BY THE ASSESS E E . THUS, THE EXPENDITURE OF RS. 12,04,938/ - MENTIONED ON PAGE NO. 33 OF LP - 6 REMAINS UNEXPLAINED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE U/S 69C OF I.T. ACT, 196 1. 4 . IN THE WRITTEN SUBMISSION BEFORE THE LD. CIT(A), ASSESSEE STATED AS FOLLOWS: - 1. THAT THERE WAS A SEARCH & SEIZURE OPERATION WAS CARRIED OUT IN TIIAK RA J SHARMA GROUP OF CASES ON 09.07.2014. DURING THE SEARCH & SEIZURE OPERATION IN THE CASE OF THE ASSESSEE AT 8/276, SHUKLAGANJ, UNNAO LOOSE PAPERS AS PER LP - 6 WAS FOUND AND SEIZED. ON PAGE NO. 33 OF THE SAID PAPERS ON WHICH PAYMENTS REGARDING LABOUR AND CON STRUCTION MATERIAL WAS GIVEN AMOUNTING TO RS. 12,04,938/ - FOR F.Y. 2007 - 08 RELEVANT TO THE F.Y. 2008 - 09. THE CASE WAS CENTRALIZED WITH THIS OFFICE VIDE ORDER DATED 16.10.2014 PASSED BY LD. CIT - I, KANPUR. THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAD FI LED HIS RETURN OF INCOME AT TOTAL INCOME OF RS.5,24,820 / - . THE ASSESSEE WAR DERIVING INCOME FROM IT(SS)A NO.272/LKW/2017 PAGE 3 OF 7 BUSINESS BEING PARTNER IN THE FIRMS AND ALSO 'NCOMEFROM OTHER SOURCES. 2 . THE A. O HAS TAKEN ACTION U/S 148 VIDE NOTICE DATED 30 - 03 - 2015, COMPLIANCE OF THE S AME W AS MADE IN TIME. ASSESSMENT HAS BEEN COMPLETED U/S 143(3)/148 OF THE I.T ACT. THERE ONLY ONE A DDITION U/ 69C IN THIS CASE WHICH IS BASED ON SEIZED PAPER NO. 33 OF LP - 6 SEIZED FROM THE POSSESSION OF HARISH CHANDRA JAISWAL. THE FAMILY MEMBERS OF THE ASS ESSEE ARE PARTNER OF THE F IRM M/S RKJ COLD STORAGE & ICE FACTORY. 3. THAT DURING THE COURSE OF ASSESSMENT PROCEEDING ASSESSEE HAS FILED REPLY DATED 01 - 01 - 2016 ALONG WITH CONFIRMATION DATED 01 - 01 - 2016 FROM M/S. RKJ COLD STORAGE & ICE FACTORY, HARDOI ROAD, S AFLPUR, UNNAO. IN WHICH IT HAS CATEGORICALLY BEING STATED THAT PAGE BNO. 33 OF ANNEXURE LP - 6 DO NOT BELONGS TO HARISH CHANDRA JAISWAL IN HIS PERSONAL CAPACITY, BUT THE SAME BELONGS TO M/S. RKJ COLD STORAGE & ICE FACTORY. THIS FIRM IS ALSO REGULAR INCOME TA X PAYER. 4 . THE LD. A.O HAS MADE ADDITION U/S 69C ON THE BASIS OF THIS DOCUMENT WITHOUT ANY FURTHER ENQUIRY OR INVESTIGATION EITHER FROM RKJ COLD STORAGE & ICE FACTORY OR ASSESSEE HIMSELF, INSPITE OF WRITTEN EXPLANATION OF ASSESSEE AS WELL AS CONFIRMATION OF THE FIRM. FOR THE SAKE OF CONVENIENCE COPY OF WRITTEN SUBMISSION FILED BEFORE THE A. O ALONG WITH CONFIRMATION AND COPY OF PAGE NO. 33 OF LP - 6 IS BEING FURNISHED HEREWITH WITH THE REQUEST THAT THE SAME MAY PLEASE BE VERY KINDLY TREATED AS SUBMISSIONS BE FORE YOUR HONOUR. 5. THE ID. A. O HAS MADE ADDITION SIMPLY STATED THAT NO OTHER DOCUMENTARY EVIDENCE WERE FURNISHED BY THE ASSESSEE WHICH MAY PROVE THAT EXPENDITURE MENTIONED ON THE SEIZED PAPER WERE ACTUALLY INCURRED BY THE ASSESSEE RKJ COLD STORAGE & ICE FACTORY. IT(SS)A NO.272/LKW/2017 PAGE 4 OF 7 6. THE ID. A.O HAS FAIL TO APPRECIATE FACTUAL AS WELL AS LEGAL POSITION OF SECTION 69C IN WHICH ONUS IS CAST UPON THE DEPARTMENT TO PROVE THE EXPENDITURE INCURRED. IN THIS CASE THERE IS NO INDEPENDENT ENQUIRY FROM THE FIRM, NO CORROBORATIVE MATER IAL FOUND AND SEIZED RECORD TO SUGGEST THE OWNERSHIP OF PAPER IN THE HANDS OF ASSESSEE, INSPITE OF THE FACT THAT OWNERSHIP OF PAPER HAS BEEN OWNED BY THE FIRM WHI CH IS ALSO INCOME TAX PAYER. 5 . THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE SEIZED P APER DOES NOT BELONG TO HIM, BUT BELONGS TO THE FIRM I.E. M/S R. K. G. COLD STORAGE & ICE FACTORY. THE LD. A.R. OF THE ASSESSEE FURTHER ARGUED THAT HE HAS SUBMITTED COPY OF AFFIDAVIT BEFORE THE ASSESSING OFFICER WHICH CONFIRMS THAT THE IMPUGNED SEIZED DOC UMENT DOES NOT BELONG TO THE ASSESSEE BUT BELONG S TO M/S R. K. G. COLD STORAGE & ICE FACTORY. 6 . AT THE TIME OF HEARING BEFORE US , THE LD. A.R. OF THE ASSESSEE VEHEMENTLY ARGUED THAT THE AMOUNT CONTAINED IN THE SIZED PAPER WAS SUBSTANTIATED BY THE AFFIDAVIT F ILED BEFORE THE ASSESSING OFFICER THAT IT BELONGS TO SOMEONE ELSE AND NOT TO THE ASSESSEE. THE FACT BEING SHOWN IN THE FORM OF AFFIDAVIT SHOULD HAVE BEEN ACCEPTED BY THE ASSESSING OFFICER. IF THERE IS ANY DOUBT, THE CONCERNED ASSESSING OFFICER OF THE COL D STORAGE FACTORY, WHO HAS GIVEN AFFIDAVIT, COULD HAVE ENQUIRED IN DETAIL. THAT SHOULD NOT BE A GROUND TO MAKE ADDITION. AT THE SAME TIME, THE SEIZED DOCUMENT WAS NOT CORROBORATED BY ANY SUPPORTING EVIDENCE AND WITHOUT SUCH CORROBORATION, ADDITION CANNOT BE MADE. ON THIS ASPECT, RELIANCE WAS PLACED ON THE FOLLOWING JUDICIAL AUTHORITIES: - 1 ) CIT V. ANIL BHALLA (2010) 322 ITR 191 (DELHI) 2 ) CBI V. V.C. SHUKLA (1998) 3 SCC 410 3 ) ACIT V. SHARAD CHAUDHARY (2014) 165 TTJ 145 (DELHI TRIB) 4 ) BANSAL STRIPS (P) LTD V. ACIT (2006) 99 ITD 177 (DELHI) 5 ) ACIT V. SUBHASH VERMA (2009) 125 TTJ 865 (DELHI) (SB) IT(SS)A NO.272/LKW/2017 PAGE 5 OF 7 7 . REGARDING THE FACT THAT WHETHER ADDITION CAN BE MADE ON ACCOUNT OF LOOSE PAPER, THE LD. A.R. OF THE ASSESSEE PLACED RELIANCE UPON THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL I N THE CASE OF S.P. GOYAL VS. DCIT [2002] 82 ITD 85 (MUMBAI (TM). 8 . THE LD. D.R., ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 9 . WE HAVE PERUSED THE CASE RECORDS, HEARD THE RIVAL CONTENTIONS AND WE FIND THAT IN THE FINDINGS GIVEN BY THE A SSESSING OFFICER, HE NOTED THAT A DOCUMENT WAS SEIZED HAVING PAGE 33 OF LP - 6 WHEREIN AN AMOUNT OF RS.12,04,938/ - WAS SUBJECT MATTER OF TRANSACTION. REGARDING THIS AMOUNT, AN AFFIDAVIT WAS FILED BEFORE THE ASSESSING OFFICER TH AT IT BELONGED TO M/S R. K. G. COLD STORAGE & ICE FACTORY AND NOT TO THE ASSESSEE. THE ASSESSING OFFICER AND THE LD. CIT(A) SHOULD HAVE MADE INDEPENDENT ENQUIRY WITH REGARD TO THE SAID EXECUTOR OF THE AFFIDAVIT I.E. M/S R. K. G. COLD STORAGE & ICE FACTORY WHETHER THE STATEMENT IS GENU INE OR NOT. BUT THIS CANNOT BE THE GROUND TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. WE ALSO FIND THAT THE SEIZED DOCUMENT WAS ALSO NOT CORROBORATED BY ANY OTHER SUPPORTING EVIDENCE WHICH CAN TAKE STAND AGAINST THE ASSESSEE. HERE IN THIS CASE WHERE SIMPLY A LOOSE DOCUMENT WAS FOUND AND ON THAT BASIS ADDITION WAS MADE. THIS IS NOT PERMITTED WITHIN THE PERIPHERY OF THE INCOME - TAX ACT. 10 . IN THE CASE OF S.P. GOYAL VS. DCIT (SUPRA), FOLLOWING THE RATIO OF THE HON'BLE APEX COURT IN THE CASE OF CBI V. V.C. S HUKLA (SUPRA) , THE MUMBAI BENCH OF THE TRIBUNAL HAS HELD THAT ADDITION MADE ON MERE SUSPICION WITHOUT ANY CORROBORATING EVIDENCE WAS LIABLE TO BE DELETED. IN THE CASE OF CIT V. ANIL BHALLA (SUPRA), THE HON'BLE DELHI HIGH COURT HAS HELD THAT WHERE NO INDEP ENDENT MATERIAL OR EVIDENCE HAD BEEN BROUGHT ON RECORD BY ASSESSING OFFICER TO ESTABLISH THAT NOTINGS/JOTTINGS IT(SS)A NO.272/LKW/2017 PAGE 6 OF 7 RECORDED ON LOOSE SHEET OF PAPER SEIZED DURING SEARCH REPRESENTED AN UNACCOUNTED TRANSACTION , TRIBUNAL HELD THAT LOOSE SHEET DID NOT REPRESENT AN Y EXPENDITURE INCURRED BY ASSESSEE, DELETION OF ADDITION BASED ON LOOSE SHEET, TREATING IT AS UNEXPLAINED EXPENDITURE IN ASSESSEE'S HANDS WAS JUSTIFIED. IN THE CASE OF ACIT V. SHARAD CHAUDHARY (SUPRA), THE TRIBUNAL HAS HELD THAT A LOOSE PAPER FOUND DURING SEARCH STANDALONE COULD NOT BE USED AS BASIS FOR MAKING IMPUGNED ADDITION WITHOUT THE COMPANY OF ANY OTHER SUPPORTIVE MATERIAL AND EVIDENCE. 11 . WE, THEREFORE, FIND THAT IN THE CASE OF THE ASSESSEE WHEN ON ONE HAND AFFIDAVIT WAS FURNISHED STATING THAT THE AMO UNT BELONGS TO SOMEONE ELSE AND IF THE DEPARTMENT WAS NOT AGREEING WITH IT, IT COULD HAVE ENQUIRED INDEPENDENTLY REGARDING THE STATUS OF AFFIDAVIT AND VERIFY THE STATEMENT THEREIN. SECONDLY, WE DO NOT FIND ANYTHING ON RECORD TO SUGGEST THAT SEIZED DOCUMEN T WAS SUPPORTED BY ANY OTHER CORROBORATIVE EVIDENCE. THEREFORE, WE HOLD THAT ADDITION MADE IN THE HANDS OF THE ASSESSEE IS ARBITRARY, ILLEGAL AND LIABLE TO BE DELETED. WE, THEREFORE, SET ASIDE THE ORDER OF THE LD. CIT(A) AND DIRECT DELETION OF ADDITION M ADE IN THE HANDS OF THE ASSESSEE. 12 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 / 0 3 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SARATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 23 RD MARCH , 201 8 JJ: 2 003 IT(SS)A NO.272/LKW/2017 PAGE 7 OF 7 COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR