The ACIT, Central Circle-1, Surat V. Shri Govindbhai Jivarajbhai Balar, Surat

ITSSA 275/AHD/2011

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0282 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 26-09-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-09-2014
• Assessment Year: 2002-2003
• Appeal Filed On: 17-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: J P SHAH
• Keywords: Unexplained expenditure; Income from undisclosed sources; Block assessment
• Section: 153A

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI , A CCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. (SS) . / I.T (SS) A.NO.2 75 /AHD/2011 A.Y.200 2 - 03 2. (SS) . / I.T (SS) A.NO. 278 /AHD/201 1 A.Y.200 4 - 05 1. THE ASST.CIT CENTRAL CIRCLE - 1, SURAT 2. DO - / VS. 1.SHRI GOVINDBHAI JIVRAJBHAI BALAR 59, KANTARESHWAR SOCIETY KATARGAM, SURAT 2. - DO - ./ ./ PAN/GIR NO. : AASPB 9283 C ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUBHASH BAINS, CIT - DR / RESPONDENT BY : SHRI J.P. SHAH, AR / DATE OF HEARING 12/09/2014 / DATE OF PRONOUNCEMENT 26/09/2014 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : BOTH T H E S E APPEAL S BY THE REVENUE IS DIRECTED AGAINST THE COMMON O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - II, AHMEDABAD ( CIT (A) IN SHORT ) DATED 03/01/2011 PERTAINING TO ASSESSMENT YEAR S (AY S ) 2002 - 03 & 2004 - 05 . SINCE COMMON ISSUES ARE INVOLVED, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF B Y WAY OF THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. IT (SS) A NO S . 275 & 278 /AHD/ 2011 ACIT VS. SHRI GOVINDBHAI JIVRAJBHAI BALAR ASST.YEAR S 2002 - 03 & 20 04 - 05 RESPECTIVELY - 2 - 2. FIRST, WE TAKE UP THE REVENUE S APPEAL IN IT (SS) A NO. 275/AHD/2011 FOR AY 200 2 - 0 3 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I) ON THE FACTS AND CIRCUMSTANCE OF THE CA SE AND IN LAW, THE LD.CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION AT RS.11,98,418 MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT. II) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN LAW AND IN FACT S IN HOLDING THAT AS EARLIER ASSESSMENT WAS FINAL, ADDITION CANNOT BE MADE, WHEN NO FRESH EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IGNORING THAT IN THIS CASE, THE ASSESSMENT U/S.143(3) IS MADE FOR THE FIRST TIME, AND ADDITION WAS MADE WHEN THE ASSESS EE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS/CONTRACTORS. III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS PRAYED THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 2. BRIEF LY STATED FACTS ARE THAT A SEARCH ACTION U/S.132 OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS CARRIED OUT AT THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE DOKANIA GROUP (BALAR SUB - GROUP) OF CASES ON 14.02.2008. THE SEARCH/SU RVEY ACTION WAS CARRIED OUT AT THE BUSINESS AS WELL AS RESIDENTIAL PREMISES OF THE ASSESSEE AND A NOTICE U/S.153A OF THE ACT WAS ISSUED SUBSEQUENTLY. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE FURNISHED THE RETURN OF ITS INCOME ON 22/10/2008 DECLARING TOTAL INCOME OF RS.1,80,745/ - . SUBSEQUENTLY, THE ASSESSMENT U/S.143(3) OF THE ACT WAS FRAMED VIDE ORDER DATED 31/12/2009, THEREBY THE ASSESSING OFFICER (AO IN SHORT ) MADE DISALLOWANCE OF EXPENSES OF RS.29,466/ - AND MADE ADDITION U/S.69C OF RS.11,98,418/ - BEING IT (SS) A NO S . 275 & 278 /AHD/ 2011 ACIT VS. SHRI GOVINDBHAI JIVRAJBHAI BALAR ASST.YEAR S 2002 - 03 & 20 04 - 05 RESPECTIVELY - 3 - UNEXPLAINED EXPENDITURE. AGAINST THIS, THE ASSESSEE FILED AN APPEAL BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS PARTLY ALLOWED THE APPEAL, THEREBY THE ADDITION OF RS.11,98,418/ - WAS DELETED. AGGRIEVED BY THE ORDER OF THE LD.CIT(A) , NOW THE REVENUE IS IN APPEAL BEFORE US. 3. GROUND NOS.1 & 2 ARE INTER - CONNECTED, THEREFORE THE SAME ARE DECIDED TOGETHER. THE LD.CIT - DR SUBMITTED THAT THE LD.CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION. HE SUPPORTED THE ORDER OF THE AO AND SUBM ITTED THAT THE ASSESSEE FAILED TO FURNISH THE WAGES REGISTER OR MUSTER ROLL OR ANY SUCH RECORD IN SUPPORT OF THE CLAIM OF EXPENSES OF WAGES. 3.1. ON THE CONTRARY, LD.COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE LD.CIT(A) AND SUBMITTED THAT THERE IS FINDING ON FACT THAT PAYMENTS WERE MADE TO THE KARKHANEDARS AND WORK WAS CARRIED OUT THROUGH KARKHANEDARS AND NOT DIRECTLY. HE SUBMITTED THAT THE LD.CIT(A) HAS RIGHTLY FOLLOWED THE DECISION OF HON BLE ITAT AHMEDABAD BENCH RENDERED IN THE CASE OF MEGHMAN I ORGANICS LTD. VS. DCIT (36 DTR 187) AND ALSO THE JUDGEMENT OF THE HON BLE DELHI HIGH COURT RENDERED IN THE CASE OF CIT V S. RADHIKA CREATION (47 DTR 60). 4. WE HAVE HEARD RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE OR DERS OF THE AUTHORITIES BELOW. THE AO MADE ADDITION OF RS.11,98,418/ - ON THE BASIS THAT THE LABOUR PA YMENTS HAVE BEEN MADE OUT OF UNACCOUNTED INCOME AS THE ASSESSEE HAS SHOWN TOTAL LIABILITIES OF OUTSTANDING MAJURI EXPENSES OF RS.13,07,365/ - AND THE IT (SS) A NO S . 275 & 278 /AHD/ 2011 ACIT VS. SHRI GOVINDBHAI JIVRAJBHAI BALAR ASST.YEAR S 2002 - 03 & 20 04 - 05 RESPECTIVELY - 4 - WHOL E OUTSTANDING AMOUNT REFLECT THE TOTAL LABOUR EXPENSES FOR THE YEAR UNDER CONSIDERATION, THEREFORE IN THE NORMAL COURSE, IT IS ONLY ONE FOR ONE MONTH WAGES CAN BE CONSIDERED AS OUTSTANDING. WE FIND THAT THE LD.CIT(A) HAS GIVEN A FINDING ON FACT IN PARA - 5 .2 OF HIS ORDER AS UNDER: - 5.2. THE APPELLANT HAS SUBMITTED THAT THE ASSESSING OFFICER HAS NOT MADE THE ADDITION ON THE BASIS OF MATERIALS AND INFORMATION GATHERED DURING THE SEARCH. HENCE, THE ADDITION IS NOT CALLED FOR IN THE ASSESSMENT MADE U/S.143(3) R.W.S. 153A OF THE I.T.ACT. ON MERIT, IT WAS SUBMITTED THAT FOR A.Y. 2002 - 03, OUT OF RS.13,07,365/ - , OUTSTANDING MAJOORI EXPENSES, CURRENT YEAR S MAJOORI EXPENSES WAS RS.7,98,091/ - AND THE BALANCE WAS FOR THE EARLIER YEAR HENCE, THE ASSESSING OFFICER H AS MADE THE ADDITION FOR EARLIER YEARS EXPENSES ALSO. IT WAS FURTHER SUBMITTED THAT THE APPELLANT HAS NOT WITHHELD THE PAYMENT OF ANY LABOURER IN CURRENT YEAR OR IN ANY OTHER YEAR. THE PAYMENTS WITHHELD WERE ONLY OF KARKHANEDARS. THE CONFIRMATION FROM ALL SUCH CONTRACTORS CONTAINING THEIR COMPLETE ADDRESSES AND PAN WERE FILED BEFORE THE ASSESSING OFFICER CONFIRMING THE OUTSTANDING PAYMENT. THE ASSESSING OFFICER HAS NOT BEEN ABLE TO DISPROVE/REJECT THEM BY LEADING COGENT MATERIAL AND EVIDENCES. THE ASS ESSING OFFICER HAS ONLY ON THE BASIS OF ASSUMPTIONS AND SURMISES MADE THE ADDITION. THE NUMBER OF KARKHANEDARS HAS OBTAINED PAN AND THEY ARE TAX PAYING PERSONS ON THE RECORD OF THE INCOME - TAX DEPARTMENT. THE WAGE REGISTER AND MUSTER ROLL WERE TO BE MAINT AINED BY THE KARKHANEDARS IN THEIR CASES AND NOT BY THE APPELLANT. IT IS ALSO RELEVANT THAT THE APPELLANT HAS EARNED JOB WORK CHARGES INCOME FROM DIAMOND POLISHING ACTIVITY MORE THAN THE MAJOORI EXPENSES INCURRED. THE G.P. RATE SHOWN BY THE APPELLANT IS REASONABLE AND THE MAJOORI EXPENSES CANNOT BE DOUBTED. APPELLANT FURTHER SUBMITTED THAT AFTER THE SEARCH, THE PROCEEDINGS U/S.153A HAS BEEN INITIATED BUT ON THAT DATE NO ASSESSMENT WAS PENDING. SECTION 153A OF THE I.T.ACT PROVIDES THAT THE ASSESSMENTS PE NDING ON THE DATE OF SEARCH ONLY SHALL STAND AWAITED. THE ORIGINAL RETURNS HAVE BECOME FINAL AND IN THE FRESH U/S.153A, THE ADDITIONS CAN ONLY BE MADE ON THE BASIS OF INFORMATION/MATERIALS GATHERED DURING THE SEARCH. AS NO FRESH MATERIAL WAS FOUND, THE E ARLIER ISSUES WERE NOT TO BE DISTURBED. FOR THIS, THE RELIANCE IS PLACED ON THE DECISION OF IT (SS) A NO S . 275 & 278 /AHD/ 2011 ACIT VS. SHRI GOVINDBHAI JIVRAJBHAI BALAR ASST.YEAR S 2002 - 03 & 20 04 - 05 RESPECTIVELY - 5 - HON BLE ITAT AHMEDABAD BENCH IN THE CASE OF MEGHMANI ORGANICS LTD. VS. DCIT 36 DTR 187. RELIANCE WAS ALSO PALCED ON THE DECISION OF HON BLE DELHI HIGH COURT IN TH E CASE OF CIT VS. RADHIKA CREATION 47 DTR 60 AS PER WHICH THE AUTHENTICITY OF THE EXPENDITURE WAS NOT TO BE EXAMINED IN THE BLOCK ASSESSMENT PROCEEDINGS WHEN NO SUCH MATERIAL WAS FOUND DURING THE SEARCH. 4.1. IT IS NOT THE CASE OF THE REVENUE THAT THE MA TERIAL WAS GATHERED DURING THE SEARCH OPERATION. THE ASSESSEE HAD PLACED EVIDENCES IN THE FORM OF CONFIRMATION BEFORE THE LD.CIT(A) IN RESPECT PAYMENT MADE TO THE CONTRACTORS. THEREFORE, AFTER CONSIDERING THE TOTALITY OF THE FACTS AND THE DECISION OF T HE COORDINATE BENCH RENDERED IN THE CASE OF MEGHMANI ORGANICS LTD. VS. DICT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A), SAME IS HEREBY UPHELD. THUS, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. AS A RESULT, REVENUE S APPEAL IN IT(SS)A N O.275/AHD/2011 FOR AY 2002 - 03 IS DISMISSED. 5. NOW, WE TAKE UP THE REVENUE S APPEAL IN IT(SS)A NO.278/AHD/2011 FOR AY 2004 - 05. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - I) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN LAW AND IN FACTS IN DELETING THE ADDITION AT RS.7,78,276/ - MADE ON ACCOUNT OF UNEXPLAINED EXPENDITURE U/S.69C OF THE ACT. II) ON THE FACTS AND CIRCUMSTANCE OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN LAW AND IN FACTS IN HOLDING THAT AS EARLIE R ASSESSMENT WAS FINAL, ADDITION CANNOT BE MADE, WHEN NO FRESH EVIDENCE WAS FOUND DURING THE COURSE OF SEARCH IGNORING THAT IN THIS CASE, THE ASSESSMENT U/S.143(3) IS MADE FOR THE FIRST TIME, AND ADDITION WAS MADE WHEN THE ASSESSEE HAD FAILED TO PROVE THE CREDITWORTHINESS OF THE CREDITORS/CONTRACTORS. IT (SS) A NO S . 275 & 278 /AHD/ 2011 ACIT VS. SHRI GOVINDBHAI JIVRAJBHAI BALAR ASST.YEAR S 2002 - 03 & 20 04 - 05 RESPECTIVELY - 6 - III) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, IT IS PRAYED THAT THE ORDER OF THE LD.CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 6. AFTER HEARING BOTH THE SIDES, WE FI ND THAT THE FACTS ARE IDENTICAL TO THE FACTS AS WERE IN REVENUE S APPEAL BEARING IT(SS)A NO.275/AHD/2011 FOR AY 2002 - 03(SUPRA), WHEREIN WE HAVE DISMISSED THE REVENUE S APPEAL. SINCE THERE IS NO CHANGE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN THIS YE AR, FOR THE SAME REASONING, WE DISMISS THE REVENUE S APPEAL IN IT(SS)A NO.278/AHD/11 FOR AY 2004 - 05. THUS, GROUNDS OF REVENUE S APPEAL ARE DISMISSED. 7 . IN THE COMBINED RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN COURT ON THE DATE MENTIONED HEREINABOVE AT CAPTION PAGE SD/ - SD/ - ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEM BER AHMEDABAD; DATED 26 / 09 /20 14 . . , . . ./ T.C. NAIR, SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPOND ENT. 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