Shri Bhajanlal Nagrani, V. The ACIT, 1(1),

ITSSA 34/IND/2009

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8499 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 24-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 06-01-2011
• Assessment Year: misc
• Appeal Filed On: 04-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAV SAXENA
• Keywords: Unexplained investment; Loose papers; Peak credit
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C.SHARMA, ACCOUNTANT MEMBER PAN NO. : AAMPN 6707H I.T.(SS)A.NO.34/IND/2009 A.Y. : 01-04-1996 TO 13-11-2022 SHRI BHAJANLAL NAGRANI, ACIT, PROP. NAGRANI TRADERS, 1(1), 189/2. BHAIRATHI COLONY, INDORE. INDORE. APPELLANT RESPONDENT APPELLANT BY : SHRI PRAKASH JAIN, C.A. RESPONDENT BY : SHRI KESHAV SAXENA, CIT DR O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) DATED 28.11.2008 FOR THE BLOCK PERIOD 1.4 .1996 TO 13.11.2002 IN THE MATTER OF ORDER PASSED BY THE ASS ESSING OFFICER U/S 154/250/143(3) OF THE INCOME-TAX ACT, 1 961, 2. FOLLOWING TWO GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE :- -: 2: - 2 1. THAT IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS BAD IN LAW AS WELL AS ON THE FACTS. IT IS BASED ON INCORRECT INTERPRETATION OF LAW AND THE FACTS HAVE ALSO BEEN INCORRECTLY CONSTRUED. 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DIRECTING THE LD. AO TO MAKE ADDITION OF RS. 16,07,149/- ON ACCOUNT OF ALLEGED UNEXPLAINED INVESTMENT IN PURCHASES THE SAID DIRECTION OF THE LD. CIT(A) IS CONTRARY TO THE FINDINGS GIVEN BY THE HON'BLE I.T.A.T. INDORE BENCH IN ASSESSEES OWN CASE VIDE I.T.(SS).A.NO. 142/IND/2005 WHEREIN THE HON'BLE I.T.A.T. VIDE PARA 23 PAGE 53 HAS GIVEN THE DIRECTION THAT NO ADDITION COULD BE MADE ON ACCOUNT OF UNDISCLOSED INCOME. 3. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D FOUND FROM RECORD THAT IN THE ORIGINAL ORDER PASSED U/S 1 58BC DATED 30 TH NOVEMBER, 2004, THE AO MADE ADDITION OF RS. 26,03,134/-. BY THE ORDER DATED 6.9.2005, THE LD. C IT(A) -: 3: - 3 DELETED ALL THE ADDITIONS EXCEPT THAT HE DIRECTED T O TAKE GROSS PROFIT ON THE SALES FOR THE PERIOD 13.8.2002 TO 9.1 1.2002 AT CURRENT RATES. HOWEVER, WHILE GIVING EFFECT TO THE ORDER OF THE CIT(A), THE AO VIDE ORDER DATED 25 TH SEPTEMBER, 2006, HE MADE ADDITION OF RS. 1,66,337/- ON ACCOUNT OF GROSS PROFIT AND ALSO MADE ADDITION OF RS. 3,40,780/- ON ACCOUNT OF INVESTMENT MADE IN PURCHASING THE GOODS, WHICH WERE SOLD DURIN G THE PERIOD 13.8.2002 TO 9.11.2002. THE AO ALSO OBSERVED THAT THERE IS NO DIRECTION BY THE LD. CIT(A) WITH RESPEC T TO THE ADDITION MADE SEPARATELY ON ACCOUNT OF PEAK CREDIT, HENCE, NO RELIEF BEING GIVEN WITH REGARD TO THE SAME. AGAINST THIS ORDER OF AO DATED 23.12.2005, THE ASSESSEE FILED AN APPLICAT ION FOR RECTIFICATION FOR MISTAKE U/S 154, WHICH WERE REJEC TED BY THE ASSESSING OFFICER AND THE ORDER OF THE AO WAS CONFI RMED BY THE LD. CIT(A) VIDE ORDER DATED 28.11.2008 AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. AT THE OUT-SET, THE LD. AUTHORIZED REPRESENTATIVE PLACED ON RECORD THE ORDER OF THE TRIBUNAL DATED 19 .12.2008 IN I.T.(SS).A.NO. 142/IND/2005, WHEREIN TRIBUNAL HAVE DISMISSED THE APPEAL OF THE REVENUE AGAINST THE ORDER OF CIT( A) WHEREIN -: 4: - 4 THE CIT(A) HAD DELETED ALL THE ADDITIONS EXCEPT GRO SS PROFIT ON SALE FOR 88 DAYS. THUS, IT WAS SUBMITTED THAT THE O RDER PASSED BY THE ASSESSING OFFICER U/S 154 HAS NO LEGS TO STA ND. THE LD. AUTHORIZED REPRESENTATIVE ALSO PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN I.T.(SS).A.NO. 48/IND/2009 IN THE C ASE OF MANISH ENTERPRISES DATED 21.4.2009, WHEREIN THE TRI BUNAL HAVE DISMISSED THE APPEAL OF THE REVENUE WITH RESPE CT TO THE ORDER PASSED BY THE ASSESSING OFFICER U/S 154 GIVIN G EFFECT TO THE ORDER OF THE CIT(A) DATED 20 TH SEPTEMBER, 2005. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS, CAREFULL Y GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AN D ALSO THE ORDER OF THE TRIBUNAL DATED 19.12.2008, IN ASSESSEE S OWN CASE WHEREIN APPEAL FILED BY THE REVENUE AGAINST THE ORD ER OF CIT(A) DATED 6.9.2005 WAS DISMISSED BY TRIBUNAL. WE FOUND THAT THE TRIBUNAL IN ITS ORDER DATED 19 TH DECEMBER, 2008, PASSED IN THE CASE OF M/S. MANISH ENTERPRISES AND MR. BHAJAN NAGR ANI (ASSESSEE IN OUR CASE ), FOLLOWING IS THE PRECISE O BSERVATION OF THE TRIBUNAL AT PAGE 53, PARA 23 :- FROM THE ABOVE, IT IS NOTED THAT SHRI BHAJAN LAL NAGRANI, THE ASSESSEE, VISITED BHOPAL, ON A DAY -: 5: - 5 BEFORE THE SEARCH I.E. 12.11.2002, LODGED A POLICE COMPLAINT IN THE MANGALWARA POLICE STATION, BHOPAL, ON 12.11.2002, ITSELF PROVES THAT SHRI LALCHAND DIWANI WAS DOING HIS INDEPENDENT PARALLEL BUSINESS, WHICH WAS IN THE KNOWLEDGE OF THE ASSESSEE AND IT CAME TO HIS NOTICE ONLY ON 12.11.2002 WHEN HE VISITED BHOPAL. THEREFORE, NO ADDITION IS CALLED FO R IN THE CASE OF THE ASSESSEE SHRI BHAJANLAL NAGRANI. HOWEVER, INSPITE OF THAT THE CIT(A) DIRECTED TO TRE AT THE INCOME WORKED OUT ON THE BASIS OF SALES RECORDE D IN THE LOOSE PAPERS OF 88 DAYS BY APPLYING THE CURRENT GROSS PROFIT RATE ONLY AS UNDISCLOSED INCOM E. NO EVIDENCE WAS RECOVERED TO PROVE UNDISCLOSED INCOME BEYOND THE LOOSE PAPERS OF 88 DAYS. SIMILARLY, IT WAS MERE PRESUMPTION THAT THE ASSESSE E MADE UNDISCLOSED INVESTMENT IN THE SALES. THIS ISSU E HAS ALREADY BEEN DISCUSSED IN DETAIL, WHILE DEALING WITH THE APPEAL IN THE CASE OF M/S. MANISH ENTERPRISES IN THE FOREGOING PARAGRAPHS. THEREFORE, -: 6: - 6 FOR THE REASONS MENTIONED THEREIN, THIS GROUND OF APPEAL IS DISMISSED. 6. IT IS CLEAR FORM THE ABOVE ORDER OF THE TRIBUNAL TH AT NO EVIDENCE WAS RECOVERED TO PROVE THE UNDISCLOSED INC OME BEYOND LOOSE PAPERS FOR 88 DAYS AND IT WAS HELD THA T IT WAS A MERE PRESUMPTION THAT THE ASSESSEE MADE UNDISCLOSED INVESTMENT IN THE SALES. THE TRIBUNAL HAVE ALSO STA TED THAT IN THIS ORDER ITSELF IN THE CASE OF MANISH ENTERPRISES , DETAILED OBSERVATIONS HAVE BEEN MADE WITH REGARD TO DELETION OF ADDITION MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SALES. 7. WE HAD ALSO GONE THROUGH THE ORDER OF THE TRIBUNAL DATED 21 ST APRIL, 2009, WHEREIN UNDER SIMILAR CIRCUMSTANCES, WHERE THE AO IN HIS ORDER U/S 154/250/143(3), HAS A GAIN MADE ADDITION IN THE CASE OF M/S. MANISH ENTERPRISE S ON THE SIMILAR GROUND WHILE GIVING EFFECT TO THE ORDER OF CIT(A) DATED 12TH SEPTEMBER, 2005, THE SAME WAS HELD TO BE WRONG BY THE TRIBUNAL. THIS ORDER OF THE AO PASSED U/S 154 WAS S ET-ASIDE BY THE LD. CIT(A) AND THE AO WAS GIVEN DIRECTION TH AT UNDISCLOSED INCOME WAS TO BE TAKEN AT RS. 4,25,000/ - AND THE RELIEF GRANTED BY THE LD. CIT(A) VIDE ORDER DATED 1 2.9.2005 -: 7: - 7 AMOUNTING TO RS. 66,12,490/- WAS TO BE UPHELD. AGA INST THIS ORDER OF CIT(A), THE REVENUE WAS IN FURTHER APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ORDER DATED 21 ST APRIL, 2009, DISMISSED THE APPEAL OF THE REVENUE AND HELD THAT T HE AO WAS NOT JUSTIFIED IN GIVING EFFECT TO THE ORDER OF THE CIT(A) DATED 12 TH SEPTEMBER, 2005. PRECISE OBSERVATION OF TRIBUNAL AT PAGE 4, PARA 5 WAS AS UNDER :- 5. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF THE VIEW THAT THE DEPARTMENTAL APPEAL IS LIABLE TO BE DISMISSED. THE LD. CIT(A) VIDE APPELLATE ORDER DATE D 12 TH SEPT.,2005, ALLOWED RELIEF TO THE ASSESSEE IN A SU M OF RS. 66,12,490/-. THE REVENUE PREFERRED APPEAL BE FORE THE TRIBUNAL IN I.T.(SS).A.NO. 141/IND/05 CHALLENGI NG THE DELETION OF THE ABOVE ADDITION AND THE APPEAL O F THE REVENUE WAS DISMISSED VIDE ORDER DATED 19 TH DECEMBER, 2008. THE ABOVE FACTS, THEREFORE, SHOW TH AT THE AO WAS OF THE VIEW THAT THE LD. CIT(A) HAS GRAN TED RELIEF TO THE ASSESSEE IN A SUM OF RS. 66,12,490/-. THEREFORE, THE AO CANNOT DISPUTE THIS FACT AT THIS STAGE UNDER THE PROCEEDINGS U/S 154 OF THE ACT BECAUSE TH E -: 8: - 8 SAME AMOUNT WAS AGITATED IN THE DEPARTMENTAL APPEAL IN I.T.(SS).A.NO. 141/IND/05. IN THIS VIEW OF THE M ATTER, THE DEPARTMENTAL APPEAL HAS NO MERIT. THE SAME IS ACCORDINGLY DISMISSED. 8. THUS, IT IS CRYSTAL CLEAR THAT THE TRIBUNAL VIDE OR DER DATED 19 TH DECEMBER, 2008, HAS UPHELD THE ADDITION ONLY IN RESPECT OF GROSS PROFIT EARNED ON THE BASIS OF SALE S RECORDED IN THE LOOSE PAPERS OF 88 DAYS AND HAVE HELD THAT THER E WAS NO EVIDENCE TO PROVE THE UNDISCLOSED INCOME AND THE LO OSE PAPERS OF 88 DAYS AND FURTHER IT WAS HELD THAT MERELY ON T HE BASIS OF PRESUMPTION, NO ADDITION CAN BE MADE ON ACCOUNT OF UNDISCLOSED INVESTMENT IN SALES. RESPECTFULLY FOLLO WING THE PROPOSITION LAID DOWN BY THE I.T.A.T. IN ASSESSEES OWN CASE IN QUANTUM APPEAL AND ALSO IN THE CASE OF M/S. MANISH ENTERPRISES IN RESPECT OF 154 ORDER AS DISCUSSED HE REINABOVE, WHICH ARE UNDER EXACTLY SIMILAR CIRCUMSTANCES, WE DO NOT FIND ANY MERIT IN THE ORDER PASSED BY THE ASSESSING OFFI CER U/S 154 GIVING WRONG APPEAL EFFECT TO THE ORDER OF CIT(A) D ATED 6.9.2005 AND WHICH WAS FURTHER UPHELD BY THE LD. CI T(A) VIDE HIS ORDER DATED 20.11.2008. -: 9: - 9 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 24 TH MARCH, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH MARCH, 2011. CPU* 243