ACIT, Circle-19(1), V. Rajhans Aromatics,

ITSSA 52/DEL/2005

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8808 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 06-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 06-10-2010
• Assessment Year: misc
• Appeal Filed On: 31-01-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S B GARG; SACHIN KR
• Keywords: Loose papers; Document seized; Documents seized

Judgement Text

IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.(SS)A. NO. 52/DEL/2005 BLOCK PERIOD : 1.4.1995 TO 21.2.2002 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 19(1), NEW DELHI VS. M/S RAJHANS AROMATICS, C/O S.B. GARG & CO., CAS, 20/17, SHAKTI NAGAR, DELHI 110 007 (PAN: AAAFR4326C) (APPELLANT ) (RESPONDENT ) ASSEESSEE BY : SH. S.B. GARG & SH. SACHIN KR. FCA DEPARTMENT BY : S MT. REENA S. PURI, C.I.T.(D.R.) PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 5.11.2 004 PERTAINING TO BLOCK PERIOD 1.4.1995 TO 21.2.2002. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INCOM E TAX (APPEALS) ERRED IN DELETING THE ADDITION OF ` 1,38, 50,316/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM UNDISC LOSED SOURCES BASED ON SPECIFIC EVIDENCE SEIZED DURING THE COURSE OF SEARCH OPERATIONS. 2.1 ON THIS ISSUE THE ASSESSING OFFICER MADE THE A DDITIONS BY HOLDING AS UNDER:- (I) AS A RESULT OF SEARCH ACTION AT THE BUSINESS P REMISES OF THE APPELLANT ON 21.2.2002, ANNEXURE A-1(11) WAS SEIZED WHICH IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 2 CONTAINED THE SUNDRY DEBTORS LIST AS ON 31.3.1993 A T PAGES 179 TO 182 OF THE SAID ANNEXURE. APART FROM THIS , IN CONSEQUENCE OF SEARCHES CONDUCTED AT THE RESIDENTIA L PREMISES OF SHRI HARBANS LAL, PARTNER OF THE APPELLA NT FIRM, ANNEXURE A-4 CONTAINING PAGES 1 TO 6 WAS SEIZED. T HIS ANNEXURE ALSO CONTAINED THE LIST OF DEBTORS PREPARE D ON VARIOUS DATES LIKE 1.1.2001, 12.1.2002, 17.2.2002 E TC. (II) THE AGGREGATE OF THE SUM OF THE AS REFLECTED IN ANNEXURE A- 4 WAS ARRIVED AT ` 17,67,73,188. HOWEVER AS PER P AGES 179 TO 182 OF ANNEXURE A-1(11), THE SUM OF THE DEBTO RS DRAWN AS ON 31.3.93 WAS ` 8,54,52,520/-. THE ASSESS ING OFFICER ACCEPTED THE DEBTORS AS ON 31.3.93 DRAWN A S PER ANNEXURE A-I (11) TO BE BELONGING TO THE PERIOD OUT SIDE THE BLOCK PERIOD I.E. FROM 1.4.95 TO 21.2.2002. AS REGA RDS THE DEBTORS LIST REFLECTED IN ANNEXURE A-4, IT WAS OBSE RVED BY THE ASSESSING OFFICER THAT SINCE THE LIST HAS BEEN DRAWN ON VARIOUS DATES LIKE 1.1.01, 12.1.02, 17.2.02, THESE DEBTORS CORRESPONDED TO THE BLOCK PERIOD. THE EXPLANATION OF THE APPELLANT WAS ASKED FOR IN THIS REGARD AND THE APPE LLANT SUBMITTED BEFORE THE ASSESSING OFFICER AS UNDER:- A) EXCEPT THE FOLLOWING ENTRIES, ALL OTHER ENTRIES PER TAINED TO M/S SHARP TRADERS: 1) M/S USHA PRINTERS ` 2,50,000/- 2) M/S EMAMI LTD. ` 12,000/- 3) M/S KEVA FRAGRANCES PVT. LTD. ` 5,10,300/- 4) M/S JANAKPUR CIGRATTE FACTORY LTD. ` 2,450/- 5) M/S EXPONENTIAL FINANCIAL SERVICES IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 3 PVT. LTD. ` 1,23,92,893/- ============ TOTAL ` 1,31,67,643/- B) THE DATES MENTIONED ON THE PAGES IN ANNEXURE A-1 (I. E. 1.1.01, 12.1.02, 17.2.02) ARE THE DATES ON WHICH TH E LIST WAS PREPARED. HOWEVER, THE DEBTORS CORRESPONDED TO THE PERIOD ENDING 31.3.93. C) MANY DEBTORS HAVE BEEN REPEATED AGAIN AND AGAIN AT DIFFERENT PLACES AS THE LIST WAS PREPARED ON DIFFER ENT DATES. D) THE ENTRY OF M/S EXPONENTIAL FINANCIAL SERVICES PVT. LTD. PERTAINED TO M/S S&S ASSOCIATES (` 1,23,92,893/-). E) M/S RAJHANS AROMATICS WAS FORMED IN THE MONTH OF OCT, 1994 AND M/S RAJHANS ENTERPRISES WAS FORMED IN THE MONTH OF JUNE, 1998 AND M/S SHARP TRADERS WAS FORMED IN THE YEAR 1985. F) M/S RAJHANS AROMATICS WAS FORMED IN THE MONTH OF OCTOBER, 1994 AND M/S RAJHANS ENTERPRISES WAS FORMED IN THE MONTH OF JUNE, 1998 AND M/S SHARP TRADERS WAS FORMED IN THE YEAR 1985. G) AS A RESULT OF SEARCH ACTION, 12 LOOSE PAPERS INDIC ATING DEBTORS WERE FOUND WHICH WERE PASTED ON 6 PAGES RANDOMLY IN ANNEXURE A-4. THE DATES WERE NOT MENTIONED ON ALL OF THESE PAGES BUT WAS ONLY ON 3 P AGES OUT OF 12. FOR EXAMPLE ON PAGE 1, DATE MENTIONED WA S 17.2.02 AND ON PAGE 5, THE DATE MENTIONED WAS 1.1.01 AND PAGE 6, THE DATE MENTIONED WAS 12.1.02. THESE IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 4 DATES DO NOT INDICATE THE DATE OF ACTUAL TRANSACTIO N BUT SPECIFY THE DATES ON WHICH THE LIST WAS PREPARED. H) IN PAGES 179 TO 182 OF ANNEXURE A-1(11) OF PARTY B -2 WHICH CONTAINS THE SUNDRY DEBTORS LIST AS ON 31.3.9 3, ALL THE PAGES ARE IN CONTINUATION AND BELOW OF EACH PAG E THIS IS WRITTEN AS CONTINUED. I) THE APPELLANT HAS ALSO TALLIED THE LIST OF DEBTORS AS CONTAINED IN PAGES 1 TO 6 OF ANNEXURE A-4 (PARTY B- 4) WITH THE LIST OF SUNDRY DEBTORS AS CONTAINED IN PAG ES 179 TO 182 OF ANNEXURE A-1 (11) OF PARTY B-2. J) THE APPELLANT HAS ALSO GIVEN A LIST OF THE DEBTORS AND THEIR CORRESPONDING AMOUNTS WHICH ARE GETTING REPEA TED AT MANY PLACES IN ANNEXURE A-4. K) THE APPELLANT HAS AGAIN STATED THAT DEBTORS OF ` 1,31,67,643/- HAVE BEEN RECORDED IN THE REGULAR BOO KS OF ACCOUNTS. L) IN PAGE 57 OF ANNEXURE A-2 OF PARTY B-5 THE YEAR 9 2 IS MENTIONED AT NO. OF PLACES IN THIS PAGE. IT IS SUBMI TTED THAT A PLAIN READING OF THIS PAGE MAKES IT CRYSTAL C LEAR THAT IT CONTAINS THE DETAILS OF TRANSACTIONS WITH M/ S MANOHAR LAL WADHU RAM (MLWR) AND IT WAS FURTHER SUBMITTED THAT THESE TRANSACTIONS PERTAINED TO THE F.Y. 1992-93. IT IS ALSO SUBMITTED THAT LAST LINE ON THE LEFT SIDE READS, 7982900 BALANCE WHICH CLEARLY SHOWS THAT A SUM OF ` 79,82,900/- IS DUE FROM M/S MLWR. IT IS SUBMITTED THAT THIS AMOUNT OF ` 79,82,900/- IS BEING REFLECTED, IN THE LIST OF DEBTORS AS ON 31.3.93 MENT IONED IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 5 HEREINABOVE AT PAGE 182 OF THE ANNEXURE A-1(1)) OF PARTY B-2. M) PAGE 42 OF ANNEXURE A-I OF PARTY B-5 REFLECTED TWO ENTRIES 800000 2000 X 400 15.10.1990 AND 800000 2000 X 400 31.10.1990 READY. IT IS FUR THER SUBMITTED THAT FIRST ENTRY REPRESENTS THE CONTRACT ENTERED INTO AND THE SECOND ENTRY REFLECTS ACTUAL TRANSACTI ONS OF SALES/ DELIVERY OF 2000 KG OF MENTHOL @ 400 PER KG TOTALING TO ` 800000/- MADE ON 31.10.1990 TO SH. SAN JU. IT IS ALSO SUBMITTED THAT SOME AMOUNT WAS RECEIVED F ROM HIM AND THE BALANCE OF ` 267875/- WAS DUE FROM HIM EVEN AS ON 31.3.1993 AND THE SAME IS REFLECTED AT S .NO. 35, MENTIONED HEREINABOVE, AT PAGE 182 OF THE ANNEX URE A-1(11) OF PARTY B-2. IT IS ALSO SUBMITTED THAT APAR T FROM ` 2,67,875/-, A SUM OF ` 7,525/- WAS ALSO DUE FROM HIM ON ACCOUNT OF PACKING, FORWARDING AND FREIGHT AND THE SAME IS REFLECTED AT S.NO. 206, MENTIONED HEREINABOVE AT PAGE 182 OF ANNEXURE A-1(11) OF PARTY B-2. III) IT HAS BEEN MENTIONED BY THE ASSESSING OFFICER THAT IN ORDER TO PROVE THAT THE SUNDRY DEBTORS WHICH WERE G ETTING REFLECTED IN BOTH THE LISTS WERE THE SAME, THE APPE LLANT PRODUCED THREE WITNESSES ON 29.6.2004 AND THEIR STATEMENTS WERE RECORDED ON OATH AND ALL OF THEM ADMI TTED THAT THEY PURCHASED MENTHOL FROM M/S SHARP TRADERS DU RING THE PERIOD 1991-93 AND THE PAYMENTS HAVE NOT YET B EEN MADE TO M/S SHARP TRADERS AS THE GOODS PROVIDED BY M/S SHARP TRADERS TURNED OUT TO BE OF INFERIOR QUALITY. IV) THE ASSESSING OFFICER AFTER CONSIDERING THE APPELLANTS SUBMISSIONS, ARRIVED AT THE AGGREGATE SU M OF SUNDRY DEBTORS PERTAINING TO THE BLOCK PERIOD AS UNDER:- IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 6 LIST OF SUNDRY DEBTORS AS PER ` 17,67,73,188 ANNEXURE A-4 (PAGES 1 TO 6) LESS: A) THE TOTALS OF ENTRIES, WHICH ARE GETTING REPEATED IN THE ABOVE LIST AS PER ANNEXURE A-4(PAGES 1 TO 6) ` 6,43,02,709/- B) THE ENTRIES WHICH HAVE BEEN RECORDED IN THE REGULAR BOOKS OF ACCOUNTS 1) M/S USHA PRINTERS ` 2,50,000/- 2) M/S EMAMI LTD. ` 12,000/- 3) M/S KEVA FRAGRANCES PVT. LTD. ` 5,10,300/- 4) M/S JANAKPUR CIGRATTE FACTORY LTD. ` 2,450/- 5) M/S EXPONENTIAL FINANCIAL SERVICES PVT. LTD. ` 1,23,92,893/- ============ TOTAL ` 1,31,67,643/- C) LIST OF SUNDRY DEBTORS AS ON 31.3.93 WHICH IS OUTSIDE THE BLOCK PERIOD AS PER PAGES 179 TO 182 OF ANNEXURE A-1(11) OF PARTY B-2 ` 8,54,52,520/- ` 16,29,22,872/- BALANCE OF SUNDRY DEBTORS PERTAINING TO THE BLOCK PERIOD ` 1,38,50,316/- V) ON THE BASIS OF ABOVE FINDING, IT WAS HELD BY THE ASSESSING OFFICER THAT THE SUNDRY DEBTORS OF ` 1,38,50,316/- AS APPEARING IN PAGES 1 TO 6 OF ANNEXURE A-4 PERTAINED TO THE BLOCK PERIOD AND IN ABSENCE OF ANY EXPLANATION THIS AMOUNT WAS TREATED AS INCOME FROM UNEXPLAINED SOURCES AND ADDED BACK AS INCOME FOR THE BLOCK PERIOD. IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 7 3. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDER THE SUBMISSIONS AND HELD AS UNDE R:- I HAVE CONSIDERED THE ABOVE SUBMISSIONS OF THE A/R OF THE APPELLANT AND THE FACTS BROUGHT OUT IN THE ASSESSMEN T ORDER BY THE ASSESSING OFFICER I HAVE PERUSED THE CONTENTS OF THE SEIZED DOCUMENTS AS REFLECTED IN ANNEXURE A-4 (PAGE 1 TO 6 ) FOUND FROM THE BUSINESS PREMISES OF THE APPELLANT AND ANNEXURE A-1 (11) SEIZED FROM THE RESIDENTIAL PREMISES OF SHRI HARBAN S LAL, PARTNER OF THE APPELLANT FIRM. THE ASSESSING OFFICER HAS ACCEPTED THAT THE AGGREGATE SUM OF ` 8,54,52,520/- PERTAINING TO THE ENTRIES REFLECTED IN PAGES 179 TO 182 OF ANNEUXRE A-1(11) CORRESPONDED TO THE SUNDRY DEBTORS AS ON 31.3.1993 WHICH WAS OUT SIDE THE BLOCK PERIOD. THE ENTRIES FOUND IN PAGES 1 TO 6 OF ANNEXURE A-4 TOTALLED UPTO ` 17,67,73,188/-. A NUMBER OF ENTRIES WERE REPEATED ENTRIES OF SAME DEBTORS OF ` 6,43,02,709/- IN ANNEXU RE A-4. DURING THE ASSESSMENT PROCEEDING THE APPELLANT HAS RE CONCILED ALL THE ENTRIES APPEARING IN ANNEXURE A-4 WITH THE ENTRIES APPEARING IN PAGE 179 TO 182 OF ANNEXURE A (11) BA RRING THE FOLLOWING ENTRIES:- 1) M/S USHA PRINTERS ` 2,50,000/- 2) M/S EMAMI LTD. ` 12,000/- 3) M/S KEVA FRAGRANCES PVT. LTD. ` 5,10,300/- 4) M/S JANAKPUR CIGRATTE FACTORY LTD. ` 2,450/- 5) M/S EXPONENTIAL FINANCIAL SERVICES PVT. LTD. ` 1,23,92,893/- ============ TOTAL ` 1,31,67,643/- IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 8 THE ABOVE ENTRIES WERE ALSO CHECKED WITH THE REGULA R BOOKS OF ACCOUNTS AND THEY HAVE BEEN FOUND TO BE DULY RECORDED IN THE BOOKS OF ACCOUNTS. THE ASSESSING O FFICER WHILE MAKING THE ADDITION HAS OBSERVED THAT THERE W ERE SOME DATES LIKE. 1.1.2001, 12.1.2002 AND 17.2.2002 NOTED IN SOME PAGES OF ANNEXURE A-4 AND SO THE LIST REPRE SENTED BY ANNEXURE A-4 CANNOT BE TAKEN OUTSIDE THE BLOCK PERIOD. HOWEVER, EVEN THOUGH THESE DATES APPEARED AT THE TO P OF SOME PAGES OF ANNEXURE A-4, THE ENTRIES THEREIN R ECORDED IN THE RELEVANT PAGES WERE FOUND TO TALLY WITH THE ENTRIES RECORDED IN PAGES 179 TO 182 OF ANNEXURE A-1(11). S O THE APPELLANTS CONTENTION THAT THE LIST OF SUNDRY DEBT ORS AS ON 31.3.1993 WAS PREPARED ON THE RELEVANT DATES CANNO T BE BRUSHED ASIDE. DURING APPELLATE PROCEEDING ALSO, T HE A/R OF THE APPELLANT SUBMITTED BOTH THE LISTS AS PER ANNEXU RE A-4 AND ANNEXURE A-1(11) AND RECONCILED THE INDIVIDUAL ENTRIES APPEARING IN BOTH THE LISTS. IT IS NOTED THAT THE ASSESSING OFFICER HAS WRONGLY TAKEN THE AGGREGATE OF REPEATE D ENTRIES AT ` 6,43,02,709/- WHICH SHOULD BE TO THE TUNE OF APPROXIMATELY 8 CRORES. SINCE ALL THE ENTRIES AS PE R ANNEXURE A-4 BARRING THOSE WHICH ARE PART OF REGULA R BOOKS OF ACCOUNTS AGGREGATING TO ` 1,31,67,643/-, GOT TAL LIED WITH THE ENTRIES RECORDED IN PAGES 179 TO 182 OF ANNEXUR E A- 1(11). I FIND NO REASON IN IDENTIFYING THE SUNDRY D EBTORS PERTAINING TO THE BLOCK PERIOD AT ` 1,38,50,316/- AS ARRIVED AT BY THE ASSESSING OFFICER. SINCE THE LIST OF SUND RY DEBTORS AS ON 31.3.1993 AS PER ANNEXURE A-1(11) AGGREGATING TO ` 8,54,52,520/- HAS BEEN ACCEPTED TO BE CORRECT, THE ENTRIES IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 9 IN ANNEXURE A-4 DULY RECONCILED WITH THE ENTRIES IN ANNEXURE A-1(11) ARE NOTHING BUT SUNDRY DEBTORS AS ON 31.3.1993 BECAUSE NO CORROBORATIVE EVIDENCE HAS BEE N BROUGHT ON RECORD TO SHOW THAT THESE ENTRIES PER TAINED TO TRANSACTIONS ENTERED INTO DURING THE BLOCK PERIOD. THE ASSESSING OFFICER HAS ALREADY ACCEPTED THE AGGREGA TE SUM OF DEBTORS OF ` 8,54,52,520/- AS PER ANNEXURE A-1(1 1), AS ON 31.3.1993 TO BE OUTSIDE THE BLOCK PERIOD AND SO THE DEBTORS APPEARING IN PAGES 1 TO 6 OF ANNEXURE -4 HA VING BEEN MATCHED WITH THE ENTRIES IN ANNEXURE A-1(11) CA NNOT BE TREATED AS FAILING WITHIN BLOCK PERIOD. AS A RESULT, I AM UNABLE TO UPHOLD THE ADDITION MADE BY THE ASSESSIN G OFFICER OF ` 1,38,50,316/- AND THE SAME IS DELETED . 4. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE R ECORDS. 5.1 LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER . 5.2 LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS). 5.3 UPON CAREFUL CONSIDERATION, WE FIND THAT LD. CO MMISSIONER OF INCOME TAX (APPEALS) HAS MADE AN ELABORATE AND REAS ONABLE ORDER AND THE SAME DESERVES NO INTERFERENCE. UPON CAREF ULLY EXAMINING THE FACTUAL DETAILS AND RECONCILIATION, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS COME TO THE CONCLUSION THAT ASSESSING OFFICER HAS IT(SS)A NO. 52/DEL/2005 BP-1.4.1995 TO 21.2.2002 10 ACCEPTED THE AGGREGATE SUM OF DEBTORS OF ` 8,54,52 ,520/- AS PER ANNEXURE A-1(11), AS ON 31.3.1993 TO BE OUTSIDE THE BLOCK PERIOD AND SO THE DEBTORS APPEARING IN PAGES 1 TO 6 OF ANNEXU RE -4 HAVING BEEN MATCHED WITH THE ENTRIES IN ANNEXURE A-1(11) CANNOT BE TREATED AS FAILING WITHIN BLOCK PERIOD. LD. DEPARTMENTAL REPR ESENTATIVE COULD NOT CONTROVERT THE FINDING OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS) ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILLEGAL ITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) AND UPHOLD THE SAME. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06/10/2010 UP ON CONCLUSION OF HEARING. SD/- SD/- [A.D. JAIN] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE 06/10/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES