Shri Girishkumar Amrutlal Gor, Ahmedabad V. The Dy.CIT.,C.Circle-2(2), Ahmedabad

ITSSA 755/AHD/2010

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0055 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 9 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-02-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 19-10-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIMALENDU VERMA
• Assessee Lawyers: U S BHATTI
• Keywords: Gross profit estimation; Document seized; Documents seized
• Section: 153A; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SRI D.K TYAGI, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTAN T MEMBER SRI GIRISHKUMAR AMRUTLAL GOR, 202, SHATRUNJAY APARTMNET, PALDI, AHMEDABAD PAN: ACBPG5240M (APPELLANT) VS THE DCIT, C.CIR-2(2), AHMEDABAD-9 (RESPONDENT) REVENUE BY: SRI VIMALENDU VERMA, CIT-D .R. ASSESSEE BY: SRI U.S. BHATTI, A.R. DATE OF HEARING : 06-02-2014 DATE OF PRONOUNCEMENT : 28-02-20 14 / ORDER PER : D.K. TYAGI, JUDICIAL MEMBER:- THIS IS THE ASSESSEES APPEAL AGAINST THE ORDER OF LD. CIT(A)-III AHMEDABAD DATED 20-09-2010. IT(SS)A NO. 755/AHD/2010 ASSESSMENT YEAR 2006-07 I.T.(SS)A NO. 755/AHD/2010 A.Y. 2006-07 PAGE NO SRI GIRISHKUMAR AMRUTLAL GOR VS. DCIT 2 2. ASSESSEE HAS FILED REVISED GROUND AS UNDER:- 1. THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN UPH OLDING ADDITION OF RS. 2,05,000/- ON ACCOUNT OF UNEXPLAINED INVESTM ENT U/S. 69 OF THE INCOME TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT A SEARCH OPERAT ION WAS CARRIED OUT IN JOHN GROUP OF CASES AND ASSESSEE WAS ALSO SUBJECTED TO SEARCH PROCEEDINGS U/S. 132 OF THE ACT AS HE WAS THE DIRECTOR OF JOHN BIOTECH PVT. LTD. IN RESPONSE TO NOTICE U/S. 153A OF THE ACT, ASSESSEE F ILED RETURN OF INCOME DISCLOSING TOTAL INCOME OF RS. 96,299/- SHOWN IN TH E ORIGINAL RETURN OF INCOME. DURING THE SEARCH A DIARY WAS FOUND WHICH INDICATED THAT THE ASSESSEE HAS PURCHASED AN OFFICE FOR RS. 4,55,000/- OUT OF WHICH RS. 2,05,000/- WAS PAID BY CASH AND WAS NOT REFLECTED A NYWHERE. IN THE NOTES TO THE RETURN OF INCOME FILED IN RESPONSE TO NOTICE U/ S. 153A OF THE ACT IT WAS MENTIONED BY THE ASSESSEE THAT THE AMOUNT OF RS. 2, 05000/- FOR THE PURCHASE OF OFFICE WAS PAID OUT OF THE CASH BALANCE. HOWEVE R THIS CONTENTION WAS NOT ACCEPTED BY THE AO WHO MADE AN ADDITION OF RS. 2,05 000/- IN THE TOTAL INCOME OF THE ASSESSEE U/S. 69 OF THE INCOME TAX AC T. AGAINST THIS ACTION OF AO, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) AND BEFORE HIM THE CONTENTION OF THE ASSESSEE WAS THAT AFTER THE SEARC H THE COMPANY NAMELY M/S JOHN BIOTECH PVT. LTD FILED ITS RETURN OF INCOME IN RESPONSE TO NOTICE U/S. 153A OF THE ACT BY DISCLOSING THE ADDITIONAL INCOME FROM ASSESSMENT YEAR 2004-05 TO A.Y. 2006-07 AS UNDER:- A.Y. ORIGINAL RETURNED INCOME ADDITIONAL INCOME REVISED INCOME 2004-05 (-)RS.3,03,341/- RS.3,35,056/- RS. 35,715/- I.T.(SS)A NO. 755/AHD/2010 A.Y. 2006-07 PAGE NO SRI GIRISHKUMAR AMRUTLAL GOR VS. DCIT 3 2005-06 (-)RS.9,31,581/- RS.5,23,801/- (-) RS.4,07, 780/- 2006-07 (-)RS.6,98,152/- RS.4,07,885/- (-) RS. 2,90 267/- THE CONTENTION OF THE ASSESSEE WAS THAT THIS DISCLO SURE OF ADDITIONAL INCOME IN THE HANDS OF COMPANY WAS MADE SUO MOTO ON THE GR OUND OF LOW GP OF COMPANY. ACCORDING TO HIM THE COMPANY HAD SURPLUS CASH BALANCE AS A RESULT OF THIS DISCLOSURE. OUT OF CASH AVAILABLE W ITH THE COMPANY ASSESSEE MADE PAYMENT OF RS. 2,05,000/- FOR THE PURCHASE OF OFFICE PREMISES IN HIS NAME. IT WAS THEREFORE SUBMITTED THAT THE INCOME D ECLARED IN THE HANDS OF JOHN BIOTECH PVT. LTD WAS APPLIED FOR ACQUIRING OFF ICE PREMISES BY THE ASSESSEE. THIS CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE LD. CIT(A) ON THE GROUND THAT NO ADDITIONAL INCOME WAS OFFERED BY THE COMPANY JOHN BIOTECH PVT. LTD IN THE STATEMENT RECORDED DUR ING THE COURSE OF SEARCH. FURTHER AS PER THE AUDITED ACCOUNTS OF THE COMPANY, THERE WAS NO CASH BALANCE. AFTER THE INCOME WAS DISCLOSED BY THE COM PANY ON ACCOUNT OF LOW GP COMPANY PAID MEAGER TAX OF RS. 12,812/- FOR A.Y. 2004-05 AND IT HAD THE EFFECT OF REDUCING THE LOSSES IN THE CASE OF C OMPANY. HE THEREFORE DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE HOLDING IT TO BE AFTERTHOUGHT AND CONFIRMED THE ADDITION OF RS. 2,05,000/- IN THE TOT AL INCOME OF THE ASSESSEE BY OBSERVING AS UNDER:- 4. 1 HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. ON THE PERUSAL OF THE ADDITIONAL INCOME DECLARED BY THE CO MPANY, IT IS NOTICED THAT AT THE TIME OF SEARCH THERE WAS NO MEN TION ABOUT THE LOW GP DECLARED BY THE COMPANY. THERE WAS NO MENTION TH AT THE FUNDS OF THE COMPANY WERE USED BY THE DIRECTOR FOR THE PURPO SE OF ACQUIRING OFFICE IN HIS NAME. THE APPELLANT, GIRISH KUMAR GOR WAS SPECIFICALLY ASKED ON 23 OCTOBER 2007, REGARDING THE PURCHASE OF OFFICE PREMISES TO WHICH HE STATED THAT THE OFFICE WAS PURCHASED BY HIM IN HIS NAME ON 27 SEPTEMBER 2006 BY PAYING RS.250,000/- BY CHEQUE. NOWHERE IN THE I.T.(SS)A NO. 755/AHD/2010 A.Y. 2006-07 PAGE NO SRI GIRISHKUMAR AMRUTLAL GOR VS. DCIT 4 STATEMENT, THE APPELLANT MENTIONED ABOUT THE LOW GP OF JOHN BIOTECH PVT. LTD OR THE AVAILABILITY OF THE CASH OF THE COM PANY IN HIS POSSESSION. THE DOCUMENTS FOUND DURING THE COURSE O F SEARCH INDICATED THAT THE TOTAL CONSIDERATION OF THE OFFIC E PREMISES WAS RS. 455,400/- ADMEASURING 396 FEET. IN THE SAME DOCUMEN T BELOW THIS FIGURE OF RS.455, 400/-, TWO FIGURES OF RS.2,50 BY CHEQUE AND RS.2.05 BY CASH ARE MENTIONED. THE DATE OF CASH TRANSACTION IS RECORDED AS ON 27 JANUARY 2006. IT WAS THEREFORE CLEAR THAT THE AP PELLANT HAD PAID CASH OF RS. 205,000/- FOR ACQUIRING THE OFFICE PREM ISES. IN ORDER TO EXPLAIN THIS CASH INVESTMENT, THE APPELLANT CHOSE T O SHOW SOME ADDITIONAL INCOME IN THE HANDS OF THE COMPANY WHO H AD BEEN SHOWING HEAVY LOSSES FOR ASSESSMENT YEAR 2004-05 TO ASSESSM ENT YEAR 2006-07. BY DOING SO, THE COMPANY PAID ONLY MEAGER TAXES TO THE TUNE OF RS.12,000/- ONLY. BY DOING SO, HE WANTED TO EXPLAIN THE INVESTMENT OF RS. 205,000/- BY SHOWING THAT THE ADDITIONAL INCOME SHOWN BY THE COMPANY WAS IN THE FORM OF CASH BALANCE WITH HIM AN D THIS CASH WAS INVESTED IN ACQUIRING THE OFFICE PREMISES. IN MY VI EW, THE STORY OF THE APPELLANT CANNOT BE ACCEPTED BECAUSE 1. AT THE TIME OF SEARCH THERE WAS NO MENTION ABOUT THE LOW GP SHOWN BY THE COMPANY. 2. AT NO POINT OF TIME DURING THE COURSE OF SEARCH OR SURVEY, THE APPELLANT STATED THAT HE HAD THE CASH BALANCE OF TH E COMPANY WITH HIM. IN FACT, AS PER THE AUDITED ACCOUNTS OF THE CO MPANY THERE WAS NO CASH BALANCE IN THE HANDS OF THE COMPANY. 3. NONE OF THE DIRECTORS OF THE COMPANY STATED BEFO RE THE SEARCH TEAM THAT THE COMPANY HAS BEEN SHOWING LOW GP AND THAT T HE COMPANY HAS UNDERSTATED ITS INCOME. NOBODY CLAIMED THAT SUCH UN DERSTATED INCOME WAS IN THE FORM OF CASH WITH THE APPELLANT. 4. THERE IS NO PROOF THAT THE CASH OF RS.205,000/- INVESTED IN THE OFFICE PREMISES IS OUT OF THE CASH BALANCE OF THE COMPANY M/S. JOHN BIOTECH PVT LTD. 5. THE ADDITIONAL INCOME SHOWN BY THE COMPANY JOHN BIOTECH PVT, LTD HAS NOT RESULTED IN DUE PAYMENT OF ANY TAX BECAUSE THERE WE RE SUBSTANTIAL LOSSES IN THE COMPANY AND EVEN AFTER SHOWING ADDITIONAL I.T.(SS)A NO. 755/AHD/2010 A.Y. 2006-07 PAGE NO SRI GIRISHKUMAR AMRUTLAL GOR VS. DCIT 5 INCOME, EITHER THE LOSS HAS BEEN REDUCED OR ONLY MEAGER TAXES OF RS. 12,000/- WAS PAID. SHOWING OF ADDITIONAL INCOME IN THE HANDS OF THE COMPANY WAS THEREFORE AN AFTERTHOUGHT. 4. BEFORE US LEARNED COUNSEL OF THE ASSESSEE BESIDE S REITERATING THE SAME SUBMISSION AS MADE BEFORE LOWER AUTHORITIES ALSO PL ACED RELIANCE ON THE DECISION OF ITAT, MUMBAI G BENCH IN THE CASE OF D CIT VS. SUNIL UMASHANKAR RUNGTA (2005) 94 TTJ 329. LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF LOWER AUTHORITIES. 5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT THERE IS NO DISPUTE ABOUT THE FACT THAT WHEN DURING THE COURSE OF SEARCH ASSESSEE WAS ASKED SPECIFICALLY ABOUT PURCHASE OF O FFICE PREMISES IT WAS STATED BY HIM THAT OFFICE WAS PURCHASED BY PAYING A SUM OF RS. 2,50,000/- ONLY BY CHEQUE. HE DID NOT DISCLOSE THAT AMOUNT OF RS. 2,05,000/- WAS ALSO PAID IN CASH FOR THIS PURPOSE. AS EVIDENCE OF THIS CASH PAYMENT OF RS. 2,05,000/- WAS THERE IN THE SEIZED DOCUMENTS, ASSES SEE SUBSEQUENTLY TRIED TO EXPLAIN THE SOURCE OF THIS PAYMENT OUT OF DISCLOSUR E MADE IN THE HANDS OF COMPANY. THIS EXPLANATION OF THE ASSESSEE DOES NOT APPEAR TO BE BONAFIDE BECAUSE INSTEAD OF DISCLOSING THIS AMOUNT IN HIS IN DIVIDUAL CAPACITY, THE SAME HAS BEEN DISCLOSED IN THE HANDS OF THE COMPANY WHICH WAS ALREADY RUNNING IN LOSSES AND THIS DISCLOSURE HAS RESULTED ONLY IN REDUCING THE LOSSES OF THE COMPANY AND A TAX LIABILITY OF MEAGER SUM OF ABOUT RS. 12,000/- ONLY. IN VIEW OF THIS, WE ARE OF THE CONSIDERED OPINION T HAT THE SUM DISCLOSED IN THE HANDS OF THE COMPANY CANNOT BE SAID TO BE AVAIL ABLE TO ASSESSEE TO EXPLAIN THE SOURCE OF CASH PAYMENT OF RS. 2,05,000/ - FOR PURCHASE OF SHOP IN HIS OWN NAME WHICH WAS INITIALLY HIDDEN FROM THE DE PARTMENT. AS FAR AS I.T.(SS)A NO. 755/AHD/2010 A.Y. 2006-07 PAGE NO SRI GIRISHKUMAR AMRUTLAL GOR VS. DCIT 6 DECISION OF ITAT, MUMBAI G BENCH IN THE CASE OF D CIT VS. SUNIL UMASHANKAR RUNGTA (SUPRA) IS CONCERNED, WE FIND THA T FACTS OF THAT CASE ARE TOTALLY DIFFERENT FROM THE FACTS OF ASSESSEES CASE . IN THAT CASE ASSESSEE GOT RELIEF FROM THE TRIBUNAL BECAUSE IN THAT CASE CIT ( A) HELD THAT THERE WAS A CLEAR NEXUS BETWEEN THE UNDISCLOSED INCOME RETURNED BY THE COMPANY AND COMMENSURATE INVESTMENT MADE BY THE ASSESSEE IN IVP S AND KVPS. SINCE NO SUCH NEXUS HAS BEEN ESTABLISHED BY THE ASSESSEE, THE RATIO AS LAID DOWN IN THAT CASE CANNOT BE APPLIED TO THE FACTS OF THIS CA SE. WE ARE THEREFORE NOT INCLINED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT(A) AND THE SAME IS HEREBY UPHELD. 6. IN THE RESULT, ASSESSEES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THE DATE MENTIONE D HEREINABOVE AT CAPTION PAGE SD/- SD/- (ANIL CHATURVEDI) ( D.K. TYAGI) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 28/02/2014 AK / COPY OF ORDER FORWARDED TO:- 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,