M/s Divine Jewellers, Indore V. The Asstt. Commissioner of Income Tax 2(1), Indore

ITSSA 79/IND/2010

• Counselvise Citation: [2011] 124 COUNSELVISE.COM (IT) 8233 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 19 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 01-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: misc
• Appeal Filed On: 12-07-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARUN DEWAN
• Assessee Lawyers: S S DESHPANDE
• Keywords: Search and seizure; Loose papers; Principle of natural justice
• Section: 131

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER IT(SS)A NO.79/IND/2010 BLOCK PERIOD :1998-99 TO 2000-01 M/S DIVINE JEWELLERS INDORE PAN AADFD-3021B ..APPELLANT V/S. ASSTT. COMMR. OF INCOME TAX 2(1), INDORE ..RESPONDENT APPELLANT BY : SHRI S.S. DESHPANDE RESPONDENT BY : SHRI ARUN DEWAN ORDER PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) DATED 30.3.2010 ON THE GROUND THAT LD. FIRST APPELLATE AU THORITY 2 ERRED IN MAINTAINING THE ADDITION OF RS.2,75,000/- ON ACCOUNT OF LOOSE PAPERS FOUND DURING THE SOURCE OF SEARCH ESPECIALLY WHEN THE ASSESSEE EXPLAINED ALL T HE ENTRIES IN SUCH LOOSE PAPERS AND SURRENDERED A REASONABLE AMOUNT OF RS. 1,50,000/-. 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSEE TOOK IDENTICAL PLEA AS HAS BEEN RAISED IN THE GROUN DS OF APPEAL BY FURTHER SUBMITTING THAT A REASONABLE FIGURE/ADDITION MAY BE MAINTAINED. ON THE OTHER HA ND, THE LEARNED SENIOR DEPARTMENTAL REPRESENTATIVE DEFENDED THE IMPUGNED ORDER BY SUBMITTING THAT THE ASSESSEE DID NOT EXPLAIN SOME OF THE ENTRIES ON THE LOOSE PAPERS AND THE SURRENDERED AMOUNT OF RS. 1,50,000/- MAY NOT BE CONSIDERED AS A CONCLUSIVE PROOF. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. REPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATER IAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE BUSINESS 3 PREMISES OF THE ASSESSEE WHEREIN APART FROM REGULAR BOOKS OF ACCOUNTS, STOCK REGISTER, CERTAIN INCRIMIN ATING DOCUMENTS WERE FOUND AND THE SAME WERE SEIZED. AS PER THE REVENUE, NO REGULAR BOOKS OF ACCOUNTS FOR THE C URRENT FINANCIAL YEAR 1999-00 WERE FOUND. THE NOTICE U/S 158BC WAS SERVED UPON THE ASSESSEE AS PER WHICH THE DUE DATE FOR FILING THE RETURN WAS 45 DAYS FROM THE SERVICE OF THE NOTICE. THE ASSESSEE FURNISHED THE RETURN ON 7.8.2000 I.E. WITHIN THE STIPULATED PERIOD, DISC LOSING TOTAL UNDISCLOSED INCOME AT RS.9,52,333/- AND PAID THE TAX AT RS. 5,71,400/-. THE DETAILS OF TOTAL INCOME INCLUDING UNDISCLOSED INCOME WAS COMPUTED AS UNDER :- PREVIOUS YEAR ASSESSMENT YEAR TOTAL INCOME INCLUDING UNDISCLOSED INCOME IN RS. RETURNED/AS SESSED INCOME IN RS. 1 98 - 99 454,000 NIL 2 99 - 2000 419,502 NIL 3 2000 - 01 147,916 69,086 TOTAL 1,021,419 69,086 4 DURING SEARCH, APART FROM REGULAR BOOKS MAINTAINED BY THE ASSESSEE, CERTAIN LOOSE PAPERS WERE ALSO SEIZED . THE DETAILS OF SUCH PAPERS ARE LPS-1 (PAGES 1 TO 61), L PS-2 (PAGES 1 TO 36) AND LPS-3 (PAGES 1 TO 19). AS PER T HE REVENUE, THE ENTRY MENTIONED ON PAGES 1 TO 9 (LPS-3 ) WERE NOT FOUND RECODED IN THE BOOKS OF ACCOUNTS. I T IS SEEN THAT WHILE RECORDING THE STATEMENT U/S 131 ON 31.12.2009 SPECIALLY IN REPLY TO QUESTION NO. 44, T HE ASSESSEE FOR LOOSE PAPERS SURRENDERED RS. 4,25,000/ - FOR THE REASON THAT SHRI GORISHANKAR SONI WAS UNABLE TO EXPLAIN THE ENTRIES RECORDED IN THESE PAPERS WHICH WERE RELATING TO SALES, PURCHASES, JOB WORK, SAMPLE TRANSACTION. HOWEVER, AS PER THE RETURN, THE ASSES SEE DECLARED RS. 1,50,000/- FOR WHICH VIDE QUESTIONNAIR E DATED 20 TH SEPTEMBER, 2000, THE ASSESSEE WAS ASKED ABOUT RS. 2,75,000/- AS TO WHY THE SAME SHOULD NOT BE ADDED AS UNDISCLOSED INCOME. AS PER THE REVENUE NO SATISFACTORY REPLY WAS FILED. HOWEVER, AS PER THE A SSESSEE, IT WAS CLAIMED THAT SOME OF THE ENTRIES RELATE TO J OB WORK 5 AND APPROVALS, ETC. ANOTHER CLAIM OF THE ASSESSEE IS THAT THE LOOSE PAPERS ALSO CONTAIN CERTAIN SALE PURCHASE TRANSACTIONS WHICH ARE ALREADY COVERED UNDER THE HE AD EXCESS GOLD FOUND AND DISCLOSED, THEREFORE, IT WA S CLAIMED TO BE A DOUBLE ADDITION. ADMITTEDLY, DURIN G THE COURSE OF SEARCH A SUM OF RS. 4,25,000/- WAS DISCLO SED WHEREAS AFTER SCRUTINISING THE DETAILS, THE ASSESSE E AS AN ABUNDANT CAUTION, DECLARED RS. 1,50,000/- PRESUMING THAT SOME OF THE ENTRIES MIGHT NOT BE EXPLAINED. I N PARA 4.2 OF THE IMPUGNED ORDER (PAGE 6) THE CHART SUBMIT TED ON 5.12.2008 AND THE COPIES OF THE LOOSE PAPERS WER E MENTIONED TO BE CAREFULLY EXAMINED BY HIM AND FOUND THAT THE ASSESSEE COULD NOT EXPLAIN THE EXACT NATUR E OF ENTRIES IN THE LOOSE PAPERS WITH SUPPORTING EVIDENC E. CONSEQUENTLY THE REMAINING ADDITION OF RS. 2,75,000 /- (RS,. 4,25,000/- (-) RS. 1,50,000) WAS AFFIRMED WHI CH IS UNDER CHALLENGE BEFORE US. WE FURTHER FIND THAT BE FORE THE LEARNED ASSESSING OFFICER AS WELL AS THE LEARNE D COMMISSIONER OF INCOME TAX (APPEALS) A STRONG PLEA WAS 6 RAISED THAT SOME OF THE ENTRIES BELONGED TO JOB WOR K RECEIPTS, JOB WORK PAYMENTS AND APPROVAL, ETC. AND THE ASSESSEE ALSO GAVE THE ADDRESSES OF SOME OF THE PERSONS/JEWELLERS AS NOTED AT PAGES 6 AND 7 OF THE ASSESSMENT ORDER BUT SOMEHOW THIS PLEA OF THE ASSES SEE COULD NOT FILE FAVOUR. THE RELEVANT PORTION FROM T HE ASSESSMENT ORDER (PAGES 6 AND 7) ARE REPRODUCED HEREUNDER :- CLAIM OF GOLD JEWELLERY AS BF-1/14 FOR JOB RECEIPTS : AS PER BF-1/14 THE ASSESSEE HAS CLAIMED THAT JEWELLERY FROM RECEIPTS NO. 49 TO 65 WEIGHING 4831 .500 GMS FROM DATE 14.9.99 TO 23.10.99 WAS RECEIVED FOR PREPARING ORNAMENTS FROM VARIOUS PERSONS WAS OUT OF WHICH 3944.038 GMS WAS ISSUED TO VARIOUS KARAGIRS AND OUT OF THE ABOVE 887.462 GMS WAS AVAILABLE WITH THE ASSESSEE. THE DETAILS OF THE JEWELLERY WHICH WAS ISSUED ARE IN SEIZED LOOSE PAPE RS LPS 1 PAGE 1 TO 36 & LPS 2 PAGE 1 TO 61. THE ASSESSEE HAS ALSO PREPARED DETAILED CHART WHICH FURNISHED DURING THE ASSESSMENT PROCEEDINGS AND IT IS CLAIMED THAT 3944.038 GRAMS OF GOLD WAS WITH DIFFERENT KARAGIRS ON THE DATE OF SEARCH. THIS OFF ICE HAS ISSUED SUMMONS TO SOME OF THE PERSONS FOR VERIFICATION OF THE SAME. BUT ONLY TWO SUMMONS COULD BE SERVED IN RESPONSE TO WHICH ONE SHRI M.L. SONI ATTENDED ON BEHALF OF M/S POORAN JEWELLERS AND SHRI DHIRAJ SONI PROP. ALANKAR JEWELLERS ATTENDED. THE STATEMENT OF SHRI DHIRAJ SONI WAS RECORDED WHO ADMITTED TO HAVE GIVEN JEWELLERY FOR JOB WORK BUT H E 7 ALSO ADMITTED THAT HE DOES NOT MAINTAIN ANY BOOKS O F ACCOUNTS AND BASICALLY HE IS DOING WORK OF REPAIRIN G JEWELLERY AND DALALI. HE WAS NOT ABLE TO GIVE DETA ILS OF DATE ON WHICH HE GAVE THE GOLD JEWELLERY FOR JOB WO RK AND ALSO HE COULD NOT TELL WEIGHT OF THE GOLD GIVEN FOR JOB WORK. HE ADMITTED THAT HE HAS NOT RECEIVED BAC K THE GOLD GIVEN FOR JOB WORK. THE SAID PERSON IS NOT ASSESSED TO ANY TAX. HIS AVERAGE YEARLY INCOME IS BETWEEN RS. 25000/- TO RS. 30000/-. THUS HE IS NOT A PERSON OF MEANS. THIS SHOWS THAT THE AFORESAID PERSON IS NOT CAPABLE OF GIVING THE GOLD FOR PREPAR ING GOLD JEWELLERY WEIGHING 309.500 GMS. SHRI M.L. SONI FILED THE COPY OF ACCOUNT OF M/S DEVINE JEWELLERS I N THE BOOKS OF M/S POORAN JEWELLERS WHICH DID NOT SHOW ENTRY OF HAVING GIVEN GOLD WEIGHING 445 GMS FO R PREPARING GOLD JEWELLERY. THE PROPRIETOR OF M/S POORAN JEWELLERS IS ONE SMT. TAPIBAI SONI WHO IS ASSESSED TO TAX. THE ASSESSEE FILED LETTER FROM SAH KI JEWELLERS, SHYAM JEWELLERS & SINDHI JEWELLERS BUT THE SUMMONS TO THESE PARTIES WERE RETURNED BACK FOR INCOMPLETE ADDRESS. THESE CONFIRMATIONS CANNOT BE RELIED UPON AS THOSE ARE NOT SUPPORTED BY COPY OF ACCOUNT AND NOI BOOKS OF ACCOUNTS WERE PRODUCED BY THE ASSESSEE AND IT IS NOT KNOWN WHETHER THOSE ARE ASSESSED TO TAX OR NOT. IT MAY ALSO BE MENTIONED THAT THESE RECEIPTS ARE NEITHER SIGNED BY THE PERSONS WHO CLAIM TO HAVE GIVEN JEWELLERY FOR REPAIRING. THE ASSESSEE HAS AL SO NOT RECORDED THE SAME IN STOCK REGISTER. THEREFORE, THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED. ANOTHER CLAIM OF THE ASSESSEE IS THAT OUT OF THE AB OVE JEWELLERY 3944.038 GMS OF THE JEWELLERY IS GIVEN FO R APPROVAL AND PREPARATION OF JEWELLERY. THE ASSESSEE HAS TRIED TO ESTABLISH THE ABOVE FACT ON THE BASIS OF VARIOUS ANNEXURES PREPARED ON THE BASIS OF LOOSE PAPERS LPS-1 & 2 FILED DURING THE COURSE OF ASSESSMENT. ON GOING THROUGH THE BOOKS OF ACCOUNTS FOR THE PERIOD AFTER SEARCH IT IS SEEN THAT OUT OF THE ABOVE THE ASSESSEE HIMSELF AS SOLD GOLD JEWELLERY WEIGHING 2406.143 GMS OUT OF THE ABOVE JEWELLERY GIVEN ON APPROVAL AND THE SALES ARE ACCOUNTED FOR I N 8 BOOKS MAINTAINED AFTER THE SEARCH. THE ASSESSEE HAS GIVEN THE DETAILS OF BILL NUMBER ETC. ALSO. TH E VERY FACT THAT THE ASSESSEE HAS SOLD GOLD JEWELLERY AFTER SEARCH WHICH CLAIMED TO BE OF JOB WORK CONFIR MS THAT THE GOLD CLAIMED BY THE ASSESSEE TO BE RECEIVE D FROM VARIOUS PERSONS FOR JOB WORK AS PER RECEIPT NO . 49 TO 64 IS THE GOLD OF THE ASSESSEE HIMSELF WHICH IS INTRODUCED IN BOOKS OF ACCOUNTS THE SOURCE OF WHICH IS UNDISCLOSED. THUS, THE ASSESSEE HAS INTRODUCED H IS OWN UNACCOUNTED GOLD IN THE BUSINESS WHICH EARNED BY THE ASSESSEE FROM UNDISCLOSED SOURCES. THEREFORE , THE CONTENTION OF THE ASSESSEE THAT THE GOLD RECEIV ED FOR JOB WORK WEIGHING 4831.500 GMS IS NOT CORRECT AND HENCE IS REJECTED. THE VALUE OF 4831.500 GMS OF GOLD AT THE RATE OF RS. 454/- PER GMS AMOUNTING TOR S. 21,93,501/- IS ADDED TO TOTAL UNDISCLOSED INCOME OF THE ASSESSEE FOR THE BLOCK PERIOD FOR WHICH PENALTY U/S 158BFA(2) WILL ALSO BE INITIATED. IF THE AFORESAID OBSERVATION/CONCLUSION DRAWN IN TH E ASSESSMENT ORDER IS ANALYSED, WE FIND THAT SOME PER SONS FROM M/S POONAM JEWELLERS, ALANKAR JEWELLERS, ALSO ATTENDED AND THE STATEMENT OF SHRI DHIRAJ SONI ON B EHALF OF POONAM JEWELLERS ALSO TENDERED IN HIS STATEMENT THAT SOME JEWELLERY WAS GIVEN TO THE ASSESSEE FOR JOB WO RK AND AT THE SAME TIME HE FURTHER TENDERED THAT HE IS NOT MAINTAINING ANY BOOKS OF ACCOUNTS FOR REPAIRING AND DALALI. SHRI M.L. SONI ALSO FILED THE COPY OF ACCOU NT OF M/S DIVINE JEWELLERS IN THE BOOKS OF M/S POONAM 9 JEWELLERS. THE PROPRIETOR OF M/S POONAM JEWELLERS IS ALSO ASSESSED TO TAX. THE ASSESSEE ALSO FILLED LET TERS FROM SAHKI JEWELLERS, SHYAM JEWELLERS AND SINDHI JEWELLE RS. HOWEVER, AS PER THE REVENUE, THE SUMMONS ISSUED TO THESE PERSONS WERE RETURNED BACK DUE TO INCOMPLETE ADDRESS, THEREFORE, THESE LETTERS WERE ALSO IGNORED . IN VIEW OF THESE FACTS, A REASONABLE SUSPICION AROSE T HAT THERE IS A POSSIBILITY OF JOB WORK, ROUGH NOTINGS, APPROVAL AMOUNTS, MAY BE ON THE LOOSE PAPERS FOR WHICH THE ASSESSEE SURRENDERED RS. 1,50,000/- IN ITS RETURN. THE ASSESSING OFFICER NEITHER ASKED THE ASSESSEE FOR FURNISHING THE ALLEGED INCOMPLETE DETAILS NOR CONFR ONTED THE ASSESSEE ABOUT THE ALLEGED SHORT COMINGS. HE H AS ALSO NOT GIVEN CATEGORICAL FINDING THAT THESE PARTI ES ARE NON-EXISTENT. STILL KEEPING IN VIEW THE PRINCIPLES OF NATURAL JUSTICE, MATERIAL AVAILABLE ON RECORD, ASSE RTION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER, THE LEAR NED COMMISSIONER OF INCOME TAX (APPEALS) AND BEFORE US, IT WOULD MEET THE ENDS OF JUSTICE IF THE ADDITION IS 10 SUSTAINED TO RS. 1 LAC IN PLACE OF RS.2.75 LACS SUS TAINED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) . WE, THEREFORE, RESTRICT THE ADDITION TO RS. 1 LAC. FINALLY, THIS APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LEARNED REPRESENTATIVES OF BOTH THE SIDES AT THE CONCLUSION OF HEARING ON IST JULY, 2011. (R.C. SHARMA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER IST JULY, 2011 COPY TO:APPELLANT/RESPONDENT/CIT/CIT(A)/DR/GUARD FI LE D/-