M/s H Kiran Kumar & Co., Srikakulam, Vizianagaram V. The DCIT, Central Circle-1(1), Visakhapatnam

ITSSA 92/VIZ/2002

• Counselvise Citation: [2010] 124 COUNSELVISE.COM (IT) 8774 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 8 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 08-10-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 28-09-2010
• Assessment Year: misc
• Appeal Filed On: 17-05-2002
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBRATA SARKAR
• Assessee Lawyers: C V S MURTHY
• Keywords: Search and seizure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER IT (SS) A NO. 92 /VIZAG/ 20 02 ASSESSMENT YEAR : BLOCK PERIOD 1.4.1988 TO 3.9.1998 H. KIRAN KUMAR & CO. SRIKAKULAM DCIT CENTRAL CIRCLE - I VISAKHAPATNAM (APPELLANT) VS. (RESPONDENT) GIR NO.H - 302 APPELLANT BY: SHRI C.V.S. MURTHY, CA RESPONDENT BY: SHRI SUBRATA SARKAR, DR ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A) ON A SOLITARY GROUND THAT HE HAS ERRED IN SUSTAINING THE ADDITION OF RS.10 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEES. DURING THE COURSE OF HEARING OF THE APPEAL, THE LD. COUNSEL F OR THE ASSESSEE HAS SUBMITTED THAT SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF MANAGING PARTNER OF SHRI H. KIRAN KUMAR AND HIS FATHER SHRI H. KRISHNA RAO AND DURING THE COURSE OF SEARCH, VARIOUS DOCUMENTS CONTAINING THE DETA ILS OF ACCOUNTS WERE FOUND. THE SEIZED MATERIAL WAS CONFRONTED TO MR. H. KRISHNA RAO AND DURING THE COURSE OF A STATEMENT, HE DISCLOSED A SUM OF RS.54 LAKHS UNDER VARIOUS HEADS WHICH ARE AS UNDER: - 1. M/S. ARUN ESTATE AND M/S. ARUN ESTATES - RS.35 LAKHS 2. M/S. H. KIRAN KUMAR & CO. - RS.18 LAKHS 3. INTEREST INCOME - RS. 1 LAKH RS.54 LAKHS IN THE STATEMENT RECORDED FROM SHRI H. KIRAN KUMAR ON 3.9.1998 IN REPLY TO QUESTION NO.18, HE STATED THAT HE HAS NOT FILED ANY RETURN OF INCOME IN R ESPECT OF PARTNERSHIP FIRM M/S. H. KIRAN KUMAR & CO. HE HAS ALSO STATED THAT HE WOULD VOLUNTARILY DISCLOSE AN AMOUNT OF RS.10 LAKHS AS UNDISCLOSED INCOME IN THE HANDS OF M/S. H. KIRAN KUMAQR & CO. THE BASIS FOR THIS DECLARATION WAS GIVEN IN DETAIL BY SHR I H. KRISHNA RAO, FATHER OF SHRI H. KIRAN 2 KUMAR, MANAGING PARTNER OF THE FIRM. CONSEQUENTLY, NOTICE U/S 158 BD READ WITH 158 BC WAS ISSUED TO THE ASSESSEE FIRM CALLING FOR RETURN FOR THE BLOCK PERIOD 1.4.88 TO 3.9.98 AND IN RESPONSE THERETO, BLOCK RETURN WAS FILED. THOUGH SEIZED MATERIAL RELATING TO THE ACCOUNTS OF THE ASSESSEE FIRM WAS FOUND DURING THE COURSE OF SEARCH, BUT THE ASSESSING OFFICER HAS PREFERRED TO ESTIMATE THE INCOME AT RS.10 LAKHS ON THE BASIS OF THE STATEMENTS. ASSESSEE PREFERRED AN APP EAL BEFORE THE CIT(A) BUT DID NOT FIND FAVOUR WITH HIM. 2. NOW THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL WITH THE SUBMISSION THAT IT HAS PREPARED THE ACCOUNTS ON THE BASIS OF SEIZED MATERIAL AND ACCORDING TO WHICH ASSESSEE SUFFERED THE LO SSES. THEREFORE, THE INCOME ESTIMATED BY THE ASSESSING OFFICER IS NOT CORRECT. MORE OVER, HE HAS ESTIMATED THE INCOME ON THE BASIS OF THE STATEMENT OF THE ASSESSEES WITHOUT BRINGING ANY CORROBORATIVE EVIDENCE. 3. THE LD. D.R. ON THE OTHER HAND HAS SUB MITTED THAT NOTHING IS BORNE OUT FROM THE ORDER OF THE LOWER AUTHORITIES THAT ASSESSEE HAS EVER SUBMITTED THE BOOKS OF ACCOUNTS PREPARED ON THE BASIS OF THE SEIZED MATERIAL. UNDISPUTEDLY, ASSESSEE HAD NOT MAINTAINED THE REGULAR BOOKS OF ACCOUNTS AND DURIN G THE COURSE OF SEARCH, SEIZED MATERIAL RELATING TO THE UNDISCLOSED BUSINESS WAS FOUND AND WHEN IT WAS CONFRONTED TO THE ASSESSEE, ASSESSEE CAME FORWARD AND OFFERED AN UNDISCLOSED INCOME OF RS.10 LAKHS. THEREFORE, THUS THE ASSESEE HAS NO RIGHT TO RETRACT FROM THE DISCLOSURE MADE DURING THE COURSE OF SEARCH. 4 . HAVING HEARD THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF RECORD, WE FIND THAT NO DOUBT THE INCRIMINATING MATERIAL RELATING TO THE UN DISCLOSED BUSINESS OF THE ASSESSEE WAS FOUND DURING THE CO URSE OF SEARCH AND INITIALLY THE ASSESSEE HAS AGREED TO SURRENDER AN AMOUNT OF RS.10 LAKHS BUT LATER ON HE RETRACTED FROM HIS EARLIER STATEMENT. THOUGH HE CLAIMED THAT HE HAS SUBMITTED THE BOOKS OF ACCOUNTS PREPARED ON SEIZED MATERIAL BEFORE THE A.O. FOR VERIFICATION BUT NOTHING IS BORNE OUT FROM THE RECORD IN THIS REGARD. IN THE LIGHT OF THESE FACTS, WE ARE OF THE VIEW THAT THE ACCOUNTS PREPARED BY THE ASSESSEE ON THE BASIS OF SEIZED MATERIAL SHOULD BE VERIFIED 3 BY THE A.O. IN THE LIGHT OF THE SEIZED MATE RIAL AND THERE AFTER THE INCOME OF THE ASSESSEE TO BE WORKED OUT. WE THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE A.O. WITH A DIRECTION TO RE - ADJUDICATE THE ISSUE IN THE LIGHT OF BOOKS OF ACCOUNTS PREPARED BY THE ASSESSEE ON THE BASIS OF THE SEIZED MATERIAL. 5 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 8.10 .20 10 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIA L MEMBER VG/SPS VISAKHAPATNAM, DATED 8 TH OCTOBER , 20 10 COPY TO 1 H. KIRAN KUMAR & CO., C/O SREE RAMA, 4 - 4 - 5, 3 RD STREET, KOTHAGRAHARAM, VIJAYANAGARAM - 535 001 2 DCIT, CENTRAL CIRCLE - I, VISAKHAPATNAM 3 THE CI T (CENTRAL), HYDERABAD 4 THE CIT (A) - I , HYDERABAD 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM