Shri Nathuram Narain Agrawal, v. The ACIT, 1(1),

CO 116/IND/2007 | 2003-2004
Pronouncement Date: 05-02-2010 | Result: Dismissed

Appeal Details

RSA Number 11622723 RSA 2007
Assessee PAN AACFN6525F
Bench Indore
Appeal Number CO 116/IND/2007
Duration Of Justice 2 year(s) 4 month(s) 7 day(s)
Appellant Shri Nathuram Narain Agrawal,
Respondent The ACIT, 1(1),
Appeal Type Cross Objection
Pronouncement Date 05-02-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 05-02-2010
Date Of Final Hearing 05-01-2010
Next Hearing Date 05-01-2010
Assessment Year 2003-2004
Appeal Filed On 28-09-2007
Judgment Text
1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH INDORE BEFORE SHRI JOGINDER SINGH AND SHRI V.K. GUPTA AM ITA NOS 485 & 486/IND/07 A.YS. 2003-04 & 2004-05 ASSTT. COMMR. OF INCOMETAX 1(1) BHOPAL APPELLANT VS M/S NATHURAM SHRINARAYAN AGRAWAL ITARSI RESPONDENT PAN AACFN6525F C.O. NO.116/IND/07 ARISING OUT OF ITA NO. 485/IND/07 M/S NATHURAM SHRINARAYAN AGRAWAL ITARSI OBJECTOR VS ASSTT. COMMR. OF INCOMETAX 1(1) BHOPAL RESPONDENT DEPTT. BY SHRI K.K. CHAUDHARY CIT DR ASSESSEE BY S/SHRI ANIL KHABYA AND R.K.MANGAL 2 O R D E R PER JOGINDER SINGH JM BOTH THESE APPEALS ARE BY THE REVENUE AGAINST THE ORDER OF THE LEARNED CIT(A) DATED 9.7.2007 AND CROSS OBJECTION BY THE ASSESSEE ARISING OUT OF ITA NO. 485/IND/07. THE REVENUE HA S RAISED THE FOLLOWING COMMON GROUNDS :- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED CIT(A) HAS ERRED IN DELETING THE ADDITION O F RS.77 24 331/- OUT OF THE TOTAL ADDITION OF RS. 80 04 831/- MADE ON ACCOUNT OF UNACCOUNTED STOCK OF FOOD-GRAINS IN BENAMI NAMES OF 55 FARMERS 2. THAT THE LEARNED CIT(A) ERRED IN DELETING THE DISAL LOWANCES OF RS.22 94 837/- AND RS. 43 48 437/- RESPECTIVELY MADE ON ACCOUNT OF DEDUCTION U/S 80IB OF THE ACT. 3. THAT THE LEARNED CIT(A) FURTHER ERRED IN DELETING T HE DISALLOWANCE OF INTER-UNIT TRANSACTION FOR RS. 16 1 5 089/- IN ITS CROSS OBJECTION THE ASSESSEE HAS RAISED THE GROUND THAT THE LEARNED CIT(A) ERRED IN MAINTAINING THE ADDITION O F RS. 2 80 500/- AS ALLEGED UNEXPLAINED INVESTMENT U/S 69 OF THE ACT. 2. DURING HEARING OF THESE APPEALS WE HAVE HEARD LE ARNED REPRESENTATIVES FROM BOTH THE SIDES CONSIDERED THE ARGUMENTS ADVANCED BY THEM AND ALSO PERUSED THE MATERIAL AVAI LABLE ON THE FILE. 3 THE CRUX OF ARGUMENTS ON BEHALF OF THE REVENUE IS T HAT PROPER/REQUIRED INQUIRY WAS NOT MADE BY THE AO. HOWEVER THE ASSES SMENT ORDER WAS SUPPORTED. ON THE OTHER HAND THE LEARNED COUNSEL F OR THE ASSESSEE DEFENDED THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE IS HAVING TWO BRANCHES I.E. ASHOK DAL MILLS AND SHRINA THJI WAREHOUSING CORPORATION. IT WAS POINTED OUT THAT FROM 1.4.2001 THE ASSESSEE STARTED THE NEW BUSINESS OF WAREHOUSING AND IN THE PREMISES OF ASHOK DAL MILL NEW BUILDING WAS CONSTRUCTED FOR THE NEW B USINESS. A PLEA WAS ALSO RAISED THAT WHEN THE ASSESSEE STARTED NEW ELIGIBLE BUSINESS ALSO MAINTAINED SEPARATE ACCOUNT AND OLD BUSINESS P REMISES WAS NOT SPLIT UP. A STRONG PLEA WAS RAISED THAT IN PAST AL SO NO WAREHOUSING ACTIVITY WAS DONE BY THE ASSESSEE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON THE FILE. BRIEF FACTS ARE THA T THE ASSESSEE DECLARED INCOME OF RS.8 53 920/- IN ITS RETURN FILED ON 28.1 1.2003. SINCE THE CASE WAS TAKEN UP FOR SCRUTINY NOTICE U/S 143(2) O F THE ACT WAS ISSUED ON 14.10.2004. ANOTHER NOTICE U/S 142(1) ALONG WIT H QUESTIONNAIRE WAS ISSUED ON 7.5.2005. THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FURNISHED THE DETAILS FROM TIME TO TIME WHICH WERE 4 EXAMINED BY THE AO. THE ASSESSEE IS TRADING IN FOO D GRAINS WAREHOUSING AND ALSO HAVING INTEREST INCOME. A SEA RCH AND SEIZURE OPERATION WAS CONDUCTED ON 23 RD AND 24 TH OCTOBER 2002 AND IST NOVEMBER 2002 AT THE GODOWN PREMISES OF THE ASSESS EE AT KHEDA ITARSI. DURING SEARCH AN INQUIRY WAS CONDUCTED FRO M SHRI RAMSWAROOP REGARDING STORAGE OF GRAM AT SSWC. AS P ER THE REVENUE IN THE RECORD OF SSWC 63 AND 91.8 BAGS OF GRAM WERE KEPT BY SHRI RAMSWAROOP MALVIYA. HOWEVER SHRI MALVIYA IN HIS STATEMENT DATED 24.10.2002 DENIED HAVING KEPT ANY G RAM OR ANY OTHER FOOD GRAIN AT SSWC. THE ASSESSEE VIDE REPLY DATED 25.11.2004 GAVE A LIST OF FARMERS/TRADERS WHOSE MATERIAL WAS SEIZED (TOTAL 75 PERSONS). AS PER THE REVENUE OUT OF 75 PERSONS 54 FARMERS S UBMITTED THEIR AFFIDAVIT TO CLAIM THEIR GOODS. FURTHER THE ASSESS EE ALSO SUBMITTED LIST OF FARMERS WHO HAD TAKEN DELIVERY OF GOODS BEFORE S EARCH (14 PERSONS) AND LIST OF TRADERS WHOSE GOODS WERE SEIZE D (7 TRADERS) VIDE LETTER DATED 1.2.2006 AND 14.3.2006. TWO FARMERS S HRI RAJENDRA PATEL AND SHRI VISHNUPRASAD APPEARED IN PERSON IN RESPON SE TO SUMMONS. SHRI RAJENDRA PATEL CLAIMED THAT IN FINANCIAL YEAR 2002-03 HE KEPT 232 BAGS OF WHEAT WHICH WERE TAKEN BACK IN JANUARY 200 3. SHRI 5 VISHNUPRASAD OF VILLAGE BHATTI ALSO CLAIMED THAT HE KEPT 250 BAGS OF WHEAT. STATEMENTS OF THESE TWO FARMERS WERE RECORD ED. THE LEARNED AO CONSIDERED THE STOCK OF 55 FARMERS AS UNACCOUNTE D STOCK OF THE FIRM KEPT IN BENAMI NAMES THEREFORE HE ADDED THE AMOUNT OF RS.80 04 831/- AS UNEXPLAINED INVESTMENT IN SUCH ST OCK. ON APPEAL THE LEARNED CIT(A) DID NOT APPRECIATE THE THEORY OF BENAMI THAT TOO IN THE ABSENCE OF ANY MATERIAL/EVIDENCE IN SUPPORT OF SUCH CLAIM THEREFORE HE DELETED THE ADDITION. HOWEVER SINCE SHRI PRAMOD SINGH SOKANI AND RAMSWAROOP MALVIYA DID NOT ADMIT THE OWN ERSHIP OF GOODS CONSEQUENTLY THE ADDITIONS OF RS. 1 86 000/ - AND RS. 94 500/- IN RESPECT OF THESE TWO PERSONS WERE FOUND TO BE SU STAINABLE THEREFORE THE BALANCE ADDITION OF RS.77 24 331/- W AS DELETED WHICH IS UNDER CHALLENGE ON BEHALF OF THE REVENUE BEFORE U S. 4. ON CONSIDERATION OF TOTALITY OF FACTS WE HAVE FO UND THAT THE ADDITION OF RS.80 04 831/- WAS MADE BY THE LEARNED AO AS UNACCOUNTED STOCK OF FOOD GRAINS IN BENAMI NAMES IN THE WAREHOUSE. AS PER THE ASSESSEE THE IMPUGNED ADDITION WAS MADE ON THE BASIS OF SOME PROCEDURAL MISTAKES. THE ASSESSEE STARTED THE WAREHOUSING ACTIVITY ONLY FROM F.Y. 2001-02 AND IN THE INITIAL YEAR OF BUSINESS 6 OPERATION PROCEDURAL MISTAKES WERE COMMITTED WHICH WAS FOUND IN 75 CASES BUT THE ADDITION WAS MADE ONLY IN 55 CASES WHICH SUGGESTS THAT SUCH PROCEDURAL MISTAKE WAS NOT TAKEN AS THE B ASIS FOR MAKING THE ADDITION RATHER THE THEORY OF BENAMI WAS APPLIED BY THE AO. WE ARE IN AGREEMENT WITH THE OPINION OF THE LEARNED CIT(A ) THAT FOR PROVING THAT A PARTICULAR TRANSACTION IS BENAMI IS ON THE P ERSON WHO IS CLAIMING SO AND THE BURDEN HAS TO BE STRICTLY DISCH ARGED WITH THE HELP OF CORROBORATING MATERIAL. ON THE BASIS OF MERE SU SPICION NO ADDITION CAN BE SUSTAINED. THERE IS A FACTUAL FINDING THAT NO OATH WAS ADMINISTERED ON 24.10.2002 AND THE STATEMENT WAS RE CORDED ON 23 RD AND 24 TH OCTOBER 2002. IT IS A SETTLED PRINCIPLE THAT NO ADDITION CAN BE MADE MERELY ON SUSPICION BECAUSE SUSPICION CANNOT T AKE THE SHAPE OF EVIDENCE HOWSOEVER STRONG IT MAY BE. WE HAVE ALSO F OUND THAT THE LEARNED CIT(A) HAS NOT BLINDLY DELETED THE ADDITION RATHER THE DENIAL OF OWNERSHIP OF GOODS BY TWO PERSONS HAS BEEN DULY CONSIDERED AND THE ADDITIONS OF RS. 1 86 000/- AND RS.94 500/- RE SPECTIVELY WERE DULY SUSTAINED. WE HAVE NOT FOUND ANY INFIRMITY IN THE SAME THEREFORE THIS GROUND OF THE REVENUE IS HAVING NO MERIT CONSEQUENTLY DISMISSED. 7 5. THE NEXT GROUND RAISED PERTAINS TO DELETING THE DISALLOWANCE OF RS.22 94 837/- AND RS. 43 48 437/- RESPECTIVELY MAD E ON ACCOUNT OF DEDUCTION U/S 80IB OF THE ACT. THE CRUX OF ARGUMENT S ON BEHALF OF THE REVENUE IS THAT FULL FACTS HAVE NOT BEEN RECORDED B Y THE AO AS IT HAS BEEN CLAIMED THAT INITIALLY THERE WAS DAL MILL AND THE STORAGE HOUSE WAS CONSTRUCTED NEXT YEAR. HOWEVER THE LEARNED CO UNSEL FOR THE ASSESSEE DEFENDED THE IMPUGNED ORDER. KEEPING IN VI EW THE TOTALITY OF FACTS WE ARE IN AGREEMENT WITH THE STAND OF THE RE VENUE THAT DESIRED INQUIRY WAS NOT MADE BY THE AO CONSEQUENTLY THE A O IS DIRECTED TO VERIFY THE CLAIM OF THE ASSESSEE ON THREE ASPECTS L IKE HANDLING STORAGE AND TRANSPORTATION OF FOOD GRAINS AND ALSO WHETHER IT WAS INTEGRATED BUSINESS THEREFORE THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES AND REMANDED BACK TO THE FILE OF THE AO FOR EXAMINATION IN THE LIGHT OF ABOVE OBSERVATIONS. NEE DLESS TO MENTION HERE THAT DUE OPPORTUNITY BE PROVIDED TO THE ASSESS EE TO SUBSTANTIATE ITS CLAIM. THE ASSESSEE IS ALSO AT LIBERTY TO FURNI SH EVIDENCE IF ANY BEFORE THE AO. THIS GROUND OF THE REVENUE IS THERE FORE ALLOWED FOR STATISTICAL PURPOSES ONLY. THE REVENUE HAS ALSO RAI SED THE GROUND FOR INTER-UNIT TRANSACTION (ITA NO. 486/IND/07) SINCE THE CLAIM OF 8 DEDUCTION U/S 80IB HAS BEEN REMANDED BACK TO THE FI LE OF THE LEARNED AO THIS GROUND IS ALSO REMANDED BACK TO HIM FOR DE CIDING THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQU ATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. AS FAR AS THE CROSS OBJECTION OF THE ASSESSEE FO R MAINTAINING THE ADDITION OF RS. 2 80 500/- U/S 69 OF THE ACT AS UNE XPLAINED INVESTMENT IS CONCERNED WE ARE OF THE VIEW THAT SINCE WE HAVE UPHELD THE STAND OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF R S.77 24 331/- OUT OF RS.80 LACS THIS CROSS OBJECTION OF THE ASSESSEE IS AUTOMATICALLY DISPOSED OF CONSEQUENTLY DISMISSED. 7. IN THE RESULT THE REVENUES APPEALS ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON_5 TH FEBRUARY 2010. SD SD (V.K. GUPTA) (JOGINDER SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED - 5 TH FEBRUARY 2010 COPY TO APPELLANT RESPONDENT CIT CIT(A) DR GU ARD FILE *DN/-