Shri Sewaram Takhtani, v. The ACIT, 2(1),

CO 70/IND/2006 | misc
Pronouncement Date: 20-04-2010 | Result: Dismissed

Appeal Details

RSA Number 7022723 RSA 2006
Assessee PAN ABVPT1923F
Bench Indore
Appeal Number CO 70/IND/2006
Duration Of Justice 3 year(s) 8 month(s) 24 day(s)
Appellant Shri Sewaram Takhtani,
Respondent The ACIT, 2(1),
Appeal Type Cross Objection
Pronouncement Date 20-04-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted DB
Tribunal Order Date 20-04-2010
Date Of Final Hearing 13-04-2010
Next Hearing Date 13-04-2010
Assessment Year misc
Appeal Filed On 26-07-2006
Judgment Text
PAGE 1 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH : INDORE BEFORE SHRI JOGINDER SINGH JUDICIAL MEMBER AND SHRI V.K. GUPTA ACCOUNTANT MEMBER PAN NO. : ABVPT1923F I.T(SS).A.NO.46/IND/2006 1.4.1995 TO 25.9.2001 ACIT SHRI SEWARAM TAKHTANI 2(1) VS PROP. M/S.SEWARAM RAJKUMAR INDORE. 14 JAY SHREE SYNDICATE COLONY INDORE. APPELLANT RESPONDENT C.O.NO.70/IND/2006 (ARISING OUT OF I.T.(SS)A.NO.46/IND/2006 1.4.1995 TO 25.9.2001 SHRI SEWARAM TAKHTANI ACIT PROP. M/S.SEWARAM RAJKUMAR VS 2(1) 14 JAY SHREE SYNDICATE COLONY INDORE. INDORE. APPELLANT RESPONDENT DEPARTMENT BY : SHRI K.K.SINGH CIT DR ASSESSEE BY : SHRI S.N.AGARWAL C. A. DATE OF HEARING : 13.04.2010 PAGE 2 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. O R D E R PER V.K. GUPTA A.M. THIS APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N BY THE ASSESSEE ARISE OUT OF ORDER OF THE LD. CIT(A)-I IN DORE DATED 18.01.2006 FOR THE BLOCK PERIOD 1.4.1995 TO 25.9.2001. 2. WE HAVE HEARD BOTH THE PARTIES AND HAVE ALSO PERUSE D THE MATERIAL AVAILABLE ON RECORD. 3. THE LEARNED COUNSEL AT THE VERY OUT-SET SUBMITTED THAT ADDITIONAL GROUND RAISED BY THE ASSESSEE IN THE CRO SS OBJECTION AS WELL AS OTHER GROUNDS RAISED THEREIN ORIGINALLY WERE NOT PR ESSED. HENCE CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED AS NOT PRESSED. 4. NOW WE SHALL TAKE UP REVENUES APPEAL IN I.T. (SS).A.NO.46/IND/2006 . 5. GROUND NO. 1 READS AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN REDUCING THE ADDITION OF RS. 62 00 000/- TO RS. 36 00 000/- I.E. DELETING THE ADDITION BY RS. 2 6 00 000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF PROFIT ESTIMATED ON UNACCOUNTED PURCHASES AMOUNTING TO RS. 3 63 00 2 10/- PAGE 3 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. 6. THE FACTS IN BRIEF ARE THAT THERE WAS A SEARCH A CTION AT THE BUSINESS PREMISES OF ASSESSEE ON 25.9.2001 WHEREIN CERTAIN DOCUMENTS IN THE FORM OF PURCHASE BILLS IN THE NAME OF THREE EN TITIES WERE FOUND. THE ASSESSEE ADMITTED TO HAVE BEEN OPERATING IN THE NA ME OF THESE BENAMI CONCERNS. THE A.O. CARRIED OUT FURTHER INVESTIGATIO NS IN ADDITION TO THE WORK DONE BY THE INVESTIGATION TEAM OF THE ASSESSEE AND FOUND THAT TOTAL PURCHASES IN FICTITIOUS NAME OF THESE THREE PARTIES AMOUNTED TO RS. 3 63 00 210/- AND THEREAFTER HE PROCEEDED TO ASCE RTAIN THE AMOUNT OF UNDISCLOSED INVESTMENT IN SUCH PURCHASES AS WELL AS PROFIT EARNED BY THE ASSESSEE ON SALE OF SUCH UNACCOUNTED PURCHASES. THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAS NOT GIVEN ANY WORKIN G OF UNACCOUNTED PROFITS. HOWEVER THE ASSESSEE HAD SURRENDERED A SU M OF RS. 50 LAKHS WHICH COULD BE TAKEN INTO CONSIDERATION FOR ARRIVIN G AT THE PROFIT EARNED BY THE ASSESSEE FROM SUCH UNACCOUNTED TRANSACTIONS. THEREAFTER THE A.O. FOUND THAT EXCESS STOCK TO THE TUNE OF RS. 59 76 75 7/- HAD ALSO BEEN FOUND. THE ASSESSEE MADE VARIOUS CONTENTIONS AS REG ARD TO CORRECT VALUE OF FINISHED PRODUCTS AND RAW MATERIAL AND BASIS UPO N THESE SUBMISSIONS THE A.O. REDUCED THE VALUE OF EXCESS STOCK TO RS. 5 4 07 429/-. THE A.O. FURTHER FOUND THAT THE CASH TO THE TUNE OF RS. 11 7 8 896/- REMAINED UNEXPLAINED AND HAD TO BE TAKEN INTO CONSIDERATION FOR ARRIVING AT THE UNDISCLOSED INCOME. THE A.O. FURTHER FORMED THAT CE RTAIN HUNDIES WERE PAGE 4 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. FOUND WHICH IN AGGREGATE AMOUNTED TO RS. 26 LAKHS. THE A.O. HOWEVER REJECTED THE CONTENTION OF THE ASSESSEE THAT OUT OF THESE HUNDIES WORTH RS. 20 LAKHS HAD MATURED BEFORE THE DATE OF SEARCH. HEN CE THE CASH THEREFROM WAS AVAILABLE FOR INVESTMENT FOR STOCK OR TO EXPLAI N THE CASH FOUND PHYSICALLY FOR THE REASON THAT IN THE COURSE OF SEA RCH INITIALLY THE CONCERNED PERSON I.E. ASSESSEES SON HAD ADMITTED T HAT THE AMOUNT ADVANCED ON HUNDIES WAS FROM UNACCOUNTED FUNDS AND MONEY HAD NOT COME BACK TO THE ASSESSEE INSPITE OF MATURITY OF TH ESE HUNDIES. THE A.O. THEREAFTER PROCEEDED TO WORK OUT THE QUANTUM OF WO RKING CAPITAL INVOLVED IN THE PURCHASES. THE INVESTIGATION WING H AD ARRIVED AT WORKING CAPITAL OF RS. 36 LAKHS AND PROFITS OF RS. 36 LAKHS IN SUCH UNACCOUNTED TRANSACTION. HOWEVER THE A.O. ESTIMATED RS. 10 LAK HS AS UNDISCLOSED INVESTMENT IN THE PURCHASES OF SUCH UNACCOUNTED PUR CHASES AND ALSO HELD THAT THE PROFIT THEREIN SHOULD BE ESTIMATED AT RS.6 2 LAKHS AGAINST RS. 36 LAKHS ESTIMATED BY DDIT. THE A.O. ALSO MADE OTHER M INOR ADDITIONS ON ACCOUNT OF INVESTMENT IN FDRS FUNDS DEPLOYED IN IM MOVABLE PROPERTY AND ASSETS FOUND IN THE NAME OF THREE LADIES AND WO RKED OUT THE NET UNEXPLAINED ASSETS AT RS. 69 15 084/-. THEREAFTER THE A.O. FURTHER MADE ADDITIONS ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS ACCRUED INTEREST ON FIXED DEPOSIT PAYMENT OF FINE FOR VIOLATION OF CEN TRAL EXCISE ACT AND THUS DETERMINED THE UNDISCLOSED INCOME AT RS. 72 6 8 084/-. THE A.O. PAGE 5 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. COMPARED THE ADDITIONS MADE BY HIM ON THE BASIS OF ASSETS AND OTHER ACCOUNTS WITH THE ADDITIONS SUGGESTED BY THE DDI W ING AND HELD THAT IN EITHER CASE THE TOTAL UNDISCLOSED INCOME AT RS. 72 08 143/-. AGGRIEVED BY THIS THE ASSESSEE CARRIED THE MATTER INTO APPEAL B EFORE THE LD. CIT(A) WHEREIN DETAILED SUBMISSIONS WERE MADE. THE LD. CIT (A) HOWEVER UPHELD THE ACTION OF A.O. AS REGARD TO TREATING UNA CCOUNTED PURCHASES IN THE NAME OF BOGUS CONCERN AS OF THE ASSESSEE. THERE AFTER THE LD. CIT(A) EXAMINED THE QUANTUM OF INVESTMENT REQUIRED TO MAKE SUCH PURCHASES AND PROFIT ESTIMATED BY THE ASSESSING OFFICER THERE IN. THE LD. CIT(A) RELYING ON THE VARIOUS JUDICIAL DECISIONS CITED BY THE ASSESSEE UPHELD THE ACTION OF THE A.O. AS REGARD TO QUANTUM OF CAPITAL REQUIRED TO INVEST IN SUCH PURCHASES. IN DOING SO THE LD. CIT(A) REJECTE D THE CONTENTION OF THE ASSESSEE THAT NO EVIDENCE WAS FOUND TO THIS EFFECT FOR THE REASON THAT UNACCOUNTED PURCHASES HAD BEEN ESTABLISHED TO THE E XTENT OF RS. 3.63 CRORES AND IT WAS NATURALLY COROLLARY THAT SOME CAP ITAL WAS ESSENTIAL TO INVEST IN SUCH PURCHASES. 7. AS REGARD TO NET PROFIT IN SUCH TRANSACTION THE AS SESSEE SUBMITTED BEFORE THE LD. CIT(A) THAT IT WAS ESTIMAT ED BY THE ASSESSING OFFICER WITHOUT ANY BASIS AND IT WAS HIGHLY ABNORMA L. HAVING REGARD TO THE FACT OF NET PROFIT RATE DISCLOSED BY THE ASSESS EE ON THE DISCLOSED SALES OF THE SAME ITEM IN FINANCIAL YEAR 2000 & 2001. ACC ORDINGLY IT WAS PAGE 6 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. CONTENDED THAT NET PROFIT OF LAST YEAR AND TWO YEAR S AT THE AVERAGE RATE OF 2.30 % SHOULD HAVE BEEN ADOPTED FOR CALCULATING UND ISCLOSED INCOME FROM UNRECORDED SALES. THE LD. CIT(A) AFTER PERUSIN G THE ASSESSMENT ORDER HELD THAT THE A.O. WAS NOT HIMSELF SURE ABOUT THE ADDITION WHICH HE WAS MAKING. AS THE NET PROFIT RATE OF 17.08 % ADOPT ED BY THE ASSESSING OFFICER WAS NO WHERE NEAR TO THE NET PROFIT RATIO B Y THE ASSESSEE IN THE CURRENT YEAR AS WELL AS IN EARLIER YEARS NOR WITH T HE RATE OF 10 % RECOMMENCED BY THE DDIT. THEREAFTER THE LD. CIT(A ) HELD THAT IT WOULD BE FAIR AND REASONABLE TO ADOPT THE RATE OF N ET PROFIT RATE SUGGESTED BY THE DDIT AND CONSEQUENTLY PROFIT OF RS. 36 LAKH S OF UNACCOUNTED PURCHASES HAD TO BE UPHELD. THE ADDITION WAS ACCOR DINGLY RESTRICTED TO THE EXTENT OF RS. 36 LAKHS. AGGRIEVED BY THIS THE REVENUE IS IN APPEAL BEFORE US. 8. THE LD. CIT DR NARRATED THE FACTS AND PLACED STRONG RELIANCE ON THE ORDER OF THE A.O. 9. WE HAVE CONSIDERED THE SUBMISSIONS MADE BY BOTH THE SIDES MATERIAL ON RECORD AND THE ORDERS OF THE AUTHORITIE S BELOW. 10. IT IS NOTED THAT ASSESSEE HAS BEEN FOUND TO HAVE IN DULGED IN UNACCOUNTED PURCHASES IN THE NAME OF BOGUS FIRMS. T HE PROFIT THEREON AND INVESTMENT TO MAKE SUCH PURCHASES HAS BEEN ESTI MATED BY THE DDI WING AT RS. 36 LAKHS RESPECTIVELY THUS AGGREGATIN G TO RS. 72 LAKHS PAGE 7 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. WHEREAS THE A.O. HAS ESTIMATED THE CAPITAL REQUIRED TO MAKE SUCH PURCHASES AT RS. 10 LAKHS AND AS A CERTAIN PROFIT T HEREIN AT RS. 62 LAKHS. AS FAR AS ESTIMATION OF NET PROFIT IS CONCERNED WE FIND THAT THE NET PROFIT RATE IN THE DISCLOSED TRANSACTIONS IS PURELY 2.5 %. AS AGAINST THIS THE LD. CIT(A) HAS UPHELD THE ADDITION AT RS. 36 LAKHS WHI CH IS ROUGHLY 10 % OF SUCH UNACCOUNTED PURCHASES. IN OUR VIEW THIS ACTIO N OF THE LD. CIT(A) CANNOT BE CONSIDERED AS UNREASONABLE FROM ANY ANGLE . HENCE WE FIND NO MERIT IN THIS GROUND OF THE REVENUE. WE ALSO FIND T HAT THE LD. CIT(A) ALSO HELD THAT IN HIS APPELLATE ORDER THE UNDISCLO SED INCOME OF THE ASSESSEE WOULD NOT BE LESS THAN RS. 50 LAKHS ADMITT ED BY THE ASSESSEE HIMSELF. HENCE THERE CANNOT BE PREJUDICE TO THE R EVENUE IN VIEW OF THESE FINDINGS OF THE LD. CIT(A). 11. IN GROUND NO. 2 THE REVENUE IS AGGRIEVED BY THE D ECISION OF THE LD. CIT(A) IN DELETING THE ADDITION OF RS. 20 L AKHS ON ACCOUNT OF DISALLOWANCE OF SET-OFF CLAIMED BY THE ASSESSEE FOR THE REASON THAT IT WOULD RESULT INTO INCOME OF THE ASSESSEE LESS THAN THE INCOME DISCLOSED BY THE ASSESSEE IN THE BLOCK RETURN. 12. AT THE VERY OUT-SET WE ARE OF THE PRIMA FACIE VIEW THAT IN VIEW OF THE FINDING OF THE LD. CIT(A) IN PARA 7 AT PAGE 27 OF THE APPELLATE ORDER THIS GROUND IS LIABLE TO BE DISMISSED AS THE LD. CIT(A) HAS STATED PAGE 8 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. THEREIN THAT IN ANY CASE THE UNDISCLOSED INCOME WO ULD NOT BE LESS THAN THE INCOME RETURNED BY THE ASSESSEE. 13. THE LD. CIT DR HAS VEHEMENTLY SUPPORTED THIS VIEW OF THE A.O. AND THE LEARNED COUNSEL FOR THE ASSESSEE ON T HE OTHER HAND HAS STRONGLY RELIED ON THE ORDER OF THE LD. CIT(A). AS REGARD TO THE MERITS OF THE ISSUE IT IS NOTED THAT THE A.O. HAS MADE THIS ADDITION REJECTING THE PLEA OF THE ASSESSEE THAT THE ACKNOWLEDGEMENT/RECEI PT VOUCHERS SUBMITTED BY THE ASSESSEE WHICH REVEALED THAT THIS SUM HAD B EEN RECEIVED BY THE ASSESSEE PRIOR TO THE DATE OF SEARCH AS AN AFTER TH OUGHT BECAUSE SUCH EVIDENCES WERE NOT FOUND IN THE COURSE OF SEARCH AN D IN THE INITIAL STATEMENT THE ASSESSEE HAD ACCEPTED THE FACT THAT MONEY HAD NOT COME BACK TO THE ASSESSEE IN RESPECT OF SUCH MATURED HUN DIES. 14. WE FIND THAT THE LD. CIT(A) HAS TAKEN INTO CONSIDER ATION THE AFFIDAVIT FILED BY THE ASSESSEE WHICH WAS BEFORE T HE A.O. HAS ALSO TAKEN INTO CONSIDERATION THE FACT THAT THE ASSESSEE CAN R ETRACT FROM HIS ORIGINAL STAND PROVIDED HE WAS IN A POSITION TO SUPPORT SUC H REVISED VERSION WITH OTHER CORROBORATIVE EVIDENCE. THE LD. CIT(A) HAS AL SO TAKEN INTO CONSIDERATION THE FACT THAT IN THE FINAL STATEMENT THAT THE AMOUNT HAD BEEN RECEIVED BY THE ASSESSEE AT THE TIME OF MATURITY AN D THERE WAS NO RENEWAL ON THE FACE/BACK ON THE HUNDIES HENCE SUCH VERSIO N OF THE ASSESSEE WAS LIABLE TO BE ACCEPTED. IN THE PROCEEDINGS BEFORE US THE LEARNED COUNSEL PAGE 9 OF 9 - I.T.(SS) NO.46/IND/2006 SHRI SEWARAM TAKHTANI INDORE. FOR THE ASSESSEE HAS ALSO REBUTTED THE CLAIM OF THE LD. CIT DR THAT ACKNOWLEDGEMENTS/RECEIPTS WAS WITH THE BORROWERS AS THE ORIGINAL HUNDIES WERE NOT DELIVERED BACK TO THEM AS THE SAME HAD BEEN MISPLACED WHICH APPEARS TO BE A LOGICAL CONTENTION. IN THIS V IEW OF THE MATTER WE DO NOT FIND ANY MERITS IN THIS GROUND OF THE REVENUE A LSO. THE SAME IS THEREFORE DISMISSED. 15. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS DISMISSED. 16. TO SUM UP THE ASSESSEES CROSS OBJECTION AND REVEN UES APPEAL ARE DISMISSED. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 20 TH APRIL 2010. SD/- SD/- (JOGINDER SINGH) (V. K. GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 20 TH APRIL 2010. CPU* 134164