DCIT, Bangalore v. Shri. Subrato Roy,, Bangalore

ITA 1409/BANG/2008 | 2006-2007
Pronouncement Date: 12-03-2010 | Result: Allowed

Appeal Details

RSA Number 140921114 RSA 2008
Bench Bangalore
Appeal Number ITA 1409/BANG/2008
Duration Of Justice 1 year(s) 3 month(s) 22 day(s)
Appellant DCIT, Bangalore
Respondent Shri. Subrato Roy,, Bangalore
Appeal Type Income Tax Appeal
Pronouncement Date 12-03-2010
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-03-2010
Date Of Final Hearing 04-03-2010
Next Hearing Date 04-03-2010
Assessment Year 2006-2007
Appeal Filed On 20-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K. JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER ITA NO.1273/BANG/2008 ASSESSMENT YEAR : 2006-07 SRI SUBRATA ROY NO.120 GROUND FLOOR YETHIRAJ MUTT BUILDING 11 TH CROSS MALLESWARAM BANGALORE 560 003. : APPELLANT VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 1(4) BANGALORE. : RESPONDENT ITA NO.1409/BANG/2008 ASSESSMENT YEAR : 2006-07 THE DEPUTY COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 1(4) BANGALORE. : APPELLANT VS. SRI SUBRATA ROY NO.120 GROUND FLOOR YETHIRAJ MUTT BUILDING 11 TH CROSS MALLESWARAM BANGALORE 560 003. : RESPONDENT ITA NO.1273 & 1409/B/08 PAGE 2 OF 9 ASSESSEE BY : SHRI S. PARTHASARATHI/ MS. SHEETAL BORKAR REVENUE BY : SMT. V.S. SREELEKHA O R D E R PER GEORGE GEORGE K. JUDICIAL MEMBER THESE CROSS APPEALS ARE FILED BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT(APPEALS) DATED 21.8.08 . THE ASSESSMENT YEAR CONCERNED IS 2006-07. 2. SINCE THESE APPEALS ARISE OUT OF THE CIT(APPEALS ) ORDER DATED 21.8.08 AND PERTAIN TO THE SAME ASSESSEE THEY ARE DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 3. THE ASSESSEE IN ITA NO.1273/B/08 HAS RAISED 8 GR OUNDS. GROUND NOS.1 & 8 ARE GENERAL AND NO ADJUDICATION IS CALLED FOR. IN THE COURSE OF HEARING IT WAS SUBMITTED BY THE LD. AR THAT GROUND NOS. 2 & 6 ARE NOT PRESSED AND SAME ARE DISMISSED AS NOT PRESSED. 4. GROUND NO.7 IS ONLY CONSEQUENTIAL AND NO DELIBER ATION IS REQUIRED ON THE SAME. THE REMAINING EFFECTIVE GROUNDS ARE AS F OLLOWS :- 3. THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THA T THE ASSESSING OFFICER HAD GIVEN A CATEGORICAL FINDING T HAT THE APPELLANT WAS NOT MAINTAINING ANY BOOKS OF ACCOUNTS AND THERE FORE HE OUGHT TO HAVE HELD THAT NO ADDITION UNDER SECTION 6 9 COULD BE MADE AND THEREFORE OUGHT TO HAVE DELETED THE ADDITI ON IN ENTIRETY. 4. THE CIT(APPEALS) OUGHT TO HAVE APPRECIATED THAT NO PAYMENT TO THE EXTENT OF RS.13 LAKHS HAVE EVER BEEN MADE OR ANY EXPENDITURE TO THAT EXTENT HAVING BEEN CLAIMED BY T HE APPELLANT NO ADDITION COULD HAVE BEEN MADE UNDER SECTION 69C IN THE ITA NO.1273 & 1409/B/08 PAGE 3 OF 9 HANDS OF THE APPELLANT IN THE ABSENCE OF ANY ENQUIR Y ON THE OTHER PERSON TO WHOM THE PAYMENT WAS ALLEGED TO HAVE BEEN MADE. 5. WITHOUT PREJUDICE THE APPELLANT HAVING NOT CLAI MED OR INCURRED ANY EXPENDITURE NO ADDITION UNDER SECTION 69C COULD BE MADE IN THE HANDS OF THE APPELLANT. 5. THE REVENUE IN ITA NO.1409/B/08 HAS RAISED 7 GRO UNDS. ALL THE GROUNDS RELATE TO THE SOLITARY ISSUE VIZ. WHETHER THE CIT(APPEALS) IS JUSTIFIED IN DELETING THE UNEXPLAINED INVESTMENT ON ACCOUNT OF EXCESS GOLD FOUND AT THE RESIDENCE VALUED AT RS.16 81 781. 6. WE SHALL FIRST TAKE UP THE ASSESSEES APPEAL ( ITA NO.1273/B/08) . BRIEFLY STATED THE FACTS IN RELATION TO THE ISSUE A RE AS FOLLOWS. THE ASSESSEE IS AN INDIVIDUAL IN THE BUSINESS OF MAKING JEWELLER Y. THERE WAS A SEARCH U/S. 132 OF THE ACT IN THE RESIDENTIAL AND BUSINESS PREMISES OF THE ASSESSEE. THE ASSESSING OFFICER IN THE COURSE OF AS SESSMENT PROCEEDINGS EXAMINED SEIZED MATERIAL MARKED AS A/SJ-1/2 WHICH E VIDENCED CASH PAYMENTS. THERE WAS MENTION OF CASH PAYMENT OF RS. 6 LAKHS AND RS.7 LAKHS WITH THE WORDS RAMESH SHARMA AND CASH PAID IN THE SAID SEIZED MATERIAL. THE ASSESSEE WAS ASKED TO EXPLAIN THE AM OUNTS PAID IN CASH. IT WAS SUBMITTED BY ASSESSEE THAT PAYMENT HAS BEEN MAD E TO RAMESH SHARMA WHO WAS THE DIRECTOR OF M/S. KALATMAK INTERI OR PVT. LTD. AND THE PAYMENTS HAVE BEEN MADE BY THE FIRM M/S. SRISTI JEW ELLERS IN WHICH THE ASSESSEE IS A PARTNER FOR THE INTERIOR WORKS DONE FOR THE SHOWROOM OF FIRM AT MALLESWARAM. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND ADDED RS.13 LAKHS (6 LAKHS + 7 LAKHS) AS UNEXPLAINE D INVESTMENT. ITA NO.1273 & 1409/B/08 PAGE 4 OF 9 7. ON FURTHER APPEAL THE CIT(APPEALS) DISMISSED TH E APPEAL OF THE ASSESSEE BY HOLDING THUS: 6(B) IN THE GROUND NO. 5 OF THE APPEAL I FIND S TILL A NEW ARGUMENT HAS BEEN PUT FORTH. LEAVE ASIDE THE FACT OF PAYMENT OF RS.13 LAKHS TO SRI RAMESH SHARMA EITHER IN CASH OR CHEQUE THE STAND TAKEN BEFORE THE A.O. AT THE APPELLATE STAGE IT IS PLEADED THAT THE SLIP OF PAPER BEING NOT SIGNED OR AUTHENTI CATED HAS NO EVIDENTIARY VALUE AND THEREFORE CANNOT BE RELIED UP ON BY THE A.O. TO MAKE SUCH ADDITION. THUS INCONSISTENCY GALORES IN THE ARGUMENTS OF THE APPELLANT. HOWEVER I DO NOT AGRE E WITH THE ARGUMENT OF AUTHORISED REPRESENTATIVE THAT SUCH SEI ZED PAPER HAS NO EVIDENTIARY VALUE. BY VIRTUE OF SECTION 132(4A) R.W.S. 292C OF THE INCOME TAX ACT EVEN IF THE PAPER BEARS NO SIGN ATURE SINCE IT HAS BEEN SEIZED FROM THE RESIDENCE OF THE APPELLANT ITS CONTENTS HAS TO BE TREATED AS TRUE UNLESS REBUTTED. THE APP ELLANT HAS NOT REBUTTED SUCH PAYMENT. THEREFORE IT HAS TO BE TREA TED AS CASH PAYMENT TO SRI RAMESH KUMAR. SUCH CASH PAYMENT IS NOT VERIFIABLE FROM THE CASH BOOK OF M/S. SRISTI JEWELL ERS. HOWEVER IN THE PROFIT AND LOSS ACCOUNT (ENCLOSED AS ANNEXE- A) BY THE FIRM M/S. SRISTI JEWELLERS ENCLOSED WITH THE RETURN OF I NCOME SUCH EXPENDITURE HAS NOT BEE CLAIMED. IN TOTO THE PLEA S TAKEN BY THE APPELLANT WERE FOUND TO BE FALSE. ON THE OTHER HAN D THE DOCUMENT WAS SEIZED FROM THE RESIDENCE OF THE ASSES SEE. ITS CONTENT HAS TO TREATED AS TRUE AS PER SECTION 132(4 A) R.W.S. 292C OF THE I.T. ACT WHICH SHOWS PAYMENT OF CASH OF RS.1 3 LAKHS TO SRI RAMESH SHARMA. THE ONUS OF SUCH PAYMENT CLAIMED TO HAVE BEEN MADE BY M/S. SRISTI JEWELLERS IS NOT FOUND SUBSTANT IATED. THE ONLY INFERENCE FROM SUCH CIRCUMSTANTIAL EVIDENCE BA CKED BY STATUTORY PRESUMPTION IS THAT THE PAYMENT WAS MADE BY THE APPELLANT OUT OF HIS UNACCOUNTED INCOME. 8. DISENCHANTED BY THE ORDER OF CIT(APPEALS) ASSES SEE IS IN SECOND APPEAL BEFORE US. THE ASSESSEE HAD FILED PAPERBOOK CONTAINING 20 PAGES AND THE SAME IS CERTIFIED AS PRODUCED BEFORE THE AU THORITIES BELOW. HE HAS ALSO FILED AN APPLICATION UNDER RULE 29 OF THE I.T.A.T. RULES 1963 FOR ADMISSION OF FRESH EVIDENCE VIZ. A COPY OF THE CON FIRMATION LETTER OF MR. RAMESH SHARMA FOR THE RECEIPT OF SUM OF RS.11 LAKHS DURING THE PERIOD ITA NO.1273 & 1409/B/08 PAGE 5 OF 9 RELEVANT TO A.Y. 2006-07. THE LD. AR REFERRING TO THE SEARCH MATERIAL MARKED AS A/SJ-1/2 STATED THAT IT DOES NOT INDICAT E THAT THE PAYMENT HAS BEEN MADE BY THE ASSESSEE. IT WAS SUBMITTED THAT T HE PAYMENT MADE TO MR. RAMESH SHARMA IS BY THE FIRM M/S. SRISTI JEWELL ERS AND THE FIRMS BALANCE SHEET REFLECTS SUCH INTERIOR DECORATION AND IT HAS NOTHING TO DO WITH THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. IT WAS AL SO SUBMITTED MR. RAJESH SHARMA HAS DECLARED THE RECEIPT OF RS.11 LAKHS IN H IS RETURN OF INCOME FOR THE A.Y. 2006-07 AND ACKNOWLEDGEMENT FOR THE RETURN OF INCOME WAS PRODUCED BEFORE THE AUTHORITIES BELOW. IT WAS ALSO CONTENDED CIT(APPEALS) IS NOT RIGHT IN STATING THE AMOUNT PAI D TO SRI RAMESH SHARMA IS NOT CLAIMED AS DEDUCTION IN THE PROFIT & LOSS AC COUNT OF M/S. SRISTI JEWELLERS SINCE THE AMOUNT WAS CAPITALISED UNDER T HE HEAD FURNITURE & FIXTURES AND SAME IS EVIDENT FROM THE BALANCE SHEE T OF SRISTI JEWELLERS FOR THE YEAR ENDING 31.3.06. THE LD. DR ON THE OTHER HAND CONTENDED THE ADDITION WAS MADE BY THE AO IN VIEW OF THE INCONSI STENT EXPLANATION FURNISHED BY THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE ADDITION. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE ARE OF THE VIEW THAT FOR PROPER ADJUDIC ATION OF THE MATTER FOR THE ADVANCEMENT OF SUBSTANTIAL CAUSE FRESH EVIDENCE TH AT IS NOW FURNISHED BEFORE US NEED TO BE ADMITTED AND WE ADMIT THE SAME . IN THE INSTANT CASE WE ARE OF THE VIEW THAT AO OUGHT TO HAVE MADE MORE ELABORATE ENQUIRIES PRIOR TO MAKING THE ADDITIONS. THE ASSESSEE AT THE VERY FIRST INSTANCE HAD STATED THAT THE PAYMENTS MADE TO RAMESH SHARMA IS BY THE FIRM M/S. SRISTI JEWELLERS AND SAME IS REFLECTED IN THE BALAN CE SHEET OF THE FIRM. IT ITA NO.1273 & 1409/B/08 PAGE 6 OF 9 WAS SUBMITTED ASSESSEE IN HIS INDIVIDUAL CAPACITY H AS NOTHING TO DO WITH THE PAYMENT. A SLIP WHICH DOES NOT CARRY ANY NAME AS TO WHO HAS MADE THE PAYMENT CANNOT BE MADE USE OF FOR MAKING ADDITI ONS OF THIS NATURE UNLESS PROPER ENQUIRY WAS MADE BY THE AO. THE AO O UGHT TO HAVE MADE ENQUIRIES WITH THE RECIPIENT OF RS.13 LAKHS SRI RA MESH SHARMA. RAMESH SHARMA FILED CONFIRMATION LETTER TO THE EFFECT THAT FOR THE CONCERNED YEAR HE HAS RECEIVED RS.11 LAKHS TOWARDS INTERIOR DECORATIO N WORK DONE BY HIM ON THE PREMISES OF M/S. SRISTI JEWELLERS AS AGAINST TH E BILL FOR RS.13 22 500. IN THE INTEREST OF JUSTICE AND FAIRPLAY WE ARE OF THE VIEW THE MATTER NEEDS TO BE RESTORED TO THE FILE OF ASSESSING OFFICER AND HE SHALL CONSIDER THE MATERIAL/CONTENTIONS OF THE ASSESSEE AND PASS FRESH ASSESSMENT ORDERS. 10. NOW LET US ANALYSE THE DEPARTMENTS APPEAL IN ITA 1409/B/08 . AS STATED EARLIER THE ASSESSEE AN INDIVIDUAL IS IN THE BUSINESS OF MAKING JEWELLERY. A SEARCH WAS CONDUCTED IN THE RESIDENCE AND BUSINESS PREMISES OF THE ASSESSEE ON 25.2.06. DURING THE SEARCH OF T HE RESIDENTIAL PREMISES 4915.373 GMS. OF GOLD WAS FOUND. THE ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF GOLD. ASSESSEE STATED HE AND HIS WIFE TO GETHER HAD 3 TO 3.5 KGS. OF GOLD WHICH WAS RECEIVED AT THE TIME OF THEIR MAR RIAGE AND OTHER OCCASIONS. HOWEVER ASSESSEES WIFES JEWELLERY TO THE EXTENT OF 1218.97 GMS. WAS IDENTIFIED AND WAS SEPARATELY ASSESSED IN HER HANDS. 11. FOR THE BALANCE 3696.398 GMS. IT WAS STATED BY THE ASSESSEE THAT JEWELLERY BUSINESS WAS DONE FROM HIS WORKSHOP AT HI S RESIDENCE AND PERSONAL GOLD WAS MIXED ALONG WITH BUSINESS GOLD. ASSESSEE HAD FILED LETTERS FROM CERTAIN PERSONS BEFORE THE DDIT (INV.) TO THE EFFECT THAT GOLD WAS ENTRUSTED FOR MAKING JEWELLERY/ORNAMENTS. DDIT (INV) WAS OF THE VIEW ITA NO.1273 & 1409/B/08 PAGE 7 OF 9 OUT OF BALANCE 3696.398 GMS. OF GOLD ASSESSEE WAS NOT ABLE TO GIVE PROPER EXPLANATION WITH REFERENCE TO 2 KGS. OF GOLD AND THE SOURCE OF SAME IS NOT EXPLAINED. 12. DURING THE ASSESSMENT PROCEEDINGS A SHOW CAUSE NOTICE WAS ISSUED TO EXPLAIN AS TO WHY 2 KGS. OF GOLD VALUED A T RS.16 81 781 SHOULD NOT BE TREATED AS UNEXPLAINED INVESTMENT. ASSESSEE FILED A REPLY STATING THAT ASSESSEE IS FROM GOLDSMITHS FAMILY AND FOR GE NERATIONS TOGETHER WAS IN THE BUSINESS OF MANUFACTURING JEWELLERY AND ORNA MENTS. IT WAS SUBMITTED VARIOUS PERSONS USED TO GIVE GOLD FOR THE PURPOSE OF ALTERATION AND FOR MAKING MODERN JEWELLERY OUT OF OLD AND OUT- FASHIONED JEWELLERY. IT WAS STATED ASSESSEE IS UNEDUCATED AND IS A SMALL BU SINESSMAN IN THE JEWELLERY BUSINESS. IT WAS SUBMITTED HE HAD NOT MA INTAINED PROPER RECORDS AND DOCUMENTS IN CONNECTION WITH COLLECTION OF JEWE LLERY FROM THE CUSTOMERS. THE ASSESSEE SUBMITTED THAT PART OF GOL D JEWELLERY FOUND IN THE COURSE OF SEARCH IS PARTLY PERSONAL GOLD AND PARTLY BELONGING TO FEW CUSTOMERS AND THEREFORE THE ADDITION AS UNEXPLAINED INVESTMENT U/S. 69 OF THE ACT IS NOT CALLED FOR. 13. THE AO REJECTED THE EXPLANATION OF THE ASSESSEE AND HELD THAT THE ASSESSEE WAS GIVEN BENEFIT TO THE EXTENT OF 1696.39 8 GMS. OF GOLD AS BELONGING TO VARIOUS PARTIES AND WITH REFERENCE TO 2 KGS. THE ASSESSEE HAS NOT GIVEN ANY EXPLANATION. HE CONCLUDED THAT THE V ALUE OF 2 KGS. OF GOLD AMOUNTING TO RS.16 81 781 IS TO BE ADDED BACK TO IN COME OF ASSESSEE AS UNEXPLAINED INVESTMENT. 14. THE CIT(APPEALS) ON APPEAL DELETED THE ADDITI ON MADE BY THE AO BY STATING THAT AO OUGHT TO HAVE MADE ENQUIRIES BEF ORE MAKING ADDITION ITA NO.1273 & 1409/B/08 PAGE 8 OF 9 SINCE NAME OF THE PARTIES FROM WHOM THE ALLEGED GOL D WERE GIVEN TO THE ASSESSEE WAS AVAILABLE WITH THE DEPARTMENT AND THER EFORE AO WAS NOT RIGHT IN MAKING THE ADDITION. 15. REVENUE BEING AGGRIEVED IS IN APPEAL BEFORE US. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON R ECORD. WHEN ASSESSEE ALLEGES 2 KGS. OF GOLD BELONGS TO THIRD PERSONS IT IS FOR THE ASSESSEE TO PROVE WITH SOME EVIDENCE THAT IT BELONGS TO THEM. THE CIT(APPEALS) HIMSELF HAS OBSERVED THERE HAS BEEN NO PROPER EXAMI NATION BY THE AO SINCE THERE WAS SHORTAGE OF TIME FOR COMPLETION OF ASSESSMENT. THE ASSESSEE OUGHT TO HAVE PRODUCED CONFIRMATORY LETTER S OR THE ADDRESS OF THE PARTIES CONCERNED WHO ENTRUSTED GOLD JEWELLERY WIT H THE ASSESSEE TO FACILITATE THE DEPARTMENT TO ISSUE SUMMONS AND MAKE NECESSARY ENQUIRY. WE FIND NO EFFORTS HAVE BEEN MADE ON THIS LINE. TH EREFORE IN THE INTEREST OF JUSTICE WE ARE OF THE VIEW THE MATTER NEEDS TO BE RESTORED TO THE FILE OF THE AO FOR FRESH CONSIDERATION OF THE MATTER. THE AO SHALL DRAW FRESH ORDERS OF ASSESSMENT AFTER AFFORDING ASSESSEE REAS ONABLE OPPORTUNITY OF BEING HEARD. 16. IN THE RESULT THE APPEALS FILED BY BOTH THE AS SESSEE AND THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF MARCH 2010. SD/- SD/- (A. MOHAN ALANKAMONY ) ( GEORGE GEORG E K. ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED THE 12 TH MARCH 2010. DS/- ITA NO.1273 & 1409/B/08 PAGE 9 OF 9 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD FILE (1+1) BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE.