ACIT, v. Shri Gurumukh M. Jagwani,

ITA 1771/PUN/2007 | 2002-2003
Pronouncement Date: 07-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 177124514 RSA 2007
Assessee PAN ACXPJ0669D
Bench Pune
Appeal Number ITA 1771/PUN/2007
Duration Of Justice 3 year(s) 12 day(s)
Appellant ACIT,
Respondent Shri Gurumukh M. Jagwani,
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 07-01-2011
Assessment Year 2002-2003
Appeal Filed On 26-12-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A PUNE BEFORE SHRI I.C. SUDHIR AND SHRI D. KARUNAKARA RAO ITA NO. 1771 TO 1773/PN/07 (ASSTT. YEARS 2002-03 TO 2004-05) ACIT CENTRAL CIRCLE AURANGABAD .... APPELLANT VS. SHRI GURUMUKH M. JAGWANI M/S. LAXMI INDUSTRIES 84 CHINCHOLI VILLAGE JALGAON PAN NO. ACXPJ0669D . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SHRI HARESHWAR SHARMA ORDER PER D. KARUNAKARA RAO AM THESE THREE APPEALS FILED BY THE REVENUE ARE AGAINST THE ORDER OF THE CIT(A) I NAGPUR IDENTICALLY DATED 10-09-2007 FOR THE ASSESSMENT YEARS 2002-03 TO 2004-05. 2. AT THE VERY OUTSET LD. COUNSEL FOR THE ASSESSEE M ENTIONED THAT THERE ARE A COUPLE OF ISSUES INVOLVED IN ALL THE THREE APPEALS BEARING ITA NOS. 1771 1772 AND 1773/PN/07 AND THEY ARE AS FOLLOWS. THE FIRST ISSUE RELATES TO THE DELETION OF ADDITION MADE ON ACCOUNT OF SUPPRESSED PROFITS FROM THE UNRECORDED SALE. SECOND ISSUE RELATES TO THE ADDITIONS MADE U/S. 68 OF THE INCOME TAX ACT. 3. IN CONNECTION WITH THE FIRST ISSUE STATING THAT THESE APPEALS ARE FILED BY THE REVENUE LD. COUNSEL MENTIONED THAT THE FIRST IS SUE RELATING TO SUPPRESSION OF PROFIT ON UNRECORDED SALE WAS BONE OF CONTENTION BE FORE THE TRIBUNAL IN OTHER YEARS AND IT WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THIS TRIBUNAL ITA NO. 1771 TO 1773/PN/07 A.YS: 2002-03 TO 2004-05 PAGE 2 OF 4 IN CONNECTION WITH THE ITA NO. 1764 AND 1764/PN/07 FOR THE A.Y 1999-00 AND 2000-01 DATED 15-10-2010. FURTHER IT WAS INFORMED TH AT THE ABOVE DECISION WAS AFFIRMED BY THE ANOTHER ORDER OF THIS TRIBUNAL IN CONNEC TION WITH THE ITA NO. 1379/PN/07 FOR THE A.Y 2003-04 DATED 05-02-2010. FURT HER STATING THAT THESE IMPUGNED SUPPRESSED SALES WAS ITSELF THE PRODUCT OF E XTRAPOLATIONS BASED ON THE DATA GATHERED IN THE SEARCH FOR PART PERIOD FROM 01-05-20 04 TO 22-09-2004 RELEVANT FOR THE A.Y 2005-06 LD. COUNSEL MENTIONED T HAT SUCH EXTRAPOLATIONS OUTSIDE THE PREVIOUS YEAR ARE NOT ENTERTAINED AND RELIED ON THE SAID ABOVE REFERRED TRIBUNAL ORDER AND THE CITATIONS MENTIONED THERE IN. ON THIS ISSUE LD. DR FOR THE REVENUE ARGUED STATING THAT THIS IS A CASE THAT THE ASSESSEE ADMITTED TO THE FACT OF SUPPRESSION OF SALES THOUGH THE SAME WAS RETRACTED SUBSEQUENTLY. HOWEVER HE ADMITTED TO THE FACT THAT THERE IS NO SUP PORTING SEIZED MATERIAL IN POSSESSION OF THE DEPARTMENT TO SUBSTANTIATE EITHER T HE IMPUGNED SUPPRESSED SALES OR THE RELATABLE PROFITS. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE PARA 4 OF THE ORDER OF THE TRIBUNAL VIDE ITA NO. 1375 TO 1378/PN/07 DATED 2 2-06-2009 FOR THE PROPOSITION THAT THE EXTRAPOLATION OF SUPPRESSED SALES TO AN AY BASED ON THE SEIZED DATA FOR PART OF THE PY OF A DIFFERENT A Y IS NOT TO BE ENTERTAINED LEGALLY. FOR THE SAKE OF COMPLETENESS RELEVANT PARA 4 AND 5 OF THE ORDER DATED 22-06-2009 ARE REPRODUCED AS UNDER:- 4. HEARD THE SUBMISSIONS OF BOTH THE SIDES. FROM T HE SIDE OF REVENUE SHRI A.S. SINGH APPEARED AND PLACED RELIANCE ON THE ORDER OF THE A.O. HOWEVER FROM THE SIDE OF RESPONDENT ASSESSEE. SHRI SUNIL PATHAK APPEARED AND SUPPORTED THE ORDER OF THE LEARNED CIT (A). ON APPRECIATION OF FACTS OF THE CASE AS DISCUSSED HEREINABOVE IT I S EVIDENT THAT THE A.O HAS ATTEMPTED TO EXTRAPOLATE TURNOVER OF THE ASSESS EE ON THE BASIS OF DIARY WHICH HAS RECORDED DEPOSITS OF GOODS ONLY FOR THE PERIOD FROM 1-5- 2004 TO 22-9-2004. ON DUE APPRECIATION OF FACTS AND CIRCUMSTANCES OF THE CASE THE FIRST APPELLATE AUTHORITY HAS ARRIVED AT THE CONCLUSION THAT THERE WAS NO BASIS FOR THE IMPUGNED BACKWARD EXTRAPOLATIO N OF THE TURNOVER ESPECIALLY WHEN NO INCRIMINATING EVIDENCE OR MATERI AL WAS FOUND CONSEQUENT UPON THE SEARCH TO DEMONSTRATE THAT IN T HE PAST YEARS AS WELL THE ASSESSEE WAS INDULGED IN SUPPRESSION OF SALES. MOREOVER THE ADMITTED POSITION IS THAT THE ASSESSEE HAS MAINTAINED REGULA R BOOKS OF ACCOUNTS STATED TO BE COVERED UNDER TAX AUDIT REPORT BRING D ULY AUDITED. AN ANOTHER FACTUAL FINDING IS PLACED ON RECORD THAT THE STOCK FOR THE SAID PERIOD WAS FOUND SHORT AT THE TIME WHEN THE SEARCH WAS CONDUCT ED. THEREFORE VEHEMENT CONTENTION WAS THAT A CONCLUSION COULD EAS ILY BE DRAWN THAT THE SHORTAGE OF STOCK HAS ESTABLISHED THE FACT THAT THO SE DISPATCHES AS RECORDED IN THE DIARY WERE MADE OUT OF THE SAID STO CK. A LEGAL PLEA HAS ALSO BEEN RAISED THAT ONCE THE SEIZED MATERIAL I.E. DIARY PERTAINED TO A SPECIFIC FINANCIAL YEAR I.E. 2004-05 RELEVANT TO A. Y 2005-06 THEN IF AT ALL ITA NO. 1771 TO 1773/PN/07 A.YS: 2002-03 TO 2004-05 PAGE 3 OF 4 ANY ACTION WAS REQUIRED THE SAME OUGHT TO BE FOR T HE A.Y 20E05-06 AS IT WAS HELD BY SEVERAL COURTS THAT NO INCOME COULD BE ESTIMATED FOR THE OTHER YEARS ON THE BASIS OF EVIDENCE FOUND FOR ONE PARTICULAR YEAR ESPECIALLY WHEN THERE WAS NO INCRIMINATING EVIDENCE PERTAINED TO ANY OTHER ASSESSMENT YEAR. THE CASE LAW CITED WAS AS FO LLOWS:- 1. ROYAL MARWAR TOBACCO PRODUCTS (P) LTD. (120 TTJ 3 87 (AHD) 2. H.C. CHANDNA (P) LTD. VS. DCIT (91 TTJ 243 (DE L) 3. ASSTT. CIT VS. SMT. RADHA RANI (101 TTJ 1017 (J P) 4. ASSTT. CIT VS. AMBICA FOOD INDUSTRIES LTD. (110 TTJ (HYD) 5. ASSTT. CIT VS. M.M. SALES AGENCIES (97 TTJ 575 JP) 6. STATE OF ORISSA VS. J.P. SIKIRIA 7 CO (67 STC 101 (ORISSA). 5. ON AN EXAMINATION OF THE LAW LAID DOWN IN THE A BOVE PRECEDENTS AND ALSO CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE AS DISCUSSED HEREINABOVE WE FIND NO FALLACY IN THE ORDER OF THE CIT(A) ESPECIALLY WHEN THE IMPUGNED UNSUPPORTED BACKWARD EXTRAPOLATION OF THE TURNOVER WAS NOT BASED UPON OR SUPPORTED BY ANY INCRIMINATING MATERIAL FOR THE YEARS UNDER C ONSIDERATION THOUGHT THE REVENUE DEPARTMENT AND TAKEN AN EXTREME STEP OF SEARCH AT THE PREMISES OF THE ASSESSEE. WE HEREBY CONFIRM THE FINDINGS OF THE LEARNED CIT(A) AND DISMISS THE GROUNDS OF THE REVEN UE. 5. FROM THE ABOVE IT IS EVIDENT THAT THERE IS NO INCRI MINATING MATERIAL FOR SUPPORTING THE REVENUES ALLEGATIONS THAT THERE IS SU PPRESSION OF SALES FOR ALL THESE THREE YEARS. IN SUCH CIRCUMSTANCES THE ISSUE ST ANDS COVERED IN FAVOUR OF THE ASSESSEE BY OUR ORDERS REFERRED ABOVE. IN THE RESULT THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 6. REGARDING THE SECOND ISSUE OF ADDITIONS MADE U/S. 68 LD. COUNSEL MENTIONED THAT THIS ISSUE HAS TO BE SET ASIDE TO TH E FILES OF THE A.O FOR DECIDING THE ISSUE AFRESH CONSIDERING THE FACT THESE ADDITIONS WERE HOMOLOGOUS TO THE ONES MADE IN THE CASES OF ANITA B. JAGWANI AND BRIJL AL M. JAGWANI AND FINALLY SET ASIDE BY THE TRIBUNAL TO THE FILES OF THE REVENUE WI TH CERTAIN DIRECTIONS. APPEAL DETAILS ARE BRIJLAL M. JAGWANI VIDE ITA NO. 1334/PN/0 7 AND ANITA B. JAGWANI VIDE ITA NOS. 1134 TO 1136/PN/07. CONSIDERING THE DECISIO NS OF THE TRIBUNAL AND THE COMMONNESS OF THE FACTS WE FIND NO REASON TO DISHON OR THE REQUEST OF THE LD. COUNSEL. HOWEVER LD. COUNSEL IS DIRECTED TO FILE TH E COPIES OF THE SAID ORDERS OF THE TRIBUNAL IN THE CASE OF BRIJLAL M. JAGWANI (SUPRA) AND OTHERS FOR PROVIDING THE CONTENTS OF THE ORDER FOR FACILITATING THE INVESTIGATI ON BY THE A.O IN THE CASE OF THESE APPEALS. ACCORDINGLY THE GROUNDS RAISED IN THE APPEAL OF THE REVENUE ARE SET ASIDE . ITA NO. 1771 TO 1773/PN/07 A.YS: 2002-03 TO 2004-05 PAGE 4 OF 4 7. IN THE RESULT ITA NO. 1771/PN/07 IS PARTLY ALLOWED . ITA NO. 1772/PN/07 IS ALLOWED FOR STATISTICAL PURPOSE AND ITA NO. 1773/PN/07 IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH DAY OF JANUARY 2011. SD/- SD/- (I.C. SUDHIR) (D.KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBE R PUNE DATED THE 07 TH JANUARY 2011 R COPY OF THE ORDER IS FORWARDED TO : 1. ACIT CENTRAL CIRCLE AURANGABAD 2. ASSESSEE 3. CIT(A)-I NAGPUR 4. CIT(CENTRAL) NAGPUR 5. D.R. ITAT A BENCH BY ORDER ASSISTANT REGISTRAR I.T.A.T PUNE