Mahaveerchand Jain, CHENNAI v. DCIT, CHENNAI

ITA 300/CHNY/2013 | 2002-2003
Pronouncement Date: 09-04-2014 | Result: Dismissed

Appeal Details

RSA Number 30021714 RSA 2013
Assessee PAN AALPK3243Q
Bench Chennai
Appeal Number ITA 300/CHNY/2013
Duration Of Justice 1 year(s) 1 month(s) 19 day(s)
Appellant Mahaveerchand Jain, CHENNAI
Respondent DCIT, CHENNAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-04-2014
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 09-04-2014
Date Of Final Hearing 08-04-2014
Next Hearing Date 08-04-2014
Assessment Year 2002-2003
Appeal Filed On 19-02-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH CHENNAI . . . !' # $! % BEFORE DR. O.K.NARAYANAN VICE-PRESIDENTAND SHRI VIKAS AWASTHY JUDICIAL MEMBER ./ ITA NOS. 296 297 298 299 300 301 302 & 303(MD S)/2013 # & '& / ASSESSMENT YEARS : 1998-99 TO 2005-06 SHRI MAHAVEERCHAND JAIN 40 SACHIDANANDAN STREET KOSAPET CHENNAI - 600 012. PAN : AALPK 3243 Q V. THE DEPUTY COMMISSIONER OF INCOME TAX CENTRAL CIRCLE II(2) CHENNAI - 600 034. (')/ APPELLANT) (+ ')/ RESPONDENT) ') - / APPELLANT BY : SHRI T.N. SEETHARAMAN ADVOCATE + ') - / RESPONDENT BY : SHRI T.N. BETGERI IRS JCIT . - /0 / DATE OF HEARING : 8 TH APRIL 2014 12' - /0 / DATE OF PRONOUNCEMENT : 9 TH APRIL 2014 / O R D E R PER DR.O.K.NARAYANAN VICE-PRESIDENT THIS IS A BUNCH OF EIGHT APPEALS. ALL THE APPEAL S ARE FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEARS ARE 19 98-99 1999- 2000 2000-01 2001-02 2002-03 2003-04 2004-05 A ND 2005-06. THESE APPEALS ARE DIRECTED AGAINST THE ORDERS PASSE D BY THE COMMISSIONER OF INCOME TAX (APPEALS)-II AT CHENNAI. THE APPEAL FOR THE ASSESSMENT YEAR 1998-99 ARISES OUT OF THE A SSESSMENT 2 I.T.A. NOS. 296 TO 303/MDS/13 COMPLETED UNDER SECTION 143(3) READ WITH SECTION 14 7. THE ASSESSMENTS FOR THE REMAINING ASSESSMENT YEARS EXC EPT FOR ASSESSMENT YEAR 2005-06 HAVE BEEN COMPLETED UNDER SECTION 143(3) READ WITH SECTION 153C. THE ASSESSMENT FOR ASSESSMENT YEAR 2005-06 HAS BEEN COMPLETED UNDER SECTION 144 R EAD WITH SECTION 153C OF THE INCOME-TAX ACT 1961. 2. THE ASSESSEE IS AN INDIVIDUAL CARRYING ON THE BU SINESS OF AUCTIONEERS UNDER THE NAME AND STYLE OF KANKARIA A UCTIONEERS. THE ASSESSEE IS AUTHORIZED UNDER THE TAMIL NADU PAW N BROKERS ACT 1943 TO AUCTION PAWNED JEWELLERY. 3. THERE WAS A SEARCH AND SEIZURE OPERATION UNDER S ECTION 132 CARRIED OUT IN THE PREMISES OF SHRI JASWANT CHAND B HANDARI AND MRS. BHANDARI ON 12.8.2004. IN THE COURSE OF SEARC H IT WAS REVEALED THAT THE BHANDARI FAMILY HAD SOLD JEWELLER Y AND DIAMONDS THROUGH THE ASSESSEE M/S KANKARIA AUCTIONEERS. TH E DOCUMENTS SEIZED IN THE COURSE OF SEARCH CARRIED OUT AT THE P REMISES OF BHANDARIES HAVE REVEALED THAT THE ASSESSEE IS CARRY ING ON THE BUSINESS OF AUCTIONING ON A LARGE SCALE. COPIES OF CHEQUES ISSUED BY THE ASSESSEE IN FAVOUR OF MRS. BHANDARI FOR PAYM ENT OF THE PROCEEDS REALIZED ON AUCTION WERE ALSO SEIZED. THE SEARCH MATERIALS ALSO BROUGHT TO LIGHT THAT THE ASSESSEE W AS CARRYING ON 3 I.T.A. NOS. 296 TO 303/MDS/13 PRIVATE AUCTION ALSO BY USING THE DOCUMENTATION PRE SCRIBED UNDER TAMIL NADU PAWN BROKERS ACT 1943. 4. IT IS IN THE LIGHT OF THE ABOVE DETAILS THAT THE IMPUGNED ASSESSMENTS HAVE BEEN COMPLETED IN THE PRESENT CASE . IN THE COURSE OF EXAMINING THE DETAILS THE ASSESSING OFFI CER FOUND THAT THE ASSESSEE HAD MADE HUGE CASH DEPOSITS IN HIS ACCOUNT WITH M/S VIJAYA BANK. THE SOURCE AND DETAILS OF THESE CASH DEPOSITS WERE ASKED FOR. BUT THE ASSESSEE COULD NOT EXPLAIN THE WHEREABOUTS REGARDING THE CASH DEPOSITS REFLECTED IN HIS BANK A CCOUNT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT FURNISH THE DETAILS OF ANY OF THE PERSONS WHO ATTENDED IN THE A UCTION CONDUCTED BY THE ASSESSEE. THE EXPLANATION REGARDING THE CAS H DEPOSITS PROVIDED BY THE ASSESSEE WAS THAT THOSE AMOUNTS REP RESENTED THE AMOUNTS COLLECTED FROM VARIOUS BIDDERS. THE EXPLAN ATION PROVIDED BY THE ASSESSEE BEFORE THE ASSESSING AUTHORITY WAS THAT WHENEVER HE COLLECTS MONEY FROM THE BIDDERS THE AMOUNTS ARE DEPOSITED IN THE BANK ACCOUNT AND WHEN THE GOLD AND VALUABLES AR E RELEASED TO THE BIDDERS ON GETTING ENTIRE AUCTION AMOUNTS AND T HEREAFTER THE ASSESSEE PAYS THE MONEY TO THE PERSONS WHOSE GOLD A ND VALUABLES WERE AUCTIONED BY THE ASSESSEE. THUS ACCORDING TO THE ASSESSEE HIS INCOME PORTION IS ONLY THE MARGIN/COMMISSION EA RNED OUT OF SUCH AUCTION SALES. 4 I.T.A. NOS. 296 TO 303/MDS/13 5. THE ABOVE EXPLANATION OFFERED BY THE ASSESSEE WA S NOT ACCEPTABLE TO THE ASSESSING OFFICER. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF A CCOUNTS OR ANY OTHER PERSONAL ACCOUNTS TO SHOW THE DETAILS OF CASH DEPOSITS REFLECTED IN HIS BANK ACCOUNT. ASSESSEE DID NOT FU RNISH EITHER THE NAMES OF THE PERSONS WHO ENTRUSTED GOLD AND VALUABL ES FOR AUCTIONING OR THE NAME AND DETAILS OF THE PERSONS W HO HAD SECURED THE GOLD AND VALUABLES THROUGH THE AUCTIONS. NO S UCH DETAILS WERE PRODUCED BEFORE THE ASSESSING AUTHORITY. IN THE AB SENCE OF SUCH DETAILS THE ASSESSING OFFICER HELD THAT THE CASH D EPOSITS MADE BY THE ASSESSEE IN HIS BANK ACCOUNT (MAINTAINED WITH M /S VIJAYA BANK) ARE UNEXPLAINED CREDITS AND THEREFORE TO BE TREATE D AS THE INCOME OF THE ASSESSEE. ACCORDINGLY THE ASSESSING OFFICE R MADE THE ADDITION OF SUCH CASH DEPOSITS FOR ALL THESE EIGHT ASSESSMENT YEARS UNDER APPEAL. 6. THE ADDITIONS WERE TAKEN IN FIRST APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSI ONER OF INCOME TAX (APPEALS) AFTER EXAMINING THE FACTS OF THE CASE IN A DETAILED MANNER HELD THAT THE ASSESSEE COULD NOT P RODUCE ANY DETAILS BEFORE THE ASSESSING OFFICER TO SUPPORT HIS ARGUMENT THAT THE MONEY BELONGED TO THOSE PERSONS WHO HAD SECURED GOL D AND 5 I.T.A. NOS. 296 TO 303/MDS/13 VALUABLES IN AUCTION PROCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT THE ASSESSEE HAD NOT EV EN MAINTAINED BOOKS OF ACCOUNTS. THE COMMISSIONER OF INCOME TAX (APPEALS) RELIED ON NUMBER OF JUDICIAL PRONOUNCEMENTS INCLUDI NG THAT OF THE HONBLE SUPREME COURT RENDERED IN THE CASE OF CIT V . K. CHINNATHAMBAN (292 ITR 682) AND HELD THAT THE ONUS OF PROVING THE SOURCE OF DEPOSITS RESTS ON THE PERSON ON WHOSE NAM E THE DEPOSIT APPEARS IN THE BANK ACCOUNT AND AS THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE SOURCE AND FURNISH SUCH DETAILS THE AS SESSING OFFICER WAS JUSTIFIED IN MAKING ADDITIONS IN THE HANDS OF T HE ASSESSEE. HE ACCORDINGLY CONFIRMED THE ADDITIONS AND DISMISSED T HE APPEALS. THE ASSESSEE IS AGGRIEVED AND THEREFORE THESE APPE ALS BEFORE US. 7. WE HEARD SHRI T.N. SEETHARAMAN THE LEARNED COUN SEL APPEARING FOR THE ASSESSEE AND SHRI T.N. BETGERI T HE LEARNED JOINT COMMISSIONER OF INCOME TAX APPEARING FOR THE REVEN UE. WE HEARD BOTH SIDES IN DETAIL. 8. AS FAR AS THE APPEAL FOR THE ASSESSMENT YEAR 199 8-99 IS CONCERNED THE ASSESSEE HAS RAISED A GROUND AGAINST REOPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME-TAX ACT 1961. WE DO NOT FIND MUCH FORCE IN THE SAID GROUND. REVENUE HA S COLLECTED SUFFICIENT MATERIALS IN THE COURSE OF SEARCH CARRIE D OUT AT THE 6 I.T.A. NOS. 296 TO 303/MDS/13 PREMISES OF BHANDARIES TO MAKE OUT A REASON OF ESC APEMENT OF INCOME. THEREFORE IT IS TO BE SEEN THAT THE ASSES SING OFFICER HAS RIGHTLY REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 1998-99. 9. REGARDING THE REMAINING ASSESSMENT YEARS THE AS SESSEE HAS RAISED A COMMON GROUND AGAINST INVOKING SECTION 153C. IN FACT THE SEARCH CARRIED OUT IN THE PREMISES OF THE BHANDARIES HAD BROUGHT OUT DOCUMENTS AND DETAILS RELATING TO THE T RANSACTIONS CARRIED OUT BETWEEN THE ASSESSEE AND BHANDARIES. I T IS FROM THE MATERIALS SEIZED IN THE COURSE OF THAT SEARCH REVE NUE CAME TO KNOW THAT THE ASSESSEE WAS CARRYING ON AUCTIONING B USINESS ON A LARGE SCALE BOTH PUBLIC AUCTION AS WELL AS PRIVATE AUCTION. AS THE SEARCH CARRIED OUT AT THE PREMISES OF BHANDARIES HA D UNEARTHED MATERIALS INVOLVING THE ASSESSEE AS WELL THE ASSES SING AUTHORITY HAS RIGHTLY INVOKED SECTION 153C AND COMPLETED THE ASSESSMENTS ACCORDINGLY. THEREFORE THIS GROUND ALSO FAILS. 10. NOW COMING TO THE MERIT OF THE CASE THE ONLY I SSUE RAISED BY THE ASSESSEE IN ALL THESE APPEALS IS THAT THE COMMI SSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE AD DITIONS MADE BY THE ASSESSING AUTHORITY. IT IS THE CASE OF THE ASSESSEE THAT THE CASH DEPOSITS REFLECTED IN VIJAYA BANK ACCOUNT IN F ACT REPRESENTED THE AMOUNTS RECEIVED FROM AUCTIONEERS WHICH WERE S UBSEQUENTLY 7 I.T.A. NOS. 296 TO 303/MDS/13 PAID TO THE PERSONS WHOSE GOLD AND VALUABLES WERE A UCTIONED BY THE ASSESSEE. THEREFORE IT IS THE CASE OF THE ASS ESSEE THAT SUCH AMOUNTS CANNOT BE TREATED AS INCOME IN HIS HANDS AS HIS ONLY INCOME IS THE MARGIN/COMMISSION IN THE AUCTION PROC EEDINGS. 11. THEORETICALLY THE EXPLANATION OF THE ASSESSEE SEEMS TO BE OKAY. BUT WHAT IS THE FACT? INSPITE OF CARRYING ON THE BUSINESS ON A LARGE SCALE THE ASSESSEE HAS NOT MAINTAINED BOOKS OF ACCOUNTS. THE ASSESSEE IS ALSO CARRYING PRIVATE AUCTIONING BU SINESS BY USING THE DOCUMENTATION PRESCRIBED UNDER TAMIL NADU PAWN BROKERS ACT 1943. THE ASSESSEE HAS NOT PRODUCED THE DETAILS OF PERSONS WHO PAID CASH TO THE ASSESSEE AGAINST AUCTIONS. THE AS SESSEE DID NOT FURNISH THE DETAILS OF PERSONS WHOSE VALUABLES WERE SOLD BY THE ASSESSEE IN AUCTION. IT IS VERY INCREDIBLE TO OBSE RVE THAT THE ASSESSEE INSPITE OF CARRYING ON SUCH LARGE SCALE B USINESS COULD NOT PRODUCE BEFORE THE ASSESSING AUTHORITY ANY OF T HE RELEVANT DETAILS REGARDING THE PERSONS WITH WHOM THE ASSESSE E HAD CASH DEALINGS. THE ASSESSEE IS MAKING ONLY PLEADINGS BE FORE LOWER AUTHORITIES THAT HE IS AN AUCTIONEER; HIS INCOME IS ONLY THE MARGIN/COMMISSION; AND THE DEPOSITS IN THE BANK ACC OUNT CANNOT BE TREATED AS HIS INCOME ETC. IT IS THE DUTY OF THE ASSESSEE TO PROVE BEFORE THE ASSESSING AUTHORITY THAT THE CASH DEPOSI TS REFLECTED IN HIS VIJAYA BANK ACCOUNT IN FACT RELATED TO THE MONIES R ECEIVED FROM THE 8 I.T.A. NOS. 296 TO 303/MDS/13 PERSONS WHO PARTICIPATED IN THE AUCTIONS. THE RESP ONSIBILITY CANNOT BE DISCHARGED BY JUST EXPLAINING THAT HE IS CARRYIN G ON THE BUSINESS OF AUCTIONING. AN AUCTIONEER IS IN FACT BOUND TO K EEP METICULOUS ACCOUNTS AND PARTICULARS REGARDING HIS AUCTION ACTI VITIES. INSPITE OF THAT THE ASSESSEE DID NOT PRODUCE ANY DETAILS BEFO RE THE ASSESSING AUTHORITY. 12. THE RESULT IS THAT THE ASSESSEE COULD NOT EXPLA IN TO THE SATISFACTION OF THE ASSESSING OFFICER THE SOURCE O F CASH DEPOSITED BY HIM IN THE VIJAYA BANK ACCOUNT. THE CASH DEPOSI TS REFLECTED IN THE VIJAYA BANK ACCOUNT ALWAYS REMAINED UNEXPLAINED . IN THESE CIRCUMSTANCES THE ONLY COURSE OF ACTION AVAILABLE TO THE ASSESSING OFFICER IS TO TREAT THOSE CASH DEPOSITS AS UNEXPLAI NED CREDITS. THEREFORE WE FIND THAT THE ASSESSING OFFICER HAS R IGHTLY MADE ADDITIONS IN THE HANDS OF THE ASSESSEE. 13. DURING THE COURSE OF HEARING THE LEARNED COUNS EL HAS ARGUED THAT EVEN IF ADDITIONS WERE CALLED FOR THE GROSS AMOUNTS OF CASH DEPOSITS COULD NOT BE ADDED FOR THE REASON THA T THE ASSESSEE BEING AN AUCTIONEER IS ENTITLED ONLY FOR MARGIN/CO MMISSION. THE LEARNED COUNSEL ALSO CONTENDED THAT ALTERNATIVELY T HE PEAK AMOUNT ALONE SHOULD HAVE BEEN ADDED. BUT WE ARE NOT IN A POSITION TO ACCEPT THE ABOVE ALTERNATIVE GROUNDS BECAUSE THE F ACTS OF THE CASE 9 I.T.A. NOS. 296 TO 303/MDS/13 DO NOT JUSTIFY EVEN THOSE ALTERNATIVE GROUNDS. THE BASIC REASON FOR ADDITION IS THE ABSENCE OF EVIDENCE AND DETAILS WIT H THE ASSESSEE TO PROVE THE GENUINENESS OF THE SOURCE OF DEPOSITS. W HEN THAT IS THE CASE THE ARGUMENT OF MARGIN/COMMISSION IS NOT SUST AINABLE. AS THE ASSESSEE HAS NOT PRODUCED ANY OF THE DETAILS RE GARDING THE FLOW OF FUNDS IT IS ALSO NOT POSSIBLE TO ADOPT THE PEAK AMOUNT THEORY. 14. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE FIND THAT THE LOWER AUTHORITIES ARE JUSTIFIED IN MAKING AND CONFI RMING THE ADDITIONS IN THE HANDS OF THE ASSESSEE. THE ORDERS OF THE CO MMISSIONER OF INCOME TAX (APPEALS) ARE CONFIRMED. 15. IN RESULT THESE APPEALS FILED BY THE ASSESSEE ARE DISMISSED. ORDERS PRONOUNCED ON WEDNESDAY THE 9 TH OF APRIL 2014 AT CHENNAI. SD/- SD/- (VIKAS AWASTHY) (DR. O.K. NARAYANAN) ( !' ) ( ... ) # $! /JUDICIAL MEMBER /VICE-PRESIDENT /CHENNAI 5$ /DATED THE 9 TH APRIL 2014. KRI. 10 I.T.A. NOS. 296 TO 303/MDS/13 $6 - +#/7 8 '/ /COPY TO: 1. ') /APPELLANT 2. + ') /RESPONDENT 3. . 9/ () /CIT(A)-II CHENNAI 4. . 9/ /CIT CHENNAI-II CHENNAI 5. :; +#/# /DR 6. ;& < /GF.