ITO, New Delhi v. Shri Manoj Godha, New Delhi

ITA 3923/DEL/2009 | 2003-2004
Pronouncement Date: 22-01-2010 | Result: Partly Allowed

Appeal Details

RSA Number 392320114 RSA 2009
Assessee PAN AAHPG6386Q
Bench Delhi
Appeal Number ITA 3923/DEL/2009
Duration Of Justice 4 month(s) 3 day(s)
Appellant ITO, New Delhi
Respondent Shri Manoj Godha, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 22-01-2010
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 22-01-2010
Date Of Final Hearing 13-01-2010
Next Hearing Date 13-01-2010
Assessment Year 2003-2004
Appeal Filed On 18-09-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER & SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO. 3923 /DEL/2009 ASSESSMENT YEAR: 2003-04 INCOME TAX OFFICER VS. MANOJ GODHA WARD 24(3) C.R. BLDG. 4 PINE DRIVE ROAD NEW DELHI. DLF CHHATARPUR NEW DELHI. PAN NO. AAHPG6386Q (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.S. SAHOTA SR. DR RESPONDENT BY : SH. ATUL PURI CA ORDER PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER OF CIT(A) DATED 15.06.09 FOR A.Y. 2003-04. G ROUNDS OF APPEAL READ AS UNDER: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 29 76 000/- MADE ON ACCOUNT OF UNDISCLOSED SALES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 1 63 955/- MADE ON ACCOUNT OF INTEREST ON UNSECURED LOANS. 3. THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AMEN D ANY GROUND OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 2. A SURVEY WAS CARRIED OUT AT THE PREMISES OF THE ASSESSEE ON 20.11.03. DURING THE COURSE OF SURVEY CERTAIN DOCU MENTS WERE IMPOUNDED WHEREIN CERTAIN ENTRIES REGARDING AN AMOUNT OF RS. 34 31 000/- WERE FOUND. ITA NO. 3923/DEL/09 2 THIS AMOUNT WAS ADDED BY THE AO AS UNACCOUNTED SALE MADE BY THE ASSESSEE TO SHRI ARUN AHUJA WHICH WERE NOT SHOWN IN THE REGULAR BOOKS OF ACCOUNT. THESE TRANSACTIONS ARE RECORDED IN THE AS SESSMENT ORDER AT PAGES 2 3 & 4. A STATEMENT OF ASSESSEE WAS RECODED U/S 131 ON 03.12.03. DURING THE COURSE OF ASSESSMENT PROCEEDING THE SUBM ISSION OF ASSESSEE VIDE LETTER DATED 6.3.06 WERE THAT THE STAND OF ASS ESSEE WERE SIMILAR AS EARLIER SUBMITTED THAT NO SALES WERE MADE TO MR. AR UN AHUJA TO WHOM THE JEWELLERY WAS GIVEN FOR APPROVAL AND CERTAIN AMOUNT WAS RECEIVED AS SECURITY WHICH WAS RETURNED BACK ON RECEIVING BACK THE JEWELLERY FROM SAID SH. ARUN AHUJA. THE BOOKS OF ACCOUNT ARE SHOWING T HE CORRECT PICTURE OF SALE THEREFORE NO ADDITION IS WARRANTED EITHER AS INCOME OR AS UNACCOUNTED SALE. THE AO DID NOT ACCEPT SUCH SUBMISSION FOR TH E FOLLOWING REASONS: - 1. IN THE STATEMENT OF THE ASSESEE RECORDED ON 3.1 2.03 THE ASSESSEE ADMITTED THAT THESE ARE SALES TRANSACTIONS. THE AO ALSO MENTIONS THAT VIDE LETTE R DATED 7.12.05 THE ASSESSEE HAS DENIED THAT THESE TRANSACTIONS ARE FOR SALE AND HAS STATED THAT THEY RELATE TO JEWELLERY SENT FOR APPROVAL. 2. THE ASSESSEE DID NOT RECONCILE THE ACCOUNTS IN S PITE OF OPPORTUNITIES OFFERED. 3. THE ASSESSEE DID NOT MAINTAIN ANY RECORDS FOR TH E MOVEMENT OF THE ITEMS SENT FOR APPROVAL AS CLAIMED BY THE ASSESSEE. 4. THE SECURITY DEPOSIT RECEIVED IN CASH DOES NOT F IND ANY MENTION IN THE CASH BOOK OF THE ASSESSEE NEITHE R AT THE TIME OF RECEIVING NOR AT THE TIME OF REPAYME NT. 5. THE ASSESSEES CLAIM THAT ONLY SALES ARE ENTERED IN THE BOOKS OF ACCOUNT AND NOT GOODS SENT FOR APPROVA L IS AGAINST ALL ACCOUNTING STANDARDS. ACCORDINGLY AN ADDITION OF RS. 34.31 LAKH WAS MADE. ITA NO. 3923/DEL/09 3 3. IN AN APPEAL FILED BEFORE CIT(A) THE ABOVE SUBMI SSIONS WERE REITERATED. IT WAS SUBMITTED THAT THE PLEA OF THE ASSESSEE HAS BEEN SUMMARILY REJECTED BY THE AO WITHOUT GOING INTO THE FACTS. IT WAS SUBMITTED THAT ASSESSEE HAD RECEIVED ONLY A SUM OF RS. 13 LAK H THEREFORE AN ADDITION OF ENTIRE SUM OF RS. 34 31 000/- WAS AGAINST LAW. LD. CIT(A) OBSERVED THAT THE ISSUE OF UNACCOUNTED SALES/GOODS CLAIMED TO BE SEND FOR APPROVAL WAS EXAMINED BY CIT(A) IN THE ORDER FOR A.Y. 1997-98 AN D THUS THE FACTS OF THE PRESENT CASE ARE IDENTICAL WITH THAT CASE. IT WAS OBSERVED THAT IN THAT CASE THE GOODS AMOUNTED TO RS. 1.43 CRORES WERE SEND FOR APPROVAL TO 3 PARTIES WHICH INTER-ALIA INCLUDED SAID SH. ARUN AHUJA. THE ISSUE OF SENDING GOODS ON APPROVAL WAS EXAMINED AND DISCUSSED IN DETAIL IN THAT ORDER. HE OBSERVED THAT IN THAT CASE THE ASSESSEE HAD FURNISH ED COPIES OF APPROVAL MEMOS SHOWING RECEIPT OF JEWELLERY AND OTHER PRECIO US AND SEMI-PRECIOUS STONES RECEIVED FROM M/S S.B. INTERNATIONAL JAIPUR ON APPROVAL BASIS AND THUS IN THAT CASE THERE WAS CONCRETE EVIDENCE IN T HE IMPOUNDED DOCUMENTS TO SHOW THAT THESE GOODS WERE GIVEN ON APPROVAL WER E RECEIVED BACK BY THE ASSESSEE WHICH DID NOT CULMINATE INTO SALE. HOWEVE R FROM THE FACTS OF PRESENT CASE IT WAS OBSERVED THAT IT WAS ACCEPTED T HAT THE ASSESSEE WAS GENERALLY FOLLOWING THE PRACTICE OF SENDING GOODS O N APPROVAL BASIS BUT THERE WAS ABSENCE OF EVIDENCE TO SHOW THAT GOODS ON APPROVAL BASIS WERE IN FACT RECEIVED BACK. IT IS OBSERVED BY CIT(A) TH AT THERE IS EVIDENCE ON RECORD TO SUGGEST THAT THE ASSESSEE HAD RECEIVED CA SH AMOUNT OF RS. 13 LAKH AGAINST THE GOODS AND ASSESSEE DID NOT SHOW TH AT THE SAID AMOUNT OF RS. 13 LAKH WAS SUBSEQUENTLY RETURNED BACK THEREFO RE THE PLEA OF THE ASSESSEE IN ITS ENTIRETY COULD NOT BE ACCEPTED. CON SIDERING THE SUM OF RS. ITA NO. 3923/DEL/09 4 13 LAKH BEING UNACCOUNTED SALE AND APPLYING THE GP RATE OF 35% ON THE BASIS OF APPELLATE ORDER FOR A.Y. 1997-98 LD. CIT( A) HAS SUSTAINED THE ADDITION OF RS. 4 55 000/-. LD. CIT(A) HAS ALSO CO NSIDERED THE ISSUE OF UNDISCLOSED INVESTMENT INTRODUCED BY THE ASSESSEE F OR CARRYING ON THE BUSINESS OUTSIDE THE BOOKS OF ACCOUNT AND HIS FINDI NGS ON THIS ISSUE ARE THAT A SUM OF MORE THAN RS. 21 LAKH WAS AVAILABLE WITH T HE ASSESSEE FOR SAID INVESTMENT. THEREFORE NO SEPARATE ADDITION WAS CA LLED FOR. 4. IN GROUND NO. 1 THE DEPARTMENT IS AGGRIEVED BY T HE RELIEF GIVEN BY THE CIT(A). 5. AFTER NARRATING THE FACTS IT WAS VEHEMENTLY PLEA DED BY LD. DR THAT LD. CIT(A) HAS WRONGLY RELIED UPON THE APPELLATE ORDER OF CIT(A) FOR A.Y. 1997- 98. HE SUBMITTED THAT AN EVIDENCE IN THE SHAPE OF DOCUMENTS WAS FOUND DURING THE SURVEY ACCORDING TO WHICH THE ASSESSEE W AS DOING TRANSACTIONS OUTSIDE THE BOOKS OF ACCOUNT TO THE TUNE OF RS. 34 31 000/- AND THEREFORE SUSTENANCE OF ADDITION ONLY TO THE EXTENT OF RS. 4 55 000/- WAS NOT IN ACCORDANCE WITH LAW AND ADDITION SHOULD HAVE BEEN S USTAINED IN ITS ENTIRETY. 6. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR TH AT THE ISSUE REGARDING SALE OUTSIDE BOOKS OF ACCOUNT AS MADE IN A.Y. 2001-02 ON THE BASIS OF SURVEY CONDUCTED ON 20.11.03 WAS CONSIDERE D BY THE TRIBUNAL VIDE ITS ORDER DATED 08.02.08 IN ITA NO. 1906/DEL/05 AND IT WAS HELD THAT APPLICATION OF GP RATE OF 35% WAS QUITE IN ORDER AN D SO FAR AS IT RELATES TO INVESTMENT IN THE BUSINESS OF MAKING UNACCOUNTED SA LE THE MATTER WAS RESTORED BACK TO THE FILE OF AO WITH CERTAIN DIRECT IONS. HE HAS PRODUCED ITA NO. 3923/DEL/09 5 BEFORE US A COPY OF THAT ORDER WHICH WAS ALSO GIVEN TO LD. DR AND THUS IT WAS SUBMITTED THAT ON THIS ISSUE THE MATTER IS COVE RED BY THE EARLIER ORDER OF THE TRIBUNAL. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. WHILE CONSIDERING THE C ASE FOR A.Y. 2001-02 IN THE LIGHT OF SURVEY CONDUCTED ON THE PREMISES OF AS SESSEE ON 20.11.03 THE AO MADE SIMILAR ADDITION TO THE TUNE OF RS. 20 57 4 50/- WHICH WAS REDUCED TO RS. 5 45 107/- BY THE LD. CIT(A) AFTER GIVING A FINDING THAT RS. 5 LAKH WAS FOUND TO BE RETURNED TO THE ASSESSEE. THEREFORE T HE UNACCOUNTED SALES WERE ONLY TO THE TUNE OF RS. 15 57 450/- AND ON WHI CH LD. CIT(A) HAD APPLIED THE GP RATE OF 35% BY UPHOLDING THE ADDITION TO A S UM OF RS. 5 45 107/- AND BALANCE ADDITION OF RS. 15 12 343/- WAS DELETED AND HE DID NOT MAKE FURTHER ADDITION ON ACCOUNT OF INVESTMENT ON THE GROUND THA T SUFFICIENT FUNDS WERE AVAILABLE WITH THE ASSESSEE FOR MAKING THE INVESTME NT IN THE BUSINESS OF DOING BUSINESS OUTSIDE THE BOOKS OF ACCOUNT AND ON THESE FACTS IN THE APPEAL FILED BY THE REVENUE THE FINDINGS OF TRIBUNA L AS RECORDED IN PARA 4 OF AFOREMENTIONED ORDER DATED 08.02.08 WERE AS UNDER: - WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE CIT(A) HAD REDUCED THE UNACC OUNTED SALES BY RS. 5 LAKH WHICH AS PER THE ASSESSEE WERE ACCOUNTED AND THIS WAS ALSO NOT DISPUTED BY THE LD. DR. CIT(A) ADOPTED GROSS PROFIT RATE OF 35% WHICH WAS M ORE THAN THE GP RATE BEING DECLARED BY THE ASSESSEE IN EARLIER YEARS. THE LD. DR PRODUCED NO MATERIAL TO SHOW THA T GP RATE COULD BE HIGHER THAN THE GP RATE ADOPTED BY CI T(A). THE ORDER OF CIT(A) TO THAT EXTENT IS THEREFORE UPHELD. HOWEVER WE DO NOT AGREE WITH THE DECISION OF CIT(A ) THAT ITA NO. 3923/DEL/09 6 NO ADDITION IS REQUIRED TO BE MADE ON ACCOUNT OF IN VESTMENT IN UNACCOUNTED SALES OF THE YEAR. CIT(A) HAS REFER RED TO THE UNACCOUNTED SALES OF THE EARLIER YEARS WHICH HAVE B EEN REOPENED BUT THE FACTS AND FIGURES ARE NOT AVAILABL E TO INDICATE WHETHER THE SOURCE OF INVESTMENT IN THE UNACCOUNTED SALES OF THE YEAR ARE EXPLAINED PROPERL Y OR NOT. IN OUR VIEW THIS ASPECT REQUIRES DETAILED EXAMINATI ON PROPERLY OR NOT. IN OUR VIEW THIS ASPECT REQUIRES DETAILED EXAMINATION AS TO HOW MUCH CAPITAL FROM THE UNACCOU NTED SALES OF EARLIER YEARS IS AVAILABLE THIS YEAR FOR E XPLAINING THE INVESTMENT RELATING TO THE UNACCOUNTED SALES OF THI S YEAR. WE THEREFORE RESTORE THIS ASPECT OF THE FILE OF A O FOR PASSING A FRESH ORDER REGARDING SOURCE OF INVESTMEN T IN THE UNACCOUNTED SALES OF THE YEAR AFTER ALLOWING PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. IN THE RESULT THE APPEAL IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. 8. THEREFORE WE FOUND THAT UNDER SIMILAR CIRCUMSTA NCES THE TRIBUNAL FOR A.Y. 2001-02 HAS UPHELD THE ORDER OF CIT(A) SO AS I T RELATES TO APPLICATION OF GP RATE @ 35% AND FOR THE PURPOSE OF EXAMINING INVE STMENT IN THE BUSINESS OUTSIDE THE BOOKS OF ACCOUNT THE MATTER IS RESTORED BACK TO THE FILE OF AO. AS THE FACTS AND CIRCUMSTANCES ARE SAME AD OPTING THE SAME APPROACH WE PASS SIMILAR ORDER WE HOLD THAT SO FA R AS IT RELATES TO APPLICATION OF GP RATE OF 35% WE UPHOLD THE ORDER OF CIT(A) AND SO AS IT RELATES TO ADDITION WHICH CAN BE MADE ON ACCOUNT OF INVESTMENT THE MATTER IS RESTORED BACK TO THE AO WITH SIMILAR DIRECTIONS WHICH HAVE BEEN GIVEN BY TRIBUNAL IN THE CASE OF ASSESSEE FOR A.Y. 2001-02 A ND THE RELEVANT PART OF THAT DECISION OF TRIBUNAL HAS ALREADY BEEN REPRODUC ED IN THE ABOVE PART OF THIS ORDER. WE DIRECT ACCORDINGLY. ITA NO. 3923/DEL/09 7 9. IN THE RESULT FIRST GROUND OF THE REVENUE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. 10. APROPOS GROUND NO. 2 DURING THE COURSE OF ASSES SMENT PROCEEDING IT WAS FOUND BY THE AO THAT ASSESSEE HAD CLAIMED DEDUC TION OF INTEREST AMOUNTING TO RS. 8 08 045/- BEING AMOUNT PAID ON LO ANS OBTAINED FOR BUSINESS PURPOSES. THE AMOUNT OUTSTANDING AS UNSEC URED LOANS WAS AMOUNTING TO RS. 80 47 505/-. IT WAS ALSO OBSERVED THAT AS AGAINST THOSE UNSECURED LOANS THE ASSESSEE HAD MADE INTEREST FREE ADVANCES OF RS. 2 18 17 107/- WHICH WERE GIVEN TO VARIOUS PARTIES AND NO INTEREST WAS CHARGED. IT WAS FOUND THAT ADVANCES WERE MADE TO T HE FOLLOWING PARTIES FREE OF INTEREST: - I) BALSON INDUSTRIES RS. 1 50 000/- (FOR SHOWROO M PURPOSE) II)BHAYAN ELECTRONICS RS. 5 00 000/- (FOR ELECTRIC AL WORKS ETC.) III) DUGAR BROS. & CO. RS. 3 00 000/- (FOR SPACE I N JAIPUR) IV)JAY DEE AGRO CHEMICAL P. LTD. RS. 7 00 000/- ( -DO- ) V)NAVJEEVAN COMPLEX RS. 5 00 000 /- ( -DO- ) RS. 21 50 000/- 11. THE ASSESSEE EXPLAINED THAT THESE ADVANCES WERE MADE FOR THE PURPOSE OF PURCHASE OF AN OFFICE IN JAIPUR AND THUS THE AMOUNT WAS UTILIZED FOR THE PURPOSE OF BUSINESS AND NO PART OF INTEREST RELATING TO THAT AMOUNT COULD BE DISALLOWED. THE AO OBSERVED THAT ASSESSEE DID NOT FILE ANY EVIDENCE TO SUPPORT SUCH CONTENTION HENCE INTEREST TO THE EXTENT OF RS. 2 13 955/- WAS DISALLOWED. THE SUBMISSIONS MADE BE FORE AO WERE REITERATED BEFORE CIT(A) AND RELIANCE WAS PLACED ON VARIOUS DECISIONS TO ITA NO. 3923/DEL/09 8 CONTEND THAT NO DISALLOWANCE COULD BE MADE. IN THE ALTERNATIVE IT WAS SUBMITTED THAT IN EARLIER YEARS A DISALLOWANCE OF R S. 1 LAKH WAS MADE AND DEPENDING ON THAT DISALLOWANCE ADDITION COULD NOT B E MADE IN THE PRESENT YEAR. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS IN DETAIL OBSERVING FROM THE RESULT OF APPELLATE ORDER FOR A.Y. 1997-98 HAS SUSTAINED THE ADDITION TO THE EXTENT OF RS. 50 000/- AND DELETED THE ADDITION OF RS. 1 63 955/-. THE DEPARTMENT IS AGGRIEVED HENCE IN APPEAL. 12. LD. DR SUBMITTED THAT THE DISALLOWANCE DELETED BY CIT(A) ON THE BASIS OF ORDER FOR A.Y. 1997-98 WAS FACTUALLY WRONG AS THE AMOUNT WHICH WERE INTEREST FREE ON THE BASIS OF WHICH DISALLOWA NCE IS MADE BY THE AO WERE NOT EXISTING IN A.Y. 1997-98. THE ASSESSEE DI D NOT SUBMIT ANY EVIDENCE TO SUPPORT HIS CASE THAT THE SAID AMOUNTS WERE ACTUALLY UTILIZED FOR THE PURPOSE OF BUSINESS THEREFORE LD. CIT(A) WAS WRONG IN DELETING THE PART ADDITION. HE SUBMITTED THAT THE ORDER OF CIT(A) IS BASED ON WRONG FACTS THEREFORE SHOULD BE SET ASIDE AND THAT OF AO BE RE STORED. 13. ON THE OTHER HAND IT WAS SUBMITTED BY LD. AR T HAT THE AMOUNT WAS GIVEN BY THE ASSESSEE TO OPEN AN OFFICE AT JAIPUR A ND THEREFORE THE AMOUNTS WERE UTILIZED FOR THE PURPOSE OF BUSINESS O NLY. THUS NO PART OF THE SAME COULD BE DISALLOWED AND CONSIDERING THE FACTS LD. CIT(A) HAS RIGHTLY GRANTED THE RELIEF TO THE ASSESSEE. 14. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF MATERIAL PLACED BEFORE US. THOUGH IT HAS BEEN THE CONTENTION OF ASSESSEE THAT AMOUNT HAS BEEN UTILIZED FOR THE PURPOSE OF BU SINESS AS ASSESSEE HAS ITA NO. 3923/DEL/09 9 PURCHASED AN OFFICE AT JAIPUR. BUT IT IS SEEN FROM THE ASSESSMENT ORDER THAT ASSESSEE DID NOT SUBMIT ANY EVIDENCE TO SUPPORT HIS CONTENTION. DESPITE THE OBSERVATIONS OF LD. AO THAT NO EVIDENCE HAS BEE N FILED NO EVIDENCE WAS FILED EVEN BEFORE CIT(A) TO CORROBORATE SUCH CONTEN TION. SIMILAR IS THE POSITION BEFORE US. NO EVIDENCE HAS BEEN SUBMITTED BY THE ASSESSEE TO SUPPORT HIS CONTENTION. THE ADVANCES WERE STATED T O BE MADE NOT IN A.Y. 1997-98 BUT THEREAFTER. THEREFORE RELYING ON THE FINDINGS FOR A.Y. 1997-98 RELIEF COULD NOT BE GIVEN TO THE ASSESSEE. THUS L D. CIT(A) HAS WRONGLY DELETED THE PART ADDITION. THE ORDER OF AO IN THIS REGARD IS RESTORED AND THAT OF CIT(A) IS SET ASIDE. THIS GROUND OF THE REVENUE IS ALLOWED. 15. IN THE RESULT THE APPEAL IS PARTLY ALLOWED IN THE MANNER AFORESAID. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 22.01.201 0 (A.K. GARODIA) (I.P. BANSAL ) ACCOUNTANT MEMBER JU DICIAL MEMBER DATED: *KAVITA CHOPRA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT TRUE COPY BY ORDER DEPUTY REGISTRAR ITA NO. 3923/DEL/09 10