DCIT, Bareilly v. Shri Jaspal Singh, Bareilly

ITA 484/LKW/2010 | 2004-2005
Pronouncement Date: 07-01-2011 | Result: Dismissed

Appeal Details

RSA Number 48423714 RSA 2010
Assessee PAN AFFPS3655H
Bench Lucknow
Appeal Number ITA 484/LKW/2010
Duration Of Justice 5 month(s) 29 day(s)
Appellant DCIT, Bareilly
Respondent Shri Jaspal Singh, Bareilly
Appeal Type Income Tax Appeal
Pronouncement Date 07-01-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-01-2011
Date Of Final Hearing 06-01-2011
Next Hearing Date 06-01-2011
Assessment Year 2004-2005
Appeal Filed On 09-07-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL B - BENCH LUCKNOW. BEFORE SHRI H.L.KARWA HON'BLE VICE PRESIDENT AND SHRI N.K.SAINI ACCOUNTANT MEMBER I.T.A.NO.484(LKW.)/2010 A.Y. : 2004-05 THE DY.CIT-I VS. SHRI JASPAL SINGH C/O M/S.SARAN BAREILLY. SINGH KARTAR SINGH CHOWK BAZAR BAREILLY. PAN AFFPS 3655H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI P.K.BAJAJ D.R. RESPONDENT BY : SHRI YOGESH AGRAWAL ADVOCATE O R D E R PER H.L.KARWA VICE PRESIDENT THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) BAREILLY DATED 26.3.2010 RELATING TO THE ASSESSMENT YEAR 2004- 05. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER : THAT THE COMMISSIONER OF INCOME-TAX (APPEALS) WA S ERRED IN LAW IN DELETING THE ADDITION OF RS.20 52 157 WITHO UT APPRECIATING THE MATERIAL FACTS AND EVIDENCES BROUG HT ON RECORD BY THE AO. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT F OR THE ASSESSMENT YEAR 2004-05 THE ASSESSEE FILED HIS RETURN OF INCOME SH OWING NET INCOME AT RS.4 85 600 INCLUDING RS.55 701 SHOWING INCOME FROM TRADING OF GOLD 2 BULLIONS. THE TOTAL PURCHASES SHOWN BY THE ASSESSEE DURING THE YEAR WERE AT RS.15 74 62 329 AND AGAINST THIS THE TOTAL SALES S HOWN BY HIM WERE AT RS.15 16 87 843. THUS THE NET PROFIT OF RS.55 702 WAS SHOWN. THE AO OBSERVED THAT EXAMINATION OF ACCOUNT REVEALED THAT THE ASSESSEE HAS PURCHASED GOLD BULLIONS FROM PUNJAB NATIONAL BANK A ND SOLD IT TO THE CUSTOMERS AT THE RATE OF RESPECTIVE DAY. TO COMPARE THE RATE OF GOLD THE AO HAS OBTAINED IT FROM M/S.HARSAHAIMAL SHIAMLAL JEWE LLERS BADAUN WHOSE ASSESSMENT HAS ALSO BEEN DONE BY THE CIRCLE. A COPY OF THE RATE OF GOLD WAS PROVIDED TO THE ASSESSEE DURING THE ASSESSMENT PROC EEDINGS. THE AO NOTICED THAT THE ASSESSEE HAS SOLD THE GOLD ON THE HIGHER R ATE AT 2.3% AS COMPARED TO THE RATES PROVIDED BY M/S.HARSAHAIMAL SHIAMLAL JEWE LLERS BADAUN. ACCORDING TO THE AO IF THE SALE RATES PROVIDED BY M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN WERE TO BE ADOPTED THE SALE OF THE ASSESSEE INCREASED BY RS.20 11 556. THE AO REQUIRED THE ASSE SSE TO SHOW CAUSE AS TO WHY THE SALES AS SHOWN BY THE ABOVE-MENTIONED PARTY SHOULD NOT BE ADOPTED IN HIS CASE. IN RESPONSE TO ABOVE QUERY THE ASSSES SEE SUBMITTED THAT HE IS DEALING IN GOLD BULLIONS ON WHOLESALE BASIS AND M/S .HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN DEALT IN GOLD AND SILVER ORNAMEN TS ONLY. IT WAS ALSO STATED BY THE ASSESSEE THAT RATE OF GOLD BULLION IN RAW FO RM AND THAT OF THE GOLD ORNAMENTS IS BOUND TO BE DIFFERENT AS THE COST O F ORNAMENTS INCLUDED COST OF LABOUR DESIGNING ETC. THEREFORE ANY ADVERSE IN FERENCE ON THE BASIS OF ANY DIFFERENCE DUE TO CHANGE OF RATES SHOULD NOT BE TA KEN IN THIS CASE. HOWEVER AS MOST OF THE SALES WERE IN CASH AND IN ABSENCE OF COMPLETE ADDRESS AND IDENTITY OF THE CUSTOMERS THE SALES COULD NOT BE V ERIFIED. ACCORDINGLY THE ACCOUNTS OF THE ASSESSEE WERE REJECTED UNDER SECTIO N 145(3) OF THE INCOME- TAX ACT 1961 (IN SHORT THE ACT). THE AO REFRAMED THE PROFIT AND LOSS 3 ACCOUNT OF THE ASSESSEE AND NET PROFIT WAS WORKED O UT AT RS.21 07 585 AND CONSEQUENTLY THE ADDITION WAS MADE TO THE INCOME SHOWN BY THE ASSESSEE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE C ARRIED THE MATTER IN APPEAL BEFORE THE LD .CIT(A) AND THE LD.CIT(A) DELE TED THE ADDITION OBSERVING AS UNDER : AFTER PERUSAL OF ASSESSMENT ORDER AND SUBMISSION O F THE APPELLANT IT WAS CONSIDERED NECESSARY TO GET THE FACTS IN ISSUE VERIFIED AT THE END OF THE A.O. AND SUBMIT HIS REMAND REPORT. THE A.O. SUB MITTED HIS REMAND REPORT WITH THE FINDINGS THAT IT WAS SUBMITT ED BY M/S HARSAHAI MAL SHYAMLAL JEWELLERS THAT THE RATES PROVIDED TO T HE ASSESSING OFFICER WERE AS PER THE LIST MAINTAINED BY BUDAUN SARAFFA A SSOCIATION. IT WAS CLEARLY MENTIONED BY THE PARTY THAT HE WAS DOING BU SINESS OF PURCHASE AND SALE OF GOLD AND SILVER ORNAMENTS DURING THE PE RIOD OF 31.10.2003 TO 31.3.2005 AND NO GOLD BULLION AND SILVER BULLION WERE PURCHASED OR SOLD BY IT. THE A.O. CONCLUDED HIS REPORT MENTIONIN G THAT M/S HARSAHAI MAL SHYAMLAL JEWELLERS WAS NOT DOING ANY T RADING OF GOLD AND SILVER BULLION DURING THE YEAR UNDER CONSIDERAT ION. THE ANALYSIS OF THE FACTS OF THE CASE THE LINE OF BUSINESS OF M/S HARSAHAI MAL SHYAMLAL JEWELLERS WHOSE CASE WAS MADE BASIS FOR WORKING OUT DIFFERENCE OF SALES OF THE A.O. REVEALS THAT THE COMPARISON WAS FACTUALLY WRONG AND AGAINST THE PROV ISIONS OF THE ACT. IT APPEARS THAT THE A.O. WAS PREOCCUPIED WITH HIS I NTENSION TO MAKE ADDITION BY IGNORING THE FACTS OF THE CASE AND THE PROVISION OF THE LAW ON THIS ISSUE. IT MAY BE SEEN FROM THE OBSERVATION OF THE A.O. AT PAGE 5 AND 6 OF THE ORDER THAT HE DID NOT ANALYSE AND AP PRECIATE THE SUBMISSION OF THE ASSESSEE AND REJECTED IT IN A SUM MARY MANNER 'WITH THE FINDING THAT THE SALES WERE NOT OPEN FOR VERIFI CATION AND THE BOOKS OF ACCOUNT ARE NOT RELIABLE. HE REJECTED BOOKS U/S 145(3) OF THE ACT. IT IS A SETTLED LAW THAT COMPARISON CAN BE MADE BET WEEN THE FACTS AND RESULTS OF THE CASES HAVING SAME LINE OF BUSINESS. IN THE PRESENT CASE IT WAS AN UNDISPUTED FACT THAT THE AS SESSEE WAS ENGAGED IN THE PURCHASE AND SALE OF GOLD BULLION. THE CASE WHICH WAS UTILIZED BY THE A.O. FOR COMPARISON WITH THE CASE OF THE ASS ESSEE WAS ADMITTEDLY ENGAGED IN THE PURCHASE AND SALE OF GOLD AND SILVER 4 ORNAMENTS. IF ANY MATERIAL COLLECTED ON THE BACK OF THE ASSESSEE AND UTILIZED AGAINST HIM IN THAT CASE IT IS THE DUTY OF THE A.O. TO PROVIDE COPY OF SUCH INFORMATION TO THE ASSESSEE FOR SUBMIT TING HIS EXPLANATION. TO UTILIZE THIRD PARTY INFORMATION AS AN EVIDENCE AND DRAW AN ADVERSE INFERENCE OUT OF IT BY KEEPING THE ASSESSEE IN DARK WOULD BE ILLEGAL AND AGAINST NATURAL JUSTICE. IN SU CH FACTS AND CIRCUMSTANCES IT IS AMPLY CLEAR THAT THE COMPARISO N MADE BY THE A.O. WAS ILLEGAL AND UNJUSTIFIED. THEREFORE ADDITION MA DE BY THE A.O. IS NOT SUSTAINABLE. 4. BEFORE US SHRI P.K.BAJAJ LD.D.R. HEAVILY RELIE D ON THE ORDER OF THE AO. HE FURTHER SUBMITTED THAT THE LD.CIT(A) HAS NO T APPRECIATED THE FACT THAT COPY OF THE RATE LIST OF GOLD WAS PROVIDED TO THE ASSESSEE AND THE ASSESSEE HAS NOT POINTED OUT ANY DEFECT NEITHER DUR ING THE ASSESSMENT PROCEEDINGS NOR DURING THE APPELLATE PROCEEDINGS IN THE RATES PROVIDED BY M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN. HE FURT HER SUBMITTED THAT THE RATES OF GOLD QUOTED BY THE ABOVE PARTY WERE OF ST ANDARD GOLD AND THE BULLION IS MADE OF ONLY STANDARD GOLD. THEREFORE I T DOES NOT MATTER WHETHER IT HAS BEEN QUOTED BY A BULLION DEALER OR BY AN OR NAMENT DEALER. THEREFORE THE DECISION OF THE LD.CIT(A) IS NOT SUSTAINABLE IN LAW AND THE ADDITION MAY BE SUSTAINED. 5. SHRI YOGESH AGRAWAL ADVOCATE LD. COUNSEL FOR T HE ASSESSEE WHILE APPEARING FOR THE ASSESSEE REITERATED THE SUBMISSIO NS MADE BEFORE THE LOWER AUTHORITIES. HE FURTHER SUBMITTED THAT IN THIS CAS E THE AO CALLED FOR INFORMATION OF PURCHASE AND SALE OF GOLD BULLION F ROM M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN FOR THE PURPOSE OF MAKIN G COMPARISON WITH THE RATES OF PURCHASE AND SALE OF GOLD BULLION BY THE ASSESSEE. THE AO AFTER MAKING COMPARATIVE STUDY OF RATES OF THESE TWO PERS ONS REACHED TO A CONCLUSION THAT THE ASSESSEE SUPPRESSED SALE CONSI DERATION OF RS.20 52 157. 5 SHRI YOGESH AGRAWAL LD. COUNSEL FOR THE ASSESSEE S UBMITTED THAT THE ASSESSEE WAS PURCHASING GOLD FROM PUNJAB NATIONAL BANK. ALL THE PURCHASES WERE DULY ACCOUNTED FOR WITH SUPPORTING BILLS AND VOUCHERS. HE FURTHER SUBMITTED THAT THE ASSESSEE MAINTAINED STO CK REGISTER AND OTHER REQUIRED DOCUMENTS. IT WAS ALSO SUBMITTED BY SHRI Y OGESH AGRAWAL LD. COUNSEL FOR THE ASSESSEE THAT THE SALES WERE MADE IN CASH AS WELL AS THROUGH ACCOUNT PAYEE CHEQUES AND DRAFTS. HE FURTHER SUBMIT TED THAT THE NATURE OF THE BUSINESS OF THE ASSESSEE AND THE BUSINESS CARR IED ON BY M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN WITH WH OM COMPARISON WAS MADE WAS ALTOGETHER DIFFERENT FROM EACH OTHER. AC CORDING TO THE LD. COUNSEL FOR THE ASSESSEE M/S.HARSAHAIMAL SHIAMLAL J EWELLERS BADAUN WAS ENGAGED IN PURCHASE OF OLD JEWELLERY AND SALE OF ORNAMENTS TO THE RETAIL CUSTOMERS. HOWEVER THE ASSESSEE WAS DEALING IN GOL D BULLION ONLY FROM THE PUBLIC SECTOR BANK I.E. PUNJAB NATIONAL BANK. RATE S OF PURCHASE AND SALE OF GOLD BULLION ARE REGULARLY REPORTED IN THE BULLION MARKET. THEREFORE THE COMPARISON MADE WITH A JEWELLER WHO IS ENGAGED ON LY IN PURCHASE OF GOLD JEWELLERY FROM CUSTOMERS AND MANUFACTURING JEWELLER Y FOR SALE TO RETAIL CUSTOMERS WAS TOTALLY UNJUSTIFIED AND CONTRARY TO THE FACTS OF THE CASE. HE THEREFORE SUBMITTED THAT THE LD.CIT(A) WAS JUSTIFI ED IN DELETING THE ADDITION. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND HAVE ALSO PERUSED THE MATERIALS AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE WAS DEALING IN GOLD BULLION. THEREFORE TH E COMPARISON MADE WITH A JEWELER NAMELY M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN WHO WAS ENGAGED ONLY IN PURCHASE OF GOLD JEWELLERY FROM CUS TOMERS AND MANUFACTURING JEWELLERY FOR SALE TO RETAIL CUSTOMER S WAS TOTALLY UNJUSTIFIED AND CONTRARY TO THE FACTS OF THE PRESENT CASE. WE FIND FORCE IN THIS 6 SUBMISSION OF SHRI YOGESH AGRAWAL LD. COUNSEL FOR THE ASSESSEE THAT IF A COMPARISON WAS TO BE MADE FOR THE PURPOSE OF INVEST IGATION THE AO SHOULD HAVE COLLECTED INFORMATION FROM THE PARTIES ENGAGED IN THE SIMILAR LINE OF BUSINESS. IN THE INSTANT CASE THE AO HAS NOT CORR ECTLY APPRECIATED THE EXPLANATION OF THE ASSESSEE AND REJECTED THE SAME I N A HASTY MANNER STATING THAT THE SALES WERE NOT OPEN FOR VERIFICATION AND THE BOOKS ARE NOT RELIABLE. IN THAT VIEW OF THE MATTER ALSO NO ADDITION IS CAL LED FOR. IN THE INSTANT CASE THE AO HAS NOT APPRECIATED THE EXPLANATION OF THE ASSESSEE THAT HE IS A WHOLESALE DEALER IN GOLD BULLION. FURTHER THE ASSE SSEE HAS PURCHASED THE ENTIRE BULLION FROM PUNJAB NATIONAL BANK. THE ENTIR E PURCHASES WERE DULY SUPPORTED BY BILLS AND WERE VERIFIABLE AND VOUCHAB LE. THERE IS NOT DOUBT THAT THE ASSESSEE MAINTAINED A STOCK REGISTER IN WH ICH ENTIRE PURCHASES AND SALES WERE RECORDED. IN OTHER WORDS THE ENTIRE SA LES BY THE ASSESSEE DURING THE YEAR STAND RECORDED IN ITS BOOKS OF ACCOUNT. TH ERE IS NO DISPUTE THAT SALES HAVE BEEN MADE IN CASH AND ALSO BY ACCEPTING ACCO UNT PAYEE CHEQUES/DRAFTS. IT IS ALSO SEEN THAT ALL THE SALES MADE BY THE ASSESSEE HAVE BEEN AT A RATE MORE THAN ITS PURCHASE RATE. IT IS A LSO SEEN THAT BECAUSE OF REQUIREMENT OF A HUGE INVESTMENT IN PURCHASE THE ASSESSEE ALSO PREFERRED IN SELLING ITS GOODS IN CASH SO THAT THERE REMAINED NO OUTSTANDING. IT SEEMS THAT THE AO HAS MADE THE IMPUGNED ADDITION MERELY ON THE BASIS OF SURMISES AND CONJECTURES AND ALSO RELYING ON THE LI NE OF BUSINESS OF M/S.HARSAHAIMAL SHIAMLAL JEWELLERS BADAUN IT IS TRUE THAT THE COMPARISON CAN BE MADE BETWEEN FACTS AND RESULTS OF THE CASES HAVING SAME LINE OF BUSINESS. AS WE HAVE ALREADY HELD HEREINABOVE THAT THE ASSESSEE IS DEALING IN GOLD BULLION AS A WHOLESALER WHEREAS THE PARTY WITH WHOM COMPARISON WAS MADE IS A TRADER IN ORNAMENTS. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE WE ARE OF THE OP INION THAT THE LD.CIT(A) 7 HAS CORRECTLY APPRECIATED THE FACTS OF THE PRESENT CASE AS WELL AS THE SETTLED LEGAL POSITION AND THEREFORE WE DECLINE TO INTERFE RE WITH HIS ORDER ON THIS ISSUE. ACCORDINGLY WE UPHOLD THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE ASSESSEE. 7. IN THE RESULT THE APPEAL IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 7.1.11. SD. SD. (N.K.SAINI) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT JANUARY 7TH 2011. COPY TO THE : 1. APPELLANT 2. RESPONDENT 3. CIT(A) (4) CIT 5.DR. A.R. ITAT LUCKNOW. SRIVASTAVA.