Smt Ravinder Kaur, Vijayawada v. The DCIT, Central Circle, Vijayawada

ITSSA 10/VIZ/2005 | misc
Pronouncement Date: 18-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 1025316 RSA 2005
Assessee PAN AIOPK2129C
Bench Visakhapatnam
Appeal Number ITSSA 10/VIZ/2005
Duration Of Justice 6 year(s) 1 month(s) 14 day(s)
Appellant Smt Ravinder Kaur, Vijayawada
Respondent The DCIT, Central Circle, Vijayawada
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 18-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 18-03-2011
Date Of Final Hearing 27-12-2010
Next Hearing Date 27-12-2010
Assessment Year misc
Appeal Filed On 04-02-2005
Judgment Text
IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV JUDICIAL MEMBER AND SHRI BR BASKARAN ACCOUNTANT MEMBER IT(SS)A NO.10/VIZAG/2005 BLOCK ASSESSMENT PERIOD: 1.4.1990 TO 5.9.2000 SMT. RAVINDER KAUR PROP: BAKSHI AUTOSPARES VIJAYAWADA VS. DCIT CENTRAL CIRCLE VIJAYAWADA (APPELLANT) PAN NO: AIOPK2129C (RESPONDENT) APPELLANT BY: SHRI Y SURYACHANDRA RAO CA RESPONDENT BY: SHRI TL PETER DR ORDER PER SHRI B. R. BASKARAN ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 06.12.2004 PASSED BY LEARNED CIT(A) VIJAYAWADA AND IT RELATES TO THE BLOCK PERIOD 01-04-1990 TO 05-09-2000. 2. THE ASSESSEE IS ASSAILING THE DECISION OF LEARN ED CIT(A) IN CONFIRMING THE BLOCK ASSESSMENT MADE BY THE ASSESSING OFFICER BY DETERMINING THE UNDISCLOSED INCOME AT RS.2 74 480/-. THE ORDER OF LEARNED CIT(A) GIVE RISE TO FOLLOWING THREE ISSUES. A) INCOME FROM BUSINESS FOR THE A.Y 2000-01 RS.93 969/- B) INCOME FROM OTHER SOURCES RS.95 453/- C) GROSS PROFIT ON DEFICIT STOCK RS.97 055 /- 3. THE FACTS RELATING TO THE CASE ARE DISCUSSED IN BRIEF. THE ASSESSEE IS THE PROPRIETRIX OF M/S BAKSHI AUTO SPARES VIJAYAWA DA. A SEARCH AND SEIZURE OPERATIONS WAS CARRIED ON IN THE HANDS OF T HE ASSESSEE ON 05-09- 2000. DURING THE COURSE OF SEARCH INVENTORY OF STO CK WAS TAKEN AND IT WAS FOUND THAT THERE WAS EXCESS STOCK OF RS.9.00 LAKHS. THE SAID EXCESS STOCK VALUE WAS ADMITTED AS UNEXPLAINED INVESTMENT BY THE HUSBAND OF THE IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 2 OF 6 ASSESSEE NAMED SHRI AMARJIT SINGH LAMBA. HOWEVER THE ASSESSEE FILED HER BLOCK RETURN DECLARING NIL INCOME. HOWEVER DURING THE COURSE OF ASSESSMENT PROCEEDING IT WAS NOTICED THAT THE SEAR CH PARTY DID NOT VALUE THE INVENTORY TAKEN ON THE DATE OF SEARCH. ACCORDI NGLY THE ASSESSEE WAS ASKED TO VALUE THE SAME AND SHE VALUED THE STOCK AS ON THE DATE OF SEARCH AT RS.12 81 302/-. THE ASSESSEE WAS ALSO ASKED TO FURNISH THE TRADING ACCOUNT FOR THE PERIOD FROM 1.4.2000 TO 5.9.2000 AN D IN THE SAID TRADING ACCOUNT THE STOCK WAS SHOWN AT RS.18 43 290/-. O N COMPARISON OF BOTH THE STATEMENTS THE ASSESSING OFFICER NOTICED THAT THERE WAS DEFICIT STOCK OF RS.5 61 988/-. THE ASSESSING OFFICER TREATED THE SA ID DEFICIT STOCK AS UNACCOUNTED SALES AND ACCORDINGLY WORKED THE GROSS PROFIT ON THE SAID DEFICIT SALES AT RS.97 055/- AND TREATED THE SAID P ROFIT AS THE UNDISCLOSED INCOME OF THE ASSESSEE. 3.1 THE ASSESSING OFFICER ALSO TREATED THE INCOM E PERTAINING TO THE ASSESSMENT YEAR 2000-01 ALSO AS THE UNDISCLOSED INC OME OF THE ASSESSEE. THE INCOME PERTAINING TO THAT YEAR CONSISTED OF BUS INESS INCOME FROM M/S BAKSHI AUTO SPARES AND BANK INTEREST ASSESSABLE UND ER OTHER SOURCES HEAD. IN THE EARLIER YEARS THE ASSESSEE HAD BEEN F ILING THE RETURN OF INCOME BY DECLARING BUSINESS INCOME AS PER SECTION 44AF. THE SAID SECTION IS A SPECIAL PROVISION FOR COMPUTING PROFITS AND GA INS OF RETAIL BUSINESS WHOSE TURNOVER IS LESS THAN FORTY LAKHS RUPEES. AC CORDING TO SUB. SEC. (1) OF THE SAID SECTION THE PROFITS AND GAINS FROM A R ETAIL TRADE SHALL BE TAKEN AS 5% OF THE TOTAL TURNOVER OR AT THE HIGHER AMOUNT IF THE ASSESSEE DECLARES INCOME AT HIGHER THAN 5% OF THE TOTAL TURN OVER. HOWEVER AS PER SEC.44AF(5) AN ASSESSEE MAY CLAIM LOWER PROFIT THA N THE ONE SPECIFIED IN SEC. 44AF(1) IF HE KEEPS AND MAINTAIN SUCH BOOKS O F ACCOUNT AND OTHER DOCUMENTS AS REQUIRED UNDER SECTION 44AA(2) AND GET S HIS ACCOUNTS AUDITED AND FURNISHES A REPORT OF SUCH AUDIT AS REQUIRED UN DER SECTION 44AB OF THE ACT. IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 3 OF 6 3.2 IF AN ASSESSEE DECLARES THE INCOME FROM BUSI NESS AS PER SEC. 44AF(1) OF THE ACT THEN THE DUE DATE FOR FILING RETURN WOU LD BE 31 ST JULY OF THE ASSESSMENT YEAR. HOWEVER IF AN ASSESSEE PREFER TO GET HIS ACCOUNTS AUDITED AS PER SEC. 44AF(5) OF THE ACT WITH THE CLA IM THAT HIS BUSINESS INCOME IS LOWER THAN THE LIMITS SPECIFIED IN SEC. 4 4AF(1) THE DUE DATE WOULD BE 31 ST OCTOBER (FOR ASSESSMENT YEAR 2000-01). 3.3 IN THE HANDS OF THE ASSESSEE THE SEARCH TOO K PLACE ON 05-09-2000. BY THAT TIME SHE HAD NOT FILED HER RETURN OF INCOM E FOR THE ASSESSMENT YEAR 2000-01. IN THE EARLIER YEARS THE ASSESSEE HAD FIL ED HER RETURN OF INCOME BY DECLARING INCOME FROM BUSINESS AS PER SEC. 44AF( 1) OF THE ACT. HOWEVER FOR THE ASSESSMENT YEAR 2000-01 THE ASSES SEE CLAIMED THAT SHE WOULD GET HER ACCOUNTS AUDITED AS PER SEC. 44AF(5) OF THE ACT AS HER BUSINESS INCOME WAS LESS THAN THE LIMITS PRESCRIBED IN SEC. 44AF(1) OF THE ACT. 3.4 AS PER SEC. 158BB(CA) OF THE ACT IF THE DU E DATE FOR FILING RETURN OF HAS EXPIRED ON THE DATE OF SEARCH BUT NO RETURN OF INCOME HAS BEEN FILED THE INCOME RELATING TO THAT YEAR SHALL BE TAKEN AS UNDISCLOSED INCOME OF THE ASSESSEE IF THE INCOME EXCEEDS THE MAXIMUM AMOUNT NOT CHARGEABLE TO TAX. HOWEVER IF THE DUE DATE HAS NOT EXPIRED ON T HE DATE OF SEARCH THEN THE INCOME AS PER BOOKS OF ACCOUNT SHALL NOT BE TRE ATED AS THE UNDISCLOSED INCOME. 3.5 IN THE BLOCK ASSESSMENT PROCEEDING THE ASSE SSEE CLAIMED THAT THE DUE DATE FOR FILING THE RETURN OF INCOME FOR THE AS SESSMENT YEAR 2000-01 HAS NOT EXPIRED ON THE DATE OF SEARCH AS SHE HAS P REFERRED TO GET HER ACCOUNTS AUDITED AS PER SEC. 44AF(5). HOWEVER THE ASSESSING OFFICER REJECTED THE SAID CLAIM ON THE BASIS OF PAST CONDUC T OF THE ASSESSEE I.E. IN THE EARLIER YEARS THE ASSESSEE HAD DECLARED INCOME AS PER SEC.44AF(1) OF THE ACT. ACCORDINGLY THE ASSESSING OFFICER ESTIMATE D THE INCOME FROM BUSINESS UNDER SECTION 44AF(1) OF THE ACT AT RS.93 969/- AND INCLUDED THE IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 4 OF 6 SAME IN THE UNDISCLOSED INCOME OF THE ASSESSEE. IT IS PERTINENT TO NOTE HERE THAT THE ASSESSEE COULD FILE THE REGULAR RETUR N FOR THE SAID ASSESSMENT YEAR ONLY ON 09-09-2002 AS THE BOOKS OF ACCOUNT WE RE SEIZED BY THE DEPARTMENT AND THEY WERE RELEASED TO THE ASSESSEE O NLY ON 27-08-2002. IN THE SAID RETURN THE ASSESSEE HAD ALSO DECLARED THE INCOME FROM OTHER SOURCES CONSISTING OF BANK INTEREST AT RS.95 453/-. . THE ASSESSING OFFICER TREATED THE SAID INTEREST INCOME ALSO AS THE UNDISC LOSED INCOME OF THE ASSESSEE. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BE FORE LEARNED CIT(A) BUT COULD NOT FIND FAVOUR FROM HIM. HENCE THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERU SED THE RECORD. WE SHALL FIRST TAKE UP THE ISSUE RELATING TO THE ESTIMATION OF GROSS PROFIT ON THE DEFICIT STOCK. THOUGH THE ASSESSEES HUSBAND DECLARED A SU M OF RS.9.00 LAKHS AS THE UNDISCLOSED INCOME OF THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING THE ASSESSING OFFICER APPEARS TO HAVE A CCEPTED THE FACT THAT THERE WAS NO BASIS FOR THE SAID ADMISSION FOR THE REASON THAT THE INVENTORY TAKEN ON THE DATE OF SEARCH WAS NOT VALUED. ACCORD INGLY HE HAS DIRECTED THE ASSESSEE TO VALUE THE SAID INVENTORY AND ALSO A SKED THE ASSESSEE TO FURNISH THE TRADING ACCOUNT FOR THE PERIOD FROM 1.4 .2000 TO THE DATE OF SEARCH (I.E. 5-9-2000). THUS IT CAN BE NOTICED TH AT BOTH THE VALUATION AND THE TRADING ACCOUNT HAVE BEEN FURNISHED BY THE ASSE SSEE HERSELF. ON COMPARISON OF BOTH IT WAS NOTICED BY THE ASSESSING OFFICER THAT THERE WAS DEFICIT STOCK OF RS.5 61 988/-. THE ASSESSING OFFI CER PRESUMED THE SAID DEFICIT STOCK AS THE UNACCOUNTED SALES AND ACCORDIN GLY ESTIMATED THE GROSS PROFIT THERE ON AT RS.97 055/-. THOUGH THE ASSESSE E DISPUTES THAT THE PROFIT SHOULD NOT HAVE BEEN WORKED OUT IN THE MIDDLE OF TH E YEAR YET WE FIND THAT THE ASSESSEE DID NOT OFFER ANY ACCEPTABLE EXPLANATI ON FOR THE DEFICIT STOCK ARRIVED AT BY THE ASSESSING OFFICER THAT TOO ON TH E BASIS OF STATEMENTS FURNISHED BY THE ASSESSEE. IN OUR VIEW THE ASSESSI NG OFFICER WAS FAIR ENOUGH TO TREAT THE DEFICIT STOCK AS THE UNACCOUNTE D SALES OF THE ASSESSEE. IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 5 OF 6 IN THAT CASE WE FIND NO INFIRMITY IN ESTIMATING THE GROSS PROFIT ON THE UNACCOUNTED SALES AND TREATING THE SAME AS THE UNDI SCLOSED INCOME OF THE ASSESSEE. ACCORDINGLY WE UPHOLD THE ORDER OF LEAR NED CIT(A) ON THIS ISSUE. 6. THE REMAINING TWO ADDITIONS DEPEND UPON THE DUE DATE FOR FILING RETURN OF INCOME OF THE ASSESSMENT YEAR 2000-01. T HE TAX AUTHORITIES TREATED THE DUE DATE FOR FILING THE RETURN OF INCOM E OF THE SAID YEAR AS 31.7.2000 I.E. PRIOR TO THE DATE OF SEARCH ON THE BASIS OF THE PAST CONDUCT OF THE ASSESSEE IN DECLARING THE BUSINESS INCOME AS PER SEC. 44AF(1) OF THE ACT. HOWEVER THE CLAIM OF THE ASSESSEE IS THAT SH E PREFERRED TO GET HER ACCOUNTS RELEVANT FOR THE ASSESSMENT YEAR 2000-01 A S PER SEC. 44AF(5) AND HENCE ACCORDING TO THE ASSESSEE THE DUE DATE WAS 3 1.10.2000 I.E. AFTER THE DATE OF SEARCH. WE NOTICE THAT THE TAX AUTHORI TIES REJECTED THE SAID CLAIM BY TREATING THE SAME AS AN AFTER THOUGHT. HO WEVER ON A CAREFUL READING OF SEC. 44AF WE FIND THAT THERE IS NO BAR THAT AN ASSESSEE WHO HAD DECLARED INCOME AS PER SEC. 44AF(1) IN ONE YEAR CAN NOT GET HIS ACCOUNTS AUDITED AS PER SEC.44AF(5). IN THE ABSENCE OF SUCH A PROVISION WE FIND NO REASON TO REJECT THE SAID CLAIM OF THE ASSESSEE. IF AN OPTION IS GIVEN TO AN ASSESSEE UNDER THE ACT IN OUR VIEW IT IS THE PRER OGATIVE OF AN ASSESSEE TO EXERCISE THE SAID OPTION AND NO ONE CAN COMPEL THE ASSESSEE TO ACCEPT A PARTICULAR OPTION. BESIDES THE ABOVE WE FIND THAT THE BOOKS OF ACCOUNT RELEVANT FOR THE ASSESSMENT YEAR 2000-01 SHOWED PRO FIT AT RS.63 696/- WHICH IS LESS THAN THE LIMITS SPECIFIED IN SEC. 44A F(1). HENCE THE ASSESSEE HAD AN OPTION TO PREFER THE METHOD PRESCRIBED UNDER SECTION 44AF(5) OF THE ACT. THOUGH THE ASSESSEE HAS FILED THE AUDIT REPO RT BELATEDLY AS PER HER OPTION IT HAS BEEN EXPLAINED THAT THE DELAY HAS O CCURRED DUE TO THE SEIZURE OF BOOKS OF ACCOUNTS BY THE DEPARTMENT. WE ALSO FIND THAT THE TAX AUTHORITIES HAVE REJECTED THE SAID CLAIM OF THE ASS ESSEE ON THE BASIS OF SUSPICION AND NOT ON THE BASIS OF ANY OTHER MATERIA L. HENCE WE ARE OF THE VIEW THAT THE REJECTION OF THE SAID CLAIM OF THE AS SESSEE IS NOT PROPER. IN VIEW OF THE FOREGOING DISCUSSIONS WE ARE OF THE VI EW THAT THE DUE DATE FOR IT(SS)A NO.10/VIZAG/2005 RAVINDER KAUR VJA PAGE 6 OF 6 FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2000-01 SHOULD BE TAKEN AS 31.10.2000 ONLY IN THE CASE OF THE ASSESSEE AND ACCORDINGLY THE INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES DETERMI NED BY THE ASSESSING OFFICER AS UNDISCLOSED INCOME ON THE BASIS OF RETUR N OF INCOME OF THE ASSESSEE ARE LIABLE TO BE DELETED. WE ORDER ACCORD INGLY. IT WAS ALSO SUBMITTED THAT THE ASSESSEE HAS BEEN DECLARING THE INTEREST INCOME FROM BANK FOR THE PAST SEVERAL YEARS AND THE TDS IS ALSO DEDUCTED THERE FROM. HENCE IT CANNOT BE SAID THAT THE ASSESSEE COULD NOT HAVE DECLARED THE SAID INTEREST INCOME TO THE DEPARTMENT. THIS IS VIEW IS SUPPORTED BY THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE O F CIT VS. SHAMLAL BALRAM GURBANI (2001) (249 ITR 501 (BOM)). IN THIS VIEW OF THE MATTER ALSO THE INTEREST INCOME IS LIABLE TO BE DELETED. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18 TH MARCH 2011. SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM DATE: 18-03-2011 COPY TO 1 SMT RAVINDER KAUR PROPX; BAKSHI AUTO SPARES 27- 19-23 DURGAIAH STREET GOVERNORPET VIJAYAWADA-520002. 2 THE DY.COMMISSIONER OF INCOME TAX CENTRAL CIRCLE VIJAYAWADA. 3 4. THE CIT VIJAYAWADA. THE CIT(A) VIJAYAWADA. 5 THE DR ITAT VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM