ACIT, SRIGANGANAGAR v. M/s. Kashmir Trading Company, SRIGANGANAGAR

ITSSA 9/JODH/2009 | misc
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 923316 RSA 2009
Assessee PAN AACFK9118R
Bench Jodhpur
Appeal Number ITSSA 9/JODH/2009
Duration Of Justice 2 year(s) 1 month(s) 7 day(s)
Appellant ACIT, SRIGANGANAGAR
Respondent M/s. Kashmir Trading Company, SRIGANGANAGAR
Appeal Type Income Tax (Search & Seizure) Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted DB
Tribunal Order Date 22-07-2011
Date Of Final Hearing 18-07-2011
Next Hearing Date 18-07-2011
Assessment Year misc
Appeal Filed On 15-06-2009
Judgment Text
IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 1 IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR JODHPUR BENCH : JODHPUR BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER BEFORE SHRI RAJPAL YADAV JUDICIAL MEMBER AND AND AND AND SHRI K.D. RANJAN ACCOUNTANT MEMBER SHRI K.D. RANJAN ACCOUNTANT MEMBER SHRI K.D. RANJAN ACCOUNTANT MEMBER SHRI K.D. RANJAN ACCOUNTANT MEMBER IT (SS) A NO.09/JU/2009 BLOCK ASSESSMENT PERIOD : 1990-91 TO 2000-01 ASSTT. CIT CIRCLE SRI GANGANAGAR. VS. M/S KASHMIR TRADING COMPANY 4 SUBJI MANDI SRIGANGANAGAR. PAN: AACFK9118R C.O. NO.5 0 /JU/2009 (IN IT (SS) A NO.09/JU/2009 BLOCK ASSESSMENT PERIOD : 1990-91 TO 2000-01 M/S KASHMIR TRADING COMPANY 4 SUBJI MANDI SRIGANGANAGAR. PAN: AACFK9118R VS. ASSTT. CIT CIRCLE SRI GANGANAGAR. ASSESSEE BY : SHRI SURESH OJHA AR REVENUE BY : SHRI G.R. KOKANI DR O R D E R O R D E R O R D E R O R D E R PER K.D. RANJAN AM: PER K.D. RANJAN AM: PER K.D. RANJAN AM: PER K.D. RANJAN AM: THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTIONS BY THE ASSESSEE ARISE OUT OF ORDER OF CIT (APPEALS) BIKANER. THESE W ERE HEARD TOGETHER AND FOR THE SAKE OF CONVENIENCE ARE DISPOSED OF BY THIS COM MON ORDER. 2. IN REVENUES APPEAL THE FOLLOWING GROUNDS OF APPEA L HAVE BEEN TAKEN:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN :- I) DELETING THE ADDITION OF RS.1 13 000/- IN THE NAME O F SH. JAI IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 2 NARAYAN & RS.1 55 000/ - IN THE NAME OF SH. ROSHAN LAL AND WITHOUT NAME MADE BY THE AO ON ACCOUNT OF BOGUS CASH CREDITS THOUGH THE AO HAS RIGHTLY MADE THE SAID ADDITION AS THE ASSESSEE HAS FAILED TO DISCHARGE HIS ONUS. II) DIRECTING THE AO TO CHARGE INTEREST @ 1% INSTEAD OF 2% U/ S 158BFA THOUGH THE AO HAS RIGHTLY CHARGED THE INTEREST @ 2 % AS PROVIDED IN THE INCOME-TAX ACT 1961 FOR LATE FILING OF RETURN. 3. THE FIRST ISSUE FOR CONSIDERATION RELATES TO DELETING THE ADDITION OF ` 1 13 000/- IN THE NAME OF SHRI JAI NARAYAN AND ` 1 55 000/- IN THE NAME OF SHRI ROSHAN LAL. THE FACTS OF THE CASE STATED IN BRIE F ARE THAT A SEARCH AND SEIZURE OPERATION WAS CONDUCTED AT THE BUSINESS PREMISES O F THE ASSESSEE. THE ASSESSEE IS ENGAGED IN ARHAT BUSINESS. DURING THE CO URSE OF SEARCH A DASTI BAHI WAS FOUND. DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS THE AO ADDED CASH CREDITS APPEARING IN THE REGULAR BOOKS OF ACCOUNT WHICH ACCORDING TO THE ASSESSEE COULD NOT HAVE BEEN ADDED IN THE BLOCK ASSESSMENT MADE U/S 158 BC. IN THE ORIGINAL ASSESSMEN T THE AO MADE ADDITION OF `22 65 477/- AS PEAK OF DASTI BAHI WHICH WAS DELETED BY THE CIT (A). LD. CIT (A) ALSO ALLOWED SUBSTANTIAL REL IEF. BOTH THE ASSESSEE AS WELL AS THE REVENUE APPEALED TO ITAT. THE ITAT SET A SIDE THE MATTER TO THE FILE OF AO WITH THE DIRECTIONS TO ASCERTAIN AND FIND OUT THE UNDISCLOSED INCOME FROM ARHAT ON THE BASIS OF INCOME THEORY ONL Y. THE AO WAS ALSO DIRECTED TO FIND OUT THE TOTAL UNDISCLOSED INCOME OF THE ASSESSEE FROM ARHAT ON THE BASIS OF DASTI BAHI AND NOT TO CONSIDER THE A SSETS AND EXPENDITURE FOR THAT PURPOSE BY ADOPTING PEAK THEORY. HE WAS AL SO DIRECTED TO CONSIDER THE CREDITS AND CASH CREDITS. IN THE SET ASIDE ASSESSMENT PROCEEDINGS THE AO MADE ADDITION OF ` 1 13 000/- IN THE NAME OF SHR I JAI NARAYAN AND ` 1 55 000/- IN THE ACCOUNT WITHOUT NAME AND SHRI ROSH AN LAL. THE AO WHILE MAKING THE ASSESSMENT CALCULATED THE PEAK IN THE ACCOU NT OF SHRI JAI NARAYAN AT ` 1 13 000/- PERTAINING TO ASSESSMENT YEAR 1 996-97 AND ` 1 55 000/- IN THE ACCOUNT WITHOUT NAME AND IN THE N AME OF SHRI ROSHAN LAL PERTAINING TO ASSESSMENT YEAR 1998-99 AND ADDED THESE AM OUNTS TO THE IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 3 INCOME OF THE ASSESSEE. HOWEVER THE ASSESSING OFFICER DID NOT ALLOW TELESCOPING OF THE PEAK CREDITS IN THE BOOKS OF ACCOUN T WITH THAT OF PEAK OF DASTI BAHI. 4. BEFORE CIT (A) IT WAS SUBMITTED BY THE ASSESSEE THAT IN THE SCHEME OF BLOCK ASSESSMENT THERE WAS NO SCOPE FOR ADDING THE ENTRIE S WHETHER VERIFIABLE OR NOT WHICH WERE FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT. AT THE BEST THE AO SHOULD HAVE REOPENED THE REGULAR ASSESSMENT AND SHOULD HAVE MADE THE ADDITION IN THE RELEVANT ASSESSMENT YEAR AND NOT IN THE BLOCK PERIOD. THE LD. CIT (A) NOTED THAT THE AO HAD NOT ALLOWED THE BENEFIT OF TELESCOPING OF THE AMOUNT OF CASH CREDITS AGAINST THE PEAK OF DASTI BAHI. THE AMOUNT OF ` 1 13 000/- IN THE NAME OF SHRI JAI NARAYAN RELATED TO ASSESSMENT YEAR 1996-97 AND ` 1 55 000/- IN THE ACCOUNT WITHOUT NAME AND ` 1 25 500/- IN THE NAME OF SHRI ROSHAN LAL RELATED TO ASSESSMENT YEAR 1998- 99. THE AO CALCULATED PEAK OF DASTI BAHI FOR ASSESSME NT YEAR 1996-97 AT ` 3 92 472/- WHEREAS PEAK OF CREDIT IN THE NAME OF SH RI JAI NARAYAN WAS OF ` 1 13 000/- WHICH WAS ARRIVED ON 17.09.1995 WHEREAS PE AK OF DASTI BAHI FOR ASSESSMENT YEAR 1996-97 WAS MADE ON 22.02.1996. LD. CIT (A) ALSO NOTED THAT UPTO THE DATE OF PEAK OF DASTI BAHI I.E. 22. 02.1996 THE WHOLE OF THE AMOUNT WAS RECEIVED BACK EXCEPT ` 5 000/-. DURING T HE WHOLE PROCEEDINGS THERE WAS NO INDICATION THAT THE ASSESSEE WAS HAVING ANY OTHER SOURCE OF INCOME OR ANY OTHER ASSET OR AMOUNT WAS FOUND. FROM T HESE FACTS IT WAS CLEAR THAT THE AMOUNT INTRODUCED IN THE REGULAR BOO KS OF ACCOUNT IN THE NAME OF BOGUS PERSONS WERE OUT OF AMOUNTS APPEARING IN THE DASTI BAHI. ON THE OTHER HAND THE SET OFF OF THIS AMOUNT SHOULD HAVE BE EN ALLOWED AGAINST THE PEAK OF DASTI BAHI AS THE AMOUNT OF PEAK OF DASTI B AHI FOR ASSESSMENT YEAR 1995-96 WAS AT ` 3 06 491/- AND THE PRESUMPTIONS WERE IN FAVOUR OF THE ASSESSEE. LD. CIT (A) THEREFORE DELETED THE ADDITION MADE IN RESPECT OF SHRI JAI NARAYAN. AS REGARDS THE ADDITION OF ` 1 55 000/- LD. CIT (A) NOTED THAT ALL THE ENTRIES RELATED TO DATES STARTING FROM 16.01.1998 TO 13.02.1998. PEAK OF DASTI BAHI FOR ASSESSMENT YEAR 1998-99 WAS TAKEN AS ON 1 5.01.1998. IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 4 WHEN THE PEAK OF DASTI BAHI WAS TAKEN ON 15.01.1998 AND THE DATE OF TRANSACTIONS WERE BETWEEN 16.1.98 AND 13.02.98 THEN PRESUMPTION WAS IN FAVOUR OF THE ASSESSEE THAT THE AMOUNTS WERE ADVANCED O UT OF PEAK AVAILABLE IN THE DASTI BAHI AS ON 15.1.98. THEREFO RE THERE WAS NO SCOPE FOR MAKING ANY ADDITION ON ACCOUNT OF THESE TRANSACTIONS. LD. CIT (A) THEREFORE ALLOWED THE TELESCOPING OF THE AMOUNT OF ` 2 68 000/ - AGAINST PEAK OF DASTI BAHI. 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH T HE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE IT IS CLEAR THAT THE AO HAD MADE ADDITION OF ` 1 13 000/- IN THE NAME OF SHRI J AI NARAYAN AND ` 1 55 000/- IN THE NAME OF SHRI ROSHAN LAL ON THE BA SIS OF THE ENTRIES FOUND RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. THE A SSESSEE HAD TAKEN A PLEA BEFORE THE CIT (A) THAT NO ADDITION IN RESPECT OF ENTRIES FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT CAN BE MADE IN THE ASSESSMENT PROCEEDINGS U/S 158 BC. THIS PLEA OF THE ASSESSEE HAS BEEN REJECTED BY THE CIT (A). HERE WE WOULD LIKE TO MENTION THAT IT IS A SETTLED L AW THAT NO ADDITION ON THE BASIS OF ENTRIES RECORDED IN REGULAR BOOKS OF ACCOUNT C AN BE MADE U/S 158BC. SINCE ASSESSEE HAD NOT FILED ANY APPEAL AGAINST REJECTION OF THE PLEA WE CANNOT RECORD OUR FINDING ON THIS ISSUE. HOWE VER LD. CIT (A) HAS ALLOWED TELESCOPING OF ` 1 13 000/- IN THE NAME OF S HRI JAI NARAYAN AND ` 1 55 000/- IN THE NAME OF SHRI ROSHAN LAL OUT OF THE PEAK OF DASTI BAHI. LD. CIT (A) HAS RECORDED A FINDING OF FACT THAT THE ASSESSEE WAS NOT HAVING ANY OTHER SOURCE OF INCOME OR ANY OTHER ASSET. THEREFORE WHATEVER WAS INTRODUCED IN THE REGULAR BOOKS OF ACCOUNT IN THE NA ME OF BOGUS PERSONS WAS OUT OF THE AMOUNTS APPEARING IN THE DASTI BAHI. TH IS FINDING OF FACT HAS NOT BEEN CONTROVERTED BY THE REVENUE BEFORE US. THE ASSE SSEE WAS CARRYING ON THE BUSINESS OF ARHAT AND UNDISCLOSED INCOME WAS FOUND RECORDED IN THE DASTI BAHI. THE AO HAD MADE THE ADDITION ON THE B ASIS OF ENTRIES FOUND RECORDED IN THE REGULAR BOOKS OF ACCOUNT APART FROM ADDITION BASED ON PEAK OF DASTI BAHI. SINCE THE AO HAD MADE ADDITION ON THE BASIS OF PEAK OF IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 5 ENTRIES RECORDED IN REGULAR BOOKS OF ACCOUNT WHILE DE TERMINING THE UNDISCLOSED INCOME OF THE ASSESSEE THE ENTRIES RECORDED I N THE REGULAR BOOKS OF ACCOUNT HAVE TO BE TELESCOPED WITH ENTRIES RE CORDED IN THE DASTI BAHI. LD. CIT (A) THEREFORE IS JUSTIFIED IN ALLO WING THE TELESCOPING OF THE ADDITION MADE ON THE BASIS OF PEAK CREDITS OF THE ENTR IES RECORDED IN THE REGULAR BOOKS OF ACCOUNT AGAINST THE PEAK OF CREDITS F OUND RECORDED IN DASTI BAHI. IN OUR CONSIDERED OPINION LD. CIT (A) IS JUST IFIED IN TELESCOPING THE AMOUNT IN THE NAME OF SHRI JAI NARAYAN AND SHRI ROSH AN LAL TO THE EXTENT OF ` 2 68 000/-. ACCORDINGLY WE DO NOT FIND ANY INFI RMITY IN THE ORDER PASSED BY LD. CIT (A) DELETING THE ADDITION. 6. THE NEXT ISSUE FOR CONSIDERATION RELATES TO DIRECTIN G THE AO TO CHARGE INTEREST @ 1% INSTEAD OF 2% U/S 158 BFA. THE AO WHILE COMPUTING THE INCOME CHARGED INTEREST U/S 158BFA(1) @ 2%. HOWEVER LD. CIT (A) DIRECTED TO CHARGE INTEREST @ 1% PER MONTH IN PLACE OF 2%. 7. BEFORE US LD. SR. DR SUBMITTED THAT AT THE TIME O F FILING OF THE RETURN THE RATE OF INTEREST TO BE CHARGED U/S 158 BFA (1) W AS 2% AND NOT 1% THEREFORE LD. CIT (A) AS NOT JUSTIFIED IN DIRECTING THE AO TO CHARGE INTEREST @ 1% PER MONTH. ON THE OTHER HAND LD. AR OF THE ASSES SEE SUPPORTED THE ORDER OF THE CIT (A). 8. WE HAVE HEARD BOTH THE PARTIES. U/S 158 BFA (1) IN A CASE WHERE RETURN OF TOTAL INCOME INCLUDING UNDISCLOSED INCOME FOR THE BLOCK PERIOD IN RESPECT OF SEARCH INITIATED U/S 132 OR BOOKS OF ACCOUNT OR OTHER DOCUMENTS OR ANY ASSET REQUISITIONED U/S 132A ON OR AFTER THE FIRST D AY OF JANUARY 1997 AS REQUIRED BY A NOTICE U/S 158BCA IS FURNISHED AFTER THE EXPIRY OF PERIOD SPECIFIED IN SUCH NOTICE OR IS NOT FURNISHED THE ASSESSEE SHALL BE LIABLE TO PAY SIMPLE INTEREST AT THE RATE SPECIFIED IN THE SECT ION. IN A CASE WHERE RETURN IS FILED AFTER THE EXPIRY OF THE PERIOD SPECIF IED IN THE NOTICE THE INTEREST WILL BE CALCULATED TILL THE DATE OF FURNISHI NG OF THE RETURN OF INCOME. IN A CASE WHERE NO RETURN HAS BEEN FURNISHED THE INTE REST WILL BE CALCULATED IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 6 TILL THE DATE OF COMPLETION OF ASSESSMENT U/S 158BC OF T HE ACT. IN THE INSTANT CASE THE BLOCK PERIOD CONSISTS OF ASSESSMENT YEARS 1990-91 TO 2000-01. THE INTEREST U/S 158 BFA (1) RELATES TO LATE SUBMISSION OF RETURN OF INCOME. W.E.F. 8.9.2003 THE RATE OF INTEREST ON DELAYED RET URN OF INCOME IS TO BE CHARGED @ 1% OF THE TAX ON UNDISCLOSED INCOME. W.E .F. 1.6.2001 THE RATE OF INTEREST FOR DELAYED RETURN OF INCOME WAS 1 % OF TAX ON UNDISCLOSED INCOME. DURING THE PERIOD 1.1.97 TO 31 ST MAY 2001 THE RATE OF INTEREST WAS 2%. THEREFORE RATE OF INTEREST APPLICABLE IN THE C ASE OF THE ASSESSEE IS 2% AND NOT 1%. IN THIS CASE SEARCH AND SEIZURE OPERATIO N WAS CARRIED OUT ON 29 TH JULY 1997. THE AO ISSUED NOTICE U/S 158 BC DATED 17 .7.2000 AND THE ASSESSEE FILED RETURN OF INCOME ON 30 TH MARCH 2001 ADMITTING THE UNDISCLOSED INCOME OF ` 12 40 530/-. THE INTEREST U/S 158BFA (1) IS CHARGEABLE IN RESPECT OF DELAYED FILING OF RETURN OF INCOME AND THE INTEREST FOR THE RELEVANT PERIOD WAS 2%. THEREFORE LD. CIT (A) HAS COMMITTED A MISTAKE IN DIRECTING THE AO TO CHARGE INTEREST @ 1% A S AGAINST THE RATE OF INTEREST OF 2% WHICH WAS APPLICABLE AT THAT POINT OF TIME. WE THEREFORE SET ASIDE THE DIRECTIONS OF LD. CIT (A) AND DIRECT THE AO TO CHARGE INTEREST FOR DELAYED PERIOD @ 2%. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED. 10. NOW COMING TO THE CROSS OBJECTIONS THE GROUNDS TA KEN BY THE ASSESSEE ARE AS FOLLOWS:- 1. THAT THE ADDITION DELETED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IS JUSTIFIED BECAUSE THE CREDIT IS FULLY EXP LAINABLE AND THE ASSESSEE SUCCESSFULLY DISCHARGED THE BURDEN AS PROVI DED U/S 68 OF INCOME TAX ACT 1961. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY DELETED THE ADDITION BECAUSE IN THE CASE OF THE ASSESSEE ASSESSMEN T WAS COMPLETED UNDER THE BLOCK ASSESSMENT AND THE CREDIT/A MOUNT APPEARING IN THE REGULAR BOOKS MAINTAINED BY HIM. IT(SS) NO.09/JU/2009 CO NO.50/JU/2009 7 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) RIGHTLY ALLOWED THE DIRECTION IN RESPECT OF CHARGING THE INTEREST BECAUSE THI S RATE IS AS PROVIDED UNDER THE STATUTE AT THE TIME OF SEARCH/ORIGINAL ASSESSMENT. 11. FROM THE GROUNDS OF CROSS OBJECTIONS IT IS CLEAR THAT THEY ARE IN SUPPORT OF ORDER OF CIT (A). SINCE WE HAVE CONFIRME D THE ORDER OF THE CIT (A) DELETING THE ADDITION MADE U/S 68 OF THE ACT THE GR OUNDS RAISED IN THE CROSS OBJECTIONS BY THE ASSESSEE BECOME INFRUCTUOUS. THEREFOR E THE CROSS OBJECTIONS FILED BY THE ASSESSEE IS DISMISSED AS INFRUCTUOUS. 12. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED AND THE CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED AS INFRUC TUOUS. ORDER PRONOUNCED IN THE OPEN COURT ON 22.07.2011. SD/- SD/- [RAJPAL YADAV] [K.D. RAN JAN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED 22 ND JULY 2011 DK COPY FORWARDED TO:- 1. APPELLANT. 2. RESPONDENT 3. INCOME-TAX OFFICER 4. CIT 5. DR 6. GUARD FILE ASSTT. REGISTRAR ITAT JODHPUR