Income Tax Appellate Tribunal - Pune
Navin Ratilal Patel, vs Dcit, Sangli on 12 July, 2019
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCH "C", PUNE
BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND
SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.1421/PUN/2013
िनधा रण वष / Assessment Year : 2009-10
Navin Ratilal Patel, DCIT,
Near Bombay Steel, Vs. Circle-1, Sangli
Karad-Tasgaon Road,
Palus - 416310
Maharashtra
PAN : AMCPP7277J
(Appellant) (Respondent)
Appellant by Shri Sunil Ganoo
Respondent by Shri Vishwas Munde
Date of hearing 11-07-2019
Date of pronouncement 12-07-2019
आदेश / ORDER
PER R.S.SYAL, VP :
This appeal by the assessee is directed against the order passed by the CIT(A), Kolhapur on 30-04-2013 in relation to the assessment year 2009-10.
2. The first issue raised in this appeal is against the confirmation of addition of Rs.34,51,951/-.
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3. Briefly stated the facts of the case are that the assessee is a retail trader engaged in hardware, paints, sanitary ware and PVC pipes. Survey action u/s.133A of the Income-tax Act, 1961 (hereinafter called 'the Act') was carried out at the business premises of the assessee on 12/13-02-2009. During the course of survey, the assessee declared additional income of Rs.78,22,148/-, over and above his regular income, comprising of the following items:
(i) Unexplained investment in stock : Rs.34,51,951/-
(ii) Excess cash found in premises : Rs. 1,20,197/-
(iii) Unaccounted investment in Building, Furniture, Land etc. : Rs.41,00,000/-
(iv) on account of low household : Rs. 1,50,000/-
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: Rs.78,22,148/-
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4. However, return was filed with total income of Rs.6,31,060/-, not including any of the amounts offered during the course of survey. The first issue is against the confirmation of addition of unexplained investment in stock amounting to Rs.34,51,951/-. The AO recorded that the assessee, during the course of survey, accepted that he was not maintaining any books of account and never maintained any books of account even for earlier years. It has further been recorded that the assessee admitted that his accounts for earlier years were made on estimate basis. No sale 3 ITA No.1421/PUN/2013 Navin Ratilal Patel bills were issued on regular basis except where customers specifically required so. A stock inventory was prepared as on the date of survey, namely, 12-02-2009 computing total value of stock at Rs.34,51,951/-. The AO treated the entire such amount of inventory as unexplained investment for which declaration was also made by the assessee during the course of survey. The ld. CIT(A) sustained the addition, against which the assessee has come up in appeal before the Tribunal.
5. We have heard both the sides and gone through the relevant material on record. The assessee's statement was recorded during the course of survey, firstly, on 12-02-2009 and then on 13-02-2009, copies of which have been placed at pages 27 onwards of the paper book. In the initial statement on 12.2.2009, the assessee responded to question no. 4 by submitting that no books of account were maintained of Jalaram Trade Centre, being the concern of the assessee, but all the purchase bills were available and kept. However, in response to question no.8, the assessee submitted that: "I have prepared/kept purchase registers, sales registers, day book and cash book, ledger etc., of Jalaram Trade Centre in computer". In the final statement on 13-02-2009, the assessee again stated that the books of account were not 4 ITA No.1421/PUN/2013 Navin Ratilal Patel maintained on regular basis although purchase registers for earlier years and current year were maintained. It is a matter of record that the assessee is regular Income-tax return filer. Return for the A.Y. 2006-07 was filed by the assessee declaring total income of Rs.74,520/-. A copy of such return has been placed at page 780 of the paper book. This return was accompanied by Profit and loss account and Balance sheet of the assessee. From such Balance sheet, whose copy is available at page 781 of the paper book, it can be seen that the assessee had shown closing stock as on 31-03- 2006 at Rs.4,83,243/-. For the A.Y. 2007-08, the assessee filed a return declaring total income of Rs.98,229/-, a copy of which is available at page 783 of the paper book. This return was again accompanied by Profit and loss account and Balance sheet. The figure of stock as on 31-03-2007 was declared at Rs.8,86,085/-. For the immediately preceding assessment year, namely, 2008-09, the assessee filed his return accompanied by Balance sheet and Profit and loss account. From the Balance sheet, whose copy is available at page 15 of the paper book, it is discernible that the declared closing stock to the tune of Rs.12,79,733/-.
6. It can be seen from the statements of the assessee recorded during the course of survey that a total surrender for Rs.78.22 lakh 5 ITA No.1421/PUN/2013 Navin Ratilal Patel was made on 12/13-02-2009. However, it is pertinent to note that such surrender was immediately retracted by means of a letter written to the AO, whose copy has been also been placed on record. It can be seen from the assessment order that the AO treated the entire amount of stock available at the time of survey as unexplained on the premise that the assessee was not maintaining books of account. However, it has come up from question no. 8 of the assessee's initial statement that he was maintaining books of account on computer. In such circumstances, it cannot be said that the entire stock of the assessee was from undisclosed sources, more so, when the assessee was regular filing income-tax returns. In any case, the availability of stock as on 31-03-2008 at Rs.12,79,733/- cannot be disputed which was declared by the assessee in his Balance sheet and the same has not been doubted by the AO. Thus on one hand, there is a fact that the assessee filed returns for the earlier years showing the availability of stock coupled with statement of the assessee that he was maintaining accounts on computer, on the other hand, there is another version of the assessee as recorded in the statement that no accounts were maintained. In any case, it cannot be said that the entire inventory of the assessee was unexplained. Considering the conflict in the 6 ITA No.1421/PUN/2013 Navin Ratilal Patel statements and further the retraction of the assessee, he needs to be given credit for some amount of inventory. In the absence of any material to justify availability of explained stock at a particular figure at the time of survey and taking a holistic view of the matter, we are of the considered opinion that it would be just and fair to accept the availability of explained stock, at least, to the extent of the amount appearing in the last balance sheet, at Rs.12,79,733/-. We, therefore, restrict the addition to Rs.21,72,218/- (i.e.Rs.34,51,951 - Rs.12,79,733).
7. The second issue raised in this appeal is against the addition of Rs.1,20,197/- made on account of excess cash found in the premises of the assessee at the time of survey.
8. Here again, the assessee was found to be in possession of cash at the time of survey to the tune of Rs.1,20,197/-. Surrender was made for the entire cash. In view of the retraction made by the assessee, the said surrender was not honoured. However, the AO made addition for this sum which came to be affirmed in the first appeal.
9. Having heard both the sides and gone through the relevant material on record, here again, we find that the position is almost 7 ITA No.1421/PUN/2013 Navin Ratilal Patel similar to that of the first issue. The ld. AR claimed that the assessee produced books of account before the AO during the course of proceedings depicting availability of cash. However, such books of account, indicating availability of cash as on the date of survey at a particular level, were not produced before us. Though there is nothing to fully accept or fully reject the contention of the assessee, it cannot be presumed that the entire cash was unexplained, more particularly, when the assessee was regularly filing returns in the past. Going by our decision taken for ground no.1, we accept the availability of declared cash in the hands of the assessee at the time of survey at Rs.5,090.89, being the amount declared in his balance sheet as on 31-03-2008. The addition is, therefore, restricted to Rs.1,15,106/- (i.e. Rs.1,20,197 - Rs.5,091).
10. The next ground is against the confirmation of addition of Rs.41.00 lakh towards unaccounted investment in Building, Furniture and Land.
11. Facts apropos this issue are that during the course of survey, the assessee was asked as to who was the owner of the business premises Jalaram Trade Centre, residential house and construction 8 ITA No.1421/PUN/2013 Navin Ratilal Patel in front of the residential house. In his initial statement, the assessee submitted that the open plot was purchased in 1996 by his father Sh. Ratilal Patel out of sale proceeds received from sale of another ancestral house at Kacch, Gujarat. The assessee further submitted that the construction was done by his father in 1985 but for which evidence was not available. It was submitted that a sum of Rs.17.00 lakh was spent on the house out of which Rs.9.00 lakh was paid and the balance amount was still payable. However, in the second statement, the AO has recorded a version of the assessee that the entire construction cost was incurred by him and such amount stood at Rs.41.00 lakh, which was surrendered by the assessee. Since the assessee made retraction, no such income was offered for taxation. The AO, however, on the basis of surrender made during the course of survey, made such addition which came to be countenanced in the first appeal.
12. Having heard both the sides and gone through the relevant material on record, it is found as an admitted position that the assessee categorically stated in his initial statement recorded on 12-02-2009 that the house was in the name of his father and even went on explain the source of investment in the house by his father. It is a matter of record that the assessee's father filed his return for 9 ITA No.1421/PUN/2013 Navin Ratilal Patel the assessment year under consideration, whose copy is available in the paper book. This return was accompanied by the balance sheet in which the assessee's father declared investment in property at Rs.23,20,900/-. Copies of the Balance sheet of the assessee's father and return of income are available at pages 60 and 59 of the paper book. This return for the A.Y. 2009-10 was filed u/s.139(1) on 15-05-2009. In view of these facts, it is apparent that the property under challenge was in the name of assessee's father who declared it in his Income-tax return as well. If the amount of construction was more than that declared by his father, then it was for the Revenue to make an addition in the hands of the assessee's father. By no standard, any addition on account of property purchased and constructed by the assessee's father, can be made in the hands of the assessee. We, therefore, order to delete the addition of Rs.41.00 lakh.
13. The last ground is against the addition of Rs.1,50,000/- made towards low household withdrawals. This amount was though surrendered during the course of survey, but was not offered by the assessee in his return of income because of retraction. The AO, on the basis of such surrender, made addition, which came be to upheld in the first appeal.
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14. Having heard both the sides and gone through the relevant material on record, it is seen that the assessee made withdrawals for household expenses to the tune of Rs.40,000/-. Considering the totality of the facts of the instant case, we are of the considered opinion that such withdrawal of household expenses are on lower side. Amount of household expenses, in the peculiar facts of the instant case, is enhanced to Rs.1,00,000/- on estimate basis, thereby sustaining addition of Rs.60,000/-. As a result, the assessee gets relief of Rs.90,000/- on this score.
15. In the result, the appeal is partly allowed.
Order pronounced in the Open Court on 12th July, 2019.
Sd/- Sd/-
(PARTHA SARATHI CHAUDHURY) (R.S.SYAL)
JUDICIAL MEMBER VICE PRESIDENT
पुणे Pune; दनांक Dated : 12th July, 2019
सतीश
11
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Navin Ratilal Patel
आदेश क ितिलिप अ िे षत/Copy
षत of the Order is forwarded to:
1. अपीलाथ / The Appellant;
2. यथ / The Respondent;
3. The CIT(A)-Kolhapur
4. The CIT, Kolhapur
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, पुणे "सी" / DR 'C', ITAT, Pune;
6. गाड फाईल / Guard file.
आदेशानुसार/ ार BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune Date
1. Draft dictated on 11-07-2019 Sr.PS
2. Draft placed before author 12-07-2019 Sr.PS
3. Draft proposed & placed JM before the second member
4. Draft discussed/approved JM by Second Member.
5. Approved Draft comes to Sr.PS the Sr.PS/PS
6. Kept for pronouncement on Sr.PS
7. Date of uploading order Sr.PS
8. File sent to the Bench Clerk Sr.PS
9. Date on which file goes to the Head Clerk
10. Date on which file goes to the A.R.
11. Date of dispatch of Order.
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