Income Tax Appellate Tribunal - Jaipur
Ramavtar Sharma , Gangapur City vs Assessee on 23 August, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
BEFORE: SHRI R. P TOLANI, JM & SHRI VIKRAM SINGH YADAV, AM
ITA No.537 /JP/12
Assessment Year : 2004-05
Shri Ram Avtar Sharma S/o Shri Vs. The Income Tax Officer,
Radhey Shyam Sharma, Ward-2, Sawai Madhopur
Chamunda Mandir Ke pass,
Gangapur City
PAN No. CNWPS 5924 C
Appellant Respondent
Assessee by : Shri Siddarth Ranka (C.A.)
Revenue by : Shri G.R. Pareek (JCIT)
Date of Hearing : 27.05.2016
Date of Pronouncement : 23/08/2016.
ORDER
PER SHRI VIKRAM SINGH YADAV, A.M.
This appeal has been filed by the assessee against the order of CIT(A) Kota dated 26.03.2012 wherein the assessee has taken following grounds of appeal:
(1) That on the facts and in the circumstances of the case, the ld. Lower authorities grossly erred in coming to the conclusion that the assessee is the owner of the goods (gold ornaments and jewellery) seized by the Sales Tax Authorities and in making/sustaining an addition of Rs. 29,32,344/-.
1.1 That the assessee being not the owner of the said goods, he being only a carrier of goods, he having carried goods on behalf of many traders of Gangapur City, whose name he had stated on the spot in his statements before the Sales Tax Authorities, the ld. lower authorities grossly erred in still holding that the assessee is the owner of the said gold ornaments ITA No. 537/JP/12 Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur and jewellery and silver utensils and in making the impugned addition of Rs.29,32,344/- u/s 69A of the Income Tax Act, 1961.
1.2 That the assessee being a man of low means, having no taxable income in the past, nor during the year under appeal, earning small income on account of being carrier of goods, the ld. Lower authorities grossly erred in holding that the assessee is real owner and in not deleting the said addition.
1.3 That the ld. lower authorities grossly erred in assuming and presuming that the said goods were purchased by him and that he is liable to be assessed as the owner when he is a carrier of goods earning Commission and the ld. Assessing Officer has accepted the Income shown by way of Carrier.
1.4 That the ld. CIT(A) having been satisfied that out of the many parties, goods relating to 3 parties having been admitted by them, he having deleted the addition to the extent of Rs.4,82,756/- (admitted by 3 jewellers) the ld. CIT(A) gross erred in not deleting the balance of addition of Rs. 29,32,344/- when facts and circumstances for all the parties remain the same.
2. That on the facts and in the circumstances or the case, the ld. lower authorities grossly erred in holding that the assessee is explainable for the amount deposited as penalty before the Sales Tax Authorities amounting to Rs.10,37,257/-and in holding the same as income from undisclosed sources u/s 69C of the Income Tax Act.
2.1 That the traders whose goods the assessee was carrying from Delhi and whose names were conveyed to the sales Tax Authorities on the spot, they having provided the said amount of penalty for release of the goods from the Sales tax Authorities, the assessee having conveyed the Assessing Officer the said amount having been received from them, the impugned addition in the hands of the assesee is unjustified , bad in law and deserves to be deleted.
2.2 That the ld. assessing Officer made an addition of Rs.11,03,077/- while the ld. CIT(A) sustained to the extent of Rs. 10,37,257/- which is justified, bad in law and deserves to be deleted.
2 ITA No. 537/JP/12Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur 2.3 That when two persons having admitted of payment of penalty for the release of the said goods, the ld. CIT(A) having deleted amounts having been received from them at Rs. 65,820/-, the sustenance of balance admission is unjustified, bad in law and deserved to be deleted when facts and circumstances for all the parties remain the same.
3. That on the facts and in the circumstances of the case, the ld. lower authorities grossly erred in making separate additions, in not telescoping the same when different additions ought to have been set off/ telescoped.
2. Briefly the facts of the case are that the Assessing officer received certain information from the Commercial tax department in the case of the appellant and thereafter, the assessment was completed u/s 144 read with section 148 wherein addition of Rs.34,15,100/- was made u/s 69A of the Act and another addition of Rs. 11,03,077/- was made u/s 69C of the Act. The appellant carried the matter in appeal before the ld. CIT(A), Kota who had given partial relief to the assessee and for the remaining additions, the appellant is in appeal before us.
2.1 The ld AR submitted that the appellant was carrying on business as a Carrier of goods. This fact has not been disputed by the ld. AO while completing assessment for the year under appeal as he has assessed his income at Rs. 70,000/- from carrier work. The appellant did not have any other source of income during the year under appeal.
The ld AR further submitted that as per provisions of section 78(5) of the RST Act. 1994 , the Incharge of check post is empowered to impose the penalty on the owner of goods or a person authorise in writing by such owner or the person incharge of the goods where the requisite documents related to goods are not found available with the goods during their movement. Similarly sales tax is also leviable on the value of goods a per provision of section 78(11) on the transporter or a Carrier of goods by presuming that goods so transported have been sold in the state of Rajasthan by him and he is deemed to be a dealer for those goods under the said Act. Therefore, imposing of penalty as well as charging of Sales Tax in the value of goods founds in the possession of the appellant as a "Carrier of goods" does establish his ownership but as done as provided under the Sales tax law.
3 ITA No. 537/JP/12Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur The ld AR further submitted that the ld. AO was not proper and justified in making addition of Rs. 34,15,100/- in appellant's income u/s 69A of the IT Act, 1961 by treating the value of goods belonging to other persons as appellants goods which he was carrying as a Carrier. He has done this merely on the basis of order passed by the Ld. CTO, Flying Squad, Commercial Taxes Department, Bhiwadi(Alwar) vide order u/s 78(5) & 78(11) dated 09.05.2003 of the RST Act, 1994. He has not properly considered the following while making said addition:
(a) The appellant in his first statement recorded on 9/5/2003 by the Authorities of Commercial Taxes Department has explained that he was carrying the goods found in his possession during the course of their inspection as a Carrier which belong to 10 persons whose names addresses as well as description & quantity was also explained before him.
(b) The ld. AO after getting information about the action by the Commercial Taxes Department has during the enquiry proceedings/assessment proceedings recorded statement of the appellant on 15.11.2003, 13.1.2004 and 28.7.2009. The appellant has explained full particulars about the ownership of the goods found in his possession which belong to 10 persons.
(c) The ld.AO has also personally examined & recorded statement of 3 persons Shri Suresh Chand Soni, Shri Ram Vilas Soni and Shri Mithilesh Soni who have confirmed about the nature of their regular dealing with the appellant. Even two persons Shri Satish Chand Soni and Shri Ram Vilas Soni have also recorded transactions in their regular books of accounts. Copies of relevant pages of Cash Book & Ledger were also obtained by the ld. AO which were also made as part of his assessment order as Annex. G & H. Shri Ram Vilas Soni has also recorded the amount of penalty & Sales Tax & Carrier charges on the Gold Jewellery & Silver reimbursed to the appellant in his cash book dated 9.5.2003 as under:
Gold Jewellery Cost of goods 1,29,400 Penalty CTO 38,800 Sales Tax 2,592 Courier charges 250 Total Rs. 1,71,322 Silver Cost of goods 46,800 Sales tax 936 4 ITA No. 537/JP/12 Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur Courier charges 200 Sales Tax penalty 14,940 Total Rs. 62,876 The above facts proved beyond any doubt that the goods carried by the appellant was not owned by him.
The ld AR further submitted that the ld.AO has not established the appellant's ownership on the goods found in his possession at the time of their inspection by the authorities of Commercial Taxes Department before treating the value of goods Rs. 3415100/- as unexplained u/s 69A of the IT Act, 1961 for the purpose of making addition.
The ld AR further submitted that the authorities of Commercial taxes Dept. has seized the material found in the possession of the appellant & created demand of Rs.11,03,077/-. The appellant has collected the amount from the concerned owners of goods in proportion to the value of their goods & deposited the same with the Commercial Taxes Dept. After payment of demand said goods were released by the Commercial Taxes Deptt. which the appellant has handed over to them. Thus treating payment of Rs. 11,03,077/- by the appellant to the commercial taxes Dept. as unexplained expenses in the hands of the appellant u/s 69C of the IT Act, 1961 is also not proper & justified.
The ld AR has further relied on the following decisions:
• Mangilal Agarwal vs ACIT 163 Taxman 399 (Raj) • CIT vs. S. Pitchaimanickam Chettiar 15 Taxman 68 (Mad) 2.2 The findings of the ld. CIT(A) are as under:
"In case of movable assets (gold, silver, Currency etc.), possession is considered proof of ownership (unless otherwise is proved). The assessee in all the proceedings before sales tax authorities admitted that the jewellery belonged to them. The assessee in all the proceedings before I.T. authorities states that jewellery belonged to others. The assessee paid penalty of Rs.11,03,077/- levied by sales tax, to get the jewellery of Rs. 34 lacs released by Sales tax authorities, however, before Income Tax Authorities he stated that the same was paid by others. There was no proof to prove that the amount of penalty was paid by these persons. In all the documents before sales tax authorities assessee was treated as owner. He himself never denied ownership before Sales tax authorities. Assessee filed appeal, against order of penalty passed by 5 ITA No. 537/JP/12 Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur Sales tax authorities, as owner of jewellery and claimed that he was the owner of jewellery. Out of 10 persons , 2 persons namely Shri Satish Chand Soni and Shri Ramvilas Soni admitted to have purchased goods from assessee and have shown advance of money in their books of a/çs. Shri Satish Chand has shown advance of Rs.2,67,356/-, Shri Ramvilas soni has shown advance of Rs.1,76,400/-. Similarly Shri Mithilesh Kumar Soni also admitted transaction of 5 kg. Of silver and has shown advance of total Rs. 39,000/-. The assessee was found to blow hot and cold according to his own convenience.The assessee at one time stated that he admitted ownership as he was offered 50% of the refund out of penalty levied by Sales tax authorities (if any). It is therefore, held that asessee, except in the cases of three persons , failed to prove that the jewellery did not belong to him. Accordingly, except jewellery of Rs.4,82,756/- (admitted by 3 jewellers) the rest of the jewellery was held to be belonging to assessee & was undisclosed. Accordingly, addition of Rs. 29,32,344/- is confirmed. The Assessing Officer is directed to delete addition of Rs. 4,82,756/-.
2.3 The ld. DR relied on the order of the lower authorities.
2.4 We have heard the rival contentions and perused the material available on record. The reasons recorded u/s 148 of the Act by the AO states that the assessee is a carrier of goods for the traders in the gangapur city who used to bring their gold, silver and jewellery. Further, the Assessing officer states that the penalty on the goods which have been seized by the Commercial tax department has been paid by the said traders in proportionate to their respective goods so seized. Further the assessee in his statement before the Commercial Taxes Dept. as well as statements made before the AO prior to the issuance of notice u/s 148 and subsequently during the course of assessment proceedings as well as through furnishing of an affidavit has consistently stated that he is not the owner of the gold, Jewellery and other articles found in his possession. It is also noted that the AO while framing the assessment has acknowledged this fact that the assessee is maintaining consistent position stating that the gold, jewellery and other articles doesn't belong to him and belong to other 10 specified persons whose particulars have been disclosed in his earlier statement. At the same time, the AO did not agree with the said position of the assessee and has stated that contrary to the statements made by the assessee, the documentary evidence received from the Commercial Tax Department proves that the assessee was the owner of the gold and other items found in his possession by the Commercial Taxes Dept. 6 ITA No. 537/JP/12 Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur 2.5 In this regard, we have gone through the statement of the assessee dated 09.05.2003 made before the Commercial Taxes dept wherein the assessee has stated that he is a courier of the goods and also disclosed the name of the persons having jewellery shops in Gangapur for whom he was carrying the goods from Delhi to Gangapur City. The order has been passed by the Commercial Taxes department u/s 78(5) read with section 78(11) of the Rajasthan Sales tax Act, 1944. Here, it would be relevant to refer to section 78(2), 78(5) and section 78(11) of Rajasthan Sales tax Act, 1944 which reads as under:.
Section 78(2):The driver or the person in charge of a vehicle or carrier of goods in movement shall -
(a) carry with him a goods vehicle including "Challan" and "Bilities" bills of sale or dispatch memos and prescribed declaration forms;
(b) stop the vehicle or carrier at every check-post and while entering and leaving the limits of the State, bring and stop the vehicle at the nearest check-
post, set up under sub-section (1);
(c) produce all the documents including prescribed declaration forms relating to the goods before the Incharge of the check post;
(d) give all the information in his possession relating to the goods; and
(e) allow the inspection of the goods by the Incharges of the check-post or any other person authorized by such Incharge.
Section 78(5): The incharge of the check post or the officer empowered under sub-section (3), after having given the owner of the goods or a person authorised in writing by such owner or the person incharge of the goods a reasonable opportunity of being heard and after having held such enquiry as he may deem fit, shall impose on him for possession or movement of goods, whether seized or not, in violations of the provisions of clause (a) of sub section (2) or for submission of false or forged documents or declaration, a penalty equal to thirty percent of the value of such goods.
Section 78(11): If a transporter fails to give information as required from him under clause (d) of sub-section (2) about the consigner, consignee or the goods within such time as may be specified or transports the goods with forged documents, besides imposing the penalty under sub-section (5), it shall be 7 ITA No. 537/JP/12 Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur presumed that the goods so transported have been sold in the State of Rajasthan by him and he shall be deemed to be a dealer for those goods under this Act.
2.6 On review of the above provisions of Rajasthan Sales Tax Act, it is clear that the penalty can be levied either on the owner of the goods or the person authorised by the owner or the in-charge of the goods. In the instant case, taking into consideration the statement of the appellant dated 09.05.2003 made before the Commercial Taxes dept, penalty levied u/s 78(5) in terms of the order issued by the Commercial Taxes Dept. dated 09.05.2003 can only be said to be levied on the appellant as the in-charge/ carrier of the goods and not as the owner of the goods. The said order issued by the Commercial Taxes Dept. dated 09.05.2003 nowhere states that the ownership of the gold lies with the assessee. Further, subsequent filing of an appeal against the said order wherein the appellant is the signatory again doesn't prove the ownership of the appellant. Therefore, the contention of the Assessing officer that the documentary evidence received from the Commercial Tax Department proves that the assessee was the owner of the gold and other items found in his possession by the Commercial Taxes Dept. is contrary to the legal and factual position which cannot be accepted. Further, the AO has recorded the statement of the three persons who have admitted that gold belongs to them and inspite of that, he has gone ahead and made an addition in the hands of the asessee. The ld. CIT(A) has taken a note of the said admission and has given partial relief to the assessee. This also support the case of the assessee that gold found in his possession does not belong to him and it belong to other 10 persons. Although only 3 persons have admitted about their ownership of their share of gold, the fact that the other 7 persons have not come forward, that does not establish the ownership over gold belongs to the assessee.
2.7 Here, it would be relevant to refer to the decision of the Hon'ble Rajasthan High Court in the case of Mangilal Agarwal vs. ACIT 163 Taxman 399 that "no presumption of ownership can be raised statutorily in favour of the revenue and against the assessee, nor is there any warrant to invoke section 69A merely on the basis of assessee's possession. On his disclaimer that such articles found in his possession do not belong to him, the burden lies on the revenue to establish the ownership of the assessee before raising any presumption against him."
8 ITA No. 537/JP/12Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur 2.8 Similarly, in the case of CIT vs. S. Pitchaimanickam Chettiar 15 Taxman 68, Hon'ble Madras High Court has held that "Section 69A can apply only when the gold is owned by the assessee and he is not in a position to explain the source of acquisition of that gold. If the ownership is not established then the assessee is not bound to give an explanation as to the source of acquisition of the goods. Further, from mere possession of the gold, the ownership cannot be presumed in the person who possessed the gold at the particular point of view. Section 110 of the Evidence Act, which provides that a person is found in possession of anything, the burden of proof that he is not the owner is on the person who affirms that he is not the owner could not be invoked in the instant case as besides relying on the said section the revenue had not produced any other material to indicate that the gold belonged to the assessee. The assessment in this case, could not, therefore, be sustained on the basis of section 110 of the Evidence Act."
2.9 Further it is noted that the assessee's explanation regarding his commission income from carrier business has been accepted by the Revenue for the year under consideration. Further, nothing has been brought on record to suggest that the assessee is the owner of the gold and silver jewellery other than the documents received from the Commercial Sales tax department which we have already examined or the assessee has any other sources of income other than the income from carrier business. In light of above and respectfully following the High Court decisions referred supra, we delete the addition of Rs. 29,32,344 made u/s 69A of the IT Act. Further, the assessee's explanation regarding deposit of penalty amount on behalf of the jewellers is also found reasonable and we see no justification in the addition made by the AO u/s 69C of the Act which is hereby deleted. Ground no. 1 and 2 are therefore allowed.
3. In the light of ground No.1 & 2 decided in favour of the appellant, ground no.3 became academic and we see no necessity to examine it.
In the result the appeal filed by the assessee is allowed with above directions.
9 ITA No. 537/JP/12Shri Ram Avtar Sharma, Gangapurcity vs. ITO, Ward -2, Sawai Madhopur Order pronounced in the open court on 23/08/2016.
Sd/- Sd/-
(R.P Tolani) (VIKRAM SINGH YADAV)
Judicial Member Accountant Member
Jaipur
Dated:- 23/ 08/2016
Pillai
Copy of the order forwarded to:
1. The Appellant- Shri Ram Avtar Sharma, Gangapur City
2. Respondent- The ITO, Ward-2, Sawai Madhopur
3. The The CIT(A) -Kota
4. The CIT-Kota
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 537/JP/12) By order, Assistant. Registrar.
10