Income Tax Appellate Tribunal - Jaipur
Sunil Kumar Gupta, Jaipur vs Acit, Jaipur on 29 December, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM
vk;dj vihy la-@ITA No. 763/JP/2013
fu/kZkj.k o"kZ@Assessment Year : 2008-09.
Shri Sunil Kumar Gupta,
Prop. M/s. Sunny Electronics,
15, Bichun Bagh, S.C. Road,
Jaipur.
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Vs.
The Asstt. Commissioner of Income Tax, Circle-3,
Jaipur.
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vihykFkhZ@Appellant
izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee by : Shri Manish Agarwal (CA)
jktLo dh vksj ls@ Revenue by : Shri D.S. Kothari (CIT)
lquokbZ dh rkjh[k@ Date of Hearing : 20.12.2016.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 29/12/2016.
vkns'k@ ORDER
PER SHRI KUL BHARAT, JM.
This appeal by the assessee is filed against the order of ld. CIT (A)-I, Jaipur dated 19.07.2013 pertaining to assessment year 2008-09. The assessee has raised the following grounds of appeal :-
On the facts and in the circumstances of the case the ld. CIT (A) has grossly erred in upholding the addition of Rs. 6,77,941/- on account of excess cash found during the course of survey arbitrarily.
That the ld. CIT (A) has further erred in ignoring the vital evidences submitted during the course of assessment proceedings before the ld. AO wherein cash as per books of accounts and as found during the course of survey was in parity. Thus no addition would be made on account of excess cash and accordingly the addition of Rs. 6,77,941/- as uphold deserves to be deleted.
That the ld. CIT (A) has further erred in ignoring the statements recorded during the course of survey wherein the assessee has categorically stated that the books of accounts as on date of survey were not complete and various entries were to be made to arrive at the figure of cash in hand. Hence the addition of Rs. 6,77,941/- deserves to be deleted.
On the facts and in the circumstances of the case the ld. CIT (A) has further erred in not considering the observation of the AO at para 3 of page 1 in which AO has accepted cash sale on account of shortage of stock amounting to Rs. 6,78,231/-. Therefore the addition of Rs. 6,77,941/- deserves to be deleted.
That the ld. CIT (A) has further erred in solely relying upon the sworn-in statements recorded during the course of survey, by grossly ignoring the decision of Hon'ble Supreme Court in S. Khader Khan reported in 351 ITR 480.
On the facts and in the circumstances of the case the Ld. CIT(A) has grossly erred in upholding an amount of Rs.21,570/- on account of profit element included in the stock les found during the course of survey when in fact the stock as computed during the assessment proceedings is not correct and suffers from various defect. Therefore in the circumstances the addition of Rs.21,570/- deserves to be deleted.
That the Ld. CIT (A) has further erred in upholding Rs.21,570/- on account of out of books sale when the assessee has voluntarily entered cash sale in his books while completing the books as per sale bills. Hence the addition of Rs.21,570/- deserved to be deleted.
That the appellant craves the right to add, delete, amend or abandon any of the grounds of appeal either before or at the time of hearing of appeal.
2. Briefly stated the facts are that a survey action under section 133A of the Income Tax Act, 1961 (hereinafter referred to as the Act) was carried out at the business premises of the assessee on 08.02.2008. During the course of survey, statement of the assessee was recorded and in answer to question no. 23, the assessee stated that he earned income from sale purchase of land at Rs. 13,55,000/-. In response to question no. 19, the assessee stated that the amount of Rs. 6,77,941/- is the income from his business which has not been entered in the books of account. Therefore, he surrendered the cash found at Rs. 6,77,941/- as undisclosed income during the financial year 2007-08. Subsequently, the assessee filed return declaring total income of Rs. 16,82,700/-. However, the assessee has not included a sum of Rs. 6,77,941/- in the income tax return filed. The case was picked up for scrutiny assessment and during the course of assessment proceedings the AO observed that a copy of cash book furnished during the course of assessment proceedings wherein as on 08.02.2008 closing balance has been shown at Rs. 7,05,839/- is an afterthought and an act of retraction from the disclosure made during the course of survey in the statement recorded on oath. Therefore, the AO treated the excess cash found at Rs. 6,77,941/- and added to the declared income of the assessee. Apart from this, the AO also made addition of Rs. 21,570/- finding that there was a difference in stock found at Rs. 6,78,231/-. Therefore, applying the GP rate at 3.18% made addition of Rs. 21,570/-. The assessee aggrieved by this, carried the matter before ld. CIT (A), who after considering the submissions dismissed the appeal.
3. Now the assessee is in appeal before this Tribunal.
4. Ground nos. 1 to 1.4 relate to the addition of Rs. 6,77,941/-. The ld. Counsel for the assessee reiterated the submissions as made in the written brief. He submitted that during the course of survey carried out at the business premises of the asessee, total cash was physically found at Rs. 7,00,670/-. The ld. Counsel submitted that the assessee was asked to verify the same from the books of account. However, since the books of accounts were incomplete and the assessee was not in a position to work out the actual cash as per books of accounts, tentative cash balance was calculated and in the statements recorded on oath, he surrendered the difference in the cash physically found as reduced by the cash as per books amounting to Rs. 6,77,941/-. The ld. Counsel submitted that during the course of survey, statement recorded by the Revenue in answer to question no. 15 it was stated that as stated earlier the entry in the cash book after 23rd January, 2008 has not been made but the assessee can compute as on 08.02.2008. He submitted that from the statement it can be inferred that the books were not complete when the statement was obtained by the revenue. He submitted, under these facts, the AO as well as the ld. CIT (A) were not justified in not accepting the explanation of the assessee and making addition solely on the basis of the statement recorded during the course of survey. He submitted that it is an well settled position of law that statement recorded u/s 133A i.e. during the course of survey cannot be treated as conclusive proof with regard to the transaction. It is only when the books of accounts are complete, then only it can be decided whether the statement is supported by any evidence. Reliance is placed on the decision of the Coordinate Bench in the case of M/s. Unique Art Age vs. ACIT in ITA Nos. 271/JP/2013 and 458/JP/2013. Reliance is also placed on the judgment of Hon'ble Kerala High Court rendered in the case of Paul Mathews & Sons v. CIT, 263 ITR 101 (Ker.) and also the judgment of Hon'ble Supreme Court rendered in the case of CIT vs. S. Khader Khan, 254 CTR 229 (SC). He further submitted that during the course of survey total cash physically found at Rs. 7,00,670/-. He submitted that it is not in dispute that during the course of survey the assessee had stated that the transactions relating to sale and purchases have been entered in the books of accounts till 23.01.2008. However, the expenditure relating to shop are entered upto December, 2007. He submitted that after the survey the assessee got the books of accounts completed by incorporating all the pending entries and the cash balance as on date of survey as per completed books of account was Rs. 7,05,839/-, daily cash summary was submitted in support of claim. He submitted that the AO failed to point out any defect in the cash book produced and also failed to bring on record any contrary evidence/material on record, rather he accepted the trading results based on such books of accounts. He submitted that it is settled law that where the books of accounts are not completed at the time of survey, the assessee should be allowed to complete the same and adverse inference, if any, is to be drawn on the basis of completed books of accounts only. He submitted that in the present case, during the course of proceedings, it was stated that cash so found is in relation to shortage of stock due to cash sale, which was yet to be entered in the regular books of accounts. However, the ld. CIT (A) did not consider the same and considered it as change of argument and treated it as claim of telescoping. He submitted that the assessee got the books of accounts completed by incorporating all the pending entries and the cash balance as on the date of survey as per completed books is in parity with the cash physically found during the survey. He submitted that the ld. CIT (A) failed to appreciate the facts that the AO himself has accepted cash sale on account of shortage of stock amounting to Rs. 6,78,231/-.
4.1. On the contrary, the ld. D/R supported the orders of the authorities below and submitted that the assesee himself declared the excess cash found during the course of survey as undisclosed income. Therefore, he cannot take a U-turn as there is nothing on record suggesting that the statement was made under duress or coercion.
4.2. We have heard rival contentions, perused the material available on record and gone through the orders of the authorities below. The undisputed fact remain that during the course of survey the cash physically found was of Rs. 7,00,670/- whereas as per cash book, the cash balance was Rs. 22,729/-. Therefore, an excess cash of Rs. 6,77,941/- was found. During the course of survey it was also found that stock as per books of account on the date of survey was Rs. 31,24,306/-. However, during physical verification by the Survey Team, the lists of inventories were not complete. It was noticed by the AO that stock amounting to Rs. 6,78,231/- was found to be short as on the date of survey after completion of inventories it comes to Rs. 24,46,075/-. Therefore, the AO treated that the stock has been sold out of books of account. The explanation of the assessee before the ld. CIT (A) was that this short stock was sold in cash and the excess cash found during the course of survey was the amount of the stock sold which was not entered in the books as the assessee himself has stated that the books are incomplete and are to be completed. We find merit into the contention of the assessee as the basis for making addition on account of the difference in stock found by the AO was sold in cash. In our considered view when there is a shortage of stock as per the physical verification and the stock entered into the books of account, there is a possibility that such stock was sold which the authorities below have not doubted. However, the authorities below did not accept the explanation that excess cash found during survey represented the cash sales which were not entered into the books of account. There is no material available on record for taking a contrary view. Therefore, the AO as well as the ld. CIT (A) have erred in making the addition and confirming the same under the facts and circumstances of the present case. The AO is hereby directed to delete the addition made on account of excess cash found during the course of survey and the gross profit adopted on the difference in stock. The grounds raised in the appeal are allowed.
5. In the result, appeal of the assessee is allowed.
Order pronounced in the open court on 29/12/2016.
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( BHAGCHAND) ( KUL BHARAT )
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Jaipur
Dated:- 29/12/2016.
Das/
vkns'k dh izfrfyfi vxzsf"kr@Copy of the order forwarded to:
1. The Appellant- Shri Sunil Kumar Gupta, Jaipur.
2. The Respondent- The ACIT Circle-3, Jaipur.
3. The CIT(A).
4. The CIT,
5. The DR, ITAT, Jaipur
6. Guard File (ITA No. 763/JP/2013)
vkns'kkuqlkj@ By order,
lgk;d iathdkj@ Assistant. Registrar
8
ITA No. 763/JP/2013
Shri Sunil Kumar Gupta