Income Tax Appellate Tribunal - Ahmedabad
Jayantilal R. Parekh, Surat vs Dcit,Circle 6, Surat on 11 November, 2016
आयकर अपीलीय अिधकरण,
अिधकरण अहमदाबाद यायपीठ 'सी' अहमदाबाद।
IN THE INCOME TAX APPELLATE TRIBUNAL
"C" BENCH, AHMEDABAD
BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND
SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER
आयकर अपील सं./ ITA No. 1456/Ahd/2013
िनधा रण वष / Assessment Year : 2009-10
Shri Jayantilal R. Parekh, DCIT,
2, Sadhna Tower, Patidar Gin, Vs Circle-6,
Compound Station Road, Surat
Bardoli - 394601,Dist. Surat
PAN : AAYPP 6687 Q
अपीलाथ /
अपीलाथ (Appellant) यथ
यथ /
थ (Respondent)
Assessee by : Shri Rasesh Shah, AR
Revenue by : Shri Prasoon Kabra, Sr DR
सुनवाई क तारीख/ Date of Hearing : 07/09/2016
घोषणा क तारीख / Date of Pronouncement: 11/11/2016
आदेश/O R D E R
PER R.P. TOLANI, JUDICIAL MEMBER:-
\ This appeal by the assessee is directed against the order of the Learned Commissioner of Income-Tax (Appeals)-I, Surat dated 12.03.2013 for Assessment Year 2009-10.
2. The solitary ground raised is as under:-
On the facts and in circumstances of the case as well as law on the subject, the ld.CIT(A) has erred in partly confirming the addition of Rs.62,25,061/- out of the total addition of Rs.70,87,000/- made by Assessing Officer on account of excess stock found during survey u/s 133A of the Act, 1961.
3. The brief facts are - the assessee is engaged in the business of sale of gold ornaments in a small town of Bardoli, in the name and style of "Akshar Jewellers." A survey u/s 133A of the Act was carried out at the assessee's business premises on 19.02.2009. During the course whereof, it was found that as per books the gold ornaments in the stock of the assessee were to the ITA No. 1456/Ahd/2013 Jayanti R. Parekh vs. DCIT AY : 2009-10 2 tune of 2948.360 gm whose value came to at Rs.26,76,235/- at the rate of 907.7 per gm; as against which, according to survey parties, the actual inventory stock came to 8198.1 gm, i.e. excess of 5240.64 gm was found. The excess of stock was worked out at Rs.70,87,000/- and excess cash of Rs.4,24,141/- was found and total addition of Rs.75,11,141/- was proposed. The assessee agreed for the disclosure of the said income. During the course of assessment proceedings, the AO found that the disclosed income was not offered in the return of income as admitted during the course of survey statements. A show cause notice was issued to the assessee in this behalf. The assessee's written submission is reproduced by the AO in his order, which mainly contends as under:-
i) The CBDT in its circular dated 10.03.2003 has clearly directed to the authorities that no attempt should be made to obtain the on-the-spot disclosure of income during the course of survey to avoid menace of obtaining force confessions. Reliance was placed on the decision in the case of DCIT vs. M/s. Premsons (ITAT, Mumbai), Vinod Solanki vs. UOI (SC), and Bhuvanendra, 303 ITR 235 (Mad).
ii) The assessee claimed that the survey party found physical stock of gold ornaments of 2948.360 gms only. Only some notings on the papers were found which were worked out to be weighing 8189.000 gms and the excess stock found is not as a result of actual inventory of physical stock but the paper calculation of the actual stock. Thus, the so called inventory is not on basis of working of physical stock, but some paper notings.
iii) Survey party had admitted that books of account were found in the premises in the state of readiness. Besides, at the year end, the assessee produced books of accounts duly audited and no fault has been found therein.ITA No. 1456/Ahd/2013
Jayanti R. Parekh vs. DCIT AY : 2009-10 3
iv) The disclosure statement was given by the assessee without consulting the records and based on paper working. Thereafter, the assessee reconciled the book stock position and found that there were no excess stocks and based on some writing in the regular course of business, they have been extrapolated into the stock of the assessee and under the unfavourable survey circumstances, the assessee was left with no choice but to admit the disclosure. Thus, the disclosure was in contravention of both the survey and without allowing the assessee to verify the correct position and then come up with a reply. Thus, the survey statement was not binding on the assessee. Except the survey statement, there is no physical inventory in possession of the Department describing the item and weight of the jewellery to come to the conclusion that the actual stock of jewellery of 8189.00 gms was found by the survey party. The survey statement, being not a binding statement, is not binding upon the assessee. Reliance is placed on the judgment of Hon'ble Supreme Court in the case of Pullngode Rubber Produce Co. Ltd vs. State of Kerala, [1973] 91 ITR 18, judgment of Hon'ble High Court of Rajasthan in the case of Polar Marmo Agglomerated Ltd vs. Union of India, [1994] 73 ELT 536 (Raj.) and the decision of Customs, Excise and Gold Tribunal in the case of Oriental Enterprises vs. Collector of Customs, [1986] 23 ELT 507 (Tri.).
v) Further reliance is placed on the Government Press Note dated 07.12.1999 [(2000) 158 CTR (St) 5], directing the officer not to indulge in coercion of the assessee to surrender income..
3.1 The AO, however, relying on the survey statement made the addition.
4. Aggrieved, the assessee preferred first appeal where the ld. CIT(A) confirmed the addition.
ITA No. 1456/Ahd/2013Jayanti R. Parekh vs. DCIT AY : 2009-10 4
5. Ld. Counsel for the assessee contends as under:-
(i) As per CBDT Circular dated 10.03.2003, Revenue Authorities are prohibited from obtaining on-the-spot declaration of income at the time of survey.
(ii) In such circumstance, the survey party should have forwarded the paper work prepared during the course of survey to the AO and recourse to a proposed assessment. Besides, the Government of India, vide its press note (supra) has prohibited the Officers not to coerce the assessee for disclosure and while doing action u/s 133A, no assessment or estimate can be made.
(iii) Survey statement is not taken on oath; therefore, it is not a binding piece of evidence.
(iv) Even it is assumed that the survey statement has any evidentiary value, the assessee has the right to ascertain proper facts and point out that the statement was given under misimpression and there is evidence to suggest that the new changed version of the assessee is correct. Reliance is placed on Hon'ble Supreme Court judgment in the case of Pullngode Rubber Produce Company Ltd (supra).
(v) Ld. AO, while making the assessment, has failed to controvert the assessee's claim that no physical stock/inventory was prepared, but the excess stock was worked out on the basis of some paper work in the name of physical inventory. In the absence of controverting this fact, the AO's sole reliance on unbinding survey statement is arbitrary and untenable.
6. The ld. DR, on the other hand, relied on the orders of the authorities below.
ITA No. 1456/Ahd/2013Jayanti R. Parekh vs. DCIT AY : 2009-10 5
7. We have heard the rival contentions, perused the material available on record and gone through the orders of the authorities below. A perusal of orders shows that there is no reference to any annexure or specific inventory of excess stock. The assessee during the course of proceedings took a plea that the alleged excess stock was not worked out on the basis of actual verification of jewellery, but on the basis of some paper work. The contentions of the assessee have not been controverted. In the absence of any material on record about the nature/working of the alleged stock inventory, it is not possible to verify whether the actual excess physical stock was found or the working is based on some paper work. We find merit in the contention of the ld. Counsel that the survey statement is not a binding piece of evidence and at the most it constitutes an information on which the assessee has right to respond and put forward its claim. This exercise seems to have been not properly undertaken. In view of these facts and circumstances, we are inclined to set aside the ground raised by the assessee to the file of the Assessing Officer to decide the same afresh after giving adequate opportunity of being heard to the assessee and verifying the actual stock of inventory and the facts as to whether the excess physical stock was actually counted and worked out on the basis of some calculation. The Assessing Officer is expected to pass a speaking order in accordance with law keeping in mind our observations.
8. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced in the Court on 11th November, 2016 at Ahmedabad.
Sd/- Sd/-
(PRADIP KUMAR KEDIA) (R.P. TOLANI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Ahmedabad; Dated 11/11/2016
*Biju T., Sr. PS
ITA No. 1456/Ahd/2013
Jayanti R. Parekh vs. DCIT
AY : 2009-10
6
आदेश क ितिलिप अ ेिषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant
2. यथ / The Respondent.
3. संबंिधत आयकर आयु / Concerned CIT
4. आयकर आयु (अपील) / The CIT(A)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड फाईल / Guard file.
आदेशानुसार/ BY ORDER, TRUE COPY उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad