Income Tax Appellate Tribunal - Indore
The Ito, 1(1), Bhopal vs M/S. Maheshwari Advertising, Bhopal on 14 March, 2017
ITO vs. M/s Maheshwari Advertising
ITA No. 218/Ind/2016
आयकर अपील य अ धकरण, इ दौर यायपीठ, इ दौर
IN THE INCOME TAX APPELLATE TRIBUNAL,
INDORE BENCH, INDORE
BEFORE SHRI C.M. GARG, JUDICIAL MEMBER
AND SHRI O.P. MEENA, ACCOUNTANT MEMBER
आ.अ.सं./I.T.A. No. 218/Ind/2016
नधा रण वष /Assessment Year: 2010-11
Income Tax Officer 1(1)
Bhopal :: अपीलाथ /Appellant
Vs
M/s Maheshwari Advertising
Bhopal
PAN - AAHFM - 9895J :: यथ /Respondent
राज!व क" ओर से/Revenue by Shri Mohd. Javed - DR
नधा %रती क" ओर से/Assessee by Shri S.S. Deshpande
सन
ु वाई क" तार ख 22.2.2017
Date of hearing
उ+घोषणा क" तार ख 14.3.2017
Date of pronouncement
आदे श /O R D E R
PER SHRI C.M. GARG, JM
This appeal has been filed by the Revenue against the order of the learned CIT(A)-31, New Delhi, having concurrent jurisdiction over the CIT(A)-1, Bhopal, dated 23.12.2015 in First Appeal No. 31/13-14 for the assessment year 2010-11.
1 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016
2. The sole effective ground raised by the Revenue-appellant reads as follows :-
"On the facts and in the circumstances of the case, ld. CIT(A)-31, New Delhi, Camp at Bhopal has erred in -
"Deleting the addition of Rs.45,18,389/- made by A.O. on account of unaccounted sale/receipts which was voluntarily surrendered by the assessee during the course of survey conducted on 24.02.2010"
3. The facts, in nutshell, are that the assessee firm is engaged in the business of Advertising agency. The filed the e-return of income on 29.9.2010 showing total income of Rs. 1,11,60,220/-. Notice u/s 143(2) of the Act was issued on 7.9.2011 which was duly served upon the assessee. The Assessing Officer observed that a survey u/s 133 of the Act was conducted on 24.2.2010 at the business premises of the assessee firm. During the course of survey proceedings, the assessee firm surrendered the following sums as its undisclosed income :-
(i) Excess cash found Rs.39,22,821/-
(ii) Unaccounted sale/receipts as per LPS-2 Rs.45,18,389/-
Total - Rs.84,41,210/-
However, vide its reply dated 8.1.2013, the assessee firm retracted from the "surrender of unaccounted sale/receipts" amounting to 2 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 Rs.45,18,389/- on the ground that after the conclusion of survey, sale bills in respect of "estimated work orders" found during the course of survey proceedings, were issue and accounted for in the books of accounts of the assessee firm. The Assessing Officer, on consideration of the reply of the assessee, observed as under :--
(i) During the course of survey proceedings, statement of Shri Sunil Maheshwari, partner of the assessee firm, was recorded on oath on 24.2.2010. In the above statement, Shri Maheshwari has accepted the fact that the work orders found during the course of survey were not entered in the account books of the firm. Further, Shri Maheshwari has unconditionally accepted the amount involved in the above work orders at Rs.45,18,389/- as the undisclosed income of the firm.
(ii) All sale bills pertaining to seized work orders were prepared on 25.2.2010 i.e. immediately after the conclusion of the survey. No plausible reason for the same was furnished by the assessee.
3
ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016
(iii) As claimed by the assessee, it is maintaining regular books of accounts on mercantile system of accounting. Further, it is seen that seized work orders relate to period much older than the date of survey. Non-inclusion/delayed inclusion of the huge sales/receipts in account books for a long period makes it clear that the preparation of sale bills/their accounting in the books of accounts immediately after the concluion of survey is only an afterthought. Had the survey been not conducted in the business premises of the assessee firm, the huge sale/receipts of Rs.45,18,389/- might never have been accounted for.
(iv) During the course of survey, excess cash amounting to Rs.39,22,821/- was found which was unconditionally accepted and offered for taxation. Finding of such huge excess/unaccounted cash indicates that the assessee firm is indulged in the practice of not accounting all its sales/receipts in its books of accounts. Thus, it is apparent that the assessee firm has unaccounted sales/receipts. 4 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016
(v) It is also seen that the assessee has not furnished the profit and loss account for the period before the date of survey and after the date of survey. Further, no reconciliation of the sale/receipts incorporating the work orders found during the course of survey proceedings was furnished.
(vi) The assessee has also not furnished the hoarding-wise receipts and the period displayed thereof".
On the basis of the above observation, the Assessing Officer added the amount of Rs. 45,18,389/- to the total income of the assessee by treating the same as undisclosed income of the assessee.
4. Against the above action of the Assessing Officer, the assessee preferred first appeal before the learned CIT(A). On consideration of the facts of the case in the light of the submissions of the learned counsel for the assessee, the learned CIT(A) deleted the addition made by the Assessing Officer by observing as under :-
"4.3 I have considered the findings recorded by the ld. A.O. as per the assessment order, the submissions made by the ld. AR and the facts of the case on record. It is seen that in this case a survey under section 133A was conducted whereby 5 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 unaccounted sale/receipts of the order of Rs.45,18,389/- were detected and income to that extent was surrendered by the appellant. As per the assessment order the ld. Assessing Officer made an addition of the same amount stating that the assessee has retracted the said surrender. The AR before me has submitted that all the sales bill were prepared on 25.02.2010 immediately after the date of survey to avoid any future confusion to ensure that such papers have been included in the income. This also categorically establishes that the receipts comprised in the seized papers have been duly considered as income by the assessee. Thus, no adverse inference could have been drawn from such fact. The appellant has also submitted various documents in the form of ledger account, copies of bills and vouchers etc. in support of the claim that the receipts to the extent of Rs.45,18,389/- were actually included in the total turnover which was offered to tax. In view of the above, the action of the ld. A.O. in making the addition on the ground of retraction by the assessee is clearly on the wrong footing and amounts to double taxation. Such action cannot be 6 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 upheld. I, therefore, direct the ld. A.O. to delete the addition made. Accordingly, the ground no. 2 is allowed to the appellant."
5. Against the deletion of addition by the learned CIT(A), the Revenue is in appeal before the Tribunal.
6. We have heard arguments of both the sides and carefully perused the relevant material placed on record of the Tribunal, inter-alia, impugned assessment order and the first appellate order.
7. The learned DR supporting the action of the Assessing Officer submitted that the surrendered amount of Rs.45,18,389/- on account of unaccounted sales/receipts was correctly treated as undisclosed income of the assessee and the same was correctly added to the total income of the assessee. The learned DR submitted that during the course of survey proceedings, statement of Shri Sunil Maheshwari, a partner of the firm, was recorded on 24.2.2010 wherein he has accepted the fact that the work orders found during the course of survey were not entered in the books of accounts of the firm and he unconditionally accepted the amount 7 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 involved in the above works order as undisclosed income of the assessee.
8. The learned DR challenging the first appellate order pointed out that the learned CIT(A) in para 4.3 went wrong in appreciating the facts of the case to hold that the action of the Assessing Officer in making the addition was on the wrong footing and amounts to double taxation. The learned DR also pointed out that the learned CIT(A) was not correct in deleting the addition made by the Assessing Officer on the basis of voluntary surrender made by the assessee during the course of survey. Therefore, the impugned order may be set aside by restoring that of the Assessing Officer.
9. Replying to the above, the learned counsel for the assessee submitted that the partner of the assessee firm prepared bills on 25.2.2010 immediately after the date of survey to avoid any confusion to ensure that such amounts/receipts should be included in the trading receipts of the assessee. The learned counsel for the assessee vehemtnly pointed out that these receipts have been duly considered as income of the assessee in the final books of accounts which were submitted along with the return 8 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 before the Assessing Officer. The learned counsel for the assessee strenuously contended that the assessee submitted various documents in the form of ledger account, copies of sales bills and vouchers, etc. in support of the fact that the receipts to the extent of Rs. 45,18,389/- were actually included in the total turnover shown by the assessee in the trading results of the assessee which were also offered to tax. Therefore, if any further addition is made, it would amount to double taxation and the learned CIT(A) after correctly appreciating the facts and circumstances of the case, has granted relief to the assessee which cannot be dismissed.
10. On careful consideration of the above submissions, first of all we observe that the learned CIT(A) has deleted the addition with confusion recorded in para 4.3 of the first appellate order which has been reproduced hereinabove in para 4 of his order.
11. Undisputedly, survey u/s 133A of the Act was conducted on 24.2.2010 wherein unaccounted sale receipts or bills of Rs.45,18,389/- were detected and this amount was surrendered by Shri Sunil Maheshwari, partner of the assessee firm. 9 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016
11. The Assessing Officer made the addition of the same amount on the allegation that the assessee has retracted from the surrender made during the course of survey proceedings. This fact has not been controverted by the learned DR that the assessee submitted all the sale bills which were prepared on very next date of survey i.e. 25.2.2010 to ensure that the impugned amount should be included in the trading results/income of the assessee. When the impugned amount which was picked up by the Assessing Officer for making the addition, has been shown as receipt in the accounts of the assessee and such receipts of Rs.45,18,389/- were actually included in the total turnover shown by the assessee in the books of accounts and the same were also offered to tax then in our opinion the Assessing Officer was not justified in making the addition of the same amount on the ground of retraction by the assessee. On the basis of the above noted factual matrix, we are inclined to hold that the Assessing Officer has prompted to make double addition by ignoring the fact that the amounts surrendered during the course of survey have been included by the assessee in the books of accounts and financial results of the assessee which obviously amounts to 10 ITO vs. M/s Maheshwari Advertising ITA No. 218/Ind/2016 double addition which is not permitted as per the provisions of the Act. In this situation, the learned CIT(A) was quite correct in deleting the impugned baseless addition and we are not able to see any valid reason to interfere with the order of the learned CIT(A) in this regard and, hence, we uphold the same. Accordingly, the sole ground of the revenue is dismissed.
12. In the result, the appeal of the revenue is dismissed.
The order has been pronounced in open Court on 14th March, 2017.
Sd/- sd/-
लेखा सद!य या यक सद!य
(O.P.Meena) (C.M. Garg)
Accountant Member Judicial Member
March 14th, 2017.
Dn/
11