Shri Moh.Afzal Moh.Azam Ghdiyali, Surat v. The Income tax Officer,Ward-8(1),, Surat

ITA 2071/AHD/2007 | 2002-2003
Pronouncement Date: 21-05-2010 | Result: Dismissed

Appeal Details

RSA Number 207120514 RSA 2007
Bench Ahmedabad
Appeal Number ITA 2071/AHD/2007
Duration Of Justice 3 year(s) 6 day(s)
Appellant Shri Moh.Afzal Moh.Azam Ghdiyali, Surat
Respondent The Income tax Officer,Ward-8(1),, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 21-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 21-05-2010
Date Of Final Hearing 18-05-2010
Next Hearing Date 18-05-2010
Assessment Year 2002-2003
Appeal Filed On 15-05-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD AHMEDABAD A BENCH (BEFORE S/SHRI G.D. AGARWAL VICE-PRESIDENT AND MUKUL SHRAWAT JUDICIAL MEMBER) ITA.NO.2071/AHD/2007 ASSTT.YEAR : 2002-2003 SHRI MOH. AFZAL MOH. AZAM GHADIYALI PROP. OF M/S.H.MARIYAM TEXTILES 477 PANDOL IND. ESTATE-2 VED ROAD SURAT. VS. ITO WARD-8(1) SURAT. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI HARDIK VORA REVENUE BY : DR.JAYANT JHAVERI O R D E R PER G.D. AGARWAL VICE-PRESIDENT: THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-V SURAT DATED 22-2-2007 ARISING OUT OF THE ORDER OF THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961. 2. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER: 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AS WELL AS LAW ON THE SUBJECT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS.5 53 950/- FOR ALLEGED UND ISCLOSED INCOME U/S.69 OF THE ACT. 3. THE FACTS OF THE CASE ARE THAT THE CENTRAL EXCIS E DEPARTMENT CARRIED OUT SEARCH ON 21-10-2001 AT THE FACTORY PREMISES AT 474 /477 PANDOL INDS. ESTATE VED ROAD SURAT. AS A CONSEQUENCE THERETO THE STA TEMENT OF THE ASSESSEE WAS RECORDED BY THE CENTRAL EXCISE AUTHORITY ON 26-12-2 001. IN THE STATEMENT THE ASSESSEE HAD ADMITTED TO HAVE PURCHASED THE IMPORTE D FILAMENT YARN FOR RS.5 53 950/- FROM OPEN MARKET. HE ALSO ADMITTED T O HAVE MADE THE PAYMENT OF THE SAME IN CASH. SUCH TRANSACTION WAS NOT RECO RDED IN THE ASSESSEES BOOKS OF ACCOUNTS. DURING THE COURSE OF ASSESSMENT PROCE EDINGS THE ASSESSEE NEITHER PRODUCED BOOKS OF ACCOUNTS NOR ANY OTHER EVIDENCE T O EXPLAIN THE SOURCE OF PAYMENT FOR SUCH PURCHASES. THE ASSESSEE DID NOT P RODUCE THE BANK STATEMENT ITA.NO.2071/AHD/2007 -2- ALSO. IN VIEW OF THE ABOVE THE AO MADE THE ADDITI ON OF RS.5 53 950/- ON THE GROUND THAT THE ASSESSEE MADE THE PAYMENT FOR THE A BOVE PURCHASES IN CASH FROM UNDISCLOSED SOURCES. ON APPEAL THE CIT(A) CO NFIRMED THE ADDITION WITH THE FOLLOWING FINDING: 6. I HAVE PERUSED THE FACTS OF THE CASE AS DISCUSS ED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER AND ALSO CAREFULLY GONE THROUGH THE SUBMISSION AS MADE BY THE A.R. AFTER A NALYZING THE FACTS OF THE CASE AND THE RELEVANT DOCUMENTS SUCH A S BANK STATEMENTS ETC. IT IS NOTICED THAT HE HAD CLEARLY ADMITTED THAT THE GOODS WORTH RS.5 53 950/- WERE PURCHASED BY HIM (TH E APPELLANT) FROM THE FUNDS NOT DISCLOSED IN THE BOOKS OF ACCOUN TS AND THE SALE PROCEEDS WERE ALSO NOT REFLECTED THERE AND THIS CLE ARLY PROVES THAT THE INVESTMENT IN PURCHASE WAS TOTALLY UNEXPLA INED. I THEREFORE IN VIEW OF THE ABOVE REFERRED FACTS HOLD THAT THE ADDITION AS MADE BY THE ASSESSING OFFICER WAS JUSTI FIED IN THE EYES OF LAW AND HENCE THE SAME WAS RIGHTLY ADDED UN DER SEC.69 OF THE ACT. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. HENCE THIS APPEAL BY THE ASSESSEE. 4. AT THE TIME OF HEARING BEFORE US IT IS STATED B Y THE LEARNED COUNSEL THAT THE ISSUE UNDER APPEAL IS COVERED BY THE DECISION O F HONBLE JURISDICTIONAL HIGH COURT ALLAHABAD HIGH COURT AS WELL AS DECISIO N OF THE ITAT AHMEDABAD BENCHES IN THE FOLLOWING CASES: I) CIT VS. PRESIDENT INDUSTRIES 258 ITR 656 (GUJ); II) CIT VS. GURUBACHHANSINGH J. JUNEJA 302 ITR 63 (GUJ ); III) ASHOK KUMAR RASTOGI VS. CIT 100 CTR 204 (ALL) IV) NOVE DYE STUFF VS. ITO ITA NO.2900/A/2006 HE HAS STATED THAT THE AS PER THE ABOVE DECISIONS IN THE CASE OF UNACCOUNTED SALES OR PURCHASES THE ADDITION CAN BE MADE ONLY F OR THE NET PROFIT FOR SUCH SALES AND THE ENTIRE SALE AMOUNT CANNOT BE ADDED TO THE TOTAL INCOME OF THE ITA.NO.2071/AHD/2007 -3- ASSESSEE. HE SUBMITTED THAT THE AO ADDED THE ENTIR E SALE AMOUNT TO THE TOTAL INCOME OF THE ASSESSEE IN VIOLATION OF THE ABOVEMEN TIONED DECISIONS. HE FURTHER SUBMITTED THAT IN THE CASE OF UNACCOUNTED T RANSACTION THE ASSESSEE CANNOT PRODUCE ANY DOCUMENTARY EVIDENCE AND THEREF ORE HIS STATEMENT MADE BEFORE THE CUSTOM AUTHORITY SHOULD BE ACCEPTED IN T OTALITY. HE HAS SUBMITTED THAT BEFORE THE CUSTOM AUTHORITY THE ASSESSEE HAS STATED THAT THE GOODS WERE DIRECTLY SUPPLIED BY THE SELLER TO THE BUYER AND TH E ASSESSEE WAS ONLY ACTING AS A MIDDLEMAN. THE PAYMENT FOR PURCHASE OF GOODS BY TH E ASSESSEE WAS MADE ONLY AFTER COLLECTING THE MONEY FROM THE PERSONS TO WHOM THE ASSESSEE HAD SOLD THE GOODS. HE THEREFORE SUBMITTED THAT THE ADDITIO N MADE BY THE AO AND SUSTAINED BY THE CIT(A) SHOULD BE DELETED. 5. THE LEARNED DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE AUTHORITIES BELOW. HE HAS STATED THAT IN THIS CAS E THE CENTRAL EXCISE AUTHORITIES HAVE FOUND SUFFICIENT EVIDENCE TO ESTAB LISH THAT THE UNACCOUNTED GOODS WERE PURCHASED BY THE ASSESSEE. THE ASSESSEE IN THE STATEMENT BEFORE THE EXCISE AUTHORITY HAS ALSO ADMITTED THE SAME. THAT AS PER THE SECTION 69 THE ONUS IS UPON THE ASSESSEE TO EXPLAIN THE SOURCE OF THE INVESTMENT. IN THIS CASE THE ASSESSEE DID NOT PRODUCE ANY IOTA OF EVIDENCE T O EXPLAIN THE SOURCE OF ABOVE PURCHASE. HE THEREFORE SUBMITTED THAT THE ADDITION UNDER SECTION 69 WAS RIGHTLY SUSTAINED BY THE CIT(A). HE FURTHER SUBMIT TED THAT THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL ARE NOT APPLICABLE BECA USE THE AO HAS NEVER ADDED THE UNACCOUNTED SALES. HE HAS ONLY ADDED THE UNACC OUNTED INVESTMENT IN THE PURCHASES MADE BY THE ASSESSEE. IN FACT AS PER THE DECISIONS RELIED UPON BY THE LEARNED COUNSEL FURTHER ADDITION FOR THE GP ON THE SALE OF UNACCOUNTED PURCHASE SHOULD HAVE BEEN MADE WHICH WAS OMITTED BY THE AO. HE THEREFORE SUBMITTED THAT THE ORDER OF THE CIT(A) SHOULD BE SU STAINED. 6. WE HAVE CONSIDERED THE ARGUMENTS OF BOTH THE SID ES AND PERUSED THE MATERIAL PLACED BEFORE US. THE SECTION 69 READS AS UNDER: ITA.NO.2071/AHD/2007 -4- 69. UNEXPLAINED INVESTMENTS.--WHERE IN THE FINANCI AL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT IF ANY M AINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EX PLANATION ABOUT THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANA TION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SA TISFACTORY THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE INCOME OF T HE ASSESSEE OF SUCH FINANCIAL YEAR. 7. IN THE CASE UNDER APPEAL BEFORE US IT IS UNDISP UTED THAT THE ASSESSEE MADE THE PURCHASE OF IMPORTED POLYESTER FILAMENT YA RN FOR RS.5 53 950/-. IN THE STATEMENT THE ASSESSEE HAS ADMITTED THAT THE P AYMENT FOR THE SAME WAS MADE IN CASH. THE RELEVANT FINDING RECORDED BY THE AO IN THIS REGARDS READS AS UNDER: (J) AS PER THE STATEMENT GIVEN BY YOU ON 26-12-200 1 YOU HAVE CONFIRMED THAT YOU HAVE MADE PURCHASE OF IMPORTED P OLYESTER FILAMENT YARN FOR RS.5 53 950/- FROM OPEN MARKET. THE PAYME NT OF THE SAME WAS MADE IN CASH AS FURTHER STATED BY YOU. IT WAS ALSO CONFIRMED BY YOU THAT THE SAID TRANSACTION WAS NOT RECORDED IN THE B OOKS OF ACCOUNTS AND HENCE NO SHORTAGE OF STOCK WAS FOUND PHYSICALLY ON THE DATE OF SEARCH OF EXCISE DEPTT. THE ABOVE PURCHASE OF IMPORTED POLYE STER FILAMENT YARN WAS SOLD TO THREE PARTIES AND THEY HAVE ALSO CONFIR MED TO HAVE PURCHASED THE SAME FROM YOU. KINDLY EXPLAIN WHY AN AMOUNT OF RS.5 53 950/- PAID IN CASH FOR PURCHASE OF 6155 KG OF IMPORTED YARN MAY NOT BE ADDED TO YOUR TOTAL INCOME. THUS THE PURCHASE DURING THE FINANCIAL YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE PAYMENT THEREOF IN CASH PAID BY THE ASSESSEE WAS DULY ESTABLISHED. THEREAFTER AS PER THE PROVISION S OF SECTION 69 THE BURDEN WAS UPON THE ASSESSEE TO OFFER EXPLANATION ABOUT TH E NATURE AND SOURCE OF SUCH INVESTMENT. HOWEVER FROM THE PERUSAL OF THE ASSES SMENT ORDER WE FIND THAT NO EXPLANATION WAS GIVEN BEFORE THE AO. IN FACT T HE ASSESSEE DID NOT PRODUCE THE BOOKS OF ACCOUNTS OR OFFER RELEVANT DETAILS ON THE GROUND THAT SUCH BOOKS ITA.NO.2071/AHD/2007 -5- WERE LOST IN FLOOD. HE ALSO DID NOT PRODUCE THE BA NK STATEMENT OR EVEN THE NAME OF THE BANK AND THE BRANCH WHERE THE ASSESSEE HAD ACCOUNT. THOUGH AT THE TIME OF HEARING BEFORE US THE LEARNED COUNSEL FOR THE ASSESSEE TRIED TO EXPLAIN THAT THE PAYMENT FOR PURCHASE OF GOODS WAS MADE AFTER REALIZING THE MONEY FROM THE SALE OF GOODS. HOWEVER NO EVIDENCE IN SUPPORT OF THIS EXPLANATION IS GIVEN BY HIM EITHER BEFORE THE LOWER AUTHORITIES OR BEFORE US. THEREFORE SUCH EXPLANATION CANNOT BE ACCEPTED. IN OUR OPINION ON THE FACTS OF THE ASSESSEES CASE SECTION 69 WAS SQUARELY APPLIC ABLE AND THE ASSESSEE WAS UNABLE TO DISCHARGE THE ONUS OF EXPLAINING THE INVE STMENT IN UNACCOUNTED PURCHASES. 8. THE LEARNED COUNSEL OF THE ASSESSEE HAS RELIED U PON SEVERAL DECISIONS. HOWEVER WE FIND THAT THE FACTS IN ALL THE CASES RE LIED UPON BY THE LEARNED COUNSEL ARE ALTOGETHER DIFFERENT. IN THE CASE OF P RESIDENT INDUSTRIES (SUPRA) THE ADDITION WAS MADE BY THE AO FOR ENTIRE UNACCOUNTED SALES. THE ITAT HELD THAT THE ADDITION FOR ENTIRE UNACCOUNTED SALE COULD NOT BE MADE BUT THE ADDITION IS TO BE MADE ONLY TO THE EXTENT OF ESTIMATED PROFITS EMB EDDED IN SALES. ON THE ABOVE FACTS THE HONBLE HIGH COURT HELD THAT NO RE FERABLE QUESTION OF LAW AROSE FROM THE ORDER OF THE ITAT. MOREOVER IN THE ABOVE CASE THE TRIBUNAL HAS RECORDED THE FINDING THAT THERE IS NO MATERIAL ON THE RECORD TO SUGGEST THAT THE ASSESSEE MADE ANY INVESTMENT OUTSIDE THE BOOKS OF ACCOUNTS TO MAKE THE ALLEGED UNACCOUNTED SALES. HOWEVER IN THE CASE UN DER APPEAL BEFORE US THE ADDITION IS NOT MADE BY THE AO ON THE GROUND OF UNA CCOUNTED SALES BUT THE ADDITION IS MADE FOR THE INVESTMENT IN THE UNACCOUN TED PURCHASES. 9. THE FACTS IN THE CASE OF GURUBACHHANSINGH J. JUN EJA (SUPRA) RELIED UPON BY THE LEARNED COUNSEL WERE ALSO SIMILAR TO THE FAC TS IN THE CASE OF PRESIDENT INDUSTRIES (SUPRA). IN THIS CASE ALSO THE ADDITIO N WAS MADE FOR THE UNACCOUNTED SALES. THE ITAT HELD THAT ONLY GP OF THE SAID AMOU NT CAN BE BROUGHT TO TAX. AGAINST THE ABOVE ORDER THE HONBLE HIGH COURT UPH ELD THE ORDER OF THE ITAT BY HOLDING AS UNDER: ITA.NO.2071/AHD/2007 -6- 6. HENCE IN ABSENCE OF ANY MATERIAL ON RECORD TO SHOW THAT THERE WAS ANY UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE WHICH WAS REFLECTED BY THE ALLEGED UNACCOUNTED SALES THE FIN DING OF THE TRIBUNAL THAT ONLY THE GP ON THE SAID AMOUNT CAN BE BROUGHT TO TAX DOES NOT CALL FOR ANY INTERFERENCE. THE TRIBUNAL WAS THEREFORE JUSTIFIED IN DELETING THE ADDITION OF RS.10 85 003 MADE. 7. THE QUESTION REFERRED FOR THE OPINION IS THEREF ORE ANSWERED IN THE AFFIRMATIVE I.E. IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. FROM THE ABOVE IT IS EVIDENT THAT IN THE ABOVE CAS E THERE WAS NO MATERIAL ON RECORD TO SHOW THAT THERE WAS ANY UNEXPLAINED INVES TMENT. WHILE IN THE CASE UNDER APPEAL BEFORE US THERE WAS AN EVIDENCE OF UN ACCOUNTED PURCHASE AND THE ASSESSEE ADMITTED TO HAVE MADE THE PAYMENT IN CASH FOR SUCH UNACCOUNTED PURCHASES. THUS THERE WAS AN EVIDENCE OF UNACCOUN TED INVESTMENT IN THE PURCHASE OF SUCH GOODS. 10. IN THE CASE OF ASHOKUMAR RASTOGI (SUPRA) THE H ONBLE ALLAHABAD HIGH COURT DELETED THE ADDITION OF RS.50 000/- MADE BY T HE AO AND SUSTAINED BY THE ITAT ON THE GROUND THAT THE ADDITION FOR UNEXPLAINE D INVESTMENT HAS BEEN MADE PURELY ON THE BASIS OF THE GUESS WORK SURMISE S AND CONJECTURES. IN THE CASE UNDER APPEAL BEFORE US THE ADDITION IS MADE O N THE BASIS OF FACTS FOUND BY THE CUSTOM AUTHORITIES IN THE SEARCH CONDUCTED BY T HEM AND NOT ON THE BASIS OF PRESUMPTION SURMISES AND CONJECTURES. 11. THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO R ELIED UPON THE DECISION OF THE ITAT AHMEDABAD IN THE CASE OF NOVE DYE STUFF V S. IT ITA NO.2900/AHD/2006. COPY OF THE ORDER IS FURNISHED B EFORE US. HOWEVER WE FIND THAT THE ENTIRE ADDITION OF RS.20 67 951/- MAD E BY THE AO UNDER SECTION 69 OF THE ACT WAS DELETED BY THE ITAT BECAUSE IT AC CEPTED THAT THERE WAS NO UNACCOUNTED STOCK WITH THE ASSESSEE. THE ITAT ACCE PTED THE FACTUAL EXPLANATION WITH REGARD TO THE DISCREPANCY IN THE S TOCK. THE LEARNED COUNSEL COULD NOT EXPLAIN HOW THE ABOVE FACTUAL FINDING IN THE CASE OF NOVA DYE STUFF ITA.NO.2071/AHD/2007 -7- INDUSTRIES (SUPRA) WOULD BE APPLICABLE IN THE CASE OF ASSESSEE. IN THE CASE UNDER APPEAL BEFORE US THE ASSESSEE HIMSELF ADMITT ED IN THE STATEMENT THAT HE HAS PURCHASED THE GOODS FROM THE OPEN MARKET AND TH E PAYMENT FOR THE SAME WAS MADE IN CASH. THEREFORE ALL THE DECISIONS REL IED UPON BY THE LEARNED COUNSEL WOULD NOT BE APPLICABLE TO THE FACTS OF THE ASSESSEES CASE. IN OUR OPINION ON THE FACTS OF THE ASSESSEES CASE SECTI ON 69 OF THE ACT IS CLEARLY APPLICABLE AND THE CIT(A) HAS RIGHTLY SUSTAINED THE ADDITION. WE THEREFORE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE APPE AL FILED BY THE ASSESSEE. 12. IN THE RESULT THE ASSESSEES APPEAL IS DISMISS ED. ORDER PRONOUNCED IN OPEN COURT ON 21 ST MAY 2010. SD/- SD/- (MUKUL SHRAWAT) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 21-05-2010 VK* COPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR ITAT. BY ORDER AR ITAT AHMEDABAD