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Income Tax Appellate Tribunal, JODHPUR BENCH, JODHPUR
Before: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
IN THE INCOME TAX APPELLATE TRIBUNAL, JODHPUR BENCH, JODHPUR BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SINGH YADAV, AM
ITA. No. 30/JODH/2021 Assessment Year: 2016-17
Shri Pawan Kumar Jain Vs. The Pr. CIT-1, Navkar Trader, Sangaria, Jodhpur. Hanumangarh. PAN/GIR No.: ABKPJ1006E Appellant Respondent Assessee by : Shri Rajendra Jain (C.A.), Smt Raksha Birla (C.A.) & Shri Mohit Soni (Adv.) Revenue by : Smt. Sanchita Kumar (CIT) a Date of Hearing : 11/08/2021 Date of Pronouncement : 07/09/2021 vkns'k@ ORDER
PER: VIKRAM SINGH YADAV, A.M.
This is appeal filed by the assessee against the order of Ld. Pr.CIT-1, Jodhpur passed U/s 263 dated 23.03.2021 pertaining to assessment year 2016-17.
Briefly the facts of the case are that the assessee has filed his return of income for the year under consideration declaring total income of Rs. 48,99,245/-and the assessment was completed u/s 143(3) at total income of Rs. 50,05,320/-. Subsequent, a show-cause was issued by the ld PCIT u/s 263 and the impugned order was passed holding the
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assessment order as erroneous in so far as prejudicial to the interest of Revenue and setting aside the same to consider the issues raised in the impugned order afresh after making proper enquiries and verification. Against the said order and findings of the ld PCIT, the assessee is in appeal before us.
The ld. AR submitted that during the year under consideration, survey proceedings were carried out on 30.11.2015, and during the course of the survey proceedings on the basis of certain documents and details found, it was observed that there is income of Rs. 43,00,935/- which had not been reflected and the same was accepted to be included in assessee’s income. The assessee while filing the return of income duly included the said amount of Rs. 43,00,935/- in the return and paid due taxes thereon. During the course of assessment proceedings, the ld. AO has examined the issue on various aspects including the legal position as well as the factual position of the case and after complete verification of the fact the assessment order was made.
It was submitted that in the notice u/s 263, the ld PCIT observed that proper inquiries and verification were not made on following two issues:
a) That during survey income surrendered for advances given was Rs. 43,00,935/- which included advances given out of books to two persons. It is observed that advances to two persons during three financial years was Rs. 21,63,310/- and Rs. 16,26,405/- against which surrender was made at Rs. 8,00,000/- and Rs. 9,00,000/-respectively.
3 ITA No. 30/JODH/2021 Shri Pawan Kumar Jain vs. Pr. CIT b) The second issue pointed out is that an agreement for purpose of property for Rs. 60,00,000/- was found against which Rs. 36,00,000/- was paid on 27.11.2015 and balance was to be paid on 30.4.2016 which was not verified.
It was submitted that even during the course of survey, detailed examination of these documents was made which was also verified at the time of assessment proceedings, and income taken was more than the income which was determined on the basis of these documents. Further there was no income embedded in these documents but since the income was accepted during the course of survey proceedings, the said income was duly included and tax was paid by the assessee.
The ld AR referred to the statements of the assessee recorded on 1.12.2015 during survey proceedings and in reply to question No. 4, it was stated as under:-
iz'u& losZ dk;Zokgh ds nkSjku tCr nlrkostksa ds vuqyaxud ch&3 tks fd ,d ikWdsV Mk;jh gS] ftlesa izFke fyf[kr ist ij Jh gsejkt T;k.kh iq= Jh tuuwjke] xkao c’khj vafdr gS rFkk vUnj ds i`"Bksa ij :i;ksa ds ysu nsu laca/kh dqN fglkc fy[kk gS rFkk ftles ckjs esa vkils losZ dk;Zokgh ds nkSjku ntZ c;kuksa esa iz’u la-39 esa iwNk x;k Fkk rFkk rc vkius mRrj esa ;g lR;kfir fd;k Fkk fd mDr O;fDr ds lkFk gq, ysu nsu vkidh cfg;ksa esa ntZ ugh gS rFkk ;g Mk;jh vkids }kjk rS;kj dh xbZ rFkk vkids O;olk; ls gh lacaf/kr gSA d`i;k bl Mk;jh esa ntZ izfof"V;ksa ds ckjs esa Li"Vhdj.k nsosaA mRrj& eSa iqu% Lohdkj djrk gwWa fd mDr Mk;jh esa vafdr izfof"V;ka gekjs }kjk Jh gsejkt T;k.kh dks for o"kZ 2013&14] 2014&15 o 2015&16 esa fn;s x;s _.k ls lacaf/kr gS rFkk gekjh QeZ eS- uodkj VªsMlZ dh ys[kk iqLrdksa
4 ITA No. 30/JODH/2021 Shri Pawan Kumar Jain vs. Pr. CIT esa ntZ ugh gSA ;s izfof"V for o"kZ 2013&14 ls lacaf/kr :i;s 05]04]720@& gS o for o"kZ 2014&15 ls lacaf/kr izfof"V;kWa dk ;ksx 10]38]165@& :i;s o pkyw for o"kZ esa 6]20]425@& :i;s curk gSA ijUrq pwafd leLr izfof"V;kWa dks tksM+k tkuk U;k;ksfpr ugh gS D;ksafd mUgh iSls dk jksVs’ku gks jgk gS fQj Hkh eSa viuh xyrh Lohdkj djrs gq, rFkk viuh ekufld 'kkfUr gsrq rhuksa o"kksZa dk vkSlr ¼x.kuk dh ljyrk gsrq½ :i;s 7]21]103@& curk gS rFkk mDr ij C;kt dh vkSlr x.kuk ds e/;utj bl folaxfr dh ,ot esa ,d eq’r :i;s 8]00]000@& dh jkf’k fu/kkZj.k o"kZ 2016&17 ds fy, viuh fu;fer vk; ds vfrfjDr djkjksi.k gsrq lefiZr dj jgk gwWaA iz’u losZ dk;Zokgh ds nkSjku tCr nLrkostksa ds vuqyXud ch&4 tks fd ,d ikWdsV Mk;jh gS] ftlesa izFke fyf[kr ist ij Jh ljxhr xksnkjk iq= Jh lqyrkukjke] yhykoyh vafdr gS rFkk vUnj ds i`"Bksa ij :i;ksa ds ysu nsu laca/kh dqN fglkc fy[kk gS rFkk ftlds ckjs esa vkils losZ dk;Zokgh ds nkSjku ntZ c;kuksa esa iz’u la-39 esa iwNk x;k Fkk rFkk rc vkius mrj esa ;g lR;kfir fd;k Fkk fd mDr O;fDr ds lkFk gq, ysu nsu vkidh cfg;ksa esa ntZ ugh gS rFkk ;g Mk;jh vkids }kjk rS;kj dh xbZ rFkk vkids O;olk; ls gh lacaf/kr gS d`i;k bl Mk;jh esa ntZ izfof"V;ksa ds ckjs esa Li"Vhdj.k nsosA mRrj eSa iqu% Lohdkj djrk gwWa fd mDr Mk;jh esa vafdr izfof"V;ksa gekjs }kjk Jh ljxhr xksnkjk dks for o"kZ 2014&15 o 2015&16 esa fn;s x;s _.k ls lacaf/kr gS rFkk gekjh QeZ eS- uodkj VªsMlZ dh ys[kk iqLrdksa es ntZ ugh gSA bu izfof"V;ksa esa foRr o"kZ 2014&15 ls lacaf/kr jkf’k :i;s 6]84]915@& o foRr o"kZ 2015&16 ls lacaf/kr jkf’k :i;s 9]41]490@& vkrh gS ijUrq pwafd leLr izfof"V;ksa dks tksM+k tkuk U;k;ksfpr ugh gS D;ksa fd mUgh iSlksa dk jksVs’ku gks jgk gS fQj Hkh eSa viuh xyrh Lohdkj djrs gq, rFkk viuh ekufld 'kkfUr gsrq nksuksa o"kksZa dk vkSlr ¼x.kuk dh ljyrk gsrq½ :i;s 8]13]202@& curk gS rFkk mDr ij C;kt dh vkSlr x.kuk ds e/;utj bl folaxfr dh ,ot esa ,d eq’r :i;s 9]00]000@& dh jkf’k fu/kkZj.k o"kZ 2016&17 ds fy, viuh fu;fer vk; ds vfrfjDr djkjksi.k gsrq lefiZr dj jgk gwWaA mijksDr pkjksa vuqyXudksa ;Fkk ch&1 ls ch&4 esa ntZ lHkh izfof"V;ksa ds isVs dqy jkf’k :i;s 25]00]935@& ¼:i;s 2]90]770@& $ :i;s 5]10]165@& $ :i;s 8]00]000@& $ :i;s 9]00]000@&½ dks fu/kkZj.k
5 ITA No. 30/JODH/2021 Shri Pawan Kumar Jain vs. Pr. CIT o"kZ 2016&17 ds fy, esjh fu;fer vk; ds vfrfjDr djkjksi.k gsrq lefiZr dj jgk gwWA iz’u eSa vkidks ,d ywt isij la-178 dh cSd&lkbZM fn[kk jgk gwWa bl ij ntZ fnukad 28-11-2015 dks rhu O;fDr;ksa dks dqy 18]00]000@& :i;s dh jkf’k m/kkj nsus ckcr fooj.k ntZ gSA ;g izfof"V;ksa fdl QeZ@O;fDr ls lacaf/kr gS] d`i;k bldk Li"Vhdj.k nsos rFkk lacaf/kr cfg;ksa ls lR;kiu djkosaA mRrj ;g dkxt esjh izksijkbZVjf’ki QeZ eSa- uodkj VªsMlZ ls lacaf/kr gS] blesa rhu yksxksa dks m/kkj fn;s x;s :i;ksa dk fooj.k ntz gS] tks fd esjh QeZ dh fu;fer cgh [kkrksa esa ntZ ugh gS vkSj ;g jkf’k vHkh Hkh ysuh cdk;k gsAvr% eSa viuh ekufld 'kkafr ,oe~ fookn ls cpus ds fy, mDr jkf’k :i;s 18]00]000@& dks viuh izksijkbZVjf’ki QeZ eSa uodkj VªsMlZ dh fu/kkZj.k o"kZ 2016&17 dh fu;fer vk; ds vfrfjDr djkjksi.k gsrq lefiZr dj jgk gwWaA
It was further submitted that in the assessment order, the nature of business of the assessee is being mentioned. The assessee is proprietor in M/s Navkar Traders, Dhan Mandi, Sangaria and the main source of income is commission income from trading of agriculture commodities. The farmers and producers bring their agriculture produce to the assessee which is being sold by the assessee. The sale of such agriculture produce is mainly made on commission basis and sometimes the price of the produce is fixed, and the farmers take the money in installments as and when the goods are being sold. The details of payments made to them are being recorded in these diaries to keep a record of payment made to farmers against their commodity which is being sold through the assessee. The advance given to these farmers are out of the sale produce of their products and the income of the assessee is only the commission income in such sale. The advance which is given is also
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out of the sale produce of the farmers being sold, and therefore there is no investment of the assessee in making these payments. The assessee is a Pacca Aarditya and is making sales on behalf of these farmers. However during the course of survey proceedings, these entries are for receipts and payments being made to the farmers. It was therefore, submitted even during the course of survey proceedings that there is rotation of funds. The produce is being received, the same is being sold, and payments are being made to the farmers. It was on the basis of appreciation of these facts it was observed even during survey proceedings that the total advance in one of the party comes to Rs. 7,21,103/-, however to round it off the income of Rs. 8,00,000/- was taken. Similarly in the case of the other party, the said amount came to Rs. 8,13,202/- which was rounded off as Rs. 9,00,000/-.
It was submitted that in these facts, it was therefore not correct to say that the amount was Rs. 21,63,310/- and Rs. 16,26,405/- is the amount of advance given and it was Rs. 8,00,000/- and Rs. 9,00,000/- only which could have been estimated on the basis of these documents. This amount was also determined at the time of survey proceedings and was also verified at the time of assessment proceedings. The said amount was duly included in the return and therefore there is no error and the said order on this issue cannot be said to be erroneous or prejudicial to the interest of Revenue.
Similarly in relation to the other issue, the agreement for purchase of property was made at Rs. 60,00,000/- and only Rs. 36,00,000/- was paid during the year, which was verified and verifiable
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from the books and even during the survey the same was verified. The balance payment as per agreement was required to be made in next year. There prima facie there is nothing which needs to be done in the year under consideration. Even otherwise, the registered sale deed is a public document, and the balance payment of Rs. 24,00,000/- was duly made on 7.5.2016 which is not a event of the current year. The said payment was also verifiable form the bank statement and registered sale deed, which was also verified. In letter dated on 2.8.2018, the details of bank loan taken for purchase of this property and copy of bank statement was also furnished in relation to the payment made during the year under consideration. Nothing remains to be examined in the year under consideration and therefore the order cannot be said to be erroneous or prejudicial to the interest of revenue on this issue also.
It was accordingly submitted that under the present facts and circumstances, the order so passed U/s 263 may be set-aside.
Per contra, the ld. CIT/DR relied on the finding of the ld PCIT which are contained at para 5 of his order which reads as under:-
“5. The reply filed by the A/R of the assessee and information /details available on the records have been considered carefully and my observations in this regard are under:
(i)/Issue/Point 1: A survey u/s 133A of the Income-tax Act, 1961 was carried out in the case of the assessee. During the
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survey, the assessee made a total surrender of Rs.43,00,935/-, including addition made on account of advances given out of regular books of account. On the basis of the documents found during the survey, the assessee has made following out of books advances: Name of FY Amount Total Surrender person made Hemraj 2013- 5,04,720 21,63,310 8,00,000 Jaani 14 2014- 10,38,165 15 2015- 6,20,425 16 Sargit 2014- 6,84,915 16,26,405 9,00,000 Godara 15 2015- 9,41,490 16
From the above, it is clear that during the FY 2013-14 to 2015-16, the assessee made total advance of Rs. 2163310/- to Himraj Jyani which were out of his regular books of account. Similarly, Sargit Godara was advanced a total sum of Rs. 16,26,405/- during the FY 2014-15 to 2015-16 which was also out of the regular books.
As per the details submitted and information gathered during the course of survey, out of total amount of Rs.21,63,310/-
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advanced to Shri Hemraj Jyani, the assessee surrendered Rs.8,00,000/- in the year under consideration. The AO is directed to take necessary action as per the Income-tax Act 1961 in respect of unrecorded transactions of Rs.5 04 720/- and Rs 10 38 165/- in AY 2014-15 and 2015-16, respectively.
(ii)/ Issue/point 2:- During the survey proceedings, an agreement for purchase of house property was found. As per this document, the assessee had purchased a house property for an amount of Rs.60,00,000/-. A payment of Rs.36,00,000/-was made on 27.11.2015 and the remaining payment was made on 30.04.2016. The Assessing Officer failed to verify the said information as to whether the registered deed was executed or not. The AO is directed to examine this issue after verifying necessary details and documents from the assessee.”
We have heard the rival contentions and perused the material available on record. On perusal of statement of Shri Pawan Kumar Jain recorded u/s 133A on 01.12.2015, it is noted that in response to question no. 4, he has offered an amount of Rs 8 lacs to tax towards advances given out of books to Shri Hemraj Jyani and in response to question no. 5, he has offered an amount of Rs 9 lacs to tax towards advances given out of books to Shri Sargit Godara. Here it is relevant to note that the assessee has stated in his statement that though there are various entries found recorded pertaining to three financial years in respect of these two persons, given that there is circulation of money,
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figures of Rs 8 lacs and Rs 9 lacs have been arrived at after considering the interest element and which was surrendered to tax by way of additional income and the same was duly examined and taken on record by the survey team. Further, it is noted that the said advances of Rs 17 lacs form part of total surrender of Rs 43,00,935/- made by the assessee for the financial year 2015-16 relevant to impugned assessment year. During the course of assessment proceedings, there is a clear affirmation by the Assessing officer that the assessee has voluntary surrendered income of Rs 43,00,935/- on account of advances given to farmers and unrecorded advances found during the course of survey as additional income in his return of income and the same was treated as unexplained investment u/s 69 liable for taxation at the rate of 30% under section 115BBE of the Act as is clear from the following findings recorded in the assessment order:-
“ Undisclosed Income Surrendered during the Survey 1. During the year, a survey was conducted u/s 133A of the Income-tax Act, 1961. In light of the discrepancies discovered during the survey, the assessee voluntarily surrendered an amount of Rs. 43,00,935/- on account of advance given to farmers and unrecorded advances. In light of the above facts, advance given to farmers and unrecorded advances of Rs. 43 lakhs stands as unexplained investment as per section 69. The same are required to be taxed as per the provision of section 115BBE. 2. It is also noted that this income of the assessee would not have been discovered unless an action u/s 133A of the IT Act,
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1961 was conducted. Hence, penalty u/s 271(1)© is hereby initiated for concealing true income on the amount of Rs. 43,00,935/- being undisclosed income subsequently surrendered by the assessee.”
We therefore find that the matter relating to unrecorded advances found during the course of survey and taxability thereof has been enquired by the AO and specific queries have been raised in respect of documents found during the course of survey as part of notice u/s 142(1) dated 29.11.2018, the reply submitted by the assessee has been duly examined by the AO including the statement of the assessee recorded during the course of survey where there is clear mention about rotation of funds and how the final figures of Rs 17 lacs has been arrived at, the findings of the survey team, the surrender made by the assessee and additional income offered in the return of income. It is therefore not a case where the AO has merely gone by the surrender made and additional income offered by the assessee in the return of income rather the AO has examined the whole gamut of documentation found during the course of survey and thereafter has accepted the additional income so offered by the assessee towards the discrepancies found during the course of survey. Thus, it cannot be said that there is failure on part of the Assessing officer to make proper enquiries and verifications which should have been made in respect of these transactions found during the course of survey.
Regarding the second issue raised by the ld PCIT relating to agreement for purchase of property and payment of Rs 36 lacs made
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during the year, it has been submitted that the payment is duly verifiable from the bank statement and the books of accounts maintained by the assessee and also find mention in the registered sale deed executed during the subsequent financial year and the details thereof were duly submitted vide letter dated 1.08.2018 and thus duly examined by the AO during the course of assessment proceedings. In this regard, we find that the AO has raised a specific query as part of initial notice u/s 142(1) dated 24.07.2018 and in response to the same, the assessee has submitted that he has made a payment of Rs 36 lacs towards purchase of a residential house and a part of which has been funded through bank borrowing amounting to Rs 27 lacs from the OBC Bank duly reflected in the financial statements. We therefore find that the matter has been duly examined by the AO and after taking into consideration the submission of the assessee including the source of payment towards the purchase of residential house, the same has been accepted and no adverse finding has been recorded. Thus, it cannot be said that there is failure on part of the Assessing officer to make proper enquiries and verifications which should have been made in respect of the said transaction.
In light of aforesaid discussions and in the entirety of facts and circumstances of the case, there is no basis to hold that the order passed by the Assessing officer is erroneous is so far as prejudicial to the interest of the Revenue. The order of the ld PCIT and the directions contained therein are hereby set-aside and the order of the Assessing officer is sustained.
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In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open Court on 07/09/2021.
Sd/- Sd/- (Sandeep Gosain) (Vikram Singh Yadav) Judicial Member Accountant Member
Jodhpur Dated:- 07/09/2021. *Santosh Copy of the order forwarded to: 1. A. The Appellant- Shri Pawan Kumar Jain, Hanumangarh. 2. The Respondent- Pr. CIT-1, Jodhpur. 3. CIT 4. CIT(A) 5. DR, ITAT, Jodhpur. 6. Guard File { ITA No. 30/Jodh/2021} By order, Asst. Registrar