CIT vs. JITENDRA KUMAR AGARWAL

By way of these appeals, the appellant has assailed the judgment and order of the Tribunal whereby Tribunal has dismissed the appeals of the department and partly allowed the appeal preferred by the assessee.

This court while admitting the appeals framed following substantial questions of law:-

1 Appeal No.297/2011 admitted on 3.7.2013 “Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs.1,21,85,400/- which was made by the Assessing Officer and confirmed by CIT(A) on account of undisclosed investment of assessee in land and simply directing to compute 10% profit on the said investment as income of the assessee, even after holding that the investment is assessee’s own turnover in land dealing and not the investment made for others?”

2 Appeal No.334/2011 admitted on 3.7.2013 “Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs.53,50,000/- which was made by the Assessing Officer and confirmed by CIT(A) on account of undisclosed investment of assessee in land and simply directing to compute 10% profit on the said investment as income of the assessee, even after holding that the investment is assessee’s own turnover in land dealing and not the investment made for others?”

3 Appeal No.653/2011 admitted on 14.11.2011 “Whether on the facts and in the circumstances of the case, the Tribunal was justified in deleting the addition of Rs.4,32,78,595/- which was made by the Assessing Officer and confirmed by CIT(A) on account of undisclosed investment of assessee in land and simply directing to compute 10% profit on the said investment as income of the assessee, even after holding that the investment is assessee’s own turnover in land dealing and not the investment made for others?”

4 Appeal No.676/2011 admitted on 31.7.2012 “Whether on the facts and in the circumstances of the case, the Tribunal was (4 of 7) [ITA-297/2011]

5 Appeal No.5/2012 admitted on 19.2.2016 “Whether the Tribunal was justified in deleting the addition of Rs.1,99,50,574/- made by the Assessing Officer, despite the same being surrendered by the assessee during survey and no document being filed to prove the same to be accounted income of the assessee?

The facts of the case are that the assessee deals in jewellery, bullion, precious/semi precious stones in the name of his proprietorship concern M/s. Garg Jewellers. A survey u/s 133A was conducted on 21 & 22.1.2008 and some incriminating documents were impounded. In the incriminating documents it was noted certain unaccounted transaction relating assessment years 2004-05 to 2008-09. Therefore, the assessements were reopened by invoking provisions of Section 147/148.

1 During the survey proceedings, statement of Ch. Chandra Prakash Garg, father of the assessee was recorded wherein he admitted that the transaction appearing in impounded documents A-3 and A-5 were transactions out of regular books. A show cause notice was issued as no details of sales and purchase parties were made available.

All the questions which arise for consideration are whether whole amount which is taken into consideration for the property is to be added in the income. The view taken by the tribunal is 12% on the basis of income. The transaction which has been shown by the assessee during the year it has come on record is only on the basis of statement of one of the relative (father of the assessee) and who was assessed for the whole amount of transaction and relevant finding in this regard recorded by the AO reads as under:- “It would now be extremely relevant to look at the statement given during the course of survey by the father of the assessee, Sh. Chandra Prakash Garg, who admitted in the statement that the land transactions shown in the A-5 were actually his investments in property and that these investments were out of his regular books of accounts which he would offer for income in the year to which these entries were related.”

1 For the same transaction, no contrary or other material was found on record, therefore the whole income was considered as income of the assessee.

2 The observations made by the Tribunal reads as under:- “After considering the submissions and perusing the material on record, we find that the entries of Annexure-A-5/71 to A-5/76 relating to pages 370 to 373 and 375 to 379 (as page 374 is blank) of the seized material relates to incoming and out going on account of land dealing. If the total of both sides separately is taken of these papers, the it is seen that the total tallies. The total incoming amount is of Rs.8,88,94,273/- and total out going amount is also of the same figure. The AO has made addition of the amount peaking

During the course of survey it was clearly mentioned that whatever the income found related to A.Y. 2005-06 onwards that will be declared in the A.Y. 2008-09 and according as stated above, the assessee has surrendered the amount of Rs.3,00,00,000/- or so.” In view of these facts, we are of the view that these incoming entries and out going entries relate to sale and purchase of land, and, therefore, this should be treated as turnover of the assessee and a profit rate should be applied on these transactions. It is not possible that accumulated profit of Rs.1.25 crores or undisclosed debtors of Rs.1.75 crores or so were related to A.Y.2008-09 only as in our considered view they relate to the accumulated profit of earlier year also i.e. 2004-05 to A.Y. 2008-09. Keeping in mind the quantum of accumulated closing stock and quantum of debtors, we are of the view that if (7 of 7) [ITA-297/2011]

3 In our considered opinion, the tribunal has assessed 10% of the amount as profit and in doing so, no error has been committed by the tribunal.

In that view of the matter, the issues are answered in favour of the assesee and against the department. The appeals stand dismissed. (INDERJEET SINGH),J. (K.S. JHAVERI),J. Brijesh 10-14.