M.SUBHANGI,CHIDAMBARAM vs. ITO WARD 3, CUDDALORE

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals), Puducherry dated 15.12.2017 relevant to the assessment year 2013-14. The only effective ground raised by the ld. Counsel for the assessee relates to confirmation of addition of ₹.3,50,774/- on account of difference detected on the bank jewel loans obtained, pawn advances made by the assessee between the survey report and as per the books of account.

Brief facts of the case are that the assessee is deriving income from pawn broking business and receiving share income from M/s. Malan Jewellery Firm. A survey was conducted under section 133A of the Income Tax Act, 1961 [“Act” in short] on 18.02.2013 in the group cases of M/s. Malan Jewellery Firm. As the assessee did not file her return of income for the assessment year 2013-14 within the stipulated time, a notice under section 142(1) of the Act was issued on 17.10.2014, which was duly served on the assessee on 25.10.2014. Since the assessee did not file return of income in response the above notice issued under section 142(1) of the Act, a penalty notice under section 271(1)(b) of the Act was also issued. The assessee filed her return of income for the assessment year 2013-14 on 02.02.2016 admitting an income of ₹.71,69,040/-.

In order to verify the correctness of the details furnished in the return of income and the statement recorded and materials impounded during the course of survey under section 133A of the Act, the case was taken up for scrutiny by issue of notice under section 148 of the Act. After following due procedure, the Assessing Officer has completed the assessment under section 143(3) r.w.s. 147 of the Act dated 30.12.2016.

During the course of assessment proceedings, the assessee vide letter dated 10.11.2016 furnished the details regarding balance of bank jewel loans and pawn advances as per books as on the day of survey, the same are reproduced as under: As on the date As per books Difference (₹.) of survey (furnished vide letter dated (₹.) 10.11.2016) (₹.) Bank Jewel Loans 15,03,49,263/- 15,01,80,871/- 1,68,392/- Pawn advances 22,44,73,619/- 22,42,91,237/- 1,82,382/- In the absence of any valid explanation for the differences in bank jewel loan and pawn advances, the amount of ₹.1,68,392/- and ₹.1,82,382/- totalling to ₹.3,50,774/- was brought to tax in the hands of the assessee. On appeal, the ld. CIT(A) confirmed the addition.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that the Assessing Officer has not provided the data on the values arrived at during the course of survey to properly reconcile the figures and moreover, the survey was conducted in the group cases of M/s. Malan Jewellery Firm and some of the advances relate to the group entities also. The differences are minimum and insignificant, the ld. Counsel prayed for deleting the above addition.

On the other hand, the ld. DR supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In this case, admittedly, the survey under section 133A of the Act was conducted on 18.02.2013 in the group cases of M/s. Malan Jewellery Firm, wherein, three pawn broking businesses are being carried out in the same premises. The assessee furnished the details to the extent of ₹.15,01,80,871/- of the bank jewel loans against the declaration during the course of survey at ₹.15,03,49,263/- and thus, there is a difference of ₹.1,68,392/-. Similarly, against the declaration of pawn advances of ₹.22,44,73,619/-, the assessee has furnished to the extent of ₹.22,42,91,237/-, thereby the difference is ₹.1,82,382/-. From the above, it is quite apparent that there is not even 0.1% difference between the bank jewel loans and pawn advances admitted as on the date of survey and as per the books of account furnished during the course of assessment proceedings which appears to be very insignificant in the absence of providing the data on the values arrived at during the survey by the Assessing Officer to the assessee. However, unaccounted income in this line of business in the absence of proper maintenance of books of accounts cannot be ruled out and also cannot be ignored the fact that, some of the advances relate to the group entities, which could not be reconciled in the absence of value arrived at by the Assessing Officer, we are of the opinion to restrict 50% of the total addition, which would meet the ends of natural justice. Thus, the ground raised by the assessee is partly allowed. No other ground has been taken up at the time of hearing.