RAJESH KUMAR POONIA,JHUNJHUNU vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE- JHUNJHUNU, JHUNJHUNU, JHUNJHUNU

आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर
IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, "B" JAIPUR
डा० एस. सीतालक्ष्मी, न्यायिक सदस्य एवं श्री राठोड कमलेश जयन्तभाई, लेखा सदस्य के समक्ष
BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI,
आयकर अपील सं. / ITA Nos. 611 & 623/JP/2024
निर्धारण वर्ष / Assessment Year : 2016-17 & 2017-18
Rajesh Kumar Poonia
S/o Ishwar Singh Poonia Thirpali
Chooti, Thirpali Bapi Rajgarh,
Churu
बनाम
ACIT,
Vs.
Circle-Jhunjhunu,
Jhunjhunu
स्थायी लेखा सं. / जीआईआर सं./PAN/GIR No.: BRXPK 6775 P
अपीलार्थी / Appellant
प्रत्यर्थी / Respondent
निर्धारिती की ओर से / Assessee by: Sh. Vedant Agrawal, Adv. (V.C)
राजस्व की ओर से / Revenue by : Sh. Anup Singh, Add. CIT-DR
सुनवाई की तारीख / Date of Hearing : 01/04/2025
उदघोषणा की तारीख / Date of Pronouncement: 06/05/2025
आदेश/ ORDER
PER: RATHOD KAMLESH JAYANTBHAI, AM
There are two appeals filed by the assessee aggrieved from the order of Commissioner of Income Tax (Appeal), Jaipur -04 [ for short CIT(A) ]
both for the assessment year 2016-17 & 2017-18 passed on 22.04.2024 &
15.04.2024 respectively, which in turn arises from the order passed by the ACIT, Circle, Jhunjhunu [ for short AO ] passed under Section 143(3) of the Income tax Act, 1961 [ for short Act ] dated 28.12.2018 & 17.08.2019. In ITA No. 623/JP/2024, the assessee has taken the following grounds;
“1. The Learned CIT (A) has legally and factually erred in Confirming invocation of section 145(3) of the Act and rejecting books of Accounts without pointing out any specific discrepancy in the books of accounts:-
2. Under the facts and Circumstances, the Learned CIT (A) has erred in law on facts in confirming the addition on the basis of statement recorded u/s 133A in the course of survey for making additions more particularly when statement recorded u/s 133A on 16.03.2018 has not got an evidentiary value. No cross examination of the retraction was made and in violation of principles of natural justice-
3. Under the facts and Circumstances the CIT (A) has erred in law by ignoring the CBDT instruction s issued by CBDTs letter issued vide F.NO. 286/2/2003 IT (Inv) dated 10/03/2003 and F.No. 286/98/2013-IT(inv.1) dated 18.12.2014. 2.1 In ITA No. 611/JP/2024, the assessee has taken the following grounds of appeal:
“1. The Learned CIT (A) has legally and factually erred in Confirming invocation of section 145(3) of the Act and rejecting books of Accounts without pointing out any specific discrepancy in the books of accounts:-
2. Under the facts and Circumstances, The Learned CIT (A) has erred in law on facts in confirming the addition on the basis of statement recorded u/s 133A in the course of survey for making additions more particularly when statement recorded u/s 133A on 16.03.2018 has not got an evidentiary value. No cross examination of the retraction was made and in violation of principles of natural justice.
3. Under the facts and Circumstances the CIT (A) has erred in law by ignoring the CBDT instruction s issued by CBDTs letter issued vide F.NO. 286/2/2003 IT (Inv) dated 10/03/2003 and F.No. 286/98/2013-IT(inv.1) dated 18.12.2014. 3.1 First, we take up the appeal of the assessee in ITA No. 623/JP/2024. 3.2 The brief fact as culled out from the records is that return of income declaring total income of Rs. 17,64,160/- was filed electronically on 31/03/2018. The case was selected for Limited Scrutiny through CASS and the notice u/s 143(2) of the IT Act, 1961 was issued on 08/08/2018 which was duly served upon the assessee. Subsequently notice u/s 142(1) of the IT Act, 1961 along with questionnaire was issued on 27/08/2018 and was duly served upon the assessee. Further, on change of incumbency a fresh notice u/s 142(1) of the IT Act, 1961 was issued on 26/10/2018 requiring certain details / information / clarification through electronically mode. In compliance to these notices, the assessee uploaded the replies on e-filing portal and furnished required details/ explanation/clarification/ evidences, which were perused and examined thoroughly in respect of the issues/reasons on the basis of which the case was selected for limited scrutiny.
3.3 The assessee derives income from trading of poultry feed and chicken. He had shown total income amounting to Rs. 17,64,160/- for the year under consideration. Further the assessee had shown income of Rs.
1,75,150 as agriculture income. In this case, survey proceedings were conducted u/s 133A of the income Tax Act, 1961 on 16/03/2018 to 17/03/2018 at the business premise of the assessee. During the course of survey proceedings the statements of the assessee were recorded u/s 131
of the income Tax Act, 1961 on oath on 16/03/2018 and 17/03/2018. In his statements, the assessee admitted while answering question No.18 that his business income for the financial year 2015-16 (AY 2016-17) was Rs 40-50
lacs, whereas as per ITR filed for the year under consideration he has shown his business income at Rs. 19,14,163/-only. Thus, the assessee has shown less business income by Rs.25,85,837/-(Average of 40-50 lac comes to Rs.45,00,000/- minus Rs.19,14,163/-). In view of the facts discussed above, the matter was required to be examined thoroughly beyond the reasons of the 'limited scrutiny. Accordingly, the case was converted from limited scrutiny criteria to complete scrutiny after obtaining necessary approval of the Pr. Commissioner of Income Tax-3, Jaipur vide her letter No. 2282 dated 10/12/2018. 3.4 After conversion of the case from 'limited scrutiny to complete scrutiny a notice u/s 142(1) of the IT Act, 1961 was issued to the assessee along with a detailed questionnaire/ show cause dated 10/12/2018. In response to this the assessee furnished his reply electronically on 14/12/2018 and subsequent replies thereafter.
3.5 Ld. AO noted that during the course of survey proceedings incriminating papers, diaries, etc were found and impounded. Statement of Shri Rajesh Poonia Prop. of M/s Lakshay Poultry Farm, Pilani were recorded on oath u/s 131 of the IT Act, 1961 on 16/03/2018 and 17/03/2018. In his statement in reply to question No. 18, the assessee admitted on oath that his income during the year under consideration was Rs.40-50 lac which was estimated on the basis of impounded diaries, ledger, etc. He further admitted that he would submit relevant documents in support of his income admitted/ accepted. However, on perusal of ITR filed by the assessee, it was noticed that he has shown less income for the year under consideration compared to that accepted at the time of survey proceedings. Thus the assessee was issued a show cause notice dated
10/12/2018. The assessee filed the reply on 14.12.2018. Ld. AO considered the submission of the assessee but found it not acceptable because the assessee admitted in his statement on oath recorded u/s 131 of the Act while answering question No. 18 that his income for the year under consideration was Rs.40-50 lacs. The assessee admitted his business income based on his calculation bases on his memory and incriminating documents including ledgers, diaries, etc, which were impounded while survey. The bench noted that the assessee has retracted to that statement vide affidavit dated. 18.05.2018 i.e. with in a reasonable time after the survey [ paper book page 1 & 2]. During the hearing Id. DR on being asked did not specifically what was the material based on upon which the disclosure was obtained but the same were not presented. Ld. AO did not bring any record found at the time of the survey on any loose sheet as that is relied upon. The income which is offered by the assessee is supported by the books of accounts which Id. AO stated that are prepared after the survey but did not find any specific defects. Ld. AO noted that the assessee has filed ledger of vehicle expenses and of Diesel expenses which were in cash and he stated that same are not verifiable, but he did not find the claim of the assessee as incorrect based on the activity conducted. Ld. AO did not compare that of the assessee's claim that how it was not comparable.
Thus, the rejection of the books were not correct. Ld. AO simply mentioned the invocation of section 145(3), but the mandatory notice was not given mentioning the defects in the books of accounts based on the provision of section 145 of the Act. The provision of section 145(3) provides that;
(3) Where the Assessing Officer is not satisfied about the correctness or completeness of the accounts of the assessee, or where the method of accounting provided in sub-section (1) has not been regularly followed by the assessee, or income has not been computed in accordance with the standards notified under sub-section (2), the Assessing Officer may make an assessment in the manner provided in section 144. Thus, it is clear from the above provision of the act that the Id. AO or that of the Id. CIT(A) may proceed under Section 145(3) under any of the following circumstances:
•
Where he is not satisfied about the correctness or completeness of the accounts; or •
Where method of accounting cash or mercantile has not been regularly followed by the assessee; or Accounting Standards as notified by the Central Government have not been regularly followed by the assessee.
Based on the facts as discussed above it was not case of the revenue for the second and third reason but is of on the first reason that the Id. AO is not satisfied about the correctness of completeness of the accounts. But the same is not the situation when the assessee has produced all the records that were required by the AO. The bench noted that before the Id. CIT(A) the assessee made a submission to support as to why the provision of section 145(3) cannot be invoked in the case of the assessee. The assessee submitted that AO cannot reject the books of accounts and apply the provisions of section 145(3) of the Act unless no material record has been brought on record to hold that book results are not reliable, when that are maintained in regular course of business. Even the Id.AO has not given required notice for rejection of book results as required under law. Even the Id. CIT(A) has simply supported the finding of the Id. AO without dealing with the contention of the assessee. Therefore, in such circumstances and facts of the case, the Assessing Officer was not justified in rejecting the books of account by invoking the provisions of section 145(3) of the Act and the additions made by the Assessing Officer are liable to deleted. Having held so that the books' results cannot be rejected based on the surmises and conjectures. We also note that even books of accounts were confirmed to have been rejected by both the lower authorities but no addition related to that rejected books of accounts was made by issuing a separate notice therefore, the book result cannot be disbelieved and the addition cannot be made based on the surmises and conjectures.
Ld. AR of the assessee submitted that the case laws cited by Ld. CIT(A) are related to the search and the statement recorded u/s 132(4) cannot be P. Ltd [ 166 taxmann.com 722 (Rajasthan) ] wherein the High Court held that;
11. Now it is a matter of record that Shirish Chandrakant Shah had retracted his statements given before the Assessing Officer. Even otherwise, an admission by the assessee cannot be said to be a conclusive piece of evidence. The admission of the assessee in absence of any corroborative evidence to strengthen the case of the Revenue cannot be made the basis for any addition. Therefore, the substantial questions of law framed by the appellant pertained to an open issue which stands concluded by the decision of the Hon'ble Supreme Court; one such decision was rendered in "M/s Pullangode Rubber Produce Co. Ltd. v. State of Kerala And Another" [1973] 19 ITR 18. Respectfully following the binding judgment and the discussion so recorded herein above ground no. 1 & 2 raised by the assessee are allowed. Since we have allowed the appeal of the assessee on merits the technical ground raised by the assessee becomes academic.
In terms of these observations, the appeal of the assessee in ITA no.
623/JP/2024 stands is allowed
10. The fact of the case in ITA Nos. 611/JP/2024 is similar to the case in ITA No. 623/JP/2024. As we have heard both the parties and persuaded the materials available on record and based on that the bench has noticed that the issues raised by the assessee in this appeal No. 611/JP/2024 are equally similar on set of facts and grounds as that of with 623/JP/2024. Therefore, it is not imperative to repeat the facts and various grounds raised. Hence, the bench feels that the decision taken by us in ITA No.
623/JP/2024 for Assessment Year 2016-17 shall apply mutatis mutandis in the case of Rajesh Kumar Poonia in ITA No. 611/JP/2024 for the Assessment Year 2017-18. 11. In the result, both the appeals of the assessee are allowed.
Order pronounced in the open court on 06/05/2025. (डा० एस. सीतालक्ष्मी )
(Dr. S. Seethalakshmi)
न्यायिक सदस्य/Judicial Member
जयपुर/ Jaipur
दिनांक/Dated:- 06/05/2025
*Ganesh Kumar, Sr. PS ( राठोड कमलेश जयन्तभाई )
(Rathod Kamlesh Jayantbhai)
लेखा सदस्य / Accountant Member
आदेश की प्रतिलिपि अग्रेशित/Copy of the order forwarded to:
The Appellant- Rajesh Kumar Poonia, Churu
1. 2. 3. 4. 5. 6. प्रत्यर्थी / The Respondent- ACIT, Circle- Jhunjhunu, Jhunjhunu
आयकर आयुक्त / The ld CIT
आयकर आयुक्त (अपील) / The ld CIT(A)
विभागीय प्रतिनिधि, आयकर अपीलीय अधिकरण, जयपुर/DR, ITAT, Jaipur
गार्ड फाईल / Guard File (ITA Nos. 611 & 623/JP/2024)
आदेशानुसार / By order,
सहायक पंजीकार / Asst.