Commissioner Of Income Tax-Bikaner v. Sh.mohd.ismail(D.b.income Tax Appeal

COMMISSIONEROFINCOMESH.MOHD.ISMAIL(D.B.INCOME TAX APPEAL NO.7/14) TAX-BIKANER VS. Dated:- 25.5.16. HON'BLE MR.JUSTICE SANGEET LODHAHON'BLE MR.JUSTICE KAILASH CHANDRA SHARMA Mr.Ravindra Purohit, for the appellant. 1.This appeal is directed against the order dated 31.7.13 ofIncome Tax Appellate Tribunal (ITAT), Jodhpur Bench, Jodhpur,whereby the cross appeals filed by the Revenue and theassessee against the order of the Commissioner of Income Tax(Appeals) [CIT(A)], Bikaner, dated 22.10.03, stand disposed of.The appeal preferred by the assessee has been allowed and theappeal of the Revenue is partly allowed. 2.The facts relevant are that pursuant to warrant ofauthorisation under Section 132(1) of the Income Tax Act, 1961(for short “the Act”), search and seizure operation was carriedout in the business premises of M/s. Popular Iron Store, GajnerRoad, Bikaner, a proprietorship concern of Shri Mohd. Ismail.During the course of search, stock found was inventorised, thebooks of accounts were seized, panchnama was prepared andthe statement of Mohd. Ismail, the assessee was recorded underSection 132(4) of the Act. Pursuant to the notice issued underSection 158BC, the assessee furnished return for the block period showing undisclosed income of Rs.1,21,500/- in theAssessment Year 2000-01. The Assessing Officer passed theassessment order under Section 158BC (c)/143(3) of the Actdetermining yearwise undisclosed income of the assesseequantified at Rs.47,81,150/-. Aggrieved thereby, the appealpreferred by the assessee has been partly allowed by the CIT (A)whereby the various additions made by the AO were deleted,however, the addition of Rs.2,21,013/- made by the AO onaccount of excess stock found as against the stock declared bythe assessee at Rs.1,21,500/- was confirmed. In thesecircumstances, the assessee as also the Revenue both preferredthe appeal before the ITAT. The ITAT while relying upon thereasoning given in Jakir Hussain's case decided by commonorder, allowed the appeal preferred by the assessee and partlyallowed the appeal preferred by the Revenue. 3.In Jakir Hussain's case, the appeal preferred by theRevenue being the Appeal No.8/14 already stands dismissed bythis court as withdrawn vide order dated 10.5.16 inasmuch asthe tax effect therein did not exceed the monetary limit ofRs.20 lacs as prescribed under Circular No.21/2015 issued bythe Ministry of Finance, Department of Revenue, Central Boardof Direct Taxes, Government of India, New Delhi. That apart, yetanother appeal preferred by the Revenue in Mohd. Yasin's case decided by the common order of the ITAT impugned in thepresent appeal, also stands withdrawn inasmuch as, the taxeffect therein also less than the monetary limit prescribed. 4.Learned counsel would submit that the ITAT has also erredin confirming the order of the CIT (A) deleting addition ofRs.42,45,030/- made on account of cash credits and interestthereon under Section 68 of the Act of 1961. Learned counselsubmitted that the ITAT has erred in confirming the orderpassed by the CIT (A) deleting addition of Rs.1,83,563/- out ofthe addition of Rs.4,04,573/- made on account of excess stockfound during the course of search. Learned counsel furthercontended that the ITAT has erred in confirming the order of CIT(A) deleting the addition of Rs.1,58,246/- on account ofinadequate household expenses. Learned counsel submitted thatthe directions issued by the CIT(A) for levy of interest underSection 158BFA w.e.f. 1.1.01 onwards is not justified. 4.Learned counsel would submit that the ITAT has also erredin confirming the order of the CIT (A) deleting addition ofRs.42,45,030/- made on account of cash credits and interestthereon under Section 68 of the Act of 1961. Learned counselsubmitted that the ITAT has erred in confirming the orderpassed by the CIT (A) deleting addition of Rs.1,83,563/- out ofthe addition of Rs.4,04,573/- made on account of excess stockfound during the course of search. Learned counsel furthercontended that the ITAT has erred in confirming the order of CIT(A) deleting the addition of Rs.1,58,246/- on account ofinadequate household expenses. Learned counsel submitted thatthe directions issued by the CIT(A) for levy of interest underSection 158BFA w.e.f. 1.1.01 onwards is not justified. 5. Indisputably, the cash credits and relatable interest areshown in the balance sheet as also in the regular books ofaccounts for the Assessment Year 1990-91 to 2000-01. On beingasked, the assessee had explained the nature and source ofcredits. The CIT (A) after due examination of the material onrecord categorically observed that no efforts were made by theAO for proving the credits as non genuine. The CIT (A) and the ITAT have concurrently found that the credits aggregatingRs.42,45,030/- are properly explained by the assessee. 6.Regarding the addition on account of excess stock foundduring the course of search , it is to be noticed that the searchparty made physical inventory of the stock on 6.8.99 but therate was not written in the inventory list of different items. Thestock consisted of various items viz. Pipe, iron, iron scrap, ironsheet, railway girder scrap, rail line scrap sheet, scrap etc. whichwas valued by the AO adopted average rate of Rs.15/- per kg.on the basis of three bills which relate to pipes only. After dueconsideration, the CIT (A) arrived at the finding that it wouldhave been both scientific and correct if the items found duringthe course of search are valued individually on the basis of theindividual bills after proper identification. After due considerationof all relevant aspects, the CIT (A) arrived at the finding that thebasis for valuation adopted by the AO is unjustified. The CIT (A)after taking into consideration the stock of the individual itemsdetermined the value of the excess stock. The finding arrived atby the CIT (A) has been affirmed by the ITAT. 7.Coming to the addition made on account of estimatedhousehold expenses, the CIT (A) found that there was noevidence or material found during the course of search, whichcould suggest that any expenditure over and above disclosed was incurred by the assessee. The CIT (A) observed that the AOhas not made the assessment of the household expenses on thebasis of the documents seized in search but made a case ofestimation of household expenses which is outside the purviewof block assessment. The issue with regard to the addition onaccount of estimated household expenses was examined by theCIT(A) thread bear keeping in view the position of the lawsettled by various decisions. The finding arrived at by the CIT(A)has been affirmed by the ITAT, observing that no addition dehors any evidence found during the search can be made in blockorder. The ITAT found that the expenses required to meet theassessee's household requirements have been duly explained. 8.Regarding the charging of interest under Section 158BFA,the CIT(A) after due examination of the proceedings found thatthe assessee had made an application on 11.4.2000 for supply ofcopies of statement, inventory of stock and other seizedmaterials which were made availabe to him in the month ofNovember, 2000. In this view of the matter, the CIT (A)observed that the period upto the December,2000 should not betreated as period of delay caused cannot be attributed to theassessee. The findings arrived at by the CIT(A) has beenaffirmed by the ITAT. 9.In the considered opinion of this court, the findings arrived 8.Regarding the charging of interest under Section 158BFA,the CIT(A) after due examination of the proceedings found thatthe assessee had made an application on 11.4.2000 for supply ofcopies of statement, inventory of stock and other seizedmaterials which were made availabe to him in the month ofNovember, 2000. In this view of the matter, the CIT (A)observed that the period upto the December,2000 should not betreated as period of delay caused cannot be attributed to theassessee. The findings arrived at by the CIT(A) has beenaffirmed by the ITAT. 9.In the considered opinion of this court, the findings arrived at by the CIT(A), affirmed by the ITAT, discussed hereinabove,remain findings of facts arrived at after due consideration of thematerial on record as also the settled position of law and thus,no substantial question of law arises for consideration of thiscourt in this appeal. 10.No other point has been pressed by the counsel for theappellant. 11.In the result, the appeal is dismissed. (KAILASH CHANDRA SHARMA),J.(SANGEET LODHA),J.