Mr. Sanjay Garg v. Commissioner Of Income Tax, Ajmer

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 78 / 2004 Mr. Sanjay Garg, Prop M/s. Kota Stone Depot, Anasagar Link Road, Ajmer. ----Appellant Versus Commissioner of Income Tax, Ajmer. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Prakul Khurana For Respondent(s) : Mr. Nikhil Tiwari on behalf of Mrs. Parinitoo Jain _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERI HON'BLE MR. JUSTICE VINIT KUMAR MATHURJudgment Per Hon’ble Jhaveri J. 08/02/2017 1.By way of this appeal, the appellant has challenged thejudgment and order of the Tribunal whereby the Tribunal haspartly allowed the appeal of the assessee and while reversing theorder of the CIT(A) has confirmed the order of the AssessingOfficer. 2.This Court while admitting the appeal on 21.07.2004 has framed the following substantial question of law: “Whether, under the facts and incircumstances of the case, the Ld. IncomeTax Appellate Tribunal was justified inconsidering the sales of Rs. 1 lakh asincome in the hands of appellant andwhether the finding of the Tribunal isperverse?” 3.The brief facts of this case are that the original return wasfiled in this case on 28.11.1994 declaring an income ofRs.64,420/- (salary income Rs.61000/-, income from businessRs.18816/- and income from other sources (-) Rs.15392/-).Thereafter, the return was revised on 30.11.1994 declaring anincome of Rs.1,32,970/-. The same was processed u/s 143(1) (a)on 3.1.95 at the same figure. 3.1. The case was picked up under scrutiny being a search case. This case belongs to Garg group of cases in which search andseizure operation was carried out at the residence/businesspremises. Notice u/s 143(2) was issued to assessee and inresponse to the assessee attended the proceedings from time totime. 3.2. Necessary details as asked for have been filed by theassessee and the same are placed on record after verification. Allthe books of account, documents, papers relating to assessee forasstt. Year 1994-95 which were seized at the time of search havebeen examined. Books of account, documents, bills and vouchersrelating to assessee of post search period up to 31.03.1994 havealso been examined. 3.3. The assessee derives income from salary received from M/sGarg Granites (P) Ltd. And M/s Garg Marmo Tiles (P) Ltd. In whichhe is one of the Directors, Income from business and income fromother sources i.e. interest received/paid from variousfirms/creditors. 3.4. On perusal of trading a/c reveals that total sales of marblesby M/s Kota Stone Depot, Ajmer shown at Rs.1,44,301/- andgross profit of Rs.22,236/- has been shown after deducting salesof Rs.1,00,000/- made by the firm with the direction of Shri S.N.Garg. Thus, if the sales of Rs.1,00,000/- is considered in thehands of assessee then total gross profit will come toRs.1,22,236/-. 3.5. The assessee was specifically asked while order sheet entreedated 28.06.1995 why the sales should not be treated as hisincome and gross profit determined accordingly. In response towhich no explanation whatsoever is offered by the assessee.Since, the value of cost of total sales is considered and included intrading account, therefore, entire sales of Rs.41,44,301/- is takento determine the gross profit of assessee from marble purchasesand sales. No details of opening/closing stock, purchases, saleshave been adduced by the assessee. 4.Counsel for the appellant has taken us to para 5 of the orderof Tribunal which reads as under: 3.5. The assessee was specifically asked while order sheet entreedated 28.06.1995 why the sales should not be treated as hisincome and gross profit determined accordingly. In response towhich no explanation whatsoever is offered by the assessee.Since, the value of cost of total sales is considered and included intrading account, therefore, entire sales of Rs.41,44,301/- is takento determine the gross profit of assessee from marble purchasesand sales. No details of opening/closing stock, purchases, saleshave been adduced by the assessee. 4.Counsel for the appellant has taken us to para 5 of the orderof Tribunal which reads as under: “5.we have heard the rival submissions.We have also perused the records. Fromthe record, we find that the difference inthe stock was found as per inventoryprepared in the case of Kota Stone Depot,in which Shri S.N.Garg had surrenderedadditional income of Rs. 1 Lakh. We do notagree with the contention of the 1d. AR ofthe assessee that this sum of Rs. 1 lakh isincluded in the surrender of Rs. 5 Lakhs inthe case of Shri S.N.Garg. He could notlead any specific evidence to the factswhether a sum of Rs. 5 lakhs was inclusiveof Rs. 1 lakh on account of excess sales ofM/s Kota Stone Depot. Besides how cansales of the assessee be reduced by Rs. 1lakh on the direction of a third person i.e.We have also perused the records. Fromthe record, we find that the difference inthe stock was found as per inventoryprepared in the case of Kota Stone Depot,in which Shri S.N.Garg had surrenderedadditional income of Rs. 1 Lakh. We do notagree with the contention of the 1d. AR ofthe assessee that this sum of Rs. 1 lakh isincluded in the surrender of Rs. 5 Lakhs inthe case of Shri S.N.Garg. He could notlead any specific evidence to the factswhether a sum of Rs. 5 lakhs was inclusiveof Rs. 1 lakh on account of excess sales ofM/s Kota Stone Depot. Besides how cansales of the assessee be reduced by Rs. 1lakh on the direction of a third person i.e. Shri S.N.Garg, who is neither owner norconnected with the business of M/s KotaStone Depot, in any way. Therefore, wereverse the order of the 1d. Commissionerof Income-tax (Appeals) and restore thatof the Assessing Officer. The order of theAssessing Officer is upheld.” 5.The counsel for the appellant has contended that Rs.1,00,000/- which was added to the assessee was shown to theaccount of S.N. Garg who happens to be the father of theassessee which has been established by the paper book which hasbeen produced wherein the return of the father is produced onrecord. Thus, on the premises on which the deletion was notallowed by the Tribunal, does not survive. 6.In that view of the matter, the Tribunal has wronglysustained Rs.1,00,000/- which is allowed to be deducted as perthe record. 7.In that view of the matter, the issue is answered in favour ofthe assessee and against the department. 8.The appeal stands allowed. (VINIT KUMAR MATHUR)J. (K.S. JHAVERI)J. Asheesh Kr. Yadav/30